TaxTMI 
TaxTMI 
2015 (2) TMI 526
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....ich had been subjected to tax audit u/s 44AB and consequently erred in partially confirming the action of the Assessing Officer in rejecting the books of - accounts invoking section 145 of the Act. 2. The learned Commissioner (Appeals) erred in not accepting the provisional financial statements of the company for the relevant financial year and not appreciating the fact that the noncompletion of statutory audit of the appellant a public sector corporation was beyond its control. 3. In the alternative and without prejudice to the above, the learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the average net profit of the past years was 9.13%. 4. The learned CIT (Appeals) erred in confirming the interest credited t....
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....F.Y. 2003- 04 & hence opening balances are subject to finalization. (ii) Relevant provisions of Companies Act & Accounting Standards as prescribed by ICAA have not been strictly followed. (iii) The records of Regional Office were not available for verification hence unable to comment on the same. (iv) The impact of observations i to iii above on balance sheet and profit and loss account is unascertainable." Balance sheet and the P&L Account filed along with the return of income was also provisional. In response to the show cause notice as to why profit should not be estimated @ 30% gross receipts, the assessee submitted as under:- "(a) we are following mercantile system of accounting consistently. Also the accounting standards as notif....
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.... officer then took comparable case of M/s. Piem Hotel who have shown net profit of 29.11% and on that basis the assessing officer estimated the income by taking net profit @ 30% of the gross receipts of Rs. 210,386,908.49 and thereby estimating the income at Rs. 6,31,16,070/-. Further the assessing officer noted that assessee has earned interest of Rs. 13,76,73,805/- which has not been offered for taxation as income from other sources but has been credited to grant-inaid account in the balance sheet. The assessee's explanation in this regard before the AO was as under"- "Corporation has parked unutilized amounts under various grant received in fixed deposits in banks. As per the Office memorandum received from Ministry of Tourism, Governme....
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....sion of additional evidence under Rule 29. Thus, he submitted that the income should be now assessed on the basis of statutory audit report, as the only ground for estimating the income by the authorities below was that the said statutory audit report was not available. Therefore, this matter should be restored back to the file of the AO. 7. Regarding taxability of interest, learned counsel though admitted that this issue has been decided by the Tribunal against the assessee, however, now new facts have come on record, which goes to show that the assessee's contention that the interest accrued on grant-in-aid is part of said aid only and it is not the income of the assessee. This new fact he submitted is in form of office memorandum dated ....
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....he statutory audit report is available for the relevant financial year, we are of the opinion that such an evidence is to be admitted and this issue should be restored back to the file of the AO to be consider the statutory audit report and complete the assessment afresh taking into account such report. We are order accordingly. Thus Ground No. 1 to 3 is treated as allowed for statistical purposes. 10. So far as the taxability of interest, the same has been admitted by the parties that, similar issue has been decided against the assessee by the Tribunal in the A.Y. 1996-97. The assessee's case has been that the interest which has been accrued on account of fixed deposits made out of unutilized grand-in-aid fund, partaks the character of gr....