TaxTMI 
TaxTMI 
2016 (1) TMI 984
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....Revenue. 3. The first issue raised by Revenue in this appeal is that Ld. CIT(A) has erred in deleting the application u/s145 of the Act. 4. Briefly stated facts are that assessee is a Private Limited Company engaged in business of manufacturing of ingots and cement. The assessee filed return of income for the relevant assessment year declaring the loss of Rs. (-) 338876.61 under the head of business income. During the course of assessment proceedings, AO found several discrepancies from the audit report filed by assessee which were as follows:- i) Auditor's report states that assessee has not yet adequate internal data commensurate with the nature of assessee's business; ii) The comment of auditor that details examination of cost records u/s. 209(1)(D) of the Companies Act, 1956 has not been carried out with a view to determine whether they are accurate or complete; iii) As per audit report, the assessee has earned speculative profit in dealing of shares but the assessee does not maintain proper records of the transaction involved; iv) During the course of hearing it was found that vouchers connecting to revenue expenditure are most....
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....hat there is no significant omission therein? If the answers to above four questions are in the affirmative, assessee's profits are to be computed on the basis of his accounts. In such cases, proviso to section 145(1) or section 145(2) cannot be invoked. The Patna High Court has delivered a very important ruling in Md. Umer vs. CIT 1975 CTR (Pat) 13 : (1975) 101 ITR 525 (Pat). In that case, the assessee was individual, who derived income from sale of country liquor in assessment year 1966-67. Tribunal gave five reasons for the purpose of rejection of book profits as follows:- (1) The sales were not verifiable. (2) From the point of drawing of the liquor from the barrels, no account was maintained and even the normal leakage in the process of drawing and filling in the bottles was not shown. (3) Year to year, the book results shown have been rejected and profit invariably estimated by the Department. (4) The percentage of profit shown was low. (5) Drawings for expenses were inadequate. However, assessee had produced all his books of accounts before the Income-tax Officer and only two defects were found by him : (1) absence of....
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.... the case, Ld. CIT(A) has erred in deleting the disallowance of loss of Rs. 84,40,567/- on the basis of some fresh evidence violating the provision of Rule-46A(3) of I.T. Rules. 3. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the disallowance of loss of Rs. 84,40,567/- which was made due to the variation of the amounts furnished by the assessee u/s 142(1) & collected by the A.O u/s. 133(6)." 7. The common issue raised by Revenue is that Ld. CIT(A) has erred in deleting the disallowance of Rs. 84,40,567/- on the basis of fresh evidence without following the provisions of Rule-46A of the I.T. Rules, 1962. During the year under consideration, assessee has shown manufacturing expenses of Rs. 5,23,32,438/- in relation to sale shown in the financial statement of the assessee for Rs. 4,38,91,871/-. From the above, AO found a loss of Rs. 84,40,567/- is arising out of trading account of assessee. The AO called upon the assessee to justify the trading loss but according to the AO the assessee did not offer any explanation. Therefore the AO rejected the loss claimed by assessee. So AO disallowed the loss claim by assessee and added it to t....
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....art the cost of electricity per metric ton for this year was much higher compared to next year: Year 2003-04 2004-05 Production (M.ton) 4007.68 4129.95 Electricity consumed (Rs) 1,54,78,738 1,18,12,249 Consumption per M.Ton 3862 2860 3) The company's manufacturing unit was not working smoothly throughout the year despite assessee's best efforts. Just to keep the business running and to increase production manufacturing expenses were incurred. Due to several problems like electricity, labour, etc., the manufacturing unit was ultimately shut down on 03/11/2006. In concluding, we submit the following: 1. The Assessing Officer has not detected any discrepancy in the amounts of purchases, sales, closing stock or any other item of expenditure. The alleged defects raised by the Assessing Officer were all explained in course of the assessment proceedings. 2. The accounts of the company were properly audited and the same were followed by tax audit, a report of which in Form No. 3CD was filed along with the return. In annexure to Form No. 3CD information in respect of quantity of purchases, consumption, closing s....