TaxTMI 
TaxTMI 
2008 (2) TMI 896
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....at Rs. 84,07,200. 3. A survey was conducted under s. 133A of the Act on 11th Feb., 2005 at the business premises of the assessee. Certain bills and chits of paper were found during the survey. At para 4.1 of the assessment order the AO records that on the day of survey the total sale was at Rs. 39,134. Further from the summary which was obtained from the cash counter it was found that for the previous 5 days before the survey operations, the total sales were found to be of the order of Rs. 1,96,420. Thus the average sale of the bar and restaurant was at Rs. 39,365 for the 5 days. The AO considered 15 holidays-cum-dry days in the year and then extrapolated the average sales of 5 days and has come to a conclusion that the yearly sales should be Rs. 1,37,77,700 for the financial year 2004-05 as against the sales of Rs. 19,78,590 shown by the assessee in its return of income for the asst. yr. 2004-05. On the same basis the AO in his assessment order for the asst. yr. 2005-06 has estimated the sales at Rs. 1,37,77,700. Sales of the asst. yrs. 2001-02, 2002-03, 2003-04 were also estimated and arrived at based on extrapolation technique of these data found for 5 days. 4. It is also to b....
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....assessee firm duly maintains its books of account which are being regularly audited. The returns of income for the asst. yrs. 2004-05 and 2005-06 were duly submitted on 19th May, 2004 and 31st Oct., 2005 respectively. His case is that the CIT(A) was in error in holding that the provisions of s. 145(3) were impliedly invoked, as the AO has not made any discussion in this regard. He vehemently contends that the fact is that the AO has not found any defect in the books of account or in his method of accounting followed and that the CIT(A) has not considered the facts and the propositions and the case law relied upon before him. The case law relied upon before the CIT(A) are as follows : (i) Pandit Bros. vs. CIT (1954) 26 ITR 159 (P&H); (ii) S. Veeriah Reddiar vs. CIT (1960) 38 ITR 152 (Ker); (iii) International Forest Co. vs. CIT 1975 CTR (J&K) 88 : (1975) 101 ITR 721 (J&K); (iv) M. Durai Raj vs. CIT (1972) 83 ITR 484 (Ker); (v) R.M.P. Perianna Pillai & Co. vs. CIT (1961) 42 ITR 370(Mad). 7. The learned counsel submits that except the fact that the books were not found in the restaurant premises at the time of survey, there was no material whatsoever to come to a conclusion....
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....and P&L a/c filed much before the date of survey cannot to be rejected without finding out any defects in the same. (ii) That the AO has not rejected the books of account and the CIT(A) was wrong in holding that the AO has impliedly rejected the books of account. (iii) The sales of 5 days preceding the Valentine's Day were duly recorded in the books of account and there is no discrepancy in the books of account. Reference to the previous five years show that during the week preceding the Valentine's Day the sales are very high and thus it cannot be taken as a good sample. He filed the paper book consisting of pp. 01-42. He pointed out that the figures of sales of this particular period in the earlier 5 years as recorded in the books to buttress his point, that the sales has been high during this period, in every year. (iv) From pp. 20 to 28, copies of sales-tax assessment orders and proceedings were filed and it is submitted that the sales-tax turnovers and records have not been considered by the Revenue authorities. He vehemently contends that the turnovers accepted by one Governmental authority after due examination of the books of account and other records, cannot ....
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....ich are filed in the paper book, it can be seen that these very books were considered by the sales-tax authorities while framing assessment orders. When one Government authority has verified the books of account and passed assessment orders, it would be wrong on the part of another Government authority to come to a conclusion based on presumptions and assumptions that the claim of maintenance of books of account is an afterthought on the sole reason that they were not found during survey. Thus in view of the foregoing discussion and on the basis of material available on record we hold that the conclusion of the CIT(A) that the assessee had never maintained any regular books of account and that these were cooked up books of account is against the facts of the case. 11.2 This brings us to the second issue of rejection of books of account. The AO nowhere in his order has stated that there are defects in the books of account and that he has invoked provisions of s. 145(3). It is true that as on the date of survey i.e. 11th/12th Feb., 2005 (i.e. the night of 11th Feb., 2005) certain sales were noticed in the bar and restaurant. The sales figures of the earlier 5 days' were also fou....