2018 (5) TMI 804

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.... taking recourse to section 144 proceedings despite the fact that it had very well placed on record of all documents in the nature of balance sheet, profit and loss account as well as Tax audit report before the Assessing Officer during assessment. Learned counsel vehemently contends that the Assessing Officer ought not to have disturbed the relevant book results after invoking best judgment assessment u/s 144 of the Act. Learned Departmental Representative on the other hand supports both the lower authorities' action in invoking section 144 proceedings as affirmed in the CIT(A)'s order under challenge. 3. We have heard both the learned representatives. The first dispute between the parties is that of correctness of both the lower authorities' action invoking best judgment assessment against the assessee in the course of assessment as upheld in the lower appellate proceedings. There is no dispute that the assessee had not filed its books of accounts during the course of scrutiny as maintained u/s 2 (12A) of the Act. The Assessing Officer afforded 20 opportunities from 28.09.2012 to 22.04.2014 for this specific purpose. He had also issued relevant notices u/s 143(2) on 19.09.2012....

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.... had been prepared and that the advance fees of Rs. 1,51,00,265/- as on 31.03.2010 had not been offered for taxation, as it was not included in fees shown in the Profit & Loss account. 6.1. The AR appearing on behalf of the appellant has submitted as follows: "Your appellant submits that it had submitted the returns of income along with the audited accounts duly audited by the Statutory Auditors and duly authorised members of the Institute of Chartered Accountants of India which is enacted by an Act of Parliament and the Tax Audit Report u/s 44AB of the Income Tax Act 1961. This one also the report of the auditor who is also authorised by the Income Tax Act. The Assessing Officer insisted the assessee every time to produce the books of accounts as maintained by the assessee and which were audited by the statutory auditors under Indian Companies Act 1956 and under the Income Tax Act 1961. Your appellant has submitted all the details of the requirements of the assessing officer as and when requisitioned but not the books of accounts. The furnishing of the documents, Balance Sheet, Profit & Loss Accounts the auditors reports thereon and the Tax Audit Reports....

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....ries in their accounts books the auditors must have done so and must have found that the accounts books supported the claims for deductions when the deductions were disallowed by the Income tax officer on the ground that the detailed information regarding them was not available justice was not to the assessee. There was however other materials mainly consisting of the auditors reports from which it could be inferred that the deductions were properly supported by the relevant entries in the accounts books. In a sense it may be a question of law as to what the meaning of material" is and whether the auditors reports were material. But the question of law is well settled and is not capable of being disputed and does not therefore call for reference. Your appellant furnishes the decision of the Delhi High Court in the case of Addl CIT vs Jay Engineering Works Ltd reported in 113 ITR 389 where the appellant furnishes the Auditors Report but could not produce the books of accounts whether "material' in the absence of accounts books. It was held in favour of the assessee by the High Court. 1.10. Your appellant submits that when a return is furnished and the accounts ....

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....ty, leave encashment etc. It was explained that TDS was also deducted. The AO noted from the documents filed that sum of Rs. 1,98,94.804/- was mentioned instead of Rs. 1.74,62,773/-. The appellant did not explain this discrepancy as well. The AO has summoned the auditor Mr. R.K. Maheshwari, FCA and his statement on oath was recorded. He stated that he could not understand that the fraud has happened in the company. He also confirmed that in the books of accounts produced before him, no payment in the nature of Technical Knowhow charges. consultancy charges, gratuity, leave encashment, ex-gratia, bonus, royalty was paid' to Mr. Ashish Mitra or Ms. Archana Malhotra. The AO requested the appellant company to cross examine the auditor. but the appellant refused to cross examine them. Thus, the AO's conclusion that the sum of Rs. 2.45,00.000/- was out of books remains unrebutted. The AR was not able to controvert any of the findings of the AO before me as well. Thus, I find no reason to interfere with any of the findings of AO and the action of AO is hereby confirmed. This ground is dismissed." 5. Learned counsel representing assessee quotes case law in CIT vs Smt Pukhraj Wat....