TaxTMI 
TaxTMI 
2018 (10) TMI 63
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....why there was a loss in the said year. For the sake of completeness, we would refer to the said submissions, which have been noted by the Commissioner of Income Tax (Appeals) in tabular form:- " S.No. Observations made by Ld. AO Our submission Remarks 1. The assessee was specifically asked to explain the reason for fall in profitability` Specific factors which caused loss of Rs. 16,41,966 during A.Y. 2007-08 against the profit of Rs. 1,34,71,291 during previous A.Y. 2006-07 The financial year 2006-07 (relevant year for the A.Y. 2007-08) was very tough year for the company. During this year the company has achieved a turnover of Rs. 53.43 crores against the turnover of Rs. 34.36 crores in the immediate preceding year 2005-06 registering a huge growth of 52% over the previous year. This phenomenal has put pressure on the margins of the company as more infrastructure, working capital & men power was required to achieve this. However the company .somehow maintained the operating margins but could not prevent losses due to the reasons/factors explained here above. A summary of the major factors which caused dentin the profitability of the company during the ye....
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....he non existence of stocks are enclosed for the AY 2004-05, 2005-06, 2006-07, 2007-08 & 2008-09. Therefore contention the Ld AO regarding and opening and closing stock are not correctly justified. We are relying on the following judgments with regards to consistency & continuity 1. Radha Swami Satsang Vs. CIT. Supreme Court.100 CTR 267 2. CIT Vs. ARJ Security Prints High Court 183 CTR 323 3. CIT Vs. Neo Polypack Pvt. Ltd High Court 245 ITR 492 Also we are enclosing comparative chart for the above-mentioned Assessment years showing that there is no opening stock, closing stock & WPI. Refer Annexure-1 3. Further on perusal of other income details disclosed by the assessee, it is seen that substantial amount of Rs. 1.13 crores has been shown as provisions written back as against the corresponding amount of Rs. 1.46 crores disclosed in the last year. During the course of the assessment, all the details of provision written back along with the nature of these provisions written back was filed with the Ld. AO. However it is reproduced again for your reference. The Company Ibilt has acquired an Informatic Divison (Division) of the c....
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....with documentary evidences to establish the expenses so incurred was wholly and completely for business purposes. Details filed by the assessee were found to be incomplete since the assessee has no where mentioned the purposes for which traveling were under taken: Foreign travels were made for business purpose and all the details of foreign travel were filed with the Ld.AO along with the purpose for which it was made during the course of the assessment. The Ld AO was specifically requested vide letter dated 07.12.2009 that if anything still is required or to be explained. But the Ld AO kept mum and did not ask anything further. However it is again attached herewith you for your kind reference. Refer Annexure-3 Therefore the contention of Ld AO is justified in the eyes of the Law 5. It is further observed that the assessee has claimed provision for doubtful advances of Rs. 17,90,884/ which has not been added back to the total income of the assessee, since the same represents unascertained liability. Considering all the above facts discussed above and the circumstances of the case. I am of the view that the assessee has failed in disclosing its true and correct income ....
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....ils and explanations. It seems that Ld. AO was determined to reject the books of account and to without giving proper opportunity to the assessee since no show cause was given to the assessee to explain "why books of accounts should not be rejected and assessee's total income should not assessed at 4% of the total turnover. Therefore, the contention of the Ld. AO is justified in the eyes of the Law. We are relying on the follow judgments: Sh. Pyare Lal Mittal V/s ACIT (2007) 197 Taxation 186 (Gauhati) Dhakeshwari Cotton Mills V/s. CIT 26 ITR 775 (SC) Puspanjali Dying & Printing Mills (P) Ltd. 72 TTJ 886 (AHD) Raghubar Mandal Harihar Mandal V/s State of Bihar 8 STC 770 (SC) Aluminium Industries (P) Ltd. V/s CIT GLR 216 (GAU) Calcutta Discount Pvt. Ltd.V/s 91 ITR 8 (SC) 6. Rejection of books of accounts u/s 145 (3) of the Act Therefore the contention of the Ld AO to reject the book of accounts and invoke the Sec145(3) is not justified. S.No. Observations made by Ld. AO Our submission Remarks 1. The assessee was specifically asked to explain the reason for fall in profitability Specific factors which caused loss of Rs.....
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....maintenance contract and facility management services for up to five years. The contracts awarded to them were on tender basis. Further, the respondent-assessee was purchasing equipments from reputed original equipment manufacturers (OEMs) like IBM, HP, ORACLE, Cisco, Dlink, Dax, Redhat, Acer, Sun etc. The assessment order states that there was exponential increase in the turnover from Rs. 34.36 crore in the last year to Rs. 53.43 crore in the current year, and the respondent-assessee had explained that to meet the commitments, they had recruited employees. The respondent-assessee had produced books of accounts including cash book and ledgers, going into nine volumes along with the vouchers. To justify and explain drop and decrease in operating profits the respondent-assessee had produced and furnished details as is apparent from the chart/table quoted above. 4. Learned counsel for the Revenue states that the respondent-assessee had not declared any opening and closing stock. He relies on the assessment order. However, the Assessing Officer did not examine and deal with the contention and plea raised by the respondent-assessee, duly taken into consideration by the Commission of ....