TaxTMI 
TaxTMI 
2019 (12) TMI 319
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....he income at Rs. 3,45,66,400/-. On an application filed by assessee u/s.264 of the I.T. Act before the CIT(Central) explaining the reasons for non-participation during the assessment proceedings, the CIT(Central), Hyderabad, set aside the assessment proceedings and consequently the assessment was completed u/s.158BC(c) rws 264 on 24-6-2008 determining the income of Rs. 11,19,27,240/-. 2.1. Against the assessment order dated 24.6.2008, the assessee filed an appeal before the CIT(A) challenging the invocation of jurisdiction u/s.158BC of the I.T. Act and the CIT(A) granted partial relief to the assessee. The assessee filed an appeal before the ITAT in IT(SSA) NO.2/H/2013, while the department challenged the deletion of addition in appeal No. IT(SSA) No.6/H/2012. The 'C' Bench of ITAT, Hyderabad vide its order dated 11-12-2013 in IT(SS)A No.2/HYD/2013 dismissed the assessee's appeal challenging the jurisdiction u/s.158BC of the I.T.Act and in the revenue's appeal in ITSS(A) No.6/HYD/2012 vide order dated 11-12-2013, set aside the issue to the file of the Assessing Officer with a direction to recompute the undisclosed income after taking the comparable cases into cons....
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....ness came to a standstill. The action of the Department resulted in virtual squeeze of the appellant's cash flow. The cheques issued by the appellant to the subcontractors for the work performed by them have bounced. The firm and the Directors have become targets of wide and adverse publicity in the press. Some criminal complaints for cheating and fraud were registered with the police department. Consequently arrest warrants were issued against the power of Attorney Holder Sri C.Suresh and his wife and children. Mr. Suresh was taken into remand by police on 08-05-03 and remained in judicial custody till August 06. His wife and children could obtain anticipatory bail only on 14.03.2005. He was granted bail on 28-08-06. The police Department officials have seized the records, documents and papers "Om the appellant's office and locked and sealed the premises. In this background, the appellant firm could not comply with the notices purported to have been served by the department further to the search operations. The Assessing Officer (Dy. Commissioner, Central Circle-2, Hyderabad) completed the assessment ex-parte for the block period under section 15....
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....at 40% which was on high side and tax could have been levied after taking into consideration comparable cases. The Tribunal further observed that the books which are the source of work are consumables and should have been treated accordingly as revenue expenditure and not as capital expenditure. In the light of above facts, the case was referred back to the assessing officer for reassessment. The Assessing Officer, Circle 9(1) while allowing the expenditure on books as Revenue Expenditure, did not consider the profit/loss on the basis of comparable cases of relevant industries as directed by the Tribunal, but chose to estimate the income at 30% stating that during the course of search operations, "lots of incriminating material was found". The assessing officer therefore levied a total tax and interest at Rs. 2,58,29,606/. It maybe pertinent "here to quote Hon'ble Supreme Court order ruling that all documents and pieces of paper seized during search can be incriminating documents. Also the assessing officer has not recorded any proof of such documents. Further, this issue of incriminating material being found was never raised with either the Commissio....
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....puting the tax liability, contrary to the established law. In the light of these facts, it is prayed that: , * The order passed by the learned Assessing Officer under Section 143(3) r.w.s.254 of the IT Act, 1961 be set aside and the loss declared by the appellant as per books be accepted The comparable cases furnished by the appellant, in support of the loss claimed, are taken into consideration. The penal interest imposed under section 158BFA(1) be removed as : (a) The returns in the block assessment were filed within the time frame, and the assessments were completed (b) The date of filing return for the year 2003-04 has not expired when the search took place. 5. As regards grounds against invocation of jurisdiction u/s 158BC, the CIT(A) dismissed the same and on the issue of determination of the undisclosed income, the CIT(A) granted partial relief by observing as under: "The report published by GIAN JYOTHI JOURNAL gives about net profitability of the Software Industry for different periods. It is reported by the Author of the GIAN JYOTHI JOURNAL that the average net profit came down to 11.47% in 2001 as compared ....
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.... grounds of appeal: 6.1 Assessee's grounds of appeal: "1 The order of the learned CIT(A)-7 in ITA No.105/CIT(A)-7/2015-16, dt.11/9/2007 is contrary to law and facts. 2 The appellant contends that the learned CIT(A) is in error in directing that the undisclosed income of the appellant to be assessed at Rs. 3,01,38,613/- for the block period. In the facts and circumstances of the case, there is no undisclosed income at all. 3 The appellant contends that the learned CIT(A) erred in estimating the net income of the appellant at 9% of the turnover and without allowing any other expenses. The said estimate is erroneous. 4 The appellant contends that in the facts and circumstances of the case the income computation does not warrant any estimate. 5. It is contended that the inclusion of the income for asst. year 1999-2000 , 2000-01, 2001-02 and 2002-03 is erroneous as the returns of income for these asst. years were filed in time and before the search was conducted . Hence the same cannot be included as undisclosed income in the block assessment. 6 The appellant contends that (even assuming while denying) if any estimate of profit is....
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....e of the assessee and have computed the net profit thereon, whereas the returns were filed for the relevant AYs taxes have been paid and the income declared therein cannot be considered as undisclosed income and brought to tax. He referred to the copies of the income tax returns placed at pages 139 to 141 of the paper book and submitted that these are copies of the returns which are all in the custody of the search party. 8. Ld. DR, on the other hand, supported the orders of the authorities below and submitted that the CIT(A) has been more than reasonable in estimating the profit at 9% as against 14% which is the average net profit as per the Gyan Jyothi Journal which has been referred to and relied upon by the CIT(A) for the relevant period. He, therefore, prayed for upholding the order of the A.O. 9. Having regard to the rival contentions and perusing the material on record, we find that this is the second round of litigation before the Tribunal. In the earlier proceedings, the Tribunal has directed the AO to consider and bring on record, the comparable cases to estimate the income of the assessee and to recompute the undisclosed income after such an exercise. We find that ....