TaxTMI 
TaxTMI 
2022 (11) TMI 1440
X X X X Extracts X X X X
X X X X Extracts X X X X
....le for TDS u/s 194A; specifically when book results estimated; no further disallowances can be made.'' 2.1 In Ground of Appeal No.1 of the assessee, the addition of Rs. 2,26,41,521/- is under challenge. 2.2 Brief facts of the case are that during the assessment proceedings, the AO alleged that the assessee is engaged in the practice of delayed invoicing and under invoicing of sales in its books of accounts. The assessee is taking advance from customers against the sale of vehicles. In most of the cases the delivery of goods has been given to the customers, the vehicles are also registered with RTO, delivery memo have been issued for the year under consideration. However, the sales bills are prepared in the subsequent years and recorded the sale in its books of account in the subsequent years but not in the subjected year. The AO issued summon u/s 131 to one of the customers namely Shri Sunil Bhutani on 24.03.2014. In compliance thereto he attended and filed details. The assessee sold him a car Versa DX15S-BSIII on 02.12.2009 for a sum of Rs. 3,69,000/- as per the invoice issued to the said customer against which he had paid Rs. 4,01,000/- (Rs.5,100/- on 02.12.2009 for booking....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere were various discrepancies in the books of the assessee regarding the sales claimed by the assessee, the said results cannot be the basis for application of the GP rate during the current year. The AO has clearly demonstrated that assessee is indulging in suppression of sales by gathering the various evidences from the customer i.e. specific case of a customer i.e. Shri Sunil Bhutani and other cases as noted in his number 9 and 10 of the assessment order which shows that there was suppression of sales to the extent of 4.1476%. So the increased the sales of the assessee from Rs. 1,14,86,38,878/- to Rs. 1,19,83,41,281/-. The assessee has not given any explanation as to why the said sales were suppressed by the assessee. In view of above, it is apparent that assessee has indulged in suppression of the sales. Further it is evident that assessee has indulged in delayed invoicing of the sales as evident from the instances pointed out by the AO in Page No. 9 and 10 of the assessment order and case of the assessment order and case of the Sunil Bhutani as discussed above. This also shows that assessee's closing stock is not reliable. As regarding the applicati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ls, Voucher of expenses debited in P&L account, information / details as required (refer AO Pg-1 & 2 Last para). The entire sales, purchases and expenses are fully vouched. The accounts are audited u/s 44AB of the Act (PB 23-54) as also under the Companies Act (PB 2-22) and Rajasthan VAT Act. The same were produced before the AO also along with other details from time to time. The AO at some places alleged that Cash Book and Cash Receipts were not produced before him. However, such allegation is factually wrong because firstly, the assessee did maintain Cash Book & Cash Receipts and based on such primary record only, entries have been made in the ledgers of the assessee. The AO himself mentioned at pg-10 Pr-5.1 ...that in majority of the cases cash and cheques were received as advance and entry regarding sale of vehicles was made in the ledger account. Therefore, the finding of the AO are contradictory on this aspect. 3. With regard to the allegation of suppression / deferment of the sale w.r.t. some examples like Shri Sunil Bhutani and others, we have made our submissions separately. Hence kindly refer para 8.1 to 8.2 of this written submission at pg. 11 to 13. 4....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Vaibhav Gems 112 DTR 84 (Raj) it was held: "Accounts-Rejection-Estimation of GP rate-While the past history becomes relevant basis in a case like this but if the AO wishes to tinker with the basis of past records, then some flaw has to be found by the AO in making some addition-Tribunal has come to a conclusion that in the immediate past assessment year, the Tribunal itself had applied GP rate of 2.60 per cent whereas in the present year under consideration the GP rate has been declared as 4.85 percent- AO was unable to point out as to what are the distinguishing features in between the two assessment years-No substantial question of law arises.", In the case of CIT v/s Inani Marbles P. Ltd. (2009) 316 ITR 125 (Raj) (DPB 36-37), it was held that: "Accounts-Rejection-GP rate-Assessee's own result of immediately preceding assessment year at 2.51 per cent having been accepted upto the level of Tribunal, Tribunal was justified in applying the same GP rate for the assessment year in question as against 15 per cent applied by the AO and 2.30 per cent declared by the assessee" CIT v/s Popular Electric Co. Pvt. Ltd (1993) 203 ITR 630 (Cal), MA Rauf v/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it is difficult to make a comment and to make a comparison. Therefore, the comparison made and drawing adverse inference against the assessee by the AO as regards the application of G.P., was fully unjustified. More particularly when the material so gathered was never confronted and hence such material i.e. the so called comparable cases, could not be considered even. Kindly refer Vimal Chandra Golecha v/s ITO & Anr. (1982) 134 ITR 119 (Raj.), ITO & Anr. v/s Gargidin Jawla Prasad Maholi & Ors. (1980) 124 ITR 203 (All). 4.2 Further when the assessee has its own past history and this is not the first year, then the assessee's own past history is the best guide and there was no justification at all to rely to the comparable case. Kindly refer Ajay Goyal VS. ITO 99 TTJ 164 (JD), It was held that: "Accounts-Rejection-GP rate-Best guide for estimation of the trading results after rejecting the books is either the past history of the assessee or any other comparable case-The past history of the assessee takes preference over a comparable case-Assessee having declared higher GP rate than the preceding year, its trading results require acceptance and trading addition requi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e gap in demand and supply with waiting period to potential customers of diesel variant. There was no discount demand by customers. This proves that no CONSUMER OFFER was proposed during the entire financial year by manufacturer as well as by the dealer in 2012-13. While in Financial year 2010-11 the market was based on small segment petrol cars such as M-800, Alto, Van, Wagon-R. Needless to mention that there was huge consumer offer shared by dealer and the cut throat competition among two dealer in same territory is proven fact. The opening stock of General motors product was also sold by M/s Relan Motors Ajmer on higher values even at full dealer margins, because there was no existence of another dealer for 4 months in Ajmer, Bhilwara and Nagour market. Thus there was fine gap of product availability which directly influenced the gross profit and net profit of Relan Motors (2012-13). The comparison with above dealer is not justified, can be compare with the than multiple dealer of same market. Therefore request to consider our gross profit based and calculated on market situation of product demand/supply. But the AO without analysed the facts have simp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that the appellant itself had declared 4.% in AY 2013-14, which is more than what Relan Motors has declared. 5. It is alternatively submitted that even if application of G.P Rate of 3.25% is held justified, the authorities below have not been fair by applying ad-hoc GP rate of 3.25% on the entire enhanced sale of Rs. 1,19,83,41,281/- as against declared sale of Rs. 1,14,86,38,878/-. However, by completely ignoring the fact that out of the total sale of Rs. 1,14,86,38,878/- declared of this year, the sale booked in relation to the advances received and adjusted in this year pertaining to various preceding assessment years being A.Y. 2008-09 to A.Y 2010-11 were not reduced. In fact, as per chart submitted to the authorities below (PB 68 of AY 2010-11), out of the total sale declared of Rs. 114.86 cr, it is only Rs. 82.10 cr which was the sale relating to the advances received in the current year whereas the balance sale related to advance received in the earlier years. Therefore, even assuming, though not admitting, the application of higher GP rate was required, the same could have been only with reference to the current year sale and not with reference to the entire sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he evidences, though admittedly available before them and they themselves referred such evidences. 7. Material used, not confronted- No addition permissible: 7.1 As apparent from the impugned assessment order that the AO made direct enquires u/s 133(6) from the offices of the RTO/DTO (Ajmer, Beawer, Jhunjhunu) and also from a customer Sh. Bhutani (AO pg. 3 & 12) and the material so gathered were used against the assessee, drawing an adverse inferences that i) the assesse did not fully account for the sale out of the advance amounts received from the customers. ii) The assessee is engaged in the practice of delayed invoicing and under invoicing of sales in its books of accounts. Unfortunately, however, the assessee was never confronted with the terms of the enquiry made and response received thereto directly but even than adverse inference was drawn nor he provided any opportunity of cross examination of the documents Hence it is a clear case of gross violation of principle of natural justice which has vitiated the assessment proceedings. Consequently, the impugned addition must be deleted. Kindly refer Vimal Chandra Golecha v/s ITO & Anr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....can be struck down as invalid on that score alone (Maneka Gandhi vs. Union of India AIR 1978 SC 597; Gangadharan Pillai vs. ACED: (1980) 126 ITR 356 (Ker) : (1978) 8 CTR (Ker) 352 at pp. 365 to 367). In other words, the order which infringes the fundamental principle, passed in violation of audi alteram partem rule, is a nullity. When a competent Court or authority holds such an order as invalid or sets it aside, the impugned order becomes null and void. (Nb. Khan Abbas Khan vs. State of Gujarat AIR 1974 SC 1471 at 1479) . In the light of these decisions, we do opine that the addition made by the Assessing Officer in violation of the principles of natural justice has to be set aside as void only in so far as the additions by way of cash credits alone are concerned, which are separable from the other additions in the order that are not challenged and consequently becoming thus non est in the eye of law." 7.3. No adequate and reasonable opportunity of hearing: Here also it is a case of hasty assessment without adequate opportunity. The AO raised queries vide order sheet entry dated 25.03.2014 only (AO Pg-3) whereas the assessment was completed on 28.03.2014, hardly providing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t towards the sale consideration. On the contrary, a perusal of the ledger a/c of Bhutani (Annexure B-1 to the assessment order) clearly shows the breakup of the total receipt of Rs. 4,13,720/- (Rs.4,01,000/- as per AO but actually received by the assessee) as under: Date Particulars Amount Remark PB 10.08.2010 Sales Including VAT 3,62,069/- Sales Bill Issued Annex B-2 16.08.2010 RTO Expenses including Incidental 15,100/- Rs.14,760/- Life Time RT Expenses incurred by Assessee as per RC Annex A-5 17.08.2010 Insurance 12,431/- Expenses incurred by Assessee Annex A-7 21.08.2010 Extended Warranty 4,582/- Paid by assessee to the Maruti by Cheque Annex B-1 25.08.2010 Accessories Purchased 6,818/- Expenses incurred by Assessee Annex B-5 31.08.2010 Other Expenses including other Accessories 12,720/- Expenses incurred by Assessee Annex B-7 Total (Rs.) 4,13,720/- 8.1.3 The above chart clearly shows that there was no suppression of the total amount of sale consideration so received. The assessee, on one hand received Rs. 4,13,720/- on different ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Invoice (Annex B-2), Copies of Payment Vouchers (Annex B-3 to B-7). 8.2.2 Thus, when the AO made enquiry at the back of the assessee even on a random basis, it was found that the customer has been given all the primary documents based on which, the assessee has accounted for the transaction to the full extent and all the receipts by way of cash and cheque are entered in the accounts. The AO failed to point out a suppression of a single penny. In such a state of affairs one surprise as to how this was considered to be a case of suppression of the sale consideration and then it has been repeatedly cited by the AO in this very year while making addition of suppression of sale i.r.t the advance received from customer and not only in this year but also in other years, this was made as a basis. Other 12 customer's cases w.r.t advance received from customers: 9. Suppression of 4.1476% is unjustified: 9.1 Against theory of statistics: The AO analysed the details submitted by the assessee (AO pg. 9-10) by considering sample cases of 12 customers by way of a chart based on the details submitted by the assessee and alleged a difference between the sale con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eaving no differenceas alleged. Similar is the position w.r.t. other cases also. In some cases, there may be still some meagre difference but negligible and may be because of various reasons beyond control. At the same time however, in some cases the assessee has shown more amount than the alleged difference. Thus, factually there was no difference between the total amount as accounted for by the assessee and those paid by the customer there is no suppression at all. Chart clarifying the difference alleged by AO at Pg. 09-10. (Regarding Difference found between Bill Details as Per Ledger & Bill Details as Per Registration Certificate) S. No Customer Name Bill Details as per Registration Certificate (A) Bill Details as per Ledger Account (B) Difference Amount as Per AO Order Rs. (C) (A-B) R. T. O exp. Amt. Rs. (D) Insurance Exp. Rs. (E) Price of Accessories Rs. (F) Total Debits Rs. (G) (D + E + F) Difference Rs. (C-G) 1 Raj Kumar Swami ( Alto) PB-84-85 2,17,000/ 1,98,994/- 18,006/- 8,382/- 8,438/- 990/- 17,810/- 196/- 2 VirendraKumar Sharma ( Alto Lxi) PB-82-23 2,83,000/- 2,56,953/- 26,047/- 12,514/-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Sales accepted by the Commercial Tax Department: It cannot be denied that the Commercial Tax Authorities (Value Added Tax) are directly concerned with the determination of the correct amount of the sale in as much as, VAT is collected only withy reference to the amount of sale and therefore, stack of the Commercial Tax Department are much, much more than of the Income Tax Department, which is concerned only the income element, coming out of the sales. Therefore, once the VAT Authorities have accepted and assessed the sale the authencity of the assessed figures of the sale cannot be doubted under normal circumstances. Pertinently, the sales as declared by the assessee was duly accepted by the VAT / Commercial Tax Department. Unfortunately, the lower authorities did not pay any attention to this vital facts going to the root of the issue and therefore, Income Tax Authorities could not have made any addition on this account as was held by the Hon'ble Karnataka High Court in the case of Shree Shankar Khandsari Sugar Mills v. CIT (1992) 193 ITR 669 (Cal) (DPB 9-11),it was held that. "Income is estimated on the basis of the assessee's turnover furnished by the CTO. Inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the required details viz the complete address, Identity proof of the customer, Cash Book and cash receipts were not submitted or other details though required were not furnished, is nothing but aimed to create a false impression in as much as the authorities below themselves have time & again recorded findings of fact that the assessee submitted the same. To take an example, the ld. CIT(A) at Pg-11 of his order for A.Y. 2011-12 in pr-4.21 has recorded that some details were furnished by the assessee based on which AO drew inference. Similarly AO at Pg-9 in the assessment order for A.Y. 2011-12 has recorded that Reply to the questionnaire was furnished on 25.02.2014 along with the copies of the Ledger accounts and the either print out of the Invoice as per Boos of accounts or the Registration Certificates of the vehicles in support of the claim of sale The AO further recorded at Pg-10 that the assessee has also submitted details of stock. At Pg-10 Pr-5.1 On verification of ledger accounts of the customers and sale bills, it is noticed that in majority.... . The AO at pg. 11 states that "The assessee vide letter submitted on 25.02.2014 gave the 'Summary Ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t with the ld.AR that to achieve huge sales, the assessee is bound to reduce its profits. Yet however, there is an increase in the sale as also in the GP rate. The assessments for AY 2010-11 was completed under scrutiny u/s 143(3) on dated 28.03.2013 however, there appears no addition made by applying a higher rate of GP than declared. In other words, the AO was satisfied with the declared trading results. Thus, the overall results are better than the preceding year. Though the ld. CIT(A) has rejected the past history simply saying that the accounts were defective and hence the GP declared therein could not be relied upon, and advance received from customers were treated bogus however, the fact is that no trading addition was made in AY 2010-11. Coming to the case of Rellan Motor firstly, we find that it was a case of AY 2013-14 which is later to the year under consideration. Needless to say that generally the result of the subsequent year cannot be applied in the preceding (current) year. Interestingly, whereas Rellan Motors declared GP of 3.92% in that year, the assessee declared (revised) GP rate of around 4%. Secondly a perusal of the orders does not show that the assessee was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e details submitted by the assessee the AO alleged a difference between the sale consideration mentioned in the RC (based on the Performa/VAT Invoice) and those entered in the books of accounts. And worked out a difference of Rs. 1,35,337/- (Sales amount as per books Rs. 31,27,663/- and as per RC-Performa/VAT Invoice Rs. 32,63,000/-) and drew adverse inference that assessee was indulged in the suppression of sales to the extent of 4.1476%, which was applied on the declared sale of Rs. 1.14 cr and actual sale was assumed at Rs. 1.19 cr by making enhancement of Rs. 5 cr (app). At the outset we find that the sale of Rs. 114 cr and 1500 customers (app), the sample size of 12 cases, is grossly insufficient so as to draw a justifiable inference to be applied on all the cases. The basic contention of the assessee was that there was no suppression of sale because Performa/VAT invoice and the RC referred to/mentioned the consolidated amount i.e. sale consideration, Road Tax, Registration & Insurance expenses whereas in the ledger account seen by the AO contained separate details of the sale consideration, Road Tax, Registration & Insurance expenses. Hence, if all the debit items are added t....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- would have been affected during the year under consideration. Accordingly, the AO considering the amount of advance from customers shown by the assessee and sale affected in respect of these advances, estimated the total sales against these advances at Rs. 30 crore on which GP rate 3.25% was applied as in (GOA-1) and gross profit of Rs. 97,50,000/- on such deferred sales was determined and added to the income of the assessee. 3.3 In the first appeal the ld. CIT(A) restricted the estimation of sale upto Rs. 18.58 Cr. only but after confirming the application of G.P Rate of 3.25%, he partly confirmed the addition upto Rs. 62,98,437/- vide order dated 31.03.2015 in appeal no. 431/2013-14 holding as under: "I have considered the contention of the appellant as well as the assessment order. it is seen that though the assessee has accepted that assessee has deferred the sales but the assessee's contention that assessee has deferred sales since proper documentation or total finance value was not received by the assessee till the year end is without any basis as no documents in support of such a claim have been submitted. The vehicle sold have already been registered as per R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessment proceedings. Further it has been already brought on record that assessee is suppressing the sales by 4.14%. So the sales of the assessee are estimated at Rs. 19,37,98,072/- and as against the sales estimated by the AO at Rs. 30 crores. No specific reason has been given by the AO for quantifying such sales at Rs. 30 crores. In view of above discussion, the GP rate on the sale of Rs. 19,37,98,072/- is applied @ 3.25% on the same reasoning as in Ground No. 1, thereby giving the Gross Profit of Rs. 62,98,437/-. The addition made by the AO to above extent is confirmed." During the course of hearing, the ld. AR placed following submissions. "1. Contradictory approach of the AO w.r.t. the Advances from customers: 1.1 At the outset it is submitted that a bare perusal of the assessment orders of three years i.e. A.Y. 2009-10, 2010-11 and the current year A.Y. 2011-12, the AO has looked upon the things in an altogether different & contradictory manners even though the facts & circumstances are the same and the method & manner of the receipts of the sale proceeds and accounting thereof, are same being consistently followed by the assessee. The same is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the same by applying 12.15% (alleged suppressed sale as per his calculation) on total turnover of Rs. 62,40,92,904/- (Rs.21,92,72,275/- + Rs. 40,48,200,629/-) and worked out the alleged suppressed sale of Rs. 7,58,27,287/- in addition to Rs. 62.41 Cr. as stated above. Thus, as per AO the total sale should have been Rs. 69,99,20,191/- (Rs.40.48 Cr. + Rs. 22 Cr. + 12.15% being Rs. 7.58 Cr.). Finally, he applied G.P. rate of 3.25% on 69.99 Cr. so worked out and made the resultant trading addition of Rs. 2,06,46,689/-. vide assessment order passed u/s 143(3) / 147 dated 30.03.2015. Thus, the AO himself adopted three altogether different approaches in respect of same very aspect of the amount of advances received from the customers in three different assessment years viz (i) considering the entire advances as unexplained cash credit u/s 68, (ii) considering a part of the advances as the case of deferred sale but not disbelieving such advances as unexplained credits, (iii) considering the entire amount of advances as a part of turnover. Therefore, the prime question arises as to which approach of the AO should be believed. If the approach adopted in the later two years is consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the AO. Kindly refer Radhasoami Satsang v/s CIT (1992) 193 ITR 321 (SC), on the theory of consistency, has held as under: " ..Strictly speaking, res judicata does not apply to the income tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following, year, where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and parties have allowed that position to ne sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year". 2.2 Not a case of deferred sale: It is submitted that the assessee is a Pvt. Ltd. Company and has been consistently following the same method and manner of accounting the sale proceeds. The revenue is being recognize in accordance with the applicable Accounting Standards issued by ICAI. Moreover, in some cases proper documentation was lacking and in some cases total finance value was not available. Kindly refer Dutta Automobiles P. Ltd vs. ACIT(2016) 180 TTJ (Kol) 128 (DPB 65-69) and ACIT vs. Dow Agrosciences India P. Ltd. (2016) 53 ITR_TRIB 590 (Mum) (DPB 54-6....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on in this year whereas the assessee itself has declared profits in the later three years. Thus, to this extent there is multiple addition. 4. Double addition: The authorities below have not denied that the cases of advance received from customers was nothing but a case of sales and all advances were received on account of sale only. These were not received by the assessee for any other purpose. It is also not denied that if not in the current year, in the later year/s, part of these advances stood considered as sale. The very term deferred sale implies though the sale accounted for but not in the relevant year however in the later year. In other words, in view of the authorities below, though the assessee has declared the sale out of these advances, but instead of declaring such sale in the relevant year, the same were deferred to the later years. Hence, the very fact of recording the income arising from the sale stood accepted by the authorities below. The only dispute remained is the correct year of declaration and taxing of the income. On the other hand it is not disputed that the tax rate in block period of three years i.e. A.Y. 2009-10, 2010-11 and 2011-12 w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oach by the AO in different years even though the facts & circumstances are the same and the method & manner of the receipts of the sale proceeds and accounting thereof, are same being consistently followed by the assessee. He also strongly contended that is was not a case of deferred sale and further contended that because of the different approach adapted by the AO in the years under consideration, it has resulted into distorted picture of the income of not only of the given year but also of the other years and also resulted into multiple additions because suitable credit of the sale already booked has not been given. We are in agreement with these contentions however, the ld. CIT(A) rejected the contentions mechanically. It is noticed that similar allegation of deferment of sale was made by the AO in AY 2010-11 also though no quantification was made however, in our order dated 09-11-2022 in ITA no.396/JP/15,we have rejected such contention and the approach. Similarly, the allegation of suppression of sale and enhancement made of 4.14% and application of GP rate of 3.25% have also been rejected by us deleting the resultant addition for the reasoning given in ground of appeal no.1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it which has been estimated by the AO. It may be mentioned that it has been held in the case of Kanha Vanaspati Ltd, vs. CIT 17 SOT 160 (Delhi) that where the assessee has borrowed money from the financers for making payment to its suppliers and had paid financial charges to the financiers and debited the same under the head 'Discounting Charges, the said discounting charges are in nature of interest and are liable for tax deduction at source u/s 194A of the I.T. Act. In view of above discussions and findings of the AO, the addition made by the AO is confirmed." 4.4 During the course of hearing, the ld. AR of the assessee placed following submissions. "1. No Tax deductible as per S.194A(3)(iii) (a): The facts are not disputed that all the payees to whom the total amount of interest of Rs. 6,96,201/- was paid as listed (at Pg-12 Pr-5.1 of the ld. CIT(A) order) are the non-banking financial corporation (NBFC) and therefore, the provisions of S.194A is not applicable in view ofS.194A(3)(iii)(a) which provides that any payment of interest to a banking company to which the Banking Regulation Act, 1949 (BRA) is applicable. Further as per provisions of RB....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment under the IT Act is given by s. 29 which states that the income from profits and gains of business shall be computed in accordance with the provisions contained in ss. 30 to 43D. Sec. 40 provides for certain disallowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under s. 29 is to be made under s. 145 on the basis of the books regularly maintained by the assessee. If those books are not correct or complete, the ITO may reject those books and estimate the income to the best of his judgment. When such an estimate is made it is in substitution of the income that is to be computed under s. 29. In other words, all the deductions which are referred to under s. 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in s. 40 is also taken into account." Moreover, there are several decisions in support of this contention though rendered under other provisions of the Act but the underline principle is the same. Similar view has been taken in the cases of disallowance made u/s 40A(3) & S. 68 in the cases of : CIT Vs Banwari Lal Bansh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re is no dispute whatsoever that P Corpn. had already paid the taxes due on its income received from the appellant and had received refund from the Tax Department. The Tribunal came to the right conclusion that the tax once again could not be recovered from the appellant (deductor-assessee) since the tax has already been paid by the recipient of income. The order passed by the Tribunal to reopen the matter for further hearing as regards ground No. 7 has attained its finality. In the circumstances, the High Court could not have interfered with the final order passed by the Tribunal. Be that as it may, the Circular No. 275/201/95-IT(B), dt. 29th Jan., 1997 issued by the CBDT should put an end to the controversy. In the circumstances, it is not necessary to go in detail as to whether the Tribunal could have at all reopened the appeal to rectify the error apparent on the face of the record.-CIT vs. Hindustan Coca Cola Beverages (P) Ltd. (2007) 207 CTR (Del) 119 set aside." 4.2 In the case of CIT vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd. (2006) 287 ITR 354 (Raj), which is also binding upon the ITO, it was held that: "When the payee has paid more tax than the tax p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d as under: "Thus it is now settled proposition of law as per the various decisions of Hon'ble High Courts that the second proviso to section 40(a)(ia) is curative in nature and is applicable retrospectively. Having held that the benefit of second proviso is available to the assessee if the recipient of interest has already taken this amount in its total income and filed the return of income, we direct the AO to verify this fact and decide the Issue in the light of the above observations and decisions." 5.4 It is submitted that, the Hon'ble ITAT Jaipur has remanded the matter to the AO in view of CA certificate filed later in the case of Doon Valley V/s ITO in ITA No. 668/JP/2017 Date 05.01.2018. 5.5 Also kindly refer Kanhiyalal Kalyanmal v/s DCIT in ITA No. 172/JP/16 on dated 02.08.2016, G.G. Associates v/s ITO in ITA No. 1963/PN/2014 on dated 28.06.2016, Shri Azmath Ulla v/s ACIT in ITA No. 144/Bang/2017 dated 24.05.2017, Shri Shekhar Ghagwan Gore v/s ITO in ITA No. 184/PN/2015 dated 25.07.2016 and Vasai Roller Flour Mills (P) Ltd. v/s DCIT in ITA No. 5437/Mum/2015 dated 26.07.2016. Therefore, the entire disallowance, so made may kindly be dele....