JOLIREDDY ASWARTHU,ANANTAPUR vs. ACIT., CIRCLE-1, ANANTAPUR

PER VIJAY PAL RAO, VICE PRESIDENT:

3. At the time of hearing, the learned AR of the assessee has submitted that the AO as well as the Ld.CIT(A) has passed ex- parte orders. She has specifically pointed out that the Ld.CIT(A) has not decided the appeal of the assessee on merits and the same was dismissed in-limine for non-prosecution and therefore, the impugned order of the Ld.CIT(A) is not sustainable and liable to be set aside. The Ld.AR has further pointed out that the AO has made double additions by estimating income @8% on the main contract and @5% on the sub-contract work and thereafter, also made the additions on account of commission, bank interest, maintenance income etc. Thus, the order of the AO is highly arbitrary, unjustified when the assessee is maintaining proper books of accounts and declared the income, based on the books of accounts. Estimation of income on the part of the AO is invalid, when there was no rejection of books of accounts of the assessee.

4. On the other hand, the Ld.DR has fairly submitted that both the AO as well as the Ld.CIT(A) passed the orders ex-parte and therefore, the matter may be remanded to the record of the AO for verification and examination of the relevant record to be produced by the assessee.

5. We have considered the rival submissions as well as perused the orders of the authorities below. The Ld.CIT(A) has dismissed the appeal of the assessee in-limine for non- prosecution. Therefore, the impugned order passed by the Ld.CIT(A) is not in conformity with the provisions of 250(6) of the Income Tax Act, 1961 (“the Act”). Accordingly, the same is set aside. We further note that the AO has also made the addition on account of estimation of income of the assessee, which is also arbitrary in nature, as the AO has presumed that the assessee is not maintaining any books of accounts. The assessee has filed financial statements in the paper book, which includes, Trading, Profit & Loss account and Balance Sheet along with the Schedules to the Profit & Loss account and Schedule of fixed assets. The assessee has also filed tax audit report in Form No.3CB. Therefore, once the assessee is maintaining books of accounts, which are also audited as per the provisions of Income Tax Act, then the estimation of income by the AO on the presumption that the assessee is not maintaining the books of accounts is contrary to the facts on record. Hence, the matter is remanded to the record of the AO for fresh adjudication after proper verification and examination of the relevant record, including the books of accounts of the assessee as well as giving proper opportunity of hearing to the assessee.