BAL KISHAN GARG,MEERUT vs. CIT, MEERUT

PDF · subscribers
ITA 3398/DEL/2013Status: DisposedITAT Delhi06 June 2016AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT's order under Section 263 was bad in law as the books of account were not rejected by either the AO or the CIT. Income cannot be estimated without rejecting audited books of account.

What were the facts?

The assessee, engaged in sale of power and civil contract work, filed its return declaring income. The AO made an addition for unsupported expenses. The CIT revised the order under Section 263, citing low net profit and directing the AO to estimate net profit at 4%.

What were the issues?

Whether the CIT can revise an assessment order under Section 263 to estimate income without rejecting the assessee's audited books of account.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : A : NEW DELHI

Before: SHRI J. SUDHAKAR REDDY, AM & MS SUCHITRA KAMBLE

For Appellant: Shri C.S. Anand, Advocate
For Respondent: Shri Ravi Jain, CIT, DR
Hearing: 31.05.2016Pronounced: 06.06.2016

ORDER

PER J. SUDHAKAR REDDY, AM:

1.

This is an appeal filed by the assessee directed against the order passed u/s 263 of the Act by the CIT, Meerut on 18.3.2013 for assessment year 2008-09.

2.

The assessee is an individual and is engaged in the business of sale of power to UP Asbestos Ltd. and civil contract work for Turbine installation, boiler installation and husk yard at Lucknow and Dadri sites of UP Asbestos. It filed its return of income on 29.9.2008 declaring income of Rs.6,44,780/-. The assessment was completed u/s 143(3) by making an addition of Rs.1 lac on the ground that certain expenses claimed by the assessee were not properly supported by evidence. The CIT, Meerut, revised this order passed u/s 263 on 18.03.2013 by holding that:

a) The assessee being a civil contractor has shown negligible net profit in the year as compared with the net profit declared in the preceding assessment years 2006-07 and 2007-08; and b) The ld.CIT held that in the interest of justice, net profit rate of entire declared results including interest be taken by the AO at 4%.

2.1. Aggrieved, the assessee is before us.

3.

After hearing the rival contentions, we find that the order of the ld.CIT(A) is bad in law for the reason that books of account have not been rejected either by the AO or by the ld.CIT. Income cannot be estimated without rejection of books of account. The AO made an ad hoc disallowance of certain expenses without rejecting the books of account. In fact, the books of accounts are audited. Under these circumstances, we squash the order passed by the ld.CIT u/s 263 of the Act.

4.

In the result, the appeal of the assessee is allowed.

The order pronounced in the open court on 06.06.2016.

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →