In a significant case the Delhi Court held addition should not be made towards the income without reacting to the books of accounts. Therefore the bench dismissed the appeal file dby the revenue.
The respondent-assessee Forum Sales Pvt. Ltd is a company which deals in gift items and novelties, pet treat products, market survey and research and commission business and is engaged in providing corporate gifting solutions to various companies.
A search, seizure and survey operation under Section 132/133A of the Act was conducted on the AMQ group of companies including the office premises of the respondent-assessee. Consequently, a notice under Section 153A of the Act was issued to the respondent-assessee for filing its income tax return
Accordingly, the respondent-assessee filed its ITR declaring income of Rs.66,53,882/- for AY 2014-15. Thereafter, the Assessing Officer passed an order under Section 143(3) of the Act, assessing the income of the respondent-assessee at Rs.11,11,66,320/- by making the additions.
Aggrieved by the order of the AO, the respondent-assessee preferred an appeal before the Commissioner of Income-Tax,who partly allowed the appeal of the respondent-assessee. Thereafter, the respondent-assessee as well as the Revenue preferred cross appeals before the ITAT. However the ITAT dismissed the appeal of the Revenue and partly allowed the appeal of the respondent/ assessee. Therefore the revenue filed the appeal before the tribunal
Zoheb Hossain, SSC and Sanjeev Menon, counsel for the petitioner relied upon the decision of Unit Construction Co. Ltd. v. Joint Commissioner of Income Tax contented that it is not necessary for the AO to reject the books of account in order to assess the income on the best judgment basis. submitted that the
Yoginder Handoo and Ashwin Kataria Counsel for respondent/assessee additions made by the AO are only based upon surmises and conjectures. Further AO did not make any effort to verify the genuineness of such expenses from the concerned parties.
After analyzing the facts and submissions the division bench of Justice Purushaindra Kumar Kaurav and Justice Yashwant Varma held that Addition of income made by the AO on an estimated basis was without rejecting books of accounts.
Thus the court dismissed the appeal filed by the petitioner/revenu.
Zoheb Hossain, and Sanjeev Menon counsel who appeared for the petitioner and Yoginder Handoo and Ashwin Kataria Advocates who appeared for the revenue.
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