Case Law Details
Priyamda Media & Infotainment Private Limited Vs DCIT (ITAT Delhi)
ITAT Delhi held that without pointing out any specific defect in the audited books of accounts, AO cannot and should not make any estimated addition. Accordingly, such estimated addition deleted.
Facts- The assessee is engaged in the business of News Network, broadcasting and telecasting. The return was selected for scrutiny and assessment. Notably, where the parties have confirmed the lesser amount the AO made the addition u/s. 41 of the Act. Further, AO found that the assessee has made payment to contractors on which tax has been deducted at source but the same has not been deposited before the due date. AO made additions invoking the provisions of section 40a(ia) of the Act. Further since the assessee could not produce the books of account and vouchers invoking the provisions of section 145 (3) of the Act the AO disallowed 20% of the expenditure and made the addition of Rs.5080380/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the AO himself mentions that the expenses claimed by the assessee were also test checked and while making the addition the AO says that the books of account vouchers were not The logical question arises if the books and vouchers were not produced then from where the AO test checked the expenses. Further we do not find in the assessment order where the AO asked the assessee to produce books of accounts / vouchers for verification. Once again a logical question arises why 20% and why not 30, 50 even 100%. Without pointing out any specific defect in the audited books of accounts the AO cannot and should not make any estimated addition. We, therefore, direct the AO to delete the impugned addition of Rs.5080380/-.
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