Samir Kishor Parekh Vs ACIT (ITAT Ahmedabad)
Held that addition made on estimated basis, without rejecting books of accounts of the assessee, is unsustainable in law
Facts-
Investigation team of the Excise Department revealed that tile manufacturers were declaring only 50% of the actual ex-factory prices and MRP for the purpose of payment of Excise duty. Consequently, the DGCEI carried out search at the business premises of the assessee on 21-08-2008 and it was alleged that the assessee had resorted to certain measures like removal of ceramic frit, undervaluing of finished goods and issuing parallel invoices etc. to evade excise duty. On the basis of the investigation carried by the Excise Department, the Income Tax Department initiated assessment proceedings and AO made certain additions to the returned income of the assessee, which were confirmed by the CIT(A) in appeal for the impugned year under consideration.
Conclusion-
Held that additions have been sustained by Ld. CIT(Appeals) on purely estimate basis and it is well-settled law that no addition could be made on estimated basis without rejecting books of account of assessee as held by various Courts.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
These two appeals have been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-5, Ahmedabad in Appeal nos. CIT(A)-5/ACIT. Cir. 10/10003/2014-15 & CIT(A)-5/ACIT. Cir. 10/10058/2013-14 & vide order dated 30/01/2020 passed for the assessment years 2008-09 & 2010-11. Since, issues are involved in both cases, the same are being disposed of by a common order.
2. The assessee has taken the following grounds of appeals:-
AY 2008-09
“Your appellant being aggrieved by the order passed by the learned Commissioner of Income Tax (Appeals]- V, Ahmedabad presents this appeal against the same on the following amongst other grounds.
The learned C.I.T. (Appeals] has erred in confirming the erroneous and illegal addition made by way of firstly on adhoc and estimated basis only. It is submitted that addition made by C.I.T. (Appeals] in the tune of Rs. 40, 00,000/- is made without any base, corroborative evidence on record, without proper efforts to find out the veracity and authentication of information relied and without rejecting books of accounts. CIT (Appeals] has mentioned the same fact in their order on pg. no. 40 that..
“This addition is purely on the estimate basis to take care of short comings notices in the accounts of appellant.”
Such addition is bad and illegal in the eyes of law hence the same is unjustified and the same be deleted.
The appellant placed reliance on following case laws to in support of above:
