|Question And Answer|
|Subject:||Sec. 144 and sec 68|
|Answered by:||Research Team|
|Tags:||Best judgement assessment, Unexplained cash credit|
|Date:||July 29, 2023|
Assessee is Private Limited co ,engaged in manufacturing of spices and pickles , has filed the ROI declaring loss for AY. 2018-19 amounting to Rs 2620000,/ – which includes Dep of Rs. 6 lakhs . It has also carried forward Business loss of Rs. 6 lakhs and Depreciation loss of 15 lakhs .
Case was selected for scrutiny assessment and AO completed the assessment u/sec. 144 by computing loss at zero and making addition of Rs 20 lakhs u/sec. 68 of the Act on the ground that assessee has not responded to notices issued by AO.
Whether action of the AO is justified ?
Whether AO can make addition u/sec. 68, when he rejected books n passed order u/Sec.144 of the Act on the ground of non compliance of notice issued u/Sec. 143(2) of the Act.
The action of the Assessing Officer is not justified . Even while passing the order under section 144 of the Act the Assessing Officer to pass the order considering past records . The order cannot be arbitrary . In DCIT v. Bridge & Building Construction Co. (P.) Ltd (2022) 94 ITR 515 ( Kol)( Trib) the Tribunal held that estimation of income must be on reasonable basis in congruent to the result of the prior previous years. Principle of consistency must be followed . In the appeal it may be desirable to take the specific ground of natural justice and produce all the documents by making application under Rule 46A of the Rules .