S. 145: AO is not entitled to reject books of account in a casual and high-handed manner
The assessing officer has been faulted for not following section 145(3) of the Act. The tribunal has held that before the assessing officer records satisfaction about the correctness or completeness of the accounts of the assessee, he ought to have given proper opportunity to the assessee. The books of account could not have been rejected casually. The tribunal has held that rejection of books of account was not itself correct. It was not done by giving proper opportunity to the assessee. The rejection is high handed. There was an affidavit filed even before the Commissioner of Income Tax (Appeals) and the revenue did not controvert the contents thereof. However, the assessing officer made addition of gross profit and that was a matter clarified by the assessee in this Affidavit. The Commissioner of Income Tax has not uphold this gross profit addition. The comparison by the assessing officer and by looking at the very document, namely, the profit and loss account was improper. The tribunal has termed the approach of assessing officer as unfortunate. It is termed as arbitrary, high handed and cannot be sustained. Without examining the basic parameters for rejection of the books of accounts the revenue goes in appeal before the tribunal, this is what is faulted by the tribunal. To our mind, the complaint of the assessee before the tribunal was wholly justified. Not only did the assessing officer fail to record the requisite satisfaction in terms of section 145(3) but proceeded to make addition and that was estimate which was also not sound.
I-T - Whether when assessee is under investigation, Revenue is legally right in collecting cheque payments towards future tax demand in order to protect its own interest - NO: HC
By TIOL News Service
AHMEDABAD, NOV 07, 2014: THE issue before the Bench is - Whether when the assessee is under investigation, Revenue is legally right in collecting cheque payments towards future tax demand in order to protect its own interest. NO is the verdict.
Facts of the case
The assessee is a trading company. The assessee filed the present petition on the ground that the Revenue without passing any assessment order and ordering a definite tax demand, had recovered three cheques totaling to Rs.3,08,50,688 from the assessee. The Counsel of the assessee urged the court to direct the Revenue to return the said cheques to the assessee. Whereas the Counsel of the Revenue submitted that the adjudication proceedings were already initiated and show-cause notices were also issued, thus to protect the interest of the Revenue, it had found on investigation that the assessees would be liable to pay the amount of Rs.3,08,50,688/- including the penalty. Therefore, in the larger public interest, the cheques were recovered. However, there was no final assessment order or provisional assessment order passed.
The HC held that,
++ it is required to be noted that the Department has recovered the cheques totaling to Rs.3,08,50,688/- from the assessees towards the future tax demand and/or liability of the assessees. However, it is required to be noted that as such the assessment proceedings are not completed and neither any provisional assessment order nor final assessment order has been passed against the assessee crystallizing the tax demand. The identical question came to be considered by the Division Bench of this Court and the Division Bench vide order dated 14.2.2014 passed in SCA No.959/2014, has quashed and set aside the action on the part of the Department collecting the cheques from the assessees without passing any final assessment order either provisional and/or final assessment order crystallizing the tax demand;
++ in view of the reasons stated above, the present petition succeeds in part and the action of the Department in collecting the cheques totalling to Rs.3,08,50,688/-, as mentioned in para-32(B) of the petition, without passing any final assessment order and/or without passing any provisional assessment order and without crystallizing the tax demand, is hereby quashed and set aside and the Department is hereby directed to return the aforesaid cheques to the assessees, forthwith. As the adjudication proceedings are already initiated, the same may be concluded in accordance with law and on merits. It will also be open for the Department to pass provisional assessment order, if permissible under the law. The amount of Rs.10 lacs deposited by the assessees pursuant to the interim order passed by this Court, the Registry is directed to return the same to the assessees by way of A/c payee cheque, without prejudice to the rights of the department of the final assessment and/or provisional assessment.
(See 2014-TIOL-1910-HC-AHM-IT)
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