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Showing contexts for: destroyed document in The Acit, Central Caircle-2(2),, vs M/S. Mardia Chemicals Ltd.,, on 28 January, 2022Matching Fragments
ITA nos.3437/AHD/2002 with 5 others Asstt. Years 1993-94 & others
21. During assessment proceeding, the Ld. AO issued notice u/s 142(1) and required the assessee to produce the books of accounts and documents. In response, the assessee submitted that there was a fire on 18.08.1998 at the office of assessee due to which the books of accounts and documents were destroyed. Therefore, the assessee presented its inability to produce books of account and documents. However, the Ld. AO did not accept this submission of the assessee on the reasoning that the assessment for immediate preceding assessment year i.e. assessment year 1996-97 was completed on 31.03.1999 which was framed after the outbreak of fire on 18.08.1998 and the assessee produced books of account for that assessment-year before AO. The Ld. AO, therefore, opined that the fire cannot be so selective as to destroy the books of account of assessment- year 1997-98 but not those of assessment-year 1996-97. On this basis, the Ld. AO disbelieved the submission of assessee, rejected books of account u/s 145 and estimated Gross-Profit. While making this estimation, the Ld. AO observed that during the assessment-year under consideration, the assessee has shown a loss of Rs. (-) 77 lakhs on a turnover of Rs. 158.67 crores which yields 4.92% loss, whereas in the immediately preceding year i.e. assessment-year 1996-97, the assessee had declared G.P. of 25.20%. Hence the Ld. AO applied G.P. rate of 25.20% of preceding assessment-year for the year under consideration and made an addition of Rs. 40,75,00,000/-.
ITA nos.3437/AHD/2002 with 5 others Asstt. Years 1993-94 & others
24. Before us, the Ld. D/R relied upon the assessment-order and argued that the Ld. AO has made addition perfectly.
25. We have perused the assessment-order as well as order of CIT(A) and heard the arguments of ld. DR. After a careful consideration, we find that the Ld. AO has rejected book-results and made the addition due to the single reason that the assessee has not produced books of account and documents. But the assessee has fully explained that owing to the outbreak of fire, the books and documents were destroyed. The assessee has also given complete evidences of the fire having taken place. We are of the considered view that the Ld. AO cannot reject book-results merely on his own belief or disbelief without considering the factual submissions made by the assessee. It is also noteworthy that the assessee is a listed company and its books of account were duly audited by statutory auditors, internal auditors, tax auditors and the financial results are published to investors as well as submitted to various authorities. The Ld. CIT(A) has given due consideration the overall position of the facts and rightly held that the Ld. AO was not justified to reject the book-results of the assessee. We agree with the findings noted and conclusions taken by the Ld. CIT(A). Therefore, this Ground of the Revenue is dismissed.
53. Being aggrieved by the order of the ld. CIT-A, the Revenue is in appeal before us.
54. Before us, the Ld. D/R relied upon the assessment-order and argued that the Ld. AO has made addition perfectly.
55. We have heard the contention of the Ld. DR and given due consideration to the facts. As discussed earlier there was a fire in the premise of assessee due to ITA nos.3437/AHD/2002 with 5 others Asstt. Years 1993-94 & others which the books of accounts and documents were destroyed. However, the accounts of assessee are properly audited under Companies Act as well as Income-tax Act and the assessee has filed depreciations charts, duly audited by the auditors. The auditors have computed depreciation and certified. Due to absence of supporting records being destroyed by fire, it would be reasonable to accept that the depreciation has been rightly claimed. We, therefore, uphold the order of the ld. CIT(A) and direct the AO to delete the addition. Accordingly, this Ground of appeal of the Revenue is dismissed.
79.1 Being aggrieved by the order of Ld. CIT(A), the Revenue is in appeal before us.
79.2 The Ld. D/R supported the order of assessment.
80. We are consciously aware of the submission repeatedly made by the assessee that due to the occurrence of fire, the documents were destroyed and therefore it was not possible to submit evidences. The fact of the fire is undoubtly proved with the help of FIR, newspaper cuttings, etc. Being so, the reasoning of non-production of evidences is well explained and deserves acceptance. The Ld. CIT(A) is fair enough in concluding that in such a situation we have to depend upon the audit-report which is also a statutory document. As the auditors have expressed true and fair view of accounts and there is no adverse reporting against the impugned expenses, the Ld. CIT(A) is justified in allowing deduction of expenses which have been incurred in the course of business and debited to P&L A/c. Therefore, we agree with the view taken by Ld. CIT(A) and dismiss these Grounds.