- (1.) HEARD learned counsel for the parties at length.
(2.) THE following questions of laws are involved in this appeal: (I) "Whether on the facts and in the circumstances of the case the learned ITAT has erred by holding that the AO has not made the impugned additions under the regular provisions of the Act whereas the records show to the contrary thereby making the said finding perverse?" (ii) "Whether on the facts and in the circumstances of the case the learned ITAT has erred in law by impliedly upholding the deletion of addition of Rs. 7,49,672/ - representing unverifiable transactions?" (iii) "Whether on the facts and in the circumstances of the Case the learned ITAT has erred in law by impliedly upholding the deletion of addition of Rs. 34,44,754/ - representing disallowance under Section 40(a) (ia) of the Act?" Learned counsel for the appellant submitted that in fact the assessee was assessed under Section 143(3) of the Income Tax Act, 1961, which is apparent from the assessment order dated 26.12.2007, copy of which has been placed on record as annexure -1. It is submitted that it is true that the assessee wanted to take benefit under Section 115JB and he has also shown his total income for the assessment year 2005 -06 as 'NIL' but A.O. issue -wise considered various components and before that, he issued letters under Section 133(6) to different parties. In some of the cases, reply was received and in others, either the letter was remained unserved or no reply was received. Thereafter, a show -cause notice was also given to the assessee about the above facts and he was asked to show reasons as to why the books of account should not be rejected. After considering the contentions of the assessee, the A.O. observed that the representative of the assessee could not produce any evidence for the proof of some of transactions and, therefore, held that assessee was unable to prove the genuineness of transactions with the above parties. The books of accounts were not believed and the transactions made with the above parties are treated as unexplained and relevant amounts were added to the total income of the assessee and thereafter, the A.O. ordered to proceed under Section 271(1)(c) of the Act of 1961 for imposition of penalty. A.O. also considered the claim of the assessee under Section 40(a) (ia) of the Act of 1961 and after rejecting the claim, added the income of Rs.34,44,754.17. Some of the expenses were also found unverifiable expenses and thereafter, specifically in the operative part of the assessment order, ordered " Assessed under Section 143(3) of the I.T. Act, 1961 on a total income of Rs.67,52,390.00. Allowed B/f Losses if any." However, it appears that learned A.O. inadvertently or wrongly also ordered - "The computation as per 115 JB is modified accordingly" and "Charge interest as per Law. Penalty proceeding under Section 271(1)(c ) of the I.T. Act, 1961 is hereby initiated for the above. Issued D.N. with Challan." This clearly indicates that the assessment order was under Section 143(3) and not under Section 115 JB of the Act of 1961.
(3.) THE assessee preferred appeal against the said assessment order which was partly allowed by the C.I.T.(Appeal) vide order dated 23.01.2009. The C.I.T. (Appeal) also considered each and every component which has been considered by the A.O. and thereafter, deleted the above addition which could have been done only in regular assessment under Section 143 (3) only and not under Section 115JB.. However, while considering ground no.4, the C.I.T. (appeal) held that "the AO has added back the sum of Rs. 7,49,672/ -, Rs. 4,86,973/ - and Rs. 34,44,754/ - to the Book Profit for the purpose of charging tax u/s 115 JB without giving any reason.'' The C.I.T.(Appeal) directed the A.O. to remove the amounts added by him to the sum of Rs.20,70,995/ -.;