ACIT Central Cir.-2(1), Pune V. Intermedia Cable Communication Pvt. Ltd., Pune

ITA 1043/PUN/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59979 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 02-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: DR V L JAIN
• Keywords: Rejection of books of accounts; Income from undisclosed sources; Search and seizure; Principle of natural justice; Reasonable cause; Corroborative evidences
• Section: 153A; 145; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C.SUDHIR, JM AND SHRI D. KARUNAKARA RAO, AM S.NO. I.T.A. NOS. ASSTT. YEAR. 1. 1043/PN/2009 2000-01. 2. 1044/PN/2009 2001-02. 3. 1045/PN/2009 2002-03. 4. 1046/PN/2009 2003-04. 5. 1047/PN/2009 2004-05. 6. 1048/PN/2009 2005-06. 7. 1049/PN/2009 2006-07. ASSTT. COMMISSIONER OF INCOME-TAX, IN TERMEDIA CABLE COMMUNICATION CENTRAL CIRCLE 2(1), PUNE. VS. PVT. LTD., 996/99, TORDA VILLA, PUNE 411 002. PAN AAACI8326E (APPELLANT) (RESPONDENT) S.NO. I.T.A. NO. ASSTT. YEAR 1. 850/PN/2009 2000-01 2. 851/PN/2009 2001-02 3. 852/PN/2009 2002-03 4. 853/PN/2009 2003-04 5. 854/PN/2009 2004-05 6. 855/PN/2009 2005-06 7. 856/PN/2009 2006-07. INTERMEDIA CABLE COMMUNICATION ASSTT. COMMISSIONER OF PVT. LTD., 996/99, TORDA VILLA, VS. INCOME-TAX, CENTRAL CIRCLE-2(1), PUNE 411 002. PUNE. PAN AAACI8326E (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.K. SINGH CIT-DR ASSESSEE BY : DR V.L. JAIN. AR DATE OF HEARING: 18-01-2012 DATE OF PRONOUNCEMENT: 31-1-2012 ORDER PER D. KARUNAKARA RAO, AM: THERE ARE FOURTEEN APPEALS UNDER CONSIDERATION INVOLVING SEVEN ASSESS MENT YEARS FROM AY 2000-01 TO AY 2006-07. THEY ARE THE C ROSS APPEALS CONSISTING OF SEVEN EACH OF ASSESSEE AND REVENUE RESPECTIVELY. ALL TH E FOURTEEN APPEALS ARE FILED AGAINST A COMPOSITE ORDER OF THE LD. CIT (A) DATED 24/06/09. 2 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. 2. THE ISSUES RAISED IN THE GROUNDS ARE SAME AND FO R OF THE SAKE OF CONVENIENCE GROUNDS RAISED BY THE REVENUE AND ASSESSEE FOR THE A.Y.2000-01 ARE REPRODUCED AS UNDER: 1) THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF RS.3,35,73,600/-. 2) THE LD.CIT (A) FAILED TO CONSIDER THE FACT THA T A.O. HAS CARRIED OUT INVESTIGATION RECORDED STATEMENTS OF OPERATOR AFTER WHICH CONCLUSION WAS DRAWN AND ASSESSMENT WAS FRAMED BY MAKING ADDITION. 3) AFTER HAVING COME TO THE CONCLUSION THAT THE ASS ESSEES CASE REQUIRED ESTIMATION OF NUMBER OF SUBSCRIBERS AND INCOME BECA USE THE CORRECT STATUS IN THIS REGARD WAS NOT REFLECTED IN ITS BOOK S , THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ESTIMATE MADE BY THE AO. 4) THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE SUBSCRIBER BASE WAS ESTIMATE BY THE AO AT 40% OF THE NUMBER OF RESIDENTIAL ACCOMMODATION [WHICH, IN TURN WAS ASCERTAINED FROM THE NUMBER OF ELECTRICITY CONNECTIONS] ON THE BASIS OF THE STATEM ENT OF DIRECTOR OF THE ASSESSEE COMPANY THAT THEY TAKE 40% OF THE A NUMBER OF RESIDENTIAL ACCOMMODATION IN THE AREA AS POSSIBLE CONNECTIVITY FOR PLANNING PURPOSES . THE ESTIMATE MADE BY THE ASSESSEE FOR PLANNING I TS BUSINESS CAN REASONABLY BE EXPECTED TO BE CORRECT AS IT WOUL D BE BASED ON THE ASSESSEES OWN EXPERIENCE. 5) THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ESTIMATE MADE BY THE AO WAS ALL THE MORE REASONABLE AS HE HAD TAKEN THE ELECTRICITY CONNECTIONS OF ONLY A PART OF THE AREA SERVICED BY THE ASSESSEE. 6) THE LD.CIT(A) ERRED IN ARBITRARILY ESTIMATING THE SUPPRESSION OF SUBSCRIBER BASE BY THE ASSESSEE AT 10% OF THE CONNE CTION SHOWN BY THE ASSESSEE WITHOUT INDICATING ANY BASIS FOR TH E SAID ESTIMATION IN HIS ORDER. 3. GROUNDS RAISED BY THE ASSESSEE FOR THE A.Y.2000-01 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED A.O. HAS ERRED IN ASSESSING THE INCOME OF THE APPELLANT AT RS.4,03,26,280/- AS AGAINST THE RETURN INCOME OF RS.48,01,480/-. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW I N VIOLATING THE PRINCIPLES OF NATURAL JUSTICE IN UTILIZING MATERIAL, BEHIND THE BACK OF THE APPELLANT, FOR ARRIVING AT A FINDING OF UNDI SCLOSED INCOME. (A) THE LEARNED ASSESSING OFFICER HAS ERRED ON FAC TS AND LAW IN MAKING A ADDITION OF RS.3,55,24,800/- AS UNDISCLOSED INCOME BASED ON THE SURMISES AND CONJECTURES, SPECULATION AND ESTIMATES. (B) THE LEARNED ASSESSING OFFICER HAS ERRED ON FACT S AND IN LAW IN MAKING ADDITION ON THE BASIS OF NUMBER OF CABLE SUBSCRIBERS/ CONNECTIONS PER YEAR ON THE BASIS OF AN ESTIMATED PERCENTAGE OF ELECTRICITY CONNECTIONS . 3. THE APPELLANT PRAYS THAT 3 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. A) ADDITION OF RS.3,55,24,800/- MADE ON ACCOUNT OF UNDISCLOSED INCOME BY ESTIMATING NUMBER OF CABLE CONNECTIONS MA Y PLEASE BE DELETED. B) PERSONAL HEARING MAY BE GRANTED. C) ANY OTHER RELIEF YOUR HONOUR MAY DEEM FIT 4. DURING THE PROCEEDING BEFORE US THE LEARNED COUN SEL FOR THE ASSESSEE FILED IDENTICAL ADDITIONAL GROUNDS FOR ALL THE SEVEN ASSESSMENT YEARS AND THE SAME RELEVANT FOR THE AY 2000-01 READ AS FOLLOWS. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ESTIMAT ION OF THE SUPPRESSED RECEIPTS WITHOUT REJECTING BOOKS OF ACCOUNTS IN COMPLIANCE W ITH REQUIREMENTS OF SECTION 145(3) OF I T ACT, 61. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ESTIM ATION OF THE SUPPRESSED RECEIPTS IN THE COMPLETED ASSESSMENT WITHOUT ANY EV IDENCE IN THE SEARCH MATERIAL. 5. ADMISSION OF LEGAL GROUND AND ITS ADJUDICATION: AT THE VERY OUTSET OF THE HEARING PROCEEDINGS BEFORE US, SRI V L JAIN, LD COUNSEL FOR THE ASSESSEE ANALYZED THE GROUNDS OF BOTH ASSESSEE AND THE REVENUE FOR ALL SE VEN AYS IN GENERAL AND FOR AY 2000- 01 IN PARTICULAR AND MENTIONED THAT THEY RELATES TO THE ADDITION OF RS.3,55,24,800/- AND OTHER SUMS FOR OTHER ASSESSMENT YEARS ON ESTIMATION BASIS IN THE ASSESSMENT MADE U/S 153A OF THE ACT. IN THE PROCESS, THE AO REJECTED TH E BOOKS OF ACCOUNTS OF THE ASSESSEE SILENTLY IN GENERAL AND DECLARED NUMBER OF CABLE CO NNECTIONS RECORDED IN THE BOOKS. AO FAILED TO ENLIST OR OUTLINE THE REASONS FOR SUCH RE JECTIONS AND DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE. RELYING ON THE PROVISIONS OF SECTION 145 OF THE ACT, LD COUNSEL ARGUED STATING THAT AS PER THE SAID PROVISI ONS, AO IS AUTHORIZED TO REJECT PROVISIONS OF FAILURE TO REGULARLY FOLLOW A METHOD OF ACCOUNTING, INCORRECTNESS OR INCOMPLETENESS OF THE ACCOUNTS. IN THE ABSENCE OF A NY SUCH FAILURE OR INCORRECTNESS OR INCOMPLETENESS, AO CANNOT SILENTLY REJECT THE BOOKS AND PROCEED TO RESORT OF BEST JUDGMENT ASSESSMENT IN THE MANNER PROVIDED IN SECTI ON 144 OF THE ACT. IN THE BACKGROUND OF THE ABOVE, THE ASSESSEE FILED LETTER DATED 05/09/2011 RAISING THE AFOREMENTIONED ADDITIONAL GROUND AND CONVINCINGLY SUBMITTED THAT THE ABOVE IMPORTED ADDITIONAL GROUNDS ARE LEGAL IN NATURE AND THEY TRANSFUSE INTO THE ROOT OF THE ISSUES RAISED IN THE NORMAL GROUNDS RAISED BY BOTH THE PAR TIES. THEREFORE, AS PER DR JAIN, THE SAID ADDITIONAL GROUNDS OUGHT TO BE ADMITTED AND DI SPOSED ON ITS MERITS. ACCORDING TO HIM, IN CASE THE ASSESSEE WINS ON THESE ADDITIONAL GROUNDS, THE ADJUDICATION OF THE ORIGINAL GROUNDS RAISED BY BOTH THE PARTIES IN ALL FOURTEEN APPEALS BECOMES AN ACADEMIC EXERCISE. 6. PER CONTRA, SRI S K SINGH, LD DR FOR THE REVENUE OPPOSED THE ADMISSION OF THE ADDITIONAL GROUND IN PRINCIPLE AND HOWEVER, LEGAL N ATURE OF THESE GROUNDS WAS NOT CONTESTED IN VIEW OF THEIR OBVIOUS NATURE. JUSTIFYI NG THE ESTIMATIONS, SRI SINGH ARGUED 4 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. STATING THAT THE ASSESSEE, BEING A CABLE OPERATOR/S IGNAL TRANSMITTER FAILED TO PROVIDE DETAILS ON THE EXACT CABLE CONNECTIVITY. FURTHER, RELYING ON THE STATEMENT GIVEN BY THE DIRECTOR, SHRI EJAZ INAMDAR DATED 27/04/2006 ( IN RESPONSE TO THE QUESTION NO.13) WHEREIN HE MENTIONED THAT WE TAKE 40% AS POSSIBLE CONNECTIVITY, HE MENTIONED THAT IT MUST CONSTITUTES BASIS FOR ESTIMATIONS AND THE B OOKS THEREFORE, ARE NOT RELIABLE. FURTHER HE RELIED ON THE WRITTEN NOTE SUBMITTED BY THE REVENUE AND POINTED OUT THE DISCUSSION ON THE ALLEGATION OF MISMATCH OF NUMBER OF CONNECTIONS BETWEEN THE SERVICE TAX DIVISION OF THE CENTRAL EXCISE DEPARTMENT AND I NCOME-TAX DEPARTMENT. IN SUCH CIRCUMSTANCES, INVOKING THE PROVISIONS OF SECTION 1 45(3) OF THE ACT ARE JUSTIFIED AS ARGUED BY THE LEARNED DR FOR THE REVENUE. 7. DURING THE REBUTTAL TIME, THE LD COUNSEL FOR THE ASSESSEE MENTIONED THAT IT IS A CASE OF SEARCH U/S 132 OF THE ACT AND IT IS AN ADMI TTED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND TO SUGGEST THE SUPPRESSION OF CA BLE CONNECTIONS FOR ANY OF THE SEVEN YEARS UNDER CONSIDERATION. FURTHER, LD COUNS EL ARGUED STATING THAT THERE IS NEITHER INACCURACY NOR INCOMPLETION IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE FOR ALL THE YEARS UNDER CONSIDERATION. UNDER THIS CONSIDERA TION, DECISION OF SILENTLY INVOKING OF PROVISIONS OF SECTION 145(3) OF THE ACT AND THE DEC ISION TO RESORT TO ESTIMATION ARE INVALID. REFERRING TO THE DEPARTMENT ALLEGATION OF MISMATCH OF THE CABLE CONNECTIONS BETWEEN THE ONES DISCLOSED IN INCOME TAX RETURN AND THOSE ALLEGED BY THE AUTHORITIES OF SERVICE TAX DIVISION, LD COUNSEL DEMONSTRATED THAT THE ALLEGATIONS MADE BY THE CENTRAL EXCISE DEPARTMENT, SERVICE TAX DIVISION, WERE FOUND UNTRUE. THEREFORE, NO CREDIBILITY SHOULD BE ATTACHED TO SUCH ALLEGATION. FURTHER, H E MENTIONED THAT THE BOOKS MAINTAINED BY THE ASSESSEE ARE CORRECT, ACCURATE AN D COMPLETE IN ALL RESPECT AND THEY WERE DULY AUDITED BY THE STATUTORY AUDITORS AS PER THE PROVIS IONS OF SECTION 44AB OF THE INCOME-TAX ACT. HE ALSO MENTIONED THAT THE AO FAILE D TO POINT OUT ANY DISCREPANCIES IN THE SAID AUDIT REPORT. ADJUDICATION OF THE ADDITIONAL GROUNDS 8. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND ISSUES RAISED IN THE ORDERS OF THE REVENUE AND ISSUES RAIS ED IN THE ADDITIONAL GROUNDS. WE FIND THAT THERE IS NO DISPUTE ON THE LEGAL NATURE OF THE ISSUE RAISED IN THE ADDITIONAL GROUNDS. CONSIDERING THE NON REQUIREMENT OF ANY INVESTIGATIO N IN TO THE PRIMARY FACT REQUIRED FOR ADJUDICATION OF THE SAID LEGAL ISSUE RAISED IN THE ADDITIONAL GROUNDS, WE ARE OF THE OPINION THAT THE ADDITIONAL GROUNDS RAISED SHOULD B E ADMITTED IN THE INTEREST OF THE JUSTICE. 5 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. 9. THE ISSUE RAISED IN THE ADDITIONAL GROUNDS RELA TES TO THE REQUIREMENT OF REJECTION OF BOOKS OF ACCOUNTS AS PER THE PROVISIONS OF SECTI ON 145(3) OF THE ACT BEFORE SUPPRESSED RECEIPT IS RESORTED BY THE ASSESSING OFF ICER. FOR ADJUDICATING TO THE ABOVE WE PROCEED TO BRING OUT SOME RELEVANT FACTS AND THE BACKGROUND OF THE ASSESSEE. BACKGROUND FACTS 10. ASSESSEE COMPANY CARRIES ON THE BUSINESS OF CABLE OPERATOR SERVICES AS WELL AS TRANSMITTING SIGNALS TO ITS INPUT HOLDERS / FRAN CHISEES. THERE WAS SEARCH ACTION ON THE ASSESSEE ON 14/11/2005. THE REVENUE SUSPECTED THE BONAFIDE OF SUBSCRIBERS BASE OF THE ASSESSEE AND THEY ARE OF THE NUMBER OF CABLE CO NNECTIONS OF THE SUBSCRIBERS ARE SUPPRESSED. OTHERWISE, ADMITTEDLY NO SPECIFIC INACC URACY OR INCOMPLETION IN THE ACCOUNTS ARE NOTICED IN THE BOOKS MAINTAINED BY THE ASSESSEE FOR ALL THESE YEARS. OTHERWISE, THE SUSPICIOUS AREAS IDENTIFIED BY THE R EVENUE LEADING TO ESTIMATION BASED BEST JUDGMENT ASSESSMENT ARE AS UNDER. 11. F IRST REASON FOR REJECTION OF BOOK RESULT : DURING RECORDING OF THE STRONG STATEMENT IN RESPONSE TO A QUESTION NO.13 MR. EZAZ INAMDAR, MANAGING DIRECTOR OF THE COMPANY REVEALED THEIR BASE FOR PLANNING AND THE SA ID QUESTIONS AND ANSWERS ARE GIVEN IN PARA 6.2 OF IMPUGNED ORDER WHICH READS AS UNDE R. QUESTION 13 INFORMATION REGARDING CERTAIN HOUSING TO ASCERTAIN THE NUMBER OF ACCOMMODATIONS AVAILABLE /EXISTING IN THESE SOCI ETIES AND THE DATA WAS COMPARED WITH THE NUMBER OF DIRECT CABLE CONNECTION S SHOWN BY ICC. IT WAS FOUND THAT PERCENTAGE OF CONNECTIVITY WAS MERELY 32 .45%. IT IS HOWEVER BROUGHT TO YOUR NOTICE THAT THESE HOUSING ARE OCCUP IED MOSTLY BY THE URBAN MIDDLECLASS WERE HAVING A CABLE CONNECTION IS ROUTI NE. IN THE LIGHT OF THE ABOVE, PLEASE STATE WHY IT SHOULD NOT BE ASSUMED THAT THE CABLE CONNECTIVITY IS UNDERSTATED TO A LARGE SCALE ? ANSWER WHATEVER INFORMATION PROVIDED TO YOUR OFFICE REGAR DING DIRECT CABLE CONNECTIVITY IS CORRECT AND THERE HAS BEEN NO DISCR EPANCY IN REGARD TO DIRECT CONNECTIONS OF ICC. SO FAR THE PERCENTAGE OF CONNE CTIVITY DISCUSSED THERE ARE FACTORS OF VACANCY IN RESIDENTIAL ACCOMMODATIONS, I NVESTORS FROM MUMBAI AND NRIS. FURTHER, FOR PLANNING PURPOSE, WE TAKE 40% AS POSSIBLE CONNECTIVITY. THUS, THE AO INFERRED TO THE CONCLUSION THAT THE AS SESSEE'S BOOKS DOES NOT REFLECT THE CORRECT NUMBER OF CABLE CONNECTIONS AS ACCOUNTED ON ES ARE FAR BELOW THE SAID 40%. AO ALSO STUMBLED ON SOME INFORMATION INVOLVING THE ALL EGATION OF SERVICE TAX EVASION IN TURN SUPPRESSION OF CABLE CONNECTION EVADING SERVICE TAX. 12. OTHERWISE ASSESSEE FILES REGULAR RETURN OF INCO ME. EX CONSEQUENTI TO SEARCH ACTION, NOTICES U/S. 153A WERE ISSUED ON 30/10/2006 FOR ALL YEARS UNDER 6 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. CONSIDERATION. AFTER EXAMINING THE CONTENTS OF THE RETURNS, THE SCRUTINY ASSESSMENT WAS COMPLETED ADOPTING THE UNIFORM BASIS OF ESTIMATION @ 40% OF THE ELECTRICITY CONNECTION OF THE AREA (PROVIDED BY THE MSEB AS A CABLE CONNE CTION OF THE ASSESSEE). ASSESSING OFFICER COMPILED THE YEAR-WISE RATE PER C ABLE CONNECTION. THE ASSESSMENT FOR ALL THE SEVEN ASSESSMENT YEARS WERE COMPLETED A ND FINALLY DETERMINED THE UNDISCLOSED INCOME OF ALL THE SEVEN YEARS AS PER THE CHART (ON PAGE 24 OF ASSESSMENT ORDER) GIVEN BELOW. 13. THE ABOVE TABLE REFLECTS THE MODE AND MANNER OF ESTIMATION OF INCOME FOR SEVEN AYS AND SUM OF TOTAL INCOME FOR ALL SEVEN AYS SO ES TIMATED WORKS OUT TO RS 77.12 CRORES. AFTER THE SCRUTINY ASSESSMENTS, THEN THE MA TTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE QUESTIONED THE AO'S BASIS OF THE ESTIMATION AND PRINCIPLES TO BE FOLLOW ED BY THE ASSESSING OFFICER IN MATTERS OF ASSESSMENTS INVOLVING SEARCH AND SEIZURE ACTIONS LIKE PRESENT ONE AND MENTIONED IN SEARCH ASSESSMENT, THERE IS NO ROLE FOR ESTIMATION SUCH AS 40% OF MSEB CONNECTIONS. A.YRS. INDEXED CONNECTIVITY OPTION (40%) SHOWN BY CO. BALANCE NOT SHOWN RATE PER CONNECTION UNDISCLOSED INCOME (X MONTHS) 2000 - 01 95571 38228 13558 24670 120.00 3,55,24,800 2001 - 02 42050 42050 14276 27774 170.00 220.00 SUB TOTAL 1,41,64,740 5,49,92,520 6,91,57,260 2002 - 03 115641 46256 14904 31352 220.00 270.00 SUB TOTAL 3,44,87,200 5,92,55,280 9,37,42,480 2003 - 04 127206 50882 15364 35248 270.00 271.43 SUB TOTAL 4,75,84,800 6,69,71,552 11,45,56,352 2004 - 05 139926 55970 16366 39604 271.43 277.78 298.15 SUB TOTAL 2,14,99,427 1,10,01,199 10,62,71,393 13,87,72,019 2005 - 06 153604 61441 21505 39936 298.15 313.70 SUB TOTAL 7,14,41,510 7,51,67,539 14,66,09,049 2006 - 07 168333 67333 23175 44158 355.70 321.84 SUB TOTAL 3,14,14,001 14,21,18,107 17,35,32,108 TOTAL 77,18,94,068 7 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. ASSESSEE ARGUED THAT SUCH WEIRD AND UNFETTERED ESTI MATIONS ARE AGAINST THE SET PRINCIPLES OF SEARCH AND SEIZURE ASSESSMENTS. 14. ON HEARING BOTH THE PARTIES AS PER THE DISCUSSI ON GIVEN IN PARA 8 OF THE IMPUGNED ORDER THE CIT(A) RESORTED TO DIFFERENT EST IMATION, HIS ESTIMATION IS GIVEN IN PARA 8.1 IS AS FOLLOWS: 8.1 TAKING INTO ACCOUNT THE ABOVE-MENTIONED ASPE CTS AND MATERIAL ON RECORD WHICH, INTER-ALIA, INCLUDES THE FINDINGS OF THE ASS ESSING OFFICER REGARDING LACK OF PROPER MAINTENANCE OF RECORD IN RESPECT OF SUBSCRIB ER BASE , I AM OF THE CONSIDERED VIEW THAT IT WOULD BE FAIR AND REASONABL E IF INCOME OF THE APPELLANT IS ESTIMATED BY INCREASING 10% OF SUBSCRIBER BASE WITH REFERENCE TO NUMBER OF CONNECTIONS SHOWN BY THE APPELLANT FOR THE PURPO SE OF INCOME-TAX FOR ALL THE ASSESSMENT YEARS UNDER APPEAL. (FOR THIS PURPOSE, RATE PER CONNECTION PER MONTH SHALL BE ADOPTED FROM THE WORKING ADOPTED BY THE A.O. IN THE ASSESSMENT ORDER). THIS ESTIMATION IS HELD TO BE R EASONABLE AND FAIR KEEPING IN VIEW THE LEAKING OF REVENUE BECAUSE OF QUESTIONS AB OUT GENUINENESS OF INPUT HOLDERS AS MENTIONED ABOVE AND ALSO BECAUSE OF SUPP RESSION OF NUMBER OF SUBSCRIBERS. THIS GIVES FOLLOWING RESULTS : 15. THUS, THE SIZE OF THE CABLE CONNECTIVITY OF THE ASSESSEE IS THE BONE OF CONTENTION BETWEEN THE PARTIES. WHILE THE AO ESTIMATED THE SAM E @ 40% OF THE MSEB CONNECTIVITY OF AN AREA, THE CIT(A) RESTRICTED THE SAME TO 10%. PER MONTH RATE PER SUPPRESSED CABLE CONNECTION IS CONFIRMED BY THE CIT (A) WITHOUT ANY DISCUSSION IN THE IMPUGNED ORDER. 16. AGGRIEVED WITH THE ABOVE RELIEF GRANTED BY THE CIT(A) IN FAVORITE OF THE ASSESSEE, THE REVENUE FILED APPEALS AND THE DETAILS ARE ON THE FIRST PAGES OF THIS ORDER. FURTHER, AGGRIEVED BY THE CIT(A)'S DECISION IN NOT DELETING THE ADDITIONS IN FULL, THE ASSESSEE FILED APPEALS FOR ALL YEARS UNDER CONSIDER ATION. FACTS RELEVANT TO ADDITIONAL GROUNDS: 17. ASSESSEE IS A COMPANY WHOSE BOOKS OF ACCOUNTS A RE DULY AUDITED AS PER THE PROVISIONS OF THE ACT. WITH THE EXCEPTION OF SOME U NFOUNDED OR IRRESPONSIBLE ASSERTIONS OF THE AO, WHO HELD IN PARA 12 OF HIS ORDER THAT TH ERE EXISTS SOME EVIDENCES TO SUPPORT THE SUPPRESSION OF CABLE CONNECTIONS BY THE ASSESSE E, OTHERWISE, THE SEARCH ACTION DID NOT RESULT IN THE DISCOVERY OF ANY DIRECT EVIDENCE TO DEMONSTRATE THE SAME SO SHOW THAT THE ENTRIES OR BOOKS OF ACCOUNTS OF THE ASSESSEE FO R SEVEN ASSESSMENT YEARS ARE INACCURATE AND THEY SUFFER FROM DEADLY PROBLEM OF I NCOMPLETENESS OF THE BOOKS OF ACCOUNTS. HOWEVER, ON THE ISSUE OF EXISTENCE OF SUC H EVIDENCES, THERE WAS DISCUSSION BY BOTH THE PARTIES DURING THE PROCEEDING BEFORE US . IN RESPONSE TO THE CHALLENGE OF THE ASSESSEE'S COUNSEL FOR PRODUCTION OF SUCH EVIDENCES , THE REVENUE COULD NOT BRING OUT ANY SUCH EVIDENCE TO STRENGTHEN THEIR CASE. THEREF ORE, WE FIND NO DIFFICULTY IN 8 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. EXPUNGING SUCH ASSERTIONS OF THE AO AS INAPPROPRIAT E AND THEREFORE, PROCEED TO UPHOLD THE VIEW OF LD COUNSEL FOR THE ASSESSEE. FURTHER, I N SUPPORT OF THEIR BELIEF ON THE ALLEGATIONS OF SUPPRESSION, THE REVENUE KEPT HEAVY RELIANCE ON THE ALLEGATIONS OF SUPPRESSION OF CABLE CONNECTIONS FOR SERVICE TAX OF THE CENTRAL EXCISE DEPARTMENT. IN THIS REGARD, LD COUNSEL DEMONSTRATED SUCCESSFULLY T O THE CONCLUSION THAT THE SAID DEPARTMENT COULD NOT FINALLY SUCCEED IN CLINCHING THE EXISTENCE OF ANY EVASION OF SERVICE TAX BY WAY OF SUPPRESSION OF CABLE CONNECTIVITY. THEREF ORE THE BOOKS ACCOUNTS OF THE ASSESSEE ARE PROPER, RELIABLE, COMPLETE AND FROM ANY DISCREPANCY AND INACCURACY. THE OTHER POINT ON WHICH THE REVENUE KEPT IT'S HEAVY RELIANCE RELATES TO THE ANSWER OF SRI INAMDAR GIVEN IN RESPONSE TO QUESTION NO.13 IE WE TAKE 40% AS POSSIBLE CONNECTIVITY. AS PER THE ASSES SEE, THE SAME WAS GIVEN IN THE CON TEXT OF BUSINESS PLANNING. OBVIOUSLY IT WAS MEANT FOR BUSIN ESS SET UP, INSTALLATION PLANT AND MACHINERY, EMPLOYEES RECRUITMENT, PURCHASE OF ELECT RONIC GADGETS ETC. ITS A VOGUE AND GENERALIZED ASSERTION OF SRI INAMDAR AND MUCH IMPOR TANCE AS DONE BY THE AO SHOULD NOT BE ATTACHED. ON THE OTHER HAND, THE REVENUE REL IED HEAVILY THE SAID STATEMENT OF SRI INAMDAR WHICH IS EVIDENT FROM THE WAY AO ADOPTED TH E SAID 40% AS THE BASIS OF ESTIMATION OF THE SUPPRESSED CABLE CONNECTIONS OF A N AREA. OF COURSE, THE CIT(A) DID NOT APPROVE OF THE AO'S LINE OF ESTIMATION @ 40% AN D THE CIT(A) IN TURN RESORTED TO ESTIMATION @10% OF ELECTRICITY CONNECTIONS OF AN AR EA. THUS, IN PRINCIPLE, THE CIT(A) REJECTED THE ACCOUNTS OF THE ASSESSEE AND HOWEVER, HE GRANTED RELIEF ON QUANTITY OF ESTIMATIONS. AS THERE IS NO EXPRESS DISCUSSION IN T HE ORDERS OF THE REVENUE THAT THE AO POINTED OUT ANY INACCURACIES OR INCOMPLETENESS OF T HE ACCOUNTS. SIMILARLY, THERE IS NO EXPRESS REJECTION OF THE BOOKS OF ACCOUNTS ANY OF T HE YEARS UNDER CONSIDERATION THAT THE ACCOUNTS OF THE ASSESSEE ARE REJECTED INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT. THEREFORE, IN THE LIGHT OF THE ABOVE FACTUAL MATRIX OF THE CASE, THE ASSESSEE RAISED THE IMPUGNED ADDITIONAL GROUNDS QUESTIONING THE DECISION OF THE AO IN MAKING THE ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT WITHOUT INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT FOR REJECTING THE ACCOUNTS OF THE ASSESSEE. LD COUNSEL FILED THE FOLLOWING TWO WRITTEN SUBMISSIONS AND THE SAME IS REPRODUCED IN THE SUCCEEDING PARAGRAPHS OF THIS ORDER. 18. EXTRACT FROM THE WRITTEN SUBMISSION BY THE ASSE SSEE: 13. THUS, FROM THE ABOVE, IT IS EVIDENT PROVISIO NS OF SECTION 145(3) ARE INVOKED UNDER SUB-SECTION 3 ON ACCOUNT OF INCOMPLET ENESS OF BOOKS OF ACCOUNT & INACCURACIES OF THE SAID BOOKS OF ACCOUNT S 14. IN THE LIGHT OF THE ABOVE SCOPE WE HAVE EXAMINE D THE FACT OF THE PRESENT CASE. THE STANDARD OF THE REVENUE IS ESTIMATIONS B Y THE ASSESSING OFFICER ARE JUSTIFIED EVEN WHEN THE SPECIFIC INACCURACIES O R INCOMPLETENESS ARE NOT POINTED OUT . 9 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. 2) ASSESSING OFFICER DID NOT MAKE SPECIFIC REFEREN CE OF SUB-SEC.(3) OF THE ACT IN HIS ORDER 3) AND THERE IS ALLEGATION BY THE SERVICE DEPARTM ENT ABOUT THE NUMBER OF ------ STATEMENT OF SHRI EZAZ INAMDAR ABOUT I.E. WE TAKE 40% AS POSSIBLE CONNECTIVITY ON THE OTHER HAND THE STAND ARD OF THE ASSESSEE IS AS PROVIDED IN THE PARA 5 TO 8 AND REJOINDER ALSO OF WRITTEN SUBMISSIONS WHICH IS AS UNDER. 5. THE ASSESSING OFFICER HAS MERELY CONCLUDED (AS CAN BE SEEN FROM PARA 12 OF THE ASSESSMENT ORDER FOR A.Y. 2000-2001) THAT THERE ARE EVIDENCES WHICH REVEAL THAT THE SUBSCRIBER BASE HAS BEEN CON CEALED AS NO PROPER NUMBER OF CONNECTIVITY IS BEING SHOWN ON RECORD BY THE COMPANY. THIS IS A MERE GENERAL, FEEBLE AND VAGUE STATEMENT WITHOUT ANY ROOTS IN THE FACTS EMANATING FROM THE SEARCH. 6. THE ASSESSING OFFICER HAS HIMSELF DISCARDED THE ESTIMATION OF INCOME ON THE BASIS OF SERVICE TAX DEPARTMENT CALCULATIONS. THE SHOW CAUSE NOTICE DATED 3/12/2007 PLACED AT PAGE 16 OF THE PAPER BOOK B HAS BEEN DISCARDED BY THE ASSESSING OFFICER IN FAVOUR OF THE SHOW CAUSE NOTICE DATED 28/12/2007 (PLACED AT PAGE 76 OF PAPER BOOK B ) WHICH SEEKS TO RESORT TO ESTIMATION OF INCOME ON THE BASIS OF NUMB ER OF HOUSEHOLDS HAVING ELECTRICAL CONNECTIONS. THIS SHOWS THE UNCER TAIN AND UNSURE STANCE OF THE ASSESSING OFFICER. 7. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS FO R THE PROPOSITION THAT THE ACTION OF THE ASSESSING OFFICER TO RESORT TO SEC. 1 45(3) IS INCORRECT : I. CIT VS. SHRIMATI POONAM RANI-- 326 ITR 223 (DE LHI) IN THE ABSENCE OF ANY MATERIAL POINTING TOWARDS FAL SEHOOD OF THE BOOKS OF ACCOUNTS AND NO PARTICULAR DEFECT, OR DISC REPANCY BEING POINTED IN THE BOOKS OF ACCOUNTS, THE DELHI HIGH CO URT HELD THAT RESORT COULD NOT BE MADE TO REJECTING THE BOOKS OF ACCOUNTS BY INVOKING SEC.145(3). II) SAURASHTRA BALL PEN (P) LTD. VS. DCIT----24 S OT 556 (MUMBAI) THE HON. TRIBUNAL HAS ANALYZED THE PROVISIONS OF SE C.145(3) AND CONCLUDED THAT THE ASSESSING OFFICER HAS TO BE SATI SFIED ABOUT THE INCORRECTNESS AS ALSO THE INCOMPLETENESS OF THE ACC OUNTS AFTER TAKING INTO CONSIDERATION VARIOUS FACTORS AND NOT O MITTING TO CONSIDER THE MATERIAL BEFORE HIM WHILE EXERCISING S UCH DISCRETION. III. CIT VS. RAJNIKANTH DAVE --281 ITR 6 (ALL.) THE COURT HELD THAT THE ASSESSING OFFICER IS NOT JU STIFIED IN REJECTING THE BOOKS RESULTS WITHOUT ANY ALLEGATION THAT THE M ETHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE IS SUCH THAT THE INCOME CANNOT BE PROPERLY DEDUCED. IV. MADNANI CONSTRUCTION CORTN (P) LTD. VS. CIT29 6 ITR 45 (GAU.) WHEN THE ASSESSING OFFICER HAS NEITHER EXPRESSED HI S DISSATISFACTION ABOUT THE CORRECTNESS OR COMPLETENE SS OF THE ACCOUNTS NOR ANY ERROR IS POINTED OUT IN PROFIT AND LOSS ACCOUNT AND AUDITED REPORT, THE POWERS OF BEST JUDGMENT CAN NOT BE INVOKED. V. ASHOKE REFACTORS (P) LTD. VS. CIT--279 ITR 457 (CAL.) WITHOUT FORMATION OF OPINION THAT THE ACCOUNTS MAIN TAINED BY THE ASSESSEE WERE NOT CORRECT OR COMPLETE OR THAT INCOM E COULD NOT BE DEDUCED FROM THE BOOKS OF ACCOUNTS, THE ASSESSEES BOOKS OF ACCOUNTS CANNOT BE REJECTED AND SUCH A REJECTION IS PERVERSE AND VOID. VI. INTERNATIONAL FOREST COMPANY VS. CIT--101 ITR 721 (J & K) 10 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. ACCOUNTS CANNOT BE REJECTED MERELY ON THE GROUND TH AT THE SUMMONS ISSUED TO PARTIES WERE EITHER RETURNED UNSE RVED OR NO COMPLIANCE WAS MADE WHERE THE ASSESSEE HAS MAINTAI NED PROPER BOOKS OF ACCOUNTS AND THEY WERE AUDITED U/S.44AB AN D WERE PRODUCED BEFORE THE ASSESSING OFFICER IN WHICH NO O THER DEFECT WAS FOUND. VII. DCIT VS. ASSOCIATED PETROLEUM CORPORATION -- 43 SOT 45 (AHD) WITHOUT POINTING OUT ANY DEFECT, THE ASSESSING OFFI CER CANNOT RESORT TO REJECTION OF BOOKS AND WITHOUT REJECTING BOOKS OF ACCOUNTS, ASSESSING OFFICER CANNOT ESTIMATE THE PRO FITS. VIII. CIT VS. PARADISE HOLIDAYS--325 ITR 13 (DELH I) 8. RELIANCE IS PLACE ON THE FOLLOWING DECISIO N FOR THE PROPOSITION THAT IN THE ABSENCE OF ASSESSMENT YEAR SPECIFIC INCRIMINATING M ATERIAL, ASSESSMENT OF SUCH YEAR CANNOT BE DISTURBED BY INVOKING THE PROVI SION OF SEC.153C. I. SINHGAD TECHNICAL EDUCATIONAL SOCIETY VS. ACIT REPORTED IN 56 DTR 241 (PUNE) AND II. LMJ INTERNATIONAL LTD. V S. DCIT REPORTED IN 119 TTJ 214 (KOL). ASSESSEES COUNSEL FILED A REJOINDER ORIENTED WRIT E UP SUMMARIZING THE ARGUMENTS AND COUNTER ARGUMENTS AND THE SAME IS REPRODUCED AS FOL LOWS. QUICK RESPONSES TO THE COMMENTS PROVIDED BY THE LEA RNED CIT (DR) VIDE A LETTER DATED 07/09/2011 FROM THE ASSESSING OFFICER. 1. DURING THE COURSE OF SEARCH, IT WAS NOTICED TH AT THE ASSESSEE WAS NOT SHOWING ITS SUBSCRIBER BASE PROPERLY - THIS COMMENT IS WITHOUT ANY BASIS IN THE SEARCH MATERIAL. 2. SHRI EZAZ INAMDAR HAS STATED IN HIS SWORN STATEM ENT RECORDED ON 27/04/2006 IN RESPONSE TO THE QUESTION NO.13 THAT WE TAKE 40% AS POSSIBLE CONNECTIVITY - THIS RESPONSE IS PICKED IN ISOLATION WITH UTTER D ISREGARD TO THE QUESTION AND THE ANSWER. A READING OF THE QUESTIO N AND ANSWER MAKES IT CLEAR THAT A PART OF THE SENTENCE IS EXTRA CTED TO MISLEAD. THE FULL SENTENCE IS FURTHER FOR PLANNING PURPOSE, WE TAKE 40% AS THE POSSIBLE CONNECTIVITY . 3. PARA 10 OF THE ASSESSMENT ORDER HAS BEEN EXTRACT ED TO PROVIDE THE CONCLUSION OF THE ENQUIRIES. - NONE OF THE STATEMENTS MADE IN PARA A-E LEADS TO THE INFERENCE THAT AN ESTIMATE IS REQUIRED. 4. THE NOTICE OF THE SERVICE TAX DEPARTMENT IS HEAV ILY RELIED ON FOR THE FACTS CONTAINED THEREIN - THE SERVICE TAX DEPARTMENT ITSELF HAS IN ORDER DA TED 09/11/2010, CHOSEN TO DROP THE PROCEEDINGS . 5. THE COMMENTS CONFIRM IN THE FINAL PARA OF PAGE 3 OF THE LETTER THAT IT WAS POST SEARCH INVESTIGATIONS WHEN SURVEYS WERE CARRIED OUT THAT YIELDED ANOMALY IN RATES OFFERED BY DIFFERENT FRANC HISEES. 6. IN SO FAR AS THE DEPARTMENT APPEAL IS CONCERNED, IT NEEDS TO BE POINTED OUT THAT IN THE FINAL PARA IT IS ALREADY CONCEDED T HAT THE INCOME WAS CORRECTLY ESTIMATED BY THE CIT APPEALS 19. THUS, THIS BENCH HAS TO NOW ADJUDICATE IF THE AO IS JUSTIFIED IN RESORTING TO ESTIMATIONS WHEN THE AO FAILED TO PINPOINT THE INAC CURACIES OF THE ACCOUNTS OR 11 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. INCOMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. AND WHEN HE FAILED TO SUCCESSFULLY AND EXPRESSLY INVOKE THE PROVISIONS OF SECTION 145 OF THE ACT. FURTHER, WE NEED TO EXAMINE THE RELIANCE KEPT BY THE AO ARE PROPER OR OTHERWISE . FOR ANALYSING THE SAME, WE NEED TO FIRST EXAMINE THE 'SCOPE OF SECTION 145 OF THE A CT'. 20. SCOPE OF THE PROVISIONS OF SECTION 145A OF THE ACT- VALID INVOKING PROVISIONS: SCOPE OF SECTION 145: THE AO ASSUMES JURISDICTION I N REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY VIRTUE OF SECTION 145 O F THE INCOME-TAX ACT RELATING TO 'METHOD OF ACCOUNTING'. SECTION 145 WAS AMENDED BY THE FINANCE ACT, 1995 WITH EFFECT FROM 1.4.1997 AND RELEVANT SUBSECTION (3) AS APPLIC ABLE TO THE YEARS UNDER CONSIDERATION READS AS UNDER:- METHOD OF ACCOUNTING 145 (1) (2).... (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR ............, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVID ED IN SECTION 144 . 21. SUB-SECTION (2) OF THE PRE-AMENDED PROVISION IS SAME AS THE SUB SECTION (3) OF THE SUBSTITUTED SECTION 145 OF THE INCOME TAX ACT A ND IT HAS FOLLOWING INGREDIENTS: (A) AO BEING NOT SATISFIED ABOUT THE CORRECTNESS OR COM PLETENESS OF THE ACCOUNTS OF THE ASSESSEE; AND (B) CONSEQUENTIAL BEST JUDGMENT ASSES SMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. THE EXPRESSIONS AT (A) IE AO NOT SATISFIED, CORRECTNESS, COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE ARE RE LEVANT AND THEY REQUIRE MORE ELUCIDATION. BEFORE ANALYZING THE PHRASES OF AO BE ING NET SATISFIED' AND THE 'CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS', IT IS NECESSARY TO ELABORATE ON WHAT CONSTITUTES THE 'ACCOUNTS OF THE ASSESSEE' USED IN CONJUNCTION WITH THE 'CORRECTNESS OR COMPLETENESS . THE SAME HAS NOT BEEN DEFINED IN THE ACT IN THAT FORM. HOWEVER, THE FINANCE ACT, 2001 INTRODUCED CLAUSE 12(A) OF SECTIO N 2 PROVIDING FOR AN INCLUSIVE DEFINITION FOR BOOKS OR BOOKS OF ACCOUNTS'. THE CL AUSE 12(1) READS AS FOLLOWS:- (12A) 'BOOKS OR BOOKS OF ACCOUNTS INCLUDES' LEDGERS, DAY-BOOKS, CASH BOOKS, ACCOUNT-BOOKS AND OTHER BOOKS, WHETHER KEPT IN WRITTEN FORM OR AS PRINT-OUTS OF THE DATA STORED IN A FLOPPY, DISC, TA PE OR ANY OTHER FORM OF ELECTROMAGNETIC DATA STORAGE DEVICE. 22. THE ABOVE DEFINITION GIVEN IN CLAUSE (12A) OF S ECTION 2 IS REASONABLY IMPORTANT FOR UNDERSTANDING THE PHRASE 'ACCOUNTS OF THE ASSES SEE' MENTIONED IN THE PRE-AMENDED SECTION 145(2) OF THE ACT. THESE EXPRESSIONS WERE A LSO REFERRED TO IN THE PROVISIONS OF SECTION 44 AB OF THE ACT. THE COMBINED READING OF T HE ABOVE SAID PROVISIONS READ WITH SECTION 44AB AND OTHER GUIDELINES ISSUED IN CONNECT ION WITH THE BOOKS OF ACCOUNTS TO BE MAINTAINED BY THE CLASS OF ASSESSEE'S OF THIS KIND, ADEQUATELY ADVOCATES FOR 12 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. MAINTENANCE OF THE SAID REGISTERS/DAY-BOOKS APART F ROM OTHER BOOKS/LEDGERS ENLISTED IN CLAUSE (12A) OF SECTION 2. IN OTHER WORDS, THE REQU IREMENT OF MAINTAINING DAY-TO-DAY REGISTERS AND DAY-TO-DAY STOCK REGISTERS IS THUS A STATUTORY REQUIREMENT OF THE ASSESSEE- COMPANY. THERE IS NO ADVERSE COMMENT BY THE STATUTO RY AUDITORS AS EVIDENT FROM THE AUDIT REPORT ENCLOSED TO THE RETURN OF INCOME FILED BY THE ASSESSEE. 23. COMPLETENESS OF ACCOUNTS: THE COMPLETENESS OF ACCOUNTS REFERS NOT ONLY TO THE ACCOUNTING ENTRIES FOR ALL THE TRANSACTION D ONE IIN THE PREVIOUS YEAR; BUT ALSO TO THE LIST OF LEDGER/BOOKS OF ACCOUNTS AS DESCRIBED I N CLAUSE (12A) ABOVE AND LOGICALLY IT ALSO REFERS TO THE SUPPORT REGISTERS, DOCUMENTS, BI LLS, INVOICES ETC. IN OTHER WORDS, THE FAILURE TO MAINTAIN RELEVANT REGISTERS OR ANY OTHER BOOKS DESCRIBED IN THE LIST MAKES THE ACCOUNTS OF THE ASSESSEE INCOMPLETE. 24. CORRECTNESS OF THE ACCOUNTS: T HE CORRECTNESS OF THE ACCOUNTS REFERS TO THE QUALITY OR ACCURACY OR RELIABILITY OR CREDIBILITY O F THE ACCOUNTS MAINTAINED BY THE ASSESSEE AND IT COVERS THE RECONCILABLE MISTAKES OR ERRORS IN ACCOUNTS. THUS, THE COMPLETENESS REFERS TO LIST OF BOOKS OF A CCOUNTS AND ENTRIES THEREIN AND THE CORRECTNESS OF THE ACCOUNTS REFERS TO THE QUALITY O F THE ACCOUNTS OF THE ASSESSEE. AO MAY REJECT THE BOOKS EITHER FOR REASONS OF INCOMPLE TENESS OF THE ACCOUNTS OR FOR REASONS OF THE CORRECTNESS OF THE ACCOUNTS. AOS SA TISFACTION ABOUT THE COMPLETENESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE ASSUME S IMPORTANCE. 25. FURTHER, WITH REGARD TO REJECTION OF BOOKS OF A CCOUNTS BY THE AO U/S 145 OF THE ACT, ACCEPTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS A RULE AND REJECTING THE SAME IS AN EXCEPTION' . THIS IS THE PRINCIPLE IN EXISTENCE AND AO SHALL N OT REJECT THE BOOKS UNLESS THE ACCOUNTS OF THE ASSESSEE SUFFER FROM EITHER OF THE TWIN REASONS SPECIFIED IN THE ACT IE CORRECTNESS OR COMPLETENESS. HON' BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF BASTIRAM NARAYANDAS MAHESWARI (210 ITR 438), HELD THAT THE FAILURE TO MAINTAIN PROPER REGISTERS CONTRIBUTES TO THE DISSATISFACTION OF THE AO ABOUT THE FAIRNESS OR COR RECTNESS OF THE ACCOUNTS AND THUS THE AO IS EMPOWERED TO MAKE THE BEST JUDGMENT ASSESSMEN T. IT IS THE SETTLED LAW THAT THE BOOKS CANNOT BE REJECTED U/S 145 OF THE ACT AND RES ORT TO BEST JUDGMENT ASSESSMENT, UNLESS THE AO RECORD ANY FINDING THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE INCORRECT RENDERING IT IMPOSSIBLE TO DEDUCE THE PROFITS. AO NEEDS TO INDICATE THAT HE NOTICED ANY INCONSISTENCY OR INFIRMITY IN THE AUDIT REPORT. JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF MADNANI CONSTRUCTION CORPORATI ON P LTD VS CIT (296 ITR 0045) (GAUHATI) IS RELEVANT. ALLEGATION OF LOWER GP IS NO GROUND FOR REJECTION OF BOOKS U/S 145 OF THE ACT AS HELD BY THE HIGH COURT OF PUNJAB & HA RYANA IN THE CASE OF CIT VS PATIALA DISTRICT CO OP MILK PRODUCERS UNION LTD (328 0615 AND ANOTHER CASE REPORTED IN 336 ITR 0332. IT IS THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BASTIRAM 13 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. NARAYANDAS MAHESHRI VS CIT, 210 ITR 0438 FOR REJECT ION OF THE ACCOUNTS, NON MAINTENANCE OF THE DAY TO DAY RECORDS SHOWING THE M ANUFACTURING DETAILS IS ADEQUATE. THUS, WHEN NO DISCREPANCY IS NOTICED IN THE ACCOUNT S MAINTAINED BY THE ASSESSEE, AO CANNOT ASSUME JURISDICTION U/S 145(3) OF THE ACT AS HELD BY THE DELHI HIGH COURT IN THE CASE OF ANAND KUMAR DEEPAK KUMAR. IT IS ALSO RELEVA NT TO MENTION THAT WITHOUT ENLISTING THE DEFECTS, INCOMPLETION AND INACCURACIE S IN THE ACCOUNTS OF THE ASSESSEE, AO CANNOT EXPRESSIVELY OR OTHERWISE, INVOKE THE PROVIS IONS OF SECTION 145(3) OF THE ACT. AHMEDABAD BENCH OF THE TRIBUNAL HELD IN THE CASE OF M/S PARAS DYEING AND PRINTING MILLS P LTD 004 ITR(TRIB) 0029 (AHD) THAT WHEN NO S PECIFIC DISCREPANCIES OR DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS BEEN POINT ED OUT NOR WAS ANY MATERIAL BROUGHT TO ESTABLISH THAT PURCHASES WERE INFLATED O R RECEIPTS SUPPRESSED, THERE IS NO JUSTIFICATION IN INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT. IF THERE WAS NO CHALLENGE TO THE TRANSACTIONS REPRESENTED IN THE BO OKS, THEN IT IS NOT OPEN TO THE DEPARTMENT TO CONTEND THAT WHAT WAS SHOWN BY THE EN TRIES IS NOT THE REAL STATE OF AFFAIRS. THERE WAS NO BASIS FOR REJECTION OF BOOKS OF ACCOUNT. CIT V. VIKRAM PLASTICS [1999] 239 ITR 161 (GUJ) WAS RELIED ON. THUS, SUSPI CION, HOWEVER STRONG IT MAY BE, IS NO GROUND FOR THE AO FOR INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THUS, THIS THE SCOPE OF THE PROVISIONS OF SECTION 145(3), WHIC H PROVIDE AUTHORITY TO THE AO TO ADOPT BEST JUDGMENT IN THE MANNER PROVIDED U/S 144 OF THE ACT. 26. REGARDING THE 'AO BEING NOT SATISFIED' ABOUT THE CORRECTNESS AND COMPLETENESS OF THE ASSESSEE'S ACCOUNTS, THE CALCUT TA HIGH COURT JUDGMENT IN THE CASE OF ASHOK REFRACTORIES PVT. LTD (279 ITR 457) IS REL EVANT. IN THE SAID CASE, THE HON' BLE HIGH COURT HELD THAT IN ORDER TO REJECT THE ACCOUNT S, THE AO HAS TO COME TO AN OPINION THAT THE INCOME CANNOT BE PROPERLY DEDUCED FROM THE ACCOUNTS SO MAINTAINED. IN ORDER TO ARRIVE AT SUCH CONCLUSION, IT MUST BE SHOWN THAT THE AO HAS TAKEN INTO CONSIDERATION RELEVANT FACTORS AND NOT OMITTED TO CONSIDER THE MA TERIAL BEFORE HIM. THUS, THE ABOVE SCOPE OF THE PROVISIONS OF SECTION 145 CONCLUSIVELY ESTABLISHING THE FACT THAT, WHAT IS IMPORTANT FOR REJECTION OF BOOKS IS THE AO BEING NO T SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS AND IT IS FOR THE AO T O ESTABLISH THE INCOMPLETENESS OR INCORRECTNESS OF THE ACCOUNTS OF THE ASSESSEE. DIVERGENT STANDS OF THE PARTIES OF THE DISPUTE SU MMATION: 27. IN THE LIGHT OF THE ABOVE SCOPE AND PHILOSOPHY RELATING TO THE PROVISIONS OF SECTION 145(3) OF THE ACT, WE NEED TO EXAMINE THE DIVERGENT STANDS OF THE PARTIES IN THE LITIGATION. A. STAND OF THE REVENUE: WE HAVE EXAMINED THE ORDERS OF THE REVENUE, PERUS ED THE MATERIAL AVAILABLE BEFORE US AND HEARD THE ARGU MENTS OF THE REVENUE. FROM ALL THESE SOURCES, WE FIND THE CASE OF THE REVENUE IS T HAT THE ASSESSEE IS COVERED BY THE 14 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. PROVISIONS OF SECTION 132 OF THE ACT AND GATHERED E VIDENCES TO SUGGEST THE SUPPRESSION OF THE CABLE CONNECTIONS. FURTHER, AS PER THE REVEN UE, THE EXISTENCE OF ALLEGATIONS OF THE EVASION OF SERVICE TAX BY WAY OF DISCREPANCY ON THE NUMBER OF THE CABLE CONNECTIONS BY THE CENTRAL EXCISE DEPARTMENT, SERVI CE TAX DIVISION SUGGEST THE SUPPRESSION OF THE CABLE CONNECTIONS. FURTHER, THE STATEMENT OF SRI IJAJ INAMDAR, WHO STATED THAT THE ASSESSEE CONSIDERS 40% OF THE ELECT RICITY CONNECTIONS OF THE AREA FOR PLANNING OF HIS BUSINESS, ALSO SUGGESTS THE SUPPRES SION OF THE CABLE CONNECTIONS. B. STAND OF THE ASSESSEE: PER CONTRA, THE CASE OF THE ASSESSEE IS THAT THE SEARCH ACTION NEVER YIELD ANY INCRIMINATING INFORMATION, W HATSOEVER, QUESTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR ALL THE YEARS UNDER CO NSIDERATION. THEREFORE, THE ACCOUNTS OF THE ASSESSEE ARE COMPLETE AND ACCURATE. FURTHER, AS PER THE ASSESSEE, THERE ARE NO EVIDENCES WHAT SO EVER TO INDICATE THAT THE ACCOUNT S ARE INCOMPLETE. LD AR FOR THE ASSESSEE CHALLENGED THE PRODUCTION OF THE ALLEGED E VIDENCES REFERRED TO IN PARA 12 OF THE ASSESSMENT ORDER BEFORE THE TRIBUNAL FOR WHICH THE REVENUE HAS NO REACTION. THUS, THE SAID REMARKS OF THE AO ON THE EXISTENCE OF EVID ENCES IN SUPPORT OF THE SUPPRESSION OF THE CABLE CONNECTIONS ARE UNFOUNDED. REGARDING T HE ALLEGATION OF SERVICE TAX EVASION BY THE CENTRAL EXCISE DEPARTMENT, SERVICE TAX DIVIS ION, LD COUNSEL FOR THE ASSESSEE EXPLAINED THE SAID ALLEGATION AND INFORMED THAT THE SAID ALLEGATION WERE FINALLY DROPPED BY THE SAID DEPARTMENT AS THEY COULD NOT SUPPORT TH E ALLEGATION. ASSESSEE FILED RELEVANT PAPERS TO DEMONSTRATE THE SAME. FURTHER, LD COUNSEL FOR THE ASSESSEE RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT THAT THE AO NEVE R COULD ENLIST OR PROVIDE SINGLE CONCLUSIVE INSTANCE OF EITHER INCOMPLETENESS OR INA CCURACY IN THE ACCOUNTS FOR THE ALL SEVEN AYS UNDER CONSIDERATION. ASSESSEE MAINTAINED ALL THE REQUISITE BOOKS OF ACCOUNTS NECESSARY FOR HIS BUSINESS. IN SUCH CIRCUMSTANCES, THE AO CANNOT RESORT OF ESTIMATIONS ADOPTING WEIRD BASIS OF 40% OF THE ELECTRICITY CONN ECTIONS OF AN AREA IN MAKING THE BEST JUDGMENT ASSESSMENTS U/S 144 OF THE ACT WITHOUT VAL IDLY REJECTING THE ACCOUNTS OF THE ASSESSEE. IT IS ALSO AN ARGUMENT OF LD COUNSEL THAT THE 40% BASIS ADOPTED BY THE AO WAS REJECTED BY THE CIT(A) IN THE FIRST APPELLATE P ROCEEDINGS AND THEREFORE, THE REVENUE HAS NO VALID BASIS WHATSOEVER FOR RESORTING THE EST IMATIONS. HENCE AS PER THE COUNSEL, THE IMPUGNED ASSESSMENTS SHOULD BE QUASHED IN VIEW OF INVALID INVOKING OF THE PROVISIONS OF SECTION 145(3) AND CONSEQUENTIAL BEST JUDGMENT ASSESSMENT. 28. IN THE PRECEDING PARAGRAPHS OF THIS ORDER, WE H AVE ANALYSED THE ISSUES CONCERNING THE ADMISSION OF THE ADDITIONAL GROUND T RACING THE BACKGROUND FACTS OF THE CASE, THE SCOPE OF THE PROVISIONS OF SECTION 145(3) OF THE ACT, DIVERGENT STANDS OF THE PARTIES IN DISPUTE AND THE CIRCUMSTANCES LEADING TO MAKING OF AN ASSESSMENT ON ESTIMATION BASIS ETC. WHILE DISCUSSING THE SAME, W E HAVE DEMONSTRATED THE NEED FOR ENLISTING THE ACCURACIES AND INCOMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. IN OTHER 15 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. WORDS, WE HAVE APPROVED THE EXISTING DICTUM THAT ACCEPTANCE OF THE BOOKS OF ACCOUNT OF THE ASSESSEE IS THE RULE AND THE REJECTION OF BOOKS IS AN EXCEPTION . IN THIS CASE, THE ASSESSEE IS UNDER STATUTORY OB LIGATION TO MAINTAIN THE BOOKS SPECIFIED IN SEC. 2(12A) OF THE INCOME TAX AC T. IT IS A CASE WHERE BOOKS OR ACCOUNTS ARE DULY AUDITED BY THE STATUTORY AUDITORS AS REQUIRED UNDER THE STATUTE. THEY ARE UNDER OBLIGATION TO PROVIDE CATEGORICAL FINDING S ABOUT THE VERIFICATION OF THE BOOKS OF ACCOUNT, CONSTANT FOLLOWING OF THE METHOD OF ACC OUNTING ADOPTED, ACCURACIES OR COMPLETENESS IF ANY OF THE BOOKS OF ACCOUNTS. IN A CASE WHERE BOOKS ARE MAINTAINED AND THE SAME WERE AUDITED IT IS THE RULE THAT THE A O SHALL ACCEPT THE SAID BOOKS SO LONG AS HE HAS NOT FOUND OUT ANY DEFECTS OR INCOMPLETENE SS OF TRANSACTIONS OR DISCREPANCIES OR ANY INACCURACIES, WHATEVER MAY BE THE NAME GIVEN TO THEM. FURTHER, IT HAS BEEN THE RULE THAT WHEN THE BOOKS ARE REJECTED BY THE AO BY INVOKING THE PROVISIONS OF SUB- SECTION 3 OF SEC. 145 OF THE ACT, THE ONUS IS ON TH E AO TO PIN-POINT OR ENLIST THE DEFICIENCIES OR INACCURACIES IN THE SAID BOOKS OF A CCOUNT OF THE ASSESSEE. WITHOUT POINTING OUT THE SAME EITHER DIRECTLY EXPRESSING IN THE ORDER OR INDIRECTLY BY IMPLICATION, THE AO CANNOT RESORT TO REJECTION OF THE ACCOUNTS O F THE ASSESSEE AND FURTHER, HE CANNOT RESORT TO THE BEST JUDGMENT ASSESSMENT IN TH E MANNER PRESCRIBED IN SEC. 145(3) OF THE ACT. IN THE LIGHT OF THE ABOVE RULE IN FORC E, WE HAVE ANALYSED THE SCENARIO OF THE INSTANT CASE AND FIND THAT THE AO NOWHERE EXPRESSLY REJECTED THE BOOKS. IN ALTERNATIVE, AO HAS NOT ENLISTED THE INACCURACIES OR INCOMPLETEN ESS OF THE ACCOUNTS BY IMPLICATION TOO. THEREFORE, IT IS THE CASE OF NON REJECTION OF BOOKS OF ACCOUNTS BY THE AO BY EXPRESS REASONS BEFORE AO RESORTS TO THE ESTIMATION IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. FURTHER, WE FIND THAT THE SEARCH ACTION HA S NOT YIELDED IN THE DISCOVER OF ANY EVIDENCES EITHER DIRECT OR INDIRECT TO DEMONSTRATE THAT THE ASSESSEE IS RESORTING TO SUPPRESSION OF THE CABLE CONNECTIVITY. ALTHOUGH, TH E AO CARELESSLY MADE SOME REFERENCES TO THE EXISTENCE OF EVIDENCE (REFER TO C ONTENTS IN PARA 12 OF THE ASSESSMENT ORDER) , THE FACT IS THAT NO SUCH EVIDENCES WERE BR OUGHT TO THE NOTICE OF THIS BENCH DESPITE THE REPEATED CHANCES GIVEN TO THE REVENUE D URING THE PENDENCY OF THE PROCEEDINGS BEFORE US. THEREFORE, WE PRESUME THAT THE REVENUE HAS NO SUCH EVIDENCES IN THEIR POSSESSION AS CLAIMED BY AO. 29. THE OTHER ARGUMENTS OF THE REVENUE INCLUDE ON ( I) THE STATEMENT OF MR. EZAZ INAMDAR, WHEREIN IT IS STATED THAT 40% OF THE ELECTRICITY CONNECTIONS OF AN AREA IS CONSIDERED FOR THEIR PLANNING PURPOSES AND (II) THE ALLEGATIONS OF THE SERVICE TAX DIVISION OF THE CENTRAL EXCISE DEPARTMENT, GOVERNME NT OF INDIA WHO INITIATED CERTAIN PROCEEDINGS UNDER THEIR LAWS IN SUPPORT OF THEIR AL LEGATION OF SUPPRESSION OF THE SERVICE TAX BY WAY OF SUPPRESSION OF THE CABLE CONNECTIVITY . 16 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. 30. REGARDING THE ABOVE ARGUMENT AT (I) ABOVE RELAT ING TO THE CONTENTS OF THE STATEMENT OF SHRI INAMDAR, IT IS EVIDENT THAT THE S AID STATEMENT IS UNSPECIFIC, VOGUE AND THE SAME WAS MADE IN CONNECTION WITH PLANNING OF TH E BUSINESS IE IN OTHER WORDS ASSESSEE PURCHASES THE REQUIRED MACHINERY WITH A CA PACITY FOR GATHERING 40% OF THE ELECTRICITY CONNECTIONS OF AN AREA. IT SHOULD NEVE R MEAN THAT THE ASSESSEE IS PROVIDING CABLE CONNECTIONS TO 40% OF THE ELECTRICITY CONNECT IONS. IN OUR OPINION IT CONSTITUTES A WILD SURMISES, WHICH SHOULD BE REJECTED OUTRIGHT AS DONE BY THE FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER. THEREFORE, THIS STATEMENT OF SHRI INAMDAR OUGHT NOT TO BECOME A BASIS FOR REJECTION OF BOOKS OF ACCOUNT AS THE SA ID STATEMENT FAILED TO CONTRIBUTE TO EITHER INCOMPLETENESS OR INACCURACY OF THE ACCOUNTS OF THE ASSESSEE FOR THE SEVEN ASSESSMENT YEARS UNDER CONSIDERATION. THE FULL SEN TENCE OF THE STATEMENT OF SRI INAMDAR READS THAT FURTHER FOR PLANNING PURPOSE, WE TAKE 40% AS THE POSSIBLE CONNECTIVITY AND WE FAILED TO UNDERSTAND HOW THE AO CAN CONSTRUE THE SAME AS CONCLUSIVE EVIDENCE IN SUPPORT OF THE SUPPRESSION O F THE CABLE CONNECTIVITY OF THE ASSESSEE IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCES. IN OUR OPINION, THE SCRUTINY ASSESSMENTS OF THIS KIND AND MAGNITUDE INV OLVING CREATION OF HUGE DEMAND ARE NOT LEGALLY SUSTAINABLE AND THEREFORE, ARE AVOIDABL E. AO SHOULD HAVE THE WISDOM OF DISTINGUISHING THE ELEMENTS OF PLANNING OF THE COMP ANY VIS AVIS THE EARNING OF ACTUAL OR REAL INCOME OF THE COMPANY. THE PLANNING OF THE COM PANY INVOLVES THE CAPACITY BUILDING OF THE COMPANY AND IT IS THE ENDEAVOR OF THE COMPAN Y TO ACHIEVE ITS FULL CAPACITY AND QUITE OFTEN, IT IS NEVER REACHED AND P LAN/CAPACITY OF THE COMPANY IS CONTINUOUSLY REVISED UPWARDS. CAPACITY OF THE COMPA NY IS NOT THE BASIS FOR TAXATION AND THEREFORE, THE TAX HAS TO BE LEVIED ON THE INCOME A ND NOT ON THE INCOME EARNING CAPACITY OF THE ASSESSEE. GENERALLY, THE CAPACITY OF THE CO MPANY IS ALWAYS HIGHER AND IT IS THE OBJECT RELATED DECISION OF THE COMPANY. W E ARE SURPRISED HOW THE OFFICERS MISS THESE BASIS ISSUES. THEREFORE, THE AO/CIT(A) HAVE ERRED IN KEEPING RELIANCE ON SUCH GENERALIZED STATEMENT FOR REJECTION OF THE BOOKS OF ACCOUNTS AND THE SAME DOES NOT CONSTITUTE REASONABLE CAUSE FOR REJECTION OF THE AU DITED BOOKS OF ACCOUNTS OF THE ASSESSEE FOR ALL THE YEARS. 31. REGARDING THE ARGUMENT AT (II) ABOVE, LEARNED C OUNSEL FOR THE ASSESSEE HAS SPECIFICALLY DEMONSTRATED THAT THE SAID PROCEEDINGS UNDER SERVICE TAX LAWS FINALLY CAME TO THE CONCLUSION WITHOUT ANY SUCCESS TO THE THE SA ID SERVICE TAX DIVISION OF THE CENTRAL EXCISE DEPARTMENT. THEREFORE, THE ALLEGATION OF TH E SERVICE TAX DEPARTMENT IS MERELY AN ALLEGATION WITHOUT SUBSTANCE UNDER THE FACTS OF THE CASE. NEITHER THE SERVICE TAX DEPARTMENT NOR THE INCOME-TAX DEPARTMENT COULD PIN POINTEDLY DEMONSTRATED THE EXISTENCE OF SUPPRESSION OF THE CABLE CONNECTIVITY, WHICH IS THE BUSINESS OF THE ASSESSEE. WE HAVE ALREADY DESCRIBED IN THE PRECEDI NG PARAGRAPHS THAT ASSESSEE IS 17 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. ENGAGED IN PROVIDING CABLE CONNECTIONS AND EARNED I NCOME OUT OF THAT. IT IS THE ALLEGATION OF THE DEPARTMENT THAT THE ASSESSEE HAS EARNED UNACCOUNTED INCOME BY WAY OF SUPPRESSION OF CABLE CONNECTIVITY. BUT, THIS AL LEGATION OF THE CENTRAL EXCISE DEPARTMENT, IN OUR OPINION, DOES NOT MERIT ANY ATT ENTION AS THE PROCEEDINGS UNDER THE SAID LAW NEVER FRUCTIFIED LEGALLY AGAINST THE ASSES SEE. IN ANY CASE, THESE ARE MERE ALLEGATIONS WHICH SHOULD BE DISCOURAGED OUTRIGHT IN MATTERS OF MAKING OF THE ASSESSMENTS IN GENERAL AND SEARCH ASSESSMENTS IN PA RTICULAR. 32. IT IS A SETTLED LAW, THE SUSPICION, HOWEVER STRONG IT MAY BE, NEVER REPLACES THE SPECIFIC FINDINGS OR EVIDENCES AS THEY UNAMBIGUOUSLY THROW LIGHT ON THE INCOMPLETENESS AND INACCURACY OF THE ACCOUNTS O F THE ASSESSEE. IT IS NOT THE CASE IN HERE. THEREFORE, THERE IS NO SCOPE FOR ANY SUCH SURMISES AND SUSPICION IN MATTERS OF REJECTION OF BOOKS OF ACCOUNTS. IT IS THE ONUS ON THE AO TO ENLIST THE DEFECTS OR DISCREPANCIES OR ENTRIES OR FAILURE OF THE ASSESSEE IN MAINTAINING SOME REQUISITE BOOKS IN THE ORDER BEFORE THE BOOKS ARE REJECTED U/S 145( 3) OF THE ACT. AO MIGHT NOT HAVE MENTIONED EXPRESSIVELY THE PROVISIONS OF SEC. 145(3 ) OF THE ACT IN THE ORDER BUT THE REQUIREMENT IS, AO MUST ENLIST THE DEFECTS OR DISCR EPANCIES OR INCOMPLETION OR INACCURACIES OF THE ACCOUNTS OF THE ASSESSEE. IN T HE INSTANT CASE AO DID NOT BOTHER TO HONOUR THE LAW IN ITS TRUE SPIRIT. HOW AO CAN RESOR T TO ESTIMATION OF INCOME WITHOUT REJECTION OF ACCOUNTS SYSTEMATICALLY MAINTAINED BY THE ASSESSEE FOR ALL THE YEARS UNDER CONSIDERATION AND ALSO WITHOUT INVOKING THE PROVISI ONS OF SECTION 145 OF THE ACT AFTER DULY COMPLYING WITH THE CONDITIONS SPECIFIED IN THE M? SHOULD WE ENCOURAGE SUCH CALLOUS APPROACH OF THE AO, WHO DID NOT BOTHER TO R EAD THE SAID PROVISIONS AND CONDITIONS SPECIFIED THEREIN?. AOS ORDER DOES NOT CONTAIN A WHISPER ABOUT THE PROVISIONS OF SECTION 145 OF THE ACT, WHILE HE PROC EEDED TO MAKE BEST JUDGMENT ASSESSMENT. THIS IS NOT DONE. THEREFORE, IN OUR CON SIDERED OPINION THE AO MADE A BEST JUDGMENT ASSESSMENTS IN THIS CASE ASSUMING JURISDIC TION U/S 145(3) OF THE ACT INVALIDLY. SUCH ASSESSMENTS ARE UNSUSTAINABLE. THEREFORE, CIT( A) DID NOT APPROVE THE AOS DECISION RIGHTLY AND HE WAS SILENT ON THE ISSUES RE LATING TO THE PROVISIONS OF SECTION 145 OF THE ACT AND REJECTED THE AOS BASIS IE 40% OF TH E ELECTRICITY CONNECTIONS OF AN AREA. HE FIXED THE ESTIMATION AT 10% OF THE SAME. WE CANN OT APPROVE THE ESTIMATIONS OF ANY KIND IE 40% OR 10% AS THE CASE MAY BE, WHEN THE BOO KS OF ACCOUNTS OFF THE ASSESSEE ARE NOT PROVED FAULTY ON FRONTS OF ACCURACY OR INCO MPLETENESS. IT IS A TRITE LAW THAT THE ONUS IS HEAVILY ON THE AO WHEN THE BOOKS ARE TO BE REJECTED AND THE INCOME OF THE ASSESSEE IS ESTIMATED. UNLESS, THE ACCOUNTS ARE REJ ECTED FOR EXPRESS REASONS, WHICH IS NOT THERE IN THIS CASE, AND CORROBORATED BY THE CON CLUSIVE EVIDENCE , IN CONSEQUINTI, ANY DECISION ON THE ESTIMATION OF INCOME IS UNSUSTAINA BLE IN LAW. THEREFORE, THE REJECTION OF BOOKS OF ACCOUNT IMPLIED MADE BY THE AO CONFIRME D BY THE CIT (A) IS NOT PROPER AND 18 ITA NOS.1043 TO 1049/PN/2009 & ITA NOS. 850 TO 856/PN/2009. ASSTT. YEARS:2000-01 TO 2006-07. THEREFORE CANCELLED. IN CONSEQUINTI, THE ESTIMATION OF INCOME MADE BY THE AO FOR ALL SEVEN AYS ADOPTING 40% OF THE ELECTRICITY CONNECTIO NS OF THE AREA AS THE BASIS HAS TO BE DISMISSED. ACCORDINGLY, THE ADDITIONAL GROUND RAISED ON THE INVALID JURISDICTION OF SEC. 145(3) OF THE ACT FOR ALL THE SEVEN YEARS IS ALLOWED . 33. IN ALL THESE SEVEN ASSESSMENT YEARS, BOTH THE A SSESSEE AND THE REVENUE RAISED THE GROUNDS CALLING THE MERITS OF THE DECISION OF F IRST APPELLATE AUTHORITY. ALL THESE GROUNDS REVOLVE AROUND THE MERITS OF THE ADDITIONS TO THE RETURN OF INCOME. THESE ADDITIONS OBVIOUSLY FLOW FROM THE ESTIMATIONS WHICH HAVE BEEN REJECTED BY US IN THE PRECEDING PARAGRAPHS CONSEQUENT TO OUR FINDING ON T HE ADDITIONAL GROUND ADJUDICATION OF ALL THESE GROUNDS OF BOTH THE REVENUE AND ASSESS EES APPEAL FOR ALL THE SEVEN ASSESSMENT YEARS BECOMES MERELY AN ACADEMIC EXERCIS E. THEREFORE, WE ARE OF THE OPINION THE GROUNDS ARE DISMISSED AS ACADEMIC . 34. IN THE RESULT, ALL APPEALS OF THE REVENUE ARE DISMISSED AND ALL THE SEVEN APPEALS OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31-01-2012. SD/- SD/- (IC SUDHIR) (D.KARUNAKARA RA O) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 31-01-2012 ASWANI COPY TO:- 1. THE ASSESSEE 2. THE ACIT, CENTRAL CIRCLE-2(1), PUNE. 3. THE CIT (A) I, PUNE 4. THE CIT- PUNE 5. THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T .A.T., PUNE. SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE