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2018 (11) TMI 1541 - AT - Income TaxN.P. determination - assessee is a Partnership Firm, engaged in the business of civil construction - assessee is a Partnership Firm, engaged in the business of civil construction - Held that:- neither the authorities below has specified circumstances under which it could have been presumed that the reported rate of profit is low nor has cited any comparable case, in support, for application of “high profit rate” on gross total receipt - neither the authorities below has specified circumstances under which it could have been presumed that the reported rate of profit is low nor has cited any comparable case, in support, for application of “high profit rate” on gross total receipt. There is a consistency in judicial opinion that after rejection of books of accounts, income is to be computed after due consideration of the past history of the assessee. We find that the authorities below were in gross ignorance determining NP rate without consideration of the past history of the appellant and without any instance of some comparable case on identical facts in applying profit rate of 8%, in the case of the assessee - it would be just, fair and reasonable to estimate the income of the assessee at the Net Profit rate of 5.75% of the gross total receipts of ₹ 15,26,42,919/- [as adopted by CIT(A)]for the year under appeal. Thus, the assessee gets relief of 2.25% in estimation of profit rate on the gross total receipts, as against the 8% net profit rate estimated by the Authorities below. - Decided partly in favour of assessee Addition u/s 41 - outstanding liability in the accounts of trade creditors appearing as payable in the Balance Sheet - Held that:- CIT(A) had not brought anything on record to prove that any amount or benefit had been obtained by the appellant during the year under consideration against liabilities which is allegedly ceased to exist moreso when no such specific allowance in respect of material purchased was allowed in present assessment where income was initially and finally upto this stage is arrived after application of flat rate of profit. It is also an established proposition of law that onus is on the revenue to establish that any benefit has accrued to the appellant against alleged liabilities during the year under consideration. In the light of the provisions of section 41(1) of the Act and the Judgment of Hon’ble Apex Court in the case of ‘Kesaria Tea Company [2002 (3) TMI 1 - SUPREME COURT] and ‘CIT Vs Sugauli Sugar’ [1999 (2) TMI 5 - SUPREME COURT], we hold that the action of the Ld CIT(A) in making addition is unsustainable on facts and in law. Therefore, addition of ₹ is deleted. - Decided in favour of assessee Disallowing statutory claim of Depreciation - Held that:- Claim of Depreciation has already been taken care while applying N.P rate of 6% and therefore, no further allowance is called for. Thus Ground is rejected. Separate addition against Income Tax refund - Held that:- During the course of hearing the Counsel of the assessee fairly conceded that this represents Interest on Income Tax Refund, which is liable for addition. We therefore, confirm the addition. Separate addition towards amounts received as Trade Tax Refund - Held that:- We find that VAT has been deducted by various Departments on contract payment and the assessee has claimed debit of ₹ 46,08,996/- against VAT paid. Correspondingly assessee has received Refund of Trade Tax amounting to ₹ 13,88,945/-. Since, no specific deduction has been allowed in respect of VAT paid and being deducted by various Department on the same analogy, Trade Tax Refund cannot be separately added. - Decided in favour of assessee Penalty u/s 271(1)(c) - Held that:- Since, the basis for imposition of penalty was the addition of ₹ 90,33,414/- being the alleged unverifiable sundry creditors, which is stood deleted in quantum appeal as above,therefore, the consequential penalty levied u/s 271(1)(c) by the CIT(A) would not survive and as such deleted.
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