TMI Blog1977 (7) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ase was discussed in the presence of the ITO and the assessee s counsel and it was noticed that there were some mistakes in the figures of gross receipts. The original certificate dt. 14th Feb., 1972 which was issued by the P.A. to the Executive Engineer, contained certain mistakes. The assessee s counsel had showed to the AAC and the ITO a detailed statement containing nine different columns for the period 1st April 1970 to 31st March, 1974. The AAC referred to the order sheet entry dt. 22nd Oct., 1975 when the certificate was discussed with the ITO and the counsel for the assessee. According to the column 4(b) of the detailed statement, the gross receipts up to 12th running account bill paid on 29th March, 1972 came to Rs. 5,20,958. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets i.e. compressor amounting to Rs. 31,155 two uack hammers amounting to Rs. 3,117 and one crusher amounting to Rs. 8,336 totalling Rs. 42,609. It was stated before the ITO that these assets had been transferred from the firm of the same name which had its Head Office at Delhi, but no copy of account of that firm was produced. The ITO therefore, added this amount as income from undisclosed sources. The AAC on appeal was satisfied that adequate opportunity was not allowed to the assessee to prove the source of these investments and, therefore, he admitted fresh evidence to prove that these assets were received from Delhi firm in which the assessee s partners were also the partners. The AAC showed the fresh evidence to the ITO Copies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide the question of explanation regarding the source of the new machinery brought into books this year. The I.T.O. shall give an opportunity to the assessee to prove its case in this regard. 6. The third ground in the Department s appeal challenges the order of the A.A.C. reducing the net profit rate from 15 per cent to 12 per cent and further allowing depreciation of Rs. 19,816. This ground of appeal to some extent is suprising because the depreciation had been allowed by the I.T.O. himself. Therefore, the dispute is only whether the net profit rate before depreciation should be 15 per cent or 121/2 per cent. This point is directly connected with the assessee s appeal in which the assessee challenges the application of net profit rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, at the time when the contract is entered into, it is clearly agreed between the contracting parties that some of the building materials will be supplied by the other party to the contract, that is, the person or authority on entrusting the construction work to the contractor and that credit will have to be given by the contractor for the materials thus received and the rates at which the credit is to be given is also agreed upon between the contractor and the other party to the contract. The facts in that case were that the contract was entered into with the Railway authorities and it was agreed that cement and iron had to be supplied by the Railway authorities for the execution of the work and no accounting of the cost of those ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Government on the rates and place of delivery mentioned in Schedule A of the tender document. On page 34 is given an extract of cl. 12 according to which the remaining cement or steel at the end of the contract has to be returned to the Government. The assessee has also filed a certificate on page 27 from the Executive Engineer that the assessee has returned the surplus steel weighting 5.175 M.T. to the Department on completion of the work. It is, therefore, clear that when the contract was entered into the assessee clearly knew that the Department had to supply cement and steel at fixed rates and only notionally the cost of cement and steel was included in the total amount of contract work, but when the bills were made, the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the assessee has filed the assessment order of M.L. Talwar Company of New Delhi for the Asst. yr. 1974-75 in which a net profit rate of 10 per cent has been applied under s. 143(3) as against 9.4 per cent disclosed. Another assessment order by the ITO, Bhopal for the Asst. yr. 1974-75 in the case of M/s. Manoharlal Talwar (Mulas Sheds,) has been filed to show that net profit at 10 per cent on gross receipts has been applied. The assessee contends that the contract taken in 1968 for execution in 18 months was completed 5 years and therefore there was less profit earned. Looking to these facts, the AAC having applied twelve and a half per cent net profit rate cannot be said to have erred on the side of excessive leniency as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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