TMI Blog2014 (10) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... rst return of income of the partnership firm - it was not the first year of the partnership firm and there was no change in the partnership - The AO also had not established how and in what manner, the assessee failed to comply with the provisions of section 184 of the Act – thus, the AO was not justified in making the disallowance and the CIT(A) rightly deleted the same – the order of the CIT(A) is upheld – Decided against revenue. - ITA No.68/Jodh/2012, ITA No.272/Jodh/2013 - - - Dated:- 25-7-2014 - Hari Om Maratha, JM N K Saini, AM,JJ. For the Petitioner : Shri Amit Kothari For the Respondent : Shri N A Joshi, DR ORDER Per: N K Saini: These two appeals by the department relating to the same assessee are directed against the separate orders of Ld. CIT(A) dated 30/11/2011 19/02/2013 for the A.Ys. 2008-09 2007-08 respectively. The main issue is common in these appeals, which were heard together, so these are being disposed off by this consolidated order for the sake of convenience. 2 First we will deal with I.T.A.No.68/Jodh/2012. The only ground raised in this appeal reads as under: On the facts and in the present circumstances of the case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of previous records and past history of the case. The Assessing Officer vide letter dated 21/11/2011 furnished the remand report and submitted as under:- From A.Y. 2003-04 to 2007-08, the assessee shown the net profit from 2.41% to 4.06% and the A.0. estimated the NP varying from 4%to 6%. 0n1y in A.Y, 2003-04 assessee preferred appeal till ITAT where in the NP rate was held at 4%. A perusal of the past assessment records of these assessment years, it revealed that in all these assessment years books of accounts were produced by the assessee and trading additions were made after due examination. However, in present assessment year i.e. 2008-09, assessee never produced books of accounts and its supporting vouchers for examination even after repeated requests. As is evident from the assessment records the assessee did not produce even the list of creditors and debtors, In absence of bare minimum requirement of supporting documents, in my humble opinion the then A.0. was justified in his act. Without prejudice to above, while estimating the taxable income for assessment year 2008-09, the commission income of ₹ 67,370/- was left to arrive at the assessed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Net business profit after bank interest commission Add: Salary Interest to partners 1930894 311099 418903 950126 535847 2268118 522629 2751938 473416 3 Net profit before salary and interest 2241993 1154239 1485973 2790747 3225354 4 Contract receipts 77151858 50250682 30163028 60683858 62272268 5 Net profit percentage (3/4) 2.91% 2.30% 4.93% 4.60% 5.18% 6 Additions by A.O. Trading addition Under disclosure of receipts Addition u/s 40(1)(ia) Disallowance of lump sum expenses u/s 40A(3) 0 0 0 859640 272763 855788 265000 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to compute the net profit subject to deduction of interest and salary paid to partners. The issue is decided accordingly and balance addition if any is deleted. Now the department is in appeal. 6. Learned D.R. strongly supported the order of the Assessing Officer and submitted that the assessee did not cooperate in spite of various opportunities given and did not produce books of accounts along with bills and vouchers, therefore, the Assessing Officer had no option except to estimate the income and the Ld. CIT(A) was not justified in allowing relief to the assessee. 7. In his rival submissions, learned counsel for the assessee strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the submissions made before the Ld. CIT(A). 8. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is noticed that the assessee did not produce the bills and vouchers for verification before the Assessing Officer. Therefore, there was no other option except to estimate the income, however the estimate by applying the net profit rate of 12% by the Assessing Officer was withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t rate declared by the assessee was better than the net profit rate declared in the earlier years and the Assessing Officer had not given any basis while estimating the net profit rate at 6% on the gross receipts shown by the assessee. We therefore, do not see any merit in this ground of the departmental appeal. 13. The next issue vide Ground No. 2 relates to the deletion of disallowance of ₹ 5,22,629/- made by the Assessing Officer on account of salary and interest paid to the partners. 14. Facts relating to this issue, in brief, are that the Assessing Officer disallowed the interest and remuneration of ₹ 5,22,629/- credited to the partners capital account while invoking the provisions of section 185 of the Act. Being aggrieved, the assessee carried the matter to the ld. CIT(A) and submitted as under:- 3.1 It is respectfully submitted that the provisions of section 185 can be invoked only when the assessee failed to comply with the provisions of the section 184(5). The ld Assessing Officer has totally failed to establish in his assessment order, how the appellant was failed to comply with the provisions of sect 184 of the Act. 3.2 The provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the law that income cannot be taxed twice. 15. The learned CIT(A), after considering the submissions of the assessee, held that the provisions of section 185 of the Act were not applicable in the case of the assessee. Accordingly, disallowance made by the Assessing Officer was deleted. Now the department is in appeal. 16. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it appears that there was no change in the partnership deed. The provisions contained in section 184 of the Act requires that a certified copy of the partnership deed is to be furnished along with return if there is change in the partnership deed or it was the first return of income of the partnership firm. In the present case, it was not the first year of the partnership firm and there was no change in the partnership. The Assessing Officer also had not established how and in what manner, the assessee failed to comply with the provisions of section 184 of the Act. Therefore, the Assessing Officer was not justified in making the impugned disallowance and the Ld. CIT(A) rightly deleted the same. In that view of the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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