TMI Blog2016 (11) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... .A Nos. 81,82(Asr)/2015, I.T.A No. 113(Asr)/2016 - - - Dated:- 15-6-2016 - Sh. A. D. Jain, Judicial Member And Sh. T. S. Kapoor, Accountant Member Appellant by: Sh. J.S Bhasin (Adv.) Respondent by: None. ORDER Per T. S. Kapoor ( AM ) These are three appeals relating to Asst. Years 2010-11, 2011-12 2012-13. The ITA Nos.81 82 (Asr)/2015 has been filed by assessee against the consolidated order of CIT(A)-II, Amritsar, dated 2.12.2014 and ITA No.113(Asr)/2016 has been filed by Revenue against the order of CIT(A)-II, Amritsar, dated 4.11.2015. 2. In ITA Nos.81 82 (Asr)/2015, the assessee has taken the similar grounds of appeal and only differences are due to figures. The issues raised by assessee is the action of learned CIT(A) by which he had upheld the application of 10% of net profit rate and has also upheld the action of learned Assessing Officer of separately making addition of interest on fixed deposits receipts which were claimed to have been held as business assets. The assessee is also aggrieved with the denial of depreciation claim from the profits worked out by estimation on % age basis. 3. In ITA No.113(Asr)/2016, the Revenue is aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itsar Bench vide its order dated 14.11.2002. Therefore, it was prayed that the appeal of Revenue be dismissed and appeals of assessee be allowed. 9. On a question from Bench as to why not these cases be restored to Assessing Officer for fresh assessment in view of the decision of Punjab Haryana High Court in the case of Telelinks vs. CIT, Bathinda, the learned AR submitted that learned CIT(A) in Asst. Year 2012-13 has considered all relevant parameters and therefore, there is no point in sending back the cases to Assessing Officer. 10. We have heard the learned AR and have gone through the material placed on record. We find that in the three years the assessee continues to be in the same business as Govt. Contractor and Assessing Officer in these three years rejected the books of accounts and applied net profit rate of 10% in Asst. year 2010-11 2011-12 by holding as under: This state of affair cannot be accepted and in view of same application of past profit rate in this case will not be correct as this will give leeway to the assessee to report any income and get away with estimated profit. In view of above mentioned reasons, in the present case, as AO has found cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. In view of above decision, it is clear that assessee s current year facts cannot be compared with earlier year case in quality of nature of work and also in respect of huge quantum of unverifiable and bogus expenses. Hon ble Supreme Court has held in the case of CST V/s H.M. Esuf Ali H.M. Abdul Ali 191 ITR 271 (SC) that the AO is the best judge of the situation and CIT(A) cannot substitute her judgment for that of the AO unless there were compelling reason for doing so. The Hon ble Supreme Court further observed that estimation always have some guess work and in quasi judicial authority must record reasons for not accepting the AO s estimate. The Hon ble P H High Court has said in the case of CIT V/s Palwal Co- operative Sugar Mills Limited 284 ITR 153 (P H) as under: Every judicial/quasi-judicial body/authority must pass a reasoned order which should reflect the application of mind of the concerned authority to the issues/points raised before it. The requirement of recording reasons is an important safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and minimizes arbitrarin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction Private Limited in ITA No. 44 of 2009. The Hon ble High Court has also taken into consideration that CBDT circular no 29-D(XIX-14) dated 31.08.1965 is not applicable as the rule 5AA of the Income Tax rule has been amended with effect from 02.04.1987. It was observed:- Firstly, the circular no 29D dated 31.08-1965 which prescribed to allow depreciation out of the estimated profit, is not applicable, as the Rule 5AA of the income Tax Rules has been omitted with effect from 2.04.1987. This aspect was discussed by this High Court and it was observed in the case of CIT Vs Bishambhar Dayal Co. 210ITR 118(Alld) that the Income Tax appellate Tribunal relied upon a circular of the Central Board of Direct Taxes No. 29D (xix) of 1965, F. No. 45/239/ 65-ITC, dated 31.03.1965. Under this circular, the Board had issued instructions that where income is proposed to be computed by applying a net rate and the assessee hs furnished the prescribed particulars for the claim in respect of depreciation, the depreciation should be allowed separately and deducted out of the gross profits. The order of the Income Tax appellate Tribunal is in conformity with the circular issued by the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his grounds of appeal, the appellant had relied upon the following case laws:- (i) Decision of Hon ble ITAT, Amritsar in the case of Vidya Sagar Saini, Pathankot vs DCIT in ITA No. 80/2012 dated 13-02- 2013. (ii) Decision of Punjab Haryana High Court in the case of CIT vs Earth Tech Engineers in ITA No. 689 of 2013 dated 13-03-2014. (iii) Decision of Hon ble Punjab Haryana High Court in the case of Tellinks vs CIT Bhatinda in ITA no. 269 of 2014 and 225 of 2014 dated 20-11-2014. (iv) Decision of hon ble ITAT, Amritsar in the case of ACIT vs Arihant Builders in ITA No. 401 (Asr) /2011. (v) Decision of Hon ble ITAT, Amritsar in the case of Construction Engineers Srinagar, Addl. CIT in ITA No.266/Asr/2010 for A.Y.2006-07. (vi) Decision of Hon ble ITAT, Chandigarh in the case of Jaswant Singh Contractor vs. ACIT, Circle Kurushetra in ITA No.1109/Chd/2011 dated 29.02.2012. (vii) Decision of Hon ble ITAT, Amritsar in the case of M/s Satish Aggrawal Co. vs. Addl. CIT in ITA no. 483(Asr)/2013 dated 26.08.2013. The past history of the last five years of the case of the appellant was as under: A Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income was estimated by applying net profit rate, depreciation was allowable as per circular no. 29D dated 31-08-1965. (b) Decision of hon ble Rajasthan High Court in the case of Bharat Construction Co vs CIT reported in (2002) 258 ITR 140. (c) Decision of hon ble ITAT, Amritsar in the case of ITO vs Khosla Construction Co. dated 8 Dec, 2000. It is not the case of the AO that the Assets on which depreciation of ₹ 32,37,428/- had been claimed by the appellant were not put to use for the business purposes of the appellant. Even the board s circular No. 29D(XIX-14) dated 31-08-1965 duly supports the case of the assessee. Even the following decisions support the claim of depreciation after applying net profit rate: - (i) Decision of Hon ble Supreme Court of India in the case of CIT vs Poddar Cement (P) Ltd reported in 226 ITR 625 (ii) Decision of Hon ble Punjab Haryana High Court in the case of CIT vs Fazilka Dabwali Tpt Co. (P) Ltd reported in (2004) 270 ITR 378 (iii) Decision of Hon ble Punjab Haryana High Court in the case of CIT vs Metalman Auto (P) Ltd., reported in 336 ITR 434. The AO has not held anywhere in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Daljit Singh and Bros (PKT),in its decision in ITA No.201(Asr)/2002 vide its order dated 14.11.2002, under similar facts and circumstances has held that once the books of accounts has been rejected the Assessing Officer cannot fall back upon the same books for making addition on account of interest accrued on the FDRs reflected in the books of account. The findings of the Hon ble Bench as contained in para 6.6 are reproduced below. 6.6 After considering the rival submissions and going through the material available on the record, it has been noticed that the Assessing Officer rejected the books of account of the assessee and applied a net profit rate of 8% on the gross receipts of the assessee. In other words, the Assessing Officer has not accepted the books results. On the other hand, he took the figure of ₹ 2,94,700/- on account of interest accrued on FDRs as reflected by the assessee in the books of account. We, therefore find substantial force in this contention of the learned counsel for the assessee that once the books of account has been rejected, the Assessing Officer cannot fall back upon the same books for making addition on account of interest accru ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
