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2016 (9) TMI 1429 - AT - Income TaxRejecting the books of accounts - CIT-A confirming the net profit rate of 15% against the declared rate of 10.12% and net profit rate 29.52% estimated the ld. A.O. - Held that:- In the year 2005- 06, the turnover of gross contract receipts was ₹ 12102939/- and whereas gross receipts in the year was ₹ 34012026/-. Whereas the gross receipt in the A.Y. 2006-07 was ₹ 46441234/- . ₹ 46114965 is the gross contract receipts for the year 2004-05 and 2005-06, in our view, in fact the gross receipt of 2006-07 was ₹ 46441234/-. Thus, the gross receipts of 2006-07 is matching the gross receipts for the earlier two years. Therefore, to apply the NP rate for the year 2005-06 @ 29.52%, in our view, was not correct and therefore, a rational view is required to be taken estimating the profit of the assessee. The ends of justice would be served if the estimate of profit of the assessee is estimated at 17% subject to depreciation, interest and remuneration to the partners. Thus, the appeal of the assessee is dismissed and appeal of the revenue is partly allowed on this ground. Disallowing on account of depreciation - use of machinery in the assessment year under consideration - Held that:- AR has failed to point out the bill showing that it was purchased prior to 30/03/2006 and was put to use by the assessee in the year under consideration. Since the assessee has failed to produce any document showing the uses of machine in the assessment year under consideration, therefore, depreciation on the machine is disallowed. Accordingly, this ground of assessee appeal is dismissed. Addition of outstanding liabilities - Held that:- AO was not required to travel and examine the outstanding liabilities of wages which was specifically disallowed by the Assessing Officer in the earlier years and the order of the Assessing Officer was set aside after upholding the rejection of books and specific directions were issued to estimate the profit on the basis of the past history. Since the profit of the assessee has been estimated @ 17% of the turnover by the Tribunal hereinabove, that will take care of all the disallowances earlier made by the Assessing Officer in its assessment year and therefore, no specific addition should have been made by the Assessing Officer under the outstanding liability (wages payable), as the said adjudication by the Assessing Officer is beyond the scope of the remand proceedings - no hesitation to delete the addition made towards unexplained liability shown in the balance sheet. Moreover, the Assessing Officer has made the disallowances U/s 68 of the Act, in view of the judgment of the Hon’ble Jurisdictional High court in the case of CIT Vs. G.K. Contractor [ 2009 (1) TMI 840 - RAJASTHAN HIGH COURT], once the books are rejected and the income of the assessee is estimated, no separate addition can be made U/s 68 of the Act. - Decided in favour of assessee.
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