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2016 (12) TMI 613 - AT - Income TaxRejection of books of account - addition applying net profit rate at 9.75% subject to interest and depreciation and subject to income declared by the assessee - Held that:- As in assessee's own case for assessment year 2005-06 and 2007-08 we modify the order of the ld. CIT(A) on this issue with the direction to the AO to apply the net profit rate of 9.75% subject to depreciation and interest. Apropos rejection of books of account, it was submitted that Coordinate Bench has been taking consistent view that interest and depreciation is to be allowed for application for net profit rate. Therefore, the rejection of books of account is upheld. The ground raised in respect of rejection of books of account is dismissed. Addition in respect of interest on FDR & NSC - income from other sources OR business receipts - Held that:- As during the course of hearing, a query was raised to ld. Counsel for the assessee to demonstrate from the contract whether such FDRs were made for getting the performance guarantee from its banker. The ld. Counsel for the assessee could not point out from the record. However, he submitted that requisite evidence was placed before the AO. In the absence of the contract, it cannot be inferred that the FDRs were made by the assessee was out of commercial expediency. We, therefore, deem it in the interest of justice to restore this issue to the file of the AO to verify whether the FDRs receipts made by the assessee were out of commercial expediency. The AO observed that the assessee was required to make the FDRs with the banker for getting the performance guarantee/ bank guarantee as to the contract executed by the assessee. Thus, he would treat interest as income from business receipt, if the assessee fails to establish the nexus between the contract and the FDRs, in that event, no relief would be granted.- Decided in favour of assessee for statistical purposes. Disallowance on account of sales and administrative expenses incurred at the petrol pump of the assessee - Held that:- The AO did not produce the relevant bills and vouchers as to the above sales and administrative expenses. Hence, the AO disallowed 20% of total expenses of ₹ 13,78,700/- which comes to ₹ 2,75,740/-. Before the ld. CIT(A), the issue was raised who observed that the expenses are not fully verifiable but some disallowances were considered by him justified and the ld. CIT(A) thus disallowed the expenses to the extent of ₹ 1,37,870/- . Hence in view of the above facts and circumstances, we concur with the finding of the ld. CIT(A) on this issue Addition u/s 69B - without making any reference to the Valuation Officer’s valuation report - Held that:- The AO has made this addition on the ground that the assessee was required to furnish the details of expenditure incurred for building construction during the year under consideration. The AO observed that the case of the assessee has been referred to the Valuation Cell in the preceding year. The Valuation Officer for the year under consideration has determined the value at ₹ 8,44,645/- as against ₹ 6,00,000/- declared by the assessee. We find that the order of the ld. CIT(A) is cryptic and non-speaking. Therefore, the order of the ld. CIT(A) is set aside and the finding of the AO is upheld. - Decided in favour of revenue Addition on account of unexplained cash deposit into the bank - Held that:- DR insisted that findings of the ld. CIT(A) may be modified to the extent of that the AO would be at liberty to verify claim of the assessee in relevant assessment year. We therefore, modify the findings of the ld. CIT(A) to the extent that the AO would be at liberty to verify the claim of the assessee in the relevant assessment year. Addition on sales tax refund - AO treated the same as income from other sources - Held that:- The contention of the assessee is that once books are rejected ad profit is estimated then no separate addition in respect of sales tax refund ought to have been made. In our considered view, this issue needs reconsideration at the end of AO. Hence, this issue is restored to AO’s file for decision afresh.
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