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2017 (12) TMI 912 - AT - Income TaxRejection of books of accounts - G.P. rate determination - Held that:- The validity of the rejection of books of account is not an issue now as the same is not pressed by the Ld. Counsel for the assessee before us. Further, the CIT(A)’s decision to estimate the profits applying rate of 15% is also not approved as the same is not supported by any material or any case laws. AO is directed to examine the allowability of statutory deductions u/s.40(b) relating to the remuneration to the partners and u/s.32 relating to the depreciation out of the profits so estimated by the AO in the remand proceedings and pass a speaking order on this issue after considering the decisions relied upon by the Ld. Counsel for the assessee Shri Ram Jhanwar Lal Vs. ITO and Ors (2008 (7) TMI 505 - RAJASTHAN HIGH COURT. Assessee is also directed to discharge the onus from his side by furnishing the relevant comparable cases during the remand proceedings before the AO to help him taking best decision relating to profit percentage. Accordingly, Ground No.2 raised by the assessee is partly allowed for statistical purposes. Addition u/s.69 - we find the CIT(A) is not fair in directing the AO to assess the said amount of ₹ 20 lakhs of capital introduced by the partner of this firm. We find there are similar capital introduction by other partners and AO/CIT(A) did not consider need of taxing the same in the hands of the firm. In our view, considering the principle of consistency, this amount should also be examined for taxation in the hands of the partner involved. As such, there is no nexus established by the Revenue that the said amount of ₹ 20 lakhs has genesis in the firm’s profits. Accordingly, Ground No.4 is allowed in favour of the assessee.
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