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2018 (5) TMI 954 - AT - Income TaxAssessment u/s 144 - addition of contract receipts - CIT-A reduced the net profit rate from 12% to 8% as against 2.21% shown by the assessee applying the provisions of section 44AD - Held that:- Explanation(b)(ii) (as applicable) to section 44AD defines ‘eligible business’, as a business whose total turnover or gross receipts in the previous year do not exceed an amount of ₹ 40 lakhs. The assessee’s gross receipts from the eligible business in the concerned previous year were of ₹ 8,43,16,720/-, i.e., much above the cap prescribed by section 44AD. Thus, the provisions of section 44AD of the Act are not applicable and they have been erroneously applied by the ld. CIT(A). Books of account were rejected. Therefore, the past history of the assessee is the best guide in determining the rate to be applied. As per the assessee’s past history (impugned order pages 8 to 9), in A.Y. 2010-11, the rate of 4.17% was applied. In A.Y. 2009- 10, the rate applied was 3.67%. In A.Y. 2008-09, the rate assessed was 4.63%. So, as per this past history of the assessee, the average rate comes to 4.16%, which is directed to be applied, as against that of 2.21% shown by the assessee. Unexplained introduction of capital - Held that:- The intangible addition made to the book profits during an assessment proceedings is as much a part of the assessee’s real income, as that disclosed in the books of account. That being so, the assessee can very well avail the benefit of such addition for explaining the source of cash credits u/s 68 of the IT Act, i.e., unexplained introduction of capital in the present case. In view of the above, accepting the assessee’s alternative plea, the addition of ₹ 6 lakhs is ordered to be telescoped against the trading addition of ₹ 1,01,18,006/-. Addition u/s 43B - the amount was shown as payable, there was no evidence of actual payment thereof - CIT(A) has confirmed the addition - Held that:- The matter, as rightly contended, is covered in favour of the assessee by the order in ‘CIT vs. Banwari Lal Banshidhar’ (1997 (5) TMI 37 - ALLAHABAD High Court), wherein, it has been held that when G.P. rate is applied, that would take care of everything. This addition is, hence, deleted.
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