Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 322 - AT - Income TaxRejection of books of accounts of assessee invoking the provisions of Section 145(3) - HELD THAT:- Assessee Company has purchased few materials locally on urgent basis in cash or part payment made for the same in cash which constitutes 1.15% only of total revenue and 1.30% of total material purchased by the assessee Company during the relevant year. These materials were used in projects only. The material purchased in cash or part payment made in cash is fully supported by invoices or vouchers. The same invoices were produced during the assessment proceeding. Each payment duly supported by the external invoices. Hence, this is incorrect contention that these are supported by internal vouchers only. Rejection of books of account on the basis of insignificant defects in all respect, is not justified and books of account deserves to be accepted. Before invoking the provisions of Section 145(3) of the Act, the AO has to bring on record material on the basis of which he has arrived at the conclusion with regard to correctness or completeness of the accounts of the assessee or the method of accounting employed by it. In the instant case, it was not the case that the assessee had not followed either cash or mercantile system of accounting. It was also not the case that the Central Government had notified any particular accounting standard not followed by assessee. Hence, the second part of sub-section (3) of section 145 would not apply to the instant case. Addition on estimation basis by applying NP rate of 8% subject to depreciation and interest - HELD THAT:- Assessee company declared income of ₹ 35,10,760/- after depreciation of ₹ 5,31,296/- and finance or interest expenses of ₹ 40,75,834/-. Thus, company has shown gross income of ₹ 81,17,890/- i.e. 6.68% of gross contractual receipt of ₹ 12,16,08,395/- which is significant looking to second year of the operation in the contract business and particularly when the contracts were awarded by private parties in remote area. There is no justification for estimation of income made by the AO @ 8% of gross contractual receipts. Separate receipts on account of consultancy income and estimated income after deduction of certain expenses - HELD THAT:- We direct the AO to allow deduction of 40,75,384/- instead of ₹ 29,84,683/- as interest cost while income derived according to net profit formula. Disallowance treating the late deposit of employee contribution as income u/s 2(24)(x) read with section 36(1)(va) - HELD THAT:- It is clear that entire contributions received from the employees have been deposited before filing of return of income u/s 139(1) of the Act. Accordingly, no disallowance is warranted - Appeal of the assessee is allowed.
|