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2019 (11) TMI 98 - AT - Income TaxAddition of unexplained credit in the capital account of the partners - HELD THAT:- No specific details of the sundry debtors outstanding at the close of the year 31.3.2013 were filed before the A.O nor any justification was given about the nexus of the cash deposited in the bank account of partnership firm with the available cash in hand with the partners. This issue needs detailed examination by the A.O and therefore the issue raised in Ground No.1 is set aside to the file of A.O for afresh examination which will be in the interest of both the parties. Assessee is also directed to furnish complete details of sundry debtors outstanding in the balance sheet of the partners as on 31.3.2013 and 31.3.2014, sample copies of lorry receipts and also the cash flow statement showing the amount received against the exchange of lorry receipts. Rejection of books of accounts and application of notional percentage 5% on the booking commission - HELD THAT:- Perusal of the paper book shows that no tax audit report has been filed, no such schedules are attached relating to heads appearing in the Profit & Loss Account. Even though the assessee was provided sufficient opportunity by the A.O to give necessary details but the same remain unfulfilled at the end of the assessee. Therefore in our considered view Ld. A.O has rightly applied provisions of Section 145 and rejected the book results shown by the assessee. Application of notional profit of percentage of 5% on the booking commission and making addition in our view notional rate should have been applied on the total turnover of the assessee which in this case is ₹ 4,45,24,641/- (Gross receipts from trucks at ₹ 66,34,388/- and gross freight receipt of ₹ 37,89,253/-). Further in our considered view applying of 5% profit rate is much higher and therefore in the interest of justice and fair play we direct the Ld. A.O to apply the net profit rate of 3.5% on the gross turnover of ₹ 4,45,24,641/-. By applying net profit rate of 3.5% the amount on net profit would arrive at ₹ 15,58,362/-. This net profit shall be deemed to have been arrived after claiming all the expenses including depreciation except remuneration allowable to partners. We also direct the Ld. A.O to compute the remuneration allowable to the partners as per the provisions of law and give the deduction of the same against the profit computed at ₹ 15,58,362/-. Ld. A.O is also directed to give the deduction of the net profit of ₹ 2,32,322/- which stands already disclosed by the assessee in the income tax return filed by it. The remaining amount shall the addition sustained in the hands of the assessee. Further our this decision of adjudicating of Ground No.2 shall not be considered as a precedence for the subsequent years. In the result Ground No.2 of the assessee’s appeal is partly allowed. Addition u/s 44AE - HELD THAT:- Since we have already applied net profit rate on the total turnover of the assessee including freight receipts from running trucks, making a separate addition u/s 44AE of the Act is uncalled for and therefore same is directed to be deleted. In the result Ground No.3 of the assessee is allowed. Calculation of assessed income - income disclosed by the assessee was not deducted from the addition - HELD THAT:- We find force in the contention of the assessee. While adjudicating Ground No.2 in the preceding paras we have already given direction to give set off of the total income of ₹ 2,32,322/- shown in the Income Tax Return and thus it takes care of assessee’s Ground No.4 and therefore the same stands allowed.
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