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2020 (11) TMI 175 - AT - Income TaxValidity of assessment order passed by the AO for want of a valid notice u/s.143(2) - HELD THAT:- Assessee has not pointed out how the notice issued by the AO u/s.143(2) of the Act on 25-08- 2009 is invalid. Further, the assessee has participated in the assessment proceedings in pursuant to the notice u/s.143(2) of the Act as well as notice u/s.142(1) - when this objection was not raised by the assessee before the authorities below and not disputed the service of notice issued u/s.143(2) of the Act, then in view of the provisions of Section 292BB of the Act, the assessee cannot be allowed to dispute the service of notice issued u/s.143(2) of the Act. It is a matter of fact that the AO issued notice u/s.143(2) on 25-08-2009, which is within the limitation period as prescribed under such section, accordingly, the Ground No.3 of the assessee’s appeal is dismissed. NP estimation - rejection of books of accounts - Addition being the Net Profit @10% adopted by the Assessing Officer as against the Net Profit declared by the assessee as 5.7% - HELD THAT:- Net Profit declared by the assessee in the preceding year as well as in the subsequent year, which was accepted by the Assessing Officer is a reasonable and proper guidance to estimate the income for the year under consideration. Having considered the fact that the Net Profit declared by the assessee is more than the average of Net Profit for the AYs.2007-08 and 2009-10, then, even after rejection of books of accounts, no trading addition is called for. Addition made to the gross receipts of the assessee on account of the receipt from M/s.Nagarjun Construction Co., for ₹ 15,58,492/- it is noted that in response to notice u/s.133(6) the said company has furnished information of payment of ₹ 59,70,453/- as well as ₹ 15,58,492/- to the AO. AO further noted that both the TDS certificates are dated 21-06- 2008. The assessee has not disputed the fact that he has reported only ₹ 59,70,453/- but contended that this amount of ₹ 15,58,492/- is part and parcel of ₹ 59,70,453/-. This is not the fact appearing from the certificates issued by M/s.Nagarjun Construction Co. Though the payment was not received by the assessee during the year under consideration, however, once the said payment was accrued and become due in the year under consideration, the actual receipt of the payment becomes irrelevant when the assessee is following the Mercantile System of accountancy. Since the assessee has not claimed the TDS credit against the said amount, therefore, the corresponding TDS credit shall be allowed to the assessee once the said amount is added to the gross receipt of the assessee. Hence, to the extent of the addition in the gross receipts is confirmed. Protective addition on account of un-explained capital introduced by the two partners of assessee-firm - HELD THAT:- Since the AO has made only protective addition in the hands of assessee-firm and proposed to make a substantive addition in the hands of partners, therefore, the fate of the protective addition is depending on the outcome of the substantive addition made in the hands of the partners. Nothing has been brought on record about the substantive addition, if any, made in the hands of the partners of the assessee-firm and further, whether the said addition was challenged and sustained by the CIT(A) or not? Accordingly, when the impugned order was passed by the CIT(A) ex-parte and without considering this material fact of the outcome of the substantive addition, if any, in the hands of the partnership firm, this issue is set aside to the record of the CIT(A) for fresh adjudication, after considering the outcome of the substantive addition, if any, made in the hands of the partners. Needless to mention that assessee should be given a fair opportunity of hearing, before passing a fresh order.
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