9911796707
TMI Blog2006 (3) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... this case are that the return of income was furnished on 31st Oct., 2004 declaring an income of Rs. 1,56,308. The AO observed that the assessee, a transport contractor, had not properly maintained the books of account. It was further noted that in the year under consideration, the assessee had shown GP rate of 3.84 per cent on contract receipts of Rs. 2.01 crores as against preceding year's GP rate of 2.65 per cent and contract receipts of Rs. 3.01 crores. After rejecting the books of account, he applied 5 per cent GP rate to make an addition of Rs. 2,33,128. The CIT, vide show-cause notice dt. 13th July, 2005 observed that the assessee had shown lower net profit, which was not properly examined by the AO. She further noted that intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised Representative has placed on record a copy of the order passed by the Tribunal in assessee's own case for the immediately preceding year in ITA No. 572/Ju/2005 in which it was directed to apply GP rate of 3 per cent on the declared receipts. As against this, the assessee itself declared GP rate of 3.8 per cent which was enhanced by the AO after rejecting books of account to 5 per cent enabling the making of addition of Rs. 2,33,128. From the assessment order, it is observed that the AO has duly considered the GP rates of the earlier years and nowhere there is reference to the net profit rate. It is true that the AO after rejecting the books of account has option either to apply the GP rate and then allow deductions of indirect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these factors are considered in totality, it becomes apparent that the application of GP rate at 5 per cent by the AO in comparison with 3 per cent GP rate finally held to be applicable in the immediately preceding year, cannot be said to be on lower side by any standard. 4. The next objection taken by the learned CIT is against the provision of Rs. 16,57,350 made by the assessee in its books of account, which in her opinion was not properly examined by the AO. 5. From the copy of balance sheet, it is observed that the total amount under the head 'Current liabilities' is at Rs. 16,60,350. Its detail is available as per Schedule No.9, which divulges that the provision/expenses payable was at a sum of Rs. 16,57,350. On going through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Allahabad High Court in the case of CIT vs. Bhanwari Lal Bansidhar (1998) 148 CTR (All) 533 : (1998) 229 ITR 229 (All) has categorically held that where the AO has made trading addition after rejecting books of account and applied GP rate, no separate addition under s. 40A(3) can be made. The AO's action is duly supported by the aforesaid judgment. It is pertinent to note that the CIT gets revisional power under s. 263 where assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue. The twin conditions are required to be satisfied simultaneously. If an order is only erroneous and not prejudicial to the interest of the Revenue, that case does not fall within the sweep of s. 263. In the lik ..... X X X X Extracts X X X X X X X X Extracts X X X X
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