9911796707
TMI Blog2014 (2) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... income has been computed by applying net profit rate, deduction u/s 32 is to be deemed to have been already given full effect. 4. That on the facts and in the circumstances of the case, the ld. CIT(A) has failed to appreciate that every assessment year is independent one and AO applied n.p. rate of 7% due to peculiar facts and circumstances in this assessment year. 5. That the order of the Ld. CIT(A) be vacated and that of the AO be restored.. 6. That the appellant craves leave to add, amend or withdraw any ground of appeal before or at the time of hearing of the appeal." 2. The brief facts of the case in the appeal of the Revenue are that the assessee is a building contractor and deriving business income by executing work mostly for the MES at places like Barmer, Bathinda, Jodhpur, Belgum etc. The assessee was asked to produce books of account and vouchers and on verification, the AO has given his finding vide para 4 & 5 of his order, which for the sake of clarity is reproduced as under: "4. On 5.3.2008 Sh. C.P. Jandial, Adv. Sought adjournment and case was adjourned to 11.3.2008. On 11.3.2008 Sh. C.P. Jandial, Adv. Alongwith Sh. Ashwani Kumar Accountant attending the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses but no vouchers of these expenses has been produced by the assessee. g. Assessee has debited a sum of Rs.5,91,18,949/- on account of material and carriage. This account appear at ledger folio No.95 to 110. No vouchers of carriage (truck payments) and other purchase has been produced. h. During assessment proceedings it is noticed that assessee has made purchases from M/s. Navkar Agency as under (ledger folio 306-copies of the purchase vouchers duly signed by assessee): Sl.No. Item Bill No./Date Amount 1. Cement 234/27.5.2005 25,600/- 2 Do 254/2.7.2005 25,200/- 3. Do 336/25.7.2005 25,600/- 4. Do 369/3.8.2005 39,000/- 5. Do 395/20.9.2005 39,000/- 6 Do 418/30.08.2005 26,600/- 7. Do 424/1.9.2005 34,320/- 8. Do 436/6.9.2005 39,600/- 9. Do 495/1.10.2005 39,600 Total 2,94,520/- Perusal of the purchase bills as produced by the assessee reveals that all these are cash purchases which means that the assessee has made the cash payment at the time of purchase where as in the books of account assessee has shown these purchases as credit and have shown cash payment on different dates of Rs.20,000/- or less. 5. No evidence/confirmation of creditors file. No details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmations from most of the creditors and some of the creditors had confirmed balances as per books of account of the assessee. The Ld. CIT(A) compared expenses with earlier years and found that they were compared favorably with the expenses as claimed in the impugned order. The Ld. CIT(A) also observed that there being no escalation clause in the agreement with the MES Authorities and the assessee had explained before the AO about the escalation in the Steel and Cement prices to a large extent . Vide para 20 of CIT(A)'s order, it was found that the AO has not been able to rebut the plea of the assessee about escalation of 26% and 20% increase in the rates of Steel and Cement, besides other increases in the wages, salary and expenses . No adverse material has been brought on record to justify the application of 7% net profit. Therefore, the ld. CIT(A), in the interest of justice applied the net profit rate of 4% which is more than the average net profit rate for the last three years but confirmed the rejection of books of account u/s 145(3) of the Act. The Ld. CIT(A) also allowed interest and salary and also depreciation as claimed by the assessee vide para 22 & 23 of his order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010/CHD/2011, ITAT, Chandigarh Bench, Chandigarh. iv) Naresh Katare Contractors vs. ACIT ITA No.567(Agra)/2012, ITAT, Agra Bench, Agra. Therefore, he prayed to allow interest and salary to the partners. 6.2. He also relied upon the decisions of various courts of law with regard to allowability of depreciation as under: i) CIT vs. Vinod Kumar Bhatia 211 ITR 253 (P&H) ii) Girdhari Lal vs. CIT 256 ITR 318 (P&H) iii) CIT vs. Chopra Bros. India (P) Ltd. 252 ITR 413 (P&H) iv) Shri Ram Jhanwar Lal vs. ITO 321 ITR 400 (Raj.) The Ld. counsel accordingly prayed to allow depreciation in case books of accounts are rejected. 7. We have heard the rival contentions and perused the facts of the case. It is not under dispute that the assessee has not been able to substantiate the claim of the expenses as per findings of the AO in para 4(a) to para 4(h) and the assessee has not filed confirmation with regard to various purchases mentioned in the said paras of AO's order. On perusal of the order of the ld. CIT(A), we find no specific reference with regard to the filing of such confirmation or vouchers in support of the claim of the expenditure inspite of sufficient time given to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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