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2015 (6) TMI 274 - ITAT LUCKNOW

2015 (6) TMI 274 - ITAT LUCKNOW - TMI - N.P. estimation - Held that:- As in earlier years, the final assessed income of the assessee was in the range of 0.98% to 2.5%. In the subsequent year i.e. assessment year 2011-12, the income of the assessee was assessed at 2.09% on contract receipt of ₹ 1636.39 lac. In the present year, the contract receipt is ₹ 794.07 lac. The decision of the CIT(A) to assess the income of the assessee at ₹ 27 lac results into net profit rate of 3.40% a .....

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:- merit in this stand taken by CIT(A) because it is admitted position of fact that the assessee has FDR investment in this year and the same was undisclosed in the balance sheet. If these FDRs were purchased in earlier year then it was the burden on the assessee to establish that by bringing necessary evidence on record. As per the chart reproduced by CIT(A) on pages 8 to 10 of his order, apart from Sl.No. 15 & 16 also, there are other FDRs which were purchased in the present year i.e. Sl.No. 3 .....

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uld have been added in present year. Considering these facts, we feel that the order of CIT(A) is not sustainable and the same required a fresh decision in the light of above discussion. Hence, we set aside the order of CIT(A) and restore the matter back to him for fresh decision after providing adequate opportunity of being heard to both the sides - Decided in favour of revenue for statistical purposes.

Investment in purchase of FDRs does not relate to the year under appeal - Held th .....

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T, D.R. For the Respondent : Shri A. R. Rahman, Advocate ORDER Per A. K. Garodia, A. M. The appeal is filed by the Revenue and the Cross Objection is filed by the assessee, which are directed against the order of CIT(A)-II, Lucknow dated 13/08/2014 for assessment year 2010-2011. 2. First we take up the appeal filed by the Revenue. In this appeal, the Revenue has raised the following grounds: 1. Whereas the CIT(A)-II, Lucknow has upheld the rejection of books of accounts u/s 145(3) of the I.T. Ac .....

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erred in law and facts in not confirming the unexplained investment in FDRs at serial number 3 and 6 of the chart showing FDRs purchased at ₹ 3,66,262/- and ₹ 6,66,407/- respectively. 3. The Ld. CIT(A)-II, Lucknow has erred in confirming only the unexplained investment in FDR of ₹ 1,00,000/- on 29.05.2009 and omitted to confirm the balance unexplained investment in FDR at serial number 15 of the chart of ₹ 23,286/-. 3. Learned D. R. of the Revenue supported the assessment .....

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39,62,925/-. The A.O. has discussed this issue in Para- 4(A) of the assessment order mentioned supra. The A.O. has applied N.P. rate 8% of gross contract receipts of ₹ 7,94,07,164/- against shown by appellant 3.01% in his books of accounts. The appellant has filed written submission during appellate proceedings and contended that the application of N.P. rate 8% by A.O. was arbitrary/unjustified. The appellant has mentioned in his written submission that the A.O. should have taken into con .....

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ct and assessed the net profit rate of 2.09% on contract receipts of ₹ 16,36,39,708/-. Further the appellant has mentioned that the A.O. did not mention any comparable case to justify the application of N.P. rate 8%. The A.O. should have accepted the past history of appellant while framing the scrutiny assessment even in best judgment assessment. The appellant has further argued that the N.P. rate declared in assessment year under consideration is on higher side as compared to earlier asse .....

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st years the A.O. has made the disallowances and final assessed income comes to 0.98% to 2.50%. Even subsequent assessment year 2011-12 the A.O. did not apply the N.P. rate and only disallowances were made out of direct & indirect expenses and assessed the appellant income. However looking into the nature of business of appellant, position of books of accounts, bills & vouchers which were admittedly not produced before A.O. during assessment proceedings and past history of appellant own .....

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dan Lal v. ITO [2006] 99 TTJ (JD) 538, CIT v. Popular Electric Co. Pvt. Ltd. [1993] 203 ITR 630 (Cal) and M.A. Rauf v. CIT [1958[ 33 ITR 843 (Pat) the benches of the Tribunal are taking a consistent view that the past history is the best guide where the provisions of section 145(3) are applied." Hence considering the facts & circumstances mentioned above the net profit of appellant is assessed and confirmed to the extent of ₹ 27,00,000/- against shown by the appellant of ₹ 2 .....

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of the assessee was in the range of 0.98% to 2.5%. In the subsequent year i.e. assessment year 2011-12, the income of the assessee was assessed at 2.09% on contract receipt of ₹ 1636.39 lac. In the present year, the contract receipt is ₹ 794.07 lac. The decision of the CIT(A) to assess the income of the assessee at ₹ 27 lac results into net profit rate of 3.40% as against 8% estimated by the Assessing Officer. Since in the present year, the assessee has not produced books of a .....

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nsidered the rival submissions. We find that it is noted by Assessing Officer in the assessment order that from the analysis of TDS report, it was revealed that the assessee has earned interest of ₹ 6,58,219/- on total deposit of ₹ 94,76,850/- with the bank in financial year 2009-10. He has summarized the TDS report in a tabular form on page No. 2 & 3 of the assessment order. Thereafter, he has noted that out of total deposit of ₹ 94,76,850/-, the FDRs totaling ₹ 4,53 .....

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Rs submitted by appellant which were issued by bank authority i.e. OBC and finding given by the A.O. in assessment order and I find that the FDRs mentioned in Sl. 1 to 47 except Sl. No. 15 & 16 in assessment order were purchased/invested by appellant in earlier assessment years. The date, initial investment and date of maturity & amount along with interest is duly reflected in the charts issued by OBC as mentioned above. The A.O. was incorrectly taken into consideration as unexplained in .....

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Rs reflected in Sl. No. 15 & 16 during the assessment year under consideration and rest of entire FDRs from Sl. 1 to 47 were found invested prior to assessment year under consideration. During the appellate proceedings also the appellant has failed to explain the source of investment of ₹ 2,73,239/- (Rs.1,00.000 on 29.05.2009 & ₹ 1,73,239 on 21.08.2009) in purchases of these two FDRs. Therefore, to this extent the action of A.O. treating the investment in FDRs as unexplained/ .....

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s of ₹ 87,50,211/- and same liable to be deleted. The A.O. is directed to delete the addition of ₹ 87,50,2117-. Thus the appellant gets relief of ₹ 87,50,211/- 6.1 From the above Para from the order of learned CIT(A), we find that the basis of decision of CIT(A) is that the Assessing Officer has made addition without further verification of the date of principal initial investment. We do not find any merit in this stand taken by CIT(A) because it is admitted position of fact th .....

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FDRs were purchased during the financial year 2008-09 and the same were out of undisclosed sources then also interest on such investment for the present year should be added in assessment year 2009-10 and CIT(A) should have given such direction to the Assessing Officer for making such addition in assessment year 2009-10. The interest accruing in present year on those investments in FDR made in financial year 2008-09 should have been added in present year. Considering these facts, we feel that th .....

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nsidered the rival submissions. We find that as per the chart reproduced by CIT(A) at Sl.No. 15, the amount of FDR is 1,23,286/- but CIT(A) has confirmed the addition of ₹ 1,00,000/- in respect of this FDR. When the investment is admittedly of ₹ 1,23,286/-, the addition should have been of this amount and not of ₹ 1,00,000/-. Therefore, on this issue, we reverse the order of CIT(A) and restore that of the Assessing Officer. This ground is allowed. 9. In the result, the appeal o .....

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Appeals) is not justified in holding that ₹ 2,73,239/- invested in purchase of FDRs does not relate to the year under appeal and hence it is liable to be disallowed. 3. That the learned Commissioner of Income-tax (Appeals) erred in not deleting the interest levied by the Assessing Officer under section 234B of the I.T. Act as tax was deductible at source on the entire receipt from contract business and salary income as held in the case of DIT v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom .....

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