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Shri Rajendra Prasad Chaudhary, Prop. M/s Pratap Construction And Others Versus Dy. CIT. Circle-Gonda, And Others

2015 (6) TMI 274 - ITAT LUCKNOW

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% as against 8% estimated by the Assessing .....

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ecause 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 ₹ 3,66,262/-, Sl. No. 6 ₹ 6 .....

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sidering 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 that:- this ground of the assessee is also .....

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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. Act in the facts and circumstances of the .....

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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 order whereas learned A. R. of the asse .....

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s 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 consideration his own past history in estim .....

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.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 assessment years. The A.O. should have accep .....

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nces 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 case it would be fair and reasonable if .....

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IT 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 ₹ 23,89,648/-. Thus to the extent of ₹ .....

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8% 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 account and vouchers related to the expen .....

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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 ₹ 4,53,000/- matured during the financial year .....

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ued 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 investment of the accumulated balance of t .....

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ng 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/undisclosed in the hands of appellant. T .....

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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 that the assessee has FDR investment in th .....

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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 the order of CIT(A) is not sustainable and .....

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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 of the Revenue stands allowed in the term .....

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