Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

DCIT, Range 2, Lucknow Versus M/s Northern Construction

2015 (8) TMI 887 - ITAT LUCKNOW

Rejection of books of accounts - estimation of N.P. - CIT(A) while allowing deduction of depreciation, interest and salary to partners against his estimated net profit rate of 5% without looking to the provisions of section 184(5) as against 10% by A0 - Held that:- In the instant case, undisputedly the net profit rate was estimated at 4.49% in assessment year 2007-08 and 3.92% in assessment year 2008-09. Keeping the past net profit rate adopted, we find no infirmity in the order of the ld. CIT(A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tever name called, made by such firm to any partner shall be allowed. But under sub-section (5) of section 184 of the Act, nothing has been stated with regard to the allowance of depreciation against net profit rate. In the instant case, we are of the view that in the light of the provisions of section 184(5) of the Act, further deduction of interest and salary to partners cannot be allowed. 10. So far as allowance of depreciation is concerned, nothing has been stated in sub-section (5) of secti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are rejected, the same cannot be looked into for making further additions under different heads. While estimating the net profit, the Assessing Officer is required to take into cognizance all the relevant facts available before him. We have also carefully perused the aforesaid judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Banwarilal Banshidhar,[1997 (5) TMI 37 - ALLAHABAD High Court] in which it has been categorically held that once the books of account are rejected, s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

R. For The Shri. Yogesh Agrawal, Advocate ORDER PER SUNIL KUMAR YADAV: This appeal is preferred by the Revenue against the order of the ld. CIT(A), inter alia, on the following grounds:- 1. The Ld. CIT(A) has erred in law & on facts of the case in accepting additional evidence without passing an order in contravention to the provisions of Rule 46A(2) of the I. T Rules, 1962. In doing so, the CIT(A) has failed to appreciate that no reason was adduced by the assessee for not producing the add .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d report would be sent as soon as the report was received from the Bank. 3. The Ld. CIT(A) has erred in law & on facts of the case in estimating the net profit at 5% as against 10% estimated by the A.O. without appreciating the fact that the case was selected through CASS being a suspected refund case, and the assessee could not substantiate its claim by producing cogent evidence in support of payments made for purchase of materials and wages, which has a direct nexus with huge refund claime .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the case in allowing the deduction of depreciation from estimated income without considering the fact that all deduction deemed to have been taken into consideration while estimating the income. In doing so, the CIT(A) has failed in not considering the following case laws: Surinder Pal Nayyar Vs CIT(P&H) 177 Taxman 207 Indwell Constructions Vs CIT (AP) 232ITR 776 CIT Vs Pooja Construction Co.(ITAT, Amritsar) 69 ITD 147 6. The Ld. CIT(A) has erred in law & on facts of the case in deleti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ause an agent is engaged to execute some specific work on commission basis. In doing so, the Ld. CIT(A) has erroneously placed reliance on belated affidavit filed by the agent which is an afterthought to cover up cash payments made in a day in excess of ₹ 20,000/-. 7. The Ld. CIT(A) has erred in law & on facts of the case in holding that no disallowance can be made in case the income estimated by applying net profit rate without appreciating the legal position that the Hon'ble Supr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for its not filing before the Assessing Officer. The ld. CIT(A) called remand report from the Assessing Officer with respect to the additional evidence and thereafter obtained comments on the remand report from the assessee before adjudicating the issues on merit. In the light of these facts, we are of the view that there is no violation of the provisions of rule 46A of the Rules. Accordingly grounds No.1 & 2 are dismissed. 3. With regard to grounds No.3 to 5 & 7, it is noticed that dur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in short the Act") on the basis of material available before him. The Assessing Officer accordingly estimated the net profit rate at 10% on the gross receipts of the contract work, resulting into an addition of ₹ 62,96,246/-. The Assessing Officer did not allow deduction of depreciation, interest and salary to partners relaying upon the provisions of section 184(5) of the Act. 4. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) with the submission that the estimation .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

before the Tribunal with the submission that the assessee has not furnished the books of account and other relevant evidence before the Assessing Officer during the course of assessment proceedings despite various opportunities afforded to the assessee. Therefore, the Assessing Officer has rightly estimated the net profit rate at 10% of the gross receipts. The ld. D. R. has further contended that the ld. CIT(A) while allowing deduction of depreciation, interest and salary to partners against hi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e facts deduction of depreciation, interest and salary to partners cannot be allowed to the assessee. He has, however, contended that the Assessing Officer has correctly estimated the net profit rate keeping in view the entire circumstances. 7. The ld. counsel for the assessee, besides placing reliance upon the order of the ld. CIT(A), has contended that before the ld. CIT(A) assessee has furnished all the relevant evidence and the ld. CIT(A) having looked into therein has estimated the net prof .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in support of purchase of material and other expenditures. The Assessing Officer has also recorded in the order sheet entries to justify that despite various opportunities, the assessee could not produce the books of account. He accordingly invoked the provisions of section 144 of the Act and after rejecting the books of account, has estimated the net profit rate at 10% on the gross receipts. The Assessing Officer has also placed reliance upon section 184(5) of the Act for disallowing further d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e with regard to the gross receipts of ₹ 6,29,62,433/-. The ld. CIT(A) has also upheld the rejection of the books of account under section 145(3) of the Act against which assessee is not in appeal. Therefore, once the books of account are rejected, the remedy available with the assessing authorities is to estimate the net profit rate of the assessee keeping in view the past record of the assessee. In the instant case, undisputedly the net profit rate was estimated at 4.49% in assessment ye .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

voked, but on perusal of the provisions of section 184(5) of the Act we find that wherever the assessment is framed under section 144 of the Act on account of non-production of the requisite documents or the books of account by the assessee, no further deduction of interest, salary, bonus, commission or remuneration, by whatever name called, made by such firm to any partner shall be allowed. But under sub-section (5) of section 184 of the Act, nothing has been stated with regard to the allowance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

irect the Assessing Officer to estimate the net profit rate at 5% and thereafter allow further deduction of depreciation of ₹ 87,294/-. Accordingly this issue is disposed of. 11. Apropos ground No.6, it is noticed that the Assessing Officer has also further invoked the provisions of section 40A(3) of the Act with respect to certain payment exceeding ₹ 20,000/- for a sum of ₹ 61,80,304/-. When the matter reached to the ld. CIT(A), the ld. CIT(A) was of the view that once the inc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the case of CIT vs. Banwarilal Banshidhar, 148 CTR 533, in which it has been categorically held that when income of the assessee was computed applying the gross profit rate and no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of section 40A(3) of the Act and rule 6DD(j) of the Rules. No disallowance could have been made in view of the provisions of section 40A(3) of the Act read with rule 6DD(j) of the Rules, as no deduction w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version