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TMI Blog2015 (10) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law he Ld. CIT (Appeals) Gwalior has erred in disallowing of depreciation amounting to Rs. 24068/- in estimating the income by application of profit rate to arrive the income of the appellant which is against principle of law and natural justice is being liable to be deductible. 2. That under the facts and circumstances of the case and in law the Ld. CIT (Appeals), Gwalior has erred in disallowing of interest paid to partners amounting to Rs. 654974/- and salary paid to partner amounting to Rs. 50000/- in estimating the income by applying of profit rate to arrive the income of the appellant, which is against principle of law and natural justice which is an allowable deduction in case of the firm u/s 40(b) of the Act 1961 is being l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t produce any bills and vouchers and other necessary documentary evidences. All that the assessee could produce was "financial statements and ledgers of expenses debited in the profit and loss account, except the ledger of miscellaneous wags". The Assessing Officer further observed, from the details so filed, that "majority of expenditure have been paid in cash". It was also noted that it is a tax audit case and the primary documents based on which accounts are prepaid, are vouchers and bills - which are admittedly not available. The books of accounts were thus of no use. Accordingly the Assessing Officer proceeded to reject the same and adopted income of the assessee @ 12.5% of contract receipts. While doing so, he observed as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 CTR 648), once net profit rate was applied no further addition was called for in respect of inflation of expenses and purchases. In the facts and circumstances of the case, since the income is estimated @ 12.5% no further addition needs to be made. 16.0 However, in view of the peculiar features as noted above, it is felt just and reasonable to complete the case by rejecting books of account and estimating the income of the assessee @ 12.5% on gross receipts subject to allowing deduction u/s. 40(b) and depreciation. 17.0 As discussed in detail earlier in the order, the book results shown by the assessee cannot be accepted as the books are not correct and complete and profit from contract works is to be estimated, rejecting the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of CIT(A) in the case of Jagdish Prasad Bansal and Shri Naresh Katare wherein the CIT(A) has applied net profit rate @ 6%. As the facts of the case of the appellant and that of Shri Jagdish Prasad Bansal & Shri Katare are almost similar, therefore, I am of the considered view that it would be fair and reasonable if the income of the appellant is estimated @ 6% of the gross receipts. The gross receipts of the appellant for the year under appeal was Rs. 5,02,14,826/-. Therefore, the taxable income of the appellant would be Rs. 30,12,890/-. No further deduction in respect of depreciation, interest to partners or salary to partners would be allowed against this income." 6. Aggrieved by the stand so taken by the CIT(A), both the parties a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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