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Vijay Kumar Saxena Versus The ACIT, Circle-2, Kota.

2016 (2) TMI 190 - ITAT JAIPUR

Rejection of books of accounts - adoption of NP rate of 9% - Held that:- As ample opportunities have been given to the assessee to produce the books of accounts, the assessee being contractor, is statutorily bound to maintain bills, vouchers, cash book, stock register etc. and in the absence of maintenance of the said records, the AO is left with no option but to invoke section 145(3) of the IT Act and estimate the income of the assessee. Even otherwise the assessee had admitted before the autho .....

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e assessee himself has admitted the imposition of 9% NP rate subject to depreciation and interest, the AO was left with no other option but either to accept the offer or to determine the N.P. on the basis of comparable material on record or on the basis of past history. - Decided against assessee

Addition on account of interest income from FDRs - Held that:- We are in agreement with the ld. A/R for the assessee that the FDRs were required to furnish performance guarantee to get a cont .....

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- Decided in favour of assessee

Addition on account of taxi plying, on estimate basis - Held that:- AO has not given any basis for making this addition. Therefore, we do not find any justification in the order of the AO for making this addition. The addition is thus deleted.- Decided in favour of assessee

Disallowance on account of non business use of cars - Held that:- The assessee has not produced any log book in respect of running of vehicles, therefore, personal use of .....

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y the learned CIT (A), Kota for the A.Y. 2007-08 & 2009-10. The assessee has raised the following grounds of appeal :- ITA No. 137/JP/2013 (A.Y. 2007-08) : 1. That the leaned CIT (Appeals) has erred in confirming the rejection of books of account by the learned assessing officer and thereby applying the provisions of section 145(3). 2. That the learned CIT (Appeals) has erred in confirming the addition of ₹ 12,04,352/- made by the learned assessing officer, by applying a net profit rat .....

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f account by the learned assessing officer and thereby applying the provisions of section 145(3). 2. That the learned CIT (Appeals) has erred in confirming the addition of ₹ 16,47,466/- made by the learned assessing officer, by applying a net profit rate of 9% subject to depreciation. 3. That the learned CIT (Appeals) has erred in confirming the separate addition of ₹ 12,24,814/- made by the learned assessing officer on account of interest income. 4. That the learned CIT (Appeals) ha .....

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143(3) of the I.T. Act. 2.1. In respect of ground no. 1 & 2, the relevant para of the assessment order is as under :- 9. The matter was discussed with the assessee and the ld. A/R for the assessee, who agreed for the rejection of books of accounts and application of 9% N.P rate on contractual receipts (subject to depreciation and interest) and non-imposition of penalty. In this regard, following was made clear to the assessee and his A/R : On 9% N.P. rate, depreciation would be allowed but a .....

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te of 9% on gross contract receipts of ₹ 6,53,09,889/-, the income from contract work comes to ₹ 58,77,890/- which after allowance of depreciation (Rs. 3,08,195), is reduced to ₹ 55,69,695/-. Thus, an addition of ₹ 12,04,532/- (55,69,695-43,65,163) is made on this account. 3. Being aggrieved, the assessee carried the matter before ld. CIT (A), who vide his order confirmed the addition by observing as under :- I have gone through the AO s findings and assessee s submission .....

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the addition made by Assessing Officer. Considering the above addition of ₹ 12,04,532/- is confirmed. These grounds of appeal are, therefore, dismissed. 4. Now the assessee is in appeal before us. 4.1. The ld. A/R for the assessee has submitted that the authorities below have decided the issue of N.P. rate of 9% despite the fact that there is increase in the profit and the turnover of the assessee. It was also contended that the books of account have been wrongly rejected by the authoritie .....

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iance of notice u/s142(1) has been really poor. What is more, the assessee has not been able to produce any bills/vouchers which means that his claim regarding expenses can not be verified. Cash Book has not been produced and Stock Register has also not been produced. Thus, the stock, cash, exp. etc. cannot be verified. The claim of creditors can also, at bet, be partly correct. Though, one thing has been praiseworthy on assessee s part that he did not try to furnish fake books in spite of getti .....

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ount) are hereby rejected u/s 145(3) and the assessment is being completed in the manner provided u/s 144 of I.T. Act, 1961. The matter was discussed with the assessee and his A/R who agreed for the rejection of books of accounts and application of 9% N.P. rate on contractual receipts (subject to depreciation & intt.) and nonimposition of penalty. 4.3. We have heard rival contentions and perused the material available on record. In our view, ample opportunities have been given to the assesse .....

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nd interest. In our view, once the complete books of account have not been produced, the AO was right in rejecting the books of account and has righty done so. Even otherwise, the assessee has no legs to stand that the books of account and the NP rte of 9% has been wrongly decided by the AO. The admission of the assessee is the best evidence against the assessee. Once the assessee himself has admitted the imposition of 9% NP rate subject to depreciation and interest, the AO was left with no othe .....

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American Consulting Corporation (1980) 123 ITR 513 (Ori.), Seth Nathuram Munalal vs. CIT (1954) 25 ITR 216 (Nag.), CIT vs. Gupta, K.N. Construction Co. (2015) 371 ITR 325 (Raj.), CIT vs. M/s. Vaibhav Gems Ltd. (2014 52 Tax World 159 (Raj.), CIT vs. Subodh Gupta (Del) ITA 80/2014, Harban Lal Sethi vs. ACIT (2003) 30 TW 82 etc. are not applicable in the present case on the facts and circumstances. In the present case, the admission of the assessee which has prompted the AO to determine the NP rat .....

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lending. The AO was of the view that assessee is a civil contractor and, by any standards, interest on bank FDR is to be assessed as Income from Other Sources only. 5.2. The ld. CIT (A) confirmed the addition on the ground that interest income can be treated as business income only if assessee was engaged in the business of money lending, or when interest is charged on business transaction i.e. interest on delayed payment by buyers. 6. Now the assessee is before us. 6.1. The ld. A/R for the asse .....

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FDRs may be treated as Business income. To support his contention, the ld. A/R placed reliance on the judgments in the case of CIT vs. Jaypee DSC Ventures Ltd. (2011) 335 ITR 1432 (Delhi HC), Shyam Bihari vs. CIT (2012) 345 ITR 283 (Pat.HC) and CIT vs. Chinna Nachimuthu Constructions (2008) 297 ITR 70 (Karn.HC). 6.2. On the other hand, ld. D/R for the revenue supported the orders of authorities below and requested that additions be confirmed. 6.3. We have heard rival contentions and perused the .....

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the facts of the assessee s case. We, therefore, taking into consideration various judgments mentioned above, deleted the additions made by the AO. 7. Ground no. 4 in A.Y. 2007-08 relates to addition of ₹ 15,228/- on account of taxi plying, on estimate basis. 7.1. The AO made the addition by observing that Lastly, the assessee has also declared the gross receipts of ₹ 95,174/- from car hiring. In view of no documents regarding this business, the income from taxi plying is treated @ .....

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is before us. 8.1. The ld. A/R for the assessee has argued that AO has arbitrarily estimated the income from car hiring @ 25%, without giving any reason in support of the estimate. He submitted that when the books of account are rejected, revenue cannot rely on the same set of books and disallow specific items of expenditure. The estimate of income from car hiring made by the AO is based on surmises and conjectures and is not justified on any legally sustainable foundation. Therefore, he prayed .....

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