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2016 (4) TMI 659 - ITAT JAIPUR

2016 (4) TMI 659 - ITAT JAIPUR - TMI - N.P. rate determination - rejection of books of accounts - Held that:- In the absence of any basis to arrive at the conclusion of 8.5% of NP rate instead of 5.92%, we deem it appropriate to restrict the NP rate of 6% subject to depreciation and interest paid to third party. Since the assessee has failed to produce the stock register and other documents for the purpose of qualitative verification, it was not possible for the authorities below to verify the b .....

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ed to that extent. - Decided in favour of assessee in part - ITA Nos. 199/JP/2015 - Dated:- 24-2-2016 - SHRI T.R.MEENA, AM AND SHRI LALIET KUMAR, JM For The Assessee : Shri Shrawan Gupta (Advocate) For The Revenue : Shri Kailash Mangal (JCIT) ORDER PER SHRI LALIET KUMAR, J.M. The present appeal filed by the assessee is arising from the order dated 09.01.2015 passed by the learned CIT (A)-3, Jaipur for the A.Y. 2009-10. The assessee has rais .....

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e provisions of law and facts of the case, hence the same may kindly be quashed and the consequent trading addition/disallowances of ₹ 10,72,520/- may kindly be deleted. 2.2. ₹ 10,72,520/- : The ld. AO has grossly erred in law as well as on the facts of the case in making trading addition of ₹ 10,72,520/- by applying the N.P. rate of 8.5% as against 5.92% declared by the assessee. The addition so made and confirmed by the CIT (A) is being absolutely, contrary to the .....

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ts as business receipts. 3. The ld. AO erred in law as well as on the facts of the case in charging of interest u/s 234B, 234C & 234D as consequential in nature. The appellant totally denies it liability of charging of any such interest. Hence the interest so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 2. Brief facts of the case are that the assessee is a contractor engaged in civil construction work and running of heavy go .....

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#8377; 21,42,46,639/-. In the net profit, the assessee has claimed interest of ₹ 16,54,507/- and depreciation of ₹ 81,33,734/-. Further, the profit as declared by the assessee, included the interest on FDR of ₹ 49,01,129/-. It is interesting to know that the assessee himself has declared the interest income on the FDR as income from other sources in his Profit & Loss account in addition to the contract income. 2.1. Since the assessee has included the interest inc .....

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as noticed that no stock register was maintained, details of day to day expenses and consumption of material was not maintained. On verification, it was noticed that the assessee has claimed consolidated expenses under the head Contract expenses and no head-wise bifurcation of details of expenses are maintained as a result, the AO has issued show cause notice asking the assessee to explain as to why in view of the defects pointed out, section 145(3) be not invoked. Accordingly the books of accou .....

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e under the FDRs were separately added as income from other sources and the income of the assessee was assessed to an amount of ₹ 1,36,72,177/- instead of ₹ 1,25,99,660/- as declared by the assessee. Thus an addition of ₹ 10,72,510/- was made by the AO. 3. Being aggrieved by the order of AO, assessee carried the matter before ld. CIT (A), who upheld the order of the AO by observing at page 13 of his order as under :- Keeping in view the consistent decision .....

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te of 8.5% following the decision of ld. CIT (A) in respect of assessment year 2006-07. It may further be mentioned that assessment year 2007-08 and 2008-09 were not subject to scrutiny assessment and therefore the result shown in respect of these two asstt. year may not be treated to be a valid past history. Moreover the facts and circumstances of the appellant case are broadly the same as in respect of asstt. year 2006-07. Accordingly the action of the AO for applying NP rate 8.5% subject to d .....

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efore such income is net of the expenditure already incurred and is to be taxed separately even if FDRs were got issued for contract business. Therefore the action of the AO taxing ₹ 49,01,129/- being FDR interest separately is found to be correct. Accordingly addition made by the AO is confirmed. 4. Now the assessee is in appeal before us. 4.1. The ld. A/R for the assessee before us has vehemently contended that for the assessment year 2012-13, the AO himself has ap .....

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authorities below. 4.3. We have heard the rival contentions and perused the material available on record. In our view, the assessee has failed to produce the stock register before the AO despite providing various opportunities. We find that during the year under consideration the assessee has disclosed the turnover of ₹ 21,42,46,639/- and had disclosed the net profit of ₹ 1,26,99,660/-. Thus the net profit rate comes to 5.92% which in the eyes of AO was very low. The AO f .....

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ctional High Court in the matter of CIT vs. Gupta K.N. Construction Co. in DB ITA No. 59/2014 decided on 18th August, 2014 has held as under :- 2. Brief facts which have been noticed from the impugned order and other material on record are that the respondentassessee being a partnership firm is engaged in the business of civil contractor and has furnished his income tax return for the above assessment year under appeal alongwith audit report and other information. The respondent-asses .....

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queries were raised. 4. However, the Assessing Officer was dissatisfied with the explanation offered by the assessee and not only invoked the provisions of Section 145 of the Act and rejected the book results, but he further disallowed expenses to the rune of ₹ 1,17,75,202/-… Thus the Assessing Officer in effect by disallowing ₹ 1,17,75,202/- determined net profit at 13.7%. 9. In our view, no substantial question of law can be said to arise out of the imp .....

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Officer is absolutely silent as to justifying net profit rate to the extent of 13.7%,whether the addition/ disallowance made by the AO can be said to be appropriate. The assessment order is totally silent about similarly situated other traders/businessman showing net profit over and above what the assessee had shown and compared by the Assessing Officer and no evidence has been brought on record as to how the Assessing Officer was justified in applying net profit rate at 13.7%. In our view whil .....

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