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DCIT, Circle-Gonda Versus M/s A.P. Associates and M/s A.P. Associates Versus ACIT, Circle-Gonda

2016 (4) TMI 999 - ITAT LUCKNOW

Net profit determination - Held that:- We find that in Assessment Year 2008-09 also, the Assessing Officer applied net profit rate of 7% as against 8% in the present year and when the assessee carried the matter before the Ld. CIT(A), Ld. CIT(A) held that net profit rate of 4% should be applied subject to allowing of deduction for interest and salary paid to the partners. In this manner, Ld. CIT(A) reduced the assessed income to ₹ 16,01,949/- as against income computed by the Assessing Off .....

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, we find that initially the Assessing Officer issued notice u/s 142(1) of the Act but the same was not complied with and thereafter, the Assessing Officer issued notice u/s 142(1) again for which part compliance was made by the assessee by appearing before the Assessing Officer along with the copy of cash book and audit report of the assessee firm but the assessee firm did not comply fully to the questionnaire annexed to the notice u/s 142(1) of the Act. The assessee has not produced the copy o .....

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er cited by Ld. AR of the assessee is not applicable. There is no other argument of the Ld. AR of the assessee as to why and how deduction should be allowed to the assessee in respect of interest and remuneration to the partners. Hence, on this issue, we find no reason to interfere in the order of Ld. CIT(A). - ITA No.240/LKW/2015, ITA No.258/LKW/2015 - Dated:- 15-3-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri Amit Nigam, CIT DR .....

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61 2.1 Without prejudice to the above, the learned Assessing Officer having applied the net profit of 8% and the learned first Appellate authority erred in upholding it to the extent of 4%. 2.2 Because the learned first Appellate authority had no warrant to uphold the net profit rate @ 4% of Gross Receipts against 1.84%, returned by the assessee. 3. Because the learned first appellate authority erred in separately adding interest on FDRs to the total income of the assessee. 4. Because the learne .....

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of interest to partners ₹ 9,24,238 and remuneration to partners ₹ 6,00,000 without giving notice of enhancement to the assessee - and without giving any opportunity to the assessee to put up its case. 8. Because the learned 1st appellate authority ought to have allowed depreciation separately. 9. Because the order appealed against is contrary to the facts, law and principles of natural justice. 10. Any other grounds that may be taken at the time of hearing. 3. The grounds raised by .....

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f the I.T. Act and the AO had righty estimated the net profit @ 8% of the gross receipts. 2. The Ld. CIT(A), Faizabad has erred in law and on facts by estimating the net profit @ 4% as against 8% applied by AO on the gross contract receipts relying on the past history of assessee's own case without appreciating the fact that the facts of the present case are totally different from the facts of assessee's case in preceding assessment years and also principles of res-judicata are not appli .....

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no legs to stand. 4. That the appellant also craves to modify, amend, change and revise the above grounds of appeal and add further grounds of appeal, if necessary. 4. Regarding the assessee s appeal, it was submitted by the Ld. AR of the assessee that Ground No.1 is not pressed and accordingly Ground No.1 is rejected as not pressed. 5. Regarding Ground Nos. 2 to 9, he submitted that as per the Tribunal s order in the assessee s own case for Assessment Year 2008-09 in ITA No. 622/Lkw/2011 dated .....

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assessment order for the Assessment Year 2008-09 is available on pages 24 to 25 of the paper book as per which the taxable income was computed by the Assessing Officer by applying net profit rate of 7% to the gross receipts of ₹ 7,81,39,170/- and the interest income declared by the assessee in P&L account was not added separately and in the present case also, even if rate of 4% net profit is applied, the same should not be considered as exclusive of interest and Truck Hire Charges rec .....

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hat there is some compliance of the notices issued in course of assessment proceedings. He placed reliance on the Tribunal s order rendered in the case of Surendra Prasad Misra Vs. ITO reported in 104 TTJ (Lucknow) 292, copy available on pages 51 to 55 of the paper book. At this juncture, the Bench wanted to know as to whether any evidence is available in the paper book in support of this contention that substantial compliance was made by the assessee by showing the notice issued by the Assessin .....

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rofit rate of 4% should be applied subject to allowing of deduction for interest and salary paid to the partners. In this manner, Ld. CIT(A) reduced the assessed income to ₹ 16,01,949/- as against income computed by the Assessing Officer at ₹ 43,31,680/- in that year. Hence, we are of the considered opinion that regarding applicability of net profit rate of 4%, the issue is covered by the Tribunal s order in assessee own case. Therefore, respectfully following the same, we hold that .....

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is true that in Assessment Year 2008-09 also, there was interest income of ₹ 3,29,551/- but in the assessment order for that year available on pages 24 to 25 of the paper book, the Assessing Officer applied net profit rate of 7% to the gross receipt in that year of ₹ 781.39 lakh and computed the gross business income at ₹ 54,69,731/- and after allowing deduction on account of interest to partners and salary to working partners, net income was computed of ₹ 43,31,680/- an .....

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e said that application of any rate of net profit to the gross receipt of business can be inclusive of interest income or truck plying income etc. In the name of rule of consistency, mistake cannot be allowed to be perpetuated and therefore, we hold that the Assessing Officer was justified in separately adding the income on account of interest and truck income over and above the net profit computed by him after applying net profit rate of 8% which has been reduced by Ld. CIT(A) to 4%. 8. Regardi .....

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