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2016 (12) TMI 613 - ITAT JAIPUR

2016 (12) TMI 613 - ITAT JAIPUR - TMI - Rejection of books of account - addition applying net profit rate at 9.75% subject to interest and depreciation and subject to income declared by the assessee - Held that:- As in assessee's own case for assessment year 2005-06 and 2007-08 we modify the order of the ld. CIT(A) on this issue with the direction to the AO to apply the net profit rate of 9.75% subject to depreciation and interest. - Apropos rejection of books of account, it was submitted th .....

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whether such FDRs were made for getting the performance guarantee from its banker. The ld. Counsel for the assessee could not point out from the record. However, he submitted that requisite evidence was placed before the AO. In the absence of the contract, it cannot be inferred that the FDRs were made by the assessee was out of commercial expediency. We, therefore, deem it in the interest of justice to restore this issue to the file of the AO to verify whether the FDRs receipts made by the asses .....

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and administrative expenses incurred at the petrol pump of the assessee - Held that:- The AO did not produce the relevant bills and vouchers as to the above sales and administrative expenses. Hence, the AO disallowed 20% of total expenses of ₹ 13,78,700/- which comes to ₹ 2,75,740/-. Before the ld. CIT(A), the issue was raised who observed that the expenses are not fully verifiable but some disallowances were considered by him justified and the ld. CIT(A) thus disallowed the expenses .....

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n referred to the Valuation Cell in the preceding year. The Valuation Officer for the year under consideration has determined the value at ₹ 8,44,645/- as against ₹ 6,00,000/- declared by the assessee. We find that the order of the ld. CIT(A) is cryptic and non-speaking. Therefore, the order of the ld. CIT(A) is set aside and the finding of the AO is upheld. - Decided in favour of revenue - Addition on account of unexplained cash deposit into the bank - Held that:- DR insisted th .....

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estimated then no separate addition in respect of sales tax refund ought to have been made. In our considered view, this issue needs reconsideration at the end of AO. Hence, this issue is restored to AOs file for decision afresh. - ITA No. 659/JP/2013, ITA No. 673/JP/2013, ITA No. 217/JP/2015 - Dated:- 30-11-2016 - SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM For The Assessee: Shri Nikhlesh Kataria, CA For The Revenue : Shri R.A. Verma, Addl.CIT- DR ORDER PER KUL BHARAT, JM These are the three ap .....

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authorities have erred in law and on the facts in rejecting the books of account u/s 145(3) of the I.T. Act. 2. That the ld. CIT(A) grossly erred in lower authorities and on the facts in directing to apply net profit rate @ 9.75% on contract receipts of the assessee subject to interest & depreciation but subject to income declared by the assessee 3. That the lower authorities grossly erred in law and on the facts in treating the gross interest received on FDR & NSC of ₹ 29,29,387/- .....

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contract receipts when the same have been claimed as per the profit and loss account and already allowed in the computation of income, as per the assessment order. (ii) deleting the trading addition of ₹ 1,40,660/- in the petrol pump account made by the AO by applying the gross profit rate of 1.67% by following comparable case of Shri Om Prakash Sharma (iii) restricting the disallowance out of sales and administrative expenses to 10% as against made by the AO at 20% without giving any vali .....

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of account and confirming the addition by applying net profit rate at 9.75% subject to interest and depreciation and subject to income declared by the assessee. Briefly stated the facts are that case of the assessee was picked up for scrutiny assessment and assessment u/s 143(3) of the I.T. Act, 1961 (hereinafter referred to as Act ) was framed by the AO vide order dated 30-12-2011. While framing the assessment, the AO rejected the books of account and estimated the net profit rate at 9.75% giv .....

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te. Thus the ld. CIT(A) modified the order by directing the AO to adopt net profit rate @ 9.75% subject to depreciation and interest and also made the addition subject to income declared by the assessee. 3.3 The assessee and Revenue both have challenged these findings of the ld. CIT(A) by filing the separate appeals. 3.4 In the present appeal, the assessee challenged the findings of the ld. CIT(A) for making benefit of depreciation and interest subject to income declared by the assessee. 3.5 The .....

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uphold the net profit rate of 9.75% subject to depreciation and interest. He submitted that facts are identical in this case and the issue is squarely covered by the decision of Jaipur Bench. 3.6 On the contrary, the ld. DR has opposed the submission of the ld. Counsel for the assessee and supported the orders of the authorities below. 3.7 We have heard the rival contentions and gone through the orders of the authorities below. We find that the Coordinate Bench in para has decided the similar is .....

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different. Therefore, we modify the order. Respectfully following the decision of Coordinate Bench (supra), we modify the order of the ld. CIT(A) on this issue with the direction to the AO to apply the net profit rate of 9.75% subject to depreciation and interest. 3.8 Apropos rejection of books of account, it was submitted that Coordinate Bench has been taking consistent view that interest and depreciation is to be allowed for application for net profit rate. Therefore, the rejection of books o .....

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ief and submitted that the authorities below failed to appreciate the facts that FDR and NSC were made for furnishing the performance guarantee by the banker. Therefore, any income accrued thereon was essentially a business income. 4.3 On the contrary, the ld. DR supported the order of the AO and submitted that there is no legality into the order of the ld. CIT(A). 4.4 We have heard the rival contentions and gone through the orders of the authorities below. During the course of hearing, a query .....

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to the file of the AO to verify whether the FDRs receipts made by the assessee were out of commercial expediency. The AO observed that the assessee was required to make the FDRs with the banker for getting the performance guarantee/ bank guarantee as to the contract executed by the assessee. Thus, he would treat interest as income from business receipt, if the assessee fails to establish the nexus between the contract and the FDRs, in that event, no relief would be granted. Thus Ground No. 3 of .....

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are to the tune of 0.73% and 0.59% of the total turnover of the assessee. 5.3 The ld. DR relied on the orders of the AO. 5.4 We have heard the rival contentions and gone through the orders of the authorities below. It is noted from the assessment order that the assessee had debited the following sales and administrative expenses from its two Petrol Pumps. (i) Pipaliay Filling Station ₹ 10,08,674/- (ii) Suket Filing Station ₹ 3,70,026/- Total ₹ 13,78,700/- The AO did not produce .....

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e finding of the ld. CIT(A) on this issue. Thus Ground No. 4 of the assessee is dismissed. 6.1 Now we come to the appeal of the Revenue in ITA No. 673/JP/2013 for the assessment year 2009-10. 7.1 The Ground No. 1 of the Revenue is against directing to allow depreciation and interest out of net profit rate adopted at 9.75% . After hearing both the partied and perusing the materials available on record, it is noted that assessee as well as Revenue have challenged the findings of the ld. CIT(A). Th .....

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f the AO. 8.3 On the contrary, the ld. Counsel for the assessee supported the order of the ld. CIT(A). 8.4 We have heard the rival contentions and gone through the orders of the authorities below. We find that the ld. CIT(A) has estimated the disallowance @ 10% which appears to be reasonable. Therefore, the Ground No. 2 of the Revenue is dismissed. 9.1 The Ground No. 3 of the Revenue is against restricting the allowance out of sales and administrative expenses to 10% as against made by the AO at .....

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ing the course of hearing, the ld. DR supported the order of the AO and submitted that the ld. CIT(A) was not justified in deleting the addition. 10.3 On the contrary, the ld. Counsel for the assessee supported the order of the ld. CIT(A). 10.4 We have heard the rival contentions and gone through the orders of the authorities below. We find that the ld. CIT(A) has deleted the addition by observing as under:- 4.6.2…… I have verified the details and the contention of the assessee was .....

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ration has determined the value at ₹ 8,44,645/- as against ₹ 6,00,000/- declared by the assessee. We find that the order of the ld. CIT(A) is cryptic and non-speaking. Therefore, the order of the ld. CIT(A) is set aside and the finding of the AO is upheld. Thus Ground No. 4 of the Revenue is allowed. 11.1 The Ground No. 5 of the Revenue is regarding deletion of addition of ₹ 78,53,000/- on account of unexplained cash deposit into the bank without appreciating the fact that tran .....

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the assessee. The bank has certified that the assessee is not maintaining any bank account except three bank accounts as provided to the AO. 11.4 We have heard the rival contentions and gone through the orders of the authorities below. We find that the ld. CIT(A) has given a finding in para 4.72 as under:- 4.7.2 I have verified the details and it was seen that information related to A.Y. 2010-11 [F.Y. 2009-10] (copy of information is placed as Annexure A). The Assessing Officer is therefore, di .....

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to verify the claim of the assessee in the relevant assessment year. Thus Ground No. 5 of the Revenue is disposed off in terms of the above direction. 12.1 Now we take up the appeal of the assessee in ITA No. 217/JP/2015 for the assessment year 2010-11 wherein the assessee has raised the following grounds of appeal. 1. The ld. CIT(A) erred in law as well as on the facts of the present case in sustaining the rejection of books of account of the assessee and also sustaining net profit rate of 5% .....

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in sustaining treatment of the sales tax refund amounting to ₹ 1,89,225/- as income from other sources as against business income. (Modified ground vide letter dated 21-04-2016 as under:- The ld. CIT(A) erred in law as well as on the facts of the present case in directing to assess the sales tax refund separately under the head of income from business as remission of liability u/s 41(1). 13.1 Briefly stated the facts that the case of the assessee was picked up for scrutiny assessment and .....

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trol pump business by adopting the net profit rate at 0.55% resulting into an addition of ₹ 1,44,193/-. The AO also made addition of ₹ 1,44,193/- by invoking the provision of Section 50C of the Act. 13.2 Aggrieved, the assessee preferred the appeal before the ld. CIT(A) who after considering the submissions of the assessee in respect of trading addition directed the AO to adopt the net profit rate at 5% on the turnover as against the net profit rate adopted by the AO at 9.75%. 13.3 A .....

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T(A) for assessment year 2004-05 and 06-07, we feel that ld. CIT(A) was justified in directing to apply a net profit rate of 9.75% subject to depreciation and interest.. Hence the decision taken in the appeal of the assessee for assessment year 2009-10 shall apply mutatis mutandis in the assessment year 2010- 11 in assessee's appeal. Thus Ground No. 1 of the assessee is partly allowed. 14.1 The grievance of the assessee in Ground No. 2 and 3 is as under:- 2. The ld. CIT(A) erred in law as we .....

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ssee's own case for the assessment year 2009-10 wherein the similar issue has been restored to the file of the AO with following directions. We, therefore, deem it in the interest of justice to restore this issue to the file of the AO to verify whether the FDRs receipts made by the assessee were out of commercial expediency. The AO observed that the assessee was required to make the FDRs with the banker for getting the performance guarantee/ bank guarantee as to the contract executed by the .....

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. 4 of the assessee is that the ld. CIT(A) has erred in directing to assess the sale tax refund separately under the head of income from business as remission of liability u/s 41(1). 15.2 During the course of hearing, the ld. Counsel for the assessee filed the following written submission on the issue in question. Brief Facts: During the year under consideration, the assessee has shown receipts of ₹ 189225/- on account of sales tax refund declared as business income. This was the refund gr .....

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. CIT(A) directed the same to be added separately as remission of liability u/s 41(1). Now the assessee has taken this ground of appeal. Our Submission: 2.1 Estimation of Business Income Deem to Cover All Income Covered u/s 28 to 44 - No Separate Addition: At the outset, we may submit that once the business income is estimated by applying of N.P. rate then the same is taken as final business income for all purposes while covering of section 28 to section 44. The refund has been received during t .....

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