TMI Blog2016 (12) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in the aforesaid decision. Therefore, we respectfully following the said decision set aside the order of Commissioner passed u/s 263 of the Act. - Decided in favour of assessee - I.T.A. No.6191/Mum/2009, I.T.A. No.22/Mum/2010 - - - Dated:- 27-10-2016 - SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri Vijay Mehta For The Revenue : Shri A.K Srivastava ORDER PER RAJESH KUMAR, AM These two appeals by the assessee are directed against the order dated 31.1.2008 passed by the ld.CIT(A)-III, Thane under section 263 of the Income Tax Act, 1961 and order dated 23.11.2009 passed under section 144 r.w.s.263 by the CIT(A)-II, Thane both for the assessment year 2005-06. Since these appeals pertain to the same assessee, these appeals are heard together and are being disposed of by this common order, for the sake of convenience. 2. At the outset, the ld.AR submitted before us that there is a delay of 581 days in filing the appeal before the Tribunal. The ld. AR submitted before us that the delay in filing the appeal was attributable to reasons such as assessee being illiterate, improper guidance and ill-advice by the earlier Charte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO was erroneous and also prejudicial to the interest of revenue. 6. The assessment order, in this case, was passed under section 143(3) on 7.3.2007 determining the total income at ₹ 5,68,869/-. On examination of the order, the Commissioner came to the conclusion that the order passed by the AO is erroneous in so far as prejudicial to the interest of the revenue for the following reasons : i) The assessee had sub-contracted work of ₹ 40.40 lakhs' during the year but failed to deduct tax at source on it in terms of provisions of Section 194C of the IT. Act and therefore this payment should have been disallowed while computing the income of the assessee invoking provisions of Section 40a(ia) of the IT. Act. The A.O. had failed to do so because he had only disallowed all amount of ₹ 16,177/- under this head. ii) The assessee had obtained unsecured loan of ₹ 45,000/- from one Mr. S.A. Gaikwad. No confirmation of loan was obtained by the A.O. consequently he even did not make enquiry about the financial capacity of tile creditor or genuineness of the transaction before accepting the same as genuine. iii) The assessee had shown Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly shown as received from Mr.S A Gaikwad instead of Mrs. S A Gaikwad in the balance sheet. The said amount was arranged by pledging jewellery of assessee s wife in order to make labour payment. The ld. AR submitted before us that during the original assessment proceedings all these issues were examined in detail by the AO and it was only thereafter assessed the income of the assessee by applying net profit at the rate of 8% at ₹ 64,63,772/- as against 6.16% as against disclosed by the assessee. The ld.AR drew our attention to the relevant extracts from the assessment order. The ld. AR submitted that the AO has taken one of the possible view and thereafter applied flat rate 8% on the gross receipt. The ld. AR submitted that once the flat rate of estimation of income is applied no other disallowance could be made as the same were applied to the turnover of the assessee. The ld. AR submitted that the CIT has not disputed or doubted the estimation of income which, the AO calculated. The ld. AR also relied upon the following decision in support of his claim: A. Decision of the Honble Punjab Harayana High Court in the case of C1T v Smt. Santosh [ain (296 ITR 324) ; B. Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this account is as under. 8% of ₹ 64,63,772/- ₹ 5,17,100/- Less: NP declared ₹ 3,97,860/- Difference ₹ 1,19,2401- As regards the deduction of TDS for the contracts given to the sub contractor assessee was required to deduct tax at 1 % on amount of ₹ 16,17,668/-. However, the assessee did not deduct the same. As per the TDS provisions forgoing, the 1% on the amount of ₹ 16,17,668/- comes to ₹ 16,177/- is taken on additional income of the assessee towards not applying the provisions of TDS rules is added to the total income of the assessee In the case Smt. Santosh (supra), the Hon ble P H has held that : 6. We are of the view that when income of the assessee was computed by applying gross profit rate, there was no need to look into the provisions of Section 40A(3) of the Act, as applying the gross profit rate takes care of expenditure otherwise by way of cross cheque also. We are in agreement with the view taken by the Allahabad High Court in Banwari Lal Banshidhars case (supra) to the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee and against the Revenue. In the case of Singhal Builders Contractor (supra) the Jaipur Bench of the Tribunal has held as under : HELD The Assessing Officer had made enquiry in respect to cash payments hit by provisions of section 40A(3) and assessee had filed reply that the provisions were not applicable on the facts of the case. It was further seen that after knowing various defects in the maintenance of books of account, the books of account were rejected by invoking provisions of section 145(3) by the Assessing Officer and profit rate of 12 per cent was applied subject to deduction on account of depreciation and interest. Once GP rate or net profit rate is applied, then no further disallowance can be made under section 40A(3) or any other provision. Therefore, there was no reason to set aside the order of Assessing Officer at the end of Commissioner by holding the same erroneous and prejudicial to the interest of the revenue. In view of these facts and circumstances it was to be held that initiation of proceedings under section 263 was not justified. Accordingly, the order of the Commissioner was to be set aside the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit estimated by Assessing Officer at applicable rates, because the income estimated as above of the assessee is before the depreciation and interest and remuneration of the partners. Accordingly, we direct the Assessing Officer to compute the income of the assessee afresh. Accordingly, this ground of the assessee appeal is partly allowed. In the case of Income-tax Officer V/s M/s. Akash Developers in ITA No.859/Kol/2012 (AY-2007-08) dated 20.11.2015 5. We have heard Ld. Sr. DR and gone through facts and circumstances of the case. We find that there are errors/inconsistencies in the maintenance of books of account because in several cases for the relevant AY booking of sales does not tally with the year of registration. Even the method of recognition of sale adopted by the assessee is inconsistent, defective and not in accordance with any recognized system of accounting. Even before the AO or before the CIT(A), the assessee could not explain the basis of booking of various construction expenses in respect of flats kept in stock in trade. In view of these differences, we find that the CIT(A) has rightly rejected the books of account by applying the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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