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2018 (3) TMI 892

above the business income assessed by applying the net profit rate after rejecting the books of accounts - Held that:- When the books of accounts are rejected and income is assessed on the principle of ‘best judgment assessment’, then entries of the amounts shown in the books of accounts cannot be held to be reliable. Once business income of the assessee from the contract receipt business has been assessed at 8%, then it take cares of all other additions made on account of trading account and any liability including outstanding amount of trade creditors. Thus, we agree with the contention of assessee that if the income has been assessed after rejecting the books of accounts and net profit rate has been applied, then no separate addition on account of trade creditors should be made. Accordingly, we direct the AO to make addition of ₹ 35,25,490/- as has been worked out by the Ld. CIT(A). - The additions on account of sundry creditors raised in both the appeals are dismissed. Decided in favour of assessee - Addition on account of unexplained loan - Held that:- CIT (A) has noted that the party was old lender and assessee has filed his PAN details which has been verified b .....

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ing Services Deoria, U.P. Road Division Chaibasa, NHPC Ltd. Motihari, Bihar, PACL LTD. The entire contract receipts were duly reconciled from Form 26AS also which reflects gross receipts at ₹ 47,68,80,785/-. The Ld. AO from the perusal of the balance sheet noted that assessee has shown trade creditors at ₹ 3,88,68,131/- as on 31.3.2010 and requested the assessee to furnish the confirmation and other relevant details of major creditors having outstanding amount of more than Rs. one lac. In response, assessee could not file the confirmation in respect of 23 persons with outstanding amount aggregating to ₹ 1,71,03,9897/-. In absence of any confirmation from the parties, he added the said amount to the income of the assessee. Further, AO has made addition on account of unsecured loans of ₹ 81 lacs shown in the name of Shri Brijesh Kumar Jaiswal on the ground that assessee could not furnish relevant confirmation, details and documents except for photocopy of TDS certificate and Form 16A in respect of interest paid to the said person. Since, assessee could not establish the ingredients of section 68; he therefore, added the said amount of ₹ 81 lacs. Lastly, .....

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regating to ₹ 1,34,22,499/- The details of such persons have been incorporated at page 12 and 13 of the appellate order. Thus, the only part relief was given out of total addition of ₹ 1,71,03,987/- and balance amount of ₹ 1,34,22,499/- was upheld. 4. Regarding addition on account of unexplained amount of ₹ 81 lacs received from Shri Brijesh Kumar Jaiswal, Ld. CIT (A) appreciated that assessee has filed the copy of PAN; copy of acknowledgements of return for the same assessment year; and that the party was old lender since early years and income tax has been deducted at source on interest paid to him. Ld. CIT (A) had deleted the said addition after observing and holding as under:- 8.2 I have considered the entire facts of the case and the arguments forwarded by the appellant in this regard. The appellant had already taken substantial loans from the person in earlier years which have been accepted by the department and no adverse view was ever taken regarding the same. Perusal of TDS certificate (Form No. 16A) by which the appellant deducted tax on interest paid to Shri Brijesh Kumar Jaiswal, from whom unsecured loans were obtained by the appellant, it is obs .....

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t under the head trade creditors shown at ₹ 3,88,68,131/- and thereby made addition of ₹ 1,71,03,987/- on the ground that assessee could not furnish the confirmation in respect of 23 parties; secondly, after making the said addition, AO further went to reject the assessee s books of accounts after invoking provision of section 145(3) on the ground that the same are not reliable including the net profit shown in the audit report and in the trading account. He proceeded the estimate the net profit rate of 8% from the gross receipt and enhanced the business income by an amount of ₹ 1,61,93,740/- after denying the claim of deduction of depreciation from the said net profit rate. Ld. CIT(A) had accepted the outstanding amount against four trade creditors only and reduced the addition from ₹ 1,71,03,987/- to ₹ 1,34,22,499/-. After sustaining this much amount of addition on account of sundry creditors, he further upheld action of the AO in rejecting the trading result in the books of accounts and the application of net profit rate of 8%. However, he has accepted the assessee s claim for allowing of depreciation on such an amount following the various judgment .....

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rejected and income is assessed on the principle of best judgment assessment , then entries of the amounts shown in the books of accounts cannot be held to be reliable. Once business income of the assessee from the contract receipt business has been assessed at 8%, then it take cares of all other additions made on account of trading account and any liability including outstanding amount of trade creditors. Thus, we agree with the contention of the Ld. Counsel that if the income has been assessed after rejecting the books of accounts and net profit rate has been applied, then no separate addition on account of trade creditors should be made. Accordingly, we direct the AO to make addition of ₹ 35,25,490/- as has been worked out by the Ld. CIT(A). 8. In view of this finding, the additions on account of sundry creditors raised in both the appeals are dismissed. The grounds raised by the assessee on account of sundry creditors is treated as allowed only to the extent that addition on account of net profit rate will get sustained; and consequently revenue s ground No. 1 is treated as dismissed. 9. Lastly, coming to the addition on account of unexplained loan as raised by the revenu .....

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