TMI Blog2012 (4) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... n the previous year in assessee s case was apparently 3.6% of its net receipts. But in the present assessment year, the AO has pointed out various defects in the assessment order. The Ld. CIT(A) considering all the defects pointed out by the AO and finally, validly and reasonably determined the net profit rate at 5% after allowing depreciation and interest to the partners on the assessee s turnover. CIT(A)'s order upheld - Revenue Appeal Dismissed. Carry Forward of Losses - Assessee has filed original return on due date but has filed revised return of loss after due date. Thus, loss was not carry forward u/s 139(1) - HELD THAT:- Revised return was filed by the assessee after due date, thus he is not entitled for any carried forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and depreciation. iii) There are various decisions of Hon ble High Courts and Tribunals which lay down the proposition that estimation of income with or without allowing interest and depreciation were a matter of fact and no rigid formula to be made in this situation. The AO has to make the estimate based on the facts of the case. 3. In the C.O. the assessee has taken following grounds : 1) That the order of authorities below is based on pure guess work, arbitrary, prejudice as well as without any adverse material placed on record. 2) That the authorities below has completely erred in law and on facts in disallowing declared loss at ₹ 417515/- on the basis of conjecture, surmises and without any cogent reasons. 3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, the AO noticed some discrepancies and issued show cause notice dated 28.11.2008 asking the assessee to file documentary evidence. In response to the query raised by the AO in the show cause notice dated 28.11.2008, the assessee filed its reply on 28.11.2008. After going through the reply filed by the assessee, the AO was of the opinion that the books of account of the assessee are not reliable and the same deserves to be rejected by taking recourse to section 145(3) of the Act. The AO accordingly rejected the same and calculated the income of the assessee at 8% of the total receipts and did not allow the expenses being flat rate has been applied to estimate the income of the assessee. The AO further held that the assessee has filed or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s gross receipts because the AO applied 8% net profit rate when the assessee s turnover does not exceed ₹ 40 lacs. The Ld. first appellate authority has also held that usually net profit rate would be expected to fall with the increase in turnover. The income assessed in the assessment year 2001-02 in assessee s case was apparently 3.6% of its net receipts. In the assessment year, however, various defects pointed out by the AO in the present assessment order had not been highlighted and the ld. first appellate authority considering the defects pointed out by the AO in the present assessment order held that it would be reasonable to estimate, net profit rate of 5%, after allowing depreciation and interest to partners on the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss receipts subject to the allowance of salary and interest to the partners and depreciation for the assessment year 2001-02. But without any change of facts and circumstances of case, the ld. first appellate authority has wrongly applied net profit rate of 5% and also wrongly given the benefit of allowance of depreciation and interest to partners on assessee s turnover. 8. On the contrary, the ld. counsel for the assessee stated that the assessee has produced all necessary evidence required by the AO, before the AO as well as before the ld. first appellate authority. Therefore, the AO has wrongly applied section 145(3) of the Act and ld. first appellate authority has also wrongly upheld the same. As regards the net profit rate of 5%, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the application of net profit rate at 5% after allowing depreciation and interest to the partners of assessee s turnover as against 8% applied by the AO, it is a matter of fact that the AO has not given any reasonable explanation while applying 8% net profit rate on the assessee s gross receipts for the assessment year under reference. The income assessed in the assessment year 2001-02 in assessee s case was apparently 3.6% of its net receipts. But in the present assessment year, the AO has pointed out various defects in the assessment order. The Ld. CIT(A) considering all the defects pointed out by the AO and finally, validly and reasonably determined the net profit rate at 5% after allowing depreciation and interest to the partners on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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