TMI Blog2017 (2) TMI 1526X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, we are of the view that the A.O. was right in rejection of books of accounts and estimation of net profit. NP estimation - We find that the coordinate bench of this Tribunal in the case of ITO Vs. Sri Gundapaneni Nageswara Rao [ 2014 (5) TMI 344 - ITAT HYDERABAD] under similar set of facts, has directed the A.O. to estimate net profit of 3% net of all deductions including depreciation. Though, there are divergent views from the appellate authorities, the view which is more beneficial to the assessee has to be adopted in view of the Supreme Court, decision in the case of CIT vs. Vegetable Products Limited [ 1973 (1) TMI 1 - SUPREME COURT] Therefore, we are of the considered view that since, the assessee has not proved the ownership of assets to claim the depreciation we deem it appropriate to direct the A.O. to estimate net profit of 3% on gross receipts net of all deductions including depreciation. Accordingly, we direct the A.O. to estimate net profit of 3% on gross contract receipts net of all deductions for all the assessment years 2006-07 to 2009-10. Revenue appeal is partly allowed. - I.T.A. Nos. 35 to 38/Vizag/2013, C.O. Nos.9 to 12/Vizag/2016 (I.T.A.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny and accordingly a detailed show-cause notice was issued. In response to show cause notice, the assessee has filed its reply dated 22.12.2010 and submitted that as per the arrangement between the firm and partners others, the trucks are operated by the firm and all the expenditure relating to operating of truck such as diesel, toll fees, loading and unloading charges, drivers betas, tyres, spares, etc. are incurred by the firm and also the firm undertakes to pay monthly instalment of trucks owned by the non-partner and it pays a nominal amount of ₹ 1,000/- per truck per month for partners. The assessee further submitted that in addition to the vehicles owned by the firm partners, the assessee firm also operated trucks owned by others as a transport contractor and hence, the provisions of section 44AE of the Act cannot be made applicable, since it is operating more than 10 trucks, therefore estimating income keeping in view of the said provisions is incorrect. The assessee also filed objection for other issues pointed out by the A.O., to reject books of accounts and estimation of net profit by rebutting all the allegations of A.O. and stated that it is operating with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r contended that net profit estimated by the A.O. is pretty high when compared to the nature of business of the assessee, that too, the assessee being a transport contractor operating trucks belongs to others wherein it had a very low profit margin, therefore, the A.O. was erred in estimating net profit of 7% on gross receipts. In so far as depreciation, the assessee submitted that the assessing officer ought to have allowed depreciation in accordance with provisions of section 32 of the Act, even after estimation of net profit, because depreciation is a statutory claim on the value of the assets. The CIT(A), during the course of appellate proceedings forwarded additional evidences filed by the assessee to substantiate the claim of ownership of assets along with written submissions to the A.O. for his comments. The A.O. vide his remand report reiterated the findings of the A.O., in the assessment order in so far as rejection of books of accounts and estimation of net profit. As regards claim of depreciation, the A.O. submitted that since the assessee failed to claim depreciation in the original return, it cannot make any fresh claim towards depreciation in the revised return filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assets were entitled for a depreciation as a beneficial owner of those vehicles and in fact no depreciation was claimed by it. Thus, as per the principle of doctrine of estoppels, the claim which was not there earlier cannot be made afresh in the return filed in response to notice u/ 148 of the Act. The D.R. further argued that the assessee failed to prove the ownership of assets even before the A.O. by filing necessary evidences and accordingly, the CIT(A) erred in allowing the depreciation without considering the fact that the assessee has not proved the ownership of the assets either absolute or beneficial which is necessary for claiming depreciation u/s 32 of the Act. The D.R. further submitted that the Ld. CIT(A) failed to consider that the re-assessed income cannot go below the returned income as the income assessed after giving effect to the directions of the CIT(A) goes below the assessed income, which cannot be permitted under law. 8. On the other hand, the Ld. A.R. strongly supporting the order of the CIT(A) submitted that the CIT(A) has rightly allowed depreciation on assets, as the assessee is having beneficial ownership of assets and accordingly it is eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial seized during survey reveals that the assessee has not maintained regular books of accounts for all the years. Though, the assessee has maintained katcha books of accounts, which does not give true and correct profit of the business as the assessee has not accounted certain receipts from return trips. Therefore, the A.O. opined that trading result disclosed by the assessee are not amenable for verification going by the fact that the assessee did not produce regular books of accounts duly supported by documentary evidence such as bills/vouchers for different items of expenditure such as diesel, driver betas, loading unloading charges and particularly other expenses which contributes major part of the total expenditure for the assessment year under review. The A.O. further influenced from the statement of the managing partner deposed an oath at the time of recording sworn deposition dated 5.2.2010 to the effect that the freight receipts others than Raasi Cements are not reflected in the books of accounts. Therefore, we are of the view that the A.O. was right in rejection of books of accounts and estimation of net profit. 11. Having said, let us examine whether the A.O. was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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