TaxTMI 
TaxTMI 
2005 (9) TMI 267
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....sideration. 1. ITA No. 606/Luck/2004 (Assessee's appeal) 2. The only issue involved in the assessee's appeal relates to the registration of the assessee-firm. 3. The assessee filed its return of income in the status of a firm disclosing total income of Rs. 44,358. On the basis of the information received from the Cane Development Council, it was found that the assessee had not disclosed its income fully in the return and hence, notice under Section 148 was issued. Admittedly, no compliance was made to this notice. Subsequently, several notices under Section 142(1) of the Act were issued. On some occasions either there was total non-compliance or on some occasion adjournments were sought and on some occasions, either some de....
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.... under Section 142(1); or (c) when return is filed, the assessee fails to comply with all the terms of notice issued under Section 143(2) of the Act. Thus, the argument was that what Section 144(1) envisaged was that a best judgment assessment can be done only in case of complete failure. The provisions did not envisage partial failure and, therefore, under such circumstances, the provisions of Section 184(5) could not have been made applicable. It was further argued that Section 184(5) was amended w.e.f. 1st April, 2004 to provide for the disallowance of salary, interest, etc. to the partners if there was a failure as mentioned ins. 144 of the Act. Thus, even if the assessee was held to be an AOP, such a disallowance cannot be ....
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....titude of the assessee, there may be justification on the part of the AO to make the assessment under Section 144 of the Act. However, Section 184(5) does not come into operation automatically when the assessment is made under Section 144 of the Act. Had that been the case, then the provisions would have been worded somewhat in this manner: "Where an assessment is made under Section 144 of the Act, the firm shall not be assessed as such for the said assessment year and, thereupon, the firm shall be assessed in the same manner as an AOP, and all the provisions of this Act shall apply accordingly." However, this is not the situation. Sec. 184(5) comes into play only when there is a complete failure as mentioned in Section 144 of the Act. T....
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....5,082. The AO applied the net profit rate of 10 per cent and worked out the income from construction business at Rs. 4,21,508. 10. Before the CIT(A), it was contended by the assessee that applying the provisions of Section 44AD of the Act, 8 per cent net profit rate may be applied. The CIT(A) accepted the contention of this assessee by observing that the AO has not brought anything on record to justify the estimation of net profit at 10 per cent. 11. We are also of the view that since the AO has arbitrarily applied the rate of 10 per cent without any basis and without any discussion, the rate of 8 per cent applied by the learned CIT(A) is reasonable and we uphold the same. 12. Second ground in the appeal is against the deletion of ....
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.... However, as per the partnership deed, the partners had agreed to maintain the books of account and that they were to be maintained on mercantile system. Therefore, it could be presumed that the partners must have acted as per the terms of the partnership deed and hence, now they cannot turn back to say that no books were maintained. Moreover, in the course of assessment proceedings, the assessee was asked on several occasions to produce the books of account. No doubt, the assessee never produced the books, but never also said that no books were being maintained. Further, the capital accounts as placed on records showed withdrawals by the partners, credit of salaries and interest, etc., and, therefore, again, a presumption could be raised t....