TaxTMI 
TaxTMI 
2010 (11) TMI 500
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....fit rate for the current year and earlier two years and the chart is reproduced as under:- Assessment year Gross payment Net profit NP rate 2007-08 4,00,75,338 41,97,387 10.47 per cent. 2006-07 7,16,02,617 84,93,855 11.86 per cent. 2005-06 9,11,18,835 81,32,680 8.93 per cent. The Assessing Officer rejected the books of account after giving various reasons. The survey under section 133A of the Act was also conducted and it was noticed that the assessee is not maintaining regular books of account. The rejection of books of account has been upheld by the learned Commissioner of Income-tax (Appeals) and the assessee in the cross-objection has not raised a ground that the learned Commissioner of Income-tax (Appeals) has erred in rejecting the books of account. Hence, the rejection of books of account stands accepted by the assessee. The Assessing Officer referred to the answer to question No. 22 given by the assessee in the statement recorded at the time of survey in which the assessee voluntarily offered that his income may be determined by applying a net profit rate of 8 per cent. on the gross receipts without making ....
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....and Co. (No. 1) [2002] 258 ITR 431 (Raj). The learned Commissioner of Income-tax (Appeals) after considering the submissions directed the Assessing Officer to apply the net profit rate of 8 per cent. subject to depreciation and interest as per the following observations:- "I have considered the facts of the case and arguments taken by Sh. Kedia quite carefully. Keeping in view the various defects as pointed out by Assessing Officer which were also found in the earlier assessment years namely the assessment years 2004-05, 2005-06 and 2006-07 for the present year also in my considered view of the books of account were liable for rejection under the provisions of section 145(3) of the Income-tax Act as upheld by the aforesaid earlier three assessment years also and this view of the Commissioner of Income-tax (Appeals)-II, Jaipur has also been upheld by the Income-tax Appellate Tribunal, Jaipur Bench in their orders for the assessment years 2004-05, 2005-06, 2006-07. It is also a fact that except the admission by the appellant during the course of survey there was no corroborative evidence and supporting material that the appellant had earned 8 per cent. net profit ....
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.... assessee disclosed the net profit rate of 10.1.5 per cent. subject to depreciation and interest. The Assessing Officer made the addition of Rs. 5,50,567. The disallowance was restricted to Rs. 50,000 by the learned Commissioner of Income-tax (Appeals) and the order of the learned Commissioner of Income-tax (Appeals) was upheld by the Tribunal vide order dated January 30, 2009. In the assessment year 2004-05, the assessee applied a net profit rate of 8 per cent. without giving deduction in respect of depreciation and interest. Accordingly the Assessing Officer made an addition of Rs. 14,53,338. The learned Commissioner of Income-tax (Appeals) sustained the addition of Rs. 1 lakh on account of non-verifiability/non-maintenance of sitewise details. The Tribunal vide its order dated January 30, 2009 noticed that the assessee has declared the net profit rate of 10.15 per cent. and the same is better as compared to the earlier year. Therefore the addition of Rs. 1 lakh confirmed by the learned Commissioner of Income-tax (Appeals) was deleted. The assessment for the assessment year 2005-06 was made after the survey was conducted and, therefore, the Assessing Officer applied the net profi....
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.... declared the net profit rate of 11.86 per cent. as against 8.93 per cent. in the immediately preceding years. In view of the decision of the hon'ble jurisdictional High Court in the case of Kansara Bearings P. Ltd. v. Asst. CIT [2004] 270 ITR 235 (Raj), past year results are the best guide for application of profit rate. Following the same and in such circumstances and facts of the case, even if books of account are rejected and also in view of the decision of the hon'ble jurisdictional High Court in the case of CIT v. Gotan Lime Khanij Udhyog [2002] 256 ITR 243 (Raj), no addition in the present case is required to be made. Therefore, we find no infirmity in the order of the learned Commissioner of Income-tax (Appeals) which appears to be reasoned one. Thus the solitary ground of the Revenue is dismissed." Hence, we hold that the learned Commissioner of Income-tax (Appeals) was justified to the extent that the net profit rate should be allowed subject to depreciation and interest. Since the net profit rate subject to depreciation and interest is more than 8 per cent., therefore, there was no case of confirming the addition of Rs. 3 lakhs. The assessee in its cross-object....
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....third parties, therefore, no separate addition to the total income is required to be made because even after considering such interest income under the head, income from other sources the remaining business income subject to allowable depreciation and interest payment to third parties is worked out at 10.47 per cent. of the gross contract receipt. In a nutshell total addition of Rs. 3 lakhs to the trading addition is only sustained." We have heard both the parties. The Tribunal vide its order dated April 30, 2009 in the case of the assessees for the assessment year 2006-07 upheld the findings of the learned Commissioner of Income-tax (Appeals) that interest income is to be taxed under the head "Income from other sources". Once the interest income is to be taxed under the head "Income from other sources" then the same is to be excluded while giving deduction in respect of interest from the net profit rate applied. It will be useful to reproduce the details of interest as is available at page 77 of the paper book. (Rs.) (Rs.) (Rs.) (A) Interest paid:- 1. SOD A/c. 26011 with U. B. I., Jaipur 56,56,....
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.... 4,00,75,338.00 8 per cent. net profit 32,06,027.00 Less:- Interest paid 73,82,842.00 Less:- Depreciation 6,84,317.00 79,67,167.00 Balance profit (-) 47,61,140.00 Add:- Interest on FDR and NSC, etc. 48,80,754.00 Taxable income as per Departmental practice 1,19,614.00 Taxable Income declared by the assessee 25,99,451.00 Excess income declared by the appellant 24,79,837 As against taxable income of Rs. 1,19,614, the assessee has disclosed income of Rs. 25,99,451. Hence, if the interest on fixed deposit receipt, etc., even if taxed under the head "Income from other sources" even then it will not affect the taxable income of the assessee and even if the rate of 8 per cent. is applied subject to depreciation and interest. Hence, we hold that the learned Commissioner of Income-tax (Appeals) was justified in deleting the addition of Rs. 48,80,754. The third grievance of the Revenue is that the learned Commissioner of Income-tax (Appeals) has erred in deleting the addition of Rs. 40,00,150 as unexplained investment in respect of gifts given, loan given and c....
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....ations as under:- "The reply of the assessee has been considered. The same is not acceptable. The assessee is not clear as to whether the gift to the daughter was out of available cash with the assessee or the same was made after withdrawing from the bank account. As regards gift to the son out of the available cash is concerned, the same is acceptable as the assessee is not maintaining any books of account. In all, there is loan of Rs. 5 lakhs to the daughter, gift of Rs. 8 lakhs to the daughter, gift of Rs. 24 lakhs to the son and further cash of Rs. 30,150 found during the course of survey. All this stands explained and the same are added back to the declared income of the assessee. In making additions in respect of gifts to the son and daughter, the assessee has incurred expenditure and the explanation offered above is not satisfactory as the assessee has admitted that he is not maintaining books of account. In view of the deeming provisions of section 69C, the amount involved represents the deemed income of the assessee. For making addition in respect of cash found during the course of survey and the loan given to the daughter, the assessee is found to be the owner o....
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....8, he stated that he has given Rs. 5 lakhs as loan to his son-in-law for the construction of house at Plot No. C-620. The paper book contains copy of letter addressed to the Assistant Commissioner of Income-tax, Circle-6, Jaipur. This letter is available at pages 129 and 130 of the paper book. In this letter, the assessee agreed to apply the net profit rate of 8 per cent. without interest and depreciation. This letter also contains the balance tax, payable for the assessment years 2004-05, 2005-06 and 2006-07. Hence, in this letter, there is no retraction in respect of issue that net profit rate of 8 per cent. without interest and depreciation is to be applied. In this letter, the assessee gave the explanation for Rs. 24 lakhs in respect of other payments made to his daughter and cash in hand is not explained. Hence, this letter cannot be considered as retraction which has been considered by the learned Commissioner of Income-tax (Appeals). This letter contains the acknowledgment and receipt of the Additional Commissioner of Income-tax, Range-6, Jaipur. At that time, the assessee has not filed the return for the year under consideration. Hence, we are not aware as to whet....