TaxTMI 
TaxTMI 
2015 (6) TMI 562
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....owers which are coterminous with that of the Assessing Officer and no part of the same could have been sustained either on facts or in law. WITHOUT PREJUDICE TO THE AFORESAID 3. BECAUSE the "C1T(A)" has erred in law and on facts in upholding rejection of books of account (as had been made by the Assessing Officer) and in sustaining an addition of Rs. 9,21,620/- on account of extra profit as worked out in the following manner:- (a) Turnover as disclosed by the appellant and accepted in appeal Rs.17,43,61,117 (b) Gross Profit as worked out by the "CIT(A)" by applying enhanced Gross profit rate of 8;5% (as against the disclosed G.P. rate of 7.97%) to the disclosed turnover as aforesaid. : Rs. 1,48,20,695 (c) Gross Profit as disclosed by the appellant Rs. 1,38,99,075 (c) Extra profit addition as sustained by the 'CIT(A)' [(b) - (c)] Rs. 9,21,620 4. BECAUSE the books of account had been maintained by the appellant in regular course of business which were subjected to statutory audit under section 227 of the Companies Act and again under section 44AB of the Income-tax Act, 1961 and there being no perceptible defect in the books of account so audite....
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....opportunity to the appellant to cross examine the said supplier, cannot be made the basis for arriving at a conclusion that plant and machinery in question had not been purchased at all; and accordingly the disallowance of Rs. 10,28,500/- as has been made/sustained by the Authorities below stand wholly vitiated. 11. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice." 3. The grounds raised by the Revenue are as under: "1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in reducing the addition on account of gross profit from Rs. 2,08,67,745/- to Ks.9,21,620/- without appreciating the facts that the AO has worked out the Gross Profit on pro-rata basis after rejecting the books of accounts u/s 145(3) of the Act and this rejection has been confirmed by the CIT(A). 2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting the addition of Rs. 7,00,000/- made by AO u/s 68 of the Act without properly appreciating the facts that the assessee company did not discharge its onus and grossly failed to prove the creditworthiness of the alleged share applicant....
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....45/- worked out by him on this basis. We also find that it is noted by CIT(A) on page No. 2 of his order that the assessee has shown turnover of Rs. 1,743.61 lacs with gross profit at Rs. 1,38,99,075/-, which is around 7.97% of turnover. He has further noted that the Assessing Officer has applied gross profit rate of 8.5% and worked out the gross profit at Rs. 2,08,67,745/- on the basis of estimated turnover at Rs. 2,455.20 lacs. The CIT(A) has held that the estimation of turnover on the basis of stock statement submitted to the bank is not justified. He has also held that on this issue, the judgment of Hon'ble Madras High Court rendered in the case of CIT vs. N. Swamy [2000] 241 ITR 363 (Mad) supports the case of the assessee. The CIT(A) has also held that even if gross profit is worked out by the Assessing Officer by applying rate of 8.5%, credit should have been allowed by him in respect of gross profit shown by the assessee, which was not done by the Assessing Officer. Under these facts, it was held by learned CIT(A) that the gross profit rate of 8.5% should be worked out on the basis of actual turnover reported by the assessee and credit should be allowed to the assessee o....
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....terest of justice, if gross profit rate of 8% is applied, it will serve the interest of justice. We direct the Assessing Officer accordingly. The Assessing Officer should adopt the gross profit rate of 8% on the declared turnover of Rs. 17,43,61,117/- and from the gross profit so worked out, he should reduce the gross profit already reported by the assessee and addition should be made only for the balance amount. Accordingly, ground No. 1 of the Revenue is rejected whereas ground Nos. 3 to 6 of the assessee are partly allowed. 7. Now we take up ground No. 2 of the Revenue. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 8. We have considered the rival submissions. We find that this issue was decided by learned CIT(A) in favour of the assessee by making following observations on pages 8 to 9 of his order, which are reproduced below for the sake of ready reference:- "I have considered the arguments and the submissions of the authorized representative along with contents of the assessment order. The A.O. has accepted the confirmation dated 04-11-2009 issued by the Police Department explaining t....
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....ear and the same was used in present year and therefore, depreciation should be allowed on this machine also amounting to Rs. 10,28,500/-. 11. We have considered the rival submissions. Regarding the issue raised by Revenue as per ground No. 3 i.e. regarding deletion of disallowance of depreciation to the extent of Rs. 6,77,724/-, we find that a clear finding has been given by CIT(A) that this depreciation is claimed in respect of generator, transformer and fixed assets and plant of the assessee could not have been run and achieved the turnover of Rs. 1,743.61 lacs without using this plant & machinery and therefore, depreciation is to be allowed. These findings of CIT(A) could not be controverted by Learned D.R. of the Revenue and therefore, on this aspect, we do not find any infirmity in the order of CIT(A). Ground No.3 of the Revenue is rejected. 12. Regarding the remaining part of disallowance of depreciation of Rs. 10,28,500/-, we find that the same was confirmed by CIT(A) on the basis that the Learned A.R. of the assessee of the assessee has himself agreed that the purchased plant & machinery has been returned back to the concerned supplier and therefore, it is clear that the....