TaxTMI 
TaxTMI 
2017 (6) TMI 440
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....addition of Rs. 56,65,796/- made by the Assessing Officer to the income of the assesse u/s 68 of the Income Tax Act, 1961 on account of unexplained credits in the current accounts of the partners in its books of accounts, despite the fact that the assesse could not establish the credit worthiness of its partners as well as the genuineness of transactions. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 56,65,796/- made by the Assessing Officer to the income of the assesse u/s 68 of the Income Tax Act, 1961 by relying upon the decision of the jurisdictional High Court in the case of CIT vs. Metachem Industries 245 ITR 160 (MP), despite the fact that the 3 facts and circumstances of this case of are totally different from that of the present case and the ratio of this case does not apply to case of the assesse". ITA No. 245/Agra/2014 "1. On the facts & in the circumstances of the case the learned CIT(A) was not justified in adopting a net profit rate of 6% on the gross contract receipts without considering the past history of the case & comparable cases of contemporaneous period. The net profit rate appli....
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....he decision of ITAT, Agra, in the case of Shri Mahesh Chandra Contractor, ITA no. 138/Agra/2012, dated 14/09/2012 wherein profit rate of 8% is confirmed on rejection of books of account with the support of provisions of section 44AD. 6. The defendant council for the assessee has challenged the order of CIT appeals against applying the net profit rate of 6% on the total receipts, without allowing of the remuneration, interest payable to partners and also not allowing of depreciation claimed by assessee.He has submitted that the AO, while rejecting the books of accounts and invoking the provisions of Section 145(3) has not pointed out specific defects in the books of accounts.The AO by invoking the provisions of sec 145(3) and rejecting the books of account has applied gross profit rate of 10% as against 5.5% disclosed by the appellant subject to deduction of expenses claimed under the head depreciation; interest and salary payable to the partners which the CIT (Appeals) has reduced to 6% without allowing of the said deduction. 6.1 It is further submitted that the Ld. CIT Appeals while sustaining the addition by applying, the net profit rate of 6%, has ignored the procedure prescri....
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.... is without any basis and also against the provisions of sec 145(3]/144 of the Income Tax Act, and thus the net profit rate applied is not justified. 6.4 The assessee submitted that where the books of accounts are rejected u/s 145(3) and the income is estimated on the basis of materials gathered by the AO and if there is no material in possession of the department, in that case, as being referred in paper book, income is to be estimated on the basis of earlier year results of the assessee which is ought to be the best comparable case. In this regard, the assessee has furnished the comparative trading results to support his case as detailed below: Assessment Year Gross Receipts Net Profit Before Salary & Intt. Paid to artners Net Profit Rate Before Salary & Intt. Paid to Partners Net Profit After Salary & Intt. Paid to Partners Net Profit Rate After Salary & Intt. Paid to Partners 2008-09 20529089/- 1044931/- 5% 458612/- 2.2% 2009-10 39419772/- 1255051/- 3.18% 560932/- 2.2% 2010-11 55638855/- 3076216/- 5.5% 1455914/- 2.6% 7. It is admitted fact that books of accounts are rejected byinvoking provisions of Section 145(3) of the Act, pointingout that the....
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....nt challenged order of the CIT (A) regarding deletion of the additions of Rs. 56,65,796/- made by the AO on account of unexplained credits under section 68 of the Income Tax Act, 1961. 10. The ld. CIT (A) interalia observed that the deposits made by the partners in their current account as explained after taking into consideration the facts of the case that confirmatory letters of the partners' in respect of capital, introduced by them in the firm have been filed;and they are assessed to tax as evident from the copy of Income Tax Return have been filed;and being satisfied that the source of credit introduced in the form of capital from partner's and no addition u/s 68 can be made in the case of the firm in respect of such credits.Accordingly,he has deleted entire addition relying on the decisions of Hon'ble Madhya Pradesh High Court in the case of'CIT vs. Metachem Industries, 245 ITR 160 and decision and Hon'ble Allahabad High Court in the case of 'CIT vs. Jaiswal Motors Finance, 141 ITR 706. 11. The ld. DR supported the Assessment order and submitted that the source of funds in capital a/c of the partners and funds flow remained unexplained. He has also contended....