TaxTMI 
TaxTMI 
2017 (9) TMI 635
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.... the AO in the assessment order. ii) On the facts and in the circumstances of the case, the CIT (A) has erred in treating interest income from FDR & NSC as business income and part of total receipts without appreciating the facts that the interest income on FDR & NSC is income from other sources. iii) On the facts and in the circumstances of the case, the CIT (A) has erred in directing the discount income from supplier to be reduced from cost of the material because the assessee itself has shown it as other income in the Profit and Loss account, ignoring the findings of fact given in the assessment order that discount income has been treated the 'other income' by the AO. iv) The appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at the time of hearing of the appeal. 2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed. While framing the assessment, the AO rejected the books of account and estimated the profit. The AO applied NP @ 13% ther....
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....bject to the scrutiny since A.Y. 2004-05 and decided by the appellate authorities. Summarized position of the income declared and accepted after the order of the CIT(A)/ITAT from A.Y. 2007-08 are as under:- Particulars Assessment Year 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 Contract receipts (in Rs.) 13,12,14,572 /- 9,83,53,575/ - 17,28,46,412 /- 26,88,37,074 /- 20,13,26,058 /- 16,75,20,136 /- Interest Receipts (in Rs.) 29,97,924/- 25,61,068/- 28,67,299/- 6,67,360/- 4,41,768/- 1,79,196/- Total Receipts (in Rs.) 13,42,12,496 /- 10,09,14,642 /- 17,53,13,711 /- 26,95,04,434 /- 20,27,87,824 /- 16,76,99,332 /- Net Profit before depreciation and interest and remuneration to partner (in Rs.) 1,54,59,620/ - 1,08,80,397/ - 2,01,01,939/ - 2,79,53,633/ - 2,01,96,008/ - 1,68,67,510/ - Net Profit rate before dep., interest and remuneration to partner 11.52% 10.78% 11.44% 10.4% 9.96% 10.06% Net Profit rate before dep., interest and remuneration to partner finally upheld by IT....
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....ial question of law arises. CIT vs. Gupta K.N. Construction Company (2015) 116 DTR 377 (Raj.) (HC) dated 18.08.2014 In a case where the provisions of sec. 145(3) are invoked, either the past history of the assessee or the history of similarly situated cases has to be considered. In the instant case, the AO is absolutely silent in justifying the addition/disallowance made by him which has resulted in N.P. rate of 13.7%. Assessment order is totally silent about the net profit rate shown by other similarly situated cases. While comparing with the past history, if the results are fair and reasonable, then invariably no addition is to be made. In the relevant year, though the contract receipts of the assessee have sharply increased from 10.60 crores to Rs.12.32 crores in the preceding year, the N.P. rate has increased from 5.02% to 5.38%. Though the argument of the Revenue that where the assessee manipulates the accounts by keeping the profit margins commensurate with the past years or slightly more than by itself cannot be a basis for acceptance of results is justified, it is for the AO to bring on record some concrete material/evidence to make a proper addition. In t....
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.... in mind the past history of the case and defects noted by AO, we are of the view that if a n.p. rate of 11.5% is applied then it will meet the ends of justice. Accordingly, the AO is directed to recompute the profit by applying n.p. rate of 11.5% against n.p. rate of 10.07% shown by assessee. For the sake of clarification, the ld. Counsel of the assessee has stated that instead of disallowing expenses head-wise, a reasonable n.p. rate should be applied. This contention of the assessee is reasonable. Accordingly we direct the AO to apply n.p. rate of 11.5% mentioned above. This ground of the assessee is allowed in part." Therefore, following the decision of Coordinate Bench in the assessee's own case for the A.Y. 2007-08, we find no infirmity in the order of ld. CIT (A) which is hereby affirmed. The ground of the revenue is rejected. 4. Ground No. 2 relates to deletion of interest income treating the same as business profit. The ld. D/R has supported the order of the AO. He placed reliance on the decision of Hon'ble Rajasthan High Court rendered in the case of CIT vs. Bhawal Synthetics (India) (2017) 81 taxmann.com 478 (Raj.) in favour of the Revenue. 4.1. On the contrary,....
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....t is nothing but income through other sources, as such, the Commissioner of Income Tax rightly treated the same as income taxable. So far as the second question is concerned as to whether the Commissioner of Income Tax was justified in invoking powers under section 263 of the Act of 1961 by holding that the enquiry conducted by the Assessing Officer before the assessment order was neither proper nor adequate, we would like to state that the order passed by the Assessing Officer nowhere reflects about any enquiry said to be made. It simply refers the explanation given by the assessee and nothing beyond that." Therefore, respectfully following judgment of the Hon'ble Rajasthan High Court, supra, we set aside the order of ld. CIT (A) on this issue and restore the finding of the AO. Ground of the revenue is allowed. 5. Ground No. 3 is against the direction of the ld. CIT (A) reducing the discount from the cost of material instead of treating the same as part of the income. The ld. D/R supported the order of the AO. 5.1 On the contrary, the ld. Counsel for the assessee supported the order of ld. CIT (A). 5.2. We have heard rival contentions and perused the material available....