TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 51
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....tions of Rs. 5,90,411/- by applying estimation of income @3% on Trading in Tyre and @2% as net income on total freight receipts, whereas in the immediate previous year, the total net income was assessed u/s. 144 @ 1.22% of total turnover. ii. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law by not allowing partners interest on capital/ remuneration while estimating the net income of the firm u/s. 145(3) of the Act. iii. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other. 2.1 In anther Assessee's Appeal, identical issues are involved and similar grounds have been raised, the only difference is in the figures involved, hence, the grounds are not reproduced here for the sake of brevity. 2.2 Following common and identical grounds have been raised in the Revenue's Appeal for AY 2003-04:- "i. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting various additions of Rs. 51,69,895/- made by AO under specific heads pointing out specific violations. ....
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....ith the notice would entitle him in passing the order ex-parte. However, the assessee again did not make any compliance. In view of the repeated non-compliance, the AO issued summons in the name of partners Shri Narinder Gandhi and Shri Vijay Gandhi. However, the Inspector served the summons on Shri Vijay Gandhi only as the other partner Shri Narinder Gandhi was reported to have expired on 28.05.2003. On 30.01.2006, Shri Vijay Gandhi attended the hearing and submitted that all the important documents were in the custody /knowledge of Shri Narinder Gandhi who has since expired. The AO recorded the statement of Shri Vijay Gandhi in which he deposed that the books of account of the assessee firm were in his possession and he promised to produce for verification on 31.01.2006 but Shri Vijay Gandhi did neither produce books of account nor attended the proceedings. In response to further notice dated 03.02.2006, Shri Vijay Gandhi attended but did not produce books of account. Keeping in view the sequence of events and repeated non-compliance, the AO concluded that no books of accounts of the firm have not been produced and proceeded to make assessment u/ s 144 of the Act. The AO before r....
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....y dated 26.03.2006, the assessee only submitted a chart showing the details of bill No., registration no. of trucks with the dates, name of the supplier, bill amount, body charges, RC charges, amounts financed and margin money as well as' the name of the financer etc. As per the details given in the said chart the AO concluded that the total investment of Rs. 2,50,15,600/- was made in the purchase of trucks during the financial year from 2000-01 onwards, besides the investment of Rs. 1,09,38,587/- made during the year under assessment. Out of total investment so made during the year, the amount of Rs. 99,03,193/- was financed by Cholamandalam Finance Ltd. and Ashoka Leyland Finance Ltd.; and the balance amount of Rs. 10,35,394/- was invested by the assessee as margin money. Since the assessee did not produce books of account and other supporting documents, the same has been treated by the AO as unexplained investment in trucks during the year. The assessee claimed depreciation of Rs. 1,00,06,240/- as per the depreciation schedule of trucks. On the basis of details of trucks provided by the assessee, the AO worked out the allowable depreciation during the F.Y.2000-01 at Rs. 3,66....
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....the closing stock of preceding year, have also been added and completed the assessment at Rs. 59,03,010/- u/s. 144 of the I.T. Act, 1961 vide order dated 20.3.2006. 4. Against the assessment order dated 20.3.2006, the assessee appealed before the Ld. CIT(A), Faridabad, who vide his impugned order dated 25.3.2011 has partly allowed the appeal of the assessee. Aggrieved with the impugned order, the Assessee as well as Revenue are in cross appeals before the Tribunal on some of the issues mentioned in their respective appeals. 5. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records. 6. Ld. DR relied upon the order of the AO. 7. We have heard Ld. DR and perused the record....
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....0,69,392/- and has also made adhoc disallowance of Rs. 5,00,OOO/- out of expenses. If such expenditure is treated as bogus or unverifiable, than no addition can be made on account of sundry creditors as the liability in the form of sundry creditors is created by virtue of the expenses and purchases claimed. Hence, the addition of Rs. 10,84,564/-- on account of unverifiable creditors amounts to double addition. In the business of trading of tyres, if the addition of Rs. 10,69,392/- alone is considered against the sales of Rs. 32,32,590j-, the same results in the net profit rate of 33.08% which is impossible in the business of trading of tyres. Further, the AO has assessed the total income at Rs. 59,03,010/- on the turnover of freight receipts of Rs. 2.46 crores and sale of tyres of Rs. 32.32 lacs resulting into net profit rate of 21.15%, which is highly unreasonable in any business of transport of trucks. 7.1 We further find that Hon'ble Supreme Court in the case of CIT v. Simon carves (105 ITR 205) has held that tax authorities would not be acting properly and judicially if they exercise their power in the manner most beneficial to the revenue and consequently most adverse to ....
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....rriers, Faridabad for A.Y.2005-06 in which the net profit from freight and forwarding receipts of Rs. 5.00 crores has been shown at Rs. 8.93 lacs i.e. 1.78%. In the light of the above factual position and the judicial rulings cited supra, we are of the considered view that Ld. CIT(A) has rightly held that the case of assessee required rejection of book result by invoking the provisions of section 145(3) of the Act. Consequently, the income was required to be determined by applying the net profit rate. Therefore, in the interest of justice, it was fair and reasonable to estimate the net profit by applying the rate of 3.0% on sale of tyres as adopted by the AO in earlier years as a matter of consistency and rate of 2.0% on the freight receipts. The adopted rate of 2% as the case of M/ s. Siddharth Road Carriers, Faridabad pertain to A.Y. 2005-06 and not exactly to the year under appeal as well as on the reason that the turnover of the case of assessee is almost half of M/s. Siddharth Road Carriers, Faridabad, for which the net profit margin is likely to be higher due to lesser turnover. Consequently, the income of Rs. 96,977/- in the tyres business is estimated by applying the rate o....