2017 (12) TMI 364

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....he Tribunal was legally justified in restricting the addition of Rs. 96,27,290/- to Rs. 30,74,814/- made by Assessing Officer by invoking the provisions of section 145(3) and applying net profit rate of 5% instead of 8% specifically when huge discrepancies were found in the books of accounts? (ii) Whether the Tribunal was legally justified in reversing the findings of the CIT(A) and deleting the addition made on account of interest income of Rs. 3,16,339/- and other income of Rs. 7,03,275/- specifically when these incomes were different from the trading addition made in business income?" 3. The facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the I.T. A....

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.... would result in estimated net profit of Rs. 80,52,108 as against the net profit of Rs. 49,77,294. Accordingly, a trade addition of Rs. 30,74,814/- made by the AO would be confirmed and the appellant would get a relief of Rs. 65,52,476 under this head. Besides this, the appellant would be liable to tax on the interest income of Rs. 3,16,339 and other income of Rs. 7,03,275 declared in the return of income filed." 5. The CIT(A) also considered the contentions of the assessee however, has not allowed the expenses of income which was added amounting to Rs. 3,16,339/- and Rs. 7,03,275/-. 6. However, the same was considered by the tribunal observing as under:- "7.1. The ld. Counsel for the assessee reiterated the submissions as made in the ....

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....Profit % of NP 2010-11 1610.42 186.67 11.59% 59.97 3.72% 2009-10 2523.79 247.49 9.80% 91.04 3.60% 2008-09 1261.41 139.05 11.02% 63.64 5.04% 2007-08 1056.62 118.70 11.23% 45.82 4.33% 2006-07 455.66 45.28 9.93% 16.58 3.64%   7.1 If the average of the above years is taken, the net profit will come to 4.066%. 7.2 However, tribunal in view of the decision of jurisdictional high court applied the net profit of 5%. 7.3 Regarding second issue, he contended that the interest income and other income was part of the contract business and therefore once the net profit is applied, such receipts cannot be separately added to the income. Taking into consideration, the interest amount paid on the loan which was ....