TaxTMI 
TaxTMI 
2018 (3) TMI 892
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....11. In assessee's appeal, following grounds have been raised: "Ground No. 1 On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in disallowing Rs. 1,34,22,499/- with respect to 19 Sundry Creditors who are Petty Contractors and Suppliers of material and aggregate and placed in remote destinations and sites under tough working conditions and nature of business and the Assessee purchased the material from such person in unorganized sectors. "Ground No. 2 The Ld. CIT (A) ignored the fact that the Appellant had satisfactorily explained the Creditors by way of Affidavits and Confirmation of balances." Whereas in the revenue's appeal, the department has raised the following grounds:- 1. ....
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....tificate and Form 16A in respect of interest paid to the said person. Since, assessee could not establish the ingredients of section 68; he therefore, added the said amount of Rs. 81 lacs. Lastly, on perusal of various heads of expenses debited in the profit and loss account, AO had observed that assessee could not produce books of accounts alongwith relevant bills and vouchers for verification and for checking the genuineness of the said expenses. Accordingly, he rejected the books of accounts and audit report alongwith the trading result by invoking the provision of section 145(3) and thereby estimating the net profit rate of 8% of the gross contract receipt from operations. The net profit rate of 8% was determined at Rs. 3,71,48,550/-. P....
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....the entire facts and material on record and the remand report, accepted the outstanding amount in respect of four sundry creditors only and for other 19 sundry creditors who were small suppliers of sand, bazri, soil, etc., for which assessee could not file confirmation, he did not accept the amount outstanding against them aggregating to Rs. 1,34,22,499/- The details of such persons have been incorporated at page 12 and 13 of the appellate order. Thus, the only part relief was given out of total addition of Rs. 1,71,03,987/- and balance amount of Rs. 1,34,22,499/- was upheld. 4. Regarding addition on account of unexplained amount of Rs. 81 lacs received from Shri Brijesh Kumar Jaiswal, Ld. CIT (A) appreciated that assessee has filed the co....
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....nt in appellant's case. The facts being so, these evidences being part of the departmental records are admitted under Rule 46A of the Income Tax Rules, 1962 in the interest of natural justice. As all the parameters viz. identity, creditworthiness and genuineness of transaction have been established in respect of unsecured loan received by the appellant, the AO's action in making the addition of Rs. 81 lacs on account of unsecured loan is not justified. The same is directed to be deleted. Ground No. 2 of the appeal is allowed." 5. Lastly on the issue of rejection of books of accounts and estimation of net profit rate 8% whereby the AO has enhanced the business income by making addition of Rs. 1,61,93,740/-, Ld. CIT(A) upheld the ac....
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....,61,93,740/- after denying the claim of deduction of depreciation from the said net profit rate. Ld. CIT(A) had accepted the outstanding amount against four trade creditors only and reduced the addition from Rs. 1,71,03,987/- to Rs. 1,34,22,499/-. After sustaining this much amount of addition on account of sundry creditors, he further upheld action of the AO in rejecting the trading result in the books of accounts and the application of net profit rate of 8%. However, he has accepted the assessee's claim for allowing of depreciation on such an amount following the various judgments of Hon'ble High Courts as well as the CBDT circular; and accordingly the addition on account of net profit rate was worked out of Rs. 35,25,490/-. Since he had a....
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....hould be made to the income of the assessee. 7. So far as rejection of books of accounts are concerned the Ld. Counsel has not placed any objection which inter alia leads to an inference that books of accounts have rightly been rejected by the authorities below alongwith the application of net profit rate of 8%. Once the trading results and books of accounts have been rejected and income is being estimated by applying net profit rate on the declared gross contract receipt, then no other addition is required to be made on account of any other trading items including the trade creditors or any other direct expenses as well as trading liabilities shown in the accounts. The reason being that, when the books of accounts are rejected and income ....