TaxTMI 
TaxTMI 
2012 (4) TMI 750
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT(A) has erred in law in directing the AO to apply net profit rate of 5% after allowing depreciation and interest to partners on assessee's turnover as against 8% applied by the AO. 1.1 While doing so the ld. CIT(A) failed to appreciate that: i) The rate applied by the AO is the rate prescribed in the IT Act for estimation of income of contractors who do not maintain books of account. Thus, the rate applied by AO carried the weight of logic of statute. The estimate made by te AO in applying rate of 8% was a fair estimate as it was in consonance with the spirit of section 44AD wherein the legislature has taken the rate of 8% in a no books of account case to be a fair estimate. ii) In the case of assessee itself fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO. The application of 5% rate merit deletion, since it is based on own whims and caprice." 4. The brief facts relating to the issue in dispute are that the assessee filed its return of income on 30.10.2006. declaring loss of Rs. 4,40,514/- but in the profit & loss account, the assessee has shown net profit transferred to capital account. The return was duly accompanied by copies of balance sheet, profit & loss account etc. Subsequently, the assessee has also filed revised return on 08.12.2008 by declaring loss of Rs. 4,17,515/-. The assessee firm is a builder and contractor for road construction. The AO issued notice to the assessee u/s 143(2) of the Act and in response to the same, the Authorised Representative of the assessee appeared....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess loss of Rs. 4,17,515.56 pertaining to the assessment year 2006-07 can not be allowed to be carried forward and he allowed the business loss of Rs. 9,48,030/- pertaining to the assessment year 2005-06 to be carried forward and he completed the assessment u/s 143(3) of the Act on 26.12.2008 by making the addition at 8% of gross receipts of Rs. 2,38,01,582/- amounting to Rs. 19,04,127/- less brought forward business loss for the assessment year 2005-06 amounting to Rs. 9,48,303/-, totaling Rs. 9,56,097/-. Aggrieved by the assessment order dated 26.12.2008, the assessee filed the appeal before the ld. first appellate authority, who vide impugned order dated 11.06.2010 upheld the action of the AO on the issue of rejection of books of account....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved by the impugned order, the Revenue has filed the present appeal and the assessee has filed the C.O. 6. At the time of hearing, the Ld. DR relied upon the order passed by the AO and on the contrary the Ld. counsel for the assessee relied upon the order passed by the ld. CIT(A) except the issue raised by the assessee in the C.O. 7. The Ld. DR further argued that the AO has rightly applied the provisions of section 145(3) of the Act in the case of the assessee and the ld. first appellate authority has also rightly upheld the same. He further stated that the ld. first appellate authority has wrongly applied net profit rate of 5% after allowing depreciation and interest to the partners on the assessee's turnover as against 8% applied b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....filed revised return on 08.12.2008 by declaring loss of Rs. 4,17,515/- as mentioned by the AO at page 1. It is also a matter of record that after considering the documentary evidence filed by the assessee as well as reply to the notice dated 28.11.2008, the AO applied provisions of section 145(3) of the Act in the case of the assessee because the assessee has not filed some documentary evidence in original before the AO. Therefore, we are of the opinion that the AO as well as the ld. first appellate authority has rightly applied the provisions of section 145(3) in the case of the assessee. Secondly, as regards the benefit of carried forward losses, keeping in view the revised return filed by the assessee after due date, we are of the view t....