TaxTMI 
TaxTMI 
2020 (3) TMI 211
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..../- incurred in carrying out contract work. 3. Ld. CIT(A) has erred in law in not admitting the additional ground in respect of alliawability of Rs. 1,56,732/- for interest on capital contribution and Rs. 2,40,000/- for remuneration to working partners which was originally allowed by the Ld. AO but later on disallowed/withdrawn through rectification order dt. 06.08.2013 u/s 154 of the IT Act i.e. after about 21 months of filing the appeal by assessee against order dt. 14.11.2011, ignoring the law laid down by Hon'ble jurisdictional High Court (245 ITR 527). 4. Additional and legal ground of appeal: Ld. CIT(A) has erred in law in not allowing remaining depareciation of Rs. 2,27,013/- out of Rs. 2,38,263/- on fixed assets used in carrying on contract business by assessee {( @ 10% on shop of Rs. 22,87,000/- and @ 15% on tools & plant of Rs. 63,750/-} allowable as per expl. 5 to section 32 of IT Act for which no claim was needed." 2. Briefly the facts of the case are that the assessee firm is engaged in the business of civil construction and has filed its return of income declaring total income of Rs. 2,64,178/- which was selected for scrutiny and notice U/....
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....negative cash balance in its cash book and the assessment was completed U/s 144 of the Act by invoking the provisions of Section 145(3) of the Act. Further, it was submitted by the ld. DR that the assessee has taken this ground as an additional ground before the ld. CIT(A) and in absence of a specific payer made by the assessee, the said ground was not admitted and dismissed by the ld. CIT(A). 5. Regarding ground no. 2, the ld. AR submitted that the assessee had made payment of certain expenses after gap of few days from the date of receipt of expenses vouchers but due to mistake of the accountant, had entered the payment of these expenses on the date of vouchers which resulted in negative cash balance on 04.03.2019. Otherwise, at the end of the year, cash balance was a positive amount as per audited statements of accounts. As per practice of Department, in given facts, had the ld. AO applied NP rate on gross receipts, there was no need for separate addition. 6. Per contra, the ld. DR submitted that during the course of assessment proceedings on verification of cash book, it was found that the assessee was having negative cash balance of Rs. 4,29,625/- on 04.03.2009 and as....
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....laimed by the assessee in the profit and loss account. It was submitted that as per explanation 5 to Section 32, the AO should have allowed remaining depreciation on shop even if not claimed by the assessee and in support, reliance was placed on the decision of Platiblends India Ltd. vs. Add.CIT (2017) 398 ITR 568(SC). 10. Per contra, the ld. DR submitted that in the computation of income filed by the assessee at its Paper book page 17, it has shown tools and plants under the head " Fixed Assets" on which depreciation of Rs. 11,250/- has been claimed and duly allowed by the Assessing Officer. Further, our reference was also drawn to the audit report wherein the auditors have also considered the fixed assets consisting of only tools and plants on which depreciation has been computed at Rs. 11,250/-. It was accordingly submitted that there is nothing on record in terms of any asset other than tools and plants on which depreciation has not been allowed by the AO and thus, the additional ground so raised by the assessee deserve to be dismissed. 11. We have heard the rival contentions and perused the material available on record. The question that arises for consideration is wheth....
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....uction. During the year under consideration the assessee has shown net profit of Rs. 6,72,160/- before depreciation, interest and remuneration partners against gross receipts of Rs. 90,71,494/- i.e. 7.40%. During the immediately preceding year the assessee has declared net profit rate of 8% before depreciation, interest and remuneration to partners. During assessment proceeding written submissions were filed and copy of audit report was filed. copy of cash book and ledger was filed but bills, vouchers, wages sheets, muster rolls, vouchers for payments were not produced although sufficient opportunity was provided to the assessee. Opportunity was provided to the assessee 09-06-2011, 05-07-2011, 12-07-2011, 25-07-2011, 02- 08-2011, 08- 18-20-1I, 25-08-2011, 02-09-2011, 09-09-2011, 07-10-2011, 12-10-2011, 19-10-2011, but the assessee failed to avail these opportunities and failed to produce complete bills, vouchers, muster rolls, wages register and purchase bills. The assessee was asked vide order sheet entry dated 02-09-2011 to show cause as to why assessment shall not be completed u/s 144 i.e. best judgment assessment. But the assessee failed to furnish any reply on show cause and e....
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.... of income-tax assessment and sales tax assessment, the following observations of this court in Raghubar Mandal Harihar Mandal v. State of Bihar [1957] 8 STC 770 , 778 (SC), a case under the Bihar Sales Tax Act, would be material: "No doubt it is true that when the returns and the books of account are rejected, the assessing officer must make an estimate, and to that extent he must make a guess; but the estimate must be related to some evidence or material and it must be something more than mere suspicion." Again in Stale of Kerala v. C. Velukutty [1966] 60 ITR 239 (SC), which was a case under the Travancore-Cochin General Sales Tax Act, Subba Rao J. (as he then was), speaking for this court, observed at page 244 of the report thus: "The limits of the power are implicit in the expression 'best of his judgment'. Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guesswork in a 'best judgment assessment', it shall not be a wild one, but shall have a reasonable nexus to the avai....