TaxTMI 
TaxTMI 
2019 (12) TMI 1425
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....fter) dated 15/7/2015 for Assessment Year (A.Y.) 2010-11. 2. The brief facts of the case are that the assessee-firm, a civil contractor, filed its' return of income for the relevant year on 15.10.2010, disclosing an income of Rs. 8,76,920/-. The assessee not producing it's books of account, which formed the basis of it's return, in the assessment proceedings before him, the Assessing Officer (AO) invokedsection 145(3) of the Act, and noting the assessee to be a habitual defaulterand not cooperativein the assessment proceedings, estimated the 'net' profit of its' contract business at 5% of the turnover of Rs. 365.44 lacs, i.e., at Rs. 18,27,177, and allowing deduction toward interest and salary to the partners thereafter, at Rs. 2,49,557/....
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....f Rs. 1,77,273/-; and (c) did not allow any deduction for interest and remuneration to the partners, assessing, thus, the assessee's total income for the year at Rs. 31,20,757/-. 2.2 In appeal, the ld. CIT(A) was of the view that the ld. CIT had given a specific direction to the AO, who therefore could not have travelled outside the mandate of the section 263 order, which had become final on account of it having not been appealed against by the assessee before the Tribunal. The AO, however, had gone wrong in increasing the net profit rate to 8%, qua which there was no direction. In any case, the same was sans any basis or material on record. He, accordingly, directed the AO to restrict the addition to Rs. 5,69,330, i.e., as stat....
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....thereto, so that the assessee's income had to be increased by Rs. 5,69,330/-, to which amount the addition having been already restricted in first appeal, no further relief is called for. 4. We have heard the parties,and perused the material on record. 4.1 The first thing that therefore needs to be clarified is qua the scope of the assessment in the set aside proceedings. This is in view of the Revenue's claim ofthe same having been determined per the section 263 order, i.e., to enhancing the income as originally assessed by Rs. 5,69,330, even as held by the ld. CIT(A). We, however, do not think so; the revision clearly requiring a fresh consideration of the stated issues as per law after hearing the assessee. The use of the words 'do....
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....ding receipt, but the receipt back of the security advance, paid earlier. The turnover would, accordingly, stand undisturbed at the amount reflected in the books, i.e., Rs. 365.44 lacs. 4.3 The second issue is with regard to the allowance of interest and remuneration to the partners upon estimating the net profit of the contract business at 5% of the turnover. This is as once the net profit has been estimated, there is presumably no question of any separate allowance of any expenditure debited to the profit and loss account. Toward this, the matter, in our view,is purely factual, the answer to which depends upon whether the AO, while estimating the said profit (of the business), is estimating the same before or after the said expenditure....
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....er clearly reflects the AO to be fully conscious of the same while making the estimate, and of having applied his mind in allowing the deduction on account of interest and remuneration to the partners, i.e., as claimed, being otherwise admissible. A lower estimate by him would not by itself make his order erroneous, particularly considering that the ld. CIT had not found his order erroneous on account of a lower estimate per se, but due to his having allowed, after estimation, deduction on account of interest and remuneration to the partners. Why, he himself directs for applying a net profit rate of 5% on the 'escaped' turnover (of Rs. 2.50 lacs), so that he found the same as reasonable. The AO, accordingly, had no jurisdiction to revisit h....