TaxTMI 
TaxTMI 
2021 (2) TMI 276
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....in the construction work for various departments of Government of Rajasthan and having income from civil construction works. The assessee filed its return of income declaring total income of Rs. 2,65,42,230/- on 31.03.2018 for the assessment year under consideration. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notices and seeking reply of the assessee, the assessment order under section 143(3) of the Income Tax Act was passed by the AO on 24.12.2018 determining the total income at Rs. 4,26,93,520/- by applying the NP rate @ 9% instead of NP rate of 7.99% declared by the assessee subject to the interest, depreciation and remuneration to partners. While making the assessment, the AO wrongly added the remuneration allowable to the assessee firm to the total income of the assessee instead of deduction from income. Subsequently, by passing order under section 154 of the IT Act, 1961 the mistake was rectified and the income was determined at Rs. 3,90,93,520/- which resulted an addition of Rs. 1,25,51,290/-. 3. Aggrieved by the order of the AO, the assessee preferred first appeal before the ld. CIT (A) who after considering the materials....
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....ara 3.2 of assessment order the A.O. said that the Trading result furnished by the AR does not match with the trading result declared by assessee in the audit report in form 3CD. It is totally wrong that the A.O. said the trading result furnished by AR of the assessee not matched with result declared in 3CD. In the 3CD the gross profit matched with the result furnished by A/R: A.Y. G.P. Ratio as per 3CD G.P. ratio furnished by AR 2014-15 8.59 8.59 2015-16 9.37 9.37 2016-17 9.82 9.82 The above chart clearly shown that G.P. ratio furnished by AR match with result shown in form 3CD. Now we come on the N.P. Ratio, the trading result furnished by AR was adjusted result as he added in the net profit, depreciation, Interest paid to the partners and remuneration paid to partners, while in the form 3CD net profit shown after interest paid to partners and remuneration paid to partners, due to this result of N.P. not matched. We summarize the same as under:- A.Y. 2014-15 2015-16 2016-17 Net Profit 5.52% 5.06% 6.11% Trading result furnished by A/R A.Y. 2014-15 (Rs.) 2015-16 (Rs.) 2016-17....
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.... are only creditors for labour and raw form material which purchased from local person on credit basis as reputation of the assessee on that area are very good. As these creditors are relating to supply of labour and supply of raw form material and supplied by individually which mostly below Rs. 1lakh not required to establish the genuineness, creditworthiness and also not required confirmation for so bulk persons/ creditors. Assessee maintained name and designation and outstanding balance of these creditors which already submitted to A.O. A copy of same is enclosed. In para no. 4 on page no 5& 6 the A.O. comment as under and reject the books of accounts u/s 145(3) and apply the provision of Section 144 of the Income Tax Act,1961. The reply of the assessee to the show cause notice has been considered and found unacceptable. During the year the assessee has claimed payable liability of Rs. 15,41,77,052/- as on 31.03.2016 on account of sundry creditors related to Labour and Material and during the assessment proceedings the assessee failed to prove the genuineness of liability up to the extent of Rs. 14,56,79,014/- representing to labour and material, as except the ....
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....section 144 said that fails to make the return required under sub-section (1) of section 139 and has not made a return or a revised return under sub-section (4) or subsection (5) of that section. "In the appellant case, appellant file return of income in time." Subsection 1(b) of section 144 of the act said fails to comply with all the terms of a notice issued under sub-section (1) of section 142 or fails to comply with a direction issued under sub-section (2A) of that section. "Appellant complies all the terms of notice issued to the appellant u/s 2A of section 142." Subsection 1(c) of section 144 of the act said having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143. "Appellant complies with all the terms of a notice issued under subsection 2 of section 143." As the appellant comply all the provisions of section 144, due to this section 144 of the act, not applicable on the assessee and A.O. not justified to complete the assessment u/s 144 which is illegal and unjustified. We pray to for goodselves kindly allow this ground of appeal. In the appellant case the A....
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....16 a lump-sum addition made of Rs. 10,00,000/- but not rejected books of accounts of the assessee firm on appeal, your honour reduced addition to Rs. 6,00,000/- and hon'ble tribunal delete the addition in TOTO i.e. accepted return income of the assesese. On going through percentage of creditors we find 33.53% creditors as against 37.44% in previous year.(Copy of the order of hon'ble tribunal is enclosed.) On going through N.P. rate we find that N.P. rate is better from previous year as 6.11% against 5.06% in A.Y. 2015-16 and 5.52% in A.Y. 2014-15. On the above analysis it is clear that the assessee had creditors for outstanding labour and material in previous years also. It is regular feature in the assessee's trade that payment received from govt. & govt. department in last date of March which deposited in bank in next year, due to this creditors not paid in time. In the previous years A.O. not rejected books of accounts of the assessee for on the basis of outstanding creditors for labour and material. It is also important that the assessee firm shown its better trading result during the year under appeal as against in the previous years whic....
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....n the light of provision of section 145 of Act. Principles applicable with regard to the method of accounting can be summarized as under: (i) The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the AO to show that either the books of account maintained by the assessee were incorrect or incomplete or that the method of accounting adopted by him was that true profits of the assessee cannot be deducted therefrom. (325 ITR 13, Paradise Holidays- Del.) (ii) If a particular accounting system has been followed and accepted and there is no acceptable reason to differ with it, the doctrine of consistency would come into play. (339ITR 382 Jagathit Industries Ltd., Del.) Prayer We request to your honour kindly delete the addition made by the A.O. on account of GP/NP of Rs. 12551297.00 and oblige." 6. At the time of hearing of the appeal, the ld. A/R of the assessee submitted that the ld. CIT (A) though admitted that the assessee has de....
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.... that ld. CIT(A) in her findings had admitted that the assessee filed the chart of NP/GP which shows that profit rate was better in comparison to last year and thus the NPR declared by the assessee was better as compared to earlier years. We have also considered the decision of ITAT Jaipur Bench in the case of Goodwill Impex Ltd vs DCIT (supra) and its operative portion is reproduced as under:- ''5. We have heard the rival contentions and perused the material available on record. The Assessing officer has rejected the books of accounts by invoking the provisions of section 145(3) and the same has been sustained by the ld CIT(A). Once the books of accounts are rejected, only course of action left with the Assessing officer is to assess the income of the assessee on the basis of best judgement. Where the assessee has a settled past history, in such cases, accepted G.P rate for the past years in assessee's own case has been held by the Rajasthan High Court as proper and reasonable basis for estimation of G.P rate for the current year. In the instant case, the AO has made an adhoc trading addition of Rs. 2 lacs and in the process, has estimated the G.P rate of 16.47% on the de....