TaxTMI 
TaxTMI 
2022 (4) TMI 895
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....law in confirming the addition of interest income of Rs. 12,58,998/- and miscellaneous receipts of Rs. 2,89,200/- totaling to Rs. 15,48,198/- under the head income from other sources apart from the business income sustained by him. 4. The appellant craves to alter, amend and modify any ground of appeal. 4. Necessary cost be awarded to the assessee." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that the assessee company is engaged in civil construction work. Return of income for the year under consideration was filed by the assessee on 29/11/2014 declaring NIL income comprising loss of Rs. 68,43,810/-. The case of the assessee was selected for scrutiny under CASS and statutory notices were issued and served to the assessee. After making enquiry and material placed on record, the A.O. finally completed the assessment by rejecting the books of account of assessee U/s 145(3) of the Income Tax Act, 1961 (in short, the Act) as well as assessing the total income of the assessee at Rs. 93,90,204/- by making various additions. 4. Being aggrieved by t....
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.... of account which is only on account of non maintenance ofstock register ignoring the peculiar nature of the activities carried out by the assessee where the purchase of material like sand, grit, cement, steel, etc. is directly uploaded at site and consumed and the unbilled work is accounted for as WIP.Hence, invocation of section 145(3) is unjustified and the consequent addition made by AO and confirmed by Ld. CIT(A) be deleted. Reliance in this connection is placed on the following cases:- (i) Malani Ramjivan Jagannath Vs. ACIT (2009) 316 ITR 120 / 207 CTR 19 (Raj.) (HC) (ii) CIT Vs. Smt. Poonam Rani (2010) 326 ITR 223/ 41 DTR 194 (Del.) (HC) (iii) Ashok Refractories Pvt. Ltd. Vs. CIT 279 ITR 457 (Cal.) (HC) (iv) PCIT Vs. Bhawani Silicate Industries (2016) 236 Taxman 596 (Raj.) (HC) 2. On merit it is submitted that during the year the assessee mainly executed the work which was awarded to him in FY 2011-12 & 2012-13. In between the rate of sand, bricks, cement and steel increased between 10% to 20%. Further due to financial constraints, some of the parties provided the steel/ cement, the cost of which was deducted from the running bill....
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....placed on the following cases:- (i) CIT Vs. Jain Construction Company 245 ITR 527 (Raj.) (ii) CIT Vs. Bhawan Path Nirman (Bohra) and Co. 258 ITR 440 (Raj.) and 258 ITR 431 (Raj.) (iii) Shri Ganpatlal Sharma Vs. ITO ITA No.1675/JP/1993 dt. 26.5.2000 (Jaipur) (Trib.)Assessee was contractor and his income was assessed by estimating net profit rate subject to depreciation. AO declined to allow interest paid to creditors. CIT(A) upheld the addition. Tribunal reversed the decision of CIT(A) by holding that in the case of contractors where NP Rate is applied, same should be subject to allowance of depreciation and interest paid to creditors. (iv) Rishabh Construction Pvt. Ltd. Vs. DCIT ITA No. 108/JP/2011dt.31.08.2012 (Jaipur) (Trib.) (v) Kirodimal Modi Vs. ACIT in MA No. 37/JP/2009 for AY 05-06(Jaipur) (Trib.) (vi) DCIT Vs. Kirodimal Modi in ITA No. 119/JP/2010 dt.10.09.2010 for AY 07-08(Jaipur) (Trib.). 6. On the other hand, the ld. DR has vehemently supported the order of the authorities below. 7. We have considered the rival contentions and carefully perused the material placed on record. As per facts of the case, we noticed ....
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....intained, rejection of books of accounts is not justified. The assessee has regularly maintained books of accounts in similar manner which has been accepted by the AO in the scrutiny assessment made for AY 2012-13 and AY 2013-14. The definition of books of accounts u/s 2(12A) nowhere specifically includes the stock register. Section 145(3) is applicable when AO is not satisfied about the correctness or completeness of the accounts or method of accounting or the accounting standard have not been regularly followed. There is no dispute about the method of accounting and the accounting standard regularly followed by the assessee. The only dispute is that AO is not satisfied about the correctness or completeness of account which is only on account of non maintenance of stock register ignoring the peculiar nature of the activities carried out by the assessee where the purchase of material like sand, grit, cement, steel, etc. is directly uploaded at site and consumed and the unbilled work is accounted for as WIP. Hence, invocation of section 145(3) is unjustified. In this regard, we draw strength from the decision of Hon'ble Jurisdictional High Court, as relied by the assessee, in the ca....
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....le Delhi High Court in the case of CIT Vs. Smt. Poonam Rani (2010) 326 ITR 223/ 41 DTR 194 (Del.) (HC) wherein the Hon'ble High Court has held that "if the stock register was not maintained by the assessee that may put the Assessing Officer on guard against the falsity of the return made by the assessee and persuade him to carefully scrutinize the account books of the assessee. But the absence of one register alone did not amount to such a material as would lead to the conclusion that the account books were incomplete or inaccurate". The Hon'ble Kolkata High Court in the case of Ashok Refractories Pvt. Ltd.Vs. CIT 279 ITR 457 (Cal.) (HC) has held that "there was no finding that in the opinion of the Assessing Officer, the methods applied were such that the income could not be deduced from the books of account maintained by the assessee or that the accounts were not correct or complete, the books of account could not be rejected only in the absence of stock register or the item-wise stocks were not maintained in the stock register." We also draw strength from the decision of Hon'ble Rajasthan High Court in the case of PCIT Vs. Bhawani Silicate Industries (2016) 236 Taxman 596 (Raj.)....
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....ncreased by around 3% for the reasons stated above. Finance cost as % of turnover has increased by around 5% which is mainly on account of increase in interest payment on loan taken from bank. Other expenses as % of turnover has increased by around 5% which is on account of the fact that Central Excise Commissionerate, Jaipur vide order dated 30.08.2013 raised demand of Rs. 26,74,240/- which was paid during the year and because of applicability of Works Contract Tax in the state of Haryana, the assessee has to pay WCT of Rs. 40,18,047/- during the year. For all these reasons the assessee suffered loss during the year which is fully verifiable. Hence, addition made by the AO and confirmed by Ld. CIT(A) by applying n.p. rate of 8% subject to depreciation is unjustified. Without prejudice to above, we found that the Hon'ble Rajasthan High Court and the Coordinate Benches of this Tribunal in various decisions has held that even when books of accounts are rejected and n.p. rate is to be applied, the same should be subject to depreciation and interest. The AO has allowed the depreciation but not allowed the interest payment of Rs. 1,10,07,464/- from the n.p. rate of 8% applied by him. If....
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.... CIT Vs. Bhawan Path Nirman (Bohra) and Co.258 ITR 440. We therefore do not see any valid ground to interfere with the impugned order passed by the Ld. CIT(A)." In the case of Kirodimal Modi Vs. ACIT in MA No. 37/JP/2009 for AY 05-06(Jaipur) (Trib.) and DCIT Vs. Kirodimal Modi in ITA No. 119/JP/2010 order dated 10.09.2010 for AY 07-08(Jaipur) (Trib.) has held that beside depreciation, interest paid to third parties is also allowable from the net profit rate applied. Considering the totality of the facts and circumstances of the case as well as judicial precedents followed in this regard, we found merit in the contention of the assessee and we direct to delete the addition made and confirmed by the lower authorities as well as set aside the action with regard to rejection of books of account U/s 145(3) of the Act. We direct accordingly. 10. Ground No. 3 raised by the assessee in the appeal relates to challenging the order of the ld. CIT(A) in confirming the addition of interest income of Rs. 12,58,998/- and miscellaneous receipts of Rs. 2,89,200/- under the head income from other sources. 11. Having considered the rival contentions and carefully perused the material placed on ....