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TMI Blog2013 (9) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... bills and vouchers – It is also noted that rejection of books of account have not been challenged – Appeal of the Assessee is dismissed – Decided against the Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... n applied by the Tribunal to estimate its taxable income. Apart from applying the net profit rate of 2%, a plea has also been made for providing deduction as per section 40(b) of the IT Act and deduction for depreciation. The ld. CIT(A) called for the remand report from the AO and also rejoinder from the assessee and the ld. CIT(A) applied the order of the Tribunal in case of A.R. Enterprises as have been agreed by the counsel for the assessee before him to apply this decision for the purpose of determination of business income of the assessee. The ld. CIT(A) on the agreement by ld. counsel for the assessee, applying the decision in the case of M/s. A.R. Enterprises (supra), directed to apply the profit rate of 2% and computed the income of assessee at Rs.14,71,717/- without giving further deduction of salary, interest and depreciation. The findings of the ld. CIT(A) in para 5.6 and 5.7 of the appellate order are reproduced as under : "5.6. I have considered all the facts of the case under appeal as discussed in the assessment order as well as presented before me by the ld. AR in the written submission and the rejoinder. There is no dispute over the books of account not being main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also deduction for depreciation by relying on certain case laws including a case law of Hon'ble Allahabad High Court. In this regard, after going through all the case laws stated by the ld. AR, I have found that in these case laws, higher rate of profit has been applied before allowing deduction for depreciation and deduction u/s. 40 (b). In case of CIT vs. Bishambhar Dayal & Co. (supra), the Tribunal has finally decided to apply the rate of profit at 9% which was confirmed by the Hon'ble Allahabad High court. In the case of CIT vs. Ludhiana vs. Supreme Builder (supra), the rate of profit applied was 12%. Therefore, I find that in both cases cited by the Id. AR, the rate of profit applied was quite high. As far as the decision of the Hon'ble Patna High Court in case of Shyam Bihari Vs. CIT(supra) is concerned, the profit rate of 6% was sustained up to the level of the ITAT but keeping in view the principle of computation of the income of a contractor as provided in section 44AD, the Tribunal did not allow the depreciation out of the estimated profit. The Hon'ble High Court held that in case of that assessee, the provision of 44AD would not apply because the turnover exceeded Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case law of M/s. A.R. enterprises by Hon'ble ITAT, Agra. Therefore, ground No. 1 & 2 are partly allowed and ground no. 3 is dismissed." 5. The ld. counsel for the assessee reiterated the submissions made before the ld. CIT(A). He has agreed that the rejection of books of account was not challenged before the ld. CIT(A). He has, however, submitted that profit rate of 2% is still on excessive side and that interest and salary shall have to be deducted separately even after applying the profit rate of 2%. On the other hand, the ld. DR relied upon the orders of the authorities below. 6. We have considered the rival submissions and perused the findings of authorities below and do not find any justification to interfere with the order of the ld. CIT(A) in applying profit rate of 2% for the purpose of computing the business income of the assessee. It is not in dispute that the books of account were not maintained by the assessee in proper manner and the same were also not supported with proper bills and vouchers. AO has given specific finding that it is not possible for him to ascertain actual purchases and sales. The ld. CIT(A) also gave similar finding in the appellate order and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he recent decision in the case of CIT Vs Vamadevan Bhanu, 330 ITR 559 held as under:- "Assessment - Assessment on agreed basis - assessee cannot appeal against such order - Income -Tax Act, 1961." Since in the case of assessee, the counsel for the assessee specifically pleaded before the ld. CIT(A) that the decision of jurisdictional ITAT in the identical case of M/s. A.R. Enterprises may be applied for the purpose of computing business income of the assessee and has agreed to application of profit rate, therefore, when the ld. CIT(A) followed the said decision of the Tribunal in the case of assessee, there is nothing to challenge the order of ld. CIT(A) on merits. No fault could be found with the order of the ld. CIT(A) in following the decision of the Tribunal as agreed by the assessee's counsel. Since part addition is maintained by the ld. CIT(A) on the basis of agreement with the assessee, therefore, the appeal of the assessee would not be maintainable and is liable to be dismissed. The ld. counsel for the assessee during the course of argument did not dispute the above findings of the ld. CIT(A) in maintaining part addition on agreed basis. Similarly, when the ld. CIT(A) fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the order of the ld. CIT(A) in deleting the addition. The liability shown in the books of account are coming up from the earlier years which are opening balance in the assessment year under appeal. Thus, the genuine liability exists in the books of account of the assessee. Therefore, even if no confirmation is filed in their cases, the old balances coming up from earlier years would not have been added in the case of assessee. Ground No. 2 of appeal of the Revenue is accordingly dismissed. 10. On ground No. 3, the Revenue challenged the deletion of addition of Rs.29,252/- out of various expenses. The AO considering various expenses not incurred for the business purpose and that the personal user of the expenses have not been denied, made addition of Rs.29,252/-. The ld. CIT(A) deleted the addition because once the income of the assessee has been computed by applying higher profit rate, it would take care of the additions made by the AO and no separate addition is called for. Accordingly, the ld. CIT(A) deleted the addition. 11. On consideration of the rival submission, we do not find any merit in this ground. Once the income of the assessee is computed by applying profit rat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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