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TMI Blog2013 (11) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of Rs 33,468/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 30.3.2006 and the total income was determined at Rs 14,51,990/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) vide order dated 13.5.2009 granted partial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following grounds: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in reversing the assessing officer's action to reject book results u/s 145(3) of the Income Tax Act, 1961, ignoring the fact that the assessee had inflated the expenses through bills and self made vouchers. 2 On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er noticed that the contract receipts included the undisclosed income of Rs 12 lacs admitted during the course of survey. According to the AO, if the undisclosed income of Rs 12 lacs was excluded from the contract receipts, instead of profit shown by the Assessee, the book result would be deficit of Rs 3,17,836/-. He also noticed that in the immediate earlier year and immediate subsequent year, the assessee has shown GP of 8.45% and 8.36% respectively. The Assessee was show caused to explain loss in trading and also to show cause as to why the book results declared by the Assessee not be rejected u/s 145(3) and the gross profit be calculated on the basis of previous year. The submissions made by the Assessee were not found acceptable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant that he was in the business of smuggling. In the present case, it is clear that appellant was a building contractor constructing small houses and disclosure was made at the time of survey on the basis of loose papers found at its business premises. In the case of Jalaram Industries Corporation, ITA No.97 (Rajkot)/2003, Rajkot Bench of ITAT after considering the case of Fakir Mohd. Haji Hasan, held that since the assessee was having only one source of income, it cannot be said that it was deriving income from unknown sources. Further, the Rajkot Bench of ITAT in ITA No. 362/Rjt/2006 in the case of Amul Industries Pvt. Ltd. also upheld the decision of CIT(Appeals) distinguishing that case from the case of Fakir Mohd. Haji Hasan. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he G.P after excluding income disclosed during the survey. Rejection of books of accounts u/s. 145(3), when the same were audited and when no defects were found in the books, is not justified. There is no case for adoption of G.P. @ 9% by discarding book results of the appellant. The Assessing Officer is directed to adopt the book results of the appellant instead of taking the same at Rs.6,77,444/-. The book results already include additional income of Rs.12,00,000/-. 7. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. Before us, the Ld D.R. relied on the order of AO and CIT(A). He further submitted that similar addition made in the case of Sadbhav Developers made pursuant to the same survey was upheld by H'ble Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that time and the books of accounts were not written at that time and the books of accounts were written later after considering the loose paper transactions. He has further noted that the rejection of books was not justified when no defects were found in the books. Before us Revenue has not brought any material on record to controvert the findings of CIT(A). We thus find no reason to interfere with his order on this ground. Thus this ground of the Revenue is dismissed. 10. 3rd ground is with respect to disallowance of partner's salary 11. AO noticed that Assessee has debited partner's salary of Rs 2,19,000/- as against Rs 1 lac in preceeding and subsequent years though the Assessee had not made any profit during the year. He also notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neration allowable as deduction, while applying section 40(b). 12. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 13. Before us, the Ld. D.R. supported the order of AO whereas on the other hand the Ld .A.R. submitted that the salary to partners was allowable u/s 40(b). He thus supported the order of CIT(A). 14. We have heard the rival submissions and perused the material on record. AO has disallowed the salary to partners considering the same to be excessive. CIT(A) has noted that the profits declared during the survey is also to be considered for working out the remuneration to partners u/s40(b) for which he has relied on the decisions of Tribunal. Before us, the Revenue could not bring any material to controvert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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