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TMI Blog2013 (3) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,295/-. While taking this figure, deduction claimed by the assessee of depreciation, salary paid to the partners and interest on capital shall be taken care of to which proposition the assessee has also agreed. We may note here that lesser net profit rate is applied in this case for computing business income considering the earlier history of assessee and objections of the AO for inflating expenses and that the assessee earned income mainly from Government and semi-government where profit margin is always lesser. In view of the above, final addition is maintained in a sum of ₹ 21,41,295/- as against addition confirmed by the ld. CIT(A) in a sum of ₹ 62,02,802/-. As a result, the appeal of the assessee deserves to be partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing of the interest, salary and depreciation to the assessee, they have completely ignored that the AO while making the assessment has not followed the manner as provided u/s. 144 while invoking the provision of section 145(3), the procedure as prescribed under the Act for completing of the assessment by invoking the provisions of section 145(3) is mandatory to be followed by the AO, in absence of which the assessment completed is bad in law, addition made on this score and sustained by the CIT(Appeals) are liable to be deleted. 3. Briefly, the facts of the case are that the assessee filed return of income declaring income of ₹ 19,20,210/-. The assessee is a partnership firm and earned income from Civil Construction on contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), as far as the issue of rejection of books of accounts is concerned, confirmed the order of the AO because the assessee could not produce some of the vouchers for expenses. However, considering the orders passed by the AO in various other comparable cases, in which profit rate of 6% or lesser has been accepted in similar type of business, directed the AO to apply 6% profit on the gross receipts and confirmed the addition of ₹ 62,02,802/- and the appeal of the assessee was partly allowed. 4. The ld. counsel for the assessee reiterated the submissions made before the AO and submitted that the AO has not followed the procedure provided u/s. 144 of the IT Act for estimating the income. Therefore, rejection of book results is unj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial available on record. The assessee in assessment year under appeal, i.e., 2009-10 has shown profit rate of 1.53% after deduction of interest and salary paid to the partners. In preceding assessment years 2007-08 and 2008-09, the assessee has declared profit rate of 0.62% and 1.73%. The AO has allowed deduction u/s. 40(b) and depreciation in a sum of ₹ 8,10,776/-, ₹ 13,67,638/- and ₹ 15,20,966/- (total ₹ 36,99,380/-) while computing the income of assessee by applying profit rate of 12.5%. The ld. CIT(A) rightly considering the comparable cases of various other assessees in which the AO has applied profit rate of 6% in similar circumstances, correctly found that the profit rate applied by the AO was highly excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is figure, deduction claimed by the assessee of depreciation, salary paid to the partners and interest on capital shall be taken care of to which proposition the ld. counsel for the assessee has also agreed. We may note here that lesser net profit rate is applied in this case for computing business income considering the earlier history of assessee and objections of the AO for inflating expenses and that the assessee earned income mainly from Government and semi-government where profit margin is always lesser. In view of the above, final addition is maintained in a sum of ₹ 21,41,295/- as against addition confirmed by the ld. CIT(A) in a sum of ₹ 62,02,802/-. As a result, the appeal of the assessee deserves to be partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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