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TMI Blog2015 (11) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order of CIT(A) in estimating net profit rate at 8% as against additions made by AO on account of advances and sales and disallowance of expenses by invoking the provisions of section 40(a)(ia) of the Act. For this, revenue has raised following ground nos. 1 to 3: "1. That the Ld. CIT(A)-XXXIII, Kolkata is erred in directing the AO to estimate the business income of the assessee when the assessee maintained the record of transactions in his books of account though not maintained as per accounting standards for developers. 2. The Ld. CIT(A) erred in ignoring the false claim of advances and sales detected by the AO duly established by irrefutable evidences. 3. The Ld. CIT(A) erred in deleting the addition of Rs. 7,75,980/- made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial both on cash as well as credit. But the assessee has not maintained the accounts properly and has given different treatment to advance received as well as purchase of material on credit as well as on cash. Considering these facts, the CIT(A) rejected the books of account by applying the provisions of section 145(3) of the Act and directed the AO to work out the net profit rate estimating the same @ 8% by observing in para 6 as under: "6. Considering all the above facts, I am of the opinion that account of appellant are not correct and complete and do not give true picture of its income. They are therefore, liable to be rejected as per the provisions of section 145(3) of I. T. Act. As per the facts discussed in the assessment order, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed earlier. This net profit shall cover all the other addition made for bogus purchase and disallowable expenses. Also it has been held by the Special Bench Kolkata ITAT in the case of ITO vs. Kenaram Saha and Subhash Saha & Ors. 116 ITD 1 (Kol-SB) that when a net profit rate is applied, there remains no scope for further disallowance of any expenditure on technical grounds. The tribunal accordingly deleted u/s. 40A(3) by following ratio set by the decision of Allahabad High Court in the case of CIT Vs. Banwarilal Banshidhar 148 CTR 533 (All). In the decision in the case of Teja Constructions vs. ACIT 129 TTJ 57 (Hyd), this principle has been extended to disallowance u/s. 40(a)(ia) as well. In view of the ratio of the aforesaid decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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