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TMI Blog2017 (6) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. The Juridictional Madhya Pradesh High Court in the case of CIT vs. Metachem Industries (1999 (9) TMI 21 - MADHYA PRADESH High Court) held if the depositor a partner or any other individual owns the entry then the burden of the assessee firm is discharged. It is immaterial whether credits in the name of partners are reflected in the partner’s capital account or current capital account. - Decided against revenue - ITA No. 279/Agra/2014, And ITA No. 245/Agra/2014 - - - Dated:- 29-5-2017 - SHRI A. D. JAIN JUDICIAL MEMBER, AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER For The Revenue : Shri Indrajeet Singh, CIT. DR. For The Assessee : Shri Rajendra Sharma Adv. ORDER PER DR MITHA LAL MEENA, AM. These cross appeals by revenue and the assessee are directed against the order of CIT (A), Gwalior, [herein after referred to as the CIT(A) ] in respect of assessment 2 year 2010-11.The main grounds of appeal raised as per ITA nos. are reproduced hereunder. ITA No. 279/Agra/2014 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in applying the NP rate of 6% instead of 10% of gross contractual receipts applied by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the Assessing Officer ( the AO in short), estimated income from contractual receipts @10% of gross receipts. The assessee is engaged in the business of civil construction on contract basis. He rejected books results u/s 145(3), mainly on the ground that the expenses claimed by the assessee have remained unverified; and the books of accounts maintained by the assessee are neither prone to verification or reliable;and that the income chargeable under the Act cannot be properly deduced from the booms of accounts. Accordingly, the AO has applied net profit rate of 10% on the gross receipts after rejecting the books of accounts u/s 145(3) of the Act. 4 In the appeal,preferred by the respondent assessee before the ld. CIT(A), the issue of rejection of books of accounts is upheld.As regards, the estimation of income by application of net profit rate is concerned; he has reduced the said net profit rate to 6% on the gross receipt without further deduction of salary and interest to partners; placing reliance on the decision of ITAT, Agra in the cases of Jagdish Prasad Bansaland Naresh Katare. 5. The respondent ld. DR for revenue submitted that on the fact and in the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anath Dubey vs. CIT, 160 ITR 1', decision of Hon'ble Rajasthan High Court, Hon'ble Calcutta High Court, Hon'ble Karnataka High Court and also the decision of Hon'ble ITAT, Agra Bench, Agra, of which the decisions are also filed as per separate paper book. In these decisions, the Hon'ble High Courts as well as ITAT, Agra bench Agra in the cases of Om Construction Co. vs JCIT, Range-1, ITA No. 368/Agra/2013dated 02/05/2014 and Naresh Katare vs ACIT, Circle-3, ITA No. 567/Agra/2012dated 15/03/2013 wherein it is held that where the assessment is completed by invoking the provisions of Section 145(3) then the assessment is to be completed in the manner prescribed under the expenditures Section 144 of the Income Tax Act by which, the assessment is to be framed on the basis of past results of the appellant in his own case which are the best comparable case which the learned authorities below have ignored. 6.3 That the CIT (Appeals) ignoring the provisions of Section 145(3)/144 has estimated the income of the assessee by applying the net rate 6% on the gross total receipts disclosed by the assessee and also has not allowed the deduction of depreciation; salary an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal High Court) in the case of Dinanath Dubey vs. CIT,160 ITR 1 and decision of Allahabad in the case of Delta Engineering Co. (P) Ltd, vs. CIT 186 ITR 383 , in case of rejection of books of accounts, the net profit is to be estimated by applying the rate of profit in accordance with rates, applied in the case of the assessee for the earlier years. He contended that the AO and ld CIT(A) has not only ignored the provisions of Sec. 145(3)/144 of the Act but also not appreciated the results of the assessee declared in the earlier years and has estimated the income by applying the net profit rate of 6% on the gross total receipts which is without any basis and ignoring the past results as disclosed by the assessee which were before the authorities below. The ITAT, Agra bench Agra in the cases of Om Construction Co. vs JCIT, Range-1, ITA No. 368/Agra/2013 dated 02/05/2014;and that Naresh Katare vs ACIT, Circle-3, ITA No. 567/Agra/2012 dated 15/03/2013 applied 4% and 3% profit rate on the gross total receipts respectively on the similar facts. 8. Following thedecision of ITAT, Agra, in the various case cited (Supra)and the Hon ble Madhya Pradesh (Jurisdictional High Court), on simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this case are totally different from that of the present case and the ratio of this case does not apply to the case of the assessee. 12. Per contra, the ld. AR submitted that the provision of sec 68 of Income Tax Act, are not attracted in assessee s case, because the deposits are being made by the partners in their current account with the firm and the partners have more opening balance than that of closing balance. Even otherwise,partners deposited said amount with the firm, which they have withdrawn after some time from the firm, in that case also the genuineness of the transactions is fully proved as the partners are assessed to tax as evident from the copy of Income Tax Returns filed before the authorities below;and that their identityand credit worthinessis also proved thereof. He relied on the Judgement ofJuridictional Madhya Pradesh High Court in the case of' CIT vs. Metachem Industries, 245 ITR 160(MP) wherein it is held that if the depositor a partner or any other individual owns the entry then the burden of the assessee firm is discharged. It is immaterial whether credits in the name of partners are reflected in the partner s capital account or current capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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