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TMI Blog2017 (6) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... the gross total receipts before salary and interest to the partners of the firm, for the year under appeal. - Decided in favour of assessee partly. Addition on account of current liabilities and provisions, being creditors for goods - Held that:- As the books of account of the assessee are rejected by the assessing Authority in which case the same books of account could not be relied on for an addition on account of trade creditors. See CIT vs. Bahubali Neminath Muttin [2017 (1) TMI 820 - KARNATAKA HIGH COURT ] - Decided in favour of assessee. - ITA No. 52 /AGR/2013 - - - Dated:- 30-3-2017 - SHRI A.D. JAIN, JUDICIAL MEMBER, AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER For The Assessee : Rajendra Sharma, Adv. For The Revenue : Washim Arshad, Sr. DR ORDER PER, DR . MITHA LAL MEENA, AM : This appeal, by the assessee is directed against the order of the Commissioner of Income Tax, (Appeals)-1, Agra, [herein after referred to as the CIT (A) ], in respect of assessment year 2009-10. The assessee has raised the following grounds of appeal. I . On facts and circumstances of the case, the CIT ( Appeals ) was not justified in confirming the net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on the basis of material gathered by him. He further submitted that the AO has not gathered any material on the basis of which the assessment could be completed in the manner, it was done in the case of the assessee. 5.0 In support, he relied on the decision of the Jurisdictional High Court of Madhya Pradesh and also that of the ITAT, Agra Bench, Agra. In the decisions of the Hon ble High Court of Madhya Pradesh and the ITAT Agra Bench, it is held that while estimating income of the assessee, the AO should consider the assessee s past history, which would be the best comparable case for the completion of the assessment. The other decisions of various High Courts relied on by the assessee in support of his case are listed below. I . Decision of Hon ble High Court of Madhya Pradesh, in the case of Dina Nath Dubey vs . C . I . T . , 160 ITR 1 ( MP ) II . Decisions of Hon ble High Court of Rajasthan in the case of C . I . T . vs . Inani Marbles ( P ) Ltd . 31 ITR 125 III . Decision of Hon ble Allahabad High Court in the case of Delta Engineering Co . ( P ) Ltd . vs . C . I . T . 186 ITR 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee submitted that the AO has not brought any specific material evidence on record for drawing such inference, by pointing out as to which purchase or expenses vouchers were not verifiable. He further submitted that the AO has not applied any comparable case, in support, for application of high profit rate on gross total receipt. He contended that either the AO or the 1st appellate authority ought to have distinguished the findings of the jurisdictional Hon ble High Court given in the cases cited as above on , identical facts, in support of the instant case. 8. We find that the AO has neither pointed out any specific deficiency, in the purchase invoices or the expense invoices, nor discussed any comparable case on identical facts, to form the basis for application of a particular net profit rate on gross total receipts, in the case of the assessee. On perusal of the comparative Net Profit Chart of the assesses s past history on profit rate, as above, it is evident that the Net Profit Rate before interest paid to partners capital is reasonably declared at 3.54% as against 3.3 % and 3.8% of the previous years. However, after interest paid to partners capital, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re increased by 4746617/- if compared with the balance as on 31.03.2008 as per the balance sheet of the assessee. In this connection it is respectfully submitted that in the case of assessee the AO has rejected the books of account and estimated the income by applying the net profit rate of 8% on the gross total receipts, it is submitted that where the books of accounts are rejected, in that case, the AO cannot pick up some of the entries from same books of accounts which are rejected by the AO, once books of account are rejected same are to be considered as rejected for all purposes, the AO should not pick and choose the entries for computing of the income. That as regards the nature of these entries/amounts are concerned these represent the outstanding payment which is to be paid to various traders from whom the assessee had made the purchases and these amounts represent the outstanding amount payable to various traders related to the purchases made by assessee utilised in the contract and construction work undertaken by the assessee which are directly related with the receipts from contract business of the assessee duly accepted by the AO, if the receipts/payments received to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of accretion to trade creditors. Thus, the issue and facts involved in the case of the appellant are different. 9.5.2 That in another case of Commissioner of Income Tax vs. Palaniappan , the addition was made in respect of credit entries in the account of the assessee in respect of the earlier year on account of VDIS. Whether they would constitute the source of credit entries in the subsequent year and the matter was restored as regards to one specific entry of VDIS. It was not a case where the books of account were rejected and addition on account of accretion to trade creditors was made. Whereas in the instant case the facts and issue involved are not identical with the facts and issue of the case under consideration. 9.5.3. That in the decision of Commissioner of Income Tax, Trichur vs. M/s Kerala Sponge Iron , (supra), the issue was in respect of assessment of profit from commodity trading as cash credits under section 68, whereas the facts are altogether different in the instant case. 9.5.4. In the case, of Commissioner of Income Tax, Kanpur vs. Sharaf Trading Co.(supra), the issue is related to the additions of unexplained peak credit, made in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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