9911796707
TMI Blog2018 (11) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... s called for. The issues of identity, genuineness and creditworthiness of the sundry creditors at ₹ 60,42,964/- and unexplained unsecured loan of ₹ 9,48,000/- (Rs. 6,48,000/- from M/s. Amit Construction and ₹ 3,00,000/- from Shri Sheikh Allabaksh) needs to be set aside to the file of CIT(A) for afresh adjudication and if necessary a remand report may be called from the AO for verifying the facts and thereafter CIT(A) should decide as to whether the alleged amount of sundry creditors and unsecured loans are to be treated as unexplained or explained and decide accordingly. - Decided in favour of revenue for statistical purpose. - ITA No.327/Ind/2017 - - - Dated:- 14-11-2018 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Revenue : Shri K.G. Goyal, Sr.DR For The Assessee : Shri S.S. Deshpande And Bhavesh Netkar,CAs ORDER PER MANISH BORAD, AM . The above captioned appeal is filed at the instance of Revenue pertaining to Assessment Year 2012-13 and is directed against the orders of Ld. Commissioner of Income Tax (Appeals)(in short Ld.CIT(A) ], Ujjain dated 06.02.2017 which is arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no further addition can be made. The AO has rejected the books of account of the appellant u/s. 145 of the 1. T. Act and estimated the net profit @ ! 0%. It has been held by various Judicial Authorities that once the books of account have been rejected, the AO is' not empowered to make any further addition. It is also to be mentioned that appellant is carrying out Civil Construction Work. In some cases the appellant is taking direct contract and in some cases the appellant is taking sub-contract from other contractors. In the appellant's own case, the same AO has adopted 8% net profit on direct contract receipts and 4% net profit on sub-contract receipts pertaining to A. Y. 2011-12 and 201 0-1l. Both the above assessments have been completed u/s 143(3) of the I.T. Act. It will be appropriate to adopt similar net profit in this year also in order to meet the end of the justice. During this year the appellant is in receipts and ₹ 6,04,82,012/- as contract receipts. 1. Profit @ 4% on sub contract receipts of ₹ 1,24,63,661/- - Rs.4,98,546/- 2. Profit @ 8% on other co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s raised on merits may be set aside to the file of Ld.CIT(A) for necessary adjudication. 7. We have heard rival contentions and perused the records placed before us. Revenue is aggrieved with the deletion of addition of ₹ 60,42,964/- on account of unexplained sundry creditors and deletion of addition of ₹ 9,48,000/- on account of unexplained unsecured loan raised at Ground No.1 2. Without reiterating the facts in detail as the same have been discussed earlier, we find that the assessee did not cooperate during the assessment proceedings which leadg to framing of ex-parte assessment order. Books results were rejected and net profit estimated at 10%. Addition was also made for unexplained sundry creditors at ₹ 60,42,964/- and unexplained unsecured loan at ₹ 9,48,000/- as the identity, genuineness and creditworthiness of these were not proved by the assessee. 8. When the matter came up before Ld.CIT(A) he took the view that when the book results have been rejected and profits have been estimated, no other addition should have been made and he also gave relief to the assessee by estimating profit at 8% as against 10% made by the Ld.A.O. 9. For better ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why book results should not be rejected u/s 145 of the Act and Net Profit should not be applied @10% of the Act . Assessee did not make any submission regarding the Show Cause under Section 144 of the Act . As the assessee failed to submit the supporting bills/vouchers of expenses claimed and books of accounts, book results are rejected u/s 145 of the Act and net @10% which comes out to ₹ 72,94,567/-. The assessee has shown Net Profit amounting to ₹ 33,84,528/-. Therefore difference of s.39,10,039/- (72,94,567 3384528) is hereby added back to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the Act are being initiated separately on this issue. Addition ₹ 39,10,039/- 12. Now perusal of the finding of Ld.A.O vis- -vis Section 145(3) of the Act referred above we find that the Ld. Assessing Officer in the instant case is not satisfied about the correctness or completeness of the accounts of the assessee. The reason for such non satisfaction was that the assessee did not produce the books of accounts before the Ld.A.O. It is not the case that the books were produced with the documents and the Ld.A.O had examined them and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter giving opportunity to the assessee in order to compute income or loss. In the case of the assessee the profit and loss account shows turnover of ₹ 7,29,45,673/-. Ld.A.O applied the net profit rate of 10% as against 4.64% shown by the assessee under his powers under Section 144 of the Act. As far as the audited balance sheet is concerned Ld.A.O took up two figures relating to sundry creditors and unsecured loans which he deemed necessary to be examined about their identity, genuineness and creditworthiness in terms of provisions of Section 68 of the Act. The assessee did not provide any detail which paved the way to the impugned addition. Therefore after examining the details and perusal of provisions of Section 144 and 145 of the Act as well as the facts of the instant appeal, we conclude that if the Assessing Officer is not provided the books of accounts and he/she comes across the balance sheet and the profit and loss account and if case he/she decides to reject the book results then it is within the powers of the provisions of Section 144 of the Act to compute the income based on the turn over shown in the audited profit and loss and account and simultaneously Ld.A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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