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TMI Blog2019 (1) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... ee firm was supposed to work on terms and conditions where maximum part of the receipts was taken by the main contractor as the conditions of contract work vary from contract to contract as also the profitability changes depending upon such conditions. Moreover, depreciation and interest charges debited in the accounts never been considered by the Assessing Officer. It is undisputed fact that the working in the state of J 3,00,000/- and 5,00,000/- relied upon the enquiry independently held by the A.O. in which Sh. P.K. Zalpuri has confirmed the transactions and further ld. CIT(A) has observed that the partners have inducted this amount in the books of account of the appellant firm but there was a mistake on the part of the Accountant of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0%, considering the case of the assessee being a Civil Contractor. Further the Assessing Officer also made an addition u/s 40A(3) for ₹ 4,77,187/- as well as u/s 40(a)(ia) for ₹ 13,30,500/- respectively. Further, the Assessing Officer also made an addition of ₹ 3,00,000/- and ₹ 5,00,000/- on account of unsecured loan. The assessment order was challenged before the ld. CIT(A) who partly allowed the appeal of the assessee by reducing the net profit rate from 10% to 8% on gross receipt and further deleted the amounts of ₹ 3,00,000/- and 5,00,000/- which were added on account of unsecured land. 3. The Revenue Department preferred ITA No.27(Asr)/2013, on feeling aggrieved against the reduction of Gross Profit rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The disallowance on account of depreciation (u/s. 32(1)) and interest (u s. 361 (iii)) shall not survive in view of the estimation of the net profit rate. That leaves us with the addition u/s. 68 qua a secured loan s. Though the same could be made in principal, and we do not agree with the Id. CIT(A) that the same could not be in view of the assessee's profit rate being estimated (CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC)), we find no basis for the said addition in the facts and circumstances of the case. True, the burden of proof u/s. 68 is on the assessee, which has not furnished any material in the assessment proceedings. However, it is not clear if the AO had in any of the notices u/s. 142(1) required the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in our considered opinion the estimation of net profit rate @6% on the gross receipt would be quite reasonable and would meet the ends of the justice. 4. Now coming to the confirmation of the addition of ₹ 13,30,500/- qua non-deduction of TDS u/s 40(a)(ia) and ₹ 4,77,187/- qua payment made in cash in violation of Sec.40A(3), The issue under consideration dealt with by following Courts:- i) Andhra Pradesh High Court in the case of Maddi Sudharshanam Oil Mills Vs CIT {1959} 37 ITR 369(AP). ii) Andhra Pradesh High Court in Indwell Construction Vs CIT 232 ITR 776(A), followed the decision of High Court in Maddi Sudharshanam Oil Mills Vs CIT(supra) iii) ITAT Bench at Amritsar in the case of ACIT Vs J.S. Grover Construction {IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, all the deductions which are referred to under Section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in Section 40 is also taken into account. 5. No doubt there is a big difference between profit earned with own capital and profit earned with borrowed capital and such a difference could have been taken into account by the Income-tax Officer while making an estimate. If the Commissioner had set aside the estimate on the ground that the vital fact that the business was carried on with own capital and not with borrowed capital has been ignored by the Income-tax Officer, there may not have been any difficulty in upholding that order. But, when he proposes to add b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion drawn in the appeal of the assessee, grounds Nos.1 and 2 stands dismissed. Now coming to the ground Nos.3 to 6, all are connected with each other and we have gone through the order of the ld. CIT(A) again, whereby, the ld. CIT(A) while deleting the addition of ₹ 3,00,000/- and ₹ 5,00,000/- relied upon the enquiry independently held by the A.O. in which Sh. P.K. Zalpuri has confirmed the transactions and further ld. CIT(A) has observed that the partners have inducted this amount in the books of account of the appellant firm but there was a mistake on the part of the Accountant of the appellant firm who has shown these amounts as loan to the appellant firm from Sh. P.K. Zalpuri instead of showing them as induction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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