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TMI Blog2019 (11) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Profit Loss Account. Even though the assessee was provided sufficient opportunity by the A.O to give necessary details but the same remain unfulfilled at the end of the assessee. Therefore in our considered view Ld. A.O has rightly applied provisions of Section 145 and rejected the book results shown by the assessee. Application of notional profit of percentage of 5% on the booking commission and making addition in our view notional rate should have been applied on the total turnover of the assessee which in this case is ₹ 4,45,24,641/- (Gross receipts from trucks at ₹ 66,34,388/- and gross freight receipt of ₹ 37,89,253/-). Further in our considered view applying of 5% profit rate is much higher and therefore in the interest of justice and fair play we direct the Ld. A.O to apply the net profit rate of 3.5% on the gross turnover of ₹ 4,45,24,641/-. By applying net profit rate of 3.5% the amount on net profit would arrive at ₹ 15,58,362/-. This net profit shall be deemed to have been arrived after claiming all the expenses including depreciation except remuneration allowable to partners. We also direct the Ld. A.O to compute the remunerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there were additions to the capital account of the partners. The source of capital was asked. Assessee furnished the reply but they were not sufficient to convince the Ld. A.O, therefore he made the addition of ₹ 30,50,000/- for unexplained capital. Ld. A.O. also observed that there is a mismatch in the gross receipts shown by the assessee in the Profit Loss Account as against the booking commission received by the assessee. Freight receipts from five trucks owned by the assessee were also not appearing in the profit and loss account. The assessee was show caused. It furnished the submissions contending that only the net receipts have been shown. Books of accounts are audited. Ld. A.O however was not satisfied and he rejected the books of accounts observing various defects and made the addition of ₹ 18,94,514/- by applying the notional profit rate @5%on the gross receipts of ₹ 3,78,90,273/-. Ld. A.O also made addition u/s 44AE of the Act at ₹ 3,00,000/- towards the income of the five trucks plyed during the year. After making addition of ₹ 52,44,514/- income assessed at ₹ 54,76,836/-. 3. Aggrieved assessee preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the balance sheet of both the partners are placed for the preceding financial year and current financial year to support the source of capital introduced by the partners. 6. Per contra Ld. Departmental Representative vehemently argued supporting the orders of both the lower authorities and also submitted that no such details of lorry receipts were placed before the lower authorities. 7. We have heard rival contentions and perused the records placed before us. Through Ground No.1 the assessee has challenged the finding of Ld. CIT(A) confirming the addition for unexplained credit in the capital account of the partners at ₹ 30,50,000/-. It has been submitted before us that the partners namely Shri Puvinder Pal Ratan and Smt. Ravinder Kaur Ratan in their individual capacity are earning income from finance business. In this business they discount the lorry receipts, pay the discounted amount to the Drivers and on the due date which is normally 2 to 5 days from the date of lorry receipts, recover the amount from the party for which material was delivered. Reference was made to the balance sheet of both the partners. In paper book page-46 in the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records placed before us. Through Ground No.2 assessee has challenged the action of Ld. A.O of rejecting books of accounts u/s 145 of the Act and applying the notional profit rate of 5% on the booking commission of ₹ 3,78,90,213/- thereby making addition of ₹ 18,94,514/-. We observe that the assessee vide letter dated 3.10.2016 filed before the Ld. A.O during the course of assessment proceedings gave details of truck wise revenue and expenses, details of station wise freight and expenses. This reply is appearing on page-12 of impugned assessment order. As per this reply the gross receipts from running of five trucks owned by the assessee is ₹ 66,34,388/- and after deducting the expenses of ₹ 61,35,617/- the net receipts have been shown as ₹ 4,98,771/-. This net receipt is before claiming the depreciation on trucks at ₹ 18,32,330/-, which the assessee has claimed in the audited Profit Loss account. It means that if the depreciation of ₹ 18,32,330/- is reduced from the net receipts of ₹ 4,98,771/-, there is a gross negative income from running of trucks at ₹ 13,33,559/-. 13. As regards the freight income, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een arrived after claiming all the expenses including depreciation except remuneration allowable to partners. We also direct the Ld. A.O to compute the remuneration allowable to the partners as per the provisions of law and give the deduction of the same against the profit computed at ₹ 15,58,362/-. Ld. A.O is also directed to give the deduction of the net profit of ₹ 2,32,322/- which stands already disclosed by the assessee in the income tax return filed by it. The remaining amount shall the addition sustained in the hands of the assessee. Further our this decision of adjudicating of Ground No.2 shall not be considered as a precedence for the subsequent years. In the result Ground No.2 of the assessee s appeal is partly allowed. 15. Apropos Ground No.3 relating to addition u/s 44AE of the Act at ₹ 3,00,000/-, we observe that since we have already applied net profit rate on the total turnover of the assessee including freight receipts from running trucks, making a separate addition u/s 44AE of the Act is uncalled for and therefore same is directed to be deleted. In the result Ground No.3 of the assessee is allowed. 16. Apropos Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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