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TMI Blog2019 (11) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration. (ii) Whether on the facts and in the circumstances of the case the CIT(A) is justified in law in deleting approximately the full trading addition of Rs. 2,49,12,081/- and confirming the addition of Rs. 2,49,559/- only which was made after rejection of books of accounts u/s 145(3) of the IT Act, 1961 ? (iii) Whether on the facts and in the circumstances of the case the CIT(A) is justified in law deleting the entire addition made u/s 40A(3 )& 40(a)(ia) of the Act, wherein it was established fact that the assessee had violated the provision of section 40A(3) & 40(a) (ia) of the Act. ? (iv) The appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at the time of hearing of the appeal." 3. Rival contentions have been heard and record perused. The facts in brief are that the assessee company is a civil construction contractor for last five years. Its books of account are regularly audited U/s 44AB of the Act. During the course of scrutiny assessment, the A.O. after pointing out defects in the books of account, invoked the provisions of Section 145(3) of the Act and rejected the book results and esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity in the departments for obtaining contract work, which are purely for business purposes. The Interest received from the FDR relate to the profit of business income and not income from other sources. The A/R of the appellant relied upon the following case laws the HONBILE I.T.A.T. JODHPUR BENCH has also admitted in the assessment year 2010-11. 2011-12 and 2012-13, is also held that the A.O. has ignored the contention of the assessee that FDR were purchased for taking contract work and therefore the interest occurring on these F.D.R. would become as business income. The assessee wed copies of FDR which were pledged with various government departments. The A.O or the Id. CIT Appeals has not disputed the above mention facts. In our consideration opinion his interest income would partake the character of business income only in such like cases we have taken numerous decisions in the same lines. Accordingly offer consideration this interest income as - part of business income as has been claimed by the assessee so the FDR Interest is business income and no separate addition is called for. Therefore following the above cited decision of various cases and the decisions in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue explaining the reason for such provision, to restrict the trading activities of the assessee or the tax payers. The A/R of the appellant relied upon the case of the Allahabad High court in the case of CIT Vs. BANWARI LAL BANSIDHAR reported in 148 CTR 533 and CIT Vs G. K. CONTRACTOR 19 DTR 305 (Raj.) has held that when no deduction was allowed in regards to the purchases of the assessee, there was no need to look in to the provision of sec. 40(A)(3) and rule 6DD as no deduction was allowed to and claimed by the assessee in respect of the purchases. When the gross profit rate as applied, that would take care of everything and there was no need for the assessing officer to make scrutiny of the amount incurred on the purchases by the assessee. I pursued the record I find that Assessing Officer apply the provision u/s 145(3) of the I.T. Act and apply Net Profit rate which includes the addition u/s 40(a)(ia) and 40A(3) of the I.T. Act as held by the Hon'ble ITAT Jaipur Bench in the case of ACIT v/s M/s Choudhary & Brothers, Jaipur vide decisions the ITA No. 58/JPR/2013 dated 18.01.2018 as under:- "We have considered the rival submissions as well as relevant material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l issue has held in para 2.4 as under: "2.4 We have heard the rival contentions and perused the material available on record. In the instant case, the books of accounts were rejected u/s 145(3) of the Act and thereafter the AO has estimated net profit @ 5.05% on contract receipt after deduction of depreciation, interest and remuneration paid to partners as against net profit of 2.39% declared by the assessee. From the perusal of the assessment order, it is noted that there have been discussions between the AO and the assessee in terms of estimating the net profit rate once the books of account have been rejected. As part of that discussion, it is noted that in response to AO's show-cause as to why 8.5% net profit rate should not be allowed, the Id. AR has submitted that if the net profit at the rate of 8.5% is applied, then the deduction on account of payment of hiring charges for machinery taken on rent amounting to Rs. 22,41,600/- and Rs. 21,60,000/- are also to be allowed. The Ld. AO finally decided to apply net profit of 5.05% which has been agreed upon by the assessee. It is therefore seen that issue of allowance of payments of machinery hire charges has been duly take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld. CIT(A), the revenue is in further appeal before the ITAT. 9. The ld AR of the assessee placed on record the order of the Tribunal in assessee's own case for the A.Y. 2010-11 to 2012-13 and contended that after accepting rejection of books of account, the Tribunal have upheld the addition by estimating NP rate @ 1% of the gross receipts. The ld AR also placed on record, order of the Hon'ble Jurisdictional High Court dated 17/11/2015 confirming the order passed by the Tribunal. The precise observation of the Hon'ble High Court was as under: "By the judgment impugned, the learned Income Tax Appellate Tribunal by relying upon the judgment of this Court arrived at the conclusion that in case the assessee shows better result during the year under consideration as compared to past year, then there is no need for making any further addition. The finding arrived by the Tribunal is in consonance with the settled law, therefore, no addition in the income could have been made by the Assessing Officer. The Tribunal rightly declared the addition made as erroneous. The appeal does not involve any substantial question of law, hence, dismissed." 10. The ld AR also placed on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1%. During the current year under consideration where the A.O. has applied 8.5% NP rate after rejecting books of account, the ld. CIT(A) has restricted the addition by estimating NP rate of 1% after following the decision of the Tribunal in assessee's own case and also various other decisions of the Coordinate Bench and the Hon'ble High Court. As the facts and circumstances during the year under consideration are same as dealt with by the Tribunal in assessee's own case and the decision of the Tribunal was upheld by the Hon'ble High Court, we do not find any infirmity in the order of the ld. CIT(A) for following the order of the Tribunal in assessee's own case and applying NP rate of 1% on the gross receipts for estimating business income. 14. From the record we found that the A.O. has rejected books of account U/s 145(3) and estimated income for the purpose of computation of tax. While estimating the profit, the A.O. is to see past history or history of the similarly situated other businessman/traders. However, by ignoring the same, the A.O. has applied 8.5% net profit rate without any basis. By the impugned order after following the past history of the assessee and also the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this Act, the JCB is included in Goods Carriage. According to Section 194C (6), no deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of contract during the course of business of plying, hiring or leasing goods carriage, on furnishing of his PAN Number to the person paying or crediting such sum so that assessee company was not liable to deduct TDS as the JCB owner has submitted his PAN for non-deduction of TDS. 16. We also observe that the Coordinate Bench in various cases have held that when the profit is estimated by rejecting books of account, no disallowance U/s 40(a)(ia) of the Act is to be made. 17. In respect of disallowance made by the A.O. U/s 40A(3) amounting to Rs. 11,25,460/-, we found that the assessee has made the payment to the parties as they insist for payment on the very day. Due to genuine hardship of the parties, assessee has to pay in cash. Technically, the payment are covered by the provisions of Section 40A(3) but the same was considered along with Rule 6 DD (b) as it existed then which duly provided for the genuine hardship that may be caused to the taxpayer. Nowhere the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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