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TMI Blog2021 (2) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Rajasthan and having income from civil construction works. The assessee filed its return of income declaring total income of Rs. 2,65,42,230/- on 31.03.2018 for the assessment year under consideration. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notices and seeking reply of the assessee, the assessment order under section 143(3) of the Income Tax Act was passed by the AO on 24.12.2018 determining the total income at Rs. 4,26,93,520/- by applying the NP rate @ 9% instead of NP rate of 7.99% declared by the assessee subject to the interest, depreciation and remuneration to partners. While making the assessment, the AO wrongly added the remuneration allowable to the assessee firm to the total income of the assessee instead of deduction from income. Subsequently, by passing order under section 154 of the IT Act, 1961 the mistake was rectified and the income was determined at Rs. 3,90,93,520/- which resulted an addition of Rs. 1,25,51,290/-. 3. Aggrieved by the order of the AO, the assessee preferred first appeal before the ld. CIT (A) who after considering the materials available on record partly allowed the relief by applying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot match with the trading result declared by assessee in the audit report in form 3CD. It is totally wrong that the A.O. said the trading result furnished by AR of the assessee not matched with result declared in 3CD. In the 3CD the gross profit matched with the result furnished by A/R: A.Y. G.P. Ratio as per 3CD G.P. ratio furnished by AR 2014-15 8.59 8.59 2015-16 9.37 9.37 2016-17 9.82 9.82 The above chart clearly shown that G.P. ratio furnished by AR match with result shown in form 3CD. Now we come on the N.P. Ratio, the trading result furnished by AR was adjusted result as he added in the net profit, depreciation, Interest paid to the partners and remuneration paid to partners, while in the form 3CD net profit shown after interest paid to partners and remuneration paid to partners, due to this result of N.P. not matched. We summarize the same as under:- A.Y. 2014-15 2015-16 2016-17 Net Profit 5.52% 5.06% 6.11% Trading result furnished by A/R A.Y. 2014-15 (Rs.) 2015-16 (Rs.) 2016-17 (Rs.) Net Profit as per P&L 17000685 13047410 26542223 Add: Depreciation 2186308 4892558 6975264 Interest Paid to Party 4207010 610 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of raw form material and supplied by individually which mostly below Rs. 1lakh not required to establish the genuineness, creditworthiness and also not required confirmation for so bulk persons/ creditors. Assessee maintained name and designation and outstanding balance of these creditors which already submitted to A.O. A copy of same is enclosed. In para no. 4 on page no 5& 6 the A.O. comment as under and reject the books of accounts u/s 145(3) and apply the provision of Section 144 of the Income Tax Act,1961. The reply of the assessee to the show cause notice has been considered and found unacceptable. During the year the assessee has claimed payable liability of Rs. 15,41,77,052/- as on 31.03.2016 on account of sundry creditors related to Labour and Material and during the assessment proceedings the assessee failed to prove the genuineness of liability up to the extent of Rs. 14,56,79,014/- representing to labour and material, as except the name of drivers and majdoors he could not even produce the complete address of the Labours and Majdoors. In absence of the confirmation and the complete details of the creditors, the undersigned is not satisfied about the correctness and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with all the terms of a notice issued under sub-section (1) of section 142 or fails to comply with a direction issued under sub-section (2A) of that section. "Appellant complies all the terms of notice issued to the appellant u/s 2A of section 142." Subsection 1(c) of section 144 of the act said having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143. "Appellant complies with all the terms of a notice issued under subsection 2 of section 143." As the appellant comply all the provisions of section 144, due to this section 144 of the act, not applicable on the assessee and A.O. not justified to complete the assessment u/s 144 which is illegal and unjustified. We pray to for goodselves kindly allow this ground of appeal. In the appellant case the A.O. reject the books of account only and only on the basis of not filling confirmation and address of the outstanding creditors for labour and raw form material of Rs. 14,56,79,014/. Except this he had not find any defect in the books of accounts of the assessee. Creditors also not cash creditors they were only for involving of labour and material for local purchase as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that N.P. rate is better from previous year as 6.11% against 5.06% in A.Y. 2015-16 and 5.52% in A.Y. 2014-15. On the above analysis it is clear that the assessee had creditors for outstanding labour and material in previous years also. It is regular feature in the assessee's trade that payment received from govt. & govt. department in last date of March which deposited in bank in next year, due to this creditors not paid in time. In the previous years A.O. not rejected books of accounts of the assessee for on the basis of outstanding creditors for labour and material. It is also important that the assessee firm shown its better trading result during the year under appeal as against in the previous years which clear from above chart Now we pray to your goodselves. Kindly allow the appeal in Toto. We relied on the order of authorities below. (Jodh-ITAT) 2019 ITL 3374 Income-tax Officer Wd-(1), Jodhpur, Rajasthan vs. M/s Ashok Transport Co. Udau Service Station ( JR-Trib.) 2014 ITL 1351 Deputy Commissioner of Income-tax vs. M/s Balaji Winer Raj Pal Yadav and R C Sharma, JJ. ITA No.08/JP/2003 dated may 30-05-2014 Mangalore Ganesh Beedi Works Versus Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) If a particular accounting system has been followed and accepted and there is no acceptable reason to differ with it, the doctrine of consistency would come into play. (339ITR 382 Jagathit Industries Ltd., Del.) Prayer We request to your honour kindly delete the addition made by the A.O. on account of GP/NP of Rs. 12551297.00 and oblige." 6. At the time of hearing of the appeal, the ld. A/R of the assessee submitted that the ld. CIT (A) though admitted that the assessee has declared better results over the last year where NP/GP rate were lower compared to the year under consideration even then has applied the NP rate of 8.5% as against 7.99% declared by the assessee without any basis. The ld. Counsel further placed reliance on the decision of this Tribunal in the assessee's own case for the preceding year i.e. A.Y. 2015-16 in ITA No. 961/JP/2019 dated 26.09.2019 whereby addition was deleted on identical facts. 7. On the other hand, the learned D/R relied on the orders of the lower authorities. 8. We have heard the rival contentions and carefully perused the materials available on record. At the outset, we note that an identical issue was considered by this Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer is to assess the income of the assessee on the basis of best judgement. Where the assessee has a settled past history, in such cases, accepted G.P rate for the past years in assessee's own case has been held by the Rajasthan High Court as proper and reasonable basis for estimation of G.P rate for the current year. In the instant case, the AO has made an adhoc trading addition of Rs. 2 lacs and in the process, has estimated the G.P rate of 16.47% on the declared turnover of the assessee and which has been upheld by the ld CIT(A). There is no basis which has been specified by the AO while making the addition of Rs. 2 lacs and we also find that the assessee's own past history has also not being taken into consideration. Once the books of accounts have been rejected due to non-maintenance of stock register, qualitative records, etc and provisions of section 145(3) have been invoked, the authorities cannot resort to make addition on an adhoc basis to prevent leakage of revenue as so stated by the AO. Only course left with the authorities is to estimate the gross profit rate based on best judgement and the past results of the assessee provides a reasonable basis for such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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