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TMI Blog2023 (3) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed. Determination of Net profit by the ld. CIT(A) is inclusive of salary interest paid to partners - CIT(A) has determined lower net profit. We find no infirmity in this issue in the order of the ld. CIT(A). Related to issue in interest on deposit the Counsel took the plea that the fix deposit / FDRs are utilize to acquire the bank guarantee. Entire FDR is related to opportunity generation of business income in several years. The assessee maintained the consistency for utilising this interest earned and interest paid in the P L account. The issue was already agitated before the ld. CIT(A) by the assessee. We find that there is a nexus in between interest earned and interest paid in relation to the assessee business. Considering the factual matrix, we find that this particular issue is accepted by the bench. The interest paid should be adjusted with interest received which will not separately assessable. Appeal of the assessee dismissed. - I.T.A. No. 295/Asr/2019 I.T.A. No. 101/Asr/2022 - - - Dated:- 24-2-2023 - DR. M. L. MEENA , ACCOUNTANT MEMBER And SH. ANIKESH BANERJEE , JUDICIAL MEMBER For the Appellant : Sh. Sunil Kumar Bhatt , CA For the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the appeal. ITA No. 101/Asr/2022 4. In ITA No. 101/Asr/2022 the assessee raised the following grounds:- 1. On the facts and circumstances of the case the Ld CIT (Appeals) has erred i. In upholding the arbitrary assessment order passed U/s 144 of the Act by Ld Assessing Officer without any credible justification and reasoning. ii. in confirming application of adhoc net profit at rate of 4% of gross turnover exclusive of interest income as against total net profit at rate of 4.81% voluntarily declared by appellant inclusive of interest income. iii. in upholding interest income of Rs.53,60,719/- separately assessable as income from other sources without considering and completely ignoring interest paid at Rs.77,40,472/= on the loans to financial institutions which is far in excess of interest income received during the year. iv. in placing undue reliance on the arbitrary assessment order passed in hot haste u/s144 of the Act by Ld Assessing officer contrary to nature of business, past history and established principles of law. v. In upholding the disallowance of salary and interest paid to partners, debited to profit loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as much as the appellant was given numerous opportunities to attend and furnish the details requisitioned by the AO to assist him in checking the veracity of the huge expenses claimed in the accounts. In the circumstances, it is held that the appellant did not have any reasonable cause for not appearing before the AO and that the AO was well within his remit to reject the book results and substitute a GP rate for ascertaining the true and correct profits of the appellant firm: 6. However, it is also noted that the appellant's cases in the past have been subjected to a general disallowance in the scrutiny assessment proceedings. The GP ratio of the appellant firm has also been reported at a lesser figure than in the previous assessment years. It is also to be kept in mind that 'best judgement assessment cannot be an arbitrary or fanciful assessment. Since the appellant firm itself has referred to the case of Associated Contractors, wherein the jurisdictional Tribunal found GP rate of 4% to be reasonable, it is held that in the interest of fairness and justice, the GP rate be kept at 4% in the case of the appellant as well. The AO is, therefore, directed to recompute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand loans/SOD facility against the security of these bank deposits/FDR s based on fund requirements from time to time. Thus, bank deposits have served dual purpose i.e. interest income generated on which TDS has been deducted and fulfilment of terms of allotment of contracts also served by way of submission of bank guarantees. The interest earned of Rs. 53,60,917/=has been reflected separately on credit side of profit and loss account for proper presentation and disclosure requirement only since the appellant had option to set off the same against interest expenditure on loans amounting to Rs. 77,40,472/= disclosed on debit side of profit and loss account, which he has not done for fair disclosure purposes. 8. We heard the rival submission and relied on the documents available on the record. The assessee s case was assessed u/s 144 and the net profit was determined by rejecting the books of account u/s 145(3) of the Act. We find that for assessment year 2014-15 the net profit percentage declared by the assessee was 3.11. The ld. appellate authority has taken a realistic view has determined the NP @4% on the gross turnover of the assessee. The ld. CIT(A) properly clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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