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TMI Blog2018 (4) TMI 1956X X X X Extracts X X X X X X X X Extracts X X X X ..... of account of the assessee are audited and audited financial statements were available with the AO at the time of the assessment proceedings. No doubt the assessee did not produce the relevant bills/vouchers nor any supporting evidence was produced at the time of assessment proceedings. But as mentioned else were the AO should not have ignored the past history of the assessee in estimating the net profit @ 8%. Though FAA has reduced the net profit rate to 3% but at the same time he also ignored the past history of the assessee. Considering the nature of business of the assessee the profit rate as declared appears to be reasonable. No comparable cases have been brought on record by the AO or the CIT(A) to justify the adoption of the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COUNTANT MEMBER AND SHRI R.L. NEGI, JUDICIAL MEMBER For the Appellant : Shri G.S. Agarwal, C.A For the Respondent : Shri O.P Choudhary, D.R ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. This appeal by the assessee is directed against the order of the CIT(A)-Bilaspur dated 18.06.2014 pertaining to assessment year 2011-12. 2. The assessee has raised five substantive grounds of appeal:- 1. That learned CIT (A) erred in rejecting the ground that the order passed by learned Assessing officer u/s 144 was not according to law. Prayed that provision of Section 144 are not applicable, the assessment order be annulled and the income returned be accepted. 2. That the learned CIT (A) further erred in estimating Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 of the Act. 6. We therefore do not find any infirmity in the order so framed. Ground No. 1 is accordingly dismissed. 7. With ground No. 2 the assessee has objected to the estimation of net profit by the CIT(A) @ 3% as against 8% applied by the Assessing Officer. 8. As mentioned elsewhere the assessment proceedings were never attended by the assessee and the Assessing Officer was forced to frame the assessment ex-party under section 144 of the Act. 9. Be that as it may, even if the assessment is framed as ex-party the Assessing Officer is bound to take into account all relevant materials and then framed the assessment to the best of his judgment. This means that the Assessing Officer is bound to consider the material available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13,50,695 NP before remuneration Interest to partners (Rs.) 22,60,262 18,29,740 NP ratio before remuneration interest to partners 1.04% 0.85% 6 Additions by AO (Rs.) 4,47,25,739 4,19,574 1,81,000 3,39,000 7 Assessed income (Rs.) 4,47,25,739 8,98,624 5,74,190 6,34,930 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of business of the assessee the profit rate as declared appears to be reasonable. No comparable cases have been brought on record by the Assessing Officer or the CIT(A) to justify the adoption of the profit rate. Therefore we are inclined to accept the profit rate shown by the assessee. The Assessing Officer is directed to accept the net profit rate as shown by assessee in its financial statements. The addition on this ground is directed to be deleted. 12. Ground No. 3 relates to the non allowability of the depreciation on adoption of profit rate. 13. The CBDT in its Circular No. 029D (XIX-14) dated 31.08.1965 has clarified the claim of depreciation on adoption of profit rate and the said Circular read as under:- CIRCULAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e estimated it should be estimated subject to the allowance for depreciation and the depreciation allowance should be deducted there from. 3. Even where best judgment assessment is made, the above procedure should be adopted provided the required particulars have been furnished by the assessee. In cases where required particulars have not been furnished by the assessee and no claim for depreciation has been made in the return, the ITO should estimate the income without allowing depreciation allowance. In such cases the estimate of net profit would be naturally higher than otherwise and the fact that the estimate has been made without considering depreciation allowance may be clearly brought out in the assessment order. In such cases, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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