ITO, UDAIPUR V. M/s. K.P.S. Construction, UDAIPUR

ITA 68/JODH/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78220 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Rejection of books of accounts; Business income; Depreciation; Assessment record
• Section: 40A(3); 143(3); 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.68/JODH/2012 (A.Y. 2008-09) AND ITA NO.272/JODH/2013 (A.Y. 2007-08) ITO, WARD-1(1), VS. M/S. K. P.S. CONSTRUCTION, UDAIPUR. 113, SHASTRI NAGAR, KHEMPURA, UDAIPUR. PAN NO. AAFFK 4021 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 09/06/2014. DATE OF PRONOUNCEMENT : 25/07/2014. O R D E R PER N.K. SAINI, A.M THESE TWO APPEALS BY THE DEPARTMENT RELATING TO TH E SAME ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LD. CIT (A) DATED 30/11/2011 2 & 19/02/2013 FOR THE A.YS. 2008-09 & 2007-08 RESPEC TIVELY. THE MAIN ISSUE IS COMMON IN THESE APPEALS, WHICH WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. 2 FIRST WE WILL DEAL WITH I.T.A.NO. 68/JODH/2012. T HE ONLY GROUND RAISED IN THIS APPEAL READS AS UNDER: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN REDUCING THE NET PROFIT RATE FROM 12% TO 5.5% THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DE LETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORKS AS CONTRACTOR AND FILED THE RETURN OF INCOME ON 13/04/2009 DECLARING TOTAL INCOME OF RS. 29,23,781/- WHICH WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT IN SHORT). LATER ON CASE WAS SELECTED FO R SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER ASKED THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNTS, BILLS AND VO UCHERS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO PRODUC E THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS FOR VERIFICATION, THER EFORE, HE WAS LEFT WITH 3 NO OPTION, BUT TO ESTIMATE THE NET PROFIT. THE ASS ESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND APPLIED THE NET PROFIT RATE OF 12% ON THE C ONTRACTUAL RECEIPTS SHOWN BY THE ASSESSEE AND MADE THE IMPUGNED ADDITIO N. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAD NOT CO NSIDERED THE NET PROFIT PERCENTAGE OF EARLIER YEARS IN THE ASSESSEE S CASE AS CONSIDERED BY VARIOUS AUTHORITIES, IN THIS YEAR. IT WAS FURTHER S TATED THAT THERE WAS NO CHANGE IN THE NATURE OF BUSINESS ACTIVITIES FOR THE LAST SEVERAL YEARS AS THE ASSESSEE HAD CARRIED OUT VARIOUS WORKS OF PUBLI C WORKS DEPARTMENT FOR ROAD CONSTRUCTION AND THE REVENUE HAD ACCEPTED NET PROFIT RATE OF 4 TO 6 PER CENT IN THE EARLIER YEARS IN IDENTICAL F ACTS. IT WAS FURTHER SUBMITTED THAT AFTER WITHDRAWAL OF THE AUTHORIZED R EPRESENTATIVE, DURING THE ASSESSMENT PROCEEDINGS ON 08/10/2010, A REPLY D ATED 20/11/2010 WAS SENT TO THE ASSESSING OFFICER UNDER POSTAL CERT IFICATE WHICH HAD NOT BEEN CONSIDERED. IT WAS FURTHER SUBMITTED THAT IN THE SAID LETTER, IT WAS STATED THAT IN LAST FIVE ASSESSMENT ORDERS PASSED U /S 143(3) / 144 OF THE ACT BY VARIOUS AUTHORITIES OF THE DEPARTMENT, THE N ET PROFIT RATE ADOPTED WAS AROUND OF 4%. IN SUPPORT OF THE ABOVE CONTENTI ON, THE ASSESSEE FURNISHED CHART OF NET PROFIT RATE DECLARED AND ACC EPTED BY THE 4 DEPARTMENT FOR THE LAST FIVE YEARS. LD. CIT(A) ASK ED REMAND REPORT FROM THE ASSESSING OFFICER REGARDING NON-CONSIDERATION O F PREVIOUS RECORDS AND PAST HISTORY OF THE CASE. THE ASSESSING OFFICER VI DE LETTER DATED 21/11/2011 FURNISHED THE REMAND REPORT AND SUBMITTE D AS UNDER:- 'FROM A.Y. 2003-04 TO 2007-08, THE ASSESSEE SHOWN T HE NET PROFIT FROM 2.41% TO 4.06% AND THE A.0. ESTIMATED THE NP VARYING FRO M 4%TO 6%. 0N1Y IN A.Y, 2003-04 ASSESSEE PREFERRED APPEAL TILL ITAT WHERE I N THE NP RATE WAS HELD AT 4%. A PERUSAL OF THE PAST ASSESSMENT RECORDS OF THESE A SSESSMENT YEARS, IT REVEALED THAT IN ALL THESE ASSESSMENT YEARS BOOKS O F ACCOUNTS WERE PRODUCED BY THE ASSESSEE AND TRADING ADDITIONS WERE MADE AFT ER DUE EXAMINATION. HOWEVER, IN PRESENT ASSESSMENT YEAR I.E. 2008-09, A SSESSEE NEVER PRODUCED BOOKS OF ACCOUNTS AND ITS SUPPORTING VOUCHERS FOR E XAMINATION EVEN AFTER REPEATED REQUESTS. AS IS EVIDENT FROM THE ASSESSMEN T RECORDS THE ASSESSEE DID NOT PRODUCE EVEN THE LIST OF CREDITORS AND DEBTORS, IN ABSENCE OF BARE MINIMUM REQUIREMENT OF SUPPORTING DOCUMENTS, IN MY HUMBLE OPINION THE THEN A.0. WAS JUSTIFIED IN HIS ACT. WITHOUT PREJUDICE TO ABOVE, WHILE ESTIMATING THE TA XABLE INCOME FOR ASSESSMENT YEAR 2008-09, THE COMMISSION INCOME OF R S.67,370/- WAS LEFT TO ARRIVE AT THE ASSESSED INCOME. YOUR GOODSELF IS REQ UESTED TO ENHANCE THE ASSESSED INCOME TO THE EVEN AMOUNT, IF DEEMED FIT. IN HIS REJOINDER, THE ASSESSEE SUBMITTED TO THE LD . CIT(A) THAT THE ASSESSING OFFICER WAS BOUND TO FOLLOW PRECEDENCE AN D APPLY THE RATE OF THE SIMILAR KIND OF BUSINESS AS DECIDED IN THE EARL IER ASSESSMENT YEARS. 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, DIRECTED THE ASSESSING OFFICER TO APPLY N ET PROFIT RATE OF 5.5% 5 SUBJECT TO DEDUCTION OF IN AND SALARY PAID TO THE P ARTNERS. THE RELEVANT OBSERVATIONS HAS BEEN GIVEN IN PARA 4.4 OF THE IMPU GNED ORDER WHICH ARE REPRODUCED VERBATIM AS UNDER:- 4.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND REMAND REPORT OF THE A.0, ALONGWITH THE ASSESSMENT ORDER. IT IS S EEN THAT THE ASSESSEE HAS BEEN GIVEN REASONABLE AND MEANINGFUL OPPORTUNITY AN D HIS LETTER DATED 20.1.2010 REGARDING EARLIER RESULTS OF ASSESSEE'S C ASE HAS BEEN CONSIDERED BY THE A.0. IN THE REMAND REPORT. IN THIS LETTER, THE ASSESSEE'S MAIN CONTENTION WAS REGARDING NOT CONSIDERING THE NET PROFIT DECLAR ED / APPLIED IN EARLIER YEARS. AS REGARDS THE ADOPTION OF NET PROFIT RATE O F L2%BY THE A.0. BEFORE DEPRECIATION, INTEREST AND SALARY PAID TO THE PARTN ERS, IT MAY BE MENTIONED THAT ONCE THE BOOKS ARE REJECTED UNDER SECTION 145( 3), THERE MUST BE CERTAIN BASIS FOR ADOPTING THE NET PROFIT RATE. IN THE APPE LLANT'S CASE, EARLIER ORDERS HAVE BEEN EXAMINED WHICH ARE RELEVANT FOR DECIDING THE ISSUE. IN ASSESSMENT YEAR 2007-08 AND 2006-07, ASSESSMENT ORDER HAS BEEN PASSED UNDER SECTION 144 OF THE I.T ACT. THE APPELLANT HAS SUBMITTED THE DETAILS OF NET PROFIT PERCENTAGE BEFORE SALARY AND INTEREST PAID TO PARTN ERS FOR LAST FIVE YEAR AS UNDER:- S.NO. DESCRIPTION ASSESSMENT YEAR 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09 1 NET PROFIT 1930894 797125 1015821 2464010 2923780 LESS: OTHER INCOME COMMISSION BANK INTEREST - 0 - 61789 65695 151511 44381 67670 104472 2 NET BUSINESS PROFIT AFTER BANK INTEREST & COMMISSION ADD: SALARY & INTEREST TO PARTNERS 1930894 311099 418903 950126 535847 2268118 522629 2751938 473416 3 NET PROFIT BEFORE SALARY AND INTEREST 2241993 1154239 1485973 2790747 3225354 4 CONTRACT RECEIPTS 77151858 50250682 30163028 60683858 62272268 5 NET PROFIT PERCENTAGE (3/4) 2.91% 2.30% 4.93% 4.60% 5.18% 6 ADDITIONS BY A.O. TRADING ADDITION UNDER DISCLOSURE OF 0 0 0 855788 265000 0 200000 0 2272400 1177023 0 0 3449821 0 0 6 IT IS SEEN THAT THE NET PROFIT RATE OF 4.37% IN AS SESSMENT YEAR 2004-05, 4%IN ASSESSMENT YEAR 2005-06 AND 5%IN ASSESSMENT YEAR 20 06-07 HAS BEEN ASSESSED FINALLY AFTER APPEAL OR OTHERWISE, AS NO A PPEAL IS PENDING AGAINST THESE YEARS, THE ASSESSEE HAS OFFERED NET PROFIT PE RCENTAGE OF 2.91% IN ASSESSMENT YEAR 2004-05 WHICH HAS INCREASED TO 5.18 % GRADUALLY IN ASSESSMENT YEAR 2008-09 I.E. CURRENT YEAR. THIS SHO WS THAT THERE IS INCREASING TREND IN THE NET PROFIT RATE PERCENTAGE. IN VIEW OF ABOVE, IT WILL BE REASONABLE IF NET PRO FIT RATE OF 5.50% ON CONTRACT RECEIPTS EXCLUDING INTEREST AND SALARY TO PARTNERS IS APPLIED IN THE APPELLANT'S CASE BASED ON THE EARLIER RESULTS. ACCO RDINGLY, THE A.O. IS DIRECTED TO COMPUTE THE NET PROFIT SUBJECT TO DEDUC TION OF INTEREST AND SALARY PAID TO PARTNERS. THE ISSUE IS DECIDED ACCOR DINGLY AND BALANCE ADDITION IF ANY IS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE DID NOT COOPERATE I N SPITE OF VARIOUS OPPORTUNITIES GIVEN AND DID NOT PRODUCE BOOKS OF AC COUNTS ALONG WITH BILLS AND VOUCHERS, THEREFORE, THE ASSESSING OFFICER HAD NO OPTION EXCEPT TO RECEIPTS ADDITION U/S 40(1)(IA) DISALLOWANCE OF LUMP SUM EXPENSES U/S 40A(3) 859640 272763 - - - - - - - - 7 TOTAL NET BUSINESS INCOME BEFORE INTEREST & SALARY (3+6) 3374396 2275027 3958373 3967770 6675175 8 RELIEF US 154 - - 2272400 - - 9 NET BUSINESS INCOME AS PER AO 3374396 2275027 1685943 3967770 6675175 10 RELIEF BY CIT(A) NO APPEAL 265000 150000 UNDER APPEAL UNDER APPEAL 11 ACCEPTED BY APPELLANT BEFORE INTEREST & SALARY 3374396 2010027 1535943 NA NA 12 ACCEPTED PERCENTAGE BEFORE INTEREST & SALARY (11/4) 4.37% 4.00% 5.09% NA NA 7 ESTIMATE THE INCOME AND THE LD. CIT(A) WAS NOT JUST IFIED IN ALLOWING RELIEF TO THE ASSESSEE. 7 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR TH E ASSESSEE STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE DID NOT PRODU CE THE BILLS AND VOUCHERS FOR VERIFICATION BEFORE THE ASSESSING OFFI CER. THEREFORE, THERE WAS NO OTHER OPTION EXCEPT TO ESTIMATE THE INCOME, HOWEVER THE ESTIMATE BY APPLYING THE NET PROFIT RATE OF 12% BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS AND EVEN THE PAST HISTORY OF THE CASE WAS NOT CONSIDERED. LD. CIT(A) CONSIDERED THE PAST HISTORY OF THE ASSESSEE AND APPLIED THE NET PROFIT RATE OF 5.5%. IN OUR OPINI ON, THE NET PROFIT RATE APPLIED BY THE LD. CIT(A) BY CONSIDERING THE NET PR OFIT RATE DECLARED BY THE ASSESSEE AND ACCEPTED BY THE VARIOUS AUTHORITIE S FOR THE LAST FIVE ASSESSMENT YEARS I.E. A.Y. 2004-05 TO 2008-09 WAS F AIR AND REASONABLE. WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH TH E FINDINGS OF THE LD. 8 CIT(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN TH IS APPEAL OF THE DEPARTMENT. 9 . NOW WE WILL DEAL WITH I.T.A.NO. 272/JODH/2013. T HE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN:- 1. DELETING THE ADDITION OF RS. 11,77,023/- MADE BY TH E AO AFTER APPLYING THE N.P. @ 6% AS AGAINST 4.06% DECLARED BY THE ASSE SSEE. 2. DELETING THE DISALLOWANCE OF RS. 5,22629/- MADE ON ACCOUNT OF SALARY AND INTEREST PAID TO PARTNERS IGNORING THE FACT THA T THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 184(5) OF THE I.T. ACT. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DE LETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 10 . AS REGARDS TO THE GROUND NO. 1, RELATING TO DELET ION OF TRADING ADDITION, IS CONCERNED, LEARNED COUNSEL FOR THE ASS ESSEE AT THE VERY OUTSET STATED THAT THE FACTS ARE SIMILAR AS WERE IN THE A.Y. 2008-09 AND THAT THE LD. CIT(A) ALLOWED THE RELIEF TO THE ASSE SSEE BY FOLLOWING THE DECISION OF THE ITAT JODHPUR BENCH IN THE ASSESSEE S OWN CASTE IN I.T.A.NO. 657/JU/2007 FOR THE A.Y. 2003-04 ORDER DA TED 21/02/2008. IT WAS ALSO STATED THAT THE ASSESSING OFFICER PASSED T HE ASSESSMENT ORDER U/S 144 OF THE ACT AND DID NOT CONSIDER THE PAST HI STORY WHILE APPLYING THE ARBITRARY NET PROFIT RATE OF 6% INSTEAD OF 4.06 % DECLARED BY THE 9 ASSESSEE WHICH WAS MORE THAN NET PROFIT RATE OF 4% CONFIRMED BY THE ITAT IN ASSESSEES OWN CASE. 11 . LEARNED D.R. ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION O F THE LEARNED COUNSEL FOR THE ASSESSEE. 12. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE ORD ER PASSED BY THE LD. CIT(A) DOES NOT REQUIRE ANY MODIFICATION OR ALTERNA TION ON OUR PART BECAUSE THE NET PROFIT RATE DECLARED BY THE ASSESSE E WAS BETTER THAN THE NET PROFIT RATE DECLARED IN THE EARLIER YEARS AND T HE ASSESSING OFFICER HAD NOT GIVEN ANY BASIS WHILE ESTIMATING THE NET PROFIT RATE AT 6% ON THE GROSS RECEIPTS SHOWN BY THE ASSESSEE. WE THEREFORE, DO N OT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 13 THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DE LETION OF DISALLOWANCE OF RS. 5,22,629/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF SALARY AND INTEREST PAID TO THE PARTNERS. 14 FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DISALLOWED THE INTEREST AND REMUNERATION OF RS. 5,2 2,629/- CREDITED TO 10 THE PARTNERS CAPITAL ACCOUNT WHILE INVOKING THE PRO VISIONS OF SECTION 185 OF THE ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER:- 3.1 IT IS RESPECTFULLY SUBMITTED THAT THE PROVISI ONS OF SECTION 185 CAN BE INVOKED ONLY WHEN THE ASSESSEE FAILED TO COMPLY WIT H THE PROVISIONS OF THE SECTION 184(5). THE LD ASSESSING OFFICER HAS TOTAL LY FAILED TO ESTABLISH IN HIS ASSESSMENT ORDER, HOW THE APPELLANT WAS FAILED TO C OMPLY WITH THE PROVISIONS OF SECT 184 OF THE ACT. 3.2 THE PROVISIONS OF SECTION 184(5)/185 CATEGORIC ALLY SAY IF AN ASSESSEE IS FAILURE IN SECT 144, NOT AN ASSESSMENT UNDER SEC TION 144. IN OTHER WORDS, SECTION 184(5) DOES NOT COME INTO OPERATION AUTOMAT ICALLY WHEN AN ASSESSMENT MADE UNDER SECTION 144 OF THE ACT. IT C OMES INTO OPERATION WHEN THERE IS A COMPLETE FAILURE AS MENTIONED IN SE CTION 144. IN THE PRESENT CASE MERELY THE ASSESSMENT WAS MADE UNDER S ECTION 144, THERE WAS NO FINDING OF THE ASSESSING OFFICER IN HIS ASSE SSMENT ORDER THAT THE APPELLANT WAS COMPLETE FAILURE U/S 144. OUR CASE IS SQUARELY COVERED BY THE CASE OF SURENDRA PRASAD MISRA VS. ITO (2006) 7 SOT 457 (LUCK.) 3.3 IN THIS REGARD IT IS SUBMITTED THAT THE SECTION 184 SAYS THAT UNLESS THERE ARE CHANGES IN PARTNERSHIP DEED OR IT IS FIRS T RETURN OF INCOME OF ANY OF THE PARTNERSHIP FIRM THE CERTIFIED COPY OF THE P ARTNERSHIP DEED IS NOT REQUIRED TO FURNISH ALONG WITH THE RETURN OF INCOME (COPY OF THE TAX AUDIT REPORT IS ENCLOSED HEREWITH) 3.4 IN THE CASE OF APPELLANT FIRM THERE WAS NEITHER ANY CHANGE IN THE PARTNERSHIP FIRM NOR IT WAS ITS FIRST RETURN OF INC OME, SO THE COPY OF THE DEED WAS NOT REQUIRED TO FURNISH. 3.5 IT IS FURTHER SUBMITTED THAT THE SUBMISSIONS OF THE PARTNERSHIP DEED ALONG WITH THE RETURN OF INCOME IS POSSIBLE ONLY WH EN THE RETURN OF INCOME IS BEING FURNISHED IN PAPER FORM. WHEREAS, IN THE INSTANT CASE THE APPELLANT FIRM HAS FURNISHED THE RETURN OF INCOME THROUGH ELE CTRONIC MODE I.E. E- FILING, THE SOFTWARE OF THE INCOME TAX DEPARTMENT I S NOT ALLOWED TO FURNISH 11 ANY OF THE ATTACHED SHEET ALONG WITH THE PRESCRIBED RETURN IN THE DEPARTMENTS FORMAT. 3.6 NEEDLESS TO MENTION HERE THAT THE DEPARTMENT HA S MADE AN ASSESSMENT FOR LAST SEVERAL YEARS U/S 144 AND IN TH E NONE OF THE ASSESSMENT ORDER THE INTEREST ON PARTNERS CAPITAL AND REMUNERA TION TO THE PARTNERS WERE FURTHER DISALLOWED AFTER DETERMINING THE ESTIM ATED NET PROFIT. IT IS ALSO RELEVANT TO MENTION HERE THAT THESE ASSESSMENT ORDERS WERE TRAVELLED UPTO THE CIT(A) AND ITAT. 3.7 WITHOUT PREJUDICIAL TO ABOVE, IT IS FURTHER SUB MITTED THAT AT ONE SIDE THE LD ASSESSING OFFICER HAS ESTIMATED THE NET PROF IT BY APPLYING LUMP SUM RATE AND ON THE OTHER SIDE DISALLOWED THE INTEREST AND REMUNERATION OF RS. 522,629/- RECORDED IN THE BOOKS OF ACCOUNT. 3.8 THIS SHOWS THAT THERE IS DOUBLE TAXATION ON THE INCOME OF RS. 522,629/- BY DISALLOWING THE INTEREST AND REMUNERAT ION. IT IS SETTLED POSITION OF THE LAW THAT INCOME CANNOT BE TAXED TWI CE. 15 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, HELD THAT THE PROVISIONS OF SECTION 185 O F THE ACT WERE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. ACCORDINGL Y, DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELETED. NOW THE DEPA RTMENT IS IN APPEAL. 16 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT APPEARS THAT THERE WAS NO CHANGE IN THE PA RTNERSHIP DEED. THE PROVISIONS CONTAINED IN SECTION 184 OF THE ACT REQU IRES THAT A CERTIFIED COPY OF THE PARTNERSHIP DEED IS TO BE FURNISHED ALO NG WITH RETURN IF THERE 12 IS CHANGE IN THE PARTNERSHIP DEED OR IT WAS THE FIR ST RETURN OF INCOME OF THE PARTNERSHIP FIRM. IN THE PRESENT CASE, IT WAS NOT THE FIRST YEAR OF THE PARTNERSHIP FIRM AND THERE WAS NO CHANGE IN THE PAR TNERSHIP. THE ASSESSING OFFICER ALSO HAD NOT ESTABLISHED HOW AND IN WHAT MANNER, THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SE CTION 184 OF THE ACT. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE IMPUGNED DISALLOWANCE AND THE LD. CIT(A) RIGHTLY DELETED THE SAME. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 17 IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMENT A RE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 25 TH JULY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH JULY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY, ITAT, JODHPUR.