- (1.) The present appeal has been filed by the Department under Section 260A of the Income Tax Act, 1961 against the judgment and order dated 27.07.2007, passed by the Income-Tax Appellate Tribunal, Lucknow in ITA No. 323/Luc/2007 for the assessment year mentioned above.
(2.) On 15.01.2008, a coordinate Bench of this Hon'ble Court has admitted the appeal on the following substantial questions of law, reads as under:- "1. Whether on the fact and in the circumstances of the case the Income Tax Appellate Tribunal was justified in deleting disallowance of unsubstantiated sundry creditors on the ground that where the estimate profit rate is applied any other addition can be made for cash credits from the undisclosed sources of the assessee and not for non-verification of the same, while failing to appreciate the fact that the Assessing Officer in his assessment order had exactly held the same and fulfilled the requirement under the law. 2. Whether or not both the CIT (Appeals) and the Income Tax Appellate Tribunal erred in disregarding the fact of assessments having been made u/s 144 of the I.T. Act, 1961 due to non-cooperation of the assessee and the assessee having failed in discharging the onus of proving that even if the said cash credit represented income, it is income from a source which has already been taxed."
(3.) The brief facts of the case are that during the assessment year under consideration, the assessee carried on the business as contractor for civil work of Public Works Department, Nagar Palika and other Government Departments. The Assessing Officer (AO) had provided several opportunities to the assessee, but the assessee did not attend the proceedings, so the AO after issuing the notice, has passed the assessment order under Section 144, where he has made the addition pertaining to the sundry creditors to the tune of Rs.23,14,417/- by mentioning that the same were not verifiable on account of non submission of details, but the first appellate authority has deleted the addition by observing that since 8% net profit rate was estimated under Section 44AD, no separate addition could be made. The first appellate authority also reversed the findings of the Assessing Officer in taking the status of assessee as "AOP" instead of "RF". Being aggrieved, the Department has filed the appeal before the Tribunal, who vide its impugned order dated 27.07.2007 has upheld the finding of the first appellate authority regarding the application of net profit rate @ 8%; and deletion of disallowance of sundry creditors. Still not being satisfied, the Department has filed the present appeal.;