- (1.) Both these appeals raising identical questions, are by the Income Tax Department against the same assessee. The appeal No. 201 of 2001 is in respect of the assessment year 1991-92 and the appeal No. 205 of 2001 is in respect of the assessment year 1990-91.
(2.) In both the appeals, the assessee who at the relevant time was a civil contractor working for Military Engineering Services (MES) had failed to maintain proper books of accounts, the expenses were found to be unverifiable. The Assessing Officer rejected the assessee's books of accounts under Section 145 (1) of the Income Tax Act, 1961 and estimated assessee's net profit at the rate of 12% of the gross receipts. In appeals by the assessee, the CIT (Appeals) restricted the addition made by the Assessing Officer and allowed some relief in respect of the additions. He also directed that depreciation should be allowed.
(3.) The orders of the CIT (Appeals) were unsuccessfully challenged by the department before the Tribunal. Now, the department has preferred these appeals against the orders of the Tribunal raising two similar questions of law in each appeal. The substance of the questions is as follows in respect of each of the two assessment years involved: (1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal and the CIT (Appeals) were legally correct in allowing relief to the assessee, without appreciating the facts that the assessee's bonks of accounts were found unreliable and were rejected under Section 145 (I) of the Income Tax Act, 1961 (2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in upholding the decision of the CIT (Appeals) in directing the Assessing Officer to allow depreciation, without appreciating the facts that the assessee's net profit was computed after applying the flat rate of net profit ;