TMI Blog2012 (10) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... jjiram & Bros. [2008 (8) TMI 528 - MADRAS HIGH COURT] in respect of applying the profit rate of 8% as supported by the statutory rate provided u/s.44AD of the Act. There are good reasons for estimating the profit by this 8% rate of profit even in case of big contractors having turnover more than Rs.40 lacs. The assessee as well as the Revenue both have failed to point out how this rate of 8% applied by the CIT(A) was unreasonable. There are no material on record based on which a different rate can be applied at this stage for estimation of the profit. Thus considering comparative position of profit declared by the assessee in F.Ys. 2003-04, 2004-05 & 2005-06, 8% rate estimated by the CIT(A) is most reasonable. No infirmity in the order of CIT(A) - against revenue. - ITA No.119/Agr/2012 & 128/Agr/2012 - - - Dated:- 28-9-2012 - SHRI BHAVNESH SAINI, AND SHRI A.L. GEHLOT, JJ. Assessee by : Shri Deependra Mohan, C.A. Revenue by : Km. Anuradha, Jr. D.R. ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: These are cross appeals filed by the assessee and Revenue against the order dated 18.01.2012 passed by the ld. CIT(A)-II, Agra for the A.Y. 2006-07. 2. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed mercantile system of accounting. The A.O. also noted that the assessee did not maintain stock register and consumption register. Some of the payments were also made in cash. The A.O. has noted some instances where cash payments more than Rs.20,000/- was paid. Transport bills were missing in most of the purchases. Purchases of raw-materials were from unorganized sector and important to note that the payment has been made in cash which is not open for verification. It has also been noted by the A.O. that the assessee has shown lesser N.P. rate before Director remuneration in comparison to earlier year i.e. 4.82% whereas this rate was shown at 8.66% in A.Y. 2005-06 and 9.6% in A.Y. 2004-05. The A.O. rejected the books of account under section 145(3) of the Act. After rejecting the books of account, the A.O. applied 10.70% N.P. rate before depreciation and remuneration to Director. The A.O. accordingly calculated amount of addition Rs.20,08,684/-. The A.O. has also noted that the assessee has violated section 40A(3) of the Act by making cash payment more than Rs.20,000/-. The disallowance amount calculated by the A.O. is Rs.47,455/-. This amount was not added by the A.O. on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit of the assessee at 8% of the contract receipts. He interfered with the assessment order on the ground that if the total addition made by the AO is allowed to remain or accepted, then the net profit of the assessee is nearly 28%, which is not at all possible in the nature of the work undertaken by the assessee. The estimation have been made on the sole ground that the accounts maintained by the assessee has not been proper. The Tribunal has also taken into consideration that u/s 44AD also when the books of account are not maintained, income has to be estimated only at 8% and hence the order of the CIT(A) estimating the income at 8% cannot be regarded as one which is illegal. Conclusion arrived at by the Tribunal is correct. The estimation has been made judiciously which requires no interference. 8. The CIT(A) also referred judgement of Hon ble Punjab Haryana High Court in the case of CIT vs. Prabhat Kumar, 323 ITR 675 (P H) where N.P. rate of 12% was confirmed. However, the CIT(A), after considering the comparative position of the assessee and after considering various pronouncements, restricted the rate of 8% on the contract receipts subject to allowability of depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as builder. In both the activities different method of accounting has been followed. In case of construction the assessee has followed percentage completion method while in respect of builder activities the assessee has followed cash method. The A.O. noticed that the assessee has failed to furnish basis of valuation of work in progress particularly under the circumstances where the assessee followed cash method in respect of project/builder activities. Raw material in the form of gittis etc. are supported by self-made vouchers as noted by the CIT(A). Apart from the non-maintenance of the stock register, various mistakes noted by the A.O. coupled with law G.P. in the year under consideration. We find that the A.O. has correctly rejected the books of account invoking section 145(3) of the Act and the CIT(A) has rightly confirmed the order of the A.O. We, therefore, confirm the order of CIT(A) in respect of rejection of books of account. 12. As regards merit of the case, after rejecting the books of account the next step which requires to be taken is estimation of profit. The estimation of profit always depends upon the facts of each case. The decisions cited by the ld. Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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