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2012 (10) TMI 99 - AT - Income TaxRejection of books of account - Held that:- As 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. Thus the A.O. has correctly rejected the books of account invoking section 145(3) and the CIT(A) has rightly confirmed the order of the A.O - against assessee. Reduction of G.P. rate from 10.7%d to 8% by the CIT(A) - Held that:- CIT(A) noticed that the A.O. has erred in applying trading result of the A.Y. 2005 - 06 to trading result for A.Y. 2006-07 without considering the facts and submissions that the results were not comparable in both the years. However, the CIT(A) followed the judgement of Hon’ble Madras High Court in the case of CIT vs. A. Vajjiram & 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.
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