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2016 (6) TMI 546 - AT - Income TaxTrading addition - estimating of profit - rejection of books of accounts - CIT(A) deleted the addition - undisclosed and unexplained expenditure - Held that:- There was a certain payment made to subcontractors M/s Shoora Construction was noted. This was offered for tax in statement recorded during survey. However, in course of assessment proceedings, the assessee explained that the amount so offered is incurred as the expenditure by the assessee with reference to said payment has been recorded in the books of account of the assessee on receipt of claim of such expenditure. Further once trading addition is made by estimating the NP rate, no addition for such payment can be made. Even the ld Assessing Officer has not made any addition for such amount considering the explanation of the assessee. Therefore, this ground of the department is liable to be quashed. Whatever defects pointed out by the Assessing Officer is justified, the rejection of books of account U/s 145(3) of the Act. When books of account has been rejected, the only alternate before the Assessing Officer to estimate the income on the basis of past history of the case, general knowledge about civil contract or by comparing the identical case. As all the civil contract has unique type of contract, which cannot be compared squarely. Therefore, the ld Assessing Officer has to consider the past history of the case including the decision of the Coordinate Bench. As submitted by the ld AR of the assessee, the Coordinate Bench has confirmed the NP rate @ 7% to 7.2% in preceding year. Further the discrepancies found out during the course of survey, has been explained by the assessee as no separate addition has been made by the Assessing Officer. The ld Assessing Officer applied NP rate @ 8.9% subject to depreciation. He has not allowed the interest paid to the third party, which has been allowed by the ld CIT(A) and not challenged before us by the revenue. Therefore, we find NP rate applied by the ld CIT(A) @ 7.5% is reasonable. Accordingly, we uphold the order of the ld CIT(A). - Decided in favour of assessee.
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