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TMI Blog2008 (4) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue on similar facts against the orders passed by the Tribunal. 5. The Revenue has filed Appeal No. 391 of 2007 under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act") against the order dated May 31, 2006 passed by the Income-tax Appellate Tribunal, Chandigarh Bench "B" Chandigarh in I. T. A. No. 381/Chandi/2004 for the assessment year 2000-01 raising the following substantial questions of law : "1. Is the hon'ble Income-tax Appellate Tribunal legally justified in holding that in the case of contractors profit can be worked out on estimate basis at 12 per cent. of the gross receipts, when the assessee claims to be maintaining proper books of account which have duly been audited by a chartered acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ober 30, 2000 declaring net income of Rs. 8,24,512 which was processed under section 143(1) of the Act on June 14, 2001 at the returned income. The case was reopened by issuing notice under section 148 of the Act on June 18, 2001. During the course of assessment proceedings, the Assessing Officer asked the assessee to furnish various details. He rejected the accounts and the accounting system followed by the assessee while passing the assessment order dated March 31, 2003, under section 143(3) of the Act. 8. The assessee filed an appeal before the Commissioner of Income-tax (Appeals) (for short "the CIT(A)") against the order of the Assessing Officer and submitted that the Assessing Officer was not entitled to make a pure guess work while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee had not been doubted/suspected by the Assessing Officer except that there was a bona fide difference in receipts which was explained to the Assessing Officer and it was held that the assessee's case was fit for taxing gross receipts at 12 per cent. 9. Being aggrieved against the said order, the Revenue filed an appeal before the Tribunal and it was argued that the assessee did not produce the books of account in spite of ample opportunity given to it. It was also argued that the assessee was adopting the cash system of accounting and since the expenses were not proved to have been incurred during the year under consideration, the Assessing Officer rightly disallowed the whole expenses claimed by the assessee. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the satisfaction of the Assessing Officer. At the same time, the Assessing Officer disallowed the whole of the expenses claimed by the assessee, in our opinion, he was not justified because in executing the work certain expenses are required to be incurred. We are, therefore, of the confirmed view that the Assessing Officer was not justified in rejecting the whole of the expenses. However, it is true that the assessee could not furnish evidence in respect of its claim of the expenses. Therefore, the learned Commissioner of Income-tax (Appeals) was justified in applying the gross profit rate of 12 per cent. The assessee, although challenged the application of the gross profit rate of 12 per cent. and contended that 10 per cent. rate of gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims to be maintaining, proper books of account which have been duly audited but were not produced for verification. 14. We find no force in the contention raised by the counsel for the Revenue. While making the assessment, there is no provision under the Income-tax Act in which the Assessing Officer is empowered to change the system of accountancy without giving an opportunity. However, the Assessing Officer can make assessment on the basis of best judgment under section 144 of the Act after rejection of the accounted version of the assessee and rejection of books of account under section 145 of the Act, 1961. The system of presumptive taxation has been adopted under section 44AD as it was not practicable for persons engaged in contract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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