TMI Blog2014 (12) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... ced and were not regularly maintained, the book results should be rejected - as far as total turnover is concerned, the appellate authorities are right in holding that the figure of ₹ 18.43 crores cannot be disputed as the assessee was only doing development work for the Greater Noida Authority - The total turnover is also supported by the tax at source certificate - The quantum of turnover was not adversely commented upon by the AO - counsel for the assessee had earlier produced a copy of the assessment order relating to AY 2010-11, wherein the AO himself had applied net profit rate of 8% on contractual receipt of ₹ 6.66 crores and net profit rate of 3% on supply receipts of ₹ 7.21 crores - revenue has not been able to po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had not produced the books of accounts on the plea that books had been stolen. Copy of an FIR in support was filed. 4. The Commissioner of Income Tax (Appeals) noticed that the disallowance of ₹ 10.61 crores had resulted in an abnormal conclusion, as the net profit rate had jumped to 59.60% on the total turnover of ₹ 18.43 crores. This was illogical and could not be accepted. Relying upon Rule 6DD(g) of the Rules and after making reference to several decisions, he observed that the assessee should partly succeed. He observed that the assessee had filed copy of the ledger accounts before the Assessing Officer which was also filed before him but supporting details/vouchers and details of payments had not been filed. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable as the assessee s turnover was in excess of ₹ 40 lacs and the Assessing Officer was justified in making addition of ₹ 10,61,49,773/- in view of contravention of Section 40A(3) of the Act. It was also stated that 20% disallowance of expenses on account of car running and maintenance, telephone expenses, business promotion, depreciation on car etc. should be also restored. The Tribunal did not agree and has held that the assessee was in business of civil construction and disallowing expenditure of ₹ 10.98 crores would give an abnormal profit rate of 59.60% on the total turnover of ₹ 18.43 crores. This would be illusory and illogical. They agreed that Section 44AD would not be applicable but there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit rate of other comparable contractors. On the other hand, he disallowed expenditure of ₹ 10.61 crores resulting in abnormal gross profit rate of 59.60%, which should not be accepted. The effect thereof was that 70% of the expenditure on account of purchases worth ₹ 10.61 crores out of total purchases of ₹ 14 crores was disallowed. The appellate authorities have taken a holistic and broader view and held that as the books of accounts had not been produced and were not regularly maintained, the book results should be rejected. We agree with the counsel for the Revenue that the assertion that the books of accounts were stolen had a hidden motive and the assertion is rather unbelievable. The respondent assessee therefore mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total receipts were to the tune of about ₹ 14 crores. In the present assessment year the total turnover of the assessee was about ₹ 18 crores. In these circumstances we are not inclined to accept the prayer of the counsel for the Revenue that an order of remand may be passed. The Assessing Officer in the subsequent years has accepted the figure of 8% net profit, which is the figure which has been adopted by the appellate authorities in the present case. Reliance placed by counsel for the Revenue on CIT vs. Sobti Construction (India) Ltd. [2008] 307 ITR 374 is misplaced. In the said case, Section 44AD had been applied though the turnover of the assessee was admittedly above ₹ 40 lacs. In the case in hand, the appellate a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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