TMI Blog2015 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- and depreciation of ₹ 26641/- should be given which is allowed to the assessee. - Decided partly in favour of assessee. - ITA No. 414/JP/2012, ITA No. 344/JP/2012 - - - Dated:- 13-2-2015 - R. P. Tolani, JM And T. R. Meena, AM,JJ. For the Appellant : Shri Ajay Malik (Addl.CIT) For the Respondents : Shri Mahendra Gargieya Shri Fajlur Rahman, Adv. ORDER Per R. P. Tolani,JM. These are cross appeals, one by the revenue and another by the assessee against the order dated 29/02/2012 by the learned CIT(A), Kota for A.Y. 2008-09. Respective grounds of appeal are as under: Departmental appeal:- On the facts and in the circumstances of the case, the learned CIT(A), Kota has erred in:- i) applying net profit rate of 12% inspite of the fact that the A.O. has made disallowance out of the expenses claimed in P L account and learned CIT(A) held that discrepancies mentioned by A.O. with retrospective effect correct for making disallowance; ii) the appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing. Assessee's appeal in ITA No. 344/JP/2012 1. That under the facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observations of Assessing Officer that the assessee did not produce proper information and render cooperation in the assessment proceedings, only respective additions were challenged before the learned CIT(A). The learned CIT(A) gave part relief by following observations:- In this case, during the course of hearing it was found that purchases to the tune of ₹ 44,65,509/- were through bogus bills. It was also found that assessee has purchased diesel of ₹ 31,15,522/- in cash. However, the assessee did not produce log book or record of use of diesel and bills and vouchers. It was also found that the assessee has incurred hiring charges of ₹ 9,38,450/- for machinery and ₹ 31,09,904/- for hiring JCB, truck and tractor. However, the addresses of the recipients were not furnished. It is also found that assessee has incurred blasting expenses of ₹ 4,40,674/- and borewell expenses of ₹ 3,43,700/-. However, complete address of the recipients were not given. It is also found that assessee has incurred labour expenses of ₹ 19,37,702/-. Various discrepancies were noticed in relation to these payments also. The A.O. disallowed a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, following is submitted:- (a) Material purchases expenses: - The learned Assessing Officer disallowed 20% of the total expenditure observing that cement might have been purchased from some other parties and this technique was used to reduce the profit of the firm. It assumes that assessee actually purchased the claimed quantity of cement bags albeit from other parties, even then it becomes allowable expenditure, disallowance of on 20% ad hoc basis is arbitrary. (b) Diesel Expenses:- The assessee purchased petrol and diesel from one M/s Agarwal Filling Station, Bundi. Copies of bills and vouchers were produced alongwith ledger copies. The assessee had no bank account at Bundi, therefore, cash payment above ₹ 20,000/- amounting to ₹ 623104/- has been disallowed by the Assessing Officer without proper justification and applying the Rule 6DD of the Income Tax Rules, 1962. (c) Machinery, JCB Truck and Tractor Rent: - The assessee provided complete addresses of the payees, owners of such earth moving machinery they are residing in villages where no house number is allotted. Because assessee did not provide name of the father of the owner, 10% ad hoc disallowances h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the following case laws:- (i) CIT Vs. Jain Construction Co. and Others (1999) 156 CTR (Raj.) 290. (ii) Rikhabdas Jain Contractor Vs. ITO (2001) 72 TTJ (Jd) 526. (iii) Teja Construction Vs. ACIT (2010) 129 TTJ 57 (Hyd) (UO). (iv) ITO Vs. Shri Ram traders (2013) 90 DTR 217 (Jd) (v) Bharat Construction Co. Vs. CIT (2002) 258 ITR 140 (Raj). 6. The learned D.R. on the other hand, contends that the assessee's non-cooperation, non submission of documents and relevant information was deliberate and palpable. The finding of the Assessing Officer that the assessee was non-cooperative and did not produce relevant information has neither been challenged before the CIT(A) nor before the Hon'ble ITAT, thus, the assessee's dubious role emerges from the record. The learned CIT(A) ought to have appreciated that Assessing Officer gave several chances to assessee to produce the relevant information, which was not provided. If the assessee is not forthcoming with the relevant information Assessing Officer had no choice but to adopt one of the reasonable ways to frame the assessment on estimate, disallowance of expenditure on estimated % basis cannot be found fault w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot on the one hand chose to be to non-cooperative, non compliant and obstructing a fair assessment and on the other hand, claim a particular percentage of N.P. to be adopted as a prize for his recalcitrance. The assessee has not been able to demonstrate that the 2% adopted by learned CIT(A) order is arbitrary. The only reliance placed is on case law that a lesser profit should be taken, nothing has been adverted to explain why the assessee cannot earn 12% NP. In some cases contractors earn more also, in the given facts and circumstances it is the burden of the assessee to objectively prove that he earned less than the estimate. This burden has not been properly discharged. 9. It is trite law that while challenging the estimate made by the income tax authorities, the burden is on the assessee to convincingly demonstrate that the estimate is arbitrary, so as to enable the appellate authority to interfere. In absence of any convincing arguments or evidence in this behalf, we see no reason to interfere in the order of estimate made by the learned CIT(A). In these circumstances, we see no reason to interfere with the rate of N.P. as estimated by the learned CIT(A). However, we find ..... 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