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TMI Blog2015 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case, the learned Assessing Officer has erred in disallowing 20% of the total expenditure of Rs. 70,97,212/- incurred on material purchased, 20% of the total expenditure of Rs. 31,15,522/- incurred on diesel purchase, 20% of the total expenditure of Rs. 40,48,354/- incurred on machinery, JCB, Truck & Tractor, 10% of the total expenditure of Rs. 7,84,374/- incurred on blasting and bore well expenses and 10% of total expenditure of Rs. 19,37,702/- incurred on labour payment and further erred in adding Rs. 27,19,588/- to the total income of the appellant. The Hon'ble CIT (Appeals) has further erred in applying Net Profit Rate 12% and assessing the net taxable profit at Rs. 24,90,804/- as against Rs. 12,49,467/- declared by the appellant on the gross contract receipt of Rs. 2,07,56,706/-. 2. The appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing." 2. Brief facts of the case are that the assessee works as a civil contractor. During the course of assessment proceedimgs, learned Assessing Officer observed that the assessee deliberately went on seeking adjournments and did not produce relevant evidence. Var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned by A.O. were found to be correct. The assessee is a contractor doing the work for Govt. Departments. During the year, the turnover of assessee was Rs. 2,07,56,706/- and the assessee has shown a profit of Rs. 12,49,467/-. After adding the disallowance by A.O., the profit from the business comes to Rs. 39,69,054/-. This gives N.P. rate of 19.12%. I have already held that the discrepancies mentioned by A.O. were found to be correct. However, after totaling the disallowance, the Net Profit of the assessee comes to 19.12% which appears to be on higher side. In my opinion, once these discrepancies were found the A.O. should have rejected the books of accounts and should have estimated the Net Profit of the assessee. In view of the above, it would be fair and reasonable to estimate the income of assessee. Considering that assessee was involved in large scale manipulation of accounts and that the assessee has submitted bogus bills to the tune of Rs. 44,65,509/-, I am of the opinion that a higher rate of Net Profit should be applied in the case of the assessee. Accordingly, a Net Profit rate of 12% is considered reasonable in this case. This gives a Net Profit of Rs. 24,90,804 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- were justified. 10% ad hoc disallowance was unjustifiably made by the Assessing Officer. 5.1 It is further contended that learned CIT(A), however, held that looking at the discrepancies, the Assessing Officer should have rejected the books and estimated the net profit of the assessee @ 12%. The findings of ld. CIT(A) are again arbitrary, unjustified; it has been held by various judicial precedents that in case of rejection of books, the assessee's earlier years N.P. are average thereof, may be adopted. Reliance is placed on the following case laws:- (i) Indwell Construction Vs. CIT (1999) 151 CTR (AP) 207 : (1998) 232 ITR 776 (AP) (DPB 5-7). (ii) Banwalirala Banshidhar (1998) 148 CTR (All) 533 : (1998) 229 ITR 229 (All) (iii) CIT Vs. G.K. Contractor (2009) 19 DTR 305 (Raj) (DPB 12- 14). (iv) ACIT Vs. Smt. Renu Mukerjee (2008) 15 DTR (Del) (Trib) 205 (DPB 15-25). (v) Eastern Construction Company Vs. ITO (1997) 59 TTJ (Del) 723 (DPB 26-36). Even when the assessee's books of account are rejected, the consequent best judgment assessment has to be reasonable and not arbitrary. Reliance is placed on the decision in the case of CIT Vs. Gotan Lime Khaniz Udyog 256 ITR 243 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact against which should not be routinely interfered and against which no substantial question of law arises. 7. We have heard the rival contentions of both the parties and perused the material available on the record. It emerges from the record the assessee's conduct during assessment proceedings was one of non-cooperation and non-compliance qua the queries which resulted in ex parte assessment. This observation and conclusion has not been agitated the assessee either before the CIT(A) or before the ITAT in grounds. Similarly neither before CIT(A) nor before us any prayer for admission of any addition evidence has been made to improve on the merits. Thus, this case involves peculiar facts for determination of taxable income, learned CIT(A) gave part relief observing that the assessee's books should have been rejected instead of % disallowance of expenditure. Ld. CIT(A) estimated the N.P. @ 12% as reasonable estimation. According to the Revenue, the learned CIT(A) should have upheld the order of the Assessing Officer and the assessee claims that in case of rejection of books, its N.P. in earlier years should have been applied. In our view, assessee's conduct durin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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