GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (6) TMI 237 - ITAT JAIPUR

2015 (6) TMI 237 - ITAT JAIPUR - TMI - Rejection of books of accounts - estimation of net profit rate at 7% - Held that:- We find merit in the arguments of ld. DR that it is incomprehensible that such a voluminous and diverse business can be profitably conducted by assessee without proper record and stock registers. Thus the books of account of the assessee have been rightly rejected by the lower authorities. Now coming to the estimate of NP, the facts and circumstances of assessee's business re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ad of 7% determined by the ld. CIT(A). - Decided partly in favour of assesse. - ITA No. 911/JP/2012 - Dated:- 20-3-2015 - R. P. Tolani, JM And T. R. Meena, AM,JJ. For the Petitioner : Shri Rajendra Agarwal, CA For the Respondent : Smt Neena Jeph, JCIT-DR ORDER Per R P Tolani,JM. This is an appeal filed by the assessee against the order of the ld. CIT(A), Alwar; dated 04-09-2012 for the assessment year 2009-10 where in the assessee has raised following grounds. "On the facts and circumstan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dition of ₹ 8,20,039/-." 2.1 During the course of hearing, the ld. AR of the assessee has not pressed the Ground No. 1. Therefore, the same is dismissed being not pressed. 3.1 Brief facts of the case are that the assessee is a civil contractor, proprietor of M/s. Raj & Co., Ranjeet Nagar, Bharatpur. The AO observed that as against the total contract receipts of ₹ 1,64,02,406/- assessee has declared 3% of net profit rate which was lower as compared to net profit rate of 4.46% .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, it was not possible to work out the correct taxable profit and therefore, books of accounts were rejected u/s 145 of the Act. AO held that net profit rate shown by the assessee @ 3% was inadequate and estimated net profit rate of 8%. 3.2 Aggrieved, the assessee preferred first appeal where the rejection of books of account and estimation of net profit rate at 8% was challenged. It was pleaded that :- (i) All the books of account were duly maintained and produced before the AO which is mentione .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vouchers for which no details have been given. (v) The AO failed to appreciate that during the year the total receipts of the assessee has substantially increased from ₹ 75.28 lacs to ₹ 164.02 lacs in this year. 3.3 The assessee further submitted that:- The ld. AO further very arbitrarily ignored the assessment u/s 143(3) for the assessment year 2007-08 completed vide his order dated 18-11-209 (PB 8 to 12) at the total income of ₹ 8,32,962/- by no rejection of books of account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. And misc. exps. were only restricted to ₹ 50,000/-, ₹ 3,000/-, ₹ 2,000/- and ₹ 3,000/- respectively and the entire addition of unexplained opening stock of ₹ 3,73,992/- were deleted. In this way the finally assed income for the assessment year 2007-08 on the total contract receipts of ₹ 51.39 lacs came to ₹ 2,50,970/- (192720+50000+3000+2000+3000) i.e. 4.89% only. When the finally assessed income for the assessment year 2007-08 on the total contract re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

TW 606 (iv) Ramidas Modi vs. DCIT (1999) 22 TW 501. (v) Sona Textile (P) Ltd. vs. ACIT (1997) 20 TW 82. 3.4 The ld. CIT(A) partly allowed the appeal by upholding the rejection of books of account and reduced estimation of net profit rate at 7% subject to depreciation and interest by following observations. "5.3 I have gone through the assessment order as well as submissions made by the A.R. I find that the AO has rejected the book results and has applied the provisions of Section 145 of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f account of assessee were examined and verified by the ld. AO and no specific instance of cash purchase/ payments have been pointed out. In view of the reasons stated above by the AO, I am of the considered opinion that the AO was correct in holding that the book results were not open to complete verification and therefore, it was not possible to deduce the correct profit of the business particularly in light of the facts that the net profit during the year had come down to 3% as compare to 4.4 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t history of the assessee has been considered. It has been submitted that in A.Y. 2007-08, on the total contract receipts of ₹ 51.30 lacs the finally assessed income came to ₹ 250970/- i.e. 4.89% only. Further, the AO has not allowed the interest on car loan of ₹ 12,390/- and depreciation of ₹ 1,37,689/-. Regarding fall in net profit rate and gross profit rate it has been submitted that the total receipts of the appellant had substantially increased at very remote and dis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ply in case the gross receipt exceeds an amount of ₹ 40 lacs. In light of above discussion and considering that the appellant has disclosed net profit rate of 4.46% in A.Y. 2008-09 and net profit rate of 5.03% in A.Y. 2007-08, I consider it fair to estimate the net profit rate subject to depreciation and interest at 7% for A.Y. 2009-10. Accordingly, the net profit after depreciation of ₹ 137689/- and interest of ₹ 12930/- is worked out at ₹ 997550/- and addition is worked .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

defects have been pointed out in the books of account so as to justify the rejection of books of account u/s 145(3) of the Act, consequently rejection of books of account is unjustified and arbitrary. The books of account being properly written deserve to be upheld. The assessee has also filed the written submission to the following effect. "1. Para 1 - "Documentary evidences of contract expenses of ₹ 1,48,25,466/- are being furnished for your kind verification. Similarly proof o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee as the same is not possible keeping in view of the nature of business of the assessee and no such record is being maintained by any identical assessee." 4. Para 7 - "Complete books of account with supporting bills/vouchers are being produced herewith for your kind verification." It is contended that in preceding year against the net profit estimation by AO, the net profit rate of 4.89% was determined in first appeal by the ld. CIT(A) which has not been challenged by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ooking at the nature of the business and no such record was maintained in identical cases. Qua these assertions, assessee has not produced any corroborative material or list of any identical cases in which the stock register is not maintained. It is difficult to comprehend that such a big business can be profitably conducted without maintaining proper record. The assessee employs big workforce to handle different work sites, in the absence of maintenance of proper record potential chances of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he AO dated 16-07-2012 commenting as under:- Ld. DR contends that ld. CIT(A) has been very considerate while allowing interest and depreciation from 7% estimated net profit; order of the ld. CIT(A) is relied on. 3.8 The ld. Counsel for the assessee in reply contends that the assessee has also filed the reply on 14-08-2012 to this remand report dated 16-07-2012 which is placed in the paper book filed by the assessee. 3.9 We have heard the rival contentions and perused the materials available on r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version