TMI Blog2015 (6) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-3-2015 - 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 circumstances of the case, the ld. CIT(A) has erred in:- 1. Dismissing the ground completing the assessment, when the notice issued u/s 143(2) was served upon the assessee on 01-10-2010 while the time limit has already expired on 30-09-2010. 2. Dismissing the ground Rejecting the books of account by applying the provisions of Section 145 of the I.T. Act, 1961. 3. Estimating gross profit rate @ 7% (against the estimation of 8% by the ld. AO) instead of deleting the entire trading addition 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-, Telephone Exps. ₹ 4,000/-, Sundry Exps. ₹ 7,000/- and unexplained opening stock of ₹ 3,73,992/- and vide your honours' appeal order dated 18-01-2010 (PB 13 to 16) in appeal no. 144/209-10 additions made by disallowing contract exps. Traveling and conveyance exps. Telephone exps. 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 receipts of ₹ 51.30 lacs came to 4.89% only no further appeal was made by the Department, application of net profit rate at 8% without any basis simply on a wild guess on 2.18 times total receipts of ₹ 164.02 lacs for the assessment year 2009-10 by the ld. AO is fully unjust and bad in law. Reliance was placed on:- (i) DCIT vs. Associated Stone Industries (Kotah) Ltd. (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 distant areas as the result of which the gross profit rate has slightly decreased from 10.02% to 9.61%. I find that the AO has applied the rate of 8% after rejecting the book results, apparently in light of the provisions of Section 44AD of the Act which provides for computing the profits and gains of business of civil construction etc. @ 8% of gross receipts were the gross receipts do not exceed an amount of ₹ 40 lacs. In the section 44AD, it is also provided that subsection (1) shall not apply 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/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egister showing quality and quantity-wise was maintained by the assessee. It was not possible to keep the stock details; looking 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 theft, embezzlement, mis-utilization and mismanagement are present. No prudent businessman will keep such record. Thus in the absence of proper record, maintenance of stock register and other details, it is not possible for the AO to determine the correct taxable profits of the assessee. Therefore, rejection of books of account and estimation of profits is inevitable; ld. CIT(A) while giving the part relief has upheld these findings of ld. AO. Ld. DR further referred to the remand report filed by the AO dated 16-07-2012 commenting as under:- Ld. DR contends that ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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