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TMI Blog2015 (7) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not produce complete bill and vouchers in support of the claim so made." Ground raised by assessee in its Cross Objection: "That the net profit rate of 7.5% considered by learned CIT(A) is excessive and a lesser percentage should be applied." 3. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A) to the extent relief allowed by him and also submitted that the action of the learned CIT (A) in adopting profit rate of 7.5% of gross receipts is excessive. 4. We have considered the rival submissions. We find that the Assessing Officer has made addition of entire lorry hire charges remaining unpaid as on 31/03/2010 of Rs. 44,28,717/- but when the assessee carried the matter in appeal before CIT(A), he held that in the facts of the present case, the net profit of the assessee should be estimated to the extent of 7.5% of the gross receipts. We find that this issue was decided by learned CIT(A) as per Para 8 to 8.3 of his order, which are reproduced below for the sake of ready reference:- "8. I have considered the matter and examined the documents / evidences furnished by the appellant. In respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the discussions made above it is held that the best option available to the AO was to reject the book results, since he could not have satisfied himself about the correctness and completeness of the books of accounts maintained by the assessee and the only alternative available was to complete the assessment in the manner provided under section 144 of the Act in view of provisions of section 145(3) of the Act In the case of Dhondiram Dalichand v. CIT, 81 ITR 609 [Bom.) the Hon'ble High Court has held that while exercising the rowers u/s 145 of the Act it is not necessary for revenue authorities to record aforesaid findings in specific words before exercising power, particularly in view of the fact that circumstances of case otherwise justified invoking of said power. 8.3 After considering all facts of this case, I find that the provisions of section 44AD of the Act estimating the profit of contractor @ 8% of the turnover are applicable for transport contractor adopting the presumptive scheme of taxation and the scope of the section is limited to transport contractors whose turnover does not exceed Rs. 40Lakh. In the case of the appellant the gross receipts exceeds Rs. 2.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... honest and fair estimate of income of the assessee and such estimate shall not be capricious but should have a reasonable nexus to the available material, circumstances of the case and business of the appellant The appellant in the impugned assessment year has declared net profit rate of 2.84% whereas in the preceding year it was 2.60% only. However, past history of the case of the appellant cannot be relied upon as returns filed for the preceding year has not been subject matter of scrutiny. The Hon'ble ITAT, Lucknow SMC bench in ITA No. 574/Luc/05 dated 10.03.2006 in the case of M/s Gupta Constructions has confirmed the action of AO in estimating the profit at @7% of total turnover. The ITAT Allahabad Bench in case of Rajesh Kumar Singh, Gorakhpur v. ITO in ATA No. 425/Alld/2003 for AY 2000-01 dated 25.06.2004 has upheld the application of net profit rate of 7.5%. In the case of ACIT v. Raj Bros, reported in 2009 (13) MTC 88 (Trib.) by the appellant the Hon'ble ITAT, Allahabad Bench has directed to the AO to apply net profit rate of 9.6% in the case of a contractor whose turnover is Rs. 10 crore. In view of the above discussions and considering the fact that the turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are rejected. 5. Ground No. 2 of the Revenue's appeal is as under: "2. The Commissioner of Income-tax (Appeal) has erred in law and on facts of the case in deleting the addition of Rs. 46,47,454/- made on account of unexplained expenses." 6. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 7. We have considered the rival submissions. We find that out of this addition of Rs. 46,47,454/-, the major amount is regarding lorry hire charges payable of Rs. 44,14,929/-. For such high amount of unpaid lorry hire charges, learned CIT(A) has already directed the Assessing Officer to adopt 7.5% of net profit rate and in this manner, he has already upheld addition of Rs. 9,33,716/-. Moreover, the addition made by the Assessing Officer of Rs. 46,47,454/- includes provision for income tax Rs. 2,18,737/- and Rs. 13,788/- on account of audit fees payable. We fail to understand that how the provision for income tax and audit fees payable can be added by invoking the provisions of section 68 of the Act. In this regard, it is observed by learned CIT(A) in Para 10.2 of his order that the recklessness of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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