TMI Blog2015 (8) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... orities below for rejection of the books of account, we do not find any justification to interfere with their orders for rejection of the books of account. The cross-objection of the assessee is therefore, liable to be dismissed on this ground. - Decided against assessee. Reasonableness of the profit rate applied by the authorities below - Held that:- AO has applied the profit rate of 12 per cent. for estimating the income of the assessee, however the history of the assessee suggests that the assessee at the maximum has shown net profit rate of 3.17 per cent. Therefore, considering the totality of the facts and circumstances, history of the assessee and objections raised by the Assessing Officer for rejection of the books of account, it would be reasonable and appropriate to apply profit rate of 8 per cent. as against 5 per cent. applied by the learned Commissioner of Income-tax (Appeals) because the Commissioner of Income-tax (Appeals) has failed to note that substantial defects have been pointed out in maintenance of the books of account which could not give the true picture of the profit earned by the assessee. Decided partly in favour of revenue. - C.O. 24/CHD/2014 In ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis. The assessee has neither reduced the work-in-progress for the financial year 2008-09 nor added work-in-progress for the financial year 2009-10. 4. During the appellate proceedings the assessee submitted that the rejection of books of account is incorrect. It is submitted that even under section 44AB where the books of account are not maintained and gross receipts are less than ₹ 1 crore, the profit is to be calculated at 8 per cent. It is further submitted that in the case of Sh. Sukhwinder versus the assessee, the hon'ble Income-tax Appellate Tribunal, Chandigarh vide order dated September 24, 2013 accepted the books of account and net profit at 1.2 per cent of the gross receipts declared by the assessee. As regards, the labour expenses, the assessee submitted that most of them are technical labour kept on permanent basis. No labour person can enter into the premises of Air-Force without their entry in the Air-Force record at main guard room. He has regularly filed value added taxes returns with complete details. He submitted bills and vouchers for various expenses. Smt. Amandeep Singh was produced during the assessment proceedings. The assessee submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced in the impugned order in which the Assessing Officer has relied upon the findings given in the assessment order and also briefly explained that the assessee could not file any proof of payments of labour payable and bonus. The assessee could not file the required details and reply regarding the expenses were also not filed as per queries. The assessee could not file justification for valuation of the closing stock. No explanation was filed with documentary evidence for advancement of the loans. The assessee also reiterated the submissions already made. 7. The learned Commissioner of Income-tax (Appeals) considering the submissions of both parties and material on record confirmed the rejection of the books of account, however directed to reduce the net profit rate from 12 per cent. to 5 per cent. and directed the Assessing Officer to recompute the income. His findings in para 4.4 of the appellate order are reproduced as under : 4.4 Thereafter, the Assessing Officer in his comments again relied on the assessment order. From the submissions of the appellant and the Assessing Officer it is noted that the primary issue in this case is verification regarding the labour exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn by the appellant is 2.19 per cent. The claim of labour expenses as mentioned by the Assessing Officer is ₹ 44,60,202 out of which ₹ 23,00,000 is shown as payable. Therefore, the claim of labour expenses is less in this year compared to the assessment year 2005-06. Therefore, looking into the entirety of the facts of the case, I am of the opinion that the net profit be estimated at 5 per cent. of the gross receipt shown by the appellant. Thus, the net profit is increased by 2.81 per cent. over and above the net profit declared by the appellant. The Assessing Officer is directed to give effect accordingly. Thus, ground Nos. 1 to 5 is partly allowed. 8. The Revenue is in appeal challenging the reduction of the net profit rate from 12 per cent. to 5 per cent. The assessee in the cross-objection has challenged the order of the learned Commissioner of Income-tax (Appeals) in confirming the rejection of the books of account and application of net profit rate of 5 per cent. 9. The learned Departmental representative relied upon the orders of the Assessing Officer and submitted that in the cases of the contractors, the profit rate of 10 per cent. to 12 per cent. has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out 6 per cent. has been applied. 11. We have considered the rival submissions. The authorities below have given the reasons for rejection of the books of account. The assessee has failed to verify the genuineness of the opening and closing balance of labour payable. The details called for by the Assessing Officer were not furnished. The assessee failed to justify the quantitative and qualitative details of the closing stock. The queries raised by the Assessing Officer were not properly addressed. Therefore, these were the sufficient reasons for rejection of the books of account by the Assessing Officer. The findings given by the Assessing Officer are thus, not rebutted by the assessee to the satisfaction of the authorities below. Even during the course of arguments, learned counsel for the assessee could not specify as to what is the illegality in the orders of the authorities below in rejecting the books of account. Therefore, considering the findings of fact recorded by the authorities below for rejection of the books of account, we do not find any justification to interfere with their orders for rejection of the books of account. The cross-objection of the assessee is theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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