TMI Blog2010 (8) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... onsultant of the assessee appeared on time to time. On scrutiny of the accounts Ld. AO found that assessee has reported a net profit at 1.28% which is very low in comparison to the rate of profit prescribed in section 44AD for the civil contractor who were not maintaining books of accounts. In that case profit has to be adopted at 8% of the total receipts. The AO found that assessee has been working on different projects at the relevant time. He directed the assessee to produce project wise details. In response to the query of AO it was contented by the assessee that project wise details were not maintained by the Company. It is having a tele package which is being used by most of the assessee for maintaining books of accounts. It was contended by the assessee that its administration system is centrally controlled, the site supervisor maintains petty cash account for their respective sites which is also allocated project wise and all other direct expenditure for the project is maintained centrally. Thus assessee showed its inability for submitting the details project wise. It also emphasized that it is not mandatory under the Income Tax Act to maintain project wise books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer and it is noticed that these were only general observation by the Assessing Officer but no other mistake or irregularity was pointed out. There is no dispute or any finding by the Assessing Officer that system of accounting is not in conformity with the past history and there is any change in system and as such the technical objection about project wise details have not relevance in the light of past history. It was also clarified in the written submission before the Assessing Officer that details of direct expenses of the project were maintained and administration and other overhead expenses were recorded in the books of head office and as such the project wise details were also available for verification. In the light of above facts, there is no justification for the Assessing Officer to draw adverse inference and to reject the books of accounts and to make estimate in respect of trading results. Further, as the accounts were maintained in conformity with the past history and in the absence of any specific mistake or irregularity, there is no ground to dispute correctness of trading results on the basis of this issue. 3.8 Regarding closing stock, the facts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf has not applied these provisions. The Assessing Officer has also made reference to various case laws and contents of the same have also been extracted in the assessment order. As per the contents of these decisions, these are relevant to sec. 68 and 41(1) and as such these judgments have no bearing to the issue of trading results. 3.11 In the light of above discussion and the fact that books of accounts were audited and return was filed on the basis of same and there being only general observation without any specific finding and in the light of detailed consideration of all the relevant issues and as per appellate order for assessment year 2003-04, there is no justification for rejection of books of accounts or estimation of profit and entire trading addition is accordingly deleted. However, as the trading addition is being accordingly deleted. However, as the trading addition is being deleted in full, the objection of the appellant that the addition was made over and above the profit already declared as per books of accounts need no adjudication as the entire addition has been deleted and declared profit as per books of accounts is to be considered for the purpose of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reconciled its position and that has been considered by the Ld. CIT(A) on page 5. The AO has referred name of 5 concern on page 3. He observed that he had issued notices u/s 133(6). But he find a minor discrepancy in respect of two concern. The main concern is Dhanishta Builders the name of Dhanishta Builders is not available in the names of concerns mentioned in A-I at page 3. The assessee itself is showing balances of ₹ 4,81,894/- against the name of Dhanishta Builder and it has made purchases of ₹ 20,55,135/-. The objection of the AO is that no confirmation was received from this concern. Assessee contended that it has made payment through account payee cheque. Therefore, the transaction ought not to be doubted. The assessee has furnished addresses of this concern. To our mind the objection pointed out by the AO is not of such conclusive nature which can enable the AO to compute the income of the assessee from the books of accounts produced by it. Except these two objections AO has not pointed out any other objection. He thereafter straightway proceed to make a reference of the case laws on the points i.e. when books of accounts are not to be relied upon. Taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component for understating the sale value. He further enhanced this by a sum of ₹ 4,88,560/- on the ground that assessee got converted this land into a free hold property. Hence it will increase its value and took this figure on estimate basis. The AO on the basis of these calculations worked out a sum of ₹ 16,62,480/- which is in his opinion has been understated by the assessee in the sale proceeds. On appeal Ld. CIT(A) reappreciated the controversy and deleted the addition. 7. With the assistance of Ld. Representative we have gone through the record carefully. The AO has erroneously quoted section 40A (2)(b). This section deals with a situation where certain benefit in respect of salary, commission paid by an assessee to the persons covered under this section i.e. relatives etc. for availing their services. Whereas such services could be availed at a lower rate from the open market. Section 50C is the relevant section where AO can replace the sale proceed received by the assessee on the basis of value of the property adopted by the Stamp Valuation Authorities for getting the sale deed register. This section provide that where consideration received or accruing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has rightly deleted the addition. Similarly AO has doubted the loans entries appearing against the name of Shri H.S. Pasricha and Shri Kailash Pasricha Both are also the Directors and regular income tax assessee. According to the Ld. CIT(A) they have substantial existing deposits to the extent of more than about ₹ 6 lacs in case of Shri H.S.Pasricha and about ₹ 9 lacs in case of Shri Kailash Pasricha. Considering their confirmation and their creditworthiness Ld. CIT(A) has deleted the addition. On due consideration of the finding recorded by the Ld. CIT(A) we are of the opinion that assessee has fulfilled all the three ingredients of section 68 i.e. identity of the creditor, genuineness of the transaction and the creditworthiness of the creditors. We do not find any merit in this ground of appeal it is rejected. 11. Ground No. 4 in this ground of appeal the grievance of revenue is that Ld. CIT(A) has erred in directing the AO to allow depreciation on trucks @ 50%. The brief facts of the case are that assessee has claimed a sum of ₹ 41,900/- on account of depreciation on the truck. The AO has allowed depreciation @ 20% on the ground that prescribed rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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