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The ACIT Circle -7 Jaipur Versus M/s. Rakesh Construction Company

2016 (6) TMI 736 - ITAT JAIPUR

Estimation of income based on the previous history of the assessee - civil construction work - Rejection of book of accounts u/s 145(3) - Held that:- CIT(A) has effectively taken the net profit rate at 5.05% which is based on the previous history of the assessee. The ld. DR was not able to controvert the fact recorded by the ld. CIT(A) in his order. Therefore, we find no merit in this ground of appeal of the Revenue which is dismissed. - Decided against revenue - Addition u/s 41 - addition o .....

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year. Considering these facts and circumstances of the case, we are of the view that the ld. CIT(A) has rightly deleted the addition and find no infirmity in his order which is sustained - Decided against revenue - ITA No. 694/JP/2012 - Dated:- 15-6-2016 - Shri Bhagchand, AM And Shri Laliet Kumar, JM For the Revenue : Shri O.P. Bhateja, Addl. CIT -DR For the Assessee : Shri S.K. Gogra, CA ORDER Per Bhagchand, AM The Revenue has filed an appeal against the order of the ld. CIT(A)- III, Jaipur dat .....

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d, in preference to arbitrarily adopted net profit rate of 5.05 only. (iii) The order of the ld. CIT(A) is perverse in deleting the disallowance of ₹ 58,87,032/- made by the AO u/s 41(1) in spite of the fact that the assessee had neither filed confirmations nor were these persons produced for examination. 2.1 Apropos Ground No. 1 and 2 of the Revenue wherein brief facts of the case are that the return of income for the assessment year 2009-10 was e-filed by the assessee on 28-09-2010 decla .....

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s engaged in the civil construction work i.e. mainly of Rajasthan Housing Board and RIICO. The AO during the course of assessment proceedings went through the books of account of the assessee and made following observations. (i) no stock details have been maintained. (ii) Diesel and Oil expenses of ₹ 22,85,671/- were not fully supported by bills and vouchers. Particularly for the purchases from D.D. Sharma Petroleum, not even a single bill was produced. (iii) Conveyance expenses of ₹ .....

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and confirmation of one of the accountant while stating that the other one left the job. No proof regarding this was produced. (v) Out of total claimed royalty expenses of ₹ 9,97,692/- , the assessee firm could produce documents related only to royalty expenses of ₹ 9,51,239/-. The rest of the amount of ₹ 46,453/- remained unsubstantiated (vi) Office expenses of ₹ 41,270/- were not supported by proper bills and vouchers. (vii) Out of miscellaneous expenses of ₹ 45, .....

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e was not accepted by the AO because the reply of the assessee was general in nature and not connected with documentary evidences. The AO thus made following disallowance under different heard of expenses. Head of expenses Amount claimed % disallowed Amount disallowed Remarks Diesel and Oil 2285671 20 457134 - Conveyance 2355000 20 471000 - Salary 300000 20 60000 - Royalty 997692 46453 Bills/receipts not available Office 41270 20 8254 - Miscellaneous 45040 37632 Bills not available Labour 235254 .....

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pecific disallowances have been made and net profit rate is increased accordingly to 10.2% and hence an addition of ₹ 34,33,013/- has been made by the AO to the income of the assessee firm. 2.3 Aggrieved, the assessee carried the matter before the ld. CIT(A) who partly allowed the ground of assessee basing net profit rate of 5.05% by observing as under:- Conclusion:-In view of the aforesaid factual and legal position, it is held that the ratio upheld in the above decisions, in respect of e .....

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provided by the Courts, in this regard. Thus in the light of the above fact and circumstances, I am of the considered view that applying the effective net profit rate of the previous year, i.e. 5.05% in the current year, would be fair, proper and sufficient to meet the both ends of the justice, as such. Accordingly, the AO is directed to restrict the estimation of income by adopting the effective of NP rate at 5.05% only (after deduction of the depreciation, interest and remuneration paid to par .....

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s before us and during the course of hearing the ld. DR relied on the order of the AO on this issue. 2.5 During the course of hearing, the ld. AR of the assessee relied on the order of the ld. CIT(A) on this issue . 2.6 We have heard the rival contentions and perused the materials available on record. We find that the ld. CIT(A) has effectively taken the net profit rate at 5.05% which is based on the previous history of the assessee. The ld. DR was not able to controvert the fact recorded by the .....

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rties viz Rakesh Earthmovers (P) Ltd. , Vijay Enterprises and Rajasthan Enterprises. According to the AO, there were 08 such parties and accordingly summons were issued by the AO. The AO observed that except for one, i.e. Jaipur Steel Tech India (P) Ltd., no one appeared before him. The assessee was confronted with this and assessee was given a show cause notice dated 24-1-2011 asking to produce the sundry creditors of above ₹ 1.00 lac so that amounts shown are not added back to the assess .....

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Ltd. 911300 Shiv Shankar Diesel Engine 218915 Vijay Enterprises 1293742 Total 5887032 Thus the AO made the addition of ₹ 58,87,032/- to the total income of the assessee. 3.2 Aggrieved, the assessee carried the matter before the ld. CIT(A) who has deleted this addition of ₹ 58,87,032/- by observing as under:- Conclusion: From the above detailed deliberation, it is evident that the AO has invoked the provision of Section 41(1), in respect of trading liability under consideration, rathe .....

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