TMI Blog2011 (1) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the learned CIT(Appeals) Rohtak had erred in enhancing the net profit ratio to 12% of the Gross Receipts against 5% of Gross Receipts considered by AO thereby making a further addition of ₹ 3382487 to the assessed income of ₹ 21,94,133. 2. That on facts and in circumstances of the case, the learned CIT(Appeals), Rohtak had erred in making a further addition of ₹ 3382,487 instead of deleting the addition of ₹ 1012,509 made by A.O. to the returned income of ₹ 1280,189. 3. That on facts and in circumstances of the case, the learned CIT(Appeals) Rohtak had not appreciating the facts that part books of accounts were produced before AO. 3. On perusal of the grounds of appeal, we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO that the net profit shown by the assessee comes to 2.79% as compared to 1.81% in the immediately preceding year. During the course of assessment proceedings, the assessee was asked to produce complete books of account with bills and vouchers. However, the assessee had only produced part of the books with some bills of iron and steel, cement and building material and bricks. No bills and vouchers were produced for the following major expenses :- (i) Labour charges. (ii) Fabrication charges. (iii) Construction work expenses. (iv) Miscellaneous expenses. (v) Job work charges. 6. The assessee was provided a final opportunity vide order sheet entry dated 26.12.2008 to produce complete books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluding the cost of material supplied by the department. The learned CIT(A) also held that Hon ble ITAT Chandigarh in ITA No.323/Chandi/2005 dated 25.5.2007 in AY 2001-02 had applied 12% of net profit rate of contract receipts in the case of M/s Parbhat Kumar. The CIT(A), therefore, enhanced the net profit rate to 12% on total contract receipts and passed the order. 8. In the course of hearing of this appeal, the learned counsel for the assessee has not been able to explain as to why all books of account with complete bills and vouchers were not produced before the AO. However, he contended that the same were sought to be produced before the CIT(A) as would be clear from the order sheet entry made by the CIT(A). No such details of bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.00 10. On perusal, we find that the net profit assessed in FY 2003-04 relevant to the AY 2004-05 is 6.37%. In the FY 2004-05 relevant to the AY 2005-06, the net profit assessed is of 2.15%. In the assessment year under consideration, the assessee has declared net profit at 2.79% which has been increased to 5% by the AO and further increased to 12% by the learned CIT(A). The total turnover in FY 200304 was Rs. 88,43,638/- which has been increased to Rs. 2,64,29,168/- in the next FY 2004-05 and to Rs. 4,58,53,970/- in the current FY 2005-06. It is thus seen that the turnover in the current year has been increased from Rs. 88,43,638/- in FY 2003-04 to Rs. 4,58,53,970/- which is about five times. It is also seen by us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom these details, it appears that the assessee has incurred the cost of various building materials, which have not been supplied by the contractee. The margin of profit in respect of the building materials and stores is always on a lower side. 12. Keeping in view the fact that the rate of profit applied by the AO in the preceding assessment year was being 2.15% of total contract receipts and keeping in view the fact that the assessee has been in default in not producing all books of account alongwith bills and vouchers raising an adverse inference against the assessee that had the books of account produced before the AO, that would have gone against the assessee, we reasonably estimate the net profit of the assessee from contract works ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
