TMI Blog2018 (3) TMI 1706X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit rate to, even as conceded to by the ld. AR, the assessee’s counsel, during hearing, 5% of the turnover. The disallowance on account of depreciation (u/s. 32(1)) and interest (u/s. 36(iii)) shall not survive in view of the estimation of the net profit rate. Addition u/s 68 qua a secured loan/s - Held that:- Though the same could be made in principal, and we do not agree with the ld. CIT(A) that the same could not be in view of the assessee’s profit rate being estimated (CIT v. Devi Prasad Vishwanath Prasad [1968 (8) TMI 5 - SUPREME COURT], we find no basis for the said addition in the facts and circumstances of the case. True, the burden of proof u/s. 68 is on the assessee, which has not furnished any material in the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the assessee to 3.5% by relying on the order of ITAT Amritsar in case of M/s. Construction Engineers where the net profit was held at 7%. 3. Whether the ld. CIT(A) was right in law and fact in allowing the appeal of the assessee despite the fact that no books of account were produced by the assessee during the assessment proceedings. 3. The brief facts of the case are that an assessment u/s. 144 of the Act was framed by the Assessing Officer (AO) in view of the continuous non-compliances of the assessee to the various notices u/s. 142(1), beginning dated 09.10.2013, to 19.12.2014, i.e., issued pursuant to issue of notice u/s. 148 on 03.04.2013. The non compliance, which was total, was deliberate in-as-much as all the notices, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no improvement in its case had been made by the assessee before him. The ld. CIT(A), however, was of the view that the AO ought to have examined the books of account of the assessee in the remand proceedings, and issued his finding afresh, i.e., rather than (almost) repeating what he had already stated earlier in the assessment order. The profit rate of 10% was certainly in excess as the AO had overlooked the fact that the assessee was during the relevant year a sub-contractor (of M/s. Satish Aggarwal and Co.), undertaking the contract work (of black topping roads for Border Roads Organization (BRO) - a Government of India undertaking) in a remote part of the Rajouri District of J K. A rate of 7%, as decided by him in several other cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the assessee to be not a contractor but a sub-contractor. In our considered view, a difficult terrain may not necessarily imply a lower profit. Rather, economic theory would suggest the profit to match the risk involved, so that a higher risk would entail a higher rate of profit. Further, again, the assessee as the person undertaking the work would, both in theory and in practice, be entitled to a larger share of the profit, i.e., even if the same is to be considered as in the range of 7% to 8%. Considering these facts, we modify the estimation of the assessee s net profit rate to, even as conceded to by the ld. AR, the assessee s counsel, during hearing, 5% of the turnover. The disallowance on account of depreciation (u/s. 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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