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TMI Blog2020 (8) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... both the parties. We find that main issue involved in these two appeals are that the assessing officer has made an addition of Rs. 2,63,44,508/- on account of bogus purchases by estimating net profit at 40%, which in first appeal restricted by the ld.CIT(A) at Rs. 13,19,651/- by taking average estimated net profit at 7%. Assessee is against partly confirming the addition to the extent of Rs. 13,19,651/- by estimating net profit @7%; and Revenue is against deletion of addition of Rs. 2,63,44,508/- by rejecting estimation of net profit made by the AO at 40%. The assessee has also challenged rejection of books of accounts of the assessee by both the authorities. 3. We shall first deal with appeal of the assessee. 4. Brief facts as emerging f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med for providing accommodation entry etc. to different beneficiaries, which allegation the assessee company has completely denied by stating that the said Shri Praveennkumar has no connection of the said "LPPL", and therefore, the statement made by him is without any authority, hence false and incorrect. Assessee further explained that all the transactions were carried out through account payee cheques and the assessee has also effected TDS while paying the invoice amounts to the "LPPL", which demonstrated that contracted work has been done by the said party and invoice has been raised and paid for, and therefore, expenditure could not be disallowed. The assessee has also submitted that copy of ledger account in the books of "LPPL", copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The assessee has not been provided with copy of commission report of DDIT (Inv.) nor given an opportunity to cross-examine the said Shri Praveenkumar Agrawal for his alleged statement. It was submitted that any material not confronted to the assessee would not constitute as admissible evidence, and consequent action relying on such material was legally invalid and void. Assessee further submitted that it has furnished necessary documents viz. work order given to "LPPL", invoice raised by "LPPL", ledger account of the assessee in the books of "LPPL" and relevant extract of bank statement of "LPPL" showing the receipt from the assessee. It was further submitted that payments made to "LPPL" were through account payee cheque and requisite T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also submissions of the assessee, the ld.CIT(A) has observed that the AO thought it was fit to make an addition on basis of statement of Shri Praveenkumar Agrawal. However, he did not subscribe to such view of the ld.AO in blindly relying upon on the statement of the Shri Praveen Kumar Agrawal, because such statement was not corroborated with any documentary evidence. On the other hand, the assessee categorically denied role of Shri Praveenkumar Agrawal in the "LPPL" and the impugned transaction, and therefore, the AO was not fully justified as basis for addition. He observed that during the year under consideration, the assessee has shown net profit rate of 5.26% as against the net profit rate of 2.61% in the Asstt.Year 2012-13; 6.53% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 5.26% shown by the assessee is on higher side, therefore, ld.CIT(A) was not justified in adopting net profit @7%, and therefore, a reasonable rate of profit may be adopted. On the other hand, the ld.DR supported the order of ld.AO. 6. We have considered rival submissions and gone through the record carefully. So far as rejection of books of accounts is concerned, we do not find any illegality in their finding. However, what we are concerned is that the basis of estimation of net profit by the Assessing Officer at 40% and bring down the same to 7% by the ld.CIT(A). It is not in dispute that ONGC Petro have given a contract for excavation of canal to a party named Shaili Paradigum Infratech P.Ltd., which in turn sub-contracted the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L" assessee might have earned a little more profit than actually shown by it in its books of accounts in earlier years or this year. Therefore, we do not find any error in the finding of the ld.CIT(A) for rejection of the books of accounts as well as estimation of profit at 7% on the total turnover. There is no justification at the end of the AO to estimate profit at 40% of the turnover, which is merely based on some illogical consideration of facts and figures. The AO has not provided any material for estimation that profit must have been earned at 40%. Therefore, considering the above facts and circumstances, we do not find any merit in both the appeals of the parties. Both are rejected. 7. So far as peripheral issues like charging of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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