TMI Blog2020 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... pass the assessment order de novo in accordance with Law, by giving reasonable, sufficient opportunity of being heard to the assessee. In case A.O. may not be satisfied with the book results of the assessee, he should not estimate the profit of the assessee by applying N.P. rate of 8% in view of our directions given in A.Ys. 2003-04, 2004-05 and 2008-09 above, the A.O. should restrict the profit at 2% only in case of rejection of the book results. Appeal of assessee allowed for statistical purposes. - ITA. No. 1200/Del./2012, 1199/Del./2020, 1201/Del./2012, 869/Del./2012, 867/Del./2012 (A.Y. 2004-05, 2003-04, 2008-09, 2006-07) - - - Dated:- 6-10-2020 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER For Assessee : Shri Rakesh Jain, Advocate For Revenue : Shri Parikshit Singh, Sr. D.R. ORDER PER BENCH : We have heard the Learned Representative of both the parties through video conferencing and perused the material available on record. 2. Since common issue is involved in all the appeals, therefore, all were heard together and we dispose of the same through this consolidated Order. The issue in appeals for the A.Ys. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chers for all the expenses. Hence, books were rejected. The A.O. again computed the business income of assessee by applying the N.P. rate of 8% on the gross receipts and again made addition of ₹ 31,67,480/-. The Ld. CIT(A) confirmed the application of N.P. rate of 8%. The Ld. CIT(A), however, directed that sales tax of ₹ 16,76,105/- deducted by the various Departments was not excluded from gross contract receipts for working out the N.P. rate of 8%, since no profit element is involved in sales tax deducted, therefore, A.O. was directed to deduct sales tax from the gross receipts and thereafter, apply N.P. rate of 8%. The Ld. CIT(A) also granted relief to the assessee of rebate under section 88 of the I.T. Act. The appeal of assessee was partly allowed. 9. Learned Counsel for the Assessee contended that rejection of the books of account and application of net profit rate of 8% is unreasonable and book results should have been accepted. He has submitted that previous history of the assessee have also not been considered by the authorities below because in assessment year under appeal, the N.P. rate declared by assessee was of 0.22% and in A.Y. 2001-2002 the assessee de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 has accepted profit rate declared by assessee at 1.54%. The A.O. made lump sum addition of ₹ 1 lakhs on account of the expenses not verifiable and to cover-up the possible leakages. In the case of Laxminarayan Badri Das 5 ITR 170 the Hon ble Privy Counsel held that estimate should be fair. The A.O. should not act dishonestly or vindictively or capriciously. His own knowledge of previous returns, local knowledge and circumstances of the assessee to be considered to arrive at fair and proper estimation of income. In the case of Aero Club 336 ITR 400 (Del.) the Hon ble Delhi High Court held that assessment should be on rational basis. Profit margin disclosed by the assessee cannot be rejected arbitrarily. Considering the facts of the case and nature of business of assessee and history of the assessee as noted above, where the highest N.P. rate accepted by the Department was of 1.54%, we are of the view that the authorities below were not justified in applying the N.P. rate of 8% to estimate the profit of the assessee. In view of the above discussion and considering the history of the assessee, we set aside and modify the Orders of the authorities below and direct the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the Ld. CIT(A). The appeal of assessee was partly allowed. 19. Learned Counsel for the Assessee contended that A.O. was not justified in passing the ex-parte assessment order because assessee was already assessed at Delhi and only addition of ₹ 1,50,000/- was made by A.O. in the Order under section 143(3) Dated 27.12.2007. He has submitted that on the face of the Order the A.O. at Delhi with ITO, Ward-38(3) should not have passed the impugned order under section 144 Dated 30.12.2008. He has submitted that on the face of it these are contradictory Orders passed by the authorities below. He has submitted that assessee was in bonafide impression that once assessee is assessed at Delhi where assessee has shifted his business, therefore, passing of ex-parte Order is wholly unjustified. 20. On the other hand, Ld. D.R. relied upon the Orders of the authorities below. 21. We have considered the rival submissions and we find that entire matter requires reconsideration at the level of the A.O. It is an admitted fact that assessee filed return of income at Delhi with Ward-38(3), New Delhi and income of assessee for impugned A.Y. 2006-07 was assessed at Delhi under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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