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TMI Blog2021 (5) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation or reasoning for not considering any of the submissions produced before him including the additional submissions produced before him in writing during the hearing conducted on 30th January 2019 more specifically the citations of the cases (ITAT and High Courts). The appellant is at a loss to understand as to why the Appellate Authority has conveniently chosen not to respond to any of the submissions consequently the appellant humbly submits that the order is not complete in all respects and is considered not to be a speaking order in itself. 2. With reference to the action of the AO in rejecting the books of accounts, the appellant would like to check whether the AO had in letter and spirit followed a due diligent process befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of civil contracts, filed his return of income for the assessment year 2012-13 declaring total income of Rs. 3,74,216/- and the said return was processed u/s.143(1) of the Income Tax Act, 1961 (hereinafter the 'Act'). The case has been subsequently reopened u/s.147 of the Act, for the reasons recorded as per which income chargeable to tax had escaped assessment, on account of lower profit from business. Therefore, notice u/s.148 of the Act was issued and served on the assessee. In response to notice, the assessee has filed return on 08.11.2017, declaring total income as admitted in the original return of income filed u/2.139(1) of the Act. The case was taken up for scrutiny and during the course of assessment proceedings, the AO called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf exemplifies that the accounts have not been maintained as per the mandate of the Act. The same is confirmed by the affirmative letter of the Authorized Representative who categorically and clearly expressed that the vouchers, bills etc are not available. Under the above circumstance, the undersigned is unable to get satisfied about the correctness and completeness of the accounts of the assessee and hence could not place reliance on the financials and the audit report filed. The undersigned is therefore construed to invoke the provisions of sec 145(3) and proceed to make an assessment in the manner provided in sec. 144. As the correctness and completeness of the accounts is not substantiated by the assessee, the books of accounts are her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any adverse comments from the auditor, books of accounts cannot be rejected merely for the reason that no supporting bills and vouchers are produced for expenses. The AR further submitted that even the books of accounts are rejected u/s.145(3) of the Act, but estimation of profit should be reasonable having regard to the nature of business of the assessee. In this case, the assessee is into civil contracts, where net profit varies from 2 to 3% depending upon the nature of contracts and place of contracts, where the assessee has undertaken works. Therefore, without any basis, no adhoc estimation can be made towards profit from business. 6. The ld.DR on the other hand strongly supporting order of the CIT(A) submitted that once boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on the basis of which he has arrived at the conclusion with regard to rate of profit for estimation of income from the business. No doubt, under the best judgement assessment there is an element of guesswork but it should not be arbitrary. Therefore, while completing the assessment under best judgement assessment, the AO has to bring on record certain material to support his finding with regard to rate of profit admitted for estimation of profit with some comparable cases of similar nature or the profit declared in the similar industry. In this case, although the AO has adopted 5% net profit on gross receipts, but failed to bring on record any comparable case of similar nature nor give reasons for adopting such rate of net profit. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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