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TMI Blog2024 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, submits that the appeal deserves to be allowed and the substantial question of law deserves to be answered in favour of the revenue. 4. Despite case having been called on, none appeared for the respondent/assessee. 5. We have carefully considered submissions of learned Counsel for the appellant. 6. We find that the respondent/assessee is a private limited company engaged in business of civil contract. During the assessment year 2009-10 the assessee executed two projects as 'sub-contractor' on behalf of M/s. Hindustan Steel Works Ltd. and M/s. Engineering Projects of India Ltd. for construction of road under 'Prime Minister Gramin Sadak Yojana and construction of central jail at Vishalgarh, Tripura'. During the assessment year in question the assessee had made purchase of Rs. 13,85,34,422/- from various parties which were claimed as deduction in its profit and loss account. The details of parties were furnished during the assessment proceedings. The assessing officer issued notice under Section 133 (6) of the Income Tax Act, 1961 (hereinafter referred to such Act, 1961) to the parties for verification of the transaction with the assessee. Assessing officer found certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been estimated from 8% to 12%. The proviso to sub-section 1 of Section 44AD provides that it is applicable only if the gross receipt are loss that Rs. 40 lakhs. However, the Assessing Officer and appellate authorities can take the help of general principles of law laid down in Section 44AD and it does not mean that it has applied it ipso facto on the facts of the assessee. A help has been just taken from the provisions to determine the net profit ratio figure and applying the same in the case of a contractor's case and that too after being accepted by the appellant and as per ground of appeal no. 10. During the appellate proceedings the appellant after going through the assessment order and in the facts and circumstances has submitted as follows:- "Without prejudice to above factual position and considering the supply of construction material mostly by unorganized sector and considering the net result of various construction companies, and considering the sub construction business, the CIT(A) may adjudicate the appeal by applying net profit rate of 8% on contract receipts of Rs. 22,49,83,589/- which may reasonable under the given facts of the case." 22. Considering all, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the similar facts and circumstances various Hon'ble courts have held that a reasonable percentage of profit can be worked out. Some of the similar case laws are cited below. 1. In the case of M/s. Triveni Enterprise, Hyderabad Vs. the Income Tax Officer Wd 6 (1) ITA No. 352/Hyd/2011 & 353. Hyd/2011 it has been held that in the AY 2006-07 and 2008-09, the assessee was engaged in the business of Civil construction. Assessee fails to prove the expenses details AO estimated the income of the assessee at 12% of the gross receipt. On appeal, Learned CIT(A) directed the AO to estimate the income at 8% in the case of main contract receipts and at 6% on the sub contract receipt. Tribunal direct the Assessing Officer to estimate the income of the assessee at 8% on main contract receipts and at 5% of the sub contract receipts as above said. 2. In the case of Shri Om Prakash Tripathi Vs ACIT (Contractor) 2(1), Farrukhabad. ITA No. 330/Agr/2005 it has been held that, AY 2001-02, the assessee was engaged in the business of construction. Net profit rate shown by the assessee 5.32%. the being accepted by the AO CIT(A), Agra. Rejected the books of account by applying provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the order of the Ld. CIT (A) and accordingly confirmed." In addition to the above we also find that the assessee has declared the profit in its own costs for the earlier years and subsequent years, showing very less amount of profit in terms of percentage and the same was accepted by the Revenue. Therefore in our considered view we find no reason to interfere in the order of Ld. CIT(A) and this ground of Revenue's appeal is dismissed." "To ensure that a best judgment assessment is conducted with fairness and impartiality, the following principles are to be satisfied: a) Deficiency of Information: The initiation of the assessment occurs when the assessee fails to furnish complete and accurate information. In such instances, the assessing officer is authorized to commence a best judgment assessment based on the extant information. b) Due Diligence: Prior to invoking a best judgment assessment, the assessing officer is obligated to undertake reasonable efforts to procure the necessary information. This entails issuing notices to the assessee, affording adequate response time and providing multiple opportunities for the assessee to rectify any discrepancies. c) Pruden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. The materials in execution of contract have not been disbelieved by the assessing officer. In this regard, the CIT(A) and ITAT have also recorded findings of fact. The ITAT has also noticed net profit rate of last seven years which ranged from 0.45% to 3.84%. The ITAT has also noticed net profit rate determined in matters of others in the same line of trade, to be about 4%. The assessee himself has agreed before the CIT(A) for net profit at the rate of 8% on the gross receipts under the contract. Learned Counsel for the appellant could not place any material before us on the basis of which determination of net profit at the rate of 8% in the line of trade of the respondent/assessee can be said to be perverse or insufficient under the facts and circumstances of the present case. The findings recorded by the CIT(A) and the ITAT for applying the net profit rate of 8% on the gross receipts under the contract, cannot be said to suffer from any apparent illegality in the facts and circumstances of the present case. 11. For all the reasons aforestated, applying the principles of best judgment assessment and the net profit rate, we do not find any illegality in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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