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TMI Blog2025 (5) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... y separate adjudication. Hence, the same are hereby dismissed as infructuous. 3. Likewise, the issue raised by the assessee in ground No. 7 of the appeal pertains to the levy of interest u/s 234A, 234B and 234C of the Act which are consequential in nature and therefore the same does not require any separate adjudication. Hence, the same is hereby dismissed as infructuous. 4. The issue raised by the assessee through grounds Nos. 2 to 5 are interconnected and pertains to the addition made to the total income on the basis of estimation of profit after rejecting the books of accounts. 5. The relevant facts are that the assessee is an individual and engaged in the business of labour supply and execution of civil work. For the year under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned turnover, earned gross profit @ 11.53% and net profit @ 6.34% which is more the GP & NP Ratio of 11.53 % & 6.09% as reported in the immediate previous year despite being the fact that the total over for the year under consideration increased. The assessee contended that it is very much normal in the business that the businessman to achieve higher turnover reduces the profit margin whereas in his case percentage of profit increased along with increase in turnover. 9. The assessee in respect of withdrawal of cash submitted that the nature of business in which he is engaged requires regular cash to make payment to labourer, materials suppliers i.e. sand, concreate, cement etc. Therefore, the cash was withdrawn throughout the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) margin, it was noted that for the year under consideration (Assessment Year 2017-18), the G.P. was shown as 11.67%, which was lower compared to the previous and subsequent years. Given that the turnover had increased by 150% from the previous year and considering the nature of the business, the AO estimated the G.P. at 25%. This led to an addition of Rs. 30,70,412/- to the total income of the assessee. 14. Furthermore, it was observed that the assessee did not declare any rental income of Rs. 3,92,217/- received from ACC Ltd., despite this being reflected in the Form 26AS and TDS being deducted. The AO treated this as additional income under the head "Income from Other Sources." The assessee was also found to be in default for not filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, documentary evidence proceeded to reject the books of account and estimated the profit in arbitrary manner. The addition made was adhoc without any basis. 18. The learned CIT(A), after examining the submissions and facts of the case, found that the AO's estimation of 25% gross profit (GP) was arbitrary and unreasonable, especially considering the nature of the appellant's business, which is primarily service-based involving labour contracts and machinery hire. The appellant had declared a net profit of only 6.21% on the gross turnover of Rs. 2,34,83,846/-, and the ld. CIT(A) noted that such a high GP rate as estimated by the AO had never been recorded by the appellant in the past. In the absence of complete evidence and return filing fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is engaged in the business of labour supply and execution of civil work. It is noted that the books of account were rejected by the AO under section 145(3) of the Act, and the profit was estimated at an exaggerated GP rate of 25%, which was found to be arbitrary in light of the nature of the business, being predominantly service-based. While the assessee did not file a return of income within the prescribed time and failed to maintain or submit certain evidentiary documentation, it is also observed that a significant portion of transactions-approximately 72%-were conducted through banking channels. Additionally, the assessee's business was previously run by his late father under the trade name "Mohammed Ameen Contractor," which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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