Tribunal adjusts profit estimation from 8% to 3% based on historical ratios.

The Tribunal set aside the estimation of profit at 8% and directed the Assessing Officer to estimate the profit at 3% of the total turnover, considering the historical profit ratios accepted for the assessee in previous assessments.

---

---

Issues:
- Challenge to rejection of books of account
- Challenge to estimation of profit at 8% of contract receipts

Analysis:
1. Challenge to rejection of books of account:
The appeal challenges the order of the Commissioner of Income Tax (Appeals)-Ghaziabad, which upheld the assessment by the Assessing Officer (AO) estimating the income of the assessee at Rs. 41,09,614/- by considering the profit at 8% of the total turnover. The assessee contended that in previous years, the profit ratio accepted ranged between 1.60% and 3.31%, and it was not justified for the Revenue to suddenly estimate the profit at 8%. The Department consistently accepted the profit ratio within the range of 1.60% to 3.31% for earlier years without any objection. The Tribunal found no rational basis for estimating the profit at 8% and directed the AO to estimate the profit at 3% of the total turnover, considering the historical profit ratios accepted in previous assessments.

2. Challenge to estimation of profit at 8% of contract receipts:
The assessee argued that the profit ratio of 2.46, accepted in the preceding assessment year 2009-10, should be applied instead of the 8% estimation by the AO. The Revenue contended that a profit ratio of 2.46 was too low and suggested a minimum profit ratio of around 4%. The Tribunal noted the historical profit ratios accepted for the assessee in previous assessments and found that a profit ratio of 3% of the total turnover would be just and reasonable. Therefore, the Tribunal allowed the appeal in part, directing the AO to estimate the profit at 3% of the total turnover, considering the consistency in profit ratios accepted for the assessee in earlier assessments.

In conclusion, the Tribunal set aside the estimation of profit at 8% and directed the AO to estimate the profit at 3% of the total turnover, considering the historical profit ratios accepted for the assessee in previous assessments.

---