ITAT directs AO to estimate assessee's income at 8%, partially allowing appeal.

The ITAT set aside the CIT(A)'s order and directed the AO to estimate the income of the assessee at 8%, partially allowing the appeal of the assessee.

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Issues:
Estimation of income by Assessing Officer and CIT(A) - Reasonableness of estimation at 8.5% - Submission of bills and vouchers by the assessee - Applicability of comparable cases in support of reasonable estimation.

Estimation of Income by Assessing Officer and CIT(A):
The appeal was against the order of the Commissioner of Income Tax(Appeals) confirming the Assessing Officer's estimation of income at 8.5% of gross bills due to the assessee's failure to provide ledger extracts, bills, and vouchers for expenses. The assessee argued that the estimation was unreasonable and unjustified, especially considering the turnover declared. The ITAT noted that the assessee's income admitted was 6.72% of the turnover, and the gross bills were in line with Form 26AS. The AO did not provide any comparable cases for the estimation. The assessee cited relevant case laws to support their contention for a lower estimation of income.

Submission of Bills and Vouchers by the Assessee:
The assessee, a civil contractor, claimed that their books were audited, but due to relocating, they misplaced the books of account, bills, and vouchers. The assessee declared a turnover of Rs. 13.58 crores, arguing that an 8.5% profit estimation was unrealistic for a civil contractor. The ITAT considered the submissions and held that an 8% estimation would be reasonable based on the provided case laws and the turnover exceeding the Section 44AD limit.

Applicability of Comparable Cases in Support of Reasonable Estimation:
The ITAT analyzed the case laws cited by the assessee, including B. Banamber & Co., Nishikant T. Patne, and CIT-II, Amritsar v. Earth Tech Engineers. These cases supported a lower estimation of income compared to what the AO had determined. The ITAT concluded that an 8% estimation of income would meet the needs of justice based on the submissions made and the precedents cited by the assessee.

In conclusion, the ITAT set aside the CIT(A)'s order and directed the AO to estimate the income of the assessee at 8%, partially allowing the appeal of the assessee.

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