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of <h1>ITAT reduces profit estimation rate from 8% to 4% on sub-contracted work under section 144 assessment</h1> <h3>Snnehshilp Constructions Versus Income Tax Officer Ward–1 (5), Nagpur</h3> Snnehshilp Constructions Versus Income Tax Officer Ward–1 (5), Nagpur - TMI Issues:Assessment under section 144 of the Income Tax Act, 1961 at 8% of total receipt.Analysis:The appeal challenges the order dated 18/10/2023, by the Commissioner of Income Tax (Appeals) for the assessment year 2005–06. The primary issue is the assessment under section 144 of the Income Tax Act, 1961, at 8% of the total receipt. The appellant, a civil contractor, declared a loss of Rs. 93,611 for the year. The original assessment completed on 31/12/2007 included additions totaling Rs. 41,32,485. The Assessing Officer made additions for profit estimated at 8% of gross receipts and disallowance under section 40(a)(ia) of the Act. The CIT(A) set aside the assessment order and directed modification based on discrepancies in gross receipts. The subsequent orders upheld the additions and directed re-examination of income from sub-contract work. The Tribunal directed re-estimation of income from sub-contracting. The Assessing Officer then determined income at Rs. 53,44,392, including an addition of Rs. 24,09,973 at 8% of gross receipts. The CIT(A) upheld the additions, leading to the current appeal.The appellant declared work receipts of Rs. 1.33 crore and other income of Rs. 16.45 lakh. However, TDS credit details showed gross receipts of Rs. 3.01 crore. The appellant offered only Rs. 1.33 crore as work receipts and Rs. 8.38 lakh as commission income from sub-contracting a main contract of Rs. 1.68 crore. The Assessing Officer calculated income considering various factors, including 8% of gross receipts and P&L account figures. The Tribunal considered the appellant's submissions and estimated profit at 4% for sub-contract work, providing partial relief of Rs. 6,72,849. Therefore, the appeal was partly allowed, modifying the assessment of income.In conclusion, the Tribunal's decision addressed the primary issue of assessment under section 144 of the Income Tax Act at 8% of total receipts. The case involved detailed examination of the appellant's income declarations, gross receipts, and commission income from sub-contracting. The Tribunal's adjustment of profit estimation from 8% to 4% for sub-contract work reflected a fair assessment based on the facts presented. The decision provided partial relief to the appellant, highlighting the importance of accurate income assessment in tax matters.
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