TaxTMI 
TaxTMI 
2012 (11) TMI 946
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....e and Rs.68,000/- on account of salary payable on the merit basis. iii) Whether on the facts & circumstances of the case the order of the ld. CIT(A) was right to allow the Assessing Officer to represent the case on behalf of revenue. iv) Appellant craves leave to amend or add any or more grounds of appeal." 2. In the C.O., the assessee has raised following grounds: i) On the facts & circumstances of the case the order of the ld. CIT(A) was justified in allowing the appeal and deleting the additions after going through the facts & circumstances of the case. ii) That the department has got no basis and justification for coming in appeal before the Tribunal. The department did not appreciate that the order of the CIT(A) was very exhaustive and clear on the facts as well as on the law and the ld. CIT(A) has taken into consideration all the material available on record before deleting the additions. As such, the order of the CIT(A) may be confirmed and the appeal of the department may be dismissed as the department has got no basis, justification and reason for coming in appeal before the Tribunal." 3. The brief facts in the appeal of the revenue are that the matter in....
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....s the Revenue are allowed for statistical purposes." 3.1. The grounds raised before the ITAT, Amritsar Bench, by the Department are also reproduced for the sake of clarity as under: "i. Whether on the facts and circumstances of the case ld. CIT(A0 Jammu, HQ at Amritsar was justified in law to direct the A.O. to apply the net profit rate of 11% on the contract receipts without appreciating the facts that AO has framed the assessment u/s 143(3) and had not rejected the books of account of the assessee. ii) Whether on the facts and circumstances of the case ld. CIT(A) Jammu, HQ at Amritsar was justified in law not adjudicating the addition on account of unverifiable bogus purchases of material without appreciating the facts that assessee did not file any confirmation of the purchases and as per the Government Departments this much of material was not required at all. iii) Whether on the facts and circumstances of the case ld. CIT(A) Jammu, HQ at Amritsar was justified in law by not adjusting the issue of addition of Rs.1,43,33,248/- on account of unverifiable credits shown as labour and wages payable without appreciating the facts that the assessee has failed to pro....
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....-07. Moreover, the matter has been set aside to the file of the Ld. CIT(A) by the ITAT, Amritsar Bench not on the issue of jurisdiction and therefore, the ld. CIT(A) was required to limit himself to the direction of the ITAT, Amritsar Bench and the ld. CIT(A) has not followed the same. Therefore, the issue decided with regard to jurisdiction in favour of the assessee is reversed and ground No.1 of the Revenue is allowed accordingly. 6. As regards grounds No. 2 & 3, the brief facts are that the assessee was given a show cause notice to produce complete books of account alongwith details of wages and salary payable and when these were actually paid, the details of securities and FDRs etc. The advocate of the assessee appeared before the AO and submitted that the assessee had employed Kashmiri Labour which stays at the various job sites and labour is paid on daily basis. As the labour stays in tents at the jobs sites on far off places from towns and villages, due to which lack of any security measures at the sites, they keep their cash with us and take it from us only at the time of leaving for their homes & villages after completion of works. The history of labour paid and payable....
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....). Though arbitrariness cannot be avoided in such estimate, the same must not be capricious but should have a reasonable nexus to the available material and circumstances of the case. The estimate should be made according to the rules of reason, as held by the Hon'ble Madras High Court in the case of Mysore Fertilizer Co. vs. CIT 59 ITR 268. The AO in the present case has brushed aside the reliance of the assessee on the past history, which in fact for the assessment year 2003-04 has been finalized under section 143(3) vide order dated 24.03.2006 and no addition was made and there was outstanding wages payable amounting to Rs.48,38,060/-. Similarly, the assessment for the assessment year 2005-06 was also passed under section 143(3) of the Act on 26.12.2007 where outstanding wages payable were at Rs.1,40,25,660/- . If the additions, as made by the AO are compared with the turnover of the assessee, the income of the assessee comes at 40.32% which is almost 4 to 5 times of the income shown in the past and also in the case of other contractors. Therefore, the assessment made by the AO is not based on the facts but an arbitrary assessment. The expenditure in the preceding years on the w....