2013 (1) TMI 538

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... "the Act") against the common order dated 29.12.2009 passed by the Income Tax Appellate Tribunal 'B' Bench, Chandigarh (in short, "the Tribunal") in ITA No.402/CHD/2009 for the assessment year 2005-06. 2. Following substantial question of law has been claimed. "Whether on the facts and circumstances of the case and in law the ITAT was right in directing to determine the net profit @ 7% on contract receipts minus cost of material subject to allowability of salary and interest paid to the partners instead of net profit @ 10% on contract receipts applied by the AO in view of the fact that the case was referred to Special Audit, the trading results were not prone to verification and the books of accounts were rejected under section 145(3)?" ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....duced by the assessee. The Assessing Officer referred the case for special audit under Section 142(2A) of the Act. In the absence of proper documents and voucher and the report of the special auditor that the assessee had not maintained proper books of account, the Assessing officer vide order dated 11.7.2008, Annexure A.1 rejected the books of account of the assessee under Section 145(3) of the Act and on the basis of gross profit worked out at Rs. 4,19,99,172/- applied 10% net profit rate and worked out income at Rs. 41,99,917/-. Besides applying net profit rate of 10%, other additions made were on the issue of negative cash of Rs. 8,88,195/-, on account of non-submission of proof of sales tax payment of Rs. 6,12,124/- and labour payments....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... under Section 145(3) of the Act. On appeal by the assessee, the same had been varied by the CIT(A). The CIT(A) adopted the rate of 6.5% in case of direct contract receipts and 5% on sub contract receipts. The Tribunal applied the rate of 7% on the total contract receipts to estimate the income from contract business. The Tribunal while adjudicating the aforesaid issue in para 6 had recorded as under:- "6. We have heard the rival contentions and perused the records. The Hon'ble Supreme Court in CIT v. British Paints India Limited (supra) had laid down the principles that the Assessing officer while exercising his powers under the provisions of the Act has to be satisfied that the accounts maintained by the assessee are correct and complete....