TaxTMI 
TaxTMI 
2013 (6) TMI 287
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....orters and importers. In A.Y. 2006-07, the appellant had shown turn over of Rs.23,46,35,236/- and net profit of Rs. 14,30,242/- @ .16%. He further observed that during the course of assessment various details furnished by the assessee has been verified and placed on record. However, during the verification of books of account of the assessee, the assessee had claimed that he had proceeds 4,10,816 ct. of makeable rough diamonds out of the total rough diamonds received by the assessee from the principal. As per the quantity details furnished by the assessee average job charges per labour contactor comes Rs.545/- per ct. and he claimed that Rs.400/- to Rs.700/- paid by him to the labour contractor based on the quality of rough diamonds. But du....
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....hter you are claiming that you charge the labour expenses on the makeable diamonds which comes to 410816 cts out of the total manufactured rough diamonds of 600106 cts. For arriving at the makeable diamonds you have to do lot of processes like assortment of rough diamonds received and laser cutting and sawing which requires substantial amount of labour and expenses from your side. As per the P&L a/c processing charges claimed by you also indicates the electricity expenses of Rs.22,46,050/- which has been incurred within your factory and salary expenses of Rs.43,57,900/- also shown under administrative expenses. This means total of Rs.66,03,950/- has been incurred by you for making makeable diamonds out of 600106 cts. This means Rs.11/ct. As....
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....ails has been there on the subcontractor bills." The appellant was given reasonable opportunity of being heard who has also replied the query but the ld. A.O. finally concluded as under: "During the verification of books of a/c assessee was unable to show any qualitative details on the bills of sub contractor to whom assessee has given the job work. Hence, the basis on which payment to job work contractors made by the assessee in the range of Rs. 400/- to Rs. 700/- cannot be verifiable from the bills furnished by the assessee during the verification of books of a/c. The contention of the assessee regarding payment made to labour contractors cannot be verifiable completely. The total net profit shown by the assessee includ....
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....ng labour charges of Rs.1,52,19,453/-. Even verification of the some of the labour contractor was also not done in view of the non availability of these labour contractor at the given address by the assessee. Hon'ble ITAT held in its decision in the case ACIT vs. P.C. Mundra 80 TTJ 945 held that even in the case of assessee how was doing only billing business and not a manufacturer/dealer, the A.O has to compute net profit at 1.5% of the turnover. Hence in the light of above decision and the N.P ratio of comparable concerns clearly indicates that minimum profit in the case of labour job work business is not below 1.5% of the total turnover. Thus, total addition of Rs.10,39,217/- was made by the A.O. in the income of the assessee. 4. B....
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.....R. vehemently argued that the appellant had shown labour charges at Rs.1,52,19,453/- besides own expenditure on assortment laser, sawing etc. at Rs.66,03,950/- and the appellant had not made qualitative detail of the diamond and N.P. has been shown very less. The ld. A.O. rightly rejected the books of account on the basis of various defects pointed out by him. At the outset, ld. Counsel for the appellant filed a written reply and argued that the appellant had been engaged in the business of job work on cutting and polishing of the rough diamond i.e. received rough diamond from the parties and got polished through subcontractors. The appellant, therefore, doing more or less job of the commission agent. The appellant had shown N.P. at Rs.14,....