2015 (7) TMI 698

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....e assessee has shown net profit of Rs. 53,32,302/- on a total turnover of Rs. 6,52,17,258/- which comes to 8.18%. Thus, the profit percentage has fallen down by 2.7% of the total turnover as compared to the preceding assessment year. He observed that there was no claim of recession in that period considering overall market situation and most of the contractors had shown better book results in comparison to previous year. 3. On being asked by the Assessing Officer it was claimed that the fall in profit was due to increase in labour, material and overhead cost. The assessee firm also submitted the comparative details of gross profit/operational profit for the preceding year as well as current year. From the various details furnished by the assessee the Assessing Officer noted that there is substantial increase in Diesel, Petrol, Salary and Bonus, Wages and Transportation charges. From the various bills and vouchers produced before the Assessing Officer he noted that in the wages register only name of the workers are mentioned. Their complete address and nature of work carried out by them or details of work completed by them are not mentioned. Further, most of the signatures placed....

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....ted 20% GP holding the same to be most reasonable. Since the assessee has already offered GP rate of 13.60% during the year under consideration the balance 6.4% on turnover of which comes to Rs. 55,08,898/- was treated by him as suppressed profit of the impugned assessment year. He accordingly made addition of Rs. 55,08,898/- to the total income of the assessee. 4. Before CIT(A) the assessee strongly objected to the rejection of book results as well as adoption of GP rate of 20%. Based on the arguments advanced by the assessee the Ld.CIT(A) held that merely because the wage register is signed by some labourers in English the authenticity of the same cannot be doubted. However, he observed that the transport bills do not contain the Registration No. of vehicles as well as detailed addresses and contact numbers of suppliers. Further, some of the bills are not even signed or stamped, therefore, the bills and vouchers of the assessee firm cannot be relied upon fully. He, therefore, upheld the action of the Assessing Officer in rejecting the book results. 5. So far as the adoption of GP profit @20% adopted by the Assessing Officer as against 13.60% by the assessee is concerned he ....

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....made by the AO on account of fall in gross profit by rejecting the books of accounts, when the CIT(A) himself has upheld the decision of the AO in rejecting the books of accounts. 3. Whether on the facts and in the circumstances of the case and in law the CIT(A) was justified in restricting the addition made by the AO on account of fall in gross profit when the assessee could not prove the allocation of cost among sub-let, sub contract and other contracts alongwith supporting purchases and expenses bills for such work. 4. The appellant craves leave to add, amend or alter any of the above grounds of appeal" 7. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A) sustaining addition of Rs. 20,00,000/-. He submitted that as against sub contract work of 26% of the total contract receipt in the preceding assessment year the sub contract receipt during the current assessment year is 54% of the total contract receipts. He submitted that the AO rejected the books of account on 3 grounds, i.e. (1) the wage register do not give the complete address of the labourers and some of the signatures are in English, (2) the transport expenses do not give the mode of t....

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....the profit and loss account and submitted that as against the material consumption at 28.89% in the preceding year such consumption has gone upto 36.79% during the current year. Similarly, as against royalty charge of Rs. 3,67,898/- in the preceding year, the same has gone upto Rs. 23,23,403/- during the current year. He submitted that royalty payment is paid to the Government and there is no scope of any pilferage. He submitted that as against 16.96% profit from own contract work the assessee has earned 10.3% in case of sub contract work and 12.18% on other contract work. Therefore, when the assessee receives the contract amount from the principal contractor as a sub contractor profit percentage cannot be higher like that of a contractor. 11. Referring to the assessment order for A.Y. 2006-07 he submitted that in that year the assessee had not given the list of sundry debtors, sundry creditors and work in progress for which the book results were rejected. However, for the current year there is no such defect. The assessee has fully explained all the details. Referring to the copy of the assessment order for A.Y. 2012-13 he submitted that the AO has accepted the book results and....

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....d the vehicle numbers etc. Further, the payments made to the sub contractors are made in cash and the bills issued by them do not give complete address and contact numbers and registration no. etc. Further, there was overwriting of date in one bill. In view of the above and considering the fact that the GP for the impugned assessment year is less than the preceding assessment year, he rejected the book results and adopted 20% GP. 14. We find the Ld.CIT(A) while upholding the rejection of books of accounts, however, sustained addition of Rs. 20,00,000/- as against addition of Rs. 55,08,898/- made by the Assessing Officer. From the various details furnished by the assessee, we find from page 76 of the paper book that the assessee has incurred transportation charges of Rs. 6,73,606/- out of which an amount of Rs. 6,60,396/- has been paid to one Mr. Khilari Balasaheb K. whose PAN number is given and TDS has been made from the transportation charges. The balance amount is paid to 4 persons totalling to Rs. 13,210/-. Further, complete address of all the 5 transports are given. Therefore, under these circumstances, we are of the considered opinion that the Assessing Officer should not ....