TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 697
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....eclaring a total income of Rs. 2,72,73,429/-. The case was selected for scrutiny and accordingly notice u/s 143(2) of the Income-Tax Act, 1961 was issued on 19.8.2010. During the course of assessment proceedings, the assesse was asked to produce bills & vouchers for the expenditure debited to P&L account. The A.O., after verification of bills & vouchers submitted by the assessee, has observed that most of the expenditures were supported by self-made vouchers. The A.O., further noticed that the vouchers did not contain the essential details regarding the address of the payer, the quantum of work done or services rendered, the rate per unit, etc. Therefore, in the light of these deficiencies, the A.O. was of the opinion that the books of acco....
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....see further submitted that it has requested the party to rectify the mistakes in form no.26AS. Therefore, requested to accept the declared turnover in the financial statements. The A.O., however after considering the explanations, recomputed the turnover based on form no.26AS and estimated the net profit of 12.5% on main contract works and 8% net profit on sub contract works and 3% net profit on sub contract works given to third parties. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before CIT(A), the assessee contended that the A.O. was not correct in rejecting the books of accounts, as it has maintained proper books of accounts and also bills & vouchers for the expenditure debited to P&L accoun....
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....ning the gross turnover. Aggrieved by the CIT(A) order, the revenue is in appeal before us and raised the following grounds. 1. The Id. CIT(A) erred both in law and on facts of the case. 2. The Id. CIT(A) erred in directing the A.O. to estimate the income at 9% as the A.O. has est imated the income 12.5% af ter examining the books and after considering the facts & circumstances of the case. 3. The Pd. CIT(A) ought to have considered the decision of the then previous CIT(A) in the case of Sri Vallabhaneni Venkateswara Rao in which income was estimated at 12,5% on similar circumstances. 4. The Id. CIT(A) er red in di rect ing the AO not to cons ider the work in progress as gross receipts for est imat ing the income unless the work ....
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...., the CIT(A) directed the A.O. to exclude the work in progress included in the gross turnover. The D.R's contention is that the A.O. has rightly estimated the net profit of 12.5%, considering the facts and circumstances of the case that the assesse did not produced bills and vouchers for the expenditure debited to P&L account. The D.R. further contended that unless the work in progress is included in the gross turnover, the correct net profit cannot be determined in the civil construction business. 7. We have gone through the assessment order, CIT(A) order and also case laws relied upon by the parties. It is an admitted fact that estimation of net profit from civil contract receipts is consistently followed by the department on different r....
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....f contracts taken by assessee on sub-contract, the income to be estimated at 8 per cent of the gross receipts. In case of contracts given by the assessee to the 3rd party on sub-contract, income to be estimated at 4 per cent. This is, because, when the assessee gives contract to the other parties on sub-contract, the assessee cannot keep the same percentage of profit at 9 per cent, it has to forgo certain portion of profit i.e., around 5 per cent to the sub-contractors. Similar is the position in the case of contracts taken by assessee on subcontract from other parties. Further, the assessee is entitled for depreciation and remuneration, and interests to partners on the profit estimated by AO at applicable rates, because the income estimate....