TaxTMI 
TaxTMI 
2016 (4) TMI 698
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.... shall have to make assessment to the best of his judgment in the manner provided u/s 144 as per Section 145(3) of the I.T. Act, 1961 and although appellant firms case is not covered u/s 44AD of the Act due to higher turnover but net profit rate prescribed u/s 44AD is only 8% whereas the appellant firm has declared 8.38% net profit even higher turnover which is required to accept being most reasonable. Therefore, addition of Rs. 5,09,028/- sustained by the ld. CIT(A), Ajmer are required to be deleted. 2. On the facts and in the circumstances and in law of the case the ld. CIT(A) has erred in observing that assessee is not carrying on the business of civil construction, being as per I.T. Act civil construction u/s 44AD includes:- ....
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.... it has claimed total expenses aggregating to Rs. 51,57,582/-. The AO required the assessee firm to produce its books of account with relevant vouchers in order to verify the genuineness of the expenses debited in the Income & Expenditure Account, assessee firm neither submitted the desired details along with supporting vouchers of the expenses nor gave satisfactory explanation before the AO. The AO for want of necessary details about expenditure rejected the books of account of the assessee firm and made a disallowance of Rs. 10,91,860/-. 2.2 Aggrieved, the assessee preferred first appeal before the ld. CIT(A) wherein it was contended that when the books of accounts are rejected then only gross profit should have been estimated and disa....
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....eturn of the assessee declares nil income and because of claim of depreciation at Rs. 4,66,073/- and partners interest at Rs. 4,66,378/-, the disallowance should be deleted being the reasonable claim. The ld. AR relied on the following case laws. (i) N. Ramchandra Reddy (ITA No. 1372 of 2007 - Hyd Bench (ii) Subodh Gupta ITA No. 80/2014 dt. 9-12-2014 Del. H.C. (iii)Mahesh Chand Contractor ITA No. 138/Agra/2012 Agra (iv) Choudhary & Brother 135 TTJ (JP) (UO) 55 (v) Ashok Jain Kota vs. DIT (decided on 13-02-15) (vi) M/s. Ved Prakash Pareekk vs. ITO (TW Vol. 39 Pager 176 (vii) M/s. Vijay Builders Jaipur (TW Vol.III Part 3 page 93) (viii) Jaswant Singh Contractor vs. ITO....
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.... only gross profit method should be adopted. The major infirmity and problem in the accounts and computation of proper income was non furnishing the expenditure vouchers consequently ld. AO disallowed reasonable part of expenses to assess proper income on his best judgment. Therefore, the AO was within his legal rights to recourse the disallow expenditure. The ld. CIT(A) has upheld the line of action of the AO however he has been generous in awarding substantial relief in machinery and diesel head. (iv) The assessee's plea that Section 44AD should be taken as analogy to this case. The same is applicable to contractor having receipts below Rs. 40 lacs. Since the assessee by statutory provision is bared from the applicability of ....