AI Drafter 
TaxTMI 
TaxTMI 
2011 (5) TMI 1006
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee failed to prove the expenses with evidence. As such the Assessing Officer estimated the income of the assessee at 12% of the gross receipts. On appeal, the learned CIT(A) directed the Assessing Officer to estimate the income at 8% in the case of main contract receipts and at 6% on the sub-contract receipts. Aggrieved, the assessee is in appeal before this Tribunal. 4. The learned counsel for the assessee relied on the judgement of the Bombay High Court in the case of CIT vs. Smt. Sushila Chaturvedi, in Income-tax Appeal No. 1076 of 2007 dated 18.3.2009. The learned DR relied on the order of the CIT(A). 5. We have heard both the parties and considered the material on record. In the case of Shri K. Ramakrishna Contractor (P) Ltd., Hyderabad in I.T.A. No. 461/Hyd/2006, the Tribunal vide its order dated 4.12.2009 held as follows: "4. We have heard both the parties and perused the material on record. The issue of rejection of books of account by the assessing officer was not challenged by the assessee. Once it is found that books of account does not reflect the true profit of the assessee, in such cases the provisions of the proviso to Sec. 145(1) becomes applicable an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the assessee in this regard and allow him adequate opportunity to adduce and file such evidence so as to satisfy the assessing officer that the claim of erection of temporary sheds to the tune of Rs. 10,20,401/- same is correct and allowable. We order and direct accordingly. 6.2 Later the learned Accountant Member dissented above findings of the Judicial Member and he recorded the findings in Para 16 to 22 as follows: With due respect to my learned brother, I am inclined to disagree with the order of my learned brother in paras 10 and 11 above, in so far as it related to estimation of the profit of the assessee at 12% as against 12.5% adopted by the assessing officer and 10% adopted by the first appellate authority. My reasons for disagreement and decision in that behalf are discussed below: Assessee, admittedly, is a firm carrying on business in civil contract works. Assessee's net contract receipts for the ay 1991-92 were Rs. 9,10,18,512/- whereas the same for the ay 1992-93 were Rs. 8,37,19,315/-. In the cases of similar assessees, viz. civil contractors, the Tribunal Benches at Hyderabad, have been consistently approving estimation of profit at 12.5% of the net contr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st payments, bank charges and commission payments and financial charges Incurred by the assessee as per those very financial statements. Further, I find much merit In the contention of the ld. DR that the assessee has gone In for substantial addition to plant and machinery from 2,07,14,420/- to Rs. 3,46,35,514/- which Is evident from the depreciation statement for the assessment year 1991-92 and as such there Is corresponding reduction In the revenue expenditure and having gone In for massive capital Investments and contracted for more outlay towards bank Interest payments, financial charges etc. Assessee cannot claim It to be exceptional circumstance warranting estimation of Income at a rate lower than the normal one. This Is all the more so, since the Interest commitments to bank etc. Undertaken by the assessee, on additions to plant and machinery etc. Would have their Impact for quite a few years to come, and It bank charges and Interest commitments are accepted as a exceptional circumstances warranting adoption of lower rate of estimation of the profit that would circumstance would prevail In the succeeding years as well, and for that matter, assessee would be encouraged, to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the net contract receipts by the assessing officer for both these years Is not only In accordance with the rate adopted In assessee's own cases for earlier years, but also In accordance with the rate normally approved by the Tribunal In similar cases. The circumstances of Incurrence of larger expenditure on account of bank Interest, bank charges and commissions, financial charges, etc. In my view cannot be accepted as an exceptional one warranting adoption of any lower rate. I accordingly set aside the orders of the CIT(A) on this aspect for both these years and restore the assessments made by the assessing officer, estimating the profit of the assessee at 12.5%. Before parting with the subject, I may point out that though It may appear that the differences between the rate of 12% adopted by my learned brother and the rate of 12.5% approved by me Is a mere 5% of the said difference of 0.5% Is applied to the net contract receipts disclosed by the assessee, It would work out to Rs. 4,55,092/- In considering these large amounts Involved In these two years, and the Impact of decision of approval of sub normal rate on account of larger Interest etc., commitments, In the succeeding....