TaxTMI 
TaxTMI 
2016 (8) TMI 1078
X X X X Extracts X X X X
X X X X Extracts X X X X
....circumstances of the case in deleting the receipts/sales of Rs. 2,15,15,138/- made by AO on account of less receipts shown by the assessee from various projects in the books. 2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the I.T. Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 4th March, 2013. While framing the assessment, the AO made addition of Rs. 96,27,290/- on account of profit addition by adopting the net profit @ 8% of total contract receipts Rs. 18,25,57,305/- (i.e. 1,46,04,584 - 49,77,294). The assessee aggrieved by this order preferred an appeal before ld. CIT (A), who after considering the submissions partly allowed the appeal. While allowing the appeal, the ld. CIT (A) adopted the net profit @ 5% on the turnover declared by the assessee at Rs. 16,10,52,607/-. The revenue and assessee both aggrieved by the decision of the ld. CIT (A), have preferred appeal and cross objection respectively. 3. The first ground of the revenue is with regard to the adoption of net profit @ 5% in place of 8% as adopted by the AO. 3.1. The ld. D/R vehemently argued th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... crores and not Rs. 2.15 crores as stated by the AO. The AO has not given credit of excess receipts which has already been accounted for in the books but not shown in Form 26AS. The chart showing reconciliation of job work as per books of accounts and as per Form 26AS is at page 79 of paper book. In considering the receipts, AO has not considered the increase in stock in progress of Rs. 1,65,61,100/- on which the party has deducted tax at source but the same is shown as stock in process. The ld. CIT (A) after considering the reconciliation of the amount shown in the books and that as per Form 26AS accepted the receipt declared by the assessee. The ld. Counsel further submitted that in subsequent years i.e. 12-13 and 13-14 the AO has assessed the income of the assessee by passing order under section 143(3). The net profit rate declared by the assessee as well as books of accounts has been accepted. He submitted that there is no change in facts and circumstances in the present case. Therefore, he submitted that even the rate adopted by the ld. CIT (A) is on higher side against which the assessee has filed cross objection. 3.3. We have heard rival contentions and perused the material....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f revenue, to meet the end of justice. (NP shown by the assessee was @ 3.73%). The assessee preferred an appeal and respected CIT (A) further restricted the additions at Rs. 300000/-. 4.21. Thus, considering the past history of the appellant with regard to the percentage of net profit declared and assessed by the AO, the average net profit rate (AY 2005-06 3.75%, AY 2006-07 4.0%, AY 2007-08 4.57%, AY 2008-09 5.57%, AY 2009-10 3.86% after adjusting addition of Rs. 3 lacs) would be 4.35%. Accordingly, considering all these fact ors and other deficiencies as noted above, it would be fair to apply the net profit rate of 5.00% to the turnover declared by the appellant at Rs. 16,10,42,167/-. This would result in estimated net profit of Rs. 80,52,108/- as against the net profit of Rs. 49,77,294/-. Accordingly, a trading addition of Rs. 30,74,814/- made by the AO would be confirmed and the appellant would get a relief of Rs. 65,52,476/- under this head. Besides this, the appellant would be liable to tax on the interest income of Rs. 3,16,339/- and other income of Rs. 7,03,275/- declared in the return of income filed." The ld. CIT (A) has examined in detail the material placed be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....23.01.2013 (PB 81-90). The difference is mainly for the reason that assessee included Rs. 80,30,437/- as work in process on which tax was deducted by NBCC but the bill was passed for payment on 21.10.2010. In fact assessee got the contract and starts the work in FY 08-09 and completed in AY 09-10. The total work done was Rs. 8,07,39,082/- which is declared in the books of accounts as under:- Year Amount 2008-09 Rs.1,17,52,102/- 2009-10 Rs.6,09,56,543/- (complete work was done and last bill amounting to Rs. 80,30,437/- was raised during the year but bill was passed by the party on 21.10.2012, i.e after getting our accounts audited and deducted the tax considering it in the year 2009-10. The same was included in value of WIP on 31.03.2010 by the assessee) 2010-11 Rs.80,30,437/- (the assessee considered receipt because the same was taken as WIP in opening stock. There is no impact on profit). From the said detail, it can be noted that the entire receipt from the NBCC is accounted for. In some cases NBCC has wrongly deducted tax twice, once at the time of crediting the bill and again at the time of payment. Further, on the amount of Rs. 80,30,437/-, the tax was deducte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... per Form 26AS were shown for Rs. 1,48,10,882/- whereas receipts as per books were shown for Rs. 1,42,76,583/- resulting in less receipts of Rs. 5,34,299/- shown by the assessee. The party has given details that receipts as per Form 26AS includes advance payment of Rs. 6,74,488/-. Further, assessee has included this amount in the closing WIP and thus it cannot be said that there is no receipts booked by the assessee. (f) Swyambhu Enterprises:- The difference between the receipts as per Form 26AS and that shown in the books is Rs. 4,61,131/-. The difference is due to Work Contract Tax. The party has deducted tax on gross amount whereas the assessee has booked receipts net of taxes because WCT has been considered as liability. (g) M/s Radnik Exports:- The difference of Rs. 1,15,056/- in book receipts and Form 26AS was only due to bills of earlier years passed this year by the party. Since the receipt was considered in earlier year there was no need to include it again in current year. (h) Kansai Nerolac Ltd:- The receipts as per Form 26AS were shown for Rs. 30,06,140/- whereas receipts in books were shown at Rs. Nil. Assessee explained that in the immediate previous year the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ducible. Even the CIT(A) accepts the same but only for the reason that certain confirmations could not be produced, he upheld the application of section 145(3). This cannot be a basis for rejection of books of accounts. " The ld. CIT (A) on the basis of submissions made has given the finding of fact in para 4.9 of his order as under :- "4.9. Further, considering the explanations given for the other parties as well, it is seen that receipts amounting to Rs. 60,29,951/- has been declared in the books of accounts for which there is no corresponding entry in the 26AS. The total difference between 26AS and the receipts shown in the books works out to Rs. 1,54,85,187/- after giving credit for the receipts declared for which no corresponding entry is found in 26AS. Thus, considering all these factors, I do not find any reason to disturb the quantum of turnover which has been declared by the appellant. Moreover, if an amount has to be included in the turnover for this year, the same amount has either to be excluded from the turnover declared in the preceding year or of the turnover declared in the succeeding year. In either case, it is not going to matter much in terms of the ultimate r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... profit. Therefore, the ground raised in the cross objection against rejection of books of accounts as well as adopting the net profit rate @ 5% is reasonable under the facts and circumstances of the present case. During the course of hearing, both the parties have relied upon the case laws. The revenue's contention is that in the line of civil construction, the Hon'ble Jurisdictional High Court has affirmed the estimation of net profit @ 12.5%. Since the estimation of profit depends on facts of each case, in the case in hand, in our considered view, the ld. CIT (A) has rightly applied the rate of 5% as the both assessee and revenue have not placed any material suggesting that the net profit could have been earned higher or lower than estimated by the ld. CIT (A). Accordingly this ground of the assessee is rejected. 7. Ground no. 2 of the cross objection is against holding that the assessee would be separately liable for tax on interest income of Rs. 3,16,339/- and other income of Rs. 7,03,275/- apart from the trading addition sustained by him. 7.1. The ld. Counsel for the assessee reiterated the submissions as made in the written brief. It is contended by the ld. Counsel that bo....