TaxTMI 
TaxTMI 
2017 (12) TMI 912
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....f Rs. 21,79,036/-, are not pressed. On hearing both the parties, the said grounds are dismissed as 'not pressed'. That leaves Ground Nos. 2 and 4 for adjudication. The same are extracted as under : "2. The Ld.CIT(A) further erred in law and on facts in estimating the net profits at Rs. 2,00,41,924/- @15% of the total contract receipts. 4. The Ld.CIT(A) erred in law and on facts in confirming the addition of Rs. 20,00,000/- u/s.69 on account of unexplained introduction of capital by the partner." 3. Briefly stated relevant facts of the case are that the assessee is a Civil Contractor and is a sub-contractor to M/s. Ashoka Buildcon Ltd., Nashik for the year under consideration. The sub-contract involves six lanning of Pim....
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....ction 145 of the Act and rejected the books of account. Consequently, the CIT(A) estimated the profits applying the GP of around 15% on the said turnover and the addition on this account works out to Rs. 2,00,41,924/- 15% of the total contract receipts of Rs. 13,36,12,831/-. Contents of Para 25 of the order of CIT(A) are relevant. Further, the CIT(A) also enhanced the assessment by another addition of an amount of Rs. 20 lakhs u/s.69 of the Act. This amount constitutes the capital introduced by the assessee into the firm. CIT(A) treated the same as income of the assessee. Deviating from this approach, on the other such cash introduction into the firm, CIT(A) directed the AO to make 5. Aggrieved with the above enhancement of the income by....
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....he books of account and non-cooperation of the assessee before the AO as well as the CIT(A). He submitted that the order of the CIT(A) should be confirmed on the issue of estimation of profits applying 15%. 8. During the rebuttal time, Ld. Counsel for the assessee mentioned that the decision to adopt 15% GP rate against original proposal of 10% without giving deduction to other statutory deductions such as remuneration, depreciation etc. constitutes an afterthought. Referring to the show cause notices and other correspondences with the assessee, Ld. Counsel submitted that the CIT(A) initially proposed for adopting only 10% as GP rate without giving any deductions. However, due to some reasons, the CIT(A) changed his mind and adopted an e....
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....ate estimation. The same reads as following : "12. . . . . . . . . . Accordingly, Assessing Officer is directed to compute the profit by applying net profit rate of 6.25% on the gross contract receipts. We direct accordingly." 11. The case law of S.K. Jain (supra) is a case of a Civil Contractor engaged in executing the Government contracts - Irrigation Department. The assessee in that case executed sub-contract works too. We have examined the comparative data of profit rates of the assessee over the years which are recorded by the assessee and find there is huge variance ranging from 2.40% to 9.70%. There is GP rate of 19.07% for A.Y. 2014- 15 too and it appears to be an extraordinary GP rate. Excluding the said extraordinary i....
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....r section of NH 3, if any. As such, the validity of the rejection of books of account is not an issue now as the same is not pressed by the Ld. Counsel for the assessee before us. Further, the CIT(A)'s decision to estimate the profits applying rate of 15% is also not approved as the same is not supported by any material or any case laws. Considering the above concluded issues, AO is directed to examine the allowability of statutory deductions u/s.40B relating to the remuneration to the partners and u/s.32 relating to the depreciation out of the profits so estimated by the AO in the remand proceedings and pass a speaking order on this issue after considering the decisions relied upon by the Ld. Counsel for the assessee (1) Shri Ram Jha....