TaxTMI 
TaxTMI 
2018 (2) TMI 881
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....ate Authority erred in setting aside the order of the Assessing Officer, who had rejected the Assessee's books of accounts for the AYs 2007-08, 2008-09, 2009-10 & 2010-11 and applied the G.P. Rate of 5% (for three years) and 3.5% for the AY 2008-09? 2. With the consent of counsel for parties, these appeals are heard finally. 3. Assessee is a Road Contractor. He, for the relevant assessment years, which are the subject matter of the present appeals, had claimed a gross turnover of Rs. 19,67,67,039.08 for the AY 2007-08, Rs. 42,78,04,114.60 for the AY 2008-09, Rs. 52,17,54,048.00 for the AY 2009-10 and Rs. 73,92,42,831.00 for the AY 2010-11. 4. The Assessing Officer conducted proceedings and asked for various information. By elaborat....
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.... the ratio of various judgments, the CIT(A) for the AY 2007-08 and 2008-09 held as follows: "I have carefully considered the facts of the case, the important aspects which immerge from the present appeal are- 1. The Method of accounting has been accepted for several years on same set of facts. Reliance is placed on 294 ITR 655: [Gauhati] MKB [Asia) P. Ltd, v. Commissioner of Income-Tax 2. Non maintenance of stock register cannot be a ground for rejection of account in every case it depends upon the nature of business. 324 ITR 95 (Delhi) Commissioner of Income-Tax v. Jas Jack Elegance Exports 192 Taxman 167 (Delhi) & Commissioner of Income-Tax- XII v. Poonam Rani. 3. The onus was on revenue to show that accounts were incomplete o....
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....ied in rejecting the books of accounts, by applying section 145(3) of the IT Act and estimating Net Profit @ 3.5% of the Gross Receipts. The addition made by the Assessing Officer to the tune of Rs. 12991319/ - is therefore, deleted. Appeal on these grounds is allowed." 6. This reasoning was adopted for another year i.e. AY 2009-10. However, in the other two Assessment Years, CIT(A) affirmed the reasoning of the AO, inter alia, in the following terms: "12. The appellant has argued that the A.O. "has failed to appreciate that the registers are required to be maintained as "Must Roll" as the requirement of Labour Law for the business and Assessing Authority has failed in appreciating the expenses incurred" such like. The expenditure are....
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....the facts of the case. As discussed above, the A.O. has computed net income, separately for exceptional items (compensation on delayed payments) and non-exceptional items (other receipts). For exceptional items, the net income is the same as the gross receipts because the appellant has admittedly not incurred any expenditure on earning this income. Regarding non-exceptional items, the AO. has estimated net profit @ 5% of these receipts. In fact, in the same line of business, a higher rate of net profit has been upheld in the following decisions: 1. Zora Singh v CIT (2008) 173 Taxman 76 (P&H) 2. Bandi Co-op. Labour & Construction Society v CIT (2008) 300 ITR 102 (P&H) 3. CIT v Bhawan & Park Nirman (2002) 258 ITR 676 (Raj) 4. Arih....
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....e ITAT relied upon the judgment of Commissioner of Income Tax v. B.N. Aggarwal and Others 259 ITR 754 (SC). As a consequence, all the appeals of the Revenue were rejected and the appeals of the Assessee for the two Assessment Years were allowed. The Revenue relies upon the findings of the Assessing Officer and highlights that besides the absence of Stock Register, the respondent-Assessee did not produce any material evidence in the form of invoices, contracts with its various sub-contractors and suppliers, the proof of quantities involved, muster rolls, vouchers etc. relating to supplies and all connected details which would have justified its claims. 9. Learned Senior counsel for the Assessee on the other hand contested the Revenue's su....
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....ese related to various aspects of the respondent-Assesee's road contract construction activity such as: (i) specific contracts entered into with sub-contractors/ labour contractors/suppliers; (ii) absence of any supporting primary materials such as invoices disclosing quantities purchased; (iii) the muster rolls or any other such materials or documentary evidence (including payment made to ESI, PPF on account of sub-contractors-even if by the contractors) to the workmen involved; (iv) any other proof of the quantities or materials utilized and their relative costs. 11. The court also notices that the Assessing Officer's order undoubtedly reflects that queries were made from various sub-contractors, however, as to what was stated by them ....