2018 (2) TMI 1641

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...., in proceedings under section 143(3) of the Income-tax Act, 1961 (in short the "Act"). 2. A perusal of revenue's pleadings in both these appeals indicates that identical issues are sought to be raised for our apt adjudication. Learned departmental representative pinpoints the fact that first common issue in these two appeals is that of rejection of books by the Assessing Officer under section 145(3) of the Act has reversed in lower appellate proceedings. He then submits that the CIT(A) has partly restricted the Assessing Officer's action estimating 8% net profits on assessee's self executed contract work receipts amounting to Rs. 2,01,94,365/-, 5% net profit on sublet contract work amounting to Rs. 50,14,247/- and 5% net profit on black....

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....g corresponding support account, there was no agreement of subletting with such sub-contractors, it had entered into substantial transactions with specified persons under section 40A(2)(b) of the Act, the relevant expenses had been supported only by internal vouchers instead of independent verification and it had not properly compiled its vehicle's logbook; respectively. All this resulted in rejection of assessee's books of accounts. The Assessing Officer then quoted section 44AD of the Act for guidance purposes to conclude that assessee's self executed construction work, sublet purchase and black metal sales ought to be subjected to 8% and 5% (in latter two instances); respectively, resulting in three impugned additions. 4. The CIT(A) r....

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....he book results, the AO is not justified in invoking the provisions of section 145(3). Hence, the first ground of appeal is allowed. 6. The next three grounds of appeals are with regard to estimation of appellant's profits. As discussed supra, the AO proceeded to estimate the income of the appellant by invoking the provisions of section 145(3). In fact, it is seen from the assessment order that, the AO has again not brought forth any reason to estimate the gross turnover of the appellant at 8%, except by taking analogy of section 44AD, though however, the AO himself accepts that the appellant's case is not covered by section 44AD. He further held that, even small and marginal contractors earn 3% and therefore the appellant ....

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....nue, and in the interest of fair play and justice, I uphold addition to the tune of Rs. 5 lacs. Thus, the appellant gets relief of the balance amount. 6.3. In light of the above, the additions made by the AO are directed to be deleted." 5. Learned departmental representative vehemently submits during the course of hearing that the Assessing Officer had rightly rejected assessee's books in order to arrive at 8% net profit estimated figures in question. She vehemently supports the Assessing Officer's action to pray for reviving both rejections of books as well as all three additions on merits. Learned authorized representative on the other hand supports the lower appellate findings extracted in the preceding paragraphs. We notice ....