TaxTMI 
TaxTMI 
2018 (7) TMI 1167
X X X X Extracts X X X X
X X X X Extracts X X X X
....2) of the I.T. Act, is not justified in deleting addition made on account of rejection of books of account of trading activity." 2. "On the facts and in the circumstances of the case and in law. The Ld. CIT(A) is not justified in reducing the percentage of estimation of net profit from 8% to 7% on account of construction receipt." Whereas the effective grounds raised by the assessee read as under:- 1. Whether on the facts and in the circumstances of the case in law: >The Learned Commissioner of Income Tax (Appeals) was justified in upholding: * The Assessing Officer's stand of rejecting the books of accounts and making an addition on estimation basis @7% on account of construction receipts. The assessment for impugned AY was framed by Ld. Deputy Commissioner of Income Tax-Circle 6(1), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on 19/03/2014 wherein the income of the assessee has been assessed at Rs. 525.37 Lacs after certain additions as against returned income of Rs. 300.69 Lacs e-filed by the assessee on 30/09/2011 which was later revised to same figures on 29/09/2012. The subject matter of cross appeals before us is estimation of income against trading activi....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 29/07/2016 wherein the Ld. CIT(A), upon factual matrix, did not concur with the stand of Ld. AO in rejecting the books of accounts. Finally, the estimated addition on account of trading results were deleted whereas the net profit rate on account of construction activity was reduced to 7% in the following manner:- 6.3 I have carefully perused the assessment order and the submission made by the appellant's AR vide letter dated 31.05.2016, 01.07.2016 and 29.07.2016. it is seen that appellant is engaged in two types of activity, first such activity is trading of iron & steel, MS Plate, MS Angle, G.P. Sheet etc and second activity is of construction of EWS Flats under the SRA Scheme of State Government. With respect to the trading activity of the appellant, the appellant has furnished all the relevant details which were verified by the AO, only on the basis of confirmation filed by the appellant and confirmation received from some parties in response to the notice issued u/s 133(6), came to the conclusion that the appellant was engaged in circular trading as at appearing from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t noticed u/s 133(6) were returned unserved lead to the conclusion that books of account were not maintained in a proper manner. In response to the show cause, the appellant vide letter dated 18.03.2014 expressed its inability to submit quantitative details of material consumed in respect of construction business before the AO. The AO considered the appellant's submission but it was not accepted on the following grounds 1 The appellant is not able to furnish item-wise details of work done and item-wise & work wise utilization of material & labour input. 2 The appellant has not produced day to day stock register showing purchase, sale and consumption of material. 3 Labour register was furnished but work wise utilization of labour has not been furnished 4 Notices issued u/s 133(6) have come back unserved and in two cases no reply was received. Under these circumstance, the AO rejected the books of account and estimated the net profit at the rate of 8% of construction activity. 6.4 The appellant during appellate proceedings stated that the appellant is public limited company listed at the Bombay Stock Exchange since last 25 years. Regular books of account are mai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which books of account cannot be held as complete. The consumption of material only can be verified form the stock register- In the instance case the appellant has not maintained the stock register and is also not able to furnish the new address of parties whose notices u/s 133(6) were unserved which itself leads to no verification of the purchase and its consumption for the construction activity of the appellant. Hence, the rejection of books of account with respect to the construction activity by AO is found to be correct. Now the question arises as to how the estimation was made. Neither the AO nor the appellant has given any basis of estimation. Hence, to meet net profit from the construction activity. Hence. AO is directed to deleted the addition in excess of 7% of the construction receipt. Therefore, the ground of appeal no. 1 is partly allowed. Aggrieved, the assessee as well as revenue is in further appeal before us. 5. The Ld. Departmental representative, Shri Rajesh Kumar Yadav, contested the stand of Ld. CIT(A) in granting relief to the assessee whereas the Ld. Auhtorized Representative [AR] for assessee, Shri Anil Thakrar, placed reliance on the order of this Tribun....