2018 (3) TMI 1706

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....nafter) dated 27.03.2015 for Assessment Year (AY) 2009-10. 2. The Revenue's appeal raises the following grounds: '1. Whether the ld. CIT(A) was right in law and fact in accepting the explanation of the assessee without evidence or records despite the fact that numerous opportunities of being heard were granted to the assessee. 2. Whether the ld. CIT(A) was right in law and fact in reducing the net profit rate of the assessee to 3.5% by relying on the order of ITAT Amritsar in case of M/s. Construction Engineers where the net profit was held at 7%. 3. Whether the ld. CIT(A) was right in law and fact in allowing the appeal of the assessee despite the fact that no books of account were produced by the assessee dur....

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.... lacs), were effected. In first appeal, the ld. CIT(A) called for a remand report from the AO in pursuance to the assessee's Ground 2 before him challenging the assessment u/s. 144 in view of the attendance of the two directors on 24.03.2015, indicating the assessee's willingness to cooperate in the assessment proceedings. Per his remand report dated 21.03.2017, the AO reiterated his earlier findings, further indicating that no improvement in its case had been made by the assessee before him. The ld. CIT(A), however, was of the view that the AO ought to have examined the books of account of the assessee in the remand proceedings, and issued his finding afresh, i.e., rather than (almost) repeating what he had already stated earlier in the as....

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....e., could be relied upon. The ld. CIT(A) has in the present case not impugned the framing of assessment u/s. 144. He, though called for the remand report, modified, as we observe, the AO's estimation of the net profit not on the basis of any material, but by relying on the decision by the Amritsar Bench of the Tribunal in Construction Engineers, Srinagar (in ITA No. 493/Asr/2010, dated 11.05.2012). And, two, reduced it upon considering the assessee to be not a contractor but a sub-contractor. In our considered view, a difficult terrain may not necessarily imply a lower profit. Rather, economic theory would suggest the profit to match the risk involved, so that a higher risk would entail a higher rate of profit. Further, again, the assess....