TaxTMI 
TaxTMI 
2020 (2) TMI 455
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..... In case if books have been rejected the profit should be applied on the basis of surrounding circumstances or the profit taken by other assessee. 3 That the Ld. CIT (A) erred in confirming the addition of Rs. 723724/on account of net profit rate and therefore the addition of Rs. 723724/- should be deleted. 4. That the learned CIT(A) has erred in confirming the addition of Rs. 723724/- for the A.Y. 2008-09 and Rs. 1413086/- for AY 2009-10 which was surrendered in course of survey operation conducted at premises of assessee under stress where circumstances and evidences doesn't permit the same. That the learned CIT(A) ought to have appreciate that there was no substantive evidence on record in support of above addition. 5. Without prejudiced to the above, the learned CIT(A) ought to have appreciated that even assuming there was evidence supporting the investment the same is not includible in total income because the assessee was having sufficient fund and the same should be allowed as deduction under the principle of telescoping. 6 That the appellant craves to add, alter or delete any ground or grounds during the hearing of appeal. ITANo.1326/Ind/2016 Assessment Yea....
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....ent Years 2008-09 and 2009-10 at Rs. 14,27,960/- and Rs. 4,43,860/- showed net profit rate of 5.24% and 2.34% respectively. The Ld. A.O completed assessment u/s 143(3) of the Act by applying the net profit rate of 8% on the gross receipts. Ld. A.O has also made addition of Rs. 2,00,000/- for undisclosed income for the Assessment Year 2009-10. Aggrieved assessee preferred appeal before Ld. CIT(A) but could not succeed. 5. Now the assessee is in appeal before the Tribunal. 6. Ld. Counsel for the assessee submitted that for the Assessment Years 2006-07 & 2007-08 Ld. A.O has accepted the Net Profit rate of 5% shown by the assessee in the assessment completed u/s 143(3) of the Act. He further argued referring to following written submissions for both the appeal:- a. If books of account were rejected, profit has to be taken from surrounding, circumstances or past record (Ground no. 1,2 and 3) 4.1 The appellant has produced audited books of account along with audit report which was not accepted by the Ld AO in rejected the same he applying net profit rate @ 8% assuming that the assessee had taken contract for providing Road Construction Material and his income is contractual receip....
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....4% 2009-10 21468304 2.34% 504379 21468304 1717464 8% Applied 8% against NP declared @ 2.34% 4.6 Hence the Ld AO as well as CIT (A) both of the erred in law applying net profit @ 8%. In absence of any corroborative evidence even no comparable case to the case of assesse has been cited. Reference may be made from following decisions that where books of accounts are rejected and profit is to be estimated it is past history, which is the most relevant criteria. (a) Asstt.CIT vs OM Brothers (2010)44 DTR 13 (ALL) (APB-S7-62) (b) CIT vs Targeted Construction Co. Ltd (2015) 55taxmann.oom 294 (All) (APB -63- 65 (c) Pragati Engineering Corporation Co.Vs ITO (order dt 5th April 2013 passed by Hon'ble Allahabd High Court in ITA No 11 of 2012)(APB 66-70) (d) ACIT Vis kanhalyala, Choudhary 29 CCH 0766 It Was held that where books of accounts are rejected net profit should be applied on the basis of the past history (e) CIT V/s Gotan line Khanij Udyog 169 CTR 318 (f) Ajay Goyal v/s ITO 99 TTJ 164, (g) CIT Vis Popular electric Company 2003 ITR 630 Even assuming that assesses is also doing sub contractor and doing petty contract the net profit rate @5 is justifiab....
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....t day it is only when the appellant has attendant the post Survey proceedings u/s 131 on 09-09-2008 than he chosen to declare his un disclose Income. She also mentioned that disclosure has been made voluntarily during post survey investigation thus action of AO making addition of 200000.00 over and above is found justifiable. 6 Submission The assessee is engaged in purchase and sales of bitumen and at the time of survey he offered Rs. 1000000.00 as his business income. The margin of product in Bitumen product is 2 of total turnover. Looking at things from macro overall point of view the amount of Rs. 200000.00 would be very well covered in total business income It is evident that the statement recorded u/s 131 was also in continuation of the statement recorded at the time of survey u/s 133 (A) the assessee has co operate the department at the time of survey and no obstruction was made the statement also reflects the manner of the behaving of appellant is co operative. While making addition of Rs. 2 back as undisclosed sources, as not mentioned particular head/investment for which the undisclosed income of Rs. 2 lack was, related to, no bifurcation or finding was given he simp....
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....o at the time -of survey. Summons under 131(1) can be served only in case of obstruction by person or some sort of hindrance is put by him on the contrary, the appellant has cooperated at the time of survey under section 133A on perusal of the statement recorded under 131 immediately after completion of survey it reveals that it calls the assessee to declare the profit. It is clearly established that assessee has cooperated during the survey and he did not make any default as stipulated under 133A(6). It is also apparent that survey was already completed on 5-9-2008 and papers and other record was also impounded no proceeding was pending, the statement taken under section 131 is not legally correct and the amount agreed on such statement is not tenable. Reference may be made on following decisions: If assessee cooperated during survey and there is no default under section 133A(6), no recourse can be made under section 131 as held in various decisions: a.CIT v. Mool Chand Salecha [2002] 256 ITR 730 (RAJ.)] b.United Chemical Agency v. ITA [1974] 97 ITR 14 (ALL.) c.Dr. Vijay Pahwa v. Samir Mukhopadhyay, Dy. CIT [1995] 129 CTR 64 (Cal.) N.K. Mohnot v. Dy. CIT [1995] 215 ITR....
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....r. After perusal of entire material on record, A.O. is found fully justified in estimating appellant's net profits @8% on declared business receipts. Accordingly addition of Rs. 4,71,092/- and Rs. 12,13,086/- made for A.Y. 2008-09 and 2009-10 respectively is, hereby, confirmed." 10. Before us Ld. Counsel for the assessee strongly relied on the fact that for Assessment Years 2006-07 and 2007-08 where the Net Profit of 5.90% and 4.88% was shown by the assessee, Ld. A.O completed the assessment u/s 143(3) of the Act by applying 5% of Net Profit rate on the undisclosed turnover. It was further contended that the business of the assessee remained the same and turnover has almost doubled in the years under appeal. 11. It is also noteworthy to observe that survey u/s 133A of the Act was conducted at the business premises of the assessee on 5.9.2008 and statement u/s 133A were recorded. Assessee was carrying out its business from 2005 onwards and neither any books of accounts were maintained nor returns were filed. The gross receipts were calculated on the basis of receipts appearing in the bank statement held by the assessee in Axis Bank. 12. Now in the given facts whether the ....