TaxTMI 
TaxTMI 
2019 (9) TMI 1489
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....0,000/- without consideration of book results, i.e. G.P. & N.P. of the assessee which are more than previous year.'' 2.1 Brief facts of the case are that the assessee is a partnership firm and having income from civil construction works . The return of income declaring income at Rs. 1,30,047,410/- was filed by the assessee on 30-09-2015 for the year under consideration. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notice and seeking reply of the assessee the assessment order u/s 143(3) of the Act on 26-12-2017 was passed by the AO, making the addition of Rs. 10.00 lacs. 2.2 Aggrieved by the order of the AO, the assessee preferred first appeal before the ld. CIT(A) who after considering t....
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....through banking channels. As assessee firm completed it's civil contract work on different places and in remote area also, on that place no banking channel available, due to ?his.assessee paid labour charges to labour in cash. Now we further submit as under:- 2. In this respect we want to say that the business of the assessee mainly consists of civil contractor which received contracts from Govt of Rajasthan Department for various places. In this business, Govt not made payment for their work in time to assessee, even in the month of March they show payment made but actually received that on the last day of the month or in the month of April in next financial year. Ongoing through B/S of the assessee firm the bank balance as on....
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....t assessee firm shows it's better result and also paid tax on better profit in comparisons of last years, means there is no leakage of revenue on which basis AO made disallowance of Rs. 10,00,000/- for labour expenditure. On going through assessment order we found that A.O not detected any defect in the books of the assessee, even not invoking provision of section 145(3) of the Income Tax Act, for rejecting the books of accounts of the asssessee and made lump sum/ ad hoc addition of Rs. 10,00,000/- from disallowing of labour expenses on estimation without finding any defect in the books of accounts and voucher of the assessee. It is settled law that the A.O. not made any addition on ad-hoc or estimate basis without finding any ....
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....e other hand, the ld. DR relied on the orders of the revenue authorities. 2.6 We have heard the rival contentions and perused the materials available on record. We noticed that as per facts of the present case the assessee had shown sundry creditors to the tune of Rs. 10,22,847/- and on verification by the AO it was found that since the assessee could not produce the parties before him, therefore, in order to protect probable leakage of Revenue, the AO made disallowance of Rs. 10.00 lacs out of labour expenses. We have also considered the written submission filed by the assessee before the ld. CIT(A). In that written submission and the arguments before us, it was the specific stand of the assessee that assessee firm completed its civil c....
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....y, in such cases, accepted G.P rate for the past years in assessee's own case has been held by the Rajasthan High Court as proper and reasonable basis for estimation of G.P rate for the current year. In the instant case, the AO has made an adhoc trading addition of Rs. 2 lacs and in the process, has estimated the G.P rate of 16.47% on the declared turnover of the assessee and which has been upheld by the ld CIT(A). There is no basis which has been specified by the AO while making the addition of Rs. 2 lacs and we also find that the assessee's own past history has also not being taken into consideration. Once the books of accounts have been rejected due to non-maintenance of stock register, qualitative records, etc and provisions of section ....
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....raised by the assessee thus becomes academic and we donot deem it appropriate to adjudicate the same on merits.'' After having gone through the facts of the present case and also the decision relied on by the ld.AR of the assessee (supra), we find that the ITAT Jaipur Bench in the case of Goodwill Impex Ltd vs DCIT (supra) had categorically held that where the assessee company had declared better trading results as compared to previous year and such result provides a reasonable basis to hold that there should not be any addition in the hands of the assessee company. It is also noted that the AO had not detected any defect in the books of the assessee and AO has not invoked the provisions of section 145(3) of the Act for rejecting the boo....