TaxTMI 
TaxTMI 
2024 (10) TMI 309
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of the Id. CIT (Appeals) regarding books of account is perverse. 2. The Ld. CIT (Appeals) as well as ld. AO failed to appreciate entire material on the record inter alia the demurrage charges 8, 19,124/- in form of time extension, Royalty of 9,30,225/- & Shram Upkar 3,36,916/- deducted from the bills by the contractee and depreciation 8,52,665/-, Bank interest of 36, 783/- and interest of 1,47,026/- paid to the Tata Motor Finance in estimating the contractual income. 3. The Ld. CIT (Appeals) failed to appreciate that the copy of bill deductions were filed before Id. AO as annexure to TDS certificate which has not been discussed by ld. AO and so there is no issue of additional evidence u/r 46A. The Id. CIT (Appeals) also failed to exercise appellate power conferred upon u/s 250 (4) to know the true aspect of the matter in deciding correct tax liability. 4. The Learned CIT (Appeals) failed to appreciate the cited case law and to portray its distinguishing features from the appellant case. He erred on the facts & in the law in not following the principle of precedence and Ratio Decidendi and has missed the judicial discipline. The confirmation of applied ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to leave, add or delete all are or any of the above grounds which are independent to each other." Asst Year : 2009-10: 3. The brief facts of the case are that the assessee is an individual and during the year under appeal, was engaged in the business of execution of contract under MPRRDA ( Madhya Pradesh Rural Road Development Authority ) being one of the major parties, under whom work has been executed and payments received there on. Regular return has been filed in normal course u/s 139(1) of the Act 61, supported by tax audit report ( TAR ) and audited accounts, disclosing income at Rs. 17,65,530/-. The same was picked up for scrutiny and in absence of any supporting books of accounts and documents being produced by the assessee, before the AO in course of assessment proceedings, ( in spite of repeated notices being issued and served ), the assessing officer completed the assessment by taking recourse to section 145(3) of the Act 61, and estimated the income at 7.25% (seven. two five percentage ) of the gross contract receipts of Rs. 4,44,16,951/- (as disclosed in audited profit and loss account), and arrived at a total income of Rs. 32,20,230/-. It may be mentioned that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r due consideration of such extra-ordinary item, and the order of the ITAT dated 07/02/2017, was recalled for fresh adjudication, vide order dated 27th January, 2021, in MA Nos 05 and 06 / Alld/ 2017. 9. During the second round of hearing before the tribunal, the assessee has filed a paper book dated 21/01/2022, containing 41 pages, consisting copies of audited accounts and copies of appellate orders of first appellate authorities for subsequent years AY 2011-12 and 2012-13, ( as evidence that deduction u/s 37(1) of the Act 61, has been allowed in respect of demur rage claimed, for non completion of work within time ), in addition to the already existing paper book filed on 14/03/2016, containing 74 pages. 10. The Ld. DR has also filed paper book dated 22/12/2021 containing 49 pages consisting of assessment records of the assessee for subsequent years AY 2011-12 and 2012-13, as documentary evidence, that even in subsequent years, in absence of books of accounts being produced, net profit has been estimated @ 8% on gross receipts, and another paper book filed on 24/01/2022 containing 33 pages, consisting of judicial precedents he relied upon for support of his arguments. 10....
X X X X Extracts X X X X
X X X X Extracts X X X X
....produced for easy reference : Asst Year: Gross Receipts: Net Profit as per NP Rate % Additional Disclosed Percentage audited accounts Percentage deductions Profit in demurrage Return: Claimed in return 2009-10 4,44,16,951.00 25,55,430.00 5.75 8,19,124.00 17,36,306.00 3.9% 2010-11 4,37,59,063.00 25,08,842.00 5.73 9,05,558.00 16,03,284.00 3.6% 10.5 It is seen that the assessee has filed copies of accounts details signed by the GM, MPRRDA, in annexure- 2 of his paper book filed on 14/03/2016, which certifies that the total amount deducted from gross bills for non completion of work in time and on A/c of Royalty is as follows : Asst Year : 2009-10 Royalty Time Extension : 3,95,225.00 1,50,000.00 3,85,000.00 6,69,124.00 1,50,000.00 - 9,30,225.00 8,19,124.00 Already debited in Profit Loss A/c Reduced from capital A/c 10.6 The basic argument and clai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot be accepted at face value, specially without supporting invoices, of materials consumed and labour expenses, the two huge expenses claimed, among others. 14. In the instant case we further observe, that in the instant case, the assessee without producing any documentary evidences relating to claims of direct expenses made in trading account specially on account of materials and labour, wants to claim deductions on estimate based on past records and further wants to claim, head-wise deductions, on account of upkar, royalty, demurrage, compound tax, etc. as per statement certified by the contractee, which is legally and technically unacceptable arguments, because when book results are rejected, it is rejected as a whole and there cannot be any part rejection and part acceptably of book results, and there cannot be any head wise bifurcation of any claims under direct or indirect expenses, separately, because once books are rejected, it is rejected for the assessee and for the revenue, both, and in the instant case the statement of the Ld AR before the AO, on 05/08/2011 proves beyond doubt, that books of account never ever existed at all. 15. We are of the opinion that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....declared by the assessee. Therefore, the addition to the extent of differential of 0.38 per cent. was to be sustained and the remaining addition sustained by the Commissioner (Appeals) was to be deleted. Followed ACIT v. Allied Gems Corporation (I.T.A. Nos. 794 and 795/JP/2011 and 716/JP/2012, dated December 15, 2017). (AY. 2012 -13 ) 19. In the instant case, based on earlier years records, in the case of the assessee himself, and after considering the profit percentage declared in Asst years 2007-08 and 2008-09, at 6.6% and 6.32%, respectively, the Hon'ble Bench vide order dated 07/02/2017, took a view to estimate the contract business profits @ 6.30%, on Gross Receipts, after considering all claims referred to in sections 29 of the Act, in accordance with provisions contained in sections 30 to 43D of the Act 61, and we also are of the same opinion and there are no reasons to take a different view in the matter. 20. However, regarding the qualms of the assessee that the demurrage, for non completion of the work in time amounting to Rs. 8,19,124/-, for the year under appeal, has neither been received till date nor receivable in future, we are under the opinion that s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....make any additions or disallowances, based on the same rejected books. 24. At this stage we would also like to refer to some judicial pronouncement, where it has been held that, when books of accounts are already rejected and recourse has been taken to section 145(3) of the Act 61, and gross profit has been estimated at fair percentage on sales, it is not open to the AO to rely upon the same rejected books of accounts, to make additions and or disallowance on other heads of expenditure. 25. Hon'ble Karnataka High Court in the case of CIT vs Bahubali Neminath Muttin 388 ITR 608 ( Karnataka HC ) has observed as follows : relevant portion reproduced: "Alternatively, and without prejudice to the preliminary objections raised above, he would submit that, on merits it should be noted that admittedly the books of accounts of the respondent have been rejected by the assessing authority. The profit of the respondent is estimated as provided under Section 145 (3) of the I.T. Act. When the gross profit rate is applied, it would cover any infirmity and there was no need for the Assessing Officer to make a scrutiny of the amounts incurred on the purchases by the responde....