2026 (5) TMI 109

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.... that the assessee is a private limited company engaged in contract works. For AY 2015-16, it filed its return of income on 31.10.2015 declaring total income of Rs. 1,52,29,210/- on a turnover of Rs. 27,45,27,862/- (profit rate @2.28%).The case was selected for limited scrutiny under CASS for verification of "large other expenses claimed." The original assessment was completed by estimating profit @ 8% of turnover, which was upheld by the CIT(A). Subsequently, the Tribunal set aside the matter to the file of the Assessing Officer for de novo assessment. Pursuant to directions, the Assessing Officer issued notices u/s. 142(1). The assessee filed partial details and explained that due to infrastructure project delays and cost escalations, pro....

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....es not guarantee correctness if primary evidence is deficient, adequate opportunity was provided but non-response to show cause weakens assessee's case, estimation of income is justified once books are rejected, the AO adopted a reasonable and scientific method by: * Referring to industry benchmarks * Considering comparable companies The assessee failed to provide credible comparables or documentary support. Accordingly, both grounds relating to rejection of books and estimation of income were dismissed. Now assessee is in appeal before this Tribunal. 4. The ld.AR for the assessee contended that the AO mechanically repeated earlier assessment without fresh application of mind. No new defects were identified in de ....

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....made vouchers, which lack credibility. The assessee also failed to respond to the show cause notice. In such circumstances, we are of the considered view that the AO was justified in invoking section 145(3) and rejecting the books of account. Accordingly, the action of the AO and CIT(A) in rejecting the books is upheld. Regarding estimation of Profit, we are of the view that while estimation is warranted, the rate of estimation must be reasonable and fair. In the present case the AO adopted 8% primarily based on large listed companies and section 44AD benchmark. However, the assessee is a sub-contractor, not a principal contractor and works are executed in remote and difficult terrains. Comparables used by AO are not strictly comparable ....