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Estimation of income from contract receipt. Analysis: The appeals by the revenue pertain to assessment years 1996-97 and 1997-98 against a common order by the Commissioner of Income-tax (Appeals). The main issue is the estimation of income from the contract receipt. The Assessing Officer found the accounts of the assessee, a partnership firm engaged in transport contracting and supplying firewood, unreliable due to lack of proper documentation. The Assessing Officer estimated profits at 8%, but the first appellate authority reduced it to 4%. The revenue argued that the lower estimation would result in lower taxable income than declared by the assessee, which they deemed unjustified. Regarding the cross-objection, the revenue contended that the assessee, using lorries for their business, should not be granted depreciation at the higher rate of 40% as claimed. The assessee argued that their business model did not necessitate maintaining detailed accounts, and the estimation of profit at 4% by the Commissioner of Income-tax (Appeals) was appropriate. They also claimed entitlement to the higher depreciation rate due to the use of lorries for transporting goods. The tribunal found that the assessee's business involved transport contracts and supplying firewood, with collections from villages distributed to collectors. The lack of proper documentation led to profit estimation based on available records. The tribunal rejected the applicability of section 44AD for profit estimation, as it pertains to civil construction, which was not the nature of the assessee's business. The tribunal upheld the estimation of profit at 7.5% for both assessment years, considering admitted income rates and comparative analysis. Regarding the cross-objection on depreciation, the tribunal noted that necessary relief under relevant provisions is deemed granted when profit is estimated. The grant of depreciation at 25% was upheld, and the cross-objection by the assessee was dismissed. Ultimately, the appeals by the revenue were allowed, and the cross-objections by the assessee were dismissed.
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