2012 (1) TMI 415 - AT - Income Tax

Summary

Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) u/s 143(3) of the Income Tax Act, 1961 for assessment year 2008-09. Grounds raised include rejection of books of account u/s 145(3) and application of net profit rate of 12% on net contract receipts.

Rejection of Books of Account u/s 145(3): Assessee, a civil contractor, failed to appear before Assessing Officer and provide necessary information. Original vouchers, muster roll, and stock register were not produced. Books of account were incomplete and not properly vouched. AO rejected books u/s 145(3) and applied 12% net profit rate based on Punjab & Haryana High Court precedent.

Application of Net Profit Rate: Assessee claimed to be a road contractor, declared 5.23% NP rate on gross receipts. Despite explanations, incomplete documentation led to rejection of books u/s 145(3). Authorities applied 12% NP rate citing a High Court decision. Tribunal directed AO to apply 7% NP rate due to lack of complete vouchers. Decision based on similar cases and lack of verifiable expenses.

Conclusion: Appeal partly allowed, directing AO to determine income using 7% NP rate. Ground challenging 12% NP rate dismissed, while another ground partly allowed. The decision was pronounced on January 27, 2012, by Ms. Sushma Chowla, Judicial Member, and Shri Mehar Singh, Accountant Member of ITAT Chandigarh.