2023 (12) TMI 712 - AT - Income Tax

Estimation of net profit - assessee is a civil contractor has declared the net profit @5.79% - AO had made additions under various heads but the ld. CIT(A) has observed that the books of accounts of the assessee deserves to be rejected and profits to be estimated @8% - HELD THAT - We also notice that this Tribunal in the assessee s own case for Assessment Year 2011-12 2014-15 has decided the similar issue and sustained the addition @6.75%. Since the net profit @6.75% has been estimated by the Tribunal in the assessee s own case, we, therefore, respectfully following the same, uphold the finding of the ld. CIT(A) of rejecting the books results and estimate the net profit rate @ 6.75% for the year under appeal on the gross turnover and the addition is sustained only to the extent of the difference between the net profit rate of 6.75% estimated by us as against the net profit declared by the assessee in its income tax return. Accordingly, the assessee s appeal is partly allowed and the that of the revenue is dismissed for Assessment Year 2013-14. As far as Assessment Year 2015-16 is concerned, only the assessee is in appeal and the issue remains the same regarding the estimation of net profit where the assessee has challenged that the ld. CIT(A) has erred in estimating the net profit @8%. We considering our decision for Assessment Year 2013-14 as well as the decision of this Tribunal in the assessee s own case for Assessment Year 2011-12 and 2014-15, estimate the net profit for Assessment Year 2015-16 @6.75% and partly allow the appeal of the assessee.

Summary

Issues Involved:
The judgment involves cross-appeals for Assessment Year 2013-14 and an appeal for Assessment Year 2015-16. The primary issue revolves around the estimation of net profit by the authorities and the subsequent challenges by both the assessee and the revenue.

Assessment Year 2013-14:
The case pertains to a partnership firm engaged in civil contracts. The Assessing Officer made additions totaling to Rs. 7,34,12,430, assessing the total income at Rs. 9,32,97,520. The Assessing Officer rejected the books of accounts of the assessee and estimated profits at 8%. The Tribunal noted previous decisions where net profit was estimated at 6.75% in similar cases. Consequently, the Tribunal upheld the estimation of net profit at 6.75% for the year under appeal, partly allowing the assessee's appeal.

Assessment Year 2015-16:
In this year, the sole issue was the estimation of net profit at 8% by the CIT(A). Following the decision for Assessment Year 2013-14 and previous cases, the Tribunal estimated the net profit for this year at 6.75% and partly allowed the assessee's appeal.

Conclusion:
The Tribunal upheld the estimation of net profit at 6.75% for both Assessment Years 2013-14 and 2015-16, partly allowing the assessee's appeals and dismissing the cross-appeal filed by the revenue.