2024 (3) TMI 515 - AT - Income Tax

Rejection of books of accounts - estimation of income from business - CIT(A)-NFAC granted relief by reducing the estimated profits to 8% of main contracts and 5% of sub-contracts as against 12.5% of main contracts and 8% of the sub-contract works estimated by the Ld. AO - HELD THAT - We find that the Ld. CIT(A)-NFAC has granted substantial relief to the assessee and this Bench of the Tribunal has consistently held that while estimating the profits, it shall be 8% on the main contracts and 5% on the sub-contract work. The Ld. CIT (A)-NFAC has relied on the decision of this Bench in the case of M/s. K. Venkata Raju 2022 (4) TMI 960 - ITAT VISAKHAPATNAM and accordingly estimated the income of the assessee. No merit in the argument of the Ld. AR and we have no hesitation uphold the decision of the Ld. CIT(A)-NFAC and dismiss the grounds raised by the assessee.

Summary

Issues:
The appeal challenges the order of the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi [CIT(A)-NFAC] regarding the estimation of income for the Assessment Year 2014-15.

Estimation of Income:
The assessee, engaged in contract works, filed its return of income for AY 2014-15. The Assessing Officer (AO) estimated the income due to alleged discrepancies in the books of account and expenses claimed. The AO estimated income at Rs. 1,75,30,716/-, adding Rs. 32,22,870/- to the assessed income. The CIT(A)-NFAC reduced the estimation to 8% on main contracts and 5% on sub-contracts, denying deductions for remuneration to Directors and depreciation. The Tribunal upheld the CIT(A)-NFAC's decision, citing consistent precedent and dismissed the appeal.

Allowance of Deductions:
The assessee contended that the CIT(A)-NFAC erred in not allowing deductions for remuneration to Directors and depreciation. The Authorized Representative argued that these deductions were crucial in estimating profits. However, the Departmental Representative opposed further deductions once income is estimated. The Tribunal upheld the CIT(A)-NFAC's decision, denying the additional deductions and dismissing the appeal.

Conclusion:
The Tribunal affirmed the CIT(A)-NFAC's decision to reduce the income estimation percentages and deny additional deductions for remuneration and depreciation. The appeal was dismissed, upholding the relief granted by the CIT(A)-NFAC and maintaining the estimation of income for the AY 2014-15.