9911796707
TMI Blog2012 (5) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal vide order dated 31st May, 2011, the notice was limited to the following question of law: "Whether the Tribunal erred in deleting the trading addition of Rs.42,88,000/- made by the AO after rejecting the books of accounts?" 3. We have heard counsel for the parties and proceed to dictate our decision. 4. The Assessing Officer rejected the books of accounts inter alia recording the following reasons : (1) The net profit of 1.28% declared by the assessee was low in comparison to prescribed profitability of 8% in Section 44AD of the Act. (2) The real net profit was Rs. 2,76,592/- against the total turnover of Rs. 10,71,93,334/-. Thus percentage of net profit was 0.25%, which is low. Ms/ Unibuild Engineering and Construction Co. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly rejected, but without ignoring the low profit rate. 6. With regard to the reason No.1, the assessee had given the following explanation to the Assessing Officer at the time of assessment : "Project wise details. It is already on record that company is executing various Government projects at difference places and the same are managed by the common staff of the company. The company is maintaining complete record of direct expenses is respect of each - of the project and overhead and administrative expenses which are centrally controlled as common expenses of the various projects and same are accounted for in the books of accounts and duly supported and verifiable on the basis of evidence and vouchers. There is thus no infirmity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent system of account is such that the site supervisors maintain petty cash account for their respective sites which alone- is allocated project wise and all other direct expenditure for project is maintained centrally similarly, all indirect expenses are maintained centrally. As we are following mercantile system of account, there is no deficiency in our accounting system. Hence there is no reason for invoking section 145." (The above quoted paragraph have been taken from the order of the CIT(Appeals), as the Assessing Officer only reproduced the last para of the aforesaid submission in the assessment order.) 7. We may record here that the ld. counsel for the appellant-Revenue had submitted before us that the books of accounts maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment record and it is noticed that the Assessing Officer has not mentioned in any of the hearing, claimed by the appellant, for production of books of accounts, that books of accounts were not produced and as such the contention of the appellant that books of accounts were produced is supported from the affidavit of the Chartered Accountant and letter dtd. 26112/07. However, the basis of addition is not in the context of production or non production of the books of accounts but in respect of various general observations made by the Assessing Officer regarding project wise details, closing stock and unconfirmed balances. It appears that Assessing Officer has made only general observation as in the assessment year 2003-04. I have g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground to dispute correctness of trading results on the basis, of this issue." The findings recorded by the CIT(Appeals) have been affirmed by the Tribunal. 8. The aforesaid findings recorded by the appellate authority are factual and Revenue has not been able to show on what basis or reason the same can be challenged/questioned. 9. The second aspect pertains to failure to show closing stock of six projects, out of the nine projects. The Assessing Officer has mentioned in the assessment order that closing stock for only 3 sites namely, Indrapuram site, IOCP Panipat and APMC Azadpur was disclosed. The CIT(Appeals) in the appellate order has recorded that the assessee had pointed out that three project sites were complete and final payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The Assessing Officer has not given full details/ particulars of the said parties who had not confirmed the balances. He referred to the notice sent to Dhanishta Builders under Section 133(6) of the Act. Two alleged discrepancies in the balances of Vardhaman Traders and Dhanishta Builders were recorded. Against Vardhaman Traders there was balance of Rs. 3,17,012/- but no purchases were made. Dhanishta Builders had an opening balance of Rs. 4,81,894/- and a closing balance of Rs. 20,55,135/-, but no confirmation was filed. Assessment order records that on 19.12.2007, the assessee was asked to furnish confirmation and the case was adjourned to 26.12.2007. The assessee on 26.12.2007 replied that they require more time to secure confirmatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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