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TMI Blog2012 (10) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 16-7-2012 - SH. H.S. SIDHU AND SH. B.P.JAIN, JJ. Department by: Sh. R.L. Chhanalia, DR Respondent by: Sh. Kuldip Bhagat, CA ORDER PER BENCH ; The Revenue has filed the present appeal against the impugned order of the CIT(A), Jalandhar, dated 29.04.2011 for the assessment year 2007-08. The assessee has also filed C.O. 2. The grounds of appeal raised by the Revenue are as under: 1. That on the facts and in the circumstances of the case the ld. CIT(A) has erred in law by directing the A.O. to apply the N.P. rate 4% on the total receipt as against 8% applied by the A.O. 1a. While doing so, the Ld. CIT(A) has failed to appreciate that the A.O. applied the N.P. rate of 8% after examining the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44AB of the Act. 5. The facts relating to the issues in dispute are that the assessee is a civil contractor, filed its return of income on 30.10.2007 declaring total income of Rs.17,07,660/- and the same was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter called the Act ). The AO selected the case for scrutiny by issuing notice u/s 143(2) of the Act on 24.09.2009, which was served on the assessee on 26.09.2008. The AO also issued another notices under section 143(2) and 142(1) alongwith questionnaire to the assessee on 10.09.2009. In response to the said notices, the authorized representative of the assessee attended the proceedings before the A.O. from time to time and furnished all necessary documentary evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r documentary evidence, the AO again doubted on the decreasing N.P. rate in the case of the assessee and asked various questions to the assessee and the assessee replied the same from time to time with the support of the documentary evidence. The AO also examined the register for wages produced by the assessee and lastly the AO pointed out various defects in the books of account as he has discussed in appeal in paragraph 4(a), 4(b) 4(c) in the assessment order and finally, he rejected the books of account u/s 145(3) of the Act, being incorrect and incomplete and not reflecting true and correct assessable income of the assessee-firm by inflating all expenses and suppressing the receipts. 6. The AO has relied upon various case laws on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e N.P. rate of 2.79% as declared by the assessee in its return of income. 9. We have heard both the parties and perused the record available with us especially, the orders passed by the Revenue Authorities on the issues in dispute. We are of the view that as a matter of fact, the assessee has executed two contracts of M.E.S. and as per profit loss account of the assessee annexed with the return of income during the year under consideration. The assessee has declared Net profit rate of 2.87% as compared to 4.38% returned during the year immediate preceding assessment year. The assessee has furnished its reply dated 4th Nov., 2009, which was reproduced by the AO in para 3 of his order. The AO having still doubt on the subject and asked va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of decisions rendered by various Hon ble Courts. Accordingly, we uphold the same. 9.1. As regards to the applicability of N.P. rate @ 4% on the total receipts as against 8% applied by the AO, we are of the view that the AO has applied various case laws in the case of the assessee without confronting the same to the assessee and the ld. first appellate authority has rightly disagreed with the estimation made by the AO at N.P. rate of 8% only on the basis of case laws relied upon by the A.O. without confronting the same to the assessee. The ld. first appellate authority has reduced the N.P. rate of 4% to the gross receipts computed by the A.O. instead of 8% applied by the A.O. on the basis of previous assessment year and especially the incr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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