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TMI Blog2012 (10) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... partment by Shri R.A. Verma Assessee by Shri H.P. Verma and Shri Girish Agrawal ORDER PER JOGINDER SINGH , judicial member This bunch of 12 cross-appeals filed by the Revenue and the assessee arises out of the common order of the learned CIT(A) dated 2.8.2011. We would like to deal with the appeals of the Revenue first (ITA Nos.128 to 133/Ind/2011) wherein the following common ground has been raised :- On the facts and in the circumstances of the case, the CIT (Appeals) has erred in applying Gross Profit of 12% (A.Ys. 2000-01, 2001-02, 2002-03, 2004-05 and 2005-06) when the assessee himself has shown Gross Profit of 24.14% (A.Y. 2003-04) and Gross Profit of 25% as against 30% applied by the AO for the A.Y. 2003-04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material available on record. The crux of arguments on behalf of the assessee is that a higher GP rate has been adopted by the learned CIT(A) whereas the contention on behalf of the Revenue is that such gross profit rate is towards lower side. Before coming to any conclusion, we are reproducing hereunder the relevant portion of the order of the learned CIT(A) :- 5.7 I have carefully considered the submission of the appellant and the facts of the case. It is noticed that the Assessing Officer had issued specific questionnaire to the appellant alongwith the notice u/s 142(1) to furnish evidence/detail regarding the original booking of bungalows in all projects and complete addresses of the transacting parties alongwith their confirmatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of books of account has applied GP rate of 30 % in all the assessment years as against GP rate ranging from 2% to 24.14 % different GP rates shown by the appellant. It is noticed that the Assessing Officer has not given any specific reason for applying GP rate of 30 %. It is a settled law that when the books of accounts are rejected. the profit are to be ascertained / determined on some logical basis having some nexus with material on record and that assessment cannot be made arbitrarily. This opinion finds support from the following case laws:- (i) 288 ITR 10SC [Kachwala Gems-vs-.JCIT "It is well-settled that in a best judgment assessment there is always a certain degree of guess work. No doubt the authorities concerned should trv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness was being closed down. The Ld. AR also stated that Assessing Officer has not cited any reason where NP or GP rate of 30 % is shown by any builder. The AR also claimed tha. in the case of M/s SA V Builders carrying on the same business in same locality, the Hon'ble ITA T has applied NP rate of 6 % as against the NP rate of 8 % applied by the CIT (A). It was accordingly claimed that even if the books of accounts are rejected, the NP rates @6% may be applied. 5.10 It is noticed that the appellant is not a contractor or simply engaged in the business of civil construction and in fact the appellant is engaged in the business of sale purchase of plots and construction of houses/ shops and sale thereof. In this background in such business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... priate to apply GP rate of 25 %. After applying GP rate as discussed above, the estimation of gross profit and relief allowed to the appellant is works out as under :- S. No. A. Y. Sales shown by the appellant GP Rate shown by the appellant G.P. rate estimated by the AO G.P estimated by the AO G.P. to be applied as discussed above GHP on application, of GP rate @ 12%/ 25% Relief granted to the appellant 01 2000-01 4480000 4.68% 30% 1344000 12% 537600 806400 02 2001-02 3485000 8.38% 30 '% 1045000 12% 418200 626800 03 2002-03 1886700 10% 30 '% 566010 12% 226404 339606 04 2003-04 434480 24.14% 30 '% 130344 25% 108620 2172 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal, the learned CIT(A) adopted the gross profit rate at 12% against which the assessee as well as the revenue are aggrieved. However, for the assessment year 2003-04, against the claimed gross profit of 24.14% (by the assessee) the learned CIT(A) adopted the same at 25%. Admittedly, the assessee is not merely a contractor or engaged in civil construction rather the assessee is also engaged in the business of purchase and sale of plots, construction of shops, houses and sale thereof, therefore, the rate of 8% cannot be applied. The books of accounts of the assessee were also not found reliable and the same were rightly rejected u/s 145(3) of the Act. To put an end to the litigation, the only option with the revenue authorities and also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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