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TMI Blog2014 (1) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... , the profit of the assessee shall have to be estimated on reasonable basis considering the history of the assessee and the profit margin – Decided against Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases are made against the bills, but some of the bills were not printed which comes to Rs.4,65,726/- only, which means 4.44% of purchase of grit and in terms of total purchases, the same is only 1.23%. Therefore, huge addition is unjustified. It was submitted that rejection of books of account in such circumstances is unjustified. The profit rate applied at the rate of 8% as per section 44AD is unjustified because the assessee has maintained regular books of account, which are audited and such provisions are applicable when no books of account are maintained and being special provision, profit is estimated at the rate of 8%. The ld. CIT(A), considering the material on record and in the light of submissions of the assessee, deleted the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords in its business and, therefore, a lenient view be taken, an amount of Rs.2,00,000/- as disallowance on purchase of grit is found reasonable and justified. Further, A.O. has not given any basis for estimating the net profit of the appellant @ 8% of receipts without any basis. The applicability of the said estimate is found in provisions of sec. 44AD of the I.T. Act in respect of civil contractors, when no books of accounts are maintained by the appellant. In case under appeal, the appellant has not only maintained regular books of accounts, but they have been duly audited also in which no specific defect has been found except for purchase of grit on challans and kachcha bills. Disallowance of Rs.2,00,000/- has already been confirmed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder comes to Rs.4,65,726/- only. The assessee produced all the bills, which were found entered into the books of account. The nature of business of the assessee clearly proves that even sometimes grits are purchased from un-organized sectors, therefore, pukka bills would not be issued by the parties because the purchases are made from remote areas also. The ld. CIT(A) was, therefore, justified in estimating such disallowance at Rs.2,00,000/- out of the defects pointed out in a sum of Rs.4,65,726/-. Thus, there was no justification to apply the profit rate of 8% for estimating the profit of the assessee. For minor defects pointed out in making the purchase of grit, the huge addition made by the AO is not justified. It is well settled law th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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