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TMI Blog2015 (5) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer can be said to be appropriate. The assessment order is totally silent about similarly situated other traders/businessmen showing the net profit over and above what the assessee had shown and compared by the Assessing Officer and no evidence has been brought on record as to how the Assessing Officer was justified in applying the net profit rate at 13.7 per cent. In our view, while comparing with the past history, if the results are fair and reasonable then invariably no addition need to be made. It would be appropriate to reproduce the trading results of the assessee for the year under appeal including the last five years On a perusal of the above, it is apparent that out of the past five assessment years in three of the assessment years, i.e., 2004-05, 2005-06, 2006- 07, the matter travelled up to the stage of the Tribunal where the Tribunal applied the rate of 5 per cent. Compared with the said fact, in the present assessment year though the contract receipts have sharply increased from ₹ 10.60 crores to ₹ 12.32 crores in the immediate past assessment year at the same time the net profit has increased from 5.02 per cent. to 5.38 per cent. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of work of the assessee is fully unorganised and that the work is carried out at various sites, where he could not maintain a proper system of accounting. It was also admitted by the assessee that the accounting work was conducted by the labour supervisor, who was also promoted from amongst labourers and did not have a knowledge of accounting and was unable to maintain co- ordination between assessee and suppliers and those sites. It was further submitted that the turnover and the net profit rate is better vis-a-vis the last five preceding years and, therefore, the book results should be accepted. 4. However, the Assessing Officer was dissatisfied with the explanation offered by the assessee and not only invoked the provisions of section 145 of the Act and rejected the book results but he further disallowed the expenses to the tune of ₹ 1,17,75,202 out of the major heads of the expenses, namely, out of purchases of ₹ 7,50,39,180 disallowed at 20 per cent., out of labour charges of ₹ 3,72,48,425 disallowed 10 per cent., out of salary to the tune of ₹ 9,48,000 disallowed 20 per cent., out of vehicle expenses of ₹ 69,850 disallowed 20 per cent., out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was unable to produce the vouchers and/or relevant information to substantiate the claim made in the profit and loss account. He contended that though the results shown may be technically said to be better in comparison to the past years but when the very vouchers have not been produced, therefore, mere acceptance in the past years cannot be a ground not to make addition in the subsequent years like the present one, where the assessee failed to substantiate the expenses claimed. He further submitted that if the said analogy is accepted then in all such cases, where there is slight rise in the very trading result or results are almost similar vis-a-vis in the past year then the addition can never be made. He contended that the order of the Assessing officer was well reasoned one and substantial question of law arises out of the said impugned order, therefore, the appeal deserves to be admitted. 8. We have considered the submissions of the officer appearing on behalf of the Revenue and have perused the impugned order so also the orders of the lower authorities. 9. In our view, no substantial question of law can be said to arise out of the impugned order as it is essentially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. On a perusal of the above, it is apparent that out of the past five assessment years in three of the assessment years, i.e., 2004-05, 2005-06, 2006- 07, the matter travelled up to the stage of the Tribunal where the Tribunal applied the rate of 5 per cent. Compared with the said fact, in the present assessment year though the contract receipts have sharply increased from ₹ 10.60 crores to ₹ 12.32 crores in the immediate past assessment year at the same time the net profit has increased from 5.02 per cent. to 5.38 per cent. or now as per the order of the Tribunal it can be said to be raised at 5.78 per cent. with the addition of ₹ 5 lakhs sustained. 11. Though the argument of the learned officer of the Revenue can be said to be proper and justified that in a case where the assessee manipulates the accounts by keeping the profit margins commensurate with the past assessment years or slightly increases and that itself by a large cannot be a basis for acceptance of the results. But, in the face of the said facts, if it is for the Assessing Officer to bring on record some concrete material/evidence to make a proper addition. We have already noticed hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether the explanation offered by the assessee and which found acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded had been entirely de hors the sub ject, or when it had been based on no reasoning, or when it had been based on absurd reasoning to the extent that no prudent man of aver age judicial capacity could have ever reached to such conclusion, or when it had been found against any provision of law, then a case for formulation of any substantial question of law on such finding can be said to arise. Such is not the case here on facts. 16. This court in the case of Pansari Gems International v. CIT reported in [2013] 33 Taxmann.com 667 (Raj) has held as under : The total turnover during the year under reference is ₹ 8.86 crores. The Income-tax Appellate Tribunal has held that gross profit rate does not depend on the basis of specification of item, but it depends upon the quality, shine, etc. The assessee has earned gross profit varied from 6.32 per cent. to 26.45 per cent., but from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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