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TMI Blog2015 (8) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. In brief, the reason for rejection of books of account is that the assessee failed to verify the genuineness of opening and closing balance of labour payable. It appears from the assessment order that the Assessing Officer has asked the assessee to submit the detail in a particular fashion. However, the assessee only filed copy of labourers identification register. Secondly, the assessee failed to justify the quantitative and qualitative details of the closing stock. Thirdly, the assessee failed to justify the loan to one Smt. Amandeep Kaur. The Assessing Officer has also submitted that the assessee was requested to file the detail of work done along with material, labour used, verification/ justification of purchase, work done and expenses of labour, bonuses, etc. However, the assessee has taken the plea that the works were related to Defence Department and after completion of work, the copy of work agreement and other details are kept by the Defence Department. The assessee, therefore, failed to submit the documentary evidences asked for by the Assessing Officer The Assessing Officer has also mentioned that with regard to query regarding audit report in which the method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturns online with the narration of complete purchase, payments received, labour paid, input vat and output vat. The assessee also explained that without maintaining regular books of account quarterly vat return cannot be filed online. The assessee submitted all the bills/vouchers of diesel, petrol Rs. 85,697. Hire charges Rs. 49,382, insurance Rs. 12,423, repair and maintenance Rs. 51,919 and car account to claim depreciation Rs. 1,34,647. The assessee also explained that he has taken value of four plots in its books of account including stamp duty and miscellaneous expenses. The value of plots mentioned by the learned Income-tax Officer, Barnala is only of sale deal. The assessee produced Smt. Amandeep Kaur to whom Rs. 50,000 was advanced. The assessee paid freight Rs. 1,43,491 during the year under consideration. The assessee explained that he paid freight less than Rs. 20,000 in single transition and less than Rs. 50,000 in the year to any transport. 5. The books of account were duly audited by the chartered accountant Vishav Jyoti Mahajan and Co. on September 16, 2010. In spite of all these the learned Income-tax Officer, Barnala rejected the books of account under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpense is not conclusively proved. Further, the work agreements are not produced. Therefore, looking into the facts of the case, I am of the opinion that books of account are correctly rejected by the Assessing Officer under section 145(3) of the Income-tax Act, 1961. However, as regards the estimation of profit after rejection of books of account, the hon'ble Income-tax Appellate Tribunal, Chandigarh in the case of M/s. Harbhajan Singh and Co. No. 183/CHD/ 2013 dated April 15, 2013 has observed that even after rejection of books of account past history of the assessee is the best guide to ascertain and determine the trading results of particular year. Thus, even after rejection of books of account, the past history of the asses see has to be applied and adopted for the purpose of estimation of profit. The appellant has submitted that in his case in the assessment year 2005-06, the assessment is completed under scrutiny and net profit at 2.84 per cent. is estimated by the Assessing Officer against the net profit declared at 2.61 per cent. on turnover of Rs. 1,07,15,819. As per submission made, during the assessment year 2005-06, the claim on account of labour payment is Rs. 63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /CHD/1997 has ordered application of net profit rate of 12 per cent. to the contract receipts. (d) Surinder Pal Nayar, Contractor, Ludhiana The Chandigarh Bench of the Tribunal in this case vide its judgment in I. T. A. No. 381/CHD/2004 has upheld the application of net profit rate of 12 per cent. subject to no further deduction on account of depreciation. 10. On the other hand, learned counsel for the assessee reiterated the submissions made before the authorities below and submitted that it was a work assigned by the Defence Ministry (Air Force) therefore, permanent labour is to be applied and all the documents thereafter, are taken away by the Defence Authority for the purpose of secrecy of the work conducted by the assessee. Therefore, in certain items, the complete details could not be filed. He has submitted that in the year under appeal, the assessee has declared net profit rate of 2.19 per cent. and in preceding assessment year net profit rate was 2.22 per cent. and 3.17 per cent., therefore, the profit rate applied by the learned Commissioner of Income-tax (Appeals) at 5 per cent. is still on excessive side. He has filed copies of unreported orders of the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 8 per cent. as against 5 per cent. applied by the learned Commissioner of Income-tax (Appeals) because the learned Commissioner of Income-tax (Appeals) has failed to note that substantial defects have been pointed out in maintenance of the books of account which could not give the true picture of the profit earned by the assessee. Therefore, instead of reducing the substantial profit rate in the facts and circumstances, the learned Commissioner of Income-tax (Appeals) should have decided the issue in the light of the finding of fact given by the Assessing Officer. We, therefore, considering the submission of both parties and the decisions relied upon by both parties and considering the objections raised by the Assessing Officer, find it reasonable and appropriate to estimate the profit in the case of the assessee by applying net profit rate of 8 per cent. The order of the learned Commissioner of Income-tax (Appeals) to that extent is, therefore, modified and we direct the Assessing Officer to apply net profit rate of 8 per cent. against the receipts disclosed by the assessee for the purpose of computing the business income of the assessee. 13. In the result, the Departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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