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TMI Blog2011 (1) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... in circumstances of the case, the learned CIT(Appeals) Rohtak had erred in enhancing the net profit ratio to 12% of the Gross Receipts against 5% of Gross Receipts considered by AO thereby making a further addition of ₹ 3382487 to the assessed income of ₹ 21,94,133. 2. That on facts and in circumstances of the case, the learned CIT(Appeals), Rohtak had erred in making a further addition of ₹ 3382,487 instead of deleting the addition of ₹ 1012,509 made by A.O. to the returned income of ₹ 1280,189. 3. That on facts and in circumstances of the case, the learned CIT(Appeals) Rohtak had not appreciating the facts that part books of accounts were produced before AO." 3. On perusal of the grounds of appeal, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO that the net profit shown by the assessee comes to 2.79% as compared to 1.81% in the immediately preceding year. During the course of assessment proceedings, the assessee was asked to produce complete books of account with bills and vouchers. However, the assessee had only produced part of the books with some bills of iron and steel, cement and building material and bricks. No bills and vouchers were produced for the following major expenses :- (i) Labour charges. (ii) Fabrication charges. (iii) Construction work expenses. (iv) Miscellaneous expenses. (v) Job work charges. 6. The assessee was provided a final opportunity vide order sheet entry dated 26.12.2008 to produce complete books of account with bills and vouchers b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied by the department. The learned CIT(A) also held that Hon'ble ITAT Chandigarh in ITA No.323/Chandi/2005 dated 25.5.2007 in AY 2001-02 had applied 12% of net profit rate of contract receipts in the case of M/s Parbhat Kumar. The CIT(A), therefore, enhanced the net profit rate to 12% on total contract receipts and passed the order. 8. In the course of hearing of this appeal, the learned counsel for the assessee has not been able to explain as to why all books of account with complete bills and vouchers were not produced before the AO. However, he contended that the same were sought to be produced before the CIT(A) as would be clear from the order sheet entry made by the CIT(A). No such details of bills and vouchers have been produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the current FY 2005-06. It is thus seen that the turnover in the current year has been increased from Rs. 88,43,638/- in FY 2003-04 to Rs. 4,58,53,970/- which is about five times. It is also seen by us that in the FY 2004-05 relevant to the AY 2005-06, the AO has himself applied the rate of profit at 2.15% against total turnover of Rs. 2,64,29,168/-. 11. Further, the CIT(A) has applied the decision of Hon'ble High Court of Punjab & Haryana in the case of M/s Parbhat Kumar (supra) while applying the rate of profit at 12%. We have gone through the aforesaid decision of Hon'ble High Court of Punjab & Haryana and find that in that case, the assessee was a contractor engaged in the work of civil construction. The Tribunal while deciding the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of account produced before the AO, that would have gone against the assessee, we reasonably estimate the net profit of the assessee from contract works by applying the rate of net profit at 4%, which seems to be very reasonable and justified in the light of the rate adopted in the immediately preceding assessment year and in the light of facts that the assessee failed to produce complete books of account. We, therefore, direct the AO to apply the rate of net profit at 4% of contract receipts, and modify the assessment order accordingly.
13. In the result, the appeal filed by the assessee is partly allowed in the manner as indicated above.
Decision pronounced in the open Court on 20th January, 2011. X X X X Extracts X X X X X X X X Extracts X X X X
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