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TMI Blog2011 (4) TMI 1411X X X X Extracts X X X X X X X X Extracts X X X X ..... gross receipts of contract by relying on the orders of the Hon'ble ITAT Bench, Lucknow in the case of Gupta Contractor which is not comparable with the case of the Appellant. 3. That the learned CIT (A) erred in confirming 50% of Rs. 14,16,513/- as unexplained investment in contract business in absence of any material or evidence. 4. That the learned Assessing Officer failed to provide any opportunity to the Appellant to explain before he applied the rate of 7% relying on the case of Gupta Contractor. 5. That copy of remand report alleged to have been furnished vide CIT (A) letter dated 14/12/2008 was not received by the Appellant, thereby denying the opportunity of further submissions. 6. That the learned CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the same on the basis of decision of the ITAT, Allahabad Bench in the case of Ganga Prasad Tripathi vs. ITO and the decision of ITAT Lucknow in the case of Gupta Brothers vs. ITO. Accordingly, the net profit of the assessee for the year was computer at ₹ 13,73,415/-. 4. Being aggrieved, the assessee carried the matter to the learned CIT (A) and submitted that the cases relied by the Assessing Officer were not comparable with the assessee s case since in those cases, remuneration to working partners and interest on capital was deducted from the net profit of 7% while the assessee s status was individual. It was also stated that for the assessment year 2001-2002, the ITAT, Lucknow Bench has upheld the estimation of profit @6% in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the turnover of ₹ 1,53,76,166/- and in the subsequent year the net profit rate accepted by the Department was @2.45% on the turnover of ₹ 3,19,78,202/-. He further submitted that the average net profit rate for the assessment years 2004-2005 to 2006-2007 comes at 3.65%, therefore, the net profit rate applied @7% was very excessive. In support of the above contention, the learned counsel for the assessee drew our attention towards a chart showing the turnover and net profit rates for the assessment years 2004-2005 to 2006-2007 which is placed at page No. 4 of the submissions furnished on 13/04/2011. He further submitted that the facts of the case relied by the Assessing Officer while applying the net profit rate of 7% are dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income is to estimate the same by applying the net profit rate. In the present case, the net profit rate declared by the assessee for the preceding year i.e. assessment year 2004-2005 was at 1.5% while in the succeeding year i.e. for the assessment year 2006-2007 was at 2.45% but in the succeeding year, the turnover of the assessee was at ₹ 3,19,78,208/- while in the year under consideration the turnover is at ₹ 1,96,20,240/-, therefore, the net profit rate for the year under consideration should have been more in comparison to the succeeding year because the increase in the turnover may be one of the reasons for the decline in the net profit rate. In our opinion, the net profit rate applied by the Assessing Officer and confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable in treating almost entire undisclosed receipts as unexplained investment in business and taxing the same separately in addition to the profit estimated from the undisclosed contract receipts. He further observed that the undisclosed receipts to the extent of ₹ 14,16,513/-, which were not accounted for by the assessee and were indirectly accepted to be assessed as notional profit and that some investment outside books, must have been made by the assessee for earning such receipts. The Assessing Officer considered it fair and reasonable to estimate the investment @50% of total undisclosed receipts. Accordingly, the addition of ₹ 7,08,256/- was sustained. Now the assessee is in appeal. 11. The learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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