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TMI Blog2016 (12) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... - and income from job work and fabrication at Rs. 1,62,93,530/-. Thus, the aggregate turnover was Rs. 1,84,01,562/- on which a net profit of Rs. 1,55,326/- was declared. During the course of assessment proceedings, the assessee firm failed to submit the books of accounts and other bills/vouchers. The assessee also did not submit any details regarding TDS on salary, fabrication and job work payments. The AO rejected the trading results of the assessee and computed the net profit @ 8% on the total turnover of Rs. 1,84,01,562/-, thereby determining the business income at Rs. 14,72,124/-. 2.1 Aggrieved, the assessee carried the matter to the First Appellate Authority. The Ld. CIT (A) gave a finding that the addition of Rs. 14,72,124/- had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking section 40(a)(ia) of the Act by ignoring the factual realities where only one contract was performed by assessee and profits were estimated by the Ld. AO rejecting/doubting books results. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in making disallowance u/s 40(a)(ia) of the Act amounting to Rs. 97,68,528/- without appreciating that post books rejection only option available is to estimate the profits as per comparable/otherwise and not make individual disallowances. 3. That on the facts and in the circumstances of the case and in law, the ld. CIT (A) erred in making disallowance u/s 40(a)(ia) of the Act amounting to Rs. 97,68,528/- without appreciating that section 40(a)(ia) being " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible course of action open was to apply estimated net profit rate. The Ld. AR also submitted that the provisions of section 40(a)(ia) could not be applied in case of direct costs like sub-contract charges etc. as in the present case. In the alternative, the Ld. AR submitted that Finance Act, 2012 has amended Section 40(a)(ia) to the effect that in case the payee has offered the disputed amount in its return of income, no disallowance shall be made and, therefore, the AO may be directed to verify the status of the payment in the hands of the payee and then make a disallowance, if so required by law. On the issue of estimation of profits, the Ld. AR submitted that the net profit rate of 8% had been applied without giving any reasonable basi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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