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TMI Blog1973 (8) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... at Udipi. During the year of account he had taken up contracts which included the construction of a hospital at Udipi and construction of roads. The Income-tax Officer dealt with these several contracts under three headings. The first one was with regard to the building of a hospital at Udipi and construction of a garage and certain other items. Items Nos. 2 and 3 related to the construction of roads. The assessee did not maintain any accounts. In regard to the contract of item No. 1, he disclosed a profit of 8 per cent. of the receipts on estimate. The Income-tax Officer was of opinion that the profit disclosed was low. He estimated the profits in respect of the building contract at 10 per cent. of the total receipts. In arriving at the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s court are three in number. They are : "1. Whether, on the facts and in the circumstances of the case, the inclusion of any sum as profit on the estimated cost of materials supplied by P. W. D. to the assessee is right in law? 2. Whether in estimating the assessee's profit at 10% in the case of one work and 12% in the case of another work, and in rejecting the assessee's estimate of 8%, the Tribunal acted arbitrarily on mere conjectures, suspicions and surmises ; and whether such an estimate is correct in law ? 3. Whether the inference drawn by the Tribunal that the income of the sub-contractors should be regarded as the income of the assessee is erroneous in law by reason of misplacement of the burden of proof and whether such inferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all be said that there was any error of law in this behalf. The point sought to be raised in regard to the inclusion of the cost of materials as already mentioned by us is academic. So far as the road works were concerned, the materials involved would be quite small. It would virtually be a contract of labour. It is common knowledge that in such contracts the margin of profits is higher than in the case of buildings and other constructions. No error of law can be discerned in the action of the Tribunal in estimating the profits in respect of these several contracts. The third question that has been raised is in regard to the alleged sub-contracts. The two alleged sub-contractors were examined before the Income-tax Officer. Their evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper construction of the provisions of section 271(1)(c) of the Income-tax Act, 1961, and in the circumstances of the case and the evidence on record, it could be held in law that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income?" The proceeding for imposition of penalty was initiated by the Income-tax Officer in view of his finding that the alleged sub-contracts were nominal and those alleged sub-contractors were only benamidars for the assessee and in view of the other additions that had been made by him in the computation of the income. The Appellate Assistant Commissioner agreed with him, though he reduced the quantum of penalty to be imposed. On a further appeal, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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