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TMI Blog2019 (9) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... e. G.P. & N.P. of the assessee which are more than previous year.'' 2.1 Brief facts of the case are that the assessee is a partnership firm and having income from civil construction works . The return of income declaring income at Rs. 1,30,047,410/- was filed by the assessee on 30-09-2015 for the year under consideration. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notice and seeking reply of the assessee the assessment order u/s 143(3) of the Act on 26-12-2017 was passed by the AO, making the addition of Rs. 10.00 lacs. 2.2 Aggrieved by the order of the AO, the assessee preferred first appeal before the ld. CIT(A) who after considering the materials available on records of both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract work on different places and in remote area also, on that place no banking channel available, due to ?his.assessee paid labour charges to labour in cash. Now we further submit as under:- 2. In this respect we want to say that the business of the assessee mainly consists of civil contractor which received contracts from Govt of Rajasthan Department for various places. In this business, Govt not made payment for their work in time to assessee, even in the month of March they show payment made but actually received that on the last day of the month or in the month of April in next financial year. Ongoing through B/S of the assessee firm the bank balance as on 31/03/2015 of Rs. 2,28,67,792/- Other than this the Govt department also dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is AO made disallowance of Rs. 10,00,000/- for labour expenditure. On going through assessment order we found that A.O not detected any defect in the books of the assessee, even not invoking provision of section 145(3) of the Income Tax Act, for rejecting the books of accounts of the asssessee and made lump sum/ ad hoc addition of Rs. 10,00,000/- from disallowing of labour expenses on estimation without finding any defect in the books of accounts and voucher of the assessee. It is settled law that the A.O. not made any addition on ad-hoc or estimate basis without finding any defects in books and voucher of the assessee.In the assessee case A.O. not found any defect in the books and vouchers of the assessee. In our support we submit foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry creditors to the tune of Rs. 10,22,847/- and on verification by the AO it was found that since the assessee could not produce the parties before him, therefore, in order to protect probable leakage of Revenue, the AO made disallowance of Rs. 10.00 lacs out of labour expenses. We have also considered the written submission filed by the assessee before the ld. CIT(A). In that written submission and the arguments before us, it was the specific stand of the assessee that assessee firm completed its civil construction works at different places in remote areas where no banking channel was available. Therefore, due to that fact, the assessee had paid labour charges to labourers in cash. The assessee had also submitted the comparative chart of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading addition of Rs. 2 lacs and in the process, has estimated the G.P rate of 16.47% on the declared turnover of the assessee and which has been upheld by the ld CIT(A). There is no basis which has been specified by the AO while making the addition of Rs. 2 lacs and we also find that the assessee's own past history has also not being taken into consideration. Once the books of accounts have been rejected due to non-maintenance of stock register, qualitative records, etc and provisions of section 145(3) have been invoked, the authorities cannot resort to make addition on an adhoc basis to prevent leakage of revenue as so stated by the AO. Only course left with the authorities is to estimate the gross profit rate based on best judgement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the ITAT Jaipur Bench in the case of Goodwill Impex Ltd vs DCIT (supra) had categorically held that where the assessee company had declared better trading results as compared to previous year and such result provides a reasonable basis to hold that there should not be any addition in the hands of the assessee company. It is also noted that the AO had not detected any defect in the books of the assessee and AO has not invoked the provisions of section 145(3) of the Act for rejecting the books of account of the assessee but made the lumsum/ adhoc addition on account of labour expenses on estimation basis without finding any defects in the books of account and vouchers of the assessee. Hence, relying upon the decision of ITAT Jaipur in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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