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TMI Blog2021 (8) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... ord any past history of net profit declared by the assessee as well as any comparable rate to contradict the net profit rate applied by the Assessing Officer at 1%. Accordingly, in the facts and circumstances of the case, when the assessee has not produced any material or facts to dispute the reasonableness of the net profit applied by the Assessing Officer @ 1% after rejection of books of accounts then this ground of the assessee's appeal is de void of any merit. appeal of the assessee is partly allowed. - ITA No. 117/ALLD/2017 - - - Dated:- 30-7-2021 - Vijay Pal Rao , Member ( J ) For the Appellant : Praveen Godbole , CA For the Respondents : A. K. Singh , Sr. DR ORDER Per Vijay Pal Rao , Judicial Member This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds raised by the assessee against the additions made by the Assessing Officer. 3. Ground No. 2 is regarding the addition made by the Assessing Officer by adopting net profit rate of 4.5% before depreciation on the gross receipts of transportation business of M/s. Singh Transport. The learned AR of the assessee has submitted that the Assessing Officer has given the details of total receipts and net profit before depreciation however, the amount of depreciation considered by the Assessing Officer at ₹ 4,23,316/- is incorrect figure. He has referred to the profit loss account of Singh Transport agency and submitted that the assessee has claimed the depreciation of ₹ 1,30,744/-. Thus the computation of the net profit by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using its own transport. 6. As regards the transport business, the Assessing Officer noted that the assessee has received the total payment of ₹ 2,82,21,064/- on which net profit before depreciation is declared at ₹ 11,18,906/- which comes to 3.96%. Though the Assessing Officer has considered the net profit before depreciation, however, since the amount of depreciation is incorrect therefore, instead of considering the net profit before depreciation, the net profit declared by the assessee would be a proper figure to compare with the reasonable net profit for the purpose of estimation of the income after rejection of books of accounts. It is settled proposition of law that after rejection of books of accounts the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of books of accounts would not ipso facto results an addition to the total income of the assessee if the gross profit/net profit declared by the assessee is either better then or in the line of the past history or any other reasonable basis being the comparable rate of net profit/gross profit. In the case in the hand, the average of the net profit declared by the assessee for the preceding three years comes to 1.34% which can be considered as a reasonable and proper guidance for estimation of the income for the year under consideration. Hence the addition made by the Assessing Officer by applying net profit rate of 4.5% is highly arbitrary and not justified. Accordingly, the estimation of the income ought to have been made by applying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has resulted in net profit. 10. Thus the learned AR has submitted that once the assessee has explained the reasons for low profit in the said activity of supply of sand and bricks then the addition made by the Assessing Officer by applying net profit of 1% on sale of bricks is not justified. 11. On the other hand, learned DR has submitted that the Assessing Officer has applied N.P. of only 1% of the sale of bricks which is reasonable and proper as nobody would do the business of trading in the bricks at loss. He has further submitted that the assessee has not brought any material on record to show that the rate applied by the Assessing Officer is unreasonable. He has relied upon the orders of the authorities below. 12. I have cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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