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TMI Blog2022 (2) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... Mech Engineers [ 2021 (3) TMI 738 - TELANGANA HIGH COURT] holds that contractual and sub-contractual receipts have to be assessed @9% and 6%; respectively. Faced with this situation, we restore the Revenue's instant grievance back to the Assessing Officer with a clear cut direction that it shall be incumbent upon the assessee to prove all kinds of receipts forming part of turnover as well as the corresponding expenditures' claims failing which the same would stand assessed in light of the hon'ble jurisdictional high court's foregoing decision. Revenue's appeal is treated as allowed for statistical purposes. - I.T.A. No. 139/HYD/2018 - - - Dated:- 27-1-2022 - S.S. Godara, Member (J) And Laxmi Prasad Sahu, Member ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer. Relevant documentary evidence was also filed. The submissions of the appellant are extracted hereunder: 2.1. REJECTION OF BOOKS OF ACCOUNT: 2.1.1. The law with regard to invocation of S. 145(3) is well settled. As per the guidelines issued in this regard by various judicial authorities, rejection of books of account should not be resorted to in a casual or mechanical fashion....................................................... In view of the above factual and legal submissions, the rejection of books of account and consequent assessment on estimate basis is legally unsustainable and hence the Appellant humbly prays the CIT(A) to hold that the books of account maintained were correct and complete and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with rejection unilaterally in violation of basic principles of natural justice. It is obligatory on the part of the AO to communicate such defects to the appellant and to call for an explanation on the alleged infirmities thereby affording a proper and reasonable opportunity to rebut the allegations of the AO. Careful and objective consideration of such rebuttals, the AO is expected to resort to rejection of accounts. In the case of the appellant none of these principles was followed by the assessing officer. The books of account of the appellant were audited under Companies Act and Income Tax Act and both the reports were clear i.e., The assessments for two immediate preceding years i.e., A.Y. 2012-13 and 2013-14 were completed u/s. 143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks were not based on tangible and clear evidences or material. Thus, the very rejection of accounts was arbitrary and against principles of natural justice. Therefore, the AO is directed to accept the book results and accordingly to accept the income returned. Thus, the ground 3 of original grounds and additional ground 1 of the appeal are allowed. XI). Ground Nos. 4, 5 and 6 of original Grounds and additional ground no. 2 are against the adoption of uniform rate of 15% while estimating the income. Though the grounds against rejection of accounts are allowed, the grounds raised on merits of the assessment are also considered for proper adjudication of the issue involved. The appellant filed detailed submissions in this regard vide par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same should be stated in the order. Thus, there is force in the argument of the appellant that where the profit is sought to be determined by adopting a net profit rate, the AO is bound to take the rate of profit disclosed in the appellant's own case for earlier years and rate of profit normally accepted in respect of others in the same industry. The net profit from the civil contracts declared by the Appellant in its accounts for A.Y. 2014-15 was about 6.05% as against average rate of about 6.02% for the two immediately preceding years and accordingly it was almost on par with the appellant's performance in the preceding years. In so far as similar or identical cases are concerned, the jurisdictional Bench of Hon'ble ITAT has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee not only to cast its onus of proving the corresponding contracts as well as sub-contracts executed in the relevant previous year but also the cogent supportive evidence of the expenditure items wholly and exclusively incurred for deriving the business income/turnover. The fact also remains that the Assessing Officer had nowhere commented upon the assessee's voluminous evidence even if it is accepted that it has placed on record before us some additional details as well. We make it clear that hon'ble jurisdictional high court's recent decision in ITTA No. 40 41/2020 PCIT Vs. Mech Engineers and Vice versa holds that contractual and sub-contractual receipts have to be assessed @9% and 6%; respectively. 4.2. Faced wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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