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TMI Blog2022 (9) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) has considered the past history of the assessee. During the course of hearing, nothing has been brought on record disputing the past history of the assessee which is on record and has been considered by the CIT(A). We therefore do not find any affirmity in the order of the CIT(A) and the same is hereby confirmed. In the result, the ground of appeal taken by the Revenue is dismissed. Addition u/s 68 - whether no supporting evidence had been submitted by the assessee to establish creditworthiness and genuineness of the trade advances? - HELD THAT:- During the course of hearing, our reference was drawn to increase in trade payable during the year and corresponding increase in consumption of raw material during the year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andigarh have held net profit rates of 10% to 12% to be reasonable justified? 2. Whether on the facts and circumstances of the case the ld. CIT(A) has erred in allowing the appeal of the assessee by deleting the addition of Rs. 6,50,35,836/- made u/s. 68 of the Income Tax Act, 1961, since no supporting evidence had been submitted by the assessee to establish creditworthiness and genuineness of the trade advances. 2. Regarding ground no. 1, briefly the facts of the case are that during the course of assessment proceedings, the AO observed that the assessee has declared net profit rate of 3% on gross receipts of Rs. 56,39,86,236/- and accordingly the assessee was asked to furnish documentary evidence from which the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. 4. During the course of hearing, the ld. D/R relied on the findings of the AO and submitted that in view of the various decisions of the Coordinate Chandigarh Benches and Hon'ble Punjab Haryana High Court, the net profit rate should be computed @ 10% to 12% as against 6% applied by the ld. CIT(A). 5. Per Contra, the ld. A/R relied on the findings of the ld. CIT(A) and it was submitted that the AO has applied exorbitant rate of 10% of net profit which is not possible in the line of business of civil contractor and it was further submitted that it is a settled legal position as held by the Hon'ble Jurisdictional High Court as well as Coordinate Chandigarh Benches that where net profit has to be estimated, the past hist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result, the ground of appeal taken by the Revenue is dismissed. 7. Regarding Ground No. 2, the brief facts of the case are that during the course of assessment proceedings, the AO observed that there is an increase in trade payables from Rs. 57,74,488/- in assessment year 2015-16 to Rs. 7,08,10,324/- in Assessment Year 2016-17 and in spite of repeated opportunities, the assessee did not furnish any documentary evidence. Thereafter after issuing a show cause notice under section 144 of the Act, the AO brought to tax the increase in the amount of trade payables amounting to Rs. 6,50,35,836/- under section 68 of the Act treating the same as unexplained cash credit in absence of any supporting evidence as to the identity, genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 5.3 of his order which read as under:- 5.3. I have gone through the facts of the case and the written submissions. It is observed that the AO on perusal of Balance Sheet noted that there was huge increase in 'Trade Payables' from Rs. 57,74,488/- in the A.Y. 2015-16 to Rs. 7,08,10,324/- in the A.Y. 2016-17. As the appellant failed to justify the genuineness of its claim the AO completed the assessment u/s. 144 of the Act and made an addition on this ground at Rs. 6,50,35,836/- as per the material available on record. It is pertinent to mention that these payables are not cash creditors falling in the purview of section 68, rather these are directly linked with the purchases of the assessee and as per well settled law sundr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of CIT vs. Dulla Ram Labour contractor [2014] 42 Taxmann.com 349, the Hon'ble Punjab Haryana High Court held that: Section 68 of the Income Tax Act, 1961 - cash credits (Rejection of books of account, effect of) - Whether where books of account are rejected in their entirety, Assessing Officer cannot rely upon any entry in those books of account for making an addition to assessee's taxable income under section 68- Held, yes. In view of the facts and circumstances of the case and judicial pronouncements discussed above, I find that the AO was not correct in making an addition of Rs. 6,50,35,836/- u/s. 68 of the Act and therefore, the addition is ordered to be deleted. This ground of appeal is allowed. 11. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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