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TMI Blog2013 (6) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the facts of the case. 2. The order of the Commissioner of Income Tax(Appeals), Hubli, is not based on the grounds of appeal filed before him. 3. The Commissioner of Income Tax(Appeals), Hubli, has not given any finding on the correctness or otherwise of the disallowances made based on detailed verification made by the Assessing Officer. 4. The Commissioner of Income Tax(Appeals), Hubli, erred in rejecting the books results without examining the books of account as there is no mention in the order about production of books of account before the Commissioner of Income Tax(Appeals). 5. The principle of Res judicata does not apply to the Income Tax proceedings as each Assessment Year is separate. Decision based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice proposing to disallow 10% of the labour charges and diesel charges and 20% of the material purchase expenses. 5. In reply to the show cause notice, the assessee furnished bills and invoices for purchase of cement, iron and electrical items to the extent of Rs.51,47,225. From the list so produced, the AO noticed that the materials had been purchased in Shimoga whereas the contract was executed in different parts of Karnataka Maharashtra. Out of the bills produced by the assessee, the AO noticed that iron and steel had been purchased by the assessee from Dhanalaxmi Trader, Dhanashree Steels, Rohini Traders Ganesh Steels. The proprietor of Dhanalaxmi Traders was examined by the AO and in his statement, he admitted that the bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onent of material purchases which was Rs.90,74,539 constituted 48.16% of the contract value and there is no reason to suspect that the assessee would have inflated such expenses. The assessee also pointed out that during the previous year, the assessee carried only work of laying foundation for erecting tower by cell phone operators. It was submitted that the cell phone operators are professional houses and generally in such contracts, there are no high margins, which will force the assessee to resort to inflating the expenses to show less profits. Similarly, with regard to the purchase of diesel and labour charges also, the assessee pointed out that comparison of these charges with contract receipts was reasonable and there was no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1243 1495457 7.94% Addition of Rs.2928928 G.P. works out to 23.4% Appeal filed now being heard 10. The CIT(Appeals) on a consideration of the above submissions, held as follows:- I have carefully considered the submissions made by appellant and it is decided as follows. AO in his assessment order it is repeatedly mentioned that despite that the fact of several opportunities are given to the assessee to produce the details raw materials such as steels, cement, jally, sand and bricks etc. and randomly disallowed item wise as mentioned above. The assessee AR in their written submission has shown the chart of NP for the last four years. Keeping in view of to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of account. It was his submission that no books of accounts were produced by the assessee before the CIT(A). We are of the view that these submissions are only technical. We also find that the major expenses in the profit loss account is only on account of labour charges, diesel purchase and material purchase. In such circumstances, there was a case for estimation of income of the assessee. The CIT(A) has resorted to a reasonable estimate of the assessee s income, which is a net profit of 9% of the contract receipts. In this regard, we also find that if the addition made by the AO is sustained, the gross profit of the assessee would work out to 23.4%, which is quite abnormal, considering the assessee s past history. We are theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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