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TMI Blog2023 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... r expenses in the case of the assessee and after such estimation of income rejecting the books of accounts there is no scope for any further addition for any other expenses. Directly on the point of estimation of net profit the Hon ble Madhya Pradesh High Court in the case of CIT Vs. Purshottamlal Tamrakar Uchehra [ 2003 (3) TMI 10 - MADHYA PRADESH HIGH COURT] has held that once the net profit is applied while determining the income of the assessee then section 40A(3) of the Act is not applicable. Reverting to the facts of the present case, when the ld. CIT(A) has rejected the books of accounts u/s 145(3) of the Act and had arrived at net profit at 10% that would cover all expenses and disallowances and therefore, the contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net profit of the assessee at 10% of the total turnover of Rs. 10,66,30,000/- which works out to Rs. 1,06,63,000/- even after the assessee was failed to substantiate its claim about the expenditure of Rs. 5,10,86,839/- out of the total expenses of Rs. 9,52,78,012/-/ (ii) The appellant prays to adduce such further evidence to substantiate his case. (iii) The appellant prays leave to add, alter, clarify, amend and or withdraw any grounds of appeal as and when the occasion demands. 2. The relevant facts are that the assessee is a company engaged in the business of Mining, Quarrying and Civil Construction. The assessee filed its return of income on 01-10-2013 declaring total loss of Rs. 9,72,180/-. The case was selected fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and it was observed by the A.O that the assessee received gross receipts of Rs. 11,65,00,969/- during the F.Y. 2012-13 but failed to disclose the same in the return of income filed for A.Y. 2013-14. Hence there was no ambiguity regarding the year of taxability of these receipts and was rightly brought to tax in the A.Y. 2013-14. Moreover, during the remand proceedings, the A.O had written letter to the third parties for confirmation of facts that whether the amount received by the assessee during the F.Y. 2012- 13 were in the form of advance or receipt. The two parties viz. PCDA (SC) Pune and Garrison Engineer, Ahmednagar replied that the amount was paid to the assessee for work done by the assessee. Hence, the same can be treated as gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Act. The ld. CIT(A) also directed to ensure that the amount which is already taxed in the A.Y. 2013-14 is not subjected to taxation again. In case the return is non-est, the case for A.Y. 2014-15 can be reopened u/s 147 of the Act to determine the correct profits for the A.Y. 2014-15. It is in this backdrop that the revenue has come in appeal before this Tribunal contesting the decision of the ld. CIT(A), firstly in estimating the net profit at 10% of the business receipts, allowing the whole expenses claimed by the assessee which, as per the department remained to be verified. In one of the remand proceedings, the A.O has given the findings that the assessee has not furnished any details about the expenses of Rs. 5,10,86,839/- out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this matter was heard recording the submissions of the ld. D.R and considering the materials/documents on record. 5. As we have already examined in the preceding paragraphs that it is a case of best judgment assessment u/s 144 of the Act and irrespective of several opportunities provided by the A.O to the assessee there was non compliance before the A.O. During the proceedings before the ld. CIT(A) various remand reports from time to time have been called and after going through these remand reports and the submissions made by the assessee the ld. CIT(A) has rejected the books of accounts u/s 145(3) of the Act and has estimated the net profit of the assessee at 10%. It is the contention of the department that while arriving at the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was there any need to go into sec. 40A(3) and r. 6DD(j). We see force in the view taken by the Tribunal that when income of the assessee was computed applying the gross profit rate and that when no deduction was allowed in regard to the purchases of the assessee, there was no need to look into the provisions of sec. 4A(3) and r. 6DD(j). No disallowance could have been made in view of the provisions of sec. 40A(3) r.w. rule 6DD(j) as no deduction was allowed to and claimed by the assessee in respect of the purchases. When gross profit rate is applied, that would take care of everything and there was no need for the AO to make scrutiny of the amount incurred on the purchases by the assessee. 6. Therefore, as it now stands the rule of la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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