9911796707
TMI Blog2024 (12) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds of appeal: "1. Both the lower authorities erred in law and on facts confirm addition of Rs. 40,44,977 by rejecting books of accounts u/s. 145A of the Act, estimating the gross profit at the rate 20.97 percent purely on assumption and presumption without appreciating the nature of business of the appellant and past gross profit and net profit therefore addition of GP/NP may be deleted in the interest of justice." 3. The brief facts of the case are that the assessee is engaged in the business of road maintenance and Govt. contractor. During the assessment proceedings of the assessee, from a detailed examination of the books and records, the Assessing Officer observed several discrepancies. The assessee was asked to provide supporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P&L) account, the total contract income was shown as Rs. 19,62,06,649/-, which led to a discrepancy of Rs. 30,25,558/-. In view of these findings, the Assessing Officer issued a show cause notice to the assessee, asking why their books of accounts should not be rejected under Section 145A of the Income Tax Act, and why their gross profit should not be estimated at 20.97% (as in the previous year, Assessment Year 2016-17). In reply, the assessee submitted the assessee hired local villagers for supervision of machinery such as tractors, trolleys, and JCBs used in road construction and maintenance. The assessee submitted that these workers, who were paid in cash, were not permanent employees but were hired as and when needed. It was submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate from the previous year i.e. assessment year 2016-17 (20.97%) to the total turnover as reported by the assessee. Based on the P&L account, the total contract receipt shown was Rs. 19,62,06,649/-, and applying the 20.97% gross profit rate resulted in a gross profit of Rs. 4,11,44,534/-. However, the gross profit reported by the assessee for the year under review was Rs. 3,70,99,557/-, representing a gross profit rate of 18.91%. The difference of Rs. 40,44,977/- (Rs. 4,11,44,534/- minus Rs. 3,70,99,557/-) was added to the total income of the assessee. 4. In appeal before Ld. CIT(Appeals), the assessee relied on various case laws to support his position. However, Ld. CIT(Appeals) observed that these cases were distinguishable from the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a contract led to the estimation of profits, with the Tribunal relying on material evidence before them. Furthermore, in the case of Arihant Builders Developers & Investors Pvt. Ltd. vs ACIT decided by the ITAT Indore, the AO rejected the books of account due to defects in the maintenance of records, particularly regarding payments for labour charges and cartage. The assessee's failure to maintain proper documentation and vouchers led to the rejection of their book results, with a net profit rate of 12.5% applied to their total receipts. After considering the relevant case laws, Ld. CIT(Appeals) held that the AO had rightly rejected the books of accounts under Section 145A of the Act. Consequently, the addition of Rs. 40,44,977/- made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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