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TMI Blog2025 (1) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee from assessment year 2015-16 to 2021-22, the details of which are given at para 12 above, gives average net profit rate at 5.37%. Similarly, various contractors operating near the place of the assessee i.e. near Nashik and engaged in similar line of business are also showing the profit rates ranging from 4% to 8% and in one case such profit rate has been shown at 10.24%. Provisions of section 44AD of the Act prescribe profit rate of 8% for civil contractors in unaudited cases where the turnover is less than the prescribed limit. Although in the case of the assessee, the turnover is above the prescribed limit as per the provisions of section 44AD and the accounts are audited, still the provisions of section 44AD can be taken as a parameter for estimating the income. The average net profit ratio for the last four years i.e. from assessment year 2015-16 to 2021-22 is 5.37%, we are of the considered opinion that the order of CIT(A) / NFAC directing the AO to estimate the profit at 8% is justified under the facts and circumstances of the case. We, uphold the order of the Ld. CIT(A) / NFAC on this issue and the grounds raised by the Revenue are dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... te Govt. 26,50,000 -- -- 2 Ekdant Buildcon ATDPS9291F Pandit Colony, Nashik RCC Building Construction State Govt. 88,50,000 -- -- 3 Shivam Construction AXFPP1767R Sakri, Dist Dhule Road Work of Nagarpanchayat 41,24,298 -- -- 4 Sairaj REaltech Pvt Ltd AAOCS9722J Untewadi Nashik RCC Building Construction State Govt. 43,47,550 -- -- 5 Nisha Dilip Deore ALHPD9919M Badlapur RCC Building Construction State Govt. 20,00,000 -- -- 6 Kunal Prakash Patil AMWPB6883E Arunkumar, Vaidy Nagar, Dhule RCC Building Construction State Govt. 68,95,355 -- -- 7 Kandu Namdeo Bagul BGPPB3483A Sakri, Dist. Dhule RCC Building Construction State Govt. 6,00,000 -- -- 8 Chatu Babulal Pawar AZLPP9742N Sakri, Dist. Dhule RCC Building Construction State Govt. 5,00,000 -- -- 9 Chandrashekhar Yashwant Sonawane FIFPS7666C Dhamnar, Tal. Sakri, Dist. Dhule RCC Building Construction State Govt. 4,00,000 -- -- 5. To verify the genuineness of the aforesaid sub-contract payments, the Assessing Officer asked the assessee to furnish the copies of contract agreements, copies of R.A. bills / vouchers submitted by the sub-contractor and copy of TDS for financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- on a turnover of Rs. 9,22,49,433/- which gives an absurd result of about 40% profit which is not possible in this line of business. The assessee also gave comparable profit shown by the contractors in similar line of business in the same vicinity, the details of which are as under: Name of the Contractor Turnover Profit % of Net Profit 1) Ramesh Bansi Kute 1,69,19,656 6,86,110 4.06% 2) M.T. Patil Builders and Contractors Pvt. Ltd. 77,34,14,649 3,58,56,116 4.64% 3) Gajanan Construction 13,65,14,956 71,84,956 5.26% 4) Shivaji Ghuge 11,66,08,889 47,49,484 4.07% 7. The gross contract receipts and profit percentages of Shri Shiwaji Ghuge of Nashik for the last four years was also brought to the notice of the Ld. CIT(A)/NFAC which are as under: A.Y. Turnover Taxable Net business Profit % of Net Profit 2016-17 5,02,23,914 23,50,020 4.59% 2015-16 11,66,08,889 47,49,484 4.07% 2014-15 5,37,30,011 22,06,154 4.11% 2013-14 1,59,49,778 6,68,457 5.44% 8. It was accordingly requested to estimate the profit reasonably at 6% of the turnover. It was submitted that in the following cases the profit rate has been estimated at 5%. Name of decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m each other. 3.5 Since, the books of account of the assessee is audited by certified auditor and no letter from auditor, is submitted by the assessee wherein the auditor has accepted that such type of error has been done by him at the time of auditing the books of account, it is presumed that the 3CD report prepared on the basis of books of accounts submitted at the time of audit, is correct. 3.6 The assessee has not furnished all the supporting documents to prove the genuineness of contractual payment. The assessee has also not furnished any reply on the issue of filing TDS return after due date and depositing TDS after filing ITR in violation of sec.40(a)(ia) of the Income Tax Act 1961. 4. The appellant craves leave to add, alter, amend and delete any ground (s) of appeal. 11. The Ld. DR strongly objected to the order of the Ld. CIT(A) / NFAC directing the Assessing Officer to estimate the profit at 8% instead of sustaining the addition of Rs. 3,16,96,450/- made by the Assessing Officer on account of bogus sub-contract expenses. He submitted that when the assessee failed miserably to substantiate with documentary evidence to support the claim of such huge sub-contract exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs. 3,16,96,450/- being the payments to sub-contractors made by the assessee on the ground that the assessee could not substantiate with documentary evidence to his satisfaction regarding the genuineness of such huge payments to the sub-contractors. We find before the Ld. CIT(A) / NFAC, apart from making elaborate submissions the assessee took an alternate ground that making addition of Rs. 3,16,96,450/- to the total income of the assessee declared at Rs. 51,11,891/- on a turnover of Rs. 9,22,49,433/- will give net profit ratio of about 40% which is not possible in such line of business especially when the assessee is doing contract work for government departments. We find based on the arguments advanced by the assessee, the Ld. CIT(A) / NFAC directed the Assessing Officer to estimate the profit at 8% of the gross contract receipts. 16. We do not find any infirmity in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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