9911796707
TMI Blog2025 (4) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts of the assessee by the lower authorities. 3. Briefly stated facts of the case are that, the assessee-firm is a civil contractor and filed it's return of income on 28.10.2017 for the impugned assessment year 2017-2018 admitting total income of Rs. 32,03,260/-. The case was selected for complete scrutiny under CASS. Notice u/sec. 143(2) of the Income-tax Act (in short "the Act") dated 09.08.2018 was issued and served on the assessee. Subsequently notices u/sec. 142(1) of the Act dated 14.02.2019 was issued and served on the assessee through ITBA Portal calling the assessee to furnish the financial statements, computation statement and Form 3CD. In response, the assessee has filed the same. During the course of assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d branch only, but, not for the remaining two branches, i.e., Secunderabad and Bidar. The Assessing Officer after verification of sequence of Voucher Nos. in ledger accounts noted that, there is no continuity, but, there is leap in the numbers. Further, the voucher Nos. for purchases of sand as well as Labour charges are one and the same. Further, as regards the purchase of goods/materials, the assessee has recorded only the amounts of month-wise purchases but not the details of parties from which the purchases were made. In absence of the above information, the ledger accounts maintained by the assessee lacks credibility. Therefore, the Assessing Officer estimated the profits @ 6% of the contract receipts and determined profits from busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular books of accounts and got audited from an Accountant and the Auditor has not made out any incorrectness in books of accounts or made any adverse comments in respect of various expenditure debited into the P & L A/c. Therefore, in absence of any observations, merely on the basis of non-production of details of one branch expenditure, the books of accounts cannot be rejected and profit cannot be estimated. Learned Counsel for the Assessee further referring to the assessment order passed by the Assessing Officer for earlier assessment years submitted that, in earlier assessment years, the appellant's case was subjected to scrutiny and the Assessing Officer has accepted the financial results declared by the assessee even though made so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Assessing Officer. He accordingly submitted that the order of the learned CIT(A) should be upheld. 8. We have heard both the parties, perused the material on record and the orders of the authorities below. It is an undisputed fact that the assessee is in the business of execution of Civil Engineering Contracts for defense. The assessee has claimed loss on works contract in respect of Hyderabad Branch. The Assessing Officer rejected the books of accounts on the ground that the assessee failed to substantiate the loss claimed against Hyderabad Branch and also failed to furnish relevant information in respect of various expenditure debited into P & L A/c in respect of Hyderabad Branch and, therefore, estimated 6% profit on total co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n works contract of Hyderabad Branch and the said expenditure has not been fully substantiated with relevant evidences. At the same time, the Assessing Officer also failed to make-out a case for rejection of books of accounts and estimation of profit @ 6%. Assuming for a moment, the Assessing Officer is right in rejection of books of accounts and resorted for estimation of profit @ 6%, in our considered view, the profit estimation cannot be arbitrary or without any basis. Although, the Assessing Officer has estimated 6% profit, but, could not give any reasons as to why 6% profit is justifiable with reasons in the given facts of the present case or with any comparable cases of similar nature of business. On the other hand, the assessee has f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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