Case Law Details
Shri Om Prakash Singh Vs ACIT (ITAT Agra)
Conclusion: When the books of accounts was rejected, the income of assessee was to be estimated on some reasonable basis for which comparable case and history of assessee could be taken as a guide. Thus, the N.P rate @ 8% applied by the authorities below was without any basis and material on records, the same was rejected and was considered fair to apply an average rate of earlier two years which was 3.50%.
Held: Assessee was a civil contractor doing civil construction work. Case was selected for scrutiny which got culminated into Assessment order passed under section 144 making trading addition of Rs. 1,42,88,131/-which was reduced to Rs. 1,14,80,575/- by CIT(A). CIT (A), confirmed the action of AO on principals, reduced the N.P rate from 12% to 8% placing reliance in the case of Mahesh Chand, Contractor Vs ITO in ITA No. 359/Agra/2011 that “Once books of accounts were rejected then AO had to estimate the income, but the estimation had to be done in a proper manner and on some basis. It was held that after rejection of accounts, the income of the assessee is to be estimated on some reasonable basis for which comparable case and history of the assessee can be taken as a guide. It was seen that rate applied by the authorities below was without any basis, no case comparable to the case of assessee had been cited, application of N.P rate @ 8% was applied without any material on records, ignoring the past trends of NP rate. However, the past history of assessee on the basis of Returns filed range from 1.88% to 2.04% except in A.Y 2010-11 where assessee agreed for being assessed at 5.25%. Keeping in finding that there was no evidence or reason for application of N.P rate of 8%, it was considered it fair, reasonable and logical to apply an average rate of two years i.e (A.Y 2009-10 N.P rate of 1.88% and A.Y 2010-11 N.P rate of 5.25%) which gave N.P rate of 3.50% as against 2.04% shown by the assessee on turnover. In this case after due consideration of past history average N.P rate was arrived and applied by the Division Bench. However, assessee should not be entitled for any other deduction such as depreciation and interest paid.
FULL TEXT OF THE ITAT JUDGMENT
This appeal, by the assesse, is directed against the order dated 30.06.2016 passed by the learned CIT(A)-I, Agra in the matter of assessment passed under section 144 of the Income Tax Act, 1961 for Assessment Year 2011-12 by the Dy. CIT, Circle-3, Mathura.The assessee has taken following grounds:
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