Shiv Shakti Construction Vs ACIT (ITAT Delhi)
ITAT Delhi held that estimation of profit at 10%, instead of 8% as adopted under presumptive scheme of taxation provided u/s. 44AD, justified as the same is guided by the principles of objectivity, fairness and consideration of justice.
Facts- The assessee a partnership firm is engaged in 100% Government contracts only and is a government approved civil contractor. The assessee is engaged in the execution of irrigation development activities including earth work, canal lining works, river and canal protection works and other work of similar nature. The assessee firm is stated to be also involved in various construction activities of diverse nature. The contracts are executed by the assessee on the basis of contracts awarded based on legal bidding / tendering process of the Government Department. All the receipts of the assessee are from Govt. contracts. These projects are stated to be carried out in remote areas which are not easily accessible. The revenue generated is thus 100% on the basis of approved tenders/invoices generated on the basis of work certified and approved by the government engineers and architects for the work awarded.
Vide the present appeal, the appellant has mainly contested that CIT(A) has erred in estimating the net profit at 10% of the gross receipts in view of the fact of rejection of books of accounts.
Conclusion- Held that the CIT(A), in his wisdom, has estimated profit at 10% after considering host of circumstances such a quality of evidence made available to support ‘other sundry creditors’, large cash expenses incurred, the net profit ratio declared and net profit ratio determined by the Assessing Officer etc. The law has not invented any straight jacket formula to judge such estimations precisely. Such estimations are in the realm of probabilities. There is nothing conclusive about it. The estimations carried out by the CIT(A) cannot be said to be marred by any kind of perversity. The estimates of profits by the CIT(A) are not fanciful or whimsical but appears to be guided by the principles of objectivity, fairness and considerations of justice and maintains some sort of equilibrium. We thus are not inclined to interfere and re-estimate the estimations made by the CIT(A) in the absence of any palpable overreach on this score.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The captioned appeals filed by the Revenue and the assessee respectively for various assessment years were heard together and are being disposed of by this common order.
2. The details of captioned appeals under consideration are tabulated hereunder:
