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03-09-2019, Shobha Ram Sharma, Section 144, 145(3), 44, Tribunal Agra

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1 week 3 days ago #10694 by amit
Section - 144, 145(3), 44
Order Date - 03-09-2019
Favouring - Assessee Partly
Court - Tribunal Agra
Appellant - Shobha Ram Sharma
Respondent - ACIT
Justice - LALIET KUMAR JM & DR. M. L. MEENA AM
Citation - 919Taxpundit24
Appeal No. - I.T.A No. 306/Agra/2017
Asstt. Year - 2012-13

Order

PER : Dr. M. L. MEENA, A. M.

These are cross appeals, filed by the assessee as well by the revenue, calling into question correctness of order dated 31.03.2017 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 2012-13 by the ACIT, Circle-3, Mathura.The assessee has taken following groundsin I.T.A No. 306/Agra/2017:

1. Because, in any view, addition confirmed by CIT(A) to the extent of Net Profit of Rs.2,21,78,118/- against Rs.48,05,287/- declared in the business of "M/s Shobha Ram Sharma, Contractor" is grossly arbitrary, highly unjust, wrong, illegal and in any view highly excessive.

2. Because, in any view, the Net Profit estimated by CIT(A) at 8% i.e Rs.2,21,78,118/- of Gross Profit against 1.73% i.e., Rs.48,05,287/- as per Audited Profit & Loss A/c in the "Contractors business" is grossly arbitrary, highly unjust, wrong, illegal and in any view highly excessive .

3. Because, in any view, CIT(A) has grossly erred in dismissing the ground against the Assessment u/s 144 of the I.T Act.

4. Because in any view, and without prejudice to the above grounds, addition confirmed, interest charged and the Assessment order passed are wrong, illegal, without opportunity, bad in law and against the facts and law of the case.

The department in ITA NoI.T.A No. 296/Agra/2017has raised the following grounds of appeal:

“1.The Ld. CIT(A) has erred in law and on facts in restricting net profit rate to 8% of Gross Receipts in place of net profit rate of 12% estimated by the A.O., even though the assessee deliberately did not produce the books of accounts / information required by the AO due to which the AO had no alternative than to estimate assessee’s income by applying net profit rate, and to complete assessment u/s 44 of the I.T. Act, 1961.

2. The Ld. CIT(A) has erred in law' and on facts in deleting addition to the tune of Rs. 1,10,89,0558/- by restricting net profit rate to 8% of Gross Receipts in place of net profit rate of 12% estimated by the A.O. without properly appreciating facts of the case.

3. The appellant craves leave to add. alter, amend one or more grounds of appeals before the appeal is heard and disposed off.”

2. Since the cross appeals relate to the common issue of estimation of Net Profit by the AO and by the learned CIT(A) we take up appeal by the assessee first bearing ITA No. I.T.A No. 306/Agra/2017Vide Grounds No. 1,2 & 3 assessee has challenged the action of the authorities below in making trading addition by application of N.P rate @ 12%, which during the course of first appeal was reduced to 8% by the learned CIT(A) on contract receipts ignoring the fact that such a rate of profit is highly excessive in the line of business in which assessee is engaged.

3. The assessee is a civil contractor doing civil construction work. Return of Income was filed electronically showing income of Rs.43,58,630/-. Case was selected for scrutiny under ‘CASS’, which got culminated into Assessment order dated 2012-13 passed under section 144 of the I.T. Act by applying N.P rate of 12% on gross receipts of Rs. 27,72,26,469/-which worked out to Rs.2,84,61,888/- which was reduced to Rs.1,73,72,830/- by Ld. CIT(A) who estimated N.P by applying rate of 8% on above Gross Receipts and thus allowed relief of Rs.1,10,89,058/-

4. The appellant’s Ld. Counsel Shri Anurag Sinha, Adv. filed a Paper Book running into 120 pages which is on records. The Ld. A.R submitted that where books of accounts are rejected and profit is to be estimated due consideration has to be given to the business o the assessee and comparable cases. He for this proposition invited our attention to the orders passed by this Bench in ITA No 330(Agra)/2016the case of Smt. Archana Dutta Vs ACIT, Mathura (APB 106 -114) wherein vide order dated 14.05.2018 the Bench has applied average N.P rate of 4.16% on gross receipts of 8,43,16,720/-, further attention was drawn toITA No 160(Agra)/2015 &ITA No 160(Agra)/2016the case of M/s. Sri Siddheshwar Engineer India (P) Ltd. Vs ACIT-5, Firozabad (APB 115- 120) wherein the Bench vide order dated 13.03.2018 applied average N.P rate of 2.65% on gross receipts of 11,27,43,678/- and Rs. 53,36,76,866/-respectivelyand latest order dated 22.03.2019 passed by the Bench in ITA No 331(Agra)/2016 the case of Shri Om Prakash Singh Vs ACIT-Circle-3, Mathura (APB 84-105) in which average N.P rate of 3.50% on gross receipts of 14,35,07,199/-was applied. He thus pleaded that appellant Gross receipts being Rs.27,72,26,469/- rate of 2.65% as

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