What did the Tribunal hold?

The Tribunal rejected the assessee's books of accounts due to lack of factual verification. However, it directed the Assessing Officer to re-estimate the net profit rate at 7.5% based on the assessee's concession.

The Assessing Officer and CIT(A) disallowed expenses in the assessee's civil construction business due to the inability to factually verify books and vouchers. The assessee, while challenging the disallowances, restricted their grievance to the re-estimation of the net profit rate.

What were the issues?

The primary issue was the disallowance of expenses due to unverifiable books and vouchers, and the secondary issue was the re-estimation of the net profit rate in the civil construction business.

M/S Vishnu Shankar Ojha, Bhojpur vs ITO | ITAT Patna 2020

Income Tax Appellate Tribunal, PATNA ‘VIRTUAL COURT’AT KOLKATA

Before: Shri S.S. Godara, JM & Dr. A. L. Saini, AM

आदेश /O R D E R Per Bench(Oral): This assessee’s appeal for assessment year 2010-11 arises against the Commissioner of Income-tax (Appeals), Patna’s order dated 27.12.2017 passed in case No.128/CIT(A)-1/2012-13 involving proceedings u/s 143(3) of the Income Tax Act, 1961; (in short ‘the Act’). Heard both the parties. Case file perused. 2. With the able assistance of both the learned representatives, we notice during the course of hearing that the Assessing Officer as well as CIT(A) have proceeded to disallow/add various expenses items in assessee’s civil construction business after observing that his books and vouchers; although maintained, could not be subjected to factual verification. Faced with this situation, Mr. Rastogi’s only plea during the course of hearing is that although this taxpayer has raised former issue of correctness of the impugned disallowance/addition(s), he however restricts its grievance only to the extent of re-estimation of net profit rate in civil construction business. We therefore reject the assessee’s books of accounts due to lack of factual verification of bills and vouchers in view of hon’ble jurisdictional high court’s decision in DCIT vs. M/s Rishi Builders India Pvt. Ltd.; MA No.694 of 2010 dated 23.04.2018 to partly decline learned departmental representative’s arguments supporting both the learned lower authorities’ action under challenge to this effect. We thus direct the Assessing Officer to re-estimate the assessee’s net profit rate @ 7.5% (going by Mr. Rastogi’s concession during the course of hearing) as per law in consequential proceedings. It is made clear that the assessee’s partners remuneration etc. shall also be considered for granting the impugned relief.

This assessee’s appeal is partly allowed in above terms.

Order pronounced in open court on 14/09/2020 at the time of hearing.

M/S VISHNU SHANKAR OJHA,BHOJPUR vs. ITO, WARD-1, ARA

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