RAJA RAM CONTRACTORS vs. CIT LUDHIANA

ITA No. 689 of 2009 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 689 of 2009 Date of decision:07.04.2010 Raja Ram Contractors through Shri Jaspal Kumar s/o Shri Raja Ram, Partner, # 50, Aggar Nagar, Ludhiana, presently residing at Krishna Basti, Patiala Gate, Sangrur, Punjab. ...... Appellant Versus C.I.T., Aayakar Bhawan, Rishi Nagar, Ludhiana, Punjab. .... Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. S.K. Mukhi, Advocate for the appellant. ---- 1. To be referred to the reporters or not ? 2. Whether the judgment should be reported in the digest ? ---- M.M. KUMAR, J. Assessee has moved this Court with a prayer for quashing the order dated 23.03.2009 passed by the Income Tax Appellate Tribunal Bench-B, Chandigarh (for brevity the 'Tribunal') in ITA No. 1067/CHANDI/2008 in respect of the assessment year 2005-06 (Annexure A-1). The Tribunal in the impugned order has upheld the opinion expressed by the CIT (Appeals) for rejection of books of account and the application of rate of 10% of the gross receipts in order to compute income subject to allowances. The Tribunal has rejected the arguments of the assessee/appellant that the rate of 10% adopted

ITA No. 689 of 2009 -2- by the CIT (Appeals) was on higher side. It is pertinent to mention that the Assessing Officer has applied a rate of 12% which has been scaled down by the CIT (Appeals) to 10% with a further allowance for expenditure on account of salary paid to partners and depreciation. The basis of aforesaid conclusion is that in estimation of income by applying a flat rate inherently involves an element of subjectivity. Hence the rate of 10% is considered to be reasonable in the facts and circumstances. We have heard learned counsel for the assessee at considerable length and find that view taken by the Tribunal does not warrant interference because for rate of 10% with further allowance of salary to partners and depreciation is absolutely reasonable in the facts and circumstances of the case especially when the books of account belonging to the assessee-appellant have been rejected. It has not been shown that the rate of 10% has been applied arbitrarily and could not have applied. There is no question of law much less a substantive question of law warranting admission of appeal under Section 260A of the Income Tax Act, 1961. The appeal is wholly without merit and the same is accordingly dismissed.

(M.M. KUMAR) JUDGE April 07, 2010 (JITENDRA CHAUHAN) naresh.k. JUDGE