GOVINDAM BRJ INFRA PROJECTS PRIVATE LIMITED,JAIPUR vs. ACIT/DCIT CIR-6,JPR, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR

Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh xxu xks;y] ys[kk lnL;] ds le{k
BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 1114 & 1115/JPR/2025
fu/kZkj.k o"kZ@Assessment Years : 2017-18 & 2018-19

Govindam
BRJ
Projects
Private
Limited
Plot No. 718, Flat No. 201, Anupam
Apartment,
Gopalpura
Bypass,
Mahaveer Nagar, jaipur.
cuke
Vs.
The ACIT/DCIT,
Circle-6,
Jaipur.
LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAECG9877G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Deepak Somani, C.A.
jktLo dh vksjls@Revenue by : Shri Gaurav Awasthi, JCIT lquokbZ dh rkjh[k@Date of Hearing

: 11/09/2025

mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 15/10/2025

vkns'k@ORDER

PER: DR. S. SEETHALAKSHMI, J.M.

These are two appeals filed by the assessee against two separate orders of ld.
CIT (A), National Faceless Appeal Centre (NFAC) Delhi dated 24.03.2025 passed under section 250 of the I.T. Act, 1961, for the assessment years 2017-18 and 18-
19. 2. The assessee has raised the following grounds of appeal :-
Govindam Brj Projects Pvt. Ltd., Jaipur.

ITA NO. 1114/JPR/2025 AY 2017-18 :
“1. On the facts and in the circumstances of the case and in law, the learned AO and CIT (A) erred in making ad-hoc disallowance of 10% of labour expenses i.e. Rs.
9,71,272/- without pointing out specific defects or conducting proper verification.
The disallowance is arbitrary and not based on any material evidence establishing that the expenses were not genuine or inflated.

ITA NO. 1115/JPR/2025 AY 2018-19 :

“1. The ld. CIT (A) erred in law and on facts in upholding the action of the ld. AO in rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961, when the books of accounts were regularly maintained and audited under section 44AB.
The AO failed to point out any specific defects in the books of accounts that would warrant rejection u/s 145(3). The rejection was mechanical and arbitrary without proper application of mind.

“AFFIDAVIT
Govindam Brj Projects Pvt. Ltd., Jaipur.

I, Shankar Lal Sharma, aged 54 years, son of Shri Bhagwani Ram, Director of M/s.
Govindam BRJ Infra Projects Private Limited (PAN: AAECG9877G), having its registered office at Plot No. 718, Flat No. 201, Anupam Apartment, Gopalpura Bypass,
Mahaveer Nagar, Jaipur-302018, do hereby solemnly affirm on oath as under :-

(Shankar Lal Sharma)

VERIFICATION

I, Shankar Lal Sharma, director of M/s. Govindam BRAJ Infra Projects
Private Limited do hereby verify that the contents of the above affidavit are true and correct to the best of my knowledge and belief. 5
ITA No. 1114 & 1115/JPR/2025
Govindam Brj Projects Pvt. Ltd., Jaipur.

Verified today on 4th day of August, 2025

Deponent

(Shankar Lal Sharma)

Director

Govindam BRAJ Infra Projects Private Limited”

The affidavit filed by the assessee for condonation of delay for the AY 2018-19 is the same as in AY 2017-18, except the quantum of addition and date of assessment order passed by the AO. Therefore, for the sake of repetition, the same are not being reproduced.

and served on the assessee. Subsequent notices were issued thereafter. In response, the assessee filed details with respect to its claim in the ITR. During the assessment proceedings, the AO noticed that the assessee had made cash payment of Rs. 97,12,726/- towards labour/wages charges. The AO was of the view that no proper record of labor charges payment has been kept, only wage sheets or handmade vouchers of cash expenses were produced. The AO was not satisfied with the explanations offered by the assessee in respect of cash payment, therefore, he disallowed 10% of the cash payment amounting to Rs. 9,71,272/- and added it to the total income of the assessee. On perusal of Profit & Loss account, the AO observed that the assessee had claimed interest expenses on late payment of TDS.
In reply to the notice under section 142(1), the assessee stated that it had forgotten to disallow the interest on late payment of TDS and accordingly, the AO disallowed Rs. 32,986/- and added it to the total income of the assessee. During the assessment proceedings, the assessee was also asked to produce the confirmation of the sundry creditors. In reply the assessee furnished details of sundry creditors wherein the genuineness of transactions of Rs. 18,24,000/- could not prove and hence the AO added back this amount to the total income of the assessee. The AO completed the assessment under section 143(3) of the IT Act,
1961 vide his order dated 28.12.2019 at a total income of Rs. 48,48,930/- by making the additions mentioned above. Aggrieved by the order of assessment, the Govindam Brj Projects Pvt. Ltd., Jaipur.

assessee preferred appeal before the ld. CIT (A), who observed that the assessee has not furnished any documentary evidences for his consideration, therefore, considering the documents available on file, dismissed the appeal of the assessee.

Now, aggrieved by the order of the ld. CIT (A), the assessee has come in appeal before the Tribunal on the grounds reproduced herein above.

made which is bad in law and needs to be deleted in view of various judicial precedents quoted hereinafter.

Judicial Precedents:


Smt. SudhaLoyalka C/o M/s. RRA Taxindia vs. ITO - [2018 (7) TMI
1892](ITAT Delhi):
it was held that,
“Para 6, After hearing both ….. In our considered opinion, the sustaining of impugned addition is not justified due to the following reasons:- i) It has not been mentioned either by A.O or by Ld. CIT(A) as to under which section of the Income Tax Act, these closing credit balances appearing as on 31.03.2012 could be added. Therefore, non-mentioning the precise provision of law makes the impugned addition bad in law. "


Neeraj Paliwal vs. ITO - [2021 (12) TMI 584] (ITAT Jodhpur):
It was held that,

“12. Having considering the rival contentions and carefully perused the material placed on record. From perusal of the record, we observed that the order of the AO as well as that of the CIT(A) that they have not specifically mentioned as to under which section of the Act the additions have been made. In this regard, we draw strength from the decision of the Coordinate Bench of the Delhi ITAT in the case of Smt. SudhaLoyalkavs ITO, ITA
No. 399/De1/2017. 2. Rebuttal of points raised by the Ld. AO for making adhoc disallowance:

-
In the construction industry, it is a common practice to make cash payments to daily- wage labourers, many of whom are illiterate and not in a position to sign elaborate receipts.Handmade vouchers/wage sheets are standard documentary evidence in such circumstances.

-
Affixing of revenue stamps is only a procedural requirement under the Stamp Act for receipts exceeding a prescribed limit. Its absence may be at best a technical lapse but does not make the underlying transaction non-genuine

-
Laborers engaged in construction sites are generally migratory, daily-wage earners and it is practically impossible to obtain detailed identification for each casual laborer.
Govindam Brj Projects Pvt. Ltd., Jaipur.

-
TDS provisions under section 194C are not applicable on payments made directly to casual labourers for wages.

-
Percentage of labour cost to gross receipts varies depending upon the nature of project, labour intensity, and stage of execution. Merely because the AO feels 13% is “high” does not justify disallowance, especially without benchmarking against comparable cases.

Judicial Precedents:

Dharmendra
Prasad
More,
Balasore vs
ITO,Ward-1,
Balasore
(ITA/215/CTK/2022)

Facts of the case present are very similar to this case in which the Assessing Officer had disallowed 5% out of labour charges and transportation charges on the ground that the vouchers were self-made vouchers and complete details of the labourers was not available.
The Ld. CIT(A) has admittedly dismissed the assessee's appeal on account of non- representation.
Hon’ble ITAT allowed the appeal by stating at para 6 of the order,
“6. We have considered the rival submissions. A perusal of the facts in the present case shows that the disallowance as made by the AO at 5% out of labour charges and transportation expenses are clearly on adhoc basis. If the AO had found that there was discrepancy in the vouchers produced, it was very much open to the AO to identity the defect and disallows the same. This has not been done. Also the books of account of the assessee have not been rejected. The assessee is in the business of clearing & forwarding agent in respect of cement. This admittedly involves substantial labour charges and transportation charges. Considering these facts, we are of the view that the adhoc disallowance made by the AO is uncalled for.”
In the case of Pr. CIT vs. R.G.Buildwell Engineers Ltd., (2018) 99 taxmann.com 284 (SC), the Hon'ble Supreme Court has upheld the action in deleting the adhoc disallowance by the Tribunal on the ground that there was omission to reject the books of account of the assessee.
In view of it is evident that the AO’s objections are based on technicalities and presumptions, not on actual detection of bogus expenditure.No specific instance of false claim has been identified.
Hence, the ad-hoc disallowance of 10% is arbitrary, unjustified, and deserves to be deleted.
Ground No. 2
On the facts and in the circumstances of the case and in law, the learned AO and CIT(A) erred in treating sundry creditors as unexplained cash credit u/s 68 merely for want of PAN details and whereby making addition of Rs. 18,24,000/-. Further there is no dispute on the amount of purchase.
Brief Facts:
Govindam Brj Projects Pvt. Ltd., Jaipur.

The Ld. AO required confirmation of sundry creditors and found that certain creditors'
confirmations did not contain PAN details. Accordingly, the Ld. AO made addition of Rs.
18,24,000/- as unexplained cash credit u/s 68 of the Act.
Submission:
It is humbly submitted that names, confirmations, and balances of creditors were furnished. PAN is not a mandatory requirement. Creditors are part of regular audited books.AO might have conducted independent enquiry by issue of summons u/s 131 or notices u/s 133(6) to these creditors. Law is clear that AO must attempt verification.Merely doubting due to absence of PAN does not establish non-genuineness.
Further it is settled law that when purchase is not in dispute, the addition of sundry creditors cannot be made u/s 68. Judicial Precedents:

CIT v. Pancham Dass Jain, Allahabad High Court, (2006) 205 CTR (All) 444 / 156
Taxman 507 (All), judgment dated 21 Aug 2006
In this case Hon’ble Allahabad High Court (2006)upheld the decision of ITAT. Relevant para 4
of the order is reproduced hereunder:
“4. The submission is misconceived. The Tribunal has recorded a categorical finding of fact based on appreciation of materials and evidence on record that the AO had accepted the purchases, sales as also the trading result disclosed by the respondent-assessee. It had recorded a finding that the aforesaid two amounts represented the purchases made by the assessee on credit and, therefore, the provisions of Section 68 of the Act could not be attracted in the present case. We fully agree with the view taken by the Tribunal on this issue, inasmuch as, on the basis of the findings recorded by it that these two amounts represented purchases made by the respondent-assessee on credit and the purchases and sales having been accepted by the Department, the question of addition of the aforesaid two amounts under Section 68 of the Act did not arise inasmuch as the provisions of Section 68 of the Act would not be attracted on the purchases made on credit.”
Prayer
In light of the above rebuttals and settled law, the Appellant prays that:
1. The disallowance of Rs. 9,71,272/- towards labour/wages be deleted.
2. The addition of Rs. 18,24,000/- u/s 68 be deleted.
3. Interest and Penalty proceedings be quashed as premature.”

Now we adjudicate the grounds taken by the assessee as under :

Ground No. 1 relates to disallowance of Rs. 9,71,272/- @ 10% of labour expenses of Rs. 97,12,726/- on account of cash payment.

TDS on all the cash payment as claimed and huge part of such cash payments remained unverified because of the reasons discussed above. The AO mentioned that the assessee had made approximately 13% of gross receipt of current financial year is made for labor payment and all such payments have been made in cash, thus not been fully verifiable for the reasons discussed above. Further, the payment made in cash was not backed with proper vouchers being handmade voucher, payment vouchers not supported with revenue stamps etc. On the contrary, the assessee submitted that the workers as mentioned in the Labor Wages Sheets were hired on daily basis for construction work and in the Labor Wages Sheets maintained, their signature or thumb impression was obtained when cash payment was made to them, the main reason for making cash payment is that they being illiterate, do not maintain any bank account. The daily wages workers are generally casual in nature who come from nearby villages/towns in city for work and these workers do not work at same place regularly. The assessee further submitted that the Labor Wages Sheets maintained contains the period of work, name of worker, type of worker, wage rate, payment made and signature or thumb impression of the workers. On perusal of the case file, we find that it is an undisputed fact that the appellant has produced all the necessary bills/vouchers, copy of ledger account related to expenses relating to civil construction activities and labour wages sheets before the AO to verify the genuineness of the expenses incurred. We do not find
Govindam Brj Projects Pvt. Ltd., Jaipur.

any mention in the assessment order that the AO has specifically examined the details furnished by the assessee or any specific defect was observed by theAO in any of the content of the labour wages sheets except a general comment about non mentioning of identity details of the labourers and the AO has not pointed out any specific defect in the vouchers/bill. There is also no finding that any expenditure was not found to be genuine or not related to the business. In our opinion, the Scheme of the Act does not authorize the AO to make a disallowance according to his wishes, rather it provide that he should first point out the defects in the accounts of the assessee. In the finding extracted (supra) it nowhere reveals which specific voucher was not in accordance with law. The AO has not brought on record any specific material even though complete details were filed during the course of assessment proceedings. In a just sweeping statement, the AO observed that it is noted that the payments are seen to have been made in cash to persons whose identity cannot be established and the before, the claim of such payments cannot be accepted in totality. In view of the same, 10% of the claimed expenses being Rs. 9,71,272/- are hereby disallowed as being unverifiable, which is not a correct approach and is not in accordance with law. No evidence was collected to suggest that payments were not genuine. We also take note of the reality that in civil constructions wherever laborers are hired from open market, no proof of identity is provided by such illiterate laborers and even they hesitate to receive
Govindam Brj Projects Pvt. Ltd., Jaipur.

payment of wages through banking channel. It is settled law that addition based upon surmises and conjectures cannot be sustained.

The Hon’ble Supreme Court in the case of CIT (Bom.) vs. Walchand &
Company Pvt. Ltd. in 65 ITR 381 (SC) held that “ in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively for business, the expenditure has to be adjudged from the point of view of the businessman and not of revenue. Thus, we find that Assessing Officer has made the disallowance purely on guess work and without cogent reasoning. Under these circumstances, adhoc disallowance cannot be sustained. Accordingly, we do not find any infirmity or illegality in the order of the ld. Commissioner of Income
Tax (Appeals) in this regard. Accordingly we confirm the same.”
8.1
ITA No. 399/Del/2017 wherein the Coordinate Bench has held as under :-
Govindam Brj Projects Pvt. Ltd., Jaipur.

“ In our considered opinion, the sustaining of impugned addition is not justified due to the following reasons :- i)
It has not been mentioned either by AO or by ld. CIT (A) as to under which section of the Income Tax Act, these closing credit balances appearing as on 31.03.2012 could be added. Therefore, non-mentioning the precise provision of law makes the impugned addition bad in law.

We also draw strength from decision of the Coordinate Bench of ITAT Bangalore in the case of Shree Ramareddy Ramesh vs. ITO in ITA No. 2027/Bang/2016
wherein it has been held as under :-
“ About the third amount of Rs. 30,21,961/-, we find that this is a fact that no section is mentioned by the AO or CIT (A) for making this addition and for this reason alone, the addition is bad in law as per the tribunal order cited by the learned AER of the assessee having been rendered in the case of Smt. Sudha Loyalka vs. ITO (supra) wherein it was held that non mentioning the precise section makes the addition bad in law.”

verified in respect of five creditors. On perusal of record, we notice that the assessee has maintained regular books of account and that it has been engaged in various construction activities, purchase of construction equipments, machineries etc. The ld. AR of the assessee submitted that during the course of assessment proceedings, as per requisition of the assessing officer, the names, confirmations and balances of sundry creditors were furnished. He also submitted that PAN is not a mandatory requirement. Creditors are part of regular audited books. Merely doubting due to absence of PAN does not establish non-genuineness. Further, it is settled law that when purchase is not in dispute, the addition of sundry creditors cannot be made under section 68. If the AO is not satisfied with the details furnished by the assessee, then in order to verify the genuineness of the transaction, identity and creditworthiness of the creditors, the AO should have issued summons under section 131 or notices under section 133(6) of the IT Act, 1961 to these creditors. Law is clear that AO must attempt verification. In this case, the AO has not conducted any independent verification by way of issuing summons or notices to the creditors to prove the genuineness and creditworthiness. Once the assessee has submitted the names, confirmations and balances of sundry creditors, then the primary onus on the assessee has been discharged. We further note that in the case in hand, the AO has made the addition only on the basis of suspicion and not on the basis of any evidence or other material to show that these sundry creditors are Govindam Brj Projects Pvt. Ltd., Jaipur.

not genuine or having no source of investment. In the case in hand, the AO has not brought any material on record to show that these sundry creditors are bogus or they are not worthy of giving credit to the assessee. The AO has only expressed his doubt about the genuineness but this is only a suspicion without any basis. When the assessee has furnished names, confirmations and balances of the creditors, then in the absence of any contrary material to controvert or disprove the documentary evidence produced by the assessee, the addition made by the AO under section 68
is not justified.

vide acknowledgement No. 369690841311018 declaring total income of Rs.
70,33,180/-. Communication was sent to the assessee on 10.04.2019 by CPC stating that the above ITR filed is defective and a reminder was sent by CPC on 23.05.2019. In response, the assessee filed ITRs on 04.06.2019 (marked defective),
09.07.2019 & 16.09.2019. The ITR dated 16.09.2019 was processed by CPC under section 143(1). The case was selected for scrutiny under CASS to verify the issue of “contract receipts or fees”. Notices under section 143(2) of the I.T. Act, 1961
was issued on 22.09.2019. In response to the notice, the assessee uploaded the details of contract receipts on 07.10.2019. Subsequently notice under section 142(1) dated 23.12.2019 was issued in response to which the assessee filed partial details and requested four weeks time to upload further details. Reminder letters dated 28.01.2021, 12.02.2021 were issued. In response to letter dated 12.02.2021, the assessee uploaded further details but failed to address all the issues. A letter dated 23.02.3021 was issued providing final opportunity to the assessee to address all the issues mentioned in questionnaire of notice under section 142(1). In response, the assessee has filed only the basic details of materials purchased and not the ledger account of suppliers, vouchers or bills. The assessee has not furnished the details of various contract works, details of purchases and payment made to contractors in the prescribed manner as required vide notice under section 142(1) dated 23.12.2020. The assessee has admitted a turnover of Rs.
Govindam Brj Projects Pvt. Ltd., Jaipur.

17,97,27,307/-. Since the assessee’s books are unreliable and not capable of proving the assessee’s income, the business income of assessee is estimated to be 8% of the turnover i.e. Rs. 1,43,78,184/-. Therefore, the AO completed the assessment under section 143(3) r.w.s. 144B of the IT Act, 1961 at assessed income of Rs. 1,61,38,888/- against declared income of Rs. 70,33,180/- resultantly making an addition of Rs. 91,05,710/-. Being aggrieved with the order of assessment, the assessee preferred an appeal before the ld. CIT (A), who dismissed the appeal of the assessee in the absence of documents, evidences and written submissions in support of its case.
Being not satisfied with the order of the ld. CIT (A), the assessee has come in appeal before the Tribunal on the grounds reproduced herein above.


The undisputed fact is that the assessee is a Private Limited Company which has been consistently following a particular method of accounting. Its accounts are audited both under the Companies Act as well as under Section 44AB of the Income-tax Act for more than 5 years.


Auditor’s remarks in Form 3CD were general in nature (stock register, valuation, TDS reconciliation) and did not indicate unreliability of accounts.The Statutory Auditor has given unmodified opined in the Audit reportfor the same year that Financial Statement of the assessee give a true and fair view in conformity with the accounting principles generally accepted in India (PB 169).


Ld. AO and Ld. CIT(A) failed to point out any specific instance of suppression of turnover or inflation of expenses.Uniforms and tailoring expenses were incurred for supervisory staff working at construction sites. Fuel is used for tractors and other construction equipment.
Mere booking of such business expenses under ‘purchase’ does not make it unreliable.


Assessee has submitted statement of accounts of major suppliers/vendors i.e. assessee’s account in the books of vendors (PB 213-224) to justify the purchases but the Ld. AO has failed to consider the same.
Judicial Precedents:

Vishal Infrastructure Ltd. v. ACIT (2007)104ITD537(Hyd.) - ITAT Hyderabad
It was held that, “5.2 In our considered opinion….the revenue has erred in rejecting its books of account and completing the assessment making huge additions. It also distinguished the case law relied upon by the revenue. We accept the contentions of the assessee especially when the Assessing Officer did not dispute the method of accounting followed by the assessee and compliance of the accounting standards prescribed under the IT Act.”
Govindam Brj Projects Pvt. Ltd., Jaipur.


RadhasoamiSatsang v. CIT [1992] 193 ITR 3211 (SC)
The Hon'ble Supreme Court declared that though the principles of res judicata do not apply to income-tax proceedings each assessment year being a unit by itself, yet in cases, when a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have been allowed that position to be sustained by not challenging the order, it may not be appropriate to allow that position to be changed in a subsequent year.


CIT v. A.R.J. Security Printer and CIT v. Neo Poly Pack (P.) Ltd. [2000] 245 ITR 4922
(Delhi)
The Delhi High Courtheld that even when the doctrine of res judicata does not apply to income-tax proceedings, where an issue has been decided consistently in a particular manner for earlier assessment years, the same view should prevail, even during the subsequent years unless there is a material change in the facts. The law is, therefore, fairly well-settled. For rejecting the view taken for the earlier assessment years, there must be a material change in the fact situation. There is no gainsaying that the previous view will have no application even in cases where the law itself has undergone a change but before an earlier view can be upset or digressed from, one of the two must be demonstrated, namely, a change in the fact situation or a material change in law whether enacted or declared by the Supreme
Court.
Ground No. 2
The Ld. CIT(A) has erred in confirming the estimation of income @ 8% of turnover and consequent addition of ₹91,05,708/-, which is excessive, arbitrary and not based on any comparable cases or industry practice.

Estimation at 8% was arbitrary, with no comparable case cited.

Declared NP margin (~4%) is reasonable considering the business model and government contracts.

Addition of ₹91,05,708/- is excessive and disproportionate.
Ground no. 3
The Ld. CIT(A) has erred in law and on facts in holding that adequate opportunity of hearing was given, whereas the show cause notice dated 19.04.2021 allowed only 7 days during the peak of COVID-19 pandemic, and the adjournment request dated 26.04.2021
was not considered.

SCN dated 19.04.2021 allowed only 7 days to respond during the peak COVID-19 wave.

Adjournment request dated 26.04.2021 (PB 18) was ignored and order passed on 28.04.2021. 
Denial of adequate opportunity vitiates the assessment proceedings.
Govindam Brj Projects Pvt. Ltd., Jaipur.

Prayer
In view of the above submissions and judicial precedents, it is respectfully prayed that:

The books of accounts and returned income declared by the appellantbe accepted and estimation of income @ 8% be deleted.

Consequential interest and penalty proceedings be dropped.

Any other relief as the Hon’ble bench may deem fit.”

Now we adjudicate the grounds taken by the assessee as under :

Ground Nos. 1 to 5 are inter-connected and relate to rejection of books of account under section 145(3) and making addition of Rs. 91,05,708/-
@ 8% of turnover without considering the nature of infrastructure and road construction business.

account unreliable. Accordingly, treating the assessee’s books of account unreliable and not capable of proving the assessee’s business income, the AO invoked the provisions of section 145(3) and rejected the books of accounts of the assessee. Consequently, the AO estimated the business income of the assessee by applying @ 8% of the admitted turnover of Rs. 17,97,27,307/- and thereby making an adhoc addition of Rs. 1,43,78,184/-. On appeal, the ld. CIT (A) has confirmed the addition made by the AO.
14.1 We find that the assessee has filed a chart showing the turnover, net profit before tax and net profit percentage for the preceding years and current year, as under :-
AY.
Turnover
Net Profit before tax
Net Profit %
2014-15
8,27,13,294
25,63,345
3.10%
2015-16
20,66,17,182
61,71,924
2.99%
2016-17
19,09,57,814
62,09,483
3.25%
Average

From the above, we note that the NP rate declared by the assessee for the year under consideration is 4.26% as against the NP rate of 3.04% declared for the immediately preceding assessment year. Thus it is clear that the assessee has Govindam Brj Projects Pvt. Ltd., Jaipur.

declared better result for the year under consideration and, therefore, even if the AO proceeded to reject the books of account, it would not result an automatic addition in the income of the assessee. The proper course of proceedings after rejection of books of account is to estimate the income of the assessee as per the provisions of section 144 of the IT Act and, therefore, the AO has to estimate the income by applying a reasonable and proper basis. It is settled proposition of law that the average past history of GP of assessee is a proper and reasonable basis for estimation of income in case the AO rejected the books of account for a particular assessment year. In the case in hand, the AO after rejection of books of account has not proceeded in accordance with the provisions of the Act but has estimated business income at Rs. 1,43,78,184/- by applying 8% of the estimated turnover of Rs. 17,97,27,307/- which means that the AO has estimated business income on the basis of book results of the assessee itself. In other words, the AO even after rejecting the books of account computed the business income of the assessee by considering the book result and thereby making an adhoc addition of Rs.
91,05,710/- to the declared income of Rs. 70,33,180/- which is not in accordance with the provisions of the Act and, therefore, the action of the AO is not permissible. The ld.CIT (A) has also proceeded in the same manner. Accordingly, in the facts and circumstances of the case when the NP declared by the assessee for the year under consideration is better in comparison to preceding assessment years
Govindam Brj Projects Pvt. Ltd., Jaipur.

even on heavy increase in turnover as compared to immediately preceding year then even after rejection of books of account no trading addition is called for.
Hence in the facts and circumstances of the case, we delete the trading addition sustained by ld. CIT (A). Since we have deleted the trading addition made by the AO, therefore, the issue raised by the assessee against the rejection of books of account has become academic in nature.

Resultantly, both the appeals of the assessee are allowed.
Order pronounced in the open court on 15/10/2025. ¼ xxu xks;y ½

¼MkWa-,l-lhrky{eh½
(GAGAM GOYAL)

(Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 15/10/2025
*Santosh
आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
1. The Appellant- Govindam BRJ Infra Projects Pvt. Ltd., Jaipur.
2. izR;FkhZ@ The Respondent- ACIT/DCIT, Circle-6, Jaipur.

सहायक पंजीकार@Aेेजज. त्महपेजतंत