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Facts
The assessee company, engaged in civil contracting, filed its return declaring an income of Rs. 22,51,140. The Assessing Officer (AO) initiated scrutiny and, noting the absence of books of accounts and vouchers despite opportunities, passed a best judgment assessment order under Section 144 of the Income Tax Act. The AO estimated the net profit at 8% of the gross receipts, citing a comparable case.
Held
The assessee appealed to the CIT(A), who agreed with the AO and dismissed the appeal. The assessee then appealed to the ITAT. The ITAT noted that the assessee could not appear before the AO and the CIT(A) had not adequately dealt with the submissions. Therefore, the ITAT set aside the CIT(A)'s order and restored the matter to the AO for a fresh decision.
Key Issues
Whether the CIT(A) erred in confirming the assessment order passed by the AO under Section 144 of the Income Tax Act, 1961, without adequately adjudicating the grounds of appeal and considering the assessee's submissions.
Sections Cited
144, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI BRAJESH KUMAR SINGH,
This appeal by the Assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 14.03.2024 [hereinafter referred to as the ‘Ld. CIT(A)’] arising out of the assessment order dated 28.12.2016 passed under Section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’)
ITA No.- 2313/Del/2024 JPR Balaji Infra Pvt. Ltd. pertaining to Assessment Year (A.Y.) 2014-15 by the Income Tax Officer, Ward, 13(4), New Delhi (hereinafter referred to as the ‘AO’).
Brief facts of the case: The return of income was filed in this case on 30.09.2014 declaring an income of Rs. 22,51,140/-. During the year, the assessee company was engaged in the business of civil contractors and declared revenue of Rs.15,93,44,864/- from contracts. Apart from the above the assessee company had also declared other income of Rs. 4,74,598/-. The case was taken up for scrutiny and the AO noted that despite a number of opportunities given, the ARs of the assessee Company did not produce the books of accounts along with original bills and vouchers for verification. Accordingly, the AO passed the assessment order u/s 144 of the Act after making best judgment assessment and determining the income of business on estimate basis.
2.1 The noted that for estimating of the net profit no other entity could be better than the proprietorship of the director of the company for comparison. The AO found that the proprietorship of the director, Shree Balalji Associates, had been given work order of Rs.73,35,920/-(as per copy of work order filed) for which a payment of Rs.75,10,250/- was made by the assessee company and the proprietor Sh. Jitender Basoya had declared net income of Rs.6,00,820/- from the above work order @ 8% of the gross receipts as per the provisions of section 44AD of the IT Act.
ITA No.- 2313/Del/2024 JPR Balaji Infra Pvt. Ltd. 2.2. The AO further noted that keeping in view the similar nature of business and similar conditions and submission of the AR of the assessee that none of the resources of the assessee was used by Shree Balaji Associates and the rates of contract given to Shree Balaji Associates were less than the rates of other contracts, the N.P. ratio of the assessee should be higher than the N.P. ratio of Shree Balaji Associate, but in the interest of natural justice, the net income of the assessee from contract receipts was computed by him @ 8% of gross receipts as per provisions of section 44AD of the IT Act. The AO relying upon the order of Ram Prasad Bhatta vs. ACIT, the Hon'ble ITAT Cuttack Bench in (CTK of 2014) which held that where a civil contractor did not produce salary and wage register and other evidences in support of expenses incurred, the Assessing Officer was justified in estimating profit at 8% of gross contract receipts u/s 44AD. Accordingly, the AO estimated the net profit @ 8% of the gross receipts of Rs.15,93,44,864/- as per the provision of the section 44AD of the Act, and accordingly determined business income at Rs. 1,27,47,589/-.
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A).
3.1 The Ld. CIT(A) agreed with the finding of the AO and dismissed the appeal of the assessee.
ITA No.- 2313/Del/2024 JPR Balaji Infra Pvt. Ltd. 4. Aggrieved with the said order, the assessee is in appeal before us.
At the outset, the Ld. AR submitted that the assessee had originally filed 27 grounds of appeal but now submits that the assessee could not appear before the AO and the Ld. CIT(A) also dismissed its appeal without dealing with the submissions made before him. The Ld. AR further submitted that the grounds of appeal have now been revised by the assessee and the same are reproduced as under:
“ May it please your honour: There are 27 grounds in this appeal which are difficult to discuss particularly when only two issues are involved. The honorable bench was also of the view the grounds should be concise. The appellant prays to allow it to withdraw all the present 27 grounds and be replaced it with the three grounds as under: Ground No 01: The Ld. CIT(A) NFAC erred in passing a general appellate order against various grounds of appeal raised in as much as it is not clear how each ground is adjudicated. Ground No 02: Keeping in view the facts, circumstances and applicable law the Id CIT(A) NFAC erred in confirming the assessment order passed by the Id Assessing Officer u/s 144 of the Income Tax Act 1961. Ground No 03: The appellant craves leave to add, delete, alter, amend and modify any ground of appeal at the time of/ before the hearing of the appeal and all the grounds are without prejudice to each other.”
The Ld. Sr. DR relied upon the order of the authorities below.
We have heard both the parties and perused the material available on record. The assessee could not appear before the AO during the assessment proceedings.
ITA No.- 2313/Del/2024 JPR Balaji Infra Pvt. Ltd. Further, the Ld. CIT(A) has not dealt adequately with the submissions of the assessee made during the appellate proceedings before him. Hence, in the given facts of the case, we, set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to decide it afresh after affording reasonable opportunity of being heard and in accordance with law. Further, the assessee is also at liberty to file any further evidence / details before the AO in support of its claim.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 21.01.2026