BABOO LAL NIMORIA,MATHURA vs. INCOME TAX OFFICER-3(1), MATHURA

The assessee has filed appeal against the order of the Learned ADDL/JCIT (A)- 10, Mumbai [“Ld. JCIT(A)”, for short] dated 19.03.2025 for the Assessment Year 2011-12.

Brief facts of the case are, assessee filed its return of income declaring total income of Rs.9,82,920/- on 24.09.2011 in the status of individual. The case was manually selected for scrutiny and notices u/s 143(2) and 142(1) were issued and served on the assessee. During assessment proceedings, AO observed that assessee is a Civil Contractor working as Proprietor of Ajay Construction. He observed that assessee has declared net profit of 3.07% of the gross receipts and the gross receipt of Rs.3,15,19,362/- was received from Hindustan Construction Company Ltd. (HCCL, in short). He observed that in the data available in 26AS portal, the HCCL has declared gross receipt of Rs.4,45,30,519/- and deducted TDS of Rs.4,48,064/- and M/s. Deep & Veer Construction gross receipt of Rs.4,04,040/- and deducted TDS of Rs.4,040/-. Since the assessee has declared gross receipts of Rs.3,49,31,066/- which included labour and wages payment of Rs.38,15,744/- made directly by HCCL. He observed that gross receipts as confirmed by HCCL were acceptable, however he observed that assessee has not incorporated the gross receipt from M/s. Deep & Veer Construction. Further he observed that during assessment proceedings, assessee could not produce bills/vouchers pertaining to labour and wages claimed to the extent of Rs.91,54,786. The show-cause notice was issued to the assessee why the books of account should not be rejected. Since no compliance from the assessee, the AO invoked the provisions of section 145 (3) of the Act and accordingly rejected the books of account, proceeded to estimate the income of the assessee @ 8%. Accordingly, he made the addition of Rs.18,58,026/- after giving credit to the income already declared by the assessee. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) in the first round of appeal and ld. CIT (A) has sustained the additions made by the AO. Aggrieved, assessee filed an appeal before the ITAT and coordinate Bench has, after considering the submissions of the assessee, remanded the issue back to the file of ld. CIT (A) to decide the issue afresh in accordance with law.

In the impugned order passed by the Addl.JCIT-10, Mumbai, he directed the assessee to file previous assessment year and subsequent assessment year assessment orders. Since assessee could not submit any details, he proceeded to complete the appellate proceedings by sustaining the addition @ 8% as per original assessment order.

Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :-

At the time of hearing, ld. AR of the assessee brought to my notice findings of the coordinate Bench which is placed at page 192 of the paper book wherein coordinate Bench has remitted the issue back to the file of ld. CIT (A) to decide the issue afresh. He brought to my notice pages 4 to 6 of the impugned order wherein ld. CIT (A) has relied on the findings of the erstwhile ld. CIT (A) and rejected the detailed submissions of the assessee by relying on several decisions of various courts which are also reproduced by the ld. CIT (A) at pages 7 to 9 of the impugned order. He submitted that ld. CIT (A) has grossly rejected the submissions of the assessee and overlooked the directions of the ITAT to consider the facts on record available and decide the issue as per law.

On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities.

Considered the rival submissions and material placed on record. I observe that coordinate Bench has remitted the issue back to the file of ld. CIT (A) to consider the issue under consideration afresh. However, I observe that ld. CIT (A) has asked the assessee to submit the assessment order for AYs 2009-10, 2010-11 and 2012-13 and ld. CIT (A) has rejected the plea of the assessee on the basis that there is no trace of the verification of the issue under consideration that is verification of wages and labour charges. In the absence of the same and non-availability of the history of the assessment in the past, he proceeded to sustain the addition made by the AO. After considering the material facts on record, I observe that the assessee has already filed financial history for AYs 2009-10 to 2012-13 and I observe that there is a huge variation in sales recorded by the assessee as well as net profit declared by the assessee. It shows that the business of the assessee is not consistent and fluctuates year on year basis. After due consideration, I observe that assessee has declared 1.88% in AY 2009-10 and 3.69% in AY 2012-13 since the business of the assessee is fluid and fluctuated year on year, the assessee is in the business of civil contractor and declared major transaction with HCCL and also gross turnover was accepted by the AO. Since the assessee is involved in the civil contractor, the issue raised by the AO is relating to labour and wages. Since this industry is unorganized it is difficult for the assessee to bring on record various payments in an unorganized sector. Considering the peculiarity of the facts in this case, in my considered view, estimating the profit @ 4% will meet the ends of justice. Accordingly, I direct the AO to estimate the income @ 4%. Accordingly, grounds raised