A.C.I.T CIR - 1,ASANSOL, ASANSOL vs. SUBHASISH ACHARYYA, BURDWAN

The revenue has raised the following ground:- “ That the ld. CIT(A), Asansol has erred in law and on facts by allowing the relief of Rs.31,27,000/-, disallowed by the AO on account of violation of section 40A(3). “

In the C.O ( No.75/K/2013 arising out of A.Y 2008-09), the assessee has raised the following ground:- 1) For that on the facts of the case the ld. CIT(A) was not justified in estimating the net Profit from Contract business @ 8% of Gross Receipts and the same may please be reduced.

The brief facts of the issue are that the assessee is engaged in the business of civil construction. During the course of assessment proceedings the ld.AR of the assessee was asked by the ld. AO to produce the relevant books of account, deposit reconciliation statement, details of work-in-progress, details of projects and major expenses shown in the audited statement of accounts. On 1-12-2010, the assessee appeared along with his authorized representative and produced the TDS certificate of Rs.40,90,171/-, which was not disclosed as his income in the audited accounts filed. The assessee has also filed an undisclosed saving bank account bearing account no.30991 maintained with Bank of India, Burnpur Branch. The ld. AO observed that the assessee during the course of hearing admitted that he did not maintain any books of account. It was further observed by the ld.AO that revised statement of accounts was submitted by the assessee on 24-11-2010 showing gross contract receipts of Rs. 2,72,85,498/- instead of Rs. 2,30,26,408/-. The assessee also submitted that he could not produce any corroborative evidence in support of the revised statements of account submitted before the ld.AO. The ld. AO found the following discrepancies in the statement of accounts filed by the assessee, which are tabulated as below:-

Aggrieved, the revenue as well as the assessee are in appeal before us by raising the aforesaid ground.

The ld.DR relied on the order of the ld.AO. In respect of cross objection, the ld. AR has filed before us comparative chart containing the net profit disclosed by the assessee from A.Y 2005-06 onwards and fair estimation of the net profit.

We have heard the rival submissions. We find that the ld.AR has filed a comparative statement of gross contract receipts and net profit details from A.Y 2005- 06 onwards, which are reproduced herein below:- “Comparative Statement of Gross Contract Receipts And Net Profit Assessed Assessment Year GrossContract Assessed % Remarks Receipts Net Profit 2005-06 2,564,845.00 210,317.00 8.19 u/s. 143(1) 2006-07 7,334,574.00 306,728.00 4.18 u/s. 143(1) 2007-08 7,634,817.00 432,472.00 5.66 u/s.143(1) 2008-09 26,742,587.00 718,434.00 2.68 Disclosed by Assessee. Assessed at 8% We find that the average of net profit for last three years works out to 6%. We feel the estimation of net profit at 6% of net receipts in the facts and circumstances of the case would meet the ends of justice. The Ld. AO is directed accordingly. The Cross objection of the assessee is partly allowed to that extent.

With regard to the revenue’s appeal, we feel that the ld.CIT(A) had rightly concluded that when net profit is estimated, then there cannot be any separate disallowance/addition u/s. 40A(3) of the Act. We place reliance on the following decisions in support of this proposition:- • CIT Vs. Mohammad Dhurabudeen (2008) 4 DTR (Mad) 218 • CIT Vs. Banwarilal Banshidar (1998) 229 ITR 229(All) • CIT Vs. Smt. Santosh Jain (2008) 296 ITR 324(P&H) 159 Taxman 392(P & H) • CIT Vs. Purushottamlal Tamrakar Uchehra (2003) 184 CTR (MP) 349(2004) 270 ITR 314(MP) • Indwell Construction Vs. CIT (1999) 232 ITR 776(AP)

In the result, the appeal of the revenue is dismissed and cross objection of the assessee is partly allowed as stated above. ORDER PRONOUNCED IN THE OPEN COURT ON 15-4-2016.