SHRI LAKHMAN ARJAN KARMUR,JAMNAGAR vs. THE NETILNAL FACELESS APPEAL CENTER, DELHI, DELHI

The assessee has taken the following grounds of appeal:-

“1. Ld. CIT(A) erred in law as well as in fact in estimating net profit by adopting profit rate of 8% on gross receipts of Rs. 1,12,92,313/-.”

The brief facts in relation to this case are that the assessee is a civil contractor and executed works contracts of � 1,12,92,131/- during the year under consideration. The same was also reflected in form number 26AS along with TDS of � 1,27,507/-. However, the assessee did not file its return of income and subsequently assessment was completed under section 144 r.w.s 147 of the Act making addition of the entire gross receipts of � 1,12,92,131/- as reflected in form 26AS.

In appeal before Ld. CIT(Appeals), the assessee submitted that only the profit embedded in the contractual receipts can be subject to tax and it would be capricious to tax entire receipts as income of the assessee. The assessee also filed comparable cases relating to other contractors and submitted that the comparative profit rate of the contractors in the similar line of business is lower than 5% (ranging between 1.3 to 5% of gross receipts). The Ld. CIT(Appeals), in light of the fact that the assessee did not file any evidence in support of the expenses incurred for carrying out the contract work, and had only relied on examples of assessees engaged in similar line of business, on a fair estimate, restricted the profit to 8% of total receipts u/s 44AD of the Act. While passing the order, Ld. CIT(Appeals) made following observations”

Before us, counsel for the assessee reiterated the submissions made before Ld. CIT(Appeals) and submitted that even 8% of gross receipts is excessive in the assessee’s line of business. He submitted several instances in case of contractors engaged in similar line of business and submitted that the net profit in such line of business is less than 5% of the gross receipts. In response, DR submitted that estimation of net profit at 8% by Ld. CIT(Appeals) is very reasonable in the instant set of facts, especially when Page No 4 Shri Lakhman Arjan Karmur vs. CIT(A) Delhi the assessee has not brought forth any evidence in support of expenses incurred.

We have heard the rival contentions and perused the material on record. The assessee has not been able to bring forth any supporting evidences in respect of expenses incurred in earning the contractual income. The assessee has cited examples of assessee’s in similar line of business and submitted that the profit margin in their case was less than 5%. However, since the assessee has been unable to submit any supporting evidences in respect of expenses before us, we are of the considered view that the ld. CIT(A) has been reasonable in estimating profit by apply the rate of 8%. In the result, we uphold the order of ld. CIT(A) in the instant set of facts.

In the result, the appeal of the assessee is dismissed.