Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR – VIRTUAL COURT
Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Nagpur [‘the CIT(A)’] dated 18.03.2016 for the assessment year 2010-11.
Briefly, the facts of the case are that the appellant is Contractor engaged in the business of execution of Government Contract. The Return of Income for the assessment year 2010-11 was filed on 05.02.2011 declaring total income of Rs.49,74,990/-.
Against the said return of income, the assessment was completed by the Asstt. Commissioner of Income Tax, Circle-8, Nagpur (‘the Assessing Officer’) vide order dated 27.02.2013 passed u/s 144 of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.1,17,50,597/-. While doing so, the Assessing Officer estimated the profits from the business of execution of contract at the rate of 6% on the ground that the appellant could not discharge the onus of proving the genuineness of payment made to the sub-contractors.
Being aggrieved by the above action of the Assessing Officer, an appeal was filed before the ld. CIT(A) challenging the rejection of books of accounts and application of GP rate at 6% is excessive and ordinary. The ld. CIT(A) confirmed the finding of the Assessing Officer by rejecting the contention of the appellant that the Assessing Officer had not given reasonable adequate opportunity of proving the genuineness of the sub-contractors payments and, accordingly, upheld the action of the Assessing Officer estimating the income of the assessee at the rate of 6%.
Being aggrieved, the appellant is in appeal before us in the present appeal.
Before us, it is contested that the Assessing Officer ought not to have rejected the books of accounts, which are duly audited and accepted by the Department in the earlier years. It is further submitted that the sub-contractors to whom the payments were made by the appellant had filed their return of income duly reflecting the receipts of the appellant company and all the payments were made by the account payee cheques after deducting tax at source at the applicable rate. Without prejudice to the above, it is contested that the estimating of the net profit at rate of 6% of gross receipts is arbitrary and not based on any comparable instances. It is further contended that having estimated the income it is not open to the Assessing Officer to make separate addition in respect of bank interest etc which formed part of the trading gross receipts of business.
On the other hand, ld. Sr. DR submits that since the assessee had failed to prove the genuineness of the sub-contractors payment by producing the sub-contractors for confirmations, the Assessing Officer was justified in rejecting the books of accounts estimating the profit at the rate of 6% and, therefore, no interference is called for.