1. Vishal Infrastructure Ltd. vs Assistant Commissioner Of … on 29 March, 2006 2007 104 ITD 537 Hyd
2. Kerala High Court in the case of CM. Francis & Co. (P.) Ltd. v. CIT
3. Allahabad High Court in another case of Imran Ahmed v. CIT 1982 Tax LR (NOC) 111 (All.)
MES Contractor be assesses at 7.5% says Jodhpur Tribunal
Assessee was engaged in business of contract work of military engineering services – Assessing Officer having found that assessee disclosed lower gross profit rate 7.20 per cent in relevant year, in comparison to 10.25 per cent in immediately preceding year despite three fold increase in gross receipt and assessee had not maintained salary register, payment register etc., rejected books of account of assessee and estimated income of assessee by applying net profit rate of 12.5 per cent – Whether since explanations of assessee that gross receipts had substantially increased by three times for which assessee had to reduce margin, and that contract works were executed in military and air force areas where working hours were lesser in comparison to normal civil work and that cost of various expenses and material had also been increased, was not rebutted by revenue, gross profit rate applied by Assessing Officer could not be sustained – Held, yes – Whether on facts, it would be fair and reasonable if net profit rate of 7.50 per cent was applied subject to interest to third parties, depreciation, interest to partners and salary to partners – Held, yes-Shri Ram Traders [2013] 37 taxmann.com 427 (Jodhpur – Trib.)
While making estimated addition AO can not make a pure guess Dhakeswari Cotton Mills Ltd [1954] 26 ITR 775 (SC
As regards the second contention, although ITO is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under section 23(3) he is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. CIT [1944] 12 393. In the instant case, the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the assessee to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result was that the assessee had not had a fair hearing. The estimate of the gross rate of profit on sales, both by the ITO and the Tribunal, was based on surmises, suspicions and conjectures. The Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills but did not show that statement to the assessee did not give him a opportunity to show that statement had no relevancy whatsoever to the case of the mill in question. It was not known whether the mills which had disclosed these rates were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to the assessee, but it refused even to look at books and papers which assessee’s representative produced before the Accountant Member in his chamber. The assessment in this case and in the connected appeal, was above the figure of Rs. 55 lakhs and it was just and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience, particularly when it was known to the department that the books of the assessee were in the custody of the Sub-Divisional Officer. Thus both the ITO and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. It was thus a fit case for the exercise of power under Article 136.
Facts that profits were low and that there was no stock register maintained by assessee were not materials upon which finding under section 13 [1922 Act] could be based: Pandit Bros 26 ITR 159 (P&H)
Gross profit rate couldn’t be computed with reference to returns of subsequent years : J&K High Court
Nek Ram Sharma & Co. [2017] 85 taxmann.com 176 (Jammu & Kashmir) 19-08-2017
The appellant firm is a partnership firm which was constituted for the purpose of execution of purchase contract of bulk timber worth over Rs. Three crores from Jammu and Kashmir State Forest Corporation .The appellant had made the sales below the cost price to unidentifiable parties.
CIT A adopted the GP ratio of subsequent years to make the addition in second innings of the proceedings, because record of earlier years was not available.
ITAT Asr: Disallowance for higher consumable stores without rejection of books or declaring expenditure bogus where stock register is not maintained is not sustainable
Shivam Metal Shaper :I.T.A No. 123/(Asr)/2017: 15-09-2017
Cases Followed
P&H High Court in KS Bhatia 269 ITR 577
Chhattisgarh High Court in Roop Chand Tharani 249 CTR 326
ITAT Asr Harpreet Singh Gulati ITA 317/ASR/2013
PMS Diesel ITA 317/ASR/2013
Kashmir Steel Rolling Mills ITA 509/Asr/2016 dtd 04-09-2017
P&H High Court in KS Bhatia 269 ITR 577
“……………..in the absence of a definite finding that the case of assessee comes within the provisions of section 145(1) that it was not possible for Assessing Officer to make additions to the gross profit. It has been further held that mere fact that profits as compared to earlier year were lower does not warrant an addition…………………….”
Chhattisgarh High Court in Roop Chand Tharani 249 CTR 326
“………………without pointing out any specific mistake in the books of account, the Assessing Officer cannot reject the books of account………………..”
Kashmir Steel Rolling Mills ITA 509/Asr/2016 dtd 04-09-2017
“……….the assessee was not able to produce some of the expenditure vouchers…………… a disallowance @ 1/10 of these expense is being made………………….. The Assessing Officer in its assessment order dated 28.12.2006 had not rejected the books of account of the assessee and there is no finding given by the Assessing Officer in its assessment order that the books of account are not reliable or unverifiable…………………. there is no question of making any ad-hoc disallowance towards consumption of bagasse…………………….”