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.)
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.