I TA N o. 40 /B LP R/ 2 01 3 As s ess m e nt Ye r: 20 06 - 0 7 Page 1 of 3 IN INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, SMC , RAIPUR [Coram: Pramod Kumar AM] ITA No.40/BLPR/2013 Assessment Year: 2006-07 Sant Kumar Sharma .Appellant Vinoba Nagar, Bilaspur (C.G.) [PAN: ACUPS 5343 Q] Vs. Asstt. Commissioner of Income Tax 1(1), Bilaspur(C.G.) ...... .Respondent Appearances by: Rieha Khatri, for appellant Shital Verma, for respondent Date of concluding hearing: 22.06.2016 Date of pronouncing order : 21.09.2016 O R D E R 1. By way of this appeal, assessee appellant has challenged correctness of order dated 20.07.2012, passed by learned CIT(A), Bilaspur (C.G.), in matter of assessment under section 144 of Income Tax Act, 1961 for assessment year 2006-07. revised grounds of appeal, as filed before me on 17.6.2016, are as follows: 1. Learned CIT(A) has erred in law and on facts, in estimating NP @ 6% without giving any basis and without considering accepted past history of case. 2. That learned CIT(A) has erred in law and on facts, in sustaining addition of Rs 1,32,101 on account of excise duty recovery from principal SE Railways, which is already included in cost of raw material debited in books of accounts, when once I TA N o. 40 /B LP R/ 2 01 3 As s ess m e nt Ye r: 20 06 - 0 7 Page 2 of 3 books of accounts are rejected AO cannot rely upon same books of accounts to make further additions. 3. That learned CIT(A) has erred in law and on facts in not allowing deduction of depreciation of Rs 1,17,910 deductible in ordinary course of assessment even when profit is estimating by rejecting books of accounts. 2. assessee before me is contractor. During course of scrutiny assessment proceedings, Assessing Officer noted that assessee has shown gross profit of 11.48% and net profit of 3.16% respectively. As assessee did not produce books of accounts for verification, Assessing Officer adopted net profit of 10%. reasoning adopted was this. In preceding years, assessee himself had adopted 8% profit under section 44 AD, and, as turnover has progressed to 1,45,80,276 in current year, overheads must have come down considerably, giving assessee edge of at least 2% in profits. net profit was thus adopted @ 10% and income was computed at Rs 14,58,027. further addition of Rs 1,32,101 for excise duty recovery from railways, on basis of entries in profit and loss account. income of assessee was thus assesse at Rs 15,90,130. Aggrieved, assessee carried matter in appeal before CIT(A). In appeal, learned CIT(A) has restricted addition on basis of 6% net profits. assessee is not satisfied and is in further appeal before me. 3. I have heard rival contentions, perused material on record and duly considered facts of case in light of applicable legal position. 4. I have noted that in present case, assessee had partially complied with requisitions during assessment proceedings inasmuch as all details and break up of expenses etc were furnished before Assessing Officer. Yet, I TA N o. 40 /B LP R/ 2 01 3 As s ess m e nt Ye r: 20 06 - 0 7 Page 3 of 3 Assessing Officer proceeded to estimate profits @ 10% on basis which is simply unsustainable in law. fact that assessee had shown 8% profit under presumptive taxation in immediately preceding year is wholly irrelevant and then Assessing Officer takes this rate even higher by estimating further savings on account of operations of scale at 2%. In appeal, CIT(A) has adopted profit at 6% but then there is no specific material to support this estimation either. Bearing in mind this discussion, as also fact that there was partial and substantial compliance before Assessing Officer, I consider it appropriate to estimate net profit @ 5% which assessee himself has accepted before CIT(A). As profit is being estimated, there is no occasion for further addition of Rs 1,32,101 being excise duty recovery from railway as same is integral part of business operations. That separate addition must stand deleted. As regards claim of depreciation of Rs 1,17,910, Assessing Officer shall examine same on merits and allow depreciation, if found to be admissible, from estimated profit. 5. In result, appeal is allowed in terms indicated above. Pronounced under rule 34(4) of Appellate Tribunal Rules 1963 today on 21st day of September, 2016. Sd/- Pramod Kumar (Accountant Member) Dated: 21 st day of September, 2016. PBN/* Copies to: (1) appellant (2) respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Raipur Bench, Raipur Sant Kumar Sharma v. Asstt. Commissioner of Income-tax – 1(1), Bilaspur