BABOO LAL NIMORIA,MATHURA V. INCOME TAX OFFICER-3(1), MATHURA

ITA 261/AGR/2025

AI Insights

The case involves Baboo Lal Nimoria, a civil contractor and proprietor of Ajay Construction, who appealed against the order of the Learned ADDL/JCIT (A)-10, Mumbai, which sustained the additions made by the Assessing Officer (AO) for the Assessment Year 2011-12. The AO had rejected the books of account under section 145(3) of the Income Tax Act, 1961, due to non-compliance in producing bills/vouchers for labor and wages, and estimated the income at 8% of gross receipts. The CIT (A) upheld this decision, leading to the appeal before the ITAT. The ITAT found that the CIT (A) did not adequately consider the assessee's submissions and the directions of the ITAT in a previous round, which led to the decision to estimate the income at 4%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775243 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: ANURAG SINHA
• Keywords: TDS
• Section: 142(1); 145

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH ‘SMC’ : AGRA. BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.261/AGR/2025 (Assessment Year: 2011-12) Baboo Lal Nimoria, vs. Income Tax Officer 3(1), 1, M/s. Ajay Construction, Mathura. Village Lathakuri, Post – Soan, Mathura – 281 003 (Uttar Pradesh). (PAN : ACAPN3734A) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Anurag Sinha, Advocate REVENUE BY : Shri Anil Kumar, Sr. DR Date of Hearing : 21.08.2025 Date of Order : 03.09.2025 O R D E R 1. The assessee has filed appeal against the order of the Learned ADDL/JCIT (A)- 10, Mumbai [“Ld. JCIT(A)”, for short] dated 19.03.2025 for the Assessment Year 2011-12. 2. Brief facts of the case are, assessee filed its return of income declaring total income of Rs.9,82,920/- on 24.09.2011 in the status of individual. The case was manually selected for scrutiny and notices u/s 143(2) and 142(1) were issued and served on the assessee. During assessment proceedings, AO observed that assessee is a Civil Contractor working as Proprietor of Ajay Construction. He observed that assessee has declared net profit of 3.07% of the gross receipts and the gross receipt of Rs.3,15,19,362/- was received from Printed from counselvise.com 2 ITA No.261/AGR/2025 Hindustan Construction Company Ltd. (HCCL, in short). He observed that in the data available in 26AS portal, the HCCL has declared gross receipt of Rs.4,45,30,519/- and deducted TDS of Rs.4,48,064/- and M/s. Deep & Veer Construction gross receipt of Rs.4,04,040/- and deducted TDS of Rs.4,040/-. Since the assessee has declared gross receipts of Rs.3,49,31,066/- which included labour and wages payment of Rs.38,15,744/- made directly by HCCL. He observed that gross receipts as confirmed by HCCL were acceptable, however he observed that assessee has not incorporated the gross receipt from M/s. Deep & Veer Construction. Further he observed that during assessment proceedings, assessee could not produce bills/vouchers pertaining to labour and wages claimed to the extent of Rs.91,54,786. The show-cause notice was issued to the assessee why the books of account should not be rejected. Since no compliance from the assessee, the AO invoked the provisions of section 145 (3) of the Act and accordingly rejected the books of account, proceeded to estimate the income of the assessee @ 8%. Accordingly, he made the addition of Rs.18,58,026/- after giving credit to the income already declared by the assessee. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) in the first round of appeal and ld. CIT (A) has sustained the additions made by the AO. Aggrieved, assessee filed an appeal before the ITAT and coordinate Bench has, after considering the submissions of the assessee, remanded the issue back to the file of ld. CIT (A) to decide the issue afresh in accordance with law. Printed from counselvise.com 3 ITA No.261/AGR/2025 3. In the impugned order passed by the Addl.JCIT-10, Mumbai, he directed the assessee to file previous assessment year and subsequent assessment year assessment orders. Since assessee could not submit any details, he proceeded to complete the appellate proceedings by sustaining the addition @ 8% as per original assessment order. 4. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- “1. BECAUSE, the Ld. CIT(A) erred in law and on facts in upholding the rejection of the appellant's books of accounts under section 145(3) of the come Tax Act, 1961, despite the same having been duly produced during the assessment proceedings. 2. BECAUSE, the Ld. CIT(A) grossly erred in upholding the AO's action in estimating the net profit @ 8% of gross turnover, which is excessive, arbitrary, and without basis, ignoring the appellant's declared net profit rate of 3.07%. 3. BECAUSE, the Ld. CIT(A) failed to consider or apply the settled judicial principle that, upon rejection of books, profit estimation must be based on the assessee's past history and comparable cases. The appellant had relied on several case laws and past assessments which were not duly considered. 4. BECAUSE, the Ld: CIT(A) erred in not appreciating binding precedents laid down by Hon'ble High Courts and Tribunals, which stress the need to estimate net profit based on past accepted results of the assessee and similar industry standards. 5. BECAUSE, the Ld. CIT(A) erred in dismissing the appeal on the basis that certain details (such as scrutiny records of earlier and later years) were not submitted, without granting adequate opportunity of hearing. 6. BECAUSE, the Ld. CIT(A) has merely endorsed the findings of the Assessing Officer without independent application of mind or recording detailed reasons addressing the appellant's arguments and submissions.” Printed from counselvise.com 4 ITA No.261/AGR/2025 5. At the time of hearing, ld. AR of the assessee brought to my notice findings of the coordinate Bench which is placed at page 192 of the paper book wherein coordinate Bench has remitted the issue back to the file of ld. CIT (A) to decide the issue afresh. He brought to my notice pages 4 to 6 of the impugned order wherein ld. CIT (A) has relied on the findings of the erstwhile ld. CIT (A) and rejected the detailed submissions of the assessee by relying on several decisions of various courts which are also reproduced by the ld. CIT (A) at pages 7 to 9 of the impugned order. He submitted that ld. CIT (A) has grossly rejected the submissions of the assessee and overlooked the directions of the ITAT to consider the facts on record available and decide the issue as per law. 6. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 7. Considered the rival submissions and material placed on record. I observe that coordinate Bench has remitted the issue back to the file of ld. CIT (A) to consider the issue under consideration afresh. However, I observe that ld. CIT (A) has asked the assessee to submit the assessment order for AYs 2009-10, 2010-11 and 2012-13 and ld. CIT (A) has rejected the plea of the assessee on the basis that there is no trace of the verification of the issue under consideration that is verification of wages and labour charges. In the absence of the same and non-availability of the history of the assessment in the past, he proceeded to sustain the addition made by the AO. After considering the material facts on record, I observe that the assessee has already filed financial Printed from counselvise.com 5 ITA No.261/AGR/2025 history for AYs 2009-10 to 2012-13 and I observe that there is a huge variation in sales recorded by the assessee as well as net profit declared by the assessee. It shows that the business of the assessee is not consistent and fluctuates year on year basis. After due consideration, I observe that assessee has declared 1.88% in AY 2009-10 and 3.69% in AY 2012-13 since the business of the assessee is fluid and fluctuated year on year, the assessee is in the business of civil contractor and declared major transaction with HCCL and also gross turnover was accepted by the AO. Since the assessee is involved in the civil contractor, the issue raised by the AO is relating to labour and wages. Since this industry is unorganized it is difficult for the assessee to bring on record various payments in an unorganized sector. Considering the peculiarity of the facts in this case, in my considered view, estimating the profit @ 4% will meet the ends of justice. Accordingly, I direct the AO to estimate the income @ 4%. Accordingly, grounds raised by the assessee are partly allowed. 8. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on this 3rd day of September, 2025. sd/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: 03.09.2025 TS Printed from counselvise.com 6 ITA No.261/AGR/2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "