Deputy Commissioner of Income-tax, V. S.S. Patil Construction Pvt. Ltd., Jalgaon

ITA 1683/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9150 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Business income; Depreciation; Retraction
• Section: 44AD; 133A; 145; 27

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS. 1613 TO 1615/PUN/2014 / ASSESSMENT YEARS : 2009-10 TO 2011-12 S.S. PATIL CONSTRUCTION PVT. LTD., NIRMAL, VIVEKANAND NAGAR, PACHORA 425 301, DIST. JALGAON PAN : AAGCS7726N . /APPELLANT V/S JCIT, RANGE - 1, JALGAON/ DCIT, CIRCLE-2,JALGAON . /RESPONDENT . / ITA NOS. 1682 TO 1684/PUN/2014 / ASSESSMENT YEARS : 2009-10 TO 2011-12 JCIT, RANGE - 1, JALGAON/ DCIT, CIRCLE-2,JALGAON . /APPELLANT V/S S.S. PATIL CONSTRUCTION PVT. LTD., NIRMAL, VIVEKANAND NAGAR, PACHORA 425 301, DIST. JALGAON PAN : AAGCS7726N . /RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI MUKESH JHA, JCIT / ORDER PER BENCH : THERE ARE 6 APPEALS UNDER CONSIDERATION AGAINST TH E ORDER OF CIT(A)-II, NASHIK DATED 20-06-2014 INVOLVING ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12 RESPECTIVELY. THESE ARE 3 CROSS APPEALS. THE ISSUE IN ALL THESE 3 / DATE OF HEARING :25.07.2017 / DATE OF PRONOUNCEMENT: 28.07.2017 2 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 APPEALS ARE IDENTICAL AND WAS INTERCONNECTED, THERE FORE, THESE ARE CLUBBED TOGETHER AND ARE BEING ADJUDICATED BY THIS COMPOSIT E ORDER. 2. TO START WITH WE SHALL TAKE UP THE CROSS APPEALS FOR A.Y. 2009-10. ITA NO. 1613/PUN/2014 (BY ASSESSEE) AND ITA NO.1682 /PUN/2014 (BY REVENUE) A.Y. 2009-10 : 3. ASSESSEE RAISED FOLLOWING GROUNDS IN THE APPEAL : 1. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD.CIT(A) IS NOT JUSTIFIED IN ESTIMATING THE NE T PROFIT RS.1,76,84,871/- WHICH IS @10% ON GROSS CONTRACT RECEIPT AT RS.17,68,48,71 2/-, AS AGAINST N.P. SHOWN BY THE APPELLANT AT RS.1,22,06,040/- AND MADE THE A DDITION AT RS.54,78,831/-, WITHOUT CONSIDERING THE NATURE OF BUSINESS AND WITH ANY COMPARABLE CASES IN THE SIMILAR LINE OF BUSINESS OF CONTRACTS. THEREFOR E, ADDITION MAY PLEASE BE DELETED. 2. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND IN LAW, IF THE ESTIMATED ADDITION AS PER APPELLATE ORDER OF CIT(A) IS CONSIDERED, THEN NET PROFIT WOULD BE AT RS.2,04,66,294/- (RS.1,76,84 ,871/- + DEPRECIATION RS.25,81,423) WHICH WILL BE RATED AT 11.57% (RS.2,0 4,66,294/ RS.17,68,48,712 X 100), AS AGAINST PROFIT SHOWN BY APPELLANT AT RS. 1,47,87,463/- (RS.1,22,06,040/- + DEPRECIATION RS.25,81,423), WHI CH IS RATED @8.36% (RS.1,47,87,463 / RS. 17,68,48,712 X 100). AS THE APPELLANT HAS SHOWN REASONABLE PROFIT, FURTHER ESTIMATED ADDITION MADE AT RS.54,78,831/- BY THE CIT(A) IS NOT JUSTIFIED AND HENCE, ADDITION MAY PLE ASE BE DELETED. 4. REVENUE RAISED FOLLOWING GROUNDS IN THE APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A)-2, NASHIK HAS ERRED IN ESTIMATING THE NET PROFIT @10% AS AGAINST 15% ESTIMATED BY THE ASSESSING OFFICER WITHOUT APPR ECIATING THE VARIOUS DEFECTS AS POINTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A)-2, NASHIK HAS ERRED IN NOT CONSIDERING TH E INCRIMINATING MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY ACTION U/S.13 3A OF THE INCOME-TAX ACT, 1961 AND VARIOUS DEFECTS POINTED OUT DURING ASSESSM ENT PROCEEDINGS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ORDER OF THE LD.CIT(A)-2, NASHIK BE CANCELLED ON THE ABOVE ISSUE S AND THAT OF THE A.O. BE RESTORED. 5. THE BACKGROUND FACTS OF THIS CASE ARE THAT THE A SSESSEE IS A CIVIL CONTRACTOR IN JALGAON AREA. THERE WAS ACTION U/S.1 53A OF THE ACT ON THE ASSESSEE ON 03-04-2012. ASSESSEE GAVE A STATEMENT U/S.131 R.W.S. 133A OF THE ACT AND ACKNOWLEDGED THE DEFECTIVENESS OF THE B OOKS OF ACCOUNTS FROM THE 3 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 A.Y. 2006-07 ONWARDS TO 2011-12. FURTHER, THE ASSE SSEE AGREED TO OFFER AN ADDITIONAL INCOME TOTALLING TO RS.7.75 CRORES (ROUN DED OFF) FOR ALL THE ASSESSMENT YEARS. THE QUESTION NO.16 AND ANSWERS TH EREOF OF THE SAID STATEMENT ARE RELEVANT IN THIS REGARD. CONTENTS AR E EXTRACTED IN PARA 5.1 (PAGES 3 TO 6) OF THE ORDER OF CIT(A). HOWEVER, TH E REASON FOR THE DISCLOSURE IS ONLY ON CERTAIN DEFICIENCIES IN MAINTENANCE OF THE PROPER BILLS. THERE ARE CASH PAYMENTS WHICH ARE SUPPORTED MERELY BY SELF-VOUCHER S IN CERTAIN CASES. OTHERWISE, AS EVIDENT FROM THE AOS ORDER, NO SPECI FIC INCRIMINATING MATERIAL IS MENTIONED BY THE AUTHORITIES IN THEIR ORDER THAT RE QUIRES DISCLOSURE OF AN ADDITIONAL INCOME. THEREFORE, THE SAID DISCLOSURE WAS RETRACTED BY THE ASSESSEE ON THE GROUND OF LACK OF EVIDENCE AND ALSO IN VIEW OF THE UNDUE INFLUENCE OF COERCION ON THE ASSESSEE AT THE TIME OF DEPOSITION OF THE STATEMENT. 6. IN THE ASSESSMENT PROCEEDINGS, AO REJECTED THE S AID RETRACTION AND PROCEEDED TO ESTIMATE THE PROFITS @15% ON THE TURNO VER OF THE ASSESSEE. CONTENTS OF PARA 11.2 SUGGESTS THE COMPLETE RELIANC E OF THE AO ON THE SAID STATEMENT OF THE ASSESSEE. FOR THE SAKE OF COMPLET ENESS THE SAID PARAGRAPH IS EXTRACTED AS UNDER : 11 . 2 . THUS , CONSIDERING THE VARIOUS DEFECTS AS POINTED OUT A B OV E , THE PROV I S I ONS O F SECT I ON 145 ( 3 ) IS H E R E BY APPLIED AND TH E INCOM E OF THE ASSE S S EE C OMPANY IS H E REBY ES TIMAT ED. HOW EVE R , F OR T H E PURPO SE OF ES TIM A T ION , TH E ES T I M A TI ON DI FF E R S FROM CA SE T O C ASE. EA C H AND EV ER Y A S PECT H A S TO B E CONSID E RED , SUCH AS T HE NATURE OF WORK , BUSINESS OF THE ASS E SS E E , METHOD OF BOOKS OF ACCOUNTS MAINTAINED , NATURE OF DEFECTS NOTICED , REMARKS OF THE AUDITOR ETC ETC . THUS , FOR THE PURPOSE OF ESTIMATION AND CONSIDERING THE N ATURE OF THE ASSESSEE COMPANY ' S BUSINESS , I HEREBY RELY ON THE STATEMENT RECORDED DU R ING SURVEY PROCEEDINGS AND CONS I DER THE INCOME TO BE ESTIMAT E D @ 15 % OF T H E TOTA L GROSS CONTRACT RECE I PTS. HE R E I T IS TO BE SPECIFICALLY M E NTIONED TH A T NO O TH E R TY PE OF DEDUCT I ON W ILL BE ALLOW E D FROM TH I S E ST I MATION . THE NET P R OF I T IS , TH ERE FO RE , E S TI M A T E D @ 15 % OF TH E TOTAL CONTRACT RECEIPTS . PENALTY PROC E EDINGS U/S 2 7 4 R . W.S . 2 7 1 ( 1 )( C ) IS SEPARATELY IN I T I A T ED , AS TH E ASS E SSEE HAS F ILE D IN AC C UR ATE PA RTI CUL A RS OF INC O M E. 7. FROM THE ABOVE, IT IS EVIDENT THAT THE AO MADE A DDITION OF RS.2,64,50,590/- FOR THE A.Y. 2009-10 CALCULATING T HE NET PROFIT @15% ON THE 4 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 CONTRACT CHARGES RECEIVED OF RS.17,68,48,712/-. SI MILAR ADDITIONS ARE MADE IN OTHER 2 ASSESSMENT YEARS, I.E. 2010-11 AND 2011-12 TOO. FURTHER, AO ALSO MADE ADDITION ON ACCOUNT OF SUNDRY CREDITORS FOR WA NT OF DETAILS AND CONFIRMATION LETTERS FROM THE SAID CREDITORS. ARGU MENT OF THE ASSESSEE WAS THAT NO SUCH ADDITION IS WARRANTED ON THE GROUND OF BOGU S CREDITORS WHEN THE BOOKS ARE REJECTED AND THE PROFITS ARE ESTIMATED. 8. IN THE FIRST APPELLATE PROCEEDINGS, ASSESSEE MAD E ELABORATE SUBMISSIONS AND ALSO FILED THE WRITTEN SUBMISSION STATING THAT THE RETRACTION IS GENUINE AND THE STATEMENT MADE BY THE ASSESSEE DURING THE SURVE Y PROCEEDINGS WAS MADE UNDER COERCION. IT IS ALSO DEMONSTRATED THAT THE A SSESSEE DOES NOT KNOW THE ENGLISH LANGUAGE AND HE WAS NOT AWARE OF THE FACT O F GIVING A FAVOURABLE STATEMENT FOR ESTIMATION OF NET PROFITS @15% ON THE CONTRACT RECEIPTS OF THE YEAR. AS SUCH, ANY SUCH STATEMENT AND THAT TO, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL IN SUPPORT OF SUCH EXTREME N ET PROFIT RATE OF 15% IN THIS LINE OF CIVIL CONTRACT BUSINESS IS UNSUSTAINABLE. FURTHER, ASSESSEE SUBMITTED REGARDING THE FURTHER ADDITION ON ACCOUNT OF SUNDRY CREDITORS, THAT THE SAME IS UNSUSTAINABLE AND RELIED ON VARIOUS DECISIONS AGAIN ST THE VIEWS OF THE AO. PARA NOS. 6.3 TO 6.3.3 OF THE ORDER OF CIT(A) ARE RELEVA NT. THEREFORE, THE SAID ADDITION ON ACCOUNT OF SUNDRY CREDITORS WAS DELETED BY THE CIT(A). FURTHER, THE AOS DECISION RELATING TO ESTIMATION OF THE PRO FITS AT 15% WAS REJECTED IN PRINCIPLE . ULTIMATELY, THE CIT(A) RESTRICTED THE GROSS PROFIT ADDITION TO 10% OF THE CONTRACT RECEIPTS UNIFORMLY IN ALL THE 3 ASSESS MENT YEARS UNDER CONSIDERATION. FOR THE SAKE OF COMPLETENESS, THE C ONTENTS OF PARA NOS. 6.3.2 AND 6.3.3 ARE REPRODUCED AS UNDER : 6.3.2 FROM THE ASSESSMENT ORDER, I HAVE OBSERVED T HAT THE AO . HAS ESTIMATED NET PROFIT AT 15 % REL Y ING ON THE STATEMENT RECORDED DU R ING SUR V E Y ACTION, THOUGH IT WAS RETRACTED BEFORE THE AO. BY THE APPELLANT. THERE ARE CERTAIN DEFECTS TO REJECT THE BOOKS OF AC COUNTS, AS OBSERVED 5 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 ABOVE. NOW ALL THE FACTS OF THE CASE AND RIVAL CONT ENTION OF THE PARTIES HAVE BEEN CONSIDERED. IN ORDER TO MAKE THE MOST REA SONABLE AND CORRECT ESTIMATE OF PROFIT , THE NATURE AND THE PROFITABILIT Y OF THE BUSINESS OF THE APPELLANT, THE N.P. SHO W N B Y THE APPELLANT IN EARLIER AND SUBSEQUENT YEARS, THE N.P. PROFIT SHO W N BY OTHER ASSESSEES IN SIMILAR TYPE OF BUSINESS, ETC. ARE REQUIRED TO BE TAKEN INTO ACCOUN T. THE N.P. ESTIMATED BY THE AO DOES NOT APPEAR TO BE COMMENSURATE W ITH THE N.P. PROFIT SHO W N IN THE LINE OF BUSINESS OF SUCH CONTRACTORS. NO C OMPARABLE CASES AND / OR SPECIFIC REASONS FOR ESTIMATION N.P. AT 15 % IS BROUGHT ON RECORD. I AM OF THE CONSIDERED OPINION THAT THE N.P. RATIO APPLIED BY THE AO. AT 15 % IS SOMEWHAT E X CESSIVE. FURTHER, IT IS SETTLED PRINCIPLE OF LAW TH AT THERE IS NO E V IDENTIAR Y V ALUE AND AN Y ADMISSION MADE DURING SUCH STATEMENT RECORDED IN THE SUR V E Y . THE HON'BLE SUPREME COURT IN THE CASE OF ''CIT VS S.KHADER KHAN SON (2013) 352 ITR 480 (S C) HAS HELD THAT,: 'SECTION 133A DOES NOT EMPO W ER ANY IT AUTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS NO E V ID E NTIAR Y VA LUE A ND AN Y A DMIS S ION MADE DURING SUCH STATEM E NT CANNOT , B Y ITSEL F , B E M A D E THE B AS I S FOR ADDI T ION. 6.3.3 THE NET PROFIT SHOWN BY THE APPELLANT IN ITS RETURN OF INCOME IS ALSO VERY LOW AND DOES NOT REFLECT THE CORRECT INCOME/PR OFIT. AS POINTED OUT EARLIER, THE BOOKS OF ACCOUNTS MAINTAINED BY THE AP PELLANT SUFFER FROM A NUMBER OF DEFECTS AND DISCREPANCIES. THEREFORE, IN ORDER TO COVER UP ALL THE OMISSIONS AND TO PROTECT THE LEAKAGE OF REVENUE , AND CONSIDERING ENTIRE FACT INTO TOTALITY AND RATIO LAID DOWN IN TH E DECISIONS RELIED UPON BY THE APPELLANT, I HEREBY ESTIMATE THE NET INCOME FRO M CONTRACT BUSINESS OF THE APPELLANT AT 10% OF THE GROSS CONTRACT RECEIPT OF RS.17,68,48,712/-. THEREFORE, THE N.P. IS WORKED OUT TO RS.1,76,84,871 /- AS AGAINST THE NET PROFIT AT RS.2,62,27,307/- ADOPTED BY THE AO. THUS, THE APPELLANT GETS A RELIEF OF RS.85,42,436/-. [RS.2,62,27,307 (-) RS.1, 76,84,871]. IN OTHER WORDS, THE ADDITION OF RS. 54,78,831/- IS SUSTAINED IN CONTRACT BUSINESS INCOME [RS.1,76,84,871 (-) RS.1,22,06,040]. 9. AGGRIEVED WITH THE CONFIRMING OF GROSS PROFIT AD DITION @10% AGAINST THE BOOK PROFITS, ASSESSEE IS IN APPEAL BEFORE US. FUR THER, AGGRIEVED WITH THE NON- CONSIDERATION OF THE ASSESSEES STATEMENT DURING SU RVEY ACTION WITH REFERENCE TO THE GROSS PROFIT RATE OF 15% THE REVENUE IS IN A PPEAL BEFORE US. THEY ALSO RAISED A GROUND RELATING TO THE RELIEF GRANTED BY T HE CIT(A) ON ACCOUNT OF SUNDRY CREDITORS FOR THE A.YRS. 2010-11 AND 2011-12 . 10. IN CONNECTION WITH THE REVENUES APPEAL, ON THE ISSUE RELATING TO THE GROSS PROFIT ADDITIONS, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE IS NOT VERY SERIOUS IN PRESSING AGAINST THE CONCLUS IONS OF THE AO/CIT(A) ON THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT. HOWEVER, O N THE ISSUE OF ADOPTING THE NET PROFIT RATE OF 10%, LD. COUNSEL FOR THE ASSESS EE MENTIONED THAT THE SAME 6 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 IS ON THE HIGHER SIDE. BRINGING OUR ATTENTION TO T HE ABOVE REFERRED EXTRACTS FROM THE ORDER OF CIT(A), LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE CIT(A) FAILED TO BRING ANY COMPARABLE CASES TO STRE NGTHEN NET PROFIT RATE OF 10%. ALTERNATIVELY, THERE IS NO SUSTAINABLE REASON RECORDED BY THE CIT(A) BEFORE ADOPTING THE SAID 10% AS NET PROFIT ON THE G ROSS CONTRACT RECEIPTS OF THE ASSESSEE. REFERRING TO THE PROVISIONS OF SECTION 4 4AD OF THE ACT, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION OF NET PROFIT AT 8% WITHIN THE MEANING OF SECTION 44AD OF THE ACT IS REASONABLE. T HUS, THE LD. AUTHORISED REPRESENTATIVE TOOK A STRONG VIEW AGAINST ADOPTING EITHER 10% AS DONE BY THE CIT(A) OR 15% ADOPTED BY THE AO. 11. FURTHER, ON THE ISSUE OF NET PROFIT RATE, LD. A UTHORISED REPRESENTATIVE MENTIONED AND GAVE SOME CONCESSION TO INCREASE THE NET PROFIT RATE EXCEEDING SAID 8% BUT NOT EXCEEDING 9%. FURTHER ALSO, LD. AU THORISED REPRESENTATIVE, ON THE ISSUE ON ACCOUNT OF SUNDRY CREDITORS SUBMITT ED THAT SUCH ADDITIONS ARE HELD UNSUSTAINABLE BY VARIOUS JUDGMENTS. 12. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE FAI RLY MENTIONED THAT THE ISSUES RAISED IN THEIR APPEALS RELATE TO THE CORE I SSUES RAISED BY THE ASSESSEE IN THE APPEAL UNDER CONSIDERATION. RELYING ON THE SAI D STATEMENTS TAKEN DURING THE SURVEY ACTION, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE SAME IS VALID AND SUBMITTED FOR REJECTING THE RETRACTION ST ATEMENT OF THE ASSESSEE. LD. DEPARTMENTAL REPRESENTATIVE MENTIONED THAT THE NET PROFIT RATE OF 15% IN THE 3 ASSESSMENT YEARS IS VALID AND SUSTAINABLE CONSIDERI NG THE BACKGROUND FACTS OF THIS CASE, I.E. DEFICIENT BOOKS OF ACCOUNT, ASSESSE ES STATEMENT IN FAVOUR OF NET PROFIT RATE OF 15% AND THE ALLEGATION OF SUNDRY CRE DITORS. 7 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 13. WE HEARD BOTH THE COUNSELS/REPRESENTATIVES ON T HE ISSUES RAISED IN THE CROSSS APPEALS FOR ALL THE ASSESSMENT YEARS UNDER C ONSIDERATION. WE PERUSED THE PAPER BOOK FILED BEFORE US. THE ADJUDICATION O N BOTH THE ISSUES, I.E. PROPER NET PROFIT RATE FOR ALL THREE YEARS, ADDITION OF SU NDRY CREDITORS RAISED IN BOTH THE APPEALS GIVEN AS UNDER. 14. REGARDING THE REASONABLE NET PROFIT RATE IN THI S LINE OF CIVIL CONTRACT BUSINESS FOR ALL THREE YEARS IN THIS CASE OF THE AS SESSEE, WE FIND THE DISPUTE IS THAT WHILE THE ASSESSEE IN RESPECT OF FAVOUR OF 8% AS OUTLINED IN SECTION 44AD OF THE ACT, THE REVENUE IS IN FAVOUR OF 15% AS DISC USSED BY THE AO IN THE ASSESSMENT ORDER. HOWEVER, THE AO HAS NOT GIVEN AN Y SPECIFIC REASON OR JUSTIFICATION WITH EVIDENCE BY WAY OF ANY INCRIMINA TING MATERIAL, IN SUPPORT OF HIS DECISION. THE STATEMENT OF THE ASSESSEE IS THE ONLY AVAILABLE EVIDENCE FOR THE AO. NO SUSTAINABLE REASON IS GIVEN BY THE AO W HY THE RETRACTION IS NOT VALID. 15. FURTHER, WE FIND THAT THE CIT(A) HAS DISAPPROVE D THE NET PROFIT RATE OF 15% ON THE CONTRACT RECEIPTS HOLDING THE SAME AS ON HIGH SIDE. FURTHER, WITH REFERENCE TO ADDITION ON ACCOUNT OF SUNDRY CREDITOR S. CIT(A) HELD NO FURTHER ADDITION ON THIS ACCOUNT IS WARRANTED, WHEN THE PRO FITS OF THE BUSINESS IS ESTIMATED AFTER REJECTING THE BOOKS OF THE ASSESSEE . IN OUR VIEW, THE CIT(A) HAS FAIRLY DISAPPROVED THE AOS POINT OF VIEW IN TH E SAID ISSUE. WE AFFIRM THE SAME. 16. HOWEVER, WHEN IT COMES TO THE PERCENTAGE OF NE T PROFIT RATE OF 10% ADOPTED BY THE CIT(A), WE FIND AGAIN THE SAID RATE IS NOT BORROWED FROM ANY COMPARABLE CASE. THE CONTENTS OF PARA 6.3.2 TO 6.3 .3 EXTRACTED ABOVE SUPPORTS THE SAME. THEREFORE, NET PROFIT RATE OF 10% ADOPTE D BY THE CIT(A) IS NOT 8 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 SACROSANCT. HENCE, WE PROCEED TO EXAMINE IF THE 8% ADVOCATED BY THE LD. AUTHORISED REPRESENTATIVE NEEDS TO BE APPROVED IN T HIS CASE. BUT THE FACT IS THAT SAID PROVISIONS OF SECTION 44AD ARE NOT STRICT LY APPLICABLE HERE. TURNOVER ALLEGATION OF SUNDRY CREDITORS ETC. MAKE SOME DIFFE RENCE. THEREFORE, WE CANNOT APPROVE THE SAID NET PROFIT RATE OF 8% TO THE FACTS OF THE CASE. HENCE, WE ARE OF THE VIEW THAT, CONSIDERING THE CONCESSION GIVEN BY THE LD. AUTHORISED REPRESENTATIVE, THE ESTIMATION OF PROFIT @9% FOR TH E ASSESSMENT YEARS UNDER CONSIDERATION SHOULD MEET BOTH ENDS OF JUSTICE. AO IS DIRECTED TO RESTRICT THE ADDITION TO NET PROFIT OF 9% ON THE CONTRACT RECEIP TS FOR THE A.Y. 2009-10. ACCORDINGLY, THE GROUNDS ON THE RELATED ISSUES, DIS CUSSED IN A COMPOSITE MANNER, SHOULD BE PARTLY ALLOWED. ITA NOS. 1614 & 1615/PUN/2014 (BY ASSESSEE) AND ITA NOS.1683 & 1684/PUN/2014 (BY REVENUE) A.YRS. 2010-11 & 2011- 12 : 17. GROUNDS RAISED BY THE ASSESSEE AND THE REVENUE IN THE ABOVE APPEALS ARE IDENTICAL, I.E. GROUND NOS. 1 AND 2 OF THE ASSE SSEE ARE LINKED TO THE GROUND NOS. 1 AND 2 OF THE REVENUE. THE DECISION ON THIS ISSUE WAS ALREADY GIVEN IN THE CONTEXT OF THE CROSS APPEALS FOR THE A.Y. 2009- 10. IN THE SAID APPEALS, WE HAVE HELD THE BOOKS OF ACCOUNTS ARE RIGHTLY REJECTE D AND THE NET PROFITS OF THE ASSESSEE SHOULD BE ESTIMATED ADOPTING 9% OF THE CON TRACT RECEIPTS FOR THE A.Y. 2009-10. CONSIDERING THE COMMON FACTS AND ARGUMENT S, WE ARE OF THE OPINION THAT THE ABOVE CONCLUSIONS ARE EQUALLY RELEVANT FOR THE A.YRS. 2010-11 AND 2011-12 ALSO. ACCORDINGLY, RELEVANT GROUNDS ARE PA RTLY ALLOWED IN FAVOUR OF THE ASSESSEE. 18. ANOTHER ISSUE WHICH IS RAISED COMMONLY BY THE R EVENUE FOR THE A.YRS. 2010-11 AND 2011-12 RELATES TO THE SUNDRY CREDITORS AND THE CORRECTNESS OF DELETING THE ADDITION BY THE CIT(A), WHEN THE PROFI TS ARE ESTIMATED. 9 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 19. BEFORE US, LD. COUNSEL FOR THE ASSESSEE IN ADDI TION TO HIS ARGUMENTS MADE A STATEMENT AT THE BAR THAT THE SAID LIABILITI ES WERE DISCHARGED BY MAKING PAYMENT TO THE CREDITORS LATER AFTER THE END OF THE PREVIOUS YEAR. FOR THIS HE RELIED ON THE BOOKS OF ACCOUNT MAINTAINED FOR THE S UBSEQUENT YEARS BY THE ASSESSEE. THEREFORE, THE LIABILITIES ARE CLAIMED T O BE GENUINE. IN ANY CASE, IT IS THE SETTLED LEGAL POSITION THAT NO SEPARATE ADDITIO N IS CALLED FOR WHEN THE BOOKS OF ACCOUNTS ARE REJECTED AND PROFITS ARE ESTIMATED. 20. WE HEARD BOTH THE SIDES AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE CONTENTS OF THE PARA NO.6. 3.11 WHERE THE ISSUE OF SUNDRY CREDITORS IS DISCUSSED. FOR THE SAKE OF COM PLETENESS, THE SAID PARA IS REPRODUCED BELOW : 6.3.11 I FIND FROM THE ASSESSMENT ORDER THAT THE APPELLANT COMPANY IS MAINLY ENGAGED IN CONSTRUCTION OF ROAD WORKS ALLOTT ED BY GOVERNMENT AND SEMI GOVERNMENT ORGANIZATIONS, WHICH ARE ALSO LABOUR ORI ENTED. IN THE CASE OF THE APPELLANT, THE SAID LIABILITY IS OUTSTANDING TOWARD S UNPAID LABOUR CHARGES/EXPENSES AND OUT OF THAT, THE A.O. HAS MADE THE ADDITIONS OF RS.2,33,19,357/- CONSIDERING THEM OF BOGUS LIABILIT Y. HOWEVER, I HAVE NOTED THAT THERE IS NO ALLEGATION OF THE A.O. THAT THE SA ID EXPENSES OF LABOUR CHARGES DEBITED TO THE PROFIT AND LOSS ACCOUNT ARE NOT SUPP ORTED. IN FACT, THE A.O. HAS ALLOWED THEM AS DEBITED TO THE PROFIT AND LOSS ACCO UNT. 21. FURTHER, WE HAVE ALREADY ANALYSED THIS ISSUE IN THE PRECEDING PARAGRAPHS OF THIS COMPOSITE ORDER, WHERE WE HAVE HELD THAT NO SEPARATE ADDITION ON ACCOUNT OF SUNDRY CREDITORS, BEING TRADE CREDITORS, IS SUSTAINABLE IN VIEW OF THE FACT THAT THE BOOKS OF ACCOUNTS ARE REJECTED AND TH E BUSINESS PROFITS OF THE ASSESSEE ARE UNDISPUTEDLY ESTIMATED. THE CIT(A) CO RRECTLY APPLIED THE SAID RATIO AND GRANTED RELIEF IN BOTH THESE YEARS UNDER CONSIDERATION. IN OUR VIEW, THE DECISION OF THE CIT(A) IS FAIR AND THE SAME DOE S NOT CALL FOR ANY INTERFERENCE ON THIS ISSUE. ACCORDINGLY, RELEVANT GROUND NO.3 I N BOTH THE APPEALS OF THE REVENUE HAVE TO BE DISMISSED AND IN FAVOUR OF THE A SSESSEE. 10 ITA NOS.1613 TO 1615/PUN/2014 ITA NOS. 1682 TO 1684/PUN/2014 22. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JULY, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 28 TH JULY, 2017. / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - II, NASHIK 4. CIT - II, NASHIK 5. , , A BENCH PUNE; 6. / GUARD FILE.