M/s S.P. Constructions, Chandigarh V. ITO, Chandigarh

ITA 245/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86226 (ITAT-CHANDIGARH)
• Duration Of Justice: 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARJIT SINGH
• Keywords: Depreciation; Question of law
• Section: 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NOS. 244 & 245/CHD/2015 ASSESSMENT YEARS: 2007-08 & 2008-09 M/S S.P. CONSTRUCTIONS, VS THE ITO, WARD 1(4), CHANDIGARH CHANDIGARH PAN NO.AARFS7411E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL RESPONDENT BY : SHRI HARJIT SINGH DATE OF HEARING : 30.03.2015 DATE OF PRONOUNCEMENT : 31.03.2015 ORDER PER T.R.SOOD, A.M. BOTH THE APPEALS FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10.12.2014 OF CIT(A), CHANDIGARH 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A)-I THROUGH HIS ORDER DATED 10.12.2014 HAS ERR ED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250( 6) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF APPLYING NET PROFIT RATE OF 10% ON TURNOVER OF THE APPELLANT EVE N WHEN BOOKS WERE NOT REJECTED BY LD. AO BUT THE CIT(A) HELD THAT THE BOOKS HAVE BEEN REJECTED AND ON CONSIDERING THE TOTALITY OF FACTS, THE BOOKS WERE NOT LIABLE TO BE REJECTED AND THEREBY THE APPLICATION O F NET PROFIT RATE WAS TOTALLY MISCONCEIVED. 3. THAT ON FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY C1T(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF APPLYING NET PROFIT RATE OF 10% IN CIVIL CONTRACT BUSINESS OF THE APPELLANT EVEN WHEN SUCH APPLICATION OF PROFIT RATE IS EXTREMELY H IGH, IS ARBITRARY, WITHOUT APPLICATION OF JUDICIOUS MIND AND WITHOUT LOOKING INTO EVIDENCES AND HISTORY. 2 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS C ONDUCTED IN THE PREMISES OF TALWAR GROUP IN CHANDIGARH. DURING THE COURSE OF SEARCH IT WAS G ATHERED THAT M/S S.P. CONSTRUCTIONS, H.NO. 571, SECTOR 16-D, CHANDIGARH IS A PARTNERSHIP FIRM HAVING TWO PARTNERS. THE FIRM WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND CONTRACT BUSINESS AND IT MOSTLY CONSTRUCTED PRIVATE HOUSES. THE TURNOVER OF THE FIRM WAS MORE THAN RS. 40 LAKHS FOR THE LAST 5 6 YEARS BUT THE FIRM NEVER GOT ITS ACCOUNTS AUDITED AND DID NOT FILE ANY RETURN. FROM THE EXAMINATION OF BANK ACCOUNT, IT WAS FOUND THAT ASSESSEE RECEIVED MORE THAN RS. 5 CRORES BUT NO RETURN HAS BEEN FILED, THEREFORE, NOTICE U/S 148 WAS ISSUED AND SERVED. I N RESPONSE TO THIS NOTICE THE ASSESSEE FILED RETURN OF INCOME ON 2.11.2012 DECLARING INCOME OF R S. 3,19,865/-. 4. THE ASSESSING OFFICER RAISED VARIOUS QUERIES AND ISSUED DETAILED QUESTIONNAIRE BUT ASSESSEE FAILED TO FILE VARIOUS DETAILS WHICH HAS B EEN NOTED BY ASSESSING OFFICER IN VARIOUS PARAGRAPHS AND ARE SUMMARIZED AS UNDER:- I) THOUGH DETAILS OF EXPENSES EXCEEDING RS. 25,000/- W ERE FILED BUT NO SUPPORTING VOUCHERS FOR THESE EXPENSES WERE PRODUCED. IT WAS A LSO NOT DISCLOSED TO WHOM SUCH AMOUNT HAS BEEN PAID. II) THE ASSESSEE WAS ASKED TO FILE COPIES OF THE BANK A CCOUNT OF THE PARTNERS WHICH WAS NEVER FILED DESPITE VARIOUS OPPORTUNITIES. III) THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF PURCHASES IN THE FOLLOWING MANNER:- NAME AND ADDRESS OF SELLER NATURE OF ITEM PURCHASED TOTAL QUANTITY PURCHASED DURING THE YEAR AMOUNT OF PURCHASES MADE DURING THE YEAR TOTAL PAYMENT MADE DURING THE YEAR TOTAL PAYMENT MADE IN CASH AMOUNT OUTSTANDING AS ON 21.02.2011 BUT THE ABOVE DETAILS WERE NOT FILED. IT WAS NOTICED BY THE ASSESSING OFFICER THAT SUNDRY CREDIT ORS WERE SHOWN TO THE TUNE OF RS. 75,69,505/- AND, THEREFORE, ASSESSEE WAS REQUESTED TO FILE CONFIRMATION FROM SUCH SUNDRY CREDITORS PARTICULARLY WHERE AMOUNT EXCEEDS RS. 1 L AKH. NO SUCH DETAILS WERE FILED AND IT WAS REPLIED AS UNDER:- PLEASE NOTE THAT SOME OF THE CREDITORS ARE BROUGHT FORWARD FROM THE PREVIOUS YEARS, FOR WHICH SCRUTINY PROCEEDINGS HAVE ALREADY BEEN CONDUCTED BY THE DEPARTMENT. HOWEVER , FOR THE CRED ITORS WHICH CAME INTO EXISTENCE IN THE CURRENT YEAR THE ASSESSEE IS IN TH E PROCESS OF PRODUCING 3 THE ACCOUNT CONFIRMATION OF PARTIES WHOSE BALANCE E XCEEDS RS. 1,00,000/- AND THIS SHALL BE SUBMITTED SHORTLY. THE ASSESSEE WAS ALSO ASKED TO FILE DETAILS OF SUND RY DEBTOR WHICH WAS RS. 1,83,30,016/- AND CONFIRMATION WHETHER DEBTS EXCEEDED RS. 1 LAKH. IN RESPONSE TO THIS, THE ASSESSEE REPLIED AS UNDER:- LIST OF SUNDRY DEBTORS HAVE ALREADY BEEN GIVEN TO YOUR GOODSELF ALONG WITH BALANCE ACCOUNT CONFIRMATION IN A DESIRED FORM AT WHOS AMOUNT EXCEEDS RS. 1 LAC AS ON 31.03.2007 AND KEEPING IN V IEW SOME ARE ALREADY IN DISPUTE AND THE OTHER WHO HAVE DECLINED ARE BEIN G SERVED WITH LEGAL NOTICES AS SUCH CONFIRMATION FROM ALL THE PARTY IS NOT POSSIBLE. THE ASSESSING OFFICER NOTICED THAT IN THE BALANCE SHEET THE DEBTS WERE SHOWS AS UNDER:- A) EXPECTED PAYMENT AGBD RS. 1,48,61,898/- B) EXPECTED PAYMENT OTHERS RS. 25,82,807/- C) ANIL TALWAR ADVANCE AGAINST CONST. RS. 15,83,31 1/- TOTAL RS. 1,83,30,016/- FROM THE ABOVE, IT WAS CONCLUDED THAT THAT IN RESPE CT OF RS. 1,66,00,000/- THE ASSESSEE WAS NOT KNOWING EVEN THE NAMES OF THE PARTIES FROM WHOM THE AMOUNTS WERE OUTSTANDING. 5. THE ASSESSEE HAD ALSO SHOWN SALARY AND WAGES OF RS. 95,87,609/- BUT NO MUSTER ROLL OR DETAILS OF THESE EXPENSES WERE FILED AND THESES EXP ENSES WERE CLAIMED TO HAVE BEEN PAID IN CASH. THE DETAILS OF OPENING AND CLOSING INVENTORIES WERE ALSO FILED. 6. IN VIEW OF THE ABOVE THE ASSESSING OFFICER WAS O F THE OPINION THAT VARIOUS EXPENSES CANNOT BE VERIFIED AND, THEREFORE, HE APPLIED NET P ROFIT RATE OF 10% ON THE RECEIPTS. 7. ON APPEAL, IT WAS MAINLY CONTENDED THAT PROFIT C OULD NOT BE ESTIMATED WITHOUT REJECTING THE BOOKS. THE DEFECTS POINTED OUT IN THE RECORD A RE NON-EXISTENT. THERE IS NO JUSTIFICATION FOR ESTIMATION OF PROFIT AT 10%. SEPARATE DEDUCTION SH OULD BE ALLOWED FOR DEPRECIATION. CERTAIN CASE LAWS WERE ALSO RELIED. 4 8. THE LD. CIT(A) AFTER EXAMINING THESE SUBMISSIONS NOTICED THAT ASSESSEE HAS NOT FILED VARIOUS DETAILS AND SUPPORTING VOUCHERS FOR VARIOUS EXPENSES. THE ASSESSING OFFICER HAS APPLIED THE NET PROFIT RATE WHICH CLEARLY SHOWS THAT HE WAS NOT SATISFIED WITH THE RESULT, THEREFORE, THE CONTENTION THAT NET PROFIT HAS BEEN APPLIED WITHOUT REJECTING THE BOOKS WAS REJECTED. THE LD. CIT(A) HAS DISCUSSED VARIOUS CASE LAWS RELIED ON BY THE LD. COUNSEL BEFORE HIM AND ALSO REFERRED TO THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF CIT V PRABHAT KUMAR 323 ITR 675 (P&H) WHEREIN A NET PROFIT OF 12% WAS A PPLIED AND CONFIRMED BY THE HON'BLE HIGH COURT. HE OBSERVED THAT ESTIMATION OF PROFIT HAS T O BE ON THE BASIS OF FACTS OF EACH CASE AND CONSIDERING THE VARIOUS FACTS HE CONFIRMED THE RATE OF 10%. 9. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND EMPHASIZED THAT NO SERIOUS DEFECTS WERE FOUND IN THE BOOKS OF ACCOUNT. HE FURTHER SUBMITTED THAT IN ANY CASE PROFITS HAVE BEEN ESTIMA TED ON A VERY HIGH SIDE WHICH IS NOT JUSTIFIED. HE REFERRED TO THE DECISION OF HON'BLE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF TELELINKS V CIT IN ITA NO. 269 OF 2014 (DATED 20.11.2014) WHERE IN IT IS CLEARLY OBSERVED THAT ONLY REASONABLE RATE OF PROFIT CAN BE APPLIED AND THE ES TIMATION HAS TO BE ON JUDICIOUS BASIS. ON AN ENQUIRY BY THE BENCH HE ADMITTED THAT ASSESSEE HAD NOT FILED ANY RETURN BEFORE THE ISSUE OF NOTICE U/S 148 AND IT WAS ENGAGED IN THE BUSINESS OF CONS TRUCTION OF PRIVATE HOUSES. 10. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND CIT(A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. BEFORE US THE ISSUE OF REJECTION OF BOOKS WAS NOT SERIOUSLY PRESSED BUT IT IS CLEAR FRO M THE MATERIAL AVAILABLE ON RECORD THAT ASSESSEE IS A FIRM AND WAS HAVING TWO PERMANENT ACCOUNT NUMB ERS. IT WAS ADMITTED BEFORE US THAT THERE WAS A FIRM WITH THE SAME NAME BUT THE PARTNERS WERE DIFFERENT AND THE FIRM WAS AGAIN STARTED WITH THE SAME NAME WITH DIFFERENT PARTNERS. SINCE THIS ISSUE IS NOT BEFORE US WE ARE NOT GOING INTO THE DETAILS. FURTHER, IT IS ALSO ADMITTED FACT THAT ASSESSEE DID NOT FILE ANY RETURN DESPITE HAVING TAXABLE INCOME. THIS FACT BECOMES CLEAR BECA USE ASSESSEE HAS ITSELF FILED THE RETURN DECLARING INCOME OF RS. 3,19,865/- IN RESPONSE TO N OTICE U/S 148. WE HAVE ALREADY DISCUSSED THE AFFAIRS OF THE ASSESSEE AND FAILURE TO FILE E MANY DETAILS WHILE DISCUSSING THE FACTS OF THE CASE AT 5 THE OUTSET OF THIS ORDER. TO SUMMARIZE THE DEFECTS AGAIN, THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING VOUCHERS FOR EXPENSES EXCEEDING RS. 25,0 00/-. THE ASSESSEE DID NOT FILE COPIES OF THE BANK ACCOUNT OF THE PARTNERS AND, THEREFORE, THE AS SESSING OFFICER COULD NOT HAVE VERIFIED THE VARIOUS PAYMENTS RECEIVED BY THE FIRM FROM BANKERS OR PAYMENT TAKEN DIRECTLY FROM THE CUSTOMER BY THE PARTNERS. THE ASSESSEE HAS SHOWN WAGES PAYAB LE OF RS. 9,38,500/- WHICH WERE PAID ON 5.7.2007 AND NORMALLY LABOUR WILL NOT WORK FOR PERI OD OF THREE MONTHS WITHOUT RECEIVING THEIR PAYMENTS. THE ASSESSEE ALSO DID NOT FILE THE DETAIL S OF PURCHASES IN THE FORMAT GIVEN BY THE ASSESSING OFFICER. THE ASSESSEE WAS HAVING SUNDRY CREDITORS OF RS. 75,69,505/- AND DID NOT FILE ANY CONFIRMATION EVEN IN CASES WHERE SUNDRY CREDITO RS EXCEEDS RS. 1 LAKH. EVEN REGARDING SUNDRY DEBTORS NO CONFIRMATION WAS FILED AND AS NOT ED BY THE ASSESSING OFFICER EVEN IN THE BALANCE SHEET THE NAMES OF THE SUNDRY DEBTORS TO TH E EXTENT OF RS. 1,66,00,000/- WERE NOT SHOWN. NO DETAILS OF OPENING AND CLOSING STOCK WERE FILED. THE ASSESSING OFFICER HAS DISCUSSED AND SUMMARIZED THIS ISSUE AT PAGE 5 IN THE FOLLOWING PA RA. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT PURCHASES MADE BY THE ASSESSEE ARE NOT SUBJECT TO ANY VERIFICATION SUNDRY CREDITORS AND DEBTORS ARE ALSO NOT SUBJECT TO ANY VERIFICATION. WAGES, SA LARIES, GENERAL EXPENSE AND OTHER EXPENSES MENTIONED IN PARA 15 OF MY LETTE R DATED 21.01.2013 ARE ALSO NOT SUBJECT TO ANY VERIFICATION. IN VIEW OF THE ABOVE FACTS, THE BOOK VERSION SHOWN BY THE ASSESSEE CANNOT BE RELIED UPON. I THEREFORE, APPLY NET PROFIT RATE OF 10% ON THE GROSS RECEIPTS OF RS. 5,42,83,935/-, WHICH WILL MEAN THAT ASSESSEES INCOME WOULD WORKED OUT AT RS. 54,28,393/-. FROM THIS INTEREST PAID TO PARTNERS A T RS. 6,28,455/- IS TO BE DEDUCTED AND THE BALANCE WOULD BE INCOME OF THE AT RS. 47,99,938/-. 12. THE ABOVE CLEARLY SHOWS THAT SINCE ASSESSING OF FICER COULD NOT VERIFY VARIOUS DETAILS I.E WHY HE HAS ESTIMATED THE PROFITS. THIS CLEARLY SHO WS THAT BOOKS HAVE BEEN REJECTED. 13. NOW THE QUESTION IS ONCE BOOKS OF ACCOUNT ARE R EJECTED , WHAT RATE OF PROFIT SHOULD BE APPLIED. WE AGREE WITH THE CONTENTION OF LD. COUNS EL THAT PROFIT SHOULD BE ESTIMATED ON THE BASIS OF VARIOUS FACTS OF AS PARTICULAR CASE. EVEN THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE CITED BY LD. COUNSEL IN THE CASE OF TELELI NKS VS CIT (SUPRA) HAS OBSERVED THAT WHILE DISCUSSING THE NATURE OF POWER TO BE EXERCISED FOR DETERMINING THE NET PROFIT, IT WAS OBSERVED AS UNDER:- 6 THE FIRST QUESTION RELATES TO THE NATURE OF THE POWER EXERCISED WHILE DETERMINING A NET PROFIT RATE. THE QUESTION MUST N ECESSARILY BE ANSWERED BY HOLDING THAT WHERE BOOKS OF ACCOUNTS ARE REJECTE D OR NOT PRODUCED, THE ASSESSING OFFICER WOULD BE WELL WITHIN THE LIMITS O F HIS JURISDICTION TO ACCESS INCOME BY APPLYING A FICTIONAL NET PROFIT RA TE. THE POWER SO CONFERRED IS QUASI-JUDICIAL AND , THEREFORE, NO UNB RIDLED AS IT MUST BE GUIDED BY REASON AND THOUGH IT MAY INVOLVE A DEGREE OF GUESSWORK, MUST BE BASED UPON A RATIONAL ANALYSIS OF FACTS. THE FIRST QUESTION OF LAW IS ANSWERED ACCORDINGLY. 14. WHILE DISCUSSING THE SECOND QUESTION, FACTORS REQUIRED TO BE TAKEN INTO CONSIDERATION FOR DETERMINATION OF THE NET PROFIT RATES, IT WAS OBSER VED AS UNDER:- THE S ECOND QUESTION OF LAW NAMELY FACTORS REQUIRED TO BE TAKEN INTO CONSIDERATION WHILE APPLYING A NET PROFIT RATE HAS COME UP FOR CONSIDERATION, AS ON THE SAME SET OF FACTS THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME TAX AND INCOME TAX APPELLATE TRIBUNAL HAVE APPLIED DIFFERENT RATES OF NET PROFIT, THE DISCRETION TO DETERMINE AN ADEQUATE NET PROFIT RATE UNDOUBTEDLY VESTS WITH AUTHORITIES UNDER THE ACT BY THE DISCRET ION SO VESTED IS NEITHER UNBRIDLED NOR UNGUIDED AS IT MUST BE GUIDED BY REAS ON I.E SHOULD BE PRECEDED BY REASONS WHICH, IN TURN, SHOULD BE PRECEDED BY A PERCEPTIBLE PROCESS OF REASONING BASED UPON DUE CONSIDERATION OF ALL RELEV ANT FACTS. HOWEVER, AUTHORITIES UNDER THE ACT APPEAR TO CONSTRUE THEIR JURISDICTION AS A DISCRETION TO APPLY A THUMP RULE DEPENDENT ALMOST ENTIRELY ON THE WHIMS OF A PARTICULAR OFFICER. THE DISCRETION TO DETERMINE A NET PROFIT RATE MUST NECESSARILY BE EXERCISED ON THE BASIS OF RELEVANT FACTORS WHICH WE SHALL ENUMER ATE BUT BEFORE DOING SO, WOULD CLARIFY THAT THESE FACTORS ARE NEITHER EXHAUS TIVE NOR A FINAL WORD ON RELEVANT FACTORS THAT MAY BE CONSIDERED WHILE DETER MINING THE NET PROFIT RATE. A FEW SIGNIFICANT FACTORS ARE THE PAST TAX HISTORY OF THE ASSESSEE, IF AVAILABLE, ASSESSMENT ORDER THAT MAY HAVE BEEN PASSED AND ACCE PTED BY THE DEPARTMENT, THE NATURE OF THE ASSESSEES BUSINESS, AN APPRAISAL OF THE VALUE OF THE CONTRACT, PREVAILING ECONOMIC CONDITIONS VIS--VIS THE ASSESSEES BUSINESS, THE PRICE OF RAW MATERIAL, LABOUR ETC. THE RISE IN PRICE INDEX AS NOTIFIED BY THE CENTRAL GOVERNMENT FROM TIME TO TIME IF APPLICABLE AND IF THE ASSESSING OFFICER PROCEEDS TO RELY UPON ASSESSMENTS OF OTHER ASEESSEES ENGAGED IN SIMILAR BUSINESS TO DO SO ONLY AFTER DETERMINING PO INTS OF SIMILARITY ETC. 15. THEREFORE, ONCE DETAILS ARE NOT FILED, THE PROF IT HAS TO BE ESTIMATED AND SUCH ESTIMATION WOULD HAVE TO BE DONE CONSIDERING THE FACTS OF THE PARTICULAR CASE IN A JUDICIOUS MANNER. IN THE 7 CASE OF CIT V PRABHAT KUMAR (SUPRA) WHERE ADDITION WAS MADE ON ACCOUNT OF WAGES, WHICH WAS NOT FOUND TO BE VERIFIABLE, ULTIMATELY THE COURT AP PLIED PROFIT RATE OF 12% AND IT WAS OBSERVED AS UNDER:- THE TRIBUNAL HAS PROCEEDED ON THE BASIS THAT THERE MAY BE UNVERIFIABLE WAGES WHICH MAY CALL FOR ADDITION TO I NCOME, BUT NOT TO THE EXTENT ASSESSED BY THE COMMISSIONER OF INCOME-T AX (APPEALS). APPLYING NET PROFIT RATE ON THE BASIS OF BEST JUDGM ENT ASSESSMENT IN A GIVEN SITUATION WILL BE A QUESTION OF FACT UNLESS S UCH AN ASSESSMENT IS SHOWN TO BE ARBITRARY OR PERVERSE. IN THE PRESENT C ASE, IT CANNOT BE HELD THAT ANY SUBSTANTIAL QUESTION OF LAW ARISES. ASSESS MENT OF 12 PER CENT. OF NET PROFIT RATE OF CONTRACT RECEIPT IS NOT SHOWN TO BE ARBITRARY OR PERVERSE. THUS, WHEREIN IN A CASE WAGES WERE FOUND NOT VERIFI ABLE, 12% PROFIT REACHED WAS HELD TO BE REASONABLE. 16. NOW IN THE CASE BEFORE US WE HAVE ALREADY NOTED THAT ASSESSEE DID NOT FILE EVEN THE RETURN UNLESS THE SAME WAS DETECTED DURING SEARCH MADE IN THE CASE OF M/S TALWAR GROUP. ANYWAY THE MOST RELEVANT FACTOR IN THE CASE BEFORE US WAS THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOUSE FOR PRIVATE PARTIES. IT IS A COMMON KNOWLEDGE THAT RATE OF PROFIT IN CONSTRUCTION OF A PRIVATE HOUSES IS MUCH HIGHER THA N IN COMPARISON TO THE MASS CONSTRUCTION CONTRACTS FOR GOVERNMENT OR OTHER GOVERNMENT AUTHOR ITIES. THIS IS SO BECAUSE THE CONSTRUCTION OF A PRIVATE HOUSE INVOLVES SUPERIOR QUALITY OF WORK, FANCY ITEMS FOR WHICH GENERALLY THE CONTRACTOR CHARGES HIGHER RATE OF MARGIN. FURTHER, IT IS TO B E NOTED THAT ASSESSEE HAD HUGE AMOUNT OF SUNDRY CREDITORS AMOUNTING TO RS. 75,69,505/- FOR WHICH NO CONFIRMATION HAS BEEN FILED. EVEN THE NAMES OF THE SUNDRY DEBTORS ARE NOT DISCLOSED IN TH E BALANCE SHEET. NORMALLY, THE CHANDIGARH BENCH OF THE TRIBUNAL HAS ESTIMATED THE RATE OF PR OFIT IN THE CASE OF CONSTRUCTION FIRMS AT 8%. BUT CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPIN ION THAT ESTIMATE OF PROFIT AT THE RATE OF 9% WOULD MEET THE ENDS OF JUSTICE IN THIS CASE AND, T HEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND ESTIMATE THE NET PROFIT AT 9%. 17. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOW ED. 8 ITA NO. 245/CHD/2015:- 18. THE FACTS AND CIRCUMSTANCES OF THIS CASE ARE ID ENTICAL TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2007-08 WH ICH WE HAVE ADJUDICATED IN THE ABOVE NOTED PARAS. FOLLOWING THE SAME, IN THIS CASE ALSO THE N ET PROFIT RATE IS ESTIMATED AT 9%. 19. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST MARCH, 2015 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR