PRAVIN PANDURANG PATIL, Islampur V. JT CIT RANGE -2, Sangli

ITA 850/PUN/2008

• Counselvise Citation: 85024514 RSA 2008
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Business income; Proportionate interest
• Section: 44AD; 142(1); 147; 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 850/PN/08 (ASSTT. YEARS: 2005-06) MR PRAVIN PANDURANG PATIL, .. APPELLANT NEAR SHIRALA NAKA, ISLAMPUR PAN ABPPP6100N VS. JT. COMMISSIONER OF INCOME-TAX, R-2, SANGLI .. RESPONDENT APPELLANT BY: SHRI M K KULKARNI RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAPUR DATED 31.3.2008 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.12.2007 PASSED BY THE ASSESSING OFFICER UNDER SECTION 144 O F THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO T HE ASSESSMENT YEAR 2005-06. 2. THE MAIN GROUND NOS. 1, 2 & 3 RAISED IN THIS APP EAL READ AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT(A), KOLHAPUR WAS NOT JUSTIFIED IN NOT ACCEPTING THE GRO UND OF APPEAL RAISED TO THE EFFECT THAT EX PARTE ASSESSMENT FINALIZED U/S 144 W AS NOT VALID IN VIEW OF THE FACT THAT NO SHOW CAUSE NOTICE AS REQUIRED BY 2 ND PROVISO TO SECTION 144(1) WAS ISSUED AND SERVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT(A), KOLHAPUR WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO OF INVOKING THE PROVISIONS OF SECTION 145(3) AND REJECTING THE BOOK S OF ACCOUNTS REGULARLY MAINTAINED AND HOLDING THAT THE BOOKS OF ACCOUNTS W ERE NOT ABSOLUTELY RELIABLE. IN THE ABSENCE OF ANY INGREDIENTS OF THIS SECTION, THE ACTION IS VITIATED IN LAW AND IT BE HELD ACCORDINGLY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT(A), KOLHAPUR WAS NOT JUSTIFIED IN ESTIMATING THE NET PR OFIT OF RS 61.41 LAKHS AND SUBSTITUTING THE SAME AS INCOME OF THE APPELLANT WI THOUT ANY COGENT REASONS BUT ONLY ON THE BASIS OF ESTIMATIONS. THE BOOK RESULTS OF THE APPELLANT BE ACCEPTED ACCEPTING THE INCOME RETURNED. ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 2 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A CI VIL CONTACTOR EXECUTING GOVERNMENT CONTRACTS. THE ASSESSING OFFICER FINALLI SED THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 UNDER SECTION 144 OF THE AC T ON THE GROUND THAT THE ASSESSEE FAILED TO COMPLY WITH THE VARIOUS NOTICES ISSUED BY THE ASSESSING OFFICER AND THE OVERALL ATTITUDE OF THE ASSESSEE WA S NOT CO-OPERATIVE. ACCORDING TO THE ASSESSING OFFICER, ON ALL THE QUERIES, THE A SSESSEE HAD GIVEN CRYPTIC REPLIES WITHOUT ANY EVIDENCE, AND ACCORDING TO THE ASSESSING OFFICER THERE WAS NO OPTION BUT TO FINALISE THE PROCEEDINGS EX PARTE UNDER THE PROVISIONS OF SECTION 144 OF THE ACT. 4. BEING AGGRIEVED WITH THE ASSESSMENT, ASSESSEE TO OK UP THE DISPUTE IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS SUBMITTED BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE ASSES SMENT HAD BEEN MADE U/S 144 WITHOUT SERVING THE MANDATORY SHOW CAUSE NOTICE UNDER SECTION 144(1) OF THE ACT; THAT ASSESSEE HAD ATTENDED BEFORE THE ASSE SSING OFFICER ON A NUMBER OF OCCASIONS AND FILED RELEVANT INFORMATION ASKED FOR; THAT INFORMATION REQUIRED VIDE NOTICE UNDER SECTION 142(1) HAD BEEN FURNISHED; THA T THERE WAS SOME DELAY IN FURNISHING THE SAME; BUT THE ASSESSEE HAD REPLIED T O THE SUBSEQUENT QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER. IT WAS ALSO EXPLAINED THAT THE ASSESSEE IS A CONTRACTOR FOR GOVERNMENT AND SEMI-GO VERNMENT ORGANIZATIONS, HIS BOOKS OF ACCOUNT ARE DULY AUDITED AND THE RETUR N WAS PREPARED ON THE BASIS OF THE AUDITED BALANCE SHEET, PROFIT & LOSS ACCOUNT , ETC. 5. THE ABOVE SUBMISSIONS OF THE ASSESSEE DID NOT FI ND FAVOUR WITH THE COMMISSIONER OF INCOME-TAX (APPEALS), WHO AFFIRMED THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 144 OF THE ACT. AFTER DISCUSSING THE CHRONOLOGICAL EVENTS IN PARA 6 OF IMPUGNED ORDER, THE COMMISSIONE R OF INCOME-TAX (APPEALS) HELD IN PARA 7 AS FOLLOWS: 7.IT IS CLEAR FROM THE ABOVE THAT THE APPELLANT IN INITIAL PHASE HAD NOT ATTENDED IN RESPONSE TO FEW NOTICES AND HAD NOT FILED THE INFOR MATION ASKED FOR BUT AT A LATER STAGE THE INFORMATION ASKED FOR WAS SUBMITTED BEFORE THE AO. THE PROVISIONS OF SECTION 147 CAN BE INVOKED IN CASE A PERSON FAILS TO COMPLY WIT H ALL THE TERMS OF NOTICE ISSUED U/S 142(1) OR 143(2). THE EMPHASIS IS ON THE WORD ALL. THE APPELLANT HAD NOT COMPLIED FULLY BY FILING ALL THE DETAILS ASKED IN THE NOTICE UNDER SECTION 143(2) DT 3.9.3007. THE APPELLANT HAD FILED INFORMATION AND DOCUMENTS IN RESPONSE TO THE SUBSEQUENT LETTERS ISSUED BY THE ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 3 AO ON 27.9.2007 AND AGAIN ON 31.10.2007. IT MAY ALS O BE SEEN FROM THE ABOVE THAT THE APPELLANT HAD NOT ATTENDED BEFORE THE AO IN COMPLIA NCE WITH THE ORIGINAL NOTICE ISSUED U/S 143(2). TAKING A STRICTLY TECHNICAL VIEW IT CAN BE SAID THAT THE ASSESSMENT U/S 144 WAS JUSTIFIED. 6. AS REGARDS THE ASSESSEES CONTENTION THAT A SHOW CAUSE NOTICE SHOULD BE ISSUED BEFORE THE CASE IS ASSESSED UNDER SECTION 14 4, THE COMMISSIONER OF INCOME-TAX (APPEALS) OBSERVED THAT A NOTICE UNDER SECTION 142(1) WAS ISSUED FOLLOWED BY REMINDERS TO THE ASSESSEE, WHO FILED IN FORMATION AND AS SUCH, THE ARGUMENT OF THE ASSESSEE WAS NOT ACCEPTED BY HIM. 7. ANOTHER ISSUE RELATES TO THE APPLICATION OF PROV ISIONS OF SECTION 44AD AND ESTIMATING NET INCOME FROM CONTRACT BUSINESS AT 8% OF THE TOTAL RECEIPTS AND ESTIMATING THE PROFIT OF ROLLER HIRE BUSINESS AT 40 %. THE ASSESSING OFFICER STATED THAT PERUSAL OF THE PROFIT & LOSS ACCOUNT REVEALED THAT BUT FOR INCOME FROM ROLLER HIRE CHARGES, TOTAL INCOME WOULD HAVE RESULTED IN A LOSS. IN REGARD TO PURCHASES, NO STOCK REGISTER WAS MAINTAINED AND THEREFORE, IT WAS DIFFICULT TO VERIFY CONSUMPTION FIGURES AND THAT THE CLOSING STOCK WAS ON THE BASIS OF ASSESSEES OWN CERTIFICATION. ACCORDING TO THE ASSESSING OFF ICER, ASSESSEE HAD DEDUCTED TAX ON SUB-CONTRACT PAYMENTS OF RS 1,67,24,537/-, W HEREAS TOTAL EXPENSES DEBITED TO THE ACCOUNTS UNDER THE HEAD LABOUR CONTR ACT, SUB-CONTRACT AND TRANSPORT CONTRACT AMOUNTED TO RS 1,86,62,475/-. FO R THESE REASONS, THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND EST IMATED THE INCOME FROM CONTRACTING BUSINESS AT 8% AND FOR ROLLER HIRE BUSI NESS AT 60% OF THE ROLLER HIRE CHARGES. BEFORE THE COMMISSIONER OF INCOME-TAX (APP EALS), IT WAS CONTENDED THAT THERE WAS NO FINDING BY THE ASSESSING OFFICER THAT THE ACCOUNTS WERE UNRELIABLE OR HAD ANY SERIOUS DEFECTS; THAT IN A CA SE WHERE THERE ARE AUDITED ACCOUNTS AND TURNOVER EXCEED RS 40 LAKHS, PROVISION S OF SEC. 44AD ARE NOT APPLICABLE AND THEREFORE, THE ESTIMATION OF INCOME AT THE RATE OF 8% WAS NOT APPROPRIATE. THE ACCOUNTS CONTAINED DETAILS OF EXPE NDITURE ON CONSUMABLES, FUEL ETC. ON THE ROAD ROLLERS ON THE BASIS OF WHICH HIRE INCOME FROM SUCH ACTIVITY CAN EASILY BE DETERMINED AND THE ESTIMATION MADE BY THE AO AT 60% WAS ON THE HIGHER SIDE. ACCORDING TO THE COMMISSIONER OF INCOM E-TAX (APPEALS), ASSESSEE ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 4 HAD NOT MAINTAINED STOCK REGISTER AND WAS UNABLE TO GIVE ANY BASIS FOR THE WORK- IN-PROGRESS OR CONSUMPTION OF MATERIAL FOR THE VARI OUS CONSTRUCTION WORKS, AND PURCHASE BILLS WERE NOT PRODUCED BEFORE THE ASSESSI NG OFFICER. THE ASSESSING OFFICER HAS POINTED OUT CERTAIN DISCREPANCIES IN TH E REGISTER MAINTAINED FOR LABOUR PAYMENTS AND SUB-CONTRACT PAYMENTS AS PER TDS CERTI FICATES WORKED OUT TO A FIGURE MUCH LESS THAN THE TOTAL AMOUNT OF EXPENSES CLAIMED UNDER LABOUR CONTRACT IN THE PROFIT & LOSS ACCOUNT. FOR ALL THE ABOVE REASONS, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE ACCOUNT BOOKS OF THE ASSESSEE WERE NOT RELIABLE AND THAT THE ASSESSEE FU RNISHED THE INFORMATION DURING THE ASSESSMENT PROCEEDINGS IN A SUMMARY MANN ER THAT TOO AFTER A CONSIDERABLE DELAY. THE COMMISSIONER OF INCOME-TAX (APPEALS) THEREAFTER PROCEEDED TO MAKE HIS OWN ESTIMATION AND DIRECTED T HE ASSESSING OFFICER TO TAKE THE TOTAL PROFIT AT RS 61.41 LAKHS INSTEAD OF RS 91 ,46,674/- ESTIMATED BY THE ASSESSING OFFICER. STILL AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 8. BEFORE US, THE LEARNED COUNSEL FOR THE APPELLANT VEHEMENTLY ARGUED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN U PHOLDING THE BEST JUDGMENT ASSESSMENT MADE BY THE ASSESSING OFFICER INVOKING T HE PROVISIONS OF SECTION 144 OF THE ACT, EVEN WHEN NO SHOW CAUSE NOTICE WAS REQUIRED BY THE PROVISO TO SECTION 144(1) OF THE ACT AS ISSUED AND SERVED ON T HE ASSESSEE. APART THEREFROM IT HAS ALSO BEEN SUBMITTED BY RELYING N THE DECISIO N OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF H . GOUTHAMCHAND V ADDL . CIT 8 ITR (TRIB) 269 (BANG.) THAT AN ASSESSMENT UNDER SECTION 144 CANNOT BE MADE MERELY BECAUSE THE ASSESSEE HAD FAILED TO EXPLAIN ALL THE QUERIES RAISED BY THE DEPARTMENT WHEN THE ASSESSEE HAD FILED THE INFORMATION CALLED FOR. THE LEARNED COUNSEL ALSO POINTED OUT IN SUPPORT OF GROUND NO. 2 OF THE APPEA L THAT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN REJECTING THE BOOK RESULTS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. IN THE ALT ERNATIVE, IN SUPPORT GROUND NO. 3 IT HAD BEEN SUBMITTED THAT THE COMMISSIONER OF INCO ME-TAX (APPEALS) WAS NOT JUSTIFIED IN ESTIMATING NET PROFIT AT RS 61.41 LAKH S, WHICH WAS QUITE EXCESSIVE CONSIDERING THAT THE ASSESSEE HAD DECLARED A TOTAL INCOME OF RS 45,23,640/-. IT IS ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 5 POINTED OUT THAT THE ASSESSEE IS ENGAGED IN CIVIL C ONTRACTING BUSINESS, EXECUTING GOVERNMENT CONTRACTS ON WHICH THE PROFIT RATE IS NO T VERY HIGH. IN THIS CONNECTION, A REFERENCE HAS BEEN INVITED TO THE PAPER BOOK WHER EIN IS PLACED COPIES OF ALLOTMENT OF TENDERS BY VARIOUS AGENCIES TO THE ASS ESSEE WHICH CLEARLY SHOW THAT THE WORK WAS ASSIGNED TO THE ASSESSEE ON A VERY LOW PROFIT MARGINS AND, THEREFORE, THE LOWER AUTHORITIES HAVE ERRED IN MAKI NG EXCESSIVE ESTIMATION OF PROFITS BY APPLYING A PROFIT RATE OF 8%. IT HAS BEE N ARGUED THAT EVEN THE INCOME ESTIMATED ON ACCOUNT OF ROLLER HIRE CHARGES IS ALSO EXCESSIVE. 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE HAS DEFENDED THE ORDER OF THE COMMI SSIONER OF INCOME-TAX (APPEALS). ACCORDING TO HIM, THE COMMISSIONER OF IN COME-TAX (APPEALS), MADE NO MISTAKE IN UPHOLDING THE INVOKING OF SECTION 144 BY THE ASSESSING OFFICER, INASMUCH AS THE ASSESSEE HAD NOT FULLY COMPLIED WIT H THE TERMS OF NOTICE ISSUED UNDER SECTIONS 142(1) OR 143(2) OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. IN SO FAR AS GROUND NO 1 IS CONCERNED, GRIEVANCE OF THE ASSESSEE IS THA T THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN UPHOLDING THE INVOKING OF SECTION 144 OF THE ACT BY THE ASSESSING OFFICER IN ORDER TO MAKE A BEST JUDGMENT ASSESSMENT. SECTION 144 OF THE ACT PERMITS AN ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF AN ASSESSEE TO THE BEST OF HIS JUDGMENT, IF ANY OF THE CONDITIONS PRESCRIBED IN CLAUSES (A) TO (C) OF SUB-SECTION (1) OF SECTION 14 4 ARE FULFILLED IN A CASE. IN THIS CASE, THE STAND OF THE REVENUE IS THAT IN TERMS OF CLAUSES (B) AND (C) OF SECTION 144(1), THE ASSESSING OFFICER WAS JUSTIFIED IN MAKI NG THE BEST JUDGMENT ASSESSMENT. IN TERMS OF CLAUSES (B) AND (C) IF AN A SSESSEE FAILS TO COMPLY WITH THE TERMS OF NOTICE ISSUED UNDER SECTION 142(1) OR 143(2) OF THE ACT, INVOKING OF SECTION 144 IS JUSTIFIED. THE COMMISSIONER OF INCOM E-TAX (APPEALS) HAS CONCLUDED THAT THE ASSESSEE HAD FAILED TO COMPLY WI TH ALL THE TERMS OF THE NOTICES ISSUED UNDER SECTIONS 142(1) OR 143(2) OF THE ACT. HOWEVER, IN REACHING TO SUCH CONCLUSION IN PARA 7 OF THE IMPUGNED ORDER, THE COM MISSIONER OF INCOME-TAX ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 6 (APPEALS) HAS APPRECIATED THE FACTUAL POSITION IN T HE FOLLOWING MANNER IN HIS ORDER: THERE IS A COPY OF A QUESTIONNAIRE ON THE RECORD W HICH APPEARS TO HAVE BEEN ISSUED ALONG WITH THE NOTICE DT 31.9.07. ON 29.9.07, A LET TER WAS ADDRESSED TO THE APPELLANT BY THE JCIT, RANGE 2, SANGLI, ASKING HIM VARIOUS DETAI LS INCLUDING LOANS, CREDITORS, DEBTORS, OUTSTANDING LIABILITIES, ADDITIONS TO FIXED ASSETS, COPIES OF BANK ACCOUNTS, DETAILS OF VARIOUS EXPENSES, METHOD OF STOCK VALUATION ETC. A NOTICE U/S 131 WAS ALSO ISSUED TO THE APPELLANT ASKING HIM TO PRODUCE THE INFORMATION. ON 31.10.07, ANOTHER LETTER WAS ADDRESSED TO THE APPELLANT ASKING FOR CERTAIN OTHER INFORMATION SUCH AS BALANCE SHEET OF JOINT VENTURES, DETAILS OF IMMOVABLE PROPERTY, PERS ONAL VEHICLES, LEDGER EXTRACT ALONG WITH MASTER ROLL FOR PAYMENT FOR LABOUR, PURCHASES OF DI ESEL, ASPHALT, STEEL, CEMENT ETC. THE APPELLANT SUBMITTED HIS REPLY TO THE QUESTIONS ASKE D VIDE LETTER DT 27.9.07. REPLIES TO ALL THE 19 QUESTIONS ASKED WAS SUBMITTED INCLUDING DETA ILS OF SUNDRY CREDITORS, SUNDRY DEBTORS, PROVISIONS, ADDITIONS TO PLANT AND MACHINE RY, LEDGER ACCOUNT FOR VARIOUS EXPENSES. THE INFORMATION REQUIRED VIDE LETTER DT 3 1.10.07 WAS ALSO FURNISHED. THIS INFORMATION INCLUDED DETAILS OF CAPITAL ACCOUNT, PE RSONAL BALANCE SHEET, LIST OF CREDIT CARS, DETAILS OF VARIOUS EXPENSES. THE LEDGER ACCOUNT OF LABOUR CHARGES PAID DIESEL, OIL PURCHASE, PURCHASE OF OTHER MATERIALS WERE ALSO SUB MITTED. AFT4R CONSIDERING THE ABOVE DETAILS, A LETTER WAS AGAIN ISSUED TO THE APPELLANT ON 6.12.2007. IN THIS LETTER A SET OF QUERIES WERE RAISED BASED ON THE EXAMINATION OF THE INFORMATION FILED EARLIER BY THE APPELLANT. SOME OF THE IMPORTANT QUERIES RELATED TO DETAILS OF CLOSING STOCK IN LIGHT OF HEAVY PURCHASES SHOWN IN THE MONTH OF MARCH, IN THE LEDGER ACCOUNT, PROPORTIONATE INTEREST ON RELATABLE TO DIVIDEND INCOME, COPIES OF MUSTER ROLL TO SUPPORT LABOUR PAYMENTS, COPY OF TDS RETURNS FILED ETC. THE APPELLANT SUBMIT TED A WRITTEN REPLY TO THE QUESTIONS RAISED, COPY OF THE UNDATED REPLY WAS ON THE FILE. THIS REPLY IS ACCOMPANIED BY STATEMENT OF INCOME OF THE JOINT VENTURE. 7/12 EXTRACTS OF LA ND HOLDING, ACKNOWLEDGEMENTS OF TDS RETURN FILED, COPIES OF CERTAIN CONTRACT BILLS. THE ASSESSMENT WAS COMPLETED VIDE ORDER DT 28.12.07. 11. A PERUSAL OF THE AFORESAID REVEALS THAT IT IS N OT A CASE WHERE THE DETAILS AND THE INFORMATION CALLED FOR HAVE NOT BEEN COMPLI ED WITH, BUT IS A CASE WHERE ALL THE QUERIES RAISED ON EXAMINATION OF THE INFORM ATION FILED, WAS NOT SAID TO HAVE BEEN PROVIDED BY THE ASSESSEE. AS PER THE AFOR ESAID DISCUSSION BY THE COMMISSIONER OF INCOME-TAX (APPEALS), WHICH IS NOT IN DISPUTE, IT EMERGES TO BE A CASE WHERE THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE RESPONSE TO THE QUERIES RAISED BY HIM ON EXAMINATION OF THE INFORMA TION FILED BY THE ASSESSEE. THE SAME, IN OUR VIEW, WOULD NOT CONSTITUTE A FAILU RE TO COMPLY WITH ALL THE TERMS OF THE NOTICE ISSUED UNDER SECTION 142 OR 143(2) OF THE ACT, AS MANDATED IN TERMS OF CLAUSES (B) AND (C) OF SECTION 144(1) OF THE ACT . IN OUR OPINION, NON-SATISFACTION WITH THE ANSWER TO THE QUERIES RAISED CANNOT ENABLE THE ASSESSING OFFICER TO INVOKE CLAUSES (B) AND (C) OF SECTION 144(1) OF THE ACT. THUS, FACTUALLY SPEAKING, IN THE PRESENT CASE, WE FIND NO JUSTIFICATION FOR T HE COMMISSIONER OF INCOME-TAX (APPEALS) TO UPHOLD THE INVOKING OF SECTION 144 OF THE ACT BY THE ASSESSING OFFICER UNDER SECTION 144 OF THE ACT. THUS, ON THIS ASPECT ASSESSEE PARTLY SUCCEEDS. ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 7 12. HOWEVER, THE NEXT ISSUE RELATES TO THE REJECTIO N OF BOOK RESULTS DECLARED BY THE ASSESSEE. IN THIS REGARD, WE HAVE CAREFULLY PERUSED THE DISCUSSION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I N PARAGRAPH B WHEREIN THE BUSINESS INCOME OF THE ASSESSEE HAS BEEN COMPUTED, IT CLEARLY EMERGES THAT THE PURCHASE BILLS WERE NOT PRODUCED SO AS TO VERIFY TH E PURCHASES AND CLOSING STOCK. SIMILARLY, THE ASSESSING OFFICER NOTED THAT LABOUR PAYMENT VOUCHERS WERE NOT EXPLICIT FOR VERIFICATION. THE ASSESSING OFFICER HA S ALSO NOTED THAT THE AMOUNTS ENTERED IN THE LABOUR PAYMENT REGISTERS DID NOT TAL LY WITH THE AMOUNTS DEBITED AND THE VOUCHERS FOR SUCH DIFFERENCES WERE ALSO NOT PRODUCED. IT HAS ALSO BEEN CONCLUDED THAT THE SUNDRY CREDITORS AND DEBTORS WER E UNVERIFIABLE IN THE ABSENCE OF CONFIRMATIONS. THE FINDING OF THE ASSESSING OFFI CER IS THAT NONE OF THE EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT WER E SUBSTANTIATED IN THE ABSENCE OF THE REQUISITE DETAILS. FOR ALL THE ABOVE REASONS, THE ASSESSING OFFICER REJECTED THE TRADING RESULTS DECLARED AND INSTEAD E STIMATED INCOME OF THE ASSESSEE BY ESTIMATING NET PROFIT RATE AT 8% OF CON TRACT RECEIPTS. THE INFIRMITIES NOTED BY THE ASSESSING OFFICER, IN OUR VIEW, PERSIS TED EVEN BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) AND WE FIND NO REASONS TO DEPART FROM THE CONCLUSIONS ARRIVED AT BY THE LOWER AUTHORITIES ON THIS ASPECT, SINCE NO CREDIBLE MATERIAL HAS BEEN FURNISHED BEFORE US, WHI CH WOULD REQUIRE INTERFERENCE. THEREFORE, UNDER THESE CIRCUMSTANCES, WE FIND NOTHI NG WRONG WITH THE ACTION OF THE REVENUE AUTHORITIES IN ESTIMATING THE INCOME UN DER THE FACTS AND CIRCUMSTANCES OF THE CASE. IN SO FAR AS THE PLEA OF THE ASSESSEE THAT INCOME HAS BEEN ESTIMATED EXCESSIVELY, WE FIND THAT THE COMMIS SIONER OF INCOME-TAX (APPEALS) HAS ESTIMATED THE INCOME FROM REGULAR CON TRACT BUSINESS AT 8% OF THE CONTRACT RECEIPTS. IN SO FAR AS INCOME FROM SUB-CON TRACTING IS CONCERNED, THE SAME HAS BEEN ESTIMATED AT 4%. IN OUR CONSIDERED OP INION, ESTIMATION AT 8% IS ON HIGHER SIDE HAVING REGARD TO THE FACTS AND CIRCU MSTANCES OF THE CASE. THE LEARNED COUNSEL FOR THE APPELLANT HAS EXPLAINED THE CIRCUMSTANCES IN WHICH THE CONTRACTS HAVE BEEN AWARDED TO THE ASSESSEE. THE A SSESSEE HAD RETURNED TOTAL BUSINESS INCOME OF RS 32,10,386/- ON TOTAL CONTRACT RECEIPTS OF RS 6,61,06,399/- ITA NO 850/PN/08 PRAVIN P PA TIL, ISLAMPUR 8 WHICH PROVIDES RATE OF 4.85%. IN OUR CONSIDERED OPI NION, IT WOULD MEET THE ENDS OF JUSTICE IF INCOME FROM CONTRACTING BUSINESS IS E STIMATED AT 6% AS AGAINST 8% ESTIMATED BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) ON RECEIPT OF RS 523.5 LAKHS. SO FAR AS PROFIT ON SUB-CONTRACT AND ROAD RO LLER HIRING IS CONCERNED, WE UPHOLD THE ESTIMATION AS ADOPTED BY THE COMMISSIONE R OF INCOME-TAX (APPEALS). WE DIRECT ACCORDINGLY. 13. GROUND NO. 4 OF APPEAL THAT THE ASSESSMENT WAS BARRED BY LIMITATION HAS NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR THE ASS ESSEE AT THE TIME OF HEARING AND, IS, THEREFORE, DISMISSED AS NOT PRESSED. 14. GROUND NO. 5 RELATING TO LEVY OF INTEREST UNDER SECTION 234B, & 234C OF THE ACT IS CONSEQUENTIAL IN NATURE AND NEEDS NO ADJUDIC ATION. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MAY, 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 13 TH MAY, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. MR PRAVIN P PATIL, ISLAMPUR 2. JT. CIT, R-2 SANGLI 3. THE CIT(A)-, KOLHAPUR 4. THE CIT-I, KOLHAPUR 5. THE D.R, A BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE