SHRI RAJ KUMAR KHEMANI, BHARATPUR V. ITO, BHARATPUR

ITA 911/JPR/2012

• Counselvise Citation: 91123114 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DR DHK
• Keywords: Depreciation
• Section: 44AD; 143(3); 145

Judgement Text

ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 911/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI RAJ KUMAR KHEMANI PROP. M/S. RAJ & CO. 2, BAGWAN COLONY, KARTARPURA RAILWAY CROSSING, JAIPUR CUKE VS. THE ITO WARD- 1 BHARATPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AECPK 1275 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJENDRA AGARWAL, C.A. JKTLO DH VKSJ LS@ REVENUE BY :SMT. NEENA JEPH, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23/02/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 20 /03/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A), ALWAR; DATED 04-09-2012 FOR THE ASSESSMENT YEAR 2009-10 WHERE IN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN:- 1. DISMISSING THE GROUND COMPLETING THE ASSESSMENT, WHEN THE NOTICE ISSUED U/S 143(2) WAS S ERVED UPON ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 2 THE ASSESSEE ON 01-10-2010 WHILE THE TIME LIMIT HAS ALREADY EXPIRED ON 30-09-2010. 2. DISMISSING THE GROUND REJECTING THE BOOKS OF ACCOUNT BY APPLYING THE PROVISIONS OF SECTION 145 O F THE I.T. ACT, 1961. 3. ESTIMATING GROSS PROFIT RATE @ 7% (AGAINST THE ESTIMATION OF 8% BY THE LD. AO) INSTEAD OF DELETING THE ENTIRE TRADING ADDITION OF RS. 8,20,039/-. 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1. THEREFORE, THE SAME IS DI SMISSED BEING NOT PRESSED. 3.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CIVIL CONTRACTOR, PROPRIETOR OF M/S. RAJ & CO., RANJEET NAGAR, BHARAT PUR. THE AO OBSERVED THAT AS AGAINST THE TOTAL CONTRACT RECEIPTS OF RS. 1,64,02,406/- ASSESSEE HAS DECLARED 3% OF NET PROFIT RATE WHICH WAS LOWER AS C OMPARED TO NET PROFIT RATE OF 4.46%. THE ASSESSEE WAS ASKED TO PRODUCE T HE BOOKS OF ACCOUNT WITH SUPPORTING BILLS & VOUCHERS, STOCK REGISTER, QUALIT Y AND QUANTITY-WISE DETAILS OF OPENING AND CLOSING STOCK AND DAY TO DAY CONSUMP TION OF MATERIALS WHICH WERE NOT PRODUCED. BESIDES AO FOUND THAT DAY TO DAY RECORD OF CONSUMED MATERIAL AND PAYMENT OF LABOUR HAD NOT BEEN MAINTAI NED, COMPLETE BILLS AND VOUCHERS IN RESPECT OF EXPENSES AND PURCHASES WERE NOT PRODUCED. THE AO WAS OF THE VIEW THAT FROM THE RECORDS PRODUCED BY T HE ASSESSEE, IT WAS NOT ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 3 POSSIBLE TO WORK OUT THE CORRECT TAXABLE PROFIT AND THEREFORE, BOOKS OF ACCOUNTS WERE REJECTED U/S 145 OF THE ACT. AO HELD THAT NET PROFIT RATE SHOWN BY THE ASSESSEE @ 3% WAS INADEQUATE AND ESTIMATED N ET PROFIT RATE OF 8%. 3.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE THE REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF NET PROFIT RATE AT 8% WAS CHALLENGED. IT WAS PLEADED THAT :- (I) ALL THE BOOKS OF ACCOUNT WERE DULY MAINTAINED A ND PRODUCED BEFORE THE AO WHICH IS MENTIONED BY HIM IN THE ASSESSMENT ORDER AS PRODUCED BOOKS OF ACCOUNT WHI CH HAVE BEEN TEST CHECKED. (II) THE BOOKS OF ACCOUNTS WERE EXAMINED WHICH ALSO REFLECTS THE CASH PURCHASES / PAYMENTS. (III) THE AOS ASSERTION IS THAT PROPER VOUCHERS AN D DAY TO DAY STOCK IS NOT MAINTAINED WITHOUT ANY SPECIFIC DE TAILS AND GENERAL OBSERVATIONS. (IV) THERE ARE NO ADVERSE FINDINGS FROM THE AO THAT BOOKS OF ACCOUNT ARE NOT PROPERLY MAINTAINED. THE GENERAL OB SERVATION MADE IS REGARDING NON-PRODUCTION OF VOUCHERS FOR WH ICH NO DETAILS HAVE BEEN GIVEN. (V) THE AO FAILED TO APPRECIATE THAT DURING THE YEA R THE TOTAL RECEIPTS OF THE ASSESSEE HAS SUBSTANTIALLY INCREASE D FROM RS. 75.28 LACS TO RS. 164.02 LACS IN THIS YEAR. ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 4 3.3 THE ASSESSEE FURTHER SUBMITTED THAT:- THE LD. AO FURTHER VERY ARBITRARILY IGNORED THE ASSESSMENT U/S 143(3) FOR THE ASSESSMENT YEAR 2007- 08 COMPLETED VIDE HIS ORDER DATED 18-11-209 (PB 8 TO 1 2) AT THE TOTAL INCOME OF RS. 8,32,962/- BY NO REJECTION OF B OOKS OF ACCOUNT OF THE ASSESSEE U/S 145 AND MAKING CERTAIN ADDITIONS IN THE RETURNED INCOME OF RS. 1,92,970/- BY DISALLOWIN G CONTRACT EXPS. OF RS. 2,50,000/-, TRAVELING AND CONVEYANCE E XPS. RS. 5,000/-, TELEPHONE EXPS. RS. 4,000/-, SUNDRY EXPS. RS. 7,000/- AND UNEXPLAINED OPENING STOCK OF RS. 3,73,992/- AND VIDE YOUR HONOURS APPEAL ORDER DATED 18-01-2010 (PB 13 TO 16 ) IN APPEAL NO. 144/209-10 ADDITIONS MADE BY DISALLOWING CONTRACT EXPS. TRAVELING AND CONVEYANCE EXPS. TELEPHONE EXPS . AND MISC. EXPS. WERE ONLY RESTRICTED TO RS. 50,000/-, RS. 3,000/-, RS. 2,000/- AND RS. 3,000/- RESPECTIVELY AND THE ENTIRE ADDITION OF UNEXPLAINED OPENING STOCK OF RS. 3,73,992/- WERE DE LETED. IN THIS WAY THE FINALLY ASSED INCOME FOR THE ASSESS MENT YEAR 2007-08 ON THE TOTAL CONTRACT RECEIPTS OF RS. 51.39 LACS CAME TO RS. 2,50,970/- (192720+50000+3000+2000+3000 ) I.E. 4.89% ONLY. WHEN THE FINALLY ASSESSED INCOME FOR THE ASSESSMENT YEAR 2007-08 ON THE TOTAL CONTRACT RECEIPTS OF RS. 51.30 LACS CAME TO 4.89% ONLY NO FURTHER APPEAL WAS MADE BY THE DEPAR TMENT, APPLICATION OF NET PROFIT RATE AT 8% WITHOUT ANY BA SIS SIMPLY ON A WILD GUESS ON 2.18 TIMES TOTAL RECEIPTS OF RS. 16 4.02 LACS FOR THE ASSESSMENT YEAR 2009-10 BY THE LD. AO IS FULLY UNJUST AND BAD IN LAW. RELIANCE WAS PLACED ON:- (I) DCIT VS. ASSOCIATED STONE INDUSTRIES (KOTAH) LT D. (1998), 22 TW 155. (II) SMT. P.K. JAIN VS. ITO (1999), 22 TW 498 (III) AJANTA CONSTRUCTION (P) LTD. VS. ACIT (1999) 22 TW 606 (IV) RAMIDAS MODI VS. DCIT (1999) 22 TW 501. ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 5 (V) SONA TEXTILE (P) LTD. VS. ACIT (1997) 20 TW 82. 3.4 THE LD. CIT(A) PARTLY ALLOWED THE APPEAL BY UPH OLDING THE REJECTION OF BOOKS OF ACCOUNT AND REDUCED ESTIMATION OF NET PROF IT RATE AT 7% SUBJECT TO DEPRECIATION AND INTEREST BY FOLLOWING OBSERVATIONS . 5.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS W ELL AS SUBMISSIONS MADE BY THE A.R. I FIND THAT THE AO HAS REJECTED THE BOOK RESULTS AND HAS APPLIED THE PROVISIONS OF SECTION 145 OF THE ACT FOR THE FOLLOWING REASONS:- (I) DAY TO DAY RECORDS OF MATERIAL CONSUMED HAVE NO T BEEN MAINTAINED. (II) DAY TO DAY RECORDS OF PAYMENT MADE TO LABOUR H AS NOT BEEN MAINTAINED. (III) COMPLETE BILLS/ VOUCHERS IN RESPECT OF EXPENSES/PURCHASES CLAIMED IN THE RETURN OF INCOME HAVE NOT BEEN PRODUCED FOR VERIFICATION. (IV) SOME OF THE EXPENSES HAVE BEEN CLAIMED ON THE BASIS OF SELF MADE VOUCHERS AND HAVE BEEN MADE IN C ASH. (V) STOCK RECORDS WERE NOT MAINTAINED. THE A.R. HAS SUBMITTED THAT THE BOOKS OF ACCOUNT OF ASSESSEE WERE EXAMINED AND VERIFIED BY THE LD. AO A ND NO SPECIFIC INSTANCE OF CASH PURCHASE/ PAYMENTS HAVE B EEN POINTED OUT. IN VIEW OF THE REASONS STATED ABOVE BY THE AO, I AM OF THE CONSIDERED OPINION THAT THE AO WAS CORRECT IN HOLDI NG THAT THE BOOK RESULTS WERE NOT OPEN TO COMPLETE VERIFICATION AND THEREFORE, IT WAS NOT POSSIBLE TO DEDUCE THE CORREC T PROFIT OF THE BUSINESS PARTICULARLY IN LIGHT OF THE FACTS THAT TH E NET PROFIT DURING THE YEAR HAD COME DOWN TO 3% AS COMPARE TO 4 .46% IN A.Y. 200-09 AND 5.03% IN A.Y. 07-08. THEREFORE, THE REJECTION ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 6 OF BOOKS OF ACCOUNT AND APPLICATION OF PROVISION O F SECTION 145(3) BY THE AO IS UPHELD AND GROUND NO. 2 IS DISM ISSED. THE AO HAS APPLIED NET PROFIT RATE OF 8% TO THE CON TRACT RECEIPTS TO MAKE AN ADDITION OF RS. 820039/- TO THE TOTAL INCOME OF RS. 463390/- DECLARED BY THE APPELLANT IN THE RE TURN OF INCOME. THE A.R. HAS SUBMITTED THAT THE APPLICATION OF RATE OF 8% IS ARBITRARY AND NEITHER ANY COMPARABLE CASE RES ULT NOR PAST HISTORY OF THE ASSESSEE HAS BEEN CONSIDERED. I T HAS BEEN SUBMITTED THAT IN A.Y. 2007-08, ON THE TOTAL CONTRA CT RECEIPTS OF RS. 51.30 LACS THE FINALLY ASSESSED INCOME CAME TO RS. 250970/- I.E. 4.89% ONLY. FURTHER, THE AO HAS NOT ALLOWED TH E INTEREST ON CAR LOAN OF RS. 12,390/- AND DEPRECIATION OF RS. 1, 37,689/-. REGARDING FALL IN NET PROFIT RATE AND GROSS PROFIT RATE IT HAS BEEN SUBMITTED THAT THE TOTAL RECEIPTS OF THE APPEL LANT HAD SUBSTANTIALLY INCREASED AT VERY REMOTE AND DISTANT AREAS AS THE RESULT OF WHICH THE GROSS PROFIT RATE HAS SLIGHTLY DECREASED FROM 10.02% TO 9.61%. I FIND THAT THE AO HAS APPLIED THE RATE OF 8% AFTER REJECTING THE BOOK RESULTS, APPARENTLY IN LIGHT OF THE PROVISIONS OF SECTION 44AD OF THE ACT WHICH PROVIDES FOR COMPU TING THE PROFITS AND GAINS OF BUSINESS OF CIVIL CONSTRUCTION ETC. @ 8% OF GROSS RECEIPTS WERE THE GROSS RECEIPTS DO NOT EXCEE D AN AMOUNT OF RS. 40 LACS. IN THE SECTION 44AD, IT IS ALSO PRO VIDED THAT SUB- SECTION (1) SHALL NOT APPLY IN CASE THE GROSS RECEI PT EXCEEDS AN AMOUNT OF RS. 40 LACS. IN LIGHT OF ABOVE DISCUSSION AND CONSIDERING THAT THE APPELLANT HAS DISCLOSED NET PR OFIT RATE OF 4.46% IN A.Y. 2008-09 AND NET PROFIT RATE OF 5.03% IN A.Y. 2007-08, I CONSIDER IT FAIR TO ESTIMATE THE NET PRO FIT RATE SUBJECT TO DEPRECIATION AND INTEREST AT 7% FOR A.Y. 2009-10 . ACCORDINGLY, THE NET PROFIT AFTER DEPRECIATION OF R S. 137689/- AND INTEREST OF RS. 12930/- IS WORKED OUT AT RS. 99 7550/- AND ADDITION IS WORKED OUT AT RS. 505397/- (RS. 997550 492153). ACCORDINGLY, THE ADDITION MADE BY THE AO IS UPHELD AT RS. 505397/- AND THE APPELLANT WILL GET A RELIEF OF RS. 314642/-. THE GROUND NO. 3 IS PARTLY ALLOWED AND GROUND NO. 4 IS ALLOWED. 3.5 AGGRIEVED, THE ASSESSEE IS BEFORE US. ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 7 3.6 LD. COUNSEL FOR THE ASSESSEE REITERATED THE FAC TS THAT IN THE YEAR IN QUESTION IT IS NOT IN DISPUTED THAT THE TURNOVER OF THE ASSESSEE HAS INCREASED BY 2.18 TIMES AS COMPARED TO PRECEDING YEAR. NO WOR THWHILE DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNT SO AS TO J USTIFY THE REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT, CONSEQUENTL Y REJECTION OF BOOKS OF ACCOUNT IS UNJUSTIFIED AND ARBITRARY. THE BOOKS OF ACCOUNT BEING PROPERLY WRITTEN DESERVE TO BE UPHELD. THE ASSESSEE HAS ALSO FILED THE WRITTEN SUBMISSION TO THE FOLLOWING EFFECT. 1. PARA 1 DOCUMENTARY EVIDENCES OF CONTRACT E XPENSES OF RS. 1,48,25,466/- ARE BEING FURNISHED FOR YOUR K IND VERIFICATION. SIMILARLY PROOF OF ALL OTHER EXPENSES VIZ. SALARIES & ALLOWANCE, TELEPHONE EXPS. , TRAVELING & CONVEYANCE EXPS. PRIN TING & STATIONARY EXPS. FEES, CAR EXPS. INTEREST ON CAR LO AN, MISC. EXPS. ETC ARE ALSO BEING PRODUCED HEREWITH FOR YOUR KIND EXAMINATION. 2. PARA 3 DETAILS WITH DOCUMENTARY EVIDENCES OF MATERIAL PURCHASE AND EXPENSES INCURRED ARE BEING P RODUCED HEREWITH FOR YOUR KIND VERIFICATION. 3. PARA 5 - NO STOCK REGISTER SHOWING QUALITY AND QUANTITYWISE STOCK WAS KEPT BY THE ASSESSEE AS THE SAME IS NOT POSSIBLE KEEPING IN VIEW OF THE NATURE OF BUSINESS OF THE ASSESSEE AND NO SUCH RECORD IS BEING MAINTAINED BY ANY IDENTICAL ASSESSEE. 4. PARA 7 - COMPLETE BOOKS OF ACCOUNT WITH SUPPORTING BILLS/VOUCHERS ARE BEING PRODUCED HEREWI TH FOR YOUR KIND VERIFICATION. ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 8 IT IS CONTENDED THAT IN PRECEDING YEAR AGAINST THE NET PROFIT ESTIMATION BY AO, THE NET PROFIT RATE OF 4.89% WAS DETERMINED IN FIRST APPEAL BY THE LD. CIT(A) WHICH HAS NOT BEEN CHALLENGED BY THE DEPARTM ENT. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REJECTED IN ASSESS MENT YEAR 2007-08. IT IS PLEADED THE BOOKS OF ACCOUNTS MAY BE UPHELD AND ADD ITION MAY BE DELETED. IN THE ALTERNATIVE LENIENT VIEW IN THE MATTER IS PL EADED. 3.7 THE LD. DR ON THE OTHER HAND CONTENDS THAT IT I S NOT IN DISPUTE THAT PROPER BOOKS OF ACCOUNTS WERE NOT PRODUCED BY THE A SSESSEE; NO STOCK REGISTER SHOWING QUALITY AND QUANTITY-WISE WAS MAIN TAINED BY THE ASSESSEE. IT WAS NOT POSSIBLE TO KEEP THE STOCK DETAILS; LOOK ING AT THE NATURE OF THE BUSINESS AND NO SUCH RECORD WAS MAINTAINED IN IDENT ICAL CASES. QUA THESE ASSERTIONS, ASSESSEE HAS NOT PRODUCED ANY CORROBOR ATIVE MATERIAL OR LIST OF ANY IDENTICAL CASES IN WHICH THE STOCK REGISTER IS NOT MAINTAINED. IT IS DIFFICULT TO COMPREHEND THAT SUCH A BIG BUSINESS CA N BE PROFITABLY CONDUCTED WITHOUT MAINTAINING PROPER RECORD. THE ASSESSEE EMP LOYS BIG WORKFORCE TO HANDLE DIFFERENT WORK SITES, IN THE ABSENCE OF MAIN TENANCE OF PROPER RECORD POTENTIAL CHANCES OF THEFT, EMBEZZLEMENT, MIS-UTILI ZATION AND MISMANAGEMENT ARE PRESENT. NO PRUDENT BUSINESSMAN W ILL KEEP SUCH RECORD. THUS IN THE ABSENCE OF PROPER RECORD, MAINT ENANCE OF STOCK REGISTER ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 9 AND OTHER DETAILS, IT IS NOT POSSIBLE FOR THE AO TO DETERMINE THE CORRECT TAXABLE PROFITS OF THE ASSESSEE. THEREFORE, REJECTI ON OF BOOKS OF ACCOUNT AND ESTIMATION OF PROFITS IS INEVITABLE; LD. CIT(A) WHI LE GIVING THE PART RELIEF HAS UPHELD THESE FINDINGS OF LD. AO . LD. DR FURTHER RE FERRED TO THE REMAND REPORT FILED BY THE AO DATED 16-07-2012 COMMENTING AS UNDER:- 2- VK;DJ VF/KFU;E DH /KKJK 1453 DS RGR CGH&[KKRKS DK S FUJLR DS LECU/K ESA %& FNUKAD 21-11-2011 DKS FY[KH X;H UKSV 'KHV ESA LI'V GS RFKK FU/KKZFJRH IZKF/KD`R IZFRFU/KH JH JKTSUNZ VXZOKY LH-,- US UKSV LHV IJ GLRK{KDJ LOH DKJ FD;K X;K FKK FD FCY OKMPJ ISK FD;S GS MUES LS DBZ OKMPJ FU/KKZJ.K DS NKSJKU GKFK LS CUK;S X;S FKS RFKK FU/KKZFJRH DK DKSBZ EKY [KKRK JFTLVJ RS;KJ UGHA FD;K GQVK FKK FU/KKZFJR H DS FO}KU LH , JH JKTSUNZ VXZOKY US HKH VKIUS TOKC LS LOHDKJ FD;K GS FD FNU IZFRFNU EKY [KKRK RS;KJ DJUK LEHKO UGH GSA BLLS LI'V GS FD FU/KKZFJRH DS [KKRKCGH O YKHK&GKFU TKS N KK;SZ X;S OG LGH UGH GS FTLDS FY;S FU;EKUQLKJ /KKJK 1453 DS VURXZR FU/KKZFJRH DK BS DSNKJH O;OLK; ESA FU/KKZJ.K O'KZ 2009&10 ESA 'KQ) YKHK 8 IZFRKR DK VKWADYU DJRS GQ, FU/KKZJ.K F D;K GS TKS LGH O MFPR GSA A LD. DR CONTENDS THAT LD. CIT(A) HAS BEEN VERY CONSI DERATE WHILE ALLOWING INTEREST AND DEPRECIATION FROM 7% ESTIMATED NET PRO FIT; ORDER OF THE LD. CIT(A) IS RELIED ON. 3.8 THE LD. COUNSEL FOR THE ASSESSEE IN REPLY CONTE NDS THAT THE ASSESSEE HAS ALSO FILED THE REPLY ON 14-08-2012 TO THIS REMA ND REPORT DATED 16-07- 2012 WHICH IS PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. 3.9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. CIT(A) AFTER CONSIDERI NG THE ASSESSEE'S EXPLANATION AND REPLY OF THE REMAND REPORT, LISTE D ABOVE FIVE DEFECTS TO BE ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 10 PRESENT IN ASSESSEE'S BOOKS OF ACCOUNT WHICH MADE T HE DETERMINATION OF PROPER TAXABLE PROFITS NOT POSSIBLE IN TERMS OF SEC . 145(3). IN THIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT EFFECTIV ELY DEMONSTRATE THAT THESE DEFICIENCIES IN THE BOOKS AND STOCK REGISTER HAD NO RELEVANCE. WE FIND MERIT IN THE ARGUMENTS OF LD. DR THAT IT IS INCOMPREHENSI BLE THAT SUCH A VOLUMINOUS AND DIVERSE BUSINESS CAN BE PROFITABLY C ONDUCTED BY ASSESSEE WITHOUT PROPER RECORD AND STOCK REGISTERS. IN CONSI DERATION OF ALL THESE FINDINGS, ARGUMENTS AND MATERIAL AVAILABLE ON RECOR D, WE ARE OF THE VIEW THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN RIGH TLY REJECTED BY THE LOWER AUTHORITIES. NOW COMING TO THE ESTIMATE OF NP, THE FACTS AND CIRCUMSTANCES OF ASSESSEE'S BUSINESS REMAINED SAME AS IN THE PREC EDING YEAR WHERE VARIOUS ADDITIONS WERE MADE BY THE AO. IN FIRST APPEAL, THE LD. CIT(A) RESTRICTED THE ESTIMATION OF NET PROFIT RATE AT 4.46% SUBJECT TO D EPRECIATION AND INTEREST WHICH IS REASONABLE. LOOKING AT THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT ESTIMATE OF NP RATE OF 7% IS ON HIGHER SIDE LOOKING AT THE PAST HISTORY OF THE ASSESSEE. T HUS, WE RESTRICT THE NET PROFIT RATE AT 4.46 % AS ADOPTED IN PRECEDING YEAR INSTEAD OF 7% DETERMINED BY THE LD. CIT(A). HENCE, THE GROUND OF THE ASSESSE E IN THIS BEHALF IS PARTLY ALLOWED. ITA NO. 911/JP/2012 SHRI RAJ KUMAR KHEMANI VS. ITO WARD- 1, BHARATPUR 11 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 /03/2015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH MARCH, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAJ KUMAR KHEMANI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 1, BHARATPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.911/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR