Asstt.CIT,Cir.-2, Aurangabad, V. Shri Popatlal M. Chordiya, Aurangabad

ITA 93/PUN/2004

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4342 (ITAT-PUNE)
• Duration Of Justice: 9 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 30-01-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 16-01-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Rejection of books of accounts; Business income; Depreciation; Source of fund
• Section: 44AD

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 93/PN/2004 AND ITA NO.168/PN/2006 (ASSTT.YEARS : 2001-02 AND 2002-03) ACIT, CIRCLE-2, AURANGABAD .. APPELLANT VS. POPATLAL M. CHORDIYA, PLOT NO.10, AHINSA NAGAR, OPP : AAKASHAWANI, JALNA ROAD, AURANGABAD. .. RESPONDENT PAN NO.AAHPC 1004H APPELLANT BY : SRI S.K. SINGH RESPONDENT BY : SMT. DEEPA KHARE DATE OF HEARING : 09-05-2013 DATE OF PRONOUNCEMENT : 14-05-2013 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE SEPARATE ORDERS DATED 22-10-2003 AND 18-11-2005 OF THE CIT(A)-II, AURANGABAD RELATING TO ASSESSMENT YEARS 2001-02 AND 2002-03 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE THESE WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.93/PN/2004 (A.Y. 2001-02) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. HE FILED THE RETURN OF INCOME ON 31-10-2001 DECLARING TOTAL INCOME AT RS.5,85,640 /-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS 2 UNDERTAKEN CONTRACT WORK AS WELL AS RECEIVED HIRE C HARGES ON ACCOUNT OF HIRING OF EQUIPMENTS USED IN THE CONTRACT WORK. HE NOTED THAT IN THIS CASE A SURVEY ACTION U/S.133A OF THE INCOME TAX ACT, 1961 WAS UND ERTAKEN ON 27-02-2001 DURING WHICH CERTAIN DISCREPANCIES WERE FOUND AND O N THE BASIS OF THE SAME EXCESS CASH FOUND AT RS.75,000/- AND EXCESS STOCK F OUND AT RS.20 LAKHS AMOUNTING TO RS.27,50,000/- WAS OFFERED BY THE ASSE SSEE AS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION DURING THE COURSE OF SURVEY. HOWEVER, HE NOTED THAT IN THE RETURN OF INCOME THE ASSESSEE HAS NOT HONOURED THE DECLARATION MADE DURING THE COURSE OF SURVEY AN D HAS RETRACTED FROM THE SAME AND HAD FILED THE RETURN SHOWING NET INCOME AT RS.5,85,640/-. THE ASSESSING OFFICER EXAMINED THE BOOKS OF ACCOUNTS PR ODUCED BEFORE HIM AND FOUND SERIOUS DEFECTS IN THE SAME. HE NOTED THAT T HE ASSESSEE DOES NOT MAINTAIN ANY STOCK REGISTER AND DOES NOT MAINTAIN A NY QUANTITATIVE DETAILS OF CLOSING STOCK. THE PAYMENTS FOR PURCHASES AND HIRE CHARGES ARE NOT SUPPORTED BY BILLS AND VOUCHERS. HE NOTED THAT THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME IN THE PROFIT AND LOSS ACCOUNT OF THE CONTRA CT BUSINESS. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE HE NOTED THAT THE BILLS OF VEHICLE EXPENSES/MACHINERY REPAIR ETC ARE NOT FULLY SUPPORT ED BY DOCUMENTARY EVIDENCES. SIMILARLY, NO BILLS FOR TESTING CHARGES , TRAVELLING EXPENSES ETC. WERE FOUND. HE NOTED THAT THERE ARE MANY SISTER CO NCERNS OF THE ASSESSEE AND FROM THE DETAILS OF PAYMENTS MADE TO THE SISTER CON CERNS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COULD NOT GIVE SATISFACTORY ANSWER REGARDING THE PAYMENTS MADE TO THE VARIOUS SISTER CONCERNS. IN V IEW OF THE DEFECTS MENTIONED ABOVE THE ASSESSING OFFICER CONFRONTED TH E ASSESSEE AND ASKED HIM TO EXPLAIN AS TO WHY THE BOOK RESULTS SHOULD NOT BE REJECTED AND THE PROFIT ESTIMATED. 3 3. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT AFTER REJECTING THE BOOKS OF ACCOUNTS. HE OBSERVED THAT AS AGAINST RS.1,36,51,5 84/- RECEIVED ON ACCOUNT OF HIRING OF JCB ETC. THE ASSESSEE HAS INCURRED EXPEN SES AMOUNTING TO RS.40,97,275/- ON ACCOUNT OF DIESEL AND OIL, RS.18, 35,000/- ON ACCOUNT OF MACHINERY REPAIRS AND RS.3,32,500/- ON ACCOUNT OF S ALARY. THE ASSESSEE HAS DECLARED PROFIT OF ONLY RS.40,98,500/- ON ACCOUNT O F HIRING CHARGES. HE NOTED THAT THE BILLS OF DIESEL AND OIL ARE FROM AURANGABA D CITY ONLY AND THE NAME OF THE ASSESSEE HAS NOT BEEN GIVEN. SIMILARLY, THE DE TAILS OF SALARY COULD NOT BE PRODUCED AND THE MACHINERY REPAIRING EXPENSES ARE N OT FULLY SUPPORTED BY BILLS. HE, THEREFORE, MADE ADDITION OF RS. 6,26,00 0/- BEING 10% OF THE TOTAL EXPENSES OF RS.62,64,775/- ON ACCOUNT OF DIESEL AND OIL, MACHINERY REPAIRS AND SALARY. HE ACCORDINGLY DETERMINED THE INCOME F ROM HIRING OF JCB RS.47,24,500/-. 3.1 SO FAR AS THE INCOME FROM CONTRACT BUSINESS IS CONCERNED THE ASSESSING OFFICER ESTIMATED THE PROFIT AT 8% ON THE CONTRACT RECEIPT AND DETERMINED THE INCOME FROM CONTRACT BUSINESS AT RS.17,16,208/-. A FTER ADDING THE INCOME DECLARED DURING THE COURSE OF SURVEY AMOUNTING TO R S.27,50,000/- THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS .91,90,708/- AS BUSINESS INCOME OF THE ASSESSEE. 4. IN APPEAL THE LD. CIT(A) UPHELD THE ACTION OF TH E ASSESSING OFFICER AS REGARDS THE REJECTION OF BOOKS OF ACCOUNTS ARE CONC ERNED. SO FAR AS THE INCOME FROM BUSINESS IS CONCERNED HE HELD THAT THE PROFIT FROM HIRING CHARGES AND CIVIL CONSTRUCTION WORK SHOULD NOT BE WORKED OUT SE PARATELY. HE NOTED THAT THE ASSESSING OFFICER WHILE ESTIMATING THE PROFIT H AS IGNORED THE PAST RESULTS. 4 FURTHER, HE HAS COMPLETELY IGNORED THE HUGE EXPENSE S ON ACCOUNT INTEREST AND DEPRECIATION WHICH HAVE A DIRECT BEARING ON FLUCTUA TING PROFITS. FURTHER, THE AMOUNT OF RS.27,50,000/- DECLARED DURING THE COURSE OF ACTION U/S.133A IS ALSO A PRODUCT OF BUSINESS PROFITS ONLY ALTHOUGH IT HAS TO BE ACCOUNTED FOR SEPARATELY. HE NOTED THAT THE AVERAGE PROFIT OF TH E ASSESSEE FOR THE PAST 3 YEARS WORKS OUT TO 1.98%. HE, THEREFORE, HELD THAT PROFIT @3% OF THE GROSS TURNOVER ALONG WITH DISCLOSURE MADE DURING THE COUR SE OF SURVEY AMOUNTING TO RS.27,50,000/- WILL MEET THE ENDS OF JUSTICE SINCE THE PROFIT ALMOST WORKS OUT TO 10.82% WHICH IS QUITE REASONABLE IN THIS LINE OF BUSINESS. HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ASSESS THE BUSINE SS PROFIT OF THE ASSESSEE AT RS.10,53,000/- BEING 3% OF THE GROSS TURNOVER PLUS DECLARATION OF RS.27,50,000/- MADE DURING THE COURSE OF SURVEY TOT ALLING TO RS.38,03,000/- AS AGAINST RS.91,90,708/- ESTIMATED BY THE ASSESSING O FFICER. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(A)- II, AURANGABAD ERRED IN (I) TREATING THE EXCESS STOCK OF RS.20 LAKHS FOUND AT THE TIME OF SURVEY AS BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES W ITHOUT APPRECIATING THAT EXCESS STOCK WAS DECLARED AS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME AND THIS HAD BEEN CORRECTLY TAXED U/ S.69C OF THE ACT, I.E. UNDER THE HEAD INCOME FROM OTHER SOURCES. (II) TREATING THE EXCESS CASH OF RS.7,50,000/- FOUN D AT THE TIME OF SURVEY AS BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES W ITHOUT APPRECIATING THAT THE EXCESS CASH WAS DECLARED AS ADDITIONAL INC OME OVER AND ABOVE DECLARED REGULAR INCOME AND THIS HAD BEEN CORRECTLY TAXED U/S.69A, I.E. UNDER THE HEAD INCOME FROM OTHER SOURCES. (III) IGNORING THE PRINCIPLES LAID DOWN BY THE HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF AKHTARI BEGUM & SONS VS. CIT 145 ITR 295, WHEREIN, IT WAS HELD THAT UNRECORDED TRANSACTION, F OUND IN THE FORM OF EXCESS STOCK, HAS TO BE ASSESSED AS UNDISCLOSED INC OME AND NO DEDUCTION FOR THE EXPENSES WAS ALLOWABLE FROM SUCH UNDISCLOSED IN COME. (IV) DELETING THE ADDITION OF RS.6,26,000/- ON ACCO UNT OF 10% DISALLOWANCE OF EXPENSES INCURRED ON DIESEL AND OIL , MACHINERY REPAIRS AND SALARY PERTAINING TO MACHINERY HIRING BUSINESS WITH OUT APPRECIATING THE FACT THAT THE EXPENSES WERE NOT SUPPORTED BY PROPER BILL S AND VOUCHERS. 5 (V) IGNORING THE PROFIT OF RS.40,98,500/- SHOWN BY THE ASSESSEE HIMSELF AS INCOME EARNED FROM HIRING OF MACHINERY BUSINESS AND CLUBBING THE SAME WITH INCOME FROM CONTRACT BUSINESS AND ESTIMATING P ROFIT ON BOTH THE SOURCES OF INCOME TREATING AS CONTRACT RECEIPTS. (VI) RESTRICTING THE RATE OF PROFIT AT 3% AGAINST 8 % ESTIMATED BY THE ASSESSING OFFICER ON THE GROUND OF AVERAGE NET PROF IT OF PRECEDING THREE YEARS WITHOUT APPRECIATING THAT NO SCRUTINY WAS DON E IN PRECEDING YEAR AND UPON SCRUTINY, BOOK VALUE WAS REJECTED BY THE ASSES SING OFFICER, WHICH HAS ALSO BEEN UPHELD BY THE CIT(A) AND ALSO NOT APPRECI ATED THAT THE REJECTION OF BOOK VALUE AND ESTIMATION OF PROFIT IN THIS YEAR IS BASED ON DETAILED EXAMINATION OF BOOKS OF ACCOUNT SURVEY MATERIAL. 6. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE BEFOR E THE LD. CIT(A) HAS ARGUED THAT THE PROFIT FOR A.Y. 2000-01 WAS SHOWN AT 2.96% , FOR A.Y. 1999-00 AT 3.10% AND FOR A.Y. 1998-99 THE PROFIT WAS (-) 0.21 %. WE FIND THE LD. CIT(A) ON THE BASIS OF THE PROFIT FOR THE 3 PRECEDI NG YEARS NOTED THAT THE AVERAGE COMES TO 1.98%. AFTER CONSIDERING THE PROF IT @3% ON THE TURNOVER AND MAKING FURTHER ADDITION OF RS.27,50,000/- BEING THE INCOME OFFERED DURING THE COURSE OF SURVEY ON ACCOUNT OF EXCESS ST OCK, HE OBSERVED THAT THE AVERAGE PROFIT WORKS OUT TO 10.82% WHICH IS QUITE R EASONABLE IN THIS LINE OF BUSINESS. WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) SINCE THE EXCESS STOCK OF RS.20 LAKHS AND EXCESS CASH OF RS.7,50,000 /- HAS BEEN ADDED SEPARATELY OVER AND ABOVE THE PROFIT PERCENTAGE OF 3% ON THE TURNOVER AND THE PROFIT RATE OF 3% HAS BEEN ADOPTED BY HIM ON THE BA SIS OF THE RESULTS OF 3 PRECEDING ASSESSMENT YEARS. THEREFORE, WE ARE OF T HE CONSIDERED OPINION THAT THE ORDER OF THE LD. CIT(A) UNDER THE FACTS AND CIR CUMSTANCES OF THE CASE IS A REASONED ONE, AND NEEDS NO INTERFERENCE. WE ACCORD INGLY UPHOLD THE SAME. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. 6 ITA NO.168/PN/2006 (A.Y. 2002-03): 7. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 20-10-2002 DECLARING GROSS TOTAL INCOME OF RS.6,53, 338/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOT ED THAT THE BOOKS CONTAIN SERIOUS DISCREPANCIES. HE NOTED THAT OUT OF THE TO TAL PURCHASES OF MATERIAL OF RS.1,69,90,001/- AN AMOUNT OF RS.1,08,80,000/- ARE ON ACCOUNT OF DUBBER, SAND AND MORRUM. THE ENTIRE PURCHASES ON THESE ACC OUNTS ARE SUPPORTED BY SELF-MADE VOUCHERS AND THERE ARE NO PROPER BILLS. FURTHER, HE NOTED THAT THE VOUCHERS WERE PREPARED IN ONE SITTING AND IN CERTAI N VOUCHERS THE SIGNATURES WERE ALSO MISSING. HE NOTED THAT THE PAYMENT OF RS .1,10,000/- ON ACCOUNT OF CONSTRUCTION PAYMENT IS SUPPORTED ONLY BY SELF-MADE VOUCHERS. HE NOTED THAT OUT OF THE HIRE CHARGES OF RS.20,28,085/- AN AMOUNT OF RS.17,29,485/- WERE CLAIMED TO BE MADE TO THE FARMERS AS HIRE CHARGES F OR TRACTORS AND NOT SUPPORTED BY FULL DOCUMENTARY EVIDENCE AND SUPPORTE D BY ONLY SELF-MADE VOUCHERS. SIMILARLY, HE NOTED THAT THE ENTIRE PAYM ENT OF RS.25,55,373/- ON ACCOUNT OF LABOUR CHARGES ARE SUPPORTED BY SELF-MAD E VOUCHERS ONLY. THE SALARY PAID TO THE DRIVERS, CLEANERS, JCB OPERATORS ETC AMOUNTING TO RS.23,40,600/- ARE NOT SUPPORTED BY FULL DOCUMENTAR Y EVIDENCE AND MOST OF THE VOUCHERS ARE SELF-MADE AND IN SOME CASES WHERE PAYMENTS ARE BEYOND THE TAXABLE SALARY NO TDS HAS BEEN MADE. THE SITE EXPE NSES OF ABOUT RS.2,29,000/- ARE SUPPORTED ONLY BY SELF-MADE VOUCH ERS. IN VIEW OF THE ABOVE AND IN VIEW OF THE OBSERVATION MADE DURING A.Y. 200 1-02 THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND ESTIMATED THE PROFIT @8% OF THE TURNOVER. 7 8. IN APPEAL, THE LD. CIT(A) HELD THAT THE ASSESSIN G OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOK RESULTS AND ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER : 8. I HAVE CONSIDERED THE SUBMISSIONS AS WELL AS TH E FACTS OF THE CASE. IT IS OBSERVED THAT ONLY GROUND ON WHICH THE AO HAS REJEC TED THE BOOKS OF ACCOUNTS IS THAT SOME OF THE EXPENDITURES DEBITED TO P & L ACCO UNT ARE SUPPORTED BY SELF MADE VOUCHERS. 9. SELF MADE VOUCHERS PERSE CANNOT BE SAID THAT TH EY ARE DEFECTIVE UNLESS AND UNTIL PROVE OTHERWISE NOT GENUINE. THERE FORE, SELF MADE VOUCHERS ALONE CANNOT BE MADE AS A GROUND FOR REJECTION OF B OOKS OF ACCOUNTS U/S.145 OF THE I.T. ACT. 10. THE CASE LAWS RELIED UPON BY THE AO ARE ON THE POINT WHERE THE BOOK VALUE IS NOT SUPPORTED BY THE PROPER DOCUMENTA TION. IN THE FACTS OF THE ASSESSEE'S CASE, THE BOOKS ARE SUPPORTED BY VOUCHER S, WHICH ARE SELF MADE. THESE SELF MADE VOUCHERS HAVE NOT BEEN HELD BY THE AO AS NOT GENUINE. IN OTHER WORDS, THERE IS NOTHING ON RECORD BROUGHT OUT BY THE AO WHICH ESTABLISHES THAT THESE SELF MADE VOUCHERS ARE EITHER DEFECTIVE OR NOT GENUINE. 11. ON THE CONTRARY, THE ASSESSEE HAS ESTABLISHED THE GENUINENESS OF THE SELF MADE VOUCHERS BY EXPLAINING THE NATURE OF BUSINESS, NATURE OF THE EXPENDITURE INCURRED, BY FILING COPIES OF ACCOUNT E XTRACT, AND BY PRODUCING SOME OF THE PAYEES. 12. THEREFORE, I FIND MERITS IN ASSESSEE'S SUBMISS ION THAT SELF MADE VOUCHERS ALONE CANNOT FORM THE BASIS FOR REJECTION OF BOOKS OF ACCOUNTS U/S.145 OF THE I.T. ACT. 13. HENCE, IN VIEW OF THE FACTS OF THE CASE AS DIS CUSSED ABOVE, SUBMISSIONS MADE BY ASSESSEE, PERCENTAGE OF PROFIT IN THE EARLIER YEARS, AND THE CASE LAWS RELIED UPON BY THE ASSESSEE, IT IS HELD T HAT BOOKS OF ACCOUNTS CANNOT BE REJECTED ONLY ON THE GROUND OF SELF MADE VOUCHER S. 14. ONCE THE BOOK RESULTS ARE HELD TO BE CORRECT, THE PROFIT DECLARED BY THE ASSESSEE HAS TO BE ACCEPTED UNLESS AND UNTIL TH ESE EXPENDITURE WHICH ARE HELD TO BE NOT GENUINE, WHICH IS NOT SITUATION IN T HE PRESENT CASE. 15. IN VIEW OF THE ABOVE DISCUSSION, THE GROUND IS DECIDED IN THE FAVOUR OF THE ASSESSEE. 8.1 AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSING OFFI CER WHILE REJECTING THE BOOKS OF ACCOUNTS HAD GIVEN THE REASONS FOR THE SAM E. IT IS AN ADMITTED FACT 8 THAT MOST OF THE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNTS ARE NOT SUPPORTED WITH BILLS AND VOUCHERS AND ONLY SELF-MAD E VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER. FURTHER, THE ASSESSI NG OFFICER HAD ALSO MENTIONED THAT EVEN THE SELF-MADE VOUCHERS DID NOT BEAR THE SIGNATURE IN SOME CASES AND THE LD. COUNSEL FOR THE ASSESSEE COULD NO T CONTROVERT THE FINDINGS GIVEN BY THE ASSESSING OFFICER. UNDER THESE CIRCUM STANCES, WE ARE OF THE CONSIDERED OPINION THAT REJECTION OF BOOKS OF ACCOU NTS WAS JUSTIFIED AND THEREFORE THE ORDER OF THE LD. CIT(A) HOLDING THAT SELF-MADE VOUCHERS CANNOT FORM THE BASIS FOR REJECTION OF BOOKS U/S.145 OF TH E INCOME TAX ACT IS NOT CORRECT. GROUND OF APPEAL NO.2 BY THE REVENUE IS AC CORDINGLY ALLOWED. 10. NOW COMING TO THE ESTIMATION OF PROFIT WE FIND THE ASSESSING OFFICER HAS APPLIED PROFIT PERCENTAGE OF 8% AS AGAINST APPR OXIMATELY 2.36% DECLARED BY THE ASSESSEE. WE FIND THE ASSESSING OFFICER ADO PTED 8% PROFIT ON THE BASIS OF PROVISIONS OF SECTION 44AD. HOWEVER, SINCE THE TURNOVER OF THE ASSESSEE IS MORE THAN RS. 40 LAKHS, THEREFORE, THE PROVISIONS O F SECTION 44AD CANNOT BE APPLIED. FURTHER, THE ASSESSEE HAD SHOWN PROFIT PE RCENTAGE OF (-)0.21% IN A.Y. 1998-99, 3.10% IN 1999-2000 AND 2.96% IN A.Y. 2000-01. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN SUBSEQUENT YEARS THE BOOK RESULTS DECLARED BY THE ASSESSEE HAVE BEEN ACC EPTED ALSO COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE . HOWEVER, THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT PROFIT PERCENTAGE OF 3% SHOULD BE ADOPTED IN OUR OPINION CANNOT BE ACCEPTED ESPECIALLY IN VIEW OF THE SERIOUS IRREGULARITIES IN MAINTENANCE OF ACCOUNTS A ND BILLS AND VOUCHERS. IT IS ALSO A FACT THAT IN THE PRECEDING ASSESSMENT YEAR D URING THE COURSE OF SURVEY ADDITION ON ACCOUNT OF EXCESS STOCK AND EXCESS CASH TOTALLING TO RS.27,50,000/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THIS WAS IN 9 ADDITION TO THE ESTIMATED PROFIT OF 3% DETERMINED B Y THE CIT(A) WHICH HAS NOT BEEN CHALLENGED BY THE ASSESSEE. THUS, OVERALL PROFIT PERCENTAGE IN THE PRECEDING ASSESSMENT YEAR COMES TO 10.82%. CONSIDE RING THE TOTALITY OF THE FACTS OF THE CASE ADOPTION OF NET PROFIT RATE OF 5% ON THE CONTRACT RECEIPT FOR THE IMPUGNED ASSESSMENT YEAR IN OUR OPINION WILL ME ET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY PARTLY ALLOWED. 11. IN THE RESULT, ITA NO.93/PN/2004 BY THE REVENUE IS DISMISSED AND ITA NO.168/PN/2006 BY THE REVENUE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 14 TH DAY OF MAY, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED THE 14TH MAY 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, AURANGABAD 4. THE CIT-II, AURANGABAD 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // PRIVAT E SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE