Law:

Section:

Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of profit - Assessment years 1999-2000 and 2000-01 Where in case of assessee civil contractor, Commissioner (Appeals) directed adoption of gross profit rate of 12 per cent and Tribunal upheld it, in the absence of challenge by assessee as well as revenue to the said rate, order of Commissioner (Appeals) was to be upheld [In favour of assessee] The assessee-firm was carrying on the business of construction of roads at various places as per the agreement with the various Government authorities and the Assessing Officer estimated its profits rejecting its accounts. It argued that the Assessing Officer had estimated 100 per cent profit on gross receipts. The Commissioner (Appeals) held that the assessee's case was fit for taxing gross receipts at 12 per cent. It was argued by the revenue that the assessee did not produce the books of account in spite of ample opportunity given to it. It was also argued that the assessee was adopting the cash system of accounting and since the expenses were not proved to have been incurred during the year under consideration, the Assessing Officer rightly disallowed the whole expenses claimed by the assessee. It was further argued that the Commissioner (Appeals) was not justified in allowing separate claim of depreciation after applying a flat rate of 12 per cent by observing that the application of flat rate runs parallel to the provisions of section 44AD where all the expenses including depreciation are deemed to have been allowed. The Tribunal, however, upheld his order. Held that, the Commissioner (Appeals) had rightly directed the Assessing Officer to make the assessment against the assessee on the basis of flat rate of 12 per cent. The assessee had not challenged the order of the Commissioner (Appeals) applying the net profit rate at 12 per cent to tax it. On the other hand, the revenue had also failed to challenge the order of the Commissioner (Appeals) applying the net profit rate at 12 per cent by producing evidence that a higher rate of net profit should have been applied than the rate applied by the Commissioner (Appeals). Thus, the order of the…

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