1. IN THE INCOME TAX APPELLATE TRIBUNAL
JODHPUR BENCH, JODHPUR
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND
SHRI K.G. BANSAL, ACCOUNTANT MEMBER
ITA No. 428/JU/2010
Asstt. Year : 2007-08
M/s. Kangiri Contractor, vs. Income-tax Officer,
Near RHB Colony, Suratgarh. Suratgarh.
(PAN – AABFA 2768 C)
(Appellant) (Respondent)
Appellant by : Shri Suresh Ojha, A.R.
Respondent by : Shri T.C. Gupta, D.R.
ORDER
PER JOGINDER SINGH, J.M.:
This appeal is by the assessee challenging the order of the ld. CIT(A),
Bikaner dated 26.04.2010 on the ground that the ld. first appellate authority
should have appreciated that the case of the assessee is squarely covered u/s.
44AD of the Act, as the receipts are less than Rs.40,00,000/- and the profit is
more than 8%. As such, the addition sustained by the ld. CIT(A) is
unjustified.
2. During the hearing of this appeal, the ld. counsel for the assessee filed
paper book today only, but the learned DR had no objection if the appeal is
heard today. Consequently, we are proceeding with the appeal on the basis
of material available on record. It was submitted by the ld. counsel for the

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assessee that it is a case of a contractor and the total receipts received during
the relevant period were less than Rs.40,00,000/-. Therefore, the case of the
assessee is squarely covered u/s. 44AD of the Act. It was further submitted
that the assessee declared the net profit rate at 8.15% against 8% of the
immediate preceding year. The Assessing Officer applied the net profit at
12.5% which was reduced to 9% by the ld. CIT(A). The crux of the
submissions is that net profit rate of 8.15% can be applied which will meet
the ends of justice. On the other hand, the ld. DR, though defended the
assessment order, but did not controvert the factual matrix asserted by the ld.
counsel for the assessee.
3. We have considered the rival submissions and perused the material
available before us. After considering the totality of facts, the question arises
whether separate addition can be made for the work in progress ? The
uncontroverted fact is that the assessee produced copy of balance sheet and
other relevant record during the assessment proceedings, first appellate stage
and even before us, from which one fact is oozing out that when the case of
the assessee is squarely covered by section 44AD of the Act, therefore, the
adoption of net profit rate of 12.5% by the ld. Assessing Officer is without
any basis. Even otherwise, since the turnover is less than Rs.40,00,000/-, in
accordance with the provisions of section 44AD of the Act, the assessee is

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not obliged to maintain the books of account. Consequently, the assessee has
correctly returned the net profit rate of 8.15%. Even otherwise, if the history
of the assessee is analyzed, the net profit rate of 8.15% will meet the ends of
justice which will take care of every addition. Since the rate of 8.15% is
found justified, therefore, no separate addition can be made for work in
progress, as the work in progress is also the part of the business.
Consequently, the ld. Assessing Officer is directed to apply the net profit
rate at 8.15% as returned by the assessee on gross receipts. The appeal of the
assessee is, accordingly, allowed.
Finally, the appeal of the assessee is disposed of as indicated above.
Order pronounced in the open court in presence of both the sides at
the conclusion of hearing today on 30.09.2010.
Sd/- Sd/-
(K.G. BANSAL) (JOGINDER SINGH)
Accountant Member Judicial Member
Dated: 30th
September, 2010
*aks/-
Copy forwarded to:-
1. Appellant,
2. Respondent,
3. Income-tax Officer,
4. CIT,
5. D/R
6. Guard File