- (1.) The Revenue is before us challenging the order dated August 28, 2012, passed by the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (hereinafter referred to as "the Tribunal"), on the following substantial questions of law: "(i) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was right in law in directing the Assessing Officer to apply the net profit rate of 6 per cent against 12 per cent whereas the hon'ble Punjab and Haryana High Court itself in different set of facts had applied the net profit rate of 10 per cent.? (ii) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was right in law in accepting the interpretation adopted by the Visakhapatnam Special Bench of the Income-tax Appellate Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT,2012 16 ITR 1 that the disallowance under section 40(a)(ia) is to be made only in respect of payments which are outstanding at the end of the financial year and payment of which is without deduction of tax (after the end of the financial year)? (iii) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was right in law in deleting the addition of Rs. 8,04,948, though the same had been shown by the assessee under the sub-head 'work-in-progress' and has not been reflected in the trading account?" Before dealing with the submissions made by counsel for the Revenue, it would be appropriate to delimit the facts in brief.
(2.) The assessee is a civil contractor and during assessment year 2008-09, filed a return of income. The return was selected for scrutiny and, vide order dated November 10, 2010, the Assessing Officer, while rejecting the account books, assessed the income by applying a net profit rate of 12 per cent, on the gross receipts. The Assessing Officer also made additions under section 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for failure to deduct tax at source regarding the payment to sub-contractors. The Assessing Officer also made an addition on account of work-in-progress.
(3.) Aggrieved by this order, the assessee filed an appeal. The Commissioner of Income-tax (Appeals), Rohtak, (hereinafter referred to as "the CIT(A)) vide order dated March 18, 2011, deleted the net profit rate of 12 per cent by holding that no reason has been assigned for rejecting account books, confirmed additions on account of non-deduction of tax at source and held that as the deletion on account of work-in-progress is already reflected in the accounts, the addition has been rendered infructuous.;