AJESH BINDAL, J. - (1.) THE appellant has approached this Court by filing the present appeal under s. 260A of IT Act, 1961 (for short 'the Act') short 'the Tribunal') in ITA No. 872/Chandi/2004 in respect of the asst. yr. 2001 -02 raising the following substantial questions of law : "(i) Whether under the facts and circumstances of the case the Tribunal's finding are perverse in estimating the net profit at 42,225 @ 8 per cent of gross receipts and application of provisions of s. 145 and rejecting book results ? (ii.a) Whether under the facts and circumstances of the case the Tribunal is justified in upholding the accrual and arising of income in the opening of relevant financial year amounting to Rs. 40,000 against total investment of Rs. 1,20,000 -
(2.) BRIEFLY the facts, evident from the orders on record, are that the assessee being a labour contractor, filed his return of processed under s. 143(1) of the Act. However, the case of the assessee was picked up for scrutiny and a notice was accordingly issued. During the course of assessment, the assessee having not been able to satisfy the AO, with regard to initial investment of Rs. 1,20,000 made by him, the claim to the extent of Rs. 80,000 was disallowed and added to his income treating the same from undisclosed sources. Further, the assessee having a total receipt of Rs. 52,79,416 had shown the net profit @ 1.52 per cent of the gross receipts. Having failed to produce the books of accounts and vouchers to justify the expenses made against the gross receipts, net profit rate was estimated at 8 per cent by the AO vide order
(3.) IN appeal before the CIT(A), the application of net profit rate at the rate of 8 per cent was upheld whereas in spite of there being no satisfactory explanation, additional relief to the extent of Rs. 40,000 was granted on account of initial capital invested by the assessee. Still further in appeal before the Tribunal, the assessee failed on account of addition of Rs. 40,000 as initial investment, however, while estimating the gross profit rate, a relief of Rs. 80,210 was granted to the assessee thereby reducing the net profit rate from 8 per cent to 6.5 per cent. We have heard learned counsel for the parties and with their assistance have perused the impugned order.;