Krishna Construction Company Versus ACIT, Jodhpur

Parties Involved

Facts Summary

The assessee, Krishna Construction Company, a contractor engaged in civil construction, filed its return of income for the assessment years 2017-18 and 2018-19. The case was selected for limited scrutiny, and the Assessing Officer found discrepancies in the books of account, leading to the rejection of the books and the estimation of income at 8% of the gross receipt. The assessee challenged this order before the Commissioner of Income Tax (Appeals), who dismissed the appeal. The assessee then appealed to the Income Tax Appellate Tribunal, arguing that the Assessing Officer should have granted deductions for interest payments to third parties and banks. The Tribunal allowed the appeal in part, directing the Assessing Officer to grant deductions for interest paid to third parties and banks after estimating the profit at 8% of the gross receipt.…

Legal Issues

• 1. Whether the Assessing Officer was justified in rejecting the books of account and estimating income at 8% of the gross receipt?
• 2. Whether the disallowance under Section 40A(3) of the Act was justified when the books of account were rejected?

Judgment Outcome

Decided in favour of Partly Assessee.

Precedents Relied Upon

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