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3. Given that no return of income was filed either u/s 139 or pursuant to notice u/s 148, the AO completed the assessment u/s 147 read with section 144 of the Act wherein he estimated 25% of the gross contractual receipts as net profit and the same was brought to tax in the hands of the assessee. However, we do not find any basis of estimating the net profit @ 25% by the Assessing Officer for arriving at the taxable income at Rs. 5,73,020/- in the hands of the assessee.

4. During the course of appellate proceedings, the ld. AR submitted that net profit should be estimated @ 8% instead of 25% as such estimation is against the provisions of section 44AD of the Act. Given the fact that no return of income was filed by the assessee, the ld. CIT(A) held that the section 44AD could not be applied in the instant case and accordingly, he confirmed the estimation of net profit @ 25% and the addition so made by the AO at Rs. 5,73,020/- was confirmed. Now the assessee is in appeal before us.

5. The ld. AR reiterated the submissions made before the ld. CIT(A) and submitted that given the nature of contractual receipts, reasonable estimation of profit should be made in the hands of the assessee and provisions of section 44AD provide the basis for such estimation where the profit can be estimated @ 8% on contractual receipts. It was further submitted that the business of the assessee has been shut down, there is no person to look after the affairs of the company and as a result, no return of income was filed by the assessee.

6. The ld. DR is heard who has relied on the findings of the lower authorities. It was submitted by the ld DR that there has been complete non- compliance by the assessee by not submitting the return in response to notice Aravali Structures India Private Ltd., Jaipur Vs ITO, Jaipur u/s 148 and in such a scenario, estimation of net profit by the AO is reasonable which should be sustained.

7. We have heard the rival contentions and perused the material available on record. The limited issue under consideration is the estimation of net profit in the hands of the assessee which is engaged in the business of erection of telecom tower and is in receipt of contractual receipts amounting to Rs. 22,92,082/- during the previous year relevant to impunged assessment year. The AO has not stated the basis for estimating and arriving at 25% net profit on the gross contractual receipts. Whereas if we look at the provisions of section 44AD, it provides that in case of an eligible assessee engaged in an eligible business, a sum equal to 8% of the total turnover or gross receipts of the assessee in the previous year shall be deemed to the profits and gains of such business under the head "profits and gains of business or profession". In absence of any comparable third party data of an entity engaged in similar line of business or the assessee's own past history, necessary guidance can be sought from the provisions of section 44AD of the Act which provides for estimating net profit @ 8%. Therefore, in the instant case, it would be reasonable to estimate the net profit in the hands of the assessee @ 8% of the gross contractual receipts while arriving at his taxable income and the remaining addition made by the AO is hereby deleted.