| The Tax Publishers2020 TaxPub(DT) 0473 (Sur-Trib) INCOME TAX ACT, 1961
Section 145(1) Section 132(1) Section 153C and 132(4)
As regards to estimation of net profits on the 'on money receipts' in the return of income a fair amount of income being net profit of over 30% from such total receipts had already been shown by the assessee, i.e., amount of Rs. 3 crores thus, no further additions were justified and as such, the net profits on on money receipts taken by AO @ 100% was rightly deleted by the CIT(A).
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Accounting method - Estimation of income - Net profit disclosed by assessee on 'on money' receipts on sale of flats or shops in project as recorded in books -
Assessee-firm was engaged in the construction business. A search action under section 132 was carried out in the case of partners of Anupam Group. Assessee's business office premises and site office were also covered under survey action under section 133A, therefore, assessment under section 143(3) was completed by the AO in this case, thereby determining the total income at Rs. 9,02,77,106 after making addition of Rs. 6,02,77,106 on account of receipt of 'on money'. CIT(A) deleted the entire additions made by the AO by holding that AO made additions taking 100% purported 'on-money' whereas while relying upon the higher judicial authorities including the Gujarat High Court wherein it was held that estimation of net income from total 'on money' receipts would be justified and since in the case of assessee, the assessee had disclosed net profit of over 30% of total unaccounted 'on money' receipts, the additions was, therefore, deleted. Held: The unaccounted income accepted by the assessee was duly disclosed in the returns filed subsequently in all the cases, except in the case of assessee firm, the income as disclosed for the firms/projects had been accepted in-toto by the AO. Department had failed to prove that the Shri J.M. Patel acted as a broker, by leading any independent evidence, and failed to recover any documents depicting the transactions as such. The statement and affidavit of Shri J.M. Patel had been used by the revenue without affording an opportunity of cross-examination to the assessee. IT Return already filed by the assessee was rightly held to be a fair amount of income as taking the net profit of Rs. 30% from total 'on money' receipts, therefore the CIT(A) rightly concluded that in the totality of all the facts and circumstances, the amounts depicted in the diary even if taken to be true, the net amount of income from 'on money' receipts, earned out of books of accounts. Even then, no further additions were justified and thus, CIT(A) had rightly deleted the additions.
Followed:Panna Corporation (2012) 74 DTR 89 (Guj-HC) : 2012 TaxPub(DT) 3269 (Guj-HC). Relied:ITO v. Saikrupa Construction Co. (2007) 13 SOT 459 (Mum-Trib) : 2007 TaxPub(DT) 490 (Mum-Trib)Dhanvarsha Builders and Developers (P) Ltd. v. Dy.CIT 102 ITD 375 (Pune-Trib).
REFERRED :
FAVOUR : In assessee's favour. (partly).
A.Y. : 2013-14
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