TaxTMI 
TaxTMI 
2010 (10) TMI 639
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....d accounts filed by the assessee as per provisions of section 44AB of the Act. He accordingly estimated the net profit at 8 per cent on the gross contract receipts of Rs. 1,39,30,655 from M/s. H.P.C. and determined the income at Rs. 8,09,465 from the business of contract and supply carried on by the assessee as against the declared receipt of Rs. 8,09,465. The entire amount was added as income of the assessee for the financial year 1998-99 relevant to the assessment year 1999-2000 on the basis of net profit at the rate of 8 per cent declared by the assessee in the statement of accounts for the financial year 1999-2000 filed during the course of block assessment. 4. The Ld. D.R. pointed out that there was a search in the case of the assessee and its group concerns on 28-11-2000 and during the course of search the relevant books of account were not found and thus, it was not known how the assessee could file the audit report under section 44AB of the Act on 29-11-1999. He also reiterated that the books of account were not produced during the course of block assessment proceedings and this fact that the assessee was not maintaining books of account was found as a consequence of searc....
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....t during the course of search. However, the Assessing Officer is required to give credit for the income covered by pre-paid taxes i.e., T.D.S. and advance-tax in view of decision in the case of Dr. (Mrs.) Alaka Goswami (supra). This ground of appeal is, therefore, partly allowed. 7. Ground Nos. 2 and 3 are inter-connected and the Department has objected to the deletion of addition on account of undisclosed investment in construction of flats and undisclosed sales of flats and shops in the Snehbash Housing Complex. 8. The Assessing Officer on the basis of seized documents worked out the undisclosed investment in flats and profit on undisclosed sales of flats and shops in the aforestated Snehbash Housing Complex. 9. The Ld. CIT(A) deleted the addition on the ground that the seized documents were not found from the possession of the assessee but at the residence of Dr. Rahul Gupta and his wife Smt. Nandita Gupta who along with her son was partner in the erstwhile firm of M/s. Snehbash Housing Complex, Silchar. According to the Ld. CIT(A) the submission of the assessee that the firm was dissolved on 28-2-1997 and thereafter the assessee became the proprietor thereof and, therefore, ....
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....8 per cent. The Ld. CIT(A) deleted the addition on the ground that the addition was not based on any material found during the course of search. 14. The Ld. D.R. relied on the order of the Assessing Officer and the detailed discussion therein. 15. The Ld. counsel supported the order of the Ld. CIT(A) and reiterated the submissions taken before the lower authorities. 16. We have carefully considered the issue on the basis of material on record and rival submissions. The view of the Ld. CIT(A) that the addition was not based on any material found during the course of search was not correct because to the extent the assets declared in the financial statement of affairs by the assessee were not explained by the corresponding liabilities declared therein, the assets can be taken as undisclosed. However, the addition was not made by the Assessing Officer because he had already made the addition on account of the undisclosed profit which was more than Rs. 2,80,000. Since we have already confirmed the addition on account of net profit no separate addition is required to be confirmed on account of unexplained investment not supported by corresponding liabilities. The ground of appeal of ....
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....n as below: Financial Years Assessment Years Total Income (Rs.) Returned Income/Assessed Income (Rs.) Difference A B C D E 1990-91 1991-92 46,910.00 46,960.00 NIL 1991-92 1992-93 75,330.00 70,330.00 5,000.00 1992-93 1993-94 1,37,390.00 1,37,390.00 NIL 1993-94 1994-95 1,59,150.00 1,59,150.00 NIL 1994-95 1995-96 3,37,530.00 3,37,530.00 NIL 1995-96 1996-97 6,81,930.00 5,60,730.00 1,21,200.00 1996-97 1997-98 2,87,060.00 2,87,060.00 NIL 1997-98 1998-99 2,89,240.00 2,89,240.00 NIL 1998-99 1999-2000 12,21,660.00 NIL 12,21,660.00 1999-2000 2000-01 10,22,920.00 NIL 10,22,920.00 2000-01(upto 28-11-2001) 2001-02 3,71,000.00 NIL 3,71,000.00 Total 27,41,780.00 and allowed deduction under section 158BB(i)(c) and exemption limit for the assessment year 1999-00, 2000-01 and deduction under section 158BB(i)(d) for Rs. 1,00,000 and Rs. 1,87,100 while passing the order dated 29-11-2002 and directed for penalty proceedings under section 158BFA(2). 3. The assessee is a civil contractor and partner in K.K. Jewellers, Silchar. He was also Chief Managing Partner of construction firm styled M/s. Sneha Bus Housing C....
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....cord. As regards ground No. 1: deleting the addition made by the Assessing Officer in net profit from contract. 10. The Assessing Officer while completing the assessment has made addition for the assessment year 1999-2000. The Assessing Officer has brought on record that the gross receipt from H.P.C. contract was Rs. 1,39,30,655 and net profit shown as Rs. 8,09,465. No complete set of books such as cash book, ledger, voucher, audited accounts etc. Were found in the course of search in the assessee's premises nor they were produced in the course of block assessment proceeding. Therefore, the net profit disclosed by the assessee was not verifiable. The assessee has shown net profit of Rs. 2,90,306 which approximately 8 per cent. Therefore, the Assessing Officer arrived at the conclusion for adopting 8 per cent net profit against Rs. 8,09,465 net profit shown by the assessee and the addition was made for Rs. 2,90,363 being difference of the profit. 11. In appeal, the learned CIT(A) deleted the addition while relying on the decision Salvi Divakar Shankar v. Asstt. CIT [2000] 72 ITD 552 (Pune), Smt. Sitadevi Daga v. Asstt. CIT [1998] 67 ITD 151 (Ind.) and Sou. Vidya Madanlal Malani v....
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....on was made. 19. The learned CIT(A) while deleting the addition has discussed this issue on page 3 ground Nos. 5 and 6. 20. After verification of facts, records and rival submissions we are of the opinion that the addition was made while rejecting Registered Valuer's report on the basis of documents DJ 1 for sale of flats 122 and 123 which were not signed and dated by the Seller and Purchaser. The Purchaser of the flats were not examined during the course of search. Even if sales were found genuine on the basis of seized material and evidence collected, but sales cannot be income, but profit only to be brought to tax. The addition was made by rejecting the submission of the assessee for investment in construction of flats and shops as per accounts maintained. It would have been better for the Assessing Officer to adopt Assam PWD Plinth Area Method for valuation of civil construction. Therefore, we are of the opinion that the Assessing Officer while rejecting the Registered Valuer's report and not adopting APWD rates for valuation resulting addition on DJ1 seized paper, which is not signed and dated either by the Purchaser or by the Seller, is only on presumption and assumption. T....
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....d with the Revenue. Since the income was disclosed and tax was paid as per computation and TDS were paid and submitted evidence. The income covered by TDS and tax paid cannot be termed as undisclosed income even though the returns were filed beyond due date. The Assessing Officer should have considered the belated returns on the basis of reasons if any, for not filing the return on or before the due date. The returns cannot be non est just only for filing the same after the due date. The Assessing Officer should have considered the facts on record and the returns filed to arrive at undisclosed income as required under section 158B(b) for assessment under section 158BC. 29. Therefore, the income disclosed by the assessee cannot be treated as undisclosed income. Our views get support from the orders Dr. (Mrs.) Alka Goswami's case (supra) and Shamlal Balram Gurbani (supra), Chandra Bhan v. Asstt. CIT [2006] 98 ITD 6 (Agra) and Dang & Co. (P.) Ltd. v. Dy. CIT [2005] 94 ITD 29 (Delhi) (TM). 30. In the result, we confirm the order of the learned CIT(A) deleting the addition. 31. In the result, the ground of appeal is dismissed. As regards Ground No. 6 32. The Assessing Officer....
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....2002 beyond the time prescribed under section 139 of the Act i.e., 31-3-2001 and (b) the belated return of income for assessment year 2000-01 filed under section 139(4) of the Act, could be considered undisclosed income in view of the provisions of section 158BB(1)(c) of the Act and in view of the fact that the relevant books of account for assessment year 1999-2000 were neither found during the course of search nor produced by the assessee during the course of block assessment proceedings and in view of the decision in the case of Dr. (Mrs.) Alaka Goswami (supra) only the income covered by the prepaid advance tax and T.D.S., if any, was required to be deducted from the income determined for the block period ? THIRD MEMBER ORDER Per G.D. Agrawal, Vice President (As a Third Member) - Since there was a difference of opinion between the Ld. Members constituting "Guwahati Bench" of ITAT, Guwahati in respect of the aforesaid appeal, I was nominated as Third Member by the Hon'ble President, ITAT under section 255(4) of Income-tax Act, 1961. The questions referred in this case read as under :- "(1) Whether on the facts and circumstances of the case, the addition could be made in the bl....
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.... found as a result of search and information based on such evidence. The Assessing Officer failed to bring on record any material to suggest that the income disclosed by the assessee was incorrect or the assessee had earned more income than what was disclosed in respect of his contract work. He, therefore, deleted the addition made by the Assessing Officer as according to him, the Assessing Officer estimated the rate of net profit without any material and support of the seized documents, which was outside the scope of block assessment. 4. The department preferred appeal before the Tribunal. The ld. A.M. did not agre with the decision of the CIT(A), because the evidence regarding absence of books of account was gathered during course of search. He, however, directed the Assessing Officer to give credit of TDS, if any. The Ld. J.M. in his proposed order has upheld the order of the CIT(A) deleting the addition on account of estimate of net profit. He stated that the Ld. D.R. failed to establish on the basis of seized material that extra profit was earned by the assessee. 5. I find that the Assessing Officer estimated the rate of net profit at 8 per cent on the total contract receipt....
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....s for this addition. 8. I have heard the parties and perused the material placed on record. The assessee had shown liabilities of Rs. 9,30,000 against various creditors. The Assessing Officer observed that the assessee could not prove the credit to the extent of Rs. 2,80,000 from 8 creditors. However, he did not make any addition of this amount as the said amount was covered by the addition of Rs. 3,04,987 made by him on account of low rate of net profit. While dealing with question No. 1 above, I have already upheld the order of the CIT(A) as well as Ld. J.M. on the addition of Rs. 3,04,987 for estimating the rate of net profit at 8 per cent as against shown by the assessee at 5.81 per cent on the contract receipts of the assessee. While adjudicating question No. 1, I have held that while determining the undisclosed income of the block period, the addition can be made only on the basis of material found as a result of search. Admittedly, during the course of search, no material was found to hold that the liability to the extent of Rs. 2,80,000 is non-existing or has ceased. The Assessing Officer made the addition for want of evidence having been produced by the assessee in suppor....
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....ecisions :- (a) Dr. (Mrs.) Alaka Goswami's case (supra) (b) Shamlal Balram Gurbani's case (supra) 11. I have heard the parties and perused the proposed orders of Ld. Members. The question is whether the income declared in the returns for assessment years 1999-2000 & 2000-01, filed beyond the prescribed time, is to be treated as assessee's undisclosed income and not deductible from the undisclosed income assessed under section 158BC of the Act. The assessee filed the returns for assessment years 1999-2000 and 2000-01 on 22-3-2002 which was not only belated from the due date for filing of the return under section 139(1), but also beyond the time limit for furnishing of belated return under section 139(4) of the Act. Therefore, such return is to be treated as non est. The Ld. J.M. has relied upon the decision of Hon'ble Bombay High Court in the case of Shamlal Balram Gurbani (supra) and also the jurisdictional High Court in the case of Dr. (Mrs.) Alaka Goswami (supra). In the case of Shamlal Balram Gurbani (supra), though the assessee did not file the return of income, however, the ITAT found that the undisclosed income assessed by the Assessin....