TaxTMI 
TaxTMI 
2012 (8) TMI 11
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..... 21 lakhs for the A.Y. 1998-99 and Rs. 32,68,000 for the A.Y. 1999-2000), when the source for the said investment is properly explained. Therefore, the learned CIT(A) ought to have deleted all the three additions made aggregating to Rs. 1,18,68,000/-. c. The learned CIT(A) erred in confirming estimation of profit at 8% on difference in work-in-progress arrived at Rs. 7,87,263/-. d. The learned CIT(A) erred in confirming the estimation of income on work-in-progress for the assessment year 1998-99 at Rs. 2,33,064/-. e. The learned CIT(A) erred in confirming the addition of remuneration of Rs. 6 lakhs received from M/s. Image Chit Funds Pvt. Ltd., as the undisclosed income of the appellant. 3. The Revenue raised the following grounds: a. On the facts and circumstances of the case, the Ld. CIT(A) was not correct in allowing further relief to the assessee from profit in work-inprogress for assessment year 1997-98, when the same had been already allowed in the computation of block period income. b. On the facts and circumstances of the case, the Ld. CIT(A) was not correct in allowing the adjustment of loss of Rs. 6,96,461/- and deleting the addition of profit on work-i....
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.... 14,777.33 26,55,466 5. During the course of search, various receipts from the seller of the property viz., Mr. K. Anjaneyulu and Brothers, were found and seized. The details are as under: S. No. Name of the party who issued the receipt Amount (Rs.) Whether cash/ cheque Date Person to whom the receipt was issued 1 K. Anjaneyulu & Bros. 1,00,000 Cash Sri C.V. Rao 2 K. Anjaneyulu & Bros. 10,00,000 Cash 09.01.97 Sri C.V. Rao 3 K. Anjaneyulu & Bros. 14,00,000 Cash 29.01.97 Sri C.V. Rao 4 K. Anjaneyulu & Bros. 14,00,000 Cash 30.01.91 Sri C.V. Rao 5 K. Anjaneyulu & Bros. 10,00,000 Cash 03.02.97 Sri C.V. Rao 6 K. Anjaneyulu & Bros. 1,00,000 Cash 07.02.97 Sri C.V. Rao 7 K. Anjaneyulu & Bros. 15,00,000 Cash 19.02.97 Sri C.V. Rao 8 K. Anjaneyulu & Bros. 6,00,000 Cash 03.06.97 Sri C.V. Rao 9 K. Anjaneyulu & Bros. 4,00,000 Cash 29.07.97 Sri C.V. Rao 10 K. Anjaneyulu & Bros. 10,00,000 Cash 02.08.97 Sri C.V. Rao 11 K. Anjaneyulu & Bros. 1,00,000 Cash 19.....
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....0 Cheque 09.04.98 Image Hotels Pvt. Ltd. 40 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Hotels Pvt. Ltd. 41 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Hotels Pvt. Ltd. 42 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Garments Exports P. Ltd. 43 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Garments Exports P. Ltd. 44 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Garments Exports P. Ltd. 45 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Garments Exports P. Ltd. 46 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Agro Farms (P) Ltd. 47 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Agro Farms (P) Ltd. 48 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Agro Farms (P) Ltd. 49 K. Anjaneyulu & Bros. 59,000 Cheque 09.04.98 Image Agro Farms (P) Ltd. 50 K. Anjaneyulu & Bros. 48,845 Cheque 09.04.98 Sri K. Dhanunjaya Rao 51 K. Anjaneyulu & Bros. 48,845 Cheque 09.04.98 Sri K. Dhanunjaya Rao 52 K. Anjaneyulu & Bros. 48,845....
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....in commencement of Project some of the advances are either refunded or adjusted as interest bearing deposits in the proprietor concern "IMAGE FINANCE CORPORATION". It is therefore there is no nexus between the Flat advances collected and the amounts spent on work in progress. 9. The AR further submitted that right from the inception of the Project he has adopted an accounting method of estimating 8% net profit on work in progress. He further submitted that the ultimate profit will be determined on completion of the project by deducting work in progress from the total sales turnover of the project. This principle was never disputed by the Department and income estimated under this method was accepted. 10. He drew our attention to the table of flat advances collected and work in progress which is as follows for the years from 1992- 93 to 2001-02. Financial year Receipts Flat Advances (Rs.) Payments Work-inprogress (Rs.) Percentage of work-inprogress over flat advances received (%) [(3)/(2)x100] Advance given for land purchase (Rs.) (1) (2) (3) (4) (5) 1992-93 - 3929578 - 1993-94 1735000 2256050 130 - 1994-95 ....
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....to explain the seized documents which was reproduced herein: "Q2) Please refer to the sheet Nos. from 21 to 49 of Annexure ICF/A1/3 and sheet Nos. 212 to 216 of the same annexure relating to the purchase of 3.00 acres of land in Sy. Nos. 71 & 82 in Madhapur Village, Serilingampally Mandal, R.R. District. In your sworn deposition given on 13.8.1999, you have confirmed the payment of Rs. 1,18,68,000 to Sri K. Anjaneyulu, Sri K. Indrasena, Sri K. Manikyam and Smt. K. Lingamma. Sri K. Anjaneyulu in his sworn deposition given on 22.9.1999, has confirmed the same. Please explain about the payment of Rs. 1,18,68,000 in cash to the above parties? Ans. I have gone through the above referred documents relating to the Madhapur land purchased from Sri K. Anjaneyulu and others. I confirm that I have paid Rs. 1,18,68,000 to Sri K. Anjaneyulu and others relating to the purchase of 3 acres of land at Madhapur. I have not maintained my books of account. They are not up to date. Subject to verification of my sources for the above cash payments, I am offering this amount of Rs. 1,18,68,000 as undisclosed income. 15. During the course of search the assessee clearly said that he has paid on mo....
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....ar books of accounts are maintained. He also furnished valuation report which supports the claim of assessee as regards work in progress. 17. The CIT(A) while deciding the appeal resorted to estimation of work in progress based on the pre search period percentage of utilization of advances for construction. The assessee has filed comparative statement of advances collected and advances utilized for construction which varies from year to year. The CIT(A) has taken the average of the pre search period i.e. 60% and estimated the work in progress for the A.Y. 1998-99 which is not correct. The CIT(A) is not justified in estimating without the basis of any evidence other than by guess work. Therefore, the method adopted by the CIT(A) for arriving at the work in progress, and thereby working out the deficit is not correct. 18. In our opinion, the assessee has justified the payment of onmoney for purchase of land and he has filed necessary cash flow statement to explain the sources for on-money payment and details of advances received for Usha Enclave to justify the sources of fund. The assessing officer has conducted series of investigation and probed the assessee, which proves that....
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....he other hand the DR relied on the order of the CIT(A) and requested to upheld the CIT(A) order. 24. We have heard both the parties and perused the material on record. The assessee has disclosed 8% profit of Rs. 7,18,832/- on Rs. 89,85,399/- in the regular return filed for the A.Y. 1997-98. The assessee has filed cash flow statement before the assessing officer for the A.Y. 1997-98 and claimed work in progress of Rs. 98,40,788/-. Admittedly there was difference in work in progress (Rs. 98,40,263/- - Rs. 89,85,399/-) of Rs. 8,55,389/-. The assessing officer estimated the 8% profit on entire work in progress and the CIT (A) estimated 8% profit for difference in work in progress of Rs. 8,55,389/- which works out to Rs. 68,431/-. Therefore out of Rs. 7,87,263/- added by assessing officer the CIT(A) confirm the addition of Rs. 68,431/- and given relief of Rs. 7,18,832/-. The CIT(A) has rightly estimated the 8% profit on difference in work in progress and given relief for the balance and his order needs no rectification. Hence we confirm the order of the CIT(A). 25. Similarly for the A.Y. 1998-99, the due date for furnishing the return of income was already ended the assessing offi....