TaxTMI 
TaxTMI 
2012 (12) TMI 182
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....d. CIT(A) was not justified in not accepting the books result and in applying the net profit rate of 6.5 % as against the net profit rate of 0.93 % shown by the appellant. 4. Rival contentions have been heard and records perused. Facts of the case are that the assessee is a Company doing work of construction under the name and style of M/s. Hare Krishna Colonizers Pvt.Ltd. There was search at the place of some of the persons, who happened to be Directors of the assessee company. As there was no search at assessee company, action u/s 153C was taken in the hands of assessee company from assessment years 2000-01 to 2006- 07. In the assessment order, the Assessing Officer observed that the assessee company deals in real estate and as a developer and builder. The Assessing Officer stated that the assessee had simply furnished print out of ledgers and no specific details were furnished before him. The Assessing Officer further stated that during the course of search, Shri Ramnath Sharma, one of the Directors of the Company admitted that the group was earning unaccounted money on purchase and sale of property by receiving and making payment of On money. The Assessing Officer fur....
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..... Vs. DCIT (2004) 88 TTJ (Agra) 651, wherein N.P. rate of 4 % on the declared sales is applied. He submitted that the facts of said case are identical with the facts of the case of the appellant. Thus, the AR of the appellant requested that the book results of the appellant be accepted or in the alternative, the NP rate of 4 % be applied on the sales in place of GP rate of 25 % applied by the Assessing Officer. 5. By the impugned order, the ld. CIT(A) observed that in the case of assessee who is engaged in the business of contractors and building constructions, net profit rate on the sales should be applied after rejecting the books of account in place of gross profit rates. Gross profit rate is generally applied in the cases of concerns dealing mainly in trading of goods. Moreover, the AO had applied a GP Rate of 25 % which is on the higher side. The AR contended in the alternate argument that NP rate of 4 % on the sales may be applied, relying on the decision in the case of Dass Builders Pvt. Ltd. Vs. DCIT, (2004) 88 TTJ (Agra) 651. It may be noted that NP rate depends on facts and circumstances of each case. I came across the decision of Hon'ble ITAT Indore Bench in appeal no....
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....ment of such other person mandatorily for seven years cannot be justified on the ground of plain equity. (b) No opportunity to explain whether assets are disclosed in the hands of other person is provided to him during search before taking decision of seizure. Third person cannot be put in a worse position than the person searched. Under such situation, even disclosed assets belonging to other person may be seized and in that case invoking provision of section 153C can not be the intention of the Legislature. The provision of section 153C needs to be read down in a manner so as to achieve the actual legislative intent. The literal interpretation of the provision of this section needs to be toned down so that there are no unintended severe repercussions on the third person. 8. It was further submitted that the powers of the assessing officer u/s 153C are not unbridled but are loaded with several restrictions. It is also illogical that strict conditions should be necessary for a search and consequent assessment u/s 153A and that there should be no restrictions for the assessing officer for the issue of the notice and assessment u/s 153C in the case of a third party, who has ....
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....terial. It is not a power that can be exercised under the sweet will and pleasure of the concerned authorities. The scope of that power has been explained over and over again by this court." Commissioner of Income Tax v. Laxminarayan Badridas 51TR 170 PC : "He (the assessing authority) must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guesswork. In that sense, too, the assessment must be to some extent arbitrary." CIT vs Dr. M.K.E. Memon 248 ITR 310 (Bom.) : The search was carried but in December 96 in the course of which certain books were found for the period November 1993 to December 1996. The A....
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....hich found placed at 34, 38, 43, 48,54 & 60 of the paper book, we found that vouchers were submitted before the Assessing Officer, whereas the Assessing Officer in the assessment order has remarked that no such details were furnished. We found that variation in the net profit rates were shown because of indirect expenses, which kept on fluctuating depending on facts and circumstances of each year. However, genuineness of expenditure were never doubted nor it was case of Assessing Officer that expenditure were not incurred for the purpose of business. Most of the expenditure consisted of salary, conveyance, depreciation, bank interest, directors remuneration, legal and professional charges and office rent. Looking to the quantum assessee's business, the amount of indirect expenditure by the assessee and debited to the books of account appears to be reasonable as against the sales shown by the assessee in the assessment year :- A.Y. Sales shown by the assessee G.P. rate shown by the assessee N.P. rate shown by the assessee 2000-01 6973010 10.3 % 0.93 % 2001-02 3441370 10.49 % (-)3.47 % 2002-03 7591000 13.5 % 2.3 % 2003-04 5660955 15.66% 1.26% 2....
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.... 2004-05 A.Y. 2005-06 A.Y. 2006-07 1. Expenses other than major verifiable expenses. Chart - III, Column (9N8) 1.39.711 1.07,646 1,90,213 59,775 81,699 1,31,400 2,26,982 14. We direct accordingly. 15. In the assessment year 2006-07, the assessee has taken one more ground with regard to addition made on account of sale of plot at Chuna Bhatti for reconsideration of Rs. 1,42,70,256/-. 16. Facts in brief are that during the course of search & seizure operations, an agreement to sell between the assessee and Shri Shyamnath Sharma as sellers and Shri Paramjeet Chandok & Smt. Badamidevi Jain as purchasers for the sale of 1.04 acre land for a consideration of Rs. l,42,70,256/ was found. When Shri Ramnath Sharma, one of the directors of the company, was confronted with the agreement of sell and asked to explain the nature of transaction, he stated that this transaction was for the total consideration of Rs.1,42,00,000/- and upto the date of search i.e. 16.09.2005, the assessee had received Rs.71,00,000/-,out of which Rs. 4l,OO,OOO/- lakhs had been accounted for and the balance of Rs. 30,00,000/- received in cash were not recorded in the books of account and ....
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....d on 30.04.2005 was subsequently cancelled vide deed dated 29.06.2005. Thereafter, the property was sold for a consideration of Rs. 40,OO,OOO/- only vide sale deed registered on 25.10.2005. Out of the sale consideration of Rs. 40,OO,OOO/-, the appellant had shown sale proceeds of Rs.32,00,000/- and the other co-owner, Shri Shyamnath Sharma, had shown Rs.8,00,000/-. Thus, the argument of the appellant was that the actual consideration for the sale of the said property was Rs. 40,OO,OOO/- only. On perusal of the documents and considering the fact of the case, the submission of the appellant is not found tenable. First, when the director of the appellant, Shri Ramnath Sharma, was confronted with the agreement to sell found during the course of search in his statement recorded u/s 132(4) on 16.09.2005, he had categorically stated that the property was sold for a total consideration of Rs.1,42,00,000/-. Second, the deed for cancellation of agreement to sell dated 30.04.2005 has been purported to be entered on 29.06.2005 but it is conspicuous to note that no such deed of cancellation was found during the course of search and seizure operations on 16.09.2005 . Third, had the dee....
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....ale receipts on the sale of the said land by Rs. 75,02,692/- ( Rs. 1,07,02,692/- - Rs. 32,00,000/-). If the actual sale proceeds of the said land of Rs. 1,07,02,692/- is substituted in place of the sale proceeds of Rs. 32,00,000/- shown by the appellant, it amounts to an addition of Rs. 75,02,692/- in the returned income. Therefore, the addition to the extent of Rs. 75,02,692/- is confirmed as against the addition of Rs. 78,00,000/- made by the Assessing Officer. In the result, the appellant gets a relief of Rs. 2,97,308/- ( Rs. 78,00,000/- - Rs. 75,02,6923/-)." 19. It was contended by the ld. Authorized Representative that agreement to sale the Chunna Bhatti, Bhopal land measuring 1.04 acres was not acted upon. The sale-agreement was between four selling parties to two buying parties. This draft agreement suffered from the various shortcomings. He further contended that fair market value of the land was Rs. 63 lakhs as per Collector and stamp duty was also charged accordingly. He further submitted that provisions of Section 53A of the T.P. Act, was not applicable in so far as possession of the land was not given as per the agreement itself and the major amount was still ....