TaxTMI 
TaxTMI 
2014 (1) TMI 1402
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.... erred in confirming the addition made by the Assessing Officer of Rs.11,00,000/- disbelieving the explanation of the appellant that the said amounts were paid to the appellant by Shri V. Prajesh and Shri Rajender Singh. 4. The learned CIT(A) ought to have appreciated the fact that both the persons were present before the Assessing Officer and accepted the facts during the course of sworn deposition." 2. Briefly stated, assessee is an individual and is in the business of civil construction and also partner in M/s. SSV Inn. Assessee filed return of income admitting income at Rs.2,36,240/-. In the assessment completed under section 143(3), Assessing Officer estimated the income @ 12.5% on the gross receipts and added an amount of Rs.1,9....
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....g as under : "5.4. Further, the A.O. estimated the net profit of the business at 12.5%, as against 8% adopted by the appellant/assessee, apparently on the ground that the provisions of sec.44AB apply to the appellant and neither books of account were maintained nor audited. No specific reasons were assigned by the A.O. for estimating the profits of the business at 12.5%. However, considering the facts of the case, where no books of account maintained and where provisions of sec. 44AB found applicable, the estimation of profit sat 12.5% held to be reasonable. The judicial decisions in this regard also put the margins of the business in the range of 8 to 12.5% , depending on the facts of each case. In this case, as indicated, the facts sup....
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....n relation to material supplied by the Government, which reduced the total contract receipts. Further being a firm, there was a claim of payment of interest and salary to the partners. In that context, net profit was estimated at 8% of the net contract receipts. The facts are different from the assessee's case. Considering that assessee is operating as an individual without borrowed funds, margin of 12.5% on the given facts of the case is reasonable. Accordingly, the order of the CIT(A) is sustained and assessee's ground No.2 is rejected. 7. Grounds No. 3 and 4 pertains to the addition of Rs. 11 lakhs. While finalizing the scrutiny assessment, A.O. noticed that assessee paid through his bank account an amount of Rs. 11 lakhs to M/s. Sai ....
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....he A.C's report, M/s. Sai Ganesh Builders is not a proprietary concern as mentioned in the copy of agreements for sale, but only a firm consisting of 4 partners, with the name of Mr. Ganesh, as mentioned in the said document (agreement for sale), not relatable to the said firm. Further, Mr. Ganesh is neither existing nor traced as per 'the information brought on record. Though the A.O recorded the statements from Rajender Singh and Mr. V. Prajesh who confirmed to have given the cash of Rs. 5,50,000/- each to Mr. B.V.Krishna Rao, towards purchase of flats from M/s. Sai Ganesh Builders, they could not furnish any further details such as the stage of construction at which agreements were entered and the reasons for cancellation of agreements e....
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....talments, may misrepresent the facts, since the said amounts originated from account of B.V.Krishna Rao and yet to reach him from M/s. Sai Ganesh Builders. Thus the amounts of investment made by appellant with M/s. Sai Ganesh Builders, represent the unexplained investments in the hands of the appellant, as per the provisions of Sec. 69 of the LT. Act. Accordingly, the addition of Rs.11,00,000/- made by the A.O, stand sustained. This ground of appeal is treated as dismissed". 8. Learned Counsel referring to the facts of the case and the paper book filed in this regard submitted that M/s. Sai Ganesh Builders is not a proprietary concern but a firm consisting of four partners and assessee, on behalf of Mr. V. Prajesh and Mr. Rajender Singh,....
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....rce is not explained, the amount can be treated as income from the unexplained source. In this case, source is the assessee's own funds in the bank account. So, as per the provisions of the Act, the amount cannot be treated as unexplained at all. It may be that explanation given by the assessee about the nature of expenditure may not be satisfactory to the A.O. but there is no question about the source of funds. Therefore, treating the same as unexplained expenditure is not at all correct as per the provisions of the Act. 11. Next is, confirmation by the CIT(A). He has changed nature of addition from unexplained expenditure treated by the A.O. to unexplained investment. We are unable to understand how the learned CIT(A) could treat 'unex....