TaxTMI 
TaxTMI 
2014 (3) TMI 176
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....ound which is required to be adjudicated is Ground No.3 pertaining to estimation of profit @ 16%. 3. Briefly the facts relating to ground No. 3 are that the assessee an individual is engaged in the business of real estate and construction. For the impugned assessment year, assessee filed her return of income on 13/08/2003 declaring total income of Rs. 3,36,010/-. On 23/01/2008, a search and seizure operation u/s 132 of the IT Act was conducted in case of the assessee and her husband Shri P.B. Raghava Rao and others in the group. During search operations, certain incriminating materials were seized by the Department. As a result of search, a notice was issued u/s 153A of the Act calling upon the assessee to file her return of income. In response to the said notice, the assessee filed her return of income on 07/09/2009 declaring the same taxable income of Rs. 3,36,010/-. It will be pertinent to mention here that during search proceeding, the assessee had admitted an amount of Rs. 30 lakh as undisclosed income for different assessment years, the details of such undisclosed income are as under: 2003-04 Rs. 10 lakhs 2005-06 Rs. 10 lakhs 2006-07 Rs. 03 lakhs 2007-....
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....as follows: On the basis of special audit report, the AO completed the assessment by making the following additions: 1) Unexplained credit in bank account of Rs. 6,93,669/- 2) Unexplained cash receipt of Rs. 1,90,344/- As a result total income was determined at Rs. 29,33,120/-. 6. Being aggrieved of the additions made in the assessment order, Assessee preferred an appeal before the CIT(A). 7. In course of the proceeding before the CIT(A), the assessee contended that the majority of the additions have been made by the AO in an arbitrary manner without considering the gross income shown in the returns of income filed in response to the notice u/s 153A of the Act. It was contended that the special auditors have not considered the books of account presented in support of returns of income filed in response to notice u/s 153A. It was submitted that bank credits were treated as unaccounted receipts excluding the transactions in books of account, which resulted in additions under the head 'undisclosed bank account', although, the transactions were recorded in the books of account which in turn were relied upon by the assessee for filing returns of income u/s 153A....
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....najakshamma on 15/10/2001 and the same was transferred to Ch. Vanajakshamma on the same day." 8.1 The CIT(A) on considering the submissions of the assessee as well as other materials on record and the remand report submitted by the AO noted that the AO in the remand report has accepted the fact that the credits into the bank account stand explained except small variations in figures. He further noted that the submissions of the assessee and reconciliation made by the AO in the remand report are based on the revised books of account while the additions made by the AO was on the basis of old books of account, seized material as well as the observations of the special audit. The CIT(A) having noted the fact that various credits into the bank accounts were incorporated in the revised books of account, which were taken as basis by the assessee for filing return u/s 153A of the Act, there is no basis for treating the amount of Rs. 6,93,669/- as unexplained credit. With regard to addition of Rs. 19,03,447/- representing the amount shown to have been received in cash from Shri CH. Janardhan Reddy and Smt. CH. Rohini towards balance amount receivable on sale of hotel, the CIT(A) noted th....
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.... the Assessee thereby inviting further interference from the AO and report of the special audit. 3) The AO has selectively chosen to apply the provisions of section 40A(3) as pointed out by the special audit. Extra/incremental expenditure were not subjected to the discussion with reference to the applicability of section 40A(3) and section 40(a)(ia) and also relevance of the same to the business income. 4) On examining the remand report of the AO, in the aforesaid context, the CIT(A) noted that the AO in the remand report has only considered the issue relating to credits in the undisclosed bank accounts and analyzing the revenue receipts in the bank account including on money/extra money but he was completely silent on the adhoc 20% disallowance of the expenditure under certain heads reflected in the old seized books whereas he is altogether silent on the incremental expenditure. 8.2 The CIT(A) noted that the special audit report as well as remand report indicate that while making additions under the head 'credits in bank accounts', neither the original books of account nor reconstructed books of account have been considered in assessing the business income. The re....
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.... opinion that in the given circumstances, a fair estimation of the profits on the turnovers would take care of the defects/deficiencies as found in the case. The CIT(A), thereafter, considering the profits for each of the assessment year based on the additions/disallowances which have been confirmed or deemed to have been confirmed under various heads as given in tabular form in para 7.3 of his order found that the profits for each of the assessment year are varying with minimum of 9.00% in the AY 2007-08 to a maximum of 37.23% in AY 2004-05. The CIT(A) noted that since there will be overlapping of incomes and expenditure of the projects in more than one FY, it will be reasonable to work out average rate/profit of the 7 assessment years. The CIT(A) on the basis of the profits for each assessment year as mentioned in the tabular form found that the average of the business profit on the total turnover in all the assessment years put together worked out to 15.47% including the business loss for AY 2002-03. He further noted that aggregate percentage of 15.47% was worked out due to significant amount adjusted/treated under the heads such as disallowances u/s 40A(3) amounting to Rs. 10,0....
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....ct the AO to estimate the profit by applying rate of 8%, net of all deductions, on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 11. In the result, appeal in ITA No. 615/H/12 is partly allowed. ITA No. 616/H/12 for AY 2003-04 in case of P. Pavani 11. Assessee has raised 4 grounds. Ground No. 1 & 4 are general in nature, hence, no need to be adjudicated. The learned AR did not press Ground No. 2, therefore, this ground is dismissed as not pressed. 12. The only ground which is required to be adjudicated is Ground No.3 pertaining to estimation of profit @ 16%. This ground is materially identical to that of the ground decided by us in AY 2002-03 in ITA No. 615/H/12 vide paras 2 to 10 (supra) and, therefore, following the conclusions drawn therein we direct the AO to estimate the net profit by applying rate of 8% on the turnover, declared by the assessee. Accordingly, this ground is partly allowed. 13. In the result, appeal in ITA No. 616/H/12 is partly allowed. ITA No. 617/Hyd/12 for AY 2004-05 in case of P. Pavani. 14. Ground No. 1 & 5 do not require any adjudication as they are general in nature. . Ground No. 3 was not pressed....
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....y applying a net profit rate of the turnover. The Assessing Officer in addition to the determination of net profit as a percentage of turnover, made further disallowance under Section 40A(3). The Commissioner of Income- tax (Appeals) deleted the disallowance made under Section 40A(3). The Revenue aggrieved with the order of the Commissioner of Income-tax (Appeals) is in appeal before us. It is contended by learned Counsel that once a net profit rate is applied, no further addition/disallowance can be made under Section 40A(3). In support of this contention, he has relied upon the decision of the hon'ble Allahabad High Court in the case of CIT v. Banwari Lal Banshidhar in which their Lordships held as under (headnote): "affirming the decision of the Tribunal, that no disallowance could be made in view of the provisions of Section 40A(3) read with rule 6DD(j) of the Income-tax Rules, 1962, as no deduction was allowed to and claimed by the assessee. When the gross profit rate was applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases made by the assessee." The above decision of the ....
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....CIT(A) has come to a just and fair conclusion. It is a fact that the assessee himself has disallowed an amount of Rs. 1,85,140/- out of the expenditure claimed while taking into consideration the fact that full sets of bills and vouchers are not available. Further, books of account of the assessee were found to be defective hence, profit was estimated by rejecting them. Once, profit is estimated rejecting the books of account no separate disallowance of expenditure can be made. Therefore, the CIT(A) was justified in deleting the addition. 24. Similarly, with regard to the addition made of Rs. 42,68,680/- on account of incorrect credits in bank accounts, as can be seen from the extract of the remand report at para 5.3 of the CIT(A)'s order, the AO has accepted the contention of the assessee that the bank credits have already been considered by him as contract receipts in the revised books of account and taken into consideration while filing return of income in response to notice u/s 153A of the Act. He has further stated that on verification of the account copies, it was found that the receipts were reflected by the assessee in the reconstructed books of account and were incl....
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.... Rs. 19,52,902 on 22/10/2004. When the AO called upon the assessee to explain this, she replied that the negative cash balance is due to wrong recording of entries in the books of account and it had happened due to a mistake of the Accountant in not recording transactions as per the date of transaction. AO, therefore, observing that the assessee's version clearly indicates that the books of account are not dependable, treated the amount of Rs. 19,52,902/- being the book negative cash balance as unexplained cash and added the same to the income of the assessee. 30. Before the First Appellate Authority during appeal proceedings, the assessee contended that book negative cash balance was found out from the original set of books and not on the basis of books of account supporting the return filed u/s 153A. It was submitted that the addition is not sustainable as there is no negative cash balance as per the revised books of account on the basis of which return u/s 153A was filed. The CIT(A), though, accepted the fact that the negative book balance was on the basis of original set of books of account and as per the reconstructed books of account based on the seized material and th....
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....ded by us in AY 2002-03 in ITA No. 615/H/12 vide paras 2 to 10 (supra), therefore, following the conclusions drawn therein we direct the AO to estimate the profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 38. Ground Nos. 2 & 3 relate to disallowances expenditure on estimate basis and u/s 40(a)(ia) amounting to Rs. 6,49,092/- and Rs. 8,84,400/- respectively. 39. This issue has been decided by us in ITA No. 617/H/12 for AY 2004-05 in case of P. Pavani vide paras 16 to 19.1. Following the decision therein we hold that no separate disallowance of expenditure either on estimate basis or u/s 40(a)(ia) of the Act can be made when the profit of the assessee has been estimated. We, therefore, direct the AO to delete the additions made on this count. Thus, ground Nos. 2 & 3 are allowed. 40. In the result, appeal in ITA No. 619/H/12 is partly allowed. ITA No. 679/H/12 for AY 2006-07 by revenue appeal in case of Smt. P. Pavani 41. The only issue raised by the department is with regard to the action of the CIT(A) in deleting the additions made by the AO and resorting to estimation of profit by applying the rate of....
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....he AO to delete the additions made on this count. Thus, ground No. 2 is allowed. 51. Ground No. 3 relates to CIT(A) sustaining the addition of Rs. 4,87,600/- out of Rs. 6,01,847/- representing unaccounted investment in jewellery. 52. During assessment proceedings, the AO noted that during search and seizure operation, certain amounts of jewellery in gold and silver was found at the residence of the assessee, which was valued by registered valuer. As per the details furnished in valuation report, the total of the gold jewellery was quantified at Rs. 728.200 grams, which was shown to be belonging to 10 individuals including assessee. In addition to this, gold weighing 335 grams was shown to have mortgaged to Andhra Bank for obtaining loan. Therefore, total quantity of jewellery amounted to 1063.200 grams. AO treated jewellery of 563 grams valued at Rs. 6,01,847/- after allowing credit of 500 grams as per the CBDT Circular as unaccounted investment of assessee in absence of any evidence towards the date of acquisition and added it to the income of the assessee. 53. Before the CIT(A) it was contended by the assessee that the gold jewellery belonged to 10 family members includi....
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.... the CIT (A) in sustaining addition of Rs.1,85,176/- out of an addition of Rs.4,41,675/- made by the Assessing Officer on account of disallowance of expenditure on estimate basis. 62. Briefly the facts relating to the issue are, the assessee is an individual. A search and seizure operation was carried out in the business and residential premises of the assessee and his wife Smt. Pavani and other group concerns on 21-3-2008. During the search, as stated by the Assessing Officer in the assessment order certain incriminating material pertaining to the assessee was found and seized. In response to notice issued u/s 153A of the Act, the assessee filed his return of income on 9-10-2009 declaring an income of Rs.3,98,700/-. During the assessment proceedings, the assessee's case was referred to special audit. The Special audit after going through the seized books of accounts submitted his audit report. On the basis of the seized material, special audit report and other materials on record, the Assessing Officer proceeded to complete assessment by making following additions:- i) On money receipts in respect of flats of M/s Pavani Homes Rs.5,22,964/- ii) undisclosed amount in th....
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....essing Officer would lead to inference that the books of accounts of the assessee were deemed to have rejected proceeded to estimate the profit from the business of the assessee. The CIT (A) taking into consideration the additions/disallowances made for each assessment year computed the profit vis-a-vis the turnover declared by the assessee for assessment years 2002-03 to 2008-09 worked out the average profit to 11.99%. The CIT (A) observed that though higher percentage of profits is involved in more than one of seven assessment years but due to the reason the turnovers for assessment year 2007-08 is very high while the profits are at the lowest at 7.11%. Considering the aforesaid facts, the CIT (A) thought it proper to estimate the profit at 15% for all the seven assessment years. 66. We have heard the parties and perused the material on record. The learned AR contended before us that the assessee is in construction business hence, net profit rate of 15% adopted by the CIT (A) is high and excessive. It was submitted by the learned AR that the co-ordinate benches of this Tribunal had consistently held that in case of rejection of books of accounts in case of civil construction w....
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....ion also. 73. In ground No.3, the assessee has challenged confirmation of addition of Rs.20,000/- on account of difference in bank balance. Briefly stated in the report submitted by the Special Audit it was pointed out, the balance in the Andhra Bank a/c No.6667 as appearing in the books of assessee as on 31-3-2004 is Rs.31,647/- whereas in the balance sheet it was shown at Rs.11,647/-. The Special Audit therefore suggested for addition of the amount of Rs.20,000/- less shown by the assessee in the balance-sheet. On the basis of suggestion made by the Special Audit the AO added an amount of Rs.20,000/-. The CIT (A) also confirmed such addition by observing that the assessee could not explain the difference in a detailed manner. 74. We have heard the parties and perused the material on record. It is contention of the learned AR that the Special Audit while conducting the audit has not considered the revised books of accounts supporting the return of income filed in response to notice u/s 153A wherein the amount of Rs.11,647/- was shown as the cash balance. It was submitted that even the bank statement also shows the balance as on 31-3-2004 at Rs.11,647/-. In view of the afores....
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....well as incremental expenditure as per which there is no negative cash balance. That being the case CIT (A) was not justified in sustaining the addition of Rs.10,71,499 which was made on the basis of old set of books of accounts. Without verifying the revised books of accounts, and claim of the assessee that as per which there is no negative cash balance the revenue authorities are not justified in making the addition on the basis of old books of accounts which admittedly were found to be defective. Therefore considering the totality of facts and circumstances of the case, we are of the view that the addition of the amount of Rs.10,71,499/- cannot be sustained. Accordingly, we direct to delete the same. 78. Ground No.6 is similar to ground No.4 of ITA No. 622/Hyd/12 decided vide paras 65 and 66(supra). Following our decision therein, we direct the Assessing Officer to estimate the profit at 8% on the total turnover disclosed by the assessee net of all deductions. 79. In the result, appeal in ITA No. 624/H/12 is partly allowed. ITA No.681/Hyd/12 for AY 2004-05 by the revenue in case of Shri P.V. Raghava Rao. 80. The only issue raised by the department is with regard to t....
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....ded by us in ITA No. 677/H/12 for AY 2004-05 vide paras 20 to 24, therefore following the decision therein we do not find any reason to interfere with the order of the CIT(A) in resorting to estimation of profit while deleting the additions made by the AO. 90. In the result, appeal of revenue in ITA No. 682/H/12 is dismissed. ITA No. 626/H/12 for AY 2006-07 in case of Shri P.V. Raghava Rao. 91. Ground No. 1 & 6 are general in nature. Ground No. 4 is dismissed as not pressed. 92. Ground No. 2 relates to disallowance of expenditure on estimate basis. This issue has been decided by us in ITA No. 625/Hyd/2012 in case of same assessee for AY 2004-05 vide para 85 (supra). Following the decision therein we hold that no separate disallowance of expenditure can be made when the profit of the assessee has been estimated. We, therefore, direct the AO to delete the additions made on this count. Thus, ground No. 2 is allowed. 93. Ground No. 3 relates to confirmation of the addition of Rs. 7,57,837/- by the CIT(A) on account of negative cash balance. Similar issue has been decided by us in ITA No. 618/H/12 for AY 2005-06 in case of Smt. Pavani vide paras 28 to 31 (supra). Followin....
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....ssment order, the assessee having failed to produce any proof in support of the claim that the amount paid in respect of sale of the flat was out of his own sources of income, AO treated the amount of Rs. 57,89,250/- as assessee's undisclosed income. The addition was challenged in appeal before the CIT(A). 102. In course of appeal proceedings before the CIT(A), it was contended by the assessee that the assessee in fact received an amount of Rs. 40,50,000/- from Shri Raja Praveen Reddy by the end of the FY 2006-07, which was duly recorded in the books and the balance amount was received during the FY 2008-09. It was also brought to the notice of the CIT(A) that in AY 2008-09, the AO has made an addition of Rs. 20 lakh in this regard. The CIT(A) on the basis of submissions made by the assessee called for a remand report from the AO. The AO in the remand report stated that during the remand proceeding, the assessee had explained that the extra money received towards which the addition was made was duly accounted and formed part of the total contract receipts reflected in the return filed u/s 153A. It was also explained by the assessee that extra money received are duly accounte....
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....amount of Rs. 57,89,250/- is concerned, the remand report submitted by the AO as well as the observations made by the CIT(A) would clearly show that they have accepted the fact that the said amount has been accounted for, hence, there cannot be any scope for further addition on that account. However, so far as the addition of Rs. 14,98,000/- made by the CIT(A), it is to be noted that in para 5.7 of his order, the CIT(A) has noted that the assessee has offered the said amount as additional income in the form of extra receipts for the year under reference. If it has already been offered as additional income, then, it cannot be again added to the income of the assessee. We, therefore, remit this issue to the file of the AO to verify whether the assessee has offered the aforesaid amount of Rs. 14,98,000/- as additional income and decide the issue accordingly after affording an opportunity of being heard to the assessee. 104. Ground No. 5 relates to estimation of profit at 15%. This ground is materially identical to that of the ground decided by us in assessee's own case AY 2002-03 in ITA No. 6622/H/12 vide paras 65 & 66 (supra), therefore, following the conclusions drawn therein....
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....that the offer was made by the assessee during the course of search without examining actual transaction in the books of account and on the presumption that only Rs. 28,80,000/- was recorded as on 31/03/2007. It was further submitted that the assessee in fact had received and duly recorded in the books of account, an amount of Rs. 40,50,000/- by the end of FY 2006-07 against the total consideration of Rs. 57,89,250/-, which also include the amount of Rs. 20 lakhs. It was, thus, submitted that the return of income filed in response to notice u/s 153A for AY 2007-08 already includes the amount of Rs. 20 lakh since the assessee has received the said amount during the FY and the balance amount was offered in the FY 2008-09. On the basis of the submissions made by the Assessee, CIT(A) called for a remand report from the AO. In the remand repot, AO stated that on examining the direct income account in the books of account for AY 2006-07, it was found that the assessee has shown Rs. 40,50,000/- as received from R.P. Reddy for sale of flat No. 203, HUDA Enclave, Jubilee Hills, Hyd. However, as per the sworn statement of the assessee dated 18/03/2008, the assessee himself stated that the to....
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....the result, appeal in ITA No. 628/H/12 is partly allowed. ITA No. 1388/H/12 for AY 2002-03 in case of Pavani Towers. 113. Ground No. 1 & 6 are general in nature. 114. In Ground No. 2 & 3, the assessee has raised the issue of sustaining the addition in absence of seized material. 115. Briefly stated, assessee is a partnership firm. As a result of search and seizure operation conducted in case of Smt. P Pavani and Shri P.V. Raghava Rao and others, a notice was issued u/s 153C of the Act. In response to the notice, the assessee filed its return of income on 03/08/2009 admitting income of Rs. 42,880/-. In the assessment proceeding, which ensued thereafter, the AO referred to an auditor for special audit. After receiving special audit report, the AO made addition on account of undisclosed receipts on considering the fact that the assessee has disclosed gross receipts of Rs. 42,50,000/- in the return filed in response to section 153C as against Rs. 22,85,000/- disclosed in the original return. However, he noticed that the assessee, though, had enhanced his gross receipts but, at the same time, computed his income at Rs. 42,875/- by claiming addition as expenses. The AO noted ....
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.... is very much clear from the materials on record that at the time of filing of original return, the assessee only disclosed gross receipts through cheques totally suppressing receipts in cash which came to light only as a result of search. In the aforesaid circumstances, the contention of the assessee that the addition cannot be made in absence of seized material is without any basis. However, so far as estimation of profit @ 16% is concerned, we are of the view that the net profit rate adopted by the CIT(A) is on the higher side considering the nature of business carried on by the assessee, i.e., civil construction work. Considering the facts and circumstances of the case, we are of the view that net profit rate of 8% would be just and reasonable. We, therefore, direct the AO to estimate the profit by applying the rate of 8% on the turnover of Rs. 42,52,000/- net of all deductions. 118. Ground No. 5 relates to addition of an amount of Rs. 30,375/- representing contribution of chit. W hile making the aforesaid addition, the AO noted that the assessee has wrongly debited to Margardarshi Chit to the sale and cement account. 119. During the appeal proceedings before the CIT(A), ....
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....elates to estimation of profit at 16% of the gross receipts of Rs. 1,20,10,000. This ground is materially identical to that of the ground decided by us in AY 2002-03 in ITA No. 1388/H/12 in assessee's own case vide para 117 (supra), therefore, following the conclusions drawn therein we direct the AO to estimate the profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 128. In the result, appeal in ITA No. 1389/H/12 is partly allowed. ITA No. 1445/H/12 for AY 2003-04 by the revenue in case of Pavani Towers. 129. Ground Nos. 1 & 4 are general in nature. Hence, they do not require to be adjudicated. 130. Issue raised in ground Nos. 2(a) & 2(b) are that, the CIT(A) is not justified in deleting the addition made of Rs. 93,70,000/- towards unaccounted receipts when the assessee failed to submit any bills. 131. This issue has been decided by us in ITA No. 677/H/12 for AY 2004-05 vide paras 20 to 24 read with para 117 of ITA No. 1388/H/12, therefore following the decision therein we do not find any reason to interfere with the order of the CIT(A) in resorting to estimation of profit while deleting the addition....
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....e balance 40%. The assessee further contended that the assumptions made by the AO is totally incorrect as it is based on the seized material and not derived out of the books of account supporting the return of income furnished wherein the total receipts of Rs. 1,20,10,000/- were accounted in the books of account. It was further contended that the assessee has recorded total receipts from sale of flats amounting to Rs. 3,00,27,883/- on revenue realization basis spread over between FY 2001-02 to 2003-04, which is more than the amount of Rs. 2,86,64,080/- including unaccounted turnover of Rs. 1,14,65,740/- as quantified by the AO. The CIT(A) after considering the submissions of the assessee in the context of seized material and also findings of the AO, noted that the basis as adopted by the AO for estimating unaccounted receipt is from sale of flat bearing No. A-202 to Shri G. Sivakumar wherein the construction value as per the seized material was shown at Rs. 5,93,969/- as against the amount of Rs. 3,55,500/- admitted by the assessee, which according to the AO resulted in suppression of receipts to the extent of Rs. 2,38,469/-, which worked out to 40% of the total consideration of Rs....
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.... 1,14,65,740/- that too by assuming that receipts shown by the assessee represents 60% of the total consideration. Further, it is also a fact that the assessee taking into consideration the information available in the seized materials has declared the gross receipts of Rs. 1,20,10,000/- in the return furnished in response to notice issued u/s 153C as against the receipts of Rs. 26,40,000/- shown in the original return. Therefore, the conclusion drawn by the CIT(A) that the unaccounted receipts from sale of flat has already been taken care of by enhancing gross receipt of Rs. 1,20,10,000/- cannot be disregarded. We, therefore, do not find any infirmity in the order of the CIT(A) in deleting the addition, which is accordingly upheld. Hence, this ground of revenue is dismissed. 136. In the result, appeal in ITA No. 1445/H/12 is dismissed. ITA No. 1390/H/12 for AY 2004-05 in case of M/s Pavani Towres 137. Ground No. 1 and 5 are general in nature. 138. Ground Nos. 2 &3 are against the addition made when no material was found during search and seizure operations and without considering the fact that the assessment is made u/s 153C of the Act. Similar has been decided by us i....
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....ved of such addition, the assessee preferred an appeal before the CIT(A). 147. The CIT(A) after considering the submissions of the assessee and in the light of the materials on record, restricted the disallowance to 10% of the total expenditure claimed under the aforesaid two heads. 148. We have heard the parties and perused the materials on record. As can be seen from the grounds of appeal raised before the CIT(A), the assessee never challenged the disallowance of expenditure on the ground of absence of seized material. It is evident from the facts on record, in the preceding assessment years also, the CIT(A) has resorted to estimation of profit since the books of account of the assessee were not found to be reliable. In the appeal before us, it is a fact on record that the expenditure claimed on account of direct expenses and salary & wages was not supported by bills and vouchers. That being the case, the CIT(A) was justified in disallowing the amount of 10% and accordingly, there is no reason to interfere with the order of the CIT(A), which is hereby upheld. Accordingly, the grounds raised in this regard are therefore dismissed. 149. In the result, assessee's appeal....
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....except the amount of Rs. 50,590/-, rest of the addition made attracts provisions u/s 40A(3) of the Act. That being the case, in our view, the order passed by the CIT(A) is fair and reasonable and cannot be interfered with. The Ground is, therefore, dismissed. 158. In the result, appeal in ITA No. 1386/H/12 is partly allowed. ITA No. 1387/H/12 for AY 2008-09 in case of Pavani Constructions. 159. Ground No. 1 & 5 are general in nature. 160. Ground Nos. 2 & 3 are against the addition made when no material was found during search and seizure operations and without considering the fact that the assessment is made u/s 153C of the Act. Similar issue has been decided by us in ITA No. 1388/H/12 for AY 2002- 03 vide paras 114 to 117 (supra). Following the decision therein we dismiss these grounds of appeal of the assessee. 161. In Ground No. 4, the assessee has challenged the disallowance of 10% expenses claimed under the head 'direct expenses and wages & salaries. Similar issue was raised in ITA No. 1385/H/12 for AY 2006-07, hence, following the decision therein we confirm the order of the CIT(A) on this count and dismiss the grounds raised by the assessee. 162. In the....
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.... 2006-07, hence, following the decision therein we confirm the order of the CIT(A) on this count and dismiss the grounds raised by the assessee. 170. Ground No. 5 relates to the action of the CIT(A) in confirming the addition of 10% of the expenses of Rs. 5,98,868/-. 171. We have heard the parties and perused the materials on record. The AO has made the disallowance on the ground that assessee has failed to produce supporting vouchers and has failed to deduct tax at source. The CIT(A) has held that no disallowance can be made u/s 40(a)(ia) as the AO has not established the default by assessee. Even so far as allegation of non furnishing of bills and vouchers are concerned, the CIT(A) has observed that though vouchers were available with the assessee, the AO refused to verify them and made the addition solely on the basis of special audit report. The CIT(A), therefore, restricted the disallowance to 10% of the expenditure claimed. In our view, considering the facts and circumstances of the case, we direct the AO to disallow 5% in stead of 10%, considering the fact that some amount of inflation on expenditure cannot be ruled out. Accordingly, this ground is partly allowed. 1....
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....2 for AY 2006-07 in assessee's own case vide para 171 (supra). Following the decision therein we direct the AO to disallow 5% on this count and the ground raised by assessee is partly allowed. 182. In the result, appeal in ITA No. 1393/H/12 is partly allowed. ITA No. 1394/H/12 for AY 2008-09 in case of Pavani Estates 183. Ground Nos. 1 & 7 are general in nature. 184. Ground Nos. 2 & 3 are against the addition made when no material was found during search and seizure operations and without considering the fact that the assessment is made u/s 153C of the Act. Similar issue has been decided by us in ITA No. 1388/H/12 for AY 2002-03 vide paras 114 to 117 (supra). Following the decision therein we allow this ground of appeal of the assessee. 185. In Ground No. 4, the assessee has challenged the disallowance of 5% expenses claimed under the head 'direct expenses and wages & salaries. Similar issue was raised in ITA No. 1385/H/12 for AY 2006-07, hence, following the decision therein we confirm the order of the CIT(A) on this count and dismiss the grounds raised by the assessee. 186. Ground No. 5 relates to the action of the CIT(A) in confirming the addition of 10....
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.... offered as income in the same year. thus, it was submitted that there was no undisclosed income as the contract with the said party was cancelled and, therefore, there is no justifiable reason for making the addition solely on the basis of the seized material. In support of his contention, the assessee submitted a copy of the cancellation agreement. Similarly in case of Smt. Srilatha, it was submitted by the assessee that originally agreement was for making the building at a specified rate on total area of 2200 sft., but, during the execution of work, she expressed her intention to take up certain works of floor and interior on her own and accordingly balance amount of Rs. 9,87,500/- was not collected from her. In support of such contention, assessee submitted supplementary agreement entered with the party. Assessee further submitted that as the return of income for the assessment year under consideration was submitted on 01/10/2008 i.e. subsequent to the date of search all receipts were considered and there cannot be any suppression of receipts. 191. The CIT(A) after considering the submissions of the assessee in the light of the materials on record, found that there are subse....
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....receipt of Rs. 17,76,000/-. 193. In the result, appeal in ITA No. 1394/H/12 is partly allowed. ITA No. 1447/H/12 for AY 2008-09 by the revenue in case of Pavani Estates. 194. Ground No. 1 & 5 are general in nature. 195. Ground No. 2 relates to the action of the CIT(A) in deleting the addition of Rs. 9,87,500/- representing alleged suppression of receipt from sale of flat to Smt. Srilatha. 196. Having heard the parties and perused the materials on record, we do not find any infirmity in the order of CIT(A). It is very much clear from the discussion made by the CIT(A) that the assessee has demonstrated before him that original agreement with Smt. Srilatha was subsequently modified and assessee has actually received an amount of Rs. 11,62,500/- in stead of Rs. 21,15,000/- as per the original agreement. In that view of the matter, there is no reason to interfere with the order of the CIT(A) and the same is hereby confirmed. 197. In Ground No. 3, the revenue has challenged the action of the CIT(A) in estimating profit on the receipt of Rs. 17,76,000/- from Smt. Vani in terms of agreement. 198. In view of our finding in assessee's appeal in ITA No. 1394/H/12 (sup....
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....o- -do- Partl y Allowed 15 681/H/12 2004-05 Asst. Commissioner of Shri P.V. Raghava Dismissed Income-tax, Central Rao, Nellore Circle, Tirupathi (PAN - AKPPP0576P) 16 625/H/12 2005-06 Shri P. V. Raghava Rao, Asst. Commissioner of Partl y Nellore Income-tax, Central Allowed (PAN - AKPPP0576P) Circle, Tirupathi 17 682/H/12 2005-06 Asst. Commissioner of Shri P.V. Raghava Dismissed Income-tax, Central Rao, Nellore Circle, Tirupathi (PAN - AKPPP0576P) 18 626/H/12 2006-07 Shri P. V. Raghava Rao, Asst. Commissioner of Partl y Nellore Income-tax, Central Allowed (PAN - AKPPP0576P) Circle, Tirupathi 19 683/H/12 2006-07 Asst. Commissioner of Shri P.V. Raghava Dismissed Income-tax, Central Rao, Nellore Circle, Tirupathi (PAN - AKPPP0576P) 20 627/H/12 2007-08 Shri P. V. Raghava Rao, Asst. Commissioner of Partl y Nellore Income-tax, Central allowed (PAN - AKPPP0576P) Circle, Tirupathi for statistical purposes. 21 628/H/12 2008-09 -do- -do- Partl y Allowed 22 1388/H12 2002-03 M/s Pavani Towers, Asst. Commissioner of Partl y Nellore. Income-tax, Central Allowed Circle, Tirupathi (PAN - AAFFP1143G) 23 1444/H/12 2002-03 Asst. Commissioner of M/s....