TaxTMI 
TaxTMI 
2015 (7) TMI 112
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....for the Asstt.Year 2011-12 are filed against the order of the CIT(A)-IV, Ahmedabad dated 21.10.2014. Assessment Year 2008-2009 2. In the assessee's appeal, the ground no.1 reads as under: 1. The ld.CIT(A) has erred in estimating net profit at 16% of the contract receipt and making addition of difference amount of Rs. 7,41,65,209 (i.e. NP @ 16% Rs. 138882330 less NP shown by the appellant Rs. 64717221) is unjustified, unwarranted and bad in law. The assessee has also raised additional ground of appeal, which reads as under: "The ld.CIT(A)-IV, Ahmedabad has erred in dismissing the appeal whereby the addition made by the Assessing Officer has disallowance u/s.40A(3) made an addition of Rs. 5,47,500/- is unwarranted, unjustified and bad in law." Since the DR had no objection for admission this additional ground of appeal of the assessee, the same was admitted and parties were allowed to make their submissions thereon. In the Revenue's appeal for the Asstt.Year 2008-09, sole ground taken in the appeal reads as under: "1. Theld.CIT(A) has erred in law and on facts in deleting the addition made of Rs. 1,25,00,000/- made on account of disallowance of bogus e....
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.... is not in dispute before us. The only grievance of the assessee is that after rejection of the books of accounts, the CIT(A) was not justified in arbitrarily estimating the net income at the rate of 16%, which is excessive and unrealistic considering the nature and volume of the business of the assessee. 8. On the other hand, the DR supported the order of the CIT(A) and submitted that the estimation of net profit at the rate of 16% by the CIT(A) was justified. 9. We find that no basis for making estimation of net income at the rate of 16% was brought on record by the CIT(A). In respect of net income of the preceding year disclosed by the assessee at the rate of 12.41%, the assessee pointed out that the said rate cannot be adopted during the year under consideration, because the nature of work in that year was quite different from the nature of work undertaken during the year. It is explained that the work executed during the preceding year was not of under-sea project, whereas, the work involved during the year was of under-sea project. In respect of tender documents, it was explained that the net profit embedded in the project was 11.11% as well as loss of 22.20%, which was....
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....by the AR of the assessee. We hold that charging of interest under section 234A, 234B and 234C is consequential in nature, and accordingly, dismiss this ground of appeal of the assessee. Assessment Year 2009-2010 17. The ground no.1 of the assessee's appeal reads as under: "1. The ld.CIT(A) has erred in dismissing the appeal whereby upholding the addition made by the AO of Rs. 1,74,194/- on the alleged ground of unexplained interest on cash loan is unjustified, unwarranted and bad in law." 18. Because of smallness of the amount, the AR of the assessee made no specific submission in respect of this ground of appeal, and therefore, the same is dismissed for lack of prosecution. 19. In the assessee's appeal, the ground no.2 reads as under: 2. The ld.CIT(A) has erred in estimating net profit at 16% of the contract receipt and making addition of difference amount of Rs. 6,59,28,523/- (i.e. NP @ 16% Rs. 119242720 less NP shown by the appellant Rs. 53314197) is unjustified, unwarranted and bad in law. In the Revenue's appeal for the same assessment year, the ground taken in the appeal reads as under: "1. On the facts and circumstances of the cäse t....
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....erred in dismissing the appeal whereby upholding the addition made by the AO of Rs. 1,78,00,000/- on the alleged ground of retraction of income admitted during the search is unjustified, unwarranted and bad in law." 28. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, a search and seizure operation was conducted at premises of the assessee and in the premises of other persons on 24.6.2010. 29. Further, a locker of Shri Dinesh Jakasania, Director of the assessee-company maintained with HDFC Bank, Powai, Mumbai was searched on 10.8.2010 and statement of Shri Dinesh J. Jakasania was recorded under section 132(4) of the Act, wherein, in reply to question no.6, the said deponent disclosed undisclosed income of various persons including Rs. 1,78,00,000/- on account of assessee-company for the assessment year under consideration, and Rs. 7,00,00,000/- for the Asstt.Year 2011-12. Thereafter, the assessee filed return of income for the assessment year under consideration on 4.12.2012, showing total income of Rs. 53,63,900/-. The assessee also filed a letter of retraction dated 31.1.2013 wherein the a....
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....ent recorded under section 132(4) does not show how the above undisclosed income of Rs. 1,78,00,000/- of the assessee stands utilized on the date of search, it was represented by which assets, or was utilized for which expenditure. Still further, we find that DR could not controvert the submission of the assessee that no incriminating material relating to the assessee-company was found during the course of search, and even the lower authorities could not bring any corroborative material, which was found during the course of search, which could support the disclosure of income of Rs. 1,78,00,000/- for the year under consideration, or which could point out that the assessee actually earned any income either of Rs. 1,78,00,000/- or any part thereof, which was not disclosed prior to the date of search. 37. We find that the Hon'ble jurisdictional High Court in the case of Kailashben Manharlal Chokshi Vs. CIT (supra) held as under: "The assessee was a partner of a firm and during the search conducted under section 132 of the Income-tax Act, 1961at the premises of the firm and the partners a statement of the assessee under section 132(4) was recorded. The assessee disclosed an u....
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....ter making withdrawal from the firm's account. With respect to furniture in the first floor a detailed source of investment of furniture purchased with due confirmation from the party concerned had been filed by the assessee before the Assessing Officer. Since no payment for this additional furniture was made by the assessee till the date of search, no addition could be made on this count. The explanation of the assessee was convincing but not been considered by the authorities below. Merely on the basis of the admission of the assessee the additions could not be made unless and until some corroborative evidence was found in support of such admission. The statement recorded at such odd hours could not be considered to be a voluntary statement, if it was subsequently retracted and necessary evidence was led contrary to such admission. The Tribunal was not justified in making addition of Rs. 6 lakhs." 38. Thus, we find that the Hon'ble jurisdictional High Court has categorically held that merely on the basis of admission of the assessee, the additions cannot be made unless and until some corroborative evidence was found in support of such admission. Therefore, in our consi....
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....e in the Asstt.Year 2008-09, except for change in figures. 43. During the year under consideration also the assessee was engaged in the contract work of widening and deepening of Mithi River. Quantity of work done was measured and certified by the Engineer-incharge appointed by the Mumbai Metropolitan Region Development Authority. During this year, the assessee's turnover from such contract was Rs. 25,08,88,413/- and the assessee disclosed income at Rs. 53,63,900/- in the return of income which worked out to 4.57% of the turnover. As the facts and issues involved are similar, we following the decision in the case of the assessee in the Asstt.Year 2008-09, direct the AO to estimate the net profit of the assessee of the year at the rate of 8% of the turnover from contract work. Thus, this ground of appeal of the assessee is partly allowed. 44. The ground no.4 of the assessee's appeal for the Asstt.Year 2010- 11 reads as under: "4. The CIT(A) has erred in upholding decision of the AO in imposing penalty u/s.271(1)(c)/271AAA of the Act is unjustified, unwarranted and bad in law." 45. This ground of appeal is premature, and therefore, the same is dismissed. 46. Th....