TaxTMI 
TaxTMI 
2015 (12) TMI 1324
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....ble construction expenses, without appreciating the fact that the CIT (Appeals) had himself admitted in his order that the assessee was not maintaining adequate books of account, and further that the assessee's case was not covered under the provisions of Section 44AD of the Act as the turnover of the business exceeded Rs. 40.00 lacs, therefore, accepting profit equivalent to 10% of the gross receipt was perverse application of law in the assessee's case. 2. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 1,00,000/- made by the A.O. u/s 40(A)(3) of the Act on account of cash expenditure exceeding Rs. 20,000/- without appreciating the fact that the payment of stamp duty were not covered under the exception provided in Rule 6DD of the I.T. Rules and neither the expenditure made on account of sellers was covered under the exception of Rule 6DD of the I.T. Rules." 3. Ground no.1 is against the deletion of addition of Rs. 11,35,949/-made on account of unverifiable construction expenses. 4. A search under section 132 of the Income-tax Act, 1961 (hereinafter 'the Act') was initiated and took place in the business and residential premises of the....
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.... law in support of the real estate business. The documents seized during search also suggested that he had been earning unaccounted income in the same. In this connection, the assessee was required to furnish complete details of the disclosure made u/s 132(4) of the I.T. Act and the additional income actually disclosed in the returns of income furnished pursuant to the search. The following information was furnished by the assessee :- Shri Ashish Mohan Agarwal: Original filed u/s 139 Filed after search u/s 153A Additional income 50,000 1,05,000 55,000 59,500 1,24,290 64,790 1,05,600 7,22,600 6,17,000 1,40,000 36,07,830 34,67,830 2,92,280 37,71,920 34,79,640 9,95,230 36,32,100 26,36,870 Not due 5,31,800 45,31,800 Shri Devendra Mohan Agarwal: Original filed u/s 139 Filed after search u/s 153A Additional income 50,000 3,35,380 2,85,380 67,500 3,73,890 3,06,390 1,07,000 3,07,770 2,00,770 1,20,000 31,66,890 30,46,890 3,60,850 5,79,030 2,18,180 44,363 15,55,410 15,11,047 Not due 4,29,050 4,29,050 ....
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....onable net profit of the assessee's business. Even if he were a civil contractor, his case would not be covered by section 44AD of the I.T. Act (because the turnover of the business exceeded Rs. 40,00,000/). On the other hand, even if he were just a builder/developer, his net profit had still to be estimated at a reasonable figure. The rate of 8% given in section 44AD is taken only as a benchmark for purposes of estimation of net profit in such cases. The assessee has submitted that the net profit shown by him was a healthy 10% of his gross receipt. In view of this, there is no justification for any separate disallowance out of expenditure. The addition is deleted." 6. Ld. DR relied on the order of the AO and submitted that the ld. CIT (A) deleted the addition made by the AO on account of unverifiable construction expenses without appreciating the fact that the assessee was not maintaining adequate books of account and further the assessee's case was not covered under the provisions of Section 44AD of the Act as the turnover of the business exceeded Rs. 40 lakhs, therefore accepting profit equivalent to 10% of the gross profit was perverse application of law in assessee's ca....
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.... gather), the AO should avoid making further addition to such income simply because such income/expenditure was not recorded in the regular books of account. Further addition is warranted only if the AO has material/evidence unearthed during search suggesting that the actual income earned by the assessee was more than what was disclosed by the latter in course of the search and subsequently in his returns, however, we find that no such evidence was brought on record by the AO to justify the ad hoc disallowance. We agree with the ld. CIT (A) that the addition was made simply because the assessee had not maintained regular books of account and the required documents in respect of such income. Estimation of income should not be capricious or whimsical as held by the Hon'ble Apex Court and High Courts in Plethora of judgments. Before the AO, the assessee has claimed to have furnished his income and expenditure account as well as statement of his assets and liability year after year, incorporating the findings relating to undisclosed income and assets during the search. We also take note of the fact that the assessee had shown the additional income in the returns furnished by him and hi....
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....ered under the exception provided in Rule 6DD(b) and the said payments were duly vouched by the physical existence of stamp papers in question which were actually utilized for purpose of acquiring the land in question. Consequently, the ld. CIT (A) deleted the addition. 12. Ld. DR, while relying on the order of the AO, submitted that the ld. CIT (A) deleted the addition without appreciating the fact that the payment of stamp duty was not covered under the exception provided in Rule 6DD of the Incometax Rules, 1962 (hereinafter 'the Rules') and neither the expenditure made on account of sellers was covered under the exception of Rule 6DD of the Rules. He accordingly pleaded to set aside the order of the ld. CIT (A) and restore the order of the AO on this issue. 13. Ld. AR reiterated the submissions made before the ld. CIT (A) and submitted that the assessee had incurred total expenditure of Rs. 84,04,300/- on purchase of land which included cost of land (Rs.77,10,000/-), payment of stamp duty (Rs.6,21,000/-) and registration expenses (Rs.73,300/-). He submitted that the expenditure incurred in cash referred to by the AO was incurred on payment of stamp duty and registration ex....