TaxTMI 
TaxTMI 
2012 (3) TMI 499
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....ess of civil contract works, besides house property income. During the year, he had declared the net profit of Rs. 7.5 crores on a total turnover of Rs. 137.64 crores, which gave the profit ratio of 5.45%. The gross profit declared by the appellant was Rs. 10.11 crores, which worked out to 7.34% of the total turnover. A survey u/s. 133A of the Income-tax Act, 1961 was conducted in the assessee's case on 18.10.2006, relevant to the A.Y. 2007-08. The assessee had declared an amount of Rs. 3.5 crores as additional income for A.Y. 2006-07 during the said survey. The additional income was declared in view of the fact that the assessee had not been able to substantiate his raw material and construction expenses with vouchers etc. The assessee....
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....egories of sundry creditors. The assessee was also required to submit bills and vouchers for substantiating the claim of 'Earth Expenses' for two specified fortnights. However, the assessee expressed his inability to produce any such details and did not produce a single bill or voucher for verification. The Assessing officer noted that on account of non production of bills and vouchers, even random verification of expenditure could not have been undertaken. From the facts therefore, she concluded that the expenses incurred by the assessee were not fully verifiable. 6. In view of the above discussed total non verifiability of the expenses claimed by the assessee, both at the time of survey and during the assessment proceedings, besi....
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.... returned income. 8. On appeal, the CIT(A) confirmed the addition. Against this, the assessee is in appeal before us. 9. The learned AR submitted that the assessee had duly offered the above sum of Rs. 5,00,00,000 in the returns of income for the respective assessment years and paid the tax due thereon. The Assessing Officer, while framing the assessment order for the assessment year 2007-08, over and above the income offered under Section 133A of Income-tax Act, 1961, made addition of another Rs. 1.5 crores by holding that the returned income is very low ignoring the explanation given by the assessee in this regard. It was submitted before the Assessing Officer that on account of the following facts of the case, the income return....
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....of Arihant Builders, Developers & Investors P Ltd. vs. ACIT (106 ITD 10), it was submitted that it was reasonable to estimate the profits, net of all deductions at 8% of the gross receipts. However, the gross profit adopted by the Assessing Officer is 8.43%, and, therefore, the net profit embedded therein would be lower than that. On this reasoning alone the CIT(A) upheld the addition. Thus, from the above, it is very clear that the Commissioner of Income-tax (Appeals) had upheld the assessment order by assuming that the gross profit returned is 8.43% as against actual G.P. of 10.4%. The learned Commissioner of Income-tax [Appeals] wrongly placed reliance on the decision of Special Bench of Indore ITAT, in the case of Arihant Builders, Dev....
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....ss rate of gross profit declared by the assessee as compared to the previous year would not by itself be sufficient to justify the addition. Nor does it lead to an inference that there was inflation of expenditure or suppression of receipts. Reliance for this proposition of law is placed on the decision of Bombay High Court in the case of R.B. Bansilal Abirchand Spg. & Wvg. Mills v. CIT [1970) 75 ITR 260 and High Court of Gauhati in the case of Aluminium Industries (P.) Ltd. V. Commissioner of Income-tax (1995) 80 Taxman 184. 13. The Tribunal, Ahmedabad Bench in the case of Deputy Commissioner of Income-tax vs. Paras Dyeing and Printing Mills P. Ltd. {2010) 4 ITR (Trib) 29 (Ahd.), after reviewing various case laws on the subject also held ....