TaxTMI 
TaxTMI 
2016 (9) TMI 1215
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....his appeal, Revenue has raised the following two Grounds of appeal :- "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying upon incorrect facts that there cannot be adhoc estimate of profit at 8% in the A Y 2006-07. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the facts relied by the Assessing Officer in assessment order and directed to delete an addition made of Rs. 37,70,718/-." 3. Although Revenue has raised two Grounds of appeal, but there is a solitary issue relating to the manner in which the Assessing Officer has assessed the income of assessee from the business of development and construction at Rs. 37,70,71....
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....g Officer estimated the profits for the year by applying a rate of 8% on the advances of Rs. 4,71,33,974/- received by the assessee upto the year under consideration, thereby resulting in an addition of Rs. 37,70,718/- to the returned income. Such an action of the Assessing Officer was carried in appeal before the CIT(A), raising contentions on facts and in law. 5. In appeal before the CIT(A), assessee pointed out that in the earlier two Assessment Years of 2004-05 and 2005-06 the 'project completion method' adopted by the assessee was accepted by the Department and it was also pointed out that so far as assessment for Assessment Year 2005-06 is concerned, same was also a scrutiny assessment made u/s 143(3) of the Act. Assessee also expl....
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....liance placed by the Assessing Officer on the decision of the Mumbai Bench of the Tribunal in the case of Champion Construction Co., 5 ITD 494, assessee pointed out that the said decision was inapplicable inasmuch as in the present case neither 80% of the projected receipts of the project were received and nor 80% of the work was completed during the year under consideration; and, thus the criteria laid down in Champion Construction Co. (supra) was not applicable. Considering the factual and other submissions put forth by the assessee, CIT(A) called for a remand report from the Assessing Officer on certain points which he has tabulated in para 7 of his order. After considering the reply of the Assessing Officer and the submissions of the as....
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....rdict of Supreme Court has arrived in June 2011. iv) Because of constant litigations between partners Bombay High Court had issued injunction stopping the project in August, 2006 and the injunction got lifted in the year 2008. Therefore it can be seen that in the financial year 2005-06 project was nowhere near completion. v) In fact, the sales and booking money received upto AY 2006-07 has been partly refunded to the investors in the AY 2007-08. Therefore the profit from the project cannot be estimated on the work-in-progress. vi) The profit from the project will depend upon several expenses including cost of litigation which will affect the cost of the goods sold. Therefore it will be premature to estimate profit....
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.... showing the total profit from the project declared in the subsequent periods which showed that the ultimate profit declared by the assessee was much more than 8% estimated and that the instant action of the Assessing Officer was an ad-hoc exercise which was impermissible in law. It was, therefore, contended that there was no justification for interfering with the ultimate conclusion of the CIT(A). 9. We have carefully considered the rival submissions. In the present case, it is quite clear that the income of Rs. 37,70,718/- has been assessed to tax purely on an ad-hoc basis. Even if the Assessing Officer was to give a go-by to the 'project completion method' adopted by the assessee and deduce the income from the impugned project, it was....