2017 (8) TMI 363

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....ted to the assessment of income on estimation basis rejecting the books of account. The grounds of appeal are one and the same for both the assessment years. 1. The order of the Commissioner of Income-tax (Appeals) 4, Chen nai-600034 dated November 26, 2015 in I. T. A. No. 8/2013-14/2010-11/CIT(A) for the above mentioned assessment year is contrary to law, facts and in the circumstances of the case. 2. The Commissioner of Income-tax (Appeals) erred in sustaining the assessment of estimated income at 8 per cent. of the project receipts on the strength of the provisions of section 145(2) of the Act in the computation of taxable total income without assigning proper reasons and justification. 3. The Commissioner of I....

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....at the change of course for the purpose of making addition on the estimated basis was erroneous and wholly unjustified. 8. The Commissioner of Income-tax (Appeals) went wrong in record ing the findings in this regard in paragraphs 8 to 23 of the impugned order without assigning proper reasons and justified. 9. The Commissioner of Income-tax (Appeals) failed to appreciate that the decisions relied upon were applied out of context and not applicable to the factual matrix of the case thereby vitiating the decision to sustain the wrong assessment framed by the original authority and ought to have appreciated that the entire computation of assessable income was wrong, erroneous, unjustified, incorrect and not sustainable in law....

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....nd expenditure as balance-sheet items. In the case of expenditure, the assessee has shown the entire expenditure in the balance-sheet under the head "work-in-progress, net of cost" and the receipts were admitted as "advances from clients", in the balance-sheet. The appellant contended that on completion of the project, these items will be shifted to the profit and loss account and the resultant income will be accounted in the return of income on final completion. However, during the assessment proceedings, the assessee has not produced the bills, vouchers, books of account and the relevant evidences before the Assessing Officer establishing that the assessee is correctly maintaining the books of account and the expenditure has been correctl....

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.... the Assessing Officer estimated the income at Rs. 4,45,65,113 and for the assessment year 2011-12, the Assessing Officer estimated the income on the balance receipts of Rs. 3,27,33,922 at the rate of 8 per cent. which worked out to Rs. 26,18,714. 4. Aggrieved by the order of the learned Assessing Officer, the assessee went on appeal before the Commissioner of Income-tax (Appeals) and the learned Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Hence the assessee is in appeal before us. 5. During the appeal hearing, appearing for the assessee, Shri S. Sridhar, the learned advocate argued that the assessee is following the project completion method and maintaining the books of account. As per the proje....

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....ncome on completion of the project. Estimation of income or arriving at the income in the intervening period is not possible which will lead to distorting trading results. Though the assessee claimed to have followed the project completion method, it is obligatory on the part of the assessee to maintain the regular books of account and support the contentions with the books of account, bills and vouchers and prove the method followed by it and establish the true and correct financial position. The expenditure debited to the work-in-progress/advance received required to be accounted correctly to show that no inflation of expenditure and no suppression of income was made by the assessee. The assessee has not produced the books of account, bil....

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....aised by the assessee was that the Assessing Officer cannot estimate the income on accumulated gross receipts in the assessment year under consideration and has to confine himself to estimate the income for the receipts received during the year. This issue has been considered by us. The assessee has not established by producing the books of account and the bills that it has followed the project completion method. As per the assessment order, the assessee has completed the works of 76 per cent. in the case of Sabari and 74 per cent. in the case of Sabari and 74 per cent. in the case of Mistral the projects and recovered more than 80 per cent. of project income. It was not the assessee's case that the assessee has admitted the income rela....