AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 278
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....to the facts and circumstances of the case the learned Commissioner of Income tax (A) has erred in upholding the rejection of our books of accounts under section 145(3) of Income tax Act, ignoring our submissions and referred cases and explanations and not considering that the Pradhikaran is a statutory local authority and there is no mens' -rea or dishonest intentions to furnish any inaccurate particulars and also overlooking the facts, that there was no discrepancies in the books of accounts. 4. That looking to the facts and circumstances of the case the learned Commissioner of Income tax (A) has erred in confirming and estimated net income of the Appellant at 8% on the gross turnover and assessing the total income at Rs. 3,OI,46,037/- against the returned loss of Rs. 5,53,41,624/- shown by the Appellant without considering the past history of the case. Your petitioner submits that the learned Assessing Officer should have if he was not satisfied with the position of accounts referred the matter for the Special Audit VIs 142(2A) of the Income tax Act. 5. That looking to the facts and circumstances of the case the learned Commissioner of Income tax (A) has erred in upholdi....
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....ing the profit. The assessing officer adopted profit @ 8% of the gross receipts and added the same into the income of the assessee. Thereby, the assessing officer made addition of Rs. 3,01,46,037/-. 4. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) who after considering the submissions sustained addition, dismissed appeal of the assessee. 5. Against this the assessee is in appeal before this Tribunal. 6. Ground no.1, 3 & 5 are in respect of method of accounting and rejection of books of account. 7. Apropos these grounds Ld. counsel for the assessee has reiterated the submissions as made in the written submissions. The submissions of the assessee are reproduced as under: "The assessee is a local authority and a Government of M.P. Undertaking. 1. The State Government established CitylGram Development Authorities for the expansion & development of notified cities, which also includes Bhopal. The Development Authority does the work of expansion by providing house accommodations, commercial complexes, public utility premises, play grounds, entertainment centres, public utility centres etc. within Bhopal Municipal area. The various schemes of infrastruct....
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....kup is added. As per the details submitted above, your honour will kindly appreciate that this authority is a City Development Authority which works as an organ of the State Government. It has been created for the purposes of development of city and in any case, not to generate surplus or earn profit. Thus, it is clearly a non-profit making organization. This can be very well be perused from the position of the statement of Returned! Assessed Losses at Page No.59 of our paper book where in the position of the past years are depicted which mostly are deficit. 6. For the above assessment year 2010-2011 the appellant filed its Income Tax return at a deficit of Rs. 5,53,41,624/- on 15.10.2010 and a revised return filed on 05.01.2011 showing the same deficit and in which there was a refund of Rs. 13,87,607/-. The learned Assessing Authority has issued notices and fixed the case for hearing DIs 143(2) of Income Tax Act. Further, the case was attended from time to time (Kindly peruse Page no. 55 to 58 of our Paper book). Grounds of Appeal Ground No.1 This ground in appeal is against the Learned CIT (Appeals) upholding that the appellant is following Mercantile system of Accountin....
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....re the learned CIT (Appeals) who have not appreciated our position and have upheld the decision of the learned Assessing Officer. We would submit before you the details of the discrepancies in a tabular format with the complete clarification and contention of the Appellant in respect of all the discrepancies which is enclosed with this written synopsis from Page no. 1 to 5, which may kindly be perused. That the appellant is keeping manual accounts but at the time of audit and finalization of the accounts various entries were made to rectify erroneous entries, omissions, posting in wrong heads and other mistakes on the direction of auditor. Thus, computerized accounts were prepared on Tally software only to facilitate the audit process and identify the mistakes, which was considered by the statutory auditor to finalize audit. It is also pertinent to note and submit that the authority has a local resident audit from the M.P. Local fund audit, by whom vouchers are vouched on day to day basis and after which they are entered in the manual books of accounts. We would also like to submit that the appellant's cases for the past and subsequent years were under scrutiny and the or....
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.... business and assessed income of the appellant taking 8% of the Gross receipts. Even at the cost of repetition, it is submitted and prayed that the Ld. AO in assessment disregarded the conditions and circumstances of the Appellant and failed to appreciate that the appellant is a City Development Authority which works as an organ of the State Government. It has been created only for the purposes of development of city and to enhance the living standard of citizens of Bhopal and NOT to generate surplus or earn profit. Thus, it is clearly a non-profit making organization. It is a well-known proposition of law that if a Revenue Officer is to make an assessment to the best of his judgement, he must not act dishonestly, or vindictively. Moreover, he must exercise his rational judgement in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment and for this purpose he may take into consideration assessee's circumstances, his past history, his own knowledge of the previous returns and the assessments of the assessee and all other matter which he thinks would assist him in arriving at a fair and proper estimate. However, in the c....
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....c Weaker Sections (EWS) projects, Janbhagidari etc. and some other projects where no supervision charges are claimed and other cases the supervision charges is only 4 to 5%. The assessee has carried out project in accordance with the guidelines of Housing and Environment Development of Government of M.P. and cost prescribed by the authorities below. Ld. counsel vehemently argued that the adopting @8% is highly excessive, and arbitrary in nature. 11. On the contrary Ld. DR oppose the submissions and submitted that the assessee is acting as a contractor, therefore the assessing officer was justified to apply 8% is done in the case of civil contractors. 12. We have heard the rival submissions and perused the material available on records. The law is well settled where the assessing officer rejects books of accounts, he is required to estimate profit while estimating the profit, the assessing officer is not only made the estimation on the basis of material available but also examine the surrounding facts. In the present case the assessing officer has mechanically applied @ 8% treating the assessee as a civil contractor without looking into fact that the assessee has also been carryin....