2021 (3) TMI 565

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e Government. He submitted that in support of deposit, a challan was also furnished before the authorities below. He submitted that TDS amount was deposited much before the completion of assessment. He submitted that when the assessee has already deposited the TDS amount, the AO is not justified in making entire amount as addition and ld CIT(A) is not justified in confirming the same. 4. Replying to above, ld DR submitted that when the assessee had not deducted the TDS u/s.194C of the Act on the payments to the contractors of Rs. 41,84,879/-, the AO had no option but to disallow the entire amount. Ld D.R. submitted that the receipt of payment was not furnished before the AO and ld CIT(A). He, therefore, supported the orders of lower authorities. 5. On consideration of the rival submissions, I observe that the assessee is in the business of real estate and made payments of Rs. 41,84,879/- to the contractors, who were engaged for construction work. However, as stated by ld A.R. that the TDS amount was not deposited to the Government due to financial stringency and later on deposited before the completion of the assessment. Section 194C of the Income Tax Act provides that any indivi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....han in an average. However, the AO noted that the assessee did not file any other documents in support of the financial statements as well as the necessary self-supporting documentary evidences in respect of the amounts shown as work-in-progress and as advances received from the customers. The AO also noted from Form 3CD dated 2.9.2014 that at column 13(a), the assessee has certified that it is following mercantile system of accounting but actually for the purpose of accounting, the assessee is following on its own system inasmuch as it has accounted income only after the property has been registered. It was in this backdrop that the Assessing Officer observed the books of accounts are not reliable and, therefore, rejected the same and considering the fact that the projects have been ongoing for at least five financial years on which the assessee has not offered any income for taxation, estimated the income @ 15% of advance from customers shown at Rs. 11,23,61,227/-, which works out to Rs. 1,68,54,180/- and added the same to the income of the assessee. In first appeal, the action of the AO was confirmed. 7. At the time of hearing, ld counsel for the assessee submitted that the ass....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n which the net profit can be offered at the time of completion of project. It is also undisputed fact that during the course of assessment proceedings the assessee did not produce the books of account and other documents as sought by the Assessing Officer. Therefore, the Assessing Officer has rejected the books of account of the assessee under section 145(3) of the Act and estimated the income on the advance received from customers. The rejection of books of account as well as the estimation of income @ 15% on customer's advance was approved by the ld. CIT(A). Once the books of account are rejected and the assessee is not co-operating, the only option left with the Assessing Officer is to estimate reasonable income after taking into account the total receipts of that year. However, in this case, the authorities below have adopted the estimation on the total amount received from the customers. I find that in the case of Shivalik Buildwell Pvt Ltd.(supra), it has been held that assessee being a developer of project, profits in its case would arise only on transfer of title of property and, therefore, receipt of any advance or booking amount could not be treated as trading receipt of....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... received from customers during the relevant financial period 2013-14 which was Rs. 3,65,00,439 on which the AO has made addition @ 15% of total amount of advance from customers, which has also been confirmed by the ld CIT(A). Ld counsel vehemently argued that the revenue recognised by the AO on the amount advanced from customers @ 15% is very high, excessive and unreasonable. Therefore, same may kindly be reduced to 5% of total amount received from customers during the year under consideration and not the whole amount which includes the brought forward advance from customers. He submitted that the assessee being a builder and developer, has to incur huge expenditure on development and construction of projects on the unit allotted to the respective customers against which advance has been received. Ld counsel pointed out that in this case, the assessee has filed return declaring huge loss, therefore, the assessee would get nothing if unreasonable and excessive profit is estimated but prayed that the profit element which is reasonable, just and proper may kindly be taxed in the hands of the assessee imparting justice to the assessee. He also submitted that the assessee was not allow....