TaxTMI 
TaxTMI 
2021 (3) TMI 1061
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....the ld. AO. Further books of accounts was not rejected, hence, in the circumstances estimation of sale on the basis of circulation certificate is totally unjustified and the estimation of sale on the basis of Circulation Certificate deserves to be quashed. 2. That on law and facts, the ld. CIT(A) has grossly erred in making addition of Rs. 34,22,814/- by applying Net Profit @ 14.26% on estimated sale of Rs. 2,40,02,905/-. The addition of Rs. 34,22,814/- is totally unjustified and against the facts on record and addition deserves to be quashed. 3. That the order of the ld. AO is bad in law and deserves to be quashed. 4. That the appellant reserves to the right to add, amend, withdraw or alter any ground of appeal before the finalization of said appeal." Grounds of assessee's appeal in ITA No. 1311/JP/2019 " 1. Whether on the facts and in the circumstances of the case, the ld. CIT(A) was justified in holding the income received on leasing of land and building to be assessed under the head 'income from house property' and consequently allowing the deduction U/s 24 of the I.T. Act, 1961 ignoring the facts of the case that the land in questio....
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....lear prohibition on further renting it out to anybody. Since, according to the ld. DR, the assessee had flouted terms and conditions of the allotment, therefore, no relief should have been given by the ld. CIT(A) to the assessee. It was further submitted that ld. CIT(A) ignored the fact that the assessee had flouted the terms and conditions of numerous authorities just to reap benefits. As per the ld. DR, the norms of allotment of the total area to the assessee was subject to the condition that at the most, the assessee can sublet the area not exceeding 40% of the total built up area. Whereas on the contrary, the assessee while flouting those terms and conditions rented out 47.57% of the total built up area. The ld DR has also relied upon the findings recoded by the A.O., which are reproduced below: "6. The submission of the assessee has been considered carefully but the same is not acceptable. Vide notification No. 3(63) 4D/3/2005 dated 05/08/2007 of the Urban Development & Housing Department subletting of the premises by news papers was allowed on fulfillment of certain conditions such as: (i) registration of newspaper should be older than 30 years and is regula....
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.... declared by assessee: 4608856.00 Add: Addition due to disallowing standard deduction u/s 24: 3335135.00 Add: Addition in trading results: 24002905.00 Total assessed income: 31946896.00 As such in assessment order the Ld. AO has made addition of Rs. 33,35,135/- by disallowing standard deduction u/s. 24 on rental income and Rs. 2,40,02,905/- in trading results. 3. During the course of filing of return of income assessee filed audited Trading account, Profit & Loss account and Balance Sheet alongwith all annexures and audit report. Further during the course of assessment proceedings books of accounts, purchase and sale vouchers and expenses vouchers and all relevant record were produced and duly examined by the Ld. AO and no discrepancy was point out by the Ld. AO in respect of maintenance of books of accounts . Further the Ld. AO has duly accepted the books of accounts and action u/s. 145 was not taken by the Ld. AO. As such books of accounts was not rejected as provided u/s. 145. 4. Further submitted due to instruction No. 8 of 2017 dated 29.09.2017 issued by CBDT for conducting assessment proceedings the Ld. AO vide letter No. ITBA/C....
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....iety as mentioned in lease deed. iii) Further the Govt. of Rajasthan, Department of urban development and housing department vide notification No. 3(63) 4D/3/2005 dated 05.08.2007 has allowed that the 40% area can be given on rent by owner. iv) Prior permission was granted by JDA to let out the property on rent. v) In the case of Hotel Arti Deluxe Vs. ACIT (2005) 97 TTJ 342 (Luck.)(tm) it has been held as under: "Assessee having let out a building simpliciter to a nursing home, through it was constructed to run a hotel, the rent receipt was attributable only to the ownership rights of the assessee and was liable to be assessed under the head 'Income from house property'. In the case of Neelam Cable Manufacturing Co. vs. ACIT (1997) 59 TTJ 476 (Delhi ITAT), it has been held as under: "Rental income received by the assessee from the leasing out of factory godowns and industrial sheds is assessable as income from property and not as income from business". In the case of New Paris Complex vs. ACIT (2004) 89 TTJ 684 (Coch.), it has been held as under: "Since the assessee-firm was carrying on the business of construc....
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....n close proximity of the specific range. The basis reason for treating such income as 'income from other sources' by the A.O., was that the assessee had not fulfilled certain conditions as desired by the JDA on the basis of which the land was allotted at concessional rate. 6.1 However, now the question which arises before us is to see as to whether on non-fulfillment of certain conditions under other Act can lead to 'change the head of income'. We are of the view that it is an established law under the Income Tax Act that income can be charged under particular head of income on fulfillment of certain conditions depending upon the nature of income. However, non-fulfillment of condition under some other Act cannot impact the decision regarding charging of income under particular head of income and if some violations have been done by the assessee related to some other Act, then in that eventuality, the action for such violation can be taken under that Act only. 6.2 Since in the present case, the A.O. has failed to pin point any violation of any condition regarding chargeability of income under the head "income from house property". Therefore, in our view, the A.O. was not compe....
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....ee 3,32,55,000 Sales as per books 2,58,79,595 Concealed sales as per assessee 73,75,405 Concealed sales as per books 4,06,30,405 [The AO pasted the scanned image] The discount as claimed by the assessee could not be verified by the assessee, neither has she claimed it as an expense nor as TDS been deducted on the same. Out rightly it has been mentioned that sale as per circulation certificate the total actual sales, there are required to be filed for determining government advertisements rates. Such an argument of the assessee is self contradictory and not acceptable. By no stretch of imagination can one think of giving a discount of 50% in any business. On further perusal of market practices, it was gathered that a discount of around 25-30% is given to hawkers and distributors. Even if we consider maximum discount of 25% it comes out to be Rs. 1,66,27,500/- still sales are concealed to an amount of Rs. 2,40,02,905/- (4,98,82,500 - 2,40,02,905). Thus, amount of Rs. 2,40,02,905/- needs to be added back to the total income." 8. On the other hand, the ld AR appearing on behalf of the assessee has reiterated the same arguments as were ....
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....efore, reliance placed on the report of the DVO was misconceived and the impugned Judgment of the High Court is set aside". In the case of ACIT vs. Govind Ram Kakwani 90 TTJ 981 (Jabalpur ITAT), it has been held as under:- "No trading addition was warranted as the assessee's books of accounts were not rejected and proviso to s. 145 was not applied and the AO has accepted the purchase and sales". In the case of ITO vs. Dr. Kailash Sharma & Sons (2004) 84 TTJ 955 (Jd.), it has been held as under: "When the AO did not point out any specific mistake in the books of account and did not reject the same but made addition and the Department is not challenging the finding of the CIT(A) that the provision of s. 145 could not be invoked, additions cannot be made on estimate basis". In the case of Sri Venkatraju Modern Boiled & Raw Rice Mill vs. ACIT (1997) 57 TTJ (Hyd.) 493, it has been held as under: "Without first rejecting books maintained by assessee showing cost of construction, the AO was not justified in making reference to valuation cell and then addition on that basis under s. 69". In the case of CIT Vs. Pratap Singh,....
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.... "Where the stock statement submitted to the bank were prepared on estimate basis which were admitted inflated in order to obtain larger credit AO was not justified in making addition on the basis of higher value shown n those statements that the stock discussed in the books of account particularly when no apparent mistake was noticed in the books of account maintained by the assessee'. In the case of Technical Glass Industries Vs. ACIT (2004) 91 TTJ (Agra) 561, it has been held as under: "Stock hypothecated to bank having been shown on mare estimate basis in order to obtain overdraft facilities without any physical verification, difference in value of stock as hypothecated to the bank and as shown in books of assessee could not be made subject-matter of addition". The assessee has maintained regular books of accounts and books were duly audited. GP rate was better in comparison to last years. Books of accounts duly examined by Ld. AO and no discrepancy were notice by Ld. AO further books of accounts has not rejected, hence addition on the basis of circulation certificate is totally unjustified. In the case of ACIT Vs. Shankar Exports (2011) 64 DTR 4....
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....ad concealed the sales amounting to Rs. 2,40,02,905/- and added the same to the total income of the assessee. Although, it was submitted by the ld. AR that the A.O. had estimated the sale figures without rejection of books of account and the circulation certificate filed before RNI was only on estimation basis and is on a higher side so as to obtain a better rate of advertisement, therefore, the same should not have been made the basis by the A.O. for making additions. It was also submitted by ld AR that the circulation certificate did not show right and correct position of sale and in alternative, the assessee also contended that the entire sale of Rs. 2,40,02,905/- was wrongly treated as income by the A.O. and in that eventuality, the addition at the most could have been made on the basis of net profit rate. 10.1 The ld. CIT(A) after considering the contentions of both the parties had correctly held that the circulation certificate was part and parcel of the documents of the assessee record, therefore, the same was rightly made as basis for calculating the income of the assessee. However, the alternative plea raised by the assessee was considered to be genuine and therefore, o....
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....r 2015-16 Sales 43,083,639.00 50,451,600.00 27,157,826.00 38,616,717.00 69,664,917.00 54,159,849.00 Gross Profit 11,591,818.00 10,477,244.00 5,449,367.00 7,083,939.00 14,733,205.00 11,768,745.00 Net Profit (As per books) 573,741.00 2,443,190.00 3,960,187.00 5,240,717.00 10,010,234.00 7,723,674.00 Less : Rent - 7,374,316.00 9,662,820.00 9,775,812.00 10,687,578.00 11,117,118.00 Add: Interest on Loan against rent - 1,624,506.00 1,738,320.00 1,154,096.00 683,252.00 130,728.00 573,741.00 (3,306,620.00) (3,964,313.00) (3,380,999.00) 5,908.00 (3,262,716.00) Net Profit rate: 1.33% -6.55% -14.60% -8.76% 0.01% -6.02% On perus....