AI Drafter 
TaxTMI 
TaxTMI 
2024 (5) TMI 1205
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....n law and/or facts in upholding the addition of Rs. 54,02,545/- made by the Ld. A.O. being estimated net profit @ 10% of total receipts. 5. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal." Brief facts of the case 3. The brief facts of the case are that the assessee had e-filed its return of income for A.Y. 2015-16 on 26.09.2015 declaring loss of Rs. 3,29,55,888/-. The case was selected for complete scrutiny under CASS and accordingly notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred as 'the Act') was issued by the DCIT. The AO noticed that in the current year the assessee had shown loss of Rs. 3,29,55,888/- on total turnover of Rs. 5,40,25,457/- whereas in the preceding year the assessee had declared net profit of Rs. 26,21,429/- on total turnover of Rs. 1,47,09,632/-. Thus, the assessee had shown negative NP of minus 61% during the year as compared to positive NP of 17.82% in the preceding year. The assessee is a builder involved in development of various projects. In the course of assessment, the AO had called for various details from the assessee which was only partly complied. As the....
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....has relied upon the following decision in respect of wrong rejection of books of accounts: 1. Gujarat High court in the case of CIT vs Vikram Plastics [1999] 239 ITR 161 (GUJ.) 2. ITAT Ahmedabad in the case of Pankaj Diamond vs. Assistant Commissioner of Income-tax [2010] 5 ITRCTRIB.) 469 (Ahmedabad) 3. ITAT Ahmedabad in the case of Nice Industries vs ITO, Wd- 5(3),Surat,[2010] 7 taxmann.com 89 (Ahmedabad) 4. ITAT Ahmedabad in the case of Deputy Commissioner of Income-tax, Ahmedabad vs. Asian Grantio India Ltd [2020] 113 taxmann.com 445 (Ahmedabad - Trib.) 5. Ahmedabad ITAT in the case of Inspecting Assistant Commissioner Vs. Dinesh Tiles Factory [1988] 37 TAXMAN 357 (AMD.) (MAG.) 6. ITAT Mumbai in the case of Kamani Oil Industries Pvt. Ltd. Vs DCIT I.T.A. No. 5465/Mum/2017 7. ITAT Rajkot in the case of Panchshil Exim Pvt. Ltd. vs. Deputy Commissioner of Income Tax (2020) 58 CCH 0326 Rajkot Trib" 6. Further, the Ld. AR has relied upon the following decisions in respect of wrong estimation of income: "1. Hon'ble Supreme court in the case of Brij Bhushan Lal Parduman Kumar vs. Commissioner of Income-tax [1....
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....as relied upon certain judicial pronouncements in this regard. The issue involved in the case of UCO Bank vs. CIT (supra) was whether CBDT Circular dated 9-10- 1984 was in conflict with provisions of section 145 of the Act and the decision of the Supreme Court in the case of Keshavji Ravji & Co. (supra) was on the binding nature of CBDT Circular & Instructions. The other decisions are also not found on the exact issue as involved in this case. As per Instruction No. 01/2011 of CBDT, the jurisdiction over corporate assessee with income of Rs. 30 Lakhs and above in metro cities was with the DCIT/ACIT. In the current year, the assessee had disclosed loss of Rs. 3,29,55,888/-. The definition of income in Section 2(24) of the Act is an inclusive definition and it is a settled principle that under the provision of Income Tax Act, income includes loss. The Hon'ble Supreme Court had held in the case of CIT v. Harprasad & Co. P. Ltd. (1975) 99 ITR 118 (SC) that the words 'income' or 'profits and gains', should be understood as including losses also. To reproduce from the order: From the charging provisions of the Act, it is discernible that the words "income" or "profits and gains"....
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....application and copy of project report and sanction letter for secured loan from bank and other parties. (iii ) The details of usage motors in specified format is not submitted. (iv) No confirmation in respect of advance received from the buyers were submitted. (v) No details regarding reasons of advance given to related parties is furnished. (vi) No details of project wise WIP called in specified format was submitted. Further, no details regarding cost of land or JV agreement was submitted. (vii) No documentary evidence for purchases made as called for was provided. No proof like copy of bills / transportation bill and delivery challan of purchases and services has been submitted by the assessee." 12. The assessee has contended that all the details that were not furnished had no impact on the profitability of the assessee and that it had furnished the trial balance which was examined and analysed in the assessment order. It is true that all the details and documents as not produced by the AO may not have impact on the profit but nevertheless they have a bearing on the correctness of the accounts. The assessee had not explained as to ....
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....ld not be estimated on its turn over by rejecting the books of the assessee u/s 145(3) of the Act . (ie. why disallowance of unreasonable and excessive expenditure should not be made and consequently GP should not be estimated at 10%) However, in reply, instead of submitting required details, assessee asked for adjournment in reply dated 22/12/2017 (4 working days left before time barring date) which clearly shows delaying attitude of assessee rather than submitting details to facilitate assessing officer understand the reasonableness and expediency of the transact ions. 3.1.7 As stated above, the assessee failed to produce/furnished justification as well as supporting evidences like basis of WIP, copy of bills and transportation details of expenditure claimed in its books, party-wise ledger account of purchases and services and also failed to furnish project-wise details with copy necessary approval proof . Therefore assessee definitely defaulted in this respect. Further, discrepancies as discussed in above paras have also been found in the net prof it result shown by the assessee during the year under consideration. In absence of details of closing stock and expenditure ....
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....porting evidence for expenditure as claimed in the books of accounts were brought on record. Further, the party-wise ledger account of purchases and expenses were not provided, which prevented the AO from making any enquiry in this respect. The assessee was duty-bound to support the accounts maintained by it with the basic details and in the absence of primary evidences of bills, vouchers, challans, party-wise accounts etc., it was not possible to rely on the veracity of the accounts maintained by the assessee. The quantitative details and workings of WIP were also not produced. As mentioned earlier, the sales had increased almost four-times during the year and the purchases during the year had declined to Rs. 59.32 Lakhs only as against purchase of Rs. 1.25 crores in the preceding year and in spite of these events there was a huge loss during the year, which had raised the eyebrow of the Department. The assessee was duty-bound to produce the details and information as called for by the AO and explain the reason for the abnormal loss incurred during the year. The nonproduction of the details as mentioned earlier and the analysis of the accounts and information as available led the ....
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....f diamonds were not kept by the assessee. The addition was made merely on estimate basis without bringing on record any material to show that the assessee had earned any income in excess of the amount disclosed in the return. It is an established position of law that even after rejecting the book result if the assessing authority adds any income to the income declared by the assessee, then, the said addition has to be based on some material and the same cannot be added on the whims or caprice of the assessing authority. In the instant case, it was observed that the trading result shown by the assessee compared favourably with the past accepted position in the case of the assessee itself. Therefore, merely rejecting the book result on the ground that quality-wise details of diamonds had not been maintained would not empower the Assessing Officer to add any income to the income shown by the assessee." The assessee in that case was not only in a different trade but the books were rejected due to absence of quality-wise details of diamonds. Further, the book results in that case were comparable with past results. Thus the facts are found to be totally different. 18. In the case o....
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....g defects: (i) no stock register of raw material or semi-finished goods or finished goods was maintained nor any daily manufacturing account was prepared, (ii) the production of various types of tiles was not verifiable with reference to specific quantity of raw materials consumed during the production process and wastage/breakage and scrap was also not verifiable as neither such record was maintained nor made available, and (iii) claim of maintenance of quantity was not substantiated and the only quantity maintained and made available was on the basis of purchase and sales accounts. The Coordinate Bench of this Tribunal held that the type of business carried on by the assessee reflected special features attached to the nature of the business which made it rather impossible to maintain day-to-day quantitative tally in respect of the consumption, production and disposal of the stocks at various levels. Further, the assessee had produced before the Tribunal, the relevant sales registers wherein various details were given in respect of the sales bills prepared against which the goods were delivered together with the challan number, etc. On consideration o....