AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1483
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....ar 2014-15 wherein the assessee has assailed the impugned order on the following grounds of appeal before us: "1. For the assessment order passed by the Ld. CIT(A) is bad in law as well as on facts. 2. The learned CIT(A) has erred in upholding the addition of Rs. 1,36,15,941 to the income of the appellant on the basis of a difference in turnover as reported in the audit report and Form 26AS, without properly considering the explanations and reconciliations provided by the appellant. The difference in turnover arose due to machinery and mobilization advances received by the appellant, on which the contractee had deducted TDS, and which were appropriately accounted for by the appellant as part of gross receipts as and when the work was completed. The addition is, therefore, unjustified and deserves to be deleted. 3. That the appellant provided a detailed reconciliation explaining the difference in turnover, which was due to the advances, and this was disregarded by the CIT(A). The addition was made without considering the correct accounting treatment and factual submissions. 4. That under the facts and circumstances of the case, the additions made ....
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...., 1961 on 25.03.2019 and made the following observation :- (i) As per submission of the assessee, 26AS was rectified on 25.02.2019 i.e. during revisional proceedings. Still there is discrepancy of Rs. 1,05,87,547/- as per reconciliation submitted by the assessee with reference to his books of account. (ii) As per reconciliation statements submitted during scrutiny assessment proceedings, the assessee submitted reconciliation in respect of mobilization advance and machinery advance. (iii) Again to reconcile the discrepancy the assessee has submitted additional remarks. In respect of discrepancy of Rs. 2528,394/- in respect of TAN-BPLE0525A, the assessee has submitted that he has received mobilization advance of Rs. 1,81,48,000/- out of which amount of Rs. 93,87,704/- was adjusted during the year under consideration. (iv) Similarly, to reconcile discrepancy of Rs. 1,36,16,000/- the assessee has stated that he received mobilization advance of Rs. 1,56,87,000/- out of which a sum of Rs. 20,71,000/- was adjusted during the year under consideration. (v) The assessee has also referred to the reconciliation submitted during scrutiny assessment p....
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....ing the details of mobilization and machinery advances for Rs. 1,56,87,000/-. That all the machinery advances and mobilization advances were added to the gross receipts in the year itself or following years. However, amount of Rs. 20,71,000/- out of Rs. 1,56,87,000/- which is against mobilization advances or, machinery advances has been added in the gross receipts in current year only. Therefore, total gross receipts for TAN- JBPE00749A is Rs. 4,13,04,440/- which has been duly recorded in the books of accounts. We are hereby enclosing the ledger copy of such gross receipts and the bill of memorandum received from the government departments for your kind consideration. Further, balance amount of Rs. 1,36,16,000/- has been shown in gross receipts in the following year. We are hereby enclosing the ledger copy of gross receipts for the next following year as well as the bill of memorandum received from the government departments. That we are enclosing herewith 26AS for F.Y. 14-15 (A Y. 15-16) for your reference. While analyzing the 26AS, it is clear that gross receipts shown in the books of account is more as compared to the gross receipts appearing in the 26....
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....e being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 9. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee, at the threshold, submitted that both the lower authorities had based on perverse observations made/sustained the addition of Rs. 1,36,15,941/- in the hands of the assessee. Elaborating on his contention, the Ld. AR submitted that though the assessee had before the CIT(Appeals) duly reconciled the impugned difference/variance of his gross receipts of Rs. 1,36,16,000/- (supra), therefore, the latter had most arbitrarily upheld the addition. The Ld. AR in support of his aforesaid claim had taken us through the submissions that were filed by the assessee before the CIT(Appeals), Raipur-3, dated 21.02.2024, Page 72 to 80 of APB, wherein at Sr. No.6, he had filed a reconciliation of the gross receipts of ....
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.... 24.04.14 14,60,302 24.09.14 12,99,698 09.10.14 5. CGMMGSVYM 04.09.13 20,86,000 -- -- 16,00,000 08.05.14 4,86,000 01.07.14 6. CGMMGSVYM 04.09.13 11,55,000 1,55,000 22.02.14 8,00,000 01.05.14 2,00,000 28.02.14 Total 1,56,87,000 20,71,000 1,36,16,000 The Ld. AR submitted that the assessee had before the CIT(Appeals) duly demonstrated that out of the mobilization and machinery advance of Rs. 1,56,87,000/- received by him from Executive Engineer, Chhattisgarh Rural Roads Development Agency (TAN : JBPE00749A) during the subject year, an amount of Rs. 20,71,000/- was disclosed in the gross receipts for the subject year itself i.e. A.Y.2014-15, while for, the balance amount of Rs. 1,36,16,000/- formed part of its gross receipts for A.Y.2015-16. The Ld. AR submitted that though the CIT(Appeals) had duly taken cognizance of the aforesaid factual position but had thereafter, without any reason upheld the addition of Rs. 1,36,15,941/-. The Ld. AR to buttress his aforesaid claim had once again drawn our attention to the "reconciliation chart" of gross receipts, Page ....
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....ee that the mobilization and machinery advance of Rs. 1,36,16,000/- (supra) received by him during the subject year was properly accounted for by him as part of his gross receipts of the succeeding year i.e. A.Y.2016-17 is found to be in order, then the impugned addition made by him during the subject year would stand vacated. Thus, the Grounds of appeal Nos. 2 & 3 raised by the assessee are allowed for statistical purposes in terms of our aforesaid observations. 14. Grounds of appeal Nos.1, 4 & 5 being general in nature are dismissed as not pressed. 15. In the result, appeal of the assessee in ITA No.510/RPR/2024 for A.Y.2014-15 is allowed for statistical purposes in terms of our aforesaid observations. ITA No.511/RPR/2024 A.Y.2017-18 16. We shall now take up the appeal filed by the assessee in ITA No.511/RPR/2024 for A.Y.2017-18, wherein he has assailed the impugned order on the following grounds of appeal: "1. For the assessment order passed by the Ld. CIT(A) is bad in law as well as on facts. 2. That the addition of Rs. 18,08,007/- on account of undisclosed investment is unjustified and should be deleted, as the said investment has already been ....
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....ncome for A.Y.2017-18 on 02.11.2017, declaring an income of Rs. 1,05,73,620/-. Survey proceedings u/s. 133A of the Act conducted on the assessee on 29/30.01.2018. During the course of the survey proceedings, the assessee had vide his statement recorded u/s.131 of the Act, dated 30.01.2018 come forth with a surrender of additional income of Rs. 2,82,68,266/-, i.e. for A.Y. 2017-18 and A.Y.2018-19, as under: A. Offering of net profit @8% of turnover after depreciation, interest etc. (as against net profit of 5% (approx.) disclosed since last few years: F.Y. 2016-17 F.Y. 2017-18 Turn over 20,08,287,57/- 34,00,00,000/- (estimated) Profit shown 1,04,43,575/- 1,02,00,000/- (estimated) Profit @8% 1,60,66,300/- 2,72,00,000/ Difference 56,22,775/- 1,70,00,000/ Total surrender 2,26,22,775/ B. Disclosure of unexplained investment in immovable property (building at Street No.13, Block No.19, Plot No.2/81, P.H. No.26, Ward No.03, Near Siddh Shikar Vistar, Shanti Nagar, Bilaspur): FY Investment value as per Approved Valuer Value of investment taken in Books of account Difference in Investment (Discrepancy) ....
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....re the CIT(Appeals) who finding no infirmity in the view taken by the A.O upheld the additions and dismissed the same. 23. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 24. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 25. Apropos the addition made by the A.O towards the suppressed investment of Rs. 18,08,007/- made by the assessee towards investment in construction of building i.e. Street No. 13, Block No.19, Plot No.2/81, P.H. No.26, Ward No.03, Near Siddh Shikar Vistar, Shanti Nagar, Bilaspur, we principally concur with the Ld. AR's contention that as the assessee pursuant to his statement recorded in the course of the survey proceedings u/s. 131 of the Act, dated 30.01.2018, had offered to disclose his net profit @8% of turnover [as against 5% (approx.) disclosed in the last two years], which, thereafter, was duly honoured by him and offered for tax in the return of incom....
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....al purchase. You have also failed to furnish all documentary evidences in respect of your claim of expenditure under different heads. Please offer your comments. As considering the above stated discrepancies your book results are not reliable. Ans. Our concern has been showing net profit of about 5% since the last few years. Since, we are engaged in contractual job it is not possible to maintain documentary evidences in respect of all the petty expenses including petty contractor expenses. However, considering all the findings noted as above during Survey u/s 133A, I offer net profit @8% of turnover, after depreciation, interest etc. The working of additional income disclosed during survey is given as under: F.Y.2016-17 F.Y.2017-18 Turn over 20,08,287,57/- 34,00,00,000/- (estimated) Profit shown 1,04,43,575/- 1,02,00,000/- (estimated) Profit @8% 1,60,66,300/- 2,72,00,000/- Difference 56,22,775/- 1,70,00,000/- Total surrender 2,26,22,775/- 28. On a perusal of the statement of the assessee recorded u/s. 131 of the Act, we find that the same revealed multi-facet discrepancies that had surfaced in the course of surve....
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....14-15 Rs. 20,60,501/- Rs. 20,72,875/- Nil FY 2015-16 Rs. 53,08,177/- Rs. 53,20,011/- Nil FY 2016-17 Rs. 38,20,796/- Rs. 20,12,789/- Rs. 18,08,007/- FY 2017-18 Rs. 38,37,484/- Nil Rs. 38,37,484/- Total Rs. 1,50,26,958/- Rs. 94,05,675/- Rs. 56,45,491/- The report of the approved valuer is being shown to you and it is requested to furnish your explanation in respect of difference in investment in the building of Rs. 56,45,491/- Ans. I have to state that the cost estimated by the registered valuer is on the higher side because I being a contractor myself and has obtained the material at much cheaper rates as compared to the market rate and have supervised the project myself due to which cost of investment is much lower in comparison. The report of the approved valuer has been taken on higher side as he has not considered the factors pointed out above by me. However, I do not dispute the valuation given by the approved valuer and accept the difference of Rs. 56,45,491/- as unexplained investment in the building for the AY 2017-18 respectively as detailed in the above chart. On the basis of statement give....
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....at a similar observation that is recorded by the A.O at Para 6 of the assessment order in the case of the captioned assessee while making an addition of Rs. 3,43,651/- towards short/deficit contract receipts, had also figured in the body of the assessment order of its "sister concern" viz. M/s. Landmark Royal Engineer (India) Pvt. Ltd, Page 58 of APB. 33. Considering the aforesaid facts, we restore the matter to the file of the A.O with a direction to verify the authenticity of the aforesaid claim of the assessee. In case, the assessee's claim that the disallowance of Rs. 3,43,651/- made by the A.O is based on facts borrowed from/pertaining to the case of his sister concern i.e. M/s. Landmark Royal Engineer (India) Pvt. Ltd, is found to be in order, then the addition so made in the hands of the assessee shall stand vacated. Accordingly, the Ground of appeal No.3 raised by the assessee is allowed for statistical purposes in terms of our aforesaid observations. 34. We shall now deal with the Ld. AR's claim that the A.O had grossly erred in law and facts of the case in making the disallowance u/s. 40A(3) of the Act of Rs. 6 lacs. 35. As per the incriminating documents....
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....d by the judgment of the Hon'ble High Court of Punjab and Haryana in the case of CIT Vs. Smt. Santosh Jain, (2008) 296 ITR 324 (P & H), wherein it was held by the Hon'ble High Court that where the income of the assessee has been computed by applying a gross profit rate, there is no need to look into the provisions of Section 40A(3) of the Act, as applying the gross profit rate takes care of expenses otherwise than by way of crossed cheque also. Thus, the Ground of appeal No.4 raised by the assessee is allowed in terms of our aforesaid observations. 39. Apropos the claim of the assessee that the A.O had grossly erred in disallowing the assessee's claim for deduction of delayed deposit of employees share of contribution towards ESI/PF of Rs. 84,398/-, we are unable to concur with the same. Ostensibly, as the issue is squarely covered against the assessee by the judgment of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT, Civil Appeal No.2833 of 2016, dated 12.10.2022, therefore, we find no infirmity in the view taken by the lower authorities who had rightly made/sustained the aforesaid addition, and thus, uphold the same. Thus, Ground ....
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....and circumstances of the case, the additions made by the Ld. CIT(A) are liable to be deleted." 43. Succinctly stated, the assessee had filed his return of income for A.Y. 2018-19 on 31.10.2018, declaring an income of Rs. 2,73,51,250/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 44. Thereafter, assessment was completed by the A.O vide his order passed u/s. 143(3) of the Act, dated 30.04.2021, wherein, the income of the assessee was determined at Rs. 2,87,79,264/-, after, inter alia, making the following additions/disallowances: Sr. No. Particulars Amount 1. Addition on account of short/ deficit business income that was offered by the assessee in his statement recorded u/s. 131 of the Act, dated 30.01.2018 (during survey proceedings) @8% of the turnover vis-à-vis net profit of 7.92% of the turnover disclosed in the return of income Rs. 2,77,000/- 2. Addition/ disallowance u/s. 40A(3) of the Act Rs. 4,17,448/- 3. Unexplained investment towards construction of building Rs. 7,33,566/- 45. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without succ....
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.... income of the assessee had been estimated @8% of his turnover and he had not raised any claim for deduction of the aforementioned amount, therefore, the A.O could not have carried out any disallowance of any such expenditure which was never claimed by the assessee as a deduction. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Punjab and Haryana in the case of CIT Vs. Smt. Santosh Jain, (2008) 296 ITR 324 (P & H), wherein it was held by the Hon'ble High Court that where the income of the assessee has been computed by applying a gross profit rate, there is no need to look into the provisions of Section 40A(3) of the Act, as applying the gross profit rate takes care of expenses otherwise than by way of crossed cheque also. Thus, the Ground of appeal No.3 raised by the assessee is allowed in terms of our aforesaid observations. 52. Apropos the addition of Rs. 7,33,566/- made on account of short/deficit investment by the assessee during the subject year towards construction of subject building, viz. Street No.13, Block No.19, Plot No.2/81, P.H. No.26, Ward No.03, Near Siddh Shikar Vistar, Shanti Nagar, Bilaspur, we find that though the impugned ....