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2015 (7) TMI 722 - ITAT AHMEDABADNet profit determination - AO has applied 15% of the contract receipts - ld.CIT(A) has restricted the same to 8% - Held that:- The appellant has purchased land during the year and has shown work in progress of ₹ 9,42,319/-. The cost of the land has been shown to be ₹ 98,96,100/-. Since the appellant is constructing the building to its share holders cum members, the profit element on account of land will not be there. However, there would be a profit element in the construction work that has been carried out by the appellant on the land as the appellant is charging for the construction on a lumpsum basis. Therefore, the profit rate should be applied on the W.I.P. of ₹ 9,.42,319/-. The A.O. has applied profit rate of 15% on the receipts shown by the appellant. The rate applied by the A.O. is without any basis or any comparable instance. Normally, the rate of profit in this line of business is adopted @ 8% of the contract receipts. The A.O. is, therefore, directed to estimate the income of the appellant by applying the profit rate of 8% on the W.I.P. of ₹ 9,42,319/-. - Decided against revenue. Penalty u/s.271(1)(c) - penalty has been imposed by the A.O. as the income was assessed by him at ₹ 17,14,395/- as against a loss of ₹ 1,680/- shown in the return of income - Held that:- The appellant had given all the particulars regarding the claim in the return of income and the accounts were also presented before the assessing officer. It was his bonafide belief that the he has not earned any income from the activity. The assessing officer did not accept his claim. The addition made by the assessing officer on the basis of estimate does not make the case fit for imposition of penalty. The appellant did not furnish any inaccurate particulars or misrepresented any fact in his return of income. He furnished the return giving all the facts. Where there is no finding that any details were supplied by the assessee in its return of income found to be incorrect or erroneous or false there was no question of invoking the penalty under section 271(1)(c). Mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Considering the above facts and circumstances, the penalty imposed by the assessing officer is deleted and the appeal is allowed. See Reliance Petro products Pvt.Ltd. reported in [2010 (3) TMI 80 - SUPREME COURT ] - Decided in favour of assessee.
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