2011 (12) TMI 650 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition made by Assessing Officer in estimating business income from civil contract.
2. Deletion of addition made by Assessing Officer relating to peak credit in bank account.

Issue 1: Estimation of Business Income from Civil Contract:
The ld. CIT(A) deleted the addition made by the Assessing Officer at &8377; 3,33,543/- by estimating the business income from civil contract. The Assessing Officer estimated the profit at &8377; 4,46,303/- based on total cheque amounts received from contract works during the year. The appellant argued that the estimation was too high and arbitrary, as the gross contract receipts exceeded &8377; 40 lakhs, making the application of u/s 44AD(1) inapplicable. The ld. CIT(A) found that the Assessing Officer did not discuss the accounts of the appellant or provide a basis for the estimation, leading to the deletion of the addition. The Tribunal upheld the decision, noting that the books of account were supported by vouchers, and no specific errors were found in the accounts or vouchers. The estimation of profit at 10.37% was deemed baseless, and the order of the ld. CIT(A) was confirmed, dismissing the Revenue's appeal.

Issue 2: Peak Credit in Bank Account:
The ld. CIT(A) deleted the addition made by the Assessing Officer relating to peak credit of &8377; 10,34,382/- in the bank account. The Assessing Officer proposed the addition as unaccounted income, citing transactions in the bank account that were not explained by the assessee. The appellant contended that the account was disclosed in the Balance Sheet and the peak credit did not pertain to the relevant assessment year. The ld. CIT(A) agreed with the appellant, highlighting that the account was disclosed, and the peak credit was outside the relevant accounting year. The Tribunal found no fault in the ld. CIT(A)'s decision, as the explanation provided by the assessee was satisfactory, and no contradictory evidence was presented. Consequently, the addition was deemed unwarranted, and the order of the ld. CIT(A) was upheld, dismissing the Revenue's appeal.

This judgment by the Appellate Tribunal ITAT CHENNAI in 2011 addressed issues related to the estimation of business income from civil contract and the addition of peak credit in a bank account, ultimately ruling in favor of the assessee in both instances.