2015 (10) TMI 1072 - AT - Income Tax

Income estimation at 8% - assessment was made u/sec. 144 - Held that - The Special Bench of the ITAT in the case of M/s Arihant Builders Vs. ACIT 2006 (11) TMI 253 - ITAT INDORE considered the issue under similar facts and circumstances of the case and after taking clue from the provisions of section 44AD, though not applicable, held that estimation of income at 8% of the turnover is reasonable. In our opinion, in the case under consideration estimation at 8% is very reasonable because the coordinate benches of the Tribunal is accepting the estimation of income ranging from 8% to 12.5% depending upon the facts of the case and nature of contracts undertaken.Therefore, in the absence of proper reasons for earning lesser profit, the order of the AO is upheld and income estimation at 8% on the gross receipts made by AO is accordingly confirmed - Decided against assessee. Addition on waiver of interest by Andhra Bank - addition as income under the head Other Sources - Held that - In the course of present arguments, assessee filed a statement of Andhra Bank ledger account copy stated to have been filed in September, 2013 in the course of arguments. As seen from the record, this particular document is not on the paper book nor specifically filed. Nor the nature of income was forth coming from the orders of authorities. Therefore, at the time of deciding the issue, it was specifically stated vide para 28 that we find that assessee did not place any material on record about the nature of income nor contended before us that these incomes has nexus with the contract business . Since this particular document stated to have been filed in the course of argument, it is not on record, the contention of the assessee now that this amount was written off by bank and was considered as income under section 41(1) cannot be considered in the course of proceedings under section 254(2). Be that as it may, even otherwise, since this amount was claimed as expenditure in earlier year and was allowed as such, the same can be considered as income of the year, even though the estimation was made on the contract work of during the year. Since this income does not pertain to contract work of this year, we are of the opinion that there is no error in the order of the ITAT confirming the income under the head Other Sources . Therefore, the contention of the assessee is rejected.- Decided against assessee.

Summary

Issues Involved:
1. Estimation of income at 8% on turnover.
2. Addition of Rs. 53,56,308 pertaining to waiver of interest.

Issue 1: Estimation of income at 8% on turnover:
The appellant raised a fundamental issue regarding the estimation of income at 8% on the turnover, challenging the decision of the ITAT. The appellant contended that the assessment made under section 144 should consider the past performance and record of the assessee, as highlighted in various court cases. The ITAT, in its order, upheld the estimation of income at 8% without explicitly addressing the applicability of the case laws mentioned by the appellant. The ITAT justified the 8% estimation based on the lack of proper audit of books of account by the appellant, and the reasonableness of the estimation considering the nature of contracts undertaken. The ITAT also referred to previous cases where income estimations ranged from 8% to 12.5% based on the facts and nature of contracts. The ITAT rejected the appellant's contention that past performance should have been considered, emphasizing that the decision was based on valid reasons and relevant laws. Therefore, the ITAT upheld the estimation at 8% and dismissed the appellant's arguments.

Issue 2: Addition of Rs. 53,56,308 pertaining to waiver of interest:
The appellant contested the addition of Rs. 53,56,308, claiming that it pertained to the waiver of interest by Andhra Bank, which was related to the contract business income. The appellant argued that since it was a business income and had escaped the notice of the ITAT, the decision should have been in favor of the assessee. However, the ITAT noted that the appellant failed to provide sufficient evidence or documentation regarding the nature of this income during the proceedings. The ITAT highlighted that the appellant's claim was made during the arguments and was not substantiated with proper documentation in the record. The ITAT concluded that since the income did not pertain to the contract work of that year and was previously claimed as expenditure, it could be considered as income for the current year under the head of "Other Sources." The ITAT also clarified that it did not have the power to review its own order except for correcting mistakes as provided by the statute. Therefore, the ITAT dismissed the appellant's contentions related to the addition of Rs. 53,56,308.

In conclusion, the ITAT upheld the estimation of income at 8% on turnover and dismissed the appellant's arguments regarding the consideration of past performance. Additionally, the ITAT rejected the appellant's contentions concerning the addition of Rs. 53,56,308, stating that the income in question did not relate to the contract work of that year and should be considered under "Other Sources." The ITAT emphasized the importance of providing proper documentation and evidence during proceedings and clarified its limitations in reviewing its own order.