2018 (8) TMI 1723 - AT - Income Tax

Estimation of income - additional income declared by the assessee during the assessment proceedings and computation of gross receipts by the CIT(A) and estimation of income on the said gross receipts @ 12% by the Ld. CIT(A) - Held that - There is no dispute that the entire receipts of ₹ 2. 13. 21000/- represent the business receipts against the admission of turnover of ₹ 1, 20, 00, 000/- in the return of income. Though the assessee canvassed for exclusion of receipts of ₹ 40. 00 lacs from the turnover of the year under consideration no supporting evidence was placed by the assessee to show that the receipts were received in advance before completion of the work. The agreements placed before us support that the receipts were business receipts required to be assessed in the impugned assessment year. Therefore, we hold that the entire receipts worked out by the Ld. CIT(A) to the extent of ₹ 2, 13, 21, 000/- rightly assessed by the Ld. CIT(A) as gross contract receipts for the year under consideration. CIT(A) estimated the income @12% and the Ld. AR did not bring any tangible evidence to show that the profit of the assessee was less than 12%. The assessee has neither submitted the details of expenditure relatable to the additional gross contract receipts admitted by the assessee nor the advances received by the assessee as per bank account. The assessee has not declared the true and correct receipts and the income earned there from. Only after the case was selected for scrutiny and called for the details, the assessee had admitted the additional gross receipts of ₹ 50, 44, 750/- before the AO. Though the assessee stated that the Sum of ₹ 40. 00 lacs represent the advance but not established the same with any evidence. Therefore, we hold that the Ld. CIT(A) has rightly rejected the books of accounts and estimated the income fairly @12% and we do not find any reason to interfere with the order of the Ld. CIT(A). CIT(A) has not given an opportunity for rebuttal of the gross receipts and consequent estimation of income - Held that - As during the appeal hearing, we have given an opportunity to the Ld. AR to place the relevant material to show that the turnover was less than the sum computed by the ld. CIT(A) and the income estimated was less than 12% but the Ld. AR did not make out a case with tangible evidence to establish that the contract receipts were less than ₹ 2, 13, 21, 000/- and the profit of the assessee was less than 12%. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld. Accordingly the appeal of the assessee on this ground is dismissed. - Decided against assessee

Issues Involved:
1. Admission of additional income of ?50,44,750.
2. Determination of gross receipts at ?2,13,21,000.
3. Estimation of income at 12% by rejection of books of accounts.
4. Inclusion of ?40,00,000 as advances in gross receipts.
5. Miscellaneous unrecorded credits of ?2,76,520.

Issue-wise Detailed Analysis:

1. Admission of Additional Income of ?50,44,750:
The assessee initially disclosed a total income of ?7,94,280 and gross contract receipts of ?1,20,00,000. During assessment proceedings, the assessee admitted additional receipts of ?50,44,750, declaring income at 8% under Section 44AB of the Income Tax Act. The assessee later claimed this admission was under pressure from the AO. However, the CIT(A) found that the admission was voluntary, as the hearing concluded on 25.03.2015, and the assessee filed the admission letter on 27.03.2015 without any evidence of coercion. The Tribunal upheld this finding, dismissing the assessee's claim of pressure and coercion.

2. Determination of Gross Receipts at ?2,13,21,000:
The CIT(A) determined the gross receipts to be ?2,13,21,000, contrary to the assessee's admission of ?1,70,44,750. The CIT(A) found discrepancies in the assessee's financial statements and bank accounts, indicating that the actual receipts from 'Star Residency' were ?1,52,50,000 and other receipts amounted to ?60,71,000. The Tribunal agreed with the CIT(A)'s detailed analysis and upheld the determination of gross receipts at ?2,13,21,000.

3. Estimation of Income at 12% by Rejection of Books of Accounts:
The CIT(A) rejected the assessee's books of accounts due to inconsistencies and estimated the income at 12% of the gross receipts. The assessee argued for an 8% estimation under Section 44AD, but the CIT(A) and the Tribunal found that the assessee did not maintain proper accounts for civil contract works and failed to provide evidence for expenses related to additional receipts. The Tribunal upheld the CIT(A)'s estimation of income at 12%, finding no reason to interfere with the order.

4. Inclusion of ?40,00,000 as Advances in Gross Receipts:
The assessee contended that ?40,00,000 received as advances should be excluded from gross receipts, as the work was not completed. The CIT(A) and the Tribunal found that the construction agreement required payments on a stage-by-stage basis, and the assessee did not provide evidence that the receipts were advances unrelated to completed work. Thus, the inclusion of ?40,00,000 in gross receipts was upheld.

5. Miscellaneous Unrecorded Credits of ?2,76,520:
The assessee argued that miscellaneous credits of ?2,76,520 should not be taxed as they did not represent income for the assessment year. However, the CIT(A) and the Tribunal found that the assessee did not maintain complete books of accounts and failed to provide evidence for these credits. Consequently, the inclusion of these credits in gross receipts was upheld.

Conclusion:
The Tribunal dismissed the appeal, upholding the CIT(A)'s order to estimate income at 12% on gross receipts of ?2,13,21,000, including the ?40,00,000 as advances and ?2,76,520 as miscellaneous credits. The Tribunal found no merit in the assessee's claims of coercion, incorrect gross receipts, and unjustified estimation of income.

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