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2021 (4) TMI 1193 - AT - Income TaxRejection of books of accounts - Estimation of profit - assessee submitted that he had maintained regular books of account and got audited them u/s 44AB - HELD THAT - We are of the view that since the books of account of the assessee are subject to audit u/s 44AB of the Act and bills vouchers were not available and before the AO the assessee confessed that he destroyed the bills/vouchers after incurring the expenditure. Considering the prayer of the assessee in the interest of justice as well as looking into the facts of the case we direct the AO to estimate the profit @ 8% on direct contract receipts and @ 3% on sub-contract works. Accordingly ground raised by the assessee on this issue is partly allowed. Long term capital gains on the sale of landed - HELD THAT - The contention of the assessee is that the purchase consideration of the property is at 1, 49, 00, 000/- and the AO while making the assessment for AY 2008-09 has determined the total purchase of the property at 3.5 crores. Therefore to meet the ends of justice we remit the issue back to the file of the AO with a direction to ascertain the correct purchase value of the property and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to substantiate his claim by way of documentary evidence. This ground is allowed for statistical purposes. Unexplained cash credit - HELD THAT - On perusal of record and submissions of the assessee the assessee could not satisfy the basic ingredients laid down in section 68 of the IT Act even though the revenue authorities provided sufficient opportunities to the assessee to substantiate his claim by way of documentary evidence as per the requirement of section 68 of the Act. Therefore we are of the considered view that the CIT(A) has rightly decide the issue against the assessee and accordingly we uphold the order of the CIT(A) and dismiss the ground raised by the assessee on this issue. Unexplained investments in form of pro-notes in the hands of the assessee in respect of the following pro-notes found and seized by the department at the time of search - HELD THAT - The submission of the assessee is that these three pro-notes were not in the name of the assessee and it was in the name of others as per the above table. We are of the view that if the AO was not satisfied with the submission of the assessee he could have summoned the persons whose names are appeared on the pro-notes but without doing the same he had made addition in the hands of the assessee is not proper and not in accordance with law. We find force and substance in the arguments advanced by the ld. AR of the assessee and therefore we direct the AO to delete the addition made in the hands of the assessee. Addition of interest income accrued - HELD THAT - On perusal of the interest calculation done by the AO @ 20% on the entire pro-notes we are of the view that the calculation done by the AO is not correct. The assessee has admitted the interest of 2, 17, 101/-. The AO has calculated the interest on the entire amount of 33, 76, 000/- whereas we have directed the AO to delete the additions of 9, 00, 000 1, 26, 000/- 23, 50, 000/- on the ground that the source of the same were explained by the assessee. We have observed that the assessee has explained the source of 23, 50, 000/- and directed the AO to delete this addition; however he is liable for interest income thereon only @ 24% as offered on the pro-notes as observed by the AO. Therefore we direct the AO to recalculate the interest on 23, 50, 000/- . This ground is partly allowed. Unexplained investment in jewellery - HELD THAT - During the course of search gross weight of jewellery at 751.5 grams were found. On perusal of the submissions made by the assessee before the CIT(A) that there are four members in his family consisting of his wife unmarried daughter son and himself. Assessee quoted Instruction No. 1916 of 11/05/1004 of CBDT and according to which he is entitled to have 950 grams of jewellery and the assessee is having the less than the entitled quantity. However the AO denied to give benefit as per the said Instruction of CBDT on the ground that as per the above Instruction certain jewellery not to be seized. We are of the view that various courts have decided the issue in favour of the assessee in the light of the above Instruction issued by the CBDT - We direct the AO to delete the addition made in the hands of the assessee on account of jewellery.
Issues Involved:
1. Estimation of profit from civil contracts. 2. Addition of long-term capital gains. 3. Addition of unexplained cash credits. 4. Addition of unexplained investment in promissory notes. 5. Addition of interest income from amounts lent. 6. Addition of unexplained cash. 7. Addition of unexplained investment in jewelry. Detailed Analysis: 1. Estimation of Profit from Civil Contracts: The assessee maintained regular books of account, which were audited under section 44AB of the Income-Tax Act. However, the Assessing Officer (AO) rejected the books due to the absence of bills and vouchers and estimated the profit at 12.5% on direct contracts and 8% on sub-contracts, resulting in an addition of ?48,87,040/-. The CIT(A) revised this to 10% and 5%, respectively. The ITAT further revised the estimation to 8% on direct contracts and 3% on sub-contracts, considering the facts and submissions, and partly allowed the ground raised by the assessee. 2. Addition of Long-Term Capital Gains: The AO added ?6,86,651/- on a protective basis towards long-term capital gains from the sale of property. The CIT(A) upheld the addition, noting discrepancies in the purchase value considered by the AO. The ITAT remitted the issue back to the AO to ascertain the correct purchase value and decide the issue in accordance with the law, providing the assessee an opportunity to substantiate his claim with documentary evidence. 3. Addition of Unexplained Cash Credits: The AO added ?5,71,000/- as unexplained cash credit, as the assessee failed to produce the creditor for examination. The CIT(A) confirmed the addition, noting that the documents provided by the assessee did not prove the genuineness of the transaction. The ITAT upheld the CIT(A)'s decision, stating that the assessee did not meet the requirements of section 68 of the Act. 4. Addition of Unexplained Investment in Promissory Notes: The AO added ?33,76,000/- as unexplained investment. The CIT(A) confirmed the addition, stating that the assessee did not provide satisfactory evidence that the amount was lent out of HUF funds. The ITAT directed the AO to delete the addition of ?1,26,000/- and ?23,50,000/- as the assessee explained the source of these amounts. However, the ITAT upheld the addition of ?9,00,000/- as unexplained investment, as the pro-notes were not in the assessee's name, and the AO did not summon the individuals named on the pro-notes. 5. Addition of Interest Income from Amounts Lent: The AO added ?2,76,422/- as interest income accrued on the amount lent. The CIT(A) confirmed the addition. The ITAT directed the AO to recalculate the interest on ?23,50,000/- at 24%, as the source of this amount was explained by the assessee. The ground was partly allowed. 6. Addition of Unexplained Cash: The assessee did not press this ground during the hearing, and it was dismissed as not pressed. 7. Addition of Unexplained Investment in Jewelry: The AO added ?12,19,714/- towards unexplained investment in jewelry found during the search. The CIT(A) confirmed the addition, stating that the assessee did not provide evidence to explain the source of the jewelry. The ITAT directed the AO to delete the addition, citing CBDT Instruction No. 1916, which entitles the assessee to possess up to 950 grams of jewelry for a family of four. Additional Arguments: The assessee argued that the CIT(A) enhanced the income by bringing a new source of income, relying on various case laws. The ITAT rejected this argument, stating that the CIT(A) only dealt with issues arising from the AO's order. Conclusion: The appeal of the assessee was partly allowed, with specific directions to the AO to re-evaluate certain additions and delete others based on the evidence and legal precedents provided.
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