9911796707
TMI Blog2015 (8) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 3. The assessee is an individual. He is a contractor carrying out contract work on behalf of others. For the A.Ys. 2004-05 to 2009-10, the assessee filed returns of income u/s. 139(1) of the Income Tax Act, 1961 (Act) declaring the following income:- A.Y Original return of Income (u/s. 139) (Rs.) 2004-05 1,46,686 2005-06 3,94,510 2006-07 18,09,501 2007-08 14,37,560 2008-09 2,77,670 2009-10 4,77,760 4. A search u/s. 132 of the Act was conducted in the residential premises of Shri Ashok Kumar Chowta at Flat No.1003, Concord Apartment, Falnir, Mangalore on 13.2.2009. In the course of search, certain documents were found and seized. Some of the documents seized viz., A/AKC/C/8, A/AKC/9, A/AKC/12 and A/AKC/14 contained details of payment by Mr.Ashok Kumar Chowta to the Assessee. The Assessee had signed against each entry of payment as found in the seized document. Some payments were by cheque and some payments were by way of cash. These documents, according to the revenue, indicated payments made by way of cash by Ashok Kumar Chowta to the assessee for contract work done by the assessee for Ashok Kumar Chowta. 5. A Survey u/s. 133A of the Act was conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c., and was posting such payments to my account and getting my signature for such payments. Q.No.15: What was the total volume of the work done by you for the F.Y.s 2003-04, 2004-2005, 2006-2007m 2007-2008 and 2008-2009 and how much payments have you received totally from Sri.Ashok Kumar Chowta? I have not maintained books of account for my transactions with Sri.Ashok Kumar Chowta. As explained earlier, Sri.Chowta's engineers used to take measurement on completion of certain specified stages of work and used to draw bills in my name which I use to sign and submit to Sri.Chowta. However, Sri.Chowta has not passed even a single bill raised in my name. He use to make payments to me on weekly basis for the labour charges and for the materials purchased, so as to enable me to make payments to the labourers and the material suppliers. Certain payments for material suppliers were directly made by Sri.Ashok Kumar Chowta, but such payments were booked against my name and my signature was taken. Since, I have not maintained books for the works carried out for Sri.Ashok Kumar Chowta and also that I am not able to trace out all the bills submitted by me, I do not know the total volume of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly but the books such expenses also against my name. Q.27 Why did you sign for the receipt of the payment if such payments are not made to you and when you do not know to whom such payments are made? Ans. He does not make payment to me for the work. I have done if I refuse to sign for the above-mentioned cash payments. So, I am forced to sign for these cash payments. Q.No.28: Have you ever refused to sign for the above cash payments and had he ever refused payments to you? Ans: Yes. Q.No.29: In that case why did you not refused to carry on with the work and stop the work? Ans: If I stop the work he will not make the payments due to me and I will not be able to make payments to the labourers. Q.No.36: Please tell me whether all the receipts from Sri.Ashok Kumar Chowta in cheque as well as cash are accounted in your books and are included in the turnover disclosed in your income tax returns? Ans: I have disclosed the turnover in my income tax return as per the bills raised on Sri.Ashok Kumar Chowta. I do not know whether the bills raised by me tally with the total cheque and cash receipt from Sri.Ashok Kumar Chowta, as per the materials seized in the search in his case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived towards cash for purchase of materials like sand, laterite stone, bricks, jelly, Hollow blocks etc. I have made cash payments out of the above receipts for the purchase of these materials required for construction. My income from the above receipts will be very negligible. These payments are received in cash only because the suppliers of the above materials insisted on cash payment. In fact, these payments are made for and on behalf of Sri Ashok Kumar Chowta for the construction of his projects. However, to purchase peace with the department, I am prepared to offer 8% of the above receipts as my additional income for the relevant Asst. years." 8. We may mention here that the incriminating document referred to by the AO is a diary seized from Ashok Kumar Chowta showing certain cash payments having been paid to the assessee. Apart from the contract receipts referred to above, there were also entries regarding cash payments received from the Assessee for purchase of properties by the Assessee from Sri.Ashok Kumar Chowta. On the above cash payments for purchase of property and cash receipts for execution of contract work, question No.9 & 11 and answers thereto in the statement r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the financial difficulties that I am facing now, I request you to allow me sufficient time for payment of the tax. I assure that, I will pay the taxes in installments. I have fully co-operated with the department during the course of the Survey conducted in my office premises and also in the post survey enquiries as well as in furnishing the details required by you. Considering the cooperation extended by me, and also the fact that I have voluntarily come forward and offered the additional income I request that I may be absolved of all the penal consequences. I once again assure that I will start paying the taxes at the earliest." 9. The cash receipts not so accounted, as admitted in the statement recorded at the time of survey, for the various assessment years are as follows:- A.Y Gross receipts not included (Rs.) 2004-05 17,80,000 2005-06 1,27,35,005 2006-07 28,05,000 2007-08 60,26,250 2008-09 27,00,000 Total 2,66,21,255 10. On the aforesaid gross receipts not included in the books of account, the assessee agreed to offer 8% additional contract receipts as income for the various assessment years. As stated in the statement recorded the assessee did not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.2009, can be sustained ? and (iv) Whether action of the CIT(A) in deleting the addition on account of unexplained investment in properties for A. Y. 2007-08 made by the AO was proper? 14. As can be seen from the aforesaid issues framed by the Tribunal for consideration, estimation of 8% profit on disclosed contract receipts in the books of account was not considered by the Tribunal at all. Therefore, there is an apparent error in the order of the Tribunal, inasmuch as the grounds raised by the assessee have not been adjudicated. 15. We have heard the parties on the question of estimation of 8% profit on disclosed contract receipts. It is seen from the assessment order that the aforesaid estimation of profits at 8% was made purely on the basis of statement recorded at the time of search. We have already, while deciding the estimation of profits on undisclosed contract receipts, that estimation of income at 1.5% of the cash receipts was also not justified. The following were the conclusions of the Tribunal in this regard:- "37. We have considered this argument of the learned DR. We have also perused the orders of assessment passed in the case of Ashok Kumar Chowta for the A. Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has to be brought to tax. 39. In our view, there was no basis for the CIT (A) to have come to a conclusion that 1.5% of the receipts as evidenced in the seized diary should be brought to tax in the hands of the assessee. We, therefore, uphold the order of the CIT (A) deleting the addition of 8% of the receipts as found in the seized diary, however hold that the action of the CIT (A) in bringing to tax 1.5% of the cash receipts recorded in the seized diary was without any basis. There was no statement admitting any other income and the CIT(A) has based his conclusions in sustaining addition at 1.5% of cash receipts recorded in the seized diary based on an non-existent admission of other incomes not declared. Thus the relevant grounds of the assessee in its appeal as well as the cross objections are allowed while the appeals by the revenue on this aspect as raised in its appeals are dismissed." 16. As far as disclosed contract receipts in the books of account are concerned, as already stated, the addition was made only on the basis of statement recorded at the time of survey. The books of account have not been rejected by the AO u/s. 145 of the Act. In such circumstances, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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