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TMI Blog2018 (2) TMI 1653X X X X Extracts X X X X X X X X Extracts X X X X ..... on to ₹ 2,67,767/- from ₹ 58,32,000/- estimated by the Assessing Officer at 25% of net profits on relevant project. Heard both the parties. Case file perused. 2. It emerges from the case records that the revenue seeks to revive Assessing Officer s action in both rejecting assessee s books as well as estimating its net profits to ₹ 58,32,000/- @ 25% of the total sales. Both the learned representatives take us through learned CIT(A) s findings elaborately discussing the relevant facts, Assessing Officer s reasons as well as assessee s submissions as under:- 3.4. I have considered the facts of the case and submissions made by the appellant. In this case the AO has made the addition of ₹ 58,32,000/- by estimating the net profit @25% of the total sales invoking the provisions of Section 145(3) of the I.T. Act. He has noticed certain discrepancies in the books of account and the same are discussed alongwith the submissions obtained from the appellant from para No.3 to 3.3 of the assessment order. Briefly the AO has observed that the project labour expenses consists of slab 1 to slab-8 was not correct because the labour expenses charged by the labour c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sake of reference the same are reproduced hereunder:- Financial Year Sale (Rs./cr.) Interest to Partners (Rs. / lakhs) Returned Income (Rs. / lakhs) Income offered for tax (Rs. / lakhs) 1 2 3 6 2008-09 0 24.20 -25.80 24.20 2009-10 2.33 25.76 - 15.97 25.76 2010-11 2.88 3.76 48.96 10.82 5.21 53.60 7.18 60.78 3.6. From the above chart, it is evident that the appellant had the total sales of ₹ 5.21 crores on which it has shown the overall income of ₹ 60.78 lakhs. So there was the net profit of 11.66% of the turnover. So it is true that in the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds of some flats which was less than the sale proceeds of the other flats, it has been pleaded by the appellant that the sale rate of each and every unit could not be same and it depends upon various factors. It varies from one unit to another unit. However, it was submitted that the sale price of all the units were more than the jantri rate. Thus, it cannot be said that any of the flats have been shown below the jantri rate. Further pleaded that the AO had issued the summons u/s.131 of the Act to all the buyers and during the course of assessment proceedings they have been examined. But no discrepancies with regard to any suppression of the sale proceeds in respect of sale of any unit has been found. This means that the amount recorded in the books of assessee were in conformity with the amount paid by each of the purchasers of the units. Further it was submitted that sale deed price was in conformity with the sale amount shown in the books of accounts. Further pleaded that the price range of the flat was between ₹ 28 lakhs to 35 lakhs. However, after observing the break even point and having considered the comfort of liquidity the prices were raised subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details about the work carried put and the working of their labour expenses are not fully verifiable therefore the possibilities of such claims at the inflated rate cannot be ruled out. Thus, to plug the leakage of revenue it would be fair and reasonable to disallow the labour expenses of ₹ 2,67,767/- being 10% of the labour claims with regard to the labour expenses relating to contractors namely Jay Ambe Construction at ₹ 9,38,090/-, Pravin P. Chotalia at ₹ 8,32,000/-, Shri Himanshu Prajpati at ₹ 6,75,585/-, Tushar Jani at ₹ 2,32,000/- totaling to ₹ 26,77,675/- has been made. Thus, the disallowance of the labour expenses to the extent ofRs.2,67,767/- is confirmed and the relief is granted to the balance amount. 3. Learned departmental representative vehemently contends that the Assessing Officer had rightly rejected the assessee s books in order to estimate its profit @ 25% on the total sales coming to ₹ 2,33,28,000/-. He particularly places a strong reliance on Assessing Officer s reasons as discussed in CIT(A) s order in paragraph 3.4 that the assessee had failed on multiple issues making the Assessing Officer to reject its books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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