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TMI Blog2019 (9) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, Thane (hereinafter referred to as ld. AO). 2. The solitary issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the action of the ld. AO in rejecting the books of accounts of the assessee and confirming the addition made by the ld. AO of net profit at 9% of total turnover on an estimated basis subject to minor corrections in the figures. 3. The brief facts of this issue are that the assessee is a proprietor of two concerns namely M/s. Indian Corporation and M/s. Indian Complex Services engaged in the business of land development and the assessee is also a contractor. The main business of the assessee is to acquire land on development basis from the villagers and construct the warehouses on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee vide question Nos.15 - 18 as to why the said sum of Rs. 5,62,00,000/- should not be treated as part of cash component of sale consideration in contract business for the F.Y.2011-12 relevant to A.Y.2012-13 which the assessee came forward to accept that the said sum of Rs. 5,62,00,000/- to be cash component of sale proceeds in his contract business for the F.Y.2011-12. The assessee declared income from his contract business to the tune of Rs. 5,88,25,751/- which admittedly included Rs. 5,62,00,000/-, pursuant to which the gross profit and net profit ratio worked out to 18.50% and 15.71% respectively. The ld. AO, however, observed that the amount offered in the sum of Rs. 5,62,00,000/- was over and above the regular income offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,750 - Rs. 5,62,00,000) 26,25,750 INCOME ASSESSED 2,98,12,337 4. The ld. CIT(A) upheld the action of the ld. AO in rejecting the books of accounts and give partial relief to the assessee stating that the direct income and maintenance income are not akin to the receipts from contract business and hence, the same are to be excluded while determining the net profit at 9% on turnover of contract business. Accordingly, he arrived at the turnover of contract business at Rs. 31,82,82,489/- (Rs. 37,44,82,489 - income offered of Rs. 5,62,00,000/) and applied 9% on the said sum which worked out to Rs. 2,86,45,425/- and from the said sum, he reduced the income already disclosed by the assessee in the sum of Rs. 26,25,750/- (5,88,25,750 - Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the declaration made by the assessee at the time of survey conducted on 29/09/2011. Infact, the ld. AO had reduced Rs. 5,62,00,000/- from the net profit from the contract business declared by the assessee and then compared the profit percentage and arrived at a wrong conclusion that net profit has declined drastically during the year. We have gone through the statements recorded from the assessee at the time of survey which is part of the paper book filed before us. From the said statement, we find that the question posed by the survey team on the assessee and the replies given by the assessee categorically inferred that the amounts reflected in the pocket diaries impounded represented cash component of sale receipts from contract business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,594/- and Rs. 2,19,28,106/- respectively which were offered to tax as business income by the assessee and assessed as such by the ld. AO. These two figures were included as part of total turnover by the ld. AO while estimating the net profit of 9% thereon, but were sought to be excluded by the ld. CIT(A) as they were not derived from contract business. We find that assessee had maintained the consolidated financial statements for all his business activities carried out including the contract business and from which division wise transactions, turnover, purchases, expenses and its related profitability could be properly deduced there from. These details were also provided before the ld. AO and before the ld. CIT(A). The ld. CIT(A) had reso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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