9911796707
TMI Blog2022 (1) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... than ₹ 6 crore. Secondly, Ld. CIT(A) has rejected the assessee's claim that the increased figure of ₹ 6 crore reflected as declaration in survey by debit to stock in the profit and loss account is reflected in corresponding closing work in progress. CIT(A) has rejected the submission of assessee for having included the aforesaid sum of ₹ 6 crores in the closing work in progress on the basis of certification of the audited account, which did not show that the closing stock includes this increased figure. We find that this aspect can be verified by the AO. The components of closing work in progress are to be examined by him to arrive at the veracity of assessee's factual submission that closing work in progress includes this as a corresponding effect of stock of ₹ 6 core to declared in survey debited to profit and loss. As assessee submission regarding wrong application of section 68 is concerned, we are of the considered opinion that the said issue will arise only, if the above submissions of the Ld. Counsel of the assessee are not found to be correct by the AO. In any case, it is settled law that quoting a wrong section is not fatal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is a partnership firm, engaged in the business of builder and developer. Subsequently, the case of the assessee was selected for scrutiny under CASS and notices u/s. 143(2) of the Act were issued and served upon the assessee. In compliance, requisite details were submitted, examined and placed on record. During the year under consideration the assessee had booked sales at ₹ 44,55,98,225/- and shown net profit of ₹ 3,54,73,863/-, after interest and remuneration to partners. The assessment proceedings u/s. 143(3) of the I.T. Act, 1961 were completed on 29/12/2016, assessing the total income at ₹ 6,00,00,000/-. In this case, a survey, u/s. 133A of the I.T. Act, 1961, was conducted on 08.11.2013. During the course of survey action, on verification of various documents found and impounded, it was observed that in respect of various housing projects, such as 'Charms Paradise' Wing 'A', 'B' and Wing 'C', constructed by M/s. Charms Corporation and Charms City, comprising of building Hellbron (A-1) to Corsica (A-11) constructed by M/s. Charms Developers, there was vast variation in sales rate of the flats booked/sold, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee have been perused carefully and the same are not acceptable for the reasons discussed below. i) Although it was not directly admitted, it is evident from the statement of Smt. Hemlata Singh and the impounded material scanned and reproduced above that there is on-money component in the safes affected by the assessee firm. ii) It was voluntarily declared by Shri John Mathew, partner that amount of ₹ 6 Crores is to cover up the differences in rate variations for various reasons and factors. iii) The amount of ₹ 6.0 Crores was not entered in the books of account or explained as on the date of survey. iv) The amount of ₹ 6.0 Crores was not attributable to specific customers to whom sales were booked, Even today, although credited in the books, the amount of ₹ 6.0 Crores stands unexplained. v) The declaration in survey was made over and above the normal income. No established businessman will make a declaration on the ground of rate differences. Had it been only for the reasons stated 'as business prudence, directions of the flats, payment schedules further bank loans or self finance etc', it was not required to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,54,73,890 2. Add: Unexplained income u/s. 68 r.w.s. 115BBE (₹ 60000000/- less ₹ 35473890) 2,45,26,110 Assessed Total Income 6,00,00,000 4. Upon assessee's appeal Ld. CIT(A) confirmed the action of the AO. Furthermore, the Ld. CIT(A) made an enhancement of the assessment by ₹ 6 crores. The assessees argument that ₹ 6 crores disclosed in survey was already added in the profit and loss account was rejected by the Ld. CIT(A) on a finding that neither the assessee nor the assessee's auditors has stated that the increased sum of ₹ 6 crores is reflected in the closing work in progress/closing stock. In this regard to buttress the point the Ld. CIT(A) has observed as under:- The notes to accounts appended to the audited financial statements report significant accounting policies with regards to various matter including closing work in progress. This has been scanned and is placed at Page No. 13 of this order. The relevant para reads as under:- Closing WIP at the end is valued and certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO of ₹ 2,45,26,110/- is confirmed by dismissing all the grounds of appeal and the income of the appellant is further enhanced by ₹ 3,54,73,890/- under the provisions of section 251(2) of the Act. The total addition, over and above the returned income of ₹ 3,54,73,863/- is of ₹ 6,00,00,000/-. Accordingly, the assessed income of the appellant is ₹ 9,54,73,863/-. 6. Against the above order assessee is in appeal before us. 7. We have heard both the parties and perused the records. Ld. Counsel of the assessee made various legal submissions that the addition is not sustainable under section 68 of the I.T. Act. That the addition has been made on estimated basis without 1st rejecting the books. Furthermore, he submitted that assessee has actually declared as additional income, the sum of ₹ 6 crores declared during survey. He submitted that the additional amount of ₹ 6 corers, which has been debited to the profit and loss account as a stock declared in survey is duly reflected in the closing work in progress. That this amount was over and above the profit already declared by the assessee. That assessee's profit shown in profit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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