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2014 (4) TMI 309 - ITAT MUMBAIRejection of books of accounts u/s 145(2) of the Act - Addition made on account of non-tallying off bills and vouchers – Undervaluation of sales of flats and shops – Validity of additional evidences – Compliance of Rule 46A of the Rules not made – Held that:- The assessee is a builder and developer - the flat sold by the assessee during the year constituted its stock-in-trade, there is no justification for making any addition by taking the value adopted by Sub Registrar for Stamp Duty purchased as per provisions of Section 50C - the flat so sold constituted stock-in-trade, there is no justification for upholding the addition on the basis of notional value determined by Stamp Duty authorities as against actual sale price received by the assessee, insofar as there is no evidence on record to hold that assessee was in respect of consideration in excess of what was stated in the sale-deed - the flats sold are not its capital assets but stock-in-trade - there is no justification on the part of the CIT(A) for making/sustaining addition on this count for the assessment year under consideration i.e. 2007-08 - the income declared by the assessee on sale proceeds gives rise to the profit rate of 3.30%, which is very low in case of a builder and contractor. Even though the mistakes pointed out by the AO is not so fatal and sufficient to reject the entire book results of the assessee, but the observation made by the AO to the effect that vouchers do not tally with the amount mentioned in the profit and loss account, some of the expenses are not routed through P&L account, means payments were made outside the profits and loss account, expenses debited in the P&L account was not supported by proper vouchers, cannot be brushed aside out rightly, in view of very low profit declared by the assessee as a builder and developer – thus, the order is modified and the AO is directed to take profit @ 5% of the sale proceeds – Decided partly in favour of Revenue.
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