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2014 (6) TMI 137 - ITAT AHMEDABADEstimation of profits @12% on total receipts – Addition of members contribution and the closing stock - Addition made u/s 41(1) of the Act - Rejection of books of accounts – Held that:- The accounting method followed by the Assessee was not as per the established accounting principles as the Assessee had not accounted the receipts on the basis of booking amount and nor the receipts were accounted on the basis of actual sales made when the possession was given and proceeds realized but had stated to have accounted on the basis of Architects Certificate regarding construction completed during the year. The accounting method followed by the Assessee was not proper and it was impossible to work out true profit on the basis of entries made in the books of accounts and the accounts of the Assessee as not correct or complete and the proper course would be to reject the books of accounts and estimate the profits – the Assessee had shown members contribution which was not shown in earlier years - the net profit received since inception of the project and applying the profit rate of 12% and after giving the credit of the amount shown by the Assessee, held the balance amount as the income of the Assessee - the accounts of the Assessee has been found to be incorrect and the method adopted to be improper and the book entries to be not reliable and the percentage of the total receipts was already added for working out the income, no addition separately on account of closing stock could be added - Revenue has not brought any material on record to controvert the findings of CIT(A) – thus, there was no reason to interfere in the order of CIT(A) – Decided against Revenue.
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