TMI Blog2021 (8) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no other alternative before the lower authorities than to applying the rate of estimated gross profit on the basis of preceding assessment, however considering the turnover of ₹ 2,97,95,124/- compared to the turnover of ₹ 77,58,677/- shown in the preceding year we consider that it would be reasonable to estimate the gross profit @ 15% as against gross profit estimated @ 18% by the ld. CIT(A). Accordingly, we direct the Assessing Officer to estimate the gross profit @ 15% and make the addition of net profit. In view of the discrepancies as cited above in this order and failure of the assessee for not furnishing the relevant details to establish the correctness and completeness of the account, the ground no. 1 of the assessee against rejecting the books of account u/s. 145(2) is dismissed. - Decided partly in favour of assessee. - ITA No. 340/Ahd/2019 - - - Dated:- 16-7-2021 - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Revenue : Shri L.P. Jain, Sr. D.R. For the Assessee : Shri/Ms. Aditi Sheth, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee s appeal for A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /142(1)/70/AE/2016-17 dated 15.11.2016 and thereafter notice u/s. 142(1) dated 30.11.2016. 2. Vide above referred notices, you are requested to furnish certain details before 22.11.2016 and 05.12.2016. But, it is regretted to notice that you have not comply the above notices till date. Vide above referred notices, you are requested to furnish details like; 1) Working of opening and closing stock 2) Method of valuation of closing stock for open land and work in progress 3) Explanation for cost of sale of ₹ 3,40,78,002/- against sale value of ₹ 1,38,36,743/- 4) Explanation for sales made at lower price than the cost of sales 5) Sales ledger along with name and address of customers, copy of register sale deed, size of plot and construction thereon. 6) Copy of building plan approved by concerned authority and justifies incurrence of expenses on construction with measurement. 7) Details of land development cost along with total area of land which is developed during the year. As you have not avail opportunity given to you, it is constrain but to finalized your assessment on the basis of material and data a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncesheet as advances- Bills raised A/c. (Arunaben A. Joshi - P.No.5) ₹ 14,35,500 Bills raised A/c. (Kananben D. Bhojak - P.No. 1 1) ₹ 16,55,171 Bills raised A/c. (Nileshbhai M. Rathod - P.No. 14) ₹ 13,96,239 Bills raised A/c. (Sureshbhai R. Vaghasiya -P. No. 75) ₹ 14,36,991 As you have completed the work as payment received against the bill raised, you should be shown above receipts as income. But you have not doing so and kept out-standing as advances. 6. You have not furnished copies of sale deed of residential units as well as open plots of land sold by you during the year. Further, you have not furnished details regarding number of unit completed and sold and number of unit under work in progress. Same way, you have not furnished details of total plots, plot sold till date and number of plots kept in stock in trade. Further, you have not provided working and method of opening stock and closing stock. It is difficult to understand that how you ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance before the Assessing Officer. Even the Assessing Officer has given further time vide notices dated 15th December, 2016, 30th December, 2016 and 13th December, 2016 and till the date of assessment order no detail has been furnished. Under the circumstances, the Assessing Officer has made detailed analysis of facts emerged from the material available on record as elaborated at page no. 5 to 10 of the assessment order. The Assessing Officer has also found discrepancy in the detail of closing stock of land shown in the audit report and in the return of income filed by the assessee. The Assessing Officer has also noticed that assessee has failed to substantiate that how the cost of sale of ₹ 3,40,78,002/- was shown against the sale value of ₹ 1,38,36,743/-. The Assessing Officer has also observed that assessee has shown purchase of bricks of ₹ 36,09,000/- at the end of the financial year on 25th March, 2013 and total quantity of bricks was shown as purchase ₹ 8,02,000/-. The assessee has not furnished any detail of these transactions before the Assessing Officer in spite of giving a number of opportunities. Under the circumstances, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r after taking into account the high turnover shown by the assessee compared to the previous year. 5. During the course of appellate proceedings before us, the ld. counsel has contended that ld. CIT(A) has restricted the addition of gross profit at 18% which is at the higher level without any valid reason. On the other hand, ld. Departmental Representative contended that in spite of giving a number of opportunities, the assessee has failed to substantiate the genuineness of huge losses before the Assessing Officer and ld. CIT(A) during the course of appellate proceedings, he supported the order of ld. CIT(A). 6. Heard both the sides and perused the material on record. In this case, the assessment was completed u/s. 143(3) of the Act. During the course of assessment, the Assessing Officer has noticed that assessee had shown total loss of ₹ 1,74,25,492/- on sales of residential unit of ₹ 1,38,36,743/- and sales of open plot of land of ₹ 1,34,58,381/-. The Assessing Officer has also noticed that data shown in the audit report was not co-related with the data shown in the return of income of the assessee. In order to verify the genuineness of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 55,75,493/- Add: Land development expenses in ₹ 1,24,59,039/- Total land cost in ₹ 1,80,34,532/- -Total land in Sq.Mt. ₹ 13503.94 Cost of land per Sq.Mt. in 1335.50/- Value of Closing stock worked out for open land (7709.32 Sq.Mt. x ₹ 1335.50) in Rs.- 1,02,95,797/- The assessee has shown cost of sales of ₹ 3,40,78,002/- as against sales shown of ₹ 1,38,36,743/- only. In construction line, it is not believable that the builder sold its stock by receiving sales price less than the cost price and shown trading loss of ₹ 2,02,41,259/~. Copy of registered sale deed not provided even after repeated request. Copy of building plan approved by concerned authority was not provided Details of land development cost along with total area of land developed during the year. Copy of ledgers along with necessary bills and vouchers of different parties for land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to be filed before the Assessing Officer nor specified relevant reasons for not making compliance. In the light of the above facts and circumstances, we consider that there was no other alternative before the lower authorities than to applying the rate of estimated gross profit on the basis of preceding assessment, however considering the turnover of ₹ 2,97,95,124/- compared to the turnover of ₹ 77,58,677/- shown in the preceding year we consider that it would be reasonable to estimate the gross profit @ 15% as against gross profit estimated @ 18% by the ld. CIT(A). Accordingly, we direct the Assessing Officer to estimate the gross profit @ 15% and make the addition of net profit. In view of the discrepancies as cited above in this order and failure of the assessee for not furnishing the relevant details to establish the correctness and completeness of the account, the ground no. 1 of the assessee against rejecting the books of account u/s. 145(2) is dismissed. In view of the comments reported above in this order, ground no. 2 3 of the assessee of estimating the gross profit is partly allowed. Ground Nos. 4 5 of the assessee are dismissed since no separate addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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