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2016 (6) TMI 781 - AT - Income TaxEstimation of profit at eight per cent. on the assessee's contractual receipts under the provisions of section 44AD - assessee is a civil contractor - Held that:- Commissioner of Income-tax (Appeals) has observed in the impugned order that the books of account produced by the assessee during the assessment proceedings cannot be relied on, as they had been prepared only when the Assessing Officer had detected that the total contract receipts had not been declared by the assessee in his return of income. Now, this is not in accordance with law. There is no provision under the Act whereby income of an assessee can be estimated in oblivion or disregarded of the books of account produced before the Department, which books are not rejected under section 145 of the Act. In case the Department chooses not to go by the books of account produced, it is a must for the Assessing Officer to reject them on the basis of a reasoned order by pointing out the specific defects therein. This has illegally not been done in the present case. The books produced cannot be disregarded merely on a specious observation that they are not reliable, having been prepared after detection. The undisputed fact remains that these books were duly produced by the assessee before the Assessing Officer in the assessment proceedings and the Assessing Officer did not reject them. It is not a case of levy of concealment penalty, where change of stand after detection may be detrimental. Therefore, this issue is remitted to the file of the Assessing Officer to be decided afresh in accordance with law, on duly taking into consideration the books of account produced by the assessee by affording adequate opportunity to the assessee to support his case Estimation of agricultural income - Held that:- though the assessee had duly apprised the learned Commissioner of Income-tax (Appeals) of the above mistake committed by the Assessing Officer, the learned Commissioner of Income-tax (Appeals) remained in oblivion of this and merely reiterated that the assessee was having land holding of 110 acres and not 75 acres, as had also been wrongly held by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) has fallen in error in upholding the Assessing Officer's action in assessing agricultural income of the assessee at ₹ 34,30,758. This conclusion of the learned Commissioner of Income-tax (Appeals) is found to be a result of complete misreading and non-reading of the aforesaid contentions of the assessee before both the authorities below, which were not rejected at any stage. Even before this Bench, nothing has been brought on record to rebut the assessee's specific stand that his land holding was 75 acres and not 110 acres, which was the total land holding of the assessee and his family.Taking the formula of the Assessing Officer, on estimating agriculture income at ₹ 27,500 per annum, the total agriculture income of the assessee from his land holding of 75 acres comes to ₹ 27,500 x 75 = ₹ 20,62,500 and not of ₹ 35,34,722, as assessed. Therefore, the amount of ₹ 35,34,722 minus ₹ 20,62,500 = ₹ 14,72,222 is deleted from the addition made and the addition is sustained to the extent of ₹ 20,62,500.
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