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2016 (6) TMI 883 - AT - Income TaxUnexplained expenditure u/s 69C - whether addition is unwarranted and not sustainable in the eyes of law as the profit from the execution of works contract @8% had been returned by the appellant under section 44AD? - From an analysis of section 44AD of the Act contained hereinabove, we have already held that the assessee had not incurred the expenses to the extent of 92 % of the gross receipts. Therefore, in the present case, the provisions of section 69C of the Act cannot be applied. Asking the assessee to prove to the satisfaction of the Assessing Officer, the expenditure to the extent of 92% of gross receipts, would also defeat the purpose of presumptive taxation as provided under section 44AD of the Act or other such provision. Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process of assessment in cases of small traders or in cases of those businesses where the incomes are almost of static quantum of all the businesses, the Assessing Officer could have made the addition under section 69C of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD of the Act. No such exercise has been done by the Assessing Officer in this case - Decided in favour of assessee Addition on account of unexplained cash credits - Held that:- It is a fact on record that inspite of stating the donor to be a close relation, the assessee did not file any evidence other than confirmation in order to corroborate the assertion contained therein. - Decided against assessee Addition on undisclosed capital gains - Held that:- The whole amount of sale consideration has been taxed by the Assessing Officer as capital gains without giving assessee any benefit with regard to cost of acquisition or cost of construction. It can be nobody's case that the assessee had acquired the property without paying any cost. Some value for cost of acquisition has to be given to the assessee. We observe that even in cases of properties acquired through gifts, etc. the cost of acquisition as incurred by the previous owner is given to the assessee. The fact of acquiring the plot from Dr.Rajan Sushant is evident from the office order of Himachal Pradesh Housing & Urban Development Authority dated 8.1.2003. The Assessing Officer as well as the CIT (Appeals) asked for Sale Deed, however, we see that this order is as good as a Sale Deed. However, the amount of purchase consideration is not coming out from this office order. The assessee stated that he purchased the property for ₹ 10 lacs and made the payments through account payee cheque. However, no evidence in this regard was shown to us. In view of this, we direct the Assessing Officer to give an opportunity to the assessee to produce the evidence in this regard and given resultant benefit of cost of acquisition as per law. With regard to the cost of construction it is observed that in all the three years, while adjudicating another issue, the Assessing Officer himself has accepted the cost of construction in very clean terms. In the Assessing Officer's order for assessment year 2006-07, an amount at ₹ 4 lacs as cost of construction has been accepted at page 4. Similarly, in assessment year 2007-08, and in assessment year 2008-09 the cost of construction at ₹ 16 lacs and ₹ 4 lacs respectively have been accepted by the Assessing Officer. Since the Assessing Officer himself has accepted these costs of construction, no different stand can be taken by him while making the addition. In view of this, we direct the Assessing Officer to delete the addition made on account of construction cost being taken at nil and also direct him to consider the cost of construction at ₹ 24 lacs while computing the capital gain. - Decided partly in favour of assessee for statistical purposes.
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