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2018 (7) TMI 48 - AT - Income TaxEstimation of profit - Held that:- CIT(A) is reasonable in estimating the profit at 20%. The fact that assessee himself has offered profit of 17% on the sale consideration indicates that he has earned substantial profits, more than similarly placed building contractors. Therefore, the contention raised that the determination of profit should be at 17% on the sale consideration cannot be accepted. Since there are many lapses on the part of assessee and AO had to enquire and find out various transactions of assessee, we are of the opinion that estimation of profit at 20% on the sale consideration is reasonable and accordingly, the estimation by CIT(A) is upheld. Grounds on this issue in all the three assessment years are rejected as assessee’s main contention is only on the rate of profit. The rate of profit at 20% is confirmed. Difference in sale consideration - Held that:- There is ₹ 1 Lakh extra sale consideration determined by the AO. Like-wise, the other one is taking the registration charges of buyer as part of turnover. We are prima-facie satisfied that there are certain mistakes in determining the sale consideration by AO in the order. Since the profit is estimated on the sale consideration in each year, it is necessary to arrive at correct sale consideration. Therefore, AO is directed to examine these amounts and determine the sale consideration correctly, after giving due opportunity to assessee. The grounds in this regard are considered allowed for statistical purposes. Addition u/s 68 - Held that:- Since the income is based on estimation, the re-casted cash book need not be considered for the purpose of making addition u/s. 68 of the Act. It is true that law permits addition u/s. 68 of the Act even when books are rejected, but in the peculiar facts of the case, where assessee has prepared the cash book on the basis of the information received on enquiries caused by the AO, the so called cash credit of ₹ 40 Lakhs on 11-04-2007 need not be brought to tax separately as the income was declared at 20% on the sales turnover, rejecting statements prepared by assessee. The addition by the CIT(A) of an amount which was not added by the AO is not warranted on the facts of the case and hence AO is directed to delete the same. The order of CIT(A) to that extent is modified. Grounds are allowed. Addition u/s. 40(a)(ia) on the interest payment reflected by assessee in the cash flow statement - Held that:- To invoke the provisions of Section 40(a)(ia) amount has to be claimed as an expenditure. Since the amount was not claimed as expenditure by assessee in the computation of income or in the prepared books of account, the question of disallowance u/s. 40(a)(ia) does not arise. There may be a situation that TDS has to be made as per Section 194A and assessee may have to deduct tax on that. For that, one has to be examine the same under the provisions of Section 201. It is also not on record whether the interest payment is a single payment to one person or multiple payments which may not attract TDS. Since the fact is that this amount has not been claimed as expenditure, the disallowance u/s. 40(a)(ia) does not arise, as those provisions are applicable only on the amounts which are claimed as deduction in the P&L A/c. Method of assessment - Held that:- Assessee has agreed with the rejection of books of account and estimation of income at 20% was conformed in assessee’s appeals. Consequent to that, we see no reason to consider the grounds of Revenue. We notice that AO has not followed any systematic method in bringing to tax various amounts in the order. While appreciating the efforts put in by the AO in unearthing the information and confronting of assessee, the ultimate assessment is not properly done and so, the only option is to estimate the income as was done by the Ld.CIT(A). In view of that, we find no merit in the grounds raised by Revenue
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