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TMI Blog2012 (12) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, The Ld CIT(A) erred in estimating a net profit of 25% of the sales as against determined profit of 26.52% by the AO. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the additions made u/s. 40A(3) of the I.T. Act on the ground that the profit has been estimated at 25% on the sales. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made u/s. 40(3) which is an independent provision for disallowances at 20% in respect of cash expenses". For the year 2006-07 there is one more Ground of Appeal in the appeal preferred by the Revenue. "On the facts and in the circumstances of the case and in law, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sized material) incurred over and above already reflected in the regular return filed over the years were as under: Asst.Year Total Expenses (unaccounted) Expenses claimed as allowable in the P&L A/c. filed with the Return u/s. 153c 2000-01 49,02,781 38,97,825 2001-02 23,75,693 7,74,874 2002-03 23,47,337 12,00,430 2003-04 89,62,914 34,55,356 2004-05 70,85,795 27,41,482 2005-06 7,50,000 6,00,000 2006-07 50,000 50,000 The said expenditure had been incurred for Leela Baug Building. The said expenditure was over and above the expenditure debited to the profit and loss account in regular books of accounts. During assessment proceedings, the AO made inquiries about construction activities of the assessee and the cash p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not correct as it does not give a true and correct working. Considering the fact that the appellants project is a redevelopment project wherein the old tenants were required to be given free of cost premises for which the expenses were to be borne by the appellant, the size of the project, saleable area available, the delay in project whereby there would be escalation in cost, therefore the method of estimating the income based on expenses incurred is not justified. In order to meet the ends of justice an estimation of the income is required to be made based on the % of sales which is more authentic and correct method to determine the profits when book results cannot be accepted. Since the issue in appeal has implication in same fact and id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessee's premises, that during 153C proceedings, assessee had filed full details of his income. Departmental Representative (DR) supported the orders of the FAA. After hearing the rival submission and perusing the material available on record, we find that assessee had shown 19.27% Gross Profit (GP). AO fixed the GP at 26.52%. FAA reduced it to 25%. 4.1 Thus, basically it is a matter of estimation and that also in a search and seizure related matter. Assessee has admitted that expenses outside the books were incurred. Considering all these facts, AR agreed that if rate of estimate of the FAA is reduced to a reasonable level, assessee would have no grievance. Considering the facts and circumstances of the case, we are of the opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Chandrika K Shah, who is also the director of the assessee company. Mrs. Chandrika K Shah was holding an area of 178 sq. ft. in the original structure, but was allotted 748 sq. ft and a consideration of Rs.16,50,000/- has been received from her. It is seen that the rate charged from the other customers for the flats sold during the period from May 2004 to June 2005 range from Rs.5,940/- to Rs.8,943/- per sq. ft whereas the rate charged to Mrs. Chandrika K shah works out to Rs.2,895/- (165000/570 i.e. 748-178) which is comparatively very low. Hence, vide show cause notice dtd. 12-04-2007, the assessee company was required to show cause as to why the value of the additional area allotted to Ms. Chandrika K Shah should not be adopted at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board. From this, it is established by the appellant that the premises held by Mrs. Chandrika Shah was a commercial premise. Also for non granting of alternative accommodation during the construction period require to be considered in the additional area given to Mrs. Chandrika Shah. Also considering the argument of the appellant that if the commercial area originally held is converted into residential area based on the rate prevailing in that area, the space allocable to Mrs. Chandrika Shah would be higher than the area considered by the AO. Considering all the above and considering the fact that the net profit is estimated at 25% of the sales, I am of the view the addition made of Rs.8,34,440/- is unwarranted and therefore deleted. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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