TMI Blog2014 (1) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... funds on which there is no dispute - The order of the CIT(A) is not correct - Decided in favour of assessee. - ITA.No.1091/Hyd/2013 - - - Dated:- 24-1-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Mr. S. Rama Rao For the Respondent : Mr. B. Yadagiri ORDER Per B. Ramakotaiah, A. M. This appeal by assessee is against the Orders of the CIT(A)-VI, Hyderabad dated 10.05.2013. The assessee has raised three effective grounds which are as under : "2. The learned CIT(A) erred in confirming the action of the Assessing Officer in estimating the net income from contracts at 12.5% of the gross receipts. 3. The learned CIT(A) erred in confirming the addition made by the Assessing Officer of Rs.11,00,000/- disbelieving the explanation of the appellant that the said amounts were paid to the appellant by Shri V. Prajesh and Shri Rajender Singh. 4. The learned CIT(A) ought to have appreciated the fact that both the persons were present before the Assessing Officer and accepted the facts during the course of sworn deposition." 2. Briefly stated, assessee is an individual and is in the business of civil construction and also partner in M/s. SS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts of each case. In this case, as indicated, the facts support the decision of the A.O. to estimate the profit at 12.5%. Accordingly, the addition of Rs.1,99,574/-, made on account of estimating the profits at 12.5%, as against 8% adopted by the assessee, stand confirmed. Thus, this ground of appeal, is treated as dismissed." 6. After considering the rival contentions, we are of the opinion that the order of the CIT(A) does not require any modification. Even though learned Counsel justified estimation at 8% on the reason that claim of depreciation at Rs.1,32,871/- was about 3%, therefore, if depreciation is allowed, the same profit margin would be arrived at. This contention of the learned Counsel could not be accepted in the absence of books of accounts. In the absence of confirmation of contract receipts, there is no option than to estimate the profits on the receipts declared by the assessee in the P L account. Since assessee has declared gross contract receipts at Rs.44,22,275/- without any audit report, we do not see any reason to accept 8% estimation. As rightly pointed out by the learned CIT(A), various judicial decisions considered the margins of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash deposits into the bank account of the appellant, out of which cheques were given for Rs. 10,00,000/- (27.05.2008) and Rs. 1,00,000/- (16.05.2008), by the appellant to the firm M/s. Sai Ganesh Builders. As per the A.C's report, M/s. Sai Ganesh Builders is not a proprietary concern as mentioned in the copy of agreements for sale, but only a firm consisting of 4 partners, with the name of Mr. Ganesh, as mentioned in the said document (agreement for sale), not relatable to the said firm. Further, Mr. Ganesh is neither existing nor traced as per 'the information brought on record. Though the A.O recorded the statements from Rajender Singh and Mr. V. Prajesh who confirmed to have given the cash of Rs. 5,50,000/- each to Mr. B.V.Krishna Rao, towards purchase of flats from M/s. Sai Ganesh Builders, they could not furnish any further details such as the stage of construction at which agreements were entered and the reasons for cancellation of agreements etc. Based on the facts that have emerged, the submissions of Mr. Rajender Singh, Mr.Prajesh and Mr. B.V.Krishna Rao, as emanated from their statements appeared to be an afterthought and proved wrong for the following reasons: 1. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have received the money back. Therefore, there is neither unexplained investment nor unexplained expenditure in these transactions. He referred to various statements and the enquiry report of the A.O. in this regard. 9. Learned D.R. vehemently argued on behalf of the Revenue that the whole explanation of the assessee is make believe and there is no truth in that. Assessee neither explained the investment nor explained the expenditure. Accordingly the authorities are correct in making the addition. 10. After considering the rival contentions, we are not in agreement with the findings of the learned CIT(A). First of all, there is no scope for making any addition under section 69 as unexplained expenditure, as was done by the A.O. In fact, assessee has paid the amount of Rs. 11 lakhs through his bank account to M/s. Sai Ganesh Builders and this is evident from the assessment order itself. Once the amount has gone through the bank account out of the own sources of the assessee, how it becomes unexplained expenditure is not forthcoming. As per the provisions of the Act, only when the source is not explained, the amount can be treated as income from the unexplained source. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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