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2015 (7) TMI 722 - ITAT AHMEDABAD

2015 (7) TMI 722 - ITAT AHMEDABAD - TMI - Net profit determination - AO has applied 15% of the contract receipts - ld.CIT(A) has restricted the same to 8% - Held that:- The appellant has purchased land during the year and has shown work in progress of ₹ 9,42,319/-. The cost of the land has been shown to be ₹ 98,96,100/-. Since the appellant is constructing the building to its share holders cum members, the profit element on account of land will not be there. However, there would be a .....

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s. The A.O. is, therefore, directed to estimate the income of the appellant by applying the profit rate of 8% on the W.I.P. of ₹ 9,42,319/-. - Decided against revenue.

Penalty u/s.271(1)(c) - penalty has been imposed by the A.O. as the income was assessed by him at ₹ 17,14,395/- as against a loss of ₹ 1,680/- shown in the return of income - Held that:- The appellant had given all the particulars regarding the claim in the return of income and the accounts were also p .....

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lied by the assessee in its return of income found to be incorrect or erroneous or false there was no question of invoking the penalty under section 271(1)(c). Mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Considering the above facts and circumstances, the penalty imposed by the assessing officer is deleted and the appeal is allowed. See Reliance Petro products Pvt.Ltd. reported in [201 .....

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Tax(Appeals)-XIV, Ahmedabad ( CIT(A) in short) both identically dated 02/08/2011 ITA Nos.2695 & 2696/Ahd/2011 (By Revenue) and CO Nos.286 & 287/Ahd/2011 (By Assessee ) respectively pertaining to Assessment Years (AY) 2005-06. Both the appeals and the cross-objections were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. First, we take up the Revenue s quantum appeal in ITA No.2695/Ahd/2011 for AY 2005-06. The Revenue has raised the foll .....

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e ultimate owners of the premises were neither original Share holder of the company nor the promoters. 3) On the facts and in the circumstances of the case, the Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad ought to have upheld the order of the Assessing Officer. 4) It is therefore, prayed that the order of the Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad may be set-aside and that of the order of the Assessing Officer be restored. 2. Briefly stated facts are that the case of t .....

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eal before the ld.CIT(A), who after considering the submissions of the assessee, partly allowed the appeal, whereby the ld.CIT(A) restricted the profit rate to 8% as against 15% of the contract receipts. 3. The ld.Sr.DR was supported the order of the AO and submitted that the ld.CIT(A) was not justified in reducing the addition. He submitted that the ld.CIT(A) ought to have confirmed the finding of the AO. 3.1. None appeared on behalf of the assessee, however written submission dated 23/03/15 ha .....

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d.AR of the appellant. The A.O. has rightly held that the income from the construction activity should be taxable in the present year. The appellant is constructing the project for its ITA Nos.2695 & 2696/Ahd/2011 (By Revenue) and CO Nos.286 & 287/Ahd/2011 (By Assessee ) respectively share holder cum members. The appellant has purchased land during the year and has shown work in progress of ₹ 9,42,319/-. The cost of the land has been shown to be ₹ 98,96,100/-. Since the appel .....

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he A.O. is without any basis or any comparable instance. Normally, the rate of profit in this line of business is adopted @ 8% of the contract receipts. The A.O. is, therefore, directed to estimate the income of the appellant by applying the profit rate of 8% on the W.I.P. of ₹ 9,42,319/-. The ground is accordingly partly allowed. 4.1. The aforesaid finding of the ld.CIT(A) has not been controverted by the ld.Sr.DR by placing any contrary material on record. Therefore, we do not see any re .....

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06 (in ITA No.2695/Ahd/2011 for AY 2005-06). The assessee has raised the following grounds in its cross-objection:- 1. That the tax effect is less that threshold limit of ₹ 3.00 Lacs, and as such the appeal filed by the Department be dismissed in limine in view of Board s Circular. WITHOUT PREJDUICE: 2. That the learned CIT(A)-XIV has grievously erred both in law and on the facts of the case in directing the A.O. to estimate the income by applying profit rate 8% on work in progress. 3. Tha .....

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ound No.1, the assessee has submitted in its written submission dated 23/03/2015 that the appeal is not maintainable due to low tax effect. However, we find that the AO has enclosed a copy of order dated 20/09/2011 giving effect to the CIT(Appeals) s order. As per this order, the revised income is at ₹ 4,24,131/-. However, the assessee in its submission dated 23/03/2015 at page No.23 of the paperITA Nos.2695 & 2696/Ahd/2011 (By Revenue) and CO Nos.286 & 287/Ahd/2011 (By Assessee ) .....

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bjection. Therefore, the other grounds are rejected for want of proper prosecution. As a result, assessee s cross-objection No.286/Ahd/2011 for AY 2005-06 is dismissed. 8. Now, coming to the Revenue s penalty appeal, i.e. ITA No.2696/Ahd/2011 for AY 2005-06. The Revenue has raised the following grounds of appeal:- 1) The Ld.Commissioner of Income-tax(Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the penalty of ₹ 7,00,000/- levied u/s.271(1)(c) of the Act. 2) On the fact .....

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mitted that the ld.CIT(A) was not justified. 8.2. None appeared on behalf of assessee, however written submission dated 23/03/2015 has been filed. 9. We have heard the Sr.DR, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided this issue in para-2.3 of his order by observing as under:- 2.3. Decision: I have carefully perused the assessment order and the submission filed by the ld.AR of the appellant. Since all grou .....

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able in the return of income and books of account held that the appellant s income for the assessment year should be worked out after applying a rate of 15% on the total receipts of the appellant. In my opinion the appellant had given all the particulars regarding the claim in the return of income and the accounts were also presented before the assessing officer. It was his bonafide belief that the he has not earned any income from the activity. The assessing officer did not accept his claim. Th .....

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decision of Honourable Supreme Court in the case of Reliance Petro products Pvt.Ltd. reported in 322 ITR 158 is clearly applicable. According to the decision, where there is no finding that any details were supplied by the assessee in its return of income found to be incorrect or erroneous or false there was no question of invoking the penalty under section 271(1)(c). Mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding .....

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ot rebutted the finding of the ld.CIT(A), therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby confirmed. Thus, grounds raised in this Revenue s appeal are rejected. 10. Now, coming to the assessee s cross-objection No.287/Ahd/2011 for AY 2005-06 (in ITA No.2696/Ahd/2011 for AY 2005-06). The assessee has raised the following grounds in its cross objection:- 1. That the ld.A.O. has not accepted the explanation of the appellant holding it not acceptable a .....

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