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2015 (10) TMI 1630 - ITAT AHMEDABAD

2015 (10) TMI 1630 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - income estimated at a higher percentage than what is disclosed by the assessee - assessee offered the income @ 10.75% on the receipt from extra work performed by the assessee in respect of bungalows sold by it but CIT(A) estimated the income @ 25% of the receipt which is upheld by the ITAT - Held that:- As decided in Commissioner of Income-tax Versus Whitelene Chemicals [2013 (8) TMI 144 - GUJARAT HIGH COURT] merely because acco .....

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t done with the profit motive and usually, it is done either on no profit or no loss basis or on negligible profit. The assessee has already disclosed reasonable profit which is 10.75%. The explanation of the assessee is plausible and reasonable. - Decided in favour of assessee. - ITA No. 1467/Ahd/2011 - Dated:- 19-6-2015 - SHRI G.D. AGRAWAL AND SHRI S. S. GODARA, JJ. For The Assessee : Shri Gaurav Nahta, AR For The Revenue : Shri Dinesh Singh, Sr. DR. ORDER PER G.D. AGRAWAL, VICE PRESIDENT: Thi .....

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art from the standard work and fittings in the bungalows, if some buyers require any specific work to be performed or any specific fittings to be provided, then the assessee charged separately which was over and above the sale price of the bungalows. That during the accounting year relevant to assessment year under consideration, the total collection from the additional work performed by the assessee was ₹ 2,78,96,582/-. That in the return filed, the assessee has disclosed additional incom .....

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assessee, the CIT(A) estimated the profit from the extra work done @ 25% of the receipt which was worked out to ₹ 78,56,911/-. After reducing ₹ 30,00,000/- already offered by the assessee, he sustained the addition at ₹ 48,56,911/-. The assessee accepted the order of the CIT(A) while the Revenue filed the appeal before the ITAT. The ITAT upheld the order of the CIT(A). That the Assessing Officer levied penalty u/s 271(1)(c) in respect of the addition of ₹ 48,56,911/-. It .....

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ls, (2014) 360 ITR 385 (Guj.). He also submitted that the extra work is done by the assessee only as a service provided to the customers who have purchased bungalow from the assessee. Therefore, while providing such services, there is no profit motive and many a time many builders provide such services at cost. The assessee has already disclosed the profit of 10.75% on the receipt from such extra services which was quite fair and reasonable. That merely because a higher percentage of income is e .....

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formed by the assessee in respect of bungalows sold by it. The CIT(A) estimated the income @ 25% of the receipt which is upheld by the ITAT. The Assessing Officer has levied the penalty in respect of addition ultimately sustained after the order of the ITAT. Now the question is whether the assessee can be said to be liable for penalty u/s 271(1)(c) merely because the income has been estimated at a higher percentage than what is disclosed by the assessee. 6. We find that this issue is considered .....

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rejection of book results on the basis of fair gross profit rate. Second limb of the penalty was that assessee had retained 3% of the sales tax with it. 3. With respect to first aspect of the penalty, the Tribunal observed that no penalty can be imposed merely because account books of assessee were rejected and that profit was estimated on the basis of fair gross profit ratio. With respect to retention of the portion of the sales tax, the Tribunal stated that no evidence was brought by the Reve .....

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rejection of book result and on the basis of fair gross profit ratio, the Tribunal found no additional material to sustain the penalty. With respect to so-called retention of the sales tax, the Tribunal found that the Revenue could not establish such charge. Explanation offered by the assessee could not be termed as not bona fide. We do not see any question of law arising. Tax Appeal is therefore, dismissed. 7. The ratio of above decision would be directly applicable to the facts of the assesse .....

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