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TMI Blog2016 (6) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure under section 69 C of the Income Tax Act, 1961 . The said addition is unwarranted and not sustainable in the eyes of law as the profit from the execution of works contract @ 8% had been returned by the appellant under section 44 AD of the Income Tax Act, 1961. 5. Briefly, the facts are that the assessee is a civil contractor and had declared its profits under section 44AD of the Income Tax Act, 1961 (in short 'the Act') amounting to Rs. 3,02,050/- against the gross receipts of Rs. 37,75,444/-. The Assessing Officer on the basis of these figures inferred that the assessee has incurred expenses to the tune of Rs. 34,73,394/- (Rs.37,75,444 - Rs. 3,02,050/-). However, he observed that it is contrary to the expenses shown in the cash flow statement of Rs. 18,49,264/-. The explanation of the assessee was that an amount of Rs. 16,24,130/- was paid from the bank account on various dates which was not reflected in the cash flow statement. Since no documentary evidence was filed to prove that these payments were towards contract work, the Assessing Officer made an addition of Rs. 32,24,130/- (Rs.34,73,394 - Rs. 2,49,264/-). 6. Before the CIT (Appeals), the assessee st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial available on record. The issue to be decided by us is whether accepting the case of the assessee as taxable under the presumptive taxation as provided under section 44AD of the Act, the Assessing Officer can make addition under section 69C of the Act making the cash flow statement provided by the assessee the basis of his addition. 10. Section 44AD of the Act reads as under : "44AD (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession". (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :" 10. The provisions of the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee who opts to claim the income being less than 8% of the gross receipts. 14. Now, applying the above to the facts of the present case, we observe that the Assessing Officer, for making the impugned addition has started with the presumption that an amount to the extent of 92% of the gross receipts is the expenditure incurred by the assessee, which is a totally wrong premise. If the income component is estimated, how the expenditure component on the basis of said income can be considered to have been 'actually' incurred. We must also observe here that this is not a case, where the Assessing Officer has doubted the gross receipts or gross turnover of the assessee. In fact, accepting the same, estimating income @ 8% on the same at presumptive rate, he preferred to make further addition under section 69C of the Act. The argument of the learned D.R. that the turnover of the assessee has been doubted by the Assessing Officer is totally ill-found, in view of the same. 15. Further, it is a fact on record that the assessee had not maintained books of account that is why he opted for 8% income as per section 44AD of the Act. The section also does not put obligation on the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of those businesses where the incomes are almost of static quantum of all the businesses, the Assessing Officer could have made the addition under section 69C of the Act, once he had carved out the case out of the glitches of the provisions of section 44AD of the Act. No such exercise has been done by the Assessing Officer in this case. Before parting we would like to deal with the case law relied on by the learned D.R. 18. The only case law relied on by the learned D.R. is that of Ahmedabad Bench of the Tribunal in the case of Shivani Builders (supra). On perusal of the said order, we observe that the basis of finding given in this order is mainly the fact that the assessee had failed to record its turnover correctly in its books. However, no such finding is there in the present case. As already held by us in the preceding paragraph, the Assessing Officer himself while computing the income of the assessee has made the business income to be taxable @ 8% of the gross receipts as provided under section 44AD of the Act. The ground No.1 is allowed in favour of the assessee. 19. The ground No.2 raised by the assessee reads as under : " 2. That in the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee cannot be said to have discharged the onus of proving he genuineness of the transaction as well as the creditworthiness of Shri Wadhwa." 25. On perusal of the same, we do not find any infirmity since it is a fact on record that inspite of stating the donor to be a close relation, the assessee did not file any evidence other than confirmation in order to corroborate the assertion contained therein. The ground raised by the assessee is dismissed. 26. The appeal of the assessee is partly allowed. ITA No.1162/Chd/2013 : 27. The ground No.1 raised by the assessee is as under : "1. That in the facts and circumstances of the case the Ld Commissioner of Income Tax ( Appeals) is not justified in upholding the adding back of the sum of Rs. 17,04,706/- as an unexplained expenditure under section 69 C of the Income Tax Act, 1961 . The said addition is unwarranted and not sustainable in the eyes of law as the profit from the execution of works contract @8% had been returned by the appellant under section 44 AD of the Income Tax Act, 1961." 28. It is relevant to observe here that the facts in ground No.1 of this appeal are similar to the facts in ground No.1 in ITA No.1161/C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record as additional evidence before the CIT (Appeals). The CIT (Appeals) after considering the submissions of the assessee observed that no document in support of his contention, be it cost of acquisition or improvement or construction of building or sale consideration has been produced. Further, the CIT (Appeals) dismissed the ground of assessee holding as under: "Copy of statement of Prithvi Vikram Sen filed on page 24 of PB is not even dated and is without any address, proof of identity or supported by any other documents. Penalty letter placed at page 50 of the PB carries signature of the Member Secretary, SADA, New Shimla which is dated 22.12.2005, while the office letter bearing the file no.2808 dated 22.12.08. The compounding fee receipt is dated 9.8.2008 (page 51 of PB) and is for Rs. 1,52,303/-. However the amount paid to Municipal Corp. Shimla for compounding charges from PNB New Shimla is not found reflected in the bank narration filed on pages 29-30 of the PB. Infact what is narrated is dated 11.8.2008 for Rs. 77,856/-as paid. Assessee's attempt at corroboration to prove his case is found wanting. In such a backdrop, I am afraid the natural conclusion is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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