TMI Blog2016 (11) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee failed to produce the same in spite of several opportunities. In our considered view merely paying the amount through banking channel and submitting the bank statements in support of it, the assessee does not get discharged from his responsibility. However, at the same time we cannot ignore the fact that the assessee has shown its income from the business of civil construction which has been accepted and the assessee cannot generate the income without incurring the expenses on the material. Therefore, once the income has been accepted then its corresponding expenses should also be accepted by the lower authorities. As the material supplier are not responding in terms of the notice issued u/s 131 of the Act, the assessee should not be punished for the same. In view of above and in the interest of the justice & fair play, we are inclined to give one more opportunity to the assessee to justify the amount of creditors. Advance received against the sale of flat - Estimation of profit - Held that:- We find that assessee in earlier year has declared profit @ 2.35% which was accepted by the Department. In our considered view, the estimated profit calculated@ 20% is on much higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of directions issued by the ld. CIT under section 263 of the Act although no such direction was emanating therefrom. 3. The facts in brief as have been culled out on record from the order of lower authorities and other documents are that the assessee is an individual and engaged in the business of Civil Constructions. The original assessment was framed on dated 18- 9-2008 at a total income of ₹10,05,520/-. Thereafter the proceedings were initiated under section 263 of the Act for seeking the clarification of the balance sheet item shown as booking advance of flats and sundry creditors for an amount of ₹ 1,76,46,882/-. In response to the notice u/s 263 of the Act the assessee submitted that the aforesaid figure of ₹ 1,76,46,882/- consists of two transactions head i.e. advance for the booking of the flats of ₹ 98.01 lacs and Sundry creditors of ₹ 78,45,882/-. The assessee further pleaded that the above figures with necessary details were submitted at the time of assessment. However at the relevant time of proceedings u/s 263 of the Act no body appeared from the side of the assessee and accordingly the ld. CIT under section 263 of the Act hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) of paragraph (1) of his order during the course of assessment proceedings. The CIT accordingly set aside the assessment and directed the AO to pass a fresh assessment order after carrying out inter-alia certain verification. This part of the CIT s order is extracted above also. A dispassionate reading of the body of the Order u/s. 263 makes it very apparent that the CIT had never excised the issue of Sundry Creditors from his order cancelling the earlier assessment order. The AO examined the body of the order of the CIT and gathered from it the points upon which the assessment has been directed to be made once again. The show cause u/s. 263 was also for the sum declared to be representing the Sundry Creditors and in para 7 the CIT has given a finding that the assessee has not submitted the required details and papers as requisitioned on 01.11.2010 and hence has not substantiated the explanation furnished. The term explanation furnished includes the explanation offered by the assessee for the Sundry Creditors. In view of the above discussion it is held that the Additional Ground of Appeal of the assessee requires to be rejected as it is not covered by the case laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of only two creditors out of the 27 parties. In the case of the remaining parties the assessee merely gave their name followed by the words Kharagpur/Midnapur . The AO has not made any verification from the parties whose address were supplied and it is not possible to verify creditors from the bare name and city detail filed by the assessee. Further, the purpose of verifying sundry creditor is to examine not only their identity and genuineness of the transactions but also their capacity to supply the goods. These verification are not possible to be done by only a cursory examination of bank account. The assessee has not produced any bill, ledger account or other challan/receipts to prove the genuineness of the sundry creditors. It is well known that narration in the bank statement cannot be equated with proof of genuineness of creditors. The assessee has not filed the Income tax particulars of the parties also. The same situation was there at the time of order u/s. 263 of the Act. The history of non-compliance before the AO, the CIT-XVII and the lack of details filed in appellate proceedings along with the factum of non production of books of account, ledger, bills a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast issue raised by the assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by sustaining the addition of ₹ 4.60 lakh being 20% profit on the advance against flats. 12. The assessee has shown flat advance of ₹ 23.01 lakh but failed to produce the supportive evidence. Therefore, AO has treated the estimated profit @ 20% of ₹ 23.01 lakhs. 13. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas as assessee submitted that the addition on account of advance received against the sale of flat is not warranted on the basis of estimation @ 20%. It is much higher than the 8% specified on contractual work u/s. 44AD of the Act. On the other hand, Ld. DR vehemently supported the order of authorities below. 14. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we find that assessee in earlier year has declared profit @ 2.35% which was accepted by the Department. In our considered view, the estimated profit calculated@ 20% is on much higher side. After considering the facts in totality we restrict the estimated profit @ 5%. Hence, this ground of assessee s appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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