Anjani Estate, Bhavnagar V. The ITO, Ward-2(3), Bhavnagar

ITA 340/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9845 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 04-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: SHRIMS ADITI SHETH
• Keywords: Gross profit estimation; Business income; Principle of natural justice; Cost of acquisition; TDS
• Section: 143(3); 142(1); 40(a)(ia); 194C; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ANJANI ESTATE, R.S. NO. 18/1-2, SHIV SAGAR SOCIETY, TARASAMIYA ROAD, OPP. TOP 3 CINEMA, BHAVNAGAR PAN: AAUFA2238G (APPELLANT) VS INCOME TAX OFFICER, WARD-2(3), BHAVNAGAR AAYKAR BHAVAN, JASHONATHCHOWK, NAKULBAUG, BHAVNAGAR-364001 (RESPONDENT) REVENUE BY: SHRI L.P. JAIN, SR. D.R. ASSESSEE BY: SHRI/MS. ADITI SHETH, A.R. DATE OF HEARING : 09-07-2021 DATE OF PRONOUNCEMENT : 16-07-202 1 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2014-15, ARISES FRO M ORDER OF THE CIT(A)-6, AHMEDABAD DATED 04-01-2019, IN PROCEEDIN GS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF AO OF REJECTING THE BOOKS OF ACCOUNT U/S.145(2) OF THE AC T. ITA NO. 340/AHD/2019 ASSESSMENT YEAR 2014-15 I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 2 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN RS. 6,25,547.70/- ESTIMATING GP AT 18% AND INCOME OF APPELLANT AT RS.17,27,264/-. 3. IN ANY CASE, GP ESTIMATION IS ON THE HIGHER SIDE . 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.79,26,709/-U/S.40(A)(IA) R.W.S.194C OF THE ACT. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF PURCHASE OF BRICKS OF RS.36,09,000/- AS BOGUS. 6. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACTS AND THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHOR ITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUA SHED. 7. THE LEARNED C1T(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S.234A/B/C OF THE ACT 8. THE LEARNED C1T( A) HAS ERRED IN LAW AND ON FACT S OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIALING PENALTY U/S.271(L)(E) OF THE A CT. 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DE CLARING LOSS OF RS. 1,74,25,492/- WAS FILED ON 30 TH SEP, 2014. THE CASE WAS SUBJECT TO SCRUTINY ASSESSMENT AND NOTICE U/S. 143(2) OF THE ACT WAS IS SUED ON 24 TH SEP, 2015. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFI CER OBSERVED THAT ASSESSEE HAS SHOWN TOTAL LOSS OF RS. 1,74,25,492/- ON SALES OF RESIDENTIAL UNITS OF RS. 1,38,36,743/- AND SALES OF OPEN PLOT O F LAND OF RS. 1,34,58,381/-. TO EXAMINE AND VERIFY THE CLAIM OF HUGE LOSS SHOWN BY THE ASSESSEE, THE ASSESSING OFFICER HAS ISSUED LETTER DATED 13 TH DECEMBER, 2016 ASKING THE FOLLOWING DETAIL:- 'SUB:- SHOW CAUSE NOTICE - ASSESSMENT PROCEEDINGS F OR A. Y. 2014-15 -REGARDING. PLEASE REFER THIS OFFICE LETTER NO. ITO-WD.2(3)/142 (1)/70/AE/2016-17 DATED 15.11.2016 AND THEREAFTER NOTICE U/S. 142(1) DATED 30.11.2016. 2. VIDE ABOVE REFERRED NOTICES, YOU ARE REQUESTED T O FURNISH CERTAIN DETAILS BEFORE 22.11.2016 AND 05.12.2016. BUT, IT IS REGRETTED TO NOTICE THAT YOU HAVE NOT COMPLY THE ABOVE NOTICES TILL DATE. VIDE ABOVE REFERRED NOTICES, YOU ARE REQUESTED TO F URNISH DETAILS LIKE; 1) WORKING OF OPENING AND CLOSING STOCK 2) METHOD OF VALUATION OF CLOSING STOCK FOR OPEN LAND AND WORK IN PROGRESS 3) EXPLANATION FOR COST OF SALE OF RS. 3,40, 78,002/- AGAINST SALE VALUE OF RS. 1,38,36,743/- 4) EXPLANATION FOR SALES MADE AT LOWER PRICE THAN THE COST OF SALES I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 3 5) SALES LEDGER ALONG WITH NAME AND ADDRESS OF CUSTOMERS, COPY OF REGISTER SALE DEED, SIZE OF PLOT AND CONSTRUCTION THEREON. 6) COPY OF BUILDING PLAN APPROVED BY CONCERNED AU THORITY AND JUSTIFIES INCURRENCE OF EXPENSES ON CONSTRUCTION WITH MEASUREMENT. 7) DETAILS OF LAND DEVELOPMENT COST ALONG WI TH TOTAL AREA OF LAND WHICH IS DEVELOPED DURING THE YEAR. AS YOU HAVE NOT AVAIL OPPORTUNITY GIVEN TO YOU, IT IS CONSTRAIN BUT TO FINALIZED YOUR ASSESSMENT ON THE BASIS OF MATERIAL AND DATA AVAILA BLE ON RECORD. 3. ON VERIFICATION OF LAND DEVELOPMENT EXPEN SES, IT IS OBSERVED THAT YOU HAVE DEBITED FOLLOWING AMOUNT TO VARIOUS PARTIES. DATE PARTY NAME AMOUNT 26.08.2013 JANUI EARTH MOVERS (ASHOKBHAI) 2,24,500 04.10.2013 RAMESHBHAI B. BAMBHANIYA (LABOUR) 10,00,000 05.10.2013 BHUPATBHAI POPATBHAI KANTARIYA (LABOU R- KADIO) 10,00,000 09.10.2013 MANISHBHAI MANSUKHBHAI SOLANKI (LABOUR ) 8,90,000 31.10.2013 RAMESHBHAI GIGABHAI JADAV (LABOUR) 8,00,000 01.112013 DHANJIBHAI MANSUKHBHAI MAKWANA (LABOUR) 8,00,000 12.11.2013 MARUTI EARTH MOVERS 3,54,450 12.11.2013 MARUTI EARTH MOVERS 6,45,550 30.11.2013 CHAMUNDA MATERIALS SUPPLIERS 12,99,790 07.02.2014 CHAMUNDA MATERIALS SUPPLIERS 8,09,400 2.02.2014 JANVI EARTH MCVERS (ASHOKBHAL) 1,33,100 TOTAL 79,56,790 EVEN THOUGH REPEATED REQUEST, YOU ARE NOT FURNISHED THE LEDGER COPY OF ABOVE PARTIES, BILLS AND VOUCHERS, THEIR ADDRESS, CREDIBILITY OF A BOVE PARTIES AND DETAILS OF INCOME-TAX RETURNS FILED IF ANY BY THEM. THEREFORE, THE DETAILS OF ABO VE PARTIES ARE COMPLETELY UNVERIFIABLE. 4. FURTHER, BILLS, TRANSPORTATION RECEIPT AND LEDGE R COPY OF DHARMIK BUILDING MATERIALS FOR PURCHASE OF BRICKS OF RS. 36,09,000/- WAS NOT FAMIS HED TILL DATE. IT IS SURPRISE TO NOTICE THAT ON SINGLE DAY I.E. 25.05.2013, YOU HAVE SHOWN PURCHASE OF 8,02,000 BRICKS. 5. ON VERIFICATION OF DETAILS FURNISHED BY YOU, IT IS OBSERVED THAT YOU HAVE DONE CONSTRUCTION WORK AND BILL RAISED FROM FOLLOWING PARTIES, BUT NOT SHO WN AS INCOME AND KEPT OUTSTANDING IN BALANCE- SHEET AS ADVANCES- BILLS RAISED A/C. (ARUNABEN A. JOSHI - P.NO.5) RS. 14,35,500 I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 4 BILLS RAISED A/C. (KANANBEN D. BHOJAK - P.NO. 1 1) RS. 16,55,171 BILLS RAISED A/C. (NILESHBHAI M. RATHOD - P.NO. 14) RS. 13,96,239 BILLS RAISED A/C. (SURESHBHAI R. VAGHASIYA -P. NO. 75) RS. 14,36,991 AS YOU HAVE COMPLETED THE WORK AS PAYMENT RECEIVED AGAINST THE BILL RAISED, YOU SHOULD BE SHOWN ABOVE RECEIPTS AS INCOME. BUT YOU HAVE NOT DOING SO AND KEPT OUT-STANDING AS ADVANCES. 6. YOU HAVE NOT FURNISHED COPIES OF SALE DEED OF RE SIDENTIAL UNITS AS WELL AS OPEN PLOTS OF LAND SOLD BY YOU DURING THE YEAR. FURTHER, YOU HAVE NOT FURNI SHED DETAILS REGARDING NUMBER OF UNIT COMPLETED AND SOLD AND NUMBER OF UNIT UNDER WORK IN PROGRESS. SAME WAY, YOU HAVE NOT FURNISHED DETAILS OF TOTAL PLOTS, PLOT SOLD TILL DATE AND NUM BER OF PLOTS KEPT IN STOCK IN TRADE. FURTHER, YOU HAVE NOT PROVIDED WORKING AND METHOD OF OPENING STO CK AND CLOSING STOCK. IT IS DIFFICULT TO UNDERSTAND THAT HOW YOU HAVE SHOWN COST OF SALES (B UILT-UP SOLD DURING THE YEAR) OF RS. 3,40,78,002/- AS AGAINST YOU HAVE SHOWN TOTAL SALES OF RS. 1,38,36,743/-. THAT MEANS, YOU HAVE SOLD YOUR BUILT UP PROPERTY BY MAKING LOSS OF RS. 2 ,02,41,259/-. THIS IS IMPOSSIBLE IN CONSTRUCTION LINE OF BUSINESS. 7. IT IS OBSERVED THAT YOU HAVE SHOWN SALES OF OPEN PLOT OF 195.34 SQ. FT. WITH CONSTRUCTION FOR RS. 25,00,000/-. IF CONSIDERING TOTAL SALES OF 15 UNIT DURING THE YEAR, THE TOTAL SALES PROJECTED TO RS. 3,75,00,000/- AS AGAINST YOU HAVE SHOWN SALES OF RS . 1,38,36,743/-. 8. YOU HAVE SHOWN OPENING WORK IN PROGRESS OF RS. 2 ,48,36,785/-, IF THE SAME IS DEDUCTED FROM TOTAL OPENING STOCK OF RS. 3,04,12,278/-, THE BALAN CE OF RS. 55,75,493/- IS TO BE CONSIDERED AS OPENING STOCK OF OPEN PLOT. AGAIN THIS, YOU HAVE SH OWN LAND DEVELOPMENT OF RS. 1,24,11,786/-. THAT MEANS, YOU HAVE SHOWN 2.22 TIMES LAND DEVELOPM ENT COST THAN THE ACTUAL LAND PURCHASE COST. THIS IS INCONVINCIBLE AT ALL 9. FROM THE ABOVE ALL DETAILS, IT IS CRYSTAL CLEA R THAT YOUR BOOKS OF ACCOUNTS ARE FABRICATED ONE AND YOU ARE NOT IN A POSITION TO PRODUCED DETAILS AND CLARIFICATION ON ABOVE POINTS E VEN THOUGH, REPEALED OPPORTUNITIES PROVIDED TO YOU. 10. IN THE ABOVE CIRCUMSTANCES, I AM CONSTRAIN BUT NO A LTERNATIVE TO FINALIZED YOUR ASSESSMENT BY IGNORING LOSS OF RS. 1,74,25,492/- CLAIM BY YOU IN RETURN OF INCOME AND TOTAL INCOME ASSESSED AT RS. 20,60,000/- BY CONSIDERING PROFIT OF RS. 1 LAKH PER UNIT FOR 15 UNITS (RS. 15,00,000) AND PROFIT OF RS. 100/-PER SQ. MT. FOR 5600 SQ. MT. (RS. 5,60, 000) SOLD DURING THE YEAR. 11. GIVE VAT AUDIT REPORT AND ANNUAL RETURN OF VAT FILED BY YOU FOR THE YEAR UNDER CONSIDERATION. ALSO, GIVE RECONCILIATION STATEMENT, IF THERE IS ANY MISMATCH BETWEEN SALES/PURCHASE S AS PER BOOKS OF ACCOUNT AND VAT AU DIT REPORT/VAT ANNUAL RETURN.' YOU ARE HEREBY GIVEN LAST OPPORTUNITY TO CLARIFY Y OUR CASE. YOU ARE REQUESTED TO ATTEND OFFICE ON OR BEFORE 19/ 12/2012 WITH NECESSA RY DETAILS AND EXPLANATION ON THE EACH POINT AS MENTIONED ABOVE. IF YOU FAILS TO ATTEND THE OFFICE IN STIPULATED TIME, IT IS PRESUMED THAT YOU HAVE NOTHING TO SAY IN THE MATTER AND YOUR CASE WILL BE FINALIZED AFTER MAKING DISALLOWANCE / ADDITIONS AS DISCUSSED IN. POINT NO. 10 ABOVE.' HOWEVER THE ASSESSEE HAS NOT MADE ANY COMPLIANCE BE FORE THE ASSESSING OFFICER. EVEN THE ASSESSING OFFICER HAS GIVEN FURT HER TIME VIDE NOTICES I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 5 DATED 15 TH DECEMBER, 2016, 30 TH DECEMBER, 2016 AND 13 TH DECEMBER, 2016 AND TILL THE DATE OF ASSESSMENT ORDER NO DETAIL HAS BEEN FURNISHED. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER HAS MADE DETAI LED ANALYSIS OF FACTS EMERGED FROM THE MATERIAL AVAILABLE ON RECORD AS EL ABORATED AT PAGE NO. 5 TO 10 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS ALSO FOUND DISCREPANCY IN THE DETAIL OF CLOSING STOCK OF LAND SHOWN IN THE AUDIT REPORT AND IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO NOTICED THAT ASSESSEE HAS FAILED TO SUBSTANTIA TE THAT HOW THE COST OF SALE OF RS. 3,40,78,002/- WAS SHOWN AGAINST THE SALE VAL UE OF RS. 1,38,36,743/-. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT ASSESS EE HAS SHOWN PURCHASE OF BRICKS OF RS. 36,09,000/- AT THE END OF THE FINA NCIAL YEAR ON 25 TH MARCH, 2013 AND TOTAL QUANTITY OF BRICKS WAS SHOWN AS PURC HASE RS. 8,02,000/-. THE ASSESSEE HAS NOT FURNISHED ANY DETAIL OF THESE TRAN SACTIONS BEFORE THE ASSESSING OFFICER IN SPITE OF GIVING A NUMBER OF O PPORTUNITIES. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER HAS ANALYZED G ROSS PROFIT SHOWN IN THE PRECEDING YEAR AS UNDER:- ASSTT. YEAR TURNOVER IN RS. GROSS PROFIT IN RS. GROSS PROFIT IN % 2014-15 2,97,95,124 (1,37,89,134) -46.28% 2013-14 77,58,677 16,14,751 20.81% IN THE LIGHT OF THE ABOVE FACTS AND AFTER CONSIDERI NG THE ANALYSIS OF THE TRANSACTION ELABORATED AT PAGE 6 & 7 OF THE ASSESSM ENT ORDER AND ABSENCE OF ANY CLARIFICATION AND DETAIL FROM THE SIDE OF THE A SSESSEE, THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT U/S. 145( 2) OF THE ACT AND ESTIMATED THE GROSS PROFIT @ 25% ON TOTAL SALE TO T HE AMOUNT OF RS. 74,48,781/- AFTER TAKING INTO ACCOUNT THE GROSS PRO FIT @ 25% AS STATED ABOVE. I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 6 THE ASSESSING OFFICER HAS WORKED OUT NET PROFIT OF THE ASSESSEE AT RS. 38,12,423/- AS AGAINST LOSS SHOWN BY THE ASSESSEE O F RS. 1,37,89,134/-. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFI CER HAS ALSO FOUND THAT ASSESSEE HAS NOT FULLY DEDUCTED THE TAX U/S. 194C O F THE ACT IN RESPECT OF LAND DEVELOPMENT OF RS. 1,24,11,786/- AND LABOUR CHARGES OF RS. 37,73,423/-. THE ASSESSEE HAS DEDUCTED TDS ON THE AMOUNT OF RS. 82,22,500/- ONLY AND NO TDS WAS DEDUCTED ON THE DIFFERENCE AMOUNT OF RS. 79,26,709/- AS REQUIRED U/S. 40(A)(IA) OF THE ACT. HOWEVER, THE A SSESSING OFFICER HAS NOT MADE ANY SEPARATE ADDITION AFTER TAKING INTO CONSID ERATION THAT THE ADDITION OF NET PROFIT OF RS. 38,12,423/- WOULD COVER THIS D EFAULT. THE ASSESSING OFFICER HAS ALSO NOTICED THAT ASSESSEE HAS SHOWN PU RCHASE OF BRICKS OF RS. 36,09,000/- ON MARCH, 2013 BY A SINGLE BILL. IN SU PPORT OF THIS CLAIM THE ASSESSEE HAS NOT FURNISHED COPY OF VAT RETURN TO VE RIFY URD PURCHASE SHOWN BY IT. HOWEVER, THE ASSESSING OFFICER HAS NO T MADE ANY SEPARATE ADDITION, IN VIEW OF THE ADDITION OF RS. 38,12,423/ - MADE IN THE NET PROFIT OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE TH E LD. CIT(A). THE LD. CIT(A) HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RESTRICTING T HE ADDITION TO GROSS PROFIT @ 18% AS AGAINST ESTIMATION OF GROSS PROFIT @ 25% M ADE BY THE ASSESSING OFFICER AFTER TAKING INTO ACCOUNT THE HIGH TURNOVER SHOWN BY THE ASSESSEE COMPARED TO THE PREVIOUS YEAR. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT LD. CIT(A) HAS RESTRICTED THE AD DITION OF GROSS PROFIT AT I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 7 18% WHICH IS AT THE HIGHER LEVEL WITHOUT ANY VALID REASON. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THA T IN SPITE OF GIVING A NUMBER OF OPPORTUNITIES, THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE GENUINENESS OF HUGE LOSSES BEFORE THE ASSESSING OFF ICER AND LD. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS, HE SUPP ORTED THE ORDER OF LD. CIT(A). 6. HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAD SHOWN TOTAL LOSS OF RS. 1,74,25,492/- ON SALES OF RESIDENTIAL U NIT OF RS. 1,38,36,743/- AND SALES OF OPEN PLOT OF LAND OF RS. 1,34,58,381/-. T HE ASSESSING OFFICER HAS ALSO NOTICED THAT DATA SHOWN IN THE AUDIT REPORT WA S NOT CO-RELATED WITH THE DATA SHOWN IN THE RETURN OF INCOME OF THE ASSESSEE. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSING OFFI CER HAS ISSUED A DETAILED NOTICES DATED 13 TH DECEMBER, 2016 ASKING THE ASSESSEE TO FURNISH THE DETAIL/EVIDENCES TO SUBSTANTIATE THE CORRECTNESS OF THE CLAIM MADE IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT , THE ASSESSING OFFICER HAS GIVEN A NUMBER OF OPPORTUNITIES TO THE ASSESSEE TO FURNISH SUPPORTING DETAIL TO JUSTIFY THE HUGE LOSS OF RS. 14,25,492/- SHOWN ONLY ON THE BASIS OF SALE OF OPEN PLOT OF LAND AND SALE OF RESIDENTIAL U NITS AS STATED ABOVE. HOWEVER, THE ASSESSEE HAS NOT MADE ANY COMPLIANCE B EFORE THE ASSESSING OFFICER. CONSEQUENTLY, AFTER REJECTING THE BOOKS O F ACCOUNT U/S. 145(2) OF THE ACT, THE ASSESSING OFFICER HAS DETERMINED GROSS PROFIT OF THE ASSESSEE @ 25% OF TOTAL SALE AFTER COMPARING THE GROSS PROFIT SHOWN IN THE PRECEDING ASSESSMENT YEAR. ACCORDINGLY, THE ASSESSING OFFICE R HAS COMPUTED NET I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 8 PROFIT AT RS. 38,12,423/- AFTER TAKING INTO ACCOUNT HE GROSS PROFIT DETERMINED AT RS. 74,48,781/-. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FILE TH E DETAIL TO JUSTIFY THE BOOK RESULT SHOWN BY THE ASSESSEE. HOWEVER, THE ASSESSE E HAS FAILED TO MAKE ANY COMPLIANCE TO THE QUERY AND CLARIFICATION SOUGHT BY THE ASSESSING OFFICER. EXAMPLE OF SUCH QUERIES RAISED BY THE ASSESSING OFF ICER ELABORATED IN PARA 6 OF THE ASSESSMENT ORDER IS REPRODUCED AS UNDER:- 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FO LLOWING POINTS ARE EMERGED WHICH ARE ALSO PRIMARILY REQUIRED FOR JUSTIFICATION OF HUGE LOSS S HOWN BY THE ASSESSEE. METHOD OF OPENING STOCK AND CLOSING STOCK IS NOT FU RNISHED. WORKING OF OPENING STOCK AND CLOS ING STOCK IS NOT FURNISHED. THE ASSESSEE HAS SHOWN CLOSING STOCK OF LAND AT RS. 85,18,376/- CONSIDERING RS. 1104.95 PER SQ.MT. FOR 7709.32 SQ.M T. HOWEVER, THE SAME IS NOT CO-RELATED WITH OTHER DATA SHOWN IN THE AUDIT REPORT. AS PER FOLLOW ING DATA OF AUDIT REPORT, THE VALUE OF CLOSING STOCK OF OPEN LAND COMES TO RS. 1,02,95,797/- INSTE AD OF RS. 85.18.376/- SHOWN BY THE ASSESSEE. VALUE OF OPENING STOCK IN RS. 3,04,12,278/- LESS: OPENING WORK IN PROGRESS IN RS. 2,48,36,78 5/- NET FIGURE IS TO BE CONSIDERED AS VALUE OF OPENING STOCK OF LAND IN RS.55,75,493 /- ADD: LAND DEVELOPMENT EXPENSES IN RS. 1,24,59,039/ - TOTAL LAND COST IN RS. 1,80,34,532/- -TOTAL LAND IN SQ.MT. RS. 13503.94 COST OF LAND PER SQ.MT. IN 1335.5 0/- VALUE OF CLOSING STOCK WORKED OUT FOR OPEN LAND (7709.32 SQ.MT. X RS. 1335.50) IN RS.- 1,02,9 5,797/- THE ASSESSEE HAS SHOWN COST OF SALES OF RS. 3,40,78 ,002/- AS AGAINST SALES SHOWN OF RS. 1,38,36,743/- ONLY. IN CONSTRUCTION LINE, IT IS NOT BELIEVABLE THAT THE BUILDER SOLD ITS STOCK BY RECEIVING SALES PRICE LESS THAN THE COST PRICE AND SHOWN TRADING LOSS OF RS. 2,02,41,259/~. COPY OF REGISTERED SALE DEED NOT PROVIDED EVEN AFTE R REPEATED REQUEST. COPY OF BUILDING PLAN APPROVED BY CONCERNED AUTHORI TY WAS NOT PROVIDED DETAILS OF LAND DEVELOPMENT COST ALONG WITH TOTAL A REA OF LAND DEVELOPED DURING THE YEAR. COPY OF LEDGERS ALONG WITH NECESSARY BILLS AND VOUC HERS OF DIFFERENT PARTIES FOR LAND DEVELOPMENT EXPENSES IS NOT PROVIDED. THE ASSESSEE HAS SHOWN PURCHASE OF BRICKS OF RS. 3 6,09,000/- ON 25.05.2013 BY SINGLE BILL. THE TOTAL QUANTITY IS 8,02,000 BRICKS. IF ONE TRUCK TRANSPORT 5000 BRICKS, THEN ABOUT 60 TRUCKS REQUIRE TO TRANSPORT 8,02,000 BRICKS ON SINGLE DAY. NO DETAILS OF TRANSPORTATION WERE PROVIDED. IN NUMBER OF CASES, THE BILLS RAISED BY THE ASSESSE E ON ACCOUNT OF CONSTRUCTION WORK DONE FOR DIFFERENT PARTIES. AH THE PARTIES HAVE PAID THE AMOUNT AS AND WHEN BILLS RAISED. EVEN THOUGH, THE ASSESSEE HAS NOT CREDITED THAT AMOUNT (TOTAL OF RS. 59,23,901 /-) IN PROFIT AND LOSS ACCOUNT BUT KEPT OUTSTANDING IN BALANCE-SHEET AS ADVANCE RECEIV ED. DETAILS REGARDING NUMBER OF UNIT COMPLETED NUMBER O F UNIT UNDER CONSTRUCTION AND NUMBER OF UNITS SOLD WAS NOT PROVIDED. SAME WAY, DE TAILS OF TOTAL PLOTS (OPEN LAND), PLOTS SOLD OUT OF THEM AND NUMBER PLOTS KEPT IN STOCK WAS NOT PROV IDED. I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 9 THE ASSESSEE HAS SHOWN 2.22 TIMES LAND DEVELOPMENT COST THAN THE ACTUAL LAND PURCHASE COST. IT MEANS, THE ASSESSEE HAS INCREASED COST OF LAND BY SHOWING FABRICATED LAND DEVELOPMENT EXPENSES. ON VERIFICATION OF AUDIT REPORT, IT IS FURTHER REV EALED THAT THE ASSESSEE HAS SOLD ONE PLOT OF LAND OF 195.34 SQ.MT, WITH CONSTRUCTION BY SALE CONSIDERATION OF RS. 25,00,000/-. IF CONSIDERING TOTAL SALES OF 15 UNIT DURING THE YEAR WITH LAND COST AND CONSTRUCTION THEREON, THE TOTAL PROJECTED SALES COMES TO RS. 3,75,00,000/- AS AGAIN ST THE ASSESSEE HAS SHOWN SALES OF RS. 1,38,36,743/- ONLY. IT IS DEMONSTRATED FROM THE AFORESAID ANALYSIS OF T HE ASSESSMENT PROCEEDINGS THAT ASSESSEE HAS FAILED TO SUBSTANTIATE THE DISCRE PANCY NOTED BY THE ASSESSING OFFICER. THE ASSESSEE HAS NOT FURNISHED ANY DETAIL TO CLARIFY AND EXPLAIN THE ABNORMALITY OBSERVED BY THE ASSESSING O FFICER IN RESPECT OF THE VARIOUS TRANSACTIONS INCLUDING THE SALE OF OPEN PLO T OF LAND SHOWING LOSSES DURING THE YEAR UNDER CONSIDERATION AS ELABORATED A BOVE. IT IS ALSO NOTICED THAT EVEN DURING THE COURSE OF APPELLATE PROCEEDING S BEFORE THE LD. CIT(A) THE ASSESSEE HAS AGAIN FAILED TO FURNISH ANY ADDITI ONAL EVIDENCES AND RELEVANT DETAIL TO CLARIFY THE VARIOUS POINTS AND TO CONTROV ERT THE ADDITIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE ASSESSEE HAS NE ITHER FURNISHED THE COMPLETE DETAILS WHICH WAS REMAINED TO BE FILED BEF ORE THE ASSESSING OFFICER NOR SPECIFIED RELEVANT REASONS FOR NOT MAKI NG COMPLIANCE. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE CONS IDER THAT THERE WAS NO OTHER ALTERNATIVE BEFORE THE LOWER AUTHORITIES THAN TO APPLYING THE RATE OF ESTIMATED GROSS PROFIT ON THE BASIS OF PRECEDING AS SESSMENT, HOWEVER CONSIDERING THE TURNOVER OF RS. 2,97,95,124/- COMPA RED TO THE TURNOVER OF RS. 77,58,677/- SHOWN IN THE PRECEDING YEAR WE CONS IDER THAT IT WOULD BE REASONABLE TO ESTIMATE THE GROSS PROFIT @ 15% AS AG AINST GROSS PROFIT ESTIMATED @ 18% BY THE LD. CIT(A). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE GROSS PROFIT @ 15% AND MAKE THE ADDITION OF NET PROFIT. IN VIEW OF THE DISCREPANCIES AS CITED ABOV E IN THIS ORDER AND FAILURE OF I.T.A NO. 340/AHD/2019 A.Y. 2014-15 PAGE NO ANJANI ESTATE VS. ITO 10 THE ASSESSEE FOR NOT FURNISHING THE RELEVANT DETAIL S TO ESTABLISH THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNT, THE GR OUND NO. 1 OF THE ASSESSEE AGAINST REJECTING THE BOOKS OF ACCOUNT U/S . 145(2) IS DISMISSED. IN VIEW OF THE COMMENTS REPORTED ABOVE IN THIS ORDER, GROUND NO. 2 & 3 OF THE ASSESSEE OF ESTIMATING THE GROSS PROFIT IS PARTLY A LLOWED. GROUND NOS. 4 & 5 OF THE ASSESSEE ARE DISMISSED SINCE NO SEPARATE ADD ITION HAS BEEN MADE BY THE LOWER AUTHORITIES ON THESE ISSUES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16-07-2021 SD/- SD/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD : DATED 16 /07/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,