CIT Vs Jeet Construction Company (Supreme Court of India)
The matter arose from proceedings relating to the block assessment years 1997-98 to 2003-04 involving a partnership firm engaged in the business of civil construction. A search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted on 23.12.2002 at the residential premises of the firm’s working partners and at the firm’s business premises. During the search, books of account and other materials relating to the firm were seized. Since the seized material required verification, the Assessing Officer (AO) issued a notice under Section 158BD on 16.09.2004, which was served on 20.09.2004. As the assessee could not produce books of account and vouchers, the AO rejected the books and estimated the income for the block period by applying an 8% rate, determining income at ₹51,44,968 without granting credit for income already returned by the assessee.
Read HC Judgment in this case: Section 158BD Additions Cannot Rest on Assumptions Without Search Evidence: Allahabad HC
The assessee challenged the assessment before the Commissioner of Income Tax (Appeals). By order dated 13.08.2007, the CIT(A) deleted the addition of ₹51,44,968 on the ground that Section 44AD was not applicable to the facts of the case. However, the addition relating to illegal commission payments aggregating to ₹5,88,500, along with levy of surcharge and credit of prepaid taxes, was confirmed.
