M/s. Shanti Constructions Vs ITO (ITAT Agra)
AO the assessee partnership firm , has been engaged in the business of real estate and construction of buildings for past several years, assessed total income of Rs. 3,94,62,580 u/s 143(3) of the Income Tax Act, 1961 (“the Act” in short) as against returned income shown by the assessee of Rs. 1,12,120. The AO has observed that the assessee did not produce bills/vouchers before him for ascertaining the accuracy and correctness of the books of account; that it did not furnish evidence regarding closing stock; that it could only furnish the photocopy of confirmations of advances received from customers and that the assessee is following project completion method and not percentage completion method. The AO also observed that the project completion method has no existence at all since 01.04.2003 and laid emphasis on revised AS-7 introduced by the ICAI (Institute of Chartered Accountants of India) in 2002 and accordingly on that basis the accounts of construction business should be prepared from AY 2002-03 onwards. Thus, the AO rejected the books of account maintained and determined the business profit of the assessee at Rs.3,24,93,594 during the assessment year by sales of assuming constructed area of 4,500 sq. yards by way of adopting value for the purpose of stamp duty and further made addition of Rs.15,56,866 with respect to closing work in progress on estimate basis of 15% and by considering advances of Rs.50,10,000 from customers as bogus advances.
