Sai Vishwa Promoters Builders And Developers Vs ITO (ITAT Pune)
Assessee, a partnership firm engaged in construction & slum rehabilitation projects, received ₹85,00,000 from sale of Transferable Development Rights (TDR) on 07.04.2008. It did not file return of income. Based on bank information showing total credits of ₹1,93,64,405, AO reopened the case u/s 148 & completed assessment ex parte u/s 144, treating ₹85 lakh as business income from TDR & the balance ₹1,08,64,405 as unexplained income u/s 68.
Before CIT(A), Assessee explained that it had incurred business expenditure of ₹88,10,760 including construction cost, payments to slum dwellers & additional consideration to landowners. CIT(A) partly accepted the claim, allowed ₹6,10,760 as construction expenses & ₹10,00,000 as payment to landowners (supported by bank proof), but disallowed ₹12,00,000 claimed as payment to slum dwellers (to be part of earlier year WIP) & ₹60,00,000 additional consideration due to lack of registered agreement & supporting evidence. He thus reduced the addition to ₹61,24,405.
Before Tribunal, Assessee argued that ₹22,44,971 out of bank credits was capital contribution & only ₹1,71,19,434 was business receipt, & net profit could not exceed 8% due to nature of work & disputes leading to non-maintenance of books. Tribunal noted that Assessee failed to produce any proof of capital contribution & accepted the full gross receipts of ₹1,93,64,405 determined by AO. However, keeping in mind that Assessee was genuinely engaged in construction & slum development, had audited accounts in earlier years & business nature supported lower margins, Tribunal held that the income determined by CIT(A) at ₹61,24,405 was on the higher side. In absence of books, it applied a reasonable net profit rate of 12% on gross receipts of ₹1,93,64,405, after allowing all usual business deductions such as partner salary, interest & depreciation, & directed AO to compute income accordingly.
