Tribunal decisions for undisclosed income: one upheld, one deleted.

The tribunal upheld the addition of Rs.91,26,000/- as undisclosed income for A.Y. 2009-2010, dismissing the appeal. However, for A.Y. 2010-2011, the tribunal allowed the appeal and deleted the addition of Rs.22,78,665/- due to alleged low profitability.

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Issues Involved:
1. Addition of Rs. 91,26,000/- on account of unaccounted cash payment for A.Y. 2009-2010.
2. Addition of Rs. 22,78,665/- due to alleged low profitability for A.Y. 2010-2011.

Issue 1: Addition of Rs. 91,26,000/- on account of unaccounted cash payment for A.Y. 2009-2010

The assessee filed its original return of income for A.Y. 2009-2010 on 29.09.2009 declaring income of Rs.3,13,64,528/-. Following a search in the residential premises of the Director and survey proceedings at the office premises, proceedings under section 153A were initiated. During reassessment, the A.O. added Rs.91,26,000/- as unaccounted cash payment based on a seized cash receipt dated 27.11.2008. The receipt was signed by Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav, confirming the receipt of Rs.91,26,000/- in cash. The A.O. concluded that the statements denying the cash payment by the involved parties were unreliable, treating the amount as undisclosed income.

During the appeal, the assessee argued that the cash receipt was an advance receipt prepared to arrange funds, but no cash was actually paid. The CIT(A) rejected this explanation, stating that it was against human probabilities for a proper receipt to be given without actual payment. The CIT(A) upheld the addition, noting that the explanation lacked evidentiary support and the receipt indicated a genuine transaction.

In the tribunal, the assessee reiterated its arguments, emphasizing that the disputes over the land were unresolved, making cash payments improbable. The D.R. countered, asserting that the receipt was clear evidence of payment. The tribunal, after reviewing the evidence and considering the business practices in real estate, concluded that the assessee likely paid the amount out of unaccounted sources. The tribunal upheld the CIT(A)'s order, confirming the addition of Rs.91,26,000/- as undisclosed income.

Issue 2: Addition of Rs. 22,78,665/- due to alleged low profitability for A.Y. 2010-2011

In the course of a search, the assessee admitted Rs.70,00,000/- as undisclosed income, apart from Rs.1,45,74,785/- on which no advance tax was paid. The A.O. calculated the total amount to be disclosed at Rs.2,15,74,785/-. The assessee declared a loss in certain projects and filed a return showing an income of Rs.1,92,96,120/-, resulting in a shortfall of Rs.22,78,665/-, which the A.O. added to the returned income.

During the appeal, the assessee argued that the shortfall arose due to statutory deductions in house property income. The CIT(A) dismissed the appeal, stating that the assessee retracted from its earlier admission of additional income. The CIT(A) upheld the addition, finding no infirmity in the A.O.'s calculation.

In the tribunal, the assessee provided a reconciliation showing that the difference in income was due to the claim of municipal tax and statutory deduction under section 24. The tribunal found that the A.O.'s basis for the addition was incorrect, as the difference arose from legitimate statutory claims. The tribunal deleted the addition of Rs.22,78,665/-, accepting the assessee's contentions.

Conclusion:

The tribunal dismissed the appeal for A.Y. 2009-2010, confirming the addition of Rs.91,26,000/- as undisclosed income. For A.Y. 2010-2011, the tribunal allowed the appeal, deleting the addition of Rs.22,78,665/- due to alleged low profitability. The order was pronounced in the open court on 07.03.2014.

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