Real-estate receipt taxation: only the income component, not the full gross receipts, can be added when undisclosed consideration is unproven.

Receipts from the Manav Row House real-estate project were not taxed as the entire alleged undisclosed income because the record did not establish that the full consideration had in fact been received outside the books. The Tribunal applied the principle that, in construction or property activities, only the income element is taxable and the profit may be estimated where unaccounted receipts are alleged. On that basis, the addition of the whole amount was rejected and the relief granted by the CIT(A) was upheld.

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Issues: Whether the addition made on account of alleged undisclosed income from the Manav Row House project was sustainable, and whether the income could be estimated by applying a profit rate in place of treating the entire receipts as undisclosed income.

Analysis: The assessee's explanation was that the land-sale receipts and the construction income from the project had already been disclosed in the relevant assessment years, and that the receipts were not the full project consideration alleged by the Assessing Officer. The record showed that the receipts attributable to the project were partly reflected in the returns, while the balance represented construction-related income received in different years. The Tribunal relied on the principle that, even where unaccounted receipts are found in a real-estate or construction activity, what is taxable is the income element and not the entire gross receipts. It also considered the judicial approach that profit can be estimated on such receipts, rather than treating the whole amount as undisclosed income, especially where the material does not establish that the entire consideration was actually received as alleged.

Conclusion: The addition of the entire alleged undisclosed income was not justified. The departmental challenge to the relief granted by the CIT(A) failed, and the assessee's disclosed and estimated income treatment was accepted.

Ratio Decidendi: Where receipts from a construction or real-estate project are in dispute, only the income component, not the entire gross receipts, can be brought to tax if the evidence does not establish full undisclosed consideration.

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