Tribunal includes 'on money' in assessee's income for sale of flats

The Tribunal upheld the AO's findings that the assessee received 'on money' for the sale of flats in various projects, adding these amounts to the assessee's income for the relevant assessment years. The Tribunal rejected the assessee's argument to tax only the net profit element, stating that the entire amount of 'on money' should be included in the income as the assessee failed to prove any related expenditure. The appeals for all assessment years were dismissed, and the order was pronounced on 03rd November 2017.

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Issues Involved:
1. Receipt of 'on money' for sale of flats.
2. Taxation of gross amount versus income element on sale.

Detailed Analysis:

1. Receipt of 'on money' for sale of flats:

The assessee, engaged in manufacturing incense sticks and real estate development, faced a search operation on 18.06.2010. The AO found that the assessee had received 'on money' for the sale of flats in projects Jasmine, Amythest, and KRSNA. Incriminating material, including a computer printout, indicated unaccounted cash receipts. The AO added these amounts to the assessee's income for the relevant assessment years (2008-09 to 2011-12).

The CIT(A) confirmed the AO's findings for certain flats but deleted additions for others, stating that 'on money' should be taxed in the year the income from the sale of flats is declared. The assessee appealed, arguing that the AO's conclusions were based on loose papers and unsubstantiated assumptions. The assessee also contended that no extra cash or assets were found during the search, and the signatures on the loose papers did not match those of the buyers.

The Tribunal upheld the AO's findings, noting that the assessee admitted to receiving unaccounted cash in a sworn statement and failed to provide documentary evidence to rebut the AO's observations. The Tribunal found no merit in the assessee's arguments and dismissed the appeals for all assessment years under dispute.

2. Taxation of gross amount versus income element on sale:

The assessee argued that only the net profit element in the undisclosed sale should be taxed, not the gross amount. The Tribunal rejected this contention, stating that the assessee failed to prove any expenditure incurred for the receipt of 'on money'. Therefore, the entire amount of 'on money' was rightly added to the assessee's income.

Conclusion:

The Tribunal dismissed the appeals for all assessment years (2008-09 to 2011-12), sustaining the AO's additions of 'on money' to the assessee's income. The Tribunal also dismissed the ground of appeal regarding the charging of interest under sections 234A, 234B, and 234C of the Act as not maintainable. The order was pronounced on 03rd November 2017.

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