Tribunal partially allows appeal, deletes undisclosed income addition, upholds Rs. 45,50,000 addition, rejects inadmissibility claim.

The Tribunal partially allowed the appeal, deleting the addition of undisclosed income based on the treatment of on-money received and the profit element involved. The Tribunal upheld the addition of Rs. 45,50,000 as undisclosed income, as the assessee accepted the disclosure made during the survey. The Tribunal rejected the contention that the statement recorded during the survey was inadmissible and determined that no further addition was required based on the profit rate disclosed by the assessee. The Tribunal deleted the addition and partly allowed the appeal.

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Issues:
Appeal against addition of undisclosed income of Rs. 45,50,000.

Analysis:

Issue 1: Addition of undisclosed income
The assessee contested the addition of Rs. 45,50,000 as undisclosed income, which was confirmed by the ld.CIT(A). The AO based the addition on a survey conducted at the business premises, where the assessee disclosed Rs. 80.00 lakhs as undisclosed income, out of which only Rs. 23,00,000 was disclosed. The assessee argued that the statement recorded during the survey is not admissible evidence as the authorized officer lacked jurisdiction to administer an oath. However, the Tribunal found that the assessee did not dispute the disclosure made during the survey and accepted Rs. 23 lakhs. Therefore, the Tribunal upheld the addition based on sufficient evidence agreed upon by the assessee, rejecting the contention that the statement was inadmissible.

Issue 2: Treatment of on-money received
The assessee argued that the on-money received on booking of flats/houses should be treated as part of business receipts and taxed based on the profit element. The Tribunal considered the profit rate disclosed by the assessee and found that the disclosed amount of Rs. 23,00,000 covered a significant portion of the total undisclosed amount. Applying the profit rate disclosed by the assessee, the Tribunal determined that no further addition was required. Consequently, the addition of Rs. 45,50,000 was deleted based on the accepted contentions regarding the treatment of on-money as business income.

Issue 3: Entitlement of partners for remuneration
The assessee also claimed that partners were entitled to remuneration and interest against the undisclosed income. However, as these claims were not made in the return but only before the ld.CIT(A), and no findings were recorded on this aspect, the Tribunal rejected this contention. Since the Tribunal accepted the arguments related to the treatment of on-money, it did not delve into the issue of partners' entitlement to remuneration. The Tribunal, therefore, deleted the addition of Rs. 45,50,000 and partly allowed the appeal of the assessee.

In conclusion, the Tribunal partially allowed the appeal, deleting the addition of undisclosed income based on the treatment of on-money received and the profit element involved. The Tribunal's decision was based on the evidence agreed upon by the assessee during the survey and the application of the disclosed profit rate to determine the tax liability.

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