Tribunal allows assessee's appeals, rejects revenue's cross-appeal, directs revenue recognition for plots.

The Tribunal allowed the assessee's appeals for AY 2010-11 and AY 2009-10, setting aside the rejection of books of accounts, the estimation of sale rate, and the addition based on unaccounted income. The Tribunal directed revenue recognition only for plots with executed sale deeds and set off the undisclosed income admitted during the survey. The cross-appeal by the Revenue was dismissed.

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Issues Involved:
1. Rejection of Books of Accounts under Section 145(3).
2. Estimation of Sale Rate at Rs. 1,500 per square yard.
3. Addition based on Unaccounted Income.
4. Revenue Recognition and Profit Taxable.
5. Setoff of Undisclosed Income Admitted during Survey.

Detailed Analysis:

1. Rejection of Books of Accounts under Section 145(3):
The Assessing Officer (AO) rejected the books of accounts on grounds that the sale consideration recorded was significantly lower than the actual sale consideration, and a commission payment of Rs. 15,000/- was not reflected in the cash book. The CIT(A) upheld the AO's decision, noting that the accounts were incomplete and did not record all material transactions. However, the Tribunal found that the discrepancies cited by the AO were not substantial enough to justify the rejection of the books of accounts. The Tribunal emphasized that the books were audited without any adverse findings and that the additional income declared during the survey was included in the profit and loss account. Consequently, the rejection of the books of accounts was set aside.

2. Estimation of Sale Rate at Rs. 1,500 per square yard:
The AO estimated the sale rate at Rs. 1,500 per square yard based on statements made during the survey. The Tribunal noted that the statements were recorded under Section 131(1) without any indication of non-cooperation by the assessee, making the statements inadmissible. The Tribunal also highlighted that the AO did not corroborate the statements with any material evidence, such as examining purchasers or obtaining records from the sub-registrar. The Tribunal concluded that the estimation of the sale rate was not legally sustainable and allowed the assessee's appeal on this ground.

3. Addition based on Unaccounted Income:
The AO made an addition of Rs. 7.96 crore based on unaccounted income, estimating that the assessee received on-money payments at Rs. 1,500 per square yard. The CIT(A) upheld the AO's estimation but directed that the addition be restricted to 50% of the difference between Rs. 1,500 and the recorded sale price. The Tribunal found that the addition was based solely on statements recorded during the survey, which were not corroborated by any other evidence. The Tribunal held that the addition was not legally sustainable and allowed the assessee's appeal on this ground.

4. Revenue Recognition and Profit Taxable:
The CIT(A) directed the AO to determine the income chargeable during the year for plots either registered in the name of customers or given possession under Section 53A of the Transfer of Property Act, 1882. The Tribunal noted that the provisions of Section 2(47) of the Income Tax Act apply to capital assets and not to stock-in-trade, as in the case of the assessee. The Tribunal held that the profit can be considered earned only in respect of immovable property for which a registered sale deed is executed. The Tribunal allowed the assessee's appeal on this ground.

5. Setoff of Undisclosed Income Admitted during Survey:
The assessee argued that the undisclosed income of Rs. 1.50 crore admitted during the survey should be set off against the undisclosed income finally determined. The Tribunal agreed with the assessee, noting that the income declared during the survey was included in the total income and due tax was paid. The Tribunal directed the AO to give setoff of the undisclosed income admitted during the survey against the undisclosed income finally determined.

Conclusion:
The Tribunal allowed the assessee's appeals for both AY 2010-11 and AY 2009-10, setting aside the rejection of books of accounts, the estimation of sale rate, and the addition based on unaccounted income. The Tribunal also directed the AO to recognize revenue only for plots with executed sale deeds and to set off the undisclosed income admitted during the survey. The cross-appeal by the Revenue was dismissed.

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