2014 (11) TMI 797

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.... appeal is filed by the revenue calling in question the judgement of the Income Tax Appellate Tribunal ("the Tribunal" for short) dated 1.9.1999. 2. The respondent - assessee is a partnership firm engaged in the business of construction of flats and residential complexes. The assessee started construction of a total of 120 flats in a complex called "Ashoplab Apartments" in the city of Surat. The scheme contained three types of flats admeasuring 725 square feet, 750 square feet and 975 square feet respectively. The flats were sold at a disclosed rate of Rs. 185/- per square feet. A search was carried out on 4.7.1996. Initially, a disclosure was made of undisclosed income of Rs. 3.5 lakhs by a partner of the assessee firm Shri K. R. Sardara....

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....iew of the fact that the assessee had already disclosed income of Rs. 26 lakhs, believed that no further tax can be imposed. It is this judgement of the Tribunal which the revenue has challenged in the present appeal. 4. At the time of admission of the appeal, the following question was framed: "Whether the Appellate Tribunal is right in law and on facts in deleting the addition made on account of undisclosed income earned by the assessee out of "on money" receipts from the sale of row houses done during the block period?" 5. Learned counsel for the revenue, Shri Sudhir Mehta submitted that the Tribunal committed a serious error in reversing the order of the Assessing Officer. He submitted that the on money collection by the respondent ....

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....permit the revenue to collect the tax on the entire receipt believing the it was only the income embedded in such receipt which can be subjected to tax. 10. As pointed out by the counsel for the respondent, this Court in the case of Commissioner of Income Tax v. President Industries, reported in (2002) 258 ITR 654 had taken a similar view. In the said case, during the course of survey conducted on the premises of the assessee, from the excise records found, an inference was drawn by the Assessing Officer that sales accounting to Rs. 29 lakhs and odd had not been disclosed in the books of account. The Assessing Officer made addition of the entire sum of the said undisclosed sales as income of the assessee for the assessment year 1994-95. Su....

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....s. 10.85 lakhs was not found in the books of account. Such amount was included in the total income of the assessee. The Commissioner (Appeals) gave substantial relief to the assessee and reduced the income on the basis of gross profit rate. The Tribunal confirmed the order of the Commissioner (Appeals). On further appeal before the High Court by the revenue, the High Court refused to refer any question holding that in absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged undisclosed sales, the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference. 12. Counsel also relied on the decis....