TaxTMI 
TaxTMI 
2014 (12) TMI 674
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....ook results at 8% on sale of plots of land without properly appreciating the fact and grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. 2. The ld.CIT(A) has erred in confirming addition of Rs. 5,49,00,000/- made by AO u/s.69C of the Act on the basis of failure to explain source of the expenditure without appreciating the fact that there was no evidence on record to prove that the appellant received the 'on money' on sale of plots and incurred unaccounted expenditure. 3. Alternatively and without prejudice to the above ld.CIT(A) further erred in not appreciating the submissions of the appellant that if statement regarding receipt of 'on money' was accepted without any evidence found at the time of survey than statement of expenditure incurred in respect of earning the said income should also be accepted in absence of any contrary evidence. 4. The ld.CIT(A) has grossly erred in law in issuing notice of enhancement without appreciating the factual data available with him and further erred in enhancing the income of the appellant by Rs. 9,68,00,0....
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....e incurred out of books. Therefore, in view of the fact that the assessee himself has disclosed during the course of survey and recorded in the Audit Report, therefore the AO was justified in not accepting the book result and estimating the income. It is settled position of law where the accounts of assessee are rejected, the AO is duty bound to make a fair estimation of the profit. While doing so, he is required to give reasoning for adopting a particular rate of profit. In the absence of such reasoning, the order computing profit on the basis of estimate becomes unjustified. The law does not permit AO to adopt any rate of profit on the basis of conjectures and surmises . In the present case, the AO while estimating the profit has not given any basis for arriving at the net profit @ 8%. On this count, the order of the AO is defective and, therefore, this issue is restored back to the file of AO for fresh adjudication. The AO is directed to pass a speaking order as to how it has adopted at 8% of the net profit. Thus, this ground of the assessee's appeal is allowed for statistical purposes. 5. Ground Nos.2 to 4 are against the confirmation of addition of Rs. 5,49,00,000/- made by....
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....vey. He submitted that basing on such statement was not proper. He vehemently argued that the ld.CIT(A) was not justified in confirming the addition made by the AO on this count. 5.4. On the contrary, ld.CIT-DR supported the orders of the authorities below and submitted that the authorities have rightly made the addition and confirmed the same. He submitted that the assessee himself has admitted the fact and disclosed the same in his Audit Report that certain receipts were not recorded in the books. The assessee cannot be permitted to take a contradictory strength. He submitted that it was the assessee who has stated during the course of survey that certain 'onmoney' was received which were not recorded in the books of accounts. In pursuance of such statement, the assessee has offered amount of Rs. 1,11,00,000/- as his unaccounted income. Therefore, it cannot be inferred that the additions were made merely on the basis of the statement. He submitted that even the assessee has not retracted from the statement. Under these facts, he submitted that the AO was justified in making such addition. 5.5. In rejoinder, ld.counsel for the assessee submitted that the authorities below ha....
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.... Rs. 5,49,00,000/- is covered under proviso to section 69C of the I.T.Act. Hence the unexplained expenditure for which there is no evidence on the books is disallowed. Therefore the same is added as deemed income of the a u/s.69C of the Income-tax Act. Penalty proceedings u/s.274 r.w.s.271(1)(c) of the Income-tax Act is initiated for furnishing inaccurate particulars of income and thereby concealment of income. (Addition on account of unexplained expenditure Rs. 5,40,00,000)" 6.1. We find that the AO has made addition on the basis of the statement recorded during the course of survey. During the course of survey, in answer to Question No.11, the assessee has stated that he had received 'on-money' of Rs. 6,60,00,000/- as sale consideration of 600 plots. In the same answer, it is stated by the assessee that he had incurred different kind of unaccounted expenses which is to be paid in cash, e.g. amount to be paid to farmers over and above the amount as per agreement, expenses of developing, leveling, plan passing which are to be incurred in cash out of on money receipt. Profit of 15% after deducting unaccounted expenses from unaccounted income. It is stated that there is only 15% o....
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....al and did not accept the contention of the revenue that as no accounts had been maintained to substantiate the expenditure incurred by the assessee, the entire amount received by the respondent should be treated as income. The Court concluded that the Tribunal was justified in considering that the respondent - assessee ought to have spent reasonable amount for the purpose of receiving such gross receipt. 15. It can, thus, be seen that consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves. If that be the legal position, what should be estimated as a reasonable profit out of such receipts, must bear an element of estimation." 6.3. The uncontroverted facts emerge from the records are that during the course of survey, two statements have been recorded. The assessment and enhancement of assessment has been framed on the basis of such statements coupled with material in the form of loose-papers collected during the course of survey. Notices u/s.148/142(1) of the Act dated 31/10....
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....aking on money as Rs. 1,10,000/- per plot. However, the ld.CIT(A) while enhancing the addition adopted 'on money' at Rs. 1,10,000/- per plot but figure of plot sold was taken at 1480. It appears ex-facie that both the Assessing Officer as well as the ld.CIT(A) have based their findings on two different statements recorded during the course of survey. No independent inquiry is made by the authorities below. The contention of the assessee is that it had sold only 600 plots, details of 'on money' received out of sale of such plot is enclosed at paper-book page Nos.43 to 83. From the noting, it is evident that the amount of 'on money' is ranging from plot to plot. However, in the statement the assessee has stated to have received Rs. 1,10,000/- per plot as 'on money'. Neither the Revenue nor the assessee could explain as to how two different statements were recorded on the same date of the same person. It is noticed that two statement have two different version of the facts. Both the authorities have based their findings on the assumption that each plot has same size, without considering the fact that in the business of real estate, sale consideration of property is dependent on size a....