TaxTMI 
TaxTMI 
2017 (11) TMI 1082
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.... contended that the Assessing Officer after considering the evidence on record as well as considering the transactions has observed as under : "Thus the Assessing Officer rejected the books of account as afore stated and held at internal page 11 of her order that the total area of the plots sold by the assessee works out to 1,23,274.92 sq. yards and applied the rate of Rs. 635 per sq. yard on the aforesaid square yards. On the other hand, the assessee has shown the value of Rs. 4,40,72,870 received against the selling of the aforesaid land. The difference of the same, i.e., Rs. 3,42,06,704 was added to the total income of the assessee on account of addition of suppression of sales." 4. He contended that there are group of persons who purchased the plot and the price was at a higher side whereas in the individual case, it should have been at a lower side. The calculations are as under : (i) The following facts with respect to purchase of land were reflected in the records as : Date of Area Amount Saleable land (sq. yds.) Cost of purchase of saleable land Rs./sq. yds. 4-8-2003 43 Bigha = 1,41,900 sq. yds. 3,29,23,000 90,438 364 ....
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....t Bindayaka for which the land of 32.80 bighas (1,08,240 sq. yards) was purchased on September 24, 2002. The cost of purchase per sq. yard for the saleable land, i.e., 64,944 sq. yards which is around 60 per cent. of the total land (60 per cent. - 1,08,240 sq. yards) worked out to be Rs. 148.40 per sq. yard whereas as per the agreement with members of the Rajasthan Financial Corporation (RFC), the same were proposed to be sold at Rs. 755 per sq. yard. This fact is brought into light to establish that the plot of land which was bought earlier by the assessee was being sold at a higher rate (Rs. 755 per sq. yard) whereas the plots out of land bought later were sold at much lower rate (Rs. 400 per sq. yard). (vi) As mentioned above, plots were sold at Rs. 635 per sq. yard to members of RTS, and proposed to be sold at Rs. 755 per sq. yard to the members of RFC whereas it was sold merely at Rs. 400 per sq. yard to other individual persons. The rates for the above two organisations should have been much less because plots were sold in bulk to them and they were in a better position to negotiate on the price of the land than the individuals. In fact, they were as many as 200 plot....
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....facts there is no dispute. Therefore, the contention of the appellant, that a large number of plots were sold above the average cost of purchase of Rs. 266.51 per sq. yard, is also found to be correct because, undisputedly, 181 plots out of the total 307 plots were sold at Rs. 470 per sq. yard to the members of the RTS. Here it is also relevant to note that there is no dispute regarding the fact that the appellant got an average sale price of Rs. 357 per sq. yard (after taking into account the plot sold at a price lower than the average cost price) and earned an overall gross profit of Rs. 366.66 lakhs on total sales of plots at Rs. 440.72 lakhs, i.e., gross profit rate of over 8 per cent. (c) I also find merit in the arguments of learned authorised representative the persons examined by the Assessing Officer had confirmed the purchase made from the appellant. In that regard, I have perused the statements of Shri Ramswarup Gurjar and Shri Roop Narain Sharma (PB pages 52-53, 55-57) recorded by the Assessing Officer on December 13, 2006, wherein both these persons had confirmed the purchase of plots for shops at the same price as recorded by the appellant in its books of acc....
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....e, in accordance with the foregoing observations, it is held that the Assessing Officer was not justified in rejecting the books of account under section 145(3) of the Income-tax Act in the case of the appellant-assessee. Consequently, the ground of appeal against the rejection of books of account is decided in favour of the appellant-assessee. 3.3 (v) The second issue involved in this ground of appeal is against the estimation of sales by applying rate of Rs. 635 per sq. yard on the total area of plots sold 1,23,274.92 sq. yards leading to estimation of sales at Rs. 7,82,79,574, which resulted into addition of Rs. 3,42,06,704 on account of suppression of sale. In this regard, it is observed that the Assessing Officer has made the said estimation after rejecting the books of account of the appellant-assessee. However, as discussed in the preceding paras, I have held that the Assessing Officer was not justified in rejecting the books of account of the appellant-assessee. Therefore, as the books of account of the appellant-assessee were not found to be liable to be rejected under section 145(3) of the Income- tax Act, consequently, the estimation of sales made thereafter by ....