2019 (10) TMI 632

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....re that a search action was taken u/s. 132(1) of the Income-tax Act, 1961 (hereinafter called 'the Act') in Jadhav-Shah group of cases at Nashik on 08-02-2008, of which the assessee is a part. During the course of search, certain incriminating documents/material was found from the business and residential premises of the assessee. Statement of the assessee was recorded u/s.132(4) of the Act. The assessee was specifically asked to explain the transactions of sale/purchase of lands noted in the diaries and on loose papers, in response to which the assessee submitted that all the transactions noted in the diaries and loose papers pertained to him. Pursuant to notice u/s.153A of the Act, the assessee furnished returns declaring total income of ....

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....ed were not mentioned in certain cases by the assessee in such cash book. Similarly name of persons to whom such cash was paid were also not mentioned in certain cases. Total of such cash paid over the period 01-04-2001 to 08-02-2008 was to the tune of Rs. 10,16,60,973/-. Total cash credited for the A.Y. 2007-08 stood at Rs. 2,08,43,767/- and for the A.Y. 2008-09 at Rs. 7,94,96,368/-. The AO required the assessee to substantiate the receipts of cash by supplying name of the persons from whom it was received on account of purchase of land and name of the persons to whom such cash was paid. The assessee submitted that the cash book was prepared from the material seized in the course of search which was a complete record of the transacti....

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....ears 2002-03 till 2008-09 before the ld. CIT(A), which has been tabulated at page 3 of the impugned order. In such tabulation, the assessee gave year-wise maximum cash balance offered to tax, which for the A.Y. 2007-08 stood at Rs. 28,71,458/- and for the A.Y. 2008-09 at Rs. 5,64,910/-. Thereafter, the assessee submitted property-wise details of purchase consideration, sale proceeds received with net profit. Against the sales of plots amounting to Rs. 8,09,43,888/- in the tabulation on pages 3 and 4 of the impugned order, the assessee stated to have been earned profit of Rs. 55,06,787/-. The ld. CIT(A) called for the remand report from the AO in respect of the details furnished by the assessee, who mainly relied on the original order passed....

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....m of a cash book prepared after the search, which the AO accepted to be having all the relevant details of unrecorded transactions. These transactions are basically in the nature of either purchase of land for customers against commission ranging 0.50% to 2% as stated during the course of search itself or these are transactions of purchase and sale of land by the assessee for self. It is an admitted position that the seized documents partly contained names of the persons from whom cash was received for purchasing land on their behalf. Some of the transactions did not have any name/narration. It is after the search that the assessee prepared his cash book and ledger on the basis of the seized documents. The AO has recorded in Para 5.3.6 (ii)....

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....h book, it is found that the assessee has recorded certain amounts with dates mentioning the name of the persons from whom cash was received. The assessee's case is that he received cash from prospective buyers of land and thereafter negotiated with the prospective sellers with a view to earn commission income. In addition to that, there are certain transactions of cash received which did not bear any name. Such transactions will have to be presumed as done by the assessee for his own purpose. Once the assessee has purchased and sold certain pieces of land for outside customers, it is only the profit element in such transactions which can be charged to tax. If certain amount of cash is received from buyers which is then handed over to selle....

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.... representing the amount received by the assessee, either on his own account or for further purchase of land on behalf of others, has not been subjected to tax. The profit element on such sale is also required to be added, which the ld. CIT(A) forgot to do. When we examine the amount of profit tabulated by the ld. CIT(A) on page 4 of his order at Rs. 55,06,787/- with the corresponding sales of Rs. 8.09 crore, the percentage of profit which turns out, is 6.80%. We direct that similar percentage of profit should be applied to the remaining receipts of Rs. 2.07 crore, which escaped the attention of the ld. CIT(A). Such percentage of gross profit, if applied to the remaining amount of Rs. 2.07 crore, gives further profit of Rs. 14.07 lakh wh....