TaxTMI 
TaxTMI 
2014 (4) TMI 1262
X X X X Extracts X X X X
X X X X Extracts X X X X
....The appellant is a partnership firm which is engaged in the business of building and construction. On 12.01.2008 a search action u/s 132(1) of the Act was carried out on the group which included the assessee firm. In the course of search, certain income was disclosed in the statements made by the partners u/s 132(4) of the Act and in the return of income subsequently filed for the assessment year under consideration i.e. 2008-09 the disclosure made during the search was followed-up by including an income of Rs. 3.40 crores in the return of income. The return of income was filed declaring total income of Rs. 2,87,61,981/- which was subject to scrutiny assessment. In the assessment finalized on 30.12.2009 the Assessing Officer estimated the total undisclosed income at Rs. 10,53,46,450/- as against the amount disclosed by the assessee of Rs. 3.40 crores. Thus, the difference of Rs. 7,13,46,450/-, which is the subject matter of controversy before us, was added to the total return of income as 'undisclosed income'. As a result, the total income for the assessment year 2008-09 has been determined at Rs. 10,01,08,430/-, as against an amount of Rs. 2,87,61,981/- returned by the assessee fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, the Assessing Officer applied the rate of Rs. 4,000/- per sq.ft. to the sale of all other units made by the assessee as per the details contained in para 19 of the assessment order and computed the total on-money received on sale of units at Rs. 10,53,46,450/-. After taking into account the amount of Rs. 3.40 crores declared by the assessee in its return of income, the balance of Rs. 7,13,46,450/- was added to the returned income. The said addition was carried in appeal by the assessee before the CIT(A). 5. In appeal before the CIT(A), assessee assailed the action of the Assessing Officer in law and on facts. The assessee contended that there was no justification to infer that assessee had sold the units in the project at Rs. 4,000/- per sq.ft. as against the rates indicated in the respective agreements which varied between Rs. 2,000/- to Rs. 2,500/- per sq.ft.. As per the assessee, the seized paper no. 56 did not indicate that assessee had sold the unit to Mrs. Fatima Moiz Fakruddin @ of Rs. 4,000/- per sq.ft. and thus, there was no reason to infer that assessee has sold the units at a price over and above the stated consideration. In the alternative, it was submitted that eve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....copies of which have been placed in the Paper Book at pages 9-10. The said document is the offer letter given to the customer, Mrs. Fatima Moiz Fakruddin & others which contains various options, namely, bare shell premises, warm shell premises and fully furnished premises with rates of Rs. 2,300/- per sq.ft., Rs. 2,500/- per sq.ft. and Rs. 4,100/- per sq.ft. respectively. It was thus contended that if one is to consider the notings made in seized paper no. 56 which contains calculations on the basis of the rate of Rs. 4,000/- per sq.ft., it would show that the said rate is for a fully furnished unit quoted by assessee in the offer-letter (placed at pages 9-10 of the Paper Book) whereas in actuality the said customer has been sold bare shell premises @ Rs. 2,300/- per sq.ft.. According to the learned counsel, the copy of the offer-letter was also seized at the time of search and the same has not at all been considered by the Assessing Officer merely because its supported the stand of the assessee that no money over and above the rate of Rs. 2,300/- per sq.ft. stated in the agreement, has been charged from the customer, Mrs. Fatima Moiz Fakruddin & others. The learned counsel argued ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Rs. 20,00,000/- on different dates. In any case, the learned counsel submitted that the loose paper no.20 was duly explained and it reflected receipts from customers for extra work carried out as per their instructions. 8. The learned counsel also pointed out a contradiction in the stand of the Assessing Officer by referring to sale of a unit no.702 i.e. Item No. 14 in the Tabulation in para 6.2 of the assessment order. The said unit has been sold to one Mrs. Manisha Shravan Agarwal, wife of a partner of the assessee firm and the rate charged is Rs. 2,500/- per sq.ft.. On this sale, no addition has been made by the Assessing Officer on account on-money. The learned counsel explained that assessee firm was constituted by two projects i.e. Shri Arvind Jain family having 50% share and the balance of 50% was owned by Pride group. If the assessee was collecting on-money on sale of units, than in that the event assessee would have also collected on-money on sale of premises to Mrs. Manisha Shravan Agarwal since the other partner i.e. Pride group, who was having 50% in the assessee firm, would not have allowed the firm to charge a lower price from Mrs. Manisha Shravan Agarwal. However,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the rate of Rs. 4,000/- adopted in order to estimate the sale of all the units, the learned Departmental Representative relied upon the judgement of the Hon'ble Supreme Court in the case of H.M. Esufali H. M. Abdulali (supra) which has also been relied upon by the lower authorities. The learned Departmental Representative also submitted that the reference placed by the learned counsel with respect to the seized paper no.64-65, the same are mere quotations given to Mrs. Fatima Moiz Fakruddin, which is of no avail because the notings of the sale found recorded on seized paper no.56 justified the inference that assessee received on-money on sale of unit to Mrs. Fatima Moiz Fakruddin. Further, it is pointed out that the declaration of additional income on account of on-money by the assessee itself denotes that the assessee received on-money on sale of all the units; and, therefore the addition has been rightly made by the lower authorities by estimating on-money on sale of the entire project. In sum and substance, the learned Departmental Representative has relied upon the orders of the authorities below in support of the case of the Revenue. 11. We have carefully considered the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ditional income in the return income filed for the instant assessment year. Notably, the difference between the sale consideration found noted in the seized material and that recorded in the sale deed amounted to Rs. 2.96 crores. 13. Quite clearly, the on-money receipt reflected in the seized material on sale of unit to Mrs. Fatima Moiz Fakruddin & others, has been offered for taxation by the assessee. Therefore, nothing much can turn by adjudicating as to whether or not the notings on the seized paper no.56 of Bundle No.2 reflect receipt of on-money from Mrs. Fatima Moiz Fakruddin. So however, the dispute starts from the fact that the Assessing Officer has presumed on the basis of the said seized material that assessee must have earned on-money on sale of all the units sold in the project. Factually speaking, there is no dispute that other than page no.56 of Bundle No.2 and to some extent loose paper no.20, there is no other material seized or found in the course of search or otherwise, which would show that assessee has received on-money on sale of units in the impugned project. The Assessing Officer adopted the rate of Rs. 4,000/- per sq.ft., as reflected in seized paper no.56,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....value of Rs. 31,171.28. From this circumstance, it was open to the Sales Tax Officer to infer that the assessee had large scale dealings outside his accounts. The assessee has neither pleaded nor established any justifiable reason for not entering in his accounts the dealings noted in the bill book seized. It is obvious that he was maintaining false accounts to evade payment of sales tax. In such a situation, it was not possible for the Sales Tax Officer to find out precisely the turnover suppressed. He could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him is not arbitrary and has nexus with facts discovered, the same cannot be questioned. In the very nature of things the estimate made may be an overestimate or an under estimate. But, that is no ground for interfering with his "best judgment". It is true that the basis adopted by the officer should be relevant to the estimate made. The High Court was wrong in assuming that the assessing authority must have material before it to prove the exact turnover suppressed. If that is true, there is no question of "best judgment" assessment. The assessee cannot b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Assessing Officer or for the Tribunal to resort to such estimation and therefore the estimation are purely based on conjectures and hypotheses and therefore unsustainable. We are unable to accept the said contention of learned counsel. Learned counsel was not able to dispute the findings of the Assessing Officer as well as the Tribunal, where seized material shows that there was suppression for a period of 24 days during the assessment year 1996-97 and 15 days for 1997-98 and also that the suppressions were on a day-to-day basis and the evidence recorded from the partners shows that the same method was adopted throughout the assessment years for the entire block period. In the light of such evidence recovered from the assessee at the time of search, together with the admission of the partner, there is absolutely no justification for the assessee to contend that there is no evidence on record." 17. The aforesaid judicial pronouncements support the proposition that in a case where suppression of income is admitted as a modus operandi or a methodology than the income for the entire period can be estimated even in the absence of any evidence found showing receipt of such income over t....