AI Drafter 
TaxTMI 
TaxTMI 
2022 (2) TMI 815
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.... on 30.12.2016. The assessee has filed cross-objections against revenue's appeal which are only in support of impugned order and therefore, would not require any specific adjudication on our part. 2. It was point of agreement between both the sides that the facts as well issues in all the years are same and adjudication in any one year shall equally apply to all the other years also. It transpired that the cross-appeals for AY 2013-14 would cover all the issues arising out of these appeals and therefore, AY 2013-14 was taken as the lead year. 3. The grounds raised by the assessee read as under: - 1. The order of the Learned CIT(A) is bad and erroneous in law and against the principles of natural justice. 2. The learned CIT (A) erred in not considering the grounds of appeal and written submissions in proper perspective. 3. a) The learned CIT (A) erred in not considering the vital fact that when the time to serve notice u/s.143(2) is already over and when there is no incriminating material. Any addition made requires deletion. b) Unaccounted Sales (i) The findings by the learned CIT (A) that the accounts of the appellant wer....
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.... relief provided by Ld. CIT(A) against development expenses. The grounds raised by the assessee in cross-objections read as under: - 1) The order of the learned CIT (A) is correct and sustainable to the extent allowed by him in the facts and circumstances of the case. 2) The learned CIT(A), after duly considering the magnitude of the disallowance made by the Assessing Officer without there being any material to support disallowance, allowed 60% of the expenditure incurred under the development expenses by the appellant. And for other reasons that may be adduced at the time of appellate hearing, the Cross Objector prays that this cross objection may be admitted, considered and justice be rendered. As evident, the cross-objection merely support the impugned order to the extent relief granted by Ld. CIT(A). Therefore, the same would not require any specific adjudication on our part. 4. The registry has noted a delay of 19 days in revenue's appeal, the condonation of which has been sought by revenue on the strength of an affidavit wherein it has been submitted that delay occurred due to nonreceipt of assessment records on time. The Ld. AR did not rai....
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....ddition on account of unaccounted / suppressed sales; (ii) Addition of unaccounted investment in Land; (iii) Disallowance of development expenses claimed by the assessee; (iv) disallowance of Sales Commission expenses claimed by the assessee. These additions / disallowances are the subject matter of cross appeal before us. The facts leading to impugned additions are as under: - (i) Addition on account of unaccounted / suppressed sales The assessee sold several developed sites altogether admeasuring 2240 cents in Karamadai and Pogalur village in Coimbatore District during AYs 2009-10 to 2015-16. During search operation, incriminating documents in the form of agreement and advance receipts were found which indicated that the assessee was suppressing sale receipts to the extent of about 2 to 5 times. The assessee was reflecting only 20% to 50% of actual sale consideration in the registered sale deeds. To substantiate the same, the Ld. AO has quoted one instance, wherein on 23.01.2013, the assessee sold site admeasuring 5.02 cents in Vijaylakshmi Park at Karamadai vide registered Document No.497/2013. In this document, the consideration was shown as Rs. 4.03 Lacs as against actua....
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....or road laying, civil work, laying-off of plants, electrical works etc. was done by unorganized sector which would not issue proper bills / vouchers. However, Ld. AO opined that the assessee failed to discharge onus of substantiating the expenditure and accordingly, disallowed 70% of this expenditure. The same resulted into disallowance of Rs. 534.96 Lacs in the hands of the assessee. (iv) Sales Commission The assessee debited sales commission of Rs. 14.67 Lac. However, it could not produce the details of TDS on such payment. It was submitted that it was referral commission paid one time and generally, the payments were below Rs. 5000/-. However, Ld. AO estimated disallowance of 70% against this expenditure and added an amount of Rs. 10.27 Lacs to the income of the assessee. Appellate proceedings & Our Adjudication 8. During appellate proceedings, the assessee challenged the validity of assessment proceedings on legal grounds. However, these grounds were rejected by Ld. CIT(A) in the light of statutory provisions and in terms of various judicial pronouncements as enumerated in the impugned order. At the same time, Ld. CIT(A) adjudicated the issues on merits which were a....
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....he difference was merely 4% of sales offered. No reference to cash receipt or agreement indicating cash receipt in respect of sale of plots was brought on record as apparently no such material was available on record. Further, the sales had just commenced during the previous year relating to AY 2009- 10 in respect of impugned project sites. Therefore, the addition for AYs 2009-10 was to be deleted. Similar addition for AYs 2010-11 & 2012-13 were deleted on the same reasoning / logic that there was no direct reference to any specific material indicating unaccounted cash sale transaction. No reference to cash receipt or agreement indicating cash receipt in respect of sale of plot was brought on record as apparently no such material was available before Ld. AO. In other words, the additions for AYs 2009-10, 2010-11 & 2012-13 were deleted whereas the additions for AYs 2013-14 & 2014-15 was confirmed. Aggrieved, the assessee is in further appeal before us for AYs 2013-14 & 2014-15. We find that the revenue has not assailed the findings of Ld. CIT(A) for AYs 2009-10, 2010-11 & 2012-13 and therefore, the impugned order, to that extent has attained finality. No such addition was made by Ld....
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....record. The extrapolation done by Ld. AO had no basis and the action of Ld. AO in estimating the additions could not be upheld. The action of Ld. AO was totally untenable and devoid of any merits for it was based on conjectures and surmises. Therefore, the addition made in all these three years was deleted. We find that the revenue has accepted the findings of Ld. CIT(A) for all the three years and the issue has thus, attained finality. Development Expenditure The Ld. CIT(A), after considering the factual matrix, noted that the assessee had brought tracts of land and developed those into saleable lay outs by converting these lands into plots. It was not possible to have developed layouts without incurring any expenditure like clearing of debris, levelling of grounds, lay out of roads, installation of posts. It was also acceptable that some the activities would involve engagement of labour and service provider in unorganized sector. At the same time, the assessee was duty bound to furnish full details / particulars in support of the claim. However, the assessee failed to demonstrate that all the expenditure was incurred for the purpose of business. Therefore, keeping in mind t....
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....he registered document. The said approach, in our considered opinion, is not a correct approach since in an assessment framed on the basis of search action, the additions are strictly to be based on incriminating material found and seized by the revenue during the curse of search proceedings. Only on the basis of few instances, to presume that such concealment was done by the assessee in all the transactions, in a blanket manner, was not a correct presumption. It could also be seen that Ld. AO has also not considered the fact that the assessee might have incurred expenditure on cost of construction and other expenses in the same manner for which benefit should have been granted to the assessee. The sale figures could not be said to be the income of the assessee. It is trite law that only the real income earned by the assessee could be brought to tax. It is the finding that the assessee has sold developed sites during these years which would entail incurring of expenditure on the part of the assessee. Therefore, on the given facts and circumstances, it would be in the fitness of things to estimate profit element embedded in unaccounted sale transactions since entire sales figures co....