AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 307
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....details of sale of five flats was found and impounded. Based on the information found in the above said piece of paper, the AO made additions of unaccounted income. Further, the AO also disallowed the expenditure claimed towards payment of professional fees. The Ld CIT(A) granted partial relief in respect of unaccounted income and confirmed the addition relating to professional fees. Hence, both the parties are in appeal before the Tribunal on the issues decided against each of them. 3. We shall first deal with the issue relating to the addition of undisclosed income. During the course of survey operation, a piece of paper was found in the office drawer of one of the directors named Shri Sanjay Gawande. It contained details of sale of following five flats:- Flat No. Name of Purchaser A-803 Shri Sajjan Garg A-1001 & 1002 Smt Preetika Goyal B-1001 & 1002 Smt Meenu Garg It also contained the details of sale consideration in the form cheque payment and cash payment. The AO verified the ledger account copies of these parties and noticed that the cheque payment alone has been accounted in the books. Accordingly, he took the view that the cash payments noted down in the paper re....
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....nted receipts. For example (a) In respect of Flat No.1003, the Ready reckoner value was Rs. 82,40,500/-. The Grossed up value computed by the AO was Rs. 1,27,89,256/-. The agreement value was Rs. 1,17,28,070/-. Hence the difference amount of Rs. 10,61,186/- (Rs.1,27,89,256/- (-) Rs. 1,17,28,070/-) was treated as unaccounted receipts. (b) In respect of Flat No.902, the Ready reckoner value was Rs. 59,28,500/-. The Grossed up value computed by the AO was Rs. 92,01,032/-. The agreement value was Rs. 1,00,00,000/-. Since the agreement value was more than the grossed up value computed by the AO, no addition would arise. In the above said manner, the AO computed the unaccounted receipts for 40 flats. The aggregate amount of probable unaccounted receipts computed by the AO worked out to Rs. 7,73,15,067/- and the AO added the same to the total income of the assessee. 6. In the appellate proceedings, the Ld CIT(A) took the view that the profit element involved in the unaccounted sale consideration should alone can be assessed. Accordingly, he held that the assessing officer was not right in assessing the entire amount of unaccounted sale consideration. The Ld CIT(A) estimated the prof....
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....asis of negotiation done with each of the buyers. Hence each of the sales is a separate contract and the price for which the flat is sold would depend upon the price finalized between the assessee and each of the buyer upon negotiation. Hence, there is no basis to presume that the assessee would have received cash component in each of the sale. (e) We notice that the assessing officer has made enquiries with some of the buyers of the flat. He has stated that the reply was received from two of the buyers, but the AO has not discussed anything about them, meaning thereby, it should be presumed that those two buyers did not give any adverse reply. The Ld A.R submitted that the buyers listed in serial numbers 21 to 35 at pages 26 and 27 of the assessment order have sent replies stating that they have received flats in "shell" condition only, meaning thereby, these buyers have carried out finishing works at their own cost. There is no evidence to show that any of these buyers have stated that they have paid cash over and above the agreement value. (f) Since the transaction involves sale of flats, the assessee would be receiving cash, only if it is paid by the buyers. If none of the ....
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....le price. But it is not open to him, merely on the basis of what he perceives to be the market conditions, to make additions to the sale price or the profits, without any evidence of understatement." In the instant case, the noting made in the piece of paper did not fructify into sale of flats. Apart from the above said material, the assessing officer did not have any other material in his possession to show that the assessee has received sale consideration over and above the agreed price. The enquiries made by the AO with some of the buyers did not also show that the assessee was suppressing sale receipts. (c) In the case of CIT vs. Metro Construction Company (Income tax Appeal No.2339 of 2013 dated 6th January, 2016)(Bom), the Hon'ble Bombay High Court observed as under with regard to extrapolation of income:- "7. We are of the view that the decision of the Apex Court in Esufali, H M Abdulali (supra), would have not application to the present facts. It was a case of the regular books, i.e., bills etc being disowned by the assessee and the Authority resorting to best judgement assessment. This is not a case of (not)(sic.) a best judgment assessment and wherever documents ind....
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....nder the stated professional services. Hence, the AO took the view that the assessee has failed to prove incurring of the professional fees and accordingly disallowed the claim of Rs. 27,25,000/-. The Ld CIT(A) also confirmed the same. 14. The Ld A.R reiterated the submissions made before the tax authorities. She submitted that the assessee has furnished the copies of bills raised by both of them. She said that these payments were made in connection with arranging debts for the assessee from PNB Housing finance, since these persons could negotiate the debt for the assessee from the above said finance company. Further, TDS has also been deducted from the above said payments. She further submitted that the failure of the recipients to respond to the notices issued by the AO and their failure to file return of income cannot be basis to reject the claim. She submitted that the assessee has incurred the professional fees wholly for the purpose of business and hence, the tax authorities are not justified in disallowing the same. 15. The Ld D.R, on the contrary, supported the orders passed by the tax authorities on this issue. 16. We heard the parties on this issue and perused the reco....