2011 (3) TMI 1650 - AT - Income Tax

Summary

Issues Involved:
1. Estimation of cash component of brokerage income.
2. Addition on account of proforma bill despite income being offered in the subsequent year.

Summary:

Issue 1: Estimation of Cash Component of Brokerage Income

The assessee contested the CIT(A)'s confirmation of the AO's action estimating the cash component of brokerage income at Rs. 1,00,000/-. The assessee, a member of the Batra group involved in real estate brokerage, was subjected to a search u/s 132 of the IT Act. The AO noted unaccounted cash components in property sales and estimated brokerage income based on these findings. The AO's estimation was based on seized documents and statements, concluding that 50% of brokerage was received in cash. The CIT(A) upheld this estimation, despite acknowledging no clear evidence of cash components in transactions and the appellant's explanations regarding the seized documents. The Tribunal found no evidence supporting the AO's estimation and noted that the CIT(A) had already sustained an unexplained deposit of Rs. 98,765/-. The Tribunal concluded that presumptions and surmises cannot justify additions and set aside the CIT(A)'s order, allowing the assessee's appeal.

Issue 2: Addition on Account of Proforma Bill

The AO added Rs. 23,140/- based on a proforma bill found during the search, which the assessee claimed was accounted for in the subsequent year. The CIT(A) confirmed this addition, doubting the timing of the income. The Tribunal, however, found that the amount was indeed credited in the subsequent year's bank account and declared as income for the financial year 2003-04. Therefore, the addition for the current year was deemed uncalled for, and the assessee's appeal on this ground was allowed.

Conclusion:

The appeal filed by the assessee was allowed, with the Tribunal setting aside the CIT(A)'s order on both issues. The Tribunal emphasized the lack of evidence for the cash component of brokerage income and acknowledged the proper accounting of the proforma bill in the subsequent year.