2015 (1) TMI 1457 - AT - Income Tax

On-money receipt - estimating the net profit - Hon ble Settlement Commission has accepted the contention of the assessee that only net profit should be estimated on the amounts received outside the books of account. Accordingly the Hon ble Settlement Commission has estimated the net profit at 12% of thereon - HELD THAT - The assessments of AY 2005-06 and also the year before us viz. AY 2006-07 have been taken up for scrutiny only on the basis of survey operations and hence the facts prevailing in both the cases are identical in nature. Hence we do not find it necessary to take a different view from that one taken by the Hon ble Settlement Commission. Accordingly we are of the view that the Ld CIT(A) was justified in estimating the profit at 12% (it is stated that the rate of profit was wrongly mentioned as 17% in the order of Ld CIT(A)). D.R submitted that there is a reference of 35% in the Settlement Commission s order. However on a perusal of the said order we notice that the assessee has given a working of the profit of the project by considering the value of scrap sales and adhoc disclosure in order to substantiate the offer of 12%. Hence in our view the said reference of 35% is not relevant here.

Summary

Issues Involved:
- Appeal against deletion of addition for on-money receipt
- Cross objection supporting deletion of addition

Analysis:
1. The appeal by the revenue and the cross objection by the assessee were directed against the order of the Ld CIT(A) pertaining to the assessment year 2006-07. The revenue contested the decision of the Ld CIT(A) in deleting the addition related to on-money receipts amounting to Rs. 1,40,00,000, opting instead to estimate the net profit. On the other hand, the assessee supported the Ld CIT(A)'s decision in the cross objection.

2. The assessee, a member of the Gangar Group engaged in the business of builders and developers, was found to be receiving money outside the books of account during survey operations conducted at the business premises. The assessing officer determined the on-money receipts at Rs. 1.40 crores and treated it as the assessee's income. Subsequently, the assessee and other group concerns filed a settlement petition before the Settlement Commission, which accepted the contention that only net profit should be estimated on amounts received outside the books of account, setting it at 12% for the assessment year 2005-06.

3. The Ld CIT(A), in the appeal challenging the assessment order for AY 2006-07, considered the Settlement Commission's order and concluded that only the net profit calculated at 12% on the on-money receipts should be assessed, contrary to the 17% mentioned in the order. The revenue disputed this decision, leading to the current appeal.

4. The Tribunal observed that the Settlement Commission had acknowledged the expenses incurred outside the books of accounts by the assessee and upheld the estimation of net profit at 12% for AY 2005-06. Given the identical nature of facts in both AY 2005-06 and 2006-07, the Tribunal concurred with the Settlement Commission's approach and upheld the Ld CIT(A)'s decision to estimate the profit at 12%, correcting the earlier mention of 17%.

5. The Tribunal dismissed the revenue's appeal, finding no reason to interfere with the Ld CIT(A)'s order. The cross objection filed by the assessee was also upheld in support of the Ld CIT(A)'s decision. Consequently, both the appeal of the revenue and the cross objection of the assessee were dismissed, affirming the Ld CIT(A)'s order.