2016 (9) TMI 7 - HC - Income Tax

Addition on profit from Suryarath Scheme - ITAT deleted the addition - Held that - The assessee had already disclosed the receipts as per the sale and there is no scope for further additions. This view of the Commissioner of Incometax (Appeals) was confirmed by the Tribunal. Entire issue was thus based on facts and upon apprehension of materials on record with the Commissioner of Incometax (Appeals) and Tribunal concurrently held that the evidence on record do not suggest any income earned by the assessee, over and above which was disclosed which was in tune with the development agreement. - Decided against revenue.

Summary

Issues:
Challenge to deletion of addition of profit from Suryarath Scheme by ITAT without properly appreciating facts and material brought on record by AO.

Analysis:
The appeal was filed by the Revenue challenging the judgment of the ITAT regarding the addition of profit from the Suryarath Scheme. The ITAT was questioned on whether they erred in law and on facts by deleting the addition made by the AO without properly appreciating the facts and material on record. The assessee had entered into a development agreement with a cooperative housing society, showing a total profit of ?33.31 lacs. However, the AO added ?61.33 lacs as an estimated amount, which was approximately 10% of the total sale receipts of ?6.99 crores.

Upon review, the Commissioner of Incometax (Appeals) deleted the additions, stating that unless the development agreement is proven to be bogus or sham, such additions cannot be sustained. It was noted that the assessee had already disclosed the receipts from the sale, leaving no room for further additions. This decision of the Commissioner of Incometax (Appeals) was upheld by the Tribunal. The Tribunal and the Commissioner of Incometax (Appeals) concurrently held that the evidence on record did not indicate any additional income earned by the assessee beyond what was disclosed in accordance with the development agreement.

The High Court, after perusing the orders and considering the arguments presented, concluded that no question of law arose in the case. As a result, the Tax Appeal was dismissed by the High Court. The judgment emphasized that the entire issue was fact-based, and both the Commissioner of Incometax (Appeals) and the Tribunal had found that there was no evidence to suggest any undisclosed income earned by the assessee, aligning with the terms of the development agreement.