2012 (6) TMI 657 - HC - Income Tax

Suppression of sale proceeds and estimation of undisclosed income - sale consideration as per the sale deed did not tally with the actual payments made by the purchasers - assessee s contention that the receipt of on-money should be held in the name of two partners and not against the firm - additional ground of assessee that the expenditure incurred was not considered by the Revenue - Held that - The provisions Chapter XIV-B, i.e. limit the inquiry by the Assessing Officer to those materials found during the search and seizure operation are not applicable to proceedings under Sections 153A/153C mentioning that the AO can take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee - Consequently, the principles of Section 158BB of the Act cannot be imported for the purposes of interpreting Section 153A/153C - as the interpretation of Sections 153A/153C of the Act is quite clear, no substantial question of law arises for consideration. no evidence before the AO to conclude that on-money was received by Ahura Holdings (firm) in respect of all the sale transactions - Held that - There was adequate material before the Assessing Officer in the form of eight sale deeds and in the form of replies given by assessee to questions posed to him with regard to receipt of on-money to enable AO to come to an informed conclusion in this regard. Appreciation of the available material is within the domain of the Assessing Officer and this does not lead to any substantial question of law, unless the conclusions arrived at are perverse - CIT (Appeals) agreed with the assessee that disallowance on the cost of land was not justified and as regards legal fees and some development expenses etc., the AO was directed to have a fresh look into the matterNo substantial question of law arises nor there is any occasion to interfere with the view taken concurrently by all the authorities - against assessee.

Issues Involved:
1. Suppression of sale proceeds and estimation of undisclosed income.
2. Applicability and interpretation of Sections 153A and 153C of the Income-Tax Act.
3. Evidence of receipt of on-money by Ahura Holdings.
4. Consideration of expenditure incurred in the development of the property.

Issue-wise Detailed Analysis:

1. Suppression of Sale Proceeds and Estimation of Undisclosed Income:
The primary issue before the Assessing Officer was the suppression of sale proceeds and the estimation of undisclosed income for Ahura Holdings. The search and seizure operation revealed discrepancies between the sale consideration as per the sale deeds and the actual payments made by purchasers. It was found that on-money was paid to Ahura Holdings by the vendees. The Assessing Officer, using his best judgment, estimated the undisclosed income and passed an assessment order on a substantive basis for Ahura Holdings, while making protective assessments for Gopal and Avadesh. The Commissioner of Income-Tax (Appeals) upheld the Assessing Officer's findings, agreeing that there was sufficient material to conclude that Ahura Holdings had received on-money.

2. Applicability and Interpretation of Sections 153A and 153C of the Income-Tax Act:
The Tribunal considered whether the Assessing Officer was required to confine himself only to the material found during the search operations under Sections 153A and 153C of the Act. The Tribunal held against the assessees, stating that the Assessing Officer could consider material beyond what was found during the search. The High Court concurred, noting that the provisions of Chapter XIV-B, which limit the inquiry to materials found during the search, are not applicable to Sections 153A/153C. Therefore, the Assessing Officer can consider additional material for assessing undisclosed income.

3. Evidence of Receipt of On-Money by Ahura Holdings:
The assessees contended that there was no evidence to conclude that on-money was received by Ahura Holdings for all transactions. They argued that material was available only for eight transactions. The High Court disagreed, stating that there was adequate material, including eight sale deeds and Gopal's statements, to enable the Assessing Officer to conclude that on-money was received by Ahura Holdings. The court emphasized that the appreciation of available material is within the domain of the Assessing Officer and does not lead to a substantial question of law unless the conclusions are perverse, which was not the case here.

4. Consideration of Expenditure Incurred in the Development of the Property:
The assessees argued that the Assessing Officer did not account for the expenditure incurred in developing the property. The High Court reviewed the assessment and appellate orders and found that the Commissioner of Income-Tax (Appeals) had agreed with the assessees on some disallowances and directed the Assessing Officer to reconsider certain expenses. The court concluded that the expenditure was indeed considered by the Revenue, and the issue raised was purely factual, raising no substantial question of law.

Conclusion:
The High Court dismissed the appeals, concluding that no substantial question of law arose for consideration. The court upheld the findings of the Assessing Officer, the Commissioner of Income-Tax (Appeals), and the Tribunal, affirming that the undisclosed income was that of Ahura Holdings and that the interpretation of Sections 153A/153C was clear and correct.

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