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2014 (8) TMI 795 - AT - Income TaxAccrual of income - Sale consideration treated as undisclosed income - Civil construction business - Whether the real income has been offered for taxation by the assessee or not agriculture land was purchased - pending NA clearance, land was plotted and sold but could not registered - later 2.5 times money was returned to allottees - Held that - The objection of the AO regarding the non-saleability of the land without NA is neither relevant to the issue nor it is against the prevalent business practice - Such schemes where the facts are known to the allottees are much prevalent and it cannot be the case that once the plots are allotted the income should not be shown - assessee correctly showed the income in the earlier years recognizing the revenue from transfer of rights - It cannot be said that the cost to reacquire the rights would not be allowed and only the entire sale proceeds would be taxed - only real income has to be taxed. Payments had started to some of the allottees does not mean that the profits from sale where no sale deed has been finally signed had accrued - The expenses claimed are the development expenses which were already shown in the books of accounts of M/s Maheshwari Builders, naturally as in those years the projects were accounted for in its books - Only real income has to be taxed Relying upon Smt. Jashvidyaben C. Mehta Versus Commissioner Of Income-Tax 1987 (9) TMI 18 - GUJARAT High Court - CIT(A) has rightly noted that the discrepancies noted by the AO were never confronted to the assessee and therefore he did not get an opportunity to controvert them - total profit of the scheme has been declared by the assessee in earlier years and in AY 09-10 - Revenue has not brought any material to controvert the findings of CIT(A) the order of the CIT(A) is upheld Decided against Revenue.
Issues Involved:
Appeal against order of Ld. CIT(A) for A.Y. 2009-10 - Addition made on account of sale consideration treated as undisclosed income - Discrepancies in profit from sale of land - Assessment of total income - Validity of AO's objections - Evidence provided by the assessee - Jurisdictional High Court judgments cited - Deletion of addition by Ld. CIT(A) upheld. Detailed Analysis: 1. Background and Assessment Process: The appeal was filed by the Revenue against the order of the Ld. CIT(A) for the assessment year 2009-10. The assessee, engaged in civil construction business, declared a total income of Rs. 5,81,310. The AO framed the assessment under section 143(3) determining the total income at Rs. 81,12,220. The dispute arose regarding the sale consideration of an immovable property sold by the assessee, which the AO treated as undisclosed income. 2. AO's Findings and Assessee's Explanation: The AO, based on AIR information, found a variance between the sale amount and the profit declared by the assessee. The assessee explained that the property was agricultural land awaiting NA clearance, initially reflected in the books of another entity. The AO disagreed with the explanation, adding the balance amount to the assessee's income. The Ld. CIT(A) later deleted this addition after considering the submissions and evidence provided by the assessee. 3. Ld. CIT(A)'s Decision and Reasoning: The Ld. CIT(A) examined the facts, objections raised by the AO, and the evidence submitted by the assessee. He noted discrepancies in the AO's objections and overruled them. The Ld. CIT(A) emphasized that the total profit had been declared by the assessee in previous years and in the relevant assessment year. He cited various judgments to support the principle of taxing only real income. Consequently, he directed the deletion of the addition made by the AO. 4. Appellate Tribunal's Decision: The Revenue appealed against the Ld. CIT(A)'s order. During the hearing, the DR supported the AO's findings, while the AR reiterated the submissions made before the CIT(A). The Appellate Tribunal upheld the Ld. CIT(A)'s decision, noting that the alleged discrepancies were not confronted to the assessee by the AO. The Tribunal found no reason to interfere with the Ld. CIT(A)'s reasoned order, as the Revenue failed to provide any material to challenge it. 5. Conclusion: Ultimately, the Appellate Tribunal dismissed the Revenue's appeal, affirming the deletion of the addition made by the AO by the Ld. CIT(A). The Tribunal found no grounds to overturn the Ld. CIT(A)'s decision, as the evidence and reasoning provided by the assessee were deemed sufficient to support the deletion of the disputed addition. In summary, the judgment addressed the issues of disputed income addition, assessment discrepancies, assessee's explanations, Ld. CIT(A)'s decision rationale, and the Appellate Tribunal's final ruling, ultimately upholding the deletion of the addition made by the AO.
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