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2015 (3) TMI 450 - AT - Income TaxAddition on account of entries contained in handwritten sheet found during the course of search - Income from undisclosed sources - Held that - No merit in the aforesaid addition made in the hands of the assessee on the basis of entries on handwritten sheet which did not belong to him. Once the assessee is not carrying on any construction work, then the natural corollary is that it would not make any payment for the purpose of construction and when handwritten sheet depicted construction payments, the same could not be treated as the document belonging to the assessee. Further the assessee clearly pointed out that the name of the person on the said sheet was Mr. Sajjan Jain, who was employee of M/s. Goel Construction Co. Pvt. Ltd. and the said facts could have been verified by the Assessing Officer, but the Assessing Officer had failed to discharge his onus and in the said circumstances there is no merit in the addition made in the hands of the assessee. Further the assessee has also filed affidavit to the effect that the said document was not in his handwriting or in the handwriting of his employees and also Shri Sajjan Jain was not in his employment and belonged to M/s. Goel Construction Co. Pvt. Ltd. In the entirety of the facts and circumstances, we delete the addition of ₹ 12,30,767. - Decided in favour of assessee. Income from undisclosed sources - Addition of ₹ 5 lakhs - document seized from the business premises of the assessee - Held that - The plea of the assessee was that the customers had come to the office to reconcile their respective accounts but since cheques of RC were continuously returning unpaid and after discussion he offered ₹ 5 lakhs cash as mentioned on the said page but actually he again backed out. The assessee in the said reply further stated that this fact could be proved from the entries on the left side of the page where it is noted that he had been allotted flat for ₹ 15,36,100 and he had only made payment of ₹ 7,89,760 and balance payment due was ₹ 7,46,340 and he had paid another sum of ₹ 1,95,000. The assessee further claimed that as the cheques of ₹ 2 lakhs again bounced and the balance payment remained at ₹ 7,51,340. Though the assessee had tried to reconcile the entries but has failed to establish its case. The said document clearly reflects that there is cash of ₹ 5 lakhs and commission of nil. He also mentioned against the amounts received from RC totalling ₹ 7,89,760, on the right side of the document. We find no merit in the claim of the assessee in this regard and in the absence of the assessee having furnished any evidence to prove its case that sum of ₹ 5 lakhs was offered against cheques being dishonoured, does not establish the case of the assessee. In case the cheques were being dishonoured then how the total of ₹ 7,89,760 has been taken and it does not talk of any dishonour of cheques. In the absence of any evidence filed to prove its case we find no merit in the plea of the assessee and we uphold the addition of ₹ 5 lakhs in the hands of the assessee as income from undisclosed sources - Decided against assessee. Addition of ₹ 19,95,000 and ₹ 5,11,373 made in the hands of the assessee - assessee pleads that the said amounts have been considered by Shri J. C. Bansal in his computation filed before the hon'ble Settlement Commission - Held that - where the applicant had also offered additional income before the Settlement Commission in the hands of Maa Saraswati Educational and Social Welfare Trust, we find no merit in the so called addition made in the hands of the assessee totalling ₹ 19,95,000. Accordingly, we direct the Assessing Officer to delete the addition of ₹ 19,95,000. Further, addition of ₹ 5,11,373 was made in the hands of the assessee on protective basis. In view of the settlement petition having been filed by Shri J. C. Bansal before the Settlement Commission, the Settlement Commission has already decided the issue in the hands of Maa Saraswati Educational and Social Welfare Trust and which also incorporates the additional income offered by Shri J. C. Bansal and further being assessed in his hands. In view thereof, we find no merit in the said addition of ₹ 5,11,373 and the same is directed to be deleted. - Decided in favour of assessee. Disallowance of deduction under section 80-IB - amount declared during the course of survey as additional income amounting to ₹ 1.70 crores - Held that - In view of the ratio being settled in National Legguard Works v. CIT (Appeals) 2006 (9) TMI 100 - PUNJAB AND HARYANA HIGH COURT , Tudor Knitting Works P. Ltd. v. CIT 2015 (3) TMI 457 - PUNJAB & HARYANA HIGH COURT , KIM Pharma P. Ltd. v. CIT 2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT we hold that the assessee is not entitled to the deduction under section 80-IB of the Act on the surrendered income of ₹ 1.70 crores as the surrendered income cannot form part of the business income and it is to be taxed as deemed income against which the business losses could not be set off - Decided against assessee. Undisclosed income - addition based on the seized document - Held that - As per tabulated details the amount credited/paid totalled to ₹ 46,43,115 and the balance on each page was shown as receivable by Mr. Monga and his family members from the assessee vide letter dated August 10, 2008. Further sum of ₹ 13,00,000 is mentioned in the said letter as having been received by him. In totality thus, the total payments made by the assessee were of ₹ 46,43,115 ₹ 13,00,000 and the addition is to be restricted to ₹ 59,43,115 as held by the Commissioner of Income-tax (Appeals). The balance being the amount payable by the assessee to Shri Monga and his family members is not includible as income of the assessee. Accordingly, we uphold the addition of ₹ 59,43,115 in the hands of the assessee and dismiss the grounds of appeal raised by both assessee - Decided against assessee. Determination of profit from the real estate business of the assessee - CIT (Appeals) in rejected the percentage completion method adopted by the Assessing Officer - Held that - Where the assessee was following a particular method of accounting consistently, which has been accepted by the Department from year to year and in the absence of any defect being pointed out by the Assessing Officer that by following such method, income had escaped assessment, we find no merit in the order of the Assessing Officer in holding that percentage completion method should be applied to the assessee for the year under consideration. It is the prerogative of the assessee to arrange its affairs in such a manner and follow any recognised method of accounting to compute its profits. In view thereof, we find no merit in the order of the Assessing Officer in recomputing the income in the hands of the assessee. Upholding the order of the Commissioner of Income-tax (Appeals), we dismiss ground of appeal raised by the Revenue. - Decided against revenue.
Issues Involved:
1. Addition based on handwritten sheets found during search. 2. Addition based on undisclosed income from seized documents. 3. Non-allowance of deduction under section 80-IB. 4. Method of accounting for recognizing revenue (percentage completion method vs. project completion method). Issue-wise Detailed Analysis: 1. Addition Based on Handwritten Sheets Found During Search Ground No. 2: Addition of Rs. 12,30,767 - Facts: During a search, handwritten sheets showing transactions in the name of Shri Sajjan Jain were found. The Assessing Officer added Rs. 12,30,767 as unexplained expenditure under section 69C of the Income-tax Act, 1961. - Assessee's Argument: The document did not belong to the assessee but to an employee of M/s. Goel Construction Co. Pvt. Ltd., who was maintaining the project office at the site. - Commissioner of Income-tax (Appeals): Upheld the addition, stating the document was found on the assessee's premises and the assessee failed to provide a cogent explanation. - Tribunal's Decision: Deleted the addition, noting the assessee had discharged the onus of proving the document did not belong to it and the Assessing Officer failed to summon the concerned person to verify the claim. Ground No. 3: Addition of Rs. 5 Lakhs - Facts: Another document showing transactions in cheques and cash received from customers was found. The Assessing Officer added Rs. 5 lakhs as undisclosed income. - Assessee's Argument: Claimed the cheque payments were not regular and the cash payment was never actually made. - Commissioner of Income-tax (Appeals): Upheld the addition, stating the assessee failed to provide evidence of cheques bouncing. - Tribunal's Decision: Upheld the addition, noting the assessee failed to provide evidence to prove the case. 2. Addition Based on Undisclosed Income from Seized Documents Ground Nos. 1 and 2: Additions of Rs. 19,95,000 and Rs. 5,11,373 - Facts: Documents found during the search indicated investments by the assessee in M/s. Saraswati Educational and Welfare Trust. The Assessing Officer made additions based on these documents. - Assessee's Argument: Claimed the amounts were already considered by Shri J. C. Bansal in his computation filed before the Settlement Commission. - Commissioner of Income-tax (Appeals): Upheld the additions, rejecting the plea that the documents were interlinked. - Tribunal's Decision: Deleted the additions, noting the Settlement Commission had already considered these amounts in its order. 3. Non-allowance of Deduction Under Section 80-IB Ground No. 3: Deduction of Rs. 1.70 Crores - Facts: The assessee claimed deduction under section 80-IB on additional income declared during a survey. - Commissioner of Income-tax (Appeals): Denied the deduction, referencing the Punjab and Haryana High Court's decisions. - Tribunal's Decision: Upheld the denial, citing jurisdictional High Court rulings that surrendered income cannot form part of business income for deduction purposes. 4. Method of Accounting for Recognizing Revenue Revenue's Appeal: Percentage Completion Method vs. Project Completion Method - Facts: The Assessing Officer adopted the percentage completion method to determine the profit from the real estate business, while the assessee followed the project completion method. - Commissioner of Income-tax (Appeals): Rejected the percentage completion method, stating the assessee consistently followed the project completion method and no defects in the books were pointed out. - Tribunal's Decision: Upheld the Commissioner of Income-tax (Appeals)'s decision, noting both methods are recognized and the assessee's chosen method was consistently followed and accepted by the Department. Conclusion: - The assessee's appeals in I.T.A. Nos. 547 and 548/Chd/2013 are partly allowed. - The assessee's appeal in I.T.A. No. 549/Chd/2013 is dismissed. - The Revenue's appeals in I.T.A. No. 561/Chd/2013 to I.T.A. No. 564/Chd/2013 are dismissed. - The Revenue's appeals against the sister concern in I.T.A. Nos. 558 and 559/Chd/2011 are also dismissed.
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