2019 (6) TMI 467 - AT - Income Tax

Assessment u/s 153A - alleged unaccounted business income alleged to be earned on sales of plots in Kediaz Corridor computed on the basis of noting found in AS-9 impounded u/s 133(6) - HELD THAT - As documentary evidences that the booking in the name of parties as mentioned in the seized document in above cases was cancelled and the plots were later on sold to some other party. Once it is proved that the booking has been cancelled then it is admitted fact that upon cancellation of booking whatever amount was received from such party either against plots or JDA charges etc. will have to be refunded back to such party and in such a situation there cannot be income and no addition can be made against alleged cash receipt of these plots. Further sales of the parties to whom these plots were subsequently sold is verifiable from books of accounts and affidavit submitted by such parties and there is no material available on record that the assessee received some payment from such parties over and above to whatever recorded in books of accounts. From the record we also found that the cash receipt against such plots as recorded in books of accounts is equal to or more than the cash receipt in seized documents. There is no reason to presume that the receipt recorded in books of accounts is different from the cash as per seized document. Further the cash receipt from the parties to whom these plots were sold is verifiable from books of accounts and affidavit submitted by such parties and there is no material available on record that the assessee received some payment from such parties over and above to whatever recorded in books of accounts. Cash was either not received actually or refunded by the assessee. We also found that proper documentary evidence like affidavits etc. were filed before the A.O. in support of the explanation so filed. Since the assessee had filed the affidavit in the case of almost all the plot holders and the sale consideration received to assessee against sales of plots is duly verifiable from such affidavits the CIT(A) was not justified in upholding addition by estimating the G.P. at 31% for sustaining the addition and rejecting the evidences submitted by the assessee in the form of affidavit of the parties. CIT (A) did not give any cogent reason or did not referred any evidence/material/document to prove that the assessee actually received amount against sales of plots over above to whatever recorded in books of accounts. - Decided in favour of assessee Gain on sale of land - unaccounted payment received against sales of the plots - capital gain or business income - alleged brokerage income @ 4% earned on the sale of plots - HELD THAT - We also found from the record that the plots belonging to the assessee was accepted by the A.O. herself as capital assets therefore whatever gain was assessable on sale of such plots is liable to be taxed under the head capital gains as against the income from business. Accordingly the A.O. was not justified in bringing to tax such income from sale of plots held by the assessee as capital asset under the head business income. From the record we found that in the case of the assessee there is no tangible material available on record to form a reasonable belief that amount of sale consideration worked out by AO against the sales of plots mentioned in the impounded record was actually received by assessee. Further also there is no material that any consideration against the plots owned by third party was received by the assessee. However the CIT(A) had confirmed the addition of 4, 49, 644/- on account of alleged brokerage income @ 4% earned on sale of plots of 1, 12, 41, 839/- (which does not pertain to the assessee) on the basis of document marked as 21-22 of Exhibit-9. Nothing was placed on record by the ld DR before us so as to persuade us to deviate from the findings so recorded by the ld. CIT(A) accordingly we confirm the action of the ld. CIT(A) for deleting the addition made on account of sale of plots. So far as he has upheld the addition by estimating brokerage income @ 4% earned on sale of such plots. Keeping in view nature of assessee s business and prevailing market condition we estimate the brokerage income at 1% in place of 4% estimated by the ld. CIT(A). Income from long term capital gains - working out the alleged unaccounted receipts on the basis of amount found noted in Exhibit-9 (in relation to plots which pertaining to the assessee) - HELD THAT - Whatever amount was received by the assessee against the sales of plot is duly recorded in books of accounts and except to that no amount was received by the assessee. We found that for sustaining the addition and rejecting the evidences submitted by the assessee in the form of affidavit of the parties the CIT (A) did not give any cogent reason nor he referred any evidence/material/ document to prove that the assessee actually received amount against sales of plots over above to whatever recorded in books of accounts. Accordingly we direct the A.O. to delete the addition under the head income from long term capital gains. Addition on account of undisclosed receipts from sale of plots - HELD THAT - Addition so sustained by ld. CIT (A) is based only on the basis of presumption and assumption without considering the submission evidences and explanation filed by the assessee in the right judicial perspective. From examination of the assessment order as well as order of CIT (A) it will reveal that the entire addition was made on the basis of presumptions assumption without having any material to prove the same to be correct. The submission and documents submitted by the assessee completed ignored and rejected without any cogent reason. Accordingly we do not find any justification for the addition upheld by the ld. CIT(A) by estimating profit of 31% on the alleged receipt which was even found by the ld. CIT(A) having not actually received by the assessee. Accordingly we direct to delete the addition of 26, 69, 539/- upheld by the ld. CIT(A). Addition made by the A.O. on account of purchase of mobile phone - HELD THAT - As per the balance sheet and ITR we observe that there was a total withdrawal of the family members with regard to household expenses was 9, 19, 207/-. Looking to the household withdrawal of 9, 19, 207/-. the expenses of 71, 500/- so incurred by the assessee on purchase of mobile phone is duly explained. Furthermore detailed finding to this effect has also been recorded by the ld. CIT(A) at para 17.2 of his appellate order which has not been controverted by the ld DR by bringing any positive material on record. Accordingly we do not find any reason to interfere in the order of the ld. CIT(A) in deleting the addition made by the A.O. on account of purchase of mobile phone as found during the course of search. Addition u/s 69C - estimation of income at 2% against the alleged expenditure - HELD THAT - Since the A.O. and the ld. CIT(A) has made addition of income as well as expenses both the benefit of telescoping of income earned by the assessee is to be allowed against the alleged expenses so incurred by the assessee. It is admitted position of law that the income as well as expenses cannot be added and due credit of income should be given to assessee against the unaccounted expenses. There is no material with the department to show that the undisclosed income in the hands of the assessee was utilized for other purposes except to undisclosed expenses of the assessee. In absence of any evidence otherwise for utilization of undisclosed income it can prudently be presumed that such income was utilized for incurring undisclosed expenditure. Thus we direct the A.O. to allow credit of 3, 66, 000/- being commission income confirmed by us hereinabove by estimating the same at 2% against the alleged expenditure of 4, 08, 781/-. Accordingly we confirm addition of 42, 781/- (4, 08, 481 3, 66, 000) under the head Section 69C. We direct accordingly. Addition on account of alleged excess silver found at the time of search - Section 69A r.w.s. 115BBE - addition was made by rejecting the submission evidences submitted by the assessee - HELD THAT - No reason to interfere in the findings so recorded by the ld. CIT(A) which are as per material on record. Furthermore no any positive material was brought on record by the ld. DR so as to persuade us to deviate from the findings so recorded by the ld. CIT(A) while deleting the addition made on account of excess silver jewellery found. Unaccounted business income alleged to be earned on sales of plot - noting found on Page 1 of exihibit-8 seized from 1 Gayatri Nagar Main Tonk Road Sanganer Flyover Jaipur - HELD THAT - In the case of the assessee there is no tangible material available on record to form a reasonable belief that amount of sale consideration presumed to be received in cash against the sales of plot noted on the seized document was actually received to assessee. Further also there is no material that any consideration against the plots owned by third party was received by the assessee. No documents were found from the possession of assessee or from the other one to prove that any consideration was received/receivable to assessee against alleged sale of plot noted on the paper. No reason to interfere in the order of the ld. CIT(A) deleting the addition Undisclosed business income admitted in his statements recorded during search which was later on retracted - HELD THAT - From the record we found that except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee made undisclosed investment in jewellery. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by assessee is correct therefore the same cannot be relied upon. The Hon ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala Another 1971 (9) TMI 64 - SUPREME COURT has held that admission is an extremely important piece of evidence but it can t be said that it is conclusive. It is upon to the assessee to show that it is incorrect. The Hon ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 2006 (7) TMI 162 - RAJASTHAN HIGH COURT has held that admission in statement during search is not conclusive proof of fact and can always be explained. As finding of the ld. CIT(A) which has not been controverted by the ld DR by bringing any positive material on record we do not find any reason to interfere with the findings so recorded by the ld. CIT(A) for deleting the addition

Summary

Issues Involved:
1. Unaccounted business income from sales of plots.
2. Unaccounted receipts from sales of plots.
3. Alleged brokerage income.
4. Income from long-term capital gains.
5. Unexplained expenses.
6. Unexplained cash found during search.
7. Alleged excess gold and silver jewelry found during search.
8. Undisclosed business income admitted in statements during search.

Detailed Analysis:

1. Unaccounted Business Income from Sales of Plots:
The A.O. made additions based on documents found during the search which indicated unaccounted business income from sales of plots. The CIT(A) deleted significant portions of these additions after examining the seized documents and finding discrepancies, such as booking cancellations and amounts already recorded in books. The CIT(A) upheld some additions by applying a GP rate of 31% on unaccounted receipts. The ITAT found that the CIT(A) had provided a detailed analysis and upheld the deletion of major additions while confirming only a small portion based on estimated GP.

2. Unaccounted Receipts from Sales of Plots:
The A.O. made additions based on differences in sales rates noted in seized documents and those recorded in books. The CIT(A) deleted a significant portion of these additions, stating that the sales were not entirely unaccounted and that the differences were due to various factors like booking cancellations. The CIT(A) applied a GP rate of 31% on the remaining unaccounted receipts. The ITAT upheld the CIT(A)'s findings, noting that the CIT(A) had provided a comprehensive analysis and that the additions were based on assumptions without concrete evidence.

3. Alleged Brokerage Income:
The CIT(A) estimated brokerage income at 4% on the sale amount of certain plots. The ITAT found this estimation to be on the higher side and reduced it to 2%, considering the nature of the business and prevailing market conditions.

4. Income from Long-Term Capital Gains:
The CIT(A) directed the A.O. to treat certain receipts as long-term capital gains instead of business income. The ITAT upheld this direction, noting that the CIT(A) had correctly categorized the income based on the nature of the transactions.

5. Unexplained Expenses:
The A.O. made additions for unexplained expenses based on seized documents. The CIT(A) deleted these additions, stating that the expenses were covered by household withdrawals and other documented sources. The ITAT upheld the CIT(A)'s findings, noting that the CIT(A) had provided a detailed explanation and that the A.O. had not pointed out any defects in the books of accounts.

6. Unexplained Cash Found During Search:
The A.O. made additions for unexplained cash found during the search. The CIT(A) deleted these additions, stating that the cash was duly recorded in the books of accounts and supported by documentary evidence. The ITAT upheld the CIT(A)'s findings, noting that the CIT(A) had provided a detailed analysis and that the A.O. had not pointed out any defects in the books of accounts.

7. Alleged Excess Gold and Silver Jewelry Found During Search:
The A.O. made additions for excess gold and silver jewelry found during the search. The CIT(A) deleted these additions, stating that the jewelry was explained through wealth tax returns and other documentary evidence. The ITAT upheld the CIT(A)'s findings, noting that the CIT(A) had provided a detailed analysis and that the A.O. had not provided any concrete evidence to support the additions.

8. Undisclosed Business Income Admitted in Statements During Search:
The A.O. made additions based on the assessee's statements during the search, where they admitted to undisclosed income. The CIT(A) deleted these additions, stating that the statements were retracted and not supported by any concrete evidence. The ITAT upheld the CIT(A)'s findings, noting that the additions were based solely on statements without any corroborative evidence, and that the CIT(A) had provided a detailed analysis.

Conclusion:
The ITAT upheld the CIT(A)'s detailed and comprehensive analysis, which resulted in the deletion of significant portions of the additions made by the A.O. The ITAT found that the CIT(A) had correctly analyzed the seized documents, statements, and other evidence, and had provided a detailed explanation for the deletions and adjustments made. The ITAT also made minor adjustments, such as reducing the estimated brokerage income from 4% to 2%. Overall, the ITAT's decision was based on a thorough review of the evidence and the CIT(A)'s detailed findings.