2020 (3) TMI 127 - HC - Income Tax

Addition on account of sales - Addition loose sheets recovered during survey operations - HELD THAT - We do not find any reason to interfere in the impugned order. The documents recovered during the survey operation have to be read as they exist and nothing can be added to them. The said documents disclose what they state. The said documents reflect broker-wise due as on 12.01.2005 . This clearly means that the tabulation reflected the amount recoverable by the assessee from the named brokers as on 12.01.2005 and it did not reflect the amount actually received or accrued. The assessee admittedly is a real estate developer and its explanation that it had received booking amount of Rs. 17 crores which was reflected in the book of accounts to the AY 2005-06 and that in respect of the said bookings further amounts were to be received in subsequent years was completely a plausible explanation. Indeed the assessee disclosed in its books of accounts further receipt of Rs. 1, 34, 59, 86, 447/- in the subsequent years and the assessee also reflected the balance amount due as Rs. 7, 88, 50, 502/-. AO was not justified in making addition on account of sales.

Summary

Issues:
1. Delay of 150 days in filing the appeal.
2. Addition of &8377; 1,46,55,94,922/- on account of sales.

Delay of 150 days in filing the appeal:
The High Court heard the senior standing counsel for the Revenue on merits regarding the delay in filing the appeal. The appeal was against the order passed by the Income Tax Appellate Tribunal, which favored the respondent-Assessee and rejected the appeal by the revenue. Despite the delay, the Court decided not to interfere in the appeal and did not pass any order on the application seeking condonation of delay.

Addition of &8377; 1,46,55,94,922/- on account of sales:
The case involved the recovery of three loose sheets during a survey operation, which contained "broker-wise due as on 12.01.2005". The Assessing Officer added the amount mentioned in the sheets as the income of the assessee for the Assessment Year 2005-06. However, the assessee explained that the amount was not received during that year but was recoverable in subsequent years. The CIT (A) accepted the appeal of the respondent-Assessee, and the Tribunal also rejected the appeal by the revenue. The High Court, after considering the documents recovered during the survey operation, found the explanation provided by the assessee to be plausible. The Court noted that the documents reflected the amount recoverable by the assessee from the brokers as of a specific date and did not indicate actual receipts. The Court concluded that the Assessing Officer was not justified in making the addition on account of sales, leading to the dismissal of the appeal.

In conclusion, the High Court dismissed the appeal, emphasizing that the documents recovered during the survey operation should be interpreted as they exist, and the amount mentioned in the sheets did not represent actual receipts but recoverable amounts. The Court found the explanation provided by the assessee regarding the subsequent receipt of amounts to be credible, leading to the rejection of the addition made by the Assessing Officer.