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TMI Blog2013 (5) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 4.3.2013 were passed to the effect that these applications shall be considered along with the main case. Before we come to the amended questions raised, it may be necessary to give short background of the case. 2. A search under Section 132 (1) of the Income Tax Act, 1961 was conducted of the residential premises of the assessees on 5.10.1995. In that search, some cash as well as some incriminating documents were found and seized. Notices for block assessment under Section 158BC of the Act were served upon the respondents which culminated into various additions by the Assessing Officer. Since it was a case of block assessment, the assessment order was passed after getting approval of Commissioner of Income Tax. These additions were challenged by the respondents-assessees by filing appeals, as mentioned above. By the impugned orders, some additions are deleted. In ITA 663/2010, following questions of law are raised: "1. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.27,673/- for AY 1988-89 and Rs.35,809/- for AY 1991-92 on account of understatement of cost of renovation of residence holding that it was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit of the assessee and hence the order of Hon'ble ITAT was erroneous and perverse. 6. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.1,42,770/- for AY 1991-92, Rs.51,080/- for AY 1992-93, Rs.56,080/- for AY 1993-94, Rs.50,882/- for AY 1994-95 and Rs.1,60,782/- for AY 1995-96 by estimating the commission @ 2% without any basis as against the correct amount of commission worked out by the AO and no expenses were allowed in the absence of any evidence and hence the order of Hon'ble ITAT was erroneous and perverse. 7. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.9,66,000/- for AY 1992-93 on account of undisclosed income based on documentary evidence holding that there is nothing on record to show that the assessee had earned undisclosed income and ignoring the document found during the course of search which could not be substantiated by the assessee and hence the order of Hon'ble ITAT was erroneous and perverse. 8. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.26,000/- for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of inspection of the property by the valuation officer as per the valuation report was 11.10.1996 and the valuation report has been submitted for the dates April, 1987 to March 1988 and April 1990 to March 1991. It was not possible to demarcate the property which was to be valued after a period 8 years prior without there being any document available with the AVO to base his report. As such, it was pleaded that the addition made on guess work and surmises may be deleted. On the other hand, the Ld. CIT D.R. relied upon the order of the Assessing Officer. She submitted that the assessee was present at the time of the inspection of the property as is evident from the valuation report. As such, the assessee was quite aware of the valuation being undertaken. Moreover, the assessee has declared the value at Rs.55,000/- as per the report of the AVO. Under the circumstances, it was pleaded that the addition made may be sustained. 7. We have considered the rival submissions and perused the documents on record. During the course of search, no material or document has been found to substantiate that the assessee had spent the impugned amount on construction. Statement of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the statement given without having the benefit of relying on the documentary evidence. This is again a matter of appreciation of evidence. 8. As far as question of law No.4 is concerned, it pertains to deletion by the ITAT of the addition of Rs.3 lacs on account of profit from property deals. The deletion is made on the ground that addition is made only on suspicion, surmises and conjectures and it is without any reliable documents. Learned counsel for the Revenue argued that the addition was based on the documents found in the residence of the assessee. However, the said document No.90 was examined by the ITAT and found to be 'dumb document'. The addition was, thus, rightly deleted. No question of law arises. 9. Likewise, proposed question of law No.5 is factual, based on evaluation of documentary evidence. A finding of fact is recorded to the effect that the assessee had already considered the income earned on this account in the Commission Income Statement. The ITAT has recorded the finding of fact that assessee had earned only commission income on the transaction and, therefore, there could not have been any such addition. 10. Insofar as proposed question No.6 is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record. The relevant discussion finds place in para 10 of the assessment order. The document being relief upon by the assessing officer to make the instant addition pertains to one Shri Siraj. As already noted elsewhere in the order, the assessee is a property dealer earning commission income. The explanation rendered by the assessee during the course of assessment proceedings as well as before us is quite plausible. The notings on the page itself are clear in as much as commission of Rs.10,000/- being approx. 1% of the deal is mentioned. The assessing officer himself writes in the body of the order that this document relates to one Sh. Shiraz. The Assessing Officer has treated 966/- written on the document as Rs.9,66,000/- which has been accepted by the assessee. Further, the assessee has explained in the entire document and admitted to have earned commission in respect of this deal, which has been declared by the assessee. There is nothing on record to show that the assessee had earned undisclosed income as held by the assessing officer. In view of these facts, since no documentary evidence was brought on record by the Revenue or found during search that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of profit from running of committee and estimating the profit @ 2.5% as against 5% as made by AO without giving any reasons and hence the order of Hon'ble ITAT was erroneous and perverse. 3. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.2,04,000/- for AY 1995-96 and Rs.22,750/- and Rs.26,000/- for AY 1996-97 based on seized documents stating that the explanation giving by assessee is plausible one and ignoring the reasons given by AO and hence the order of Hon'ble ITAT was erroneous and perverse. 4. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.1,22,341/- for AY 1996-97 on account of understatement of cost of renovation of residence holding that it was made on pure estimation basis when the AO had made this addition on the basis of valuation report of Assistant Valuation Officer, and hence the order of Hon'ble ITAT was erroneous and perverse. 5. Whether on facts and circumstances of the case the Hon'ble ITAT is justified in law in deleting the addition of Rs.2,76,762/- on account of jewellery and Rs.1,67,200/- on account of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organizing committees. The relevant discussion finds place in para 13 of the assessment order. The Assessing Officer, on an ad-hoc basis, considered 20 members having contributed Rs.20,000/- each and calculated the amount at Rs.4,00,000/- on which a profit of 5% has been applied. If this logic of the Assessing Officer is to be considered, it would mean that the assessee would have earned Rs.20,000/- on an investment of 20,000/- @ Rs.1000/- per month for 20 months which is quite improbable. The counsel of the assessee has explained at length the working of the committee business, which has not been rebutted by the Revenue. The moot question before us is as to what would be the reasonable rate of profit, which could have been earned by organizing such committees. In our opinion, to cut down the litigation and also keeping in view the principle of natural justice, it will be reasonable if the rate of profit be taken at 2.5% instead of 5%, applied by the Assessing officer. Thus, this Ground of appeal is partly allowed as observed. This conclusion/decision would also cover/applicable to the identical grounds Nos.9(3), 10(1),10(4) raised in the appeal, consequently, the rate be taken at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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