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TMI Blog2014 (12) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded, consisting of 18 questions and 22 questions respectively - there are glaring inconsistencies in two statements - only profit element embedded into the business receipt is to be taxed - additions cannot be made solely on the basis of survey statement - sale-deeds were executed in other years, therefore the authorities below were not justified in taxing the sale consideration in the years under consideration - there is no finding by the authorities below and no inquiry has been made as to when such properties were transferred to the respective buyers in terms of the provisions of Income Tax Act - actions of both the authorities below cannot be justified, however, there was no effective representation by the assessee and relevant information was not placed but the AO did not make further enquiry on the basis of material collected during the course of survey proceedings – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication – Decided in favour of assessee. - I.T.A. No. 4207/Ahd/2007, I.T.A. No.1732/Ahd/2010 - - - Dated:- 12-12-2014 - Shri Anil Chaturvedi And Shri Kul Bharat,JJ. For the Appellant : Shri S. N. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c)(b) of the Act is not justified. 7. Initiation of penalty u/s.271F of the Act is not justified. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 3. Briefly stated facts are that a survey action u/s.133A of the Income Tax Act,1961 (hereinafter referred to as the Act ) was carried out at the premises of the assessee. Subsequently, the case was reopened and assessment u/s.143(3) r.w.s. of the Act was framed vide order dated 13/12/2006, thereby the Assessing Officer (AO in short) made addition of ₹ 10,02,508/- in respect of the profit and ₹ 5,49,00,000/- in respect of the unexplained investment u/s.69-C of the Act. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee rejected the appeal and also while disposing of the appeal, the ld.CIT(A) made enhancement in the addition made u/s.69C of the Act. 3. First ground is against the addition of ₹ 10,02,508/- in estimating book results at 8% on sale of plots and land without properly appreciating the fact. The ld.counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally as it is a settled position of law that the assessment cannot be made solely on the basis of the statement recorded during the course of survey. In support of this contention, he relied on the following caselaws:- (i) 263 ITR 101 (Ker.) in the case of Paul Mathews Sons vs.CIT (ii) 300 ITR 157 (Mad.) in the case of CIT vs. S.Khadarkhan Sons (iii) 328 ITR 384 (Del) in the case of CIT vs. Dhingra Metal Works (iv) 97 ITD 361 (Ahd) in the case of Ashok Manilal Thakkar vs. ACIT. 5.1. The ld.counsel for the assessee submitted that admittedly the assessee is carrying out the business of development of the land and he has in its balance-sheet shown the plots as stock-in-trade, such stock-intrade cannot be subjected to tax till the sale-deeds have been executed in favour of the purchaser. In support of this contention, he relied on the following two judgements of Hon ble Jurisdictional High Court: (i) 133 ITR 55 (Guj.) in the case of CIT vs. Ashaland Corpn. (ii) 173 ITR 666 (Guj.) in the case of CIT vs. Motilal C.Patel Co. 5.2. The ld.counsel for the assessee submitted that the ld.CIT(A) has passed his finding on the basis pick and choose method of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the ld.counsel for the assessee. The undisputed fact remains that the AO has made addition of ₹ 5,49,00,000/- invoking the provisions of section 69C of the Act, by observing as under:- 8. In this case the return of income for AY 2004-05 has not been filed till the date of finalization of assessment. In fact on the day of survey the assessee has admitted that he has received ON MONEY OF ₹ 6.60 Crores and unaccounted expenses @ 85% were made from the same thus he ultimately could earn around 15% of the On Money receipt as net profit, thereby admitted a disclosure of ₹ 111 Lacs as additional Income. It was claimed during the course of survey that the land purchased was originally divided into 800 plots out of which 600 plots were sold by the assessee. The assessee had not furnished any evidence regarding any expenses incurred for earning such ON MONEY . In answer to question No.10 the assessee has admitted that per plot he received ₹ 1,10,000/- as on money. In this case, no receipt of the amount was satisfactorily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Hon ble High Court has held as under:- It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold have been made by the assessee and that has also not been disclosed. In the absence of such finding of fact the question whether entire sum of undisclosed sale proceeds can be treated income of the relevant assessment year answers by itself in negative. The record goes to show that there is no finding nor any material has been referred about the suppression of investment in acquiring the goods which have been found subject of undisclosed sales. Therefore, no question of law which requires to be referred to this Court arises out of Tribunal s order. The order of Tribunal under s. 256(1) is not erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no effective representation on behalf of the assessee as the regular assessment was made u/s.144 of the Act. In reopening proceedings as well, the assessee remained noncooperative. The AO in para-8 of the order has observed as under:- 8. In this case the return of income for A.Y. 2004-05 has not been filed till the date of finalization of assessment. In fact on the day of survey the assessee has admitted that he has received ON MONEY of ₹ 6.60 Crores and unaccounted expenses @ 85% were made from the same thus he ultimately could earn around 15% of the On Money receipt as net profit, thereby admitted a disclosure of ₹ 111 Lacs as additional income. It was claimed during the course of survey that the land purchased was originally divided into 800 plots out of which 600 plots were sold by the assessee. The assessee had not furnished any evidence regarding any expenses incurred for earning such ON MONEY . In answer to question NO.10, the assessee has admitted that per plot he received ₹ 1,10,000/- as on money. In this case, no receipt of the amount was satisfactorily explained or shown in the audited accounts. Simultaneously the expenditure has not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney was paid by the assessee to the owners of land, as it has been specifically claimed in the statement. It is settled proposition of law that only profit element embedded into the business receipt is to be taxed. It is also settled proposition of law that additions cannot be made solely on the basis of survey statement. In this case, one of the submissions is that he is into the business of development of properties, the residential plots, therefore plots are stock-in-trade. It is pointed out that sale-deeds were executed in other years, therefore the authorities below were not justified in taxing the sale consideration in the years under consideration. However, we find there is no finding by the authorities below and no inquiry has been made as to when such properties were transferred to the respective buyers in terms of the provisions of Income Tax Act. Moreover, factum of number of plots sold during the year under consideration requires verification at the end of the Assessing Officer as the AO and the CIT(A) have taken two different figures. Therefore, after considering the totalities of the facts and judicial pronouncements as relied by the ld.counsel for the assessee, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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