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TMI Blog2014 (12) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... . Addition of unaccounted income – Held that:- During the course of the search proceedings, Shri Mahesh Nanji Patel admitted undisclosed income of ₹ 5 crores in the hands of the assessee based on the papers found and seized - assessee was making entries of the on-money received by it during the course of its business - u/s. 153A, the AO has the power to assess or reassess the total income in respect of each AY falling within such assessment year in case of person where a search is initiated u/s. 132 - the AO has the power to assess or reassess the total income of the assessee - what can be taxed is the undisclosed income and not the undisclosed receipts, this means that only a reasonable amount of profit which the assessee could have earned can be added - seized paper indicates assessee was receiving on-money in the ordinary course of its business - even the unaccounted expenditures are also reflected in the seized papers - a reasonable profit should be taxed which is embedded in the total unaccounted gross receipts and therefore 8% is allowed – Decided in favour of assessee. - I.T.A. No. 2600/Mum/2012, I.T.A. No. 8765/Mum/2010 - - - Dated:- 12-9-2014 - SHRI VIJAY PAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while deciding the matter on condonation of delay. We find that the reasons explained by the assessee are not malafide and there is nothing on record to infer that by filing a belated appeal, the assessee could have achieved an ulterior purpose. Accordingly, we are satisfied with the reasons explained by the assessee that the assessee was having sufficient cause for not filing the appeal within the period of limitation. However, we feel that the assessee should pay cost of ₹ 5,000/- to the department. We condone the delay with cost. ITA No. 2600/M/2012 Assessee s appeal 2. The sole grievance of the assessee is that the Ld. CIT(A) erred in confirming the addition of ₹ 6,01,51,589/- out of the addition of ₹ 6,36,91,589/- made by the AO on account of alleged unaccounted income. 3. The assessee is a builder and developer. Search and seizure action in Patel Group of cases was conducted on 17.01.2008. Survey proceedings u/s. 133A of the Act were also carried out simultaneously in business premises of Patel Group of cases. The assessee is part of the said group. 3.1. The assessee filed return of income on 29.9.2008 declaring total income at ₹ 75,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized document. 5. Aggrieved by this, the assessee and the Revenue both are in appeal before us. 6. The Ld. Counsel for the assessee strongly submitted that the Revenue authorities have grossly erred in treating the entire unaccounted receipts as its income. It is the say of the Ld. Counsel that considering the nature of business of the assessee i.e. being a builder and a developer, the on-money received by the assessee is embedded with the profit element and therefore only profit should be estimated on the unaccounted receipts. In support, the Ld. Counsel relied upon the decision of the Tribunal Mumbai Bench in the case of Mrs. Mehroo N. Irani Vs ACIT in ITA No. 1140(Bom) of 1989. The Ld. Counsel also relied upon the decisions of the Tribunal Ahmedabad Bench in the case of Kishore Mohanlal Telwala Vs ACIT in ITA No. 4712/Ahd/1996 and Tribunal Pune Bench in the case of Balaji Construction Vs ACIT in ITA No. 145/Pune/1996. 7. Per contra, the Ld. Departmental Representative strongly supported the findings of the AO. It is the say of the Ld. DR that once the assessee has accepted the undisclosed income during the course of the search proceedings, the same cannot be retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, investments, assets, expenses etc. The above unaccounted income has been generated from the property business of M/s. Platinum Properties. I shall submit the year-wise breakup shortly. I also undertake to pay the due taxes on this undisclosed income in due course of time. The above disclosure is being made by me with the understanding that no penal proceedings and other proceedings under I.T. Act shall be initiated against the firm M/s. Platinum Properties and its partners. 9. The Revenue authorities have strongly relied upon this admission of the assessee without considering the nature of business of the assessee. Here it would be pertinent to see the entries in the seized material. The following entries pertaining to the assessee were found unaccounted and not reflected in the regular books of accounts. Party No.AR-1, Nanji R. Pate, 401, anand Sagar, Plot No.34, Sector - 17, Vashi. Bundle No. Page No. Assessment Year Unaccounted Receipts Unaccounted expenditure. 1 24 2008-2009 22,300 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 2008-09 5,239,000 1 37 2008-09 14,423,500 1 39 2008-09 4000,000 1 43 2008-09 10,078,950 1 54,52,50 2008-09 10,223,500 1 53 2008-09 3,500,000 1 56 2008-09 3,323,500 1 57 2008-09 500,000 3 4 2008-09 24,500 Total 91,202,034 24,500 Party No. AS-3: Platinum Properties, Plot No. 4 Sector 20, Roadpali, Kharghar, Taloja, Kalamboli Bundle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on-money in the ordinary course of its business. Even the unaccounted expenditures are also reflected in the seized papers. 10.1. Considering the facts in totality, in our considered opinion, a reasonable profit should be taxed which is embedded in the total unaccounted gross receipts and therefore 8% should meet the end of justice. We, accordingly, direct the AO to recompute the undisclosed income by taking 8% as net profit ratio on total unaccounted receipts. Since we have directed to estimate the profit at 8%, all the expenditures are deemed to be allowed. 11. Before parting, the Ld. CIT(A) as well as the Ld. Departmental Representative has strongly relied upon the decision of the Hon ble Supreme Court in the case of Dewan Bahadur Seth Das Mohta (supra). In the present case, we find that the assessee has declared the entire gross receipts during the course of the search proceedings thereafter realize that only the profit element should have been offered for taxation which it rightly did in the return of income. Any offer made on the wrong assumption of fact/law cannot be made a ground for taking the benefit by the Revenue authorities. Therefore, the retraction of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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