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TMI Blog2017 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the directions of the Coordinate Bench and we see no infirmity in the same. At the same time, we are not in agreement with the findings of the ld CIT(A) where he states at para 4.3 (vi) of his order that set off OF sale proceeds would be available against the undisclosed stock surrender of 2.8 crores found at the time of search of sale proceeds realized out of books of 2.51 crores since there is no material/evidence on record that this amount was invested elsewhere and in view of the clear directions of the ld CIT(A) in his order dated 19.5.09.” The reason for the same is that there is no such directions by the ld CIT(A) in the first round and that’s precisely the reason why the assessee took the additional ground before the Coordinate Bench and which has been rightly given effect to by the AO. - Decided in favour of revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income arising out of undisclosed transactions is correctly assessed in the hands of the assessee individual on his own expressed taking of responsibility. The total sale of property under question is found by the AO ₹ 37660000 on the basis of seized papers as against ₹ 12500000/- as per sale deed in the name of company as against purchase by the company for a sum of ₹ 24805000 on the basis of seized materials. Therefore, there was undisclosed transactions of purchase and sale of this property other than the sale deeds in the name of company. Thus the profit arising out of the undisclosed transactions ₹ 12800000 can be assessed in the hands of the assessee individual. However the property stands sold on 3.7.2006 as per date of sale deed. Therefore the undisclosed profit is to be considered in the year of its sale i.e. in AY 2007-08 and the addition of undisclosed profit ₹ 12800000 during this year is deleted. However a due set off should be allowed if similar profit arise in AY 2007-08 from the purchase and sale of this property with the surrendered amount of undisclosed investments from properties by the assessee group in AY 2007-08." 2.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 of its order which is reproduced as under:- "17. Above submissions are carefully considered and the same are found to be not acceptable being beyond the directions of the higher authorities. There is no directions of set off of entire sale proceeds of Mahala property either by the CIT(A) or by the ITAT. Where the directions of the CIT(A) are clear that set off be allowed of profit earned, if the same profit is part of surrender in AY 2007-08. The directions of the ITAT are that set off of profit be allowed to the assessee subject to proof by the assessee that surrendered amount was available with the assessee for allowing set off against the income added by the AO. Assessee has never claimed set off of entire sale proceeds before the CIT(A) or the ITAT. So there is no question of allowing of set off of profit of ₹ 1.28 crores against the investment in AY 2007-08. Now the A/R wants to travel beyond the directions of the higher authorities which cannot be done in set aside/restored proceedings. In such proceedings the AO is restricted to act strictly in accordance with the directions of the higher authorities. 17. It may be seen from the order of the ld CIT(A) that set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed by the CIT(A). Now the only question remained is of set off of profit of ₹ 1.28 crores on the date of sale of the property if the same is part of surrender in AY 2007-08 as per the directions of the ld CIT(A) but it is not so as is evident from the chart of unaccounted income surrendered in the return, details of which are reproduced above. As such the assessee does not deserve any set off, if the directions of the ld CIT(A) are considered. 20. However, the directions of the ITAT are on different footings directing to set off of this amount of profit as available for undisclosed investments surrendered by the assessee in AY 2007-08 because if it was not done it would amount to double taxation once in the form of earning of profit and then in the form of undisclosed investment. Accordingly, following the directions of the ITAT set off of profit earned from this property is allowable, if it is used for investment in other properties which have been surrendered in AY 2007-08 are made after the sale of the Mahala property i.e. 3.6.2007 or before this date, the assessee was specifically asked to provide the date wise details of undisclosed investment in AY 2007-08. But the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the available surrender of the investment in next assessment year if co-related. • Thus the profit arising out of the undisclosed transactions ₹ 128,000,000/- can be assessed in the hands of the assessee individual. However, the property stands sold on 03.07.2006 as per the date of sale deed. Therefore, the undisclosed profit is to be considered in the year of its sale i.e. in AY 2007-08 and the addition of the undisclosed profit of ₹ 128,00,000/- during the relevant assessment year is deleted. However, a due set off should be allowed if similar profit arises in assessment year 2007-08 from the purchase and sale of this property with the surrendered amount of undisclosed investment for properties by the assessee group in AY 2007-08. Thus, there is a clear finding of ld. CIT(A) that undisclosed investment of ₹ 45,04,000/- in Mahla property and similar profit arising on its sale is to be assessed to tax in AY 2007-08 as against addition of ₹ 1.28 crores made by the AO in AY 2006-07. Further, there is a direction to give set off of sale proceeds of this purchase and of profits arising on its sale in AY 2007-08. The AO has accordingly added ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts of the company M/s Mahla Real Estate Pvt. Ltd. and therefore unaccounted profit which requires to be added in the hands of assessee at ₹ 112,36,055/- (Rs. 128,00,000-15,63,945). (iv) I find from orders and submissions that as per seized documents, the value of sales recorded is ₹ 3,76,60,000/- as against the sales recorded in registered sale deed at ₹ 125,00,000/-. Therefore, unrecorded sales proceeds work out to ₹ 251,60,000/-. Cost of the land as per seized documents has been worked out at ₹ 248,55,000/-. Further, cost of property as recorded in registered deeds is ₹ 109,36,055/-. Thus profit of ₹ 15,63,945/- has been recorded/booked in the case of Mahla Real Estate Pvt. Ltd. Therefore, undisclosed profit from sale of said property would work out to (Rs. 128,05,000-Rs. 15,63,945)= 112,41,055/-. (v) Ld. CIT(A) in order dated 19.05.09 had directed that undisclosed profit is to be considered in the year of its sale and quantum of this profit was required to be worked out by the AO for AY 2007- 08. In view of above discussion, the AO is directed to assess the undisclosed profit from this property at ₹ 112,41,055/- for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. AR relied on and supported the order of the ld CIT(A) and submitted that broadly two issues are involved in this case. First issue is regarding set off against surrendered income and secondly shifting of income from assessment year 2006-07 to 2007-08 and also whether assessed income can be below the return income. On each of this matter, Ld. AR has submitted as under:- 1. Issue of set off against surrendered income:- It was submitted that the issue involved revolves around the immovable property titled as Mahla Property. Although this property has been purchased in the hands of the M/s Mahla Real Estate Pvt. Ltd. but the unaccounted investment/profit in respect of this property has been considered in the hands of the assessee. The assessee being a director in this company had offered the unaccounted investment and the income pertaining to the purchase and sale of this property in his individual hands. The facts of purchase and sale of this property as per registered deed and as per seized papers found during search are as under:- Particulars of purchase and sale of Mahla Property: Mahla Property Purchase amount Sale amount Profit As per registered deed 10936055 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to ₹ 1,12,41,055/- (12805000-1563945) was assessable as income in Assessment Year 2007-08 as income to the extent of ₹ 15,63,945/- already stood declared by the assessee in the books of accounts. The directions of the Learned CIT(A) are perfectly lawful, legal and justified. There is no case for the Revenue for agitating the matter. 3. Issue of assessed income being below the returned income:- It was submitted that the Revenue has also agitated the matter on the ground that the direction of the Learned CIT(A) would result in determination of income lesser than shown in the return by the assessee. This issue had cropped up in the first round of appeal before the Hon'ble ITAT and the same was decided in cross-objection no. 127/JP/2009 and ITA no. 645, 646/JP/2009 order dated 26.12.2010. The relevant directions of the Hon'ble ITAT are in the context of this very property the same appear in para no. 49 & 50 of page 37 of the order dated 26.11.2010 of the ITAT. The same are quoted below:- "There is no dispute that set off is allowable against the surrendered amount …………..(Para 49) ………. One of the contention of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere can be determination of income under the provisions of the Act less than the returned income due to various factors. There is no bar in determining the total income/undisclosed income less than the returned income if facts so warrant. (iii) NIRMALA L.MEHTA vs. BALASUBRAMANIAM, COMMISSIONER OF INCOME TAX & ORS. (2004) 269 ITR 0001 It may be held that merely because the petitioner offered the prize money won in the lottery of the Sikkim Government, to tax under the IT Act, 1961, that shall not take away her right in contending that the said prize money was not chargeable and assessable to tax under the IT Act in the revisional jurisdiction. In view of the aforesaid facts it was submitted that the order of the learned CIT(A) is perfectly lawful and deserves to be confirmed. The directions given by him are in accordance with the law and facts of the case. The appeal of the Revenue deserves to be dismissed. 2.6 We have heard the rival submissions and pursued the material available on record including the order of the ld CIT(A) and the Coordinate Bench in the first round of appeal as well as the latest order of ld CIT(A) under challenge before us and the ld AR's contentions as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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