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TMI Blog2012 (2) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... nce-cum-office premises of the assessee on 9.10.2002. In the course of search, incriminating documents, books of account, etc., were found and seized and statements under section 132(4) of the Act of the assessee and some of his employees were also recorded. 3. In the above background, the Assessing Officer issued notice under section 158BC of the Act requiring the assessee to file a return of undisclosed income for the above-stated block period. In response, assessee filed a return declaring undisclosed income for the block period at ₹ 50 lakhs. In the subsequent assessment finalized under section 158BC(c) read with section 143(3) of the Act on 28.10.2004, the Assessing Officer determined the total undisclosed income at ₹ 1,00,26,450/- after making additions on account of on-money receipts on sale of flats/shops and undisclosed income of machinery hire charges, etc. The additions made to the returned income were challenged in appeal before the Commissioner of Income-tax (Appeals) who has since dismissed the appeal of the assessee. Not being satisfied with the order of the Commissioner of Income-tax (Appeals), the assessee is in further appeal before us on various Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said entries. 6. On the basis of facts and in the circumstances of the case, the ld CIT(A) 1 Nashik is not justified in confirming the additions made on account of on money as well as machinery hire charges when he has carried out independent inquiries with the relevant parties and information received under such inquiries supports the contention of the appellant. 7. On the basis of facts and in the circumstances of the case, the ld CIT(A) 1 Nashik is not justified in confirming the stand of the AO of ignoring the information collected by the AO under the independent inquiries u/s 131 of the Act from the parties from whom the undisclosed on money as well as machinery hire charges are allegedly shown to be received by the appellant. He is further not justified in alleging that the impugned transactions are also kept outside by the said parties and no businessman shall confirm the same on inquiry by the Income-tax Department. 8. On the basis of facts and in the circumstances of the case, the ld CIT(A) 1 Nashik is not justified in confirming the various vicious remarks/observations of the AO in the assessment order for the block period. 4. In so far as G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects. The Gopal Nagar Project consisted of 5 buildings and Swastik Niwas Project consisted of 2 buildings. The diaries found indicated receipt of on-money for sale of flats and shops undertaken by the assessee with regard to the aforesaid 2 projects. The diaries found revealed that assessee had received monies from customers, which was over and above the consideration stated in the sale deeds. On this aspect, assessee was examined and questions were put to him at the time of search in a statement recorded under section 132(4) of the Act. On account of the diaries found, the assessee admitted receipt of on-money in sale of flats/shops in respect of the aforestated 2 projects. It is observed that in the course of assessment proceedings, assessee computed on-money receipts at ₹ 32,57,322/- on account sale of flats/shops in respect of the 2 projects. Simultaneously the claim of the assessee was that the said receipts, which were over and above the consideration stated in the sale deeds, were on account of some extra work carried out for the respective customers and in doing so, assessee had incurred some expenditure, which was required to be deducted while computing undisclosed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he regular account books. A reference was made to copy of the statement recorded under section 132(4), which is placed at pages 173 to 193 of the Paper Book. Secondly , it is also pointed out that during the course of assessment proceedings assessee brought to the notice of the Assessing Officer that even the search material contained details of certain expenditure incurred against the unaccounted onmoney receipts and, therefore, for both the above reasons, assessee pointed out that the incurrence of expenditure against unaccounted on-money receipts is apparent from record. In this connection, reference was also made to page 194 of the Paper Book wherein is placed copy of a letter dated 15.10.2004 addressed to the Assessing Officer detailing references to certain page numbers of the seized material which showed incurrence of an expenditure of ₹ 4,92,398/- against unaccounted on-money receipts. The learned Counsel vehemently pointed out that in the said communication, assessee had also referred to other instances which showed that unaccounted expenditure was also noted in the material seized. 11. On the other hand, the learned Departmental Representative has contested the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived onmoney against extra work to be performed for the customers; that in carrying out such extra work, assessee was required to incur certain extra expenditure which too remained unaccounted in the regular books of account. We may refer to question no. 26 of the statement of the assessee recorded under section 132(4) of the Act dated 10.10.2002, a copy of which has been placed at pages 173 to 193 of the Paper Book. In question No. 26, assessee was confronted as to why the entire amount of on-money receipts should not be treated as undisclosed income. In the answer, assessee submitted that the entire amount does not reflect income, inasmuch as it was also spent on respective projects and in fact it was stated that the same was not lying with him. Further-more, even during the assessment proceedings, as has been pointed out by the Counsel for the appellant, it was asserted that the search material itself shows certain unaccounted expenditure having been incurred. In this connection, our attention was invited to page 197 of the Paper Book wherein is placed a copy of paper seized which shows details of expenditure incurred on construction, which was unaccounted. The said seized mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee submitted that a similar estimation be applied in the present case, inasmuch as the business in the case of M/s Bakre Construction (supra) was similar to that of the assessee. 15. The learned CIT-Departmental Representative has contended on this aspect that the extent of undisclosed expenses is an estimate required to be done which would tantamount to element of guess-work while assessing the undisclosed income, which is not feasible. 16. Having considered the rival submissions on this issue, we find that no doubt there is no evidence to show the exact amount of undisclosed expenses which have been incurred by the assessee. So, however, incurrence of such expenditure stands proved on the basis of search material itself. In somewhat similar circumstances in the case of M/s Bakre Construction (supra) which was engaged in construction business, assessee was found during the course of search to have received on-money, Revenue was called upon to estimate undisclosed expenses incurred against such on-money receipts. In the said precedent, the Tribunal confirmed the order of the Commissioner of Incometax (Appeals) whereby undisclosed income was estimated at 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded in the seized material. While carrying out this exercise, the Assessing Officer relied upon following judgments: (i) CST v H.M. Esufali H.M. Abdul Ali 90 ITR 271 (SC); (ii) Overseas Chinese Suisine v. ACIT 56 ITD 67 (Bom)(TM); and, (iii) Golani Brothers v. ACIT 16 SITC 144 (Pune)(Trib). The Commissioner of Income-tax (Appeals) has also sustained the action of the Assessing Officer against which assessee is in further appeal before us. 18. Before us, the learned Counsel for the assessee submitted that the lower authorities were not justified in estimating further on-money receipts in respect of flats and shops for which there was no evidence found during the course of search. In fact, according to the learned Counsel, the seized diaries contained detail of all the flats/shops sold indicating therein not only the declared consideration, but also the unaccounted consideration and, therefore, in cases where no unaccounted consideration was found recorded, same should be accepted as such. The learned Counsel pointed out that the seized material was complete, inasmuch as it contained details of flats/shops sold by the assessee in respect of each building and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived in sale of all the flats/shops. In fact, in cases where the amount has been assessed as on-money receipts, same corresponds to amounts found to have been written in such seized material. Therefore, in cases where there are no entries of unaccounted consideration in the very same material there cannot be a presumption to the contrary. Thus, in our view, the Assessing Officer was not justified in assuming that in such situation he was to estimate receipt of on-money in cases where the seized material pointed to the contrary. Therefore, we are inclined to uphold the plea of the assessee on this Ground. 21. In so far as the reliance placed by the Assessing Officer on the judgment in the case of H M Esufali H.M. Abdul Ali (supra) is concerned, same, in our view is inapplicable to the facts of the present case. In the case before the Hon ble Supreme Court evidence of suppression of sales was found for a period of 19 days and on that basis, it was presumed that suppression of sale would have occurred in the balance period also. Therefore, the estimation for the balance period was upheld In fact, in the present case there is no such fact-situation, inasmuch as the same seized mater ..... X X X X Extracts X X X X X X X X Extracts X X X X
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