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TMI Blog2018 (2) TMI 1804X X X X Extracts X X X X X X X X Extracts X X X X ..... on record or the basis on which the addition was made more so when the statement recorded was immediately retracted by the assessee after survey, therefore, the addition is liable to be deleted. 2. The learned CIT(A) erred in sustaining the addition merely on basis of statement recorded during survey without verifying the correctness of the same from the details and submission furnished in the assessment proceeding as well as appellate proceeding and remand proceeding therefore the finding recorded are contrary to the material on record and the action is contrary to the CBDT Instruction No. 286/2/2003 (Inv.) II dt. 10/3/2003, hence the additions may be deleted. 3. The learned CIT(A) erred in not appreciating the fact that Expenditure incurred from 1/4/2003 till 21/3/2006 was Rs. 45,58,230/- which was duly supported by bills and vouchers submitted in assessment proceeding and remand proceeding, therefore the estimate made by A.O. of the expenditure on adhoc basis at Rs. 6 lacs is arbitrary and without any basis liable to be rejected. 4. The learned CIT(A) erred in confirming the Assessment order estimating the sale proceeds of flats at Rs. 3,49,12,5007- as against Rs. 3,06,97, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income declared by the assessee with regard to the earnings from the project, the Assessing Officer required the assessee to explain as to why the income was not declared at the amount of Rs. 1,00,00,000/- disclosed at the time of survey. The response of the assessee was that subsequent to the survey, it compiled its accounts, which were got audited and it showed that the estimation made at Rs. 1,00,00,000/- was incorrect. During the course of assessment, assessee also furnished the reconciliation between the income estimated at the time of survey and that computed on the basis of audited accounts at the time of filing of the return of income, which is as under :- Particulars Amount as per Survey u/s 133A Audited Accounts Land Cost 9,20,000 9,20,000 TDR Cost Sharda Patel 10,22,000 10,22,000 Opening Construction WIP 1.4.2002 1,39,55,277 1,39,55,277 Closing WIP 31.3.2003 2,43,36,202 2,43,36,202 Expenditure from 1.4.2003 till 31.3.2006 6,00,000 45,58,230* Sale Proceeds 3,46,12,500 3,06,97,827** Note 1 * The Estimate of expenses between 1998 to 2006 is estimated at Rs. 6 lakhs as against actual expenses of Rs. 45.58 lakhs as evidenced by the audite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income was based on audited accounts and that the same was very much available before the Assessing Officer even in the remand proceedings and that no infirmity thereof have been pointed out, but the same has been merely disbelieved. It was pointed out that during the survey, no incriminating material was found which could establish that the amount of sales computed in the audited accounts or the expenditure debited in the Profit & Loss Account were incorrect or that assessee was receiving on-money. The learned representative pointed out that the statement recorded u/s 133A of the Act at the time of survey has no evidentiary value as affirmed by the Hon'ble Supreme Court in the case of CIT vs S. Khader Khan Sons, 352 ITR 480 (SC). Furthermore, it is pointed out that the statement made during the survey was duly retracted within a period of one month by way of a communication dated 15.03.2007, a copy of which has been placed in the Paper Book at pages 18-19. Be that as it may, it has been emphasised that the return of income ought to have been accepted, which is based on the audited account books. 6. On the other hand, the ld. DR supported the stand of the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered at the time of survey and that declared in the return of income. The said reconciliation has been reproduced by us in the earlier part of this order and it clearly reflects that the difference is on two counts, namely, (i) sale proceeds were adopted at Rs. 3,47,12,500/- at the time of survey as against Rs. 3,06,97,827/- taken in the audited accounts; and (ii) expenditure for Assessment Years 2004-05 to 2006-07 was estimated at the time of survey as Rs. 6,00,000/- as against Rs. 45,58,230/- adopted in the audited accounts. Broadly speaking, the explanation of the assessee was that the sale proceeds taken in the audited accounts are based on the registered sale agreements executed with the flat buyers and, therefore, the same could not be doubted. So far as the difference in the expenditure was concerned, it was claimed that the amount taken in the audited account was evidenced by vouchers, documents, etc. and, therefore, could not be flawed. 9. In the above background, the first point to be seen is whether the Assessing Officer was justified in making the addition merely for the reason that assessee had offered a higher amount of income at the time of survey, which ostensibly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts. In response, the assessee furnished the requisite details, copies of which are duly placed at pages 282 to 548 of the Paper Book. At the time of hearing, the learned representative had taken us through the statement of expenditure of various assessment years, which was claimed in the audited accounts. Particularly, we find that a major portion of the expenditure is on account of payment of property taxes, water charges and other payments which are duly effected by means of cheques. Be that as it may, we find that there is no adverse finding on the merits of the claim made by the assessee. Pertinently, at this point we may also state that so far as the sale proceeds adopted in the audited accounts are concerned, the same is based on the agreements of sale entered with the different flat buyers and there is no negation of the same. Therefore, in our considered opinion, the manner in which the declaration was made at the time of survey, which ostensibly was de hors any supporting documents, was not something which could be conclusively held against the assessee in the face of the claims made by the assessee in the return of income, which were based on audited accounts and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the audit report dated 23.03.2007, which accompanied the return of income, was also "fabricated". In our considered opinion, the CIT(A) has not appreciated the facts in their proper perspective. Even if one is to discount the date on which the assessee filed the letter of retraction, it goes without dispute that the return of income itself was filed by the assessee on 29.03.2007, based on the audited account books, and we find no reason to affirm the observation of the CIT(A) that the audit report dated 23.03.2007 was fabricated. Much has been written by the lower authorities on this aspect, but we find that when the entire account books alongwith the supporting documents were available for verification by the Assessing Officer in the remand proceedings, nothing adverse has been brought out. Even the CIT(A) has not found anything amiss with the quality of audited account books or the supporting documents, which were available on record and, therefore, in our view, there was no justification for having rejected the income deduced by the assessee from the project in its return of income. Accordingly, we hereby set-aside the order of CIT(A) and direct the Assessing Officer to delet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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