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TMI Blog2019 (2) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... st is declared on actual agreed price but the sales values are declared as per registered sale deed, which is not the actual sale price. Since, in this AY, AO has only made addition u/s 69, we can only adjudicate on this aspect. Since the assessee has accepted the purchase price and AO has made the addition u/s 69, we direct the AO to allow the assessee to declare the value of closing stock based on the purchase price. Since the cost of purchase is treated as investment in land, the assessee is allowed to carry forward the unsold value of land as closing stock as determined above. The assessee cannot treat the difference between purchase price and sales price as loss and is also not eligible to carry forward as business loss u/s 71. Accordingly, the grounds raised by the assessee on this issue are partly allowed. - ITA No. 178 to 180/Hyd/2017 - - - Dated:- 31-1-2019 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Smt. Sreelata Vooktkoor For The Revenue : Shri Esther N. Hangal ORDER PER S. RIFAUR RAHMAN, AM: These appeals filed by the assessee are directed against separate orders of CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y taking advances from the prospective buyers. He further submitted that whatever the amount of purchase consideration i.e. ₹ 10 lakhs or ₹ 41.9 lakhs, the payments were made to the landlord out of the advances received from customers. Therefore, he offered 8% as net profit on purchase value of the property. 2.2 AO did not agree with the above submissions of the assessee and made addition of ₹ 42.84 lakhs as undisclosed investment in the property purchased and he did not agree with the estimation of income at 8% of the purchase price. 2.3 Similarly, AO made addition of ₹ 9,22,050/- on account of the undisclosed investment made by the assessee in purchase of property in the name of his wife to the extent of ₹ 9,22,050/-. 3. Aggrieved with the above order, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee made the following submissions: i) Though the land of Ac. 3.03 guntas was purchased for an amount of ₹ 42,84,605/-, the registered value is only ₹ 10,76,455/- ii) The said property was divided into 43 plots which were sold in respective financial years as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Circle-2(1), Baroda. 3. Hon'ble Madras High Court decision in the case of CIT Vs Chensing Ventures. (vi) The assessee entered into an agreement to purchase plot of 600Sqyrds in Survey No.196 in the name of his wife Smt.K.Renuka for a consideration of ₹ 9,22,050/-. However this agreement was not executed and later on was cancelled. Whereas the Assessing Officer considered undisclosed investment of ₹ 9,22,050/- as income based on this unexecuted document. (vii) The assessee offered 8% as income on the agreement value though this document was not executed. viii) The agreement was for 600 Sq.yards where as the land registered in the name of Smt. K. Renuka, wife of K. Nagaiah, was only for 446 Sq. Yards at a documented price of ₹ 48,818/-. Ix) Therefore the addition made based on unregistered document shall be deleted. 5. After considering the submissions of the assessee, CIT(A) sustained the additions made by observing as under: As stated in the earlier paras the appellant did not did not maintain any books of account and the receipts and payments were made in cash the appellant was not assessed to income tax prior to surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income which is part of purchase cost of land should be allowed to claim as expenditure for the year and the loss incurred by the assessee should be allowed to carry forward to be adjusted in the subsequent years. She submitted alternate methods of treatment in the paper book filed before us. 9. Ld. DR supported the orders of revenue authorities and submitted that new alternatives or new evidence cannot be submitted now. 10. Considered the rival submissions and perused the material on record. We notice that in the survey proceedings at the premises of Shri Beereddy Jaipal Reddy certain documents belonging to the assessee were found. As per the sworn statement of Mr. Jaipal Reddy, assessee has purchased land for ₹ 41.90 lakhs. The assessee maintained that he has purchased the property from the amounts collected by him from the prominent purchasers. He did not confirm whether he purchased for the value as per registered document or as per the value mentioned in the sworn statement given by Mr. Jaipal Reddy. Since, assessee does not have proper sources for such huge investment, to buy peace with the department, he was willing to declare the value as disclosed by Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Closing Stock 10448 373.50 39,02,203 Since the cost of purchase is treated as investment in land, the assessee is allowed to carry forward the unsold value of land as closing stock as determined above. The assessee cannot treat the difference between purchase price and sales price as loss and is also not eligible to carry forward as business loss u/s 71. Accordingly, the grounds raised by the assessee on this issue are partly allowed. AY 2010-11 11. In this AY, the assessee has raised basically two grounds, i.e. ground No. 2, wherein, assessee objects that AO has made addition u/s 69 and not allowed assessee to declare profit @ 8% on purchase cost. In ground No. 3, the assessee objects that he was not allowed to carry forward the business loss. With regard to carry forward of business loss u/s 71, we have already discussed this in earlier year and adjudicated that it cannot be carried forward. 11.1 Coming to disallowance u/s 69, and determining the business profit, we have verified the information submitted before us. There is no dispute that assessee has invested ₹ 54.05 lakhs d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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