9911796707
TMI Blog2019 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... ally declaring taxable income at Rs. 1,17,21,050/- which was revised on 30.10.2012 declaring total income at Rs. 1,22,22,060/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. The ld.AO found that during the course of survey statement of Shri Nikil Prahladbhai Patel, partner of the assessee-firm was recorded wherein he has admitted an undisclosed receipt of Rs. 3,74,79,000/-. This disclosure was made on the basis of recovery of a diary viz. "Vikram diary" containing pages 1 to 129 and taken into possession by the survey team as Annexure A. The ld.AO has confronted the assessee to show as to how it has not included the alleged undisclosed income admitted during the course of survey. The assessee submitted that no such diary was found during the course of survey. It has actually been created by the survey team at the early morning hours of October 20, 2011. An affidavit dated 20.11.2011 has been submitted to the AO to this effect and the affidavit has been reproduced by the AO in para 5.2 of the assessment order. The ld.AO has made an analysis of this affidavit as well as alleged diary and recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52 (MP) 5. In order to demonstrate the amount requires to be added back or quantification of the profit involved in the alleged on-money, he submitted that the assessee-firm has started its business from the Asstt.Year 2011-12 to 2016-17. The turnover and profit ratio has been compiled in tabular form, which has been filed along with synopsis during the course of hearing. He made reference to this material. They read as under: Asst. Year Turnover Profit Ratio 2011-12 Rs. 1,62,25, 161/- Rs. 38,35,927/- 23.65% 2012-13 Rs. 5,44,29,724/- Rs.L28.32.868/- 23.58% 2013-14 Rs. 2,20,87,315/- Rs.NIL- - 2014-15 Rs. 80,61,000/- Rs. 38,32,625/- 47.55% 2015-16 Rs. 58,62.000/- Rs. 15,18,753/ - 25.91% 2016-17 Rs. 58,32,000/- Rs. 7,62,877/- 13.08% Total Rs. 11,24,97,200/- Rs. 7,62,877/- 20.25% 6. On the strength of the above, he submitted that addition, if any, requires to be made then it should be restricted to Rs. 75,89,498/- i.e. [20.25% of Rs. 3,74,79,000]. This figure has been worked out by the assessee on the basis of weighted average of the profit starting from the Asstt.Year 2011-12 upto the Asstt.Year 2016-17. 7. The ld.DR, on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of 84 persons to whom the assessee has ultimately sold shops/residential flats are available, who have allegedly given certain money to the assessee in cash. Therefore, as far as evidence found during the course of survey against the assessee is concerned, we are satisfied that department is able to lay its hand on sufficient evidence which call for making addition on account of onmoney received by the assessee for sale of flats/shops. The next question is, whether gross receipts are to be added or treated at par qua receipts received through account payee cheque, in other words, whether addition of total amount is to be made or, it is to be confined to the profit element involved in this receipt. Before adverting to this aspect, we would like to note the finding of the AO that this on-money received by the assessee on sale of flats/shops to 84 persons whose accounts are reflected in the books, which is recorded in page no.24-25 of the order. It reads as under: "It is not possible to collect a blank diary at early morning and to prepare the name and address of the persons by an outsider officer i.e. Shri Mohan Kumar S., who belongs to/non Gujarati and how he can imaging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondent - partnership firm received on money of Rs. 62 lakhs during the block period for sale of the flats, is not seriously in dispute. The Tribunal confirmed such findings arrived at by the Assessing Officer. However, the Tribunal did not permit the revenue to collect the tax on the entire receipt believing the it was only the income embedded in such receipt which can be subjected to tax. 10. As pointed out by the counsel for the respondent, this Court in the case of Commissioner of Income Tax v. President Industries, reported in (2002) 258 ITR 654 had taken a similar view. In the said case, during the course of survey conducted on the premises of the assessee, from the excise records found, an inference was drawn by the Assessing Officer that sales accounting to Rs. 29 lakhs and odd had not been disclosed in the books of account. The Assessing Officer made addition of the entire sum of the said undisclosed sales as income of the assessee for the assessment year 1994-95. Such addition was confirmed by the Commissioner (Appeals). The Tribunal, however, held that the entire sales could not have been added as income of the assessee, but only to the extent the estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adani v. Commissioner of Income Tax, reported in (2008) 304 ITR 52, wherein referring to and relying upon the decision of this Court in the case of Commissioner of Income Tax v. President Industries (supra) and other decisions of other High Courts, the M. P. High Court had also taken a similar view. It was observed that entire sale proceeds of the assessee should not be added in his income and that the Tribunal has erred in doing so." 10. Other decisions referred by the ld.counsel for the assessee are also to similar facts. Therefore, we are of the view that only element of profit embedded in these receipts are required to be treated as unaccounted income. For quantifying that, at the cost of repetition, we would like to note of profit ratio shown by the assessee in different years, which reads as under: Asst. Year Turnover Profit Ratio 2011-12 Rs. 1,62,25, 161/- Rs. 38,35,927/- 23.65% 2012-13 Rs. 5,44,29,724/- Rs.L28.32.868/- 23.58% 2013-14 Rs. 2,20,87,315/- Rs.NIL- - 2014-15 Rs. 80,61,000/- Rs. 38,32,625/- 47.55% 2015-16 Rs. 58,62.000/- Rs. 15,18,753/ - 25.91% 2016-17 Rs. 58,32,000/- Rs. 7,62,877/- 13.08% Total Rs. 11,24,97,20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the expenses incurred by the assessee in relation to the building construction during the assessment proceedings. The major reason for the disallowance was that the labor contractors could not prove the regular payment to the laborers. It was also observed that the assessee has not released entire payment to the labor contractors till the end of the financial year under consideration. Therefore, it was doubted on the payment to the laborers made by the labor contractors. However, we note that all the supporting evidence of the parties such as their PAN No., bank account, bills, income tax return were duly furnished, which is available on record. The AO has not doubted in any of the documents filed by the assessee during the assessment proceedings. We also note that there was a certain defects in the amount of bills furnished by the labor contractors during the assessment proceedings, but that does not lead to the conclusive evidence that the payment to the laborers is bogus. Therefore, we are of the view, that the justice will be served to the assessee if the disallowance made by the CIT(A) is reduced to 2% of the total labor expenses. Accordingly, we direct the AO to rest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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