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2014 (11) TMI 797 - HC - Income TaxAddition of undisclosed income – on money receipts and sale of row houses - Whether the Tribunal is right in law and on facts in deleting the addition made on account of undisclosed income earned by the assessee out of “on money” receipts from the sale of row houses done during the block period – Held that:- The partnership firm received on money of ₹ 62 lakhs during the block period for sale of the flats - the Tribunal rightly confirmed the findings arrived at by the AO - 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 – in Commissioner of Income Tax v. President Industries [1999 (4) TMI 8 - GUJARAT High Court] the same was decided by court - the entire sales could not have been added as income of the assessee, but only to the extent the estimated profits embedded in the sales for which the net profit rate was adopted entailing addition of income on the suppressed amount of sales - unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed, such addition could not be sustained - even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves – thus, not the entire receipts, but the profit element embedded in such receipts can be brought to tax – the order of the Tribunal is upheld – Decided against revenue.
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