2016 (5) TMI 235 - AT - Income Tax

Unaccounted receipts - on-money received - Held that - There is nothing on record to suggest that any material was found during the course of search evidencing on-money received for other bungalows. In such situation, the extrapolation method cannot be applied to the receipts of other bungalows. Further, the Assessing Officer was not justified in estimating the profit on on money receipts @ 25 %. This 25% estimation of profit on on-money receipts is purely on the basis of assumptions, surmises and conjectures. Thus, in our opinion, the CIT(A) was not justified in confirming the addition made by the Assessing Officer by estimating the profit on on money receipts @ 25% while the assessee has already offered tax on the admitted unaccounted receipts from its Greenwood Project amounting to ₹ 300 lakhs. Under these facts and circumstances of the case, the authorities below are not justified in making the addition in question and confirming the same; and therefore, the addition in question is directed to be deleted. - Decided in favour of assessee

Issues:
1. Assessment based on material found during search
2. Estimation of on-money receipts from Greenwood project
3. Profit estimation on "on money" receipts
4. Addition to total income based on profit estimation
5. Charging interest under sections 234B and 234C of the Act
6. Penalty proceedings under section 271AAA of the Act

Assessment based on material found during search:
The appeal challenged the Commissioner of Income Tax (Appeals) decision to confirm the action of the Assessing Officer in not restricting the assessment/additions based on the material found during the search. The Assessing Officer estimated the on-money receipts from the Greenwood project despite no material found during the search to support the calculation. The Tribunal found that the extrapolation method used by the Assessing Officer was not justified as there was no evidence of on-money receipts for other bungalows. The Tribunal concluded that the addition made by the Assessing Officer was not valid, and the estimation of profit on "on money" receipts at 25% was based on assumptions. Therefore, the Tribunal directed the deletion of the addition.

Estimation of on-money receipts from Greenwood project:
The case involved the estimation of on-money receipts from the Greenwood project by the Assessing Officer based on seized material and statements recorded during the search proceedings. The Tribunal noted that the Assessing Officer's estimation of on-money receipts at Rs. 1281.33 lakhs and subsequent profit estimation at 25% were not supported by concrete evidence. The Tribunal found that the assessee had already disclosed a significant amount of on-money receipts, rendering the additional estimation unwarranted. The Tribunal held that the authorities were unjustified in making the addition and directed its deletion.

Profit estimation on "on money" receipts:
The appeal contested the Assessing Officer's decision to estimate profits at 25% on "on money" receipts from the Greenwood project. The Tribunal determined that the profit estimation was solely based on assumptions, surmises, and conjectures, lacking factual basis. The Tribunal emphasized that the assessee had already disclosed a substantial amount of on-money receipts, making the additional profit estimation unreasonable. Consequently, the Tribunal ruled in favor of the assessee, directing the deletion of the profit-based addition to the total income.

Addition to total income based on profit estimation:
The Assessing Officer had added Rs. 20,33,000 to the total income of the assessee based on the profit estimation of 25% on "on money" receipts. The Tribunal found this addition unjustified as it was made without concrete evidence and solely relied on assumptions. Given that the assessee had already disclosed a significant amount of on-money receipts, the Tribunal deemed the addition unwarranted and ordered its deletion.

Charging interest under sections 234B and 234C of the Act:
The appeal raised concerns regarding the charging of interest under sections 234B and 234C of the Act. The Tribunal did not provide specific details on this issue in the judgment.

Penalty proceedings under section 271AAA of the Act:
The appeal contested the initiation of penalty proceedings under section 271AAA of the Act. The Tribunal did not delve into the details of this issue in the judgment.

In conclusion, the Tribunal allowed the appeal filed by the assessee, highlighting the lack of concrete evidence to support the estimation of on-money receipts and profits on "on money" receipts. The Tribunal deemed the additions to the total income unjustified and directed their deletion, emphasizing the importance of factual basis in such assessments.

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