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2016 (10) TMI 531 - AT - Income TaxUndisclosed income - amount of cash ‘on-money’ with respect to all the unsold stocks - Held that:- There will always be some estimation and guess work while computing the undisclosed income of the assessee as the same had been kept hidden by the assessee from the Revenue which is within the special knowledge of the assesssee and may not be brought out completely before the authorities , thus, exact precision can never be reached in estimating undisclosed income, the safe guard should be to ensure that guess work in estimating undisclosed income should not be arbitrary. In our considered view, the ld. CIT(A) has taken a correct stand confirming and sustaining the assessment order passed by the AO vide his appellate orders dated 08-11-2011, as also we agree with the stand taken by the learned CIT(A) in his appellate order dated 08-11-2011 whereby he directed the AO that amount of cash ‘on-money’ with respect to all the unsold stocks as at 31-03-2007 held by the assessee which the AO added in the undisclosed income of the assessee have to be eliminated from the chargeability to tax and the rest amount is to be brought to tax as undisclosed income of the assessee. We find no infirmity in the orders of the ld. CIT(A) whereby ld CIT(A) has upheld the assessment orders of the AO by confirming that the cash ‘on-money’ was in-fact being received by the assessee in the previous year relevant to the impugned assessment year, hence, we uphold/sustain the appellate order dated 08-11-2011 passed by the ld. CIT(A) by dismissing the appeal of the assessee Unrecorded sales - Held that:- As with respect to the sales recorded during the instant assessment year excluding sales which were of the unsold inventory of the last year which we have directed to include ‘on money’ based on page 18 and back of page 18/annexure A-3, the additions shall be made on same proportion as were made in the assessment year 2007-08 in the ratio of sale to undisclosed income brought to tax as the conduct of the assessee is continuing as brought on record since 2005 meeting till the recording of statement on 14-03-2008 as set out above whereby conduct of the assessee based on preponderance of human probabilities points to the receipt of ‘on money’ regularly by the assessee during the instant assessment year backed with booming real estate sector which itself is admitted by the assessee and quantification need to be done based on the empirical data of the immediately preceding year as the real estate boom continued during this instant assessment year . Keeping in view that the assessee has surrendered ₹ 1.25 crores during the search proceedings vide statement dated 14-03-2008, whichever figure as arrived at as per our above directions or surrendered amount of ₹ 1.25 crores whichever is higher of the two needs to be added as un-disclosed income as in our considered view the estimate of the undisclosed income has to be made which definitely need some guess work which of course should not be arbitrary while on the other hand the details of surrender amount of ₹ 1.25 crores is within the special knowledge of the assessee which details are not brought out by the assessee. The Revenue has made addition @ 20% on extrapolation which is also not sustainable in the instant case by reading in isolation in divorce to the total surrender of ₹ 1.25 crores as the addition has been made on the basis of the statement of partner dated 14-03-2008 which categorically stated that the surrender was to the extent of ₹ 1.25 crores and secondly revenue has not made any enquiry to bring on record cogent tangible incriminating material to prove that the assessee received 20% cash on all sales while empirical data of preceding year which led to the framing of the assessment order of the preceding year as confirmed by the learned CIT(A) which order of the learned CIT(A) we confirmed does not suggest that addition to the tune of 20% on the sales value were made by the Revenue as sustained by learned CIT(A) in immediately preceding assessment year 2007-08. Hence addition are to be sustained in the manner laid down by us in our above decision. We have considered the case laws relied upon by both the parties while arriving at the conclusions as set out above. We order accordingly.
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