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2017 (12) TMI 1216 - AT - Income TaxAddition on money received on sale of flats - search and seizure action u/s. 132 - statements recorded during the course of the search - Held that:- The undisputed facts before us are that search and seizure action u/s. 132 of the IT Act took place on 17.11.2014 on the assessee as well as its group company. The assessee submitted return of income on 31.10.2015 declaring total income of ₹ 13,48,82,480/-, which was subsequently revised to ₹ 13,45,71,200/- on 7.07.2016 and finally revised the return on 30.12.2016 by including therein a sum of ₹ 72,50,000/- and paid taxes thereon. The sum of ₹ 72,50,000/- declared by the assessee relate to the Chestnut project, single building project completed during the year in respect of which evidence was found during the course of the search for on money received and it was also surrendered by the assessee company during the course of the search and is included in the sum of ₹ 63,39,52,372/- added by the Assessing Officer to the assessee’s income. We noted that the AO while computing the total income of the assessee has considered the revised return declared by the assessee at ₹ 13,45,71,200/- Therefore, the addition of ₹ 72,50,000/- has to be confirmed and, accordingly, we confirm the said addition of ₹ 72,50,000/-.The assessee has also included the said amount in its revised computation and paid taxes thereon on 27.12.2016. Addition made on the basis of estimating the sale consideration in respect of the flats - Held that:- From the documents in the booking, it is evident that different flats and different shops have been booked at different rates by the assessee. From page 443 of the paper-book, as found during the course of search, the assessee has given discount on the bookings at different rates to different customers. We noted that in respect of two shops although the base rate has been mentioned @21,000 per sq. ft, the assessee has given discount around ₹ 4150 per sq. ft. and booked the shops @17500 per sq. ft including the club charges of ₹ 750/-. Similarly, in respect of flat also we noted that the base rate has been mentioned @12,000/- per sq. ft and after adding floor rise, club charges, infra charges etc., total rate came to ₹ 14375 per sq. ft. and the assessee has also given discount of ₹ 1000/- and ultimately booked the flat @13,350 per sq. ft. Even on the same very page had the details of the flats which had been booked @ 14550/-, 14300/- and ₹ 13225/- per sq. ft. Therefore, the conclusion drawn by the Assessing Officer while making the addition is based just on assumption as if the assessee the assessee has sold all the flats @15750 per sq. ft. In view of this fact, we delete the addition of ₹ 33,47,33,101/- made on the basis of estimating the sale consideration in respect of the flats @15750/- per sq. ft. and ₹ 9,97,40,450/- based on the presumption as having being booked shops @26000/-. Project completion method has been followed consistently by the assessee. Both the projects relating to the flats and the shops in respect of which the evidence were found for receipt of on-money by the assessee were not completed during the year. Since these projects were not completed during the year, the amount received by the assessee is merely a booking amount i.e. only the advance received for booking of the flat/shop. These amounts therefore in our view cannot be added during the impugned assessment year. We are of the view that the project completion method is one of the method of accounting where the expenses identifiable with the project are to be allowed in the year when the project is completed. Similarly, the receipt from the project is to be accounting for as income only in the year in which the project is completed. Direct the AO to make the addition in respect of these on-money in the respect assessment years in which the projects have been completed. Estimation of income - Income tax imposed on the real income and not on the income which have estimated by the assessee - Held that:- Material except the estimated profit computed during the course of the search that the actual profit from the said project was much more that the actual profit shown by the assessee. Income tax has not be levied or vested on the estimated profit, it has to be levied on the real income derived by the assessee. In our view, no addition can be made by the Assessing Officer merely on the basis of the statement of the assessee recorded during the course of the search until and unless there are corroborative evidence to support that the assessee has derived income whatever was estimated during the course of the search. No cogent material or evidence was brought to our knowledge by the learned DR. We, therefore, set aside the order of the CIT(A) on this issue and delete the addition made by the Assessing Officer to the extent of ₹ 12,04,18,428/-
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