2020 (1) TMI 855 - AT - Income Tax

Estimation of net income from total ‘on money’ receipts - assessee had disclosed net profit of over 30% of total unaccounted ‘on money’ receipts - Assessment u/s 153C -AO while making the additions had basically relied upon the some loose documents seized during the survey AND small diary impounded at the office of the assessee and noting therein - HELD THAT:- It is an undisputed fact that survey action u/s.133A was carried out at the office premises of Anupam Group wherein during the course seven small pocket diaries were recovered from the premises. And the same were confronted by recording statement of u/s.132(4) wherein it was admitted that these represents net profit from “on money receipts” or different purchases of the group which were not recorded in the regular books of accounts and was net earnings after all expenses. The unaccounted income accepted by the assessee was duly disclosed in the returns filed subsequently in all the cases, except in the case of assessee firm, the income as disclosed for the firms/projects has been accepted in-toto by the AO.

There is sufficient evidence in the case of Shri Jayantilal Mulchand Patel in the form of documents and statement u/s.132(4) of the I.T.Act which confirm that the transactions in the property as true for determining his total income. Even the presumption of correctness is attached with the statement so recorded u/s.132(1)(a) of the I.T.Act which has not been rebutted or uprooted by the assessee.

Revenue/Department has also failed to prove that the said Shri Jayantilal Mulchand Patel acted as a broker by leading any independent evidence, and failed to recover any documents depicting the transactions as such. The statement and affidavit on Shri Jayantilal Mulchand Patel has been used by the Revenue without affording an opportunity of cross-examination to the assessee.

CIT(A) had rightly concluded that without deciding the evidentry value of the documents seized from the said Shri Jayantilal Mulchand Patel and statement or affidavit for examining the case from a different angle.

CIT(A) rightly concluded that in the totality of all the facts and circumstances, the amounts depicted in the diary even if taken to be true, the net amount of income from ‘on money’ receipts, earned out of books of accounts. Even then, no further additions are justified and thus rightly deleted the additions.

We are also in agreement with the decision of PANNA CORPORATION [2014 (11) TMI 797 - GUJARAT HIGH COURT] wherein it was held that the estimation of net income from total ‘on money’ receipt is justified and profits of the assessee's business as a builder should be estimated by applying net profit rate of 15 percent of the total consideration as per the sale agreements and also on the ‘on money’ received by the assessee.

Considering all we are of the view that although the AO has determined the total income at ₹ 9,02,77,106/-, thus taking into account that in the Return of Income a fair amount of income (net profit of over 30%) from such total receipts has already been shown by the assessee i.e. amount of ₹ 3 crores. Thus, no further additions are justified. We see no reason to interfere into or divert from the findings so recorded by the ld.CIT(A), accordingly ground no.1 of Revenue is dismissed.