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2022 (2) TMI 815 - ITAT CHENNAIAddition on account of unaccounted / suppressed sales - assessee was reflecting only 20% to 50% of actual sale consideration in the registered sale deeds - HELD THAT:- Only on the basis of few instances, to presume that such concealment was done by the assessee in all the transactions, in a blanket manner, was not a correct presumption. It could also be seen that AO has also not considered the fact that the assessee might have incurred expenditure on cost of construction and other expenses in the same manner for which benefit should have been granted to the assessee. The sale figures could not be said to be the income of the assessee. It is trite law that only the real income earned by the assessee could be brought to tax. It is the finding that the assessee has sold developed sites during these years which would entail incurring of expenditure on the part of the assessee. Therefore, it would be in the fitness of things to estimate profit element embedded in unaccounted sale transactions since entire sales figures could not be held to be the income of the assessee. As per statutory mandate, a presumptive rate of 8% is applicable on civil construction business. Taking cue from the same, we apply the same rate to the unaccounted sales as computed by Ld. AO. Accordingly, Ld. AO is directed to estimate profit rate of 8% on unaccounted sales Unaccounted investment in Land - HELD THAT:- To presume that the assessee would have paid 5 times of the registered sale deed value would not be correct particularly when there was no adverse material on record. The value of land would depend upon various factor such as location of site, extant market conditions, position of the parties, nature of sale etc. and all these relevant factors could not be brushed aside. Moreover, it was incumbent on Ld. AO to prove that extra money was paid by the assessee. There was no such finding on record. The extrapolation done by Ld. AO had no basis and the action of Ld. AO in estimating the additions could not be upheld. The action of Ld. AO was totally untenable and devoid of any merits for it was based on conjectures and surmises. Therefore, the addition made in all these three years was deleted. We find that the revenue has accepted the findings of Ld. CIT(A) for all the three years and the issue has thus, attained finality. Development Expenditure disallowance - HELD THAT:- The assessee had brought tracts of land and developed the plots into saleable lay outs by converting these lands into plots. It could not be possible to have developed layouts without incurring any expenditure like clearing of debris, levelling of grounds, lay out of roads, installation of posts etc. The finding is also acceptable that some the activities would involve engagement of labour and service provider in unorganized sector. Therefore, a disallowance as high as 70% was not justified. The estimation of 40% as made by Ld. CIT(A), in our considered opinion, is quite reasonable and fair. Therefore, the same would not require any interference on our part. The grounds raised in assessee’s appeal as well as revenue’s appeal, on this issue, stand dismissed. Sales Commission disallowance - AO has estimated this disallowance @70% which has been confirmed by Ld. CIT(A) - HELD THAT:- Most of the payment was stated to be below ₹ 5000/- which would not require TDS compliance on the part of the assessee. These payments were one-time payment as referral payment. Therefore, we estimate this disallowance @40% as done for development expenses. The Ld. AO is directed to restrict the disallowance to 40% as against 70% confirmed by Ld. CIT(A). The assessee’s ground of appeal, for all the year, stand partly allowed.
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