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2022 (9) TMI 184 - AT - Income TaxAdditions towards On-money received - business of real estate development carried out - AO observed that higher rate having been agreed to be paid, as compared to the contracted rate - assessee had earned on money on booking/allotment of its properties - as contended by assessee that in all the three years involved the addition was based on a common premise and his arguments therefore were to be considered with respect to all the three years involved - document found during survey at the assesses premises revealed him to be the co-owner of 4 shops with his son ,though subsequently the allotment was made in the name of his wife and son - estimating profits for the said years by application of 17.5% rate on the accounted and unaccounted sales of the assessee. HELD THAT:- As no credence can be given to the statement of Mr.Sorathiya relating to the rate of Rs.2400/- per sq. ft being the actual rate at which the properties were sold by the assessee. The contention of the Revenue that the admission of on money received by other entities of the group to the settlement commission lends credence to the statement of Mr.Sorathiya, we find is also not acceptable. Nothing has been brought to our notice by the Revenue to demonstrate the parity of the facts and circumstances of those cases with that of the assessee. The Revenue has not even pointed out the facts and circumstances in which surrender/admission had been made by each such concern to the Settlement Commission. It appears to be a sweeping generalized exercise of the Revenue in treating the facts and circumstances of the assesses case being similar to the other group cases. Assessment of incomes cannot be done on this basis. There is no basis, therefore, we hold, for drawing an analogy from the group concerns admission before the settlement commission, with the assessee’s case so as to derive that the assessee also had received on money. Contention of the Revenue that even applying the alternate basis of determining the on money received by the assessee by taking the maximum rate charged during the year as the actual rate , we find that the same also cannot be the basis. The logic applied that rates are constant during a particular period does not impress us, until demonstrated statistically. It is not to be forgotten that the exercise being indulged into by the Revenue authorities is determination and assessment of income of assesses. The said exercise may not require finding of income earned to be established with certainty to make any addition of the same, and can be made on the basis of surrounding facts and circumstances demonstrating to a large degree the fact of earning income, but still there has to be a substantial basis for the same. Pure assumptions , estimations and guess works cannot be the basis for determining incomes. The endeavour of the Revenue in treating the maximum rate for property sold during the year as being the actual rate for all properties sold, appears to be an exercise to this end only. This basis is also held to be unacceptable and thus rejected. Even otherwise the assessee has demonstrated that even as per the this exercise, in maximum cases no on- money was noted to be received by the assessee. The basis for holding that the assesseesse received on money clearly did not apply to maximum properties sold. The said facts and circumstances lead to the inescabable conclusion that the basis therefore was ill conceived. We hold that there was no basis warranting a finding of on money received by the assessee. The addition made by applying net profit rate to the total turnover of the assessee also does not survive since as stated above no other basis has been brought to our notice for rejecting the books of the assessee as not capable of presenting the true picture of profits earned. The addition made therefore by estimating profits for all the three years is deleted. Appeal of assessee allowed.
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