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2016 (5) TMI 1609 - AT - Income TaxUnaccounted transactions regarding sale of land - Determination of correct income of the assessee - co-ownership in land sold - Assessee submitted that the AO had wrongly calculated the addition as the share of assessee was admittedly 1825.49 marlas being 43% and this fact was verifiable from copy of seized documents - AR submitted that assessee alongwith other joint owners of certain land had sold such land and had claimed to be exempt from capital gains being the asset was agricultural land but the same was rejected by Assessing Officer and in the case of group companies they had agreed before the Settlement Commission for taxability of such income as business income and therefore in the present appeal the assessee is not on the issue of taxability of such profits as business income but he submitted that Assessing Officer had wrongly calculated the addition by including the share of Sham Lal one of the co-owner in the income of assessee which is highly unjustified HELD THAT:- We are in agreement with the arguments of learned AR for the proposition that correct amount of taxes should be collected and AO should not misuse the lack of knowledge of the assessee. As undisputed fact that the total area of land was 4245.43 marlas as noted in the seized document placed at (PB Page 843). It is also undisputed fact that share of assessee was 43% therefore, the share of assessee was only 1825.49 marlas. It is also undisputed fact that the rate for the purpose of calculation of income of the assessee has been taken from the seized document @Rs.18750/- per marla. The above fact is further fortified from para 20 of order of settlement commission where the settlement commission has also noted the share of the assessee at 43% out of total land of 4243.55 marlas and had also noted that said land was sold at Rs.18750 per marlas. Assessee’s share was definitely 43% of the total land and the gross receipts from sale of such land @ Rs.18,750 per marla comes out of at Rs.34,22,7,938/- and therefore, the Assessing Officer should not have taken the value of sale consideration at Rs.4,65,09,900/-. Contention of learned AR that Assessing Officer has included the share of Mr. Sham Lal also seems to be correct because of the fact that if the share of Mr. Sham Lal is included in the land holding of assessee, it will come out at about the same figure for which Assessing Officer had made the addition. However, on this account also the action of the Assessing Officer is not justified as per Mr. Sham Lal had already offered his share of income from land as business income before Settlement Commission. CIT(A), has reduced the addition after reducing the cost price of the land as 35,41,391/- where as in our considered opinion the learned CIT(A) should have restricted the same to Rs.30,68,6,547/- (being correct sale value Rs.34227938/- purchase cost Rs.3541391/-). Therefore, we allow ground of assessee’s appeal and direct the Assessing Officer to restrict the addition confirmed by learned CIT(A) at Rs.42,95,9,509/-to Rs.30,68,6,547/- only. Contention of the assessee that the asset should have been treated as capital asset - We do not find any force in the grounds of appeal as Mr. Sham Lal and his group companies has already admitted before the settlement commission that the same may be treated as business income, therefore, ground Nos. (i) to (iii) are dismissed.
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