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2017 (4) TMI 1090 - AT - Income TaxUndisclosed income earned from sale of row houses - return filed in response to notice under section 158BC - Held that:- We are of the opinion that the assessee in fact did charge "on money" in relation to booking/sale of flats. However, the entire receipts on account of “on money" charged by the assessee on sale/booking of flats cannot be the undisclosed income of the assessee for the block period because what can be taxed under Chapter XIV-B is undisclosed income and not the undisclosed receipts, during the course of hearing before the Revenue Authority. Assessee has brought evidence on record to support that he had to pay a sum of ₹ 38 lakhs to the erstwhile organizer of NTC and further a amount of ₹ 21.91 lakhs for the land to various persons and it had also to spend a sum of ₹ 158 lakhs on the cost of construction for which necessary deduction has to be allowed. In any case what can be taxed is the profit which could have been earned by the assessee on the alleged unaccounted receipts amounting to ₹ 1,32,91,840/- and not the entire amount. Further, the AO has not brought any material on record that the assessee in fact had made any initial investment of ₹ 15 lakhs as alleged. In any case even if it is assumed that the assessee did make an initial investment of ₹ 15 lakhs which is to be taxed under section 69C the corresponding deduction will have to be allowed u/s 37 of the Act as the investment was made in acquisition of business assets and as such the amount spent, was for the business of the assessee. The assessee has himself offered 8 per cent profit on the total receipts which should be considered fair and reasonable. In any case it is to be seen that after the exhaustive search and obtaining the discloser of ₹ 17 lakhs the search party has been able to find any unaccounted assets except those which have been referred to in the statement of the assessee and a broad breakup of which was given by the assessee in his statement aggregating to ₹ 17 lakhs. These assets are by way of application of the unaccounted income which have been earned by the assessee from Hare Krishna Apartment project, part of which was reflected on the piece of paper found during the course of search against which the assessee himself has offered a sum of ₹ 17 lakhs as his unaccounted income. Thus, it is clear that-the assets found at the time of search were the application of the unaccounted income of ₹ 17 lakhs which was offered to tax by the assessee in his return filed in response to notice under section 158BC. Thus, AO was not justified in making the addition as the concealed income of the assessee because the profit earned on the unaccounted receipts on the basis of the special provisions at 8 per cent as per section 44AD of the Act will be less than the amount of ₹ 17 lakhs disclosed by the assessee as undisclosed income in the return filed in response to notice under section 158BC. - Decided in favour of assessee.
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