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2020 (12) TMI 18 - AT - Income TaxUnaccounted receipts as income - Survey u/s 133A - loose sheets were found disclosing the unaccounted receipts which were received in cash as well as cheque - assessee had admitted the entire undisclosed receipts as income for various assessment years, however, offered only 30% of the undisclosed receipts as income in the return filed in response to notice issued under section 148 - HELD THAT:- From the finding of the CIT(A) as well as the submissions made by the assessee before the AO and during the course of assessment proceedings, it is observed that the unaccounted cash expenditure was not considered while admitting the additional income. The assessee admitted the entire cash receipts as additional income and the department has accepted the same without going into further details of unaccounted expenditure. AO also did not work out the cost of construction of additional works for the flat and arrived at the profit. In normal practice, the AO should consider the expenditure for construction of the flats including cash expenditure and arrive at the cost of construction. From the total sale proceeds i.e. cash receipts as well as bank receipts, cost of construction required to be reduced and net profit required to be brought to tax. AO may also go into the details of unaccounted expenditure and make addition invoking the relevant provisions of the Act. AO has not done such exercise in this case. AO also did not consider the unaccounted expenditure incurred though the evidences are available in the impounded material. AO also did not refer the cost of construction to the departmental valuation and simply estimated the unaccounted receipts @1000/- per sq.ft in respect of residential area and ₹ 1500/- per sq.ft in respect of commercial area without arriving at the actual cost of construction with accounted expenditure and the unaccounted expenditure which is baseless. Also incumbent upon the AO to arrive at the accounted receipts and unaccounted receipts and the actual expenditure incurred. No such exercise was done by the AO and simply taxed the entire unaccounted receipts which were offered by the assessee at the time of survey. When there is evidence available with regard to unaccounted expenditure and receipts, taxing the entire unaccounted receipts as income is unjustified. Hence, estimation of income made by the assessee which was accepted by the Ld.CIT(A) appears to be reasonable, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
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