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TMI Blog2015 (6) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the said addition was made on the basis of the impounded material impounded during the course of survey u/s 133A from the assessee premises. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in accepting the plea of the assessee that the figures mentioned on page 110 of impounded book BF/7 are nothing but an estimate despite the fact that the book BF/7 was impounded just 3 days before from the closing of the F.Y. 2007-08 and the assessee failed to produce any substantive evidence before the A.O. regarding its claim of estimation. 3. All the above three grounds are interrelated; therefore, they are being taken-up and considered together. 4. The facts of the case are that the assessee derives income from construction and sale of flats. During the accounting year relevant to assessment year under consideration, there was survey at the assessee's premises on 28.03.2007. During the course of survey, certain papers were found and impounded. One of the papers, i.e. page 110, there was a Trading and Profit & Loss account for the year ended on 28.03.2007; as per which, the net profit worked out to Rs. 2,94,17,251/-. During the course of survey, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss account found at the time of survey was rightly made by the Assessing Officer and the same should be sustained. The ld. Departmental Representative further pointed out that as per Profit & Loss account found at the time of survey, the labour payment was Rs. 98,19,829/- while in the audited Profit & Loss account filed alongwith return of income, the labour payment disclosed was only Rs. 68,48,934/-. Obviously, the balance labour payment was not recorded by the assessee in the books of accounts. Thus, the same was made out of unexplained source and the addition was rightly made by the Assessing Officer u/s 69C of the Income-tax Act. He, therefore, submitted that on both these counts the order of the CIT(A) should be reversed and that of the Assessing Officer may be restored. 8. The ld. Counsel for the assessee, on the other hand, pointed out that the Trading and Profit & Loss account found at the time of survey is rough and estimated Profit & Loss account. He pointed out that the land for the project was purchased in the preceding year and the construction work was also started in the preceding year and has been shown as closing work-inprogress in the last year. That the Profit & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the labour payment mentioned in the paper was also estimated/projected one, which the assessee was supposed to incur on the completion of the project. He further submitted that except the loose paper, no corroborative evidence was found with regard to incurring of any labour payment over and above what was debited in the books of account. That the labour payment debited in the books of accounts is duly supported by bills and vouchers of the petty labour contractors. The complete details of the labour payment made by the assessee alongwith necessary bills and vouchers were produced before the Assessing Officer during the assessment proceedings. The regular books of accounts are duly audited by the Chartered Accountant. The auditor has not pointed out any discrepancy in the maintenance of the books of accounts or in respect of labour payments. He, therefore, submitted that merely because some estimated labour payment was written on the projected profit & loss account, the addition for unexplained expenditure cannot be made. 10. We have carefully considered the arguments of both the sides and perused the material placed before us. The first question is whether the income from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the project under consideration during the year under consideration was not assessable in this year, because the project was not completed. Once the income is not assessable, the question of determination of quantum of income from the said project is only academic. In view of above, we do not find any merit in Ground No.1 of the Revenue's appeal and the same is rejected. 11. So far as the difference between the labour payment mentioned in the profit & loss account found at the time of survey and the labour payment disclosed in the books of account and the audited profit & loss account, the finding of the CIT(A) is as under:- ".... It is further seen that it is not the case that the amount of Rs. 98,19,829/- appearing in the impounded Trading & P&L a/c has been actually paid as no material evidencing the payment of labour charges to that extent has been brought on record. As complete details of labour parties have been filed during the course of assessment proceedings, Assessing Officer could have verified the actual facts by making independent inquiry from the labour contractors. As details relating to PAN and address are already on record, Assessing Officer ought to have made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) with regard to Ground Nos. 2 & 3 of the Revenue's appeal and thus, these grounds of Revenue are rejected. 13. Ground No.4 of the Revenue's appeal reads as under:- "4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 2,57,358/- made by the A.O. after disallowing the transportation exp. despite the fact that the assessee failed to produce any substantive evidence in support of these exp. and thus failed to discharge the onus to prove genuineness of the exp. before the A.O." 14. We have heard both the parties and perused the material placed before us. The CIT(A) deleted the addition with the following findings:- "7.3 I have considered the reasons given by assessing officer and also the submissions of appellant. On perusal of the above, it is seen that assessee has filed all the relevant evidences in support of the genuineness of expenditure claimed by it. It is seen that during the course of assessment proceedings, assessee filed copy of relevant invoices issued by the parties to whom payment of transportation charges have been made. The assessee has also made TDS from payment of transportation charges. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase cost of land is of Rs. 7,31,000/-. The assessee was issued show cause which is reproduced as under: "As per the copy of sale deed of /and in question dated 16.2.2006, you have purchased the lend admeasuring 6523 Sq, mtrs. at Revenue Survey No. 112 of Village Singanpore, T.P. 26, Final Plot No.50/3, for Rs. 7,31,000/-. From the copy of the sale deed, it is also found that the same is registered at Sr. No..1830 of Katargam, Surat, 2006. The land on which residential towers/complex constructed, worked out at Rs. 112.06 per sq. Mtrs, which is prima facie very low rate. You are hereby issued show cause and required to produce the Valuation Report of the approved Registered Valuer. 5.1 It is also noticed that as per medium term long term agreement with State Bank of Mysore dated 28.02.2007 under the head "security and margin", it is contended that the equitable mortgage of open land at SY No. 112/2, TPS No. 26: Final Plot No. 50/3 Paikee admeasuring 6523 sq. mtrs. at Singanpore, Surat valued at Rs. 448.59 lacs belonging to you on which they have sanctioned a medium term loan of Rs. 3 crores. You are hereby issued cause as to why the value of the land should not be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not adduced any document to prove that the work of leveling, fencing etc. was carried out by them. Even if it is assumed that the work of leveling, fencing etc. was carried out by the assessee, it is difficult to believe that the market value of the open plot of land can rise by as high as 6136%. 6.5 Besides, the assessee itself admitted that the financial, institution has sanctioned the loan on the basis of market value and not as per value adopted in the books of accounts. Therefore, there is no ambiguity in adopting the real market value at Rs. 448.59 lakhs as adopted by the State Bank of Mysore as per agreement dated 28.2.2007. Therefore, the assessee has undervalued the land to the extent of Rs. 4,41,28,000 i.e.(Rs.4,48,59,000 - Rs. 7,31 ,000/-). 6.6 Therefore, the amount of Rs. 4,41,28,000/- is treated as unexplained investment of the assessee u/s 69 of the I.T. Act." 18. The CIT(A) deleted the addition; hence, this ground of appeal by the Revenue. 19. We have heard both the parties and perused the material placed before us. The assessee had purchased an open plot of land on 16.02.2006 for a sum of Rs. 7,31,000/-. Subsequently, in the year 2007, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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