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TMI Blog2015 (9) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... sq. feet as cost. 03. The Commissioner of Income Tax (Appeals) has failed to note that the cost per sq.feet after development of site works out to Rs. 139/- per sq.feet, whereas the assessee has shown sale price @Rs.140/- per sq.feet as per guideline value, however original selling price was Rs. 400/- to Rs. 600/-initially. 04. The Commissioner of Income Tax (Appeals) has failed to note the main issue of suppression of real sale price in the plot size. 05. The Commissioner of Income Tax (Appeals) has failed to appreciate that there was huge difference in sale price shown by assessee as per guideline value and real market price of plot. 06. The Commissioner of Income Tax (Appeals) has failed to consider that the Assessing Officer has summoned 53 buyers of the plots and recorded statement on oath from 23 persons who were appeared and created concrete evidence that sale value of the plots at market price is much higher than the guideline value, which the assessee has admitted. 07. The Commissioner of Income Tax (Appeals) has decided the case on the basis of cash flow statement filed by the assessee before the Commissioner of Income Tax (Appeals) rather by deciding on the sale pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per sq ft varied from Rs. 400 in Apr 2007 to Rs. 600 in June 2007. The A.O has estimated the sales consideration at Rs. 5,68,02,885/- for the sale of 124697 sq ft area of the plot on the basis of the statements given by few purchasers of the plots. Accordingly, the Assessing Officer estimated the profit from sale of plots at Rs. 3,72,36,760/- as per income method as under:- Sale consideration as per calculation sheet : Rs. 5,68,02,885/- Less: Purchase price, including registration Charges : Rs. 1,93,49,308/- Balance : Rs. 3,74,53,577/- Less: Value of unsold plots : Rs. 2,16,817/- Profit from sale of plots : Rs. 3,72,36,760/- 4.1 The Assessing Officer also computed the income of the assessee by investment method at Rs. 2,36,85,707/- on the basis of the total amounts deposited in the bank accounts of the assessee, his wife and Mrs.Gandhimathi. The Assessing Officer has computed the profit by investment method at Rs. 2,36,85,707/- by following computation method. Total Sale proceeds as per bank accounts : Rs. 3,36,26,000/- Investment made by the assessee : Rs. 47,22,880/- Total : Rs. 3,83,48,880/- Less: Payment made to RVP Associates : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,80,000/-and also final remand report dt. 15.01.2013. 4.4 The Commissioner of Income Tax (Appeals) further observed that he had considered the findings of the Assessing Officer given in the assessment order, remand report and the submissions made by the ld. Authorised Representative for assessee carefully and also perused the copies of the sworn statements given by the purchasers of the plots, the declarations made by them giving clarifications/explanations about the purchase price of the plots and also the loan confirmations or affidavits made by the parties which were placed in the case records. The main argument of the ld. Authorised Representative for assessee was that the assessee did not make huge profits as determined by the Assessing Officer in the assessment order. The other argument was that he had only earned a commission @ Rs. 50/- per sq ft on the land sold. He has further stated that the 'on money' along with the document price which he has taken from the prospective buyers of the plots was taken on behalf of the land owners M/s RVP Associates and the entire money was deposited in the bank account which was again transferred to M/s RVP Associates by way of cash and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o take the sale proceeds as per bank accounts at Rs. 3,36,26,000/- without giving credit to the re-deposits made in the bank account at Rs. 30,00,000/- and also without looking into the claim of the assessee that loans of Rs. 44,50,000/- was received from 6 persons. From the perusal of the assessment records and details furnished by the assessee revealed that the assessee has received a loan of Rs. 10,00,000/- in cash from J.Vidhyachand, a loan of Rs. 7,50,000/-- from R.Sekar, a loan of Rs. 5,00,000/- from R.Muthuraju which were supported by affidavits, indicating their PAN nos and complete addresses. Regarding the amounts received from Sun Pharmacy of Rs. 14,00,000/- and Poongavanam of Rs. 3,00,000/- and swaramoorthy of Rs. 5,00,000/- it was stated by the ld. Authorised Representative for assessee that these were the advances received from the parties and same was adjusted against the lands allotted to them subsequently. The ld. Authorised Representative for assessee also furnished the copies of the affidavits made by these 3 parties from whom' the cash advance was taken against purchase of the land. It was the contention of the ld. Authorised Representative for assessee stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real estate business without any legal basis as the assessee was found to be withdrawing cash from the bank account for making payments which can be seen from the withdrawals appearing in the bank accounts on various dates. However, there was no evidence in respect of the agricultural income of Rs. 3,15,000/- which consist of Rs. 2,50,000/-on account of agricultural income and Rs. 1,25,000/- on account of sale of sugar. Even during the appellate proceedings, the assessee has come forward to admit on 31.01.2014 that he had earned profit @ Rs. 50/- per sqft on sale of land measuring Rs. 1,24,679/- which comes to Rs. 62,33,950/-. During the course of appellate proceedings, AR of the assessee, was questioned about the actual profit earned by the assessee and also required to give the explanation or clarification w.r.t the actual income earned by the assesseeK based on the investment method. In response to the same, the AR of the assessee furnished the cash flow statement for the AY 2008-09 and for AY 2009-10 giving the details of the receipts and payments for investment purposes and the cash flow submitted by the assessee for assessment years 2008-09 and 2009-10. 4.6 The cash flow ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to adopt the profit of Rs. 87,24,139/- as the profit from real estate business and other activities which remain to be accounted in the books of accounts and restrict the addition to Rs. 87,24,139/- instead of Rs. 3,72,36,760/-. Hence, the Assessing Officer was directed to delete the balance addition of Rs. .2,85,12,621/-(Rs. 3,72,36,760 - Rs. 87,24,139). Against this, the Revenue is in appeal before us. 5. We have heard both the parties and perused the material on record. In the assessment year 2008-2009, the assessee sold property measuring about 124679 sq.ft out of total land purchased by assessee at 156816 sq.ft. The assessee incurred purchase cost towards this at Rs. 1,93,49,308/-. The assessee declared the sale consideration as per the document value at Rs. 1,73,01,780/- as against the Assessing Officer estimated the sale consideration of the property towards 124679 sq.ft at Rs. 5,68,02,885/- and computed total profit from this transaction as follows:- Sale consideration as per calculation sheet : 5,68,02,885/- Less: Purchase price, including registration Charges : 1,93,49,308/- Balance : 3,74,53,577/- Less: Value of unsold plots : 2,16,817/- Profit from sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y without any supportive material on his hand. In our opinion, the assessee's version of gross receipt from the sale of property is based on evidence brought on record and further loan amount considered by the Assessing Officer as unexplained income to the tune of Rs. 44,50,000/- was considered by the Commissioner of Income Tax (Appeals) and there is no reason to doubt the same and it is to be considered as explained credit only. Further, it is noted that the Assessing Officer even at the assessment stage accepted the total receipt of the plot at Rs. 2,71,16,000/-. However, the Assessing Officer was not ready to compute the income on the basis of investment method instead he adopted the income on the estimation basis. In our opinion, when the material brought on record suggests the correct state of affairs of the assessee, it is not appropriate to estimate the income of the assessee on the basis of irrelevant consideration. The Assessing Officer could estimate the income of the assessee only when the following condition fulfilled. (1) Failure to make return of income u/s.139(1) or 139(4) of the Act. (2) Failure to produce the books of accounts in terms of notice issued u/s.142(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the Commissioner of Income Tax (Appeals) directed to delete the addition of Rs. 57,00,000/-. Against this, the Revenue is in appeal before us. 10. We have heard both the parties and perused the material on record. In this case, the Commissioner of Income Tax (Appeals) deleted the addition of Rs. 57,00,000/- on the reason that it was paid out of unaccounted income generated and such income was confirmed by the Commissioner of Income Tax (Appeals) for the assessment year 2008-2009 at Rs. 87,24,139/-. Thus, the Commissioner of Income Tax (Appeals) gave a telescopic benefit out of the addition made in the earlier assessment year towards unexplained investment of Rs. 57,00,000/-. Being so, we do not find any infirmity in the order of the Commissioner of Income Tax (Appeals) on this issue and the ground of the Revenue is dismissed. 11. The next ground raised by the Revenue in this appeal is that the Commissioner of Income Tax (Appeals) order is erroneous where in the cash flow statement filed before Commissioner of Income Tax (Appeals) the assessee has admitted receiving of Rs. 67,25,000/- towards sale proceeds of scrap from Sri Mahendran to build up source. However, in the order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling of scrap on behalf of Mrs. Vijayalakshmi. The assessee also contested on the alternative ground that it at all the income on sale of scarp was to be taxed, same was to be assessed in the hands of partnership firm, M/s. Standard steel rolling mills wherein the assessee was holding a share to the extent of the 36.842% as per the sale agreement dated 03.05.2008 signed between assessee and Mrs. Vijayalakshmi. The ld. Authorised Representative for assessee further contended that the agreement dated 03.05.2008 containing the purchase of shares of 36.842% in the share of Vijayalakshmi in which she was a partner in Standard Steel Rolling Mills was already made available before the Assessing Officer in the course of survey proceedings. The assessee also produced the copy of cash receipt given by Smt. Vijayalakshmi authorizing the assessee as power of agent for the purpose of selling scrap and other accessories of Standard Steel Rolling Mills and also giving the details of the sale price of the scrap at Rs. 67,25,000/- to Shri. T. Mahendran. The cash receipt produced by the assessee gives the details of commission of Rs. 1,27,000/- paid to assessee for selling the scrap. The Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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