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2015 (9) TMI 959 - ITAT CHENNAI

2015 (9) TMI 959 - ITAT CHENNAI - TMI - Estimation of sales consideration - unaccounted business in the real estate activity - CIT(A) directed AO to adopt the profit as the profit from real estate business and other activities which remain to be accounted in the books of accounts and restrict the addition - Held that:- computation of the income of the assessee is based on substantial evidence provided by the assessee and explanation given for the same. The Assessing Officer in the remand report .....

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ome 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 ₹ 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 .....

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such income was confirmed by the Commissioner of Income Tax (Appeals) for the assessment year 2008-2009 at ₹ 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 ₹ 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.- Decided against revenue.

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. Standard Steel Rolling Mills, a partnership firm. Consequent to the power of attorney the assessee sold scrap on 12.02.2009 at ₹ 67,25,000/-. This fact is not disputed by the Revenue authorities. The assessee is entitled to receive commission at ₹ 1,27,000/- from this transaction and the same was offered to tax. Considering these facts the Commissioner of Income Tax (Appeals) deleted the addition made by the Assessing Officer to the tune of ₹ 67,25,000/-. The contention of th .....

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Appellant : Shri. N. Madhavan, IRS, JCIT. For The Respondent : Shri. Philip George, Advocate ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These two appeals by Revenue are directed against different orders of the Commissioner of Income Tax (Appeals)-VI, Chennai, dated 30.03.2014 for the above assessment years. First, we take up ITA No.1788/Mds/2014, assessment year 2008-2009 for adjudication. 2. The Revenue has raised the following grounds:- 01. The Commissioner of Income Tax (Appeals) has failed .....

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ost per sq.feet after development of site works out to ₹ 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 ₹ 400/- to ₹ 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 .....

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statement filed by the assessee before the Commissioner of Income Tax (Appeals) rather by deciding on the sale price of plots . 3. The facts of the case are that the assessee is an individual filed his return of income for the assessment year 2008-2009 on 18.09.2009 admitting a taxable income of ₹ 2,08,948/- and agricultural income of ₹ 65,000/-. The assessee is a proprietor of M/s. Green Land Trading Company which was a consignment agent for pneumatic spares. The assessee also did .....

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06.12.2010 in the business premises of the assessee, where in it was noticed that the assessee was found to be carrying unaccounted business in the real estate activity. It was found that the assessee has purchased lands in the months of April & May 2007 from M/s.RVP Associates and sold as plots after development in the project name V.M.Nagar Thattanchavady immediately after purchase from RVP Associates. The entire business of development of plots and selling the same was done in the name of .....

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himself. It was also found during the course of survey action that the cash was received over and above the registered price in respect of the sale of properties. Subsequently, the Assessing Officer issued summons u/s 131 of the IT Act to 53 persons. Out of them 23 persons, appeared before the Assessing Officer and have given a statement under oath regarding the purchase price paid by them, the mode of payments and the person to whom they have paid the money. It was stated by the Assessing Offi .....

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ss: Purchase price, including registration Charges : ₹ 1,93,49,308/- Balance : ₹ 3,74,53,577/- Less: Value of unsold plots : Rs. 2,16,817/- Profit from sale of plots : ₹ 3,72,36,760/- 4.1 The Assessing Officer also computed the income of the assessee by investment method at ₹ 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  .....

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ssioner of Income Tax (Appeals) observed the assessee has disclosed ₹ 40,00,000/- as unaccounted income under the head Adhayam receipts in the course of assessment proceedings vide his letter dated 27.12.2010. As the income computed by the Assessing Officer by estimation method at ₹ 3,72,36,760/- is higher than the income computed by investment method at ₹ 2,36,85,707/- and also by offer of income by the assessee at ₹ 40,00,000/-, in the course of assessment proceedings, .....

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y stated the amounts paid in the sworn statements given by them before the Assessing Officer. It was the contention of the the ld. Authorised Representative for assessee that the purchasers have clarified before Assessing Officer that the additional amount paid in some cases included for construction of the compound wall and charges for obtaining approval for converting the industrial land as for residential use. During the course of appellate proceedings, the Commissioner of Income Tax called f .....

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rty for the period FY 2004-05 at ₹ 35,55,000/- and for the period FY 2011-12 (3rd floor) at ₹ 13,25,000/- totaling to ₹ 45,80,000/-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 g .....

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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 also by way of demand drafts etc. Some of the plots were purchased and sold on the same day. Majority of the plots were sold within 3 months from the date of pu .....

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g cash deposited in the bank accounts was much more than the total sale price of the plots. Just before 2 days from the date of the assessment order, i.e. on 29.12.2010, the assessee, has himself given a voluntary statement before the Assessing Officer that the total receipts from plot sales was ₹ 2,71,16,000/-after deducting the transfer entries between accounts to the tune of ₹ 93,00,000/-, loan amounts ₹ 44,50,000/-, various redeposits ₹ 30,00,000/-, agricultural incom .....

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remand report. The sale price received as per the document value was only ₹ 1,73,01,780/- as per the figure mentioned in the assessment order. That means, the entire on money received by the assessee was deposited in the bank account by the assessee. Therefore, the exact quantum of sale consideration of ₹ 5,68,02,885/- estimated by the A.O has no basis. The determination/estimation of the sale consideration of ₹ 5,68,02,885/- was not based on any valid evidence. However the sal .....

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ee that loans of ₹ 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 ₹ 10,00,000/- in cash from J.Vidhyachand, a loan of ₹ 7,50,000/- from R.Sekar, a loan of ₹ 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 ₹ 14,00,000/- and Poong .....

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or assessee stated that the affidavits from these 3 parties were already furnished before A.O during the course of assessment proceedings. The assessee relied on the ratio of the decision of the Supreme Court Of India in the case of Orissa Corporation Ltd reported in 159 ITR 78 to prove that the loans are genuine and the assessee has discharged onus of proof furnishing the details of the loan creditors, addresses of the creditors, PAN nos. and confirmations. Considering the evidences furnished b .....

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unt in which the sale proceeds were credited also needs to be removed from the computation of profit made by the A.O. In other words, the total receipts from plot sales of ₹ 2,71,16,000/-admitted by the assessee in the course of assessment proceedings vide his letter dated 29.12.2010 needs to be taken into consideration for the purpose of computing the gross receipts received from the sale of plots by the assessee. Further the Assessing Officer had again added the investments made by the a .....

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aid by Smt. Jayanthi should not be again included in the computation of income of the assessee. Therefore, the entire investment of ₹ 47,22,880/- made by the assessee in his name also in the name of his wife should not be again included in the computation of the profit for tax purposes. Further, the Assessing Officer had included registration charges of ₹ 13,69,672/- and cash in hand of ₹ 9,64,835/- in the computation of the profit out of real estate business without any legal .....

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earned profit @ ₹ 50/- per sqft on sale of land measuring ₹ 1,24,679/- which comes to ₹ 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 200 .....

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/- except to the extent of the agricultural income of ₹ 3,00,000/-) admitted as per the cash flow statement submitted during the appellate proceedings was treated as correct and genuine figure. As the assessee did not produce any documentary evidence in respect of the agricultural activities genuineness of the claim of income earned from agricultural activities was not accepted and the same was held as income from other sources. The reduction in respect of stamp duty charges paid of earlie .....

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real income earned by the assessee during the year under consideration. The reduction in respect of the payment made to RVP Associates is given for the purpose of computation of net profit as the assessee paid the money to RVP Associates out of the deposits made in the bank accounts maintained by the assessee in his name and in the name of Mrs.Gandhimathi. Therefore, the net profit earned by the assessee in the real estate business and other activities during the year under consideration was com .....

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directed the Assessing Officer to adopt the profit of ₹ 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 ₹ 87,24,139/- instead of ₹ 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 - ₹ 87,24,139). Against this, the Revenue is in appeal before us. 5. We have heard both the parties and peruse .....

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om 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 of plots : 3,72,36,760/- The contention of the assessee counsel is that there is no unaccounted sale of property and the entire money was deposited in the bank account at ₹ 4,44,31,000/- which includes loan from various parties and the assessee expla .....

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ongavanam : 3,00,000/- Eswaramurthy : 5,00,000/- Transfer form assessee account to Gandhi Mathi Account : 93,00,000/- Plot sold by my wife Jayanthi : 1,90,000/- Sale of sugarcane : 1,25,000/- Agricultural income : 2,50,000/- Various re deposit : 30,00,000/- Total receipts from various activities : 1,28,65,000/- Total receipts from the plot sale : 2,71,16,000/-. Thus, the assessee s total receipt from the sale of plot at ₹ 2,71,16,000/- and computed profits on the sale of these land transac .....

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of the assessee is based on substantial evidence provided by the assessee and explanation given for the same. The Assessing Officer in the remand report has no material to suggest the gross income from the sale of plot at ₹ 5,68,02,885/- and contrary to this, the Assessing Officer estimated the sale value of the property 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 .....

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t 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 .....

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order of the Commissioner of Income Tax (Appeals) on this issue and the same is confirmed. The appeal of the Revenue in ITA No.1788/Mds/2014 is dismissed. 7. Coming to the ITA No.1796/Mds/2014 for the assessment year 2009-2010, the first grievance of the Revenue in this appeal is that the Commissioner of Income Tax (Appeals) has erred in allowing fresh evidence in violence of Rule 46A by admitting the assessee to file receipt for payment of scrap sales amount of ₹ 57,00,000/- to Mrs. Vija .....

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₹ 57,00,00/- to the income returned. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 9. The Commissioner of Income Tax (Appeals) observed that there was no dispute that the assessee had paid a sum of ₹ 57,00,000/- out of unaccounted sources during the assessment year under consideration. Regarding the source of the payment, the assessee had accepted that the advance of ₹ 57,00,000/- was paid out of the income generated in the real es .....

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ppeals) directed to delete the addition of ₹ 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 ₹ 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 ₹ 87,24,139/-. Thus, the Commiss .....

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oner of Income Tax (Appeals) the assessee has admitted receiving of ₹ 67,25,000/- towards sale proceeds of scrap from Sri Mahendran to build up source. However, in the order, the Commissioner of Income Tax (Appeals) confirmed only ₹ 1,27,000/- as commission from scrap sales . 12. The facts of the case are that during the course of survey u/s.133A, copy of documents impounded. An agreement between Mr. Mahendran and the assessee was also impounded, wherein scarps of standard rolling mi .....

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rn of income. The ld. Authorised Representative for assessee has stated that the assessee has received a sum of ₹ 10,00,000/- only. A perusal of copy of document it was agreed by the parties that a sum of ₹ 10,00,000/-should be paid immediately i.e on 12.02.2009 and the balance amount should be settled before clearing the scraps. It was stated in the agreement on 31.03.2009 that the entire scraps were cleared after paying the balance of ₹ 57,25,000/-. Hence, it was clear that t .....

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shmi w/o. late Rajendran, to dispose off the scrap on behalf of Vijayalakshmi. The Commissioner of Income Tax (Appeals) had perused the special power of attorney dated 21.05.2008 produced by the ld. Authorised Representative for assessee, wherein it was stated that the assessee was agent to manage the share of Vijayalakshmi s properties in the said M/s. Standard Steel Rolling Mills, a partnership firm without having any right of alienation. The scrap was sold on 12.02.2009 for a consideration of .....

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d 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 .....

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