TMI Blog2016 (4) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... count of assessee as well as joint account. We are of the view that we need to determine the reasonable of income from the real estate i.e. the line of business activities of the assessee. In our view, AO should estimate the income of the assessee after evaluation of the business of the assessee and similar business in the real estate. Such percentage can be adopted to determine the gross income of the assessee and arrive at net taxable income @ 25% of the gross income by giving proper opportunity of being heard to assessee. Accordingly, we direct the AO to arrive the net income along with the other declared income as taxable income - Decided in favour of assessee for statistical purposes. - ITA No. 94/Hyd/2015 - - - Dated:- 16-3-2016 - SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri S. Rama Rao For The Revenue : Shri B. Kurmi Naidu ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal is preferred by the assessee against the order of the learned Commissioner of Income-tax(Appeals), Vijayawada, dated 07/10/2014 for AY 2007-08. 2. On perusal of record, we find that this appeal was filed before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dlords. (iii) There is no basis as how the company/ landlords accepted to give/take money to/from the assessee without any guarantee for the transaction. (iv) No proof was produced for receipt of commission from the three companies. (v) The details of purchasers/ sellers are not known. Accordingly, the AO has taken the balance deposit of ₹ 72,09,792/- as gross receipts of the assessee and income at 25% was estimated. 3.1 In respect of account in ICICI Bank bearing account NO.030401502265 which assessee jointly held with his wife and son, the deposits were worked out at ₹ 79,61,107/- by the AO. The AO noted that the Assessee has given the same explanation for this amount also. AO further stated that out of these transactions certain transactions were relatable to his wife and she had already filed her return of income for A.Y.2007-08. Out of the total deposits of ₹ 79,61,107/-, the Assessing Officer accepted the assessee's explanation for ₹ 18,42, 126/- only. After reducing this amount, the amount of gross receipts of ₹ 11 ,73,896/- admitted by the assessee in his return of income and the interest income of ₹ 1,22,965/- shown in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments were to be made, names and addresses of the sellers etc., The assessee furnished documentary evidence in two cases involving an amount of ₹ 2,93,500/- only and there is no documentary evidence for the balance amount to show that it was paid to the land lords. Hence, relief to the extent of ₹ 2,93,500/- may be allowed. (iv) In respect of joint account, relief to the extent of ₹ 59,20,329/- may be allowed towards gross commission received of ₹ 19,51 ,612/- from Jana Chaitanya Housing Ltd, ₹ 16,92,250/- from Ratna Housing(P) Ltd and ₹ 5,01,876!- from M/s.Chalapathi Estate (P) Ltd., by the assessee's wife and ₹ 17,74,591/- towards sweeping reverse entries in the bank account. 4.1 In his comments on the remand report of the Assessing Officer, the AddI.CIT, Range-9, Hyderabad denied to give relief of ₹ 2,93,500/- as observed by the Assessing Officer for the reason that as per the sale deed furnished by the assessee, the assessee has no role in the sale transactions made by the vendor vendee. He further observed that the Assessing Officer has already allowed credit for ₹ 18,42,126/- for the commission received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also not proved beyond doubt. Further, it is also not possible to verify these claims with books of account, as the assessee had not maintained them. Hence, it is not possible to give credence to the assessee's arguments. In such circumstances, I am of the view that the assessee failed to explain the deposits in the bank account satisfactorily and accordingly adopting the peak balance in the bank accounts of the assessee as unexplained cash deposits u/s.69 of the Act would be more appropriate in this case. The relevant extract of the assessee's submissions dated 12/11/2013, in this regard, are as under: As submitted earlier, even the peak amount of the receipts amounted to ₹ 47,50,881/- and the opening balance was ₹ 22,28,473/-. The net peak would be ₹ 25,22,408/-. 5.1 On verification of the consolidated statement of bank accounts, it is noticed that there was peak balance of ₹ 47,60,881/- on 20/10/2006 and the opening balance as on 1/4/2006 was ₹ 22,28,473/- and the net peak was ₹ 25,22,408/-. The AO is directed to tax this amount of ₹ 25,22,408/- as unexplained cash deposits u/s.69 of the Act. 5. Aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself accepted 25% of income and AO computed the taxable income as per return of income. He also relied on the order of the CIT(A) and assessment order. 9. Considering the submissions of both the counsels and material facts on record, it is observed that as per the records, the assessee is a commission agent derived income from real estate activities. From the record, it is clear that no commission agent or even the person dealing with the real estate can earn @ 25% as income from the business. On careful evaluation of the return of income, assessee had offered to tax 25% as net income from the commission earned from real estate activities and not from gross receipts. First we need to arrive what will be the income earned from the real estate business as commission. AO has treated 25% as commission, which cannot be proper in the normal course of business. Moreover, the assessee has used the joint account to carry out the business, activities of accepting money from purchasers and paying to the sellers and the net balance shown as commission income. The similar business activities were also carried by his wife, who has shown commission income. We are not in a position to alloc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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