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TMI Blog2017 (3) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... f convenience and brevity. ITA No. 693/Ahd/2013 Assessee's appeal for A.Y. 2010-11 3. Assessee has raised two substantive grounds of appeal. Ground no. 1 relates to the addition made u/s. 14A of the Act amounting to Rs. 12,80,892/-. 4. During the course of the scrutiny assessment proceedings, the assessee was asked to show cause why the provisions of Section 14A should not be invoked in respect of investments in shares, the income of which is exempt from tax. The assessee strongly contended that it is having sufficient interest free funds for making investment in equity shares. Though, this contention was primarily accepted by the A.O. but he was of the opinion that the assessee failed to provide nexus of investments made in equity share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e search proceedings, the assessee had disclosed an amount of Rs. 9 crores earned as unaccounted on money on sale of 278 units out of which 223 were conveyed and 55 were booked. The A.O. worked out the average on money of Rs. 3,23,741/- per unit on 278 units. The A.O. further worked out that average of Rs. 373.65 per sq. yd. was the on money on the total size of the plot. The A.O. was of the firm belief that the assessee must have also taken on money on the units that were booked/conveyed after the date of search i.e. 07.10.2009. The A.O. found that the highest rate that has been charged in the Aantarkshitij scheme was at Rs. 2813 per sq. yd. The A.O. added to this. The average on money per sq. yd. calculated as referred to hereinabove and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 373.65 per square yard. For calculating the average on money rate the Assessing Officer has considered the average of entire sales hence he cannot take the highest rate for determining the rate of sales of the remaining plots. It is also seen that the average sale rate recorded for the entire plots is Rs. 2,169/- per sq. yard. The highest rate is Rs. 2,813/- per sq. yard in October, 2009 and the lowest rate is Rs. 3,586/- per sq. yard in April, 2009. It is seen that the average rate of. the lands sold during September 2009 is Rs. 24137- per square yard and the average rate in August is Rs. 2420/- per square yard and the average rate in July 2009 is 1600/- per square yard. In view of the above the Assessing Officer is directed to adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s o f documentary evidences and judicial decisions. 15. There is not even a single piece of evidence lest it be cogent material evidence which could justify the impugned additions made by the A.O. 16. The entire additions made by the A.O. are based upon the surmise and the presumption that the assessee must have earned on money post 07.10.2009 also. These observations have formed the basis of the addition. In Lalchand Bhagat Ambica Ram vs. CIT 37 ITR 288, The Hon'ble Supreme Court disapproved the practice of making additions in the assessment on mere suspicion and surmises or by taking note of the "notorious practice" prevailing in trade circles. 17. The assessee had given complete details of booking received after 06.10.2009 and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conceded. The features noticed by him in the assessees' business certainly constitute a starting point of inquiry. They are, however, not to be taken as evidence or material showing any suppression or understatement of the sale price. If on further probe, the assessing Officer was able to unearth any evidence or material on the basis of which actual suppression of the sale price could be found, then the additions made on that basis would be valid. But it is not open to him, merely on the basis of what he perceives to be the market conditions, to make additions to the sale price or the profits, without any evidence of understatement. 21. In our considered opinion, the Assessing Officer has drawn a presumption that all the units booked aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds of appeal. Ground no. 1 relates to the deletion of the disallowance of interest of Rs. 9,07,942/- made u/s. 36(1)(iii) of the Act and Ground no. 2 relates to the restriction of the addition made on account of undisclosed on money to Rs. 25,25,655/- out of total Rs. 1,01,63,640/-. 27. Ground no. 2 is dismissed qua our detailed discussion given in allowing ground no. 2 of assessee's appeal in ITA No. 693/Ahd/2013 (supra). 28. This leaves with only grievance of the revenue relating to the deletion of the disallowance of Rs. 9,07,942/-. 29. During the course of the scrutiny assessment proceedings, the assessee was asked to explain the interest expenditure claimed u/s. 36(1)(iii) of the Act and to justify the reasonableness of the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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