TMI Blog2017 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... no infirmity in the same. At the same time, we are not in agreement with the findings of the ld CIT(A) where he states at para 4.3 (vi) of his order that set off OF sale proceeds would be available against the undisclosed stock surrender of ₹ 2.8 crores found at the time of search of sale proceeds realized out of books of ₹ 2.51 crores since there is no material/evidence on record that this amount was invested elsewhere and in view of the clear directions of the ld CIT(A) in his order dated 19.5.09.” The reason for the same is that there is no such directions by the ld CIT(A) in the first round and that’s precisely the reason why the assessee took the additional ground before the Coordinate Bench and which has been rightly given effect to by the AO. - Decided in favour of revenue - ITA No. 198/JP/2013 - - - Dated:- 28-3-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Revenue : Shri R.A.Verma (Addl.CIT) For The Assessee : Shri S.L. Poddar (Advocate) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the Revenue against the order of ld. CIT(A), Alwar dated 18.12.2012 for A.Y. 2007-08 wherein Revenue has taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of other individual or company the undisclosed income arising out of undisclosed transactions is correctly assessed in the hands of the assessee individual on his own expressed taking of responsibility. The total sale of property under question is found by the AO ₹ 37660000 on the basis of seized papers as against ₹ 12500000/- as per sale deed in the name of company as against purchase by the company for a sum of ₹ 24805000 on the basis of seized materials. Therefore, there was undisclosed transactions of purchase and sale of this property other than the sale deeds in the name of company. Thus the profit arising out of the undisclosed transactions ₹ 12800000 can be assessed in the hands of the assessee individual. However the property stands sold on 3.7.2006 as per date of sale deed. Therefore the undisclosed profit is to be considered in the year of its sale i.e. in AY 2007-08 and the addition of undisclosed profit ₹ 12800000 during this year is deleted. However a due set off should be allowed if similar profit arise in AY 2007-08 from the purchase and sale of this property with the surrendered amount of undisclosed investments from properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the Assessing officer are contained at para No. 17 to 20 of its order which is reproduced as under:- 17. Above submissions are carefully considered and the same are found to be not acceptable being beyond the directions of the higher authorities. There is no directions of set off of entire sale proceeds of Mahala property either by the CIT(A) or by the ITAT. Where the directions of the CIT(A) are clear that set off be allowed of profit earned, if the same profit is part of surrender in AY 2007-08. The directions of the ITAT are that set off of profit be allowed to the assessee subject to proof by the assessee that surrendered amount was available with the assessee for allowing set off against the income added by the AO. Assessee has never claimed set off of entire sale proceeds before the CIT(A) or the ITAT. So there is no question of allowing of set off of profit of ₹ 1.28 crores against the investment in AY 2007-08. Now the A/R wants to travel beyond the directions of the higher authorities which cannot be done in set aside/restored proceedings. In such proceedings the AO is restricted to act strictly in accordance with the directions of the higher authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where prescribes the profit earned on sale of Mahala property as directed by the ld CIT(A) and therefore question of giving set off has no relevance. From the order of the ld CIT(A) it may further be seen that the disclosed investment in the said property was only of ₹ 10936055 whereas the AO found undisclosed investment in the said property of ₹ 1.50 crores in this property which stands considered in AY 2006-07 and also partly confirmed by the CIT(A). Now the only question remained is of set off of profit of ₹ 1.28 crores on the date of sale of the property if the same is part of surrender in AY 2007-08 as per the directions of the ld CIT(A) but it is not so as is evident from the chart of unaccounted income surrendered in the return, details of which are reproduced above. As such the assessee does not deserve any set off, if the directions of the ld CIT(A) are considered. 20. However, the directions of the ITAT are on different footings directing to set off of this amount of profit as available for undisclosed investments surrendered by the assessee in AY 2007-08 because if it was not done it would amount to double taxation once in the form of earning of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.3 Being aggrieved with the above order of AO, the assessee carried the matter in appeal before the ld. CIT(A) and his findings are contained at para 4.3 of its order which is reproduced below:- 4.3 I have considered the assessment order of the AO u/s 254/250/154/143(3) dated 28.12.2011 and the submissions made by the AR of the appellant. (i) I am inclined to agree with the observation of the AO that the AO has to act strictly in accordance with the findings and directions of the higher authorities in set aside proceedings and while giving effect to appellate orders. The findings and directions by the ld. CIT(A) with respect to Mahla property in order dated 19.05.2009 are as under:- (a) Para 1,2 3 page 31: The undisclosed investment in the form of cash payment for purchase of Mahla property at ₹ 95,15,000/- is confirmed. Balance ₹ 328,390/- is deleted. Outstanding liability for payment for purchase ₹ 45,04,000/- is to be considered in next year as investment on actual payment basis. Similarly sale proceeds of this purchase may be set off with the available surrender of the investment in next assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the surrendered amount of undisclosed investments for properties by the assessee group in AY 2007-08 . The Hon ble ITAT set aside this issue to the file of AO to consider the issue of set off of undisclosed profit of ₹ 1.28 crores against the amount surrender by the assessee since facts in that regard were not clear (iii) The AR has submitted that the said Mahla property was sold on 3.7.2006 as per date of sale deed and the ld. CIT(A) directed the AO to give set off of sale consideration and profit in the year of sale which is available for other investment made by the assessee in the AY 2007-08. It has been submitted by the AR that the said property was sold for ₹ 3,76,60,000/- as per sale deed and the purchase cost as per registered deed is ₹ 109,36,055/-. So set off of ₹ 267,23,945/- should be allowed since the sale consideration was received out of books on 3.07.2006 and was found as investment in stock of ₹ 2.80 crore on the date of search on 01.11.2006. It has been further submitted that profit from the sale of said property of ₹ 15,63,945/- was recorded/disclosed in the regular books of accounts of the company M/s Mahl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- instead of ₹ 128,00,000/- in the order dated 28.12.11, notwithstanding the fact that the assessed income would fall to ₹ 737,94,065/- i.e. below the returned income of ₹ 827,40,410/-. In fact, it is also seen that the although the assessed income would fall below the returned income in AY 2007- 08 by ₹ 89,46,345/- but at the same time, the assessed income has gone up by ₹ 94,15,000/- in AY 2006-07 on account of additions relating to the Mahla property. The AO is directed to work out the revised income and relief as directed above. In view of the above, the ground No. 1,4 5 are partly allowed on above terms, ground No. 3 is allowed and ground No. 2 is dismissed. 2.4 Now the Revenue is in appeal before us. Ld. DR has vehemently argued the matter, took us through the orders of Coordinate Bench in the first round of appeal and the order of the ld CIT(A) in the first round of appeal and the latest CIT(A) order under challenge. He supported the order of the Assessing Officer and submitted that the AO has correctly given effect to the directions of the ITAT in the first round of appeal and there is no infirmity in such order. 2.5 The Ld. AR r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be available against the undisclosed stock surrendered by the assessee at the time of search of ₹ 2.8 Crores. The Learned CIT(A) has further observed that there is nothing on record which may show that this amount of ₹ 2,51,60,000/- was invested elsewhere. The finding of the Learned CIT(A) is perfectly in order. This finding of the Learned CIT(A) is in tune with the earlier order dated 19.05.2009 wherein the Learned CIT(A) had directed that the sale proceeds of the purchase of this property require to be set off with the available surrender of the investment. 2. Shifting of income from Assessment Year 2006-07 to 2007-08 It was submitted that the Learned CIT(A) has further correctly held that as per the earlier order dated 19.05.2009 the profit on sale of this property was required to be considered in Assessment Year 2007-08 instead of in Assessment Year 2006-07. Thus the income on sale of this property of ₹ 1,28,05,000/- was wrongly taken in Assessment Year 2006-07 was shifted/transferred to Assessment Year 2007-08. The profit on sale of this property was further corrected. It was held that the assessee as per registered sale deed declared profit of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee can be a figure lower than the income returned by the assessee. It is a well settled that the principle for determining the taxable income of the assessee under the IT Act should be within the purview of the law in force. If the taxable income determined by the AO is not in accordance with such principle it is open to the assessee to contend the same before the higher authorities to follow the correct application of law to determined the actual taxable income of the assessee. In our considered view, the lower authorities, not expected, to say that merely because the assessee has returned income which is higher than the income determined in accordance with legal principles such returned income can be treated as lawfully assessed. An assessee is liable to pay tax only upon the taxable income. The law imposed by the AO to assess the income according to law and determined the tax payable thereon. In doing so, the AO cannot assess the income of the assessee an amount which is not taxable as per law though shown by the assessee in the return. It is always open to the assessee to take a plea that the taxable income though shown as income is not taxable under law bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the amount surrendered by the assessee. And in light of these directions, the AO has considered the submissions of the assessee and has stated that since the sale of Mahala property has happened on 3.7.2006, the profit arising from such sale of Mahala property amounting to ₹ 1.28 Crores (after considering the sale consideration of ₹ 3.76 Crores and cost of purchase of ₹ 2.48 Crores as per seized documents) has been worked out and the same was allowed set off against the surrender of stock of ₹ 2.8 Crores. In our view, the AO has rightly given effect to the directions of the Coordinate Bench and we see no infirmity in the same. 2.8 At the same time, we are not in agreement with the findings of the ld CIT(A) where he states at para 4.3 (vi) of his order that set off OF sale proceeds would be available against the undisclosed stock surrender of ₹ 2.8 crores found at the time of search of sale proceeds realized out of books of ₹ 2.51 crores since there is no material/evidence on record that this amount was invested elsewhere and in view of the clear directions of the ld CIT(A) in his order dated 19.5.09. The reason for the same is that there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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