INCOME TAX ACT, 1961

Section 44AD & 69C

Income from undisclosed sources - Addition under section 68 - Receipt of on-money on sale of flats noticed during search - Also, details of expenditure, i.e., cash payment towards purchase of land found during search

During search carried out at residence of assessee a piece of paper was found exhibiting that the assessee had received on-money on sale of flats. Accordingly, AO made addition of entire on-money received by assessee. CIT(A) restricted addition to 20% of on-money received by assessee. Held: During the course of search not only details of on-money received by assessee on booking of flats and shops were was found, but details of certain expenditure, not recorded in the books were also found. This included cash payment for purchase of land. Therefore, CIT(A) rightly observed that gross on-money noticed on seized paper could not be considered as income of assessee and only element of income embedded in on-money received by assessee for booking of flats/shops was required to be taxed. However, CIT(A) had not mentioned any attending circumstances for harbouring a belief that 20% could have been earned from this activity. Accordingly, 8% profit offered by assessee on alleged gross receipts of on-money received in cash was fair and reasonable.

Supported by:Kishor Mohanlal Telwala, (1999) 64 TTJ 543 (Ahd-Trib) : (1999) 107 Taxman 86 (Ahd-Mag-Trib) : 1999 TaxPub(DT) 831 (Ahd-Trib).