The Tax Publishers2020 TaxPub(DT) 3966 (Guj-HC)

INCOME TAX ACT, 1961

Section 143

This Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax was profit embedded in such receipts and not the entire receipts themselves and in view of legal position that not the entire receipts, but profit element embedded in such receipts can be brought to tax, therefore, there could be no interference in decision of Tribunal accepting such element of profit out of total undisclosed receipt.

Assessment - Addition to income - Receipt of on-money - Only profit element to be added

Assessee was engaged in business of construction of flats and residential complexes and started construction of a total of 120 flats in a complex. The scheme contained three types of flats. A search was carried out and a disclosure was made of undisclosed income by a partner Mr. J. This disclosure was confirmed by other partner Mr. B of the firm in his statement. In response to notice issued by Department, assessee filed return declaring undisclosed income. During the search of the residential premises of Mr. B, a loose paper was found and seized. The paper pertained to details of sale of two of the flats. On the basis of the contents of the loose paper and the statement of the partner, AO came to conclusion that assessee firm was collecting unaccounted cash from the purchasers of the flats. He estimated such cash collection at Rs. 1 lakh per flat. Since for the block period, 62 flats were sold, he believed that assessee had earned undisclosed income during that period. AO passed an order for collection of tax and interest, etc., on such basis. Held: Question was no longer res integra in view of the order passed in Dy. CIT (Asstt.) v. Panna Corporation [Tax Appeal No.323 of 2000] : 2012 TaxPub(DT) 3269 (Guj-HC) held that Tribunal was justified in considering that assessee ought to have spent reasonable amount for the purpose of receiving such gross receipt. As seen consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax was the profit embedded in such receipts and not the entire receipts themselves. Not the entire receipts, but the profit element embedded in such receipts can be brought to tax. No interference was called for in the decision of the Tribunal accepting such element of profit out of total undisclosed receipt. Thus, no substantial question of law arose.

Followed:Dy. CIT (Asstt.) v. Panna Corporation [Tax Appeal No.323 of 2000] : 2012 TaxPub(DT) 3269 (Guj-HC) CIT v. Gurubachhan Singh J. Juneja (2008) 302 ITR 63 (Guj.) : 2008 TaxPub(DT) 1637 (Guj-HC) Man Mohan Sadani v. CIT (2008) 304 ITR 52 (MP) : 2008 TaxPub(DT) 1197 (MP-HC) CIT v. President Industries (2002) 258 ITR 654 (Guj) : 2002 TaxPub(DT) 0056 (Guj-HC) DCIT v. Anupam Organiser 2020 TaxPub(DT) 0473 (Sur-Trib)Relied:CIT v. Samir Synthetics Mill (2010) 326 ITR 410 (Guj) : 2010 TaxPub(DT) 0044 (Guj-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14



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