MAJID KHAN,HYDERABAD vs. DCIT, CENTRAL CIRCLE-3(3), HYDERABAD

Facts

A search and seizure operation under Section 132 of the Income-tax Act, 1961 was conducted, leading to a notice under Section 153C. The assessee filed a return admitting a certain income. During scrutiny, the AO noticed a difference between income disclosed under Section 132(4) and the return filed, leading to additions.

Held

The Tribunal found that the assessee offered income under two heads, but the AO considered only one. The Tribunal held that if income offered under the 'real estate business activity' head is considered, the difference is explained. Therefore, the additions sustained by the lower authorities were deleted.

Key Issues

Whether the AO and CIT(A) erred in not considering income offered under the head 'income on estimate basis from real estate business activity' when making additions for discrepancies in gross receipts/expenses.