BALAJI FOUNDATION,CHENNAI vs. ITO, VIRUDHUNAGAR

Shri S. Sridhar, the Ld. counsel for the assessee submitted that the assessee engaged itself in the business of real estate. There was a survey in the premises of the assessee. During the survey operation, according to the Ld. counsel the Revenue authorities found certain material and impounded the same. As per the impounded document, the Assessing Officer found the sale value of the plots was ₹90,12,000/- for the assessment year 2005- 06 and what was disclosed by the assessee in the return of income was ₹70,21,321/-. The balance of ₹19,04,321/- was considered as suppression of sale value of the plots. Similarly, there was difference between the sale price shown in the return of income for the assessment year 2004-05 and sale consideration disclosed in the document impounded. During the course of survey operation, sales was determined as ₹88,44,673/- and the same was considered as suppression of sale by the Assessing Officer. According to the Ld. counsel, the Assessing Officer has not referred the documents impounded during the course of survey operation for determining the sale consideration over and above which was disclosed by the assessee in the return of income. Referring to the order of the CIT (Appeals), the Ld. counsel for the assessee submitted that the impounded document has also disclosed the expenditure incurred by the assessee for sale of land. The Assessing Officer conveniently has taken the sale consideration in the impounded document and omitted to refer to the expenditure disclosed in the very same impounded document. Therefore, according to the Ld. counsel for the assessee, the orders of the lower authorities may be set aside and the Assessing Officer may be directed to re-examine the matter on the basis of the material available on record.

On the contrary, Shri R. Duraipandian, the Ld. Departmental Representative submitted that admittedly there was a survey operation in the premises of the assessee under Section 133A of the Income Tax Act, 1963 (in short ‘the Act’). The documents found in the course of survey operation was sale deeds and other papers containing details of actual sale value collected by the assessee.

The assessee has accounted only the sale consideration disclosed in the registered sale deed. The excess money collected by the assessee over and above the sale consideration in the sale deed was not included or accounted in the books of account. However, the material impounded during the course of survey operation disclosed the details of on-money receipt over and above the sale consideration disclosed in the sale deed. The Assessing Officer in fact confronted with the assessee, the material found during the course of survey operation. The Assessing Officer further found that all the expenses were already debited to profit and loss account in the original return filed by the assessee before the date of survey.

We have considered the rival submissions on either side and perused the material available on record. Admittedly, there was a survey operation under Section 133A of the Act in the premises of the assessee and several incriminating materials were found by the Revenue authorities. There was a difference between the sale consideration disclosed in the return of income and the sale consideration referred in the documents found during the course of survey operation. The difference between the sale consideration disclosed in the return of income and the one found in the material during the course of survey operation was considered as suppression of sale value by the Assessing Officer. Accordingly, the same was added to the total income. The assessee now claims before this Tribunal that there are certain expenditures incurred by the assessee for sale of the plots which was also refereed in the very same impounded document. The Ld. counsel submitted that if the expenditure referred in the impounded document was considered then there may not be any difference.

We have carefully gone through the orders of both the authorities below. During the course of appeal proceeding, the CIT (Appeals) specifically asked the authorized representative of the assessee whether there was any evidence for the so called expenditure claimed by the assessee in the impounded material. The authorized representative clarified that no such expenditure was referred in the impounded material. For the purpose of convenience, we are reproducing Para 7.4 & 7.5 of the impugned order of the CIT (Appeals). “With regard to the expenses on real estate business, all the expenses were already debited to the profit and loss account in the original returns filed before the survey. During the course of survey no details of expenses which were not accounted in the books was found. During the course of appeals authorized representative was specifically asked whether any evidence for the expenses claimed in appeal like Eviction of unauthorized occupants Payment to local sheets/VIPs, Payment to document writes, On Transport expenses, Incumbrance certificate Expenses for obtaining copies etc was available in the impounded materials for which the answer was in the negative. This is a case where evidence was found with regard to receipt of on money (unaccounted) but no evidence was found with regard to unaccounted expenditure over and above what is debited to the profit and loss account.”

In the result both the appeals of the assessee stands dismissed.