CIT vs. Dolphin Builders P. Ltd.; 35 taxman.com 3 (MP):
The assessee, a construction company constructed 24 flats in two buildings and entered into agreement with ‘G’, according to which flats were sold through ‘G’ on an agreed commission. A raid was conducted in the premises of ‘G’ in which a note book was found, where in the column for cost of flats some figures were mentioned in respect of assessee’s apartments. The Assessing Officer taking view that the figures indicated the sale price of flats of assessee’s apartments, recomputed the income u/s. 44AD by calculating sale proceeds as per the seized document. Commissioner (Appeals) held that since gross receipts including those not accounted for exceeded Rs. 40 lakh, section 44AD was not applicable. On cross appeals before the Tribunal, the appeal of the assessee was allowed that no addition was required.
On appeal by the Revenue, the Madhya Pradesh High Court upheld the decision of the Tribunal and held as under:
“i) On perusing the orders of the Assessing Officer, Income-Tax Commissioner, the ITAT it is agreed that the arguments advanced on behalf of assessee that no prima facie evidence of passing any money from ‘G’ to assessee was proved and for the papers seized from any other place i.e. ‘G’ assessee cannot be held liable, so, the tribunal has committed no error.
ii) On perusing the material in the matter it is found that there was no evidence in the matter that the excess amount, if any, was collected by ‘G’ or even if it was collected then it was passed on to the assessee. There was no search, survey or seizure of the premises of the assessee. Apart from this, the department had not examined any purchaser or flat owner to verify the correctness of the aforesaid noting that some higher amount was paid by the said purchaser to ‘G’ or the fact that actual price was much higher to the price which was recorded in the account books.
iii) The Tribunal has also found that if any amount was collected in excess to the agreed price then ‘G’ could have been liable for that and not the assessee. It is found that reasoning of the Tribunal to be reasonable. Though there may be some doubt about the price of the flats but until and unless it could have been proved by some evidence, aforesaid doubt cannot take place of proof. Until and unless such noting is corroborated by some material evidence, the Assessing Officer erred in making addition in the income.
iv) So far as the applicability of section 44AD is concerned, when the assessee had maintained accounts books, vouchers and other documents as required u/s/s. (2) of section 44AA and got them audited and furnished it along with audit report then such benefit should have been extended to the assessee. In the present case audited accounts books were maintained and there was no question of disbelieving them in absence of any cogent evidence.
v) The order passed by the Tribunal is based on proper appreciation of facts and there is no error in the order. In view of the aforesaid discussion, no merit and substance is found in the appeal and is, accordingly dismissed.”
