DCIT, CENTRAL CIRCLE-1, RAJKOT V. M/S GARDEN ENTERPRISE, RAJKOT

ITA 123/RJT/2023

AI Insights

The case involves a series of appeals related to the assessment years 2013-14 to 2017-18 concerning M/s Garden Enterprise, a partnership firm engaged in property development. The appeals were primarily focused on the additions made by the Assessing Officer (AO) regarding unaccounted cash receipts from the sale of residential units, termed as 'on-money'. The AO had relied on digital data seized during a survey at another firm, which implicated M/s Garden Enterprise in unrecorded cash transactions. The Commissioner of Income-tax (Appeals) partly deleted some additions but upheld others, leading both the revenue and the assessee to appeal to the Tribunal. The Tribunal found procedural compliance in the reopening of assessments and the addition of income but noted the need for a detailed examination of the AO's findings and the assessee's rebuttals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822860 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 03-05-2023
• Other Referred Cases: CIT vs. Best & Co. (P.) Ltd. [1966] 60 ITR 11/AIR 1966 SC 1325
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D. M. RANDANI; LD; ISSUING VARIOUS STATUTORY NOTICES INCLUDING SHOW
• Assessee Lawyers: SANJAY PUNGLIA; LD
• Keywords: Set aside; Corroborative evidences; Income from undisclosed sources; Onus to prove; Principle of natural justice; TDS; Competent authority
• Section: 148; 142(1); 271(1)(c); 40A(3); 133A

Judgement Text

" 1 आयकर अपीलीय अिधकरण,राजकोट Ɋायपीठ,राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER & SHREE DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं/ITA No.121-122/RJT/2023 (Assessment Years: (2013-14 & 2014-15) DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 Vs. M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/./ITA No. 86/RJT/2023 (Assessment Year: (2015-16) M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 Vs. DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/./ITA No. 123/RJT/2023 (Assessment Year: (2015-16) DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 Vs. M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/ITA No. 87/RJT/2023 (Assessment Year: (2016-17) M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 Vs. DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/./ITA No. 124/RJT/2023 (Assessment Year: (2016-17) DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 Vs. M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 Printed from counselvise.com Page 2 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/./ITA No. 88/RJT/2023 (Assessment Year: (2017-18) M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 Vs. DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/./ITA No.125/RJT/2023 (Assessment Year: (2017-18) DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 Vs. M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) आयकरअपीलसं/./ITA No.89/RJT/2023 (Assessment Year: (2018-19) M/s. Garden Enterprise, Sadhu Vasvani Road, Opp. Shilpan Tower, Rajkot – 360005 Vs. DCIT, Central Circle – 1, Rajkot Amruta Estate, 2nd Floor, MG Road, Rajkot – 360001 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AALFG5887C (Appellant) (Respondent) Appellant by : Shri D. M. Randani, Ld. AR Respondent by : Shri Sanjay Punglia, Ld. CIT(DR) Date of Hearing : 25/09/2025 Date of Pronouncement : 22/12/2025 O R D E R Per: Bench: This bunch of nine appeals, consisting six cross-appeals filed by the revenue and four appeals by assessee, pertaining to Assessment Years (A.Y.s) 2015-16 to 2017-18, (Assessment Year vise) all are directed against the separate orders passed u/s. 250 of the Income Tax Act, 1961 (herein referred as to “Act”) by the Learned Commissioner of Income-tax (Appeals)-Ahmedabad-11, all dated Printed from counselvise.com Page 3 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris 28.02.2023, which in turn arose out of separate assessment orders passed by the Assessing Officer. 2. Since, the issues involved in all these appeals are common and identical; therefore, these appeals have been heard together and a consolidated order are being passed for the sake of convenience. We shall take the lead case in ITA No.121/Rjt/2023 for Assessment Year 2013-14 filed by the revenue for deciding these appeals en-masse. 3. The grounds of appeal raised by the revenue in ITA 121/Rjt/2023 for AY 2013-14, are as follows. “1. In the facts and on the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 8,03,74,500/- made by AO on account of on-money receipts on sale of residential units. 2. In the facts and On the circumstances of the case and in law, learned Commissioner (Appeals) has erred in appreciating the facts that during the course of survey, a digital data in the form of Pen Drive was found and having a record of whole transactions i.e. cash/cheque payments, on which the AO has relied upon. 3. AO in the facts and on the circumstances of the case and in law, has duly investigated and applied his mind and after satisfying himself framed the assessment on the basis of cogent material and relevant evidence on record. 4. In the facts and on the circumstances of the case and in law, learned Commissioner (Appeals) has erred in appreciating the facts that impounded documents have file naming of \" TESTING3.xlsx\", \"Tower A61 \",\"Tower B60\", \"Tower C60\", \"Tower D59\", \"Tower E61\", \"Tower G61\" containing a complete summary of all such individual having apartment wise transaction of cash and cheque. 5. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 6. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 4. The facts of the case are stated in brief as follows: The assessee is a Partnership firm engaged in the business of property and development. The original return of income for the year has been filed on 30/07/2013 loss declaring 21,87,375/-. A survey action u/s 133A of the Act has been conducted on 24- 25/04/2019 in a case of M/s Silver Infra, Ahmedabad by the ADIT(Inv), Unit- 2(2), Ahmedabad. During the survey action, digital data in the form of 'Pen Drive' Printed from counselvise.com Page 4 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris has been found and impounded from a partner of the above firm, Shri Keyur Bhalodia. Co-incidentally, Shri Keyur Bhalodia is also a partner in the assessee firm i.e. M/s Garden Enterprise. On verification of the digital data, details regarding 'On-money' transactions of M/s Garden Enterprise have been recovered. The details of the digital data pertaining to the assessee-firm M/s Garden Enterprise are as follows- 5. The files named as 'Tower A61.xlsx', 'Tower B60.xlsx', 'Tower C60.xlsx', 'Tower D59.xlsx', 'Tower E61.xlsx', 'Tower F60.xlsx', 'Tower G61.xlsx' contained apartment wise specific details like the name of the owner, area of the apartment, rate at which it has been sold and dates on which cheque and cash has been collected etc. A sample sheet (containing details of flat no. 101, Tower A) is reproduced hereunder for reference – Printed from counselvise.com Page 5 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Further, the file named 'TESTING3.xlsx' contained a summary of all such individual apartment wise sheets. The same is reproduced hereunder for reference - Printed from counselvise.com Page 6 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 7 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 8 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 9 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 10 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 11 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 12 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 13 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 14 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 15 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 16 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 17 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 18 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris From the above data, it can be seen that the assessee-firm has received total Rs. 146,65,13,765/- in cash and Rs. 97,48,94,185/- in bank on account for booking / sale of residential units of its Garden City Project. 6. During the post survey proceedings before the ADIT(Inv), Unit-2(2), Ahmedabad, the incriminating evidences from the digital data have been printed in five volumes (Vol. 1 to 5) and confronted to Shri Keyur Bhalodia, who also happens to be a partner of the assessee firm. In response, vide his written reply dated 04-07-2019, he has admitted that certain sheets (as reproduced above) contained details of unaccounted cash transactions of M/s Garden Enterprise which are not recorded in its regular books of accounts. Further, in his reply dated 04/07/2019 before the ADIT, he has elaborated on the relevant pages which pertain to the unaccounted business activities of M/s Garden Enterprise. The relevant portion of his reply is reproduced here under- At the outset we have to submit that a survey was also carried out by the Income- tax department on 18.07.2017 at the business premises of the firm of M/s Garden Enterprise and during the course of which Rs. 1,74,70,000 was disclosed on account of profit on trading in land. The firm had paid tax on the same. Printed from counselvise.com Page 19 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris The images pertaining to Garden City Project are on page numbers 8 to 10,17 to 21, 25 to 29, 57, 76 to 94, 121 to 130, 132, 134 and 135, 146 to 155 Page No. 8, 9 & 10 This image shows the list of Block No. and maintenance deposit taken against each flat after providing the possession. Further it also shows the amount collected from members for society maintenance deposit. All the amounts are duly recorded in books of accounts. Page No. 17 to 21 These pages are covered in page numbers 76 to 94 Page No. 25 to 29 The images shows the list of Debit and Credit entries of the transaction made with partners or their relatives with respect to flat sold to them. All entries are accounted for in the regular books of accounts. Page No. 57 This image shows the list of contractor to whom payment has been made by cheque. Page No. 76 10 94 The image shows the list of area of the flat as well as sales amount and members from whom cash and cheque received on sale of flats. We have worked out net income from the project by considering total cash receipt from members and total cash expenses not debited in books of accounts. The cash received from members appears on page no 93 of digital data Voume-1 and is also repeated on page no 30 of digital data Volume-2. The actual cash received from members was 137 crore as appearing on page no 30 of Digital Data Volume-2 and not 146 crores as appearing on page no 93 of Printed from counselvise.com Page 20 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Digital Data Volume-1. We have therefore prepared a reconciliation of the two amounts and the same is given as per Annexure-1 of this reply. The main reason for the reconciliation is that the excess cash received from the members was returned back and additional cash received from members on new booking is added back. It may not be out of place to mention here that the firm had made payment of Rs.69,59,30,000 to the Landlords in cash. This amount was contributed by the partners in the profit sharing ratio. The partners of the firm had in all introduced cash of Rs.71,55,00,000 in this scheme. The detail of cash introduced by the partners is given as per Annexure-2 of this reply. The jottings of the payments made to landlord appear on page number I of digital data volume-2. Out of total amount of Rs.137 Crore received from members and cash capital contribution received from partners, cash expenses were incurred for payments made to landlord and for construction of the scheme and after considering these expenses and amount of Rs.90.17 Crore was distributed amongst the partners. This also includes initial cash capital introduced by partners for purchase of land. This appears on page numbers 121 to 123 of Digital Data Volume -1 as well as page number I of Digital Data Volume-5. The details of cash expenses appear on page number 6 to 72 of digital data Volume-5 and some cash expenses also appear on page number 99 and 101 of digital data volume-2. Printed from counselvise.com Page 21 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris 7. Shri Keyur Bhalodia who is a common partner in both the entities i.e. the surveyed firm as well as the assessee firm has categorically mentioned that \"after considering all the expenses (i.e. accounted as well as unaccounted) an amount of Rs. 90.17 Crore was distributed amongst the partners.\" The partners on behalf of M/s Garden Enterprise have purchased a land situated at Sadhu Vasvani Road, Rajkot from Shri Ilaben Shantilal Ranchh and Shri Ranjanben Jivrajbhai Vagadiya on 05/04/2013. The registered value of this land was Rs. 14,50,00,000/- . From impounded digital data, a sheet containing an account titled \"BALANCE SHEET V.C.C. LAND A/c ... Dt. 15.07.2015\" has been recovered which is reproduced hereunder - It can be seen that the land was actually purchased at a value of Rs. 84,05,00,000/- and not at Rs. 14,50,00,000/ -. The above sheet clearly reveals the fact that cash payments of Rs. 69,55,00,000/- have been made on different dates over and above the cheque payments. The sale deed contained only those payments which are made through cheques totalling Rs. 14,50,00,000/- (0.5+0.3+0.2+13.5). As stated Printed from counselvise.com Page 22 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris by the Shri Keyur Bhalodia in his reply dated 04/07/2019, the partners have born the cash payment for acquisition of land in their respective partnership ratio in the firm M/s Garden Enterprise. Further, two different sheets have been recovered from the surveyed premise with two different figures of cash receipts on sale / booking of flats collected by the firm. One sheet reflected total cash receipts of Rs.1,46,65,13,765/- whereas another sheet reflected Rs.1,37,78,81,950/ -. Shri Keyur Bhalodia, in one paragraph of his submission dated 04-07-2019, has clarified that the actual cash received was 137 crore as appearing on page 30 of volume 2 and not 146 crore as appearing on page 93 of volume 1. For this, he has submitted a reconciliation sheet along with his reply which is summarized here under- 8. However, on perusal of the reconciliation sheet submitted and its comparison with the individual flat holders' sheets extracted from the impounded digital data, it has been ascertained that the sheet as per page 87 to 93 of volume 1 highlighting cash receipts of Rs.1,46,65,13,765/- was latest whereas the other sheet with cash receipt of Rs.1,37,78,81,950/- was older one. The actual reconciliation as a result of the comparison is then prepared which is as under – Printed from counselvise.com Page 23 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Thus, as per the latest impounded sheet, total cash of Rs. 1,46,65,13,765/- has been received by M/s Garden Enterprise on sale or booking of the flats of its Garden City Project. Apart from the above, the following sheet from the impounded digital data (Page no. 121 of Volume 1) also highlight a figure close to the cash receipts of 146.65 Cr- Printed from counselvise.com Page 24 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris The data on the above referred sheet clearly reveals the distributions made in Cash as well as in Cheque. The veracity of the noting made on the above sheet has been confirmed by comparing the cheque distributions mentioned on the above sheet with the data provided by the assessee-firm in its audited books. Following cheque distributions are mentioned on the sheet- Printed from counselvise.com Page 25 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Thus, Rs. 5,00,00,000/- have been distributed in FY 14-15 and Rs. 15,00,00,000/- have been distributed in FY 15-16. On perusal of the audited books of the assessee-firm, it has been noted that same amounts have been recorded in the respective years as total drawings from the partner's capital accounts. Printed from counselvise.com Page 26 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris 9. From the aforementioned exercise, it has been confirmed that the noting made on the above referred sheet (page no. 121 of vol. 1) are actual transactions of distributions made to partners of the firm through cash as well as through cheques. The cash distribution entries as per the above sheet are as under - Printed from counselvise.com Page 27 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris The above figure of total cash distribution (Rs. 147.51Cr) is close to the figure of cash receipts (Rs. 146.65Cr) as found on the sheets numbered 87 to 93 of volume 1 as discussed earlier. Thus, the figure of cash receipts of Rs. 146.65Cr also gets corroborated from the cash distribution figures as appearing on the sheet numbered 121 of volume 1. Shri Keyur Bhalodia, in submission dated 04/07/2019 had stated that the cash payments made to the landlords and cash expenses incurred for construction of the scheme have been meted out of total cash (on- money) received from flat holders and cash capital contribution received from the partners, and after considering these, an amount of Rs. 90.17 Cr. was distributed amongst the partner. This statement from Shri Keyur Bhalodia confirms one fact that minimum Rs. 90.17 has been earned in cash (net of all kinds of expenses) by the firm which was then distributed amongst the partners. However, allowance of such unaccounted expenses cannot be granted as no specific details of such expenses have been furnished. Though, Shri Keyur Bhalodiya has submitted certain sheets containing data of cash expenses but no reconciliation as to how much of it is already booked and how much of it is not recorded on books was accompanied with those sheets. Hon'ble Supreme Court in the case of CIT vs. Best & Co. (P.) Ltd. [1966] 60 ITR 11/AIR 1966 SC 1325, observed that although the burden of proof that a receipt is income lies on the revenue, it is not always so. It was held that the doctrine of shifting onus is applicable to income-tax proceedings and when sufficient Printed from counselvise.com Page 28 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris evidence, either direct or circumstantial, is disclosed by the revenue, adverse inference can be drawn against the assessee, if the assessee has suppressed documents or evidence, for its failure to place before the department the material which is exclusively within his knowledge and keeping. Thus, it would be inappropriate to grant benefit of those expenses to the assessee for which no specific details are submitted. Further, even if the expenses would have been claimed, the same were needed to be disallowed in view of section 37, section 40(a)(ia), section 40A(3) of the Act which specifically prohibit allowance of such expenses which are either incurred in cash or where no TDS is made. Further, the assessee has not provided any documentary proof (i.e. invoice) in support of genuineness of such expenses incurred. It is also pertinent to mention that in absence of complete details of the third parties to whom payments were made there is loss to revenue which requires disallowance of such expenses, if claimed. In view of the above facts and findings, a notice u/s 148 of the Income- tax Act has been issued on 30/03/2021 with approval of competent authority. In response to the notice, a return of income has been filed on 11/05/2021 declaring loss of Rs. 21,87,375/ -. Notice u/s 143(2) of the Act was issued on 03/06/2021 and the reason / satisfaction recorded for re-opening has been supplied to the assessee. Then, notice u/s 142(1) has been issued seeking details and explanations from the assessee. The impounded documents containing the information relating to the assessee firm along with the submissions of Shri Keyur Bhalodiya before the investigating authority have also been supplied to the assessee in view of natural justice. 10. As seen above, the impounded digital data contained specific and self- explaining details regarding payments received in cash against each flat sold by M/s Garden Enterprise. On reconciliation of all the individual sheets along with the summary sheet it is ascertained that between FY 2011-12 to FY 2018-19, the assessee-firm has received total Rs.146,65,13,765/- in cash and Rs.97,48,94,185/- Printed from counselvise.com Page 29 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris in bank on account for booking / sale of residential units of its Garden City Project. Therefore, in questionnaire issued u/s 142(1) dated 03/06/2021, the assessee has been requested to explain whether the cash receipts as appearing on the impounded incriminating document are reflected / accounted for in its regular books of account or not and if all these transactions are reflected in regular books of account then to submit necessary documentary evidences to substantiate the same. In response to the questionnaire, the assessee has submitted part of the details on the same day but did not comment anything on the specific queries raised pertaining to the cash receipts (on-money) as revealed from the impounded digital data and its contents. On 07/06/2021, an objection against re-opening has been received from the Authorised Representative of the assessee. The objection has been duly disposed of and conveyed to the assessee. 11. The AO has also dealt with assessee’s arguments as follows: Printed from counselvise.com Page 30 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 31 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 32 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 33 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 34 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 35 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Printed from counselvise.com Page 36 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris 12. Finally, the AO has concluded as follows: “Therefore, there is no hesitation in believing that the firm has collected on-money of Rs. 1,46,65,13,765/- (at least) in form of cash over and above the payments received in cheque and mentioned in the respective registered sale deeds. This on-money collection is spread across FYs 2011-12 to 2018-19. The on-money receipt pertaining to the year under consideration has been derived by sorting every single cash receipt date wise. The reference is taken from the individual flat holder sheets titled as \"Tower A61\", \"Tower B60\", \"Tower C60\", \"Tower D59\", \"Tower E61\", \"Tower G61\". Further, wherever the exact date is not mentioned on the respective sheet, the date of sale of respective flat has been considered. Accordingly, the quantum of on- money receipts attributable to the year under consideration has been calculated at Rs. 8,03,74,500/-. In view of the above, Rs. 8,03,74,500/- is assessed as unaccounted income from business activities for the year under consideration and the total income reported by the Assessee-firm in its return filed in response to notice u/s 148 of the Act is enhanced to that extent. Further, since the assessee-firm has concealed the particulars of its income, penalty proceedings u/s 271(1)(c) of the Act are also being initiated separately. 13. On appeal, Ld. CIT(A) partly deleted the addition, observing as follows: “6.8 In view of above factual and legal matrix and looking to nature of business carried out by appellant, it is reasonable to estimate net profit on undisclosed on-money receipt rather than taxing entire on money as taxable income of appellant. It is settled law that on-money receipt as advance will be taxed in the year in which the sale consideration in recognised by the appellant in the books of account. It is also important to note that in case of unrecorded sales, the profit margin remains higher than the recorded sales. The year wise income under the head Business is arrived accordingly and detailed hereunder:- Printed from counselvise.com Page 37 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris 6.8.1 In the nutshell, the details of addition made and addition confirmed is as under:- 6.9 Considering above facts, the AO is directed to tax undisclosed income as per tabular chart herein above on year-to-year basis and also relief would be provided accordingly. 6.10 In view of the above discussion and legal matrix of the case, the AO is directed to delete the addition made for A.Y.2013-14. Thus, the ground of appeal no. 2 is partly allowed.” 14. Aggrieved, by the order of the learned CIT(A), the revenue as well as assessee is in appeal before us. 15. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. Learned CIT-DR for the revenue submitted the following written submission on technical issue. “The Id AR has taken an argument that the proceedings-initiated u/s.147 of the Act for A.Y 2013-14 to 2016-17 are bad in law. In this regard, reliance is placed on the facts of the case as discussed in the assessment order and also reasons for initiating proceedings u/s.147 of the Act as elaborated in para 14 to 17 of the assessment order wherein it is very clear that the AO has followed due procedure of law in compliance with the Supreme Court's decision in the matter of GKN Driveshafts. The stand of the AO has been confirmed by the Id CIT(A) at para 5.1 to 5.3 of his order.The Id AR has taken another argument that the proceedings-initiated u/s.153C of the Act for A.Y.2017-18 and 2018-19 are bad in law. In this regard, reliance is placed on the facts of the case as discussed in the assessment order. The AO has initiated action u/s.153C for the reasons elaborately discussed at para 1 to para 3 of his order Printed from counselvise.com Page 38 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris and which has been sustained by the Id. CIT(A) also. An important fact which is worth noticing for A.Y 2017-18 and 2018-19 is that the case were under scrutiny as per normal provision of Act and thereafter in consequences to search and abetment of the assessment, proceedings u/s.153C were validly initiated as per law. 16. On the other hand, learned Counsel for the assessee submitted that reasons recorded by the assessing officer and approval and satisfaction note are defective. Therefore assessment order should be quashed. 17. We note that the AO received information from the Investigation wing, Ahmedabad regarding the outcome of Survey action u/s.133A of the Act conducted in the case of M/s. Silver Infra, Ahmedabad. During the survey, digital data in the form of 'Pen Drive' has been found and impounded from a partner of the firm M/s. Silver Infra, Shri Keyur Bhalodia and co-incidentally, Shri Keyur Bhalodia is also a partner in the appellant firm i.e. M/s. Garden Enterprise. As seen from the said impugned digital data contained specific and self-explaining details regarding payments received in cash against each flat sold by M/s. Garden Enterprise. On reconciliation of all the individual sheets along with the summary sheet, it is ascertained that the appellant firm has received total Rs.146,65,13,765/- in cash for booking/sale of residential units of its Garden City Project. The appellant's case was accordingly reopened by issue of notice u/s.148 of the Act. We find from the assessment order that the AO had reasons to escaped assessment and the reopening was done after proper application of mind. In the case of Navratna Developers and Organisers Pvt. Ltd. for A.Y.2000-01, the Hon'ble jurisdictional ITAT in its order ITA No 2143/Ahd/09 and CO No. 145/A/09 dated 27/08/2014, upheld reopening proceedings, holding that it is settled law that at the stage of issue of notice u/s. 148, the only question is whether there was relevant material on the basis of which a reasonable person could have formed the requisite belief. Whether that material would conclusively prove escapement of income is not the concern at that stage. It is a settled law that at the time of issuing notice u/s 148 of the Act, the AO simply has to be satisfied Printed from counselvise.com Page 39 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris and should have \"reasons to believe\" that income has escaped assessment. The investigation of whether it has actually escaped assessment or not can only be done once the assessment proceedings are reopened. Further, we have also gone through the record and find that the AO has followed due procedure while reopening the assessment proceedings. It is further observed that after filing of return of income in response to notice u/s.148 of the Act by the appellant, the AO had provided the copy of reason of reopening to the appellant. Further, after receiving objection against reopening from the appellant, the AO had duly disposed of and conveyed to the appellant. The AO had also offered opportunities of being heard to the appellant by issuing various statutory notices including show cause notice, as is narrated in the re-assessment order. Therefore, approval and satisfaction note are in accordance with law, hence we dismiss the technical grounds raised by the assessee in these appeals. 18. Now coming on the merits of the case, learned CIT-DR for the revenue invited our attention towards the findings of the learned CIT(A), which is reproduced below, for ready reference. “6.8.1 In the nutshell, the details of addition made and addition confirmed is as under:- 6.9 Considering above facts, the AO is directed to tax undisclosed income as per tabular chart herein above on year-to-year basis and also relief would be provided accordingly. 6.10 In view of the above discussion and legal matrix of the case, the AO is directed to delete the addition made for A.Y.2013-14. Thus, the ground of appeal no. 2 is partly allowed.” Printed from counselvise.com Page 40 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris Learned DR for the revenue pointed out that during the appellate proceedings, the learned CIT(A) has just received the above profit chart from the assessee and confirmed the estimated addition in the hands of the assessee. The learned CIT(A) did not rebute and reject the various findings of the assessing officer given in the assessment order. The assessing officer arrived at the findings with corroborative evidences, therefore, ld.CIT(A) did not discuss, the findings of the assessing officer that why the findings of the assessing officer are not correct. Therefore, the matter may be remitted back to the file of the learned CIT(A) with the direction to deal with the findings of the assessing officer, which is based on corroborative evidences. 19. On the other hand, learned Counsel for the assessee relied on the findings of the learned CIT(A), and argued that only profit element is to be taxed in the hands of the assessee, and even the profit element taxed by the learned CIT(A) is on higher side, which should be reduced further, and for that learned Counsel relied on the various case law, as mentioned in the legal compilation. 20. On merit, we considered submission of both the parties. We find that assessing officer, vide his assessment order para No.6 to para No. 29, ( page No. 16 to 42), has analysed the seized material with corroborative evidences by making the various diagrams. The assessing officer also pasted the seized material in the assessment order itself. The assessing officer discussed the entire seized material with help of corroborative evidences and statements which have not been dealt with by the learned CIT(A). The assessee has also not submitted a chart showing reconciliation of on money received prior to commencement of the project from the partners, on money received from customers prior to commencement of the project and on money received after commencement of the project. The learned CIT(A) just took the submission from the assessee and case law, and sustain the estimated addition, which is not acceptable, as the assessing officer made a detailed finding, showing corroborative evidences, along with Printed from counselvise.com Page 41 of 41 ITA No. 86 to 89 & 121 to 125/RJT/2023 M/s. Garden Enterpris statements, which have not been rebutted or rejected by the learned CIT(A). Therefore, order passed by the learned CIT (A) is not in accordance with the mandatory provisions of section 250(6) of the Act, hence, such order is liable to be rejected. The overwhelming number of documentary evidences found by search team, which was corroborated by the assessing officer. The ld CIT(A) has not discussed any of these documents mentioned in the assessment order. The Id CIT(A) has not made any adverse finding in any of these documents mentioned in the assessment order by the assessing officer. The Ld.CIT(A) ought to have examined all these details and documents and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at his own conclusion, which the learned CIT(A) failed to do so. Therefore, these all appeals of the assessee, as well as revenue needs to be restored back to the file of the ld.CIT(A) with the direction of the learned CIT(A) to deal with the findings of the assessing officer after taking appropriate remand report from the assessing officer, if any, and to examine the reconciliation of on money from partners and customers and then adjudicate the issue in accordance with law. 21. In the result, all appeals of assessee and revenue are allowed for statistical purposes, in above terms. Order is pronounced in the open court on 22/12/2025 - - Sd/- Sd/- (Dr. Arjun Lal Saini) (Dinesh Mohan Sinha) Accountant Member Judicial Member Rajkot (True Copy) Date: 22/12/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Rajkot Printed from counselvise.com "