DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -4, SURAT, SURAT V. SHREE KUBERJI ELEGANT, SURAT

ITSSA 24/SRT/2025

AI Insights

The case involves two appeals by the Revenue against the orders of the Commissioner of Income-tax (Appeals) - 4, Surat, for the assessment years 2019-2020 and 2020-21. The primary issue in dispute was the rate of profit applied on the 'on-money' receipts from real estate transactions, which the Assessing Officer initially taxed at a gross profit rate of 30%. The CIT(A) reduced this to 13% based on precedents and the specific circumstances of the assessee's projects. The Revenue challenged this reduction, arguing for the application of a higher rate and the invocation of Section 115BBE for taxing unexplained money. The Tribunal's decision upheld the CIT(A)'s reduction of the profit rate and dismissed the application of Section 115BBE, aligning with judicial precedents that such provisions apply only when the source of income remains unexplained.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782988 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Appeal Filed On: 28-04-2025
• Other Referred Cases: Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC), CIT v. Durga Prasad More (1971) 82 ITR 540
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: KIRAN K. SHAH
• Keywords: Business income; Search and seizure; Valuation report
• Section: 143(3); 132; 153A; 68; 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH “DB” SURAT BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) IT(SS)A. 23 & 24/SRT/2025 Assessment Year: 2019-2020 & 2020-21 Dy. CIT Central Circle-4, Room No. 508, Aayakar Bhavan, Majura Gate, Surat-395001. Vs. Shree Kuberji Elegant, 2nd Floor, Shri Kuberji Corporation House, Surat City Surat Textile Market, Surat-395002. PAN NO. ACYFS 2174 F Appellant Respondent Assessee by : Mr. Kiran K. Shah, CA Revenue by : Mr. Mukesh Jain, CIT-DR Date of Hearing : 09/10/2025 Date of pronouncement : 30/10/2025 ORDER PER OM PRAKASH KANT, AM These two appeals by the Revenue are directed against two separate orders, both dated 24.02.2025, passed by the Ld. Commissioner of Income-tax (Appeals) – 4, Surat [in short ‘the Ld. CIT(A)’] for assessment year 2019-2020 and 2020-21 respectively. As common issue-in-dispute is involved in both these appeals and therefore, same were heard together and disposed of by way of this consolidate order for the sake of convenience. Printed from counselvise.com 2. Firstly, we take up the 2019-2020, grounds raised 1. On the facts and in the circumstances of the case and the Ld. CIT(A) has erred in not appreciating that profit @ 30% over the on-money receipts totaling Rs. 3,38,05,512/ under consideration was made by the Assessing Officer after detailed analysis of incriminating details/document rec during the Search proceedings. 2. On the facts and in the circumstances of the case the Ld. CIT(A) erred not appreciating that the Assessee has already debited the incidental expenses for the 17% will only tantamount to additional unwarranted benefit to the Assessee over legitimate income which ought to have been taxed. 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) ha erred in directing to tax the addition under normal provision/rate applicable or assessee and not u/s 115BBE of the I.T. Act despite the fact that the on provisions u/s. 69A of the Act as the said on recorded in books of account, therefore the provisions of sec. 115BBE of the Act are applicable in this case and the tax liability is to be worked out u/s 115BBE of the I.T. Act. 4. ⁠4. On the facts and in the circumstances of the case and in law the Ld. CITA) erred in deleting the addition made by the Assessing Officer ignoring the principle of \"Human Probability Test\" i.e. preponderance of probability which is applicable for Income Tax proceedings as laid down in Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC) and CIT v. Durga Prasad More (1971) 82 ITR 540. 5. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of ap necessary, either before or during the course of the hearing of the appeal on the basis of submissions 3. Briefly stated, the facts of the case are that the assessee, a partnership firm engaged in the business of real estate development, filed its return of income on 05.07.2019 declaring a IT(SS)A. 23 & 24/SRT/2025 we take up the appeal of Revenue for assessment year grounds raised in which are reproduced 1. On the facts and in the circumstances of the case and the Ld. CIT(A) has erred in not appreciating that profit @ 30% over money receipts totaling Rs. 3,38,05,512/- for the period under consideration was made by the Assessing Officer after detailed analysis of incriminating details/document rec during the Search proceedings. 2. On the facts and in the circumstances of the case the Ld. CIT(A) erred has erred in restricting the NP @ 13% and in not appreciating that the Assessee has already debited the incidental expenses for the project and that allowing extra credit of 17% will only tantamount to additional unwarranted benefit to the Assessee over legitimate income which ought to have been taxed. 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) ha erred in directing to tax the addition under normal provision/rate applicable or assessee and not u/s 115BBE of the I.T. Act despite the fact that the on-money receipt is cov provisions u/s. 69A of the Act as the said on-money is not recorded in books of account, therefore the provisions of sec. 115BBE of the Act are applicable in this case and the tax liability is to be worked out u/s 115BBE of the I.T. Act. . On the facts and in the circumstances of the case and in law the Ld. CITA) erred in deleting the addition made by the Assessing Officer ignoring the principle of \"Human Probability Test\" i.e. preponderance of probability which is applicable for x proceedings as laid down in Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC) and CIT v. Durga Prasad More (1971) 82 ITR 540. 5. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of ap necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made. Briefly stated, the facts of the case are that the assessee, a partnership firm engaged in the business of real estate t, filed its return of income on 05.07.2019 declaring a Shree Kuberji Elegant 2 IT(SS)A. 23 & 24/SRT/2025 for assessment year as under: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that profit @ 30% over for the period under consideration was made by the Assessing Officer after detailed analysis of incriminating details/document recovered 2. On the facts and in the circumstances of the case and in law, has erred in restricting the NP @ 13% and in not appreciating that the Assessee has already debited the project and that allowing extra credit of 17% will only tantamount to additional unwarranted benefit to the Assessee over legitimate income which ought to have been taxed. 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) ha erred in directing to tax the addition under normal provision/rate applicable or assessee and not u/s 115BBE of the money receipt is covered by the money is not recorded in books of account, therefore the provisions of sec. 115BBE of the Act are applicable in this case and the tax liability . On the facts and in the circumstances of the case and in law the Ld. CITA) erred in deleting the addition made by the Assessing Officer ignoring the principle of \"Human Probability Test\" i.e. preponderance of probability which is applicable for x proceedings as laid down in Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC) and CIT v. Durga Prasad 5. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the Briefly stated, the facts of the case are that the assessee, a partnership firm engaged in the business of real estate t, filed its return of income on 05.07.2019 declaring a Printed from counselvise.com total income of Rs. Nil Subsequently, a search and seizure operation under section 132 of the Income-tax Act, 1961 (hereinafter referred to as conducted in the cases of the “Kuberji Group” of Surat. During the course of the said operation, certain incriminating materials were found and seized, inter alia indicating receipt of sale of shops in various real estate projects. 3.1 Upon due examination of the seized material, the Assessing Officer recorded satisfaction that the documents so found pertained to the assessee, and accordingly, after following the procedure prescribed by law, issued notice under section section 153A of the Act. The assessment was thereafter completed under section 153C read with section 143(3) 30.03.2023, determining total income at addition so made represented alleged unexplained money received by way of on-money on sale of shops, which was brought to tax under section 69A of the Act, and subjected to higher rate of tax under section 115BBE. 4. On further appeal, the Ld. CIT(A) following the decision of the Tribunal in other group cases restricted th 13% of the addition made by the ld AO in relation to receipt. The Ld. CIT(A) also deleted invoking of section 115BBE IT(SS)A. 23 & 24/SRT/2025 Rs. Nil for the year under consideration. Subsequently, a search and seizure operation under section 132 of tax Act, 1961 (hereinafter referred to as conducted in the cases of the “Kuberji Group” of Surat. During the course of the said operation, certain incriminating materials were found and seized, inter alia indicating receipt of “on- sale of shops in various real estate projects. Upon due examination of the seized material, the Assessing Officer recorded satisfaction that the documents so found pertained to the assessee, and accordingly, after following the procedure prescribed by law, issued notice under section 153C read wit of the Act. The assessment was thereafter completed 153C read with section 143(3) , determining total income at Rs. 3,38,05,512/ addition so made represented alleged unexplained money received money on sale of shops, which was brought to tax of the Act, and subjected to higher rate of tax 115BBE. On further appeal, the Ld. CIT(A) following the decision of the Tribunal in other group cases restricted the addition to the extent of addition made by the ld AO in relation to receipt. The Ld. CIT(A) also deleted invoking of section 115BBE Shree Kuberji Elegant 3 IT(SS)A. 23 & 24/SRT/2025 for the year under consideration. Subsequently, a search and seizure operation under section 132 of tax Act, 1961 (hereinafter referred to as “the Act”) was conducted in the cases of the “Kuberji Group” of Surat. During the course of the said operation, certain incriminating materials were -money” against Upon due examination of the seized material, the Assessing Officer recorded satisfaction that the documents so found pertained to the assessee, and accordingly, after following the procedure 153C read with of the Act. The assessment was thereafter completed of the Act on Rs. 3,38,05,512/-. The addition so made represented alleged unexplained money received money on sale of shops, which was brought to tax of the Act, and subjected to higher rate of tax On further appeal, the Ld. CIT(A) following the decision of the e addition to the extent of addition made by the ld AO in relation to on-money receipt. The Ld. CIT(A) also deleted invoking of section 115BBE by Printed from counselvise.com the Assessing Officer. Aggrieved raising the grounds as reprodu 5. We have heard rival submissions of the parties and perused the relevant materials on record issue in dispute is regarding restricting of on-money to 13% the year under consideration. 5.1 In the case, the Assessing Officer estimated gross profit @ of the on-money and brought the said amount to tax Officer noted that total on Rs.28,09,00,000/- for three years and arrive at the net profit of Rs.3,38,05,512/ Rs.99,99,288/- for assessment year 2019 2021-22 respectively. Accordingly, for the year under consideration, the Assessing Officer computed net profit on the on amounting to Rs.3,38,05,512/ finding of ld AO as under for ready reference : “6.5 I have gone through the assessment order a submissions made by the AR of the appellant. I have also gone through the other material available on record. It is noted that the addition has been made on the on the basis of assuming undisclosed income at Rs.3,38,05,512/ estimating gross prof accounts. It is also noted that the AO has computed total on money received amounting to Rs.28,08,00,000/ and has taken 30% of the same to arrive at net profit of IT(SS)A. 23 & 24/SRT/2025 the Assessing Officer. Aggrieved, the Revenue is in appeal by way of raising the grounds as reproduced above. We have heard rival submissions of the parties and perused the relevant materials on record. In the instant case the only limited issue in dispute is regarding restricting of the addition on account 13% of 30% of the ‘on-money; receipt pertaining to the year under consideration. In the case, the Assessing Officer estimated gross profit @ and brought the said amount to tax Officer noted that total on-money receipt was amounting to for three years and he took 30% of the same to at the net profit of Rs.3,38,05,512/-, Rs.4,04,35,200/ for assessment year 2019-2020, 2020 22 respectively. Accordingly, for the year under consideration, Assessing Officer computed net profit on the on amounting to Rs.3,38,05,512/-. The relevant summarisation of reproduced by the Ld. CIT(A) is for ready reference : 6.5 I have gone through the assessment order a submissions made by the AR of the appellant. I have also gone through the other material available on record. It is noted that the addition has been made on the on the basis of assuming undisclosed income at Rs.3,38,05,512/ estimating gross profits at 30% after rejecting books of accounts. It is also noted that the AO has computed total on money received amounting to Rs.28,08,00,000/- for 3 years and has taken 30% of the same to arrive at net profit of Shree Kuberji Elegant 4 IT(SS)A. 23 & 24/SRT/2025 the Revenue is in appeal by way of We have heard rival submissions of the parties and perused . In the instant case the only limited the addition on account receipt pertaining to In the case, the Assessing Officer estimated gross profit @ 30% and brought the said amount to tax. The Assessing money receipt was amounting to he took 30% of the same to , Rs.4,04,35,200/- and 2020, 2020-21, and 22 respectively. Accordingly, for the year under consideration, Assessing Officer computed net profit on the on-money summarisation of the Ld. CIT(A) is extracted as 6.5 I have gone through the assessment order and the submissions made by the AR of the appellant. I have also gone through the other material available on record. It is noted that the addition has been made on the on the basis of assuming undisclosed income at Rs.3,38,05,512/- by its at 30% after rejecting books of accounts. It is also noted that the AO has computed total on- for 3 years and has taken 30% of the same to arrive at net profit of Printed from counselvise.com Rs.3,38,05,512/ AYs 2019-20, 2020 current appeal is for AY 2019 been worked out at Rs.3,38,05,512/. This has been treated as total net profit of the appellant on account of unexplained money u/s 69A of the Act. The addition was made on the basis of following seized records. a) Digital data found in the case of Dhirajbhai D. Gangani as reproduced in para 6.1 of the assessment order which is regarding transactions of Shop No. UG Karan and Ashok Gangani. b) Similar nature of diary was found in the case of Dhirajbhai D. Gangani in respect of UG in para 6.2 of the assessment order. c) Digital data found in phone of Vikas Agrawal in respect of three shops of Kuberji Plaza Market which is decoded without any base and thereby estimated on money of Rs. 1.23.75,000/ 5.2 Thereafter, the Ld. CIT(A) following the finding of the Tribunal further restricted the addition to the extent of 13% of the net profit which was determined by the Assessing Officer estimating 30% of the on-money as net profit. The relevant finding of the Ld. CIT(A) is reproduced as under: “6.8 I find that in the case of Shree Kuberji Associates, identical facts and circumstances are there accordingly both CIT(A) and Hon'ble ITAT, Surat have passed orders in the same cases. The CIT(A) vide ITBA Appeal No.CIT(A), Surat arrived at 13% of booking receipts. The operative part of C order is as follows. \"6.11 Coming to the third issue which is of estimate of net profit rates on the on money receipts worked out by the AO @ 30% of the total on money receipts. The AR of the appellant has relied upon the ratio of several decisions Bench and Hon'ble High Court of Gujarat and submitted that the said authorities have confirmed the net profit rates on on IT(SS)A. 23 & 24/SRT/2025 Rs.3,38,05,512/-, Rs.4,04.35,200/- and Rs.99.99,288/ 20, 2020-21 and 2021-22, respectively. The current appeal is for AY 2019-20, in which the net profit has been worked out at Rs.3,38,05,512/. This has been treated as total net profit of the appellant on account of unexplained u/s 69A of the Act. The addition was made on the basis of following seized records. a) Digital data found in the case of Dhirajbhai D. Gangani as reproduced in para 6.1 of the assessment order which is regarding transactions of Shop No. UG-22 between Aksha Karan and Ashok Gangani. b) Similar nature of diary was found in the case of Dhirajbhai D. Gangani in respect of UG-13 & UG-14 which is reproduced in para 6.2 of the assessment order. c) Digital data found in phone of Vikas Agrawal in respect of ops of Kuberji Plaza Market which is decoded without any base and thereby estimated on money of 1.23.75,000/-.” Thereafter, the Ld. CIT(A) following the finding of the Tribunal further restricted the addition to the extent of 13% of the net profit which was determined by the Assessing Officer estimating 30% of money as net profit. The relevant finding of the Ld. CIT(A) is reproduced as under: 6.8 I find that in the case of Shree Kuberji Associates, identical facts and circumstances are there and action taken by the AO, accordingly both CIT(A) and Hon'ble ITAT, Surat have passed orders in the same cases. The CIT(A) vide ITBA Appeal No.CIT(A), Surat-4/10887/2018-19 dated 16.12.2022 has arrived at 13% of booking receipts. The operative part of C order is as follows. \"6.11 Coming to the third issue which is of estimate of net profit rates on the on money receipts worked out by the AO @ 30% of the total on money receipts. The AR of the appellant has relied upon the ratio of several decisions of Hon'ble ITAT Ahmedabad Bench and Hon'ble High Court of Gujarat and submitted that the said authorities have confirmed the net profit rates on on Shree Kuberji Elegant 5 IT(SS)A. 23 & 24/SRT/2025 9.99,288/- for 22, respectively. The 20, in which the net profit has been worked out at Rs.3,38,05,512/. This has been treated as total net profit of the appellant on account of unexplained u/s 69A of the Act. The addition was made on the a) Digital data found in the case of Dhirajbhai D. Gangani as reproduced in para 6.1 of the assessment order which is 22 between Akshar b) Similar nature of diary was found in the case of Dhirajbhai 14 which is reproduced c) Digital data found in phone of Vikas Agrawal in respect of ops of Kuberji Plaza Market which is decoded without any base and thereby estimated on money of Thereafter, the Ld. CIT(A) following the finding of the Tribunal further restricted the addition to the extent of 13% of the net profit which was determined by the Assessing Officer estimating 30% of money as net profit. The relevant finding of the Ld. CIT(A) is 6.8 I find that in the case of Shree Kuberji Associates, identical and action taken by the AO, accordingly both CIT(A) and Hon'ble ITAT, Surat have passed orders in the same cases. The CIT(A) vide ITBA Appeal 19 dated 16.12.2022 has arrived at 13% of booking receipts. The operative part of CIT(A) \"6.11 Coming to the third issue which is of estimate of net profit rates on the on money receipts worked out by the AO @ 30% of the total on money receipts. The AR of the appellant has relied of Hon'ble ITAT Ahmedabad Bench and Hon'ble High Court of Gujarat and submitted that the said authorities have confirmed the net profit rates on on- Printed from counselvise.com money in the range of 8% to 17% for the projects situated in the city area. It was further submitted that th project was situated in the outskirts of the city and the margin of profit in the projects which are not in the city is lower than the city projects. The project being undertaken by the appellant is on outskirts of Surat city at Saroli K AR of the appellant submitted that the rates confirmed by the ITAT in the case of City Projects should not be applied to the case of the appellant. The AR further submitted that the rate of 7.4% declared on the project under IDS is hence, should not be taken at a higher rate. However, in my opinion, the booking receipts found during the course of Search were only for the particular period and does not include all the booking receipts of the project. Further, the expens construction as per the valuation report showed that the value of the work in progress worked by the DVO was much more than the value of work in progress shown by the appellant in the books of accounts. This shows that the appellant has indulged in incurring project expenses in cash outside the books of accounts from the source of the on money receipts. At the same time, considering the fact that the appellant's project is on the outskirts of the city and relatively cheaper than the commercial space booking receipts found in the seized material would be most appropriate rate being average of 10% and 16%. Ground No.5 is partly allowed.\" 6.9 The Hon'ble ITAT Surat vide order dated 22.12.2023 has upheld the ord High Court orders including Jurisdiction High Court order. The operative part of order of ITAT Surat is quoted as under. 13. We find that Hon'ble Jurisdictional High Court in CIT Vs Standard Tea Processing C (Guj) held that the addition for undisclosed income on account of inflated purchase price can be made only for the period to which document found during the search is related and not for the entire block period. The Hon'ble B. Nagendra Baliga (2014) 47 taxmann.com 331 (Kar) held that the Assessing Officer has not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimat Bench of Tribunal in ACIT Vs M/s Amar Corporation Ltd. ITA No. 2036/Ahd/2007 and in Sayan Textiles Park Ltd. Vs ACIT in ITA No. 360/Ahd/2014 also held that question of extrapolation can only arise only in a situation when th indication that it was a regular occurrence in a systematic IT(SS)A. 23 & 24/SRT/2025 money in the range of 8% to 17% for the projects situated in the city area. It was further submitted that the appellant firm's project was situated in the outskirts of the city and the margin of profit in the projects which are not in the city is lower than the city projects. The project being undertaken by the appellant is on outskirts of Surat city at Saroli Kumbharia and hence, the AR of the appellant submitted that the rates confirmed by the ITAT in the case of City Projects should not be applied to the case of the appellant. The AR further submitted that the rate of 7.4% declared on the project under IDS is reasonable and hence, should not be taken at a higher rate. However, in my opinion, the booking receipts found during the course of Search were only for the particular period and does not include all the booking receipts of the project. Further, the expens construction as per the valuation report showed that the value of the work in progress worked by the DVO was much more than the value of work in progress shown by the appellant in the books of accounts. This shows that the appellant has incurring project expenses in cash outside the books of accounts from the source of the on money receipts. At the same time, considering the fact that the appellant's project is on the outskirts of the city and relatively cheaper than the commercial space in the city, in my opinion, 13% rate on the booking receipts found in the seized material would be most appropriate rate being average of 10% and 16%. Ground No.5 is partly allowed.\" 6.9 The Hon'ble ITAT Surat vide order dated 22.12.2023 has upheld the order of CIT(A) and has also quoted several Hon'ble High Court orders including Jurisdiction High Court order. The operative part of order of ITAT Surat is quoted as under. 13. We find that Hon'ble Jurisdictional High Court in CIT Vs Standard Tea Processing Co. Ltd. (2013) 34 taxmann.com 31 (Guj) held that the addition for undisclosed income on account of inflated purchase price can be made only for the period to which document found during the search is related and not for the entire block period. The Hon'ble Karnataka High Court in CIT Vs B. Nagendra Baliga (2014) 47 taxmann.com 331 (Kar) held that the Assessing Officer has not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimate basis. Further the Coordinate Bench of Tribunal in ACIT Vs M/s Amar Corporation Ltd. ITA No. 2036/Ahd/2007 and in Sayan Textiles Park Ltd. Vs ACIT in ITA No. 360/Ahd/2014 also held that question of extrapolation can only arise only in a situation when the documents give an indication that it was a regular occurrence in a systematic Shree Kuberji Elegant 6 IT(SS)A. 23 & 24/SRT/2025 money in the range of 8% to 17% for the projects situated in the e appellant firm's project was situated in the outskirts of the city and the margin of profit in the projects which are not in the city is lower than the city projects. The project being undertaken by the appellant umbharia and hence, the AR of the appellant submitted that the rates confirmed by the ITAT in the case of City Projects should not be applied to the case of the appellant. The AR further submitted that the rate of reasonable and hence, should not be taken at a higher rate. However, in my opinion, the booking receipts found during the course of Search were only for the particular period and does not include all the booking receipts of the project. Further, the expenses for construction as per the valuation report showed that the value of the work in progress worked by the DVO was much more than the value of work in progress shown by the appellant in the books of accounts. This shows that the appellant has incurring project expenses in cash outside the books of accounts from the source of the on money receipts. At the same time, considering the fact that the appellant's project is on the outskirts of the city and relatively cheaper than the in the city, in my opinion, 13% rate on the booking receipts found in the seized material would be most appropriate rate being average of 10% and 16%. Ground No.5 is 6.9 The Hon'ble ITAT Surat vide order dated 22.12.2023 has er of CIT(A) and has also quoted several Hon'ble High Court orders including Jurisdiction High Court order. The operative part of order of ITAT Surat is quoted as under. 13. We find that Hon'ble Jurisdictional High Court in CIT Vs o. Ltd. (2013) 34 taxmann.com 31 (Guj) held that the addition for undisclosed income on account of inflated purchase price can be made only for the period to which document found during the search is related and not for the Karnataka High Court in CIT Vs B. Nagendra Baliga (2014) 47 taxmann.com 331 (Kar) held that the Assessing Officer has not entitled to extrapolate undisclosed income detected in the course of search for a particular period to e basis. Further the Coordinate Bench of Tribunal in ACIT Vs M/s Amar Corporation Ltd. ITA No. 2036/Ahd/2007 and in Sayan Textiles Park Ltd. Vs ACIT in ITA No. 360/Ahd/2014 also held that question of extrapolation e documents give an indication that it was a regular occurrence in a systematic Printed from counselvise.com manner. Thus, in view of aforesaid factual and legal discussion, we uphold the order of ld. CIT(A) on our aforesaid observations. In the result, grounds of appeal raised by rev assessee are dismissed 14 So far as taxing of addition under Section 115BBE of the Act is concerned, we find that no such provision was invoked by Assessing Officer while making addition in the assessment order. We further find that combination this bench in case of Dagina Jewellers (supra) held that when the source of income was explained and is apparently established, hence section 115BBE is not applicable for such business receipts. It was held that the provisions of Sections 68 and 69 ar like deposit of cash out of cash sales and excess closing stock. While giving such finding, we have made reliance on the decision of Hon'bie Gujarat High Court in the case of Shilpa Dyeing & Printing Mills Ltd, Tax 04.04.2013. Thus, in view of aforesaid position, the Assessing Officer is directed to tax the addition under normal provision/rate applicable on assessee. In the result, the ground No. 2 of appeal is allowed. 6.10 Accordingly restricted to 13% of alleged receipts. The addition to the extent of Rs.43,94,717/ Rs.11,26,85,040/ relief of Rs.2,94,10,795 Further, as held by the Hon'ble ITAT in order referred above, Section 115BBE is not applicable in appellant's case. Ground No.1 to 5 are 5.3 We find that in the instant case rate of 13% has been invoked by the Tribunal on the receipt profit which was determined by the Assessing Officer. In the cases cited before the net profit rate of 8% to 17% has been referred by the Tribunal in the order. The relevant finding of the Tr reproduced as under: “11. We have considered the submissions of both the parties on merit and carefully perused. We have also deliberated on various case laws relied by Ld. AR for the assessee before the lower authorities as well as before us. As recorded above, the IT(SS)A. 23 & 24/SRT/2025 manner. Thus, in view of aforesaid factual and legal discussion, we uphold the order of ld. CIT(A) on our aforesaid observations. In the result, grounds of appeal raised by revenue as well as assessee are dismissed 14 So far as taxing of addition under Section 115BBE of the Act is concerned, we find that no such provision was invoked by Assessing Officer while making addition in the assessment order. We further find that tion this bench in case of Dagina Jewellers (supra) held that when the source of income was explained and is apparently established, hence section 115BBE is not applicable for such business receipts. It was held that the provisions of Sections 68 and 69 are not applicable for trading transactions like deposit of cash out of cash sales and excess closing stock. While giving such finding, we have made reliance on the decision of Hon'bie Gujarat High Court in the case of Shilpa Dyeing & Printing Mills Ltd, Tax Appeal No. 290 of 2013. dated 04.04.2013. Thus, in view of aforesaid position, the Assessing Officer is directed to tax the addition under normal provision/rate applicable on assessee. In the result, the ground No. 2 of appeal is allowed. 6.10 Accordingly, in the instant case, I too, direct addition to be restricted to 13% of alleged receipts. The addition to the extent of Rs.43,94,717/- [13% of total on-money receipt of Rs.11,26,85,040/-] is hereby sustained and the appellant gets relief of Rs.2,94,10,795/- [Rs.3,38,05,512 Rs. 43,94,717]. Further, as held by the Hon'ble ITAT in order referred above, Section 115BBE is not applicable in appellant's case. Ground partly allowed.” We find that in the instant case rate of 13% has been invoked y the Tribunal on the receipt of the on-money and not o which was determined by the Assessing Officer. In the cases cited before the net profit rate of 8% to 17% has been referred by the Tribunal in the order. The relevant finding of the Tr reproduced as under: 11. We have considered the submissions of both the parties on merit and carefully perused. We have also deliberated on various case laws relied by Ld. AR for the assessee before the lower authorities as well as before us. As recorded above, the Shree Kuberji Elegant 7 IT(SS)A. 23 & 24/SRT/2025 manner. Thus, in view of aforesaid factual and legal discussion, we uphold the order of ld. CIT(A) on our aforesaid observations. enue as well as assessee are dismissed 14 So far as taxing of addition under Section 115BBE of the Act is concerned, we find that no such provision was invoked by Assessing Officer while making addition in the assessment order. We further find that tion this bench in case of Dagina Jewellers (supra) held that when the source of income was explained and is apparently established, hence section 115BBE is not applicable for such business receipts. It was held that the provisions of e not applicable for trading transactions like deposit of cash out of cash sales and excess closing stock. While giving such finding, we have made reliance on the decision of Hon'bie Gujarat High Court in the case of Shilpa Appeal No. 290 of 2013. dated 04.04.2013. Thus, in view of aforesaid position, the Assessing Officer is directed to tax the addition under normal provision/rate applicable on assessee. In the result, the ground , in the instant case, I too, direct addition to be restricted to 13% of alleged receipts. The addition to the extent money receipt of ] is hereby sustained and the appellant gets [Rs.3,38,05,512 Rs. 43,94,717]. Further, as held by the Hon'ble ITAT in order referred above, Section 115BBE is not applicable in appellant's case. Ground We find that in the instant case rate of 13% has been invoked money and not on the net which was determined by the Assessing Officer. In the cases cited before the net profit rate of 8% to 17% has been referred by the Tribunal in the order. The relevant finding of the Tribunal is 11. We have considered the submissions of both the parties on merit and carefully perused. We have also deliberated on various case laws relied by Ld. AR for the assessee before the lower authorities as well as before us. As recorded above, the Printed from counselvise.com Assessing Officer worked out the figure of on of all the units of assessee despite the fact that incriminating material indicates on Satakat was found only in respect of shop No. 3001 and 3002. The Assessing frontage or entrance position. In commercial project, uniform rate is not possible irrespective of floors. Further no i..terpolation is permissible when there is no evidence in respect of 100% units. Further there is always difference in the rate so far as payment period is concerned. We find that the Id. CIT(A) on considering the various submissions of assessee accepted the contention of assessee that on the basis of incriminating material certain discou subjected to negotiation. On the basis of different factors affecting the rate on various floors, the ld. CIT(A) reduced 15% on the gross money in entire estimation. The ld. CIT(A) on considering the decision of various Tribu was of the view that profit rates of on ranges from 8% to 17% on the project situated in the city area. Since project of assessee was in the outskirts of city and that the assessee has already declared 7.4% profi good amount in IDS 2016, the ld. CIT(A) restricted the addition to the extent of 13% thereby allowed partial/substantial 5.4 Respectfully, following the decision of the Tribunal in the case of the assessee, we feel it appropriate the file of the Assessing Officer for application of the net profit rate of 13% on the on-money received by the assessee during the year under consideration. allowed for statistical pu 6. Turning to the second issue it must be observed that such provision applies only where income is deemed under sections 68 to 69D amount in question remains unexplained. made if an assessee fails in explaining the nature and source of IT(SS)A. 23 & 24/SRT/2025 fficer worked out the figure of on-money in respect of all the units of assessee despite the fact that incriminating material indicates on-money in respect of certain units. Further Satakat was found only in respect of shop No. 3001 and 3002. The Assessing Officer has not considered the location of floor or frontage or entrance position. In commercial project, uniform rate is not possible irrespective of floors. Further no i..terpolation is permissible when there is no evidence in respect of 100% ther there is always difference in the rate so far as payment period is concerned. We find that the Id. CIT(A) on considering the various submissions of assessee accepted the contention of assessee that on the basis of incriminating material certain discount was allowed and prices were subjected to negotiation. On the basis of different factors affecting the rate on various floors, the ld. CIT(A) reduced 15% on the gross money in entire estimation. The ld. CIT(A) on considering the decision of various Tribunals and High Courts was of the view that profit rates of on-money in various cases ranges from 8% to 17% on the project situated in the city area. Since project of assessee was in the outskirts of city and that the assessee has already declared 7.4% profit and reasonable good amount in IDS 2016, the ld. CIT(A) restricted the addition to the extent of 13% thereby allowed partial/substantial Respectfully, following the decision of the Tribunal in the case , we feel it appropriate to restore this matter back to the file of the Assessing Officer for application of the net profit rate money received by the assessee during the year under consideration. The ground No. 1 and 2 of the appeal are allowed for statistical purposes. the second issue of applicability of section it must be observed that such provision applies only where income is deemed under sections 68 to 69D — i.e., where the source of the amount in question remains unexplained. The addition u/s 69A is made if an assessee fails in explaining the nature and source of Shree Kuberji Elegant 8 IT(SS)A. 23 & 24/SRT/2025 money in respect of all the units of assessee despite the fact that incriminating money in respect of certain units. Further Satakat was found only in respect of shop No. 3001 and 3002. Officer has not considered the location of floor or frontage or entrance position. In commercial project, uniform rate is not possible irrespective of floors. Further no i..terpolation is permissible when there is no evidence in respect of 100% ther there is always difference in the rate so far as payment period is concerned. We find that the Id. CIT(A) on considering the various submissions of assessee accepted the contention of assessee that on the basis of incriminating nt was allowed and prices were subjected to negotiation. On the basis of different factors affecting the rate on various floors, the ld. CIT(A) reduced 15% on the gross money in entire estimation. The ld. CIT(A) on nals and High Courts money in various cases ranges from 8% to 17% on the project situated in the city area. Since project of assessee was in the outskirts of city and that t and reasonable good amount in IDS 2016, the ld. CIT(A) restricted the addition to the extent of 13% thereby allowed partial/substantial relief.” Respectfully, following the decision of the Tribunal in the case to restore this matter back to the file of the Assessing Officer for application of the net profit rate money received by the assessee during the year The ground No. 1 and 2 of the appeal are of applicability of section 115BBE, it must be observed that such provision applies only where income i.e., where the source of the The addition u/s 69A is made if an assessee fails in explaining the nature and source of Printed from counselvise.com money found. In the present case, however, the emanate directly from the business of the assessee sale of shops — and the purchasers ar once the source of income is explained as arising from business transactions, section 115BBE has no application. 6.1 We are therefore in agreement with the Ld. CIT(A) that the Assessing Officer erred in invoking section 115B question is assessable under normal provisions at the applicable rate, and not under the deeming provisions of section 69A or section 115BBE. 6.2 The ground No. 3 of the appeal is dismissed. 7. Now, we take up the appeal of the assessee for assessment year 2020-21. The grounds raised by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that profit @ 30% over the on-money receipts totaling Rs. 4,04,35,200/ period under consideration was made by the Assessing Officer after detailed analysis of incriminating details/document recovered during the Search proceedings. 2. On the facts and in the circums the Ld. CIT(A) has erred has erred in restricting the NP @ 13% and in not appreciating that the Assessee has already debited the incidental expenses for the project and that allowing extra credit of 17% will only tantamount t benefit to the Assessee over legitimate income which ought to have been taxed.. IT(SS)A. 23 & 24/SRT/2025 In the present case, however, the on emanate directly from the business of the assessee and the purchasers are identifiable. In our once the source of income is explained as arising from business transactions, section 115BBE has no application. We are therefore in agreement with the Ld. CIT(A) that the Assessing Officer erred in invoking section 115BBE. The income in question is assessable under normal provisions at the applicable rate, and not under the deeming provisions of section 69A or ground No. 3 of the appeal is dismissed. we take up the appeal of the assessee for assessment 21. The grounds raised by the assessee are reproduced 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that profit @ 30% money receipts totaling Rs. 4,04,35,200/ period under consideration was made by the Assessing Officer after detailed analysis of incriminating details/document recovered during the Search proceedings. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred has erred in restricting the NP @ 13% and in not appreciating that the Assessee has already debited the incidental expenses for the project and that allowing extra credit of 17% will only tantamount to additional unwarranted benefit to the Assessee over legitimate income which ought to have been taxed.. Shree Kuberji Elegant 9 IT(SS)A. 23 & 24/SRT/2025 on-money receipts emanate directly from the business of the assessee — namely, the e identifiable. In our opinion, once the source of income is explained as arising from business We are therefore in agreement with the Ld. CIT(A) that the BE. The income in question is assessable under normal provisions at the applicable rate, and not under the deeming provisions of section 69A or we take up the appeal of the assessee for assessment 21. The grounds raised by the assessee are reproduced 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that profit @ 30% money receipts totaling Rs. 4,04,35,200/- for the period under consideration was made by the Assessing Officer after detailed analysis of incriminating details/document tances of the case and in law, the Ld. CIT(A) has erred has erred in restricting the NP @ 13% and in not appreciating that the Assessee has already debited the incidental expenses for the project and that allowing extra o additional unwarranted benefit to the Assessee over legitimate income which ought to Printed from counselvise.com 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred in directing to tax the addition under normal provision/rate a 115BBE of the I.T. Act despite the fact that the on is covered by the provisions u/s. 69A of the Act as the said on money is not recorded in books of account, therefore the provisions of sec. 115BBE of the Ac and the tax liability is to be worked out u/s 115BBE of the I.T. Act. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer ignoring th Test\" i.e. preponderance of probability which is applicable for Income Tax proceedings as laid down in Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC) and CIT v. Durga Prasad More (1971) 7.1 As the grounds raised by the assessee in assessment year 2020-21 and the issues involved therein are identical in substance to those adjudicated in assessment year 2019 quantum. Respectfully following our findings hereinabove, the grounds raised for this year mutandis in terms of the preceding discussion. 8. In the result, both the appeals are allowed purposes. Order pronounced by way display o on 30/10/2025 under Rule 34(4) of ITAT Rules, 1963. Sd/ (SANDEEP GOSAIN JUDICIAL MEMBER Dated: 30/10/2025 Rahul Sharma, Sr. P.S. IT(SS)A. 23 & 24/SRT/2025 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred in directing to tax the addition under normal provision/rate applicable on assessee and not u/s 115BBE of the I.T. Act despite the fact that the on-money receipt is covered by the provisions u/s. 69A of the Act as the said on money is not recorded in books of account, therefore the provisions of sec. 115BBE of the Act are applicable in this case and the tax liability is to be worked out u/s 115BBE of the I.T. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer ignoring the principle of \"Human Probability Test\" i.e. preponderance of probability which is applicable for Income Tax proceedings as laid down in Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC) and CIT v. Durga Prasad More (1971) 82 ITR 540. rounds raised by the assessee in assessment year he issues involved therein are identical in substance to those adjudicated in assessment year 2019–20, differing only in quantum. Respectfully following our findings hereinabove, the sed for this year are also stand decided in terms of the preceding discussion. In the result, both the appeals are allowed partly Order pronounced by way display of result on notice board under Rule 34(4) of ITAT Rules, 1963. Sd/- (SANDEEP GOSAIN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Shree Kuberji Elegant 10 IT(SS)A. 23 & 24/SRT/2025 3. On the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred in directing to tax the addition under pplicable on assessee and not u/s money receipt is covered by the provisions u/s. 69A of the Act as the said on- money is not recorded in books of account, therefore the t are applicable in this case and the tax liability is to be worked out u/s 115BBE of the I.T. 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by the e principle of \"Human Probability Test\" i.e. preponderance of probability which is applicable for Income Tax proceedings as laid down in Sumati Dayal vs. CIT (1995) 214 ITR 801: 80 Taxman 89 (SC) and CIT v. Durga rounds raised by the assessee in assessment year he issues involved therein are identical in substance 20, differing only in quantum. Respectfully following our findings hereinabove, the also stand decided mutatis partly for statistical f result on notice board under Rule 34(4) of ITAT Rules, 1963. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Surat 5. Guard file. //True Copy// IT(SS)A. 23 & 24/SRT/2025 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Surat Shree Kuberji Elegant 11 IT(SS)A. 23 & 24/SRT/2025 BY ORDER, (Assistant Registrar) ITAT, Surat Printed from counselvise.com "