GINGER PROPERTIES PRIVATE LIMITED,AHMEDABAD V. THE ASSTT. COMMISSIONER OF INCOMETAX, CENTRAL CIRCLE-1(2), , AHMEDABAD

ITSSA 45/AHD/2023

AI Insights

The case involves Ginger Properties Pvt. Ltd., which faced scrutiny under Sections 153A and 132(4) of the Income Tax Act following a search and seizure operation. The Assessing Officer made additions to the assessee's income for unaccounted cash receipts and expenses, which were contested in appeals. The Tribunal examined the legality of these additions, the estimation of profit rates on unaccounted receipts, and the treatment of interest expenses related to interest-free loans and advances. The Tribunal's decision balanced the application of profit rates on unaccounted receipts while dismissing the Revenue's challenges on interest disallowances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37188 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: Sankalp Recreation P. Ltd. Vs. ACIT, CIT vs. President Industries, CIT vs. Balchand Ajit Kumar, CIT vs. Gurubachhan Singh, Man Mohan Sadani vs. CIT, CIT vs. Samir Synthetics Mill, DCIT vs. Panna Corporation, Chetan C. Patel vs. ACIT, CIT vs. Jay Builders, Greenfield Reality P. Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B. P. SRIVASTAV
• Assessee Lawyers: TUSHAR HERMANI; PARIMALSINH B. PARMAR
• Keywords: Set aside; Business income; Unexplained expenditure; Income from undisclosed sources; Document seized; Documents seized; Principle of natural justice; Search and seizure
• Section: 153A; 13

Judgement Text

"IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 1 of 14 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 Assessment Years: 2018-19, 2019-20 Ginger Properties Private Limited, Sur. No.207/20, F.P. No.271/2, Sankalp House, B/h. Rajpath Club, Bodakdev, Ahmedabad – 380 054. [PAN – AADCG 0202 C] Vs. Assistant Commissioner of Income Tax, Central Circle – 1(2), Ahmedabad. ITA No.483/Ahd/2023 Assessment Year: 2019-20 Assistant Commissioner of Income Tax, Central Circle – 1(2), Ahmedabad. Vs. Ginger Properties Private Limited, Sur. No.207/20, F.P. No.271/2, Sankalp House, B/h. Rajpath Club, Bodakdev, Ahmedabad – 380 054. [PAN – AADCG 0202 C] (Appellants) (Respondents) Assessee by Shri Tushar Hermani, Sr. Advocate & Shri Parimalsinh B. Parmar, AR Revenue by Shri B.P. Srivastav, Sr. DR Date of Hearing 18.02.2025 Date of Pronouncement 05.03.2025 O R D E R PER BENCH: IT(SS)A No.45/Ahd/2023 is the appeal filed by the Assessee for the Assessment Year 2018-19 and ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 are IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 2 of 14 Cross Appeals filed by the Assessee & Revenue for the Assessment Year 2019-20, against the consolidated order dated 30.03.2023 passed by the CIT(A)-11, Ahmedabad. 2. The Assessee has raised the following grounds of appeal :- IT(SS)A No.45/Ahd/2023 for Assessment Year 2018-19 “1. The Ld. CIT(A) has erred in law and on facts of the case in confirming the additions made by learned Assessing Officer without any incriminating material found during the search. 2. The Ld. CIT(A) has erred in law and on facts of the case in estimating profit margin at the rate of 14%. In the facts and circumstances of the case, such estimation is highly excessive and does not reflect the real income earned by the appellant. 3. The Ld. CIT(A) has erred in law and on facts of the case in directing AO to confirm the addition on account of alleged on-money for A.Y. 2020-21 to A.Y. 2023-24 which were not the subject matter of appeal before CIT(A). He further erred in applying rate of 14% on gross receipts to compute net income which is highly excessive and not commensurate with the real income, 4. Both lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and principles of Natural Justice and therefore deserves to be quashed. 5. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.” ITA No.433/Ahd/2023 for Assessment Year 2019-20 “1. The Ld. CIT(A) has erred in law and on facts of the case in confirming the additions made by learned Assessing Officer without any incriminating material found during the search. 2. The Ld. CIT(A) has erred in law and on facts of the case in estimating profit margin at the rate of 14%. In the facts and circumstances of the IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 3 of 14 case, such estimation is highly excessive and does not reflect the real income earned by the appellant. 3. The Ld. CIT(A) has erred in law and on facts of the case in directing AO to confirm the addition on account of alleged on-money for A.Y. 2020-21 to A.Y. 2023-24 which were not the subject matter of appeal before CIT(A). He further erred in applying rate of 14% on gross receipts to compute net income which is highly excessive and not commensurate with the real income, 4. Both lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and principles of Natural Justice and therefore deserves to be quashed. 5. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.” 2.1 The Revenue has raised the following grounds of appeal:- ITA No.483/Ahd/2023 for Assessment Year 2019-20 “1. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs.56,43,692/- on account of disallowance of interest expenses, without appreciating the fact that interest bearing funds has been diverted towards interest free loan & advance. 2. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law in restricting the addition made on account of estimated on- money receipt and unaccounted income of Rs.2,56,30,000/- without appreciating the facts that assessee was involved in charging on-money on booking of sale of units in project Grace-II. 3. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition made on account of unexplained expenses of Rs.28,62,500/- without appreciating the facts that assessee failed to establish that the cash expenditure was laid out wholly and exclusively for the purpose of business. 4. 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. IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 4 of 14 5. 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.” 2.2 We will take IT(SS)A No.45/Ahd/2023 filed by the assessee Ginger Properties Private Limited, for the Assessment Year 2018-19 as the lead case. Brief facts of the case 3. A search & seizure action was conducted on 30.10.2018 and on subsequent dates inter alia covering Kailash Goenka Group as well as Robin Goenka Group. The assessee is engaged in the business of Real Estate and had undertaken a real estate commercial project by the name of Sankalp Grace-II. This project has four buildings (A to D) which was constructed during the different periods of time and during the course of search only Building D in Grace-II was under construction (live project) and rest of the three buildings were completed prior to the date of search. The return of income for the Assessment Year (A.Y.) 2018-19 was filed on 27.09.2018 declaring total loss at Rs. (-) 11,57,943/-. Proceedings under Section 153A of the Act were initiated on 07.02.2019. In response, the assessee filed its return of income under Section 153A of the Income Tax Act, 1961 on 12.03.2019 declaring total income at Rs.14,22,710/-. Statutory notices were issued, calling for various details with respect to particulars furnished in return of income. In response to the notices, the assessee furnished replies on various dates. The Assessing Officer in paragraph no.4 of the order has mentioned the materials found during the search and seizure operation in the form of hand written diaries, loose paper notings, printed forms/bills etc. as well as the evidences related to cash payments towards land, brokerage, salaries, personal expenses etc. 3.1 The Assessing Officer observed that Sankalp Group was founded in 1981 and Kailash Goenka and Robin Goenka are looking after the activities of the Group. The Sankalp Goenka is running its Restaurants with different brands. The Assessing Officer observed that the Sankalp Group runs Syndicate of unaccounted transaction of cash receipts and payments and thereby evades lawful tax. The group charges cash over and above the registered value of the unit and in the sale deed only the amount paid through cheque is quoted. The assessee group never offered cash receipts for taxation, which was received as on-money and details of which were IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 5 of 14 available in the seized documents. The AO has referred to the statement of Shri Dilip C. Patel, accountant of Robin Goenka Group and other employees of the group recorded under Section 132(4) of the Act, who had admitted about involvement of unaccounted cash in real estate transactions. After going through the statements and records, the Assessing Officer held that the assessee had generated on-money in the projects which was nothing but business receipts of the Project Grace-II and the same was required to be taxed as business income as per accounting method regularly followed by the assessee. The assessee had contended that as per the accounting method regularly followed, no revenue on account of sale of units from the said project can be recognised till A.Y. 2019-20. The AO had, however, rejected the contention of the assessee and taxed the on-money receipts in the years to which they pertained and accordingly addition was made in the A.Y. 2018-19 & 2019-20. 3.2 The assessee had further contended that if addition in respect of on-money receipt was required to be made, it has to be made on estimated percentage of 8% to 10% only in respect of unaccounted portion of on-money but this contention of the assessee was also rejected by the Assessing Officer. The AO on the basis of the seized diaries had worked out the on-money received as well as the expenses incurred in cash by the assessee, the details of which is tabulated in para-12.1 of the assessment order. As per the seized documents the on-money received by the assessee in A.Ys. 2018-19 and 2019-20 was to the extent of Rs.4,82,000/- and Rs.2,84,92,500/- respectively. Further, cash payment of Rs.28,62,500/- pertaining to A.Y. 2019-20 was also found noted in the seized documents. The Assessing Officer held that during the year under consideration, the assessee had received an amount of Rs.4,82,000/- towards on-money and the entire amount should be added to the total income of the assessee on account of unaccounted cash receipts. The addition for unexplained cash expenditure as per the seized document was also made in the A.Y. 2019-20. 3.3 The Assessing Officer further observed that in the Balance Sheet, the assessee has shown Long Term Borrowings of Rs.28,63,06,832/- and Short Term Borrowing of Rs.3,29,23,563/- and provided interest free loans and advances of an IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 6 of 14 amount of Rs.6,30,13,273/-. The assessee claimed interest expenses for the amount of Rs.2,59,99,033/- on loans taken from Banks and others. The Assessing Officer held that the expenses on payment of interest on borrowed funds which has been diverted towards interest free loans and advances and non-business investment is not admissible under Section 36(1)(iii) of the Act. Thus, the Assessing Officer added Rs.60,00,631/- on account of interest free loan under Section 36(1)(iii) of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A), who partly allowed the appeal of the assessee. Submissions 5. The Ld. AR in respect of ground no.1 (i.e. issue no.1), submitted that the assessee is engaged in the real estate business and the seized material in question contained noting in respect of unaccounted receipts and unaccounted expenses. The Ld. AR submitted that the unaccounted receipts (appearing in the seized material) were generated in the course of business activities. It is not the case of the Assessing Officer that such receipts were not related with the business activities of the assessee. Also, there is nothing on record to demonstrate that the assessee had any other source of income from which such receipts could have been generated. Further, the very same seized material in question contained the noting in respect of unaccounted expenses as well. Perusal of the particulars mentioned against such expenses would make it clear that such expenses have also been recorded in the course of normal business activities. Perusal of seized material would indicate that a part of receipts generated in the normal course of business are kept outside the books of accounts and similarly certain part of expenses are also being incurred in cash in the normal course of business which are kept outside the books of account. Under such facts and circumstances of the present case, question that falls for consideration of the Tribunal is as follows : a) Whether the Assessing Officer was justified in making separate addition in respect of unaccounted receipts as well as unaccounted expenses in relation to the business activities carried on by the assessee ? IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 7 of 14 b) Whether the CIT(A) was justified in restricting the impugned additions made by the Assessing Officer to the extent of real income earned in relation to the unaccounted business activities carried on by the assessee by adopting reasonable gross profit rate and applying the same to total unaccounted receipts reflected in the seized material ? 5.1 The Ld. AR submitted that it is well settled legal proposition that the entire unaccounted receipts cannot be added. Rather, only the profit element embedded therein can be added in the hands of the assessee. The Ld. AR relied upon the following decisions:- Sankalp Recreation P. Ltd. Vs. ACIT – IT(SS)A No.65/Ahd/2022 CIT vs. President Industries (2002) – 258 ITR 654 (Guj) CIT vs. Balchand Ajit Kumar (2003) – 263 ITR 610 (MP) CIT vs. Gurubachhan Singh (2008) – 302 ITR 63 (Guj) Man Mohan Sadani vs. CIT (2008) – 304 ITR 52 (MP) CIT vs. Samir Synthetics Mill (2010) – 326 ITR 410 (Guj) DCIT vs. Panna Corporation – Tax Appeal 323 of 2000 (Guj) Chetan C. Patel vs. ACIT – IT(SS)A No.522/Ahd/2011 and others CIT vs. Jay Builders (2013) - 33 taxman.com 62 (Guj) Greenfield Reality P. Ltd – IT(SS)A No.289/Ahd/2018 & Others 5.2 The Ld. AR further submitted that the next logical step is to determine quantum of income element embedded in such unaccounted receipts. Profit ratio as per books of accounts is in the range of 1% to 7%. The profit ratio of unaccounted transactions is usually higher. Hence, the CIT(A) adopted average 14% profit rate. The said profit rate at 14% was applied on on-money receipts and thus the methodology adopted by the CIT(A) is scientific and leaves no room for arbitrariness. The Ld. AR submitted that action of the CIT(A) in estimating the income of the assessee does not call for any interference but the profit rate at 14% is substantially on higher side and some reasonable rate of profit should be considered by the IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 8 of 14 Tribunal. The ld. Sr. Counsel submitted that in assessee’s group own appeals, profit rate of 12.5% rate was adopted by the ITAT, which may be applied to the present appeals for the Assessment Years. 5.3 Regarding disallowance of interest, involved in Revenue’s appeal, the Ld. Sr. Counsel submitted that the assessee had sufficient own funds to account for the interest free advances and loans. Further, the Assessing Officer had not established any nexus in respect of deployment of borrowed funds towards interest free advances. 6. The Ld. DR, on the other hand, submitted that there can be no universal profit rate of 12.5%. Further, apart from estimation, the CIT(A) had telescoped the unaccounted income with the unaccounted expenses to determine the real value/income of the assessee, which was not correct, as the nature of expenditure was not explained. He submitted that looking to the nature of the business of the assessee, the location and type of project and various discrepancies found during the search proceedings in case of unrecorded sales, the profit margin remains higher than the recorded sales and the average profit percentage is rightly adopted at 14% for all the years under consideration by the CIT(A). The ld. CIT-DR submitted that the extrapolation of on-money receipts for the other years was provided by the assessee only and, therefore, it was not open for the assessee to contest the same. Thus, the Ld. DR relied upon the order of the AO. On the issue of disallowance of interest u/s 36(1)(iii) also, he supported the order of the Assessing Officer. Our findings & order 7. We have considered the rival submissions. The first ground taken by the assessee is that the addition was not based on any incriminating material found during the search. We do not find any merit in this ground. The Assessing Officer had referred to seized materials found during the search on the basis which the on- money receipts as well as cash expenses have been worked out. The details of IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 9 of 14 seized material based on which the on money receipts was quantified in the Assessment Order is duly found mentioned in paragraph no.12.1 of the Assessment Order wherein the Annexure & page number of the seized documents is also mentioned. Thus, it is found that the addition in respect of on money receipts as well as cash expenses were based on the seized material found during the search and once certain additions were made on the basis of seized material the Assessing Officer was free to consider the other material/issue as well. Therefore, ground no.1 as taken by the assessee is dismissed. 8. Ground nos.2 to 4 pertain to estimation of profit margin @ 14% in respect of on money receipts. The Assessing Officer had worked out on-money receipts as well as unaccounted expenses on the basis of the seized documents which was found to be as under:- Particulars A.Y. 2018-19 A.Y. 2019-20 Total Unaccounted on money received 4,82,000 2,56,30,000 2,61,12,000 Unaccounted Expense paid - 28,62,500 28,62,500 Total 4,82,000 2,84,92,500 2,89,74,500 8.1 The Assessing Officer had made addition for the entire on-money receipts as well as the unaccounted expenses as per the seized documents in the two years to which it pertained. The CIT(A) had held that the unaccounted receipts in respect of on money and the expenditure in cash as recorded in the seized documents pertained to the Real Estate business of the assessee. The contention of the assessee was that the addition for both the unaccounted income as well as unaccounted expenditure cannot be made and that only the real income of the assessee should be worked out. The CIT(A) had held that the real nature of transaction was that the assessee was receiving on-money in respect of sale of flats. On the basis of evidences found during the search, it transpired that it was normal practice for the assessee to receive on-money in cash in respect of all the sale transactions. Therefore, the sale price as recorded in the books of accounts was IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 10 of 14 extrapolated after taking into account the portion of on-money receipts. In the proceedings before the CIT(A), the assessee had suo-moto extrapolated the on- money receipts on accrual basis to the extent of Rs.26,02,59,300/- as against the addition of Rs.2,61,12,000/- made by the Assessing Officer on receipt basis, which was accepted by the CIT(A). In order to work out the real income from on-money receipts, the CIT(A) had applied profit rate of 14% on the extrapolated on-money receipts as worked out by the assessee itself. The summary of the additions as made by the Assessing Officer and the addition as confirmed by the CIT(A) is as per the following table:- Assessment Year ON-money as per Assessment Order On money extrapolated by assessee Real income @14% of estimated ON- Money 2018-19 4,82,000 - - 2019-20 2,56,30,000 - - 2020-21 - 7,69,32,450 1,07,70,543 2021-22 - 12,84,06,600 1,79,76,924 2022-23 - 4,87,87,200 68,30,208 2023-24 - 61,33,050 8,58,627/- Total 2,61,12,000 26,02,59,300 3,64,36,302 8.2 It is found that the addition of Rs.2,61,12,000/- was made by the Assessing Officer on account of on-money receipts as per the seized documents in the A.Ys. 2018-19 and 2019-20. On the other hand, the ld. CIT(A) had considered the extrapolated on-money receipts of Rs.26,02,59,300/- for the A.Ys. 2020-21 to 2023- 24 as worked out by the assessee itself and estimated income therefrom by applying net profit rate of 14%. The income extrapolated by the assessee was as per the method of accounting regularly followed and considering the fact that though the certain on-money was received in earlier years, the sales had actually crystallised in the subsequent years only. Once having admitted that it was the normal practice for the assessee to receive on-money and the assessee itself had worked out the on- IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 11 of 14 money receipts crystallized for the A.Ys. 2020-21 to 2023-24; the assessee cannot take a plea that the ld. CIT(A) was not correct in confirming the addition in the A.Ys. 2020-21 to 2023-24 when no appeal was pending before him for these years. The fact remains that the appeal was pending before the CIT(A) for the A.Ys. 2018-19 and 2019-20 and addition in these years were deleted on the basis of submissions of the assessee that the on-money received as per seized documents, did not accrue in these years. Thus, having derived the benefit from the CIT(A) in the A.Ys. 2018-19 and 2019-20, it was not open for the assessee to challenge the addition as confirmed by the CIT(A) for the subsequent years as per the own admission and working of the assessee. The assessee in the written submission before the ld. CIT(A) had given detailed working of extrapolation of on-money receipt by taking into account the area and the agreement value. The extrapolated on-money was worked out @ Rs.1575/- per square feet which was about 50% of the agreement value and the real income of extrapolated on-money amount was estimated by applying profit rate of 6%. The fact that the assessee had received on money receipts which had crystallized during the A.Ys. 2020-21 to 2023-24 has not been denied. Therefore, we do not find any merit in the ground no.3 as taken by the assessee and the same is dismissed. While upholding the deletion of addition in respect of on-money receipts in the A.Y. 2018-19 and 2019-20 by the ld. CIT(A), we direct the AO to tax the on-money receipts crystallized in the A.Ys. 2020-21 to 2023-24, as per own admission of the assessee, by applying the profit rate as decided in this appeal. 8.3 As regards estimation of income by applying net profit rate of 14%, the contention of the assessee is that the same is high. According to the assessee, profit was estimated at the rate of 12.5% in other group cases of the assessee. We find that no universal rate of 12.5% was applied in other group cases. In the case of Sankalp INN decided by the Co-ordinate Bench of this Tribunal in IT(SS)A No.45 to 48/Ahd/2022 and others, dated 31.01.2025, profit rate of 13% was upheld in respect of on-money receipts. Accordingly, we find it reasonable to apply the profit rate of 13% in this case also. Accordingly, the ground taken by the assessee in this regard is partly allowed. IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 12 of 14 9. The appeal of the assessee in IT(SS)A No.45/Ahd/2023 is partly allowed. 10. The grounds taken by the assessee in ITA No.433/Ahd/2023 for A.Y. 2019- 20 are identical to IT(SS)A No.45/Ahd/2023. Accordingly, the decision taken by us in IT(SS)A No.45/Ahd/2023 will apply mutatis mutandis to ITA No.433/Ahd/2023 for A.Y. 2019-20. ITA No.483/Ahd/2023 for A.Y. 2019-20 11. The first ground taken by the Revenue is against disallowance of Rs.56,43,692/- on account of interest expenses. The Assessing Officer had disallowed Rs.56,43,692/- being interest at 12% of the following interest free loans and advances given by the assessee: Interest free loans to related parties (Dimple Goenka) Rs.3,45,65,257/- Interest free loans and advances to others Rs.1,56,30,562/- According to the AO the assessee had diverted its interest-bearing funds, on which interest was paid, towards interest free loans and advances. However, the AO had not established any nexus between the diversion of interest-bearing funds towards interest free advances as alleged in the assessment order. The assessee had sufficient funds of his own which could have been utilized towards interest free loans and advances. The ld. CIT(A) had given a finding that there never arose any debit balance in consolidated ledger of Dimple Goenka and hence there was no question of any interest that could have been charged from her and finding of the ld. CIT(A) has not been controverted by the Revenue. In In the absence of any nexus or any evidence on record that assessee had diverted its interest-bearing funds towards interest free loans and advances; no disallowance u/s 36(1)(iii) could have been made. We, therefore, do not find any infirmity in the order of ld. CIT(A) on this issue. The decision of the ld. CIT(A) deleting the addition of Rs.56,43,692/- on account of interest expenses, is upheld and the ground taken by the Revenue is dismissed. 12. The second ground pertains to deletion of on-money receipts of Rs.2,56,30,000/- in this year. As already discussed earlier, total addition of Rs.2,61,12,000/- on account of on money receipts was made in A.Y. 2018-19 & IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 13 of 14 2019-20 which was deleted by the CIT(A). On the other hand, the ld. CIT(A) had confirmed the addition of Rs.3,64,36,302/- on account of on money receipts in A.Y. 2020-21 to 2023-24 by applying profit rate of 14%. Thus, the total addition in respect of on money receipts as upheld by the CIT(A) was more than the addition as actually made by the Assessing Officer. The addition for on money in the subsequent years was confirmed considering the method of accounting as regularly followed by the assessee. Therefore, we do not find any merit in the ground as taken by the assessee. The same is dismissed. 13. Ground no.3 pertains to deletion of unexplained expenses of Rs.28,62,500/-. The Assessing Officer was not correct in making the addition for on money receipts as well as the expenses incurred in cash, as appearing in the seized material. The on-money, which was received in cash, was available with the assessee to incur the cash expenditure as recorded in the seized documents. Therefore, the telescoping effect for the cash expenditure has to be allowed to the extent of unaccounted cash receipts. Accordingly, the CIT(A) had rightly deleted the addition. The ground taken by the Revenue is dismissed. 14. In the result, the appeal of the Revenue is dismissed. 15. In the final result, IT(SS)A No.45/Ahd/2023 and ITA No.433/Ahd/2023 filed by the assessee for Assessment Years 2018-19 & 2019-20 are partly allowed and ITA No.483/Ahd/2023 filed by the Revenue for Assessment Year 2019-20 is dismissed. Order pronounced in the open Court on this 5th March, 2025. Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 5th March, 2025 PBN/* IT(SS)A No.45/Ahd/2023 & ITA No.433/Ahd/2023 & ITA No.483/Ahd/2023 (Assessment Years: 2018-19 & 2019-20) Ginger Properties Pvt. Ltd. vs. ACIT Page 14 of 14 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "