ACIT, Kota V. KAIZEN ENTERPRISES PVT. LTD, Kota

ITA 1042/JPR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6493 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-06-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 30-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Retraction
• Section: 143(3); 153A; 131; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1042/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-2014 THE ACIT, CENTRAL CIRCLE, KOTA. CUKE VS. M/S KAIZEN ENTERPRISES PVT. LTD., S-67-68, OPERA HOSPITAL ROAD, INDRA VIHAR, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCK 7751 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT CO NO. 02/JP/2017 (ARISING OUT OF ITA NO. 1042/JP2016) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 M/S KAIZEN ENTERPRISES PVT. LTD., S-67-68, OPERA HOSPITAL ROAD, INDRA VIHAR, KOTA. CUKE VS. THE ACIT, CENTRAL CIRCLE, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCK 7751 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 22/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/01/2019 VKNS'K@ ORDER PER: SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), JAIPUR DATED 30.09.2016 FOR THE ASSESSMENT YEAR 2013-14 AND ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 2 THE CROSS OBJECTION BY THE ASSESSEE WHEREIN THE RES PECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 1042/JP2016 (REVENUES GROUNDS OF APPEAL): 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN RESTRICTING THE ADDITION OF RS. 1,16,10,000/- MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE TO RS. 10,80,000/- AND, IN O BSERVING THAT THE ENTIRE ON MONEY RECEIPT BY THE ASSESSEE CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS RIGHT IN NOT CONSIDERING THE FACT THAT T HE ENTIRE ON MONEY WAS ADMITTED BY THE ASSESSEE AS ITS UNDISCLOS ED INCOME IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND SU CH STATEMENT WAS NOT RETRACTED TILL FILING OF RETURN OF INCOME. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN OBSERVING THAT THE ENTIRE ON MO NEY CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND THAT NO FRUITFUL ENQUIRY HAS BEEN CONDUCTED BY THE AO WHEN THE EVIDE NCE REGARDING RECEIPT OF ENTIRE ON MONEY WAS FOUND DURI NG THE COURSE OF SEARCH AND WAS ADMITTED BY THE ASSESSEE IN THE S TATEMENT U/S 132(4) OF THE ACT AND THUS THERE REMAINED NOTHING T O BE FURTHER ENQUIRED BY THE ASSESSING OFFICER. CO NO. 02/JP2017 (ASSESSEES GROUNDS OF APPEAL): 1.(A) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW IN COMPUTING THE PROFIT OF RS. 29,70,000/- I N THE ON MONEY OF RS. 1,35,00,000/- BY APPLYING GP RATE OF 22%, AS AGAINST THE PROFIT OF RS. 18,90,000/- COMPUTED BY THE ASSESSEE @ 14% AND ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 3 THEREBY SUSTAINING THE ADDITION TO THE EXTENT OF RS . 10,80,000/- (I.E. RS. 29,70,000 LESS RS. 18,90,000) OUT OF THE ADDITION OF RS. 1,16,10,000/- (I.E. RS. 1,35,00,000 ON MONEY LESS R S. 18,90,000 PROFIT IN THE ON MONEY SHOWN BY THE ASSESSEE) MADE BY THE LEARNED ASSESSING OFFICER. (B) THAT THE ASSESSEE HAD COMPUTED THE PROFIT IN TH E ON MONEY @ 14%, EVEN THOUGH THE ACTUAL RATE WAS ONLY 13.02% DURING THE YEAR UNDER CONSIDERATION. (C) THAT THE CHARTS SHOWING COMPARATIVE PROFITABILI TY WERE FURNISHED DURING THE COURSE OF THE ASSESSMENT PROCE EDINGS OF THE ASSESSEE FOR THE PAST SIX YEARS, WHICH WERE COMPLET ED UNDER SECTION 143(3) READ WITH SECTION 153A AND PROFITABI LITY FIGURES WERE DULY ACCEPTED BY THE LEARNED ASSESSING OFFICER . (D) THAT FOR THESE AND SOME OTHER REASONS, IT IS PR AYED THAT THE ADDITION TO THE EXTENT OF RS. 10,80,000/- SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) KINDLY BE DELE TED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH OP ERATIONS U/S 132 WERE CONDUCTED ON 19.12.2012 IN THE CASE OF NAINANI GROUP, KOTA TO WHICH THE ASSESSEE BELONGS. THE STATEMENT OF DIREC TOR OF THE ASSESSEE COMPANY WAS RECORDED U/S 132(4) ON 19.12.2012 WHERE IN HE MADE A SURRENDER OF UNDISCLOSED INCOME OF RS. 1.35 CRORES ON ACCOUNT OF ON MONEY RECEIVED FROM BOOKING OF FLATS IN PROJECT A ASHRIRWAD AANANDAM DURING THE PERIOD MAY TO NOVEMBER, 2012. THE RELEVA NT QUESTIONS NO. 12 AND 13 AND HIS RESPONSE IN RELATIO N THERETO IN THE SAID STATEMENT RECORDED U/S 132(4) READS AS UNDER:- IZ'U 12- RYK'KH DH DK;ZOKGH DS NKSJKU VKIDS DK;KZY; IFJLJ ESA ,D POCKET DIARY FEYH GS FTLS TCRH DH LWPH ESA ANNEXURE A S-1 DS EXHIBIT 16 IJ ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 4 FN[KK;K X;K GS D`I;K BLS NS[K DJ CRK,SA FD BLESA D; K&D;K IZFOFV;KWA GSA RFKK FDL LS LACAF/KR GS\ MKJ MIJKSDR ANNEXURE (POCKET DIARY) DKS ESUSA HKYH HKKWAFR NS[K FY;K GS BLESA DQY FYF[KR PAGE 12 GSA PAGE NO.1 IJ M/S. KAIZEN ENTERPRISES PVT. LTD DS PROJECT AASHIRWAD AANANDAM DS FLATS DH SALE ISVS MAY 2012 ESA IZKIR UDN :I;S CHL YK[K DK FOOJ.K GS PAGE NO.03 IJ MIJKSDR CO. DS GH FLATS DH SALE ISVS IZKIR UDNH :I;S 15 YK[K GS TKS JUNE 2012 ESA IZKIR GQ;S FKS PAGE NO.6 IJ M/S KAIZEN ENTERPRISES DS FLATS DH SALE LS AUG 2012 ESA IZKIR :I;S DQY LKSYG YK[K UDN IZKIR GQ;S GSA PAGE NO.8 IJ SEPT 2012 ESA IZKIR UDNH :I;S 35 YK[K TKS FLATS CSPUS ISVS IZKIR GQ;S GS FD FOXR GS PAGE NO.10 IJ HKH BLH IZDKJ FLATS CSPUS LS UDN ESA IZKIR :I;S 22 YK[K DH IZFOFV GS] PAGE NOL.12 IJ HKH EKG NOV 2012 ESA IZKIR :I;S 15 YK[K UDN ESA IZKIR DH IZFOFV GS TKS FLATS CSPUS DS ISVS IZKIR GQ;S GSAA BL IZDKJ DQY :I;S 13500000@& ,D DJKSM+ IS RHAL YK[K GEKJH COMPANY M/S KAIZEN ENTERPRISES PVT. LTD. DH SCHEME AASHRIRWAD AANANDAM DS FLATS DH FCH LS EBZ 2012 LS NOV 2012 DS CHP IZKIR UDNH DH IZFOFV;KWA GSA IZ'U 13-D`I;K MIJKSDR JKF'K DQY :I;S 13500000@& DKS VIUH FU;FER YS[KK IQLRDKSA LS EGHUKOKJ FEYKU DJOK;SAA MKJ ESUSA POCKET DIARY O FU;FER YS[KK IQLRDKSA DKS HKYH HKKWAFR NS[K FY;K GSA ANNEXURE AS-1 EXIBIT 16 ESA NTZ IZFOFV;KWA EQ>S VIUH CO. M/S KAIIZEN ENTERPRISES PVT. LTD DS COMPLEX AASHIRWAD AANDAM DS FLATS CSPUS LS IZKIR ON MONEY FTLS ESUSA VIUH FU;FER YS[KK IQLRDKSA ESA UGH FN[K KBZ GSA VR% MDR DIARY LS LACAF/KR UDN ESA IZKIR DQY JDE :I;S 13500000@& ,D DJKSM+ ISRHL YK[K DKS ESA VIUH COMPANY M/S KAIZEN ENTERPRISES PVT. LTD. DH PKYW FOR OKZ DH V?KKSFKR VK; EKURS GQ;S DJKJK SI.K DS FY;S LEFIZR DJRK GWWAA 3. DURING THE POST SEARCH PROCEEDINGS, THE STATEMEN T OF THE DIRECTOR OF THE ASSESSEE COMPANY WAS AGAIN RECORDED WHEREIN HE CONFIRMED THE SURRENDER OF UNDISCLOSED INCOME OF RS. 1.35 CRORES MADE EARLIER DURING ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 5 THE COURSE OF SEARCH AND THE RELEVANT PORTION OF HI S STATEMENT RECORDED U/S 131 DATED 22.02.2013 READS AS UNDER:- IZ'U 17 VKIDS DK;KZY; ESA FNUAKD 19-12-2012 DKS RYK 'KH DS NKSJKU ,D POCKET DIARY TCR DH XBZ FKHA FTLS ANNEXURE-AS DS EXHIBIT -16 BUNZKT FD;K X;K FKKA FTLESA DQY 1 LS 12 IST GSA VKIUS VIUS C;KU FNUAKD 20-12- 2012 TKS FD RYK'KH DS NKSJKU DK;KZY; ESLLZ DKBZTU B UVJIZKBTST IZK-FY- DS PROJECT AASHIRWAD ANANDAM DS FLATS DH SALE ISVS MAY ] 2012 ESA IZKIR UDN :I;S CHL YK[K DK FOOJ.K CRK;K GS PAGE NO.1-3 IJ MIJKSDR DEIUH DS FLATS DH SALE ISVS IZKIR :I;S 15 YK[K ,OA JUNE ] 2012 ESA IZKIR ,OA IST UA-6 IJ ESLLZ DKBZTU BUVJIZKBZTST IZK-FY- DS FLATS DH SALE LS VXLR] 2012 ESA IZKIR :I;S DQY LKSYG YK[K UDN IZKIR GKSUK CRK;K GS PAGE NO.8 IJ SEP 2012 ESA IZKIR UDNH :I;S 35 YK[K TKS FLATS CSPUS ISVS IZKIR GQ, GSA BLH IZDKJ PAGE NO.10 IJ FLATS CSPUS LS UDN IZKIR :I;S 22 YK[K DH PAGE NO.12 IJ HKH EKG UOECJ 2012 ESA IZKIR :I;S 15 YK[K UDN ESA IZKIR DH IZFOVH GS TKS FLATS CSPUS DS ISVS IZKIR DQY :I;S 13500000@& ,D DJKSM+ ISRHL YK[K VKIDH COMPANY M/S KAIZEN ENTERPRISES PVT. LTD DS COMPLEX AASHIRWAD ANANDAM DS FLATS CSPUS LS IZKIR ON MONEY PKYW FOK OKZ DH V?KKSFKR VK; EKURS GQ, DJKJKSI.K DS FY, LEFIZR FD;K FKK D;K VKI BLLS LGER GSAA MKJ TH GKWA] TKS ESUSA TKS VIUH DEIUH COMPANY M/S KAIZEN ENTERPRISES PVT. LTD. ESA DQY :I;S 13500000@& ,D DJKSM+ ISARHL YK[K DH V ?KKSFKR VK; EKURS GQ, DJKJKSI.K DS FY, LEFIZR FD;K FKKA ML IJ FQJ LS DK;E GWWAA 4. THE ASSESSEE THEREAFTER FILED ITS RETURN OF INCO ME ON 29.09.2013 DECLARING TOTAL INCOME OF RS. 2,74,08,460/- WHICH I NCLUDES THE AMOUNTS SURRENDERED DURING THE SEARCH TO THE EXTENT OF ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 6 RS. 18,90,000/- WHICH WAS COMPUTED BY THE ASSESSEE BY APPLYING GROSS PROFIT RATE OF 14% ON THE ON MONEY RECEIPTS OF RS . 1.35 CRORES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ISSUED A SHOW CAUSE TO EXPLAIN THE SAID DISCREPANCY BETWEE N THE AMOUNT SURRENDERED DURING THE COURSE OF SEARCH AND THE SUB SEQUENT DISCLOSURE MADE IN THE RETURN OF INCOME. IN RESPONSE, THE ASS ESSEE VIDE ITS SUBMISSION DATED 15.10.2014 STATED THAT THOUGH A SU M OF RS. 1.35 CRORES REPRESENT ON MONEY ON THE SALE OF FLATS, H OWEVER, IT IS ONLY THE PROFIT ELEMENT IN THE SAID ON MONEY AND NOT THE E NTIRE ON MONEY WHICH CAN BE BROUGHT TO TAX. IT WAS FURTHER SUBMIT TED THAT THE SURRENDER OF THE ENTIRE ON MONEY IS BLATANTLY WRO NG AND WAS MADE BY THE DIRECTOR OF THE COMPANY IN A CONFUSED STATE OF MIND. THE REPLY SO FILED BY THE ASSESSEE WAS CONSIDERED, HOWEVER NOT F OUND ACCEPTABLE TO THE ASSESSING OFFICER AND HIS RELEVANT FINDINGS ARE AS UNDER: 6.6.1 THE DIRECTOR OF THE ASSESSEE-COMPANY SHRI D. N. NAINANI IN HIS STATEMENT RECORDED U/S 132(4) DURING THE COURSE OF SEARCH PROCEEDINGS HAS ADMITTED UNDISCLOSED INCOME OF RS. 1.35 CRORES AND CONFIRMED IN THE POST SEARCH ENQUIRY IN THE STATEMENT TAKEN U/S 131 ON 22.02.2013. IN THE STATEMENT MADE ABOVE, THE ASSESSEE HAS ADMIT TED THAT THE AMOUNT RECORDED ON THE PAPERS OF THIS DIARY ARE ONL Y THE ON MONEY RECEIVED BY IT, NO ELEMENT OF PROFIT IS INVOLVED TH EREOF. FURTHER, ON THE DATE OF SEARCH THE ASSESSEE COMPANY HAS BOOKED ALL THE EXPENSES INCURRED IN ITS PROJECT. NO REASON HAS BEEN FURNISH ED BY THE ASSESSEE COMPANY FOR NON-BOOKING OF THE SAID ON MONEY RECE IVED IN THE BOOKS OF ACCOUNT, WHICH HE RECEIVED FROM MONTH OF MAY TO DECEMBER FOR THE ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 7 F.Y. 2012-13 RELEVANT TO A.Y. 2013-14. FURTHER, THE CASES LAWS RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE IN THIS CAS E AS THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE DIFFERENT. 5. FURTHER, THE ASSESSING OFFICER HELD THAT NO SET OFF OF ANY EXPENSES CAN BE CLAIMED AGAINST THE SURRENDER INCOM E AND EVEN IF THE SURRENDER HAS BEEN RETRACTED PARTLY BY THE DIRECTOR OF THE ASSESSEE- COMPANY ON BEHALF OF HIS COMPANY, IT WOULD STILL BE BINDING ON THE ASSESSEE AND IN SUPPORT RELIANCE WAS PLACED ON VARI OUS JUDICIAL DECISIONS. THE ASSESSING OFFICER ACCORDINGLY BROUGH T TO TAX AN AMOUNT OF RS. 1,16,10,000/- BEING THE DIFFERENCE BETWEEN T HE AMOUNT SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SE ARCH AMOUNTING TO RS. 1.35 CRORES AND THE AMOUNT DECLARED IN THE RETU RN OF INCOME AMOUNTING TO RS. 18,90,000/-. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT THE RE IS NO DISPUTE ABOUT THE GROSS RECEIPT OF ON MONEY BY THE ASSESSEE DUR ING THE YEAR. THE ONLY ISSUE IS WHETHER THE ON MONEY RECEIVED BY TH E ASSESSEE SHOULD BE TAXED AS A WHOLE OR THE PROFIT EARNED ON THE ON MONEY RECEIPTS SHOULD BE TAXED. THE LD. CIT(A) FURTHER HELD THAT F ROM THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE, IT IS EVIDENT T HAT EVIDENCE OF INCURRING OF EXPENSES WERE NOT AVAILABLE IN THE SEI ZED DOCUMENTS/MATERIAL BUT THE FACT WAS THAT ONLY A PAR T OF EXPENDITURE PERTAINING TO THE ON MONEY HAD ALREADY BEEN BOOKE D IN THE REGULAR BOOKS AND NOT ALL THE EXPENDITURES. THE LD. CIT(A) THEREAFTER REFERRED TO THE DECISIONS OF THE COORDINATE BENCH IN CASE OF ABHISHEK ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 8 CORPORATION VS. DCIT 63 TTJ 651 AND ITO VS. ANAND B UILDERS, AND HELD THAT WHOLE OF THE GROSS RECEIPT OF ON MONEY CANNO T BE TAXED IN THE CASE OF THE ASSESSEE AND ONLY A REASONABLE PROFIT C AN BE TAXED. IT WAS FURTHER HELD BY THE LD. CIT(A) THAT THE AO SIMPLY A DDED THE DIFFERENTIAL AMOUNT OF RS. 1,16,10,000/- ON THE BASIS OF SWORN S TATEMENT RECORDED DURING THE SEARCH OPERATION. NO FRUITFUL ENQUIRY HA S BEEN CONDUCTED BY THE AO TO SUPPORT HIS CONTENTION. THE LD. CIT(A) FU RTHER HELD THAT THE ASSESSEE HAD DISCLOSED 14% PROFIT ON THESE GROSS RE CEIPTS WHICH CANNOT BE SAID TO BE CORRECT AS NOT BASED ON ANY REASONING . THE LD. CIT(A) HELD THAT IT WILL BE REASONABLE IF GP RATE OF 22% B E APPLIED ON THE UNDISCLOSED ON MONEY AND THEREFORE, THE ADDITION TO THE EXTENT OF RS. 10,80,000/- WAS SUSTAINED AND THE BALANCE ADDIT ION OF RS. 1,05,30,000/- WAS DELETED. 7. AGAINST THE SAID FINDING OF THE LD. CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. THE ASSESSEE IN ITS CROSS OBJECT ION HAS SUPPORTED THE ORDER OF THE LD CIT(A) BUT AT THE SAME TIME, CHALLE NGED THE RATE OF GROSS PROFIT APPLIED BY THE LD. CIT(A) @ 22% AS AGA INST 13.02% DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME. 8. THE LD CIT DR VEHEMENTLY ARGUED THE MATTER AND S UBMITTED THAT IN VIEW OF SWORN STATEMENT OF THE DIRECTOR OF THE A SSESSEES COMPANY RECORDED U/S 132(4) AND IN VIEW OF THE ADMISSION MA DE IN THE SAID STATEMENT, THERE IS NO DISPUTE THAT THE ASSESSEE HA S ADMITTED THE RECEIPT OF THE ON-MONEY FROM SALE OF THE FLATS. IT WAS FURTHER SUBMITTED THAT THE SAID ADMISSION HAS NOT BEEN RETRACTED TILL DATE BY THE ASSESSEE COMPANY BUT AT THE SAME TIME, THE ASSESSEE COMPANY HAS FAILED TO ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 9 HONOUR THE SURRENDER SO MADE WHILE FILING THE RETUR N OF INCOME. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER WHERE HE HAS BROUGHT THE WHOLE OF THE ON-MONEY TO TAX IN THE HANDS OF THE ASSESSEE COMPANY. IT WAS F URTHER SUBMITTED THAT DECISIONS RELIED UPON BY THE LD CIT(A) ARE DIS TINGUISHABLE AND DOESNT SUPPORT THE CASE OF THE ASSESSEE COMPANY. HE THUS SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED TH AT THE ORDER OF THE LD CIT(A) SHOULD BE SET-ASIDE. 9. PER CONTRA, THE LD. AR HAS SUBMITTED THAT THE SO LE BASIS FOR ASSESSING THE ENTIRE ON-MONEY RECEIPT OF RS.1.35 CR ORES IS THE STATEMENT OF THE DIRECTOR OF ASSESSEE COMPANY U/S 1 32(4) AND SUBSEQUENT REAFFIRMATION OF SUCH INCOME IN STATEMEN T U/S 131 RECORDED IN POST SEARCH PROCEEDINGS. HOWEVER, IT IS A SETTLE D LAW THAT ADMISSION ALONE CANNOT BE A BASIS OF ASSESSMENT. CBDT IN INST RUCTION NO. 286/2003-IT (INV.) DATED 10.03.2003 HAS ACCEPTED TH AT INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE ASSESSEES HAV E CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED IN COME DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS. S UCH CONFESSION IS NOT BASED UPON RELIABLE EVIDENCES AND NOT CONSIDERE D BY THE CONCERNED ASSESSEE WHILE FILING RETURNS OF INCOME. IN THESE C IRCUMSTANCES, CONFESSION DURING THE COURSE OF SEARCH & SEIZURE AN D SURVEY OPERATION DOES NOT SERVE ANY USEFUL PURPOSE. IT IS THEREFORE ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEAD TO INFORMATION ON WHAT HAS NOT BEEN DISC LOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENT. S IMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH & S EIZURE AND SURVEY ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 10 OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONF ESSION AS TO THE UNDISCLOSED INCOME. THIS VIEW IS AGAIN REITERATED B Y CBDT IN LETTER [FN 286/98/2013-IT (INV. II)] DT. 18.12.2014. THE FACT OF GETTING SURRENDER BY EXTRACTING PRESSURE ON ASSESSEE IS ALSO ACCEPTED BY THE COURTS/TRIBUNAL IN VARIOUS CASES. IN SUPPORT, RELI ANCE WAS PLACED ON THE VARIOUS DECISIONS IN CASE OF CIT VS. HIRANAND 272 I TR 626 (RAJ), RAJESH JAIN VS. DCIT (2006) 100 TTJ 929 (DEL), GRANDHI NAR ENDER VS. ACIT (2010) 41 DTR 227 (VISAKHA), SURENDRA PAL VERMA VS ACIT (2004) 89 ITD 129 (CHD) AND HARSHAD L. THANKKER VS. ACIT (200 5) 3 SOT 277 (MUM). 10. THE LD. AR FURTHER SUBMITTED THAT FROM THE BOAR DS INSTRUCTION AND THE CASE LAWS REFERRED ABOVE, IT CAN BE NOTED THAT THERE CANNOT BE A DIRECT EVIDENCE OF EXERCISING PRESSURE/COERCION FOR SEEKING SURRENDER IN THE STATEMENT U/S 132(4) BUT THE SAME IS TO BE GATH ERED FROM THE EVIDENCES, MOSTLY CIRCUMSTANTIAL. FROM A LOOK AT TH E SEIZED DIARY, IT CAN BE NOTED THAT THE SAME APPEARS TO HAVE BEEN MADE IN ONE SITTING. IT DOES NOT CONTAIN THE NAME OR THE FLAT NO. AGAINST W HICH THE AMOUNT IS RECEIVED. FURTHER, NO CORRESPONDING ASSET IN RELATI ON TO SUCH AMOUNT IS FOUND. WHATEVER ASSET/ EXPENDITURE IS FOUND IN SEAR CH, THE SAME IS SEPARATELY OFFERED FOR TAX BY SH. D.N. NAINANI, DIR ECTOR OF THE COMPANY AS IS EVIDENT FROM COPY OF HIS RETURN FOR AY 2013-1 4 WHERE HE HAS OFFERED AN AMOUNT OF RS.2,08,63,242/- IN THE INCOME . THEREFORE, SOLELY ON THE BASIS OF DIARY AND THE STATEMENT OF ASSESSEE , WITHOUT BRINGING ANY MATERIAL ON RECORD THAT ASSESSEE HAS CAPITALIZE D SUCH AMOUNT IN THE BOOKS OR THERE IS A CORRESPONDING ASSET/ EXPENDITUR E IN RELATION TO THE SAME, NO ADDITION CAN BE MADE BY TREATING THE RECEI PT AS INCOME. ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 11 11. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, ACCEPTED THE RECEIPT OF ON-MONEY BUT SINCE RECEIPT IS NOT EQUAL TO INCOME, HE APPLIED REASONAB LE G.P. RATE OF 14% CONSIDERING THE PAST HISTORY OF THE CASE AND OFFERE D RS.18,90,000/- IN THE RETURN OF INCOME. IN THE FOLLOWING CASES, IT IS HELD THAT ON-MONEY/ SALES ITSELF CANNOT BE ADDED TO INCOME BUT ONLY A R EASONABLE G.P. RATE ON SUCH ON-MONEY/ SALES CAN BE ASSESSED AS INCOME:- JAY BUILDERS VS. ACIT 215 TAXMAN 50 (GUJ.) ITO VS. ANAND BUILDERS 265 ITR 37 (ST.) (SC) ABHISHEK CORPORATION VS. DCIT 63 TTJ 651 (AHD.) CIT VS. PRESIDENT INDUSTRIES 258 ITR 654 (GUJ.) MOHAN SADHANIVS. CIT 304 ITR 52 (MP) CIT VS. BALCHAND AJIT KUMAR 263 ITR 610 (MP) AGRAWAL MOTORS VS ACIT 68 ITD 407 (JAB) ITO V. GURUBACHAN SINGH J. JUNEJA 216 ITR 99 (AHD) THE PRINCIPLES LAID DOWN IN THESE CASES ARE EQUALLY APPLICABLE IN CASE OF ASSESSEE AND THEREFORE, THE LD. CIT(A) HAS RIGHTLY HELD THAT THE ON- MONEY RECEIPT AS SUCH CANNOT BE TAXED AS INCOME BUT ONLY A REASONABLE G.P. RATE ON SUCH RECEIPT CAN BE ASSED TO TAX. HENC E, THE ORDER OF LD. CIT(A) TO THIS EXTENT BE UPHELD BY DISMISSING THE G ROUND OF DEPARTMENT. 12. REGARDING ASSESSEES CROSS OBJECTION, THE LD. A R FURTHER SUBMITTED THAT THE LD. CIT(A) HAS APPLIED G.P. RATE OF 22% ON THE ON- MONEY RECEIPT. THERE IS NO BASIS FOR THE SAME. AS A GAINST THIS, ASSESSEE ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 12 HAS APPLIED G.P. RATE OF 14% CONSIDERING THAT G.P. RATE DECLARED DURING THE YEAR IS 13.02% AND THIS IS THE FIRST YEAR OF PR OJECT. THEREFORE, THE ADDITION OF RS.10,80,000/- SUSTAINED BY LD. CIT(A) BE DELETED. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE, THE SEARCH WAS C ONDUCTED ON 19.12.2012 WHEREIN THE STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED U/S 132(4) WHEREIN HE HAS SURRENDERED THE AMOUNT OF RS 1.35 CRORES ON ACCOUNT OF ON- MONEY RECEIVED FROM BOOKING OF FLATS IN PROJECT A ASHRIRWAD AANANDAM DURING THE PERIOD MAY TO NOVEMBER, 2012. SUBSEQUENT LY, STATEMENT U/S 131 WAS RECORDED ON 22.02.2013 WHERE STATEMENT AND SURRENDER SO MADE EARLIER DURING THE SEARCH WAS CONFIRMED. SUBSEQUENTLY, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 30.09.2013. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSEE COMPANY HAS SUBMITTED THAT THOUGH A SUM OF RS. 1.35 CRORES REPRESENT ON MONEY WHICH WAS RECEIVED BY THE ASSE SSEE COMPANY FOR THE SALE OF FLATS, HOWEVER, IT IS ONLY THE PROFIT E LEMENT IN THE SAID ON MONEY AND NOT THE ENTIRE ON MONEY WHICH CAN BE B ROUGHT TO TAX. THUS, THERE IS A CLEAR ADMISSION BY THE ASSESSEE EV EN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BESIDES THE STATEMENT RE CORDED U/S 132(4) DURING THE SEARCH PROCEEDINGS AND U/S 131 DURING TH E POST-SEARCH PROCEEDINGS. EVEN FROM THE PERUSAL OF THE STATEME NT, THERE IS NOTHING WHICH DEMONSTRATES THAT THERE IS ANY FORCED SURRENDER BY THE ASSESSEE AND NOTHING HAS BEEN BROUGHT ON REC ORD IN TERMS OF ANY CIRCUMSTANTIAL EVIDENCE OF FORCED SURR ENDER. FURTHER, ON PERUSAL OF THE STATEMENT, THERE IS NOTH ING WHICH ANY ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 13 WAYS SUGGEST THAT WHAT THE ASSESSEE HAS ADMITTED IS ONLY THE PROFIT ON RECEIPT OF ON-MONEY AND NOT THE RECEIPT OF ON-MO NEY. SIMILAR FINDING HAS BEEN RECORDED BY THE ASSESSING OFFICER AND WHICH HAS NOT BEEN DISTURBED BY THE LD CIT(A) AND WE SEE NO REASO N TO DISTURB THE SAID FINDINGS. THEREFORE, IN ABSENCE OF ANY RETRAC TION AND WHERE THE ASSESSEE CONTINUES TO MAINTAIN HIS POSITION THAT IT STILL ABIDES BY THE STATEMENT, THE CONTENTION OF THE LD AR HAS NO LEGAL LEG TO STAND WHERE HE CONTENDS THAT THE REVENUE AUTHORITIES HAVE EXERTED UNDUE PRESSURE AND OBTAINED SURRENDER OF INCOME. IN ABSE NCE OF ANY RETRACTION, THE ASSESSEE IS THEREFORE CLEARLY AT FA ULT IN NOT DECLARING THE UNDISCLOSED INCOME FULLY IN ITS RETURN OF INCOME. 14. HAVING SAID THAT, LETS NOW EXAMINE ANOTHER CO NTENTION OF THE LD AR. THE LD AR HAS CONTENDED THAT NOTWITHSTANDING T HE FACT THAT THE ASSESSEE COMPANY HAS ACCEPTED THE RECEIPT OF ON-MON EY, GIVEN THAT RECEIPT IS NOT EQUAL TO INCOME AND IT IS INCOME WHI CH CAN BE BROUGHT TO TAX, INCOME SO DETERMINED BY THE ASSESSEE COMPANY B Y APPLYING GROSS PROFIT RATE OF 14% SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AND ALSO SHOULD NOT BE DISTURBED BY THE LD CIT(A). THE SAID PROPOSITION MAY BE APPLIED IN A SITUATION WHERE THE WHOLE OF TH E TRANSACTION RELATING TO SALE OF FLATS ARE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS IN TERMS OF RECEIPT OF THE SALE CONSIDERATION AND T HE CORRESPONDING EXPENDITURE FOR CONSTRUCTION OF THE FLATS. IN THAT CASE, IT MAY BE SAID THAT IT IS ONLY THE SALE RECEIPTS NET OF EXPENDITUR E WHICH CAN BE SUBJECT TO TAX. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS GIVEN A FINDING THAT ON THE DATE OF SEARCH, THE ASSESSEE COMPANY HA S BOOKED ALL THE EXPENSES INCURRED IN ITS PROJECT AND NO REASON HAS BEEN FURNISHED BY ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 14 THE ASSESSEE COMPANY FOR NON-BOOKING OF THE SAID O N MONEY RECEIVED IN THE BOOKS OF ACCOUNT, WHICH HE RECEIVED FROM MON TH OF MAY TO DECEMBER FOR THE F.Y. 2012-13 RELEVANT TO A.Y. 2013 -14. THE LD CIT(A) HAS HOWEVER RETURNED A CONTRARY FINDING THAT FROM THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE, IT IS EVIDENT THAT EVIDENCE OF INCURRING OF EXPENSES WERE NOT AVAILABLE IN THE SEIZED DOCUME NTS/MATERIAL BUT THE FACT WAS THAT ONLY A PART OF EXPENDITURE PERTAI NING TO THE ON MONEY HAD ALREADY BEEN BOOKED IN THE REGULAR BOOKS AND NOT ALL THE EXPENDITURES. THEREFORE, IT IS ATLEAST NOT A CASE OF COMPLETE NON- REPORTING OF TRANSACTIONS RELATING TO SALE OF FLATS IN THE BOOKS OF ACCOUNTS AND CERTAIN TRANSACTIONS RELATING TO THE S AME HAVE BEEN REPORTED IN THE BOOKS OF ACCOUNTS. HOWEVER, IN ORD ER TO DETERMINE THE ACTUAL POSITION RELATING TO RECEIPT OF SALE CONSIDE RATION AND BOOKING OF EXPENSES IN THE BOOKS OF ACCOUNT RELATING TO THIS P ARTICULAR PROJECT NAMELY AASHRIRWAD AANANDAM, NOTHING HAS BEEN BROU GHT TO OUR ATTENTION OR SUBMITTED AS PART OF THE PAPER BOOK BY EITHER OF THE PARTIES. THEREFORE, IN ORDER TO DETERMINE THE ACTU AL POSITION OF TRANSACTIONS SO RECORDED IN THE BOOKS OF ACCOUNTS O F THE ASSESSEES COMPANY IN RESPECT OF PROJECT AASHRIRWAD AANANDAM , THE MATTER IS SET-ASIDE TO THE FILE OF THE ASSESSING OFFICER. TH E ASSESSING OFFICER WILL DETERMINE AND EXAMINE ALL THE TRANSACTIONS RELATING TO RECEIPTS OF SALE CONSIDERATION (INCLUDING THE ON-MONEY) AND INCURREN CE OF THE EXPENDITURE AND TO WHAT EXTENT, THE SAME HAS BEEN R EPORTED OR NOT, WILL THEN DETERMINE THE TAXABILITY THEREOF IN THE H ANDS OF THE ASSESSEE FOR THE IMPUNGED ASSESSMENT YEAR. ITA NO. 1042JP/2016 & CO NO. 02/JP/2017 ACIT VS. M/S KAIZEN ENTERPRISES PVT. LTD. 15 IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CR OSS-OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 18/01/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/01/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CENTRAL CIRCLE, KOTA. 2. IZR;FKHZ@ THE RESPONDENT- M/S KAIZEN ENTERPRISES PVT. LTD., K OTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. ITA NO. 1042/JP/2016 & CO NO. 02/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR