Dy. Commissioner of Income Tax, Central Circle-3, Surat V. DMC Construction Pvt. Ltd., Mumbai

ITA 112/SRT/2021

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0865 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 01-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Income from undisclosed sources
• Section: 148; 132; 133A; 143(2)

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.112/SRT/2021 (AY 2012-13) (Hearing in Physical Court) Deputy Commissioner of Income-tax, Central Circle-3, Surat, Room No. 507, 5 th Floor, Aayakar Bhawan, Majura Gate, Surat-395001 Vs DMC Construction Pvt. Ltd 9 th Trivedi Niwas, Rashtriya Shala Road, Ville Parle West, Mumbai-400056 PAN No. AADCD 2089 C अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri P. M. Jagasheth, C.A राजˢ की ओर से /Revenue by Shri Vinod Kumar Sr-DR सुनवाई की तारीख/Date of hearing 20.09.2023 उद्घोषणा की तारीख/Date of pronouncement 10.10.2023 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of Ld. Commissioner of Income tax (Appeals)-4, Surat [for short to as “Ld. CIT(A)”] dated 13.04.2021 for the assessment year 2012-13, which in turn arises out of assessment order passed by Dy. Commissioner of Income-tax, Central Circle-3 Surat / Assessing Officer under section 143(3) r.w.s. 147 of Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for the sake of brevity) on 28.03.2016. The Revenue has raised following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.2,04,00,000/- made on account of unaccounted on money receipt from the real estate project even though the addition was made on the basis of incriminating documents found and impounded during the course of survey proceedings under Sec. 133A of the Act. ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 2 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition of Rs.59,90,713/- made on account of unaccounted on money receipt from the real estate project to Rs.5,34,000/- even though the addition was made on the basis of incriminating documents found and impounded during the course of survey proceedings under Sec. 133A of the Act. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the extrapolation of income was made by the Assessing Office in respect of the units belonging to the same project and there was no dispute regarding the factum of receipt of on money on sale of the units of the said project. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee has received on money in respect of sale of certain units of a project and the remaining units of the same projects were sold at a lower rate especially when there was no difference in the prevailing market conditions for such sale of units. 5. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat maybe set aside and that of the AO may be restored to the above extent. 6. The appellant craves leave to add, alter amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal” 2. Brief facts of the case are that assessee is a builder & developer. The assessee was developing two residential project, one in Surat and other in Daman. A search action under section 132 of the Act was carried out at the office of Sumangal Corporation, where Chartered Accountant (CA) of assessee Pranay Mehta was having adjacent office and who was also financial adviser of the group concern, hence, he was also covered regarding search proceedings. The said Pranay Mehta was also CA of ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 3 assessee. During search action, some information in the form of excel sheet was collected by Investigation Team showing payment regarding assessees project construction indicating payment of booking in cash as well as some payment in cash. On the basis of such information, the case of assessee was reopened under secretin 147 of the Act. Notice under section 148 issued on 27.03.2015 served upon assessee. In response to such notice, the assessee filed his reply on 09.09.2015. In the reply the assessee stated that original return of income filed on 26.09.2011 may be treated as returned of income in response to notice under section 148 of the Act. The assessee requested for supply of reasons recorded. Reason for re-opening was supplied to assessee. The assessee filed his objection against such re-opening on 14.09.2015. The objection of assessee was rejected by speaking order dated 17.11.2015. The Assessing Officer after rejection of objection proceeded for re- assessment. Notice under section 143(2) was served on 11.09.2015. 3. During re-assessment proceedings, the Assessing Officer noted that in the search proceedings at Sumangal Co. at 4 th Floor, Union Square, Above Jade Blue, Ghod Dod Road, Surat, evidence regarding cash receipt i.e., on-money on sale of flats were found from the backup of computer of CA. The modus operandi of the assessee was that actual sale price of the flats were not recorded in the Sale Deed and excess of the sale prices over and above the agreement value used to be collected in cash. And such on-money was not recorded in regular books of accounts of assessee. The Assessing Officer recorded the details of excel ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 4 sheet recovered from the computer back-up of Pranay Mehta, CA, in para- 3 of assessment order. On the basis of such noting, the Assessing Officer recorded that details of sales of flats were called and verified, which is not reflected in the regular books of accounts and took his view that correct sales consideration is not shown in the books of accounts. The assessing officer rejected the books of account by taking view that books of account are not corrected does not show the correct position of profit of the assessees business. The assessing officer has not recorded, if any show cause notice before rejection of books of accounts was issued to the assessee or not. 4. After rejection of books of account, the Assessing Officer proceeded to estimate the profit of the assessee in respect of both the project developed by the assessee, i.e. IP Mission-Zian in Surat and Abhishek and Arihant Tower in Daman. The assessee was asked to furnish document / account in support of his claim. The Assessing Officer recorded that assessee furnished a submission which was not found satisfactory. Thereafter the Assessing Officer again issued another show cause notice dated 22.03.2016 and further asked the assessee as to why on-money as per extract /digital data found during search should not be added to the total income of assessee. The Assessing Officer recorded that assessee filed his reply dated 23.03.2016. The summary of reply of assessee is recorded on page-6 of assessment order. 5. In reply of assessee stated that proposed addition of on-money was based on extrapolation on the basis of data found in the office of Pranay ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 5 Mehta, CA is not justified. The assessee again objected that re-opening on the basis of such impounded was bad-in-law. The assessee started project “Zion” in 2010 and sold out units in different years. The cash portion shown against various buyers was accounted for in the books of account. The addition of Rs.15.00 lakh as on-money of each flat in Surat Project on the basis of flat No.404, the assessee explained that said buyer paid entire consideration in cash. In respect of Daman project, the assessee stated that entire cash portion was accounted in books of account of assessee. So far as amount of Rs.23.50 lakh as ‘on money’ mentioned against the name of “GURU”, the assessee explained it can be seen that no flat number is written against “Guru”, who was broker for the flats in “Abhishek” project in Daman, which was for lower middle classes locality. However, flats in Daman in even the better of flats with ultra-modern facility cannot fetch exorbitant on-money component of Rs.23.50 lakhs. The Assessing Officer considering the reply of assessee and verification of digital data recorded that assessee undertook project IP Mission-Zion, which is a residential project situated at Mission House Opp. CNI Church, Mugalisara, Surat and evidence of on-money was found pertaining to 10 flats. The amount involved in those transactions varies from Rs. 7,500/- to Rs.15.00 lakh respectively. The Assessing Officer prepared a summary on page-8 in his assessment order. On the basis of such summary and the details of document of flat No.404 purchased by Kavita N Parmar, the Assessing Officer recorded that payment of Rs.14.90 lakh was paid through cheque and Rs.10,000/- by ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 6 way of cash. Thus, the contention of assessee that buyer had paid full cash for purchasing such flat found wrong and contents in the appraisal report was true. The assessee claimed that two flats bearing No.404 & 405 were purchased by Kavita Contractor @ Kavita N Parmar and that Rs.15.00 lakh for one flat which is evident in the copy of document in the form of un-registered satakat dated 15.04.2015. There is no other document to prove that Kavita N Parmar had purchased flat No.405 in “Zion” project. Thus, satakhat for flat No.405 is nothing but after- thought story cover-up by assessee in the evidence of cash component. The Assessing Officer on the basis of his working noted that in each flat the assessee had received on-money of Rs.15.00 lakh i.e., (Rs.15,00,000 x 20 flats = Rs.3,00,00,000/-). The Assessing Officer on basis of his calculation ascertained that approximately 32% cash payment were made in financial year 2010-11 and 68% in financial year 2011-12 respectively. The Assessing Officer worked out 68% of Rs.3.00 crores at the figure of Rs.2.04 crores and treated the said amount as unaccounted income of assessee and added back to the total income of assessee. 6. For Daman project, the Assessing Officer noted that assessee undertook two towers in the name of Abhishek Tower & Arihant Tower, consists of 78 flats and 28 flats respectively. The assessee took his plea that Arihant Tower undertaken initially (Tower-B) was cancelled and money received from Tower-B was returned back and was adjusted in Tower-A project. To verify such assertion of assessee, the Assessing Officer carried out enquiry from his office by deputing Inspector who furnished his report ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 7 on 14.03.2016 and confirmed that only one project in the name of “Abhishek Tower” (tower-A) was constructed having 54 flats. In the impounded materials there was evidence related to on-money with regard to 17 flats in Tower-A and those flats of Tower-B. The Assessing Officer recorded the details of such impounded material on page-11 of assessment order. On the basis of figure in the incriminating material, the Assessing Officer was of the view that on-money ranging from Rs. 25,000/- to Rs.8.21 lakhs per flats were received. The Assessing Officer was of the view that difference of cash component as per impounded material and registered documents in respect of 23 flats comes out to Rs.25,51,600/- (17+6). The Assessing Officer further recorded that there was no evidence produced by assessee to corroborate that on-money for tower-B was refunded to the customers. Thus, the on-money received from customers of Tower-B was adjusted in Tower-A. The Assessing Officer worked out the on-money on the basis of impounded material on proportionate basis of Rs. 59,90,713/- i.e., (2551600/23)*54). Thus. the Assessing Officer also made addition of Rs.59,90,713/- on account of unaccounted income in respect of Daman Project. 7. Aggrieved by the addition of alleged on-money in respect of both projects, the assessee filed appeal before CIT(A). Before PCIT(A) the assessee filed detailed and exhausted written submission. The assessee also furnished a chart which was prepared by Assessing Officer on the basis of impounded material in the search action on Pranay Mehta, CA. The assessee submitted that Assessing Officer made addition in the hand of ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 8 assessee mainly on the basis of impounded material found from the office of Pranay Mehta CA, during search proceedings on third person different diamonds group i.e., Sumangal Corporation of Surat. The Department found one excel sheet from the computer of CA Pranay Mehta showing some entries of cash and cheques payments received on account of bookings of project undertaking by assessee. The Assessing Officer on the basis of same excel sheet assumed that cash amount noted in excel sheet was on-money and further extended his imagination by estimating on-money at the highest cash received on the bookings of one flat in respect of whole project. The case of assessee was re-opened only on the basis of digital data in excel sheet impounded from the office of CA Pranay Mehta. Such excel sheet just showing money receipt from various parties related to advance bookings or for purchase of flats. Nothing was written on the excel sheet that cash receipt as on-money or anything against the figure on piece of that excel sheet. The assessee started its construction project in assessment year 2009-10 and at that time there was no restriction on if the payment should be made either on cash or through banking channel for purchasing immovable property. Hence various parties booked flats by giving advance payment in cash or some of them registered the documents in cash only. Some of them given partial cash or cheque payment also. The Assessing Officer made the addition on mere assumption that whatever cash noted down in the excel sheet was on-money and different amount in cash as per excel sheet and cash in books are considered as on-money or ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 9 unaccounted receipt. The assessee undertook two projects during that year one is – ‘I.P. Mission Zion Residency’ and other is at Daman named ‘Abhishek Tower’. The excel sheet containing payment received for booking of those two projects and recorded in computer of CA Pranay Mehta. The Assessing Officer has not enquired personally about the correctness of such information available with him. From the details of Zion Residency found from the computer of CA Pranay Mehta, there was number of details regarding advance booking of flats either cash or cheque along with details. Details of receipt of total 16 flats, out of 20 flats were found. The Assessing Officer considered the highest cash payment of Rs.15.00 lakh against sale of one flat and estimated the same on-money in respect of each and every flat in the said tower. There were only 20 flats in “Zion Residency” and impounded materials contain details of 16 flats out of 14 flats were already sold out before search action. If the assessee had received any on-money on the sale of those flats, the same should be mentioned in the impounded material that those flats were already sold out. While appreciating the evidentiary value of document, it has to be considered entirely and not in part. Hence, extrapolation on the basis of highest cash receipt of one flat cannot be applied to other flats, whose details of receipt was also mentioned in the impounded material during search action. The receipt of 15 flats should be taken as mentioned in the excel sheet @ Rs.15.00 lakh each of the flats is absolutely baseless. The assessee also explained that all the flats having different super build-up area i.e. flat No. 01 & ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 10 02 is having 37.01 square meter, flat No. No. 03 is having super build- up area of 49.62 square meter, flat 04 is No. having 58.75 square meter and flat No. 05 is having 89.9 square meter. Thus, each and every five category flats on different floors were having different area and therefore, different price assumed the same rate of on-money of all flats taking into consideration is totally baseless. Assuming uniform rate of sale for each flat is totally impractical as assessee furnished the details of area of different flats, date of sale, consideration. 8. For the booking in the project at Daman, the excel sheet impounded from the office of Pranay Mehta, CA had reference of two constructed buildings and assessee started bookings of such projects in assessment year 2010-11 but after considering response in two years, the assessee dropped the idea to construct two towers and instead of completing one tower. Whatever advance received on bookings in respect of other tower was adjusted in respect of Tower-A and such fact was verified by Assessing Officer and found to be correct. The assessee reiterated that in two years, assessee was able to make booking of 23 flats. Assuming estimation of on-money in respect of all 54 flats is not justified. To substantiate their submission that no extrapolation is permissible for estimating on-money in respect of all the flats on the basis of impounded material. The assessee relied upon the decision of Ahmedabad Tribunal in Savaliya Bildcon in ITA No.401/AHD/2014 & ITA No.3188/AHD/2015; Amar Corporation in ITA Nos.2036 to 2041/AHD/2007; Neptune Reality Pvt. Ltd. in ITA No.2918/ AHD/2011; ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 11 Surya Enclave Developers in ITA No.707/AHD/2011; and Yadav Developers Pvt. Ltd. in ITA No.3674-3676/AHD/2008. 9. In alternative submission, the assessee submitted that it is settled law that whenever unaccounted sales are found in the form of on-money, only addition of profit component of such unaccounted sale and not the whole sale, to be made. To support such view, the assessee relied upon the decision of Hon’ble jurisdictional High Court in the case of CIT vs. President Industries [2002] 124 Taxman 654 (Guj); CIT vs. Gurbachhan Singh J Juneja 215 ITR 509 (Guj); Shhlok Enterprise in ITA No.2018/AHD/2016; Abhishek Corporation [1999] 63 TTJ 651 (Ahd) and Kishore Mohanlal Telwala [1999] 107 Taxman 86 (Ahd Trib). 10. The assessee again stated that the Assessing Officer made addition without considering the important fact, which should have been considered that there was no statement of any one admitting or explaining entries found in the excel sheet found from the office of Pranay Mehta, CA. Whatever assumed by the Department for estimating extrapolation on-money was baseless and without any evidence. The Assessing Officer has not cross-verified the figure from actual buyer despite of the fact that all details like name, address etc., were available. The Assessing Officer just relied upon the excel sheet found from third party but no evidence was produced to prove that assessee received any on-money. In the Doman project, assessee was not able to sale 20% of flats in the build-up in assessment year 2013-14. In any case total cash received found in the impounded excel sheet and the books of account ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 12 of assessee was Rs.17.56 lakhs for “Zion Residency” and Rs.23,23,600/- for Abhishek Tower. Thus, in total Rs.40,79,600/- for both projects. Hence, what addition at maximum was to be added @ 8% of such different and not be entire. On the basis of such, alternative plea, the assessee ultimately prayed for deleting entire addition. 11. The Ld. CIT(A) after considering the submission of assessee noted that Assessing Officer made addition of Rs.2.04 Crores on account of on- money that assessee received in cash. The details were reproduced by Assessing Officer as found recorded in the seized materials as well as reflected in the regular books of account of assessee. The Ld. CIT(A) on the basis of details recorded by Assessing Officer noted that on the impounded excel sheet, Assessing Officer himself noted that Rs.46.16 lakhs are mentioned as received cash in seized material, whereas Rs.44.71 lakhs was reflected in the regular books of account of assessee on account of cash component. Thus, there is difference of Rs.1.45 lakh and cheque amount as reflected in the seized material of Rs.43.00 lakhs, whereas in the regular books of account it is reflected at Rs.1,74,54,000/-, which clearly shows that regular books of account reflecting more amount received by way of cheque in comparison to seized material. Thus, there is only difference of Rs.1.45 lakhs on account of cash received, as is reflected in the regular books of account. The ld. CIT(A) on considering the various decisions relied by Ld. Authorized Representative (Ld.AR) for the assessee that Ahmedabad Tribunal have held that extrapolation of figures on the basis of ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 13 impounded / seized materials were not allowable, when size of all flats on each floor was different. Thus, applying of same rate of on-money on all these flats were illogical and factually incorrect. The Ld. CIT(A) by referring the decision of Tribunal in Savaliya Bildcon (supra), wherein it was held that presumption of on-money in respect of each residential flat is a mere ipse dixit which is not objectively justifiable. In case of Neptune Reality Pvt. Ltd. (supra) the Tribunal held that extrapolation cannot be applied to the receipt of other bungalows for which, no evidence was found. The Ld. CIT(A) on referring that difference of cash is only Rs.1.45 lakh vis-à-vis the seized material and the books of account. Thus, it is reasonable and judicious to consider on-money only of Rs.1.45 lakhs, which is based on impounded material. The PCIT(A) taxed @ 20% of such on-money which comes to Rs. 29,000/- (20% of Rs.1.45 lakh) and accordingly confirmed the addition to that extent. The ld CIT(A) deleted the substantial part of addition made by Assessing Officer. 12. With regard to addition in respect of Daman Project, the Ld. CIT(A) recorded that in the impounded material of cash (on-money) was mentioned in respect of 17 flats of Tower-A and 6 flats of Tower-B respectively. The Assessing Officer on the basis of such figure extrapolated the figure and arrived at figure of Rs.59,90,713/-. The Ld. CIT(A) on the basis of case law cited with regard to Surat project held that cheque amount shown in the seized material was Rs.11,19,001/-, whereas in the books of account, it is Rs.67,01,700/- and cheque ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 14 amount shown by the assessee was higher in the books of account of assessee comparatively the seized material. The assessee has shown cash receipt of Rs.49.94 lakhs in the seized material, whereas as per books of account, it was Rs.34.64 lakhs having difference of Rs.15.30 lakhs. Thus, such fact proved that assessee has not shown Rs.15.30 lakhs (49,94,000- 34,64,000 = 15,30,000). The CIT(A) accordingly estimated profit Rs. 3,06,000/- that is @ 20% of Rs.15.30 lakh as income of assessee, which was worked out at Rs.3,06,000/- and confirmed to that extent. However, the ld CIT(A) concur with the finding of Assessing Officer that assessee has not shown any evidence regarding returned investors in Tower-B of Rs.2.28 lakhs. Thus, the addition to that extent was also upheld thereby confirmed additions of Rs. 5,34,000/- (3,06,000+ 2,28,000). Aggrieved by the order of Ld. CIT(A) the Revenue has filed present appeal before the Tribunal. 13. We have heard the submissions of Ld. Senior Departmental- Representative (Ld. Sr-DR) for the Revenue and Ld.AR for the assessee. The ld Sr-DR for the Revenue submits that search action was carried out by Investigation Wing on Diamond Group of Surat. In the search action, CA Pranay Mehta who was having officer in the premises of Diamond Group was also was covered. From the back-up computer data of CA, the Investigation Wing found certain excel sheet containing incriminating material shown of on-money received by assessee in respect of projects undertaken by assessee in Surat as well as Daman. The Assessing Officer on the basis of such concrete evidence found in ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 15 the back-up of computer data, compared of such data with the books of account of assessee and noted that cash shown in the excel sheet impounded in search action, was not recorded by assessee. The books of assessee was rejected. The Assessing Officer after rejecting books of accounts as the same were not matching with the seized material and reasonably estimated the on-money in respect of both projects developed by the assessee. The Ld. Sr-DR for the Revenue submits that taking on- money by the builder is a well-known practice. No direct evidence on such on-money is easily available. In the present case, the Assessing Officer on the basis of seized material worked out the on-money received by assessee. The Ld. CIT(A)deleted the substantial additions on the basis of submission of assessee by taking view that assessee has shown cash component in his books of account and only a difference of cash component vis-à-vis the books of account and the incriminating material found during search action could be considered as ‘on money’. The Ld. CIT(A) further went step ahead and estimated only @ 20%of profit on the said difference of cash component. About the receipt of cash component, there was clear-cut evidence against the assessee. The ld SR DR for the revenue further submits that in a search case the transaction can be presumed for whole of the period on the basis of seized material as has been held by Delhi High Court in CIT Vs Chetan Dass Laxman Das (2012) 25 taxmann.com 227 (Delhi). The Ld. Sr-DR for the Revenue prayed for restoring the order of Assessing Officer on both the addition ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 16 and to reverse the order of Ld. CIT(A). To support his submissions, the ld Sr DR for the revenue relied on the following decisions;  Dhakeshwari Cotton Mills Vs CIT (1954) 26 ITR 775 (SC),  Commissioner of Sales Tax Vs H.M. Esufali H.M. Abdulali (1973) 90 ITR 271-SC,  CIT Vs Chetan Das Lachman Das (2012) 25 taxmann.com 227 (Delhi),  Tara Singh Vs ITO (2017) 81 taxmann.com 293 (P&H),  ACIT Vs Giriraj Developers (2017) 82 taxmann.com 54 (Mum-Trib),  Overseas Chinese Cuisine (India) Private Limited (1996) 55 TTJ 304 (ITAT-Mumbai)’  Golbami Brothers Vs ACIT (2000) 75 ITD 1 (ITAT-Pune),  JCIT Vs Narayan Land Estate (IT(SS) A No. s 182,184, 185 & 186/Ahd/2019, 704 7 1836/Ahd/ 2019 dated 10.06.2022. 14. On the other hand, Ld. AR for the assessee supported the order of Ld. CIT(A) and submits that the case of assessee was reopened under secretin 147 of the Act on the basis of search conducted on the third party. No satisfaction was recorded about the incriminating material found against the assessee. The assessee was neither called by search team during the search action or in the post search proceedings. There is no statement of any person with regard to seized material for seeking explanation, found in the form of excel sheet. Straightway the case of the assessee was reopened under section 147. Notice under section 148 issued on 27.03.2015 served upon assessee. Reopening in absence of satisfaction, on the basis impounded evidence is not permissible. 15. The ld AR for the assessee submits that during search proceedings on third party i.e. at Sumangal Corporation of Surat, the revenue found one ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 17 excel sheet from the computer of CA Pranay Mehta showing some entries of cash and cheques payments received on account of bookings of project undertaking by assessee. The Assessing Officer on the basis of same excel sheet simply assumed payment of on-money. No statement of any person, either of CA or the purchaser was recorded either by the investigation team or by the assessing officer. the assessing officer rejected the books of account without specifying any defect and estimated on-money on the basis of highest figure of cash received in respect of whole project. There was no reference of on money on the excel sheet that cash receipt as on-money. The assessee started its construction project in assessment year 2009-10 and at that time there was no restriction on if the payment should be made either on cash or through banking channel for purchasing immovable property. There was no restriction in payment of cash at the relevant time. Various parties paid booking amount in cash or some of them registered the documents in cash only. Some of them given partial cash or cheque payment also. The Assessing Officer has not enquired personally about the correctness of such information available with him. In the details of Zion Residency found from the computer of CA Pranay Mehta, there was number of details regarding advance booking of flats either cash or cheque along with details. Details of receipt of total 16 flats, out of 20 flats were found. The Assessing Officer considered the highest cash payment of Rs.15.00 lakh against sale of one flat and estimated the same on-money in respect of each and every flat in the said tower. There were only 20 flats in “Zion ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 18 Residency” and impounded materials contain details of 16 flats out of 14 flats were already sold out before search action. Extrapolation on the basis of highest cash receipt of one flat cannot be applied to other flats. All the flats having different super build-up area which was explained to the assessing officer as well as to ld CIT(A). All category flats on different floors were having different area and therefore, different price assumed the same rate of on-money of all flats taking into consideration is totally baseless. Assuming uniform rate of sale for each flat is totally impractical as assessee furnished the details of area of different flats, date of sale, consideration. 16. The ld AR for the assessee with regard to booking for Project at Daman, submits that the impound material contained reference of two constructed buildings and assessee started bookings of such projects in assessment year 2010-11 but after considering response in two years, the assessee dropped the idea to construct two towers and instead of completing one tower. The advance of bookings in respect of other tower was adjusted in respect of Tower-A and such fact was verified by Assessing Officer and found to be correct, still the assessing officer added the booking amount in the profit of the assessee. The assessee made booking of 23 flats. Assuming estimation of on-money in respect of all 54 flats is not justified. 17. In alternative submission, the assessee submitted that it is settled law that whenever unaccounted sales are found in the form of on-money, only addition of profit component of such unaccounted sale and not the ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 19 whole sale, to be made. To support his submission, Ld. AR for the assessee relied upon the following case law. On the issue of year of taxation, the ld AR for the assessee relied on the following decisions;  CIT Vs Happy Homes Corporation (2019) 103 taxmann.com 22-SC,  CIT Vs Happy Home Corporation (2018) 94 taxmann.com 292 (Guj),  CITVs. Happy Home Corporation ITA No.2720/AHD/2014 (ITAT AHD.),  CIT vs. Shivalik Buildwell(P.) Ltd. (2013) 40 taxmann.com 2019 (Guj),  CIT vs. Ashaland Corporation (1981) 7 Taxman 393 (Guj),  CIT vs. Motilal C Patel & Co. (1988) 40 Taxmann 336 (Guj) and  DCIT vs. Shiv Sai Developers (2011) 16 taxmann.com 256 (Mum) 18. On the point of extrapolation to the price, the assessee relied on the following case laws;  CIT Vs Standard Tea Processing Co. Ltd. [2013] 34 taxmann.com 31 (Guj)  CIT vs. B. Nagendra Baliga [2014] 47 taxmann.com 331 (Kar)  ACIT vs. Amar Corporation ITA No.2036/AHD/2007,  Sayan Textile Park Ltd. Vs ACIT ITA No.360/AHD/2014,  Savaliya Buildcon vs. DCIT, in ITA No.401/AHD/2014 & 3188/AHD/2015 (AHD.),  M/s Neptune Realty Pvt. Ltd. Vs. DCIT, (ITA No.2918/AHD/2011.  DCIT, Vs. M/s Surya Enclave Developers (ITA No.707/AHD/2011,  Yadav Developers Pvt., Ltd. Vs. DCIT (ITA No.3674/AHD/2008,  Mani Square Ltd. Vs. ACIT [2020] 118 taxmann.com 452 (Kol.Trib.),  Fort Projects (P.) Ltd. Vs. DCIT [2013] 29 taxmann.com 84 (Kol.Trib.)  ACIT Vs Kush Corporation ITA Nos.93,94 357/Srt/2022,  CIT Vs. President Industries [2002] 124 Taxman 654 (Guj.) ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 20 19. On the issue of taxing only income component of the alleged on-money, Ld. AR for the assessee relied on various case law:  CIT Vs. Gurbachhan Singh J. Juneja [2008] 215 CTR GUJ 509 (Guj.)  DCIT Vs. Panna Corporation Tax Appeal No. 323 of 2000 (Guj)  DCIT, Circle-2(3), Surat vs. M/s Shhlok Enterprise ITA No.2018/AHD/2016 (ITAT, Surat)  DCIT, CC-2, Surat Vs. Brijwasi Developers Pvt. Ltd. ITA No.290/AHD/2013 (ITAT, AHD) (camp at Surat)  Kishore Mohanlal Telwala Vs. ACIT [1999] 107 Taxman 86 (Mag.) (ITAT, AHD) 20. We have considered the rival submissions of both the parties and have gone through the order of lower authorities carefully. We have also deliberated on the various case laws relied by both the parties. We find that Assessing Officer made addition on the basis of impounded material found from the back-up of computer data of CA, who was also maintaining the accounts of assessee, in the search action on Diamond Group at Surat. We find that Assessing Officer presumed the cash shown against the booking was on account of ‘on money’ received against each of the flats irrespective of size or floor. We find that no independent investigation was carried out by Assessing Officer and names of buyers who ultimately purchased property in both the projects were available in the seized material. The Assessing Officer tried to obtain certain information from the office of Sub-Register. However, no such efforts were undertaken by the Assessing Officer to verify from the purchaser whether any on-money or money in addition to sale consideration shown on their registered sale deed was paid to the ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 21 assessee or not. The assessing officer applied the highest figure of cash component recorded in the excel sheet in respect of all 20 flats in Surat Project. The Assessing Officer on the basis of his working noted that in each flat the assessee had received on-money of Rs.15.00 lakh i.e., (Rs.15,00,000 x 20 flats = Rs.3,00,00,000/-). The Assessing Officer on basis of his calculation ascertained that approximately 32% cash payment were made in financial year 2010-11 and 68% in financial year 2011-12 respectively. The Assessing Officer worked out 68% of Rs.3.00 crores at the figure of Rs.2.04 crores and treated the said amount as unaccounted income of assessee and added back to the total income of assessee. 21. Similarly, for Daman project, the Assessing Officer took his view that on-money ranging from Rs. 25,000/- to Rs.8.21 lakhs per flats were received by assessee. The Assessing Officer worked out difference of cash component as per impounded material and registered documents in respect of 23 flats comes out to Rs.25,51,600/- (17+6). The Assessing Officer further was of the view that that there was no evidence produced by assessee to corroborate that on-money for Tower-B was refunded to the customers. The Assessing Officer worked out the on-money on the basis of impounded material on proportionate basis of Rs. 59,90,713/- i.e., (2551600/23)*54) and made addition of Rs.59,90,713/- on account of unaccounted income in respect of Daman Project. 22. We find that before Ld. CIT(A) assessee filed very detailed written submission and on alternative plea, we find that Ld. CIT(A) on ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 22 comparing the figure of cash shown in the excel sheet impounded from computer data recovered from the office of Pranay Mehta, CA as well as from the books of account of the assessee and found out that there was only difference of cash component reflected in the seized material vis-à- vis the books of account of assessee of Rs.8.45 lakh in respect of project I P Mission Zion, Surat and by referring various decisions of Tribunal that no extrapolation was permissible in respect of all the units and only income component of on-money can be taxed and not entire transaction. The ld CIT(A) accordingly taxed @ 20% of Rs.8.45 lakhs with Rs. 29,000/- in respect of Surat project. 23. We find that in respect of project at Daman, the Ld. CIT(A) on comparing the detailed recorded in the excel sheet as well as in the books of assessee found that there is difference of Rs. 15,30,000/- and he thereby tax @ 20% on such amount and restricted the addition to the extent of Rs. 3,09,600/-, on the similar basis at adopted for Surat Project. 24. We have independently examined the facts of the case as it a case based on search action and find that Assessing Officer reopened the case of assessee on the basis of seized material. The Assessing Officer has not independently investigated the issue of alleged on-money either from the purchasers or referred the statement of any person if recorded either during search action or if any corroborative evidence found on the excel sheet. We find that the names of the buyers were duly reflected and no independent investigation from such buyers to ascertain the fact that ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 23 cash amount shown in the excel sheet was really a part of sale consideration or was on-money. On the impounded excel sheet there was no reference of on-money. The Assessing Office investigated certain fact from the office of Sub-Register concern. However, in the assessment order, the Assessing Officer nowhere recorded that the assessee has registered the document in deviation of jantri rate prevailing at the time of registration of sale deed in respect of buyers. 25. The Hon’ble Gujarat High Court in CIT Vs Standard Tea Processing Company Limited (supra) held that the addition of undisclosed income on account of inflated purchases price can be made only for the period to which documents found during the search is related and not for the entire period. Hon’ble Karnataka High Court in CIT Vs B Nagendra Baliga (supra) held that the assessing officer is not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimate basis. Further, Hon’ble Gujarat High Court in a series of case as relied by the ld AR for the assessee also held that only profit element of on money in the hands of the assessee has to be taxed and not the entire receipt. 26. We may note that there is no direct evidence in the present case that there is payment of or assessee received any on money, yet the ld CIT(A) on finding the difference in the seized material and the books of the accounts of assessee taken in the account of such money and taxed at the rate of 20%. There is no appeal from the assessee in taxing such difference. Hence, we do not find any reason to interfere with the order ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 24 of ld CIT(A). Thus, on independent examination of fact, we find that Ld. CIT(A) while granting relief to assessee has reasonably sustained the addition to the extent of profit element in the alleged on-money which we confirm. 27. The case laws relied by the ld SR DR for the revenue is not helpful to him as either the facts of all those cases are at variance or non- jurisdictional High Court. In CIT Vs Chetan Das Lachman Das (supra) it was held that transaction can be presumed for whole of the year on the basis of seized material. The said decision is of non-jurisdictional High Court, however, jurisdictional High Court in Standard Tea Processing Company Limited (supra) held that the addition of undisclosed income on account of inflated purchases price can be made only for the period to which documents found during the search is related and not for the entire period. Therefore, the decision of jurisdictional High Court has binding precedent. Further, Hon’ble Karnataka High Court in CIT Vs B Nagendra Baliga (supra) held that the assessing officer is not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimate basis. Thus, on the basis of two different view of different non-jurisdictional High Court, the ratio favourable to the assessee may be followed. In Tara Singh Vs ITO (supra) and in CIT Vs H.M. Esufali H.M. Abdulali (supra) in both the cases it was held that in best judgement assessment if the estimate made by the authorities is bonafide and based on rational may be a good proof of estimate. We find ITA No.112/SRT/2021 (A.Y 12-13) DMC Construction Pvt. Ltd. 25 that the facts of the present case is at variance, as in the case in hand there is no clear evidence that the cash recorded in the seized material was in fact ‘on money’ moreover, the area of flats is quite different on different floors, even, otherwise there was no rational in estimating the same figure. In Dhakeshwari Cotton Mills Vs CIT (supra) it was held tax authorities are not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. Thus, the ratio of the decisions is more favourable to the assessee. In Narayan Land Estate (supra), the estimation @ 30% of on money was upheld, even in the present case, the ld CIT(A) estimated fair income. Thus, facts in all remaining cases relied by the revenue are at variance and not helpful to revenue. In the result, the grounds of Revenue’s appeal are dismissed. 28. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 10/10/2023. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 10/10/2023 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT 4. DR 5. Guard File True copy/ // True Copy // Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat e copy/