The DCIT, Central Circle-1(2), Ahmedabad V. M/s. Pushkar Infrastructure, Ahmedabad

ITA 1135/AHD/2019

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 6312 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 03-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers; Question of law; Block assessment; Retraction; Set aside
• Section: 32; 131; 145; 271(1)(c); 143(3); 133A; 153A; 64; 271B; 113; 43; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T ( S S) .A . N o . 3 4 7/ A h d/ 2 0 19 ( A s se ss m e nt Y e a r : 20 11- 12 ) Pu s h k ar I nf r a s tr uc t u r e , 40 3 , A a s t ha n C o m p lex , Op p. P o l yt e c h n i c, A mb a w a d i, Ah me da bad - 3 80 01 5 V s . As s is ta nt C o m mi s s i one r of I nc o me Ta x , C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad [ P AN N o. A A LF P2 6 97 K ] (Appellant) .. (Respondent) I .T ( S S) .A . No s. 3 6 7 , 36 8 & I . T. A N o . 11 35/ A hd / 20 1 9 ( A s se ss m e nt Y e a r s : 20 1 1 - 1 2, 2 01 2- 13 & 20 15- 1 6 ) De pu t y C o m mi s s io ne r o f I nc o me Tax , C e nt r a l C ir c l e - 1( 2 ) , Ah me da bad V s . M/ s . P us hk a r I n f r a s tr u ct u r e, 40 3 , A a s t ha n C o m p lex , Op p. P o l yt e c h n i c, A mb a w a d i, Ah me da bad - 3 80 01 5 [ P AN N o. A A LF P2 6 97 K ] (Appellant) .. (Respondent) Appellant by : None Respondent by: Shri Kamlesh Makwana, CIT DR & Shri Ashok Kumar Suthar, Sr. D.R. D a t e of H ea r i ng 03.08.2023 D a t e of P r o no u n ce me nt 11.08.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: In these bunch of appeals one appeal has been filed by the assessee and three appeals have been filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 02.04.2019 passed for Assessment Years 2011-12, 2012-13 & 2015-16. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 2 - 2. Since all the appeals are emanating from a common order passed by Ld. CIT(A) for all the assessment years under consideration and further, since the facts of the case and issues for consideration are common for all the years under consideration, all the appeals are being disposed of by way of a common order. We shall first deal with assessee’s appeal for A.Y. 2011-12. 3. The assessee has raised the following grounds of appeal:- “1. In law and in facts and circumstances of the appellant’s case, the Learned Commissioner of Income tax (Appeals)-11, Ahmedabad (hereinafter referred ass “CIT(A)”), has erred in not appreciating the fact that the assessment order passed u/s 143(3) r.w.s. 153C(1)(b) of the Income-tax Act, 1961, by the Assistant Commissioner of Income Tax, Central Circle-1(2), Ahmedabad, was void and deserved to be quashed. 2.1 In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in holding that the on-money receipts reflected in the seized material found from the premises of Mr. Mihir Shah represent undisclosed income of the appellant. 2.2 Without prejudice to the above, in law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in confirming the addition of Rs. 15,74,200/- by estimating the net profit @20%, on such alleged undisclosed receipts of Rs. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 3 - 78,71,000/-, when he should have applied the net profit rate of 8% on such receipts. 3.1 In law and in the faces and circumstances of the appellant’s case, the Ld. CIT(A) has erred in holding that the alleged unaccounted transaction of Rs. 1,00,00,000/- is required to be considered in the hands of the appellant firm on the basis of loose papers found from the premises of Mr. Mihir Shah. 3.2 Without prejudice to the above, in law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in confirming the addition of Rs. 20,00,000/- by estimating the net profit @20%, on the alleged unaccounted transaction of Rs. 1,00,00,000/-, when he should have applied the net profit rate of 8% on such amount. 4. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has failed to appreciate that even if material relied upon by him for confirming the unaccounted receipts of Rs. 78,71,000/- was reliable, no separate addition could have been made for the same, as the amount of addition made on account of alleged unaccounted transaction of Rs. 1,00,00,000/- referred in ground no. 3.1 and 3.2 above, exceeds the said amount. 5. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in dismissing the appellant’s IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 4 - ground of appeal against charging of interest u/s. 234A, 234B, 234C and 234D of the Act, when no such interest is chargeable in the case of the appellant. 6. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in dismissing appellant’s ground of appeal against the initiation of penalty proceedings u/s. 271(1)(c) and u/s. 271B of the Act.” 4. Ground No.1 of the assessee’s appeal is general in nature and does not require any specific adjudication. Ground No.2.1:- Ld. CIT(A) erred in holding that the on- money receipts reflected in the seized material found from the premises of Mr. Mihir Shah represent undisclosed income of the appellant. 5. The brief facts in relation to this ground of appeal are that a search action under Section 32 of the Act was carried out in the case of Ashit Vora & Mihir S. Shah on 04.12.2014. During the course of search, certain documents were seized relating to Pushkar-5 project developed by the assessee firm. On analysis of the documents seized, the Assessing Officer observed that with respect to one unit, the sale consideration was Rs. 80,40,000/- whereas the cash receipt was Rs. 48,40,000/-. The Assessing Officer observed that the documented value of the aforesaid unit was Rs. 32,00,000/- and hence concluded that the unaccounted IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 5 - income of the assessee firm for sale of aforesaid unit was Rs.48,40,000/-. Further the Assessing Officer observed that with respect to another unit in the same project, the total consideration is Rs. 67,25,000/- and there is cash receipts of Rs. 30,00,000/- on 08.03.2011 and Rs. 1,30,000/- on 15.04.2012 against aggregate consideration. On this basis the Assessing Officer observed that unaccounted income of the assessee firm is Rs. 30,31,000/-. The Assessing Officer observed that since the documents which was seized were found from the premises of one of the partners being Mihir S Shah such documents have more evidentiary value and cash payments reflected in such loose papers are undisclosed income of the assessee. Further, the Assessing Officer observed that such unaccounted amount represents approximately 45% of the total value of flats / sales booked. Applying this amount on gross receipts disclosed by the assessee firm in the return of income, the unaccounted income of the assessee was estimated by the Assessing Officer in the following manner:- A.Y. Total gross receipt as per ROI On-money receipts being amount of cash considering 45% part of sale consideration as received in cash 2011-12 1,92,85,000 1,57,78,637 2012-13 2,10,49,674 1,72,22,460 2015-16 1,18,28,292 96,77,693 IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 6 - 6. The assessee filed appeal before Ld. CIT(A) and contended that the material found from the premises of Mihir S. Shah do not belong to the assessee. The assessee further argued that even if addition of on- money is required to be made, it should be restricted to alleged on-money mentioned in the loose paper pertaining to few units sold by the assessee firm and any extrapolation of such on-money to entire scheme in all the assessment years cannot be made as the Assessing Officer since has not brought any evidence which prove that the assessee has received on- money in respect of each and every unit / flat sold by the assessee, more particularly when no statement of any buyer was recorded by the Assessing Officer to prove his contention of receipt of on-money on entire scheme. In addition to the above, the assessee further argued that it is settled legal principle that entire on-money does not represent income of the assessee and only net profit embedded in such on-money should be taxed. 7. In light of the above observations, Ld. CIT(A) observed that during the course of search at the residential premises of Mihir S. Shah, loose papers were found which reflect cheque receipts as well as cash receipts pertaining to two units sold by the assessee in two schemes being Pushkar-5 developed by the assessee. Therefore, when assessee has not disputed the fact that documented price of two units referred in loose papers have been duly accounted in the books of account, the assessee cannot deny on-money receipts as mentioned in the loose papers more particularly when name of the scheme and party name are mentioned in IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 7 - such papers. When cheque amount reflected in seized material are accepted to be income by the assessee firm, it cannot deny that cash / on- money receipt reflected in the very same seized material does not belong to it. Further, the Ld. CIT(A) observed that Assessing Officer has extrapolated on-money receipts of 45% to the entire turnover, which cannot be sustained as such extrapolation is on an estimation and guess work basis only. Further, the Assessing Officer has not brought on record any clinching evidence of receipt of on-money on entire sales made by the assessee and hence extrapolation of income simply based upon few instances cannot be sustained. Accordingly, Ld. CIT(A) partly allowed the appeal of the assessee by holding that the on-money reflected in the seized material found from the premises of Mr. Mihir S. Shah represent undisclosed income of the assessee. However, the Ld. CIT(A) restricted the addition only to on-money receipts with respect to two units as mentioned in the loose papers found from the premises of Mr. Mihir S. Shah and dismissed the extrapolation of such on-money receipts to the entire sales made by the assessee firm. While passing the order, Ld. CIT(A) made the following observations while partly allowing the appeal of the assessee:- “5.5 On careful consideration of entire facts along with the seized material referred by AO it is observed that during the course of search at the residential premises of Mihir S. Shah, loose papers were found which reflect cheque receipts as well as cash receipts pertaining to two units sold by Appellant in two schemes IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 8 - being Pushkar - 5 developed by Appellant. The AO has observed that Mr. Mihir S. Shah is a partner in Appellant Firm hence loose paper relied upon by AO cannot be stated to be rough noting. Both the loose papers relied upon by AO clearly state documented price and total price, which means that remaining figure is on-money receipt even if there is no word 'cash' mentioned in such loose papers. When Appellant has not disputed the fact that documented price of two units referred in loose paper is already accounted in books of account, it cannot deny on-money receipts as mentioned in loose paper more particularly when name of the scheme and party name are mentioned in such papers. When cheque amount reflected in seized material are accepted to be income by Appellant Firm, Appellant cannot deny that cash/on- money receipt reflected in very same seized material does not belong to it. The Appellant has not brought any evidence to prove that such alleged on-money reflected in seized material are in fact offered to tax my Mihir S. Shah as his undisclosed income in his Return of Income hence in absence of any documentary evidences to support that such income does not belong to Appellant, on- money reflected in loose paper represent undisclosed income of the Appellant. Appellant has argued that such loose papers are not prepared by it or nor signed by any employee/partner of the firm but such facts are immaterial considering the fact that cheques reflected in the loose paper are already shown as income by Appellant Firm. It is settled legal law that loose papers are IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 9 - required to be seen as a whole and it cannot be read by adopting pick and choose method as contended by Appellant. Considering these facts, on-money receipts on sale of two units is Rs 48,40,000 and Rs.30,31,000, respectively as summarised by AO based upon Annexure - A/8 are undisclosed income of Appellant. It is observed that loose paper found from the premises of the third party are pertaining to two units for Scheme Pushkar – 5 developed and sold by Appellant Firm. The AO has computed ratio of on-money @ 45% based upon on-money receipts in comparison with total receipts for two units reflected in seized material and such ratio is applied on total turnover shown in regular books of account for all the Assessment Years. The AO has extrapolated on-money receipts of 45% on entire turnover which cannot be sustained as such extrapolation is on assumption and guesswork. It is also an undisputed fact that search was carried out in the case of Mihir S. Shah and Asit Vora on 4 th December, 2014, notices are issued in the case of Appellant on 29 th September, 2016 and Assessment Orders are passed on 28 th December, 2016 and AO has neither recorded any statement of buyers whose sales have been recognised in all these years nor brought any clinching evidence of receipt of on-money on entire sales made by Appellant hence extrapolation of income simply based upon few instances cannot be sustained. Reliance is placed on following decisions: ...... IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 10 - “Considering the above observations and binding decisions of jurisdictional ITAT and High Court, referred supra, it is held that AO was not justified in extrapolating the income of Appellant in all the Assessment Years based upon on-money receipts reflected in loose paper pertaining to two units sold by Appellant. It is pertinent to note that Appellant firm has offered to tax income of above project developed by it in AY 2011-12 and 2012-13 only and such facts are not disputed by AO in Assessment Order. In the return of income for AY 2015-16, no sales have been offered to tax hence, there was no reason on the part of AO to estimate on-money receipt in such year only on the ground that sale documents were registered in AY 2015-16 even though sale value was already recognised by appellant in two Assessment Years referred supra. Thus, in present case, addition for on-money is required to be made on undisclosed income of Rs.78,71,000 in AY 2011-12 based upon notings mentioned in loose papers referred supra and remaining addition made by AO in AO 2012-13 and 2015-16 are deleted.” 5.6 It is also observed that Assessing Officer has extrapolated undisclosed income based upon instances of on-money receipts of few units and entire amount has been taxed as income of Appellant. The issue of extrapolation is already discussed in above paras. It is settled legal law that entire receipts or on-money IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 11 - cannot be income of Appellant as income embedded in such on- money alone can be taxed as undisclosed income.” 8. The assessee is in appeal before us against the addition confirmed by Ld. CIT(A) with respect to on-money receipts in respect of two units at Pushkar-5 Project. On going through the records of the case, we are of the considered view that CIT(A) has not erred in facts and in law in confirming the addition with respect to the aforesaid two units. In our view, Ld. CIT(A) has correctly observed that the assessee has not brought any evidence to prove that such alleged on-money reflected in seized material are in fact offered to tax by Mihir S. Shah as his undisclosed income in his return of income and hence in absence of any documentary evidences to support that such income does not belong to the assessee, on-money reflected in loose papers represent undisclosed income of the assessee. In the result, we do not find any infirmity in the order of Ld. CIT(A) so as to call for any interference. 9. In the result, Ground No. 2.1 of the assessee’s appeal is dismissed. Ground No. 2.2:- Vide This Ground of Appeal, the assessee has submitted that in the facts of the instant case, Ld. CIT(A) should have adopted the net profit rate of 8% of such on- money receipts and erred in estimating the net profit @ 20% on such alleged undisclosed receipts of 78,71,000/-. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 12 - 10. It would be useful to refer to some judicial precedents which will throw useful light on the subject. In the case of Jay Builder 33 taxmann.com 62 (Gujarat), the High Court held that where assessee received on-money while selling properties and Tribunal substantially accepting contention of assessee that not entire on-money received but only profit element could be taxed in its hands and sustained addition @ 15 % of on-money received by assessee, appeal by assessee against order of Tribunal did not survive. In the case of Saikrupa Construction Co. 13 SOT 459 (MUM.), the assessee was a builder developer. The Assessing Officer rejected account books of assessee and estimated income of assessee to best of his judgment on basis of papers found during course of survey under Section 133A conducted at business premises of assessee. The Commissioner (Appeals) held that method adopted by Assessing Officer was not correct and directed him to estimate profits of assessee by applying net profit rate of 15 per cent on total receipts as per sale agreements and also on-money received by assessee. The ITAT held that since papers found during course of survey were not complete record of income or expenditure of assessee, total income of assessee could not be properly calculated on basis of such papers and therefore, Commissioner (Appeals) was justified in his action. The Ahmedabad Tribunal in the case of Adinath Construction decided vide order dated 21.10.2005 in ITA No. 1975 and 176/Ahd/1999 held that entire on-money did not represent the recipient's income but only to the extent of 15% thereof. Further, the ITAT Ahmedabad in the case of Shri Jigesh V. Koralwala in IT(SS)A No. 262,263 &264/Ahd/2010 also IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 13 - held that that entire on-money did not represent the recipient's income but only to net profit computed @15% may be subject to tax in the hands of the assessee. 11. In view of the above judicial precedents on the subject, in the interest of justice we are hereby restricting the addition to 15% of the gross receipts in hands of the assessee as the net profit of the assessee in respect of on-money receipt. 12. In the result, Ground No. 2.2 of the assessee’s appeal is partly allowed. Ground No. 3.1:- Ld. CIT(A) erred in holding that unaccounted transaction of Rs. 1,00,00,000/- is required to be considered in the hands of the assessee on the basis of loose papers found from the premises of Mihir Shah. 13. In this connection, it would be useful to reproduce the relevant extracts of order passed by Ld. CIT(A) while confirming the addition of Rs. 1,00,00,000/- in the hands of the assessee:- “7.4 On careful consideration of all the facts and relevant seized material relied upon by AO, which is summarised in tabular chart herein below, it is found that such loose papers were found during the course of search at the residence of Mr. Mihir Shah, partner of Appellant Firm. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 14 - Annexure Page no. Amount (Rs.) Particular A/1 53 11,15,000 Cash amount 53 1,00,00,000 To receive in Pushkar 50 50,00,000 Deposit Pushkar 36 20,00,000 Given to Pushkar A/3 2 20,00,000 Pushkar A/8 2 20,00,000 Given-Pushkar The first contention of Appellant that Mr. Mihir Shah is Assessment Proceedings has admitted that transaction noted in above loose papers pertains to him and not to Pushkar cannot be accepted as Appellant has brought nothing on record to prove that such transactions are owned by Mr. Mihir Shah while filing return of income under Section 153A of the Act nor such transactions are already subject matter of addition in his Assessment Order. The seized paper referred by AO contains name “Pushkar” hence such loose paper needs to be adjudicated in present case. The AO has considered noting of Rs.50,00,000 as mentioned at page No. 50 of Annexure – A/1 (noting dated 28 th September, 2010) adn Rs.7,65,000 noted at page No. 53 of Annexure – A/1 (26 th July, 2010) in AY 2010-11 as dates mentioned in loose paper pertains to current year. The remaining amount of Rs.1,63,50,000 is considered in AY 2015-16 though no specific date has been mentioned in such loose paper. It is pertinent to note that page No 36 of Annexure – A/1 contains noting of Rs. 20,00,000 being IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 15 - amount given to “pushkar”. However, bottom such loose paper proves that noting is pertaining to month January 2006 hence AO cannot tax such amount as undisclosed income of AY 2015-16. The AO has not brought anything on record to prove that above amount reflects notings pertaining AY 2015-16 hence, addition made by AO to that extent is deleted. 7.7 With regard to remaining noting of Rs.7,65,000/- and Rs.50,00,000/- in AY 2010-11 and Rs 3,50,000 and Rs 1,00,00,000 in AY 2015-16 it is observed that page No 53 of Annexure A/1 contains noting of Rs. 11,15,000 being “amount to be given in Pushkar” and from which Rs.7,65,000/- is reduced on 26 July, 2010. The remarks against such amount is “Cash Given” and this figure is considered in AY 2011-12 and remaining amount of Rs 3,50,000 (11,15,000 – 7,65,000) is considered in AY 2015-16. However, this contention of AO is incorrect as noting is related to AY 2011-12 because loose paper contain date of July 2010 hence entire amount of Rs. 11,15,000 is required to be considered in AY 2011-12. Even entire project of above scheme developed by Appellant was completed in AY 2012-13 as admitted by Appellant hence there cannot be any on money transaction related to Appellant in AY 2015-16. It is observed that very same page contains noting of Rs. 1,00,00,000/- as “To receive in Pushkar”, which means that Appellant Firm was having accumulated amount of unaccounted income of Rs. 1,00,00,000/- and such figure IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 16 - includes above noting of Rs.11,15,000 and on this basis separate addition of Rs.11,15,000 is not required to be made. It is also noted that in page No. 50 of Annexure- A/1 there is noting of Rs.50,00,000/- being credit in Pushkar and such noting is dated 28 th September 2010 which means that outstanding balance of Rs.1 crore is reduced to Rs. 50 lacs hence noting pertaining to Rs.50,00,000 in page No. 50 is already part of noting mentioned at page No. 53 of Annexure- A/1. On this basis separate addition of Rs.50,00,000 cannot be made in nutshell the maximum credit in above referred loose paper is Rs.1,00,00,000/- which is required to be considered as unaccounted transactions in the hands of Appellant Firm. 7.8 In Appellate Proceedings Appellant has claimed that above notings are already part of separate addition of undisclosed income arising from sale of units by Appellant Firm hence separate addition cannot be made. However this contention of Appellant is not accepted for the reason that separate noting pertaining to receipt of on-money from two units is found during the course of search and Appellant has not established any linkage between these two figures separately noted in separate loose papers. On this basis noting of Rs 1,00,00,000/ is required to be taxed separately in the hands of Appellant considering the observations made herein below. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 17 - 7.9 With regard to alternate contention of Appellant that only net profit embedded on such unaccounted transaction needs to be taxed, it is observed that Appellant Firm has only carried out one project being Pushkar-5 in related Assessment Years hence noting found in the name of Pushkar needs to be considered as unaccounted income earned from sale of units more particularly when AO has not proved that such notings are other than notings of business transactions. When Appellant Firm is having only one business, receipt of Rs. 1,00,00,000 is required to be taxed as undisclosed income from sale of units and not as unexplained income. It is also observed that while adjudicating the issue regarding taxing of on-money receipts in preceding paras, I have already held that only net profit embedded in such undisclosed income can be taxed. My observation in euch paras are based upon judicial pronouncements discussed therein and relying upon the findings given in preceding paras. I restrict addition of Rs. 20,00,000 being 20% of unaccounted income of Rs 1,00,00,000 in AY 2010-11. On this basis addition made in AY 2010-11 for Rs. 57,65,000 is restricted to Rs 20,00,000 and entire addition of Rs 1,63,50,000 made in AY 2015-16 is deleted. Thus, the related grounds for AY 2011-12 are partly allowed and grounds of appeal for AY 2015 16 are allowed.” 14. From the above observations of Ld. CIT(A), we observe that the Ld. CIT(A) has not erred in facts and in law in holding that the aforesaid IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 18 - amount of Rs. 1,00,00,000/- represents the income of the assessee firm. In our considered view, Ld. CIT(A) has correctly held that the assessee has not brought anything on record to prove that such transactions are owned by Mr. Mihir Shah while filing return of income under Section 153A of the Act in order such transactions are the subject matter of addition in his assessment order. Further, in our view, Ld. CIT(A) has also correctly observed at Para 7.8 that the aforesaid amount of Rs. 1,00,00,000/- has no linkage with the separate noting pertaining to receipt of on-money from two units relating to Pushkar-5 Project. Therefore, since the assessee has not been able to establish any linkage between the separate noting pertaining to on-money from two units found during the course of search and the separate noting in respect of Rs. 1,00,00,000/-, in our considered view, the addition of the same has been correctly confirmed by Ld. CIT(A). In the result, Ground No. 3.1 of the assessee’s appeal is dismissed. Ground No. 3.2:- Ld. CIT(A) erred in confirming addition of Rs. 20,00,000/- by estimating net profits @ 20% on the alleged unaccounted transaction of Rs. 1,00,00,000/-. 15. In this regard in the earlier of our judgment, we have held that in view of various judicial precedents rendered by the Jurisdictional Gujarat High Court and ITAT Ahmedabad, we have restricted the addition of 15% of the unaccounted transactions as net taxable receipts in the hands of the assessee. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 19 - 16. In the result, the Assessing Officer is directed to restrict the addition to Rs. 15,00,000/- by estimating net profit @ 15% of the alleged unaccounted transaction of Rs. 1,00,00,000/-. 17. In the result, Ground No. 3.2 of the assessee’s appeal is partly allowed. Ground No.4:- Ld. CIT(A) erred in appreciating that no separate addition could have been made for a sum of Rs. 78,71,000/- since the addition amounting to Rs. 1,00,00,000/- exceeds the said amount. 18. We observe that Ld. CIT(A) has given a specific finding that there is no connection between the documents leading to addition in respect of two units sold in Pushkar-5 Project and addition on account of Rs. 1,00,00,000/- refer to above. In this case it would be pertinent to reproduce the observations made by Ld. CIT(A) in the appellate order:- “7.8 In Appellate Proceedings Appellant has claimed that above notings are already part of separate addition of undisclosed income arising from sale of units by Appellant Firm hence separate addition cannot be made. However this contention of Appellant is not accepted for the reason that separate noting pertaining to receipt of on-money from two units is found during the course of search and Appellant has not established any linkage between these two figures separately noted in separate IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 20 - loose papers. On this basis noting of Rs 1,00,00,000/ is required to be taxed separately in the hands of Appellant considering the observations made herein below. 7.9 With regard to alternate contention of Appellant that only net profit embedded on such unaccounted transaction needs to be taxed, it is observed that Appellant Firm has only carried out one project being Pushkar-5 in related Assessment Years hence noting found in the name of Pushkar needs to be considered as unaccounted income earned from sale of units more particularly when AO has not proved that such notings are other than notings of business transactions. When Appellant Firm is having only one business, receipt of Rs. 1,00,00,000 is required to be taxed as undisclosed income from sale of units and not as unexplained income. It is also observed that while adjudicating the issue regarding taxing of on-money receipts in preceding paras, I have already held that only net profit embedded in such undisclosed income can be taxed. My observation in euch paras are based upon judicial pronouncements discussed therein and relying upon the findings given in preceding paras. I restrict addition of Rs. 20,00,000 being 20% of unaccounted income of Rs 1,00,00,000 in AY 2010-11. On this basis addition made in AY 2010-11 for Rs. 57,65,000 is restricted to Rs 20,00,000 and entire addition of Rs 1,63,50,000 made in AY 2015-16 is deleted. Thus, the related IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 21 - grounds for AY 2011-12 are partly allowed and grounds of appeal for AY 2015 16 are allowed.” 19. Accordingly, looking into facts of the instant case there can be no presumption that the amount of Rs. 78,71,000/- was part of the amount of Rs. 1,00,00,000/- as submitted by the assessee. We further observe that Ld. CIT(A) has held that the principle of extrapolation with respect of the aforesaid two units cannot be extended to the balance units sold by the assessee. In this case, the assessee as per the notings, is having undisclosed income amounting to Rs. 1,00,00,000/-. Therefore, if the same does not relate to the aforesaid two units (undisclosed income of Rs. 78,71,000/-) then this casts a shadow of doubt as to which other units this amount pertains to. Further, the Ld. CIT(A) has correctly observed that the assessee has not been able to establish any linkage / connection between these two additions and has not brought anything to show that the amount of Rs. 78,71,000/- from part of the unaccounted transactions of Rs. 1,00,00,000/-. 20. In the result, in light of the above facts Ground No. 4 of the assessee’s appeal is dismissed. 21. Ground Nos. 5 & 6 of the assessee’s appeal being consequential in nature do not require any specific adjudication. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 22 - Now we shall discuss the Department’s appeal for A.Y. 2011- 12 22. The Revenue has taken the 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 law and on facts in deleting the addition of Rs.1,42,04,437/- out of total addition of Rs.1,57,78,637/- made on account of unaccounted on money received in cash. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in restricting the addition to Rs. 20,00,000/- out of addition of Rs. 57,65,000/- made on account of unaccounted money received in cash. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 4. 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.” Ground No. 1: Ld. CIT(A) has erred in deleting addition of Rs. 1,42,04,437/- out of total addition of Rs. 1,57,78,637/- made on account of unaccounted on-money received in cash. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 23 - 23. In this connection we observe that Ld. CIT(A) has observed that even if addition of on-money is required to be made, it should be restricted to alleged on-money as mentioned in the loose papers pertaining to two units sold by the assessee and any extrapolation of such on-money to entire scheme cannot be made since the Assessing Officer has not brought any evidences which prove that the assessee has received on-money on sale of each and every unit / flat sold by it. This is more so in light of the fact that no statement of any buyer was recorded by Assessing Officer to prove his contention of receipt of on-money on the entire scheme. During the course of assessment, the Assessing Officer observed that the assessee has received a sum of Rs. 78,71,000/- as unaccounted on-money with respect to sale of two flats. Thereafter, the Assessing Officer extrapolated the on-receipts being amount of cash considering 45% of sale consideration as received in cash and computed the on-money receipts of the assessee at Rs. 1,57,78,637/- in respect of all units sold by the assessee during the year under consideration. However, Ld. CIT(A) held that in absence of any evidence whatsoever the theory of extrapolation cannot be extended to all units sold by the assessee. While passing the order the Ld. CIT(A) made the following observations:- “It is observed that loose paper found from the premises of the third party are pertaining to two units for Scheme Pushkar – 5 developed and sold by Appellant Firm. The AO has computed ratio of on-money @ 45% based upon on-money receipts in comparison IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 24 - with total receipts for two units reflected in seized material and such ratio is applied on total turnover shown in regular books of account for all the Assessment Years. The AO has extrapolated on- money receipts of 45% on entire turnover which cannot be sustained as such extrapolation is on assumption and guesswork. It is also an undisputed fact that search was carried out in the case of Mihir S. Shah and Asit Vora on 4 th December, 2014, notices are issued in the case of Appellant on 29 th September, 2016 and Assessment Orders are passed on 28 th December, 2016 and AO has neither recorded any statement of buyers whose sales have been recognised in all these years nor brought any clinching evidence of receipt of on-money on entire sales made by Appellant hence extrapolation of income simply based upon few instances cannot be sustained. Reliance is placed on following decisions: (i) Decision of Hon’ble Ahmedabad ITAT in case of M/s. Amar Corporation ITA No. 2041/Ahd/2007 dated 31/03/2011 “.....The DR has also pointed out that Mr. Chimanbhai being the main person was aware of the business activity of the group, therefore, his statement was very important and must not be ignored. The ld.DR has also argued that those three documents have disclosed the unaccounted activity of the Group. He has also IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 25 - referred the statement of the partner Mr. Bimal Shah. As per his argument, though Mr. Bimal Shah, Partner and Mr. Chimanlal have retracted but the retraction was very late after the ITA Nos. 2036 to 2041/Ahd/2007 (By Revenue) & CO Nos. 190 to 195/Ahd/2007 respectively lapse of more than two months, therefore, such retraction had no evidentiary value Ld. DR has also referred a newly inserted section 292C by Finance Act, 2007 with retrospective effective from 01/10/1975. He has elaborated that where any books of accounts, documents, jewellery, amount, money or other valuable article is found in the possession or control of any person in the course of a search u/s.132 of the Act, then it may be presumed that such document, money, etc. belonged to such person and that the contents of the document are true. He has contended that the contents of the loose-papers were nothing but true and as per those contents the AO has rightly arrived at the figure of 'on-money' which was taxed in each year in the hands of the assessee. He has also supported the action of the AO for extrapolating the 'on-money' in all the years and in support he has cited Commissioner of Sales Tax vs. H.M. Esufali H.M. Abdulali reported at (1973) 90 ITR 271 (SC). If we see the contents of the loose paper 19 and the connected statement of Mr. Chimanbhai then it is evident that in his statement he had made it clear that if there was 'on-money' of Rs.180/-, the same was in respect of "this" flat. Apart from the loose paper and IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 26 - the statement of Mr. Chimanbhai there is no incriminating material through which it was found that the 'on-money' was received in respect of the other flats. But there was no material in his possession to conclusively demonstrate that in respect of the other flats the assessee had in fact charged 'on-money' from the customers. Once the Revenue Department has taken the extreme step of conducting a raid on this assessee, then it is expected to unearth every penny of unrecorded money, but the fact is that neither any unaccounted money was recovered nor any such document was found in possession of the assessee through which it could be held that the assessee was in the practice of charging on-money on other facts as well. Therefore, we hereby hold that the extrapolation was incorrect. The AO is empowered to confine himself on the incriminating material found during the course of search and material is to be treated as true and correct With the result, rest of the addition pertaining to other flats as deleted by Ld. CIT(A) is hereby affirmed. For this year the said ground of the Revenue is partly allowed. As far as other years are involved, because we have already held that in the absence of any cogent evidence, there was no scope of extrapolation, hence, we hereby uphold the view taken by the CIT(A) resultantly for other years the said ground of the Revenue deserves to be dismissed. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 27 - The above decision has been affirmed by Hon'ble Gujarat High Court vide Tax Appeal No. 26 of 2012 dated 18/07/2012 (i) Decision of Ahmedabad ITAT in case of Shri Kiran J Trivedi v/s. DCIT IT(SS) No: 63 to 65 & 100 to 102/Ahd/2014 dated 18-04-2017 ‘9. The CIT(A) reverses Assessing Officer's action as follows: ....9. When the present case is examined in view of this legal position, it is found that the entire addition in three years made by AO is based on statements of eight farmers. However, subsequently, during cross examination, all the farmers retracted from their statements. From the perusal of records it is found that only three farmers out of the seven had bank accounts, but even in the case of these three farmers no cash deposits were found in their bank accounts. 10. None of the farmers (land owners) identified the appellant as purchaser of the land. All of them stated that they do not know to whom they had sold the land. In such a situation, the allegation of AO regarding payment of on money by appellant remains unverifiable. 11. During the course of search no material was seized from the premises of the appellant which indicates payment of on IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 28 - money by appellant and his family members. In such a situation, the allegation of AO that appellant paid on money in cash to the fanners remains unsubstantiated. 12. Moreover, the AO has extrapolated the cash component in the entire transaction on the basis of statements of these farmers, which resulted in estimation of total on money at Rs. 1,63,22,639. For this extrapolation the AO has presumed that cash was received in each and every transaction. From the perusal of records, it is found that in one case (survey No. 162/p) the seller is Manan Trivedi and the buyer is M/s. TCPL. It is absurd to presume that even Manan Trivedi (who is a family member of appellant) paid on money to M/s. TCPL which is a company of his own family. 13. It is well established principle that suspicion, however, strong can never take the place of evidence. At the best, it can only lead to investigation. In the present case, the statements of farmers could have been reasons for suspicion that appellant has paid on money. However, there is no corroborative evidence brought on record by AO to prove payment of on money by appellant in this ease. I, therefore, hold that AO is not justified to conclude that appellant paid on money in respect of purchase of these plots of land. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 29 - Additions of Rs.47,94,018 for A.Y. 2008-09, Rs.30,00,000 for A.Y.2009-10 and Rs.87,00,000 for A.Y.2010-11 are not justified, in such a situation and the same are directed to be deleted. Ground No.1 of the appeal is allowed for all the three years.” 10. Heard both the parties reiterating their respective stands. Ms. Bhalla quotes hon’ble Delhi high court’s decision in Dayawanti vs. CIT (2017) 390 ITR 496 and Ramesh G., DDIT vs. Praksh V. Sanghavi (2015) 64 taxmann.com 221 (Karnataka). Former decision holds that statements recorded during search operation could be relied upon to make additions in respect of undisclosed income from the material found read with search depositions. We find the said decision to be totally distinguishable on facts as the case records in the instant appeals do not refer to any such material so as to buttress the Assessing Officer’s findings. Latter decision hereinabove pertains to procedural aspect of Section 131 jurisdiction vested with an authorized officer who can either summon the person concern or himself visit the said person for examination on oath. We revert back to the facts of instant case once again to observe that this latter case law also does not apply since there is no substantive evidence which renders this procedural aspect as mere academic. We wish to observe here that the CBDT’s IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 30 - circular dated 10.03.2003 already advises the search authorities to collect evidence pointing out any undisclosed income rather than recording admissions of the searched assessees. Hon’ble jurisdictional high court’s judgment in Kailashben Manoharlal Choksi vs. CIT (2010) 328 ITR 411 (Gujarat) also adopts the same very view. We therefore do not find any reason to interfere the CIT(A)’s conclusion hereinabove deleting the impugned addition of unexplained investment in all three assessment years in question. The Revenue’s sole substantive ground as well as its three appeals IT(SS)A Nos. 100 to 102/Ahd/2014 are declined. The assessee’s cross objection C.O. No. 113 to 115/Ahd/2014 supportive of the CIT(A) above extracted findings are rendered academic. (iii) Decision of Ahmedabad ITAT in case of ACIT v/s. Dhara Associates ITA No. 1945/Ahd/2007 dated 26-08-2011 ‘6. Once a view has been taken by the Respected Coordinate Bench on identical facts in a connected group of cases, therefore, assigning the same reason and the same logic, we hereby hold that the AO should confine himself verbatim to the seized material, i.e. the impugned diary/note-book containing pages 1 to 141 marked as “Annexure BF-1”. Thereafter, the A.O.is expected to restrict only to those sales IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 31 - instances which were found recorded therein i.e. in the said Note-Book. We have noticed that the AO was aware about those specific sale instances of the plots; relevant paragraph from the assessment order has already been extracted above. Those specific sale instances where the amount of “on- money” has also been categorically noted, should be made the basis of addition. In respect of rest of the notings, there was no mention by the AO that the assessee has received “on-money”. Hence, following the above judgement of the Respected Coordinate Bench, we can conclude that no addition of “on-money” was warranted in respect of all the plots. We are also not with the view taken by the ld.CIT(A) to adopt a uniform rate of Rs.100/- of “on-money” on all the plots. We hereby hold that since the Revenue Department is in possession of the impugned diary wherein certain sale instances were found recorded in respect of specific amount of “on-money” alleged to have been charged by the assessee on sale of those plots, therefore, the AO should have made the addition only in respect of those sales instances and not to extrapolate the said amount of “on-money” merely on presumption on all the plots. We direct accordingly. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 32 - 7. In view of the above conclusion, as far as the grounds of the Revenue are concerned, the same are hereby partly allowed.’ (iv) Hon’ble Gujarat in case of Jayaben Ratilal Sorathia [2013] 40 taxmann.com 436 "4.00. At the outset, it is required to be noted that on the basis of search carried out in the premises of the son of the assessee and diary seized and on the basis of noting in the said diary, the assessee made disclosure of Rs.65 Lacs for the A.Y. 2006-07 with respect to the sale transactions which took place during the A.Y. 2006-07 and applying same ratio and ratio relating to A.Y. 2006-07 and A.Y. 2007-08, the Assessing Officer determined the income for the A.Y. 2005 06 and considering the fact that the regular assessment was framed under section 143(3) and there was no any seized material with respect to A.Y. 2005-06, considering the aforesaid fact and observing that no incriminating material was found with respect to A.Y. 2005-06 and during the assessment, the Assessing Officer did not find any defect in the books of accounts maintained by the assessee and considering the fact that even no any material was found during the search relating to assessment year in question, CIT(A) directed to delete addition of Rs.36,94,955/- by IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 33 - observing that the Assessing Officer was not justified in making addition of Rs.36,94,955/- solely on the basis of the disclosure of Rs.65 Lacs with respect to transactions which took place in the year 2006-07 and the order passed by the CIT(A) is rightly confirmed by the Tribunal. 4.01. While confirming the order passed by the CIT(A), the ITA(T) has observed as under:..... 4.02. Now so far as the reliance placed upon the decision of the Andhra Pradesh High Court in the case of Gopal Lal Bhadruka(supra) is concerned, it is required to be noted that in the case before the Andhra Pradesh High Court, the land sale transaction was in the very assessment year in which the search was carried out. It is true and it cannot be disputed that considering section 153A of the Act, Assessing Officer can reopen and/or reassess the return with respect to six preceding years. However, there must be some incriminating material available with the assessing I officer with respect to the sale transactions in the particular assessment year such as in the present case 2005-2006. Under the circumstances, on facts, the decision of the Andhra Pradesh High Court IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 34 - shall not be applicable to the facts of the present case. 5.00. In view of the above and the reasoning given by the tribunal reproduced hereinabove, we do not see any reason to interfere with the impugned judgement and order passed by the ITAT as no substantial question of law much less substantial question of law arise in the present appeal. Hence, present appeal deserves to be dismissed and is accordingly dismissed." (v) Decision of ITAT Ahmedabad Bench 'A' in case of Shri Bhupendrabhai R. Patel ITA No: 259/A/2010 dated 17/05/2013 "9. We have heard the rival submissions and perused the material on records. In the present case, the Assessing Officer has made the additions on the basis of material collected and statement recorded during the course of search relating to Assessment Year 2007-08 Before A.O., there was no other documents to support the receipt of on money except for the Assessment Year 2007-08 The Ld. CIT (A), while deleting the additions, has given the finding that the Assessing Officer has not collected and brought on record any material to justify the estimate of on-money IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 35 - receipt. Further no enquiries were made from the members of the various societies regarding the giving of on-money to the Societies for the years other than Assessing year 2007- 08 He further held that the Assessing Officer has estimated the one money purely on hypothetical and imaginary manner and has extrapolated the evidence found for Assessment Year 2007-08 in respect of 2 plots sold and on receipt of the on money received by the assessee. He further held that the Assessing Officer has presumed that the assessee has received on money for all the seven years in all without any basis. He has further noted that the Assessing Officer had relied upon the statements of Shri Thakurbhai Ramchandra and Shri Pravinbhai Bakorbhai Patel but no opportunity of cross-examination was given to the assessee even though the assessee had made a request. Nothing has been brought on record by Revenue to controvert the findings of the CIT (A). The case laws relied by Revenue are distinguishable on facts. In view of the foregoing we find no reason to interfere with the order of the Ld. CIT (A). Thus this ground of appal is allowed. (iv) Hon'ble Pune ITAT in case of D N Kamani (HUF) Vs. DCIT 241 ITR 85 (AT). IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 36 - "Search and seizure-block assessment accounting-rejection of accounts and assessment on estimate-section 145 is not applicable in case of block assessment- presumption regarding undisclosed income is not permissible in case of block assessment- construction and sale of sixteen flats on leasehold land-search in premises of one of the purchasers disclosing that part of the cost had not been disclosed by vendor- presumption that similar payments must have been received from other purchasers was not sufficient-no proof in spite of enquiry during proceedings for block assessment that unaccounted money had been received from the other fifteen purchasers-block assessment on estimate on basis of unaccounted money received in respect of one of flats-not valid- addition made on account of unaccounted money received in respect of one of the flats was valid-income-tax act, 1961, s. 158bd." In the said case addition of Rs.42 lacs was made by way of on-money receipt for 15 flats out of 16 flats sold on the basis of the search carried out at the premises of one of the purchasers. The two ITAT members had deferred and the matter was referred to Third Member. The Third Member had agreed for deleting such addition." IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 37 - Considering the above observations and binding decisions of jurisdictional ITAT and High Court, referred supra, it is held that AO was not justified in extrapolating the income of Appellant in all the Assessment Years based upon on-money receipts reflected in loose paper pertaining to two units sold by Appellant. It is pertinent to note that Appellant firm has offered to tax income of above project developed by it in AY 2011-12 and 2012-13 only and such facts are not disputed by AO in Assessment Order. In the return of income for AY 2015-16, no sales have been offered to tax hence, there was no reason on the part of AO to estimate on-money receipt in such year only on the ground that sale documents were registered in AY 2015-16 even though sale value was already recognised by appellant in two Assessment Years referred supra. Thus, in present case, addition for on- money is required to be made on undisclosed income of Rs.78,71,000 in AY 2011-12 based upon notings mentioned in loose papers referred supra and remaining addition made by AO in AO 2012-13 and 2015-16 are deleted.” 24. In our considered view, Ld. CIT(A) has correctly held that in the instant facts the theory of extrapolation cannot be extended to all units sold by the assessee during the impugned year under consideration. The aforesaid contention is also supported by various judicial precedents on this issue. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 38 - 25. In the result, Ground No. 1 of the Department’s appeal is dismissed. Ground No. 2:- Ld. CIT(A) erred in restricting the addition to Rs. 20,00,000/- out of addition of Rs. 57,65,000/- made on account of unaccounted money received in cash. 26. We have adjudicated on this issue in detail while addressing Ground No. 2.2 of the assessee’s appeal. In light of the observations made by us in the aforesaid ground of appeal of the assessee, Ground No. 2 of the Department’s appeal is dismissed. 27. In the result, Ground No. 2 of the Department’s appeal is dismissed. 28. Ground Nos. 3 & 4 of the Department’s appeal are general in nature and do not require any specific adjudication. Assessment Year 2012-13 (Revenue’s Appeal):- 29. The Revenue has taken the 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 law and on facts in deleting the addition of Rs.1,72,22,460/- made on account of unaccounted money received in cash. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 39 - 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 3. 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.” Ground No.1:- Ld. CIT(A) has erred in deleting the addition of Rs. 1,72,22,460/- made on account of unaccounted money received in cash. 30. The brief facts in relation to this addition, in a nut shell, are that on the basis of loose papers found during the course of search under Section 132 of the Act in the case of Ashit Vora and Mihir S. Shah on 04.12.2014, the Assessing Officer observed that the assessee had sold two units in Pushkar-5 Project in which the assessee received unaccounted on-money receipts amounting to Rs. 78,71,000/-. The Assessing Officer thereafter compared on-money receipts with sale of flats developed by the assessee firm and concluded that on-money receipts are approximately 45% of actual sale consideration. Accordingly, the Assessing Officer extrapolated a sum of Rs. 1,72,22,460/- as on-money receipts during the year under consideration i.e. A.Y. 2012-13, being the amount of unaccounted cash by considering 45% of the sale consideration (during the impugned assessment year the total gross sale consideration as per return of income was Rs. 2,10,49,674/-) as received in cash. Accordingly, the Assessing Officer IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 40 - made an addition of Rs. 1,72,22,460/- as unaccounted on-money receipts during the impugned year under consideration. 31. We observe that while discussing Ground No. 1 of the Department’s appeal for A.Y. 2011-12, we have discussed at length as to why the theory of extrapolation cannot be extended to all flats sold by the assessee firm, in absence of any concrete / specific evidence which indicates that the assessee firm had received unaccounted on-money receipts with respect to sale of all flats during the impugned year under consideration. Accordingly, in light of our detailed discussion while discussing Ground No. 1 of the Department’s appeal for A.Y. 2011-12, Ground No. 1 of the Department’s appeal is hereby dismissed. 32. In the result, Ground No. 1 of the Department’s appeal is dismissed. 33. Ground Nos. 2 & 3 of the Department’s appeal for A.Y. 2012-13 are general in nature and do not require any specific adjudication. Assessment Year 2015-16 (Revenue’s Appeal):- 34. The Revenue has taken the 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 law and on facts in deleting the addition of Rs.96,77,693/- made on account of unaccounted money received in cash. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 41 - 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,63,50,000/- made on account unaccounted money received in cash. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of A.O. 4. 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.” Ground No.1:- CIT(A) erred in deleting addition of Rs. 96,77,693/- made on account of unaccounted money received in cash. 35. The brief facts in relation to this ground of appeal are similar to Ground No. 1 of the Department’s appeal for A.Y. 2011-12 and Ground No. 1 of the Department’s appeal for A.Y. 2012-13. 36. We have discussed at length the aforesaid grounds in the preceding part of our judgment. In the foregoing paragraphs, we have held that Ld. CIT(A) has not erred in facts and in law in holding that the Assessing Officer is not justified any extrapolating the unaccounted income in respect of sale of two flats in Pushkar-5 Project to the total sale consideration in respect of all flats by the assessee firm, in absence of any concrete / clinching evidence. It would be useful to reproduce the IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 42 - relevant extracts of the order by Ld. CIT(A) while deleting the addition of Rs. 96,77,693:- “Considering the above observations and binding decisions of jurisdictional ITAT and High Court, referred supra, it is held that AO was not justified in extrapolating the income of Appellant in all the Assessment Years based upon on-money receipts reflected in loose paper pertaining to two units sold by Appellant. It is pertinent to note that Appellant firm has offered to tax income of above project developed by it in AY 2011-12 and 2012-13 only and such facts are not disputed by AO in Assessment Order. In the return of income for AY 2015-16, no sales have been offered to tax hence, there was no reason on the part of AO to estimate on- money receipt in such year only on the ground that sale documents were registered in AY 2015-16 even though sale value was already recognised by appellant in two Assessment Years referred supra. Thus, in present case, addition for on-money is required to be made on undisclosed income of Rs.78,71,000 in AY 2011-12 based upon notings mentioned in loose papers referred supra and remaining addition made by AO in AO 2012- 13 and 2015-16 are deleted.” 37. In the aforesaid paragraph, Ld. CIT(A) has observed that during the A.Y. 2015-15, no sales have been made by the assessee firm. Accordingly, there is no question of extrapolating any undisclosed IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 43 - income in respect of two units sold during A.Y. 2011-12 in the impugned Assessment Year i.e. 2015-16. In our view, Ld. CIT(A) has correctly held that firstly the theory of extrapolation cannot be extended in absence of any concrete / clinching evidence that the assessee received unaccounted cash in respect of all units sold by the assessee firm, (apart from the two units in respect of which evidence of unaccounted receipt of on-money was found) and secondly, the assessee has not made any sales during the year under consideration i.e. A.Y. 2015-16, then the Assessing Officer cannot estimate on-money receipt only on the ground that sale documents were registered in A.Y. 2015-16, even though sale value was already recognised by the assessee firm in A.Ys. 2011-12 and 2012-13. 38. In the result, Ground No. 1 of the Department’s appeal is dismissed. Ground No. 2:- CIT(A) erred in deleting addition of Rs. 1,63,50,000/- made on account of unaccounted money received in cash. 39. The brief facts in connection with this ground of appeal of the Department are that during the course of search, the Assessing Officer found certain loose papers at the residence of Mihir S. Shah partner of the assessee firm. On analysis of the aforesaid loose papers, the Assessing Officer made an addition of Rs. 57,65,000/- as unaccounted income of the assessee during the A.Y. 2010-11 and the remaining amount of Rs. 1,63,50,000/- was added to the assessee’s income in A.Y. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 44 - 2015-16. The Ld. CIT(A) deleted the addition on the ground that no specific date has been mentioned in loose papers was found and therefore, there is no basis / reason for taxing the aforesaid amount in A.Y. 2015-16. While passing the order Ld. CIT(A) observed as under:- “7.4 On careful consideration of all the facts and relevant seized material relied upon by AO, which is summarised in tabular chart herein below, it is found that such loose papers were found during the course of search at the residence of Mr. Mihir Shah, partner of Appellant Firm. Annexure Page no. Amount (Rs.) Particular A/1 53 11,15,000 Cash amount 53 1,00,00,000 To receive in Pushkar 50 50,00,000 Deposit Pushkar 36 20,00,000 Given to Pushkar A/3 2 20,00,000 Pushkar A/8 2 20,00,000 Given-Pushkar The first contention of Appellant that Mr. Mihir Shah is Assessment Proceedings has admitted that transaction noted in above loose papers pertains to him and not to Pushkar cannot be accepted as Appellant has brought nothing on record to prove that such transactions are owned by Mr. Mihir Shah while filing return of income under Section 153A of the Act nor such transactions are IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 45 - already subject matter of addition in his Assessment Order. The seized paper referred by AO contains name “Pushkar” hence such loose paper needs to be adjudicated in present case. The AO has considered noting of Rs.50,00,000 as mentioned at page No. 50 of Annexure – A/1 (noting dated 28 th September, 2010) adn Rs.7,65,000 noted at page No. 53 of Annexure – A/1 (26 th July, 2010) in AY 2010-11 as dates mentioned in loose paper pertains to current year. The remaining amount of Rs.1,63,50,000 is considered in AY 2015-16 though no specific date has been mentioned in such loose paper. It is pertinent to note that page No 36 of Annexure – A/1 contains noting of Rs. 20,00,000 being amount given to “pushkar”. However, bottom such loose paper proves that noting is pertaining to month January 2006 hence AO cannot tax such amount as undisclosed income of AY 2015-16. The AO has not brought anything on record to prove that above amount reflects notings pertaining AY 2015-16 hence, addition made by AO to that extent is deleted.” 40. On going through the facts of the case and the observations made by Ld. CIT(A), we are of the considered view that Ld. CIT(A) has correctly deleted the aforesaid addition while noting that in absence of any specific date mentioned in the loose paper, the Assessing Officer cannot add the remaining amount of Rs. 1,63,50,000/- as undisclosed income of the assessee firm in A.Y. 2015-16. Accordingly, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. IT(SS)A Nos. 347/Ahd/2019 & 367,368&1135/Ahd/2019 Pushkar Infrastructure vs. ACIT & DCIT vs. Pushkar Infrastructure Asst. Years –2011-12, 2012-13 & 2015-16 - 46 - 41. In the result, Ground No. 2 of Department’s appeal is dismissed. 42. Ground No. 3 and 4 of the Department’s appeal are general in nature and do not require any specific adjudication. 43. In the combined result, the assessee’s appeal is partly allowed and the Department’s appeal is dismissed for the Assessment Years under consideration before us. This Order pronounced in Open Court on 11/08/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/08/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 04,07&08.08.2023 2. Date on which the typed draft is placed before the Dictating Member 08.08.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 10.08.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .08.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 11.08.2023 7. Date on which the file goes to the Bench Clerk 11.08.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................