M/s. Jay Kesar Bhavani Developers Pvt.Ltd., Surat V. The ITOI,Wd.1(3), Surat

ITA 1196/AHD/2013

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5896 (ITAT-SURAT)
• Duration Of Justice: 6 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS T BIDARI
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Rejection of books of accounts; Question of law
• Section: 133A; 115JB; 201; 64; 13; 145(3)

Judgement Text

JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 1 OF 15 , , IN THE INCOME TAX APPELLATE TRIBUNAL-SURAT-BENCH-SU RAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUTANT MEMBER . . /. I.T.A NO.1196/AHD/2013 / ASSESSMENT YEAR:2009-10 M/S. JAY KESAR BHAVANI DEVELOPERS PVT. LTD., A-48,KESAR KUNJ, SHRI BHULABHAI DESAI MARG, LAXMIKANT ASHRAM ROAD KATARGAM SURAT 395004 PAN:AABCJ 6278 P V. INCOME TAX OFFICER, WARD-1(3) SURAT APPELLANT / RESPONDENT /ASSESSEE BY SHRI SAPNESH SHETH, CA /REVENUE BY SHRI SRINIVAS T. BIDARI, CIT(D.R.) / DATE OF HEARING: 12.02.2020 /PRONOUNCEMENT ON 13 .02.2020 /O R D E R PER O. P. MEENA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, SUR AT(IN SHORT THE CIT (A)) DATED 01.02.2013 PERTAINING TO ASSESSMENT YEAR 2009-10, WHICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) DATED 09.12.2011 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE INCOME TAX OFFICER, WARD- 1(3),S URAT (IN SHORT THE AO). JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 2 OF 15 2. GROUND NO. 1 TO 3: RELATING TO DISALLOWANCE DEDUCTI ON OF RS. 5,02,25,387 U/S. 80IB(10) ARE NOT PRESSED BEFORE US , BY THE LEARNED COUNSEL ON THE GROUND THAT THE ORIGINAL RET URN OF INCOME WAS NOT FILED WITHIN STATUTORY PERIOD FOR ELIGIBLE TO MAKE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, EX-CON SEQUENTI, THESE GROUNDS OF APPEAL ARE TREATED AS DISMISSED AS NOT PRESSED. 3. GROUND NO. 4 TO 6 RELATES TO REJECTION OF BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE ACT, CONFIRMING THE ADD ITION OF RS. 4,72,02,368 ON ACCOUNT OF ENTIRE CONSTRUCTION RECEI PTS AS ALLEGED UNRECORDED RECEIPTS, WITHOUT APPRECIATING IN THE RI GHT AND TRUE PERSPECTIVE, THAT THE EXPENDITURE DIRECTLY INCURRED FOR THE CONSTRUCTION OF THE RESIDENTIAL UNITS, DULY RECORDE D IN THE BOOKS OF ACCOUNTS AND THE ACCOUNTS ARE DULY SUPPORTED BY AUTHENTIC EVIDENCES I.E. BILLS, VOUCHERS, GOVERNMENT APPROVED VALUER REPORTS, WORK PROGRESS FILED WITH HUDCO, AND CIT (A ) HAD ERRED IN OVERLOOKING AND IN SUMMARILY REJECTING THE DETAIL ED STATEMENT OF FACTS HENCE, ADDITION OF ENTIRE GROSS RECEIPTS MADE UNDER PRESUMPTION , ASSUMPTION AND ALLEGATION OF NON-INC URRENCE OF ANY CONSTRUCTION EXPENDITURE FOR THE CONSTRUCTION OF RE SIDENTIAL UNITS AND IGNORING VARIOUS EVIDENCE PLACED IN PAPER BOOK FURNISHED BEFORE THE AO, HENCE, VERSION OF THE AO IS NOT JUST IFIED. 4. SUCCINCT FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL UNITS. THE ASSESSEE HAS FILED RETURN OF INCOME ON 08.10.2009 DECLARING TOTAL INCOME OF RS.8 ,82,070. BOOK PROFIT WAS SHOWN AT RS. 25,84,547 FOR THE PURPOSE O F SECTION 115JB OF THE ACT. THE ASSESSEE HAS SHOWN TURNOVER OF RS.567. 44 LAKHS AND JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 3 OF 15 OTHER INCOME OF RS.123.49 LAKHS AND SHOWN NET PROFI T AT RS. 25,54,547. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS .30,23,019 U/S. 80IB(10) OF THE ACT. A SURVEY UNDER SECTION 133A CO NDUCTED ON 30.12.2009 BY THE DDIT(INV.) SURAT AS TO HOW BUSINE SS PREMISES OF THE ASSESSEE. THE AO NOTED THAT THE ASSESSEE HAS SHOWN TURNOVER OF RS. 6,90,92,636 AND CLAIMED EXPENSES OF RS.6,65,08,089 AND SHOWN GROSS PROFIT AT RS.25,84 547 BEFORE TAX IN ORIGINAL RETUR N OF INCOME WHEREAS AFTER SURVEY THE ASSESSEE HAS FILED REVISED PROFIT & LOSS ACCOUNT DISCLOSING TURNOVER AT RS.25,94,55,680 AND EXPENDIT URE OF RS.25,71,84,057 SHOWING GROSS PROFIT AT RS.22,71,6 22. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED ADDITIONAL EXPENDITUR E OF RS.4,29,02,369 TO COVER UP ADDITIONAL AMOUNT OF CON STRUCTION WORK OF RS.4,29,02,369 CREDITED IN THE REVISED PROFIT & LOS S ACCOUNT. THE AO FURTHER OBSERVED THAT EACH CASH PAYMENT IS SHOWN BE LOW RS.20,000 AND VOUCHERS ARE MADE, HENCE, BOOKS OF ACCOUNTS ARE NOT RELIABLE ACCORDINGLY, SAME WERE REJECTED UNDER SECTION 145(3 ) OF THE ACT. THE AO HAS OBSERVED THAT TOTAL RECEIPTS AS PER IMPOUNDE D PAGE NO. 5 TO 39 OF ANNEXURE B-I IS AT RS.10,39,86,000 WHEREAS IN THE RETURN OF INCOME SAME HAS BEEN SHOWN AT RS.5,67,83,632 HENCE, GROSS RECEIPTS ARE SHOWN LESS BY RS.4,72,02,368. THE AO FURTHER OB SERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE HAS JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 4 OF 15 CONFESSED TO HAVE RECEIVED TOTAL RECEIPTS OF RS.9,9 8,17,066 OUT OF TOTAL GROSS RECEIPTS OF RS.10,39,86,000 AND BALANCE RECEIPTS OF RS. 41,68,934 WERE NOT RECEIVED DURING YEAR. THE AO FUR THER OBSERVED THAT THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME OF RS.5.11 CRORES, IN ADDITION TO REGULAR INCOME DURING SURVEY BEFORE DDIT(INV.) SURAT FOR A.Y.2010-11. THE ASSESSEE COMPANY ALSO CONFESSE D TO HAVE RECEIVED UNRECORDED RECEIPTS FOR THE CUSTOMERS. THE ASSESSEE HAS ALREADY CLAIMED THE EXPENSES TO THE EXTENT OF RS. 6 65 CRORES. IN VIEW OF ABOVE DISCUSSION, THE AO BROUGHT TO TAX, THE UNA CCOUNTED RECEIPTS OF RS.4,72,02,368 AND MADE ADDITION TO TOTAL INCOME . 5. BEING, AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT (A). HOWEVER, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS RECEIPTS AT RS.6,90,92,636 IN THE ORIGINAL RETURN O F INCOME, WHICH ARE INCREASED TO RS.25, 94, 55, 680, IN THE REVISED PRO FIT & LOSS ACCOUNT AND BALANCE SHEET. THE ASSESSEE HAS ALSO INCREASED ITS EXPENSES FROM RS.6,65,08,089 TO RS. 25,71,84,057 IN THE REVISED P ROFIT & LOSS ACCOUNT. THE ADDITIONAL EXPENSES HAVE BEEN CLAIMED ON THE BASIS OF CASH VOUCHERS WHICH WERE NOT PRODUCE BEFORE THE SUR VEY TEAM ON THE DATE OF SURVEY. THE ASSESSEE HAS STATED THAT THE AU DITORS DID NOT CONSIDER THE SAME CORRECTLY IN THE AUDITED ACCOUNT S. FOR SOME UNITS SALE CONSIDERATION WAS SHOWN AS BOOKING ADVANCE. TH E APPELLANT ALSO JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 5 OF 15 STATED THAT EVEN THE EXPENDITURE HAS NOT BEEN CORRE CTLY ACCOUNTED FOR BY THE AUDITORS. IN VIEW OF THESE FACTS, THE LD . CIT(A) OBSERVED THAT THE RECEIPTS AND EXPENSES HAVE BEEN INCREASED SEVERAL TIMES IN COMPARISON TO THOSE REFLECTED IN THE AUDITED BOOKS OF ACCOUNTS, ITSELF IS SUFFICIENT REASON FOR REJECTION OF THE BOOKS OF ACCOUNTS OF THE APPELLANT. THEREFORE, THE REJECTION OF BOOKS OF ACC OUNTS BY MADE THE AO, WAS UPHELD. THE LD. CIT(A) FURTHER OBSERVED THA T AS PER THE IMPOUNDED MATERIALS THE GROSS RECEIPTS ARE SHOWN AT RS.10,39,86,000, WHILE IN THE RETURN OF INCOME THE CORRESPONDING RECEIPTS IN RESPECT OF 38 UNITS HAVE BEEN DISCLOSED AT RS.5,67,82,632. THEREFORE, THE DIFFERENCE OF RS.4,72,02,368 HAS BEE N RIGHTLY ADDED BY THE AO AS UNACCOUNTED RECEIPTS. THE APPELLANTS CONTENTION THAT THE AO SHOULD HAVE ALLOWED THE DEDUCTION FOR UNACCO UNTED EXPENDITURE OUT OF UNACCOUNTED RECEIPTS AND SHOULD NOT HAVE ADDED THE GROSS RECEIPTS WAS NOT FOUND ACCEPTABLE AS THE DISPUTED UNACCOUNTED RECEIPTS OF RS.4,72,02,368 HAVE BEEN WO RKED OUT ON THE BASIS OF IMPOUNDED MATERIALS. IT IS ALSO FACT THAT IN THE REVISED PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS INCREASED ITS EXPE NSES TO RS.25, 94, 55, 680 BY ADDING CLOSING STOCK OF RS.14, 74, 60, 6 75 AND CONSTRUCTION WORK OF RS.4, 29, 02, 369. FURTHER, THE CLAIM OF AD DITIONAL EXPENSES ARE SUPPORTED ONLY BY CASH VOUCHERS WITH CASH PAYME NT LESS THAN RS. JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 6 OF 15 20,000 IN EACH CASE AS MENTIONED BY THE AO. THESE V OUCHERS WERE NOT FOUND OR PRODUCE BEFORE THE SURVEY TEAM AND WER E NOT GIVEN TO THE AUDITORS. THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET, PREPARED BY THE AUDITORS DID NOT INCLUDE THESE RECEIPTS AND EXPENDITURE. THEREFORE, THE APPELLANTS CLAIM WAS NOT FOUND MAIN TAINABLE. IN VIEW OF THESE FACTS, THE ADDITION MADE BY THE AO AT RS.4 , 72, 02,368 BEING ENTIRE UNRECORDED RECEIPTS WAS CONFIRMED. 6. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LEARNED COUNSEL SUBMITTED THAT THE AO HAS MADE THE ADDITION OF ENTIRE ON MONEY RECEIPTS, WITHOUT ALLOW ING EXPENSE WHICH WERE DULY SUPPORTED BY THE VOUCHERS WHICH WERE REFL ECTED IN THE IMPOUNDED MATERIAL. IT IS FACT THAT THE ASSESSEE HA S INCURRED EXPENDITURE CORRESPONDING TO THE GROSS RECEIPTS. TH E CORRESPONDING EXPENDITURE IN CASH IS THE REQUIREMENT OF CONSTRUCT ION BUSINESS. THE ASSESSEE HAS ACCORDINGLY MADE A CLAIM OF EXPENDITUR E BY WAY OF FILING REVISED PROFIT & LOSS ACCOUNT BY WHICH THE EXPENDIT URE WAS INCREASED AND ALSO THE GROSS RECEIPTS WERE INCREASED. HOWEVER , THE AO BASED ON IMPOUNDED MATERIAL COMPUTED GROSS RECEIPTS AT RS .10 29 CRORES AS AGAINST THE RECEIPTS SHOWN IN THE BOOKS OF ACCOUNTS AT RS.5.67 CRORES, WHICH WAS FILED BEFORE SURVEY UNDER SECTION 133A CA RRIED OUT. HOWEVER, THE AO HAS FAILED TO CONSIDERED EXPENDITUR E SO INCURRED JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 7 OF 15 AND CLAIMED BY WAY OF FILING VOUCHERS OF THE SAME. THE AO HAS MADE ADDITION OF THE DIFFERENCE BETWEEN GROSS RECEIPTS A ND RECEIPTS IN BOOKS OF ACCOUNTS OF RS.4.72 CRORES BUT DID NOT ALL OW CREDIT OF EXPENSES INCURRED. LEARNED COUNSEL CONTENDED THAT T HE ENTIRE ON MONEY RECEIPTS CANNOT BE CONSIDERED AS NET INCOME O F THE ASSESSEE AS THE ASSESSEE HAS INCURRED CORRESPONDING EXPENDIT URE TO EARN SUCH ON-MONEY RECEIPTS. THEREFORE, ONLY PROFIT EMBEDDED THEREIN IN THE LINE OF BUSINESS WHICH HAS BEEN DISCLOSED BY THE AS SESSEE SHOULD BE CONSIDERED FOR ARRIVING AT TRUE AND NET INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. PRESIDENT INDUSTRI ES [2002] 258 ITR 654 (GUJARAT) /124 TAXMAN 654 (GUJARAT) SUBMITTED T HAT ENTIRE SALES COULD NOT BE ADDED AS INCOME OF THE ASSESSEE, BUT A DDITION COULD BE MADE ONLY TO THE EXTENT OF ESTIMATED PROFITS EMBEDD ED IN SALES FOR WHICH NET PROFIT DISCLOSED IN THE BOOKS OF ACCOUNT S WAS TO BE ADOPTED. IT WAS FURTHER SUBMITTED THAT EVEN OTHERWI SE ALSO, THE ENTIRE ON MONEY CANNOT BE TAXED IN THE YEAR OF RECE IPT AS THE SAME IS REQUIRED TO BE TAX IN THE YEAR IN WHICH ACTUAL S ALES TAKES PLACE. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RE LIANCE IN THE CASE OF JAY BUILDERS V. ACIT, 33 TAXMANN.COM 62 AND ALS O DECISION OF HONBLE ITAT, AHMEDABAD IN THE CASE OF KISHOR TELWA LA [199] 64 TTJ JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 8 OF 15 543. IT WAS CONTENDED THAT THE ADDITION COULD BE MA DE ONLY IN RESPECT OF THOSE UNITS WHERE EVIDENCES RELATING TO RECEIPT OF ON-MONEY HAS BEEN FOUND AND NOT IN RESPECT OF OTHER UNITS WHERE THERE ARE NO SUCH EVIDENCES. THE LEARNED COUNSEL FOR THE ASSESSEE FUR THER RELIED ON THE JUDGEMENT IN THE CASE OF THE HONBLE GUJARAT HIGH C OURT IN THE CASE OF CIT V. ASHLAND CORPORATION 133 ITR 55 AND IN CIT V. MOTILAL C PATEL & COMPANY 173 ITR 666 WHEREIN IT LAID DOWN THAT IT IS SETTLED LAW THAT NO ADDITION CAN BE MADE PURELY BASED ON STATEM ENT RECORDED DURING SURVEY. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT V. PANNA CORPORATION [TAX APPEAL NO. 323 AND 325 OF 20 0 DATED 16.06.2012] 74 DTR 89, WHEREIN IT WAS HELD THAT IT HAS BEEN CONSISTENTLY HELD BY THIS COURT AND SOME OTHER COUR TS HAVE BEEN FOLLOWING THE PRINCIPLE THAT EVEN UPON DETECTION OF ON-MONEY RECEIPT OR UNACCOUNTED CASH RECEIPT, WHAT CAN BE BROUGHT TO TAX IS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND NOT THE ENTIRE RECEIP TS THEMSELVES. IF THAT WERE, THE LEGAL POSITION, WHAT SHOULD BE ESTIM ATED AS A REASONABLE PROFIT OUT OF SUCH RECEIPTS, MUST BEAR A N ELEMENT OF ESTIMATION. FURTHER IN THE CASE OF ABHISHEK CORPORATION V. DY. CIT [1999] 63 TTJ (AHD.) 651 IT WAS HELD THAT WHERE IT WAS FOUND THAT ASSESSEE HAD BEEN CHARGING ON MONEY/PREMIUM IN RE SPECT OF JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 9 OF 15 BOOKING OF FLATS, THE ENTIRE RECEIPTS ON ACCOUNT OF ON MONEY/PREMIUM CHARGED BY THE ASSESSEE ON BOOKING O F FLATS WOULD NOT BE THE UNDISCLOSED INCOME OF THE ASSESSEE FOR T HE BLOCK PERIOD, BUT ONLY NET PROFIT RATE COULD BE APPLIED ON UNACCO UNTED SALES/RECEIPTS FOR THE PURPOSE OF MAKING THE ADDITI ON. 7. IN VIEW OF ABOVE STATED JUDICIAL PRONOUNCEMENTS, IT WAS CONTENDED THAT ONLY ELEMENT OF PROFIT IS TO BE CONS IDERED. IT WAS SUBMITTED THAT THE NET PROFIT DISCLOSED BEFORE TAX BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS @4.55% IN ASSESSMENT YEAR 2009-10 AND WAS @ 4.59% IN ASSESSMENT YEAR 201 0-11. THEREFORE, THE ONLY NET PROFIT SHOULD BE ADOPTED, AND THE ENTI RE ON-MONEY RECEIPTS OF RS. 4.72 CRORES. THE LEARNED COUNSEL F OR THE ASSESSEE FURTHER PLACED RELIANCE ON THE DECISION OF ITAT SUR AT BENCH IN THE CASE OF ACIT V. M/S. MANSI REALITY PVT. LTD. [I.T.A .NO. 540/AHD/2016 A.Y. 11-12 DATED 13.12.2019, WHEREIN NET PROFIT OF ON-MONEY RECEIPTS WAS ADOPTED BY THE LD.CIT (A) WAS UPHELD BY THE TRI BUNAL BY HOLDING THAT IN THE CASE OF ON-MONEY RECEIPTS, ONLY PROFIT EMBEDDED THEREIN IS TO BE TAXED AND NOT THE ENTIRE ON-MONEY RECEIPTS . 8. PER CONTRA, LEARNED CIT(D.R.) RELIED ON THE ORDER OF CIT (A) A ND SUBMITTED THAT THE EXPENDITURE CLAIMED BY WAY OF CA SH VOUCHERS WERE NOT PRODUCED DURING SURVEY, HENCE, SAME IS NOT FOUND JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 10 OF 15 ACCEPTABLE BY THE AO LOWER AUTHORITIES. THE EXPENDI TURE INCURRED BY THE ASSESSEE HAS BEEN ALREADY ACCOUNTED FOR IN AUDI TED BOOKS OF ACCOUNTS HENCE, THE CIT (A) WAS JUSTIFIED IN CONFIR MING ADDITION OF ENTIRE ON-MONEY RECEIPTS. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE IMPOUNDED MATE RIAL REVEALED THAT THE ASSESSEE HAS EARNED GROSS RECEIPTS AMOUNTI NG RS.10,39,86,000 WHEREAS IN THE RETURN OF INCOME, TH E SAME WERE SHOWN AT RS.5,67, 83, 632. HENCE, THE AO MADE ADDIT ION OF DIFFERENCE IN GROSS FOUND AND SHOWN BY THE ASSESSEE AT RS.4,72 ,02,368 RECEIVED BY THE ASSESSEE ON ACCOUNT ON-MONEY ON SALE OF FLAT S DURING THE YEAR UNDER CONSIDERATION. WE FIND THAT THE ASSESSEE HAD CLAIMED THE EXPENDITURE BY WAY OF FILING CASH VOUCHERS DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, HOWEVER, THE AO HAS DISBELI EVED THE SAME WITHOUT GIVING COGENT REASON AND INVESTIGATION AND VERIFICATION. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT CON SIDERING THE FACT THAT THE ENTIRE MONEY RECEIPTS CANNOT BE TAXED IN ENTIRETY AND ONLY THE PROFIT EMBEDDED THEREIN IN SUCH RECEIPTS IS TO BE CONSIDERED FOR ARRIVING AT CORRECT, TRUE AND REAL INCOME FOR TAXAT ION. THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED HIS VIEWS BY PLA CING RELIANCE ON THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 11 OF 15 V. PANNA CORPORATION [TAX APPEAL NO. 323 AND 325 OF 2000 DATED 16.06.2012] [2012] 74 DTR 89 (GUJARAT) WHERE IT WA S HELD THAT IT HAS BEEN CONSISTENTLY HELD BY THIS COURT AND SOME O THER COURTS HAVE BEEN FOLLOWING THE PRINCIPLE THAT EVEN UPON DE TECTION OF ON- MONEY RECEIPT OR UNACCOUNTED CASH RECEIPT, WHAT CAN BE BROUGHT TO TAX IS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND NOT THE ENTIRE RECEIPTS THEMSELVES. IF THAT WERE THE LEGAL POSITIO N, WHAT SHOULD BE ESTIMATED AS A REASONABLE PROFIT OUT OF SUCH REC EIPTS, MUST BEAR AN ELEMENT OF ESTIMATION. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO OF JUDGEMENT OF HON`BLE JURISDICTIONAL HI GH COURT, WE ARE OF THE CONSIDERED OPINION THAT ONLY PROFIT ELEMENT S EMBEDDED IN ON- MONEY RECEIPTS IS REQUIRED TO BE TAXED AND NOT THE ENTIRE ON-MONEY RECEIPTS. 10. THE LEARNED COUNSEL HAS FURTHER PLACED RELIANCE ON THE DECISION OF HONOURABLE JUDICIAL HIGH COURT IN THE CASE OF CIT V. PRESIDENT INDUSTRIES [2002] 258 ITR 654 (GUJARAT)HEAD NOTE RE ADS SECTION 69B, READ WITH SECTION 256, OF THE INCOME-TAX ACT, 1961 - UNDISCLOSED INVESTMENTS - ASSESSMENT YEAR 1994-95 - WHETHER AMO UNT OF SALES BY ITSELF CANNOT REPRESENT THE INCOME OF THE ASSESS EE WHO HAS NOT DISCLOSED THE SALES - HELD, YES - DURING SURVEY IT WAS FOUND THAT ASSESSEE HAD NOT DISCLOSED CERTAIN SALES IN BOOKS O F ACCOUNT - JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 12 OF 15 WHETHER TRIBUNAL WAS JUSTIFIED IN HOLDING THAT UNLE SS THERE WAS A FINDING THAT INVESTMENT BY WAY OF INCURRING COST IN ACQUIRING GOODS WHICH HAD BEEN SOLD, HAD BEEN MADE BY ASSESSEE AND THAT HAD ALSO NOT BEEN DISCLOSED, ONLY NET PROFITS EMBEDDED IN SA LES, AND NOT WHOLESALE PROCEEDS ITSELF, WOULD BE TREATED AS UNDI SCLOSED INCOME OF ASSESSEE - HELD, YES. 11. IN THE CASE OF CIT V ABHISHEK CORPORATION [2000] 158 CTR 374 (GUJARAT) THE HONBLE GUJARAT HIGH COURT OF WHICH C ATCH NOTE READS AS UNDER: ADDITION ON ACCOUNT OF UNACCOUNTED RECEIP TS- ASSESSEE- FIRM UNDER TOOK SUPERVISION OF CONSTRUCTION WORK AN D BOOKING OF FLATS ON BEHALF OF TWO CO-OPERATIVE SOCIETIES INF ERENCE WAS DRAWN FROM A PAPER SEIZED FROM ONE M THAT FLATS WERE SOLD AT PREMIUM IN RESPONSE TO A NOTICE DECLARED UNDISCLOSED INCOM E OF RS. 30 LAKHS CONSIDERING THE FACT THAT ASSESSEE WAS ENT ITLED SUPERVISION CHARGES ONLY AND TAKING INTO CONSIDERATION DEPRECIA TION , SALARY , ETC. . TRIBUNAL DETERMINED THE PROFIT RATE 1.31 PER CENT SAME WAS NOT DISPUTED BY REVENUE TRIBUNAL FOUND THAT UNDIS CLOSED INCOME OF RS. 30 LAKHS DECLARED BY THE ASSESSEE WAS NOT LE SS THAN NET PROFIT CALCULATED AT 1.31 PERCENT INVESTMENT IN LAND AND IN CONSTRUCTION WAS NOT SHOWN TO HAVE BEEN MADE BY THE ASSESSEE THUS, , TRIBUNAL RENDERED ITS DECISION ON APPRECIAT ION OF MATERIAL JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 13 OF 15 PLACED ON RECORD NO REFERABLE QUESTION OF LAW ARI SES. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECISIO N OF HONBLE GUJARAT HIGH COURT THE NET PROFIT RATE DISCLOSED A T 4.55% DURING THE ASSESSMENT YEAR UNDER CONSIDERATION BY THE ASSESSEE IN BOOKS OF ACCOUNTS AND CONSIDERING THE FACTS THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE COMES UNDER DEDUCTION OF SECTION 80IB( 10) HENCE, THERE WAS NO OCCASION TO SUPPRESS THE PROFIT RATE AS DIS CLOSED BY THE ASSESSEE. 12. THE AHMEDABAD TRIBUNAL IN ABOVE CASE IN THE OF DCIT V. ABHISHEK CORPORATION V. DCIT [1999] 63 TTJ(AHD0 651 (AHMEDABAD- TRIB)HELD THAT WHERE IT WAS FOUND THAT ASSESSEE HAD BEEN CHARGING ON MONEY/PREMIUM IN RESPECT OF BOOKING OF FLATS, THE ENTIRE RECEIPTS ON ACCOUNT OF ON MONEY/PREMIUM CHARGED B Y THE ASSESSEE ON BOOKING OF FLATS WOULD NOT BE THE UNDISCLOSED IN COME OF THE ASSESSEE FOR THE BLOCK PERIOD, BUT ONLY NET PROFIT RATE COULD BE APPLIED ON UNACCOUNTED SALES/RECEIPTS FOR THE PURPO SE OF MAKING THE ADDITION. SIMILARLY THE ITAT SURAT BENCH IN THE CASE OF ACIT V. M/S. MANSI REALITY PVT. LTD. [I.T.A.NO. 540/AHD/2016 A.Y . 11-12 DATED 13.12.2019, WHEREIN NET PROFIT OF ON-MONEY RECEIPTS WAS ADOPTED BY THE LD.CIT (A) WAS UPHELD BY THE TRIBUNAL BY HOLDIN G THAT IN THE CASE JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 14 OF 15 OF ON-MONEY RECEIPTS, ONLY PROFIT EMBEDDED THEREIN IS TO BE TAXED AND NOT THE ENTIRE ON-MONEY RECEIPTS. 13. IN THE LIGHT OF ABOVE DISCUSSION, AND RESPECTFULLY FOLLOWING THE JUDGEMENTS OF HON`BLE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE AND ALSO OF TRIBUNAL, WE OF THE CONSIDERED OPINION THAT LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF ENT IRE ON-MONEY RECEIPTS AMOUNTING TO RS.4,72,02,368. THEREFORE, ON LY ESTIMATED NET PROFIT IS REQUIRED TO BE TAXED. WE FIND THAT THE A SSESSEE HAS SHOWN NET PROFIT AT 4.55.% FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION AND 4.59% FOR A.Y. 2010-11. FURTHER, THE HON`BLE HIGH C OURT IN THE CASE OF CIT V. ABHISHEK CORPORATION (SUPRA) HAS UPHELD T HE NET PROFIT AT 1.31% AS DECLARED BY THE ASSESSEE IN THAT CASE. TH E NET PROFIT RATE DISCLOSED AT 4.55% DURING THE ASSESSMENT YEAR UNDER CONSIDERATION BY THE ASSESSEE IN BOOKS OF ACCOUNTS AND CONSIDERING T HE FACTS THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE COMES UNDER DEDU CTION OF SECTION 80IB(10) OF THE ACT, HENCE, THERE MAY NOT BE ANY IN TENTION TO DISCLOSE THE LOWER RATE OF PROFIT. CONSIDERING THESE FACTS, AND TAKING IN TO ACCOUNT NET PROFIT IN CONSTRUCTION BUSINESS, IT WOU LD BE REASONABLE TO ESTIMATE 6% OF NET PROFIT ON TOTAL ON-MONEY RECEIPT S OF RS. 4,72,02,368. ACCORDINGLY, THE AO IS DIRECTED TO TAX NET PROFIT @6% ON JAY KESAR BHAVANI DEVELOPERS PVT. LTD. V. ITO-WD-1( 3) SURAT/I.T.A.NO. 1196/AHD/2013/A.Y. 09-10 PAGE 15 OF 15 TOTAL ON-MONEY RECEIPTS OF RS.4,72,,02,368. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE GROUND NO. 4 TO 6 OF APPEAL ARE PARTLY ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.02.202 0 SD/- SD/- (SANDEEP GOSAIN) ( O.P.MEENA) JUDICIAL MEMBER ACCOUNTA NT MEMBER SURAT: DATED: 13 TH FEBRUARY, 2020/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/ GUARD FILE OF ITAT. BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, SURAT