M/s Bhoomiyaji Land & finance Co., Dewas V. The ITO, Dewas

ITA 142/IND/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2332 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: S S DESHPANDE
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value; Business income; Cost of acquisition; Corroborative evidences; Capital expenditure
• Section: 50C; 142(1); 133A; 133(6); 68; 69; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.263/IND/2013 ASSESSMENT YEAR: 2006-07 M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. / VS. A CIT - 1 ( 1 ), UJJAIN (APPELLANT) (REVENUE ) P.A. NO. AACFB9350N ITA NO.411/IND/2013 ASSESSMENT YEAR: 2006-07 D CIT - 1(1), UJJAIN / VS. M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. (APPELLANT) (REVENUE ) P.A. NO. AACFB9350N ITA NO.490/IND/2013 ASSESSMENT YEAR: 2007-08 M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. / VS. ITO DEWAS (APPELLANT) (REVENUE ) P.A. NO.AACFB9350N BHOOMIYAJI LAND & FINANCE 2 ITA NO.412/IND/2013 ASSESSMENT YEAR: 2007-08 DCIT - 1(1), UJJAIN / VS. M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. (APPELLANT) (REVENUE ) P.A. NO. AACFB9350N ITA NO.142/IND/2013 ASSESSMENT YEAR: 2008-09 M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. / VS. ITO DEWAS (APPELLANT) (REVENUE ) P.A. NO.AACFB9350N ITA NO.137/IND/2013 ASSESSMENT YEAR: 2008-09 DCIT - 1(1), UJJAIN / VS. M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. (APPELLANT) (REVENUE ) P.A. NO. AACFB9350N ITA NO.634/IND/2013 ASSESSMENT YEAR: 2010-11 DCIT - 1(1), UJJAIN / VS. M/S. BHOMIYAJI LAND & FINANCE CO. 123, TUKOGANJ, NAYAPURACHOWK, DEWAS. (APPELLANT) (REVENUE ) P.A. NO. AACFB9350N BHOOMIYAJI LAND & FINANCE 3 APPELLANT BY SHRI S . S . D E S H P A N D E , C A REVENUE BY SHRI K . G . G O Y A L S R . DR DATE OF HEARING: 30.01.2018 DATE OF PRONOUNCEMENT: 31.01.2018 / O R D E R PER BENCH: THESE ARE BUNCH OF SEVEN APPEALS. CROSS APPEALS ARE FILED FOR A.YS. 2006-07, 2007-08 & 2008-09 AND REVENUES APPE AL FOR A.Y. 2010-11 ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A )-UJJAIN DATED 28.03.2013, 28.03.2013,13.12.2012 & 14.7.2014 RESPE CTIVELY. AS ALL THESE APPEALS RELATES TO SAME ASSESSEE AND GROU NDS RAISED ARE COMMON, THESE ARE HEARD TOGETHER AND ARE BEING DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND GRAVIT Y. FIRST WE TAKE CROSS APPEAL FOR A.Y. 2006-07 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING L AND AND PLOTTING AND CONSTRUCTING HOUSES THERE UPON. RETURN OF INCOM E WAS FILED ON 31.10.2006 DECLARING INCOME OF RS.190250/-. SURVEY PROCEEDINGS U/S 133A OF THE ACT WAS CONDUCTED ON 15.03.2007, IN COME SURRENDERED DURING THE COURSE OF SURVEY WAS RETRACT ED ON THE NEXT DAY PLEADING THAT THE SURRENDERED WAS MADE UNDER CO ERCIVE PRESSER AND DESERVES STATE OF MIND. CASE SELECTED FOR SCRUT INY. NOTICES U/S 143(2) AND 142(1) ISSUED. DETAIL FILED BY THE ASSES SEE WERE EXAMINED. THE LEARNED ASSESSING OFFICER( IN SHORT L D. AO) BHOOMIYAJI LAND & FINANCE 4 COMPLETED THE ASSESSMENT AFTER MAKING ADDITION OF RS.1,06,49,250/- FOR SUPPRESSION OF SALES AND ALSO ADDITION OF RS.28,66,250/- FOR UNVERIFIED CREDITORS. THE APPEAL BY THE ASSESSEE BEFORE THE LD. CIT(A) BROUGHT PART RELIEF. NOW BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. 3. FIRST COMMON ISSUE RELATES TO ALLEGED UNACCOUNTE D SALES ADDITION OF RS.1,06,49,250/-. THE LD. AO MADE THE IMPUGNED A DDITION OBSERVING THAT THE ASSESSEE HAS NOT SHOWN ACTUAL SA LE CONSIDERATION IN ITS BOOKS AND THEY WERE DISCLOSED IN THE RANGE OF 25% TO 46% OF ACTUAL SALES CONSIDERATION. THE STATE MENT RECORDED BY THE AO IN THE CASE OF FEW PARTIES ALSO SUPPORTED HIS BASIS OF ESTIMATING SUPPRESSION SALES. THEREAFTER WHEN THE I SSUE CAME UP BEFORE THE LD. CIT(A), HE CALLED FOR REMAND REPORTS FROM THE AO WHICH WERE RECEIVED ON 11.02.2010, 25.03.2010 & 15. 10.2012. ON THE BASIS OF REMAND REPORTS AND THE FACTS EMANATING OUT OF THE RECORDS, THE LD. CIT(A) ESTIMATED THE SALES AT RS.1 CRORE IN PLACE OF RS.70,99,500/- SHOWN BY THE ASSESSEE AND ALSO CALCU LATED THE PROFIT @ OF 8% AS AGAINST 1.70% SHOWN BY THE ASSESS EE THEREBY GIVING PART RELIEF BY THE ASSESSEE. NOW BOTH THE A SSESSEE AND REVENUE ARE IN APPEAL BEFORE US. LD. COUNSEL FOR TH E ASSESSEE VEHEMENTLY ARGUED REFERRING TO THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND OTHER DOCUMENTS PLACED IN THE PAPER BOOK. THE LD. DR SUPPORTED THE ORDER OF THE LD. AO. BHOOMIYAJI LAND & FINANCE 5 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD PLACED BEFORE US. THE ISSUE RAISED BY BOTH T HE ASSESSEE AND REVENUE RELATES TO ADDITION OF SUPPRESSED SALES MAD E BY THE AO. WE FIND THAT THE ASSESSE IS MAINTAINING REGULAR BOOKS OF ACCOUNT WHICH ARE AUDITED AND QUANTITATIVE DETAILS ARE ALSO AVAIL ABLE. THERE WERE CERTAIN DISCREPANCIES IN THE ACCOUNTS IN THE FORM O F UNRECORDED SALES AS REVEALED BY THE LD. AO ON THE BASIS OF INF ORMATION AND STATEMENT RECORDED IN CASE OF FEW BUYERS. WE FIND T HAT THE AO ON THE BASIS OF THE FINDINGS RECORDED IN CASE OF FEW B UYERS OF PLOT AND APPLIED THE SAME ON THE TOTAL UNITS SOLD BY THE ASS ESSEE. THERE WAS NO OTHER EVIDENCE WITH THE AO FOR ESTIMATING SUPPRE SSED SALES. FURTHER EVEN IN THE REMAND REPORT IT WAS REVEALED T HAT NO MAJOR DISCREPANCY WAS OBSERVED BY THE AO DURING THE VERIF ICATION OF ENTRIES WITH THE REGULAR BOOKS OF ACCOUNTS. FURTHER IT HAS BEEN CONSISTENTLY HELD BY HONBLE COURTS IN VARIOUS CASE S THAT ONLY THE PROFIT PERCENTAGE OF THE UNDISCLOSED SALES ARE LIAB LE TO BE TAXED. 5. WE FURTHER OBSERVE THAT LD. CIT(A) PARTLY ALLOWE D THIS ISSUE IN FAVOUR OF THE ASSESSEE OBSERVING AS FOLLOWING: 3.2.12 I HAVE CONSIDERED THE FACTS OF THE CASE C AREFULLY. THE APPELLANT HAS SHOWN SALES OF RS. 70,99,500/- DURING THE YEAR AND GROSS PROFIT SHOWN AT 15.50% AND NET PROFIT AT 1.70% AGAINST THE SALES OF RS. 71.99 LACS IN PREVIOUS YEA R AND G.P. @ 22.5% AND N.P. @ 2.70%. THE ACCOUNTS OF THE APPELLA NT ARE AUDITED AND IT IS MAINTAINING REGULAR BOOKS OF ACCO UNT AND QUANTITATIVE DETAILS AVAILABLE IN TRADING ACCOUNT. THE APPELLANT HAS RAISED OBJECTION OF APPLYING THE PROVISION OF S ECTION 145(3) BY THE ASSESSING OFFICER AND ESTIMATING THE INCOME OF THE APPELLANT BY THE ASSESSING OFFICER. IT IS OBSERVED THAT THERE ARE CERTAIN DISCREPANCIES IN THE ACCOUNTS OF THE APPELL ANT AND BHOOMIYAJI LAND & FINANCE 6 APPELLANT HAS NOT RECORDED SALE PROCEEDS IN ENTIRET Y IN ITS BOOKS OF ACCOUNTS WHICH ARE EVIDENT FROM THE STATEMENT OF THE CREDITORS WHO HAD GIVEN ADVANCE AGAINST THE PURCHAS E OF PLOT IN MADHUBAN COLONY, DEWAS. SHRI RAJESH AGRAWAL WHO HAD BEEN WORKING WITH THE APPELLANT AS PROPERTY BROKER HAS A LSO ADMITTED THAT DURING THE SURVEY U/S 133A THAT REGIS TRY WAS MADE ON LESSER AMOUNT THAN THE ACTUAL PRICE OF THE PLOT. ON THAT ACCOUNT HE HAD SURRENDERED RS. 5,00,000/- DURING TH E SURVEY, ALTHOUGH LATER ON HE HAS RETRACTED FROM HIS STATEME NT AND EXPLAINED THAT THE ENTRIES RECORDED IN THE DIARIES WERE ONLY ESTIMATES. BUT, IT DOES NOT CHANGE THE FACTS OF THE CASE THAT APPELLANT HAS NOT RECORDED SALE PROCEEDS ENTIRELY I N ITS BOOKS OF ACCOUNTS . THE AO HAS RECORDED THE STATEMENTS OF SO ME OF THE PLOT HOLDERS ON TEST CHECK BASIS AND APPELLANT COUL D NOT REBUT THE FINDING OF THE AO RECORDED ON THE BASIS OF THE STATEMENT. APPELLANT HAS RAISED OBJECTION ONLY, BUT COULD NOT FURNISHED THE EVIDENCE THAT IT HAS RECEIVED THAT AMOUNT ONLY FOR WHICH IT HAS ISSUED THE RECEIPT AND PROPERTY GOT REGISTERED. THE AO HAS WORKED OUT THE SALE OUTSIDE BOOKS OF ACCOUNT ON THE BASIS OF THE STATEMENTS AND ADDED 60% OF THE RECORDED SALES IN T AXABLE INCOME OF THE APPELLANT. IN MY VIEW THE ADDITION MA DE BY THE AO BY ESTIMATING SUPPRESSED SALE TO THE EXTENT 60% AND ADDING IT TO THE TAXABLE INCOME OF THE APPELLANT ON THE BASIS OF THE THREE STATEMENTS IS NOT JUSTIFIED. 3.2.13 DURING THE APPELLATE PROCEEDING WHEN CIT (A) HAS GOT CONDUCTED ENQUIRY THROUGH AO IN RESPECT OF THE REGI STERS IMPOUNDED DURING SURVEY NO MAJOR DISCREPANCY WAS OB SERVED BY THE AO AFTER VERIFYING THE ENTRIES WITH REGULAR BOOKS OF ACCOUNT. THE APPELLANT HAS EXPLAINED THE DISCREPANC IES WHAT HAS BEEN OBSERVED BY THE AO. BUT THE BOOKS RESULTS OF THE APPELLANT CONSIDERING THE ABOVE DISCREPANCIES AND S TATEMENTS CAN NOT BE ACCEPTED AS SUCH. THE RELEVANT PORTION O F SECTION 145(3) IS REPRODUCED AS UNDER- (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECT ION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESS ING OFFICER BHOOMIYAJI LAND & FINANCE 7 MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SE CTION 144.] 3.2.14 AS PER THE PROVISIONS OF SECTION 145(3), IF AO IS NOT SATISFIED ABOUT THE CORRECTNESS OF THE ACCOUNT HE C AN INVOKED THE PROVISIONS OF SECTION 145(3). IT IS HELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. A. KRISHNA SWAMI MUDLI YAR (1964) 53 ITR 122 (SC) HELD THAT: SECTION 145 DOES NOT COMPEL THE ITO TO ACCEPT IN ALL CASES A BALANCE SHEET OF CASH RECEIPT AND OUT GOINGS PREPAR ED FROM THE BOOKS OF ACCOUNT. 3.2.15 IN THE CASE OF HON'BLE CIT VS. MCMILLAN& CO. (1958) 33 ITR 182 (SC) IT IS HELD BY THE HON'BLE APEX COUR T THAT : THE ITO EVEN WHEN HE ACCEPTS THE ASSESSEES METHO D OF ACCOUNTING IS NOT BOUND BY THE FIGURE OF PROFITS SH OWN IN THE ACCOUNTS . 3.2.16 THE AO HAS ESTIMATED 60% OF SALES I.E.1, 06,49,250/- OUTSIDE BOOKS OF ACCOUNTS ON THE BASIS OF THREE STA TEMENTS ONLY WHICH APPEARS TO BE ON HIGHER SIDE CONSIDERING THE DEFECTS NOTICED BY THE AO. HOWEVER, AFTER CONSIDERING ALL T HE DISCREPANCIES AS OBSERVED, I HEREBY ESTIMATE THE SA LES OF THE APPELLANT AFTER REJECTING BOOKS OF ACCOUNTS BY INVO KING PROVISIONS OF SECTION 145(3). IT WOULD BE APPROPRIA TE AND MEET THE INTEREST OF JUSTICE IF THE SALES IS ESTIMATED A T RS. 1,00,00,000/- IN PLACE OF 70,99,500/-. BUT THE ENTI RE DIFFERENCE IN THE SALE CANNOT BE TAKEN AS INCOME OF THE APPELL ANT AND ONLY NET PROFIT OF THE ON THE ESTIMATED SALES CAN BE TAX ED. 3.2.17 HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. BALCHANDAJIT KUMAR 135 TAXMAN 180 (M.P.) . HON'BLE HIGH COURT HAS HELD THAT : THE TOTAL SALES CANNOT BE REGARDED AS THE PROFIT OF THE ASSESSEE. THE NET PROFIT RATE HAS TO BE ADOPTED AND ONCE A NET PROFIT RATE IS ADOPTED, IT CANNOT BE SAID THAT THER E IS A PERVERSITY OF APPROACH. 3.2.18 FURTHER THE NET PROFIT AS SHOWN BY TH E APPELLANT CANNOT BE APPLIED IN ITS CASE BECAUSE IN THE CASE O F THE BHOOMIYAJI LAND & FINANCE 8 APPELLANT THERE ARE SUPPRESSED SALES AND APPELLANT HAS NOT RECORDED THE ENTIRE SALES IN ITS BOOKS OF ACCOUNTS. HON'BLE ITAT, INDORE BENCH, INDORE IN THE CASE OF M/S SHREE RAM T RACTORS VS. ITO WARD 1 (2), UJJAIN REPORTED IN ITA NO. 1102 TO 1105/IND/04 AND ITA NO. 63 TO 66/IND/05 DATED 30.01.2006 HAS HE LD THAT : AFTER CONSIDERING THE TOTALITY OF THE FACTS AND C IRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT NET PROFIT RATE SHOWN BY THE ASSESSEE AS PER ITS BOOKS OF ACCOUNT IS OF NO RELEV ANCE, BECAUSE HAD IT BEEN CORRECT AND TRUE, THEN THERE WAS NO OPP ORTUNITY FOR THE COMMERCIAL TAX DEPARTMENT TO FIND OUT AND DETER MINE THE SALE OUTSIDE BOOKS OF ACCOUNT WHICH WERE IN CRORES. THE FACT THAT ASSESSEE WAS INDULGING IN CARRYING OUT SALE/PU RCHASE OUTSIDE THE BOOKS OF ACCOUNT AND THERE IS SUFFICIEN T EVIDENCE TO SHOW THAT NET PROFIT RATE DEPICTED BY THE ASSESSEE IN BOOKS OF ACCOUNT WAS NOT CORRECT AND TRUE STATE OF AFFAIRS. COSEQUENTLY THE ASSESSEE CLAIM THAT NET PROFIT RATE OF 3% APPLI ED BY THE CIT(A) WAS ON HIGHER SIDE DO NOT HAVE ANY MERIT. 3.2.19 CONSIDERING THE FACTS OF THE CASE AND VARIOUS JUDICIAL PRONOUNCEMENTS IT WILL BE REASONABLE IF N.P.@ 8% IS APPLIED ON ESTIMATED SALES OF 1,00,00,000/- IN PLACE OF 1.70% SHOWN BY THE APPELLANT IN ITS RETURN, BECAUSE NET PROFIT SHO WN BY THE APPELLANT IS ON LOWER SIDE CONSIDERING ITS LINE OF THE BUSINESS. THE NET PROFIT ON ESTIMATED SALES WORKS OUT TO RS. 8,00,000/-. THE APPELLANT HAS ALREADY SHOWN NET PROFIT OF RS. 1 ,70,343/-, HENCE BALANCE ADDITION WILL BE AT RS. 6,29,657/- AN D IT IS HEREBY CONFIRMED AND APPELLANT WILL GET RELIEF OF R S. 1,00,19,593/-. THIS GROUND OF THE APPEAL OF THE APPELLANT IS PARTLY ALLOWED . 6. THEREFORE, EVEN THOUGH THE ASSESSEE HAD DISCLOSE D 1.7% NET PROFIT AGAINST THE TOTAL SALES OF RS.71.99 LAKHS, I N VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DETAILED FIND ING OF LD. CIT(A) WHICH GOES UN-REBUTTED AT THE END OF BOTH THE PARTI ES, WE FIND MERIT IN THE FINDING OF LD. CIT(A) ESTIMATING NET PROFIT @ OF 8% ON THE BHOOMIYAJI LAND & FINANCE 9 SALES OF RS.1 CRORE WHICH TAKES CARE OF SUPPRESSED PORTION OF SALES UNEARTHED BY THE LD. AO ON THE BASIS OF HIS INVESTI GATION AND ESTIMATING OF HIGHER PROFIT EARNED ON THE SUPPRESSE D SALES. WE THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE FIND NO REASON TO INTERFERE IN THE FINDING OF THE LD. CIT(A ) DELETING THE ADDITION OF RS.1,00,19,593/- IN SUSTAINING THE ADDI TION AT RS.6,29,657/-. 7. AS A RESULT GROUND NO.1 OF REVENUES APPEAL AND GROUND NO. 1 & 2 OF ASSESSEES APPEAL ARE DISMISSED. 8. NEXT ISSUE RAISED BY THE REVENUE FOR A.Y. 2006-0 7 RELATES TO UNPROVED CREDITORS OF RS.28,66,250/-. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED RELE VANT MATERIAL BEFORE US. WE FIND THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE COULD NOT PRODUCE COMPLET E DETAILS OF UNSECURED LOAN/CREDITORS AND ADVANCE RECEIVED AGAIN ST PLOT BOOKING TO THE SATISFACTION OF LD. AO. FOR THIS VER Y REASON, THE LD. AR CALCULATED THE AMOUNT OF TRADE CREDITORS AND UNE XPLAINED CASH CREDIT TOTALING TO RS.1,35,15,500/- BUT MADE THE IM PUGNED ADDITION FOR UNPROVED CREDITORS AT RS. 28,66,250/- AFTER GIV ING BENEFIT OF DEDUCTION TOWARDS ADDITION MADE FOR SUPPRESSED SALE S OF RS.1,06,49,250/-. 10. WE FURTHER FIND THAT THE LD. CIT(A) DELETED THE IMPUGNED ADDITION OF RS.28,66,250/- OBSERVING AS FOLLOWS: BHOOMIYAJI LAND & FINANCE 10 3.3.4 I HAVE CONSIDERED THE FINDING OF THE AO AND WRITTEN SUBMISSION OF THE APPELLANT CAREFULLY. THE AO HAS A DDED RS. 45,16,000/- OF OPENING BALANCES DURING THE YEAR UND ER CONSIDERATION. IT IS ALREADY DECIDED BY THE CIT(A) IN THE CASE OF THE APPELLANT FOR A.Y.2005-06 THAT ADDITION IN RES PECT OF EARLIER YEAR ADVANCES WAS NOT JUSTIFIED IN THIS YEAR. IT HA S TO BE TAXED IN THE YEAR WHEN THE APPELLANT HAS RECEIVED THE ADV ANCES. THE AO CAN EXAMINE THE GENUINENESS OF THE TRANSACTION I N THE RELEVANT YEAR ONLY. HOWEVER, ASSESSING OFFICER IS F REE TO TAKE NECESSARY ACTION IN RESPECTIVE YEARS, IF SUCH ADVAN CES ARE NON GENUINE BY HIM. IT IS HELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. P.MOHANKALA (2007) 291 ITR 278 (SC) THAT : A BARE READING OF SECTION 68 SUGGESTS THAT THERE HAS TO BE CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY ASSESS EE; THAT SUCH CREDIT HAS TO BE OF A SUM DURING THE PREVIOUS YEAR; AND THAT THE ASSESSEES OFFER NO EXPLANATION ABOUT THE N ATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS OR THE EXP LANATION OFFERED BY THE ASSESSEES IN THE OPINION OF THE ASSE SSING OFFICER IS NOT SATISFACTORY. IT IS ONLY THEN THE SUM SO CRE DITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE EXPRESSION THE ASSESSEES OFFER NO EXPLANATION MEANS WHERE THE ASSESSEES OFFER NO PRO PER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS T HE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSES SEES. IT IS TRUE THAT THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEES AS NOT SAT ISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATE RIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED O BJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APPL ICATION OF MIND IS SINE QUA NON FOR FORMING THE OPINION. [PARA 14] CONSIDERING THE ABOVE FACTS, THEREFOR E, AO IS NOT JUSTIFIED IN MAKING ADDITION OF RS. 45,16,000/- OF OPENING BALANCE IN THE TAXABLE INCOME OF THE APPELLANT AND IT IS HEREBY DELETED . BHOOMIYAJI LAND & FINANCE 11 3.3.5 THE APPELLANT HAS FILED THE EVIDENCES I N SUPPORT OF ADVANCES WHICH WERE REFUNDED THROUGH CHEQUES AND RE GISTRIES WERE MADE IN THE NAME OF THE PERSONS WHO HAVE GIVEN ADVANCES OR IN THE NAME OF THE PERSONS WHOSE NAME W AS ENDORSED BY THEM. I HAVE VERIFIED THE ENTRIES ALONG WITH THE SUPPORTING EVIDENCES AND FOUND THAT APPELLANT HAS R EFUNDED RS. 19,36,000/- THROUGH CHEQUES TO THE PARTIES AND ENTRIES WERE APPEARING IN THE BANK ACCOUNT OF THE APPELLANT . WITH RESPECT OF RS. 35,15,500/- SALE DEEDS WERE REGISTER ED AND OUT OF THE REMAINING AMOUNT OF RS. 35,48,000/- SOME SAL E DEEDS WERE REGISTERED AND SOME AMOUNTS WERE REFUNDED TO T HE PARTIES WHO HAVE GIVEN ADVANCE FOR PLOT BOOKING. THE APPELL ANT HAS FILED THE EVIDENCES WHICH WERE ON RECORD. REMAND RE PORT IS CALLED FROM THE AO ON THE WRITTEN SUBMISSION OF THE APPELLANT, BUT AO HAS NOT COMMENTED ANYTHING ON THIS ISSUE AND NOT GIVEN ANY JUSTIFICATION FOR SUSTAINING ADDITION AFTER CON SIDERING THE SUPPORTING DOCUMENTS FURNISHED BY THE APPELLANT. 3.3.6 THE APPELLANT HAS NOT TAKEN UNSECURED LOANS, THE ADVANCES RECEIVED BY IT AGAINST PLOT BOOKING IS NOT IN THE NATURE OF CASH CREDIT, THEREFORE APPELLANT IS NOT REQUIRED TO PROVE THE CREDITWORTHINESS OF THE DEPOSITORS WHO HAVE GIVEN A DVANCE AGAINST THE BOOKING OF THE PLOT. THE APPELLANT HAS PROVIDED THE ADDRESSES TO THE AO ON THE BASIS OF THE INFORMATION PROVIDED BY THE PROSPECTIVE BUYERS, IF THEY WERE NOT FOUND ON T HE GIVEN ADDRESS OR NOT RESPONDED IN PROPER MANNER TO THE AO APPELLANT COULD NOT BE PENALIZED FOR THEIR ACTION. IT IS HELD BY THE HON'BLE ITAT, INDORE BENCH, INDORE IN THE CASE OF THE APPELLANT FOR THE A.Y. 2005-06 THAT: IT IS NOT IN DISPUTE THAT THE APPELLANT WAS ENGAG ED IN THE BUSINESS OF DEVELOPING AND SELLING PLOTS HOUSES. TH E ADVANCES WERE RECEIVED FROM THE CUSTOMERS AGAINST THE BOOKIN G OF PLOTS/FLATS WHICH WERE EITHER PAID IN CASH OR BY CH EQUES. IN SOME CASES ADVANCE WAS RECEIVED IN INSTALLMENTS. AS PER THE TERMS OF BOOKING, THE REGISTRY WAS TO BE GOT DONE O NLY AFTER RECEIPT OF ENTIRE AMOUNT OF SALE CONSIDERATION. THU S THE AMOUNT SO RECEIVED FOR BOOKING THE LAND/HOUSE WAS NOT STRI CTLY IN THE NATURE OF CASH CREDIT IN SO FAR AS NORMALLY THE ASS ESSEE WAS NOT UNDER OBLIGATION TO RETURN THE SAME AND SUCH BOOKIN G BHOOMIYAJI LAND & FINANCE 12 PAYMENT/INSTALLMENT WAS GOT CONVERTED IN TO INCOME IN THE YEAR OF RECEIPT OF ENTIRE AMOUNT OF SALE CONSIDERATION O F THE RESPECTIVE PLOT/FLATS. THE BOOKING AMOUNT WAS, THUS NOT PURELY IN NATURE OF CASH CREDIT FOR WHICH THE ASSESSEE WAS REQUIRED TO PROVE THE CREDITWORTHINESS OF THE PERSONS, WHO BOOKED THE PLO T WITH HIM. 3.3.7 I HAVE VERIFIED RESPECTIVE REGISTRIES PLACED ON RECORD AND THE DETAILS OF THE PAYMENTS MENTIONED IN THE RE GISTRIES WHICH IS DULY TALLIED WITH THE DETAILS OF PAYMENT S HOWN BY THE APPELLANT IN THE CHART PLACED ON RECORD. THE APPELL ANT HAS PROVED THE GENUINENESS OF THE TRANSACTION BY FURNIS HING THE COPIES OF THE REGISTRIES AND REFUNDED THE AMOUNTS T HROUGH BANKING CHANNELS. IN THE CASE OF THE APPELLANT IN T HE A.Y. 2005- 06 CIT(A) AND HON'BLE ITAT HAVE DELETED ALL THE AD DITIONS RELATING TO PARTIES IN WHOSE CASE SALES DEEDS HAVE BEEN ULTIMATELY REGISTERED, AMOUNT HAVE BEEN REFUNDED AN D AMOUNTS TRANSFERRED TO OTHER ACCOUNTS. CONSIDERING THE ABOV E FACTS AND FINDING OF THE HON'BLE ITAT, INDORE BENCH, INDORE T HE ADDITION MADE BY THE AO AT RS. 89,99,500/- IS NOT SUSTAINABL E AND IT IS HEREBY DELETED . 3.3.8 CONSIDERING THE ABOVE FACTS ADDITION MADE BY THE ASSESSING OFFICER AT RS. 1,35,15,500/- (AND NET ADDITION OF RS 28,66,250/- AFTER ALLOWING THE SET OFF OF SUPPRESSED SALE OF R S. 1,06,49,250/ -) IS NOT SUSTAINABLE AND IT IS HEREBY DELETED . 11. IN THE CASE OF ASSESSEE FOR A.Y. 2005-06, COORD INATE BENCH INDORE VIDE ITANO.269/IN/2010 DECIDED IN FAVOUR OF THE ASSESSEE ON THE ISSUE OF ADVANCE RECEIPTS FOR PLOT BOOKING B Y HOLDING THAT THE BOOKING AMOUNTS WERE NOT PURELY IN THE NATURE OF CA SH CREDIT FOR WHICH THE ASSESSEE WAS REQUIRED TO PROVE THE CREDIT WORTHINESS OF THE PERSONS WHO BOOKS THE PLOT WITH HIM. WE FURTHER FIND THAT THE LD. CIT(A) EXAMINED THE ISSUE IN DETAIL BY VERIFYIN G RESPECTIVE REGISTRY PLACED ON RECORDS AND DETAILS MENTIONED IN THE REGISTRY BHOOMIYAJI LAND & FINANCE 13 DULY TALLIED WITH THE PAYMENTS SHOWN BY THE ASSESSE E. GENUINENESS OF THE TRANSACTIONS STANDS PROVED WITH THE COPIES O F REGISTRIES AND THE AMOUNTS REFUNDED THROUGH BANKING CHANNELS. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE B ENCH IN ASSESSEES OWN CASE FOR A.Y. 2005-06, DETAILED FINDING OF LD. CIT(A) WHICH GOES UNCONTROVERTED BY THE REVENUE AS WELL AS IN THE GIV EN FACTS AND CIRCUMSTANCES OF THE CASE AND THE DOCUMENTS PLACED BEFORE THE LOWER AUTHORITIES, FIND NO REASON TO INTERFERE IN T HE FINDING OF LD. CIT(A), DELETING THE ADDITION OF RS.28,66,250/-. 12. AS A RESULT REVENUES GROUND NO.2 FOR A.Y. 2006 -07 IS DISMISSED. NOW WE TAKE CROSS APPEAL FOR A.Y. 2007-08 13. FIRST COMMON ISSUE RELATES TO ADDITION OF SUPPR ESSED SALES OF RS.3,72,79,410/-. THE LD. CIT(A) ESTIMATED THE SALE S AT 2.5 CRORES AND ESTIMATED NET PROFIT @ 8% THEREBY SUSTAINING AD DITION AT RS.17,05,082/- AND DELETED THE REMAINING ADDITION O F RS.3,55,74,328/-. WE FURTHER FIND THAT VERY SAME IS SUE CAME UP BEFORE US DURING THE ADJUDICATION OF APPEAL FOR A.Y . 2007-08. AS ALL THE FACTS AND CIRCUMSTANCES REMAINS THE SAME WHICH HAVE NOT BEEN DISPUTED BY BOTH THE PARTIES, WE ARE INCLINED TO AP PLY SAME VIEW AS TAKEN WHILE DECIDING THE ISSUE FOR A.Y. 2007-08 AND CONFIRM THE VIEW TAKEN BY LD. CIT(A) SUSTAINING ADDITION OF RS. 17,05,082/- AND DELETING REMAINING ADDITION OF RS.3,55,74,328/-. AS A RESULT GROUND BHOOMIYAJI LAND & FINANCE 14 NO.3 OF REVENUES APPEAL AND GROUNDS NOS. 2 & 3 OF ASSESSEES APPEAL ARE DISMISSED. 14. APROPOS TO GROUND NO.1 OF ASSESSEES APPEAL FOR A.Y. 2007-08 RELATING TO ALLEGED ADDITION OF RS.8,03,142/- ON AC COUNT OF ALLEGED EXTRA CASH FOUND DURING THE COURSE OF SURVEY U/S 13 3A OF THE ACT, WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD BEFORE US. 15. WE FIND THAT DURING THE COURSE OF SURVEY PROCEE DINGS INVENTORY OF CASH FOUND AT THE BUSINESS PREMISES WAS MADE AND CASH OF RS.814340/- WAS FOUND. RS.11198/- WAS CASH IN HAND IN THE BOOKS OF ASSESSEE AS ON 15.03.2007. THE PARTNER OF THE A SSESSEE FIRM COULD NOT EXPLAIN THE EXCESS CASH FOUND AT RS.80314 2/- IN LIGHT OF THESE FACTS THE CONTENTION OF THE ASSESSEE AS WELL AS THE LD. COUNSEL BEFORE THE LOWER AUTHORITIES AND BEFORE US THAT NO CASH WAS FOUND DURING THE COURSE OF SURVEY IS NOT ACCEPTED. WE THE REFORE, UPHOLD THE VIEW TAKEN BY THE LD. CIT(A) AND CONFIRM THE AD DITION OF RS.803142/-. GROUND NO.1 OF ASSESSEES APPEAL IS DI SMISSED. 16. NOW WE TAKE UP GROUND NO.4 & 5 OF ASSESSEES AP PEAL RELATING TO ADDITION CONFIRMED U/S 68 AT RS.35,37,500/- AND RS. 3,30,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 17. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED MATERIAL ON RECORD PLACED BEFORE US. THE LD. AO ISSUED NOTICES TO 53 PARTIES U/S BHOOMIYAJI LAND & FINANCE 15 133(6) OF THE ACT, WHICH WERE RECEIVED BACK UNSERVE D WITH THE REMARKS OF POSTAL AUTHORITIES INCOMPLETE ADDRESS N OT TRACEABLE. THEREAFTER THE MATTER TRAVELLED TO LD. CIT(A) WHO P ARTLY ALLOW THE APPEAL SUSTAINING ADDITION AT RS.35,37,500/- BY OBS ERVING AS FOLLOWS: I HAVE CONSIDERED THE FACTS OF THE CASE CAREFULLY. THE APPELLANT HAS SHOWN ADVANCES AGAINST PLOT AND BUILDING BOOKIN G AS ON 31.03.2007 AT RS. 3,02,40,550/- THE AO HAS ISSUED L ETTER U/S 133(6) TO THE PARTIES FROM WHOM THE APPELLANT HAS R ECEIVED ADVANCES DURING THE YEAR, TREATING THE ADVANCE AS L OAN RECEIVED BY THE APPELLANT. THE APPELLANT HAS NOT TAKEN UNSEC URED LOANS, THE ADVANCED BY IT AGAINST PLOT BOOKING IS NOT IN T HE NATURE OF CASE CREDIT, THEREFORE APPELLANT IS NOT REQUIRED TO PROVE THE CREDITWORTHINESS OF THE DEPOSITORS WHO HAVE AGAINST THE BOOKING OF THE PLOT. THE APPELLANT HAS PROVIDED TO THE AO ON THE BASIS OF THE INFORMATION PROVIDED BY THE PROSPECTIV E BUYERS, IF THEY WERE NOT FOUND ON THE GIVEN ADDRESS OF NOT RES PONDED IN PROPER MANNER TO THE AO APPELLANT COULD NOT BE PENA LIZED FOR THEIR ACTION. IT IS HELD BY THE HONBLE ITAT, INDORE BENCH, INDORE IN THE CASE OF THE APPELLANT FOR THE A.Y. 2005-06 THAT: IT IS NOT IN DISPUTE THAT THE APPELLANT WAS ENGAGE D IN THE BUSINESS OF DEVELOPING AND SELLING PLOTS HOUSES. TH E ADVANCES WERE RECEIVED FROM THE CUSTOMERS AGAINST THE BOOKIN G OF PLOTS/FLATS WHICH WERE EITHER PAID IN CASE OR BY CH EQUES. IN SOME CASES ADVANCE WAS RECEIVED IN INSTALLMENTS. AS PER THE TERMS OF BOOKING, THE REGISTRY WAS TO BE GOT DONE O NLY AFTER RECEIPT OF ENTIRE AMOUNT OF SALE CONSIDERATION. THU S, THE AMOUNT SO RECEIVED FOR BOOKING THE LAND/HOUSE WAS NOT STRI CTLY IN THE NATURE OF CASE CREDIT IN SO FAR AS NORMALLY THE ASS ESSES WAS NOT UNDER OBLIGATION TO RETURN THE AND SUCH BOOKING PAYMENT/INSTALLMENT WAS GOT CONVERTED IN TO INCOME IN THE YEAR OF RECEIPT OF ENTIRE AMOUNT OF SALE CONSIDERATION O F THE RESPECTIVE PLOT/FLATS. THE BOOKING AMOUNT WAS, THUS NOT PURELY IN NATURE OF BHOOMIYAJI LAND & FINANCE 16 CASH CREDIT FOR WHICH THE ASSESSES WAS REQUIRED TO PROVE THE CREDITWORTHINESS OF THE PERSONS, WHO BOOKED THE PLO T WITH HIM. THE APPELLANT HAS FILED THE COPIES OF THE SALE DEED S IN RESPECT OF 17 CASES IN WHICH AMOUNT INVOLVED AT RS. 28,05,100/ -. I HAVE VERIFIED RESPECTIVE REGISTRIES PLACED ON RECORD AND THE DETAILS OF THE PAYMENT MENTIONED IN THE REGISTRIES WHICH ARE D ULY TALLIED WITH THE DETAILS OF THE PAYMENT SHOWN BY THE GENUIN ENESS OF THE TRANSACTION BY FURNISHING THE COPIES OF THE REG ISTRIES. FURTHER, THE APPELLANT HAS REFUNDED THE AMOUNT OF R S. 32,47,500/- IN RESPECT OF 32 CASES. THE APPELLANT C OULD ONLY GOT VERIFIED THE AMOUNT OF RS. 75,000/- RECEIVED FROM S HRI ASHOK KUMAR CHOUHAN AND LATER ON SALE DEED WAS REGISTERED IN HIS NAME. FOR REMAINING AMOUNT OF RS. 31,72,500 /- WHICH IT HAS CLAIMED AS REFUNDED TO THE PARTIES, NO PROOF OF CAS E RECEIPT AND REPAYMENT WAS FURNISHED BY THE APPELLANT, THEREFORE , CLAIM OF THE APPELLANT IS ONLY SELF-SERVING AND IT COULD NOT BE ACCEPTED WITHOUT ANY EVIDENCE THAT APPELLANT HAS RECEIVED TH E AMOUNT AND REPAID THE SAME. SIMILARLY, THE APPELLANT HAS N OT FURNISHED ANY DETAIL IN RESPECT OF THE ADVANCE APPEARING AT S L. NO. 26 OF THE AOS LIST IN THE NAME OF NAMIBAISHIVHARE AT RS. 1,25,000 /- . THE APPELLANT HAS FILED CONFIRMATION IN RESPECT O F THE ADVANCED AS PRE SL. NO . 28 & 29 IN THE NAME OF SHRI OM PRAK ASHGOUD AND SHRI POP SINGH RAJPUT FROM WHOM THE APPELLANT H AD RECEIVED RS. 75,000/- EACH AND AMOUNT IS OUTSTSNDIN G AS IT IS THEIR NAME. BUT IT FAILED TO FILE ANY DETAIL IN RES PECT OF ADVANCE RECEIVED FROM SHRIYOGESHILAWA AT RS. 2,40,000 /- APPEARING AT SL. NO. 52. THESE ARE THE UNPROVED CREDITS WHICH AP PELLANT FAILED TO EXPLAIN. THEREFORE, THE ADDITION MADE BY THE AO AT RS. 35,37,500/- (31,72,000/-+RS. 2,40,000) IS HEREBY CONFIRMED AS APPELLANT FAILED TO FURNISH ANY EVIDENCE TO PRO VE THAT AMOUNT WAS REFUNDED TO THEM AND NO CONFIRMATIO N IN RESPECT OF THESE AMOUNTS WERE FURNISHED BY THE APPE LLANT. BHOOMIYAJI LAND & FINANCE 17 18. WE FURTHER OBSERVE THAT THE ASSESSEE SHOWED ADV ANCES AGAINST PLOT AND BUILDING BOOKING AS ON 31.03.2007 AT RS.30 240550/-. LETTERS WERE ISSUED U/S 133(6) OF THE ACT, BY THE A O ON THE ADDRESS PROVIDED BY THE ASSESSEE AS IN TURN PROVIDED BY TH E PROSPECTIVE BUYERS. COORDINATE BENCH, INDORE IN THE CASE OF ASS ESSEE FOR A.Y. 2005-06(SUPRA) ALSO HELD IN THE FAVOUR OF ASSESSEE THAT IF ADDRESS GIVEN BY THE PROSPECTIVE BUYERS WERE NOT CORRECT OR THEY HAVE NOT RESPONDED IN PROPER MANNER TO THE LD. AO THEN THE A SSESSEE COULD NOT BE PENALIZED FOR THEIR ACTION. GENUINENESS OF T HE TRANSACTIONS STANDS PROVED WITH THE COPIES OF REGISTRIES. ASSESS EE HAS BEEN UNABLE TO PROVE SOURCE OF CASH CREDIT OF RS.35,37,5 00/- EVEN UP TO THE STAGE OF APPELLATE PROCEEDINGS BEFORE FIRST APP ELLATE AUTHORITY AND NOR ANY SUBSTANTIAL EVIDENCE HAS BEEN PLACED BE FORE US. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, FIND NO REASON TO INTERFERE IN THE FINDING OF LD. CIT(A) CO NFIRMING ADDITION OF RS.35,37,500/-. THUS, GROUND NO.4 OF THE ASSESSEES APPEAL IS DISMISSED. 19. APROPOS GROUND NO.5 OF ASSESSEES APPEAL RELATI NG TO ADDITION U/S 68 OF THE ACT AT RS.3,30,000/-, WE HAVE HEARD R IVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. 20. WE FIND THAT THIS ADDITION RELATED TO 4 ENTRIES APPEARING IN THE NAME OF SHRI RAMESH SHINDE, AT RS.45,000/-, SHRIDEV KARAN YADA, AT RS.1,55,000/-, SHRILAXMI NARAYAN CHOWKSE, AT RS. 60,000/- AND SHRI ASHOK RAO THOURAT AT RS.70,000/-. FOR ALL THES E FOUR PERSONS BHOOMIYAJI LAND & FINANCE 18 ASSESSEE MISERABLY FAILED TO PROVIDE ANY INFORMATIO N SUFFICIENT TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE C ASH CREDIT. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.3,30,000/- BY OBSERVING AS FOLLOWS: I HAVE CONSIDERED THE FACT CAREFULLY. THE APPELLANT HAS FILED EXPLANATION IN RESPECT OF EACH AND EVERY EXCEPT 4 ENTRIES APPEARING IN THE NAMES OF RAMESH SHINDE (-RS. 45,00 0/-), DEVKARANYADAV (-RS. 60,000/-) AND ASHOK RAOTHORAT (- RS.70,000/-) TOTALING TO RS. 3,30,000/-. FOR REMAIN ING ACCOUNT AMOUNTING TO RS. 7,34,5000/- THE APPELLANT HAS FILE D PROOF OF REFUND TO THEM THROUGH BANKING CHANNEL, COPIES OF R EGISTRIES, CASH RECEIPT VOUCHERS OR COPY OF MONEY RECEIPT, WHI CH IS VERIFIED ALONG WITH THE BOOKS OF ACCOUNT AND FOUND TO BE EXP LAINED. THE AO HAS MADE THE ADDITION WITHOUT PROVIDING AND CONF RONTING THE INFORMATION RECEIVED BY HIM FROM THE CREDITORS U/S 133(6). DURING THE APPELLATE PROCEEDING ALSO THE SAME WERE NOT PROVIDED TO THE APPELLANT. HOWEVER, THE APPELLANT H AS EXPLAINED THE ENTRIES THE MADE BY IT IN ITS BOOKS OF ACCOUNT ALONG WITH DOCUMENTARY EVIDENCES, THEREFORE, AO IS NOT JUSTIFI ED IN MAKING ADDITION IN RESPECT OF THOSE ENTRIES WHICH WERE EXP LAINED BY THE APPELLANT. HENCE ADDITION MADE BY THE AO TO THE EXTENT OF RS. 7,34,500/- IS NOT SUSTAINABLE AND IS HEREBY DEL ETED. THE BALANCE ADDITION MADE BY THE AO AT RS. 3,30,000/- IS HEREBY CONFIRMED AS APPELLANT FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF RECEIPT OF PAYMENTS FROM THE PARTIES AND ITS REPAYMENT THEREOF. THIS GROUND OF APPEAL OF THE APPELLANT IS PARTLY ALLOWED . 21. WE FURTHER FIND THAT THE LD. COUNSEL FAILED TO BRING ANY NEW FACT IN SUPPORT OF THIS GROUND WE, THEREFORE, IN THE GIV EN FACTUAL MATRIX BHOOMIYAJI LAND & FINANCE 19 UPHOLD THE VIEW TAKEN BY THE LD. CIT(A) CONFIRMING ADDITION OF RS.3,30,000/- U/S 68 OF THE ACT. THUS, GROUND NO.5 OF THE ASSESSEES APPEAL IS DISMISSED. 22. APROPOS GROUND NO.1 OF REVENUES APPEAL CHALLEN GED THE LD. CIT(A) FINDING DELETING THE ADDITION OF RS.23,02,50 0/- UNEXPLAINED INVESTMENT. 23. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED MATERIAL ON RECORD BEFORE US. WE FIND THAT THE LD. AO TAKING TH E BASIS OF THE STATEMENT OF ONE OF THE PARTNER SHRI PREM KUMAR AGR AWAL IN WHICH HE ACCEPTED THAT THE INVESTMENT MADE IN THE BUSINES S ARE MORE THAN THE PRICE OF THE PROPERTY AND ACCORDINGLY OFFE RED RS.52,00,000/- AS UNEXPLAINED INVESTMENT. HOWEVER, THE STATEMENT WAS RETRACTED ON THE VERY NEXT DAY OF COMPLETION OF SURVEY PROCEEDINGS BY WAY OF FILING OF AFFIDAVIT SIGNED BY ALL THE PARTNERS. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE THAT LD. AO FAILED TO BRING ANYTHING ON RECORD WHICH COULD PROVE THAT THE ASSESSEE MADE UNEXPLAINED INVESTMENT IN PURCHASE OF PROFITS EXCEPT THE ADMISSION OF ONE OF THE PARTNER. IT IS ALSO OBSERVE D THAT THE ALLEGED ADDITION OF RS.23,02,500/- WAS MADE ON ACCOUNT OF D IFFERENCE IN STAMP VALUATION OF THE LAND PURCHASED ON 28.09.2006 AND 09.10.2006 AT RS.31,1000/- AND RS.31,10,000/- FROM MR. AMRITPAL SINGH KHANUJA. THE MARKET PRICE OF THIS LAND AS PER THE STAMP VALUATION AUTHORITY WAS RS. 42,69,500 & RS.42,44,0 00/- RESPECTIVELY. THE DIFFERENCE OF THE MARKET PRICE AN D PURCHASE COST OF BHOOMIYAJI LAND & FINANCE 20 THESE TWO LANDS COMES TO RS.23,02,500/-. HOWEVER, W E DO NOT FIND ANY BASIS IN THE FINDING OF THE LD. AO APPLYING PRO VISIONS OF SECTION 50C OF THE ACT, BECAUSE PROVISIONS OF SECTION 50C O F THE ACT APPLIES ON THE SELLER OF THE PROPERTY AND NOT ON THE PURCHA SER. THE LD. CIT(A) HAS RIGHTLY ADOPTED THIS VIEW HOLDING THAT P ROVISIONS OF SECTION 50C WERE NOT APPLICABLE ON THE ASSESSEE BEI NG THE PURCHASER OF THE PROPERTY AND ALSO DURING THE SURVE Y PROCEEDINGS NO DOCUMENTARY EVIDENCE WAS FOUND WHICH MAY PROVE T HAT THE ASSESSEE HAS MADE PAYMENT OVER AND ABOVE THE REGIST ERED VALUATION OF THE PROPERTY. IN LACK OF ANY INCRIMINATING MATER IAL, NO ADDITION WAS CALLED FOR BY THE AO AS RIGHTLY HELD BY I.T.A.T ., INDORE BENCH IN THE CASE OF ACIT VS. RAJ HOMES P. LTD. BHOPAL 9 ITJ 286 (2007) AND FURTHER HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DHEENGAR METAL WORKS (2010) 328 ITR 384 ALSO HELD THAT , IN ANY EVENT IT IS SETTLED LAW THAT THOUGH THE ADMISSION IS EXTREMELY IMPORTANT PIECE OF EVIDENCE IT CANNOT BE SAID TO BE CONCLUSIVE AND IT IS OPEN TO THE PERSON, WHO HAS MADE THE ADMISSION, TO SHOW THAT IT IS INCORRECT . 24. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECIS ION AND JUDGMENTS DISCUSSED ABOVE AND IN THE GIVEN FACTS AND CIRCUMST ANCES OF THE CASE FIND NO INCONSISTENCY IN THE FINDING OF LD. CI T(A) DELETING THE ADDITION OF RS.23,02,500/- MADE BY THE LD. AO U/S 6 9 OF THE ACT. IN THE RESULT REVENUES GROUND NO.1 IS DISMISSED. 25. APROPOS GROUND NO.2 OF REVENUES APPEAL FOR A.Y . 2007-08 RELATED TO DELETING OF ADDITION OF RS.28,97,500/- M ADE ON ACCOUNT OF BHOOMIYAJI LAND & FINANCE 21 UNEXPLAINED INVESTMENT, WE HAVE HEARD THE RIVAL CON TENTION AND PERUSED MATERIAL ON RECORD PLACED BEFORE US. 26. WE FIND THAT THIS ISSUE RELATES TO GROUND NO.1 OF REVENUES APPEAL ADJUDICATED ABOVE, WHEREIN WE HAVE DISCUSSED ABOUT SURRENDER MADE BY THE PARTNER AT RS.52 LACS AND THE REAFTER RETRACTED ON THE VERY NEXT DAY. THE LD. AO MADE ADD ITION OF RS.23,02,500/- U/S 69 OF THE ACT TAKING THE BASIS O F PROVISIONS OF SECTION 50C OF THE ACT, BEING THE DIFFERENCE OF MAR KET VALUE AND PURCHASE COST OF THE PLOTS PURCHASE. LD. AO MADE TH E REMAINING ADDITION (RS. 52 LACS-23,02,500/-) AT RS.28,97,500/ - AS UNEXPLAINED INVESTMENT IN THE PROPERTIES. WE HAVE A LREADY DISCUSSED THE ISSUE IN DETAIL WHILE ADJUDICATING GR OUND NO.1 ABOVE THAT ADDITION CANNOT BE MADE MERELY ON THE BASIS OF STATEMENT GIVEN DURING THE COURSE OF SURVEY WHICH IS NOT ON O ATH AND IF THERE IS NO INCRIMINATING MATERIAL WITH THE AO TO MAKE SU CH ADDITION. WE, THEREFORE, ARE OF THE VIEW, LD. AO ERRED IN MAK ING THE ADDITION OF RS.28,97,500/- WITHOUT BRINGING ANY EVIDENCE ON RECORD. WE, THEREFORE, UPHELD THE VIEW TAKEN BY THE LD. CIT(A) DELETING ADDITION OF RS.28,97,500/-. THUS, GROUND NO.2 OF THE REVENUE S APPEAL FOR A.Y. 2007-08 IS DISMISSED. NOW WE TAKE UP CROSS APPEAL FOR A.Y. 2008-09 27. FIRST COMMON ISSUE RAISED BY REVENUE IN GROUND NO.1 AS WELL AS ASSESSEES GROUND NO.1 RELATES TO DISALLOWANCE O F REFUND OF BHOOMIYAJI LAND & FINANCE 22 ADVANCE MONEY AND CANCELLATION CHARGES PAID BY THE ASSESSEE TO ITS CUSTOMERS OF RS.45,13,000/-. 28. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED MATERIAL ON RECORD BEFORE US. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. AO WHILE VERIFYING THE CLAIM OF THE CANCELLATION CHARGES BEING THE EXTRA AMOUNT PAID TOGETHER WITH T HE AMOUNT OF ADVANCE OBSERVED THAT THE ASSESSEE RETURNED THE AMO UNT OF ADVANCE AFTER A PERIOD OF LONG TIME AND PAID EXTRA AMOUNT TO REDUCE THE PROFITABILITY AND SIMULTANEOUSLY INCREAS ING THE COST OF STOCK. HE ALSO OBSERVED THAT THE MODES OPERANDI ADOPTED BY THE ASSESSEE IN A.Y. 2008-09 WAS NOT FOLLOWED IN THE PR ECEDING A.Y. 2007-08. HE ALSO OBSERVED THAT THERE WAS A CHANGE I N METHOD OF VALUATION THEREBY GIVING RISE TO APPLICABILITY OF S ECTION 145 OF THE ACT. HOWEVER, AUDITOR DID NOT REPORT ANY DEVIATION IN METHOD OF VALUATION. IN BACKDROP OF THESE FINDING LD. AO ADDE D THE AMOUNT OF RS.45,13,000/- TO THE INCOME OF ASSESSEE. WHEN THE ISSUE CAME UP BEFORE THE LD. CIT(A), IT WAS REVEALED BY HIM THAT ACTUALLY TOTAL PAYMENT OF ADVANCE WAS RS.50,08,000/- WHICH ALREADY INCLUDED EXTRA AMOUNT PAID OF RS.10,37,000/-. THE PORTIONS O F ADVANCE AMOUNT REPAID BY THE ASSESSEE IS OF RS.39,71,000/- AND THE LD. CIT(A) DELETED THIS ADDITION OF RS.39,71,000/-, IN VIEW OF THE FACT THAT THE LD. AO COULD NOT BRING ANYTHING MATERIAL O N RECORD TO PROVE THAT APPELLANT HAS NOT MADE REPAYMENT TO THE CUSTOMERS. BHOOMIYAJI LAND & FINANCE 23 29. FURTHER FROM PERUSAL OF THE RECORDS WE FIND THA T THE FORFEITURE OF THE AMOUNT WAS AS PER THE AGREEMENT AND IN THE INDE PENDENT ENQUIRY CONDUCTED BY THE LD. AO DURING THE REMAND P ROCEEDINGS THE CUSTOMERS HAVE CONFIRMED TO HAVE RECEIVED BACK THE AMOUNT. FURTHER THE ASSESSEE RECOGNIZES THE SALE ON THE DAT E OF REGISTRY OF SALE DEED AND THE AMOUNT RECEIVED AS ADVANCE ON ACC OUNT OF PLOT BOOKING IS BEING CAPITALIZED AND SHOWN AS LIABILITY IN THE BALANCE SHEET TILL THE DATE OF SALE. DURING THE YEAR UNDER APPEAL THE ASSESSEE HAS RETURNED THE ADVANCE TO DIFFERENCE CUS TOMERS AND REDUCED THE LIABILITY TO THAT EXTENT. WE, THEREFORE , IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE CONFIRM THE VIEW TAKE N BY THE LD. CIT(A) DELETING THE ADDITION OF RS.39,71,000/- BEIN G THE REPAYMENT OF ADVANCE OF PLOT BOOKING RECEIVED BY THE ASSESSEE IN EARLIER YEARS AND THE SAME HAS BEEN DULY PROVED BY THE ASSESSEE W ITH DOCUMENTARY EVIDENCES. GROUND NO.1 OF REVENUES APP EAL IS DISMISSED. 30. APROPOS GROUND NO.1 OF ASSESSEES APPEAL REGARD ING THE REMAINING AMOUNT OF RS.10,37,000/- IS CONCERNED WHI CH THE ASSESSEE HAS CLAIMED AS CANCELLATION CHARGES AND LD . CIT(A) CONFIRM THE VIEW TAKEN BY THE LD. AO DISALLOWING TH E EXPENDITURE OF RS.10,37,000/-, WE ARE UNABLE TO SUPPORT THE CONTEN TIONS OF THE LD. COUNSEL, BECAUSE THE ASSESSEE HAS PAID EXTRA PAYMEN T OVER AND ABOVE THE ADVANCE FOR PLOT BOOKING. THERE IS NO CLA USE IN THE AGREEMENT ABOUT PAYMENT OF EXTRA AMOUNT. THE PLOT B OOKING HAS BEEN CANCELLED AFTER SUBSTANTIAL TIME GAP OF 2 TO 3 YEARS. AS THERE BHOOMIYAJI LAND & FINANCE 24 WAS NO CLAUSE IN THE AGREEMENT FOR PAYMENT OF CANCE LLATION CHARGES, BY DEBITING THE EXTRA AMOUNT OF PLOT BOOKI NG CHARGES IN TRADING ACCOUNT THE ASSESSEE HAS INCREASED THE PURC HASE COST REDUCED THE GROSS PROFIT. WE, THEREFORE, AGREE WIT H THE VIEW TAKEN BY THE LD. CIT(A) THAT AS THE ASSESSEE HAS CAPITALI ZED THE AMOUNT OF ADVANCE AND RECOGNIZED SALES ON THE DATE OF REGISTR Y FOR SALE DEED THE AMOUNT PAID OVER AND ABOVE THE ADVANCE AMOUNT S HOULD BE IN THE NATURE OF CAPITAL EXPENDITURE AND NOT REVENUE E XPENDITURE. WE, THEREFORE, SUSTAIN THE ADDITION OF RS.10,37,000/-. IN THE RESULT GROUND NO.1 OF ASSESSEES APPEAL IS DISMISSED. 31. APROPOS GROUND NO.2 OF REVENUES APPEAL CHALLEN GING THE DELETION OF ADDITION OF RS.10,86,557/- MADE BY THE AO BY ESTIMATING NET PROFIT @ 8% ON TOTAL SALES OF ALL TH E PROJECTS AND ADDING THE DIFFERENCE AMOUNT OF THE PROFIT WORKED O UT AND PROFIT SHOWN BY THE ASSESSEE THEREBY ADDING RS.10,86,557/- TO THE INCOME OF ASSESSEE, WE HAVE HEARD THE RIVAL CONTENT ION AND PERUSED MATERIAL ON RECORD BEFORE US. 32.WE FIND THAT THE LD. AO INVOKED THE PROVISION OF SECTION 145(3) OF THE ACT BY OBSERVING THAT THERE IS A CHANGE IN T HE VALUATION OF CLOSING STOCK AND ACCORDINGLY ESTIMATED NET PROFIT @ OF 8%. LD. CIT(A) DELETED THIS ADDITION IN LIEU OF HIS FINDING OF CONFIRMING ADDITION OF RS.10,37,000/- SUSTAINED BY WAY OF DISA LLOWING THE CLAIM OF CANCELLATION CHARGES. WE ALSO FIND THAT LD . CIT(A) TOOK THE BASIS THAT THE AO HAS NOT POINTED OUT ANY DEFECTS I N THE BOOKS OF BHOOMIYAJI LAND & FINANCE 25 ACCOUNT AND DID NOT COMPARE THE CASE OF THE APPELLA NT WITH THE PAST HISTORY NOR CITED ANY COMPARABLE CASES. 33. WE, HOWEVER, DO NOT AGREE WITH THE FINDING OF L D. CIT(A) BECAUSE IN THE PRECEDING YEARS IN A.Y. 2006-07 & 2007-08, W E HAVE CONFIRMED THE VIEW OF ADOPTING NET PROFIT @ 8% BEIN G APPLIED ON THE TOTAL/ESTIMATED SALES. WE, THEREFORE, FOLLOWING THE CONSISTENCY AS TAKEN IN THE PAST AS WELL AS SIMILARITY OF FACTS AR E OF THE VIEW THE LD. AO HAS RIGHTLY APPLIED NET PROFIT @ 8% ON THE TOTAL SALE OF THE ASSESSEE AND WE THEREFORE, BRUSH ASIDE THE VIEW TAK EN BY LD. CIT(A) THAT AS THE ADDITION OF RS.10,37,000/- STANDS CONFI RMED, IT WILL TAKE CARE OF THE PROFIT ELEMENT. WE, THEREFORE, SET ASIDE THE FINDING OF LD. CIT(A) AND CONFIRM THE ADDITION OF RS.10,86, 557/-. AS A RESULT GROUND NO.2 OF THE REVENUES APPEAL IS ALLOW ED. NOW WE TAKE REVENUES APPEAL FOR A.Y. 2010-11 34. FIRST GROUND RELATES TO DISALLOWANCE U/S 80IB(1 0) OF THE ACT PARTLY SUSTAINED BY THE LD. CIT(A). 29.WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED M ATERIAL ON RECORD BEFORE US. WE FIND THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT FOR THE PROFITS EARNED FROM ACT IVITY OF CONSTRUCTION OF ROW HOUSE IN GAURAV NAGAR EXTENSION , CLAIMED DEDUCTION OF RS.55,57,839/-. THE LD. AO AFTER EXAMI NING THE P & L ACCOUNT OF BOTH UNITS, OBSERVED THAT THE ASSESSEE H AS NOT BHOOMIYAJI LAND & FINANCE 26 DISTRIBUTED EXPENSES ACCORDING TO THE LEVEL OF ACTI VITY, TIME DEVOTED AND TURNOVER ACHIEVED BY IT FOR THE TWO SET OF BUSI NESS BEING ONE ELIGIBLE FOR DEDUCTION U/S 80IB(10) AND THE OTHER N OT ELIGIBLE FOR DEDUCTION. LD. AO WAS NOT CONVINCED WITH THE ALLOCA TION OF EXPENDITURE AND DISALLOWED THE DEDUCTION BY RS.16,8 6,083/-. HOWEVER, WHEN THE ISSUE CAME UP BEFORE THE LD. CIT( A), THE ASSESSEE GOT PART RELIEF AND DISALLOWANCE WAS SUSTA INED TO RS.5,25,614/-. 35.WE FURTHER OBSERVE THAT TAKING INTO CONSIDERATIO N THAT THE ASSESSEE EXECUTED 127 SALE DEEDS AND TO SALE THE PL OTS IT HAD TO INCUR THE EXPENSES AT VARIOUS STAGES. OUT OF THE 12 7 SALE DEEDS, 28 PERTAINED TO THE GAURAV NAGAR EXTENSION FOR WHICH T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10). WE THEREFORE, FIND SUBSTANCE IN THE FINDING OF LD. CIT(A) ADOPTING 25% OF TOTAL EXP ENSES FOR GAURAV NAGAR EXTENSION PROJECT BECAUSE 28 SALE DEEDS WERE OF GAURAV NAGAR EXTENSION OUT OF THE TOTAL 127 SALE DEEDS. TH E LD. CIT(A) HAS GIVEN DETAILED WORKING FOR EACH EXPENSES IN HIS FIN DINGS IN PARA 4.1 OF HIS APPELLATE ORDER AND ACCORDINGLY SUSTAINED TH E DISALLOWANCE AT RS.5,25,614/-. WE FIND NO REASON TO INTERFERE IN TH E FINDING OF LD. CIT(A) AND UPHOLD THE SAME. AS A RESULT GROUND NO.1 &2 OF THE REVENUES APPEAL ARE DISMISSED. 36. APROPOS GROUND NO.3& 4 THE REVENUE HAS CHALLENG ED THE DELETION OF DISALLOWANCE OF RS.20,27,000/- ON ACCOU NT OF PLOT BOOKING CANCELLATION. BHOOMIYAJI LAND & FINANCE 27 37. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED MATERIAL ON RECORD BEFORE US. WE FIND THAT THIS ISSUE OF PLOT B OOKING CANCELLATION CAME UP IN THE APPEAL FOR A.Y. 2008-09 ALSO. THE AS SESSEE HAS FURNISHED THE PARTY WISE LIST OF PLOT CANCELLED AND THE SAME FORMS PART OF APPELLATE ORDER OF LD. CIT(A). THESE DETAIL S HAVE BEEN EXAMINED BY THE FIRST APPELLATE AUTHORITY. THE LD. COUNSEL FOR THE ASSESSEE HAS BEEN UNABLE TO CONTROVERT THE FINDING OF LD. CIT(A). IT IS NOT DISPUTED THAT ASSESSEE HAS FURNISHED THE LIS T OF PLOTS TO THE LD. AO FOR EXAMINATION AND IS ALSO OFFERED THE REVE NUE FROM SALE OF THESE PLOTS FOR TAXATION. IN BACKDROP OF THESE FACT S WE UPHOLD THE FINDING OF LD. CIT(A) DELETING THE ADDITION OF RS.2 0,27,000/-. IN THE RESULT GROUND NO.3& 4 ARE DISMISSED. 38. APROPOS GROUND NO.5 RELATING TO DELETION OF U/S 40(A)(IA) OF RS.4,32,745/-, WE FIND THAT THE ASSESSEE PAID THE A MOUNT OF RS.4,32,745/- TO M/S. MPPKVV CO. LTD. ON ACCOUNT O F SUPERVISION CHARGES AND TOWARDS ELECTRIFICATION WORK AND SYSTEM DEVELOPMENT. THIS FACT IS NOT IN DISPUTE THAT M/S. MPPKVV CO. LT D. IS A STATE GOVERNMENT UNDERTAKING AND LD. CIT(A) DELETED THE D ISALLOWANCE FOR THE VERY REASONS THAT THE AMOUNT WAS PAID TO ST ATE GOVERNMENT UNDERTAKING. THE LD. DR COULD NOT CONTROVERT THIS F INDING OF LD. CIT(A). WE THEREFORE CONFIRM THE FINDING OF LD. CIT (A) THAT NO DISALLOWANCE WAS CALLED FOR AS PAYMENT WAS MADE TO THE ELECTRICITY COMPANY FOR VARIOUS CHARGES AND TAX WAS NOT REQUIRE D TO BE DEDUCTED AND THEREFORE, NO DISALLOWANCE WAS CALLED FOR U/S 40(A)(IA) OF THE ACT. THUS, GROUND NO.5 IS DISMISSED. BHOOMIYAJI LAND & FINANCE 28 39. AS A RESULT, APPEAL OF THE REVENUE FOR A.Y. 201 0-11 IS DISMISSED. 40. IN THE RESULT CROSS APPEALS FOR A.Y. 2006-07 & 2007-08 ARE DISMISSED, APPEAL OF THE ASSESSEE FOR A.Y. 2008-09 IS DISMISSED, APPEAL OF REVENUE FOR A.Y. 2008-09. IS PARTLY ALLOW ED AND APPEAL OF REVENUE FOR A.Y. 2010-11 IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON. 31. 0 1.2018. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 31 / 01/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE