The ACIT, Circle-2(1)(2), Baroda V. M/s. Neptune Realty Pvt. Ltd., Baroda

ITA 1657/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5979 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 17-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: SANKET BAKSHI
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 1657/AHD/2016 (ASSES SMENT YEAR: 2010-11) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(2), BARODA A PPELLANT VS. M/S. NEPTUNE REALTY PVT. LTD., 14, SAHJANAND KUTIR & LAGHU UDHYOG, AKOTA, BARODA 390 020 RESPONDENT PAN: AAACN9837D /BY REVENUE : SHRI V. K. SINGH, SR. D.R. /BY ASSESSEE : SHRI SANKET BAKSHI, A.R. /DATE OF HEARING : 22.02.2018 /DATE OF PRONOUNCEMENT : 27.02.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 A RISES AGAINST THE CIT(A)-12, AHMEDABADS ORDER DATED 22.02.2016, IN CASE NO. CIT(A)- 12/339B/CC-1/BARODA/14-15, REVERSING ASSESSING OFFI CERS ACTION MAKING ADDITION OF RS.55,57,500/- ON ACCOUNT OF ON MONEY EXTRAPOLAT ION PERTAINING TO ASSESSEES GREENWOOD PROJECT BY FOLLOWING HIS ORDER IN PRECE DING ASSESSMENT YEAR AS UPHELD IN ITA NO.2918/AHD/2011, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 1657/AHD/16 [ACIT VS. M/S. NEPTUNE REALTY P VT. LTD. ] A.Y. 2010-11 - 2 - 2. IT EMERGES AT THE OUTSET THAT THE REVENUES SOLE SUBSTANTIVE GRIEVANCE SEEKS TO REVIVE ASSESSING OFFICERS ABOVESTATED ACTION MA KING ON MONEY ADDITION OF RS.55,57,500/- PERTAINING TO ASSESSEES GREENWOOD PROJECT. BOTH THE LEARNED REPRESENTATIVES VERY FAIRLY SUGGEST THAT THE ABOVE CO-ORDINATE BENCHS DECISION (SUPRA) HAS ALREADY REJECTED REVENUES SIMILAR SUBS TANTIVE GRIEVANCE IN PRECEDING ASSESSMENT YEAR READING AS UNDER: 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT IN THE FIELD OF REAL E STATE. THE ASSESSEE HAS DEVELOPED A HOUSING PROJECT NAMED 'GREENWOOD' IN THE CITY OF BA RODA. THE SAID PROJECT COMPRISES OF 26 BUNGALOWS AND THE ENTIRE PROJECT CONSISTS OF HIGH END RESIDENTIAL UNITS. A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE AMOD GROU P OF CASES ON 11.02.2009. BASED ON THE SCRUTINY OF SEIZED MATERIAL RELATING TO BUNG ALOW NO.B-26 AND BUNGALOW NO.B- 15 AND STATEMENTS RECORDED DURING THE COURSE OF SEA RCH PROCEEDINGS U/S 132(4) OF THE ACT, THE ASSESSING OFFICER ESTIMATED THE ON-MONEY R ECEIPTS IN RESPECT OF 17 BUNGALOWS SOLD DURING THE YEAR AS WELL AS UPTO DATE OF SEARCH AT RS. 1281.33 LAKHS AS AGAINST THE SALE CONSIDERATION OF THESE 17 BUNGALOWS RECORDED I N BOOKS AT RS.1182.77 LAKHS AND, THEREAFTER, ESTIMATED THE PROFITS @ 25% OF THE ON-M ONEY RECEIPTS WHICH CAME TO RS.3,20,33,000/-. SINCE THE ASSESSEE HAS ALREADY DI SCLOSED AN AMOUNT OF RS.300 LAKHS ON ACCOUNT OF ON- MONEY RECEIPTS IN RESPECT OF GREE NWOOD PROJECT, A NET ADDITION OF RS.20,33,000/- WAS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A) IN APPEAL. 2.1 IN THIS REGARD, THE STAND OF THE ASSESSEE BEFOR E US WAS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE AMOUNT OF ON- M ONEY RECEIPTS FROM THE GREENWOOD PROJECT AT RS.1281.33 LAKHS DESPITE THE FACT THAT N O MATERIAL WAS FOUND DURING THE COURSE OF SEARCH BASED ON WHICH THE ASSESSING OFFIC ER HAS COMPUTED THE AMOUNT OF ON- MONEY. THE ASSESSEE FURTHER CONTENDED THAT THE CIT( A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE P ROFIT ON ON-MONEY RECEIPTS @ 25% PURELY ON THE BASIS OF ASSUMPTIONS, SURMISES AND CO NJECTURES. THE ASSESSEE CONTENDED THAT THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN MAKING THE ADDITION OF RS.20,33,000/- TO THE TOTAL INCOME OF THE ASSESSEE BY ESTIMATING T HE PROFITS @ 25% ON ON-MONEY RECEIPTS WHILE THE ASSESSEE HAS DISCLOSED AN AMOUNT OF RS.300 LAKHS ON ACCOUNT OF ON- MONEY RECEIPTS IN RESPECT OF GREENWOOD PROJECT. HE ACCORDINGLY PLEADED THAT THE ADDITION IN QUESTION MAY BE DELETED. ON THE OTHER H AND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AUTHORITI ES BELOW. 2.2 AFTER GOING THROUGH THE RIVAL CONTENTIONS AND M ATERIAL ON RECORD, WE FIND THAT A SEARCH ACTION U/S 132 WAS CARRIED OUT IN AMOD GROUP CASES ON 11.02.2009. THE ASSESSEE ADMITTED UNACCOUNTED RECEIPTS FROM ITS GRE ENWOOD PROJECT AMOUNTING TO RS.300 LAKHS WHICH WAS OFFERED TO TAX. IT WAS ON TH E BASIS OF PAGE NO.1 OF ANNEXURE A- 2 AND PAGE NO.5 OF ANNEXURE A-2 THE ASSESSING OFFIC ER CONCLUDED THAT THE ASSESSEE HAD RECEIVED CASH AS ON-MONEY FOR BUNGALOW NOS. B-26 AN D B-15. THUS, THE ASSESSING OFFICER WORKED OUT THE AMOUNT OF CASH RECEIVED @ 52 % OF TOTAL RECEIPTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE SUBMISSIONS FOR ESTABLISHING THAT NO CASH WAS RECEIVED ON EITHER OF THESE PAPERS/CUST OMERS AND FURTHER, NO CASH WAS RECEIVED OR RECEIVABLE IN RESPECT OF OTHER CUSTOMER S. THE STAND OF THE ASSESSEE HAS BEEN THAT NO CASH WAS RECEIVED BUT THE AMOUNTS AGAI NST ALPHABET 'C' REPRESENTED THE AMOUNT TO BE RECEIVED SUBJECTED TO THE CONFIRMATION FOR EXTRA WORK. THE ASSESSEE ALSO ITA NO. 1657/AHD/16 [ACIT VS. M/S. NEPTUNE REALTY P VT. LTD. ] A.Y. 2010-11 - 3 - MENTIONED THAT THE DISCLOSURE OF RS.300 LAKHS MADE DURING THE COURSE OF SEARCH WAS SUFFICIENT TO COVER THE UNACCOUNTED MONEY RECEIVED FROM THE PROJECT. IN THIS BACKGROUND, THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE AND PROCEEDED TO ESTIMATE THE AMOUNT OF ON- MONEY RECEIVED BY APPLYI NG THE EXTRAPOLATION METHOD. WE FIND THAT THERE IS NOTHING ON RECORD TO SUGGEST THA T ANY MATERIAL WAS FOUND DURING THE COURSE OF SEARCH EVIDENCING ON-MONEY RECEIVED FOR O THER BUNGALOWS. IN SUCH SITUATION, THE EXTRAPOLATION METHOD CANNOT BE APPLIED TO THE R ECEIPTS OF OTHER BUNGALOWS. FURTHER, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE PROFIT ON 'ON MONEY' RECEIPTS @ 25 %. THIS 25% ESTIMATION OF PROFIT ON O N-MONEY RECEIPTS IS PURELY ON THE BASIS OF ASSUMPTIONS, SURMISES AND CONJECTURES. THU S, IN OUR OPINION, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY TH E ASSESSING OFFICER BY ESTIMATING THE PROFIT ON 'ON MONEY' RECEIPTS @ 25% WHILE THE ASSES SEE HAS ALREADY OFFERED TAX ON THE ADMITTED UNACCOUNTED RECEIPTS FROM ITS GREENWOOD PR OJECT AMOUNTING TO RS.300 LAKHS. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, TH E AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKING THE ADDITION IN QUESTION AND CONFIRMING T HE SAME; AND THEREFORE, THE ADDITION IN QUESTION IS DIRECTED TO BE DELETED. 3. WE APPRECIATE BOTH THE PARTIES FAIR STAND AND A DOPT JUDICIAL CONSISTENCY IN THE IMPUGNED ASSESSMENT YEAR IN UPHOLDING LEARNED C IT(A)S FINDINGS UNDER CHALLENGE DELETING ON MONEY ADDITION IN QUESTION. REVENUES SOLE SUBSTANTIVE GROUND AS WELL AS MAIN APPEAL FAILS. 4. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS T HE 27 TH DAY OF FEBRUARY, 2018.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. G ODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/02/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0