The DCIT(OSD), Circle-9, Ahmedabad V. M/s. Shukan Builders, Ahmedabad

ITA 1697/AHD/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4794 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-03-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; TDS
• Section: 13; 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (THROUGH VIRTUAL COURT) BEFORESHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S) ASSET. YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 1518/AHD/2015 2010-11 SHUKAN BUILDERS 132 FT. RING ROAD, NAVA WADAJ AHMEDABAD-380013 PAN NO. ABLFS6018G DCIT (OSD) CIRCLE-9, AHMEDABAD 2. 1697/AHD/2015 2010-11 DCIT CIRCLE-2(2), AHMEDABAD M/S. SHUKAN BUILDERS, 132 FT. RING ROAD, NAVA WADAJ, AHMEDABAD- 380013 PAN NO. ABLFS6018G ASSESSEE BY : SHRI S. N. SOPARKAR WITH SMT. URVASHI SODHAN& SHRI PARIN SHAH, AR'S REVENUE BY : SHRI VIRENDRA OJHA CIT DR WITH SHRI DILEEP KUMAR, SR. DR / DATE OF HEARING : 03.09.2020 / DATE OF PRONOUNCEMENT: 19.10.2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CROSSAPPEALS HAVE BEEN FILED BY THE REVENUE AN D ASSESSEEFOR A.Y. 2010-11WHICH ARE ARISING FROM THE ORDER OF THE CIT( A)-10, AHMEDABAD DATED 31.03.2015, IN THE ASSESSMENT PROCEEDINGS UNDER SEC TION 143(3)OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 ITA NO. 1518/AHD/2015 A.Y. 2010-11(ASSESSEES APPEA L):- 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO AMOUNTING TO RS.62,51,247/- AS BOGUS PURCHASES. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF BUI LDING CONSTRUCTION AND DEVELOPERS. THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS CLAIMED TO HAVE MADE PURCHASES THE STEEL FOR RS.62,51,247/- ONLY. T HE DETAILS OF SUCH PURCHASES ALONG WITH THE PARTIES STAND AS UNDER: I. M/S BHARAT TRADING CO RS. 3237988.00 II. M/S LAXMI ENTERPRISES RS. 3014259.00 4. THE AO DURING THE ASSESSMENT PROCEEDINGS TO VERI FY THE VERACITY OF THE IMPUGNED PURCHASES DEPUTED THE INSPECTOR OF INCOME TAX TO CONDUCT NECESSARY ENQUIRIES. HOWEVER, THE INSPECTOR, IN HIS REPLY SUB MITTED THAT HECOULD NOT VERIFY THE GENUINENESS OF THE PARTY AS THE SAME WER E NOT AVAILABLE AT THE GIVEN ADDRESS. FURTHERMORE, THE INSPECTOR OF INCOME TAX C OULD NOT KNOW ANY DETAILS ABOUT SUCH PARTY ON CONDUCTING ENQUIRIES FROM THE N EIGHBORS. 5. THE AO ALSO CONDUCTED THE ENQUIRIES FROM THE VAT DEPARTMENT AND FOUND THAT THE REGISTRATION OF BOTH THE FIRMS HAVE BEEN CANCELLED. FURTHERMORE, THE AO ALSO FOUND THAT BOTH THE PARTIES HAVE NOT RE PORTED ANY SALES TO THE ASSESSEE IN THEIR RESPECTIVE RETURNS FILED TO THE V AT DEPARTMENT FOR THE SALES MADE TO THE ASSESSEE. 3 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 6. IN VIEW OF THE ABOVE THE AO TREATED THE PURCHASE S AS DISCUSSED ABOVE AS BOGUS AND, THEREFORE, HE DISALLOWED THE SAME BY ADD ING TO THE TOTAL INCOME OF THE ASSESSEE. 7. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LE ARNED CIT(A) WHO CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER : 4.1.3 AFTER CONSIDERING RIVAL SUBMISSION, I HOLD T HAT THE AO WAS JUSTIFIED IN DISALLOWING RS. 62,51,247/- ON ACCOUNT OF PURCHASES MADE FROM M/S. BHARTI TRADING CO. AND M/S.LAXMI ENTERPRISE FOR THE REASONS DISC USSED AS FOLLOWS. AS CAN BE SEEN, THE AO HAS MADE DETAILED INVESTIGATION REGARD ING PURCHASES FROM THE ABOVE TWO PARTIES. THE PARTIES WERE NOT AVAILABLE AT THE GIVEN ADDRESS. THE APPELLANT WAS ASKED TO PRODUCE THE ABOVE PARTIES BUT THE SAME WER E NOT PRODUCED. THE APPELLANT SUBMITTED THAT AT PRESENT THE ABOVE PARTIES WERE NE ITHER AVAILABLE AT THE GIVEN ADDRESS NOR THE APPELLANT WAS IN CONTACT WITH THEM. THE APPELLANT ALSO EXPRESSED ITS INABILITY TO PROVIDE THE LATEST ADDRESS OF THE ABOV E TWO PARTIES. THOUGH THE APPELLANT SUBMITTED AS ABOVE YET THE APPELLANT PRODUCED AFFID AVITS FROM THESE PARTIES. IT IS NOT UNDERSTOOD THAT IF THE APPELLANT COULD PRODUCE AFFI DAVITS FROM THESE PARTIES, WHAT PREVENTED IT FROM PRODUCING THE PARTIES OR GIVING T HEIR LATEST ADDRESS. ALL THIS IS MENTIONED IN PARA 3.3.3 OF THE ASSESSMENT ORDER. TH E APPELLANT WAS NOT ABLE TO EXPLAIN THIS DISCREPANCY EVEN DURING APPEAL PROCEED INGS. THE AO HAS ALSO MENTIONED ANOTHER DISCREPANCY IN THE SUBMISSIONS OF THE APPELLANT. ALONGWITH AFFIDAVITS OF THE ABOVE PARTIES, CONFIRMATIONS OF C OPY OF THEIR ACCOUNT IN BOOKS OF ACCOUNT OF THE APPELLANT WERE FILED. THE AO HAS OBS ERVED THAT THE CONFIRMATIONS ARE DATED 1.4.2010 BUT THE SAME WERE NOT PRODUCED DURIN G ASSESSMENT PROCEEDINGS TILL A LONG TIME DESPITE ISSUE OF TWO SHOW-CAUSE NOTICES, AGAIN, THE APPELLANT HAS FAILED TO EXPLAIN THIS DISCREPANCY BOTH AT THE ASSESSMENT STA GE AND AT THE APPELLATE STAGE FURTHER AND MOST IMPORTANTLY THE AO WROTE TO THE CO NCERNED ASSTT. COMMISSIONER OF SALES TO VERIFY THE SALES MADE BY THESE PARTIES TO THE APPELLANT. IN BOTH THE CASES, THE CONCERNED ASST COMMISSIONER SENT DETAILS OF DAT E WISE PURCHASE AND TALE MADE BY THE ABOVE TWO PARTIES, IN BOTH THE CASES, THE NA ME OF THE APPELLANT DID NOT APPEAR IN THE SALES MADE BY THE ABOVE TWO PARTIES. THERE C ANNOT BE A BETTER PROOF THAN THE INFORMATION RECEIVED FROM SALES DEPARTMENT REGARDIN G SALES/PURCHASE MADE BY A TRADER. THIS CLEARLY PROVES THAT THE APPELLANT DID NOT MAKE ANY PURCHASES FROM THE ABOVE PARTIES. WITH DUE REGARD TO RATIO OF JUDGMENTS RELIED BY TH E APPELLANT THE SAME ARE NOT APPLICABLE IN THE PRESENT CASE AS THE FACTS ARE DIFFERENT. IN GLASSLINEEQUIPMENTS VS. CIT 253 ITR 454(GUJ) THE ISSUE IS REGARDING PAR T ACCEPTANCE OF PART OF THE AFFIDAVIT BY THE CIT(A) WHICH IS NOT THE ISSUE IN T HE PRESENT CASE. FURTHER IN MEHTA PARIKH & CO VS. CIT 30 ITR 181(SC), THE ISSUE WAS R EGARDING ENTRIES IN THE CASH BOOKS WHICH IS NOT THE ISSUE IN THE PRESENT CASE. F URTHER, IN KRISHAN TEXTILES VS. CIT 4 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 310 ITR 227(GUJ), THE ISSUE WAS REGARDING CROSS-TAL LYING THE ACCOUNTS OF THE APPELLANT & THAT OF A THIRD PARTY WHICH IS NOT ISSU E IN THE PRESENT CASE. IN THE PRESENT CASE THE INFORMATION HAS BEEN SENT BY A GOV ERNMENT DEPARTMENT I.E. SALES TAX DEPARTMENT WHICH IS THE REPOSITORY OF AT) INFOR MATION REGARDING SALES MADE BY ANY PARTY. IN VIEW OF ABOVE, DISCUSSION, I HOLD THAT THE AO WA S JUSTIFIED IN MAKING ADDITION OF RS.62,51,247/- ON ACCOUNT OF TREATING PURCHASES FRO M M/S BHARAT TRADING CO & M/S. LAXMI ENTERPRISE AS BOGUS. ACCORDINGLY, THE AD DITION OF RS 62,51,247/- IS UPHELD& THE SAME IS CONFIRMED. THIS GROUND OF APPEA L IS DISMISSED. 8. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNN ING FROM PAGES 1 TO 305 AND SUBMITTED THAT THE ASSESSEE IS MAINTAINING STOCK REGISTERS WHEREIN THE IMPUGNED PURCHASES AND ITS CONSUMPTION HAS BEEN DUL Y RECORDED. FOR THIS PURPOSE, THE LEARNED AR DREW OUR ATTENTION ON PAGES 94 TO 97 OF THE PAPER BOOK. THE LEARNED AR ALSO DREW OUR ATTENTION ON THE INVOI CES ISSUED BY THE PARTIES AS DISCUSSED ABOVE ALONG WITH THE DELIVERY CHALLANS WHICH ARE PLACED ON PAGES 3 TO 82 OF THE PAPER BOOK. 10. SIMILARLY, THE LEARNED AR ALSO CLAIMED THAT THE ASSESSEE HAS MADE PAYMENT FOR THE PURCHASES FROM THE ABOVE PARTIES TH ROUGH ACCOUNT PAYEE CHEQUES AS EVIDENT FROM THE BANK STATEMENT OF THE A SSESSEE WHICH ARE PLACED ON PAGES 83 TO 93 OF THE PAPER BOOK. 11. THE LEARNED AR FURTHER CONTENDED THAT IF THE IM PUGNED PURCHASES ARE TREATED AS BOGUS THEN THE ASSESSEE SHOULD ALSO BE A LLOWED TO REDUCE THE CORRESPONDING AMOUNT FROM THE SALES AND THE CLOSING STOCK RESPECTIVELY. 5 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 12. THE LEARNED AR ALSO CONTENDED THAT AT THE MOST THE ELEMENT OF PROFIT AT THE RATE OF 5% ON SUCH PURCHASES CAN BE ADDED TO TH E TOTAL INCOME OF THE ASSESSEE FOR THE SIMPLE REASON THAT THE ASSESSEE HA S SHOWN THE IMPUGNED PURCHASES AS CONSUMPTION WHICH HAS BEEN SUBSEQUENTL Y SOLD. 13. ON THE OTHER HAND, THE LEARNED DR VEHEMENTLY SU PPORTED THE ORDER OF THE AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADMITTEDLY, THE PART IES FROM WHOM THE ASSESSEE HAS SHOWN PURCHASES AMOUNTING TO RS.62,51,247/- ARE NOT TRACEABLE. LIKEWISE, THE REGISTRATION OF THESE PARTIES THE VAT DEPARTMEN T WERE ALSO CANCELLED. THUS, BASED ON THESE FACTS, IT CAN BE INFERRED THAT PURCHASES REPRESENTS THE BOGUS PURCHASES. BUT, BEFORE WE ARRIVE AT ANY CONCL USION, THE FACT THAT NEEDS TO BE CONSIDERED IS THAT THE ASSESSEE HAS SHOWN SUCH P URCHASES IN ITS STOCK REGISTER WHICH HAVE BEEN CONSUMED IN THE CONSTRUCTI ON ACTIVITY. SUBSEQUENTLY, THE FINAL PRODUCT I.E. FLATS/ SHOPS FROM SUCH CONST RUCTION ACTIVITY HAS BEEN SHOWN EITHER AS SALES OR CLOSING STOCK. THUS, IF WE DONT ALLOW THE DEDUCTION ON ACCOUNT OF SUCH PURCHASES, TREATING THEM AS BOGU S, THEN WILL LEAD TO DOUBLE ADDITION TO THE INCOME OF THE ASSESSEE. ON ONE SIDE , WE ARE DISALLOWING THE PURCHASES BUT ON THE OTHER SIDE WE ARE TREATING THE SALES OF SUCH PURCHASES AS GENUINE. IT IS BECAUSE, NONE OF THE AUTHORITIES BEL OW HAS DOUBTED ON THE SALES MADE BY THE ASSESSEE AGAINST SUCH PURCHASES. 15. IN VIEW OF THE ABOVE, WE FIND FORCE IN THE CONT ENTION OF THE LEARNED AR THAT AN ELEMENT OF PROFIT CAN BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE PREVENT THE LOSS IF ANY TO THE REVENUE ON ACCOUNT O F SUCH PURCHASES. IN THE CONSTRUCTION ACTIVITY, IT IS THE PREVAILING PRACTIC E THAT THE ASSESSEE MAKES 6 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 PURCHASES OF THE RAW MATERIALS FROM THE GREY MARKET AND FURTHER MADE BOGUS PURCHASES TO RECORD THE SAME IN THE BOOKS OF ACCOUN TS. ACCORDINGLY, WE DONT INCLINE TO DISALLOW PURCHASES TREATING THEM AS BOGU S IN THE GIVEN FACTS AND CIRCUMSTANCES. 16. THE NEXT QUESTION ARISES HOW TO DETERMINE THE E LEMENT OF PROFIT EMBODIED IN SUCH PURCHASES AS DISCUSSED ABOVE. TO O UR MIND, THERE IS NO STANDARD JACKET FORMULA TO WORK OUT THE ELEMENT OF INCOME EMBODIED IN SUCH PURCHASES. THE ASSESSEE HAS ALREADY OFFERED GROSS P ROFIT AT THE RATE OF 8.16% ON THE SALES IN ITS BOOKS OF ACCOUNTS, MEANING THER EBY, PROFIT ON SUCH PURCHASES HAS ALREADY DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. HOWEVER, IN THE INTEREST OF JUSTICE AND FAIR PLAY A ND TO PREVENT ANY LEAKAGE TO THE REVENUE, WE ARE OF THE VIEW THAT THE JUSTICE WI LL BE SERVED THE ASSESSEE AS WELL AS TO THE REVENUE IF INCOME OF THE ASSESSEE IS ENHANCED BY 5% ON SUCH PURCHASES. ACCORDINGLY, WE DIRECT THE AO TO MAKE TH E ADDITION @ 5% ON SUCH BOGUS PURCHASES. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 17. THE NEXT ISSUE ARISES BY THE ASSESSEE IS THAT T HE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR RS.6,01, 000/- ON ACCOUNT OF COMMISSION EXPENSES. 18. THE ASSESSEE DURING THE YEAR HAS CLAIMED TO HAV E INCURRED COMMISSION EXPENSES AMOUNTING TO RS.8,51,000/- ONLY. OUT OF TH E SAID COMMISSION, A SUM OF RS.6,01,000/- REPRESENTS COMMISSION PAID TO 4 PA RTIES WHO HAVE ARRANGED THE BUYERS OF THE FLAT. THE DETAILS OF THE PARTIES AND THE SERVICES RENDERED BY THEM STAND AS UNDER: 7 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 NAME AND ADDRESS AND PAN OF PARTY COMMISSION EXPENSES(RS.) TDS AMOUNT (RS.) NET AMOUNT PAID BY CHEQUE SERVICE RENDERED SMT. VARSHABEN P. PRAJAPATI PAN: AAYPP4343H 22, SHRINAGAR SOCIETY, NAVA VADAJ, AHMEDABAD 157000/- 15700 141300 FOR FLAT NO. M-502, G-103, F-201 SMTPADMABEN M. PRAJAPATI PAN:AASPP2744G B-7/2, SWAGAT APPT. NAVA VADAJ, AHMEDABAD 150000 15000 135000 FOR FLAT NO. N-401, F- 204 SHRI HARDIK S. PRAJAPATI PAN: ANRPP2338Q 200000 20000 180000 FOR FLAT NO. A-204 F-404 N504 SMT. TARLIKABEN S. PRAJAPATI PAN: AASPP1874D A/2/4, SHRADHA APPT., NAVA VADAJ, AHMEDABAD 94000 9400 84600 FOR FLAT NO. D-404 H-203 19. HOWEVER, THE AO DURING THE ASSESSMENT PROCEEDIN GS DIRECTED THE ASSESSEE TO PRODUCE THE COMMISSION AGENTS AS DISCUS SED ABOVE BUT THE ASSESSEE FAILED TO DO SO. THE AO SUBSEQUENTLY DEPUTED INSPEC TOR OF INCOME TAX TO VERIFY THE VERACITY OF THE COMMISSION EXPENSES INCU RRED BY THE ASSESSEE. THE INSPECTOR OF INCOME TAX RECORDED THE STATEMENT OF T WO FLAT OWNERS NAMELY SUCH SMT. ANJANABENHIRENDRA KUMAR PATEL, FLAT NO. F 204 AND SMT. AMITABEN D. PATEL FLAT NO. H-203 WHO DENIED THE INVOLVEMENT OF ANY COMMISSION AGENT. AS SUCH BOTH THE FLAT OWNERS CLAIMED THAT THEY HAVE PURCHASED THE FLATS DIRECTLY FROM THE BUILDERS WITHOUT INVOLVING ANY CO MMISSION AGENT OR WITHOUT THE INVOLVEMENT OF ANY ADVERTISEMENT. ACCORDINGLY, THE AO PROPOSED TO MAKE THE DISALLOWANCE OF THE IMPUGNED COMMISSION ON THE REASONING THAT THERE WAS NO SERVICE RENDERED BY THE COMMISSION AGENTS. 8 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 20. THE ASSESSEE IN RESPONSE TO SUCH SHOW-CAUSE NOT ICE SUBMITTED ITS INABILITY TO PRODUCE THE COMMISSION AGENTS BUT AT T HE SAME TIME CONTENDED THAT ALL THE DETAILS OF THE COMMISSION AGENTS ARE AVAILA BLE WITH HIM (AO) AND,THEREFORE, HE CAN CALL UPON THEM VERIFY THE GEN UINENESS OF THE COMMISSION EXPENSES. 21. THE ASSESSEE ALSO FILED THE RETRACTED STATEMENT OF SMT. ANJANABEN HIRENDRA KUMAR PATEL WHEREBY IT WAS STATED THAT SHE HAS PURCHASED THE FLAT THROUGH THE COMMISSION AGENT. 22. THE ASSESSEE ALSO CLAIMED THAT THE AMOUNT OF CO MMISSION HAS BEEN PAID AFTER THE DEDUCTION OF TDS UNDER SECTION 194 H OF T HE ACT. 23. HOWEVER, THE AO DISAGREED WITH THE CONTENTION O F THE ASSESSEE AND HELD THAT THERE WAS NO SERVICES RENDERED BY THE COMMISSI ON AGENTS WHICH IS NECESSARY TO CLAIM THE DEDUCTION OF COMMISSION EXPE NSES. THUS, THE AO DISALLOWED THE COMMISSION EXPENSES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 23. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE L EARNED CIT(A) WHO CONFIRMED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 4.2.3 THE RIVAL SUBMISSIONS HAVE BEEN CONSIDERED. IT IS SEEN THAT THE APPELLANT PAID COMMISSION TO FIVE (5) PERSONS. WHEN ASKED TO PRODU CE THESE PERSONS, THE APPELLANT COULD PRODUCE ONLY ONE (1) PERSON COMMISSION IN RES PECT OF WHICH HAS BEEN ALLOWED BY THE AO. THE APPELLANT COULD NOT PRODUCE THE REST OF THE PERSONS. AS PER THE APPELLANT, THE COMMISSION HAS BEEN PAID TO THESE PE RSONS FOR PROVIDING SERVICES IN RESPECT OF BOOKING OF FLATS IN THEIR SCHEME I.E. TH E ABOVE PERSONS HELPED IN FINDING BUYERS FOR THE SAID FLATS. THOUGH THE APPELLANT SUB MITTED THUS, YET THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THE BUSINESS EXPEDIENCY OF THE COMMISSION PAYMENT. THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT EXPEN DITURE ON COMMISSION PAYMENT HAS BEEN INCURRED FOR PURPOSE OF BUSINESS. COMMISSI ON HAS BEEN PAID FOR TEN (10) FLATS. NO EXPLANATION HAS BEEN GIVEN AS TO WHY COMM ISSION HAS BEEN PAID ONLY FOR 9 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 TEN (10) FLATS AND NOT FOR THE REST OF THE FLATS SO LD BY THE APPELLANT. FURTHER, THE APPELLANT HAS NOT FILED ANY SUBMISSIONS EITHER DURI NG ASSESSMENT PROCEEDINGS OR APPEAL PROCEEDINGS EVIDENCING THAT THE PERSONS WHOM COMMISSION HAVE BEEN PAID ARE INTO REGULAR BUSINESS OF PROVIDING SERVICES FOR FACILITATING BOOKING OF FLATS NO DETAIL HAS BEEN PROVIDED TO SHOW WHAT KIND OF BUSIN ESS OR SERVICES THESE PERSONS DO ON REGULAR BASIS. ALSO NO INFORMATION HAS BEEN PRO VIDED TO SHOW WHETHER THESE PERSONS HAVE EARNED COMMISSION INCOME FROM OTHER PA RTIES ALSO. IN VIEW OF DISCUSSION ABOVE, I HOLD THAT THE AO WA S JUSTIFIED IN DISALLOWING COMMISSION PAYMENT OF RS.6,01,000/-. ACCORDINGLY, T HE ADDITION OF RS.6,01,000/- IS UPHELD AND THE SAME IS CONFIRMED. THIS GROUND OF AP PEAL IS DISMISSED. 24. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 25. THE LEARNED AR BEFORE US SUBMITTED THAT THE DIS ALLOWANCE HAS BEEN MADE BY THE AO ON THE BASIS OF THE STATEMENT RECORD ED OF THE FLAT OWNERS NAMELY SMT. ANJANABEN HIRENDRA KUMAR PATEL, FLAT NO . F-204 AND SMT. AMITABEN D. PATEL FLAT NO. H-203 WHO DENIED THE INV OLVEMENT OF ANY COMMISSION AGENT WHICH WERE TAKEN BEHIND THE BACK O F THE ASSESSEE. AS SUCH THE ASSESSEE WAS NOT AFFORDED THE OPPORTUNITY OF CR OSS VERIFICATION OF THE STATEMENTS OF THE FLAT OWNERS, THEREFORE, THERE CAN NOT BE ANY ADDITION BASED ON SUCH STATEMENT. 26. ON THE OTHER HAND, THE LEARNER DR VEHEMENTLY SU PPORTED THE ORDER OF THE AUTHORITIES BELOW. 27. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING D ISCUSSION, WE NOTE THAT THE ASSESSEE HAS CLAIMED TO HAVE MADE PAYMENT OF THE CO MMISSION TO CERTAIN PARTIES WHO HAVE ARRANGED THE BUYERS OF THE FLATS. THE AO VERIFIED THE GENUINENESS OF THE COMMISSION BY ENQUIRING FROM THE TWO FLAT OWNERS AS DISCUSSED ABOVE WHO DENIED TO HAVE TAKEN ANY SERVIC ES OF THE COMMISSION 10 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 AGENT. THEREFORE, THE DISALLOWANCE WAS MADE BY THE AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LEARNED CIT (A). 28. FIRST OF ALL, WE NOTE THAT THE AO WAS AWARE OF ALL THE DETAILS OF THE COMMISSION AGENTS SUCH AS THE ADDRESSES, PAN BUT HE HAS NOT TAKEN ANY CONFIRMATION FROM SUCH AGENTS ABOUT THE GENUINENESS OF THE COMMISSION RECEIVED BY THEM. THE ASSESSEE BY FURNISHING THE RE QUISITE DETAILS ABOUT THE COMMISSION AGENT SHIFTED ITS ONUS UPON THE AO TO PR OVE THAT COMMISSION EXPENSES WAS NOT INCURRED IN THE COURSE OF THE BUSI NESS. 29. FURTHERMORE, THE AO WASUNDER THE OBLIGATION TO PROVIDE THE OPPORTUNITY FOR THE CROSS-EXAMINATION OF THE STATEMENT OBTAINED FROM THE FLAT OWNERS TO THE ASSESSEE AS WELL AS TO THE COMMISSION AGENTS BEFORE ARRIVING AT THE CONCLUSION THAT THERE WAS NO INVOLVEMENT OF THE COMMISSION AGE NTS IN SELLING THE FLATS TO THE FLAT OWNERS. IN OUR CONSIDERED VIEW, THE STATEM ENT OBTAINED AT THE BACK OF THE ASSESSEE OF THE FLAT OWNERS CANNOT BE A GROUND FOR MAKING THE DISALLOWANCE IN THE GIVEN FACTS AND CIRCUMSTANCES. HENCE, WE ARE NOT INCLINED TO UPHOLD THE FINDING OF THE AUTHORITIES BELOW. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 30. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. COMING TO THE ITA NO. 1697/AHD/2015(A.Y.2010-11):- 31. THE ONLY ISSUE RAISED BY THE REVENUE IS THAT TH E LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS.12,6 2,76,167/- ON ACCOUNT OF ON MONEY. 32. THE AO DURING THE ASSESSMENT PROCEEDINGS ON RAN DOM ENQUIRIES FROM TEN PERSONS WHO HAVE PURCHASED FLATS/SHOPS IN THE P ROJECTS DEVELOPED BY THE 11 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 ASSESSEE, FOUND THAT THE BUYERS HAVE MADE THE PAYME NT FOR THE PURCHASE OF THE FLATS/SHOPS THROUGH CASH AND CHEQUES IN THE RATIO O F 40% TO 50%. ACCORDINGLY, HE WAS OF THE VIEW THAT THE RECEIPT SHOWN BY THE AS SESSEE IN THE YEAR UNDER CONSIDERATION AMOUNTING TO RS.18,94,14,251/- IS EQU IVALENT TO 60% OF THE TOTAL CONSIDERATION AND THE BALANCE AMOUNT OF RS.12,62,76 ,167/- REPRESENTS 40% OF THE TOTAL CONSIDERATION WHICH WAS RECEIVED IN CASH AND THE SAME WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. ACCORDINGLY , THE AO TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME. 33. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE L EARNED CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 4.5.4 THE RIVAL SUBMISSIONS HAVE BEEN CONSIDERED. THE REMAND REPORT OF THE AO DATED 16.6.14 HAS BEEN PERUSED. AS MENTIONED ABOVE, DURING ASSESSMENT PROCEEDINGS, THE AO, BASED ON STATEMENT OF TEN (10) FLAT/ SHOP OWNERS RECORDED DURING ENQUIRY BY THE ITI, HAD MADE ADDITION OF RS. 12,62,76,167/- ON ACCOUNT OF 'ON MONEY' WHICH AS PER THE AO, THE APPELLANT HAD RECEI VED ON SALE OF FLATS/SHOPS. THE AO'S CONTENTION WAS THAT SINCE TEN (10) PERSONS HAV E SAID THAT THEY HAVE PAID 40- 50% OF COST OF FLATS/SHOPS AS 'ON MONEY' OTHER FLAT /SHOP OWNERS TOO WOULD HAVE PAID 'ON MONEY'. SO HE CALCULATED 'ON MONEY' AS 40% OF THE SALE CONSIDERATION RECEIVED BY THE APPELLANT ON ALL FIATS/SHOPS AND MA DE ADDITION OF RS.12,62,76,167/- ON THIS ACCOUNT. THE APPELLANT'S CONTENTION WAS THA T THESE STATEMENTS WERE RECORDED ON ITS BACK, SO THE SAME COULD NOT BE RELIED ON. FU RTHER THE APPELLANT FILED AFFIDAVITS FROM THESE TEN (10) PERSONS DURING ASSESSMENT WHERE THEY DENIED HAVING PAID ANY 'ON MONEY'. THE AO REJECTED THE CONTENTS OF THE AFF IDAVITS. NO OPPORTUNITY WAS GIVEN BY THE AO TO THE APPELLANT TO PRODUCE THESE P ERSONS. DURING APPEAL PROCEEDINGS, KEEPING THE PRINCIPLES OF NATURAL JUST ICE IN VIEW, THE AO WAS ASKED TO SUMMON THESE TEN (10) PERSONS U/S 131 OF THE ACT AN D TO RECORD THEIR STATEMENTS ON OATH WHICH WAS DONE BY THE AO. AS MENTIONED IN PARA 4.3.3 ABOVE, THE AO VIDE HIS REMAND REPORT DATED 16.6.2014 REPORTED THAT ALL THE TEN PERSONS ATTENDED IN RESPONSE TO SUMMONS U/S 131 OF THE ACT AND THEIR ST ATEMENTS WERE RECORDED ON OATH. BASED ON THESE STATEMENTS THE AO AS FOLLOWS:- 'SPECIFIC QUESTIONS WERE ASKED REGARDING AMOUNT PAI D FOR PURCHASE OF FLAT/SHOPS AND AMOUNT OF CASH PAID OTHER THAN AS MA INTAINED IN THE REGISTERED SALE DEED. THE PERSONS WHO ATTENDED CONF IRMED TO HAVE SIGNED THE AFFIDAVIT THEMSELVES. THEY DENIED HAVING PAID ANY A MOUNT OVER AND ABOVE THE SALE DEED. THEY ALSO DENIED TO HAVE PAID ANY AM OUNT IN CASH AS ON MONEY.' 12 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 THUS. THE AO HAS CLEARLY SUBMITTED THAT ON BEING AS KED SPECIFICALLY WHETHER ANY 'ON MONEY' WAS PAID, THE FLAT OWNERS DENIED HAVING PAID ANY AMOUNT IN CASH AS 'ON MONEY'. THUS TEN (10) FIAT/SHOP OWNERS HAVE CLEARLY DENIED HAVING PAID ANY MONEY IN CASH TO THE BUILDER OVER AND ABOVE THE SALE PRICE. DURING ASSESSMENT PROCEEDINGS, THE AO BASED ON STATEMENT OF THESE TEN (10) FLAT/SH OP OWNERS HAD CONCLUDED THAT THE APPELLANT MUST HAVE GOT 'ON MONEY' ON ALL FLATS/SHO PS AND ACCORDINGLY WORKED OUT THE 'ON MONEY' COMPONENT AT RS. 12, 62,76,167/- AND ADDED THE SAME TO THE INCOME OF THE APPELLANT. NOW WHEN THE AO HAS REPORTED THAT TEN (10) FLAT OWNERS IN STATEMENT RECORDED ON OATH HAVE DENIED HAVING PAID ANY MONEY IN CASH, THE BASIS OF AO'S WORKING THE 'ON MONEY' OF RS. 12,62,76,167/- D OES NOT REMAIN. IN VIEW OF DISCUSSION ABOVE AND BASED ON THE AO'S REMAND REPORT DATED 16.6.14, I HOLD THAT THE AO WAS NOT JUSTIFIED IN MA KING ADDITION OF RS. 12,62,76,167/- ON ACCOUNT OF 'ON MONEY' RECEIVED BY THE APPELLANT. ACCORDINGLY, THE ADDITION OF RS. 12,62,76,167/- IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 34. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 35. BOTH THE LEARNED DR AND THE AR BEFORE US VEHEME NTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NO TE THAT THE AO IN THE REMAND PROCEEDINGS VDE LETTER DATED 16 TH JUNE 2014 HAS VERIFIED ALL THE TEN OWNERS OF THE FLATS/SHOPS IN RESPONSE TO THE SUMMON ISSUED UN DER SECTION 131 OF THE ACT AND REACHED TO THE CONCLUSION THAT THERE WAS NO CAS H INVOLVED IN THE PURCHASE OF FLATS/SHOPS. THE RELEVANT EXTRACT OF THE REMAND REPORT IS REPRODUCED AS UNDER: 13 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 THE COMMISSIONER OF INCOME-TAX, (APPEALS)-XV, AHMEDABAD SIR, SUB: REMAND REPORT IN THE CASE OF M/S. SUKAN BUIL DERS PAN- ABLFS6018G,A.Y.2QLO-11-REG. REF. NO.CLT(A)/S.B./APPEAL/2014-15, DATED 26/05/2 014 ******************************** KINDLY REFER TO THE ABOVE. 2. IN THIS CONNECTION, AS DIRECTED BY YOUR HONOUR SUMMONS U/S.131OF THE ACT WERE ISSUED TO FOLLOWING PERSONS, WHO ARE FLAT/SHOP OWNE RS IN THE RESIDENTIAL SCHEME SHUKAN CITY DEVELOPED BY THE ASSESSEE. THE PERSONS TOTAL NO. 10 , WHO HAVE FILED AFFIDAVIT DURING THE COURSE OF ASSESSMENT PROCEEDING ATTENDED IN RESPONS E TO SUMMONS U/S.131 AND THEIR STATEMENT UNDER OATH WAS DULY RECORDED. SR.NO. NAME OF THE FLAT/SHOP OWNERS FLAT/SHOP NO. 1 SHRIDINESHBHAI L. PRAJAPATI FLAT NO. N-104 2 SMT. JASIBENROHITBHAI PATEL FLAT NO. P-104 3 SHRI JIGNES'NSHAILESHBHAIRAVAL FLAT NO. L-304 4 SMT. MANGUBENAMRATLAL PATEL FLAT NO. J-103 5 SMT. MINAXIBENMUKUNDRAIRAVAL FLAT NO. P-302 6 SMT. JASIBENVIJAYBHAI PATEL FLAT NO. M-403 7 SHRIASHWINBHAISURESHBHAI PANDYA FLAT NO. O-502 8 SMT. ANJANABENHIRENKUMAR. PATEL FLAT NO. F-2Q4 9 SHRI JITUBHAIDASHRATBHAI PATEL SHOP NO. G-5 10 SHRI JADISHBHAIKALIDAS PATEL SHOP NO. FF-26 SPECIFIC QUESTIONS WERE ASKED REGARDING AMOUNT PAI D FOR PURCHASE OF FLAT/SHOPS AND AMOUNT OF CASH PAID OTHER THAN AS MAINTAINED IN THE REGISTERED SALE DEED. THE PERSONS WHO ATTENDED CONFIRMED TO HAVE SIGNED THE AFFIDAVIT THE MSELVES. THEY DENIED HAVING PAID ANY AMOUNT OVER AND ABOVE THE SALE DEED. THEY ALSO DENI ED TO HAVE PAID ANY AMOUNT IN CASH AS ON MONEY. THE DETAILS OF THE RELEVANT PERIOD OF BAN K A/C. INCLUDING BANK STATEMENT OF ALL THE PERSONS ABSTAINED EXCEPT FOR TWO PERSONS NAMELY 1) SMT. MANGUBENAMRUTBHAI PATEL AND 2) DINESHBHAI L PRAJAPATI. (PART DETAILS OF BANK STATE MENT). SUBMITTED FOR KIND PERUSAL AND NECESSARY ACTION ENCL. COPY OF STATEMENT RECORDED ON11/06/2014& 12/06/2014 14 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 COPY FOR KIND INFORMATION: 1. THE JT. CIT, RANGE-9, AHMEDABAD. DCIT(OSD), CIR.9, AHMEDABAD FROM THE ABOVE REMAND REPORT, THERE REMAINS NO AMB IGUITY TO THE FACT THAT THE ASSESSEE HAS NOT RECEIVED ANY CASH AGAINST THE SALE OF THE FLATS/SHOPS FROM THE BUYER. ACCORDINGLY, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LEARNED CIT(A) AND, THUS, WE DECLINE TO INTERFERE I N HIS ORDER. HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 36. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 37. IN THE COMBINED RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED WHEREAS THE APPEAL FILED BY THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON THE 19 TH OCTOBER,2020 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) VICE PRESIDENT ( WASEEM AHMED ) ACCOUNTANT MEMBER AHMEDABAD; DATED 19/10/2020 TANMAY, SR. PS TRUE COPY 15 ITA NOS. 1697&1518/AHD/2015 AY: 2010-11 TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !! ' # / CONCERNED CIT 4. ' # ( ) / THE CIT(A)- 5. &'() **+ , , / DR, ITAT, AHMEDABAD. 6. ),- ./ / GUARD FILE. / BY ORDER, & * //TRUE COPY// / ! ( DY./ASSTT.REGISTRAR) ! '# $, &' / ITAT, AHMEDABAD 1. DATE OF DICTATION 21.09.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.09.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 05.10.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 19 .10.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE OR DER