M/S EKTA HOUSING PVT. LTD., MUMBAI V. DY. CIT CENTRAL CIRCLE-6(2), MUMBAI

ITA 1732/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4480 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 25-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Rectification of order; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Opportunity of cross examination; Question of law; Third party statement; Tax effect; Documents seized; Set aside
• Section: 69C; 142(1); 153A; 115JB; 205; 69B; 271D; 201; 143(2); 69A; 207; 208; 64; 158B(b); 113; 43; 48; 73; 72; 13; 153; 119; 22; 153C; 147; 131; 68; 69; 132; 154; 15; 139

Judgement Text

PAGE 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI S.RIFAUR RAHMAN (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO. 1732 - 1733 /MUM/201 9 (ASSESSMENT YEAR S : 2013 - 14 & 201 6 - 1 7 ) M/S EKTA HOUSING PVT. LTD 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001 . PAN NO. AAACE2460K VS. DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. (A PPELLANT ) (RE SPONDENT ) ITA NO.2186/MUM/2019 (ASSESSMENT YEAR: 2016 - 17) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S EKTA HOUSING PVT. LTD 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAACE2460K (APPELLANT) (RESPONDENT) ITA NO.1734 TO 1737 /MUM/2019 (ASSESSMENT YEARS: 2013 - 14 TO 2016 - 17) M/S EKTA PARKSVILLE HOMES PVT. LTD.,401 , HALL MARK BUSINESS PLAZA,OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAACW4316N VS. DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. PAGE 2 (APPELLANT) (RESPONDENT) ITA NO. 2194 & 2195 /MUM/2019 (ASSESSMENT YEAR S : 201 4 - 15 & 2015 - 16 ) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S EKTA PARKSVILLE HOMES PVT. LTD., 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAACW4316N (APPELLAN T) (RESPONDENT) ITA NO.1738 TO 1740 /MUM/2019 (ASSESSMENT YEARS: 2014 - 15 TO 2016 - 17) M/S EKTA SUPREME CORPORATION.,401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AABFE8308G VS. DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POI NT, MUMBAI 400 021. (APPELLANT) (RESPONDENT) ITA NO.2202 TO 2204/MUM/2019 (ASSESSMENT YEARS: 2014 - 15 TO 2016 - 17) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S EKTA SUPREME CORPORATION.,401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAGE 3 PAN NO. AABFE8308G (APPELLANT) (RESPONDENT) ITA NO.1741 & 1742 /MUM/2019 (ASSESSMENT YEARS: 2015 - 16 & 2016 - 17) M/S EKTA SHELTERS PVT. LTD.,401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAACE3017G VS. DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. (APPELLANT) (RESPONDENT) ITA NOS. 2197 & 2198 /MUM/2019 (ASSESSMENT YEARS: 201 5 - 16& 2016 - 17) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S EKTA SHELTERS PVT. LTD.,401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAACE3017G (APPELLANT) (RESPONDENT) ITA NO.1744 & 1745 /MUM/2019 (ASSESSMENT YEARS: 2015 - 16 & 2016 - 17) PAGE 4 M/S EKTA SHUBHAM VENTURE; 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AADFE1333R VS. DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. (APPELLANT) (RESPONDENT) ITA NOS. 2201 & 2196/MUM/2019 (ASSESSMENT YEARS: 2015 - 16 & 2016 - 17) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S EKTA SHUBHAM VENTURE; 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AADFE1333R (APPELLANT) (RESPONDENT) ITA NOS. 2199 & 2200/MUM/2019 (ASSESSMENT YEAR: 2016 - 17) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S EKTA WOR LD PVT. LTD; GOPAL FLOOR, NEAR GOPAL SHARMA SCHOOL, OFF. ADI SHANKRACHARYA MARG, POWAI, ANDHERI EAST, MUMBAI 400 076. PAN NO. AABCE9770F PAGE 5 (APPELLANT) (RESPONDENT) ITA NO.1743/MUM/2019 (ASSESSMENT YEAR: 2014 - 15) M/S PAHLI HILL DEVELOPERS; 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAAFP5949A VS. DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. (APPELLANT) (RESPONDENT) ITA NOS. 2193/MUM/2019 (ASSESSMENT YEARS: 2014 - 15) DY. COMMISSIONER OF INCOME - TAX - CENTRAL CIRCLE 6(2), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021. VS. M/S PAHLI HILL DEVELOPERS; 401, HALL MARK BUSINESS PLAZA, OFF. WESTERN EXPRESS HIGHWAY, KALANAGAR, BANDRA EAST, MUMBAI 400 001. PAN NO. AAAFP5949A ASSESSEE BY : SHRI NARESH JAIN , A.R REVENUE BY : SHRI SUNIL UM AP, CIT D.R DATE OF HEARING : 0 1 .0 4 . 2021 DA TE OF PRONOUNCEMENT : 2 4 .0 5 . 2021 ORDER PER BENCH : THE PRESENTCROSS - APPEAL S /APPEALS ARE DIRECTED AGAINST THE RESPECTIVE ORDER S PASSED BY THE CIT(A) - 54, MUMBAI . AS CERTAIN PAGE 6 COMMON ISSUES ARE INVOLVED IN THE AFOREMENTIONED APPEALS , THEREFORE, THE SAME ARE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATED OR DER. WE SHALL FIRST TAKE UP THE APPEAL FILED BY THE ASSESSEE , VIZ. M/S EKTA HOUSING PVT. LTD FOR A.Y. 201 3 - 14 IN ITA NO. 1732/MUM/2019. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION @20% OF THE ON - MONEY IN THIS YEAR WITHOUT CONSIDERING THE FACT THAT THE APPELLANT OFFERED THE INCOME OF RS. 3.48 LAKHS @ 12% OF ON - MONEY OF RS. 29 LAKHS IN A.Y 2016 - 17 WHEN THE PROJECT WAS COMPLETED AND SAL E WAS RECOGNIZED IN P&L A/C. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 29 LAKHS WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ES TIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 3. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 2. BRIEFLY STATED, THE ASSESSEE C OMPANY WHICH IS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER HAD FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 201 3 - 1 4 ON 30.09.2013 , DECLARING A TOTAL INCOME OF 16,53,43,100/ - . THE RETURN OF INCOME WAS THEREAFTER REVISED ON 06.06.2014 AT AN INCOME OF RS.17,11,54,520/ - . SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP AND THE ASSESSEE COMPANY WAS COVERED IN THE SAID PROCEEDINGS. INCRIMINATING DOCUMENTS REVEALING RECEIPT OF UNACCOUNTED AMOUN TS BY WAY OF ON - MONEY BY THE ASSESSEE COMPANY AND ITS GROUP CONCERNS AGAINST SALE OF RESIDENTIAL AND COMMERCIAL PROPERTIES HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS. NOTICE UNDER SEC. 153A WAS ISSUED AND DULY SERVED UPON THE ASSESSEE FOR THE YEA R IN QUESTION I.E A.Y 2013 - 14. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153A WAS FILED BY THE ASSESSEE COMPANY ON 13.01.2017, DECLARING A TOTAL INCOME OF PAGE 7 RS. 17,11,54,520/ - . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O FROM A PERUSAL OF THE SEIZED MATERIAL THAT THE ASSESSEE COMPANY HAD INTER - ALIA RECEIVED ON - MONEY ON SALE OF FLATS W.R.T ITS PROJECTS, VIZ. MAPLE WOOD/COR NEL AND CALIFORNIA, AS UNDER: PROJECT NAME FLAT NO. AMOUNT (IN LACS) FINANCIAL YEAR (OF RECEIPT) ASSESSMENT YEAR MAPLE WOOD/CORNEL 801/802 RS. 197 2015 - 16 2016 - 17 CALIFORNIA 1101 RS. 29 2012 - 13 (REGISTRATION ON 04.03.2013) 2013 - 14 OBSERVING THAT THE ASSESSEE HAD NOT OFFERED THE ON - MONEY OF RS.29 LACS THAT WAS RECEIVED BY IT DURING THE YEAR IN QUESTION AS ITS INCOME IN THE RETURN FILED U/S 153A OF THE ACT, THE A.O CALLED UPON IT TO PUT FORTH AN EXPLANATION AS REGARDS THE SAME. IN REPLY, IT WAS SUBMITTE D BY THE ASSESSEE THAT THE NET INCOME OF RS. 3.48 LAC I.E 12% OF THE ON - MONEY OF RS. 29 LAC RECEIVED W.R.T ITS PROJECT, VIZ. CALIFORNIA HAD BEEN OFFERED BY IT AS INCOME IN THE COMPUTATION OF INCOME FOR A.Y 2016 - 17 I.E THE YEAR IN WHICH THE PROJECT WAS COM PLETED AND SALE WAS RECOGNISED IN THE PROFIT & LOSS ACCOUNT. HOWEVER, THE A.O DID NOT FIND FAVOUR WITH THE AFORESAID EXPLANATION OF THE ASSESSEE. OBSERVING, THAT THE REGISTRATION OF THE FLAT NO. 1101 WAS DONE IN MARCH, 2013, THE A.O WAS OF THE VIEW THAT AS THE SALE TRANSACTION STOOD CONCLUDED DURING THE YEAR UNDER CONSIDERATION AND THE CORRELATING INCOME ARISING THEREFROM HAD ACCRUED DURING THE PERIOD RELEVANT TO A.Y 2013 - 14 THUS, THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSEE TO ACCOUNT FOR THE SAM E IN A.Y 2016 - 17. ALSO, THE A.O BEING OF THE VIEW THAT THE ENTIRE AMOUNT OF ON - MONEY OF RS. 29 PAGE 8 LAC WAS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE U/S 68 OF THE ACT , THEREFORE, REJECTED THE ASSESSEE S OFFER FOR ACCOUNTING FOR ONLY 12 % OF THE ON - MONEY RECEIPT AS ITS INCOME . ALTHOUGH THE A.O HAD IN HIS ASSESSMENT ORDER CATEGORICALLY OBSERVED THAT THE ENTIRE AMOUNT OF ON - MONEY OF RS. 29 LAC WAS TO BE ADDED TO THE ASSESSEES INCOME UNDER SEC. 68 OF THE ACT, HOWEVER, THE CONSEQUENTIAL ADDITION TO THE SAID EFFECT INADVERTENTLY REMAINED OMITTED TO BE MADE IN THE ASSESSMENT ORDER PASSED BY HIM UNDER SEC. 153A R.W.S 143(3), DATED 15.12.2017. SUBSEQUENTLY, THE A.O PASSED A RECTIFICATION ORDER UNDER SEC. 154 WHEREIN THE ADDITION OF RS. 29 LAC WAS MADE BY HIM . 4. AS THE A.O IN THE IMPUGNED ASSESSMENT ORDER HAD CATEGORICALLY OBSERVED THAT THE ENTIRE AMOUNT OF ON - MONEY OF RS. 29 LAC RECEIVED BY THE ASSESSEE W.R.T ITS PROJECT CALIFORNIA WAS TO BE ADDED TO THE ASSESSEES INCOME U/S 68 DURING THE YEAR IN QUESTION I.EA.Y 2013 - 14 THUS, THE ASSESSEE ASSAILED THE SAID OBSERVATION OF THE A.O BEFORE THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS , THEREFORE, THE SAME BEING INSEPARABLE FROM IT S BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED IN SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM MOBILE PH ONES THE REFORE , THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT . AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OB SERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% O F THE ON - MONEY PAGE 9 RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE B ASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT 12% OF SUCH RECEIPTS COULD NOT BE SUBSTANTIATED BY THE ASSESSEE THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE DISALLOWANCE TO THE SAID EXTENT. 5. AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. WE SHALL FIRST ADVERT TO THE GRIEVANCE OF THE ASSESSEE THAT THE CIT(A) H A D ERRED IN ESTIMATING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEI PTOF RS. 29 LAC @ 20% WHICH IS ON THE HIGHER SIDE , AND THE SAME SHOULD HAVE BEEN ESTIMATED BY HER @12% OF THE SAID RECEIPTS AS WAS OFFERED BY THE ASSESSEE . BEFORE PROCEEDING ANY FURTHER, WE MAY HEREIN OBSERVE THAT THE REVENUE ON THE OTHER HAND IN THE CASE OF THE ASSESEE FOR THE SUCCEEDING YEAR , VIZ. A.Y 2016 - 17 AS WELL AS IN THE CAS E OF THE OTHER GROUP CONCERNS HAD ASSAILED THE CONFINING OF THE ADDITION W.R.T THE ON - MONEY RECEIPTS BY THE CIT(A) AT 20% OF THE A MOUNT OF SUCH UNACCOUNTED RECEIPTS, AS AGAINST THE ADDITION OF THE ENTIRE AMOUNT MADE BY THE A.O IN THE SAID RESPECTIVE CASES. INSOFAR THE YEAR IN QUESTION I.E A.Y 2013 - 14 IS CONCERNED, THE REVENUE APPARENTLY CONSIDERING THE LOW TAX EFFECT THEREIN INVOLVED HA D NOT CARRIED THE MATTER ANY FURTHER IN APPEAL BEFORE US. AS OBSERVED BY US HEREINABOVE, THE A.O ON A PERUSAL OF THE SEIZED MATERIAL OBSERVED THAT THE ASSESSEE HAD DURING THE YEAR IN QUESTION I.E A.Y 2013 - 14 RECEIVED ON - MONEY OF RS. 29 LAC W.R.T SALE OF F LAT NO. 1101 IN ITS PROJECT, VIZ. CALIFORNIA. IT WAS FURTHER OBSERVED BY THE A.O THAT THE SALE AGREEMENT FOR THE AFORESAID F LAT NO. 1101 WAS REGISTERED ON 04.03.2013 I.E DURING THE YEAR UNDER CONSIDERATION ITSELF . PAGE 10 ADMITTEDLY, THE AFORESAID FACTUAL OBSE RVATIONS OF THE A.O ARE NOT IN DISPUTE. OBSERVING , THAT THE ASSESSE HAD NOT OFFERED THE ON - MONEY OF RS. 29 LAC RECEIVED BY IT AS ITS ADDITIONAL INCOME FOR THE YEAR IN QUESTION I. E A.Y 2013 - 14 THE A.O CALLED FOR AN EXPLANATION AS REGARDS THE SAME FROM THE AS SESSEE . IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD OFFERED THE NE T INCOME ELEMENT EMBEDDED IN THE ON - MONEYRECEIPT I.E @12% OF R S . 29 LAC IN ITS COMPUTATION OF INCOME FOR A.Y 2016 - 17 I.E THE YEAR IN WHICH THE PROJECT WAS COMPLETED AND SALE OF THE AFORESAID FLAT WAS RECOGNISED IN ITS PROFIT & LOSS ACCOUNT. HOWEVER, THE A.O WAS OF THE VIEW THAT THE ENTIRE AMOUNT OF THE ON - MONEY OF RS. 29 LAC WAS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN THE YEAR OF RECEIPT ITSELF . ALSO, THE A.O WAS OF THE VIEW THAT AS THE REGISTRATION OF THE FLAT IN QUESTION I.E FLAT NO. 1101 WAS DONE IN MARCH, 2013, THEREFORE, THE CORRELATING INCOME ARISING FROM THE SALE TRANSACTION HAD ACCRUED TO THE ASSESSEE DURING THE PERIOD RELEVANT TO A.Y 2013 - 14 AND THERE WAS NO JUS TIFICATION ON THE PART OF THE ASSESSEE IN ACCOUNTING FOR THE SAME AS ITS INCOME IN A.Y 2016 - 17 . TO SUM UP, THE A.O DISLODGED BOTH THE QUANTIFICATION OF THE INCOME RELATABLE TO THE ON - MONEY RECEIPT AS WELL AS THE YEAR OF TAXABILITY OF THE SAID AMOUNT, AS WAS CLAIMED BY THE ASSESSEE. ON APPEAL, THE CIT(A) FOUND FAVOUR WITH THE CLAIM OF THE ASSESSEE TH A T ONLY THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT WAS LIABLE TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. BUT THEN, THE CLAIM OF THE ASSESSEE WHEREIN HE HAD SOUGHT DEFERRING OF ACCOUNTING FOR THE ON - MONEY RECEIPT AS ITS INCOME TO A.Y 2016 - 17I.E THE YEAR W HEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED IN PROFIT & LOSS A/C WAS REJECTED BY THE CIT(A). PAGE 11 6. SUPPORTING ITS CLAIM THAT THE CIT(A) HAD RIGHTLY RESTRICTED THE ADDITION W.R.T THE ON - MONEY OF RS. 29 LAC RECEIVED BY THE ASSESSEE AS REGARDS SALE OF F LAT NO. 1101 IN ITS PROJECT, VIZ. CALIFORNIA, IT WAS S UBMITTED BY THE LD. A.R THAT THE CIT(A) HAD RIGHTLY OBSERVED THAT AS REGARDS THE ON - MONEY RECEIVED BY THE ASSESSEE WHAT COULD BE BROUGHT TO TAX WAS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND N OT THE ENTIRE RECEIPTS. IN SUPPORT OF HIS AFORESAID CONTENTION THE LD. A.R HAD RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DY. CIT VS. PANNA CORPORATION (2012) 82 CCH 266 (GUJ). IT WAS SUBMITTED BY THE LD. A.R THAT THE HONB LE HIGH COURT IN ITS SAID ORDER HAD OBSERVED THAT U PON 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 RECEIPTS . FURTHER, RELIANCE WAS PLACED BY THE LD. A.R ON THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF PCIT, SURAT VS. ANUPAM ORGANISER (2020) (9) TMI 973 (GUJ) . IT WAS SUBMITTED BY THE LD. A.R THAT THE HONBLE HIGH COURT RELYING ON ITS EARLIER ORDER PASSED IN THE CASE OF PANNA CORPORATION(SUPRA), HAD OBSERVED, THAT AS THE TRIBUNAL WAS JUSTIFIED IN CONSIDERING THAT THE ASSESSEE OUGHT TO HAVE SPENT REASONABLE AMOU NT FOR THE PURPOSE OF RECEIVING THE AMOUNT OF ON - MONEY THUS, WHAT COULD BE BROUGHT TO TAX WAS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND NOT THE ENTIRE RECEIPTS THEMSELVES. SUPPORT WAS ALSO ALSO DRAWN BY THE LD. A.R FROM THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. ABHISHEK CORPORATION (2000) 158 CTR 374 (GUJ). FURTHER , RELIANCE WAS PLACED BY THE LD. A.R ON THE ORDER OF THE ITA T , MUMBAI IN THE CASE OF GURUPRERNA ENTERPRISES VS. ACIT (2011) 30 CCH 17 (MUM) . IT WAS , THUS , SUBMITTED BY THE LD. A.R THAT THE CIT(A) WAS PRINCIPALLY CORRECT IN RESTRICTING THE ADDITION TO THE EXTENT OF THE INCOME PAGE 12 ELEMENT EMBEDDED IN THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE COMPANY. BUT THEN, IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT(A) HAD ESTIMAT ED THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT A HIGH PITCHED FIGURE I.E @20% OF THE AMOUNT OF ON - MONEY RECEIVED BY THE ASSESSEE AS AGAINST THAT OFFER E D BY THE ASSESSEE @12% OF THE AMOUNT OF SUCH RECEIPTS. IN ORDER TO DRIVE HOME HIS AFORESAID C LAIM, IT WAS SUBMITTED BY THE LD. A.R THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH HAD BEEN ACCEPTED BY THE COMMISSION. IT WAS, THUS, SUBMITTED BY THE LD. A.R THAT THE ESTIMATION OF THE PROFIT ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS @20% BY THE CIT(A) BE SUBSTITUTED BY THAT SHOWN BY THE ASSESSEE @12%. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT AS THE ASSESSSEE HAD RECOGNISED THE SALES OF THE HOUS ING PROJECT, VIZ. CALIFORNIA IN THE PERIOD RELEVANT TO A.Y 2016 - 17 HENCE, THE A.O WAS NOT CORRECT IN ASSESSING THE ON - MONEY OF RS. 29 LAC RECEIVED BY THE ASSESSEE W.R.T FLAT NO. 1101 IN THE SAID PROJECT IN A.Y 2013 - 14. IT WAS SUBMITTED BY THE LD. A.R THA T AS THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING THEREFORE, THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS OF RS. 29 LAC RECEIVED BY THE ASSESSEE W.R.T FLAT NO . 1101 IN ITS PROJECT, VIZ. CALIFORNIA WAS TO BE CONSIDERED IN THE RELEVANT YEAR OF COMPLETION OF THE PROJECT. IT WAS, THUS, SUBMITTED BY THE LD. A.R THAT THE CIT(A) HAD ERRED IN UPHOLDING THE VIEW OF THE A.O THAT THE ON - MONEY RECEIPT IN QUESTION WAS TO BE BROUGHT TO TAX DURING THE YEAR OF RECEIPT ITSELF I.EA.Y 2013 - 1 4. IN SUPPORT OF ITS CLAIM THAT IN A CASE WHERE AN ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD THE ON - MONEY RECEIVED IS TO BE BROUGHT TO TAX IN THE YEAR OF COMPLETION OF T HE PROJECT THE LD. A.R RELIED ON THE ORDER PAGE 13 OF THE HONBLE HIGH COURT OF GUJAAT IN THE CASE OF CIT(CENTRAL), SURAT VS. HAPPY HOME CORPORATION (2018) 94 TAXMANN.COM 292 (GUJ). IT WAS SUBMITTED BY THE LD. A.R THAT THE SAID ORDER OF THE HONBLE HIGH COURT HAD THEREAFTER BEEN UPHELD BY THE HONBLE SUPREME COURT AND THE SLP FILED BY THE REVENUE HAD BEEN DISMISSED. ALSO, RELIANCE WAS PLACED BY THE LD. A.R ON THE ORDER OF THE ITAT, AHMEDABAD IN THE CASE OF M/S D.R CONSTRUCTION VS. ITO, WARD 2(3), SURAT , ITA NO. 27 35/AHD/2010, DATED 08.04.2011. ON THE BASIS OF HIS AFORESAID CONTENTIONS, IT WAS SUBMITTED BY THE LD. A.R THAT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE COMPANY BE WORKED OUT @12% OF SUCH RECEIPTS AND SUBJECTED TO TAX IN A.Y 2016 - 17 I.E W HEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED BY THE ASSESSEE IN ITS PROFIT & LOSS A/C. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ASSESSMENT ORDER. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE AMOUNT OF THE ON - MONEY RECEIVED BY THE ASSESSEE W.R.T FLAT NO. 1101 OF ITS PROJECT, VIZ. CALIFORNIA WAS AN UNACCOUNTED RECEIPT, THEREFORE, THE A.O HAD RIGHTLY SUBJECTED THE ENTIRE AMOUNT OF SUCH RECEIPT TO TAX. IT WAS SUBMITTED BY THE LD. D.R THAT THE CIT(A) H AD MOST ARBITRARILY RESTRICTED THE ADDITION TO THE EXTENT OF THE IMPUGNED INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. D .R THAT AS THE SALE AGREEMENT FOR THE AFORESAID PROPERTY IN QUESTION I.E FLAT N O. 1101 WAS EXECUTED IN MARCH, 2013 THUS , THE CIT(A) HAD RIGHTLY OBSERVED THAT THE SALE TRANSACTION IN QUESTION HAVING BEEN CONCLUDED DURING THE PERIOD RELEVANT TO A.Y 2013 - 14 ITSELF, T HERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSEE IN ACCOUNTING FOR THE SAME IN A.Y 2016 - 17. ON THE BASIS OF HIS AFORESAID CONTENTIONS IT WAS SUBMITTED BY THE LD. D.R THAT THOUGH THE CIT(A) HAD RIGHTLY PAGE 14 OBSERVED THAT THE SALE TRANSACTION IN QUESTION WAS LIABLE TO BE ACCOUNTED FOR BY THE ASSESSEE DURING THE YEAR IN QUESTION , BUT S HE HAD ERRED IN SCALING DOWN THE ADDITION TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE COMPANY, AS AGAINST THE ADDITION OF THE ENTIRE AMOUNT OF ON - MONEY THAT WAS MADE BY THE A.O. 8. WE HAVE HEARD THE AUTHORIS ED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTI ONS. ADMITTEDLY, THE ASSESSEE DURING THE YEAR IN QUESTION I.E A.Y 2013 - 14 HAD RECEIVED ON - MONEY OF RS. 29 LAC W.R.T SALE OF FLAT NO. 1101 IN ITS PROJECT, VIZ. CALIFORNIA. INSOFAR THE QUANTIFICATION OF THE INCOME ASSESSABLE AS REGARDS THE AMOUNT OF ON - MON EY RECEIVED BY THE ASSESSEE IS CONCERNED, WE FIND THAT THE SAME WAS CONFINED BY THE ASSESSEE UP TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN THE AMOUNT OF SUCH ON - MONEY AND WAS ACCORDINGLY TAKEN ON AN AD HOC BASIS I.E @12% OF SUCH RECEIPT AT RS. 3.84 LAC. HOWEVER, THE A.O SUBJECTED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 29 LAC TO TAX IN THE HANDS OF THE ASSESSEE IN THE YEAR OF RECEIPT ITSELF I.E A.Y 2013 - 14. ON APPEAL , THE CIT(A) PRINCIPALLY AGREED WITH THE ASSESSEE THAT THE ENTIRE AMOUNT OF ON - MONEY COULD NOT BE SUBJECTED TO TAX AND SHE RESTRICTED THE ADDITION TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN SUCH RECEIPTS, WHICH HOWEVER WAS ESTIMATED BY HER @20% OF THE AMOUNT OF ON - MONEY RECEIVED BY THE ASSESSEE , OBSERVING AS UNDER: 5.5. TH E ASSESSEE HAD SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS THAT IT HAD INCURRED PAGE 15 EXPENSES OUT OF THESE CASH RECEIPTS WHICH HAVE NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, HE REQUESTED TO ALLOW THESE EXPENSES AND TAX ONLY THE N ET INCOME. FOR THIS HE RELIED UPON THE JUDGMENTS AS COULD BE SEEN FROM HIS SUBMISSIONS SUPRA. 5.6 THE LEARNED COUNSEL FURTHER CONTENDED THAT THE GROUP CASE OF THE APPELLANT WHICH HAVE APPROACHED THE INCOME TAX SETTLEMENT COMMISSION HAVE OFFERED 15% OF ON - M ONEY TO TAX WHICH HAS BEEN ACCEPTED BY THE HONBLE ITSC. THE PERCENTAGE OF PROFIT OFFER E D BEFORE THE ITSC AND THE ACCEPTANCE BY THE SETTLEMENT COMMISSION IS APPLICABLE ONLY TO THE CASES BEFORE THE COMMISSION AND IS IN NO WAY BINDING ON THE OTHER CASES WHIC H ARE NOT BEFORE IT. AT BEST IT CAN ONLY BE A GUIDING FACTOR. ACCORDING TO THE LEARNED COUNSEL, IN THE CASE OF THE APPELLANT A PROFIT OF ONLY 12% IS FEASIBLE AND THE SAME IS OFFERED TO TAX. THE REASON FOR OFFERING 12% IS NOT SUBSTANTIATED WITH ANY BASIS OR EVIDENCE. ON THE OTHER HAND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRIME DEVELOPERS ITA NO. 2452 OF 2013, HELD AS UNDER : (E). THE GRIEVANCE OF T H E REVENUE BEFORE US IS THAT THE ADOPTION OF NET PROFIT OF 17.08% AS DETERMINED BY THE TRIBUNAL IS NOT CORRECT. ALTHOUGH THE QUESTIONS AS FORMULATED DOES NOT STATE THAT THE ADOPTION OF ANY PARTICULAR RATE OF NET PROFIT, IN SUBMISSIONS IT IS SUBMITTED THAT I T HAS TO BE REPLACED/SUBMITTED BY 65% AS NET PROFIT AS ARRIVED AT BY THE ASSESSING OFFICER. (F). WE FIND THAT THE REVENUE SEEKS TO SUBSTITUTE THE ESTIMATED NET PROFIT ARRIVED AT BY THE TRIBUNAL WIT H A NEW FIGURE OF NET PROFIT. THIS WITHOUT IN ANY MANNER S HOWING THAT THE ESTIMATE ARRIVED AT BY THE TRIBUNAL IN THE IMPUGNED ORDER IS PERVERSE. IT IS A SETTLED POSITION OF LAW THAT IN ESTIMATED NET PROFIT ARRIVED AT BY THE AUTHORITIES IS A QUESTION OF FACT AND IF THE MATERIAL ON RECORD DOES SUPPORT THE ESTIMATE ARRIVED AT BY THE TRIBUNAL THEN IT DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW (SEE CIT VS. PIRAMAL SPINNING AND WEAVING MILLS LTD. 124 ITR 408). IN THIS CASE, WE FIND THAT THE NET PROFIT ESTIMATED AT 17.08% IS A VERY POSSIBLE VIEW ON THE FACTS FOUND. (G). IN THE ABOVE VIEW, QUESTION NO. 1 AS PROPOSED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. THEREFORE, THE PERCENTAGE OF PROFIT HAS TO BE ESTIMATED ON CASE TO CASE DEPENDING ON THE FACTS AND CIRCUMSTANCES OF TH E CASE. 5.7 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS FELT REASONABLE TO ESTIMATE THE PROFIT OF THE ASSESSEE AT 20% OF THE ON - MONEY RECEIVED DU R ING THE YEAR. THE A.O IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 20% OF THE ON - MONEY RECEIVED. IN VIEW OF THE ABOVE, THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. PAGE 16 ON THE ONE HAND THE ASSESSEE IS A GGRIEVED WITH THE WORKING OF THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY IT @ 20% OF SUCH RECEIPTS BY THE CIT(A) AS AGAINST THAT SHOWN BY IT @12%, WHILE FOR THE REVENUE IS AGGRIEVED WITH THE CONFINING OF THE ADDITION W.R.T THE ON - MONEY RECEIVED BY THE ASSESSEE UP TO THE EXTENT OF THE IMPUGNED INCOME ELEMENT THEREIN EMBEDDED I.E @20% OF SUCH RECEIPTS AS AGAINST THE ADDITION OF THE ENTIRE AMOUNT O F ON - MONEY MADE BY THE A.O. IT IS THE CLAIM OF THE ASSESSEE THAT AS A REASONABLE AMOUNT WOULD HAVE BEEN SPENT FOR THE PURPOSE OF RECEIVING THE AMOUNT OF ON - MONEY THUS, WHAT COULD BE BROUGHT TO TAX WAS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND NOT THE ENTIRE AMOUNT OF ON - MONEY RECEIPT. AS IS DISCERNIBLE FROM THE ORDER S OF THE LOWER AUTHORITIES , THE ASSESSEE HAD IN THE COURSE OF THE ASSESSMENT PROCEEDING AND ALSO BEFORE THE FIRST APPELLATE AUTHORITY SUBMITTED THAT AS IT HAD INCURRED EXPENSES OUT OF THE CASH RE CEIPTS WHICH HAVE NOT BEEN AC COUNTED FOR IN ITS BOOKS OF ACCOUNT THUS , ONLY THE NET INCOME ELEMENT INVOLVED IN SUCH ON - MONEY RECEIPTS BE SUBJECTED TO TAX. AFORESAID CLAIM OF THE ASSESSEE THAT IT HAD INCURRED CASH EXPENSE S OUT OF THE ON - MONEY RECEIPTS , WE FI ND,HAD BEEN ACCEPTED BY THE A.O IN THE ASSESSMENT ORDER WH E R E IN HE HAD OBSERVED THAT IN THE COURSE OF THE SEARCH PROCEEDINGS DOCUMENTS RELATING TO CERTAIN CASH EXPENSES WERE ALSO FOUND WHICH WERE MAINTAINED BY SHRI. VIVEK MOHANANI , PROMOTER OF THE EKTA GR OUP . IT IS FURTHER OBSERVED BY THE A .O THAT THE SOURCE OF THE CASH EXPENSE S WERE THE UN AC COUNTED CASH RECEIPTS I.E T HE AMOUNT OF ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE. FOR THE SAKE OF CLARITY THE RELEVANT OBSERVATION OF THE A.O ADMITTING THE AFORESAID FACTUAL POSITION IS REPRODUCED AS UNDER : PAGE 17 5.4 IT WAS ALSO FOUND THAT ONE OF THE DIRECTORS, SHRI. VIVEK MOHANANI USED TO MAINTAIN THE RECORDS OF SUCH UNACCOUNTED TRANSACTIONS IN HIS TWO BLACKBERRY MOBILE PHONES IN NOTES FOLDERS SO AS TO KEEP TRACK OF VARIOUS PAYMENTS RECEIVED IN CASH. DOCUMENTS RELAT ING TO CERTAIN CASH EXPENSES WERE ALSO FOUND WHICH WERE MAINTAINED BY SHRI. VIVEK MOHANANI . THE SOURCE OF THE CASH EXPENSES WAS UNACCOUNTED SALES RECEIPTS . FURTHER, AS OBSERVED BY THE A.O IN THE ASSESSMENT ORDER, SHRI. VIVEK MOHANANI (SUPRA) IN HIS ST ATEMENT RECORDED U/S 132(4) OF THE ACT, DATED 12.10.2015 HAD ON BEING CONFRONTED WITH THE SEIZED DOCUMENTS ADMITTED THAT THE SAME HAVE RECORDS OF CASH TRANSACTIONS, BOTH RECEIPTS AND EXPENSES, WHICH ARE NOT ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS. IN TH E BACKDROP OF THE AFORESAID FACTS, WE FIND THAT IS A MATTER OF AN ADMITTED FACT THAT THE INCRIMINATING DOCUMENTS SEIZED IN THE COURSE OF THE SEARCH PROCEEDINGS CONTAINED RECORDS OF CASH TRANSACTIONS, BOTH RECEIPTS AND EXPENSES , WHICH WERE NOT ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. AS OBSERVED BY US HEREINABOVE, THE A.O WHILE FRAMING THE ASSESSMENT HAD CATEGORICALLY OBSERVED THAT THE UNACCOUNTED TRANSACTIONS W.R.T CASH EXPENSES INCURRED BY THE ASSESSEE FROM THE UNACCOUNTED SALES RECE IPTS I.E ON - MONEY RECEIPTS HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS. IT IS, THUS, IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION THAT THE ASSESSEE HAD INCURRED EXPENSES OUT OF THE ON - MONEY RECEIPTS THAT WE SHALL HEREIN ADJUDICATE THE SUSTAIN ABILITY OF THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T THE ON - MONEY RECEIVED BY THE ASSESSEE WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN SUCH RECEIPTS AND THE ENTIRE AMOUNT OF THE ON - MONEY COULD NOT BE ADDED IN THE H ANDS OF THE ASSESSEE COMPANY. WE FIND THAT THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DY. CIT VS. PANNA CORPORATION (2012) 82 CCH 266 (GUJ) , HAD OBSERVED , THAT C ONSISTENTLY THE COURTS HAVE BEEN FOLLOWING THE PRINCIPLE THAT EVEN PAGE 18 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 RECEIPTS THEMSELVES. IT WAS FURTHER OBSERVED BY THE HONBLE HIGH COURT THAT WHAT SHOULD BE ESTIMATED AS A REASONABLE PROFIT OUT OF SUCH RECEIPTS MUST BEAR AN ELEMENT OF ESTIMATION. FOR THE SAKE OF CLARITY THE OBSERVATIONS OF THE HONBLE HIGH COURT ARE REPRODUCED AS UNDER: 9. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIES AND HAVING PERUSED THE ORDERS UNDER CONSIDERATION, WHAT E MERGES IS THAT THE FINDINGS ARRIVED AT BY THE ASSESSING OFFICER THAT THE RESPONDENT - PARTNERSHIP FIRM RECEIVED ON MONEY OF RS.62 LAKHS DURING THE BLOCK PERIOD FOR SALE OF THE FLATS, IS NOT SERIOUSLY IN DISPUTE. THE TRIBUNAL CONFIRMED SUCH FINDINGS ARRIVED AT BY THE ASSESSING OFFICER. HOWEVER, THE TRIBUNAL DID NOT PERMIT THE REVENUE TO COLLECT THE TAX ON THE ENTIRE RECEIPT BELIEVING THE IT WAS ONLY THE INCOME EMBEDDED IN SUCH RECEIPT WHICH CAN BE SUBJECTED TO TAX. 10. AS POINTED OUT BY THE COUNSEL FOR THE RESPONDENT, THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. PRESIDENT INDUSTRIES, REPORTED IN (2002) 258ITR 654 HAD TAKEN A SIMILAR VIEW. IN THE SAID CASE, DURING THE COURSE OF SURVEY CONDUCTED ON THE PREMISES OF THE ASSESSEE, FROM THE EXCISE RECOR DS FOUND, AN INFERENCE WAS DRAWN BY THE ASSESSING OFFICER THAT SALES ACCOUNTING TO RS.29 LAKHS AND ODD HAD NOT BEEN DISCLOSED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE SUM OF THE SAID UNDISCLOSED SALES AS INCOME OF THE ASSE SSEE FOR THE ASSESSMENT YEAR 1994 - 95. SUCH ADDITION WAS CONFIRMED BY THE COMMISSIONER (APPEALS). THE TRIBUNAL, HOWEVER, HELD THAT THE ENTIRE SALES COULD NOT HAVE BEEN ADDED AS INCOME OF THE ASSESSEE, BUT ONLY TO THE EXTENT THE ESTIMATED PROFITS EMBEDDED IN THE SALES FOR WHICH THE NET PROFIT RATE WAS ADOPTED ENTAILING ADDITION OF INCOME ON THE SUPPRESSED AMOUNT OF SALES. SUCH DECISION WAS CARRIED IN APPEAL BY THE REVENUE BEFORE THE HIGH COURT. THE HIGH COURT REJECTED THE APPEAL, OBSERVING THAT UNLESS THERE I S A FINDING TO THE EFFECT THAT INVESTMENT BY WAY OF INCURRING THE COST IN ACQUIRING THE GOODS WHICH HAVE BEEN SOLD HAS BEEN MADE BY THE ASSESSEE AND THAT HAS ALSO NOT BEEN DISCLOSED, SUCH ADDITION COULD NOT BE SUSTAINED. IT WAS OBSERVED THAT IN ABSENCE OF SUCH FINDINGS OF FACT, THE QUESTION WHETHER THE ENTIRE SUM OF UNDISCLOSED SALE PROCEEDS CAN BE TREATED AS INCOME OF THE RELEVANT ASSESSMENT YEAR ANSWERS BY ITSELF IN THE NEGATIVE. THE HIGH COURT REJECTED THE APPEAL HOLDING THAT NO QUESTION OF LAW WHICH REQ UIRES TO BE REFERRED ARISES. 11. IN THE CASE OF COMMISSIONER OF INCOME TAX V. GURUBACHHAN SINGH J. JUNEJA, REPORTED IN (2008) 302 ITR 63 (GUJ.), ONCE AGAIN A SOMEWHAT SIMILAR ISSUE CAME UP BEFORE THIS COURT. IN THE SAID CASE, THE ASSESSEE WAS ENGAGED IN TH E BUSINESS OF TRADING OF TYRES. SEARCH PROCEEDINGS WERE CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. ON THE BASIS OF LOOSE SHEETS WHICH WERE SEIZED DURING SUCH SEARCH OPERATION, THE ASSESSING OFFICER HELD THAT SALES TO THE EXTENT O F RS.10.85 LAKHS WAS NOT FOUND IN THE BOOKS OF ACCOUNT. SUCH AMOUNT WAS INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THE COMMISSIONER (APPEALS) GAVE SUBSTANTIAL RELIEF TO THE ASSESSEE AND REDUCED THE INCOME ON THE BASIS OF GROSS PROFIT RATE. THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER (APPEALS). ON FURTHER APPEAL BEFORE THE HIGH COURT BY THE REVENUE, THE HIGH COURT REFUSED TO REFER ANY QUESTION HOLDING THAT IN ABSENCE OF PAGE 19 ANY MATERIAL ON RECORD TO SHOW THAT THERE WAS ANY UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE WHICH WAS REFLECTED BY THE ALLEGED UNDISCLOSED SALES, THE FINDING OF THE TRIBUNAL THAT ONLY THE GROSS PROFIT ON THE SAID AMOUNT CAN BE BROUGHT TO TAX DOES NOT CALL FOR ANY INTERFERENCE. 12. COUNSEL ALSO RELIED ON THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX V. SAMIR SYNTHETICS MILL, REPORTED IN (2010) 326 ITR 410, WHEREIN THE HIGH COURT CONFIRMED THE VIEW OF THE TRIBUNAL ACCEPTING ONLY THE PROFIT OF UNACCOUNTED SALE FOR THE PURPOSE OF COLLECTING TAX. 13. OUR ATTENTION WAS ALSO D RAWN TO THE DECISION OF THE M. P. HIGH COURT IN THE CASE OF MAN MOHAN SADANI V. COMMISSIONER OF INCOME TAX, REPORTED IN (2008) 304 ITR 52, WHEREIN REFERRING TO AND RELYING UPON THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. PRESIDE NT INDUSTRIES (SUPRA) AND OTHER DECISIONS OF OTHER HIGH COURTS, THE M. P. HIGH COURT HAD ALSO TAKEN A SIMILAR VIEW. IT WAS OBSERVED THAT ENTIRE SALE PROCEEDS OF THE ASSESSEE SHOULD NOT BE ADDED IN HIS INCOME AND THAT THE TRIBUNAL HAS ERRED IN DOING SO. 14. WE MAY RECALL THAT THE TRIBUNAL, IN THE IMPUGNED JUDGEMENT, RELIED ON ITS PREVIOUS JUDGEMENT IN CASE OF KISHOR MOHANLAL TELWALA. THE SAID JUDGEMENT OF THE TRIBUNAL WAS APPARENTLY CARRIED IN APPEAL BY THE REVENUE. THE HIGH COURT BY A SPEAKING ORDER DATED 2 4.4.2000, DISMISSED THE APPEAL HOLDING THAT NO QUESTION OF LAW WAS INVOLVED. SIGNIFICANTLY, IN CASE OR KISHOR MOHANLAL TELWALA, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION. IN HIS CASE, UNACCOUNTED RECEIPT OF RS.1.47 CRORES WAS DETECTED. IN TH IS BACKGROUND, THE DIVISION BENCH CONFIRMED THE VIEW OF THE TRIBUNAL AND DID NOT ACCEPT THE CONTENTION OF THE REVENUE THAT AS NO ACCOUNTS HAD BEEN MAINTAINED TO SUBSTANTIATE THE EXPENDITURE INCURRED BY THE ASSESSEE, THE ENTIRE AMOUNT RECEIVED BY THE RESPON DENT SHOULD BE TREATED AS INCOME. THE COURT CONCLUDED THAT THE TRIBUNAL WAS JUSTIFIED IN CONSIDERING THAT THE RESPONDENT - ASSESSEE OUGHT TO HAVE SPENT REASONABLE AMOUNT FOR THE PURPOSE OF RECEIVING SUCH GROSS RECEIPT. 15. IT CAN, THUS, BE SEEN THAT CONSIS TENTLY, THIS COURT AND SOME OTHER COURTS 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 RECEIPTS THEMSELVES. IF THAT BE THE LEGAL POSITION, WHAT SHOULD BE ESTIMATED AS A REASONABLE PROFIT OUT OF SUCH RECEIPTS, MUST BEAR AN ELEMENT OF ESTIMATION. 16. IN VIEW OF THE LEGAL POSITION THAT NOT THE ENTIRE RECEIPTS, BUT THE PROFIT ELEMENT EMBEDDED IN SUCH RECEIPTS CAN BE BROUGHT TO TAX, IN OUR VIEW, NO INTERFERENCE IS CALLED FOR IN THE DECISION OF THE TRIBUNAL ACCEPTING SUCH ELEMENT OF PROFIT AT RS.26 LAKHS OUT OF TOTAL UNDISCLOSED RECEIPT OF RS.62 LAKHS. IN OTHER WORDS, WE ACCEPT THE LEGAL PROPOSITION, THE TRIBUNAL ACCEP TING RS.26 LAKHS DISCLOSED BY THE ASSESSEE AS PROFIT OUT OF TOTAL UNDISCLOSED RECEIPT OF RS.62 LAKHS, WOULD NOT GIVE RISE TO ANY QUESTION OF LAW. 17. IN THE RESULT, THE TAX APPEALS ARE DISMISSED. ALSO, AS OBSERVED BY US HEREINABOVE, A SIMILAR VIEW HAD BEE N TAKEN BY THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF PCIT, SURAT VS. ANUPAM ORGANISER (2020) (9) TMI 973 (GUJ) . IN ITS SAID ORDER THE HONBLE HIGH COURT RELYING ON ITS EARLIER ORDER PASSED IN THE CASE OF PAGE 20 PANNA CORPORATION (SUPRA), HAD OBSERVED, THAT AS THE TRIBUNAL WAS JUSTIFIED IN CONSIDERING THAT THE ASSESSEE OUGHT TO HAVE SPENT REASONABLE AMOUNT FOR THE PURPOSE OF RECEIVING THE AMOUNT OF ON - MONEY THUS, WHAT COULD BE BROUGHT TO TAX WAS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND NOT THE ENTIRE RECEIPT S .SIMILAR VIEW HAD ALSO BE DRAWN BY THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. ABHISHEK CORPORATION (2000) 158 CTR 374 (GUJ) . RELYING ON THE ORDER OF THE ITAT, AHMEDABAD IN THE CASE OF ABHISHEK CORPORATON VS. DCIT 63 TTJ 651 (AHD) THE ITAT, MUMBAI IN THE CASE OF ACIT VS. GURUPRENA ENTERPRISES, ITA NOS. 255 TO 257, 544 & 545/MUM/2010 AND 4836/MUM/2009 [AFFIRMED BY THE HONBLE HIGH COURT OF BOMBAY IN CIT VS.GURUPRERNA ENTERPRISES IN ITA 1849 OF 2011] HAD OBSERVED AS UNDER: EVEN THOUGH IT IS ESTABLISHED FROM SEIZED DOCUMENTS THAT ASSESSEE WAS RECEIVING PREMIUM/ON - MONEY ON BOOKING OF FLATS BELONGING TO THIRD PARTIES, ENTIRE RECEIPTS OF ON - MONEY/PREMIUM CANNOT BE TREATED AS UNDISCLOSED INCOME OF ASSESSEE; ONLY NET PROFIT RATE CAN BE APPLIED ON UNACCOUNTED SALES/RECEIPTS FOR MAKING ADDITION. ALSO, RELYING ON THE AFORESAID JUDICIAL PRONOUNCEMENTS THE ITAT, MUMBAI F BENCH IN THE CASE OF M/S SUMER BUILDERS VS. DY. CIT, CENTRAL CIRCLE - 5(3), MUMBAI, ITA NO. 4915/MUM/2016; DATED 09.01.2021 HAD OBSERVED AS UNDER: FURTHER, ADMITTEDLY THE ON - MONEY IS M ERELY RECEIPTS OF SALE PROCEEDS AS NOTED BY THE ASSESSING OFFICER IN HIS ORDER AT PAGE NO. 3 AND WHAT COULD BE TAXED IS ONLY INCOME AND NOT RECEIPTS. WE FURTHER NOTE THAT IN VARIOUS JUDGMENTS RELIED ON ABOVE IT HAS BEEN CATEGORICALLY HELD THAT ON - MONEY REC EIPTS ARE IN THE NATURE OF SALE PRICE AND NOT INCOME PER SE. IN THE CASE OF CIT V S. PRESIDENT INDUSTRIES [258 ITR 654 (GUJ)] IT HAS BEEN HELD THAT THE ENTIRE SUM OF UNDISCLOSED SALE PROCEEDS CANNOT BE TREATED AS INCOME. SIMILAR VIEW HAS BEEN TAKEN BY THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. HARIRAM BHAMBHANI IN ITXA NO. 313 OF 2013. FURTHER IN T H E CASE OF GURUPRERNAENTERPRISES (SUPRA) RELYING ON ABHISHEK PAGE 21 CORPORATION VS. DCIT [63 TTJ (AHD) 651] IT HAS BEEN HELD AS UNDER : - EVEN THOUGH IT IS ESTABLISHED FROM SEIZED DOCUMENTS THAT ASSESSEE WAS RECEIVING PREMIUM/ON - MONEY ON BOOKING OF FLATS BELONGING TO THIRD PARTIES, ENTIRE RECEIPTS OF ON - MONEY/PREMIUM CANNOT BE TREATED AS UNDISCLOSED INCOME OF ASSESSEE; ONLY NET PROFIT RATE CAN BE APPLIED ON UNACCOUNTED SALES/RECEIPTS FOR MAKING ADDITION. THE OTHER JUDGMENTS RELIED ON BY THE ASSESSEE ALSO SUPPORT ITS CASE. THE LD. D.R HAS NOT BROUGHT ON RECORD ANY CONTRARY JUDGMENTS. WE, THEREFORE, AGREE WITH THE CONSISTENT VIEW EXPRESSED IN THESE JUDGMENTS THAT ON - MONEY RECEIPTS ARE IN THE NATURE OF UNDISCLOSED RECEIPTS AND NOT INCOME PER - SE AND THEREFORE ONLY PROFIT ELEMENT EMBEDDED THEREIN ARE LIABLE TO BE TAXED AND NOT THE ENTIRE ON - MONEY RECEIPTS. IN THE CASE BEFORE US, IN THE BACKDROP OF THE FACT ADMITTED BY THE A.O WHILE FRAMING THE ASSESSMENT THAT THE INCRIMINATING DOCUMENTS SEIZED IN THE COURSE OF THE SEARCH PROCEEDINGS CONTAINED RECORDS OF CASH TRANSACTIONS, BOTH RECEIPTS AND EXPENSES , WHICH WERE NOT ACCOUNTED FOR IN THE RE GULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, AND THAT THE UNACCOUNTED TRANSACTIONS W.R.T CASH EXPENSES INCURRED BY THE ASSESSEE OUT OF THE UNACCOUNTED SALES RECEIPTS I.E ON - MONEY RECEIPTS HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS , WE ARE OF THE CONSI DERED VIEW THAT NO INFIRMITY ARISES FROM THE ORDER OF THE CIT(A) WHO DRAWING SUPPORT FROM THE JUDICIAL PRONOUNCEMENTS THAT WERE RELIED UPON BY THE ASSESSEEE BEFORE HIM, HAD CONCLUDED , THAT THE ADDITION AS REGARDS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS T O BE MADE TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN SUCH RECEIPTS AND THE ENTIRE AMOUNT OF ON - MONEY COULD NOT HAVE BEEN ADDED IN THE HANDS OF THE ASSESSEE. WE, THU S , AGREEING WITH THE CONSISTENT VIEW TAKEN IN THE AFORESAID JUDICIAL PRONOUNCEMENTS, TH EREIN RESPECTFULLY FOLLOW THE SAME, AND THUS, FINDING NO INFIRMITY IN THE VIEW TAKEN BY THE CIT(A), UPHOLD THE SAME . PAGE 22 9. WE SHALL NOW ADVERT TO THE GRIEVANCE OF THE ASSESSEE THAT THE CIT(A) HAD ERRED IN ESTIMATING THE INCOME ELEMENT EMBEDDED IN T H E ON - MONE Y OF RS. 29 LAC RECEIVED BY THE ASSESSEE@ 20% OF SUCH RECEIPT, WHICH IS ON HIGHER SIDE , AND THE SAME SHOULD HAVE BEEN ESTIMATED @12% OF THE AMOUNT OF SUCH ON - MONEY RECEIPT AS WAS OFFERED BY THE ASSESSEE. INSOFAR THE QUANTIFICATION OF THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE IS CONCERNED, WE FIND THAT IT WAS THE CLAIM OF THE ASSESSEE THAT THE SAME IN ALL FAIRNESS BE TAKEN @12% OF THE SAID RECEIPTS AS WAS OFFERED BY IT . HOWEVER, THE CIT(A) BEING OF THE VIEW THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE VERY BASIS FOR ESTIMATING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS @12% THUS , HELD A CONVICTION THAT THE SAME COULD REASONABLY BE TAKEN @20% OF TH E SAID RECEIPTS. ADMITTEDLY, BOTH THE ASSESSEE AND THE CIT(A) HAD RESORTED TO AN ESTIMATION OF THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS, WHICH WE ARE AFRAID IN NEITHER CASE IS BACKED BY ANY BASIS OR REASONING. AS OBSERVED BY US HEREINABOVE, THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DY.CIT VS. PANNA CORPORATION (2012) 82 CCH 266 (GUJ) , HAD HELD , THAT FOR THE PURPOSE OF ESTIMATING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS W HAT SHOULD BE ESTIMATED AS A REASONABLE PROFIT OUT OF SUCH RECEIPTS MUST BEAR AN ELEMENT OF ESTIMATION. ADMITTEDLY, THE QUANTIFICATION OF THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS HAS TO BE ON THE BASIS OF A PROCESS OF ESTIMATION, BUT THEN , THERE HAS TO BE TO THE EXTENT POSSIBLE SOME LOGICAL REASONING EXPLAINING THE BASIS FOR ARRIVING AT SUCH ESTIMATE . AS IS DISCERNIBLE FROM THE ORDER OF THE CIT(A), IT WAS THE CLAIM OF THE ASSESSEE COMPANY THAT ITS GROUP CONCERNS WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION (FOR SHORT ITSC) HAD OFFERED FOR TAX THE INCOME PAGE 23 ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THEM @15% OF SUCH RECEIPTS AND THE SAME HAD BEEN ACCEPTED BY THE COMMISSION. HOWEVER, THE CIT(A) WAS OF THE VIEW THAT THE PERCENTAGE OF PROFIT OFFERED BY THE GROUP CONCERNS BEFORE THE ITSC AND ACCEPTED BY THE LATTER WAS APPLICABLE ONLY TO THE CASES BEFORE THE COMMISSION AND WAS IN NO WAY BINDING ON THE OTHER CASE WHICH WERE NOT BEFORE IT. AT THE SAME TIME , IT WAS OBSERVED BY THE CIT(A) THAT THE PERCENTAGE OF PROFIT OFFERED BY THE GROUP CONCERNS BEFORE THE ITSC AND ACCEPTED BY THE LATTER COULD BE TAKEN AS A GUIDING FACTOR. IN THE BACKDROP OF THE AFORESAID OBSERVATION OF THE CIT(A), WE ARE OF THE CONSIDERED VIEW THAT SHE IN ALL FAIRNESS FOR THE PURPOSE OF ESTIMATING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS COULD HAVE SAFELY TAKEN IT AT THE SAME FIGURE I.E @15% OF THE AMOUNT OF ON - MONEY RECEIPTS AS WAS ACCEPTED BY THE ITSC . OUR AFORESAID CONVICTION IS ALL THE MORE SUPPORTED BY THE FACT THAT NO REASON OR LOGIC HA D BEE N GIVEN BY THE CIT(A) FOR TAKING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS@20%. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE O N - MONEY RECEIPTS.THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 10. WE SHALL NOW TAKE UP THE GRIEVANCE OF THE ASSESSEE THAT THE CIT (APPEALS) HAD ERRED IN CONFIRMING THE ADDITION W.R.T THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY IN THE YEAR IN QUESTION I.E A.Y 2013 - 14 WITHOUT CONSIDERING THE FACT THAT IT HAD OFFERED THE SAME IN A.Y 2016 - 17 I.E THE YEAR WHEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED IN THE PROFIT & LOSS A/C. IN ORDER TO DRIVE HOME HIS AFORESAID CLAIM THE LD. A.R HAD RELIED ON THE ORDER OF THE HONBLE PAGE 2 4 HIGH COURT OF GUJARAT IN THE CASE OF CIT(CENTRAL), SURAT VS. HAPPY HOME CORPORATION (2018) 94 TAXMANN.COM 292 (GUJ) . IT WAS SUBMITTED BY THE LD. A.R THAT THE SAID ORDER OF THE HON BLE HIGH COURT HAD THEREAFTER BEEN UPHELD BY THE HONBLE SUPREME COURT AND THE SLP FILED BY THE REVENUE HAD BEEN DISMISSED IN CIT (CENTRAL) VS. HAPPY HOME CORPORATION(2019)103 TAXMANN.COM 22 (SC) . ALSO, RELIANCE WAS PLACED BY THE LD. A.R ON THE ORDER OF TH E ITAT, AHMEDABAD IN THE CASE OF M/S D.R CONSTRUCTION VS. ITO, WARD 2(3), SURAT, ITA NO. 2735/AHD/2010, DATED 08.04.2011 . ON THE BASIS OF HIS AFORESAID CONTENTIONS, IT WAS SUBMITTED BY THE LD. A.R THAT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE COMPANY BE WORKED OUT @12% OF SUCH RECEIPTS AND THE SAME BE SUBJECTED TO TAX IN A.Y 2016 - 17I.E IN THE YEAR W HEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED BY IT IN THE PROFIT & LOSS A/C. 11. WE HAVE HEARD THE AUTHO RISED REPRESENTATIVE FOR THE ASSESSEE AND ALSO THE REBUTTAL OF THE LD. D.R IN CONTEXT OF THE ISSUE IN QUESTION, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEE N PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. A S OBSERVED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. BILHARI INVESTMENT (P) LTD. (2008) 299 ITR 1 (SC) THAT AN ASSESSEE HAVING ALL ALONG FOLLOWED THE COMPLETED CONTRACT ME THOD, AND THE DEPARTMENT HAVING ACCEPTED THE SAME OVER SEVERAL YEARS, THE COMPLETED CONTRACT METHOD ADOPTED BY THE ASSESSEES IS NOT REQUIRED TO BE SUBSTITUTED BY PERCENTAGE COMPLETION METHOD IN THE ABSENCE OF ANY FINDING OF THE A . O THAT THE COMPLETED CONTR ACT METHOD DISTORTS THE PROFITS OF A PARTICULAR YEAR. SAME VIEW HAD BEEN ARRIVED AT BY THE HONBLE HIGH PAGE 25 COURT OF GUJARAT IN THE CASE OF CIT(CENTRAL), SURAT VS. HAPPY HOMES CORPORATION (2018) 94 TAXMANN.COM 292 (GUJ) THAT WHERE THE ASSESSEE BEFORE THEM WH IC H WAS ENGAGED IN CONSTRUCTION BUSINESS WAS FOLLOWING PROJECT COMPLETION METHOD, ITS INCOME COULD BE BROUGHT TO TAX ONLY IN THE YEAR WHEN SALE DEEDS OF UNITS SOLD WERE REGISTERED EVEN THOUGH SALE CONSIDERATION MIGHT HAVE BEEN RECEIVED EARLIER FROM THE BUYER. THE SAID ORDER OF THE HONBLE HIGH COURT WAS THEREAFTER APPROVED BY THE HONBLE SUPREME COURT IN CIT, (CENTRAL) VS. HAPPY HO ME CORPORATION (2019) 103 TAXMANN.COM 22 (SC) AND THE SLP FILED BY THE REVENUE WAS DISMISSED. ADMITTEDLY, THERE IS NO DISPUTE ON THE ISSUE THAT WHERE AN ASSESSEE HAD ALL ALONG BEEN FOLLOWING THE COMPLETED CONTRACT METHOD AND THE DEPARTMENT HAD ACCEPTED TH E SAME OVER SEVERAL YEARS, THE N, THE SAID METHOD OF ACCOUNTING CANNOT BE SUBSTITUTED BY PERCENTAGE COMPLETION METHOD IN THE ABSENCE OF ANY FINDING BY THE A . O THAT THE COMPLETED CONTRACT METHOD DISTORTS THE PROFITS OF A PARTICULAR YEAR . IN FACT, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA P. LTD. (2009) 312 ITR 254 (SC) HAD OBSERVED THAT A SYSTEM OF ACCOUNTING CONSISTENTLY FOLLOWED IS ORDINARILY EXPECTED TO BE ACCEPTED UNLESS THE SYSTEM DOES NOT REFLECT TRUE PROFITS. IT IS, THUS, IN THE BACKGROUND OF THE AFORESAID SETTLED POSITION OF LAW THAT WE SHALL DEAL WITH THE VIEW TAKEN BY THE CIT(A) THAT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY ON SALE OF FLAT WAS TO BE BROUGHT TO TAX IN THE YEAR IN QUESTION I.EA.Y 2013 - 14 AND NOT IN A.Y 2016 - 17 I.E WHEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED BY THE ASSESSEE IN ITS PROFIT & LOSS A/C. IN OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUN TED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT PAGE 26 BE DIVORCED THEREFROM , AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN ACCOUNTED FOR OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)]. WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE TO TAX I N TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 12. THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 13. THE GROUND OF APPEA L NO. 3 BEING GENERAL IS DISMISSED AS NOT PRESSED. ITA NO. 1733/MUM/2019 ( A SSESSEES APPEAL) ITA NO. 2186/MUM/2019 (REVENUES APPEAL) A.Y 2016 - 17 (A). ITA NO. 1733/MUM/2019 ( ASSESSEES APPEAL) 1 4 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE CAPTIONED ASSESSEE FOR A.Y 2016 - 17. THE ASSESSEE HAS ASSAILED THE IMPUGNED PAGE 27 ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ER RED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THEYEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF PROJECT MAPLEWOOD OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETIO N METHOD AND FURTHER ERRED IN REJECTING THE PROJECT COMPLETION METHOD FOR THIS PROJECT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 197 LAKHS, WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 3. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE T HE APPEAL IS DISPOSED OFF. 1 5 . BRIEFLY STATED, THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y 2016 - 17 ON 15.10.2016, DECLARING A TOTAL INCOME OF 4,36,34,320/ - . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 1 6 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O FROM A PERUSAL OF THE SEIZED MATERIAL THAT THE ASSESSEE COMPANY HAD INTER ALIA RECEIVED ON - MONEY ON SALE OF FLATS W.R.T ITS PROJECTS, VIZ. MAPLE WOOD/CORNEL AND CALIFORNIA, AS UNDER: PROJECT NAME FLAT NO. AMOUNT (IN LACS) FINANCIAL YEAR (OF RECEIPT) ASSESSMENT YEAR MAPLE WOOD/CORNEL 801/802 RS. 197 2015 - 16 2016 - 17 CALIFORNIA 1101 RS. 29 2012 - 13 (REGISTRATION ON 04.03.2013) 2013 - 14 OBSERVING , THAT THE ASSESSEE HAD NOT OFFERED THE ON - MONEY OF RS.197 LACS THAT WAS RECEIVED BY IT DURING THE YEAR IN QUESTION AS ITS INCOME IN THE RETURN FILED U/S 153A OF THE ACT, THE A.O CALLED UPON IT TO PUT FORTH AN EXPLANATION AS REGARDS THE SAME. IN REPLY, IT W AS SUBMITTED BY THE ASSESSEE THAT THE ON - MONEY RECEIPT OF RS. 197 LAC PAGE 28 PERTAINING TO THE PROJECT MAPLE W OOD/CORNELL SHALL BE CONSIDERED FOR COMPUTING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER, THE A.O DID NOT FIND FAVOUR WITH THE AFORES AID EXPLANATION OF THE ASSESSEE. IT WAS OBSERVED BY THE A.O THAT DURING THE YEAR UNDER CONSIDERATION REVENUE WAS ALREADY RECOGNISED BY THE ASSESSEE. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE ON - MONEY RECEIPT WOULD BE CONSIDERED IN THE YEAR WHEN THE PRO JECT WAS COMPLETED, THE SAME DID NOT FIND FAVOUR WITH THE A.O. THE A.O WAS OF THE VIEW THAT AS PER THE ACCOUNTING GUIDELINES ISSUED A BUILDER WAS OBLIGATED TO FOLLOW THE PERCENTAGE COMPLETION METHOD. AS SUCH, IT WAS OBSERVED BY THE A.O THAT THE ON - MONEY RE CEIVED BY THE ASSESSEE WAS REQUIRED TO BE OFFERED FOR TAX IN THE YEAR OF RECEIPT ITSELF . FURTHER, IT WAS OBSERVED BY THE A.O THAT NO PART OF DEDUCTION TOWARDS EXPENSES WAS TO BE ALLOWED TO THE ASSESSEE OUT OF ITS ON - MONEY RECEIPTS. AS THE ASSESEEE HAD ACCO UNTED FOR AN AMOUNT OF RS. 3.48 LAC I.E 12% OF ON - MONEY OF RS. 29 LAC THAT WAS RECEIVED BYIT IN A.Y 2013 - 14 W.R.T ITS PROJECT CALIFORNIA, THE SAME WAS REDUCED BY THE A.O WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR IN QUESTION I.EA.Y 201 6 - 17. ACCORDINGLY, THE A.O ON THE BASIS OF H IS AFORESAID DELIBERATIONS MADE AN ADDITION U/S 68 OF RS. 193.52 LAC [RS. 197 LAC (ON - MONEY RECEIVED AS REGARDS THE PROJECT MAPLE W OOD/CORNEL ) ( MINUS ) RS. 3.48 LAC (INCOME ELEMENT @12% OF ON - MONEY OF RS. 29 LAC THAT WAS RECEIVED BY THE ASSESSEE IN A.Y 2013 - 14 W.R.T ITS PROJECT CALIFORNIA AND WAS OFFERED FOR TAX DURING THE YEAR IN QUESTION)] 1 7 . ON APPEAL, I T WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS PAGE 29 THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEI VED BY THE ASSESSEE COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE AMOUNT OF THEIR ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE THEREFO RE, SHE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXT ENT. INSOFAR THE CLAIM OF THE ASSESSEE THAT AS IT WAS FOLLOWING PROJECT COMPLETION METHOD AND THE INCOME FROM THE PROJECT, VIZ. MAPLE W OOD/CORNELL WOULD BE OFFERED ON THE COMPLETION OF THE PROJECT, THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE ASSSSEE HAD BEEN FOLLOWING PER C ENTAGE COMPLETION METHOD IN THE P AS T AND HAD SHI F TED TO PROJECT COMP LETION METHOD ONLY DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17. HOLDING A CONVICTION THAT AS THE ASSESSEE HAD BEEN FOLLOWING PERCENTAGE COMPLETION METHOD WHICH TOO WAS IN ACCORDANCE WITH THE GUIDELINES ISSUED BY ICAI, THE CIT(A) WAS OF THE VIEW THAT THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSEE TO SHIFT TO PROJECT COMPLETION METHOD. IT WAS, IN FACT NOTICED BY THE CIT(A) THAT CERTAIN GROUP CONCERNS OF THE ASSESSEE HAD BEEN FOLLOWING PERCENTAGE COMPLETION METHOD AND WERE OFFERING INCOME WORKED OUT ON THE SAID BASIS. BEING OF THE VIEW THAT THE PAGE 30 ASSESSEE COMPANY WHICH WAS UNABLE TO JUSTIFY SHIFTING TO PROJECT COMPLETION METHOD WAS TRYING TO TWEAK WITH THE REVENUE RECOGNITION METHODS TO SUIT ITS PURPOSE, THE CIT(A) DECLINED THE AFORE SAID CLAIM OF THE ASS ESSEE. IT WAS, THUS, OBSERVED BY THE CIT(A) THAT THE ON - MONEY RECEIPTS COULD NOT BE DEFERRED TILL THE COMPLETION OF THE PROJECT AND HAD TO BE TAXED IN THE YEAR OF RECEIPT. 1 8 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. WE SHALL FIRST DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED @ 20% OF THE AMOUNT OF ON - MONEY OF RS. 197 LAKHS RECEIVED BY THE ASSESSEE , WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF THE AMOUNT OF ON - MONEY AS WAS OFFERED BY THE ASSESSEE COMPANY. BOTH THE LD. AUTHORISED REPRESENTATIVES FOR THE PARTIES ARE IN AGREEMENT THAT THE FACTS AND THE ISSUE PERTAINING TO THE AFORESAID GRIEVANCE OF THE ASSESSEE ARE THE SAME AS WERE THERE BEFORE US IN THE ASSESSEES APPEAL FOR A.Y 2013 - 14 IN ITA NO. 1732/MUM/2019. ACCORDINGLY, AS THE FACTS AND THE ISSUE IN CONTEXT OF TH E AFORESAID GRIEVANCE OF THE ASSESSEE REMAINS THE SAME AS WERE THER E BEFORE US IN ITS APPEAL FOR A.Y 2013 - 14 IN ITA NO. 1732/MUM/2019 , THEREFORE, OUR ORDER THEREIN PASSED AND ALSO THE REASONING ADOPTED SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOS AL OF THE SAID ISSUE INVOLVED IN THE CAPTIONED APPEAL FILED BY THE ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY OF RS. 197 LAC RECEIVED BY THE ASSESSEE CAN SAFELY BE TAKEN @15% OF THE SAID AMOUNT . THE GR OUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. PAGE 31 1 9 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION W.R.T THE INCOME ELEMENT OF THE AMOUNT OF ON - MONEY OF RS. 197 LAKHS THAT WAS RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 WITHOUT CONSIDERING THE FACT THAT THE SAME WAS ASSESSABLE IN THE YEAR OF COMPLETION OF THE PROJECT, VIZ. MAPLE WOOD/CORNEL AS PER THE PROJECT COMPLETION METHOD FOLLOWED BY THE ASSESSEE . ADMITTEDLY, THE INCRIMINATING MATERIAL SEIZED IN THE COURSE OF THE SEARCH PROCEEDINGS INTER ALIA REVEALED THAT THE ASSESSEE DURING THE YEAR IN QUESTION HAD REEIVED ON - MONEY OF RS. 197 LAC ON SALE OF FLAT NOS. 801/802 OF ITS PROJECT, VIZ. MAP L E WOOD/COR N EL . IT WAS THE CLAIM OF THE ASSESSEE THAT THE INCOME ELEMENT OF THE ON - MONEY OF RS. 197 LAC WOULD BE OFFERED FOR TAX IN THE YEAR IN WHICH THE AFORESAID PROJECT IS COMPLETED . HOWEVER, THE A.O WAS OF THE VIEW THAT THE ON - MONEY OF RS. 197 LAC RECEIVED BY THE ASSESSEE W.R.T THE AFORESAID FLAT NOS. 801/802 WAS LIABLE TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. ON APPEAL, THOUGH THE CIT(A) RESTRICTED THE ADDITION AS REGARDS THE ON - MONEY OF RS. 197 LAC THAT WAS RECEIVED BY THE ASSESSEE W.R.T FLAT NOS. 801/802 (SUPRA) TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN SUCH RECEIPTS, HOWEVER, SHE CONCURRED WITH THE VIEW TAKEN BY THE A.O THAT THE SAID INCOME WAS TO BE SUBJECTED TO TA X IN THE YEAR OF RECEIPT ITSELF I.EA.Y 2016 - 17. BEFORE US, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD, THEREFORE, THE INCOME ELEMENT PERTAINING TO THE AMOUNT OF ON - MONEY OF RS. 197 LAC RECEIVED W.R.T OF FLAT NOS. 801/802 , AS RIGHTLY CLAIMED BY THE ASSESSEE , WAS TO BE OFFERED FOR TAX WHEN THE PROJECT IN QUESTION, VIZ. MAPLE WOOD/CORNEL WAS COMPLETED. PAGE 32 20 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID ISSUE IN THE BACKDROP OF THE OBSERVATIONS OF THE LOWER AUTHORITIES. IT IS THE CLAIM OF THE ASSESSEE THAT THE CIT(A) HAD ERRED IN FAILING TO APPRECIATE THAT THE ON - MONEY RECEIVED BY THE ASSESSEE W.R.T FLAT NOS. 801/802 OF ITS PROJECT, VIZ. MAPLEWOOD/CORNELL AS PER THE PROJECT COMPLETION METHOD WAS TO BE BROUGHT TO TAX IN THE YEAR O F COMPLETION OF THE SAID PROJECT, OR ALTERNATIVELY IN THEYEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD. BEFORE US, IT IS THE CLAIM OF THE ASSESSEE THAT THE PROJECT IN QU ESTION, VIZ. MAPLEWOOD/CORNEL DURING THE YEAR UNDER CONSIDERATION I.E A.Y 2016 - 17 W A S AT ITS VERY NASCENT STAGE AND NO INCOME HAD BEEN OFFERED DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 . IT IS FURTHER STATED BY THE ASSESSEE THAT IT IS FOLLOWING PROJECT COMPLETION METHOD FOR THE AFORESAID PROJECT, VIZ. MAPLEWOOD/CORNEL WHICH IS LIKELY TO BE COMPLETED IN F.Y 2018 - 19 . REBUTTING THE OBSERVATION OF THE A.O THAT THE ASSESSEE HAD ALREADY RECOGNISED THEREVENUE FOR THE AFORESAID PROJECT, VIZ. MAPLEWOOD/CORNEL DUR ING TH E YEAR UNDER CONSIDEATIONI.EA.Y 2016 - 17 AND IT IS NOT ITS CASE THAT INCOME HAD NO T BEEN OFFERED BY IT ON ITS REGULAR PROFIT DURING THE SAID YEAR, THE ASSESSEE VIDE ITS WRITTEN SUBMISSIONS, DATED OCTOBER 9 TH , 2008, HAD SUBMITTED BEFORE THE CIT(A) THA T THE A.O HAD MISREPORTED T H E AFORESAID FACT. IT IS, THUS, SUBMITTED BY THE ASSESSEE THAT AS THE ADDITION HAD BEEN MADE BY THE A.O ON THE BASIS OF WRONG REPORTING OF FACTS THUS, THE SAME CANNOT SURVIVE. 2 1 . AS IS DISCERNIBLE FROM THE ORDER OF THE CIT( A), THE ASSESSEE IN ORDER TO DRIVE HOME ITS CLAIM THAT AS IT WAS FOLLOWING THE PROJECT COMPLETION METHOD, THEREFORE, THE ON - MONEY RECEIVED BY IT WAS TO BE CONSIDERED IN THE YEAR OF COMPLETION OF THE PROJECT, VIZ. MAPLE PAGE 33 WOOD/CORNEL HAD FILED WRITTEN SUBM ISSIONS WHICH HAVE BEEN REPRODUCED BY THE CIT(A) AT PAGE 11 - PARA 6.2 OF HER ORDER. IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) THAT THE PROJECT IN QU ESTION, VIZ. MAPLE WOOD/CORNEL THAT WAS JUST STARTED DURING THE YEAR IN QUESTION WAS IN ITS NASCE NT STAGE AND THE ASSESSEE HAD CHOSEN TO FOLLOW PROJECT COMPLETION METHOD FORTHE SAID PROJECT. IT IS FURTHER STATED BY THE ASSESSE THAT IT HAD CHOSEN TO CHANGE ITS METHOD OF ACCOUNTING TO PROJECT COMPLETION METHOD W.E.F A.Y 2016 - 17. FURTHER, THE ASSESSEE HA D FURNISHED EXHAUSTIVE REASONS FOR CHANGE IN THE METHOD OF ACCOUNTIN G FROM PECENTAGE COMPLETION METHOD THAT WAS FOLLOWED BY IT IN THE PAST TO PROJECT COMPLETION METHOD W.E.F A.Y 2016 - 17 . HOWEVER, WE FIND THAT THE CIT(A) AFTER REPRODUCING THE EXHAUSTIVE REAS ONS GIVEN BY THE ASSESSEE TO EXPLAIN AS TO WHY IT HAD CHANGED THE METHOD OF ACCOUNTING TO PROJECT COMPLETION METHOD W.E.F A.Y 2016 - 17HAD WRONGLY OBSERVED IN HER ORDER THAT NO REASON HA D BEEN GIVEN BY THE ASSESSEE TO EXPLAIN AS TO WHY IT HAD SHIFTED FROM TH E PERCENTAG E COMPLETION METHOD THAT IT WAS FOLLOWING IN THE P AST TO PROJECT COMPLETION METHOD W.E.F A.Y 2016 - 17. FURTHER, L OOSING SIGHT OF THE REASONS THAT HAD LED TO THE CHANGE IN THE METHOD OF ACCOUNTING BY THE ASSESSEE COMPANY, IT WAS OBSERVED BY THE CIT(A) THAT AS THE PERCENTAGE COMPLETION METHOD THAT WAS BEING FOLLOWED BY THE ASSESSEE IN THE PAST WAS IN ACCORDANCE WITH THE GUIDELINES ISSUED BY THE ICAI, THEREFORE, THERE WAS NO JUSTIFIABLE REASON FOR SHIFT ING TO PROJECT COMPLETION METHOD IN A.Y 2016 - 17. APART FROM THAT, IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) THAT THE A.O HAD MISREPORTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 HAD OFFERED THE INCOME O F ITS PROJECT, VIZ. MAPLE WOOD/CORNEL IN ITS REGULAR BOOKS OF ACCOUNTS. PAGE 34 ALSO, THE LD. A.R HAD DRAWN OUR ATTENTION TO THE OBSERVATION OF THE A.O THAT AS PER THE ACCOUNTING GUIDELINES ISSUED THE BUILDER SHOULD FOLLOW PERCENTAGE COMPLETION METHOD. IT IS THE CLAIM OF THE ASSESSEE, THAT THOUGH THE CHANGE IN THE METHOD OF ACCOUNTING FROM PERCENTAGE COMPLETION METHOD THAT WAS BEING FOLLOWED BY IT IN THE PAST TO PROJECT COMPL E TION METHOD W.E.F A.Y 2016 - 17 WAS DULY BACKED BY BONAFIDERESAONS, THE SAME, HOWEVER, HAD NOT EVEN BEEN LOOKED INTO BY THE LOWER AUTHORITIES WHICH HAD PROCEDEED ON THE BASIS OF MISREPORTED FACTS . ACCORDINGLY, IT IS THE CLAIM OF THE ASSESSEE THAT THE REJECTION BY THE LOWER AUTHORITIES OF THE PROJECT COMPLETION METHOD THAT WAS BEING FOLLOWED BY IT DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 WAS LIABLE TO BE VACATED. 2 2 . WE HAVE GIVEN A THOUGHTFUL CONSIDEATION TO THE ISSUE IN HAND, AND FIND SUBSTANTIAL FORCE IN THE CLAIM OF THE ASSESSEE THAT ITS EXHAUSTIVE REASONING DEMONSTRATING THE BONAFIDE REASON S FOR CHANGE IN THE METHOD OF ACCOUNTING FROM PERCENTAGE COMPLETION METHOD THAT WAS BEING FOLLOWED BY IT IN THE PAST TO PROJECT COMPLETION METHOD W.E.FA.Y 2016 - 17 HAD NOT BEEN APPRECIATED BY THE CIT(A). APART FROM THAT, WE FIND THAT THOUGH THE ASSESSE E VIDE ITS WRITTEN SUBMISSIONS, DA T ED 08.10.2018, HAD SUBMITTED BEFORE THE CIT(A) THAT THE A.O HAD MISREPORTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DURING THE YEAR IN QUESTION I.EA.Y 2016 - 17 HAD OFFERED THE INCOME OF ITS PROJECT, VIZ. MAPLEWOOD/CORNE L IN ITS REGULAR BOOKS OF ACCOUNTS , HOWEVER, THE SAID ASPECT HAD NOT BEEN ADDRESSED BY THE CIT(A) WHILE UPHOLDING THE VIEW TAKEN BY THE A.O. FURTHER, IT WAS ALSO THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) THAT IT HAD CONSISTENTLY ADOPTED AND FOLLOWED THE PROJECT COMPLETION METHOD OF ACCOUNTING IN THE SUBSEQUENT YEARS, WHICH HAD BEEN ACCEPTED BY THE A.O AND NO ERROR WAS POINTED OUT IN THE SAME. IN PAGE 35 THE BACKDROP OF THE AFORESAID FACTS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE REJECTION BY THE LOWER AUTHORITI ES OF THE PROJECT COMPLETIONMETHOD THAT WAS BEING FOLLOWED BY IT DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 , AND CONSISTENTLY THEREAFTER, COULD NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. 2 3 . IN OUR CONSIDERED VIEW, WHERE THE CHANGE IN THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE IS FOR A BONAFIDE REASON AND SUCH NEW METHOD OF ACCOUNTING IS THEREAFTER REGULARLY EMPLOYED BY THE ASSESSEE, NO FAULT CAN BE FOUND WITH THE SAME. OUR AFORESAID VIE WIS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF BAJAJ AUTO LTD. VS. CIT (2016) 389 ITR 259 (BOM). A LSO, THE HONBLE HIGH COURT OF BOMBAY IN ITS EARLIER JUDGMENT PASSED IN THE CASE OF MELMOULD CORPORATION VS. COMMISSIONER O F INCOME TAX, 202 ITR 789 (BOM) , RELYING ON THE DECISION OF KARNATAKA HIGH COURT IN COMMISSIONER OF INCOME TAX VS. CORPORATION BANK LTD. (1988) 174 ITR 616 (KAR) HAD HELD THAT WHERE THE CHANGE IN T H E METHOD OF ACCOUNTING IS A BONAFIDE ONE WHICH WAS THEREAF TER CONSISTENTLY FOLLOWED BY THE ASSESSEE YEAR AFTER YEAR, THEN, THE CHANGE WOULD HAVE TO BE ACCEPTED IRRESPECTIVE OF THE FACT THAT DURING THE YEAR WHEN THE CHANGE WSA BROUGHT ABOUT A DETERIMENT WAS CAUSED TO THE REVENUE. THE HONBLE HIGH COURT HAD OBSERVE D AS UNDER: THE CHANGE WAS A BONA FIDE ONE AND WAS A PERMANENT ARRANGEMENT WHICH WAS TO BE FOLLOWED YEAR AFTER YEAR, THE CHANGE WOULD HAVE TO BE ACCEPTED NOTWITHSTANDING THE FACT THAT DURING THE ASSESSMENT YEAR IN QUESTION, WHICH WAS THE FIRST YEAR WHEN THE CHANGE OF METHOD WAS BROUGHT ABOUT, A PREJUDICE OR DETRIMENT MIGHT BE CAUSED TO THE REVENUE, BECAUSE THE OPENING STOCK WAS VALUED AT TOTAL COST WHILE CLOSING STOCK WAS VALUED AT DIRECT COST. IN FACT, THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF SU NDARAM & CO. LTD. VS. CIT (1959) 36 ITR 162 (MAD) HAD OBSERVED THAT THE PAGE 36 FACT THAT THE METHOD HAS BEEN EMPLOYED REGULARLY MAY, FOR THE FIRST YEAR OF ACCOUNTS, BE PROVED BY SHOWING THE REGULARITY FROM ACCOUNTS OF SUBSEQUENT YEARS. IN THE BACKDROP OF THE AFO RESAID FACTS R.W THE SETTLED POSITION OF LAW , WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD GROSSLY ERRED IN FAILING TO APPRECIATE THE EXHAUSTIVE REASONING GIVEN BY THE ASSESSEE TO SUPPORT ITS CLAIM THAT IT HAD W.E.F A.Y 2016 - 17 CHANGED THE METHOD OF RE COGNISING ITS REVENUE FROM PERCENTAGE COMPLETION METHOD THAT WAS BEING FOLLOWED BY IT IN THE PAST TO PROJECT COMPLETION METHOD . ALSO, WE FIND THAT THE CIT(A) HAD FAILED TO ADDRESS THE CLAIM OF THE ASSESSEE THAT THE A.O HAD MISREPORTED IN THE ASSESSMENT ORD ER THAT THE ASSESSEE DURING THE YEAR IN QUESTION I.E A.Y2016 - 17 HAD OFFERED THE INCOME OF ITS PROJECT, VIZ. MAPLEWOOD/CORNEL IN ITS REGULAR BOOKS OF ACCOUNTS. APART FROM THAT, WE FIND THAT THE CATEGORICAL CLAIM RAISED BY THE ASSESSEE BEFORE THE CIT(A) TH AT IT HAD CONSISTENTLY ADOPTED AND FOLLOWED THE PROJECT COMPLETION METHOD OF ACCOUNTING IN THE SUBSEQUENT YEARS WHICH HAD BEEN ACCEPTED BY THE A.O AND NO ERROR WAS POINTED OUT IN THE SAME HAD ALSO NOT BEEN LOKED INTO BY THE SAID FIRST APPELLATE AUTHORITY. AS OBSERVED BY US AT LENGTH HERINABOVE WHILE DISPOSING OFF THE APPEAL IN THE CASE OF THE ASSESSEE FOR A.Y 2013 - 14 IN ITA NO. 1732/MUM/2017, THAT AN ASSESSEE HAVING ALL ALONG FOLLOWED THE COMPLETED CONTRACT METHOD, AND THE DEPARTMENT HAVING ACCEPTED THE SAME OVER SEVERAL YEARS, THE COMPLETED CONTRACT METHOD ADOPTED BY THE ASSESSEES IS NOT REQUIRED TO BE SUBSTITUTED BY PERCENTAGE COMPLETION METHOD IN THE ABSENCE OF ANY FINDING OF THE A.O THAT THE COMPLETED CONTRACT METHOD DISTORTS THE PROFITS OF A PARTICULAR YE AR. IN ORDER TO FORTIFY OUR AFORESAID VIEW, WE HAD DRAWN SUPPORT FROM CERTAIN JUDICIAL PRONOUNCEMENTS. ACCORDINGLY, IN T H E BACKDROP OF OUR AFORESAID PAGE 37 OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE AFORESAID CLAIM OF THE ASSESSEE REQUIRES TO BE LOOKED INTO BY THE A.O. WE, THUS, FOR THE LIMITED PURPOSE OF CONSIDERING THE REASONING GIVEN BY THE ASSESSEE FOR CHANGE OF ITS METHOD OF ACCOUNTING FROM PERCENTAGE COMPLETION METHOD THAT WAS BEING FOLLOWED BY IT IN THE PAST TO PROJECT COMPLETION METHOD W.E.F A.Y 2016 - 17, AND ALSO MAKING NECESSARY VERIFICATIONS AS REGARDS ITS CLAIM THAT IT HAD CONSISTENTLY ADOPTED AND FOLLOWED THE PROJECT COMPLETION METHOD OF ACCOUNTING IN THE SUBSEQUENT YEARS, WHICH HAD BEEN ACCEPTED BY THE A.O AND NO ERROR WAS POINTED OUT IN THE S AME RESTORE THE MATTER TO THEFIL E OF THE A.O . IN CASE, IT IS FOUND THAT THE ASSESSEE HAD FOR A BONAFIDE REASON CHANGED ITS METHOD OF ACCOUNTING FROM PERCENTAGE COMPLETION METHOD THAT WAS BEING FOLLOWED BY IT IN THE PAST TO PROJECT COMPLETION METHOD W.E.F A .Y 2016 - 17, AND THE SAME THEREAFTER HADCONSISTENTLY BEEN FOLLOWED OVER THE YEARS, THE N, IN THE ABSENCE OF ANY FINDING OF THE A.O THAT THE COMPLETED CONTRACT METHOD DISTORTS THE PROFITS OF A PARTICULAR YEAR THE COMPLETED CONTRACT METHOD ADOPTED BY THE ASSESSEES WOULD NOT BE SUBSTITUTED BY PERCENTAGE COMPLETION METHOD . NEEDLES TO SAY, THE A.O SHALL IN THE COURSE OF THE SET - ASIDE PROCEEDINGS AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AT THE SAM E TIME, AS OBSERVED BY US HEREINABOVE WHILE DISPOSING OFF THE ASSESSEES APPEAL FOR A.Y 2013 - 14 IN ITA NO. 1732/MUM/2019 , AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE CORRESPONDING SALE TRANSACTION HAD BEEN ACCOUNTED FOR OR WOULD BE ACCOUNTED FOR BY PAGE 38 THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED I NCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . WE, THUS, DIRECT THE A.O TO CONSIDER OUR AFORESAID OBSERVATIONS WHILE SUBJECT ING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE TO TAX . THE GROUND OF APPEAL NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 2 4 . THE GROUND OF APPEAL NO. 3 BEING GENERAL IS DISMISSED AS MOT PRESSED. 2 5 . THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2186/MUM/2019 ( REVENUES APPEAL) 2 6 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A. Y 2016 - 17. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I) . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 1,93,52,000/ - MA DE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 1,93,52,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF PAGE 39 BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III) . WHETHER ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV) . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 2 7 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF THE ON - MO NEY RECEIPTS OF RS. 197 LAC U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOS E SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CL AIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION . I T IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) CANNO T BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO T HE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. LASTLY, THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF PAGE 40 THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). 2 8 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOT H THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL A S CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. WE SHALL FIRST DEAL WITH THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) IS IN ERROR IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. BEFORE US, IT WAS THE CLAIM OF THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) THAT T H E CIT(A) WHILE ARRIVING AT THE AFORESAID VIEW HAD ABSOLUTELY LOST SIGHT OF THE MATERIAL F ACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION AND NOT AN EXHAUSTIVE ONE. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT , THEREFORE, THE SUPPORT DRAWN BY THE CIT(A) FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) WAS MISPLACED AND IN FACT MISCONCEIVED. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTIT Y OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS , NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. ALSO, IT WAS SUBMITTED BY THE LD. D.R THAT THE CIT(A) HAD MOST ARBITRARILY DIS LODGED THE ADDITION OF THE ENTIRE AMOUNT OF ON - MONEY MADE BY THE A.O AND HAD ARBITRARILY RESTRICTED THE SAME TO THE EXTENT OF 20% OF SUCH RECEIPTS. PAGE 41 29. PER CONTRA, THE LD. A.R RELIED ON THE ORDER OF THE CIT(A). IT WAS SUBMITTED BY THE L D. A .R THAT THE BASI S FOR THE ADDITION OF THE ON - MONEY RECEIPTS BY THE A.O WERE THE NOTINGS ON SOME LOOSE SHEETS AND THE DATA THAT WAS RETRIEVED FROM THE MOBILE PHONES FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE IMPUGNED AMOUNTS WERE NOT FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, THEREFORE, THE CIT(A) OBSERVING THAT THE SINE QUA NON FOR INVOKING THE PROVISIONS OF SEC. 68 WAS ABSENT , HAD THUS , RIGHTLY VACATED THE ADDITION THEREIN MADE BY THE A.O. IN SUPPORT OF HIS CONTENTION THAT WHER E THE REQUIREMENT OF SEC. 68, I.E THE AMOUNT BEING CREDITED IN THE BOOKS OF ACCOUNT IS NOT SATISFIED, NO ADDITION CAN BE MADE U/S 68 OF THE ACT, THE LD. A.R RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BHAICHAND H. GANDHI (1983) 141 ITR 67 (BOM). ALSO RELIANCE WAS PLACED ON THE ORDER OF THE ITAT, MUMBAI IN THE CASE OF MEHUL V. VYAS VS. INCOME - TAX OFFICER (2017) 80 TAXMANN.COM 311 (MUM) AND THAT OF THE ITAT, BANGALORE IN THE CASE OF DCIT VS. RAJA UDAYSHANKAR (2006) 7 SOT 680 (BANG). 30 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. AFTER DELIBERATING AT LENGTH ON THE ISSUE IN QUESTION I.E WHETHER NOTINGS IN LOOSE SHEETS AND DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS WOULD JUSTIFY AN ADDITION BY TH E A.O U/S 68 OF THE ACT , WE FIND SUBSTANTIAL FORCE IN THE CONTENTIONS ADVANCED BY THE LD. A.R. WE ARE PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE LD. A.R THAT AS NOTINGS IN LOOSE SHEETS AND DATA RETRIEVED FROM THE MOBILE PHONES PAGE 42 CANNOT BE HELD AS THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR , HENCE NO ADDITION IN RESPECT OF SUCH NOTINGS AS REGARDS ON - MONEY RECEIVED BY THE ASSESSEE COULD HAVE BEEN MADE UNDER SEC.68 TO THE ACT. OUR AFORESAID OBSERVATION IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BHAICHAND H. GANDHI (1983) 143 ITR 67 (BOM.) . ALSO, A SIMILAR VIEW HAD BEEN ARRIVED AT BY A COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT, MUMBAI IN THE CASE OF MEHUL V. VYAS VS. ITO (2017) 764 ITD 296 (MUM) . FURTHER , A FINE DISTINCTION BETWEEN BOOKS OF ACCOUNT AND DOCUMENTS CAN SAFELY BE GATHERED FROM THE DEFINITION OF THE TERM UNDISCLOSED INCOME AS CONTEMPLATED IN SEC. 158B(B) OF THE ACT. AS OBSERVED BY THE ITAT, BANGALORE IN THE CASE OF DCIT VS. RAJA UDAYSHAN KAR (2006) 7 SOT 680 (BANG) , THAT A SEPARATE USAGE OF THE WORDS BOOKS OF ACCOUNT AND DOCUMENTS IN THE DEFINITION OF THE TERM UNDISCLOSED INCOME IN SEC. 158B(B) THEREIN CLEARLY PROVIDES FOR A DISTINCTION BETWEEN THE TWO. BACKED BY ITS AFORESAID OBSERV ATION , THE TRIBUNAL HAD CONCLUDED THAT AS SEC. 68 IS APPLICABLE TO ANY ENTRY CREDITED IN THE BOOKS OF ACCOUNT THUS , THE SAME WOULD NOT BE APPLICABLE TO ANY ENTRY IN A DOCUMENT. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS WE CONCUR WITH THE VIEW TAKEN BY THE CIT(A) THAT AS THE NOTINGS OF ON - MONEY WERE FOUND IN THE LOOSE SHEETS AND DATA RETRIEVED FROM THE MOBILE PHONES AND DID NOT FORM PART OF THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE SAME, THUS, COULD NO T HAVE BEEN ADDED U/S 68 OF THE ACT. INSOFAR THE CLAI M OF THE REVENUE THAT THE ADDITIONS OF ON - MONEY MADE U/S 68 BY THE A.O ON THE BASIS OF NOTINGS IN LOOSE SHEETS AND DATA RETRIEVED FROM THE MOBILES WAS IN ORDER, FOR THE REASON, THAT THE SAID SECTION USES THE TERM BOOKS AND NOT REGULAR BOOKS OF ACCOUNT IS CONCERNED, WE ARE AFRAID THAT THE SAME DOES NOT FIND FAVOUR WITH US. AS IS PAGE 43 DISCERNIBLE FROM SEC. 2(12A) OF THE ACT, THE SAME THEREIN DEFINES BOOKS OR BOOKS OF ACCOUNTS. WE ARE UNABLE TO COMPREHEND THAT AS TO ON WHAT BASIS THE REVENUE IS SEEKING INCLUS ION OF LOOSE SHEETS AND DATA RETRIEVED FROM MOBILE PHONES WITHIN THE SCOPE AND GAMUT OF THE DEFINITION OF BOOKS OR BOOKS OF ACCOUNTS AS PROVIDED IN SEC. 2(12A) OF THE ACT. A LTERNATIVELY, WE ALSO FIND SUBSTANCE IN THE OBSERVATION OF THE CIT(A) , THAT AS BO TH THE INVESTIGATION WING AND THE A.O HAD HELD THAT THE IMPUGNED NOTINGS WERE THE ON - MONEY RECEIVED BY THE ASSESSEE ON SALE OF FLATS/SHOPS IN THE BUILDING PROJECT S UNDERTAKEN BY IT THUS, IN ABSENCE OF ANY DISPUTE AS REGARDS THE NATURE OF SUCH RECEIPT, THE SAME, WAS LIABLE TO BE ASSESSED AS A BUSINESS RECEIPT AND NOT AS AN INCOME U/S 68 OF THE ACT. W E CONCUR WITH THE VIEW TAKEN BY THE CIT(A) THAT NOW WHEN THE A.O HAD IN THE ASSESSMENT ORDER MENTIONED THE FLAT WISE AND YEAR WISE RECEIPTS OF ON - MONEY THUS, T HE SAME LEAVES NO IOTA OF DOUBT THAT THE SAME WERE IN THE NATURE OF BUSINESS RECEIPTS WHICH WERE INSEPARABLE FROM THE ASSESSEES BUSINESS OF A BUILDER AND DEVELOPER. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID DELIBERATIONS , WE ARE OF A STRONG CONVICTION THAT NO INFIRMITY ARISES FROM THE ORDER OF THE CIT(A) WHO IN OUR CONSIDERED VIEW HAD RIGHTLY CONCLUDED THAT THE IMPUGNED ADDITIONS COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. WE, THUS, UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT HE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS.(I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 31 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1733/MUM/2019 FOR A.Y 2016 - 17 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WERE LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME T HEREIN PAGE 44 EMBEDDED AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORES AID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (IV) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 3 2 . T HE APPEAL FILED BY THE REVENUE IS DISMISSED. 3 3 . RESULTANTLY, THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. M/S EKTA PARKSVILLE HOMES PVT. LTD. ITA NO. 1734/MUM/2019 (ASSESSEES APPEAL) A.Y 2013 - 14 3 4 . WE SHALL NOW DEAL WITH THE APPEAL FILED BY THE CAPTIONED ASSESSEE, VIZ. M/S EKTA PARKSVILL E HOMES PVT. LTD. FOR A.Y 2013 - 14. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW TH E LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF PROJECT OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION AR E SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING THE PROJECT COMPLETION METHOD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT RE CEIVED ON - MONEY OF RS. 22 LAKHS WITHOUT APPRECIATING THE FACT THAT THE GROUP DIRECTOR MR. VIVEK MOHANANI OF APPELLANT DENIED FOR THE SAME. SHE OUGHT TO HAVE DELETED THE ADDITION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSION ER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 22 LAKHS, WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, M ODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. PAGE 45 3 5 . BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER HAD FILED ITS ORIGINAL RETURN OF INC OME FOR A.Y. 2013 - 14 ON 29.09.2013, DECLARING A LOSS OF (RS. 5,25,48,651/ - ). SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP AND THE ASSESSEE COMPANY WAS COVERED IN SUCH PROCEEDINGS. INCRIMINA TING DOCUMENTS REVEALING RECEIPT OF UNACCOUNTED AMOUNTS BY WAY OF ON - MONEY BY THE ASSESSEE COMPANY AND ITS GROUP CONCERNS TOWARDS SALE OF RESIDENTIAL AND COMMERCIAL PROPERTIES HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS. NOTICE UNDER SEC. 153A WAS ISSUED AND DULY SERVED UPON THE ASSESSEE FOR THE YEAR IN QUESTION I.E A.Y 2013 - 14. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153A WAS FILED BY THE ASSESSEE COMPANY ON 12.01.2017, DECLARING A LOSS AS ORIGINALLY RETURNED OF (RS. 5,25,48,651/ - ) . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 3 6 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT IN THE COURSE OF THE SEARCH PROCEEDINGS CONDUC T ED U/S 132 ON EKTA BHOOMI GROU P THE STATEMENT OF SHRI. DILIPBORADE WHO WAS AN EMPLOYEE OF THE ASSESE COMPANY, VIZ. M/S EKTA PARKSVILLE PVT. LTD. AND WAS ENGAGED IN LIASIONING AND HANDLING OF CASH AT THE INSTRUCTIONS OF SHRI. VIVEK MOHANANI, JOINT MANAGING DIRECTOR AND SHRI PRATEEK AROR A WAS RECORDED ON 05.10.2015 AT HIS RESIDENCE AT 107/4 SWAPANA CHS, SECTOR 1, RSC - 21, CHARKOP, KANDIVILI WEST, MUMBAI, WHEREIN HE HAD ADMITTED THAT HE HAD HANDLED CASH FOR EKTA GROUP AND HAD PROVIDED COMPLETE DETAILS AS REGARDS THE SAME ALONGWITH THE RES PECTIVE DATES, WHICH INTER ALIA TO THE EXTENT RELATED BY THE A.O TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION READ AS UNDER : PAGE 46 SR. NO. DATE AMOUNT CASH COLLECTED FROM (NAME) CASH HANDED OVER TO REMARKS 9 IN SEPT, 2012 22 LACS CERTAIN HAWALA PARTY NAMED SURAJ BHAI FROM ROAD NO. 2 KALABA DEVI PRATIK ARORA HERE I HAD CARRIED TORN CURRENCY NOTE OF RS. 10 FOR COLLECTING MONEY. PRATIK ARORA CAN ONLY EXPLAIN THIS TRANSACTION O N BEING CONFRONTED WITH THE AFORESAID STATEMENT OF SHRI. DILIPBORADE (SUPRA), SHRI. VIVEK MOHANANI, JT. MANAGING DIRECTOR OF THE ASSESSEE COMPANY IN HIS STATEMENT RECORDED BY THE DDIT ON 27.01.2016 DENIED THE SAME. HOWEVER, THE A.O ACTED UPON THE DETAILS PROVIDED BY SHRI. DILIPBORADE IN HIS STATEMENT RECORDED UNDER SEC. 13 2(4), DATED 05.10.2015, FOR THE REASON THAT HE BEING AN EMPLOYEE OF THE ASSESSEE COMPANY, VIZ. M/S EKTA PARKSVILLE PVT. LTD. HAD IN HIS STATEMENT RECO R DED ON OATH U/S 132(4) PROVIDED COMPLETE DETAILS OF CASH THAT WAS HANDLED BY HIM FOR EKTA GROUP ALONGWI TH QUANTITY, DATES, DETAILS OF CASH COLLECTED, NAME OF THE PERSON TO WHOM THE SAME WAS HANDED OVER ALONGWITH THE FINANCIAL YEARS/DATES TO WHICH THE CASH COLLECTED PERTAINED. ACCORDINGLY, ON THE BASIS OF THE AFORESAID DETAILS PROVIDED BY SHRI. DILIPBORADE I N HIS STATEMENT RECORDED U/S 132(4), DATED 05.10.2015 THE A.OADDED THE AFORESAID AMOUNT OF RS. 22 LAC U/S 68 OF THE ACT. 3 7 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEET S AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THUS, PAGE 47 COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE A.O DE HORS ANY INCRIMINATING MATERIAL HAD MADE AN ADDITION OF RS. 22 LAC ON THE BASIS OF THE STANDALONE STATEMENT OF SHRI. DILIPBORADE, THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SHRI. DILIPBORADE WAS A KEY EMPLOYEE OF THE ASSESSEE COMPANY , AND THE ASSESSEE GROUP WAS HABITUALLY RECEIVING ON - MONEY ON SA LE OF PROPERTIES, THEREFORE, IT COULD SAFELY BE PRESUMED THAT THE AFORESAID AMOUNT OF RS. 22 LAC WAS RECEIVED BY THE ASSESSEE AS ON - MONEY ON SALE OF FLATS OF ITS PARKSVILLE PROJECT. ACCORDINGLY, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE THAT THE ADDI TION OF RS. 22 LAC ON THE BASIS OF A STANDALONE UNCORROBORATED STATEMENT OF SHRI. DILIPBORADE COULD NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. AT THE SAME TIME, THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAXWAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY T HE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE A.O BY APPLYING SEC. 115BBE OF THE ACT HAD ERRED IN NOT ALLOWING SET - OFF OF BUSINESS LOSS OF CURRENT YEAR OF RS. 5,25,48,651/ - A GAINST THE INCOME ASSESSED, THE SAME WAS ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SEC. 115BBE HAD CAME INTO EFFECT FROM 01.04.2017, PAGE 48 THEREFORE, THE SAME WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSE FOR THE YEAR IN QUESTION I.E A.Y 2013 - 14. APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIPTS WERE HELD BY HIM AS BUSINESS INCOME AND NOT AN INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. 115BBE WOULD ALSO NOT BE APPLICABLE ON THE SAID COUNT TOO. ACC ORDINGLY, THE CIT(A)DIRECTED THE A.O TO ALLOW SET - OFF OF CURRENT YEARS BUSINESS LOSS AND BROUGHT FORWARD LOSSES AFTER DUE VERIFICATION. 3 8 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. THE LD. A.R ASSAILED THE IMPUGNED ADDITIONS WHICH WERE MADE BY THE A.O TOWARDS ON - MONEY ALLEGEDLY RECEIVED BY THE ASSESSEE COMPANY ON THE BASIS OF AN UNSUBSTANTIATED STATEMENT OF IT EMPLOYEE, VIZ. MR. DILIPBORADE THAT WAS RECORDED U/S 132(4) OF THE ACT. IT WAS SUBMITTED BY THE LD. A.R THA T SHRI. VIVEK MOHANANI, JT. MANAGING DIRECTOR OF THE ASSESSEE COMPANY ON BEING CONFRONTED WITH THE IMPUGNED STATEMENT OF MR. DILIPBORADE HAD CLEARLY DENIED THE RECEIPT OF ANY SUCH AMOUNT OF ON - MONEY BY THE ASSESSEE COMPANY ON SALE OF FLATS IN ITS PROJECT, VIZ. PARKSVILLE PROJECT. IT WAS VEHEMENTLY SUBMITTED BY THE LD. A.R THAT THOUGH NEITHER ANY INCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS NOR ANY EVIDENCE PROVING THE RECEIPT OF THE ALLEGED AMOUNT OF ON - MONEY BY THE ASSESSEE CO MPANY HAD BEEN BROUGHT ON RECORD, THE A.O, HAD HOWEVER MERELY ON THE BASIS OF THE UNSUBSTANTIATED STATEMENT OF SHRI. DILIPBORADE DRAWN ADVERSE INFERENCES IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE A.O WAS NOT JUSTIFIED I N MAKING THE IMPUGNED ADDITIONS IN THE HANDS OF THE ASSESSEE COMPANY SOLELY ON THE BASIS OF A THIRD PARTY STATEMENT. IN ORDER TO DRIVE HOME HIS AFORESAID CONTENTION THE LD. A.R RELIED ON THE JUDGMENT OF THE HONBLE HIGH PAGE 49 COURT OF MADRAS IN THE CASE OF CIT VS. SMT. S. JAYALAKSHMI AMMAL (2016) 74 TAXMANN.COM 35 (MAD). IT WAS FURTHER AVERRED BY THE LD. A.R THAT THE STATEMENT OF SHRI. DILIPBORADE RECORDED U/S 132(4) COULD NOT BE CONSTRUED AS AN INCRIMINATING MATERIAL. IN SUPPORT OF HIS SAID CONTENTION RELIANCE WAS PLACED ON THE ORDER OF THE ITAT, JODHPUR IN THE CASE OF SHREE CHAND SONI VS. DCIT (2006) 101 TTJ 1028 (JODHPUR). FURTHER, RELYING ON THE JUDGMENT OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. TARA CHAND MAHIPAL (2016) 65 TAXMANN.COM 29 (CAL), IT WAS SUBMITTED BY THE LD. A.R THAT ADDITIONS COULD NOT BE MADE ON THE BASIS OF U NCORROBORATED DOCUMENTS SEIZED FROM A THIRD PARTY IN THE COURSE OF THE SEARCH PROCEEDINGS. IT WAS SUBMITTED BY THE LD. A.R THAT AN A DDITION COULD NOT BE MADE IN THE H ANDS OF AN ASSESSEE MERELY ON THE BASIS OF A BALD STATEMENT OF A THIRD PARTY WITHOUT THERE BEING ANY CORROBORATIVE EVIDENCE. IN ORDER TO FORTIFY HIS AFORESAID CONTENTION THE LD. A.R HAD RELIED ON THE JUDGMENT S OF THE HONBLE HIGH COURT OF ANDHRA PRADESH IN CIT VS. NARESH KUMAR AGGARWAL (2014) 369 ITR 171 (AP); HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. K. BHUVANENDRAN AND CO. (2008) 303 ITR 235 (MAD) ; AND THAT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DY. CIT VS. MAHENDRA AMBALAL PATEL (2 010) 78 CCH 377 (GUJ). IT WAS, THUS, SUBMITTED BY THE LD. A.R THAT THE ADDITIONS MADE BY THE A.O TOWARDS ON - MONEY ALLEGEDLY STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE COMPANY IN A.Y 2013 - 14, A.Y 2014 - 15 & A.Y 2015 - 16 HAD NO LEGS TO STAND UPON AND WERE LI ABLE TO BE VACATED. 3 9 . PER CONTRA, THE LD. D.R RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT AS SHRI. DILIP BORADE, EMPLOYEE OF THE ASSESSEE COMPANY , HAD IN HIS STATEMENT RECORDED U/S 13 1 OF THE ACT PROVIDED DETAILS AS REGARDS THE ON - PAGE 50 MONEY THAT WAS RECIEVED /COLLECTED BY HIM THUS, THE A.O HAD RIGHTLY MADE ADDITIONS TOWARDS ON - MONEY RECEIVED BY THE ASSESSEE COMPANY IN THE RESPECTIVE YEARS. 40 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FO R BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. AS OBSERVED BY T HE A.O IN THE ASSESSMENT ORDER, SHRI. DILIPBORADE, EMPLOYEE OF THE ASSESSEE COMPANY WAS INVOLVED IN DOING LIAISON WORK FOR THE GROUP AS WELL AS HANDLED CASH OF THE GROUP ON THE INSTRUCTIONS OF SHRI. VIVEK MOHANANI, SHRI. ASHOK MOHNANI, PROMOTERS OF THE EK TA GROUP AND SHRI. PRAT EE K ARORA. I N HIS STATEMENT RECORDED U/S 13 1 , DATED 05.10.2015 SHRI DILIPBORADE WAS CALLED UPON TO FURNISH DETAILS OF CASH HANDLED BY HIM FOR EKTA GROUP. RELEVANT EXTRACT OF THE STATEMENT OF SHRI. DILIPBORADE IS REPRODUCED AS UNDER : DURING THE COURSE OF SEARCH U/S 132 IN THE EKTA BHOOMI GROUP AT THE RESIDENCE OF SHRI. DILIPBORADE ON 05/10/2015 AT 107/4, SWAPANA CHS, SECTOR 1, RSC - 21, CHARKOP, KANDIVILI WEST, MUMBAI 400 067 IN HIS STATEMENT RECORDED U/S 131, HE WAS ASKED TO GIVE THE DETAILS OF CASH HANDLED BY HIM FOR EKTA GROUP. HIS REPLY IS REPRODUCED BELOW : Q.11. PLEASE GIVE THE DETAILS OF CASH HANDLED BY YOU FOR EKTA GROUP ALONGWITH DETAILS OF QUANTITY AND DATES. PLEASE EXPLAIN DETAIL. ANS: SR. NO DATE AMOUNT CASH COLLECTED FROM (NAME) CASH HANDED OVER TO REMARKS 1. F.Y 2014 - 15 5 CRORE IN VARIOUS INSTALMENTS PRATIK ARORA, VIVEK M O HANANI SHRI PURANDARE FROM HDIL AND CERTAIN LADY NAMED SMT. SUSHAMA ON 2 ND FLOOR OF VIVA GROUP OFFICE AT VIRAR. PRATIK ARORA AND VIVEK MOHNANI HAD CALLED. THEY CAN ONLY EXPLAIN THIS TRANSACTION. 2. F.Y 2013 - 14 1.5 CR. IN YSAHWANT VIVEK VIVEK MOHANANI HAD PAGE 51 VARIOUS INSTALMENTS. (9820475111) LAMINGTON ROAD, NEAR POLICE STATION. MOHANANI CALLED TO CONFIRM MY IDENTITY TO COLLECT CASH. VIVEK MOHNANI CAN EXPLAIN. 3. F.Y 2013 - 14 4.5 CR COLLECTED FROM SITE OFFICE, MEADOWS, NAGOTHANE, SIDHARTH NAGAR. VIVEK MOHANANI AND PRATIK ARORA HARISH BHAI, SALES PERSON FROM EKTA BHUMI GARDEN, BORIVIL SITE, CALLED ME TO COLLECT THE CASH FROM SITE. VIVEK MOHANANI AND PRATIK ARORA CAN ONLY EXPLAIN THIS TRANSACTION. 4. F.Y 2014 - 15 80 LACS ON VARIOUS DATES COLLECTED FROM PARTY NAME NO KNOWN THANE WEST FROM FLAT PURCHASERS. PRATIK ARORA PRATIK CAN ONLY EXPLAIN THIS TRANSACTION. 5. F.Y 2013 - 14 15 LACS VIVEK MOHANANI DESHPANDE AND ASSOCIATES VIVEK MOHNANI CAN EXPLAIN. 6. MARCH, 2015 36 LACS VIVEK MOHANANI VRUSHABH IN BHOOMI DEVELOPER VIVEK MOHNANI CAN EXPLAINTDR PURCHASED. 7. 25 TH DEC, 2014 55 LAS KAUSALCHEDDA 9892362551 VIVEK MOHNANI VIVEK MOHNANI CAN ONLY EXPLAIN HERE. SHRI PRATIK ARORA HAD GIVEN HIS VISITING CARD AS TOKEN OF IDENTITY TO COLLECT CASH. 8. OCT, 2014 25 LACS PARTY FROM HIRANANDANI, POWAI PRATIK ARORA PRATIK HAD CALLED FOR COLLECTION, PRATIK CAN ONLY EXPLAIN. 9. IN SEPT, 2012 22 LACS CERTAIN HAWALA PARTY NAMED SURAJ BHAI FROM ROAD NO. 2 KALABA DEVI PRATIK ARORA HERE, I HAD CARRIED TORN CURRENCY NOTE OF RS. 10 FOR COLLECTING MONEY. PRATIK ARORA CAN ONLY EXPLAIN THIS TRANSACTION. WE MAY HEREIN OBSERVE, THAT THE AFORESAID DETAILS PROVIDE D BY SHRI. DILIPBORADE WAS PURSUANT TO THE QUERY RAISED BY THE A.O THEREIN CALLING UPON HIM TO FURNISH DETAILS OF CASH HANDLED BY HIM FOR EKTA GROUP ALONGWITH QUANTITY AND DATES. IN OTHER WORDS, THE A.O HAD QUERIED AS REGARDS THE DE TAILS OF CASH WHICH HE HAD HANDLED FOR EKTA PAGE 52 GROUP. FOR SAKE OF CLARITY THE QUERY RAISED BY THE A.O IN PURSUANCE TO WHICH THE AFORESAID DETAILS WERE PROVIDED BY SHRI. DILIPBORADE (SUPRA) IS REPRODUCED AS UNDER : Q.11. PLEASE GIVE THE DETAILS OF CASH HANDLED BY YOU FOR EKTA GROUP ALONGWITH DETAILS OF QUANTITY AND DATES. PLEASE EXPLAIN DETAIL. (EMPHASIS SUPPLIED BY US) ALTHOUGH SHRI DILIPBORADE WAS AN EMPLOYEE OF THE ASSESEE COMPANY, VIZ. M/S EKTA PARKSVILLE HOMES PVT. LTD., BUT AS OBSERVED BY THE A.O IN THE ASSESSMENT ORDER HE USED TO DO LIASIONING WORK FOR EKTA GROUP AND USE D TO DELIVER AND RECEIVE CASH ON THE INSTRUCTIONS OF MR. VIVEK MOHANANI, MR. ASHOK MOHANANI AND MR. PRATEEK ARORA. TO SUM UP, IT IS A MATTER OF FACT BORNE FROM THE RECORDS THAT SHRI. DILIPBORADE WAS THOUGH AN EMPLOYEE OF THE ASSESSEE COMPANY BUT HE USED TO DO LIAS I ONING WORK FOR EKTA GROUP AND ALSO DELIVERED AND RECEIVED CASH AS PER THE INSTRUCTIONS OF MR. VIVEK MOHANANI AND MR. ASHOK MOHANANI, PROMOTERS AND SHRI. PRATEEK ARORA, A KEY EMPLOYEE OF THE EKTA GROUP. APART FROM THAT, AS OBSERVED BY US HERINABOVE, THE DETAILS FURNISHED BY SHRI. PRATEEK ARORA WAS IN CONTEXT OF THE CASH THAT WAS HANDLED BY HIM FOR EKTA GROUP AND NOT ONLY FOR THE ASSESSEE COMPANY IN QUESTION, VIZ. M/S EKT A PARKSVILLE HOMES PVT. LTD. IT IS, THUS, IN THE BACKDROP OF THE AFORESAID MATERIAL FACT THAT WE SHALL ADVERT TO THE DETAILS FURNISHED BY SHRI. DILIPBORADE AND THEREIN TEST THE SUSTAINABILITY OF THE VIEW TAKEN BY BOTH THE LOWER AUTHORITIES THAT THE SAME PE RTAINED TO THE ON - MONEY THAT WAS RECEIVED IN RESPECT OF SALE OF FLATS IN THE PROJECT OF THE ASSESSEE COMPANY, VIZ PARKSVILLE PROJECT . 41 . AS IS DISCERNIBLE FROM THE ASSESSMENT ORDER, THE A.O HAD CONCLUDED THAT ALL THE ALLEGED RECEIPTS OF MONEY BY SHR I. DILIP PAGE 53 BORADE, VIZ. SR. NO. 2 , SR. NO. 3 , SR. NO. 4 , SR. NO. 7 , SR. NO. 8 & SR. NO. 9 AS CULLED OUT IN THE AFORESAID CHART WERE TOWARDS ON - MONEY RECEIVED AS REGARDS SALE OF FLATS BY THE ASSESSEE COMPANY IN ITS PROJECT PARKSVILLE PROJECT . BASIS FOR ARRIVIN G AT SUCH CONCLUSION WAS THE STANDALONE FACT THAT SHRI. DILIPBOARDE WAS ON RECORD AN EMPLOYEE OF THE ASSESSEE COMPANY. WE ARE , HOWEVER , UNABLE TO SUBSCRIBE TO THE AFORESAID VIEW SO TAKEN BY THE A.O. AS OBSERVED BY US HEREINABOVE, NOT ONLY THE A.O HAD ADMIT TED THAT SHRI. DILIPBORADE WAS DOING LIASIONING WORK FOR THE EKTA GROUP AND WAS DELIVERING AND RECEIVING CASH AS PER THE INSTRUCTIONS OF MR. VIVEK MOHANANI AND MR. ASHOK MOHANANI, PROMOTERS AND SHRI. PRATEEK ARORA, A KEY EMPLOYEE OF THE EKTA GROUP, BUT IN FACT THE DETAILS FURNISHED IN RESPONSE TO Q.NO. 11 OF HIS STATEMENT RECORDED U/S 131, DATED 05.10.2015 WAS AS REGARDS THE CASH THAT WAS HANDLED BY HIM IN RESPECT OF THE ENTIRE EKTA GROUP. ON A CAREFUL SCRUTINY OF THE AFORESAID REPLY OF SHRI. DILIPBORADE, WE FIND THAT AT NO STAGE HE HAD AT ANY INSTANCE STATED THAT THE CASH HANDLED BY HIM WAS AS REGARDS THE TRANSACT IONS OF THE ASSESSEE COMPANY, VIZ. M/S EKTA PARKSVILLE HOMES PVT. LTD. OR ITS PROJECT, VIZ PARKSVILLE PROJECT . ACCORDINGLY, IN THE TOTALITY OF THE AFORESAID FACTS , WE FIND NO REASON MUCH THE LESS ANY JUSTIFICATION TO RELATE THE IMPUGNED TRANSACTIONS TO TH E ASSESSEE COMPANY, VIZ. M/S EKTA PARKSVILLE HOMES PVT. LTD. 42 . BE THAT AS IT MAY, WE FIND THAT MAJORITY OF THE IMPUGNED TRANSACTIONS PERTAINING TO COLLECTION OF CASH BY SHRI. DILIPBORADE MAKES A REFERENCE TO THE NAME OF THE PERSON FROM WHOM THE IMPUGNED AMOUNT WAS COLLECTED BY HIM. IN FACT, IN TWO INSTANCES EVEN THE MOBILE NUMBER S OF THE CONCERNED PERSON S ARE GIVEN. HOWEVER, WE FIND THAT THE A.O HAD NOT EVEN DONE THE BARE MINIMUM BY ATTEMPTING ANY VERIFICATION WHICH WOULD HAVE REVEAL ED A CLEAR PAGE 54 CUT NEXUS B ETWEEN THE AFOREMENTIONED PERSONS AND THE TRANSACTIONS OF SALE /RECEIPT OF ADVANCE BY THE ASSESSEE COMPANY W.R.T ITS PROJECT , VIZ. PARKSVILLE PROJECT . THE A.O WITHOUT PLAC ING ON RECORD ANY MATERIAL WHICH WOULD REVEAL THAT THE PERSONS FROM WHOM THE IMPUGNED AMOUNT S WERE RECEIVED/COLLECTED BY SHRI. DILIPBORADE FIGURED IN THE LIST OF THE PERSONS FROM WHOM ADVANCES WERE RECEIVED OR FLATS WERE SOLD BY THE ASSESSEE IN ITS PROJECT, VIZ. PARKSVILLE PROJECT OR WERE IN ANY WAY CONNECTED TO THE SAID TRANSACTIONS , HAD HUSHED TO CONCLUDE THAT THE IMPUGNED AMOUNTS WAS THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE W.R.T SALE OF FLATS IN ITS PROJECT, VIZ. PARKSVILLE PROJECT. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE A.O HAD HUSHED THROUGH THE ISSUE AND DE HORS PLA CING ON RECORD ANY MATERIAL HELD THE ALLEGED RECEIPTS AS ON - MONEY RECEIVED BY THE ASSESSEE ON SALE OF FLATS OF ITS PROJECT , VIZ. PARKSVILLE PROJECT . 4 3 . WE SHALL IN THE BACKDROP OF TE AFORESAID FACTUAL MATRIX ADVERT TO THE SUSTAINABILITY OF THE ADDITIONS MADE BY THE A.O , WHICH THEREAFTE R HAD BEEN UPHELD BY THE CIT(A) ON THE BASIS OF THE STANDALONE STATEMENT OF SHRI. DILIPBORADE (SUPRA). AS OBSERVED BY US HEREINABOVE, IT IS A MATTER OF FACT THAT NO INCRIMINATING MATERIAL HAD SURFACED IN THE COURSE OF THE S EARCH PROCEEDINGS WHICH WOULD CORROBORATE THE RECEIPT OF THE IMPUGNED AMOUNTS AS ON - MONEY ON SALE OF FLATS BY THE ASSESSEEE COMPANY IN ITS PROJECT PARKSVILLE PROJECT . IN FACT, EXCEPT FOR THE STANDALONE STATEMENT OF SHRI. DILIPBORADE (SUPRA) THERE IS NOTHI NG AVAILABLE ON RECORD WHICH WOULD SUPPORT THE FACTUM OF RECEIPT OF THE IMPUGNED AMOUNTS IN QUESTION. INSOFAR THE STATEMENT OF SHRI. DILIPBORAD E (SUPRA) RECORDED U/S 131 OF THE ACT ALLEGING RECEIPT OF THE AMOUNTS, THE SAME, IN OUR CONSIDERED VIEW C A NNOT BE HELD TO AN INCRIMINATING MATERIAL. OUR AFORESAID VIEW IS FORTIFIED BY THE ORDER OF THE ITAT, JODHPUR IN THE PAGE 55 CASE OF SHREE CHAND SONI VS. DCIT (2006) 101 TTJ 1028 (JODHPUR). IN THE SAID ORDER, IT WAS OBSERVED BY THE TRIBUNAL THAT AS A S TATEMENT RECORDED UN DER SEC. 132(4) DOES NOT TANTAMOUNT TO UNEARTHING OF ANY INCRIMINATING EVIDENCE DURING THE COURSE OF SEARCH THEREFORE, NO ADDITION COULD BE MADE ONLY ON THE BASIS OF STATEMENT UNDER S. 132(4) MADE BY THE ASSESSEE ADMITTING BOGUS CAPITAL FORMATION. AS SUCH, IN THE PRESENT CASE BEFORE US, THE ONLY BASIS FOR MAKING OF THE IMPUGNED ADDITIONS BY THE A.O TOWARDS ALLEGED ON - MONEY RECEIVED BY THE ASSESSEE IS THE STANDALONE UNCORROBORATED STATEMENT OF THE ASSESSEES EMPLOYEE, VIZ. SHRI.DILIP BORADE (SUPRA), WHO WE MAY HEREIN REITERATE WAS RENDERING HIS SERVICES NOT ONLY FOR THE ASSESSEE COMPANY BUT FOR THE ENTIRE EKTA GROUP. IN OUR CONSIDERED VIEW ADDITION S CANNOT JUSTIFIABLY BE MADE ON THE BASIS OF UNCORROBORATED DOCUMENTS SEIZED FROM A THIRD PARTY IN THE C OURSE OF SEARCH PROCEEDINGS. OUR SAID VIEW IS SUPPORTED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. TARA CHAND MAHIPAL (2016) 65 TAXMANN.COM 29 (CAL). IN ITS SAID JUDGMENT , IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT AD DITION MADE TO THE ASSESSEES INCOME MERELY ON THE BASIS OF PAPERS SEIZED FROM THE POSSESSION OF THE ASSESSEES BROTHER WAS UNJUSTIFIED WHEN THE MATERIAL SOUGHT TO BE RELIED ON WAS NOT CORROBORATED. ALSO, A SIMILAR VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. SMT. S. JAYALAKSHMI AMMAL (2017) 390 ITR 0189 (MAD) . IN THE CASE BEFORE THE HONBLE HIGH COURT, THE ASSESSEE'S SON IN THE COURSE OF THE SEARCH PROCEEDINGS WAS EXAMINED ON 29.12.1999 UNDER SECTION 132 OF THE INCOME TAX ACT, 1961. AS PER THE STATEMENT OF THE ASSESSEE'S SON, THERE WAS A PAYMENT OF RS.31,00,000/ - TOWARDS PURCHASE OF PROPERTY, AND THAT SUCH PAYMENT WAS MADE IN THE PRESENCE OF HIS FATHER, NAMELY, THE PAGE 56 ASSESSEE. ACCORDING TO HIM, A SUM OF RS.31,00,000/ - WAS PAID TO SHRI. BABU. HOWEVER, THE REVENUE AUTHORITIES DID NOT SEEK ANY CLARIFICATION AS REGARDS THE AFORESAID STATEMENT OF HIS SON. IT IS IN THE BACKDROP OF T HE AFORESAID FACTS THAT THE HONBLE HIGH COURT HAD OBSERVED AS UNDER: 19. WHILE ADVERTING TO THE ABOVE, W E ARE OF THE CONSIDERED VIEW THAT, FOR DECIDING ANY ISSUE, AGAINST THE ASSESSEE, THE AUTHORITIES UNDER THE INCOME TAX ACT, 1961 HAVE TO CONSIDER, AS TO WHETHER THERE IS ANY CORROBORATIVE MATERIAL EVIDENCE. IF THERE IS NO CORROBORATING DOCUMENTARY EVIDENCE, THEN STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961, ALONE SHOULD NOT BE THE BASIS, FOR ARRIVING AT ANY ADVERSE DECISION AGAINST THE ASSESSEE. IF THE AUTHORITIES UNDER THE INCOME TAX ACT, 1961, HAVE TO BE CONFERRED WITH THE POWER, TO BE EXERCISED, SOLELY ON THE BASIS OF A STATEMENT, THEN IT MAY LEAD TO AN ARBITRARY EXERCISE OF SUCH POWER. AN ORDER OF ASSESSMENT ENTAILS CIVIL CONSEQUENCES. THEREFORE, UNDER JUDICIAL REVIEW, COURTS HAVE TO EXERCISE DUE CARE AND CAUTION THAT NO MAN IS COND EMNED, DUE TO ERRONEOUS OR ARBITRARY EXERCISE OF AUTHORITY CONFERRED. 20. IN THE CASE ON HAND, STATEMENT RECORDED ON 29.12.1999 FROM THE SON OF THE ASSESSEE UNDER SECTION 132(4) OF THE ACT IS NOT CORROBORATED BY ANY MATERIAL DOCUMENT. ADMITTEDLY, REVENUE H AS ALSO NOT CONFRONTED THE ASSESSEE, WITH THE SAID STATEMENT OF HIS SON. IF THAT BE THE CASE, IT CAN BE SAFELY CONCLUDED THAT, THERE WAS NO MATERIAL DOCUMENTARY EVIDENCE, TO SUBSTANTIATE AND CORROBORATE THE STATEMENT OF MR.NATARAJAN, SON OF THE ASSESSEE. I F THE ASSESSEE MAKES A STATEMENT UNDER SECTION 132(4) OF THE ACT, AND IF THERE ARE ANY INCRIMINATING DOCUMENTS FOUND IN HIS POSSESSION, THEN THE CASE IS DIFFERENT. ON THE CONTRA, IF MERE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT, WITHOUT ANY CORROBORA TIVE MATERIAL, HAS TO BE GIVEN CREDENCE, THAN IT WOULD LEAD TO DISASTROUS RESULTS. CONSIDERING THE NATURE OF THE ORDER OF ASSESSMENT, IN THE INSTANT CASE CHARACTERISED AS UNDISCLOSED AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT M ERE STATEMENT WITHOUT THERE BEING ANY CORROBORATIVE EVIDENCE, SHOULD NOT BE TREATED AS CONCLUSIVE EVIDENCE AGAINST THE MAKER OF THE STATEMENT. FACTS INVOLVED IN THE CASE OF THE ASSESSEE BEFORE US MORE OR LESS REMAINS THE SAME. AS OBSERVED BY US HEREINABOV E , THE ADVERSE INFERENCES DRAWN BY THE A.O REGARDING RECEIPT OF ON - MONEY BY THE ASSESSEE COMPANY ON SALE OF FLATS IN ITS PROJECT PARKSVILLE PROJECT ARE BACKED NOT BY ANY INCRIMINATING MATERIAL THAT HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS BUT BY A STANDALONE UNCORROBORATED STATEMENT OF ITS EMPLOYEE, VIZ. SHRI. DILIP BORADE (SUPRA). AP ART FROM THAT, WE FIND THAT SH. VIVEK MOHANANI, DIRECTOR OF THE ASSESSE E COMPANY ON BEING CONFRONTED WITH THE AFORESAID PAGE 57 STATEMENT OF SHRI. DILIP BORADE (SUPRA) HAD CATEGORICALLY DENIED THE RECEIPT OF ANY SUCH AMOUNTS BY THE ASSESSEE COMPANY. IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE OF A STRONG CONVICTION THAT THE A.O WI THOUT PLACING ON RECORD ANY MATERIAL CORROBORATING THE STATEMENT OF SHRI. DILIPBORADE (SUPRA) AND DISPROVING THE CLAIM OF SHRI. VIVEK MOHNANI (SUPRA), HAD MOST ARBITRARILY DRAWN ADVERSE INFERENCES AS REGARDS REC E IPT OF ON - MONEY ON SALE OF FLATS BY THE ASSE SSEE COMPANY. SIMILAR VIEW WAS ARRIVED AT BY THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DY. CIT VS. MAHENDRA AMBALAL PATEL (2010) 40 DTR 243 (GUJ) . IN ITS ORDER, IT WAS INTER ALIA OBSERVED BY THE HONBLE HIGH COURT THAT AN A DDITION CANNOT BE MADE IN THE HANDS OF AN ASSESSEE MERELY ON THE BASIS OF A BALD STATEMENT OF A THIRD PARTY WITHOUT THERE BEING ANY CORROBORATIVE EVIDENCE. IN OUR CONSIDERED VIEW, NOW WHEN IT IS AN ADMITTED FACT THAT THE REVENUE HAD FAILED TO PLACE ON RECORD ANY MATERIAL WHICH WOUL D CORROBORATE RECEIPT OF ON - MONEY BY THE ASSESSEE COMPANY ON SALE OF FLATS IN ITS PROJECT, VIZ. PARKSVILLE PROJECT , THEREFORE, NO ADDITION ON THE SAID COUNT COULD HAVE VALIDLY BEEN MADE IN THE HANDS OF THE ASSESSEE. RELIANCE IS PLACED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. K. BHUVANENDRAN&ORS. (2008) 303 ITR 235 (MAD) . IN ITS SAID OR DER, IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT AS THE R EVENUE HAD NOT BROUGHT ON RECORD ANY MATERIAL TO ESTABLISH THAT CONSIDERATION SHOWN IN THE SALE DEED WAS UNDERSTATED , AND NO MATERIAL WAS FOUND DURING SEARCH TO SHOW THAT ASSESSEE HAD PAID A N AMOUN T OVER AND ABOVE THE STATED CONSIDERATION, NO ADDITION COULD HAVE BEEN MADE ON THE BASIS OF A RETRACTED STATEMENT OF THE ASSESSEE RECORDED DURING SEARCH. IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX R.W THE SETTLED POSITION OF LAW, WE ARE OF THE CONSIDE RED VIEW THAT THE A.O IN THE ABSENCE OF PAGE 58 ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS OR ANY SUCH MATERIAL WHICH WOULD PROVE TO THE HILT THAT THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF ITS FLATS IN ITS PROJECT, VIZ . PARKSVI LLE PROJECT , HAD ERRED IN MAKING ADDITIONS IN THE HANDS OF THE ASSESSEE COMPANY MERELY ON THE BASIS OF A N UNCORROBORATED STANDALONE STATEMENT OF SHRI. DILIPBORADE (SUPRA) RECORD ED U/S 131 OF THE ACT. AT THIS STAGE, WE MAY HEREIN OBSERVE , THAT AS DELIBERAT ED BY US AT LENGTH HEREINABOVE, EVEN THE DETAILS FURNISHED BY SHRI. DILIPBORADE (SUPRA) IN REPLY TO Q.NO. 11 OF HIS STATEMENT RECORDED U/S 131, DATED 05.10.2015 DOES NOT REVEAL THAT THE IMPUGNED TRANSACTIONS OF RECEIPT OF CASH BY HIM PERTAINED TO THE ASSESSEE COMPANY, VIZ. M/S EKTA PARKSVILLE HOMES PVT. LTD. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID OBSERVATION S WE ARE UNABLE TO PERSUADE OURSELVES TO UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT HE HAD SUSTAINED THE ADDITION PERTAINING TO THE ALLEGED RECEIPT OF ON - MONEY BY THE ASSESSEE COMPANY ON SALE OF FLATS IN ITS PROJECT, VIZ. PARKSVILLE PROJECT DURING THE YEAR IN QUESTION, VIZ. A.Y 2013 - 14. WE, THUS, SET ASIDE THE ORDER OF THE CIT(A) AND VACATE THE ADDITION TO THE EXTENT THE SAME WAS SUSTAINED BY HIM IN CONTEXT OF THE AFORESAID IMPUGNED RECEIPT OF ON - MONEY OF RS. 22 LAC. THE GROUND OF APPEAL NO. 2 IS ALLOW ED IN TERMS OF OUR AFORESAID OBSERVATIONS. 4 4 . AS WE HAVE CONCLUDED THAT NO PART OF ADDITION PERTAINING TO THE IMPUGNED AMOUNT OF ON - MONEY OF RS.22 LACS CAN BE SUSTAINED IN THE HANDS OF THE ASSESSEE, THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJ UDICATING THE GROUNDS OF APPEAL NOS. 1 & 3 WHICH HAVING BEEN RENDERED AS ACADEMIC IN NATURE ARE LEFT OPEN. PAGE 59 4 5 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IN NATURE IS DISMISSED. 4 6 . THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OB SERVATIONS. ITA NO. 1735/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2194/MUM/2019 (REVENUES APPEAL) A.Y 2014 - 15 ( A). ITA NO. 1735/MUM/2019 ( ASSESSEES APPEAL ) 4 7 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE CAPTIONED ASSESSEE FOR A.Y 2014 - 15. THE ASSESSEE HAS ASSAILEDTHE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF PROJECT OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING THE P ROJECT COMPLETION METHOD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT RECEIVED ON - MONEY OF RS. 600 LAKHS WITHOUT APPRECIATING THE FACT THAT THE GROUP DIRECT OR MR. VIVEK MOHANANI OF APPELLANT DENIED FOR THE SAME. SHE OUGHT TO HAVE DELETED THE ADDITION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 600 LAKHS, WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 4 8 . BRIEFLY STATED, THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 2014 - 15 ON 17.11.2014, DECLARING A LOSS OF (RS.8,67,72,453 - ). NOTICE UNDER SEC. 153A WAS ISSUED AND DULY SERVED UPON THE ASSESSEE FOR THE YEAR IN QUESTION I.E A.Y 201 4 - 1 5 . RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153A WAS FILED BY THE ASSESSEE COMPANY ON 12.01.2017, DECLARING A LOSS AS PAGE 60 ORIGINALLY RETURNED OF (RS. 8,67,72,453/ - ). SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142 (1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 4 9 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT IN THE COURSE OF THE SEARCH PROCEEDINGS CONDUC T ED U/S 132 ON EKTA BHOOMI GROUP THE STATEMENT OF SHRI. DILIPBORADE WHO WAS AN EMPLOYEE OF THE ASSESE COMPANY, VIZ. M/S EKTA PARKSVILLE PVT. LTD. AND WAS ENGAGED IN LIASIONING AND HANDLING OF CASH AT THE INSTRUCTIONS OF SHRI. VIVEK MOHANANI, JOINT MANAGING DIRECTOR AND SHRI PRATEEK ARORA WAS RECORDED ON 05.10.2015 AT HIS RESIDENCE AT 107/4 SWAPANA CHS, SECTOR 1, RSC - 21, CHARKOP, KANDIVILI WEST, MUMBAI, WHEREIN HE HAD ADMITTED THAT HE HAD HANDLED CASH FOR EKTA GROUP AND HAD PROVIDED COMPLETE DETAILS AS REGARDS THE SAME ALONGWITH THE RESPECTIVE DATES, WHICH INTER ALIA TO THE EXTENT RE LATED BY THE A.O TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION READ AS UNDER : SR. NO. DATE AMOUNT CASH COLLECTED FROM (NAME) CASH HANDED OVER TO REMARKS 2. F.Y 2013 - 14 1.5 CR IN VARIOUS INSTALLMENTS YASHWANT (9820475111) LAMINGTON ROAD, NEAR POLICE STATION VIVEK MOHNANI VIVEK MOHNANI HAD CALLED TO CONFIRM MY IDENTITY TO COLLECT CASH. VIVEK MOHNANI CAN EXPLAIN. 3. F.Y 2013 - 14 4.5 CR COLLECTEDFROM THE OFFICE. MEADOWS, NAGOTHANE, SIDDHARTH NAGAR. VIVEK MOHNANI AND PRATIK ARORA HARISH BHAI SALES PERSON FROM EKTA BHUM GARDEN, BORIVILLI SITE, CALLED ME TO COLLECT THE CASH FROM SITE. VIVEK MOHNANI AND PRATIK ARORA CAN ONLY EXPLAIN THIS TRANSACTION. PAGE 61 ON BEING CONFRONTED WITH THE AFORESAID STATEMENT OF SHRI. DILIPBORADE (SUPRA), SHRI. VIVEK MOHANANI, JT. MANAGING DIRECTOR OF THE ASSESSEE COMPANY IN HIS STATEMENT RECORDED BY THE DDIT ON 27.01.2016 DENIED THE SAME. HOWEVER, THE A.O ACTED UPON THE DETAILS PROVIDED BY SHRI. DILIPBORADE (SUPRA) IN HIS STATEMENT RECORDED UNDER SEC. 132 (4), DATED 05.10.2015, FOR THE REASON THAT HE BEING AN EMPLOYEE OF THE ASSESSEE COMPANY, VIZ. M/S EKTA PARKSVILLE PVT. LTD. HAD IN HIS STATEMENT RECO R DED ON OATH U/S 132(4) PROVIDED COMPLETE DETAILS OF CASH HANDLED BY HIM FOR EKTA GROUP ALONGWITH QUANTIT Y, DATES, DETAILS OF CASH COLLECTED, NAME OF THE PERSON TO WHOM THE SAME WAS HANDED OVER ALONGWITH THE FINANCIAL YEARS/DATES TO WHICH THE CASH COLLECTED PERTAINED. ACCORDINGLY, ON THE BASIS OF THE AFORESAID DETAILS PROVIDED BY SHRI. DILIPBORADE IN HIS STAT EMENT RECORDED U/S 132(4), DATED 05.10.2015 THE A.O ADDED THE AFORESAID AMOUNT OF RS. 6 CRORE [ RS. 1.5 CRORE (+) RS. 4.5CRORE ] U/S 68 OF THE ACT. 50 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND N OTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE A.O DE HORS ANY INCRIMINATING MATERIAL HAD MADE AN ADDITION OF RS. 6 CRORE ON THE BASIS OF A STANDALONE STATEMENT OF SHRI. DILIPBORADE, THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT PAGE 62 AS SHRI. DILIP BORADE (SUPRA) WAS A KEY EMPLOYEE OF THE ASSESSEE COMPANY , AND THE ASSESSEE GROUP WA S HABITUALLY RECEIVING ON - MONEY ON SALE OF PROPERTIES, THEREFORE, IT COULD SAFELY BE PRESUMED THAT THE AFORESAID AMOUNT OF RS. 6 CRORE WAS RECEIVED BY THE ASSESSEE AS ON - MONEY ON SALE OF FLATS IN ITS PARKSVILLE PROJECT. ACCORDINGLY, THE CIT(A) REJECTED T HE CLAIM OF THE ASSESSEE THAT THE ADDITION OF RS. 6 CRORE ON THE BASIS OF A STANDALONE UNCORROBORATED STATEMENT OF SHRI. DILIP BORADE COULD NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. AT THE SAME TIME, THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR T AX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, S HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE DISALLOWANCE TO THE SAID EXTENT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE A.O BY APPLYING SEC. 115BBE OF THE ACT HAD ERRED IN NOT ALLOWING SET - OFF OF BUSINESS LOSS OF CURRENT YEAR OF RS. 8,67,72,453/ - AGAINST THE INCOME ASSESSED, THE SAME WAS ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SEC. 115BBE HAD CAME INTO EFFECT FROM 01.04.2017, THEREFORE, THE SAME WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSE FOR THE Y EAR IN QUESTION I.E A.Y 2014 - 15 . APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIPTS WERE HELD BY HIM AS BUSINESS INCOME AND NOT AN INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. PAGE 63 115BBE WOULD ALSO NOT BE APPLICABLE ON T HE SAID COUNT TOO. ACCORDINGLY, THE CIT(A)DIRECTED THE A.O TO ALLOW SET - OFF OF CURRENT YEARS BUSINESS LOSS AND BROUGHT FORWARD LOSSES AFTER DUE VERIFICATION. 51 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. BOTH THE LD . AUTHORISED REPRESENTATIVES FOR THE PARTIES ARE IN AGREEMENT ON THE POINT THAT THE FACTS AND THE ISSUE INVOLVED IN THE CAPTIONED APPEAL ARE THE SAME AS WERE THERE BEFORE US IN THE APPEAL OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR I.E A.Y 2013 - 14 I N ITA NO. 1734/MUM/2019. AS THE FA C TS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE ASSESSEE FOR A.Y 2014 - 15 IN ITA NO. 1735/MUM/2019 REMAINS THE SAME AS WERE THERE BEFORE US IN CONTEXT OF THE ISSUE IN HAND IN THE ASSESSEES APPEAL FOR THE IMMEDIATELY PR ECEDING YEAR I.E A.Y 2013 - 14 IN ITA NO. 1734/MUM/2019, THEREFORE, OUR ORDER THEREIN PASSED SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE PRESENT APPEAL. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID OBSERVATIONS WE ARE UNABLE TO PERSUADE OU RSELVES TO UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT HE HAD SUSTAINED THE ADDITION PERTAINING TO THE ALLEGED RECEIPT OF ON - MONEY BY THE ASSESSEE COMPANY ON SALE OF FLATS IN ITS PROJECT, VIZ. EKTA PARKSVILLE DURING THE YEAR IN QUESTION, VIZ. A.Y 201 4 - 1 5 . WE, THUS, SET ASIDE THE ORDER OF THE CIT(A) AND VACATE THE ADDITION TO THE EXTENT THE SAME WAS SUSTAINED BY HIM IN CONTEXT OF THE AFORESAID IMPUGNED RECEIPT OF ON - MONEY OF RS . 6 CRORE BY THE ASSESSEE COMPANY. THE GROUND OF APPEAL NO. 2 IS ALLOWED IN TERM S OF OUR AFORESAID OBSERVATIONS. 52 . AS WE HAVE CONCLUDED THAT NO PART OF ADDITION PERTAINING TO THE IMPUGNED AMOUNT OF ON - MONEY OF RS.6 CRORE CAN BE SUSTAINED PAGE 64 IN THE HANDS OF THE ASSESSEE, THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJUDICATING THE GROUNDS OF APPEAL NOS. 1 & 3 WHICH HAVING BEEN RENDERED AS ACADEMIC IN NATURE ARE LEFT OPEN. 5 3 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IN NATURE IS DISMISSED. 5 4 . THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS . (B).ITA NO. 2194/MUM/2019 (REVENUES APPEAL) 5 5 . WE SHALL NOW DEAL WITH THE APPEAL FILED BY THE REVENUE FOR A.Y 2014 - 15. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 6,00,00,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? ( II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 6,00,00,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTI CULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTI ES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST ADDITIONS MADE U/S 68, BY INVOKIN G PROVISIONS OF SECTION 115BBE? (V). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRE D? 5 6 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPT OF RS.6 CRORE U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT PAGE 65 FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBS ERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF T HE ACT IS AN INCLUSIVE DEFINITION. I T IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES TH US, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. ALSO , THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). LASTLY, THE REVENUE IS AGGRIEVED WITH THE DIRECTION OF THE CIT(A) TO T H E A.O TO ALLOW SET - OFF OF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68, WHICH AS STATED BY THE REVENUE IS CONTRARY TO THE PROVISIONS OF SECTION 115BBE. 5 7 . WE HAVE HEARD THE AUTHORISED R EPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL A S CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE PAGE 66 AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE P HONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP ENTITY O F THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHIL E DISPOSING OFF THE REVENUES APPEAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF TH E CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 5 8 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1735/MUM/2019 FOR A.Y 2014 - 15 CONCLUDED THAT NO PART OF THE ADDITION UPHELD BY THE CIT(A) W.R.T THE IMPUGNED AMOUNT OF ON - MONEY RECEIPTS IS LIABLE TO BE SUSTAINED , THEREFORE, THE GRIEVANCE OF T HE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISS ED. PAGE 67 5 9 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAS ERRED IN VACAT ING THE VIEW TAKEN BY THE A.O WHO AS PER THE MANDATE OF SEC. 115BBE OF THE ACT HAD DECLINED THE ASSESSEES CLAIM FOR SET - OFF OF THE BUSINESS LOSSES AGAINST THE ADDITIONS MADE U/S 68 OF THE ACT. AS IS DISCERNIBLE FROM THE RECORDS, THE A.O WHILE FRAMING THE ASSESSMENT HAD DECLINED THE ASSESSEES CLAIM FOR SET - OFF OF THE CURRENT YEAR BUSINESS LOSS OF RS. 8,67,72,453/ - AGAINST T HE INCOME ASSESSED. ON APPEAL, THE CIT(A) OBSERVED THAT AS THE PROVISIONS OF SEC. 115BBE HAD CAME INTO EFFECT FROM 01.04.2017, THE SAME, THUS, WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE FOR A.Y 2014 - 15. ALTERNATIVELY, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS HELD BY HIM TO BE IN THE NATURE OF A BUSINESS RECEIPT AND WAS NOT TO BE TREATED AS ITS INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. 115BBE ON THE SAID COUNT TOO WOULD NOT BE APPLICABLE. ACCO RDINGLY, THE CIT(A) ON THE BASIS OF HER AFORESAID OBSERVATIONS DISLODGED THE ABOVEMENTIONED VIEW OF THE A.O AND DIRECTED HIM TO ALLOW THE BUSINESS LOSS OF CURRENT YEAR AND BROUGHT FORWARD LOSSES AGAINST THE ASSESSED INCOME AFTER DUE VERIFICATION . 60 . AGGRIEVED WITH THE DIRECTIONS OF THE CIT(A) TO ALLOW THE BUSINESS LOSS OF CURRENT YEAR AND BROUGHT FORWARD LOSSES AGAINST THE ASSESSED INCOME AFTER DUE VERIFICATION, THE REVENUE HAS ASSAILED HER ORDER BEFORE US. BEFORE PROCEEDING ANY FURTHER, IT WOULD BE R ELEVANT TO CULL OUT SEC. 115BBE OF THE ACT, WHICH READS AS UNDER: SECTION 115BBE. TAX ON INCOME REFERRED TO IN SECTION 68 OR SECTION 69 OR SECTION 69A OR SECTION 69B OR SECTION 69C OR SECTION 69D. [(1) WHERE THE TOTAL INCOME OF AN ASSESSEE, PAGE 68 (A) INCLU DES ANY INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTION 69D AND REFLECTED IN THE RETURN OF INCOME FURNISHED UNDER SECTION 139; OR (B) DETERMINED BY THE ASSESSING OFFICER INCLUDES ANY INCOME REFERRED TO IN SEC TION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTION 69D, IF SUCH INCOME IS NOT COVERED UNDER CLAUSE (A), THE INCOME - TAX PAYABLE SHALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME - TAX CALCULATED ON THE INCOME REFERRED TO IN CLAUSE (A) AN D CLAUSE (B), AT THE RATE OF SIXTY PER CENT.; AND (II) THE AMOUNT OF INCOME - TAX WITH WHICH THE ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME REFERRED TO IN CLAUSE (I).] (2) NOTWITHSTANDING ANYTHING CONTAINE D IN THIS ACT, NO DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE 3524 [OR SET OFF OF ANY LOSS] SHALL BE ALLOWED TO THE ASSESSEE UNDER ANY PROVISION OF THIS ACT IN COMPUTING HIS INCOME REF ERRED TO IN CLAUSE (A) 3525 [AND CLAUSE (B)] OF SUB - SECTION (1).] AS OBSERVED BY US HEREINABOVE, THE AFORESAID SEC. 115BBE WAS MADE AVAILABLE ON THE STATUTE VIDE THE FINANCE ACT, 2012 W.E.F 01.04.2012. HOWEVER, THE EMBARGO AS REGARDS NOT ALLOWING OF ANY SET - OFF OF ANY LOSS WHILE COMPUTING THE ASSESSEES INCOME AS REFERRED TO IN CLAUSE (A) OF SUB - SECTION (1) TO SEC. 115BBE I.E INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 6 9B, SECTION 69C OR SECTION 69D , THAT WAS INCLUDED IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 139 OF THE ACT WAS MADE AVAILABLE ON THE STATUTE ONLY VIDE THE FINANCE ACT, 2016 I.EW.E.F 01.04.2017. FURTHER, THE LEGISLATURE IN ALL ITS WISDOM HAD THEREAF TER AS PER AN AMENDMENT TO SUB - SECTION (2) TO SEC. 115BBE THAT WAS MADE AVAILABLE ON THE STATUTE VIDE THE FINANCE ACT, 2018 W.R.E.F 01.04.2017 , HAD THEREIN EXTENDED THE AFORESAID RESTRICTION ALSO TO SET - OFF OF ANY LOSS WHILE COMPUTING THE ASSESSEES INCOME AS REFERRED TO IN CLAUSE (B) OF SUB - SECTION (1) TO SEC. 115BBE I.E INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTION 69D THAT WAS DETERMINED BY THE A.O AND DID NOT FORM PART OF THE RETURNED INCOME. BE THAT AS IT MAY, THE RESTRICTION ON SET - OFF OF ANY LOSS AS AGAINST AN ADDITION INTER ALIA MADE U/S 68 OF THE ACT HAD BEEN MADE AVAILABLE ON THE STATUTE ONLY PAGE 69 W.E.F 01.04.2017. WE, THUS, CONCUR WITH THE VIEW TAKEN BY THE CIT(A) THAT THE PROVISION OF SEC. 115BBE WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION I.EA.Y 2014 - 15. AT THIS STAGE, WE MAY HEREIN CLARIFY THAT THEAMENDMENT BROUGHT IN SUB - SECTION (2) OF SEC. 115BBE BY THE FINANCEACT, 2016 , WHEREBY SET - OFF OF LOSSES AGAINST INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTION 69D , WAS APPLICABLE PROSPECTIVELY I.E W.E.F 01.04.2017. OUR AFORESAID VIEW IS FORTIFIED BY THE ORDER OF THE ITAT, JAIPUR IN THE CASE OF ACIT, CENTRAL CIRCLE - 2, JAIPUR VS. SANJAY B AIRATHI GEMS LTD. (2017) 84 TAXMANN. COM 139 (JAIPUR) . ALTERNATIVELY, WE ALSO CONCUR WITH THE VIEW TAKEN BY THE CIT(A) THAT NOW WHEN THE ON - MONEY RECEIVED BY THE ASSESSEE ON SALE OF FLATS/SHOPS IN ITS PROJECT HAD BEEN HELD TO BE THE BUSINESS RECEIPTS OF TH E ASSESSEE WHICH ARE INSEPARABLE FROM ITS BUSINESS AS THAT OF A BUILDER AND DEVELOPER AND A RE NOT TO BE TREATED AS AN INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. 115BBE ON THE SAID COUNT TOO WOULD NOT STAND INVOKED IN THE CASE OF THE PRESENT ASSESSEE. WE, THUS, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS FIND NO INFIRMITY IN THE VIEW TAKEN BY THE CIT(A), WHO RIGHTLY OBSERVING THAT THE PROVISIONS OF SEC. 115BBE WOULD NOT BE ATTRACTED IN THECA S E OF THE ASSESSEE FOR THE YEAR IN QUESTION HAD DIRECTED THE A.O TO ALLOW THE BUSINESS LOSS OF CURRENT YEAR AND BROUGHT FORWARD LOSSES AGAINST THE ASSESSED INCOME OF THE ASSESSEE AFTER DUE VERIFICATION. ACCORDINGLY, WE HEREIN PRINCIPALLY UPHOLD THE AFORESAID VIEW TAKEN BY THE CIT(A) IN CONTEXT OF T HE ISSUE IN QUESTION. BEFORE PARTING, WE MAY HEREIN OBSERVE THAT AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1735/MUM/2019 FOR A.Y 2014 - 15 CONCLUDED THAT NO PART OF THE ADDITION UPHELD BY THE CIT(A) W.R.T THE IMPUGNED AMOUNT OF ON - PAGE 70 MONEY R ECEIPTS IS LIABLE TO BE SUSTAINED , THEREFORE, THE GRIEVANCE OF THE REVENUE IN HAND IS EVEN OTHERWISE RENDERED AS MERELY ACADEMIC IN NATURE . BE THAT AS IT MAY, THE GROUND OF APPEAL NO. ( I V) RAISED BY THE REVENUE IS DISMISSED. 61 . THE APPEAL FILED BY THE REV ENUE IS DISMISSED. 62 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1736/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2195/MUM/2019 (REVENUES APPEAL) A.Y 20 1 5 - 16 (A). ITA NO. 1736/MUM/2019 ( ASSESSEES APPEAL) 63 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE CAPTIONED ASSESSEE FOR A.Y 201 5 - 1 6 . THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF PROJECT OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING THE PROJECT COMPLETION METHOD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMIS SIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT RECEIVED ON - MONEY OF RS. 160 LAKHS WITHOUT APPRECIATING THE FACT THAT THE GROUP DIRECTOR MR. VIVEK MOHANANI OF APPELLANT DENIED FOR THE SAME. SHE OUGHT TO HAVE DELETED THE ADDITION. 3 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 160 LAKHS, WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS O FFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. PAGE 71 6 4 . BRIEFLY STATED, THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 2015 - 16 ON 29.09.2015, DECLARING AN INCOME RS. 2,29,20,150/ - . NOTICE UNDER SEC. 153A WAS ISSUED AND DULY SERVED UPON THE ASSESSEE FOR THE YEAR IN QUESTION I.E A.Y 2015 - 16. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153A WAS FILED BY THE ASSESSEE COMPANY ON 11.01.2017, DECLARING AN INCOME AS ORIGINALLY RETURNED OF RS. 2,29,20,150/ - SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSE E. 6 5 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT IN THE COURSE OF THE SEARCH PROCEEDINGS CONDUCED U/S 132 ON EKTA BHOOMI GROUP THE STATEMENT OF SHRI. DILIPBORADE WHO WAS AN EMPLOYEE OF THE ASSESE COMPANY, VIZ. M/S E KTA PARKSVILLE PVT. LTD. AND WAS ENGAGED IN LIASIONING AND HANDLING OF CASH ON THE INSTRUCTIONS OF SHRI. VIVEK MOHANANI, JOINT MANAGING DIRECTOR AND SHRI PRATEEK ARORA WAS RECORDED ON 05.10.2015 AT HIS RESIDENCE AT 107/4 SWAPANA CHS, SECTOR 1, RSC - 21, CHAR KOP, KANDIVILI WEST, MUMBAI, WHEREIN HE HAD ADMITTED THAT HE HAD HANDLED CASH FOR EKTA GROUP AND HAD PROVIDED COMPLETE DETAILS AS REGARDS THE SAME ALONGWITH THE RESPECTIVE DATES, WHICH INTER ALIA TO THE EXTENT RELATED BY THE A.O TO THE CASE OF THE ASSESS EE FOR THE YEAR IN QUESTION READ AS UNDER : SR. NO. DATE AMOUNT CASH COLLECTED FROM (NAME) CASH HANDED OVER TO REMARKS 4. F.Y 2014 - 15 80 LACS ON VARIOUS DATES COLLECTED FROM PARTY NAME NOT KNOWN THANE WEST FROM FLAT PURCHASERS. PRATIK ARORA PRATIK CAN ONLY EXPLAIN THIS TRANSACTION. 7. 25 TH DEC, 2014 55 LACS KAUSALCHEDDA 9892362551 KALINA EST. VIVEK MOHANANI VIVEK MOHANANI CAN ONLY EXPLAIN HER. SHRI PRATIK ARORA HAD GIVEN HIS VISITING CARD AS TOKEN OF PAGE 72 IDENTITY TO COLLECT CASH. 8. OCT 2014 25 LACS PARTY FROM HIRANANDANI POWAI. PRATIK ARORA PRATIK HAD CALLED FOR COLLECTION. PRATIK CAN ONLY EXPLAIN. ON BEING CONFRONT ED WITH THE AFORESAID STATEMENT OF SHRI . DILIP BORADE (SUPRA), SHRI. VIVEK MOHANANI, JT. MANAGING DIRECTOR OF THE ASSESSEE COMPANY IN HI S STATEMENT RECORDED BY THE DDIT ON 27.01.2016 DENIED THE SAME. HOWEVER, THE A.O ACTED UPON THE DETAILS PROVIDED BY SHRI. DILIP BORADE (SUPRA) IN HIS STATEMENT RECORDED UNDER SEC. 132(4), DATED 05.10.2015, FOR THE REASON THAT SHRI. DILIPBORADE (SUPRA)BEING AN EMPLOYEE OF THE ASSESSEE COMPANY, VIZ. M/S EKTA PARKSVILLE PVT. LTD. HAD IN HIS STATEMENT RECO R DED ON OATH U/S 132(4) PROVIDED COMPLETE DETAILS OF CASH HANDLED BY HIM FOR EKTA GROUP ALONGWITH QUANTITY, DATES, DETAILS OF CASH COLLECTED, NAME OF THE PE RSON TO WHOM THE SAME WAS HANDED OVER ALONGWITH THE FINANCIAL YEARS/DATES TO WHICH THE CASH COLLECTED PERTAINED. ACCORDINGLY, ON THE BASIS OF THE AFORESAID DETAILS PROVIDED BY SHRI. DILIPBORADE (SUPRA) IN HIS STATEMENT RECORDED U/S 132(4), DATED 05.10.2015 THE A.O ADDED THE AFORESAID AMOUNT OF RS 1.60 CRORE [ RS. 80 LAC (+) RS. 55 LAC (+) RS. 25 LAC ] U/S 68 OF THE ACT. 6 6 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS T HE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN PAGE 73 BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESS EE THAT THE A.O DE HORS ANY INCRIMINATING MATERIAL HAD MADE AN ADDITION OF RS. 1.60 CRORE ON THE BASIS OF A STANDALONE STATEMENT OF SHRI. DILIPBORADE, THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SHRI. DILIPBORADE (SU PRA) WAS A KEY EMPLOYEE OF THE ASSESSEE COMPANY , AND THE ASSESSEE GROUP WAS HABITUALLY RECEIVING ON - MONEY ON SALE OF PROPERTIES, THEREFORE, IT COULD SAFELY BE PRESUMED THAT THE AFORESAID AMOUNT OF RS. 1. 6 0 CRORE WAS RECEIVED BY THE ASSESSEE AS ON - MONEY ON SALE OF FLATS IN ITS PROJECT, VIZ. PARKSVILLE PROJECT. ACCORDINGLY, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE THAT THE ADDITION OF RS. 1.60 CRORE ON THE BASIS OF A STANDALONE UNCORROBORATED STATEMENT OF SHRI. DILIPBORADE COULD NOT BE SUSTAINED AND WA S LIABLE TO BE VACATED. AT THE SAME TIME, THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESS EE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% O F THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, S HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. AS REGARDS THE CLAIM OF THE ASSESSEE TH AT THE A.O BY APPLYING SEC. 115BBE OF THE ACT HAD ERRED IN NOT ALLOWING SET - OFF OF BROUGHT FORWARD BUSINESS LOSS OF RS. 8,67,72,453/ - AGAINST THE INCOME ASSESSED, THE SAME WAS ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SEC. 115BBE HAD CA ME INTO EFFECT FROM PAGE 74 01.04.2017, THEREFORE, THE SAME WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSE FOR THE YEAR IN QUESTION I.EA.Y 201 5 - 16 . APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIPTS WERE HELD BY HIM AS BUSINESS INCOME AND NOT AN INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. 115BBE WOULD ALSO NOT BE APPLICABLE ON THE SAID COUNT TOO. ACCORDINGLY, THE CIT(A)DIRECTED THE A.O TO ALLOW SET - OFF OF CURRENT YEARS BUSINESS LOSS AND BROUGHT FORWARD LOSSES AFTER DUE VERIFICATION. 6 7 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. BOTH THE LD. AUTHORISED REPRESENTATIVES FOR THE PARTIES ARE IN AGREEMENT ON THE POINT THAT THE FACTS AND THE ISSUE INVOLVED IN THE CAPTIONED APPEAL ARE THE SAME AS WERE THERE BEFORE US IN THE APPEAL OF THE ASSESSEE FOR A.Y 2013 - 14 IN ITA NO. 1734/MUM/2019. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE ASSESSEE FOR A.Y 201 5 - 1 6 IN ITA NO. 173 6 /MUM/2019 REMAINS THE SAME AS WERE THERE BEFORE US IN CONTEXT OF THE ISSUE IN HAND IN THE ASSESSEES APPEAL FOR A.Y 2013 - 14 IN ITA NO. 1734/MUM/2019, THEREFORE, OUR ORDER THEREIN PASSED AND ALSO THE REASONING ADOPTED SHALL APPLY MUTATIS MUTANDIS FOR THE PU RPOSE OF DISPOSAL OF THE PRESENT APPEAL. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID OBSERVATIONS WE ARE UNABLE TO PERSUADE OURSELVES TO UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT HE HAD SUSTAINED THE ADDITION PERTAINING TO THE ALLEGED RECEIPT OF ON - MONEY BY THE ASSESSEE COMPANY ON SALE OF FLATS IN ITS PROJECT, VIZ. EKTA PARKSVILLE DURING THE YEAR IN QUESTION, VIZ. A.Y 201 5 - 1 6 . WE, THUS, SET ASIDE THE ORDER OF THE CIT(A) AND VACATE THE ADDITION TO THE EXTENT THE SAME WAS SUSTAINED BY HIM IN CONTEXT OF TH E AFORESAID ALLEGED RECEIPT OF IMPUGNED AMOUNT OF ON - MONEY OF RS 1. 6 0 CRORE PAGE 75 BY THE ASSESSEE COMPANY. THE GROUND OF APPEAL NO.2 IS ALLOWED IN TERMS OF OUR AFORESAID O BSERVATIONS. 6 8 . AS WE HAVE CONCLUDED THAT NO PART OF ADDITION PERTAINING TO THE IMPUGNED AMOUNT OF ON - MONEY OF RS. 1. 6 0 CRORE CAN BE SUSTAINED IN THE HANDS OF THE ASSESSEE, THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJUDICATING THE GROUNDS OF APPEAL NOS. 1 & 3 WHICH HAVING BEEN RENDERED AS ACADEMIC IN NATURE ARE LEFT OPEN. 6 9 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IN NATURE IS DISMISSED. 70. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2195/MUM/2019 ( REVENUES APPEAL) 71 . WE SHALL NOW TAKE UP THE CROSS - APPEAL FILED BY THE REVENUE FOR A.Y 2015 - 16. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF R S. 1,60,00,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETIN G THE ADDITIONS OF RS. 1,60,00,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST ADDITIONS MADE U/S 68, BY INVOKING PROVISIONS OF SECTION 115BBE? PAGE 76 (V). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 72 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPT OF RS.1.60 CRORE U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FO UND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2 (12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE R ELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. FURTHER, THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). LASTLY, THE REVENUE IS AGGRIEVED WITH THE DI RECTION OF THE CIT(A) TO SET - OFF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68, WHICH AS STATED BY THE REVENUE IS CONTRARY TO THE PROVISIONS OF SECTION 115BBE. PAGE 77 73 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUS ED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDI NGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP ENTITY OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN TH E CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED T HAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 7 4 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 173 6 /MUM/2019 FOR A.Y 2 01 5 - 1 6 CONCLUDED THAT NO PART OF THE ADDITION UPHELD BY THE CIT(A) W.R.T THE IMPUGNED AMOUNT OF ON - MONEY RECEIPTS IS LIABLE TO BE SUSTAINED , THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO PAGE 78 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 7 5 . INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAS ERRED IN VACATING THE VIEW TAKEN BY THE A.O WHO HAD AS PER THE MANDATE OF SEC. 115BBE OF THE ACT DECLINED THE ASSESSEES CLAIM FOR SET - OFF OF THE BUSINESS LOSS ES AGAINST THE ADDITIONS MADE U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED WHILE DISPOSING OFF THE APPEAL IN THE ASSESSEES OWN CASE FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE ASSESSEES APPEAL FOR A.Y 2014 - 15 IN ITA NO. 21 94 /MUM/201 9 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE PROVISIONS OF SEC. 115BBE WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION AND HAD DIRECTED THE A.O TO ALLO W SET - OFF OF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68 OF THE ACT. THE GROUND OF APPEAL NO. (I V ) RAISED BY THE REVENUE IS DISMISSED. 7 6 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7 7 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1737/MUM/2019 (ASSESSEES APPEAL) PAGE 79 A.Y 2016 - 17 7 8 . WE SHALL NOW DEAL WITH THE APPEAL OF THE CAPTIONED ASSESSEE FOR A.Y 2016 - 17. THE A SSESSEE HAS ASSAILED THE IMPUGNED ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT RECEIVED ON - MONEY OF RS. 33.77 LACS WITHOUT APPRECIATING THE FACT THAT THE GROUP DIRECTOR MR. VIVEK MOHANANI OF THE APPELLANT DENIED FOR THE SAME. SHE OUGHT TO HAVE DELETED THE ADDITION OF RS. 33.77 LAKHS IN FULL . 3. ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION @ 20% OF THE ON - MONEY AMOUNT OF RS. 9 LAKHS IN THIS YEAR WITHOUT CONSIDERING THE FACT - THAT THE APPELLANT OFFERED THE INCOME @12% OF ON - MONEY OF RS . 9 LAKHS IN A.Y 2017 - 18. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF C OMPLETION OF PROJECT OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING THE PROJECT COMPLETION METHOD. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 46.77 LACS WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 5. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 7 9 . BRIEFLY STATED, THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR A.Y. 2016 - 17 ON 15.10.2016, DECLARING A LOS S OF (RS. 5,41,67,564/ - ). SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 80 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT IN THE COURSE OF THE SURVEY ACTION CONDUCED U/S 133A(1) AT THE SITE OFFICE OF EKTA TRIPOLIS, SIDHARTH NAGAR ROAD, ROAD NO. 2 & 9, NEAR MEGA MALL, OFF . LINK ROAD, GOREGAON WEST, MUMBAI ON 05.10.2015 C E RT A IN LOOSE PAPERS WERE FOUND AND IMPOUNDED AS ANNEXURE A - 1 PAGE NOS. 1 - 9 . STATEMENT OF SHRI HARDEEP S. BAJWA, SALES MANAGER FOR EKTA TRIPOLIS WAS RECORDED ON OATH U/S 131 ON 05.10.2015. ON BEING QUERIED AS PAGE 80 REGARDS THE CONTENT OF ANNEXURE A - 1 PAGE 3 AND 5 , IT WAS STATED BY HIM THAT THE SAME PERTAINED TO A PROPOSED DEAL CALCULATION FOR S HOP NO S . 29 AND 30 WHICH HE HAD NOTED DOWN (FOR THE PURPOSE OF UNDERSTANDING) AS WAS TELEPHONICALLY DICTATED BY A CLIENT WHOM HE HAD EARLIER ATTENDED AT VIRAR. IT WAS FURTHER STATED BY HIM THAT AS THE ASSESSEE COMPANY HAD A RULE OF NOT ACCEPTING CASH COMPONENT, THEREFORE, TH E PROPOSED DEAL WAS DECLINED AND DID NEVER SEE THE LIGHT OF THE DAY. HOWEVER, THE A.O WAS NOT INCLINED TO ACCEPT THE AFORESAID EXPLANATION OF THE ASSESSEE. H OLDING A CONVICTION THAT THE NOTINGS OF CASH COMPONENT ON THE AFORESAID IMPOUNDED DOCUMENT, VIZ. (I ). SHOP NO. 29: RS. 16.67 LACS; AND (II). SHOP NO. 30 : RS. 17.10 LACS PERTAINED TO THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE AS REGARDS ITS PARKSVILLE PROJECT BUT HAD NOT BEEN OFFERED FOR TAX , THE A.O, BROUGHT THE AGGREGATE SUM OF RS. 33.77 LACS [R S. 16.67 LAC (+) RS. 17.10 LACS] TO TAX U/S 68 OF THE ACT. FURTHER, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY OF RS. 4 LAC AS REGARDS A SHOP NO. 150 IN THE PROJECT EKTA PARKSVILLE, AGAINST WHICH NET INCOME @12% OF THE AMOUNT OF ON - MONEY WAS OFFERED FOR TAX BY IT IN THE COMPUTATION OF INCOME FOR THE YEAR IN QUESTION. ALSO, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY OF RS. 9 LAC W.R.T SALE OF SHOP NO. 158 IN ITS PROJECT, VIZ. PARKSVILLE PROJECT , AGAINST WH ICH IT HAD OFFERED NET INCOME @12% FOR TAX IN ITS COMPUTATION OF INCOME FOR A.Y 2017 - 18. HOWEVER, THE A.O WAS OF THE VIEW THAT THE ENTIRE AMOUNT OF ON - MONEY WAS LIABLE TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESEEE. ALSO, THE A.O REJECTED THE CLAIM OF THE ASSESSEE FOR ACCOUNTING OF THE ON - MONEY OF RS. 9 LAC PERTAINING TO SHOP NO. 158 IN PARKSVILLE PROJECT IN A.Y 2017 - 18. OBSERVING, THAT EVIDENCE AS REGARDS RECEIPT OF ON - MONEY OF RS. 9 LAC BY THE ASSESSEE HAD SURFACED IN THE COURSE PAGE 81 OF THE PROCEEDINGS C ONDUCTED DURING THE F.Y 2015 - 16, T H E A.O, THUS, WAS OF THE VIEW THAT THERE WAS NO JUSTIFICATION IN SUBJECTING THE SAME TO TAX IN A.Y 2017 - 18 I.E IN THE YEAR IN WHICH THE SALE TRANSACTION WAS REGISTERED AND REVENUE ARISING THEREFROM WAS RECOGNISED. ON THE B ASIS OF HIS AFORESAID OBSERVATIONS THE A.O AFTER ALLOWING DEDUCTION FOR 0.4 LAC (I.E 12% OF 4 LAC) THAT WAS ALREADY OFFERED FOR TAX BY THE ASSESSEE DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17, THEREIN MADE AN ADDITION OF RS. 46,37,000/ - [RS. 33,77,000/ - (+ ) R. 12,60,000/ - ] U/S 68 OF THE ACT. 81 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT THE FACTUM OF HAVING RECEIVED ON - MONEY OF RS. 13 LAC W.R. T SHOP NO. 150 AND SHOP NO. 158 IN THE PROJECT EKTA PARKSVILLE HAD BEEN ADMITTED BY SHRI.VIVEKMOHNANI, JT. MANAGING DIRECTOR OF THE ASSESSEE COMPANY. A S REGARDS THE ADDITION MADE BY THE A.O TOWARDS ON - MONEY OF RS. 33.77 LAC W.R.T SHOP NOS. 29 & 30, IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE GROUP WAS AS A MATTER OF PRACTICE RECEIVING ON - MONEY IN THE COURSE OF ITS BUSINESS OF SALE OF PROPERTIES. AS SUCH, THE CIT(A) WAS OF THE VIEW THAT THE STATEMENT OF SHRI. HARDEEP S. BAJWA THAT THE ASSESSEE COMPANY AS A MATTER OF RULE DID NOT RECEIV E CASH COMPONENT DID SOUND ABSURD. FURTHER, THE CIT(A) WAS OF THE VIEW THAT IN CASE THE PROPOSED DEAL W.R.T THE NOTING OF RS. 33.77 LACS HAD NEVER MATERIALISED, THEN, THERE WOULD HAVE BEENNO NEED ON THE PART OF SHRI. HARDEEP S. BAJWA TO HAVE REDUCED IT IN WRITING MUCH THE LESS RETAINED THE SAME. BACKED BY HIS AFORESAID OBSERVATIONS THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE THAT THE A.O WAS IN ERROR IN MAKING THE IMPUGNED ADDITION ON THE BASIS OF UNSUBSTANTIATED DOCUMENTARY EVIDENCE. AT THE SAME TIME, TH E CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX WAS PRINCIPALLY ACCEPTED PAGE 82 BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. O BSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY T HE ASSESSEE, THE CIT(A) SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE A.O BY APPLYING SEC. 115BBE OF THE ACT HAD ERRED IN NOT ALLOW ING SET - OFF OF THE CURRENT BUSINESS LOSS OF RS. 5,41,67,564/ - AGAINST THE INCOME ASSESSED, THE SAME WAS ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SEC. 115BBE HAD CAME INTO EFFECT FROM 01.04.2017, THEREFORE, THE SAME WOULD NOT BE APPLI CABLE TO THE CASE OF THE ASSESSE FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17 . APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIPTS WERE HELD BY HER AS BUSINESS INCOME AND NOT AN INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SE C. 115BBE WOULD ALSO NOT BE APPLICABLE ON THE SAID COUNT TOO. ACCORDINGLY, THE CIT(A) DIRECTED THE A.O TO ALLOW SET - OFF OF THE CURRENT YEARS BUSINESS LOSS AND BROUGHT FORWARD LOSSES AFTER DUE VERIFICATION. 82 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDE R OF THE CIT(A) IN APPEAL BEFORE US. THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE ASSAILED THE ADDITIONS MADE BY THE A.O ON THE BASIS OF ROUGH NOTINGS IN CERTAIN LOOSE SHEETS VIZ ANNEXURE A - 1 PAGE 3 AND 5 IMPOUNDED IN THE COURSE OF SURVEY ACTION CONDUC T ED U/S 133A(1) AT THE SITE OFFICE OF EKTA TRIPOLIS, SIDHARTH NAGAR ROAD, ROAD NO. 2 & 9, NEAR MEGA MALL, OFF . LINK ROAD, GOREGAON WEST, MUMBAI ON 05.10.2015. IT WAS SUBMITTED BY THE LD. A.R THAT SHRI PAGE 83 HARDEEP S. BAJWA, SALES MANAGER FOR EKTA TRIPOLIS IN HIS STATEMENT RECORDED ON OATH U/S 131 ON 05.10.2015 HAD CATEGORICALLY STATED THAT THE IMPUGNED NOTINGS PERTAINED TO A PROPOSED DEAL CALCULATION FOR S HOP NOS. 29 AND 30 WHICH HE HAD NOTED DOWN (FOR THE PURPOSE OF UNDERSTANDING) AS WAS T ELEPHONICALLY DICTATED BY A CLIENT WHOM HE HAD EARLIER ATTENDE D AT VIRAR. IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH THE AUTHOR OF THE IMPUGNED NOTINGSI.E SHRI. HARDEEEP S . BAJWA HAD IN HIS STATEMENT RECORDED U/S 131 ON 05.10.2015 CLARIFIED THAT THE IMPUGN ED DEAL HAD NEVER MATERIALISED, HOWEVER, THE A.O MERELY ON THE BASIS OF THE SAID DUMB NOTINGS HAD HELD THE SAME AS ON - MONEY RECEIVED BY THE ASSSSEE ON SALE OF SHOP NOS. 29 AND 30. IT WAS SUBMITTED BY THE LD. A.R THAT THE IMPUGNED ADDITION OF RS. 33.77 LACS [SHOP NO. 29: RS. 16.67 LACS (+) SHOP NO.30: RS.17.10 LACS ] MADE BY THE A.O ON THE BASIS OF THE DUMB AND UNSUBSTANTIATED NOTINGS CANNOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. AS REGARDS THE ADDITION MADE BY THE A.O TOWARDS ON - MONEY OF RS. 4 LAC AND RS. 9 LAC THAT WAS RECEIVED W.R.T SHOP NO S . 150 & 158, RESPECTIVELY, IN THE PROJECT EKTA PARKSVILLE, IT WAS SUBMITTED BY THE LD. A.R THAT THE ASSESSEE HAD OFFERED NET INCOME @12% OF THE AMOUNT OF SAID ON - MONEY FOR TAX IN ITS COMPUTATION OF INCOME FOR A.Y 2016 - 17 AND A.Y 2017 - 18 , RESPECTIVELY, I.E THE YEAR S IN WHICH THE REGISTRATION OF THE SHOP S IN QUESTION WAS DONE AND THE SALE SWERE RECOGNISED IN THE BOOKS OF ACCOUNT. IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH THE CIT(A) HAD PRINCIPALLY ACCEPTED THE ASSESSEES CLAIM THAT THE ENTIRE AMOUNT OF ON - MONEY COULD NOT BE ASSESSED AS ITS INCOME, HOWEVER, S HE HAD ERRED IN WORK ING OUT THE INCOME ELEMENT AT AN EXORBITANT FIGURE I.E @ 20% OF THE AMOUNT OF ON - MONEY AND BRINGING THE SAME TO TAX IN THE YEAR OF RECEIPT ITSELF I.E A.Y 2016 - 17. PAGE 84 83 . PER CONTRA, THE LD. D.R RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE NOTINGS IN THE IMPOUNDED DOCUMENT, VIZ. ANNEXURE A - 1 PAGE 3 AND 5 CLEARLY REVEALED THE RECEIPT OF ON - MONEY BY THE ASSESSEE ON SALE OF SHOPS NOS. 29 AND 30, THEREFORE, THE A.O HAD RIGHTLY MADE ADDITION W.R.T THE ON - MONEY SO RECEIVED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT THE CIT(A) HAD ERRED IN REST RICTING THE ADDITION TO 20% OF THE AMOUNT OF ON - MONEY OF RS. 33.77 LAC RECEIVED BY THE ASSESSEE. AS REGARDS THE ON - MONEY OF RS. 13 LAC [SHOP NO. 150: RS. 4 LAC (+) SHOP NO. 158 : RS. 9 LAC] IT WAS SUBMITTED BY THE LD. D.R THAT THE CIT(A) HAD THOUGH RIGHTLY HELD THAT THE SAME WAS LIABLE TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN THE YEAR OF RECEIPT I.EA.Y 2016 - 17 , BUT AT THE SAME TIME S HE HAD ERRED IN SCALING DOWN THE ADDITION TO 20% OF THE AMOUNT OF THE ON - MONEY. 84 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS . WE SHALL FIRST DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE CIT(A) HAD ERRED IN HOLDING THAT THE ASSESSEE COMPANY HAD RECEIVED ON - MONEY OF RS. 33.77 LACS LOOSING SIGHT OF THE FACT THAT SHRI. VIVEK MOHANANI, DIRECTOR OF THE ASSESSEE COMPANY HAD CATEGO RICALLY DENIED OF HAVING RECEIVED ANY SUCH AMOUNT. AS OBSERVED BY US HEREINABOVE, IN THE COURSE OF THE SURVEY ACTION CONDUC T ED U/S 133A(1) AT THE SITE OFFICE OF EKTA TRIPOLIS, SIDHARTH NAGAR ROAD, ROAD NO. 2 & 9, NEAR MEGA MALL, OFF . LINK ROAD, GOREGAON WE ST, MUMBAI ON 05.10.2015 CERTAIN LOOSE PAPERS WERE FOUND AND IMPOUNDED AS ANNEXURE A - 1 PAGE NOS. 1 - 9 . STATEMENT OF SHRI HARDEEP S. BAJWA, SALES MANAGER FOR EKTA PAGE 85 TRIPOLIS WAS RECORDED ON OATH U/S 131 ON 05.10.2015. ON BEING QUERIED AS REGARDS THE CONTEN T S OF ANNEXURE A - 1 PAGE 3 AND 5 , IT WAS STATED BY HIM THAT THE SAME PERTAINED TO A PROPOSED DEAL CALCULATION FOR S HOP NOS. 29 AND 30 WHICH HE HAD NOTED DOWN (FOR THE PURPOSE OF UNDERSTANDING) AS WAS TELEPHONICALLY DICTATED BY A CLIENT WHOM HE HAD ATTEND ED AT VIRAR. IT WAS FURTHER STATED BY HIM THAT AS THE ASSESSEE COMPANY HAD A RULE OF NOT ACCEPTING CASH COMPONENT THUS THE PROPOSED DEAL WAS DECLINED AND DID NEVER SEE THE LIGHT OF THE DAY. HOWEVER, THE A.O NOT FINDING FAVOUR WITH THE AFORESAID EXPLANATION OF SHRI. HARDEEP S. BAJWA AND BEING OF THE VIEW THAT THE NOTINGS OF CASH COMPONENT IN THE AFORESAID IMPOUNDED DOCUMENT, I.E ANNEXURE A - 1 PAGE 3 AND 5 REFERRED TO THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE W.R.T SALE OF ITS SHOPS, VIZ. SHOP NO. 29 : R S. 16.67 LACS; AND SHOP NO. 30 : RS. 17.10 LACS IN ITS PARKSVILLE PROJECT BUT HAD NOT BEEN OFFERED FOR TAX THUS, BROUGHT THE AGGREGATE SUM OF RS. 33.77 LACS [RS. 16.67 LAC (+) RS. 17.10 LACS] TO TAX IN THE HANDS OF THE ASSESEE COMPANY U/S 68 OF THE ACT. 8 5 . IT IS IN THE BACKDROP OF THE AFORESAID FACTS THAT WE SHALL HEREIN ADJUDICATE AS TO WHETHER OR NOT THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT THE ASSESSEE HAD RECEIVED ON - MONEY OF RS. 33.77 LACS CAN BE SUSTAINED. FOR A FAIR APPRECIATION OF THE FACTS P ERTAINING TO THE ISSUE IN HAND, WE HEREIN CULL OUT THE RELEVANT EXTRACT OF THE STATEMENT OF SHRI. HARDEEP S. BAJWA, SALES MANAGER OF EKTA TRIPOLIS, WHO ADMITTEDLY HAD AUTHORED THE NOTINGS OF THE IMPOUNDED DOCUMENT, I.E ANNEXURE A - 1 PAGE 3 AND 5 , WHICH REA DS AS UNDER: Q.15 YOUR ATTENTION IS HEREBY DRAWN ON PAGE 3 AND 5 OF ANNEXURE A1. PLEASE GO THROUGH THE SAME AND OFFER YOUR COMMENTS. ANS. I WOULD LIKE TO EXPLAIN DETAIL THE ACTUAL SCENARIO FOR THE PAGE 3 AND PAGE NO. 5. I WAS SHIFTED TO EKTA TRIP[OLIS SINCE NOVEMBER 2014 AND A CLIENT WHOM I HAD ATTENDED AT PAGE 86 VIRAR WAS TELEPHONICALLY DICTATING A PROPOSED DEAL CALCULATION FOR SHOP NO. 29 AND 30 WHILE I WAS OPERATING FROM EKTA TRIPOLIS THIS IN TURN WAS DULY DECLINED KEEPING IN MIND THE COMPANY RULE AGAINST THE CASH COMPONENT. THIS NOTE WAS WRITTEN IN MY DIARY WHILE TALKING TO THE CLIENT ON THE PHONE TO UNDERSTAND HIS REQUEST. AS IS DISCERNIBLE FROM THE AFORESAID STATEMENT OF SHRI. HARDEEP S. BAJWA THAT WAS RECORDED U/S 131 ON 05.10.2015, HE HAD CA TEGORICALLY STATED THAT THE IMPUGNED NOTINGS OF ANNEXURE A - 1 PAGE 3 AND 5 WERE THE CALCULATIONS PERTAINING TO A PROPOSED DEAL FOR SHOP NOS. 29 & 30 WHICH A CLIENT WHOM HE PRIOR TO BEING SHIFTED TO EKTA TRIPOLIS HAD ATTENDED HAD DICTATED ON TELEPHONE. IT WAS STATED BY MR. HARDEEP S. BAJWA THAT HE HAD JOTTED DOWN THE DETAILS ONLY FOR THE PURPOSE OF UNDERSTANDING WHAT THE PROPOSED CUSTOMER WAS TRYING TO TELEPHONICALLY CONVEY. IT WAS FURTHER STATED BY MR. HARDEEP S. BAJWA THAT THE IMPUGNED DEAL WAS DECLINED B Y THE ASSESSEE COMPANY AND THUS HAD NOT MATERIALISED. SHRI. VIVEK MOHANANI, DIRECTOR OF THE ASSESSEE COMPANY ON BEING CONFRONTED WITH THE IMPUGNED NOTINGS RECORDED IN ANNEXURE A - 1 PAGE 3 AND 5 HAD CATEGORICALLY DENIED OF RECEIPT OF THE AFORESAID AMOUNTS B Y THE ASSESSEE COMPANY. HOWEVER, THE A.O NEITHER BEING INSPIRED BY THE EXPLANATION OF SHRI. HARDEEP S. BAJWA, AUTHOR OF THE IMPUGNED NOTINGS NOR BY THE DENIAL BY SHRI. VIVEK MOHANANI (SUPRA) OF RECEIPT OF THE IMPUGNED AMOUNTS BY THE ASSESSEE COMPANY ,THEREIN HELD THAT THE IMPUGNED NOTINGS REFERRED TO THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE COMPANY W.R.T SHOP NOS. 29 & 30 OF ITS PROJECT, VIZ. PARKSVILLE PROJECT . ON A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE PRIMARY ISSUE THAT HAD WEIGHED IN THE MIND OF THE A.O WHILE REJECTING THE CLAIM OF THE ASSESSEE THAT IT HAD NOT RECEIVED THE IMPUGNED AMOUNTS AS ON - MONEY WAS THAT THE ASSESSEE COULD NOT PRODUCE ANY OTHER DOCUMENT AS A CORROBORATIVE EVIDENCE WHICH WOULD PROVE ITS CLAIM THAT CASH WAS NOT REC EIVED IN THE ABOVE PAGE 87 TRANSACTION AND THE SAME WAS ONLY A PROPOSAL. IN OUR CONSIDERED VIEW, THE VERY BASIS FOR DRAWING OF ADVERSE INFERENCES AND PRESUMING RECEIPT OF ON - MONEY BY THE ASSESSEE COMPANY IS FALLACIOUS. AS OBSERVED BY US HEREINABOVE, SHRI. HARPEEP S. BAJWA, AUTHOR OF THE IMPUGNED NOTINGS OF ANNEXURE A - 1 PAGE 3 AND 5 HAD CLEARLY EXPLAINED THE CIRCUMSTANCES UNDER WHICH THE NOTINGS WERE MADE BY HIM AND ALSO STATED THAT THE IMPUGNED DEAL HAD THEREAFTER NOT MATERIALISED. ALSO,SHRI. VIVEK MOHANANI, DIRE CTOR ON BEING CONFRONTED WITH THE IMPUGNED NOTINGS HAD CATEGORICALLY DECLINED OF RECEIPT OF ANY SUCH AMOUNT BY THE ASSESSEE COMPANY. IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE UNABLE TO FIND OURSELVES IN AGREEMENT WITH THE A.O WHO WITHOUT DISLODGING TH E EXPLANATION GIVEN BY SH. HARDEEP S. BAJWA IN HIS STATEMENT RECORDED U/S 131 , AND DISPENSING WITH THE DISLODGING OF THE DENIAL OF SHRI. VIVEK MOHANANI (SUPRA) AS REGARDS RECEIPT OF ANY SUCH AMOUNT BY THE ASSESSEE COMPANY, HAD MERELY GONE BY THE DUMB NOTIN GS OF THE IMPOUNDED DOCUMENTS, VIZ. ANNEXURE A - 1 PAGE 3 AND 5 AND HAD CONCLUDED THAT THE ASSESSE HAD RECEIVED THE IMPUGNED AMOUNTS THEREIN MENTIONED AS ON - MONEY W.R.T ITS SHOP NOS. 29 & 30. NOT ONLY THAT, WE ARE UNABLE TO COMPREHEND THAT AS TO HOW THE A.O COULD HAVE EXPECTED THE ASSESSEE TO PRODUCE DOCUMENTS WHICH WOULD CORROBORATE THAT CASH WAS NOT RECEIVED IN THE IMPUGNED TRANSACTION AND THE SAME WAS ONLY A PROPOSAL. WE HOLD A STRONG CONVICTION THAT IN CASE THE EXPLANATION GIVEN BY THE ASSESSEES EMPLOYE E WHO HAD MADE THE IMPUGNED NOTINGS AND THE DENIAL OF SHRI. VIVEK MOHANANI (SUPRA) OF RECEIPT OF THE IMPUGNED AMOUNT BY THE ASSESSEE COMPANY DID NOT INSTILL ANY CONFIDENCE WITH THE A.O, THEN, IT WAS FOR HIM TO PLACE ON RECORD MATERIAL TO DISPROVE THE AFORE SAID EXPLANATION /STATEMENT. OUR AFORESAID VIEW IS SUPPORTED PAGE 88 BY THE JUDGMENT OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. TARA CHAND MANIPAL (2016) 65 TAXMANN.COM 29 (CAL). IN ITS SAID ORDER IT WAS HELD BYTHE HIGH COURT THAT ADDITION MADE TO THE ASSESSEES INCOME MERELY ON THE BASIS OF PAPERS SEIZED FROM POSSESSION OF ASSESSEES BROTHER WAS UNJUSTIFIED WHEN THE MATERIAL SOUGHT TO BE RELIED ON WAS NOT CORROBORATED. ALSO, RELIANCE IS PLACED ON THE ORDER OF THE ITAT, JODHPUR IN THE CASE OF J.R .C B H ANDARI VS. ACIT (2003) 79 TTJ 1 (JD) . IT WAS HELD BY THE TRIBUNAL THAT IN THE ABSENCE OF ANY IOTA OF EVIDENCE IN RESPECT OF RECEIPT OF THE AMOUNTS MENTIONED IN THE ENTRY NOTED ON A LOOSE SHEET WHICH WAS FOUND IN THE POSSESSION OF A THIRD PERSON, ADDITION CANNOT BE MADE IN THE HANDS OF AN ASSESSEE. BE THAT AS IT MAY, AS THE A.O H AD FAILED TO SUBSTANTIATE THE RECEIPT OF THE IMPUGNED AMOUNTS BY THE ASSESSE COMPANY BY PLACING ON RECORD ANY MATERIAL THUS, THE PRESUMPTION ON HIS PART AS REGARDS RECEIPT OF ON - MONEY BY THE ASSESSEE CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. ACCORDI NGLY, WE HEREIN SET - ASIDE THE ORDER OF THE CIT(A) AND VACATE THE ADDITION TO THE EXTENT SUSTAINED BY HIM AS REGARDS THE IMPUGNED ON - MONEY OF RS. 33.77 LAC THAT WAS MADE BY THE A.O. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE I S ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 8 6 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HA D ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 46.77 LACS WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS WAS OFFERED BY THEASSESSEE . AS THE ADVERSE INFERENCES DRAWN BY THE LOWER AUTHORITIES AS REGARDS RECEIPT OF ALLEGED ON - MONEY OF RS. 33.77 LAC W.R.T SHOP NOS. 29 & 30 HAD BEEN VACATED BY US THUS, THE GRIEVANCE OF THE ASSESSEE PERTAINING TO QUANTIFICATION OF THE ADDITION TO THE SAID EXTENT THE SAME WAS PAGE 89 SUSTAINED BY THE CIT(A) HAVING BEEN RENDERED AS ACADEMIC IN NATURE, WE , THEREFORE REFRAIN FROM ADVERTING TO AND ADJUDICATING THE SAME. AS REGARDS TH E GRIEVANCE OF THE ASSESSEE TO THE EXTENT THE SAME SURVIVES AS REGARDS ESTIMATION BY THE CIT(A ) OF THE PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 13 LAC [SHOP NO. 150 : RS. 4 LAC (+) SHOP NO. 158 : RS. 9 LAC], WHICH AS CLAIMED BY THE ASSESSEE IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF THE AMOUNT ON - MONEY AS WAS OFFERED BY IT, WE FND THAT THE FACTS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDINGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTA TIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE SAID ISSUE IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @1 5% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 13 LACS. THE GROUND OF APPEAL NO. 4 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 8 7 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION W.R.T THE INCOME ELEMENT OF THE AMOUNT OF ON - MONEY AMOUNT OF RS. 9 LAKHS DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAD OFFERED THE INCOME ARISING THEREFROM IN ITS COMPUTATION OF INCOME FOR A.Y 2017 - 18. ADMITTEDLY, THE INCRIMINATING MATERIAL SEIZED IN THE COURSE OF THE SEARCH PROCEEDINGS INTER ALIA REVEALED THAT THE ASSESS EE DURING PAGE 90 THE YEAR IN QUESTION HAD RE C EIVED ON - MONEY OF RS. 9 LAC ON SALE OF SHOP NO. 158 IN ITS PROJECT, VIZ. PARKSVILLE. NET INCOME @12% OF THE AMOUNT OF THE ON - MONEY OF RS. 9 LAC WAS OFFERED FOR TAX BY THE ASSESSEE IN ITS COMPUTATION OF INCOME FOR A.Y 2017 - 18, I.E THE YEAR IN WHICH THE REGISTRATION OF THE SHOP IN QUESTION WAS DONE AND THE SALE WAS RECOGNISED IN THE BOOKS OF ACCOUNT . HOWEVER, THE A.O WAS OF THE VIEW THAT THE ON - MONEY OF RS. 9 LAC RECEIVED BY THE ASSESSEE W.R.T THE AFORESAID S HOP NO. 158 WAS LIABLE TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESEEE IN THE YEAR OF RECEIPT ITSELF. IT WAS OBSERVED BY THE A.O THAT AS THE EVIDENCE OF RECEIPT OF ON - MONEY OF RS. 9 LAC HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS CONDUCTED DURING THE F.Y 2 015 - 16, THEREFORE, THERE WAS NO JUSTIFICATION IN SUBJECTING THE SAME TO TAX IN A.Y 2017 - 18 I.E IN THE YEARS IN WHICH THE SALE TRANSACTIONS WERE REGISTERED AND REVENUE ARISING THEREFROM WAS RECOGNISED . ON APPEAL, THOUGH THE CIT(A) RESTRICTED THE ADDITION AS REGARDS THE ON - MONEY OF RS. 9 LAC THAT WAS RECEIVED BY THE ASSESSEE W.R.T SHOP NO. 158 (SUPRA) TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN SUCH RECEIPTS, HOWEVER, HE CONCURRED WITH THE VIEW TAKEN BY THE A.O THAT THE SAID INCOME WAS TO BE SUBJECTED TO TAX DURING THE YEAR OF RECEIPT ITSELF I.E A.Y 2016 - 17. BEFORE US, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD, THEREFORE, THE INCOME ELEMENT PERTAINING TO THE AMOUNT OF ON - MONEY OF RS. 9 LAC RECEIVED W.R .T SHOP NO. 158 WAS RIGHTLY OFFERED FOR TAX IN THE YEAR IN WHICH REGISTRATION OF THE SAID SHOP WAS DONE AND THE PROJECT IN QUESTION, VIZ. PARKSVILLE WAS COMPLETED. IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH THE CLAIM TO THE SAID EFFECT W A S RAISED BY WAY OF A SPECIFIC GROUND OF APPEAL BEFORE THE CIT(A) HOWEVER, HE HAD NO T PAGE 91 ADJUDICATED UPON THE SAME ON THE GROUND THAT IT WAS NOT BEING PRESSED BY THE ASSESSEE. 8 8 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID ISSUE IN THE BACKDROP OF THE OBSERV ATIONS OF THE LOWER AUTHORITIES. IT IS THE CLAIM OF THE ASSESSEE THAT AS IT WAS CONSISTENTLY FOLLOWING A PROJECT COMPLETION METHOD FOR ITS PROJECT, VIZ. PARKSVILLE, THEREFORE, THE INCOME PERTAINING TO ON - MONEY THAT WAS RECEIVED W.R.T SALE OF SHOP NO. 9 W A S RIGHTLY OFFERED FOR TAX IN THE PERIOD RELEVANT TO A.Y 2017 - 18 I.E WHEN THE SALE AGREEMENT WAS REGISTERED AND THE PROJECT W A S COMPLETED. IN OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESP ONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD B EEN ACCOUNTED FOR OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND S OF APPEAL NO S . 2 & 3 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATI ONS . 8 9 . THE GROUND OF APPEAL NO. 5 BEING GENERAL IN NATURE IS DISMISSED AS NOT PRESSED. 90 . THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. M/S EKTA SUPREME CORPORATION : PAGE 92 ITA NO. 1738/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2202/MUM/2019 (REVENUES APPEAL) A.Y 2014 - 15 (A ). ITA NO. 1738/MUM/2019 (ASSESSEES APPEAL) 91 . WE SHALL FIRST TAKE UP THE APPEAL FILED BY THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SUPREME CORPORATION FOR A.Y 2014 - 15. THE ASSESSEEHAS ASSAILED THE IMPUGNED ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION @ 20% OF THE ON - MONEY IN THIS YEAR WITHOUT CONSIDERING THE FACT - THAT THE APPELLANT OFFERED THE INCOME OF RS. 40.49 LAKHS @12% OF ON - MONEY OF RS.337.39 LAKHS IN A.Y 2016 - 17 WHEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED IN P&L A/C. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 337.39 LAKHS WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW G ROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 92 . BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER HAD FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 2014 - 15 ON 30.09.2014, DECLARING AN INCOME OF R S. 1,70,05,422/ - . SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL PERTAINING TO THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SUPREME CORPORATION WAS FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS. N OTICE U/S 153C WAS ISSUED AND DULY SERVED UPON THE ASSESSEE COMPANY FOR THE YEAR IN QUESTION . RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153 C WAS FILED BY THE ASSESSEE PAGE 93 CO MPANY ON 12.01.2017, DECLARING ITS INCOME AS ORIGINA LLY RETURNED AT RS. 1,70,05,422/ - . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 93 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE SEIZED MATERIAL , VIZ LOOSE PAPERS FOUND FR OM THE RESIDENCE OF SHRI. NARESH KALANI MADE A MENTION OF SALE OF 6 FLATS NAMELY, FLAT NOS. 801, 901, 1001, 1101, 1201 & 13/1401. ON A PERUSAL OF THE DETAILS IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY W.R.T ITS PROJECT EUDORA , AS UNDER: ASSESSMENT YEAR AMOUNT (IN LACS) FLAT NO 2014 - 15 RS. 337.39 901 2015 - 16 RS. 165.17 RS. 398.84 1001 1101 2016 - 17 RS. 265.00 1201 TOTAL RS.1164.00 ON BEING QUERIED THAT AS TO WHY THE AFORESAID AMOUNT OF ON - MONEY MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPTS FOR THE YEAR IN QUESTION, IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE GROSS AMOUNT OF ON - MONEY OF RS. 1164 LAC AMOUNTING TO RS. 139.71 LACS WAS OFFERED FOR TAX IN ITS COMPUTATION OF INCOME FOR A.Y 2016 - 17. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO TREATED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 337.39 LAC RECEIVED BY THE ASSESSEE DURING T HE YEAR IN QUESTION AS AN UNACCOUNTED RECEIPT U/S 68 OF THE ACT. PAGE 94 94 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE C IT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15%OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIF ICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. 9 5 . AG GRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEI PT AT 20% OF RS. 337.39 LAKHS WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF THE SAID ON - MONEY RECEIPTS AS WAS OFFERED BY THE ASSESSEE IS CONCERNED, WE F I ND THAT THE FACTS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFO RE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDINGLY, OUR ORDER PAGE 95 PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE ISSUE IN HAND IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED I N THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 337.39 LACS. THE GROUND OF APPEAL NO. 3 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS . 9 6 . AS NOTICED BY US HEREINABOVE, THE A.O HAD INTER ALIA CALLED UPON THE ASSESSEE TO EXPLAIN THAT AS TO WHY THE AMOUNT OF ON - MONEY OF RS. 337.39 LAC RECEIVED BY IT W.R.T FLAT NO. 901 IN ITS PROJECT, VIZ. EUDORA MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPT IN T HE YEAR OF RECEIPT ITSELF I.E A.Y 2014 - 15. IN REPLY, IT WAS INTER ALIA SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE AMOUNT OF ON - MONEY OF RS. 337.39 LAC (SUPRA) WAS OFFERED FOR TAX IN ITS COMPUTATION OF INCOME FOR A.Y 2016 - 17. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 337.39 LAC RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS AN UNACCOUNTED RECEIPT U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) TH OUGH FOUND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT THEREIN EMBEDDED, HOWEVER, SHE DID NOT DISLODGE THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF TH E ON - MONEY I.E IN THE YEAR OF RECEIPT ITSELF . 9 7 . BEFORE US, THE ASSESSEE HAS ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THAT THE ON - MONEY WAS TO BE PAGE 96 BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH TE PARTIES IN CONTEXT OF THE ISSUE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPT. I N OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRAN SACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN ACCOUNTED FO R OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UND ISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.EA.Y 2014 - 15 TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND S OF APPEAL NO S . 1 AND 2 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 9 8 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IS DISMISSED AS NOT PRESSED. PAGE 97 9 9 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2202/MUM/2019 (REVENUE S APPEAL) 100 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 201 4 - 1 5 . THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 3,37,39,000/ -- MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 3, 37,39,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 101 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEI PTS OF RS. 337.39 LACS U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHE ETS AND IN THE DATA RETRIVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE PAGE 98 DEFINITION. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. FURTHER, THE REVENUE IS AGGRIEVED WITH THE CONFINING OF THE ADDITION OF THE ON - MONEY RECEIPTS AT 20% OF THE ENTIRE AMOUNT BY THE CIT(A). 102 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTH ORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLU DING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP ENTITY OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN THE PAGE 99 CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE R EVENUE ARE DISMISSED. 103 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 173 8 /MUM/2019 FOR A.Y 2014 - 15 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN EMBEDDED ,AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTI NG THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. ( I V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 104 . THE APPEAL FILED BY THE REVENUE IS DIS MISSED. 105 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1739/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2203/MUM/2019 (REVENUES APPEAL) A.Y 2015 - 16 (A ). ITA NO. 1739/MUM/2019 (ASSESSEES APPEAL) : PAGE 100 106 . WE SHALL NOW TAKE UP THE APPEAL OF THE CAPTIONED ASSESSEE FOR A.Y 2015 - 16. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITIO N ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION @ 20% OF THE ON - MONEY IN THIS YEAR WITHOUT CONSIDERING THE FACT - THAT THE APPELLANT OFFERED THE INCOME OF RS. 67.68 LAKHS @12% OF ON - MONEY OF RS.564.01 LAKHS IN A.Y 2016 - 17 WHEN THE PROJECT WAS COMPLETED AND SALE WAS RECOGNIZED IN P&L A/C. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIO NER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 564.01 LAKHS WHICH IS ON HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEN D, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 10 7 . BRIEFLY STATED, THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 2015 - 16 ON 26.09.2015, DECLARING A N INCOME OF RS. 21,22,88,960/ - . SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL PERTAINING TO THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SUPREME CORPORATION WAS FOUND IN THE COURSE OF THE S EARCH PROCEEDINGS. NOTICE U/S 153C WAS ISSUED AND DULY SERVED UPON THE ASSESSEE COMPANY FOR THE YEAR IN QUESTION. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153C WAS FILED BY THE ASSESSEE COMPANY ON 12.01.2017, DECLARING ITS INCOME AS ORIGINAL LY RETURNED OF RS. 21,22,88,960/ - . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 10 8 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE SEIZED MATERIAL, VIZ LOOSE PAPERS FOUND FROM THE RESIDENCE OF SHRI. NARESH KALANI MADE A MENTION OF SALE OF 6 FLATS NAMELY, FLAT NOS. 801, 901, 1001, 1101, 1201 & 13/1401. PAGE 101 FURTHER, THE SEIZED DOCUMENT, VIZ. PAGE 46 & 46A FOUND FROM THE RESIDENCE OF SHRI. PRATEEK ARORA REVEALED RECEIPT OF ON - MONE Y W.R.T FLAT NOS. 901, 1001 AND 1101 OF RS. 3.37 CRORE, RS. 1.65 CRORE AND RS. 3.98 CRORE, RESPECTIVELY. ALSO, AS PER THE SEIZED DOCUMENTS, VIZ. PAGE 3 AND PAGE 46 OF THE LOOSE PAPERS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD ENTERED INTO A DEAL FOR FLAT NO. 1301/1401, WHICH WAS COM PLETED AND THE AGREEMENT WAS REGISTERED ON 08.05.2017. OBSERVING, THAT THE SALE AMOUNT WAS RECEIVED BY THE ASSESSEE EARLIER, THE A.O ADDED THE ON - MONEY OF RS. 3,93,89,404/ - PERTAINING TO THE SAID FLAT TO THE TOTAL INCOME O F THE ASSESEEE FOR A.Y 2016 - 17 U/S 68 OF THE ACT. ON A PERUSAL OF THE DETAILS IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY W.R.T ITS PROJECT EUDORA, AS UNDER: ASSESSMENT YEAR AMOUNT (IN LACS) FLAT NO 2014 - 15 RS. 337.39 901 2015 - 16 RS. 165.17 RS. 398.84 1001 1101 2016 - 17 RS. 265.00 1201 TOTAL RS.1164.00 ON BEING QUERIED THAT AS TO WHY THE AFORESAID AMOUNT OF ON - MONEY MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPTS FOR THE YEAR IN QUESTION, IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE GROSS AMOUNT OF ON - MONEY OF RS. 1164 LAC I.E AMOUNTING TO RS. 139.71 LACS WAS OFFERED FOR TAX IN ITS COMPUTATION OF INCOME FOR A.Y 2016 - 17. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 564.01 LAC [RS. 165.17 LAC (+) PAGE 102 RS. 398.84 LAC] RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS AN UNACCOUNTED RECEIPT U/S 68 OF THE ACT. 10 9 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAM E WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION . AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DI RECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. 1 10 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMAT ING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEI PTS OF RS. 564.01 LAKHS AT 20% WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS WAS OFFERED BY THE ASSESSE IS CONCERNED, WE FND THAT THE FACTS AND THE ISSUE THEREIN INVOLVED PAGE 103 REMAINS THE SAME AS WERE THER BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDINGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE ISSUE IN HAND IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 564.01 LACS. THE GROUND OF APPEAL NO. 3 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 1 11 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD INTER ALIA CALLED UPON THE ASSESSEE TO EXPLAIN THAT AS TO WHY THE AMOUNT OF ON - MONEY AGGREGATING TO RS. 564.01 LAC I.E RS. 165.17 LAC AND RS. 398.84 LAC RECEIVED BY IT W.R.T FLAT NO. 1001 AND FLAT NO. 1101, RESPECTIVELY, IN ITS PROJECT, VIZ.EUDORA MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPT S IN THE YEAR OF RECEIPT ITSELF I.E A.Y 201 5 - 1 6 . IN REPLY, IT WAS INTER ALIA SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE AMOUNT OF ON - MONEY OF RS. 564.01 LAC (SUPRA) WAS OFFERED FOR TAX IN ITS COMPUTATION OF INCOME FOR A.Y 2016 - 17. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 564.01 LAC RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS ITS UNACCOUNTED RECEIPT U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) THOUGH FOUND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT THEREIN EMBEDDED, HOWEVER, SHE DID NOT DISLODGE PAGE 104 THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF THE ON - MONEY I.E THE YEAR OF RECEIPT ITSELF . 1 12 . BEFORE US, THE ASSESSEE HA S ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THAT THE ON - MONEY WAS TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH T H E PARTIES IN CONTEXT OF THE ISSUE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPTS. I N OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANN OT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN ACCOUNTED FOR OR WOULD BE ACCOUNTE D FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARS HA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.EA.Y 201 5 - 1 6 TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND S OF APPEAL NO S . 1 & 2 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . PAGE 105 1 13 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IS DISMISSED AS NOT PRESSED. 1 14 . THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2203/MUM/2019 (REVENUES APPEAL) : 1 15 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 2015 - 16. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 5,64,01,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 5,64,01,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 1 16 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 5,64,01,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE ASSESS EE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THU S, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. PAGE 106 IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DIS REGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFOR E, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO EST ABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. ALSO , THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE A DDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). 1 17 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED PAGE 107 ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WH ILE DISPOSING OFF THE REVENUES APPEAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF T HE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 11 8 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEE S APPEAL IN ITA NO. 173 9 /MUM/2019 FOR A.Y 201 5 - 1 6 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN EMBEDDED ,AND HAD FURTHER DIRECTED T HE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVAT IONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (IV) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 11 9 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 1 20 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1740/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2204/MUM/2019 (REVENUES APPEAL) A.Y 2016 - 17 (A). ITA NO. 1740/MUM/2019 (ASSESSEES APPEAL) : PAGE 108 1 21 . WE SHALL NOW TAKE UP THE APPEAL OF THE CAPTIONED ASSESSEE FOR A.Y 2016 - 17 . THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD. 2. ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM ON - MONEY RECEIVED AT 20% OF RS. 658.89 LAKHS WHICH IS ON A HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 1 22 . SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BE LONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL PERTAINING TO THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SUPREME CORPORATION WAS FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS. RETURN OF INCOME FOR A.Y. 2016 - 17 WAS FILED BY THE ASSESEE ON 16.10.2016, DECLARI NG AN INCOME OF RS. 12,94,26,570/ - . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 1 23 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE SEIZED MATERIAL, VIZ . LOOSE PAPERS FOUN D FROM THE RESIDENCE OF SHRI. NARESH KALANI MADE A MENTION OF SALE OF 6 FLATS NAMELY, FLAT NOS. 801, 901, 1001, 1101, 1201 & 13/1401. FURTHER, AS PER THE SEIZED DOCUMENT, VIZ. PAGE 46 & 46A FOUND FROM THE RESIDENCE OF SHRI. PRATEEK ARORA REVEALED RECEIPT O F ON - MONEY W.R.T FLAT NOS. 901, 1001 AND 1101 OF RS. 3.37 CRORE, RS. 1.65 CRORE AND RS. 3.98 CRORE, RESPECTIVELY. ALSO, AS PER THE SEIZED DOCUMENTS, VIZ. PAGE 3 AND PAGE 46 OF THE LOOSE PAPERS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD ENTERED INTO A DEAL FOR A PAGE 109 FLAT NO.1301/1401 WHICH WAS COMPLETED AND THE AGREEMENT WAS REGISTERED ON 08.05.2017.IN THE BACKDROP OF THE AFORESAID FACTS, THE A.O INTER ALIA CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE ON - MONEY OF RS. 6,56,89,404/ - [RS. 265 LAC (+) RS. 393.89 LAC] MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPTS FOR THE YEAR UNDER CONSIDERATION I.E A.Y 2016 - 17. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE GROSS AMOUNT OF ON - MONEY OF RS. 1164 LAC (COMPRISING OF RS. 265 LAC) THEREIN AMOUNTING TO RS. 139.71 LACS HAD BEEN OFFERED FOR TAX IN ITS COMPUTATION OF INCOME FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17. AS REGARDS THE IMPUGNED ON - MONEY PERTAINING TO FLAT NO. 1301/1401 OF BHAGWAN DAS RANGNANI, IT WAS SUBMITTED BY THE ASSESSEE THAT THE FACT THAT THE DEAL PERTAINING TO THE SAID FLAT WAS AT THE VERGE OF CANCELLATION AT THE TIME OF SEARCH HAD REMAINED OMITTED TO BE CONSIDERED . HOWEVER, THE A.O DID NOT FIND FAVOUR WITH THE AFORESAID EXPLANATION OF THE ASSESSEE. ALSO, THE A.O WAS NOT INCLINED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT ONLY 12% OF THE AMOUNT OF ON - MONEY WAS TO BE BROUGHT TO TAX IN ITS HANDS. OBSERVING , THAT THE ASSESSEE HAD RECEIVED ON - MONEY OF RS. 265 LAC DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17, THE A.O WAS OF THE VIEW THAT THE ENTIRE AMOUNT WAS LIABLE TO BE ADDED IN THE HANDS OF ASSESSEE. FURTHER, IT WAS OBSERVED BY THE A.O THAT THE ON - MONEY RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS WAS TO BE BROUGHT TO TAX IN ITS HANDS IN THE SAID RESPECTIVE PRECEDING YEARS O F RECEIPT. ACCORDINGLY, THE A.O TAKING NOTE OF THE FACT THAT THE ASSESEE HAD ALREADY OFFERED AN AMOUNT OF RS. 139.71 LAC I.E 12% OF ON - MONEY RECEIPTS OF RS.1164 LACS AS ITS INCOME FOR THE YEAR IN QUESTION I.EA.Y 2016 - 17 THUS RESTRICTED THE ADDITION W.R.T O N - MONEY RECEIPT PERTAINING TO FLAT NO. 1201 AT AN AMOUNT OF RS. 125.29 LAC [RS. 265 LA C ( - ) RS. 139.71 LAC]. FURTHER, PAGE 110 THE A.O ALSO MADE AN ADDITION OF THE ON - MONEY OF RS. 393.89 LACS THAT WAS RECEIVED BY THE ASSESSEE FOR F LAT NO S . 1301/1401 AT THE STAGE OF BOOKING, THOUGH, THE AGREEMENT FOR SALE WAS NOT REGISTERED TILL THE DATE OF SEARCH. ACCORDINGLY, THE A.O MADE AN ADDITION OF RS. 519.18 LAC [ RS. 393.89 LAC (+) RS 125.29 LAC] AS UNACCOUNTED RECEIPTS U/S 68 OF THE ACT. 1 24 . ON APPEAL, IT WAS OBSERVED BY T HE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT F OUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION H AD OFFERED 15%OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSES SEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. 1 25 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING THE PAGE 111 INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED AT 20% OF RS. 658.89 LAKHS WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS WAS OFFERED BY THE ASSESSE IS CONCERNED, WE F I ND THAT THE FACTS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORD INGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE I SSUE IN HAND IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF R S. 658.89 LACS. THE GROUND OF APPEAL NO. 2 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 1 26 . AS OBSERVED BY US HEREINABOVE, THE A.O WAS OF THE VIEW THAT THE AMOUNT OF ON - MONEY OF RS. 265 LAC RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION I.E A.Y 2016 - 17 W.R.T FLAT NO. 1201 OF ITS PROJECT, VIZ. EUDORA WAS LIABLE TO BE ADDED IN ITS HANDS DURING THE YEAR OF RECEIPT ITSELF I.E A.Y 2016 - 17. OBSERVING, THAT THE ASSESEE HAD ALREADY OFFERED AN AMOUNT OF RS. 139.71 LAC I.E 12% OF ON - MONEY RECEIPT S OF RS.1164 LACS AS ITS INCOME FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17, THE A.O HAD ACCORDINGLY RESTRICTED THE ADDITION W.R.T ON - MONEY RECEIPT PERTAINING TO F LAT NO. 1201 AT AN AMOUNT OF RS. 125.29 LAC [RS. 265 LAC ( - ) RS. 139.71 LAC]. FURTHER, THE A.O A LSO MADE AN ADDITION OF THE ON - MONEY OF RS. 393.89 LACS THAT WAS RECEIVED BY THE ASSESSEE FOR FLAT NOS. 1301/1401 AT THE STAGE OF BOOKING, THOUGH, THE AGREEMENT FOR SALE WAS NOT REGISTERED PAGE 112 TILL THE DATE OF SEARCH. ACCORDINGLY, THE A.O MADE AN ADDITION OF R S. 519.18 LAC (RS. 393.89 LAC (+) RS 125.29 LAC] AS UNACCOUNTED RECEIPTS U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) THOUGH FO UND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT TH EREIN EMBEDDED, HOWEVER, SHE DID NOT DISLODGE THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF THE ON - MONEY I.E THE YEAR OF RECEIPT ITSELF . 1 27 . BEFORE US, THE ASSESSEE HAD ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THAT THE ON - MONEY WAS TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES IN CONTEXT OF THE ISSUE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPTS. I N OUR CONSIDERED V IEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN E MBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN ACCOUNTED FOR OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID V IEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS C ONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT PAGE 113 [102 ITD 3 75 (PUNE)] . WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.EA.Y 201 6 - 1 7 TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND OF APPEAL NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 28 . THE GROUND OF APPEAL NO. 3 BEING GENERAL IS DISMISSED AS NOT PRESSED. 12 9 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2204/MUM/2019 ( REVENUES APPEAL) : 1 30 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 2016 - 17 . THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 5,19,18,404/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 5,19,18,404/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF T RANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPE NSES INCURRED? 1 31 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 6,56,89,404/ - (NETED AT RS. 5,19,18,404/ - ) U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE PAGE 114 COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DR AWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. ALSO , IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS O F TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. FURTHER, THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). 1 32 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PR ESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN PAGE 115 THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE D ISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 FOR A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAM E, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 1 33 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO.17 40 /MUM/2019 FOR A.Y 201 6 - 1 7 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WERE LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN INVOLVED,AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% O F SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (I V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 1 34 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. PAGE 116 135 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMI SSED. M/S EKTA SHELTERS PVT.LTD. : ITA NO. 1741/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2197/MUM/2019 (REVENUES APPEAL) A.Y 2015 - 16 (A). ITA NO. 1741/MUM/2019 (ASSESSEES APPEAL) : 1 36 . WE SHALL FIRSTTAKE UP THE APPEAL FILED BY THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SHELTERS PVT. LTD. FOR A.Y 2015 - 16. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CO MMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION @ 20% OF THE ON - MONEY IN THIS YEAR WITHOUT CONSIDERING THE FACT - THAT THE APPELLANT OFFERED THE INCOME OF RS. 29.76 LAKHS @12% OF ON - MONEY OF RS.248 LAKHS IN A.Y 2016 - 17. 2. ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF THE PROJECT OR ALTERNATIVE LY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING PROJECT COMPLETION METHOD . 3 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM THE ON - MONEY RECEIVED AT 20% WHICH IS ON A HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GRO UND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 1 3 7 . BRIEFLY STATED, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER. SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL PERTAINING TO THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SHELTERS PVT. LTD. WAS FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS. NOTICE U/S 153C WAS ISSUED AND DULY SERVED PAGE 117 UPON THE ASSESSEE COM PANY FOR THE YEAR IN QUESTION. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153C WAS FILED BY THE ASSESSEE COMPANY ON 07.01.2017, DECLARING NILINCOME. SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 1 3 8 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF TWO PROJECTS, VIZ. (I). IRIS; AND (II). RAM LAXMI NIWAS. ON A PERUSAL OF THE SEIZED DOCUMENTS, IT WAS OBSERVED BY THE A.O THAT TH E ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF FLATS/SHOPS OF ITS AFOREMENTIONED PROJECTS, VIZ. (I). IRIS; AND (II). RAM LAXMI NIWAS, AS UNDER: PROJECT NAME FLAT/SHOP NO. AMOUNT (IN LACS) YEAR OF RECEIPT RAM LAXMI NIWAS 1101 475 2015 - 16 901 173 2015 - 16 TOTAL 648 IRIS 1102 90 2015 - 16 1001 150 2014 - 15 502/802 175 2015 - 16 101 58.50 2015 - 16 1002 99 2014 - 15 IRIS TOTAL 572.50 GRAND TOTAL 1220.50 ON BEING QUERIED THAT AS TO WHY THE AFORESAID AMOUNT OF ON - MONEY MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPTS FOR THE RESPECTIVE YEAR S , IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE AMOUNT OF ON - MONEY RECEIPTS WAS EITHER OFFERED FOR PAGE 118 TAX OR WOULD BE SO OFFERED IN THE RESPECTIVE YEAR OF COMPLETION OF THE CONCERNED PROJECT, AS UNDER: (I). NET INCOME OF RS. 29.76 LACS I.E 12% OF THE ON - MONEY OF RS. 24 9 LAKHS PERTAINING TO IRIS PROJECT HAD BEEN OFFERED IN THE COMPUTATION OF INCOME FOR A. Y 2016 - 17. (II). NET INCOME OF RS. 38.82 LACS I.E 12% OF THE ON - MONEY OF RS. 323.50 LAKHS PERTAINING TO IRIS PROJECT HAD BEEN OFFERED IN THE COMPUTATION OF INCOME FOR A.Y 2017 - 18 AS THE AGREEMENTS PERTAINING TO THE CONCERNED FLATS WERE REGISTERED DURIN G THE F.Y 2016 - 17. (III). ON - MONEY OF RS. 648 LAKHS PERTAINING TO RAM LAXMI NIWAS PROJECT SHALL BE CONSIDERED FOR COMP U TING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. ACCORDINGLY, IT WAS THE CLAIM OF THE ASSESSEE THAT PART OF THE AMOUNT OF ON - MO NEY OF RS. 1219.50 LACS HAD ALREADY BEEN TAKEN INTO CONSIDERATION IN COMPUTING THE INCOME OF THE SUCCEEDING YEARS IN WHICH THE PROJECT WAS COMPLETED, WHILE FOR THE REMAINING PART WOULD DULY BE CONSIDERED IN THE YEAR IN WHICH THE CONCERNED PROJECT IS COMPLE TED. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 249 LAC [RS. 150 LAC (+) RS. 99 LAC] RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS ITS UNACCOUNTED RECEIPT S U/S 68 OF THE ACT. 1 3 9 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS PAGE 119 T HE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INC OME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD N OT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESSEE WAS FOLLOWING DIFFERENT METHODS OF REVENUE RECOGNITION NOT ONLY FOR ITS DIFFERENT PROJECTS BUT EVEN IN THE SAME PROJECT THE METHOD FOR RECOGNISING THE REVENUE WAS CHANGED TO SUIT ITS NEEDS. OBSERVING , THAT THE ASSESSEE WAS NOT FOLLOWING A CONSISTENT METHOD OF REVENUE RECOGNITION, THE CIT(A) WAS OF THE VIEW THAT NO INFIRMITY COULD BE RELATED TO ASSESSING OF THE PROFIT PERTAINING TO THE ON - MONEY DURING THE YEAR UNDER CONSIDERATION. 1 4 0 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRI EVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT OF RS.24 9 LAKHS AT 20% WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% AS WAS OFFERED BY THE ASSESSE IS CONCERNED, WE FND THAT THE PAGE 120 FACTS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDINGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE SAID I SSUE IN HAN D IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 24 9 LACS. THE GROUND OF APPEAL NO. 3 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 1 4 1 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LOWER AUTHORITIES ARE IN ERROR IN CONCLUDING THAT THE ON - MONEY SO RECEIVED BY IT W.R.T F LATS /S HOPS IN ITS PROJECTS RAM LAXMI NIWAS AND IRIS WAS TO BE ASSESSED IN THE YEAR OF RECEIPT. AS OBSERVED BY US HEREINABOVE, THE A.O HELD A CONVICTION THAT THE AMOUNT OF ON - MONEYRECEIVED BY THE ASSESSEE W.R.T FLAT S/SHOPS IN ITS PROJECT S , VIZ. RAM LAXMI NIWA S AND IRIS WAS TO BE ASSESSED AS THE UNACCOUNTED RECEIPT S OF THE ASSESSEE IN THE YEAR OF RECEIPT ITSELF . ON BEING QUERIED THAT AS TO WHY THE ON - MONEY AGGREGATING TO RS. 249 LAC RECEIVED BY THE ASSESSEE W.R.T FLAT/SHOP NOS. 1001 AND 1002 IN ITS PROJECT, VIZ. IRIS AMOUNTING TO RS. 150 LACS AND RS. 99 LAC , RESPECTIVELY, MAY NOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF I.EA.Y 201 5 - 1 6 , IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET INCOME OF RS. 29.76 LACS I.E 12% OF THE ON - MONEY OF R S. 24 9LAC PERTAINING TO IRIS PROJECT HAD BEEN OFFERED IN THE COMPUTATION OF INCOME FOR A.Y 2016 - 17. HOWEVER, THE AFORESAID REPLY OF THE PAGE 121 ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY OF RS. 24 9 LAC RECEIVED BY TH E ASSESSEE DURING THE YEAR IN QUESTION AS ITS UNACCOUNTED RECEIPT U/S 68 OF THE ACT. ON APPEAL, THE CIT(A) THOUGH FOUND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT THEREIN E MBEDDED, HOWEVER, SHE DID NOT DISLODGE THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF THE ON - MONEY I.E THE YEAR OF RECEIPT ITSELF . 1 4 2 . BEFORE US, THE ASSESSEE HA S ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THA T THE ON - MONEY WAS TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES IN CONTEXT OF THE ISSUE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPTS. I N OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOUL D BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN ACCOUNTED FOR OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BU ILDERS AND DEVELOPERS PVT. LTD.VS. DCIT PAGE 122 [102 ITD 375 (PUNE)] . WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.EA.Y 2015 - 16 TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND S OF APPEAL NO S . 1 & 2 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 43 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IS DISMISSED AS NOT PRESSED. 1 44 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2197/MUM/2019 ( REVENUES APPEAL ) : 1 45 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 2015 - 16. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US: (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 2,49,00,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHE R ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 2,49,00,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHE N SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINE NESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST ADDITIONS MADE U/S 68, BY INVOKING PROVISION S OF SECTION 115BBE? (V). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? PAGE 123 1 46 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 2,49,00,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVE NUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITI ON. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC . 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN B E RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. ALSO , THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). LASTLY, THE REVENUE IS AGGRIEVED WITH THE DI RECTION OF THE CIT(A) TO SET - OFF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68, WHICH AS STATED BY THE REVENUE IS CONTRARY TO THE PROVISIONS OF SECTION 115BBE. 1 47 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERU SED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PAGE 124 AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THA T THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEED INGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP ENTITY OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT . LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN TH E CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED TH AT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 1 48 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1741/MUM/2019 FOR A.Y 2015 - 16 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN INVOLVED, AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICT ING THE ADDITION TO 20% PAGE 125 OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 14 9 . INSOFAR THE GRIEVANCE OF THE REVENUE T HAT THE CIT(A) HAS ERRED IN VACATING THE VIEW TAKEN BY THE A.O WHO HAD AS PER THE MANDATE OF SEC. 115BBE OF THE ACT DECLINED THE ASSESSEES CLAIM FOR SET - OFF OF THE BUSINESS LOSSES AGAINST THE ADDITIONS MADE U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIN D HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA PARKSVILLE HOMES PVT. LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAP TIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE A PPEAL IN THE CASE OF THE GROUP CONCERN OF THE ASSESSEE FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019 SHALL APPLY MUTATIS MUTANDIS FOR DISP OSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE PROVISIONS OF SEC. 115BBE WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION AND HAD DIRECTED THE A.O TO SET - OFF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68 OF THE ACT. THE GROUND OF APPEAL NO. (IV) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 1 50 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 1 5 1. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1742/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2198/MUM/2019 (REVENUES APPEAL) PAGE 126 A.Y 2016 - 17 (A). ITA NO. 1742/MUM/2019 (ASSESSEES APPEAL) : 1 5 2 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE CAPTIONED ASSESSEEFOR A.Y 201 6 - 17 . THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION @ 20% OF THE ON - MONEY IN THIS YEAR FOR (IRIS PROJECT) THE ON - MONEY RECEIPTS OF RS. 323.50 LAKHS FOR WHICH THE APPELLANT OFFERED THE I NCOME OF RS. 38.82 LAKHS @12% OF ON - MONEY OF RS. 323.50 LAKHS IN A.Y 2017 - 18 WHEN THE AGREEMENT WAS REGISTERED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME F ROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF THE PROJECT RAMLAXMI OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERR ED IN REJECTING PROJECT COMPLETION METHOD. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM THE ON - MONEY RECEIVED AT 20% WHICH IS ON A HIGHER SIDE AND SHOULD HAVE BE EN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 1 5 3 . BRIEFLY STATED, THE ASS ESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y 2016 - 17, DECLARING A LOSS OF (RS. 4,07,83,318/ - ). SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 1 5 4 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF TWO PROJECTS, VIZ. (I). IRIS; AND (II). RAM LAXMI NIWAS. ON A PERUSAL OF THE SEIZED DOCUMENTS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF FLATS/ SHOPS OF ITS AFOREMENTIONED PROJECTS, VIZ. (I). IRIS; AND (II). RAM LAXMI NIWAS, AS UNDER: PROJECT NAME FLAT/SHOP NO. AMOUNT YEAR OF RECEIPT PAGE 127 (IN LACS) RAM LAXMI NIWAS 1101 475 2015 - 16 901 173 2015 - 16 TOTAL 648 IRIS 1102 90 2015 - 16 1001 150 2014 - 15 502/802 175 2015 - 16 101 58.50 2015 - 16 1002 99 2014 - 15 IRIS TOTAL 572.50 GRAND TOTAL 1220.50 ON BEING QUERIED THAT AS TO WHY THE AFORESAID AMOUNT OF ON - MONEY MAY NOT BE ADDED AS ITS UNACCOUNTED RECEIPTS FOR THE RESPECTIVE YEARS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE NET INCOME I.E @12% OF THE AMOUNT OF ON - MONEY RECEIPTS WAS EITHER OFFERED FOR TAX OR WOULD BE SO OFFERED IN THE RESPECTIVE YEAR OF COMPLETION OF THE CONCERNED PROJECT, AS UNDER: (I). NET INCOME OF RS. 29.76 LACS I.E 12% OF THE ON - MONEY OF RS. 248 LAKHS PERTAINING TO IRIS PROJECT HAD BEEN OFFERED IN THE COMPUTATION OF INCOME FOR A. Y 2016 - 17. (II). NET INCOME OF RS. 38.82 LACS I.E 12% OF THE ON - MONEY OF RS. 323.50 LAKHS PERTAINING TO IRIS PROJECT HAD BEEN OFFERED IN THE COMPUTATION OF INCOME FOR A.Y 2017 - 18, AS THE AGREEMENTS PERTAINING TO THE CONCERNED FLATS WERE REGISTERED DURI NG THE F.Y 2016 - 17. (III). ON - MONEY OF RS. 648 LAKHS PERTAINING TO RAM LAXMI NIWAS PROJECT SHALL BE CONSIDERED FOR COMP U TING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. PAGE 128 ACCORDINGLY, IT WAS THE CLAIM OF THE ASSESSEE THAT PART OF THE AMOUNT OF ON - M ONEY OF RS. 1219.50 LACS HAD ALREADY BEEN TAKEN INTO CONSIDERATION IN COMPUTING THE INCOME OF THE SUCCEEDING YEARS IN WHICH THE PROJECT WAS COMPLETED, WHILE FOR THE REMAINING PART WOULD DULY BE CONSIDERED IN THE YEAR IN WHICH THE CONCERNED PROJECT IS COMP LETED. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO WAS OF THE VIEW THAT THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS PERTAINING TO THE YEAR IN QUESTION I.E RS. 323.50 LAC (IRIS PROJECT) AND RS. 648 LAC (RAM LAXMI NIWAS PROJE CT) WERE TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.E A.Y 2016 - 17. FURTHER, THE A.O EXCLUDED THE INCOME OF RS. 29.76 LAC I.E 12% OF ON - MONEY OF RS. 24 9 LAC THAT WAS RECEIVED BY THE ASSESSEE W.R.T IRIS PROJECT IN THE IMMEDIATELY PRECEDING YEAR I.E A.Y 2015 - 16 AND WAS OFFERED IN ITS COMPUTATION OF INCOME FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17. BACKED BY HIS AFORESAID OBSERVATIONS, THE A .O MADE AN ADDITION OF RS. 293.74 LAC [RS. 323.50 LACS ( - ) RS. 29.76 LACS] A S REGARDS THE ON - MONEY RECEIVED BY THE ASSESSEE W.R.T IRIS PROJECT. FURTHER, THE A.O ADDED THE ON - MONEY OF RS. 648 LACS THAT WAS RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS REGARDS ITS RAM LAXMI NIWAS P ROJECT. ACCORDINGLY, THE A.O MADE AN A DDITION OF RS. 9,41,74,000/ - [RS. 2,93,74,000/ - (+) RS. 6,48,00,000/ - ] AS THE ASSESSEES UNACCOUNTED RECEIPTS U/S 68 OF THE ACT. 1 5 5 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREF ORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOO SE SHEETS PAGE 129 AND THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION T O THE SAID EXTENT. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESSEE WAS FOLLOWING DIFFERENT METHODS OF REVENUE RECOGNITION NOT ONLY FOR ITS DIFFERENT PROJECTS BUT EVEN IN THE SAME PROJECT THE METHOD FOR RECOGNISING THE REVENUE WAS CHANGED TO SUIT IT S NEEDS. OBSERVING , THAT THE ASSESSEE WAS NOT FOLLOWING A CONSISTENT METHOD OF REVENUE RECOGNITION, THE CIT(A) WAS OF THE VIEW THAT NO INFIRMITY COULD BE RELATED TO ASSESSING OF THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED DURING THE YEAR UNDER CON SIDERATION. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE A.O BY APPLYING SEC. 115BBE OF THE ACT HAD ERRED IN NOT ALLOWING SET - OFF OF CURRENT YEARS BUSINESS LOSS OF RS.4,07,83,318/ - AGAINST THE INCOME ASSESSED, THE SAME WAS ACCEPTED BY THE CIT(A). IT WAS O BSERVED BY THE CIT(A) THAT AS SEC. 115BBE HAD CAME INTO EFFECT FROM 01.04.2017, THEREFORE, THE SAME WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSE FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17 . APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - M ONEY RECEIPTS WERE HELD BY HER AS BUSINESS INCOME AND NOT AN PAGE 130 INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. 115BBE WOULD ALSO NOT BE APPLICABLE ON THE SAID COUNT TOO. ACCORDINGLY, THE CIT(A)DIRECTED THE A.O TO ALLOW SET - OFF OF CURRENT YEARS BU SINESS LOSS AND BROUGHT FORWARD LOSSES AFTER DUE VERIFICATION. 1 5 6 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED AT 20% OF RS. 971.50 LA CS (NETTED AT RS. 941.74 LACS) WHICH IS ON THE HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS WAS OFFERED BY THE ASSESSE IS CONCERNED, WE FND THAT THE FACTS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDI NGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE SA ID ISSUE IN HAND IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 971.50 LA CS . THE GROUND OF APPEAL NO. 3 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 1 5 7 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LOWER AUTHORITIES ARE IN ERROR IN CONCLUDING THAT THE ON - MONEY SO RECEIVED BY IT W.R.T FLATS/SHOPS IN ITS PROJECTS RAM LAXMI NIWAS AND IRIS WAS TO BE ASSESSED IN THE YEAR OF RECEIPT. AS OBSE RVED BY PAGE 131 US HEREINABOVE, THE A.O HELD A CONVICTION THAT THE AMOUNT OF ON - MONEYRECEIVED BY THE ASSESSEE W.R.T FLAT S/SHOPS IN ITS PROJECT S , VIZ. RAM LAXMI NIWAS AND IRIS WAS TO BE ASSESSED AS THE UNACCOUNTED RECEIPT SOF THE ASSESSEE IN THE YEAR OF RECEIPT I TSELF . ON BEING QUERIED THAT AS TO WHY THE ON - MONEY AGGREGATING TO RS. 648 LAC RECEIVED W.R.T FLAT/SHOP NOS. 1 1 01 AND 901 IN ITS PROJECT, VIZ. RAM LAXMI NIWAS AMOUNTING TO RS. 475 LACS AND RS. 173 LAC, RESPECTIVELY, AND THAT AGGREGATING TO RS.323.50 LAC REC EIVED W.R.T FLAT/SHOP NOS. 1102, 502/802 AND 101 IN ITS PROJECT IRIS AMOUNTING TO RS. 90 LAC, 175 LAC AND RS. 58.50 LAC, RESPECTIVELY, MAY NOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF I.E A.Y 201 5 - 1 6 , IT WAS SUBMITTED BY THE ASSESSEE THAT THE N ET INCOME OF RS. 38.82 LACS I.E 12% OF THE AMOUNT OF ON - MONEY OF RS. 323.50 LACS PERTAINING TO IRIS PROJECT HAD BEEN OFFERED IN THE COMPUTATION OF INCOME FOR A.Y 2017 - 18, AS THE AGREEMENTS PERTAINING TO THE CONCERNED FLATS WERE REGISTERED DURING THE F.Y 201 6 - 17. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE ON - MONEY OF RS. 648 LACSRECEIVED BY IT W.R.T FLATS/SHOPS IN ITS PROJECT, VIZ. RAM LAXMI NIWAS SHALL BE CONSIDERED FOR COMP U TING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER, THE AFOR ESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS ITS UNACCOUNTED RECEIPT U/S 68 OF THE ACT. OBSERVING, THAT THE ASSESEE HAD ALREADY OFFERE D AN AMOUNT OF RS. 29.76 LAC I.E 12% OF ON - MONEY RECEIPTS OF RS. 249 LACS AS ITS INCOME FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17, THE A.O ACCORDINGLY RESTRICTED THE ADDITION W.R.T ON - MONEY RECEIPT PERTAINING TO FLAT/SHOP NOS. 1102, 502/802 AND 101 IN ITS PR OJECT IRISTO 293.74 LAC [RS. 323.50 LAC ( - ) RS. 29.76 LAC] . FURTHER, THE A.O ADDED THE PAGE 132 ENTIRE AMOUNT OF ON - MONEY AGGREGATING TO RS. 648 LAC THAT WAS RECEIVED BY THE ASSESSEE W.R.T FLAT/SHOP NOS. 1101 AND 901 IN ITS PROJECT, VIZ. RAM LAXMI NIWAS AMOUNTI NG TO RS. 475 LACS AND RS. 173 LAC, RESPECTIVELY. ON APPEAL, THE CIT(A) THOUGH FOUND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT THEREIN EMBEDDED, HOWEVER, SHE DID NOT DISLO DGE THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF THE ON - MONEY I.E THE YEAR OF RECEIPT ITSELF . 1 5 8. BEFORE US, THE ASSESSEE HA S ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THAT THE ON - MONEY WAS TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES IN CONTEXT OF THE ISSUE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPTS. I N OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANN OT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN ACCOUNTED FOR OR WOULD BE ACCOUNTED FOR BY THE ASS ESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMEN T YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE PAGE 133 CASE OF DHANVAR SHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.EA.Y 2016 - 17 TO TAX IN TERMS OF OUR AFORESAI D OBSERVATIONS. THE GROUND S OF APPEAL NO S . 1 & 2 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 5 9 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IS DISMISSED AS NOT PRESSED. 1 6 0 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. B). ITA NO. 2198/MUM/2019 (REVENUES APPEAL) : 1 6 1 . WE SHALL NOW TAKE UP THE CROSS - APPEAL FILED BY THE REVENUE FOR A.Y 2016 - 17. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFO RE US: (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 9,41,74,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 9,41,74,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD N OT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST A DDITIONS MADE U/S 68, BY INVOKING PROVISIONS OF SECTION 115BBE? (V). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PROD UCE DETAILS OF EXPENSES INCURRED? PAGE 134 1 6 2 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 9,41,74,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHON ES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT( A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. ALSO , IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. FURTHER, THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). LASTLY, THE REVENUE IS AGGRIEVED WITH THE DIRECTION OF THE CIT(A) TO ALLOW SET - OFF OF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68, WHICH AS STATED BY THE REVENUE IS CONTRARY TO THE PROVISIONS OF SECTION 115BBE. 1 6 3. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PAGE 135 AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JU DICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NO S. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 1 6 4 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 17 42 /MUM/2019 FOR A.Y 201 6 - 1 7 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN INVOLVED,AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTI NG THE ADDITION TO 20% PAGE 136 OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (V) RAISED BY THE REVENUE IS DISMISSED. 1 6 5 . INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A ) HA D ERRED IN VACATING THE VIEW TAKEN BY THE A.O WHO AS PER THE MANDATE OF SEC. 115BBE OF THE ACT HAD DECLINED THE ASSESSEES CLAIM FOR SET - OFF OF THE BUSINESS LOSSES AGAINST THE ADDITIONS MADE U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN AD JUDICATED BY US WHILE DISPOSING OFF THE APPEAL IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA PARKSVILLE PVT. LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019.AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS T HE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE AFORESAID APPEAL IN THE CASE OF THE ASSESSEES GROUP CONCERN, VIZ. M/S EKTA PARKSVILLE PVT. LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019 SHALL APPLY MUTATIS M UTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE PROVISIONS OF SEC. 115BBE WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION AND HAD DIRECTED THE A.O TO SET - OFF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68 OF THE ACT. THE GROUND OF APPEAL NOS. (IV) RAISED BY THE REVENUE IS DISMISSED. 1 6 6 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 1 67 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. M/S EKTA SHUBHAM VENTURE : PAGE 137 ITA NO. 1744/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2201/MUM/2019 (REVENUES APPEAL) A.Y 2015 - 16 (A). ITA NO. 1744/MUM/2019 (ASSESSEES APPEAL) : 1 68 . WE SHALL NOW DEAL WITH THE APPEAL OF THE CAPTIONED ASSESSEE, VIZ. M/S EKTA SHUBHAM VENTURE FOR A.Y 2015 - 16. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF THE PROJECT PANORAMA OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGNITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING PROJECT COMPLETION METHOD FOR THIS PROJECT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM THE ON - MONEY RECEIVED AT 20% OF RS. 185 LAKHS WHICH IS ON A HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFER ED BY YOUR APPELLANT. 3 . THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 1 69 . BRIEFLY STATED, THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS O F A BUILDER AND DEVELOPER. ORIGINAL RETURN OF INCOME FOR A.Y 2015 - 16 WAS FILED BY THE ASSESSEE FIRM ON 26.09.2015, DECLARING A LOSS OF (RS. 2,24,292/ - ). SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKT A GROUP. INCRIMINATING MATERIAL PERTAINING TO THE CAPTIONED ASSESSEE FIRM , VIZ. M/S EKTA SHUBHAM VENTURE WAS FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS. NOTICE U/S 153C WAS ISSUED AND DULY SERVED UPON THE ASSESSEE FIRM FOR THE YEAR IN QUESTION. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153C WAS FILED BY THE ASSESSEE FIRM ON 07.01.2017 DECLARING THE LOSS AS ORIGINALLY RETURNED OF (RS.2,24,492/ - ) . SUBSEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. PAGE 138 1 70 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF A PROJECT, VIZ.PANORAMA AT CHEMBUR . ON A PERUSAL OF THE SEIZED DOCUMENTS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEI VED ON - MONEY ON SALE OF FLATS OF ITS AFOREMENTIONED PROJECT, AS UNDER: PROJECT NAME FLAT NO. AMOUNT (IN LACS) FINANCIAL YEAR OF RECEIPT DATE OF AGREEMENT PANORAMA 303 120 2014 - 15 23.02.2015 601 65 2014 - 15 25.07.2014 1401 77 2015 - 16 NOT DONE 1002 200 2015 - 16 NOT DONE GRAND TOTAL 462 OBSERVING THAT THE DATE OF REGISTRATION OF THE AFORESAID FLAT NOS. 303 & 601 PERTAINED TO A.Y 2015 - 16 , THE A.O CALLED UPON THE ASSESEE TO SHOW CAUSE AS TO WHY THE ON - MONEY OF RS. 185 LACS RECEIVED AS REGARDS THE SAID FLATS MAY NOT BE ADDED AS ITS INCOME FOR THE YEAR IN QUESTION I.E A.Y 2015 - 16. ALSO, TAKING NOTE OF THE FACT THAT THE FLATS NOS. 1401 & 1002 WERE STILL UNREGISTERED ON THE DATE OF SEARCH, THE A.O BEING OF THE VIEW THAT THE ON - MONEY OF RS. 277 LACS WAS RECEIVED BY THE ASSESSEE DURING THE A.Y 2016 - 17, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME MAY NOT BE ADDED TO ITS INCOME FOR THE SAID YEAR. IN REPLY , IT WAS SUBMITTED BY THE ASSESSEE THAT THE AFORESAID GROSS ON - MONEY OF RS. 4.62 C RORES [RS. 185 LACS (+) RS. 277 LACS] WOULD BE CONSIDERED FOR DETERMINING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO HELD A CONVICTION THAT THE ENTIRE AMOUNT OF ON - M ONEY WAS TO BE PAGE 139 BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF . ACCORDINGLY, THE A.O ADDED THE ON - MONEY OF RS. 1.85CRORE [RS. 1.20 CRORE (FLAT NO. 303) (+) RS. 65 LAC (FLAT NO. 601)] U/S 68 OF THE ACT IN THE YEAR IN QUESTION I.E A.Y 2015 - 16. 1 71 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCO ME - TAX SETTLEMENT COMMISSION HAD OFFERED 15% OF THE ON - MONEY RECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, SHE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESSEE WAS FOLLOWING P ERCENTAGE COMPLETION METHOD IN THE PAST AND HAD SHIFTED TO PROJECT COMPLETION METHOD ONLY IN A.Y 2016 - 17. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESEEE HAD NOT GIVEN ANY REASON FOR CHANGING THE METHOD FOR RECOGNISING ITS REVENUE FROM PERCENTAGE C OMPLETION METHOD TO PROJECT COMPLETION METHOD. IT PAGE 140 WAS FURTHER NOTICED BY THE CIT(A) THAT SOME OF THE GROUP CONCERNS OF THE ASSESSEE WERE FOLLOWING PERCENTAGE COMPLETION METHOD . OBSERVING, THAT THE PERCENTAGE COMPLETION METHOD WAS ALSO IN ACCORDANCE WITH THE GUIDELINES ISSUED BY THE ICAI, THE CIT(A) WAS OF THE VIEW THAT TH E RE WAS NO JUSTIFIABLE REASON FOR THE ASSESSEE TO SHIFT TO PROJECT COMPLETION METHOD. IN FACT, THE CIT(A) HELD A CONVICTION THAT THE ASSESSEE WAS TRYING TO TWEAK WITH THE METHODS OF RECOGNISING REVENUE WHICH WAS NOT PERMISSIBLE. BACKED BY HER AFORESAID OBSERVATIONS THE CIT(A) REJECTED THE ASSESSEES REQUEST FOR CONSIDERING THE PROJECT COMPLETION METHOD FOR REVENUE RECOGNITION. AS RE GARDS THE CLAIM OF THE ASSESSEE THAT THE A.O BY APPLYING SEC. 115BBE OF THE ACT HAD ERRED IN NOT ALLOWING SET - OFF OF THE CURRENT YEAR BUSINESS LOSS OF RS. 2,24,292/ - AGAINST THE INCOME ASSESSED, THE SAME WAS ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE C IT(A) THAT AS SEC. 115BBE HAD CAME INTO EFFECT FROM 01.04.2017, THEREFORE, THE SAME WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSE FOR THE YEAR IN QUESTION I.E A.Y 2015 - 16 . APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIPTS WE RE HELD BY HER AS BUSINESS RECEIPTS AND NOT AN INCOME U/S 68 OF THE ACT, THEREFORE, THE PROVISIONS OF SEC. 115BBE WOULD ALSO NOT BE APPLICABLE ON THE SAID COUNT TOO. ACCORDINGLY, THE CIT(A)DIRECTED THE A.O TO ALLOW SET - OFF OF CURRENT YEARS BUSINESS LOSS AN D BROUGHT FORWARD LOSSES AFTER DUE VERIFICATION. 1 72 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAD ERRED IN ESTIMATING THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEI PTSOF RS. 185 LACS @ 20% , WHICH IS ON THE HIGHER SIDE , AND SHOULD HAVE BEEN ESTIMATED @12% AS WAS OFFERED BY THE ASSESSE IS CONCERNED, WE FND THAT THE PAGE 141 FACTS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDINGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISSUE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASS ESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE SAID ISSUE IN THE CASE OF THE CAPTIONED ASSESSEE. WE, THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EM BEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 185 LAKHS . THE GROUND OF APPEAL NO. 2 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS 1 73 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LOWER AUTHORITIES ARE IN ERROR IN CONCLUDING THAT THE ON - MONEY SO RECEIVED BY IT W.R.T FLATS IN ITS PROJECT PANORAMA WAS TO BE ASSESSED IN THE YEAR OF RECEIPT. AS OBSERVED BY US HEREINABOVE, T HE A.O HELD A CONVICTION THAT THE AMOUNT OF ON - MONEYRECEIVED BY THE ASSESSEE W.R.T FLAT S IN ITS PROJECT, VIZ. PANORAMA WAS TO BE ASSESSED AS THE UNACCOUNTED RECEIPT SOF THE ASSESSEE IN THE YEAR OF RECEIPT ITSELF . ON BEING QUERIED THAT AS TO WHY THE ON - MONE Y AGGREGATING TO RS. 185 LAC RECEIVED W.R.T FLAT NOS. 303 AND 601 IN ITS PROJECT, VIZ. PANORAMA AMOUNTING TO RS. 120 LAC AND RS. 65 LAC, RESPECTIVELY, MAY NOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF I.E A.Y 2015 - 16, IT WAS SUBMITTED BY THE ASSESS EE THAT THE SAID AMOUNTS WOULD BE CONSIDERED FOR DETERMINING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO TREATED THE ENTIRE AMOUNT OF ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR IN PAGE 142 QUESTION AS ITS UNACCOUNTED RECEIPT U/S 68 OF THE ACT.ON APPEAL, THE CIT(A) THOUGH FOUND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE AMOUNT OF ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT THEREIN EM BEDDED, HOWEVER, SHE DID NOT DISLODGE THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF THE ON - MONEY I.E THE YEAR OF RECEIPT ITSELF . 1 74 . BEFORE US, THE ASSESSEE HAS ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THAT THE ON - MONEY WAS TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES IN CONTEXT OF THE ISSUE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPTS. I N OUR CONSIDERED VIEW, AS THE RE CEIPT OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING O F SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . WE, THUS, DIRECT T HE A.O TO SUBJECT THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE PAGE 143 YEAR UNDER CONSIDERATION I.EA.Y 2015 - 16 TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND OF APPEAL NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 75 . THE GROUND OF APPEAL NO. 3 BEING GENERAL IS DISMISSED AS NOT PRESSED. 1 76 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2201/MUM/2019 ( REVENUES APPEAL ) : 1 77 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 2015 - 16. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 1,85,00,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 1,85,00,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECT ION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS O F TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST ADDITIONS MADE U/S 68, BY INVOKING PROVISIONS OF S ECTION 115BBE? (V). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 1 78 . AS OBSER VED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 1,85,00,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS PAGE 144 NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE REVENUE HA S CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINITION. FU RTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN SEC. 2(12 A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. ALSO , IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 O F THE ACT. FURTHER, THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT OF ON - MONEY BY THE CIT(A). LASTLY, THE REVENUE IS AGGRIEVED WITH THE DIRECTION OF THE CIT(A) TO ALLOW SET - OFF OF THE BUSI NESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68, WHICH AS STATED BY THE REVENUE IS CONTRARY TO THE PROVISIONS OF SECTION 115BBE. 1 79 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES A ND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE PAGE 145 AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, IT COULD NOT HAVE BEEN B ROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 . AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO . 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 1 80 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1744/MUM/2019 FOR A.Y 2015 - 16 PRINCIPALLY UPHELD THE VIEW TAKEN BY T HE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN INVOLVED, AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT OF 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVAN CE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. PAGE 146 1 81 . INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAS ERRED IN VACATING THE VIEW TAKEN BY THE A.O WHO AS PER THE MANDATE OF SEC. 115BBE OF THE ACT HAD DECLINED THE ASSESSEES CLAIM FOR SET - OFF OF THE BUSINESS LOSSES AGAINST THE ADDITION S MADE U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA PARKSVILLE PVT. LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019.AS THE FACTS AND ISS UE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE AFORESAID APPEAL IN THE CASE OF THE ASSESSEES GROUP CONCERN, VIZ. M/S EKTA PARKSVILLE PVT . LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE PROVISIONS OF SEC. 115 BBE WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION AND HAD DIRECTED THE A.O TO ALLOW SET - OFF OF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST THE ASSESSED INCOME . THE GROUND OF APPEAL NO. (IV) RAISED BY THE REVENUE IS DISMISSED. 1 82 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 1 83 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 1745/MUM/2019 (ASSESSEES APPEAL) ITA NO. 2201/MUM/2019 (REVENUES APPEAL) A.Y 2016 - 17 (A). ITA NO. 1745/MUM/2019 ( ASSESSEES APPEAL) : PAGE 147 1 84 . WE SHALL NOW DEAL WITH THE APPEAL OF THE CAPTIONED ASSESSEE FOR A.Y 2016 - 17. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT INCOME FROM ON - MONEY RECEIVED IS ASSESSABLE IN THE YEAR OF RECEIPT AS AGAINST IN THE YEAR OF COMPLETION OF THE PROJECT PANORAMA OR ALTERNATIVELY IN THE YEARS WHEN CONDITIONS OF REVENUE RECOGN ITION ARE SATISFIED AS PER PERCENTAGE COMPLETION METHOD AND FURTHER ERRED IN REJECTING PROJECT COMPLETION METHOD FOR THIS PROJECT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN H OLDING THAT THE PROFIT FROM ON - MONEY OF FLATS IN THE PROJECT PANORAMA WAS ASSESSABLE IN THIS YEAR THOUGH THE FLATS WERE NOT REGISTERED DURING THIS YEAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEA LS) HAS ERRED IN ESTIMATING PROFIT FROM THE ON - MONEY RECEIVED AT 20% OF RS. 277 LAKHS WHICH IS ON A HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 1 85 . SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL PERTA INING TO THE CAPTIONED ASSESSEE FIRM, VIZ. M/S EKTA SHUBHAM VENTURE WAS FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS. THE ASSESSEE FIRM HAD E - FILED ITS RETURN OF INCOME FOR A.Y 2016 - 17 ON 15.10.2016, DECLARING AN INCOME OF RS. 32,61,920/ - . SUBSEQUENTLY, N OTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. 1 86 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION OF A PROJECT, VIZ.PANORAMA AT CHEMBUR . ON A PERUSAL OF THE SEIZED DOCUMENTS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF FLATS OF ITS AFOREMENTIONED PROJECT, AS UNDER: PROJECT NAME FLAT NO. AMOUNT FINANCIAL YEAR OF DATE OF AGREEMENT PAGE 148 (IN LACS) RECEIPT PANORAMA 303 120 2014 - 15 23.02.2015 601 65 2014 - 15 25.07.2014 1401 77 2015 - 16 NOT DONE 1002 200 2015 - 16 NOT DONE GRAND TOTAL 462 OBSERVING THAT THE DATE OF REGISTRATION OF THE AFORESAID FLAT NOS. 303 & 601 PERTAINED TO A.Y 2015 - 16 , THE A.O CALLED UPON THE ASSESEE TO SHOW CAUSE AS TO WHY THE ON - MONEY OF RS. 185 LACS RECEIVED AS REGARDS THE SAID FLATS MAY NOT BE ADDED AS ITS INCOME FOR A.Y 2015 - 16. ALSO, TAKING NOTE OF THE FACT THAT THE FLATS NOS. 1401 & 1002 WERE STILL UNREGISTERED ON THE DATE OF SEARCH, THE A.O BEING OF THE VIEW THAT THE ON - MONEY OF RS. 277 LACS WAS RECEIVED BY THE ASSESSEE DURING THE A.Y 2016 - 17, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME MAY NOT BE ADDED TO ITS INCOME FOR THE SAID YEAR. IN R EPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE AFORESAID GROSS ON - MONEY OF RS. 4.62 CRORES [RS. 185 LACS (+) RS. 277 LACS] WOULD BE CONSIDERED FOR DETERMINING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER, THE AFORESAID REPLY OF THE ASSESSE E DID NOT FIND FAVOUR WITH THE A.O WHO WAS OF THE VIEW THAT THE ENTIRE AMOUNT OF ON - MONEY WAS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN THE YEAR OF RECEIPT. ACCORDINGLY, THE A.O INTER ALIA ADDED THE ON - MONEY OF RS. 2.77CRORE [RS. 77 LAC (FLAT NO . 1401) (+) RS. 200 LAC (FLAT NO. 1002 )] U/S 68 OF THE ACT FOR THE YEAR IN QUESTION I.E A.Y 201 6 - 1 7 . 1 87 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE PAGE 149 NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIE VED FROM THE MOBILE PHONES, THE SAME , THUS, COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CLAIM OF THE ASSESSEE THAT ONLY THE NET INCOME EMBEDDED IN THE ON - MONEY RECEIPT COULD BE BROUGHT TO TAX, THE SAME WAS PRINCIPALLY ACCEPTED BY THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE GROUP CONCERNS OF THE ASSESSEE WHICH HAD APPROACHED THE INCOME - TAX SETTLEMENT COMMISSION HAD OFFERED 15%OF THE ON - MONEY R ECEIPTS FOR TAX, WHICH WAS ACCEPTED BY THE COMMISSION. AT THE SAME TIME, THE CIT(A) OBSERVING THAT THE BASIS FOR QUANTIFICATION OF THE NET INCOME ELEMENT OF THE ON - MONEY RECEIPTS AT 12% COULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE, HE SUBSTITUTED THE SAME BY 20% OF THE GROSS ON - MONEY RECEIPTS AND DIRECTED THE A.O TO RESTRICT THE ADDITION TO THE SAID EXTENT. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESSEE WAS FOLLOWING PERCENTAGE COMPLETION METHOD IN THE PAST AND HAD SHIFTED TO PROJECT COMPL ETION METHOD ONLY IN A.Y 2016 - 17. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE ASSESEEE HAD NOT GIVEN ANY REASON FOR CHANGING THE METHOD FOR RECOGNISING ITS REVENUE FROM PERCENTAGE COMPLETION METHOD TO PROJECT COMPLETION METHOD. IT WAS FURTHER NOTICED BY THE CIT(A) THAT SOME OF THE GROUP CONCERNS OF THE ASSESSEE WERE FOLLOWING PERCENTAGE COMPLETION METHOD. OBSERVING, THAT THE PERCENTAGE COMPLETION METHOD WAS IN ACCORDANCE WITH THE GUIDELINES ISSUED BY THE ICAI, THE CIT(A) WAS OF THE VIEW THAT TH E RE WAS NO JUSTIFIABLE REASON FOR THE ASSESSEE TO SHIFT TO PROJECT COMPLETION METHOD. IN FACT, THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE WAS TRYING TO TWEAK WITH THE METHODS OF RECOGNISING REVENUE, WHICH WAS NOT PAGE 150 PERMISSIBLE. BACKED BY HIS AFORESAID OBSERVATIONS T HE CIT(A) REJECTED THE ASSESSEES REQUEST FOR CONSIDERING THE PROJECT COMPLETION METHOD FOR REVENUE RECOGNITION. 1 88 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. INSOFAR THE GRIEVANCE OF THE ASSESSEE THAT THE LD. COMM ISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEI PTS OF RS. 277 LACS AT 20% , WHICH IS ON THE HIGHER SIDE , AND SHOULD HAVE ESTIMATED THE SAME @12% AS WAS OFFERED BY THE ASSESSE IS CONCERNED, WE F I ND THAT THE FAC TS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14. ACCORDINGLY, OUR ORDER PASSED IN CONTEXT OF THE SAID ISS UE WHILE DISPOSING OFF THE APPEAL OF THE GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MUM/2019 FOR A.Y 2013 - 14 SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF DISPOSAL OF THE SAID ISSUE IN THE CASE OF THE CAPTIONED ASSESSEE. WE , THUS, ARE OF THE CONSIDERED VIEW THAT THE NET INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEIPTS CAN SAFELY BE TAKEN IN THE CASE OF THE CAPTIONED ASSESSEE @15% OF THE AMOUNT OF THE ON - MONEY RECEIPTS OF RS. 277 LA CS . THE GROUND OF APPEAL NO. 3 IS PARTLY ALLO WED IN TERMS OF OUR AFORESAID OBSERVATIONS 1 89 . WE SHALL NOW DEAL WITH THE GRIEVANCE OF THE ASSESSEE THAT THE LOWER AUTHORITIES HAD ERRED IN CONCLUDING THAT THE ON - MONEY SO RECEIVED BY IT W.R.T FLATS IN ITS PROJECT PANORAMA WERE TO BE ASSESSED IN THE YEAR OF RECEIPT. AS OBSERVED BY US HEREINABOVE, THE A.O HELD A CONVICTION THAT THE AMOUNT OF ON - MONEYRECEIVED BY THE ASSESSEE W.R.T FLAT S IN ITS PROJECT, VIZ. PANORAMA WAS TO BE PAGE 151 ASSESSED AS THE UNACCOUNTED RECEIPT SOF THE ASSESSEE IN THE YEAR OF RECEIPT ITSELF . ON BEING QUERIED THAT AS TO WHY THE ON - MONEY AGGREGATING TO RS. 277 LAC RECEIVED W.R.T FLAT NOS. 1401 AND 1002 IN ITS PROJECT, VIZ. PANORAMA AMOUNTING TO RS. 77 LAC AND RS. 200 LAC, RESPECTIVELY, MAY NOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF I.E A.Y 2015 - 16, IT WAS SUBMITTED BY THE ASSESS EE THAT THE SAID AMOUNTS WOULD BE CONSIDERED FOR DETERMINING THE INCOME IN THE YEAR OF COMPLETION OF THE PROJECT. HOWEVER, THE AFORESAID REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO THEREIN TREATED THE ENTIRE AMOUNT OF ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR IN QUESTION AS ITS UNACCOUNTED RECEIPT U/S 68 OF THE ACT.ON APPEAL, THE CIT(A) THOUGH FOUND FAVOUR WITH T H E ASSESSEES CLAIM THAT THE ADDITION W.R.T THE ON - MONEY WAS TO BE RESTRICTED TO THE EXTENT OF THE INCOME ELEMENT THEREIN EMB EDDED, HOWEVER, SHE DID NOT DISLODGE THE VIEW ARRIVED AT BY THE A.O AS REGARDS THE YEAR OF TAXABILITY OF THE ON - MONEY I .E THE YEAR OF RECEIPT ITSELF . 1 90 . BEFORE US, THE ASSESSEE HAS ASSAILED THE VIEW TAKEN BY THE LOWER AUTHORITIES WHO HAD CONCLUDED THAT THE ON - MONEY WAS TO BE BROUGHT TO TAX IN THE YEAR OF RECEIPT ITSELF. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES IN CONTEXT OF THE ISS UE IN HAND I.E THE YEAR OF ASSESSABILITY OF THE ON - MONEY RECEIPTS. SPECIFICALLY IN CONTEXT OF THE YEAR IN QUESTION, IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT(A) HAD ERRED IN HOLDING THAT THE NET INCOME PERTAINING TO THE ON - MONEY RECEIVED W.R.T FLATS IN ITS PROJECT, VIZ. PANORAMA WAS ASSESSABLE DURING THE YEAR IN QUESTION I.EA.Y 2016 - 17 DESPITE THE FACT THAT THE FLATS UNDER CONSIDERATION HAD NOT EVEN BEEN REGISTERED DURING THE YEAR. I N OUR CONSIDERED VIEW, AS THE RECEIPT OF ON - MONEY IS INEXTRICABLY INTER LINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION ACCOUNTED FOR BY PAGE 152 THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBEDDED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUCT OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE ACCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE B ASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . WE, THUS, DIRECT THE A.O TO SUBJECT THE INCOME ELEMENT E MBEDDED IN THE ON - MONEY RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION I.EA.Y 2015 - 16 TO TAX IN TERMS OF OUR AFORESAID OBSERVATIONS. THE GROUND S OF APPEAL NO S . 1 & 2 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 91 . THE GROUND OF APPEAL NO. 4 BEING GENERAL IS DISMISSED AS NOT PRESSED. 1 92 . THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2201/MUM/2019 ( REVENUES APPEAL ) : 1 93 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 2016 - 17. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : PAGE 153 (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 2,77,00,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 2,77,00,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV) . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST ADDITIONS MADE U/S 68, BY INVOKING PROVISIONS OF SECTION 115BBE? (V). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 1 94 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 2,77,00,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS N OT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSERVATION OF THE CIT(A) THE RE VENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF THE ACT IS AN INCLUSIVE DEFINI TION. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCOUNT AS CONTEMPLATED IN S EC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PAGE 154 PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. ALSO , THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). LASTLY, THE REVENUE IS AGGRIEVED WITH THE DIRECTION OF THE CIT(A) TO SET - OFF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST ADDITIONS MADE U/S 68, WHICH AS STATED BY THE REVENUE IS CONTRARY TO THE PROVISIONS OF SECTION 115BBE. 1 95 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PE RUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE T HAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCE EDINGS, THEREFORE, IT COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. L TD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17. AS THE FACTS AND THE ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN T HE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD PAGE 155 THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED T HAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (III) RAISED BY THE REVENUE ARE DISMISSED. 1 96 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1745/MUM/2019 FOR A.Y 2016 - 17 PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN INVOLVED,AND HAD FURTHER DIRECTED THE A.O TO RESTRICT THE SAME TO THE EXTENT O F 15% OF SUCH RECEIPTS, THEREFORE, THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE AND OBSERVATIONS RECORDED THEREIN. THE GROUND OF APPEAL NO. (V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 1 97 . INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HA D ERRED IN VACATING THE VIEW TAKEN BY THE A.O WHO AS PER THE MANDATE OF SEC. 115BBE OF THE ACT HAD DECLINED THE ASSESSEES CLAIM FOR SET - O FF OF THE BUSINESS LOSSES AGAINST THE ADDITIONS MADE U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA PARKSVILLE PVT. LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019.AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE IN QUESTION WHILE DISPOSING OFF THE AFORESAID APPEAL IN THE CASE OF THE ASSESSEE S GROUP CONCERN, VIZ. M/S EKTA PARKSVILLE PVT. LTD. FOR A.Y 2014 - 15 IN ITA NO. 2194/MUM/2019 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE PAGE 156 UPHOLD THE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE PROVISIONS OF SEC. 115BBE WOULD NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE FOR THE YEAR IN QUESTION AND HAD DIRECTED THE A.O TO ALLOW SET - OFF OF THE BUSINESS LOSSES OF THE ASSESSEE AGAINST THE ASSESSED INCOME . THE GROUND OF APPEAL NO. (IV) RAISED BY THE REVENUE IS DISMISSED. 1 98 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 1 99 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. M/S EKTA WORLD PVT.LTD. : ITA NO. 2199/MUM/2019 (REVENUES APPEAL) ITA NO. 2200/MUM/2019 (REVENUES APPEAL) A.Y 2016 - 17 (A). ITA NO. 2199/MUM/2019 ( REVENUES APPEAL ) : 200 . WE SHALL NOW TAKE UP THE QUANTUM APPEAL OF THE REVENUE IN THE CASE OF THE CAPTIONED ASSESSEE, VIZ. M/S EKTA WORLD PVT. LTD. FOR A.Y 2016 - 17. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 75,00,000/ - MADE U/S 68 OF THE IT ACT, 1961. (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AS SESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO SET OFF BUSINESS LOSSES AGAINST ADDITIONS MADE U/S 68, BY INVOKING PROVISIONS OF SECTION 115BBE? PAGE 157 (V). WHETHER ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 201 . SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CA SE OF THE ENTITIES BELONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL THAT HAD SURFACED IN THE COURSE OF THE SEARCH PROCEEDINGS REVEALED THAT THE ASSESSEE FIRM, VIZ. M/S EKTA WORLD WHICH WAS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER HAD RECEIVE D ON - MONEY ON SALE OF FLATS W.R.T ITS PROJECT OCCUL T AT CHEMBUR. R ETURN OF INCOME FOR A.Y 201 6 - 1 7 WAS E - FILED BY THE ASSESSEE FIRM ON 15.10.2016 DECLARING NIL INCOME UNDER THE NORMAL PROVISIONS AND BOOK PROFIT OF RS. 5,34,823/ - U/S 115JB OF THE ACT. SUB SEQUENTLY, NOTICES UNDER SEC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE FIRM . 202 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE A.O OBSERVED THAT THE WHATS APP MESSAGES THAT WERE EXCHANGED BETWEEN SHRI. VIVEK MOHANANI , DIRECTOR AND S HRI PRATEEK ARORA , A KEY EMPLOYEE OF EKTA GROUP AND WERE RETRIEVED IN THE COURSE OF THE SEARCH PROCEEDINGS REVEALED THAT ON - MONEY OF RS. 75 LACS WAS RECEIVED FROM ONE SHRI. VENKET AGAINST THE SALE OF FLAT IN THE ASSESSEES PROJECT, VIZ. OCCUL T AT CHEMBUR . IT WAS OBSERVED BY THE A.O THAT THE AFORESAID FACT WAS CONFRONTED TO SHRI. PRATEEK ARORA (SUPRA), AND WAS ALSO ADMITTED TO BE THE UNACCOUNTED INCOME OF THE ASSESSEE FIRM BY SHRI. VIVEK MOH A NANI (SUPRA) . HOWEVER, IT WAS NOTICED BY THE A.O THAT THE ASSESSEE FIRM HAD THEREAFTER NOT OFFERED THE AFORESAID AMOUNT OF ON - MONEY AS ITS ADDITIONAL INCOME IN THE RETURN OF INCOME FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17. IN THE BACKDROP OF THE AFORESAID FACT S THE A .O CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ON - MONEY OF RS. 75 LAC RECEIVED BY IT ON SALE OF FLAT IN ITS PROJECT OCCUL T MAY NOT BE ADDED TO ITS INCOME PAGE 158 RETURNED FOR THE YEAR IN QUESTION I.E A.Y 2016 - 17. IN REPLY, THE ASSESSEE REFERRING TO THE SEIZED RECORD AS WAS RELIED UPON BY THE A.O FOR ALLEGING RECEIPT OF ON - MONEY OF RS. 75 LA C , THEREIN DECLINED OF HAVING RECEIVED ANY SUCH AMOUNT. IT WAS SUBMITTED BY THE ASSES S EE THAT IT HAD NEITHER CARRIED OUT ANY SALE OF A FLAT IN ITS PROJECT OCCULT TO ANY PERSON BY THE NAME OF VENKET NOR THERE WAS ANY BROKER BY THE SAID NAME FOR SALE OF FLAT S IN ITS PROJECT. IT WAS, THUS, SUBMITTED BY THE ASSESSEE THAT THE ADDITION OF THE IMPUGNED ON - MONEY OF RS. 75 LAC WAS NOT CALLED FOR IN ITS HANDS. HOWEVER, THE AFO RESAID EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. IT WAS OBSERVED BY THE A.O THAT SHRI. V I VEK MOHANANI (SUPRA) IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT, ON BEING CONFRONTED WITH THE W HATSAPP MESSAGES EXCHANGED BETWEEN HIM AND SHRI . PRATEEK ARORA (SUPRA) HAD CONFIRMED THE RECEIPT OF ON - MONEY OF RS. 75 LACS ON SALE OF FLAT IN ITS PROJECT, VIZ. OCCULT. FURTHER, THE A.O WAS OF THE VIEW THAT THE ONUS WAS CAST UPON THE ASSESSEE TO DISPROVE THE NOTINGS OF RECEIPT OF CASH ON THE LOOSE PA PER THAT WAS SEIZED IN THE COURSE OF THE SEARCH PROCEEDINGS FROM ITS PREMISES. BACKED BY HIS AFORESAID OBSERVATIONS , THE A.O ADDED THE AMOUNT OF RS. 75 LAC AS ON - MONEY RECEIVED BY THE ASSESSEE FIRM ON SALE OF FLAT IN ITS PROJECT, VIZ. OCCULT AT CHEMBUR. 203 . ON APPEAL, THE CIT(A) ON T H E BASIS OF EXHAUSTIVE DELIBERATIONS CONCLUDED THAT IN THE ABSENCE OF ANY EVIDENCE EITHER DIRECT OR CORROBORATIVE, THE ADDITION MADE ONLY ON THE BASIS OF SOME WHATSAPP MESSAGES COULD NOT BE UPHELD. ACCORDINGLY, THE CIT(A) V ACATED THE ADDITION OF RS. 75 LAC MADE BY THE A.O. 204 . AGGRIEVED, THE REVENUE HAS ASSAILED THE ORDER OF THE CIT(A) BEFORE US. THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) FOR THE PAGE 159 ASSESSEE AT THE VERY OUTSET SUBMITTED THAT AS THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL FILED BY THE REVENUE WAS BELOW THAT CONTEMPLATE D IN THE CBDT CIRCULAR NO. 17/2019, DATED 08.08.2019, THEREFORE, THE SAME WAS NOT MAINTAINABLE. 205 . AS SUBMITTED BY THE LD. A.R, AND RIGHTLY SO, THE CENTRAL BOARD OF DIRECT TAX ES (CBDT) VIDE ITS CIRCULAR NO.17/2019 DATED 08.08.2019 HAS AMENDED CIRCULAR NO. 3/2018 DATED 11.07.2018 FOR FURTHER ENHANCEMENT OF MONETARY LIMIT FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE ITAT, HIGH COURTS AND SLPS/APPEALS BEFORE SUPREME COURT AS A MEASURE FOR REDUCING LITIGATION. 206 . CBDT VIDE CIRCULAR NO. 3/2018 DATED 11.07.2018 HAS SPECIFIED THAT APPEALS SHALL NOT BE FILED BEFORE THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMIT OF RS.2 0,00,000/ - . FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED. FURTHER, TAX EFFECT SHALL BE TAXES INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDER, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. AT PARA 13 OF THE ABOVE CIRCULAR, IT HAS BEEN MENTIONED THAT: PAGE 160 13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTION/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNA L AND IT SHALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. 207 . AS A STEP TOWARDS FURTHER MANAGEMENT OF LITIGATION, CBDT VIDE CIRCULAR NO. 17/2019 HAS FIXED THE MONETARY LIMIT FOR FILING OF APPEALS BEFORE ITAT AT RS.50,00,000/ - . 208 . AS IS DISCERNIBLE FROM THE MEMORANDUM OF APPEAL, THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS BELOW THE MONETARY LIMIT OF RS.50,00,000/ - . 209 . ON BEING CONFRONTED WITH THE AFORESAID FACT, THE LD. D.R DID NOT CONTROVERT THE AFORESAID FACTUAL POSITION. IT WAS, HOWEVER, SUBMITTED BY THE LD. D.R THAT LIBERTY MAY KINDLY BE GIVEN TO SEEK RECALL OF THE DISMISSAL OF APPEAL AND ITS RESTORATION, IN CASE IT CAN BE SHOWN THAT THE APPEAL IS COVERED BY THE EXCEPTIONS. 210 . WE AGREE WITH THE ABOVE CONTENTIONS OF THE LD. D . R AND MAKE IT CLEAR THAT THE APPELLANT REVENUE SHALL BE AT LIBERTY TO POINT OUT THE EXCEPTIONS AND WE WILL TAKE APPROPRIATE REMEDIAL MEASURES IN THIS REGARD. 211 . RESULTANTLY, W ITH THE ABOVE OBSERVATIONS THE CAPTIONED APPEAL INVOLVING A TAX EFFECT OF LESS THAN RS.50 LAC IS DISMISSED. 212 . THE APPEAL OF THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. (B). ITA NO. 2200/MUM/2019 (REVENUES APPEAL) : 2 13 . WE SHALL NOW TAKE UP THE APPEAL OF THE REVENUE IN THE CASE OF THE CAPTIONED ASSESSEE FOR A.Y 2016 - 17, WHICH IN TURN ARISES FROM PAGE 161 THE ORDER OF THE CIT(A) VACATING THE PENALTY IMPOSED BY THE ADDL. CIT, CENTRAL RANGE - 6, MUMBAI U/S 271D OF RS. 75 LACS. THE REVE NUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U.S 271D AMOUNTING TO RS. 75,00,000/ - , BY RELYING ON DECISION IN QUANTUM ADDITIONS? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE DECISION IN QUANTUM ADDITION WAS NOT ACCEPTED BY THE DEPARTMENT AND APPE AL IS PENDING BEFORE HONBLE ITAT? 2 14 . ON THE BASIS OF THE WHATS APP MESSAGE S DATED 19.09.2015 EXCHANGED BETWEEN SHRI. VIVEK MOHNANI, PROMOTER OF THE EKTA GROUP AND SHRI. PRATEEK ARORA, KEY EMPLOYEE OF THE GROUP THAT WERE RETRIEVED IN THE COURSE OF T HE SEARCH PROCEEDINGS AND THEREAFTER FORM ED PART OF THE SEIZED MATERIAL, THE A.O HAD VIDE HIS LETTER NO. DCIT/CC/6(4)/MUM/271D& E/17 - 18, DATED 29.12.2017 MADE A REFERENCE TO THE ADDL. CIT, CENTRAL RANGE - 6, MUMBAI FOR IMPOSING PENALTY U/S 271D FOR CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS OF THE ACT BY THE ASSESSEE FIRM IN LIEU OF HAVING RECEIVED AN UNACCOUNTED AMOUNT OF RS. 75 LAC IN CASH. THE ADDL. CIT, CENTRAL RANGE - 6, MUMBAI, THEREIN CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271D W.R.T THE CASH RECEIPT OF RS. 75 LAC MAY NOT BE IMPOSED ON IT. IN REPLY, THE ASSESSEE DENIED OF HAVING RECEIVED THE ALLEGED AMOUN T OF RS.75 LAC. IT WAS SUBMITTED BY THE ASSESSEE FIRM THAT IT HAD NEITHER CARRIED OUT ANY SALE OF A FLAT IN ITS PROJECT OCCULT TO ANY PERSON BY THE NAME OF VENKET NOR WAS THERE ANY BROKER BY THE SAID NAME FOR SALE OF ANY FLAT IN ITS SAID PROJECT. IT WAS , THUS, SUBMITTED BY THE ASSESSEE THAT NOW WHEN THE IMPUGNED ON - MONEY OF RS. 75 LAC WAS NEVER RECEIVED BY IT, THEREFORE, NO PENALTY U/S 271D FOR THE ALLEGED INFRACTION OF THE PAGE 162 PROVISIONS OF SEC. 269SS COULD BE IMPOSED ON IT. HOWEVER, THE ADDL. CIT DID NOT F IND FAVOUR WITH THE AFORESAID EXPLANATION OF THE ASSESSEE. IT WAS OBSERVED BY THE ADDL. CIT THAT THE WHATSAPPP MESSAGE S BETWEEN SHRI. VIVEK MOHANANI (SUPRA) AND SHRI. PRATEEK ARORA (SUPRA) CLEARLY MADE A REFERENCE OF RECEIPT OF THE AMOUNT OF RS. 75 LAC. IN ORDER TO FORTIFY HIS CONVICTION THAT THE ASSESSEE FIRM HAD ACTUALLY RECEIVED THE AFORESAID AMOUNT OF RS. 75 LAC, THE ADDL. CIT REFERRED TO THE CONTENTS OF THE WHATS APP MESSAGE S EXCHANGED BETWEEN THE AFOREMENTIONED PERSONS. BACKED BY HIS AFORESAID OBSERVAT IONS, THE ADDL. CIT VIDE HIS ORDER DATED 29.06.2018 IMPOSED A PENALTY U/S 271D OF R S . 75 LAC ON THE ASSESSEE FIRM. 2 15 . ON APPEAL, THE CIT(A) AFTER EXHAUSTIVELY DELIBERATING ON THE FACT SITUATION IN THE BACKDROP OF THE MATERIAL AVAILABLE ON RECORD CONCLUD ED THAT AS THERE WAS NO EVIDENCE THAT AN AMOUNT OF RS. 75 LAC WAS RECEIVED BY THE ASSESSEE , THUS , THERE WAS NO CASE FOR LEVY OF PENALTY U/S 271D OF THE ACT. ACCORDINGLY, THE CIT(A) VACATED THE PENALTY U/S 271D OF RS. 75 LAC IMPOSED BY THE ADDL. CIT. 2 16 . AGGRIEVED, THE REVENUE HAS ASSAILED THE ORDER OF THE CIT(A) BEFORE US. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL P RONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIONS. LD. D.R RELIED ON THE ORDER PASSED BY THE ADDL. CIT DATED 29.06.2018 IMPOSING PENALTY U/S 271D OF THE ACT. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE FAC TUM OF RECEIPT OF UNACCOUNTED PROJECT RECEIPTS OF RS. 75 LAC BY THE ASSESSEE WAS CLEARLY DISCERNIBLE FROM THE WHATS APP MESSAGE S EXCHANGED BETWEEN SHRI PRATEEK ARORA, A KEY EMPLOYEE OF THE PAGE 163 ASSESSEE GROUP AND SHRI. VIVEK MOHANANI, PROMOTER OF THE ASSESSEE GR OUPTHUS , THE ADDL. CIT OBSERVING THAT THE AFORESAID TRANSACTION OF THE ASSESSEE WAS IN CONTRAVENTION OF THE EXPRESS PROVISIONS OF SEC. 269SS OF THE ACT HAD RIGHTLY IMPOSED PENALTY U/S 271D OF THE ACT. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE CIT(A) HAD ERRED IN VACATING THE PENALTY IMPOSED BY THE ADDL. CIT U/S 271D OF THE ACT, THEREFORE, HIS ORDER MAY BE SET - ASIDE AND THAT OF THE ADDL. CIT BE RESTORED. 2 17 . PER CONTRA, THE LD. A.R RELIED ON THE ORDER OF THE CIT(A). IT WAS SUBMITTED BY THE LD. A.R THAT TAKING COGNIZANCE OF THE FACT THAT THERE WAS NO EVIDENCE OF RECEIPT OF THE IMPUGNED CASH OF RS. 75 LAC BY THE ASSESSEE COMPANY, THE CIT(A) HAD RIGHTLY QUASHED THE PENALTY THAT WAS IMPOSED BY THE ADDL. CIT U/S 271D OF THE ACT ON BASELESS ASSUMPTIONS AND PRE SUMPTIONS. IT WAS SUBMITTED BY THE LD. A.R THAT ASTHE ASSESSEE COMPANY HAD NEITHER CARRIED OUT ANY SALE OF A FLAT IN ITS PROJECT OCCULT TO ANY PERSON BY THE NAME OF VENKET NOR WAS THERE ANY BROKER BY THE SAID NAME FOR SALE OF FLAT IN ITS SAID PROJECT T HUS , THERE WAS NO JUSTIFICATION ON THE PART OF THE ADDL. CIT TO HAVE IMPOSED PENALTY U/S 271D AS REGARDS A NON - EXISTENT TRANSACTION. 2 18 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, WHATS APP MESSAGES EXCHANGED BETWEEN SHRI PRATEEK ARORA, A KEY EMPLOYEE OF THE ASSESSEE GROUP AND SHRI. VIVEK MOHANANI, PROMOTER OF THE ASSESSEE GROUP WERE RETRIEVED IN THE COURSE OF THESEARCH PROCEEDINGS AND FORM ED PART OF THE SEIZED RECORDS. GIST OF THE RETRIEVED WHATS APP MESSAGES WHICH FORMED PART OF THE SEIZED MATERIAL IS CULLED OUT AS UNDER: PAGE 164 DATE TIME MESSAGE FROM PRATIK MESSAGE TO PRATIK 19.09.2015 1:29 P.M VENKAT IS GIVING APPROX 50A IN THE EVENING 19.09.2015 1:29 P.M BALANCE ON MONDAY OK KOOL TODAY 75 HE WILL GIVE 1:30 P.M OK KOOL 19.09.2015 1:41 P.M HE IS GIVING 65 IN CHEQUE TOO 19.09.2015 6:32 P.M RECEIVED 50 FROM VENKAT 19.09.2015 6:37 P.M OK KOOL IT IS ON THE BASIS OF THE AFORESAID WHATS APP MESSAGE S THAT THE ADDL. CIT HAD INFERRED THAT THE ASSESSEE HAD RECEIVED CASH AMOUNT OF RS. 75 LACS BY WAY OF UNACCOUNTED RECEIPTS AS REGARDS SALE OF FLAT IN ITS PROJECT, VIZ. OCCULT. BACKED BY HER AFORESAID VIEW, THE ADDL. CIT HAD CALL ED UPON THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S 271D OF THE ACT FOR RECEIVING THE IMPUGNED AMOUNT IN CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS OF THE ACT MAY NOT BE IMPOSED ON IT. IN REPLY, THE ASSESSEE HAD DENIED OF HAVING RECEIVED THE AFORESAID IMPUGNED AMOUNT OF RS. 75 LAC. AS OBSERVED BY US HEREINABOVE, I T WAS THE CLAIM OF THE ASSESSEE THAT IT HAD NOT RECEIVED ANY AMOUNT IN CASH FROM SALE OF FLATS/UNITS IN ITS BUILDING PROJECT AFTER 01.06.2015 I.E IN VIOLATION OF THE PROVISIONS OF SEC. 269SS O F THE ACT. IN ORDER TO FORTIFY ITS AFORESAID CLAIM, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD NEITHER CARRIED OUT ANY SALE OF A FLAT IN ITS PROJECT OCCULT TO ANY PERSON BY THE NAME OF VENKET NOR WAS THERE ANY BROKER BY THE SAID NAME FOR SALE OF FLAT S IN ITS SAID PROJECT. HOWEVER, THE ADDL. CIT WAS NOT INCLINED TO ACCEPT THE EXPLANATION OF THE ASSESSEE , AND BEING OF THE VIEW THAT THE ASSESSEE HAD IN CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS OF THE ACT PAGE 165 RECEIVED UNACCOUNTED PROJECT RECEIPTS OF RS. 75 LAC , THEREIN IMPOSED A PENALTY U/S 271D OF RS. 75 LAC ON THE ASSESSEE FIRM. 2 19 . WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION IN THE BACKDROP OF THE RESPECTIVE CONTENTIONS ADVANCED BY THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES , AND HAVE ALSO PERUS ED THE MATERIAL AVAILABLE ON RECORD. ALTHOUGH, THE AFORESAID WHATS APP MESSAGE S EXCHANGED BETWEEN SHRI PRATEEK ARORA, A KEY EMPLOYEE OF THE ASSESSEE GROUP AND SHRI. VIVEK MOHANANI, PROMOTER OF THE ASSESSEE GROUP APPARENTLY POINTS OUT TO A CASH TRANSACTION, HOWEVER, THE SAME ON SUCH STANDALONE BASIS CANNOT JUSTIFIABLY EVIDENCE THAT THE IMPUGNED AMOUNT OF RS. 75 LAC WAS RECEIVED BY THE ASSESSEE. AS IS DISCERNIBLE FROM THEWHATS MESSAGE S , THE ALLEGED TRANSACTION IS STATED TO BE WITH ONE SHRI . VENKAT. HOWEVER, IT HAS BEEN THE CLAIM OF THE ASSESSEE THAT IT HAD NEITHER CARRIED OUT ANY SALE OF A FLAT IN ITS PROJECT OCCULT TO ANY PERSON BY THE NAME OF VENKET NOR WAS THERE ANY BROKER BY THE SAID NAME FOR SALE OF ANY FLAT IN ITS SAID PROJECT. N EITHER THE AFORESAID CLAIM OF THE ASSESSEE HAD TILL DATE EITHER BEEN DISLODGED OR DISPROVED BYTHE ADDL.CIT/A.O NOR ANY MATERIAL HAS BEEN PLACED ON OUR RECORD BY THE LD. D.R TO PROVE TO THE CONTRARY. IN SUM AND SUBSTANCE, IT IS A MATTER OF FACT BORNE FROM T HE RECORDS THAT NEITHER THE ASSESSEE HAD CARRIED OUT ANY SALE OF A FLAT IN ITS PROJECT OCCULT TO ANY PERSON BY THE NAME OF VENKET NOR ANY BROKER WAS THERE OF THE SAID NAME FOR SALE OF ANY FLAT IN THE AFORESAID PROJECT OF THE ASSESSEE . APART FROM THAT, WE FIND THAT THE IMPUGNED WHATS APP MESSAGE ON 19.09.2015 AT 1:41 P.M ALSO MAKES A REFERENCE TO A PAYMENT OF RS. 65 LAC IN CHEQUE. IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) (IN COURSE OF ITS QUANTUM APPEAL) THAT IF THE RECEIPT OF CASH OF RS. 75 LA C IS TO BE TAKEN AS TRUE, THEN , THE PAGE 166 TRANSACTION OF R S . 65 LAC THROUGH CHEQUE ALSO SHOULD BE CONSIDERED TRUE. HOWEVER, AS STATED BY THE ASSESSEE, IT REMAINED AS A MATTER OF A N UNCONTROVERTED FACT THAT THERE WAS NO RECEIPT OF RS. 65 LAC THROUGH CHEQUE IN THE BANK ACCOUNTS OF THE ASSESSEE. INSOFAR THE ADMISSION ON THE PART OF SHRI. VIVEK MOHANANI THAT THE AMOUNT OF RS. 75 LAC WAS THE CASH RECEIVED FOR SALE OF A FLAT IN THE PROJECT OF THE ASSESSEE COMPANY, VIZ. OCCULT, THE SAID STATEMENT HAD THEREAFTER BEEN R ETRACTED BY HIM AND THE FACT THAT NO SUCH TRANSACTION HAD OCCASIONED WAS BROUGHT BY HIM TO THE KNOWLEDGE OF THE DDIT(INV.). IN THE BACKDROP OF THE AFORESAID FACTS, WE CONCUR WITH THE VIEW TAKEN BY THE CIT(A) THAT AS THE ALLEGED RECEIPT OF THE AMOUNT OF RS. 75 LAC BY THE ASSESSEE HAD NOT BEEN PROVED, THEREFORE, NO PENALTY U/S 271D COULD HAVE BEEN IMPOSED ON THE ASSESSEE FOR ALLEGEDLY RECEIVING THE IMPUGNED AMOUNT IN CONTRAVENTION OF THE PROVISIONS OF SEC. 269SS OF THE ACT. TO SUM UP, WE ARE OF THE CONSIDERED VIEW THAT AS NEITHER THE A.O N OR THE ADDL. CIT HAD BROUGHT ANYTHING ON RECORD TO SHOW THAT THE ASSESSEE H A D IN FACT RECEIVED CASH OF RS. 75 LAC, NO PENALTY U/S 271D COULD JUSTIFIABLY BE IMPOSED ON THE BASIS OF ASSUMPTIONS, PRESUMPTIONS , SURMISES AND CONJECTIURES DE HORS AN Y IOTA OF EVIDENCE PROVING THE SAME . OUR AFORESAID VIEW THAT ADVERSE INFERENCES CANNOT BE DRAWN IN THE HANDS OF AN ASSESSEE MERELY ON THE BASIS OF UNSUBSTANTIATED PRESUMPTIONS IS FORTIFIED BY THE ORDER OF THE ITAT, BANGALO RE IN THE CA SE OF NANDINI DELUXE VS. ACIT (2014) 42 CCH 20 (BANG) . IN ITS SAID ORDER, IT WAS INTER ALIA OBSERVED BY THE TRIBUNAL THAT TAXING OF PROFITS EARNED ON UNEXPLAINED SALES ON THE BASIS OF FIGURES FOUND IN THE MOBILE PHONES OF THE PARTNER WITHOUT BRINGING ON R ECORD ANY EVIDENCE TO SUBSTANTIATE THE ADDITION MADE WAS NOT ALLOWED. ACCORDINGLY, IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS, FINDING PAGE 167 NO INFIRMITY IN THE VIEW TAKEN BY THE CIT(A) THAT PENALTY IMPOSED BY THE ADDL. CIT U/S 271D IN THE ABSENCE OF ANY EVI DENCE OF RECEIPT OF THE IMPUGNED AMOUNT OF RS. 75 LAC BY THE ASSESSEE CANNOT BE SUSTAINED, WE UPHOLD THE SAME. 2 20 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 2 21 . RESULTANTLY, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. M/S PAHLI HILL DEVEL OPERS LLP : ITA NO. 174 3 /MUM/2019 (ASSESSEES APPEAL) ITA NO. 2193/MUM/2019 (REVENUES APPEAL) A.Y 201 4 - 1 5 (A). ITA NO. 1743/MUM/2019 (ASSESSEES APPEAL) : 2 22 . WE SHALL NOW TAKE UP THE APPEAL OF THE CAPTIONED ASSESSEE , VIZ. M/S PAHLI HILL DEVELOPERS LLP FOR A.Y 201 4 - 1 5 . THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) H AS ERRED IN HOLDING THAT THE APPELLANT RECEIVED ON - MONEY WITHOUT APPRECIATING THE FACT THAT THE PARTNER OF APPELLANT DENIED FOR THE SAME. SHE OUGHT TO HAVE DELETED THE WHOLE ADDITION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMIS SIONER OF INCOME - TAX (APPEALS) HAS ERRED IN ESTIMATING PROFIT FROM THE ON - MONEY RECEIVED AT 20% OF RS. 336.30 LAKHS WHICH IS ON A HIGHER SIDE AND SHOULD HAVE BEEN ESTIMATED @12% OF ON - MONEY AS OFFERED BY YOUR APPELLANT. 3. THE APPELLANT CRAVES LEAVE TO AL TER, AMEND, MODIFY OR SUBSTITUTE ANY GROUND/GROUNDS AND TO ADD ANY NEW GROUND OR GROUNDS ON OR BEFORE THE APPEAL IS DISPOSED OFF. 2 23 . BRIEFLY STATED, THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER. SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 05.10.2015 IN THE CASE OF THE ENTITIES BELONGING TO THE EKTA GROUP. INCRIMINATING MATERIAL PERTAINING TO THE CAPTIONED ASSESSEE FIRM, VIZ. M/S PAHLI HILL DEVELOPERS LLP WAS FOUND IN THE COURSE OF PAGE 168 THE SEARCH PROCEEDINGS. NOTICE U/S 153C WAS ISSUED AND DULY SERVED UPON THE ASSESSEE FIRM FOR THE YEAR IN QUESTION. RETURN OF INCOME IN COMPLIANCE TO THE NOTICE ISSUED U/S 153C WAS FILED BY THE ASSESSEE FIRM ON 10 .01.2017 DECLAR ING AN INCOME OF RS. 2,21,83,351/ - . SUBSEQUENTLY, NOTICES UNDER S /S EC. 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE FIRM . 2 24 . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS GATHERED BY THE A.O THAT THE ASSESSEE HAD UNDERTAKEN CONSTRU CTION OF A PROJECT, VIZ. THE ONE . ON A PERUSAL OF THE SEIZED DOCUMENTS AND STATEMENTS RECORDED IN THE COURSE OF THE SEARCH PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF FLATS OF ITS AFOREMENTIONED PROJECT, AS U NDER: PROJECT NAME FLAT NO. AMOUNT (IN LACS) FINANCIAL YEAR OF RECEIPT DATE OF AGREEMENT THE ONE 1401 & 1402 136 . 30 201 3 - 1 4 23.02.2015 1201 & 1202 200 .00 201 3 - 1 4 25.07.2014 GRAND TOTAL 336 .3 0 OBSERVING , THAT THE ASSESSEE HAD NOT OFFERED THE AFORESAID AMOUNT OF ON - MONEY OF RS. 3,36,30,000/ - AS ITS ADDITIONAL INCOME IN THE RETURN OF INCOME, THE A.O CALLED UPON IT TO SHOW CAUSE AS TO WHY THE SAME MAY NOT BE ADDED TO ITS RETURNED INCOME SPECIFICALLY WHEN THE SALE TRANSACTIONS FOR THE SAID FLATS WERE REGISTERED IN THE PERIOD RELEVANT TO A.Y 2014 - 15. IN REPLY, THE ASSESSEE DENIED OF HAVING RECEIVED ANY ON - MONEY W.R.T THE TRANSACTIONS IN QUESTION. HOWEVER, THE A.O WAS NOT INCLINED TO ACCEPT THE AFORESAID REPLY O F THE ASSESSEE. IT WAS OBSERVED BY THE A.O THAT THE CLAIM OF THE ASSESSEE THAT NO ON - MONEY WAS RECEIVED W.R.T SALE OF FLATS OF ITS PROJECT THE PAGE 169 ONE COULD NOT BE ACCEPTED AS THE SEIZED DOCU M ENT, VIZ. ANNEXURE A - 3 PAGE 3 - 4 CLEARLY MENTIONED THE BIFURCATIO N OF THE RATE PER SQ. FT. FOR THE FLATS INTO CHEQUE AND CASH PORTION. IT WAS FURTHER OBSERVED BY THE A.O THAT THE ASSESSEE HAD ALSO FAILED TO PRODUCE ANY MATERIAL IN SUPPORT OF ITS CLAIM THAT NO ON - MONEY WAS RECEIVED IN RESPECT OF THE SALE TRANSACTIONS IN QUESTION. ACCORDINGLY, THE A.O REJECT ED THE ASSESSEES REPLY AND ADDED THE AMOUNT OF RS. 3,36,30,000/ - [RS. 2,00,00,000/ - (+) RS. 1,36,30,000/ - ] AS THE UNACCOUNTED RECEIPTS U/S 68 OF THE ACT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 2 25 . ON APPEAL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE ON - MONEY RECEIVED BY THE ASSESSEE WAS FOR SALE OF FLATS, THEREFORE, THE SAME BEING INSEPARABLE FROM THE ASSESSEES BUSINESS WAS IN THE NATURE OF A BUSINESS RECEIPT. FURTHER, THE CIT(A) OBSERVED THAT AS THE AMOUNT O F ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AS REGARDS THE CL AIM OF THE ASSESSEE THAT THE A.O DE HORS ANY INCRIMINATING MATERIAL THAT WOULD CONCLUSIVELY PROVE RECEIPT OF ON - MONEY BY THE ASSESSEE FIRM HAD MADE AN ADDITION OF RS. 3,36,30,000/ - ON THE BASIS OF A N UNSUBSTANTIATED STANDALONE STATEMENT OF SHRI. PRATEEK AR ORA AND DUMB NOTINGS IN THE SEIZED DOCUMENTS, VIZ. ANNEXURE A - 3 PAGE 3 - 4 , THE SAME DID NOT FIND FAVOUR WITH THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT AS SHRI PRATEEK ARORA (WRONGLY MENTIONED BY THE CIT(A) IN HIS ORDER AS SHRI. DILIP BORADE) WAS A KEY EMPLOYEE OF THE ASSESSEE COMPANY AND THE ASSESSEE GROUP WAS HABITUALLY RECEIVING ON - MONEY ON SALE OF PROPERTIES, THEREFORE, IT COULD SAFELY BE PRESUMED THAT THE PAGE 170 AFORESAID AMOUNT OF RS. 3,36,30,000/ - WAS RECEIVED BY THE ASSESSEE AS ON - MONE Y ON SALE OF FLATS IN ITS PROJECT, VIZ. THE ONE. IT WAS OBSERVED BY THE CIT(A) THAT SHRI. PRATEEK ARORA WAS A KEY EMPLOYEE OF THE EKTA GROUP AND WAS ACTIVELY INVOLVED IN NEGOTIATING AND HANDLING CASH FOR THE GROUP. OBSERVING THAT CERTAIN LOOSE PAPERS W ERE FOUND IN THE COURSE OF THE SEARCH PROCEEDINGS FROM THE RESIDENCE OF SHRI. PRATEEKARORA (SUPRA), AND THAT RECEIPT OF ON - MONEY WAS ADMITTED BY HIM IN HIS STATEMENT RECORDED ON OATH U/S 132(4) , THE CIT(A) WAS OF THE VIEW THAT THE SAME BEING A VALUABLE PIE CE OF EVIDENCE COULD NOT BE OVERLOOKED. AS REGARDS THE DENIAL BY SHRI. VIVEK MOHANANI (SUPRA) OF HAVING RECEIVED ANY ON - MONEY ON SALE OF FLATS IN QUESTION IN THE ASSESSEES PROJECT, VIZ. THE ONE, THE CIT(A) WAS OF THE VIEW THAT THE SAID SIMPLICITER DENIA L WOULD NOT SUFFICE TO DISLODGE THE EVIDENTIARY VALUE OF THE NOTINGS AND THE FACTS STATED BY SHRI. PRATEEK A RORA (SUPRA) IN HIS STATEMENT RECORDED ON OATH U/S 132(4) OF THE ACT. BACKED BY HIS AFORESAID OBSERVATIONS, THE CIT(A) REJECTED THE CLAIM OF THE ASS ESSEE AND ADDED THE AFORESAID AMOUNT OF RS. 3,36,30,000/ - AS ON - MONEY RECEIVED BY THE ASSESSEE ON SALE OF THE AFORESAID FLATS IN QUESTION. 2 26 . AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER OF THE CIT(A) IN APPEAL BEFORE US. WE HAVE HEARD THE LD. AUTHORI SED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILA BLE ON RECORD , AS WELL AS CONSIDERED THE JUDICIAL PROUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RESPECTIVE CONTENTIO NS. AS OBSERVED BY US HEREINABOVE, DURING THE COURSE OF THE SEARCH PROCEEDINGS CONDUCTED ON 07.10.2015 ON THE EKTA BHOOMI GROUP CERTAIN LOOSE PAPERS WERE FOUND FROM THE RESIDENCE OF SHRI. PRATEEK ARORA, KEY EMPLOYEE OF PAGE 171 EKTA GROUP, WHICH THEREAFTER WERE MARKED AS ANNEXURE A - 3 PAGE 1 - 74A . ON A PERUSAL OF THE NOTINGS OF ANNEXURE A - 3 PAGE 3 & 4 THE A.O HELD A CONVICTION THAT THE SAME WERE IN CONTEXT OF THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE ON SALE OF FLATS IN ITS PROJECT, VIZ.THE ONE.ON BEING CONFRONTED WITH THE SEIZED MATERIAL, SHRI. PRATEEK ARORA (SUPRA) ADMITTED THAT CONTENTS THER E IN MENTIONED WERE IN CONTEXT OF THE CASH ELEMENT INVOLVED IN THE SALES TRANSACTIONS. FOR A FAIR APPRECIATION OF THE ISSUE IN QUESTION WE SHALL HEREIN CULL OUT THE RELEVANT PARTS OF THE SEIZED DOCUMENTS (AS ARE DISCERNIBLE FROM THE ASSESSMENT ORDER), WHICH READS AS UNDER: ANNEXURE A3 - PAGE NO. 3 : PAGE NO.3 OF ANNEXURE A3 FOUND FROM RESIDENCE OF PRATEEK ARORA 5180 X 39000 = 202000000/ - = 180000000 A. VALUE -- 2,20,20,000/ - -- 411139500/ - -- 19113500/ - ON BEING CONFRONTED, IT WAS STATED BY SHRI. PRATEEK ARORA IN HIS STATEMENT RECORDED ON OATH U/S 132(4) THAT THE AFORESAID NOTINGS PERTAINED TO DETAILS OF A PALI HILL FLAT. IT WAS STATED BY HIM THA T THE SAID PAGE WAS GIVEN TO HIM BY THE PROMOTER OF THE ASSESSEE COMPANY. FURTHER, IT WAS STATED BY HIM THAT THE AREA OF THE FLAT WAS 5180 SQ.FT AND THE RATE PER SQ. FEET WAS RS. 39,000/ - . IT WAS FURTHER STATED BY HIM THAT WHILE FOR THE DEAL VALUE WAS MENTIONED AT RS.20,20,20,000/ - HOWEVER, THE AGREEMENT VALUE MENTIONED WAS RS.18,00,00,000/ - . IT WAS FURTHER STATED BY HIM THAT AS PER THE AFORESAID PAGE THE CASH COMPONENT AGAINST THE SUBJECT DEAL WAS RS. 2,20,00,000/ - . FOR THE SAKE OF CLARITY AND INORDER TO AVOID ANY PAGE 172 DOUBT THE RELEVANT EXTRACT OF THE STATEMENT OF SHRI. PRATEEK ARORA (SUPRA) IS REPRODUCED AS UNDER: Q.2 I AM SHOWING YOU PAGE NO. 3 (WRITTEN IN PENCIL), A XEROX COPY OF THE SAID PAGE 3 IS MARKED AS 3A OF ANNEXU RE A3. PLEASE GO THROUGH THE SAM E AND EXPLAIN THE CONTENTS OF THE SAME. ANS. THE PAGE HAS DETAILS OF PALI HILL FLAT. THIS PAGE WAS GIVEN TO ME BY MY PROMOTER. THE RATE PER SQ. FT. MENTIONED IS RS. 39,000/ - AND AREA MENTIONED IS RS. 5180/ - SQ.FT. THE DEAL VALUE IS MENTIONED AT RS. 20,20,2 0,000/ - AND AGREEMENT VALUE M E NTIONED RS. 18,00,00,000/ - . THE TERM AMENITIES MENTIONED IN THE PAGE REPRESENT THE CASH AS PER THE CODING BETWEEN ME AND THE PROMOTERS. AS PER THE REFERRED PAGE THE CASH COMPONENT AGAINS T THE SUBJECT DEAL REPRESENTS RS. 2,20, 00,000/ - ON BEING CONFRONTED WITH THE AFORESAID STATEMET OF SHRI. PRATEEK ARORA , SHRI. VIVEK MOHANANI (SUPRA) IN HIS STATEMENT RECORDED ON OATH U/S 132(4) THOUGH ADMITTED THAT HE HAD PURCHASED A FLAT IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE FOR A CONSIDERATION OF RS. 18,00,00,000/ - , HOWEVER, HE DENIED THE EXPLANATION OF SHRI. PRATEEK ARORA (SUPRA) AS REGARDS THE CASH ELEMENT THAT WAS ALLEGEDLY STATED TO HAVE BEEN INVOLVED IN RESPECT OF THE SAID TRANSACTION . FURTHER, IT WAS STATED BY HIM THAT THE NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 PERTAINED TO FLAT NO. 701 IN THE ASSESSEESPALI HILL PROJECT, VIZ. THE ONE. REL E VANT EXTRACT OF THE STATEMENT OF SHRI. VIVEK MOHANANI (SUPRA) RECORDED U/S 132(4) IS REPRODUCED AS UNDER : FOR PAGE NO. 3 I WOULD LIKE TO EXPLAIN THAT THIS 5180 SQ. FT. AREA PERTAIN TO A FLAT NO. 701 IN PALI HILL PROJECT NAMED AS THE ONE. YES, I AGREE THAT ONE FLAT HAS BEEN BOUGHT BY ME AT RS. 18,00,00,000/ - . HOWEVER FOR O THER EXPLANATION GIVEN BY PRATEEK I AM NOT AGREED WITH PRATEEK REGARDING CASH COMPONENT. ON THE BASIS OF THE AFORESAID FACTS THE A.O OBSERVED THAT ON - MONEY OF RS. 2.20 CRORE WAS RECEIVED W.R.T THE PROPERTY THAT WAS BOUGHT BY SHRI. VIVEK MOHANAI . OBSERVING, THAT THE ADDITIONAL VALUE OF CHEQUE OF RS. 83.70 LAC WAS PAID BY THE ASSESSEE TOWARDS REGISTRATION OF FLAT NOS. 1401 & 1402, THE A.O OBSERVED THAT THE PAGE 173 CASH COMPONENT THEREIN INVOLVED WAS REDUCED TO AN AMOUNT OF RS. 136.30 LACS. IT WAS, THUS, O BSERVED BY THE A.O THAT THE ASSESSEE COMPANY HAD RECEIV E D ON - MONEY OF RS. 1,36, 3 0,000/ - ON SALE OF FLAT NOS. 1401 & 1402 IN ITS PROJECT, VIZ. THE ONE. 2 27 . FURTHER, ON A PERUSAL OF THE NOTINGS OF ANNEXURE A - 3 PAGE 4 , THE A.O OBSERVED THAT THE SAME REA D AS UNDER: ANNEXURE A3 - PAGE NO. 4 : PAGE NO. 4 OF ANNEXURE A3 FOUND FROM RESIDENCE OF PRATEEK ARORA 7 TH HABITABLE 12 TH FLOOR - 5180 SQ. FT 8 TH HABITABLE 13 TH FLOOR - 1545 SQ. FT. 6725 SQ. FT 6725 X 39000 = 262275000 AGREEMENT = 2000 62275000/2 = 31137500 = 200 PAID =11137500/ - 5 TH FLOOR 9.20 BJOGE LESS 2% = 18.4 50.80 901.6/2 + 11137500 16217500 450.80 400 = 50.80 PAID 6 TH HABITABLE PRICE AS DISCUSSED & COMPRISED @40000 PER. SQ.FT 5 TH HABITABLE MR. SHIRANGI - SAME PRICE 4 TH HABITABLE MR. REYON 3 RD HABITABLE VAVANT 2 ND HABITABLE BHAGWAN 1 ST HABITABLE VAVANT. PAGE 174 ON BEING CONFRONTED, IT WAS STATED BY SHRI. PRATEEK ARORA IN HIS STATEMENT RECORDED ON OATH U/S 132(4) THAT THE AFORESAID PA G E CONTAINED DETAILS OF PALI HILL FLAT AND THERE WERE MULTIPLE TRANSACTIONS RECORDED ON THE SAID PAGE. FOR THE SAKE OF CLARITY THE RELEVANT EXTRACT OF THE STATEMENT OF SHRI. PRATEEK ARORA (SUPRA) IS REPRODUCED AS UNDER: Q.2 2 I AM SHOWING YOU PAGE NO. 4 OF ANNEXURE A3. PLEASE GO THROUGH THE SA ME AND EXPLAIN THE CONTENTS OF THE SAME. ANS. THE PAGE CONTAINS DETAILS OF PALI HILL FLAT. THESE ARE MULTIPLE TRANSACTIONS RECORD E D ON THE SAID PAGE. TRANSACTION 1: THE DETAILS OF 7 TH HABITABLE & 8 TH HABITABLE FLOO RS CONSISTING 5180SQ. FTS & 1545 SQ. FT RESPECTIVELY AGGREGATING TO 6725 SQ. FTS IS MENTIONED. THE RATE MENTIONED FOR THE SAID FLOORS IN THE PAGE WAS RS. 39000 PER SQ.FT AND THE TOTAL DEAL VALUE MENTIONED AT RS. 26,22,75,000/ - (6725 X 39000). AGAINST THE DEAL VALUE, THE DIFFERENCE OF RS. 6,22,75,000/ - WAS DIVIDED AMONGST TWO FLATS AND RS. 3,11,37,500/ - . OUT OF WHICH RS. 2,00,00,000/ - WAS RECEIVED AND BALANCE WAS SHOWN AS RECEIVABLE RS. 1,11,37,500/ - . TRANSACTION 2 : THE SECOND TRANSACTION MENTIONED AT THE SAME PAGE WAS FOR THE 5 TH HABITABLE FLOOR AND AMOUNT MENTIONED WAS RS. 9.20 CRORES. BROKERAGE @2% AMOUNTING TO RS. 18,40,000/ - WAS DEDUCTED AND BALANCE IS WORKED OUT AT RS. 9,01,60,000/ - . AS MENTIONED ABOVE, THIS AMOUNT WAS AGAIN DIVID E D BY 2 AND WORKED O UT RS. 4,50,80,000/ - , OUT OF WHICH AGAIN RS. 4,00,00,000/ - WAS THE AGREEMENT VALUE AND RS. 50,80,000/ - WAS THE CASH PORTION. TRANSACTION 3: THE ENTRY PERTAINING TO 6 TH HABITABLE FLOOR IS ALSO MENTIONED AND THE PRICE AS DISCUSSED AND CONFIRMED @RS. 40,000/ - PER SQ.FT. SOME OTHER ENTRIES WERE ALSO WRITTEN ON THE BOTTOM OF T H E PAGE INDICATING HABITABLE FLOOR AND THE NAME OF THE PARTIES AND THE STATUS OF THE OCCUPANCY OF THE FLOOR. ON BEING CONFRONTEDSHRI. VIVEK MOHANANI (SUPRA) IN HIS STATEMENT RECORDED ON OATH U/S 132(4) REBUTTED THE STATEMENT OF SHRI. PRATEEK ARORA (SUPRA) AS REGARDS HIS EXPLANATION W.R.T THE CONTENTS OF PAGE 4 OF ANNEXURE A - 3 ON THE GROUND THAT T H E PROJECT IN QUESTION, VIZ. THE ONE DID NOT HAVE A 8 TH HABITABLE FLOOR. IN ORDER TO FORTIFY HIS PAGE 175 AFORESAID CLAIM, SHRI. VIVEK MOHANANI (SUPRA) FURNISHED THE DULY APPROVED PLAN OF THE SAID PROJECT. REL E VANT EXTRACT OF THE STATEMENT OF SHRI. VIVEK MOHANANI (SUPRA) RECORDED U/S 132(4) IS REPRODUCED AS UNDER : FOR PAGE NO. 4AS STATED BY PRATEEK THIS PERTAIN TO PALI HILL PROJECT, HOWEVER THER E IS NO 8 TH HABITABLE FLOOR IN THIS PROJECT. FURTHER I HEREBY FURNISH THE PROJECT PLAN DULY APPROVED IN SUPPORT OF MY CONTENTION AS ANNEXURE 1. FOR PAGE NO. 6 SOME SIMILAR FACT S HAVE BEEN MENTIONED WITH REGARD TO PALI HILL FLAT BOUGHT BY ME. HOWEVER NO CASH COMPONENT H A S BEEN INTRODUCED IN THIS. I TOTALLY DENY, AS IT HAS NEVER BEEN WRITTEN BY ME. I DONT RECOGNISE WHOSE HANDWRITING IT IS. HOWEVER, THE A.O O N THE BASIS OF THE AFORESAID FACTS OBSERVED THAT THE ASSESSEE HAD RECEIVED ON - MONEY OF RS. 2,00,00,000/ - FOR FLAT NOS. 1201 AND 1202. ACCORDINGLY, BACKED BY HIS AFORESAID OBSERVATIONS THE A.O MADE AN ADDITION OF RS. 3,36,30,000/ - [RS. 1,36,30,000/ - (+) RS. 2,0 0,00,000/ - ] TOWARDS ON - MONEY RECEIVED BY THE ASSESSEE W.R.T SALE OF THE AFORESAID FLATS IN ITS PROJECT, VIZ. THE ONE. 2 28 . ON APPEAL, THOUGH THE CIT(A) PRINCIPALLY SUSTAINED THE VIEW TAKEN BY THE A.O THAT THE ASSESSEE WAS IN RECEIPT OF ON - MONEY W.R.T T HE FLATS IN ITS PALI HILL PROJECT, VIZ. THE ONE, HOWEVER, HE RESTRICTED THE ADDITION TO THE EXTENT OF THE INCOME ELEMENT EMBEDDED IN THE AMOUNT OF SUCH ON - MONEY I.E @20% OF THE SAID AMOUNT. 2 29 . IT IS IN T H E BACKDROP OF THE AFORESAID FACTS THAT WE SH ALL ADJUDICATE UPON THE SUSTAINABILITY OF THE ADVERSE INFERENCES AND THE CONSEQUENTIAL ADDITION MADE W.R.T THE IMPUGNED AMOUNT OF ON - MONEY STATED TO HAVE BEN RECEIVED BY THE ASSESSEE AS REGARDS THE PAGE 176 FLAT NOS. 1401/02 AND 1201/02 IN ITS PROJECT, VIZ. THE ONE , AS UNDE R : (A). RE: ADDITION TOWARDS ON - MONEY W.R.T FLAT NOS. 1401/02 : RS. 136.30 LAC . 2 30 . AS OBSERVED BY US HEREINABOVE, THE IMPUGNED ADDITION TOWARDS RECEIPT OF ON - MONEY OF RS. 136.30 LAC W.R.T FLAT NOS. 1401/02 WAS MADE BY THE A.O ON T H E BASIS OF THE NOTINGS IN THE DOCUMENT, VIZ. ANNEXURE A - 3 PAGE 3 THAT W A S SEIZED FROM THE RESIDENCE OF SHRI. PRATEEK A R ORA (SUPRA) A/W THE EXPLANATION THAT WAS GIVEN BY HIM AS REGARDS THE SAID NOTINGS . AS OBSERVED BY US HEREINABOVE, THE A.O ON THE BASIS OF THE IMPUGNED NOTINGS RECORDED IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE 3 HAD CONCLUDED THAT SHRI. VIVEK MOHANANI (SUPRA) H A D PAID ON - MONEY OF RS. 2,20,00,000/ - TOWARDS PURCHASE OF A FLAT ADME ASURING 5180 SQ.FT IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE. OBSERVING, THAT AN ADDITIONAL VALUE OF CHEQUE OF RS. 83.70 LAC WAS PAID TOWARDS REGISTRATION OF FLAT NOS. 1401 & 1402, THE A.O RESTRICTED THE CASH COMPONENT FOR PURCHASE OF THE AFOREME NTIONED PROPERTY TO AN AMOUNT OF RS. 136.30 LACS [RS. 220 LAC ( - ) RS. 83.70 LAC]. ACCORDINGLY, BACKED BY HIS AFORESAID OBSERVATIONS THE A.O MADEAN ADDITION OF RS. 136.30 LACS (SUPRA) TOWARDS ON - MONEY WHICH AS PER HIM WAS PAID BY SHRI. VIVEK MOHANANI (SUPRA ) FOR PURCHASE OF THE PROPERTY IN QUESTION . 2 31 . ON A PERUSAL OF THE STATEMENT OF SHRI. PRATEEK ARORA (SUPRA) RECORDED U/S 132(4), WE FIND THAT IT WAS STATED BY HIM IN REPLY TO Q UESTION NO. 2 THAT THE DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 CONTAINING THE IMPUGNED NOTINGS WAS GIVEN TO HIM BY THE PROMOTER OF THE ASSESSEE COMPANY . ON BEING CONFRONTED, SHRI. VIVEK PAGE 177 MOHANANI (SUPRA), PROMOTER OF THE ASSESSEE COMPANY , HAD IN HIS STATEMENT RECORDED ON OATH U/S 132(4) STATED THAT THE AREA OF 5180 SQ . FT PERTAINED TO A FLAT NO. 701 IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE . FURTHER, IT WAS THOUGH ADMITTED BY HIM THAT HE HAD PURCHASED A FLAT FOR A CONSIDERATION OF RS. 18,00,00,000/ - , HOWEVER, HE DENIED THE EXPLANATION OF SHRI. PRATEEK ARORA ( SUPRA) AS REGARDS THE CASH ELEMENT THAT WAS ALLEGEDLY STATED TO HAVE BEEN THEREIN INVOLVED. ON A PERUSAL OF THE AFORESAID FACTS, WE FIND , THAT WHILE FOR IT IS THE CLAIM OF THE DEPARTMENT THAT THE IMPUGNED NOTINGS IN THE IMPOUNDED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 PERTAINED TO FLAT NOS. 1401 & 1402 IN ASSESSEES PALI HILL PROJECT, VIZ. THE ONE PURCHASED BY SHRI. VIVEK MOHANANI (SUPRA), WHILE FOR IT IS THE CLAIM OF SHRI. VIVEK MOHANANI (SUPRA) IN HIS STATEMENT RECORDED U/S 132(4) THAT THE IMPUGNED NOTINGS IN THE AFORESAID SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 3 PERTAIN ING TO 5180 SQ.FT WERE W.R.T THE FLAT NO. 701 IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE. BEFORE PROCEEDING ANY FURTHER, WE MAY HEREIN OBSERVE , THAT AS CLAIMED BY SHRI. PRA TEEK ARORA (SUPRA) IN REPLY TO QUESTION NO. 2 OF HIS STATEMENT RECORDED ON OATH U/S 132(4), THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 WAS GIVEN TO HIM BY THE PROMOTER OF THE ASSESSEE COMPANY. ACCORDINGLY, IT IS IN THE BACKDROP OF THE AFORESAID FAC T THAT THE EXPLANATION OF SHRI. VIVEK MOHANANI (SUPRA), PROMOTER OF THE ASSESSEE COMPANY AS REGARDS THE NOTINGS I N THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 HA VE TO BE CONSIDERED AND IN OUR VIEW REQUIRES TO BE GIVEN DUE WEIGHTAGE. AS OBSERVED BY US HEREINABOVE, SHRI. VIVEK MOHANANI (SUPRA) HAD CATEGORICALLY STATED IN HIS STATEMENT RECORDED U/S 132(4) THAT THE AREA OF 5180 SQ.FT MENTIONED IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 PERTAINED TO FLAT NO. 701 IN THE ASSESSEES PALI HILL PAGE 178 PROJECT, VIZ. THE ONE. ON A PERUSAL OF THE RECORD, WE FIND THAT THE ASSUMPTION DRAWN BY THE A.O THAT THE AMOUNT OF RS. 2.20 CRORES (SUPRA) PERTAINED TO THE ON - MONEY THAT WAS PAID BY SHRI. VIVEK MOHANANI (SUPRA) FOR PURCHASE OF FLAT NOS. 1401 & 1402 IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE IS NOT BACKED BY ANY SUPPORTING MATERIAL. ON THE CONTRARY, SHRI. VIVEK MOHANANI (SUPRA) WHO HAD APPARENTLY AUTHORED THE NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 (AS STATED BY SHRI. PRATEEK ARORA) HAD CATEGORICALLY STATED THAT THE AREA OF 5180 SQ. FT THEREIN MENTIONED PERTAINED TO FLAT NO. 701 IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE. IN FACT, CONTENTS OF THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO . 4 WHICH MAKES A REFERENCE TO 7 TH HABITABLE 12 TH FLOOR 5180 SQ. FT. FURTHER FORTIFIES THE AFORESAID CLAIM OF SHRI. VIVEK MOHANANI (SUPRA) THAT THE NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 PERTAINED TO FLAT NO. 701 IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE. AS SUCH, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE UNSUBSTANTIATED ADVERSE INFERENCES DRAWN BY THE LOWER AUTHORITIES THAT THE NOTINGS W.R.T THE AREA OF 5180 SQ. FT IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE NO. 3 PERTAINED TO THE FLAT NOS. 1401 & 1402 THAT WAS PURCHASED BY SHRI. VIVEK MOHANAI (SUPRA) IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE. IN OUR CONSI DERED VIEW THE A.O HAD FAILED TO CARRY OUT NECESSARY VERIFICAT I ONS AS REGARDS THE IMPUGNED NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A - 3 PAGE 3 . W E WOULD NOT HESITATE TO OBSERVE THAT DE HORS ANY SUPPORTING MATERIAL THE A.O HA D HUSHED TO CONCLUDE THAT THE IMPUGNED NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 3 PERTAINED TO THE ON - MONEY THAT WAS RECEIVED BY THE ASSESSEE W.R.T FLAT NOS. 1401 & 1402 PAGE 179 PURCHASED BY SHRI. VIVEK MOHANAI (SUPRA) IN THE PALI HILL PROJECT, VIZ. THE ONE. A S THE VIEW ARRIVED AT BY THE A.O IS NOT BACKED BY ANY SUPPORTING MATERIAL, WE , THUS, IN ALL FAIRNESS RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO MAKE NECESSARY VERIFICATIONS AS REGARDS THE IMPUGNED NOTINGS RECORDED IN THE AFORESAID ANNEXURE A3 PAGE 3 . AT THIS STAGE, WE MAY HEREIN OBSERVE THST A CONJOINT PERUSAL OF ANNEXURE A3 - PAGE 3 & PAGE 4 A/W THE STATEMENT OF SHRI. VIVEK MOHANANI (SUPRA) , THEREIN INSPIRES SUBSTANTIAL CONFIDENCE AS REGARDS THE LATTERS CLAIM THAT THE NOTINGS IN THE SAID SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 3 PERTAI N TO RECEIPT OF ON - MONEY BY THE ASSESSEE W.R.T FLAT NO. 701 IN THE ASSESSEES PALI HILL PROJECT, VIZ. THE ONE. HOWEVER, THE A.O IN THE COURSE OF THE SET - ASIDE PROCEEDINGS SHALL NOT BE BOUND BY OUR AFORESAID OBSERVATION AND SHALL REMAIN AT A LIBERTY TO CARRY OUT NECESSARY VERIFICATIONS AS HE DEEMS FIT. NEEDLESS TO SAY, THE A.O IN THE COURSE OF THE SET - ASIDE PROCEED INGS WHILE READJUDICATING THE AFORESAID ISSUE SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND OF APPEAL NO. 1 INSOFAR THE SAME PERTAINS TO THE AFORESAID IMPUGNED ADDITION IS CONCERNED IS ALLOWED FOR STATISTICAL PURPOSES SUB JECT TO OUR OBSERVATIONS RECORDED HEREINBELOW. 2 32 . BEFORE US, THE THEASSESSEE HAS ALSO ASSAILED THE ORDER OF THE CIT(A) ON THE GROUND THAT S HE HAD ERRED IN ESTIMATING INCOME ELEMENT EMBEDDED IN THE ON - MONEY RECEI PTS AT 20% , WHICH IS ON THE HIGHER SIDE , INSTEAD OF ESTIMAT ING THE SAME @12% AS WAS OFFERED BY THE ASSESSE . W E F I ND THAT THE FAC TS AND THE ISSUE THEREIN INVOLVED REMAINS THE SAME AS WERE THER E BEFORE US IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. EKTA HOUSING PVT. LTD. IN ITA NO. 1732/MU M/2019 FOR A.Y 2013 - 14 WHEREIN WE HAD DIRECTED THE A.O TO ESTIMATE THE INCOME ELEMENT EMBEDDED IN THE ON - MONEY PAGE 180 RECEIPTS AT 15% . ALTHOUGH WE HAVE RESTORED THE ISSUE PERTAINING TO RECEIPT OF ON - MONEY OF RS. 2.20 CRORE TO THE FILE OF THE A.O FOR FRESH ADJUDIC ATION, WE MAY , HOWEVER OBSERVE THAT IF IN THE COURSE OF THE SET - ASIDE PROCEEDINGS IT IS FOUND THAT THE ASSESSEE HAD RECEIVED ON - MONEY W.R.T THE TRANSACTION IN QUESTION, THEN, THE A.O SHALL IN TERMS OF OUR AFORESAID OBSERVATIONS RESTRICT THE ADDITION TO THE EXTENT OF THE INCOME ELEMENT THEREIN EMBEDDED I.E @15% OF SUCH ON - MONEY RECEIPT .FURTHER, I N OUR CONSIDERED VIEW, AS THE RECEIP T OF ON - MONEY IS INEXTRICABLY INTERLINKED AND IN FACT INTERWOVEN WITH THE CORRESPONDING SALE TRANSACTION TO THE EXTENT ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, THE SAME, THUS, CANNOT BE DIVORCED THEREFROM, AND THE INCOME ELEMENT THEREIN EMBED DED WOULD BE REQUIRED TO BE BROUGHT TO TAX IN THE SAME YEAR IN WHICH THE SALE TRANSACTION HAD BEEN OR WOULD BE ACCOUNTED FOR BY THE ASSESSEE AS PER ITS REGULAR METHOD OF ACCOUNTING THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. OUR AFORESAID VIEW THAT THE CONDUC T OF SEARCH AND SEIZURE OPERATION IN A PARTICULAR YEAR DOES NOT LEAD TO AN INFERENCE THAT THE UNDISCLOSED INCOME DETECTED AS A CONSEQUENCE THEREOF HAS TO BE TAXED IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED, AND THE A CCOUNTING OF SUCH INCOME HAVE TO BE MADE ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS SUPPORTED BY THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOPERS PVT. LTD. VS. DCIT [102 ITD 375 (PUNE)] . THE GRO UND OF APPEAL NO. 2 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS (A). RE: ADDITION TOWARDS ON - MONEY W.R.T FLAT NOS. 1 2 01/02 : RS. 200 LAC . 2 33 . WE SHALL NOW DEAL WITH THE ADDITION AS HAD BEEN SUSTAINED BY THE CIT(A) W.R.T THE ON - MONEY OF RS. 200 LAC THAT IS INTER ALIA STATED PAGE 181 TO HAVE BEEN RECEIVED BY THE ASSESSEE AS REGARDS THE FLAT NOS. 1201 AND 1202 IN ITS PALI HILL PROJECT, VIZ. THE ONE. AS OBS ERVED BY US HEREINABOVE, THE A.O ON A PERUSAL OF THE NOTINGS OF THE SEIZED DOCU M ENT, VIZ. ANNEXURE A3 - PAGE 4 READ ALONGWITH THE STATEMENT OF SHRI. PRATEEK ARORA (SUPRA) THAT WAS RECORDED ON OATH U/S 132(4), HAD CONCLUDED THAT THE ASSESSEE HAD INTER ALIA RECEIVED ON - MONEY W.R.T FLAT NOS. 1201 AND 1202 IN ITS PALI HILL PROJECT, VIZ. THE ONE. AS OBSERVED BY US HEREINABOVE, THE RELEVANT EXTRACT OF THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 4 READ AS UNDER : PAGE NO. 4 OF ANNEXURE A3 FOUND FROM RESIDENCE OF PRATEEK ARORA 7 TH HABITABLE 12 TH FLOOR - 5180 SQ. FT 8 TH HABITABLE 13 TH FLOOR - 1545 SQ. FT. 6725 SQ. FT 6725 X 39000 = 262275000 AGREEMENT = 2000 62275000/2 = 31137500 = 200 PAID =11137500/ - ON BEING CONFRONTED WITH THE AFORESAID NOTINGS, IT WAS INTER ALIA STATED BY SHRI. PRATEEK ARORA (SUPRA), AS UNDER: Q.2 2 I AM SHOWING YOU PAGE NO. 4 OF ANNEXURE A3. PLEASE GO THROUGH THE SA ME AND EXPLAIN THE CONTENTS OF THE SAME. ANS. THE PAGE CONTAINS DETAILS OF PALI HILL FLAT. THESE ARE MULTIPLE TRANSACTIONS RECORDED ON THE SAID PAGE. TRANSACTION 1: THE DETAILS OF 7 TH HABITABLE &8 TH HABITABLE FLOORS CONSISTING 5180SQ. FTS & 1545 SQ. FT RESPECTIVELY AGGREGATING TO 6725 SQ. FTS IS MENTIONED. THE RATE M ENTIONED FOR THE SAID FLOORS IN THE PAGE WAS RS. 39000 PER SQ.FT AND THE TOTAL DEAL VALUE MENTIONED AT RS. 26,22,75,000/ - (6725 X 39000). AGAINST THE DEAL VALUE, THE DIFFERENCE OF RS. 6,22,75,000/ - WAS DIVIDED AMONGST TWO FLATS AND RS. 3,11,37,500/ - . OUT O F WHICH RS. 2,00,00,000/ - WAS RECEIVED AND BALANCE WAS SHOWN AS RECEIVABLE RS. 1,11,37,500/ - . PAGE 182 HOWEVER, SHRI. VIVEK MOHANANI (SUPRA) ON BEING CONFRONTED WITH THE AFORESAID CONTENTS OF THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 4 HAD IN HIS STATEMENT RECORDED ON OATH U/S 132(4) REBUTTED THE EXPLANATION THAT WAS GIVEN BY SHRI. PRATEEK ARORA (SUPRA) W.R.T THE CONTENTS OF PAGE 4 OF ANNEXURE A - 3 ON THE GROUND THAT THE PROJECT IN QUESTION, VIZ. THE ONE DID NOT HAVE A 8 TH HABITABLE FLOOR. I N ORDER TO FORTIFY HIS AFORESAID CLAIM, SHRI. VIVEK MOHANANI (SUPRA) HAD EVEN PLACED ON RECORD THE DULY APPROVED PLAN OF THE SAID PROJECT. RELEVANT EXTRACT OF THE STATEMENT OF SHRI. VIVEK MOHANANI (SUPRA) THAT WAS RECORDED U/S 132(4) IS REPRODUCED AS UNDER : FOR PAGE NO. 4AS STATED BY PRATEEK THIS PERTAIN TO PALI HILL PROJECT, HOWEVER THERE IS NO 8 TH HABITABLE FLOOR IN THIS PROJECT. FURTHER I HEREBY FURNISH THE PROJECT PLAN DULY APPROVED IN SUPPORT OF MY CONTENTION AS ANNEXURE 1. HOWEVER, WE FIND THAT T HE A.O DISCARDING THE DULY SUBSTANTIATED REBUTTAL OF SHRI. VIVEK MOHANANI (SUPRA), HAD ACTED UPON THE UNSUBSTANTIATED NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 4 AND CHOSE TO BE GUIDED BY THE STATEMENT OF SHRI. PRATEEK ARORA (SUPRA). 2 34 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US IN THE BACKDROP OF THE MATERIAL AVAILABLE ON RECORD AND THE CONTENTIONS ADVANCED BY THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES. ON A CONJOINT PERUSALOF THE SEIZED DOCUMENT, VIZ. ANNEX URE A3 PAGE 3 & PAGE 4 , WE HOLD A STRONG CONVICTION THAT THE NOTINGSTHEREIN MENTIONED INTER ALIA DEALS WITH A COMMON TRANSACTION PERTAINING TO A PROPERTY ADMEASURING 5180 SQ. FT ON THE 7 TH HABITABLE 12 TH FLOOR IN THE ASSESSEES PALI HILL PROJECT, VIZ. T HE ONE . AFTER EXHAUSTIVE DELIBERATIONS ON THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 3 , THE IMPUGNED ADDITION MADE BY THE A.O ON PAGE 183 THE BASIS OF THE NOTINGS THEREIN RECORDED HAD BEEN RESTORED BY US TO THE FILE OF THE A.O FOR FRESH ADJUDICATION . IN OUR CONSI DERED VIEW, THE A.O HAD WRO N GLY INFERRED THAT THE NOTINGS OF ANNEXURE A3 PAGE 3 & PAGE 4 W.R.T A PROPERTY ADMEASURING 5180 SQ. FT. ON T H E 7 TH HABITABLE FLOOR , AS NOTINGS PERTAINING TO TWO DIFFERENT PROPERTIES. WE, THUS, VACATE THE ADVERSE INFERENCES SEPARATELY ARRIVED AT BY THE A.O ON THE BASIS OF THE NOTINGS OF THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 4 INSOFAR THE SAME WERE RECORDED IN CONTEXT OF THE PROPERTY ADMEASU RING 5180 SQ. FT ON THE 7 TH HABITABLE FLOOR , W HICH IN OUR CONSIDERED VIEW HAD RESULTED TO DUPLICA C Y OF ADDITION S IN THE HANDS OF THE ASSESSEE . AS WE HAVE ALREADY RESTORED THE ISSUE AS REGARDS RECEIPT OF ON - MONEY BY THE ASSESSEE W.R.T PROPERTY ADMEASURING 5 180 SQ. FT ON THE 7 TH HABITABLE FLOOR IN ITS PALI HILL PROJECT, VIZ. THE ONE TO THE FILE OF THE A.O FOR FRESH ADJUDICATION IN TERMS OF OUR OBSERVATIONS RECORDED HEREINABOVE, THUS, THE ADVERSE INFERNCES AND THE CONSEQUENTIAL ADDITION SEPARATELY MADE BY TH E A.O AS REGARDS THE AFORESAID PROPERTY BY DRAWING SUPPORT FROM THE IMPUGNED NOTINGS OF THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 4 ARE HEREIN VACATED. 2 35 . INSOFAR THE ADVERSE INFERENCE DRAWN BY THE A.O AS REGARDS THE PROPERTY ADMEASURING 1545 SQ.FT ON THE 8 TH HABITABLE FLOOR ARE CONCERNED, THE SAME WE FIND CANNOT BE SUSTAINED IN THE BACKDROP OF THE CLAIM RAISED BY SHRI. VIVEK MOHANANI IN HIS STATEMENT RECORDED U/S 132(4) THAT THERE IS NO 8 TH HABITABLE FLOOR IN THE PALI HILL PR OJECT, VIZ. THE ONE, WHICH WE FIND HE HAD SUBSTANTIATED BY FURNISHING THE PROJECT PLAN DULY APPROVED IN SUPPORT THEREOF. NEITHER THERE IS ANY MATERIAL AVAILABLE ON RECORD N OR IS THERE ANY FINDING OF THE L OWER AUTHORITIES WHICH WOULD DISLODGE OR DISPROVE THE AFORESAID CLAIM OF SHRI. VIVEK MOHANANI (SUPRA) . APART FROM THAT, NO CONTENTION HAS PAGE 184 BEEN ADVANCED BY THE LD. D.R BEFORE US DISPUTING THE VERACITY OF THE AFORESAID CLAIM OF SHRI. VIVEK MOHANANI. IN THE BACKDROP OF THE AFORESAID FACT SITUATION, WE ARE UN ABLE TO UPHOLD THE ADVERSE INFERENCES DRAWN BY THE LOWER AUTHORITIES AS REGARDS THE ALLEGED PROPERTY ADMEASURING 1545 SQ. FT ON THE STANDALONE BASIS OF DUMB NOTINGS IN THE SEIZED DOCUMENT, VIZ. ANNEXURE A3 PAGE 4 , WHICH AS OBSERVED BY US HEREINABOVE HAD BEEN DISLODGED BY THE ASSESSEE ON THE BASIS OF CLINCHING MATERIAL. ACCORDINGLY, IN THE BACKDROP OF OUR AFORESAID DELIBERATIONS THE ADVERSE INFERENCES AND THE CONSEQUENTIAL ADDITION MADE BY THE LOWER AUTHORITIES AS REGARDS THE ALLEGED ON - MONEY OF RS. 200 LA C (SUPRA) IS HEREIN VACATED IN TERMS OF OUR OBSERVATIONS RECORDED HEREINABOVE . THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE TO THE EXTENT RELATABLE TO THE AFORESAID ADDITION IS HEREIN ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 2 36 . THE GROUND OF APPEAL NO. 3 BEING GENERAL IS DISMISSED AS NOT PRESSED. (B). ITA NO. 2193/MUM/2019 ( REVENUES APPEAL) : 2 37 . WE SHALL NOW TAKE UP THE CROSS - APPEAL OF THE REVENUE FOR A.Y 2014 - 15. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS BEFORE US : (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 3,36,30,000/ - MADE U/S 68 OF THE IT ACT, 1961, BY HOLDING THAT THE ON - MONEY IS NOT PART OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS. 3,36,30,000/ - MADE U/S 68, IN DISREGARD TO THE INCLUSIVE DEFINITION OF BOOKS OF ACCOUNT IN SECTION 2(12A) OF THE ACT, PARTICULARLY WHEN SECTION 68 USES THE WORD BOOKS AND NOT REGULAR BOOKS OF ACCOUNT? (III). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES? PAGE 185 (IV). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY EVEN THOUGH THE ASSESSEE HAS FAILED TO PRODUCE DETAILS OF EXPENSES INCURRED? 2 38 . AS OBSERVED BY US HEREINABOVE, THE A.O HAD BROUGHT TO TAX THE ENTIRE AMOUNT OF ON - MONEY RECEIPTS OF RS. 3,36,30,000/ - U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE CIT(A) HAD INTER ALIA OBSERVED THAT AS THE AMOUNT OF ON - MONEY WAS N OT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIEVED FROM THE MOBILE PHONES, THEREFORE, THE SAME COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT. AGGRIEVED WITH THE AFORESAID OBSE RVATION OF THE CIT(A) THE REVENUE HAS CARRIED THE MATTER IN APPEAL BEFORE US. IT IS THE CLAIM OF THE REVENUE THAT THE VIEW ARRIVED AT BY THE CIT(A) IS IN COMPLETE DISREGARD OF THE FACT THAT THE DEFINITION OF THE TERM BOOKS OF ACCOUNT IN SEC. 2(12A) OF TH E ACT IS AN INCLUSIVE DEFINITION. ALSO , IT IS THE CLAIM OF THE REVENUE THAT AS THE TERM USED IN SEC. 68 IS BOOKS AND NOT THE REGULAR BOOKS OF ACCOUNT, THEREFORE, THE VIEW ARRIVED AT BY THE CIT(A) BY DRAWING SUPPORT FROM THE DEFINITION OF BOOKS OF ACCO UNT AS CONTEMPLATED IN SEC. 2(12A) CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. FURTHER, IT IS THE CLAIM OF THE REVENUE THAT AS THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF PARTIES, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTI ES THUS, NO INFIRMITY CAN BE RELATED TO THE ADDITION OF THE IMPUGNED AMOUNTS UNDER SEC. 68 OF THE ACT. LASTLY , THE REVENUE IS AGGRIEVED WITH THE RESTRICTION OF THE ADDITION OF THE ON - MONEY RECEIPTS TO 20% OF THE ENTIRE AMOUNT BY THE CIT(A). 2 39 . WE HAVE H EARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS CONSIDERED THE JUDICIAL PAGE 186 PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THEIR RE SPECTIVE CONTENTIONS. INSOFAR THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN CONCLUDING THAT AS THE AMOUNT OF ON - MONEY WAS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT WAS FOUND NOTED ON SOME LOOSE SHEETS AND IN THE DATA RETRIE VED FROM THE MOBILE PHONES IN THE COURSE OF THE SEARCH PROCEEDINGS, THEREFORE, IT COULD NOT HAVE BEEN BROUGHT TO TAX U/S 68 OF THE ACT IS CONCERNED, THE SAME, WE FIND HAD BEEN ADJUDICATED BY US WHILE DISPOSING OFF THE APPEAL OF THE REVENUE IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE, VIZ. M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17. AS THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL OF THE CAPTIONED ASSESSEE REMAINS THE SAME, THEREFORE, OUR ORDER PASSED IN CONTEXT OF THE ISSUE I N QUESTION WHILE DISPOSING OFF THE REVENUES APPEAL IN THE CASE OF M/S EKTA HOUSING PVT. LTD. IN ITA NO. 2186/MUM/2018 IN A.Y 2016 - 17 SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OFF THE ISSUE IN HAND. ACCORDINGLY, ON THE SAME TERMS AND REASONING WE UPHOLD T HE ORDER OF THE CIT(A) TO THE EXTENT SHE HAD CONCLUDED THAT THE IMPUGNED ADDITION OF ON - MONEY COULD NOT HAVE BEEN MADE U/S 68 OF THE ACT. THE GROUNDS OF APPEAL NOS. (I) TO (II I ) RAISED BY THE REVENUE ARE DISMISSED. 2 40 . AS WE HAD WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 1743/MUM/2019 FOR THE YEAR IN QUESTION I.E A.Y 2014 - 15 HELD THAT NO PART OF THE ADDITION W.R.T ON - MONEY RECEIPTS OF RS. 200 LAC IS LIABLE TO BE SUSTAINED, THEREFORE, T HE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR AFORESAID ADJUDICATION OF THE ISSUE IN HAND AND IS ACCORDINGLY RENDERED AS INFRUCTUOUS. INSOFAR THE ADDITION MADE BY THE A.O AS REGARDS THE IMPUGNED ON - MONEY PAGE 187 RECEIPTS OF RS. 2.20 CRORE IS CONCERNED, THE SAID ISSUE WHILE DISPOSING OFF THE ASESSEES APPEAL IN ITA NO. 1743/MUM/2019 HAD BEEN RESTORED BY US TO THE FILE OF THE A.O FOR FRESH ADJUDICATION. AT THE SAME TIME, WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO. 174 3 /MUM/2019 FOR A.Y 201 4 - 1 5,WE HAVE PRINCIPALLY UPHELD THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T ON - MONEY RECEIPTS WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF THE ELEMENT OF NET INCOME THEREIN INVOLVED,AND HAD FURTHER DIRECTED THAT IN CASE THE ASSESSEE IS FOUN D TO HAVE RECEIVED THE ON - MONEY PERTAINING TO THE PROPERTY IN QUESTION, I.E ADMEASURING 5180 SQ. FT ON THE 7 TH HABITABLE 12 TH FLOOR IN ITS PALI HILL PROJECT, VIZ. THE ONE, THE N, THE A.O SHALL RESTRICT THE ADDITION TO THE EXTENT OF 15% OF SUCH ON - MONEY RE CEIPT . IN T H E BACKDROP OF OUR AFORESAID OBSERVAT I ONS THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION TO 20% OF ON - MONEY RECEIPTS IS SUBSUMED IN OUR ADJUDICATION OF THE SAID ISSUE AND OBSERVATIONS THEREIN RECORDED . THE GRO UND OF APPEAL NO. ( I V) RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 2 41 . THE APPEAL FILED BY THE REVENUE IS DISMISSED. 2 42 . RESULTANTLY, THE APPEA L FILED BY THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS, WHILE FOR THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 24 /05/2021. SD/ - SD/ - S. RIFAUR RAHMAN RAVISH SOOD ( ACCOUNTANT MEMBER) ( JUDICIAL ME MBER) MUMBAI, DATE: 24 .0 5 .2021 PAGE 188 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE DY./ASST.REGISTRAR ITAT, MUMBAI