The DCIT, Circle-8, Ahmedabad V. Sambhav Infrastructure Pvt. Ltd., Ahmedabad

ITA 1818/AHD/2015

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0651 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 17-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Income from undisclosed sources; Principle of natural justice; Additional evidence; Retraction; Documents seized
• Section: 133A; 143(2); 64; 13

Judgement Text

आयकर अपील य अ धकरण, अहमदाबाद यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH ‘D’ BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.1818/Ahd/2015 नधा रण वष /Asstt. Year: 2012-13 DCIT, Cir.4(1)(1) Ahmedabad. Vs. Sambhav Infrastructure P.ltd. B-12, Amar Aprtment Vasna Barrage Road Vasna, Ahmedabad. PAN : AAKCS 5194 C अपीलाथ / (Appellant) त ् यथ / (Respondent) Assessee by : None Revenue by : Shri Mohd Usman,CIT-DR स ु नवाई क तार ख/Date of Hearing : 07/12/2021 घोषणा क तार ख /Date of Pronouncement: 05/01/2022 आदेश/O R D E R PER RAJPAL YADAV, VICE-PRESIDENT Present appeal is directed at the instance of the Revenue against order of ld.CIT(A)-9, Ahmedabad dated 9.3.2015 for the Asstt.Year 2012-13. 2. This appeal was listed on the board on 30.8.2017. In response to the notice of hearing, none has appeared on behalf of the assessee. However, on issuance of fresh notice, Shri Tushar Hemani appeared for the assessee on 25.7.2018. He sought adjournment and hearing was adjourned to 2.8.2018. Thereafter, at his request as well as request of Revenue, hearing was adjourned time and again. Shri Tushar Hemani pleaded no instruction, and fresh notice was issued to the assessee. ITA No.1818/Ahd/2015 2 Inspite of service of notice, no one has present on behalf of the assessee. Ultimately, under compelling circumstances, service of notice was effected upon the assessee with the help of the Department and panchnama submitted to this effect is available on record. In other words, this matter was listed for hearing on twenty seven times between 13 th August, 2017 upto 28 th October, 2021. On nine occasions Bench did not function, but on remaining occasions most of the time assessee sought adjournment. Experiencing non-cooperative attitude of the assessee, and its non-appearance in spite of repeated service of notices, we proceed to decide appeal ex parte qua the assessee. 3. Initially, Department has filed grounds of appeal, which are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. Thereafter, Revenue has filed concise grounds of appeal, which reads as under: “1) The Ld. CIT(A) has erred in law and on facts by deleting the addition made on account of unaccounted receipts of Rs.16,01,00,000/- ignoring the material and documentary evidences found and also the admission of the undisclosed income over and above to the regular income by Shri Mihir P. Desai, Director of the company, during the course of survey u/s. 133A of the IT. Act. 2) The CIT(A) has erred in law and on facts by holding that the profits can only be taxed on unaccounted receipts in place of entire unaccounted receipts, in absence of any claim of unaccounted expenses by the assessee and also having deposited the majority of the unaccounted receipts in its bank account.” 4. A perusal of the above two grounds would reveal that both are inter-connected. The common issue in both the grounds is, whether gross unaccounted receipts found during the course of survey is to be taxed or only profit element embedded in those receipts is to be taxed. Let us consider both these grounds together. ITA No.1818/Ahd/2015 3 5. The facts giving rise to filing of the present appeal is that, as emerging out from relevant records are that the assessee is engaged in the business as builder and developer. It has filed return of income on 30.9.2012 declaring total income at Rs.6,02,34,870/-. The case of the assessee was selected for scrutiny assessment by issuance of notice under section 143(2) of the Income Tax Act, 1961, which was duly served on the assessee. Prior to this, a survey under section 133A of the Act was conducted at various premises of the assessee-company on 24.10.2011. In the survey proceedings carried out at 501, 502, Safal Prelude Prahaladnagar, Ahmedabad certain papers inventorised as Annexure A/1, A/2, A/3 and A/4 were impounded, in which unaccounted cash receipts of Rs.20,01,00,000/- in respect of Stavan Alteza, Stavan Paradise and Stavan arise schemes of the assessee-company were reflected. This cash receipt was admitted by one Shri Mhir P. Desai, Director of the assessee-company as unaccounted income of the company in a statement dated 24.10.2021 made under section 133A of the Act. However, in the return filed, the assessee has offered to tax only Rs.4.00 crores instead of Rs.20,01,00,000/- disclosed by the assessee during the survey. Based on the submission of the assessee dated 28.10.2013, a show cause notice dated 24.01.2014 issued to the assessee seeking justification as to why only an amount of Rs.4.00 crores has been offered to tax instead of Rs.20,01,00,000/- which was admitted to be undisclosed income of the assessee based on the papers/documents seized during the course of survey. It was explained by the assessee, the amount of Rs.20,01,00,000/- represented members receipt for flat booking, which were not recorded in the books of accounts, and were noted in the impounded diaries. It further submitted that the assessee is following percentage of completion method and offering income on work-in-progress on estimate basis and declare profit on execution of sale deed of respective flats. Rs.4.00 crores represented current year’s income on extra construction receipts admitted during the survey. It further submitted that extra ITA No.1818/Ahd/2015 4 construction receipts admitted at the time of survey was not income of the assessee rather it was for the extra work and other expenses related to the project, which was otherwise required to be borne by the customers/ members. It reiterated that alleged unaccounted fund collected from the members were utilized for extra work of their flats and meeting other related expenses, and such works spread over two to three years, and after considering the price increase in the construction material, profit out of such extra work, was almost nil. However, in order to buy peace, an amount of Rs.4 crores on such extra collection as profit in the return. Assessee has relied upon certain decision of higher authorities for the proposition of law that entire admitted undisclosed income could not be taxed, and only profit embedded therein should be brought to tax, and that the statement made under section 133A has no evidentiary value, and should be accompanied by corroborative evidence. 6. The ld.AO considered submissions of the assessee. The explanations of the assessee were not found to be acceptable to the AO. He noted that facts of unaccounted receipt of Rs.20,01,00,000/- was admitted by the Director time and again, i.e. during the survey proceedings and subsequently during assessment proceedings. Further, during the survey proceedings, no evidences pertaining to expenditure in cash/unaccounted expenditure were found, and even no claim of expenditure putforth against the admitted impugned receipts. The ld.AO further observed that though the statement made under section 133A has no evidentiary value, but documents seized during the coruse of survey demonstrate unaccounted receipts, which were not controverted by the assessee. The addition was not merely on the basis of statement of Director of the company, but the same were supported by the papers/documents seized during the course of survey, inventorised as Annexure A/1, A/2, A/3 and A/4, which demonstrated factum of unaccounted cash receipts of Rs.20,01,00,000/-. The ld.AO ITA No.1818/Ahd/2015 5 further observed that there is no dispute about undisclosed receipt of Rs.20,01,00,000/-, and the assessee has offered Rs.4.00 crores as profit during the current year. The dispute was only with regard to the year of taxability of entire income of Rs.20,01,00,000/- and not the element of income in the said amount. In other words, the assessee has accepted entire unaccounted receipt of Rs.20,01,00,000/-, out of that Rs.16,01,00,000/- agreed to offer as income in the year in which sale deed would be executed. Assessee failed to furnish details of expenditure flat-wise, in respect of which the assessee has received unaccounted receipt of Rs.20,01,00,000/- from the customers though called for from time to time. Considering all these facts, and in the absence of any convincing evidence on record, the ld.AO made addition of Rs.16,01,00,000/- to the total income of the assessee. 7. Against this addition, the assessee went in appeal before the ld.first appellate authority. Before the ld.CIT(A), besides reiterating submissions made before the AO, the assessee gave point wise reply to observation of the AO for taxing the unaccounted collection from the members. They are recorded by the ld.CIT(A) in his impugned order at page no.31 which reads as under: Para No. AO’s observation Rebuttal by appellant company 3.5 The assesses has itself submitted that out of unrecorded receipts of Rs.20,01,00,000/- the assessee has offered Rs.4,00,00, 000/-for the flats in respect of which sale deeds were executed during the year. The assessee has also stated that remaining portion of unrecorded receipts will be offered as income in the year in which corresponding sale deeds are executed. Thus, going by the submission of the assessee The unrecorded receipts as admitted by the appellant company are advance received from customers for extra work to be executed in the flats. As per method of accounting followed, the company has transferred advance collection from members as shown in liabilities in balance sheet to P & L A/c on flat sale as per documents executed as sales. Following the same ITA No.1818/Ahd/2015 6 itself, the under dispute is year of taxability of entire income of Rs.20,01,00,000/- and not element of income in the said amount. method, portion of the unrecorded receipts from members as admitted at the time of survey is also offered in P & L A/c for which sale deeds are executed. Thus, the company has offered portion of such admitted unaccounted receipts in profit & loss account in AY 2012-13 amounting to Rs.4.00crore, inAY2013~ 14 amounting to Rs. 1.20 crore and in AY 2014-15 will offer Rs. 7.23 crore in proportion to the sale deed executed in each year. 3.6 The assessee was specifically asked to furnish flat wise details of extra work done and evidences in support of claim of expenditure in respect of said receipts of Rs.20,01,00, 000/-. However, the assessee has not furnished any such details. In the absence of any such details, the entire income of Rs.20,01,00, 000/- is liable to be taxed as income ofF.Y. 2011-12 only. The unrecorded receipts as admitted by the appellant company are advance received from customers for extra work to be executed in the flats. The extra work is carried out by company and cost of such work is recorded in books of account. Therefore, the portion of unaccounted receipts are offered in the year of execution of sale deed / possession of flat, as the extra work is carried out just before possession of flat. 3.8 The assessee in its submission has admitted entire unaccounted receipt of Rs.20,01,00,000/- as its income. However, it has contended that out of Rs.20,01,00.000/-, amount of Rs. 16.01,00,000/- will be offered as income in the year The unrecorded receipts as admitted by the appellant company are advance received from customers for extra work to be executed in the flats, such receipts are recorded in books of account after survey and shown in ITA No.1818/Ahd/2015 7 in which remaining sale deeds mil be executed. However, the_assessee has not furnished flat-wise working of this bifurcation alone with necessary evidences. Thus, the assessee is merely trying to postpone payment of taxes on its due income by making excuse of its accounting policy which is not supported by facts and evidences. liability side of balance sheet as advance received from members. As per method of accounting followed, the company has transferred advance collection from members as shown in liabilities in balance sheet to P & L A/c on flat sale as per documents executed as sales. Following the same method, portion of the unrecorded receipts from members as admitted at the time of survey is also offered in P & L A/c for which sale deeds are executed. Thus, the company has offered portion of such admitted unaccounted receipts in profit & loss account in AY 2012-13 amounting to Rs. 4.00 crore, inAY2013-14 amounting to Rs. L20 crore and in AY 2014-15 will offer Rs. 7.23 crore in proportion to the sale deed executed in each year and the remaining amount will be offered in next years. 15. In view of the above facts of the case, it is submitted that the appellant company has recorded unaccounted collection from members as admitted in survey in books of account. Whereas, the Id. AO has taxed entire unaccounted receipts / collection in the year of survey. The company has offered portion of unaccounted members collection as per Method of Accounting on execution of sale deed of flats. According to method of accounting followed by company, accounted and unaccounted collection from members is to be recorded in Profit & Loss Account in the year when sale deeds are executed. Therefore, portion of unaccounted members collection offered in Profit & Loss A/c in AY 2012- 13 amounting to Rs. 4 crore, in AY2013-14 amounting to Rs. 1.20 crore, will offer in AY 2014-15 amounting to Rs. 7.23 crore and remaining collection on the basis of execution of sale deeds in next years'. Thus, the appellant company has offered members collection (accounted and unaccounted) on the basis of method of accounting / accounting ITA No.1818/Ahd/2015 8 policy of the company, which is followed by company prior to survey. The amount received as advance money against booking of flats (cheque and cash) is not assessable as income for the year, the same will be taxed in the year when the flats are sold, as the company is offering income in P & L A/c on estimation basis on cost of construction, even though there is negligible Therefore, as per the provisions of Rule 46A, the additional evidences submitted by the assessee should not be admitted. Therefore, in view of the facts brought out in the assessment order and the facts stated above, the additions made by the A.O. deserve to be upheld even if the additional evidences submitted by the assessee are considered. Therefore, it is requested that the additions made by the A.O. may kindly he sustained.’ 8. In view of this submission of the assessee, the ld.CIT(A) called for remand report from the AO, and the AO vide its letter dated 13.2.2015 submitted his report, which was reproduced by the ld.CIT(A) in the impugned order as under: "In this regard, it is submitted that, a survey action u/s.133A of the Act was conducted at various premises of the company on 24.10.2011. During the course of survey proceedings, the assessee had made a disclosure of Rs. 20 crores on account of money received in the on-going projects. During the statement the assessee had admitted to disclose this income for the F.Y.2011-12 relevant to A.Y.2012-13. The return of income for A. Y.2012-13 -was filed by the assessee on 30.09.20J2 declaring the total income of Rs.6,02,34,870/-. During the course of assessment proceedings, the A.O. confronted the assessee on this issue as the assessee had offered income of Rs. 4 crores only out of the total admitted undisclosed income of Rs.20.01 crores. The A.O, was not convinced with the theory put forward by the assessee of project percentage completion method and made the addition of remaining Rs. 16.01 crores to the total income of assessee. The assessee during the appellate proceedings had contemplated the same theory of percentage completion method before your honour and the issue was reminded to the undersigned for verification. In the interest of natural justice, the assessee was given an opportunity vide this office letter dated 28. JO.2014 to produce necessary evidence to substantiate its claim for differing admitted undisclosed income to subsequent years. The assessee vide submission on 13.10.2014 and 04.02,2015 simply submitted the following :- 1. Copy of written submission before CJT(A). 2. Coy of ITR Ackn and Computation of total income for A. Y.2012-13. 3. Copy of WIP working submitted ClT(A)for A. Y.2012-13. 4. Copy of ITR Ackn and Computation of Total income for A.Y.2013-14. ITA No.1818/Ahd/2015 9 5. Copy of Audited Balance and Profit and Loss Account for F. Y.2012-13. On perusal of the details, it is seen that there is no evidence to suggest that the assessee has been following percentage completion method. Hence, the contention cannot be accepted. Also, it is pertinent to mention that the assessee in its statement recorded during the course of survey has categorically disclosed the same as unaccounted income pertaining to the F.Y.2011-12 relevant to A, Y, 2012-13 and further admitted to pay the tax in the same year itself. Even after the survey, the assessee has not made any petition before the department of having made disclosure under pressure/coercive but has simply filed the return of income without taking into account the disclosure of unaccounted income made during the course of assessment proceedings. In view of this, this is nothing but an afterthought by assessee to defer this income in the subsequent years so as to avoid payment of taxes. Therefore, as per the provisions of Rule 46A, the additional evidences submitted by the assessee should not be admitted. Therefore, in view of the facts brought out in the assessment order and the facts stated above, the additions made by the AO deserve to be upheld even if the additional evidences submitted by the assessee are considered. Therefore, it is requested that the additions made by the AO may kindly be sustained. 9. Thereafter, the assessee has also filed a rejoinder to the remand report filed by the assessee, which rejoinder also incorporated by the ld.CIT(A) in his impugned order. For brevity, we would reproduce the same as under: "In the Appellate proceedings, AR of the Appellant furnished detailed submission on Grounds of Appeal along with Paper book containing Submission to AO and related details furnished before AO vide letter dated 23-07-2014 and letter dated 30-07-2014. 3. Your goodself referred above submissions of the appellant to AO (DCIT, Circle-4(1)(1), Ahmedabad) for his comments. 4. Your goodself provided us comments of AO, which are referred to your goodself vide letter No. DCIT/Cir-4(1)(1)/Sambhav/2014-15 dated 13-02-2015, where the AO stated that: "In this regard, it is submitted a survey action u/s. 133A of the Act was conducted at various premises of the company on 24.10.2011. During the course of survey proceedings, the assessee had made a disclosure of Rs. 20 crores on account of money received in the on-going projects. During the statement the assessee had admitted to disclose this income for the F. Y. 2011-12 relevant to A. Y. 2012-13. The return of income for A.Y. 2012-13 was filed by the assessee on 30.09.2012 declaring the ITA No.1818/Ahd/2015 10 total income of Rs. 6,02,34,870/-. During the course of assessment proceedings, the A.O. confronted the assessee on this issue as the assessee had offered income of Rs. 4 crores only out of the total admitted undisclosed income of Rs. 20.01 crores. The A. O. was not convinced with the theory put forwarded by the assessee of project percentage completion method and made the addition of remaining Rs. 16.01 crores to the total income of assessee. The assessee during the appellate proceedings had contemplated the same theory of percentage completion method before your honour and the issue was reminded to the undersigned for verification. In the interest of natural justice, the assessee was given an opportunity vide this office letter dated 28.10.2014 to produce necessary evidence to substantiate its claim for differing admitted undisclosed income to subsequent years. The assessee vide submission on 13.10.2014 and 04.02.2015 simply submitted the following: 1. Copy of written submission before CIT(A). 2. Copy of ITR Ackn aid Computation of total income for A. Y. 2012- 13. 3. Copy of WIP Working submitted CIT(A) for A.Y. 2012-13. 4. Copy of ITR Ackn and Computation of Total income for A. Y. 5. Copy of Audited Balance and Profit and Loss Account for F.Y. 2012-13 On perusal of the details, it is seen that there is no evidence to suggest that the assesse has been following percentage completion method. Hence, the contention cannot be accepted. Also, it is pertinent to mention that the assessee in its statement recorded during the course of survey has categorically disclosed the same as unaccounted income pertaining to the F.Y. 2011-12 relevant to A.Y. 2012-13 and further admitted to pay the tax in the same year itself. Even after the survey, the assessee has not made any petition before the department of having made disclosure under pressure/coercive but has simply filed the return of income without taking into account the disclosure of unaccounted income made during the course of assessment proceedings. In view of this, this is nothing but an afterthought by assessee to defer this income in the subsequent years so as to avoid payment of taxes. Therefore, as per the provisions of Rule 46A, the additional evidences submitted by the assessee should not be admitted. Therefore, in view of the facts brought out in the assessment order and the facts stated above, the additions made by the A.O. deserve to be upheld even if the additional evidences submitted by the assessee are considered. Therefore, it is requested that the additions made by the A O. may kindly be sustained. Copy of the statement recorded on 24.10.2011. " ITA No.1818/Ahd/2015 11 5. The AO in the Remand Report merely presented the facts of the case, which are already on record and discussed in detail in letter dated 23-07-2014. Though at the cost of repetition, the same are reproduced: (i) A Survey u/s. 133A was carried out at the business premises of the appellant's company on 24-10-2011. During the survey, director of the appellant company admitted unaccounted receipts of Rs. 20.01 crore, as noted in impounded diaries. During AY 2012-13, the appellant company offered income of Rs. 4 crore as current year's income on such extra construction receipts of Rs. 20.01 crore admitted in survey. (ii) The survey has taken place on 24-10-2011, in this connection the appellant has filed letter dated 09-11-2011, where it was informed that "With reference to the proceedings u/s. 133A of the Income tax, at our business premise on 24th October 2011, it is hereby stated that the amount of income tax liability for the financial year 2011-12, arising on account of receipt of ON-MONEY of Rs. 20.01 crores, declared during the course of survey u/s. 133A of the Act along with other tax liability will be paid before end of the financial year 2011-12 and not later than filing of return of income (Pg. 24)." Thus, the appellant categorically mentioned that the amount declared / admitted at the time of survey is receipt and not income. (iii) Thereafter, the AO issued u/s. 210(3) of the IT Act, in this connection the appellant has filed letter dated 30-03-2012, where in connection to payment of Advance tax, it was stated that: "3. During the survey on 24-10-2011, details of collection from members were found noted in diaries, such collection was amounted to Rs. 2001 lacs, such collection is to be reconcile from regular books, after receiving impounded material, as such collection includes notings of collection for flats as well as for extra work. 4. Collection for flats is fully recorded in the regular books, whereas extra work collection is not recorded, as the same is to be incurred at the time of completion of flats or the same is to be carried out by some other agencies, where the company is having middleman profit only. Estimated net profits on such collection are appx ofRs.400 lacs (Pg- 25)." Thus, the appellant categorically mentioned that the amount declared / admitted at the time of survey is receipt and estimated net profits on such collections are approximately of Rs. 400 lac i.e. Rs. 4 corre, offered in the return of income filed. (iv) The accounts were finalized for the year 2011-12, the Auditors in Notes of Accounts stated that "During the year proceedings u/s. 133A of the Income tax Act, was carried out by IT Dept. During the course of said proceedings, additional receipt of Rs. 20.01 crores was admitted by the company. The management estimated profit of Rs. 4.00 crores on such additional receipts and shown the same as income in Profit & Loss account in the current year (Pg. 46)." ITA No.1818/Ahd/2015 12 Thus, the appellant categorically mentioned that the amount declared/admitted at the time of survey is receipt and estimated net profits on such collections of Rs. 4 crores is offered in the return of income filed (iv) It is further submitted that the appellant company is following percentage of completion method and offering income on work done i.e. WIP. The WIP is worked out by taking in consideration cost of land, cost of material labour / contract charges, legal payments, advertisement expenses, interest cost, site salaries, architect & consultants fees, stationery & broachers expense, incidental costs, etc. The estimated profit is offered in proportion of cost incurred against estimated cost and collection / booking amount from members. (v) The appellant company has offered extra profit of Rs. 4 crore on unrecorded receipts from members amounting to Rs. 20.01 crore. Thus, the appellant has offered the profit embedded in the unrecorded collection for taxation. (vi) In view of the above facts of the case, fundamentals of various decisions of Hon’ble Courts and Tribunals, to meet with the both ends of inflow / outflow, the appellant company though the net profit ratio is 5.80%, has offered profits @ 20% on extra collection, as there are always higher profits in the extra work items and accordingly offered Rs. 4 crore in Income tax return filed for A.Y. 2012-13. It is therefore prayed that the addition of entire extra receipts may kindly be restricted to the offer made by the appellant in Income tax returns. 6. The A O has raised following issues in his Remand Report: (i) Issue: There is no evidence to suggest that the assessee has been following percentage completion method. Hence, the contention cannot be accepted. (ii) Reply: The AO is suppose to be most intelligent person as far as analyzing the facts and law is concerned. The construction companies normally follows either Percentage Completion Method or Project Completion Method. If, the finding of AO be considered as correct, the appellant is not liable to pay any tax on any amount as not following Percentage Completion Method, then the AO indirectly wants to say that the appellant company is following Project Completion Method. Under Project Completion Method, the income is to be offered only on completion of project and no income is offered in the years when construction activity is going on. Whereas, contrary to this, the appellant company has offered income on Percentage Completion Method, even though construction is in progress, profit is estimated and taxes are paid. Thus, if your honour rely on the Remand Report, your appellant is not liable to pay tax on single rupee in the year under consideration. ITA No.1818/Ahd/2015 13 (ii) Issue: it is pertinent to mention that the assessee in its statement recorded during the course of survey has categorically disclosed the same as unaccounted income pertaining to the F.Y. 2011- 12 relevant to A.Y. 2012-13 and further admitted to pay the tax in the same year itself. Reply- The appellant admitted the members collection of Rs. 20.01 crore as income of AY 2012-13 and shown -willingness to pay taxes. Accordingly, following judicial decisions off Hon'ble Courts and Tribunals, to meet with the both ends of inflow / outflow, the firm has offered profit of Rs. 4 crore on such extra collection in the tax returns filed for A.Y. 2012-13 and paid taxes thereon. (iii) Issue: Even after the survey, the assessee has not made any petition before the department of having made disclosure under pressure/coercive but has simply filed the return of income without taking into account the disclosure of unaccounted income made during the course of assessment proceedings. In view of this, this is nothing but an afterthought by assessee to defer this income in the subsequent years so as to avoid payment of taxes. Reply: The appellant has filed following submissions to AO, where it was mentioned that net profit is estimated at Rs. 4 crore on the members collection of Rs. 20.01 crore: (a) The AO issued u/s. 210(3) of the IT Act, in this connection the appellant has filed letter dated 30-03-2012, where in connection to payment of Advance tax, it was stated that: "3. During the survey on 24-10-2011, details of collection from members were found noted in diaries, such collection was amounted to Rs. 2001 lacs, such collection is to be reconcile from regular books, after receiving impounded material, as such collection includes notings of collection for flats as well as for extra work. 4. Collection for flats is fully recorded in the regular books, whereas extra work collection is not recorded, as the same is to be incurred at the time of completion of fiats or the same is to be carried out by some other agencies, where the company is having middleman profit only. Estimated net profits on such collection are appx of Rs. 400 lacs (Pg.2S)." Thus, the appellant categorically mentioned that the amount declared / admitted at the time of survey is receipt and estimated net profits on such collections are approximately ofRs. 400 lac i.e, Rs. 4 crore, offered in the return of income filed. (b) In the Audited Accounts for the year 2011-12, the Auditors in Notes of Accounts stated that "During the year proceedings ids. I33A of The Income tax Act, was carried out by IT Dept. During the course of said proceedings, additional receipt of Rs.20.01 crores was admitted by the company. The management estimated profit of Rs.4.00 crores on such ITA No.1818/Ahd/2015 14 additional receipts and shown the same as income in Profit & Loss account in the current year." Thus, the appellant categorically mentioned that the amount declared/admitted at the time of survey is receipt and estimated net profit on such collections of Rs.4 crore is offered in the return of income filed. (iv) Issue: Therefore, as per the provisions of Rule 46A, the additional evidences submitted by the assessee should not be admitted. Therefore, in view of the facts brought out in the assessment order and the facts stated above, the additions made by the A.O. deserve to be upheld. Reply: The appellant has not submitted any additional evidence. Legal submission on offering of profits embedded in receipts on the basis of relevant decisions of Hon 'ble Courts and Tribunals furnished, legal submission on offering of income admitted u/s. 133A on the basis of relevant decisions of Hon'ble Courts and Tribunals furnished and legal submission on unrecorded members collection admitted in survey as advance from members as per method of accounting followed and portion of such unaccounted collection is offered on year-to-year basis as per sale deed executed and the profit is offered on cost of project on the basis of relevant decisions of Hon 'ble Courts and Tribunals furnished. These legal submissions cannot be said as additional evidence, as the appellant has not filed any additional evidences. Whatsoever furnished in the Appellate Proceedings is part of material already with IT Dept in AY 2011-12, in AY 2012-13, in AY 2013-14 and in AY 2014-15, in physical or in soft data with IT Returns filed on IT website. (v) Issue: Even if the additional evidences submitted by the assessee are considered. Therefore, it is requested that the additions made by the A. O. may kindly be sustained. Reply: The AO is overwhelmed in taking decision by putting his leg in shoes of Hon'ble Commissioner of Income Tax (Appeals). The appellant humbly prayed that decision may kindly be taken after due consideration of submissions made by appellant vide letter dated 23-07- 2014 and letter dated 30-07-2014. Such submissions have detailed discussion on facts, on law and backed by judicial decisions by Hon'ble Courts and Tribunals including jurisdictional High Court and Tribunals. 7. In view of the above facts of the case, it is submitted that the appellant company has recorded unaccounted collection from members as admitted in survey in books of account. Whereas, the Id AO has taxed entire unaccounted receipts / collection in the year of survey. The company has offered portion of unaccounted members collection as per Method of Accounting on execution of sale deed of flats. According to method of accounting followed by company, accounted and unaccounted collection from members is to be recorded in Profit & Loss Account in the year when sale deeds are executed. Therefore, portion of unaccounted members collection offered in Profit & Loss A/c in AY 2012- ITA No.1818/Ahd/2015 15 13 amounting to Rs. 4 crore, in AY2013-14 amounting to Rs. 1.20 crore, will offer in AY 2014-15 amounting to Rs. 7.23 crore and remaining collection on the basis of execution of sale deeds in next years'. Thus, the appellant company has offered members collection (accounted and unaccounted) on the basis of method of accounting / accounting policy of the company, which is followed by company prior to survey. The amount received as advance money against booking of flats (cheque and cash) is not assessable as income for the year, the same will be taxed in the year when the flats are sold, as the company is offering income In P &L A/c on estimation basis on cost of construction, even though there is negligible sale in the year. It is therefore prayed that portion of unaccounted members collection of Rs. 4 crore offered in AY 2012-13, offered on the basis of flat sale may kindly be considered as for the yew. The remaining collection is offered in next years' as per method of accounting followed by company, the addition made for remaining amount of Rs.16.01 crores (admission in survey Rs.20.01 crores less: amount offered in AY-2012-13 Rs. 4 crore) may kindly be deleted as the same is double taxation in the hands of company, being the same is offered in the later years. 8. In view of the above facts of the case, fundamentals of various decisions of Hon 'ble Courts and Tribunals, to meet with the both ends of inflow / outflow, the appellant company though the net profit ratio is 5.80%, has offered profits @ 20% on extra collection, as there are always higher profits in the extra work items and accordingly offered R$. 4 crore in Income tax return filed for A.Y, 2012-13, It is therefore prayed that the addition of entire extra receipts may kindly be restricted to the offer made by the appellant in Income tax returns.” 10. After examining submissions of the assessee, remand report of the AO and rejoinder thereto by the assessee, the ld.CIT(A) allowed the claim of the assessee by observing that the assessee company has accounted for unaccounted collection in the books of accounts and deposited Rs.15,84,00,000/- in the bank accounts till 31-3-2012, and as per the accounting practice followed by the assessee, estimated profit on cost of construction as per percentage completion method was offered in the year under consideration, and unaccounted receipts were transferred to profit & loss account in the next year. He further observed that as per the taxability of entire unaccounted receipt is concerned, the same was meant for extra work required by members concerned; the expenditure thereof may or may not be debited, which depended upon period of work completed piecemeal, and in all practical ITA No.1818/Ahd/2015 16 purpose, extra construction work required by the members could be completed just before handing over of the possession to the members i.e. after the gap of 2-3 years. Therefore, as additional construction work required by the members for which unaccounted receipts were made not a period specific, the entire receipt could not be brought to be taxed, but only an estimated profits could be taxed. So far the ld.AO’s finding that the assessee has not furnished flat-wise details of extra work done and evidences in support of claim of the expenditure is concerned, the ld.CIT(A) observed that as per the principle of taxing only the profit element embedded in unaccounted receipts from the members, could be brought to tax and entire gross amount unless there were evidences in possession of the AO to indicate that all the expenses have already been debited and unaccounted income has been applied elsewhere. After relying on certain judicial pronouncements, allowed the claim of the assessee and directed the AO to delete the addition of Rs.16,01,00,000/-. Dissatisfied with order of the ld.CIT(A), Revenue is before the Tribunal. 11. Before us, none appeared on behalf of the assessee. The ld.DR while supporting order of the AO, contended that the approach of the ld.CIT(A) in allowing claim of the assessee was not based on the evidence, rather he was carried by generalizing the same from “macro perspective” angle. There were admitted proof of unaccounted receipts project-wise in form of impounded documents being annexure A/1, A/2, A/3 and A/4 but there was no iota of evidence to establish unaccounted expenditure, either during the survey proceedings or in the assessment proceedings. The ld.CIT(A) disregarded all this, and arrived at a erroneous conclusion. It is submitted by the ld.DR that admissions made by the assessee were voluntary and without any whisper of retraction, and thereafter agreed to pay tax thereon. In such circumstances, order of the ld.CIT(A) devoid of any merit for upholding the same. ITA No.1818/Ahd/2015 17 12. We have heard submissions of the ld.DR and gone through the record. We have also gone through orders of both the authorities below. The issue before us, whether voluntary admission of unaccounted receipts from the members is to be assessed to tax on gross basis, or as held by the ld.CIT(A), only the profit element embedded in the total receipts is required to be taxed. Admitted facts are that survey was conducted at 501, 502, Safal Preclude, Prahaladnagar, Ahmedabad under section 133A of the Act on 24.10.2011. During the course of survey certain papers inventorised as Annexure A/1 to A/4 were impounded. Unaccounted receipts of Rs.20.01 crores in respect of Stavan Alteza, Stavan Paradise and Stavan Arise schemes of the assessee company are reflected in these projects. Statement of Shri Mihir P. Desai, director of the assessee- company was recorded and he was confronted with these pages, who admitted receipt of Rs.20.01 crores, which were not recorded in the books of accounts. However, while filing the return of income on 30.1.2012, the assessee offered income of Rs.4 crores only in the return of income as against Rs.20.01 crores unaccounted receipts noticed during the course of survey. The assessee has not disputed about the discovery of Rs.20.01 crores unaccounted receipts during the course of survey. It has admitted that fact. However, while filing return of income, it took a stand that instead of gross unaccounted receipts, only profit element alleged to be embedded in these receipts be taken into consideration. The ld.AO has referred two letters written by the assessee. These letters are reproduced in para 6.7 of the assessment. They read as under: “6. Further, vide letter dated 9 th November, 2011 you had again reiterated the acceptance of additional income of Rs.20,01,00,000/-. The relevant portion of the same is reproduced as under: "With reference to the proceeding u/s 133A of the Income tax Act, at our business premise on 24th October 2011, it is here by stated that the amount of Income tax liability for the financial year 2011-12, arising on account of receipt of ON MONEY of Rs. ITA No.1818/Ahd/2015 18 20-01 crores, declared during the course of survey u/s. 133A of the Act along with other tax liability will be paid before end of the financial year 2011-12 and not later than filing of return of income. Further, it is intimated that we are in the process of passing necessary entries in our books of accounts of the ON MONEY declared by us of Rs.20.01 Crores." 7. Again vide letter dated 5th June, 2012, you have again confirmed the acceptance of additional income of Rs.20,01,00,000/-. The relevant portion of the same is reproduced as under: "During the survey on 24-10-2011, details of collection from members were found as noted in diaries, such collection has amounted to Rs. 2001 lacs and such collection is unaccounted collection from members against booking of flats, which was -not recorded in the books of accounts. To give honour to the Income Tax Department's Proceedings and to cooperate the Department, to avoid prolong litigations and to have peace of mind. I, Mihir Desai, Director of the company, has categorically accepted the above mentioned unaccounted collection from members of Rs. 2001 lacs as unaccounted income for the F.Y. 2011-12. I further assure that on the disclosed income of Rs. 2001 lacs, the tax liability comes to Rs. 600 lacs (Approx). Out of which, my company has already paid advance tax of Rs. 1.53 crores. Further, I propose to make the remaining payment of tax on disclosed income as under: Balance taxes will be paid as under SN Date Amount (Rs. In lacs 1 15-05-2012 50 2 30-06-2012 50 3 16-07-2012 50 4 30-07-2012 50 5 15-08-2012 50 6 30-08-2012 50 7 15-09-2012 50 8 30-09-2012 100 Total 450 Kindly consider our above submission sympathetically." 13. It is pertinent to note that both letters filed by the assessee were prior to return of income filed by it. The second letter referred by the AO dated 5.6.2012 would specifically exhibit the acceptance of Rs.20.01 crores as income of the assessee, which would give rise to tax liability of Rs.6 crores. This has also been recognized by the assessee; rather ITA No.1818/Ahd/2015 19 the assessee has proposed the payment of tax on alleged undisclosed income. However, while filing the return of income, the assessee took a somersault and only alleged that it will offer profit element embedded in the gross receipts. 14. The ld.AO has rejected this proposition of the assessee. However, on appeal, theld.CIT(A) has reversed this finding. A large number of decisions have been referred by the ld.CIT(A), and these decisions were cited before the AO also viz. i) Kishor Mohanlal Telwala Vs. ACIT, 64 TTJ (Ahd) 543; ii) Abhishek Corpn Vs. DCIT, 63 TTJ (Ahd 651 iii) CIT Vs. Gurubachhan Singh J Juneja, 302 ITR 63 (Guj) iv) RK Corporation, ITA No.4940/1996 , ITAT, Ahmedabad bench v) CIT Vs. President Industreies, 258 ITR 664 (Guj) vi) CIT Vs. Balchand A Kumar (2003) 263 ITR 610 (MP) vii) ITO Vs. Sai Krupa Construction (2007) 13 SOT 459 (Mum) viii) CIT Vs. S. Khader Khan Sons (2013) 352 ITR 480 (SC) ix) Pau Mathews & Sons Vs. CIT, (2003) 263 ITR 157 (Mad) x) Ashok Manilal Thakkar Vs. ACIT, (2005) 97 ITD 361 (Ahd) xi) CIT Vs. Shri Ramdas Motor Transport (1999) 238 ITR 177 (AP) xii) Kailashben Manharlal Chokshi Vs. CIT, 328 ITR 411 (Guj); xiii) Rajesh Jain Vs. DCIT, (2006) 100 TTJ 929 (Del) xiv) ITO Vs. Vijaykumar Kesar (2010) 327 ITR 497 (Chattis) 15. There is no dispute with regard to the proposition laid down to these decisions. As far as the decisions referred under the head legal submissions on offering the income admitted under section 133A is concerned, decision in the case of CIT Vs. S. Khader Khan Sons (supra), Paul Mathews & Sons (supra) and Ashok Manilal Thakkar (supra) etc. are to the effect that statement recorded under section 133A is without ITA No.1818/Ahd/2015 20 any oath and does not carry evidentiary value. There is no dispute with regard to the proposition. This proposition is not available in the present case. Simple reason is that documentary evidence exhibiting acceptance of unaccounted receipts was found. This was admitted by the director of the assessee-company, therefore, cumulative setting of these two aspects, it suggests that there was unaccounted receipts. The AO is not harping upon statement of the Director only, which otherwise without oath. The assessee never disputed the discovery of unaccounted receipts. It disputed quantum of income embedded in those receipt. Therefore, these case laws do not help the assessee. This fact has been recognized by two letters written by the assessee- company and as referred by the AO. As far as the proposition that entire extra-collection should not be termed as profit of the assessee-company, rather profit embedded in such receipts is required to be assessed as income is concerned, we are of the view that there is no dispute with regard to the proposition that whenever unaccounted receipts unearthed during any investigation, then the gross receipts are not to be taxed. But this situation is applicable only when simultaneously some evidences are being found exhibiting unaccounted expenditure. The AO has specifically asked the assessee to give details of expenditure which were not incorporated in the books. He asked for flat-wise details of work done along with relevant measurement sheets/bills. In other words, the assessee must have maintained details for controlling overall expenditure. Those details might not be part of regular books of accounts, but they may goad the AO to estimate what is the nature of work; how much expenditure probably would have been incurred by the assessee; even under estimation. No such things were submitted by the assessee. To be more specific, there should be corresponding details of unaccounted expenditure. These details might not be exactly the same to unaccounted receipts, but there should be similar. Otherwise, it is to be ITA No.1818/Ahd/2015 21 construed that all sorts of expenditure have been accounted for even those expenditure representing unaccounted receipts collected from buyers of the flats. In these situations, the gross amount has to be brought to tax. Realising this situation, the assessee himself has admitted gross amount of Rs.20.00 crores as its income in the letter date 5.6.2012 written to the Income Tax Department, whereby it has divided tax liability in instalment also. This letter has been noticed by the AO in para 7 of the assessment order. These factors have totally been ignored by the ld.CIT(A). The ld.CIT(A) proceeded on altogether different analogy and estimated that unaccounted expenditure might not have been incurred by the assessee against this unaccounted receipts, and therefore, only profit element ought to be worked out. To this effect, there is no evidence produced by the assessee rather before filing of return. It has again admitted of taxability of gross amount. These two letters have been written after conclusion of survey with due deliberation and consideration, and somehow this stand was withdrawn while filing the return. The ld.CIT(A) has analyzed all these aspects, and rightly made addition. We reverse finding of the ld.CIT(A) and restore that of the AO. 16. In the result, appeal of the Revenue is allowed. Order pronounced in the Court on 5 th January, 2022 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) VICE-PRESIDENT Ahmedabad; Dated 05/01/2022