DCIT, CC-6(2), MUMBAI V. M/s S. B. DEVELOPERS, MUMBAI

ITA 2889/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4127 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YESHWANT BHASKAR
• Keywords: Unexplained cash credit; Business income; Business expenditure; Loose papers; Question of law; Corroborative evidences; Documents seized; Set aside
• Section: 40A(3); 143(3); 13; 153C; 68; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.2889/MUM./2019 (ASSESSMENT YEAR : 201415) ITA NO.2890/MUM./2019 (ASSESSMENT YEAR : 201516) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE6(2), MUMBAI . APPELLANT V/S M/S. S.B. DEVELOPERS A/201, RAJPIPLA, OPP. STANDARD CHARTERED BANK, SANTACRUZ (WEST) MUMBAI 400 051 PAN ABSFS4504L . RESPONDENT ITA NO.2981/MUM./2019 (ASSESSMENT YEAR : 201415) ITA NO.2892/MUM./2019 (ASSESSMENT YEAR : 201516) M/S. S.B. DEVELOPERS A/201, RAJPIPLA, OPP. STANDARD CHARTERED BANK, SANTACRUZ (WEST) MUMBAI 400 051 PAN ABSFS4504L . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE6(2), MUMBAI . RESPONDENT REVENUE BY : SHRI YESHWANT BHASKAR ASSESSEE BY : SHRI ANUJ KISNADWALA DATE OF HEARING 02.09.2021 DATE OF ORDER 30/09/2021 2 M/S. S.B. DEVELOPERS O R D E R PER S. RIFAUR RAHMAN, A.M. THESE CROSS APPEALS ARE AGAINST THE IMPUGNED ORDER OF EVEN DATE 13 TH FEBRUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)54, MUMBAI, FOR THE ASSESSMENT YEAR 201415 AND 201516. 2. THE ONLY COMMON ISSUE WHICH AROSE IN THESE APPEALS IS, WHETHER OR NOT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE CASH RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF BUSINESS RECEIPT AND COULD NOT BE TREATED AS INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 3. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. THESE APPEALS FILED BEFORE US INVOLVES AROUND THE PROJECT UNDERTAKEN BY THE ASSESSEE CALLED SION O2 AND THE ISSUE INVOLVED RELATING TO ONMONEY RECEIVED IN THE ABOVE SAID PROJECT AFTER A SEARCH OPERATION CONDUCTED UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') WAS CONDUCTED IN THE AHUJA GROUP OF CASES ON 25TH JUNE 2015, AND INCRIMINATING DATA IN THE FORM OF LOOSE PAPERS AND DIGITAL FORM RELATING TO THE TAX EVASION WERE FOUND AND SEIZED. THE PREMISES OF SHRI SUNIL CHOWDHARY, DRIVER OF SHRI JAGDISH AHUJA (PROMOTER OF THE GROUP) WERE ALSO SEARCHED AND PARALLEL BOOKS OF ACCOUNT OF THE AHUJA GROUP WERE FOUND IN HIS PREMISES. THE ANALYSIS OF THE DATA FOUND WAS CONFRONTED TO THE PROMOTER MR. JAGDISH AHUJA, WHO HAD ADMITTED TO RECEIVING ONMONEY IN VARIOUS PROJECTS UNDERTAKEN BY THE GROUP. ACCORDINGLY, NOTICE UNDER SECTION 153C OF THE ACT WAS ISSUED TO THE ASSESSEE ON THE BASIS OF THE DATA FOUND DURING THE SEARCH. MR. JAGDISH AHUJA, PROMOTER OF THE GROUP HAS CLEARLY ADMITTED TO RECEIVING ONMONEY WHICH WAS A PART OF THE PARALLEL BOOKS OF ACCOUNT MAINTAINED BY HIM. ON THE BASIS OF THE STATEMENT AND THE CORROBORATIVE EVIDENCES FOUND DURING THE SEARCH, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE PROPOSING TO 3 M/S. S.B. DEVELOPERS MAKE AN ADDITION OF THE ONMONEY RECEIVED. THE ASSESSING OFFICER LISTED THE RECEIPT OF YEARWISE ONMONEY RECEIVED BY THE ASSESSEE-COMPANY ARE LISTED BELOW: PROJECT NAME ASST. YEAR AMOUNT () SION O2 2014-15 22,30,47,750/- SION O2 2015 - 16 10,04,77,000/ - 4. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE REPLIED THAT THE PROJECT SION O2 WAS AT A VERY INITIAL STAGE AND THERE IS HARDLY ANY CONSTRUCTION COST WHICH WAS INCURRED. SINCE IT WAS IN AN INITIAL STAGE, THERE IS NO QUESTION OF TAXING ANY INCOME. FURTHER, IT WAS SUBMITTED WITHOUT PREJUDICE PLEA THAT IN THE EVENT OF TAXING THE CASH SALES FOR THE MONEY RECEIVED DURING THIS ASSESSMENT YEAR AS AN ON MONEY, THE ENTIRE AMOUNT OF CASH SALES COULD NOT BE BROUGHT TO TAX, BUT ONLY THE NET INCOME THEREFROM. ALSO IT WAS SUBMITTED THAT IT SHOULD BE TAXED ONLY IN THE YEAR IN WHICH THE PROJECT IS COMPLETED OR WHEN THE SALE IS IN RESPECT OF THE SAID TRANSACTIONS ARE OFFERED TO TAX. THE ASSESSING OFFICER REJECTED THE SUBMISSIONS OF THE ASSESSEE AND ACCORDING TO THE ASSESSING OFFICER THE INCOME WHICH WAS PROPOSED TO BE TAXED WAS NOT SOMETHING WHICH WAS RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THIS WOULD NOT HAVE OFFERED TO TAX, HAD THE SEARCH NOT TAKEN PLACE. FURTHER HE OBSERVED THAT THE ASSESSEE HAD NOT GIVEN THE DETAILS OF THE PERSON WHO HAD ACTUALLY PAID THE ON MONEY LIKE THE NAME, PAN, ADDRESS AND CONFIRMATION FROM THOSE PARTIES. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT THE ON MONEY RECEIVED HAS TO BE TAXED UNDER SECTION 68 OF THE ACT. ACCORDINGLY, HE MADE AN ADDITION BASED ON THE ABOVE CHART IN THE RESPECTIVE ASSESSMENT YEARS. AGGRIEVED WITH THE ABOVE ADDITIONS, ASSESSEE FILED APPEALS BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LEARNED CIT(A), THE ASSESSEE FILED 4 M/S. S.B. DEVELOPERS DETAILED SUBMISSIONS FOR OBJECTING FOR MAKING ADDITION OF TOTAL ON MONEY RECEIVED DURING THE ASSESSMENT YEAR AND MAKING A SUBMISSION THAT ONLY NET PROFIT SHOULD BE BROUGHT TO TAX ON TOTAL ONMONEY RECEIVED. FURTHER IT WAS SUBMITTED THAT ASSESSEE AND OTHER GROUP COMPANIES REPRESENTED BEFORE THE SETTLEMENT COMMISSION THE ISSUE OF DETERMINING THE PERCENTAGE OF PROFIT ON THE ONMONEY, WHICH WAS ACCEPTED BY SETTLEMENT COMMISSION TO TAX THE PROFIT ELEMENT ON THE RECEIPT OF ON MONEY @12% AND ALSO MADE A PLEA THAT THE INCOME SHOULD BE TAXED IN THE YEAR OF REALIZATION OF THE PROFIT. 5. AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) OBSERVED THAT IT IS ACCEPTED AND ADMITTED FACTS THAT ASSESSEE HAS RECEIVED ON MONEY IN THE PROJECTS UNDERTAKEN BY IT. HOWEVER, HE OBSERVED THAT THE ASSESSEE GROUP COMPANIES HAD ALSO OFFERED THE ON MONEY RECEIVED BEFORE SETTLEMENT COMMISSION WHERE FIVE ENTITIES OF THE GROUP MADE AN APPLICATION. HE OBSERVED THAT THIS ISSUE WAS PRESENT IN THREE CONCERNS OF THE AHUJA A GROUP WHICH APPROACHED THE SETTLEMENT COMMISSION AND HAD OFFERED 12% OF THE ONMONEY AS INCOME AND THE SAME WAS ACCEPTED BY THE SETTLEMENT COMMISSION. HE OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT THE MONEY OF THE ENTIRE GROUP INCLUDING THAT OF THE ASSESSEE WAS OFFERED BEFORE THE SETTLEMENT COMMISSION, WHICH WAS EVIDENT FROM THE RECORD SUBMITTED. HOWEVER, HE REJECTED THE ABOVE CONTENTION AND OBSERVED THAT THE INCOME OF THE ASSESSEE WAS NEVER OFFERED BEFORE SETTLEMENT COMMISSION AND OBSERVED THAT THE INCOME HAS TO BE TAXED IN THE HANDS OF THE RIGHT PERSON AND NOT ANY OTHER PERSON. FURTHER, THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE OFFER @12% OF MONEY RECEIVED WAS ACCEPTED BY SETTLEMENT COMMISSION, THE SAME HAS TO BE APPLIED IN THE CASE OF THE ASSESSEE ALSO. THE LEARNED CIT(A) 5 M/S. S.B. DEVELOPERS REJECTED THIS SUBMISSION ALSO AND OBSERVED THAT THE ACCEPTANCE OF SETTLEMENT COMMISSION OF ON MONEY RECEIVED AS REASONABLE IS RELEVANT TO THE FACTS PERTAINING TO THE ASSESSEE BEFORE IT, THE SAME CANNOT BE BLINDLY APPLIED TO ALL OTHER CASES. HE ALSO OBSERVED THAT AT BEST THE DECISION OF THE SETTLEMENT COMMISSION CAN ONLY BE A GUIDING FACTOR AND CANNOT BE BINDING IN OTHER CASES. 6. FURTHER, THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ON MONEY SHOULD BE TAXED IN THE YEAR OF COMPLETION OF THE PROJECT OR THE YEAR IN WHICH THE CORRESPONDING SALES ARE SHOWN. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE HAD ADMITTED TO RECEIVING THE ON MONEY, NO FURTHER DETAILS AS TO THE FLAT NUMBERS FOR WHICH THE ON MONEY RECEIVED OR PARTIES WHO HAVE MADE THE PAYMENT IN SPITE OF A SPECIFIC QUERY IN THIS CASE BY THE ASSESSING OFFICER IT WAS NOT FURNISHED. HE OBSERVED THAT EVEN DURING APPELLATE PROCEEDINGS, THE ASSESSEE COULD NOT FURNISH ANY DETAILS REGARDING THIS AMOUNT AND THIS IS NOT FORMING THE PART OF THE REGULAR BOOKS OF ACCOUNTS NOR THE EXACT SOURCE IS PROVED BY THE ASSESSEE. FURTHER, HE OBSERVED THAT IF THE ASSESSEE TAKES INORDINATE TIME TO COMPLETE THE PROJECT OR ABANDONS THE PROJECT AND NEVER COMPLETES IT, THE MONEY RECEIVED DURING THE YEAR WILL NEVER BE BROUGHT TO TAX. THE LEARNED CIT(A) OBSERVED THAT ASSESSEE RELIED ON THE DECISION OF THE TRIBUNAL, AHMADABAD BENCH, IN M/S. DR CONSTRUCTION V/S ITO, ITA NO.2735/AHD./2010. THE LEARNED CIT(A) DISTINGUISH THE FACTS IN THE ABOVE CASE AND OBSERVED THAT IN THAT CASE ASSESSEE HAD DECLARED THE LIST OF THE BUYERS FROM WHOM ON MONEY WAS RECEIVED. HE OBSERVED THAT IN THIS CASE THE ONMONEY RECEIVED COULD BE IDENTIFIED FROM THE NAME OF THE PROJECT AND THE ASSESSEE COULD NOT FURNISH THE COMPLETE DETAILS OF THE BUYERS OR 6 M/S. S.B. DEVELOPERS CONFIRMATIONS FROM THEM BOTH AT THE ASSESSMENT AND APPELLATE STAGES. ACCORDINGLY, HE HELD THAT THE AMOUNT OF ON MONEY HAS TO BE TAXED IN THE YEAR OF RECEIPT WHICH IS THE RELEVANT ASSESSMENT YEAR WHICH IS UNDER CONSIDERATION. 7. FURTHER, IT IS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT THERE IS NO DISPUTE ABOUT THE FACT THAT THE INCOME BROUGHT TO TAX IS ON MONEY RECEIPT FROM SALE OF FLATS, THE DEPARTMENT ALSO HAD REFERRED TO THIS INCOME AS ONMONEY. THEREFORE, THE SAME HAS TO BE BROUGHT TO TAX AS BUSINESS RECEIPT AND NOT UNDER SECTION 68 OF THE ACT AS UNEXPLAINED CASH CREDIT. THE LEARNED CIT(A) OBSERVED THAT ASSESSING OFFICER ALSO REFER TO THIS INCOME AS ON MONEY/CASH SALES IN THE ASSESSMENT ORDER BUT HAS ULTIMATELY BROUGHT TO TAX AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. HE REFERRED THE MATTER TO THE ASSESSING OFFICER VIDE LETTER DATED 2ND JANUARY 2019, DIRECTING HIM TO VERIFY THE SEIZED MATERIAL AND CONFIRM WHETHER THE CONTENTION OF THE ASSESSEE I.E., TREATMENT OF THIS INCOME AS ONMONEY AND, THEREFORE, AS BUSINESS RECEIPT IS CORRECT OR NOT. IN RESPONSE, THE ASSESSING OFFICER, VIDE HIS REPORT DATED 10TH JANUARY 2019, BY REFERENCE TO THE LIST OF PARTIES SUBMITTED BY THE ASSESSEE FROM WHOM ONMONEY IS RECEIVED AND SUBMITTED THAT THE PAN IS NOT MENTIONED IN SOME CASES AND NO LETTERS FROM THE SAID PERSONS WAS FILED CONFIRMING THAT THEY HAD GIVEN ON MONEY TO THE ASSESSEE. SINCE THE ASSESSEE HAD FAILED TO SATISFACTORILY EXPLAINED THE NATURE AND SOURCE OF CREDITS WITH EVIDENCES, THE ASSESSING OFFICER STATED THAT THE AMOUNTS WERE CORRECTLY ADDED UNDER SECTION 68 AND NOT AS BUSINESS RECEIPTS. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFICERS REPORT IS COMPLETELY SILENT ON THE MAIN ISSUE I.E., THE STATUS OF THESE RECEIPTS AS 7 M/S. S.B. DEVELOPERS PER THE SEIZED MATERIAL. HE OBSERVED THAT THERE IS NO MENTION OF THE SEIZED MATERIAL AND THE ASSESSING OFFICERS REPORT, ON THE OTHER HAND, THE ASSESSEE WAS ALSO CONTENDING ALL ALONG THAT THE RECEIPTS ARE ON ACCOUNT OF ON MONEY AND IT WAS RECORDED AS SUCH IN THE PARALLEL BOOKS OF ACCOUNT. HE OBSERVED THAT IN SOME OF THE CASES OF THE GROUP, 12% OF THE SAME WAS OFFERED AS INCOME BEFORE THE SETTLEMENT COMMISSION AND THE SAME WAS ACCEPTED. FROM THE FACTS AS EMERGING FROM THE MATERIAL ON RECORD AND THE ASSESSEES AVERMENTS, IT COULD BE CONCLUDED THAT THE ENTRIES MADE IN THE PARALLEL BOOKS OF ACCOUNT ARE REGARDING THE ON MONEY RECEIPTS BY THE ASSESSEE. THE SOURCE IS EXPLAINED AS BEING CASH SALES FROM THE RESPECTIVE PROJECTS, THEREFORE, HE HELD THAT IT HAS TO BE TREATED AS BUSINESS RECEIPTS AND NOT CASH CREDIT UNDER SECTION 68 OF THE ACT. 8. THE LEARNED CIT(A) OBSERVED THAT NEXT ISSUE IS THE QUESTION OF THE PERCENTAGE OF MONEY WHICH HAS TO BE BROUGHT TO TAX. HE OBSERVED THAT IT IS THE ASSESSEES CONTENTION THAT THE ENTIRE ONMONEY CANNOT BE TAXED BECAUSE OF SUBSTANTIAL AMOUNT. IN FACT, THE ENTIRE AMOUNT WAS INCURRED AS EXPENDITURE. THE MATERIAL EVIDENCING THE RECEIPT OF ON MONEY OR THE PARALLEL BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEEGROUP. THESE PARALLEL BOOKS OF ACCOUNTS ALSO HAVE A RECORD OF CASH EXPENSES. HE OBSERVED THAT THE NET RESULT AS PER THESE PARALLEL BOOKS OF ACCOUNT IS A LOSS. ACCORDING TO THE LEARNED CIT(A), THE CASH EXPENSES IF EXCEEDING 20,000, HAS TO BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT, BUT THE DETAILS OF EXACT EXPENSES WAS NOT FURNISHED. HE OBSERVED THAT VARIOUS COURTS HAVE HELD THAT IN A CASE OF RECEIPT OF ONMONEY, NOT THE ENTIRE ONMONEY CAN BE TAXED, BUT IT IS ONLY A PERCENTAGE OF PROFIT THAT CAN BE TAXED. HE CAME TO CONCLUSION BY RELYING ON THE DECISIONS OF HONBLE GUJARATA HIGH COURT IN THE CASE OF 8 M/S. S.B. DEVELOPERS PANNA CORPORATION ITA NO.323 AND 325 OF 2000, HON'BLE JURISDICTIONAL HIGH COURT AND THE TRIBUNAL, THE LEARNED CIT(A) HELD THAT IN VIEW OF THE ABOVE JUDGMENTS INCLUDING THAT OF THE BINDING JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT, IT IS HELD THAT THE ENDS OF JUSTICE WOULD BE MADE IF THE ADDITION ON ACCOUNT OF ON MONEY IS RESTRICTED TO 25% OF THE ONMONEY RECEIVED. ACCORDINGLY, HE PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN GROUP COMPANY VIZ., SAI ASHRAY DEVELOPERS PVT. LTD. V/S DCIT, ITA NO.2967/MUM./2019, ETC., ORDER DATED 11TH JUNE 2017, VIDE WHICH THE ISSUE FOR OUR CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. FOR THE SAKE OF CLARITY, THE OPERATING PARA OF THE ISSUE DECIDED BY THE COORDINATE BENCH CITED SUPRA, IS REPRODUCED BELOW: 13. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE NOTED THAT IN THESE APPEALS THE ISSUE OF ON MONEY RECEIVED BY THE ASSESSEE IS PROVED BEYOND DOUBT FROM THE RECORDS FOUND DURING SEARCH PROCEEDINGS AND SUBSEQUENT ACCEPTANCE BY THE KEY PERSONAL OF THE AHUJA GROUP. THE ISSUE BEFORE US IS ONLY CONSIDERATION OF THE ABOVE SAID ON MONEY TO BE TAXED UNDER SECTION 68 OF THE ACT OR BASED ON THE FINDINGS OF THE LEARNED CIT(A) THAT RECEIPT OF ON MONEY HAS TO BE TAXED ONLY ON NET INCOME AND ESTIMATED NET INCOME @25% OF THE GROSS ON MONEY RECEIVED. WE NOTICE FROM THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ABOVE SAID ISSUES ARE ALREADY CONSIDERED BY THE COORDINATE BENCH IN TULIP LAND AND DEVELOPERS (SUPRA) AND BHALCHANDRA TRADING P. LTD. (SUPRA) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE APPEAL FILED BY THE ASSESSEE AND DISMISSED THE ISSUES RAISED BY THE REVENUE. FOR THE SAKE OF CLARITY, IT IS REPRODUCED BELOW: BHALCHANDRA TRADING PVT. LTD. V/S DCIT ITA NO.29772978/MUM./2019 ORDER DATED 25.05.2021 7.1. WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD. AO HAD PROCEEDED TO MAKE AN ADDITION U/S.68 OF THE ACT TOWARDS ON-MONEY RECEIVED BY THE ASSESSEE FOR SALE OF FLATS. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE LD. AO THAT THERE WERE CERTAIN UNACCOUNTED BUSINESS EXPENSES MADE BY THE ASSESSEE OUT OF THE ON-MONEY RECEIVED AND HENCE, ONLY PROFIT ELEMENT THEREON COULD BE ADDED AND NOT THE ENTIRE ON-MONEY RECEIPTS. WE FIND THAT 9 M/S. S.B. DEVELOPERS THE LD. AO IGNORING THE ENTIRE CONTENTIONS OF THE ASSESSEE PROCEEDED TO TAX THE NET ON-MONEY RECEIVED OF RS.2,20,00,000/- IN THE A.Y.2014-15 BY APPLYING THE PROVISIONS OF SECTION 68 AS UNEXPLAINED CASH CREDIT. THE LD. AO ALSO OBSERVED THAT ASSESSEE HAS NOT PROVIDED THE PARTY-WISE DETAILS OF ON-MONEY RECEIPT. THE DETAILS OF ON-MONEY RECEIVED AND ON-MONEY REVERSAL FOR VARIOUS ASSESSMENT YEARS ARE TABULATED AS UNDER:- YEAR ON MONEY RECEIVED ON MONEY REVERSE NET ON MONEY 2009-10 5,70,67,250/ - 22,50,000/- 5,48,17,250/- 2010-11 2,52,54,500/ - 4,81,50,000/- (2,28,95,500)/- 2011-12 NIL 1,21,17,250/- (1,21,17,250)/- 2014-15 3,35,00,000/ - 1,15,00,000/- 2,20,00,000/- 2015-16 38,80,000/ - 65,00,000/- (26,20,000)/- TOTAL 11,97,01,750/ - 8,05,17,250/- 3,91,84,500 7.2. WE FIND THAT THE ASSESSEES GROUP CONCERNS ALSO HAD OFFERED 12% OF ON- MONEY RECEIPTS AS ITS INCOME BEFORE THE HONBLE INCOME TAX SETTLEMENT COMMISSION. THE LD. CIT(A) CATEGORICALLY ADMITTED IN HIS ORDER THAT THE SAID RECEIPT REPRESENTS ON-MONEY RECEIVED ON SALE OF FLATS FROM WHICH CERTAIN EXPENSES WERE ALSO INCURRED BY THE ASSESSEE AND HENCE, ONLY THE PROFIT ELEMENT THEREOF COULD BE BROUGHT TO TAX AND NOT THE ENTIRE ON-MONEY RECEIPTS. WE FIND THAT THE LD. CIT(A) ACCORDINGLY ESTIMATED THE PROFIT ELEMENT TO BE AT 25% AND RESTRICTED THE ADDITION TO RS.55 LAKHS AS AGAINST RS.2,20,00,000 MADE BY THE LD. AO. AGAINST THIS FINDING OF THE LD. CIT(A), THE REVENUE IS NOT IN APPEAL BEFORE US. 7.3. IT IS NOT IN DISPUTE THAT ASSESSEE HAD INDEED RECEIVED ON-MONEY FOR SALE OF FLATS TO THE TUNE OF RS.2,20,00,000/- DURING THE YEAR UNDER CONSIDERATION. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD INCURRED CERTAIN BUSINESS EXPENSES OUT OF SUCH ON-MONEY WHICH ARE KEPT OUTSIDE THE BOOKS OF ACCOUNTS. HENCE, IT WILL BE JUST AND FAIR THAT ONLY THE PROFIT ELEMENT EMBEDDED ON ANY SUCH UNDISCLOSED TRANSACTION COULD BE BROUGHT TO TAX ON AN ESTIMATED BASIS. THE ASSESSEE HAD ALREADY PLEADED THAT ON-MONEY TRANSACTIONS WERE OFFERED BY THE ASSESSEES GROUP CONCERNS @12% OF ON-MONEY RECEIPTS BEFORE THE HONBLE INCOME TAX SETTLEMENT COMMISSION AND THE SAME HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION. HENCE, THE DATA AND INFORMATION WAS INDEED AVAILABLE WITH THE LD. CIT(A) TO HAVE SOME RATIONAL BASIS TO MAKE PROFIT ESTIMATION IN THE HANDS OF THE ASSESSEE HEREIN BY FOLLOWING 12% THEREOF FROM THE ORDER OF HONBLE INCOME TAX SETTLEMENT COMMISSION. ACCORDINGLY, WE DIRECT THE LD. AO TO ADD ONLY 12% OF ON- MONEY RECEIPTS AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE GROUND NO.1 & 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 10. WITH REGARD TO GROUND NO. 2 IN ASSESSEES APPEAL I.E. YEAR OF TAXABILITY. THE CO-ORDINATE BENCH HAS ALREADY CONSIDERED IN THE ASSESSEES GROUP CASE IN M/S TULIP LAND & DEVELOPERS P. LTD. (ITA NO. 2980/M/2019 & 3727/M/2019), THE RATIO IS GIVEN BELOW : 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS FOUND TO HAVE RECEIVED ON MONEY FROM THE BUYER OF FLATS/PROPERTIES ON THE BASIS OF DOCUMENTS WHICH HAVE 10 M/S. S.B. DEVELOPERS BEEN FOUND DURING THE COURSE OF SEARCH AND THE ON MONEY RECEIVED BY THE ASSESSEE IN TWO YEARS A.Y. 2014-15 & 2015-16 OF RS.32,50,000/- AND RS.1,50,00,000/- RESPECTIVELY. HOWEVER, WE FIND THAT IN THE ASSESSMENT THE AO HAS ADDED RS.2,15,00,000/- WHICH IS A TYPOGRAPHICAL ERROR AND CORRECT AMOUNT IS RS.1,50,00,000/-. WE HAVE ALSO CROSS VERIFIED THIS FROM THE ORDER OF SETTLEMENT COMMISSION AND SUBMISSIONS BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION EQUAL TO 25% OF THE ON MONEY RECEIVED BY THE ASSESSEE. THE LD. A.R. HAS ARGUED BEFORE THE BENCH THAT SINCE IN THE SISTER CONCERNS CASES ON MONEY HAS BEEN BROUGHT TO TAX @ 12% BY THE SETTLEMENT COMMISSION, THEREFORE THE SAME RATE SHOULD BE APPLIED TO ASSESS THE ON MONEY IN THE HANDS OF THE ASSESSEE ALSO. WE FIND THE ARGUMENTS OF THE ASSESSEE QUITE CONVINCING AND COGENT AND ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ASSESS THE SAME BY APPLYING 12% ON RS.1,50,00,000/- AND THAT TOO IN THE YEAR WHEN THE REGULAR INCOME OF THE ASSESSEE IS ASSESSED TO TAX AS PER THEREGULAR METHOD OF ACCOUNTING. IN DECIDING SO WE FIND SUPPORT FROM THE DECISION OF THE ACIT VS. ISA ENTERPRISES (SUPRA) WHEREIN IT HAS BEEN HELD THAT INCOME HAS TO BE ASSESSED ON THE BASIS OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE OPERATIVE PART IS REPRODUCED AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE GIVE THE REASONS FOR OUR DECISION IN THE SUCCEEDING PARAGRAPHS. HAVING GONE THROUGH THE RETURN OF INCOME FILED BY ISAE FOR THE AY 2008- 09 TO AY 2014-15, WE FIND THAT IT IS FOLLOWING THE PROJECT COMPLETION METHOD. IT FILED ITS RETURN OF INCOME FOR THE AY 2014-15 ON 04.04.2015 DECLARING TOTAL INCOME OF RS.4,45,00,710/-. THE ABOVE INCOME HAS BEEN ACCEPTED WITHOUT ANY VARIATION BY ACIT-20(1), MUMBAI IN THE ASSESSMENT DATED 28.12.2016 COMPLETED U/S 143(3) OF THE ACT. NOW IT WOULD BE APPOSITE TO DISCUSS THE CITED TWO DECISIONS. IN THE CASE OF M/S JALARAM JAGRUTI DEVELOPMENT PVT. LTD. (SUPRA), THE ISSUE BEFORE THE HON'BLE BOMBAY HIGH COURT WAS THE FOLLOWING: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON'BLE TRIBUNAL IN LAW, WAS RIGHT IN HOLDING THAT RECEIPTS OF RS.3,46,250/- RECORDED IN THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH WERE REFLECTED IN THE BOOKS OF ACCOUNTS AND COULD BE TAXED ONLY IN THE YEAR IN WHICH THE PROJECT WAS COMPLETED?' THE HON'BLE HIGH COURT HELD THAT: 'THE FINDING OF FACT RECORDED BY THE TRIBUNAL IS THAT THE RECEIPTS IN QUESTION HAD DIRECT NEXUS WITH THE PROJECT OF THE ASSESSEE AND THAT THE SAID CASH RECEIPTS HAVE BEEN OFFERED TO TAX IN THE AY 2008-09, SINCE THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD. ONCE THE CASH IN 11 M/S. S.B. DEVELOPERS QUESTION HAS ALREADY BEEN ASSESSED TO TAX, THE QUESTION OF TAXING THE SAME ASSESSMENT YEAR IN QUESTION AY 2005-06 DOES NOT ARISE.' 7.1 IN M/S M/S GURUPRERANA ENTERPRISES (SUPRA) THE FOLLOWING QUESTIONS OF LAW WERE RAISED BEFORE THE HON'BLE BOMBAY HIGH COURT: A) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN DELETING THE ADDITION HOLDING THAT THE ASSESSEE HAS NOT ACTUALLY RECEIVED ANY CASH RECEIPTS AND THE DECLARATION MADE BY THE PARTNER OF THE FIRM WAS TOWARDS TOTAL SALE RECEIPTS AND NOT TOWARDS INCOME FOR THE YEAR? B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN DELETING THE ADDITION HOLDING THAT THE PROJECT COMPLETION METHOD WAS APPLICABLE ON ACCOUNT RECEIPTS OF RS.5 CRORES EVEN THOUGH THE ASSESSEE HAD NOT ACCOUNTED THE RECEIPTS IN THE REGULAR BOOKS OF ACCOUNTS? C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE ADDITION OF RS.5 CRORES ITSELF HAD FAILED TO FOLLOW THE NORMS OF ACCOUNTING STANDARD REGARDING DISCLOSURE OF RECEIPTS AS PER THE AS-7 AND AS PER SECTION 145 OF THE I.T. ACT, 1961?' THE HON'BLE HIGH COURT HELD AS UNDER: 'COUNSEL FOR THE PARTIES STATE THAT THE INCOME WHICH IS DISPUTED IN THE PRESENT PROCEEDINGS HAS BEEN OFFERED TO TAX ON THE BASIS OF THE PROJECT COMPLETION METHOD DURING THE ASSESSMENT YEAR 2009-10 AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE. IN THESE CIRCUMSTANCES, WE SEE NO REASON TO ENTERTAIN THE PROPOSED QUESTION OF LAW AS THE ENTIRE EXERCISE WOULD BE ACADEMIC. IN THE ABOVE VIEW, THE QUESTIONS (A) TO (C) AS PROPOSED CANNOT BE ENTERTAINED.' 8. WE HAVE MENTIONED EARLIER THAT THE RETURN OF INCOME FOR A.Y. 2014- 15 FILED BY THE ASSESSEE DECLARING TOTAL INCOME OF RS.4,45,00,710/- HAS BEEN ACCEPTED BY THE ACIT-20(1), MUMBAI U/S 143(3) OF THE ACT. THEREFORE, WE FOLLOW THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT MENTIONED AT PARA 7 HERE-IN-ABOVE AND UPHOLD THE ORDER OF THE LD. CIT(A). 9. SIMILAR RATIO HAS BEEN LAID DOWN IN THE VARIOUS OTHER DECISIONS AS REFERRED TO BY THE LD. A.R. DURING THE HEARING AND STATED HEREINABOVE. WE ARE THEREFORE INCLINED TO HOLD THAT ON MONEY RECEIVED BY THE ASSESSEE WOULD ONLY BE TAXABLE AS PER THE REGULAR METHOD OF ACCOUNTING OF THE ASSESSEE. IN THE PRESENT CASE THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD AND THEREFORE THIS INCOME HAS TO BE ASSESSED ALONG WITH THE REGULAR INCOME OF THE ASSESSEE IN THE YEAR OF COMPLETION OF THE PROJECT. 12 M/S. S.B. DEVELOPERS WITH REGARD TO REVENUES APPEAL, THE ISSUE IS ALREADY CONSIDERED IN THE ABOVE PARAS. 11. CONSISTENT WITH THE VIEW TAKEN AS AFORESAID, RESPECTFULLY FOLLOWING THE AFORESAID FINDINGS, SIMILAR DIRECTIONS ARE ISSUED ON THIS ISSUE. CONSEQUENTLY, GROUNDS, RAISED BY THE ASSESSEE ARE PARTLY ALLOWED AND GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 13. TO SUM UP, THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED WHEREAS THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2021. SD/- MAHAVIR SINGH VICE PRESIDENT SD/- S. RIFAUR RAHMAN ACCOUNTANT MEMBER MUMBAI, DATED: 30/09/2021 RAHUL SHARMA, SR. P.S . COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI