M/s SAI ASHRAY DEVELOPERS PVT. LTD., MUMBAI V. DCIT CC-6(2), MUMBAI

ITA 2966/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6043 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Unexplained cash credit; Business expenditure; Loose papers; Set aside
• Section: 153C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2966/M/2019 ASSESSMENT YEAR: 2012-13 M/S. SAI ASHRAY DEVELOPERS PVT. LTD., A/201, RAJPIPLA, OPP. STANDARD CHARTERED BANK, SANTACRUZ (W), MUMBAI 400 054 PAN: AAQCS4670P VS. DCIT CC-6(2), ROOM NO.1903, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ANUJ KISNADWALA, A.R. REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 28.06.2021 DATE OF PRONOUNCEMENT : 05.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 12.02.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.7,25,000/- BY LD. CIT(A) BEING 25 % OF THE ON MONEY RECEIVED AS AGAINST THE ADDITION OF RS.29,00, 000/- MADE BY THE AO. THE ASSESSEE ALSO CHALLENGED THE ORDER OF LD. CIT(A) ON THE ISSUE OF UPHOLDING THE ORDER OF AO WHEREBY T HE LD. CIT(A) HAS AFFIRMED THE ORDER OF THE AO THAT THIS ON MONEY IS TO BE TAXED IN THE YEAR OF RECEIPT AND NOT AS PER THE MET HOD OF ITA NO.2966/M/2019 M/S. SAI ASHRAY DEVELOPERS PVT. LTD. 2 ACCOUNTING FOLLOWED BY THE ASSESSEE. GROUND NO.2 & 3 ARE IN SUPPORT OF GROUND NO.1. 3. THE FACTS IN BRIEF ARE THAT A SEARCH ACTION UNDE R 132 OF THE ACT WAS CARRIED OUT ON THE AHUJA GROUP OF CASES ON 25.06.2015. THE ASSESSEE BEING A GROUP COMPANY WAS ALSO CENTRAL IZED IN THE CENTRAL CIRCLE NO.6(2), MUMBAI. A NOTICE UNDER SEC TION 153C WAS ISSUED TO THE ASSESSEE AFTER RECORDING SATISFACTION AND DULY SERVED UPON THE ASSESSEE WHICH WAS COMPLIED WITH BY THE ASSESSEE BY FILING RETURN OF INCOME DECLARING NIL I NCOME. DURING THE COURSE OF SEARCH OPERATION ON AHUJA GROUP INCRI MINATING MATERIAL WAS FOUND CONTAINING LOOSE PAPERS AND ALSO DIGITAL PAPERS IN THE FORM OF PEN DRIVE RELATING TO TAX EVA SION. IT WAS FOUND THAT PARALLEL BOOKS OF ACCOUNTS OF WERE MAINT AINED WITH THE DRIVER WHICH WERE ALSO FOUND AND SEIZED DURING THE COURSE OF SEARCH. STATEMENTS WERE ALSO RECORDED UNDER SECTIO N 132 OF THE ACT. ON THE BASIS OF THESE RECORDS IT WAS FOUND TH AT ASSESSEE WAS RECEIVING ON MONEY ON THE FLATS SOLD AND ADDITI ON ON ACCOUNT OF ON MONEY WAS MADE TO THE TUNE OF RS.29,0 0,000/- IN A.Y. 2012-13, RS.33,10,34,600/- IN A.Y. 2013-14 AND RS.25,91,94,000/- IN A.Y. 2015-16. IN THE CURRENT YEAR THE AO ADDED RS.29,00,000/- TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 BY FRAMING ASSESSMENT UNDER SECTION 143( 3) READ WITH SECTION 153C OF THE ACT DATED 19.12.2017. THE SIMILAR ADDITION WAS ALSO MADE IN THE OTHER ASSESSMENT YEAR S AS STATED HEREINABOVE. THE LD. A.R., AT THE OUTSET, SUBMITTE D THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO -ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2967/M/2019 A.Y. 2013-14 & ORS. THE LD. A.R. SU BMITTED THAT SIMILAR ADDITIONS WERE MADE IN A.Y. 2013-14 & 2015-16 BY ITA NO.2966/M/2019 M/S. SAI ASHRAY DEVELOPERS PVT. LTD. 3 THE AO WHICH WERE SUSTAINED BY THE LD. CIT(A) AND T HE CO- ORDINATE BENCH OF THE TRIBUNAL HAS SET ASIDE THE OR DER OF LD. CIT(A) BY DIRECTING THE AO TO ASSESS THIS INCOME @ 12% OF THE ON MONEY AND THAT TOO AS PER SYSTEM OF ACCOUNTING FOLL OWED BY THE ASSESSEE. THE LD. A.R., THEREFORE, PRAYED THAT THE CURRENT YEAR MAY ALSO BE DECIDED ON THE SAME LINES. 4. THE LD. D.R., ON THE OTHER HAND, FAIRLY CONCEDED THAT SIMILAR ISSUE HAS BEEN DECIDED IN ASSESSEES OWN CA SE IN THE ABOVE APPEALS FOR A.Y. 2013-14 & 2015-16 AND HOWEVE R RELIED STRONGLY ON THE GROUNDS OF APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT T HE IDENTICAL ISSUES HAVE BEEN DECIDED BY THE CO-ORDINATE BENCH O F THE TRIBUNAL IN A.Y. 2013-14 & 2015-16 WHICH WERE PART OF THE SAME SEARCH AND SIMILAR ADDITION ON ACCOUNT OF ON M ONEY MADE IN THOSE YEARS, THE CO-ORDINATE BENCH OF THE TRIBUN AL DIRECTED THE AO TO APPLY 12% ON MONEY AND ASSESS THE INCOME AS PER THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE OPERATIVE PART IS REPRODUCED AS UNDER: 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 PROCEEDI NGS 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 TAXE D 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 LEA RNED COUNSEL FOR THE ASSESSEE THAT THE ABOVE SAID ISSUES ARE ALREADY CONSIDERED B Y 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 F ILED BY THE ASSESSEE AND DISMISSED THE ISSUES RAISED BY THE REVENUE. FOR THE SAKE OF C LARITY, IT IS REPRODUCED BELOW: BHALCHANDRA TRADING PVT. LTD. V/S DCIT ITA NO.29772978/MUM./2019 ITA NO.2966/M/2019 M/S. SAI ASHRAY DEVELOPERS PVT. LTD. 4 ORDER DATED 25.05.2021 7.1. WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL S AVAILABLE ON RECORD. WE FIND THAT THE LD. AO HAD PROCEEDED TO MAKE AN AD DITION 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 TH ERE WERE CERTAIN UNACCOUNTED BUSINESS EXPENSES MADE BY THE ASSESSEE OUT OF THE ON-MONEY RECEIVED AND HENCE, ONLY PROFIT ELEMENT THEREON COU LD BE ADDED AND NOT THE ENTIRE ON-MONEY RECEIPTS. WE FIND THAT THE LD. AO IGNORING THE ENTIRE CONTENTIONS OF THE ASSESSEE PROCEEDED TO TAX THE NE T ONMONEY 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 OBSERVE D 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 AS SESSMENT 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 ALS O HAD OFFERED 12% OF ON- MONEY RECEIPTS AS ITS INCOME BEFORE THE HONBLE INC OME TAX SETTLEMENT COMMISSION. THE LD. CIT(A) CATEGORICALLY ADMITTED I N HIS ORDER THAT THE SAID RECEIPT REPRESENTS ON-MONEY RECEIVED ON SALE OF FLA TS FROM WHICH CERTAIN EXPENSES WERE ALSO INCURRED BY THE ASSESSEE AND HEN CE, 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 E STIMATED 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 FIN DING 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 ONMONEY 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 BOO KS OF ACCOUNTS. HENCE, IT WILL BE JUST AND FAIR THAT ONLY THE PROFIT ELEME NT EMBEDDED ON ANY SUCH UNDISCLOSED TRANSACTION COULD BE BROUGHT TO TAX ON AN ESTIMATED BASIS. THE ASSESSEE HAD ALREADY PLEADED THAT ON-MONEY TRANSACT IONS WERE OFFERED BY THE ASSESSEES GROUP CONCERNS @12% OF ON-MONEY RECE IPTS BEFORE THE HONBLE INCOME TAX SETTLEMENT COMMISSION AND THE SA ME HAS BEEN ACCEPTED BY THE SETTLEMENT COMMISSION. HENCE, THE D ATA AND INFORMATION WAS INDEED AVAILABLE WITH THE LD. CIT(A) TO HAVE SO ME RATIONAL BASIS TO MAKE PROFIT ESTIMATION IN THE HANDS OF THE ASSESSEE HERE IN BY FOLLOWING 12% THEREOF FROM THE ORDER OF HONBLE INCOME TAX SETTLE MENT COMMISSION. ITA NO.2966/M/2019 M/S. SAI ASHRAY DEVELOPERS PVT. LTD. 5 ACCORDINGLY, WE DIRECT THE LD. AO TO ADD ONLY 12% O F ON-MONEY RECEIPTS AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UND ER CONSIDERATION. ACCORDINGLY, THE GROUND NO.1 & 2 RAISED BY THE ASSE SSEE IS PARTLY ALLOWED. 14. WITH REGARD TO GROUNDS NO.4 AND 5, RAISED BY TH E ASSESSEE IN ITS APPEAL IN ASSESSMENT YEAR 201516, THIS ISSUE ALSO CONSIDERED BY THE COORDINATE BENCH IN BHALCHANDRA TRADING PVT. LTD. (SUPRA) IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN ASSESSMENT YEAR 2 01314, 201516 AND 201617 ARE ALLOWED IN FAVOUR OF THE ASSESSEE. THEREFORE, T HE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 6. SINCE THE ISSUE IN THE CURRENT YEAR IS IDENTICAL TO THE ABOVE CASE, FOLLOWING THE DECISION OF THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF ASSESSEES OWN CASE, WE ALL OW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.07.2021. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 05.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.