RUNWAL HOMES PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4(1), MUMBAI

ITA 5621/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8014 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 04-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Keywords: Business income; Search and seizure; Document seized; Question of law; Revised return; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.5621/MUM/2017 ASSESSMENT YEAR : 2015 -16 M/S RUNWAL HOMES PVT LTD., 5 TH FLOOR, RUNWAL AND OMKAR SQUARE, OFF EASTERN EXPRESS HIGHWAY, SION (E), MUMBAI 400 022 PAN AADCR5799K VS. DY. CIT CENTRAL CIRCLE 4(1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH JOSHI RESPONDENT BY : SHRI R P MEENA DATE OF HEARING : 13. 11 .2017 DATE OF PRONOUNCEMENT : 20.12 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-52, MUMBAI, DATED 09.06.2017, FOR A.Y.2015-1 6, BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.63,39 ,52,372/-- AS ALLEGED ON MONEY RECEIVED ON SALE OF FLATS, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 2 ASSESSING OFFICER IN NOT APPRECIATING THE FACT THA T THE APPELLANT IS FOLLOWING THE PROJECT COMPLETION METHOD TO RECOGNIZ E THE INCOME FROM THE PROJECTS, HENCE ON MONEY IS TO BE TAXED I N THE YEAR OF COMPLETION OF THE RELEVANT PROJECT FROM WHERE THE SAME HAS BEEN EARNED . 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN AN ADDITION OF RS. 12,04,18, 428/- AS ALLEGEDLY LOWER INCOME ON PROJECT COMPLETED, WITHOUT C ONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT THE PROFITS OFFERED TO TAX DURING THE COURSE OF THE SEARCH ACTION WERE MERELY ESTIMATED PROFITS FOR THE PROJECT. 2. GROUND NO.1 RELATES TO THE ADDITION OF ` 63,39,52,372/- ALLEGING ON MONEY RECEIVED ON SALE OF FLATS. THE BRIEF FACTS O F THE CASE ARE THAT THERE HAD BEEN SEARCH AND SEIZURE ACTION U/S. 132 OF THE AC,T ON 17.11.2014, IN THE CASE OF RUNWAL GROUP AND ASSESSEE BEING THE GROUP C OMPANY WAS ALSO COVERED IN THE SEARCH ACTION. THE ASSESSEE FILED I TS RETURN ON 31.10.2015 DECLARING TOTAL INCOME OF ` 13,48,82,480/-, WHICH WAS REVISED TO ` 13,45,71,200/- ON 07.07.2016. SUBSEQUENTLY, ON TH E BASIS OF THE DOCUMENTS SEIZED DURING THE COURSE OF THE SEARCH, I T WAS GATHERED THAT THE ASSESSEE HAD RECEIVED ON MONEY FROM THE SALE OF FLA TS. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE SALE RATE OF THE PROJECT RUNWAL ELEGANTE RANGED FROM ` 32,000/- TO ` 38,000/- PER SQUARE FEET AND IN RESPECT OF RUNWAL ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 3 SYMPHONY IT WAS FOUND TO BE 27,400/-. HOWEVER, THE ASSESSEE HAS SHOWN IN ITS BOOKS OF ACCOUNT SALE RATE OF ` 10,976/- TO ` 17,641/- PER SQUARE FEET. THE ASSESSING OFFICER, THEREFORE, ON THE BASIS OF T HE STATEMENTS RECORDED DURING THE COURSE OF THE SEARCH, ADDED A SUM OF ` 63,39,52,372/- TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO WORKED OUT THE PROFIT IN RESPECT OF THE PROJECT COMPLETED DURING THE YEAR AT ` 25,46,00,000/- AND SINCE THE ASSESSEE HAS RETURNED ONLY A SUM OF ` 13,41,81,572/- FROM THE SAID PROJECT, BALANCE AMOUNT OF ` 12,04,18,428 WAS BROUGHT TO TAX. WHEN THE MATTER WENT BEFORE THE CIT(A), HE CONFIRMED BOTH TH E ADDITIONS. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US RAISING GROUND NOS. 1 & 2 IN RESPECT OF THE FIRST ADDITION AND GROUND NOS. 3 & 4 FOR THE SECOND ADDITION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THERE HAD BEEN A SEARCH IN THE CASE GROUP CONCERN OF THE ASSE SSEE ON 17.11.2014. THE ASSESSEE IS ENGAGED IN THE DEVELOPMENT AND SALE OF FLATS. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS WERE FOUND ON THE BASI S OF WHICH IT WAS NOTED THAT THE SALE TRANSACTIONS REPORTED IN ERP SYSTEM O F THE ASSESSEE WERE TO BE COMPARABLY LOWER THAT THE CONSIDERATION VALUE OF SI MILAR KIND OF FLATS REFLECTED IN THE MANUAL BOOKING FORM. ON THE BASIS OF THE DO CUMENTS SEIZED AND THE STATEMENTS OF SHRI ANAND MODI, HEAD OF THE SALES RU NWAL GROUP, SHRI RAVI RAICHURA, SALES MANAGER, MS SUJATA RAO, SALES AND C USTOMER RELATION ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 4 MANAGEMENT, SHRI KISHORE P JAIN, HEAD OF TAXATION A ND SHRI SHAMSHER DUTT, SENIOR VICE PRESIDENT, RECORDED DURING THE COURSE O F SEARCH, THE ASSESSING OFFICER NOTED THAT DATA ENTERED IN THE ERP SYSTEM A ND THE MANUAL BOOKING THERE WAS PRICE VARIATION. IN THEIR RESPECTIVE STA TEMENTS, THEY HAVE ACCEPTED THAT THE ASSESSEE HAS RECEIVED ON-MONEY IN RESPECT OF THE PROJECT RUNWAL SYMPHONY CARRIED OUT BY THE ASSESSEE. ULTIMATELY, THE SEARCH PARTY CONFRONTED SHRI SANDEEP RUNWAL, WHO SURRENDERED THE ADDITIONAL INCOME IN THE VARIOUS CONCERNS AS DETAILED BELOW: PARTICULARS OF SOLD PREMISES / PROJECTS NAME OF THE ASSESSEE IN WHOSE NAME SUCH INCOME IS OFFERED ADDITIONAL INCOME SO OFFERED (IN RS.) FINANCIAL YEAR IN WHICH INCOME IS ARISING OR ACCRUING RUNWAL ANTHURIUM - SHOPS RUNWAL DEVELOPERS PVT, LTD. 7,36,15,000 2013 - 14 1,32,40,000 2014 - 15 R SQUARE RUNWAL DEVELOPERS PVT. LTD, 70,00,000 2014 - 15 RYNWAL ANTHURIUM - RESIDENTIAL PREMISES RUNWAL DEVELOPERS PVT LTD. 6,69,62,205 2014 - 15 RUNWAL ANTHURIUM - FLAT NO. T3-3101 & T3- 3104 OF RAMONA IN RELATION TO WHICH SPECIFIC INSTANCES HAVE BEEN QUOTED BY YOUR GOODSELF IN THE FORGOING PARA OF STATEMENT RUNWAL DEVELOPERS PVT. LTD. 1.25,06,000 2014 - 15 ELEGANTE RUNWAL PROJECTS PVT. LTD. 18,82,59,020 2014 - 15 OLIVE SUBHASH RUNWAL 1,20,85,030 2014 - 15 RUNWAL SYMPHONY RUNWAL DEVELOPERS PVT. LTD. 70,00,000 2014 - 15 TOTAL 38,06,61,255 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 5 IT WAS ALSO NOTED BY THE ASSESSING OFFICER THAT DU RING THE COURSE OF SEARCH ACTION CERTAIN PRINT OUT DATA WAS SEIZED FROM THE H EAD OFFICE OF THE ASSESSEE, WHICH CONTAINS MOST INVENTORY LIST OF THE PROJECT R UNWAL GREE AND RUNWAL FOREST AND HAS THE DETAILS OF THE CUSTOMERS AND THE AGREEMENT VALUE FOR SALES BOOKED. THE ASSESSING OFFICER, ACCORDINGLY, FILED UP THIS DATA UNIT-WISE VALUE WITH THAT AS PER EMAIL AND AS PER AGREEMENT, DETAILED AS UNDER: SR. NO. TOWER FLAT NO . DATE OF AGREEMENT SALE VALUE AS PER E-MAIL (IN CRORE) VALUE AS PER AGREEMENT BOOKED (IN CRORE) 1 T 7 702 07/02/2014 2. 74 2.59 2 T4 3501 20/08/2014 2.83 2.68 3 T8 3501 22/08/2014 2,47 1,9 4 OLI VE 1402 19/07/2014 1.46 1.11 5 T3 3506 07/12/2014 2.47 1.98 6 T3 3504 06/05/2014 2.4? 186 7 T1 3501 25/06/2014 1.66 1.32 8 GALLERIA 4(SHOP) 07/07/2014 1,92 1.34 9 GALLERIA 5(SHOP) 07/07/2014 1,92 1.34 10 T1 3101 - 1,89 1.26 11 T4 3303 11/03/2014 3.12 2.38 12 T1 3606 - 2.07 1.56 13 SHOP 21 - 2,54 1.8 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 6 14 GALLERIA G - 6 (SHOP) 14/07/2014 1.89 1.34 15 GALLERIA G - 52 (SHOP) 17/09/2014 1.S8 1.42 16 T 5 2302 08/12/2014 2.I4 2.28 17 T1 3302 - 1.81 1.61 18 T3 3601 08/08/2014 2,24 1,59 19 T 5 3501 3.11 2.94 20 T5 1102 09/12/2014 3.11 2.26 21 T5 2401 - 3,22 3.05 22 T4 3301 11/01/2014 2.97 2.81 23 T2 3403 . 1.78 1.6 24 G - 44 G - 44(SHOP) - 2.12 1.3 25 T8 3805 2.38 2.82 SR.N O. TOWER FLAT NO, / SHOP DATE OF AGREEMENT/ DATE OF CONFIRMATIO N VALUE AS PER E-MAIL & MIL (IN CRORE) VALUE AS PER AGREEMENT (IN CRORE) 1 T7 3204 25/03/2014 1.8 1.51 2 T1 3104 10/08/2014 2 .2 2 1.72 3 F9 F9 10/12/2014 1.07 1.21 4 OLIVE 1101 06/08/2014 1 . 46 1.23 5 T2 1802 06/08/2014 1.72 1.63 6 OLIVE 702 15/07/2014 1.42 1.39 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 7 7 GALLERIA 40 03/09/2014 2.13 1.31 8 GALLERIA 41 09 /03/2014 2.13 1.31 9 GAL LER IA 18 09/11/2014 2.85 1.75 10 T8 3805 27/09/2014 2.38 1.84 11 T8 4006 27/09/2014 2.38 184 12 T5 3602 27/09/2014 3.01 2.37 13 GALLERIA 21 31/03/2014 2.04 1.8 14 T8 2303 01/11/2014 2.74 2.59 15 CHESTNUT 1403 08 /02/2014 1.55 1.54 16 T1 3301 01/10/2014 1. 6 4 1.25 17 T7 3301 30/10/2014 1 . 57 1.71 18 17 3401 30/1 0 /2 0 14 1 . 57 1 . 72 19 T6 1303 25/10/2014 4 . 36 4.6 20 T8 1201 21/10/2014 2 . 48 2.35 21 T7 702 06/04/2014 2.74 2.59 22 T4 3501 20/08/2014 2 . 83 2.68 23 T1 2904 22/04/2014 2.18 2.06 24 T2 3306 08/11/2014 1 . 64 1.67 25 T2 3406 28/10/2014 1.64 1 . 05 26 T2 3S01 20/04/2014 1.64 1.45 I 27 T2 3502 20/04/2014 1 , 64 1.45 28 T4 3604 09/04/2014 3,17 3 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 8 29 T8 3S01 22/08/2014 2.47 1.9 30 T3 801 15/06/2014 1.99 1.45 31 OLIVE 1402 19/07/2014 1.43 1.11 32 C H ES T NUT 504 07/02/2014 1.46 1.46 33 T3 3506 07/12/2014 2.47 1.98 34 T3 3SG4 06/05/2014 2.47 1.86 35 T1 3501 25/06/2014 1.66 1.32 36 GA L LERIA 4 05 /02/2014 1 . 92 1.35 ON THE BASIS OF THIS DATA, THE ASSESSING OFFICER WA S OF THE VIEW THAT THE ASSESSEE HAS TAKEN ON MONEY COMPONENT IN CASH AND E XCLUDED THE SAME WHILE ENTERING INTO AN AGREEMENT WITH THE RESPECTIV E CUSTOMERS. THE ASSESSING OFFICER ALSO NOTED THAT DURING THE COURSE OF SEARCH WHEN THESE EVIDENCE WERE CONFRONTED WITH SHRI SUBODH RUNWAL, H E ANSWERED AS UNDER: ' ANS TO Q.16 'SIR AS I HAVE ANSWERED IN EARLIER QUESTION I AGAIN REITERATE THAT THIS PROJECT WAS A JOINT VENTURE WITH HDFC LIMITED RIGHT FROM THE INCEPTION TILL THEY EXITED. SUBSEQUENTLY TO THAT TH E MARKET HAS BECOME VERY COMPETITIVE AND DUE TO OPENING OF A FOR EST LAND WE HAD TO SELF AGGRESSIVELY TO ACHIEVE THE NUMBERS FRO M THE CALENDAR YEAR 2014, I ACCOMMODATED A FEW CUSTOMERS WHO WANTE D TO PAY PART CONSIDERATION IN CASH. THE DIFFERENCE IN THE A BOVE CHART IS SPECIFICALLY RELATED TO THESE CUSTOMERS WHO HAVE BE EN ACCOMMODATED I OFFER THIS DIFFERENCE AS MY INCOME. I HEREBY FURTHER REITERATE AND STATE THAT PRIOR TO THIS WE H AVE NEVER ACCEPTED IN CASH FOR ANY OF THE UNITS SOLD IN THAT PROJECT.' ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 9 THUS THE ASSESSEE HAS ACKNOWLEDGED THE DISCREPANCY AND HAS ACCEPTED THAT 'ON-MONEY' HAS BEEN TAKEN IN ALL THE ABOVE INS TANCES. FURTHER THE ASSESSEE WAS ASKED TO STATE THE OTHER INSTANCES WHE RE UNACCOUNTED CASH HAS BEEN TAKEN IN LIEU OF SALE OF RESIDENTIAL / COMMERCIAL UNITS IN THEIR PROJECTS. FOLLOWING IS THE RELEVANT PORTION O F HIS STATEMENT. Q.17 PLEASE PROVIDE THE DETAILS AS TO OTHER FLATS IN WHICH SIMILAR PRACTICE IS FOLLOWED. ANS: ALTHOUGH IN THE OTHER CASES, I DO NOT AGREE TH AT IN ALL THE CASES CASH HAS BEEN ACCEPTED BY ME OVER AND ABOVE T HE AGREEMENT VALUE. BUT TO AVOID PROTRACTED LITIGATION S WITH THE DEPARTMENT AND TO BUY PEACE I ACCEPT THE DIFFERENCE APPEARING IN THE CHART BANNING FROM 1 ST JANUARY 2014 TILL DATE AS MY ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME FOR THE RE SPECTIVE YEARS AS ON- MONEY (CASH RECEIVED OVER AND ABOVE THE AGRE EMENT VALUE). I AM SUBMITTING THE WORKING MARKED AS ANNEXURE-1 TO THIS STATEMENT WHICH HAS TWO PAGES. Q.18 AS PER THE WORKING SUBMITTED AS PART OF ANNEXU RE TO ANSWER TO QUESTION NUMBER 16 THE AMOUNT OF ON MONEY ACCEPT ED IN THE PROJECT NAMELY RUNWAI GREENS (M/S. RUNWAL HOMES PRI VATE LIMITED, IS RS.63,39,52,372/-PLEASE CONFIRM ? ANS: SIR, DUE TO REASONS MENTION ABOVE I CONFIRM TH E AMOUNT OF RS. 63,30,52,372/- (WHICH AS PER ANNEXURE-1), AS THE ON MONEY ACCEPTED IN THE PROJECTS RUNWAL GREEN (M/S. RUNWAL HOMES PRIVATE LIMITED), AND THE SAME HAS BEEN OFFERED AS ADDITION AL INCOME OVER AND ABOVE THE INCOME DECLARED IN THE M/S. RUNWAL HO MES PRIVATE LIMITED, HERE I WANT TO STATE THAT OLIVE PROJECT IS UNDER THE PROPRIETORSHIP OF MR. SUBHASH RUNWAL. SINCE SHRI SUBODH RUNWAL HAS AGREED TO DECLARE A SU M OF ` 63,39,52,372/- AS DETAILED BELOW, THE ASSESSING OFFICER ADDED THE SUM TO THE INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A). ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 10 OFFERED DURING THE YEAR IN REVISED RETURN 1 PR OJEC T NAMELY CHES T NUT (SINGLE BUILDING) RS.72,50,000/ - 2 - PROJECT NAMELY RUNWA L GR E ENS TOWERS -1,2 & 3 AND COMMERCIAL RS.31, 14,02,41 2/ - 3 PROJECT NAMELY RUNWAL GREENS TOWERS - 4, 5, 6, 7 & 8 RS.31 , 52,9 9, 9 60 / - RS .63 ,39,52,372/ - TOTAL: RS. 6 3,3 9 , 5 2,372/ - 4. THE LEARNED AR, BEFORE US, VEHEMENTLY CONTENDED THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER MERELY ON THE BA SIS OF THE STATEMENT OF SHRI SUBODH RUNWAL. THE ASSESSEE HAS AGREED TO SUR RENDER THE SAID AMOUNT DURING THE COURSE OF SEARCH UNDER COERCION FROM THE REVENUE JUST TO BUY PEACE. WHILE STRESSING THIS FACT, OUR ATTENTION WA S DRAWN TOWARDS ANSWER TO QUESTION NO.17, WHICH HAS BEEN REPRODUCED HEREIN AB OVE. IT WAS CONTENDED THAT THE PROJECT RUNWAL GREENS TOWER- 1, 2 & 3 AND COMMERCIAL HAS TO BE COMPLETED IN THE F.Y. 2016-17 AND NOT IN THE IMPUGN ED ASSESSMENT YEAR. SIMILARLY, THE PROJECT RUNWAL GREENS TOWER 4, 5, 6, 7 & 8 HAS ALSO TO BE COMPLETED IN THE F.Y. 2016 AND NOT IN THE IMPUGNED ASSESSMENT YEAR. OUR ATTENTION WAS DRAWN TOWARDS THE ORDER OF THE CIT(A) AND ON THAT BASIS IT WAS SUBMITTED THAT THE ASSESSEE WAS CONSISTENTLY FOLLOW ING THE PROJECT COMPLETION METHOD. THE PROJECT VIZ. CHESTNUT, WAS COMPLETED IN THE IMPUGNED ASSESSMENT YEAR, WHICH DUE TO OVERSIGHT REMAINED TO BE OFFERED FOR TAXATION. ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 11 THEREFORE, THE ASSESSEE SUBMITTED A REVISED RETURN AND OFFERED A SUM OF ` 72,50,000/- AND PAID TAXES THEREON. HE VEHEMENTLY CONTENDED THAT THE ASSESSEE HAS NOT RECEIVED ANY ON MONEY ON SALE OF F LATS AND THIS FACT HAS BEEN MENTIONED IN THE STATEMENT RECORDED U/S. 132(4 ) OF THE INCOME TAX ACT. ON MONEY WAS RECEIVED ONLY FOR A LIMITED PERI OD OF FEW MONTHS THAT TOO ONLY IN SOME CASES SO AS TO ACCOMMODATE THE BUYER A ND NOT LOOSE OUT ON THE BUSINESS. THE ASSESSEE NO DOUBT HAS NOT RETRACTED THIS STATEMENT BUT THE ASSESSMENT HAS TO BE MADE WITH REFERENCE TO THE MAT ERIAL FOUND AND SEIZED. THERE WAS A MISTAKE ON THE PART OF THE DIRECTOR TO THE DISCLOSURE ALTHOUGH NO INCOME HAD ACCRUED DURING THE IMPUGNED ASSESSMENT Y EAR EXCEPT THE SUM OF ` 72,50,000/- IN RESPECT OF THE PROJECT COMPLETED DU RING THE IMPUGNED ASSESSMENT YEAR. THE INCOME COULD BE DECLARED ONLY IN THE YEAR WHEN THE PROJECT WAS COMPLETED AND SHRI SUBODH RUNWAL WAS NO T AWARE OF THE CORRECT LEGAL POSITION AND, THEREFORE, DUE TO MENTAL PRESSU RE, DURING THE COURSE OF SEARCH, SIMPLY OFFERED THE INCOME. TAX HAS TO BE I MPOSED ON THE REAL INCOME CHARGEABLE TO TAX IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT. THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY T HE ASSESSEE IS RELEVANT FOR THE PURPOSE OF ASCERTAINING TAXABLE INCOME. AL L RECEIPTS ON ACCOUNT OF THE UNITS BOOKED ARE ACCOUNTED FOR AS ADVANCES RECEIVED APPEARING ON THE LIABILITY SIDE OF THE BALANCE SHEET AND ALL THE PRO JECT EXPENSES ARE APPEARING AS PROJECT WORK-IN-PROGRESS ON THE ASSET SIDE OF TH E BALANCE SHEET. ONLY AT ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 12 THE TIME OF COMPLETION OF THE PROJECT, BOTH THESE I TEMS ARE RECOGNIZED AS INCOMES AND EXPENSES RESPECTIVELY AND PROJECT PROFI TS ARE OFFERED FOR TAXATION. OUR ATTENTION WAS DRAWN TOWARDS THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. BILAHARI INVESTMENTS ( P) LTD. 299 ITR 1 (SC)., WHEREIN IT WAS HELD THAT RECOGNITION/IDENTIFICATION OF INCOME UNDER THE ACT, IS ATTAINABLE BY SEVERAL METHODS OF ACCOUNTING AND THA T PROJECT COMPLETION METHOD IS ONE SUCH ACCEPTABLE METHOD. THUS, THE AS SESSEE CANNOT FOLLOW MIXED METHOD OF ACCOUNTING, IT HAS TO STRICTLY ADHE RE TO THE METHOD IT HAS ADOPTED AND IS CONSISTENTLY FOLLOWING. 5. SO FAR AS PROJECT RUNWAL GREEN TOWERS 1, 2, 3 AN D COMMERCIAL ARE CONCERNED, THEY WERE COMPLETED IN A.Y. 2017-18 AND, THEREFORE, NO QUESTION OF ASSESSING INCOME DURING THE IMPUGNED ASSESSMENT YEAR ARISE. OUR ATTENTION WAS DRAWN TOWARDS THE OCCUPATION CERTIFIC ATES OF THIS PROJECT, WHICH WAS RECEIVED DURING THE A.Y. 2017-18. IN RESPECT O F ANOTHER PROJECT VIZ. RUNWAL GREEN TOWER 4, 5, 6, 7 AND 8 IT WAS VEHEMENT LY SUBMITTED THAT THIS PROJECT WAS ALSO NOT COMPLETED DURING THE IMPUGNED ASSESSMENT YEAR. RELIANCE WAS PLACED ON THE SPECIAL BENCH DECISION O F THIS TRIBUNAL IN THE CASE OF WALL STREET CONSTRUCTION LTD. & ANR. VS. JCIT 10 1 ITD 156 (MUM) (SB), IN WHICH IT WAS HELD THAT THE ASSESSEE FOLLOWING PROJE CT COMPLETION METHOD OF ACCOUNTING, THE INCOME IDENTIFIABLE WITH THAT PROJE CT SHOULD BE ALLOWED ONLY IN THE YEAR WHEN THE PROJECT IS COMPLETED AND THE INCO ME FROM THAT PROJECT IS ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 13 OFFERED FOR TAXATION. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE DECISIONS OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. PANCHAVATI DEVELOPERS 115 TTJ 139 (MUM) AND THAT OF JCIT VS. K RAHEJA (P) LTD. 102 ITD 414 (MUM). FURTHER ATTENTION WAS ALSO DRAWN TOWARDS TH E DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ADVANCE C ONSTRUCTION CO. (P) LTD. 275 ITR 30 (GUJ), WHEREIN IT WAS POINTED OUT THAT P ROJECT COMPLETION METHOD HAS DULY BEEN ACCEPTED. RELIANCE WAS ALSO PLACED O N THE DECISION OF DHANVARSHA BUILDERS & DEVELOPERS (P) LTD. VS. DCIT 102 ITD 375 (PUNE), FOR THE PROPOSITION OF THE LAW THAT UNDISCLOSED INCOME IN THE FORM OF ON MONEY SHOULD BE TAXED IN THE RESPECTIVE ASSESSMENT YEARS AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE LEARNED A R FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ESTIMATED THE ON MONEY AT ` 63,39,52,372/- IN THE FOLLOWING MANNER: RUNWAL HOMES PVT LTD ASST. YEAR 2015-16 SUMMARY OF ON-MONEY ESTIMATION IN RUNWAL GREEN PROJ ECTS SR. NO. DESCRIPTION AMOUNT 1 2 3 4 ON-MONEY ON FLATS AS PER SEIZE MATERIAL ON-MONEY ON SHOPS AS PER SEIZE MATERIAL ESTIMATION OF ON MONEY ON FLAT WHERE NO INCRIMINATING DOCUMENT FOUND TAKEN AT ` 15750 /- PER SQ. FT. ESTIMATION OF ON MONEY ON SHOPS WHERE NO INCRIMINATING DOCUMENT FOUND TAKEN AT ` 26000 /- PER SQ. FT. 1344,68,725 650,10,096 3347,33,101 997,40,450 TOTAL 6339,52,372 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 14 ON THE BASIS OF THE ABOVE, IT WAS VEHEMENTLY CONTEN DED THAT SO FAR AS THE SUM OF ` 33,47,33,101/- WAS CONCERNED, IT WAS JUST ESTIMATE D BY TAKING THE RATE AT ` 15,750/- PER SQ. SQ AND THE SUM OF ` 9,97,40,450/- WAS ESTIMATED BY TAKING THE RATE AT ` 26,000/- PER SQ. FEET FOR WHICH ALSO THERE WAS NO INCRIMINATING DOCUMENT FOUND. DETAILS OF EACH INCO ME ON THE BASIS OF THE DOCUMENTS SEIZED AS WELL AS ON THE BASIS OF ESTIMAT ION WORKED OUT BY THE ASSESSING OFFICER ARE GIVEN AT PAGES 438 TO 441 OF THE PAPER-BOOK. OUR ATTENTION WAS ALSO DRAWN TO PAGE 443, WHICH CLEARLY SHOWS THAT THE ASSESSEE HAS GIVEN DISCOUNT ON VARIOUS FLATS BOOKED AND, THE REFORE, IT WAS CONTENDED THAT THE ADDITION CONFIRMED BY THE CIT(A) MUST NOT BE SUSTAINED. OUR ATTENTION WAS DRAWN TOWARDS THE DETAILS OF BOOKING DONE FROM THE PERIOD MARCH 2014 TO NOVEMBER 2014, FOUND DURING THE S EARCH EVIDENCING SOME CASES OF ACCEPTING CASH RECORDED IN THE SEIZED DOCU MENTS AND WHEN THE SAME WAS CONFRONTED TO THE DIRECTOR OF THE ASSESSEE , HE SUBMITTED THAT GENERALLY THE GROUP, AS A POLICY MATTER, DID NOT AC CEPT CASH BUT IN FEW CASES, THEY ACCOMMODATED THE CUSTOMER DUE TO MARKET SITUAT ION. THE REVENUE LATER ON ESTIMATED THE CASH PORTION ON ALL UNITS BO OKED DURING THE PERIOD JAN 2014 TILL THE DATE OF SEARCH TAKING HIGHEST RATE OF SALE OF ALL UNITS EVEN FOR WHICH THERE WAS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH. IT WAS VEHEMENTLY CONTENDED THAT ON THE BASIS OF THE SEIZE D MATERIAL, ON MONEY IN RESPECT OF THE FLAT WERE ` 13,44,68,725/- WHILE IN RESPECT OF SHOPS IT WERE ` ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 15 6,50,10,096/- WHEREAS THE ASSESSING OFFICER HAS EST IMATED IT AT ` 33,47,33,101 AND 9,97,40450/- RESPECTIVELY. WHILE ESTIMATING THE ON MONEY FOR THE FLAT THE ASSESSING OFFICER HAS TAKEN THE RA TE @15,750/- PER SQ. FT FOR THE FLATS AND @ 26,000/- PER SQ. FT. FOR THE SHOPS. IT WAS ALSO CONTENDED THAT IN FACT, IN THE CASE OF UNITS FOUND RECORDED IN THE SEIZED DOCUMENTS AS REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER AT PAGES 11 AND 12, THERE ARE VARIOUS UNITS WHERE THE SALE VALUE RE CORDED IN THE BOOKS FOR PARTICULAR UNIT IS HIGHER THAN THE TOTAL REVENUE RE PORTED IN THE EMAILS, WHICH FORM PART OF THE SEIZED MATERIAL. IN THIS REGARD O UR ATTENTION WAS DRAWN TOWARDS THE FOLLOWING INSTANCES: SR. NO. & PAGE NO. OF ASST. ORDER UNIT NO. VALUE AS PER SEIZE MATERIAL AGREEMENT VALUE PG. 125. NO. 25 T8 - 3805 2,38,00,000 2,82,00,000 PG. 12S. NO. 3 F9 1,07,00,000 1,21,00,000 PG. 13 S. NO.17 T7 - 3301 157,00,000 171,00,000 PG. 13SNO. 18 T7 - 3401 157,00,000 172,00,000 PG. 135 NO. 19 T6 - 1303 436,00,000 460,00,000 PG. 135 NO. 24 T2 - 3306 164,00,000 167,00,000 PG. 13 5 NO. 32 A1 - 504 1,46,00,000 1,46,00,000 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 16 ON THIS BASIS, IT WAS CONTENDED THAT THIS FACT PROV ES THAT THE ASSESSEE HAS NOT CHARGED ON MONEY IN ALL THE CASES AND, THEREFOR E, THE ESTIMATION BY THE ASSESSING OFFICER TAKING HIGHER RATE OF SALE SHOULD NOT BE SUSTAINED. FURTHER OUR ATTENTION WAS DRAWN TO THE FACT THAT THERE ARE OTHER UNITS WHERE THE ASSESSING OFFICER HAS ESTIMATED ON MONEY EVEN THOUG H THE DETAILS OF SALE THEREOF ARE RECORDED IN THE SEIZED MATERIAL WHERE N O ON MONEY WAS TAKEN. DETAILS OF SUCH UNITS WERE BROUGHT TO OUR KNOWLEDGE , WHICH ARE AS UNDER: UNIT NO. PAPER BOOK PAGE SHOWING ENTRY IN SEIZE MATERIAL TOTAL REVENUE AS PER SEIZED MATERIAL VALUE RECORDED IN THE BOOKS VALUE ESTIMATED BY DEPT. TAKING HIGHEST SALE RATE T2 - 3206 PAGE 451 167,77,000 168,10,005 183,48,750 T7 - 801 PAGE 463 155,18,500 156,92,851 274,00,000 T7 - 1202 PAGE 443 280,00,000 289,77,000 307,12,500 T8 - 3401 PAGE 460 2,57,60,000 259,11,821 274,05,000 TL - 3402 PAGE 460 1,68,35,250 169,84,755 1,83,48,750 THUS, IT WAS CONTENDED THAT THE ACTION OF THE ASSES SING OFFICER IS TOTALLY ARBITRARY AND THERE IS NO APPLICATION OF MIND BY TH E ASSESSING OFFICER WHILE DETERMINING THE TRUE AND REAL INCOME OF THE ASSESSE E. IT WAS ALSO FURTHER SUBMITTED THAT EVEN ON THE BASIS OF SEIZED MATERIAL THE SEARCH TEAM HAS WORKED OUT THE ON MONEY INCORRECTLY. THE SEARCH TE AM HAS VERIFIED THE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 17 SEIZED MATERIAL AND COMPARED THE TOTAL REVENUE MENT IONED THEREIN WITH THE AGREEMENT VALUE AND WORKED OUT ON MONEY ACCEPTED BY THE ASSESSEE IN EACH CASE. IN THE SEIZED MATERIAL TOTAL REVENUE WORKED OUT CONSIDERING FLAT VALUE, CLUB CHARGES, INFRASTRUCTURAL CHARGES ETC., WHEREAS WHILE COMPARING SUCH VALUE WITH THE AGREEMENT ONLY FLAT VALUE IS CONSIDE RED BY THE DEPARTMENT AND THE RECOVERY FROM CUSTOMER CONSISTING OF LEGAL, CLU B CHARGES, SHARE APPLICATION MONEY, MAINTENANCE CHARGES, DEVELOPMENT CHARGES, FORMATION CHARGES, INFRASTRUCTURE CHARGES, MSEB CHARGES, WHIC H ARE DULY RECORDED IN THE BOOKS OF ACCOUNT WERE IGNORED BY THE ASSESSING OFFICER. THEREFORE THE ON MONEY RECEIVED BY THE ASSESSEE WORKED OUT ON THE BASIS OF THE SEIZED MATERIAL IS NOT CORRECT TO THAT EXTENT. THE BRIEF DETAILS IN THIS REGARD WERE GIVEN AS UNDER: PARTICULARS TOTAL REVENUE AS PER SEIZE MATERIAL TOTAL REVENUE AS RECORDED IN THE BOOKS DIFFERENCE (A-B) ON - MONEY WORKED OUT BY AO EXCESS ON - MONEY WORKED OUT BY AO (D-C) A B C D E FOR 36 FLATS 8254,10,000 7201,25,562 1052,84,438 1344,68,725 291,84,287 FOR 10 SHOPS 2058,92,500 1449,43,854 609,48,646 650,10,096 40,61,450 TOTAL 10313,02,500 8650,69,416 1662,33,084 1994,78,821 332,45,737 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 18 THUS, IT WAS CONTENDED, THAT THE ASSESSING OFFICER BE DIRECTED TO WORK OUT THE ON MONEY CONSIDERING TOTAL REVENUE RECORDED IN THE BOOKS VIS--VIS TOTAL REVENUE AS PER SEIZED MATERIAL AS PER THE AFORESAID WORKING. IN THIS REGARD OUT ATTENTION WAS ALSO DRAWN TOWARDS COPIES OF AGRE EMENT ENTERED INTO BY THE ASSESSEE WHICH ARE AVAILABLE ON PAGES 122 TO 37 8 OF THE PAPER-BOOK. FURTHER, IT WAS CONTENDED THAT THE RECEIPT, IF ANY ON MONEY HAS TO BE ASSESSED, IT IS ONLY THE NET INCOME EMBEDDED THEREI N THAT HAS TO BE ADDED AS ON MONEY REPRESENTING THE SALE CONSIDERATION AND SA LE CONSIDERATION CANNOT BE EQUATED WITH THE NET INCOME OF THE ASSESSEE. IN FACT, DURING THE SEARCH CERTAIN DOCUMENTS WERE FOUND WHEREIN THE INITIAL IN VESTOR WAS PAID COMPENSATION ON SURRENDER OF THEIR RIGHT AND THE DI RECTOR OF THE ASSESSEE COMPANY HAS STATED IN THE STATEMENT RECORDED U/S. 1 32(4) THAT DUE TO INCREASE IN PRICE, THEY COMPENSATED SOME OF THE PAR TIES ON CANCELLATION OF THEIR BOOKING. NOT ONLY THIS, THERE AS SOME PAYMEN TS TO EMPLOYEES IN CASH WHICH ALSO REFLECTED IN THE STATEMENT OF THE DIRECT OR. THEREFORE, WHATEVER CASH WAS COLLECTED ON THE SALE OF FEW UNITS WERE UT ILIZED TOWARDS EXPENSES OF THE PROJECT. THUS, THE ENTIRE CASH RECEIPT CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND ONLY A PART OF IT CAN BE CONSIDERED AS INCOME. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF - HONBLE GUJARAT HIGH COURT IN THE CASE OF INCOME TAX OFFICER VS. ANAND BUILDERS, WHEREIN THE HONBLE HIGH COURT HELD THAT THE ORDER OF ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 19 THE TRIBUNAL ON THE QUESTION AS TO WHETHER IN THE A BSENCE OF ANY EVIDENCE OF EXPENDITURE, THE ENTIRE UNACCOUNTED 'ON MONEY' RECEIVED BY THE ASSESSEE WAS TO BE SUBJECTED TO TAX OR ONLY A SMALL PERCENTAGE THEREOF DID NOT GIVE RISE TO ANY SUBSTANTIAL QUESTI ON OF LAW, THE TRIBUNAL HAVING ARRIVED AT ITS DECISION ON APPRECIATION OF F ACTS AND EVIDENCE. CIT VS. PRIME DEVELOPER IN ITA NO. 2452 OF 2013 (BO M). IN THIS CASE MUMBAI TRIBUNAL HAS HELD THAT ONLY 17.08% OF THE ON -MONEY COULD BE TAXED AS NET INCOME. HON'BLE BOMBAY HIGH COURT UPHE LD THE DECISION OF HON'BLE TRIBUNAL. COMMISSIONER OF INCOME TAX VS. GURUBACHHAN SINGH J. JUNEJA (2008) 302 ITR 0063 (GUJ) WHEREIN IT HAS BEEN HELD, IN ABS ENCE OF ANY MATERIAL ON RECORD TO SHOW THAT THERE WAS ANY UNEXP LAINED INVESTMENT MADE BY THE ASSESSEE WHICH WAS REFLECTED BY THE ALL EGED UNACCOUNTED SALES, THE FINDING OF THE TRIBUNAL THAT ONLY THE GP ON THE SAID AMOUNT CAN BE BROUGHT TO TAX DOES NOT CALL FOR ANY INTERFE RENCE. DEPUTY COMMISSIONER OF INCOME TAX VS. PANNA CORPORA TION (2012)74DTR 0089 (GUJ), IN VIEW OF THE LEGAL POSITI ON THAT NOT THE ENTIRE RECEIPTS, BUT THE PROFIT ELEMENT EMBEDDED IN SUCH R ECEIPTS CAN BE BROUGHT TO TAX, NO INTERFERENCE IS CALLED FOR IN TH E DECISION OF THE TRIBUNAL ACCEPTING SUCH ELEMENT OF PROFIT AT RS.26 LAKHS OUT OF TOTAL UNDISCLOSED RECEIPT OF RS.62 LAKHS. ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 20 COMMISSIONER OF INCOME TAX VS. PRESIDENT INDUSTRIES (2002) 258 ITR 0654 (GUJ) IN THE ABSENCE OF ANY FINDING OR MATERIAL THAT THER E WAS SUPPRESSION OF INVESTMENT IN ACQUIRING THE GOODS WH ICH ARE SUBJECT OF UNDISCLOSED SALES, TRIBUNAL WAS JUSTIFIED IN HOLDIN G THAT ENTIRE UNDISCLOSED SALES COULD NOT BE ADDED AS INCOME OF A SSESSEE BUT ADDITION COULD BE MADE ONLY TO THE EXTENT OF ESTIMA TED PROFITS EMBEDDED IN SALES FOR WHICH NET PROFIT RATE WAS ADO PTED. 6. THE LEARNED DR, ON THE OTHER HAND, DREW OUR ATTE NTION TOWARDS THE ORDER OF THE CIT(A), PARA NO.6, IN WHICH HE HAS CON FIRMED THE ORDER OF THE ASSESSING OFFICER RELYING ON THE FINDINGS OF THE AS SESSING OFFICER AS WELL AS THE STATEMENT RECORDED DURING THE COURSE OF THE SEA RCH MADE BY SHRI RAVI RAICHURA, SALES MANAGER, SHRI ANAND MODI, HEAD OF T HE SALES RUNWAL GROUP, MS SUJATA RAO, SALES AND CUSTOMER RELATION MANAGEME NT, SHRI KISHORE P JAIN, HEAD OF TAXATION, SHRI SUBODH RUNWAL, DIRECTO R, AND GIVEN THE FINDING THAT SHRI SUBODH RUNWAL HAS CLEARLY ADMITTED A SUM OF ` 63,39,52,372/- AS ON MONEY RECEIVED BY THE ASSESSEE. THEREFORE, THE SAID MONEY HAS TO BE ADDED IN THE IMPUGNED ASSESSMENT YEAR AND THE ASSES SING OFFICER, THEREFORE, FOR NOT UNFAIR AND UNJUSTIFIABLE N ADDING THE SAID ON MONEY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF TAX AUTHORITIES BELOW. TH E FIRST ISSUE INVOLVED IN THIS GROUND BEFORE US IS WHETHER THE ASSESSING OFFICER W AS CORRECT IN LAW IN ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 21 ADDING A SUM OF ` 63,39,52,372/- AS ALLEGED ON MONEY RECEIVED ON SAL E OF THE FLATS AND THE SECOND ISSUE INVOLVED IS IF ANY A DDITION HAS TO BE MADE DURING THE IMPUGNED ASSESSMENT YEAR, WHETHER THE AD DITION OF THE ON MONEY HAS TO BE MADE ON THE BASIS WHEN THE ON MONEY HAS B EEN RECEIVED OR ON THE BASIS OF THE METHOD OF ACCOUNTING FOLLOWED BY THE A SSESSEE. IT IS NOT DISPUTED THAT THE ASSESSEE IS FOLLOWING PROJECT COM PLETION METHOD. THE UNDISPUTED FACTS BEFORE US ARE THAT SEARCH AND SEIZ URE ACTION U/S. 132 OF THE IT ACT TOOK PLACE ON 17.11.2014 ON THE ASSESSEE AS WELL AS ITS GROUP COMPANY. THE ASSESSEE SUBMITTED RETURN OF INCOME O N 31.10.2015 DECLARING TOTAL INCOME OF ` 13,48,82,480/-, WHICH WAS SUBSEQUENTLY REVISED TO ` 13,45,71,200/- ON 7.07.2016 AND FINALLY REVISED TH E RETURN ON 30.12.2016 BY INCLUDING THEREIN A SUM OF ` 72,50,000/- AND PAID TAXES THEREON. THE SUM OF ` 72,50,000/- DECLARED BY THE ASSESSEE RELATE TO THE CHESTNUT PROJECT, SINGLE BUILDING PROJECT COMPLETED DURING THE YEAR I N RESPECT OF WHICH EVIDENCE WAS FOUND DURING THE COURSE OF THE SEARCH FOR ON MO NEY RECEIVED AND IT WAS ALSO SURRENDERED BY THE ASSESSEE COMPANY DURING THE COURSE OF THE SEARCH AND IS INCLUDED IN THE SUM OF ` 63,39,52,372/- ADDED BY THE ASSESSING OFFICER TO THE ASSESSEES INCOME. WE NOTED THAT THE ASSESS ING OFFICER WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE HAS CONS IDERED THE REVISED RETURN DECLARED BY THE ASSESSEE AT ` 13,45,71,200/- THEREFORE, THE ADDITION OF ` 72,50,000/- HAS TO BE CONFIRMED AND, ACCORDINGLY, W E CONFIRM THE SAID ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 22 ADDITION OF ` 72,50,000/-.THE ASSESSEE HAS ALSO INCLUDED THE SAID AMOUNT IN ITS REVISED COMPUTATION AND PAID TAXES THEREON ON 2 7.12.2016. 8. NOW COMING TO THE OTHER ADDITION INCLUDED IN THE SUM OF ` 63,39,52,372/-. THE FOLLOWING ADDITIONS WERE MADE BY THE ASSESSING OFFICER - 1 PROJECT NAMELY RUNWA L GR E ENS TOWERS -1,2 & 3 AND COMMERCIAL ` 31, 14,02,41 2/ - 2 PROJECT NAMELY RUNWAL GREENS TOWERS - 4, 5, 6, 7 & 8 ` 31 , 52,9 9, 9 60 / - TOTAL ` `` ` 63,39,52,372/ - IT IS NOT DISPUTED THAT THE ON-MONEY ON THE BASIS O F THE SEIZED MATERIAL RECEIVED BY THE ASSESSEE COMES TO ` 19,94,78,821/-OUT OF WHICH THE ADDITION OF ` 72,50,000/- HAS ALREADY BEEN CONFIRMED BY US AND H AS BEEN DULY TAKEN IN TO ACCOUNT BY THE ASSESSEE IN THE REVISED COMPUT ATION OF INCOME SUBMITTED BY THE ASSESSEE DURING THE COURSE OF HEARING BEFORE THE ASSESSING OFFICER AND ON WHICH THE ASSESSEE HAS DULY PAID THE TAX. NOW T HE QUESTION BEFORE US REMAINS TO THE DISPUTED ADDITION AMOUNTING TO ` 62,67,02,372/- THE TOTAL ON- MONEY ON THE BASIS OF THE SEIZED MATERIAL FOUND DUR ING THE COURSE OF SEARCH RELATE TO THE PERIOD OF THE BOOKING DONE FROM MARCH 2014 TO NOVEMBER 2014. THE AMOUNT SO WORKED OUT COMES TO ` 19,94,78,821/- AS DETAILED UNDER:- ON-MONEY OF FLATS AS PER SEIZED MATERIAL ` 13,44,68,725/- ON-MONEY OF SHOPS AS PER SEIZED MATERIAL ` 6,50,10,096/- ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 23 OUT OF THE SAID SUM ` 72,50,000/- HAS ALREADY BEEN CONFIRMED BY US IN TH E PRECEDING PARAGRAPH, THEREFORE, ON-MONEY ON FLATS A S PER SEIZED MATERIAL REMAINS AT ` 19,22,28,821/-. WE NOTED THAT THE ASSESSING OFFIC ER ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH RELATING TO THE PERIOD OF MARCH 2014 TO NOVEMBER 2014 TOOK THE VIEW THAT THE ASSESSEE MIGHT HAVE RECEIVED ON-MONEY IN ALL THE BOOKINGS AN D THEREFORE, HE ESTIMATED CASH PORTION ON OTHER UNITS SOLD BY TAKIN G THE HIGHEST RATE OF SALE OF OTHER UNITS ALTHOUGH NO ON-MONEY EVIDENCE WERE F OUND DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER WHILE CONFIRMING THE ADDITION RELIED ON THE STATEMENTS OF THE STAFF OF THE ASSESSEE AS WELL AS THE STATEMENT OF THE DIRECTOR SHRI SUBODH RUNWAL, MAINLY IN REPLY TO QUE STION NOS. 16, 17 AND 18, WHICH ARE REPRODUCED AS UNDER: ANS TO Q.16 SIR AS I HAVE ANSWERED IN EARLIER QUESTION I AGAIN REITERATE THAT THIS PROJECT WAS A JOINT VENTURE WITH HDFC LIMITED RIGHT FROM THE INCEPTION TILL THEY EXITED. SUBSEQUENTLY TO THAT T HE MARKET HAS BECOME VERY COMPETITIVE AND DUE TO OPENING OF A FOR EST LAND WE HAD TO SELL AGGRESSIVELY TO ACHIEVE THE NUMBERS FROM THE CALENDAR YEAR 2014, I ACCOMMODATED A FEW CUSTOMERS WHO WANTED TO PAY PART CONSIDERATION IN CASH. THE DIFFERENCE IN THE AB OVE CHART IS SPECIFICALLY RELATED TO THESE CUSTOMERS WHO HAVE BE EN ACCOMMODATED. I OFFER THIS DIFFERENCE AS MY INCOME. I HEREBY FARTHER REITERATE AND STATE THAT PRIOR TO THIS WE HAVE NEVER ACCEPTED IN CASH FOR ANY OF THE UNITS SOLD IN THAT PROJECT.' THUS THE ASSESSEE HAS ACKNOWLEDGED THE DISCREPANCY AND HAS ACCEPTED THAT 'ON-MONEY' HAS BEEN TAKEN IN ALL THE ABOVE INSTANCES. ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 24 FURTHER THE ASSESSEE WAS ASKED TO STATE THE OTHER I NSTANCES WHERE UNACCOUNTED CASH HAS BOON TAKEN IN LIEU OF SALE OF RESIDENTIAL / COMMERCIAL UNITS IN THEIR PROJECTS. FOLLOWING IS TH E EXCEPT OF THE RELEVANT PORTION OF HIS STATEMENT 'Q.17 PLEASE PROVIDE THE DETAILS AS TO OTHER FIATS IN WHICH SIMILAR PRACTICE IS FOLLOWED. ANS: ALTHOUGH IN THE OTHER CASES, I DO NOT AGREE TH AT IN ALL THE CASES CASH HAS BEEN ACCEPTED BY ME OVER AND ABOVE T HE AGREEMENT VALUE. BUT TO AVOID PROTRACTED LITIGATION S WITH THE DEPARTMENT AND TO BUY PEACE I ACCEPT THE DIFFERENCE APPEARING IN THE CHART BEGINNING FROM 1ST JANUARY 2014 TILL DATE AS MY ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME FOR THE RE SPECTIVE YEARS AS ON- MONEY (CASH RECEIVED OVER AND ABOVE THE AGRE EMENT VALUE), I AM SUBMITTING THE WORKING MARKED AS ANNEXURE~1 TO THIS STATEMENT WHICH HAS TWO PAGES. Q.18 AS PER THE WORKING SUBMITTED AS PART OF ANNEXU RE TO ANSWER TO QUESTION NUMBER 16, THE AMOUNT OF ON MONEY ACCEP TED IN THE PROJECT NAMELY RUNWAL GREENS (M/S RUNWAL HOMES PRI VATE LIMITED}, IS RS.63,39,52,372/- PLEASE CONFIRM ? ANS; SIR, DUE TO REASONS MENTION ABOVE I CONFIRM TH E AMOUNT OF RS. 63,39, 52.372A (WHICH AS PER ANNEXURE-1), AS THE ON MONEY ACCEPTED IN THE PROJECTS RUNWAL GREEN (M/S. RUNWAL HOMES PRIVATE LIMITED), AND THE SAME HAS BEEN OFFERED AS ADDITION AL INCOME OVER AND ABOVE THE INCOME DECLARED IN THE M/S. RUNWAL HO MES PRIVATE LIMITED. HERE / WANT TO STATE THAT OLIVE PROJECT IS UNDER THE PROPRIETORSHIP OF MR. SUBHASH RUNWAL. WE HAVE GONE THROUGH THE ANSWER TO QUESTION NOS. 16 , 17 AND 18. WE NOTED THAT IN REPLY TO QUESTION NO.16, DIRECTOR OF THE AS SESSEE COMPANY STATED THAT INITIALLY THE PROJECT WAS JOINT VENTURE WITH HDFC L IMITED. SUBSEQUENTLY, WHEN THE MARKET HAS BECOME MORE COMPETITIVE AND DUE TO T HE OPENING OF THE FOREST LAND THEY HAD TO SELL AGGRESSIVELY, IN ORDER TO ACHIEVE THE NUMBERS FROM THE CALENDAR YEAR 2014 AND, THEREFORE, IN ORDE R TO ACCOMMODATE FEW ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 25 CUSTOMERS WHO WANTED TO PAY PART CONSIDERATION IN C ASH, THEY ACCEPTED CASH FOR FEW UNITS. HE HAS CATEGORICALLY STATED THAT PR IOR TO THAT DATE THEY HAVE NEVER ACCEPTED ANY CASH. IN REPLY TO QUESTION NO.1 7, HE HAS CATEGORICALLY STATED THAT HE DID NOT AGREE THAT IN ALL CASES CASH BAS BEEN ACCEPTED OVER AND ABOVE THE AGREEMENT VALUE BUT HE AGREED TO SURR ENDER THE DIFFERENCE AS ITS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR IN COME FOR THE RESPECTIVE YEARS AS ON-MONEY TO AVOID PROTRACTED LITIGATIONS W ITH THE DEPARTMENT AND BUY PEACE. ON THAT BASIS THE TOTAL ON-MONEY RECEIV ED WAS WORKED OUT AT ` 63,39,52,372/- AND ADDED TO THE INCOME OF THE ASSES SEE. IT IS UNDISPUTED FACT THAT ON THE BASIS OF THE DOCUMENTS AND EVIDENC E PRODUCED BEFORE US, THE COPY OF WHICH ARE AVAILABLE AT PAGES 436 TO 441 OF THE PAPER-BOOK, THE ON MONEY RECEIVED, ON THE BASIS OF THE SEIZED DOCUMENT S, BY THE ASSESSEE IN RESPECT OF FLATS COMES TO ` 13,44,68,725/-AND IN RESPECT OF SHOPS COMES TO ` 6,50,10,096/-. FOR THE REST OF THE ADDITION IN RE SPECT OF WHICH NO INCRIMINATING MATERIAL WAS FOUND, WE NOTED FROM PAG ES 439 TO 441 OF THE PAPER BOOK, THE ASSESSING OFFICER JUST ESTIMATED TH E ON-MONEY OF THE FLAT @15,750/- PER SQ. FT TOTALING TO ` 33,47,33,101/- AND THAT OF THE SHOPS @26,000/- TOTALING TO ` 9,97,40,450/-. BUT THE ASSESSING OFFICER WAS FAIR ENOUGH TO STATE THAT NO INCRIMINATING MATERIAL WAS FOUND BUT HAD ESTIMATE @15750/- PER SQ. FT FOR FLATS AND @26000/- PER SQ. FT. FOR SHOPS. THIS IS A CASE WHERE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3 ), THEREFORE, THE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 26 ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER AS IF THE ASSESSEE HAS RECEIVED WHATEVER IS STATED IN THE DOCUMENTS EXECUT ED BY THE ASSESSEE. IN OUR OPINION, THE ONUS IS ON THE REVENUE TO PROVE TH AT THE ASSESSEE HAS ACTUALLY RECEIVED THE CONSIDERATION MUCH MORE THAN WHAT HAS BEEN AGREED TO OR STATED IN THE DOCUMENTS EXECUTED BETWEEN THE INT ENDED BUYER AND THE ASSESSEE. NO COGENT MATERIAL OR EVIDENCE WAS BROUG HT TO OUR KNOWLEDGE BY THE LEARNED DR EVEN THOUGH HE HAS VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE STATEMENT OF THE D IRECTOR OF THE COMPANY, WHICH MAY PROVE THAT THE ASSESSEE HAS RECEIVED CONS IDERATION @15750/- PER SQ. FT FOR FLATS AND @26000/- PER SQ. FT. FOR SHOPS . THERE HAS BEEN SEARCH AND SEIZURE IN THE CASE OF THE ASSESSEE. IF THE AS SESSEE WOULD HAVE RECEIVED CONSIDERATION MUCH MORE THAN WHAT IS STATED IN THE DOCUMENTS, FOR WHICH NO EVIDENCE IS FOUND DURING THE COURSE OF SEARCH, IN O UR OPINION, NO ADDITION CAN BE SUSTAINED. THERE CANNOT BE ANY AGREEMENT AGAINS T THE STATUTE. THE ASSESSEE AGREED FOR DECLARATION OF THE INCOME FOR W HICH NO MATERIAL WAS FOUND MERELY TO AVOID PROTRACTED LITIGATIONS WITH T HE DEPARTMENT AND BUY PEACE. THE ASSESSEE HAS EARNED INCOME; THE ONUS IS ON THE REVENUE TO PROVE THAT THE INCOME HAS ACCRUED TO THE ASSESSEE. EVEN OTHERWISE ALSO SINCE THERE HAS BEEN A SEARCH IN THE CASE OF THE AS SESSEE, IF THE ASSESSEE WOULD HAVE EARNED SUCH INCOME THERE MUST HAVE BEEN SOME EVIDENCE FOUND THAT EITHER THE ASSESSEE HAS MADE INVESTMENT OUTSID E THE BOOKS OF ACCOUNT ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 27 OR HAS SPEND THIS INCOME IN ONE WAY OR THE OTHER. INCOME TAX IS LEVIABLE U/S. 4 OF THE I.T ACT ON THE REAL INCOME. IF INCOME HAS NOT ACCRUED OR RECEIVED BY THE ASSESSEE, THE ASSESSEE CANNOT BE BURDENED FOR I NCOME TAX LIABILITY. FROM THE DOCUMENTS AVAILABLE ON RECORD, IT IS APPARENT T HAT THE ASSESSING OFFICER HAS ESTIMATED THE BOOKING AMOUNT AND ON THAT BASIS ASSUMED THAT THE ASSESSEE WOULD HAVE RECEIVED THE ON-MONEY. HE MADE THE PRESUMPTION AS IF THE ASSESSEE HAS SOLD ALL THE FLATS @15750/- PER SQ . FT AND THE SHOPS @26000/- PER SQ. FT. FROM THE DOCUMENTS IN THE BOOK ING, IT IS EVIDENT THAT DIFFERENT FLATS AND DIFFERENT SHOPS HAVE BEEN BOOKE D AT DIFFERENT RATES BY THE ASSESSEE. FROM PAGE 443 OF THE PAPER-BOOK, AS FOUN D DURING THE COURSE OF SEARCH, THE ASSESSEE HAS GIVEN DISCOUNT ON THE BOOK INGS AT DIFFERENT RATES TO DIFFERENT CUSTOMERS. WE NOTED THAT IN RESPECT OF TWO SHOPS ALTHOUGH THE BASE RATE HAS BEEN MENTIONED @21,000 PER SQ. FT, TH E ASSESSEE HAS GIVEN DISCOUNT AROUND ` 4150 PER SQ. FT. AND BOOKED THE SHOPS @17500 PER SQ. FT INCLUDING THE CLUB CHARGES OF ` 750/-. SIMILARLY, IN RESPECT OF FLAT ALSO WE NOTED THAT THE BASE RATE HAS BEEN MENTIONED @12,000 /- PER SQ. FT AND AFTER ADDING FLOOR RISE, CLUB CHARGES, INFRA CHARGES ETC. , TOTAL RATE CAME TO ` 14375 PER SQ. FT. AND THE ASSESSEE HAS ALSO GIVEN DISCOUN T OF ` 1000/- AND ULTIMATELY BOOKED THE FLAT @13,350 PER SQ. FT. EVEN ON THE SAME VERY PAGE HAD THE DETAILS OF THE FLATS WHICH HAD BEEN BOOKED @ 14550/-, 14300/- AND ` 13225/- PER SQ. FT. THEREFORE, THE CONCLUSION DRAW N BY THE ASSESSING OFFICER ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 28 WHILE MAKING THE ADDITION IS BASED JUST ON ASSUMPTI ON AS IF THE ASSESSEE THE ASSESSEE HAS SOLD ALL THE FLATS @15750 PER SQ. FT. IN VIEW OF THIS FACT, WE DELETE THE ADDITION OF ` 33,47,33,101/- MADE ON THE BASIS OF ESTIMATING THE SALE CONSIDERATION IN R ESPECT OF THE FLATS @15750/- PER SQ. FT. AND ` 9,97,40,450/- BASED ON THE PRESUMPTION AS HAVING B EING BOOKED SHOPS @26000/-. 9. NOW THE QUESTION BEFORE US RELATE TO THE BALANCE ADDITION OF ` 19,22,28,821/-. IT IS NOT DENIED THAT THE EVIDENCE HAS BEEN FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF RATE AT WHIC H THE ASSESSEE HAS MADE THE BOOKING AND THE ASSESSEE HAS RECEIVED CONSIDERA TION OVER AND ABOVE WHATEVER IS STATED IN THE DOCUMENT. WE NOTED FROM THE DETAILS AVAILABLE AT PAGE 437 OF THE PAPER- BOOK, THE ASSESSEE HAS BOOKED SHOPS FROM ` 19,791/- TO ` 26,039/- PER SQ. FT. AS PER THE DOCUMENTS FOUND DU RING THE COURSE OF SEARCH. SIMILARLY, FLATS HAVE BEEN B OOKED FROM ` 12,068/- TO ` 16,746/- PER SQ. FT. THE BOOKINGS HAVE BEEN DONE AT DIFFERENT RATES AS HAS BEEN FOUND FROM THE DOCUMENTS FOUND DURING THE COUR SE OF THE SEARCH. THE ASSESSING OFFICER WORKED OUT THE DIFFERENCE BETWEEN THE CONSIDERATION AGREED AND THE APPARENT CONSIDERATION MENTIONED IN THE DOCUMENTS AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. IT IS NOT DENIED THAT THE MATERIAL IN RESPECT OF ON-MONEY RECEIVED BY THE ASS ESSEE WAS FOUND DURING THE COURSE OF THE SEARCH. IT IS ALSO NOT DENIED TH AT THE ASSESSING OFFICER HAS ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 29 WORKED OUT THE DIFFERENCE BETWEEN THE AMOUNT AT WHI CH THE UNIT HAS BEEN BOOKED AND THE VALUE STATED IN THE SEIZED DOCUMENT. IN ADDITION TO THE VALUE STATED IN THE SEIZED DOCUMENT, IT IS NOT DENIED THA T THE ASSESSEE HAS RECEIVED CHARGES IN ADDITION TO THE BASE RATE TOWARDS FLOOR RISE, GARDEN FACING, CLUB CHARGES, INFRASTRUCTURE ETC. WHILE WORKING OUT DIF FERENCE, IN OUR VIEW, THE ASSESSING OFFICER SHOULD HAVE ALSO TAKEN INTO ACCOU NT VARIOUS AMOUNTS RECEIVED BY THE ASSESSEE TOWARDS FLOOR RISE, GARDEN FACING, CLUB CHARGES ETC., AND ADDED IT TO THE APPARENT CONSIDERATION. THE A SSESSEE IN THIS REGARD BEFORE US SUBMITTED A CHART GIVING THE CALCULATION MENTIONING THEREIN THE TOTAL REVENUE AS PER THE SEIZED MATERIAL, TOTAL REVENUE A S RECORDED IN THE BOOKS AND THE DIFFERENCE, ON-MONEY WORKED OUT BY THE ASSE SSING OFFICER AND EXCESS ON-MONEY WORKED OUT BY THE ASSESSING OFFICER. THE DETAILS ARE AS UNDER: PARTICULARS TOTAL REVENUE AS PER SEIZE MATERIAL TOTAL REVENUE AS RECORDED IN THE BOOKS DIFFERENCE (A-B) ON - MONEY WORKED OUT BY AO EXCESS ON-MONEY WORKED OUT BY AO (D-C) A B C D E FOR 36 FLATS 8254,10,000 7201,25,562 1052,84,438 1344,68,725 291,84,287 FOR 10 SHOPS 2058,92,500 1449,43,854 609,48,646 650,10,096 40,61,450 TOTAL 10313,02,500 8650,69,416 1662,33,084 1994,78,821 332,45,737 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 30 THE ASSESSEE HAS FILED COPIES OF AGREEMENT ALSO BEF ORE US FROM PAGES 128 TO 378 OF THE PAPER BOOK. IN THE AGREEMENT, WE NOTED THAT THESE CHARGES HAVE SPECIFICALLY BEEN MENTIONED. THE ASSESSEE THEREFOR E BEFORE US SUBMITTED THAT THE ASSESSING OFFICER HAS CALCULATED EXCESS ON -MONEY OF ` 3,32,45,737/-. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO VERI FY THIS FACT ON THE BASIS OF THE EVIDENCE SUBMITTED BY THE ASSESSEE. IN CASE TH E ASSESSING OFFICER FINDS THAT THE DIFFERENCE WORKED OUT BY HIM IN RESPECT OF THE ON-MONEY RECEIVED BY THE ASSESSEE AT ` 19,94,78,821/- IS NOT CORRECT, THIS ON-MONEY BE RE DUCED BY THE AMOUNT AS MAY BE FINALLY WORKED OUT ON THE BASI S OF THE EVIDENCE FILED BY THE ASSESSEE AFTER VERIFICATION. 10. THE ASSESSEE HAS ALSO TAKEN A PLEA BEFORE US TH AT THESE ADDITIONS CANNOT BE MADE IN TOTO. ONLY THE NET PROFIT ARRIVE D AT ON THIS ON-MONEY SHOULD HAVE BEEN ADDED IN ITS INCOME AND IN THIS RE GARD HE RELIED ON THE ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ITO VS. ANAND BUILDER. WE HAVE GONE THROUGH THE SAID DECISION. WE NOTED T HAT THE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE AS IN THEIR OPI NION NO SUBSTANTIAL QUESTION OF LAW ARISE OUT OF THE ORDER OF THE TRIBU NAL. WE HAVE ALSO GONE THROUGH THE DECISION OF HONBLE BOMBAY HIGH COURT I N THE CASE OF CIT VS. PRIME DEVELOPER ON WHICH THE LEARNED AR HAS PLACED HIS RELIANCE. WE NOTED THAT THE HONBLE HIGH COURT HAS UPHELD THE DECISION OF THE TRIBUNAL. THE TRIBUNAL IN THAT CASE TOOK THE VIEW THAT 17.08% ON THE ON-MONEY COULD BE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 31 TAXED AS NET INCOME. THE FACTS INVOLVED IN THAT CA SE ARE DIFFERENT FROM THE FACTS INVOLVED IN THE PRESENT CASE. ALTHOUGH THE A SSESSEE TRIED TO ARGUE THAT THE FACTS INVOLVED ARE SAME AND IN THIS REGARD DREW OUT ATTENTION TOWARDS THE PAPERS FOUND DURING THE COURSE OF THE SEARCH, FROM WHICH IS APPARENT THAT THE ASSESSEE HAS REFUNDED A SUM OF ` 60 LACS AS COMPENSATION IN CASH TO THE CONCERNED PARTY. WE HAVE GONE THROUGH THE SEIZED M ATERIAL. WE DO NOT FIND FROM THE MATERIAL SEIZED THE ASSESSEE HAS PAID COMP ENSATION. THE DOCUMENT ONLY TALKS OF REFUND OF MONEY. THERE MAY BE A CASE THE ASSESSEE MIGHT HAVE RECEIVED ON-MONEY AND WOULD HAVE REFUNDED IT. IN O UR OPINION, THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE ASSESSEE HAS INCU RRED EXPENDITURE FOR EARNING OF THE ON-MONEY. IT IS CASE WHERE THE CONS IDERATION HAS BEEN SUPPRESSED. IT IS NOT A CASE WHERE THE ASSESSEE HA S INCURRED THE EXPENDITURE FOR THE CONSTRUCTION OUTSIDE THE BOOKS OF ACCOUNT A ND SOLD FLATS OUTSIDE THE BOOKS OF ACCOUNT. IF THE ASSESSEE IS CLAIMING ANY EXPENDITURE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS INCURRED THE EXPENDIT URE. THERE HAD BEEN SEARCH IN THE CASE OF THE ASSESSEE AND HE COULD NOT BRING TO OUR KNOWLEDGE ANY COGENT MATERIAL OR EVIDENCE, WHICH MAY PROVE TH AT THE ASSESSEE INCURRED ANY EXPENDITURE FOR EARNING ON-MONEY. WE ARE OF TH E VIEW THAT THE EXPENDITURE INCURRED FOR THE PROJECT HAS ALREADY BE EN DEBITED TO THE BOOKS OF ACCOUNT AND, THEREFORE, NO QUESTION ARISES OF CHARG ING THE NET INCOME. WE HAVE ALSO GONE THROUGH VARIOUS OTHER DECISIONS I.E. CIT VS. GURUBACHHAN ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 32 SINGH J JUNEJA 302 ITR 63, DCIT VS. PANNA CORPORATI ON 74 DTR 89 AND CIT VS. PRESIDENT INDUSTRIES 258 ITR 654, ON WHICH THE LEARNED AR HAS VEHEMENTLY RELIED. IN OUR OPINION, THESE DECISIONS WILL NOT ASSIST THE ASSESSEE. THESE DECISIONS, IN FACT, RELATE TO UNAC COUNTED SALES AND NOT ON- MONEY RECEIVED BY THE ASSESSEE. THE LEARNED AR MUS T BE AWARE THAT THERE IS ALWAYS A DIFFERENCE IN SUPPRESSION OF CONSIDERAT ION AND UNDISCLOSED SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. IT IS NOT A CAS E WHERE THE ASSESSEE HAS BOOKED THE PROJECT OUTSIDE THE BOOKS OF ACCOUNT SO THAT EXPENSES INCURRED COULD BE ALLOWED. THERE IS EVIDENCE ON RECORD THAT THE ASSESSEE HAS RECEIVED ON-MONEY CONSIDERATION FOR THE BOOKING OF SHOPS AS WELL AS FLATS. THEREFORE, TO THAT EXTENT, SUBJECT TO OUR AFORESAID DIRECTIONS , THE ADDITION HAS TO BE CONFIRMED. THE LEARNED AR AT THIS JUNCTURE HAS TAK EN A ARGUMENT THAT IT IS A CASE WHERE THE ASSESSEE WAS FOLLOWING PROJECT COMPL ETION METHOD. PROJECT COMPLETION METHOD HAS BEEN FOLLOWED CONSISTENTLY BY THE ASSESSEE. BOTH THE PROJECTS RELATING TO THE FLATS AND THE SHOPS IN RES PECT OF WHICH THE EVIDENCE WERE FOUND FOR RECEIPT OF ON-MONEY BY THE ASSESSEE WERE NOT COMPLETED DURING THE YEAR. SINCE THESE PROJECTS WERE NOT COM PLETED DURING THE YEAR, THE AMOUNT RECEIVED BY THE ASSESSEE IS MERELY A BOO KING AMOUNT I.E. ONLY THE ADVANCE RECEIVED FOR BOOKING OF THE FLAT/SHOP. THE SE AMOUNTS THEREFORE IN OUR VIEW CANNOT BE ADDED DURING THE IMPUGNED ASSESS MENT YEAR. WE ARE OF THE VIEW THAT THE PROJECT COMPLETION METHOD IS ONE OF THE METHOD OF ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 33 ACCOUNTING WHERE THE EXPENSES IDENTIFIABLE WITH THE PROJECT ARE TO BE ALLOWED IN THE YEAR WHEN THE PROJECT IS COMPLETED. SIMILAR LY, THE RECEIPT FROM THE PROJECT IS TO BE ACCOUNTING FOR AS INCOME ONLY IN T HE YEAR IN WHICH THE PROJECT IS COMPLETED. SINCE BOTH THE PROJECT FOR THE FLATS AS WELL AS SHOPS WERE NOT COMPLETED DURING THE YEAR THEREFORE, RESPECTFULLY F OLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M/S BI LAHARI INVESTMENT (P) LTD 299 ITR 1 (SC), SPECIAL BENCH DECISION OF THE MUMBA I BENCHES OF THE TRIBUNAL IN THE CASE OF WALL STREET CONSTRUCTION LT D. VS. JCIT 101 ITD 156 (SB)(MUM); ITO VS. PANCHVATI DEVELOPERS 115 TTJ 139 (MUM) AND THAT OF JCIT VS. K RAHEJA (P) LTD. 102 ITD 314 (MUM), WE DE LETE THE ADDITION DURING THE IMPUGNED ASSESSMENT YEAR AND DIRECT THE AO TO M AKE THE ADDITION IN RESPECT OF THESE ON-MONEY IN THE RESPECT ASSESSMENT YEARS IN WHICH THE PROJECTS HAVE BEEN COMPLETED. THUS, GROUND 1 TAKEN BY THE ASSESSEE IS PARTLY ALL OWED, WHILE GROUND NO.2 IS ALLOWED. 11. GROUND NOS. 3 & 4 RELATES TO THE SUSTENANCE OF ADDITION OF ` 12,04,18,428/- MADE BY THE ASSESSING OFFICER. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT DURING THE COURSE OF SEARCH AND SEI ZURE ACTION ON THE ASSESSEE GROUP IT WAS NOTED THAT NUMBER OF PROJECTS OF THIS GROUP HAS BEEN COMPLETED BUT STILL RESPECTIVE ASSESSEES HAVE NOT S HOWN PROFIT FOR TAXATION. WHEN THE RESPECTIVE GROUPS WERE CONFRONTED, THE ASS ESSEE IN RESPECT OF ITS ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 34 PROJECT RUNWAL CHESTNUT ESTIMATED THE PROFIT ON THE BASIS OF THE ESTIMATED PROFIT & LOSS ACCOUNT. FOR THE IMPUGNED ASSESSMEN T YEAR, AT THE TIME OF THE SEARCH ON 17.11.2014, ESTIMATED THE PROFIT OF THE P ROJECT VIZ. RUNWAL CHESTNUT WHICH HAS BEEN COMPLETED DURING THE IMPUGN ED ASSESSMENT YEAR AT ` 25.46 CRORES IN THE FOLLOWING MANNER: PROJECT NAME- RUNWAL CHESTNUT (M/S. RUNWAL HOMES PV T. LTD.) ESTIMATED P&L A/C FOR FINANCIAL YEAR 2014-15 PARTICULARS AMOUNT (RS., IN CRORES) SALES SOLD UNSOLD - STOCK VALUE 97 1.83 TOTAL SALES 98.83 COST LAND RELATED CONSTRUCTION COST 24.01 33.26 OTHER COST (DEVELOPMENT, SELLING AND ADMIN COST) FINANCE COST 10.64 5.46 TOTAL COST 73.37 ESTIMATED PROFITS 25.46 THE ASSESSEE OFFERED THE SAME FOR TAXATION. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER CONFRONTED THE AS SESSEE BUT THE ASSESSEE SUBMITTED THAT THE ESTIMATED PROFITS WERE FIRSTLY J UST ESTIMATES FOR THE IMPUGNED PROJECT. IT WAS SUBMITTED THAT THE SAID P ROJECT IS ACTUALLY A VERY LARGE ONE COMPRISING OF NINE BUILDINGS OF WHICH CHE STNUT IS ONLY ONE BUILDING, WHICH WAS COMPLETED UP TO 31.03.2015. THE ESTIMAT ED PROFIT OF THE SAID PROJECT WAS REQUIRED TO BE WORKED OUT THEN AND THER E AT THE TIME OF THE SEARCH ACTION FROM THE POOL OF EXPENSES THAT TOO WI THOUT ACCESS TO THE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 35 SYSTEMS AT THAT TIME. THEREFORE, THE FIGURES OF TH E EXPENSES WERE NOT WORKED OUT ACCURATELY BY THE STAFF AND SOME OF THE COST ELEMENTS WERE MISSED OUT. EVEN THERE WAS COST ESCALATION WITH RE SPECT TO THE SAID PROJECT EXECUTED AS COMPARED TO THE COST ESTIMATES PROJECTE D EARLIER ON THE BASIS OF WHICH THE PROFIT OF THE PROJECT WAS OFFERED AT THE TIME OF SEARCH ACTION. THE DETAILS OF THE COST INCURRED AND REASONS OF THE COS T ESCALATION WAS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND ON THAT BASIS HE CONTENDED THAT WHAT IS TO BE TAXED IS THE ACTUAL PROFIT AND N OT THE PROFIT ESTIMATE. THE ASSESSING OFFICER DID NOT AGREE WITH THE SUBMISSION OF THE ASSESSEE AND TOOK THE VIEW THAT THE PROFIT ON THIS PROJECT IS AT ` 25,46,00,000/- AS HAS BEEN ADMITTED BY THE ASSESSEE DURING THE COURSE OF THE S EARCH SINCE THE ASSESSEE HAD DECLARED IN THE RETURN A SUM OF ` 13,41,81,572/- IN RESPECT OF THE SAID PROJECT. THEREFORE, THE ASSESSING OFFICER ADDED TH E BALANCE OF ` 12,04,18,428/- TO THE INCOME OF THE ASSESSEE [ ` 25,46,00,000-13,41,81,572]. WHEN THE MATTER WHEN BEFORE THE CIT(A), HE CONFIRME D THE ACTION OF THE ASSESSING OFFICER BY HOLDING AS UNDER: 14. I HAVE CONSIDERED THE FACTS OF THE CASE AS ALS O THE APPELLANTS SUBMISSIONS AND CONTENTIONS. IT IS GAT HERED THAT DURING THE COURSE OF SEARCH THE ASSESSEE HAD ADMITTED TOTA L INCOME OF RS 1,00,96,00,000/-, AS INCOME ONE OF FLATS AND FOR TH E AY UNDER CONSIDERATION, THE ASSESSEE HAD WORKED OUT SUCH INC OME AT RS 25,46,00,000/-. HOWEVER, AT THE TIME OF ASSESSMENT THE ASSESSEE TOOK A U-TURN AND MENTIONED THAT HIS INCOME IN THE CURRENT YEAR WAS ONLY RS 13,41,81,572/- I HAVE CONSIDERED THE AR GUMENT OF THE ASSESSEE AND THE FACTS OF THE CASE . FROM THE ASSES SMENT ORDER IT IS ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 36 QUITE CLEAR THAT THIS ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF CLEAR CUT EVIDENCE FOUND DURING THE SEARCH AND T HE CLEAR CUT ADMISSION OF ASSESSEE AT THE TIME OF SEARCH WHICH I S REPRODUCED BY THE AO IN PARA 7.2 OF THE ORDER IN RESPECT OF DIFFE RENT PROJECTS. AS PER THIS, WORKING OF INCOME CLEARLY WORKS OUT TO RS 25,46,00,000/- FOR THE YEAR UNDER CONSIDERATION IN RESPECT OF COMP LETED PROJECTS. AS THE ASSESSEE HAD ALREADY OFFERED INCOME OF RS 13 ,41,81,572/-, THE BALANCE AMOUNT OF RS 12,04,18,428/- WAS BROUGHT TO TAX. I HAVE CONSIDERED THE FACTS AND ARGUMENTS OF THE ASSE SSEE AND FOUND THAT THERE IS NOTHING NEW IN THE SAME AND THE SAME ALREADY STAND CONSIDERED BY THE AO .THE ASSESSE HAS ARGUED THAT THE CONSTRUCTION COSTS INCREASED FROM RS. 33 CR TO RS. 57 CR WHICH HAS NOT BEEN SUFFICIENTLY SUBSTANTIATED BY IT. MOREOVER IT LOOKS HIGHLY UNLIKELY THAT THE CONSTRUCTION COSTS WILL INCREASE SO ASTRONOMICALLY AND IT MAY BE A PLOY AT THE END OF THE ASSESSEE SIM PLY TO REDUCE TAXABLE PROFITS. THE ASSESSEE ALSO CONTENDED THAT C ERTAIN FLATS WERE NOT SOLD DURING THE YEAR AND WERE SOLD SUBSEQUENTLY . HOWEVER THE FACT REMAINS THAT ALMOST ENTIRE SALE CONSIDERATION OF ALL THESE FLATS HAD BEEN RECEIVED BY THE ASSESSEE AND THEREFORE EVE N IF THE REGISTRATION OR SALE DEED HAPPENS LATER, FOR ALL PR ACTICAL PURPOSES THE FLATS WERE SOLD AND REGISTRATION MAY HAVE BEEN DONE BY THE ASSESSEE WITH A VIW TO DEFER THE TAX LIABILITY. THE IMPORTANT POINT REMAINS THAT ONCE THE ASSESSEE HAD ADMITTED CERTAIN INCOME DURING THE COURSE OF SEARCH, IT SHOULD HAVE HONOURED THE S AME. FURTHER VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE DO NO T COME TO HELP TO THE ASSESSEE AS FIRSTLY IT IS A SEARCH AND SEIZU RE CASE AND SECONDLY HARD EVIDENCE HAS BEEN FOUND AGAINST THE A SSESSEE DURING THE COURSE OF SEARCH, ON THE BAISIS OF WHICH THE AS SESSEE ADMITTED ADDITIONAL INCOME OF RS. 100.96 CR . 15. IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDE RED OPINION THAT THE ADDITION MADE BY THE AO IS FULLY JUSTIFIED AND IS ON THE BASIS OF ASSESSEES OWN ADMISSION IN SWORN STATEMEN T AT THE TIME OF SEARCH AND THEREFORE DOES NOT CALL FOR ANY INTER FERENCE. THE SAME IS THEREFORE, UPHELD. CONSEQUENTLY, GROUND NO 3 & 4 ARE REJECTED. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. THE LEARNED AR BEFORE US ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 37 CONTENDED THAT DURING THE IMPUGNED ASSESSMENT YEAR ONE PROJECT OF THE ASSESSEE I.E. CHESTNUT GOT COMPLETED. THE SEARCH TEAM ESTIMATED THE INCOME FROM THE SAID PROJECT AND ASKED THE DIRECTOR OF THE ASSESSEE COMPANY TO DECLARE THE PROFIT AS WORKED OUT BY THEM IN THE STATEMENT RECORDED U/S. 132(4) AND, THUS, THE PROFIT FROM THE SAID PROJECT WAS ESTIMATED AT ` 25.46 CRORE. THE BOOKS OF ACCOUNT WERE NOT COMPLETED. W HEN THE BOOKS OF ACCOUNT WERE COMPLETED AND ACCOUNTS AUDITED, IT WAS NOTED THAT THE PROFIT FROM THE SAID PROJECT WAS ONLY ` 13.48 CRORE THEREFORE, THE ASSESSEE IN THE RETURN SHOWN THE ACTUAL PROFIT. THE PROFIT HAS TO BE DETERMINED ONLY AT THE END OF THE YEAR NOT IN BETWEEN. IN THIS REGARD THE LEARNED AR BEFORE US SUBMITTED THE DETAILS OF ESTIMATED PROFIT AND THE A CTUAL INCOME AS WELL AS RECONCILIATION DIFFERENCE BETWEEN THE TWO WHICH IS GIVEN AS UNDER: PARTICULARS COST ESTIMATES/ BUDGETS MENTIONED IN THE STATEMENT RECORDED UNDER OATH (IN CRS.) ACTUAL NUMBERS AS PER AUDITED ACCOUNTS FOR THE F.Y. 2014-15 (IN CRS.) DIFFERENC E SALES GROSS INCOME 97 106.38 9.38 UNSOLD STOCK VALUE 1.83 1.18 (0.65) TOTAL 98.83 107.56 8.73 COST LAND RELATED 24.01 24.16 0.15 DEVELOPMENT COST 9.59 8.34 (1.25) CONSTRUCTION COST 33.26 57.54 24.28 ADMIN & OTHER COSTS 0.86 2.67 1.81 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 38 SELLING & MARKETING EXPS. 0.19 1.36 1.17 FINANCE COSTS 5.46 0 (5.46) TOTAL COSTS 73.37 94.07 20.70 PROFIT 25.46 13.49 (11.98) THIS IS A CASE WHERE IT IS APPARENT THAT THE DECLAR ATION OF ` 25.46 CRORE AS PROFIT FROM THE COMPLETED PROJECT WAS MERELY ON THE BASIS OF ESTIMATE. RELIANCE WAS PLACED BEFORE US ON THE CIRCULAR OF CB DT DATED 10.03.2003, IN WHICH THE BOARD HAS CLEARLY LAID DOWN THAT NO ATTEM PT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME AND THE ADDITION SHOULD BE MADE ONLY ON THE BASIS OF MATERIAL GATHERED DURING THE COURSE OF SEARCH AND SURVEY. 13. THE LEARNED DR, ON THE OTHER HAND, VEHEMENTLY R ELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE CIT(A) BUT COU LD NOT CONVINCE US THE FACT THAT AS ON THE DATE OF SEARCH PROFIT FROM THE PROJE CT COMPLETED WAS ACTUAL PROFIT. WE NOTED THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT. BOOKS OF ACCOUNT OF THE ASSESSEE ARE DULY AUDITED. THE BOOKS OF THE ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER NOR HAS HE INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. ONCE, THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT, IN OUR VIEW, THE ASS ESSING OFFICER IS BOUND TO ACCEPT THE PROFIT SHOWN IN THE BOOKS OF ACCOUNT EXC EPT MAKING THE DISALLOWANCE OF THE EXPENSES CLAIMED BY THE ASSESSE E WHEREVER HE FEELS THE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 39 ASSESSEE HAS NOT GENUINELY INCURRED THE EXPENDITURE FOR WHICH THE ONUS LIES ON THE ASSESSEE. IT IS NOT A CASE WHERE THE ASSESS ING OFFICER HAS MADE THE ADDITION IN RESPECT OF THIS PROJECT ON THE BASIS TH AT THE ASSESSEE HAS RECEIVED THE CONSIDERATION MUCH MORE THAN WHATEVER HAS BEEN DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSEE HAS DULY SUBMITTED THE EXPLANATION FOR EACH AND EVERY DIFFERENCE ITEM-WISE IN THE FOLLOWING MAN NER. : S. N. PARTICULARS COST IMPACT (IN CR.) ANNEXURE 1 CONTRACT OF CIVIL WORKS WAS AWARDED TO CONTRACTOR M RAMZAN IN NOVEMBER 2010 FOR TOWER & PODIUM. HOWEVER, THE CONTRACTOR WAS NOT PERFORMING AS PER EXPECTATIONS. HENCE, HIS CONTRACT WAS TERMINATED. TOWER AREA CONTRACT (1,42,776 SQ. FT.) WAS THEN AWARDED TO GAMMON INDIA LTD. IN JANUARY 2012 AND CONTRACT FOR EXTENDED} PODIUM AREA (51,262 SQ. FT.) WAS AWARDED TO R S ENTERPRISES IN OCTOBER 2013. THE RATE OF GAMMON WAS 1,250/- PSF (FOR THE BALANCE 1,10,227 SQ. FT. REMAINING) AGAINST RS. 925/- PSF OF RAMZAN. RATE OF R S ENTERPRISES FOR PODIUM WAS NEGOTIATED AT RS.800/- P SF AGAINST RS.700/- PSF OF RAMZAN. THE TOTAL COST IMPACT ON THIS ACCOUNT IS RS. 4.10CR (RS. 3.25 + RS. 0. 52 CR). RELEVANT DOCUMENTARY SUPPORTING ENCLOSED. 1,42,776 X 925/- 51,262 X 700/- 32,549, X 925/- 4.1 A&B ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 40 1,10,227 X 1,250/- 1,42,776 51,262 X 800 2 THE AREA CONSIDERED WHILE AWARDING THE WORKS WAS BASED ON PRELIMINARY DRAWINGS AS PER SCHEMATIC STAGE. HOWEVER AS PER FURTHER EVALUATION IN DESIGN STAGE AND AFTER INCORPORATION OF DESIGN REQUIREMENTS THE AREA FOR TOWER INCREASED FROM 1,42,776 SQ. FT. TO 1,73,109 SQ. FT. (DIFF. 30,333 SQ. FT.) AND AREA/OF PODIUM WAS INCREASED FROM 51,262 SQ. FT. TO 65,980 SQ. FT. (DIFF. 14,717 SQ.FT). THIS HAD A COST IMPACT OF RS.4.97 CR. (RS.3. 79 CR. +RS.1.18 CR.) RELEVANT DOCUMENTARY SUPPORTING ENCLOSED. 30, 333 X 1,250/- 14,717 X800/- 4.97 A&B 3 AFTER CARRYING OUT EXCAVATION WORKS IT WAS FOUND THAT THE STRATA OF THE EXCAVATED PIT IS NOT STABLE. IT WAS MANDATORY TO STABILIZE THE STRATA BY SHORE PILING. ACCORDINGLY THE WORK WAS AWARDED TO SHIVAM PILE FOUNDATION. THE COST IMPACT WAS RS.1.25 CR. CONSIDERING COST CONTRACT, COST OF CONCRETE & COST OF STEEL (RS.0.99 CR. + RS.0.20 CR. + RS.0.06 CR.) FOR THE SAID PILING WORK. RELEVANT DOCUMENTARY SUPPORTING ENCLOSE 1.25 I 4 APART FROM THE INCREASE IN BUILT UP AREA AFTER THE DESIGN STAGE, ADDITIONAL ITEMS WERE REQUIRED TO BE INCORPORATED SUCH AS: ADDITIONAL LIFT, SERVICE SLAB, UTILITY SLAB, STAIRCASE WAIST SLAB, CASTING OF TIE BEAMS, STAIRCASE AT LI 7A LVL, PERIPHERY BEAMS AT P4 LVL. - THESE JOBS WERE AWARDED TO R. S. ENTERPRISES AS ADDITIONAL CONTRACT AND FLOWER BEDS, DECK SLABS & KITCHEN CHAJJAS - - THESE JOBS WERE 1.55 C&D ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 41 AWARDED TO GAMMON INDIA LIMITED AS ADDITIONAL CONTRACT THE TOTAL COST IMPACT WAS RS.1.59 CR. (RS. 1 . 04 CR. + RS. 0. 55 CR.) 6 COST OF COMPOUND WALL WAS ORIGINALLY BUDGETED AT RS.13 LAKHS AS PER BLOCK ESTIMATE, HOWEVER AS PER DESIGN AND SIZE (HEIGHT) FINALIZED THE SAME WAS RS.57.81 LAKHS (AWARDED TO R S ENTERPRISES). COST IMPACT RS.44. 81 LAKHS. 0.45 G 7 AS PER SCHEMATIC DESIGN TWO ELEVATORS WERE CONSIDERED IN BUDGET. HOWEVER AS PER TRAFFIC ANALYSIS REQUIREMENT IT WAS NECESSARY TO PUT THREE ELEVATORS. THE COST OF ONE ADDITIONAL ELEVATOR & COST OF NECESSARY RCC WORK FOR THE SAME WAS SUBSEQUENTLY ADDED TO THE BUDGETED ESTIMATES. THE TOTAL COST IMPACT WAS RS.34 LAKHS (FOR THE ELEVATOR) AND RS.46 LAKHS (FOR RELATED ADDITIONAL RCC WORKS) 0.80 E&H 9 FOR WINDOWS THE QUANTITY FOR UPVC WINDOWS TAKEN IN BUDGET WAS 1330. 83 M2 @ RS.3,228/- PER M2 AND QUANTITY OF ALUMINUM WINDOWS WAS 1,598.5 M2 @ RS. 3,120.40 FOR FLAT & 299.68 M2 @ RS. 1,829.20 PER M.2 FOR STAIRCASE & LOBBIES. HOWEVER AFTER FINALIZATION OF DESIGN THE QUANTUM OF ALUMINUM WINDOWS WAS SUBSTANTIALLY REDUCED & QUANTUM OF THE UPVC WINDOWS WAS INCREASED. THERE WAS SUBSTANTIAL INCREASE IN RATES. FOR UPVC, ACTUAL LABOUR RATE INCURRED WAS RS.600/- PSF INSTEAD OF RS.300/- PSF ESTIMATED EARLIER AND FOR ALUMINUM IT WAS RS 300/- PSF INSTEAD OF RS.170/- PSF CONSIDERED EARLIER. THIS HAD A COMBINED COST IMPACT OF RS. 1.02 CR. ITEMIZED BREAK UP IS AVAILABLE IN THE BUDGET SHEET ENCLOSED AS PROOF OF THE SAME. 1.02 J, FINISHING COST, 1 D ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 42 10 EARLIER GYPSUM PLASTER WAS NOT CONSIDERED FOR FLATS, KITCHEN, LOBBY FUTILITY, LATER ON IT WAS DECIDED TO BE DONE. TOTAL COST IMPACT OF RS.1.21 CR. (FOR FLATS), RS.0.19 CR (FOR KITCHEN, LOBBY ETC.) 1.40 G & J FINISHING COST IB ADDITIONAL COST OF VENEER & MELAMINE POLISH TO MAIN DOOR & INCREASE IN BASIC MATERIAL RATE AND QUANTITY WAS ALSO CORRECTED THE NET COST IMPACT IS RS.34 LAKHS DETAILS ATTACHED 0.34 G & J FINISHING COST IF 11 SIMILAR INCREASE IN AREA & RATE WAS THERE FOR PAINTING WORKS. THE BUDGETED RATE WAS RS.129/- FOR INTERNAL PAINT WHICH WAS INCREASED TO RS.196/- AND FOR EXTERNAL PAINT IT WAS INCREASED TO RS.450/- FROM RS.220/-. THE OVERALL COST IMPACT IS RS.81 LAKHS. ITEMIZED DETAILS ARE AVAILABLE IN BUDGET SHEET. 0.81 G & J FINISHING COST 1 C 11 COST OF BRICKWORK & PLASTER WAS NOT CONSIDERED SEPARATELY NOW ADDED AS PER ORDER 0.77 J, WO COST, 2C3 12 COST OF INFRA PLUMBING WORKS WAS CONSIDERED APPROXIMATELY AFTER COMPLETION OF SCHEMATIC DESIGN INCREASED TO RS. 1 . 34 CR. FROM ORIGINALLY BUDGETED AMOUNT OF RS. 0.60 CR., IMPACT OF RS. 0.74 CR. 0.74 BUDGET PROVISION, EXTERNAL DEVELOPMENT POINT 3 13 CONTINGENCIES WERE NOT CONSIDERED EARLIER IN THE BUDGETED ESTIMATES, RS.2.83 CR WAS ADDED FOR THE SAME, WHICH HAS SINCE BEEN INCURRED / PROVIDED FOR. 2.83 BUDGET PROVISION CONTINGENCIES 14 COST OF MISC. WORKS WAS NOT CONSIDERED EARLIER IN THE BUDGETED ESTIMATES, NOW CONSIDERED AS PER ORDER WHICH HAS SINCE BEEN INCURRED / PROVIDED FOR. 0.25 BUDGET PROVISION, TOWER BL 7 ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 43 15 COST OF CLUB HOUSE & SWIMMING POOL NOT CONSIDERED EARLIER. THESE WERE LATER INCURRED THUS INCREASING THE COST OF THE PROJECT BY APPROX. RS. 1 CR. 0.99 BUDGET PROVISION, ANCILLARY BUILDINGS 16 APART FROM THE ABOVE ITEMS FOR WHICH DETAILED COST IMPACT IS GIVEN THERE IS COST IMPACT ON OTHER ITEMS AS WELL AS OVER ALL AREA WAS INCREASED FROM 2.12 LAKHS SQ. FT. TO 2.39 LAKHS SQ. FT. THE TOTAL OF THIS EXPENDITURE INCURRED IS RS.6.57 CR. (RS.33.27 CR. - RS.26.70 CR.). CONSIDERING IMPACT OF 12.70% INCREASE IN AREA, THE OVERALL COST IMPACT FOR THESE ITEMS IS RS.0.83 CR (12. 70% OF 6.57 CR.) 0.83 6.57 CR X 12.7% TOTAL COST IMPACT FROM 1 TO 16 24.26 WE HAVE PERUSED THE EXPLANATIONS. IT IS NOT A CASE WHERE THE ASSESSEE HAS NOT EXPLAINED AS TO WHY THERE IS DIFFERENCE IN THE ESTIMATED PROFIT WITH THE ACTUAL PROFIT AS PER THE AUDITED BOOKS OF ACCOUNT. FOR EACH AND EVERY DIFFERENCE IN RESPECT OF THE ACTUAL COST INCURRED A S WELL AS THE ESTIMATED COST TAKEN AT THE TIME OF THE SEARCH WHILE WORKING OUT T HE PROFIT FROM THIS PROJECT AT ` 25.46 CRORE, THE ASSESSEE HAS EXPLAINED AND FILED A RECONCILIATION HOW THE ACTUAL COST INCURRED BY THE ASSESSEE AS PER THE AUDITED PROFIT & LOSS ACCOUNT DIFFER FROM THE COST ESTIMATED AT THE TIME OF THE SEARCH. IT IS NOT DENIED THAT AS ON THE DATE OF THE SEARCH, WHILE EST IMATING THE PROFIT AT 25.46 CRORE, THE ASSESSEE HAS SHOWN THE SALES AT 98.83 CR ORE AND ESTIMATED EXPENSES AT 73.37 CRORE BUT SUBSEQUENTLY, AS PER TH E AUDITED ACCOUNTS THE SALES CONSIDERATION REALIZED BY THE ASSESSEE ALSO I NCREASED FROM 98.83 CRORE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 44 TO ` 107.56 CRORE. SIMULTANEOUSLY, THERE IS ALSO INCRE ASE IN THE COST FROM 73.37 CRORE TO 94.07 CRORE AND, ULTIMATELY, THE PRO FIT DERIVED BY THE ASSESSEE CAME TO 13.49 CRORE. WE NOTED FROM THE ESTIMATION OF THE PROFIT AT THE TIME OF SEARCH AT ` 25.46 CRORES, THE FIGURES HAVE BEEN TAKEN IN ROUND ED OFF WHILE THE REAL PROFIT CANNOT BE ROUND OFF EVEN FROM THE W ORKING AT THE TIME OF THE SEARCH. IT IS APPARENT THAT THE NOMENCLATURE IS TO ESTIMATE PROFIT WORKED OUT IN THE ESTIMATED PROFIT AND LOSS ACCOUNT FOR THE F. Y 2014-15. WE HAVE ALSO PERUSED PAGES 25 TO 127 OF THE PAPER-BOOK, WHICH CO NTAINS THE EVIDENCE AND THE DETAILS OF EACH AND EVERY EXPENDITURE INCURRED BY THE ASSESSEE AS WELL AS THE CONSIDERATION RECEIVED BY THE ASSESSEE ON WHICH THE LEARNED AR HAS HEAVILY RELIED. INCOME TAX HAS TO IMPOSED ON THE R EAL INCOME AND NOT ON THE INCOME WHICH HAVE ESTIMATED BY THE ASSESSEE. 14. THE LEARNED DR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THAT OF THE CIT(A), HE COULD NOT ADDUCE ANY COGENT EVIDENCE OR MATERIAL EXCEPT THE ESTIMATED PR OFIT COMPUTED DURING THE COURSE OF THE SEARCH THAT THE ACTUAL PROFIT FROM TH E SAID PROJECT WAS MUCH MORE THAT THE ACTUAL PROFIT SHOWN BY THE ASSESSEE. INCOME TAX HAS NOT BE LEVIED OR VESTED ON THE ESTIMATED PROFIT, IT HAS TO BE LEVIED ON THE REAL INCOME DERIVED BY THE ASSESSEE. IN OUR VIEW, NO ADDITION CAN BE MADE BY THE ASSESSING OFFICER MERELY ON THE BASIS OF THE STATEM ENT OF THE ASSESSEE RECORDED DURING THE COURSE OF THE SEARCH UNTIL AND UNLESS THERE ARE ITA NO.5621/MUM/2017 RUNWAL HOMES PVT LTD. 45 CORROBORATIVE EVIDENCE TO SUPPORT THAT THE ASSESSEE HAS DERIVED INCOME WHATEVER WAS ESTIMATED DURING THE COURSE OF THE SEA RCH. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE BY THE LEA RNED DR. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THI S ISSUE AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTEN T OF ` 12,04,18,428/-. THUS, GROUND NOS. 3 & 4 TAKEN BY THE ASSESSEE ARE A LLOWED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DAY OF DECEMBER, 2017. SD/- SD/- (AMARJIT SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 20 TH DECEMBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, D BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI