M/s. RUNWAL DEVELOPERS P. LTD., MUMBAI V. DCIT CENT. CIR. -4(1), MUMBAI

ITA 5622/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5128 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2020
• 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: RAJESHWAR YADAV
• Keywords: Business income; Document seized; Corroborative evidences; Documents seized; Set aside
• Section: 143(3); 139(1); 64; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5622/M/2017 ASSESSMENT YEAR: 2015-16 M/S. RUNWAL DEVELOPERS PVT. LTD., 5 TH FLOOR, RUNWAL AND OMKAR ESQUARE OFF, EASTERN EXPRESS HIGHWAY, SION (E) MUMBAI 400 022 PAN: AAACR0395J VS. DEPUTY COMMISSIONER OF INCOME, CENTRAL CIRCLE -4(1), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAKESH JOSHI, A.R. REVENUE BY : SHRI RAJESHWAR YADAV, D.R. DATE OF HEARING : 01.07.2020 DATE OF PRONOUNCEMENT : 15.07.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 09.06.2017 OF COMMISSIONER OF INCOME TAX APPEAL [CIT(A)] RELEVANT TO ASSESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE UNDER:- I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.16,74,14,102/- AS ALLEGED ON MONEY RECEIVED ON SALE OF FLATS, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT THE APPELLANT IS FOLLOWING THE PROJECT COMPLETION METHOD TO RECOGNIZE THE INCOME FROM THE PROJECTS, HENCE ON MONEY IS TO BE TAXED IN THE YEAR OF COMPLETION OF THE RELEVANT PROJECT FROM WHERE THE SAME HAS BEEN EARNED. III. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 2 RS.4,48,03,316/- AS ALLEGEDLY LOWER INCOME OFFERED ON PROJECT COMPLETED, WITHOUT CONSIDERING THE FACTS OF THE CASE. IV. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT THE PROFITS OFFERED TO TAX DURING THE COURSE OF THE SEARCH ACTION WERE ESTIMATED PROFITS FOR THE ENTIRE PROJECT. V. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT FOR THE PROJECTS WHOSE PROFITS WERE OFFERED TO TAX DURING THE COURSE OF THE SEARCH, THERE WAS STILL CLOSING STOCK LYING, PROFITS ON WHICH WOULD ACCRUE IN FUTURE PERIODS ON SALE OF THE SAME. VI. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN DISALLOWING THE CLAIM OF EXPENSES OF RS.1,23,67,631/- FROM THE BUSINESS INCOME ON THE ALLEGED PLEA THAT THE SAID EXPENSES WERE CLAIMED BY THE APPELLANT AGAINST THE INCOME FROM HOUSE PROPERTY, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. VII. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT WHILE COMPUTING THE INCOME, THE APPELLANT HAS ALREADY DISALLOWED THE EXPENSES, WHICH WAS RELATED TO THE RENTAL INCOME. 3. AT THE OUTSET THE LD. AR OF THE APPELLANT COMPANY SUBMITTED THAT GROUND NOS. 1 TO 5 ARE COVERED BY THE DECISION OF COORDINATING BENCH IN THE CASE OF SISTER CONCERN M/S RUNWAL HOMES PVT. LTD. OF THE ASSESSEE COMPANY AND GROUND NOS. 6 & 7 IS COVERED BY ITS OWN CASE IN EARLIER YEAR. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS OF RESIDENTIAL, COMMERCIAL AND MALL COMPLEXES AND RUNNING AND MANAGING MALL & RENTING OF PREMISES ETC. DURING THE YEAR ASSESSEE FILED THE RETURN OF INCOME ON 30.10.2015 DECLARING AN INCOME OF RS. 12,27,61,810/-. A SEARCH ACTION WAS CONDUCTED ON THE RUNWAL GROUP INCLUDING THE ASSESSEE ON 17.11.2014. MR. SANDEEP RUNWAL, ONE OF THE DIRECTORS OF THE COMPANY IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT ADMITTED AND SURRENDERED UNDISCLOSED INCOME OF RS. 21.22 CRORE ON ACCOUNT OF ACCEPTANCE OF ON MONEY ON SALE OF FLATS AND UNDISCLOSED INCOME OF PROJECT ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 3 COMPLETED DURING THE YEAR. HOWEVER ASSESSEE HAS NOT OFFERED THE SAID INCOME IN THE RETURN FILED U/S 139(1) OF THE ACT AND CLAIMED THAT DISCLOSURE U/S 132(4) OF THE ACT WAS UNDER DURESS AND BY FORCE. LD AO MADE ADDITION BASED ON STATEMENT RECORDED DURING THE COURSE OF SEARCH AND SUBSEQUENT LETTERS FILED BY THE ASSESSEE DURING THE COURSE OF SEARCH. THE AO ESTIMATED THE UNDISCLOSED INCOME BY COMPARING THE SALE RATE OF FLATS/SHOPS SOLD DURING THE SAME PERIOD IN THE PROJECTS IN THE GROUP CONCERN. THE AO FRAMED ASSESSMENT AT RS, 34,73,46,860/- VIDE ORDER DATED 30,12,2016 PASSED U/S 143(3) OF THE ACT AS AGAINST THE RETURNED INCOME OF RS. 12,27,61,810/- 5. THE ISSUE RAISED IN THE 1 ST GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS. 16.74 CRORE ON ACCOUNT OF ON MONEY TAKEN ON SALE OF FLATS SOLD DURING THE FINANCIAL YEAR 2014-15. THE AMOUNT HAS BEEN WORKED OUT DURING THE COURSE OF SEARCH AND STATEMENT OF VARIOUS EMPLOYEES, WHICH WERE CONFRONTED TO MR SANDEEP RUNWAL A DIRECTOR OF THE ASSESSEE WHO HAS ADMITTED THE SAME IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH. MR SANDEEP RUNWAL A DIRECTOR OF THE ASSESSEE HAS ADMITTED A SUM OF RS. 17.94 CRORE OUT OF WHICH ONLY RS. 1.20 CRORE WAS OFFERED TO TAX BY THE ASSESSEE AND BALANCE 16.74 CRORE WAS ADDED BY THE AO IN THE ASSESSMENT FRAMED AS THE ASSESSEE HAS FAILED TO RETURN THE SAID INCOME IN THE RETURN OF INCOME FILED U/S 139(1) OF THE ACT. THE ON MONEY AS ADMITTED DURING SEARCH WAS CALCULATED ON ESTIMATION BASIS TAKING HIGHEST RATE OF SALE DURING THE FINANCIAL YEAR 2014-14 RELEVANT TO ASSESSMENT YEAR 2015-16, WHICH IS EVIDENT FROM THE ANNEXURES WHICH ARE PART OF STATEMENT RECORDED U/S 132(4) OF THE ACT. ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 4 6. THE LD AR SUBMITTED BEFORE THE BENCH THAT IN THE CASE OF M/S RUNWAL HOMES PVT. LTD., SISTER CONCERN OF THE APPELLANT COMPANY, SIMILAR DISCLOSURE WAS MADE WHICH WAS ALSO CALCULATED ON ESTIMATION BASIS WITHOUT ANY SUPPORTING SEIZED MATERIAL AND HONBLE TRIBUNAL VIDE ITA NO. 5621/M/2017 ASSESSMENT YEAR 2015-16 VIDE ORDER DATED 20/12/2017 DELETED ADDITIONS WHICH WERE MADE PURELY ON ESTIMATION BASIS. ACCORDINGLY, HE PRAYED TO FOLLOWING THE SAID DECISION OF COORDINATED BENCH , THE ADDITION MADE ON ESTIMATION WITHOUT ANY INCRIMINATING MATERIALS/SUPPORTING EVIDENCES MAY KINDLY BE DELETED. 7. ON THE CONTRARY LD DR SUBMITTED THAT IN THE CASE OF APPELLANT, THERE WERE EVIDENCES IN THE FORM OF PAYMENT MADE TO CONTRACTORS OF THE PROJECT TO THE EXTENT OF RS. 8.64 CRORE WHICH WAS PAID OUT OF ON-MONEY RECEIVED ON SALE OF FLATS, HENCE CONTENTIONS OF THE APPELLANT THAT NO EVIDENCES FOUND IS NOT CORRECT. THE SAID CASH PAYMENTS HAVE BEEN ADMITTED BY THE CONTRACTORS IN THE STATEMENT RECORDED BY THE SEARCH TEAM. 8. IN THE REJOINDER, AR SUBMITTED THAT DURING THE COURSE OF SEARCH, DISCLOSURES WERE MADE IN THE HANDS OF VARIOUS GROUP CONCERN, PART OF WHICH WAS OFFERED IN THE RETURN OF INCOME AND PART CONFIRMED IN THE ORDER PASSED BY HONBLE ITAT, WHICH HAS BEEN ACCEPTED BY THE ASSESSEE. IN CASE OF ONE OF THE GROUP CONCERN RUNWAL HOMES PVT. LTD. SUCH ON MONEY AS CONFIRMED BY ITAT WAS TO THE TUNE OF RS. 16.62 CRORE. IN ADDITION TO THIS, THE ASSESSEE HAS ALSO OFFERED A SUM OF RS. 1.20 CRORE AND ONE OF THE DIRECTOR MR. SUBHASH RUNWAL ALSO OFFERED 1.20 CRORE IN THE ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 5 RETURN OF INCOME FILED FOR A Y 2015-16. HENCE THERE ARE SUFFICIENT CASH BALANCE AVAILABLE IN THE HANDS OF GROUP TO TELESCOPE THE ALLEGED PAYMENTS MADE TO THE CONTRACTORS AS THE SAID CONTRACTOR HAS ADMITTED THAT PAYMENTS WERE RECEIVED FROM VARIOUS EMPLOYEES AND GROUP ENTITIES. ACCORDINGLY, HE STATED THAT CONTENTIONS OF LD DR THAT THE EXPENSES RELATES TO APPELLANT IS WITHOUT ANY BASIS. THE LD AR ALSO REFERRED TO THE STATEMENT OF THE CONTRACTORS TO JUSTIFY THE TELESCOPING. THE LD AR THEREFORE PRAYED BEFORE THE BENCH THAT THE GROUND NO 1 MAY BE ALLOWED AS BEING COVERED BY THE ORDER OF THE COORDINATE BENCH IN THE CASE OF SISTER CONCERN AS STATED HEREINABOVE. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS/RECORDS AS PLACED BEFORE US INCLUDING THE COORDINATE BENCH DECISION IN THE CASE OF M/S RUNWAL HOMES PVT LTS ITA NO. 5621/M/2017, AY 2015-16. WHERE IS FINDING IN THIS CASE BEFORE US AN ADHOC RATE OF RS. 25,000/- IN CASE OF SHOPS AND RS. 14970/- IN CASE OF FLATS WERE APPLIED TO ARRIVE AT ON-MONEY AMOUNT. IN THE ABOVE CASE HONBLE COORDINATING BENCH HAS DELETED THE ADDITION AS THE SAME WAS PURELY ON PRESUMPTIONS AND ESTIMATION WITHOUT ANY SUPPORTING EVIDENCES AS THE AO HAS APPLIED ADHOC RATE ON ALL THE FLATS SOLD WITHOUT ANY MATERIALS OR FINDING AS TO THE UNRECORDED ASSET / UNRECORDED EXPENSES FOUND TO SUPPORT THE SAID ADDITION. THE OPERATIVE PART OF THE DECISION IS REPRODUCED AS UNDER:- WE HAVE GONE THROUGH THE ANSWER TO QUESTION NOS. 16, 17 AND 18. WE NOTEDTHAT IN REPLY TO QUESTION NO.16, DIRECTOR OF THE ASSESSEE COMPANY STATED THATINITIALLY THE PROJECT WAS JOINT VENTURE WITH HDFC LIMITED. SUBSEQUENTLY, WHENTHE MARKET HAS BECOME MORE COMPETITIVE AND DUE TO THE OPENING OF THEFOREST LAND THEY HAD TO SELL AGGRESSIVELY, IN ORDER TO ACHIEVE THE NUMBERSFROM THE CALENDAR YEAR 2014 AND, THEREFORE, IN ORDER TO ACCOMMODATE FEWCUSTOMERS WHO WANTED TO PAY PART CONSIDERATION IN CASH, THEY ACCEPTED CASHFOR FEW UNITS. HE HAS CATEGORICALLY STATED THAT PRIOR TO THAT DATE THEY HAVENEVER ACCEPTED ANY CASH. IN REPLY TO QUESTION NO.17, ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 6 HE HAS CATEGORICALLYSTATED THAT HE DID NOT AGREE THAT IN ALL CASES CASH BAS BEEN ACCEPTED OVERAND ABOVE THE AGREEMENT VALUE BUT HE AGREED TO SURRENDER THE DIFFERENCE ASITS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME FOR THE RESPECTIVEYEARS AS ON-MONEY TO AVOID PROTRACTED LITIGATIONS WITH THE DEPARTMENT ANDBUY PEACE. ON THAT BASIS THE TOTAL ON-MONEY RECEIVED WAS WORKED OUT AT RS. 63,39,52,372/- AND ADDED TO THE INCOME OF THE ASSESSEE. IT IS UNDISPUTEDFACT THAT ON THE BASIS OF THE DOCUMENTS AND EVIDENCE PRODUCED BEFORE US, THECOPY OF WHICH ARE AVAILABLE AT PAGES 436 TO 441 OF THE PAPER-BOOK, THE ONMONEY RECEIVED, ON THE BASIS OF THE SEIZED DOCUMENTS, BY THE ASSESSEE INRESPECT OF FLATS COMES TO RS. 13,44,68,725/-AND IN RESPECT OF SHOPS COMES TORS. 6,50,10,096/-. FOR THE REST OF THE ADDITION IN RESPECT OF WHICH NOINCRIMINATING MATERIAL WAS FOUND, WE NOTED FROM PAGES 439 TO 441 OF THEPAPER BOOK, THE ASSESSING OFFICER JUST ESTIMATED THE ON- MONEY OF THE FLAT@15,750/- PER SQ. FT TOTALING TO RS. 33,47,33,101/- AND THAT OF THE SHOPS@26,000/- TOTALING TO RS. 9,97,40,450/-. BUT THE ASSESSING OFFICER WAS FAIRENOUGH 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 ACASE WHERE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3), THEREFORE, THEADDITION HAS BEEN MADE BY THE ASSESSING OFFICER AS IF THE ASSESSEE HASRECEIVED WHATEVER IS STATED IN THE DOCUMENTS EXECUTED BY THE ASSESSEE. INOUR OPINION, THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE HASACTUALLY RECEIVED THE CONSIDERATION MUCH MORE THAN WHAT HAS BEEN AGREED TOOR STATED IN THE DOCUMENTS EXECUTED BETWEEN THE INTENDED BUYER AND THEASSESSEE. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE BYTHE LEARNED DR EVEN THOUGH HE HAS VEHEMENTLY RELIED ON THE ORDER OF THEASSESSING OFFICER AS WELL AS THE STATEMENT OF THE DIRECTOR OF THE COMPANY,WHICH MAY PROVE THAT THE ASSESSEE HAS RECEIVED CONSIDERATION @15750/- PERSQ. FT FOR FLATS AND @26000/- PER SQ. FT. FOR SHOPS. THERE HAS BEEN SEARCHAND SEIZURE IN THE CASE OF THE ASSESSEE. IF THE ASSESSEE WOULD HAVE RECEIVEDCONSIDERATION MUCH MORE THAN WHAT IS STATED IN THE DOCUMENTS, FOR WHICH NOEVIDENCE IS FOUND DURING THE COURSE OF SEARCH, IN OUR OPINION, NO ADDITION CANBE SUSTAINED. THERE CANNOT BE ANY AGREEMENT AGAINST THE STATUTE. THEASSESSEE AGREED FOR DECLARATION OF THE INCOME FOR WHICH NO MATERIAL WASFOUND MERELY TO AVOID PROTRACTED LITIGATIONS WITH THE DEPARTMENT AND BUYPEACE. THE ASSESSEE HAS EARNED INCOME; THE ONUS IS ON THE REVENUE TOPROVE THAT THE INCOME HAS ACCRUED TO THE ASSESSEE. EVEN OTHERWISE ALSOSINCE THERE HAS BEEN A SEARCH IN THE CASE OF THE ASSESSEE, IF THE ASSESSEEWOULD HAVE EARNED SUCH INCOME THERE MUST HAVE BEEN SOME EVIDENCE FOUNDTHAT EITHER THE ASSESSEE HAS MADE INVESTMENT OUTSIDE THE BOOKS OF ACCOUNTOR 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 BYTHE ASSESSEE, THE ASSESSEE CANNOT BE BURDENED FOR INCOME TAX LIABILITY. FROMTHE DOCUMENTS AVAILABLE ON RECORD, IT IS APPARENT THAT THE ASSESSING OFFICERHAS ESTIMATED THE BOOKING AMOUNT AND ON THAT BASIS ASSUMED THAT THEASSESSEE WOULD HAVE RECEIVED THE ON-MONEY. HE MADE THE PRESUMPTION AS IFTHE ASSESSEE HAS SOLD ALL THE FLATS @15750/- PER SQ. FT AND THE SHOPS@26000/- PER SQ. FT. FROM THE DOCUMENTS IN THE BOOKING, IT IS EVIDENT THATDIFFERENT FLATS AND DIFFERENT SHOPS HAVE BEEN BOOKED AT DIFFERENT RATES BY THEASSESSEE. FROM PAGE 443 OF THE PAPER-BOOK, AS FOUND DURING THE COURSE OFSEARCH, THE ASSESSEE HAS GIVEN DISCOUNT ON THE BOOKINGS AT DIFFERENT RATES TODIFFERENT CUSTOMERS. WE NOTED THAT IN RESPECT OF TWO SHOPS ALTHOUGH THEBASE RATE HAS BEEN MENTIONED @21,000 PER SQ. FT, THE ASSESSEE HAS GIVENDISCOUNT AROUND RS. 4150 PER SQ. FT. AND BOOKED THE SHOPS @17500 PER SQ. FTINCLUDING THE CLUB CHARGES OF RS. ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 7 750/-. SIMILARLY, IN RESPECT OF FLAT ALSO WENOTED THAT THE BASE RATE HAS BEEN MENTIONED @12,000/- PER SQ. FT AND AFTERADDING FLOOR RISE, CLUB CHARGES, INFRA CHARGES ETC., TOTAL RATE CAME TO RS. 14375PER SQ. FT. AND THE ASSESSEE HAS ALSO GIVEN DISCOUNT OF RS. 1000/- ANDULTIMATELY BOOKED THE FLAT @13,350 PER SQ. FT. EVEN ON THE SAME VERY PAGEHAD THE DETAILS OF THE FLATS WHICH HAD BEEN BOOKED @ 14550/-, 14300/- AND RS. 13225/- PER SQ. FT. THEREFORE, THE CONCLUSION DRAWN BY THE ASSESSING OFFICERWHILE MAKING THE ADDITION IS BASED JUST ON ASSUMPTION AS IF THE ASSESSEE THEASSESSEE HAS SOLD ALL THE FLATS @15750 PER SQ. FT.IN VIEW OF THIS FACT, WE DELETE THE ADDITION OF RS. 33,47,33,101/- MADE ONTHE BASIS OF ESTIMATING THE SALE CONSIDERATION IN RESPECT OF THE FLATS @15750/-PER SQ. FT.AND 9,97,40,450/- BASED ON THE PRESUMPTION AS HAVING BEING BOOKED SHOPS @26000/. 10. SO FAR AS THE ISSUE OF ESTIMATION OF ON MONEY ON THE FLATS AND SHOPS ARE CONCERNED , UNDOUBTEDLY THE ADDITION HAS GO AS THE SAME IS BASED UPON ESTIMATION AND PRESUMPTION WITHOUT ANY MATERIALS/EVIDENCES BEING BROUGHT ON RECORDS BY THE AUTHORITIES BELOW. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH AS REFERRED AND REPRODUCED ABOVE AS THERE IS NO BASIS AND NO CORROBORATING MATERIALS OTHER THAN THE STATEMENTS RECORDED U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH OF THE FEW INDIVIDUALS INCLUDING ONE DIRECTOR OF THE ASSESSEE. HOWEVER THE LD. DR HAS REFERRED TO THE CASH EXPENSES OF RS. 8.64 CRORES MADE OUT OF ON MONEY WHICH THE LD AR HAS CLAIMED TO HAVE PAID OUT OF ON MONEY OFFERED TO TAX IN THE RETURNS OF THE ASSESSEE , DIRECTOR OF THE ASSESSEE MR SANDEEP RUNWAL AND OTHER SISTER CONCERNS. THE LD AR REFERRED TO A FEW QUESTIONS AND ANSWERS IN THE STATEMENT RECORDED OF THE CONTRACTOR SHRI HIMMATMAL G. PATEL SENGHANI. FURTHER THE CONTRACTOR IN HIS STATEMENT ALSO ADMITTED THAT THE PAYMENTS WERE MADE BY THE ASSESSEE AND ITS GROUP COMPANIES OVER THE YEAR. FOR THE SAKE OF READY REFERENCE WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE SAID STATEMENT AS UNDER:- Q.13 PLEASE GO THROUGH PAGE NO. 36 TO 64 OF ANNEXURE A1 AND COMMENT ON THE SAME. ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 8 ANS. THESE PAGES CONTAIN THE DETAILS OF PAYMENTS MADE TO LABOURERS AND LABOUR CONTRACTORS FOR VARIOUS PROJECTS. PAYMENTS TO LABOURERS ARE MADE IN CASH WHEREAS PAYMENTS TO SUB-CONTRACTORS ARE MADE IN CHEQUE. Q.14 PLEASE GIVE EXACT DETAIL AND SOURCE OF CASH PAYMENTS MADE TO THE LABOURERS. ANS. SIR, IN CASE OF ALL THE WORKS BEING EXECUTED, SOURCE OF CASH PAYMENT IS WITHDRAWAL FROM BANK WHICH ARE DULY REFLECTED IN MY BOOKS OF ACCOUNTS. BUT, IN CASE OF PROJECT 'RUNWAL ANTHURIUM' BEING DEVELOPED BY M/S. RUNWAL DEVELOPERS P. LTD., MAJOR SOURCE OF CASH PAYMENT IS CASH RECEIVED FROM RUNWAL GROUP AGAINST CONTRACT WORK DONE BY US AS THEY HAD NO BANK BALANCE TO CLEAR OUR BILLS THROUGH OFFICIAL BANKING CHANNELS. AN INFORMAL ARRANGEMENT WAS REACHED BETWEEN US AND RUNWAL GROUP EMPLOYEE SUJMATA RAO THAT AS SOON AS THEY WILL GET FUNDS, THE BILLS RAISED AGAINST THE CONTRACT WILL BE CLEARED AND AFTER ENCASHMENT, THE CASH WILL BE RETURNED TO THEM. TILL DATE, WE HAVE RECEIVED TOTAL AMOUNT OF RS. 8.70 CRORE IN CASH AGAINST BILLS RAISED BY M/S. M.J. CONSTRUCTION AND M/S. SENGHANI ASSOCIATES. THESE AMOUNTS WERE COLLECTED ON DIFFERENCE OCCASION IN LAST ONE YEAR BY MY SON MR. SANJAY SENGHANI FROM MISS SUJATA RAO, EMPLOYEE OF RUNWAL GROUP. ONCE, OUR BILLS ARE CLEARED, WE ARE SUPPOSED TO RETURN THE CASH AMOUNT TO RUNWAL GROUP'. 11. IN OUR VIEW THE ABOVE FACTS, THE SETTING OFF OR TELESCOPING CAN BE ALLOWED ONLY AFTER VERIFICATION WHETHER THE CASH WAS AVAILABLE IN THE GROUP CONCERNS/DIRECTORS/ASSESSEE. THEREFORE THE ISSUE IS RESTORED TO THE FILE OF THE AO TO EXAMINE AND DECIDE IT AS PER FACTS. SO FAR AS THE ADDITION ON ESTIMATION BASIS BY APPLYING ADHOC RATE OF RS. 25,000/- IN CASE OF SHOPS AND RS. 14970/- IN CASE OF FLATS ARE CONCERNED ON THE BASIS OF WHICH THE ON-MONEY WAS ARRIVED AT, THE SAME IS WITHOUT ANY BASIS AND HAS TO BE DELETED. THE CASE OF THE ASSESSEE IS COVERED BY THE DECISION OF COORDINATING BENCH IN CASE OF RUNWAL HOMES PVT. LTD(SUPRA). ACCORDINGLY WE HEREBY DIRECT AO TO RESTRICT ADDITION ONLY WHERE DIRECT EVIDENCES OF ACCEPTING ON MONEY RECEIVED FROM CUSTOMERS FOUND DURING THE SEARCH. THE AO WILL ALSO VERIFY AVAILABILITY OF CASH FLOW WITH THE ASSESSEE GROUP AS STATED ABOVE AND IF ANY SHORTAGE IS NOTICED , A FURTHER ADDITION TO THE EXTENT OF SUCH SHORTAGE MAY BE FURTHER ADDED IN THE HANDS OF APPELLANT. HENCE, WE SET ASIDE THE ISSUE TO THE AO FOR LIMITED ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 9 PURPOSE OF QUANTIFICATION OF UNDISCLOSED INCOME ON THE BASIS OF INCRIMINATING MATERIALS/EVIDENCES AND EXAMINING THE AVAILABILITY OF CASH IN THE GROUP. THE AO IS DIRECTED TO DECIDE THE ISSUE IN TERMS OUR DIRECTIONS GIVEN ABOVE. 12. IN THE RESULT GROUND 1 IS ALLOWED FOR STATISTICAL PURPOSE. 13. THE ISSUE RAISED IN THE SECOND GROUND OF APPEAL IS AGAINST DECISION OF LD. CIT(A) WHO HAS CONFIRMED THE ACTION OF LEARNED ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAS BEEN FOLLOWING THE PROJECT COMPLETION METHOD TO RECOGNIZE THE INCOME FROM THE PROJECTS AND HENCE ON MONEY IS TO BE TAXED IN THE YEAR OF COMPLETION OF THE RELEVANT PROJECT FROM WHERE THE ON MONEY HAS BEEN EARNED. 14. THE FACTS ARE THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD TO RECOGNIZE INCOME FROM SALE OF UNITS. DURING THE YEAR UNDER CONSIDERATION THE FOLLOWING PROJECTS WERE GOING ON:- 1. RUNWAL ANTHURIUM COMMERCIAL 2. RUNWAL ANTHURIUM RESIDENTIAL 3. RUNWAL SYMPHONY 4. R SQUARE DURING THE YEAR, RUNWAL ANTHURIUM COMMERCIAL AS WELL AS RESIDENTIAL AND RUNWAL SYMPHONY WERE COMPLETED AND INCOME OFFERED IN THE RETURN FILED FOR A Y 2015-16. THE ASSESSEE CLAIMED THAT ON-MONEY RECEIVED ON SALE OF FLATS CAN NOT BE ASSESSED TO TAX IN THE YEAR OF RECEIPT BUT IN THE YEAR OF COMPLETION AS THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD WHEN INCOME FROM THE SAID PROJECT IS OFFERED TO TAX. OUT OF THREE PROJECTS TWO ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 10 PROJECTS NAMELY RUNWAL ANTHURIUM AND RUNWAL SYMPHONY COMPLETED DURING THE YEAR AND ACCORDINGLY INCOME OFFERED TO TAX. AS FAR AS YEAR OF TAXABILITY OF ON MONEY RECEIPTS FROM OTHER PROJECT I.E. R SQUARE IS CONCERNED , IT CAN NOT BE TAXED IN THIS YEAR. 15. LD AR VEHEMENTLY SUBMITTED BEFORE THE BENCH THAT THE ON MONEY HAS TO BE TAXED IN THE YEAR OF COMPLETION OF THE PROJECT WHEN THE INCOME IS OFFERED TO TAX AND NOT IN THE YEAR OF RECEIPT. THE LD AR RELIED UPON THE DECISION OF THE COORDINATE BENCH IN SISTER CONCERN CASE M/S RUNWAL HOMES PVT LTD (SUPRA) WHEREIN THE COORDINATING BENCH HAS HELD THAT UNRECORDED RECEIPTS CAN NOT BE TREATED DIFFERENTLY THAN THE RECORDED RECEIPTS AND BOTH THE TYPE OF INCOME SHOULD BE TAXED IN THE YEAR OF COMPLETION OF PROJECT. THE LD AR THEREFORE PRAYED THAT THE SECOND GROUND MAY BE ALLOWED ACCORDINGLY. THE LD DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 16. AFTER HEARING THE RIVAL CONTENTIONS AND PERUSING THE MATERIAL ON RECORD INCLUDING THE DECISION OF THE COORDINATE BENCH IN THE CASE OF RUNWAL HOMES PVT LTD. AY 2015-16 ON THIS ISSUE, SINCE OUT OF THREE PROJECTS TWO ALREADY COMPLETED DURING THE YEAR AND RECORDED RECEIPTS ALREADY OFFERED TO TAX IN THIS YEAR, HENCE UNRECORDED INCOME SHALL ALSO BE TAXABLE ON ALL THE UNITS WHICH ARE OFFERED TO TAX IN THIS YEAR WHICH HAS BEEN RIGHTLY DONE SO. HOWEVER, QUA THE R SQUARE PROJECT WHICH WAS NOT COMPLETED DURING THIS YEAR, THE UNRECORDED RECEIPTS FROM THE WILL ALSO BE LIABLE TO BE TAXED IN THE YEAR OF COMPLETION OF PROJECT AS HELD BY THE COORDINATING BENCH IN SISTER CONCERN CASE . THE ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 11 RELEVANT FINDINGS OF THE BENCH IN ITA NO. 5621/M/2017, AY 2015-16 IS EXTRACTED AS UNDER:- THE LEARNED AR AT THIS JUNCTURE HAS TAKEN A ARGUMENT THAT IT IS A CASE WHERE THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD. PROJECT COMPLETION METHOD HAS BEEN FOLLOWED CONSISTENTLY BY THE ASSESSEE. BOTH THE PROJECTS RELATING TO THE FLATS AND THE SHOPS IN RESPECT 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 COMPLETED DURING THE YEAR, THE AMOUNT RECEIVED BY THE ASSESSEE IS MERELY A BOOKING AMOUNT I.E. ONLY THE ADVANCE RECEIVED FOR BOOKING OF THE FLAT/SHOP. THESE AMOUNTS THEREFORE IN OUR VIEW CANNOT BE ADDED DURING THE IMPUGNED ASSESSMENT YEAR. WE ARE OF THE VIEW THAT THE PROJECT COMPLETION METHOD IS ONE OF THE METHOD OF ACCOUNTING WHERE THE EXPENSES IDENTIFIABLE WITH THE PROJECT ARE TO BE ALLOWED IN THE YEAR WHEN THE PROJECT IS COMPLETED. SIMILARLY, THE RECEIPT FROM THE PROJECT IS TO BE ACCOUNTING FOR AS INCOME ONLY IN THE YEAR IN WHICH THE PROJECT IS COMPLETED. SINCE BOTH THE PROJECT FOR THE FLATS AS WELL AS SHOPS WERE NOTCOMPLETED DURING THE YEAR THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M/S BILAHARI INVESTMENT (P) LTD 299 ITR 1 (SC), SPECIAL BENCH DECISION OF THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF WALL STREET CONSTRUCTION LTD. 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 DELETE THE ADDITION DURING THE IMPUGNED ASSESSMENT YEAR AND DIRECT THE AO TO MAKE THE ADDITION IN RESPECT OF THESE ON-MONEY IN THE RESPECT ASSESSMENT YEARS IN WHICH THE PROJECTS HAVE BEEN COMPLETED. 17. WE, THEREFORE, RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION, ALLOW THE GROUND NO.2 IN FAVOUR OF THE ASSESSEE. THE AO IS DIRECTED ACCORDINGLY. 18. THE ISSUE RAISED IN THE GROUND NO. 3 TO 5 ARE INTER-RELATED AND ARE BEING DISPOSED OF AND DECIDED TOGETHER. THE ISSUE IS AGAINST THE CONFIRMATION OF ADDITION OF RS. 4,48,03,316/- BY THE LD. CIT(A) AS MADE BY THE AO ON THE GROUND THAT THE INCOME OFFERED AS PER BOOKS OF ACCOUNT ON THE COMPLETED PROJECTS IS LOWER VIS A VIS INCOME ESTIMATED AS PER TENTATIVE PROFIT AND LOSS ACCOUNT PREPARED AT THE TIME OF SEARCH. 19. THE FACTS IN BRIEF ARE THAT IN THESE GROUNDS THE ADDITION WAS MADE ON ACCOUNT OF PROFIT OFFERED FOR TAX AS PER BOOKS BEING LOWER THAN THE PROFITS AS PER THE PROFIT AND LOSS ACCOUNT ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 12 PREPARED AT THE TIME OF SEARCH FOR THE PROJECTS COMPLETED DURING THE YEAR. DURING THE COURSE OF SEARCH, THE APPELLANT SUBMITTED TENTATIVE PROFIT & LOSS ACCOUNT FOR THE PROJECTS COMPLETED DURING THE YEAR WHICH WERE PREPARED AT THE TIME OF SEARCH AND THEREAFTER IN THE STATEMENT RECORDED U/S 132(4), THE ASSESSEE AGREED TO PAY TAX ON THE SAID PROFIT FROM THESE PROJECTS. THE SAID TENTATIVE PROFIT & LOSS WAS PREPARED CONSIDERING SALES UPTO THE DATE OF SEARCH AND ALSO VARIOUS MATCHING EXPENDITURE ON THE SAID PROJECT. HOWEVER WHILE FILING RETURN OF INCOME U/S 139(1) PROFIT OFFERED FOR THESE COMPLETED PROJECT WAS MUCH LOWER THAN THE INCOME DETERMINED AT THE TIME OF SEARCH. IT WAS CONTENDED BEFORE THE AO THAT INCOME OFFERED IN THE RETURN OF INCOME IS AS PER AUDITED BOOKS OF ACCOUNTS AND NO DEFECT WAS FOUND OR POINTED OUT IN THE SAME. HENCE ADDITION CAN NOT BE MADE ON THE BASIS OF ESTIMATED P & L A/C PREPARED DURING SEARCH PROCEEDINGS. THE ASSESSEE HAS SUBMITTED THAT THE MAIN REASON OF LOWER PROFIT WAS THAT IN THE ESTIMATED PROFIT & LOSS ACCOUNT, COST OF FINANCE WAS NOT APPORTIONED TOWARDS THE COMPLETED PROJECT WHICH WAS DONE LATER IN THE AUDITED PROFIT & LOSS ACCOUNT AND ACCORDINGLY CORRECT INCOME WAS OFFERED TO TAX. 20. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) CONFIRMED THE ORDER OF LD AO. 21. LD AR SUBMITTED THAT THE ISSUE INVOLVED IS FULLY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF RUNWAL HOMES PVT. LTD. (SUPRA) AS REFERRED TO IN GROUND NO. 1.THE LD AR THEREFORE PRAYED THAT THIS MAY KINDLY BE DECIDED ACCORDINGLY AND BE ALLOWED. THE LD. DR OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 13 22. AFTER HEARING THE RIVAL CONTENTIONS AND PERUSING THE FACTS ON RECORDS INCLUDING THE IMPUGNED ORDERS AND DECISION OF THE COORDINATE BENCH IN ITA NO. 5621/M/2017, DATED 20/12/2017 WHEREIN ASSESSEE HAS EXPLAINED REASON OF DIFFERENCE BETWEEN ESTIMATED PROFIT AT THE TIME OF SEARCH AND PROFIT AS PER AUDITED BOOKS OF ACCOUNTS. WE NOTE THAT THE AO DID NOT POINT OUT ANY DEFECT OR ANY UNSUSTAINABLE CLAIM IN THE ASSESSMENT ORDER NOR DID HE BRING ANY SUBSTANTIVE MATERIALS ON THE RECORD TO PROVE TO THE CONTRARY. UNDER THESE CIRCUMSTANCES WE DO NOT CONCUR TO THE CONCLUSION OF THE AUTHORITIES BELOW ON THIS ISSUE. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S RUNWAL HOMES PVT LTD. (SUPRA) WHEREIN IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF SISTER CONCERN(SUPRA). THE OPERATIVE PART IS EXTRACTED BELOW: 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 AS WELL AS THE ESTIMATED COST TAKEN AT THE TIME OF THE SEARCH WHILE WORKING OUT THE PROFIT FROM THIS PROJECT AT RS.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 NOTDENIED THAT AS ON THE DATE OF THE SEARCH, WHILE ESTIMATING THE PROFIT AT RS.25.46CRORE, THE ASSESSEE HAS SHOWN THE SALES AT RS.98.83 CRORE AND ESTIMATED EXPENSES AT RS.73.37 CRORE BUT SUBSEQUENTLY, AS PER THE AUDITED ACCOUNTS THE SALES CONSIDERATION REALIZED BY THE ASSESSEE ALSO INCREASED FROM RS.98.83 CRORE TO RS.107.56 CRORE. SIMULTANEOUSLY, THERE IS ALSO INCREASE IN THE COST FROM73.37 CRORE TO 94.07 CRORE AND, ULTIMATELY, THE PROFIT DERIVED BY THE ASSESSEE CAME TO RS.13.49 CRORE. WE NOTED FROM THE ESTIMATION OF THE PROFIT AT THE TIME OF SEARCH AT RS.25.46 CRORES, THE FIGURES HAVE BEEN TAKEN IN ROUNDED OFF WHILE THE REAL PROFIT CANNOT BE ROUND OFF EVEN FROM THE WORKING 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 CONTAINS 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 REAL INCOME AND NOT ON THE INCOME WHICH HAVE ESTIMATED BY THE ASSESSEE. ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 14 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 PROFIT COMPUTED DURING THE COURSE OF THE SEARCH THAT THE ACTUAL PROFIT FROM THE SAID PROJECT WAS MUCH MORE THAT THE ACTUAL PROFIT SHOWN BY THE ASSESSEE. INCOME TAX HAS NOT BELIEVED 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 STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF THE SEARCH UNTIL AND UNLESS THERE ARE CORROBORATIVE EVIDENCE TO SUPPORT THAT THE ASSESSEE HAS DERIVED INCOME WHATEVER WAS ESTIMATED DURING THE COURSE OF THE SEARCH. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE BY THE LEARNED DR. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 12,04,18,428/-.THUS, GROUND NOS. 3 & 4 TAKEN BY THE ASSESSEE ARE ALLOWED. CONSIDERING THE FACTS IN THE LIGHT OF THE ABOVE DECISION OF THE COORDINATE BENCH , WE ARE INCLINED TO SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. GROUND NO. 3 TO 5 ARE ALLOWED ACCORDINGLY. 23. THE ISSUE RAISED IN THE GROUND NO. 6 &7 IS AGAINST THE ORDER OF LD. CIT(A) WHO HAS CONFIRMED THE ADDITION AS MADE BY THE AO BY REJECTING AND DISALLOWING THE CLAIM OF EXPENSES OF RS.1,23,67,631/- FROM THE BUSINESS INCOME ON THE GROUND THAT THE SAID EXPENSES WERE CLAIMED BY THE APPELLANT AGAINST THE INCOME FROM HOUSE PROPERTY, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE . 24. THE FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF BUILDING, DEVELOPING OF PROPERTIES, RUNNING AND MANAGING MALL, MORE PARTICULARLY, R-MALL AT MULUND MUMBAI. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD WAS LEASED OUT THE IMMOVABLE PROPERTIES AND EARNED LEAVE AND LICENCE FEES OF RS.5,30,46,965/- THE ASSESSEE HAS CREDITED THE SAME TO ITS BUSINESS AND PROFIT AND LOSS ACCOUNT. WHILE ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 15 COMPUTING THE INCOME OF THE HOUSE PROPERTY, THE ASSESSEE REDUCED THE PROPERTY TAX AND STANDARD DEDUCTION @ 30% DEDUCTION TOWARDS REPAIRS CHARGES AS PER THE PROVISIONS OF SECTION 24 OF THE ACT AND PAID TAX ACCORDINGLY. ACCORDINGLY TO THE AO, THE ASSESSEE, WHILE COMPUTING ITS INCOME FROM BUSINESS, HAS FAILED TO APPORTION AND DISALLOW THE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF 30% REPAIRS ALLOWED BY THE STATUTE AS A STANDARD DEDUCTION AGAINST THE HOUSE PROPERTY INCOME. ACCORDINGLY, THE ASSESSEE SHOULD HAVE SUO MOTO APPORTIONED CERTAIN EXPENSES TO THE RENTAL INCOME WHILE COMPUTING THE INCOME AND DISALLOWED WHILE COMPUTING BUSINESS INCOME. IN ABSENCE OF ANY EXPLANATION FROM ASSESSEE ABOUT ACTUAL EXPENSES RELATED TO RENTAL INCOME, THE AO HAS DISALLOWED 30% OF RENTAL INCOME AS EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD BUSINESS INCOME. 25. BEFORE CIT(A), THE APPELLANT SUBMITTED THAT IN THE A.Y. 2010-11 & 2011-12 THIS ISSUE WAS EXAMINED BY THE AO AND MADE DISALLOWANCE TO THE EXTENT OF 30% OF INCOME FROM THE HOUSE PROPERTY. HOWEVER, THE MATTER TRAVELLED UPTO THE LEVEL OF ITAT AND THE ISSUE IS RESTORED TO THE AO TO EXAMINE AND QUANTIFY THE ACTUAL EXPENDITURE INCURRED. HOWEVER, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER:- GROUND NO. 6 & 7 RELATED TO THE DISALLOWANCE OF RS. 1,23,67,631/- MADE BY THE AO IN RESPECT OF INCOME FROM HOUSE PROPERTY. IT IS GATHERED THAT THIS ISSUE HAS BEEN DECIDED BY ITAT IN ASSESSEES OWN CASE FOR A.Y. 2010-11 & 2011-12 AND SET ASIDE THE ISSUE TO THE FILE OF THE AO TO EXAMINE THE MATTER WITH CERTAIN DIRECTIONS. IT APPEARS THAT THAT AFTER EXAMINATION OF THE FACTS OF THE CASE AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO REACHED ON A CONCLUSION THAT THE ASSESSEE HAD CLAIMED DEDUCTION IN RESPECT OF HOUSE PROPERTY EXPENSES TO THE EXTENT OF 30% WHICH WAS NOT ALLOWABLE. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 16 HAS NOT FURNISHED ANY RELIABLE EXPLANATION OR EVIDENCE AS TO HOW AND WHY THE DISALLOWANCE WORKED OUT BY THE AO WAS UNJUSTIFIED OR UNFAIR. THEREFORE CONSIDERING THE FACTS OF THE CASE, I AGREE WITH THE AO AND THE DEDUCTION CLAIMED BY THE ASSESSEE TO THE EXTENT OF 30% IS NOT ALLOWABLE AND THEREFORE ADDITION OF RS. 1,23,67,631/- MADE BY THE AO UPHELD. 26. WE HAVE HEAD BOTH THE SIDES AND PERUSED THE MATERIALS ON RECORDS MORE PARTICULARLY THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN A Y 2010-11 & 2011-12, WE NOTE THAT THE ISSUE BEFORE THE COORDINATE BENCH WAS THE METHOD AND MANNER OF DISALLOWANCE OF EXPENSES TO THE EXTENT THESE WERE CLAIMED AS DEDUCTION U/S 24 OF THE ACT. THE COORDINATE BENCH HAS HELD THAT NOTIONAL CLAIM U/S 24 OF THE ACT CAN NOT BE BASIS FOR DISALLOWANCE BY THE AO WHILE ASSESSING THE INCOME FROM BSUINESS. IN THIS CASE IT HAS BEEN DECIDED THAT THE AO HAS TO ARRIVE AT ACTUAL FIGURE OF EXPENSES INCURRED TO EARN RENTAL INCOME WHICH ARE DEBITED TO THE PROFIT AND LOSS ACCOUNT IN ORDER TO MAKE DISALLOWANCE. THEREFORE, FOLLOWING THE DECISION OF COORDINATING BENCH, WE ARE SETTING ASIDE THE ISSUE FOR LIMITED PURPOSE TO WORK OUT ACTUAL EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT RELATING TO THE RENTAL INCOME AND RESTRICT THE DISALLOWANCE TO THE SAME ONLY. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 27. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15.07.2020. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15.07.2020. * KISHORE, SR. P.S. ITA NO.5622/M/2017 M/S. RUNWAL DEVELOPERS PVT. LTD. 17 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.