M/s Pumarth Infrastructure Pvt. Ltd. Indore, Indore V. ACIT (Central)-1, Indore

ITSSA 176/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4654 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-12-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Unexplained expenditure; Business income; Document seized; Principle of natural justice; Question of law; Documents seized
• Section: 40A(3); 143(3); 142(1); 153A; 69; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA(SS) NO.175 TO 177/IND/2017 ASSESSMENT YEARS 2009-10 TO 2011-12 REVENUE BY SMT. ASHIMA GUPTA, CIT ASSESSEE BY S/ SHRI SUMIT NEMA, SR.ADV WITH GAGAN TIWARI, ADV DATE OF HEARING 18 .12 . 2018 DATE OF PRONOUNCEMENT 12. 0 2 .2 01 9 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED THREE APPEALS FILED AT THE INST ANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2009-10 TO 2011-12 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-III (IN SHORT LD.CIT(A)], INDORE DATED 31.03.2017 WHICH ARE ARISING OUT OF THE ORDER U/S 153A R.W.S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 29.01.2016 FRAME D BY ACIT (CENTRAL)-1, INDORE. M/S. PUMARTH INFRASTRUCTURE PVT.LTD, 5/5A, NAVRATAN BAGH, NEAR GEETA BHAWAN SQUARE, INDORE VS A CIT ( CENTRAL ) 1, INDORE ( APPELLANT ) (RESPONDENT ) PAN NO. A A ACM0901H PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 2 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL ; ASSESSMENT YEAR 2009-10 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ENTIRE ASSESSMENT IS ILLEGAL, VOID AND WITHOUT JURISDICTION AND FURTHER IN NOT CONSIDERING THAT THE SAME IS IN COMPLETE BREACH OF PRINCIPLES OF NATURAL JUSTICE. 2. THAT THERE IS NO JUSTIFICATION EITHER IN LAW OR ON FACTS FOR THE LD. CIT(A) IN SUSTAINING THE ENTIRE ADDITION OF RS. 96,7 6,800/- AS ALLEGED ON MONEY RECEIVED BY THE ASSESSEE. THE DETERMINATION OF THE SAID AMOUNT OF RS. 96,76,800/- IS ARBITRARY AND PRESUMPT UOUS. 3. THAT IN ANY EVENT THE LD. CIT(A) WAS NOT JUSTIFI ED IN SUSTAINING THE ENTIRE ADDITION OF RS. 96,76,800/- WITHOUT COMPUTING THE ELEMENT OF ACTUAL PROFIT AND DEDUCTION OF EXPENSES THEREIN AND W ITHOUT CONSIDERING THE RELEVANT JUDICIAL MATRIX CITED BEFORE THE CIT(A) IN THE MATTER OF CIT V. BALCHAND AJIT KUMAR 263 ITR 610 (MP ). J' 4. THAT WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, CUMULATIVE EFFECT OF INCOME OFFERED IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT BY THE GROUP PLUS THE INCOME OFFERED FOR TAX BEFORE THE SETTLEMENT COMMISSION BY THE GROUP PLUS THE INCOME ADDED IN THE HANDS OF GROUP ENTITIES AND FINALLY SUSTAINED SHOULD HAVE BEEN CONSIDERED TO ARRIVE AT A HOLISTIC PICTURE OF UNDISCLOSED INCOME AND IF THIS IS DONE THEN THERE WOULD REMAIN NO AMOUNT WHICH CAN BE ADDED. ASSESSMENT YEAR 2010-11 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ENTIRE ASSESSMENT IS ILLEGAL, VOID AND WITHOUT JURISDICTION AND FURTHER IN NOT CONSIDERING THAT THE SAME IS IN COMPLETE BREACH OF PRINCIPLES OF NATURAL JUSTICE. 2. THAT THERE IS NO JUSTIFICATION EITHER IN LAW OR ON FACTS FOR THE LD. CIT(A) IN SUSTAINING THE ENTIRE ADDITION OF RS. 3,09 ,80,760/- AS ALLEGED ON MONEY RECEIVED BY THE ASSESSEE. THE DETERMI NATION OF THE SAID AMOUNT OF RS. 3,09,80,760/- IS ARBITRARY AN D PRESUMPTUOUS. PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 3 3. THAT IN ANY EVENT THE LD. CIT(A) WAS NOT JUSTIFI ED IN SUSTAINING THE ENTIRE ADDITION OF RS. 3,09,80,760/- WITHOUT COMPUT ING THE ELEMENT OF ACTUAL PROFIT AND DEDUCTION OF EXPENSES THEREIN AND WITHOUT CONSIDERING THE RELEVANT JUDICIAL MATRIX CITED BEFORE THE CIT(A) IN THE MATTER OF CIT V. BALCHAND AJIT KUMAR 263 ITR 610 (MP ). 4. THAT THE LD. CIT(A) WAS NOT JUSTIFIED EITHER IN LA W OR ON FACTS IN SUSTAINING THE ADDITION OF RS. 1,30,53,000/- MADE B Y THE LD. AO AS ALLEGED UNACCOUNTED CASH PAYMENT MADE TO THE THAKUR F AMILY WITHOUT CONSIDERING THAT THE FACTS AND DOCUMENTS ON RE CORD CLEARLY SHOWED THAT THE SAID AMOUNT WAS PAID OUT OF THE ON-MON EY RECEIPTS AS SHARE OF THE THAKUR FAMILY . 5. THAT WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, CUMULATIVE EFFECT OF INCOME OFFERED IN THE RETURN OF INCOME FILED U/S 1 53A OF THE ACT BY THE GROUP PLUS THE OFFERED FOR TAX BEFORE THE SETTLE MENT COMMISSION BY THE GROUP PLUS THE INCOME ADDED IN THE HANDS OF GR OUP ENTITIES AND FINALLY SUSTAINED SHOULD HAVE BEEN CONSIDERED TO ARR IVE AT A HOLISTIC IS DONE THEN THERE WOULD REMAIN NO AMOUNT W HICH CAN BE ADDED. ASSESSMENT YEAR 2011-12 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ENTIRE ASSESSMENT IS ILLEGAL, VOID AND WITHOUT JURISDICTION AND FURTHER IN NOT CONSIDERING THAT THE SAME IS IN COMPLETE BREACH OF PRINCIPLES OF NATURAL JUSTICE. 2. THAT THERE IS NO JUSTIFICATION EITHER IN LAW OR ON FACTS FOR THE LD. CLT(A) IN SUSTAINING THE ENTIRE ADDITION OF RS. 50, 96,575/- AS ALLEGED ON MONEY RECEIVED BY THE ASSESSEE. THE DETERMINATION OF THE SAID AMOUNT OF RS. 50,96,575/- IS ARBITRARY AND PRESUMPT UOUS. 3. THAT IN ANY EVENT THE LD. CIT(A) WAS NOT JUSTIFI ED IN SUSTAINING THE ENTIRE ADDITION OF RS. 50,96,575/- WITHOUT COMPUTING THE ELEMENT OF ACTUAL PROFIT AND DEDUCTION OF EXPENSES THEREIN AND W ITHOUT CONSIDERING THE RELEVANT JUDICIAL MATRIX CITED BEFORE THE CIT(A) IN THE MATTER OF (IT V. BALCHAND AJIT KUMAR 263 ITR 610 (MP ). 4. THAT THE LD. CIT(A) WAS NOT JUSTIFIED EITHER IN LA W OR ON FACTS IN SUSTAINING THE ADDITION OF RS. 14,40,000/- MADE BY THE LD. AO U/S PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 4 40A(3). 5. THAT WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, CUMULATIVE EFFECT OF INCOME OFFERED IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT BY THE GROUP PLUS THE INCOME OFFERED FOR TAX BEFORE THE SETTLEMENT COMMISSION BY THE GROUP PLUS THE INCOME ADDED IN THE HANDS OF GROUP ENTITIES AND FINALLY SUSTAINED SHOULD HAVE BEEN CONSIDERED TO ARRIVE AT A HOLISTIC PICTURE OF UNDISCLOSED INCOME AND IF THIS IS DONE THEN THERE WOULD REMAIN NO AMOUNT WHICH CAN BE ADDED. 2. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON , THEY ARE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE. IT FILED RETURN OF INCOME FOR THE ASSESSMENT YEARS 200 9-10 TO 2011-12 DECLARING INCOME AT RS.6,69,950/-, RS.66,31,440/- A ND RS.65,14,440/- RESPECTIVELY. SEARCH & SEIZURE OPERA TIONS U/S 132 WAS CARRIED OUT ON 21.02.2012 THE BUSINESS PREMISE S OF THE ASSESSEE WHICH IS PART OF THE GROUP COMPANIES OF AP OLLO GROUP OF INDORE. WARRANT OF AUTHORIZATION U/S 132 AND NOTI CE U/S 153A OF THE ACT WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE TO THE NOTICES ASSESSEE FILED SAME RETURN OF INCOME. NOTICES U/S 143(2) WERE SERVED UPON THE ASSESSEE ON 30.6.2014. QUESTIONNAI RE ALONG WITH NOTICE U/S 142(1) WAS DULY SERVED UPON THE ASSESSEE ON 4.8.2014. ASSESSMENT WERE COMPLETED ADDING VARIOUS ADDITIONS ON ACCOUNT OF SUPPRESSION, UNEXPLAINED EXPENDITURE, UNEXPLAINED I NVESTMENT AND DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.1,08,40,97 0/-, RS.5,18,15,540/- AND RS.1,31,01,170/- FOR THE ASSES SMENT YEARS PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 5 2009-10 TO 2011-12 RESPECTIVELY. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) AND PARTLY SUCCEEDED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L FOR A.YS. 2009-10 TO 2011-12 5. COMMON ISSUE RAISED IN GROUND NO.1 IN ALL THREE APPEALS IS GENERAL IN NATURE AND LD. COUNSEL FOR THE ASSESSEE HAS REQUESTED FOR NOT PRESSING THE SAME, THEREFORE, THIS GROUND NO.1 IS DISMISSED AS NOT PRESSED. 6. NEXT COMMON ISSUE RAISED IN GROUND NO.2 & 3 OF R ESPECTIVE THREE APPEALS RELATED TO ADDITION FOR ON MONEY OF RS.9 6,76,800/-, RS.3,09,80,760/- AND RS.50,96,575/- FOR ASSESSMENT YEAR 2009-10 TO 2011-12 RESPECTIVELY. 7. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT DURI NG THE COURSE OF SEARCH AT APOLLO GROUP ON 21.09.2012 VARIOUS INCRIM INATING MATERIAL FOUND WERE SEIZED WHICH ALSO INCLUDED SOME DOCUMENTS RELATING TO THE ASSESSEE. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS SUBSEQUENT TO SEARCH, LD. AO OBSERVED T HAT ASSESSEE WAS DEVELOPING TWO PROJECT NAMELY PUMARTH PARK & PUMARTH MEADOWS. IN THE SEIZED RECORDS, FOUND FROM THE OFF ICE AT 5/5A, NAVRATAN BAG, NEAR A.B. ROAD, INDORE, IN AN EXCEL F ILE WORKING OF SALE OF FLAT/PLOT WERE APPEARING IN ROWS NO. 264 TO 368 OF THE SHEET, ON THE BASIS OF WHICH IT WAS FOUND THAT FOR VARIOUS PLOTS/RAW PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 6 HOUSES ASSESSEE RECEIVED ON-MONEY FROM THE BUYERS . CERTAIN DOCUMENTS WERE ALSO FOUND WHICH HAD MENTIONED ABOUT ON- MONEY PAID TO THE LAND OWNER HOWEVER, LD. AO STICK ED TO THE FIGURE OF ON-MONEY RECEIVED BY THE ASSESSEE AND MADE TH E ADDITION OF THE GROSS AMOUNT OF ON-MONEY RECEIVED IN EACH YEAR AS RS. 96,76,800/-, RS.3,09,80,760/- & RS. 50,96,575/- FOR 2009-10 TO 2011-12 8. AGAINST THIS ADDITION ASSESSEE CAME UP BEFORE TH E LD. CIT(A) BUT COULD NOT SUCCEED, AS LD. CIT(A) TOOK THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE INCOME TAX SETTLEMENT C OMMISSION IN WHICH THE ASSESSEE MADE DISCLOSER OF THE UNACCOUNTE D ON-MONEY RECEIVED ON THE SALE OF PLOTS. 9. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 10. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS PICKED UP THE FIGURES OF GROSS ON-MONE Y FROM THE SETTLEMENT APPLICATION FILED BY THE APPELLANT. HOW EVER, IN THE SETTLEMENT APPLICATION THE APPELLANT HAD GIVEN A DE TAILED NOTE ABOUT THE AVAILABILITY OF ON-MONEY, THE NATURE OF EXPEN SES INCURRED THEREFROM AND THE NET RESULTANT INCOME CALCULATED @ 25% OF GROSS RECEIPTS. HOWEVER, THE LD. AO WHILE ACCEPTING THE FIGURE OF GROSS ON-MONEY AS GIVEN IN THE SOF BEFORE THE SETTLEMEN T COMMISSION HAS COMPLETELY IGNORED THE CLAIM FOR EXPENSES MADE BY THE APPELLANT IN THAT VERY SOF. A DECLARATION CANNOT B E ACCEPTED PARTLY PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 7 AND REJECTED PARTLYAND SUCH AN APPROACH IS ERRONEOU S AND WITHOUT ANY JUDICIAL BASIS. 11. LD. COUNSEL FOR THE ASSESSEE RELIED ON FOLLOWIN G JUDGMENTS; (I) CIT V/S BALCHAND AJIT KUMAR (2003) 263 ITR 061 0 (HC MP) (II) CIT V/S PRIME DEVELOPERS ITA NO.2452 OF 2013 (BOMBAY HIGH COURT) (III) INCOME TAX OFFICER V/S ANNAND BUILDERS SLP NO.14166 OF 2003 (HON'BLE SUPREME COURT) (IV) EAGLE SEEDS AND BIOTECH LTD V ACIT (100 ITR 30 1) I.T.A.T. INDORE BENCH. (V) ACITVS SHRI JIGESH V KORALWALA IT(SS)A NO.262,2 63 AND 264/AHD/2010, I.T.A.T. AHMEDABAD BENCH. (VI) CIT BS. PRESIDENT .(2002) 258 ITR 654 (GUJARA T HC) 12. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED AND SUPPORTED THE ORDERS OF LOWER AUTHORITIE S. 13. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. FOR ALL THREE ASSESSMENT YEARS I .E 2009-10 TO 2011-12 COMMON ISSUE RAISED BY THE ASSESSEE, IN GRO UND NO. 2 & 3 IS FOR THE ADDITIONS CONFIRMED BY LD. CIT(A) OF ON-MONEY OF RS. 96,76,800/-, RS.3,09,80,760/- & RS. 50,96,575/- REC EIVED FROM BUYERS FOR PLOTS/ROW HOUSES IN THE PROJECT UNDERTAK EN BY THE ASSESSEE IN THE NAME OF PUMARTH PARK & PUMARTH M EADOWS. BOTH THE LOWER AUTHORITIES HAVE CONFIRMED ADDITION FOR GROSS PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 8 AMOUNT OF ON-MONEY RECEIVED FROM THE PROJECTS RUN BY THE ASSESSEE. 14. LD. COUNSEL FOR THE ASSESSEE HAS FILED EXTRACT OF THE STATEMENT GIVEN BEFORE INCOME TAX SETTLEMENT COMMISSION (IN S HORT ITSC) FOR THE OTHER GROUP CONCERNS AS WELL AS THE SUBMISSIONS MADE FOR THE ASSESSEE COMPANY WHICH WAS LATER ON REJECTED BY THE INCOME TAX SETTLEMENT COMMISSION. IN THIS SUBMISSION, THE ASS ESSEE HAS DISCLOSED GROSS RECEIPTS AND HAS ALSO CLAIMED THE E XPENSES INCURRED ON THE PROJECT WHICH WERE CONNECTED TO ADMINISTRATI VE, AS WELL AS CONSTRUCTION ACTIVITIES. IN THE STATEMENT FILED BEF ORE THE ITSC 75% OF THE GROSS RECEIPTS ARE SHOWN AS EXPENSES. IT SEE MS THAT BOTH THE LOWER AUTHORITIES HAVE PARTLY ACCEPTED THE DECLARAT ION GIVEN BY THE ASSESSEE BEFORE ITSC WHICH NORMALLY SHOULD HAVE BEE N FOLLOWED IN COMPLETE SENSE. IT IS AN UNDISPUTED FACT THAT THE A VERAGE NET PROFIT BEFORE TAX DECLARED BEFORE THE ITSC IS 15.956%. IN THE CASE OF GROUP CONCERN M/S. APOLLO CREATION PVT. LTD. WHICH WAS ALSO SEARCHED ALONG WITH THE ASSESSEE, GP RATE OF 25% HA S BEEN ACCEPTED BY THE ASSESSING OFFICER. THE RELEVANT EXT RACT OF THE ORDER OF THE SETTLEMENT COMMISSION PASSED IN THE CASE OF M/S. APOLLO CREATION PVT. LTD. IS MENTIONED BELOW: 91.2 FINDING: THE ABOVE SUBMISSIONS OF THE APPLICAN T HAVE BEEN CONSIDERED. IT IS AN ADMITTED FACT THAT IN THE APPL ICANTS BUSINESS RECEIPT OF ON-MONEY IS A REGULAR PRACTICE. IT IS ALSO WELL EVIDENCED BY VARIOUS DOCUMENTARY EVIDENCES FOUND DU RING THE SEARCH WHICH SHOWS THAT APPLICANT HAS BEEN RECEIVIN G ON- MONEY IN ITS ALL OF ITS PROJECTS WHETHER THEY ARE O N SELF OWNED LAND OR ON THIRD PARTIES LAND UNDER A JOINT-DEVELOP MENT PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 9 AGREEMENT AND ACCOUNTING FOR IT THROUGH THE MODUS O PERANDI OF SMALL DENOMINATION CHEQUES. IT IS ALSO SEEN THAT GA RHA GROUP TOO HAS ADMITTED THAT IT HAS BEEN RECEIVING ON-MONE Y IN ITS VARIOUS PROJECTS INCLUDING THE GOLF-GREEN PROJECT. DURING THE SEARCH OF GARHA GROUP TOO INCRIMINATING MATERIAL TO THIS EFFECT WAS FOUND AS A CONSEQUENCE OF WHICH THE GARHA GROUP MADE A SUBSTANTIAL DISCLOSURE OF INCOME BEFORE THE INVESTI GATION WING. IN VIEW OF THESE FACTS. IT SEEMS HIGHLY UNREALISTIC THAT WHEN A PLOT OF LAND/FLAT IS BEING SOLD BY ONE PARTNER AT A MUCH HIGHER AMOUNT THAN THAT MENTIONED IN THE CONVEYANCE DEED, SIMILAR PLOT/FLAT IN THE SAME PROJECT WOULD BE SOLD BY THE OTHER PARTNER FOR A CONSIDERATION EQUIVALENT ONLY TO THE RATE MEN TIONED IN THE CONVEYANCE DEED. THE ARGUMENT THAT THE APPLICANT DI D NOT HAVE TO CARRY OUT MUCH OF INFRASTRUCTURE DEVELOPMENT ACT IVITY IN THE GOLF GREEN PROJECT AS COMPARED TO GOLF LINK PROJECT CITED IN FAVOUR OF NOT RECEIVING ON-MONEY IN GOLF GREEN PROJ ECT, TOO DOES NOT CARRY MUCH WEIGHT. THERE IS NO CORRELATION BETW EEN CARRYING ON OF INFRASTRUCTURE DEVELOPMENT AND RECEIPT OF ON- MONEY AS BUSINESS WOULD NOT FOREGO SUCH RECEIPTS MERELY BECA USE DID NOT INCUR MUCH EXPENDITURE ON INFRASTRUCTURE DEVELOPMEN T. THESE FACTS WERE POINTED OUT TO THE AR OF THE APPLICANT D URING THE HEARINGS BEFORE THE COMMISSION, DURING THE HEARING ON 26.4.2016, THE APPLICANT AFTER CONSIDERING THE ABOV E FACTORS CAME FORWARD IN A SPIRIT OF SETTLEMENT TO OFFER THE CORRESPONDING UNACCOUNTED PORTION OF THE RECEIPTS ON ITS 540% SHA RE OF SALE TO WHICH IT WAS ENTITLED UNDER THE AGREEMENT WITH GARH A GROUP. THE DISCLOSURE MADE BY THE APPLICANT ON ACCOUNT OF UNACCOUNTED RECEIPT FROM THE GOLD-GREEN PROJECT AMO UNTS TO RS.25,00,000/- ON WHICH TAXABLE INCOME HAS BEEN WOR KED OUT AFTER APPLYING A NET PROFIT RATE OF 25% WHICH AMOUN TS TO RS.6,25,00,000/-. A LETTER DATED 26.4.2016 TO THIS EFFECT FILED BY THE APPLICANT IS PLACED ON RECORD. THE YEAR-WISE WO RKING MADE BY THE APPLICANT GIVES THE DETAILS OF ADDITIONAL IN COME IN THE PROJECT GOLF-GREENS BY ESTIMATING PROFIT AT THE RAT E OF 25% ON ESTIMATED UNACCOUNTED (DIFFERENCE IN DEAL RATE OF P LOTS SOLD BY APPLICANT AND GARHA GROUP )AS UNDER: PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 10 A.Y. AREA SOLD (SQ. FEET DIFFERENCE IN SALES RATE (PER SQ FEET ESTIMATED UNACCOUNTED RECEIPTS (ROUNDED OFF) ESTIMATED NET PROFIT (1) (2) (3) (4)=2*3 (5)=25% OF 4 2009-10 133117 514 68500000 17125000 2010-11 181098 533 96600000 24150000 2011-12 38715 465 18000000 4500000 2012-13 64323 423 27200000 6800000 2013-14 62155 384 24000000 6000000 2014-15 4800 550 15700000 3925000 484208 AVERAGE:489 250000000 62500000 15. THE ABOVE FINDING OF INCOME TAX SETTLEMENT COMM ISSION IN THE GROUP CONCERN OF THE APOLLO GROUP SHOWS THAT WITH R EGARD TO THE ON-MONEY THE ADDITION HAS BEEN MADE ONLY @ 25% AN D NET THE GROSS UNACCOUNTED ON-MONEY, THEREBY, ALLOWING THE CLAIM OF UNACCOUNTED EXPENDITURE. IT HAS BEEN CONSISTENTLY H ELD THAT ONLY THE ADDITION FOR THE NET PROFIT SHOULD BE MADE ON T HE ON-MONEY RECEIVED DURING THE COURSE OF BUSINESS. 16. HON'BLE MP HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BALCHAND AJIT KUMAR (2003)263 ITR 0610 HAS HELD THAT 'WE ARE IN RESPECTFUL AGREEMENT WITH THE AFORESAID OPINION IN AS MUCH AS THE TOTAL SALE CANN OT BE REGARDED AS THE PROFIT OF THE ASSESSEE. THE NET PRO FIT RATE HAS TO BE ADAPTED AND ONCE A NET PROFIT RATE IS ADO PTED, IT CANNOT BE SAID THAT THERE IS PERVERSITY OF APPROACH . WHETHER PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 11 THE RATE IS TOW OR HIGH, IT WOULD DEPEND UPON THE F ACTS OF EACH CASE. IN THE PRESENT CASE NET PROFIT RATE OF F IVE PERCENT HAS BEEN APPLIED. WE DO NOT THINK IT APPRECIABLE TH AT THE SAME REQUIRES TO BE ENHANCED. WE ARE ALSO INCLINED TO THINK THAT IT IS HIGH. IN ANY CASE, IT CANNOT BE SAID THA T THERE HAS BEEN PERVERSITY OF APPROACH. 17. HON'BLE BOMBAY HIGH COURT IN THE COMMISSIONER O F INCOME TAX VS. M/S. PRIME DEVELOPERS ITANO.2452 OF 2013- (A) HAS HELD THAT THE RESPONDENT-ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. DURING THE SUBJECT ASSESS MENT YEAR THE RESPONDENT-ASSESSEE UNDERTOOK CONSTRUCTION OF A PROJECT CALLED PRIME MALL. HOWEVER IN ITS RETURN OF INCOME FILED FOR THE SUBJECT ASSESSMENT YEAR THE RESPONDEN T- ASSESSEE DID NOT DISCLOSE ANY PROFIT ON ITS ABOVE P ROJECT AS IT WAS FOLLOWING THE PROJECT COMPLETION METHOD. (B) ON 20 TH APRIL, 2006 THERE WAS A SEARCH ON THE RESPONDENT ASSESSEE UNDER SECTION 132 OF THE ACT. DURING THE COURSE OF THE SEARCH IT WAS FOUND THAT DURING THE PREVIOUS YE AR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION IT WAS FOUND THAT THE RESPONDENT-ASSESSEE HAD SOLD 14 UNIT S IN ITS PRIME MALL PROJECT AND RECEIVED 65% OF THE TOTAL SA LE PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 12 CONSIDERATION AS ON-MONEY. CONSEQUENT TO THE SEAR CH, THE RESPONDENT-ASSESSEE CONTENDED THAT IN THE SUBJECT ASSESSMENT YEAR NO INCOME IS CHARGEABLE TO TAX AS I T IS FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTI NG. THEREFORE THE PROFIT, IF ANY, WOULD BE SUBJECT TO T AX ON COMPLETION OF THE PROJECT WHICH TAKES PLACE ONLY FO R THE A. Y. 2006-07(90%) AND A. Y. 2007-08. THE ASSESSING OFFIC ER BY AN ORDER DATED 30 TH DECEMBER, 2008 DID NOT ACCEPT THE RESPONDENT'S CONTENTION OF PROJECT COMPLETION METHO D AND BROUGHT TO TAX, THE ENTIRE AMOUNT RECEIVED AS 'ON M ONEY' CONSIDERATION I. E. 65% OF TOTAL SALES VALUE (35% R ECORDED PLUS 65% 'ON MONEY) OF THE 14 UNIT SOLD. (C) BEING AGGRIEVED, THE RESPONDENT CARRIED THE ISS UE IN APPEAL TO THE COMMISSIONER OF INCOME TAX(A) (CIT(A) ). IN APPEAL, BY AN ORDER DATED 30TH OCTOBER, 2009 THE CI T(A) MODIFIED THE ORDER OF THE ASSESSING OFFICER TO THE EXTENT IT HELD THAT THE TOTAL CONSIDERATION RECEIVED IN RESPE CT OF SALES OF 14 UNIT DURING THE SUBJECT ASSESSMENT YEAR WOULD BE TAXED AT 40% AS NET PROFIT OF THE TOTAL CONSIDERATI ON IN PLACE OF 65% IN RESPECT OF SALES OF 14 UNITS. THE CIT(A) DID NOT ACCEPT THE RESPONDENT-ASSESSEE'S CONTENTION THAT ON LY 8% SHOULD BE TAKEN AS NET PROFIT OF THE UNACCOUNTED TU RNOVER. PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 13 THIS WAS IN VIEW OF THE FACT THAT ANNEXURE-L FOUND D URING THE COURSE OF THE SEARCH INDICATED THE NET PROFIT A T 28. 18%. (D) BEING AGGRIEVED, BOTH THE REVENUE AS WELL AS TH E RESPONDENTASSESSEE CARRIED THE ISSUE IN APPEAL TO T HE TRIBUNAL. THE TRIBUNAL BY ITS IMPUGNED ORDER AFTER CONSIDERING THE FACTS I.E. THE SEIZED DOCUMENTS AND THE RESPONDENT-ASSESSEE'S BOOKS OF ACCOUNTS CAME TO THE CONCLUSION THAT THE REASONABLE PERCENTAGE OF NET PR OFIT TO BE APPLIED IS 17.08%. THE TRIBUNAL RENDERED A FINDING THAT ANNEXURE-L ON WHICH RELIANCE WAS PLACED WHICH INDICA TED A NET PROFIT OF 28. 18% WAS MERELY AN ESTIMATED WORKI NG DONE BY THE RESPONDENT-ASSESSEE. IN THE ABOVE VIEW, THE ISSUE WAS RESTORED TO THE ASSESSING OFFICER TO WORK OUT T HE TAXABLE PROFIT AFTER ADOPTING THE REASONABLE NET PROFIT OF 17.08% ON ITS GROSS SALES TURNOVER OF RS.11.60 CRORES IN THE SUBJECT ASSESSMENT YEAR. (E) THE GRIEVANCE OF THE REVENUE BEFORE US IS THAT THE ADOPTION OF NET PROFIT OF 17.08% AS DETERMINED BY T HE TRIBUNAL IS NOT CORRECT. ALTHOUGH THE QUESTIONS AS FORMULATED DOES NOT STATE THAT THE ADOPTION OF ANY PARTICULAR RATE OF NET PROFIT, IN SUBMISSIONS IT IS SUBMITTED THAT IT HAS TO BE PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 14 REPLACED/SUBSTITUTED BY 65% AS NET PROFIT AS ARRIVE D AT BY THE ASSESSING OFFICER. (F) WE FIND THAT THE REVENUE SEEKS TO SUBSTITUTE TH E ESTIMATED NET PROFIT ARRIVED AT BY THE TRIBUNAL WIT H A NEW FIGURE OF NET PROFIT. THIS WITHOUT IN ANY MANNER SH OWING THAT THE ESTIMATE ARRIVED AT BY THE TRIBUNAL IN THE IMPU GNED ORDER IS PERVERSE. IT IS A SETTLED POSITION OF LAW THAT IN ESTIMATED NET PROFIT ARRIVED AT BY THE AUTHORITIES IS A QUESTION OF FACT AND IF THE MATERIAL ON RECORD DOES SUPPORT THE ESTIMATE ARRIVED AT BY THE TRIBUNAL THEN IT DOE S NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW (SEE CIT VI S. PIRAMAL SPINNING AND WEAVING MILLS LTD. 124 ITR 408). IN TH IS CASE, WE FIND THAT THE NET PROFIT ESTIMATED AT 17.08% IS A VERY POSSIBLE VIEW ON THE FACTS FOUND. (C) HON'BLE SUPREME COURT IN INCOME TAX OFFICER V. ANNAND BUILDERS SLP (C) NO. 14166 OF 2003 THE GUJARAT HIGH COURT DISMISSED TO DEPARTMENT'S APPEAL ON THE GROUND THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FR OM THE ORDER OF THE TRIBUNAL DIRECTING THE AD TO TAX ONLY 8 PER CENT OF THE UNACCOUNTED 'ON MONEY' RECEIPT INSTEAD OF FU LLY TAXING IT. ' PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 15 THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. PRESIDENT INDUSTRIES [2002] 258 ITR 654 : 124 TAXMA N 654 HELD 'DISMISSING THE APPLICATION FOR REFERENCE, THA T THE AMOUNT OF SALES COULD NOT REPRESENT THE INCOME OF T HE ASSESSEE WHO HAD NOT DISCLOSED THE SALES. THE SALES ONLY REPRESENTED THE PRICE RECEIVED BY THE SELLER OF THE GOODS; ONLY THE REALISATION OF THE EXCESS OVER THE COST IN CURRED COULD FORM PART OF THE PROFIT INCLUDED IN THE CONSIDERATI ON FOR THE SALES. SINCE THERE WAS NO FINDING TO THE EFFECT THA T INVESTMENT BY WAY OF INCURRING THE COST IN ACQUIRIN G THE GOODS WHICH WERE SOLD HAD BEEN MADE BY THE ASSESSEE AND THAT THE INVESTMENT WAS ALSO NOT DISCLOSED, ONLY TH E EXCESS OVER THE COST INCURRED COULD BE TREATED AS PROFIT HON'BLE ITAT , AHMEDABAD BENCH IN A CIT VS. SHRI JIGESH VS KORALWALA I(SS) A NO. NO. 262 263 AND 264/AHD/2010 'SINCE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY FOLLOWING THE AHMEDABAD TRIBUNAL DECISION IN THE CASE OF ADINATH CONSTRUCTION DECIDED VIDE ORDER DATED 21.10.20 05 IN ITA NO. 1975 AND 176/AHD. 1999 WHEREIN IT WAS HELD THAT ENTIRE ON- MONEY DID NOT REPRESENT THE RECIPIENT'S INCOME BUT ONLY TO THE EXTENT OF 15% THEREOF AND THE BALANCE 65 % BEING EXPENDED ON THE PROJECT AND NO CONTRARY DECISION WAS CITED BY . THE REVENUE AT THE PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 16 TIME OF HEARING, WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY HIM AND THE SAME IS HEREBY UPHELD. IN THE RESULT, REVENUE'S APPEALS ARE DISMISSED: 18. FROM PERUSAL OF THE ABOVE JUDGMENTS COMMON VIEW H AS BEEN TAKEN THEREBY CONFIRMING THE ADDITION ONLY FOR T HE PROFIT ELEMENT IN ON-MONEY. RESPECTFULLY FOLLOWIN G THE ABOVE JUDGMENT AND EXAMINING FACTS OF THE INSTANCES CASE WE FIND THAT THE ON-MONEY HAS BEEN RECEIVED BY THE ASSESSEE COMPANY FROM ITS BUSINESS ACTIVITY OF DEVELOP ING VARIOUS PROJECTS. UNDOUBTEDLY AGAINST UNACCOUNTED ON- MONEY THERE IS ALSO AN ELEMENT OF UNACCOUNTED EXPENDITURE WHICH CANNOT BE BRUSHED ASIDE AND FURTHER LOOKING TO THE FACT THAT IN THE VERY SAME GROUP CONCER N ADDITION CONFIRMED BY THE ITSC IS @ 25% OF ON-MONE Y. WE ARE THEREFORE INCLINED TO HOLD THAT IN THE INSTANT THREE APPEALS, ADDITION SHOULD BE SUSTAINED, ONLY TO THE EXTE NT OF 25% OF THE ALLEGED ON-MONEY I.E RS. 96,76,800/-, RS.3,09,80,760/- & RS. 50,96,575/- WHICH COMES TO RS.24,19,200/- RS.77,45,190/- & RS.12,74,144/- FOR A.YS. 2009-10 TO 2001-12, RESPECTIVELY. PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 17 19. IN THE RESULT, THIS COMMON ISSUE RAISED IN GROUN D NO.2 & 3 OF THE ASSESSEES APPEAL FOR A.Y. 2009-10 TO 2011- 12 IS PARTLY ALLOWED. 20. NOW WE TAKE UP GROUND NO.4 FOR A.Y. 2010-11 WHER EIN ADDITION U/S 69 OF THE ACT HAS BEEN MADE FOR UNACCOUNTE D PAYMENT FOR PURCHASE OF LAND. 21. BRIEF FACT RELATING TO THIS ISSUE IS THAT DURING T HE EXAMINATION OF WORKING COPIES OF HARD DRIVES FOUND FR OM THE OFFICE OF THE ASSESSEE COMPANY DURING SEARCH IN O NE OF THE EXCEL SHEET IN THE NAME OF PUMARTH PARTH /THAKUR FAMILY DETAILS OF CASH PAYMENT MADE TO THAKUR FAMILY AS ON 05.12.2009 WAS FOUND, AS PER WHICH CASH PAYMENT OF RS. 1,30,53,000/- WAS GIVEN AS UNACCOUNTED MONEY TOWARDS PURCHASE OF LAND. IN THE VERY SAME SHEET DETAILS OF PAYMENT BY CHEQUE TOTALLING TO RS.3.75 CRORES WAS ALSO FOUND. ADDITION FOR THIS UNACCOUNTED PAYMENT OF RS.1,30,53,000/- WAS MADE AND THE ASSESSEE COULD NOT SUCCEED IN GETTING RELIEF FROM THE LD. CIT(A). AS S HE LD. CIT(A) ONLY REFERRED TO THE APPLICATION GIVEN BY THE ASSESSEE BEFORE INCOME TAX SETTLEMENT COMMISSION. PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 18 22. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 23. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND ALSO GONE THROUGH THE JUDGMENTS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE WRITTEN SUBMISSIONS. THE ISSUE RELATES TO ADDITION FO R UNACCOUNTED PAYMENT OF ON-MONEY OF RS.1,30,53,000/ - TO THAKUR FAMILY. WE OBSERVE THAT THE ASSESSEE STARTED A PROJECT IN THE NAME OF PUMARTH PARK. IN THIS PROJECT LAND WAS OWNED BY THAKUR FAMILY AND THE AGREEMENT WAS ENTERED WITH THE ASSESSEE COMPANY TO DEVELOP THE PROP ERTY WITH THE THAKUR FAMILY FOR CONSTRUCTING RESIDENTIAL PLOTS/FLATS. IN CONSIDERATION THERETO AN AMOUNT OF RS.5 .31 CRORE WAS TO BE PAID TOWARDS LAND VALUE AND 50% SHARE IN THE PROFIT EARNED FROM THIS PROJECT. PART OF THIS CONSIDERATION TO THE EXTENT OF RS.3.75 CRORES WAS PAID BY CHEQUE AND FOR THE REMAINING AMOUNT APART FROM THE ALLEGED CASH PAID TO THE THAKUR FAMILY, 18 FLATS MEASURIN G 33795 SQF. WERE ALSO GIVEN TO THEM. THE ISSUE BEFORE US RELATES TO THE UNACCOUNTED PAYMENT OF RS.1,30,53,000/ -. IN THE PRECEDING PARAGRAPH WHILE ADJUDICATING GROUND NO .2 & 3 WE DISCUSSED ABOUT ON-MONEY RECEIVED BY THE ASSESSEE PROJECT IN THE NAME OF PUMARTH PARK & PUMARTH PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 19 MEADOWS. THE PROJECT IN THE NAME OF PUMARTH PARK IS ON THE LAND OWNED BY THAKUR FAMILY. THE ASSESSEE COMPANY HAS RECEIVED ON-MONEY AGAINST BOOKING OF PLOTS FOR PUMARTH PARK FOR WHICH WE HAVE ALREADY SUSTAINED AN ADDITION OF 25% OF THE ON-MONEY. THE DEDUCTION OF 75 % OF THE ON-MONEY INCLUDES VARIOUS EXPENSES INCLUDING CONSTRUCTION COST AS WELL AS ON-MONEY PAID TO THE LAND OWNERS WHICH IS NORMALLY THE SYSTEM ADOPTED BY THE RE AL ESTATE DEVELOPERS IN THE COURSE OF BUSINESS WHERE TH ERE IS UNACCOUNTED RECEIPT AND PAYMENT. ON-MONEY RECEIVED BY THE ASSESSEE FOR BOOKING OF THE PLOTS COMMENCED DURI NG THE F.Y. 2008-09 ON WARDS AND ON PERUSAL OF THE SEIZE D EXCEL SHEET RELATING TO CASH PAYMENT TO THAKUR FAMILY, WE FIND THAT THE PAYMENT HAVE BEEN MADE DURING THE F.Y. 2008-09 AND 2009-10. THE NEXUS IS ESTABLISHED ON-MONE Y RECEIVED FROM BOOKING OF PLOTS HAVE BEEN PAID AS ON- MONEY TO THAKUR FAMILY. THERE IS NO OTHER DOCUMENT FOUND/SEIZED OR PROCURED BY THE REVENUE AUTHORITIES DURING THE ASSESSMENT PROCEEDINGS WHICH CAN CONTROVERT THIS FACT. CERTAINLY, THE ASSESSEE DESERVES TELESCOPING BENEFIT OF THE ON-MONEY RECEIVED AGAINST ON-MONEY PAID. WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE AUTHORITIES OUGHT TO PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 20 APPRECIATE THE DOCUMENTS SEIZED IN CONNECTION TO PUMAR TH PROJECT IN ENTIRETY. 24. HON'BLE GUJARAT HIGH COURT IN COMMISSIONER INCOME TAX -III V. TIRUPATI CONSTRUCTION CO. 230 TAXMAN 19 8 (GUJARAT) '7. AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT, W HILE APPRECIATING A DOCUMENT, IT IS REQUIRED TO BE CONSIDERED IN ITS ENTIR ETY AND IT CANNOT BE CONSIDERED IN PART. IN THE CASE ON HAND, WHILE APP RECIATING THE PAPERS / DOCUMENTS, WHICH ACCORDING TO THE ASSESSING OFFICER, CONTAINED ACCOUNTED AND UNACCOUNTED TRANSACTIONS ON TH E PART OF THE RESPONDENT-ASSESSEE, SHE NOT ONLY FAILED TO EXAMINE I T PROPERLY BUT ALSO FAILED IN ASSESSING THE INCOME AS PER LAW. FURTHER, THOUGH, THE AO, HERSELF, HAD PREPARED THE ACCOUNT OF PROFIT AND LOSS IN RESPECT OF ACCOUNTED AND UNACCOUNTED ENTRIES, SHE DID NOT ASSIGN A NY REASON, AS TO WHY THE PROFIT AND LOSS ACCOUNT OF UNACCOUNTED TRANSACTIONS OF THE RESPONDENT-ASSESSEE CANNOT BE BELIEVED TO BE TRU E. MOREOVER, THE AO ALSO DID NOT TAKE INTO CONSIDERATION THE EXPLANATION S TENDERED BY THE RESPONDENT-ASSESSEE VIDE LETTERS DATED 1 0. 12.2008 AND 29. 12.2008. EVEN, THE WORKING OF THE PEAK BASED ON THE SEIZED DIARY GIVEN BY THE RESPONDENT-ASSESSEE FOR THE CONCE RNED ASSESSMENT YEARS WAS ALSO OVERLOOKED BY THE A 0 AND, HERE AGAIN, NO REASON WAS ASSIGNED FOR THE SAME. WE ARE, THEREFORE, OF THE OPINION THAT THE CIT(A) RIGHTLY HELD THAT IT WOULD B E JUST AND PROPER, IF, THE INCOME FROM THE TRANSACTIONS RECORDED IN THE SEIZED DIARY ARE DETERMINED ON THE BASIS OF HIGHEST PEAK, AS INCREASED BY THE NET PROFIT OF 5% ON THE RECEIPTS AND TAXED ACCORDINGLY, F OR THE RELEVANT ASSESSMENT YEARS. WE DO NOT FIND THAT THE CIT(A) AND I .T.A.T. HAS COMMITTED ANY JURISDICTIONAL ERROR IN PASSING THE IM PUGNED ODERS. 25. OUR VIEW OF GIVING SET OFF OF ON-MONEY PAYMEN T AGAINST THE ON MONEY RECEIVED FOUND SUPPORT FROM TH E ABOVE JUDGMENT OF HON'BLE GUJARAT HIGH COURT AND THUS I N PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 21 THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE O F THE CONSIDERED VIEW THAT THERE WAS NO JUSTIFICATION IN MAKING ADDITION FOR UNACCOUNTED PAYMENT OF RS.1,30,53,000/- PAID TO THE THAKUR FAMILY TOWARDS O N- MONEY FOR LAND DEVELOPMENT PROJECT WHEN ON-MONEY RECEIVED FROM SALE OF PLOTS HAVE BEEN SUBJECTED TO TA X AT NET PROFIT RATE OF 25%. WE ACCORDINGLY ALLOW GROUND NO.4 R AISED BY THE ASSESSEE FOR A.Y. 2010-11 AND DELETE THE ADDITI ON OF RS.1,30,53,000/-. 26. NOW WE TAKE UP GROUND NO.4 FOR A.Y 2011-12 WHERE IN ASSESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY LD. CIT(A) RELATING TO DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.14,40,000/- 27. BRIEF FACTS RELATING TO THIS ISSUE IS THAT THERE W ERE VARIOUS EXPENSES IN CASH, ABOVE RS.20,000/- UNDER DIFFERENT HEADS AS EVIDENT FROM THE TALLY ACCOUNT PLACED ON RECORD BEFORE THE ASSESSING OFFICER. ASSESSEE DID NO T FILE ANY DETAIL SO AS TO PROVE THAT THE ALLEGED AMOUNT SHOULD NOT BE DISALLOWED U/S 40A(3) OF THE ACT. ASSESSE COULD NOT SUCCEED IN APPEAL BEFORE THE LD. CIT(A). 28. NOW THE ISSUE IS IN BEFORE US. PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 22 29. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE REQUES TED FOR SETTING ASIDE THIS ISSUE OF DISALLOWANCE U/S 40A(3) OF THE ACT FOR VERIFICATION AT THE END ASSESSING OFFICER, AS D UE TO THE PAUCITY OF TIME ASSESSEE COULD NOT EXPLAIN ALL THE SE EXPENSES. LD. DEPARTMENTAL REPRESENTATIVE (DR) DID NOT OPPOSE THIS REQUEST. 30. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE ASSESSING OFFICER ALLEGE D THAT THE ASSESSEE HAS INCURRED CASH EXPENSES OVER AND ABOVE RS.20,000/- AND THEREFORE IS LIABLE FOR DISALLOWANCE U/S 40A(3) OF THE ACT. LOOKING TO THE REQUEST OF LD. COU NSEL FOR THE ASSESSEE FOR SETTING ASIDE THE ISSUE WHICH GOES O PPOSED BY THE REVENUE AUTHORITIES. WE DIRECT THE LD. AO TO EXAMINE THIS ISSUE OF DISALLOWANCE U/S 40A(3) OF THE A CT FOR VARIOUS EXPENSES INCURRED IN CASH AFRESH AFTER PROVIDI NG NECESSARY OPPORTUNITY TO THE ASSESSEE FOR FILING DOC UMENTS AND EVIDENCE IN SUPPORT OF ITS CLAIM THAT NO DISALLOWANC E IS CALLED FOR. ACCORDINGLY THIS ISSUE FOR DISALLOWANCE U/ S 40A(3) OF THE ACT IS ALLOWED FOR STATISTICAL PURPOSES. 31. GROUND NO.4 FOR A.Y. 2009-10 & GROUND NO.5 FOR A.YS. 2010-11 & 2011-2 ARE ALTERNATIVE GROUNDS AND IN VIEW OF PUMARTH INFRASTRUCTURE PVT. LTD ITA(SS) NO.175 TO 177/IND/2017 23 THE FACT AS WE HAVE ALREADY ADJUDICATED THE MAIN GROUNDS DEALING WITH THESE ALTERNATIVE GROUNDS WOULD BE MERELY ACADEMIC IN NATURE AND THUS WE FIND NO REASON TO ADJUDICATE THE SAME AND THEREFORE THESE ARE DISMISSED AS ACADEMIC IN NATURE. 32. IN THE RESULT, APPEAL OF THE ASSESSEE FOR A.Y. 20 09-10 & 2010-11 ARE PARTLY ALLOWED AND APPEAL OF THE ASSESSE FO R A.Y. 2011-12 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.201 9. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 12 TH FEBRUARY, 2019 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CI T(A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE