Appeal Details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 3348 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 year(s) 1 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
02-08-2022
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
03-07-2022
Assessment Year
2013-2014
Appeal Filed On
03-06-2018
Judgement Text
आयकर य कर , हमदाबाद याय ‘‘स ’’ हमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD ] ] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND MS. SUCHITRA R. KAMBLE, JUDICIAL MEMBER IT(SS)A Nos. 199 to 201/Ahd/2018 Assessment Years : 2012-13 to 2014-15 Deputy Commissioner of Income-tax, Central Circle-3, Vadodara Vs M/s. Radhe Developers, 201, Triveni Arcade, Anand Vidyanagar Road, Anand-480002 PAN : AAMFR 3769 B IT(SS)A Nos. 164 to 166/Ahd/2018 Assessment Years : 2012-13 to 2014-15 M/s. Radhe Developers, 201, Triveni Arcade, Anand Vidyanagar Road, Anand - 380001 PAN : AAMFR 3769 B Vs Asstt. Commissioner of Income-tax, Central Circle-3, Vadodara ा / (Appellant) य / (Respondent) Assessee by : Shri Mukund Bakshi, CA Revenue by : Shri A.P. Singh, CIT-DR /Date of Hearing : 04/07/2022 /Date of Pr onouncement: 03/08/2022 आदेश/O R D E R PER P.M. JAGTAP, VICE-PRESIDENT : These six appeals, three filed by the Revenue and three filed by the assessee, are cross appeals which are directed against the common order of learned Commissioner of Income-tax (Appeals)-12, Ahmedabad (“CIT(A)” in short) dated 28.03.2018 for Assessment Years 2012-13, 2013-14 & 2014-15. Since the issues involved in these appeals are common and interlinked, the IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 2 same have been heard together and are being disposed of by a single consolidated order for the sake of convenience. 2. The solitary ground raised in the Revenue’s appeals for AYs 2012-13 and 2013-14 and Ground No.1 for AY 2014-15 as well as Ground No.1 raised in the assessee’s appeal for AYs 2012-13, 2013-14 and 2014-15 involve a common issue relating to the additions made by the Assessing Officer on account of on-money receipts and extra work charges for all the three years under consideration which were deleted by the learned CIT(A) to the extent as indicated below:- Particulars AY 2012-13 AY 2013-14 AY 2014-15 - Addition made by the AO Addition deleted by ld. CIT(A) Addition made by the AO Addition deleted by ld. CIT(A) Addition made by the AO Addition deleted by ld. CIT(A) On-Money Receipts 2,72,16,368 2,72,16,368 2,23,28,666 2,23,28,266 70,25,328 70,25,328 Extra work 1,19,85,349 89,89,012 1,12,29,141 84,21,856 34,56,488 25,92,366 2.1 The material facts of the case apropos this issue are that the assessee is a partnership firm which is engaged in the real estate business. A search action under Section 132 of the Income-tax Act, 1961 (“the Act” in short) was conducted in the cases belonging to Anand Group of Builders on 26.04.2013 including the case of the assessee. A notice under Section 153A of the Act was issued by the Assessing Officer on 21.10.2013 for all the three years under consideration; in response to which, returns of income were filed by the assessee on 07.03.2016. During the relevant period, a project in the name of “Triveni Sangam” was developed by the assessee on the land belonging to Bharat Tyres – a group concern related to Triveni Infraspace Pvt. Ltd., which was also covered in the search action. The land for Triveni IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 3 Sangam Project was acquired by the assessee from Bharat Tyres as per the Development and Organization Agreement dated 14.09.2010 which was found and seized during the course of search from the residence of Shri Viresh N. Shah at page nos.196 to 204 of Annexure A-7. As per the said agreement, the proceeds received against the sale of land pertaining to Triveni Sangam project were to be received from each customers by Bharat Tyres and the proceeds received against construction/development of the respective units were to be received by the assessee-firm. During the course of search, various incriminating documents related to receipt of on-money were found from the residence of Shri Viresh N. Shah, partner of the assessee-firm. As per the details of such receipts contained in Annexure A- 10, on-money and extra work charges aggregating to Rs.6,20,87,908/- and Rs.2,82,09,952/- were received by the assessee in respect of Triveni Sangam project. In his statement recorded on 27.04.2013, Shri Viresh N. Shah, partner of the assessee-firm, stated in reply to Question No.17 that the amount of Rs.6,20,87,908/- received as on-money for the Triveni Sangam project was unaccounted income of the assessee and after reducing the expenses of Rs.1,21,18,000/-, which he estimated @ Rs.73,000/- for 166 row houses each, the net unaccounted income of the firm was Rs.4,98,82,000/-. He accordingly accepted the net unaccounted income of the assessee-firm from on-money receipts relating to Triveni Sangam project at Rs.5,00,00,000/-. In the returns of income filed in response to the notices issued by the Assessing Officer under Section 153A of the Act for all the three years under consideration, the assessee-firm however offered additional income on account of on-money related to Triveni Sangam project at Rs.50,00,000/-, Rs.96,00,000/- and Rs.12,00,000/- for AYs 2012-13, 2013-14 and 2014-15 as under:- IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 4 Particulars AY 2012-13 AY 2013-14 AY 2014-15 Total Rs. Sales offered by Radhe Developers (Construction income) 2,66,22,783 6,81,61,026 1,60,05,356 11,07,89,165 Sales offered by BTGPL (Land Income) 4,00,24,771 6,00,20,164 - 10,00,44,935 On-money @29.6556% of sale offered 1,97,64,741 3,80,12,917 47,46,486 6,25,24,144 Profit @ 25% of On- Money 49,41,185 95,03,229 11,86,622 1,56,31,036 Rounded off to 50,00,000 96,00,000 12,00,000 1,58,00,000 2.2 The assessee thus claimed that the entire on-money receipts could not be treated as its income and only the profit element embedded in the same should be treated as its income after allowing deductions for the expenses incurred out of the on-money receipts. In support of this claim, reliance was placed by the assessee on various decisions of the Tribunal wherein the profit from on-money receipts was estimated in the range of 8% to 15%. This claim of the assessee was not found acceptable by the Assessing Officer in the absence of any documentary evidence to support and substantiate that 75% of the on-money receipts were expended by the assessee outside the books of account. According to him, the expenses claimed to be incurred by the assessee out of on-money receipts for road, light, water, land measuring etc. were normal expenses of construction business and the assessee must have already claimed the same in the books of account. He held that the receipt of on-money from Triveni Sangam project amounting to Rs.6,20,87,908/- during the three years under consideration was accepted by the partner of the assessee-firm in his statement recorded during the course of search and even though it was claimed by him in the said statement that the expenditure of Rs.1,21,18,000/- estimated @ Rs.73,000/- for 166 row houses each was incurred from the on-money receipts, there IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 5 was no evidence produced by the assessee to support and substantiate the said claim. The Assessing Officer held that the entire on-money of Rs.6,20,87,908/- received in respect of Triveni Sangam project thus was undisclosed income of the assessee for all the three years under consideration. He also held that similarly the amount of Rs.2,82,09,952/- received by the assessee in cash in relation to the Triveni Sangam project towards extra work charges as reflected in the incriminating material found and seized during the course of search was undisclosed income of the assessee and in the absence of any proof in the form of bills/vouchers produced by the assessee to support and substantiate his claim that the same was in the nature of expenditure actually incurred by the assessee, the entire amount of Rs.2,82,09,952/- represented undisclosed income of the assessee for the three years under consideration. He accordingly made additions of Rs.3,92,01,717/-, Rs.3,34,57,807/- and Rs.1,04,81,816/- to the total income of the assessee for AYs 2012-13, 2013-14 and 2014-15 being the undisclosed income of the assessee in the form of on-money receipts and extra work charges received in respect of Triveni Sangam project. 2.3 The additions made by the Assessing Officer on account of on-money receipts and extra work charges pertaining to Triveni Sangam project by treating the same as undisclosed income of the assessee in all the three years under consideration were challenged by the assessee in the appeal filed before the learned CIT(A). During the course of appellate proceedings before the learned CIT(A), the following submissions inter alia were made on behalf of the assessee in support of its case that only profit element embedded in the on-money receipts as offered in the return of income @ 25% can be treated as its income and the extra work charges received by the assessee being in the nature of reimbursement of actual expenditure IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 6 incurred by the assessee, there could not be any profit element embedded in the said charges which is to be treated as income of the assessee:- “2.1 Profit out of On-Money: It was explained that in the business of the appellant several expenses are required to be incurred out of On-Money, and considering this fact, large number of authorities have held that the profit liable to be taxed out of the On-Money is between 8% to 15%. The authorities relied upon are listed as under: Sr No. Citation % a) Kishor Telwala V. ACIT – 64 TTJ 543 (Ahd.) : 8% of on-money b) Abhishek Corporation – 63 TTJ 651 (Ahd.) Confirmed by Hon’ble Gujarat High Court in ITR No. 15 of 2003 dated 07.11.2014 : Net profit on on- money applied, no profit rate given. c) Wall street Construction Ltd V. DCIT, 75 TTJ 653 – ITAT, Mumbai (TM) : 12% on on-money d) ITO Vs. Saikrupa Construction Co., 13 SOT 459 (Mum) : 15% on gross receipt The appellant may also refer to the following unreported decision of Ahmedabad Bench of ITAT in the cases of: i. ITO Vs. Anand Builders which travelled upto the Hon'ble Supreme Court and the principle that in the case of collection of on-money only 8% of the total collection should be treated as income was upheld as SLP in this case is rejected as reported in 265 ITR 37 (St.). ii. M/s Jay Builder Vs. ACIT in I.T.A. No. Nos.1821 & 1822/Ahd/2003 dated 17.09.2010 wherein the Hon'ble Tribunal has held as under: ".........Considering the totality of the facts and circumstances of the case, we direct the AO to apply a net profit rate of 25% on the cash amount and treat the resultant figure as income of the assesses rather taxing entire sum of 'on money'." iii. ACIT Vs. Jignesh Koralwala in IT(SS)A Nos. 262, 263 &264/Ahd/2010 dated 10.05.2013 wherein the profit percentage is considered @ 15% of on-money received. Copy of this order is separately enclosed. 2.2 Amount received towards extra work: IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 7 It was explained, referring to the seized document, that the amount of money received towards extra works actually represent the money for : a) Maintenance charges b) Electricity Connection charges c) Gas pipeline charges d) Service tax e) Stamp duty and Registration charges In support of the above, the appellant furnished bifurcation of such amount in respect of certain Units (refer page no. 35 of the Paper Book). It was further emphasized that these receipts is not the income of the appellant. As can be seen that even the receipts and amount as recorded under the column of 'cheques' in the seized records is lesser than the amount recorded in the books of accounts as received by cheques. In support of this contention, the appellant had submitted to the Ld. A.O. a chart showing the sales as per books upto 31.03.2014 at Rs. 21,08,34,100/- whereas the receipts by cheque as per the chart seized in respect of all the Units (including unsold Units) is Rs. 20,93,63,092/-. As per the chart itself, the value of unsold Units is Rs.98,45,000/-, the particulars of which Unit-wise is enclosed at Page No.67 of the Paper Book. This evidences that the portion of receipts under the head "Extra Work" is partially received by cheques and it is not the receipt which is unaccounted. It was further explained that maintenance charges is collected from all the customers as deposit and it is handed over to the Society of the owners to be formed. It was also submitted that the appellant shall be handing over the amount of deposit at a later date. The electricity connection charges and gas pipeline charges are the amount collected for obtaining the connection for the occupants / residents. These amounts are paid to the utility services providing companies on their behalf and that the appellant is not entitled to such receipts. The copy of ledger accounts as extracted from the books of accounts produced in the course of assessment is enclosed at Page No. 68 - 78 of the Paper Book. Likewise, the copy of the ledger account evidencing the payment of service tax is enclosed at Page No. 79 - 86 of the Paper Book. The stamp duty and registration charges are paid to the respective authorities and these amounts are the reimbursements of the payments made by the appellant. The payment of stamp duty, registration charges etc. is evidenced on the basis of the copy of Conveyance Deeds as seized in the course of search. To illustrate, the copy of the following document is furnished at Page No. 87 - 166 of the Paper Book: IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 8 Unit No. Name of the Customer Amount of stamp duty / registration as per the seized chart Amount actually paid for stamp duty & registration charges Amount paid for drafting etc. Document impounded from the office of BTGPL 23 Dixit P. Pathak 46,000 35,850 10,150 Annex. A-29 Page 19-36 87 Ashokbhai R. Prajapati 39,800 32,350 7,450 Annex. A-29 Page 54-71 91 Anilkumar D. Patel 53,000 45,600 7,400 Annex. A-32 Page 56-75 164 Dharmendra V. Patel 39,350 32,250 7,100 Annex. A-30 Page 116 - 134 2.3 Further On-Money quantified on the basis of statements of the Customers: The Ld. A.O. on the basis of statements recorded upon issue of summons u/s 131, found that the appellant has received On-Money in excess of the amounts recorded in the seized material. The amount quantified for the three years is as under: The appellant submitted to the Ld. AO that the copies of statements recorded should be furnished as also an opportunity of cross examination should also be provided. In absence of such procedure, no cognizance of third party depositions can be taken. It was further submitted that there is no reason for not recording the amounts actually received when the appellant has maintained an elaborate record. The copy of submission in this regard can be seen at Page Nos. 167 - 171 of the paper book. Ignoring the above claims and submissions of the appellant, the Ld. A.O. made the additions on the above counts in the years under consideration as tabulated hereunder: Asst. Year Amount Rs. 2012-13 14,09,108 2013-14 24,18,880 2014-15 23,14,000 Total 61,41,938 IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 9 Being aggrieved by the above additions, the appellant is in appeal. Since the issues involved in all the appeal are identical, it is requested that the same may be decided on the basis of common submissions made. 3.0 The appellant submits that the action of the Ld. A.O. in the addition is grossly unjustified and unwarranted as explained and discussed in respect of the each of the additions hereafter. Prior to same, it would be relevant to submit that the statement given by Shri Viresh Shah u/s. 132(4), as discussed above, is not honoured and is to be considered as retracted considering the fact that while filing the return of income in response to notice u/s. 153A, the income as disclosed is not offered. The appellant submits to your kind self that the statement given by Shri Viresh Shah is admittedly with respect to the receipt of On-Money totalling Rs.6.21 Crores. This was based on the working found from the computer backup in respect of all the Units totalling 166 duplexes and 44 shops including the unbooked Units indicating the fact that the quantification was made without proper appreciation of the material. Likewise, the claim of expenditure of Rs.73,000/- per Unit out of On-Money collection has no basis and it is apparently evident that such amount was obtained to arrive at a round figure of disclosure of Rs.5.00 Crores. In the search, no corresponding unexplained assets or expenditure to the tune of the amount of disclosure was found nor any effort was made by the Investigation Authorities to find the application of such income. It is also relevant to mention that in the case of the other group concern TIPL, the Director Shri Kalpesh Verma had offered 20% of the On-Money even in the course of statement (kindly refer running page no. 24 of the order of the Hon'ble ITSC (Paper Book Page No. 195). Thus on the same day, Shri Viresh Shah has offered a higher amount of profit without any basis. Sr. No. Particulars of addition AY 2012-13 AY 2013-14 AY 2014-15 1. On- Money 2,72,16,368 2,23,28,666 70,25,328 2. Extra work 1,19,85,349 1,12,29,141 34,56,488 3. Further On-Money on the basis of statements 14,09,108 24,18,880 23,14,000 4. Unaccounted income pertaining to Unsold Units - - 1,06,54,664 Total 4,06,10,825 3,59,76,687 2,34,50,480 IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 10 It is further submitted that there is no requirement under law providing that the retraction has to be made in a specific manner or within specified time. The fact that the amount is not disclosed in the return itself substantiates the fact that the appellant has retracted from the statement. As explained in para 1.4 and 3.4, there are various anomalies in the quantification of the amount of On-Money at Rs.6.21 Crores whereas the actual amount is higher. Moreover, the quantification is made in respect of all the Units even where it is unsold and, therefore, such statement can be seen to be given without appreciation of correct facts. It is a settled proposition that once a statement is deemed to be retracted, the same cannot be relied upon. CIT Vs. M. P. Scrap Traders 372 ITR 507 (Guj.) Kailashben Maharlal Choksi 328 ITR 411 (Guj.) Chandrakumar Jethrnal Kochar 55 taxmann.com 292 (Guj.) Chetnaben J. Shah Vs. ITO [2017] 79 taxmann.com 328 (Gujarat) 3.1 On Money Collection It is an undisputed fact that the On Money collected by a developer /builder from customers is a part of the sale consideration which is not recorded in the books of accounts. Nonetheless, the fact remains that it is a part of the sale consideration, which is received and collected in the course of business where substantial amount is required to be incurred in cash. It is a settled proposition that the sale receipts cannot be subjected to tax on gross basis and only the income embedded is to be taxed. The authorities for this proposition are as under: • CIT Vs. President Industries, 258 ITR 654 (Guj) Reference—Question of law—Income from unaccounted sales—Tribunal held that entire sales could not be added as income of assessee but addition could be made only to the extent of estimated profits embedded in sales for which net profit rate was adopted—-There is no finding or material about suppression of investment in acquiring the goods which are subject of undisclosed, sales—No referable question of law arises • Commissioner of Income Tax vs. Samir Synthetics Mill 326 ITR 410 (Guj) Income from undisclosed sources—Addition—Suppression of sales—CIT(A) restricted the addition to the extent of estimated profit—Tribunal upheld the IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 11 order of CIT(A)— Considering the concurrent findings of CIT(A) and the Tribunal regarding the amount of addition on account of papers found during search, there is no merit in the Department's appeal since whether there was any suppression of sale or not is basically a question of fact • Deputy Commissioner Of Income Tax Vs. Parma Corporation 74 DTR (Guj) 89 Income—Taxability—Whether entire receipt on account of on-money could be taxed in the hands of the assessee or only the income embedded in such receipt—Assessee, partnership firm received on money of Rs.62 lakhs during the block period for sale of the flats, which the Assessing Officer brought to tax—Tribunal did not permit the revenue to collect the tax on the entire receipt believing it was only the income embedded in such receipt which can be subjected- to tax—Held, consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves—If that be the legal position, what should be estimated as a reasonable profit out of such receipts, must bear an element of estimation—In view of the legal position that not the entire receipts, but the profit element embedded in such receipts can be brought to tax, no interference is called for in the decision of the Tribunal accepting such element of profit at Rs.26 lakhs out of total undisclosed receipt of Rs.62 lakhs—Revenue's appeals dismissed • CIT V. Balchand Ajit Kumar 263 ITR 610 (MP) Considering the above proposition, the authorities have also held that the income in the case of builders / developers out of the On money is ranging from 8% to 15% as per the decisions referred in para 2.1 above. It is further submitted that in the case of TIPL, another entity of the group, in whose case, the documents evidencing the collection of On Money relating to their project Triveni Yishwa was found and seized from the residence of Shri Viresh Shah, partner of the appellant. In the case of TIPL, the project Triveni Vishwa comprises of 300 residential units and the On-Money collected is Rs.20.87 crores, out of total collection of Rs.55.03 Crores. The Triveni Vishwa Project is undertaken during the A.Ys 2011-12 to 2014- 15 and is located adjacent to the project undertaken by the appellant. In the case of TIPL, the case was taken to Hon'ble ITSC for settlement. The case is IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 12 settled by an order made u/s 245D(4) on 18.07.2017. The copy of this order is placed at Page No. 172 - 272 of the paper book. In the application filed before the Hon’ble commission, it was admitted that the total On-Money collected by TIPL in the case of Triveni Vishwa Project is of Rs.20.86 crores and another Rs.18.83 crores is estimated as collected in the case of Triveni Land Mark project (Please refer para 4.10, running page 22, and Page No. 193 of the paper book), The income quantified out of On Money receipts is Rs.7.94 crores and the total income offered is Rs.8.46 crores. Out of such On Money receipts, TIPL has offered income at the rate of 20% of On Money (Refer running page 25, and Page No. 196 of the paper book). In the final proceedings, the Hon'ble Commission, considering all the facts, finalized the case by accepting further additional income of Rs.1.00 crores as discussed in paras 10.1(B) to 11, running page 82 to 86, and Page Nos. 253 - 257 of paper book). It may be clarified that the further additional income is not on account of-profit from On-Money but on other account. It is thus submitted that in the case of another group concern, Hon'ble ITSC has accepted and finalized a profit rate of 20% out of On-Money as reasonable profit in the appellant's line of business, supporting the claim of the appellant that the profit disclosed and offered by it at the rate of 25% out of On Money is to be considered adequate and reasonable based on the various authorities as discussed above. It is thus submitted to your honour that the Ld. A.O. be directed to hold and accept the amount of profit offered in the return of income and the addition made directly to be deleted. 3.2 Extra work income: Perusal of the chart at Page Nos. 1-4 would indicate that the amounts collected under this head represents the amounts collected for extra work. The evidences furnished by the appellant, as discussed in para 2.2 above, sufficiently justify and substantiate that no portion of the amount collected as above can be independently taxed. Without prejudice to the above the appellant submits that in the event of the claim of the appellant of not taxing this receipts, is not found tenable, the learned AO may please be directed to adopt and apply the rate of profit as may be decided in respect of on-money receipt discussed in para 3.1 above.” IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 13 2.4 After considering the submissions made by the assessee as well as the material available on record, the learned CIT(A) accepted the contention of the assessee that only the profit element embedded in the on-money receipts as offered by the assessee in the returns of income at 25% was liable to be treated as income of the assessee and not the entire on-money receipts as held by the Assessing Officer. He accordingly deleted the additions of Rs.2,72,16,368/-, Rs.2,23,28,266/- and Rs.70,25,328/- made by the Assessing Officer to the total income of the assessee on account of on-money receipts for AYs 2012-13, 2013-14 and 2014-15 respectively for the following reasons given in paragraph Nos.5 to 5.11 of his impugned order:- 5. I have carefully perused the assessment orders and diligently considered the appellant's submissions along with details filed in relation to the settlement petition and various other expenses claimed to be incurred by the appellant on behalf of the customers in the project, Triveni Sangam. I note that in the assessment order for the A.Y 2014-15 the section mentioned is "u/s 153A r.w.s. 143(3) of the Income Tax Act" should be "u/s 143 of the Income Tax Act". The same would stand corrected. 5.1 There is no dispute as to the amount of on-money cash receipt of Rs.6,20,87,908/- as per Annexure-A10 and admitted disclosure of Rs.5,00,00,000/- after reducing the expenses of Rs.1,21,18,000/- (@ Rs.73,000 per row house) in the hands of the appellant as stated by Shri Viresh Shah, partner of the appellant during the course of search. However, the appellant has offered Rs.50,00,000/- for A.Y. 2012-13, Rs.96,00,000/- for A.Y. 2013-14 and Rs.12,00,000/- for A.Y. 2014-15 i.e. only Rs.1,58,00,000/- in total as additional income on account of on-money cash receipts in the returns of income for the purpose of assessment proceedings u/s 153A of the Act. In substance, the appellant has not honoured the admitted disclosure of Rs.5,00,00,000/- and instead has offered only Rs.1,58,00,000/- for which, the reason of the appellant is that undisclosed expenses in cash had been incurred by the appellant for various work related to completion of the project. It is contended by the appellant that it has quantified the on-money in proportion to the recorded receipts towards the sale of land, amount due to the appellant and that the on-money worked out is of Rs.6.21 crores and that the ratio of on-money vis-a-vis the recorded receipt is 29.6556%, that the on-money IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 14 amount has been offered in 3 assessment years in the ratio of sales recognized in the books of account, that the total on-money of Rs.6.25 crores has been apportioned, that a profit percentage rate of 25% considering the profit element in the on-money receipt has been applied and offered to tax as additional income on account of the search u/s 132. The same is as under:- Particulars A.Y. 2012-13 A.Y. 2013-14 A.Y. 2014-15 Total Rs. Sales offered by Radhe Developers (Construction Income) (Rs.) 2,66,22,783 6,81,61,026 1,60,05,356 11,07,89,165 Sale offered by BTGPL (Land Income) (Rs.) 4,00,24,771 6,00,20,164 - 10,00,44,935 Total Sales (Rs.) 6,66,47,554 12,81,81,190 1,60,05,336 21,08,34,080 On-money @ 29.6556% of sale offered (Rs.) 1,97,64,741 3,80,12,917 47,46,486 6,25,24,144 Profit @ 25% of On- money (Rs.) 49,41,185 95,03,229 11,86,622 1,56,31,036 Rounded off to 50,00,000 96,00,000 12,00,000 1,58,00,000 For the purpose of adopting only profit out of on-money (instead of the entire on-money itself) for the purpose of tax, reliance has been placed on various decisions of the Tribunals including decisions of Jurisdictional ITAT, Ahmedabad where it has held that profit liable to tax out of the on-money is 8% in Kishore Telwala v/s. ACIT, 64 TTJ 543 and 15% in Jay Builder v/s. ACIT in ITA No. 1821-1822/Ahd/2003 dated 17.09.2010. This approach of the appellant has not found favour of the AO and accordingly the AO has added Rs.3,92,01,77/- in A.Y. 2012-13, Rs.3,35,57,807/- for the A.Y. 2013- 14 and Rs.1,04,81,816/- and Rs.1,06,54,664/- for A.Y. 2014-15 and thereafter deducted Rs.50,00,000/- for A.Y. 2012-13 and Rs.96,00,000/- for A.Y. 2013-14 and Rs.12,00,000/- for A.Y. 2014-15 to avoid double taxation of these amounts already offered as additional income on account of search. It is noted that the amounts added to the total income cover both the on-money cash receipts on account of sale consideration of the constructed units and the cash receipts towards extra work charges for the customers. 5.3 Thus the only issue to be decided in the context of on-money cash receipts as per Annexure A/10 is as to whether the on-money received by the appellant should be taxed as a whole or only the profit earned on those on- money receipts should be taxed. The issue in the present case is also of the admitted undisclosed income in the statement recorded vis-a-vis the additional income offered in the returns of income. IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 15 5.4 In this regard, 1 note that the entries in the lap top of the Shri Viresh Shah and the loose papers marked Annexure-A10 are only about various receipts by the appellant in relation to its project, Triveni Sangam. These receipts are of sale consideration both cheque and cash (recorded and unrecorded in the hooks of accounts) and of extra work charges not recorded in the books. As to the sale consideration, whether in cheque or in cash there is no dispute between the appellant and the AO. It is only in the context of unaccounted expenses out of the on-money cash receipts (in relation to sale consideration) that Shri Viresh Shah in his statement during the course of search, sought set off of unrecorded expenses @ Rs.73,000 per row house (and thereafter undisclosed income of Rs.5 crores was admitted) but while filing the returns of income for proceeding u/s 153A, the appellant sought set off of 75% of on-money cash receipts. The unaccounted expenses now sought to be adjusted against the on-money cash receipt (as per Annexure A/10) are on account of various extra work (plumbing material purchase, carting expenses, pest control expenses, JCB work, sanitation drainage work, brokerage expenses, site expenses as mentioned in the submission dated 21.03.2016 made before the AO) and unaccounted expenses required to be incurred for various business purposes (such as cost of liaisoning in obtaining approval of for construction, cost of liaisoning for obtaining NA use permissions, cost of marketing of housing schemes by providing incentives to brokers and land levelling expenses etc. as mentioned in the submission dated 21.03.2016 made before the AO). It was contended by the appellant before the AO that all these costs are necessarily required to be incurred in the course of business and the evidences of having incurred such expenses are difficult to obtain. 5.5 I must admit that in the real estate and building construction there are receipts in cash (on-money) by the builder as well as cash (unaccounted) expenses by the builder. What I do not agree with the appellant is that all these heads of expenses enumerated by the appellant are required to be necessarily incurred in cash and out of the books of account as some of those expenses are cost of the project and allowable under the Act. But, I do feel that all the liaisoning and approval work with various organizations might have required incurring expenses in cash and in kind which could not have been recorded in the books of accounts and that these are met out of the cash (on-money/unaccounted) receipts. So, there is limited but reasonable case of the appellant here. However, determination of these amounts, if not found recorded in the seized materials in absence of any seized/requisitioned materials, have to be considered as per the judgements of the Tribunals and the Courts. IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 16 5.6 At the same time, it is also noted that as during the course of search set off of Rs.73,000 per row house was sought by Shri Viresh Shah for which, there was no documentary evidence, similarly there was and cannot be documentary evidences of having incurred cash and unaccounted expenses for various liaisoning and approval work related to the project. So also while the papers in Annexue-A10 are only about various receipts there might or might not have been various other loose papers related to some of cash and unaccounted expenses. The assessment order is silent on this unaccounted expense aspect of the project and the business of the appellant. I note that in the submission dated 21.03.2016 made before the AO, the appellant has drawn attention towards some such expenses (in context of expenses to be set off against on-money cash receipt) wherein the seized documents vide Annexure-A1 and Annexure-A2 at the place of Triveni Sangam Site and Annxure-A1 at residence of Shri Viresh Shah are specifically mentioned. 5.7 It also appears that while preparing the returns of income, the appellant might have considered the unaccounted and cash expenses actually incurred and might have discovered the settled principle that the entire on-money cash receipts was not required to be offered to tax and that only the profit rate had to be adopted for the purpose of additional income and taxation. 5.8 Over and above the decisions of various tribunals, for the purpose of expenditure out of on-money collection and profit rate out of on-money collection, reliance has also been placed by the appellant on the order u/s 245D(4) dated 18.07.2017 of Hon’ble Settlement Commission in the case of M/s. Triveni Infraspace Pvt. Ltd. (TIPL) (for A.Ys. 2011-12 to 2014-15) and Shri Nipul H. Patel (for A.Ys. 2008-09 to 2014-15), the members of the related Group and covering the nearby projects in the name and style of ‘Triveni Landmark' and ‘Triveni Vishwa' where also there were evidences of on-money receipts and income @ 20% of on-money was offered by TIPL which has been accepted by the Hon'ble Commission. It is also verified that that further additional income offered by these applicants before the Commission is not related to the on-money cash receipts. 5.9 I find that the evidences found during the course of search in the Laptop of Shri Viresh Shah i.e. Annexure-A10 which has been reproduced in the assessment order, the on-money cash received in column-5 under the head 'cash' which is Rs.6,20,87,908/- has been re-worked by the appellant on higher side at Rs.6.25 crores for the purpose of filing returns of income for the proceedings u/s 153A. Thus, there is no shortfall in the "gross offer" by the appellant. As to the additional income actually offered of Rs.1,58,00,000/- in 3 assessment years worked out @ 25% of the re-worked on-money cash IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 17 receipt (though less than the admitted undisclosed income of Rs.5,00,00,000/-) is found to be more than the rates held justified by the Jurisdictional ITAT, Ahmedabad (which has held 8% to 15% of total on- money cash-receipt as justified) and the rate accepted by the Hon’ble Settlement Commission (in case of group entities and nearby projects @ 20% of total on-money cash receipt) has to be accepted being as per the relied upon decisions and the "retraction from admitted undisclosed income" has to be borne with. To my mind, the CIT(A) is bound by the judgements and the principles laid down by the Jurisdictional ITAT/Courts. Thus the AO is not justified in not allowing the expenses out of the books to be adjusted against the on-money cash receipt out of the books and in rejecting the additional income as offered in the returns of income by the appellant. The additional income on account of on-money cash receipt being higher than the rate as discussed above by ITAT and ITSC has to be accepted. Therefore, the additions made by the AO cannot be sustained. 5.10 In various other judgements also of the Jurisdictional ITAT, Ahmedabad -Adinath Construction ITA No.1975 & 1976/Ahd/1999, DCIT Vs. Pramukh Builders 112 ITD 179 (Ahd) (TM) - it has been held that entire on-money did not represent the recipient's income but only to the extent of 15% thereof, the balance being expended in the project. 5.11 As already noted before, the additions made by the AO on account of on-money cash receipt has two components - on-money cash receipt on account of construction sale (i.e. Rs,6,20,87,908/-) and cash receipt for extra work charges (i.e. Rs.2,66,70,976/-) - for A.Y.2013-13, Rs.3,92,01,717/- (Rs.2,72,16,368/- + Rs.1,19,85,349/-), for A.Y.2013-14 Rs.3,34.,57,807/- (Rs,2,23,28,666/-+ Rs.1,12,29,141/-) and for A.Y.2014-15 Rs. 1,04,81,816/- (Rs.70,25,328/- + Rs.34,56,488/-). Accordingly in view of the judgement of the ITATs and the order of the ITSC and the appellant having offered Rs.50,00,000/-, Rs.96,00,000/- and Rs. 12,00,000/- for A.Yrs.2012-13, 2013- 14 and 2014-15 respectively in the returns of income as discussed before, the additions of Rs.2,72,16,368/- for A.Y.2012-13, Rs.2,23,28,266/- for A.Y.2013-14 and Rs.70,25,328/- for A.Y.2014-15 are directed to be deleted. The appeal succeeds on this ground.” 2.5 The learned CIT(A), however, did not accept the contention of the assessee that the extra work charges received in the years under consideration aggregating to Rs.2,82,09,952/- being in the nature of reimbursement of expenditure actually incurred by the assessee, no IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 18 additions can be made in the hands of the assessee on account of the said receipts. He held that the profit element embedded in the said receipts was liable to be treated as income of the assessee chargeable to tax; and, estimating the same @ 25%, the learned CIT(A) partly sustained the addition made by the Assessing Officer on this issue to that extent for the following reasons given in paragraph No. 5.12 of his impugned order:- “5.12 As to the receipt of Rs.2,82,09,952/- as per the Annexure A/10 towards extra work charges, it has been submitted by the appellant that the amount of money received towards extra work was not the income of the appellant and that the amount collected had been spent towards maintenance charges (Rs.25,000/-), electricity connection charges (Rs.25,000/-), gas pipeline charges (Rs.15,000/-), service tax (Rs.33,184 to Rs. 52,854), stamp duty and registration charges (Rs.40,190/- to Rs.55,103/-), details of which in the case of about 13 persons and relevant evidences have been given in the paper book. This contention was taken before the AO also and break-up and evidences of such sample expenses were laid before the AO which are placed in the paper book also. I note that in the Annexure-A10 as explained by Shri Viresh Shah, Col. 6 contains amount received for extra work, Col. 7 contains amount received for gas connection and Col. 8 to 18 contain payments received from time to time and Col. 19 contains total of cash amount received. I am of the opinion that had the appellant accounted for these receipts and the expenses for extra works in the books of accounts (which it could/should have), there would have been no basis to reject the appellant's narrations/explanations on this aspect in the incriminating document(s). Though ideally the statement during the search has to be considered in its totality and not to be used selectively for the purpose of assessment and adjudication, but same cannot be done in the case. I note that though the receipts for extra work charges are out of the books of accounts, the appellant has shown some of the expenses related to electricity and gas connection in the books i.e. the expenses recorded in the books of accounts cannot be set off against the extra work charges receipts which are outside the books of accounts. However, at the same time, the AO's treatment of adding the entire receipt for extra work charges i.e. Rs.2,82,09,952/- to the total income of the appellant does not appear correct and tenable. To me, in spite of some sample expenses of extra work furnished by the appellant, it appears appropriate that the appellant has earned profit out of the extra work charges also. It appears in the fitness of the things that 25% of the extra charges receipts also should be treated as profit of the appellant (which has not been offered by it in the returns of income) as the additional income of the IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 19 appellant to be taxed in respective years. Accordingly the AO is directed to substitute the addition of Rs.1,19,85,349/- for A.Y.2012-13 with Rs.29,96,337/-, addition of Rs. 1,12,29,141/- for A.Y.2013-14 with Rs.28,07,285/- and Rs.34,56,488/- for A.Y.2014-15 with Rs.8,64,122/- on account of extra work charges receipts in Annexure A/10. The appeal succeeds partly on this ground.” 3. The learned DR submitted that the on-money of Rs.6,20,87,908/- was found to be received by the assessee in cash pertaining to its Triveni Sangam project on the basis of the incriminating documents found and seized during the course of search. He submitted that the factum and quantum of on-money receipts was accepted by the partner of the assessee- firm in his statement recorded during the course of search in reply to the question no.17 and even the undisclosed income of Rs.5,00,00,000/- from such receipts was surrendered by him in the hands of the assessee-firm. He submitted that even though the net amount of Rs.5,00,00,000/- was agreed to be surrendered as undisclosed income by the partner of the assessee-firm in his statement recorded during the course of search after claiming deduction on account of expenses incurred from the undisclosed on-money receipts estimated @ Rs.73000/-for 166 row houses each, no evidence in the form of bills/vouchers could be produced by the assessee during the course of assessment proceedings to support and substantiate the said claim of the expenditure. He contended that the Assessing Officer, therefore, was fully justified to treat the entire on-money receipts pertaining to Triveni Sangam project as undisclosed income of the assessee for all the three years under consideration as the receipt of the said money in cash outside the books of account was duly established on the basis of incriminating material found during the course of search and accepted by the partner of the assessee. He contended that there was nothing found during the course of search and even brought on record by the assessee during the course of assessment IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 20 proceedings to establish that any expenditure was incurred by the assessee outside the books of account from the on-money receipts and in the absence of the same, the learned CIT(A) was not justified in allowing the claim of the assessee for deduction on account of such expenditure to the extent of 75% of the on-money receipts. He contended that there was no question of making any estimation to determine the undisclosed income of the assessee on account of on-money receipts in the facts and circumstances of the case and the Assessing Officer was fully justified in assessing the entire on- money receipts as undisclosed income of the assessee for the years under consideration. He contended that similarly there was no evidence in the form of any bills/vouchers produced by the assessee to prove that any expenditure out of the extra work charges received during years under consideration was actually incurred by it. He contended that the extra work charges were received by the assessee in cash outside the books of account and in the absence of any evidence produced by the assessee in the form of bills/vouchers to establish that the amount so received or any portion thereof was incurred for any expenditure outside the books of account, the entire amount of extra work charges received by the assessee was rightly assessed by the Assessing Officer as undisclosed income of the assessee. He accordingly strongly relied on the orders of the Assessing Officer in support of the Revenue’s case on this issue. 4. The learned Counsel for the assessee, on the other hand, submitted that the entire on-money receipts of Triveni Sangam project were treated by the Assessing Officer as undisclosed income of the assessee for the three years under consideration mainly on the basis of the statement of Shri Viresh N. Shah, partner of the assessee-firm, recorded during the course of search. He contended that even though the undisclosed income on account IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 21 of on-money receipts to the tune of Rs.5,00,00,000/- was agreed to be surrendered by the partner of the assessee-firm in his statement after claiming deduction on account of expenditure of Rs.1,21,18,000/- @ Rs.73,000/- for 166 row houses each, there was no basis for estimating such expenditure and it was just a rough estimate which was made by the partner of the assessee-firm even without taking into consideration that there were 44 shops also in the Triveni Sangam project. He pointed out that there was no undisclosed asset or investment found to be made by the assessee-firm during the course of search and had the assessee-firm earned the entire on-money receipts as income, it would have certainly reflected in some investments made in undisclosed assets. He further submitted that the total sale proceeds of Triveni Sangam project including on-money receipts were Rs.27.15 crores and if the same are taken net of land cost, the profit assessed by the Assessing Officer for three years under consideration at Rs.11.84 crores comes to 70% of the net sale receipts of the project. He contended that such high profit is certainly exorbitant and unrealistic; and even if the profit offered by the assessee on account of on-money receipts is taken into consideration, the profit comes to 38% of the net sale proceeds which is quite fair and reasonable. 4.1 The learned Counsel for the assessee submitted that the case of another group concern M/s. Triveni Infraspace Pvt. Ltd. was also covered during the course of search wherein on-money receipts of Rs.39.70 crores were found to be received in cash outside the books of account. He submitted that M/s. Triveni Infraspace Pvt. Ltd. approached Income-tax Settlement Commission and vide its order dated 18.07.2017 passed under Section 255(4) of the Act, the Settlement Commission accepted the profit offered by the said firm @ 20% of the on-money receipts for AYs 2011-12 to IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 22 2014-15. He took us through the copy of the said order passed by the Settlement Commission placed at page nos. 172-272 in the paper-book and submitted that the Department has accepted the said order of the Settlement Commission. 4.2 Learned Counsel for the assessee submitted that the on-money receipts form the part of sale proceeds and as held in various judicial pronouncements relied upon by the assessee before the learned CIT(A), the same entirely cannot be treated as income of the assessee and only profit element embedded therein can constitute the income of the assessee. He also relied on the decision of the Co-ordinate Bench of this Tribunal in the case of DCIT Vs Greenfield Realty Pvt. Ltd. rendered vide its order dated 27.07.2021 passed in ITA Nos. 952 and 1271/Ahd/2019, wherein the Assessing Officer was directed by the Tribunal to assess the income of the assessee by adopting 8% of the profit out of the alleged unaccounted on- money receipts. He also relied on another decision of this Tribunal in the case of ACIT Vs. M/s. Shoppers Buildcon Pvt. Ltd., wherein the net profit rate of 15% adopted by the learned CIT(A) to estimate the profit element embedded in the on-money was upheld by the Tribunal vide its order dated 27.04.2022 passed in IT(SS)A No. 312/Ahd/2018. He further relied on the decision of this Tribunal in the case of DCIT Vs. M/s. Safal Nirman Pvt. Ltd. (IT(SS)A Nos. 336 to 338/Ahd/2018; order dated 04.06.2021), wherein the estimate made on account of profit from on-money receipt at 17.5% was accepted by the Tribunal. 4.3 The learned Counsel for the assessee contended that the learned CIT(A) is fully justified in adopting the estimate of profit as made by the assessee at 25% on account of on-money receipts after taking into IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 23 consideration all the facts of the case as well as by relying on various judicial pronouncements referred to and relied upon in his impugned order. He, therefore, strongly supported the impugned order of the learned CIT(A) on this issue and urged that the same may be upheld. As regards the receipts on account of extra work charges, the learned Counsel for the assessee submitted that the same are basically in the nature of reimbursement of expenditure actually incurred by the assessee and keeping in view the nature of the same as well as the nature of assessee’s business, the profit estimate made by the learned CIT(A) at 25% is excessive and unreasonable and the same may be reduced to 10%. 5. We have considered the rival submissions and also perused the relevant material available on record. It is observed that incriminating material was found and seized during the course of search showing receipt of on-money amounting to Rs.6,20,87,908/- by the assessee during the years under consideration from Triveni Sangam project. In his statement recorded during the course of search, Shri Viresh N. Shah, partner of the assessee-firm, accepted the factum as well as quantum of on-money received by the assessee-firm as reflected in the relevant incriminating material found during the course of search. He also stated that expenditure of about Rs.1,21,18,000/- estimated @ Rs.73,000/- for 166 row houses of the Triveni Sangam project was incurred out of the on-money received in cash and offered the balance amount of about Rs.5,00,00,000/- as the additional income of the assessee-firm for the years under consideration. In the returns of income filed in response to notices issued under Section 153A of the Act for all the three years under consideration, the assessee however offered income only to the extent of 25% of on-money receipts for all the three years under consideration claiming that the entire on-money receipts IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 24 did not constitute its income and only the profit element embedded in the said receipt was liable to be treated as its income. The Assessing Officer did not accept this claim of the assessee in the absence of any documentary evidence in the form of bills/vouchers to show that expenditure to the extent of 75% of the on-money receipts was actually incurred by the assessee in cash. In this regard, he also relied on the statement made by Shri Viresh N. Shah wherein he had offered additional income of Rs.5,00,00,000/- on account of on-money receipts as found to be received by the assessee-firm from the incriminating material found during the course of search. He, however, did not accept the said statement fully inasmuch as the claim made therein of having incurred the expenditure of Rs.1,21,18,000/- estimated @ Rs.73,000/- for 166 row houses out of on- money receipt was not accepted by the Assessing Officer; and, the entire on- money of Rs.6,20,87,908/- received by the assessee during the years under consideration in respect of Triveni Sangam project was brought to tax by him in the hands of the assessee for the years under consideration. 5.1 As submitted on behalf of the assessee before the learned CIT(A) as well as before us, the expenditure of Rs.1,21,18,000/- stated to be incurred by the assessee-firm out of on-money receipts by its partner Shri Viresh N. Shah in his statement was on estimated basis as worked out @ Rs.73,000/- for 166 row houses each. It is submitted that there were 44 shops also in the Triveni Sangam project developed by the assessee and the fact that the same were not at all considered by the partner of the assessee-firm while claiming the deduction for expenditure on estimated basis shows that such estimate was based on his guess work, without reference to any actual expenditure incurred by the assessee on Triveni Sangam project in cash out of on-money receipts. As submitted on behalf of the assessee before the learned CIT(A) IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 25 and further reiterated by the learned Counsel for the assessee at the time of hearing before us, several expenses are required to be incurred in cash outside the books of account out of on-money receipts and keeping in view the nature of such expenses as explained by the assessee as well as the nature of the assessee’s business, the same was accepted by the learned CIT(A). The bone of contention of the assessee in this regard is that the on- money receipts formed part of the sale proceeds of Triveni Sangam project and what can be taxed in the hands of the assessee is only the profit element embedded therein and not the entire on-money receipts as done by the Assessing Officer. As noted by the learned CIT(A) in his impugned order, this contention raised by the assessee was duly supported by various judicial pronouncements referred to and relied upon by him in his impugned order and at the time of hearing before us, the learned Counsel for the assessee has relied on some more decisions of this Tribunal to further support the case of the assessee. 5.2 In one of the judicial pronouncements cited by the assessee and relied upon by the learned CIT(A) in his impugned order in the case of CIT Vs. President Industries, 258 ITR 654 (Guj.), the Hon’ble Gujarat High Court upheld the conclusion drawn by the Tribunal that entire unaccounted sales could not be added as income of the assessee but addition could be made only to the extent of estimated profit embedded in sales for which net profit rate was adopted. In another case of CIT Vs. Samir Synthetics Mill, 326 ITR 410 (Guj.), relied upon by the learned CIT(A) in his impugned order, the entire amount of sales suppressed by the assessee as reflected in the papers found during the course of search was added by the Assessing Officer as undisclosed income of the assessee and when the learned CIT(A) as well as Tribunal restricted the addition to the extent of estimated profit of such IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 26 suppressed sale, the Hon’ble Gujarat High Court found no reason to interfere with the same. To the similar effect is another decision of the Hon’ble Gujarat High Court in the case of DCIT Vs. Panna Corporation, 74 DTR 89 (Guj.), relied upon by the learned CIT(A) in his impugned order, wherein it was held that the Courts have been consistently following the principle that even upon detection of on-money receipts or unaccounted cash receipts, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves. Applying this proposition propounded by the Hon’ble Gujarat High Court, this Tribunal in the case of DCIT Vs Greenfield Realty Pvt. Ltd. (ITA Nos. 952 and 1271/Ahd/2019, order dated 27.07.2021), relied upon by the learned Counsel for the assessee, has held that it would be fair and reasonable to estimate the income of the assessee by adopting net profit rate of 8% on the alleged unaccounted on- money receipts. Adopting the similar line, this Tribunal in the case of DCIT Vs. M/s. Safal Nirman Pvt. Ltd. (IT(SS)A Nos. 336 to 338/Ahd/2018 & ITA No.2244/Ahd/2018; dated 04.06.2021) and in the case of ACIT Vs. M/s. Shoppers Buildcon Pvt. Ltd. (IT(SS)A No. 312/Ahd/2018, dated 27.04.2022) adopted a net profit rate of 17.5% and 20% to estimate the income of the assessee on account of on-money receipts. 5.3 It is pertinent to note here that in the case of M/s. Triveni Infraspace Pvt. Ltd. - another group concern, substantial amount of on-money was found to be received by the assessee as a result of search and when the assessee in the said case approached Hon’ble Settlement Commission, the income at 20% of on-money receipts offered by the assessee was accepted by the Hon’ble Settlement Commission vide order dated 18.07.2017 passed under Section 244D(4) of the Act. As submitted by the learned Counsel for the assessee, the said order of the Hon’ble Settlement Commission has been IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 27 accepted by the Department inasmuch as it has not been further challenged. A useful reference at this stage can be made to the fact that there was nothing found either during the course of search or brought on record by the Assessing Officer even during the course of assessment proceedings to show any substantial investment made by the assessee outside the books of account. In the case of President Industries (supra), there was no finding or material about suppression of any investment and this fact was taken a note of by the Hon’ble jurisdictional High Court to upheld the inference drawn by the Tribunal that the entire sales could not be added to the income of the assessee but addition could be made only to the extent of estimated profit embedded in such sales. 5.4 Having regard to all the facts of the case narrated above and keeping in view the legal position emanating from various judicial pronouncements discussed above including the decisions of this Tribunal as well as that of Hon’ble jurisdictional High Court, we are of the considered view that the action of the Assessing Officer in treating the entire on-money received from Triveni Sangam project during the years under consideration as the income of the assessee was not tenable and the learned CIT(A) was fully justified in restricting the same to profit element embedded in such receipts as offered by the assessee @ 25% of the on-money receipts. 5.5 During the course of search, the assessee-firm was also found to have received an amount of Rs.2,82,09,952/- during the years under consideration in cash towards extra work charges on the basis of incriminating material found and seized. On this count, no income whatsoever was offered by the assessee in the return of income filed in response to the notices issued under Section 153A of the Act for all the three IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 28 years under consideration claiming that the amount of extra work charges being received towards reimbursement of the expenditure actually incurred by the assessee; there was no element of profit involved therein and there was no question of any income arising to the assessee from these receipts which is chargeable to tax. The Assessing Officer did not accept this claim of the assessee in the absence of any evidence in the form of bills/vouchers produced by the assessee to establish that the expenditure as claimed by the assessee was actually incurred to the extent of extra work charges received by it and added the entire amount of extra work charges to the income of the assessee. The learned CIT(A), however, restricted the additions made by the Assessing Officer on this issue to the extent of 25% being profit element embedded in the amount of extra work charges received by the assessee keeping inter alia in view the nature of the receipts as well as the nature of the assessee’s business. To arrive at this conclusion, the learned CIT(A) also adopted the same reasoning as given by him while restricting the addition made by the Assessing Officer on account of entire on-money receipts to 25% being the profit element embedded in the on-money receipts. 5.6 Apropos the issue raised in Revenue’s appeal challenging the action of the learned CIT(A) in restricting the additions made by the Assessing Officer on account of the entire receipts towards extra work charges from the Triveni Sangam project in cash during the years under consideration to 25% being profit element embedded in the said receipts, the learned representatives of both the sides have raised before us the similar arguments as raised on the issue of addition relating to on-money receipts which are also sustained by the learned CIT(A) only to the extent of 25%. Since the material facts relevant to both the issues as well as arguments of IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 29 both the sides are similar, we follow our conclusion drawn in the foregoing portion of this order while deciding the issue relating to the addition on account of on-money receipt and hold that such entire receipts cannot be treated as the income of the assessee and only the profit element embedded in such receipts is liable to be treated as income of the assessee chargeable to tax. 5.7 Insofar as the assessee’s grievance on this issue is concerned, the limited contention raised by the learned Counsel for the assessee is that keeping in view all the facts of the case including the nature of assessee’s business and the nature of extra work charges received by the assessee which is essentially the reimbursement of actual expenditure incurred by the assessee, the profit rate of 25% adopted by the learned CIT(A) to determine the income of the assessee from extra work charges receipts is exorbitant and excessive; and it would be fair and reasonable to restrict the same to 10%. We are unable to accept this contention of the learned Counsel for the assessee. It is observed that there was no evidence found either during the course of search or even brought on record by the assessee during the course of assessment proceedings to establish that the entire amount of extra work charges received by it was actually incurred. In the absence of such evidence, it is difficult to accept the contention raised by the learned Counsel for the assessee that the entire amount of extra work charges received by the assessee was actually expended and that there was no element of profit embedded in such extra work charges. The income earned by the assessee from extra work charges thus is required to be estimated by adopting a net profit rate and when the assessee-firm itself has offered income from on-money receipts by adopting a net profit rate of 25%, we do not see any reason not to adopt the same rate and to adopt a lower IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 30 rate without any justifiable basis. We, therefore, uphold the impugned order of the learned CIT(A) on this issue. 6. The solitary ground raised in the Revenue’s appeal for AYs 2012-13 and 2013-14 as well as Ground No.1 raised by the Revenue in its appeal for AY 2014-15 and by the assessee for AYs 2012-13, 2013-14 and 2014-15 are accordingly dismissed. 7. In Ground No.2 of its appeal for AY 2014-15, the Revenue has challenged the action of the learned CIT(A) in deleting the addition made by the Assessing Officer on account of on-money receipts and extra work charges amounting to Rs.81,00,343/- and Rs.25,54,321/- respectively in respect of unsold units of the project. 7.1 As noted by the Assessing Officer during the course of assessment proceedings, on-money receipts amounting to Rs.81,00,343/- and extra work charges amounting to Rs.25,54,321/- received by the assessee in cash during the previous year relevant to AY 2014-15 as found from the relevant incriminating documents were related to the bungalows and shops; the sale of which was not booked by the assessee in the books of account for AY 2014-15. In this regard, the first contention raised by the assessee was that the amounts of Rs.81,00,343/- and Rs.25,54,321/- representing on-money receipts and extra work charges were already included in the total figures of Rs.6,20,87,908/- and Rs.2,82,09,952/- that had already been considered for the purpose of assessing the income of the assessee for all the three years under consideration and, therefore, no addition of the same was separately required to be made. IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 31 7.2 The second contention raised by the assessee was that the sale from the project of Triveni Sangam was recognized on the basis of execution of Construction Agreement as per the regular method followed and, therefore, the amounts in question relating to the unsold bungalows and shops were required to be considered in the year in which the sale of corresponding bungalows and shops was considered and recognized. The Assessing Officer did not accept these contentions of the assessee and proceeded to add both the amounts in question representing on-money receipts and extra work charges in respect of unsold bungalows and shops to the total income of the assessee. 7.3 The additions made by the Assessing Officer on this issue were challenged by the assessee in the appeal filed before the learned CIT(A) and the submissions as made before the Assessing Officer were reiterated on behalf of the assessee before the learned CIT(A). The learned CIT(A) found merit in the same and proceeded to delete the additions of Rs.81,00,343/- and Rs.25,54,321/- made by the Assessing Officer on this issue for the following reasons given in paragraph Nos. 7 & 7.1 of his impugned order:- “7. As to the on-money income of Rs.81,00,343/- and extra work income of Rs.25,54,321/- for the A.Y. 2014-15, it has been contended by the appellant that they are in the context of unsold units of the project of the appellant and that as per regular method of accounting followed, the sales is recognized in the accounts on the basis of construction agreement executed and as such, the oil-money corresponding to the recorded receipts would also be required to be considered in the year in which recorded/cheque receipt is considered and recognized. As no agreement was executed in the F.Y. 2013-14 (r.t. A.Y. 2014-15), the corresponding on-money is not offered on the basis of the settled principles of revenue recognition and that otherwise also as per the chart/table seized (Annexure A10) on-money receipt is only Rs.6.21 crores and excluding the receipt of unsold units {Rs.81,00,343/- determined by the AO) such amount would be Rs.5.04 crores against which, the appellant has quantified Rs. 6.25 crores. The details of such Rs.98,45,000/- identifying the IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 32 unsold units (3 row houses and 9 shops were furnished before the AO in the context. The explanation of the appellant is found protected by the decision of the jurisdictional ITAT of Ahmedabad. 7.1 Thus the addition of Rs.1,06,54,664/- (Rs.81,00,343/- + Rs.25,54,321/-) for the A.Y. 2014-15, cannot be sustained as it is the settled law that the revenue out of on money cash receipt has to be recognized in the same year in which the revenue out of recorded and accounted for cheque transactions is recognized by the assessee as per its accounting practices- For the purpose, reliance is placed on the decision dated 08.04.2011 of the Jurisdictional ITAT, Ahmedabad in the case D.R. Construction v/s. ITO (ITA No.2735/Ahd/2010) wherein it has been held that "If the amount given by cheque carries the character as an advance against the sale consideration then on-money in cash will also carry the same character. Both types of receipts i.e. receipt through cheques and receipt through cash as on-money will arise as income to the assessee as soon as transfer of immovable property is executed and not before, or possession thereof is handed over and for this it is necessary that such immovable property should be in existence.......... Both will become part of the sale consideration to the assessee simultaneously on either handing over the possession of the flats or on execution of transfer deed whichever happens earlier". In other words, both cheque portion/cash portion being the on-money would accrue to the assessee in the year revenue is recognised by the appellant as per its accounting practice. Apart from this, the total on-money cash receipt as per the transactions recorded in the Laptop of Shri Viresh Shah and Annexure-A1O are already taken into account for the purpose of additional income offered in the returns of income filed subsequent to the search and there remains no scope for the addition made by the AO. The AO is directed to satisfy himself on the issue and claim of the appellant as to the taxability and delete the addition of Rs.1,06,54,664/- for the A.Y. 2014-15. The appeal on the ground is allowed.” 7.4 We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As found by the learned CIT(A), both the amounts in question representing on-money receipts and extra work charges in respect of unsold bungalows and shops aggregating to Rs.1,06,54,664/- were already included in the total amount of on-money receipts and extra work charges of Rs.6,20,87,908/- and Rs.2,82,09,952/- which had already been considered for the purpose of determining the IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 33 income of the assessee chargeable to tax for the three years under consideration. On the basis of this finding recorded in paragraph no.7.1 of his impugned order, the learned CIT(A) held that the amount of Rs.1,06,54,664/- could not be again added to the total income of the assessee for AY 2014-15. At the time of hearing before us, the learned DR has not been able to rebut or controvert this finding of fact recorded by the learned CIT(A). Moreover, as per the method of accounting regularly followed by the assessee, the sale of units of Triveni Sangam project was being considered for income recognition in the year in which the corresponding agreements were executed. As rightly held by the learned CIT(A) by relying on the decision of this Tribunal in the case of D.R. Construction (supra), even the on-money receipts and extra-work charges, therefore, were required to be considered for income recognition only when the agreements for the respective bungalows and shops were executed and corresponding sale was booked. Admittedly, the agreements for the respective bungalows and shops in respect of which the amounts in question were received by the assessee had not been executed and sale of the same was not booked in the previous year relevant to AY 2014-15; and, therefore, the additions made by the Assessing Officer on this issue in AY 2014-15, in our opinion, was not sustainable as rightly held by the learned CIT(A). Ground No.2 of Revenue’s appeal for AY 2014-15 is accordingly dismissed. 8. The common issue raised in Ground No.3 of the assessee’s appeal for all the three years under consideration relates to the further addition of Rs.14,07,108/-, Rs.24,18,880/- and Rs.23,14,000/- for AYs 2012-13, 2013-14 and 2014-15 respectively made by the Assessing Officer and confirmed by the learned CIT(A) on the basis of statement of the customers recorded under Section 131 of the Act. IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 34 8.1 During the course of assessment proceedings, the Assessing Officer examined some of the customers who had purchased properties in the Triveni Sangam Project and recorded their statement under Section 131 of the Act. He found on such examination that the on-money paid by some of the customers, as admitted in their statement, was more than the amount of on-money received/reflected in the relevant incriminating material found during the course of search. Since the assessee could not offer any satisfactory explanation in this regard, the difference amounts of Rs.14,07,108/-, Rs.24,18,880/- and Rs.23,14,000/- were added by the Assessing Officer to the total income of the assessee for AYs 2012-13, 2013- 14 and 2014-15 respectively. 8.2 The assessee disputed these additions made by the Assessing Officer in all the three years under consideration in the appeals filed before the learned CIT(A) and the following submissions were made on behalf of the assessee before the learned CIT(A) in support of its case on this issue:- “3.3 Further On-Money collected based on Statements of Customers: As discussed above the Ld. A.O. has, in the course of assessment proceedings, obtained statements of the customers and found that the amount paid by them is higher than the amount recorded in the seized material and thus: further addition on such finding was proposed as per the show cause dated 14.03.2016. Relevant portion being discussed in para 5 and reproduced hereunder: "5. In the context of Triveni Sangam, summons u/s. 131 were issued to the owners of the bungalows of Triveni Sangam for ascertaining the actual price paid by the customers for the purchase of property. When it was compared with the details of on-money in cash is mentioned on Annexure A-10 found and seized from the residence of Shri Viresh N. Shah, huge difference was found in the prices of the property. Details are provided in the table below: IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 35 Triveni Sangam As per Summons u/s.131 As per seized – Annexure A 10 Sr. No. Flat No. Name Amount Total Amount Differ- ence 1 65 Thakorebhai B. Patel 1351000 Hansaben T. Patel 1351000 0 2 12B Manubhai Khoyabhai Parmar 1900000 Sandipbhai Patel 1459000 441000 3 09 &10 Ashif Mumtazkhan Path an 3400000 Mumtazkhan N. Pathan 2960000 440000 4 76 Bharatbhai Harmanbhai Valad 1625000 Archanaben G Patel 1351000 274000 6 100 Chandreshwar Singh and Others 2200000 Laijibhai D Patel 1325000 875000 7 154 Nansinh D. Patel 1911000 Nansign Dal- patsign Patel 1325000 586000 8 5 Sangitaben M. Patel 1530872 Sangitaben M. Patel 1425000 105872 9 71 Chirag Kanjibhai Vataliya 1570000 Vataliya Chirag K 1433000 137000 10 34 Alpesh P. Pathak / Nutanben A Pathak 1430000 Alpesh P Pathak 1435000 0 11 82 Hitesh Chandrakantbhai Patel 1485864 Patel Hitesh C 1351000 134864 12 111 Milinkumar M Valand / PrafulatabenR 1631582 Prafulataben R Valand 1411000 220582 13 97 Ghanshyambhai M Patel/Jayminaben D 1543790 Ghanshyam M Patel 1351000 192790 14 69 Alkaben R Patel 1700000 Indubhai B Patel 1385000 315000 15 109 Nasibkhan S Pathan / Afsanabanu N Pathan 1567480 Pralcashbhai G Patel 1411000 156480 17 158 Nileskumar Jignesh kurnar j Patel 2050000 Ashish J Ranpura 1451000 599000 18 153 Vinodbhai M Patel 1427000 VinubhaPravin bhai Patel 1351000 76000 19 155 Jigneshbhai J Patel 2191000 Bhupesh V. Patel 1351000 840000 20 145 Dilipbhai K Aniin / Others 1835400 Kainayalal R Patel 1351000 484400 21 144 PrakashbhaJ S Patel 1351000 Prakashbhai S Patel 1351000 0 22 84 Girishbhai M Patel / Archanaben G Patel 1721000 Himatbhai B Patel 1351000 370000 23 94 Nilesh H Kalyani / Others 1351000 Nileshkumar Kalany 1325000 26000 Total 6273988 IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 36 You are hereby requested to produce explanation as to why the difference in figures as per the seized material and the actual amount received by you from the customers. If no explanation is provided by you, the difference i.e. Rs. 62,73,988/- in amount in various property will be added back to your income in relevant A. Y." From the perusal of the chart above, it is evident that in majority of the cases, where different has arisen, the name of the customer / person as per the seized document is different than the person who has deposed in response to summon under Section 131 and as such no reliance could be placed on the statement of the person, who had no dealings with the appellant. In the course of assessment proceedings, the appellant either explained the probable reasons for discrepancy, in absence of the copy of statement and cross examination as furnished at Page Nos. 168 to 171 of the paper book. The explanation primarily related to the fact that the persons who have deposed before the Ld. A.O. might have purchased the property at a higher value from the person to whom the appellant has sold as first buyer and, therefore, no cognizance could be placed on the statement of such persons who had no dealings with the appellant. Moreover, despite specific request for furnishing the copy of statements as also an opportunity of cross examination, it was not provided and, therefore, in absence of such opportunity being given the statements given by them is to be ignored for any addition made. The appellant relies on the following authorities in support of the above proposition. • Kishanchand Chellaram V. DR 125 ITR 713 (SC) Addition made on the basis of information supplied by the Bank Manager not being made available to the assessee or the manager examined by the department. No conclusion could be reached that the amount belonged to the assesses and, hence addition was unjustified. • C. Vasantlal & Co. V. DR 45 ITR 206 (SC) It is open to the Assessing Officer to collect the material to facilitate assessment even by private enquiry. But if he desires to use against the assesses the material so collected, the assesses must be informed of the material and must be given an adequate opportunity of explaining it IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 37 • In DR V. East Coast Commercial Co. Ltd. 63 ITR 449 (SC) The matter was remanded back to the Tribunal where certain conclusions were drawn on the basis of report of investigation commission which was not furnished to the assesses, • In Gargi Din Jwala Prasad V. DR 96 ITR 97 (All.) The addition was found to be vitiated where it was made on the basis of a statement of a witness and the permission to cross examine was given without conveying the substance of the statements. • Addl. DR V. Miss Lata Mangeshkar 97 ITR 696 (Bom.) It was held that the entries in ledger seized from third party were not corroborated from day book. Addition deleted. • M/s Andaman Timber Industries V. CCE [2015] 62 taxmann.com 3 (SC) Without prejudice to the above the appellant submits that in the event of the claim of the appellant for not taxing this receipts, is not found tenable, the Ld. A.O. may please be" directed to adopt and apply the rate of profit as may be decided in respect of On-Money receipt discussed in para 3.1 above.” 8.3 The learned CIT(A) did not find merit in the submissions made on behalf of the assessee on this issue and proceeded to confirm the additions made by the Assessing Officer on this issue for all the three years under consideration for the following reasons given in paragraph no.6.1 of his impugned order:- “6.1 As to the addition of Rs.14,09,108/- for the A.Y. 2012-13, Rs.24,18,880/- for A.Y. 2013-14 andRs.23,14,000/- for the A.Y. 2014-15, aggregating to Rs.61,41,98s/-, I am of the view that the above such submission {attempted reconciliation) of the appellant is in the realm of plausibility, but the same is not proven which the appellant is in the realm of plausibility, but the same is not proven which the appellant could have by giving the details of persons who had originally made the booking with the appellant but those units were sold to other parties who are the ultimate purchasers of the units in the project. Whereas the AO's conclusion is based on the statements recorded from the purchasers of units in the project, the same cannot be ignored more so, when the appellant has not disproved the IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 38 same with evidences, which it could have. Mere contention that opportunity of cross examination of those purchasers who gave statements u/s 131 was not given to the appellant does not weaken the case of the Revenue as the appellant could have submitted the confirmations/affidavits from those customers and explained the difference. The plausible reconciliation of the differences as made before the AO by the appellant fall short of evidences/explanation to clinch the issue in its favour. Under the facts and circumstances of the issue, I find no basis to interfere with the additions made by the AO. These additions of Rs. 14,07,108/-, Rs.24,18,,880/-and Rs.23,14,0007- are upheld and the grounds of appeal on the issue do not succeed.” 8.4 We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the difference in question on account of the on-money receipts admitted by the parties in their statement recorded by the Assessing Officer and the corresponding on-money receipts as per the incriminating material found during the course of search was explained by the assessee before the authorities below by pointing out specifically that the persons whose statements had been recorded under Section 131 of the Act were different from the persons whose names appeared in the relevant seized material showing receipt of on-money in many cases and, therefore, there was a possibility that the persons whose statements were recorded by the Assessing Officer might have purchased the properties from the parties to whom the said properties were sold by the assessee by paying more amount in cash as on-money. The relevant information in the tabular form was also furnished by the assessee before the learned CIT(A) to support and substantiate this explanation. A perusal of the respective orders of the authorities below shows that this explanation of the assessee was not rejected by giving any cogent or convincing reasons. On the other hand, learned CIT(A) in paragraph No. 6.1 of his impugned order has observed that the explanation of the assessee was plausible but no confirmations of IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 39 the concerned parties were filed by the assessee to support and substantiate the same. In our opinion, when the allegation of any further on-money received by the assessee was made by the Assessing Officer, the onus was on him to support and substantiate the same. In this regard, it is observed that the entire case of the Assessing Officer on this issue was based on the statements of the parties recorded under Section 131 of the Act and the inference as regards the receipt of further on-money by the assessee was drawn by him without supplying the copies of statements of the concerned persons recorded by him and without giving any opportunity to the assessee to cross-examine the said deponents. It appears that even the learned CIT(A) overlooked this vital aspect observing that the lack of opportunity of cross-examination of the deponents did not weaken the case of the Revenue. 8.5 In the case of C. Vasantlal & Co. Vs. DR, 45 ITR 206 (SC), cited on behalf of the assessee, it was held by the Hon’ble Supreme Court that “it is open to the Assessing Officer to collect the material to facilitate assessment even by private inquiry. But if he desires to use against the assessee the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it”. In the case of Gargi Din Jwala Prasad Vs. DR, 96 ITR 97 (All.), the Allahabad High Court found the addition to be vitiated where it was made on the basis of a statement of a witness, and the permission to cross-examine was given without conveying the substance of the statements. In the present case, neither the copies of the statements of the deponents recorded under Section 131 of the Act were given to the assessee nor the opportunity was given to him to cross-examine the said deponents before relying on their statements for making the additions in question to the total income of the assessee. Having regard to all the facts of IT(SS) Nos. 164 to 166 & 199 to201/Ahd/2018 Assessee : Radhe Developers AY : 2012-13, 2013-14 & 2014-15 40 this case, we are of the view that the additions made by the Assessing Officer and confirmed by the learned CIT(A) on this issue for all the three years under consideration were not sustainable, and deleting the same, we allow Ground No.3 of the assessee’s appeal for all the three years under consideration. 9. In the result, the appeals of the Revenue are dismissed; whereas the appeals of the assessee are partly allowed. Order pronounced in the open Court on 3 rd August, 2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad, Dated 03/08/2022 *Bt /Copy of the Order forwarded to : 1. ! / The Appellant 2. "# ! / The Respondent. 3. $%$&' # # ( / Concerned CIT 4. # # ( ) (/ The CIT(A)- 5. + , # &' , # # &' /DR,ITAT, Ahmedabad, 6. , ./ 0 /Guard file. / BY ORDER, TRUE COPY ह # $ज (Asstt. Registrar) # # &' ITAT, Ahmedabad 1. Date of dictation- ......25/26/27.07.2022... 2. Date on which the typed draft is placed before the Dictating Member ..28/29.07.2022 Other member....28/29.07.2022.......... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ...01.08.2022............... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...03.08.2022 5. Date on which the file goes to the Bench Clerk....03.08.2022............... 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order..................... 8. Date of Despatch of the Order..................
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