DCIT Central Circle-1, Baroda V. M/s. Safal Nirman Pvt. Ltd, Baroda

ITSSA 336/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3691 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 06-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR; URVASHI SHODHAN ITSSA
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Loose papers; Principle of natural justice; Question of law; Accommodation entries; Set aside
• Section: 143(3); 153A; 133(6); 143(1); 205; 201; 143(2); 13; 153; 22; 131; 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) [THROUGH VIRTUAL COURT] IT(SS)A. NOS: 336 TO 338 & ITA NO. 2244 /AHD/2018 (ASSESSMENT YEARS: 2011-12 TO 2013-14 & 2014-15) DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, BARODA M/S. SAFAL NIRMAN PVT. LTD. SKY HARMONY, NEAR RADHESHYAM PARTY PLOT, MOTNATH MAHADEV TEMPLE ROAD, HARNI- BARODA PAN NO. AABCC 2737J (APPELLANT) (RESPONDENT) ITA. NO: 2013 /AHD/2018 (ASSESSMENT YEAR: 2014-15) M/S. SAFAL NIRMAN PVT. LTD. SKY HARMONY, NEAR RADHESHYAM PARTY PLOT, MOTNATH MAHADEV TEMPLE ROAD, HARNI- BARODA PAN NO. AABCC 2737J DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 1, BARODA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD TANWANI, CIT/DR RESPONDENT BY : SHRI S. N. SOPARKAR SR. ADV. & MS. URVASHI SHODHAN IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 2 ( )/ ORDER DATE OF HEARING : 11 -03-2021 DATE OF PRONOUNCEMENT : 04 -06-2021 PER MAHAVIR PRASAD, J.M. 1. IT(SS)A NOS. 336 TO 338/AHD/2018 AND ITA NO. 2244/AHD/2018 HAVE BEEN PREFERRED BY THE REVENUE WHEREAS ITA NO. 2013/AHD/2018 HAS BEEN FILED BY THE ASSESSEE. FOR THE SAKE OF BREVITY AND CONVENIENCE, WE WOULD LIKE TO DISPOSE OF ALL THESE APPEALS BY WAY OF A COMMON ORDER. 2. FIRST OF ALL, WE WILL TAKE UP TO IT(SS)A NO. 336/AHD/2018, REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID, CIT(A) HAS ERRED IN HOLDING THAT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH PROCEEDING FOR A Y 2011- 12 AND THEREBY, DELETING THE ADDITION OF RS.8,33,10,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE I.T. ACT AND OF RS.41,65,500/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE FOR A.Y.2011-12 BY NOT APPRECIATING THE FACT INVOLVED IN THIS CASE THAT EXIT / ACCOMMODATION ENTRIES PROVIDER OF THE ASSESSEE COMPANY WERE NON- EXISTENT AND ONLY PAPER BASED ENTITIES AND ALSO SUCH EXIT PROVIDERS COMPANIES AS WELL AS THE ASSESSEE COMPANY MISERABLY FAILED TO PROVE CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE DECISION OF THE ID. CIT(A) IS PERVERSE IN HOLDING THAT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH PROCEEDINGS FOR A.Y.2011-12, THOUGH THE LD. CIT(A) AT PARA NO.3.8 OF HIS DECISION HAS RECORDED THAT 'THE A.O. AT PARA 4.8 OF HIS ASSESSMENT ORDER HAS REFERRED TO STATEMENT OF PARTNERS/DIRECTORS RECORDED UNDER SECTION 132(4) OF THE ACT IN POST-SEARCH PROCEEDINGS REGARDING ADMISSION OF UNACCOUNTED MONEY IN THE FORM OF ON-MONEY FROM SALE OF FLATS, SHOPS, OFFICES ETC., AND APPLIED THE SAME IN RECEIVING ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOAN AND LONG TERM CAPITAL GAIN WHEREAS THE ADDITION REFERRED SUPRA IS NOT BASED UPON ANY SUCH STATEMENT'. HERE, IT IS IMPORTANT TO MENTION THAT THE STATEMENT IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 3 RECORDED U/S 132(4) OF THE I.T. ACT IS ALWAYS THE PART OF SEARCH PROCEEDINGS NOT OF THE POST SEARCH PROCEEDINGS AS POINTED OUT BY THE LD. CIT(A). ALSO IT DOES NOT MAKE ANY DIFFERENCE AS TO WHETHER THE A.O. HAD MENTIONED THE ABOVE FACT AT PARA NO.4.8 OR PARA NO.5 IN THE ASSESSMENT ORDER. THEREFORE, SELF ADMISSION OF THE DIRECTOR U/S 132(4) OF THE I. T. ACT, WHICH IS NEVER RETRACTED LATER ON IS STRONG PIECE OF INCRIMINATING DOCUMENT FOUND DURING SEARCH PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON VARIOUS DECISIONS OF THE HON'BLE COURT INCLUDING THE DECISION OF HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF PR. CIT VS SAUMYA CONSTRUCTION PVT. LTD., WHEN THE FACTS INVOLVED IN THIS CASE ARE DISTINGUISHABLE FOR THE REASON THAT ALL THE REFERRED DECISIONS COVER THE SITUATION WHERE ASSESSMENT FOR A PARTICULAR YEAR WAS COMPLETED. HOWEVER, IN THE INSTANT CASE NO ASSESSMENT FOR A.Y,2011-12 WAS COMPLETED AND MERELY PROCESSING OF RETURN OF INCOME U/S 143(1) OF THE I.T. ACT IS NOT CONSIDERED AS ASSESSMENT COMPLETED. HENCE THE DECISIONS REFERRED BY THE LD. CIT(A) IS NOT APPLICABLE IN THIS CASE, 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE UNDISCLOSED SALES RECEIPT OF RS.60,92,500/- IN THE FORM OF 'ON-MONEY' HOLDING THAT THE SAME WILL BE TAXED IN THE YEAR IN WHICH SALES ARE RECOGNIZED IN THE BOOKS OF ACCOUNT AND THAT TOO AT THE RATE 17.5% OF THE 'ON-MONEY' RECEIPT. THE ABOVE DECISION OF THE LD. CIT(A) IS NOT JUSTIFIED AS THE 'ON-MONEY' OF RS.60,92,500/- WAS RECEIVED BY THE ASSESSEE IN A.Y.2011-12 AND REMAINED OUT OF BOOKS OF ACCOUNT AND HENCE THE ENTIRE AMOUNT IS TAXABLE WHEN RECEIVED. THEREFORE, PRINCIPAL OF PROJECT COMPLETION METHOD AND ACCOUNTING STANDARDS ARE NOT APPLICABLE AS SUCH 'ON-MONEY' IS ALREADY RECEIVED IN A.Y.2011-12. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER THE LD. CIT(A)-12, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE AO MAY BE RESTORED TO THE ABOVE EXTENT. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND(S) OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. IN THIS CASE, A SEARCH U/S 132 WAS CARRIED OUT IN THE CASE OF BAFNA PANCHAL GROUP OF CASES ON 07.01.2014 WHEREIN THE ASSESSEE COMPANY WAS ALSO COVERED. THE ASSESSE FILED RETURNS OF INCOME FOR A.YS. 2011-12 TO 2013-14 IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT. THE ASSESSE FILED REGULAR RETURN OF INCOME FOR A.Y. 2014-15 ON IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 4 27.09.2014. THE DETAILS SHOWING INCOME AS PER ORIGINAL RETURN U/S 139, DATES OF FILING SUCH RETURNS OF INCOME, RETURNED INCOME U/S 153A, DETAILS OF ADDITIONS MADE BY A.O. AND ASSESSED INCOME FOR THE ASSESSMENT YEARS IN APPEAL ARE TABULATED AS UNDER: PARTICULARS ASSESSMENT YEARS 2011-12 2012-13 2013-14 2014-15 TOTAL INCOME AS PER RETURN U/S 139 (RS.) DATE OF FILING OF ORIGINAL RETURN OF INCOME 28/09/2011 27/09/2012 26/09/2013 27/09/2014 TOTAL INCOME AS PER RETURN U/S 153A (RS.) 1,37,700 5,74,140 5,95,530 89,71,800 ADDITIONS : UNEXPLAINED CASH CREDIT U/S 68 (RS.) 8,33,10,000 1,62,40,000 UNEXPLAINED EXPENDITURE (RS.) 41,65,500 8,12,000 UNDISCLOSED SALE RECEIPTS (RS.) 60,92,500 1,36,56,500 2,48,64,000 4,57,14,000 ASSESSED TOTAL INCOME (RS.) 9,37,05,700 3,12,82,640 2,54,59,530 5,46,85,800 4. AS PER LD. A.O., THE COMPANY M/S. SAFAL NIRMAN PVT. LTD. DOES NOT HAVE ANY PHYSICAL PRESENCE ON ITS GIVEN ADDRESS AT HOWRAH AND IT IS FOUND THAT IT NEVER EXISTED PHYSICALLY AND IT HAD NO EMPLOYEES AND THAT IT WAS NOT DOING ANY REAL BUSINESS. EARLIER THE COMPANY HAD ISSUED SHARES AT A PREMIUM OF RS. 172.60 PER SHARE AGAINST FACT VALUE OF RS. 10/- PER SHARE WHICH WAS SUBSEQUENTLY SOLD TO THIRD PARTY FOR RS. 10 PER SHARE AND SUCH SHARES WERE PURCHASED BY SHRI RAJESH BAFNA, SHRI MIHIR PANCHAL, SHRI OM PRAKASH BENGANI, SHRI MAHENDRA KANKARIA AND SHRI VIJAY PATEL OF THE BAFNA PANCHAL GROUP WHO CAME TO ACQUIRE THE ASSESSE COMPANY. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 5 5. ON VERIFICATION OF RETURN OF INCOME OF THE ASSESSE COMPANY FOR A.Y. 2010-11, THE ASSESSING OFFICER OBSERVED THAT THE COMPANY WAS SHOWING SHARE PREMIUM OF RS. 9,42,40,000/- IN ITS BALANCE SHEET AGAINST WHICH INVESTMENT WAS MADE IN SHARES AND REFLECTED UNDER THE HEAD ASSETS. ON VERIFICATION OF INVESTMENT IN SHARES OF VARIOUS COMPANIES, IT WAS OBSERVED THAT THESE WERE NON-PERFORMING COMPANIES. 6. LD. A.O. HELD THAT KOLKATA PARTIES WHO PROVIDED AN EXIT ROUTE TO THE INVESTMENT OF ASSESSE WHICH WAS IN TURN UTILIZED TO PURCHASE HUGE TRACTS OF LAND AND TO PROVIDE ADVANCES TO GROUP COMPANIES. ACCORDINGLY, ADDITION OF RS. 8,33,10,000/- AND RS. 1,62,40,000/- FOR A.Y. 2011-12 AND A.Y. 2012-13 RESPECTIVELY WAS MADE TO THE TOTAL INCOME OF THE ASSESSE. THE A.O. ALSO MADE ADDITION FOR UNEXPLAINED COMMISSION PAID TO ALLEGED ENTRY PROVIDERS FOR RS. 41,65,500/- IN A.Y. 2011-12 AND RS. 8,12,000/- IN A.Y. 2012-13 BEING 5% OF TOTAL TRANSACTION AMOUNT. 7. THEREAFTER ASSESSE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT INVESTIGATION WING OF INCOME TAX CALCUTTA UNIT IS SILENT WITH REGARD TO ANY LOOSE PAPERS/DOCUMENTS FOUND DURING THE COURSE OF SEARCH WHICH COULD JUSTIFY THE IMPUGNED ADDITIONS IN THE HANDS OF THE ASSESSE AND ARGUED BEFORE THE LOWER AUTHORITY THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH PERTAINING TO INVESTMENT MADE BY VARIOUS GROUP MEMBERS IN SHARE CAPITAL OF THE ASSESSE COMPANY OR RECEIPT OF CASH/UNACCOUNTED MONEY AGAINST SALE OF INVESTMENTS BY THE ASSESSE COMPANY, SUCH ADDITIONS ARE BEYOND THE SCOPE OF SECTION 153A OF THE ACT AND CITED SEVERAL CASE LAWS OF HIGHER FORUM AND WITH REGARD TO MERIT OF THE CASE. ASSESSEE SUBMITTED BRIEF BACKGROUND OF INVESTMENTS MADE BY THE ASSESSE COMPANY AND ITS SUBSEQUENT SALE AS UNDER: PARTICULARS | REMARKS DATE OF INCORPORATION OF APPELLANT COMPANY 05.02.1998 DATE OF FIRST SHARE WITH PREMIUM ALLOTTED* 1998* IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 6 WHEN SHARES WERE TRANSFERRED OTHER PARTY AT COST OF RS. 10* 22.09.2009* INVESTMENT MADE BY SAFAL NIRMAN* ON NUMEROUS DATED BEFORE 2006 REFLECTED IN BALANCE SHEET FOR FY 2006-07 ONWARDS. ASSESSMENT ORDER U/S 143(3) PASSED WHEREIN GENUINENESS OF PURCHASE HAS BEEN ACCEPTED. WHEN DIRECTORS PURCHASED SHARES 30.09.2009 SHARES PURCHASED AT BOOK VALUE BEING RS.10 PER SHARE WHEN FIRST SALE OF INVESTMENT MADE 12.06.2010 WHEN LAST SALE OF INVESTMENT MADE 03.11.2011 * PRIOR TO ACQUISITION OF THE APPELLANT COMPANY BY THE BAFNA PANCHAL GROUP OF PERSONS ON THE BASIS OF ABOVE TABULAR CHART THE LD. ARS OF THE APPELLANT HAVE ARGUED THAT SALE CONSIDERATION RECEIVED ON SALE OF INVESTMENTS (IN SHARES) BY THE APPELLANT COMPANY CANNOT BE HELD AS NON-GENUINE ON FOLLOWING GROUNDS: (I) STATEMENTS OF BUYERS OF SHARES HAVE NOT BEEN RECORDED BY ASSESSING OFFICER TO PROVE THAT THEY ARE EXIT PROVIDERS AND SALE OF SHARES IS NON GENUINE. (II) THE ASSESSING OFFICER HAS NEITHER ESTABLISHED THAT CASH DEPOSITED IN THE ACCOUNT OF THIRD PARTIES (WHICH ARE SOURCES OF FUNDS IN THE HANDS OF THE BUYERS/EXIT PROVIDERS) BELONG TO THE APPELLANT NOR DISPROVED THE CAPACITY OF BUYERS TO HOLD/ ARRANGE SO MUCH FUND. (III) ALLEGED INVESTMENTS WERE PURCHASED BEFORE FY 2006 AND ARE APPEARING IN BOOKS OF ACCOUNTS OF APPELLANT FROM THAT YEAR. THE AO HAS NOT DISPUTED THE FACT THAT INVESTMENTS APPEARING IN BOOKS OF ACCOUNT WERE TRANSFERRED TO OTHER PARTIES IN TWO YEARS. (IV) THE GENUINENESS OF PURCHASE HAS BEEN DULY ACCEPTED BY ASSESSING OFFICER. THE CASE OF APPELLANT WAS SELECTED FOR SCRUTINY IN A.Y. 2007-08 WHEREIN THE INVESTMENTS WERE ALREADY APPEARING IN BOOKS AND SUCH INVESTMENTS WERE DULY IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 7 ACCEPTED AND NE ADVERSE VIEW WAS TAKEN WHILE PASSING ASSESSMENT ORDER U/S 143(3] BY ASSESSING OFFICER. (V) HAD THE APPELLANT INTENDED TO MAKE NON GENUINE TRANSACTION, IT WOULD NOT HAVE HELD THE SHARES FOR LONG (PURCHASED THE COMPANY IN 2009 AND SOLD THE INVESTMENTS OF THE COMPANY IN 2010 AND 2011) AND WOULD HAVE SOLD THE SAME IMMEDIATELY. 8. THE ASSESSE SUBMITTED BEFORE THE LOWER AUTHORITIES WITH FOLLOWING DOCUMENTS WHICH PROVE THAT INVESTMENTS WERE SOLD IN CURRENT YEAR AT A COST WHICH IS APPEARING IN ANNUAL ACCOUNTS AND IT HAS RECEIVED MONEY THROUGH CHEQUE AND THAT ALL THE CONDITIONS ENVISAGED IN SECTION 68 OF THE ACT ARE FULFILLED: (I) FINAL ACCOUNTS OF COMPANIES OF WHICH SHARES WERE HELD AS INVESTMENTS. (II) DETAILS OF SALE OF SHARES SUCH AS NAME, DATE OF SALE, ENTITY TO WHOM SHARES SOLD, NAME OF BUYERS, ADDRESS, PAN. (III) DOWNLOADED COMPANY MASTER DATA SHOWING NAME, C1N, REGISTRATION NUMBER, ETC., ON THE MINISTRY OF CORPORATE AFFAIRS WEB SITE AND THOSE COMPANIES WERE EXISTENT AT ROC. (IV) CONFIRMATION OF BUYERS REGARDING PURCHASE OF SHARES FROM APPELLANT. (V) COPIES OF BANK STATEMENTS OF BUYERS OF SHARES. (VI) COPIES OF RETURNS OF INCOME AND ANNUAL ACCOUNTS OF BUYERS. (VII) NATURE, IDENTITY AND SOURCE OF TRANSACTIONS. 9. LD. CIT(A) CONSIDERED ALL FACTS IN DETAIL AND ALSO DISCUSSED CASE LAW AND HELD THAT : 3.8 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDERS AND CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT. IT IS OBSERVED THAT THE APPELLANT COMPANY HAS MADE INVESTMENTS IN VARIOUS PRIVATE LIMITED COMPANIES OF KOLKATA UPTO FY 2006-07/ AND SUCH COSTS OF INVESTMENTS WERE APPEARING IN AUDITED ANNUAL ACCOUNTS OF APPELLANT COMPANY UPTO A.Y. 2011-12. THE ASSESSMENT U/S 143(3) OF THE ACT WAS PASSED IN CASE OF APPELLANT FOR A.Y. 2007-08 WHEREIN COST OF INVESTMENTS WAS ACCEPTED AS GENUINE. THE APPELLANT COMPANY HAS SOLD THESE INVESTMENTS IN A.Y. 2011-12 AND 2012-13 TO VARIOUS COMPANIES HAVING ADDRESSES AT KOLKATA. THE SALE CONSIDERATION BEING COST VALUE OF INVESTMENTS RECEIVED IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 8 DURING THE YEAR THROUGH ACCOUNT PAYEE CHEQUES HAVE BEEN TAXED AS UNDISCLOSED INCOME OF APPELLANT IN BOTH THE ASSESSMENT YEARS ON THE GROUND THAT APPELLANT HAS OBTAINED THEM AS ACCOMMODATIVE ENTRIES. WITH THIS BACKGROUND, IT IS PERTINENT TO NOTE THAT SEARCH WAS CARRIED OUT IN THE BAFNA PANCHAL GROUP OF CASES ON 7TH JANUARY, 2014 AND APPELLANT HAD ALREADY FILED THEIR ORIGINAL RETURNS OF INCOME FOR A.YRS. 2011-12 TO 2013-14. THE TIME LIMIT FOR ISSUANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT HAD ALREADY EXPIRED ON THE DATE OF SEARCH. ON CAREFUL CONSIDERATION OF ENTIRE ASSESSMENT ORDER (FOR A.YRS.2011-12 AD 2012-13), IT IS FOUND THAT WHILE MAKING ABOVE ADDITIONS, THE A.O. HAS NOT REFERRED TO ANY LOOSE PAPER/DOCUMENTS FOUND DURING THE SEARCH TO PROVE THAT THE APPELLANT HAS OBTAINED ACCOMMODATIVE ENTRIES BY WAY OF SALE OF INVESTMENTS. THE SALE REALIZATIONS WERE ALREADY RECORDED IN BOOKS OF ACCOUNT PRIOR TO SEARCH AND SUCH FACT IS NOT DISPUTED BY THE AO. THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL TO PROVE THAT THESE ENTRIES WERE OBTAINED AS ACCOMMODATIVE OR CASH HAS BEEN PAID AGAINST SALE OF SUCH INVESTMENTS. THE ASSESSING OFFICER AT PARA 4.5 OF HIS ORDER HAS REFERRED TO LOOSE PAPERS FOUND FROM THE PREMISES OF M/S. SUMANGAL ENTERPRISES WHICH HAS NO RELATION WITH ABOVE REFERRED TRANSACTIONS. THE AO AT PARA 4.8 OF HIS ASSESSMENT ORDER HAS REFERRED TO STATEMENT OF PARTNERS/DIRECTORS RECORDED UNDER SECTION 133(4) OF THE ACT IN POST-SEARCH PROCEEDINGS REGARDING ADMISSION OF UNACCOUNTED MONEY IN THE FORM OF ON-MONEY FROM SALE OF FLATS, SHOPS, OFFICES ETC., AND APPLIED THE SAME IN RECEIVING ACCOMMODATIVE ENTRIES IN THE FORM OF UNSECURED LOAN AND LONG TERM CAPITAL GAIN WHEREAS THE ADDITION REFERRED SUPRA IS NOT BASED UPON ANY SUCH STATEMENT. THE AO HAS DISCUSSED THE ABOVE ADDITION AT PARA - 5 OF THE ASSESSMENT ORDER WHEREIN HE HAS REFERRED TO VERIFICATION OF GENUINENESS OF TRANSACTION THROUGH BANK ACCOUNT OF SOME OF THE ALLEGED INVESTORS CALLED U/S 133(6) OF THE ACT, BANK ACCOUNT OF PARTIES WHOSE FUNDS HAVE BEEN TRANSFERRED IN THE ACCOUNT OF INVESTORS, NOTICES U/S 133(6) OF THE ACT DATED 26TH NOVEMBER, 2015 ISSUED TO ALLEGED EXIT PROVIDER COMPANIES AND COMMISSION U/S 131(L)(D) OF THE ACT TO ENQUIRE ABOUT GENUINENESS OF THE TRANSACTION. ALL THESE EXERCISES HAVE BEEN CARRIED OUT BY THE AO IN THE ASSESSMENT PROCEEDINGS WHICH CLEARLY SUBSTANTIATE APPELLANT'S ARGUMENT THAT TRANSACTION OF SALE IS ALREADY RECORDED IN BOOKS OF ACCOUNT PRIOR TO SEARCH AND ADDITIONS WERE MADE BY THE AO WHICH ATE NOT BASED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. FURTHER, AS TIME LIMIT PRESCRIBED FOR ISSUE OF NOTICE UNDER SECTION 143(2) FOR A.YRS.2011-12 AND 2012-13 HAD ALREADY EXPIRED ON THE DATE OF SEARCH, ABOVE ADDITIONS CANNOT BE SUBJECT MATTER WHILE PASSING ASSESSMENT ORDERS UNDER SECTION 153AOF THE ACT. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 9 3.9 HON'BLE GUJARAT HIGH COURT IN CASE OF CIT VS. SAUTNYA CONSTRUCTION PVT LTD REPORTED IN 387 3ETR 529 HAS STATED AS UNDER: '18. IN THIS CASE, IT IS NOT THE CASE OF THE APPELLANT THAT ANY INCRIMINATING MATERIAL IN RESPECT OF THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FOUND DURING THE COURSE OF SEARCH. AT THE RELEVANT TIME WHEN THE NOTICE CAME TO BE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME. MUCH LATER, AT THE FAR END OF THE PERIOD WITHIN WHICH THE ORDER UNDER SECTION 153A OF THE ACT WAS TO BE MADE, IN OTHER WORDS, WHEN THE LIMIT FOR FRAMING THE ASSESSMENT AS PROVIDED UNDER SECTION 153 WAS ABOUT TO EXPIRE, THE NOTICE HAS BEEN ISSUED IN THE PRESENT CASE SEEKING TO MAKE THE PROPOSED ADDITION OF RS. 11,05,51,000/- ON THE BASIS OF THE MATERIAL WHICH WAS NOT FOUND DURING THE COURSE OF SEARCH, BUT ON THE BASIS OF A STATEMENT OF ANOTHER PERSON. IN THE OPINION OF THIS COURT, IN A CASE LIKE THE PRESENT ONE, WHERE AN ASSESSMENT HAS BEEN FRAMED EARLIER AND NO ASSESSMENT OR REASSESSMENT WAS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 153A OF THE ACT, ADDITIONS OR DISALLOWANCES CAN BE MADE ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH OR REQUISITION. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, HOWEVER, IT IS ON THE BASIS OF SOME MATERIAL COLLECTED BY THE ASSESSING OFFICER MUCH SUBSEQUENT TO THE SEARCH, THAT THE IMPUGNED ADDITIONS CAME TO BE MADE. 19. ON BEHALF OF THE APPELLANT, IT HAS BEEN CONTENDED THAT IF ANY INCRIMINATING MATERIAL IS FOUND, NOTWITHSTANDING THAT IN RELATION TO THE YEAR UNDER CONSIDERATION, NO INCRIMINATING MATERIAL IS FOUND, IT WOULD BE PERMISSIBLE TO MAKE ADDITIONS AND DISALLOWANCE IN RESPECT OF ALL THE SIX ASSESSMENT YEARS. IN THE OPINION OF THIS COURT, THE SAID CONTENTION DOES NOT MERIT ACCEPTANCE, INASMUCH AS, THE ASSESSMENT IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IS A SEPARATE AND DISTINCT ASSESSMENT. UNDER SECTION 153A OF THE ACT, AN ASSESSMENT HAS TO BE MADE IN RELATION TO THE SEARCH OR REQUISITION, NAMELY, IN RELATION TO MATERIAL DISCLOSED DURING THE SEARCH OR REQUISITION. IF IN RELATION TO ANY ASSESSMENT YEAR, NO INCRIMINATING MATERIAL IS FOUND, NO ADDITION OR DISALLOWANCE CAN BE MADE IN RELATION TO THAT ASSESSMENT NEAR IN EXERCISE OF POWERS UNDER SECTION 153A OF THE ACT AND THE EARLIER ASSESSMENT SHALL HAVE TO BE REITERATED. IN THIS REGARD, THIS COURT IS IN COMPLETE AGREEMENT WITH THE VIEW ADOPTED BY THE RAJASTHAN HIGH COURT IN THE CASE OF \JAI STEEL (INDIA), JODHPUR V. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 10 ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA). BESIDES, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT, THE CONTROVERSY INVOLVED IN THE PRESENT CASE STANDS CONCLUDED BY THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX-1 V. JAYABEN RATILAL SORATHIA(SUPRA) WHEREIN IT HAS BEEN HELD THAT WHILE IT CANNOT BE DISPUTED THAT CONSIDERING SECTION 153A OF THE ACT, THE ASSESSING OFFICER CAN REOPEN AND/OR ASSESS THE RETURN WITH RESPECT TO SIX PRECEDING YEARS; HOWEVER, THERE MUST BE SOME INCRIMINATING MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE SALE TRANSACTIONS IN THE PARTICULAR ASSESSMENT YEAR. 20. FOR THE FOREGOING REASONS, IT IS NOT POSSIBLE TO STATE THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL SUFFERS FROM ANY LEGAL INFIRMITY SO AS TO GIVE RISE TO A QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, WARRANTING INTERFERENCE. THE APPEAL, THEREFORE, FAILS AND IS, ACCORDINGLY, DISMISSED.' RELIANCE IS ALSO PLACED ON DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX - 2 V/S KAMLESH PRAHLADBHAI MODI, DATED 18TH APRIL, 2018, RELEVANT PARTS OF WHICH ARE REPRODUCED HEREUNDER: '7. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEES DID DISCLOSE SIZEABLE UNACCOUNTED CASH RECEIPTS WHICH WAS DULY TAXED. HOWEVER, WITH RESPECT TO SEVERAL LAND DEALINGS THE ASSESSEES CONTENDED THAT THE FINAL SALES DID NOT MATERIALIZE AND THEREFORE, THERE WAS NO ON MONEY RECEIPTS BY THE ASSESSES 10. CIT(APPEALS) RE-EXAMINED THE ISSUE BY GIVING INDEPENDENT REASONS. HOWEVER ON SIMILAR FACTORS, HE CONFIRMED THE ADDITIONS, UPON WHICH, THE ASSESSEE WENT IN FURTHER APPEAL BEFORE THE TRIBUNAL. 12. WE MAY TAKE THE CASE OF VEJALPUR LAND AS A TEST CASE. CTTFAPPEALS) HAS ALSO RECORDED THAT FOR SUCH LAND, THE ASSESSEES HAD PAID THROUGH CHEQUES A TOTAL SUM OF RS.22,02,100/TO ONE SHERIN CO. OP. HSG. SAC. LTD. DURING THE PERIOD BETWEEN 28.7.2003 TO 31.1.2005. CIT(APPEALS) ALSO NOTED THAT ENTIRE AMOUNT WAS REPAID BY SHERIN CO. OP. HSG. SOC. LTD. IN DIFFERENT CHEQUES DURING THE PERIOD BETWEEN 2.6.2005 TO 5.12.2005. THE REVENUE DID NOT HAVE ANY FURTHER MATERIAL TO SUGGEST THAT THOUGH THE ASSESSEE MIGHT HAVE EXITED FROM THE LAND DEAL, SHERIN CO. OP. HSG. SOC. LTD. HAD EVENTUALLY SOLD THE LAND TO THIRD PARTY AND IN THE PROCESS, THE ASSESSEE HAD EXTRACTED ITS SHARE OF PROFIT. THE TRIBUNAL THEREFORE, ACCEPTED THE ASSESSEES' CONTENTION THAT THE LOOSE DOCUMENTS DID NOT REFER IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 11 TO THE ACTUAL RECEIPT OF ON MONEY SINCE THE DOCUMENTS ITSELF CARRIED A TITLE 'PROJECTIONS' AND FURTHER THAT THE ASSESSING OFFICER HAD NOTHING TO DISCARD THE ASSESSEES' THEORY THAT THESE LAND DEALS DID NOT EVENTUALLY MATERIALIZE. 13. ESSENTIALLY THE TRIBUNAL HAVING REFERRED TO THE MATERIALS ON RECORD AND COME TO FACTUAL CONCLUSION, IN OUR OPINION, NO QUESTION OF LAW ARISES.' IT IS ALSO OBSERVED THAT DECISIONS RELIED UPON BY APPELLANT IN THE CASES OF ANIL BHOLABHAI PATEL (GUJARAT HIGH COURT), RSA DIG PRINTS (GUJARAT HIGH COURT), AND DESAI CONSTRUCTION (GUJARAT HIGH COURT) SQUARELY APPLY TO THE FACTS OF THE CASE. FURTHER, RELIANCE IS ALSO PLACED ON DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF SUNRISE PINLEASE (P.) LTD.. REPORTED IN 89 TAXMARM.COM 1, HEADNOTE OF WHICH IS REPRODUCED HEREUNDER: 'SECTION 153A OF THE INCOME-TAX ACT, 1951 - SEARCH AND SEIZURE - ASSESSMENT IN CC.SE OF [CONDITION PRECEDENT) - ASSESSMENT YEAR 2007-08 - WHETHER WHERE NO INCRIMINATING EVIDENCE AGAINST ASSESSEE TUAS FOUND DURING COURSE OF SEARCH SO AS TO ATTRACT PROVISIONS OF SECTION 153A PROCEEDINGS, NO ADDITIONS COULD BE MADE ON BASIS OF MATERIAL COLLECTED AFTER SEARCH HELD, YES - WHETHER SINCE NO INCRIMINATING EVIDENCE AGAINST ASSESSEE WAS FOUND OR SEIZED DURING COURSE OF SEARCH SO AS TO ATTRACT PROVISIONS OF SECTION 153A PROCEEDINGS, NO ADDITIONS COULD BE MADE ON BASIS OF STATEMENT OF DIRECTOR OF ASSESSEE COMPANY WHICH WAS RECORDED UNDER SECTION 131 MUCH LATER AFTER SEARCH - HELD, YES.' [PARAS 6 AND 7] [IN FAVOUR OF ASSESSEE] IT IS PERTINENT TO NOTE THAT IN ABOVE REFERRED DECISION, ENTIRE ADDITION WAS MACE IN ASSESSMENT ORDER U/S 153A OF THE ACT BASED UPON STATEMENT OF DIRECTOR RECORDED U/S 131 OF THE ACT WHICH IS MUCH LATER THAN SEARCH ARID AS ADDITION WAS NOT BASED UPON OTHER INCRIMINATING MATERIAL FOUND DURING THE SEARCH, THE HON'BLE COURT HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING THAT SUCH ADDITION CANNOT BE MADE WHILE PASSING ASSESSMENT ORDER U/S 153A OF THE ACT. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V/S BEST INFRASTRUCTURE (INDIA) PVT. LTD. 397 ITR 82 HAS HELD THAT STATEMENT RECORDED U/S 132(4) CANNOT ITSELF CONSTITUTE INCRIMINATING MATERIAL. FURTHER RELIANCE IS ALSO PLACED ON DECISION OF DELHI ITAT IN THE CASE OF MOON BEVERAGES ITA NO. 7374/DEL/2017 DATED 7& JUNE, 2018. THE AO HAS MADE ADDITION U/S 68 OF THE ACT FOR RS.L 1,85,00,000/- BASED UPON ENQUIRIES CONDUCTED AND STATEMENT RECORDED OF VARIOUS PERSONS U/S 132(4) OF THE ACT. THE ASSESSEE IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 12 COULD NOT PRODUCE THE INVESTOR COMPANY AND SINCE ITS RETURNED INCOME IS MEAGRE CONSIDERING THE HUGE INVESTMENT MADE BY IT IN THE SHARES OF THE ASSESSEE COMPANY WITH HUGE PREMIUM, THEREFORE, THE PROVISIONS OF SECTION 68 ARE CLEARLY ATTRACTED. ON THESE VERY FACTS THE HON'BLE ITAT HAS DELETED ADDITION MADE U/S 153A OF THE ACT AND HAS HELD THAT- 42. AS MENTIONED EARLIER, THE ADDITION OF RS.11,85,00,000/- WAS NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL BUT IS BASED ON STATEMENTS RECORDED DURING THE SEARCH U/S 132(4) AND POST-SEARCH ENQUIRIES. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT COMPLETED ASSESSMENTS CANNOT BE DISTURBED U/S 153A IN ABSENCE OF ANY INCRIMINATING MATERIAL. 43. THE HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA REPORTED IN 380 ITR 573 HAS HELD THAT THE COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT U/S 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FOUND ON OR DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR NOT KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. FOLLOWING THE ABOVE DECISION, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526 HAS TAKEN A SIMILAR VIEW AND HAS HELD THAT ONCE THE ASSESSMENT HAS ATTAINED FINALITY FOR A PARTICULAR YEAR I.E. IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEEDINGS U/S 153A OF THE LT. ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING THE PROCEEDINGS U/S 153A WHICH ARE CONTRARY TO AND/OR NOR DISCLOSED DURING THE REGULAR ASSESSMENT PROCEEDINGS. 44. THE HON'BLE DELHI HIGH COURT AGAIN IN THE CASE OF PR.CIT VS. LOTA JAIN REPORTED IN 384 FTR 543 HAS HELD THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, ASSUMPTION OF JURISDICTION U/S 153A WAS NOT IN ACCORDANCE WITH LAW. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORTS HIS CASE. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY REPORTED IN 397 ITR 344 HAS UPHELD THE DECISION OF HON'BLE BOMBAY HIGH COURT WHEREIN THE HON'BLE HIGH COURT HAD UPHELD THE DECISION OF THE TRIBUNAL HOLDING THAT THE INCRIMINATING MATERIAL WHICH WAS SEIZE HAS TO PERTAIN TO THE ASSESSMENT YEARS IN QUESTION AND IT IS AN UNDISPUTED FACT THAT THE DOCUMENTS WHICH WERE SEIZED DID NOT ESTABLISH ANY CO-RELATION, DOCUMENT-WISE, WITH THESE FOUR ASSESSMENT YEARS. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 13 45. SINCE IN THE INSTANT CASE ADDITION OF RS.LL,85,00,000/- WAS MADE ON THE BASIS OF STATEMENTS RECORDED U/S 132(4) AND POST-SEARCH ENQUIRY AND NO INCRIMINATING MATERIAL WAS FOUND/SEIZED DURING THE COURSE OF SEARCH, THEREFORE, FOLLOWING THE DECISIONS CITED (SUPRA), WE HOLD THAT NO ADDITION COULD HAVE BEEN MADE U/S 153A SINCE THE ASSESSMENT WAS NOT ABATED IN THE INSTANT CASE. IN VIEW OF THE ABOVE, WE HOLD THAT THE ID. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING JURISDICTION U/S 153A OF THE IT. ACT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE ID. CIT(A) IN THE 153A ASSESSMENT PROCEEDINGS BEING VOID AB-INITIO ARE DELETED.' CONSIDERING THESE FACTS AND FOLLOWING THE DECISIONS REFERRED SUPRA, WHICH ARE BINDING IN NATURE, ADDITIONS MADE U/S 68 OF THE ACT FOR RS.8,33,10,000/- IN A.Y. 2011-12 AND RS.1,62,40,000/- IN A.Y. 2012-13 CANNOT BE UPHELD AND ARE REQUIRED TO BE DELETED. FURTHER ADDITIONS MADE BY AO BY ESTIMATING UNEXPLAINED EXPENDITURE FOR RS.41,65,500/- AND RS.8,12,000/- IN BOTH, THE ASSESSMENT YEARS ARE ALSO REQUIRED TO BE DELETED. AS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT FOLLOWING DECISIONS REFERRED SUPRA ON THE GROUND THAT THESE ADDITIONS ARE BEYOND THE SCOPE OF ASSESSMENT ORDER PASSED U/S 153A OF THE ACT, GROUNDS RAISED BY APPELLANT CHALLENGING MERITS OF THE ADDITION HAVE BECOME INFRUCTUOUS HENCE SAME ARE NOT BEING ADJUDICATED. IN NUTSHELL, THE ADDITIONS MADE U/S 68 AND UNEXPLAINED EXPENDITURE FOR BOTH THE ASSESSMENT YEARS (A.Y. 2011-12 AND A.Y. 2012-13) ARE DELETED. 10. THEREAFTER LD. CIT(A) CONSIDERING THE SEVERAL CASE LAWS AND FACTS IN DETAILS IT IS HELD THAT ADDITION MADE U/S 68 OF THE ACT FOR RS. 8,33,10,000/- IN A.Y. 2011-12 AND RS. 1,62,40,000/- IN A.Y. 2012-13 CANNOT BE UPHELD AND ARE REQUIRED TO BE DELETED. AND FURTHER ADDITIONS MADE BY LD. A.O. BY ESTIMATING UNEXPLAINED EXPENDITURE FOR RS. 41,65,500/- AND RS. 8,12,000/- IN BOTH THE ASSESSMENT YEARS ARE ALSO REQUIRED TO BE DELETED AND HELD THAT THESE ADDITIONS ARE BEYOND THE SCOPE OF ASSESSMENT ORDER PASSED U/S 153A OF THE ACT AND FINALLY ADDITION MADE U/S 68 AND UNEXPLAINED EXPENDITURE FOR BOTH THE ASSESSMENT YEARS WERE DELETED. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 14 11. WE HAVE HEARD BOTH THE PARTIES AND GIVEN THOUGHTFUL CONSIDERATION. LD. A.R. HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). 12. ON THE OTHER HAND, LD. D.R. RELIED ON THE ASSESSMENT YEAR. 13. WE ARE OF THE CONSIDERED OPINION, THAT LD. CIT(A) HAS PASSED DETAILED AND REASONED ORDER AFTER RELYING ON SEVERAL CASES OF HIGH COURT AND DIFFERENT BENCHES OF ITAT AND HAS ANALYTICALLY EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE SAME DOES NOT REQUIRED ANY KIND OF INTERFERENCE AT OUR END. 14. IN THE RESULT, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 15. NOW WE COME TO NEXT GROUND RELATING TO ON-MONEY WHEREIN LD. CIT(A) HELD THAT SAME WILL BE TAXED IN THE YEAR IN WHICH SALES ARE RECOGNIZED IN THE BOOKS OF ACCOUNT AND THAT TOO AT THE RATE ARE 17.5% OF THE ON-MONEY RECEIPT. 16. IN THIS GROUND, ADDITION FOR UNDISCLOSED SALE RECEIPT FOR THE PROJECT SKY HARMONY, BARODA, HAVING AN AREA OF 131005 SQ. FT. CONSISTING OF 87 UNITS. IT WAS OBSERVED THAT DURING THE COURSE OF SEARCH, STATEMENT OF SITE SUPERVISOR SHRI SUDHIR BRAHMBHATT WAS RECORDED U/S 132(4) OF THE ACT ON 07.01.2014 WHEREIN SALE RATE OF FLAT PER SQ. FT. WAS STATED TO BE RS. 2500/- . ON THE BASIS OF SUCH STATEMENT IT WAS OBSERVED THAT IN MANY CASES THE ASSESSE HAD RECORDED VERY LESS PAYMENTS THROUGH BUYERS HAD PAID FULL AMOUNT OF TRANSACTIONS AS PER RATE SUGGESTED BY THE SITE SUPERVISOR IN HIS STATEMENT. 17. AND LD. A.O. HELD THAT IN THE BOOKS OF ACCOUNTS, THE ASSESSE HAS SHOWN SALES AS PER ITS WISH AND CONVENIENCE OF CUSTOMER. AND NOT AS PER STATEMENT OF THE SITE SUPERVISOR WHEREIN HE STATED THAT RATE OF FLAT RS. 2500/- SQ. FT. AND OBSERVED THAT ASSESSE SHOULD HAVE RECEIVED UNACCOUNTED SALE RECEIPT FROM ADDITIONAL 22 UNITS ON SALE WHICH IS NOT DISCLOSED IN BOOKS OF ACCOUNTS. CONSIDERING RATE OF SALE AT RS. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 15 2500/- PER SQ. FT. AND RS. 15 LACS UNDISCLOSED RECEIPTS ON ADDITIONAL 22 UNDISCLOSED UNIT, ADDITION HAS BEEN WORKED OUT AS UNDER: SR. NO. PARTICULARS ASSESSMENT YEAR 2011-12 2012-13 2013-14 '2014-15 (I) CONSIDERING RATE OF SALE @ RS.2500 PER SQ. FT. AS PER STATEMENT OF SITE SUPERVISOR, SHRI SUDHIR BRAHMBHATT 60,92,500 1,36,56,500 2,48,64,000 1,27,14,000 (II) CONSIDERING UNSOLD UNITS AS PER EXCEL SHEET FOUND FROM THE RESIDENCE OF SHRI RAJESH BAFNA (22 UNITS @15 LACS PER UNIT) 0 0 0 3,30,00,000 TOTAL (RS.) 60,92,500 1,36,56,500 2,48,64,000 4,57,14,000 18. ON THE OTHER HAND, ASSESSE CONTENTION WAS THAT SITE SUPERVISOR STATEMENT CANNOT BE RELIED UPON AS HE WAS NOT RESPONSIBLE FOR HANDLING SALES. AND ALTERNATIVELY CONTENDED THAT EVEN IF RATE AS PER STATEMENT IS APPLIED, THE SAME SHOULD BE APPLIED TO SALE MADE IN THE YEAR IN WHICH STATEMENT IS RECORDED AND SHOULD NOT BE APPLIED TO THE PRECEDING YEARS. AND ASSESSE CONTENDED BEFORE THE LD. CIT(A) THAT ASSESSING OFFICER DID NOT PROVIDE AN OPPORTUNITY TO CROSS EXAMINE OF SHRI SUDHIR BRAHMBHATT SITE SUPERVISOR WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. AND ASSESSE CONTENDED BEFORE THE LD. CIT(A) THAT SALE OF ALL UNITS CANNOT BE ESTIMATED AT A FLAT RATE SINCE THERE ARE VARIOUS FACTORS WHICH AFFECT THE RARTE, SOME OF THEM BEING THE LOCATION OF THE UNIT BEING SOLD, URGENCY OF FUNDS REQUIRED AT A PARTICULAR POINT OF TIME, TIME OF BOOKING, DURATION OF PAYMENT, REFERENCES/NEGOTIATIONS INVOLVED ETC. 19. AND ASSESSE CONTENDED THAT NO SALE HAS BEEN OFFERED IN BOOKS OF ACCOUNT IN A.YRS. 2011-12 TO 2013-14 WHICH IS ACCEPTED BY THE A.O. WHILE PASSING THE ASSESSMENT IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 16 ORDER HENCE ON-MONEY ADDITION CANNOT BE MADE IN THESE THREE ASSESSMENT YEARS ON THE GROUND THAT ALLEGED CASH HAS BEEN RECEIVED AND ON-MONEY IS TAXABLE ON RECEIPT BASIS. AND FURTHER STATED THAT IT IS SETTLED LAW THAT ON-MONEY IS REQUIRED TO BE TAXED IN THE YEAR IN WHICH AMOUNT RECEIVED THROUGH CHEQUE IS TAXED. AND FURTHER STATED THAT ADDITION ON ACCOUNT OF 22 UNSOLD UNITS HAVE BEEN OFFERED IN THE YEAR OF SALE IN SUBSEQUENT YEARS HENCE ADDITION OF THE SAME CANNOT BE MADE CONSIDERING THAT THE ASSESSE HAS MADE ANY UNACCOUNTED SALE OF SUCH UNITS DURING A.Y. 2014-15. AND FURTHER STATED THAT SIMILAR UNITS SOLD BY OTHER GROUP CASES BEING M/S. AUTOCARE SERVICES, M/S. SUMANGAL ENTERPRISE ETC. WHICH HAVE FILED SETTLEMENT PETITION BEFORE HONBLE INCOME TAX SETTLEMENT COMMISSION, MUMBAI HAS ESTIMATED NET PROFIT @ 17.5% BEING PROFIT ESTIMATED ON ON-MONEY AS WELL AS TURNOVER SHOWN IN BOOKS OF ACCOUNT. AND FURTHER STATED THAT IT IS SETTLED LEGAL LAW AND ENTIRE ON-MONEY CANNOT BE TAXED BUT ONLY PROFIT EMBEDDED ON ALLEGED ON-MONEY CAN BE TAXED. AND CITED A CASE OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PRESIDENT INDUSTRIES 124 TAXMAN654. AND IN THE CASE OF SAMIR SYNTHETICS REPORTED IN 326 ITR 326. 20. LD. CIT(A) CONSIDERED ALL FACTS IN DETAIL AND ALSO DISCUSSED CASE LAW AND HELD THAT : 5. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSIONS FILED BY APPELLANT. THE AO HAS MADE ADDITION FOR ON-MONEY FOR ALL THE FOUR ASSESSMENT YEARS AFTER ADOPTING SALE VALUE AT RS.2,500/- PER SQ. FT. BASED UPON STATEMENT OF SITE SUPERVISOR SHRI SUDHIR BRAHMBHATT. THE AO HAS ALSO MADE ADDITION FOR ON- MONEY FOR RS.3,30,00,000/- ON THE GROUND THAT THOUGH APPELLANT HAS BOOKED 22 UNITS, CONSIDERATIONS HAVE NOT BEEN SHOWN IN BOOKS OF ACCOUNT AND SUCH UNITS ARE SHOWN AS CLOSING STOCK. THE APPELLANT HAS CONTENDED THAT DURING THE COURSE OF SEARCH NO EVIDENCES WERE FOUND WHICH COULD PROVE THAT APPELLANT WAS RECEIVING ON-MONEY FOR UNITS BOOKED BY IT. HOWEVER, THIS CONTENTION OF APPELLANT CANNOT BE ACCEPTED AS ONE OF THE DIRECTORS OF APPELLANT COMPANY BEING MR. OMPRAKASH BENGANI IN. HIS STATEMENT. RECORDED U/S 132(4) OF THE ACT ON 7TH JANUARY, 2014 HAS STATED THAT, FLATS/UNITS ARE BOOKED AT RS.2,100/- PER SQ. FT. IN PROJECT DEVELOPED BY THE APPELLANT. IT IS FOUND THAT THE APPELLANT IN MANY CA.SES HAS SHOWN SALE VALUE BELOW SUCH AMOUNT AS ADMITTED BY DIRECTOR HENCE SUCH ON- MONEY IS REQUIRED TO BE TAXED IN THE CASE OF APPELLANT. SO FAR AS RELIANCE PLACED IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 17 ON THE STATEMENT OF SITE SUPERVISOR IS CONCERNED, SUCH STATEMENT CANNOT BE MADE APPLICABLE WHEN THE DIRECTOR OF THE APPELLANT COMPANY HIMSELF HAS ADMITTED SALE RATE AT RS.2,100/- PER SQ. FT. WHICH IS MORE RELIABLE. EVEN THE ABOVE SITE SUPERVISOR HAS JOINED THE APPELLANT COMPANY IN MARCH, 2013 AND EVEN HE HAS LEFT IT IN JULY 2014 WHICH SUGGESTS THAT HE WAS NOT A PERMANENT EMPLOYEE OF THE COMPANY. HE WAS NOT AN AUTHORISED PERSON LOOKING AFTER THE AFFAIRS OF THE COMPANY OR BOOKINGS MADE BY IT. HENCE THE AO WAS INCORRECT IN ADOPTING SALE RATE OF RS.2,500/- PER SQ. FT. WHILE ARRIVING AT ON-MONEY RECEIPTS. THE DIRECTOR OF APPELLANT, HAS ADMITTED SALE VALUE AT RS.2,100/- PER SQ. FT. AND SUCH STATEMENT HAS NOT BEEN RETRACTED LATER ON AND IN ASSESSMENT PROCEEDINGS HENCE ON-MONEY IN THE CASE OF APPELLANT IS REQUIRED TO BE RE- COMPUTED BASED UPON ACTUAL ADMITTED SALE VALUE AT RS.2,100/- PER SQ. FT. SO FAR AS THE ARGUMENT OF APPELLANT THAT THERE CANNOT BE ANY UNIFORMITY OF SALE VALUE FOR ALL THE FOUR ASSESSMENT YEARS, IT IS OBSERVED THAT THE APPELLANT HAS NOT SUBMITTED ANY SCIENTIFIC METHOD OF WORKING ON-MONEY AND EVEN RATE MENTIONED BY THE DIRECTOR IS A GENERAL AVERAGE SELLING PRICE OF UNITS SOLD BY APPELLANT. THUS, THE CONTENTION OF APPELLANT THAT RATE OF RS.2,100/- PER SQ. FT. SHOULD BE ADOPTED ONLY IN THE LAST ASSESSMENT YEAR I.E. A.Y. 2014-15 IS REJECTED. 5.1 WHILE MAKING THE ADDITION FOR ON-MONEY THE AO HAS REFERRED TO STATEMENT RECORDED IN CASE OF TWO BUYERS BEING SHRI PRAMOD KUMAR GARG TO WHOM FLAT A- 101 IS SOLD AND SHRI SANDEEP K. BAGTHARIA TO WHOM FLAT A-306 IS SOLD. THE AO HAS STATED THAT BUYERS HAVE STATED -VALUE WHICH IS HIGHER THAN SALE VALUE SHOWN IN BOOKS OF ACCOUNT. HOWEVER, THIS OBSERVATION OF AO IS INCORRECT AS SALE VALUE RECORDED IN BOOKS OF ACCOUNT AS WELL AS SALE DEED IS MATCHING WITH THE FIGURE STATED BY THE BUYERS IN THE STATEMENT. SHRI PRAMOD KUMAR GARG IN HIS STATEMENT HAS STATED THAT HE HAS PURCHASED THE FLAT @ RS.2,000 PER SQ. FT. AND PAYMENTS HAVE BEEN MADE THROUGH CHEQUES. SIMILAR STATEMENT HAS ALSO BEEN GIVEN BY ANOTHER BUYER BEING SHRI SANDEEP K. BAGTHARIA. SO FAR AS OBSERVATION OF THE AO THAT THE APPELLANT HAS SOLD SIMILAR TYPE OF FLAT TO SHRI ROHIT CHAUDHARY, A- 106 AT RS.17.50 LACS, BUT CORRECT FIGURE IS RS.19.50 LACS. SIMILAR IS THE CASE OF SHRI VIMAL ANAND, A-503 WHEREIN THE AO STATED THAT THE APPELLANT HAS SOLD UNIT AT RS. 17. 78 LACS BUT CORRECT FIGURE IS RS.25.40 LACS. IT IS ALSO OBSERVED THAT THE AO HAS WORKED OUT ON-MONEY FOR ALL THE UNITS IN ANNEXURE - B OF ASSESSMENT ORDERS WHEREIN HE HAS MENTIONED THE SALE VALUE RECORDED IN BOOKS OF ACCOUNT AND SUCH FIGURE IS MATCHING WITH THE STATEMENT OF BUYERS WHICH IN TURN SUPPORT CONTENTION RAISED BY THE APPELLANT THAT ENTIRE SALE FIGURES ARE RECORDED IN BOOKS OF ACCOUNT. CONSIDERING THESE FACTS, STATEMENT OF THE BUYERS CANNOT BE THE BASIS FOR ARRIVING AT SALE RATE FOR UNITS SOLD BY THE APPELLANT. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 18 5.2 SO FAR AS CONTENTION OF THE APPELLANT THAT IT HAS NOT SHOWN SALES IN AUDITED ANNUAL ACCOUNTS FOR A.YRS. 2011-12 TO 2013-14 HENCE IN ANY CASE ON-MONEY CANNOT BE TAXED IN THESE ASSESSMENT YEARS. IT IS OBSERVED THAT CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT AS AUDITED ANNUAL ACCOUNTS WHICH ARE ALREADY PART OF ORIGINAL RETURN OF INCOME FILED PRIOR TO DATE OF SEARCH CLEARLY STATE THAT THE APPELLANT HAS SHOWN ENTIRE CONSTRUCTION EXPENDITURE AS PART OF CLOSING STOCK AND BOOKING AMOUNTS RECEIVED IN CHEQUE HAVE BEEN SHOWN AS LIABILITY. WHILE PASSING THE ASSESSMENT ORDER THE AO HAS NOT DISPUTED SUCH FACT NOR TAXED COLLECTION RECEIVED IN CHEQUE IN THE YEAR IN WHICH IT IS RECEIVED. IT IS A SETTLED LAW THAT ON- MONEY WOULD BE TAXED IN THE YEAR IN WHICH REGULAR INCOME IS TAXED. RELIANCE IS PLACED ON DECISION OF HON'BLE AHMEDABAD ITAT IN THE CASE OF PR CONSTRUCTION V/S ITO (ITA NO. 2735/AHD/2010, DATED 8 TH APRIL, 2011) WHEREIN IT IS HELD THAT ACCRUAL OF CHEQUE/CASH AGAINST SALE OF FLAT WILL NOT ARISE ON RECEIPT BUT WILL ARISE WHEN FLATS ARE TRANSFERRED TO BUYERS. THE HON'BLE PUNE ITAT IN THE CASE OF RANADE DIGHE V/S ITO (466/PN/2010, DATED 26TH AUGUST, 2011 HAS HELD THAT ON-RNONEY CANNOT BE TAXED_ON_CASH BASIS.AS CASH RECEIPTS DO NOT PARTAKE DIFFERENT CHARACTER FROM CHEQUE RECEIPT MERELY BECAUSE IT WAS RECEIVED IN CASH AND POSSIBLY BECAUSE THERE IS INTENTION TO EVADE ITS DISCLOSURE TO THE DEPARTMENT. IT IS PERTINENT TO NOTE THAT SIMILAR CONTENTION HAS BEEN ACCEPTED BY UNDERSIGNED IN GROUP CASE BEING LUPIN ENTERPRISE FOR AY 2012-13 TO 2014-15 IN APPELLATE ORDER DATED 14 TH MARCH, 2018. CONSIDERING THESE FACTS IT IS HELD THAT AO WAS NOT JUSTIFIED IN MAKING ADDITION OF UNDISCLOSED SALE RECEIPTS FOR RS.60,92,500/- IN A.Y. 2011-12, RS. 1,36,56,500;- IN A.Y. 2012-13 AND RS.2,48,64,000/- IN A.Y. 2013-14. THUS, TO THAT EXTENT ADDITIONS MADE IN THREE ASSESSMENT YEARS ARE REQUIRED TO BE DELETED. HOWEVER, AO IS DIRECTED TO RE- COMPUTE ON-MONEY RECEIPTS CONSIDERING THE SALE RATE OF RS.2,100 PER SQ. FT. AND MAKING ADDITIONS BASED UPON FINDINGS GIVEN IN SUBSEQUENT PARAS IN THE YEAR IN WHICH UNITS ARE ACTUALLY OFFERED TO TAX IN BOOKS OF ACCOUNT. THE APPELLANT HAS SUBMITTED FOLLOWING TABULAR CHART SHOWING THE FLAT NO., ASSESSMENT YEAR IN WHICH ADDITION IS BEING MADE BY AO AND ASSESSMENT YEAR IN WHICH APPELLANT HAS OFFERED INCOME IN BOOKS OF ACCOUNT. SR. NO.. FY IN WHICH AO HAS TAXED. ON MONEY TY PE NO. AREA SQ. FT. RATE PER SQ. FT. SALE VALUE AS PER BOOKS (RS.) FY OF SALES RECOGNISED 1 2011 - 12 A 301 1270 1 103 14 01 000 2014 - 15 2 2011 - 12 B 301 1750 1386 24 25 000 2014 - 15 IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 19 3 2012 - 13 A 205 1270 1181 15 00 000 2014 - 15 4 2012 - 13 A 206 1270 1181 15 00 000 2014 - 15 5 2012 - 13 A 701 1270 1181 15 00 000 2014 - 15 6 2012 - 13 B 101 1750 1943 34 00 000 2014 - 15 7 2012 - 13 B 304 1750 1915 33 51 000 2014 - 15 8 2012 - 13 B 402 1750 1800 31 50 000 2014 - 15 9 2012 - 13 B 403 1750 2257 39 50 000 201 4 - 15 10 2012 - 13 B 404 1750 1829 32 00 000 2014 - 15 11 2012 - 13 B 503 1750 1063 18 61 000 2014 - 15 12 2013 - 14 A 202 1270 2421 30 75 000 2014 - 15 13 2013 - 14 A 401 1270 2421 30 75 000 2014 - 15 14 2013 - 14 A 801 1270 2441 31 00 000 2014 - 15 15 2013 - 14 A 803 1270 1969 25 00 000 2014 - 15 16 2013 - 14 A 805 1270 1670 21 21 000 2014 - 15 17 2013 - 14 B 303 1750 171* 30 00 000 2014 - 15 18 2010 - 11 B 502 1750 1451 25 40 000 2014 - 15 19 2011 - 12 A 503 1750 PART OF STOCK I.E NOT SOLD YET 20 2011 - 12 A 502 1270 1449 18 40 000 2015 - 16 21 2012 - 13 A 105 1270 2331 29 61 000 2015 - 16 THE AO IS DIRECTED TO VERIFY ABOVE WORKING AND MAKE APPROPRIATE ADDITION IN THE YEAR IN WHICH SALE IS RECOGNISED AS PER THE PROVISIONS OF LAW AS NARRATED BEFORE. 5.3 WITH REGARD TO OBSERVATION OF AO THAT ON-MONEY IS REQUIRED TO BE TAXED FOR 22 UNSOLD UNITS COMPUTED BASED UPON EXCEL SHEET FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF SHRI RAJESH BAFNA, IT IS FOUND THAT GROUP CONCERNS OF APPELLANT BEING M/S. AUTOCARE SERVICES AND M/S. SUMANGAL ENTERPRISE HAVE ALSO IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 20 FILED SETTLEMENT PETITIONS BEFORE HON'BLE ITSC WHEREIN THE DEPARTMENT IN RULE 9 REPORT REFERRED TO SUCH LOOSE SHEET. HOWEVER, HON'BLE SETTLEMENT COMMISSION HAS NOT TAKEN ANY ADVERSE VIEW CONSIDERING ABOVE LOOSE SHEET. IT IS PERTINENT TO NOTE THAT IN PRECEDING PARA I HAVE ALREADY HELD THAT ON-MONEY IS REQUIRED TO BE TAXED IN THE YEAR IN WHICH SALES ARE RECOGNISED IN BOOKS OF ACCOUNT HENCE IN ANY CASE AO IS NOT JUSTIFIED IN TAXING RS.3,30,00,000/- BEING ESTIMATED ON-MONEY RECEIPTS IN AY 2014-15. THUS, TO THAT EXTENT ADDITION MADE BY AO IS REQUIRED TO BE DELETED FROM AY 2014-15. 5.4 IT IS PERTINENT TO NOTE THAT WHILE MAKING THE ADDITION OF ON-MONEY, THE AO HAS STATED THAT MODUS OPERANDI FOR COLLECTION OF MONEY TOWARDS SALE OF UNITS IS SIMILAR TO THAT OF M/S. DHARNIDHAR REALTY, M/S. SUMANGAL ENTERPRISE, M/S. AUTOCARE SERVICES ETC. IT IS OBSERVED THAT THESE THREE GROUP COMPANIES OF THE APPELLANT HAVE PREFERRED SETTLEMENT APPLICATIONS WHEREIN THEY HAD MADE DISCLOSURE CONSIDERING AVERAGE NET PROFIT @ 16% FOR PROJECTS AND WHILE APPLYING SUCH NET PROFIT, THEY HAD CONSIDERED BOTH DISCLOSED SALES AND UNDISCLOSED SALES FOUND DURING THE COURSE OF SEARCH. IT IS OBSERVED THAT DISCLOSURE WAS ARRIVED AT AFTER REDUCING NET PROFIT BEFORE INTEREST & REMUNERATION AS SHOWN IN THE AUDITED ANNUAL ACCOUNTS. THE ABOVE METHOD WAS ALSO ACCEPTED BY THE HON'BLE SETTLEMENT COMMISSION IN ITS ORDER REFERRED SUPRA WHEREIN IN MAJORITY OF THE CASES IT WAS HELD THAT AVERAGE NET PROFIT WOULD BE 17.5% AS AGAINST 16% OFFERED BY THE APPLICANTS. IT IS OBSERVED THAT THE ORDER U/S 245D(4) WAS PASSED IN FOUR CASES OF THE GROUP BEING M/S. PARARN ENTERPRISES, M/S. AUTOCARE SERVICES, M/S. SUMANGAL ENTERPRISE AND M/S, DHARNIDHAR REALTY ON 5TH SEPTEMBER, 2017 WHEREIN ON CONSISTENT BASIS FOUR APPLICANTS HAD OFFERED NET PROFIT ON TURNOVER AS PER BOOKS OF ACCOUNT AS WELL AS ON-MONEY RECEIPTS. HOWEVER, IN THE RULE 9 REPORT THE PCIT HAD ARGUED THAT ENTIRE ON-MONEY RECEIPT SHOULD BE TAXED IN THE HANDS OF APPLICANT FIRRN(S). CONSIDERING THE ARGUMENT OF THE FOUR APPLICANTS REFERRED, SUPRA, AS WELL AS THE RULE 9 REPORT, THE HON'BLE SETTLEMENT COMMISSION ACCEPTED THE APPELLANT'S ARGUMENT FOR TAXING ADDITIONAL INCOME BASED UPON NET PROFIT ON- MONEY RECEIPT AS WELL AS TURNOVER RECORDED IN BOOKS OF ACCOUNT AND EVEN NO SEPARATE ADDITION U/S 68 WAS MADE. TO MAINTAIN THE CONSISTENCY AND TO PROTECT THE INTEREST OF REVENUE, IT IS HELD THAT IN THE PRESENT CASE OF THE APPELLANT ALSO, AVERAGE NET PROFIT BE ESTIMATED @ 17.5% AS AGAINST INCOME SHOWN IN RETURN OF INCOME AS WELL AS ON-MONEY ESTIMATED BY THE AO. FURTHER, ESTIMATION OF NET PROFIT IS ALSO SUPPORTED BY DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S PRESIDENT INDUSTRIES, 124 TAXMAN 124, ABHISHEK CORPORATION, ITA NO. 15 OF 2003 AND CIT V/S PANNA CORPORATION, TAX APPEAL NO, 323 OF 2000 DATED 16TH JUNE, 2012. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 21 THE AO IS DIRECTED TO VERIFY THE ABOVE WORKING AND RE-COMPUTE THE ADDITION IN CASE OF APPELLANT AS UNDER AY TURNOVER ON MONEY TOTAL (RS.) PROFIT NET PROFIT ADDITION IN BOOKS OF (RS.) BEFORE TAX @ 17.5% ON SUSTAINED ACCOUNT IN ACCOUNTS TOTAL (RS.) (RS.) (RS.) (RS.) 1 2 3 4=2+3 5 6=4*17.5% 7=6-5 2014-15 8,39,29,001 1,84,97,000 10,24,26,001 60,05,022 1,79,24,550 1,19,19,528 6. TO SUM UP, THE POSITION THAT NOW STANDS IS THAT OUT OF ADDITIONS MADE BY THE AO FOR 51 UNITS IN AY 2014-15, THE AMOUNT WORKED (SUBJECT TO VERIFICATION BY THE AO) OUT ABOVE FOR 30 UNITS ONLY REMAINS FOR A.Y. 2014-15, THE AMOUNT TO BE WORKED OUT FOR 18 UNITS AND 2 UNITS AS DISCUSSED BEFORE ARE TO BE TAXED IN A.Y. 2015-16 AND A.Y. 2016-17 RESPECTIVELY AND THE AMOUNT TO BE WORKED OUT FOR REMAINING/UNSOLD 1 UNIT IS TO BE TAXED IN THE YEAR WHEN IT MAY BE SOLD. 7, CONSIDERING THE ABOVE FACTS AND DISCUSSION, ADDITIONS MADE U/3 68 OF THE ACT FOR RS.8,33,10,000/- IN A.Y. 2011-12 AND RS.1,62,40,000/- IN A.Y. 2012-13 ARE DELETED. CONSEQUENTLY ADDITIONS MADE BY AO BY ESTIMATING UNEXPLAINED EXPENDITURE FOR RS.41.65,500/- AND RS.8,12,000/- IN BOTH THE ASSESSMENT YEARS ARE ALSO DELETED. FURTHER, ADDITIONS OF UNDISCLOSED SALE RECEIPTS FOR RS.60,92,500/- IN A.Y. 2011-12, RS.1,36,56,500/- IN A.Y. 2012-13 AND RS.2,48,64,000/- IN A.Y. 2013-14 ARE ALSO DELETED. THE ADDITION MADE IN A.Y.2014-15 FOR RS.4,57,14,000/- IS RESTRICTED TO RS.1,19,19,528 SUBJECT TO VERIFICATION OF THE CALCULATIONS BY THE AO AS STATED HEREIN ABOVE. THE ADDITIONS OF THE AMOUNT TO BE WORKED OUT FOR 18 UNITS AND 2 UNITS ARE TO BE TAXED IN A.Y. 2015-16 AND A.Y. 2016-17 RESPECTIVELY AND THE AMOUNT TO BE WORKED OUT FOR THE REMAINING 1 UNIT WILL TAXED IN THE YEAR WHEN IT MAY BE SOLD. THE AO IS DIRECTED TO TAKE APPROPRIATE ACTION IN A.Y.2015-16 AND A.Y.2016-17 AND ANY OTHER ASSESSMENT YEAR(S). 21. WE HAVE HEARD BOTH THE PARTIES AND GIVEN THOUGHTFUL CONSIDERATION AND GONE THROUGH THE SEVERAL CASE LAW OF HONBLE HIGH COURTS . IN OUR CONSIDERED OPINION, LD. CIT(A) IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 22 HAS PASSED DETAILED AND REASONED ORDER AND SAME DOES NOT REQUIRED ANY KIND OF INTERFERENCE AT OUR END. WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). 22. NOW WE COME TO REVENUES APPEAL IN ITA NO. 2244/AHD/2018. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS. 4,57,14,000/- TO RS. 1,19,19,528/- IN THE FORM OF ON-MONEY HOLDING THAT THE SAME WILL BE TAXED IN THE YEAR IN WHICH SALES ARE RECOGNIZED IN THE BOOKS OF ACCOUNT AND THAT TOO AT THE RATE 17.5% OF THE ON- MONEY RECEIPT. THE ABOVE DECISION OF THE LD. CIT(A) IS NOT JUSTIFIED AS THE ON- MONEY OF RS. 2,48,64,000/- WAS RECEIVED BY THE ASSESSE IN A.Y. 2014-15 AND REMAINED OUT OF BOOKS OF ACCOUNT AND HENCE THE ENTIRE AMOUNT IS TAXABLE WHEN RECEIVED . THEREFORE, PRINCIPAL OF PROJECT COMPLETION METHOD AND ACCOUNTING STANDARDS ARE NOT APPLICABLE AS SUCH ON-MONEY IS ALREADY RECEIVED IN A.Y. 2014- 15. 2. IT IS THEREFORE, PRAYED THAT THE ORDER THE LD. CIT(A)-12, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE A.O. MAY BE RESTORED TO THE ABOVE EXTENT. 23. IN THIS CASE, LD.CIT(A) RESTRICTED THE ADDITION OF RS. 4,57,14,000/- TO RS. 1,19,19,528/- IN THE FORM OF ON-MONEY HOLDING THAT THE SAME WILL BE TAXED IN THE YEAR IN WHICH SALES ARE RECOGNIZED IN THE BOOKS OF ACCOUNT AND THAT TOO AT THE RATE 17.5% OF THE ON-MONEY AMOUNT. THE LD. CIT(A) RESTRICTED THE ADDITION @ 17.5% ON THE BASIS OF INCOME TAX SETTLEMENT COMMISSION IN THE CASE OF LAND GROUP OF ANOTHER PROJECT NAMELY PARAM ENTERPRISE, DHARANIDHAR REALTY ETC. WHEREIN INCOME TAX SETTLEMENT COMMISSION HAS ESTIMATED NET PROFIT OF THE PROJECT @ 17.5% OF BOTH ACCOUNTED AND UNACCOUNTED TURNOVER AND ON THE BASIS. 24. IT WILL SETTLED LAW THAT ON-MONEY IS REQUIRED TO BE TAXED IN THE YEAR IN WHICH AMOUNT RECEIVED ON-MONEY IS TAXABLE ON RECEIPT BASIS. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 23 25. WE HAVE HEARD BOTH THE PARTIES AND GIVEN THOUGHTFUL CONSIDERATION AND WE ARE OF THE OPINION THAT THERE IS NO AMBIGUITY IN THE ORDER PASSED BY THE LD. CIT(A) AND HE HAS PASSED DETAILED AND REASONED ORDER AND SAME DOES NOT REQUIRE ANY INTERFERENCE AT OUR END. THUS THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 26. IN THE RESULT, ALL FOUR APPEALS OF THE REVENUE ARE DISMISSED. 27. NOW WE COME TO ASESSEES APPEAL IN ITA NO. 2013/AHD/2018 FOR A.Y. 2014-15, THE ASSESSE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF APPELLANT'S CASE, THE LEARNED CIT (APPEALS) HAS ERRED IN UPHOLDING ACTION OF AO FOR MAKING ADDITION TO THE EXTENT OF RS. 1,84,97,000 IN CURRENT ASSESSMENT YEAR WITHOUT APPRECIATING THE FACT THAT DURING THE COURSE OF SEARCH NO DETAILS REGARDING RECEIPT OF SUCH ON-MONEY WERE FOUND AND SEIZED BY THE DEPARTMENT. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN ESTIMATING NET PROFIT @ 17.5% AND DIRECTING AO TO TAX RS. 1,19,19,528 BEING NET PROFIT ON SALES RECORDED IN BOOKS OF ACCOUNT AS WELL AS ON- MONEY AS AGAINST ADDITION MADE BY AO FOR RS.4,57,14,000 WITHOUT APPRECIATING THAT ACTUAL RATE OF PROFIT REFLECTED IN BOOKS OF ACCOUNT IS VERY LOW AND CONSIDERING THE MARKET TREND, EARNING SUCH HIGH RATE OF PROFIT IS NOT PRACTICABLE. THE ADDITION CONFIRMED BY LD. CIT(A) SHALL BE DELETED. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF APPELLANT'S CASE, THE LEARNED CIT (APPEALS) HAS ERRED IN ESTIMATING NET PROFIT @ 17.5% OF TURNOVER SHOWN IN BOOKS OF ACCOUNT WITHOUT APPRECIATING THE FACT THAT NO DISCREPANCIES WERE FOUND IN BOOK RESULT EITHER IN SEARCH PROCEEDINGS OR IN ASSESSMENT PROCEEDINGS. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO WORK OUT ADDITION FOR 18 UNITS IN A.Y. 2015-16, 2 UNITS IN A.Y. 2016-17 AND REMAINING 1 UNIT IN THE YEAR OF SALE WHEN NO SUCH DIRECTION WAS REQUIRED TO BE GIVEN CONSIDERING THAT INCOME AS AND WHEN EARNED HAS BEEN DULY OFFERED IN PROFIT AND LOSS ACCOUNT. NO FURTHER ADDITION SHOULD BE MADE IN SUBSEQUENT YEARS. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. IT(SS)A NOS. 336 TO 338/AHD/2018 & ORS. . A.YS. 2011-12 TO 2013-14 & 2014-15 24 28. LD. A.R. FAIRLY CONCEDED THAT HE DOES NOT WANT TO PRESS THIS APPEAL SO SAME IS DISMISSED AS NOT PRESSED. 29. IN THE COMBINED RESULT, ALL FIVE APPEALS OF THE REVENUE AND ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04- 06- 2021 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 04/06/2021 RAJESH COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD