Assistant Commissioner of Income Tax , Central Circle - 4, Surat V. Shri Rajeev Arvindkumar Choraria, Surat

ITSSA 59/SRT/2022

AI Insights

The case involves a dispute between the Income Tax Department and Shri Rajeev Arvindkumar Choraria, a broker, concerning the assessment of unexplained cash credits under Section 69A of the Income Tax Act, 1961. The Department contended that Rs. 4.82 crores, received as booking amounts for flats and later refunded, were unexplained cash credits in the hands of the assessee. The CIT(A) had sustained a smaller addition as brokerage income, which the Tribunal partly upheld by reducing the estimated commission from 2% to 1% of the total booking amount. The Tribunal agreed with the assessee's position that as a broker, he had a limited role and did not maintain detailed records of the transactions, which were primarily the responsibility of the builder.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302051 (ITAT-SURAT)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 31-07-2022
• Other Referred Cases: ITO Vs Vikram Sujitkumar Bhatia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Loose papers; Onus to prove; Set aside
• Section: 131; 143(2); 69A; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER IT(SS)A No. 59/SRT/2022 (AY: 2013-14) (Hearing in Physical Court) A.C.I.T., Central Circle-4, Surat. Vs. Shri Rajeev Arvindkumar Choraria, 103, Gren Park, Opp Corner Point, City Light, Surat. PAN: AAOPC 8531 A APPELLANT RESPONDEDNT/ASSESSEE IT(SS)A No. 55/SRT/2022 (AY: 2013-14) Shri Rajeev Arvindkumar Choraria, 103, Gren Park, Opp Corner Point, City Light, Surat. PAN: AAOPC 8531 A Vs. D.C.I.T., Central Circle-4, Surat. APPELLANT/ASSESSEE RESPONDEDNT C.O. No. 05/SRT/2022 (AY: 2013-14) (Arising out of IT(SS)A No. 59/Srt/2022 Shri Rajeev Arvindkumar Choraria, 103, Gren Park, Opp Corner Point, City Light, Surat. PAN: AAOPC 8531 A Vs. D.C.I.T., Central Circle-4, Surat. APPELLANT/ASSESSEE RESPONDEDNT Assessee by Shri A. Gopalkrishnan Aiyer, A.R. Department by Shri Ashok B. Koli, CIT-DR Date of hearing 11/05/2023 Date of pronouncement 05/06/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These are the appeal by the Revenue and cross appeal by the assessee and Cross objection by the assessee are directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat [in short the IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 2 ld. CIT(A)] dated 10/05/2022 for the Assessment Year (AY) 2013-14. The Revenue in its appeal has raised following grounds of appeal:- “i. On the facts and in the circumstances of the case and in law. the ld. CIT(A) has erred in restricting the addition made by the Assessing Officer of Rs.4,82,95,505/- on account of unexplained money under Sec.69A of the Act to Rs.9,65,910/- being brokerage income @ 2% of the total booking amount of Rs.4,82,95,505/- and thereby giving a relief of Rs.4,73,29,595/- without appreciating the overall facts brought out by the AO on the basis of incriminating documents. ii. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition made by the Assessing Officer of Rs.4,82,95,505/- on account of unexplained money under Sec.69A of the Act to Rs.9,65,910/- being brokerage income a 2% of the total booking amount of Rs.4,82,95,505/- without appreciating the fact that the assessee has completely failed to furnish the details viz. confirmation, full address & PAN of the so called persons who have booked the flats and to whom the amounts claimed to have been returned by him which were the basic requirement to explain the entries found in the incriminating documents. iii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the Assessing Officer of Rs. 4,82,95,505/- on account of unexplained money under Sec.69A of the Act to Rs.9,65,910/- being brokerage income @ 2% of the total booking amount of Rs.4,82,95,505/-, by observing that the assessee is a broker and the broker has a limited role to play in booking of the flats/shops in the real estate projects without appreciating the fact that though the assessee has claimed that he is a broker and Rs.4,82,95,505/- is the amount of booking made by various persons through him but he has failed to furnish the basic/supporting details of such person except a few names which shows that either the assessee is deliberately avoided submission of such details or such persons are not in existence or fictitious in nature and therefore the AO has rightly treated the entire amount as to be belong to the assessee and made addition accordingly. iv. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the Assessing Officer of Rs.4,82,95,505/- on account of unexplained money under Sec.69A of the Act to Rs.9,65,910/- being brokerage income a 2% of the total booking amount of Rs.4,82,95,505/-, ignoring the findings given by the Assessing Officer and without having any basis for estimating the brokerage income @ 2%. v. In addition and in alternate to grounds No. 1, 2, 3 & 4 on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 3 considering the fact that the authenticity of the incriminating documents were accepted by the assessee himself but he has failed to furnish the details/evidences of such persons from whom the booking amounts were received and to whom the same returned, the AO was empowered to make presumption that the documents belongs to the assessee and contents therein arc true and correct as per the provisions of Section 292C of the l.T. Act. vi. In addition and in alternate to grounds No. 1, 2, 3, 4 & 5 on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made by the Assessing Officer ignoring the principles of "Human Probability Test" i.e. preponderance of probabilities which is applicable for Income Tax proceedings. vii. On the facts and in the circumstances of the case and in law, if the finding of the Id. CTT(A) that his amount of Rs.4,82,95,505/- was as received in the books of the builder which was subsequently refunded and hence the booking amount has to be brought to tax as unexplained cash credit in the hands of the builder and not in the hands of the assessee who is merely a broker, is based on the facts of the case, then the Id. CIT(A) ought to have issued directions to the AO to tax the same in the hands of the builder firm by invoking provision of Section 150( 1) of the Act. viii. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. ix. 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.” The assessee in his cross appeal has raised following grounds of appeal: “1 The order of assessment is contrary to the facts and prejudicial to the assessee. 2. On appreciation of the facts and circumstances of the case and law, the additions made by the Learned Assessing Officer and confirmed by the Learned Commissioner of Income Tax (Appeals) are contrary to law and based on erroneous understanding of the facts. 3. On appreciation of the facts and circumstances of the case and law the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by the learned assessing officer to the extent of Rs. 9,65,910/- being 2% of total gross booking of Rs. 4,82,95,505/-. The action of the Learned Commissioner of income Tax (Appeals) is contrary to the facts and law and deserves to be deleted. IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 4 4. On appreciation of the facts and circumstances of the case and interpretation of law, the Commissioner of Income Tax (Appeals) has erred in confirming the action of the learned assessing officer in issuing notice U/s. 153C of the Act without recording a proper satisfaction on the basis of evidences on record that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of the appellant. 5. The appellant craves to add, amend, modify or alter the above grounds of appeal at any stage of appellate proceedings. 6. The appellant humbly prays that the appeal be allowed in toto.” The assessee in his cross objection has raised following grounds: “1 On appreciation of facts and circumstances of the case the Learned CIT(Appeals) has correctly restricted the addition made by the Learned Assessing officer of Rs. 4,82,95,505/- on account of unexplained money U/s. 69A of the Act to Rs. 9,65,910/- being brokerage income @2% of the total booking amount of Rs. 4,82,95,505/- and thereby giving a relief of Rs. 4,73,29,595/- after appreciating the overall facts brought out by the AO. 2. On appreciation of facts and circumstances of the case the Learned CIT(Appeals) has correctly restricted the addition made by the Learned Assessing officer of Rs. 4,82,95,505/- on account of unexplained money U/s. 69A of the Act to Rs. 9,65,910/- being brokerage income @2% of the total booking amount of Rs. 4,82,95,505/- after appreciating all the facts of the case in its correct perspective. 3. On appreciation of facts and circumstances of the case the Learned ClT(Appeals) has correctly restricted the addition made by the Learned Assessing officer of Rs. 4,82,95,505/- on account of unexplained money U/s. 69A of the Act to Rs. 9,65,910/- being brokerage income @2% of the total booking amount of Rs. 4,82,95,505/- by holding that the appellant is a broker having a limited role to play in booking of the Hats / shops in the real estate projects. 4. On appreciation of facts and circumstances of the case the Learned OT(Appeals) has correctly restricted the addition made by the Learned Assessing officer of Rs. 4,82,95,505/- on account of unexplained money U/s. 69A of the Act to Rs. 9,65,910/- being brokerage income estimated @2% of the total booking amount of Rs. 4,82,95,505/-. 5. On appreciation of facts and circumstances of the case and law, the Learned Commissioner of Income tax (Appeals) has rightly restricted the addition made by the Learned Assessing Officer after considering all the facts available on record and therefore it is prayed that the order of the Learned Commissioner of Income tax (Appeals) be upheld. IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 5 6. The Learned CIT(Appeals) correctly deleted the addition made by the learned assessing officer considering the principles of "Human Probability Test" in its correct perspective to the extent applicable to the Income Tax Proceedings. 7. On appreciation of facts and circumstances of the case the Learned CIT(Appeals) has correctly given a finding that Rs. 4,82,95,505/- has been received by the builder which was subsequently refunded to the customers and hence the booking amount has to be brought to tax as unexplained cash credit in the hands of the builder and not in the hands of the appellant who is merely a broker based on facts of the case. 8. On appreciation of facts and circumstances of the case and law, the Learned Commissioner of Income tax (Appeals) has rightly deleted the additions made by the Learned Assessing Officer after considering all submissions / materials produced before him by the appellant and remand report(s) submitted by the Learned Assessing Officer on such submission. It is therefore prayed that the order of the Learned Commissioner of Income tax (Appeals) be upheld. 9. The respondent craves to add, amend, modify or alter the above grounds of cross objections at any stage of appellate proceedings. 10. The respondent humbly prays that the cross objections be accepted in toto and the appeal filed by the petitioner be dismissed.” 2. Brief facts of the case are that a search was carried out in Surat Metalic Group in Surat on 28/11/2013. In the search action, certain incriminating material was found and seized. Some of the documents were pertaining to the assessee, therefore, the case of assessee was covered under Section 153C of the Income Tax Act, 1961 (in short, the Act). The searched group were developing a project namely “Lotus” in Sachin, Surat. The documents pertaining to booking through assessee in the project ‘Lotus’ were found and seized. On the basis of seized material, satisfaction under Section 153C of the Act was recorded. Notice under Section 153C was issued to the assessee on 04/12/2015 for filing return of income for A.Y. 2013-14. In response to notice under Section 153C of the Act, the assessee filed his return of income on 25/01/2016 declaring total income at Rs. 8,94,060/-. The Assessing IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 6 Officer after serving statutory notice under Section 143(2) of the Act on 29/01/2016 proceeded for reassessment under Section 153C of the Act. During the assessment, the Assessing Officer noted that during the search action, page No. 28 to 36 being part of Annexure-A-1 were seized. Such documents reflect the booking amount of flats in project Lotus of Rs. 4.82 crores. On the basis of such documents/seized material, the Assessing Officer was of the view that such details contain on the seized material booking of flats through assessee. The total entry in the seized material were of Rs. 4.82 crores. All payments were received in cash. The Assessing Officer further noted that after post search action statement of Shri Sandeep Naik was recorded and he was confronted with the seized material, who accepted that page No. 28 to 36 of Annexure-A1, pertains to project Lotus and these details are bookings made through assessee. Sandeep Naik also told that bookings of all those flats were cancelled and payments were return to customer through assessee, when he was asked to provide the details of all such customers, he stated that he did not know these persons as bookings were made through assessee only and he has given the address of those persons. During assessment the assessing officer issued show cause notice to the assessee narrating the facts stated by Sandeep Naik in his statement that all the details mentioned on the page no. 28 to 36 contains the bookings and stated that all these flats have been cancelled and payments were returned to the customers IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 7 through assessee in F.Y. 2012-13 through assessee. The assessing officer recorded the statement of assessee under section 131. The assessing officer recorded that during recording his statement on 13/01/2014, the assessee stated that he knows Sandeep Naik and booked 125 flats in his project “Lotus” developed by Blue Feather Infracon as a broker. Subsequently all these flats were cancelled and booking were returned. The assessee disclosed the name of Rajesh Surana, Omji Mundra, Lalit Daga and Ramesh Swagat. The assessee further recorded that assessee made contradictory statement without filing any evidence no details of other persons were furnished. 3. The assessing officer issued show cause notice to furnish the confirmation, full address, PAN of all the parties which have made bookings and in case failed to furnish such details, as to why addition of cash transaction of Rs. 4.82 Crore should not be made under section 69A. the assessee filed his reply dated 16.03.2016 and stated that he had paid booking amount of Rs. 4.25 crores to Sandeep Naik after collecting from persons who booked their flats in the project. Later on bookings were cancelled and amount was returned back in F.Y. 2012- 13. The Assessing Officer extracted the relevant part of statement of assessee. The Assessing Officer recorded that during the statement, the assessee stated that he was not authorised to collect cash and denied his involvement. IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 8 4. The assessee also filed his affidavit stating therein that during the course of recording his statement under Section 131 of the Act he paid amount of Rs. 4.25 crores to Sandeep Naik after collection from persons who have booked flats in Lotus project. Later on all the books were cancelled and the amount was repaid to the persons who booked the flats. His statement was based on the information provided to him by Sandeep Naik that bookings were cancelled and the booking amount was returned back. He has no knowledge that payments were made to the persons who have booked the flats and he has only relied on the information provided by Sandeep Naik. 5. The Assessee Officer by referring page No. 28 to 36 of Annexure-A1 noted that total amount involved in the entries made on these papers of Rs. 4.82 crores and all these payments were received in cash. When such loose papers were confronted with Sandeep Naik during his statement recorded under Section 132(4) of the Act he stated that all bookings were cancelled subsequently and payments were returned to customers through assessee in f.Y. 2012-13 who was a broker in the firm. Shri Sandeep Naik was asked to furnish name and address of customers, he stated that he does not know these persons and all bookings and refund were done through assessee only. The assessee failed to furnish the name and address and flat number of the persons who booked the flat through the assessee but he failed to furnish any evidence and confirmation about the cash amount of Rs. 4.82 crores IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 9 returned back to the customers. The Assessing Officer was of the view that there is no denial by the assessee that on cancellation of booking, all the cash amount was received by him from Sandeep Naik. The assessee has not furnished name, address, PAN number and confirmation of the persons who has received the said amount back. Thus, the Assessing Officer treated the return of said booking amount of Rs. 4.82 Crore as unexplained cash credit under Section 69A of the Act in the hands of assessee. 6. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). The assessee filed his detailed written submissions before the ld. CIT(A). The ld. CIT(A) recorded the statement of assessee in para 6.3 of his order. The assessee in sum and substance submitted that the Assessing Officer made addition of unexplained money under Section 69A of the Act. The provisions of Section 69A is not applicable against the assessee. To invoke Section 69A, the assessee has to be owner of any money which is not recorded in the books maintained and onus to prove is on the Assessing Officer. The assessee was a broker dealing with the sales/ purchase of flats/offices and renting of properties. His nature of activities includes arranging meeting between the prospective customers and the developer. The customers after getting knowledge of the project through various advertisement media, approaches the assessee. The assessee used to explain them about the project and to introduce them IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 10 to developer. All the prices of unit, mode of payment, booking amount were finalised by customers and the developer. The assessee has no involvement and control on such negotiation. If the deals between the customer and developer finalised, the assessee receive commission from developer which is generally between 1% to 2% of the sale value. Thus, the involvement of assesse in such transaction was limited only to arranging the meeting and preliminary discussion about the benefits of investing in the project for which he get his share of his commission only after final payment is received by the developer and the transfer/sale deed is executed. The modus operandi of nature of business was given to the Assessing Officer. During the period under consideration, the amount of Rs. 4.25 crores of booking were made through him in cash. The cash was handed over to Sandeep Naik, partner of Blue Feather Buindcon (developer) engaged in development of project. As recorded by Assessing Officer, later on all flat booking were cancelled and Sandeep Naik returned cash to the assessee and then the assessee paid back the same to the concerned persons. Such fact was communicated to the searched team while answering the question No.5 of the statement recorded under Section 131 of the Act by the Investigating team. The assessee further submitted that Sandeep Naik partner of Blue Feather Buindcon received cash as advance against sale of flats. Admittedly money was received by Sandeep Naik who has taken possession of money and supposed of IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 11 record into in his books of account. Once the money is received by Sandeep Naik, has become the owner of money and not the assessee. Being broker, who has no authority to claim the money on behalf of builder. There is no prima facie evidence that the assessee was owner of the money. Money was ultimately received by builder for their benefit which was paid by various customers as advance which was admitted by the builder. The Assessing Officer made addition of unexplained money against the assessee, assessee is a broker and not the builder. The addition is not based on any evidence that the assessee is owner of that money which has been returned to the customers and addition under Section 69A, cannot be made against the assessee. The assessee reiterated that Shri Sandeep Naik in his statement accepted that all money has been received by him. The contract was between Sandeep Naik and other persons who has given the advance against the sale of flat, thus it was the responsibility for Sandeep Naik to comply the legal formalities. The role of assessee was limited only to introduce the interested customers to builder and thereafter the assessee is not required to act or kept any record as per business practice. 7. On the observation of Assessing Officer in the assessment order that the assessee has not provided the details of the persons such as their address, PAN and confirmation. The assessee submitted the loose paper impounded from the office of builder contains the details of IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 12 names of parties (page No. 28 to 36), the booking amount received, date of receipt and name of broker. Such fact clearly indicates that the developer maintained all necessary details with respect to details of person who had made booking in their project. The Assessing Officer should have obtained all necessary information from developer. However, the Assessing Officer without proper verification of this fact relied upon the statement of partner of firm wherein the partner has denied having any detail regarding the person who booked the flat. The assessee reiterated that his role was limited only for arranging the meeting between the customers and developer and thereafter the assessee has no responsibility. The assessee was interested only in brokerage commission which he receives from developer, once the deal is finalised by the customer and developer. 8. The ld. CIT(A) after considering the submission of assessee noted that the assessee is a broker and booked 125 flats with builder M/s Blue Feather Infracon owned by Sandeep Naik who has also confirmed the fact that the assessee is a broker and bookings were made through him in cash. The project was scrapped and the amount was returned to investor through assessee. Initially, the assessee accepted the fact that he returned the amount to the investor by taking cash from the builder, however, subsequently retracted that builder returned the amount to investor. The ld. CIT(A) was of the view that the broker has limited role to play in booking of flats in the real estate project. The IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 13 amount is received by builder and it is the duty to get all Know Your Customer (KYC) details of the investor which in the present case is the builder and who failed to do so. The ld. CIT(A) recorded that basic question will be whether amount invested by various investors with the builder can be brought to tax in the hands of broker for not furnishing the name and address of investor. There is no material on record to show that the entire investment was made by assessee. Undisputed fact is that the flats/shops were booked in different names and amounts were refunded to the investor. The amount of advance shown in the builders’ book is subsequently refunded. The booking amount has to be brought to tax as unexplained cash credit in the hands of builder and not in the hands of assessee who is merely a broker. This fact that booking of unit of 125 were booked through broker (assessee) was confirmed by builder. The assessee in his initial statement under Section 131 of the Act during post search proceedings on 13/01/2014 disclosed that he is in the real estate brokerage activities. Same fact was reiterated by him before the Assessing Officer during assessment proceedings. This fact is confirmed by builder so it can safely be accepted that the assessee is in real estate brokerage activities. On the basis of such conclusion, the ld. CIT(A) was of the view that it is reasonable and logical only brokerage income needs to be brought to tax and not the total turnover. The ld. CIT(A) on perusal of return filed by assessee found that the assessee has not shown any brokerage IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 14 income on the transaction of 125 flats. The brokers are entitled for brokerage as soon as booking is made and subsequently cancellation does not affect the said brokerage income. The commission/brokerage in the real estate with value of property of less than Rs. 50.00 lacs is 2% on purchase/sale/resale of flats/shops or plots. The assessee has accepted booking of 125 flats with the builder for an amount of Rs. 4.82 crores. Thus, the ld. CIT(A) added 2% of gross brokerage of Rs. 4.82 crores and thereby confirmed addition to the extent of Rs. 9,65,910/- and remaining addition was deleted. 9. Aggrieved by the order of ld. CIT(A), both the parties have filed their respective appeals. The revenue has challenged the action of ld. CIT(A) in deleting the substantial addition to the extent of 98% and the assessee has challenged the addition to the extent it was sustained by ld. CIT(A). The assessee has also filed his cross objection against sustaining addition @ 2% of booking amount. 10. We have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Commissioner of Income Tax- Departmental Representative (ld. CIT-DR) for the revenue and have perused the orders of the lower authorities carefully. The ld. AR of the assessee submits that he has raised additional ground of appeal vide application dated 28/03/2023 with regard to proper satisfaction. However, he is not pressing additional ground of appeal in view of recent decision of Hon’ble Apex Court in ITO Vs Vikram Sujitkumar IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 15 Bhatia in Civil Appeal No. 911 of 2022 dated 06/04/2023. Further the grounds of cross objection raised by the assessee is also not being in support of order of ld CIT(A). Considering the statement of ld AR, the Cross Objection of the assessee is dismissed being not pressed. 11. On the merits of addition, the ld. AR of the assessee submits that the assessee is in the business of broker in real estate properties. During the period under consideration, some residential flats were booked through assessee in a broker “Lotus” developed by M/s Blue feather Buildcon. A search action was carried out on Metallic Group, Surat on 28/11/2013. In the search, certain loose papers and eight diaries were found and impounded as Annexure-A1. Page No. 28 to 36 of Annexure- A1 contains certain bookings made through assessee. During the search proceedings, statement of Rakshit Patel was recorded who admitted that diary and paper pertains to booking of flat in project “Lotus”. Subsequent to post search proceedings, Shri Sandeep Naik, partner of developer firm in his statement admitted that seized pertains to their project and bookings of flats in such project. In his statement, he stated of receiving a cash of Rs. 4.82 crores and further stated that subsequently all bookings were cancelled and payments were returned to customers in F.Y. 2012-13. Statement of assessee was also recorded wherein the assessee admitted that he had paid Rs. 4.25 crores to Sandeep Naik after collecting from persons who booked flat in the project, later on Sandeep Naik returned the cash amount on IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 16 cancellation of booking of flats by customers. All the amounts were returned in cash. The Assessing Officer asked the assessee to furnish details of persons who made the booking through assessee. The details of such persons were not available as the details were maintained by the builder which were recorded in the seized paper. The Assessing Officer in absence of furnishing such names, addresses and details of the buyers, made addition of unexplained money under Section 69A of the Act of Rs. 4.82 crores in the hands of assessee. 12. The ld. AR submits that the total of cash receipt on account of bookings purportedly received through assessee and extracted from page No. 28 to 36 of Annexure-A1 loose file impounded during the course of search proceedings on 28/11/2013 is of Rs. 3.26 crores only. Such amount is considered as Rs. 4.82 crores by the Assessing Officer while making addition. The assessee has neither paid the entire money to the builder nor received the entire money returned back by the builder, rather the booking amount was paid by customers directly after negotiation of price of the flat. When the project was cancelled, the entire amount was returned back by the builder to the prospective buyers. There is no evidence against the assessee that assessee was owner of money. Advance money was received by builder and any benefit thereof was accrued to the builder only. Sandeep Naik in his statement clearly admitted the receipt of advance money and it was in their possession till the booking was cancelled. This fact clearly leads IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 17 to reasonable and clear conclusion that was existed a clear cut contract between the cut contract between the customers who made booking and paid advance to builder which has not been disputed by the builder. Inference made by assessee about the unexplained money of broker and not the builder, cannot be said to be based on any fact rather is based on presumption. Such presumption is not based on any evidence. The ld. AR of the assessee submits that in fact project was cancelled and money was returned by the builder, even the assessee has not earned any commission, which was liable to be paid only on execution of final document of sale in favour of prospective buyer. The ld. CIT(A) restricted the addition to the extent of 2% commission on the entire payment of booking amount of Rs. 4.82 crores. In fact, the assessee has not received such commission income. The ld. AR prayed for deleting the commission income estimated by ld. CIT(A). 13. On the other hand, the ld. CIT-DR for the revenue supported the order of Assessing Officer. The ld. CIT-DR for the revenue submits that as per details contained on page No. 28 to 36 of Annexure-A1, the booking of flats which were made to the assessee, involved amount of Rs. 4.82 crores. All these payments were made in cash. When these loose papers confronted with Sandeep Naik, partner of developer firm, during recording his statement under Section 132(4) of the Act on 09/01/2014, he disclosed that all these bookings were cancelled and payments were returned back to customers through assessee who was IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 18 a broker in this firm. When Sandeep Naik was asked to furnish name and details and address of buyers, he stated that he does not know these persons as booking were made through assessee only. During the assessment, the assessee was asked to furnish complete details of buyer who booked the flats through the assessee and cash returned back through him. The assessee furnished name of only some of buyers but failed to furnish evidence in the form of confirmation and details of cash amount of Rs. 4.82 crores. There is no denial by assessee that on cancellation of bookings of all the cash amount by him from partner of builder firm. The ld. CIT-DR for the revenue submits that the assessee was claiming himself to be broker/ commission agent but the assessee has not furnished such commission income in his return of income nor furnished details of persons who made booking through him. The said amount was returned back to them as per his statement. On one hand, he is not offering cash amount of Rs. 4.82 crores for tax and on the other hand, he is escaping from the responsibility to disclose the details of persons in the form of PAN, address and confirmation. The partner of builder firm has already denied regarding details of persons who booked the flat which was cancelled. Surprisingly, all the bookings were made in cash and booking amount was refunded in cash, thus, large transaction of such cash transaction escaped assessment. The ld. CIT(A) restricted the addition only to the extent of 2% of such huge amount. The ld. CIT- IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 19 DR for revenue prayed for restoring the order of Assessing Officer by reversing the finding of ld. CIT(A). 14. We have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. We have also perused the copies of various submissions filed by assessee either before the Assessing Officer of ld. CIT(A). Copies of which are placed on record. The assessee has also placed on record the copy of statement of Sandeep Naik partner of developer firm recorded on 28/11/2013 and 09/01/2014, statement of assessee recorded under Section 131 during assessment proceedings. We find that the assessee has filed a number of case laws, however, no specific case law was referred during the hearing of appeals rather the ld. AR for the assessee made his own submission on facts. Though, both the parties have filed their respective appeal, and harping on the seized documents, however, the copy of seized material being page No. 28 to 36 in not filed on record, for the reasons best known to them. 15. We find that the Assessing Officer made addition of Rs. 4.82 crores under Section 69A of the Act by taking a view that the booking of 125 flats were made through assessee, such bookings are reflected in the seized material particularly on page No. 28 to 36 of Annexure-A1. The project of the builder was not completed and the bookings amount of all the flats were made through assessee were returned back. The Assessing Officer was of the view that the bookings of flats IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 20 were made in cash and returned back in cash and the assessee failed to furnish the names of buyers and their details particular and in absence of such details and confirmation, the entire alleged booking amount of Rs. 4.82 Crore was treated as unexplained income in the hands of assessee. As noted above before the ld. CIT(A), the assessee filed detailed written submissions to substantiate the contention that the assessee was merely acting as a booking agent/broker in the project Blue Feather Infracon. We find that the ld. CIT(A) on considering the submission of assessee held that the broker has a limited role to play in booing of flats/blocks in the real estate project. The amount was received by the builder from investor. It was the duty of builder to maintain the details and KYC of investors. Builder has failed to do such exercise for maintaining the details of investors. The ld. CIT(A) on considering the facts was of the view that the basic question is whether the amount invested by various persons with the builder can still be brought to tax in the hands of broker for not furnishing name and address of the investors. The bookings were made in the name of different persons. Booking amount were refunded to different persons. Such refund are shown in the books of builder. The ld. CIT(A) also made reference of statement of builder recorded under Section 132(4) as well as recorded under Section 131 of the Act during the post search proceedings wherein he has admitted that he is in the real estate IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 21 business and the assessee is in real estate brokerage activity. The same fact was reiterated by the assessee before the Assessing Officer. The builder also confirmed about the booking through assessee, thus the ld. CIT(A) concluded that it can safely be accepted that the assessee was in the brokerage activity which is corroborated by the impounded document which is related to the brokerage activities. 16. We find that the ld. CIT(A) specifically recorded that brokerage in the transaction of real estate wherein the value of property is less than Rs. 50.00 lacs is @ 2% on sale/purchase/resale the properties. The ld. CIT(A) without making any bifurcation of cost of each flat considered the entire amount of booking of Rs. 4.82 crores and estimated 2% commission on such impugned transaction. In our view, once the ld. CIT(A) accepted the fact that brokerage or commission in the real estate is at 2% for the value of transaction less than Rs. 50.00 lacs even then estimating 2% commission on total transaction at Rs. 4.82 crores is on higher side. Considering the facts and circumstances of the case, we estimate the commission on entire transaction at 1% of the booking amount of Rs. 4.82 Crore. Our estimation also gets support from the assessee’s own submission before the ld. CIT(A) that generally commission ranges between 1% to 2% of sale value. IT(SS)A No. 59 & 55/SRT/2022 & CO 05/Srt/2022 ACIT Vs. Sh. Rajeev Arvindkumar Choraria 22 17. Though, we are conscious of the fact that ultimately the project was not completed and the alleged amount was returned back yet the commission earned by the assessee cannot be ruled out. So far as contention of ld AR for the assessee that the figures mentioned on the seized material was only Rs.3.26 Crore. As noted above no such documents (seized material) is filed before Tribunal. In the result, grounds of appeal raised by the assessee is partly allowed. Resultantly, grounds of appeal raised by the revenue are dismissed. 18. In the result, appeal of the revenue being IT(SS)A No. 59/Srt/2022 is dismissed, cross objection of the assessee being C.O. No.05/Srt/2022 is also dismissed and the cross appeal by the assessee being IT(SS)A No. 55/Srt/2022 is partly allowed. Order pronounced on 05/06/2023 in open court. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 05/06/2023 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By Order Sr. Private Secretary, ITAT Surat