SHRI SUNIL SHRIPATI MANE,KOLHAPUR V. .ASSISTANT COMMISSIONER OF INCOME TAX(CENTRAL), CIRCLE, KOLHAPUR, KOLHAPUR

ITSSA 115/PUN/2022

AI Insights

The case involves multiple appeals by both the assessee, Shri Sunil Shripati Mane, and the Revenue against the orders of the Commissioner of Income Tax (Appeals)-11, Pune, for the assessment years 2013-14, 2014-15, and 2015-16. The primary issue revolves around the additions made by the AO under sections 69 and 144 of the Income Tax Act, 1961, concerning unexplained capital and profits from the Saptagiri Park project, a land development venture. The Tribunal examined the legality of these additions, the method of calculating the profits, and the applicability of the Settlement Commission's decision in a similar case involving Shri Jayant G. Patil, a co-developer in the project.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29453 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 21-10-2022
• Other Referred Cases: ACIT v/s. Hukum Chand Jain, Ranjas Nawal v/s. CIT, PCIT v/s. Neeta Gutgutia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: PRAMOD S SHINGTE; OBSERVING
• Keywords: Corroborative evidences; Income from undisclosed sources; Document seized; Documents seized
• Section: 271(1)(c); 48; 153; 132; 153A; 22; 69; 13; 153C; 40A(3); 133A; 40(a)(ia)

Judgement Text

" आयकर अपीलीय अिधकरण “बी” Ɋायपीठ पुणे मŐ । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER IT(SS)A Nos.115, 116 & 117/PUN/2022 Assessment Years : 2013-14, 2014-15 & 2015-16 Shri Sunil Shripati Mane, Shreekamal House, Near Grampanchayat Office, 1st Lane Ujalaiwadi, Tal.-Karveer, Kolhapur – 416004 PAN : ALIPM5772A Vs. Asst. Commissioner of Income Tax (Central) Circle, Kolhapur अपीलाथŎ / Appellant ŮȑथŎ / Respondent IT(SS)A No.118/PUN/2022 Assessment Year : 2014-15 Asst. Commissioner of Income Tax (Central) Circle, Kolhapur Vs. Shri Sunil Shripati Mane, Shreekamal House, Near Grampanchayat Office, 1st Lane Ujalaiwadi, Tal.-Karveer, Kolhapur – 416004 PAN : ALIPM5772A अपीलाथŎ / Appellant ŮȑथŎ / Respondent Assessee by : Shri Pramod S Shingte Department by : Shri Arvind Desai Date of hearing : 15-10-2024 Date of Pronouncement : 12 -12-2024 आदेश / ORDER PER ASTHA CHANDRA, JM : These four appeals filed by the assessee and Revenue are directed against the common order dated 24.08.2022 of the Ld. Commissioner of Income Tax (Appeals)-11, Pune [“CIT(A)”] pertaining to Assessment Years (“AYs”) 2013-14, 2014-15 and 2015-16 respectively. Since the issues involved are identical, these were heard together and are being disposed of by this common order. 2. Briefly stated, the facts of the case are that the assessee is an individual carrying on business of land development and commission on sale and purchase of immovable properties. A search operation was 2 IT(SS)A Nos. 115 to 118/PUN/2022 carried out on 19.12.2014 in the case of Shri Jayant G. Patil u/s 132 of the Income Tax Act, 1961 (the “Act”). Simultaneously survey operation u/s 133A of the Act was also conducted at the business premises of the assessee, Shri Sunil Mane at 173/9, off Shahunaka Ujalaiwadi, near Praveen Petrol Pump, Kolhapur. In FY 2010-11, the assessee negotiated a deal with group of farmers to purchase a piece of land whereby it was decided that the assessee will purchase land having approximate area of 1,07,600 Sq. Meter from various farmers. As agreed, the assessee paid initial money of Rs.2,00,000/- and the balance payment was to be made by the assessee by selling the plots in future. As the assessee was not having enough resources to make the payment to the farmers he entered into partnership with Shri Jayant Patil to jointly develop a project in the name and style of “Saptagiri Park” at Kolhapur. No formal agreement was executed between them, however, it was agreed that both the parties will share cost of purchase as well as future profit in equal ratio. Thereafter, on 28.03.2013 the assessee and Shri Jayant Patil thereafter entered into a Development Agreement with group of farmers for a consideration of Rs.3,10,00,000/- comprising of the following schedule of payments : Sr. No. Particular Paid by Shri Sunil Mane Paid by Shri Jayant Patil Total 1 Paid in the FY 2012-13 Rs.2,00,000/- Rs.29,99,998/- RS.31,99,998/- 2 Post dated cheque to be presented after 1st April 2014 Rs.2,78,00,000/- 3 Stamp Duty paid in cash Rs.12,91,800/- Rs.3,22,91,800/- 2.1 During the search operation certain incriminating documents were found and seized from the premises of Shri Jayant Patil. While replying to the queries raised with regard to the project Saptagiri Park Mr. Jayant Patil stated that all the documents related to Saptagiri Park project are with the assessee, Shri Sunil Mane. During the survey proceedings at the business premises of the assessee, certain books and documents were impounded. The assessee offered an amount of Rs.4,55,91,800/- as undisclosed income for AYs 2014-15 and 2015-16 in his statement recorded u/s 132(4) of the Act on 19.12.2014. Subsequently, notice u/s 153C of the Act was issued on 15.07.2016. After recording satisfaction, the Ld. Assessing Officer (“AO”) completed the assessment for AYs 2013-14, 2014-15 and 3 IT(SS)A Nos. 115 to 118/PUN/2022 2015-16 u/s 153C r.w.s. 144 of the Act vide separate order(s) all dated 19.12.2016 by making the following addition(s): AY 2013-14 – (i) Rs.1,72,91,800/- on account of unexplained capital in Saptagiri Park; and (ii) Rs.1,00,000/- on account of expenses disallowed. AY 2014-15 – Rs.1,99,51,042/- on account of profit from Saptagiri Park. AY 2015-16 – Rs.1,14,52,106/- on account of profit from Saptagiri Park. AY 2013-14 : IT(SS)A No. 115/PUN/2022, by the Assessee 3. The Ld. AO completed the assessment in AY 2013-14 by invoking the provisions of section 144 of the Act for the reasons recorded in para 3 of his order at the total income of Rs.1,83,68,660/- against the income of Rs.9,76,857/- returned by the assessee in response to notice u/s 153C of the Act. The Ld. AO made the addition on account of unexplained capital invested by the assessee in Saptagiri Park project amounting to Rs.1,72,91,800/-. The breakup of the said addition as recorded by the Ld. AO in para 4(a) of his order is as under: Sr. No. Details Amount 1 Payment made in cash by Shri Sunil Mane to Farmers in 2012 as per statement u/s 132(4) dated 19/12/2014 Rs.25,00,000/- 2 Payment made in cash at the time of Development Agreement on 28/03/2013 Rs.1,33,41,800/- 3 Payment made at the time of Development Agreement dated 28/03/2013 Rs.2,00,000/- 4 Commission paid to Shri Balasaheb Daingude as per statement of the assessee u/s 132(4) of the Act dated 19/12/2014 Rs.12,50,000/- Total Rs.1,72,91,800/- 3.1 The findings of the Ld. AO in respect of the above additions of Rs.1,72,91,800/- is as under : “Hence the investment found to have been made in the project of Rs.1,72,91,000/- is found to be unexplained. The assessee fails to give satisfactory explanation for his share of the investment made for acquiring the land on which project Saptagiri Park was conceived and executed. The Investment has been quantified on the basis of the assessee's statement / 132(4) of the IT Act dated 19/12/2014 and Development Agreement dated 28/03/2013 submitted by the assessee. In view of the aforesaid discussion addition of Rs.1,72,91,800/- is made to the income of the assessee u/s 69 of 4 IT(SS)A Nos. 115 to 118/PUN/2022 the Income Tax Act, 1961. Penalty proceedings are initiated u/s 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income.” 3.2 Further, the Ld. AO made an addition of Rs.1,00,000/- on account of unverifiable expenses by recording his findings in para 4 (c) of his order as under : “4(c) As per the profit and loss account for F.Y.2012-13, the assessee has claimed total expenses of Rs.9,36,943/-, For substantiating the aforesaid expenses the assessee has not produced any books of accounts or subsidiary record. In absence of any record for verifying the genuineness of the expenses, disallowance of Rs.1,00,000/- is made on an ad hoc basis.” 4. On appeal before the Ld. CIT(A) the assessee filed written submissions during the appellate proceedings raising his contention in respect of each of the four additions made by the Ld. AO, which have been recorded by the Ld. CIT(A) in para 19 of the appellate order. The same are reproduced below: “19. During the appellate proceedings, the appellant has submitted that the total addition of Rs. 1,72,91,800/- made by the Assessing Officer consists of four parts and the appellant has filed his submission accordingly: (i) Rs. 25,00,000/-: Regarding the addition of Rs. 25,00,000/- the appellant has submitted that this amount comprises of Rs. 2,00,000/- by cheque and Rs. 23,00,000/- by cash. The appellant has stated that he had taken advance from Mr. Shahaji B. Mulik as per agreement dated 12/11/2012 amounting to Rs. 20,25,000/- and the balance amount of Rs. 2,75,000/- was raised from available cash balance. It has been stated that the amounts taken from Shri Mulik were as and when needed although the agreement was prepared on a later date. (ii) Rs. 1,33,41,800/-: This amount was given through cheques which are recorded in the registered deed dated 28/03/2013. The whole amount of Rs. 1,33,41,800/- was duly accounted in A.Y. 2014-15. The appellant has given the details of cheque issued which are reflected in the registered agreement with the farmers dated 28/03/2013, the appellant has accordingly submitted that source of these payments is mainly through sale of plots and advances which was received during F.Y. 2013-14 and Assessing Officer has incorrectly made the addition. The copy of registered agreement dated 28/03/2013 has been filed by the appellant. (iii) Rs. 2,00,000/-:This amount of Rs. 2,00,000/- is duly recorded in the books of accounts as 'land advance' in the balance sheet as on 31/03/2013 as the said payment was made through cheques as recorded in the registered deed dated 28/03/2013. The source of said payment was commission received by the assessee during the year which has been offered for taxation in the year under consideration.i.e. A.Y. 2013-14. The details of cheque are as under :- Date Cheque No. Amount(Rs.) Paid to Cleared on 22.08.2012 000036 67,000/- Bins Appaji Hajare 27.08.2012 22.08.2012 000037 67,000/ Rayappa Dhonadiba Banne 27.08.2012 22.08.2012 000038 66,000/- Ananda Kenchappa 27.08.2012 5 IT(SS)A Nos. 115 to 118/PUN/2022 Hajare (iv) Rs. 12,50,000/-: The assessee paid commission for procuring land as well as for selling the plots. Such commission was paid in F.Y. 2013-14 as reflected in seized page no. 55 and 56 of bundle no. 5. Hence, no addition should be made for A.Y. 2013-14 as no payment pertains to A.Y. 2013-14.” 4.1 After considering the facts of the case and the submissions of the assessee, the Ld. CIT(A) upheld the addition of Rs.25,00,000/- made by the Ld. AO in respect of payment made in cash by the assessee to the farmers in 2012 as per the statement recorded u/s 132(4) dated 19.12.2014 by observing in para 20.1 & 20.2 of his appellate order as under : “20.1 I have considered the facts of the case and the submissions made by the appellant. As regards to the first amount of Rs. 25,00,000/-, the appellant has not disputed the said payment. He has only submitted that out of this amount of Rs. 25,00,000/-, an amount of Rs. 2,00,000/- was paid through cheque and balance was paid through cash. For cash payment of Rs. 23,00,000/-, the appellant has tried to explain the source from Shri Shahji B. Mulik. It is not in dispute that the amount of Rs. 25,00,000/- was paid by the appellant to the farmers at the time of negotiating the deal with them. As per the registered deed dated 28/03/2012, the cheques of Rs. 2,00,000/- (3 cheques of Rs. 67,000/-, Rs. 67,000/- and 66,000/-) were given on 22/08/2012 indicating that the negotiations were finalized on 22/08/2012. Since, Rs. 2,00,000/- in cheque were paid on 22/08/2012, naturally balance amount of Rs. 23,00,000/- must have been paid at that time only. The appellant has tried to explain that this amount of Rs. 23,00,000/- was from Shri Shahji Mulik. However, it is seen that the agreement with Shri Shahji Mulik is dated 12/11/2012. This agreement does not mention that amount of Rs. 20,25,000/- was paid before 22/08/2012 to Shri Mane. Moreover, it cannot be believed that some buyer will make such a huge cash payment to the appellant, even before the deal of land was finalized with the farmers. Also, no such explanation was furnished before the Assessing Officer. No confirmation from Shri Mulik that amount of Rs. 20,25,000/- was paid to the appellant before 22/08/2012 has been filed by the appellant. In short, the appellant has not filed any documentary evidence to substantiate his claim that the source of Rs. 23,00,000/- paid on 22/08/2012 was out of the sale consideration from an agreement dated 12/11/2012. Considering the totality of facts of the case, I am of the opinion that the appellant has failed to explain the source of cash payment of Rs. 23,00,000/-. 20.2 As regards to the remaining amount of Rs. 2,00,000/- (out of Rs. 25,00,000/-) appellant has claimed that this amount was paid through cheque and is duly explained in his books of accounts. A perusal of the bank book filed by the appellant suggests that just before encashment of these cheques, the appellant deposited an amount of Rs.2,10,000/- in cash in his bank account maintained with Bank of India. The appellant has submitted that this cash deposited was out of the commission income declared in the Profit and Loss Account for the year under consideration. However, the appellant has not furnished the copy of cash book as well as details of commission income earned during the year. The appellant has not furnished the details of persons from whom such commission income is claimed to have been earned and whether the said commission income was earned in cash or otherwise. It is also important to mention that the appellant has shown closing cash in hand at Rs.11,60,284/-. In such situation whether the cash deposited in the banks was out of the disclosed income remained unverified as the appellant remained non- cooperative during the assessment proceedings and also did not attend the appellate proceedings for more than three years. Considering the totality of facts of the case, I am of the opinion 6 IT(SS)A Nos. 115 to 118/PUN/2022 that the appellant has failed to substantiate the source of Rs. 2,00,000/- paid as initial amount to the farmers. To sum up, the appellant has failed to explain the source of Rs. 25,00,000/- paid as advance vide entering into agreement with the farmers in 2012 and accordingly, the addition of Rs. 25,00,000/- made by the Assessing Officer is upheld.” 4.2 Out of the addition of Rs.1,33,41,800/- in respect of payment made in cash at the time of development agreement on 28.03.2013 the Ld. CIT(A) granted partial relief to the assessee by restricting it to Rs.98,45,522/- by observing in para 21.3 of his appellate order as under : “21.3 On the other hand it is not in dispute that cash was paid at the time of registering the development agreement. It is also not in dispute that as on the date of search, the total cash paid to the farmers was Rs.3,15,00,000/-. This statement has not been retracted by the appellant till date. Therefore, the armount of cash investment made by the appellant at the time of agreement to sell should have been worked out by the Assessing Officer by working backwards starting from this figure of Rs. 3,15,00,000/-, The appellant has claimed that the part of this cash was paid out of the advances/sale receipts during the A.Y. 2014-15 and 2015-16 and part of cash was paid by Shri Jayant G. Patil. As far as cash paid to the farmers during A.Y. 2014- 15 and 2015-16 is concerned, as discussed above, total cash paid during these two years to the farmers comes to Rs. 1,86,04,478/-. Therefore, the balance cash amount of Rs. 1,28,95,522/- (3,15,00,000-1,86,04,478) was paid by Shri Jayant G. Patil and the appellant. It is an undisputed fact that the contribution (both cash and cheque component) of Shri Jayant G. Patilwas Rs. 1,62,50,000/-. As per the registered deed dated 28/03/2012, the total contribution through cheque of Shri Jayant G. Patil comes to Rs. 1,55,00,000/- (sum of total cheque amount paid by Shri Jayant Patil as noted in the registered deed), therefore the maximum contribution of Shri Jayant G. Patil in cash comes to Rs. 7,50,000/- (1,62,50,000 1,55,00,000). In this manner, the balance cash contribution pertains to Shri Sunil Mane only which comes to Rs. 1,21,45,522/- (1,28,95,522-7,50,000), This can be explained as under. Total cash payment to farmers as on the date of search (as per statement recorded u/s 132(4) of the Act) Rs.3,15,00,000/- Less : Cash paid in A.Y 2014-15 and 2015-16 (as detailed in the assessment order for A.Y. 2014-15 and 2015-16) Rs.1,86,04,478/- Less: Cash paid by Shri Jayant G. Patil Rs.7,50,000/- Cash payment by the appellant during A.Y. 2013-14 Rs.1,21,45,522/- Thus, the total cash payment during A.Y. 2013-14 by the appellant comes to Rs. 1,21,45,522/-. Out of this amount, Rs. 23,00,000/- were paid at the time of entering into agreement of sale on 23/08/2012 which has been separately added and confirmed by me as discussed earlier. Therefore, the said amount needs to be reduced from Rs. 1,21,45,522/-. Accordingly, the cash paid by the appellant at the time of registration of development agreement on 28/03/2012 comes to Rs. 98,45,522/- (1,21,45,522- 23,00,000). Therefore, the addition of Rs. 1,33,41,800/- made by the Assessing Officer is restricted to Rs. 98,45,522/-.” 4.3 So far as the addition of Rs.2,00,000/- is concerned, the Ld. CIT(A) deleted the said addition on the grounds of double taxation by observingin para 22 of his order as under : “22 The third amount is of addition of Rs. 2.00,000/- which has already been considered by me while confirming the addition of Rs. 25,00,000/-. As the said amount has already been considered and has been held as out of 7 IT(SS)A Nos. 115 to 118/PUN/2022 unexplained sources, same cannot be added again therefore, this addition of Rs. 2,00,000/- is deleted on the grounds of double taxation.” 4.4 As regards the commission paid to Shri Balasaheb Daingude as per the statement recorded u/s 132(4) dated 19.12.2014 the Ld. CIT(A) upheld the said addition made by the Ld. AO by observing as under : “23. The last addition is of Rs. 12,50,000/- on account of commission paid to Shri Balasaheb Daingude. The appellant has not denied the payment of said commission in cash to Shri Balasaheb Daingude. The appellant has also not denied that the said commission was paid for purchasing the land from farmers. The only argument of the appellant is that the said cash payment was made in the next year i.e. A.Y. 2014-15 as noted in seized page no. 55 and 56 of bundle no. 5. I have perused the said seized documents. These documents are records of commission payment made by the appellant. It is seen from these pages that total commission paid by the appellant was Rs. 22,72,000/-. However, no date is mentioned against the cash payment of Rs. 12,50,000/-. The appellant has not denied that this payment of Rs. 12,50,000/- was for procurement of land. Normally commission of land is paid when sale deed or development agreement is registered. In the present case, the deed was registered on 28/03/2012, therefore, it is a natural inference that the amount of Rs. 12,50,000/- must have been paid on 28/03/2012. During the appellate proceedings, the AR of the appellant was specifically asked to substantiate the date of payment of this amount of Rs. 12,50,000/- to which he could not file any documentary evidence. In view of these facts, the action of the Assessing Officer in holding that the said amount of Rs. 12,50,000/- was paid in cash on 28/03/2012 cannot be found fault with. Accordingly, the said addition of Rs. 12,50,000/- is upheld.” 4.5 Thus, the Ld. CIT(A) partly allowed the appeal of the assessee against the addition of Rs.1,72,91,800/- made by the Ld. AO restricting the same to the extent of Rs.1,35,95,522/- (comprising of Rs.25,00,000/- + Rs.98,45,522 + Rs. 12,50,000). 4.6 Regarding the addition of Rs.1,00,000/- made by the Ld. AO for unverifiable expenses, the Ld. CIT(A) upheld the said addition for the lack of any documentary evidence filed before him for verification thereof. The relevant findings of the Ld. CIT(A) recorded in para 26 of his order is reproduced below : “26. I have considered the facts of the case and the submissions made by the appellant. A perusal of the Profit and Loss Account filed by the appellant suggests that direct expenses amounting to Rs. 9,00,000/- were debited in the P/L Account on account of plot purchase. Against the said purchase, sale of Rs. 10,00,000/- has been declared in the P/L Account. Besides this, the appellant has debited Rs. 35,943/- as indirect expenses in the P/L Account. The appellant has submitted that the amount of Rs. 9,00,000/- was brought forward amount from 31/03/2012 and therefore, no portion of same should have been disallowed by the Assessing Officer. Although, the appellant has made this claim before me, however, balance sheet as on 31/03/2012 as well as documentary evidences regarding the sale and purchase of said plot were not filed before me. In the absence of any documentary evidence, it is not possible for me to verify the claim of the appellant that this amount of Rs. 9,00,000/- is a brought forward amount. Also, the accounts of the appellant are not audited therefore, in the absence of underlying documents, the books of the appellant cannot be accepted on their face value. Further, no documentary evidence has been filed for indirect expenses debited in the P/L 8 IT(SS)A Nos. 115 to 118/PUN/2022 Account. Considering the facts of the case, the disallowance of Rs. 1,00,000/- made by the Assessing Officer is upheld. Ground no. 2 raised by the appellant is DISMISSED.” 5. Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “1. On the facts and in the circumstances in the case and in law the lower authorities have erred in confirming an addition of Rs.25,00,000 being an advance paid to the farmers in 2012, by disregarding appellant submissions. 2. On the facts and in the circumstances in the case and in law the lower authorities have erred in making an addition of Rs.98,45,522 being cash paid by the appellant at the time of registration of development agreement on 28/03/2022, by disregarding appellant's contention. 3. On the facts and in the circumstances in the case and in law the lower authorities have erred in making and addition of 12,50,000 being commission paid to Shri Balasaheb Daingude by disregarding appellants contention. 4. On the facts and in the circumstances in the case and in law the lower authorities have erred in making an adhoc disallowance of Rs.1,00,000/-, especially in light of the fact that all the expenses are verifiable and are supported by the documentary evidences your appellant prays for deletion of entire disallowance.” 6. The assessee has also raised an additional ground reproduced below: \"On the facts and circumstances of the case and in law the Learned Assessing Officer has erred in initiating the proceedings under section 153 C of the Income Tax Act 1961. Without appreciating the fact that proceeding were initiated on the bases of incriminating material found during the search conducted at appellants premises and therefore the proceedings ought to have been initiated under section 153A of Income Tax Act 1961. In view of this the order passed under section 153C rws 143 (3) is bad in law and needs to be quashed.” 6.1 The Ld. AR submitted the assessee is not pressing this additional legal ground as the same has been decided against the assessee by the coordinate bench of the Tribunal in assessee’s own case for AY 2010-11 in ITA No. I.T.(S.S.)A.No.114/PUN/2022 vide order dated 28.06.2023, a copy of which was placed on record. Accordingly, the additional ground raised by the assessee is hereby dismissed as not pressed. 7. Coming to the merits of the case, the Ld. AR submitted that during the search conducted at the premises of Mr. Jayant Patil various documents were found containing the sale of plots and amounts received in cash and cheque(s) etc. Further, the statement of Shri Sunil Mane, the assessee, was also recorded u/s 132(4) of the Act (page 616 to 623 of the paper book refers). 9 IT(SS)A Nos. 115 to 118/PUN/2022 7.1 Referring to page 618 to 623 of the paper book, the Ld. AR submitted that in this statement, the assessee has given answer to Question No. 8 to Question No. 21 relating to Saptagiri Park and the gist of the same is as under: “Appellant and Shri Jayant Patil has decide to purchase land from nine farmers for the total consideration of Rs. 11.35 Cr out of which Rs. 3.10 Cr was to be paid by cheque and balance Rs. 8.25 Cr was to be paid by cash. (Question No. 8) Mr. Jayant Patil has agreed to be co-owner and in 2013 he paid to the appellant Rs. 1,62.50,018/-in cheque and cash (Question No. 9) Appellant has paid Rs. 2,85,00,000/- at a time of registration in cash as well as in cheque and also referred that till date Rs. 3,15,00,000/- have been paid in cash and balance amount of Rs. 5.35,00,000/- is yet to be paid.” In summary, the gist of the above explanation is stated below: Consideration Rs. 11,35,00,000/- Amount actually Paid till the date of search Rs. 6,00,00,000/- Outstanding till Today Rs 5,35,00,000/- 7.2 The Ld. AR also submitted a chart showing the details of payment made in cash and in cheque till the date of search as under: Particulars Cheque (Rs.) Cash (Rs.) Total (Rs.) Consideration 3,10,00,000 2,90,00,000 6,00,00,000 Payments made in FY 2012-13 Shi Sunil Mane 2,00,000 25,00,000 27,00,000 Shri Jayant Patil 29,99,998 1,35,50,020 1,62,50,018 Paymnets made in FY 2013-14 Shri Sunil Mane 1,53,00,002 1,32,49,980 2,85,49,982 Shri Jayant Patil 1,25,00,000 1,25,00,000 7.3 The Ld. AR submitted that the above stated answers given by the assessee recorded in his statement u/s 132(4) clarifies the facts that on the date of agreement i.e. 28.03.2013 total payment of Rs.2,85,49,982/- was made by cheque including post dated cheque and cash payment of Rs.3,15,00,000/- was made till the date of search i.e. 19.12.2014. These figures were quoted on an approximate basis. While answering to Question No. 13, it was further pointed out that the cash payment of Rs.3,15,00,000/- was made from the sale proceeds of the plot and 10 IT(SS)A Nos. 115 to 118/PUN/2022 advances taken from other customers in FY 2014-15. However, the Ld. AO while framing the assessment order has not appreciated the above stated facts recorded in the statement of the assessee in correct perspective and therefore has erred in making the impugned addition(s). The Ld. AR further submitted that the impugned addition(s) are worked out by the Ld. AO which has been upheld by the Ld. CIT(A), solely on the basis of the statement of the assessee recorded u/s 132(4) and not on the basis of any corroborative documentary evidence thereof and hence should be deleted. 8. The Ld. DR, on the other hand, strongly supported the order of the Ld. AO and the additions upheld by the Ld. CIT(A). 9. Before us, both the Ld. AR and the Ld. DR have filed their respective ground-wise written submissions in respect of each of the additions confirmed by the Ld. CIT(A). We shall now proceed to deal with each of the grounds raised by the assessee. 10. In ground No. 1 the assessee has challenged the addition of Rs.25,00,000/- being an advance paid to the farmers in 2012. In this regard the assessee has made the following submissions before us: “In this regard, it is submitted that, in the year 2012, appellant has taken an advance against sale of plot from one Mr Shatha Bajirao Mulik, vide notarized agreement dt 12/11/2012. (copy enclosed at page no. 244 to 249 of Paper book-Part B), amounting to Rs. 20,25,000/- and the balance amount of Rs. 2,75,000/- was paid out of cash balance and the profit of other projects as declared by the assessee. In view of this explanation and the agreement referred, prayer is made to delete the addition.” 10.1 As opposed the above submission of the Ld. AR, the Ld. DR has made the following submission: “With respect to ground of appeal no. 1 of the assessee regarding the addition of Rs. 25,00,000/-,it is seen from the para 20.1 of the CIT(A) order that the assessee has admitted the fact that out of Rs. 25,00,000/-, Rs. 23,00,000/- was paid in cash to farmers. The assessee tried to explain the source as received from Shri Shahji B. Mulik but failed to substantiate his claim as it can be seen that out of Rs. 25,00,000/-, Rs. 2,00,000/- was paid through cheque on 22.08.2012 but the agreement with Shri Shahji B. Mulik is dt. 12.11.2012. The agreement with Shri Shahji B. Mulik is about 3 months after the date of payment by the assessee to the farmers. Hence the source explained by the assessee is not satisfactory. Also, with regards to payment by cheque amounting to Rs. 2,00,000/-, it was pointed by the CIT(A) that just before the encashment of the said cheque, the assessee had deposited Rs. 2,10,000/- in cash in bank account. The assessee submitted that the said cash was out of the commission income however the assessee has not furnished the copy of the cash book as well as the details of the commission income. Hence, the assessee also failed to substantiate the claim of Rs.2 lac paid through cheque. Therefore the said addition of Rs.25 lacs is justified and deserves confirmation.” 11 IT(SS)A Nos. 115 to 118/PUN/2022 10.2 We have heard the Ld. Representatives of the parties, considered their rival submissions and perused the material on record. We observe that it is an admitted fact that out of Rs. 25,00,000/-, Rs. 23,00,000/- was paid in cash to farmers by the assessee and Rs. 2,00,000 is claimed to have been paid by cheque. The assessee claimed that the cash was received from one Shri Shahji B. Mulik as advance against sale of plot, however, he failed to substantiate his claim by producing any evidence before the lower authorities. Also, the source of the cheque component of Rs.2,00,000 remained unexplained by the assessee to the satisfaction of the Ld. CIT(A)/AO. The Ld. CIT(A) therefore confirmed the addition of Rs.25,00,000 made by the Ld. AO, the reasons of which have already been reproduced in the preceeding paragraphs. Before us also, the assessee could not furnish any evidence to controvert the findings of the Ld. CIT(A) am and substantiate his claim. In this view of the matter, we do not find any infirmity in the order of the Ld. CIT(A) and uphold the addition of Rs. 25,00,000 made by him. Accordingly, ground no.1 of the assessee is dismissed. 11. In ground No. 2 the assessee has challenged the addition of Rs.1,33,41,800/- made by the Ld. AO which is restricted to Rs.98,45,522/- by the Ld. CIT(A) being cash paid by the assessee at the time of registration of development agreement. The submission of the Ld. AR on this issue is as under : “In Para 4a on page no. 7 of Assessment order, Ld AO has discussed the addition of Rs. 1,33,41,800/-, perusal of this para will reveal the fact that the sole basis of addition is analysis of the statement recorded u/s. 132(4) during the search action, and same is not supported by any documentary evidence, While dealing with this issue Learned CIT (A) has made observation in para 21.3 on page 13 of Appeal Order wherein, in principle he accepts that Learned Assessing Officer has incorrectly interrupted the statement and assumed that the cash payment is made by appellant on the date of registration of agreement. However, he gives part relief of this amount and confirm the addition to extend of Rs. 98,45,522/-. During the course of hearing before Hon'ble bench arguments are made on following two grounds. 1) Appellant has very clearly displayed that at the time of registration whatever cash has been paid was mainly sourced from Shri. Jayant Patil and appellant has contributed small part of the amount and balance amount of cash was paid in Financial year 2014-15, i.e. after the sale of plots, and therefore the addition is purely made on presumption, surmise and guesswork and same will not survive. 2) The basis of addition is solely derived from statements recorded u/s 132(4) and same is not supported by any corroborative evidence, and therefore same cannot be sustained in the eyes of law. With reference to the first point your appellant has explained in the above paras the details of the payment, and also pointed out while answering the 12 IT(SS)A Nos. 115 to 118/PUN/2022 Question No. 13 in the statement that \"till date\" (i.e. Date of Search 19-12- 2014.) Rs. 3,15,00,000/- has been paid in cash and same is paid out of cash received from sale of plots as and also advances takes from other customers. This fact is also appreciated by Learned CIT (A) in para 21.3 on page no 14 of the CIT (A) order, however, the confirmed the partial addition which is incorrect, and deserves to be deleted. In regard to point no. 2, it is submitted before the Hon'ble bench that the basis of addition of Learned Assessing Officer is purely on the strength of statement recorded u/s 132(4) and same is not supported by any corroborative evidences, and therefore such addition is not enable in the eyes of law, as held in various judicial pronouncements. In support of this argument attention was drawn to paper book submitted on 08-02- 2024 by Learned Departmental Representative (DR), wherein copy of satisfaction note recorded for AY 2013-14 is attached at page no. 12 of Paper Book and the documents referred in the satisfaction note are explained herein below: Sr. No. Particular Remark a. Cash amounting to Rs. 10,85,000/- found during search on 19-12-2014 Relevant to AY 2014-15 b. White Blue Diary seized White Bundle No. 1. (Refer page no. 45 to 48 of said Paper Book) Transaction pertains to AY 2014- 15 and considered in relevant Assessment Year. c. Page no. 204 of the said ledger contains summary of booking of another 32 plots. (Page no. 48 of said Paper Book) Transaction pertains to AY 2014- 15 and considered in relevant Assessment Year. d. Navneet Diary seized as bundle No.2 as Annexure A containing details of expenditure We have placed on record Xerox copy of said diary, same is also enclosed at Annexure A to this letter. (Please refer Note A down below.) Note A It is explained that the entries in this dairy refers the account of overall payments made in cash in connection with Saptagiri Park but it doesn't contain any date as such. In view of the above it is submitted before Hon'ble bench that there is no document to support the contention of Learned Assessing Officer that appellant has made any cash payment in the FY 2012-13 except Rs. 25,00,000/-, by cash and Rs.2,00,000/- by cheque, therefore the action of making such addition simply on the basis of statement recorded under section 132(4) is not justified. In support of the above contention reliance is placed on the following juridical pronouncement. 1. 337 ITR 238(Chattisgarh HC.) ACIT v/s. Hukum Chand Jain. 2. 131 taxmann 525 (Rajasthan) Ranjas Nawal v/s. CIT. 3. 82 taxmann.com. 287(Del) PCIT v/s. Neeta Gutgutia.” 11.1 The Ld. DR has made the following submissions on this issue: “2.2 With respect to ground of appeal no. 2 of the assessee regarding the addition of Rs. 1,33,41,800/-, in the statement recorded u/s 132(4) of the Act, the assessee admitted that an amount of Rs. 3,15,00,000/- was paid through cash. Out of the said amount, Rs. 1,86,04,478/- relates to AY 2014- 13 IT(SS)A Nos. 115 to 118/PUN/2022 15 & 2015-16 and Rs. 7,50,000/- was paid by Shri Jayant G. Patil. Hence cash paid by the assessee during AY 2013-14 works out to be Rs. 1,21,45,522/-out of which Rs. 23 lacs has already been confirmed as stated in the above para 1.2. Applying the same facts as the assessee failed to substantiate the cash payment, the addition of Rs. 98,45,522/- (1,21,45,522 - 23,00,000) is justified. 2.5 The assesses has claimed before the Hon'ble Bench for AY that addition has been made based only on statement recorded w/s 132(4) and not on the basis of evidences seized/impounded. It is submitted that in counter of the said contention of the assessee, the Se. DR Shri Sourabh Nayak has already submitted a paper book dt. 08.02.2024 containing the copies of satisfaction note and seized/impounded material. The copy of index is enclosed for ready reference as per Annexure 'A'.” 11.2 We have heard the ld. Representative of the parties, considered their submissions and the various judicial precedents relied upon by them. It is the submission of the Ld. AR that the cash of Rs. 3,15,00,000/- was sourced from sale of plots and also advances taken from other customers. The ld. Counsel of the assessee has also argued that the basis of addition by the Ld. AO is solely derived from the statement recorded under section 132(4) of the Act and is not supported by any corroborative evidence in respect thereof. On the contrary, the Ld. DR has submitted that it is an admitted fact that Rs. 3,15,00,000/- was paid through cash. Out of the said amount, Rs. 1,86,04,478/- relates to AY 2014-15 and 2015-16 and Rs. 7,50,000/- was paid by Shri Jayant G. Patil. Hence, cash paid by the assessee during AY 2013-14 works out to Rs. 1,21,45,522/- , out of which Rs.23,00,000 has already been added. Applying the same facts as in respect of addition of Rs. 23,00,000 in ground No.1, as the assessee failed to substantiate the cash payment, the addition of Rs. 98,45,522/- (1,21,45,522 - 23,00,000) by the Ld. CIT(A) is justified. We find force in the above arguments of the Ld. DR. The assessee though claimed to have sourced the cash payments from the sale of plots and advance received from other customers, he failed to substantiate the same by filing any evidence thereof. The Ld. CIT(A) has elaborately considered this issue in para 21.1 and 21.2 of his appellate order and finally given his finding in para 21.3 (reproduced in preceeding paragraphs) allowing partial relief to the assessee by restricting the addition to the amount of cash paid by the assessee at the time of registration of the Development Agreement on 28.03.2013. Further, in respect of second argument of the Ld. Counsel for the assessee that the said addition has been made by the Ld. AO only on the basis of statement of the assessee recorded under section 132(4) of the Act without any supportive corroborative evidence thereof, the Ld. DR referred to the Paper Book dated 08.02.2024 filed by the Department containing the copies of satisfaction note and seized documents and 14 IT(SS)A Nos. 115 to 118/PUN/2022 submitted that the said claim of the assessee is therefore without any basis We further observe that the Ld. CIT(A) has categorically recorded the finding that the said statement has not been retracted by the assessee till date before him. No concrete evidence has been brought on record by the assessee before us as well to controvert the findings of the Ld. CIT(A) and to substantiate the source of cash payment in the form of sale proceeds and advance from customers. Accordingly, we uphold the order of the CIT(A) in respect of ground no.2 of the assessee and dismiss the same. 12. In ground No. 3 the assessee has challenged the addition of Rs.12,50,000/- being commission paid to Shri Balasaheb Daingude. The assessee’s submission in this regard is as under : “In para 4a on page no. 7 of Assessment order, Learned AO, observes that \"The assessee has also admitted to have paid commission to Balasaheb Daingude of Rs. 12,50,000/- in his own submission filed on 23/12/2016 which is also required to be considered\", and makes the addition of Rs. 12,50,000/-. In this regard at the outset we draw the attention of the Hon'ble bench the submission dt. 23/12/2016, (Page no 129 to 135 of paper book- part A), wherein it can be observed that there is no such admission of payment of commission, therefore the basis and reason given by the Learned AO is incorrect, secondly attention was also drawn to the submission made before Ld. CIT(A), (please refer para 23 on page 15 of CIT(A) order) whereby the copy of document seized attached at page no. 624 & 625 of paper book - Part D was referred, (English translation on page no. 626 of paper book - Part D), which is ledger account of commission paid date wise. In this ledger it can be observed that on first page last entry 04/09/2014 certain commission is paid to Subhash Khot, Doingade and Subil Joshi, and on same date continued on next page the entry of payment made to Shri Balasaheb Daingude Rs. 12,50,000/- is mentioned, which is followed by next date entry on 13/11/2014, accordingly it is submitted that appellant has paid commission of Rs.12,50,000/- to said person but same is paid on 14/09/2014, AY 2015-16, and therefore no addition can be made on account of commission paid Rs.12,50,000/-.” 12.1 The Ld. DR has made the following submissions on the above issue: “With respect to ground of appeal no. 3 of the assessee regarding the addition of Rs. 12,50,000/-, the assessee has not denied the payment of commission to Shri Balasaheb Daingude. The sole contention of the assessee w.r.t. the addition on the basis of page no. 55 & 56 of the seized bundle no. 5 is that the said cash payment was made in subsequent year i.e. AY 2014- 15. However, the CIT(A) in para 23 of his order has clearly pointed the fact that no date was mentioned against the cash payment of Rs. 12.50 lacs in the said seized bundle no. 5. Also the deed in the present case was registered on 28.03.2012 as stated in para 2.1 as above, the payment through cash and cheque for the said agreement was made on 22.08.2012. Therefore it can be stated that as the other payments are made on 22.08.2012, the commission would also have been paid on the same date i.e. in FY 2012-13 relevant to AY 2013-14. Therefore the said addition is justified and deserves confirmation.” 12.2 After hearing both the sides and perusing their submissions and material placed on record, we observe that the assessee has not disputed 15 IT(SS)A Nos. 115 to 118/PUN/2022 the payment of commission to Shri Balasaheb Daingude but his sole contention is that the said commission was paid in FY 2014-15 relevant to AY 2015-16 and hence addition in present AY 2013-14 is not justified. The legder account of the commission date-wise was placed on record to substantiate this claim. The Ld. AR requested that the matter may be remanded back to the Ld. AO for verification thereof. In our considered view, it would be fit and proper to send this issue to the file of Ld. AO to decide afresh after giving an opportunity of hearing to the assessee. Accordingly, ground no. 3 is allowed for statistical purposes. 13. Ground No. 4 raised by the assessee pertains to addition on account of disallowance of expenses of Rs.1,00,000/- on an ad hoc basis by the Ld. AO which has been confirmed by the Ld. CIT(A). The Ld. AR has made the following submissions in this regard : “In para 4(c) on page no. 9 of the Assessment Order, Learned AO has discussed this issue, whereby he refer the Profit and Loss Account submitted by the appellant, wherein the claim of Rs. 9,36,943/- was made against the total receipt of Rs. 10,00,000/-. In this regard attention is drawn to page no. 295 of paper book part B, wherein the relevant Profit and Loss account is mentioned, the content of which can be summarized as follows: Sale of Plot Rs. 10,00,000/- (copy of agreement attached at page no. 321 of PB-part-B) Commission received Rs. 6,00,000/- Gross Receipts Rs. 16,00,000/- Less: Cost of plot purchase Rs, 9,00,000/- (copy of agreement attached at page no. 303 of PB-part-B) Less: Expenses by cheque Rs. 36,943/- Net Profit Rs. 6,63,957/- Perusal of the above Profit and loss account it can be observed that there was no scope of making any adhoc disallowance, because the main component of the expenditure was cost of land purchase which is supported by registered agreement and other expenditure was incidental only to the extent of Rs. 36,943/-. Learned CIT(A), rejected the above contention of the appellant by observing that no supporting documents are filed before him, however we refer the attention of the bench to page no. 233 to 339, being written submission before Learned CIT(A), wherein on page no 242 explanation is offered and relevant agreements are attached as referred above. In view of this prayer is made for deletion of such adhoc addition.” 13.1 The Ld. DR has made the following submissions on the above issue: “2.4 With respect to ground of appeal no. 4 of the assessee regarding the addition of Rs. 1,00,000/- on account of unverified expenses incurred, the CIT(A) stated that owing to unsatisfactory documentary evidences, the said amount is the income of the assessee. liable to be added in the income of the assessee. 16 IT(SS)A Nos. 115 to 118/PUN/2022 13.2 After hearing both the sides, it is observed that the said addition has been made as the assessee failed to produce satisfactory documentary evidence before the Ld. CIT(A)/AO. Before us too, the assessee has not been able to produce any supporting documents except referring the expense to be relatable to the cost of purchase of land. We, therefore confirm the addition of Rs. 1,00,000 made by the Ld. CIT(A). Accordingly, ground no. 4 is disallowed. AY 2014-15 : IT(SS)A No. 116/PUN/2022, by the Assessee; and IT(SS)A No. 118/PUN/2022, by the Revenue 14. Briefly stated, the facts relevant to the impugned issues as mentioned in the statement of facts filed before the Ld. CIT(A) are that In the survey proceedings, the assessee informed the total sale during the year was Rs.4,79,35,800/- and his share of sale was Rs.2,39,67,900/- (50% of total sale) and on this sale the assessee estimated his profit at 30% which comes to Rs.71,90,370/-. After reducing the profits shown in the original return of income the assessee offered balance amount of Rs.65,36,370/- as undisclosed income. During the assessment proceedings, the Ld. AO found that the assessee had claimed 70% of turnover as expenses on estimate basis. However, most of the expenses found recorded for the seized documents were in cash and there were multiple violations such as contravention of section 40A(iii), 40(a)(ia) of the Act, non-maintenance of payment vouchers and subsidiary records etc. which led the Ld. AO not to accept the claim of the assessee. Further, the Ld. AO noticed that out of total sale of Rs.4,79,35,800/- for the year under consideration sale of Rs.65,40,000/- was declared in the books of account, hence unaccounted sale for the year accounted at Rs.4,13,95,800/-. In this view of the matter, the Ld. AO worked out the unaccounted profit for the AY 2014-15 at Rs.3,99,02,083/- after allowing expenses of RS.14,93,717/-. The assessee’s share of profit was worked out at Rs.1,99,51,042/- being 50% of Rs.3,99,02,083/- and added the same to the income of Rs.5,54,100/- returned by the assessee in its return filed on 26.09.2014. 14.1 On appeal, the Ld. CIT(A) relied upon the decision of the Settlement Commission in the case of Shri Jayant G. Patil. Before the Settlement Commission, Shri Jayant G. Patil offered income @ 70% of his share of turnover from Saptagiri Park project which was accepted by the Settlement Commission. The share of the assessee in total turnover amounted to 17 IT(SS)A Nos. 115 to 118/PUN/2022 Rs.2,06,97,900/- being 50% of Rs.4,13,95,800/-. In view of the decision of the Settlement Commission the Ld. CIT(A) thus worked out unaccounted income of the assessee at Rs.1,44,88,530/- being 70% of Rs.2,06,97,900/-. The relevant findings and observations of the Ld. CIT(A) are reproduced below : “36. I have considered the facts of the case and the submission made by the appellant. It is an undisputed fact that the appellant along with other joint developer namely Shri Jayant G. Patil did not fully declare sale receipts in their books of accounts. In the return of income filed in response to notice u/s 1530 of the Act, the appellant admitted of making unaccounted sales and declared profit @ 30% of such unaccounted sale. The quantum of unaccounted sale for the year under consideration has been submitted by the appellant vide his letter dated 23/12/2016 at Rs. 4,13,95,800/- for A.Y. 2014-15. The Assessing Officer has adopted this figure for working out the unaccounted income for the year under consideration. The only dispute is regarding the percentage of profit on the quantum of undisclosed sale. The appellant had earlier claimed during the assessment proceedings that the profit should be worked out @ 30% of the turnover, however, the Assessing Officer disallowed certain expenses in full and some expenses were allowed @ 30% of claim made by the appellant. During the appellate proceedings, the appellant has claimed that same may be worked out @ 40% of the turnover as declared and decided by Hon. Settlement Commission in the case of Shri Jayant G. Patil. 37. I have gone through the decision of Hon. Settlement Commission dated 19/03/2018 in the case of Shri Jayant G. Patil for A.Y. 2009-10 to 2016-17. A perusal of said order suggest that in the application submitted before the Hon. Settlement Commission, Shri Jayant Patil declared his share of gross receipts at Rs. 4,91,17,800/- and in the application the income was disclosed @ 40% of the turnover. In this manner, the income disclosed in respect of Saptagiri Project was Rs. 1,96,47,120/- (for all years). However, during the proceedings, the Ld. CIT (DR) pointed out various deficiencies in the disclosure made by Shri Jayant G. Patil and therefore Shri Jayant G. Patil vide letter dated 14/03/2018 disclosed further additional income. The relevant portion of the decision of the said order is as under: 8. We have heard both the sides at length and have considered the PCIT's reports, AR's written submission and oral arguments advanced by the rival parties. We find that all the issues raised by the CIT (DR) have been satisfactorily replied by the applicant. During the course of hearing certain issues indicated in PCIT's report, particularly with regard to quantification of turnover and profit rate in respect of transactions in the two categories were raised by the Bench. The AR was also requested to go through the list of sundry creditors and unsecured loans and re-examine them for genuineness. The AR's attention was also drawn to the fact that the rates of profit disclosed at 40% in respect of sale of TDR/land appeared to be on much lower side as in some specific instances the profit rate was found much higher. In the letter dated 14.03.2018 filed by the applicant after the hearing, further additional income of Rs. 7,00,37,280/- has been offered. The relevant excerpt from the letter is reproduced as under- 1. The applicant had adopted total tumover in activity of facilitation at Rs 14,99,66,000/-and had offered 20% thereof as income. The applicant has estimated further tumover of Rs. 1,49,96,000/- On the revised turnover the applicant estimates income 25% Due to such higher estimate aggregate income on account of facilitation charges would be Rs. 4,12,40,650/- leading to further offer of Rs. 1,12,47,450/-on account of activity of facilitation. 2. The applicant had adopted total tumover in activity of sale of TDR and land in his own name/his wife's name at Rs. 10,05,13,054/-and 18 IT(SS)A Nos. 115 to 118/PUN/2022 had offered 40% thereof as income. The applicant has estimated further tumover of Rs. 1,00,51,305/- on this account. On the revised tumover the applicant estimates income @ 70% Due to such higher estimate aggregate income on account of sale of TDR/land in own name would be Rs. 7,73,95,052/- leading to further offer of Rs.3,71,89,830/- on account of this activity. 3. To resolve other issues like lack of evidence, nature of expenses and various other contentious issues the applicant seeks to offer aggregate sum of Rs. 2,16,00,000/- in various years as per statement attached. 4. Thus the applicant seeks to further offer Rs. 7,00,37,280/- in total as detailed in the first three paragraphs above as additional income in aggregate to buy peace and resolve the issues. 8.1 We have considered the applicant's offer of further additional income of Rs. 7,00,37,280/- and find that the offer made by the applicant is reasonable and adequate to cover all possible shortfalls with regard to estimation of correct turnover in both the categories of transactions and estimation of correct profit margin and other possible disallowances. The offer of further additional income at the profit rate of 25% and 70% is considered adequate to take care of possible underestimation of income under both categories. Besides further offer of additional income of Rs. 2.16 crores is considered sufficient to cover remaining shortfalls with regard to possible disallowance/additions. Thus the applicant's offer of further additional income of Rs. 7,00,37,280/- is accepted and the case is settled by including the aforesaid additional income as per Annexures attached to this order. 38. The above discussion suggests that even though initially Shri Jayant Patil disclosed profit on Saptagiri Project @ 40% of the turnover, however, during the proceedings before the Hon. Settlement Commission, he offered income @ 70% of his share of turnover from Saptagiri Park Project. The said offer of disclosure was accepted by the Hon. Settlement Commission and accordingly his case was settled by considering this rate of 70%. Since, both appellant and Shri Jayant G. Patil are partner in the same project, therefore, it is incumbent on the undersigned to give the same treatment to the appellant and to follow the same percentage for working out the unaccounted income of the appellant on his share of turnover. Accordingly, the unaccounted income of the appellant is being worked out by applying the rate of 70% on his share of turnover. As per the assessment order, for the year under consideration, the total unaccounted turnover is Rs. 4,13,95,800/-. Since, the appellant share is 50%, therefore, the share of appellant's turnover in the total unaccounted turnover comes to Rs. 2,06,97,900/-. By applying the rate of 70% on this unaccounted turnover, the unaccounted income of the appellant is worked out at Rs. 1,44,88,530/- (70% of Rs. 2,06,97,900/-). Accordingly, the addition of Rs. 1,99,51,042/- made by the Assessing Officer is restricted to Rs. 1,44,88,530/-. The ground no. 1, 2 and 3 raised by the appellant are PARTLY ALLOWED.” 14.2 The assessee is aggrieved by the findings of the Ld. CIT(A) which has brought the assessee before us by raising the following grounds of appeal : “1. On the facts and in the circumstances in the case and in law the Lower Authorities have erred in estimating the Profit from Saptagiri Park at the rate of 70% on unaccounted turnover Rs.2,06,97,900/- i.e. a sum Rs. 1,44,88,530/- by disregarding the claim of appellant that same shall be restricted to 40% of the unaccounted turnover in view of the fact, that in co- owners case Hon'ble Settlement Commission had said accordingly. Appellant prays accordingly.” 19 IT(SS)A Nos. 115 to 118/PUN/2022 14.3 The Department is also aggrieved and is in appeal before the Tribunal by raising the following grounds of appeal : “1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in allowing relief to the assessee by restricting the addition to 70% of unaccounted profit earned from the project ‘Saptagiri Park' without taking into consideration the specific disallowances of expenses made by the Assessing Officer under section 37(1), 40A(3) & 40(a)(ia) of Income Tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) failed to appreciate that the assessee failed to substantiate balance 30% expenses with supporting documentary evidences. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in applying the ratio of decision of Hon'ble Income Tax Settlement Commission in the case of Shri Jayant G. Patil, other owner in the project 'Saptagiri Park', to the case of the assessee.” 15. The Ld. AR’s contention is in its written submissions filed before us is reproduced below : “In both the years the only issue is regarding estimation of profit on the sale of plot, in the Assessment order Learned AO has initially made certain disallowances out of expenses claimed, before Learned CIT(A) reference was made to Settlement Commission order in case of Mr.Jayant Patil, wherein in the offer letter by him estimate of 40% of profit was offered, however in the final settlement order Hon'ble bench considering the facts and circumstances of that case, has estimated the income @ 70% of the Mr Jayant Patil -receipts of all such land development activity which also included Saptagiri Park project, Learned CIT(A) adopted the same basis. During the course of hearing before this Hon'ble bench, a detailed chart containing pages 1 to 52 was submitted, wherein it was pointed out that the actual profit based on documents found during the search and post accounting is only to the extent of 51%, and therefore prayer is made to estimate the profit at reasonable percentage.” 16. The Ld. DR, on the other hand, has made the following submissions on this issue in its written submissions filed before us are as under : “3.1 The AO during the assessment proceedings disallowed certain expenses in full and some expanses were allowed @30%. The assessee during the appellate proceedings claimed that the same can be worked out @40% as decided by the Hon'ble Income Tax Settlement Commission (ITSC) in the case of Shri Jayant G Patil. However, the CIT(A) in para 38 of his order has pointed out the fact that even though initially Shri Jayant G Patil disclosed profit @40% but during the proceeding before the Hon'ble ITSC, he offered income @70% which was accepted by the Hon'ble ITSC. As the assessee himself requested for the identical treatment as was in the case of Jayant Patil, the estimation of income @40% as requested by the assessee is not maintainable considering the decision of Hon'ble ITSC.” 17. Further, the Ld. DR has also filed written submissions with respect to the grounds raised by the Revenue in its cross appeal on the impugned issue, which are reproduced below: “3.2 With respect to grounds No. 1,2 & 3 raised by the Revenue, it is submitted that the CIT(A) has decided the said issue of estimation of profit merely relying upon the decision of Hon'ble ITSC and has not considered the detailed analysis of the AO w.r.t. the various expenses claimed by the 20 IT(SS)A Nos. 115 to 118/PUN/2022 assessee. The AO in the assessment order from page no. 10 to 12 (Copy enclosed as Annexure 'C') has discussed elaborately the disallowance and allowability of each & every expense claimed by the assessee. In case of expenses as mentioned on page no 12 of the assessment order, the AO has disallowed 30% of the said expenses due to failure on the part of the assessee to produce any supporting documents. Therefore the decision of the CIT(A) merely relying upon the decision of Hon'ble ITSC without considering the analysis of the AO regarding the disallowance of expenses, is not acceptable.” 18. We have considered the rival submissions of the parties and the material placed on record. It is an undisputed fact that Shri Jayant Patil offered income @ 70% of his share of turnover from Saptagiri Park Project before the Settlement Commission and accordingly his case was settled by considering this rate of 70%. We have considered the arguments put forth by the assessee as well as the Revenue in support of their respective claims reproduced in preceding paragraphs. We, however, tend to agree with the findings of the Ld. CIT(A) that since both the assessee and Shri Jayant G. Patil are partners in the same project, both of them should be given the same treatment and therefore the same percentage for working out the unaccounted income of the assessee on his share of turnover as in the case of Shri Jayant G. Patil should be followed. Accordingly, we uphold the unaccounted income of the assessee which is worked out at Rs. 1,44,88,530/- by the Ld. CIT(A) by applying the rate of 70% on his share of turnover (70% of Rs. 2,06,97,900/-). Accordingly, ground no.1 of the assessee as well as ground nos.1,2 and 3 of the Revenue raised in their respective appeals are hereby dismissed. AY 2015-16 : IT(SS)A No. 117/PUN/2022, by the Assessee 19. Admittedly, the facts of the case for AY 2015-16 are identical to the facts for the AY 2014-15 except that the total turnover of the Saptagiri Park project for AY 2015-16 is Rs.2,29,49,800/- . Before the Ld. CIT(A) the assessee made the identical submission which was made in respect of AY 2014-15. Accordingly, the Ld. CIT(A) held that his order for AY 2014-15 shall apply mutatis mutandis to the assessee’s appeal for AY 2015-16. By applying the rate of 70% on unaccounted turnover of Rs.1,14,74,900/- (assessee’s share being 50% of total turnover of Rs.2,29,49,800/-), the Ld. CIT(A) worked out unaccounted income of the assessee at Rs.80,32,430/- being 70% of Rs. 1,14,74,900/-. The relevant observations and findings of the Ld. CIT(A) are as under : “45. For the year under consideration, for the project namely Saptagiri Park, the assessee informed that the total sale of Saptgiri Park project is Rs. 2,29,49,800/-. As per the assessee, the profit ratio between him and Shri 21 IT(SS)A Nos. 115 to 118/PUN/2022 Jayant Patil is 50:50. The assessee accordingly stated that his share of sale comes to Rs. 1,14,74,900/- and on this sale the assessee estimated profit @ 30% which comes to Rs. 34,42,470/-. However, the Assessing Officer found that the assessee has claimed 70% of turnover as expenses on estimate basis. It was also noticed by the Assessing Officer that most of the expenses found recorded in the seized documents were in cash and there were multiple violations such as contravention of sec. 40A(3), 40(a)(ia), non- maintenance of payment vouchers and subsidiary records etc. Accordingly, the Assessing Officer was of the view that the estimate of 30% of turnover as claimed by the appellant cannot be accepted. Accordingly, show cause notice was issued to the assessee. While completing assessment, the Assessing Officer allowed only an amount of Rs. 35,588/- as allowable expenses. In this manner, the profit was worked out by the Assessing Officer at Rs. 2,29,04,212/- (2,29,49,800-35,588). As 50% of the profit belongs to the assessee, therefore, the income of the appellant was worked out by the Assessing Officer at Rs. 1,14,52,106/- (50% of Rs. 2,29,04,212/-). 46. The first three grounds of appeal raised by the appellant are regarding the addition of Rs. 1,14,52,106/- made by the Assessing Officer on account of undisclosed profit earned from the project namely Saptagiri Park. The facts of the case for AY 2015-16 are identical to the facts for AY 2014-15. The submissions made by the appellant are also identical. Accordingly, my decision for AY 2014-15 will apply mutatis mutandis to the assessee's appeal for AY 2015-16. Accordingly, the income of the appellant for AY 2015- 16 is being worked out by applying the rate of 70% on his share of turnover. For the year under consideration, the total turnover of the project is Rs. 2,29,49,800/-. Since, the appellant share is 50%, therefore, the share of appellant's turnover in the total turnover comes to Rs. 1,14,74,900/-. By applying the rate of 70% on this unaccounted turnover, the unaccounted income of the appellant is worked out at Rs. 80,32,430/- (70% of Rs. 1,14,74,900/-). Accordingly, the addition of Rs. 1,14,52,106/- made by the Assessing Officer is restricted to Rs. 80,32,430/-. The ground no. 1, 2 and 3 raised by the appellant are PARTLY ALLOWED.” 20. Before us, both the Ld. AR and the Ld. DR conceded that the facts of the present appeal and the issue raised therein is identical to the appeal of the assessee for AY 2014-15 and reiterated the same submissions / arguments put forth by them in respect of the appeal for AY 2014-15, which are reproduced in the preceding paragraphs. In this view of the matter, we hold that our above decision of the even date in ITA No.(SS)A No. 116/PUN/2022 for AY 2014-15 shall mutatis mutandis apply to the present appeal filed by the assessee in ITA No.(SS)A No. 117/PUN/2022 for AY 2015-16. Accordingly, ground no.1 raised by the assessee for AY 2015- 16 is hereby dismissed. 21. In the result, the appeal of the assessee in IT(SS)A No. 115/PUN/2022 for AY 2013-14 is partly allowed; ITA(SS)A No. 116/PUN/2022 for AY 2014-15 and ITA (SS)A No. 117/PUN/2022 for AY 2015-16 are dismissed. Revenue’s appeal in ITA(SS)A No. 118/PUN/2022 for AY 2014-15 is dismissed. 22 IT(SS)A Nos. 115 to 118/PUN/2022 Order pronounced in the open court on 12th December, 2024. Sd/- Sd/-/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; िदनांक / Dated : 12th December, 2024. रिव आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant. 2. ŮȑथŎ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, “बी” बŐच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडŊ फ़ाइल / Guard File. //सȑािपत Ůित// True Copy// आदेशानुसार / BY ORDER, //True Copy// वįरʿ िनजी सिचव / Sr. Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune "