SILVER INFRA,AHMEDABAD V. DCIT, CC-1(4), AHMEDABAD, AHMEDABAD

ITA 1419/AHD/2024

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This case involves cross appeals by Silver Infra (the Assessee) and the DCIT, Central Circle 1(4), Ahmedabad (the Revenue) against the order passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad for the Assessment Year 2020-21. The primary issue revolves around the addition of Rs. 11 crores as unexplained investment under section 69 of the Income Tax Act, 1961, related to on-money payments for land purchase. The A.O. had made this addition based on documents seized during a survey and statements from the partners of Silver Infra. The CIT(A) partly allowed the Assessee's appeal by estimating profit on the on-money payment at 15% instead of treating the entire amount as unexplained investment. Both parties challenged the CIT(A)'s decision, leading to this tribunal's review.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776776 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2025
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Appeal Filed On: 26-07-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Unexplained investment; Loose papers
• Section: 143(3); 131; 69; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member Silver Infra N-101, S.G. Business Hub, Nr. Punjab National Bank S.G. Highway, Ahmedabad-382470 Gujarat PAN: ADVFS3928D Vs The DCIT, Central Circle 1(4), Ahmedabad The DCIT, Central Circle 1(4), Ahmedabad (Appellant) Vs Silver Infra N-101, S.G. Business Hub, Nr. Punjab National Bank S.G. Highway, Ahmedabad-382470 Gujarat PAN:ADVFS3928D (Respondent) Assessee Represented: Shri M. J. Ranpura, A.R. Revenue Represented: Shri Abhijit, Sr. D.R. Date of hearing : 06-08-2025 Date of pronouncement : 15-09-2025 आदेश/ORDER PER : NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:- These cross appeals are filed by the Assessee and Revenue respectively against the order 31.05.2024 passed by the ITA No: 1419 & 1424/Ahd/2024 Assessment Year: 2020-21 Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 2 Commissioner of Income Tax (Appeals)-11, Ahmedabad (in short the “CIT(A)”) for the Assessment Year (AY) 2020-21 in the proceedings under section 143(3) of the Income Tax Act, 1961 (in short “the Act”). 2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2020-21 on 17-09-2020 declaring total loss of Rs.10,33,350/-. A survey u/s. 133A of the Act was conducted at the office premises of the assessee on 24 & 25th April, 2019, in the course of which, certain loose papers, documents and digital data in the form of hard disk and pen-drive were inventoried and impounded. In the course of assessment, these documents were analyzed by the A.O. It transpired that at Page No. 114 to 116 of Annexure-A/12 contained unit-wise booking and cash receipts/on-money receipt from the members in the scheme Silver Spring, a project developed by Silver Infra. The examination of these documents revealed that the assessee had received on-money of Rs.9,63,63,652/- during the period from 25-10-2018 to 20-04- 2019, which was confirmed by Shri Keyurbhai Prabhulal Bhalodia, the partner of the firm, in the course of his statement recorded u/s. 131 of the Act on 24-04-2019. The A.O. has also referred the another seized document at Page No. 109 of the excel file which was related to land payment details. Shri Keyurbhai Prabhulal Bhalodia, the partner, while explaining this document had stated that the assessee had purchased certain land for which payment of Rs. 11,00,00,000/- was made in cash and Rs. 6.10 crores was paid by cheques. The A.O. had treated this on-money payment of Rs. 11 crores made in cash for purchase of land, as unexplained Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 3 investment u/s. 69 of the Act and accordingly made the addition. The assessment was completed u/s. 143(3) of the Act on 31-03- 2022 at total income of Rs.11,10,33,350/-. 3. Aggrieved with the order of the A.O., the assessee filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed. The Ld. CIT(A) had held that entire on- money payment towards purchase of land cannot be taxed as unexplained investment and had directed to estimate profit on such on-money payment @ 15%. 4. Now both the assessee as well as the Revenue are in appeal before us. The following grounds of appeal have been taken in these two appeals: ITA No. 1419/Ahd/2024 (Assessee’s appeal) 1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2 The Ld. CIT(A)-11, Ahmedabad erred on facts as also in law in retaining addition of Rs. 1,65,00,000/- by estimating profit @ 15% on alleged on money payment of Rs. 11,00,00,000/-. The addition retained is totally unjustified in view of the fact that no project was undertaken. The addition made deserves to be deleted and may kindly be ordered to be deleted. 3. Your Honour’s appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal. ITA No. 1424/Ahd/2024 (Revenue’s appeal) 1) In the facts and on the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs. 11,00,00,000/- u/s. 69 r.w.s.115BBE of the I.T.Act on account of on money payment for purchase of Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 4 land and in estimating the income at Rs. 1,65,00,000/- holding the same as business income by applying 15% profit rate without any basis.\" 2) The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal. 5. Shri Abhijit, Ld. Sr. D.R., submitted that the addition of Rs.11 crores in respect of on-money payment for purchase of land was made on the basis of the impounded document found in the course of survey. He explained that authenticity of the documents was never disputed. Rather the partners of the assessee firm had also admitted having made cash payment of Rs. 11 crores for purchase of land, in his statement recorded u/s. 131 of the Act. Therefore, the A.O. has rightly made the addition of Rs. 11 crores u/s. 69 of the Act on account of unexplained investment. He submitted that the Ld. CIT(A) was not correct in restricting the addition in respect of on-money payment for purchase of land @ 15% only. He, therefore, requested that the addition as made by the A.O. may kindly be restored. 6. Per contra, Shri Mehul Ranpura, Ld. A.R. of the assessee submitted that the A.O. had himself given a finding that the assessee had received on-money of Rs. 9,63,63,652/- towards booking of flats and shops. Therefore, the availability of cash to that extent was already explained. He submitted that the on-money payment of Rs. 11 crores for purchase of land was duly explained as application of on-money receipt by the assessee to the extent of Rs. 9,63,63,652/-. Regarding the balance funds, he submitted that the same was brought in by the partners. The Ld. AR explained that no business activity was carried out by the assessee firm Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 5 during the year and the cheque receipts towards booking of flats and shops were shown as loans. He submitted that the A.O. had also given a finding in the assessment order that the cash was brought in by the partners for purchase of land. Considering these facts, no addition was called for in respect of cash payment for purchase of land in the hands of the assessee firm. As an alternative argument, the Ld. A.R. submitted that the profit estimated by Ld. CIT(A) was quite high considering the trend of profit in the line of business in which the assessee was engaged. He further submitted that the profit should have been estimated on the income and not on the expense incurred. 7. We have considered the rival submissions and gone through the facts and materials brought on record. The credibility of the evidences found in the course of survey, based on which the A.O. had made the addition, has not been disputed. As the facts stand, the assessee had received on-money of Rs. 9,63,63,652/- during the period from 25-10-2018 to 20-04-2019. On the other hand, the assessee had paid cash of Rs. 11 crores as on-money for purchase of land. In fact, the A.O. in Para 6.3.4 of the assessment order, had given a categorical finding that the assessee was accepting cash from the customers against the booking of the shops and flats and on the other hand, the assessee had also paid cash against acquisition of land. Thus, the source of on-money paid by the assessee for purchase of land was already explained to the extent of Rs. 9,63,63,652/-, i.e. the amount of on-money received by the assessee towards booking of shops and flats. Therefore, no addition u/s. 69 of the Act was called for to the extent of Rs. 9,63,63,652/-. Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 6 8. Regarding the source of balance cash payment of Rs. 1,36,36,348/-, the A.O. in Para 4.3.3 of the assessment order, had given a finding that the partners had brought in cash in the firm M/s. Silver Infra for making payment towards purchase of land. This fact was also evident from Page No. 110 to 120 of Excel-sheet found in the course of survey, which was individual cash ledger of the partners. In fact, the A.O. had referred to the cash ledger account of the partners and discussed about the cash brought in by the partners on different dates. In view of this categorical finding of the A.O. that the cash was brought in by the partners in the partnership firm to purchase the land, the addition, if any, in respect of cash payment, was required to be made in the hands of the individual partners and not in the hands of the assessee firm. Otherwise also, no business activity was carried on by the assessee firm during the year and there was no other source of income, other than the booking amount receipts by the assessee as already discussed earlier. Therefore, the entire addition of Rs. 11 crores as made by the A.O. in respect of unexplained investment in land u/s. 69 of the Act, is found to be misplaced and is liable to be deleted. 9. At the same time, there is no denial to the fact that the assessee had received on-money of Rs. 9,63,63,652/- during the period from 25-10-2018 to 20-04-2019, which was not accounted for in the books of accounts of the firm and which should have been brought to tax in the respective years in which the cash was received. It is a trite law that the income has to be assessed to tax in the correct year. Therefore, the entire on-money receipt of Rs. 9,63,63,652/-, received during the period from 25-10-2018 to 20- Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 7 04-2019, can’t be considered as income of the assessee for the A.Y.2020-21. Only the on-money received during the F.Y. 2019-20 (from 01.04.2019 to 20.04.2019) can be considered as income of the assessee pertaining to AY 2020-21. We, therefore, deem it proper to set-aside the matter to the file of the AO with a direction to work out the on-money received by the assessee during the financial year 2019-20. Further the entire online receipt also cannot be considered as income of the assessee. It was rightly held by the Ld. CIT(A) that only the net income earned by the assessee was required to be taxed. We find that the profit estimated by the Ld. CIT(A) @ 15% of the on-money was reasonable. Therefore, the AO is directed to work out the income by applying profit rate of 15%, as upheld by the Ld. CIT(A), on the on-money received during the year. As regard on-money received during the earlier period, the AO is free to proceed in the matter in accordance with the provisions of the Act and bring to tax the on-money receipt in the correct year on the same basis, if the time limit so permits. 10. In the result, the appeal filed by the Revenue is dismissed whereas the appeal of the Assessee is partly allowed for statistical purpose. Order pronounced in the open court on 15 -09-2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 15/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee Printed from counselvise.com I.T.A No. 1419 & 1424/Ahd/2024 A.Y. 2020-21 Page No Silver Infra Vs. DCIT 8 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "