THE DY. CIT, CENTRAL CIRCLE-1, VADODARA V. M/S. FARMVILE ENTERPRISE, VADODARA

ITA 717/AHD/2018

AI Insights

The case involves cross appeals by the assessee, Farmville Enterprise, and the Revenue against the common appellate order passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad. The appeals arose from separate assessment orders under section 143(3) r.w.s. 153C of the Income Tax Act, 1961, for the assessment years 2013-14 and 2014-15, following a search action under section 132. The main issues in the appeals included the treatment of unsecured loans as unexplained cash credits under section 68 and the addition of unaccounted sales. The Tribunal's decision was influenced by the findings of the Income Tax Settlement Commission in related group cases, which estimated the net profit on unaccounted turnover and on-money received at 17.5%. The Tribunal also noted that no incriminating material was found during the search at the assessee's premises to substantiate the Revenue's claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 42064 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: M/s Heaven Associates -Vs- DCIT, CIT V/s President Industries, Abhishek Corporation ITA No. 15 of 2003, CIT V/s Panna Corporation Tax Appeal No. 323 of 2000, Maddiudarsanam Oil Mills Co. v. Commissioner of Income-tax, The Commissioner of Income Tax, Patiala Versus Dulla Ram, Labour Contractor, Kotkapura, Commissioner of Income Tax, Jalandhar-II vs. Aggarwal Engg Co., CIT vs. G.K. Contractor
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: WAY OF ACCOMMODATION ENTRIES OF; APPLICATION OF NET PROFIT RATE OF
• Keywords: Business income; Unexplained cash credit; TDS; Accommodation entries; Loose papers; Validity of assessment; Bogus loan; Bogus
• Section: 143(3); 132; 68; 13; 153C; 72; 145(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Farmville Enterprise Shop. No. 8, Preeti Enclave, Rajesh Tower Road, Shubhanpura, Vadodara PAN: AABCT9663N (Appellant) Vs The DCIT, Central Circle-1, Baroda (Respondent) The DCIT, Central Circle-1, Baroda (Appellant) Vs Farmville Enterprise Shop. No. 8, Preeti Enclave, Rajesh Tower Road, Shubhanpura, Vadodara PAN: AABCT9663N (Respondent) Assessee Represented: Shri S.N. Soparkar, Sr. Adv. & Ms. Urvashi Shodhan, A.R. Revenue Represented: Shri Sudhendu Das, CIT-DR Date of hearing : 09-10-2024 Date of pronouncement : 07-01-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- IT(SS)A No: 72/Ahd/2018 & ITA No: 648/Ahd/2018 Asst. Years: 2013-14 & 2014-15 IT(SS)A No: 87/Ahd/2018 & ITA No: 717/Ahd/2018 Asst. Years: 2013-14 & 2014-15 I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 2 These cross appeals are filed by the Assessee and the Revenue as against the common appellate order dated 15.01.2018 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad arising out of separate assessment orders passed under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2013-14 and 2014-15. Since common issues are involved in the above appeals the same are disposed of by this common order for sake of brevity. 2. The brief facts of the case are that a search action under section 132 was carried out in the case of Bafna Panchal Groups on 07-01-2014 wherein the assessee also was covered. Pursuant to the search and in response to notice issued u/s. 153C of the Act, the assessee filed its Returns of Income for all the assessment years. Assessment under section 153C r.w.s. 143(3) were framed after making addition on account unsecured loan treated as unexplained cash credit under section 68 of the Act and unaccounted sales. The additions made by Assessing Officer are summarized as under: Particulars Asst. Yr. 2013-14 Asst. Yr. 2014-15 Returned Income u/s 153C of the Act 13,030 2,31,810 Addition Unexplained Cash Credit u/s 68 (protective basis) 3,57,00,000 1,38,00,000 Disallowance of Interest Income 33,86,650 63,61,427 Undisclosed sales receipt 2,31,01,139 2,43,67,849 Total Assessed Income 6,22,00,819 4,45,48,724 I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 3 2.1. The l d AO in the assessment orders made additions u/s.68 of the Act on Protective basis subject to the finalization of the addition on account of unrecorded sales receipts to the extent of unsecured loans. 3. Aggrieved against the assessment orders the assessee filed appeals before Ld CIT[A] who has partly confirmed the additions by following Income Tax Settlement Commission order in the group of cases, wherein estimated the net profit on accounted turnover as well as on on-money received at 17.5% and partly deleted the addition under section 68 of the Act in view of various decisions by observing as follows: “… 4.20. So far additions for undisclosed income being alleged on money receipts from customers are concerned, it is observed that while deciding the appeal for A.Y. 2011-12 and 2012-13, my predecessor CIT(A) has categorically held that no documents relating to receipt of such income was found and AO has made entire addition on assumptions. It is observed that in the said order my predecessor CIT (Appeals) has referred to statement of Mr. Mihir Panchal recorded on 7 January, 2014 wherein he has admitted average rate of sale of plot at Rs.300 per sq.ft., the Appellant has proved that average sale price of plot is Rs. 302 per sqft, in A.Y. 2014-15 hence such statement cannot be relied upon for making addition of on money. However during the course of search one more document being brochure was found where various rates are mentioned against different types of colours. My predecessor CIT (Appeals) has observed that these papers do not pertain to A.Y. 2011-12 and 2012-13 as it can even if considered as incriminating material, it pertains to A.Y. 2014-15. It is observed that the Appellant has claimed that such rates are of grass cutting rates for plots of different colours. However, this theory cannot be accepted as grass cutting rate cannot be different for different types of plots. Though the Appellant has submitted the vouchers of grass cutting and expenditure is already recorded in books of account prior to search, it does not co-relate with rate of grass cutting as I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 4 considered by the Appellant in his preliminary statement. It is also observed that during the course of search no other evidences were found which can prove that the Appellant has received on-money but brochure found during the search clearly prove that the Appellant has received on-money. Even though rates are pertaining to A.Υ. 2014-15, AO's observation that the Appellant would have charged on-money even in earlier Assessment Year being A.Y. 2013-14, cannot be brushed aside. The AO has already considered reduced rate for earlier Assessment Years while estimating on-money in the case of the Appellant. Considering these facts, on money estimation made by the AO in both the Assessment Years is correct subject to following observations in view of order passed by the Hon'ble Settlement Commission in Group cases. 4.21 It is observed that various group companies of the appellant has preferred an application wherein they have made disclosure considering average Net Profit @ 16% for projects and while applying such net profit, they have considered both disclosed sales and undisclosed sale found during the course of search. It is observed that disclosure is arrived at after reducing net profit before interest & remuneration has shown in audited annual accounts. The above method is also accepted by Hon'ble Settlement Commission in its order referred supra wherein in majority cases, it is held that average net profit is 17.5% as against 16% considered by the applicants. It is observed that order under Section 245D (4) was passed in four group cases being M/s Param Enterprisies, M/s Autocare Services, M/s Sumangal Enterprise and M/s Dharnidhar Realty on 5th September, 2017 wherein on consistent basis four applicants have offered net profit on turnover as per books of account as well as on-money receipts. However, in Rule 9 Report the PCIT has argued that entire on-money receipt should be taxed in the hands of applicant firm. Considering the argument of the four applicants referred supra, as well as Rule 9 Report, Hon'ble Settlement Commission has accepted applicant's argument for taxing additional income based upon net profit on on-money receipt as well as turnover recorded in books of account and even no separate addition under Section 68 is made. To maintain the consistency and to protect the interest of revenue, it is held that in present case average net profit is required to be estimated 17.5% as against income I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 5 shown in return of income as well as on-money estimated by the AO. Further, estimation of net profit is also supported by decision of Hon'ble Gujarat High Court in the case of CIT V/s President Industries 124 Taxman 124, Abhishek Corporation ITA No. 15 of 2003 and CIT V/s Panna Corporation Tax Appeal No. 323 of 2000 dated 16th June, 2012. Thus, net profit in present case for both the assessment years is estimated 17.5% on sales disclosed in return of income after rejecting books of account u/s 145(3) of the Act as under: Asst. Year Business Income before Interest and Remuneration (Rs.) Turnover as per books as well as on-money (Rs.) Net Profit at 17.5% Net Profit- Book Profit before Interest and Remuneration (Rs.) 2013-14` 6,28,705/- 3,00,29,319/- 52,55,131/- 46,26,426/- 2014-15 14,66,005/- 3,90,10,849/- 68,26,898/- 53,60,894/- 4.22 It is also observed that as I have estimated net profit on accounted turnover as well as on on-money and in such a case addition under Section 68 of the Act cannot be made in view of following decisions: (i) Hon'ble High Court Of Andhra Pradesh in case of Maddiudarsanam Oil Mills Co. v. Commissioner of Income-tax (1959) 37 ITR 369 (AP). (ii) Hon'ble Punjab and Haryana High Court in case of The Commissioner of Income Tax, Patiala Versus Dulla Ram, Labour Contractor, Kotkapura vide ITA no: 122 of 1999 [2014] 42 taxmann.com 349. (iii) Punjab & Haryana High Court in the case of Commissioner of Income Tax, Jalandhar-II vs. Aggarwal Engg Co. (2006) 156 TAXMAN 40. (iv) Hon'ble Rajasthan High Court rendered in the case of CIT vs. G.K. Contractor (2009) 19 DTR 305 (Raj.). 4.23 It is also observed that as I have estimated net profit in both the assessment years, separate addition of interest expenditure as confirmed in A.Y.2013-14 and 2014-15 for unsecured loan taken from M/s Samkit Finance Pvt. Limited I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 6 cannot be made. In the nutshell, entire addition made by the AO for estimating undisclosed income, addition u/s 68 of the Act made on protective basis and interest paid on unsecured loans made in both the assessment years are deleted. The AO is directed to make addition on account of low net profit for Rs.46,26,426 in A.Y. 2013-14 and Rs.53,60,894 in A.Y. 2014-15. Thus, related grounds of appeal are partly allowed. … … … 4.19 Considering the facts discussed herein above and relying upon the decisions referred supra, it is held that the AO was not justified in making addition u/s 68 of the Act and interest thereupon (except interest of Rs.3,01,065 in A.Y. 2013-14 and Rs.3,33,580 in A.Y. 2014-15 being payment made to M/s Samkit Finance Pvt. Ltd), as discussed herein above. 3.1. Thus the Ld CIT[A] directed the AO make addition on account of low net profit for Rs.46,26,426 for A.Y. 2013-14 and Rs.53,60,894 for A.Y. 2014-15 and thus partly allowed the appeals. 4. Aggrieved against the common appellate orders both the assessee and Revenue are in appeal before us. The Grounds of Appeal raised by the Assessee in IT(SS)A No. 72/Ahd/2018 for Asst. Year 20013-14 reads as under: 1. In law and facts and circumstances of appellants case the Ld. CIT(A) has directed A.O. to make addition on account of net profit for Rs.46,26,425/- on turnover shown a books of account and on money estimated by AO as against deletion of entire on-money receipts of Rs 2,31,01,139/-. 2. In law and facts and circumstances of appellants case the CIT(A) has erred in upholding AO's observations that appellant has received on money on sale of pilots during the year (though he estimated net profit on such money) without appreciating that during the course of search no evidences were found for actual receipt of alleged on-money and brochure found during the course of search I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 7 containing various rates against different types of colours on the basis of which impugned addition is made by AO represented grass cutting rates for plot of different colours and does not represent actual sale value as observed by the AD 3. In law and facts and circumstances of appellants case the Lo CIT (A) has directed AO to make addition on account of net profit on turnover shown book of without appreciating fact that both AO and CIT(A) has not found any discrepancies in books of account maintained by the appellant and same was not subject matter of addition made by A.O. . 4 In law and facts and circumstances of appellant's case, the Ld. CIT (A) has grossly erred in estimating profit @ 17.5% in case of appellant without appreciating the fact even if net profit is required to be estimated, it should be based on purchase of net profit shown in books of accounts which is not found to be incorrect either in assessment proceedings or during search proceedings, 5 The appellant carves leave to add to alter amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 4.1. The Additional Grounds of Appeal raised by the Assessee in IT(SS)A No. 72/Ahd/2018 Asst. Year 2013-14 reads as under: “Appellant craves leave to raise this additional ground of appeal before the Hon'ble ITAT. This is a legal ground and therefore as per the decision of Hon'ble Supreme Court in the case of National Thermal Power (229 ITR 383) it can be raised before the Hon'ble ITAT. 1. Both the lower authorities erred in law and on facts in framing assessment under section 153C r.w.s. 143(3) of the Act ignoring fact that there is no material belonging to assessee was found at the premises of the searched person and accordingly jurisdiction under Section 153C has been wrongly assumed by Assessing Officer. 2. Both the lower authorities erred in law and on facts in framing assessment under section 153C r.w.s. 143(3) of the Act without recording proper satisfaction and accordingly assessment is required to be quashed. It be so held now. I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 8 4.2. The Grounds of Appeal raised by the Revenue in IT(SS)A No. 87/Ahd/2018 for Asst. Year 2013-14 reads as under: “(1) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the protective addition of Rs.3,57,00,000/- made on account of unexplained cash credits. (2) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.33,86,650/- made on account of disallowance of interest on unexplained cash credits. (3) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.1,84,74,713/- made on account of unrecorded sales receipts. (4) It is, therefore, prayed that the order of the Ld.CIT(A)-12, Ahmedabad may be set-aside and that of the A.O. may be restored to the above extent. (5) The appellant craves leave to add, alter, amend and/or withdrawn any ground(s) of appeal either before or during the course of hearing of the appeal.” 5. At the outset, Ld. Senior Counsel appearing for the Assessee submitted in the case of M/s. Heaven Associates -Vs- DCIT in IT[SS]A No.245/Ahd/2017 & others the Co-ordinate Bench of this Tribunal vide order dated 24-03-2023 deleted the net profit rate at 17.5% [as against 16% declared by the on the basis of disclosure made by the assessee in its books of accounts] based on the net profit rate disclosed by other entities in the group before Income Tax Settlement Commission. The other findings given in that case is squarely applicable to facts of the present appeals. 5.1. Ld. Senior Counsel further submitted that that the assessee is not pressing the Additional Grounds raised before this Tribunal. I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 9 Recording the same, the Additional Grounds raised by the assessee is hereby dismissed. 6. Per contra Ld CIT DR appearing for the Revenue supported the orders passed by the Assessing Officer and requested to uphold the additions. 7. We have given our thoughtful consideration and perused the materials available on record including the Paper Books filed by the assessee. During the course of search action carried out in the case of Bafna Panchal Groups on 07-01-2014 wherein the assessee also was covered, no documents were found which could clearly prove that assessee had obtained loan as accommodation entries. While making impugned additions, the Ld AO referred to various statement to other group members and loose papers found during the course of search but same are not pertaining to assessee as discussed by Ld CIT[A] in his order. However the Ld AO at para 5.1 to 5.3 of A.Y. 2013-14 has discussed the documents found from the residence of Shri Sanjay Doshi who is not the partner of the assessee firm and same are relatable to other group concerns being M/s.Shalibhadra Developers, M/s.Dharnindhar Reality, M/s. Sumangal Enterprise, etc hence such loose papers and modus operandi cannot have any locus standi in present case. Similarly, while making addition u/s.68 of the Act, the Ld AO has referred to loose papers pertaining to other concerns to prove that loan taken by assessee is bogus but such loose papers nowhere prove that similar cash payments are made by assessee against loan obtained by it. It is settled legal law that loose papers found during the I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 10 course of search pertains to entities to whom it relates and anything emanating from such loose paper cannot have impact on other transactions carried out by other entities. 7.1. The Ld AO has referred to statement of Shri Sanjay Doshi and scanned loose papers at page 14 to 15 of assessment order but said statement was with reference to loan taken from M/s. Sampda Chemical Limited and such statement has no reference with parties from whom assessee has taken loan. The AO himself has stated that these entries are pertaining to M/s Shalibhadra Developers. Similarly statement of Shri Mahendra Kankaria is with reference to transactions carried out by M/s Shanti Buildcon, M/s Safal Nirmal Pvt. Ltd. etc. The statement of Shri Sandeep U. shah was taken as director of M/s Sumangal Enterprise Pvt. Ltd. who has already filed separate Settlement Petition, hence it has no direct relevance with issue involved in present appeal. 7.2. It is undisputed fact that the assessee has submitted the confirmation of the parties, address, PAN of them, copies of Return of Income, annual accounts, bank statements, etc which clearly prove that the loans have been taken through account payee cheques and the assessee has deducted TDS on interest payment made on such loans. It is further confirmed by Ld CIT[A] that bank statement of depositors clearly prove that funds are given to the assessee and the AO has not proved that sources of such funds were undisclosed income of the assessee. Thus the assessee has discharged its onus cast under section 68 of the Act by proving identity, genuineness and creditworthiness of the loan creditors but I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 11 the AO has failed to bring any direct material on record to prove that parties are shell companies or they have given accommodative entries. The AO has relied on Delhi High Court judgement in the case of CIT -Vs- Nova Promoters & Finance Lease Pvt Ltd, however in the said judgement, the loans taken by said company were accommodative entries and even details of entry providers were also available with the Department, whereas in present case, the AO has not brought anything on record to prove that loans are obtained through entry provider or same is bogus loans. Thus the ratio of said judgement cannot be made applicable in the case of the assessee. 7.3. Further the AO while passing the assessment order has referred to investigation carried out by Kolkata & Ahmedabad Investigation Wings. So far as loan of Rs 20,00,000/- taken from M/s.Bothra Auto Finance, enquiries reveal that summons were issued to said party who has attended the office of Authorised officer on 10/02/2016 and admitted that it had given loan to the assessee. As far as loans received from M/s. Babylon Trading Investment Pvt. Limited for Rs.60,00,000/- and M/s. Ortem Estate Pvt. Limited for Rs.90,00,000/- in A.Y. 2013-14 are concerned, enquiry by Calcutta Income Tax Office states that these companies are operated by entry operators Shri M.L. Nangalia. However, while passing the Assessment Order, the Ld AO has not referred to any specific statement of such party which would prove that the assessee has obtained accommodative entries, whereas the assessee has discharged its onus by submitting evidences as envisaged under Section 68 of the Act. I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 12 7.4. Co-ordinate Bench of this Tribunal in the case of M/s. Heaven Associates [cited supra] deleted the additions made u/s.68 by observing as follows: “… … 38. We have heard both the parties. We have noted that the Id.CIT(A) while deleting the addition on account of unsecured loans, has recorded a finding of the fact that no incriminating material relating to the unsecured loans was found during the course of search. The entire addition was based on investigation made by the AO, in which the concerned parties had not responded or were not found to have existed, As noted above by us also, as per the Revenue's inquiry and investigation, it was unaccounted sale receipts/on money on sale of flats which was routed back into the group-companies including the assessee by way of accommodation entries of unsecured loans from sham entities. The issue of unaccounted sales has been adjudicated first by us and we have held no merit in the addition made on this count in the hands of the assessee for both the years. Coupled with the same is the fact that the in relation to the impugned unsecured loans no incriminating material was found during search at the assesses premises. Identical addition of alleged accommodation entries of unsecured loans in the preceding year, was deleted by the Ld.CIT(A) in the absence of any incriminating material justifying the validity of assessment made which finding of the Ld.CIT(A) has not been challenged by the Revenue before us in the preceding year as noted at para-22 & 23 of our order above. 39. Clearly the very basis with the Department of unsecured loans being bogus accommodation entry for unaccounted sales of the assessee no longer survives, on the addition made of unaccounted sales being deleted by us above. And added to it the fact that no material was found during search evidencing the Revenues stand. The finding of the AO that the unsecured loans were bogus accommodation entries is based merely on surmises and conjectures and is not sustainable more particularly when the assessee has been found by the Ld.CIT(A) to discharge its onus of proving the genuineness of the transactions. The Ld.CIT(A), we find, noted that the assessee had filed all evidences to prove genuineness of the transaction. With regard I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 13 to the unsecured loans taken by the assessee in Asst. Year 2014-15 from Vansh Glass P.Ltd. the Ld.CIT(A) has recorded a categorical finding of the fact that this amount was offered for settlement by Param Enterprise, an entity of the group searched. The above factual finding of the ld.CIT(A) have not been controverted by the Ld.DR before us. Therefore we are in complete agreement with the Ld.CIT(A) that there was no basis or material with the AO for treating the unsecured loans of the assessee as being accommodation entries. 40. In view of the above, we do not find any infirmity in the order of the Ld.CIT(A) deleting the additions on account of unsecured loans. As a consequence, the disallowance made of interest paid on unsecured loans by the AO, deleted by the Ld.CIT(A), is also upheld. This issue also is decided in favour of the assessee. 7.5. However, the Co-ordinate Bench of this Tribunal in the case of M/s. Heaven Associates [cited supra] has not agreed to the estimating the net profit rate of 17.5% to the turnover disclosed by the assessee in his books of accounts, based on net profit rate disclosed by other entities by observing as follows: “… 43. We are not agreement with the Ld.CIT(A) for estimating the net profit of the assessee by application of net profit rate of 17.5% to the turnover disclosed by the assessee in his books of accounts, based on net profit rate disclosed by other entities in the group to the Settlement Commission. An estimated net profit rate was applicable only in the circumstances where books of accounts of the assessee were found to be not reliable and rejected by the Department. In the present case, both the Ld.CIT(A) and even ITAT have found no infirmity in the books of accounts of the assessee. All additions made by the AO on account of unsecured loans or unaccounted sale consideration have been deleted both by the CIT(A), and his order has been upheld by us above in the earlier part of this order. Therefore, no infirmity found in the books of accounts of the assessee. In the absence of any infirmity there is no reason I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 14 to reject book results and estimate net profit rate. Accordingly, net profit applied at the rate of 17.5% of the turnover disclosed in the books of the assessee, is held to be untenable in law, and addition made on account of the same is directed to be deleted in both the years. The assessee's appeal in both the years is accordingly allowed. 44. This issue also stands decided in favour of the assessee.” 7.6. Respectfully following the above decision of the co-ordinate Bench which is squarely applicable to the present case of the assessee [being a common search case] the additions made by the Ld. AO are not sustainable in law and directed to be deleted. 8. In the result, the appeals filed by the Assessee in IT(SS)A No. 72/Ahd/2018 & ITA No. 648/Ahd/2018 are partly allowed. 9. Regarding Revenue’s Grounds of Appeal namely Ld. CIT(A) erred in deleting the additions made on account of unrecorded sale receipts. This issue is also covered in favour of the assessee by the decision rendered by the Co-ordinate Bench of this Tribunal in the case of M/s. Heaven Associates (cited supra) by observing as follows: “28. We find that in the preceding year also, i.e. A.Y 2012-13, the basis for making addition of unaccounted sales/on-money was the same, i.e. statement of key person of another entity of the group and document found during search on the assessee. All these were found to be not constituting incriminating material by the Ld.CIT(A) in the preceding year, which finding was not challenged by the Revenue before us in its appeal for the said year in IT(SS) No.245/Ahd/2017 as noted at para-10 & 11 of our order above. Therefore it follows that the same evidences are not incriminating material for the impugned years before us also. 29. Even otherwise, leave aside the document found during search on assessee, all other evidences are in relation to other group entities, be it the admission of Shri Sanjay Jogi who admitted to units being sold I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 15 at the rate of Rs.2000/- per sq. feet in the entity in which he was key person, i.e. Lupin Enterprise and categorically denied anything to do with the assessee. So also the information with the AO that other entities in the group were also following similar modus operandi of taking on money in cash on sale of flats which was unaccounted in their books of accounts. The AO has extended this modus operandi as being followed by the assessee also, this despite the fact that search on the assessee revealed nothing to this effect. The department having taken the extreme action of invading the privacy of the assessee, searched its premises and found nothing, there remains no scope thereafter of presumption of any sort. 30. As for the document found during search, we find merit in the finding of the Ld.CIT(A) that the assesses explanation that it related to quotation of lifts proposed to be purchased by it appears more plausible. As noted above by us, this finding of the Ld.CIT(A) in the preceding year was not challenged by the Revenue before us. Even otherwise, as rightly pointed out by the Ld.CIT(A), the documents mentioned '0.7 m/'s, 1 m/s' as also original offer, 1st, 2nd and final revised offers, which lend more credence to the assesses explanation that 0.7 m/s and 1m/s' represented speed of lifts and different revised offers related to different quotations for the lifts, as opposed to the AO who ignored these details and read the document in part only and found it as relating to the sale price of the units sold by the assessee. The assessee's explanation, we agree with the Ld.CIT(A), is more plausible than that the AO, and for the said reasons, we agree with the Ld.CIT(A) that the document had nothing to do with the units sold by the assessee. 31. Moreover, the basis adopted by the AO for computing the undisclosed sale by taking Rs.2000/- per sq.meter as average sale price of the each unit is not correct, more particularly, in the absence of any incriminating material indicating this rate to be correct rate. The AO, we find, inferred from the details submitted by the assessee that the unit sold during the year, showed large variance in the rate of sale of different units during year, which variance was not justified by the assessee. According to the AO, there was no reason for such variation in the sale price of the units in the year itself, and therefore, he presumed that the all the units must have been sold at the same average rate of Rs.2000/- per sq.feet. 32. We do not find any justification in the same. The entire basis of the AO was based on the presumption and conjectures, and the addition therefore was not justified more particularly, when no incriminating material in relation to undisclosed sale was found during the search. I.T(SS(A Nos. 72 & 87/Ahd/2018 and Ors. A.Ys. 2013-14 & 2014-15 Page No Farmville Enterprise Vs. DCIT 16 Therefore, we completely agree with the Ld.CIT(A) that the addition made on account of undisclosed sale receipts was totally unjustified. The deletion of addition made by the Ld.CIT(A) therefore on account of undisclosed sale receipts of Rs.2,12,85,006/- in Asst. Year 2013-14 and Rs.1,10,06,379/ in Asst. Year 2014-15 respectively is accordingly upheld, and this issue is therefore decided in favour of the assessee. This issue accordingly is decided in favour of the assessee.” 9.1. Respectfully following the above decision, the appeal filed by the Revenue is hereby dismissed. 10. In the result, the appeals filed by the Revenue in IT(SS)A No. 87/Ahd/2018 & ITA No. 717/Ahd/2018 are hereby dismissed. Order pronounced in the open court on 07-01-2025 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 07/01/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 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 "