Tribunal decision: Revenue appeal partially allowed, adjustments for 'Earth 12' and 'Earth Errita' projects.

The Tribunal partially allowed the Revenue's appeal, reinstating the addition of Rs. 28 Lakhs for the 'Earth 12' project but confirming the deletion of Rs. 42 Lakhs for Flat No. 101. In the 'Earth Errita' project, the Tribunal upheld the deletion of Rs. 4 Lakhs but remanded the issue of Rs. 1.30 crores for further examination by the CIT(A).

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Issues Involved:
1. Deletion of addition of Rs. 70,00,000/- being on-money received by the company from the sale of flats.
2. Deletion of addition of Rs. 1.34 crores being on-money received by the company from the sale of 2 bungalows.

Issue-Wise Detailed Analysis:

1. Deletion of addition of Rs. 70,00,000/- being on-money received by the company from the sale of flats:

The Revenue challenged the CIT(A)'s decision to reverse the AO's addition of Rs. 70,00,000/- as on-money received from the sale of flats in the 'Earth 12' project. The AO based the addition on a statement made by the Director during a survey under section 133A, where it was admitted that on-money of Rs. 42 Lakhs per flat was received. The AO found discrepancies in the assessee's subsequent claims, which suggested that on-money was received at Rs. 35 Lakhs for eight flats and Rs. 42 Lakhs for three flats, with one flat's booking being canceled and re-booked later without on-money.

The CIT(A) deleted the addition, noting that the AO's reliance on the Director's statement was misplaced, as it was not corroborated by independent evidence. The CIT(A) observed that the statement was incoherent and contradictory, and the AO did not conduct further investigation to substantiate the addition. The CIT(A) accepted the assessee's explanation that on-money was received at Rs. 35 Lakhs per flat, not Rs. 42 Lakhs, and that the booking of Flat No. 101 was canceled and re-booked at a later date without on-money.

The Tribunal partially agreed with the CIT(A), confirming the deletion of Rs. 42 Lakhs for Flat No. 101 but reinstating the addition of Rs. 28 Lakhs for the four flats where on-money was understated. The Tribunal found that the Director's initial statement about receiving Rs. 42 Lakhs on average was credible and that the assessee's later revision lacked corroboration.

2. Deletion of addition of Rs. 1.34 crores being on-money received by the company from the sale of 2 bungalows:

The Revenue also contested the CIT(A)'s reversal of the AO's addition of Rs. 1.34 crores as on-money from the sale of two bungalows in the 'Earth Errita' project. The AO's addition was based on the Director's admission during the survey that on-money of Rs. 65 Lakhs per bungalow was received for six bungalows, totaling Rs. 3.90 crores for the FY 2011-12. However, the assessee only declared Rs. 2.56 crores for four bungalows in the return.

The CIT(A) accepted the assessee's explanation that the remaining Rs. 1.30 crores was included in the income for AY 2013-14, supported by evidence from the IT return for that year. Additionally, the CIT(A) accepted the assessee's claim of short receipt of Rs. 4 Lakhs due to concessions given for two bungalows.

The Tribunal found merit in the CIT(A)'s acceptance of the short receipt of Rs. 4 Lakhs but remanded the issue of the Rs. 1.30 crores addition back to the CIT(A) for further examination. The Tribunal noted that the CIT(A) did not fully investigate whether the on-money for the remaining six bungalows was properly accounted for in subsequent years. The Tribunal emphasized the need for a thorough examination of the facts to determine the correct assessment year for the on-money.

Conclusion:

The Tribunal partially allowed the Revenue's appeal. It reinstated the addition of Rs. 28 Lakhs for the 'Earth 12' project while confirming the deletion of Rs. 42 Lakhs for Flat No. 101. For the 'Earth Errita' project, the Tribunal upheld the deletion of Rs. 4 Lakhs but remanded the issue of Rs. 1.30 crores for further examination by the CIT(A).

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