TaxTMI 
TaxTMI 
2014 (3) TMI 71
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....see filed a return of income for A.Y. 2008-09 at Rs. 4,63,44,560/- on 31-3-2009. 2.1. During the course of said search and seizure operations the premises of the cashier of the group one Shri N.D. Mishra was also covered. His statement on oath was recorded on 12-9-2007 in which Shri Mishra confirmed that on telephonic directions of Shri Rajeev Gupta and Shri Pawan Guwas received, which was used to be disbursed as per the directions of Shri Jeewan Dhingra, who is part of this group. It was also deposed that in respect of these cash transactions, no books were written by him. From the documents seized, it was found that the assessee had sold many shops in Shalimar Bagh Mall and the papers seized included shop- wise on money receipt details which were written in hand along with dates and cash received. Subsequently, there was a fire in Income-tax department's premises and some papers were destroyed. Therefore, the statement of Shri N.D. Mishra was re-recorded u/s 131 where he ratified the above statement made on 12-9-2007 and confirmed the photo copies of these seized papers. The said shop-wise list of on money cash received is reproduced by the AO in his order. Thereafter the ....
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....ssociate companies, subsidiaries, firms, individuals etc. since copies of the documents etc. seized/ impounded by the Income tax Department under section 132 and 133A of the Income tax Act, 1961 have nto been received by us. 15 Total 65 7. The presence of documents and the consequent authentication of the same by the cashier of the Emaar MGF group which ultimately resulted in admission of Rs. 10 crore additional income in the hands of the assessee is conclusive of the presumption that cash/on-money has been received in respect of sale of shops in Shalimar Bagh Mall and the above cash has not been recorded in the books of the assessee. The treatment of the above cash as advance from customers by the assessee in its return of income raises a moot question relating to the treatment of on-money in the books of the assessee and its taxability. 7.1 Before the central question is addressed it shall not be out of place to throw some light on the prevailing business practices on receiving/giving of cash as consideration in addition/contradistinction to cheque/draft as payments. On money payment in commercial projects is all pervasive. In fact, it is considered as one of the m....
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....that either cash has been received out of books or undue advantage has been passed to the sister concern of the assessee. evidence was found during the search regarding the first part of the proposition - cash being received out of books - the same holds good. 9. The statement of Shri Sharvan Gupta was recorded u/s. 132(4) of the Income Tax Act. The evidentiary value of a statement recorded on oath can only be rebutted by bringing into record compelling documents, otherwise the presumption of truth in favour of averments made in the statements stands. In the case at hand, nothing has been brought on record which can counter the statement of either Sh. N.D. Mishra or Sh. Sharvan Gupta relating to the contents of the typed sheet found during the search. 2.2. It shall be pertinent to mention that in the return of income filed u/s 153C, assessee deviated from surrender of additional income of Rs. 10 crores. It was claimed that assessee was following percentage completion method and since 57.65% of work was completed, the assessee offered only 57.65% of the on money received as income amounting to Rs. 4.605 crores. Curiously at the same time assessee entered an amount of Rs. 10 cr....
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....f cash receipts / on money was sale of shops, therefore, nature of cash receipts is nothing but consideration received on sale of shops, though the same was not disclosed. Had there been no sale of shops, there would not have been any cash receipts. The decision in the case of ITO v. Dr. Koshy George referred to in the submissions is squarely applicable to the facts of present case. The reasons, such as, undue advantage to group company and that the cash component was not part of budgeted exercise cannot imprint different colour to the nature of cash receipt. Once the source of receipts is traceable, the same cannot be ignored, simply for the reason tha the cash receipts were surrendered. On surrender of any income, the nature of income does not change. The Assessing officer has given no cogent reason to bring to tax th4e amount surrendered as such. Surrender of Rs. 10,00,00,000/- was ad hoc and was made without being alive to the factual position based on system of accounting. Therefore, simply on the basis of surrender, the entire amount of cash receipts of Rs. 10 cr. Cannot be brought to tax as income for the assessment year in question and that too as income from other sourc....
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....come in its books of accounts. It clearly offered only Rs. 4.605 crores in computation of income on percentage completion method. Thus, the assessee ought not to have credited cash of Rs. 10 crores in books of accounts, as this cash was never available with assessee. CIT(A) without appreciating these crucial facts and being oblivious of the impact of the fact of unjustified credit of Rs. 10 crores in books of accounts went ahead to give the relief. (iii) It is pleaded that it is a workmanship of clandestine working by the assessee to camouflage the transaction and derive undue benefits of - (a) crediting 10 crores in books of accounts; and (b) instead of offering Rs. 10 crores as additional income declared only Rs. 4,63,44,560/-. Besides, there is no available cash to be entered in the accounts by book entries. Thus, in real terms the cash which was already spent could have never been recorded by the assessee in its books of accounts. Thus, apart from the income offered on the basis of voluntary declaration of income which is not disputed by the assessee, the credited amount of Rs. 10 croers entered in accounts also deserves to be taxed. 3.1. Ld. CIT(DR) vehemently argues tha....
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....ble, in that situation how the entry of Rs. 10 crores is made in the books of account? 4.2. In real terms it means that the assessee on one hand declared the income of Rs. 4,63,44,560/- against the declared income of Rs. 10 crores. Besides the cash of Rs. 10 crores being available, the assessee has some how entered in the books of accounts an entry of Rs. 10 crores. The team of assessee's representatives, could not give a satisfactory reply to these pertinent queries before us. Thus the relevant question and queries remain unanswered at the time of hearing. 4.3. On merits, ld. Counsel for the assessee contends that it is not disputed that assessee is following percentage completion method. In this situation 'on money' earned by the assessee towards the sale price is to be logically taxed on the percentage completion method. Since the sale proceeds including on money are to be taxed on the percentage completion method i.e. to the extent of 57.65%, which is shown by the assessee. The addition deleted by the CIT(A) is justified. In support, further reliance is placed on the orders of ITAT in the cases of ITO Vs. Dr. Koshy George 190 Taxman 4 (Coch.)(Mag.); and Dhanva....