TaxTMI 
TaxTMI 
2017 (12) TMI 1216
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....he projects, hence on money is to be taxed in the year of completion of the relevant project from where the same has been earned . 3) On the facts and circumstances of the case as well as in Law, Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in an addition of Rs. 12,04,18,428/- as allegedly lower income on project completed, without considering the facts and circumstances of the case. 4) On the facts and circumstances of the case as well as in Law, Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in not appreciating the fact that the profits offered to tax during the course of the search action were merely estimated profits for the project." 2. Ground no.1 relates to the addition of Rs. 63,39,52,372/- alleging on money received on sale of flats. The brief facts of the case are that there had been search and seizure action u/s. 132 of the Ac,t on 17.11.2014, in the case of Runwal Group and assessee being the group company was also covered in the search action. The assessee filed its return on 31.10.2015 declaring total income of Rs. 13,48,82,480/-, which was revised to Rs. 13,45,71,200/- on 07.07.201....
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....additional income in the various concerns as detailed below: Particulars of sold premises / projects Name of the assessee in whose name such income is offered Additional income so offered (In Rs.) Financial year in which income is arising or accruing Runwal Anthurium - Shops Runwal Developers Pvt, Ltd. 7,36,15,000 2013-14 1,32,40,000 2014-15 R Square Runwal Developers Pvt. Ltd, 70,00,000 2014-15 Rynwal Anthurium residential premises Runwal Developers Pvt Ltd. 6,69,62,205 2014-15 Runwal Anthurium - flat No. T3-3101 & T3-3104 of Ramona in relation to which specific instances have been quoted by your goodself in the forgoing para of statement Runwal Developers Pvt. Ltd. 1.25,06,000 2014-15 Elegante Runwal Projects Pvt. Ltd. 18,82,59,020 2014-15 Olive Subhash Runwal 1,20,85,030 2014-15 Runwal Symphony Runwal Developers Pvt. Ltd. 70,00,000 2014-15 Total 38,06,61,255 It was also noted by the Assessing Officer that during the course of search action certain print out data was seized from the head office of the assessee, which contains most ....
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....4 2.38 184 12 T5 3602 27/09/2014 3.01 2.37 13 Galleria 21 31/03/2014 2.04 1.8 14 T8 2303 01/11/2014 2.74 2.59 15 Chestnut 1403 08/02/2014 1.55 1.54 16 T1 3301 01/10/2014 1.64 1.25 17 T7 3301 30/10/2014 1.57 1.71 18 17 3401 30/10/2014 1.57 1.72 19 T6 1303 25/10/2014 4.36 4.6 20 T8 1201 21/10/2014 2.48 2.35 21 T7 702 06/04/2014 2.74 2.59 22 T4 3501 20/08/2014 2.83 2.68 23 T1 2904 22/04/2014 2.18 2.06 24 T2 3306 08/11/2014 1.64 1.67 25 T2 3406 28/10/2014 1.64 1.05 26 T2 3S01 20/04/2014 1.64 1.45 I 27 T2 3502 20/04/2014 1,64 1.45 28 T4 3604 09/04/2014 3,17 3 29 T8 3S01 22/08/2014 2.47 1.9 30 T3 801 15/06/2014 1.99 1.45 31 Olive 1402 19/07/2014 1.43 1.11 32 Chestnut 504 07/02/2014 1.46 1.46 33 T3 3506 07/12/2014 2.47 1.98 34 T3....
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....ited, is Rs. 63,39,52,372/-Please confirm ? Ans: Sir, due to reasons mention above I confirm the amount of Rs. 63,30,52,372/- (which as per Annexure-1), as the on money accepted in the projects Runwal Green (M/s. Runwal Homes Private Limited), and the same has been offered as additional income over and above the income declared in the M/s. Runwal Homes Private Limited, Here I want to state that Olive project is under the proprietorship of Mr. Subhash Runwal." Since Shri Subodh Runwal has agreed to declare a sum of Rs. 63,39,52,372/- as detailed below, the Assessing Officer added the sum to the income of the assessee, which was confirmed by the CIT(A). Offered during the year in revised return 1 Project namely Chestnut (Single Building) Rs.72,50,000/- 2- Project namely Runwal Greens Towers -1,2 & 3 and Commercial Rs.31, 14,02,412/- 3 Project namely Runwal Greens Towers - 4, 5, 6, 7 & 8 Rs.31,52,99,960/- Rs.63,39,52,372/- TOTAL: Rs.63,39,52,372/- 4. The learned AR, before us, vehemently contended that the addition has been made by the Assessing Officer merely on....
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....project Work-in-progress on the asset side of the balance sheet. Only at the time of completion of the project, both these items are recognized as Incomes and Expenses respectively and project profits are offered for taxation. Our attention was drawn towards the decision of Hon'ble Supreme Court in the case of CIT vs. Bilahari Investments (P) Ltd. 299 ITR 1 (SC)., wherein it was held that recognition/identification of income under the Act, is attainable by several methods of accounting and that project completion method is one such acceptable method. Thus, the assessee cannot follow mixed method of accounting, it has to strictly adhere to the method it has adopted and is consistently following. 5. So far as project Runwal Green Towers 1, 2, 3 and Commercial are concerned, they were completed in A.Y. 2017-18 and, therefore, no question of assessing income during the impugned assessment year arise. Our attention was drawn towards the occupation certificates of this project, which was received during the A.Y. 2017-18. In respect of another project viz. Runwal Green Tower 4, 5, 6, 7 and 8 it was vehemently submitted that this project was also not completed during the impugned assess....
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.... also drawn to page 443, which clearly shows that the assessee has given discount on various flats booked and, therefore, it was contended that the addition confirmed by the CIT(A) must not be sustained. Our attention was drawn towards the details of booking done from the period March 2014 to November 2014, found during the search evidencing some cases of accepting cash recorded in the seized documents and when the same was confronted to the Director of the Assessee, he submitted that generally the group, as a policy matter, did not accept cash but in few cases, they accommodated the customer due to market situation. The Revenue later on estimated the cash portion on all units booked during the period Jan 2014 till the date of search taking highest rate of sale of all units even for which there was no evidence found during the course of search. It was vehemently contended that on the basis of the seized material, on money in respect of the flat were Rs. 13,44,68,725/- while in respect of shops it were Rs. 6,50,10,096/- whereas the Assessing Officer has estimated it at Rs. 33,47,33,101 and 9,97,40450/- respectively. While estimating the on money for the flat the Assessing Officer ha....
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....ctly. The search team has verified the seized material and compared the total revenue mentioned therein with the agreement value and worked out on money accepted by the assessee in each case. In the seized material total revenue worked out considering flat value, club charges, infrastructural charges etc., whereas while comparing such value with the agreement only flat value is considered by the department and the recovery from customer consisting of legal, club charges, share application money, maintenance charges, development charges, formation charges, infrastructure charges, MSEB charges, which are duly recorded in the books of account were ignored by the Assessing Officer. Therefore the on money received by the assessee worked out on the basis of the seized material is not correct to that extent. The brief details in this regard were given as under: Particulars Total Revenue as per seize material Total revenue as recorded in the books Difference (A-B) On-money worked out by AO Excess onmoney worked out by AO (D-C) A B C D E For 36 flats 8254,10,000 7201,25,562 1052,84,438 1344,68,725 291,84,287 For 10 Shops 205....
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....f any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged unaccounted sales, the finding of the Tribunal that only the GP on the said amount can be brought to tax does not call for any interference. Deputy Commissioner Of Income Tax Vs. Panna Corporation (2012)74DTR 0089 (Guj), In view of the legal position that not the entire receipts, but the profit element embedded in such receipts can be brought to tax, no interference is called for in the decision of the Tribunal accepting such element of profit at Rs. 26 lakhs out of total undisclosed receipt of Rs. 62 lakhs. Commissioner Of Income Tax Vs. President Industries (2002) 258 ITR 0654 (Guj) In the absence of any finding or material that there was suppression of investment in acquiring the goods which are subject of undisclosed sales, Tribunal was justified in holding that entire undisclosed sales could not be added as income of assessee but addition could be made only to the extent of estimated profits embedded in sales for which net profit rate was adopted. 6. The learned DR, on the other hand, drew our attention towards the order of the....
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....00/- Therefore, the addition of Rs. 72,50,000/- has to be confirmed and, accordingly, we confirm the said addition of Rs. 72,50,000/-.The assessee has also included the said amount in its revised computation and paid taxes thereon on 27.12.2016. 8. Now coming to the other addition included in the sum of Rs. 63,39,52,372/-. The following additions were made by the Assessing Officer - 1 Project namely Runwal Greens Towers -1,2 & 3 and Commercial Rs. 31, 14,02,412/- 2 Project namely Runwal Greens Towers - 4, 5, 6, 7 & 8 Rs. 31,52,99,960/- Total Rs. 63,39,52,372/- It is not disputed that the on-money on the basis of the seized material received by the assessee comes to Rs. 19,94,78,821/-out of which the addition of Rs. 72,50,000/- has already been confirmed by us and has been duly taken in to account by the assessee in the revised computation of income submitted by the assessee during the course of hearing before the Assessing Officer and on which the assessee has duly paid the tax. Now the question before us remains to the disputed addition amounting to Rs. 62,67,02,372/- The total onmoney on the basis of the seized material found during t....
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....that in all the cases cash has been accepted by me over and above the agreement value. But to avoid protracted litigations with the department and to buy peace I accept the difference appearing in the chart beginning from 1st January 2014 till date as my additional income over and above the regular income for the respective years as on- money (Cash received over and above the agreement value), I am submitting the working marked as Annexure~1 to this statement which has two pages. Q.18 As per the working submitted as part of annexure to answer to question number 16, the amount of on money accepted in the project namely Runwal Greens (M/s Runwal Homes Private Limited}, is Rs. 63,39,52,372/- Please confirm ? Ans; Sir, due to reasons mention above I confirm the amount of Rs. 63,39,52.372A (which as per Annexure-1), as the on money accepted in the projects Runwal Green (M/s. Runwal Homes Private Limited), and the same has been offered as additional income over and above the income declared in the M/s. Runwal Homes Private Limited. Here / want to state that Olive project is under the proprietorship of Mr. Subhash Runwal." We have gone through the answer to question n....
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....earned DR even though he has vehemently relied on the order of the Assessing Officer as well as the statement of the Director of the company, which may prove that the assessee has received consideration @15750/- per sq. ft for flats and @26000/- per sq. ft. for shops. There has been search and seizure in the case of the assessee. If the assessee would have received consideration much more than what is stated in the documents, for which no evidence is found during the course of search, in our opinion, no addition can be sustained. There cannot be any agreement against the statute. The assessee agreed for declaration of the income for which no material was found merely to avoid protracted litigations with the department and buy peace. The assessee has earned income; the onus is on the Revenue to prove that the income has accrued to the assessee. Even otherwise also since there has been a search in the case of the assessee, if the assessee would have earned such income there must have been some evidence found that either the assessee has made investment outside the books of account or has spend this income in one way or the other. Income tax is leviable u/s. 4 of the I.T Act on the re....
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....ats have been booked from Rs. 12,068/- to Rs. 16,746/- per sq. ft. The bookings have been done at different rates as has been found from the documents found during the course of the search. The Assessing Officer worked out the difference between the consideration agreed and the apparent consideration mentioned in the documents and added the same in the income of the assessee. It is not denied that the material in respect of on-money received by the assessee was found during the course of the search. It is also not denied that the Assessing Officer has worked out the difference between the amount at which the unit has been booked and the value stated in the seized document. In addition to the value stated in the seized document, it is not denied that the assessee has received charges in addition to the base rate towards floor rise, garden facing, club charges, infrastructure etc. While working out difference, in our view, the Assessing Officer should have also taken into account various amounts received by the assessee towards floor rise, garden facing, club charges etc., and added it to the apparent consideration. The assessee in this regard before us submitted a chart giving the c....
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....e assessee tried to argue that the facts involved are same and in this regard drew out attention towards the papers found during the course of the search, from which is apparent that the assessee has refunded a sum of Rs. 60 lacs as compensation in cash to the concerned party. We have gone through the seized material. We do not find from the material seized the assessee has paid compensation. The document only talks of refund of money. There may be a case the assessee might have received on-money and would have refunded it. In our opinion, the onus is on the assessee to prove that the assessee has incurred expenditure for earning of the on-money. It is case where the consideration has been suppressed. It is not a case where the assessee has incurred the expenditure for the construction outside the books of account and sold flats outside the books of account. If the assessee is claiming any expenditure onus is on the assessee to prove that he has incurred the expenditure. There had been search in the case of the assessee and he could not bring to our knowledge any cogent material or evidence, which may prove that the assessee incurred any expenditure for earning on-money. We are of ....
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.... (SB)(Mum); ITO vs. Panchvati Developers 115 TTJ 139 (Mum) and that of JCIT vs. K Raheja (P) Ltd. 102 ITD 314 (Mum), we delete the addition during the impugned assessment year and direct the AO to make the addition in respect of these on-money in the respect assessment years in which the projects have been completed. Thus, ground 1 taken by the assessee is partly allowed, while ground no.2 is allowed. 11. Ground nos. 3 & 4 relates to the sustenance of addition of Rs. 12,04,18,428/- made by the Assessing Officer. The brief facts relating to this ground are that during the course of search and seizure action on the assessee group it was noted that number of projects of this group has been completed but still respective assessees have not shown profit for taxation. When the respective groups were confronted, the assessee in respect of its project Runwal Chestnut estimated the profit on the basis of the Estimated Profit & Loss account. For the impugned assessment year, at the time of the search on 17.11.2014, estimated the profit of the project viz. Runwal Chestnut which has been completed during the impugned assessment year at Rs. 25.46 crores in the following manner: Project....
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....me one of flats and for the AY under consideration, the assessee had worked out such income at Rs. 25,46,00,000/-. However, at the time of assessment the assessee took a U-turn and mentioned that his income in the current year was only Rs. 13,41,81,572/- I have considered the argument of the assessee and the facts of the case . From the assessment order it is quite clear that this addition has been made by the AO on the basis of clear cut evidence found during the search and the clear cut admission of assessee at the time of search which is reproduced by the AO in Para 7.2 of the order in respect of different projects. As per this, working of income clearly works out to Rs. 25,46,00,000/- for the year under consideration in respect of completed projects. As the assessee had already offered income of Rs. 13,41,81,572/-, the balance amount of Rs. 12,04,18,428/- was brought to tax. I have considered the facts and arguments of the assessee and found that there is nothing new in the same and the same already stand considered by the AO .The assesse has argued that the construction costs increased from Rs. 33 cr to Rs. 57 cr which has not been sufficiently substantiated by it. Moreover it....
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....as under: Particulars Cost Estimates/ Budgets mentioned in the statement recorded under oath (In Crs.) Actual numbers as per Audited Accounts for the F.Y. 2014-15 (In Crs.) Difference Sales Gross Income 97 106.38 9.38 Unsold Stock Value 1.83 1.18 (0.65) TOTAL 98.83 107.56 8.73 Cost Land Related 24.01 24.16 0.15 Development Cost 9.59 8.34 (1.25) Construction Cost 33.26 57.54 24.28 Admin & Other Costs 0.86 2.67 1.81 Selling & Marketing Exps. 0.19 1.36 1.17 Finance Costs 5.46 0 (5.46) TOTAL COSTS 73.37 94.07 20.70 PROFIT 25.46 13.49 (11.98) This is a case where it is apparent that the declaration of Rs. 25.46 crore as profit from the completed project was merely on the basis of estimate. Reliance was placed before us on the Circular of CBDT dated 10.03.2003, in which the Board has clearly laid down that no attempt should be made to obtain confession as to the undisclosed income and the addition should be made only on the basis of material gathered during the course of search ....
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....1,73,109 sq. ft. (Diff. 30,333 sq. ft.) and area/of podium was increased from 51,262 sq. ft. to 65,980 sq. ft. (Diff. 14,717 sq.ft). This had a cost impact of Rs. 4.97 cr. (Rs.3. 79 cr. +Rs.1.18 cr.) Relevant documentary supporting enclosed. 30, 333 X 1,250/- 14,717 X800/- 4.97 A&B 3 After carrying out excavation works it was found that the strata of the excavated pit is not stable. It was mandatory to stabilize the strata by shore piling. Accordingly the work was awarded to Shivam Pile Foundation. The cost impact was Rs. 1.25 cr. considering cost Contract, Cost of Concrete & Cost of Steel (Rs.0.99 cr. + Rs. 0.20 cr. + Rs. 0.06 cr.) for the said piling work. Relevant documentary supporting enclose 1.25 I 4 Apart from the increase in built up area after the design stage, additional items were required to be incorporated such as: Additional Lift, Service Slab, Utility Slab, Staircase Waist Slab, Casting of tie beams, Staircase at LI 7A lvl, Periphery beams at P4 lvl. - These jobs were awarded to R. S. Enterprises as additional contract and Flower Beds, Deck Slabs & Kitchen Chajjas - - These jobs were 1.55 C&D awarded to Gammon India Li....
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....considered separately now added as per order 0.77 J, WO Cost, 2C3 12 Cost of infra plumbing works was considered approximately after completion of schematic design increased to Rs. 1 . 34 cr. from originally budgeted amount of Rs. 0.60 cr., impact of Rs. 0.74 cr. 0.74 Budget Provision, External development point 3 13 Contingencies were not considered earlier in the budgeted estimates, Rs. 2.83 cr was added for the same, which has since been incurred / provided for. 2.83 Budget Provision Contingencies 14 Cost of misc. works was not considered earlier in the budgeted estimates, now considered as per order which has since been incurred / provided for. 0.25 Budget Provision, Tower Bl 7 15 Cost of club house & swimming pool not considered earlier. These were later incurred thus increasing the cost of the Project by approx. Rs. 1 cr. 0.99 Budget Provision, Ancillary buildings 16 Apart from the above items for which detailed cost impact is given there is cost impact on other items as well as over all area was increased from 2.12 lakhs sq. ft. to 2.39 lakhs sq. ft. The total of this expenditure incurred is Rs. 6.57 cr. (Rs.33.27 c....