TaxTMI 
TaxTMI 
2019 (3) TMI 631
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....al justice. 2. That there is no justification either in law or on facts for the Ld. CIT(A) in sustaining the entire addition of Rs. 96,76,800/- as alleged on money received by the assessee. The determination of the said amount of Rs. 96,76,800/- is arbitrary and presumptuous. 3. That in any event the Ld. CIT(A) was not justified in sustaining the entire addition of Rs. 96,76,800/- without computing the element of actual profit and deduction of expenses therein and without considering the relevant judicial matrix cited before the CIT(A) in the matter of CIT v. Balchand Ajit Kumar 263 ITR 610 (MP). j' 4. That without prejudice to the aforesaid grounds, cumulative effect of Income offered in the return of income filed U/s 153A of the Act by the group plus the income offered for tax before the settlement commission by the group plus the income added in the hands of group entities and finally sustained should have been considered to arrive at a holistic picture of undisclosed income and if this is done then there would remain no amount which can be added." Assessment Year 2010-11 "1. That the Ld. CIT(A) has erred in law and on facts in no....
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....ix cited before the CIT(A) in the matter of (IT v. Balchand Ajit Kumar 263 ITR 610 (MP). 4. That the Ld. CIT(A) was not justified either in law or on facts in sustaining the addition of Rs. 14,40,000/- made by the Ld. AO u/s 40A(3). 5. That without prejudice to the aforesaid grounds, cumulative effect of Income offered in the return of income filed U/s 153A of the Act by the group plus the income offered for tax before the settlement commission by the group plus the income added in the hands of group entities and finally sustained should have been considered to arrive at a holistic picture of undisclosed income and if this is done then there would remain no amount which can be added." 2. As the issues raised in these appeals are common, they are heard together and are being disposed off by this common order for the sake of convenience and brevity. 3. Brief facts of the case as culled out from the records are that the assessee company is engaged in the business of real estate. It filed return of income for the Assessment Years 2009-10 to 2011-12 declaring income at Rs. 6,69,950/-, Rs. 66,31,440/- and Rs. 65,14,440/- respectively. Search & Seizure operations u....
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....re the ld. CIT(A) but could not succeed, as Ld. CIT(A) took the basis of the submissions made by the assessee before Income Tax Settlement Commission in which the assessee made discloser of the unaccounted "On-Money" received on the sale of plots. 9. Now the assessee is in appeal before the Tribunal. 10. Ld. counsel for the assessee submitted that the Assessing Officer has picked up the figures of gross "on-money" from the settlement application filed by the appellant. However, in the settlement application the appellant had given a detailed note about the availability of "on-money", the nature of expenses incurred therefrom and the net resultant income calculated @25% of gross receipts. However, the Ld. AO while accepting the figure of gross "On-Money" as given in the SOF before the settlement commission has completely ignored the claim for expenses made by the appellant in that very SOF. A declaration cannot be accepted partly and rejected partlyand such an approach is erroneous and without any judicial basis. 11. Ld. Counsel for the Assessee relied on following judgments; (i) CIT V/s Balchand Ajit Kumar (2003) 263 ITR 0610 (HC MP) (ii) CIT V/s Prime De....
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....eipt of on-money is a regular practice. It is also well evidenced by various documentary evidences found during the search which shows that applicant has been receiving onmoney in its all of its projects whether they are on self owned land or on third parties land under a joint-development agreement and accounting for it through the modus operandi of small denomination cheques. It is also seen that Garha group too has admitted that it has been receiving on-money in its various projects including the Golf-Green project. During the search of Garha group too incriminating material to this effect was found as a consequence of which the Garha Group made a substantial disclosure of income before the investigation wing. In view of these facts. It seems highly unrealistic that when a plot of land/flat is being sold by one partner at a much higher amount than that mentioned in the conveyance deed, similar plot/flat in the same project would be sold by the other partner for a consideration equivalent only to the rate mentioned in the conveyance deed. The argument that the applicant did not have to carry out much of infrastructure development activity in the Golf Green Project as compared to ....
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.... "we are in respectful agreement with the aforesaid opinion in as much as the total sale cannot be regarded as the profit of the assessee. The net profit rate has to be adapted and once a net profit rate is adopted, it cannot be said that there is perversity of approach. Whether the rate is tow or high, it would depend upon the facts of each case. In the present case net profit rate of five percent has been applied. We do not think it appreciable that the same requires to be enhanced. We are also inclined to think that it is high. In any case, it cannot be said that there has been perversity of approach. 17. Hon'ble Bombay High Court in the Commissioner of Income Tax vs. M/s. Prime Developers ITANo.2452 of 2013- (a) has held that the respondent-assessee is engaged in the business of construction. During the subject assessment year the respondent-assessee undertook construction of a project called Prime Mall. However in its return of income filed for the subject assessment year the respondentassessee did not disclose any profit on its above project as it was following the Project Completion Method. (b) On 20th April, 2006 there was a search on the respondent -assesse....
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....sales turnover of Rs. 11.60 crores in the subject assessment year. (e) The grievance of the Revenue before us is that the adoption of net profit of 17.08% as determined by the Tribunal is not correct. Although the questions as formulated does not state that the adoption of any particular rate of net profit, in submissions it is submitted that it has to be replaced/substituted by 65% as net profit as arrived at by the Assessing Officer. (f) We find that the Revenue seeks to substitute the estimated net profit arrived at by the Tribunal with a new figure of net profit. This without in any manner showing that the estimate arrived at by the Tribunal in the impugned order is perverse. It is a settled position of law that in estimated net profit arrived at by the authorities is a question of fact and if the material on record does support the estimate arrived at by the Tribunal then it does not give rise to any substantial question of law (see CIT vis. Piramal Spinning and Weaving Mills Ltd. 124 ITR 408). In this case, we find that the net profit estimated at 17.08% is a very possible view on the facts found. (c) Hon'ble Supreme Court in Income Tax Officer ....
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.... inclined to hold that in the instant three appeals, addition should be sustained, only to the extent of 25% of the alleged 'On-Money' i.e Rs. 96,76,800/-, Rs. 3,09,80,760/- & Rs. 50,96,575/- which comes to Rs. 24,19,200/- Rs. 77,45,190/- & Rs. 12,74,144/- for A.Ys. 2009-10 to 2001-12, respectively. 19. In the result, this common issue raised in Ground No.2 & 3 of the assessee's appeal for A.Y. 2009-10 to 2011-12 is partly allowed. 20. Now we take up Ground No.4 for A.Y. 2010-11 wherein addition u/s 69 of the Act has been made for unaccounted payment for purchase of land. 21. Brief fact relating to this issue is that during the examination of working copies of hard drives found from the office of the assessee company during search in one of the excel sheet in the name of Pumarth Parth /Thakur Family details of cash payment made to Thakur family as on 05.12.2009 was found, as per which cash payment of Rs. 1,30,53,000/- was given as unaccounted money towards purchase of land. In the very same sheet details of payment by cheque totalling to Rs. 3.75 crores was also found. Addition for this unaccounted payment of Rs. 1,30,53,000/- was made and the assessee could not succeed in....
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....trovert this fact. Certainly, the assessee deserves telescoping benefit of the On-Money received against On-money paid. We are of the considered view that the revenue authorities ought to appreciate the documents seized in connection to Pumarth Project in entirety. 24. Hon'ble Gujarat High Court in Commissioner Income Tax -III v. Tirupati Construction Co. 230 Taxman 198 (Gujarat) "7. At the outset, it is required to be noted that, while appreciating a document, it is required to be considered in its entirety and it cannot be considered in part. In the case on hand, while appreciating the papers / documents, which according to the Assessing Officer, contained accounted and unaccounted transactions on the part of the Respondent-assessee, she not only failed to examine it properly but also failed in assessing the income as per law. Further, though, the AO, herself, had prepared the account of profit and loss in respect of accounted and unaccounted entries, she did not assign any reason, as to why the profit and loss account of unaccounted transactions of the Respondent-assessee cannot be believed to be true. Moreover, the AO also did not take into consideration the exp....