AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 844
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.... are verbatim same. Therefore, for the facility of reference we are referring facts from the assessment year 2012-13 as well as assessment year 2015- 16, because Asstt.Year 2012-13 is the first assessment year in this group, and Asstt.Year 2015-16 is the last assessment year. 3. The assessee has filed an application for permission to admit additional grounds. This application was allowed vide order dated 8.1.2020. The grounds were taken up on record for adjudication. Order dated 8.1.2020 reads as under: "08.01.2020 Present : Shri S.N. Soparkar, AR Shri Subhash Bains, CIT-DR Present six cross appeals for the Asstt.Years 2012-13 to 2015-16 came up for hearing. In the Asstt.Year 2012-13, the assessee has filed an application in IT(SS)A.no.289/Ahd./2018 for permission to raise additional grounds of appeal. It has sought to raise the following two grounds: 1. Both the lower authorities erred in law and on facts in framing assessment under section 143(3) r.w.s. 153A ignoring fact that material relied on making addition is found from the premises of third person and addition was made without recording satisfaction in case of third pe....
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.... Sd/- (AM) (JM) WSA  ....
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.... 7 Shaileshbhai J. Jogani 2900 29.00 8 Nikitaben P. Morkhiya 400 4.00 TOTAL 1000 100 The appellant company submits that the shares of said company was purchased by Anushthan Buildcon Pvt. Ltd. in piecemeal from F.Y. 2011-12 to F.Y. 2013-14. Thus, Anushthan Buildcon Pvt. Ltd. is 91.12% holding company of the appellant company. The Directors of the appellant company are as under:- List of directors of Greenfield Reality Pvt. Ltd. is as under:- Sr. No. Name of Director 1 Mr. AshitHaribhaiVora 2 Mr. SanketJitendrabhai Shah 3 Mr. AnkitSureshbhai Shah 4 Mr. DarshitJayeshbhai Shah 5 Mr.BhaveshbhaiLaljibhaiPansuriya 6 Mr. NitinbhaiKalubhai Desai 7 Mr. Karan Pankajbhai Shah The shareholders and directors of Anushthan Buildcon Pvt. Ltd. is as under:- List of directors of Anushthan Buildcon Pvt. Ltd. is as under:- Sr. No. Name of Director 1 Mr. AshitHaribhaiVora '2 Mr. SanketJitendrabhai Shah 3 Mr. AnkitSureshbhai Shah 4 Mr. DarshitJayeshbhai Shah List of shareholders of Anushthan Buildcon Pvt. Ltd. is as under:- Sr. No. N....
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....his project was also launched simultaneously along with the project launched in the case of the appellant company. Further, the booking receipt and other project related expenses in respect of this project were also done simultaneously as in the case of the appellant company. The loose papers found and seized in the course of search action relate to both the projects. 3. Detailed discussion on the Seize Material / Explanation for seized papers The appellant company submits that in the course of search action, loose papers pages no. 1 to 5 of Annexure A-3 & page no. 36, 37, 38, 39, 43, 44, 46, 47 of Annexure A-l and pages 10 to 12 of Annexure A-10 were seized from the residence of Shri Ashit Hirabhai Vora, one of the Directors of the appellant company. The appellant company submits that as per pages 2 & 5 of Annexure A-3, the purchase cost of the land is noted at Rs. 42,68,00,000/- (total land 8220 sq. yards). Further, on page no. 5 of seized annexure A3, the details of amounts collected by the group members towards booking receipts as well as the booking details of the 14 units have been mentioned and noted and also on the same page the land cost of Rs. 4....
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.... Details of booking receipt in cash and expenses from the same for building and developing for Shiv Kartik Enclave scheme at Vesu till 31/03/2013 have been mentioned. On verification of the page the appellant company would like to state that the details of the amount received against the bookings as well as the details of the expenses have been mentioned which clearly reflect the fact that the A.O. has arbitrarily only considered the unaccounted receipt for framing the Assessment orders which is unjustified and bad in law. Page No.43 Details of booking receipts in cash and various expenses incurred on building and developing Shiv Kartik Enclave scheme at Vesu till 18/04/2012. The appellant would like to state the expenses regarding the registration, salary , legal, commission etc have been clearly mentioned and the same justifies that against the uaccounted booking receipts there were unaccounted expenses which have been clearly mentioned in the seize material which also have to be considered by the A.O. Page No.46 Details of various expenses incurred on building and developing Shiv Kartik Enclave scheme at Vesu till 17/....
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....res incurred after purchase of land (as in preceding paras) & that it has offered 8% of profit on total receipts including cash receipts. It has been established in preceding paras that cash of Rs. 22 Crores on purchase of shares was not out of on-money received from customers but contributions from various persons. Further, it has also been established in preceding paras that cash expenses of Rs. 5.97 Crores (subsequent to purchase of land) also were not explained & supported by any evidences. Also, the assessee failed to provide proper evidence to convey the basis for estimating profit at 8% on total receipt of Vesu project. In any case, until & unless assessee provides details (PAN, Name, address etc.) with confirmations from parties to whom payments/expenses have been made out of this unaccounted money, no benefit of deductions can be allowed to assessee. The assessee failed to produce cash book of the project in support of its claim. Without prejudice to above, even if the claim of assessee for expenses is considered, the same is not allowable as per section 40A of the IT Act. 9.1 It is evident from the seized material and submission of the assessee ....
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....eceived cash onmoney of Rs. 66.4 crores. In submissions filed on 27/02/2017, assessee stated that year-wise cash receipt is totaling Rs. 58,76,00,000/-from AY 2012-13 to 2015-16 as under: AY 2012-13 2013-14 2014-15 2015-16 2016-17 Amount of On-money 15,25,00,000 2,50,07,000 11,55,00,000 7,02,75,000 22,43,18,000 Assessee stated that difference between earlier figure of Rs. 66.4 Crores & new figure of Rs. 58.76 crores arise since the earlier figure included cheque receipts also. However, assessee has not given any reconciliation of the same. The above shows that assessee has been changing its stand continuously. Even as per this new stand of assessee, the unaccounted receipt of the assessee for A.Y. 2012-13 comes to Rs. 15,25,00,000/- which is not shown by assessee in its books of accounts and also not offered in return of income. Also, the same is not substantiated with any supportive evidence. On the other hand, the seized documents clearly shows that no project was initiated during AY 2012-13 and assessee had itself shown booking from AY 2014-15 onwards as tabulated above. Since assessee had itself claimed tot....
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.... 5. Submission of the appellant and the assessment order has been carefully considered. Facts of the case in brief are that the appellant filed return of income for AY 2012-13 on 29.09.2012 declaring total income of Rs. Nil. On 4.12.2014, the appellant's business premises was covered under search action u/s. 132 of the Act alongwith "Accommodation entry' provider group of Ahmedabad". At the premises of one of the group person of "Accommodation entry' provider group of Ahmedabad", namely Shri Asit Vora at 5-B, Vasupujya Society, Paldi, Ahmedabad, papers annexurised as page no.1 & 5 of Ann-3 & page no. 36, 37, 38, 39, 43, 44, 46, 47 of Annexure A-1 and pages 10 to 12 of Annexure A-10 were found & seized. In the above mentioned pages, details of "Vesu" Project are mentioned. This project has been under taken by the appellant, therefore, proceedings u/s. 153A of the Act were initiated by issuing notice dated 22.07.2015, which was duly served upon the appellant. Vide letter dated 26.10.2016, the appellant stated that return filed on 29.09.2012 may be considered as return filed in response to notice issued u/s. 153C of the Act. The notice u/s.143(2) dated 26.10....
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....ier with Sales Tax is also partly incorrect. As these expenditure were incurred out of books, thus, all the supplier may not be having TIN etc. On going through the submission of the appellant, it is found that it is contradictory. One side the appellant contended that this figure of Rs. 5,97,76,625/- not represents expenditure in cash which remains unexplained, other side the appellant contended that as these expenditure were unaccounted, therefore, all the suppliers did not have TIN etc. This show that the appellant is not sure about the arguments to be taken to justify the unaccounted expenditure. The contentions of the appellant are contradictory, misleading, therefore, are not reliable, hence rejected. However, if the unaccounted income from this project is to be determined on the basis of all unaccounted cash receipts and all the expenditure' including the unexplained expenditure incurred in cash has been taken care of while determining the unaccounted income from this project, as mentioned in para 7, no separate addition is required to be made on this account. Thus this addition is deleted. This ground of appeal is allowed. 7. The Second ground of appea....
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.... appellant has shown on money receipt of Rs. 15.25 crore for the year under consideration, which is partly supported by the seized documents. The AO has considered expenditure incurred for the project under consideration in the above para during the year under consideration, which prove that work on the project has been started during this year. The appellant is also showing booking receipts of Rs. 15.25 crores for this year. As the appellant is showing booking in year before the year considered by the AO, hence, it is pro-revenue, thus there is no reason for not accepting the same. There is no basis for non-believing the appellant's books of accounts to this extent. Therefore, on money receipts of Rs. 15.25 crores is considered in the hands of the appellant for the year under consideration. But additions cannot be made considering the total on money receipt as income of the appellant for the year. The seized documents proved that the appellant had paid Rs. 42.68 crore in cash for purchase of land, which also remain unaccounted. Thus, receipts of on money and payment for purchase of land in cash, both remain out of the regular books of accounts. It is legally settled p....
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....eceipts is to be added ? In case it is to be added as element of profit then, at what percentage such profit is to be worked out i.e. 8% offered by the assessee or 20% estimated by the Revenue. 11. The ld.counsel for the assessee pointed out that the assessee in its appeal is impugning estimation of this profit at 20% at the end of the ld.CIT(A). According to the assessee, it should be 8% only whereas the Revenue is impugning estimation of profit at 20%. According to it, the gross receipts as added by the AO ought to have been upheld by the ld.CIT(A). The ld.counsel for the assessee appraised us the position of law on this point and emphasized that only element of profit is to be assessed in the hands of the assessee. For buttressing his contention, he drew our attention towards the order of the ITAT, Ahmedabad Bench in the case of Kishor Mohanlal Telwala, 64 TTJ 543 = 107 taxman 86 (Ahd). He submitted that in this case a search was carried out at the residence of the assessee on 6.10.1995. During the course of search a piece of paper was found exhibiting the fact that in the project, "Hare Krishna Apartment" the assessee has received on-money on sale of flats. The alternativ....
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.... assessee should be treated as income. We do not think that the Tribunal was not justified in considering the fact that the respondent assessee ought to have spent reasonable amount for the purpose of receiving the gross receipt. If the legal provisions provide that in absence of accounts, the person should be presumed to have earned 8% profit if he is in the business of civil construction, we do not think that the findings of the Tribunal could be treated as perverse. In any case, we do not think it necessary to call for statement of case from the Tribunal for our consideration." 13. The ld.counsel for the assessee further took us through the judgment of Hon'ble jurisdictional High Court in the case of DCIT Vs. Panna Corporation, Tax Appeal No.323 of 2000. He placed on record copy of this judgment. He took us through the following question of law. Hon'ble High Court after taking into consideration its judgment in the case of Koshor Mohanlal Telwala (supra) upheld order of the ITAT, and held that element of profit is to be identified in on-money receipts. We have been taken through the following finding of the Hon'ble High Court: "14. We may recall that the Tribunal,....
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.... cash for purchase of land. If income of the assessee is to be estimated at 8% of the gross receipts with i.e. 8% of 66.40 crores, then what is the source of payment of cash for purchase of the land in this project ? The assessee might have been debited the expenditure in the regular books of accounts. Therefore, benefit of such expenditure cannot be allowed to the assessee from these gross receipts, and corresponding element of income is not required to be identified, rather gross receipts is the income of the assessee because corresponding expenditure qua this on-money has been already debited in the regular books of accounts. He emphasised that if the search was not carried upon the assessee, this fact would not have been unearthed. 16. We have duly considered rival submissions and gone through the record carefully. On an analysis of the record, it would reveal that during the course of search not only details of on-money received by the assessee on booking of flats and shops in "Vesu Project" was found, but details of certain expenditure, which are not recorded in the books were also found. This included cash payment for purchase of land. Therefore, the ld.CIT(A) has r....
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....ssee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment : Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.] [(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]" 19. It is pertinent to note that that section 144 would suggest that in order to estimate income, learned Assessing Officer has to exercise his discretion which should be in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgm....
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.... line of business, and who have developed identical projects. We have perused the finding of the ld.CIT(A) also, but the ld.CIT(A) has also not mentioned any attending circumstances for harbouring a belief that 20% could have been earned from this activity. Thus after taking guidance from the judgment of Hon'ble Gujarat High Court in the case of Koshor Mohanlal Telwala (supra), we deem it proper that the assessee has rightly disclosed the profit element embedded in the gross profit at 8%. Accordingly, we allow the ground of appeal raised by the assessee, and hold that profit which has been directed to be adopted by the ld.CIT(A) at 20% of the alleged turnover should be taken at 8%. The income of the assessee is to be computed thereafter. Consequently, ground no.2 and 3 raised by the Revenue in the Asstt.Years 2012-13, 2013-14 and 2014-15, and ground nos.1 to 3 in the asstt.Year 2015-16riased by the Revenue are rejected. 21. Now we take ground no.1 of Revenue's appeal in the Asstt.Year 2012-13 and 2014-15. In this ground of appeal, Revenue has pleaded that the ld.CIT(A) has erred in deleting the addition of Rs. 2,92,76,625/- and Rs. 3,05,00,000/- in the Asstt.Years 2012-13 and Rs....
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....y the assessee for developing that flat. Thus, in other words, the expenditure whose details were found being incurred in cash could be construed as coming out of these Rs. 92/-. Thus, there cannot be any separate addition of unexplained expenditure. The ld.CIT(A) has rightly deleted the addition. 25. Ground no.4 in the Asstt.Year 2014-15 and Asstt.Year 2015-16. In these grounds of appeal, grievance of the Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 26,49,500/- and Rs. 16,81,600/- added by the AO with aid of section 68 of the Income Tax Act. 26. Brief facts with regard to the addition of Rs. 26,49,500/- is concerned, the AO has treated this amount as unexplained credit under section 68 of the Act. The assessee has contended that these are not loans rather these are booking amount and the assessee has produced necessary details viz. PAN, addresses etc. The ld.CIT(A) after going through the details deleted the addition by recording the following finding in the Asstt.Year 2014-15. The facts in the Asstt.Year 2015-16 are identical. The assessee has alleged that these are booking amount of Rs. 16,81,600/-. The AO has treated it has unexplained cash cred....