TaxTMI 
TaxTMI 
2021 (5) TMI 950
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....are involved in the aforementioned appeals, therefore, the same are being taken up and disposed off by way of a consolidated order. We shall first take up the appealfiled by the assessee, viz. M/s Ekta Housing Pvt. Ltd for A.Y. 2013-14 in ITA No. 1732/Mum/2019. The assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in confirming the addition @20% of the on-money in this year without considering the fact - that the appellant offered the income of Rs. 3.48 lakhs @ 12% of on-money of Rs. 29 lakhs in A.Y 2016-17 when the project was completed and sale was recognized in P&L A/c. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from on-money received at 20% of Rs. 29 lakhs which is on higher side and should have been estimated @12% of on-money as offered by your appellant. 3. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is dispo....
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....the sale transaction stood concluded during the year under consideration and the correlating income arising therefrom had accrued during the period relevant to A.Y 2013-14 thus, there was no justification on the part of the assessee to account for the same in A.Y 2016-17. Also, the A.O being of the view that the entire amount of on-money of Rs. 29 lac was to be brought to tax in the hands of the assessee u/s 68 of the Act, therefore, rejected the assessee‟s offer for accounting foronly 12% of the on-money receipt as its income. Although the A.O had in his assessment order categorically observed that the entire amount of on-money of Rs. 29 lac was to be added to the assessee‟s income under Sec. 68 of the Act, however, the consequential addition to the said effect inadvertently remained omitted to be made in the assessment order passed by him under Sec. 153A r.w.s 143(3), dated 15.12.2017. Subsequently, the A.O passed a rectification order under Sec. 154 wherein the addition of Rs. 29 lac was made by him. 4. As the A.O in the impugned assessment order had categorically observed that the entire amount of on-money of Rs. 29 lac received by the assessee w.r.t its project ....
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....e us. As observed by us hereinabove, the A.O on a perusal of the seized material observed that the assessee had during the year in question i.e A.Y 2013-14 received on-money of Rs. 29 lac w.r.t sale of Flat no. 1101 in its project, viz. "California". It was further observed by the A.O that the sale agreement for the aforesaid Flat no. 1101 was registered on 04.03.2013 i.e during the year under consideration itself. Admittedly, the aforesaid factual observations of the A.O are not in dispute. Observing, that the assesse had not offered the on-money of Rs. 29 lac received by it as its additional income for the year in question i.eA.Y 2013-14 the A.O called for an explanation as regards the same from the assessee. In reply, it was submitted by the assessee that it had offered the net income element embedded in the on-moneyreceipt i.e @12% of Rs. 29lac in its computation of income for A.Y 2016-17 i.e the year in which the project was completed and sale of the aforesaid flat was recognised in its Profit & loss account. However, the A.O was of the view that the entire amount of the on-money of Rs. 29 lac was to be brought to tax in the hands of the assessee in the year of receipt itse....
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....ht to tax was the profit embedded in such receipts and not the entire receipts themselves. Support was also alsodrawn by the ld. A.R from the judgment of the Hon‟ble High Court of Gujarat in the case of CIT Vs. Abhishek Corporation (2000) 158 CTR 374 (Guj). Further, reliance was placed by the ld. A.R on the order of the ITAT, Mumbai in the case of Guruprerna Enterprises Vs. ACIT (2011) 30 CCH 17 (Mum). It was, thus, submitted by the ld. A.R that the CIT(A) was principally correct in restricting the addition to the extent of the income element embedded in the on-money that was received by the assessee company. But then, it was submitted by the ld. A.R that the CIT(A) had estimated the income element embedded in the onmoney receipts at a high pitched figure i.e @20% of the amount of on-money received by the assessee as against that offered by the assessee @12% of the amount of such receipts. In order to drive home his aforesaid claim, it was submitted by the ld. A.R that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15% of the on-money receipts for tax, which had been accepted by the commission. It was, thus, submitt....
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....y subjected the entire amount of such receipt to tax. It was submitted by the ld. D.R that the CIT(A) had most arbitrarily restricted the addition to the extent of the impugned income element embedded in the on-money received by the assessee. It was further submitted by the ld. D.R that as the sale agreement for the aforesaid property in question i.e Flat No. 1101 was executed in March, 2013 thus, the CIT(A) had rightly observed that the sale transaction in question having been concluded during the period relevant to A.Y 2013-14 itself, there was no justification on the part of the assessee in accounting for the same in A.Y 2016-17. On the basis of his aforesaid contentions it was submitted by the ld. D.R that though the CIT(A) had rightly observed that the sale transaction in question was liable to be accounted for by the assessee during the year in question, but she had erred in scaling down the addition to the extent of the income element embedded in the on-money received by the assessee company, as against the addition of the entire amount of on-money that was made by the A.O. 8. We have heard the authorised representatives for both the parties, perused the orders of the low....
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....he 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/submitted 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 Vs. 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. (g). In the above view, question no. 1 as proposed does not give rise to any substantial question of law. Thus, not e....
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....mobile phones in "notes" folders so as to keep track of various payments received in cash. Documents relating to certain cash expenses were also found which were maintained by Shri. Vivek Mohanani. The source of the cash expenses was unaccounted sales receipts." Further, as observed by the A.O in the assessment order, Shri. Vivek Mohanani (supra) in his statement recorded u/s 132(4) of the Act, dated 12.10.2015 had on being confronted with the seized documents admitted that the same have records of cash transactions, both receipts and expenses, which are not accounted in the regular books of accounts. In the backdrop of the aforesaid facts, we find that is a matter of an admitted fact that the incriminating documents seized in the course of the search proceedings contained records of cash transactions, both receipts and expenses, which were not accounted for in the regular books of accounts of the assessee. As observed by us hereinabove, the A.O while framing the assessment had categorically observed that the unaccounted transactions w.r.t cash expenses incurred by the assessee from the unaccounted sales receipts i.e on-money receipts had surfaced in the course of the s....
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....that the entire sales could not have been added as income of the assessee, but only to the extent the estimated profits embedded in the sales for which the net profit rate was adopted entailing addition of income on the suppressed amount of sales. Such decision was carried in appeal by the revenue before the High Court. The High Court rejected the appeal, observing that unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed, such addition could not be sustained. It was observed that in absence of such findings of fact, the question whether the entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. The High Court rejected the appeal holding that no question of law which requires to be referred arises. 11. In the case of commissioner of Income Tax v. Gurubachhan Singh J. Juneja, reported in (2008) 302 ITR 63 (Guj.), once again a somewhat similar issue came up before this Court. In the said case, the assessee was engaged in the business of trading of ty....
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.... the contention of the revenue that as no accounts had been maintained to substantiate the expenditure incurred by the assessee, the entire amount received by the respondent should be treated as income. The Court concluded that the Tribunal was justified in considering that the respondent - assessee ought to have spent reasonable amount for the purpose of receiving such gross receipt. 15. It can, thus, be seen that consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves. If that be the legal position, what should be estimated as a reasonable profit out of such receipts, must bear an element of estimation. 16. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts can be brought to tax, in our view, 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. In other words, we accept the legal proposition, the T....
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.... view has been taken by the Hon‟ble Bombay High Court in the case of CIT vs. Hariram Bhambhani in ITXA No. 313 of 2013. Further in the case of GuruprernaEnterprises (supra) relying on Abhishek Corporation vs. DCIT [63 TTJ (Ahd) 651] it has been held as under :- "Even though it is established from seized documents that assessee was receiving premium/on-money on booking of flats belonging to third parties, entire receipts of on-money/premium cannot be treated as undisclosed income of assessee; only net profit rate can be applied on unaccounted sales/receipts for making addition." The other judgments relied on by the assessee also support its case. The ld. D.R has not brought on record any contrary judgments. We, therefore, agree with the consistent view expressed in these judgments that on-money receipts are in the nature of undisclosed receipts and not income per-se and therefore only profit element embedded therein are liable to be taxed and not the entire on-money receipts." In the case before us, in the backdrop of the fact admitted by the A.O while framing the assessment that the incriminating documents seized in the course of the search proceedings co....
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....quantification of the income element embedded in the on-money receipts has to be on the basis of a process of estimation, but then, there has to be to the extent possible some logical reasoning explaining the basis for arriving at such estimate. As is discernible from the order of the CIT(A), it was the claim of the assessee company that its group concerns which had approached the Income-Tax Settlement Commission (for short "ITSC") had offered for tax the income element embedded in the on-money received by them @15% of such receipts and the same had been accepted by the commission. However, the CIT(A) was of the view that the percentage of profit offered by the group concerns before the ITSC and accepted by the latter was applicable only to the cases before the commission and was in no way binding on the other case which were not before it. At the same time, it was observed by the CIT(A) that the percentage of profit offered by the group concerns before the ITSC and accepted by the latter could be taken as a guiding factor. In the backdrop of the aforesaid observation of the CIT(A), we are of the considered view that she in all fairness for the purpose of estimating the incom....
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.... As observed by the Hon‟ble Supreme Court in the case of CIT Vs. Bilhari Investment (P) Ltd. (2008) 299 ITR 1 (SC) that an assesseehaving all along followed the completed contract method, and the Department having accepted the same over several years, the completed contract method adopted by the assessees is not required to be substituted by percentage completion method in the absence of any finding of the A.O that the completed contract method distorts the profits of a particular year. Same view had been arrived at by the Hon‟ble High Court of Gujarat in the case of CIT(Central), Surat Vs. Happy Homes Corporation (2018) 94 taxmann.com 292 (Guj) that where the assessee before them which was engaged in construction business was following project completion method, its income could be brought to tax only in the year when sale deeds of units sold were registered even though sale consideration might have been received earlier from the buyer. The said order of the Hon‟ble High Court was thereafter approved by the Hon‟ble Supreme Court in CIT, (Central) Vs. Happy Home Corporation (2019) 103 taxmann.com 22 (SC) and the SLP filed by the revenue was dismissed. Admitt....
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....rms of our aforesaid observations. 13. The Ground of appeal No. 3 being general is dismissed as not pressed. ITA No. 1733/Mum/2019 (assessee's appeal) ITA No. 2186/Mum/2019 (revenue's appeal) A.Y 2016-17 (A). ITA No. 1733/Mum/2019 (assessee's appeal) 14. We shall now take up the appeal filed by the captioned assessee for A.Y 2016-17. The assessee has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in theyear of receipt as against in the year of completion of project "Maplewood" or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting the project completion method for this project. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from on-money received at 20% of Rs. 197 lakhs, which is on higher side and should have been estimated @12% ....
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....ia", the same was reduced by the A.O while computing the total income of the assessee for the year in question i.eA.Y 2016-17. Accordingly, the A.O on the basis of his aforesaid deliberations made an addition u/s 68 of Rs. 193.52 lac [Rs. 197 lac (on-money received as regards the project "Maple Wood/Cornel") (minus) Rs. 3.48 lac (income element @12% of on-money of Rs. 29 lac that was received by the assessee in A.Y 2013-14 w.r.t its project "California and was offered for tax during the year in question)] 17. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in mobile phones, the same, thus, could not have been brought to tax u/s 68 of the Act. As regards the claim of the assessee that only the net income element of the on-money received by the assessee could be brought to tax, the same was principally accepted by the CIT(A). It was observed by ....
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.... issue pertaining to the aforesaid grievance of the assessee are the same as were there before us in the assessee‟s appeal for A.Y 2013-14 in ITA No. 1732/Mum/2019. Accordingly, as the facts and the issue in context of the aforesaid grievance of the assessee remains the same as were there before us in its appeal for A.Y 2013-14 in ITA No. 1732/Mum/2019, therefore, our order therein passed and also the reasoning adopted shall apply mutatis mutandis for the purpose of disposal of the said issue involved in the captioned appeal filed by the assessee.We, thus, are of the considered view that the net income element embedded in the on-money of Rs. 197 lac received by the assesseecan safely be taken @15% of the said amount. The Ground of appeal No. 2 raised by the assessee is partly allowed in terms of our aforesaid observations. 19. We shall now deal with the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition w.r.t the income element of the amount of on-money of Rs. 197 lakhs that was received by the assessee during the year in question i.e A.Y 2016-17 without considering the fact that the same was assessable in th....
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....ood/Cornel which is likely to be completed in F.Y 2018-19. Rebutting the observation of the A.O that the assessee had already recognised therevenue for the aforesaid project, viz. Maplewood/Cornel during the year under consideationi.eA.Y 2016-17 and it is not its case that income had not been offered by it on its regular profit during the said year, the assessee vide its written submissions, dated October 9th, 2008, had submitted before the CIT(A) that the A.O had misreported the aforesaid fact. It is, thus, submitted by the assessee that as the addition had been made by the A.O on the basis of wrong reporting of facts thus, the same cannot survive. 21. As is discernible from the order of the CIT(A), the assessee in order to drive home its claim that as it was following the Project Completion Method, therefore, the on-money received by it was to be considered in the year of completion of the project, viz. "Maple wood/Cornel" had filed "Written submissions" which have been reproduced by the CIT(A) at Page 11- Para 6.2 of her order. It was the claim of the assessee before the CIT(A) that the project in question, viz. "Maple wood/Cornel"that was just started during the year in q....
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....on to the issue in hand, and find substantial force in the claim of the assessee that its exhaustive reasoning demonstrating the bonafide reasons for change in the method of accounting from Percentage Completion Method that was being followed by it in the past to Project Completion Method w.e.fA.Y 2016-17 had not been appreciated by the CIT(A). Apart from that, we find that though theassessee vide its written submissions, dated 08.10.2018, had submitted before the CIT(A) that the A.O had misreported in the assessment order that the assessee during the year in question i.eA.Y 2016-17 had offered the income of its project, viz. "Maplewood/Cornel" in its regular books of accounts, however, the said aspect had not been addressed by the CIT(A) while upholding the view taken by the A.O.Further, it was also the claim of the assessee before the CIT(A) that it had consistently adopted and followed the Project Completion Method of accounting in the subsequent years, which had been accepted by the A.O and no error was pointed out in the same. In the backdrop of the aforesaid facts, it was submitted by the assessee that the rejection by the lower authorities of the Project CompletionMethod tha....
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....d failed to address the claim of the assessee that the A.O had misreported in the assessment order that the assessee during the year in question i.e A.Y2016-17 had offered the income of its project, viz. "Maplewood/Cornel" in its regular books of accounts. Apart from that, we find that the categorical claim raised by the assessee before the CIT(A) that it had consistently adopted and followed the Project Completion Method of accounting in the subsequent years which had been accepted by the A.O and no error was pointed out in the same had also not been loked into by the said first appellate authority. As observed by us at length herinabove while disposing off the appeal in the case of the assesseefor A.Y 2013-14 in ITA No. 1732/Mum/2017, that an assesseehaving all along followed the completed contract method, and the Department having accepted the same over several years, the completed contract method adopted by the assessees is not required to be substituted by percentage completion method in the absence of any finding of the A.O that the completed contract method distorts the profits of a particular year. In order to fortify our aforesaid view, we had drawn support from certain ju....
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....of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. We, thus, direct the A.O to consider our aforesaid observations while subjecting the income element embedded in the on-money received by the assessee to tax. The Ground of appeal No. 1 is allowed for statistical purposes in terms of our aforesaid observations. 24. The Ground of appeal No. 3 being general is dismissed as mot pressed. 25. The appeal filed by the assessee is partly allowed in terms of our aforesaid observations. (B). ITA No. 2186/Mum/2019 (revenue's appeal) 26. We shall now take up the cross-appeal of the revenue for A.Y 2016-17. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 1,93,52,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of t....
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....ties and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. We shall first deal with the grievance of the revenue that the CIT(A) is in error in concluding that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in data retrieved from the mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. Before us, it was the claim of the ld. Departmental Representative (for short "D.R") that the CIT(A) while arriving at the aforesaid view had absolutely lost sight of the material fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition and not an exhaustive one. It was further submitted by the ld. D.R that as the term used in Sec. 68 is "books" and not the regular "books of account", therefore, the support drawn by the CIT(A) from the definition of "books of account" as contemplated in Sec. 2(12A) was misplaced and in fact misconceived. It was further submitted by the ld. D.R that as the assessee had failed ....
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....addition in respect of such notings as regards on-money received by the assessee could have been made under Sec.68 to the Act. Our aforesaid observation is fortified by the judgment of the Hon‟ble High Court of Bombay in the case of CIT Vs. Bhaichand H. Gandhi (1983) 143 ITR 67 (Bom.). Also, a similar view had been arrived at by a coordinate bench of the Tribunal viz. ITAT, Mumbai in the case of Mehul V. Vyas Vs. ITO (2017) 764 ITD 296 (Mum).Further, a fine distinction between "books of account" and "documents" can safely be gathered from the definition of the term "Undisclosed income" as contemplated in Sec. 158B(b) of the Act. As observed by the ITAT, Bangalore in the case of DCIT Vs. Raja Udayshankar (2006) 7 SOT 680 (Bang), that a separate usage of the words "books of account" and "documents" in the definition of the term "Undisclosed income" in Sec. 158B(b) therein clearly provides for a distinction between the two. Backed by its aforesaid observation, the Tribunal had concluded that as Sec. 68 is applicable to any entry credited in the books of account thus, the same would not be applicable to any entry in a document. In the backdrop of our aforesaid observations we con....
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....addition w.r.t on-money receipts were liable to be restricted to the extent of the element of net income therein embedded and had further directed the A.O to restrict the same to the extent of 15% of such receipts, therefore, the grievance of the revenue that the CIT(A) had erred in restricting the addition to 20% of on-money receipts is subsumed in our aforesaid adjudication of the issue and observations recorded therein. The Ground of appeal no. (iv) raised by the revenue is accordingly dismissed. 32. The appeal filed by the revenue is dismissed. 33. Resultantly, the appeals filed by the assessee are partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. M/s Ekta Parksville Homes Pvt. Ltd. ITA No. 1734/Mum/2019 (assessee's appeal) A.Y 2013-14 34. We shall now deal with the appeal filed by the captioned assessee, viz. M/s Ekta Parksville Homes Pvt. Ltd. for A.Y 2013-14. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holdi....
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....ged in liasioning and handling of cash at the instructions of Shri. Vivek Mohanani, Joint Managing director and Shri Prateek Arora was recorded on 05.10.2015 at his residence at 107/4 Swapana CHS, Sector 1, RSC-21, Charkop, Kandivili West, Mumbai, wherein he had admitted that he had handled cash for "Ekta group" and had provided complete details as regards the same alongwith the respective dates, which inter alia to the extent related by the A.O to the case of the assesseefor the year in question read as under : Sr. No. Date Amount Cash collected from (name) Cash handed over to Remarks 9 In Sept, 2012 22 lacs Certain Hawala Party named Suraj Bhai from Road No. 2 Kalaba Devi Pratik Arora Here I had carried torn currency note of Rs. 10 for collecting money. Pratik Arora can only explain this transaction On being confronted with the aforesaid statement of Shri. DilipBorade (supra), Shri. Vivek Mohanani, Jt. Managing Director of the assessee company in his statement recorded by the DDIT on 27.01.2016 denied the same. However, the A.O acted upon the details provided by Shri. DilipBorade in....
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....the basis for quantification of the net income element embedded in the on-money receipts at 12% could not be substantiated by the assessee, therefore, he substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. As regards the claim of the assessee that the A.O by applying Sec. 115BBE of the Act had erred in not allowing set-off of business loss of current year of Rs. 5,25,48,651/- against the income assessed, the same was accepted by the CIT(A). It was observed by the CIT(A) that as Sec. 115BBE had came into effect from 01.04.2017, therefore, the same would not be applicable to the case of the assesse for the year in question i.e A.Y 2013-14. Apart from that, it was observed by the CIT(A) that as the on-money receipts were held by him as business income and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A)directed the A.O to allow set-off of current years business loss and brought forward losses after due verification. 38. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. The ld. A.....
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....‟ble High Court of Madras in the case of CIT Vs. K. Bhuvanendran and Co. (2008) 303 ITR 235 (Mad); and that of the Hon‟ble High Court of Gujarat in the case of Dy. CIT Vs. Mahendra Ambalal Patel (2010) 78 CCH 377 (Guj). It was, thus, submitted by the ld. A.R that the additions made by the A.O towards on-money allegedly stated to have been received by the assessee company in A.Y 2013-14, A.Y 2014-15 & A.Y 2015-16 had no legs to stand upon and were liable to be vacated. 39. Per contra, the ld. D.R relied on the orders of the lower authorities. It was submitted by the ld. D.R that as Shri. Dilip Borade, employee of the assessee company, had in his statement recorded u/s 131 of the Act provided details as regards the onPage money that was recieved/collected by him thus, the A.O had rightly made additions towards on-money received by the assessee company in the respective years. 40. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As o....
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....Chedda 9892362551 Vivek Mohnani Vivek Mohnani can only explain here. Shri Pratik Arora had given his visiting card as token of identity to collect cash. 8. Oct, 2014 25 Lacs Party from Hiranandani, Powai Pratik Arora Pratik had called for collection, Pratik can only explain. 9. In Sept, 2012 22 Lacs Certain Hawala Party named Suraj Bhai from Road No. 2 Kalaba Devi Pratik Arora Here, I had carried torn currency note of Rs. 10 for collecting money. Pratik Arora can only explain this transaction. We may herein observe, that the aforesaid details provided by Shri. DilipBorade was pursuant to the query raised by the A.O therein calling upon him to furnish details of cash handled by him for Ekta groupalongwith quantity and dates. In other words, the A.O had queried as regards the details of cashwhich he had handled for Ekta group. For sake of clarity the query raised by the A.O in pursuance to which the aforesaid details were provided by Shri. DilipBorade (supra)is reproduced as under: "Q.11. Please give the details of cash handled by you for Ekta Groupalongwith details of quantity and dates. Please explain detail." (emphasis....
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....l scrutiny of the aforesaid reply of Shri. DilipBorade, we find that at no stage he had at any instance stated that the cash handled by him was as regards the transactions of the assessee company, viz. M/s Ekta Parksville Homes Pvt. Ltd. or its project, viz"Parksville project". Accordingly, in the totality of the aforesaid facts, we find no reason much the less any justification to relate the impugned transactions to the assessee company, viz. M/s Ekta Parksville Homes Pvt. Ltd. 42. Be that as it may, we find that majority of the impugned transactions pertaining to collection of cash by Shri. DilipBorade makes a reference to the name of the person from whom the impugned amount was collected by him. In fact, in two instances even the mobile numbers of the concerned persons are given. However, we find that the A.O had not even done the bare minimum by attempting any verification which would have revealed a clear cut nexus between the aforementioned persons and the transactions of sale/receipt of advance by the assessee company w.r.t its project, viz."Parksville project". The A.O without placing on record any material which would reveal that the persons from whom the impugned....
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.... for the entire Ekta group. In our considered view additions cannot justifiably be made on the basis of uncorroborated documents seized from a third party in the course of search proceedings. Our said view is supported by the judgment of the Hon‟ble High Court of Calcutta in the case of CIT Vs. Tara Chand Mahipal (2016) 65 taxmann.com 29 (Cal). In its said judgment, it was observed by the Hon‟ble High Court that addition made to the assessee‟s income merely on the basis of papers seized from the possession of the assessee‟s brother was unjustified when the material sought to be relied on was not corroborated. Also, a similar view was taken by the Hon‟ble High Court of Madras in the case of CIT Vs. Smt. S. Jayalakshmi Ammal (2017) 390 ITR 0189 (Mad). In the case before the Hon‟ble High Court, the assessee's son in the course of the search proceedings was examined on 29.12.1999 under Section 132 of the Income Tax Act, 1961. As per the statement of the assessee's son, there was a payment of Rs. 31,00,000/-towards purchase of property, and that such payment was made in the presence of his father, namely, the assessee. According to him, a sum ....
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....A.O regarding receipt of on-money by the assessee company on sale of flats in its project "Parksville project" are backed not by any incriminating material that had surfaced in the course of the search proceedings but by a standalone uncorroborated statement of its employee, viz. Shri. Dilip Borade (supra). Apart from that, we find that Sh. Vivek Mohanani, director of the assessee company on being confronted with the aforesaid statement of Shri. Dilip Borade (supra) had categorically denied the receipt of any such amounts by the assessee company. In the backdrop of the aforesaid facts, we are of a strong conviction that the A.O without placing on record any material corroborating the statement of Shri. DilipBorade (supra) and disproving the claim of Shri. Vivek Mohnani (supra), had most arbitrarily drawn adverse inferences as regards receipt of on-money on sale of flats by the assessee company.Similar view was arrived at by the Hon‟ble High Court of Gujarat in the case of Dy. CIT Vs. Mahendra Ambalal Patel (2010) 40 DTR 243 (Guj). In its order, it was inter alia observed by the Hon‟ble High Court that an addition cannot be made in the hands of an assessee merely on the ....
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.... him in context of the aforesaid impugned receipt of on-money of Rs. 22 lac. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 44. As we have concluded that no part of addition pertaining to the impugned amount of on-money of Rs. 22 lacs can be sustained in the hands of the assessee, therefore, we refrain from adverting to and therein adjudicating the Grounds of appeal Nos. 1 & 3 which having been rendered as academic in nature are left open. 45. The Ground of appeal No. 4 being general in nature is dismissed. 46. The appeal filed by the assessee is allowed in terms of our aforesaid observations. ITA No. 1735/Mum/2019 (assessee's appeal) ITA No. 2194/Mum/2019 (revenue's appeal) A.Y 2014-15 (A). ITA No. 1735/Mum/2019 (assessee's appeal) 47. We shall now take up the appeal filed by the captioned assessee for A.Y 2014-15.The assessee has assailedthe impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the yea....
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.... Amount Cash collected from (name) Cash handed over to Remarks 2. F.Y 2013-14 1.5 Cr in various installments Yashwant (9820475111) Lamington Road, Near Police Station Vivek Mohnani Vivek Mohnani had called to confirm my identity to collect cash. Vivek Mohnani can explain. 3. F.Y 2013-14 4.5 Cr Collectedfrom the office. Meadows, Nagothane, Siddharth Nagar. Vivek Mohnani and Pratik Arora Harish Bhai Sales person from Ekta Bhum Garden, Borivilli Site, called me to collect the cash from site. Vivek Mohnani and Pratik Arora can only explain this transaction. On being confronted with the aforesaid statement of Shri. DilipBorade (supra), Shri. Vivek Mohanani, Jt. Managing Director of the assessee company in his statement recorded by the DDIT on 27.01.2016 denied the same. However, the A.O acted upon the details provided by Shri. DilipBorade (supra) in his statement recorded under Sec. 132(4), dated 05.10.2015, for the reason that he being an employee of the assessee company, viz. M/s Ekta Parksville Pvt. Ltd. had in his statement recorded on oath u/s 132(4) provided complete details of cash handled by him for "Ekta group" alongwith quanti....
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....t the disallowance to the said extent. As regards the claim of the assessee that the A.O by applying Sec. 115BBE of the Act had erred in not allowing set-off of business loss of current year of Rs. 8,67,72,453/- against the income assessed, the same was accepted by the CIT(A). It was observed by the CIT(A) that as Sec. 115BBE had came into effect from 01.04.2017, therefore, the same would not be applicable to the case of the assesse for the year in question i.e A.Y2014-15. Apart from that, it was observed by the CIT(A) that as the on-money receipts were held by him as business income and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A)directed the A.O to allow set-off of current years business loss and brought forward losses after due verification. 51. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. Both the ld. Authorised representatives for the parties are in agreement on the point that the facts and the issue involved in the captioned appeal are the same as were there before us in the appeal of the assessee for the immediately preceding yea....
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....d not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition to 20% of on-money even though the assessee has failed to produce details of expenses incurred?" 56. As observed by us hereinabove, the A.O had brought to tax the entire amount of on-money receipt of Rs. 6 crore u/s 68 of the Act in the hands of the assessee company. On appeal, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones, therefore, the same could not have been brought to....
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....s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 for A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of on-money could not have been made u/s 68 of the Act. The Grounds of appeal Nos. (i) to (iii) raised by the revenue are dismissed. 58. As we had while disposing off the assessee‟s appeal in ITA No. 1735/Mum/2019 for A.Y 2014-15 concluded that no part of the addition upheld by the CIT(A) w.r.t the impugned amount of onmoney receipts is liable to be sustained, therefore, the grievance of the revenue that the CIT(A) had erred in restricting the addition to 20% of on-money receipts is subsumed in our aforesaid adjudication of the issue and observations recorded therein. The Ground of appeal no. (v) raised by the revenue is accordingly dismissed. 59. We shall now deal with the grievance of the revenue that the CIT(A) has erred in vacating the view taken by the A.O who as per the mandate of Sec. 115BBE of the Act had declined the assessee‟s claim for set-off of the business los....
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....iture or allowance ^3524[or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) ^3525[and clause (b)] of sub-section (1).]" As observed by us hereinabove, the aforesaid Sec. 115BBE was made available on the statute vide the Finance Act, 2012 w.e.f 01.04.2012. However, the embargo as regards not allowing of any set-off of any loss while computing the assessee‟s income as referred to in clause (a) of sub-section (1) to Sec. 115BBE i.eincome referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, that was included in the return of income filed by the assessee u/s 139 of the Act was made available on the statute only vide the Finance Act, 2016 i.ew.e.f 01.04.2017. Further, the legislature in all its wisdom had thereafter as per an amendment to sub-section (2) to Sec. 115BBE that was made available on the statute vide the Finance Act, 2018 w.r.e.f 01.04.2017, had therein extended the aforesaid restriction also to set-off of any loss while computing the assessee‟s income as referred to in clause (b) of sub-section (1) to Sec. 115BBE i.eincome referred....
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.... no. (iv) raised by the revenue is dismissed. 61. The appeal filed by the revenue is dismissed. 62. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. ITA No. 1736/Mum/2019 (assessee's appeal) ITA No. 2195/Mum/2019 (revenue's appeal) A.Y 2015-16 (A). ITA No. 1736/Mum/2019 (assessee's appeal) 63. We shall now take up the appeal filed by the captioned assessee for A.Y 2015-16. The assessee has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the year of completion of project "or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting the project completion method. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in holding that the appella....
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....atik Arora had given his visiting card as token of identity to collect cash. 8. Oct 2014 25 lacs Party from Hiranandani Powai. Pratik Arora Pratik had called for collection. Pratik can only explain. On being confronted with the aforesaid statement of Shri. Dilip Borade (supra),Shri. Vivek Mohanani, Jt. Managing Director of the assessee company in his statement recorded by the DDIT on 27.01.2016 denied the same. However, the A.O acted upon the details provided by Shri. Dilip Borade (supra) in his statement recorded under Sec. 132(4), dated 05.10.2015, for the reason that Shri. DilipBorade (supra)being an employee of the assessee company, viz. M/s Ekta Parksville Pvt. Ltd. had in his statement recorded on oath u/s 132(4) provided complete details of cash handled by him for "Ekta group" alongwith quantity, dates, details of cash collected, name of the person to whom the same was handed over alongwith the financial years/dates to which the cash collected pertained. Accordingly, on the basis of the aforesaid details provided by Shri. DilipBorade (supra) in his statement recorded u/s 132(4), dated 05.10.2015 the A.O added the aforesaid amount of Rs. 1.60 crore [Rs. 8....
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....17, therefore, the same would not be applicable to the case of the assesse for the year in question i.eA.Y 2015-16. Apart from that, it was observed by the CIT(A) that as the on-money receipts were held by him as business income and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A)directed the A.O to allow set-off of current years business loss and brought forward losses after due verification. 67. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. Both the ld. Authorised representatives for the parties are in agreement on the point that the facts and the issue involved in the captioned appeal are the same as were there before us in the appeal of the assessee for A.Y 2013-14 in ITA No. 1734/Mum/2019. As the facts and issue involved in the present appeal of the assessee for A.Y 2015-16 in ITA No. 1736/Mum/2019 remains the same as were there before us in context of the issue in hand in the assessee‟s appeal for A.Y 2013-14 in ITA No. 1734/Mum/2019, therefore, our order therein passed and also the reasoning adopted shall apply mutatis mutandis for....
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....as erred in directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition to 20% of on-money even though the assessee has failed to produce details of expenses incurred?" 72. As observed by us hereinabove, the A.O had brought to tax the entire amount of on-money receipt of Rs. 1.60 crore u/s 68 of the Act in the hands of the assessee company. On appeal, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. Aggrieved with the aforesaid observation of the CIT(A) the revenue has carried the matter in appeal before us. It is the claim of the revenue that the view arrived at by the CIT(A) is in complete disregard of the fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition. Further, it is the claim of the revenue that as the term....
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....are dismissed. 74. As we had while disposing off the assessee‟s appeal in ITA No. 1736/Mum/2019 for A.Y 2015-16concluded that no part of the addition upheld by the CIT(A) w.r.t the impugned amount of onmoney receipts is liable to be sustained, therefore, the grievance of the revenue that the CIT(A) had erred in restricting the addition to 20% of on-money receipts is subsumed in our aforesaid adjudication of the issue and observations recorded therein. The Ground of appeal no. (v) raised by the revenue is accordingly dismissed. 75. Insofar the grievance of the revenue that the CIT(A) has erred in vacating the view taken by the A.O who had as per the mandate of Sec. 115BBE of the Act declined the assessee‟s claim for set-off of the business losses against the additions made u/s 68 of the Act is concerned, the same, we find had been adjudicated while disposing off the appeal in the assessee‟s own case for A.Y 2014-15 in ITA No. 2194/Mum/2019. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the assessee‟s appeal for A.Y 2014....
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....llant. 5. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 79. Briefly stated, the assessee had filed its return of income for A.Y. 2016-17 on 15.10.2016, declaring a loss of (Rs. 5,41,67,564/-). Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 80. During the course of the assessment proceedings, it was observed by the A.O that in the course of the survey action conduced u/s 133A(1) at the site office of Ekta Tripolis, Sidharth Nagar Road, Road No. 2 & 9, Near Mega Mall, Off. Link Road, Goregaon West, Mumbai on 05.10.2015 certain loose papers were found and impounded as Annexure A-1 - Page Nos. 1-9. Statement of Shri Hardeep S. Bajwa, Sales Manager for "Ekta Tripolis" was recorded on oath u/s 131 on 05.10.2015. On being queried as regards the content of Annexure A-1 - Page 3 and 5, it was stated by him that the same pertained to a proposed deal calculation for Shop nos. 29 and 30 which he had noted down (for the purpose of understanding) as was telephonically dictated by a client whom he had earlier attended at Vi....
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....y Shri.VivekMohnani, Jt. Managing Director of the assessee company. As regards the addition made by the A.O towards on-money of Rs. 33.77 lac w.r.t Shop Nos. 29 & 30, it was observed by the CIT(A) that the assessee group was as a matter of practice receiving onmoney in the course of its business of sale of properties. As such, the CIT(A) was of the view that the statement of Shri. Hardeep S. Bajwa that the assessee company as a matter of rule did not receive cash component did sound absurd. Further, the CIT(A) was of the view that in case the proposed deal w.r.t the noting of Rs. 33.77 lacs had never materialised, then, there would have beenno need on the part of Shri. Hardeep S. Bajwa to have reduced it in writing much the less retained the same. Backed by his aforesaid observations the CIT(A) rejected the claim of the assessee that the A.O was in error in making the impugned addition on the basis of unsubstantiated documentary evidence. At the same time, the claim of the assessee that only the net income element embedded in the on-money receipt could be brought to tax was principally accepted by the CIT(A). It was observed by the CIT(A) that the group concerns of the assessee ....
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....n the basis of the said dumb notingshad held the same as on-money received by the assssee on sale of Shop nos. 29 and 30. It was submitted by the ld. A.R that the impugned addition of Rs. 33.77 lacs [Shop no. 29: Rs. 16.67 lacs (+)Shop No.30: Rs. 17.10 lacs] made by the A.O on the basis of the dumb and unsubstantiated notings cannot be sustained and was liable to be vacated. As regards the addition made by the A.O towards on-money of Rs. 4 lac and Rs. 9 lac that was received w.r.t Shop Nos. 150& 158, respectively, in the project "Ekta Parksville", it was submitted by the ld. A.R that the assessee had offered net income @12% of the amount of said on-money for tax in its computation of income for A.Y 2016-17 and A.Y 2017-18, respectively,i.e the years in which the registration of the shops in question was done and the saleswere recognised in the books of account. It was submitted by the ld. A.R that though the CIT(A) had principally accepted the assessee‟s claim that the entire amount of on-money could not be assessed as its income, however, she had erred in working out the income element at an exorbitant figure i.e@ 20% of the amount of on-money and bringing the same to tax in....
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....us the proposed deal was declined and did never see the light of the day. However, the A.O not finding favour with the aforesaid explanation of Shri. Hardeep S. Bajwa and being of the view that the notings of cash component in the aforesaid impounded document, i.eAnnexure A-1 - Page 3 and 5 referred to the onmoney that was received by the assessee w.r.t sale of its shops, viz. Shop no. 29 : Rs. 16.67 lacs; and Shop No. 30 : Rs. 17.10 lacs in its "Parksville project" but had not been offered for tax thus, brought the aggregate sum of Rs. 33.77 lacs [Rs. 16.67 lac (+) Rs. 17.10 lacs] to tax in the hands of the assesee company u/s 68 of the Act. 85. It is in the backdrop of the aforesaid facts that we shall herein adjudicate as to whether or not the view taken by the lower authorities that the assessee had received on-money of Rs. 33.77 lacs can be sustained. For a fair appreciation of the facts pertaining to the issue in hand, we herein cull out the relevant extract of the statement of Shri. Hardeep S. Bajwa, Sales manager of Ekta Tripolis, who admittedly had authored the notings of the impounded document, i.eAnnexure A-1 - Page 3 and 5, which reads as under: "Q.15 Your a....
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....se inferences and presuming receipt of on-money by the assessee company is fallacious. As observed by us hereinabove, Shri. Harpeep S. Bajwa, author of the impugned notings of Annexure A-1 - Page 3 and 5 had clearly explained the circumstances under which the notings were made by him and also stated that the impugned deal had thereafter not materialised. Also,Shri. Vivek Mohanani, director on being confronted with the impugned notings had categorically declined of receipt of any such amount by the assessee company. In the backdrop of the aforesaid facts, we are unable to find ourselves in agreement with the A.O who without dislodging the explanation given by Sh. Hardeep S. Bajwa in his statement recorded u/s 131, and dispensing with the dislodging of the denial of Shri. Vivek Mohanani (supra) as regards receipt of any such amount by the assessee company, had merely gone by the dumb notings of the impounded documents, viz. Annexure A-1 - Page 3 and 5and had concluded that the assesse had received the impugned amounts therein mentioned as on-money w.r.t its Shop Nos. 29 & 30. Not only that, we are unable to comprehend that as to how the A.O could have expected the assessee to produce....
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....dition to the said extent the same was sustained by the CIT(A) having been rendered as academic in nature, we, therefore refrain from adverting to and adjudicating the same. As regards the grievance of the assessee to the extent the same survives as regards estimation by the CIT(A) of the profit from on-money received at 20% of Rs. 13 lac [Shop No. 150 : Rs. 4 lac (+) Shop No. 158 : Rs. 9 lac], which as claimed by the assessee is on higher side and should have been estimated @12% of the amount on-money as was offered by it, we fnd that the facts and the issue therein involved remains the same as were there before us in the case of a group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14. Accordingly, our order passed in context of the said issue while disposing off the appeal of the group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 shall apply mutatis mutandis for the purpose of disposal of the said issue in the case of the captioned assessee.We, thus, are of the considered view that the net income element embedded in the on-money receipts can safely be taken in the case of the captioned ....
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....R that though the claim to the said effect was raised by way of a specific ground of appeal before the CIT(A) however, he had not adjudicated upon the same on the ground that it was not being pressed by the assessee. 88. We have given a thoughtful consideration to the aforesaid issue in the backdrop of the observations of the lower authorities. It is the claim of the assessee that as it was consistently following a Project Completion Method for its project, viz. "Parksville", therefore, the income pertaining to on-money that was received w.r.t sale of Shop No. 9 was rightly offered for tax in the period relevant to A.Y 2017-18 i.e when the sale agreement was registered and the project was completed. Inour considered view, as the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been accounted foror would be accounted for by the assesseeas per its regular method of accounting that has been acc....
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....a group". Incriminating material pertaining to the captioned assessee, viz. M/s Ekta Supreme Corporation was found in the course of the search proceedings. Notice u/s 153C was issued and duly served upon the assessee company for the year in question. Return of income in compliance to the notice issued u/s 153C was filed by the assessee company on 12.01.2017, declaring its incomeas originally returned at Rs. 1,70,05,422/-. Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 93. During the course of the assessment proceedings, it was gathered by the A.O that the seized material, viz loose papers found from the residence of Shri. Naresh Kalani made a mention of sale of 6 flats namely, Flat Nos. 801, 901, 1001, 1101, 1201 & 13/1401. On a perusal of the details it was gathered by the A.O that the assessee had received on-money w.r.t its project "Eudora", as under: Assessment Year Amount (in lacs) Flat No 2014-15 Rs. 337.39 901 2015-16 Rs. 165.17 Rs. 398.84 1001 1101 2016-17 Rs. 265.00 1201 Total Rs. 1164.00 ....
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....o. 1732/Mum/2019 for A.Y 2013-14. Accordingly, our order passed in context of the said issue while disposing off the appeal of the group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 shall apply mutatis mutandis for the purpose of disposal of the issue in hand in the case of the captioned assessee.We, thus, are of the considered view that the net income element embedded in the on-money receipts can safely be taken in the case of the captioned assessee @15% of the amount of the on-money receipts of Rs. 337.39 lacs.The Ground of appeal No. 3 is partly allowed in terms of our aforesaid observations. 96. As noticed by us hereinabove, the A.O had inter alia called upon the assesseeto explain that as to why the amount of onmoney of Rs. 337.39 lac received by it w.r.t Flat no. 901 in its project, viz. "Eudora" may not be added as its unaccounted receipt in the year of receipt itself i.e A.Y 2014-15. In reply, it was inter alia submitted by the assessee that the net income i.e @12% of the amount of on-money of Rs. 337.39 lac (supra) was offered for tax in its computation of income for A.Y 2016-17. However, the aforesaid reply of the assess....
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....). ITA No. 2202/Mum/2019 (revenue's appeal) 100. We shall now take up the cross-appeal of the revenue for A.Y 2014-15. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 3,37,39,000/-- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 3,37,39,000/- made u/s 68, in disregard to the inclusive definition of books of account in section 2(12A) of the Act, particularly when section 68 uses the word "books" and not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT....
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....s while disposing off the appeal of the revenue in the case of a group entity of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 for A.Y 2016-17. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of on-money could not have been made u/s 68 of the Act. The Grounds of appeal Nos. (i) to (iii) raised by the revenue are dismissed. 103. As we had while disposing off the assessee‟s appeal in ITA No. 1738/Mum/2019 for A.Y 2014-15 principally upheld the view taken by the CIT(A) that the addition w.r.t on-money receipts was liable to be restricted to the extent of the element of net income therein embedded,and had further directed the A.O to restrict the same to the extent of 15% of such receipts, therefore, the grievance ....
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.... the search proceedings. Notice u/s 153C was issued and duly served upon the assessee company for the year in question. Return of income in compliance to the notice issued u/s 153C was filed by the assessee company on 12.01.2017, declaring its income as originally returned of Rs. 21,22,88,960/-. Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 108. During the course of the assessment proceedings, it was gathered by the A.O that the seized material, viz loose papers found from the residence of Shri. Naresh Kalani made a mention of sale of 6 flats namely, Flat Nos. 801, 901, 1001, 1101, 1201 & 13/1401. Further, the seized document, viz. Page 46 & 46A found from the residence of Shri. Prateek Arora revealed receipt of on-money w.r.t flat nos. 901, 1001 and 1101 of Rs. 3.37 crore, Rs. 1.65 crore and Rs. 3.98 crore, respectively. Also, as per the seized documents, viz. Page 3 and Page 46 of the loose papers it was observed by the A.O that the assessee had entered into a deal for flat no. 1301/1401, which was completed and the agreement was registered on 08.05.2017. Observing, that the sale amount was received by the assessee earlier, th....
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....the order of the CIT(A) in appeal before us. Insofar the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in estimating the income element embedded in the on-money receiptsof Rs. 564.01 lakhs at 20% which is on the higher side and should have been estimated @12% of on-money as was offered by the assesse is concerned, we fnd that the facts and the issue therein involved remains the same as were ther before us in the case of a group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14. Accordingly, our order passed in context of the said issue while disposing off the appeal of the group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 shall apply mutatis mutandis for the purpose of disposal of the issue in hand in the case of the captioned assessee.We, thus, are of the considered view that the net income element embedded in the on-money receipts can safely be taken in the case of the captioned assessee @15% of the amount of the on-money receipts of Rs. 564.01 lacs.The Ground of appeal No. 3 is partly allowed in terms of our aforesaid observations 111. As observed....
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....ted by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. We, thus, direct the A.O to subject the income element embedded in the on-money received by the assessee during the year under consideration i.eA.Y 2015-16 to tax in terms of our aforesaid observations.The Grounds of appeal Nos. 1& 2are allowed for statistical purposes in terms of our aforesaid observations. 113. The Ground of appeal No. 4 being general is dismissed as not pressed. 114. The appeal of the assessee is allowed in terms of our aforesaid observations. (B). ITA No. 2203/Mum/2019 (revenues appeal) : 115. We shall now take up the cross-appeal of the revenue for A.Y 2015-16. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 5,64,01,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, ....
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....he material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones in the course of the search proceedings, therefore, the same could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 for A.Y 2016-17. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of th....
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....ioned assessee, viz. M/s Ekta Supreme Corporation was found in the course of the search proceedings. Return of income for A.Y. 2016-17 was filed by the assesee on 16.10.2016, declaring an income of Rs. 12,94,26,570/-. Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 123. During the course of the assessment proceedings, it was gathered by the A.O that the seized material, viz. loose papers found from the residence of Shri. Naresh Kalani made a mention of sale of 6 flats namely, Flat Nos. 801, 901, 1001, 1101, 1201 & 13/1401. Further, as per the seized document, viz. Page 46 & 46A found from the residence of Shri. Prateek Arora revealed receipt of on-money w.r.t flat nos. 901, 1001 and 1101 of Rs. 3.37 crore, Rs. 1.65 crore and Rs. 3.98 crore, respectively. Also, as per the seized documents, viz. Page 3 and Page 46 of the loose papers it was observed by the A.O that the assessee had entered into a deal for a flat no.1301/1401 which was completed and the agreement was registered on 08.05.2017.In the backdrop of the aforesaid facts, the A.O inter alia called upon the assessee to explain as to why the onmoney of Rs. 6,56,89,404/- [Rs. 265 ....
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....me loose sheets and in the data retrieved from the mobile phones, the same, thus, could not have been brought to tax u/s 68 of the Act. As regards the claim of the assessee that only the net income element of the onmoney receipt could be brought to tax, the same was principally accepted by the CIT(A). It was observed by the CIT(A) that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15%of the on-money receipts for tax, which was accepted by the commission. At the same time, the CIT(A) observing that the basis for quantification of the net income element of the on-money receipts at 12% could not be substantiated by the assessee, therefore, he substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. 125. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. Insofar the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in estimating the income element embedded in the on-money received at 20% of Rs. 658.89 lakhs which is on the higher side and should have been estimated @12% of on-money as was off....
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....he authorised representatives for both the parties in context of the issue in hand i.e the year of assessability of the on-money receipts. Inour considered view, as the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been accounted for or would be accounted for by the assessee as per its regular method of accounting that has been accepted by the department. Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the accounting of such income have to be made on the basis of the method of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. We....
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....ied the matter in appeal before us. It is the claim of the revenue that the view arrived at by the CIT(A) is in complete disregard of the fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition. Further, it is the claim of the revenue that as the term used in Sec. 68 is "books" and not the "regular books" of account, therefore, the view arrived at by the CIT(A) by drawing support from the definition of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Also, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Further, the revenue is aggrieved with the restriction of the addition of the on-money receipts to 20% of the entire amount by the CIT(A). 132. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed in....
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....up the appeal filed by the captioned assessee, viz. M/s Ekta Shelters Pvt. Ltd. for A.Y 2015-16. The assessee has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us : "1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition @ 20% of the on-money in this year without considering the fact- that the appellant offered the income of Rs. 29.76 lakhs @12% of on-money of Rs. 248 lakhs in A.Y 2016-17. 2. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the year of completion of the project or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting project completion method. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from the on-money received at 20% which is on a higher side and should have been estimat....
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....had been offered in the computation of income for A.Y 2017-18 as the "agreements‟ pertaining to the concerned flats were registered during the F.Y 2016-17. (iii). On-money of Rs. 648 lakhs pertaining to Ram Laxmi Niwas Project shall be considered for computing the income in the year of completion of the project. Accordingly, it was the claim of the assessee that part of the amount of on-money of Rs. 1219.50 lacs had already been taken into consideration in computing the income of the succeeding years in which the project was completed, while for the remaining part would duly be considered in the year in which the concerned project is completed. However, the aforesaid reply of the assessee did not find favour with the A.O who therein treated the entire amount of on-money of Rs. 249 lac [Rs. 150 lac (+) Rs. 99 lac] received by the assessee during the year in question as its unaccounted receipts u/s 68 of the Act. 139. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats, therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed tha....
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....he net income element embedded in the on-money receipts can safely be taken in the case of the captioned assessee @15% of the amount of the on-money receipts of Rs. 249lacs.The Ground of appeal No. 3 is partly allowed in terms of our aforesaid observations 141. We shall now deal with the grievance of the assessee that the lower authorities are in error in concluding that the on-money so received by it w.r.t Flats/Shops in its projects "Ram Laxmi Niwas" and "Iris" was to be assessed in the year of receipt. As observed by us hereinabove, the A.O held a conviction that the amount of onmoneyreceived by the assessee w.r.t Flats/Shops in its projects, viz."Ram Laxmi Niwas" and "Iris" was to be assessed as the unaccounted receiptsof the assessee in the year of receipt itself. On being queried that as to why the on-money aggregating to Rs. 249 lac received by the assessee w.r.t Flat/Shop Nos. 1001 and 1002 in its project, viz. "Iris" amounting to Rs. 150 lacs and Rs. 99 lac, respectively, may not be brought to tax in the year of receipt itself i.eA.Y 2015-16, it was submitted by the assessee that the net income of Rs. 29.76 lacs i.e 12% of the on-money of Rs. 249lac pertaining to IRIS proj....
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....ot pressed. 144. The appeal of the assessee is partly allowed in terms of our aforesaid observations. (B). ITA No. 2197/Mum/2019 (revenues appeal) : 145. We shall now take up the cross-appeal of the revenue for A.Y 2015-16. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us: "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 2,49,00,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 2,49,00,000/- made u/s 68, in disregard to the inclusive definition of books of account in section 2(12A) of the Act, particularly when section 68 uses the word "books" and not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness....
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....ronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones in the course of the search proceedings, therefore, the same could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group entity of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of ....
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..../Mum/2019 (assessee's appeal) : 152. We shall now take up the appeal filed by the captioned assesseefor A.Y 2016-17. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition @ 20% of the on-money in this year for (IRIS Project) the on-money receipts of Rs. 323.50 lakhs for which the appellant offered the income of Rs. 38.82 lakhs @12% of on-money of Rs. 323.50 lakhs in A.Y 2017-18 when the agreement was registered. 2. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the year of completion of the project ‗RAMLAXMI' or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting project completion method. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has ....
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....gly, it was the claim of the assessee that part of the amount of on-money of Rs. 1219.50 lacs had already been taken into consideration in computing the income of the succeeding years in which the project was completed, while for the remaining part would duly be considered in the year in which the concerned project is completed. However, the aforesaid reply of the assessee did not find favour with the A.O who was of the view that the entire amount of on-money receipts pertaining to the year in question i.e Rs. 323.50 lac (Iris Project) and Rs. 648 lac (Ram Laxmi Niwas Project) were to be brought to tax in the hands of the assessee during the year under consideration i.e A.Y 2016-17. Further, the A.O excluded the income of Rs. 29.76 lac i.e 12% of on-money of Rs. 249 lac that was received by the assessee w.r.t "Iris project" in the immediately preceding year i.e A.Y 2015-16 and was offered in its computation of income for the year in question i.e A.Y 2016-17. Backed by his aforesaid observations, the A.O made an addition of Rs. 293.74 lac [Rs. 323.50 lacs (-) Rs. 29.76 lacs] as regards the on-money received by the assessee w.r.t "Iris project". Further, the A.O added the on-money of....
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....or the year in question i.e A.Y 2016-17. Apart from that, it was observed by the CIT(A) that as the onmoney receipts were held by her as business income and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A)directed the A.O to allow set-off of current years business loss and brought forward losses after due verification. 156. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. Insofar the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in estimating income element embedded in the on-money received at 20% of Rs. 971.50 lacs (netted at Rs. 941.74 lacs) which is on the higher side and should have been estimated @12% of on-money as was offered by the assesse is concerned, we fnd that the facts and the issue therein involved remains the same as were there before us in the case of a group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14. Accordingly, our order passed in context of the said issue while disposing off the appeal of the group concern of the assessee, viz. Ekta ....
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.... i.e A.Y 2016-17, the A.O accordingly restricted the addition w.r.t on-money receipt pertaining to Flat/Shop Nos. 1102, 502/802 and 101 in its project "Iris"to 293.74 lac [Rs. 323.50 lac (-) Rs. 29.76 lac]. Further, the A.O added the entire amount of on-money aggregating to Rs. 648 lac that was received by the assessee w.r.t Flat/Shop Nos. 1101 and 901 in its project, viz. "Ram Laxmi Niwas" amounting to Rs. 475 lacs and Rs. 173 lac, respectively. On appeal, the CIT(A) though found favour with the assessee‟s claim that the addition w.r.t the on-money was to be restricted to the extent of the income element therein embedded, however, she did not dislodge the view arrived at by the A.O as regards the year of taxability of the on-money i.e the year of receipt itself. 158. Before us, the assessee has assailed the view taken by the lower authorities who had concluded that the on-money was to be brought to tax in the year of receipt itself. We have heard the authorised representatives for both the parties in context of the issue in hand i.e the year of assessability of the on-money receipts. Inour considered view, as the receipt of on-money is inextricably interlinked and in f....
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.... ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition to 20% of on-money even though the assessee has failed to produce details of expenses incurred?" 162. As observed by us hereinabove, the A.O had brought to tax the entire amount of on-money receipts of Rs. 9,41,74,000/- u/s 68 of the Act in the hands of the assessee company. On appeal, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. Aggrieved with the aforesaid observation of the CIT(A) the revenue has carried the matter in appeal before us. It is....
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....sue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of on-money could not have been made u/s 68 of the Act. The Grounds of appeal Nos. (i) to (iii) raised by the revenue are dismissed. 164. As we had while disposing off the assessee‟s appeal in ITA No. 1742/Mum/2019 for A.Y 2016-17 principally upheld the view taken by the CIT(A) that the addition w.r.t on-money receipts was liable to be restricted to the extent of the element of net income therein involved,and had further directed the A.O to restrict the same to the extent of 15% of such receipts, therefore, the grievance of the revenue that the CIT(A) had erred in restricting the addition to 20% of on-money receipts is subsumed in our aforesaid adjudication of the issue and observations recorded therein. The Ground of appeal no. (v) raised by the revenue is dismissed. 165. Insofar the grievance of the revenue that the CIT(A) had erred in vacating the view taken by the A.O who as per the mandate of Sec. 115BBE of the Act had declined the assessee‟s claim for set-off of the business losses against the additions made u....
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....y your appellant. 3. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 169. Briefly stated, the assesseefirm is engaged in the business of a builder and developer. Original return of income for A.Y 2015-16 was filed by the assessee firm on 26.09.2015, declaring a loss of (Rs. 2,24,292/-). Search and seizure action was conducted on 05.10.2015 in the case of the entities belonging to the "Ekta group". Incriminating material pertaining to the captioned assessee firm, viz. M/s Ekta Shubham Venture was found in the course of the search proceedings. Notice u/s 153C was issued and duly served upon the assessee firm for the year in question. Return of income in compliance to the notice issued u/s 153C was filed by the assessee firm on 07.01.2017 declaring the loss as originally returned of (Rs. 2,24,492/-). Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 170. During the course of the assessment proceedings, it was gathered by the A.O that the assessee had undertaken construction of a project, viz."Panorama" at Chembur. On....
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....ted by the CIT(A). It was observed by the CIT(A) that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15% of the onmoney receipts for tax, which was accepted by the commission. At the same time, the CIT(A) observing that the basis for quantification of the net income element embedded in the on-money receipts at 12% could not be substantiated by the assessee, therefore, she substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. It was further observed by the CIT(A) that the assessee was following Percentage Completion Method in the past and had shifted to Project Completion Method only in A.Y 2016-17. It was further observed by the CIT(A) that the asseseee had not given any reason for changing the method for recognising its revenue from Percentage Completion Method to Project Completion Method. It was further noticed by the CIT(A) that some of the group concerns of the assessee were following Percentage Completion Method.Observing, that the Percentage Completion Method was also in accordance with the guidelines issued by the ICAI, the CIT(A) was of the view ....
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....ur aforesaid observations 173. We shall now deal with the grievance of the assessee that the lower authorities are in error in concluding that the on-money so received by it w.r.t Flats in its project "Panorama" was to be assessed in the year of receipt. As observed by us hereinabove, the A.O held a conviction that the amount of on-moneyreceived by the assessee w.r.t Flats in its project, viz."Panorama" was to be assessed as the unaccounted receiptsof the assessee in the year of receipt itself. On being queried that as to why the on-money aggregating to Rs. 185 lac received w.r.t Flat Nos. 303 and 601 in its project, viz. "Panorama" amounting to Rs. 120 lac and Rs. 65 lac, respectively, may not be brought to tax in the year of receipt itself i.e A.Y 2015-16, it was submitted by the assesseethat the said amounts would be considered for determining the income in the year of completion of the project.However, the aforesaid reply of the assessee did not find favour with the A.O who treated the entire amount of on-money received by the assessee during the year in question as its unaccounted receipt u/s 68 of the Act.On appeal, the CIT(A) though found favour with the assessee‟s cla....
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....s of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 1,85,00,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 1,85,00,000/- made u/s 68, in disregard to the inclusive definition of books of account in section 2(12A) of the Act, particularly when section 68 uses the word "books" and not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition to 20% of on-m....
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....ourse of the search proceedings, therefore, it could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of on-money could not have been made u/s 68 of the Act. The Grounds of appeal Nos. (i) to (iii) raised by the revenue are dismissed. 180. As we had while disposing off the assessee‟s appeal in ITA No. 1744/Mum/2019 for A.Y 2015-16 principally upheld the view taken by the CIT(A) that the addition w.r.t on-money receipts was liable to be restricted to the extent of the ....
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....holding that income from on-money received is assessable in the year of receipt as against in the year of completion of the project "Panorama" or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting project completion method for this project. 2. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that the profit from on-money of flats in the project "Panorama" was assessable in this year though the flats were not registered during this year. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from the on-money received at 20% of Rs. 277 lakhs which is on a higher side and should have been estimated @12% of on-money as offered by your appellant. 4. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 185. Search and seizure action was conducted on 05.10.2015 in the case of the entities belonging to th....
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....therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones, the same, thus, could not have been brought to tax u/s 68 of the Act. As regards the claim of the assessee that only the net income embedded in the onmoney receipt could be brought to tax, the same was principally accepted by the CIT(A). It was observed by the CIT(A) that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15%of the on-money receipts for tax, which was accepted by the commission. At the same time, the CIT(A) observing that the basis for quantification of the net income element of the on-money receipts at 12% could not be substantiated by the assessee, therefore, he substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. It was further observed by the CIT(A) that the assessee was following Percentage Completion Method in the....
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....O held a conviction that the amount of on-moneyreceived by the assessee w.r.t Flats in its project, viz."Panorama" was to be assessed as the unaccounted receiptsof the assessee in the year of receipt itself. On being queried that as to why the on-money aggregating to Rs. 277 lac received w.r.t Flat Nos. 1401 and 1002 in its project, viz. "Panorama" amounting to Rs. 77 lac and Rs. 200 lac, respectively, may not be brought to tax in the year of receipt itself i.e A.Y 2015-16, it was submitted by the assesseethat the said amounts would be considered for determining the income in the year of completion of the project. However, the aforesaid reply of the assessee did not find favour with the A.O who therein treated the entire amount of on-money received by the assessee during the year in question as its unaccounted receipt u/s 68 of the Act.On appeal, the CIT(A) though found favour with the assessee‟s claim that the addition w.r.t the on-money was to be restricted to the extent of the income element therein embedded, however, she did not dislodge the view arrived at by the A.O as regards the year of taxability of the on-money i.e the year of receipt itself. 190. Before us, the ....
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....ollowing grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 2,77,00,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 2,77,00,000/- made u/s 68, in disregard to the inclusive definition of books of account in section 2(12A) of the Act, particularly when section 68 uses the word "books" and not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of ....
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....sheets and in the data retrieved from the mobile phones in the course of the search proceedings, therefore, it could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17. As the facts and the issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of on-money could not have been made u/s 68 of the Act. The Grounds of appeal Nos. (i) to (iii) raised by the revenue are dismissed. 196. As we had while disposing off the assessee‟s appeal in ITA No. 1745/Mum/2019 for A.Y 2016-17 principally upheld the view taken by the CIT(A) that the addition w.r.t....
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....s before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 75,00,000/- made u/s 68 of the IT Act, 1961. (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition to 20% of on-money even though the assessee has failed to produce details of expenses incurred?" 201. Search and seizure action was conducted on 05.10.2015 in the case of the entities belonging to the "Ekta group". Incriminating material that had surfaced in the course of the search proceedings revealed that the assessee firm, viz. M/s Ekta World which was engaged in the business....
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....n its project, viz. "Occult". Further, the A.O was of the view that the onus was cast upon the assessee to disprove the notings of receipt of cash on the loose paper that was seized in the course of the search proceedings from its premises. Backed by his aforesaid observations, the A.O added the amount of Rs. 75 lac as on-money received by the assessee firm on sale of flat in its project, viz. "Occult" at Chembur. 203. On appeal, the CIT(A) on the basis of exhaustive deliberations concluded that in the absence of any evidence either direct or corroborative, the addition made only on the basis of some whatsapp messages could not be upheld. Accordingly, the CIT(A) vacated the addition of Rs. 75 lac made by the A.O. 204. Aggrieved, the revenue has assailed the order of the CIT(A) before us. The ld. Authorised representative (for short "A.R") for the assessee at the very outset submitted that as the tax effect involved in the present appeal filed by the revenue was below that contemplated in the CBDT Circular No. 17/2019, dated 08.08.2019, therefore, the same was not maintainable. 205. As submitted by the ld. A.R, and rightly so, the Central Board of Direct Taxes (CBDT) vide i....
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....ions. 210. We agree with the above contentions of the Ld. D.R and make it clear that the appellant revenue shall be at liberty to point out the exceptions and we will take appropriate remedial measures in this regard. 211. Resultantly, with the above observations the captioned appeal involving a "tax effect‟ of less than Rs. 50 lac is dismissed. 212. The appeal of the revenue is dismissed in terms of our aforesaid observations. (B). ITA No. 2200/Mum/2019 (revenues appeal) : 213. We shall now take up the appeal of the revenue in the case of the captioned assessee for A.Y 2016-17, which in turn arises from the order of the CIT(A) vacating the penalty imposed by the Addl. CIT, Central Range-6, Mumbai u/s 271D of Rs. 75 lacs. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the penalty levied u.s 271D amounting to Rs. 75,00,000/-, by relying on decision in quantum additions? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate....
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....lty u/s 271D of the Act. Accordingly, the CIT(A) vacated the penalty u/s 271D of Rs. 75 lac imposed by the Addl. CIT. 216. Aggrieved, the revenue has assailed the order of the CIT(A) before us. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Ld. D.R relied on the order passed by the Addl. CIT dated 29.06.2018 imposing penalty u/s 271D of the Act. It was submitted by the ld. D.R that as the factum of receipt of unaccounted project receipts of Rs. 75 lac by the assesseewas clearly discernible from the whats app messages exchanged between Shri Prateek Arora, a key employee of the assessee group and Shri. Vivek Mohanani, promoter of the assessee groupthus, the Addl. CIT observing that the aforesaid transaction of the assessee was in contravention of the express provisions of Sec. 269SS of the Act had rightly imposed penalty u/s 271D of the Act. It was submitted by the ld. D.R that as the CIT(A) had erred in vacating the penalty imposed by the Ad....
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....ad denied of having received the aforesaid impugned amount of Rs. 75 lac. As observed by us hereinabove, it was the claim of the assessee that it had not received any amount in cash from sale of flats/units in its building project after 01.06.2015 i.e in violation of the provisions of Sec. 269SS of the Act. In order to fortify its aforesaid claim, it was submitted by theassessee that it had neither carried out any sale of a flat in its project "Occult" to any person by the name of "Venket" nor was there any broker by the said name for sale of flats in its said project. However, the Addl. CIT was not inclined to accept the explanation of the assessee, and being of the view that the assessee had in contravention of the provisions of Sec. 269SS of the Act received unaccounted project receipts of Rs. 75 lac, therein imposed a penalty u/s 271D of Rs. 75 lac on the assessee firm. 219. We have deliberated at length on the issue under consideration in the backdrop of the respective contentions advanced by the authorised representatives for both the parties, and have also perused the material available on record. Although, the aforesaid whats app messages exchanged between Shri Prateek A....
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....p, we are of the considered view that as neither the A.O nor the Addl. CIT had brought anything on record to show that the assessee had in fact received cash of Rs. 75 lac, no penalty u/s 271D could justifiably be imposed on the basis of assumptions, presumptions, surmises and conjectiures de hors any iota of evidence proving the same. Our aforesaid view that adverse inferences cannot be drawn in the hands of an assessee merely on the basis of unsubstantiated presumptionsis fortified by the order of the ITAT, Bangalore in the case of Nandini Deluxe Vs. ACIT (2014) 42 CCH 20 (Bang). In its said order, it was inter alia observed by the Tribunal that taxing of profits earned on unexplained sales on the basis of figures found in the mobile phones of the partner without bringing on record any evidence to substantiate the addition made was not allowed. Accordingly, in the backdrop of our aforesaid deliberations, finding no infirmity in the view taken by the CIT(A) that penalty imposed by the Addl. CIT u/s 271D in the absence of any evidence of receipt of the impugned amount of Rs. 75 lac by the assessee cannot be sustained, we uphold the same. 220. The appeal filed by the revenue i....
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....at No. Amount (in lacs) Financial Year of Receipt Date of agreement The One 1401 & 1402 136.30 2013-14 23.02.2015 1201 & 1202 200.00 2013-14 25.07.2014 Grand Total 336.30 Observing, that the assessee had not offered the aforesaid amount of on-money of Rs. 3,36,30,000/- as its additional income in the return of income, the A.O called upon it to show cause as to why the same may not be added to its returned income specifically when the sale transactions for the said flats were registered in the period relevant to A.Y 2014-15. In reply, the assessee denied of having received any on-money w.r.t the transactions in question. However, the A.O was not inclined to accept the aforesaid reply of the assessee. It was observed by the A.O that the claim of the assessee that no on-money was received w.r.t sale of flats of its project "The One" could not be accepted as the seized document, viz. Annexure A-3 - Page 3-4 clearly mentioned the bifurcation of the rate per sq. ft. for the flats into cheque and cash portion. It was further observed by the A.O that the assessee had also failed to produce any material in ....
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....uld not suffice to dislodge the evidentiary value of the notings and the facts stated by Shri. Prateek Arora (supra) in his statement recorded on oath u/s 132(4) of the Act. Backed by his aforesaid observations, the CIT(A) rejected the claim of the assessee and added the aforesaid amount of Rs. 3,36,30,000/- as on-money received by the assessee on sale of the aforesaid flats in question. 226. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. We have heard the ld. Authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial prouncements that have been pressed into service by them to drive home their respective contentions. As observed by us hereinabove, during the course of the search proceedings conducted on 07.10.2015 on the "Ekta Bhoomi" group certain loose papers were found from the residence of Shri. Prateek Arora, key employee of "Ekta Group", which thereafter were marked as Annexure A-3 - Page 1-74A. On a perusal of the notings of Annexure A-3 - Page 3 & 4 the A.O held a conviction that the same were in context of the onmoney that was rec....
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....essee‟s Pali Hill project, viz. "The One" for a consideration of Rs. 18,00,00,000/-, however, he denied the explanation of Shri. Prateek Arora (supra) as regards the cash element that was allegedly stated to have been involved in respect of the said transaction. Further, it was stated by him that the notings in the seized document, viz. Annexure A-3 - Page No. 3 pertained to Flat No. 701 in the assessee‟sPali Hill project, viz. "The One". Relevant extract of the statement of Shri. Vivek Mohanani (supra) recorded u/s 132(4) is reproduced as under : "For Page No. 3 I would like to explain that this 5180 sq. ft. area pertain to a flat no. 701 in Pali Hill project named as "The One". Yes, I agree that one flat has been bought by me at Rs. 18,00,00,000/-. However for other explanation given by Prateek I am not agreed with Prateek regarding cash component." On the basis of the aforesaid facts the A.O observed that on-money of Rs. 2.20 crore was received w.r.t the property that was bought by Shri. Vivek Mohanai. Observing, that the additional value of cheque of Rs. 83.70 lac was paid by the assessee towards registration of Flat Nos. 1401 & 1402, the A.O observed....
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....00,00,000/- was received and balance was shown as receivable Rs. 1,11,37,500/-. Transaction 2 : The second transaction mentioned at the same page was for the 5th habitable floor and amount mentioned was Rs. 9.20 crores. Brokerage @2% amounting to Rs. 18,40,000/- was deducted and balance is worked out at Rs. 9,01,60,000/-. As mentioned above, this amount was again divided by 2 and worked out Rs. 4,50,80,000/-, out of which again Rs. 4,00,00,000/- was the agreement value and Rs. 50,80,000/- was the cash portion. Transaction 3: The entry pertaining to 6th habitable floor is also mentioned and the price as discussed and confirmed @Rs. 40,000/- per sq.ft. Some other entries were also written on the bottom of the page indicating habitable floor and the name of the parties and the status of the occupancy of the floor." On being confrontedShri. Vivek Mohanani (supra) in his statement recorded on oath u/s 132(4) rebutted the statement of Shri. Prateek Arora (supra) as regards his explanation w.r.t the contents of Page 4 of Annexure A-3on the ground that the project in question, viz. "The One" did not have a 8th habitable floor. In order to fortify his afores....
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....of Rs. 2,20,00,000/- towards purchase of a flat admeasuring 5180 sq.ft in the assessee‟s Pali hill project, viz. "The One". Observing, that an additional value of cheque of Rs. 83.70 lac was paid towards registration of Flat Nos. 1401 & 1402, the A.O restricted the cash component for purchase of the aforementioned property to an amount of Rs. 136.30 lacs [Rs. 220 lac (-) Rs. 83.70 lac]. Accordingly, backed by his aforesaid observations the A.O madean addition of Rs. 136.30 lacs (supra) towards on-money which as per him was paid by Shri. Vivek Mohanani (supra) for purchase of the property in question. 231. On a perusal of the statement of Shri. Prateek Arora (supra) recorded u/s 132(4), we find that it was stated by him in reply to Question No. 2that the document, viz. Annexure A-3 - Page No. 3 containing the impugned notings was given to him by the promoter of the assessee company. On being confronted, Shri. Vivek Mohanani (supra), promoter of the assessee company, had in his statement recorded on oath u/s 132(4) stated that the area of 5180 Sq. ft pertained to a Flat No. 701 in the assessee‟s Pali Hill project, viz. "The One". Further, it was though admitted by h....
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....document, viz. Annexure A-3 - Page No. 4 which makes a reference to "7th Habitable 12th Floor - 5180 sq. ft." further fortifies the aforesaid claim of Shri. Vivek Mohanani (supra) that the notings in the seized document, viz. Annexure A-3 - Page No. 3pertained to Flat No. 701 in the assessee‟s Pali Hill project, viz. "The One". As such, in the backdrop of our aforesaid observations we are unable to persuade ourselves to subscribe to the unsubstantiated adverse inferences drawn by the lower authorities that the notings w.r.t the area of 5180 sq. ft in the seized document, viz. Annexure A-3 - Page No. 3 pertained to the Flat Nos. 1401 & 1402 that was purchased by Shri. Vivek Mohanai (supra) in the assessee‟s Pali Hill project, viz. "The One". In our considered view the A.O had failed to carry out necessary verifications as regards the impugned notings in the seized document, viz. Annexure A-3 - Page 3. We would not hesitate to observe that de hors any supporting material the A.O had hushed to conclude that the impugned notings in the seized document, viz. Annexure A3 - Page 3 pertained to the on-money that was received by the assessee w.r.t Flat Nos. 1401 & 1402 purchased....
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....pt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction to the extent accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been or would be accounted for by the assessee as per its regular method of accounting that has been accepted by the department.Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the accounting of such income have to be made on the basis of the method of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. The Ground of appeal No. 2 is partly allowed in terms of our aforesaid observations (A). Re: Addition towards on-money w.r.t Flat Nos. 1201/02 : Rs. 200 lac. 233. We shall now d....
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....ven placed on record the duly approved plan of the said project. Relevant extract of the statement of Shri. Vivek Mohanani (supra) that was recorded u/s 132(4) is reproduced as under: "For Page No. 4as stated by Prateek this pertain to Pali Hill project, however there is no 8th habitable floor in this project. Further I hereby furnish the project plan duly approved in support of my contention as Annexure 1." However, we find that the A.O discarding the duly substantiated rebuttal of Shri. Vivek Mohanani (supra), had acted upon the unsubstantiated notings in the seized document, viz. Annexure A3 - Page 4 and chose to be guided by the statement of Shri. Prateek Arora (supra). 234. We have given a thoughtful consideration to the issue before us in the backdrop of the material available on record and the contentions advanced by the authorised representatives for both the parties. On a conjoint perusalof the seized document, viz. Annexure A3 - Page 3 & Page 4, we hold a strong conviction that the notingstherein mentioned inter alia deals with a common transaction pertaining to a property admeasuring 5180 sq. ft on the 7th Habitable 12th floor in the assessee‟s Pa....
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....ed document, viz. Annexure A3 - Page 4, which as observed by us hereinabove had been dislodged by the assessee on the basis of clinching material. Accordingly, in the backdrop of our aforesaid deliberations the adverse inferences and the consequential addition made by the lower authorities as regards the alleged on-money of Rs. 200 lac (supra) is herein vacated in terms of our observations recorded hereinabove. The Ground of appeal No. 1 raised by the assessee to the extent relatable to the aforesaid addition is herein allowed in terms of our aforesaid observations. 236. The Ground of appeal No. 3 being general is dismissed as not pressed. (B). ITA No. 2193/Mum/2019 (revenues appeal) : 237. We shall now take up the cross-appeal of the revenue for A.Y 2014-15. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 3,36,30,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and ....
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....sed the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones in the course of the search proceedings, therefore, it could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms a....