2021 (7) TMI 1134

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....urse of search evidence exhibiting receipt of on-money i.e. money in cash, over and above booking amount was found. The AO was of the view that the gross amount calculated on the basis of such evidence is to be treated as unexplained income of the assessee; whereas on appeal, the ld.CIT(A) has recorded a finding that only element of profit embedded in such cash receipts is to be treated as income of the assessee. The assessee has accounted for 8% of such receipts as its income, whereas the ld.CIT(A) has estimated the profit element on such receipt at 20%. The Revenue is impugning deletion of addition by the ld.CIT(A) i.e. according to the Revenue gross amount should have been treated as unexplained income of the assessee, on the other hand,....

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.... 11,55,00,000 7,02,75,000 22,43,18,000 The AO stated that inspite of admission of on-money receipt during the search & later on before the Settlement Commission (application was rejected by the Settlement Commission), the appellant did not show on-money receipt as its income in the return filed. 5.1 Facts of the case have been considered carefully. There is no dispute about the receipt of on money related to the project developed by the appellant. But the AO considered on-money receipt of Rs. 66.40 crores as income of the appellant for AY 2014-15 & 2015-16, whereas the appellant has considered on-money receipt of Rs. 58.76 crore is 5 years. Appeals for previous years have been decided by me. The summary of additions ....

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....hd/2018. Similarly, order of the ld.CIT(A) dated 14.8.2018 for the above assessment years were challenged by the Revenue also vide IT(SS)A.No. 320, 321 and 322/Ahd/2018. These appeals have been decided by the Tribunal vide its order dated 21.2.2020. The issue on these appeals was whether the profit element embedded in the alleged on-money receipts is to be computed at 8% as declared by the assessee or 20% as determined by the CIT(A) or the gross-amount as assessed by the AO. After detailed discussion, the Tribunal has accepted the contentions of the assessee and held that profit element embedded in those unaccounted receipts is to be taken at 8%. Consequently the appeals of the Revenue were rejected. 5. We find that exactly similar issue....

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.... pertinent to observe that section 144 of the Income Tax Act provides discretion in the AO to pass best judgment when an assessee failed to appear before him, and to submit requisite details. In other words, it provides power in the AO to estimate an income of the assessee. We deem it appropriate to take note the relevant part of this section. It reads as under: 18. For exercising the best judgment, section 144 of the Income Tax Act provide the guidance to the ld.AO. This section reads as under: "144. [(1)] If any person- (a) fails to make the return required [under sub-section (1) of section 139] and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b....

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.... of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.]" 19. It is pertinent to note that that section 144 would suggest that in order to estimate income, learned Assessing Officer has to exercise his discretion which should be in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment assessment, the Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, ....

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....n such assessee needs not to maintain books of accounts, and its profit can be assumed at 8%. Though this special provision is not applicable in the present case, because gross receipts exceeded the turnover provided under section 44AD, but again we are required to find out a reasonable percentage of income which could have been alleged as earned by the assessee out of such gross receipts. This formation of opinion at the end of the Tribunal met the approval of Hon'ble Gujarat High Court in the case of Koshor Mohanlal Telwala (supra). As against this, the AO has not collected any data either from other assessees who are engaged in this line of business, and who have developed identical projects. We have perused the finding of the ld.CIT(A) ....