TaxTMI 
TaxTMI 
2021 (5) TMI 1005
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....nd employees of the companies. All these entities are commonly herein-after referred as "Rohan Group". The assessee is also one of the entity of the "Rohan group". The search action was also carried out at Registered Office of the assessee company located at II, 2nd floor, Govardhan Building, 12-14, Dr. Parekh Street, Prarthana Samaj, Mumbai - 400 004. 2. The "Rohan Group", headed by Mr. Harresh N. Mehta, is one of the leading builders of the South and Central Mumbai and mainly engaged in construction of residential buildings and redevelopment of old & dilapidated buildings. The group has re-developed over 50 buildings and constructed over 2.5 million sq. ft. residential space. Apart from M/s Rohan Developers Pvt. Ltd, other main concerns are M/s Goodwill Properties Pvt. Ltd., M/s. Silver Arch Builders & Promoters Pvt. Ltd. The main persons in this group are Mr. Harresh N. Mehta and Late Mr. Jitendra N. Mehta. Apart from these persons, Mr. Sameer Shah, Mr. Haresh M. Mehta, Mr. Riyush Vora, Mr. Kalpesh Mehta, Ms. Chaulla Joshi and Ms. Ananya Karnani are other key persons of the group who were handling financial, sales and other important functions of the business activities of....
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.... year under consideration, assessee has undertaken redevelopment of project name Moksh Plaza situated at Borivali (W). 5. The assessee filed the return of income on 30-09-2012 declaring total income at Rs. 26,99,750/-. Thereafter, notices u/s 143(2) dated 30-09-2013 and 142(1) dated 21-10-2013 along with detailed questionnaire were issued and duly served on the assessee. In response, A.R of the assessee filed the relevant information as called for by the A.O. Based on the findings in the search u/s 132 of the Act in the case of Rohan Group Concerns and their admission of additional income, AO made an addition of 30% of the Sales on account of on-money and also disallowed 25% of the conveyance charges and 30% of telephone charges added back in the hands of the assessee. 6. Aggrieved with above order the assessee preferred an appeal before the CIT(A) and filed detailed submission before Ld CIT(A). 7. Ld.CIT(A) after considering detailed submissions of the assessee and also by relying upon various judicial precedents including decision of ITAT, Special Bench decision in the case of All Cargo Global Logistics vs DCIT I.T.A Nos. 5018 to 5022 & 5059/M/10, Ld CIT(A) held that it was cl....
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....oney had been accepted over and above the registered value of the agreement. I have also noted that the AO had also relied on the same statement of Mrs. Chaula Joshi and Mr. Vijay Jasani. The contentions of the AO in that case were also the same as in the Appellant's present case. In that case also, reliance had been placed on the seized Page No. 114, confessional statement recorded u/s 132(4) of the Act, delay in filing of retraction of statements etc., 15.18. The Hon'ble Tribunal held that the statements of the employees, in Search and seizure cases, can only be used if they are supported by corroborative evidences. The department could not point out the evidence proving the receipt of alleged On-money. The Hon'ble ITAT in it's order in the case of Goodwill Properties Pvt. Ltd. had also relied in the case of DCIT Vs Silver Arch Builders and Promoters, which has been quoted extensively in the order. The relevant extract of the aforementioned case of M/s Goodwill Properties Private Limited is reproduced as under- "15. We have perused the available material. We find that the FAA has given a categorical finding of fact that no incriminating material was found duri....
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....h Builders & Promoters which is a group concern of the Appellant on this issue. The CIT(A) in its order in the case of Silver Arch Builders & Promoters for an earlier year had decided the issue of on money in her appellate order dated 29.02.2016. The issue dealt by her in that appeal is identical and based on the same evidence as in the case of the Appellant i.e., Page No. 114 of Annexure 1. The Ld. CIT(A) referred to the case of All Cargo Global Logistics Ltd. of the Special Bench of the Tribunal and held that in cases where there had not been any abatement of assessment, the assessment u/s. 153A of the Act could be made on the basis of incriminating material found during the course of search. The perusal of the statements of the employees reflected that there was no specific mention of receipt of on money, that the impugned assessment was not based on any incriminating material pertaining to the assessee seized during the search, that the addition made on account of on money was not emanating from the material found and seized during the search action. Accordingly, the addition made by the AO on the issue of on-money was deleted by the Ld. CIT(A). 15.20 Upholding the decis....
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....ers & Promoters, both are identical to the facts of the present case at hand. In these case also, there was no mention in the seized Page No. 114 of Annexure 1 of on-money w.r.t. the projects, which were developed by M/s Goodwill Properties Pvt. Ltd. or Silver Arch Builders & Promoters. 15.22 I have noted that the above decisions in the case of Goodwill Properties Private Limited and Silver Arch Builders & Promoters, both are identical to the facts of the present case at hand. In these case also, there was no mention in the seized Page No. 114 of Annexure 1 of on-money w.r.t. the projects, which were developed by M/s Goodwill Properties Pvt. Ltd. or Silver Arch Builders & promoters. 15.23 In view of these facts and circumstances, the decisions of M/s Goodwill properties Pvt. Ltd and Silver Arch Builders & Promoters will therefore apply and in all aspects to the facts of the present case. It is therefore held that the addition in respect of onmoney received in sales made needs to be deleted. Since the presumption of charging on-money can't be extended to the projects, which don't find mention in the seized document. Hence, the addition on account of on-money added b....
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....erial placed on record. We notice that the similar issue under consideration is already considered by the coordinate bench in the assessee's own case for A.Y. 2009-10, the relevant extract of the decision is reproduced below: "14. We have heard both the parties, perused materials available on record and gone through the orders of authorities below, along with case laws cited by the Ld.AR for the assessee. The solitary issue that needs to be resolved in this bunch of appeal is addition made by the AO towards on-money in cash on sale of flats. The AO has estimated 30% on total sales declared by the assessee for the relevant financial year towards receipt of on-money in cash over and above normal sales declared in the books of account on the basis of statement recorded from Shri Haresh M Mehta, director of M/s Rohan Developers Pvt Ltd. at the time of search u/s 132(4) of the Act. The AO had also taken support from statement of certain key employees, who looked after day today affairs of the assessee group. According to the AO, the contention of the assessee cannot be accepted that there is no evidence to establish that on-money is received in respect of its projects, because the sta....
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....j, Mumbai, the assessee made it clear that said amount has been seized from the residence of Shri Jitendra Mehta, director and this fact has been reflected in the Panchanama drawn during the course of search and also the same has been disclosed to tax in his individual capacity. As regards statement of director, Shri Haresh M Mehta and other employees of the group, the assessee has filed retraction statements alongwith affidavits filed by them before the AO and also explained under what circumstance they have given admission in the statement recorded u/s 132(4) of the Act. The assessee also made it clear that neither Shri Haresh M Mehta, director, nor the employees from whom statements were recorded u/s 132(4) were ever authorised to conclude sales in respect of its projects. Therefore, on the basis of their statements recorded during the course of search, no adverse inference could be drawn against the assessee regarding receipt of on-money by extrapolation of seized material found during the course of search which belonged to some other concerns. 16. Having deliberated at length on the arguments of both sides, we find that although the AO has tried to establish nexus between i....
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....ndicated that cash and other unaccounted assets found during the course of search belonged to the assessee. The Ld.AO has even failed to establish nexus between incriminating materials found during the course of search to the business of the assessee. Unless there is a direct nexus between incriminating material found during the course of search coupled with statement recorded from the director and employees of the group, merely on the basis of admission of certain parties, that too, after retraction of such statements by the parties, addition cannot be made towards receipt of on-money on adhoc basis taking a clue from statement of those persons. No doubt, estimation is possible in assessment proceedings provided the AO is having sufficient information with him regarding suppression of sales or receipt of on-money. In a case, where the department is in possession of material regarding suppression of sales or receipt of on-money for part of a period, then for the remaining period, the AO may go for estimation by taking into account various parameters including certain degree of estimation. But, then this cannot be extended or enlarged to the extent of extrapolation of information to....