AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 362
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....of income on 31.10.2017 declaring total income of Rs. 79,89,053/-. The Department had earlier carried out survey action under section 133A of the Act in the hands of the assessee on 30.8.2016. During the course of survey, a statement was recorded on oath from one of the partners named Shri Govind V. Vikmani. In the said statements, he had agreed to surrender a sum of Rs.4.23 crores for taxation over and above regular profit. The above said amount related to "on money" receipt on sale of flats. The basis for arriving at the above said figure is explained in brief. During the course of survey operations, it was noticed that there was difference of Rs.11,33,21,965/- between MM Value (Value determined by for stamp duty purposes) and Sale value and the said difference was considered as "on money receipts". It was noticed that the assessee had offered a sum of Rs.7,10,00,000/- under Income Disclosure Scheme of 2016. Accordingly, it was agreed by the partner to surrender the balance amount of Rs.4,23,21,965/-. The Assessing Officer noticed that the assessee did not offer the above said amount as mentioned in the statement. Accordingly, during the course of scrutiny proceedings, the Assess....
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....t the assessee has sold thirty flats during the year under consideration after 1.4.2016 and there was difference in the sale consideration mentioned in the agreement and MM value. The AO computed the said difference at Rs.3,40,69,184/- relating to 30 flats (flat numbers are mentioned in paragraph 3.11 at page 10 of the assessment order). Accordingly, the AO assessed the above said amount as unexplained income u/s 69A of the Act towards on money received by the assessee. The learned CIT(A) deleted the addition and hence the Revenue has filed this appeal. 6. We have heard the parties on this issue and perused the record. We noticed that the learned CIT(A) has deleted the addition with following observations :- "2.3 I have gone through the submission of the assessee and perused the assessment order. AO has made addition of Rs. 3,40,69,184/-purportedly on the basis of statement of Shri Govind V Vikmani. Assessee has alleged that working of this figure has not been provided by the AO. I find that in the assessment order at para 11 this figure has been stated to related to certain flats mentioned in that para. However the working is not available in the assessment order. ....
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....23,21,965/- In spite of the statement made by Mr Vikmani, as per accountancy rules any income has to be credited in books in the year the sale takes place. As per IT Act, it is the real income which has to be taxed. As per the working of the assessee, sale price as per agreement has been taken. The assessee has honoured its commitment to offer the profit on sale of flats. However since sales have taken place in more than one year the respective income has been offered in relevant years. The AO has not relied on any document to establish that the entire amount of Rs 4,23,21,965/- was related to the current assessment year. Also it has not been shown that amount of sale related to the flats sold during the current year has not been credited in the books and not offered in the working of the income of the year. The assessee is a builder and offers income on the basis of percentage completion method. In respect of sale of flats during the year, receipt of Rs 22,38,92,850/- has been credited. As per the working produced, for the AY 2017-18 the assessee has sold 6280.98 sq.ft area which is 89.8% of total. Sale value of flat sold is Rs 28,21,18,408. After accounting for ....
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....ale consideration of flats has been increased and it is almost equal or more than the MM Value. Accordingly, it was submitted that the above said difference of Rs.4.23 crores has already been absorbed in the sale price itself. (b) The assessee is following percentage completion method as per the Accounting Standard issued by ICAI and hence the income is offered in the year in which sale of flats takes place. (c) We noticed that the AO has computed the addition of Rs.3.40 crores in respect of 30 flats. It is the case of the assessee that all these flats have not been sold during the year relevant to AY 2017-18 alone. (d) It is submitted that the alleged on-money receipt was presumed, since the Sale consideration shown in the Agreement for sale was more than the MM Value. However, the consideration declared in the actual sale deed was equal or more than the MM Value. 8. In support of the above, the assessee has furnished the details of flats numbering 30 sold during the years relevant to AY 2017-18, 2018-19 and 2019-20. The assessing officer has computed the difference between the value shown in the Agreement for sale and the M M Value at Rs.3,40,69,184/....
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.... also, which is not in accordance with law. We notice that the AO did not conduct any independent enquiry with the buyers of flats in order to ascertain the cash payments made by them. All these facts cumulatively prove that the AO has made the impugned addition of Rs.3.40 crores without any basis. Probably, he has given much importance to the Statement given by the partner of the assessee firm. Even if an assessee surrenders any income in the Statement, yet it is possible for him to show that the said surrender was made under misconception. In this case, we notice that the assessee has explained as to why it did not offer the additional income surrendered by its partner. The assessee has, in fact, furnished details before the AO stating that the actual sale consideration has been received equal to or more than the MM Value. We notice that the AO has not verified those details at all. Thus, we notice that the AO has made the impugned addition without any basis. When there is no basis for arriving at the conclusion that the assessee has received any on-money, the addition is not justified as held by Hon'ble Supreme Court in the case of PCIT vs. Nishant Construction (P) Ltd (2019)(10....
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....; List of sundry creditors 0 11989146 11989146 Indirect expenses 0 272804 272804 Direct expense 0 176877 176877 Joshi-plan pass 1000000 0 1000000 Rudraksh Developers payable 243333 0 243333 Total 57104649 31367928 88472577 Total 53430747 35041830 88472577 Before the AO, the assessee denied the contents of the Statement given by Mr Hemal Bheda. However, the assessee sought some time to examine the details contained in the above said document. Since the assessee did not furnish the details, the AO assessed entire cash receipts of Rs.5,71,04,649/- shown in the above said document as unexplained income of the assessee u/s 69A of the Act. The Ld CIT(A) also confirmed the same. 13. We heard the parties and perused the record. Following arguments, inter alia, were advanced by Ld A.R:- (a) The AO cannot rely upon the Statement given a third party, that too,....