TaxTMI 
TaxTMI 
2023 (11) TMI 195
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.... firm. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in ignoring the fact that the extrapolation of income was made by the Assessing Officer in respect of the units belonging to the same project and there was no dispute regarding the factum of receipt of on money on sale of the units of the said project. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the assessee has received on money in respect of sale of 23 Units of a project and the remaining 81 Units of the same projects were sold at a lower rate especially when there was no difference in the prevailing market conditions for such sale of units and all flats have been booked during the A.Y. 2014-15. 4. It is, therefore, prayed that the order the Ld. CIT(A) -4, Surat may be set aside and that of the AO may be restored to the above extent. 5. The appellant craves leave to add, alter, amend and/or withdraw any round(s) of appeal either before or during the course of hearing of the appeal. 2. Brief facts of the case are that the assessee is a firm engaged in the business of builder and developer....
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....urse of search. On confronting such fact, he stated that page No. 1 and 99 are details of booking in respect of their project Blue Bells, which is being developed by their firm Shree Narayan Corporation having two towers of 104 flats, each flat having area of 2295 square feet. The seized evidence contained details of booking of flat in Tower-B. He also stated that 27 flats have already been booked by customers in Tower-B. He admitted that flats are booked at the rate mentioned in column No. 6 of the chart and the total consideration, down payment, instalments and the balance amount is mentioned in the subsequent columns. It was explained that the amount written as 5395.55 is actually Rs. 5395545/- (2295 X 2321). 3. The Assessing Officer further recorded that during the assessment, the assessee was asked to explain the seized paper. The assessee filed their reply. The contents of reply is extracted on page No. 4 to 6 of the assessment order. In reply, while explaining seized material, the assessee in sum and substance submitted that there was total booking of 23 flats till the date of search. The initial bookings were meagre amount was paid as advance for booking of such flats. S....
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....pted the reply furnished by assessee. The Assessing Officer held that the contention of assessee regarding the cancellation of booking of flats in only an afterthought, when the evidence in respect of receipt of on money was found and seized during the search proceedings. The Assessing Officer compiled certain details of various annexures i.e. A-24, A-09, A-29, A-30, A-34 on page No. 6 and 7 of assessment order. After referring his observation in respect of various papers of seized material, the Assessing Officer held that on verification of such evidence seized during the search proceedings, confirmed the factum of receipt of unaccounted income and the contention of assessee about the cancellation is nothing but an afterthought. Mere submission without corroborative evidence is not admissible, whereas the seized document is contrary to such fact. The Assessing Officer made reference of one Satakat in respect of flat No. B-1203 executed between the buyer and the assessee firm. As per Satakat, the buyer has made payment of Rs. 2.00 lacs through cheques on 03/08/20123. Further as per details available on page No. 99 of Annexure-A-4, it shows that such buyer has made payment of Rs. 13....
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....see and estimated net taxable profit of assessee by considering various decisions in taxing 25% of net profit from unaccounted/on money of Rs. 19,29,03,930/- thereby worked out addition of Rs. 4,82,25,982/- as estimated on money. The assessee firm has made disclosure/admitted unaccounted income of Rs. 1.00 crore during search, thereby granting set off such disclosure. Income of assessee was estimated at Rs. 3,82,25,982/- and made addition in the assessment order dated 28/03/2016 passed under Section 143(3) of the Act. 8. Being aggrieved by the addition made in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee challenged the rejection of books of account as well as addition on merit. Before the ld. CIT(A), the assessee filed detailed written submission, which is recorded in para 4 of order of ld. CIT(A). In the submission, the assessee in sum and substance, submitted that a survey and search was carried out at the business and residential premises of assessee. Residence of Rajesh Vaghani, one of the partner was also searched, wherein loose papers were seized as Annexure-A3 and A4. Page No. 1 of Annexure-A3 and page No. 99 o....
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....d not the whole sale is to be added. To support such contention, the assessee relied on the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs President Industries (2002) 124 Taxman 654, CIT Vs Gurbachhan Singh J Juneja 215 ITR 509 (Guj), decision of Tribunal in M/s Shhlok Enterprise ITA No. 2018/Ahd/2016, Abhishek Corporation (1999) 63 TTJ 651 (Ahd.), Kishor Mohanlal Telwala (1999) 107 Taxman 86 (Ahd.), CIT Vs Ashalald Corporation (1991) 7 Taxman 393 (Guj) and CIT Vs Motilal C. Patel & Co. (1988) 40 Taxman 336 (Guj). 10. The ld. CIT(A) after considering the submission of assessee and the contents of assessment order, rejected the grounds of appeal with regard to rejection of books of account. However, on the addition of Rs. 3.82 crores, the ld. CIT(A) granted substantial relief and sustained the addition to the extent of Rs. 27,428/-. The ld. CIT(A) while granting substantial relief to the assessee, noted that the assessee was developing project namely Blue Bells consisting of two towers A & B having total 104 flats having area of 2295 square feet each. The evidence seized during the search contains the details of booking of flat in B-Tower only. The ld. CI....
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....at the Assessing Officer estimated on money receipt by taking highest selling price per square feet for whole of the saleable area which cannot be justified. At the time of search and survey, there was booking of only 23 flats. The ld. CIT(A) by referring various decisions of the Tribunal as relied by assessee in Surya Enclave Developers (supra) and M/s Savaliya Buildcon (supra) wherein it was held that estimated ratio receipt of on money of sale of all the flats merely on the basis of statement of two purchasers, without any tangible corroboration clearly falls in the realm of conjectures and surmises. The ld. CIT(A) also referred the decision of various other Tribunals and noted that the documents at the residence of partner containing the details of gross receipt were only in respect of 23 flats, therefore on money must be determined in respect of 23 flats and not for whole of the sealable area. 12. The ld. CIT(A) by extracting the details of all 23 flats with their area, rate mentioned at seized material, gross amount, documentation rate and documentation amount, prepared total on money of Rs. 4.01 crores and held that estimation by Assessing Officer of Rs. 19.29 crores, is ....
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....the order of Assessing Officer by reversing the order of ld. CIT(A). 14. On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee reiterated his submission as per his stand taken before the Assessing Officer as well as before the ld. CIT(A). The ld. AR of the assessee submits that after search action, the reputation of assessee was badly affected and for the fear factor, out of 23 buyers, 19 persons cancelled their booking. Ultimately the assessee has no option except to reduce the rate and to recover the investment and to declare the rate @ of Rs. 1550 per square feet. The assessee sold the flat only @ 1550/- per square feet, which was above the prevailing jantri rate determined by the State Government. The ld. AR of the assessee submits that at the best, only addition could be in respect of four units only about the receipt of on money. 15. The ld. AR of the assessee in his without prejudice submission, submitted that the Assessing Officer made extrapolation in respect of whole of the saleable area without bringing any adverse material or evidence on record. Such extrapolation is not permissible in absence of any evidence. ....
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....a Enclave Developers ITA No. 707/Ahd/2011 (16) Yadav Developers Pvt. Ltd. Vs DCIT ITA No. 3674/Ahd/2018 (17) Mani Square Ltd. Vs ACIT (2020) 118 Taxmann.com 452 (18) Fort Projects (P) Ltd. Vs DCIT (2013) 29 Taxmann.com 84 (19) CIT Vs President Industries (2002) 124 Taxman 654 (Guj) (C) on the issue of estimation of profit on on money relied on these decisions (20) CIT Vs Gurubachhan Singh J Juneja (2008) 215 CTR 509 (Guj) (21) DCIT Vs Panna Corporation Tax Appeal No. 323 of 2000 (Gujarat High Court) (22) DCIT Vs M/s Shhlok Enterprise ITA No. 2018/Ahd/2016 (23) DCIT Vs Brijwasi Developers P Ltd. ITA No. 290/Ahd/2013 (24) Kishor Mohanlal Telwala Vs ACIT (1999) 107 Taxman 86 (Ahd. Trib) (D) on the issue if during the search the entries of expenditure is found, it should be believed (25) CIT Vs Indeo Airways (P) Ltd. (2012) 26 Taxmann.com 244 (Delhi) (26) M/s S.R. Corporation Vs PCIT ITA No. 289/Srt/2018 (27) Jay Deepakkumar Rawal Vs ACIT IT(SS)A No. 77/Srt/2022. 17. We have considered the rival submissions of both the parties and have gone through the orders....
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....f 236680 square feet, was sold @ Rs 2351/- per square feet worked out total revenue at Rs. 56,11,36,680/-. The assessee has shown sale of five flats @ of Rs. 1400/- per square feet and remaining flats @ of Rs. 1500/- per square feet. On the basis of such consideration, total booking amount was worked out at Rs. 36,82,32,750/- (Rs. 56,11,36,680 - 36,82,32,750). The Assessing Officer considered 25% income of total on money and arrived at a figure of Rs. 4,82,25,982/- which is estimated profit of on money and allowed set off of disclosure of Rs. 1.00 crore and made addition of Rs. 3,82,25,982/- of on money. The ld. CIT(A) by referring various decisions of the Tribunal as relied by assessee wherein it was held that estimated ratio receipt of on money of sale of all the flats merely on the basis of statement of two purchasers without any tangible corroboration clearly falls in the realm of conjectures and surmises. The ld. CIT(A) also referred the decision of various other Tribunals and held that the documents at the residence of partner containing the details of gross receipt were only in respect of 23 flats, thus, on money must be determined in respect of 23 flats and not for whole of....
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....heir bookings after a search action due to fear of interrogation and investigation by the search team. No proof of refund of their deposits or bookings is either shown to the Assessing officer while filing reply to the show cause notice except assertion that liability of bookings were refunded. In such situation, we find that the ld. CIT(A) was justified in considering the on money component in respect of such 23 persons. For other remaining buyers, the Assessing Officer has not brought any evidence except assuming and presuming and making extrapolation that assessee has received on money from each and every buyer. Thus, we find that the ld. CIT(A) was quite right and justified in considering the on money in respect of the persons whose details were found during the search action. 19. Being a search case, we independently examined the facts of the present case and find that neither the search party nor the Assessing Officer made any investigation from the purchasers or the other person whose names were found in the seized material about the payment of additional on money. The Assessing officer estimated on money after rejecting books of account by considering whole saleable area....