TaxTMI 
TaxTMI 
2026 (7) TMI 1889
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....of common order. Assessment Year 2019-2020 2. We would first take up cross-appeals pertaining to the Assessment Year 2019-2020, which arise from Common Order, dated 16/10/2025, passed by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as 'CIT(A)'], whereby the appeal against the Assessment Order, dated 21/03/2025, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [hereinafter referred as 'the Act'] was partly allowed. 3. The Assessee has raised following grounds of appeal in ITA No. 2638/AHD/2025: "1. In law and in the facts and circumstances of the case of the appellant, the impugned assessment order passed under section 143(3) r.w.s 147 of the Income tax Act is void, bad in law, without jurisdiction and deserves to be cancelled. 2. In law and in the facts and circumstance of the appellant's case, the reassessment notice issued under section 148 of the act is invalid, bad in law, and liable to be quashed. 3. In law and in the facts and circumstances of the appellant's case, the approval u/s 151 of the Income Tax Act, 1961 is invalid, mechanical and bad in law, and therefore ....
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....inate Bench of the Tribunal in the case of the Assessee for the Assessment Years 2021- 2022 and 2022-2023. It was submitted that in identical facts and circumstances, the Co-ordinate Bench of the Tribunal was pleased to allow the grounds raised by the Assessee in the aforesaid appeals and deleted identical additions made by the Assessing Officer. It was further submitted that the Assessee did not wish to press Ground Nos.1 to 3 raised by the Assessee challenging the validity of the reassessment proceedings, whereas Ground No. 6 to 10 were consequential in nature. 7. Per contra, the Learned Departmental Representative placed reliance upon the order passed by the Assessing Officerand the findings returned in Paragraph No. 9 to 15 of the Assessment Order. Ground Nos. 4 and 5 8. We would first take up Ground No. 4 & 5 raised by the Assessee. We have considered the rival submissions and have perused the material on record in relation to the aforesaid grounds. 9. On perusal of the record, it emerges that for the Assessment Year 2019-2020, the Assessee filed return of income on 26/10/2019 declaring total income of INR.10,65,14,838/- which was processed under Section 143(1) of ....
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....e rates when compared to the actual project costs as inferred from the seized documents. Sale deeds were executed at basic prices as lower than the aggregate cost details gathered from digital excel files seized during search which gave details of the cost per sq. ft. (inclusive of land, construction, professional, and indirect expenses). Selling units below the breakeven cost established suppression of sale. Further, the seized documents reflected wide variations in sale price for similar units on the same or different floors. Therefore, the Assessing Officer concluded that there was difference in actual rates and documented sales which represented 'on money' receipts. (b) Additional charges were listed separately, including AEC/AMC Charges (INR.300/- per Sq.Ft.), Common Development Charges (INR.500 per Sq.Ft.), Parking (INR.4 lakh per parking space), and Maintenance Deposits. (c) The third-party data corroborated that the group systematically accepted 'On-Money' on the sale of units. On the basis of the above the Assessing Officer levied extra charges of INR.1288/- per Sq. Ft. and INR.608 per Sq. Ft. for units sold in project 'Privilon' and 'Paarijat Eclate',....
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....officer on assumption, surmises and conjectures; not a single instance of on-money receipts has been found; there were no records, cash book, diaries of on-money receipts found. The fact that the Assessing Officer has estimated the on-money receipts proves that no evidence of on-money was found. 13. The Learned CIT(A) found some merit in the above submissions advanced by the Assessee and partially allowing the contentions of the Assessee, concluded as under: "Decision on grounds of appeal numbers 5,6,7,8,9 and 10: i. These grounds relate to total addition of Rs. 60,88,41,473/- as combined on-money receipts by the appellant in its project name Privilon and Parijaat Eklat. The appellant has also challenged levy of extra charges of Rs 1288 per square feet (Privilon) and Rs. 608 per square feet (Paarijat Eclate); as-well-as parking charges of Rs 4 lakh per unit sold, in each project. The appellant has challenged the addition made by the AO on various grounds including the contention that such addition is without any basis and corroborative evidences. In my understanding these grounds are interrelated and hence can be adjudicated together. ii. The subject m....
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....the proceedings, the Learned Authorized Representative for the Assessee had placed on record the Common Order, dated 09/10/2026, passed by the Co-ordinate Bench of the Tribunal in the case of the Assessee for the Assessment Years 2021-2022 and 2022- 2023. On perusal of the aforesaid decision, we find that the Assessee had raised identical issues in the grounds raised in appeal before the Tribunal for the Assessment Year 2022-2023, which reads as under: "1. xxx 2. In the facts and circumstances of the case of the Assessee, the Ld. CIT(A) has erred in holding that the Assessee has received alleged on-money on sale of units at project "Privilon" and "Paarijat Eclate" developed by it when no evidence relating to alleged on-money was found during the course of search and relied upon by Assessing Officer in Assessment Order. 3. In the facts and circumstances of the case of the Assessee, the Ld. CIT(A) has erred in holding that on-money receipt in its case is required to be computed considering average fair market value of sale of units @ Rs. 6,500/- per Sq. Ft. when there was no reason to estimate on-money in case of Assessee and no evidence relating to receipt....
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....has also explained that the AO has wrongly assumed/interpreted the various short-words/abbreviations to his convenience and linked the same to assume higher sale rates of the units. He has also demonstrated that the AO found notes saying "1P=4L" and assumed this meant "1 Parking Spot = Rs. 4 Lakhs in cash." The Ld. AR, however, explained that "P" actually stood for "Painting" (interior finishing works like painting and panelling), which is an optional service. This type of abbreviations, in our view, can be well explained by the person who has written these abbreviations or the person in whose possession these documents were found. If such a person gives the explanation/full-form of these abbreviation and the same are found convincing, looking into the facts and circumstances of the case, then, in our view, the other interpretation done by the AO to assume higher sale price would not be justified, especially when there is no corroborative evidence to such assumptions. In this case, even the AO did not verify his assumptions as no buyers were questioned to confirm if they paid any cash over and above the sale price mentioned in the deed. Even, the AO used internal Excel files contai....
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.... demonstrated that the value of a unit is determined by its floor level, direction (Vaastu), proximity to amenities, and the time of booking (early bird vs final phase). Therefore, the action of the Ld. CIT(A) in assuming a flat-rate for all units and without there being any corroborative evidence and merely on assumption basis cannot be held to be justified. 10.3. The facts and issue involved in this case are covered by the decision of the Hon'ble Gujarat High court in the case of "Maulikkumar K. Shah" 307 ITR 137,wherein, in somewhat identical circumstances, the Hon'ble High Court has held as under: "The assessee had constructed certain shops. There was a search at the assessee's premises and a diary was seized in which the assessee had estimated rates of these shops. The assessee had booked/sold 35 shops as on date of search. Because of the difference in rates as mentioned in the seized paper and the books of account, the Assessing Officer calculated the 'on-money' and made addition accordingly. Held that notings in the seized diary found from the premises were the only material on the basis of which the Assessing Officer had made the impug....
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....records and could have very well been verified by the AO and CIT(A). Accordingly, we have no hesitation in deleting the addition made in respect of Fort Royal Projects for AY 2007-08." 10.5. In the case of "Umacharan Shaw & Bros. vs. CIT" [1959] 37 ITR 271, the Hon'ble Supreme court has held that suspicion, however strong, cannot take place of evidence." 17. On perusal of the above Co-ordinate Bench Decision, it is clear that in the case of the Assessee, the Tribunal had deleted identical addition made by the Assessing Officer on the basis of same search material. For the Assessment Year 2021-2022 and 2022-2023, the Assessing Officer had concluded that the Assessee had received on-money in cash on the basis of loose sheets, excel sheets, broker files, and whatsApp chats found during search. In appeal preferred by the Assessee, the CIT(A) granted partial relief and lowered the addition by estimating a flat sale rate of INR.6,500 per Sq.Ft. and taxing the embedded profits at 17%. In appeal preferred by the Assessee, the Co-ordinate Bench of the Tribunal completely deleted the entire addition holding that (a) the documents relied upon by the Assessing Officer were deemed '....
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....me reasoning, we dismiss Ground No. 1 raised by the Revenue in its appeal. 24. In result, the present appeal preferred by the Revenue is dismissed. Assessment Year 2020-2021 25. Next, we would take up cross-appeals pertaining to the Assessment Year 2020-2021, which arise from Common Order, dated 16/10/2025, passed by the CIT(A) whereby the appeal against the Assessment Order, dated 21/03/2025, passed under Section 143(3) read with Section 147 of the Act for the Assessment Year 2020-2021 was partly allowed. 26. The Assessee has raised following grounds of appeal in ITA No. 2639/AHD/2025: "1. In law and in the facts and circumstances of the case of the appellant, the impugned assessment order passed under section 143(3) r.w.s. 147 of the Income-tax Act is void, bad in law, without jurisdiction and deserves to be cancelled. 2. In law and in the facts and circumstances of the appellant's case, the reassessment notice issued under Section 148 of the Act is invalid, bad in law, and liable to be quashed. 3. In law and in the facts and circumstances of the appellant's case, the approval u/s. 151 of the Income Tax Act, 1961 is invalid, mechanical ....
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....s. 6500/- per sq.ft., inclusive of all charges, and thereafter to estimate the profit arising on account of on-money received at 17% of the same, ignoring the detailed reasoning given by the A.O." 28. During the course of hearing both the sides had agreed that the issues raised in the present cross-appeals are identical to the grounds raised in the cross-appeals pertaining to the Assessment Year 2019- 2020. Therefore, our finding/adjudication in corresponding grounds raised in cross-appeal for the Assessment Year 2019-2020 shall apply mutatis mutandis to the corresponding grounds raised in present cross-appeals. Therefore, adopting the reasoning given while adjudicating corresponding grounds raised in cross-appeals for the Assessment Year 2019-2020, we proceed to dispose of the grounds raised in the present cross-appeal which are taken up hereinafter in seriatim. Ground No. 1 to 3 29. In view of the statement made by the Learned Authorized Representative for the Assessee during the course of the hearing to the effect that the Assessee does not wish to press Ground No. 1 to 3 challenging the validity of the re-assessment proceedings, the said Ground No. 1 to 3 are dismissed....
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.... 3. In law and in the facts and circumstances of the appellant's case, the approval u/s. 151 of the Income Tax Act, 1961 is invalid, mechanical and bad in law, and therefore the reassessment must be quashed. 4. The learned CIT(A) has grossly erred in partly confirming addition on account of alleged on-money receipts in the project named Privilon by directing the AO to recompute alleged on-money based on an arbitrary flat rate of Rs. 6,500 per sq. ft. (except for the units where sale deed executed is at higher rate) and by comparing such estimated value with the registered sale-deed value. The estimation of alleged on-money is ad-hoc, arbitrary and without any evidentiary basis, and therefore liable to be quashed. 5. The learned CIT(A) has grossly erred in partly confirming addition on account of alleged on-money receipts in the project named Paarijat Eclate by directing the AO to recompute alleged on-money based on an arbitrary flat rate of Rs. 6,500 per sq. ft. (except for the units where sale deed executed is at higher rate) and by comparing such estimated value with the registered sale-deed value. The estimation of alleged on-money is ad-hoc, arbitr....
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....tical to the grounds raised in the cross-appeal pertaining to the Assessment Year 2019- 2020. Therefore, our finding/adjudication in corresponding grounds raised in cross-appeal for the Assessment Year 2019-2020 shall apply mutatis mutandis to the corresponding grounds raised in present cross-appeals. Therefore, adopting the reasoning given while adjudicating corresponding grounds raised in cross-appeals for the Assessment Year 2019-2020, we proceed to dispose of the grounds raised in the present cross-appeal. Ground No. 1 to 3 40. In view of the statement made by the Learned Authorized Representative for the Assessee during the course of the hearing to the effect that the Assessee does not wish to press Ground No. 1 to 3 challenging the validity of the re-assessment proceedings, the said Ground No. 1 to 3 are dismissed as being not pressed. Grounds No. 4 to 6 41. The issues raised in Grounds No. 4 to 6 raised by the Assessee in the present appeal are identical to the issues raised by the Assessee in Grounds No.4 & 5 of appeal for the Assessment Year 2019-2020. In view of our findings/adjudication in above Paragraph 8 to 18 hereinabove, the addition made by the Assessin....
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....er, restricted such estimated rent @ 3% of fair market value of property and directed AO to allow 30% standard deduction on such estimated rent as per provision of Section 24 of the Act. Being aggrieved by above finding, the assessee has come in appeal before us. 11.1. The Ld. AR for the assessee has contended that the construction of both the projects, on which deemed rent was estimated by the lower authorities, was started prior to introduction of Section 23(5) of the Act, hence, such provisions were not applicable to the case of the assessee. The Ld. AR in his alternate contention has contended that estimated rent by the Ld. CIT(A) was on higher side. 12. On the other hand, the Ld. DR has stated that A.O. has given detailed finding while estimating deemed rent @ 7.5% on fair market value of property and such addition needs to be restored. 13. We have considered the rival submissions of the Ld. Representatives of both the parties on this issue. The provisions of Section 23(5) of the Act clearly provide that deemed rent is required to be offered to tax by builder for unsold unit when two years have lapsed from obtaining BU permission of the project. The ....