TaxTMI 
TaxTMI 
2026 (10) TMI 605
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.... AO"] u/s 143(3) of Income-tax Act, 1961 ["the Act"] for Assessment-Year ["AY"] 2013-14, the assessee "D R Corporation" has filed this appeal. 3. The background facts leading to present appeal are such that: (i) The assessee is a partnership firm engaged in the business of development and construction of housing projects. (ii) A survey u/s 133A of the Act was conducted on 04.01.2013 at the premises of the assessee-firm and its sister-concern "D R Associates". During survey proceedings, statement of Shri Ravi Khandelwal, partner of the assessee-firm, was recorded on oath. In post-survey proceedings, vide letter dated 11.01.2013, the assessee offered undisclosed income of Rs. 2,53,17,855/- on account of on-money received in respect of its project. (iii) Subsequently, the assessee filed its return of income of AY 2013-14 under consideration declaring a total income of Rs. 42,04,650/-inclusive of unaccounted income of Rs. 41,45,010/- out of total disclosure of Rs. 2,53,17,855/- made during survey. (iv) The case of assessee was selected for scrutiny and, during assessment-proceedings, the Ld. AO issued a show-cause notice asking assessee as to why ....
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.... has erred in partly confirming the action of assessing officer by sustaining the addition of Rs. 1,27,65,645/- out of total addition of Rs. 1,83,96,175/- on account of on money received from the project not declared in the return of income." "2. It is therefore prayed that the above addition made by the assessing officer and partly confirmed by the CIT(A) may please be allowed." "3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 5. The limited grievance of assessee before us is the confirmation of addition of Rs. 1,27,65,645/- by Ld. CIT(A). 6. At first, we re-produce below the relevant portion of assessment-order passed by the Ld. AO: "Hon'ble Gujarat High Court in the case of CIT vs Ashaland Corporation (133 ITR 55) has held that income accrues on the sale of land and arises in the year in which the title of the property is transferred and not in the year in which the assessee received part of consideration and earnest money. Above decision o the Hon'ble High Court is applicable in this case as the facts of the cited case are similar to the facts of the case of the assessee. ....
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....nducted at the premises of the assessee M/s. D. R. Associates & M/s. D. R. Corporation on 04.01.2013. During the course of survey, statement of Shri Ravi Khandelwal, partners of the assessee firm was recorded on oath and in the post survey proceedings, Shri Ravi Khandelwal, partner of the assessee firm had offered undisclosed income of Rs. 10,15,31,355/- for the A.Y.2013-14 vide his letter dated 11.01.2013 in both the said firms. Details of the offered undisclosed income were as under :- Name of the Firm A.Y. Offered undisclosed income (In Rs ) Remarks D. R. Associates 2013-14 7,62,13,500/- Undisclosed income was offered @155 per square feet on money received in respect of saleable area of the project 491700 square feet, hence on-money comes to Rs.7.62,13,500/- D.R. Corporation 2013-14 2,53,17,855/- Undisclosed income was offered @155 per square feet on money received in respect of saleable area of the project 163341 square feet, hence on-money comes to Rs 2.53.17.855/- Total offered income 10,15,31,355/- 4.1.1 Further, the assessee firm had filed return of income on 10.10.2013 declaring total income of Rs.42,04....
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....IT Vs. Ashaland Corporation (1982) 133 ITR 55 (Guj) is applicable in the case of the assessee and therefore, the decision of the Hon'ble Jurisdictional High Court was followed in the case of the assessee. Thus, the AO had given the credit of undisclosed income offered in the ITR for A.Y.2013-14, 2014-15 & 2015- 16 while making the addition. The details of addition made by the AO in the assessment order were as under :- Offered undisclosed income in the survey - Rs. 2,53,17,855/- Less: Undisclosed income offered in the ITR for A.Y.2013-14, 2014-15 & 2015-16 (Rs.41,45,010 + Rs. 11,73,505 + Rs. 16,03,165) - Rs. 69.21,680/- Since, the assessee had not disclosed the said survey disclosure income in the form of on-money amounting to Rs. 1,83,96, 175/- in its return of income, therefore, the AO had made addition of Rs. 1,83,96,175/- on account of undisclosed on- money received while passing the assessment order u/s. 143(3) of the Act dated 31.03.2016. 4.2 During the course of appellate proceedings, the appellant has filed written submission, which is reproduced supra. The appellant has stated that it has executed agreement and gave possession ....
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....imilar to the facts of the appellant. Therefore, the AO had given the credit of undisclosed income in the form of on-money shown by the appellant in various assessment years i.e. A.Y.2013-14, A.Y.2014-15 & A.Y.2015- 16 while making the addition in the assessment order. It is observed from the submission that the appellant has claimed that it had shown undisclosed income of Rs.1,25,52,210/- out of total disclosure of Rs.2,53,17,855/- till date as discussed supra. Since, the AO had already given the credit of undisclosed income of Rs.69,21,680/- show in the return of income for A.Y.2013-14, 2014- 15 & 2015-16, therefore, the AO is directed to verify the claim of the appellant regarding showing the undisclosed income in the form of on- money in the return of income filed for A.Y.2016-17 to A.Y.2023-24 and if found correct, delete the addition made accordingly. 4.5 With regards to the remaining undisclosed income of Rs.1,27,65,645/- (Rs.2,53,17,855 - Rs.1,25,52,210) which is not shown in the return of income till the A.Y.2023-24 by the appellant, it is stated that the said alleged on-money of Rs. 1,27,65,645/- was received by the appellant in the A.Y.2013-14 and which was acce....
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....unaccounted income u/s.69A of the Act. 4.6 In view of the above factual discussion, the addition to the extent of Rs.1,27,65,645/- (Rs.2,53,17,855 - Rs.1,25,52.210) is confirmed in A.Y.2013- 14. Thus, the grounds of appeal no. 1 & 2 are partly allowed. 5. The ground of appeal no. 3 is general in nature, hence dismissed. 8. Before us, the Ld. AR for assessee made following submissions: (i) That, the Hon'ble jurisdictional High Court of Gujarat, in CIT Vs. Ashaland Corporation (1982) 133 ITR 55 (Guj), has held that the income on sale of land/flats arises only in the year in which title in the property is transferred to buyers and not in the year in which the advance consideration/on-money is received. (ii) That, both of the lower authorities have applied the aforesaid ratio of Hon'ble High Court and, following the same, given credit for the income offered by assessee in the returns of income filed on year-to-year basis, as and when the flats were actually sold. The Ld. AO has allowed credit for the disclosure made by the assessee in the returns of AYs 2013-14 to 2015-16, aggregating to Rs. 69,21,680/-, till completion of assessment. Thereaft....
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....ppellate Tribunal dated 01-06-2017 raising following question for our consideration: "Whether on the facts and the circumstances of the case and in law, the Appellate Tribunal was justified in confirming the findings of the CIT(A) in respect of deleting the addition made by the Assessing Officer on account of undisclosed income to the tune of Rs. 26,05,00,000/- disclosed during the course of survey u/s. 133A of the I.T. Act, 1961?" 2. Broadly stated, the facts are that the respondent assessee is engaged in construction business. The respondent was subjected to a survey action which was conducted on the business premises on 18-10-2010. During such survey, incriminating documents were impounded. Statement of Shri Mukesh Patel, the partner of the respondent firm was recorded. In such statement, he admitted the firm having received a sum of Rs. 26,05,00,000/- which was not disclosed in the account or to the income tax department. He agreed that the said was firm's unaccounted income and also agreed to pay tax on the same. He also stated that the same pertained to the income of the current year. While doing so, he added that however, the same would be subject to th....
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....ceived on-money by that time, i.e., in previous year 2012-13 relevant to AY 2013-14 under consideration. Therefore, the on-money receipt was taxable in AY 2013-14 itself. According to Ld. DR, it is a clear case of postponement of tax by assessee to different assessment-years. That, although the revenue is not against the relief already granted by the Ld. CIT(A), the remaining addition of Rs. 1,27,65,645/- sustained by the Ld. CIT(A) should not be disturbed. (ii) That, the Ld. CIT(A) has, in Para 4.5 of the impugned order, categorically and rightly observed that a period of 10 years is a long time. According to Ld. DR, the property itself gets dilapidated in such a long period, therefore, there is no plausible explanation as to how registration of the remaining area could be postponed for such a long period. Ld. DR accordingly supported the impugned order of first-appeal passed by Ld. CIT(A) and requested to uphold the same. 12. In re-joinder, Ld. AR submitted that the real estate business has its own peculiarities. The projects undertaken are long-term in nature and take considerable time to complete. The buyers also make delay in payments and taking possession for r....
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....d strictly on a year-wise basis as and when the corresponding sale-deeds are registered and is not being permanently withheld or escaped from taxation. 15. Therefore, we are of the considered view that the balance sum of Rs. 1,27,65,645/- ought to be dealt with on the same footing as the rest of the disclosure already dealt by the lower authorities. Accordingly, we set aside the finding of Ld. CIT(A) confirming the addition of Rs. 1,27,65,645/- and direct the Ld. AO to verify, on the very same terms as directed by the Ld. CIT(A) in respect of AYs 2016-17 to 2023-24. Accordingly, the Ld. AO is directed to make a limited verification as to the claim of assessee of offering the undisclosed income of on-money in the returns of AYs 2025-26 to 2027-28 and if found correct, delete the addition accordingly. The Ld. AO shall, after verification, be at liberty to bring to tax in AY 2013-14 such portion of the disclosed on-money as is not found to have been offered to tax in those years in accordance with the aforesaid principle and undertaking-letter filed by Ld. AR. It is further made clear that the aforesaid direction is confined to the assessment years covered by the undertaking filed ....
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....26,375/-. The year-wise break up of the disclosure for AYs 2013-14 to 2023-24 accepted by Ld. CIT(A), as per details noted in Para 4.2 of his order, is given below for an immediate reference: A.Y. Area sold during the year Total undisclosed income shown in the return of income (In Rs.) 2013-14 87,518 1,35,65,290/- 2014-15 55,963 86,74,265/- 2015-16 53,281 82,58,555/- 2016-17 16,310 25,28,050/- 2017-18 26,638 41,28,890/- 2018-19 86,464 1,34,01,920/- 2019-20 31,812 49,30,860/- 2020-21 34,189 52,99,295/- 2021-22 0 0 2022-23 0 0 2023-24 0 0 Total 3,92,175 6,07 87,125/- 20. Now, it is submission of assessee that the assessee has subsequently offered further income of Rs. 1,14,87,205/- in AY 2024-25 and Rs. 23,17,250/- in AY 2025-26 corresponding to the area of flats sold in those respective years. Further, the assessee has quantified the disclosable income of Rs. 16,21,920/- in AY 2026-27 and going to offer the same in the return of income of AY 2026-27 yet to be filed. Thus, the disclosures upto AY 2026-27 would complete the entire on-money receipts of Rs. 7,62,13,500....
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....============ Document 1 CA Rasesh Shah & CO Chartered Accountants 4th Floor, Titoanium Business Hub, Sural-Khajod Road, Nr. Sarsana, Bhimrad, Surat 395007. Phone : 2297007, 2297006, 3532258 Email : [email protected] Reed 2317125 5:15 PM Before Income Tax Appellate Tribunal Bench "DB", Surat In the case of D R Corporation ITA No. 265/SRT/2024 for A.Y. 2013-14 Sub: Written Submission for A.Y. 2013-14 Date of Hearing: 06.07.2026 May it Please To Your Honour 1. The appeal is directed against the order of the CIT(A) sustaining the addition of Rs. 1.27,65,645/ out of the total addition of Rs. 1,83,96,175/- on account of on money received from the project but not declared in the return of income. 2. Assessee declared Rs. 2,53,17,855/- consequent to the survey conducted on 04.01.2013 on account of the on money for the total project of 163340 square feet. The assessee credited the Booking Advance (Disclosure) A/c by the sum of Rs. 2,53,17,855/- disclosed consequent to the survey in the cash book. During the year under consideration, assessee adjusted Rs. 41,45,010/- as sales reflected in schedule -11 of the audited financial statements for which the flats aggregati....
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.... 2. 2025-26 21099 Rs. 32,70,345/- 3. 2026-27 26768 Rs. 41,49,040/- 4. 2027-28 23835 Rs. 36,94,580/- Total Rs. 1,27,65,645/- 4. It is therefore prayed that the addition confirmed by the Ld. CIT(A) may please be deleted in view of the detailed written submission filed before CIT(A) relying on various case laws coupled with the above facts of the case. Date: Place: Surat (Partner of Assessee Firm) Ra (CA Rasesh Shah) Document 3 Ä® CA Rasesh Shah & CO Chartered Accountants 4th Floor, Titanium Business Hub, Surat Khajod Road, Nr. Sorsana, Bhimrad, Surat 395007. Phone : 2297007, 2297006, 3532258 Email : [email protected] Reed 23/7/26 5:15 PM Before Income Tax Appellate Tribunal Bench "DB", Surat In the case of D R Associates ITA No. 264/SRT/2024 for A.Y. 2013-14 Sub: Written Submission for A.Y. 2013-14 Date of Hearing: 06.07.2026 May it Please To Your Honour 1. The appeal is directed against the order of the CIT(A) sustaining the addition of Rs. 1,54,26,375/- out of the total addition of Rs. 4,57,15,390/- on account of on money received from the project but not declared in the return of income. 2. Assessee declared Rs. 7,62,13,5....