TMI Blog2019 (12) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, on consideration of overall facts and circumstances of the case and keeping in view the decision of the Tribunal referred to above, we do not find any infirmity in the order of learned Commissioner (Appeals). - Revenue s appeal is dismissed. - ITA no.5038/Mum./2016 - - - Dated:- 6-12-2019 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER For the Appellant : Shri B. Jaya Kumar For the Respondent : Shri Vijay Mehta ORDER PER SAKTIJIT DEY. J.M. The captioned appeal has been filed by the Revenue challenging the order dated 19th May 2016, passed by the learned Commissioner of Income Tax (Appeals) 47, Mumbai, pertaining to the assessment year 2012 13. 2. The Revenue has filed the present appeal being aggrieved with the decision of learned Commissioner (Appeals) in deleting the addition of ₹ 34,43,89,459, on account of alleged on money received on sale of flats. 3. Brief facts are, the assessee company is a real estate developer. A search and seizure operation under section 132 of the Income Tax Act, 1961 (for short the Act ) was conducted in case of Rohan Developers Pvt. Ltd., and various other entities prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to the seized material at Page 114 of Annexure A 1, the Assessing Officer concluded that the assessee has received on money on sale of Flats. From the material on record, he found that during the year under consideration the assessee has effected sales of ₹ 34,43,89,459. Computing on money of 30% on the aforesaid amount, he made addition of ₹ 34,43,89,459. Challenging the aforesaid addition, the assessee preferred appeal before the first appellate authority. 4. After considering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals) found that the receipt of on money by the assessee has not been established through any corroborative evidence. She observed, the seized / incriminating material referred to by the Assessing Officer neither indicates the name of the assessee nor the project built by it. Further, she observed, the statements recorded from the director as well as the employees were subsequently retracted by them. Thus, on the basis of such facts on record, learned Commissioner (Appeals) deleted the addition made by the Assessing Officer. 5. At the time of hearing, the learned Authorised R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceased, wherein he made disclosure of income to the tune of ₹ 100 crores at the hands of different entities. A bifurcation of such disclosure was also submitted in the course of search and seizure operation. As per the said disclosure, an amount of ₹ 34 crore was offered at the hands of the assessee in the assessment year 2011 12, towards undisclosed profit from real estate project. The learned Commissioner (Appeals) has recorded a clear finding of fact that in terms with the disclosure made at the time of search, the amount of ₹ 34 crore was offered as income in the assessment year 2011 12. Even, the Assessing Officer has not disputed the aforesaid fact. As could be seen from the assessment order, the Assessing Officer has stated that during the year under consideration, the assessee was constructing a commercial project named The Ruby at Dadar, Mumbai. As noted earlier, apart from the statements recorded under section 132(4) of the Act, the only other evidence the Assessing Officer has referred to for making the addition of on money is the Page 114 of the Annexure A 1 seized during the search and seizure operation. Though, the Assessing Officer has not discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee 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 statement of director and other employees threw light on the modus operandi of the assessee group, as per which, the group was indulging in receipt of on-money on sales which is 30% over and above the normal sales price declared in the registered document. The AO, further, observed that this fact is further strengthened by enormous material found during the course of search, including cash seized from premises of the group and other assets. The assessee had also admitted ₹ 100 crore undisclosed income in various group companies name on the basis of incriminating material found as a result of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 incriminating material found during the course of search and other undisclosed asset to the assessee, but he has failed to prove the nexus between seized materials and business activity of the assessee and also receipt of on-money. Unless, the Assessing Officer has brought out some cogent materials or evidences which establish receipt of on-money from sale of flats, no addition could be made, that too, on adhoc estimation of on-money on the basis of regular sales declared by the assessee. We further note that although the AO has placed his reliance on the statement of Mr. Haresh M Mehta recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 another assessee, though the same belongs to one group, unless there is specific material in the possession of the AO with regard to suppression of sales or receipt of on-money. Further, statement recorded during the course of search including confession may be a best piece of evidence, but that by itself would not be conclusive evidence unless such statement is further supported by evidence in the form of incriminating material found during the course of search. The AO before estimating income has to bring on record some cogent materials to justify his action. In this case, on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT v/s Silver Arch Builders and Promoters, ITA no.4024/ Mum./2016, dated 30.01.2015. 11. Thus, on conspectus of the facts and material on record as well as the decisions of the Tribunal referred to above, we are of the considered opinion that the addition made by the Assessing Officer on account of on money is purely on ad hoc/estimate basis without having any nexus with any incriminating material brought on record. In our view, merely relying upon the statements recorded under section 132(4) of the Act, which were subsequently retracted, no addition can be made purely on presumption and surmises without any corroborative evidence to follow up the statements recorded under section 132(4) of the Act. Moreover, as rightly observed by learned Commissioner (Appeals), undisclosed income declared at the time of search has already been offered by the assessee in the return of income filed for the assessment year 2011 12. Therefore, if the Assessing Officer wanted to make any addition on account of on money in the impugned assessment year, he should have brought evidence on record to back his conclusion. As discussed earlier, the incriminating material referred to by him for making ..... X X X X Extracts X X X X X X X X Extracts X X X X
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