TMI Blog2023 (5) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... . We notice that the AO has not verified those details at all - 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 (1) TMI 1283 - SC ORDER] AO has not brought on record any material in support of the addition made by him nor he provided any basis for arriving at the basis, particularly when all the 30 flats have not been sold during the year relevant to AY 2017-18. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting this addition. Addition on the basis of a document found at the premises of a Trust - assessee has been linked to the said document, since Shri Hemal Bheda said that this document may/appears to belong to the assessee herein - HELD THAT:- AO should have conducted further enquiries in order to give a finding that the above said document did contain transactions belonging to the assessee only. Hence, we agree with the contentions of the assessee that the AO could not have placed full reliance on the vague statement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 Assessing Officer asked the assessee to explain the same. 3. Before the Assessing Officer, the assessee filed a detailed reply stating that, during the year under consideration, it did not receive any on money from the flats sold by it. It was also submitted that the flats have been sold in all the subsequent years and hence the income relating to the flats sold during the year under consideration can be assessed to tax. In this regard the assessee filed a detail summary of sale of flats which contained sale value of flats, MM value (Manva Mandir Value) and difference between MM value and sale value. It was submitted that after survey operations/demonetization announced by GOI, the buyers of the flats did not pay anything in cash and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r). 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. As per the statement the amount represents amount of on- money received on flats which have been booked by customers. It has been mentioned by the AO that Shri Vikmani had offered the amount of Rs 4.3 cr in AY 2017-18. On being asked to explain why the amount was not offered the appellant has stated that the amount was to be offered subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,616/- Total: 4,23,21,965/- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanations:- (a) After demonetization as well as after the survey proceedings, the sale 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B1201 26-Oct-18 18 Unsold 19 Licchamma B101 17-Nov-16 20 Manish Thakkar A704 10-May-18 21 Unsold 22 Unsold 23 Premiladevi A302 1-Jul-17 24 Tarachand Gala A1501 17-Jan-18 25 Unsold 26 Pista Uttam A1402 23-Aug-17 27 Kamlesh Sankles A1203 26-Oct-18 28 Sanjay Shah A1101 19-Sep-16 29 Bhupesh Jain A101 12-Sep-16 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken from a person named Shri Hemal Chandrakant Bheda, who was son of one of the partners of the assessee herein named Shri Chandrakant Nanji Bheda, he stated that this piece of paper may/appears to belong to the assessee firm. Accordingly, the DCIT (Exemption) forwarded the above said information to the assessing officer. 12. The said document contained details of Receipts and Payments. No specific date is also mentioned in it. The same is extracted below:- Receipts Payment Sr. No. Particular Cash Cheque Total Amt. Particular Cash Cheque Total Amt. 1 Booking Amount 10193601 11520212 21713813 Interest payable 0 437806 437806 2 Loan from K. Galia 42500000 0 42500000 TDS paid 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... participation in the affairs of the assessee firm and he was involved in/aware of the day to day activities of the assessee firm. The document is undated, unsigned, unnamed. Hence, the AO should have conducted further enquiries in order to give a finding that the above said document did contain transactions belonging to the assessee only. Hence, we agree with the contentions of the assessee that the AO could not have placed full reliance on the vague statement at all. Even if he had given the reply in an authentic manner, the AO could not have made addition merely on the basis of said statement without corroborating the same with any other material. 15. We also notice that there was total non-application of mind on the part of the AO in making the impugned addition. We noticed that the AO has assessed entire cash receipts as income of the assessee without examining the nature of entries and further, whether those receipts can be considered as revenue receipts assessable to tax. We have earlier noticed that the aggregate receipts of Rs.5.71 crores included loan receipts of Rs.4.20 crores, which is not revenue receipt. Further, a sum of about Rs.44.00 lakhs have been shown agains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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