TMI Blog2011 (4) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,43,650/-( Rs. 3,57,120/- for A.Y. 1997-98), on account of estimated on-money alleged to have been received /collected by the appellant in the booking of Ruturaj Complex in complete disregard of available material, evidences and explanation. The addition of Rs. 1,00,000/- being made in complete disregard of the available material, evidences and explanation is prayed to be deleted. 2.1. For both the years, the assessment was made u/s.144 of the I.T. Act respectively dated 23/03/1999 and 13/03/2000. It was noted by the AO that a survey was conducted u/s.133A of the I.T. Act on 23/03/1995. A search was also conducted u/s.132 of the Act at the residence of the Directors. Their statement was also recorded u/s.132(4) of the Act. The AO has reproduced one statement of Shri Chandrakant J.Patel recorded u/s.132(4) of the Act dated 31/03/1995. On the basis of the said statement, wherein there was a reference of charging of on-money , for the year under consideration, i.e. for AY 1996-97 the AO has enquired in respect of four units which were stated to be booked during the year under consideration. The AO has recorded certain findings in respect of the rates of on-money allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enged before ld.CIT(A). After hearing the submission, ld.CIT(A) has granted part relief, relevant para reproduced below : 3.2. I have considered the submissions of the ld. A.R. and the facts of the case, This is the first assessment after the block period, pursuant to search on 23.3.95. The addition has been made on the assumption that the same rate of on-money was received in this year also. In this connection, a pertinent fact is that the appellant has, during the year, itself suo motu enhanced the selling price as recorded in the books in comparison to the selling price recorded in the books during the financial year 1994-95. The estimated addition is not based on any material evidence, but solely on the strength of the statement made during the search. An admission made at the time of search is certainly binding so far as assessment of the block period is concerned, but it cannot bind the assessee in respect of all future assessments. If a similar addition is made, it must be duly supported with evidence and cannot be based only on a statement. At the same time, it cannot be denied that there is a prevalent practice of collecting on money in the sale of real estate. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO was not definite that the on-money had actually been received by the assessee. Merely on a presumption that in the past assessee was found accepting on-money , the AO had extrapolated the same rate of on-money for the year under consideration, though there was no independent evidence or any other information to that effect. We have also noted that even the first appellate authority was not sure about the basis on which the AO had made the said addition, hence, the ld.CIT(A) has commented that an admission at the time of search is binding as far as the block period in search case is concerned, but the said statement should not fasten the assessee in respect of all the future assessments. The ld.CIT(A) has also commented the addition in respect of on-money must be duly supported with evidence pertaining to the year under consideration. However, suspecting that receiving of on-money being a prevalent practice in respect of real estate business he has confirmed an adhoc addition upto Rs. 1 lac and rest of the amount was deleted. This approach of ld.CIT(A), thus clearly indicates that the addition was merely made on presumption and there was no definite evidence in the han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said amount in the following manner:- Difference in opening balance Rs.180,000/- Difference on account of charging of interest by RHPL at Rs. 2,61,149/- against Rs. 97,900 by the appellant Rs.1,63,249/- Other Misc. transactions Rs. 65,442/- Total Rs.4,08,691/- 5. Having heard the submissions of both the sides and also on perusal of the contra copies of accounts filed before us, we find no justification in the sustenance of the difference of Rs. 4,08,691/- in the hands of the assessee. The assessee has furnished a copy of account of M/s.Royal Resorts and Hotels Ltd. in its books of accounts and also furnished a statement of accounts of the assessee in the books of the said party. The ld. AR of the assessee Mr. Mukund Bakshi has also explained the reconciliation. He has pointed out that firstly, there was a difference in the opening balance in the respective books of accounts of Rs. 1,80,000/-. There was a difference in respect of charging of interest because, on one hand, the said party has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out at Rs. 43,377/- and the same was confirmed. The short submission before us by the ld.AR was that the assessee had sufficient own funds and business receipts which were utilised towards the said advances and no part of the borrowed funds were transferred for non-interest bearing advances. Reliance was placed on the decision of Hon'ble Bombay High Court in the case of Commissioner of Income Tax vs. Reliance Utilities Power Ltd. (2009) 221 CTR (Bom) 435 : (2009) 313 ITR 340 : (2009) 178 TAXMAN 135 : (2009) 18 DTR 1, has held as follows: The very basis on which the Revenue had sought to contend or argue their case that the shareholders funds to the tune of over Rs. 172 crores was utilised for the purpose of fixed assets in terms of the balance sheet as on 31st March, 1999, is fallacious. Firstly, the balance sheet as of 31st March, 1999 is nor relevant. What would be relevant would be balance sheet as on 31st March, 2000. Apart from that, the counsel has been unable to point out from the balance sheet that the balance sheet as on 31st March, 1999 showed that the shareholders funds were utilised for the purpose of fixed assets. The P L a/c and the balance sheet would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter short once the admitted factual position was that the transactions with M/s.Royal Resorts and Hotels Ltd. were meant for business purposes, therefore, the payment of interest was also allowable as a business expenditure. We hereby reverse the findings of the ld.CIT(A) and this ground is allowed. 8. In the result, Assessee s appeals for both the years are allowed. B) Revenue s appeal for AY 1996-97 (ITA No. 3876/Ahd/2008) 9. Ground No. 1 reads as under:- 1) On the facts and circumstances of the case and in law, the learned CIT(A) has erred in dele4ting the addition on account of unaccounted receipts of Rs. 4,81,866/- over looking the fact that the addition was not made on protective basis. 9.1. It was observed by the AO that Rituraj Housing Pvt.Ltd. (RHPL) is the real owner of the project Rituraj . It was alleged that the assessee-company was the consultant of the said project. Since the assessee-company was engaged in the booking, allotment, collection and handing over of the possession in respect of shops, offices, flats, etc., therefore, assessee should have shown receipts from the members. As per Profit and Loss account assessee had not shown any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taxable in the hands of RHPL, then the addition of Rs. 4,81,868/- in the hands of the appellant i.e. Yadav Developers Pvt.Ltd. would stand deleted. In case the final decision is that the accounted receipts of Rs. 19,27,464/- would be taxable in the hands of Yadav Developers Pvt.Ltd., then the addition in the hands of the appellant would stand confirmed. 10. On hearing the submissions of both the sides, we find no reason to interfere with the findings of the ld.CIT(A). However, it is worth to mention that for AY 1996-97, an assessment order passed u/s.143(3) of the Act read with section 254 of the Act dated 20/02/2009 for AY 1996-97 in the case of M/s. Rituraj Housing Pvt.Ltd. is placed before us and therein the said sum of Rs. 4,81,866/- has now been added substantively. Once the Revenue Department has finally settled the issue in the hands of the said company, therefore there is no reason to assess the same on protective basis in the hands of the assessee, therefore we hereby affirm the findings of the ld.CIT(A). This ground of the Revenue is hereby dismissed. 11. Ground No. 2 reads as under: 2) The learned CIT(A) has erred in deleting the addition of Rs. 15,72, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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