TMI Blog2023 (11) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... ring first appellate stage by the assessee. Such fact is not controverted either by AO in raising various grounds of appeal or in the statement of fact filed in support of various grounds of appeal nor by the ld. CIT-DR at the time of making submission before us. We find that in CIT Vs Standard Tea Processing Co. Ltd. [ 2013 (7) TMI 539 - GUJARAT HIGH COURT] held that the addition for undisclosed income on account of inflated purchase price can be made only for the period to which document found during the search is related and not for the entire block period. We also concur with the finding of ld. CIT(A) that alleged incriminating material in the form of message was in respect of seven flats only. From the submission of assessee filed before the ld. CIT(A), we find that there was huge difference of time gap between the date of alleged communication and the date of booking as explained by assessee. AO has not counter such explanation of assessee by bringing corroborative evidence. AO worked out the addition in a strait jacket formula that the assessee has received on money in respect of each and every square feet or developed by assessee which is far from imagination in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the incriminating material available with the Assessing Officer in the absence of corroborative evidence were not sufficient to conclude that the appellant had indulged in such transactions of accepting on money despite the fact that CIT(A) in Para 6.4 of his order has held that it is an undisputed fact that the whatsapp chat relating to the rate which is treated as incriminating material were found during the Search relating to 7 flats. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the on-money receipt should be taxed on the actual receipt basis rather than in the year of executing the registered document. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the taxability of on-money is to be applied for the entire project, despite the fact that the details regarding the on-money receipts have been found and seized, which also is corroborated by the statement of the key person during the search proceedings. 5. On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner of the firm was taken and impounded which contained the messages received from other partner Mr. Dharmesh M Koshiya communicated to Mr. Fenil J Jasoliya with regard to sale of flats. Such messages were downloaded and print out was taken. On perusal of SMS, it was revealed that selling price of flats in the said projects were between Rs. 2800/- to Rs. 2900/- per square feet, thus the Assessing Officer took average working of such rate at Rs. 2850/- per square feet. The Assessing Officer found that documented price of sale value on the registered document were shown at Rs. 1530/- per square feet for super built up area. The Assessing Officer further recorded that in the survey/search action, Rs. 19.50 lacs were found. The bundle of notes was bearing flat No. C-603. A cheque bearing No. 000031 of bank of Baroda reflecting amount of Rs. 1.00 lac was also found and seized. Xerox copy of cheque bears the name of Shri Sandeep R. Iwala and flat No. C-603 was introduced by assessee. The Assessing Officer noted that as on 31/03/2015, a total number of 63 flats were booked in the project. The Assessing Officer by multiplying the average rate of Rs. 2850/- per square feet with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the search and on back side regarding noting by hand, the assessee explained that cheque was having writing of word Void on the left hand side of the cheque. Thus, the said cheque, though found on the date of search was not mean to be deposited in the bank account and the same was not confirmed by the drawer of the cheque. The write up on the cheque quoting the name of drawer, date and number of flat was not made by partner of firm or its employee. Such fact was corroborated in the statement of partner recorded during the course of search, wherein he has specifically mentioned that he is not aware of the said fact. The presumption drawn by department that cash of Rs. 19.50 lacs found during the course of search as on money on each flat is illegal and bad in law. The person from whom the said amount was allegedly received categorically denied in his statement recorded under Section 131 of the Act that he has not booked the said flat No. C-603 during the impugned assessment year. The rates of flat mentioned in the communication between the partner via mobile was mere a proposal to the prospective customers and by no means a concrete and irrefutable evidence of receive or earni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner of assessee during the course of statement, stated that the amount of Rs. 19.50 lacs so disclosed, relates to cash received from customer for some external work to be carried out in the flats, which is not substantiated by supporting evidence. Almost identical amount was mentioned in the messages, print out of which was taken from the partner s mobile phone. The Assessing Officer scanned the question No. 8 and 9 of statement of partner and their answers. The Assessing Officer also scanned the question Nos. 36 to 46 and their answers on page No. 13 to 15 of assessment order. The Assessing Officer recorded that 31 flats were booked as on 31/03/2014 and the total built up area of 2 BHK and 3 BHK is of 41530 square feet. The area of all flats were multiplied by Rs. 2850/- per square feet and worked out the total cost at Rs. 11,83,60,500/-. The assessee has shown sale consideration as per the sale deed @ Rs. 1530/- per square feet thereby giving set off of Rs. 6,35,40,900/- and made addition of Rs. 5,48,19,600/- in the following manner: 2 BHK = 20 x 1235 sqft = 24,700 sqft 3 BHK = 11 x 1530 sqft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y SMS. During the search proceedings, no evidence was found about the receipt of on money on sale of flats. During post search proceedings, the department recorded statement of witnesses under Section 131A and none of them admitted for payment of a single penny on account of on money. The Assessing Officer treated super built up area instead of built up area for calculation of extrapolation of receipt of alleged on money. Once it is proved that the assessee has not received any on money, then working of super built up area vis a vis built up area become infructuous. The working of super built up area only for satisfaction of customer in some of the cases mainly for the calculation of difference in FSI (Floor Surface Index), available in the constructed part. The assessee also explained the time of communication as found in the SMS with regard to flat numbers and the date of actual booking and the gap of period ranging from one month to seventeen months with respect to flat No. C-902, C-503, C803, C-701, A-904, A-1004 and C-203 as mentioned on page No. 8 of ld. CIT(A) order. The assessee on relying upon the decision of Hon ble Apex Court in Dhakeshwari Cotton Mills Ltd. Vs CIT (1954 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no clarity of Rs. 2850/- per square feet is on built up area or for carpet area as no area is mentioned in the WhatsApp chat. The ld. CIT(A) by relying on decision in the case of CIT Vs Maulik Kumar K Shah 307 ITR 137 (Guj) wherein it was held that corroborative material has to be brought on record apart from the incriminating material to prove that such sales were actually made and on money was received outside the books of account. The ld. CIT(A) noted that the Assessing Officer needs to examine the purchaser who have bought these flats to confirm the payment of on money. The onus for collecting corroborative evidence from incriminating material was on the Assessing Officer, mere entries in the seized material was not sufficient to prove that the assessee indulged in such transaction of accepting on money. The ld. CIT(A) further held that only evidence relate to seven flats, that too which is not complete in all respect and in absence of any cogent evidence, there was no scope of extrapolation as has been held by the Tribunal in Amar Corporation Vs CIT in ITA No. 2036/Ahd/2007. Further, the Tribunal in M.R. Corporation Vs ITO 35 taxmann.com 153 also held that the addition cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y disclosed unaccounted income of Rs. 19.50 lacs in his disclosure. Further from the WhatsApp chat of partners, the search party found that one of the partner has quoted rate of Rs. 2850/- per square feet in respect of various flats. The assessee has executed sale deeds of various units at the rate of Rs. 1530/- per square feet. On the basis of such differences, the Assessing Officer worked out a difference at the rate of Rs. 1320/- per square feet. The assessee has made booking of 31 flats having total area of 41530 square feet. The Assessing Officer on the basis of difference worked out the figure of on money of Rs. 5.48 crores in respect of 31 flats for the assessment year under consideration. The ld. CIT(A) deleted the entire addition by accepting the submission of assessee that there was no corroborative material to make addition of on money. The ld. CIT-DR for the revenue submits that the Assessing Officer made addition on the basis of evidence found from the back up of phone of partners which was the communication between the two partners. The Assessing Officer by calculating the difference of sale price and the price negotiated by partner with the customers, made a reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C-603. So far as disclosure of Rs. 19.50 lacs is concerned, the ld. AR of the assessee submits that the assessee has declared such amount as additional amount and has not retracted from their statement. The ld. AR of the assessee submits that no extrapolation is permissible as has been held by the Hon'ble Jurisdictional High Court in CIT Vs Standard Tea Processing Co. Ltd. (2013) 34 taxmann.com 31 (Guj), Karnataka High Court in CIT Vs B. Nagendra Baliga (2014) 47 taxmann.com 331 (Kar) and Ahmedabad Tribunal in ACIT Vs M/s Amar Corporation in ITA No. 2036/Ahd/2007 and in Sayan Textiles Park Ltd. Vs ACIT in ITA No. 360/Ahd/2014. The ld. AR of the assessee further submits that he fully supports the finding of ld. CIT(A) that profit in case of developer is arise/can be taxed only when sale is complete or document is executed. To support such view, the ld. AR of the assessee relied upon the decision of Hon'ble Gujarat High Court in CIT Vs. Motilal C Patel Co 173 ITR 666 (Guj), CIT Vs Ashaland Corporation 133 ITR 55 (Guj) and CIT Vs Happy Home Corporation 94 taxmann.com 292 (Guj). To support the view that no addition can be made in absence of evidence or no addition is permiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirm on money. The ld. CIT(A) by referring the decisions of Hon ble Superior Courts and Tribunal has held that there is no scope of extrapolation in absence of any cogent evidence and not approved the addition. The ld. CIT(A) further held that the assessee is following project completion method and as per the decision of Hon ble Jurisdictional High Court in CIT Vs Happy Home Corporation (Supra), income would be offered when final sale deed is registered on the basis of projection completion. The income accrues only when sale is materialized and not on the date of booking. The ld. CIT(A) thus also deleted the addition on this aspect as well. 12. We find that neither the search party examined the purchasers nor the Assessing Officer in assessment order recorded that the purchaser was called for any investigation. Though before us, the ld. AR of the assessee submits that the purchase party of flat No. C-603 was called, however, there is no such averment in the assessment order about calling of such purchaser either at the time of assessment or in post search investigation. We find that such fact was brought on record during first appellate stage by the assessee. Such fact is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in AY 2014- 15, therefore, considering the principles of consistency the appeal for AY 2015-16 is also dismissed with similar observation. ITA No. 357/Srt/2022 by revenue and CO No. 01/Srt/2023 for AY 2016-17 by assessee. 16. The assessee in is its Cross Objections (C.O.) has raised following grounds of appeal; (1) On the facts and circumstances of the case was well as law on the subject, the ld CIT(A) erred in confirming the addition of Rs. 25,93,800/- out of total addition of Rs. 8,12,19,600/- made on account of unexplained money receipt from the project Crystal Heights. (2) It is therefore prayed that the additions made by assessing officer and partially confirmed by CIT(A) may kindly be deleted. 17. We find that there is delay of 16 days in filing CO by assessee. The ld AR for the assessee has filed application for condonation of delay in filing such Cross Objection. The ld AR for the assessee submits that assessee has received notice of appeal by revenue only on 15.12.2022. The assessee could file its CO up to 14th January, however, the same is filed only on 27.01.2023, thus, there is delay of about 15/16 days in filing such CO. The delay in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 20%. Therefore, by taking the maximum figure at 20%, the ld. CIT(A) confirmed the addition to the extent of 20% of Rs. 1,29,69,000/- which is Rs. 25,93,800/- and deleted the remaining addition. 21. The revenue has challenged the deleting of addition to the extent of Rs. 7.86 crores and the assessee has raised its cross objection against restricting the addition to the extent of 20% of alleged on money. 22. The ld. AR of the assessee submits that 20% of addition of on money is on the higher side, the assessee has already declared net profit @ 6.91%. The assessee has made declaration of Rs.19.50 lacs and has paid tax thereon. By adding 20% of addition in the profit, it will raise the abnormal figure of profit. The ld. AR of the assessee submits that he prayed for deleting the entire addition, however, in alternative submission, the estimation may be restricted to a reasonable percentage of addition. 23. On the other hand, the ld. CIT-DR for the revenue supported the order of Assessing Officer and would submit that entire addition made by Assessing Officer may be restored. 24. We have considered the submissions of both the parties and find that the grounds of appeal rai ..... 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