2019 (3) TMI 631 - AT - Income Tax

Addition for gross amount of ‘On-Money’ received from the projects run by the assessee - HELD THAT:- Addition only for the profit element in ‘On-Money’. Respectfully following the case of M/S. PRIME DEVELOPERS [2016 (7) TMI 967 - BOMBAY HIGH COURT] and examining facts of the instances case we find that the ‘On-Money’ has been received by the assessee company from its business activity of developing various projects. Undoubtedly against unaccounted ‘On- Money’ there is also an element of unaccounted expenditure which cannot be brushed aside and further looking to the fact that in the very same Group concern addition confirmed by the ITSC is @ 25% of “On-Money”. We are therefore inclined to hold that in the instant three appeals, addition should be sustained, only to the extent of 25% of the alleged ‘On-Money’.

Addition u/s 69 has been made for unaccounted payment for purchase of land - HELD THAT:- Our view of giving set off of ‘On-Money’ payment against the ‘On money’ received found support from the above judgment of Hon'ble Gujarat High Court in TIRUPATI CONSTRUCTION COMPANY [2014 (11) TMI 806 - GUJARAT HIGH COURT] and thus in the given facts and circumstances of the case, we are of the considered view that there was no justification in making addition for unaccounted payment of ₹ 1,30,53,000/- paid to the Thakur Family towards ‘On- Money’ for land development project when ‘On-Money’ received from sale of plots have been subjected to tax at net profit rate of 25%.

Disallowance u/s 40A(3) - assessee has incurred cash expenses over and above ₹ 20,000/- - HELD THAT:- Looking to the request of Ld. counsel for the assessee for setting aside the issue which goes opposed by the revenue authorities. We direct the Ld. AO to examine this issue of disallowance u/s 40A(3) of the Act for various expenses incurred in cash afresh after providing necessary opportunity to the assessee for filing documents and evidence in support of its claim that no disallowance is called for. Accordingly this issue for disallowance u/s 40A(3) of the Act is allowed for statistical purposes.