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2020 (11) TMI 448 - AT - Income TaxMoney received on sale of flats - estimation of on money on the flats and shops - amount has been worked out during the course of search and statement of various employees, which were confronted to Mr Sandeep Runwal a director of the assessee who has admitted the same in the statement recorded during the course of search - HELD THAT:- The setting off or telescoping can be allowed only after verification whether the cash was available in the group concerns/directors/assessee. Therefore the issue is restored to the file of the AO to examine and decide it as per facts. So far as the addition on estimation basis by applying adhoc rate of ₹ 25,000/- in case of shops and ₹ 14970/- in case of flats are concerned on the basis of which the on-money was arrived at, the same is without any basis and has to be deleted. The case of the assessee is covered by the decision of coordinating Bench in case of Runwal Homes Pvt. Ltd[2017 (12) TMI 1216 - ITAT MUMBAI]. We hereby direct AO to restrict addition only where direct evidences of accepting on money received from customers found during the search. AO will also verify availability of cash flow with the assessee group as stated above and if any shortage is noticed a further addition to the extent of such shortage may be further added in the hands of appellant - we set aside the issue to the AO for limited purpose of quantification of undisclosed income on the basis of incriminating materials/evidences and examining the availability of cash in the group. Ground 1 is allowed for statistical purpose. Income recognition - whether appellant has been following the Project Completion Method to recognize the income from the projects and hence on money is to be taxed in the year of completion of the relevant project from where the on money has been earned? - HELD THAT:- As perusing the material on record including the decision of the coordinate bench in the case of Runwal Homes Pvt Ltd. [2017 (12) TMI 1216 - ITAT MUMBAI] on this issue, since out of three projects two already completed during the year and recorded receipts already offered to tax in this year, hence unrecorded income shall also be taxable on all the units which are offered to tax in this year which has been rightly done so. However, qua the R Square project which was not completed during this year, the unrecorded receipts from the will also be liable to be taxed in the year of completion of project as held by the coordinating Bench in sister concern case . Income offered as per books of account on the completed projects is lower vis a vis income estimated as per tentative profit and loss account prepared at the time of search - HELD THAT:- As perusing the facts on records including the impugned orders and decision of the coordinate bench in [2017 (12) TMI 1216 - ITAT MUMBAI] wherein assessee has explained reason of difference between estimated profit at the time of search and profit as per audited books of accounts. We note that the AO did not point out any defect or any unsustainable claim in the assessment order nor did he bring any substantive materials on the record to prove to the contrary. Under these circumstances we do not concur to the conclusion of the authorities below on this issue. Disallowing the claim of expenses from the business income - said expenses were claimed by the appellant against the Income from House Property - HELD THAT:- In assessee’s own case in A Y 2010-11 & 2011-12, noted method and manner of disallowance of expenses to the extent these were claimed as deduction u/s 24 of the Act. The coordinate bench has held that notional claim u/s 24 of the Act can not be basis for disallowance by the AO while assessing the income from bsuiness. In this case it has been decided that the AO has to arrive at actual figure of expenses incurred to earn rental income which are debited to the profit and loss account in order to make disallowance. Therefore, following the decision of coordinating bench, we are setting aside the issue for limited purpose to work out actual expenses debited to profit & Loss account relating to the rental income and restrict the disallowance to the same only. Accordingly, this ground of appeal is allowed for statistical purpose.
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