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2022 (6) TMI 564 - AT - Income TaxOn money receipts - additions based on the disclosure made before the Settlement Commission, however, the application was rejected by the commission - CIT(A) deleted the additions in excess of gross profit @30% on the ‘On-money’ receipt - Allegation that the assessee miserably failed to produce documents w.r.t. expenses incurred against the above receipts of ‘On-money’ - HELD THAT:- Assessee has failed to point out the deficiency of Revenue and the working of undisclosed income. Neither it was claimed to be excessive as because the assessee was also not been able to give any proper working of undisclosed/excess income earned by it from various projects undertaken by it. The assessee has further failed to give any factual details so as to substantiate that on-money was not charged and received by it on booking/sale of units in its various project. Neither the actual figure of on-money receipt during the year under consideration from customers has been placed before the authorities below by the appellant. On this premise we do not find any irregularities and/or wrong in not interfering by the CIT(A) with the computation as on-money receipt by the appellant during the year under consideration on booking to sale of units in the project Narayan Shrushti made by the Ld. AO. So far as the other aspect of addition on gross amount of on-money receipt or gross/net profit related to such on-money receipt to be treated as unaccounted/undisclosed income of the appellant is concerned we find that the assessee made a request before the First Appellate Authority for restricting addition to 15% of the alleged on-money being the rate of net profit. As a settled principle of law that where it is found that the assessee is charging on-money/premium in respect of booking of flats, the entire receipts on account of on-money/premium charged would not to be treated as the undisclosed income of the assessee but only net profit rate could be applied on unaccounted sales/receipt for the purpose of making addition. It is also the ratio decided by the Jurisdictional High Court in the case of CIT vs. President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] as also relied upon by the Ld. A.R. before us. It is a practice of the real estate market that cash over and above the consideration in cheques are collected from the customers but the developers have to incur various unaccounted expenses in regard to the procurement of land and approval of the projects by various authorities too and therefore, the estimated profit of on-money/premium amount collected from the customers is to be brought to tax instead of adding the gross amount of on-money/premium to the total income. In fact, the Ld. CIT(A) also carefully took into consideration this particular aspect of the matter and profit at 30% of the gross amount of on-money receipt has been treated as unaccounted income by him and the same was rightly added in the computation of total income of the assessee which in our considered opinion is just and proper and also at par with the ratio laid down by the Jurisdictional High Court as discussed hereinabove. We do not find any ambiguity in such order passed by the CIT(A) so as to warrant interference. Hence, the order passed by the Ld. CIT(A) is hereby upheld. The appeal filed by the Revenue is, therefore, found to be devoid of any merit and thus, dismissed.
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