2025 (7) TMI 1695 - HC - Income Tax

Estimating receipts on money at the rate of 10% on the total booking receipts - unaccounted cash found during the search u/s 132(1) - HELD THAT - Tribunal has merely made an estimate of the on-money received by the appellant-assessee as per the statement given by the Director voluntarily during the search which was corroborated by the actual availability of cash found during the search itself. The impugned order of the Tribunal is also passed on the basis of the findings of the CIT (Appeals) where the CIT (Appeals) has sustained the addition in part which has been increased by the Tribunal and therefore the Tribunal had only passed the impugned order on the quantum of the on-money and for that purpose we are of the opinion that no question of law would arise as there is a concurrent finding with regard to the issue of receipt of on-money by the assessee-appellant and only the Tribunal has changed the quantum of such addition sustained by the CIT (Appeals) by applying 10% on the total receipt of all the projects including the flats involved in the project Sarjan . Tribunal has enhanced the quantum of on-money receipt on the ground that assessee was accepting on-money as admitted by the Director which is a finding of fact arrived at by all the authorities. Decided in favour of revenue.

Summary

ISSUES:

Whether the Tribunal committed substantial error of law in estimating 'on-money' at the rate of 10% on the total booking receipts based on conjectures and surmises.Whether the Tribunal committed substantial error of law in estimating receipt of 'on-money' for the whole year, including the post-search period.Whether the admission by the Director regarding charging 'on-money' on all projects is sufficient evidence to justify estimation of undisclosed income.Whether the fact that booking prices were advertised for a particular project negates the possibility of charging 'on-money' on that project.

RULINGS / HOLDINGS:

The Tribunal's estimation of 'on-money' at the rate of 10% on total booking receipts was upheld as it was based on the voluntary statement of the Director and corroborated by actual cash found during the search, rejecting the contention that it was based merely on conjectures and surmises.The Tribunal correctly estimated 'on-money' receipt for the entire year, including the post-search period, as it was a regular assessment under section 143(3) of the Act, not a block assessment under Chapter XIV-B, and the Assessing Officer had jurisdiction to do so.The admission by the Director that 'on-money' was charged on all projects was held to be a relevant and sufficient basis for estimation in absence of contrary evidence, overruling the CIT(Appeals)'s reasoning that no 'on-money' was charged on the project with advertised prices.The Tribunal rejected the argument that advertised booking prices for a project precluded charging 'on-money', holding that such fact was not relevant in light of the Director's admission and lack of evidence to the contrary.

RATIONALE:

The legal framework applied includes the provisions of the Income Tax Act, 1961, particularly sections 132(1) and 132(4) relating to search and seizure and recording of statements, and section 143(3) relating to regular assessments.The Tribunal relied on the principle that in regular assessments, estimation of undisclosed income can be made based on voluntary statements and corroborative evidence such as cash found during search, without requiring documentary proof of exact ratio between 'on-money' and accounted receipts.The Court distinguished the present case from block assessments under Chapter XIV-B, where estimation is restricted to evidence found during search, emphasizing the Assessing Officer's broader jurisdiction in regular assessments.The Tribunal's approach reflects a doctrinal position that admissions by company directors regarding receipt of 'on-money' are significant and can justify estimation, even if specific project details (such as advertised prices) suggest otherwise, absent contrary evidence.No dissent or doctrinal shift was noted; the Court affirmed the concurrent findings of fact by the authorities below and held that the questions raised were primarily factual, not legal, thereby dismissing the appeal.