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2016 (10) TMI 531 - ITAT MUMBAI

2016 (10) TMI 531 - ITAT MUMBAI - TM - Undisclosed income - amount of cash ‘on-money’ with respect to all the unsold stocks - Held that:- There will always be some estimation and guess work while computing the undisclosed income of the assessee as the same had been kept hidden by the assessee from the Revenue which is within the special knowledge of the assesssee and may not be brought out completely before the authorities , thus, exact precision can never be reached in estimating undisclosed in .....

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held by the assessee which the AO added in the undisclosed income of the assessee have to be eliminated from the chargeability to tax and the rest amount is to be brought to tax as undisclosed income of the assessee. We find no infirmity in the orders of the ld. CIT(A) whereby ld CIT(A) has upheld the assessment orders of the AO by confirming that the cash ‘on-money’ was in-fact being received by the assessee in the previous year relevant to the impugned assessment year, hence, we uphold/sustai .....

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losed income brought to tax as the conduct of the assessee is continuing as brought on record since 2005 meeting till the recording of statement on 14-03-2008 as set out above whereby conduct of the assessee based on preponderance of human probabilities points to the receipt of ‘on money’ regularly by the assessee during the instant assessment year backed with booming real estate sector which itself is admitted by the assessee and quantification need to be done based on the empirical data of the .....

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itely need some guess work which of course should not be arbitrary while on the other hand the details of surrender amount of ₹ 1.25 crores is within the special knowledge of the assessee which details are not brought out by the assessee. The Revenue has made addition @ 20% on extrapolation which is also not sustainable in the instant case by reading in isolation in divorce to the total surrender of ₹ 1.25 crores as the addition has been made on the basis of the statement of partner .....

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of 20% on the sales value were made by the Revenue as sustained by learned CIT(A) in immediately preceding assessment year 2007-08. Hence addition are to be sustained in the manner laid down by us in our above decision. We have considered the case laws relied upon by both the parties while arriving at the conclusions as set out above. We order accordingly. - I .T.A. No. 76/Mum/2012, I .T.A. No. 77/Mum/2012, I .T.A. No. 7421/Mum/2012 - Dated:- 22-8-2016 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND S .....

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eedings before the learned CIT(A) arising from the three separate assessment orders , first dated 22nd December, 2009 passed u/s 143(3) read with Section 153A of the Income Tax Act,1961 (Hereinafter called the Act ) for the assessment year 2007-08 , and the rest two assessment orders dated 22nd December 2009 and 29th November, 2011 respectively passed by the learned Assessing Officer (hereinafter called the AO ) both u/s 143(3) of the Act. 2. First, we shall take up the assessee s appeal in ITA .....

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premises which at best represented provisional figures and nothing more. 3. In not appreciating the explanations given by the appellant of various reasons why flats are sold at different prices and other submissions made by the appellant. All the grounds above are without prejudice to each other. 3. The brief facts in this case are that the assessee is a partnership firm engaged in the business of civil construction i.e. development of property at Mira Road, Dist, Thane. A search operation was c .....

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,567/- which was income the same as declared in the original return of income filed u/s 139(1) of the Act. The assessee was asked by the AO to explain the contents of the seized material marked as Page No. 18, Annexure A-3 seized from 811,Embassy centre, Nariman Point,Mumbai . In reply, the assessee submitted the following explanations before the AO:- THE EXPLANTIONOF PAGE NO 18 (ROUGH WORKING) All the hand written workings on page No 18 and back of 18 are provisional rough workings. However, th .....

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in the balance sheet for the year ended 31.3.2007, few fiats were sold on discount hence the variation appears. IV - 155260 & 10205 is saleable area of Shanti Gardens Sector IV project (Residential & Commercial respectively). 1350 & 1300 is respective average price taken for working purpose which works out as written 20,96,01,000 & 1,32,66,500 and the total as ₹ 22,28,67,500 mentioned on the said page, Whereas the actual sale is ₹ 21,20,89,625, which is duly recorded .....

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eas the actual sales is ₹ 9,17,40,754/- which is duly recorded in the books of account and the balance sheet for the year ended 31.3.2007. The sales figure of ₹ 10,07,41,500 includes the sales figures of building No A2/3 which till date is under construction (i.e. 70% of the work is completed). The saleable area of the said building is 39,900 sq. ft. The sale booked as on 31.3.2007 is ₹ 9,17,40,754/- which does not include the sale value of building No. A2/3, hence the variatio .....

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n figure of ₹ 48,30,86,776 is the total of WIP S/D, ₹ 16,43,77,664 & WIP S/G ₹ 31,87,09,112". The assessee was confronted by the A.O. that if in page No. 18 Work-inprogress figures stated are matching with actual figures in the books of accounts maintained by the assessee, then why not as per section 132(4A) of the Act, sales figures should also be considered as actual sales and should be treated as revenue for the relevant period. The assessee submitted the following .....

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nd shops cannot be sold at a fixed price. There are variations in the sale prices primarily on account of discounts given to buyers and due to the sales happening at different periods of time during the pendency of the project. In particular the reasons for sales being different from the sales at a fixed price are : a. Business decision taken from time to time depending on the competition, volatility in the market, need of funds by the company etc. b. Our eagerness to have some confirmed booking .....

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es clearly do not represent actual sales. The A.O. rejected the contentions of the assessee in view of provisions of section 132(4A) of the Act. The A.O. observed that in view of provisions of section 132(4A) of the Act the loose papers and incriminating material found in the possession of the assessee belongs to the assessee and the contents thereof were true and that the same have been written/ handled by the person who were in-charge of the conduct of business. By merely denying that the pape .....

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lved in accepting cash i.e. out of books receipts. Thus, on the basis of above, the following additions were made by the AO by commenting as under:- Regarding sales of Shanti Gardens Sec. III Project, there is difference of 53,10,440 rs (22,38,98,720 - 21,85,88,280) as on 31.3.2007 i.e. for AY 2007-08, in actual sales booked till 31.3.2007 and figure written on loose paper. However WIP figures are matching with books of accounts. Accordingly ₹ 53,10,440 has been added back to the income of .....

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90,00,746 rs. (100741500-91740754) as on 31.3.2007 for A.Y. 2007-08 in actual sales booked till 31.3.2007 and figure written on loose paper. This figure on back side of Page 18 was again reproduced on front side of Page 18. Accordingly, assessee's contention in this regard can't be accepted and ₹ 90,00,746 has been added back to the income of the assessee as out of book receipts. (addition ₹ 2,50,89,061). Thus, total addition of ₹ 2,50,89,061/- was made to the income o .....

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age 18 in Annexure A-3 was a handwritten provisional working of the profit which would have been earned on various projects had all the units therein been sold at a particular predetermined price. The assessee contended that it was explained before the A.O. during the course of assessment proceedings u/s 153A read with Section 143(3) of the Act, that the flats were seldom sold at the same price in a project and that the sale price of an individual flat could differ from another because they were .....

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ich is not recorded in the books of accounts and thus adding the same as undisclosed income of the assessee. Without prejudice it was submitted by the assessee that many of the flats sold were not at all sold in the relevant previous year and the AO is not justified in taxing the entire amount in the impugned assessment year. Thus, the assessee prayed before the learned CIT(A) to delete the addition of ₹ 2,50,89,061/- made by the AO vide assessment order dated 22-12-2009 passed u/s 143(3) .....

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eized material, the sale price was estimated of the saleable area of the said project as follows: Particulars Area & rate per sq. ft. Amount (Rs. Saleable are of residential space 176720 x 1201 21,22,40,720/- Saleable area of commercial space 9715 x 1200 1,16,58,000/- Total sales estimated 22,38,98,720/- 3.2 Out of the above, during the course of Remand proceedings, it is stated by the assessee that following residential space and commercial space were not sold in the accounting year relevan .....

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of the saleable area of the said project as follows: Particulars Area & rate per sq. ft. Amount (Rs. Saleable area of residential space 155260 x 1350 20,96,01,000/- Saleable area of commercial space 16205 x 1300 1,32,66,500/- Total value of area not sold during the A.Y. 2007-08. 22,28,67,500/- 4.2 Out of the above, during the course of Remand proceedings, it is stated by the assessee that following residential space and commercial space were not sold in the accounting year relevant to the A. .....

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the saleable area of the said project as follows: Particulars Area & rate per sq. ft. Amount (Rs. Saleable area of residential space 181320 x 500 9,06,60,000/- Saleable area of commercial space 18330 x 550 1,00,81,500/- Total value of area not sold during the A.Y. 2007-08. 10,07,41,500/- Further, it was stated by the assessee that following residential and commercial areas not sold till date as observed from the balance sheet for the year ended on 31st March 2010:- Particulars Area in sq. ft .....

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sale price shown in the sale documents. The assessee has also disclosed ₹ 1.25 crores as an undisclosed income on it's own in the statement recorded during the course of search proceedings as on money received for the period from 01-04-2007 to the date of search on 13-03-2008. Thus the assessee s contention that it has not received any on-money from the sale of flats was rejected by the learned CIT(A). It was also observed by the learned CIT(A) that certain flats and commercial areas i .....

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that there is no justification in arriving at the undisclosed income by taking the same sale price for inventory stock which was not sold till the end of the accounting year and hence the ld. CIT(A) directed the A.O. to exclude the on-money determined for these unsold built up areas from the unaccounted income determined by the A.O. The ld. CIT(A) accordingly partly allowed the appeal of the assessee vide appellate order dated 08-11-2011. 6. Aggrieved by the appellate order dated 08-11-2011 of t .....

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of search operations carried out by the Revenue u/s 132(1) of the Act, apart from other seizures, one loose paper was found and seized which is marked as page No. 18 (having front and back marked 18 and 18a) of annexure A-3 from 811, Embassy Centre, Nariman Point, Mumbai which is placed in paper book page 22 -23 filed with the Tribunal. It was submitted by learned counsel for the assessee that the assessee has also made disclosure of ₹ 1.25 crores for the assessment year 2008-09 vide stat .....

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on record. The assessee submitted that the A.O. erred and relied on the loose papers found and seized from the possession of the assessee which contained rough notings and the contents were considered as true. The ld. Counsel drew our attention to the seized material page 18/18a Annexure A-3 which is placed at paper book page 22- 23 and submitted that the basic flat sale rates were applied to the total area to arrive at the total sale projection of the entire project. This is prepared for manage .....

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tion to the assessment order and order of the ld. CIT(A). It was submitted that no further enquiry was made by the A.O. from the buyers. The A.O. has applied section 132(4A) of the Act and held that there is a presumption that the contents of the seized documents are true. Assessment has been made on the basis of seized material which are nothing but rough calculations. The ld. Counsel submitted that the assessee has already surrendered an amount of ₹ 1.25 crores voluntarily for the assess .....

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t disowning the said seized document being page 18 and back of page 18 (placed at page 22-23/paper book) by the Revenue during the search operations. The ld. Counsel submitted that the assessee was confronted by the Revenue during the course of recording of the statement whereby the assessee explained as answer to the question No. 10 that the documents were prepared by the accountant for the purpose of advance tax. Thus the ld. Counsel further submitted that in reply to question No. 27 it was su .....

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l year 2007-08 with the request that no penalty/prosecution action should be taken against the assessee. The ld. Counsel submitted that no additions can be made based on presumption and surmises as was done by the Revenue. Without prejudice, the ld. Counsel submitted that the A.O. has included the entire sale proceeds being received in cash, even if addition is to be made then it was submitted that only profit component can be added to the income of the assessee and additions should be restricte .....

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i Wire Industries Ltd. v. CIT in Income Tax Reference No. 38 of 1997 dated 25th September, 2012, whereby Hon ble Bombay High Court has upheld the view of the Tribunal that merely because the tax-payer has received on money during the assessment year 1990-91 , it does not follow that the tax-payer has also received on money during the assessment year 1989-90. 8. The ld. CIT D.R. referred to the seized documents marked as page No. 18 and back of page 18 of annexure A-3 which is placed at paper boo .....

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Bombav between Bharatbhai & papaji (D.G.C.). Following points were discussed & agreed. 1. Distribution of cash money (RNDC) will be as follow: 50% will be kept by B.S. Shah against interest dues. Balance 50% will be distributed in the ratio of 60% B.S & 40%D.G. Group. 2. Papaji pointed out that the sale values of Flats & Shops in phase-I differs from the actual to what is shown in the a/c given. B.S. agreed that difference is obvious from the instances given by papaji and it shou .....

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₹ 30 lacs for which R/C & N.D. along with papaji went to B.S. s office 2/3 times to give measurement. However it did not work out at that time. Therefore against that money ND offered his office as collateral security till such time this commitment was honoured. Since ND s commitment to XYZ have been carried out in 2003, 5 Years after his death. His commitment to us should also be honoured. 6. Shifting of the office at the site (RNDC) will be done after the commitments of ND is fulfill .....

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s concluded that on money was received by the assessee and for the next year the assessee itself surrendered ₹ 1.25 crores based on the statement recorded during course of search operations whereby it was admitted by the assessee that the on money was received by the assessee from 01-04-2007 to the date of search. The ld CIT DR referred to the seized material page 18 and back of page 18 Annexure A-3 which is placed at paper book page 22-23 , wherein clearly reference to the date 31/3/2007 .....

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rned CIT DR. The ld. CIT(A) remitted the matter to the file of A.O. for exclusion of cash on-money element from the additions made with respect to the unsold stock. The assessee has come out with the submission that assessee has given discount on sales. The assessee has to produce cogent material that it is rough noting and not final which the assessee failed to produce except taking the plea that these are rough notings. The cash on money received by the assessee has to be brought to tax while .....

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urt in the case of Surendra M. Khandhar v. ACIT [2009] 224 CTR 409 (Bombay) and submitted that the assessee has accepted that cash on-money has been received by the assessee. He further relied on the decision of Hon ble Bombay High Court in the case of Harish Textile Engineers Ltd. v. DCIT, [2015] 63 taxmann.com 66 (Bombay), in the case of Mahabir Prasad Rungta v. CIT, [2014] 43 taxmann.com 328 (Jharkhand) and also the decision of the ITAT Jaipur Bench in the case of Harishchand & Brothers v .....

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in inventory was submitted in the paper book page 32-56. On being asked by the Bench, the ld. AR submitted that the project Shanti Gardens was started in 2005 and the parties as per seized material page 14 of loose paper file containing paper 1-24 are partners of the project i.e. Mr. Bharat S Shah Group and Mr D G Choudhary group are partners in the construction projects undertaken by the assessee. 10. We have considered the rival submissions and also perused the material available on record in .....

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which is marked as page no. 18 and back of page 18 of Annexure A-3 which was also found and seized by Revenue from 811, Embassy Centre, Nariman Point, Mumbai wherein certain figures were written in the said seized paper related to alleged work-in-progress(WIP) and alleged sales related to the project undertaken by the assessee . The said seized material is placed in paper book page 22-23 filed with the Tribunal. The assessee has owned up the said document as belonging to it written by its accoun .....

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but figures per-se of sales recorded are disputed by the assessee as well as it is the contentions of the assessee that it represent projected / rough sale figures and not the actual sales figure as recorded in books of accounts maintained by the assessee. There is also seizure of a document marked as page 14 of loose paper file containing pages 1-24 which is a minutes of meeting having taken place on 30th August, 2005 at Taj Mahal Hotel, Mumbai between the two partner groups of the assessee fir .....

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ject at Mira Road, Thane if read in conjunction with the seized material A-3 page 18 and back of page 18 , and also read along with the statement recorded during search operations of partner of the assessee Mr. Mukesh D Chowdhary on 14-03-2008 whereby the assessee firm surrendered ₹ 1.25 crores by admitting of having received cash on-money on sale of flats in the said project from the period 01-04-2007 till the date of search. As per seized material marked page 18 and back side of page 18/ .....

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e assessee. Apart from the above, there is also mention of the word Sales Realisation and Sales against which certain figures are mentioned in the said seized document page 18 and back of 18 of Annexure A-3 which the Revenue is rightly contending that it represents the sale of the assessee as in our considered view , the word Sales Realisation can only mean sales against which payments stood realized , thus no prudent person will write projected sales as Sales Realisation .The use of the word Sa .....

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gures as are recorded in the books of accounts which leaves us with no iota of doubt that figures against the word Sales or Sales Realisation are actual figures of sales concluded by the assessee. The presumption u/s 132(4A) of the Act shall apply , the documents having been found from the possession of the assesssee shall be deemed to belong to the assessee which in the instant case is not denied by the assessee and the content of the document shall be considered true and correct , thus, now it .....

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ned in the seized document are matching with the books of accounts of the assessee maintained in regular course of busienss and hence on the same analogy the sales should also be actual sales keeping in view the use of word Sales Realisation and Sales in the said seized document. The contention of the assessee that the said document also showed inventory which is not sold by the assessee included in the sale figures , we find that inventory held by the assessee as at 31-03-2007 in Shanti Gardens .....

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pace on the launch/prelaunch stage itself . The stupendous rise of the real estate in the period 2006- 08 can also be seen by the re-sale rates mentioned in the seized documents which was clarified vide question no. 7-9 in the statement recorded on 14-3- 2008 of Mr Mukesh D Chowdhary , partner of the assessee(placed in PB/page 1-6) whereby per seized material of folder 3 page 2 resale rates per square mentioned of the flats in the project Shanti Garden are quoted at around ₹ 2750 per squar .....

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n the other hand the assessee is showing revenue @ ₹ 1200-1350 per square feet in the Shanti Garden project for different flats. The AO has not persued these seized documents (page 2/folder 3 i.e. Annexure A-3) while framing the impugned assessment and no further enquiry is made by the AO as borne out from the records/material before us with respect to these seized documents reflecting re-sale prices. The assessee has also in reply dated 26.10.2009 to AO during the assessment proceedings f .....

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om in 2006-08 is also reflected in CRISIL research report-Indian Real Estate overview whereby the real estate sector progress has been defined as under:- Phase I (2001-2005) was an initial growth phase with stabilising residential real estate prices following the global recovery post the dot com bust and 9/11 terrorist attacks in New York. At the same time, there was steady growth in Indian economic activity, noteworthy recovery in IT/ITES industry, growing urbanisation and a rising trend toward .....

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recovery in demand because of the global economic downturn, which led to a decline in affordability and tight liquidity. The retreat of various real estate investors, accompanied by slowdown in the capital markets, has resulted in oversupply and falling prices. The Revenue has brought to tax only the difference between the sales figure recorded in the said seized document page 18 and back of page 18 of Annexure A-3 and the books of accounts maintained by the assessee as undisclosed income of th .....

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e statement recorded on 14-03-2008 that cash money was generated in these projects and the assessee had received on money to the tune of ₹ 1.25 crores from 01-04-2007 to the date of search. It is an admitted and undisputed position by the assessee that project Shanti Garden (relevant sector III & IV in the instant assessment year) was started by the assessee in the year 2005 and completed in 2007 and the same was stated by the learned counsel for the assessee before us. The alleged mee .....

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essee and the contents of the documents are true and correct. It is for the assessee to rebut the same which the assessee has merely denied the same while the documents speaks loudly that the said meeting in-fact took place on 30-08-2005 at Taj Mahal Hotel , Bombay between the two partner groups to decide about the modus operandi to generate and distribute cash on money from the projects undertaken by the assessee amongst two partner group in the manner stipulated in the said seized document . I .....

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vidence that the tax-payer has received any on-money for the assessment year 1989-90 while there was an admission by the taxpayer that it did received on-money for assessment year 1990-91, while in the instant case there is a seized document no 14 of loose paper containing pages 1-24 , which are minutes dated 30-08-2005 whereby the partner groups held meeting to decide about the modus operandi to generate and thereafter distribute cash on money amongst themselves from the projects undertaken by .....

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aken by the assessee of ₹ 1.25 crores from 01-04-2007 to the date of search . The conduct of the assessee through out starting with the commencement of the project Shanti Garden in 2005 is consistent till recording of statement on 14-03-2008 that the assessee indulged in collecting cash on-money from the projects undertaken by the assessee. The admission of the assessee vide statement recorded on 14-03-2008 of the partner of the assessee Mr. Mukesh D Chowdhary which statement of the partne .....

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ssessment year 2008-09 and offered this surrendered income of ₹ 1.25 crores for taxation. The assessee has also sold majority of the flats in the previous year 2006-07 with respect to Shanti Garden project and the insignificant inventory is left unsold as on 31- 03-2007. This period also matches with the period of boom in Indian Real Estate industry which is elaborately discussed above by us. Section 132 of the Act is a code in itself. The Section is placed in statute with an objective to .....

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sclosed income of the assessee as the same had been kept hidden by the assessee from the Revenue which is within the special knowledge of the assesssee and may not be brought out completely before the authorities , thus, exact precision can never be reached in estimating undisclosed income, the safe guard should be to ensure that guess work in estimating undisclosed income should not be arbitrary. In our considered view, the ld. CIT(A) has taken a correct stand confirming and sustaining the asse .....

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. We find no infirmity in the orders of the ld. CIT(A) whereby ld CIT(A) has upheld the assessment orders of the AO by confirming that the cash on-money was in-fact being received by the assessee in the previous year relevant to the impugned assessment year, hence, we uphold/sustain the appellate order dated 08-11-2011 passed by the ld. CIT(A) by dismissing the appeal of the assessee. We order accordingly. 11. In the result appeal filed by the assessee in ITA No 76/Mum/2012 for the assessment ye .....

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g the Search or thereafter to justify the same. 3. in not appreciating that the disclosure made by the appellant covered whatever income had been earned. 4. In not adequately appreciating that the project had only commenced in this year and was only complete to the extent of 25%. 5. in making an assumption that the appellant had earned on money on every transaction of sale without appreciating the submissions made and without appreciating that there was no evidence which was found during the Sea .....

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search as the partners accepted to receive out of book money from 1.4.2007 onwards in his statement dated 14.3.2008 u/s 132(4) of the Act and disclosed ₹ 1.25 crores on this account. The extract of the statement reads as under:- Q.27 Do you want to say anything? Ans. I have to say only that due to the price rise in building construction business I have been able to collect cash money roughly 20% over and above the sale price realized by us in financial year starting from 1.4.2007 onwards a .....

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is of disclosure of ₹ 1.25 crores? The above disclosure was made to buy peace of mind at the end of very exhausting and emotionally and mentally an extremely tiring session lasting almost for 24 hours. It was made on the basis of the partners estimate of the additional income generated without having the energy or the time or being in the frame of mind to go into any sort of detail at that of time. We do submit that earning of such additional income is not a regular feature of this trade a .....

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the sale price realized on some transactions depending upon the following factors 1) Buyers keen interest to buy a particular flat being his /her preferred choice due to reasons such as Garden/ Road Facing, view, cross ventilation, vastu, etc. 2) The urgent need of the buyer to strike a deal 3) His/her perception of the flat being a prime flat in the building We reiterate that cash money as mentioned above not exceeding 20% has been collected in some transaction only and earning such additional .....

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to 24, it was evident that assessee was involved in accepting cash on money i.e. out of books receipts. The AO observed that accordingly on an average basis, at the rate of 20% extrapolation could be done on the total sales of ₹ 18,70,90,000/- for the period 1.4.2007 to 13.3.2008(date of search] which comes to be ₹ 3,74,18,000/- and out of this, the assessee had already made disclosure of ₹ 1.25 crores , so only the balance of ₹ 2,49,18,000 was directed to be added to th .....

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bmitted that no such evidence has been found that the cash on-money has been collected on each and every bookings, hence, the A.O. was completely unjustified in making the addition during the year in question. It was submitted that the A.O. had completely ignored the submissions made by the assessee wherein it was stated clearly that cash on-money was received only in some cases and that too varied between 10% to 20% and hence there was no case for the A.O. to pro rate that statement into assump .....

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mitted that flats had been sold at a standard price and in certain cases where certain additional benefits were being given or where flats were better located or the buyer wanted to close in a deal, the assessee had been able to recover a premium and it was these premiums which had been offered to tax. Thus the assessee prayed that addition should not be made merely on the basis of presumptions when no adverse material to justify the addition is available. Thus , the assessee submitted that the .....

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ue to boom in the real estate market, the assessee collected 20% on money on the sale of flats and disclosed ₹ 1.25 crore as additional income. The A.O. wanted to apply 20% of the extra money on the sale of all flats but the assessee tried to explain that the on money received was ranging from 10% to 20% and the on money was not received on all flats sale. The assessee has not retracted the statement made on 14-03-2008 up-to 26-10-2009. The asssessee vide reply dated 26th October, 2009 tri .....

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ee could collect 20% extra money. The ld. CIT(A) accordingly uphold the action of the A.O. that on money at 20% on the sale of flats was received by the assessee as per the statement of the partner of the assessee Mr. Mukesh D Chowdhary recorded u/s 132(4) of the Act on 14-03-2008as the assessee failed to prove that the on money received ranged from 10-20% . Thus, the learned CIT(A) affirmed the assessment order dated 22-12-2009 passed by the AO u/s 143(3) of the Act vide his appellate order dat .....

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ect cash on money roughly 20% over and above sale price from 1.4.2007 till the date of search amounting to ₹ 1.25 crores which is not recorded in the books of account and the same was surrendered by the assessee. The assessee has duly filed the return of income and disclosed the said amount of ₹ 1.25 crores in the return of income filed with the Revenue and paid the due taxes. The A.O. has made the addition based upon extrapolation of 20% of the sales while no further enquiry is made .....

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ollowing project completion method of accounting hence estimate cannot be made. Occupation certificate was received in May, 2009. The ld. Counsel relied on the decision of the Tribunal in the case of Guruprerna Enterprises v. ACIT, (2011) 57 DTR (Mumbai Trib) 465 and in the case of Jalaram Jagruti Developers Pvt. Ltd. v. DCIT in ITA No. 5121 to 5123/Mum/08 for assessment years 2003-04 to 2005-06 dated 28th April, 2009.It was submitted that the above decision is affirmed by the Hon ble Bombay Hig .....

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(4A) of the Act. The ld CIT DR also relied upon the seized material marked as page 14 of folder containing loose pages 1-24 which is placed in the file. As per page No. 14, it is clearly mentioned that meeting took place between the two partner groups of the assessee on 30-08-2005 at Taj Mahal Hotel, Bombay wherein it was decided to generate and distribute cash on money from the sale of flats of Shanti Garden. The ld. D.R. submitted that the voluntary statement was made by the partner of the ass .....

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20% and now onus is on the assessee to rebut that the statement was not correct. Income Tax Proceedings are governed by preponderance of human probabilities The ld. CIT D.R. relied upon the judgment of Hon ble Supreme Court in the case of Sumati Dayal v. CIT (1995) 80 Taxman 89(SC) . It was submitted that keeping in view conduct of the assessee and on the test of preponderance of human probabilities , the additions as made by the AO and as confirmed by learned CIT(A) needs to be confirmed/sustai .....

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uring search and the statement of the assessee was voluntary and circular relied upon by the assessee is not help to the assessee. The ld CIT DR relied upon decision of Hon ble Bombay High Court in the case of Surender M Khandar(supra), decision of Hon ble Andhra Pradesh High Court in the case of Gopal Lal Badhruka v. DCIT(2012) 27 taxmaann.com 167(AP), and decision of Hon ble High Court of Allahabad in the case of CIT v. Lal Chand Jaiswal (2013) 40 taxmann.com 372(All. HC). Thus, in nutshell it .....

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e ld. Counsel submitted that ₹ 1.25 crores has been surrendered by the assessee which has already been offered for taxation and there is no dispute as to the same. It was submitted that surrender was made to cover discrepancies and department cannot be allowed to improve its case.It was submitted that Revenue can do extrapolation but not on the basis of guess work. 20. We have considered the rival contentions and also perused the material available on record including the case laws cited b .....

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cash generation and manner of distribution of cash so generated amongst partner groups with respect to the project undertaken by the assessee. Vide page No. 18 and back of page 18 of Annexure A-3, we have confirmed the addition on account of cash on money so generated in the ITA no 76/Mum/2012 with respect to the flats sold during the previous year 2006-07 relevant to the assessment year 2007-08 while on money on the unsold stock in the assessment year 2007-08 was directed to be excluded as the .....

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01-4-2007 to the date of search was 20% over and above sale price which in aggregate amounted to ₹ 1.25 crores for the period 01-04- 2007 to date of search. The A.O. has applied 20 % extrapolation on the total sales which led to addition of ₹ 3,74,18,000/- inclusive of ₹ 1.25 crores surrendered by the assessee. The AO per-se cannot apply part of the surrender by picking and choosing the figure of 20% over and above cash sales in isolation to the figure of total surrender of &# .....

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8/annexure A-3. With respect to the other stock of flat in other sectors of the project so sold during the previous year relevant to the instant assessment year 2008-09, we have to see it in context of the conduct of the assessee since 2005 when meeting took place between partner groups on 30-08-2005 whereby understanding was arrived at as well reiterated to generate cash on money from sale of flats in the project and also to distribute the same amongst partner group which is reflected in seized .....

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year 2007-08 in preceding para s. Thus, with respect to the sales recorded during the instant assessment year excluding sales which were of the unsold inventory of the last year which we have directed to include on money based on page 18 and back of page 18/annexure A-3, the additions shall be made on same proportion as were made in the assessment year 2007-08 in the ratio of sale to undisclosed income brought to tax as the conduct of the assessee is continuing as brought on record since 2005 me .....

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n view that the assessee has surrendered ₹ 1.25 crores during the search proceedings vide statement dated 14-03-2008, whichever figure as arrived at as per our above directions or surrendered amount of ₹ 1.25 crores whichever is higher of the two needs to be added as un-disclosed income as in our considered view the estimate of the undisclosed income has to be made which definitely need some guess work which of course should not be arbitrary while on the other hand the details of sur .....

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econdly revenue has not made any enquiry to bring on record cogent tangible incriminating material to prove that the assessee received 20% cash on all sales while empirical data of preceding year which led to the framing of the assessment order of the preceding year as confirmed by the learned CIT(A) which order of the learned CIT(A) we confirmed does not suggest that addition to the tune of 20% on the sales value were made by the Revenue as sustained by learned CIT(A) in immediately preceding a .....

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naccounted income based on presumptions and surmises and without appreciating correctly the facts of the case and practical realities. 2. in not appreciating that no addition could be made based on rough workings found at the premises which at best represented provisional figures and nothing more. 3. in not appreciating the explanations given by the appellant of various reasons why flats are sold at different prices and other submissions made by the appellant. All the grounds above are without p .....

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ed the order of learned CIT(A) in the assessment year 2007-08 in the manner laid down in our decision in ITA NO 76/Mum/2012 in preceding para s for assessment year 2007-08 the additions made based on seized material page 18 and back of the page 18/annexure A-3. The addition has been made in this year based upon the sale of unsold stock which was carry forward from the earlier years based upon the seized material page 18 and back of page 18 of annexure A-3 whereby addition of ₹ 1,18,500/- h .....

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es and conduct of the assessee prior to the search action on 13-03-2008. The additions for the instant assessment year 2009-10 cannot be made based on the conduct of the assessee prior to the search on 13-03-2008 unless cogent tangible incriminating material is brought on record by the Revenue to prove that the conduct of the assessee carried on by it was the same by indulging in the activity of receiving cash on money even post search on 13-03-2008. The contention of the Revenue that the sales .....

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