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2019 (7) TMI 663

in cash from Runwal Developers Ltd. - assessee alternatively pleaded before the CIT(A) that he being a Civil Contractor may be taxed at the rate of 8% of ₹ 8.70 Crores - CIT(A) taxed @16% based on profit of earlier years - HELD THAT:- Assessing Officer of Runwal Developers Pvt. Ltd., had given a categorical finding that Runwal Developers Pvt. Ltd., had indeed made unaccounted cash payments of ₹ 8.70 Crores to the assessee. Hence, the order of the Department itself explains the source of ₹ 8.70 Crores for the assessee in respect of labour payments thereon by the assessee. Hence, there cannot be any addition that could be made in the hands of the assessee in the sum of ₹ 8.70 Crores in the facts and circumstances of the instant case. We also find that both the assessee as well as Runwal Developers Pvt. Ltd., were assessed by the same Assessing Officer and by the same Circle namely DCIT, Central Circle 4(1), Mumbai. Accordingly, we have no hesitation in directing the AO to delete the addition made in the sum of ₹ 8.70 Crores in the hands of the assessee. - Decided in favour of assessee. - ITA No.688/Mum/2018, CO No.71/Mum/2019 (Arising out of ITA No.688/M .....

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t the seized documents in the form of listed paper component labour payments made in cash were found for the whole amount of ₹ 8,70,00,000/- at the time of search. Despite the fact the assessee came forward to state in his statement recorded during search that he had received a sum of ₹ 8,70,00,000/- in cash from Runwal Developers Pvt. Ltd. and had passed on the same as labour payments in cash for the very same sum of ₹ 8,70,00,000/-. In other words, the assessee has stated that he had merely acted as post office in this regard and there is no question of any income in his hands for the said transaction. The ld. AO however, did not consider the statement of the assessee and treated the entire gross sum of ₹ 8,70,00,000/- as undisclosed income of the assessee and added the same to the total income in the assessment. 3.2. Before the ld. CIT(A), the assessee argued that the ld. AO himself had quoted and relied upon the statement given by the assessee wherein assessee had confirmed that the page Nos. 36 to 64 of Annexure A1 i.e. seized papers relate to the payment made to the labourers and labour contractors. The assessee had also confirmed that he had received .....

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rom the project 'Runwal Anthurium till the relevant assessment year, which again corroborates the claim of the assessee that an amount of ₹ 8.7 crores has been received in cash from M/s. RDPL on account of contract work carried out by him for M/s. RDPL. From the aforesaid discussion, I find no basis for the rejection by the AO of the claim of the assessee that the source of the unexplained expenditure of ₹ 8.7 crores is out of the unaccounted contract receipts in cash from M/s. RDPL. Further, the ld. CIT(A) observed that the gross profit earned by the assessee for the preceding three years in the range of 11.6% to 15.4%. He observed that this gross profit for the last three years should be taken as a basis for permitting the addition in respect of this sum of ₹ 8.70 Crores and accordingly, adopted the rate of 16% as gross profit for the year under consideration and applied the sum of ₹ 8,70,00,000/- and made an addition of ₹ 1,39,20,000/- thereon. 4. Aggrieved, the assessee is in appeal before us. 5. We have heard rival submissions. The primary facts stated hereinabove remain undisputed and hence, the same are not reiterated herein for the sake of .....

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ed having given in cash in the sum of ₹ 8.70 Crores to the assessee. He also argued that there was no confirmation from Runwal Group that was filed by the assessee to justify his statement recorded on oath. We find that the assessee had submitted pages 46 & 47 of Annexure A1 seized from his residence at the time of search which contains the details of the billing for the project Runwal Anthurium . It was submitted that as per these pages, the total contract work, billing has been carried out for an amount of ₹ 9,53,44,921/- which comprised of certified work of ₹ 3,06,43,683/- and proforma invoices raised of ₹ 63,16,291/-. The assessee further submitted before the ld. CIT(A) that against the proforma invoice raised, M/s. Runwal Developers Pvt. Ltd., had made unaccounted payments to him in cash. We find that the ld. DR vehemently argued that Runwal Developers had offered on-money received from customers by them for A.Y.2014-15 and 2015-16 for this specific Anthurium project and not for the labour payments made in cash and accordingly argued that offer made in the hands of the Runwal Developers Pvt. Ltd., has got nothing to do with the addition made in the .....

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raised by M/s. M.J. Construction and M/s. Senghani Associates. 8.2 Shri Himmatbhai Senghani has thus accepted that cash payment has been received from M/s. Runwal Developers Pvt. Ltd. to the tune of ₹ 8.7 crores. Further it has been stated that it is a temporary arrangement and was to be reversed as soon as the cheque amount was realized from the Runwal group. The amount of ₹ 8.7 crores has not been accounted in the books of account of Shri Himmatbhai Senghani 8:3 During the course of assessment proceedings the assessee has been asked to explain whether any payment has been made to Shri Himmatbhai Senghani, Prop, of M/s. M.J. Construction and Senghani Associates in the F.Y. 2014-15 (search year) relevant to A.Y.2015-16. The representative of the assessee has submitted as under :- Shri. Himmatbhai Senghani - Runwal Developers Pvt. Ltd - Cash Payment Shri.. Himmatbhai Senghani is a Labour Contractor for the Runwal Group. He is executing his contracts under his Proprietorship Concern running under the name of M/s. M. J. Construction. In his respect, you have sought / asked for the following: Your goodself has alleged that has admitted to receiving a sum of ₹ 8.70 cro .....

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sesses as noted in the working would a/so have to be granted since the same are allowable costs . 8.5 The submission / explanation of the assesses has been examined and found that the same cannot be accepted on the facts of the case. Shri Himmatbhai Senghani is working as a labour contractor with the Runwal Group. From the submission of the assesses it appears that the assesses wants to cross examine the witness i.e. Shri Himmatbhai Senghani as if he is not known to the assesses and is staying far off. The assesses is trying to shift its burden to prove the genuineness of its cash transaction. Reliance is placed on judgement of the Gujarat High Court reported in CIT Vs Chandra Vilas Hotel (1987) 164 ITR 102 (Guj). This onus has not been discharged by the assesses. 8.6 The year under consideration, an amount of ₹ 17,94,14,102/- (as mentioned in paras-6 above) has been added to the total income of the assessee. Therefore, the assessee had sufficient unaccounted cash balance in its hand to make such payment to Himmatbhai Senghani The assessee company had generated cash by receiving on money from the sale of its residential/commercial units. On the basis of explanation, offered b .....

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