TMI Blog2021 (1) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of a statement of one of the partner. Though, confirmation of unsecured loan was furnished to the assessing officer. The assessee also furnished the TDS deducted on the interest paid on unsecured loan as well as copy of TDS return. Addition on account of undisclosed receipt - HELD THAT:- AO made addition on the basis of statement recorded during the survey without any supporting evidence or any adverse material on record. The learned Commissioner (Appeals) also concluded that it is settled legal position that statement recorded during the survey has no evidence of value moreover the survey party has no power to record the statement oath. On the issue of estimated addition we have seen that Commissioner (Appeals), while restricting the addition relied on the decisions in CIT President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] , Kishore Manohar Telwala [ 1998 (2) TMI 612 - ITAT AHMEDABAD] and Abhishek Indutries Vs DCIT [ 2014 (11) TMI 810 - GUJARAT HIGH COURT] . Appeal of the revenue is dismissed. - ITA No. 2018/AHD/2016 - - - Dated:- 6-1-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Appellant : Ms Anupama Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the construction of residential and commercial properties. For the year under consideration the assessee filed its return of income on 31st August 2012 declaring total income of ₹ 22.22 lakhs. The case was selected for a scrutiny and assessment was completed under section 143(3) on 30th March 2015 assessing total income at ₹ 3.22 Crore. During the assessment it was noted that a survey was conducted under section 133A on the premises of assessee on 30th August 2013. In the survey certain books of account found and were impounded. In the said survey statement of one of the partner Navin H Patel was recorded. The partner of the assessee admitted that unsecured loan was availed by the assessee firm, arranged through one Vipul Thakkar on payment of commission at the rate of 0.15% of the cheque amount. On the basis of statement of partner the assessing officer issued show cause notice as to why the unsecured loan of ₹ 1.30 Crore received during the year should not be added to the total income of the assessee. The assessing officer in para in par 4 at page No. 6 recorded that the amount of figure of unsecured loan was wrongly takes as ₹ 1.30 Crore instead of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence of ₹ 2.86 Crore, which has not been disclosed by the assessee. The assessing officer treated the entire difference of amount as income of the assessee. The assessing officer took his view that no profit can be calculated on such amount. The assessing officer also held that assessee failed to prove that unaccounted advance of ₹ 2.86 Crore are part of disclosure of ₹ 2.00 Crore made during the financial year 2013-14, i. e. for assessment year 2014-15. The assessing officer further noted that in the affidavit filed by assessee, the assessee admitted the disclosure on account of booking advances for project Shalok Acarde for assessment year 2014-15, but no of bifurcations of disclosure has been given against the money received during the year. The assessing officer concluded that ₹ 2.86 Crore is the undisclosed income of the assessee, out of the amount of ₹ 2.86 Crore, the assessee availed accommodation entry in the form of unsecured loan of ₹ 1.54 Crore, on which commissions must have been paid to Vipul Thakkar. On the aforesaid observation no separate addition of unsecured loan was made, but addition of undisclosed advances was made. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any material evidence on record treated the unsecured loan as unaccounted amount received only on the basis of a statement of one of the partner. Though, confirmation of unsecured loan was furnished to the assessing officer. The assessee also furnished the TDS deducted on the interest paid on unsecured loan as well as copy of TDS return. 6. With regard to addition on account of undisclosed receipt of ₹ 2.86 Crore, the assessee stated that during the course of assessment proceeding the assessing officer on the basis of survey report noted that assessee received ₹ 2.86 Crore as unaccounted received. The assessing officer issued show cause notice for treating the difference of actual received and the received shown by assessee in its books of account. The assessee explained that they are following percentage completion method of accounting, wherein any case even if the assessee has received any amount is advance, they show profit as a per specific percentage of work in progress. For the year under consideration the assessee has shown 8% of work in progress. The assessee also relied on various case laws as recorded by learned Commissioner (Appeals). 7. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod, the assessee received total amount of ₹ 4.81 Crore as booking advance from customer as evident from the impounded material. The assessee has accounted only ₹ 1.94 Crore, thereby a difference of ₹ 2.86 Crore, which has been treated by assessing officer as undisclosed income. The assessee has not shown any income either on such suppressed received. The learned Commissioner (Appeals) noted that before him the assessee raised mainly three contention, (i) assessee has shown correct income based on the percentage completion method, (ii) that entire alleged on money is not taxable as income as only profit element should be taxed, and (iii) that assessee has already made disclosure of ₹ 2.00 Crore as undisclosed income for the entire project on the basis of alleged on money received that is ₹ 7.56 Crore for the entire project. All these contention of assessee was rejected by assessing officer, the assessing officer simply made addition on account of difference of booking amount and the amount shown in the books of account. The learned Commissioner (Appeals) also noted that assessing officer allowed telescoping of unsecured loan of ₹ 1.54 Crore on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 405) Condition No. 2 Project area sold by agreements till 31.03.2012 should be more than 25% 41.36% (42678665/163505405)*100 Condition No. 3 Revenue realized till 31.03.2012 should be more than 10% 23.46% (21061890/89774603)*100 Working of profit for A.Y. 2012-13 Percentage of completion of work 34.74% (64322379/185149119)*100 Revenue recognized ₹ 31,188,460.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be worked out on this amount. There was no sale of flat and the sale was started in subsequent year and ended in the year when survey was conducted in assessment year 2014-15. The assessee also prayed for application of project completion method and revenue should be recognized in the subsequent year which is assessment year 2014-15. The learned Commissioner (Appeals) after considering the submission of the assessee concluded that working of project completion as noted above was furnished before him, which works out to be ₹ 45.83 lakhs. The assessee has not taken ₹2.86 Crore as a part of revenue though received. Thus, the working of assessee is defective and is an inappropriate to that extent. The assessee while filing of return worked out net profit @ 8.7 % of work in progress of ₹ 6.63 Crore and arrived at the carry forward work in progress of ₹ 7.20 Crore. Beside this work in progress cannot be taken as absolute truth because evidence of unexplained expenditure as per admission of assessee for entire project was also found, further the assessee has taken a stand that if addition is required to be made that should not be more than 8% of ₹ 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The assessee nowhere established that ₹ 2.86 was part of ₹ 2.00 Crore offered by the assessee during the survey action. The learned Commissioner (Appeals) restricted the addition to 8.7%. The ld. DR for the revenue submits that entire amount should be upheld. 13. On the other hand the ld. AR for the assessee supported the order of learned Commissioner (Appeals). The ld. AR for the assessee further submits that Ground No.4 relates to deleting the treatment of unsecured loan as unexplained credit under section 68 and ground No.5 relates to deleting the interest expenses and ground No 6 relates to restricting the difference of alleged undisclosed receipt of booking amount to 8.7%. The ld AR for the assessee further submits that survey action was carried out at the premises of the assessee on 30th August 2013. Notice under section 131 was issued to the assessee for recording the statement of the partner. No proceeding was pending at the relevant time to invoke the provision of section 131 of the Income-tax Act. The statement was recorded by the survey party under section 133A, such statement has no evidentiary value in the eyes of law. The survey party has no power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has disclosed the additional income of ₹ 2.00 Crore in the year in which flat, shops and offices were sold and document were executed. The assessee stated that they are following Percentage of Completion Method and have shown a specific percentage of work in progress (WIP) as profit and hence advance received would not affect net profit of the assessee. The claimed that during the year under consideration the assessee has shown profit at the rate of 8% of work in progress i.e. total cost of the construction. The assessing officer not accepted the version of assessee by taking view that there is difference of ₹ 2.86 Crore, which has not been disclosed by the assessee. The assessing officer treated the entire difference of amount as income of the assessee. The assessing officer took his view that no profit can be calculated on such amount. The assessing officer also held that assessee failed to prove that unaccounted advance of ₹ 2.86 Crore are part of disclosure of ₹ 2.00 Crore made during the financial year 2013-14, i. e. for assessment year 2014-15. The assessing officer treated ₹ 2.86 Crore as undisclosed income of the assessee. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich we have recorded in para 9 (supra) held that profit we should be booked in the books of account as per project completion method works out to ₹45,83,447/-against which the assessee has already offered ₹57,66,360/-in its return of income. The assessee have applied flat 8% profit rate on work in work in progress to arrive at the profit for the current year on percentage completion method. 18. The learned Commissioner (Appeals) held that assessing officer has not examined the issue not rejected the method of profit determining which are mining the project on a year-toyear basis. The assessing officer has not rejected the books of accounts by pointing out any defects in the maintenance of books of account by invoking the provision of section 145(3) of the Income tax Act. On second contention of the assessee that whole of the alleged on money received during the year cannot be taxed the learned Commissioner (Appeals) recorded that it was argued before him that it is settled law that when unaccounted sale is detected only the profit component embedded therein should be brought to tax and relied on the decision of jurisdictional High Court in CIT versus President Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue on the finding of learned Commissioner (Appeals) that the survey was conducted on 30th August 2013 and that statement was related to the assessment year 2014-15, and the firm had made disclosure of ₹ 2.00 Crore for that year. The assessing officer made addition on the basis of statement recorded during the survey without any supporting evidence or any adverse material on record. The learned Commissioner (Appeals) also concluded that it is settled legal position that statement recorded during the survey has no evidence of value moreover the survey party has no power to record the statement oath. On the issue of estimated addition we have seen that leaned Commissioner (Appeals), while restricting the addition relied on the decisions of Hon ble Jurisdictional High Court in CIT President Industries ( 258 ITR 654 Guj), Kishore Manohar Telwala (supra) and Abhishek Indutries Vs DCIT(1999) 63 TTJ (Ahd) 651 and decision of Tribunal in Brijwasi Developers Pvt Ltd (ITA No. 289/Ahd/2013). 20. No contrary facts or law is brought to our notice to take other view; therefore, we affirm the order of leaned Commissioner (Appeals). In the result the grounds of appeal raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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