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TMI Blog2021 (5) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the same are being taken up and disposed off by way of a consolidated order. We shall first take up the appealfiled by the assessee, viz. M/s Ekta Housing Pvt. Ltd for A.Y. 2013-14 in ITA No. 1732/Mum/2019. The assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in confirming the addition @20% of the on-money in this year without considering the fact - that the appellant offered the income of Rs. 3.48 lakhs @ 12% of on-money of Rs. 29 lakhs in A.Y 2016-17 when the project was completed and sale was recognized in P&L A/c. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from on-money received at 20% of Rs. 29 lakhs which is on higher side and should have been estimated @12% of on-money as offered by your appellant. 3. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 2. Briefly stated, the assessee company which is engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing therefrom had accrued during the period relevant to A.Y 2013-14 thus, there was no justification on the part of the assessee to account for the same in A.Y 2016-17. Also, the A.O being of the view that the entire amount of on-money of Rs. 29 lac was to be brought to tax in the hands of the assessee u/s 68 of the Act, therefore, rejected the assessee‟s offer for accounting foronly 12% of the on-money receipt as its income. Although the A.O had in his assessment order categorically observed that the entire amount of on-money of Rs. 29 lac was to be added to the assessee‟s income under Sec. 68 of the Act, however, the consequential addition to the said effect inadvertently remained omitted to be made in the assessment order passed by him under Sec. 153A r.w.s 143(3), dated 15.12.2017. Subsequently, the A.O passed a rectification order under Sec. 154 wherein the addition of Rs. 29 lac was made by him. 4. As the A.O in the impugned assessment order had categorically observed that the entire amount of on-money of Rs. 29 lac received by the assessee w.r.t its project "California" was to be added to the assessee‟s income u/s 68 during the year in question i.eA.Y 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had during the year in question i.e A.Y 2013-14 received on-money of Rs. 29 lac w.r.t sale of Flat no. 1101 in its project, viz. "California". It was further observed by the A.O that the sale agreement for the aforesaid Flat no. 1101 was registered on 04.03.2013 i.e during the year under consideration itself. Admittedly, the aforesaid factual observations of the A.O are not in dispute. Observing, that the assesse had not offered the on-money of Rs. 29 lac received by it as its additional income for the year in question i.eA.Y 2013-14 the A.O called for an explanation as regards the same from the assessee. In reply, it was submitted by the assessee that it had offered the net income element embedded in the on-moneyreceipt i.e @12% of Rs. 29lac in its computation of income for A.Y 2016-17 i.e the year in which the project was completed and sale of the aforesaid flat was recognised in its Profit & loss account. However, the A.O was of the view that the entire amount of the on-money of Rs. 29 lac was to be brought to tax in the hands of the assessee in the year of receipt itself. Also, the A.O was of the view that as the registration of the flat in question i.e Flat No. 1101 was done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn by the ld. A.R from the judgment of the Hon‟ble High Court of Gujarat in the case of CIT Vs. Abhishek Corporation (2000) 158 CTR 374 (Guj). Further, reliance was placed by the ld. A.R on the order of the ITAT, Mumbai in the case of Guruprerna Enterprises Vs. ACIT (2011) 30 CCH 17 (Mum). It was, thus, submitted by the ld. A.R that the CIT(A) was principally correct in restricting the addition to the extent of the income element embedded in the on-money that was received by the assessee company. But then, it was submitted by the ld. A.R that the CIT(A) had estimated the income element embedded in the onmoney receipts at a high pitched figure i.e @20% of the amount of on-money received by the assessee as against that offered by the assessee @12% of the amount of such receipts. In order to drive home his aforesaid claim, it was submitted by the ld. A.R that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15% of the on-money receipts for tax, which had been accepted by the commission. It was, thus, submitted by the ld. A.R that the estimation of the profit element embedded in the on-money receipts @20% by the CIT(A) be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily restricted the addition to the extent of the impugned income element embedded in the on-money received by the assessee. It was further submitted by the ld. D.R that as the sale agreement for the aforesaid property in question i.e Flat No. 1101 was executed in March, 2013 thus, the CIT(A) had rightly observed that the sale transaction in question having been concluded during the period relevant to A.Y 2013-14 itself, there was no justification on the part of the assessee in accounting for the same in A.Y 2016-17. On the basis of his aforesaid contentions it was submitted by the ld. D.R that though the CIT(A) had rightly observed that the sale transaction in question was liable to be accounted for by the assessee during the year in question, but she had erred in scaling down the addition to the extent of the income element embedded in the on-money received by the assessee company, as against the addition of the entire amount of on-money that was made by the A.O. 8. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he questions as formulated does not state that the adoption of any particular rate of net profit, in submissions it is submitted that it has to be replaced/submitted by 65% as net profit as arrived at by the Assessing Officer. (f). We find that the revenue seeks to substitute the estimated net profit arrived at by the Tribunal with a new figure of net profit. This without in any manner showing that the estimate arrived at by the Tribunal in the impugned order is perverse. It is a settled position of law that in estimated net profit arrived at by the authorities is a question of fact and if the material on record does support the estimate arrived at by the Tribunal then it does not give rise to any substantial question of law (see CIT Vs. Piramal Spinning and Weaving Mills Ltd. 124 ITR 408). In this case, we find that the net profit estimated at 17.08% is a very possible view on the facts found. (g). In the above view, question no. 1 as proposed does not give rise to any substantial question of law. Thus, not entertained." Therefore, the percentage of profit has to be estimated on case to case depending on the facts and circumstances of the case. 5.7 In view of the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanani. The source of the cash expenses was unaccounted sales receipts." Further, as observed by the A.O in the assessment order, Shri. Vivek Mohanani (supra) in his statement recorded u/s 132(4) of the Act, dated 12.10.2015 had on being confronted with the seized documents admitted that the same have records of cash transactions, both receipts and expenses, which are not accounted in the regular books of accounts. In the backdrop of the aforesaid facts, we find that is a matter of an admitted fact that the incriminating documents seized in the course of the search proceedings contained records of cash transactions, both receipts and expenses, which were not accounted for in the regular books of accounts of the assessee. As observed by us hereinabove, the A.O while framing the assessment had categorically observed that the unaccounted transactions w.r.t cash expenses incurred by the assessee from the unaccounted sales receipts i.e on-money receipts had surfaced in the course of the search proceedings. It is, thus, in the backdrop of the aforesaid factual position that the assessee had incurred expenses out of the on-money receipts that we shall herein adjudicate the sustainability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suppressed amount of sales. Such decision was carried in appeal by the revenue before the High Court. The High Court rejected the appeal, observing that unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed, such addition could not be sustained. It was observed that in absence of such findings of fact, the question whether the entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. The High Court rejected the appeal holding that no question of law which requires to be referred arises. 11. In the case of commissioner of Income Tax v. Gurubachhan Singh J. Juneja, reported in (2008) 302 ITR 63 (Guj.), once again a somewhat similar issue came up before this Court. In the said case, the assessee was engaged in the business of trading of tyres. Search proceedings were carried out at the residential and business premises of the assessee. On the basis of loose sheets which were seized during such search operation, the Assessing Officer held that sales to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering that the respondent - assessee ought to have spent reasonable amount for the purpose of receiving such gross receipt. 15. It can, thus, be seen that consistently, this Court and some other Courts have been following the principle that even upon detection of on money receipt or unaccounted cash receipt, what can be brought to tax is the profit embedded in such receipts and not the entire receipts themselves. If that be the legal position, what should be estimated as a reasonable profit out of such receipts, must bear an element of estimation. 16. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts can be brought to tax, in our view, no interference is called for in the decision of the Tribunal accepting such element of profit at Rs. 26 lakhs out of total undisclosed receipt of Rs. 62 lakhs. In other words, we accept the legal proposition, the Tribunal accepting Rs. 26 lakhs disclosed by the assessee as profit out of total undisclosed receipt of Rs. 62 lakhs, would not give rise to any question of law. 17. In the result, the tax appeals are dismissed." Also, as observed by us hereinabove, a similar view had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed from seized documents that assessee was receiving premium/on-money on booking of flats belonging to third parties, entire receipts of on-money/premium cannot be treated as undisclosed income of assessee; only net profit rate can be applied on unaccounted sales/receipts for making addition." The other judgments relied on by the assessee also support its case. The ld. D.R has not brought on record any contrary judgments. We, therefore, agree with the consistent view expressed in these judgments that on-money receipts are in the nature of undisclosed receipts and not income per-se and therefore only profit element embedded therein are liable to be taxed and not the entire on-money receipts." In the case before us, in the backdrop of the fact admitted by the A.O while framing the assessment that the incriminating documents seized in the course of the search proceedings contained records of cash transactions, both receipts and expenses, which were not accounted for in the regular books of accounts of the assessee, and that the unaccounted transactions w.r.t cash expenses incurred by the assesseeout of the unaccounted sales receipts i.e on-money receipts had surfaced in the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company that its group concerns which had approached the Income-Tax Settlement Commission (for short "ITSC") had offered for tax the income element embedded in the on-money received by them @15% of such receipts and the same had been accepted by the commission. However, the CIT(A) was of the view that the percentage of profit offered by the group concerns before the ITSC and accepted by the latter was applicable only to the cases before the commission and was in no way binding on the other case which were not before it. At the same time, it was observed by the CIT(A) that the percentage of profit offered by the group concerns before the ITSC and accepted by the latter could be taken as a guiding factor. In the backdrop of the aforesaid observation of the CIT(A), we are of the considered view that she in all fairness for the purpose of estimating the income element embedded in the on-money receipts could have safely taken it at the same figure i.e @15% of the amount of onmoney receipts as was accepted by the ITSC. Our aforesaid conviction is all the more supported by the fact that no reason or logic had been given by the CIT(A) for taking the income element embedded i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be substituted by percentage completion method in the absence of any finding of the A.O that the completed contract method distorts the profits of a particular year. Same view had been arrived at by the Hon‟ble High Court of Gujarat in the case of CIT(Central), Surat Vs. Happy Homes Corporation (2018) 94 taxmann.com 292 (Guj) that where the assessee before them which was engaged in construction business was following project completion method, its income could be brought to tax only in the year when sale deeds of units sold were registered even though sale consideration might have been received earlier from the buyer. The said order of the Hon‟ble High Court was thereafter approved by the Hon‟ble Supreme Court in CIT, (Central) Vs. Happy Home Corporation (2019) 103 taxmann.com 22 (SC) and the SLP filed by the revenue was dismissed. Admittedly, there is no dispute on the issue that where an assessee had all along been following the completed contract method and the Department had accepted the same over several years, then, the said method of accounting cannot be substituted by percentage completion method in the absence of any finding by the A.O that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for A.Y 2016-17. The assessee has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in theyear of receipt as against in the year of completion of project "Maplewood" or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting the project completion method for this project. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from on-money received at 20% of Rs. 197 lakhs, which is on higher side and should have been estimated @12% of on-money as offered by your appellant. 3. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 15. Briefly stated, the assessee company had filed its return of income for A.Y 2016-17 on 15.10.2016, declaring a total income of 4,36,34,320/-. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in A.Y 2013-14 w.r.t its project "California and was offered for tax during the year in question)] 17. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in mobile phones, the same, thus, could not have been brought to tax u/s 68 of the Act. As regards the claim of the assessee that only the net income element of the on-money received by the assessee could be brought to tax, the same was principally accepted by the CIT(A). It was observed by the CIT(A) that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15% of the amount of their onmoney receipts for tax, which was accepted by the commission. At the same time, the CIT(A) observing that the basis for quantification of the net income element embedded in the on-money receipts at 12% could not be substantiated by the assessee therefore, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasoning adopted shall apply mutatis mutandis for the purpose of disposal of the said issue involved in the captioned appeal filed by the assessee.We, thus, are of the considered view that the net income element embedded in the on-money of Rs. 197 lac received by the assesseecan safely be taken @15% of the said amount. The Ground of appeal No. 2 raised by the assessee is partly allowed in terms of our aforesaid observations. 19. We shall now deal with the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition w.r.t the income element of the amount of on-money of Rs. 197 lakhs that was received by the assessee during the year in question i.e A.Y 2016-17 without considering the fact that the same was assessable in the year of completion of the project, viz. "Maple wood/Cornel" as per the Project Completion Method followed by the assessee. Admittedly, the incriminating material seized in the course of the search proceedings inter alia revealed that the assessee during the year in question had reeived on-money of Rs. 197 lac on sale of Flat Nos. 801/802 of its project, viz. "Maple wood/Cornel". It was the claim of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008, had submitted before the CIT(A) that the A.O had misreported the aforesaid fact. It is, thus, submitted by the assessee that as the addition had been made by the A.O on the basis of wrong reporting of facts thus, the same cannot survive. 21. As is discernible from the order of the CIT(A), the assessee in order to drive home its claim that as it was following the Project Completion Method, therefore, the on-money received by it was to be considered in the year of completion of the project, viz. "Maple wood/Cornel" had filed "Written submissions" which have been reproduced by the CIT(A) at Page 11- Para 6.2 of her order. It was the claim of the assessee before the CIT(A) that the project in question, viz. "Maple wood/Cornel"that was just started during the year in question was in its nascent stage and the assessee had chosen to follow Project Completion Method forthe said project. It is further stated by the assesse that it had chosen to change its method of accounting to Project Completion Method w.e.f A.Y 2016-17. Further, the assessee had furnished exhaustive reasons for change in the method of accountingfrom Pecentage Completion Method that was followed by it in the past t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, dated 08.10.2018, had submitted before the CIT(A) that the A.O had misreported in the assessment order that the assessee during the year in question i.eA.Y 2016-17 had offered the income of its project, viz. "Maplewood/Cornel" in its regular books of accounts, however, the said aspect had not been addressed by the CIT(A) while upholding the view taken by the A.O.Further, it was also the claim of the assessee before the CIT(A) that it had consistently adopted and followed the Project Completion Method of accounting in the subsequent years, which had been accepted by the A.O and no error was pointed out in the same. In the backdrop of the aforesaid facts, it was submitted by the assessee that the rejection by the lower authorities of the Project CompletionMethod that was being followed by it during the year in question i.e A.Y 2016-17, and consistently thereafter, could not be sustained and was liable to be vacated. 23. In our considered view, where the change in the method of accounting adopted by the assessee is for a bonafide reason and such new method of accounting is thereafter regularly employed by the assessee, no fault can be found with the same. Our aforesaid viewis fort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting in the subsequent years which had been accepted by the A.O and no error was pointed out in the same had also not been loked into by the said first appellate authority. As observed by us at length herinabove while disposing off the appeal in the case of the assesseefor A.Y 2013-14 in ITA No. 1732/Mum/2017, that an assesseehaving all along followed the completed contract method, and the Department having accepted the same over several years, the completed contract method adopted by the assessees is not required to be substituted by percentage completion method in the absence of any finding of the A.O that the completed contract method distorts the profits of a particular year. In order to fortify our aforesaid view, we had drawn support from certain judicial pronouncements. Accordingly, in the backdrop of our aforesaid observations, we are of the considered view that the aforesaid claim of the assessee requires to be looked into by the A.O. We, thus, for the limited purpose of considering the reasoning given by the assessee for change of its method of accounting from Percentage Completion Method that was being followed by it in the past to Project Completion Method w.e.f A.Y 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 24. The Ground of appeal No. 3 being general is dismissed as mot pressed. 25. The appeal filed by the assessee is partly allowed in terms of our aforesaid observations. (B). ITA No. 2186/Mum/2019 (revenue's appeal) 26. We shall now take up the cross-appeal of the revenue for A.Y 2016-17. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 1,93,52,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 1,93,52,000/- made u/s 68, in disregard to the inclusive definition of books of account in section 2(12A) of the Act, particularly when section 68 uses the word "books" and not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been brought to tax u/s 68 of the Act. Before us, it was the claim of the ld. Departmental Representative (for short "D.R") that the CIT(A) while arriving at the aforesaid view had absolutely lost sight of the material fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition and not an exhaustive one. It was further submitted by the ld. D.R that as the term used in Sec. 68 is "books" and not the regular "books of account", therefore, the support drawn by the CIT(A) from the definition of "books of account" as contemplated in Sec. 2(12A) was misplaced and in fact misconceived. It was further submitted by the ld. D.R that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Also, it was submitted by the ld. D.R that the CIT(A) had most arbitrarily dislodged the addition of the entire amount of on-money made by the A.O and had arbitrarily restricted the same to the extent of 20% of such receipts. 29. Per contra, the ld. A.R relied on the order of the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account" and "documents" can safely be gathered from the definition of the term "Undisclosed income" as contemplated in Sec. 158B(b) of the Act. As observed by the ITAT, Bangalore in the case of DCIT Vs. Raja Udayshankar (2006) 7 SOT 680 (Bang), that a separate usage of the words "books of account" and "documents" in the definition of the term "Undisclosed income" in Sec. 158B(b) therein clearly provides for a distinction between the two. Backed by its aforesaid observation, the Tribunal had concluded that as Sec. 68 is applicable to any entry credited in the books of account thus, the same would not be applicable to any entry in a document. In the backdrop of our aforesaid observations we concur with the view taken by the CIT(A) that as the notings of on-money were found in the loose sheets and data retrieved from the mobile phones and did not form part of the books of account of the assessee, the same, thus, could not have been added u/s 68 of the Act. Insofar the claim of the revenue that the additions of on-money made u/s 68 by the A.O on the basis of notings in loose sheets and data retrieved from the mobiles was in order, for the reason, that the said section uses the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. 32. The appeal filed by the revenue is dismissed. 33. Resultantly, the appeals filed by the assessee are partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. M/s Ekta Parksville Homes Pvt. Ltd. ITA No. 1734/Mum/2019 (assessee's appeal) A.Y 2013-14 34. We shall now deal with the appeal filed by the captioned assessee, viz. M/s Ekta Parksville Homes Pvt. Ltd. for A.Y 2013-14. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the year of completion of project "or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting the project completion method. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in holding that the appellant received on-money of Rs. 22 lakhs without appreciating the fact that the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected from (name) Cash handed over to Remarks 9 In Sept, 2012 22 lacs Certain Hawala Party named Suraj Bhai from Road No. 2 Kalaba Devi Pratik Arora Here I had carried torn currency note of Rs. 10 for collecting money. Pratik Arora can only explain this transaction On being confronted with the aforesaid statement of Shri. DilipBorade (supra), Shri. Vivek Mohanani, Jt. Managing Director of the assessee company in his statement recorded by the DDIT on 27.01.2016 denied the same. However, the A.O acted upon the details provided by Shri. DilipBorade in his statement recorded under Sec. 132(4), dated 05.10.2015, for the reason that he being an employee of the assessee company, viz. M/s Ekta Parksville Pvt. Ltd. had in his statement recorded on oath u/s 132(4) provided complete details of cash that was handled by him for "Ekta group" alongwith quantity, dates, details of cash collected, name of the person to whom the same was handed over alongwith the financial years/dates to which the cash collected pertained. Accordingly, on the basis of the aforesaid details provided by Shri. DilipBorade in his statement recorded u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o effect from 01.04.2017, therefore, the same would not be applicable to the case of the assesse for the year in question i.e A.Y 2013-14. Apart from that, it was observed by the CIT(A) that as the on-money receipts were held by him as business income and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A)directed the A.O to allow set-off of current years business loss and brought forward losses after due verification. 38. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. The ld. A.R assailed the impugned additions which were made by the A.O towards on-money allegedly received by the assessee company on the basis of an unsubstantiated statement of it employee, viz. Mr. DilipBorade that was recorded u/s 132(4) of the Act. It was submitted by the ld. A.R that Shri. Vivek Mohanani, Jt. Managing director of the assessee company on being confronted with the impugned statement of Mr. DilipBorade had clearly denied the receipt of any such amount of on-money by the assessee company on sale of flats in its project, viz. "Parksville project". It was vehemently su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. D.R that as Shri. Dilip Borade, employee of the assessee company, had in his statement recorded u/s 131 of the Act provided details as regards the onPage money that was recieved/collected by him thus, the A.O had rightly made additions towards on-money received by the assessee company in the respective years. 40. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As observed by the A.O in the assessment order, Shri. DilipBorade, employee of the assessee company was involved in doing liaison work for the group as well as handled cash of the group on the instructions of Shri. Vivek Mohanani, Shri. Ashok Mohnani, promoters of the "Ekta group" and Shri. Prateek Arora. In his statement recorded u/s 131, dated 05.10.2015 Shri DilipBorade was called upon to furnish details of cash handled by him for Ekta Group. Relevant extract of the statement of Shri. DilipBoradeis reproduced as under : "During the course of search u/s 132 in the Ekta Bhoomi gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him for Ekta groupalongwith quantity and dates. In other words, the A.O had queried as regards the details of cashwhich he had handled for Ekta group. For sake of clarity the query raised by the A.O in pursuance to which the aforesaid details were provided by Shri. DilipBorade (supra)is reproduced as under: "Q.11. Please give the details of cash handled by you for Ekta Groupalongwith details of quantity and dates. Please explain detail." (emphasis supplied by us) Although Shri DilipBorade was an employee of the assesee company, viz. M/s Ekta Parksville Homes Pvt. Ltd., but as observed by the A.O in the assessment order he used to do liasioning work for Ekta group and used to deliver and receive cash on the instructions of Mr. Vivek Mohanani, Mr. Ashok Mohanani and Mr. Prateek Arora. To sum up, it is a matter of fact borne from the records that Shri. DilipBorade was though an employee of the assessee company but he used to do liasioning work for Ekta group and also delivered and received cash as per the instructions of Mr. Vivek Mohanani and Mr. Ashok Mohanani, promoters and Shri. Prateek Arora, a key employee of the Ekta group. Apart from that, as observed by us herinabove, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le numbers of the concerned persons are given. However, we find that the A.O had not even done the bare minimum by attempting any verification which would have revealed a clear cut nexus between the aforementioned persons and the transactions of sale/receipt of advance by the assessee company w.r.t its project, viz."Parksville project". The A.O without placing on record any material which would reveal that the persons from whom the impugned amounts were received/collected by Shri. DilipBorade figured in the list of the persons from whom advances were received or flats were sold by the assessee in its project, viz. "Parksville project" or were in any way connected to the said transactions, had hushed to conclude that the impugned amounts was the on-money that was received by the assessee w.r.t sale of flats in its project, viz. "Parksville project".We, thus, are of the considered view that the A.O had hushed through the issue and de hors placing on record any material held the alleged receipts as on-money received by the assessee on sale of flats of its project, viz."Parksville project". 43. We shall in the backdrop of te aforesaid factual matrix advert to the sustainability of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (2017) 390 ITR 0189 (Mad). In the case before the Hon‟ble High Court, the assessee's son in the course of the search proceedings was examined on 29.12.1999 under Section 132 of the Income Tax Act, 1961. As per the statement of the assessee's son, there was a payment of Rs. 31,00,000/-towards purchase of property, and that such payment was made in the presence of his father, namely, the assessee. According to him, a sum of Rs. 31,00,000/- was paid to Shri. Babu. However, the revenue authorities did not seek any clarification as regards the aforesaid statement of his son. It is in the backdrop of the aforesaid facts that the Hon‟ble High Court had observed as under: "19. While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni (supra), had most arbitrarily drawn adverse inferences as regards receipt of on-money on sale of flats by the assessee company.Similar view was arrived at by the Hon‟ble High Court of Gujarat in the case of Dy. CIT Vs. Mahendra Ambalal Patel (2010) 40 DTR 243 (Guj). In its order, it was inter alia observed by the Hon‟ble High Court that an addition cannot be made in the hands of an assessee merely on the basis of a bald statement of a third party without there being any corroborative evidence. In our considered view, now when it is an admitted fact that the revenue had failed to place on record any material which would corroborate receipt of on-money by the assessee company on sale of flats in its project, viz. "Parksville project", therefore, no addition on the said count could have validly been made in the hands of the assessee. Reliance is placed on the judgment of the Hon‟ble High Court of Madras in the case of CIT Vs. K. Bhuvanendran&Ors. (2008) 303 ITR 235 (Mad). In its said order, it was observed by the Hon‟ble High Court that as the revenue had not brought on record any material to establish that consideration shown in the sale deed was understat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) 47. We shall now take up the appeal filed by the captioned assessee for A.Y 2014-15.The assessee has assailedthe impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the year of completion of project "or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting the project completion method. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in holding that the appellant received on-money of Rs. 600 lakhs without appreciating the fact that the group director Mr. Vivek Mohanani of appellant denied for the same. She ought to have deleted the addition. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from on-money received at 20% of Rs. 600 lakhs, which is on higher side and should have been estimated @12% of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by Shri. DilipBorade (supra) in his statement recorded under Sec. 132(4), dated 05.10.2015, for the reason that he being an employee of the assessee company, viz. M/s Ekta Parksville Pvt. Ltd. had in his statement recorded on oath u/s 132(4) provided complete details of cash handled by him for "Ekta group" alongwith quantity, dates, details of cash collected, name of the person to whom the same was handed over alongwith the financial years/dates to which the cash collected pertained. Accordingly, on the basis of the aforesaid details provided by Shri. DilipBorade in his statement recorded u/s 132(4), dated 05.10.2015 the A.O added the aforesaid amount of Rs. 6 crore [Rs. 1.5 crore (+) Rs. 4.5crore]u/s 68 of the Act. 50. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats, therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones, therefore, the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved, the assessee has assailed the order of the CIT(A) in appeal before us. Both the ld. Authorised representatives for the parties are in agreement on the point that the facts and the issue involved in the captioned appeal are the same as were there before us in the appeal of the assessee for the immediately preceding year i.e A.Y 2013-14 in ITA No. 1734/Mum/2019. As the facts and issue involved in the present appeal of the assessee for A.Y 2014-15 in ITA No. 1735/Mum/2019 remains the same as were there before us in context of the issue in hand in the assessee‟s appeal for the immediately preceding year i.e A.Y 2013-14 in ITA No. 1734/Mum/2019, therefore, our order therein passed shall apply mutatis mutandis for the purpose of disposal of the present appeal. Accordingly, on the basis of our aforesaid observations we are unable to persuade ourselves to uphold the order of the CIT(A) to the extent he had sustained the addition pertaining to the alleged receipt of on-money by the assessee company on sale of flats in its project, viz. "Ekta Parksville" during the year in question, viz. A.Y 2014-15. We, thus, set aside the order of the CIT(A) and vacate the addition to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. Aggrieved with the aforesaid observation of the CIT(A) the revenue has carried the matter in appeal before us. It is the claim of the revenue that the view arrived at by the CIT(A) is in complete disregard of the fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition. It is the claim of the revenue that as the term used in Sec. 68 is "books" and not the "regular books" of account, therefore, the view arrived at by the CIT(A) by drawing support from the definition of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Further, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly dismissed. 59. We shall now deal with the grievance of the revenue that the CIT(A) has erred in vacating the view taken by the A.O who as per the mandate of Sec. 115BBE of the Act had declined the assessee‟s claim for set-off of the business losses against the additions made u/s 68 of the Act. As is discernible from the records, the A.O while framing the assessment had declined the assessee‟s claim for setoff of the current year business loss of Rs. 8,67,72,453/- against the income assessed. On appeal, the CIT(A) observed that as the provisions of Sec. 115BBE had came into effect from 01.04.2017, the same, thus, would not be applicable to the case of the assessee for A.Y 2014-15. Alternatively, it was observed by the CIT(A) that as the on-money received by the assessee was held by him to be in the nature of a business receipt and was not to be treated as its income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE on the said count too would not be applicable. Accordingly, the CIT(A) on the basis of her aforesaid observations dislodged the abovementioned view of the A.O and directed him to allow the business loss of current year and brought forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had therein extended the aforesaid restriction also to set-off of any loss while computing the assessee‟s income as referred to in clause (b) of sub-section (1) to Sec. 115BBE i.eincome referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D that was determined by the A.O and did not form part of the returned income. Be that as it may, the restriction on set-off of any loss as against an addition inter alia made u/s 68 of the Act had been made available on the statute only w.e.f 01.04.2017. We, thus, concur with the view taken by the CIT(A) that the provision of Sec. 115BBE was not applicable to the case of the assessee for the year in question i.eA.Y 2014-15. At this stage, we may herein clarify that theamendment brought in subsection (2) of Sec. 115BBE by the FinanceAct, 2016, whereby setoff of losses against income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, was applicable prospectively i.ew.e.f 01.04.2017. Our aforesaid view is fortified by the order of the ITAT, Jaipur in the case of ACIT, Central Circle-2, Jaipur Vs. Sanjay Bairathi Gems Ltd. (2017) 84 taxmann. Com 139 (Jaipur). Altern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he project completion method. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in holding that the appellant received on-money of Rs. 160 lakhs without appreciating the fact that the group director Mr. Vivek Mohanani of appellant denied for the same. She ought to have deleted the addition. 3. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in estimating profit from on-money received at 20% of Rs. 160 lakhs, which is on higher side and should have been estimated @12% of on-money as offered by your appellant. 4. The appellant craves leave to alter, amend, modify or substitute any ground/grounds and to add any new ground or grounds on or before the appeal is disposed off." 64. Briefly stated, the assessee had filed its original return of income for A.Y. 2015-16 on 29.09.2015, declaring an income Rs. 2,29,20,150/-. Notice under Sec. 153A was issued and duly served upon the assessee for the year in question i.e A.Y 2015-16. Return of income in compliance to the notice issued u/s 153A was filed by the assessee company on 11.01.2017, declaring an income as ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) in his statement recorded u/s 132(4), dated 05.10.2015 the A.O added the aforesaid amount of Rs. 1.60 crore [Rs. 80 lac (+) Rs. 55 lac (+) Rs. 25 lac] u/s 68 of the Act. 66. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats, therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. As regards the claim of the assessee that the A.O de hors any incriminating material had made an addition of Rs. 1.60 crore on the basis of a standalone statement of Shri. DilipBorade, the same did not find favour with the CIT(A). It was observed by the CIT(A) that as Shri. DilipBorade (supra) was a key employee of the assessee company, and the assessee group was habitually receiving on-money on sale of properties, therefore, it could safely be presumed that the aforesaid amount of Rs. 1.60 crore was received by the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1734/Mum/2019, therefore, our order therein passed and also the reasoning adopted shall apply mutatis mutandis for the purpose of disposal of the present appeal. Accordingly, on the basis of our aforesaid observations we are unable to persuade ourselves to uphold the order of the CIT(A) to the extent he had sustained the addition pertaining to the alleged receipt of on-money by the assessee company on sale of flats in its project, viz. "Ekta Parksville" during the year in question, viz. A.Y 2015-16. We, thus, set aside the order of the CIT(A) and vacate the addition to the extent the same was sustained by him in context of the aforesaid alleged receipt of impugned amount of on-money of Rs. 1.60 crore by the assessee company. The Ground of appeal No.2 is allowed in terms of our aforesaid observations. 68. As we have concluded that no part of addition pertaining to the impugned amount of on-money of Rs. 1.60 crore can be sustained in the hands of the assessee, therefore, we refrain from adverting to and therein adjudicating the Grounds of appeal Nos. 1 & 3 which having been rendered as academic in nature are left open. 69. The Ground of appeal No. 4 being general in nature is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. Further, it is the claim of the revenue that as the term used in Sec. 68 is "books" and not the "regular books" of account, therefore, the view arrived at by the CIT(A) by drawing support from the definition of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Further, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Further, the revenue is aggrieved with the restriction of the addition of the on-money receipts to 20% of the entire amount by the CIT(A). Lastly, the revenue is aggrieved with the direction of the CIT(A) to set-off the business losses of the assessee against additions made u/s 68, which as stated by the revenue is contrary to the provisions of Section 115BBE. 73. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le disposing off the assessee‟s appeal for A.Y 2014-15 in ITA No. 2194/Mum/2019 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the provisions of Sec. 115BBE would not be applicable to the case of the assessee for the year in question and had directed the A.O to allow set-off of the business losses of the assessee against additions made u/s 68 of the Act. The Ground of appeal No. (iv) raised by the revenue is dismissed. 76. The appeal filed by the revenue is dismissed. 77. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. ITA No. 1737/Mum/2019 (assessee's appeal) A.Y 2016-17 78. We shall now deal with the appeal of the captioned assessee for A.Y 2016-17. The assessee has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that the appellant received on-money of Rs. 33.77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. It was further stated by him that as the assessee company had a rule of not accepting cash component, therefore, the proposed deal was declined and did never see the light of the day. However, the A.O was not inclined to accept the aforesaid explanation of the assessee. Holding a conviction that the notings of cash component on the aforesaid impounded document, viz. (i). Shop no. 29: Rs. 16.67 lacs; and (ii). Shop No. 30 : Rs. 17.10 lacs pertained to the on-money that was received by the assessee as regards its "Parksville project" but had not been offered for tax, the A.O, brought the aggregate sum of Rs. 33.77 lacs [Rs. 16.67 lac (+) Rs. 17.10 lacs] to tax u/s 68 of the Act. Further, it was observed by the A.O that the assessee had received on-money of Rs. 4 lac as regards a Shop No. 150 in the project "Ekta Parksville", against which net income @12% of the amount of onmoney was offered for tax by it in the computation of income for the year in question. Also, it was observed by the A.O that the assessee had received on-money of Rs. 9 lac w.r.t sale of shop no. 158 in its project, viz. "Parksville project", against which it had offered net income @12% for tax in its computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached the Income-Tax Settlement Commission had offered 15% of the on-money receipts for tax, which was accepted by the commission. Observing that the basis for quantification of the net income element embedded in the on-money receipts at 12% could not be substantiated by the assessee, the CIT(A) substituted the same by 20% of the gross onmoney receipts and directed the A.O to restrict the addition to the said extent. As regards the claim of the assessee that the A.O by applying Sec. 115BBE of the Act had erred in not allowing "set-off‟ of the current business loss of Rs. 5,41,67,564/- against the income assessed, the same was accepted by the CIT(A). It was observed by the CIT(A) that as Sec. 115BBE had came into effect from 01.04.2017, therefore, the same would not be applicable to the case of the assesse for the year in question i.e A.Y 2016-17. Apart from that, it was observed by the CIT(A) that as the on-money receipts were held by her as business income and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A) directed the A.O to allow set-off of the current years busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f receipt itselfi.eA.Y 2016-17. 83. Per contra, the ld. D.R relied on the orders of the lower authorities. It was submitted by the ld. D.R that as the notings in the impounded document, viz. Annexure A-1 - Page 3 and 5clearly revealed the receipt of on-money by the assessee on sale of Shops nos. 29 and 30, therefore, the A.O had rightly made addition w.r.t the on-money so received by the assessee. It was further submitted by the ld. D.R that the CIT(A) had erred in restricting the addition to 20% of the amount of on-money of Rs. 33.77 lac received by the assessee. As regards the on-money of Rs. 13 lac [Shop No. 150: Rs. 4 lac (+) Shop No. 158 : Rs. 9 lac] it was submitted by the ld. D.R that the CIT(A) had though rightly held that the same was liable to be brought to tax in the hands of the assessee in the year of receipt i.eA.Y 2016-17, but at the same time she had erred in scaling down the addition to 20% of the amount of the on-money. 84. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Page 3 and 5 of Annexure A1. Please go through the same and offer your comments. Ans. I would like to explain detail the actual scenario for the Page 3 and Page No. 5. I was shifted to Ekta Trip[olis since November 2014 and a client whom I had attended at Virar was telephonically dictating a proposed deal calculation for shop No. 29 and 30 while I was operating from Ekta Tripolis this in turn was duly declined keeping in mind the company rule against the cash component. This note was written in my diary while talking to the client on the phone to understand his request." As is discernible from the aforesaid statement of Shri. Hardeep S. Bajwa that was recorded u/s 131 on 05.10.2015, he had categorically stated that the impugned notings of Annexure A-1 - Page 3 and 5 were the calculations pertaining to a proposed deal for Shop Nos. 29 & 30 which a client whom he prior to being shifted to Ekta Tripolis had attended had dictated on telephone. It was stated by Mr. Hardeep S. Bajwa that he had jotted down the details only for the purpose of understanding what the proposed customer was trying to telephonically convey. It was further stated by Mr. Hardeep S. Bajwa that the impugned d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that cash was not received in the impugned transaction and the same was only a proposal. We hold a strong conviction that in case the explanation given by the assessee‟s employee who had made the impugned notings and the denial of Shri. Vivek Mohanani (supra) of receipt of the impugned amount by the assessee company did not instill any confidence with the A.O, then, it was for him to place on record material to disprove the aforesaid explanation/statement. Our aforesaid view is supported by the judgment of the Hon‟ble High Court of Calcutta in the case of CIT Vs. Tara Chand Manipal (2016) 65 taxmann.com 29 (Cal). In its said order it was held bythe High Court that addition made to the assessee‟s income merely on the basis of papers seized from possession of assessee‟s brother was unjustified when the material sought to be relied on was not corroborated. Also, reliance is placed on the order of the ITAT, Jodhpur in the case of J.R.C Bhandari Vs. ACIT (2003) 79 TTJ 1 (Jd). It was held by the tribunal that in the absence of any iota of evidence in respect of receipt of the amounts mentioned in the entry noted on a loose sheet which was found in the possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -money receipts of Rs. 13 lacs.The Ground of appeal No. 4 is partly allowed in terms of our aforesaid observations 87. We shall now deal with the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition w.r.t the income element of the amount of on-money amount of Rs. 9 lakhs during the year in question i.e A.Y 2016-17 without considering the fact that the assessee had offered the income arising therefrom in its computation of income for A.Y 2017-18. Admittedly, the incriminating material seized in the course of the search proceedings inter alia revealed that the assessee during the year in question had received on-money of Rs. 9 lac on sale of Shop No. 158 in its project, viz. "Parksville". Net income @12% of the amount of the on-money of Rs. 9 lac was offered for tax by the assessee in its computation of income for A.Y 2017-18, i.e the year in which the registration of the shop in question was done and the sale was recognised in the books of account. However, the A.O was of the view that the on-money of Rs. 9 lac received by the assessee w.r.t the aforesaid Shop No. 158 was liable to be brought to tax in the hands of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the A.O to subject the income element embedded in the on-money received by the assessee to tax in terms of our aforesaid observations.The Grounds of appeal Nos. 2 & 3are allowed for statistical purposes in terms of our aforesaid observations. 89. The Ground of appeal No. 5 being general in nature is dismissed as not pressed. 90. The appeal filed by the assessee is partly allowed in terms of our aforesaid observations. M/s Ekta Supreme Corporation : ITA No. 1738/Mum/2019 (assessee's appeal) ITA No. 2202/Mum/2019 (revenues appeal) A.Y 2014-15 (A). ITA No. 1738/Mum/2019 (assessee's appeal) 91. We shall first take up the appeal filed by the captioned assessee, viz. M/s Ekta Supreme Corporation for A.Y 2014-15. The assesseehas assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the years when conditions of revenue recognition are satisfied as per percentage completion method. 2. On the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question, it was submitted by the assessee that the net income i.e @12% of the gross amount of on-money of Rs. 1164 lac amounting to Rs. 139.71 lacs was offered for tax in its computation of income for A.Y 2016-17. However, the aforesaid reply of the assessee did not find favour with the A.O who treated the entire amount of onmoney of Rs. 337.39 lac received by the assessee during the year in question as an unaccounted receipt u/s 68 of the Act. 94. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats, therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in data retrieved from the mobile phones, the same, thus, could not have been brought to tax u/s 68 of the Act. As regards the claim of the assessee that only the net income element embedded in the on-money receipt could be brought to tax, the same was principally accepted by the CIT(A). It was observed by the CIT(A) that the group concerns of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in question as an unaccounted receipt u/s 68 of the Act. On appeal, the CIT(A) though found favour with the assessee‟s claim that the addition w.r.t the on-money was to be restricted to the extent of the income element therein embedded, however, she did not dislodge the view arrived at by the A.O as regards the year of taxability of the on-money i.e in the year of receipt itself. 97. Before us, the assesseehas assailed the view taken by the lower authorities who had concluded that the on-money was to be brought to tax in the year of receipt itself. We have heard the authorised representatives for both te parties in context of the issue in hand i.e the year of assessability of the on-money receipt. Inour considered view, as the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been accounted for or would be accounted for by the assessee as per its regular method of accounting that ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had brought to tax the entire amount of on-money receipts of Rs. 337.39 lacs u/s 68 of the Act in the hands of the assessee company. On appeal, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrived from the mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. Aggrieved with the aforesaid observation of the CIT(A) the revenue has carried the matter in appeal before us. It is the claim of the revenue that the view arrived at by the CIT(A) is in complete disregard of the fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition. Further, it is the claim of the revenue that as the term used in Sec. 68 is "books" and not the "regular books" of account, therefore, the view arrived at by the CIT(A) by drawing support from the definition of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Further, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal no. (iv) raised by the revenue is accordingly dismissed. 104. The appeal filed by the revenue is dismissed. 105. Resultantly, the appeal filed by the assessee is partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. ITA No. 1739/Mum/2019 (assessee's appeal) ITA No. 2203/Mum/2019 (revenues appeal) A.Y 2015-16 (A). ITA No. 1739/Mum/2019 (assessee's appeal) : 106. We shall now take up the appeal of the captioned assessee for A.Y 2015-16. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the years when conditions of revenue recognition are satisfied as per percentage completion method. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition @ 20% of the on-money in this year without considering the fact- that the appellant offered the income of Rs. 67.68 lakhs @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s project "Eudora", as under: Assessment Year Amount (in lacs) Flat No 2014-15 Rs. 337.39 901 2015-16 Rs. 165.17 Rs. 398.84 1001 1101 2016-17 Rs. 265.00 1201 Total Rs. 1164.00 On being queried that as to why the aforesaid amount of on-money may not be added as its unaccounted receipts for the year in question, it was submitted by the assessee that the net income i.e @12% of the gross amount of on-money of Rs. 1164 lac i.e amounting to Rs. 139.71 lacs was offered for tax in its computation of income for A.Y 2016-17. However, the aforesaid reply of the assessee did not find favour with the A.O who therein treated the entire amount of on-money of Rs. 564.01 lac [Rs. 165.17 lac (+) Rs. 398.84 lac] received by the assessee during the year in question as an unaccounted receipt u/s 68 of the Act. 109. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats, therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be added as its unaccounted receipts in the year of receipt itself i.e A.Y 2015-16. In reply, it was inter alia submitted by the assessee that the net income i.e @12% of the amount of on-money of Rs. 564.01 lac (supra) was offered for tax in its computation of income for A.Y 2016-17. However, the aforesaid reply of the assessee did not find favour with the A.O who therein treated the entire amount of onmoney of Rs. 564.01 lac received by the assessee during the year in question as its unaccounted receipt u/s 68 of the Act. On appeal, the CIT(A) though found favour with the assessee‟s claim that the addition w.r.t the on-money was to be restricted to the extent of the income element therein embedded, however, she did not dislodge the view arrived at by the A.O as regards the year of taxability of the on-money i.e the year of receipt itself. 112. Before us, the assessee has assailed the view taken by the lower authorities who had concluded that the on-money was to be brought to tax in the year of receipt itself. We have heard the authorised representatives for both the parties in context of the issue in hand i.e the year of assessability of the on-money receipts. Ino ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition to 20% of on-money even though the assessee has failed to produce details of expenses incurred?" 116. As observed by us hereinabove, the A.O had brought to tax the entire amount of on-money receipts of Rs. 5,64,01,000/- u/s 68 of the Act in the hands of the assessee company. On appeal, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones, the same, thus, could not have been brought to tax u/s 68 of the Act. Aggrieved with the aforesaid observation of the CIT(A) the revenue has carried the matter in appeal before us. It is the claim of the revenue that the view arrived at by the CIT(A) is in complete disregard of the fact that the definition of the term "books of account" in Sec. 2(12A) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the CIT(A) that the addition w.r.t on-money receipts was liable to be restricted to the extent of the element of net income therein embedded,and had further directed the A.O to restrict the same to the extent of 15% of such receipts, therefore, the grievance of the revenue that the CIT(A) had erred in restricting the addition to 20% of on-money receipts is subsumed in our aforesaid adjudication of the issue and observations recorded therein. The Ground of appeal no. (iv) raised by the revenue is accordingly dismissed. 119. The appeal filed by the revenue is dismissed. 120. Resultantly, the appeal filed by the assessee is partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. ITA No. 1740/Mum/2019 (assessee's appeal) ITA No. 2204/Mum/2019 (revenues appeal) A.Y 2016-17 (A). ITA No. 1740/Mum/2019 (assessee's appeal) : 121. We shall now take up the appeal of the captioned assessee for A.Y 2016-17. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on i.e A.Y 2016-17. As regards the impugned on-money pertaining to flat no. 1301/1401 of Bhagwan Das Rangnani, it was submitted by the assessee that the fact that the deal pertaining to the said flat was at the verge of cancellation at the time of search had remained omitted to be considered. However, the A.O did not find favour with the aforesaid explanation of the assessee. Also, the A.O was not inclined to accept the claim of the assessee that only 12% of the amount of on-money was to be brought to tax in its hands.Observing, that the assessee had received on-money of Rs. 265 lac during the year in question i.e A.Y 2016-17, the A.O was of the view that the entire amount was liable to be added in the hands of assessee. Further, it was observed by the A.O that the on-money received by the assessee in the earlier years was to be brought to tax in its hands in the said respective preceding years of receipt. Accordingly, the A.O taking note of the fact that the assesee had already offered an amount of Rs. 139.71 lac i.e 12% of on-money receipts of Rs. 1164 lacs as its income for the year in question i.eA.Y 2016-17 thus restricted the addition w.r.t on-money receipt pertaining to flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 shall apply mutatis mutandis for the purpose of disposal of the issue in hand in the case of the captioned assessee.We, thus, are of the considered view that the net income element embedded in the on-money receipts can safely be taken in the case of the captioned assessee @15% of the amount of the on-money receipts of Rs. 658.89 lacs.The Ground of appeal No. 2 is partly allowed in terms of our aforesaid observations 126. As observed by us hereinabove, the A.O was of the view that the amount of on-moneyof Rs. 265 lac received by the assesseeduring the year in question i.e A.Y 2016-17 w.r.t Flat No. 1201 of its project, viz. "Eudora" was liable to be added in its hands during the year of receipt itself i.e A.Y 2016-17. Observing, that the assesee had already offered an amount of Rs. 139.71 lac i.e 12% of on-money receipts of Rs. 1164 lacs as its income for the year in question i.e A.Y 2016-17, the A.O had accordingly restricted the addition w.r.t on-money receipt pertaining to Flat no. 1201 at an amount of Rs. 125.29 lac [Rs. 265 lac (-) Rs. 139.71 lac]. Further, the A.O also made an addition of the on-money of Rs. 393.89 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee is partly allowed in terms of our aforesaid observations. (B). ITA No. 2204/Mum/2019 (revenues appeal) : 130. We shall now take up the cross-appeal of the revenue for A.Y 2016-17. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us : "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 5,19,18,404/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 5,19,18,404/- made u/s 68, in disregard to the inclusive definition of books of account in section 2(12A) of the Act, particularly when section 68 uses the word "books" and not "regular books" of account? (iii). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate that the assessee had not established identity of parties, genuineness of transactions and creditworthiness of parties? (iv). Whether on the facts and in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 for A.Y 2016-17. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the revenue‟s appeal in the case of M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the impugned addition of on-money could not have been made u/s 68 of the Act. The Grounds of appeal Nos. (i) to (iii) raised by the revenue are dismissed. 133. As we had while disposing off the assessee‟s appeal in ITA No.1740/Mum/2019 for A.Y 2016-17 principally upheld the view taken by the CIT(A) that the addition w.r.t on-money receipts were liable to be restricted to the extent of the element of net income therein involved,and had further directed the A.O to restrict the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessee, viz. M/s Ekta Shelters Pvt. Ltd. was found in the course of the search proceedings. Notice u/s 153C was issued and duly served upon the assessee company for the year in question. Return of income in compliance to the notice issued u/s 153C was filed by the assessee company on 07.01.2017, declaring Nilincome. Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 138. During the course of the assessment proceedings, it was gathered by the A.O that the assessee had undertaken construction of two projects, viz. (i). Iris; and (ii). Ram Laxmi Niwas. On a perusal of the seized documents, it was observed by the A.O that the assessee had received on-money on sale of flats/shops of its aforementioned projects, viz. (i). Iris; and (ii). Ram Laxmi Niwas, as under: Project Name Flat/Shop No. Amount (in lacs) Year of Receipt Ram Laxmi Niwas 1101 475 2015-16 901 173 2015-16 Total 648 Iris 1102 90 2015-16 1001 150 2014-15 502/802 175 2015-16 101 58.50 2015-16 1002 99 2014-15 Iris Total 572.50 Grand Total 1220. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the on-money receipts for tax, which was accepted by the commission. At the same time, the CIT(A) observing that the basis for quantification of the net income element of the on-money receipts at 12% could not be substantiated by the assessee, therefore, he substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. It was further observed by the CIT(A) that the assessee was following different methods of revenue recognition not only for its different projects but even in the same project the method for recognising the revenue was changed to suit its needs. Observing, that the assessee was not following a consistent method of revenue recognition, the CIT(A) was of the view that no infirmity could be related to assessing of the profit pertaining to the on-money during the year under consideration. 140. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. Insofar the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) has erred in estimating income element embedded in the on-money receipt of Rs. 249 lakhs at 20% which is on the higher side and should have been esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year of taxability of the on-money i.e the year of receipt itself. 142. Before us, the assessee has assailed the view taken by the lower authorities who had concluded that the on-money was to be brought to tax in the year of receipt itself. We have heard the authorised representatives for both the parties in context of the issue in hand i.e the year of assessability of the on-money receipts. Inour considered view, as the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been accounted for or would be accounted for by the assessee as per its regular method of accounting that has been accepted by the department.Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hands of the assessee company. On appeal, the CIT(A) had inter alia observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in mobile phones, therefore, the same could not have been brought to tax u/s 68 of the Act. Aggrieved with the aforesaid observation of the CIT(A) the revenue has carried the matter in appeal before us. It is the claim of the revenue that the view arrived at by the CIT(A) is in complete disregard of the fact that the definition of the term "books of account" in Sec. 2(12A) of the Act is an inclusive definition. Further, it is the claim of the revenue that as the term used in Sec. 68 is "books" and not the "regular books" of account, therefore, the view arrived at by the CIT(A) by drawing support from the definition of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Further, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s subsumed in our aforesaid adjudication of the issue and observations recorded therein. The Ground of appeal no. (v) raised by the revenue is accordingly dismissed. 149. Insofar the grievance of the revenue that the CIT(A) has erred in vacating the view taken by the A.O who had as per the mandate of Sec. 115BBE of the Act declined the assessee‟s claim for set-off of the business losses against the additions made u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal in the case of a group concern of the assessee, viz. M/s Ekta Parksville Homes Pvt. Ltd. for A.Y 2014-15 in ITA No. 2194/Mum/2019. As the facts and issue involved in the present appeal of the captioned assessee remains the same, therefore, our order passed in context of the issue in question while disposing off the appeal in the case of the group concern of the assessee for A.Y 2014-15 in ITA No. 2194/Mum/2019 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the provisions of Sec. 115BBE would not be applicable to the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of two projects, viz. (i). Iris; and (ii). Ram Laxmi Niwas. On a perusal of the seized documents, it was observed by the A.O that the assessee had received on-money on sale of flats/shops of its aforementioned projects, viz. (i). Iris; and (ii). Ram Laxmi Niwas, as under: Project Name Flat/Shop No. Amount (in lacs) Year of Receipt Ram Laxmi Niwas 1101 475 2015-16 901 173 2015-16 Total 648 Iris 1102 90 2015-16 1001 150 2014-15 502/802 175 2015-16 101 58.50 2015-16 1002 99 2014-15 Iris Total 572.50 Grand Total 1220.50 On being queried that as to why the aforesaid amount of on-money may not be added as its unaccounted receipts for the respective years, it was submitted by the assessee that the net income i.e @12% of the amount of on-money receipts was either offered for tax or would be so offered in the respective year of completion of the concerned project, as under: (i). Net income of Rs. 29.76 lacs i.e 12% of the on-money of Rs. 248 lakhs pertaining to IRIS project had been offered in the computation of income for A.Y 2016-17. (ii). Net income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. As regards the claim of the assessee that only the net income element of the onmoney receipt could be brought to tax, the same was principally accepted by the CIT(A). It was observed by the CIT(A) that the group concerns of the assessee which had approached the Income-Tax Settlement Commission had offered 15% of the on-money receipts for tax, which was accepted by the commission. At the same time, the CIT(A) observing that the basis for quantification of the net income element of the on-money receipts at 12% could not be substantiated by the assessee, therefore, he substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. It was further observed by the CIT(A) that the assessee was following different methods of revenue recognition not only for its different projects but even in the same project the method for recognising the revenue was changed to suit its needs. Observing, that the assessee was not following a consistent method of revenue recognition, the CIT(A) was of the view that no infirmity could be related to assessing of the income element embedded in the on-money received during the year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the amount of onmoneyreceived by the assessee w.r.t Flats/Shops in its projects, viz."Ram Laxmi Niwas" and "Iris" was to be assessed as the unaccounted receiptsof the assessee in the year of receipt itself.On being queried that as to why the on-money aggregating to Rs. 648 lac received w.r.t Flat/Shop Nos. 1101 and 901 in its project, viz. "Ram Laxmi Niwas" amounting to Rs. 475 lacs and Rs. 173 lac, respectively,ANDthat aggregating to Rs. 323.50 lac received w.r.t Flat/Shop Nos. 1102, 502/802 and 101 in its project "Iris" amounting to Rs. 90 lac, 175 lac and Rs. 58.50 lac, respectively, may not be brought to tax in the year of receipt itself i.e A.Y 2015-16, it was submitted by the assesseethat the net income of Rs. 38.82 lacs i.e 12% of the amount of on-money of Rs. 323.50 lacs pertaining to IRIS project had been offered in the computation of income for A.Y 2017-18, as the "agreements‟ pertaining to the concerned flats were registered during the F.Y 2016-17. It was further submitted by the assessee that the on-money of Rs. 648 lacsreceived by it w.r.t flats/shops in its project, viz. "Ram Laxmi Niwas" shall be considered for computing the income in the year of completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. We, thus, direct the A.O to subject the income element embedded in the on-money received by the assessee during the year under consideration i.eA.Y2016-17 to tax in terms of our aforesaid observations.The Grounds of appeal Nos. 1 &2are allowed for statistical purposes in terms of our aforesaid observations. 159. The Ground of appeal No. 4 being general is dismissed as not pressed. 160. The appeal of the assessee is partly allowed in terms of our aforesaid observations. B). ITA No. 2198/Mum/2019 (revenues appeal) : 161. We shall now take up the cross-appeal filed by the revenue for A.Y 2016-17. The revenue has assailed the impugned order of the CIT(A) on the following grounds before us: "(i). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the additions of Rs. 9,41,74,000/- made u/s 68 of the IT Act, 1961, by holding that the onmoney is not part of the books of accounts maintained by the assessee? (ii). Whether on the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of the on-money receipts to 20% of the entire amount by the CIT(A). Lastly, the revenue is aggrieved with the direction of the CIT(A) to allow set-off of the business losses of the assessee against additions made u/s 68, which as stated by the revenue is contrary to the provisions of Section 115BBE. 163. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones in the course of the search proceedings, therefore, the same could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been adjudicated by us while disposing off the appeal of the revenue in the case of a group concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in A.Y 2016-17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the A.O to set-off the business losses of the assessee against additions made u/s 68 of the Act. The Ground of appeal Nos. (iv) raised by the revenue is dismissed. 166. The appeal filed by the revenue is dismissed. 167. Resultantly, the appeal filed by the assessee is partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. M/s Ekta Shubham Venture : ITA No. 1744/Mum/2019 (assessee's appeal) ITA No. 2201/Mum/2019 (revenues appeal) A.Y 2015-16 (A). ITA No. 1744/Mum/2019 (assessee's appeal) : 168. We shall now deal with the appeal of the captioned assessee, viz. M/s Ekta Shubham Venture for A.Y 2015-16. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Incometax (Appeals) has erred in holding that income from on-money received is assessable in the year of receipt as against in the year of completion of the project "Panorama" or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the on-money of Rs. 277 lacs was received by the assessee during the A.Y 2016-17, therefore, called upon the assessee to explain as to why the same may not be added to its income for the said year. In reply, it was submitted by the assessee that the aforesaid gross on-money of Rs. 4.62 crores [Rs. 185 lacs (+) Rs. 277 lacs] would be considered for determining the income in the year of completion of the project.However, the aforesaid reply of the assessee did not find favour with the A.O who held a conviction that the entire amount of on-money was to be brought to tax in the year of receipt itself. Accordingly, the A.O added the on-money of Rs. 1.85crore [Rs. 1.20 crore (flat no. 303) (+) Rs. 65 lac (flat no. 601)] u/s 68 of the Act in the year in question i.e A.Y 2015-16. 171. On appeal, it was observed by the CIT(A) that as the onmoney received by the assessee was for sale of flats, therefore, the same being inseparable from the assessee‟s business was in the nature of a business receipt. Further, the CIT(A) observed that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not an income u/s 68 of the Act, therefore, the provisions of Sec. 115BBE would also not be applicable on the said count too. Accordingly, the CIT(A)directed the A.O to allow set-off of current years business loss and brought forward losses after due verification. 172. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. Insofar the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) had erred in estimating the income element embedded in the on-money receiptsof Rs. 185 lacs @20%, which is on the higher side, and should have been estimated @12% as was offered by the assesse is concerned, we fnd that the facts and the issue therein involved remains the same as were there before us in the case of a group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14. Accordingly, our order passed in context of the said issue while disposing off the appeal of the group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 shall apply mutatis mutandis for the purpose of disposal of the said issue in the case of the captioned assessee.We, thus, are of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale transaction had been or would be accounted for by the assesseeas per its regular method of accounting that has been accepted by the department.Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the accounting of such income have to be made on the basis of the method of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. We, thus, direct the A.O to subject the income element embedded in the on-money received by the assessee during the year under consideration i.eA.Y 2015-16 to tax in terms of our aforesaid observations.The Ground of appeal No. 1 is allowed for statistical purposes in terms of our aforesaid observations. 175. The Ground of appeal No. 3 being general is dismissed as not pressed. 176. The appeal of the assessee is partly allowed in terms of our aforesaid observations. (B). ITA No. 2201/Mum/2019 (revenues appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view arrived at by the CIT(A) by drawing support from the definition of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Also, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Further, the revenue is aggrieved with the restriction of the addition of the on-money receipts to 20% of the entire amount of on-money by the CIT(A). Lastly, the revenue is aggrieved with the direction of the CIT(A) to allow set-off of the business losses of the assessee against additions made u/s 68, which as stated by the revenue is contrary to the provisions of Section 115BBE. 179. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, our order passed in context of the issue in question while disposing off the aforesaid appeal in the case of the assessee‟s group concern, viz. M/s Ekta Parksville Pvt. Ltd. for A.Y 2014-15 in ITA No. 2194/Mum/2019 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the provisions of Sec. 115BBE would not be applicable to the case of the assessee for the year in question and had directed the A.O to allowset-off of the business losses of the assessee against the assessed income. The Ground of appeal No. (iv) raised by the revenue is dismissed. 182. The appeal filed by the revenue is dismissed. 183. Resultantly, the appeal filed by the assessee is partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. ITA No. 1745/Mum/2019 (assessee's appeal) ITA No. 2201/Mum/2019 (revenues appeal) A.Y 2016-17 (A). ITA No. 1745/Mum/2019 (assessee's appeal) : 184. We shall now deal with the appeal of the captioned assessee for A.Y 2016-17. The assessee has assailed the impugned order of the CIT(A) on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid flat nos. 303 & 601 pertained to A.Y 2015-16, the A.O called upon the assesee to show cause as to why the on-money of Rs. 185 lacs received as regards the said flats may not be added as its income for A.Y 2015-16. Also, taking note of the fact that the flats nos. 1401 & 1002 were still unregistered on the date of search, the A.O being of the view that the on-money of Rs. 277 lacs was received by the assessee during the A.Y 2016-17, therefore, called upon the assessee to explain as to why the same may not be added to its income for the said year. In reply, it was submitted by the assessee that the aforesaid gross on-money of Rs. 4.62 crores [Rs. 185 lacs (+) Rs. 277 lacs] would be considered for determining the income in the year of completion of the project. However, the aforesaid reply of the assessee did not find favour with the A.O who was of the view that the entire amount of on-money was to be brought to tax in the hands of the assessee in the year of receipt. Accordingly, the A.O inter alia added the on-money of Rs. 2.77crore [Rs. 77 lac (flat no. 1401) (+) Rs. 200 lac (flat no. 1002)] u/s 68 of the Act for the year in question i.e A.Y 2016-17. 187. On appeal, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in estimating income element embedded in the on-money receipts of Rs. 277 lacs at 20%, which is on the higher side, and should have estimated the same @12% as was offered by the assesse is concerned, we find that the facts and the issue therein involved remains the same as were there before us in the case of a group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14. Accordingly, our order passed in context of the said issue while disposing off the appeal of the group concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 shall apply mutatis mutandis for the purpose of disposal of the said issue in the case of the captioned assessee.We, thus, are of the considered view that the net income element embedded in the onmoney receipts can safely be taken in the case of the captioned assessee @15% of the amount of the on-money receipts of Rs. 277 lacs.The Ground of appeal No. 3 is partly allowed in terms of our aforesaid observations 189. We shall now deal with the grievance of the assessee that the lower authorities had erred in concluding that the on-money so received by it w.r.t Flats in its project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its regular method of accounting that has been accepted by the department.Our aforesaid view that the conduct of search and seizure operation in a particular year does not lead to an inference that the undisclosed income detected as a consequence thereof has to be taxed in the assessment year relevant to the previous year in which search was conducted, and the accounting of such income have to be made on the basis of the method of accounting followed by the assessee is supported by the order of the ITAT, Pune bench in the case of Dhanvarsha Builders and Developers Pvt. Ltd. Vs. DCIT [102 ITD 375 (Pune)]. We, thus, direct the A.O to subject the income element embedded in the onmoney received by the assessee during the year under consideration i.eA.Y 2015-16 to tax in terms of our aforesaid observations.The Grounds of appeal Nos. 1& 2are allowed for statistical purposes in terms of our aforesaid observations. 191. The Ground of appeal No. 4 being general is dismissed as not pressed. 192. The appeal of the assessee is partly allowed in terms of our aforesaid observations. (B). ITA No. 2201/Mum/2019 (revenues appeal) : 193. We shall now take up the cross-appeal of the revenue for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of "books of account" as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Further, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Also, the revenue is aggrieved with the restriction of the addition of the on-money receipts to 20% of the entire amount by the CIT(A). Lastly, the revenue is aggrieved with the direction of the CIT(A) to set-off the business losses of the assessee against additions made u/s 68, which as stated by the revenue is contrary to the provisions of Section 115BBE. 195. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding that as the amount of on-money was not found credited in the books of account of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid appeal in the case of the assessee‟s group concern, viz. M/s Ekta Parksville Pvt. Ltd. for A.Y 2014-15 in ITA No. 2194/Mum/2019 shall apply mutatis mutandis for disposing off the issue in hand. Accordingly, on the same terms and reasoning we uphold the order of the CIT(A) to the extent she had concluded that the provisions of Sec. 115BBE would not be applicable to the case of the assessee for the year in question and had directed the A.O toallow set-off of the business losses of the assessee against the assessed income. The Ground of appeal No. (iv) raised by the revenue is dismissed. 198. The appeal filed by the revenue is dismissed. 199. Resultantly, the appeal filed by the assessee is partly allowed in terms of our aforesaid observations, while for the appeal of the revenue is dismissed. M/s Ekta World Pvt.Ltd. : ITA No. 2199/Mum/2019 (revenues appeal) ITA No. 2200/Mum/2019 (revenues appeal) A.Y 2016-17 (A). ITA No. 2199/Mum/2019 (revenues appeal) : 200. We shall now take up the quantum appeal of the revenue in the case of the captioned assessee, viz. M/s Ekta World Pvt. Ltd. for A.Y 2016-17. The revenue has assailed the impugned order of the CIT(A) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n i.e A.Y 2016-17. In the backdrop of the aforesaid facts the A.O called upon the assessee to show cause as to why the on-money of Rs. 75 lac received by it on sale of flat in its project "Occult" may not be added to its income returned for the year in question i.e A.Y 2016-17. In reply, the assessee referring to the seized record as was relied upon by the A.O for alleging receipt of on-money of Rs. 75 lac, therein declined of having received any such amount. It was submitted by the assessee that it had neither carried out any sale of a flat in its project "Occult" to any person by the name of "Venket" nor there wasany broker by the said name for sale of flats in its project. It was, thus, submitted by the assessee that the addition of the impugned on-money of Rs. 75 lac was not called for in its hands. However, the aforesaid explanation of the assessee did not find favour with the A.O. It was observed by the A.O that Shri. Vivek Mohanani (supra) in his statement recorded u/s 132(4) of the Act, on being confronted with the whatsapp messages exchanged between him and Shri. Prateek Arora (supra) had confirmed the receipt of on-money of Rs. 75 lacs on sale of flat in its project, viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted additions. In case of penalty order, the "tax effect‟ will mean quantum of penalty deleted or reduced in the order to be appealed against. At para 13 of the above Circular, it has been mentioned that: "13. This Circular will apply to SLPs/appeals/cross objection/references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/appeals/cross objections/references. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed." 207. As a step towards further management of litigation, CBDT vide Circular No. 17/2019 has fixed the monetary limit for filing of appeals before ITAT at Rs. 50,00,000/-. 208. As is discernible from the memorandum of appeal, the "tax effect‟ involved in the present appeal is below the monetary limit of Rs. 50,00,000/-. 209. On being confronted with the aforesaid fact, the ld. D.R did not controvert the aforesaid factual position. It was, however, submitted by the Ld. D.R that liberty may kindly be given to seek recall of the dismissal of appeal and its restoration, in case it can be shown that the appeal is covered by the exceptions. 210. We agree with the above con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that now when the impugned on-money of Rs. 75 lac was never received by it, therefore, no penalty u/s 271D for the alleged infraction of the provisions of Sec. 269SS could be imposed on it. However, the Addl. CIT did not find favour with the aforesaid explanation of the assessee. It was observed by the Addl. CIT that thewhatsappp messages between Shri. Vivek Mohanani (supra) and Shri. Prateek Arora (supra) clearly made a reference of receipt of the amount of Rs. 75 lac. In order to fortify his conviction that the assessee firm had actually received the aforesaid amount of Rs. 75 Lac, the Addl. CIT referred to the contents of the whats app messages exchanged between the aforementioned persons. Backed by his aforesaid observations, the Addl. CIT vide his order dated 29.06.2018 imposed a penalty u/s 271D of Rs. 75 lac on the assessee firm. 215. On appeal, the CIT(A) after exhaustively deliberating on the fact situation in the backdrop of the material available on record concluded that as there was no evidence that an amount of Rs. 75 lac was received by the assessee, thus, there was no case for levy of penalty u/s 271D of the Act. Accordingly, the CIT(A) vacated the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he retrieved what‟s app messages which formed part of the seized material is culled out as under: Date Time Message from Pratik Message to Pratik 19.09.2015 1:29 P.M Venkat is giving approx 50A in the evening 19.09.2015 1:29 P.M Balance on Monday Ok Kool Today 75 he will give 1:30 P.M Ok Kool 19.09.2015 1:41 P.M He is giving 65 in cheque too 19.09.2015 6:32 P.M Received 50 from Venkat 19.09.2015 6:37 P.M Ok Kool It is on the basis of the aforesaid whats app messages that the Addl. CIT had inferred that the assesseehad received cash amount of Rs. 75 lacs by way of unaccounted receipts as regards sale of flat in its project, viz. "Occult". Backed by her aforesaid view, the Addl. CIT had called upon the assessee to explain as to why penalty u/s 271D of the Act for receiving the impugned amount in contravention of the provisions of Sec. 269SS of the Act may not be imposed on it. In reply, the assessee had denied of having received the aforesaid impugned amount of Rs. 75 lac. As observed by us hereinabove, it was the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of its quantum appeal) that if the receipt of cash of Rs. 75 lac is to be taken as true, then, the transaction of Rs. 65 lac through cheque also should be considered true. However, as stated by the assessee, it remained as a matter of an uncontroverted fact that there was no receipt of Rs. 65 lac through cheque in the bank accounts of the assessee. Insofar the admission on the part of Shri. Vivek Mohanani that the amount of Rs. 75 lac was the cash received for sale of a flat in the project of the assessee company, viz. "Occult", the said statement had thereafter been retracted by him and the fact that no such transaction had occasioned was brought by him to the knowledge of the DDIT(Inv.). In the backdrop of the aforesaid facts, we concur with the view taken by the CIT(A) that as the alleged receipt of the amount of Rs. 75 lac by the assessee had not been proved, therefore, no penalty u/s 271D could have been imposed on the assessee for allegedly receiving the impugned amount in contravention of the provisions of Sec. 269SS of the Act. To sum up, we are of the considered view that as neither the A.O nor the Addl. CIT had brought anything on record to show that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veloper. Search and seizure action was conducted on 05.10.2015 in the case of the entities belonging to the "Ekta group". Incriminating material pertaining to the captioned assessee firm, viz. M/s Pahli Hill Developers LLP was found in the course of the search proceedings. Notice u/s 153C was issued and duly served upon the assessee firm for the year in question. Return of income in compliance to the notice issued u/s 153C was filed by the assessee firm on 10.01.2017 declaring an income of Rs. 2,21,83,351/-. Subsequently, notices under S/sec. 143(2) and 142(1) of the Act were issued to the assessee firm. 224. During the course of the assessment proceedings, it was gathered by the A.O that the assessee had undertaken construction of a project, viz."The One". On a perusal of the seized documents and statements recorded in the course of the search proceedings, it was observed by the A.O that the assessee had received on-money on sale of flats of its aforementioned project, as under: Project Name Flat No. Amount (in lacs) Financial Year of Receipt Date of agreement The One 1401 & 1402 136.30 2013-14 23.02.2015 1201 & 1202 200.00 2013-14 25.07.2014 Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and the assessee group was habitually receiving on-money on sale of properties, therefore, it could safely be presumed that the aforesaid amount of Rs. 3,36,30,000/- was received by the assessee as on-money on sale of flats in its project, viz. "The One". It was observed by the CIT(A) that Shri. Prateek Arora was a key employee of the "Ekta group" and was actively involved in negotiating and handling cash for the group. Observing that certain loose papers were found in the course of the search proceedings from the residence of Shri. PrateekArora (supra), and that receipt of on-money was admitted by him in his statement recorded on oath u/s 132(4), the CIT(A) was of the view that the same being a valuable piece of evidence could not be overlooked. As regards the denial by Shri. Vivek Mohanani (supra) of having received any onmoney on sale of flats in question in the assessee‟s project, viz. "The One", the CIT(A) was of the view that the said simpliciter denial would not suffice to dislodge the evidentiary value of the notings and the facts stated by Shri. Prateek Arora (supra) in his statement recorded on oath u/s 132(4) of the Act. Backed by his aforesaid observations, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of Shri. Prateek Arora (supra) is reproduced as under: "Q.2 I am showing you page no. 3 (written in pencil), A Xerox copy of the said page 3 is marked as 3A of Annexure A3. Please go through the same and explain the contents of the same. Ans. The page has details of Pali Hill Flat. This page was given to me by my promoter. The rate per sq. ft. mentioned is Rs. 39,000/- and area mentioned is Rs. 5180/- sq.ft. The deal value is mentioned at Rs. 20,20,20,000/- and agreement value mentioned Rs. 18,00,00,000/-.The term amenities mentioned in the page represent the "cash‟ as per the coding between me and the promoters. As per the referred page the cash component against the subject deal represents Rs. 2,20,00,000/-" On being confronted with the aforesaid statemet of Shri. Prateek Arora, Shri. Vivek Mohanani (supra) in his statement recorded on oath u/s 132(4) though admitted that he had purchased a flat in the assessee‟s Pali Hill project, viz. "The One" for a consideration of Rs. 18,00,00,000/-, however, he denied the explanation of Shri. Prateek Arora (supra) as regards the cash element that was allegedly stated to have been involved in respect of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arity the relevant extract of the statement of Shri. Prateek Arora (supra) is reproduced as under: "Q.22 I am showing you page no. 4 of Annexure A3. Please go through the same and explain the contents of the same. Ans. The page contains details of Pali Hill Flat. These are multiple transactions recorded on the said page. Transaction 1: The details of 7th habitable & 8th habitable floors consisting 5180sq. fts & 1545 sq. ft respectively aggregating to 6725 sq. fts is mentioned. The rate mentioned for the said floors in the page was Rs. 39000 per sq.ft and the total deal value mentioned at Rs. 26,22,75,000/- (6725 X 39000). Against the deal value, the difference of Rs. 6,22,75,000/- was divided amongst two flats and Rs. 3,11,37,500/-. Out of which Rs. 2,00,00,000/- was received and balance was shown as receivable Rs. 1,11,37,500/-. Transaction 2 : The second transaction mentioned at the same page was for the 5th habitable floor and amount mentioned was Rs. 9.20 crores. Brokerage @2% amounting to Rs. 18,40,000/- was deducted and balance is worked out at Rs. 9,01,60,000/-. As mentioned above, this amount was again divided by 2 and worked out Rs. 4,50,80,000/-, out of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the Flat Nos. 1401/02 and 1201/02 in its project, viz. "The One", as under: (A). Re: Addition towards on-money w.r.t Flat Nos. 1401/02 : Rs. 136.30 lac. 230. As observed by us hereinabove, the impugned addition towards receipt of on-money of Rs. 136.30 lac w.r.t Flat Nos. 1401/02 was made by the A.O on the basis of the notingsin the document, viz. Annexure A-3 - Page 3 that was seized from the residence of Shri. Prateek Arora (supra)a/w the explanation that was given by him as regards the said notings. As observed by us hereinabove, the A.O on the basis of the impugned notings recorded in the seized document, viz. Annexure A-3 - Page 3 had concluded that Shri. Vivek Mohanani (supra) had paid on-money of Rs. 2,20,00,000/- towards purchase of a flat admeasuring 5180 sq.ft in the assessee‟s Pali hill project, viz. "The One". Observing, that an additional value of cheque of Rs. 83.70 lac was paid towards registration of Flat Nos. 1401 & 1402, the A.O restricted the cash component for purchase of the aforementioned property to an amount of Rs. 136.30 lacs [Rs. 220 lac (-) Rs. 83.70 lac]. Accordingly, backed by his aforesaid observations the A.O madean addition of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject, viz. "The One". On a perusal of the record, we find that the assumption drawn by the A.O that the amount of Rs. 2.20 crores (supra) pertained to the on-money that was paid by Shri. Vivek Mohanani (supra) for purchase of Flat Nos. 1401 & 1402 in the assessee‟s Pali Hill project, viz. "The One" is not backed by any supporting material. On the contrary, Shri. Vivek Mohanani (supra) who had apparently authored the notings in the seized document, viz. Annexure A-3 - Page No. 3(as stated by Shri. Prateek Arora) had categorically stated that the area of 5180 sq. ft therein mentioned pertained to Flat No. 701 in the assessee‟s Pali Hill project, viz. "The One". In fact, contents of the seized document, viz. Annexure A-3 - Page No. 4 which makes a reference to "7th Habitable 12th Floor - 5180 sq. ft." further fortifies the aforesaid claim of Shri. Vivek Mohanani (supra) that the notings in the seized document, viz. Annexure A-3 - Page No. 3pertained to Flat No. 701 in the assessee‟s Pali Hill project, viz. "The One". As such, in the backdrop of our aforesaid observations we are unable to persuade ourselves to subscribe to the unsubstantiated adverse inferences drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p concern of the assessee, viz. Ekta Housing Pvt. Ltd. in ITA No. 1732/Mum/2019 for A.Y 2013-14 wherein we had directed the A.O to estimate the income element embedded in the on-money receipts at 15%. Although we have restored the issue pertaining to receipt of on-money of Rs. 2.20 crore to the file of the A.O for fresh adjudication, we may,however observe that if in the course of the set-aside proceedings it is found that the assessee had received onmoney w.r.t the transaction in question, then, the A.O shall in terms of our aforesaid observations restrict the addition to the extent of the income element therein embedded i.e@15% of such on-money receipt.Further, inour considered view, as the receipt of on-money is inextricably interlinked and in fact interwoven with the corresponding sale transaction to the extent accounted for by the assessee in its books of account, the same, thus, cannot be divorced therefrom, and the income element therein embedded would be required to be brought to tax in the same year in which the sale transaction had been or would be accounted for by the assessee as per its regular method of accounting that has been accepted by the department.Our aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75,000/- was divided amongst two flats and Rs. 3,11,37,500/-. Out of which Rs. 2,00,00,000/- was received and balance was shown as receivable Rs. 1,11,37,500/-." However, Shri. Vivek Mohanani (supra) on being confronted with the aforesaid contents of the seized document, viz. Annexure A3 - Page 4 had in his statement recorded on oath u/s 132(4) rebutted the explanation that was given by Shri. Prateek Arora (supra) w.r.t the contents of Page 4 of Annexure A-3on the ground that the project in question, viz. "The One" did not have a 8th habitable floor. In order to fortify his aforesaid claim, Shri. Vivek Mohanani (supra) had even placed on record the duly approved plan of the said project. Relevant extract of the statement of Shri. Vivek Mohanani (supra) that was recorded u/s 132(4) is reproduced as under: "For Page No. 4as stated by Prateek this pertain to Pali Hill project, however there is no 8th habitable floor in this project. Further I hereby furnish the project plan duly approved in support of my contention as Annexure 1." However, we find that the A.O discarding the duly substantiated rebuttal of Shri. Vivek Mohanani (supra), had acted upon the unsubstantiated notings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e project plan duly approved in support thereof. Neither there is any material available on record nor is there any finding of the lower authorities which would dislodge or disprove the aforesaid claim of Shri. Vivek Mohanani (supra). Apart from that, no contention has been advanced by the ld. D.R before us disputing the veracity of the aforesaid claim of Shri. Vivek Mohanani. In the backdrop of the aforesaid fact situation, we are unable to uphold the adverse inferences drawn by the lower authorities as regards the alleged property admeasuring 1545 sq. ft on the standalone basis of dumb notings in the seized document, viz. Annexure A3 - Page 4, which as observed by us hereinabove had been dislodged by the assessee on the basis of clinching material. Accordingly, in the backdrop of our aforesaid deliberations the adverse inferences and the consequential addition made by the lower authorities as regards the alleged on-money of Rs. 200 lac (supra) is herein vacated in terms of our observations recorded hereinabove. The Ground of appeal No. 1 raised by the assessee to the extent relatable to the aforesaid addition is herein allowed in terms of our aforesaid observations. 236. The Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " as contemplated in Sec. 2(12A) cannot be sustained and is liable to be vacated. Further, it is the claim of the revenue that as the assessee had failed to establish the identity of parties, genuineness of transactions and creditworthiness of the parties thus, no infirmity can be related to the addition of the impugned amounts under Sec. 68 of the Act. Lastly, the revenue is aggrieved with the restriction of the addition of the on-money receipts to 20% of the entire amount by the CIT(A). 239. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Insofar the grievance of the revenue that the CIT(A) had erred in concluding that as the amount of on-money was not found credited in the books of account of the assessee but was found noted on some loose sheets and in the data retrieved from the mobile phones in the course of the search proceedings, therefore, it could not have been brought to tax u/s 68 of the Act is concerned, the same, we find had been ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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