TMI Blog2021 (5) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 [ 2005 (10) TMI 276 - ITAT PUNE-A] - We, thus, direct the A.O to subject the income element embedded in the onmoney received by the assessee to tax in terms of our aforesaid observations.The Ground of appeal No. 1 raised by the assessee is allowed in terms of our aforesaid observations Addition w.r.t the income element of the amount of on-money - change in the method of accounting adopted by the assessee - HELD THAT:- 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 fortified by the judgment of the Hon‟ble High Court of Bombay i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation wing and the A.O had held that the impugned notings were the on-money received by the assessee on sale of flats/shops in the building projects undertaken by it thus, in absence of any dispute as regards the nature of such receipt, the same, was liable to be assessed as a business receipt and not as an income u/s 68 of the Act. We concur with the view taken by the CIT(A) that now when the A.O had in the assessment order mentioned the flat wise and year wise receipts of on-money thus, the same leaves no iota of doubt that the same were in the nature of business receipts which were inseparable from the assessee‟s business of a builder and developer. Accordingly, on the basis of our aforesaid deliberations, we are of a strong conviction that no infirmity arises from the order of the CIT(A) who in our considered view had rightly concluded that the impugned additions could not have been made u/s 68. - ITA No.1732-1733/MUM/2019, ITA No.2186/MUM/2019, ITA No.1734 to 1737 /MUM/2019, ITA No.2194 & 2195/MUM/2019, ITA No.1738 to 1740 /MUM/2019, ITA No.2202 to 2204/MUM/2019 - - - Dated:- 24-5-2021 - ITA No.1741 1742 /MUM/2019, ITA Nos. 2197 2198/MUM/2019, IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of the search proceedings. Notice under Sec. 153A was issued and duly served upon the assessee for the year in question i.e A.Y 2013-14. Return of income in compliance to the notice issued u/s 153A was filed by the assessee company on 13.01.2017, declaring a total income of ₹ 17,11,54,520/-. Subsequently, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 3. During the course of the assessment proceedings, it was gathered by the A.O from a perusal of the seized material that the assessee company had inter-alia received on-money on sale of flats w.r.t its projects, viz. Maple Wood/Cornel ANDCalifornia, as under: Project Name Flat No. Amount (in lacs) Financial Year (of receipt) Assessment Year Maple Wood/Cornel 801/802 ₹ 197 2015-16 2016-17 California 1101 ₹ 29 2012-13 (registration on 04.03.2013) 2013-14 Observing that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in some loose sheets and in the data retrieved from 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 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 embedded in the on-money receipts at 12% of such receipts 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 disallowance to the said extent. 5. Aggrieved, the assessee has assailed the order of the CIT(A) in appeal before us. We shall first advert to the grievance of the assessee that the CIT(A) had erred in estimating the income element ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -17. To sum up, the A.O dislodged both the quantification of the income relatable to the on-money receipt as well as the year of taxability of the said amount, as was claimed by the assessee. On appeal, the CIT(A) found favour with the claim of the assessee that only the income element embedded in the on-money receipt was liable to be assessed in the hands of the assessee. But then, the claim of the assessee wherein he had sought deferring of accounting for the on-money receipt as its income to A.Y 2016-17i.ethe year when the project was completed and sale was recognized in Profit Loss A/c was rejected by the CIT(A). 6. Supporting its claim that the CIT(A) had rightly restricted the addition w.r.t the on-money of ₹ 29 lac received by the assessee as regards sale of Flat no. 1101 in its project, viz. California , it was submitted by the ld. A.R that the CIT(A) had rightly observed that as regards the on-money received by the assessee what could be brought to tax was the profit embedded in such receipts and not the entire receipts. In support of his aforesaid contention the ld. A.R had relied on the judgment of the Hon‟ble High Court of Gujarat in the case of Dy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing the onmoney of ₹ 29 lac received by the assessee w.r.t Flat No. 1101 in the said project in A.Y 2013-14. It was submitted by the ld. A.R that as the assessee was following the project completion method of accounting therefore, the income element embedded in the onmoney receipts of ₹ 29 lac received by the assessee w.r.t Flat No. 1101in its project, viz. California was to be considered in the relevant year of completion of the project. It was, thus, submitted by the ld. A.R that the CIT(A) had erred in upholding the view of the A.O that the on-money receipt in question was to be brought to tax during the year of receipt itself i.eA.Y 2013-14. In support of its claim that in a case where an assessee is following project completion method the on-money received is to be brought to tax in the year of completion of the project the ld. A.R relied on the order of the Hon‟ble High Court of Gujaat in the case of CIT(Central), Surat Vs. Happy Home Corporation (2018) 94 taxmann.com 292 (Guj). It was submitted by the ld. A.R that the said order of the Hon‟ble High Court had thereafter been upheld by the Hon‟ble Supreme Court and the SLP filed by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lifornia . Insofar the quantification of the income assessable as regards the amount of on-money received by the assessee is concerned, we find that the same was confined by the assessee upto the extent of the income element embedded in the amount of such on-money and was accordingly taken on an ad hoc basis i.e @12% of such receipt at ₹ 3.84 lac. However, the A.O subjected the entire amount of on-money of ₹ 29 lac to tax in the hands of the assessee in the year of receipt itself i.e A.Y 2013-14. On appeal, the CIT(A) principally agreed with the assessee that the entire amount of on-money could not be subjected to tax and she restricted the addition to the extent of the income element embedded in such receipts, which however was estimated by her @20% of the amount of on-money received by the assessee, observing as under: 5.5. The assessee had submitted during the assessment proceedings and appellate proceedings that it had incurred expenses out of these cash receipts which have not been accounted for in the books of account, He requested to allow these expenses and tax only the net income. For this he relied upon the judgments as could be seen from his submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of the on-money received. In view of the above, these grounds of appeal are partly allowed. On the one hand the assessee is aggrieved with the working of the income element embedded in the on-money received by it @20% of such receipts by the CIT(A) as against that shown by it @12%, while for the revenue is aggrieved with the confining of the addition w.r.t the on-money received by the assesseeupto the extent of the impugned income element therein embedded i.e @20% of such receipts as against the addition of the entire amount of on-money made by the A.O. It is the claim of the assessee that as a reasonable amount would have been spent for the purpose of receiving the amount of on-money thus, what could be brought to tax was the profit embedded in such receipts and not the entire amount of on-money receipt. As is discernible from the orders of the lower authorities, the assessee had in the course of the assessment proceeding and also before the first appellate authority submitted that as it had incurred expenses out of the cash receipts which have not been accounted for in its books of account thus, only the net income element involved in such on-money receipts be subjected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts and the entire amount of the on-money could not be added in the hands of the assessee company. We find that the Hon‟ble High Court of Gujarat in the case of Dy. CIT Vs. Panna Corporation (2012) 82 CCH 266 (Guj),had observed, that consistently the 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. It was further observed by the Hon‟ble High Court that what should be estimated as a reasonable profit out of such receipts must bear an element of estimation. For the sake of clarity the observations of the Hon‟ble High Court are reproduced as under: 9. Having heard the learned counsel for the parties and having perused the orders under consideration, what emerges is that the findings arrived at by the Assessing Officer that the respondent - partnership firm received on money of ₹ 62 lakhs during the block period for sale of the flats, is not seriously in dispute. The Tribunal confirmed such findings arrived at by the Assessing Officer. However, the Tribunal did not permit the revenue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial relief to the assessee and reduced the income on the basis of gross profit rate. The Tribunal confirmed the order of the Commissioner (Appeals). On further appeal before the High Court by the revenue, the High Court refused to refer any question holding that in absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged undisclosed sales, the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference. 12. Counsel also relied on the decision in the case of Commissioner of Income Tax v. Samir Synthetics Mill, reported in (2010) 326 ITR 410, wherein the High Court confirmed the view of the Tribunal accepting only the profit of unaccounted sale for the purpose of collecting tax. 13. Our attention was also drawn to the decision of the M. P. High Court in the case of Man Mohan Sadani v. Commissioner of Income Tax, reported in (2008) 304 ITR 52, wherein referring to and relying upon the decision of this Court in the case of Commissioner of Income Tax v. President Industries (supra) and other decisions of other High Courts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (9) TMI 973 (Guj). In its said order the Hon‟ble High Court relying on its earlier order passed in the case of Panna Corporation (supra), had observed, that as the Tribunal was justified in considering that the assessee ought to have spent reasonable amount for the purpose of receiving the amount of onmoney thus, what could be brought to tax was the profit embedded in such receipts and not the entire receipts.Similar view had also be drawn by the Hon‟ble High Court of Gujarat in the case of CIT Vs. Abhishek Corporation (2000) 158 CTR 374 (Guj). Relying on the order of the ITAT, Ahmedabad in the case of Abhishek Corporaton Vs. DCIT 63 TTJ 651 (Ahd) the ITAT, Mumbai in the case of ACIT Vs. Guruprena Enterprises, ITA Nos. 255 to 257, 544 545/Mum/2010 and 4836/Mum/2009 [affirmed by the Hon‟ble High Court of Bombay in CIT Vs.Guruprerna Enterprises in ITA 1849 of 2011] had observed as under: Even though it is established 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the CIT(A) who drawing support from the judicial pronouncements that were relied upon by the assesseee before him, had concluded, that the addition as regards the on-money received by the assessee was to be made to the extent of the income element embedded in such receipts and the entire amount of on-money could not have been added in the hands of the assessee. We, thus, agreeing with the consistent view taken in the aforesaid judicial pronouncements, therein respectfully follow the same, and thus, finding no infirmity in the view taken by the CIT(A), uphold the same. 9. We shall now advert to the grievance of the assessee that the CIT(A) had erred in estimating the income element embedded in the on-money of ₹ 29 lac received by the assessee@20% of such receipt, which is on higher side, and the same should have been estimated @12% of the amount of such on-money receipt as was offered by the assessee. Insofar the quantification of the income element embedded in the on-money received by the assessee is concerned, we find that it was the claim of the assessee that the same in all fairness be taken @12% of the said receipts as was offered by it. However, the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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.The Ground of appeal No. 2 raised by the assessee is partly allowed in terms of our aforesaid observations. 10. We shall now take up the grievance of the assessee that the CIT (Appeals) had erred in confirming the addition w.r.t the income element embedded in the on-money in the year in question i.e A.Y 2013-14 without considering the fact that it had offered the same in A.Y 2016-17i.e the year when the project was completed and sale was recognized in the Profit loss A/c. In order to drive home his aforesaid claim the ld. A.R had relied on the order of the Hon‟ble High Court of Gujarat in the case ofCIT(Central), Surat Vs. Happy Home Corporation (2018) 94 taxmann.com 292 (Guj). It was submitted by the ld. A.R that the said order of the Hon‟ble High Court had thereafter been upheld by the Hon‟ble Supreme Court and the SLP filed by the revenue had been dismissed in CIT (Central) Vs. Happy Home Corporation(2019)103 taxmann.com 22 (SC). Also, reliance was placed by the ld. A.R on the order of the ITAT, Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year.In fact, the Hon‟ble Supreme Court in the case of CIT Vs. Woodward Governor India P. Ltd. (2009) 312 ITR 254 (SC) had observed that a system of accounting consistently followed is ordinarily expected to be accepted unless the system does not reflect true profits. It is, thus, in the background of the aforesaid settled position of law that we shall deal with the view taken by the CIT(A) that the income element embedded in the on-money on sale of flat was to be brought to tax in the year in question i.eA.Y 2013-14 and not in A.Y 2016-17 i.ewhen the project was completed and sale was recognized by the assessee in its Profit loss A/c. In our 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 cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly, notices under Sec. 143(2) and 142(1) of the Act were issued to the assessee. 16. During the course of the assessment proceedings, it was gathered by the A.O from a perusal of the seized material that the assessee company had inter alia received on-money on sale of flats w.r.t its projects, viz. Maple Wood/Cornel AND California, as under: Project Name Flat No. Amount (in lacs) Financial Year (of receipt) Assessment Year Maple Wood/Cornel 801/802 ₹ 197 2015-16 2016-17 California 1101 ₹ 29 2012-13 (registration on 04.03.2013) 2013-14 Observing, that the assessee had not offered the on-money of ₹ 197 lacs that was received by it during the year in question as its income in the return filed u/s 153A of the Act, the A.O called upon it to put forth an explanation as regards the same. In reply, it was submitted by the assessee that the on-money receipt of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, she substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the addition to the said extent. Insofar the claim of the assessee that as it was following project completion method and the income from the project, viz. Maple Wood/Cornell would be offered on the completion of the project, the same did not find favour with the CIT(A). It was observed by the CIT(A) that the assssee had been following Percentage Completion Method in the past and had shifted to Project Completion Method only during the year in question i.e A.Y 2016-17. Holding a conviction that as the assessee had been following Percentage Completion Method which too was in accordance with the guidelines issued by ICAI, the CIT(A) was of the view that there was no justification on the part of the assessee to shift to Project Completion Method. It was, in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od/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 ₹ 197 lac on sale of Flat Nos. 801/802 of its project, viz. Maple wood/Cornel . It was the claim of the assesseethat the income element of the onmoney of ₹ 197 lac would be offered for tax in the year in which the aforesaid project is completed. However, the A.O was of the view that the on-money of ₹ 197 lac received by the assessee w.r.t the aforesaid Flat Nos. 801/802 was liable to be brought to tax in the year of receipt itself. On appeal, though the CIT(A) restricted the addition as regards the on-money of ₹ 197 lac that was received by the assessee w.r.t Flat Nos. 801/802(supra) to the extent of the income element embedded in such receipts, however, she concurred with the view taken by the A.O that the said income was to be subjected to tax in the year of receipt itself i.eA.Y 2016-17. Before us, it was submitted by the ld. A.R that as the assessee was following the Project Completion Method, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 to Project Completion Method w.e.f A.Y 2016-17. However, we find that the CIT(A) after reproducing the exhaustive reasons given by the assessee to explain as to why it had changed the method of accounting to Project Completion Method w.e.f A.Y 2016-17had wrongly observed in her order that no reason had been given by the assessee to explain as to why it had shifted from the Percentage Completion Method that it was following in the past to Project Completion Method w.e.f A.Y 2016-17. Further, loosing sight of the reasons that had led to the change in the method of accounting by the assessee company, it was observed by the CIT(A) that as the Percentage Completion Method that was being followed by the assessee in the past was in accordance with the guidelines issued by the ICAI, therefore, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fortified by the judgment of the Hon‟ble High Court of Bombay in the case of Bajaj Auto Ltd. Vs. CIT (2016) 389 ITR 259 (Bom).Also, the Hon‟ble High Court of Bombay in its earlier judgment passed in the case of Melmould Corporation Vs. Commissioner of Income Tax, 202 ITR 789 (Bom), relying on the decision of Karnataka High Court in Commissioner of Income Tax Vs. Corporation Bank Ltd. (1988) 174 ITR 616 (Kar) had held that where the change in the method of accounting is a bonafide one which was thereafter consistently followed by the assessee year after year, then, the change would have to be accepted irrespective of the fact that during the year when the change wsa brought about a deteriment was caused to the revenue. The Hon‟ble High Court had observed as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 2016-17, and also making necessary verifications as regardsits claim 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 restore the matter to thefile of the A.O. In case, it is found that the assessee had for a bonafide reason changed 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 2016-17, and the same thereafter hadconsistently been followed over the years, then, in the absence of any finding of the A.O that the completed contract method distorts the profits of a particular year the completed contract method adopted by the assesseeswould not be subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, the ld. CIT(A) has erred in deleting the additions of ₹ 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, 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? 27. As observed by us hereinabove, the A.O had brought to tax the entire amount of the on-money receipts of ₹ 197 lac 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, therefore, the same could not have been b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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(A). It was submitted by the ld. A.R that the basis for the addition of the onmoney receipts by the A.O were the notings on some loose sheets and the data that was retrieved from the mobile phones found in the course of the search proceedings. It was submitted by the ld. A.R that as the impugned amounts were not found credited in the books of the assessee, therefore, the CIT(A) observing that the sine qua non for invoking the provisions of Sec. 68 was absent, had thus, rightly vacated the addition therein made by the A.O. In support of his contention that where the requirement of Sec. 68, i.e the amount being credited in the books of account is not satisfied, no addition can be made u/s 68 of the Act, the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 term books and not regular books of account is concerned, we are afraid that the same does not find favour with us. As is discernible from Sec. 2(12A) of the Act, the same therein defines books or books of accounts . We are unable to comprehend that as to on what basis the revenue is seeking inclusion of loose sheets and data retrieved from mobile phones within the scope and gamut of the definition of books or books of accounts as provided in Sec. 2(12A) of the Act. Alternatively, we also find substance in the observation of the CIT(A), that as both the Investigation wing and the A.O had held that the impugned notings were the on-money received by the assessee on sale of flats/shops in the building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 ₹ 22 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 ₹ 22 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. 35. Briefly stated, the assessee company which is engaged in the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 132(4), dated 05.10.2015 the A.Oadded the aforesaid amount of ₹ 22 lac u/s 68 of the Act. 37. 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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 submitted by the ld. A.R that though neither any incriminating material was found in the course of the search proceedings nor any evidence proving the receipt of the alleged amount of on-money by the assessee company had been brought on record, the A.O, had however merely on the basis of the uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 group at the residence of Shri. DilipBorade on 05/10/2015 at 107/4, Swapana CHS, Sector 1, RSC-21, Charkop, Kandivili West, Mumbai 400 067 in his statement recorded u/s 131, he was asked to give the details of cash handled by him for Ekta Group. His reply is reproduced below : Q. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. 8. Oct, 2014 25 Lacs Party from Hiranandani, Powai Pratik Arora Pratik had called for collection, Pratik can only explain. 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 ₹ 10 for collecting money. Pratik Arora can only explain this transaction. We may herein observe, that the aforesaid details provided by Shri. DilipBorade was pursuant to the query raised by the A.O therein calling upon him to furnish details of cash handled by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the entire Ekta group. On a careful scrutiny of the aforesaid reply of Shri. DilipBorade, we find that at no stage he had at any instance stated that the cash handled by him was as regards the transactions of the assessee company, viz. M/s Ekta Parksville Homes Pvt. Ltd. or its project, viz Parksville project . Accordingly, in the totality of the aforesaid facts, we find no reason much the less any justification to relate the impugned transactions to the assessee company, viz. M/s Ekta Parksville Homes Pvt. Ltd. 42. Be that as it may, we find that majority of the impugned transactions pertaining to collection of cash by Shri. DilipBorade makes a reference to the name of the person from whom the impugned amount was collected by him. In fact, in two instances even the mobile 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering his services not only for the assessee company but for the entire Ekta group. In our considered view additions cannot justifiably be made on the basis of uncorroborated documents seized from a third party in the course of search proceedings. Our said view is supported by the judgment of the Hon‟ble High Court of Calcutta in the case of CIT Vs. Tara Chand Mahipal (2016) 65 taxmann.com 29 (Cal). In its said judgment, it was observed by the Hon‟ble High Court that addition made to the assessee‟s income merely on the basis of papers seized from the possession of the assessee‟s brother was unjustified when the material sought to be relied on was not corroborated. Also, a similar view was taken by the Hon‟ble High Court of Madras in the case of CIT Vs. Smt. S. Jayalakshmi Ammal (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 ₹ 31,00,000/-towards purchase of property, and that such payment was made in the presence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved by us hereinabove, the adverse inferences drawn by the A.O regarding receipt of on-money by the assessee company on sale of flats in its project Parksville project are backed not by any incriminating material that had surfaced in the course of the search proceedings but by a standalone uncorroborated statement of its employee, viz. Shri. Dilip Borade (supra). Apart from that, we find that Sh. Vivek Mohanani, director of the assessee company on being confronted with the aforesaid statement of Shri. Dilip Borade (supra) had categorically denied the receipt of any such amounts by the assessee company. In the backdrop of the aforesaid facts, we are of a strong conviction that the A.O without placing on record any material corroborating the statement of Shri. DilipBorade (supra) and disproving the claim of Shri. Vivek Mohnani (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 additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and vacate the addition to the extent the same was sustained by him in context of the aforesaid impugned receipt of on-money of ₹ 22 lac. The Ground of appeal No. 2 is allowed in terms of our aforesaid observations. 44. As we have concluded that no part of addition pertaining to the impugned amount of on-money of ₹ 22 lacs 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. 45. The Ground of appeal No. 4 being general in nature is dismissed. 46. The appeal filed by the assessee is allowed in terms of our aforesaid observations. ITA No. 1735/Mum/2019 (assessee s appeal) ITA No. 2194/Mum/2019 (revenue s appeal) A.Y 2014-15 ( A). ITA No. 1735/Mum/2019 (assessee s appeal ) 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 Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated by the A.O to the case of the assessee for the year in question read as under : Sr. No. Date Amount Cash collected from (name) Cash handed over to Remarks 2. F.Y 2013-14 1.5 Cr in various installments Yashwant (9820475111) Lamington Road, Near Police Station Vivek Mohnani Vivek Mohnani had called to confirm my identity to collect cash. Vivek Mohnani can explain. 3. F.Y 2013-14 4.5 Cr Collectedfrom the office. Meadows, Nagothane, Siddharth Nagar. Vivek Mohnani and Pratik Arora Harish Bhai Sales person from Ekta Bhum Garden, Borivilli Site, called me to collect the cash from site. Vivek Mohnani and 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 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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, she substituted the same by 20% of the gross on-money receipts and directed the A.O to restrict the disallowance 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 business loss of current year of ₹ 8,67,72,453/- 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.Y2014-15. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additions of ₹ 6,00,00,000/- 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 ₹ 6,00,00,000/- 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, 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 directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). 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 expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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 entity 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 for 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. 58. As we had while disposing off the assessee‟s appeal in ITA No. 1735/Mum/2019 for A.Y 2014-15 concluded that no part of the addition upheld by the CIT(A) w.r.t the impugned amount of onmoney receipts is liable to be sustained, therefore, the grievance of the revenue that the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (a), the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent.; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance 3524 [or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) 3525 [and clause (b)] of sub-section (1).] As observed by us hereinabove, the aforesaid Sec. 115BBE was made available on the statute vide the Finance Act, 2012 w.e.f 01.04.2012. However, the embargo as regards not allowing of any set-off of any loss while computing the assessee‟s income as referred to in clause (a) 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 included in the return of income filed by the assessee u/s 139 of the Act was made available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CIT(A) in context of the issue in question. Before parting, we may herein observe that aswe had while disposing off the assessee‟s appeal in ITA No. 1735/Mum/2019 for A.Y 2014-15 concluded that no part of the addition upheld by the CIT(A) w.r.t the impugned amount of onPage money receipts is liable to be sustained, therefore, the grievance of the revenue in hand is even otherwise rendered as merely academic in nature. Be that as it may, the Ground of appeal no. (iv) raised by the revenue is dismissed. 61. The appeal filed by the revenue is dismissed. 62. 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. 1736/Mum/2019 (assessee s appeal) ITA No. 2195/Mum/2019 (revenue s appeal) A.Y 2015-16 (A). ITA No. 1736/Mum/2019 (assessee s appeal) 63. We shall now take up the appeal filed by the captioned assessee for A.Y 2015-16. 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. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent related by the A.O to the case of the assessee for the year in question read as under : Sr. No. Date Amount Cash collected from (name) Cash handed over to Remarks 4. F.Y 2014-15 80 lacs on various dates Collected from party name not known Thane west from flat purchasers. Pratik Arora Pratik can only explain this transaction. 7. 25th Dec, 2014 55 lacs KausalChedda 9892362551 Kalina Est. Vivek Mohanani Vivek Mohanani can only explain her. Shri Pratik Arora had given his visiting card as token of identity to collect cash. 8. Oct 2014 25 lacs Party from Hiranandani Powai. Pratik Arora Pratik had called for collection. Pratik can only explain. On being confronted with the aforesaid statement of Shri. Dilip Borade (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y receipt could be brought to tax 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 embedded in the on-money receipts at 12% could not be substantiated by the assessee, therefore, she substituted the same by 20% of the gross on-money 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 brought forward business loss of ₹ 8,67,72,453/- 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.eA.Y 2015-16. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 ₹ 1,60,00,000/- 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 ₹ 1,60,00,000/- 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, 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 directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obile 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 entity 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 for 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. 74. As we had while disposing off the assessee‟s appeal in ITA No. 1736/Mum/2019 for A.Y 2015-16concluded that no part of the addition upheld by the CIT(A) w.r.t the impugned amount of onmoney receipts is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law the Ld. Commissioner of Income-tax (Appeals) has erred in confirming the addition @ 20% of the on-money amount of ₹ 9 lakhs in this year without considering the fact- that the appellant offered the income @12% of on-money of ₹ 9 lakhs in A.Y 2017-18. 3. 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. 4. 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 ₹ 46.77 lacs which is on higher side and should have been estimated @12% of on-money as offered by your appellant. 5. 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. 79. Briefly stated, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the A.O rejected the claim of the assessee for accounting of the on-money of ₹ 9 lac pertaining to Shop No. 158 in Parksville project in A.Y 2017-18. Observing, that evidence as regards receipt of on-money of ₹ 9 lac by the assessee had surfaced in the course of the proceedings conducted during the F.Y 2015-16, the A.O, thus, was of the view that there was no justification in subjecting the same to tax in A.Y 2017-18 i.e in the year in which the sale transaction was registered and revenue arising therefrom was recognised. On the basis of his aforesaid observations the A.O after allowing deduction for 0.4 lac (i.e 12% of 4 lac) that was already offered for tax by the assessee during the year in question i.e A.Y 2016-17, therein made an addition of ₹ 46,37,000/- [₹ 33,77,000/- (+) R. 12,60,000/-] u/s 68 of the Act. 81. On appeal, it was observed by the CIT(A) that the factum of having received on-money of ₹ 13 lac w.r.t Shop No. 150 and Shop No. 158in the project Ekta Parksville had been admitted by Shri.VivekMohnani, Jt. Managing Director of the assessee company. As regards the addition made by the A.O towards on-money of ₹ 33.77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) in appeal before us. The ld. Authorised representative (for short A.R ) for the assessee assailed the additions made by the A.O on the basis of rough notingsin certain loose sheets viz Annexure A-1 Page 3 and 5impounded in the course of survey action conducted u/s 133A(1) at the site office of Ekta Tripolis, Sidharth Nagar Road, Road No. 2 9, Near Mega Mall, Off. Link Road, Goregaon West, Mumbai on 05.10.2015. It was submitted by the ld. A.R that Shri Hardeep S. Bajwa, Sales Manager for Ekta Tripolis in his statement recorded on oath u/s 131 on 05.10.2015 had categorically stated that the impugned notings pertained to a proposed deal calculation for Shop nos. 29 and 30 which he had noted down (for the purpose of understanding) as was telephonically dictated by a client whom he had earlier attended at Virar. It was submitted by the ld. A.R that though the author of the impugned notingsi.e Shri. Hardeeep S.Bajwa had in his statement recorded u/s 131 on 05.10.2015 clarified that the impugned deal had never materialised, however, the A.O merely on the basis of the said dumb notingshad held the same as on-money received by the assssee on sale of Shop nos. 29 and 30. It was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ievance of the assessee that the CIT(A) had erred in holding that the assessee company had received on-money of ₹ 33.77 lacs loosing sight of the fact that Shri. Vivek Mohanani, director of the assessee company had categorically denied of having received any such amount. As observed by us hereinabove, in the course of the survey action conducted u/s 133A(1) at the site office of Ekta Tripolis, Sidharth Nagar Road, Road No. 2 9, Near Mega Mall, Off. Link Road, Goregaon West, Mumbai on 05.10.2015 certain loose papers were found and impounded as Annexure A-1 Page Nos. 1-9. Statement of Shri Hardeep S. Bajwa, Sales Manager for Ekta Tripolis was recorded on oath u/s 131 on 05.10.2015. On being queried as regards the contents of Annexure A-1 Page 3 and 5, it was stated by him that the same pertained to a proposed deal calculation for Shop nos. 29 and 30 which he had noted down (for the purpose of understanding) as was telephonically dictated by a client whom he had attended at Virar. It was further stated by him that as the assessee company had a rule of not accepting cash component thus the proposed deal was declined and did never see the light of the day. However, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company and thus had not materialised. Shri. Vivek Mohanani, director of the assessee company on being confronted with the impugned notings recorded in Annexure A-1 Page 3 and 5had categorically denied of receipt of the aforesaid amounts by the assessee company. However, the A.O neither being inspired by the explanation of Shri. Hardeep S. Bajwa, author of the impugned notingsnor by the denial by Shri. Vivek Mohanani (supra) of receipt of the impugned amounts by the assessee company,therein held that the impugned notings referred to the on-money that was received by the assessee company w.r.t Shop Nos. 29 30 of its project, viz. Parksville project . On a perusal of the assessment order, we find that the primary issue that had weighed in the mind of the A.O while rejecting the claim of the assessee that it had not received the impugned amounts as on-money was that the assessee could not produce any other document as a corroborative evidence which would prove its claim that cash was not received in the above transaction and the same was only a proposal. In our considered view, the very basis for drawing of adverse inferences and presuming receipt of on-money by the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be made in the hands of an assessee. Be that as it may, as the A.O had failed to substantiate the receipt of the impugned amounts by the assesse company by placing on record any material thus, the presumption on his part as regards receipt of on-money by the assessee cannot be sustained and is liable to be vacated. Accordingly, we herein setaside the order of the CIT(A) and vacate the addition to the extent sustained by him as regards the impugned on-money of ₹ 33.77 lac that was made by the A.O. The Ground of appeal No. 1 raised by the assessee is allowed in terms of our aforesaid observations. 86. We shall now deal with the grievance of the assessee that the Ld. Commissioner of Income-tax (Appeals) had erred in estimating profit from on-money received at 20% of ₹ 46.77 lacs which is on the higher side and should have been estimated @12% of onmoney as was offered by theassessee.As the adverse inferences drawn by the lower authorities as regards receipt of alleged onmoney of ₹ 33.77 lac w.r.t Shop Nos. 29 30 had been vacated by us thus, the grievance of the assessee pertaining to quantification of the addition to the said extent the same was sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the asseseee in the year of receipt itself. It was observed by the A.O that as the evidence of receipt of on-money of ₹ 9 lac had surfaced in the course of the search proceedings conducted during the F.Y 2015-16, therefore, there was no justification in subjecting the same to tax in A.Y 2017-18 i.e in the years in which the sale transactions were registered and revenue arising therefrom was recognised. On appeal, though the CIT(A) restricted the addition as regards the on-money of ₹ 9 lac that was received by the assessee w.r.t Shop No. 158 (supra) to the extent of the income element embedded in such receipts, however, he concurred with the view taken by the A.O that the said income was to be subjected to tax during the year of receipt itself i.e A.Y 2016-17. Before us, it was submitted by the ld. A.R that as the assessee was following the Project Completion Method, therefore, the income element pertaining to the amount of on-money of ₹ 9 lac received w.r.t Shop No. 158 was rightly offered for tax in the year in which registration of the said shop was done and the project in question, viz. Parksville was completed. It was submitted by the ld. A.R t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition 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 ₹ 40.49 lakhs @12% of on-money of ₹ 337.39 lakhs in A.Y 2016-17 when the project was completed and sale was recognized in P l A/c. 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 ₹ 337.39 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. 92. Briefly stated, the assessee company which is engaged in the business of a builder and developer had filed its original return of income for A.Y. 2014-15 on 30.09.2014, declaringan income of ₹ 1,70,05,422/-. Search and seizure action was conducted on 05.10.2015 in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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 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. 95. 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entatives 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 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 sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 Sec. 68 of the Act. Further, the revenue is aggrieved with the confining of the addition of the on-money receipts at 20% of the entire amount by the CIT(A). 102. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 ₹ 67.68 lakhs @12% of on-money of ₹ 564.01 lakhs in A.Y 2016-17 when the project was completed and sale was recognized in P l A/c. 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 ₹ 564.01 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, modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1201 Total ₹ 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 ₹ 1164 lac i.e amounting to ₹ 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 ₹ 564.01 lac [₹ 165.17 lac (+) ₹ 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 the assessee but was found noted on some lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 ₹ 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 ₹ 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. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 ₹ 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 defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 223;s appeal in ITA No. 1739/Mum/2019 for A.Y 2015-16 principally upheld the 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 befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of onmoney of ₹ 1164 lac (comprising of ₹ 265 lac) therein amounting to ₹ 139.71 lacs had been offered for tax in its computation of income for the year in question 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 ₹ 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 amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ₹ 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 ₹ 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 ₹ 139.71 lac i.e 12% of on-money receipts of ₹ 1164 lacs as its income for the year in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee during the year under consideration i.eA.Y 2016-17 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. 128. The Ground of appeal No. 3 being general is dismissed as not pressed. 129. The 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 ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 137. Briefly stated, the assessee company is engaged in the business of a builder and developer. 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, 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 aforemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the project was completed, while for the remaining part would duly be considered in the year in which the concerned project is completed. 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 ₹ 249 lac [₹ 150 lac (+) ₹ 99 lac] received by the assessee during the year in question as its unaccounted receipts u/s 68 of the Act. 139. 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, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year of receipt. As observed by us hereinabove, the A.O held a conviction that 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 ₹ 249 lac received by the assessee w.r.t Flat/Shop Nos. 1001 and 1002 in its project, viz. Iris amounting to ₹ 150 lacs and ₹ 99 lac, respectively, may not be brought to tax in the year of receipt itself i.eA.Y 2015-16, it was submitted by the assessee that the net income of ₹ 29.76 lacs i.e 12% of the on-money of ₹ 249lac pertaining to IRIS project had been offered in the 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 ₹ 249 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 el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the additions of ₹ 2,49,00,000/- 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 ₹ 2,49,00,000/- 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, 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 directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). 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 expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entity of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in 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. 148. As we had while disposing off the assessee‟s appeal in ITA No. 1741/Mum/2019 for A.Y 2015-16 principally upheld the 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 involved, and had further directed the A.O t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IS Project) the on-money receipts of ₹ 323.50 lakhs for which the appellant offered the income of ₹ 38.82 lakhs @12% of on-money of ₹ 323.50 lakhs in A.Y 2017-18 when the agreement was registered. 2. 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 ‗RAMLAXMI or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting project completion method. 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 the on-money received at 20% which is on a 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. 153. Briefly stated, the assessee company had filed its return of income for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the agreements‟ pertaining to the concerned flats were registered during the F.Y 2016-17. (iii). On-money of ₹ 648 lakhs pertaining to Ram Laxmi Niwas Project shall be considered for computing the income in the year of completion of the project. Accordingly, it was the claim of the assessee that part of the amount of on-money of ₹ 1219.50 lacs had already been taken into consideration in computing the income of the succeeding years in which the project was completed, while for the remaining part would duly be considered in the year in which the concerned project is completed. 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 receipts pertaining to the year in question i.e ₹ 323.50 lac (Iris Project) and ₹ 648 lac (Ram Laxmi Niwas Project) were to be brought to tax in the hands of the assessee during the year under consideration i.e A.Y 2016-17. Further, the A.O excluded the income of ₹ 29.76 lac i.e 12% of on-money of ₹ 249 lac that was received by the assessee w.r.t Iris project in the immediately preceding year i.e A.Y 2015-16 and was offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BBE of the Act had erred in not allowing set-off of current years business loss of ₹ 4,07,83,318/- 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 onmoney 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 current years business loss and brought forward losses after due verification. 156. 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 received at 20% of ₹ 971.50 lacs (netted at ₹ 941.74 lacs) which is on the higher side and should have been estimated @12% of on-money as was offered by the assesse is concerned, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, the aforesaid reply of the assessee did not find favour with the A.O who therein treated the entire amount of on-money received by the assessee during the year in question as its unaccounted receipt u/s 68 of the Act. Observing, that the assesee had already offered an amount of ₹ 29.76 lac i.e 12% of on-money receipts of ₹ 249 lacs as its income for the year in question i.e A.Y 2016-17, the A.O accordingly restricted the addition w.r.t on-money receipt pertaining to Flat/Shop Nos. 1102, 502/802 and 101 in its project Iris to 293.74 lac [₹ 323.50 lac (-) ₹ 29.76 lac]. Further, the A.O added the entire amount of on-money aggregating to ₹ 648 lac that was received by the assessee w.r.t Flat/Shop Nos. 1101 and 901 in its project, viz. Ram Laxmi Niwas amounting to ₹ 475 lacs and ₹ 173 lac, respectively. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee? (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 ₹ 9,41,74,000/- 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, 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 directing the A.O to set off business losses against additions made u/s 68, by invoking provisions of section 115BBE? (v). 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? 162. As observed by us hereinabove, the A.O had brought to tax the entire amount of on-money receipts of ₹ 9,41,74,000/- u/s 68 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p concern of the assessee, viz. M/s Ekta Housing Pvt. Ltd. in ITA No. 2186/Mum/2018 in 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. 164. As we had while disposing off the assessee‟s appeal in ITA No. 1742/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 was 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 to the extent of 15% of such receipts, therefore, the grievance of the revenue that the CIT(A) had erred in restricting the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orama or alternatively in the years when conditions of revenue recognition are satisfied as per percentage completion method and further erred in rejecting 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 the on-money received at 20% of ₹ 185 lakhs which is on a 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. 169. Briefly stated, the assesseefirm is engaged in the business of a builder and developer. Original return of income for A.Y 2015-16 was filed by the assessee firm on 26.09.2015, declaring a loss of (₹ 2,24,292/-). 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 Ekta Shubham Venture was found in the course of the search proceedings. Notice u/s 153C was issued and duly served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 1.85crore [₹ 1.20 crore (flat no. 303) (+) ₹ 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 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 assessee which had approached the Income-Tax Settlement Commission had offered 15% of the onmoney receipts for tax, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in estimating the income element embedded in the on-money receiptsof ₹ 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 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 ₹ 185 lakhs.The Ground of appeal No. 2 is partly allowed in terms of our aforesaid observations 173. We shall now deal with the grievance of the assessee that the lower authorities are in error in concluding that the on-money so received by it w.r.t Flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 appeal) : 177. We shall now take up the cross-appeal of the revenue for A.Y 2015-16. 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 ₹ 1,85,00,000/- made u/s 68 of the IT Act, 1961, by holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoning 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 200 2015-16 Not done Grand Total 462 Observing that the date of registration of the 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 ₹ 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 ₹ 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 ₹ 4.62 crores [₹ 185 lacs (+) ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) rejected the assessee‟s request for considering the Project Completion Method for revenue recognition. 188. 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 receipts of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oven 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 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 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 2 are allowed for statisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. Ekta Parksville 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Shri. Venketagainst the sale of flat in the assessee‟s project, viz. Occult at Chembur. It was observed by the A.O that the aforesaid fact was confronted to Shri. Prateek Arora (supra), and was also admitted to be the unaccounted income of the assessee firm by Shri. Vivek Mohanani (supra). However, it was noticed by the A.O that the assessee firm had thereafter not offered the aforesaid amount of on-money as its additional income in the return of income for the year in question 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 ₹ 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 ₹ 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, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed by the amount of income in respect of issues against which appeal is intended to be filed. Further, tax effect‟ shall be taxes including applicable surcharge and cess. However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect‟. In cases where returned loss is reduced or assessed as income, the tax effect‟ would include notional tax on disputed 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee firm in lieu of having received an unaccounted amount of ₹ 75 lac in cash. The Addl. CIT, Central Range-6, Mumbai, therein called upon the assessee to show cause as to why penalty u/s 271D w.r.t the cash receipt of ₹ 75 lac may not be imposed on it. In reply, the assessee denied of having received the alleged amount of ₹ 75 lac. It was submitted by the assessee firm that it had neither carried out any sale of a flat in its project Occult to any person by the name of Venket nor was there any broker bythe said name for sale of any flat in its said project. It was, thus, submitted by the assessee that now when the impugned on-money of ₹ 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 ₹ 75 lac. In order to fortify his conviction that the assessee firm had actually received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult to any person by the name of Venket nor was there any broker by the said name for sale of flat in its said project thus, there was no justification on the part of the Addl. CIT to have imposed penalty u/s 271D as regards a non-existent transaction. 218. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, whats app messages exchanged between Shri Prateek Arora, a key employee of the assessee group and Shri. Vivek Mohanani, promoter of the assessee group were retrieved in the course of thesearch proceedings and formed part of the seized records. Gist of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohanani, promoter of the assessee group apparently points out to a cash transaction, however, the same on such standalone basis cannot justifiably evidence that the impugned amount of ₹ 75 lac was received by the assessee. As is discernible from thewhats messages, the alleged transaction is stated to be with one Shri. Venkat. However, it has been the claim of 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 was there any broker by the said name for sale of any flat in its said project. Neither the aforesaid claim of the assessee had till date either been dislodged or disproved bythe Addl.CIT/A.O nor any material has been placed on our record by the ld. D.R to prove to the contrary. In sum and substance, it is a matter of fact borne from the records that neither the assessee had carried out any sale of a flat in its project Occult to any person by the name of Venket nor any broker was there of the said name for sale of any flat in the aforesaid project of the assessee. Apart from that, we find that the impugned whats app message on 19.09.2015 at 1:41 P.M also makes a reference to a payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. Resultantly, both the appeals filed by the revenue are dismissed. M/s Pahli Hill Developers LLP : ITA No. 1743/Mum/2019 (assessee s appeal) ITA No. 2193/Mum/2019 (revenues appeal) A.Y 2014-15 (A). ITA No. 1743/Mum/2019 (assessee s appeal) : 222. We shall now take up the appeal of the captioned assessee, viz. M/s Pahli Hill Developers LLP for A.Y 2014-15. 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 without appreciating the fact that the partner of appellant denied for the same. She ought to have deleted the whole addition. 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 the on-money received at 20% of ₹ 336.30 lakhs which is on a 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 gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no on-money was received w.r.t sale of flats of its project The One could not be accepted as the seized document, viz. Annexure A-3 Page 3-4 clearly mentioned the bifurcation of the rate per sq. ft. for the flats into cheque and cash portion. It was further observed by the A.O that the assessee had also failed to produce any material in support of its claim that no on-money was received in respect of the sale transactions in question. Accordingly, the A.O rejected the assessee‟s reply and added the amount of ₹ 3,36,30,000/- [₹ 2,00,00,000/- (+) ₹ 1,36,30,000/-] as the unaccounted receipts u/s 68 of the Act of the assesseefor the year under consideration. 225. 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 could not have been brought to tax u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search proceedings conducted on 07.10.2015 on the Ekta Bhoomi group certain loose papers were found from the residence of Shri. Prateek Arora, key employee of Ekta Group , which thereafter were marked as Annexure A-3 Page 1-74A. On a perusal of the notings of Annexure A-3 Page 3 4 the A.O held a conviction that the same were in context of the onmoney that was received by the assessee on sale of flats in its project, viz. The One .On being confronted with the seized material, Shri. Prateek Arora (supra) admitted that contents therein mentioned were in context of the cash element involved in the sales transactions. For a fair appreciation of the issue in question we shall herein cull out the relevant parts of the seized documents (as are discernible from the assessment order), which reads as under: Annexure A3 - Page No. 3 : Page No.3 of Annexure A3 found from residence of Prateek Arora 5180 X 39000 = 202000000/- = 180000000 A. Value -- 2,20,20,000/- -- 411139 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder : For Page No. 3 I would like to explain that this 5180 sq. ft. area pertain to a flat no. 701 in Pali Hill project named as The One . Yes, I agree that one flat has been bought by me at ₹ 18,00,00,000/-. However for other explanation given by Prateek I am not agreed with Prateek regarding cash component. On the basis of the aforesaid facts the A.O observed that on-money of ₹ 2.20 crore was received w.r.t the property that was bought by Shri. Vivek Mohanai. Observing, that the additional value of cheque of ₹ 83.70 lac was paid by the assessee towards registration of Flat Nos. 1401 1402, the A.O observed that the cash component therein involved was reduced to an amount of Rs. 136.30 lacs. It was, thus, observed by the A.O that the assessee company had received on-money of ₹ 1,36,30,000/- on sale of Flat Nos. 1401 1402 in its project, viz. The One . 227. Further, on a perusal of the notings of Annexure A-3 Page 4, the A.O observed that the same read as under: Annexure A3 - Page No. 4 : Page No.4 of Annexure A3 found from residence of Prateek Arora 7th Habitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to 6725 sq. fts is mentioned. The rate mentioned for the said floors in the page was ₹ 39000 per sq.ft and the total deal value mentioned at ₹ 26,22,75,000/- (6725 X 39000). Against the deal value, the difference of ₹ 6,22,75,000/- was divided amongst two flats and ₹ 3,11,37,500/-. Out of which ₹ 2,00,00,000/- was received and balance was shown as receivable ₹ 1,11,37,500/-. Transaction 2 : The second transaction mentioned at the same page was for the 5th habitable floor and amount mentioned was ₹ 9.20 crores. Brokerage @2% amounting to ₹ 18,40,000/- was deducted and balance is worked out at ₹ 9,01,60,000/-. As mentioned above, this amount was again divided by 2 and worked out ₹ 4,50,80,000/-, out of which again ₹ 4,00,00,000/- was the agreement value and ₹ 50,80,000/- was the cash portion. Transaction 3: The entry pertaining to 6th habitable floor is also mentioned and the price as discussed and confirmed @₹ 40,000/- per sq.ft. Some other entries were also written on the bottom of the page indicating habitable floor and the name of the parties and the status of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 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 ₹ 136.30 lacs [₹ 220 lac (-) ₹ 83.70 lac]. Accordingly, backed by his aforesaid observations the A.O madean addition of ₹ 136.30 lacs (supra) towards on-money which as per him was paid by Shri. Vivek Mohanani (supra) for purchase of the property in question. 231. On a perusal of the statement of Shri. Prateek Arora (supra) recorded u/s 132(4), we find that it was stated by him in reply to Quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee‟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 by the lower authorities that the notings w.r.t the area of 5180 sq. ft in the seized document, viz. Annexure A-3 Page No. 3 pertained to the Flat Nos. 1401 1402 that was purchased by Shri. Vivek Mohanai (supra) in the assessee‟s Pali Hill project, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to receipt of on-money of ₹ 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 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loors in the page was ₹ 39000 per sq.ft and the total deal value mentioned at ₹ 26,22,75,000/- (6725 X 39000). Against the deal value, the difference of ₹ 6,22,75,000/- was divided amongst two flats and ₹ 3,11,37,500/-. Out of which ₹ 2,00,00,000/- was received and balance was shown as receivable ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the backdrop of the claim raised by Shri. Vivek Mohanani in his statement recorded u/s 132(4) that there is no 8th habitable floor in the Pali Hill project, viz. The One , which we find he had substantiated by furnishing the 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 ₹ 200 lac (supra) is he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account in Sec. 2(12A) of the Act is an inclusive definition. Also, 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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