TMI Blog2021 (2) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... M/2019, ITA No.3727/M/2019 - - - Dated:- 10-2-2021 - SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER For the Assessee : Shri Vijay Mehta, A.R. Shri Anuj Kisnadwala, A.R. For the Revenue : Shri Vijay Kumar Menon, Sr. D.R. ORDER Per Rajesh Kumar, Accountant Member: The present cross appeals have been preferred against the order dated 08.03.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2016-17. ITA No.2980/M/2019 A.Y. 2016-17 2. The grounds raised by the assessee are as under: Addition of ₹ 53,75.000/- as income from on money may be deleted 1. The Ld. CIT(A) erred in confirming the addition of ₹ 53,75,000/- being 25% of on money of ₹ 2,15,00,000/- [correct amount of on money is ₹ 1.50 cr. and thus, 25% comes to ₹ 37.50 lakhs] without appreciating that the income, if any, quantified on the amount of on money ought to be taxed only in the year/s in which project has completed construction in accordance with the conditions prescribed as per the Revised Guidance Note of 2012 issued by ICAI and thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to various transactions of the assessee. The search was extended to Ahuja Group Associates and residences of their directors and also Mr. Sunil Chaudhary, driver of the promoter of the group Shri Jagadish Ahuja. During the course of search parallel books of accounts were found of Ahuja Group at the residence premises of Mr. Sunil Chaudhary, the driver of the promoter. A statement of Mr. Sunil Chaudhary was also recorded under section 132(4) of the Act and he admitted the said documents were belonging to the Ahuja Group. During the course of search proceedings the statement of Shri Jagadish Ahuja principal promoter of Ahuja Group was also recorded. During the course of search it was found that the assessee has received cash to the tune of ₹ 1,82,50,000/- as per details below: Date Particular V. Type Debit Credit 17-03-2015 Sanjay Agrawal Bhiwandi A/c Cash Sales Bhiwandi Project 10,00,000 23-03-2015 Kailash Devnani Bhiwandi Cash Sales-Bhiwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted and held that this money has to be taxed in the year of receipt. The Ld. A.R. vehemently submitted before us that the assessee is following the project completion method and if at all the assessee received any on money the income therefrom can only be assessed in the year when the project is completed or substantially completed and not in the year of receipt. The Ld. A.R. relied on a series of decisions in defence of his arguments as under: 1. Order of the Hon'ble Tribunal in the case of ACIT v. ISA Enterprises in ITA No. 4597/Mum/2015 dated 11.09.2017 2. Order of Hon'ble Tribunal in the case of M/s D.R. Constructions v ITO in ITA No. 2735/Ahd/2010 dated 08.04.2011 3. CIT vs. M/s Jalaram Jagruti Development Pvt. Ltd. (ITA No. 1537 of 2010) dated 23.11.2010 (Bombay High Court) 4. CIT vs. M/s Guruprerana Enterprises (ITA No. 1849 of 2011) dated 04.03.2013 (Bombay High Court). 5. Asst. CIT v. Layer Exports P Ltd [184 TTJ 469 (Mum)] 6. Dhanvarsha Builders Developers (P.) Ltd. Vs. DCIT 102 ITD 375 (Pune) 7. S.G.R.Enterprises v ACIT [112 TTJ 377 (Bang)] 8. DCIT v Tejas Constructions [ITA 934/PN/2009 Order dated 31.1.2012] 9. Fort Projects (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of method of accounting followed by the assessee. The operative part is reproduced as under: 7. We have heard the rival submissions and perused the relevant materials on record. We give the reasons for our decision in the succeeding paragraphs. Having gone through the return of income filed by ISAE for the AY 2008-09 to AY 2014-15, we find that it is following the project completion method. It filed its return of income for the AY 2014-15 on 04.04.2015 declaring total income of ₹ 4,45,00,710/-. The above income has been accepted without any variation by ACIT-20(1), Mumbai in the assessment dated 28.12.2016 completed u/s 143(3) of the Act. Now it would be apposite to discuss the cited two decisions. In the case of M/s Jalaram Jagruti Development Pvt. Ltd. (supra), the issue before the Hon'ble Bombay High Court was the following: Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal in law, was right in holding that receipts of ₹ 3,46,250/- recorded in the documents seized during the course of search were reflected in the books of accounts and could be taxed only in the year in which the project was completed? The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been laid down in the various other decisions as referred to by the Ld. A.R. during the hearing and stated hereinabove. We are therefore inclined to hold that on money received by the assessee would only be taxable as per the regular method of accounting of the assessee. In the present case the assessee is following project completion method and therefore this income has to be assessed along with the regular income of the assessee in the year of completion of the project. 10. The second issue raised by the assessee is against the order of Ld. CIT(A) sustaining the addition equal to 25% of the on money received. 11. The facts of the case are already narrated while dealing with the ground No.1. The only issue involved here is whether at what rate of the on money should be brought to tax. The Ld. Counsel, at the outset, submitted that since in the cases of group concerns the settlement commission has already accepted that on money is to be assessed at the rate of 12%. We therefore find merit in the contentions of the assessee s counsel that following the settlement commission s order the same should be applied in the case of the assessee also. The case of the assessee is sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the on-money receipts as per the disclosure made by the assessee before the Settlement Commission. There is no dispute that the Settlement Commission has agreed with the contentions of the assessee that the entire amount of on-money receipts cannot be considered as income of the assessee. Accordingly the Settlement Commission has estimated the income from on-money receipts @ 17% in AY 2005-06. Since the assessing officer has estimated the on-money receipts as per the disclosure made before Settlement Commission, we are of the view that the Ld CIT(A) was justified in estimating the income from the on-money receipts @ 17% for this year also by following the order passed by the Settlement Commission. Accordingly we confirm the order passed by Ld CIT(A). Accordingly we reject the appeal filed by the revenue. 13. Following the above decisions, we are inclined to held that the Ld. CIT(A) is not correct in not following the order of settlement commission wherein a rate of 12% has been applied on the on money to assess income embedded therein. Accordingly, we modify the finding of Ld. CIT(A) and direct the AO to assess the on money @ 12% as per the system of accounting followed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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