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TMI Blog2021 (6) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... e said project after a search operation conducted under section 132 of the Income Tax Act, 1961 (for short "the Act") was conducted in the Ahuja group of cases on 25th June 2015, and incriminating data in the form of loose papers and digital form relating to the tax evasion were found and seized. The premises of Shri Sunil Chowdhary, driver of Shri Jagdish Ahuja (promoter of the group) were also searched and parallel books of account of the Ahuja group were found in his premises. The analysis of the data found was confronted to the promoter Mr. Jagdish Ahuja, who had admitted to receiving on-money in various projects undertaken by the group. Accordingly, notice under section 153C of the Act was issued to the assessee on the basis of the data found during the search. Mr. Jagdish Ahuja, promoter of the group has clearly admitted to receiving on-money which was a part of the parallel books of account maintained by him. On the basis of the statement and the corroborative evidences found during the search, the Assessing Officer issued a show cause notice to the assessee proposing to make an addition of the on-money received. The Assessing Officer listed the receipt of year-wise on-money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the detailed submissions of the assessee, the learned CIT(A) observed that it is accepted and admitted facts that assessee has received on money in the projects undertaken by it. However, he observed that the assessee group companies had also offered the on money received before settlement commission where five entities of the group made an application. He observed that this issue was present in three concerns of the Ahuja a group which approached the Settlement Commission and had offered 12% of the on-money as income and the same was accepted by the Settlement Commission. He observed that the contention of the assessee that the money of the entire group including that of the assessee was offered before the Settlement Commission, which was evident from the record submitted. However, he rejected the above contention and observed that the income of the assessee was never offered before Settlement Commission and observed that the income has to be taxed in the hands of the right person and not any other person. Further, the assessee submitted before the learned CIT(A) that the offer @12% of money received was accepted by Settlement Commission, the same has to be applied in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unexplained cash credit. The learned CIT(A) observed that Assessing Officer also refer to this income as on money/Cash sales in the assessment order but has ultimately brought to tax as unexplained cash credit under section 68 of the Act. He referred the matter to the Assessing Officer vide letter dated 2nd January 2019, directing him to verify the seized material and confirm whether the contention of the assessee i.e., treatment of this income as on-money and, therefore, as business receipt is correct or not. In response, the Assessing Officer, vide his report dated 10th January 2019, by reference to the list of parties submitted by the assessee from whom on-money is received and submitted that the PAN is not mentioned in some cases and no letters from the said persons was filed confirming that they had given on money to the assessee. Since the assessee had failed to satisfactorily explained the nature and source of credits with evidences, the Assessing Officer stated that the amounts were correctly added under section 68 and not as business receipts. The learned CIT(A) observed that the Assessing Officer's report is completely silent on the main issue i.e., the status of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before us raising following grounds of appeal: Grounds raised by the assessee in ITA no.2967/Mum./2019 - A.Y. 2013-14 1. The Ld. CIT(A) erred in confirming the addition of Rs. 4,46,24,219/- being 25% of on money of Rs. 17,84,96,880/- without appreciating that the income, if any, quantified on the amount of on money ought to be taxed only in the years in which project has completed construction in accordance to the conditions prescribed as per the Revised Guidance Note of 2012 issued by lCAl and thus, the income estimated @25% of on money and taxed in the year of receipt is unjustified and liable to be deleted. 2. The Ld. ClT(A) failed to appreciate that relevant working as per the conditions prescribed in the Revised Guidance Note of 2012 issued by ICAI was duly filed before the Ld. ClT(A) and according to which, the income, if any, quantified in respect of on money could Not be taxed in the relevant year as the conditions and parameters prescribed in Revised Guidance Note of 2012 issued by ICAI for taxing income from project were not satisfied in the relevant year and hence, whatever income quantified from the construction project ought to be taxed in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by ICAI for taxing income from project were not satisfied in the relevant year and hence, whatever income quantified from the construction project ought to be taxed in accordance with the Revised Guidance Note of 2012 issued by ICAI and thus, the income estimated from on money and taxed in the year of receipt is unjustified and liable to be deleted." 3. Without prejudice to the above, the Ld. CIT(A) has erred in estimating the income @25% of on money received without appreciating the fact that as per parallel books of account, the group had incurred overall huge loss and income from on money was estimated @12% in other group entities before the Hon'ble Settlement Commission ~he same was accepted @12% and hence, the income from on money may be estimated @12% as against estimated @25% by the Ld. CIT(A) and accordingly, relief may be given to the appellant. Addition of Rs.l,07,703/- as income from inflation of expenses 4. The Ld. CIT(A) erred in confirming addition of Rs. 1,07,703/- being income @25% of inflation of expenses of Rs. 4,30,810/- without appreciating that the AO has failed to give details of bifurcation of inflation of expenses as per seized records and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 41,200/- being 25% of on money of Rs. 1,64,800/- 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 to the conditions prescribed as per the Revised Guidance Note of 2012 issued by ICAI and thus, the income estimated @25% of on money and taxed in the year of receipt is unjustified and liable to be deleted. 2. The Ld. CIT(A) failed to appreciate that relevant working as per the conditions prescribed in the Revised Guidance Note of 2012 issued by ICAI was duly filed before the Ld. CIT(A) and according to which, the income, if any, quantified in respect of on money could Not be taxed in the relevant year as the conditions and parameters prescribed in Revised Guidance Note of 2012 issued by ICAI for taxing income from project were not satisfied in the relevant year and hence, whatever income quantified from the construction project ought to be taxed in accordance with the Revised Guidance Note of 2012 issued by ICAI and thus, the income estimated from on money and taxed in the year of receipt is unjustified and liable to be deleted. 3. Without prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of Co-ordinate Bench in Tulip Land and Developers Pvt. Ltd. (supra) wherein the addition was upheld @12% of on money following the decision passed by the Settlement Commission in the case of group concerns of the assessee. The grounds raised by the Revenue are common in assessment year 2013-14 and 2015-16 except ground no.4, in assessment year 2015-16. The learned Counsel for the assessee submitted that in case the Bench decides the issue of additions under section 68 of the Act against the Revenue then this ground of appeal will becomes academic. 12. On the other hand, the learned Departmental Representative relied on the orders passed by the lower authorities and agreed that most of the grounds are covered in the case of Tulip Land Developers (supra) and Bhalchandra Trading P. Ltd. (supra). However, he argued that the issues in the appeals under consideration have to be considered independently. 13. Considered the rival submissions and material on record. We noted that in these appeals the issue of on money received by the assessee is proved beyond doubt from the records found during search proceedings and subsequent acceptance by the key personal of the Ahuja group. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and hence, only the profit element thereof could be brought to tax and not the entire on-money receipts. We find that the ld. CIT(A) accordingly estimated the profit element to be at 25% and restricted the addition to Rs. 55 lakhs as against Rs. 2,20,00,000 made by the ld. AO. Against this finding of the ld. CIT(A), the revenue is not in appeal before us. 7.3. It is not in dispute that assessee had indeed received on-money for sale of flats to the tune of Rs. 2,20,00,000/- during the year under consideration. It is not in dispute that the assessee had incurred certain business expenses out of such on-money which are kept outside the books of accounts. Hence, it will be just and fair that only the profit element embedded on any such undisclosed transaction could be brought to tax on an estimated basis. The assessee had already pleaded that on-money transactions were offered by the assessee‟s group concerns @12% of on-money receipts before the Hon‟ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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