TMI Blog2021 (7) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue is dismissed. - ITA No. 952 /Ahd/2019 ITA No. 1271 /Ahd/2019 - - - Dated:- 27-7-2021 - SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER Assessee by : Jwalin Nanavati, AR Revenue by : Shri Virendra Ojha, CIT-DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT: These are cross-appeals by the assessee and the Revenue against common order of the ld.CIT(A)-11, Ahmedabad dated 1.5.2019 for the assessment year 2016-17. Both are disposed of by this common order. 2. Core issue involved in both the appeals is that during the course of search evidence exhibiting receipt of on-money i.e. money in cash, over and above booking amount was found. The AO was of the view that the gross amount calculated on the basis of such evidence is to be treated as unexplained income of the assessee; whereas on appeal, the ld.CIT(A) has recorded a finding that only element of profit embedded in such cash receipts is to be treated as income of the assessee. The assessee has accounted for 8% of such receipts as its income, whereas the ld.CIT(A) has estimated the profit element on such receipt at 20%. The Revenue is impugning deletion of addition by the ld.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has considered on-money receipt of ₹ 58.76 crore is 5 years. Appeals for previous years have been decided by me. The summary of additions made by the AO decision taken by me in appeal is summarized in table below ;- A.Y. Additions made by A.O. CIT(A) Substantive Addition Protective Addition C1T Appeal's Direction 2012-13 15,25,00,000/- Deleted substantive addition and protective confirmed as substantive @20% for A.Y. 2012-13 to 2015-16 2013-14 2,50,07,000/- 2014-15 24,23,93818/- 11,55,00,000/- 2015-16 42,16,06,182/- 7,02,75,000/- TOTAL 66,40,00,000/- 36,32,82,000/- 2016-17 (under appeal) 22,43,18,000/- (assessed subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -money noticed on the seized paper cannot be considered as income of the assessee. There are certain expenditures which were not recorded in the books. Those expenditure must have been made from this on-money. Therefore, after going through the well reasoned order of the ld.CIT(A), and in the light of judgment of Hon ble jurisdictional High Court in the case of Panna Corporation (supra) as well as Koshor Mohanlal Telwala (supra), we are of the view that only element of income embedded in the on-money received by the assessee for booking of flats/shops in Vesu Project is required to be assessed in its hand in all these years. 17. Next question arose, what is the element of income involved in this on-money. On one hand, the assessee is showing income at 8%, on the other hand, the ld.CIT(A) is estimating it at 20%. It is pertinent to observe that section 144 of the Income Tax Act provides discretion in the AO to pass best judgment when an assessee failed to appear before him, and to submit requisite details. In other words, it provides power in the AO to estimate an income of the assessee. We deem it appropriate to take note the relevant part of this section. It reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee about his business, the previous history of the assessee or the similarly situated assessee. It is also pertinent to mention that judgment is a faculty to decide matter with wisdom, truly and legally. Judgment does not depend upon the arbitrary, caprice of an adjudicator, but on settled and invariably principles of justice. Thus, in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee. 20. During the course of hearing, we have confronted the ld.counsel for the assessee to show the basis for estimating income at 8%. Similarly, we have confronted the ld.CIT-DR as to how the figure of 20% should be taken up. The ld.counsel for the assessee drew our attention towards page nos.50-51 of the paper book wherein the assessee has kept the details of receipts received through account payee cheque as well as received cash in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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