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TMI Blog2022 (6) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... osed of by common order. IT(SS)A No. 182/Ahd/2019 is taken as the lead case. 3. The grounds of appeal raised by the Revenue in IT(SS)A No. 182/Ahd/2019 are read as under: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding the gross profit @30% on the 'On-money' receipt of Rs.3,67,95,791/- when the assessee miserably failed to produce documents w.r.t. expenses incurred against the above receipts of 'On-money'. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) should have upheld the addition of entire receipt of 'On-money' of Rs.3,67,95,791/-, as the assessee could not produce any document for expenses incurred against the above receipts of 'On-money' and the onus lies on the assessee to prove the expenses incurred. 3. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. 4. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal." 4. The brief facts leading to the case is this that the appellant, engaged in the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing expenses of the above receipts of on-money. He ultimately relies upon the order passed by the Ld. AO. 8. On the other hand, the Ld. Representative appearing for the assessee supports the order passed by the First Appellant Authority. According to him estimated profit of on-money/premium collected from the customers can be said to be justified instead of adding the gross amount of onmoney/ premium to the total income. He also relies upon the order passed by the Hon'ble Jurisdictional High Court in the matter of CIT vs. President Industries, reported in (2002) 124 Taxman 654 (Guj.) in support of his argument. 9. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 10. The brief facts leading to the case is that during the course of survey at the Head Office of the appellant at Narayan Chambers, Bharuch on 13.11.2014 various incriminating documents were found and impounded proving that the firm was involved in the practice of receiving a part of the sales consideration of such apartments and shops in cash, which is not recorded in the books of accounts of the company. Documents impounded and inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income was on the basis of the seized/impounded materials found during the course of search/survey action, statement of the partners/employees of the firm and extrapolation of on-money receipts of the property sold in the same construction projects. The Ld. Principal CIT Central, Surat also objected to the estimation of income @ 15% of the undisclosed on-money receipts and further reported understatement of income for the different construction projects/land. Considering the report under Section 245D(2B) of the Ld. PCIT Central Surat dated 08.03.2017, seized/impounded documents and detailed discussion before the Hon'ble Settlement Commission, Mumbai, the appellant's application was rejected by and under the order dated 29.03.2017 under Section 245D(2C) of the Act. The Hon'ble Settlement Commission was of the view that there is substantial understatement in the three projects namely Narayan Luxuria, Narayan Square and Narayan Residency and the application does not contain a full and true disclosure of the income which was further not disclosed before the Ld. AO. 13. Statements of some customers of Narayan Residency Projects were recorded under Section 131(1) where they have accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equested to restrict investigation with the evidences found during the search only and no reliance to be placed on the order of Settlement Commission. (v) In continuation thereto it was contended by the assessee that in the event the Department is intending to use the Settlement Commission application as a sole base as assessment of income, then, the department should accept the declaration of profit at 15% of on-money receipt. In fact it is one of the main contention of the assessee that the department has completely relied on the application petition filed by the assessee before the Hon'ble Settlement Commission. However, the settlement application was filed by the assessee purely in the spirit of settlement and with the intention to avoid litigation and buy mental peace and therefore, the additional income offered before the Hon'ble Settlement Commission was without prejudice to right to contest the issue on merits of the case if the case is not settled for any reason whatsoever and the same should not be construed as admission of guilt or concealment of assessee. In this regard, the assessee also relied upon the provision of Section 245HA(2) which explicitly provided that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent order passed by the JTSC u/s.245D (2C)". But, these contentions of the appellant are not entirely true because if there were no incriminating material found during the course of search and also during the course of survey, there was no requirement for the appellant to file the application for settlement that too twice and there would have been no reason for the Hon'ble Settlement Commission to reject the application holding that there was no true and full disclosure of additional income by the appellant. It is true that as per Section 245HA, in case of abatement of proceedings before the Settlement Commission, the AO has to dispose the case in accordance with the provisions of the Act as if no application u/s.245D has been made. 8.1 From the perusal of the assessment order, it is abundantly clear that the AO has painstakingly examined the incriminating materials in connection with various construction projects of the appellant (which are dealt at pages 18 to 69 of the assessment order) and has worked out the unaccounted income for various assessment years and from various projects. Nowhere in the assessment order, the AO has picked up the additional/undisclosed income m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived should be added as unaccounted/undisclosed income of the appellant during the respective assessment years or whether the gross/net profit related to such on-money receipt should only be treated as unaccounted/undisclosed income of the appellant liable to be added while computing the total income for the respective assessment year. 8.4 In this regard, at para-73 of the submission dated 13.10.2018 for the A.Y. it has been contended by the appellant that "we request your kind office to restrict the addition to 15% of the alleged on-money being the rate of net profit It is a settled law that when an addition in respect of on-money is made, the entire receipt cannot be charged to tax, but only the profit element is to be charged." For the purpose, reliance has been placed on various judgements of jurisdictional ITAT of Ahmedabad (Abhishek Corporation v/s. DCIT, ACIT v/s. Jignesh Koralwala) and jurisdictional High Court of Gujarat (CIT v/s. President Industries). In these cases, it has been held that where it was found that assessee had been charging on-money/premium in respect of booking of flats, the entire receipts on account of on-money /premium charged would not be the undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the impugned order before us, we find that the assessee has failed to point out the deficiency of Revenue and the working of undisclosed income. Neither it was claimed to be excessive as because the assessee was also not been able to give any proper working of undisclosed/excess income earned by it from various projects undertaken by it. The assessee has further failed to give any factual details so as to substantiate that on-money was not charged and received by it on booking/sale of units in its various project. Neither the actual figure of on-money receipt during the year under consideration from customers has been placed before the authorities below by the appellant. On this premise we do not find any irregularities and/or wrong in not interfering by the Ld. CIT(A) with the computation of Rs. 3,67,95,791/- as on-money receipt by the appellant during the year under consideration on booking to sale of units in the project Narayan Shrushti made by the Ld. AO. So far as the other aspect of addition on gross amount of on-money receipt or gross/net profit related to such on-money receipt to be treated as unaccounted/undisclosed income of the appellant is concerned we find that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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