TMI Blog2022 (6) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. On this premise we do not find any irregularities and/or wrong in not interfering by the CIT(A) with the computation 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 the assessee made a request before the First Appellate Authority for restricting addition to 15% of the alleged on-money being the rate of net profit. As a settled principle of law that where it is found that the assessee is charging on-money/premium in respect of booking of flats, the entire receipts on account of on-money/premium charged would not to be treated as the undisclosed income of the assessee but only net profit rate could be applied on unaccounted sales/receipt for the purpose of making addition. It is also the ratio decided by the Jurisdictional High Court in the case of CIT vs. President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] as also relied upon by the Ld. A.R. be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 business of real estate and construction, filed its return of income on 25.09.2009 under Section 139(1) of the Act declaring total income at Rs. 3,29,340/-. Subsequently, a search under Section 132 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 inventoried as Annexure A-2 shows price list of various units of Narayan Square Project wherein the minimum rate/price of a flat in the scheme Narayan Square was shown as Rs. 13,61,000/- and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quare 1,10,55,050 Narayan Shrusti Duplex* 2,06,42,009 Narayan Shrusti Tenament* 4,88,61,167 Narayan Garden (Shopping) 31,50,000 Total 13,83,92,181 *In the schemes, the amount of Rs. 3,23,822/- has been offered for taxation in A.Y. 2016-17 without claiming deduction u/s.80IB(10) 12. It is relevant to mention that the above disclosure of additional 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch incriminating papers must indicate undisclosed income of other person. (ii) The AO should record a valid satisfaction about incriminating material belonging to the person other than the person who is subjected to search under Section 132. (iii) The seized Tally data from Narayan Realty Ltd. reflects regular books of account maintained in regular course of business and therefore, the seized data cannot be said as incriminating. Moreso, the provisions of Section 153C of the Act do not contemplate requirement of seized data being incriminating. (iv) The assessee has further requested 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 Settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added as undisclosed income earned from the said project. The appellant has contended that because of the various defects in the papers found the impounded/seized papers could not have been considered as incriminating material and therefore, no addition could have been made in the assessment u/s.153C. However, at para-44 of its submission dated 03.10.2018, the appellant itself had admitted that the Let AO has made addition in the present case on the basis of loose papers found during the course of survey and that the Ld. AO has heavily relied upon the settlement petition u/s.145C (1) and consequent 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 bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... projects undertaken by it. The appellant has not brought forward any factual details to substantiate that the on-money was not charged and received by it on booking/sale of units in its various projects and has not also given the details of such on-money actually received during the year from its customers. Accordingly, I find no basis to interfere in the computation of Rs.3,67,95,791/- as on-money received by the appellant during the assessment year under consideration on booking/sale of units in the project Narayan Shrusti made by the AO. 8.3 The issue now is whether the gross amount of on-money received 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome and added in the computation of total income. Accordingly, Rs.1,10,38,738/- being 30% of Rs.3,67,95,791/- is upheld as undisclosed income for the A.Y. 2009-10 . AO is directed to substitute the addition of Rs.3,67,95,791/- with Rs.1,10,38,738/-. The appellants gets partial but substantial relief. The ground succeeds partly. 17. Considering the entire aspect of the matter and particularly the case made out by the assessee, the order of rejection passed by the Settlement Commission, the order passed by the Ld. AO making addition, the further submission made by the appellant before the First Appellate Authority 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 duri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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