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TMI Blog2011 (4) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... 57,120/- for A.Y. 1997-98), on account of estimated on-money alleged to have been received /collected by the appellant in the booking of Ruturaj Complex in complete disregard of available material, evidences and explanation. The addition of Rs. 1,00,000/- being made in complete disregard of the available material, evidences and explanation is prayed to be deleted. 2.1. For both the years, the assessment was made u/s.144 of the I.T. Act respectively dated 23/03/1999 and 13/03/2000. It was noted by the AO that a survey was conducted u/s.133A of the I.T. Act on 23/03/1995. A search was also conducted u/s.132 of the Act at the residence of the Directors. Their statement was also recorded u/s.132(4) of the Act. The AO has reproduced one statement of Shri Chandrakant J.Patel recorded u/s.132(4) of the Act dated 31/03/1995. On the basis of the said statement, wherein there was a reference of charging of 'on-money', for the year under consideration, i.e. for AY 1996-97 the AO has enquired in respect of four units which were stated to be booked during the year under consideration. The AO has recorded certain findings in respect of the rates of 'on-money' alleged to have been also taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission, ld.CIT(A) has granted part relief, relevant para reproduced below : "3.2. I have considered the submissions of the ld. A.R. and the facts of the case, This is the first assessment after the block period, pursuant to search on 23.3.95. The addition has been made on the assumption that the same rate of on-money was received in this year also. In this connection, a pertinent fact is that the appellant has, during the year, itself suo motu enhanced the selling price as recorded in the books in comparison to the selling price recorded in the books during the financial year 1994-95. The estimated addition is not based on any material evidence, but solely on the strength of the statement made during the search. An admission made at the time of search is certainly binding so far as assessment of the block period is concerned, but it cannot bind the assessee in respect of all future assessments. If a similar addition is made, it must be duly supported with evidence and cannot be based only on a statement. At the same time, it cannot be denied that there is a prevalent practice of collecting on money in the sale of real estate. This is not contested by the appellant. Considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search case is concerned, but the said statement should not fasten the assessee in respect of all the future assessments. The ld.CIT(A) has also commented the addition in respect of 'on-money' must be duly supported with evidence pertaining to the year under consideration. However, suspecting that receiving of 'on-money' being a prevalent practice in respect of real estate business he has confirmed an adhoc addition upto Rs. 1 lac and rest of the amount was deleted. This approach of ld.CIT(A), thus clearly indicates that the addition was merely made on presumption and there was no definite evidence in the hands of the Revenue. We are also of the view that merely on assumption the same rate of 'on-money' should not have been extrapolated by the AO for the year under consideration that too on a basis of a statement recorded in the past not connected with the assessment proceedings for the year under consideration. We are also of the view that the ld.CIT(A) had no logical basis for upholding the addition upto Rs. 1 lac, though he was in agreement with the contentions of the assessee. We, therefore, hold that there was no basis for the said addition, hence direct to delete the same. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . in its books of accounts and also furnished a statement of accounts of the assessee in the books of the said party. The ld. AR of the assessee Mr. Mukund Bakshi has also explained the reconciliation. He has pointed out that firstly, there was a difference in the opening balance in the respective books of accounts of Rs. 1,80,000/-. There was a difference in respect of charging of interest because, on one hand, the said party has accounted for interest of Rs. 2,61,149/-, whereas, on the other hand, the assessee has accounted for only Rs. 97,900/- which has created a difference of Rs. 1,63,249/-. However, he has emphasised that as far as the question of total transfer of advances on different dates was concerned, the same has duly been reconciled and no difference was found in those transfers in the books of accounts of both the concerns. On due consideration of the reconciliation filed before us and being duly supported by the relevant evidences, we hereby hold that ld.CIT(A) has wrongly confirmed the addition and the same is hereby deleted. 6. Ground No. 3 reads as under : (extracted from A.Y. 1996- 97) 3. The Ld. Commissioner of Income Tax (Appeals)-III, Baroda has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance sheet that the balance sheet as on 31st March, 1999 showed that the shareholders funds were utilised for the purpose of fixed assets. The P&L a/c and the balance sheet would not show whether shareholders funds have been utilised for investments. The argument has to be rejected on this count also. Apart from that both in the order of the CIT(A) as also the Tribunal, a clear finding is recorded that the assessee had interest-free funds of its own which had been generated in the course of the year commencing from 1st April, 1999. Apart from that in terms of the balance sheet there was a further availability of Rs. 398.19 crores including Rs. 180 crores of share capital. In this context, the finding of fact recorded by CIT(A) and Tribunal as to availability of interest-free funds really cannot be faulted. If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In this case this presumption is established considering the finding of fact both by the CIT(A) and Tribunal--Woolcombers of India Ltd. vs. CIT (1981) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , offices, flats, etc., therefore, assessee should have shown receipts from the members. As per Profit and Loss account assessee had not shown any receipts from the members. The AO has, therefore, made a calculation of the profit which was added on protective basis in the hands of the assessee as per the following observation: "7.2. As per the detailed discussion in the case of RHPL A.Yr.1994-95, and other group cases e.g. Kotel Properties Pvt.Ltd. A.Y. 1996097, the total amount received from the members during the year as shown in the books of accounts has to be considered as the accounted receipts on which net profit to be determined. Since the assessee has not shown any income on the accounted receipts, in the light of the order of the C.I.T. (Appeals) in other cases of this group accounted receipts of Rs. 19,27,464/- are being considered as receipts towards the sale of various shops and offices. The book results are rejected by invoking section 145(1) and 145(2) on similar grounds as in A.Yr. 1994-95 as the method of accounting is not proper and further the books of accounts are also not reliable. In this case and in the other group case, net profit on the accounted receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby dismissed. 11. Ground No. 2 reads as under: 2) The learned CIT(A) has erred in deleting the addition of Rs. 15,72,882/- in respect of unexplained share capital over looking the fact that in the subsidiary remand report dated 13.09.2008, nothing is there in respect of unexplained share capital and the assessee could not submit any proof of credit worthiness of the subscribers to substantiate its claim that the increase in share capital is genuine one. 11.1. The observation of the AO was that the paid up share capital of the assessee-company had increased from Rs. 7,14,842/- to Rs. 27,27,692/-. A query was raised in respect of the increase in the paid up share capital and it was noted by the AO that a share capital in the name of Shri D.K. Yadav of Rs. 4,39,968/- was only explained. The remaining share capital of Rs. 15,72,882/- was taxed as income from undisclosed sources. The matter was carried before the first appellate authority. 12. The ld.CIT(A) has considered the explanation of the assessee alongwith certain evidences and, therefore, thought it proper to call for a Remand Report from the concerned AO. A report was submitted on 25/07/2003 and, thereafter, an an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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