TMI Blog2023 (11) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by the search team. No proof of refund of their deposits or bookings is either shown to the AO while filing reply to the show cause notice except assertion that liability of bookings were refunded. In such situation, we find that the ld. CIT(A) was justified in considering the on money component in respect of such 23 persons. For other remaining buyers, AO has not brought any evidence except assuming and presuming and making extrapolation that assessee has received on money from each and every buyer. Thus, we find that the ld. CIT(A) was quite right and justified in considering the on money in respect of the persons whose details were found during the search action. Neither the search party nor the Assessing Officer made any investigation from the purchasers or the other person whose names were found in the seized material about the payment of additional on money. AO estimated on money after rejecting books of account by considering whole saleable area by multiplying figure of rate found in the seized material. Such application of formula of on money with regard to entire saleable are is not justified, particularly when there is no independent or corroborate evidence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old at a lower rate especially when there was no difference in the prevailing market conditions for such sale of units and all flats have been booked during the A.Y. 2014-15. 4. It is, therefore, prayed that the order the Ld. CIT(A) -4, Surat may be set aside and that of the AO may be restored to the above extent. 5. The appellant craves leave to add, alter, amend and/or withdraw any round(s) of appeal either before or during the course of hearing of the appeal. 2. Brief facts of the case are that the assessee is a firm engaged in the business of builder and developer. A search action under Section 132 of the Income Tax Act, 1961 (in short, the Act) was carried out on Vaisnodevi Group, Surat on 28/11/2013. Partner of assessee was also covered in the said search proceedings. Simultaneously, a survey action under Section 133A of the Act was also carried out at the project site of assessee firm on the same day. The assessee filed its return of income for A.Y. 2014-15 on 30/11/2014 declaring NIL income. The case of assessee was selected for scrutiny. During the assessment proceedings, the Assessing Officer noted that during the relevant period, the assessee firm was engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent columns. It was explained that the amount written as 5395.55 is actually Rs. 5395545/- (2295 X 2321). 3. The Assessing Officer further recorded that during the assessment, the assessee was asked to explain the seized paper. The assessee filed their reply. The contents of reply is extracted on page No. 4 to 6 of the assessment order. In reply, while explaining seized material, the assessee in sum and substance submitted that there was total booking of 23 flats till the date of search. The initial bookings were meagre amount was paid as advance for booking of such flats. Subsequent to search due to fear factor and downfall in the rates of real estate, the 15 customers out of 23 cancelled the booking and the amount of booking was refunded to them. Some of those cancelled flats alongwith unsold flat were rebooked @ of Rs. 1550 per square feet. To substantiate the high range of cancellation of boking of flats at the assessee s site that on the date of search, two diaries of booking of flats were found in the possession of assessee. A normal trend of business is that once the diary is returned back to the builder, the purchaser is deemed to have cancelled the booking, the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e factum of receipt of unaccounted income and the contention of assessee about the cancellation is nothing but an afterthought. Mere submission without corroborative evidence is not admissible, whereas the seized document is contrary to such fact. The Assessing Officer made reference of one Satakat in respect of flat No. B-1203 executed between the buyer and the assessee firm. As per Satakat, the buyer has made payment of Rs. 2.00 lacs through cheques on 03/08/20123. Further as per details available on page No. 99 of Annexure-A-4, it shows that such buyer has made payment of Rs. 13.00 lacs in cash. Details of this payment is clearly mentioned on page No. 4 and 5 of Annexure-A-29. Such facts were admitted by Shri Rajesh Vaghani that all payments were received in cash in 2012-13. The Satakat executed on later date found and impounded as per Annexure- 1 from the site office of Vaisnodevi and the receipt of payment through cheque in subsequent year 2013-14, which clearly proved that booking by the customer was alive and no cancellation of booking was made. The contention of assessee about the cancellation of booking subsequently is only an effort to cover up the evidences found and sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the assessment order dated 28/03/2016 passed under Section 143(3) of the Act. 8. Being aggrieved by the addition made in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee challenged the rejection of books of account as well as addition on merit. Before the ld. CIT(A), the assessee filed detailed written submission, which is recorded in para 4 of order of ld. CIT(A). In the submission, the assessee in sum and substance, submitted that a survey and search was carried out at the business and residential premises of assessee. Residence of Rajesh Vaghani, one of the partner was also searched, wherein loose papers were seized as Annexure-A3 and A4. Page No. 1 of Annexure-A3 and page No. 99 of Annexure-A4 are computerized diary wherein details in respect of flats in assessee s project namely Blue Bells were seized. The assessee declared Rs. 1.00 crores for A.Y. 2013-14 to cover up the document seized during the course of search action. The total booking as on the date of search was 23 flats. Subsequent to the search, 19 customers out of 23 customers, cancelled their booking. Thereafter the cancelled flats and other remaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ald Corporation (1991) 7 Taxman 393 (Guj) and CIT Vs Motilal C. Patel Co. (1988) 40 Taxman 336 (Guj). 10. The ld. CIT(A) after considering the submission of assessee and the contents of assessment order, rejected the grounds of appeal with regard to rejection of books of account. However, on the addition of Rs. 3.82 crores, the ld. CIT(A) granted substantial relief and sustained the addition to the extent of Rs. 27,428/-. The ld. CIT(A) while granting substantial relief to the assessee, noted that the assessee was developing project namely Blue Bells consisting of two towers A B having total 104 flats having area of 2295 square feet each. The evidence seized during the search contains the details of booking of flat in B-Tower only. The ld. CIT(A) noted that total 27 flats were booked in this tower (Assessing Officer s case is with regard to 23 flats). The assessee took his stand that booking recorded on those pages were cancelled after search action, and so no on money was received. Such explanation of assessee was not accepted by Assessing officer on the basis of Satakat in respect of flat No. B-1203 executed by buyer and partner of the firm. As per Satakat, payment of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of sale of all the flats merely on the basis of statement of two purchasers, without any tangible corroboration clearly falls in the realm of conjectures and surmises. The ld. CIT(A) also referred the decision of various other Tribunals and noted that the documents at the residence of partner containing the details of gross receipt were only in respect of 23 flats, therefore on money must be determined in respect of 23 flats and not for whole of the sealable area. 12. The ld. CIT(A) by extracting the details of all 23 flats with their area, rate mentioned at seized material, gross amount, documentation rate and documentation amount, prepared total on money of Rs. 4.01 crores and held that estimation by Assessing Officer of Rs. 19.29 crores, is not justifiable at all. The ld. CIT(A) thereafter while taking on money component of all 23 flats which is Rs. 4.01 crores as per documents found during the search and estimated 25% thereof as profit which is worked out at Rs. 1,00,27,428/-. As the assessee has already made a disclosure for the project for A.Y. 2013-14 and granted credit thereof sustained the addition to the extent of Rs. 27,428/- (Rs. 1,00,27,428 1,00,00,000). Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, 19 persons cancelled their booking. Ultimately the assessee has no option except to reduce the rate and to recover the investment and to declare the rate @ of Rs. 1550 per square feet. The assessee sold the flat only @ 1550/- per square feet, which was above the prevailing jantri rate determined by the State Government. The ld. AR of the assessee submits that at the best, only addition could be in respect of four units only about the receipt of on money. 15. The ld. AR of the assessee in his without prejudice submission, submitted that the Assessing Officer made extrapolation in respect of whole of the saleable area without bringing any adverse material or evidence on record. Such extrapolation is not permissible in absence of any evidence. The ld. CIT(A) on considering the alternative plea of assessee, estimated/worked out on money in respect of 23 flats which was found in the seized material and estimated 25% profit of such estimation. As the assessee has already declared Rs. 1.00 crore as additional income for A.Y. 2013-14. The ld. CIT(A) after granting set off of such income, upheld the addition to the extent of Rs. 27,428/-. 16. The ld. AR of the assessee submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Shhlok Enterprise ITA No. 2018/Ahd/2016 (23) DCIT Vs Brijwasi Developers P Ltd. ITA No. 290/Ahd/2013 (24) Kishor Mohanlal Telwala Vs ACIT (1999) 107 Taxman 86 (Ahd. Trib) (D) on the issue if during the search the entries of expenditure is found, it should be believed (25) CIT Vs Indeo Airways (P) Ltd. (2012) 26 Taxmann.com 244 (Delhi) (26) M/s S.R. Corporation Vs PCIT ITA No. 289/Srt/2018 (27) Jay Deepakkumar Rawal Vs ACIT IT(SS)A No. 77/Srt/2022. 17. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We have also deliberated on various case laws relied upon by the lower authorities as well as by the ld. AR of the assessee. We find that the Assessing Officer made addition of Rs. 3.82 crores by making extrapolation of on money in respect of whole of the saleable area and worked out component of on money of Rs. 19,29,03,930/-. The Assessing Officer brought 25% of estimated on money thereby worked out the addition of on money at Rs. 4.82 crores. As the assessee has already declared additional income of Rs. 1.00 crore thereby after granting set off of Rs. 1.00 crore, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by referring various decisions of the Tribunal as relied by assessee wherein it was held that estimated ratio receipt of on money of sale of all the flats merely on the basis of statement of two purchasers without any tangible corroboration clearly falls in the realm of conjectures and surmises. The ld. CIT(A) also referred the decision of various other Tribunals and held that the documents at the residence of partner containing the details of gross receipt were only in respect of 23 flats, thus, on money must be determined in respect of 23 flats and not for whole of the sealable area. 18. We find that ld. CIT(A) by extracting the details of all 23 flats with their area, rate mentioned at seized material, gross amount, documentation rate and documentation amount, prepared total on money of Rs. 4.01 crores and held that estimation by Assessing Officer of Rs. 19.29 crores is not justifiable at all. The ld. CIT(A) thereafter while taking on money component of all 23 flats which is Rs. 4.01 crores, which was as per seized material, estimated 25% thereof as profit, which is worked out at Rs. 1,00,27,428/-. As the assessee has already made a disclosure for the project for A.Y. 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find that the ld. CIT(A) was quite right and justified in considering the on money in respect of the persons whose details were found during the search action. 19. Being a search case, we independently examined the facts of the present case and find that neither the search party nor the Assessing Officer made any investigation from the purchasers or the other person whose names were found in the seized material about the payment of additional on money. The Assessing officer estimated on money after rejecting books of account by considering whole saleable area by multiplying figure of rate found in the seized material. Such application of formula of on money with regard to entire saleable are is not justified, particularly when there is no independent or corroborate evidence to support such action. Further, the assessing officer being investigator and adjudicator was under obligation to consider the entire seized material. The assessing officer in para-6 of his order has clearly recorded that the assessee receiving on money in cash and was incurring expenditure therefrom. No such fact was taken into consideration by assessing officer while estimating income from on money com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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