TMI Blog2023 (12) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... nce or material to substantiate the on-money in respect of 100% of unit is brought on record. We find that in CIT Vs Standard Tea Processing Co. Ltd. [ 2013 (7) TMI 539 - GUJARAT HIGH COURT] held that the addition for undisclosed income on account of inflated purchase price can be made only for the period to which document found during the search is related and not for the entire block period As in CIT Vs B. Nagendra Baliga [ 2014 (6) TMI 114 - KARNATAKA HIGH COURT] held that the Assessing Officer has not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimate basis. The Coordinate Bench of Tribunal in ACIT Vs M/s Amar Corporation Ltd. [ 2011 (3) TMI 1676 - ITAT AHMEDABAD] and in Sayan Textiles Park Ltd. [ 2015 (4) TMI 184 - ITAT AHMEDABAD] also held that question of extrapolation can only arise only in a situation when the documents give an indication that it was a regular occurrence in a systematic manner. Thus, in view of aforesaid factual and legal discussion, we uphold the order of ld. CIT(A) on our aforesaid observations. In the result, grounds of appeal raised by revenue as well as as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing profits on on money at 13% thereof u/s 69A of the Act as discussed in para 6.12 of the appeal order. 2) The learned CIT(A) grossly erred in confirming the application of provisions u/s 69A r.w.s. 115BBE of the Act though addition in section 69A was challenged and such income ought to be held as business income earned in the course of business of construction and development of project and accordingly the application 115BBE is wrongly invoked. 3) The appellant reserve right to add, alter and withdraw any grounds of appeal. 2. Whereas the Revenue in its cross-appeal in IT(SS)A No.34/SRT/2023 has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in restricting the addition to Rs. 47,30,310/- made u/s 69A of the I.T. Act and granting relief of Rs. 2,46,63,315/- to the assessee despite the facts that addition has been made on the basis of incriminating details/document recovered during the search proceedings. 2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in allowing deduction of 15% on the gross on money worked out by the AO on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developed a joint venture project for development of Shree Kuberji Textile World . During search action, several instances of on-money in respect of sale of units / shops in the commercial project, Kuberji World executed by the assessee jointly with Shree Kuberji Associates at Saroli village, Kadodara Road, Surat in the form of loose paper found, which was inventories as Annexure- AP-1. The details of image of such inventories was recorded at page-4 of assessment order. In the seized material the details contained the booking of three projects of Kuberji Group namely, Kuberji Textile Deck, Shree Kuberji Textile World and Capital Palace. At the time of search, Shri Bhaskar Agarwal was present in the premises and his statement was recorded. Shri Bhaskar Agarwal in his statement disclosed that an amount of Rs. 5.20 crores as per loose paper was received in financial year 2015-16. He further stated that he has no knowledge whether the said receipts were accounted in the books of account. The Assessing Officer further recorded that other documents inventory i.e., BS-1 was also found from the office of assessee, details of which were also reproduced at page-5 of assessment order, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 159.05 crores in assessment year 2020-21 (16.25 crores + 159.05 =175.30 crores). 5. The Assessing Officer after show cause notice on the discrepancies in the books of accounts and giving opportunities to assessee rejected the books of account. The assessing officer thereafter proceeded to estimate the profit on the component of on money by relying on the decision of Hon ble jurisdictional High Court in the case of Naresh B Agarwal (HUF) Magatulal Harlalka (HUF) order dated 03.05.2022 and CIT vs. Abhishek Corporation (2000) 158 CTR 374 (Guj) and in the case of Kishore Mohan Telwala vs. ACIT (1999) 63 TTJ (Ahd. Trib.) 651 dated 02.09.1998, wherein the net profit of on-money was estimated from 8% to 20% thereby the Assessing Officer estimated 30% of profit from on-money as net profit of the assessee. The assessing officer thereby working out profit of Rs. 52.59 crores. The Assessing Officer further recorded that assessee in its submission, submitted that they have made disclosure in Income Disclosure Scheme, 2016 (IDS-2016) of Rs. 13.00 crores thereby the assessee may be given benefit of such disclosure made in respect of projects of Shri Kuberji Textile World and Shri Kuberji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 17.50 lakh by cheque and Rs. 32.38 lakh by cash. The Assessing Officer assumed that Rs. 32.38 lakh received as on-money for one shop only on the basis of reference of word BL . The word BL was assumed as black money, which was used as on-money. The assessee submitted that the details of amount received for shop Nos.3001 3002 were fully accounted in regular accounts that there were some jottings on the bottom of page which was assumed as black money and no addition on the base of such assumption and presumption is permissible. The assessee submitted that there is amount of Rs. 1.52 lakhs against which, blank is mentioned and therefore on-money should be considered at Rs. 1.52 lakh only. On such material, found from the third person and presumption under section 132(4A) r.w.s. 292C is not applicable. The assessee strongly opposed the estimation of Rs. 58.00 lakh per shop on third floor, which is not possible. The assessee further stated that Assessing Officer relied on general statement of Pratik Agrawal, wherein in Q/A No.44 is stated that 35% was received by cheque and 65% in cash. The final decision was taken by Hemant Agrawal and Naresh Agrawal that there was reference o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er merely booked, (iii) adopting margin of profit 30% and (iv) the addition made under section 69A. The Ld.CIT(A) noted that Assessing Officer adopted and applied uniform rates of on-money for all floors irrespective location of shops. The Ld. CIT(A) was of the view that price of shops in different floors cannot be uniform as it depends upon location, entrance, size frontage etc. The Assessing Officer has not applied any such filters. Further assessee s contention was that price quoted were negotiable with WhatsApp images were relied without any additional and corroborative evidence. No benefit of discount offered by assessee was allowed. Considering the submission of assessee a reasonable percentage of 15% of gross on-money was allowed by Ld. CIT(A) (para 6.9). 8. On the other contention, Ld. CIT(A) noted that general trend of booking in real estate in Surat is that on-money received when booking was made and registration property is done when amounts are paid by cheque produced by the buyers. In some cases, there is an inordinate delay in getting the registration of property as the buyers faced difficulty in arranging such finance through financial agency or by paying from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch action was carried out in the case of Kuberji Group on 06.02.2020. During search action, certain incriminating materials were seized, the incriminating materials in the form of WhatsApp data, certain entry on the loose papers, statement of key person of the assessee was recorded on the basis of alleged incriminating materials. The Assessing Officer estimated the onmoney receipt of Rs. 175.30 crores and Assessing Officer considered the profit of on-money @ 30% as undisclosed income of assessee. The Ld. AR submits that assessee has already disclosed Rs. 13 crores for the said project under IDS 2016 and remaining amount was taxed as undisclosed income of assessee. The Assessing Officer extrapolated the figure of on-money on the basis of alleged incriminating material found in respect of few shops. The Assessing Officer applied the similar rate in respect of all the shops irrespective of different floors, location, frontage or size. The assessee was constructed the said project under joint venture with Kuberji Associates having 80% share as per MoU and the assessee was having 80% shares of such project. The Assessing Officer while making addition bifurcated the addition in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re between the assessee and Kuberji Associates. The Assessing Officer as per the decision of Jurisdictional High Court and various Benches of the Tribunal estimated only 30% of component of on-money as income of assessee. However, the ld. CIT(A) allowed 15% reduction in on-money on the ground of negotiation and term of payment. The ld. CIT(A) after reduction of 15% further reduced the profit from 30% to 13% only. The ld. CIT(A) reduced the profit without any comparable instances or on the basis of any scientific method. The assessee was undertaken commercial project. The profit in commercial project is always on higher side. The Tribunal in S.P. Enterprises estimated net profit @ 20% and in Shreenath Corporation @ 15%. On the taxability of addition under Section 115BBE of the Act, the ld. CIT-DR submits that once the addition is made under Section 69, the taxing of addition under the amended provision is automatic. 11. We have considered the submissions of both the parties on merit and carefully perused. We have also deliberated on various case laws relied by Ld. AR for the assessee before the lower authorities as well as before us. As recorded above, the Assessing Officer worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich document found during the search is related and not for the entire block period. The Hon ble Karnataka High Court in CIT Vs B. Nagendra Baliga (2014) 47 taxmann.com 331 (Kar) held that the Assessing Officer has not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimate basis. Further the Coordinate Bench of Tribunal in ACIT Vs M/s Amar Corporation Ltd. ITA No. 2036/Ahd/2007 and in Sayan Textiles Park Ltd. Vs ACIT in ITA No. 360/Ahd/2014 also held that question of extrapolation can only arise only in a situation when the documents give an indication that it was a regular occurrence in a systematic manner. Thus, in view of aforesaid factual and legal discussion, we uphold the order of ld. CIT(A) on our aforesaid observations. In the result, grounds of appeal raised by revenue as well as assessee are dismissed. 14. So far as taxing of addition under Section 115BBE of the Act is concerned, we find that no such provision was invoked by Assessing Officer while making addition in the assessment order. We further find that combination this bench in case of Dagina Jewellers (supra) held that when the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
