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TMI Blog2023 (12) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... ate assessment orders passed by Assistant Commissioner of Income Tax, Central Circle-4, Surat / Assessing Officer under section 143(3) r.w.s 153A of Income Tax Act, 1961 (hereinafter referred to as 'the Act' for the sake of brevity) dated 24.03.2022 & 23.03.2022. In all the appeal/cross appeals parties have raised certain common and interconnected grounds of appeal except variation of figures of additions, therefore, all the appeals / cross-appeals were clubbed, heard together and are decided by consolidated order to avoid conflicting decisions. For appreciation of facts, facts in IT(SS)A No.30/SRT/2023 in the case of Shree Kuberji Leisure & Infraspace LLP treated as "lead" case. The assessee in its appeal has raised the following grounds of appeal:- "1) The learned CIT(A) grossly erred in confirming addition of Rs. 47,30,310/- being 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uberji Group of Surat on 06.02.2020. The assessee is one of the entities of Kuberji Group, was covered in the search action. In the search action as per assessing officer various incriminating documents / evidences were found. Consequent upon, the cases of entire group were centralized by passing order under section 127 of the Act. Notice under section 153A dated 15.04.2021 was issued to the assessee to furnish return of income for various assessment years. In response to notice under section 153A, the assessee filed its return of income on 20.04.2021 declaring same income as declared originally income i.e., Rs. 88,75,880/-. Statutory notice under section 143(2) was issued to the assessee for scrutiny. 4. During assessment, Assessing Officer noted that assessee during the relevant period the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer after reducing the sale price shown with registered sale deed at Rs. 71.54 crores worked out total on-money at Rs. 175.30 crores. In order to determine the cost project, the Assessing Officer referred the matter to the District Valuation Officer (DVO) of the Income Tax Department, Ahmedabad. The DVO estimated the amount of construction at Rs. 136.31 crores. The Assessing Officer in para-6.3 of the assessment order recorded that the project of Shree Kuberji Textile World consists of 384 shops for sale. Out of 335 shops, sale deed of 44 shops were completed in assessment year 2019-20 thereby the Assessing Officer made bifurcation of on-money in assessment years 2019-20 and 2020-21 and considered the amount of Rs. 16.25 crores in assessment year 2019-20 and remaining amount of Rs. 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 jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no project-wise bifurcation and it was a mere reference the word "OM" and not "ON" is assumed to be on-money and this may be same estimate which was made for probable booking of three projects, which ought not to be considered for actual received of on-money. There is no reference of any rate of per square meter of any project. The assessee submitted that satakhat was seized on Annexure-BS-1 relating to shop No.3002 of Kuberji Textile World which contents the amount of sale value. The Assessing Officer further relied on loose paper at page No.142 of Annexure-BS-1 as recorded on page-4 of assessment order which relates to shop No.3001 & 3002 of Kuberji Textile World from premises of Dhirajbhai D Gangani. The Assessing Officer assumed that value of shops would be at Rs. 58.00 lakh out of which Rs. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 30% is too high when assessee has already disclosed Rs. 13.00 crores under IDS 2016. The assessee submitted that in various decisions profit is estimated from 1.00% to 13.00% and assessee also objected by treating the addition as taxable under section 115BBE of the Act. The assessee submitted that on such amount is business income and required to be taxed under normal rate as "business profit". To support such view, the assessee also relied on certain case law. 7. The Ld. CIT(A) on considering the submission made by assessee identified about core issues for his adjudication (i) the Assessing Officer adopted uniform rats of on-money on the basis of evidence / incriminating materials found in respect of a few shops (ii) Assessing Officer not excluded the shops which were not actually sold rather 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 Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive appeals and cross-appeals before the Tribunal. 9. We have heard the submission of Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Commissioner of Income Tax- Departmental Representative (Ld. CIT-DR) for the Revenue. The Ld. AR for the assessee submits that assessee has challenged the action in upholding @ 13.00% of on-money as well as taxing the addition under section 115BBE. Similarly, the Revenue has challenged the action of Ld.CIT(A) in granting / allowing deduction of 15% on the gross of on-money as well as applying net profit @ 13% of on-money against the addition @ 30% of on-money adopted by Assessing Officer. The ld AR for the assessee submits that assessee is a builder and developer and assessee developed a project "Kuberji World". During the relevant period, a search 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. 175.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tribunal directed to tax profit on undisclosed sales as business income at normal rate of tax including in case of DCIT Vs. Ram Narayan Birla ITA No. 482/JP/2015, ACIT Vs Sanjay Bairathi Gems Ltd. ITA No. 157/JP/2017, Fashion World Vs ACIT ITA No. 1634/Ahd/2016 and Dagina Jewellers in ITA No. 30/Srt/2022. 10. On the other hand, the ld CIT-DR for the revenue submits that during the search action, sufficient incriminating evidence substantiating the fact that assessee group was indulged in receiving on-money in its project. Such fact was duly corroborated by the statement of key person of assessee group. The Assessing Officer worked out the quantum of on-money in the project developed by the assessee. The Assessing Officer bifurcated the component of on-money as per share of joint venture 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer extrapolated the rate in respect of all 384 units. No independent investigation of facts was carried out by Assessing Officer during assessment proceedings. There is no refinance in the assessment order that the search party while preparing appraisal report suggested collection of on money in respect of all the units. There is no allegation of Assessing Officer that units were sold below the Jantri rate. No other independent evidence or material to substantiate the on-money in respect of 100% of unit is brought on record. 13. We find that Hon'ble Jurisdictional High Court in CIT Vs Standard Tea Processing Co. Ltd. (2013) 34 taxmann.com 31 (Guj) 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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