2021 (8) TMI 1204 - AT - Income Tax

Suppressed profit on sale of project - undisclosed income - Estimation of Net profit of suppressed sales - HELD THAT - This addition was duly and properly made on the basis of material discovered during the search. In our considered opinion learned CIT(A) has taken a correct view of the matter and has addressed all the issues. Accordingly, we uphold the order of learned CIT(A). Addition u/s.40(a)(ia) - Non deduction of TDS - expenses on account of construction expenses and on account of labour charges - HELD THAT - As the case of the appellant is covered by the decision in case of Bharati Shipyard 2011 (9) TMI 258 - ITAT MUMBAI and in case of DCIT vs. Ashika Stock Broking Ltd 2010 (11) TMI 555 - ITAT, KOLKATA . Therefore, it is held that the case of the assessee is covered u/s. 40(a)(ia) and the addition made by the AO on this account is upheld. Unexplained cash credit u/s. 68 - HELD THAT - We find that the assessee has duly submitted additional evidences before learned CIT(A). It was duly submitted that the amount received was booking advance and name of the party, his confirmation and photocopy of the PAN was also submitted. CIT(A) simply rejected the additional evidence on the ground that it was not submitted earlier - issue may be remitted to the Assessing Officer - Appeal by the assessee is allowed for statistical purposes. Rectification of mistake u/s 154 - Addition had been made on the order but the same remained to be added in the computation of total income - HELD THAT - We find ourselves duly in agreement with the order of learned CIT(A). The Assessing Officer having made addition by discussing in the assessment order and making the addition in the body thereof and has mistakenly omitted it from the computational part. Hence, in our considered opinion there is no infirmity in the order under section 154 correcting the same. As rightly pointed out by learned CIT(A) the merits in this regard could not have been gone into by the Assessing Officer in the proceedings under section 154 of the Act. Hence, we uphold the order of learned CIT(A). Addition u/s 68 - sundry creditors and advances for booking as the parties have not responded to the notice u/s 133(6) - HELD THAT - In the order of the Assessing Officer, only balances as at the closing of the year has been mentioned. It is not mentioned whether they arose during the year or they are coming from earlier year. In case they are coming from earlier year, addition under section 68 of the Act is not at all permissible. Hence, in our considered opinion this issue needs to be remitted to the file of the AO. AO shall examine the issue afresh in the light of our observation as above and thereafter he will pass an order in accordance with law.

Issues Involved:
1. Sustenance of impugned estimation of Net Profit.
2. Sustenance of additions u/s.40(a)(ia).
3. Sustenance of additions u/s. 68.
4. Validity of rectification order u/s. 154.
5. Validity of proceedings initiated u/s. 147.
6. Addition of unexplained cash credits u/s. 68.

Issue-wise Detailed Analysis:

1. Sustenance of Impugned Estimation of Net Profit:
The assessee appealed against the CIT(A)'s decision to uphold the Assessing Officer's (AO) estimation of Net Profit at ?89,50,560. The AO observed that the assessee suppressed profit on the sale of 'Morya Apartment' project, showing a sale consideration of ?1,00,00,000 in the registered agreement but actually receiving ?1,75,00,000, with ?75,00,000 unaccounted cash. The AO treated the difference as undisclosed income. The CIT(A) upheld this, noting the assessee admitted to receiving the cash and failed to rebut the AO's findings. The tribunal agreed with CIT(A), stating the addition was based on material discovered during the search and upheld the order.

2. Sustenance of Additions u/s.40(a)(ia):
The AO disallowed certain expenses amounting to ?13,85,565 due to non-deduction of TDS, adding back ?5,83,174 and ?3,51,848 for 'Morya Apartment' and 'Mayuresh Apartment' projects, respectively. The CIT(A) upheld the disallowance, referencing the Mumbai Tribunal's decision in Bharati Shipyard Ltd. vs. DCIT, which held the amendment to section 40(a)(ia) was not retrospective. The tribunal agreed, finding no need for interference.

3. Sustenance of Additions u/s. 68:
The AO treated ?1,15,000 received by the assessee as unexplained cash credit u/s. 68 due to lack of information. The CIT(A) rejected additional evidence submitted by the assessee for not being provided earlier. The tribunal remitted the issue to the AO for fresh consideration, directing the AO to take into account the additional evidence and grant the assessee an opportunity to be heard.

4. Validity of Rectification Order u/s. 154:
The AO rectified an order u/s. 154, adding ?6,00,000 and ?5,83,174 to the total income due to apparent mistakes in the original assessment order. The CIT(A) upheld the rectification, noting the additions were not subject to appellate adjudication and the AO acted within legal provisions. The tribunal agreed, finding no infirmity in the AO's rectification under section 154.

5. Validity of Proceedings Initiated u/s. 147:
The assessee challenged the validity of proceedings initiated u/s. 147 and the assessment order passed u/s. 143(3) r.w.s. 147. The tribunal did not specifically address this issue in the detailed analysis provided.

6. Addition of Unexplained Cash Credits u/s. 68:
The AO added ?51,99,883 as unexplained cash credits due to unverified sundry creditors and advances for flat bookings. The CIT(A) upheld the addition, noting the assessee failed to provide necessary confirmations and evidence. The tribunal remitted the issue to the AO, directing a fresh examination to determine if the credits arose during the year or were carried forward from previous years, as addition u/s. 68 is not permissible for credits from earlier years.

Conclusion:
- ITA No. 1995/Mum/2012: Partly allowed for statistical purposes.
- ITA No. 5264/Mum/2013: Dismissed.
- ITA No. 1466/Mum/2014: Allowed for statistical purposes.

Pronounced in the open court on 13.8.2021.

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