2023 (7) TMI 563 - AT - Income Tax

On-money receipts - undisclosed receipts - Net profit estimation - HELD THAT - As relying on Jay Builder 2012 (12) TMI 1194 - GUJARAT HIGH COURT we decide the issue directing the AO to estimate the addition to 15% of on-money receipt as upon quashing the order passed by the CIT(A). Appeal of the assessee is partly allowed.

Summary

Issues Involved:
The appeal challenges the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad, arising from the assessment under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2020-21.

Issue 1: Undisclosed Income Assessment
The appellant, a firm engaged in construction, declared a loss in its income tax return. Subsequently, a survey under section 133A revealed on-money receipts and undisclosed expenses. The Assessing Officer (AO) made an addition to the entire undisclosed income, which was later restricted on appeal to 20% of the net profit of the undisclosed receipt. The appellant argued for a lower rate based on on-money received. The Hon'ble Jurisdictional High Court had previously restricted additions to 15% of on-money receipts in a similar case. The Tribunal, following this precedent, directed the AO to estimate the addition at 15% of the on-money receipt of Rs. 1,32,70,000, thereby partially allowing the appeal.

Conclusion:
The Tribunal's decision in this case aligns with the precedent set by the Hon'ble Jurisdictional High Court, emphasizing the application of a 15% rate for additions related to on-money receipts in similar circumstances.