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TMI Blog2020 (1) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... ement were relied However, in the case of on-money of 12 crores has been disclosed based on statement of units holder. Therefore, the receipt of on-money has been taxed and disclosed by the assessee. Further, where ratio of the Jurisdictional High Court have been applied wherein they have held that only profit embedded in on-money receipts is to be taxed and not the entire receipts. Hence, said decision has no application in the case of the assessee - Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... ived on this account during current year. Thus, the assessee-company has accepted undisclosed income of ₹ 12 crore to buy peace of mind to avoid litigation and unnecessary harassment to its customers. During the course of assessment proceedings, the AO has made some calculation based on statement of 17 members and worked out average value of ₹ 16,05,500 per unit and total price of 432 units was worked out to ₹ 68.43 crores. The AO, after placing reliance on the decision of Hon'ble Supreme court in the case of CST v. H.M. Esufali [1973] 32 STC 77 (SC) has extrapolated the on-money and worked out on-money received by the assessee from 432 members at ₹ 68,43,28,400 including sale consideration plus on-money and after allowing leverage of 5% considered for total consideration including on-money receipt at ₹ 65,01,11,980. The AO, therefore observed that the total on-money receipt is worked out at 21.66% of total sale consideration, and after taking into consideration all the apprehensions raised by the assessee in the reply to show cause notice. In view of this, the AO has worked out on-money of ₹ 17,97,63,776/-[65,01,11,980 X 75,88,900/ 2,74,45,100], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President Industries, 154 CTR 372 and in the case of Jay Builders v. ACIT, 33 taxmann.com 62 and also decision of Hon'ble ITAT, Ahmedabad in the case of Kishor Telwala 64 TTJ 543. It was contended that the addition could be made only in respect of those units where evidences relating to receipt of on-money has been found and not in respect of other units where there are no such evidences. Without prejudice, it was further claimed that even otherwise also the entire on-money cannot be taxed in the year of receipt as the same is required to be taxed in the year in which actual sales takes place. After considering the explanation of the assessee, and applying judicial pronouncements as discussed in the appellate order, the CIT(A) has given his final finding in para 7.29 and 7.30 which reads as under: "7.29 The appellant has disclosed the on-money of ₹ 12 crores for the year under consideration as a result of survey action. Again, even if someone goes by the stand of the AO that there was on-money of ₹ 5,97,63,776/- also which was over and above the on-money of ₹ 12,00,00,000/- which were earned by the appellant on account of sale of the flats during the year unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the appellant for taxation is even much more than the net profit of 15% of the entire on-money of ₹ 17,97,63,776/- (i.e. the on-money of ₹ 12,00,00,000/- as offered by the appellant for taxation + the on-money of ₹ 5,97,63,776/- as added by the AO to the total income of the appellant) and therefore this addition of ₹ 5;97,63,776/- is not sustainable and accordingly this addition of ₹ 5,97,63,776/- is hereby deleted. Thus, the grounds of appeal nos, 4, 5, 6, 7, 8 and the additional ground of appeal of the appellant are allowed." 7. Being aggrieve, the Revenue has filed this appeal before us. The ld. CIT(DR) relying on the order of the AO, submitted that the AO had worked out on-money estimate on the basis of statement recorded from 17 persons, who booked Bunglow in the Garden City. Thus, the on-money receipt of ₹ 17.97 crores was worked out as received from all the 432 units booked. He further submitted that the assessee did not co-operate in the course of search proceedings, however post-search survey enquiries were made, and summons were issued to 22 persons out of which 17 person have admitted on-money receipts. Therefore, the AO re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 131 of the Act from 17 person and arrived at conclusion that ratio of on-money comes to 21.66% of total sale consideration of the project in respect of 432 units. Thus, the statement of 4 % has been utilized for making extrapolation to 96% units. Accordingly, on-money was estimated at ₹ 17.97 crores out of ₹ 12 crores disclosed by the assessee was reduced and balance was added. However, the CIT (A) observed if there was on-money of ₹ 5,97,63,776/- also which was over and above the on-money of ₹ 12,00,00,000/- which were earned by the appellant on account of sale of the flats during the year under consideration, then also the total on-money would come to ₹ 17,97,63,776/-. However, in view of decisions of Hon'ble High Court of Gujarat and also Hon'ble ITAT, Ahmedabad and many other Courts as discussed in detail in just preceding paragraphs of his appeal order this entire on-money of ₹ 17,97,63,776/- cannot be treated as profit or income of the appellant. In view of decisions of many Hon'ble Courts only profit embedded in such receipts of ₹ 17,97,63,776- being on-money can be taxed. Even if the profit @ 15% of this amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, but only net profit rate could be applied on unaccounted sales/receipts for the purpose of making the addition. 12. Similarly in the case of CIT v. President Industries [2002] 258 ITR 654 (Gujarat)head note reads "Section 69B, read with section 256, of the Income-tax Act, 1961 - Undisclosed investments - Assessment year 1994-95 - Whether amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales - Held, yes - During survey it was found that assessee had not disclosed certain sales in books of account - Whether Tribunal was justified in holding that unless there was a finding that investment by way of incurring cost in acquiring goods which had been sold, had been made by assessee and that had also not been disclosed, only net profits embedded in sales, and not wholesale proceeds itself, would be treated as undisclosed income of assessee - Held, yes". 13. In the light of above discussion, and judicial pronouncements, we of the considered opinion that Ld. CIT (A) was justified in deleting the addition made on account of estimation of on-money. We observe that decision of Calcutta High Court in the case of Amal Kumar Chakraborty v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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