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TMI Blog2021 (6) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in the appeal filed by the assessee and dismissed the issues raised by the Revenue. The assessee had already pleaded that on-money transactions were offered by the assessee‟s group concerns @12% of on-money receipts before the Hon‟ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profit estimation in the hands of the assessee herein by following 12% thereof from the order of Hon‟ble Income Tax Settlement Commission. Accordingly, we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration. Accordingly, the ground No.1 2 raised by the assessee is partly allowed. - ITA no.2967/Mum./2019, ITA no.2891/Mum./2019, ITA no.2968/Mum./2019, ITA no.2892/Mum./2019, ITA no.2969/Mum./2019 - - - Dated:- 11-6-2021 - Shri Mahavir Singh, Vice President And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri Vijay Mehta For the Revenue : Shri Prashant Kumar Gupta ORDER PER S. RIFAUR RAHMAN, A.M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total: 66,00,93,401 3. In response to the show cause notice, the assessee replied that the project Prasadam‟ was at a very initial stage and there is hardly any construction cost which was incurred. Since it was in an initial stage, there is no question of taxing any income. Further, it was submitted without prejudice plea that in the event of taxing the cash sales for the money received during this assessment year as an on money, the entire amount of cash sales could not be brought to tax, but only the net income therefrom. Also it was submitted that it should be taxed only in the year in which the project is completed or when the sale is in respect of the said transactions are offered to tax. The Assessing Officer rejected the submissions of the assessee and according to the Assessing Officer the income which was proposed to be taxed was not something which was recorded in the books of account of the assessee. This would not have offered to tax, had the search not taken place. Further he observed that the assessee had not given the details of the person who had actually paid the on money like the name, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts pertaining to the assessee before it, the same cannot be blindly applied to all other cases. He also observed that at best the decision of the Settlement Commission can only be a guiding factor and cannot be binding in other cases. 5. Further, the assessee submitted before the learned CIT(A) that the on money should be taxed in the year of completion of the project or the year in which the corresponding sales are shown. The learned CIT(A) observed that the assessee had admitted to receiving the on money, no further details as to the flat numbers for which the on money received or parties who have made the payment in spite of a specific query in this case by the Assessing Officer it was not furnished. He observed that even during appellate proceedings, the assessee could not furnish any details regarding this amount and this is not forming the part of the regular books of accounts nor the exact source is proved by the assessee. Further, he observed that if the assessee takes inordinate time to complete the project or abandons the project and never completes it, the money received during the year will never be brought to tax. The learned CIT(A) observed that assessee rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also contending all along that the receipts are on account of on money and it was recorded as such in the parallel books of account. He observed that in some of the cases of the group, 12% of the same was offered as income before the settlement commission and the same was accepted. From the facts as emerging from the material on record and the assessee s averments, it could be concluded that the entries made in the parallel books of account are regarding the on money receipts by the assessee. The source is explained as being cash sales from the respective projects, therefore, he held that it has to be treated as business receipts and not cash credit under section 68 of the Act. 7. The learned CIT(A) observed that next issue is the question of the percentage of money which has to be brought to tax. He observed that it is the assessee s contention that the entire on money cannot be taxed because of substantial amount. In fact, the entire amount was incurred as expenditure. The material evidencing the receipt of on money or the parallel books of accounts maintained by the assessee group. These parallel books of accounts also have a record of cash expenses. He observed that the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unjustified and liable to be deleted. 3. Without prejudice to the above, the Ld. CIT(A) has erred in estimating the income @25% of on money received without appreciating the fact that as per parallel books of account, the overall group had incurred huge loss and income from on money was estimated @12% in other group entities before the Hon'ble Settlement Commission and the same was accepted @12% and hence, the income from on money may be estimated @ 12% as against estimated @25% by the CIT(A) and accordingly, relief may be given to the appellant. Grounds raised by the Revenue in ITA no.2891/Mum./2019 A.Y. 2013-14 1. Whether on the facts and circumstances of the case and in law the CIT(Al erred in holding that the cash received by the assessee was in the nature of business receipt and could not be treated as income u/s.68 when the assessee did not discharge its onus and the identity, genuineness of the transaction and creditworthiness of the parties have remained unexplained ? Whether on the facts and circumstances of the case and in law the CIT(Al erred in restricting the disallowance @ 25% of the cash received when no evidence of expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit and loss account and hence, the addition confirmed @25% of inflation of expenses is without any justification and liable to be deleted. 5. Without prejudice to the above and without accepting and admitting, the Ld. CIT(A) failed to appreciate that as per parallel books of account, the group had overall incurred huge loss and income from inflation of expense was treated as part of unaccounted turnover and estimated income thereof @12% in other group entities before the Hon'ble Settlement Commission and the Settlement Commission accepted the same @12% and hence, the income from inflation of expenses may be estimated @12% as against estimated @25% by the Ld. CIT(A) and accordingly, relief may be given to the appellant. Grounds raised by the Revenue in ITA no.2892/Mum./2019 A.Y. 2015-16 1. Whether on the facts and circumstances of the case and in law the CIT(A) erred in holding that the cash received by the assessee was in the nature of business receipt and could not be treated as income u/s.68 when the assessee did not discharge -its onus and the identity, genuineness of the transaction and creditworthiness of the parties have remained unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudice to the above, the Ld. CIT(A) has erred in estimating the income @25% of on money received without appreciating the fact that as per parallel books of account, the overall group had incurred huge loss and income from on money was estimated @12% in other group entities before the Hon'ble Settlement Commission and the same was accepted @12% and hence, the income from on-money may be estimated @ 12% as against estimated @ 25% by the ld. CIT(A) and accordingly, relief may be given to the appellant. 9. Before us learned Counsel for the assessee submitted that the grounds no.1 and 2, raised by the assessee are relating to year of taxability of on money and he brought to our notice the findings of the learned CIT(A) in his order at Para 4.8 and submitted that this issue is covered by the order of Co ordinate bench in the case of Tulip Land And Developers P. Ltd. v/s DCIT, ITA No.2980, 3727/Mum./2019, dated 10th February 2021, it is a decision in the case of the sister concern of the assessee wherein it was held that on money has to be taxed as per the method of accounting followed by the assessee. With regard to ground No.3, the addition on account of 25% of the on mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal of the Ahuja group. The issue before us is only consideration of the above said on money to be taxed under section 68 of the Act or Based on the findings of the learned CIT(A) that receipt of on money has to be taxed only on net income and estimated net income @25% of the gross on money received. We notice from the submissions of the learned Counsel for the assessee that the above said issues are already considered by the Co ordinate Bench in Tulip Land And Developers (supra) and Bhalchandra Trading P. Ltd. (supra) and decided the issue in favour of the assessee in the appeal filed by the assessee and dismissed the issues raised by the Revenue. For the sake of clarity, it is reproduced below: Bhalchandra Trading Pvt. Ltd. v/s DCIT ITA no.2977 2978/Mum./2019 Order dated 25.05.2021 7.1. We have heard ld. DR and perused the materials available on record. We find that the ld. AO had proceeded to make an addition u/s.68 of the Act towards on-money received by the assessee for sale of flats. It was also submitted by the assessee before the ld. AO that there were certain unaccounted business expenses made by the assessee out of the on-money received and hence, only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had incurred certain business expenses out of such on-money which are kept outside the books of accounts. Hence, it will be just and fair that only the profit element embedded on any such undisclosed transaction could be brought to tax on an estimated basis. The assessee had already pleaded that on-money transactions were offered by the assessee‟s group concerns @12% of on-money receipts before the Hon‟ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profit estimation in the hands of the assessee herein by following 12% thereof from the order of Hon‟ble Income Tax Settlement Commission. Accordingly, we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration. Accordingly, the ground No.1 2 raised by the assessee is partly allowed. 14. With regard to grounds no.4 and 5, raised by the assessee in its appeal in assessment year 2015 16, this issue also considered by the Co ordinate Bench in Bhalchandra Trading Pvt. Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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