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TMI Blog2022 (9) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... sion lends credence to the statement of Mr.Sorathiya, we find is also not acceptable. Nothing has been brought to our notice by the Revenue to demonstrate the parity of the facts and circumstances of those cases with that of the assessee. The Revenue has not even pointed out the facts and circumstances in which surrender/admission had been made by each such concern to the Settlement Commission. It appears to be a sweeping generalized exercise of the Revenue in treating the facts and circumstances of the assesses case being similar to the other group cases. Assessment of incomes cannot be done on this basis. There is no basis, therefore, we hold, for drawing an analogy from the group concerns admission before the settlement commission, with the assessee s case so as to derive that the assessee also had received on money. Contention of the Revenue that even applying the alternate basis of determining the on money received by the assessee by taking the maximum rate charged during the year as the actual rate , we find that the same also cannot be the basis. The logic applied that rates are constant during a particular period does not impress us, until demonstrated statistically. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ground that the issue involved in all the appeals was identical arising from common set of facts. All the appeals were therefore taken up together for hearing and are being disposed of by way of this common consolidated order for the sake of convenience. 2. 1. The solitary issue involved in all the appeals, it was stated, related to addition made to the income of the assessee on account of alleged on- money received by it in the business of real estate development carried out. It was contended by the ld. Counsel for the assessee that in all the three years involved the addition was based on a common premise and his arguments therefore were to be considered with respect to all the three years involved. 3. Briefly referring to the facts of the case ld. Counsel for the assessee pointed out that a search operation was carried out in the Bafna Panchal Group of cases on the 7/01/2014 and survey was carried out in the case of the assessee on the very same date. On the basis of documents/loose papers found during the course of search/survey, notice u/s. 148 of the Act was issued for two assessment years i.e. A.Y. 2012-13 2013-14. In response to the same, return of income was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 635 955500 1505 2011-12 508000 353 224155 6 635 825000 1299 2011-12 508000 559 354965 105 600 630000 1050 2011-12 480000 808 484800 214 295 320000 1085 2011-12 236000 773 228035 303 LIME 640000 1620 2011-12 316000 238 94010 8 635 1180000 1858 2011-12 508000 0 0 305 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 590 875000 1483 2012-13 472000 367 1216530 211-A 295 320000 1085 2012-13 236000 765 225675 2 12- A 295 320000 1085 2012-13 236000 765 1225675 416 295 320000 1085 2012-13 236000 765 225675 318 295 445000 1508 2012-13 236000 342 100890 407 285 310000 1088 2012-13 228000 762 217170 215 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4592000 1048 2012-13 3504000 802 3512760 14110 17317000 1227 11288000 8788960 406 395 450000 1139 2013-14 316000 1244 491380 409 285 450000 1579 2013-14 228000 804 229140 408 285 521000 1828 2013-14 228000 555 158175 404 395 600000 1519 2013-14 316000 864 341280 403 395 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 435 31692500 32348000 33243485 207,208,209,210 ,210A 1425 1401000 983 2011-12 2019000 2019000 Grand Total 41860 33093500 34367000 35262485 4. Ld. Counsel for the assessee contended that the ld. CIT(A) however restricted the undisclosed sales to 12,79,000/-, 14,09,600/- and 51,41,600/- for all the three impugned assessment years by calculating the same on the carpet area sold and not the super built up area as done by the A.O. and restricted the addition, his reasoning being that the sale deed executed by the assessee was on carpet area and not on super built up area and therefore the excess differential received by the assessee as per the statement of Mr. Sorathia of Rs. 800 per sq. Ft was to be applied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the ld. CIT(A),but the Revenue s appeal had been dismissed on account of low tax effect involved. 6. Having pointed out the facts relating to the case as above, ld. Counsel for the assessee proceeded to make his arguments against the order of the ld. CIT(A). His arguments in brief against the same were as under: i) that the addition was based entirely on the statement of an alleged allottee of the property sold by the assessee, Mr. Devji Sorathiya, which statement was unreliable and could not be taken cognizance of for the following reasons: he had nothing to do with the property whose actual allottees were his wife and son and both had denied payment of any on- money, by way of an affidavit filed. Our attention was drawn to the copy of the affidavit placed before us at PB 121 122. Mr. Sorathia himself was not directly aware of the rate at which the property was allotted having admitted in his statement that it was his son from whom he had confirmed on phone the rate of Rs. 2400 per sq. ft. In this regard he drew our attention to the copy of the statement recorded of Mr.Devji Sorathia u/s 131(1A) of the Act on 07-01-2014 placed before us at paper book pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea (Sq. ft.) (2) Total Sale value (Rs) (3) Average Selling Price (Rs) (4)=(3)/(2) Undisclosed on-money receipt (5)={Rs.2400- __ (4) x (2)_ A.Y. 2012-13 212 178.75 320000 1 790 1 09 000 212 0.00 0 0 0 308 240.00 5 50 000 2 292 26 000 1 389.00 9 55 500 2456 0 6 389.00 9 51 000 2 445 0 105 367.00 10 00 000 2 725 0 214 178.75 4 40 000 2,462 0 303 240.00 6 40 000 2 667 0 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 4 00 000 2 238 29000 307 240.00 8 50 000 3 542 0 417 175.00 4 00 000 2286 20000 304 240.00 6 40 000 2 667 0 204 363.00 8 85 000 2 438 0 9 389.00 9 00 000 2314 33 600 5 389.00 10 00 000 2571 0 2 389.00 20 25 000 5206 0 3 389.00 20 25 000 5206 0 4 389.00 20 25 000 5206 0 111-112 734.00 28 00 000 3 815 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Settlement Commission. It was contended that the orders passed by the Settlement Commission had no binding force and further were based on the facts of each particular case and the ld. CIT(A), without being aware of the facts of those cases, applied the net profit rate surrendered in the other group concern. Ld counsel for the assessee contended that the assessee having returned net profit of 10%, 10%, 15% in all the three years involved, the said net profit should be accordingly applied. 7. Per contra ld. D.R. contended that the statement of Mr. Devji Sorathia could not be dismissed as unreliable since document found during survey at the assesses premises revealed him to be the co-owner of 4 shops with his son ,though subsequently the allotment was made in the name of his wife and son. He contended that Mr.Sorathiyas connection with the property cannot therefore be ruled out completely. Ld.DR further contended that the fact of on-money received was arrived at also on the basis that within a period of time properties were allotted at different rates which was not justifiable since there couldn t possibly be much fluctuation in price of property in a short period of time. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F Y 2011-12 as mentioned towards bottom of the table at Para No. 6.7 above. 8. Ld. D.R. contended that the AO s finding that even as per the maximum rate charged by the assessee being applied to the other parties, for determination of on money received, the quantum of undisclosed income came to the same as based on the statement of Mr. Sorathiya and therefore the AO had adopted the basis of statement of Mr. Devji Sorathia for determining the undisclosed income. He further contended that all the case laws referred to by the Ld.counsel for the assessee were distinguishable. Ld.D.R. further contended that the extrapolation was also based on the admission of the group concern before Settlement commission as also the net profit rate applied. 9. We have heard both the parties and have gone through the orders of the authorities below as also the documents and case laws referred before us. The grievance of the assessee before us against the order of the Ld.CIT(A) is twofold: on account of holding that the assessee had earned on money on booking/allotment of its properties during the impugned years before us. and against estimating profits for the said years by applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts pertinent for adjudication of the issues before us, we shall now proceed to deal with both the contentions of the Ld.Counsel for the assessee before us. 13. We shall first deal with the challenge of the assessee to the basis with the Revenue for holding that on money had been received on properties sold by the assessee, since the sustainability of the net profit addition rests on this finding, for the reason that in the absence of any on money received by the assessee, there is no other reason brought to our notice for rejecting the book results of the assessee as unreliable. 14. The argument of the Ld.Counsel for the assessee , in this regard that the statement of Mr.Devji Sorathia revealing higher rate having been agreed to be paid, as compared to the contracted rate, ,which was the primary basis for finding that on money had been received , was unreliable, we find merit in the same. Mr.Sorathia, it is not denied, is neither the owner of the stated shops, which were in fact owned by his son and wife, nor was his basis of stating the rate of purchase of shops at Rs.2400/- based on his own knowledge. It was admittedly based on what he was told by his son on phone. Mr.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one on this basis. There is no basis, therefore, we hold, for drawing an analogy from the group concerns admission before the settlement commission, with the assessee s case so as to derive that the assessee also had received on money. 16. As for the contention of the Revenue that even applying the alternate basis of determining the on money received by the assessee by taking the maximum rate charged during the year as the actual rate , we find that the same also cannot be the basis. The logic applied that rates are constant during a particular period does not impress us, until demonstrated statistically. It is not to be forgotten that the exercise being indulged into by the Revenue authorities is determination and assessment of income of assesses. The said exercise may not require finding of income earned to be established with certainty to make any addition of the same, and can be made on the basis of surrounding facts and circumstances demonstrating to a large degree the fact of earning income, but still there has to be a substantial basis for the same. Pure assumptions , estimations and guess works cannot be the basis for determining incomes. The endeavour of the Revenue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent to search action carried out at Bafna Panchal Group cases u/s 132 of the Act and accordingly present assessment is required to be carried out u/s 153C of the Act and accordingly notice issued u/s 148 of the Act is bad in law and consequential order passed u/s 143(3) r.w.s 147 of the Act is required to be quashed. 4. In law and in facts and circumstances of appellant's case, the Ld. CIT (A) has erred in estimating net profit on the Turnover shown in the books of accounts as well as on money of Rs.12,79,000/- calculated on the basis of statement of Shri Devji Sorathia without appreciating the fact that there were no evidences found during the course of survey/ search proceedings which indicates that the Appellant has earned on money on sale of shops/ offices as stated in the statement of Shri Devji Sorathia. 5. In law and in facts and circumstances of appellant's case, the Ld. CIT(A) has erred in calculating on money on sale of shops/ offices in respect sale of all shops / offices and in all assessment years merely on the basis of statement of single buyer Shri Devji Sorathia without appreciating the fact that statement of one buyer cannot be taken as base for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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