9911796707
TMI Blog2025 (2) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... on 10.01.2019 in the case of the assessee. In response to notice u/s 153A(a) of the Act issued and served on 10.10.2019, the assessee filed its return of income on 24.10.2019 declaring total income at Nil. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the assessee filed the requisite details from time to time. 3. During the course of assessment proceedings, the Assessing Officer noted that the assessee LLP is a partnership firm (on conversion from Ganraj Homes Pvt. Ltd. w.e.f. 03.06.2016) wherein Smt. Kavita Goel, Pinky Garg, Sulochana Garg, Mahavir Agarwal and Agrim Goel are the partners. The assessee firm is engaged in construction of residential and commercial projects and has executed a development agreement dated 10.10.2013 with M/s. Kalyanee Fortune Constructions, a partnership firm having its registered office at 3 AA, Edena Building, 97 Mk Road, Marine Lines, Mumbai on principal to principal basis for development of a piece of land at S.No.41, village-Sus, Mulshi, Pune, on revenue sharing basis. The share of gross sales proceeds of the project on the said land are to be apportioned between M/s. Kalyani Fort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent anything like, communications with sales representatives of other projects, negotiations with the customer wherein rates for standing units and units with higher specifications are specified, negotiations with the customer, wherein discounts may have been discussed, etc. 3. Affirmation on the part of the sales manager regarding acceptance of cash is merely rough notings made by the sales representatives in their personal capacity. 4. The sales representatives do not understand the intricacies of the various taxation laws and hence the words written by them do not have the same meaning as may be inferred for taxation purpose." 6. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He noted that the notings on the diary are not just any random notings but a comprehensive break down/calculation of the consideration along with the name of customers and flat numbers. Further the method of calculation of cash could not be said as conversation with sales representative or with any other person. Therefore, the arguments of the assessee that the details in the diary are mere negotiations are not correct. 7. So far as the argument of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Sr No Flat details Cash amount accepted including infrastructure charges Date of registry Consideration as per registered deed AY % of on money with resp. to registered deed (in Rs. in lakhs) 1 D-1603 17 15/10/2018 4918503 2019-20 34.56 2 D-803 18.64 20/11/2018 4710510 2019-20 39.57 3 D-802 4 14/12/2018 62,88,260 2019-20 6.36 4 E-601 0.75 04/01/2019 7438691 2019-20 1 5 D-1405 17.25 21/09/2018 5150459 2019-20 33.49 6 E-1501 25 02/02/2019 7819000 2019-20 31.97 7 E-601 27.25 04/01/2019 7438691 2019-20 36.63 8 D-202 20 03/01/2019 4606492 2019-20 43.41 9 E-1003 25 27/05/2019 Not submitted by Assessee 2019-20 NA 10 C-1103 31.25 27/04/2017 6805300 2019-20 45.92 11 B-602 40 01/11/2018 10468259 2019-20 38.21 12 A-502 37 26/11/2018 10522665 2019-20 35.16 13 B-501 15 17/10/2018 12542090 2019-20 11.95 14 D-902 14.25 30/11/2018 5319398 2019-20 26.68 15 D-404 10 18/01/2019 6755425 2019-20 14.80 2,89,64,000 10. From the above, he noted that the on-money component vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepting on-money and the method to calculate cash component is mentioned with example. Rs. 5600 is the rate per square feet. 1046.93 Sq. feet is the area of the flat to be sold, infra are infrastructure charges. All of these constitute agreement value. Minus 20 lakhs is the cash component involved in sale of flat. It is pertinent to mention here that the cash component for each category of the flats is different which ranges from 20 lakh to 38 lakh, The same is reproduced for ready reference. iii) As per scanned copy of page no.9 of diary no.3, the said page indicated that the calculation of agreement value and cash component. The value 58,61,968 is the amount in Rupee at the rate of 5600 for the area of 1046.78 Square Feet and 7,50,000 is the infrastructure charges. 66,11,968 is the surm of above figures (5600*1046.78+7,50,000). 10,00,000 to 12,00,000 is the cash component which may range from 10-12 Lakh. It is important to note that these calculations are given for two different situations, one when the cash component is Rs. 10 Lakh and another for amount of Rs. 12 Lakh. The copy of the relevant page is reproduced below. Furthermore, during the course of survey proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empted to corroborate the above noting from the noting found on the page no. 2 of Loose paper Bundle no.1 impounded from the same premises, wherein at sr. no. 2, there is mention of customer name as Venkat Charan A and in the column "involved" "10 lacs" is written and in column "received "it is written as "yes" The AO has held that that on verification from ledger extract of the Shri Venkat Charan it is found that the appellant has received a payment of Rs. 1 lakh only on 15/10/2018 and no payment is reflected in it till the date of Survey action i.e. 10/01/2019. Next payments shown in ledger are on 02/03/2019 for Rs. 1,60,000/- and on 06/03/2019 for Rs. 30,38,027/- all these payments through cheques. There is no mention of Rs. 10 Lacs in ledger. Therefore, the Ld. AO has concluded that cash has been received from the customers mentioned in the above-mentioned table. 6.9 Thus, the addition made by the AO on account of on-money received, which is not recorded in books of accounts, on the basis of impounded materials like documents/note book/loose paper/diary etc. is found to be corroborated by evidence. Further as regard extrapolation of on-money, the probability of acceptance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nwarranted, unjustified, and contrary to the provisions and scheme of the Act. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. 2. Without prejudice to Ground No. 1 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that if any addition needs to be sustained then that should only be restricted to the incriminating material found during the course of search proceedings. The addition made over and above such incriminating material, being merely on the basis of estimations is unwarranted, unjustified and contrary to the provisions of the Act and therefore deserves to be deleted. It be held that the Appellant be granted just and proper relief in this respect. 3. Without prejudice to Ground No. 1 and 2 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that in case additions are sustained on estimation basis, then the addition should be restricted only to the Gross Profit that might have been earned by the Appellant on such on-money. The addition made by the First Appellant Authority be reduced. The Appellant be grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the First Appellate Authority is on a very high side. The same should be substantially reduced. The Appellant be granted just and proper relief in this respect. 5. The Appellant craves leave to alter, delete, modify, add or amend any ground of appeal. ITA No.874/PUN/2024 (A.Y. 2019-20) 1. On facts and circumstances prevailing in the case and as per provisions and scheme of the Act it be held that, the First Appellate Authority erred in upholding the addition of Rs. 10,43,16,133/- made by the Learned Assessing Officer ('Ld. AO') as on-money received by the Appellant. The addition sustained is unwarranted, unjustified, and contrary to the provisions and scheme of the Act. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. 2. Without prejudice to Ground No. 1 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that if any addition needs to be sustained then that should only be restricted to the incriminating material found during the course of search proceedings. The addition made over and above such incriminating material, being merely on the basis of estimations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior to his joining the service when he was not aware of the affairs of the assessee firm at the time of sale. Further, none of the old employees whose handwritings in the diary were found was questioned / examined / called. 15. Referring to the details as per Annexure-4 placed in the paper book, Ld. Counsel for the assessee drew the attention of the Bench to the same and submitted that most of the flats were actually sold to the persons other than the name of the persons as per the incriminating documents, the details of which are as under: Sr. No. Flat No. as per incriminating document Name of the person as per incriminating document Name of the person to whom actually sold Booking amount Entry in Tally Agreement status as per incriminating document Date of entry in tally Actual date of registration 1 D 1004 Amar Nath Muraw Amar Nath Muraw 1,00,000 1,00,000 05-01-2019 12-09-2018 16-02-2019 2 D 902 Venkat Charana Venkat Charana 1,00,000 1,00,000 22-11-2018 15-10-2018 30-11-2018 3 D 1202 Swapnil Patil Swapnil Patil 1,00,000 1,00,000 25-11-2018 17-10-2018 21-02-2019 4 E 1003 Aditya Patil Kishore Krishna Panda 1,00,000 2,00,000 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mb documents, loose papers containing scribbling, rough / vague notings: i) PCIT vs. Umesh Israni (2019) 108 taxmann.com 437 (Bom) ii) CIT vs. Vatika Landbase (P.) Ltd. (2016) 67 taxmann.com 372 (Del) iii) CIT vs. Vivek Aggarwal (2015) 56 taxmann.com 7 (Del) iv) PCIT vs. Ajanta Footcare (India) (P.) Ltd. (2017) 84 taxmann.com 109 (Cal) v) CIT vs. Atam Valves (P.) Ltd. (2009) 184 Taxman 6 (P&H) vi) CIT vs. D.K. Gupta (2008) 174 Taxman 476 (Del) vii) Saaras Agro Industries vs. ACIT (2022) 143 taxmann.com 319 (Indore-Trib) viii) Ms. Priyanka Chopra vs. DCIT (2018) 94 taxmann.com 122 (Mumbai-Trib) ix) Nagarjuna Construction Co. Ltd. vs. DCIT (2012) 23 taxmann.com 239 (Hyd.) x) S.P. Goyal vs. DCIT (2002) 82 ITD 85 (MUM.) (TM) 19. Referring to the following decisions, he submitted that where the Assessing Officer relies upon the statements or documents to corroborate the additions made, the said statement has to be read in totality and cannot be read in piece-meal: i) Chander Mohan Mehta vs. ACIT (1999) 71 ITD 245 (Pune) ii) DCIT vs. Kanakia Hospitality (P.) Ltd. (2019) 110 taxmann.com 4 (Mumbai - Trib.) 20. Referring to the decision of the Mumbai Bench of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-money received. 26. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). He submitted that during the course of survey action the statements of the key personnel of the assessee firm were recorded and they have categorically stated the modus operandi adopted by the assessee regarding receipt of on-money on account of sale of flats and the full details were given on account of flats sold by the assessee. Further, the Assessing Officer has taken only 20% of the total consideration as mentioned in the registered sale deeds as on-money received by the assessee firm and its partner and has apportioned the same to the profit sharing ratio of the assessee firm along with M/s. Kalyanee Fortune Constructions. Since the assessee has sold most of the flats below the prevailing market rates and in certain cases other charges have also not been taken into account and the assessee has not recorded the on-money in its books of account, the Assessing Officer was fully justified in bringing to tax the amount of on-money received by the assessee, the details of which were found and extrapolating the on-money for other flats which were sold but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of both sides. We have also considered the various decisions cited before us by both sides. We find the Assessing Officer in the instant case made addition of Rs. 2,42,12,902/- as on-money received by the assessee being 20% of the total consideration as mentioned in the registered deeds which works out to Rs. 4,34,79,737/- for assessment year 2017-18 as per extrapolation since no evidence of receipt of any on-money was found but flats / shops have been sold during the year. Since as per the joint venture agreement the share of the assessee and M/s. Kalyanee Fortune Constructions having profit sharing ratio as 55.36% and 44.64%, respectively, he determined the share of the assessee at Rs. 2,42,12,902/- which has been upheld by the Ld. CIT(A). The reasoning of the Ld. CIT(A) has already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the entire addition was made on the basis of certain loose papers found and the statements of some of the employees. However, not a single question was aske ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject has deleted the addition on account of on-money received in the project Ganga Acropolis for assessment year 2019-20 by observing as under: "8.1 Decision on ground no 5 & 6: These grounds are on the issue of addition of Rs. 7,17,10,866/- on account of alleged on-money received. As both the grounds are inter-related, the decision on both is taken combined. 8.2 The AO, vide assessment order has mentioned that information was flagged on the insight portal regarding on-money receipt by the appellant and its partner on sale of flats/units in their project "Ganga Acropolis", and during the survey on site office of the said project, evidences of on-money received by the appellant and its partner were found. Further, average 20% of stamp duty value was taken for estimating additions of on money in those flats where extrapolation was applied. 8.3 Moreover, the AO found out that 20% of total consideration as mentioned in registered deed made during AY 2019-20 i.e. Rs. 16,06,42,620/- is on-money received by appellant firm and its partner during AY 2019-20 and the same had escaped assessment and was required to be taxed. Since, appellant and its partner i.e. & M/s. Ganraj Homes LLP i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transactions with the assessee as decided by the Hon'ble Supreme Court in the case of Central Bureau of Investigation Vs VC Shukla. 19. I find that a survey action was conducted in the appellant's own case on 31.01.2020 i.e. one year after the survey on M/s Ganraj Homes LLP. However, there is no mention in the order of assessment of any incriminating evidence having being found at the premise of the appellant. It is also imperative that the presumption u/s. 132(4A) of the Act is applicable to the person from whose possession or control the incriminating material is found & seized. Based on the incriminating material found from, third party search but not belonging to the appellant, this presumption will not be applicable unless corroborated by other evidence. Presumption available under section 132(4A) can be drawn against the person in whose case search is authorized and from whose possession or control books of account, diary or documents are found in the course of search. Presumptions regarding correctness of contents of books of account etc, cannot be raised against the third party. 20. Further, even if the loose sheets are considered to be admissible as evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm was not genuine. There are many surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof in these matters. * Omar Salay Mohamed Salt v. CIT [1959] 37 ITR 151 (SC) "...On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this court." 22. Therefore, I am of considered view that addition made of Rs. 13,95,000/- cannot be sustained hence deleted." 8.5 In view of the above, the AO is directed to delete the addition of Rs. 7,17,10,866/- made on account of on-money receipt. Accordingly, the grounds of appeal no. 5 & 6 raised by the appellant are allowed." 34. Thus, a perusal of the order of the Ld. CIT(A) in case of other partner in the joint venture namely M/s Kalyanee Fortune Constructions shows that the Ld. CIT(A) has deleted the additions for assessment years 2016-17, 2017-18, 2018-19, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 132(4A) on seizure of fax message and it was upon assessee to rebut that presumption by offering a plausible explanation. However, as mentioned earlier, the statements of the employees in the instant case were recorded u/s 131 of the Act and not u/s 132(4A) of the Act. Further, the managing partner of the assessee firm has completely denied to have received any on-money and neither he was confronted subsequently nor any of the customers who are identifiable were examined either by the Investigation Wing during the course of search or post-search enquiries or by the Assessing Officer at the time of assessment proceedings. So far as the decision of Hon'ble Bombay High Court in the case of Harish Textile Engrs. Ltd. vs. DCIT (supra) relied on by the Ld. CIT-DR is concerned, we find in that case the extrapolation on the basis of loose papers found during the course of search was upheld by the Hon'ble Bombay High Court. However, it is seen that the assessee in that case has accepted that it has received on-money whereas in the instant case the director / partner of the assessee firm has completely denied to have received any such on-money. Further, neither he was confronted subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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