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TMI Blog2025 (3) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... n a categorical finding that the terms of payments were subsequently changed and Mrs Maya Garg has paid Rs. 10 lakhs more in cheque and reduced the cash component by same amount. As the total amount paid by Mrs Maya Garg has remained the same and only the cash component has been reduced due to increase of equivalent amount in cheque, the finding of the CIT(A) cannot be faulted with. Accordingly, the ground of revenue is dismissed. Whether the entire receipt in cash should be taxed as income of the assessee? - Conclusion of the AO that there is no evidence of unaccounted cash expenses is factually incorrect. Having found that there are evidences indicating expenses in cash, it would be proper to estimate the net income embedded in the gross cash receipt. The CIT(A) has estimated the same at 50% of the gross cash receipt. This is over and above net profit of 55.43% shown by assessee in the return of income filed u/s 139. The assessee has offered additional income of Rs. 10,79,13,346/- which comes to 44.37% of the gross cash receipts. The estimation of net profit is basically a factual issue and the rate of profit would vary from case to case depending upon the facts involved in ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Pawan Singh, Judicial Member And Shri Bijayananda Pruseth, Accountant Member For the Appellant : Shri Hardik Vora, AR For the Respondent : Shri Ravinder Sindhu, CIT-DR ORDER PER BIJAYANANDA PRUSETH, AM: These six appeals by the assessee and revenue emanate from the orders passed under section 250 of the Income-tax Act, 1961 [in short, 'the Act'] of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [in short, the 'CIT(A)'], dated 15.09.2023 and 25.04.2024 for the assessment years (AYs) 2018-19, 2019-20 and 2021-22. Since facts are almost similar, with consent of both parties, the appeals were heard together, and a common order is passed for the sake of convenience and brevity. The separate grounds raised by the assessee in ITA No.632/SRT/2024 will be discussed and decided separately after deciding the common issues in other years. The ITA No. 762/SRT/2024 is taken as 'lead case'. 2. The grounds of appeal raised by the revenue in ITA No.762/SRT/2024 are as under: "1) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in restricting the addition of Rs. 24,45,10,934/- made by the AO on account of unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries reported in 258 ITR 654, CIT Vs Gurubachhan Singh Juneja reported in 302 ITR 63 especially when the facts involved in these cases are not identical to the assessee's case because the issue decided of unaccounted sales of goods and not receipt of on-money in construction/development business 6) On the facts and in the circumstances of the case and in law the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 7) It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that the AO may be restored to the above extent. 8) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made the facts and in the circumstances of the case and in law, the Ld. CIT (A)-4, Surat ought to have upheld the order of the Assessing Officer." 3. The grounds of appeal raised by the assessee in ITA No.41/SRT/2024 are as under: "1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(Appeals) has erred in confirming the addition of Rs. 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentional nor deliberate. Therefore, the assessee requested to condone the delay in the interest of justice. 5. On the other hand, learned Commissioner of Income-tax - Departmental Representative (ld. CIT-DR) for the revenue submitted assessee has failed to adduce 'sufficient cause' for the delay; hence, delay should not be condoned. 6. We have heard both the parties on this preliminary issue and find that there is a delay of 63 days. We find that assessee was neither negligent not deliberate in filing the present appeal before the Tribunal. The reasons given in the affidavit for condonation of delay would constitute sufficient cause for delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing. 7. The ld. AR of the assessee did not press ground No.4 in ITA No. 41/SRT/2024, the same is accordingly dismissed as not pressed. 8. Brief facts of the case are that the assessee is a partnership firm engaged in the business of real estate development. It belongs to the Laxminarayan Jethmal Garg group of Vapi. A search and seizure action u/s 132 of the Act was carried out in case of the assessee on 08.12.2021. Additionally, a search and seizure oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash receipts was not accepted. The CIT(A), however, accepted that cash receipt from Ms. Maya Garg was less by Rs. 10 lakhs. The CIT(A) also rejected the submission of the assessee that cash of Rs. 77,56,362/- received from Ms. Atmaram Agrawal was in FY.2013-14 and 2017-18, because it was noted in page 16 of Annexure A-55 that the same was received in FY.2020-21. Therefore, the CIT(A) has given relief of Rs. 10 lakhs only out of cash receipt of Rs. 24,42,10,934/-. The CIT(A) has, however, favourably considered the plea of the assessee that total receipts cannot be taxed and only the profit embedded therein has to be taxed. The appellant had relied on the decisions of the Hon'ble jurisdictional High Court in case of CIT vs. President Industries, 258 ITR 654 (Guj.), CIT vs. Gurbachhan Singh Juneja, 302 ITR 63 (Guj.) and DCIT vs. Narayan Land Estate, ITA No.1836/2019, dated 10.06.2022 (Guj.). In all these decisions, it has been held that on-money / unaccounted sales cannot be totally brought to tax because developers have to incur various unaccounted expenses for procurement of land, approval of the projects and other civil expenses. The appellant also submitted that there are no othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,88,52,656/- received from Shri Trilokchand Kamdar for Plot Nos.1, 2, 9 & 10, which have been considered by AO as well as CIT(A) for determining the income of assessee is not correct because those plots were sold to Shri Manoj Biharilal Goyal/ Mrs Shradhdha Goyal on 14.09.2021. Similarly, Plot No.3 was sold to Shri Sheyansh Shah on 22.03.2022 and Plot No.8 was sold to Mrs Usha Shah on 22.03.2022. Hence, the on-money should be reduced accordingly. The ld. AR also submitted that on-money of Rs. 10 lakhs received from Ms Maya Garg has to be reduced because in the revised terms of payments, the total amount receivable was same but the cash component was reduced by Rs. 10 lakhs and cheque amount was increased by Rs. 10 lakhs. The ld. AR submitted that the AO erred in adding the gross onmoney in cash and not the net receipts. The assessee is entitled to get benefit of deduction of expenses in cash and only profit element should be taxed. Since the assessee has already offered additional income of Rs. 10,79,13,346/-, the AO may be directed to accept the returned income. The ld. AR further submitted that percentage of profit can only be taxed, which should be based on the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the said cash transactions have been specifically mentioned in page 7 of Annexure - 54, which has been signed by the five partners/representatives of the partners. Further, Shri Laxminarayan Garg had also admitted that the income earned on sale of plots in cash was not recorded in the regular books maintained by the assessee. Only because of registration of the impugned property subsequently in the name of some other persons, the receipt of cash by assessee from the original/initial buyer cannot be ignored. There is no evidence that the cash was returned by assessee to Dr. Laxmichand and Shri Trilokchand Kamdar. Therefore, the request of the ld. AR to reduce the aforesaid amounts from the receipt of on-money in cash cannot be accepted. We do not find any infirmity in the finding of the CIT(A) in rejecting similar claim during the appellate proceedings before him. 13. Regarding request of the ld. AR to reduce Rs. 10,00,000/- from the addition of Rs. 24,42,10,934/- on account of receipt of on-money in cash, the CIT(A) has given a categorical finding that the terms of payments were subsequently changed and Mrs Maya Garg has paid Rs. 10 lakhs more in cheque and reduced the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), Gurubachhan Singh Juneja (supra), Narayan Land Estate (supra) and Poonam Developers (supra). It is well settled that only the profit element of the receipt can be taxed and not the gross receipt. The estimation of net profit is basically a factual issue and the rate of profit would vary from case to case depending upon the facts involved in each case. In the present case, appellant has himself declared profit at 45.83% on gross receipt of Rs. 23,54,54,302/-. However, the CIT(A) has taken the gross receipt at Rs. 24,32,10,934/- and estimated net profit @50% at Rs. 12,16,05,467/-. In our considered view, it would be just and reasonable if the profit is taken at 45% of the gross receipt of Rs. 24,32,10,934/-, which comes to Rs. 11,43,09,139/-. Accordingly, the AO is directed to restrict the addition to Rs. 11,43,09,139/-. The ground is partly allowed. 15. In the result, appeal of the assessee is partly allowed and appeal of the revenue is dismissed. ITA Nos.626/SRT/2024 & 633/SRT/2024 (AY:2019-20): 16. The facts of the case are similar to the facts in ITA Nos.762/SRT/2023 and 41/SRT/2024. The grounds raised by the parties are also similar. The ld. AR at the time of hearing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 and same is time-barred for the reason that it is not passed with 12 months from the end of financial year in which the notice u/s 148 of the Act was served (i.e. F.Y. 2021-22). 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(Appeals) has erred in confirming the action of Assessing Officer in treating the return filed u/s 148 of the Act as non-est. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(Appeals) has erred in confirming the addition of Rs. 7,08,09,485/- on account of profit element of on-money receipts of Rs. 14,16,18,971/- instead of profit of Rs. 2,83,30,961/- on admitted onmoney of 9,76,25,946/- which is declared in the return of income filed u/s 148 of the Act. 5. On the facts and circumstances of the case as well as law on the subject, the learned CIT(Appeals) has erred in confirming addition of Rs. 1,51,20,000/- (being 50% of Rs. 3,02,40,000/-) as profit element of on-money receipts without considering that the cash receipts were received from Shri Rishab Agarwal in FY 2016-17 and not FY.2017-18. 6. On the facts and circumstances of the case as well as law on the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaring income of Rs. 7,04,47,680/- including additional income of Rs. 2,83,30,961/-. The AO treated the return as non-est because the return was not filed within the time allowed in the notice u/s 148 of the Act. Thereafter, AO issued notice u/s 143(2) and 142(1) and show cause notice and after hearing assessee, added Rs. 14,16,18,971/- and Rs. 17,70,000/- to the total income of the assessee. Before AO, the assessee has not raised jurisdictional issue of inadequate time in furnishing reply to notice u/s 148A(b). However, before CIT(A), the assessee raised grounds stating that AO erred in passing order u/s 148A(d) without providing statutory time of 7 days mandated as per section 148A(b) of the Act. The CIT(A) has dealt the issue in para 6 of the appellate order u/s 250 of the Act. He has dismissed the ground of the assessee by stating that there is no requirement to conduct enquiry and provide opportunity u/s 148A of the Act before issue of notice u/s 148 in cases covered u/s 132 of the Act. He observed that the AO appears to have provided opportunity u/s 148A of the Act before issuing notice u/s 148 out of abundant precaution. As provisions of section 148A are not mandatory requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as escaped assessment. Similarly, final objection by the C&AG to the effect that assessment for relevant AY has not been in accordance with the provisions of the Act shall also be considered as information for re-opening. In search, survey or requisition cases initiated or made or conducted, on or after 01.04.2021, it shall be deemed that the AO has information, which suggest that income chargeable to tax has escaped assessment. It is, therefore, clear that if a search or survey had been conducted on or after 01.04.2021, the AO shall be deemed to have information which suggest that income chargeable to tax has escaped assessment. In the present case, there was a search in case of Shri Kanubhai M. Patel on 18.11.2021 and Shri Laxminarayan Garg on 07.12.2021 and various documents, diaries, loose papers pertaining to and information relating to the assessee were found and seized. In fact, statements of both the above persons were recorded who admitted that Annexure A-1 to A-55 belong to Shri Laxminarayan Garg, partner of the assessee-firm. Therefore, the AO had information, which suggests that income chargeable to tax has escaped assessment in case of the assessee for the relevant ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion have been made where found and seized from the premises covered during the search. Shri Kanubhai M. Patel and Shri Laxminarayan Garg have also admitted in their statement recorded during the search that papers belong to the assessee. Therefore, the finding of the CIT(A) that there is no requirement to conduct inquiry and provide opportunity before issue of notice u/s 148 of the Act in cases covered u/s 132 of the Act cannot be said to be incorrect. Once provisions of section 148A of the Act are not applicable and case is covered by the proviso to the said section, the question of granting time as per section 148A(b) of the Act does not arise. 28. The ld. AR of the assessee has relied on the decisions in case of Amit K. Jain (supra) and Sudman Consultants LLP (supra) and argued that case of the appellant is fully covered by ratio of these decisions. The ld. CIT-DR, on the other hand, relied in the case of Anandkumar Dhanraj Rathod (supra). We have carefully gone through the decisions relied upon by the rival parties. There is no dispute that only 4 days' time was given by the AO in the notice issued u/s 148A(b). This is not even disputed by the revenue. However, the ratio of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find any infirmity in the order of CIT(A) because double addition of the same amount is not permissible. This ground No.3 raised by revenue is accordingly dismissed. 30. Ground No.4 of assessee's appeal pertains to addition of Rs. 7,08,09,485/- on account of profit element of on-money receipt of Rs. 14,16,18,971/- instead of profit of Rs. 2,83,30,961/- admitted by assessee on on-money of Rs. 9,76,25,946/-, which is declared in the return of income filed u/s 148 of the Act. The revenue, on the other hand, has raised the issue that the CIT(A) erred in restricting the addition of on-money to 50% of the cash receipt of Rs. 14,16,18,971/- instead of 100% of on-money receipt. The facts of the case are similar and the arguments put forth by both sides are also similar to those of AY.2021-22. We have already decided the above issue in ITA No.762/SRT/2023 and 41/SRT/2024 for AY.2021-22, wherein we have held that 47% of the on-money received in cash would be net income of the assessee in addition to the income shown in the return of income u/s 139 of the Act. Following the reasons therein, the AO is directed to add 45% of the on-money and delete the remaining amount. The ground is partly al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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