9911796707
TMI Blog2023 (6) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of incriminating material found during the course of survey. Therefore, the facts and circumstances which are applicable to A.Y. 2017-18 are appliable to the impugned assessment year also. The fact of the assessee's case are totally identical to the facts of the A.Y 2017-18. Hence, following the decision of the Hon'ble ITAT for A.Y 2017-18 in assessee's own case on identical facts, the CIT(A) directed the AO to take 8% of on-money receipts as income of the assessee. Set off of IDS declaration disallowed to the assessee - CIT(A) noted that after allowing the benefit of declaration under IDS, 2016 no additional income need to be brought to tax - HELD THAT:- We note that assessee is entitled for set off of IDS declaration and CIT(A) based on the facts narrated above, has rightly allowed the benefit of declaration under IDS, 2016. On a careful reading of the CIT(A) order and the findings thereon, we do not find any valid reason to interfere with the decision and findings of the CIT(A) in holding that the assessee is entitled for the benefit of declaration under IDS, 2016. Unexplained cash credit u/s 68 - Revenue argued that 'on-money' should be taxable u/s 115BBE as suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... papers found at the premises during the course of survey and extrapolating the amount in random manner - HELD THAT:-Revenue has primarily reiterated the stand taken by the AO which we have already noted in our earlier para and is not being repeated for the sake of brevity. We note that addition is part of 'on-money', received by assessee and considering the facts that said money may belong to assessee, therefore we confirm the order of ld CIT(A) and dismiss assessee`s cross objection. X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 6 to 7 raised by Revenue in AY. 2017-18 in ITA No. 318/SRT/2022-Poonam Developers LLP, ground Nos. 6 to 7 raised by Revenue in AY 2018-19 in ITA No. 319/SRT/2022- Poonam Developers LLP, and ground Nos. 6 to 7 raised by Revenue in ITA No. 320/SRT/2022 for A.Y.2019-20- Poonam Developers LLP. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in directing the assessing officer to give set off of the addition confirmed to the extent of Rs. 20,88,160/- being profit @ 8% of the on money receipts, against the disclosure of Rs. 25,00,000/- made by the assessee under IDS, 2016 on account of 'sundry business receivables' for assessment year 2015-16, ignoring the fact that there was no disclosure made by the assessee for the impugned assessment year i.e. 2016-17. The Ld. CIT(A) also erred in accepting the submission of the assessee that an amount of Rs. 25,00,000/- was shown in AY. 2016-17 by way of passing journal entry out of the declaration made in IDS 2016 for AY. 2015-16, there cannot be disclosure under IDS 2016 for future unaccounted income to be earned. (iii) Ground Nos. 6 raised by Revenue in AY. 2018-19 in ITA No. 285/SRT/2022. "On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) also erred in deleting the addition ignoring the principles of "Human Probability Test" that is preponderance of probabilities which is applicable for Income Tax proceedings." 4. Cross-Objections of assessee in CO Nos. 12 and 14/SRT/22 are as follows: (i) On the facts and in circumstances of the case as well as law on the subject, the Ld. CIT(Appeals) has erred in confirming assessment order to the extent of wrongly relying upon the whatsapp chats and loose papers found at the premises during the course of survey and extrapolating the amount in random manner. (ii) On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(Appeals) has erred in partly confirming assessment order to the extent of confirming addition of profit on the basis of documents impounded during the survey proceedings without considering that it was only some rough calculation and not the proof of actual transaction taken place during the year. (iii) On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(Appeals) has erred in confirming assessment order to the extent of sole reliance on the statement recorded during the survey and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reasons for reopening of assessment. The assessee-firm has undertaken a project named Orion Villa project. As per material available on record, it was observed by the assessing officer that in this project, total 133 units of individual row house of type A, B1, B2, B3, B4,C & C1 are being constructed and on verification of the Annexure BF-2 impounded, the details of on-money received by the assessee-firm in A.Y 2016-17 is as under: Villa Type Cash receipt (in Rs) (Column B of page no 23 to 26 of Annex BF-2) A Rs. 59,00,000/- B1 Rs. 46,50,000/- B2 Rs. 1,10,02,000/- B4 Rs. 45,50,000/- Total Rs. 2,61,02,000/- These above incriminating documents were discussed by the assessing officer on page No. 3 to 9 of assessment order. During the assessment proceedings, the assessing officer asked the assessee to explain the 'on money' transaction. In response, the assessee submitted its reply before the assessing officer. However, the assessing officer rejected the reply of the assessee and observed that there were incriminating documents found and impounded during the course of survey proceedings. There is no dispute with regard to the fact of receipt of 'on-money' from sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order made by the Assessing Officer, the order made by the Commissioner (Appeals) and the Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under section 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the priced received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realization of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question whether entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in the negative. The record goes to show that there is no finding nor any material has been referred to about the suppression of investment in acquiring the goods which have been found subject of undisclosed sales." 4. Identically, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself, as noted above, has recorded in the assessment order that there has been unaccounted purchases which needs to be constructed against the unaccounted sales. Even in the decision of this court in the case of President Industries (supra) the court was conscious of this angle when it observed as under (page 655): "Therefore, unless there is a finding to the effect that investment by way of incurring the cost in acquiring the goods which have been sold has been made by the assessee and that has also not been disclosed. In the absence of such finding of fact the question whether the entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in negative. The record goes to show that there is no finding nor any material has been referred about the suppression of investment in acquiring the goods which have been found subject of undisclosed sales." 7. Secondly and equally importantly, the Assessing Officer with somewhat confusingly equated excess consumption of raw material and unaccounted sale of the finished product. It is not as if the excess consumption of raw material would automatically result into matching the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 44AD prescribes net profit rate of 8 per cent only in the case of an assessee engaged in the civil construction. Therefore, the Commissioner (Appeals) had decided the issue correctly. Hence, the appeals were to be dismissed [Pare 18]" 9. In the assessee's case also, a sheet was found having details about receipts recorded in the books as well as unaccounted receipts. It is evident that details in the sheet are regarding gross receipts and not net receipts. From the perusal of audited accounts for the year under consideration, it is evident that the gross profit was reported at the rate of around 5% for the year under consideration as well as for subsequent 2 years. Accordingly profit of Rs. 13,05,100/-, which is 5% of total alleged on-money receipts of Rs. 2,61,02,000/- can be added at the most. However, adding entire amount of turnover is completely contrary to the different decisions of jurisdictional High Court and Tribunals and hence liable to be deleted. 10. Further, where assessee, engaged in construction business, is following project completion method, its income could be brought to tax only in year when sale deeds of units sold were registered even though sale co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the residential units where advances were received during the F.Y 2015-16 relevant to A.Y 2016-17. The assessee firm is engaged in the business of construction and has undertaken a project named Orion Villa project. As per material available on record, it is seen that in this project, total 133 units of individual row house of type A, B1, B3, B,4, B4, C and C1 are being constructed and on verification of the Annexure BF-2 impounded, the details of on-money received by the assessee-firm in A.Y 2016-17 is Rs. 2,61,02,000/-. Therefore, on verification of impounded materials the actual receipts by the assessee firm was found at Rs. 2,61,02,000/- and the same was treated as unexplained money. Thus, ld DR contended that since the assessing officer has passed a detailed and elaborate order, therefore addition made by the assessing officer should be upheld. 13. On the other hand, ld Counsel for the assessee argued that ld CIT(A) has passed a speaking order after considering findings of the assessing officer and submissions of the assessee, therefore such a reasoned order should be upheld. 14. We have heard the rival contentions, perused the material on record and duly considered facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gross receipts is to be taxed. The profit element in the builder activity is ranging from 8% to 20% and keeping in view the facts of the assessee's case, I am taking 20% as net profit of the total gross receipts as income of the assessee. Therefore 20% of Rs. 2,57,76,000/- i.e. Rs. 51,55,200/- additions are confirmed and remaining Rs. 2,06,20,800/- are deleted. This ground of appeal is partly allowed." 15. Thereafter, the assessee filed appeal against the said order of CIT(A) for A.Y 2017-18 before the Hon'ble ITAT, Surat Bench. The Revenue also filed the appeal against the said order of CIT(A). The Hon'ble ITAT, Surat Bench on the facts and circumstances of the assessee's case held that only 8% of the on-money receipts should be brought to tax as income of the assessee firm and the appeal filed by the Revenue was dismissed. The findings of the Hon'ble ITAT, Surat Bench are as under: "11. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 258 ITR 188. The Allahabad High Court in the case of Shyam Bidi Works (Appeal No. 64 of 2005 vide judgement dated 18th July 2014) has approved the action of the authorities wherein the rate of profit accepted in earlier years was adopted. Further it is the net profit and net income which has to be added and not the gross profit since indirect expenses are also incurred in the business. Lord Macnaghten, in the case of London County Council v. Attorney-General 1901 AC 26, 35-6(HL),4 TC 265, 293 stated as follows: "Income Tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. It is one tax, not a collection of taxes essentially distinct." Therefore, net profit is taxable income. Hence, considering the facts and circumstances of the case, we direct the Assessing Officer to compute the net profit @ 8% of the gross receipts. Since we have adjudicated the issue involved in assessee's case, taking into account, the peculiar facts and circumstances, as narrated above, therefore, it is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. 12. In the result, appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in AY. 2017-18 in ITA No. 318/SRT/2022-Poonam Developers LLP, ground Nos. 6 to 7 raised by Revenue in AY 2018-19 in ITA No. 319/SRT/2022- Poonam Developers LLP, and ground Nos. 6 to 7 raised by Revenue in ITA No. 320/SRT/2022 for A.Y.2019-20- Poonam Developers LLP. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in directing the assessing officer to give set off of the addition confirmed to the extent of Rs. 20,88,160/- being profit @ 8% of the on money receipts, against the disclosure of Rs. 25,00,000/- made by the assessee under IDS, 2016 on account of 'sundry business receivables' for assessment year 2015-16, ignoring the fact that there was no disclosure made by the assessee for the impugned assessment year i.e. 2016-17. The Ld. CIT(A) also erred in accepting the submission of the assessee that an amount of Rs. 25,00,000/- was shown in AY. 2016-17 by way of passing journal entry out of the declaration made in IDS 2016 for AY. 2015-16, there cannot be disclosure under IDS 2016 for future unaccounted income to be earned." 19. We have heard both the parties. Facts of the group case have already been narrated by us in the above para No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, which is reproduced below: "A survey u/s. 133A was conducted in M Poonam group on 21.02.2018 by the investigation wing, Vapi at 3 premises namely M Poonam Developers, M/s Lotus Infra and M Poonam Construction. Accordingly, cases of the appellant were selected for assessment / re-assessment and Ld. Assessing Officer made huge addition in all the years under consideration. Ld. CIT(A) has reduced addition. Both assessee and department have filed an appeal before Hon'ble Tribunal on below issue: 1. Addition has been made on the basis of rough document for which no details of correlation is given by the Assessing Officer in the Assessment Order as well as before Ld. CIT(A) or Hon'ble this Tribunal. Addition has been made in different years solely on the basis of page No. 23 to 26 of Annexure BF-2 in whimsical manner without any evidences supporting the allegations and/or the calculations as to how the yearly figures are derived on the basis of impounded undated dumb documents. 2. Without prejudice to the above ground, complete on-money receipts have been added to the total income of the appellant even when it is accepted that amounts found in the impugned documents are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion No. 2: Whether the amount declared under the Scheme for an earlier assessment year can be taken into account to explain the transaction(s) in the assessment proceedings for subsequent assessment year(s)? Answer: As per section 189 of the Finance Act, 2016, any declaration made under the Scheme shall not affect finality of completed assessments. However, in an assessment proceeding before the Assessing Officer for an assessment year subsequent to the year for which the income is declared under the Scheme, the income declared for an earlier assessment year can be taken into account to explain the transactions provided there is a nexus between the income declared and the transactions of the subsequent assessment year." Hence, the Circular issued by the Ministry of Finance clearly says that the income disclosed under the Scheme for an earlier assessment year can be taken into account to explain the transactions in assessment proceedings for subsequent years. So, date of declaration is irrelevant as per circular. In the case of the appellant, declaration has been made under the Income Declaration Scheme of 2016 of total income amounting to Rs. 1,00,00,000/- as 'sundry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition comprises of the following: a) Additions made in the re-assessment proceedings for AY 2011- 12 at Rs. 92,03,181/-, b) Disclosure made in IDS 2016 at Rs. 1,09,02,810/- & c) Difference in stock at Rs. 5,02,028/-. 10. We notice that during the survey, statement was given by the assessee surrendering the undisclosed stock at Rs. 3,91,81,368/- . Ld. AO, on perusal of the income tax return observed that the assessee has failed to reflect the said undisclosed stock/income of Rs. 3,91,81,368/-. The assessee gave the following reply along with filing profit and loss account for the period from 01.04.2015 to 18.07.2015: "Sir, during survey operation the Survey Team had found a total stock of Rs. 4,22,11,880/- lying in the godown as on 17.07.15. The Survey Team had excluded a stock of Rs. 30,30,432/- being disclosed stock as per books of account of Laxmi Cotton Industry. Your Assessee would like to submit that as per impounded books of account of Laxmi cotton Industry bearing identification mark No. BNA/2, Page 1 to 12, the entries was completed only up to 30.06.2015, laxmi Cotton Industry is a partnership firm in which your assessee is a one of the partners. Your assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated from tally software has been considered average purchase value of stocks as on 17.07.2015. As the method of valuation adopted by the survey team was wrong as per accounting standard, the said value may please be ignored and the actual value of Rs. 3,06,61,938.19/- may please be considered for the sake of justice. There is approxly same (higher) in quantity of stocks found by the survey team and considered in the stock summary generated from tally software by your assessee. Regarding stock of Rs. 3,06,61,938.19/- as on 17.07.2015, your assessee likes to produce his audited books of account for F.Y:15-16 and purchase & sale bills. There was a deficit investment of Rs. 74,14,878.80 in the books of the assessee in comparison to the quantity and value of stocks held by him. Sir, your assessee was reassessed on 19.02.2016 for ASST. Year 2011-12 by the Department and a total addition of Rs. 92,03,181/- had been made by the Department on account of unexplained investment and unexplained income, against which your assessee did not prefer any appeal. Your assessee had capitalized the said sum of Rs. 92,03,181/- in his book of account as per recognized accounting standard and as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,03,181/-minus expenses for attending hearings) in explaining the source of investment in undisclosed stocks found in survey. The AO had noticed that the reopening assessment for assessment year 2011-12 had been drawn on 19.2.2016, after the date of survey on 18.7.2015. So, the claim for set-off on account of additions vide assessment order dated 19.2.2016 against undisclosed stocks found much before that date on 18.7.2015 was not allowable. The AO had also stated in his order that the case law cited by the appellant was different than the fact of the case of the appellant. The appellant before the AO and also at appellate stage has relied on the decision of Calcutta High Court in Balaram Saha us. CIT, I.T. Appeal No. 319 of 2003, dated 19.04.2011. In his case a survey was conducted at appellant's business premises on 09.01.1997 and following impoundments of books and other documents, the assessments for previous assessment years 1995-96 and 1996-97 were reopened. In asst, year 1995-96 an intangible addition of Rs. 1,43,688/- and in assessment year 1996-97 an estimated addition of Rs. 8,19,704/- (reduced to Rs. 2,84,699/ in appeal) had been made. Both the additions had been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year can be taken into account to explain the transaction(s) in the assessment proceedings for subsequent years(s)? Answer: As per section 189 of the Finance Act, 2016, any declaration made under the Scheme shall not affect finality of completed assessments. However, in an assessment proceeding before the Assessing Officer for an assessment year subsequent to the year for which the income declared under the Scheme, the income declared for an earlier assessment year can be taken into account to explain the transactions provided there is a nexus between the income declared and the transactions of the subsequent year. Question No. 12: In answer (b) to question No. 6 of Circular No 17 of 2016 dated 20.5.2016, it has been stated that "person is barred from making a declaration under the Scheme in respect of an undisclosed income in which the survey was conducted". Please clarify? Answer: The clause (b) of answer 6 may be read as "In case of survey operation, the person is barred for making a declaration under the Scheme in respect of the previous year in which the survey was conducted. The person is, however, eligible to make declaration in respect of an undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been rightly claimed as set off against the undisclosed stock surrendered during the course of survey and ld. CIT(A) has rightly appreciated the same in the light of the Sections 188 & 192 of the Finance Act, 2016 as well as Circular No. 29 of 2016 dated 18.12.2016 and thus, we confirm the finding of ld. CIT(A). 15. As regards difference of stock of Rs. 5,02,028/-, we find that the books of accounts are not rejected by ld. AO and due to some calculation error, the said difference has arisen and as the assessee has shown closing balance as on 18.07.2015 at Rs. 3,01,55,910/- arrived at after considering various details of purchase, sales and expenses prepared after the completion of survey but before finalizing of books of accounts, which are duly audited and also considering the fact that statements given during the course of survey does not carry any evidentiary value as held by Hon'ble Apex Court in the case of CIT vs. S. Khader Khan & Sons. (2013) 352 ITR 480 (SC) and therefore, ld. AO before declining the claim of the assessee ought to have referred to any discrepancy or defect in the books of account. 16. Since the Revenue has failed to bring out any such fact on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant for the reason that the said claim had been made for the first time before AO after a long period of time and the appellant had not lodged his claim at any time before assessment stage. The decisions of Courts cited by the AO are not relevant in the present case as no search and seizure operation had been conducted in this case. The Apex Court in CIT vs. S. Khader Khan & Sons. (2013) 352 ITR 480 (SC) has ruled that survey does not empower any I.T.O. to examine any person on oath and as such statement recorded u/s 133A has no evidentiary value and addition cannot be made merely on the basis of such statement. CBDT Instruction No. 286/2/2003 (Inv), dated 10.03.2003 also directs the lower authority that no addition should be made merely on the basis of statement of the assessee during survey. Further, the ITAT Kolkata in Rohitaswa Das vs. Asst. CIT, ITA No. 1949/Koi/2017, dated 28.08.2019 where claim had been made first time during assessment proceeding that the stock taken during survey operation was not correct as the premise, in which the stocks were found, had been let out by the assessee to other person and the stock in the said premises was not belonged to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised ground No. 3 raised by the Revenue is reproduced below for ready reference: "(iii) Ground Nos. 6 raised by Revenue in AY. 2018-19 in ITA No. 285/SRT/2022. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred by giving direction to tax the 'on-money' receipt as regular business income and not to treat the same as unexplained cash credit under section 68 of the Act, which is to be taxed under the provisions u/s 115BBE of the Act, despite the fact that the assessee failed to substantiate the 'on-money' receipts." 24. We have heard both the parties. Learned DR for the Revenue argued that 'on-money' should be taxable under section 115BBE of the Act, as such 'on-money' does not pertain to assessee`s business. On the other hand, ld Counsel for the assessee submitted that assessee has been taking stand right from the beginning that 'on-money' was received from the sale of flats and said 'on-money' was received by the assessee during the normal course of business. Moreover, the Income Tax Authorities have recorded the statement of assessee, and in that statement the assessee had stated that he had received 'on-money' from the customers to whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-money on booking of the flats during the year under consideration to Rs. 1,60,26,408/- as against the 'on-money' calculated of Rs. 9,57,99,600/- by the assessing officer on the basis of incriminating impounded material." 27. We have heard both the parties. Facts of the group case have already been narrated by us in the above para No. 8 to 10 of this order. Learned DR for the Revenue reiterated the findings of the assessing officer. Whereas, ld Counsel defended the order passed by the ld CIT(A).It is a fact which is not denied by the assessee that during the course of survey, incriminating material evidencing receipt of on-money relating to the impugned assessment year from project "Orion Villa" were found. Basically, all the calculation of sale and stock which are made on the said pages are done by taking the rate of Rs. 2200/ per sq. ft. which is on the basis of the incriminating material found during the course of survey relating to the project executed by the assessee -LLP and on the basis of whatsapp images. This material and evidences showed the receipt of on-money on the bookings of flats/shops which were not shown in the regular books of accounts maintained. Thus, once t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reproduced below for ready reference: "(v) Grounds of appeal No. 2 to 5 raised by the Revenue in ITA No. 318/SRT/2022 for A.Y. 2017-18, ground Nos 2 to 5 raised by the Revenue in ITA No. 319/SRT/2022 for A.Y. 2018-19, and ground Nos. 2 to 5 raised by the Revenue in ITA No. 320/SRT/2022 for A.Y. 2019-20. "The Ld. CIT(A) erred in restricting the addition of Rs. 9,57,99,600/- made by the Assessing Officer on account of unaccounted 'on-money' to Rs. 24,03,961/- i.e. net profit @ 15% on the total re-calculated on money receipts of Rs. 1,60,26,408/- (15% of Rs. 1,60,26,408) without appreciating the fact that the partner of the sister concern firm M/s Poonam Developers admitted the receipt of money and failed to substantiate the claim of unaccounted expenditure incurred warranting set off of such expenses from the 'on-money' receipts. The Ld. CIT(A) also erred in not considering the decisions of the Hon'ble jurisdictional High Court in the case of Jay Builders vs ACIT, 33 taxmann.com 62 (Guj.) and CIT(A) further erred in misinterpreting the decision of Hon'ble ITAT in the case of Poonam Developers (sister concern of the assessee)." 30. We have heard both the parties. Facts of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee's case, I am taking 20% as net profit of the total gross receipts as income of the assessee. Therefore 20% of Rs. 2,57,76,000/- i.e. Rs. 51,55,200/- additions are confirmed and remaining Rs. 2,06,20,800/- are deleted. This ground of appeal is partly allowed." 31. The ld CIT(A) also noted that M/s M Poonam Developers (sister concern of the assessee LLP) had filed appeal against the said order of CIT(A) for A.Y. 2017-18 before the Hon'ble ITAT, Surat Bench. The Revenue also filed the appeal against the said order of CIT(A). The Hon'ble ITAT, Surat Bench on the facts and circumstances of the M/s M Poonam Developers (sister concern of the assessee LLP) held that only 8% of the on-money receipts should be brought to tax as income of the assessee- firm and the appeal filed by the Revenue was dismissed. The findings of the Hon`ble ITAT Surat Bench are as under: "11. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on record. We note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Allahabad High Court in the case of Shyam Bidi Works (Appeal No. 64 of 2005 vide judgement dated 18th July 2014) has approved the action of the authorities wherein the rate of profit accepted in earlier years was adopted. Further it is the net profit and net income which has to be added and not the gross profit since indirect expenses are also incurred in the business. Lord Macnaghten, in the case of London County Council v. Attorney-General 1901 AC 26, 35-6(HL),4 TC 265, 293 stated as follows: "Income Tax, if I may be pardoned for saying so, is a tax on income. It is not meant to be a tax on anything else. It is one tax, not a collection of taxes essentially distinct." Therefore, net profit is taxable income. Hence, considering the facts and circumstances of the case, we direct the Assessing Officer to compute the net profit @ 8% of the gross receipts. Since we have adjudicated the issue involved in assessee's case, taking into account, the peculiar facts and circumstances, as narrated above, therefore, it is made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. 12. In the result, appeal of ethe Revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shops/office space. The assessing officer has presumed that as the assessee has been taking 'on-money' on booking/sale of residential units, the assessee must be taking in fact higher on-money on commercial units. Accordingly, the assessing officer applied market rate as the basis for calculation of 'on-money' receipt. The incriminating material found relating to on-money is only with reference to residential units and not the commercial units. This aspect was raised by the assessee before the assessing officer during the course of assessment proceedings, but the assessing officer did not accept the contention of the assessee. Based on these facts, ld Counsel contended that ld CIT(A) has rightly deleted the addition. 36. We have considered the submission of ld DR and ld Counsel for the assessee. As regards the quantification of on-money receipt on commercial space is concerned, the same is not on the basis of any impounded / incriminating material found during the course of survey. The said estimation is done by the assessing officer purely on presumption that higher on-money the assessee has been receiving on commercial space when the evidences of on-money were found with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. We note that addition of Rs. 30,96,480/- is part of 'on-money', received by assessee and considering the facts that said money may belong to assessee, therefore we confirm the order of ld CIT(A) and dismiss assessee`s cross objection No. 13/SRT/22. 40. In the result, the assessee`s cross objection No. 13/SRT/22, is dismissed. 41. In Cross-Objections Nos. 12 and 14/SRT/2022, the assessee has raised similar and identical grounds of appeal, which are as follows: "(i) On the facts and in circumstances of the case as well as law on the subject, the Ld. CIT(Appeals) has erred in confirming assessment order to the extent of wrongly relying upon the whatsapp chats and loose papers found at the premises during the course of survey and extrapolating the amount in random manner. (ii) On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(Appeals) has erred in partly confirming assessment order to the extent of confirming addition of profit on the basis of documents impounded during the survey proceedings without considering that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
