DY CIT -CC-4(3), MUMBAI vs. M/S. RESONANT REALTORS PROJECTS P. LTD., MUMBAI

O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the revenue against the order of the Ld. CIT(A)-52, Mumbai dated 16.02.2021 for AY. 2015-16 and AY. 2016-17 respectively.

2. The grounds of appeal

3. Thereafter, the revenue appeal for AY. 2016-17 is as under: - “1. “Whether, on the facts and the circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,15,00,000/- on account of on money received by the assessee in cash in respect of one of its projects on which assessee has not produced any new evidence other than the material seized during the search, which has already been confronted to and accepted by the assessee in his statement on Oath by presuming the said cash loan to be subsumed in the on-money declared by ORDPL before Settlement Commission, without any factual finding to the contrary.” 2. “Whether, on the facts and the circumstance of the case and in law, Ld. CIT(A) has erred in computing the income on balance unaccounted on-money receipts of Rs.7,26,46,400/- at a GP of 17.5% instead of treating the entire sum as on-money to be taxed as per relevant provisions of the Act.” A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd 3. “Whether, on the facts and the circumstance of the case and in law, Ld. CIT(A) has erred in accepting assessee’s contention that the on-money received by the assessee was in-fact subsumed in the cash loans which were already offered by the main group company ORDPL before Settlement Commission, without any factual finding to the contrary.” 4. “Whether, on the facts and the circumstance of the case and in law, Ld. CIT(A) has erred in allowing the setoff of current year loss which shall not be allowed against the unaccounted and unexplained income, in view of the specific provision u/s 115BBE of the Act.”

4. First of all, we will take up appeal for AY. 2015-16 wherein the revenue has raised ground nos. 1 & 2 regarding deletion of addition of Rs.10,74,90,000/- on account of ‘on money’ received by the assessee in cash in respect of one of its projects which was accepted by the assessee during the search and added by the AO which has been deleted by the Ld. CIT(A) by accepting the assessee’s contention that on money received got subsumed in the cash loans by main group company M/s. Omkar Realtors & Developers Pvt. Ltd. & Others (hereinafter “M/s. ORDPL”).

1. Cash Receipt 121.54 2 Cash Expense 81.26 Total 202.8 Please confirm and explain the same? A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd Ans: Sir, I confirm the same I want to state here that there may be repetition or overlapping. The same will be reconciled and will be submitted in due course. Sir, I promise whatever taxes will he due on the above undisclosed amounts ax stated in this question will be paid in due course. Q.67 Da you have to say anything else? Ans: I want to say that there are many paper and documents found and seized from various premise of our Omkar Group and from various employees as well as directors. In this regard. I have to say that there are various transactions of cash inflow and out flow which is at present difficult to reconcile. Sir, I want to say that we have received part of sale consideration in cash, only on few occasion and under compiling circumstances nor which evidences is found which is not recorded in regular books of account and it is requested that this may be treated as part of sale consideration and consequential effect of the same may be allowed in my balance sheet, Further the amount of unaccounted income offered is subject to reconciliation and verification with seized papers etc. I want to further state that there are many vouchers found where the employees might have written/mentioned in their statement recorded as cash loans, however, the fact is that most of these amounts are received as advance towards our future launch of project at Dhobhi Ghat. It is also noticed that there is duplication/overlapping of entries relating to same transaction / amount in different employees statement/paper which should not be treated separately A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd also want to say that we have declared the aforesaid amount in good faith and hence, no penalty and prosecution proceedings be initiate against the group.”

5. we submit that the above figures of ‘on money' were determined on the basis of seized materials and other information. The initial declaration was made within the constraint of time and resources and at the time when search action was ongoing. This declaration, as replied in the statement, was subject to re-verification and reconciliation. Although, it was reconciled later, yet, due to shortage of time, some errors remained in the working and could not be corrected Subsequently, at the time of filing of the return in response as. 153A/C of the Act, we had once again perused the seized materials to ascertain the correct amount of ‘on money’ received in the project.

10. The AO did not accept the aforesaid contention put forth by the assessee. According to AO, the Group Chairman Sh. Kamal Kishore Gupta and the various relevant employees of the group when confronted with the material seized i.e. A-1/0-2 from page no. 62 to 70 and 73 to 74 had confirmed that the amount reflected in the receipts are the monies received in cash against the project ‘Dhobi ghat’. Since assessee did not bring on record any new evidence other than the material seized during the search and which has already been confronted to the assessee and explained by the assessee in his statement on oath u/s 132 of the Act, the monies received to the tune of Rs.10,74,90,000/- was treated as unexplained and brought to tax in the hands of the assessee.

1. Further, it was also found that the Omkar Group has made cash payments to the following parties: Sr. Nam Amount No e of Received in . the cash party 1 Manohar lal 20000000 singhania 2 Manohar lal 8000000 singhania 3 Manohar lal 2000000 singhania Manohar lal singhania 4 5000000 Manohar lal singhania 5 5600000 Manohar lal singhania 6 9400000 7 Zuber 5000 8 Pravin Bhai 7500000 9 Bharatbhai 5000000 10 Ramesh Jogani 1500000 11 Deshmukh 1900000 12 Dilip Patel 1900000 13 Shantaben Patel 2800000 14 Kale 1000000 15 Ganesh Kashvan 1150000 16 Kale 1000000 17 Deshmukh 5000000 18 Rajni Finance 2500000 Total 10,40,55,00 0 10.3 Objection of the Revenue (i) Though the assessee has claimed the above transactions as cash loans and advances, it may be treated as cash receipts of the assessee for the relevant period and addition of the above amounts to its income may be considered. Since the cash loan received by the assessee from A.Y.2010-11 to A.Y. 2016-17 is in clear violation of the provisions of Section 269SS of the I.T. Act, 1961, applicant is liable for penalty proceedings u/s 271D of the Act. 7.5 The decision of the Settlement Commission on this issue is reproduced below: 11.7 The Sixth issue is regarding treatment of cash loan. The issue in this regard has been discussed in para 6.2 para 7.11 A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd and para 8.11 of this order. In this regard the Pr.CIT vide her letter dated 17.12.2018 has submitted further that. “The assessee has submitted the year-wise peak working of the cash loans as per Annexure Ill. It is humbly submitted that the applicant has received cash loans from various parties. The assessee has not submitted complete Name, Address and PAN of the parties from whom assessee has claimed to have taken cash loans Hence, the identity of the loan giver; genuineness and creditworthiness of these parties could not be verified. Thus, it is prayed that the Hon'ble Settlement Commission may consider treating entire cash loans as income of the assessee and penalty u/s. 271D of the IT Act may be levied.” 11.7.1 The applicant against this observation has submitted that it has given its reply to the Rule 9 report in the rejoinder to Rule 9 report filed on 01.02.2018. Further, the Applicant wishes to clarify that the amount of loans of Rs. 31.39 crore taken by the department does not cover all the loans taken by the Applicant during the aforementioned period. It is submitted that the total loans taken by the Applicant on it’s own account and in the name of it’s group concerns and also other parties over the various years covered in the application is amounting to Rs. 51,67,45,000/-. These amounts represents loans only and are not cash receipts. In fact, these loans have also been repaid back by the Applicant to various parties subsequently. The fact that the amounts collected are loans is supported by the evidences and documents in the seized materials which clearly shows that these amounts represents loans taken by the Applicant. Further, they also clarify that the Applicant has not taken benefit of such cash loans in the fund flow statement filed before Hon'ble Settlement Commission. 11.7.2 Without prejudice, even presuming that the aforesaid amounts are cash receipts as alleged by the department, it is submitted that the Applicant has worked out peak credit for each of the year in respect of aforesaid receipts. The peak credit for all the years in aggregate comes to Rs. 34,86,95,000/-. The effect of yearly peak Credit on the fund flow statement is also worked out. The working of peak and revised fund flow statement in also filed before the Ld. PCIT vide letter dated 12.12.2018. On perusal of the working and its A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd effect on the fund flow Statement, it can be seen that the additional income is arising in A.Y. 2011-12 and A.Y. 2016- 17 and that in other years, cash balance is much more than the peak amount of loan determined for each year. In view the above, even #f the prayer of the Applicant that loans are genuine is not accepted, the peak balance of receipts may kindly be considered and that after granting telescoping of the cash balance available, the shortage of cash, if any, at the most be treated as additional income of the Applicant. 11.7.3 From the above, it is clear that the Pr.CIT is in agreement with the working of peak credit of cash loan as submitted by the applicant. As regards treating the same as income of the applicant, the applicant during the subsequent hearing agreed for the peak credit of cash loan to be treated as its own money in the spirit of settlement and has submitted in this regard vide its letter dated 12.03.2019 is as under: “9. In the SOF, the applicant has submitted that cash loans were accepted by the applicant in its own name or in the names of various other group concerns during A.Y, 2010-11 to 2016-17. The seized materials placed on record before the Hon'ble Settlement Commission also. reveals the receipt of cash loans. The Department in its report dated 28.12.2017 in Rule 9 has also confirmed the receipt of cash loans by the applicant to the tune of Rs. 31,39,45,000/-. Subsequently, during the course of hearing before the Hon'ble Settlement Commission, the details of loans taken and repaid were also submitted showing aggregate loans taken to the tune of Rs. 51,67,45,000/- and repayment of loans to the extent of Rs. 16,80,50,000/-.

11.7.4 We have considered the facts mentioned above and the offer of the applicant as submitted vide its letter dated 12.03.2019 and reproduced above. We find the offer of the applicant in order. The Id. CIT DR and AO present during the hearing could not find fault against such offer. The said offer is therefore accepted accordingly. 7.6 It is noted that the entire amount of Rs 10,74,90,000/- relates to amounts accepted by ORDPL from one Arun Jain. Mr Arun Jain has not taken any flat in any of the appellant's projects. As such, the AO’s inference that the amount represents on-money in the hands of the assessee is not found correct. It is also noted that the entire amount of Rs.10,74,90,000/- taken from ‘run Jain 1been accepted as loan taken by ORDPL and the CIT has accepted as such in the Rule 9 report. The Settlement Commission has accepted this offer. Hence, the same amount cannot be added as income in the hands of the assessee. 7.7 In light of the above discussion, the amount, having been already included in the Settlement Petition filed by ORDPL before the Settlement Commission, cannot be once again a matter of discussion in the hands of the appellant. The AO is directed to delete the addition. 7.8 The ground of appeal raised by the assessee stands allowed.

8. In the result, the present appeal is partly allowed.” A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd

12. Aggrieved by the aforesaid action of the Ld. CIT(A) deleting the addition based on the offer made by the assessee before the Settlement Commission, the revenue is before us.

13. Assailing the action of the Ld. CIT(A), the Ld. CIT-DR drew our attention to question no. 35 (supra) wherein the assessee when confronted by search party that the key employees of the company has accepted the fact of the assessee was receiving on- money payment and has given the details of such money collected flat-wise. And that the assessee’s director has admitted to have received cash of Rs.81.30 crores as on-money; and drew our attention to the chart given below question no. 35 wherein the list of customers who gave ‘on money’ is given. And thereafter he drew our attention to question no. 66 (supra) at page no. 25 of the assessment order wherein item no. 3 in the chart Rs.14.94 crores have been shown which according to the Ld. DR was cash receipt of cash loans and advances against future projects; and it has nothing to do with on-money collected by assessee on the sale of flats to the tune of Rs.81.30 crores as given under question no. 35 (supra). Further, the Ld. DR drew our attention to the question no. 67 (supra) wherein the assessee’s director has admitted that during search many vouchers have been recovered from the assessee’s premises which shows cash loans etc (written by employees as to the nature of transaction) but actually most of the same was amounts received as advance towards future launch of A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd project at Dhobhi Ghat. Therefore, according to the Ld. CIT-DR, this amount of Rs.10,74,90,000/- has nothing to do with the on- money transaction accepted by the assessee. According to the Ld. CIT-DR, the aforestated statement given has not been retracted by the director of the assessee company. Therefore, according to him, the Ld. CIT(A)’s findings that this amount is also a part of the loan transaction shown by the parent company (M/s. ORDPL) is erroneous and this amount (Rs.10,74,90,000/-) doesn’t get subsumed in the Settlement Commission order which was rightly added by the AO (Rs.10,74,90,000/-). Therefore, according to the Ld. CIT-DR, the decision of the Ld. CIT(A) is erroneous and therefore, it has to be reversed and the action of the AO need to be upheld.

14. Per contra, the Ld. AR drew our attention to the page no. 13 to 21 of the PB which is the seized material A-1/0-2 (referred by AO in the assessment order as page no. 62 to 70 & 70-73) which was the basis of addition of Rs.10,74,90,000/-; and our attention was drawn to page no. 14 which is a bill of exchange and a perusal of it reveals that the recipient of amount is shown as assessee’s parent company M/s. Omkar Realtors & Developers Pvt. Ltd. & Others (M/s. ORDPL) which has received Rs.100,00,000/- @ 18% from Shri Arun Jain The Ld. AR also drew our attention to page no. 13 to 21 of the PB wherein we note that identical bill of exchange acknowledges receipt of different A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd sum of amount (figures) by M/s. ORDPL from Shri Arun Jain; the specific details money on interest received from Shri Arun Jain is noted from perusal of page 13 of PB which reveals that Rs.1 crores has been received by (M/s. ORDPL); and similarly perusal of page 14 it is noted that Rs. 1 crores @ 18% has been received by M/s. ORDPL; and at page no. 15 it is noted that M/s. ORDPL received Rs.74,90,000/- @ 18%; and at page no. 16 it is noted that M/s. ORDPL has received Rs. two (2) crores @ 18%; and perusal of page no. 17 of PB reveals that Rs.one (1) crores has been received by M/s. ORDPL @ 18%; and perusal of page no. 18 reveals a bill of exchange of Rs.one (1) crores @ 18% received by (M/s. ORDPL) is found placed; and page no. 19 reveals that M/s. ORDPL received Rs.two (2) crores and perusal of page no. 20 reveals a bill of exchange of Rs. 1.25 crores received by M/s. ORDPL @ 18%; and at page no. 21 another bill of exchange of Rs.75 lakhs received by M/s. ORDPL is found placed therein. Thus according to the Ld. AR, these bills of exchange of total sum of Rs.10.74 crores is nothing but loan received from Arun Jain by the parent company M/s. ORDPL which has been duly offered for taxation/settlement before Ld. Settlement Commission. For buttressing this fact the Ld. AR drew our attention to page no. 31 to 57 of the PB which is the report filed by the Commissioner of Income Tax under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules 1997 in the case of M/s. Omkar Realtors & Developers Pvt. Ltd. (M/s. A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd ORDPL). The Ld. AR drew our attention especially to page no. 52 of the PB wherein he drew our attention to the para no. 10.2 wherein the following chart is reproduced as under: - Sr. Name of the party Amount received in No cash 1 ML Singhania 20000000 2 ML Singhania 30000000 3 Dilip Patel 29900000 4 Ritesh Lunkar CB 12500000 5 Sunil Dalal 50000000 6 Arun Jain 10000000 7 Arun Jain 10000000 8 Arun Jain 74900000 9 Vikash Sharma 20000000 10 Ganesh Keshvan 11200000 11 Kale CB 10000000 12 Arun Jain 20000000 13 Arun Jain 20000000 14 Arun Jain 20000000 15 Arun Jain 10000000 16 Arun Jain 12500000 17 Arun Jain 75000000 18 Rajni Finance 25000000 19 Samita Vazirani 20000000 20 Ramesh Jogani 15000000 21 Deshmukh 70000000 22 Sunil Mithu Ji 10000000 23 Pravin Bhai 75000000 24 Manoj Singhania 50000000 25 Rajaram 20000000 26 Sandeep Saraf 15000000 27 Iqbal Bhai 15000000 28 Vikas Sharma 10000000 29 Bipin Patel 30000000 30 Zuber 5000 31 Sadeep Saraf 20000000 32 Hunuman Jain 20000000 33 Ramratan Khandelwal 50000000 34 Ramratan 25000000 Khandelwal/Sitaram Khandelval 35 Mukesh Jain 200000000 36 Rajendra Kale 250000000 37 Rajendra Kale 250000000 38 Yogesh Chandgothia 250000000 39 Kishore Agarwal 4500000 40 Kishore Agarwal 3000000 Total 31,39,45,000 A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd 15. The Ld. AR drew our attention to item no. 6, 7, 8, & 12 to 17 (supra) which duly reflect the amount of loan given by Shri Arun Jain to M/s. ORDPL which has been discussed at para 14 (supra) and therefore it shows total amount/loan of Rs.10.74 crores; and has been settled/offered along with total amount of Rs.31,39,45,000/- in the hands of M/s. ORDPL; and this amount has been accepted by the Ld. Settlement Commission. Our attention was drawn to page no. 55 of PB wherein the objection of the revenue has been reproduced at 10.3 (i) to (ii) of the PB as under. “10.3 Objection of the Revenue (i) Though the assessee has claimed the above transactions as cash loans and advances, it may be treated as cash receipts of the assessee for the relevant period and addition of the above amounts to its income may be considered. Since the cash loan received by the assessee from A.Y.2010-11 to A.Y. 2016-17 is in clear violation of the provisions of Section 269SS of the I.T. Act, 1961, applicant is liable for penalty proceedings u/s 271D of the Act. (ii) In view of the discussion of various issues above covered in the petition, it is submitted that the disclosure made by the applicant is less and may kindly be increased to an appropriate and correct level as stated above to arrive at true and fair settlement of issues covered in the application filed before the Hon’ble Settlement Commission.” A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd 16. And thereafter, the Ld. Settlement Commission by order dated 29.03.2019 u/s 245D (4) of the Act has taken note of the offer/additional offer made by M/s. ORDPL wherein an amount of Rs.31.39 crores (which subsumed Rs.10.74 crores) received by (M/s. ORDPL) from Arun Jain [which we note were the bill of exchange showing that M/s ORDPL received loan from Arun Jain and the relevant bill of exchange was seen placed at page no. 13 to 21 of the PB (supra) and which has been taken note at para 14 (supra)]. And the Ld. AR drew our attention to the order of Settlement Commission which is found at page no. 61 at para no. 11.7 to 11.7.4 which is as under: - “11.7. The Sixth issue is regarding treatment of cash loan. The issue in this regard has been discussed in para 6.2 para 7.11. and para 8.11 of this order. In this regard the Pr. CIT vide her letter dated 17.12.2018 has submitted further that: “The assessee has submitted the year-wise peak working of the cash loans as per Annexure III. It is humbly submitted that the applicant has received cash loans from various parties. The assessee has not submitted complete Name, Address and PAN of the parties from whom assessee has claimed to have taken cash loans. Hence, the identity of the loan giver, genuineness and creditworthiness of these parties could not be verified, it is prayed that the Hon'ble Settlement Commission may consider treating entire cash loans as income of the assessee and penalty u/s. 271D of the IT Act may be levied.” A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd 11.7.1. The applicant against this observation has submitted that it has given its reply to the Rule 9 report in the rejoinder to Rule 9 report filed on 01.02.2018. Further, the Applicant wishes to clarify that the amount of loans of Rs.31.39 crore taken b the f. department does not over -Il the loans taken by the Applicant during the aforementioned period. It is submitted that the total loans taken by the Applicant on it’s own account and in the name of it's group concerns and also other parties over the various years covered in the application is amounting to Rs. 51,67,45,000/-. These amounts represent loans only and are not cash receipts. In fact, these loans have also been repaid back by the Applicant to various parties subsequently. The fact that the amounts collected are loans is supported by the evidences and documents in the seized materials which clearly shows that these amounts represents loans taken by the Applicant. Further, they also clarify that the Applicant has not taken benefit of such cash loans in the fund flow statement filed before Hon'ble Settlement Commission. 11.7.2. Without prejudice, even presuming that the aforesaid amounts are cash receipts as alleged by the department, it is submitted that the Applicant has worked out peak credit for each of the year in respect of aforesaid receipts. The peak credit for all the years in aggregate comes to Rs.34,86,95,000/-. The effect of yearly peak credit on the fund flow statement is aso worked out. The working of peak and revised fund flow statement is also filed before the Ld. PCIT vide letter dated 12.12.2018. On perusal of the working and its effect on the fund flow A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd statement, it can be seen that the additional income is arising in A.Y. 2011-12 and A.Y. 2016-17 and that in other years, cash balance is much more than the peak amount of loan determined for each year. In view the above, even if the prayer of the Applicant that loans are genuine is not accepted, the peak balance of receipts may kindly be considered and that after granting telescoping of the cash balance available, the shortage of cash, if any, at the most be treated as additional income of the Applicant. 11.7.3. From the above, it is clear that the Pr.CIT is in agreement with the working of peek credit of cash loan as submitted by the applicant. As regards treating the same as income of the applicant, the applicant during the subsequent hearing agreed for the peak credit of cash loan to be treated as its own money in the spirit of settlement and has submitted in this regard vide it’s letter dated 12.03.2019 is as under: “9. In the SOF, the applicant has submitted that cash loans were accepted by the applicant in its own name or in the names of various other group concerns during A.Y. 2010-11 to 2016-17. The seized materials placed on record before the Hon'ble Settlement Commission also reveals the receipt of cash loans. The Department in its report dated 28.12.2017 in Rule 9 has also confirmed the receipt of cash loans by the applicant to the tune of Rs. 31,39,45,000/-. Subsequently, during the course of hearing before the Hon'ble Settlement Commission, the details of loans taken and repaid were also submitted showing. aggregate loans taken to the tune of Rs. 51,67,45,0004/- and repayment of loans to the extent of Rs. 16,80,50,000/-. A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd

10. The applicant submits that with a view to settle the case, it has treated the said transactions as its own money. The peak working of the said amount of loans works out to Rs. 34,87,95,000/-. The detailed working of the cash loans with peak working was submitted before the Ld. PCIT, Central-2 vide letter dated 13.12.2018 and the same is also filed on 21.12.2018 before the Hon'ble Settlement Commission at Page 3308 - 3312 of APB-14.

11. The applicant has considered the said peak as application of unaccounted income Offered and included in the fund flow statement. The revised fund flow statement duly incorporating the peak loan is enclosed herewith at Page 3758. Since, the peak of loan is explained by the income offered and no separate addition is called for.” 11.7.4. We have considered the facts mentioned above and the offer of the applicant as submitted vide its letter dated 12.03.2019 and reproduced above. We find the offer of the applicant in order. The Id. CIT DR and AO present during the hearing could not find fault against such offer. The said offer is therefore accepted accordingly.”

17. In the light of the Ld. Settlement Commission finding (supra) the amount of Rs.10.74 crores got subsumed in the Ld. Settlement Commission order of M/s. ORDPL. Therefore, according to the Ld. AR, the Ld. CIT(A) has correctly given relief to assessee, which does not require any interference from our side. A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd 18. We have heard both the parties and perused the records. We note that the assessee is a subsidiary of (M/s. ORDPL) and is engaged in the business of real estate development and construction in many parts of Mumbai with a focus on slum redevelopment. Based on the search in Omkar Group on 03.06.2015 and on recovery of loose papers as well as materials seized and the statement recorded u/s 132(4) of the Act, of the employees as well as that of the director of the M/s. Omkar Group/assessee company, additions were made in the hands of the five (5) companies which includes the assessee company wherein total addition in the hands of the five (5) companies were made upto Rs.105,41,66,564/-; And in the assessee’s hand an amount of Rs.21,66,36,400/- was made which included addition of Rs.10,74,90,000/- for AY. 2015-16 and Rs.10,91,46,400/- for AY. 2016-17/- and protective assessment was Rs.15,82,62,000/- was made which is not an issue before us as no ground has been is preferred by the revenue against the protective assessment. We further note that the assessee’s parent company M/s. ORDPL before the Ld. Settlement Commission and had offered the i.e. Rs.10,74,90,000/- as their income which is clear from perusal of page no. 52-53 of the PB which reflects the unexplained cash loans and advances received inter-alia from Arun Jain which was also offered along with Rs. Rs.31,39,45,000/- which was accepted by the Settlement Commission by order dated 29.03.2019 (supra). A perusal of chart below para-11 (supra) wherein the amount A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd received from Arun Jain is shown an item 6,7 & 8; as well as item no. 12 to 17 which sums up to Rs.10,74,90,000/- which stand corroborated with the PB page 13-21 which are bills of exchange evidencing loan taken from Arun Jain which is the seized documents A-1/0-2 page no. 62 to 69 (on the basis of which addition was made in the hands of assessee). Therefore, the Ld. CIT(A) taking note of this crucial fact that the amount of Rs.10,74,90,000/- which was added in the hands of assessee, was in fact offered for taxation before the Ld. Settlement Commission while submitting the details of loan received from Arun Jain by M/s. ORDPL as discussed supra. The AO has made the addition based on the chart given by Omkar Group at para 8 (supra) which was the summary of on-money received in the hands of five (5) group entities and wherein the amount of Rs.10,74,90,000/- and Rs.10,91,46,400/- has been shown to have been received by the company for AY. 2015-16 & AY. 2016-17 respectively. However, we note that this amount of Rs.10,74,90,000/- as discussed (supra) has been received by M/s. ORDPL from Shri Arun Jain. Therefore, even though it was shown in the chart as “on-money” of assessee company, in the light of the evidence brought on record (seized documents) it has been offered by M/s. ORDPL and accepted by Settlement Commission and the same amount has been again added in the hands of the assessee company. Therefore, the action of Ld. CIT(A) cannot be faulted for deleting the addition. Therefore, we confirm the impugned A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd action of the Ld. CIT(A) and dismiss the revenue appeal for AY. 2015-16. 19. For AY 2016-17, Ground no. 1 & 3 of revenue is against the action of the Ld. CIT(A) accepting assessee’s company’s contention regarding ‘on-money’ received to the tune of Rs.1.15 crores and holding it as subsumed in the income accepted by the Ld. Settlement Commission in the case of M/s. ORDPL. Brief facts is that the AO after discussing about the search operation and the statement recorded during search operation based on material seized, was of the opinion that the assessee was regularly receiving on-money for flats which are sold. According to him, Shri Kamal Kishore Gupta chairman and promoter of Omkar Group has admitted and confirmed to have received on-money of more than eighty one (81) crores which are not recorded in the books of accounts. Thereafter, the AO noted that when the data were collected and examined, the on-money amount taken in various projects by Omkar Group were re-submitted to the tune of Rs.105,41,65,564/- allocated in the hands five entities; and in the hands of the assessee company for AY. 2016-17 offered of Rs.10,91,46,400/-. According to the AO, he issued show cause notice to the assessee as to why the cash receipt of Rs.10,91,46,400/- should not be considered as unexplained and brought to tax in its hands; and the assessee pursuant to it filed A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd the reply which has been reproduced by AO at page 27 to 28 of his order. However, the AO did not accept the contention of the assessee that out of this amount i.e. Rs.10,91,46,400/- even though admitted by the chairman Shri Kamal Kishore Gupta, the correct amount of on-money received by the assessee was only to the tune of Rs.6,76,46,400/- which is corroborated by the material unearthed during search as under: Sr. Amount Annexure/Page No No. 1 65,46,400/- A-1/0-2/pg.37 2 4,00,00,000 1-2/R-7/pg.2 3 1,21,00,000 A-2/R-7/pg.113 4 90,00,000 A-2/R-7/pg 116 and 158 6,76,46,400/-

20. However, the AO did not accept the contention of the assessee and demonstrated in the assessment order by way of chart that assessee company had received cash against the project Dhobi Ghat Rs.10,91,46,400/- but out of which the AO noted that Rs.2.50 crores had been taxed in the hands of M/s.Vedaramb Properties LLP. So he reduced the same, therefore, he added Rs.8,41,46,400/- in the hands of the assessee on account of on- money receipt by holding as under: - “8.6 The contention put forth by the assessee is not accepted as the Group Chairman Sh. Kamal Kishore Gupta and the various relevant employees of the group was confirmed the facts when confronted with the material seized, the details of the same are tabulated as under: - A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd Sr. Company Document Identification Name of Name of Purpose On money No. Description of seized the the person Document project 1 Omkar Cash 02/A1/Pg. 37 Saat Sagar Advance 6,546,400 Realtorrs Receipt Rasta- Maniar for Projects voucher Dhobigh project to Pvt. Ltd. be launched 2 Omkar Cash R7- Saat Anil Goel Advance 40,000,000 Realtors Receipt A2/pg/113 Rasta- for voucher projects Dhobigh project to pvt. Ltd. be launched 3 Omkar Cash R7-A2/pg. Saat Chetanbhal Advance 12.100,000 Realtors Receipt 113 Rasta- for voucher Projects Dhobigh project to Pvt. Ltd. be launched 4 Omkar Cash R7- Saat Kesha P Advance 9,000,000 Realtors Receipt A2/Pg.116 & Rasta- Jhaveri for voucher Projects 158 Dhobigh project to Pvt. Ltd. be launched 5 Omkar Cash R7/A2/Pg. Saat Girija Advance 25,000,000 Realtors Receipt 128 & 132 Rasta- Agarwal for voucher Projects Dhobigh (Director) project to Pvt. Ltd. Prateek be launched 6 Omkar Cash 02/A1/Pg52 Saat SV Shah Advance 2,500,000 Realtors Receipt & 53 Rasta- for voucher Project Pvt. Dhobigh project to Ltd. be launched 7 Omkar Cash R7- Saat Ramratan Advance 10,000,000 Realtors Receipt A2/pg.134 & Rasta- Khandelwal for voucher Project Pvt. 136 Dhobigh Shiv project to Ltd. be launched 8 Omkar Cash 02/A1/pg. 50 Saat Mukesh Advance 2,000,000 Realtors Receipt Rasta- Jain for voucher Project Pvt. Dhobigh project to Ltd. be launched 9 Omkar Cash R-7-A2/pg. Saat Hanuman Advance 2,000,000 Realtors Receipt 133 Rasta- Jain for Project Pvt. voucher Dhobigh project to Ltd. be launched 8.7 From the aforesaid confirmation carried out during the search and post search proceedings, it is clear that the amount reflected in the receipts are the monies received in cash against the project “Dhobighat”. It is worth mention here that the statements of various persons recorded during the search proceedings u/s 132 of the I. T. Act have not been retracted by anyone. During the search assessment proceedings the assessee the flip-flopped and his contention cannot be accepted under such circumstances A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd without cogent documentary evidence. As assessee has not brought any new evidence other than the material seized during the search and which has already confronted and explained by the assessee in his statement on oath u/s 132 of the IT Act. On further verification it was revealed that the addition of Rs.2,50 cr. Which is reflected at Sl. No. 5 of above table is basis of seized. 8.8 In the above document, it is clearly mentioned that cash receipt is in the name of M/s. Vedaramb Properties LLP and the same has been brought to tax in the hands of M/s. Vedarambh Properties LLP. Thus to avoid the double addition, Rs.2,50 cr. Is reduced to the total cash receipt. In the light of above facts and the discussion made in foregoing paragraphs the monies received to the tune of Rs.8,41,46,400/- (10,91,46,400 – 2,50,00,000) is treated as unexplained and brought to tax in the hands of the assessee. Penalty proceedings u/s 271(1)(c) of the I. T. Act are initiated separately for furnishing inaccurate particulars of income, thereby concealment of income chargeable to tax. (Addition Rs.8,41,46,400/).

21. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who noted that out of aforesaid amount of Rs.8,41,46,400/-; an amount of Rs.1,15,00,000/- has already been offered as loan/cash in the hands of M/s. ORDPL; and the Ld. CIT(A) referred to the Ld. Settlement Commission order wherein the Ld. Settlement Commission has taken note of the Rule 9 A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd report submitted by PCIT before the Ld. Settlement Commission (supra) and noted that M/s. ORDPL had submitted a chart which showed serial number, name of party and amount received in cash, wherein it showed that it received an amount of Rs.31,39,45,000/- which included the following transactions which was being added by the AO as that of the assessee. SI No. Person Amount in Rs. 32 Hanuman Jain 20,00,000 33 Ramratan Khandelwal 50,00,000 34 Ramratan Khandelwal/Sitaram Khandelwal 25,00,000 35 Mukesh Jain 20,00,000 Total 1,15,00,000

of the revenue is against the action of the Ld. CIT(A) restricting the addition only to the gross profit (GP) rate 17.5% of Rs.7,26,46,400/- (ie. balance addition made by AO Rs.8,41,46,400/- minus Rs.1,15,00,000/-) without taxing the entire sum as on money to be taxed as per the relevant provisions of the Act. We note that the Ld. CIT(A) has deleted the addition by holding as under: - “7.8 The remaining amount of Rs.7,26,46,400/- (8,41,400/- - 1,15,00,000/- does not form part of the Settlement Petition and is required to be brought to tax in the hands of the appellant. The assessee has offered an income being 15% of Rs 6,76,46,400/- claiming that the entire receipt cannot be brought tax as income in face of A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd clear evidences that significant expenditure was being made cash looking at the nature of the group's activities. The assessee has relied on the order of the Settlement Commission wherein a GP rate of 17.5% has been accepted by the Commission. It has also relied on another group case where a GP rate of 25% has been adopted by the CIT(A) although not accepted by the assessee. It is assessee’s claim that in light of clear evidences of expenses which the appellant is required to make in cash, a reasonable GP rate needs to be adopted to arrive at the correct income of the assessee rather than adopting the entire receipt as income of the appellant. Reliance has also been placed by the appellant on the decision of the Settlement Commission in group cases on this issue. 7.

9. The claim of the assessee that the entire on-money receipt cannot be adopted as its income in face of clear evidences of cash expenses incurred by the group ls accepted. There are sufficient evidences of expenditure related to business having been incurred which has not been reflected in regular accounts. It is also noted that ORDPL, the lead company of the group had approached Settlement Commission with an offer of treating 15% of such receipts as income of the assessee, The Settlement Commission accepted an enhanced rate of GP of 17.5% as a rational offer. The observations of the Settlement Commission on this issue are as reproduced below: “11.4.5 We have considered the facts very carefully. The applicant could very successfully demonstrate the existence of evidences of cash expenses for the purpose of business, the source of which obviously has to be the A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd unaccounted cash receipts. As mentioned in para 5.1 of this order, Shri Kamal Kishore Gupta while declaring undisclosed income of Rs 202.80 crore during the course of search has admitted the unaccounted cash expenses of Rs 1.26 crore. Thus the existence of cash expenses for the purpose of business cannot be denied. The Pr. CIT has also not denied the existence of such expenses which is evident from the fact that he / she herself has requested to estimate profit at the rate of 38%. We have considered the evidences regarding expenses in cash found during the course of search. We have also considered the fact that the applicant is mainly engaged in SRA projects and various factors associated with this type of project which require lot of expenditure in cash in various processes such as negotiation with slum dwellers, additional compensation to slum dwellers for their extended premises, compensation to the committee members for liasoning with the slum dwellers, payment to other intermediaries, construction cost for Rehab building, etc which has ‘been very clearly mentioned by the applicant in its SOF and subsequent submissions as well as during hearing. We have also considered. the fact that even though evidence of on-money found the case of applicant is only to the extent of approximately Rs 70 crore but it has offered, on-money of more than Rs 530 crore in the allocation and finally offered to Rs 600 crore... The analysis of expenses incurred in cash for the purpose of business as mentioned in SOF and summarized in para 6.1(i)(G) above clearly demonstrate that profit percentage in th case of applicant cannot be as high as 38% as proposed by Pr. CIT. The facts of the present case cannot be compared with the facts of cases mentioned by Pr CIT as o SRA project were involved in those cases. Further the facts of each case are different and the same cannot be compared. The perusal of A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd revised fund flow statement submitted by the applicant vide its letter dated 12.03.2019 reveals that the application of income is far below the income so estimated at the rate of 17.5% of unaccounted gross receipts offered by the applicant vide its letter dated 12.03.2019. This fund flow statement has been perused by CIT DR and AO present during the hearing also ad they did not object against estimation of profits out of unaccounted gross receipts at the rate of 17.5%. We therefore direct to adopt the profit rate at 17.5% of unaccounted gross receipts as against 15% offered in SOF by the applicant.” 7.9 It is noted that the assessee is a group company handled by the same promoters and is also engaged in developing SRA projects. As such, the facts of the appellant company are exactly similar to that of the flagship company. In my view, the rate of 17.5% represents a reasonable rate of GP for the assessee and has also been accepted by the Settlement Commission in the case of the flagship company of the group. The AO is directed to adopt an enhanced GP rate of 17.5% for computing the profits with respect to the above amount of Rs 7,26,46,400/-. While computing the unaccounted income, credit may be given to the assessee with respect to the income to the extent of 15% of Rs 6,76,46,400/- already offered by the assessee. The ground is decided accordingly. 7.7 For statistical purpose, the ground is treated as partly allowed.” A.Y. 2015-16 & 2016-17 Resonant Realtors Pvt Ltd 24. Aggrieved by the aforesaid action of Ld. CIT(A) directing AO for adopting 17.5% for computing profit of Rs.7,26,46,400/- the revenue is before us.

5. The contents of this Circular may be circulated may be widely for information of all stakeholders and departmental officers. The pending assessments and litigations on this issue may be handled accordingly.” Rajarajeswari R.) Under Secretary (ITA. II), CBDT (F. No.225/45/2019-ITA.II)