THE DY.CIT, CIRCLE-3(1)(1), AHMEDABAD vs. NISHANT CONSTRUCTION PVT. LTD., AHMEDABAD

As the facts in both the appeals of the assessee are similar, so, we take ITA No. 2442/Ahd/2017 as the lead case and its finding will be applicable to the ITA No. 2243/Ahd/2017 for the sake of convenience.

The solitary ground of appeal of the assessee is directed against the order of ld. CIT(A) in deleting the addition of Rs. 32,13,77,692/- on account of alleged on money received in respect of Ratnakar III and IV scheme built and developed by the assessee company. At the time of hearing this appeal, the ld. counsel has brought to the notice of the Bench that identical issue based on similar facts has been decided by the Co-ordinate Bench of the ITAT in the assessment year 2011-12 and 2012-13 in favour of the assessee vide ITA NO. 1502/Ahd/2015 dated 14-02-2017 and ITA No. 378/Ahd/2016 dated 24-04-2017 . Further, he has brought to our notice that the decision of the Co-ordinate Bench of the ITAT has been confirmed by the Hon’ble Juri ictional High Court for the assessment year 2011-12 on similar issue and similar facts vide Tax Appeal Nos. 809 and 898 of 2017 dated 9th April, 2018 (2019) 101 taxman.com 179 (Guj). He has further submitted that Special Petition filed by the revenue against the aforesaid decision of Hon’ble Gujarat High court has also been dismissed by the Hon’ble I.T.A Nos. 2442 & 2243/Ahd/2017 A.Y. 2013-14 to 2014-15 Page No 3 DCIT vs. M/s. Nishant Construction Pvt. Ltd.

The respondent-assessee is engaged in the construction development of projects. The assessee was subjected to survey operation during which, certain documents were found and impounded. One such document was a loose paper containing certain figures of the area and rate of sale of constructed area. On the basis of such documents, further inquiries were made by the Assessing Officer. He collected material pertaining to the rates prevailing in the market and came to the conclusion that the assessee had received on-money in sale of flats in the schemes known as Ratnakar 3 and Ratnakar 4 situated in Satellite area of city of Ahmedabad. He therefore, made addition to the tune: of Rs. 32.56 crores (rounded off).

Assessee carried the matter in appeal before the Commissioner. Commissioner: (Appeals) confirmed the addition placing heavy reliance on the following three factors: (i) Above noted loose documents contained reference to constructed areas and rate of sale; , i (ii) The assessment proceedings concerning the builders M/s. Sambhav Infrastructure Pvt. Ltd in which the assessee had admitted to have received sizeable on-money during sale of flats in the same vicinity; (iii) From survey and the material collected by the Assessing Officer from the website which, according to him indicated prevailing market rates.

The issue was carried in further appeal by the assessee before the Tribunal. The Tribunal at one stage remanded the proceedings for giving opportunity to the assessee to seek cross-examination of representative of M/s. Sambhav Infrastructure Pvt. Ltd. The assessee had therefore come to the High Court and complained about the remand of the proceedings containing that no cross- examination was sought or is being insisted upon. The High Court therefore requested the Tribunal to decide the appeal on merits. Thereupon, the Tribunal ruled in favour of the assessee principally holding that there was no reliable or independent evidence to come to the conclusion that the assessee had accepted on-money in the sale of the constructed properties.

We have heard learned counsel for the parties and perused the documents on record. The Tribunal discarded loose document on the ground that the same did not pertain to assessee's schemes Ratnakar 3 and Ratnakar 4 since the document referred to the areas and rates of the penthouse whereas scheme Ratnakar 3 does not have a penthouse and scheme Ratnakar 4 does not have 4 BHK Flats and though has penthouse, area does not match with the loose document. This therefore is substantially a question of fact. If we eliminate these documents from consideration, what Revenue would have are the admissions made by the representative of M/s. Sambhav Infrastructure Pvt. Ltd of having received on-money in sale of flats and the comparison by the Revenue authorities of the given rates for the constructed properties in the same area. Firstly neither the Assessing Officer nor the CIT (Appeals) had compared the rates of M/s.

The reference to the material collected from the website was also bereft of comparability in terms of area, location and period. All in all, the entire issue was factual in nature. The Tribunal having considered the relevant facts, no question of law arises.” Further, we have noticed that Hon’ble Supreme Court has dismissed the Special Leave Petition filed by the Revenue against the aforesaid decision of Hon’ble High Court wherein it is held as under:- “Section 69A of the Income-tax Act, 1961 - Unexplained money (On money) - Assessee was engaged in construction and development of housing projects - It was subjected to survey operation during which certain documents were found and impounded - On basis of such documents, Assessing Officer came to conclusion that assessee had received on-money from sale of flats - He therefore, made certain addition to assessee's income - Tribunal, however, deleted said addition on ground that there was no reliable or independent evidence to come to conclusion that assessee had accepted on-money for sale of constructed properties - High Court upheld order passed by Tribunal -Whether, on facts, SLP filed against decision of High Court was to be dismissed - Held, yes [In favour of assessee]”

In the combined result, both the appeals of the revenue are dismissed.