S K Z DEVELOPERS LLP,AHMEDABAD vs. THE DY. CIT, CENTRAL CIRCLE-1(4), AHMEDABAD

We would first take up cross-appeals pertaining to the Assessment Year 2019-2020, which arise from Common Order, dated 16/10/2025, passed by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as ‘CIT(A)’], whereby the appeal against the Assessment Order, dated 21/03/2025, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’] was partly allowed.

The Assessee has raised following grounds of appeal in ITA No. 2638/AHD/2025: “1. In law and in the facts and circumstances of the case of the appellant, the impugned assessment order passed under section 143(3) r.w.s 147 of the Income tax Act is void, bad in law, without jurisdiction and deserves to be cancelled.

In law and in the facts and circumstance of the appellant's case, the reassessment notie issued under section 148 of the act is invalid, bad in law, and liable to be quashed.

In law and in the facts and circumstances of the appellants's case, the approval u/s 151 of the Income Tax Act, 1961 is invalid, mechanical and bad in law, and therefore the reassessment must be quashed. 4. The learned CIT(A) has grossly erred in partly confirming addition on account of alleged on-money receipts in the project named Privilon and Paarijat Eclate by directing the AO to recompute alleged on-money based on an arbitrary flat rate of Rs. 6,500 per sq. ft. (except for the units where sale deed executed is at higher rate) and by comparing such estimated value with the registered sale-deed value. The estimation of alleged on-money is ad-hoc, arbitrary and without any evidentiary basis, and therefore liable to be quashed. 5. The learned CIT(A) has grossly erred in directing the re- computation of business income by estimating profits at 17% of the so-called on-money receipts, despite the fact that no on- money whatsoever exists. The impugned direction is therefore illegal, unsustainable in law, and liable to be quashed. 6. The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s 269ST of the Act when the initiation itself is void and bad in law and deserves to be quashed. 7. The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s 271AAD(1) (ii) of the Act when the initiation itself is void and bad in law and deserves to be quashed. 8. The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s 270A of the Act when the initiation itself is void and bad in law and deserves to be quashed. 9. The learned CIT(A) has erred in confirming levy of interest u/s 234A/234B/234C, which is not justified and deserves to be deleted.”

The Revenue has raised following grounds of appeal in ITA No. 2534/AHD/2025: 1) In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in directing to recompute the sale consideration at Rs.6500/- per sq.ft., inclusive of all charges, and thereafter to estimate the profit arising on account of on-money received at 17% of the same, ignoring the detailed reasoning given by the A.O.

The above additions of INR.60,88,41,473/- made by the Assessing Officer consisted of additions of the following:

The findings returned by the Assessing Officer can be summarised as under: (a) There was discrepancy in the sale rates when compared to the actual project costs as inferred from the seized documents. Sale deeds were executed at basic prices as lower than the aggregate cost details gathered from digital excel files seized during search which gave details of the cost per sq. ft. (inclusive of land, construction, professional, and indirect expenses). Selling units below the breakeven cost established suppression of sale. Further, the seized documents reflected wide variations in sale price for similar units on the same or different floors. Therefore, the Assessing Officer concluded that there was difference in actual rates and documented sales which represented ‘on money’ receipts. (b) Additional charges were listed separately, including AEC/AMC Charges (INR.300/- per Sq.Ft.), Common Development Charges (INR.500 per Sq.Ft.), Parking (INR.4 lakh per parking space), and Maintenance Deposits. (c) The third-party data corroborated that the group systematically accepted ‘On-Money’ on the sale of units. On the basis of the above the Assessing Officer levied extra charges of INR.1288/- per Sq. Ft. and INR.608 per Sq. Ft. for units sold in project ‘Privilon’ and ‘Paarijat Eclate’, respectively. Further, the Assessing Officer made addition of INR. 4 lakh per unit sold in both the aforesaid project. Thus, the Assessing Officer made total addition of INR.60,88,41,473/- as combined on-money received by the Assessee from ‘Privilon’ and ‘Parijaat Eclat’ project. 12. Being aggrieved, the Assessee preferred appeal before the Learned CIT(A) against the Assessment Order. Before the Learned CIT(A), the Assessee made following submissions to rebut the findings observed by the Assessing Officer.

Being aggrieved by the above relief granted by the Learned CIT(A) vide Common Order, dated 16/10/2025, both, the Assessee and Revenue, are in appeal before this Tribunal on the grounds under consideration. We have given thoughtful consideration to the rival submissions and have perused the material on record. 15. It emerges that while granting relief to the Assessee, while disposing the appeal preferred by the Assessee, the Learned CIT(A) had followed the decision of the First Appellate Authority in the case of the Assessee pertaining to Assessment Year 2022-2023. During the course of the proceedings, the Learned Authorized Representative for the Assessee had placed on record the Common Order, dated 09/10/2026, passed by the Co-ordinate Bench of the Tribunal in the case of the Assessee for the Assessment Years 2021-2022 and 2022- 2023. On perusal of the aforesaid decision, we find that the Assessee had raised identical issues in the grounds raised in appeal before the Tribunal for the Assessment Year 2022-2023, which reads as under: “1. xxx 2. In the facts and circumstances of the case of the Assessee, the Ld. CIT(A) has erred in holding that the Assessee has received alleged on-money on sale of units at project “Privilon” and “Paarijat Eclate” developed by it when no evidence relating to alleged on-money was found during the course of search and relied upon by Assessing Officer in Assessment Order.

In the facts and circumstances of the case of the Assessee, the Ld. CIT(A) has erred in holding that on-money receipt in its case is required to be computed considering average fair market value of sale of units @ Rs.6,500/- per Sq. Ft. when there was no reason to estimate on-money in case of Assessee and no evidence relating to receipt of on-money was found during the course of search.

Without prejudice to above, the Ld. CIT(A) has erred in estimating the unaccounted profit ratio @17% when the actual profit ratio as shown in books of account and accepted by the Assessing Officer is much lower than such estimated profit.

xxx. 6. xxx.”

In the Common Order, dated 09/01/2025 [passed ITA No. 1677 & 1728/AHD/2024 (Assessment Year 2021-2022) and ITA No. 1678 & 1729/AHD/2024 (Assessment Year 2022-2023)] [hereinafter referred to as ‘the Co-ordinate Bench Decision’], after considering common material seized during the course of search conducted on 28/09/2021, the Tribunal concluded as under: “10.6. The facts in the hands clearly suggest that both the lower authorities have proceeded on the basis of their own assumptions and presumptions to assume the receipt of ‘on-money’ by the assessee on sale of units without any corroborative evidence being found during the search action or during the course of post-search inquiries. In view of detailed discussion made herein above, entire addition of on money made by the AO for Rs.20,24,12,970/- for project "Privilon" and Rs.33,12,61,018/- for project Parijat Eclate" is ordered to be deleted. Therefore, Ground of Appeal Nos. 2 to 4 of assessee appeal are allowed.” While arriving at the above conclusion, the Tribunal observed as under: “10. We have considered the rival contentions of the Ld. Representatives of the parties and gone through the record. 10.1. Before us, the Ld. DR could not rebut the contentions of the Ld. AR that the documents relied upon by the AO, were nothing but dumb documents as these loose sheets did not contain details of buyers, date of receipt of alleged on money, signature of buyer or agreement to sale. Therefore, the contention of the Ld. AR that these loose-papers were just quotations/offer price only cannot be brushed aside. Moreover, as noted by the AO also, in the relevant column of these seized documents, it was mentioned a “Offer Rate”.We agree with the contentions of the Ld. AR that in the real estate business, offer rates are always on the higher side and are subject to negotiation. There is no evidence on the file that any transaction actually materialized at the rates in the relevant assessment year as depicted in the alleged seized documents. The Ld. AR has also explained that the AO has wrongly assumed/interpreted the various short-words/abbreviations to his convenience and linked the same to assume higher sale rates of the units. He has also demonstrated that the AO found notes saying "1P=4L" and assumed this meant "1 Parking Spot = Rs. 4 Lakhs in cash."The Ld. AR, however, explained that "P" actually stood for "Painting" (interior finishing works like painting and panelling), which is an optional service. This type of abbreviations, in our view, can be well explained by the person who has written these abbreviations or the person in whose possession these documents were found. If such a person gives the explanation/full-form of these abbreviation and the same are found convincing, looking into the facts and circumstances of the case, then, in our view, the other interpretation done by the AO to assume higher sale price would not be justified, especially when there is no corroborative evidence to such assumptions. In this case, even the AO did not verify his assumptions as no buyers were questioned to confirm if they paid any cash over and above the sale price mentioned in the deed. Even, the AO used internal Excel files containing budget projections to calculate the project cost of Rs. 5,000 per sq. ft. The AO then assumed that any unit sold below this rate implies that the difference was collected in cash. However, the case of the assessee is that these excel-sheets were internal estimates and budgets, not actual sales. Moreover, neither any unaccounted cash in the possession of the assessee, nor any "cash book" or informal ledger recording on-money receipts or any other evidence of the utilization of such alleged cash (e.g., unexplained investments or expenses) or any day to day cash trail was found or noticed during the search action. The AO did not make any inquiries with the purchasers by issuing notices u/s 133(6) of the Act. Conversely, the assessee voluntarily filed affidavits from the buyers, who categorically denied paying any amount in cash over the registered value. The AO has not referred to any single corroborative evidences containing date wise cash receipt from any member or loose material bearing signature of buyer confirming cash payment or other evidences which clearly bifurcates negotiated deal into “cash component” and “cheque component”. That even there was a timing mismatch as the units in question were booked during the years 2014–2016 at lower market rates, which were compared with a cost average calculated years later in 2021–22. Even, we find force in the contention of the Ld. AR that the prices quoted in the loose-papers/chats found from the broker would have been the resale offer/negotiation price offered by the first buyer as these documents//chats were of the later period, even after the booking of the flats by the assessee. 10.2. Even the adoption of a uniform rate of Rs 6,500/- by the Ld.

On perusal of the above Co-ordinate Bench Decision, it is clear that in the case of the Assessee, the Tribunal had deleted identical addition made by the Assessing Officer on the basis of same search material. For the Assessment Year 2021-2022 and 2022-2023, the Assessing Officer had concluded that the Assessee had received on-money in cash on the basis of loose sheets, excel sheets, broker files, and whatsApp chats found during search. In appeal preferred by the Assessee, the CIT(A) granted partial relief and lowered the addition by estimating a flat sale rate of INR.6,500 per Sq.Ft. and taxing the embedded profits at 17%. In appeal preferred by the Assessee, the Co-ordinate Bench of the Tribunal completely deleted the entire addition holding that (a) the documents relied upon by the Assessing Officer were deemed ‘dumb documents’, (b) The ‘Offer Rates’ stated in the seized materials were merely initial quotations subject to negotiation, as opposed to actual transaction rates, (c) there was no corroborative evidence to establish cash trail, (d) the Assessing Officer failed to conduct independent inquiries either by way of issuance of notice under Section 133(6) of the Act or otherwise to rebut the buyer affidavits furnished by the Assessee denying payment of any cash, and (e) the CIT(A) had applied a flat rate of INR 6,500/- per Sq. Ft. without appreciating that the real estate pricing varies based on direction, floor level, and booking time.

The Revenue has failed to bring on record any material to differentiate the above decision of the Co-ordinate Bench of the Tribunal either on facts or on law. Therefore, respectfully following said decision of the Tribunal in the case of the Assessee for the Assessment Year 2023-2024 [ITA No. 1678/AHD/2024, Common Order, dated 09/01/2026].The addition made by the Assessing Officer on account of ‘on-money’ in relation to units sold for project ‘Privilon’ and ‘Paarijat Eclate’ [to the extent confirmed by the Learned CIT(A)] is deleted. As a result, now, the entire addition made by the Assessing Officer stands deleted. Thus, Ground Nos.4 and 5 raised by the Assessee are allowed.

In result, the present appeal preferred by the Revenue is dismissed. Assessment Year 2020-2021 25. Next, we would take up cross-appeals pertaining to the Assessment Year 2020-2021, which arise from Common Order, dated 16/10/2025, passed by the CIT(A) whereby the appeal against the Assessment Order, dated 21/03/2025, passed under Section 143(3) read with Section 147 of the Act for the Assessment Year 2020-2021 was partly allowed. 26. The Assessee has raised following grounds of appeal in ITA No. 2639/AHD/2025:

In law and in the facts and circumstances of the appellant's case, the reassessment notice issued under Section 148 of the Act is invalid, bad in law, and liable to be quashed.

In law and in the facts and circumstances of the appellant's case, the approval u/s. 151 of the Income Tax Act, 1961 is invalid, mechanical and bad in law, and therefore the reassessment must be quashed.

The learned CIT(A) has grossly erred in partly confirming addition on account of alleged on-money receipts in the project named Privilon by directing the AO to recompute alleged on-money based on an arbitrary flat rate of Rs. 6,500 per sq. ft. (except for the units where sale deed executed is at higher rate) and by comparing such estimated value with the registered sale-deed value. The estimation of alleged on-money is ad-hoc, arbitrary and without any evidentiary basis, and therefore liable to be quashed.

The learned CIT(A) has grossly erred in directing the re- computation of business income by estimating profits at 17% of the so-called on-money receipts, despite the fact that no on-money whatsoever exists. The impugned direction is therefore illegal, unsustainable in law, and liable to be quashed.

The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s 269ST of the Act when the initiation itself is void and bad in law and deserves to be quashed.

The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s. 271AAD (1) (ii) of the Act when the initiation itself is void and bad in law and deserves to be quashed.

The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s. 270A of the Act when the initiation itself is void and bad in law and deserves to be quashed.

The learned CIT(A) has erred in confirming levy of interest u/s 234A/234B/234C, which is not justified and deserves to be deleted.”

The Revenue has raised following grounds of appeal in ITA No. 2535/AHD/2025: “1) In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in directing to recompute the sale consideration at Rs.6500/- per sq.ft., inclusive of all charges, and thereafter to estimate the profit arising on account of on-money received at 17% of the same, ignoring the detailed reasoning given by the A.O." 28. During the course of hearing both the sides had agreed that the issues raised in the present cross-appeals are identical to the grounds raised in the cross-appeals pertaining to the Assessment Year 2019- 2020. Therefore, our finding/adjudication in corresponding grounds raised in cross-appeal for the Assessment Year 2019-2020 shall apply mutatis mutandis to the corresponding grounds raised in present cross-appeals. Therefore, adopting the reasoning given while adjudicating corresponding grounds raised in cross-appeals for the Assessment Year 2019-2020, we proceed to dispose of the grounds raised in the present cross-appeal which are taken up hereinafter in seriatim. Ground No. 1 to 3 29. In view of the statement made by the Learned Authorized Representative for the Assessee during the course of the hearing to the effect that the Assessee does not wish to press Ground No. 1 to 3 challenging the validity of the re-assessment proceedings, the said Ground No. 1 to 3 are dismissed as being not pressed. Grounds No. 4 to 6 30. The issues raised in Grounds No. 4 to 6 raised by the Assessee in the present appeal preferred by the Assessee are identical to the issues raised by the Assessee in Grounds No. 4 & 5 of appeal for the Assessment Year 2019-2020. In view of our findings/adjudication in above Paragraph 8 to 18 hereinabove, the addition made by the Assessing Officer on account of ‘on-money’ in relation to units sold for project ‘Privilon’ and ‘Paarijat Eclate’ [to the extent confirmed by the Learned CIT(A)], is deleted. As a result, the entire addition made by the Assessing Officer stands deleted. Thus, Ground No.4 to 6 raised by the Assessee are allowed.

Ground No. 7 to 10 raised by the Assessee pertaining to initiation of penalty proceedings, and levy of interest are dismissed as being consequential in nature. 32. In result, the appeal preferred by the Assessee is partly allowed; ITA NO.2535/AHD/2025 33. We would next take up Ground No. 1 raised by the Revenue in its appeal which is connected to Ground No. 4 to 6 raised by the Assessee in the cross-appeal (ITA No. 2639/AHD/2025). 34. We have allowed Ground No. 4 to 6 raised by the Assessee in the cross-appeal hereinabove, and have deleted the additions made by the Assessing Officer. Therefore, adopting the same reasoning, we dismiss Ground No. 1 raised by the Revenue in its appeal. 35. In result, the present appeal preferred by the Revenue is dismissed. Assessment Year 2023-2024

Next, we would take up cross-appeals pertaining to the Assessment Year 2023-2024, which arise from Common Order, dated 16/10/2025, passed by the CIT(A) whereby the appeal against the Assessment Order, dated 21/03/2025, passed under Section 143(3) read with Section 147 of the Act for the Assessment Year 2023-2024 was partly allowed. 37. The Assessee has raised following grounds of appeal in ITA No. 2640/AHD/2025: “1. In law and in the facts and circumstances of the case of the appellant, the impugned assessment order passed under section 143(3) r.w.s. 147 of the Income-tax Act is void, bad in law, without jurisdiction and deserves to be cancelled.

In law and in the facts and circumstances of the appellant's case, the reassessment notice issued under Section 148 of the Act is invalid, bad in law, and liable to be quashed.

In law and in the facts and circumstances of the appellant's case, the approval u/s. 151 of the Income Tax Act, 1961 is invalid, mechanical and bad in law, and therefore the reassessment must be quashed.

The learned CIT(A) has grossly erred in partly confirming addition on account of alleged on-money receipts in the project named Privilon by directing the AO to recompute alleged on-money based on an arbitrary flat rate of Rs. 6,500 per sq. ft. (except for the units where sale deed executed is at higher rate) and by comparing such estimated value with the registered sale-deed value. The estimation of alleged on-money is ad-hoc, arbitrary and without any evidentiary basis, and therefore liable to be quashed.

The learned CIT(A) has grossly erred in partly confirming addition on account of alleged on-money receipts in the project named Paarijat Eclate by directing the AO to recompute alleged on-money based on an arbitrary flat rate of Rs. 6,500 per sq. ft. (except for the units where sale deed executed is at higher rate) and by comparing such estimated value with the registered sale-deed value. The estimation of alleged on-money is ad-hoc, arbitrary and without any evidentiary basis, and therefore liable to be quashed.

The learned CIT(A) has grossly erred in directing the re- computation of business income by estimating profits at 17% of the so-called on-moncy receipts, despite the fact that no on-money whatsoever exists. The impugned direction is therefore illegal, unsustainable in law, and liable to be quashed.

In law and on facts, the learned CIT(A) has erred in partly sustaining the addition on account of alleged deemed rent and in directing the AO to recompute the same at 3% of the cost of vacant units, which is arbitrary, beyond jurisdiction, and bad in law. No deemed rent is warranted on the facts of the case. The entire addition of Rs. 87,07,725/- (as reduced to Rs. 60,95,407/) deserves to be deleted in full.

The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s 269ST of the Act when the initiation itself is void and bad in law and deserves to be quashed.

The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s. 271AAD(1)(ii) of the Act when the initiation itself is void and bad in law and deserves to be quashed.

The learned CIT(A) has erred in dismissing grounds challenging penalty initiation u/s. 270A of the Act when the initiation itself is void and bad in law and deserves to be quashed.

The learned CIT(A) has erred in confirming levy of interest u/s. 234A/234B/234C, which is not justified and deserves to be deleted..”

The Revenue has raised following grounds of appeal in ITA No. 2536/AHD/2025: 1) "In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in directing to recompute the sale consideration at Rs.6500/- per sq.ft., inclusive of all charges, and thereafter to estimate the profit arising on account of on-money received at 17% of the same, ignoring the detailed reasoning given by the A.O." 2) "In the facts and on the circumstances of the case and in law, the ld.CIT(A) has erred in restricting deemed rent to the extent of 3% as against 7.5% computed by A.O. as per the decision of Hon'ble Supreme Court of India in Dr. Balbir Singh vs. Municipal Corporation, Delhi [1985]." 39. During the course of hearing both the sides had agreed that the issues raised in the present cross-appeals are identical to the grounds raised in the cross-appeal pertaining to the Assessment Year 2019- 2020. Therefore, our finding/adjudication in corresponding grounds raised in cross-appeal for the Assessment Year 2019-2020 shall apply mutatis mutandis to the corresponding grounds raised in present cross-appeals. Therefore, adopting the reasoning given while adjudicating corresponding grounds raised in cross-appeals for the Assessment Year 2019-2020, we proceed to dispose of the grounds raised in the present cross-appeal. Ground No. 1 to 3 40. In view of the statement made by the Learned Authorized Representative for the Assessee during the course of the hearing to the effect that the Assessee does not wish to press Ground No. 1 to 3 challenging the validity of the re-assessment proceedings, the said Ground No. 1 to 3 are dismissed as being not pressed. Grounds No. 4 to 6 41. The issues raised in Grounds No. 4 to 6 raised by the Assessee in the present appeal are identical to the issues raised by the Assessee in Grounds No.4 & 5 of appeal for the Assessment Year 2019-2020. In view of our findings/adjudication in above Paragraph 8 to 18 hereinabove, the addition made by the Assessing Officer on account of ‘on-money’ in relation to units sold for project ‘Privilon’ and ‘Paarijat Eclate’ [to the extent confirmed by the Learned CIT(A)], is deleted. As a result, the entire addition made by the Assessing Officer stands deleted. Thus, Ground No.4 to 6 raised by the Assessee are allowed. Grounds No.7 42. Ground No. 7 raised by the Assessee pertains to addition of deemed rental income made by the Assessing Officer in respect of vacant units held by the Assessee. It is admitted position that Assessing Officer had made addition of INR.87,07,725/- under Section 23(5) of the Act holding the same to be deemed rental income chargeable to the tax in the hands of the Assessee. In appeal preferred by the Assessee, the Learned CIT(A) restricted the deemed rental income to 3% of value of units sold (as against 7.5% of value of units sold computed by the Assessing Officer). Being aggrieved, both, the Assessee and Revenue have carried this issue in appeal before this Tribunal. Ground No. 7 raised by the Assessee and Ground No. 2 is raised by the Revenue in present cross-appeals are directed against the order of Learned CIT(A) restricting the deemed rental income to 3% of value of units sold. 43. During the course of hearing, both sides agreed that this issue had come up for consideration before the Tribunal in the case of the Assessee for the Assessment Years 2021-2022 and 2022-2023. On perusal of the Co-ordinate Bench decision, we find that the Tribunal had dealt with the identical issue raised in the cross-appeals for the aforesaid assessment years in the following manner: “11. Ground No.5:- Vide Ground No.5, the assessee has contested the addition of deemed rent made by the AO @7.5 of the value of the property, however, restricted by Ld. CIT (A) @ 3% of market value of unsold unit. The AO observed that BU permission for project developed by assessee was taken on 22-01-2019 and as per provision of Section 23(5) of the Act, two years had passed on 31-03-2021, hence, addition of deemed rent @ 7.5% of value of property was required to be made. The AO, accordingly, estimated deemed rent u/s 23(5) of the Act at Rs.2,79,39,625/. This addition was challenged by assessee before the Ld. CIT (A), who, in principle, agreed with the finding of A.O. that deemed rent was required to be computed as per provision of Section 23(5) of the Act. He, however, restricted such estimated rent @ 3% of fair market value of property and directed AO to allow 30% standard deduction on such estimated rent as per provision of Section 24 of the Act. Being aggrieved by above finding, the assessee has come in appeal before us.

On the other hand, the Ld. DR has stated that A.O. has given detailed finding while estimating deemed rent @ 7.5% on fair market value of property and such addition needs to be restored.

We have considered the rival submissions of the Ld. Representatives of both the parties on this issue. The provisions of Section 23(5) of the Act clearly provide that deemed rent is required to be offered to tax by builder for unsold unit when two years have lapsed from obtaining BU permission of the project. The provision of the Act nowhere provides exclusion of estimation of deemed rent for projects, of which construction had commenced prior to introduction of said provisions. The legal plea raised by assessee fails on this ground. The Ld. AR has not drawn any specific instances, wherein, assessee has tried to give property on rent when they are unsold and lying vacant with it. The estimate of 3% as deemed rent in our view, is justified. We do not find any merit in this Ground of appeal, the same is accordingly dismissed.

In the result, assessee’s appeal is partly allowed.

Now coming to the Revenue’s Appeal for AY 2022-23.

Ground No. 8 to 11 raised by the Assessee pertaining to initiation of penalty proceedings, and levy of interest are dismissed as being consequential in nature. 46. In result, the appeal preferred by the Assessee is partly allowed; ITA NO.2536/AHD/2025 47. We would next take up appeal preferred by the Revenue for the Assessment Year 2023-2024. Ground No. 1 48. Ground No. 1 raised by the Revenue in the present appeal which is connected to Ground No. 4 to 6 raised by the Assessee in the cross- appeal. We have allowed Ground No. 4 to 6 raised by the Assessee in the cross-appeal hereinabove, and have deleted the additions made by the Assessing Officer. Therefore, adopting the same reasoning, we dismiss Ground No. 1 raised by the Revenue in its appeal. Ground No. 2 49. As regards Ground No. 2 raised by the Revenue is concerned the same is connected to Ground No.7 raised by the Assessee in the cross-appeal. We have declined to interfere with the order passed by the Learned CIT(A) restricting the deemed rental income under Section 23(5) of the Act to 3% of the value of unsold units. Therefore, in view of paragraph 42 to 44 above, we dismiss Ground No. 2 raised by the Revenue. 50. In result, the present appeal preferred by the Revenue is partly allowed. 51. In conclusion: Assessment Year 2019-2020 (a) ITA No. 2638/AHD/2025 is partly allowed. (b) ITA No. 2534/AHD/2025 is dismissed. Assessment Year 2020-21 (c) ITA No. 2639/AHD/2025 is partly allowed. (d) ITA No. 2535/AHD/2025 is dismissed. Assessment Year 2023-2024 (e) ITA No. 2640/AHD/2025 is partly allowed. (f) ITA No. 2536/AHD/2025 is partly allowed.