D R ASSOCIATES,SURAT vs. ACIT, CIRCLE 1(2), SURAT, SURAT

ITA 264/SRT/2024Status: DisposedITAT Surat01 October 2026AY 2013-1427 pages
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What were the facts?

The assessee, D.R. Corporation, is a partnership firm engaged in housing development. A survey under Section 133A of the Income Tax Act, 1961, was conducted on January 4, 2013, during which the partner recorded an on-money receipt of Rs. 2,53,17,855/-. The assessee filed its return for AY 2013-14, declaring Rs. 42,04,650/- as total income, including Rs. 41,45,010/- of the disclosed income. The Assessing Officer (AO) accepted the assessee's explanation that on-money receipts would be recognized as income in the respective years of title transfer, following CIT vs. Ashaland Corporation. The AO allowed credit for Rs. 69,21,680/- offered in AYs 2013-14 to 2015-16 and made an addition of Rs. 1,83,96,175/-. The Commissioner of Income-tax (Appeals) [CIT(A)] confirmed an addition of Rs. 1,27,65,645/-, granting partial relief.

What did the Tribunal hold?

The Tribunal, in its consolidated order for D.R. Corporation (ITA No. 265/SRT/2024) and D.R. Associates (ITA No. 264/SRT/2024), decided that the principle laid down in CIT vs. Ashaland Corporation (supra) regarding income accrual upon title transfer is applicable. The Tribunal acknowledged the assessee's submission that it had offered further income for AYs 2024-25 and 2025-26, and intended to offer income for AY 2026-27, which would complete the entire on-money receipts surrendered during the survey. For D.R. Corporation, the Tribunal set aside the CIT(A)'s finding confirming the addition of Rs. 1,27,65,645/- and directed the AO to verify the assessee's claim of offering undisclosed income in AYs 2016-17 to 2023-24. If found correct, the addition to that extent was to be deleted. For D.R. Associates, the Tribunal applied the same principle, setting aside the CIT(A)'s confirmation of Rs. 1,54,26,375/- and directing the AO to verify the claim of offering income in AYs 2025-26 to 2026-27. The AO was directed to make a limited verification and delete the addition if the claim was correct. The Tribunal clarified that the direction was confined to AYs up to 2026-27, as per the undertaking filed by the assessee. An additional ground regarding deduction under Section 80-IB(10) was dismissed as not pressed by the assessee.

What were the issues?

1. Whether the Ld. CIT(A) erred in partly confirming the addition of Rs. 1,27,65,645/- out of the total addition of Rs. 1,83,96,175/- made by the AO on account of on-money received from the project not declared in the return of income, under Section 143(3) of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that it had offered a total income of Rs. 1,25,52,210/- out of the total disclosure of Rs. 2,53,17,855/- on a year-to-year basis in AYs 2013-14 to 2023-24, corresponding to the area of the project actually sold or title transferred. The assessee relied on CIT vs. Ashaland Corporation (1982) 133 ITR 55 (Guj) and ITAT, Ahmedabad Bench in the case of its sister-concern, M/s. D.R. Construction. Revenue's Contention: The revenue, through the AO and Ld. CIT(A), proceeded to make additions based on the undisclosed income detected during the survey, while allowing credit for amounts offered in subsequent years. The revenue's specific arguments are not explicitly detailed beyond the AO's order accepting the principle of recognizing income upon title transfer.

Which sections of the Income-tax Act were involved?

Section 133A,Section 143(3),Section 80-IB(10)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

For Appellant: Shri Rasesh Shah, CA
For Respondent: Shri J.K. Chandnani, CIT(DR)
Hearing: 06.07.2026Pronounced: 01.10.2026

Per B.M. Biyani, AM:

The captioned two appeals have been filed by two different assessees which are sister-concerns and the underlying facts and issues are identical, therefore they were heard together at the request of parties and are being

D R Corporation Vs. ACIT – ITA No. 265/SRT/2024 - A.Y. 2013-14 D R Associates Vs. ACIT – ITA No. 264/SRT/2024 - A.Y. 2013-14

disposed of by this consolidated order, for the sake of convenie

The order continues below.

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