SUSNEH INFRAPARK PRIVATE LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4(1), MUMBAI, MUMBAI

आदेश / O R D E R PER AMIT SHUKLA (JM):

The captioned appeals comprise four appeals preferred by the assessee, being ITA Nos. 8541 to 8544/Mum/2025 for Assessment Years 2021-22 to 2024-25, and three corresponding appeals preferred by the Revenue, being ITA Nos. 9260 to 9262/Mum/2025 for the relevant assessment years. The appeals arise from separate orders passed by the learned Commissioner of Income Tax (Appeals)-52, Mumbai, in relation to assessments framed under section 147 of the Income-tax Act, 1961 for Assessment Years 2021-22 and 2022-23 and under section 143(3) of the Act for Assessment Years 2023-24 and 2024-25. Since the additions impugned in these appeals emanate from a common search action carried out in the Runwal Group; the evidentiary material relied upon by the Assessing Officer is substantially common; and the issues relating to alleged receipt of on-money, unaccounted expenditure, subcontracting charges and the applicability of section 43CA recur in different years, all these appeals were heard together and are being disposed of by this consolidated order.

3 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 2. For a proper appreciation of the issues arising in the respective appeals, their broad particulars may be set out at the threshold in the following table:

Assessment Assessee’s Revenue’s Nature of Principal year appeal appeal assessment issues Reopening and ITA No. alleged on- 2021-22 — Section 147 8541/Mum/2025 money of ₹65,00,000 Additional ground, alleged ITA No. ITA No. on-money of 2022-23 9260/Mum/2025 Section 147 8542/Mum/2025 ₹22,18,91,000 and section 43CA Additional ground, alleged on-money of ITA No. ITA No. Section ₹8,80,00,000, 2023-24 8543/Mum/2025 9261/Mum/2025 143(3) subcontracting expenditure and section 43CA Alleged on- money of ITA No. ITA No. Section ₹2,37,29,000 2024-25 8544/Mum/2025 9262/Mum/2025 143(3) and subcontracting expenditure

4 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. search which, according to the assessee, were subsequently retracted; and the absence of any independent material establishing actual receipt of cash from the purchasers. For Assessment Years 2023-24 and 2024-25, the assessee has also challenged the 5% disallowance out of the subcontracting expenditure incurred through M/s Senghani Creators Pvt. Ltd. and the corresponding reduction from Work-in-Progress. The Revenue, in its cross-appeals, has questioned the restriction of the on-money additions to 15% by the learned CIT(A), contending that the entire unaccounted receipts ought to have been assessed as income. It has also challenged the relief granted in respect of subcontracting expenditure and section 43CA and has disputed the allowance of the balance component of the alleged receipts on the premise that no corresponding expenditure was established by the assessee. 4. In Assessment Years 2021-22 and 2022-23, the assessee had also challenged the validity of the proceedings initiated under section 147. However, at the time of hearing, learned counsel for the assessee stated that the grounds challenging the reopening of assessment were not being pressed. Those grounds are accordingly dismissed as not pressed. The assessee has further raised additional legal grounds in Assessment Years 2022-23 and 2023-24, contending, in substance, that the assessments were framed without complying with the mandatory requirements of section 148 read with Explanation 2(iv) thereto. Since these grounds raise

5 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. a pure question of law and the relevant facts are available on record, they are admitted. However, having regard to the manner in which the substantive issues on merits are being adjudicated in the succeeding paragraphs, we do not consider it necessary to render any concluded finding on the said additional grounds. The questions raised therein are therefore left open and are treated as academic for the purposes of the present appeals. 5. The assessee is a domestic company engaged in the business of development and construction of residential and commercial real-estate projects. A search and seizure action under section 132 was carried out in the Runwal Group on 06.10.2023, in the course of which the assessee, being one of the constituent entities of the group, was also covered. In the course of the search, the Department found, inter alia, a blue- coloured diary from the office cabin of Smt. Lucy Roychoudhury and retrieved certain digital communications, including WhatsApp and Signal chats, from the mobile devices of some employees and persons connected with the group. Statements of certain employees and functionaries were also recorded under section 132(4). According to the Assessing Officer, the cumulative effect of this material revealed a systematic practice of receiving a part of the consideration for sale of flats and commercial units in cash, over and above the consideration recorded in the agreements or the regular books of account.

6 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 6. Insofar as Assessment Year 2023-24 is concerned, the assessee had filed its return of income under section 139(1) on 27.10.2023 declaring a loss of ₹7,76,49,867. The return was selected for complete scrutiny; notice under section 143(2) was issued on 09.03.2024; and notices under section 142(1), accompanied by questionnaires, were thereafter issued from time to time. The assessee furnished the particulars and explanations called for. Similar proceedings were undertaken for the other assessment years, either under section 147 or under section 143(3), as the case may be. The Assessing Officer, relying upon the diary, digital communications, statements and other search material, treated the amounts allegedly received outside the books as undisclosed business receipts and proceeded to assess the entire amount under section 28 of the Act. 7. The year-wise position of the principal disputed additions, as emerging from the orders of the authorities below, may be summarised thus:

Alleged on- Amount Subcontractin Section Assessmen money sustained g expenditure 43CA t year receipts at 15% under dispute addition 2021-22 ₹65,00,000 ₹9,75,000 — — As arising from the ₹22,18,91,00 ₹3,32,83,65 2022-23 — relevant 0 0 assessmen t order 2023-24 ₹8,80,00,000 ₹1,32,00,00 ₹87,52,585; 5% ₹58,91,934

7 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. Alleged on- Amount Subcontractin Section Assessmen money sustained g expenditure 43CA t year receipts at 15% under dispute addition 0 sustained ₹4,01,73,318; ₹2,37,29,000 ₹35,59,350 2024-25 — 5% sustained

8 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. that no confirmation had been obtained from any purchaser admitting payment of cash; no direct trail of cash was found; no corresponding withdrawal from the accounts of the purchasers was identified; no receipt or acknowledgement issued by the assessee was seized; and no unaccounted cash relatable to the alleged collections was found from its premises. It was therefore contended that the additions rested upon an inferential reconstruction of events rather than upon evidence establishing actual receipt by the assessee. 10. Without prejudice to its primary contention for deletion of the additions, the assessee submitted that the entire alleged on-money could not, in any event, be treated as income. According to the assessee, any cash component received in the course of its real-estate business would partake of the character of an unrecorded business receipt and not pure income. It was submitted that the development and execution of real-estate projects necessarily entailed various project- related outgoings, including brokerage, commission, labour charges, facilitation expenses and other costs, some of which were also reflected in the statements and the material relied upon by the Department itself. The assessee accordingly contended that, even if the existence of such receipts were assumed, only the profit element embedded therein could be assessed.

9 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 11. The learned CIT(A), upon examining the assessment orders, statements, seized material and submissions of the assessee, did not accept the plea for outright deletion. He observed that the material recovered during the search, considered cumulatively, indicated the existence of a pattern of receiving part of the consideration in cash in certain real- estate transactions. He accordingly held that the existence of unaccounted receipts could not be entirely disregarded merely because no cash was found or direct confirmations were not obtained from the purchasers. At the same time, the learned CIT(A) did not approve the action of the Assessing Officer in treating the gross receipts as taxable income. He held that the alleged on-money represented unrecorded business receipts and that only the profit component embedded therein could be subjected to tax. He accordingly restricted the additions to 15% of the alleged receipts in each year and deleted the balance. 12. The assessee remains aggrieved by the sustenance of the additions even to the extent of 15%, whereas the Revenue is aggrieved by the deletion of the remaining amount. The grounds raised by both sides on this issue are interconnected and are therefore adjudicated together. The questions which arise for consideration are, first, whether the material relied upon by the Assessing Officer furnished an adequate basis for drawing an inference regarding receipt of on-money in the identified transactions; secondly, whether the entire amount

10 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. of such receipts or merely the profit element embedded therein could be brought to tax; thirdly, whether the rate of 15% adopted by the learned CIT(A) was fair and reasonable; and lastly, whether any separate addition could survive in respect of the alleged cash expenditure forming part of the same stream of unaccounted business activity. 13. Before us, learned counsel for the assessee reiterated that the additions were principally founded upon the blue diary, statements of employees and digital communications which, according to him, did not establish actual receipt of money by the assessee. He submitted that the persons whose statements were relied upon were neither purchasers nor the ultimate recipients of the alleged cash and that their statements had subsequently been retracted. No customer had been examined and no purchaser had admitted payment of any amount over and above the recorded consideration. There was no direct cash trail, no seized receipt bearing an acknowledgement by the assessee and no recovery of any unaccounted cash corresponding to the figures adopted by the Assessing Officer. Learned counsel accordingly contended that the addition lacked adequate independent corroboration and that the entries and communications relied upon were insufficient to establish receipt of the entire amount attributed to the assessee.

11 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 14. Learned counsel further submitted that the project was situated at Dombivli and catered substantially to middle- income purchasers. It was not a premium or luxury development capable of yielding the high margins assumed by the learned CIT(A). The rate of 15%, according to him, had been adopted without reference to the disclosed financial results of the assessee, the location and character of the project, any comparable case or any other objective commercial parameter. Drawing attention to the statements reproduced by the Assessing Officer, particularly the statements of Smt. Lucy Roychoudhury, Shri Saurabh Shankar Natu and Shri Chetan Chepurwar, learned counsel submitted that the Department’s own material contained references to cash expenditure in the nature of brokerage and commission. The blue diary itself, according to him, reflected not only receipts but also project-related outgoings. He therefore submitted that the gross receipts could not be regarded as income and that, even if an estimation were considered necessary, a substantially lower rate ought to be adopted. 15. Learned counsel also relied upon the decisions in CIT v. President Industries (258 ITR 654) (Guj.), Guruprerna Enterprises, Abhishek Corporation v. DCIT, ITO v. Anand Builders, Hema Haresh Mehta v. DCIT, Kishor Mohanlal Telwala and JCIT v. Narayan Land Estate to contend that suppressed sale proceeds or on-money received in the course

12 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. of business cannot be equated with income in their entirety and that only the profit component can be assessed. Reliance was also placed upon the orders passed by the coordinate Benches in the cases of the assessee’s sister concerns, namely, M/s Horizon Projects Pvt. Ltd. for Assessment Years 2022-23 to 2024-25, M/s Runwal Enterprises Ltd. for Assessment Years 2020-21 to 2024-25 and Evie Real Estate Pvt. Ltd. for Assessment Years 2020-21 to 2024-25. It was submitted that the search material, the nature of the allegations and the business model considered in those cases were substantially similar and that a consistent approach ought to be followed. 16. The learned CIT DR, on the other hand, strongly relied upon the assessment orders. He submitted that the additions did not rest upon an isolated statement or a stray loose paper but upon a combination of diary entries, digital communications and statements recorded during the course of search. According to him, the material revealed a systematic mechanism for receiving part of the sale consideration in cash, and once the existence of the mechanism and the transactions recorded therein stood established, there was no justification for excluding any part of the receipts from taxation. He contended that the learned CIT(A) had erred in notionally assuming that 85% of the receipts represented expenditure despite the assessee having

13 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. failed to produce any evidence of the actual incurrence or quantum of such expenditure. 17. The learned CIT DR further submitted that if the assessee’s case were that the alleged expenditure had been incurred in cash, the same would attract section 40A(3), and no deduction could be allowed in respect thereof. He argued that the decision in Ekta Housing Pvt. Ltd., relied upon by the learned CIT(A), was distinguishable because, in that case, the assessee had established a direct linkage between the unaccounted receipts and the corresponding cash expenditure, whereas no such one-to-one nexus had been demonstrated in the present case. He further contended that, once a systematic practice of collecting on-money was found to exist, a corresponding inference ought to be drawn in respect of the remaining flats and commercial units sold during the relevant years and the addition should not be confined only to the transactions specifically appearing in the seized material. He also opposed any telescoping of expenditure against the receipts in the absence of an established nexus. 18. We have given our thoughtful consideration to the rival submissions and have carefully examined the assessment orders, the orders passed by the learned CIT(A), the statements and extracts referred to therein and the material forming the basis of the additions. The evidentiary material

14 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. cannot be examined in isolated compartments. A diary entry, a digital conversation or a statement, when viewed independently, may admit of more than one inference; however, where different strands of material relate to the same project, contain corresponding references to units or transactions and are supported by statements of persons associated with the relevant functions, their cumulative evidentiary effect cannot be ignored. In the present case, the diary, digital communications and statements, as appreciated by both the authorities below, reveal a discernible pattern of collection outside the recorded consideration in certain identified transactions. The subsequent retraction of the statements is a relevant circumstance, but a retraction by itself does not efface the contemporaneous documentary and digital material or render the original statements non- existent. Its effect must be evaluated in conjunction with the circumstances in which the statement was originally made, the promptness and reasons for the retraction and the corroborative material otherwise available. 19. At the same time, the material must be confined to what it reasonably establishes. The absence of purchaser confirmations, a direct cash trail or recovery of corresponding cash may not, by itself, nullify the inference arising from the cumulative search material, but it assumes significance when the Revenue seeks either to tax the entire receipt as pure income or to extend the inference to transactions not

15 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. specifically reflected in any seized record. The evidence relied upon establishes, at the highest, unrecorded business receipts connected with the identified transactions. It does not establish that the whole amount represented net income unaccompanied by any project-related cost, nor does it furnish a legitimate basis for presuming an identical cash component in every other unit sold by the assessee. An addition cannot travel beyond the transactions to which the material bears a rational and discernible nexus merely because a particular modus was noticed in some cases. The Revenue’s plea for extrapolating on-money to the remaining flats and commercial units, in the absence of transaction- specific or otherwise reliable supporting material, therefore cannot be accepted. 20. The further contention of the Revenue that the entire gross receipts should be taxed as income also does not commend acceptance. The assessee is engaged in the business of development and sale of real estate, and any amount received over and above the recorded sale consideration retains the character of a business receipt. A receipt arising in the course of business cannot be equated, without anything further, with the income embedded therein. The distinction between turnover and profit is fundamental. The material relied upon by the Department itself contains references to cash expenditure in the nature of brokerage, commission and other project-related outgoings. It would

16 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. therefore be incongruous to rely upon one part of the same evidentiary material for bringing the receipts to tax while altogether disregarding the indications of corresponding expenditure contained therein. The absence of a precise one- to-one correlation may justify estimation of the income component, but it cannot convert a gross business receipt into net taxable profit. 21. The invocation of section 40A(3) by the Revenue does not alter this conclusion. What is being allowed in such a case is not a deduction of an identified item of cash expenditure from the income computed under the regular provisions; rather, the taxable income itself is being determined by estimating the profit embedded in the suppressed business receipts. Once the income is estimated on the gross unrecorded turnover, the corresponding business outgoings stand subsumed in the process of estimation. Section 40A(3) cannot be employed to first treat the whole of the suppressed turnover as income and thereafter deny the expenditure notionally embedded therein, for that would obliterate the distinction between a receipt and the income component contained in it. Equally, once the profit is estimated on the entire unaccounted receipt, no separate addition can ordinarily be made for expenditure forming part of the same unrecorded business cycle, unless the Revenue establishes that such expenditure was incurred from an independent source or represented a separate application not absorbed in

17 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. the estimation. No such independent source has been demonstrated in the present case. 22. The remaining question is the rate at which the profit embedded in the alleged receipts should be estimated. The learned CIT(A) adopted 15%, but the appellate order does not disclose any comparable instance, project-specific margin or empirical basis supporting that rate. Having regard to the location and nature of the projects, the character of the transactions, the indications of corresponding project-related expenditure in the material itself, the judicial guidance available in comparable real-estate cases and the treatment accorded by the coordinate Benches in the cases of the sister concerns arising from the same group search, we are of the considered opinion that estimation of profit at 8% of the identified on-money receipts would be fair and reasonable. We accordingly direct the Assessing Officer to restrict the additions to ₹5,20,000 for Assessment Year 2021-22, ₹1,77,51,280 for Assessment Year 2022-23, ₹70,40,000 for Assessment Year 2023-24 and ₹18,98,320 for Assessment Year 2024-25. The grounds of the assessee challenging the rate of 15% are thus partly allowed, whereas the corresponding grounds of the Revenue seeking taxation of the gross receipts, denial of the embedded expenditure, application of section 40A(3) and extrapolation to the remaining units are dismissed. The grounds concerning

18 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. reliance upon the statements and their subsequent retraction stand disposed of as part of the foregoing composite findings. 23. We shall now take up the grounds relating to the subcontracting expenditure incurred through M/s Senghani Creators Pvt. Ltd. and the corresponding adjustment made to the Work-in-Progress. This issue arises in the assessee’s appeal as well as the Revenue’s cross-appeal for Assessment Years 2023-24 and 2024-25. For Assessment Year 2023-24, the expenditure under consideration amounted to ₹87,52,585, out of which the learned CIT(A) sustained a disallowance of 5%, resulting in reduction of ₹4,37,629 from the Work-in-Progress. For Assessment Year 2024-25, the corresponding expenditure amounted to ₹4,01,73,318 and the learned CIT(A) sustained a reduction of ₹20,08,666, being 5% thereof. The assessee seeks deletion of the amounts so sustained, whereas the Revenue contends that, once the transactions were found to be non-genuine, the entire expenditure ought to have been excluded from the project cost. 24. The genesis of the disallowance lies in a search action conducted in the case of M/s Senghani Creators Pvt. Ltd. and the material and statements gathered in the course thereof. The said concern was engaged in undertaking construction and civil works for various builders and developers, including entities belonging to the Runwal Group. During the search,

19 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. statements of certain persons associated with Senghani Creators Pvt. Ltd. were recorded, from which the Assessing Officer inferred that invoices were prepared on the basis of rough workings received from certain subcontractors; such workings were thereafter transcribed or printed on the letterheads of the respective concerns; and the rough worksheets were subsequently destroyed. The Department also carried out spot verification in the case of some downstream subcontractors, where certain parties were either not found at the stated addresses or were otherwise not available for verification. Based upon these circumstances, the Assessing Officer formed the view that the subcontracting chain was not genuine and that the expenditure booked by the assessee through Senghani Creators Pvt. Ltd. represented inflated or non-genuine project cost. 25. The assessee, both during the assessment proceedings and before the learned CIT(A), disputed the inference so drawn and furnished extensive documentation in support of the work awarded, its actual execution and the payments made. The evidentiary material placed on record may broadly be summarised as under:

Nature of record Documents furnished Relevance Nature, scope and Work orders and Contractual records value of the work copies of invoices entrusted Technical records Measurement sheets, Quantification and

20 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd.

Nature of record Documents furnished Relevance quantity summaries certification of work and abstract sheets executed Challans and Movement and reconciliation Material records consumption of statements of construction material materials issued Quality certificates, Actual deployment and health and safety Project compliance execution at the certificates and labour- project site compliance records Recording and Ledger accounts and certification of the Accounting records payment certificates liability in the regular books Discharge of liability Bank statements Banking records through regular evidencing payments banking channels

21 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. and technical teams were not disputed; the payments were made through banking channels; and no evidence was found to show that any part of the payment had returned to the assessee in cash or through any circuitous arrangement. 27. The learned CIT(A), while noticing that the Assessing Officer had not brought any direct material to establish that the transaction between the assessee and Senghani Creators Pvt. Ltd. was entirely fictitious, nevertheless held that the irregularities noticed during the search in the case of the contractor and its downstream subcontractors could not be ignored altogether. By placing reliance upon the decision of the Mumbai Bench of the Tribunal in the case of Middle Earth Enterprises, he considered it appropriate to sustain 5% of the expenditure as non-genuine and directed a corresponding reduction from Work-in-Progress. Thus, the learned CIT(A) did not approve the disallowance of the entire expenditure but retained an estimated adjustment as a measure against the perceived deficiencies in the subcontracting chain. 28. Before us, learned counsel for the assessee submitted that the entire adjustment rested upon material recovered from the premises of a third party and statements of persons connected with that concern. No incriminating material was found from the possession or control of the assessee demonstrating that the work orders, invoices or measurement records were fabricated or that the payments made to

22 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. Senghani Creators Pvt. Ltd. represented accommodation entries. It was emphasised that the expenditure had not been debited to the Profit and Loss Account as a revenue deduction in the years under consideration but had been capitalised as part of the project cost in Work-in-Progress. The reduction directed by the Assessing Officer, therefore, not only distorted the project cost of the relevant years but was also liable to affect the computation of income in the years in which revenue from the project would ultimately be recognised. 29. Learned counsel further submitted that the presumption available under section 132(4A), as also the corresponding statutory presumption relating to books and documents found during search, operates principally against the person from whose possession or control such material is found. Such presumption could not automatically be extended to the assessee, a distinct taxable entity, without independent evidence connecting it with the alleged irregularity. He submitted that the assessee had discharged the burden resting upon it by producing primary records evidencing the award and execution of work and payment of the contractual consideration. Once such evidence was furnished, the onus shifted to the Revenue to identify some falsity, inflation or inconsistency therein. The Assessing Officer, however, had not examined or disproved any of those records and had proceeded only on the basis of a general inference drawn from the internal affairs of the contractor.

23 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 30. The learned CIT DR supported the assessment orders and submitted that the material found in the case of Senghani Creators Pvt. Ltd., statements of its key persons and the results of spot verification could not be regarded as extraneous to the assessee’s claim. According to him, the findings indicated that the subcontracting chain consisted of entities which were either non-existent or incapable of executing the work attributed to them and that the documentary records produced by the assessee, including invoices and banking payments, were insufficient to establish the underlying genuineness of the expenditure. He further relied upon the decision of the Hon’ble Supreme Court in CIT v. N.K. Proteins Ltd. and submitted that, once the transaction itself was found to be non-genuine, the entire amount was liable to be disallowed and there was no justification for restricting the adjustment to 5%. 31. We have considered the rival submissions and examined the material referred to by both sides. The findings emerging from the search in the case of Senghani Creators Pvt. Ltd. could undoubtedly constitute relevant information and furnish a legitimate basis for examining the transactions entered into by the assessee with that concern. However, relevance of the information at the stage of inquiry is distinct from its sufficiency for making an addition in the hands of a separate assessee. An adverse conclusion against the assessee must ultimately rest upon material demonstrating

24 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. that the expenditure recorded by it was fictitious, inflated or did not correspond with work actually executed. Irregularities in the contractor’s internal documentation or infirmities in the affairs of some downstream subcontractors cannot, without an evidentiary link, lead to the inexorable conclusion that the principal contract between the assessee and Senghani Creators Pvt. Ltd. was itself a sham. 32. The assessee has produced the work orders, invoices, measurement and quantity records, material reconciliation statements, payment certificates, compliance documents, ledger accounts and bank statements. The Assessing Officer has not identified any discrepancy in the scope of work mentioned in the work orders; any falsity or duplication in the invoices; any mismatch in the quantity of work certified; any inconsistency in the measurement sheets; or any variation between the contractual liability, the ledger account and the payment made. There is no finding that the civil or construction work for which the expenditure was recorded had not actually been executed at the project site. Nor has any material been brought on record to show that the payment made through banking channels was returned to the assessee, directly or indirectly. The primary evidence furnished by the assessee, therefore, remains unrebutted by any transaction-specific investigation or positive material.

25 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 33. The circumstance that some of the entities engaged by Senghani Creators Pvt. Ltd. were not found at their stated addresses may warrant proceedings in the hands of the contractor or such downstream entities and may justify examination of the recipients of the payments. It does not, by itself, establish that the assessee did not receive the contracted work from Senghani Creators Pvt. Ltd. The assessee cannot be expected to establish the manner in which an independent contractor organised every segment of its labour, material and subcontracting resources, once the assessee has demonstrated the work entrusted, the work executed, its measurement and certification and the consideration paid. An adverse inference against the assessee required some material showing its participation in, or knowledge of, the alleged accommodation arrangement. No such material has been referred to by the Assessing Officer. 34. The reliance placed by the Revenue upon N.K. Proteins Ltd. does not advance its case. In that matter, the conclusion regarding bogus purchases arose from direct and cogent material establishing that the transactions in question were not genuine. The proposition that the entire amount may be disallowed once a transaction is affirmatively proved to be fictitious cannot be extended to a case where the very premise of non-genuineness remains unsupported by material directly pertaining to the assessee. In the present case, the physical execution of work has not been disproved, the project records

26 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. have not been rejected and no evidence of circulation or return of funds has been found. The factual foundation necessary for applying the principle relied upon by the Revenue is, therefore, absent. 35. We are equally unable to sustain the 5% adjustment retained by the learned CIT(A). An estimate may be resorted to where the existence of expenditure is accepted but its precise quantum is incapable of verification, or where specific deficiencies in the records warrant a reasonable approximation. Here, the learned CIT(A) has not identified any particular defect in the assessee’s records or demonstrated how such a defect translated into a 5% inflation of the project cost. The rate adopted does not emanate from any comparison, defect in quantities, excess pricing or other discernible yardstick. Moreover, the expenditure was capitalised to Work-in-Progress and had not been claimed as a deduction against the income of the relevant years. A reduction from Work-in-Progress, carrying consequences into the years in which project revenue is recognised, could not be sustained merely as an estimated safeguard against irregularities found in the affairs of another entity. 36. We also find that coordinate Benches, while considering materially similar transactions entered into with Senghani Creators Pvt. Ltd. in the cases of the assessee’s sister concerns, namely, M/s Horizon Projects Pvt. Ltd., M/s

27 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. Runwal Enterprises Ltd. and Evie Real Estate Pvt. Ltd., examined the corresponding records and deleted the disallowances. The factual pattern, nature of the search material and documentary evidence in the present case do not disclose any distinguishing feature warranting a different conclusion. We accordingly set aside the order of the learned CIT(A) on this issue and direct the Assessing Officer to delete the disallowances of ₹4,37,629 for Assessment Year 2023-24 and ₹20,08,666 for Assessment Year 2024-25 and to restore the corresponding amounts to Work-in-Progress. The relevant grounds raised by the assessee are allowed, whereas the corresponding grounds raised by the Revenue seeking disallowance of the entire expenditure are dismissed. 37. We shall now deal with the grounds raised by the Revenue concerning the deletion of the additions made under section 43CA. The issue arises in Assessment Years 2022-23 and 2023-24. In Assessment Year 2023-24, the Assessing Officer made an addition of ₹58,91,934 by adopting the stamp-duty value in place of the agreement consideration in respect of the concerned residential unit. The assessee submitted before the learned CIT(A) that the project was under construction; that the assessee consistently followed the Project Completion Method; that no revenue from the concerned unit had been recognised during the relevant year; and that the Assessing Officer had proceeded on an incorrect figure of stamp-duty valuation. It was therefore contended that no adjustment

28 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. under section 43CA could be brought to tax in the year under consideration. 38. The learned CIT(A), after examining the transaction documents, found that the stamp-duty value adopted by the Assessing Officer did not correctly reflect the value appearing from the relevant agreement. He further observed that the project remained under construction and the corresponding sale proceeds had not been recognised as revenue in accordance with the method of accounting regularly followed by the assessee. On that basis, the learned CIT(A) deleted the addition for the year under consideration, while observing that the applicability of section 43CA could be examined in the year in which the transfer fructified and the corresponding revenue was recognised. Before us, the learned CIT DR contended that execution of the agreement and receipt or accrual of consideration created enforceable rights in the property and that section 43CA could not be deferred merely because the project was under construction or possession had not been handed over. Learned counsel for the assessee, while supporting the deletion, fairly submitted that the applicability of section 43CA could be examined in the appropriate year when the sale consideration was recognised and offered to tax, subject to the correct stamp- duty value and the statutory tolerance then applicable.

29 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 39. We have considered the rival submissions. Section 43CA substitutes the value adopted or assessable by the stamp- valuation authority for the consideration received or accruing as a result of transfer of land or building or both held as stock-in-trade, subject to the statutory conditions and tolerance prescribed therein. The provision cannot be applied in abstraction from the transaction to which the business receipts relate, nor can a notional differential be brought to tax in a year in which the corresponding consideration from the transfer has not entered the computation of business income under the method of accounting regularly followed and accepted. In the present cases, the record shows that the projects were under construction, the corresponding revenue had not been recognised in the years under appeal and the Assessing Officer had also proceeded, at least in Assessment Year 2023-24, upon an incorrect stamp-duty figure. We therefore find no infirmity in the deletion of the additions for the years under consideration. However, the deletion shall not preclude the Assessing Officer from examining the applicability of section 43CA in the year in which revenue from the concerned units is recognised, strictly with reference to the correct agreement consideration, the legally relevant stamp-duty value, the provisos and tolerance limit applicable to the transaction and after affording the assessee an adequate opportunity of being heard. We clarify that this observation does not constitute a concluded finding for any

30 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. other assessment year. The corresponding grounds raised by the Revenue for Assessment Years 2022-23 and 2023-24 are accordingly dismissed. 40. We shall now apply the foregoing common findings to the individual appeals and dispose of the grounds raised for each assessment year. In doing so, it is clarified that the findings recorded in relation to the alleged on-money receipts, the evidentiary value of the diary, statements and digital material, the taxability of only the profit component, the inapplicability of section 40A(3) in the manner canvassed by the Revenue, the impermissibility of extrapolation to transactions unsupported by identified material, and the treatment of the connected cash expenditure shall form an integral part of the adjudication for all four assessment years. Similarly, our findings concerning the subcontracting expenditure incurred through M/s Senghani Creators Pvt. Ltd. shall govern Assessment Years 2023-24 and 2024-25, while the findings relating to section 43CA shall govern the relevant grounds arising in Assessment Years 2022-23 and 2023-24. 41. We first take up the assessee’s appeal for Assessment Year 2021-22 in ITA No. 8541/Mum/2025. Ground No. 1 challenging the validity of the reassessment proceedings under section 147 was expressly not pressed by learned counsel and is accordingly dismissed as not pressed. Ground Nos. 2 and 3 relate to the alleged on-money receipts of

31 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. ₹65,00,000 and the action of the learned CIT(A) in sustaining ₹9,75,000, being 15% thereof. For the reasons recorded in paragraphs 13 to 22 hereinabove, we hold that only the profit component embedded in the identified unaccounted receipts can be brought to tax and that such profit is reasonably estimable at 8%. The Assessing Officer is therefore directed to restrict the addition to ₹5,20,000. Ground Nos. 2 and 3 are thus partly allowed. Ground No. 4, concerning reliance upon statements which were subsequently retracted, stands disposed of in terms of our composite findings on the evidentiary material and requires no separate adjudication. Ground No. 5 is general in nature. Consequently, the assessee’s appeal for Assessment Year 2021-22 is partly allowed. 42. We next take up the cross-appeals for Assessment Year 2022-23. In ITA No. 8542/Mum/2025, Ground No. 1 raised by the assessee challenging the reopening under section 147 was not pressed and is therefore dismissed. The additional ground raising the issue of compliance with section 148 read with Explanation 2(iv) has been admitted as a legal ground; however, in view of the substantive adjudication on merits, the question raised therein is left open and is treated as academic for the purposes of the present appeal. Ground Nos. 2 and 3 concern the alleged on-money receipts of ₹22,18,91,000, on which the learned CIT(A) sustained an addition of ₹3,32,83,650 by applying a rate of 15%. Following

32 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. our common findings, the addition is directed to be restricted to ₹1,77,51,280, being 8% of the identified receipts. These grounds are accordingly partly allowed. The ground relating to the statements and their subsequent retraction stands disposed of as part of the composite adjudication of the on- money issue, while the remaining general ground requires no separate adjudication. 43. In the Revenue’s cross-appeal for Assessment Year 2022- 23, Ground Nos. 1 and 3 to 6 seek taxation of the entire alleged on-money receipts, question the exclusion of the balance component, invoke section 40A(3), distinguish the decision relied upon by the learned CIT(A) and seek extrapolation of on-money to the remaining units. All these contentions have been dealt with in detail in Part I of this order. The Revenue has not established that the entire gross receipt represented income, that the project-related expenditure arose from an independent source or that any reliable material existed for estimating on-money in respect of units not identified in the seized records. These grounds are accordingly dismissed. Ground No. 2, challenging the deletion of the addition under section 43CA, is also dismissed in terms of paragraph 39 hereinabove, subject to the clarification that the Assessing Officer may examine the applicability of the provision in the legally appropriate year, upon the corresponding revenue being recognised, with reference to the correct statutory parameters and after granting due

33 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. opportunity to the assessee. Thus, the assessee’s appeal for Assessment Year 2022-23 is partly allowed, whereas the Revenue’s appeal is dismissed. 44. We shall now take up the cross-appeals for Assessment Year 2023-24, which was adopted as the lead year for adjudication of the recurring issues. The additional ground raised by the assessee challenging the assessment with reference to section 148 read with Explanation 2(iv), having been admitted as a legal ground, is left open and treated as academic in view of our adjudication of the substantive grounds on merits. Ground Nos. 1 and 2 of the assessee’s appeal relate to the alleged on-money receipts of ₹8,80,00,000, on which the learned CIT(A) sustained ₹1,32,00,000 by estimating the profit at 15%. For the reasons already recorded, we direct the Assessing Officer to restrict the addition to ₹70,40,000, being 8% of the identified receipts. These grounds are therefore partly allowed. Ground No. 4, relating to reliance upon statements which were subsequently retracted, stands disposed of as an integral part of the findings recorded on the on-money issue, and Ground No. 5 is general in nature. 45. Ground No. 3 of the assessee’s appeal for Assessment Year 2023-24 concerns the 5% reduction of ₹4,37,629 from Work-in-Progress in respect of subcontracting expenditure of ₹87,52,585 incurred through M/s Senghani Creators Pvt. Ltd.

34 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. In view of the findings recorded in paragraphs 23 to 36, the adjustment does not rest upon any identified defect in the assessee’s work orders, invoices, measurement records, quantity certifications, material reconciliations, payment records or banking trail. The adjustment retained by the learned CIT(A) is accordingly deleted and the Assessing Officer is directed to restore ₹4,37,629 to the Work-in-Progress. Ground No. 3 of the assessee’s appeal is therefore allowed. 46. In the Revenue’s cross-appeal for Assessment Year 2023- 24, Ground Nos. 1 and 4 to 7 relate to the taxability of the alleged on-money receipts, the claim that the entire amount constituted income, denial of the corresponding expenditure, invocation of section 40A(3), distinction sought to be drawn from Ekta Housing Pvt. Ltd. and the proposed extrapolation to the remaining units. These grounds are dismissed in terms of our findings in Part I. Ground No. 2, seeking disallowance of the entire subcontracting expenditure relating to Senghani Creators Pvt. Ltd., is dismissed in terms of paragraphs 23 to 36. Ground No. 3, challenging the deletion of ₹58,91,934 under section 43CA, is also dismissed in terms of paragraph 39, subject to the clarification recorded therein regarding examination of the provision in the legally appropriate year. Consequently, the assessee’s appeal for Assessment Year 2023-24 is partly allowed, while the Revenue’s appeal is dismissed.

35 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. 47. We finally take up the cross-appeals for Assessment Year 2024-25. Ground Nos. 1 and 2 of the assessee’s appeal relate to the alleged on-money receipts of ₹2,37,29,000 and the addition of ₹35,59,350 sustained by the learned CIT(A) at 15%. Applying the common findings recorded in Part I, the Assessing Officer is directed to restrict the addition to ₹18,98,320, being 8% of the identified receipts. These grounds are accordingly partly allowed. Ground No. 3 relates to the 5% reduction of ₹20,08,666 from Work-in-Progress out of the subcontracting expenditure of ₹4,01,73,318 incurred through Senghani Creators Pvt. Ltd. In conformity with our findings in Part II, the entire adjustment is deleted and the Assessing Officer is directed to restore ₹20,08,666 to Work-in-Progress. Ground No. 3 is therefore allowed. Ground No. 4, relating to the statements and their subsequent retraction, stands disposed of as part of the adjudication of the on-money issue, while Ground No. 5 is general. 48. In the Revenue’s cross-appeal for Assessment Year 2024- 25, Ground Nos. 1 and 3 to 6 assail the restriction of the on- money addition to the profit component and raise substantially the same objections regarding the absence of evidence of expenditure, application of section 40A(3), distinction from the decision in Ekta Housing Pvt. Ltd. and extrapolation of on-money to the remaining units. These grounds are dismissed for the reasons recorded in paragraphs 18 to 22. Ground No. 2, seeking disallowance of the entire

36 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd. subcontracting expenditure relating to Senghani Creators Pvt. Ltd., is dismissed in terms of our findings in paragraphs 31 to 36. Accordingly, the assessee’s appeal for Assessment Year 2024-25 is partly allowed, whereas the Revenue’s appeal is dismissed. 49. The appeal-wise results may be summarised as under:

Assessment Appeal number Result year ITA No. 8541/Mum/2025 2021-22 Partly allowed ITA No. 8542/Mum/2025 2022-23 Partly allowed ITA No. 8543/Mum/2025 2023-24 Partly allowed ITA No. 8544/Mum/2025 2024-25 Partly allowed ITA No. 9260/Mum/2025 2022-23 Dismissed ITA No. 9261/Mum/2025 2023-24 Dismissed ITA No. 9262/Mum/2025 2024-25 Dismissed

Order pronounced on 24th September, 2026.

Sd/- Sd/- (ARUN KHODPIA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 24/09/2026 KARUNA, sr.ps

37 ITA No.8541/Mum/2025 and others Susneh Infrapark Pvt. Ltd.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,

(Asstt. Registrar) ITAT, Mumbai