THE DY. CIT, CC-1(3), AHMEDABAD vs. LAXMANBHAI HARIBHAI VEKARIYA, AHMEDABAD
What did the Tribunal hold?
The Tribunal held that the CIT(A) was correct in allowing telescoping benefit for unaccounted cash expenditures and unexplained investments against the on-money additions. The Tribunal found that the Revenue failed to substantiate that the on-money receipt was insufficient to cover the expenses allowed as set-off. Regarding on-money additions, the Tribunal upheld the CIT(A)'s decision to tax only the profit margin of on-money receipts, directing the calculation of profit by applying a net profit rate of 15%. The Tribunal also upheld the CIT(A)'s deletion of additions related to a land transaction where the assessee was not the owner, finding the AO's addition to be based on presumption without verifying ownership. Additions for unexplained investment in jewellery and cash were also upheld as per the CIT(A)'s order, which considered the explained nature of jewellery based on documentary evidence and allowed relief for cash found considering the excess on-money receipts. The Tribunal dismissed the Revenue's grounds concerning these issues.
What were the facts?
The Revenue (Deputy Commissioner of Income Tax) filed eight appeals against the common order of the CIT(A) for Assessment Years 2014-15 to 2021-22. These appeals arose from proceedings under Section 143(3) read with Section 153A of the Income Tax Act. A search and seizure action under Section 132 was conducted on the assessee, Laxmanbhai Haribhai Vekariya, and his employee. Incriminating documents, loose papers, digital data, and WhatsApp chats were seized, indicating unaccounted cash transactions, accommodation entries, undisclosed investments, and undisclosed profits. The Assessing Officer (AO) made various additions for unaccounted on-money receipts, expenditures, and investments. The CIT(A) granted substantial relief, upholding additions on account of on-money receipts only to the extent of the profit margin (15% net profit rate) and deleting additions for unexplained investments and cash expenditures by allowing telescoping benefit of on-money additions.
What were the issues?
1. Whether the CIT(A) erred in deleting the addition on account of unaccounted cash expenditure of Rs. 1,58,23,440/- made under Section 69C of the Act, and in allowing telescoping benefit for cash expenditures and unexplained investments against on-money additions? (Mixed question of law and fact, concerning Section 69C and the principle of telescoping). 2. Whether the CIT(A) erred in deleting the addition of Rs. 2,05,66,895/- made under Section 69A on account of acceptance of on-money on sale of units, and in reducing the estimation of on-money receipts? Revenue's Contentions: The Revenue argued that the AO correctly quantified cash receipts and expenditures not recorded in the books. The assessee accepted cash receipts on account of on-money and cash expenditures. The AO made additions for unaccounted cash expenditure under Section 69C and on-money receipt based on an average rate of 50%. The Revenue contended that the CIT(A) erred in reducing the on-money estimation and in allowing telescoping benefit for unaccounted cash expenditure, as no nexus was found between unaccounted receipts and expenditures. Assessee's Contentions: The assessee argued that the AO was incorrect in making separate additions for on-money receipts and unaccounted cash expenditure, as the expenditures were merely an application of on-money receipts. Therefore, the CIT(A) rightly allowed telescoping benefit. Regarding on-money estimation, the assessee contended that the AO extrapolated on-money receipt at 100% of the agreement value, which was incorrect, and additions should be based on actual evidence.
Which sections of the Income-tax Act were involved?
Section 132,Section 143(3),Section 153A,Section 69A,Section 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: MS SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
These eight appeals are filed by the Revenue against the common order of Commissioner of Income Tax (Appeals) – 11, Ahmedabad (in short “CIT(A)”) dated 28.03.2023 for the Assessment Years (A.Ys.) 2014- 15 to 2021-22 in the proceeding u/s. 143(3) r.w.s 153A of the Income Tax Act (hereinafter referred as “the Act”). As the issues involved in these appeals are common and interconnected, all the matters were heard together and are being disposed of vide this common order for the sake of convenience.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 2 Brief facts of the case
The brief facts of the case are that the assessee is an individual engaged in the business of construction activities in the name and style of his proprietorship concern “Shapers Buildcon”. The assessee had undertaken construction of real estate projects and also worked in the capacity of contractor. He is also a partner in the partnership firm M/s DLH Developers, from which he is deriving remuneration and share of profit. A search and seizure action under Section 132 of Act was carried out on 8.10.2020 in the case of Popular group and the residence and office of the assessee Shri Laxmanbhai Haribhai Vekariya and one of his employees Mr. Darshik Savaliya was also covered in the search operation. In the course of search, various incriminating documents, loose papers, tally accounts, digital data, WhatsApp chat etc. were seized from which it transpired that the assessee had indulged in unaccounted cash transactions, accommodation entries, made undisclosed investments and also earned undisclosed profit. Pursuant to the search, proceeding under Section 153A of the Act was initiated in the case of the assessee wherein the AO had made various additions on account of unaccounted on-money receipt, unaccounted expenditure and payments, unexplained cash expenditure, unexplained investments etc. in all the years involved in the present appeal.
Aggrieved with the assessment orders, the assessee had filed appeals before the first appellate authority, which was decided vide the impugned common order of the Ld. CIT(A) and substantial relief was allowed to the assessee. The Ld. CIT(A) while upholding the additions on
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 3 account of on-money receipts had held that only the profit margin of the on-money receipts could be subjected to tax. Accordingly, he directed to work out the profit out of on-money by applying net profit rate of 15%. The additions made on account of unexplained investments and cash expenditures were deleted by allowing telescoping benefit of the on- money addition upheld by him.
Now the Revenue is in appeal before us. The issue of on-money addition and the addition for unexplained expenditure is common to all the appeals. We will adjudicate this issue in detail in the appeal of the Revenue for the A.Y. 2014-15.
IT(SS)A No. 61/Ahd/2023 (A.Y. 2014-15)
The Revenue has taken the following grounds in this appeal:
In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs. 1,58,23,440/- made u/s 69C of the Act without appreciating the facts discussed by the AO in the assessment order.
In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,05,66,895/- u/s. 69A of the Act made on account of acceptance of On-money on sale of unit without appreciating the facts discussed by the AO in the assessment order.
In the facts and on the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 4 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent.
Submission of the Revenue
The grounds taken by the Revenue are interconnected and will be dealt together. Shri Sher Sigh, the Ld. CIT-DR, has taken us through the assessment order in quite detail. He explained that the seized materials found from the premises of the assessee consisted of several records of cash transactions in the form of diary notings, cash vouchers etc. which was duly explained by Shri Darshik Savaliya (accountant of the assessee) in the course of his statement recorded during the search. In the course of search several allotment and cancellation agreements were found with accompanying records of cash receipts and payments. Shri Savaliya had explained that booking amounts were received in cash from customers which were returned in cash at the time of cancellation of agreements and that these transactions were not recorded in the books of accounts. Further, evidences for receipt of on-money in the projects developed by the assessee were also found in the course of search. The Ld. CIT-DR pointed out that the AO at page No. 9-11 of the assessment order had quantified the cash receipts as well as cash expenditures to the tune of Rs. 24,11,12,203/-, which were not recorded in the books of accounts of the assessee. The detailed page wise analysis of these unaccounted transactions is given at page No. 11 to page No. 53 of the assessment order. When confronted with these evidences, the assessee had accepted the cash receipts on account of on-money and also admitted the cash expenditures as appearing in the seized documents. The AO had made addition for unaccounted cash expenditure of Rs. 1,58,23,440/- during the
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 5 current year under 69C of the Act. The Ld. CIT-DR explained that the assessee had admitted total on-money receipt of Rs. 28,69,29,029/- in the 3 projects namely Swastik city, Swastik Platinum and Swastik Villa for all the years. For the current year, the AO had calculated on-money receipt of the assessee at average rate of 50% considering the total revenue taken from the books of accounts. Accordingly, addition of Rs. 2,05,66,895/- was made on account of on-money receipt in the A.Y 2014- 15. The Ld. CIT-DR submitted that the Ld. CIT(A) was not correct in reducing the on-money estimation as made by the AO. He explained that the Ld. CIT(A) on analysis of seized data had held that the assessee had received on-money at the rate of 24.10% in respect of residential units, which was rounded to 25%. For the shop units, the on-money receipt was 91.46% which was rounded to 91.5%. Accordingly, the Ld. CIT(A) had reduced the estimation of on-money on these bases. The Ld. CIT-DR contended that the Ld. CIT(A) was not correct in confirming addition to the extent of 15% only of the on-money receipts as worked out by him. As regarding the deletion of unaccounted cash expenditure of Rs.1,58,23,440/-, the Ld. CIT-DR submitted that there was no nexus found between unaccounted receipts and the unaccounted cash expenditures and, therefore, the Ld. CIT(A) was not correct in allowing the telescopic benefit to the assessee. He, therefore, strongly supported the order of the Assessing Officer.
Submission of the Assessee
Per contra, Shri Parin Shah, the Ld. AR of the assessee submitted that the AO was not correct in making separate additions for on-money
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 6 receipts and the unaccounted cash expenditure as the cash expenditures were only application of the on-money receipts. Therefore, the Ld. CIT(A) had rightly allowed the telescopic benefit for the cash expenditures and unaccounted investments to the assessee. On the issue of on-money estimation, the Ld. AR submitted that the AO had extrapolated the on- money receipt of the assessee on accrual basis at the rate of 100% of the agreement value which was not correct. He submitted that the addition could have been made only on the basis of the actual evidence found in the course of search and the AO was not correct in extrapolating the on- money receipt merely on the basis of few evidences found in the course of search. The Ld. AR fairly conceded that the assessee had admitted on- money receipt of Rs.28,28,55,566/- in the projects developed by him. He further submitted that considering the evidence for various cash expenditures found in the course of search, the entire on-money receipt could not have been considered as income of the assessee. He, therefore, justified the action of the Ld. CIT(A) in estimating the real profit out of the on-money receipts, by applying net profit rate of 15%.
Our Findings:
We have carefully considered the rival submissions and gone through the materials available on record. There is no dispute to the fact that certain evidences for receipt of on-money in the residential as well as commercial projects developed by the assessee were found in the course of search. The contention of the assessee is that evidence for on-money receipt of Rs. 9,51,22,985/- only, for different years, was found in the course of search whereas the AO had made total addition of
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 7 Rs.74,54,40,875/- by extrapolating the on-money receipts, which was not correct. It is found that the AO had calculated on-money receipt of the assessee at the average rate of 50% of the total revenue as per books of account. This rate was adopted by the AO for the reason that the assessee did not provide the details of project-wise and year-wise sales recorded in the books of accounts. Before the Ld. CIT(A), however, additional evidences were filed in this respect, on which remand report of the AO was called for and considered by him. The project-wise on-money extrapolated by the assessee is summarized at page 89 to 91 of the Ld. CIT(A) order. It is found therefrom that for the residential units of project Swastik City, the sum of agreement values for different years, for which on-money information was found in the course of search, was Rs. 6,78,53,215/-; in respect of which on-money of Rs. 1,63,54,620/- was received as per the seized material, which worked out to 24.10%. The assessee had extrapolated on-money receipts in respect of agreement value of Rs. 33,60,52,720/-, for which no on-money details was found in the course of the search by applying percentage of 25% and accordingly, worked out on-money receipt of Rs. 8,40,13,180/- for the projects Swastik City for the residential units. Similarly, the on-money for shops was extrapolated by applying the percentage of 91.50% on the basis of the seized evidence. In essence, the on-money for the different projects was estimated by the assessee on the basis of the on-money profit percentage found in the course of search. The project-wise on-money (actual + extrapolated), as estimated by the assessee, was summarized by the Ld. CIT(A) in the table at page no.-91 of his order, as under:
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 8
The Ld. CIT(A) had held that the generalised working of on-money as made by the AO at the rate of 100% of the agreement value was not correct. On the other hand, the working of the assessee was on a more rational basis, considering the evidences found in the course of search. The finding given by the Ld. CIT(A) in this regard is reproduced below:
“8.16. I have perused the manner of extrapolation adopted by the appellant before the AO and also the manner adopted by the AO. From comparison of the said and considering the size and nature of Real Estate projects executed by the appellant, it can be made out that the stand of the AO in generalizing that the appellant has accepted 100% of agreement values as on money is not a comprehensive good stand and requires reconsideration. From the detailed submission of the appellant before the AO and before the undersigned, it has been observed that the appellant has worked out the on-money receipts from its various Real Estate activities as under:
Sr. Project Name Agreement On Money % of On money to No. Values Agreement Values
1 Swastik Platinum 27,68,67,328 8,11,17,847 29.30% – Residential
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 9
2 Swastik City – 40,39,05,935 10,03,67,800 24.85% Residential
3 Swastik City – 6,35,29,208 5,81,01,119 91.46% Commercial
4 Swastik Villa 3,26,29,888 4,13,47,800 @12350 per Sq. (Area – 3348 Sq. Yard Yard)
5 Occasional - 19,21,000 Contractual Income
Total 77,69,32,359 28,28,55,566
Considering the facts of the case and in just of equity, the amount of on money receipts is reconsidered and determined at the following rates:
Sr. Project Name Agreement On Money % of On No. Values money to Agreement Values
1 Swastik Platinum – 27,68,67,328 9,69,03,565 35% Residential
2 Swastik City – 40,39,05,935 14,13,67,077 35% Residential
3 Swastik City – 6,35,29,208 6,35,29,208 100% Commercial
4 Swastik Villa (Area 3,26,29,888 4,18,50,000 @12500 per – 3348 Sq. Yard) Sq. Yard
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 10
5 Occasional - 19,21,000 Contractual Income
Total 77,69,32,359 31,15,32,187
It is thus found that the Ld. CIT(A) had slightly enhanced the percentages for working out the on-money for different project vis-a-vis the rate as adopted by the assessee. Further, the Ld. CIT(A) had applied profit rate of 15% to work out the income of the assessee out of the on- money receipts. Accordingly, the profit derived by the assessee out of the on-money receipts was worked out by the Ld. CIT(A) at Rs.5,18,35,628/- . The year wise working of on-money estimated for the different projects was as per the following table:
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 11 11. It is found that the AO has not given any rationale for adopting rate of 50% of the total revenue as per books of accounts, for extrapolating the on-money receipts of the assessee. On the other hand, the working of on- money as per order of the Ld. CIT(A) is found to be scientific and based on the evidences found in the course of the search. So far as estimation of income out of on-money receipts is concerned, it is a well settled legal proposition that the entire unaccounted on-money receipts cannot considered as income. Rather, only the profit element embedded therein can be added in the hands of the assessee. The Ld. CIT(A) had, therefore, rightly held that only profit embedded in the on-money receipts could have been taxed. Accordingly, he had estimated the profit at the rate of 15% on the on-money. In the case of Sankalp INN decided by the Co-ordinate Bench of this Tribunal in IT(SS)A No.45 to 48/Ahd/2022 and others, dated 31.01.2025, profit rate of 13% was upheld in respect of on-money receipts. In the case of Jay Builder v. Assistant Commissioner of Income- tax, [2013] 33 taxmann.com 62 (Gujarat) Hon’ble Gujarat High Court had upheld the addition at rate of 15 per cent of on money received by assessee. The profit percentage of the 15% applied by the Ld. CIT(A) for working out the real income out of the on-money receipts, in the present case, is found to be reasonable. Accordingly, the decision of the Ld. CIT(A) on this issue is upheld.
One of the contentions of the assessee is that the AO could not have made addition for on-money on the basis of extrapolation and that the on- money receipt as appearing in the seized documents only could have been subjected to tax. The evidences found in the course of the search are required to be considered in totality. During search, not only evidence
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 12 for on-money receipts but evidence for unaccounted cash expenses and unexplained investments were also found, and the explanation of the assessee was that the cash expenditures and unexplained investments were made out of the on-money received in cash. While evidence for on- money receipt of Rs. 9,51,22,895/- only was found in the course of search, the evidence for total unaccounted expense alone was much higher at Rs. 20,56,70,902/-, which could not have been explained vis-à-vis the evidence for on-money receipts found in the course of the search. It was thus evident that the assessee had received much higher amount of on- money, than the evidence found in the course of search, and this fact was admitted by the assessee as well. In fact, the assessee himself had estimated the on-money for different years at Rs. 28,28,55,566/- in order to explain the unaccounted cash expenditures. Once having admitted the on-money to the extent of Rs. 28,28,55,566/-, the assessee cannot take a plea that the addition for on-money should have been made only on the basis of evidences found in the course of the search. Accordingly, the objection taken by the assessee in this regard is rejected.
Telescopic benefit for Expenses
The AO had also made addition on account of unexplained expenditures/unaccounted cash expense as per seized documents which were not recorded in the books of accounts of the assessee. The total addition made on account of unaccounted expenditures in different years was Rs. 26,80,82,761/-, the year-wise break-up of which was appearing at page 95 of the Ld. CIT(A) order as under:
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 13
The Ld. CIT(A) had allowed telescopic benefit to the assessee and deleted the addition on account of total unaccounted expenditure of Rs. 26,80,82,761/- for the reason that he had upheld the total estimation of Rs. 34,55,70,851/- on account of on-money receipts. The contention of the Revenue that the ld. CIT(A) had estimated income at the rate of 15% only out of on-money receipts and, therefore, telescopic benefit could have been allowed only to that extent, is not found relevant. The total on- money as estimated by the Ld. CIT(A) was available with the assessee to make various expenses and since the total on-money was far in excess than the total expenditures, the order of the Ld. CIT(A) cannot be faulted. While the decision of Ld. CIT(A) in allowing telescopic benefit of the unaccounted expenditures with the on-money receipts is found to be correct in principle, he should have examined whether the on- money receipts for different years as upheld by him was sufficient to take into account the unaccounted expenditures for that year. The Ld. CIT(A) had upheld the on-money receipts for A.Y. 2015-16 to 2021- 22 only, whereas the unaccounted expenditures pertained to A.Y. 2011-
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 14 12 to 2021-22. Thus, no on-money receipt for A.Y. 2011-12 to 2014-15 was affirmed by him. In the absence of any on-money receipt for these years, the Ld. CIT(A) should have examined the source of unaccounted expenses for the A.Ys. 2011-12 to 2014-15.
For the A.Ys. 2015-16 to 2021-22, the extrapolated on-money upheld by Ld. CIT(A) is found to be in excess of the unaccounted expenditures. Therefore, the telescopic benefit allowed by the Ld. CIT(A) for the unaccounted expenditures for A.Y. 2015-16 to 2021-22 is found to be in order and is upheld.
So far as addition of on-money in A.Y. 2014-15 is concerned, the AO had made addition of Rs. 2,05,66,895/- for this year on the basis of the total revenue disclosed by the assessee. The Ld. CIT(A), however, did not upheld the addition for any on-money in the A.Y. 2014-15. The AO had also made addition of Rs. 1,58,23,440/- on account of unaccounted expenditure in this year and the Ld. CIT(A) had directed to telescope this unaccounted expenditure with the addition for on-money. Since, no addition on account of on-money receipt was upheld by Ld. CIT(A) in A.Y. 2014-15, the benefit of telescoping of unaccounted expenditure of Rs. 1,58,23,440/- for this year could not have been allowed to the assessee. Therefore, the matter was fixed for clarification on this issue on 15.04.2026. In this regard the assessee had made the following submissions:
Hon’ble Bench through order sheet entry asked to clarify that in table appearing at page no. 79 of CIT(A) order in which on-money of Rs. 2,05,66,895/- pertaining to A.Y. 2014-15 is not appearing. In this regard, Appellant wants to submit that it seems to be an error
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 15
in CIT(A) order for not considering A.Y. 2014-15 in computing on-money and profit estimation thereon. Appellant is submitting herewith working for all the years along with Asstt. Year 2014-15 as per Exhibit –I (As prepared by CIT(A) on page 94 in para 8.17). It is further submitted that in real estate transactions as per prevailing market practice on- money shall be required to be paid before execution of “Agreement to Sale” and accordingly, the on-money received for various years is available as a part of “Cash Flow for purpose of expenditure” and no separate addition of Rs. 1,58,23,440/- as telescoped by CIT(A) against “on-money” is required to be made. Appellant also submits that only profit margin on “on-money” for A.Y 2014-15 which comes to Rs. 12,13,775/- is required to be added. Accordingly, your honour can confirm the addition as stated above of Rs. 12,13,775/- pursuant to Ground No. 1 & 2 of revenue appeal.
The Exhibit-I attached to this letter was as under:
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 16 17. The assessee has furnished a revised working of on-money receipts and on the basis of the agreement value has worked out the on-money for the A.Y. 2014-15 at Rs.80,91,832/-. Further, adopting the profit rate of 15%, as approved by the Ld. CIT(A), profit of Rs. 12,13,775/- has been offered for tax in this year. Accordingly, the order of Ld. CIT(A) is modified to this extent and the profit on on-money of Rs. 80,91,832/- for A.Y. 2014-15, worked-out on the basis of agreement value for this year, is confirmed to the extent of Rs. 12,13,775/- by applying net profit rate of 15%. As already mentioned earlier, the addition confirmed by Ld. CIT(A) by applying profit rate of 15% on the on-money receipts in the A.Ys. 2015-16 to 2021-22, is upheld. The Ground taken by the Revenue in this regard is partly allowed, for the A.Y. 2014-15 only.
As discussed earlier, the Ld. CIT(A) had upheld on-money receipts for A.Y. 2015-16 to 2021-22 whereas the unaccounted expenditures pertained to A.Y. 2011-12 to 2021-22. The on-money estimated by the assessee for A.Y. 2014-15 was Rs. 80,91,832/- on which addition of Rs. 12,13,775/- at profit percentage of 15% has been upheld. However, this on-money receipt of Rs. 80,91,832/- was not sufficient to account for the unaccounted expenditure of Rs. 1,58,23,440/- incurred in this year. The assessee could have been allowed telescopic benefit for unaccounted expenditures to the extent of on-money of Rs. 80,91,832/- as worked-out for this year. Even after allowing set-off/telescopic benefit to that extent, the remaining expenditure of Rs. 77,31,608/- remains unexplained and the assessee has not given any explanation regarding the source of this balance expenditures in spite of specific query in this regard. In the absence of any explanation, the addition made by the AO
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 17
on account of unexplained expenditure is confirmed to the extent of Rs. 77,31,608/-. The ground taken by the Revenue is partly allowed.
In the result, the appeal of the Revenue for the A.Y. 2014-15 is partly allowed.
IT(SS)A No. 62/Ahd/2023 (A.Y. 2015-16)
The Revenue has taken the following grounds in this appeal:
In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs 80,92,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order 2. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted expenditure of Rs 10,00,000/- made u/s 69C of the Act without appreciating the facts discussed by the AO in the assessment order 3. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the disallowance on account of excess depreciation and interest claimed of Rs 6,51,640/- made by the Assessing Officer without any basis. 4. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the addition on account of unexplained cash expenditure of Rs 1,80,00,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order 5. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in restricting the addition of Rs 9,12,52,488/- to Rs. 62,07,833/- made on account of acceptance of On-money on sale of units without any material evidence brought on record by the assessee 6. In the facts and on the circumstances of the case and in law, the Ld CIT(A) ought to have upheld the order of the A O
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 18
It is, therefore, prayed that the order of the Ld CIT(A) be set aside and that of the A.O be restored to the above extent.
Ground Nos. 1, 2 and 4 taken by the Revenue in this year are identical to ground No.1 of IT(SS)A No. 61/Ahd/2023 for A.Y. 2014-15. The AO had made addition for unaccounted cash expenditure of Rs. 80,90,000/-, Rs. 10,00,000/- and Rs. 1.80 crores on the basis of seized documents. (The addition of Rs.1.80 crore is discussed in detail in A.Y.2020-21). Similarly, the Ground No. 5 is identical to ground No. 2 of IT(SS)A No. 61/Ahd/2023 and pertains to addition on account of on- money receipts. The Ld. CIT(A) while upholding the addition on account of on-money receipts @ 15%, has directed to allow telescopic benefit of unaccounted cash expenditures. We have already upheld the addition of on-money at profit rate of 15%. Further, the on-money extrapolated in this year was sufficient to allow the telescopic benefit for the various cash expenditures. Therefore, the direction given by the Ld. CIT(A) to allow telescopic benefit for cash expenditures with the on-money receipts is found to be in order. The decision taken by us on these issues in IT(SS)A No. 61/Ahd/2023 is applicable mutatis mutandis to this year as well. Accordingly, the Ground Nos. 1, 2, 4 and 5 as taken by the Revenue are dismissed.
Ground No. 3 pertains to disallowance of excess depreciation and interest claim on cars. In fact, this is a common ground involved in other years as well. The AO had disallowed the depreciation claimed on five motor cars and also the interest and other expenses incurred in this regard, on the ground that these assets were utilized for personal
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 19 purpose as well. The contention of the assessee that the cars were also utilized by the office staff, was rejected by the AO. According to the AO, the assessee could not have utilized 5 cars and 2 luxurious bikes for his proprietary business. Accordingly, addition of Rs. 6,51,640/- was made on account of disallowance of depreciation and interest on cars by disallowing 50% of the claim. The Ld. CIT(A) had deleted the addition for the reason that the same was not based on any seized material found in the course of search. In fact, identical additions were made in all the years involved. According to the Ld. CIT(A), additions made in A.Ys. 2015-16 to 2018-19 were beyond the scope of section 153A of the Act, as these were unabated years and no addition could have been made except on the basis of seized materials. For the A.Ys. 2019-20 to 2021-22, which are abated years, the Ld. CIT(A) had restricted the disallowance to 10%, considering the personal element of usage of motor cars.
We do not find any infirmity with the order of Ld. CIT(A). This addition was made by the AO on pure estimate basis and without any evidence being found in the course of search for personal usage of cars. Further, the AO has not given any rationale for disallowing 50% of the claim of depreciation, interest and other expenses. It is settled position of law that in the case of unabated assessments no addition can be made on estimate basis, which is not emanating from any seized material. In the course of search no evidence for personal usage of the motor cars was found. Therefore, the addition as made by the AO was rightly deleted by the CIT(A) in the unabated years. In the abated years, the addition as sustained by the CIT(A) is found to be reasonable and is upheld. Accordingly, the Ground taken by the Revenue is dismissed.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 20
In the result, the appeal of the Revenue is dismissed.
IT(SS)A No. 63/Ahd/2023 (A.Y. 2016-17)
The Revenue has taken the following grounds in this appeal:
In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs 55,37,350/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order 2. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted expenditure of Rs 12,54,774/- made u/s 69C of the Act without appreciating the facts discussed by the AO in the assessment order 3. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted expenditure of Rs 7,00,000/- made u/s 69C of the Act without appreciating the facts discussed by the AO in the assessment order 4. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the disallowance on account of loss on sale of Harley Davidson bike of Rs. 2,81,488/- without appreciating the facts discussed by the AO in the assessment order 5 In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the disallowance on account of excess depreciation and interest claimed of Rs. 31,81,993/- made by the Assessing Officer without any basis 6. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the addition on account of unexplained cash expenditure of Rs. 1,32,00,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order. 7. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in restricting the addition of Rs. 15,03,57,065/- to Rs. 95,42,303/- made on account of acceptance of on-
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 21 money on sale of units without any material evidence brought on record by the assessee. 8. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent.
Ground Nos. 1, 3 and 6 pertaining to unaccounted cash expenditures and Ground No. 7 regarding addition for on-money, are identical to grounds taken by the Revenue in the earlier years and the decision taken by us in IT(SS)A No. 61/Ahd/2023 is applicable mutatis mutandis to these grounds. (The addition of Rs.1.32 crore in respect of Ground No-6 is discussed in detail in A.Y.2020-21). Accordingly, the Ground Nos. 1, 3, 6 and 7 are dismissed.
Ground No. 5 is identical to ground No. 3 of IT(SS)A No. 62/Ahd/2023 and the decision taken in that appeal on this issue is applicable mutatis mutandis to this year as well. Accordingly, the Ground No. 5 is also dismissed.
Ground No. 2 pertains to addition of Rs. 12,54,774/- on account of unaccounted expenditure made on the basis of entry appearing in the seized document. In this regard, the Ld. CIT(A) has given the following finding:
“9.2 I have perused the contention of the appellant and the contention of the AO. From the submission of the appellant, it remains un-conclusive that the amount of Rs. 12,54,774/- is an accounted expenditure and Hence, the said contention of the appellant is rejected. However, the alternative plea of
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 22 the appellant that in any case expenditure u/s 69C requires to be telescoped to be sourced from the on money receipt is found to be acceptable and hence, the said addition is hereby deleted and the said ground no. 6 is accordingly allowed.
The assessee was unable to establish that the expenditure of Rs. 12,54,774/- appearing in the seized document was duly accounted for in its books of accounts. The Ld. CIT(A) had treated the expenditure as unaccounted and directed to allow telescopic benefit of this addition with the addition of on-money made in this year. We do not find anything wrong with the finding and the direction of ld. CIT(A), as the cash expenditure was mere application of on-money received in cash. Accordingly, the decision of the Ld. CIT(A) is upheld and the ground taken by the Revenue is dismissed.
Ground No. 4 pertains to disallowance of loss of Rs. 2,81,488/- on sale of Harley-Davidson bike. The assessee has debited loss of Rs. 2,81,488/- in the P&L account which was not disallowed while computing the business income. The loss being pertaining to capital asset, the AO had disallowed the same while working out the income of the assessee. The Ld. CIT(A) has deleted the addition on the ground that the same was not based on any seized material.
We have heard the Ld. CIT-DR and the Ld. AR on this issue. The Ld. CIT(A) had deleted the addition for the reason that the same was not based on any seized material. Hon’ble Supreme Court has held in the case of Abhisar Buildwell (P) Ltd. 149 taxmann.com 399(SC) that in case any incriminating material is found for unabated/completed assessment, the AO would assume the jurisdiction to assess or reassess
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 23 the total income taking into account the incriminating material found during the search and other material available with the AO, including the income declared in the return. In the present case, addition for on-money was already made on the basis of seized material and, therefore, the AO had validly assumed jurisdiction to complete the assessment of this unabated year. Therefore, the AO was empowered to consider not only the seized material but also the other material including the income declared in the return. It was evident from the P&L account filed by the assessee that the assessee had debited loss of Rs. 2,81,488/- on sale of Harley-Davidson bike, which being a capital loss, was not eligible for deduction. Therefore, the AO had rightly made the addition. The Ld. CIT(A) has deleted the addition on incorrect premise that addition can be made only on the basis of seized material, which is not correct. As the loss of sale of asset was not an eligible deduction, the disallowance of loss of Rs. 2,81,488/- made by AO, is upheld. Accordingly, the ground taken by the Revenue is allowed.
In the result, the appeal of the Revenue is partly allowed.
IT(SS)A No. 64/Ahd/2023 (A.Y. 2017-18)
The grounds taken by the Revenue in this appeal are as under:
In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs.63,39,006/ made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order and also overlooking the unaccounted income available only for such unaccounted expenditure worked out to the tune of Rs. 92,96,392/- by the CIT(Appeal).
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 24
In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 3,50,37,000/- by estimating the net income @ 15% of total on-money extrapolated at Rs.6,19,75,948/- without any basis and not appreciating the facts discussed by the AO in the assessment order. 3. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted investment of Rs. 19,21,000/- made u/s 69 of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order. 4. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of unexplained investment of Rs.53,00,000/- made u/s. 69 of the Act without appreciating the facts discussed by the AO in the assessment order. 5. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of unexplained expenditure Rs.4,00,000/- made u/s. 69C of the Act without appreciating the facts discussed by the AO in the assessment order. 6. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 15,70,73,239/- u/s. 69A of the Act made on account of undisclosed gain on sale of property without appreciating the facts discussed by the AO in the assessment order. 7. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the disallowance on account of excess depreciation and interest claimed of Rs. 43,86,379/- made by the Assessing Officer without any basis.
The Ground No. 1 and 5 regarding cash expenditures and Ground No.-2 and 6 regarding on-money receipt are identical to the grounds taken in IT(SS)A No. 61/Ahd/2023 for A.Y. 2014-15 and decision taken by us in that appeal is applicable mutatis mutandis to these grounds. In this year the AO had made addition for actual on-money receipt of Rs.3,50,37,000/- as per seized document found in the course of search and also made separate addition for on-money of Rs. 15,70,73,239/- by estimating the on-money at the rate of 50%. Thus, there was duplication of addition on
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 25 account of on-money by the AO, on the basis of actual receipt and also on the basis of estimation. We have already dealt with this issue in detail in IT(SS)A No. 61/Ahd/2023 and the decision of the Ld. CIT(A) has been upheld. Accordingly, the Ground Nos.-1, 2, 5 and 6 taken by the Revenue are dismissed.
Ground No. 3 pertains to addition of Rs. 19,21,000/- on account of unaccounted receipt. In the course of search, an image in Whatsapp data was seized which had details of total transaction of Rs. 19,21,000/- with one Shri Ajay Rathod. Before the AO, the assessee had explained that this document represented receipts from Mr. Ajay Rathod for miscellaneous work done and that the same was unaccounted. Accordingly, the AO had treated the unaccounted receipts of Rs. 19,21,000/- as income of the assessee. The Ld. CIT-DR submitted that the Ld. CIT(A) had wrongly deleted this addition by treating the same as unexplained expenditure and allowing telescopic benefit. Per contra the Ld. AR, supported the order of the Ld. CIT(A).
We have considered the rival submissions. There is no dispute to the fact that the assessee had admitted before the AO that the entries appearing in the seized document was noting regarding miscellaneous work receipts from one Shri Ajay Rathod, which was not recorded in the books of accounts. Therefore, the Ld. CIT(A) was not correct in allowing telescopic benefit by treating the same as unaccounted expenditure. At the same time, the AO was also not correct in treating the entire receipt as income of the assessee. As explained, the receipt was for miscellaneous work done and, therefore, only the profit derived out of this
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 26 receipt could have been subjected to tax. We, therefore, deem it proper to work out the profit derived from this receipt at the rate of 15% and accordingly the addition made by the AO is sustained to the extent of Rs. 2,88,150/-. The ground taken by the Revenue is partly allowed.
Ground No. 4 pertains to addition of Rs. 53,00,000/- on account of unexplained investment. In the course of search an image from the digital data had details of transactions totalling Rs. 69,32,000/- with one Shri Yashwantbhai. As per this data, the assessee had received interest of Rs.16,32,000/- at the rate of 3% per month, on loan of Rs. 53,00,000/- advanced to Yashwantbhai. The AO had made addition for unexplained cash loan of Rs. 53,00,000/- as well as for the interest receipts of Rs. 16,32,000/-. The Ld. CIT(A) while confirming the addition of Rs. 16,32,000/- on account of unaccounted interest income had deleted the addition of Rs. 53,00,000/- in respect of cash loans. According to him, the cash loan was given out of the on-money receipts and accordingly he had allowed telescopic benefit to the assessee.
We have heard the Ld. CIT-DR as well as the Ld. AR on this issue. In the current year the Ld. CIT(A) had worked-out on-money receipt of Rs. 6,19,75,948/- which was far in excess of the unaccounted expenditures as well as the cash loan advanced by the assessee. Therefore, the Ld. CIT(A) had rightly allowed the telescopic benefit for the cash loan being out of the on-money receipts. We do not find anything wrong with the order of the Ld. CIT(A). The decision of the Ld. CIT(A) on this issue is upheld and the ground taken by the Revenue is dismissed.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 27
Ground No. 7 pertains to addition of Rs.43,86,379/- on account of disallowance of depreciation, interest etc. and is identical to Ground No. 3 of IT(SS)A No. 62/Ahd/2023. The decision taken on this issue in that appeal is applicable mutatis mutandis to this year as well. Accordingly, the Ground No. 7 is also dismissed.
In the result the appeal of the Revenue is partly allowed.
IT(SS)A No. 65/Ahd/2023 (A.Y. 2018-19)
The Revenue has taken the following grounds in this appeal:
In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs.9,57,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order. 2 In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,04,00,000/- by estimating the net income @ 15% of total on-money extrapolated at Rs.4,15,70,080/- without any basis and not appreciating the facts discussed by the AO in the assessment order. 3. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted Income of Rs. 56,52,77,800/- made u/s 69A of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order. 4. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of unaccounted expenditure of Rs.3,00,000/- made u/s. 69C of the Act without appreciating the facts discussed by the AO in the assessment order. 5. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 10,62,59,898/- u/s. 69A of the Act made on account of acceptance of On-money on sale
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 28 of units without appreciating the facts discussed by the AO in the assessment order. 6. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the disallowance on account of excess depreciation and interest claimed of Rs. 34,57,192/- made by the Assessing Officer without any basis. 42. All the Grounds taken by the Revenue in this appeal, except ground No. 3, are identical to IT(SS)A No. 64/Ahd/2023, and the decision taken in that appeal is applicable mutatis mutandis to this year as well. Accordingly, the Ground Nos.-1, 2, 4, 5 & 6 are all dismissed.
The only new ground taken by the Revenue in this appeal is Ground No. 3. In the course of search certain digital data was found from the mobile of Avnik Vekhariya which is reproduced at page-59 of the assessment order. From the said data it transpired that the assessee had sold two pieces of land at documented price of Rs. 16.51 crores. However, from the noting regarding the rate as appearing in the seized document, the AO had concluded that certain consideration over and above the documented price was received by the assessee and accordingly AO had made addition of Rs.56,52,77,800/-. Before the Ld. CIT(A), the assessee had contended that the assessee did not enter into any such transaction as appearing in this document and certain additional evidence in this respect was filed before the Ld. CIT(A). According to the assessee, this land was sold by another person by the name Laxmanbhai Haribhai Thakor having different PAN: AMWPT7141B. The matter was remanded to the AO and on the basis of his remand report, the Ld. CIT(A) had deleted the addition.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 29
We have heard the Ld. CIT-DR and the Ld. AR on this issue. It will be relevant here to reproduce the remand report of the AO regarding the identity of the person who have sold the land.
“4.1.4. In this regard, the assessee has submitted that the vide his submission dated 09.03.2022, he had submitted that the "Laxman Haribhai" is a completely different assessee and that the assessee has nothing to do with the said "Laxman Haribhai." Further, the assessee has also submitted an affidavit from Shri Mansukhbhai D Radadiya who is a partner in Ugati Developers stating that the assessee has never entered into any transaction in any manner with Shiv Ugati Developers. 4.1.5. To verify the claim of the assessee, the sale deeds of the above mentioned lands were verified. On perusal of the same, it was found that the name of the seller is mentioned as "Laxmanbhai Haribhai" & others and PAN of the said Laxmanbhai Haribhai is found to be AMWPT7141B. The details of the said PAN were extracted from ITBA and Insight Portal. It was found that the name registered against the said PAN is "Laxmanbhai Haribhai Thakor" son of Shri Haribhai Kalaji Thakor. The DOB registered against the same PAN is 24.03.1968 and the residential address of the said person is at A/17, Hari Bhaino Kuvo, Konbosko School Pase, Vejalpur, Ahmedabad. Therefore, it is seen that none of the details of Shri Laxmanbhai Haribhai such as Name, PAN, Father's name, DOB and residential address match with the details of the assessee. Further, the UID of the said person is found to be 987745968654 which is also different than that of the assessee's UID. Even the photos of both the persons which are available on the Insight Portal are found to be different as well. 4.1.6 In view of the above observations and the affidavit of Shri Mansukhbhai D Radadiya (Partner of Shiv Ugati Developers), it seems that the Laxmanbhai Haribhai who sold the project land of Shiv Ugati City might be a different person than the assessee.
It is evident from the remand report of the AO that the land in question was sold by Laxmanbhai Haribhai and others having PAN No. AMWPT7141B, who was a different person than the present assessee. The AO had also reported that none of details such as PAN, father’s name, date of birth, residential address, UID of the person who had transferred the property, was tallying with the assessee and even the photo was different. It is, thus, evident that the land was not sold by the
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 30
assessee but by an altogether different person. Considering this fact, the Ld. CIT(A) had rightly deleted the addition. We do not find any rational for contesting this issue when the relief was allowed by the Ld. CIT(A) on the basis of remand report of the AO. The ground taken by the Revenue is devoid of merit and is, therefore, dismissed.
In the result, the appeal of the Revenue is dismissed.
IT(SS)A No. 66/Ahd/2023 (A.Y. 2019-20)
The Revenue has raised the following ground in this appeal:
In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs. 20,44,675/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order 2. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 1,16,90,000/- by estimating the net income 15% of total on-money extrapolated at Rs 4,15,70,080/- without any basis and not appreciating the facts discussed by the AO in the assessment order. 3. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in restricting the addition of Rs. 10,35,08,350/- to Rs. 65,21,246/- made on account of acceptance of On- money on sale of units without any material evidence brought on record by the assessee. 4. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in restricting the disallowance on account of excess depreciation and interest claimed of Rs. 22,75,884/- to Rs. 4,55,177/- made by the Assessing Officer without any basis. 5. In the facts and on the circumstances of the case and in law, the Ld CIT(A) ought to have upheld the order of the A.O.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 31 6. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.
The Grounds taken in this appeal pertain to unaccounted cash expenditures, on-money receipts and disallowance of depreciation & interest, which are identical to the grounds in IT(SS)A No. 65/Ahd/2023 for A.Y. 2018-19. The decision taken in that appeal on these issues is applicable mutatis mutandis to this year as well, and accordingly all the Grounds are dismissed.
In the result, the appeal of the Revenue is dismissed.
IT(SS)A No. 67/Ahd/2023 (A.Y. 2020-21)
The Revenue has taken the following grounds in this appeal:
In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs. 10,58,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order 2. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs.21,00,000/- by estimating the net income @ 15% of total on-money extrapolated at Rs 3,89,13,180/- without any basis and not appreciating the facts discussed by the AO in the assessment order. 3. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted investment of Rs. 2,77,00,000/- made u/s 69 of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order 4. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 1,39,14,805/-
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 32
u/s 69A of the Act made on account of undisclosed capital gain without appreciating the facts discussed by the AO in the assessment order. 5. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of unaccounted expenditure Rs.3,10,000/- made u/s. 69C of the Act without appreciating the facts discussed by the AO in the assessment order. 6. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Bogus Entries Rs. 1,56,00,000/- without appreciating the facts discussed by the AO in the assessment order. 7. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in restricting the disallowance on account of excess depreciation and interest claimed of Rs. 13,93,968/- to Rs. 5,57,587/- made by the Assessing Officer without any basis. 8. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in restricting the addition of Rs. 1,27,63,000/- to Rs. 19,14,450 made on account of unexplained money u/s 69A of IT Act without any material evidence brought on record by the assessee. 9. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in restricting the addition of Rs. 9,93,20,670/- to Rs. 58,36,977 made on account of acceptance of On-money on sale of units without any material evidence brought on record by the assessee. 10. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of unexplained cash expenditure of Rs. 2,28,40,000/- made u/s. 69C of the Act without appreciating the facts discussed by the AO in the assessment order.
Ground no.-1 & 5 regarding unexplained cash expenditure, Ground No.-2 regarding on-money receipt and Ground No.-9 regarding extrapolation of on-money, are identical to the grounds taken in the appeals decided earlier and decision on these issues is applicable mutatis mutandis to this year also. Accordingly, the Ground 1, 2, 5 and 9 are all dismissed.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 33 52. Ground No. 3 and 4 are interconnected and are being dealt together. In the course of search at the office premise of the assessee, copy of Banakhat agreement was found and seized. It transpired therefrom that the assessee had made total payment of Rs. 7,63,43,400/- out of which cheque amount was Rs. 3 crores only. The cheque payment was found recorded in the books of accounts of the assessee. Therefore, the AO treated the other entries appearing in this document as correct. The assessee had also admitted having made cash payment of Rs. 3.07 crores as mentioned in this document, out of which Rs. 2.77 crores was paid in the current year and the balance Rs. 30,00,000/- was paid in the next year. Accordingly, the AO had made addition of Rs. 2.77 crores on account of unexplained cash payment for purchase of plot. Further, as per the seized document, the assessee had transferred/bartered 2 plots against purchase of the subject plot but no capital gain was disclosed on the plots so bartered. Therefore, an addition of Rs. 1,39,14,805/- was made on account of undisclosed capital gain.
We have heard Ld. CIT-DR and the Ld. AR on these two issues. The Ld. CIT(A) had accepted the contention of the assessee that the cash payment was made out of the unaccounted on-money receipts, the addition of which was separately made in different years. Accordingly, the Ld. CIT(A) had deleted the addition by treating the cash payment as application of on-money income. We do not find anything wrong with the order of the Ld. CIT(A). The Revenue has not made out any case that the assessee didn’t have sufficient fund available out of on-money receipts, so as to make the advance payment of Rs. 3.04 crores towards purchase
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 34 of plot. Therefore, the order of the Ld. CIT(A) on this issue is upheld and the ground of the Revenue is dismissed.
As regarding addition on account of capital gain on barter of plots, the Ld. CIT(A) has given a finding that the sale deed for exchange of plots was not executed and, therefore, there was no question of any capital gain arising in the absence of any transfer. In fact, the Ld. CIT(A) had given a direction to the AO to verify the fact regarding transfer of the assets and had allowed the appeal of the assessee for statistical purpose only. Since this matter was already set aside to the AO for the purpose of verification of fact regarding transfer of the plots, we do not find any justification for contesting this ground in the present appeal. The ground taken by the Revenue is dismissed.
Ground No. 6 pertains to addition of Rs. 1.56 crores as per seized document. In the course of search certain image files were found in which cash transactions were noted. The total cash transactions were to the extent of Rs. 1.56 crores which was recorded as Hawala transaction. The assessee had explained that he was engaged in providing cash to cheque and vice-versa and the transactions were arranged through hawala route. The AO had treated the entire cash transactions of Rs. 1.56 crores made through hawala as income of the assessee.
We have heard the Ld. CIT-DR and the Ld. AR on this issue. The finding given by the Ld. CIT(A) on this issue is found to be as under:
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IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 36
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 37
We do not find anything wrong with the order of Ld. CIT(A). The AO had already made the addition for on-money receipts in cash which was available with the assessee for exchange with cheque amounts. The total
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 38 receipt in respect of on-money was much in excess of the transaction of Rs.1.56 crores recorded in the seized documents. Under the circumstances, we do not find any justification for making separate addition for cash transaction of Rs. 1.56 crores. It is not the case that this cash of Rs. 1.56 crores was separately earned by the assessee from an independent source. The rotation/exchange of cash with the cheque was out of the cash available with the assessee in the form of on-money receipt and no separate addition was called for in this respect. Accordingly, the order of the Ld. CIT(A) on this issue is upheld. The Ground taken by the Revenue is dismissed.
Ground No. 7 pertaining to disallowance of depreciation and interest is identical to the ground taken in earlier years and the decision of the Ld. CIT(A) is upheld. The Ground is dismissed.
Ground No. 8 pertains to addition of Rs. 1,27,63,000/- u/s. 69A of the Act. In the course of search a digital data image was found which recorded total transaction of Rs. 1,27,6300/- carried out with one Shri Kamalsingh Ji. This image was found from the mobile phone of the assessee. In the absence of any explanation by the assessee the amount of Rs. 1,27,6300/- appearing in this page was treated as unexplained money and added to income.
We have heard the Ld. CIT-DR and the Ld. AR on this issue. The Ld. CIT(A) has given the following finding on this issue.
“14.2 I have perused the contention of the appellant. It is a noteworthy fact of the case that a similar noting has been found totaling to Rs 19,21,000/- and as raised by
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 39 the appellant vide ground no.8 of this appeal wherein the appellant has duly accepted the same as occasional contractual receipts. Following the same consistency, the said receipts of Rs 1,27,63,000/- are held to be in the nature of contractual on money receipts and as discussed and detailed vide para no 8 in this order, the real income arising out of the said noting is calculated @ 15% i.e. Rs.19,14,450/-. Therefore, the AO is directed to consider the confirmed addition of Rs. 19,14,450/- out of total addition of Rs.1,27,63,000/-. Thus, the said ground of appeal no. 13 is partly allowed.”
From the seized image reproduced at page No. 65 of the assessment order, it cannot be made out as to whether the entries appearing on this page were expenditures or receipts. The AO had made the addition considering these amounts as receipts. In the absence of any explanation by the assessee, the AO was correct in treating the amount as unaccounted transaction of the assessee. At the same time, the entire unaccounted receipt could not have been considered as income of the assessee. The Ld. CIT(A) has rightly applied profit percentage of 15% to work out the income out of the unaccounted receipt of Rs. 1,27,63,000/- and accordingly upheld the addition to the extent of Rs. 19,14,450/-. We do not find any reason to interfere with the order of the Ld. CIT(A). The profit estimated by him out of this unaccounted transaction is found to be quite reasonable. Hence, the decision of the Ld. CIT(A) on this issue is upheld and the ground taken by the Revenue is dismissed.
Ground No. 10 - In the course of search certain documents were found, which is reproduced at page 72 to 74 of the assessment order. The assessee had explained that the noting at these pages represented payment made to various persons who had illegal occupation of the land on which project Swastik Platinum was to be constructed. The explanation of the assessee in this regard was as under:
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On the basis of the reply of the assessee, the AO had made addition of Rs. 1.80 crores in A.Y. 2015-16, Rs. 1.32 crores in 2016-17 and Rs. 2,28,40,000/- in A.Y. 2020-21. The Ld. CIT(A) had deleted the additions, allowing telescopic benefit to the assessee vis-à-vis the addition for on- money receipts. As this ground is identical to ground taken in A.Y. 2015- 16 and 2016-17, the decision of the Ld. CIT(A) on this issue is upheld. The cash payment made by the assessee was only application of cash generated through on-money receipts and the Ld. CIT(A) had rightly allowed the telescopic benefit for the cash payments with the on-money receipts. It is not the case of Revenue that the on-money receipts were insufficient to meet the cash expenditures and the payments as per this
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document for the different years. Accordingly, the ground taken by the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
IT(SS)A No. 68/Ahd/2023 (A.Y. 2021-22)
The Revenue has taken following grounds in this appeal:
In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted cash expenditure of Rs. 13,46,33,907/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order and also overlooking the unaccounted income available only for such unaccounted expenditure worked out to the tune of Rs.81,95,365/- by the CIT(Appeal). 2. In the facts and on the circumstances of the case, the Ld.CIT(A) has addition of erred in law and/or on facts in deleting the Rs.30,76,000/- by estimating the net income @ 15% of total on-money extrapolated at Rs.5,46,35,767/- without any basis and not appreciating the facts discussed by the AO in the assessment order. 3. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unaccounted investment of Rs. 30,00,000/- made u/s 69 of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order. 4. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs.14,41,34,000/- on account of undisclosed income u/s 69A without having conclusive findings of the AO in remand proceedings on the issue and without appreciating the facts discussed by the AO in the assessment order. 5. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 7,50,00,000/- which was revised to Rs.30,00,00,000/- u/s 154 of IT Act on account of unaccounted cash receipts made on protective basis without awaiting the decision of appellate authority on the substantive addition made in
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the case of M/s DLH Developers for the same amount and without appreciating the facts discussed by the AO in the assessment order. 6. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of unexplained expenditure Rs.71,63,14,500/- made u/s. 69C of the Act without appreciating the facts discussed by the AO in the assessment order. 7. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 2,37,53,501/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order and also overlooking the unaccounted income available only for such unaccounted expenditure worked out to the tune of Rs.81,95,365/- by the CIT(Appeal). 8. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the additions of Rs. 1,02,42,500/- made on account of undisclosed Business investment u/s 69 of the Act and Rs.1,10,87,500/- on account of business Profit u/s. 69 of the Act without appreciating the facts discussed by the AO in the assessment order. 9. In the facts and on the circumstances of the case, the Ld CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 22,00,00,000/- u/s 69A of the Act made on account of undisclosed gain on sale of property without appreciating the facts discussed by the AO in the assessment order.
In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 1,35,00,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order and also overlooking the unaccounted income available only for such unaccounted expenditure worked out to the tune of Rs.81,95,365/- by the CIT(Appeal). 11. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 2,39,63,000/- made on account of unexplained money u/s 69A of IT Act without any material evidence brought on record by the 12. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in restricting the disallowance on account of excess depreciation and interest claimed of Rs. 12,78,635/- to Rs. 5,11,454/- made by the Assessing Officer without any basis.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 43 13. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in restricting the addition of Rs.3,65,30,761/- [Rs.5,46,35,767/- as per CIT(Appeal)] to Rs.81,95,365/- without any basis of applying net profit rate @ 15% and without appreciating the facts and evidence discussed in the assessment order. 14. In the facts and on the circumstances of the case, the Ld.CIT(A) has erred in law and/or on facts in deleting the addition on account of unexplained cash expenditure of Rs.2,95,21,000/- made u/s 69C of the Act as a result of giving telescoping benefit to the assessee without appreciating the facts discussed by the AO in the assessment order. 15. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 95,49,169/- on account of unexplained investment in jewellery found ignoring the law that the CIT(A) does not have any power to give the directions to re- verify the claim of the assessee by the AO which tantamount to setting aside the issue for re-adjudication by the AO.
Ground No. 1 and 14 pertains to addition of unaccounted expenditure of Rs. 13,46,33,907/- and Rs. 2,95,21,000/- which has been deleted by the Ld. CIT(A) by allowing telescopic benefit with the on-money receipts. We have already dealt this issue in the appeal for earlier years. The total cash expenditure in this year was Rs. 16,41,54,907/- whereas the Ld. CIT(A) had extrapolated on-money receipt of Rs. 5,46,35,767/- only in this year. However, the total on-money extrapolated by the Ld. CIT(A) for the different years was Rs. 34,55,70,851/- which was far in excess of total cash expenditure of Rs. 26,80,82,761/- allowed set-off by the Ld. CIT(A). The total on-money as worked out by the Ld. CIT(A) in different years was available with the assessee to make the expenses in this final year and since the total on-money was far in excess than the total expenditures, the order of the Ld. CIT(A) cannot be faulted. Therefore, the Grounds taken by the Revenue are dismissed.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 44 67. Ground No. 2 and 13 pertain to on-money estimations and is covered by our order for earlier years. Hence, these two grounds are dismissed.
Ground No. 3 pertaining to unaccounted investment of Rs.30,00,000/- is identical to Ground No. 3 of IT(SS)A No. 67/Ahd/2023 for A.Y. 2020-21 and the decision taken in that appeal is applicable mutatis mutandis to this ground as well. Hence, the Ground is dismissed.
Ground No. 4, 6 and 11 are interconnected and are being dealt 69. together. In the course of search a digital image file with details of plot No., plot area, construction area, plot cost, construction cost, registration amount and agreement amount of some of the villas of project Swastik Villa, developed by the assessee, was found. As per the details available in this digital file, the total plot and construction cost of 16 villas was Rs.71,63,14,500/- whereas the agreement amount and registration amount recorded in the file was Rs. 8,68,62,684/- and Rs. 11,99,29,545/- respectively. On the basis of this evidence, the AO had concluded that the total plot cost and construction cost as appearing in this document was the actual selling price. Accordingly, the entire unexplained expenditure of Rs. 71,63,14,500/- as per this document was added to income as unexplained expenditure.
Another digital data image was seized during search having details of 3 villas viz. B-30, A-41 and B-44 with details of plot area, construction area as well price of the villas. As per this document the total consideration
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 45 of the 3 villas was Rs. 14,41,34,000/- which was also added to the income of the assessee as undisclosed sales.
Another image was found during search containing details of Thaltej Bungalow with total amount of Rs. 3.93 crores, out of which Rs. 2,39,63,000/- was already paid by the buyer and the balance amount was outstanding. The sale consideration of Rs. 2,39,63,000/-received by the assessee as per this document in respect of Bungalow at Swastik Villa was separately added to the income of the assessee as unexplained receipt.
We have heard the Ld. CIT-DR and the Ld. AR in respect of these three interconnected issues. It is found that the Bungalow No. B-30, A-41 and B-44 in respect of which separate addition of Rs. 14,41,34,000/- was made, were appearing in the list of 16 bungalows for which addition of Rs. 71,63,14,500/- was made. Thus, the addition of Rs. 14,41,34,000/- was apparently a double addition. Similarly, the addition of Rs. 2,39,63,000/- pertaining to Thaltej Bungalow (Swastik villa) was also part of total addition of Rs. 71,63,14,500/- and was in nature of double addition. The fact of double addition was also accepted by the AO in his remand report. Therefore, the Ld. CIT(A) had rightly deleted the separate additions of Rs. 14,41,34,000/- and Rs. 2,39,63,000/- as these were part of 16 bunglows for which addition of Rs. 71,63,14,500/- was made. The Revenue has been unable to controvert the findings of the Ld. CIT(A) on this issue, who had given the relief considering the remand report of the AO. Hence, the decision of the Ld. CIT(A) is upheld and the Ground Nos.-4 & 11 taken by the Revenue are dismissed.
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As regarding addition of Rs. 71,63,14,500/-, the Ld. CIT(A) has given the following finding:
“17.3 Even with regards to addition of Rs.71.63,14,500/-, it has been observed that the same includes a sum of Rs.53,34,37,500/- which pertains to land value of the said project. The AO in its remand proceedings has accepted the fact that the appellant has duly brought on record the 7/12 extract of land parcels which proves to the fact that the appellant was never the owner of the said parcels of the land. Further, with regards to the contention of the appellant, that the appellant has merely acted upon as construction contractor, the appellant had placed on record the construction agreements entered into for the construction of the villas. The said agreements have been perused and the contention of the appellant has found to be acceptable. Further the appellant also mentioned that the construction of the part number of bungalows ie. 12 in number of the total 35 to be constructed. Post the said completion, the concerned person for the project has moved the application for the B.U. Permissions, however the same is stuck over the issue of payment of Betterment Charges. The copy of Application for the said permission was enclosed herewith as Annexure 2 at page no.3 of its submission. The appellant also relied upon seized material page no 22 of Annexure no A1 found and seized from the office premises and also referred to in the show cause notice dated 17.1.2022 vide para 22, wherein the estimate of the construction of the villas for various activities was been given clearly mentioning to the fact that the assessee is not responsible for getting the approval from GEB (Gujarat Electrical Board) and is also not responsible for getting the B.U. Permission. In view of the above facts, the said amount of Rs.53,34,37,500/- on account of land transfer cannot be added in the hands of the appellant. However, if the AO is of the view that certain cash portion has been forming part of the transaction on account of land transfers, then the same can only be taxed in the hands of individual land owners and not in the hands of the appellant and the AO may take the remedial action against such land owners if any as per law.
17.4 The appellant in its submission had duly extrapolated the on-money receipts arising out of construction of the villas at Rs 4,13,47,800/- The said on money receipts is considered at Rs 4,18,50,000/- for A Y 2021-22 of this order as per detailed discussion vide para no 8 and brought to tax vide the said paras. Further, since the income arising out of the said project is required to be taxed at Rs.4,18,50,000/-, instead of the addition of Rs.71,63,14,500/-, the addition of Rs 71,63,14,500/- is deleted and the ground of appeal is accordingly partly allowed.”
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 47 74. The AO was not correct in treating the entire cost of Rs.71,63,14,500/- as per seized document, as income of the assessee. The AO had accepted the fact that the assessee was not owner of the land. As per the seized document, the land value was Rs. 53,34,37,500/- which could not have been considered as the income of the assessee. Further the amount mentioned in the seized document was plot cost and construction cost which could not have been considered as income of the assessee. The Ld. CIT(A) has rightly held that the income was required to be estimated by extrapolating the on-money receipts arising out of construction of villas in the project Swastik Villa. Accordingly, the on- money estimated by the Ld. CIT(A) at Rs. 4,18,50,000/- is found to be reasonable and we do not find any reason to interfere with his order. Accordingly, the order of the Ld. CIT(A) is upheld and all the Ground No- 6 taken by the Revenue is also dismissed. In the result, all the three grounds of the Revenue are dismissed.
Ground No. 5 pertains to addition of Rs. 30 crores on protective basis. From the digital data found in the course of search, it transpired that the assessee had sold a parcel of land belonging to DLH Developers and received unaccounted cash for the same. It was explained that the transaction took place between DLH Developers, wherein the assessee was 25% partner, and Shri Vipul Gajera and others. The total post-dated cheque of Rs. 30 crores mentioned in the digital data was added on protective basis in the hands of the assessee. The Ld. CIT(A) had deleted the addition for the reason that substantive addition of Rs. 30 crores was already made in the assessment order of M/s DLH Developers.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 48 76. We have considered the rival submissions on this issue. As per the evidence found in the course of search, the land belonged to the partnership firm DLH Developers and not to the assessee. Therefore, any unaccounted income pertaining to this transaction was required to be considered in the hands of the partnership firm and not in the hands of the assessee. Merely because the digital data was found and seized from the assessee, the income in respect of the transaction made by the partnership firm, did not accrue to the assessee. Therefore, the AO was not correct in making addition, even on protective basis, in the hands of the assessee. The Ld. CIT(A) had rightly deleted the addition considering the fact that substantive addition was already made in the hands of M/s DLH Developers. Therefore, the order of the Ld. CIT(A) is upheld. The Ground taken by the revenue is dismissed.
Ground No. 7 pertains to addition of Rs. 2,37,53,501/- in respect of unaccounted payment. In the course of search digital data was found with noting of certain transactions with Umeshbhai. The seized document as well as the explanation of the assessee in this regard is reproduced at page No. 83 of the assessment order. This document pertained to transactions made between two parties viz. JK Laxmi and Aman. Since the assessee was unable to correlate the transactions in the image with his books of accounts, the AO had held that the payment of Rs. 2,37,53,501/- appearing on this page was made in cash and was not accounted for. Accordingly, the same was treated as unexplained expenditure and added to income. Before the Ld. CIT(A) certain additional evidences were filed, on which remand report of the AO was obtained. After examining the entries appearing in the seized digital data, the
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 49 explanation of the assessee and the remand report, the Ld. CIT(A) had deleted the addition by allowing telescopic benefit to the assessee. To the extent that the expenditure of Rs. 2,37,53,501/- was not found recorded in the books of account, the Ld. CIT(A) had upheld the findings of the AO. However, he has considered the alternate plea of the assessee that telescopic benefit of this expenditure should be allowed with the on-money receipts. We do not find anything wrong with the direction of the Ld. CIT(A) to allow the telescopic benefit of this expenditure with the cumulative on- money receipts. Accordingly, the decision of the Ld. CIT(A) is upheld, and the Ground taken by the Revenue is dismissed.
As regards Ground No. 8 - from the Whatsapp digital data found in the course of search, it transpired that the assessee had entered into certain unaccounted business, from which profit was also received. The assessee had explained that this image was a mere proposal requiring certain investments in manufacturing activities, which was never undertaken by the assessee. The AO, however, had made addition for unaccounted investment of Rs. 1,02,42,500/- and also for undisclosed business profit of Rs. 1,10,87,580/- in the manufacturing activity as per this seized digital data. The Ld. CIT(A), after considering the evidentiary value of the seized document, had deleted both the additions.
We have considered the submissions of the Ld. CIT-DR and the Ld. AR on this issue. The seized document is reproduced at page number 85 of the assessment order. As rightly held by the Ld. CIT(A), the name of the assessee was nowhere appearing in this document. Neither the period to which the transaction pertained was mentioned therein. From the
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 50 seized digital data, it is evident that the working was in respect of manufacturing activity. In the course of search, no evidence for any manufacturing activity carried on by the assessee was found. Under the circumstances, the Ld. CIT(A) had rightly deleted the addition made by the AO on the basis of this seized digital data, which had no evidentiary value and which was not corroborated by any independent evidence. The sized digital evidence was a dumb document and not being corroborated by any independent evidence, no addition could have been made on that basis. Accordingly, the decision of the Ld. CIT(A) is upheld and the Ground taken by the Revenue is dismissed.
Ground no. 9 pertains to addition of Rs. 22 crores as undisclosed gain on sale of property. In the course of search, a digital data regarding transaction in a piece of land situated at survey no. 231, TP 43, final plot no. 54 Sola, Ahmedabad was found. As per this document, payment of Rs. 22 crores was made by giving another immovable property (barter system), and the transaction was not recorded in the books of accounts. The AO had held that the assessee had transferred his property amounting to Rs. 22 crores as per the agreement, which was considered as undisclosed gain and added to income. The Ld. CIT(A) had accepted the explanation of the assessee that this was only a proposal detailing the terms and conditions required to be fulfilled and the actual transaction didn’t take place. Further that the assessee was not the owner of the plot of land mentioned in this seized digital data and, therefore, the said property could not have been transferred by him. On the basis of the documentary evidence brought on record i.e. 7/12 extract of the alleged land parcel, the Ld. CIT(A) had held that the said land parcel did not
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 51 belong to the assessee and, therefore, no addition was called for. The Revenue has been unable to controvert the findings of the Ld. CIT(A) that the assessee was not the owner of the land in question. Under the circumstances, we do not find any reason to interfere with the order of the Ld. CIT(A). The AO had made the addition on mere presumption and without verifying the actual ownership of the land under question. From the evidences brought on record it was evident that the assessee was not the owner of land and the evidence for actual transfer of land was also not available. Therefore, the order of the Ld. CIT(A) on this issue is upheld and the ground taken by the Revenue is dismissed.
Ground No. 10 pertains to addition of Rs. 1.35 crores on account of unexplained money. From digital image found in the course of search it transpired that the assessee had incurred expenditure of Rs. 1.35 crores in cash on account of marriage of his son held in December, 2017. The assessee had explained that expenditure of Rs. 98.50 lakhs only was incurred on marriage. The AO, however, treated the entire expenditure of Rs. 1.35 crores as unexplained expenditure and accordingly made the addition. The Ld. CIT(A) had deleted the addition by allowing telescopic benefit vis-à-vis on-money addition. We do not find anything wrong with the order of the Ld. CIT(A) on this issue. He had rightly allowed telescopic benefit for unaccounted expenditures with the addition of on-money receipts. The Revenue has been unable to substantiate that the on-money receipt was not sufficient to account for the expenses that were allowed set off. Under the circumstances, the decision of the Ld. CIT(A) is upheld. The Ground taken by the Revenue is dismissed.
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 52 82. Ground No. 12 pertains to disallowance of depreciation and interest and is identical to the Ground taken in earlier years. Following the decision taken on this issue in the earlier years, the Ground of the Revenue is dismissed.
Ground No. 13 - This ground pertains to addition of Rs. 3,65,30,761/- on account of on-money. This issue is covered by the decision taken by us in the earlier years. Accordingly, the decision of the Ld. CIT(A) is upheld and the ground of the Revenue is dismissed.
Ground No. 15 - This ground pertains to addition of Rs. 95,49,169/- on account of unexplained investment in jewellery and cash found in the course of search. In the course of search, gold jewellery worth Rs. 88,44,119/- and cash of Rs. 7,01,050/- was found which was treated as unexplained by the AO and added to income. The Ld. CIT(A) had allowed the relief for cash found considering the fact that no seizure of cash was made. No separate addition for cash found during search could have been made considering the additions for unaccounted on-money receipts in cash, which was much in excess. As regards jewellery found during search, considering the fact that no seizure was made, it, prime facie, reflected the explained nature of the jewelleries. Further, documentary evidence explaining the jewellery in the books of accounts along with copy of bills, vouchers, bank statement, ledger accounts were duly submitted. The Ld. CIT(A) had in fact set aside this matter to the file of AO with a direction to verify the jewellery vis-à-vis the evidences brought on record. In view of this fact, we do not find any reason to interfere with the order of
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 53
the Ld. CIT(A). On this issue, the Ground taken by the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
The final outcome of these appeals is summarized in the table below:
Sl. No. ITA No. A.Y. Outcome 1 IT(SS)A No. 61/Ahd/2023 2014-15 Partly allowed
2 IT(SS)A No. 62/Ahd/2023 2015-16 Dismissed
3 IT(SS)A No. 63/Ahd/2023 2016-17 Partly allowed
4 IT(SS)A No. 64/Ahd/2023 2017-18 Partly allowed
5 IT(SS)A No. 65/Ahd/2023 2018-19 Dismissed
6 IT(SS)A No. 66/Ahd/2023 2019-20 Dismissed
7 IT(SS)A No. 67/Ahd/2023 2020-21 Dismissed
8 IT(SS)A No. 68/Ahd/2023 2021-22 Dismissed
Order pronounced in the Court on 29/04/2026 at Ahmedabad.
Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 29th April, 2026 Neelesh, Sr. PS (True Copy)
IT(SS)A Nos. 61/Ahd/2023 to 68/Ahd/2023 DCIT Vs. Laxmanbhai Haribhai Vekariya, AYs.- 2014-15 to 2021-22 54
आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद
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