M/S KAIZEN ENTERPRISES PVT. LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX

Order 20/01/2022 This appeal is filed by the assessee to challenge the judgment of the Income Tax Appellate Tribunal dated 18.01.2019. Following questions are presented for our consideration:- "(i) Whether in the facts and circumstances of the case as well as in the law, the Ld. ITAT was correct in holding that the set-off in case of undisclosed income is not available to the appellant, despite the fact that income even if undisclosed has to be assessee as normal business income as held by various judicial pronouncement by the Hon'ble Apex Court as well as by various High Courts? (ii) Whether in the facts and circumstances of the case as well as in the law, the Ld. ITAT was correct in relying on the statements made at the time of enquiry, as the same though important piece of evidence however, cannot be held as conclusive? (iii) Whether in the facts and circumstances of the case and in law, the Ld. ITAT was correct in holding the entire receipts on account of on-money to be undisclosed income and was right in applying the G.P. rate instead of N.P. rate on the undisclosed receipt?

(2 of 3) [ITA-71/2019] (iv) Any other question of law as deemed fit in the facts and circumstances of the case may also be framed by the Hon'ble Court in the interest of justice." Though multiple questions are framed the issue is singular namely the decision of the Tribunal to confirm the view of the assessing officer and CIT (Appeals) to add a sum of Rs.1.35 crores in the hands of the assessee firm by way of income for the relevant assessment year 2013-14. Briefly stated the facts are that the assessee was engaged in the business of real estate development and was subjected to search operations. During said search the statement of the director of the assessee-firm was recorded under Section 132(4) of the Income Tax Act, 1961. In such statement the director confirmed that a sum of Rs.1.35 crores was received by way of on-money which was the income of the firm and which he was prepared to offer to tax. The assessing officer therefore made addition of said sum by way of income of the firm. The assesee carried the matter in appeal. The CIT (Appeals) gave partial relief to the assessee and applied the profit ratio of 22% on such receipt to bring the income to tax. The revenue was aggrieved by this portion of the order of CIT (Appeals). The Tribunal allowed the revenue's appeal and restored the order of the assessing officer.

In the result the entire sum of Rs.1.35 crores stood added to the income of the assessee whereupon this appeal has been filed. Having heard learned counsel for the appellant and having perused the documents on record, we do not find any reason to interfere. The director of the firm had made a categorical and clear statement of admitting the on-money received of Rs.1.35 crores which was the income of the firm. The statement was not (3 of 3) [ITA-71/2019] retracted for a long time. Under the circumstances there is no question of law applying the net profit ratio to find out the income embedded in such receipt which alone could be brought to tax as was suggested by the counsel for the appellant. No question of law arises.

The appeal is dismissed. (SAMEER JAIN),J (AKIL KURESHI),CJ KAMLESH KUMAR/7