THE DCIT, CENTRAL CIRCLE-1(2), AHMEDABAD vs. ANKIT SURESHBHAI SHAH, SURAT

आदेश/O R D E R PER BENCH:

The captioned ten appeals have been filed at the instance of the Revenue against the respective orders of the Learned Commissioner of Income Tax (Appeals), Ahmedabad arising in the matter of assessment orders passed under s. 143(3) r.w.s. 153A(1)(b) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years as mentioned in the cause title.

First, we take up IT(SS)A Nos. 343 to 345 & 349/Ahd/2018 by the revenue in case of the assessee namely Shri Ankit Sureshbhai Shah for A.Ys 2012-13 to 2015-16.

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Bartner group, inter-alia, consisted of the parties who were also subject to search under section 132 of the Act, the details of such parties are listed as under: 1. Shri Ankit Sureshbhai Shah (present assessee) 2. Shri Ashit Haribhai Vohra 3. M/s Shah Hiralal Buildcon LLP 4. M/s Greenfield Reality Pvt Ltd

4.1 In the course of search operation at the premises of Shri Ashit Haribhai Vora, certain documents were found relating to the real estate project (Shiv Someshawar Project at Althan-Surat) of M/s Shah Hiralal Buildcon LLP and real estate project (Shiv Kartik Enclave at Vesu-Surat) of M/s Greenfield Reality Private Ltd. (here after GRPL). Allegedly, these documents were containing the information about the land cost of the respective project and sources of such cost/ investment in the land.

4.2 The documents relating to M/s Shah Hiralal Buildcon LLP marked as Page-1 of annexure-A3, was containing information about the land cost of the Althan Project at ₹ 21,93,86,000/- only whereas in the books of accounts, the land cost was recorded at of ₹ 5,49,78,000/- only paid through the banking channel, leading to the difference of ₹ 16.44 crores which was paid in cash without recording the same in the books of accounts. The fact of having made the payment of land cost in cash to the tune of ₹16.44 crores was also admitted by the M/s Shah Hiralal Buildcon LLP. The AO from the same seized document further found that there was cash receipt of ₹ 23,18,38,000/- from 4 different persons namely R.K., G., Jayesh and Nitinbhai. The noting G against which an amount of ₹ 4,01,00,000/- was written was decoded as Shri Gautambhai who is the uncle of the assessee. Accordingly, it was alleged that the amount to the tune of ₹ 4,01,00,000/- only were paid by Shri Gautambhai on behalf of the assessee as initial investment in the project of M/s Shah Hiralal Buildcon LLP. The share of assessee in initial investment in the impugned project comes at 17.30%.

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4.3 Likewise, the documents relating to GRPL, marked as page-5 of Annexure- A3, was containing information about the land cost of Shiv kartik vesu project at ₹ 42.68 crores only. However, in the books of accounts, the same was recoded at ₹ 19,93,39,650/ only. Thus, it was pointed out that the remaining amount was paid in cash without recording the same in the books of accounts. The fact of having made the investment in the land in cash was also admitted. The AO from the same seized document further found that the contribution of cash for Rs. 40,57,39,000/- were made by various parties being R, G, J and Ni. Again, the word “G” was decoded as Shri Gautambhai and amount written against “G” was for ₹ 10 crores only. Thus, the AO was of the view that such a contribution has been made by Shri Gautambhai on behalf of the assessee being uncle of the assessee toward initial investment in the impugned project. The shares of initial investment in the impugned project comes @ 24.64%.

4.4 Thus, the AO alleged that the assessee has made unaccounted investment in cash for Rs. 14,01,00,000/- (4.01 crore + 10 crore) in the project of M/s Shah Hiralal Buildcon LLP and in the project of GRPL.

4.5 Further, the AO from the submission made by M/s Shah Hiralal Buildcon LLP and GRPL in their respective cases noticed that both the concerns have admitted unaccounted cash receipt against booking of flats/shop/showroom aggregating to Rs. 44.08 Crore and 64.4 crores respectively in different assessment years. Accordingly, the AO concluded that since the assessee made initial contribution in the projects discussed above at @ 17.3% and 24.64% respectively then assessee also must have received proportionate share out of the unaccounted receipts against sale of flats/shop/showroom. Accordingly, the AO worked out share of the assessee in such unaccounted cash receipts in project of M/s Shah Hiralal Buildcon LLP and GRPL at Rs. 7,62,58,400/- and Rs. 16,36,09,600/- respectively. Thus, the total unaccounted receipts for different assessment years starting from AY 2013-14 and subsequent years is of Rs. 23,98,68,000/- only.

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4.6 Accordingly, the AO sought an explanation and clarification from the assessee vide notice dated 06-12-2016. The assessee in response to such notice vide letter dated 20-12-2016 submitted that the seized document contains the information about the booking amount received in cash (unaccounted) against the projects which was utilized for making the payment against the land cost by the parties namely M/s Shah Hiralal Buildcon LLP and GRPL. The names appearing in the seized document found from the premises of Shri Ashit Haribhai Vohra were of the parties through whom the booking amounts were collected. It was also submitted by the assessee that on analyzing the seized document it is decipherable that how much booking amounts were collected through different parties and out of which how much amount was utilized against the cost of land.

4.7 With regard to the unaccounted receipts, the assessee submitted that both the concerns i.e M/s Shah Hiralal Buildcon LLP and GRPL have offered tax @ 8% on gross receipt which includes both accounted and unaccounted receipts. Unaccounted cash receipts against booking of flats belong to those concern only on which they have offered reasonable profit embedded in those receipt.

4.8 The assessee in addition to the above further contended that he is not having any connection with the party namely M/s Shah Hiralal Buildcon LLP either in the capacity of partner or any other capacity. Therefore, the question of making any capital contribution against the purchase of land does not arise.

4.9 However, the AO disagreed with the contention of the assessee on the reasoning that seized papers referred in above paragraphs were containing the information about the purchase of land by those parties namely M/s Shah Hiralal Buildcon LLP and GRPL where on-money in cash was paid. The same document also contains the receipt of cash from different persons which was ultimately utilized for making cash payment against purchase of land. The cash towards the purchase of land was paid during the period February 2011 to May 2012 i.e.

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during F.Y. 2010-11 and 2011-12 whereas booking amounts against those projects were first received during the F.Y 2012-13 and 2013-14. Therefore, assessee contention that cash payment against the purchase of land were out of boking amount collected is vouge. As such, it is not feasible by the parties namely M/s Shah Hiralal Buildcon LLP and GRPL to have accepted any booking amount against booking in impugned project at the time of purchase of land. Thus, the AO held that the source of cash payment against the purchase of land represents the investment made by the assessee and other person as initial contribution in lieu of profit sharing which is also mentioned in the seized document.

4.10 The AO further found that the name of the assessee in the seized document was not appearing for having made investment in the land purchased by M/s Shah Hiralal Buildcon LLP and GRPL. As such, the name of Shri Gautambhai appeared therein who has made the payment on behalf of the assessee for Rs. 14.01 crores out of which Rs. 10.96 crore made in the year under consideration and remaining 3.05 crores in the immediate subsequent year i.e. A.Y. 2013-14. Accordingly, the AO made the substantive addition of Rs. 10.96 and 3.05 crore in the hand of Shri Gautambhai and protective addition in the hands of the assessee in respective assessment years i.e. 2012-13 and 2013-14.

4.11 Likewise, the AO rejected the explanation of the assessee that the unaccounted receipt against booking of flats has been taxed in the hand of respective concern and therefore the same is not taxable in the hand of the assessee. The AO held that assessee and firm/company are different persons in eyes of laws. The assessee who made initial contribution received share in booking amount in lieu of contribution is liable to tax separately. The AO found that total share of unaccounted receipt in the project of both the concerns stand at Rs. 23,98,68,000/- and out of the same an amount of Rs. 14.01 crores payback of initial contribution. Thus, the remaining amount of Rs. 9,97,68,000/- is liable to be tax as unaccounted receipt starting from A.Y. 2014-15. Thus, the AO worked out the unaccounted receipt amount liable to be added for A.Y. 2014-15 and

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2015-16 at Rs. 1,30,52,104/- and 7,87,15,895/- respectively. However, the AO at time of making final addition note that in the seized document the name of Shri Gautambhai was mentioned as contributor, therefore the substantive addition was made in his name whereas protective addition made in the hands of the assessee.

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October 2011 and booking amounts were started to receive before that day. The land for the project of M/s Shah Hiralal Buildcon LLP was registered vide deed dated 14-03-2012. Thus, the observation of the AO that no possibility of booking amount at the time of purchase of land is wrong. (iv) Likewise, analysis of seized documents in relation to the project of GRPL in chronological order, it can be seen that booking amount were started to receive before 09-04-2012 which before the registration of land purchased. (v) The relevant seized page used by the AO against the assessee also contains the information about the booking received by the concerns namely M/s Shah Hiralal Buildcon and Green Field Realty Limited. But the same has not been properly analyzed by the AO. (vi) M/s Shah Hiralal Buildcon is an LLP which consist of 4 partner namely Anusthan Buildcon Pvt Ltd (68%), Asit Harobhai Vohra (2%), Nitinbhai Kalubhai Desai (15%) and Bhaves Laljibhai Parsuniya (15%). None of the partners name except Nitinbhai Kalubhai Desai matched with the abbreviation used in impugned seized paper. Further, the percentage noted against their name also do not match with profit sharing ratio. Similar facts were also observed based on seized papers in relation to the project of GRPL. (vii) The seized materials nowhere contain the name of the assessee. Thus, the AO wrongly analyzed the seized material.

6.1 Thus, the leaned CIT(A) based on above observation held that cash payments against the purchases of land for project were made from the unaccounted booking amounts. The AO worked out the amount of unaccounted investment and unaccounted receipt for different assessment years in the hand of the assessee on hypothetical basis. There cannot be any addition in the hand of the assessee even on protective basis in the given facts and circumstances. In view of the above, the ld. CIT-A deleted the addition made by the AO.

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person who is liable to tax. In other word this concept cannot be applied in cases where it cannot be established beyond doubt that the income has accrued or arises. In holding so, we draw support and guidance from the order of coordinate bench of this tribunal in case of ITO ward 10(1) Ahmedabad vs. Ketan B Thakkar HUF reported in [2015] 61 taxmann.com 18 wherein it was held as under: The protective assessment of an income can be made where, in the opinion of the Assessing Officer, an income has definitely arisen in a particular assessment year but there is any doubt about the entity in whose income is to be brought to tax. In the light of this legal position, when court revert to the facts of the present case, the court find that even income having arisen is not free from doubt since the Assessing Officer himself is not sure about the embezzlement having actually taken place. In the course of assessment of 'V', it is an admitted position that the Assessing Officer has disallowed the embezzlement loss and is in appeal against such a disallowance. When the fact of embezzlement is not accepted by the Assessing Officer, there cannot be any occasion to make substantive assessment and protective assessment in respect of such an embezzlement income. The question of protective assessment of such an income in the hands of the assessee, on protective basis, could have arisen in a situation in which, for example, the Assessing Officer was to come to a conclusion that embezzlement in has taken place but he was not sure as to who has done the embezzlement. Of course, even this proceeds on the assumption that an amount embezzled by the assessee form his employer, even if that be so, would constitute his income notwithstanding the fact that, in such a situation, the fact of unlawful gains are coupled with corresponding obligation to return the same to its rightful owner. [Para 12] 10.2 Coming to the facts of the case to hand, based on certain papers found from the premises of third party namely Shri Ahit Vohra, containing the information about cash paid against the land purchased for the proposed real estate development project of M/s Shah Hiralal Buildcon and GRPL, concluded that the assessee made unaccounted investment and received share in unaccounted booking receipt in the ratio of initial contribution in subsequent years. However, the name of the assessee was not appearing in impugned seized material based on which the AO proceeded to make protective addition in the hands of the assessee and substantive addition in the hand of on Shri Gautambhai. From the assessment order, we note that the AO only referred one paper for each project, containing the information about land cost on right side and on left side of same page, name of 4 person in abbreviated form was written along with certain amount. The AO decoded one of the abbreviation “G” as Gautambhai” and concluded that he has made initial contribution on behalf of the assessee in the

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proposed projects. There was no reasoning or basis assigned by AO for his conclusion. On the other hand, the learned CIT(A) found that there were several papers in relation to the projects found during the search at the premises of Shri Ashit Vohra. The learned CIT(A) on analysis of each and every seized paper in chronological order found that the projects were started and booking amount was received by the both the concern even before the registration of purchase deed of land. The ld. CIT(A) also found that the cash payment against the land purchase were made from the booking amount received over the period. The names noted on the seized paper represent the person through whom the booking amounts were collected. The finding of the learned CIT(A) has not been controverted by the learned DR based on any substantive materials. Thus, from the finding of the learned CIT(A) it is emerged that the concern namely M/s Shah Hiralal Buildcon and GRLP started their respective real estate project in which they collected unaccounted booking amounts which was utilized for unaccounted payment against purchase of land and other unaccounted expenditure. Thus, we are of the opinion that whatever the unaccounted receipts arise from the seized materials were taxable in the hands of those concerns and those concerns indeed have offered income by including the unaccounted booking receipt in their turnover. The AO has wrongly analyzed the seized materials and accordingly reached to the wrong conclusion that the assessee has made investment in cash in the projects and subsequently received shares in booking amount in proportion of initial contribution. Accordingly, we are of the view that no addition in the hand of the assessee is required to be made under the given facts and circumstances. Therefore, we do not find any reason to interfere in the finding of the learned CIT(A). Hence the ground of appeal raised by the revenue for all 4 appeals are hereby dismissed.

10.3 In the result, all the 4 appeals filed by the Revenue are hereby dismissed.

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Coming to IT(SS)A Nos. 358 & 346/AHD/2018, appeals by the Revenue in case of the assessee namely Shri Darshit Jayeshbhai Shah for AY 2012-13 and 2015-16.

11.1 In the result, the captioned appeals of the revenue are hereby dismissed.

Coming to IT(SS)A No. 356/AHD/2018, an appeal by the Revenue in case of the assessee namely Shri Bhaveshbhai Laljibhai Pansuriya for A.Y. 2012-13

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amount written against the name of certain individual are representing booking amount received through those individuals. The LLP M/s Shah Hiralal Buildcon has already offered tax on booking amount. Therefore, in our considered opinion, no addition is required to be made in the hand of the assessee on protective basis. Thus, we do not find any reason to interfere in the finding of the learned CIT(A). Hence, the ground of appeal raised by the revenue is hereby dismissed.

14.1 In the result, appeal of the revenue is hereby dismissed.

Coming to IT(SS)A NO. 350 to 352/AHD/2018, appeals by the Revenue in the case of the assessee namely Shri Nitinbhai Kalubhai Desai for AY 2012-13, 2014-15 & 2015-16

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19.1 At the outset, we note that in the appeals filed by the Revenue in the case of assessee namely Ankit Sureshbhai Shah bearing IT(SS)A No. 343 to 345 & 349/Ahd/2018, we have confirmed the finding of the learned CIT(A) that the cash payment against purchase of land by the SHBL and GRPL has been made out of booking amount of flats/shop etc. in the impugned projects. As such, the amount written against the name of certain individual are representing booking amount received through those individuals. The LLP SHBL and the company GRPL have already offered tax on booking amount. Therefore, in our considered opinion, no

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addition is required to be made in the hands of the assessee. Thus, we do not find any reason to interfere in the finding of the learned CIT(A). Hence the ground of appeal raised by the revenue is hereby dismissed.

19.2 In the result all three captioned appeals filed by the revenue are hereby dismissed.

Order pronounced in the Court on 27/09/2023 at Ahmedabad. Sd/- Sd/- (T.R SENTHIL KUMAR) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 27/09/2023 Manish