ACIT CIRCLE-24(1), PIRAMAL CHAMBER vs. RAIEES YASIN LASHKARIA, ANDHERI WEST

सुिवधई की िधरीख / Date of Hearing 10.03.2025 घोर्णध की िधरीख/Date of Pronouncement 24.04.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These appeals are filed by the revenue against the orders of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Years [A.Y.] 2011-12 & 2020-21.

& 5457/Mum/2024 A.Y. 2011-12 & 2020-21 Raiees Yasin Lashkaria 2. The revenue has raised the following grounds of appeal for both years: AY 2011-12

1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 1,14,28,026/ on account of undisclosed sale of property as reported in AIR without appreciating that there is no uniformity in the ratio of the percentage of sale accounted in P&L in respect of different units in Amman Akanksha project when the assessee has followed percentage completion of method.

2. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs.5,54,000/- on account of unexplained investment, representing 1% of the investment remained with assessee, as per sale agreement, on sale of rights in Shardha Dahisar projectto Rose Developers Pvt. Ltd having market value at Rs. 5,54,00,000/-, when no such retained investment has been reported by the assessee in his balance sheet.

3. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in granting relief of Rs. 7,01,516/- by restricting the addition to 12.5% of the alleged purchase of Rs. 8,01,848/-.

4. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in without appreciating the fact that the onus in on the assessee to explain and substantiate the genuineness and true nature of the purchase transaction.

5. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in holding that only profit element in alleged purchase has to be added and not the entire purchase amount when the party has not been found at the address provided by the assessee when the Inspector attached to office was deputed to serve notice u/s. 133(6) of the Act, making the purchase party as non-genuine and non-existence.

6. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in restricting the disallowance of bogus purchase to 12.5% of alleged purchase ignoring the decision of the Hon'ble Punjab and Haryana High Court in the case of JR solvent Industries Pvt. Ltd. wherein it was held that where purchases were made from non-existence seller, these would be held to be bogus even if complete quantitative details of purchases were available in the assessee's books of accounts.

7. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in restricting the disallowance of bogus purchase to 12.5% of alleged purchase ignoring the decision of the Hon'ble Gujarat High Court in the case of NK Industries Ltd. vs. DCIT in tax appeal no. 240/2003 dated 20.06.2016(2016) Taxman.com 289 (Gujrat) wherein entire bogus purchases was disallowed and the Hon'ble Supreme court has dismissed the SLP filed against the aforesaid judgement vide order SLP(CC) of 963/2017 dated 16.01.2017.

8. The appellant craves leave to amend or alter or add a new ground which may be necessary.” AY 2020-21 “1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 10,77,51,000/- made u/s. 56(2)(x) of the Income Tax Act, 1961 on account of difference between the property rate determined by the Stamp duty Valuation Authority at Rs. 14,54,42,000/- and the sale consideration of Rs. 3,76,91,000/-.

& 5457/Mum/2024 A.Y. 2011-12 & 2020-21 Raiees Yasin Lashkaria 2. The appellant craves leave to amend or alter, or add a new ground which may be necessary.”

of the revenue is dismissed.

8. Ground No. 2: Addition of Rs. 5,54,000/- u/s 69B on a/c of unexplained investment. 8.1 Ld. AR submitted a chronological chart of events with regard to the addition made u/s 69B of the Act. As explained, the assessee was appointed as a developer of a Slum Rehabilitation Authority (SRA) project and a partnership firm M/s. Prashar Developers was formed to enter into a joint Venture with the assessee by the name of Reliance and Shradha Developers on 30.03.2007. An SRA certificate was obtained in the name of Mohammed Raiees Lashkaria. All the partners together spent an amount of Rs. 1,85,00,000/- in which the Mohammed Raiees Lashkaria’s share was Rs. 30,00,000/-. Subsequently, on 01.06.2010, a joint Venture (Reliance and Shradha Developers) was cancelled, and a fresh agreement was entered into with M/s. N. Rose Pvt. Ltd. by Mohammed Raiees Lashkaria (assessee), Mohammed Salim Lashkaria, Prakash Surve and M/s. Shradha Developers on 27.02.2010. The assessee received two considerations from the above exercise are as under: i. A sum of Rs. 1,75,00,000/- which has been offered to tax as business income during the year.

& 5457/Mum/2024 A.Y. 2011-12 & 2020-21 Raiees Yasin Lashkaria ii. 1% profit in the new joint venture. 8.2 Since the market value of the entire project is Rs. 5,54,00,000/-, Ld. AO made an addition of 1% on the ground that the assessee has retained 1% share in the project. Ld. AR has explained that the assessee is one of the joint owners of the said project and has invested Rs. 30,00,000/- in it. The said amount is still reflected in the balance sheet as capital investment in the project. He has further submitted that the concept of market value u/s 43CA is applicable to business income from AY 2013-14 and is not applicable for the year under consideration. Here, the cost of investment shown in the books of account at Rs. 30,00,000/- is more than the value determined by the Ld. AO. As such, the addition made by the Ld. AO is unwarranted. After considering the assessee’s submissions, Ld. CIT(A) has rightly observed that the investment of Rs. 30,00,000/- in the project is duly reflected in the audited balance sheet and P&L account of the assessee and therefore the addition of 1% share in the project made by the Ld. AO is not tenable. Ld. DR, on the other hand, has relied on the order of Ld. AO. 8.3 After considering the rival submissions, we are of the view that there was no justification for Ld. AO to hold that the assessee had not shown its 1% share in the project, and hence, the addition made on account of unexplained expenditure u/s 69B of Rs. 5,54,000/- has been rightly deleted by Ld. CIT(A). This ground, accordingly, dismissed & 5457/Mum/2024 A.Y. 2011-12 & 2020-21 Raiees Yasin Lashkaria 9. Ground No. 3: Addition of purchases Rs. 8,01,848/- u/s 69C on a/c of unexplained expenditure. 9.1 Ld. AO made an addition of Rs. 8,01,848/-, being the purchases shown from M/s Shivamani Traders Pvt. Ltd., which were treated as bogus purchases. 9.2 Ld. AR has contended that even if the purchases were to be held as non- genuine, Ld. AO was not justified in adding the entire amount as unexplained expenditure without rejecting the books of account. He has, therefore, made an alternative argument that the addition, if at all, should be restricted to the average net profit ratio i.e. 8%, whereas Ld. CIT(A) has upheld the addition partly by applying GP rate of 12.5% on the impugned purchases. 9.3 We have heard the rival submissions. We are of the view that Ld. CIT(A), after examining the facts and circumstances in the light of various decisions of the jurisdictional High Court, has rightly applied the net profit rate of 12.5% on the impugned purchases. We are, therefore, not inclined to interfere with the order of Ld. CIT(A). This ground of appeal of the revenue is also dismissed.