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Facts
The assessee purchased a flat from Runwal Group, and a search action in the group's hands revealed admitted on-money payments. The AO assessed Rs. 33,72,590/- as unexplained cash. The CIT(A) confirmed the addition.
Held
The Tribunal noted that an identical addition was deleted by a co-ordinate bench in a similar case. Following that precedent, the Tribunal held that the addition based on estimation without incriminating material was not sustainable.
Key Issues
Whether addition on account of alleged on-money payment is sustainable when based on estimation without corroborating evidence and when similar additions were deleted in identical cases.
Sections Cited
132(4), 69C, 148, 69, 4, 143(3)
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Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH : MUMBAI
Before: SHRI B.R. BASKARAN & SHRI SANDEEP GOSAIN
Assessment Year : 2015-16 Shreya Santosh Kadam, Income Tax Officer-34(3)(1), D 1302, Sanskar, Kautilya Bhavan, Neelam Nagar, vs. Bandra Kurla Complex, Mulund East, Bandra East, Mumbai-400 081. Mumbai-400 051. PAN :BEQPK9770N (Appellant) (Respondent) Assessee by : Shri Dharan Gandhi Revenue by : Shri Kiran Unavekar, Sr.DR Date of Hearing : 12-03-2025 Date of Pronouncement : 17-03-2025 ORDER PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.17-11-2023 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2015-16. The assessee is aggrieved by the decision rendered by the Ld.CIT(A) in confirming the addition of Rs.33,72,590/- relating to alleged on-money payment made by the assessee.
The assessee had purchased a flat from Runwal Group. A search action u/s. 132(4) of the Income Tax Act, 1961 („the Act‟) was conducted in the hands of Runwal Group; wherein they had admitted that they have received on-money by way of cash. It was noticed that a sum of Rs.33,72,590/- was found noted against the name of the assessee. Based on the statement given by the Runwal Group, the AO assessed the above amount in the hands of the assessee as un-explained cash u/s. 69Cof the Act. The Ld.CIT(A) also confirmed the same.
The Ld.AR submitted thatan identical addition was made in the hands of another assessee, named, Shrirang Vijay Rao and the said addition was deleted by the Co-ordinate Bench of the Tribunal vide its order dt. 03-08-2022 in (AY.2015-16). Hence, we notice that the above said decision rendered by the Co-ordinate Bench of the Tribunal shall be applicable to the facts of the present case. Accordingly, we extract below the decision rendered by the Tribunal in the above said case:-
“4. The facts in brief are that the assessee has filed Return of Income declaring income of Rs.59,81,000 on 24.08.2015. The assessment was reopened on the basis of information received from DDIT, Mumbai that during the course of search action in the case of M/s.Runwal Group on 21.11.2014 was revealed that the group was indulged in executing cash transactions with several parties for the sale of flats in their projects viz. "Runwal Green". On the basis of such information it was pointed out that the assessee has also paid an amount of Rs.31,28,000 for the purchase of Flat No.TA-1604 in the project "Runwal Green". Therefore a Notice u/s.148 of the Act was issued on 9.3.2017. In compliance to the Notice u/s.148, the assessee filed Return of Income on 20.3.2017 declaring total income of Rs.59,81,110. In response, the assessee filed details and also submitted that no cash payment was made by him to the builder. Agreement for the purchase of said unit was executed on 21.08.2014 for Rs.2.42 Crores and during the Financial Year 2014-15 an amount of Rs.1,35,00,000 was paid and there was no cash payment made for the booking of the said flat in the project called "Runwal Green". The Assessing Officer has not accepted the submission of the assessee and stated that Subodh Runwal, Director of the "Runwal Green" Group had admitted in his statement recorded u/s.132(4) of the Act that cash payment to the amount of Rs.31,28,000 was receivedfrom the assessee. Therefore, the Assessing Officer added an amount of Rs.31,28,000 u/s.69 of the Act to the total income of the assessee.
Aggrieved the assessee filed appeal before the Id. CIT(A). The Id. CIT(A) had dismissed the appeal of the assessee.
During the course of appellate proceedings before us, the learned counsel contended that no 'on money' was given by the assessee for the purchase of flat in the above referred project. The learned counsel particularly referred the order of ITAT, Mumbai in the case of Runwal Home Pvt. Ltd. Dated 20.12.2017 placed in the Paper Book and submitted that as per the finding given in the order, no 'on money' was paid by the assessee in respect of purchase of flat No.T8-1604 in the Runwal project.
On the other hand, the learned Department Representative placed reliance on the decision of authorities below.
Heard both the parties and perused the material available on record. Without reiterating the fats as referred above, we had gone through the decision of ITAT as referred (supra) in the case of Runwal Homes Pvt. Ltd. wherein addition pertaining to the category of unit purchased by the assessee was deleted. The relevant operating para of the said decision of ITAT is reproduced as under: “8. Now coming to the other addition included in the sum of Rs. 63,39,52,372/. The following additions were made by the Assessing Officer-1 Project namely Runwal Greens Towers -1,2 & 3 and Commercial Rs. 31, 14,02,412/- 2 Project namely Runwal Greens Towers 4, 5, 6, 7 & 8 Rs. 31,52,99,960/- Total Rs. 63,39,52,372/- It is not disputed that the on-money on the basis of the seized material received by the assessee comes to Rs. 19,94,78,821/-out of which the addition of Rs.72,50,000/- has already been confirmed by us and has been duly taken in to account by the assessee in the revised computation of income submitted by the assessee during the course of hearing before the Assessing Officer and on which the assessee has duly paid the tax. Now the question before us remains to the disputed addition amounting to Rs.62,67,02,372/ The total on money on the basis of the seized material found during the course of search relate to the period of the booking done from March 2014 to November 2014. The amount so worked out comes to 19,94,78,821/-as detailed under:- On-money of flats as per seized material-Rs. 13,44,68,725/- On-money of shops as per seized material - Rs.6,50,10,096/- Out of the said sum 72,50,000/- has already been confirmed by us in the preceding paragraph, therefore, on-money on flats as per seized material remains at 19,22,28,821/-. We noted that the Assessing Officer on the basis of seized material found during the course of search relating to the period of March 2014 to November 2014 took the view that the assessee might have received on-money in all the bookings and therefore, he estimated cash portion on other units sold by taking the highest rate of sale of other units although no on-money evidence were found during the course of search. The Assessing Officer while confirming the addition relied on the statements of the staff of the assessee as well as the statement of the Director Shri Subodh Runwal, mainly in reply to question nos. 16, 17 and 18, which are reproduced as under. "Ans to Q.16 "Sir as I have answered in earlier question I again reiterate that this project was a joint venture with HDFC Limited right from the inception till they exited. Subsequently to that the market has become very competitive and due to opening of a forest land we had to sell aggressively to achieve the numbers from the calendar year 2014, I accommodated a few customers who wanted to pay part consideration in cash. The difference in the above chart is specifically related to these customers who have been accommodated. I offer this difference as my income. I hereby farther reiterate and state that prior to this we have never accepted in cash for any of the units sold in that project."
Thus the assessee has acknowledged the discrepancy and has accepted that "on-money" has been taken in all the above instances. Further the assessee was asked to state the other instances where unaccounted cash has boon takenin lieu of sale of residential/commercial units in their projects. Following is the except of the relevant portion of his statement "Q.17 Please provide the details as to other fiats in which similar practice is followed. Ans: Although in the other cases, I do not agree that in all the cases cash has been accepted by me over and above the agreement value. But to avoid protracted litigations with the department and to buy peace I accept the difference appearing in the chart beginning from 1st January 2014 till date as my additional income over and above the regular income for the respective years as on-money (Cash received over and above the agreement value), I am submitting the working marked as Annexure 1 to this statement which has two pages. Q.18 As per the working submitted as part of annexure to answer to question number 16, the amount of on money accepted in the project namely Runwal Greens (M/s Runwal Homes Private Limited), is Rs.63,39,52,372/- Please confirm ? Ans: Sir, due to reasons mention above I confirm the amount of Rs. 63,39,52.372A (which as per Annexure-1), as the on money accepted in the projects Runwal Green (M/s. Runwal Homes Private Limited), and the same has been offered as additional income over and above the income declared in the M/s. Runwal Homes Private Limited. Here / want to state that Olive project is under the proprietorship of Mr. Subhash Runwal." We have gone through the answer to question nos. 16, 17 and 18. We noted that in reply to question no.16, Director of the assessee company stated that initially the project was joint venture with HDFC Limited. Subsequently, when the market has become more competitive and due to the opening of the forest land they had to sell aggressively, in order to achieve the numbers from the calendar year 2014 and, therefore, in order to accommodate few customers who wanted to pay part consideration in cash, they accepted cash for few units. He has categorically stated that prior to that date they have never accepted any cash. In reply to question no.17, he has categorically stated that he did not agree that in all cases cash bas been accepted over and above the agreement value but he agreed to surrender the difference as its additional income over and above the regular income for the respective years as on-money to avoid protracted litigations with the department and buy peace. On that basis the total on- money received was worked out at Rs.63,39,52,372/- and added to the income of the assessee. It is undisputed fact that on the basis of the documents and evidence produced before us, the copy of which are available at pages 436 to 441 of the paper-book, the on money received, on the basis of the seized documents, by the assessee in respect of flats comes to 13,44,68,725/-and in respect of shops comes to 6,50,10,096/-. For the rest of the addition in respect of which no incriminating material was found, we noted from pages 439 to 441 of the paper book, the Assessing Officer just estimated the on-money of the flat @15,750/- per sq. ft totaling to Rs.33,47,33,101/- and that of the shops @26,000/- totaling to Rs. 9,97,40,450/-. But the Assessing Officer was fair enough to state that no incriminating material was found but had estimate @15750/-per sq. ft for flats and @26000/- per sq. ft. for shops. This is a case where assessment has been completed u/s 143(3), therefore, the addition has been made by the Assessing Officer as if the assessee has received whatever is stated in the documents executed by the assessee. In our opinion, the onus is on the Revenue to prove that the assessee has actually received the consideration much more than what has been agreed to or stated in the documents executed between the intended buyer and the assessee. No cogent material or evidence was brought to our knowledge by the learned DR even though he has vehemently relied on the order of the Assessing Officer as well as the statement of the Director of the company, which may prove that the assessee has received consideration @15750/- per sq. ft for flats and @26000/- per sq. ft. for shops. There has been search and seizure in the case of the assessee. If the assessee would have received consideration much more than what is stated in the documents, for which no evidence is found during the course of search, in our opinion, no addition can be sustained. There cannot be any agreement against the statute. The assessee agreed for declaration of the income for which no material was found merely to avoid protracted litigations with the department and buy peace. The assessee has earned income; the onus is on the Revenue to prove that the income has accrued to the assessee. Even otherwise also since there has been a search in the case of the assessee, if the assessee would have earned such income there must have been some evidence found that either the assessee has made investment outside the books of account or has spend this income in one way or the other. Income tax is leviable u/s. 4 of the I.T Act on the real income. If income has not accrued or received by the assessee, the assessee cannot be burdened for income tax liability. From the documents available on record, it is apparent that the Assessing Officer has estimated the booking amount and non that basis assumed that the assessee would have received the on-money. He made the presumption as if the assessee has sold all the flats @15750/- per sq. ft and the shops @26000/- per sq. ft. From the documents in the booking, it is evident that different flats and different shops have been booked at different rates by the assessee. From page 443 of the paper-book, as found during the course of search, the assessee has given discount on the bookings at different rates to different customers. We noted that in respect of two shops although the base rate has been mentioned @21,000 per sq. ft, the assessee has given discount around Rs. 4150 per sq. ft. and booked the shops @17500 per sq. ft including the club charges of Rs.750/-. Similarly, in respect of flat also we noted that the base rate has been mentioned @12,000/- per sq. ft and after adding floor rise, club charges, infra charges etc., total rate came to Rs.14375 per sq. ft. and the assessee has also given discount of Rs. 1000/- and ultimately booked the flat @13,350 per sq. ft. Even on the same very page had the details of the flats which had been booked @ 14550/-, 14300/- and Rs. 13225/- per sq. ft. Therefore, the conclusion drawn by the Assessing Officer while making the addition is based just on assumption as if the assessee the assessee has sold all the flats @15750 per sq. ft. In view of this fact, we delete the addition of Rs. 33,47,33,101/- made on the basis of estimating the sale consideration in respect of the flats @15750/- per sq. ft. and Rs. 9,97,40,450/- based on the presumption as having being booked shops @26000/-" As per the decision of the ITAT (supra), it is clear that the ITAT has deleted the part of the addition which was based on estimation of 'on money' on flats where no incriminating documents were found as elaborated in the finding of ITAT. It is categorically established form the facts reported (supra) that addition in respect of Tower No.8 in the project viz. "Runwal Green" were made on estimation basis, therefore the decision of the ld. CIT(A) in sustaining the addition of Rs.31,28,000 in the case of the assessee for purchasing residential unit No.T8-1604 in Tower 8 is not justified therefore following the decision of ITAT, Mumbai in the case of Runwal Homes Pvt. Ltd. (supra), we direct the Assessing Officer to delete the impugned addition. Accordingly, the Ground Nos. 2 to 4 of the assessee are allowed.”
Since the facts are identical, following the above said decision of the Co-ordinate Bench of the Tribunal, we hold that the impugned addition made by the AO is not sustainable. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the addition so made.