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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
These appeals are filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals)-53, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 07.07.2021 for the A.Y.2015-16 and 2016-17. Appeal is filed by the Revenue against order of the Ld.CIT(A) for the A.Y.2015-16.
Since the issues raised in these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in ITA.No. 1530/MUM/2021 and ITA.No. 2245/Mum/2021 for A.Y. 2015-16 as a lead case.
Brief facts of the case are, assessee is one of the many concerns of “Shakti Group” of Gadhiya family that runs real estate business. The project namely Rudra Residency is being run by the assessee. Assessee has filed original return of income for the A.Y. 2015-16 on 20.08.2015 declaring total income of ₹.NIL.
3 1532 & 2245/MUM/2021 Shree Nirman Enterprise 4. Subsequently, search and seizure operation u/s.132(1) of Income- tax Act, 1961 (in short “Act”) was conducted on the Gadhiya family and their business concerns (Gadhiya Group) on 07.01.2016. During course of search certain documents belonging to assessee were found. Accordingly, notice u/s. 153C of the Act was issued and served on the assessee. In response assessee filed return of income for the A.Y.2015-16 on 23.12.2017 declaring total income of ₹.1,41,84,870/- and Assessing Officer treated the return of income filed by the assessee as compliance to notice u/s. 153C of the Act. Thereafter notice u/s.143(2) and 142(1) of the Act were issued and served on the assessee. In response Ld. AR of the assessee attended and submitted the relevant information as called for.
The Assessing Officer observed that the documents and information found during search belonging to the Gadhiya Group and observed that Shri Bipin L. Gadhiya who was one of the main persons responsible for maintaining the various parallel accounting records and various ongoing projects of Shakti Group i.e. Shakti Villa, Shree Rudra and Shakti Lake City etc., The project Rurdra Residency is run by the assessee and whatever information/ documents ceased were collated and Assessing Officer based on the information available on record also found during search estimated
4 1532 & 2245/MUM/2021 Shree Nirman Enterprise the profit in the case of Shakti Lake City project and determined the profitability in that project @45.76%. Taking cue from the above estimation in the Shakti Lake City Project, Assessing Officer estimated the income in the project of Shree Rudra project also @ 45.76% by estimating the profit which worked out to ₹.5,31,36,328/-. Since assessee has already declared the profit at ₹.1,41,84,870/- the Assessing Officer proceeded to make the addition to the extent of ₹.3,89,51,458/-.
Aggrieved assessee preferred an appeal before the Ld.CIT(A) and Ld.CIT(A) followed his finding in the case of Shri Parth Vinod Gadhiya who is the proprietor and who runs the project of Shree Rudra. In the case of Shri Parth Vinod Gadhiya which was the basis on which Assessing Officer has determined the profit in the case of the assessee, therefore, Ld.CIT(A) adjudicated the issue in the case of Shakti Lake City and determined the profit ratio for the A.Y. 2014-15, 2015-16 and 2016-17 the profit ratio determined by him are 0.72%, 28.8% and 26.8% respectfully. Therefore, he adopted average profit ratio in Shakti Lake City for above said three years at 18.8%. Ld.CIT(A) keeping in line with the decision of the Shri Parth Vinod Gadhiya case he also determined he average profit @18.8%. Accordingly, he partly allowed the appeal filed by the assessee.
5 1532 & 2245/MUM/2021 Shree Nirman Enterprise 7. In appeal before the Ld.CIT(A), assessee has raised several other grounds relating to no incriminating material found during search, the order passed u/s. 153 of the Act is invalid; the Assessing Officer has passed the Assessment Order u/s. 153C r.w.s. 143(3) of the Act without giving proper opportunity and violation of principles of natural justice and further, addition made by the Assessing Officer on account of unaccounted money. After considering the submissions of the assessee Ld.CIT(A) dismissed the grounds raised by the assessee on the issue of jurisdiction and with regard to issue of unaccounted money he has estimated the income @18.8% similar to the estimation adopted in Shri Parth Vinod Gadhiya case.
Aggrieved both assessee as well as revenue are in appeal before us.
Assessee has raised following grounds in its appeal: - “1. The Ld. CIT(A) has erred in confirming the part of estimation carried out by the Ld. AO of profit of Shakti Lake City project from seized material at Rs.76,45,502/- adopting very high percentage of profit margin, which being erroneous deleted needs to be deleted.
2. The appellant craves to add, amend, alter, substitute, modify any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.”
6 1532 & 2245/MUM/2021 Shree Nirman Enterprise 10. Revenue has raised following grounds in its appeal: - “1. On the facts and circumstances of the case, the Ld CIT(A) has erred in deleting the addition of Rs.3,89,51,458/- made by the Assessing officer by rejecting books of accounts on the basis of large number of unaccounted transactions in the form of on money and expenditure were found recorded in impounded documents and by applying estimated profit on the basis of the profitability of sister concerns project "Shakti Lake City" Prop. Shri Parth V Gadhiya (arrived at by the Assessing Officer on the basis of entries of receipts relatable to specific units of plots sold and after deducting the expenditure related to the business recorded in some impounded records) by wrongly holding that there is uncertainty in revenue being received and therefore by applying Accounting Standard-9 no income has accrued, overlooking the fact that the receipts and payments were in the form of unrecorded cash transactions, and accounting standards were not applicable on the same.
2. On the facts and circumstances of the case, the Ld CIT(A) has erred in applying the estimated profit on the basis of his order in the case of Parth Gadhiya in appeals orders No. CIT(A)-53, Mum/10664/10675/10671/2017-18 dated 06.07.2021 (for A.Ys. 2014-15, 2015-16 & 2016-17), wherein he has wrongly held that there is uncertainty in revenue being received and therefore, by applying Account Standard 9, no income has accrued, overlooking the fact that the receipts and payments were in the form of unrecorded cash transactions. and accounting standards were not applicable on the same.
3. That the appellant craves to add, alter, modify or abrogate any grounds of appeal at the time of hearing.”
11. At the time of hearing, Ld. AR submitted that ITAT has decided the issue in the case of Shri Parth Vinod Gadhiya in a consolidated order for the ITA.No. 1705, 1529 & 1531 /Mum/2021 dated 13.04.2022 relating to A.Y. 2014-15, 2015-16 and 2016-17. After deliberating the issue involved in the case of Shri Parth Vinod Gadhiya which is similar to the facts of the present case. The Hon'ble ITAT has dismissed the grounds raised by the 7 1532 & 2245/MUM/2021 Shree Nirman Enterprise assessee as well as revenue and sustained the findings of the Ld.CIT(A) who has estimated the profit @18.8% in the case of Shakti Lake City. Ld. AR submitted that the issue is decided by the Hon'ble ITAT against the assessee as well as revenue.
On the other hand, Ld. DR relied on the findings of the Assessing Officer.
Considered the rival submissions and material placed on record, we observe that the assessee is a concern of Shakti Group and above said group is carrying on three projects namely Shakti Villa, Shree Rudra and Shakti Lake City. During search revenue had found incriminating material relating to the above projects and Assessing Officer has estimated the profit in the project Shakti Lake City @45.76% and he adopted the same percentage to estimate the profit in the other projects also. Therefore, the Assessing Officer has estimated the profit in Shree Rudra project also @45.76% and we observe that Ld.CIT(A) considered the submissions and after verifying the records, he determined the average profit earned by the group in the project Shakti Lake City @18.8%. Ld.CIT(A) estimated the same percentage of profit in the case of Shree Rudra also, considering the fact that Assessing Officer also treated all the projects run by the 8 1532 & 2245/MUM/2021 Shree Nirman Enterprise group are similar. Since the Coordinate Bench has adjudicated the issue involved in the case of Shri Parth Vinod Gadhiya and the project of Shakti Lake City and Coordinate Bench sustained the findings of the Ld.CIT(A) in the case of above project. Therefore, the project involved in this case are also part of the same and similar projects carried on by the assessee, we deem it fit and proper to sustain the findings of the Ld.CIT(A) and we do not find any reason to disturb the findings of the Ld.CIT(A) in this project also. Therefore, we are inclined to dismiss the grounds raised by the assessee as well as revenue.
In the result, appeal filed by the assessee as well as revenue are dismissed.
ITA.No. 1532/MUM/2021 (A.Y. 2016-17) 15. Assessee has raised following grounds in its appeal: - “1. The Ld. CIT(A) has erred in not following consistent approach of alleged on money profit worked out from the seized material by the Ld AO pertaining to Shakti Lake City project at Rs. 55,66,022/- and this approach being erroneous in nature the relief should be granted to appellant.
2. The appellant craves to add, amend, alter, substitute, modify any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.”
9 1532 & 2245/MUM/2021 Shree Nirman Enterprise 16. Since the issue involved in ITA.No. 1532/Mum/2021 relating to A.Y.2016-17 are exactly similar and mutatis mutandis. Therefore, respectfully following the decision of the Coordinate Bench we are inclined to dismiss the grounds raised by the assessee.
In the result, appeals filed by the assessee as well as revenue are dismissed.
Order pronounced in the open court on 21st July, 2022.