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DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), CHENNAI vs RADIANCE REALTY DEVELOPERS INDIA LTD., CHENNAI | BharatTax

DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), CHENNAI vs. RADIANCE REALTY DEVELOPERS INDIA LTD., CHENNAI

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ITA 2981/CHNY/2024Status: DisposedITAT Chennai02 May 2025AY 2019-20Bench: SHRI ABY T. VARKEY, JUDICIAL MEMBER AND\nSHRI AMITABH SHUKLA, ACCOUNTANT MEMBER\nITA Nos.2978 - 2984/Chny/2024\n&\nCO Nos.11-17/Chny/2025\nनिर्धारण वर्ष/Assessment Years: 2016-17 to 2022-23\n\nThe DCIT,\nCentral Circle-2(1),\nChennai.\nM/s Radiance Realty-\nDevelopers India Ltd.,\nRadiance Towers, 1st Floor,\n33 Feet Road, Anna Salai,\nGuindy, Chennai – 600 032.\n[PAN: AACCN5152H]\n(अपीलार्थी/Appellant)\n(प्रत्यर्थी/Respondent/Cross\nObjector)\n\nITA Nos.2971 - 2972/Chny/2024\nनिर्धारणवर्ष/66 pages

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Income Tax Appellate Tribunal, A BENCH: CHENNAI

Before: SHRI ABY T. VARKEYAND

Hearing: 27.02.2025Pronounced: 02.05.2025

आदेश / O R D E R

PER ABY T. VARKEY ABY T. VARKEY, JM: These cross appeals by the Revenue and the These cross appeals by the Revenue and the assessee arise out of ssessee arise out of the orders of the Learned Commissioner of Income Tax (Appeals) the orders of the Learned Commissioner of Income Tax (Appeals) the orders of the Learned Commissioner of Income Tax (Appeals) - 19, Chennai [ in short ‘Ld. CIT(A)’] all dated d. CIT(A)’] all dated 25.09.2024 against the orders against the orders passed by the Dy. CIT, Central Circle passed by the Dy. CIT, Central Circle-2(1), Chennai [in short ‘the AO’] for [in short ‘the AO’] for the Assessment Years [in short ‘AYs’] the Assessment Years [in short ‘AYs’] 2016-17 to 2022-23 23. Since several issues involved are common, all the appeals for all the assessment years issues involved are common, all the appeals for all the assessment years issues involved are common, all the appeals for all the assessment years were heard together. Both the parties also argued them together raising were heard together. Both the parties also argued them together raising were heard together. Both the parties also argued them together raising similar arguments on these issues. Accordingly, for the sake of ments on these issues. Accordingly, for the sake of ments on these issues. Accordingly, for the sake of convenience and brevity, we dispose all the appeals by this consolidated convenience and brevity, we dispose all the appeals by this consolidated convenience and brevity, we dispose all the appeals by this consolidated order.

Before we advert to the grounds taken in the cross appeals, it would Before we advert to the grounds taken in the cross appeals, it would Before we advert to the grounds taken in the cross appeals, it would first be relevant to cull out the basic facts of the case and effect of law in first be relevant to cull out the basic facts of the case and effect of law in first be relevant to cull out the basic facts of the case and effect of law in brief in respect of certain AYs. Search u/s 132 of the Income Tax Act, brief in respect of certain AYs. Search u/s 132 of the Income Tax Act, brief in respect of certain AYs. Search u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as “the 1961 (hereinafter referred to as “the Act”) was conducted against the Act”) was conducted against the assessee, on 14.02.2023. Consequent to the search, the AO issued 14.02.2023. Consequent to the search, the AO issued 14.02.2023. Consequent to the search, the AO issued notices u/s 148 of the Act for AYs 2016 notices u/s 148 of the Act for AYs 2016-17 to 2021-22, pursuant to 22, pursuant to which, the assessments which, the assessments under section (hereinafter referred to as “u/s.”) under section (hereinafter referred to as “u/s.”)

Issue 1: Addition made on account of unaccounted cash Issue 1: Addition made on account of unaccounted cash Issue 1: Addition made on account of unaccounted cash collections from sale of flats collections from sale of flats Ground Nos. 2 for the for the Revenue’s appeal and Ground Nos. ’s appeal and Ground Nos.6 to 11of the assessee’s cross-objection objection for AY 2016-17 Ground Nos. 2 for the for the Revenue’s appeal and Ground Nos ’s appeal and Ground Nos.5 to 10of the assessee’s cross-objection objection for AY 2017-18 Ground Nos. 3 for the Revenue Revenue’s appeal and Ground Nos. . 10 to 15 of the assessee’s cross-objection objection for AY 2018-19 Ground Nos. 2 for the Revenue Revenue’s appeal and Ground Nos. 5 to 10 s. 5 to 10 of the assessee’s cross-objection objection for AY 2019-20 Ground Nos. 2 for the for the Revenue’s appeal and Ground Nos. ’s appeal and Ground Nos. 5 of the assessee’s cross-objection objection for AY 2020-21 Ground Nos. 2 for the for the Revenue’s appeal and Ground Nos. ’s appeal and Ground Nos. 5 of the assessee’s cross-objection objection for AY 2021-22 Ground Nos. 2 for the for the Revenue’s appeal and Ground Nos. ’s appeal and Ground Nos. 2 of the assessee’s cross-objection objection for AY 2022-23 4.1 These grounds relate to These grounds relate to the additions made by the AO in relation to the additions made by the AO in relation to unaccounted cash collected from customers on sale of flats. The facts as unaccounted cash collected from customers on sale of flats. The facts as unaccounted cash collected from customers on sale of flats. The facts as noted are that, the assessee is engaged in the business of development of noted are that, the assessee is engaged in the business of development of noted are that, the assessee is engaged in the business of development of real estate having projects real estate having projects at Chennai, Bengaluru and Coimbatore at Chennai, Bengaluru and Coimbatore. Search u/s 132 of the Act was carried out at the business premises of the u/s 132 of the Act was carried out at the business premises of the u/s 132 of the Act was carried out at the business premises of the 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India ::5 ::

Karthiga, CRM staff from whose possession this excel sheet was found, from whose possession this excel sheet was found, from whose possession this excel sheet was found, gave her sworn statement u/s 132(4) of the Act sworn statement u/s 132(4) of the Act, in which while answering while answering to Q.No.13 put forth to her to Q.No.13 put forth to her, she had admitted that the term “EB” means admitted that the term “EB” means “Extra Benefits” and further in response to Q.No.15, “Extra Benefits” and further in response to Q.No.15, she stated that “EB” stated that “EB” means payment received in cash and not recorded in tally and EB means payment received in cash and not recorded in tally and EB means payment received in cash and not recorded in tally and EB payments received were communicated to the accounts team for payments received were communicated to the accounts team for payments received were communicated to the accounts team for reporting purpose. The Authorized Officer noted that, this explanation was . The Authorized Officer noted that, this explanation was . The Authorized Officer noted that, this explanation was also corroborated by the also corroborated by the WhatsApp conversation between Smt. Karthiga conversation between Smt. Karthiga and Accounts staff, Ms. Pinki. The Authorized Officer is noted to have and Accounts staff, Ms. Pinki. The Authorized Officer is noted to have and Accounts staff, Ms. Pinki. The Authorized Officer is noted to have sought an explanation regarding this particular sought an explanation regarding this particular WhatsApp conversation at conversation at Q No. 17 and Smt. Karthiga is noted to have Q No. 17 and Smt. Karthiga is noted to have confirmed the conversation confirmed the conversation 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India between between between herself herself herself and and and Smt. Smt. Smt. Pinki Pinki Pinki and and and explained explained explained that that that, she had communicated to Smt Pinki that communicated to Smt Pinki that, on 17.11.2021, a customer of B1503 of on 17.11.2021, a customer of B1503 of Tower I of Suprema Project had given Tower I of Suprema Project had given Rs. 15 Lakhs in cash in cash and further on 24.11.2021, a customer of A1105 of Tower I of Suprema Project had a customer of A1105 of Tower I of Suprema Project had a customer of A1105 of Tower I of Suprema Project had given 8 Lakhs in cash and Smt. Pinki responded to i ash and Smt. Pinki responded to it by stating “Bcs t by stating “Bcs revised sent”, in which the term ‘BCS’ stood for revised sent”, in which the term ‘BCS’ stood for “Booking Cost Sheet” “Booking Cost Sheet”.

4.2 In view of the above explanation, the Authorized Officer is noted to the above explanation, the Authorized Officer is noted to the above explanation, the Authorized Officer is noted to have analyzed the seized electronic data and gathered that the assessee have analyzed the seized electronic data and gathered that the assessee have analyzed the seized electronic data and gathered that the assessee was following a unique deceptive method to manage its unaccounted sale was following a unique deceptive method to manage its unaccounted sale was following a unique deceptive method to manage its unaccounted sale proceeds. The CRM staff would maintain excel records i proceeds. The CRM staff would maintain excel records in which the cash n which the cash component involved in sale of flats were separately mentioned as “EB” or component involved in sale of flats were separately mentioned as “EB” or component involved in sale of flats were separately mentioned as “EB” or “Extra Budget / Benefit”. As and when the customers would pay the cash, “Extra Budget / Benefit”. As and when the customers would pay the cash, “Extra Budget / Benefit”. As and when the customers would pay the cash, the same would be communicated to the accounts staff who would then the same would be communicated to the accounts staff who would then the same would be communicated to the accounts staff who would then reduce the cash received f reduce the cash received from the “Booking Cost Sheet” as if the “Extra rom the “Booking Cost Sheet” as if the “Extra Budget” has been reduced, and such revised statement would be signed Budget” has been reduced, and such revised statement would be signed Budget” has been reduced, and such revised statement would be signed by the customer as an acknowledgment for the payment made. This by the customer as an acknowledgment for the payment made. This by the customer as an acknowledgment for the payment made. This modus operandi is noted to have been confirmed by another CRM Staff, modus operandi is noted to have been confirmed by another CRM Staff, modus operandi is noted to have been confirmed by another CRM Staff, Smt. Rajeshwari who also accepted that “EB” eshwari who also accepted that “EB” noting’s denoted the cash denoted the cash receipts and that such term was used to avoid unwarranted attention. receipts and that such term was used to avoid unwarranted attention. receipts and that such term was used to avoid unwarranted attention.

4.6 In light of the above seized electronic material, depositions of the In light of the above seized electronic material, depositions of the In light of the above seized electronic material, depositions of the employees, CFO, CEO & the Managing Director, the AO is noted to have employees, CFO, CEO & the Managing Director, the AO is noted to have employees, CFO, CEO & the Managing Director, the AO is noted to have reopened the income-tax assessments of the assessee tax assessments of the assessee by issue of notices by issue of notices u/s 148 of the Act. The assessee, in response to the notices, is observed u/s 148 of the Act. The assessee, in response to the notices, is observed u/s 148 of the Act. The assessee, in response to the notices, is observed to have filed the respective return(s) of income wherein it offered 20% of to have filed the respective return(s) of income wherein it offered 20% of to have filed the respective return(s) of income wherein it offered 20% of the above unaccounted sale proceeds by wa the above unaccounted sale proceeds by way of profit element embedded y of profit element embedded therein, to tax. The AO however in the course of the assessment issued The AO however in the course of the assessment issued The AO however in the course of the assessment issued show cause to the assessee, requiring it to explain as to why the entire show cause to the assessee, requiring it to explain as to why the entire show cause to the assessee, requiring it to explain as to why the entire unaccounted cash receipts in the respective financial year(s) under unaccounted cash receipts in the respective financial year(s) under unaccounted cash receipts in the respective financial year(s) under consideration had not been offered as income in its hands fo consideration had not been offered as income in its hands fo consideration had not been offered as income in its hands for the respective assessment year(s). The assessee in their reply dated respective assessment year(s). The assessee in their reply dated respective assessment year(s). The assessee in their reply dated 21.02.2024 is noted to have denied having received any unaccounted 21.02.2024 is noted to have denied having received any unaccounted 21.02.2024 is noted to have denied having received any unaccounted cash from customers on sale of flats. The a cash from customers on sale of flats. The assessee is noted to have also ssessee is noted to have also objected to the evidentiary value of the seiz objected to the evidentiary value of the seized electronic material and its ed electronic material and its admissibility as well. The assessee further is found to have contended admissibility as well. The assessee further is found to have contended admissibility as well. The assessee further is found to have contended that, Smt. Karthiga from whose possession the electronic data was that, Smt. Karthiga from whose possession the electronic data was that, Smt. Karthiga from whose possession the electronic data was 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India seized, used to handle seized, used to handle customer issues, loans, customizations, and customer issues, loans, customizations, and feedback, and therefore according to the assessee, and therefore according to the assessee, the data found on her the data found on her laptop was of no relevance. With regard to the statement of Smt. Pinki, was of no relevance. With regard to the statement of Smt. Pinki, was of no relevance. With regard to the statement of Smt. Pinki, who confirmed the statement of Smt. Karthiga and also had who confirmed the statement of Smt. Karthiga and also had who confirmed the statement of Smt. Karthiga and also had WhatsApp conversation with her regarding collection of “EB” was conversation with her regarding collection of “EB” was submitted to have submitted to have given such a statement under coercion and therefore the assessee urged given such a statement under coercion and therefore the assessee urged given such a statement under coercion and therefore the assessee urged that her statement was also not reliable. It was explained that, the that her statement was also not reliable. It was explained that, the that her statement was also not reliable. It was explained that, the employees would have misunderstood the regular individual cash employees would have misunderstood the regular individual cash employees would have misunderstood the regular individual cash collections of less than Rs. 2 lac collections of less than Rs. 2 lacs which was also accounted in the books s which was also accounted in the books of accounts to represent unaccounted cash and thus gave statements of accounts to represent unaccounted cash and thus gave statements of accounts to represent unaccounted cash and thus gave statements under mistaken belief and confusion. According to the assessee, the under mistaken belief and confusion. According to the assessee, the under mistaken belief and confusion. According to the assessee, the Managing Director, Shri Varun Manian had also retracted his statement in Managing Director, Shri Varun Manian had also retracted his statement in Managing Director, Shri Varun Manian had also retracted his statement in which he had also highlighted infirmities in the data found from had also highlighted infirmities in the data found from had also highlighted infirmities in the data found from possession of Smt. Karthiga and therefore it was submitted that the possession of Smt. Karthiga and therefore it was submitted that the possession of Smt. Karthiga and therefore it was submitted that the purported electronic data was not reliable. purported electronic data was not reliable.

4.7 The AO however is noted to have rejected the explanation put forth The AO however is noted to have rejected the explanation put forth The AO however is noted to have rejected the explanation put forth by the assessee and has set out his detailed reasons for the same in the and has set out his detailed reasons for the same in the and has set out his detailed reasons for the same in the impugned order. The AO is observed to have impugned order. The AO is observed to have inter alia stated that, the stated that, the persons whose statements had been recorded have deposed their persons whose statements had been recorded have deposed their persons whose statements had been recorded have deposed their answers while recording the statement u/s 132(4) of the Act with answers while recording the statement u/s 132(4) of the Act with answers while recording the statement u/s 132(4) of the Act with reference to the facts as per the seized material and thus their answers reference to the facts as per the seized material and thus their answers reference to the facts as per the seized material and thus their answers 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India were corroborated by the material seized in the course of search. The AO were corroborated by the material seized in the course of search. The AO were corroborated by the material seized in the course of search. The AO further held that the assessee was not able to disprove the facts with further held that the assessee was not able to disprove the facts with further held that the assessee was not able to disprove the facts with evidence and had rather relied only on evidence and had rather relied only on bald retractions which did not have bald retractions which did not have any basis. The AO also noted that the assessee was unable to disprove any basis. The AO also noted that the assessee was unable to disprove any basis. The AO also noted that the assessee was unable to disprove the contents of the seized material, as already discussed by us above. He the contents of the seized material, as already discussed by us above. He the contents of the seized material, as already discussed by us above. He further held that the statements recorded u/s 132(4) of the Act, carried further held that the statements recorded u/s 132(4) of the Act, carried further held that the statements recorded u/s 132(4) of the Act, carried evidentiary value and that empty retractions that too after a lapse of one dentiary value and that empty retractions that too after a lapse of one dentiary value and that empty retractions that too after a lapse of one year was invalid. The AO further noted that the assessee itself had offered year was invalid. The AO further noted that the assessee itself had offered year was invalid. The AO further noted that the assessee itself had offered 20% of the unaccounted cash receipts as their income. However, 20% of the unaccounted cash receipts as their income. However, 20% of the unaccounted cash receipts as their income. However, according to AO, the entire unaccounted cash according to AO, the entire unaccounted cash sale receipts ought to be sale receipts ought to be brought to tax and therefore added the following sums as undisclosed brought to tax and therefore added the following sums as undisclosed brought to tax and therefore added the following sums as undisclosed income of the appellant in the respective years impugned before us. income of the appellant in the respective years impugned before us. income of the appellant in the respective years impugned before us.

4.8 Aggrieved by the above order of the AO, the assessee is noted to Aggrieved by the above order of the AO, the assessee is noted to Aggrieved by the above order of the AO, the assessee is noted to have preferred an appeal have preferred an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) before the Ld. CIT(A). On appeal, the Ld. CIT(A) is noted to have rejected the legal plea of the assessee objecting to the is noted to have rejected the legal plea of the assessee objecting to the is noted to have rejected the legal plea of the assessee objecting to the admissibility of the electronic evidence. The Ld. CIT(A) also upheld the admissibility of the electronic evidence. The Ld. CIT(A) also upheld the admissibility of the electronic evidence. The Ld. CIT(A) also upheld the AO’s findings, in light of the seized material and the stat AO’s findings, in light of the seized material and the statements recorded ements recorded u/s 132(4) of the Act, that the assessee was in receipt of unaccounted u/s 132(4) of the Act, that the assessee was in receipt of unaccounted u/s 132(4) of the Act, that the assessee was in receipt of unaccounted cash proceeds on sale of flats. However, the Ld. CIT(A) concurred with cash proceeds on sale of flats. However, the Ld. CIT(A) concurred with cash proceeds on sale of flats. However, the Ld. CIT(A) concurred with the assessee on the limited aspect that, the entire unaccounted sale the assessee on the limited aspect that, the entire unaccounted sale the assessee on the limited aspect that, the entire unaccounted sale proceeds could not be brought proceeds could not be brought to tax as their income and that only the to tax as their income and that only the 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India profit element embedded therein was taxable. The Ld. CIT(A) accordingly profit element embedded therein was taxable. The Ld. CIT(A) accordingly profit element embedded therein was taxable. The Ld. CIT(A) accordingly estimated the profit element at 20% of the unaccounted cash receipts and estimated the profit element at 20% of the unaccounted cash receipts and estimated the profit element at 20% of the unaccounted cash receipts and deleted the balance 80% sum which was added by the AO. Aggrieved by deleted the balance 80% sum which was added by the AO. Aggrieved by deleted the balance 80% sum which was added by the AO. Aggrieved by this consolidated order of Ld. CIT(A), both the assessee and Revenue are his consolidated order of Ld. CIT(A), both the assessee and Revenue are his consolidated order of Ld. CIT(A), both the assessee and Revenue are now in appeal before us. now in appeal before us.

4.9 Heard both the parties. We first take up the assessee’s plea Heard both the parties. We first take up the assessee’s plea Heard both the parties. We first take up the assessee’s plea regarding the admissibility of the electronic evidence relied upon by the regarding the admissibility of the electronic evidence relied upon by the regarding the admissibility of the electronic evidence relied upon by the AO to make the impugned additions. According to the assessee, the excel ned additions. According to the assessee, the excel ned additions. According to the assessee, the excel sheets found in the electronic data, the sheets found in the electronic data, the WhatsApp conversations between conversations between the employees were not admissible as it did not comply with Section 65B the employees were not admissible as it did not comply with Section 65B the employees were not admissible as it did not comply with Section 65B of the Indian Evidence Act, 1872. We find that, the lower au of the Indian Evidence Act, 1872. We find that, the lower au of the Indian Evidence Act, 1872. We find that, the lower authorities had rightly observed that, the Authorized Officer had followed the due rightly observed that, the Authorized Officer had followed the due rightly observed that, the Authorized Officer had followed the due procedures mandated in law and had also obtained the necessary procedures mandated in law and had also obtained the necessary procedures mandated in law and had also obtained the necessary certificates u/s 65B of the Act prior to the seizure of such electronic certificates u/s 65B of the Act prior to the seizure of such electronic certificates u/s 65B of the Act prior to the seizure of such electronic records. The AO is noted to have extract records. The AO is noted to have extracted the said certificate obtained ed the said certificate obtained u/s 65B of Indian Evidence Act, 1872 in the impugned order as well. u/s 65B of Indian Evidence Act, 1872 in the impugned order as well. u/s 65B of Indian Evidence Act, 1872 in the impugned order as well.

Karthiga was a customer relationship staff who was only involved in day Karthiga was a customer relationship staff who was only involved in day Karthiga was a customer relationship staff who was only involved in day- to-day miscellaneous tasks o day miscellaneous tasks of handling and resolving the queries of the f handling and resolving the queries of the customers raised and obtaining customer feedbacks and therefore she customers raised and obtaining customer feedbacks and therefore she customers raised and obtaining customer feedbacks and therefore she could have been possibly been in charge of could have been possibly been in charge of collecting on collecting on-monies from customers and that the Investigating Officers had forcibly made her admit customers and that the Investigating Officers had forcibly made her admit customers and that the Investigating Officers had forcibly made her admit to the same. Similarly, in respect of Smt. Pinky, it was argued that, she o the same. Similarly, in respect of Smt. Pinky, it was argued that, she o the same. Similarly, in respect of Smt. Pinky, it was argued that, she was a junior accounts staff who was not involved in the financial matters was a junior accounts staff who was not involved in the financial matters was a junior accounts staff who was not involved in the financial matters but was only aware about the collection of regular cash from customers but was only aware about the collection of regular cash from customers but was only aware about the collection of regular cash from customers etc. for accounting purposes, wherein etc. for accounting purposes, wherein individual transactions were less individual transactions were less than Rs. 2 lacs viz., within the permissible limits and such cash was also than Rs. 2 lacs viz., within the permissible limits and such cash was also than Rs. 2 lacs viz., within the permissible limits and such cash was also accounted in the books of accounts. According to him, the Investigating accounted in the books of accounts. According to him, the Investigating accounted in the books of accounts. According to him, the Investigating authorities had confused the said employee during the course of search authorities had confused the said employee during the course of search authorities had confused the said employee during the course of search and coerced her into admitting that the cash collections were unaccounted coerced her into admitting that the cash collections were unaccounted coerced her into admitting that the cash collections were unaccounted for. He showed us that, due to the mental stress which she faced during for. He showed us that, due to the mental stress which she faced during for. He showed us that, due to the mental stress which she faced during search, she had soon after resigned from work as well. As far as the search, she had soon after resigned from work as well. As far as the search, she had soon after resigned from work as well. As far as the 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India statement of Managing Director was concerned statement of Managing Director was concerned, he showed us that, he , he showed us that, he had retracted his statement and therefore the same was no longer had retracted his statement and therefore the same was no longer had retracted his statement and therefore the same was no longer reliable. In so far as the contents of the excel sheet was concerned, the reliable. In so far as the contents of the excel sheet was concerned, the reliable. In so far as the contents of the excel sheet was concerned, the Ld. AR argued that these were mere estimates and that the term “EB” Ld. AR argued that these were mere estimates and that the term “EB” Ld. AR argued that these were mere estimates and that the term “EB” suggested extra budget al suggested extra budget allocated for the said flat and that there was no located for the said flat and that there was no cash component in these loose sheets. cash component in these loose sheets.

Moreover, before us also, the Ld. AR was unable to point out the mistaken Moreover, before us also, the Ld. AR was unable to point out the mistaken Moreover, before us also, the Ld. AR was unable to point out the mistaken fact admitted by the Managing Director in his statement which led to the Managing Director in his statement which led to the Managing Director in his statement which led to the retraction nor was the Managing Director able to retraction nor was the Managing Director able to disprove the facts disprove the facts admitted by him with relevant relevant evidence. Hence, in our considered view, . Hence, in our considered view, 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India such bald retraction was rightly ignored by the lower authorities such bald retraction was rightly ignored by the lower authorities such bald retraction was rightly ignored by the lower authorities. As noted by the lower authorities, the electronic data including whatsapp by the lower authorities, the electronic data including whatsapp by the lower authorities, the electronic data including whatsapp conversations and excel sheets indeed related to conversations and excel sheets indeed related to the assessee's business the assessee's business activities and pertained to the actual units sold and therefore the contents and therefore the contents thereof could not be discarded thereof could not be discarded. The notings therein suggests that, it The notings therein suggests that, it contained detailed project and unit detailed project and unit-wise data, and the “EB” heading, in and the “EB” heading, in light of the statements of the employee/s, suggests light of the statements of the employee/s, suggests light of the statements of the employee/s, suggests the assessee collected cash payments over and above the declared sale collected cash payments over and above the declared sale collected cash payments over and above the declared sale consideration.

“6.5.16 The undersigned has carefully examined the above The undersigned has carefully examined the above The undersigned has carefully examined the above submission of the appellant. There is no doubt that du submission of the appellant. There is no doubt that during the course of ring the course of search that incriminating material in the form of electronic devices were search that incriminating material in the form of electronic devices were search that incriminating material in the form of electronic devices were found and seized. The reliance of such electronic devices were upheld by found and seized. The reliance of such electronic devices were upheld by found and seized. The reliance of such electronic devices were upheld by the undersigned in this order. Now the issue before the undersigned is the undersigned in this order. Now the issue before the undersigned is the undersigned in this order. Now the issue before the undersigned is whether the AO is right in relying upon the statement recorded from the ight in relying upon the statement recorded from the ight in relying upon the statement recorded from the employees from whose possession incriminating evidences in the form of employees from whose possession incriminating evidences in the form of employees from whose possession incriminating evidences in the form of electronic electronic electronic devices devices devices containing containing containing excel excel excel sheets sheets sheets and and and the the the WhatsApp WhatsApp WhatsApp conversations between the employees. The AO in the assessment order conversations between the employees. The AO in the assessment order conversations between the employees. The AO in the assessment order has brought out and discussed the issue elaborately. As brought out by brought out and discussed the issue elaborately. As brought out by brought out and discussed the issue elaborately. As brought out by the AO, the evidences collected were not from any single employee. the AO, the evidences collected were not from any single employee. the AO, the evidences collected were not from any single employee. The search team was able to confront with various employees of the The search team was able to confront with various employees of the The search team was able to confront with various employees of the appellant company about the findings that emanated fro appellant company about the findings that emanated from the Laptop m the Laptop and the associated WhatsApp conversations by recording a statement and the associated WhatsApp conversations by recording a statement and the associated WhatsApp conversations by recording a statement from each of them. Finally, such statements were put forth before Shri. from each of them. Finally, such statements were put forth before Shri. from each of them. Finally, such statements were put forth before Shri.

Varun Manian, the Managing Director of the Appellant Company. He Varun Manian, the Managing Director of the Appellant Company. He Varun Manian, the Managing Director of the Appellant Company. He confirmed the affirmation of his employ confirmed the affirmation of his employees. On account of the above ees. On account of the above revelation of facts about the term “EB” used by the employees, the revelation of facts about the term “EB” used by the employees, the revelation of facts about the term “EB” used by the employees, the search team was able to understand the abbreviation of EB which stands search team was able to understand the abbreviation of EB which stands search team was able to understand the abbreviation of EB which stands for “Extra Budget” and the modus operandi in collecting the same from for “Extra Budget” and the modus operandi in collecting the same from for “Extra Budget” and the modus operandi in collecting the same from its customers. The its customers. The evidences collected are not isolated ones. The evidences collected are not isolated ones. The evidences collected and statement recorded conclusively establish the evidences collected and statement recorded conclusively establish the evidences collected and statement recorded conclusively establish the fact about the collection of excess amount over and above the amount fact about the collection of excess amount over and above the amount fact about the collection of excess amount over and above the amount agreed in the agreements. The AO in the assessment order has made a agreed in the agreements. The AO in the assessment order has made a agreed in the agreements. The AO in the assessment order has made a clear finding upon each issue raised by the assessee company in relying ear finding upon each issue raised by the assessee company in relying ear finding upon each issue raised by the assessee company in relying such evidences. The undersigned is of the considered view that the AO such evidences. The undersigned is of the considered view that the AO such evidences. The undersigned is of the considered view that the AO has rightly rejected the submission of the assessee company in this has rightly rejected the submission of the assessee company in this has rightly rejected the submission of the assessee company in this regard.”

4.12 Having held so above, now the ne Having held so above, now the next issue for our consideration is xt issue for our consideration is whether the entire value of these whether the entire value of these cash sales / receipts have to be brought receipts have to be brought to tax or only the profit element embedded therein has to be taxed. From to tax or only the profit element embedded therein has to be taxed. From to tax or only the profit element embedded therein has to be taxed. From the facts placed before us, it is the facts placed before us, it is noted that the assessee is engaged in th d that the assessee is engaged in the business of development of real estate. In the course of search, electronic business of development of real estate. In the course of search, electronic business of development of real estate. In the course of search, electronic data was found, more particularly excel sheets which data was found, more particularly excel sheets which inter alia inter alia contained details of cash proceeds cash proceeds received on sale of flats. Having perused these received on sale of flats. Having perused these excel sheet on sample basis, it excel sheet on sample basis, it is noted that these notings suggested se notings suggested collection of cash from the customers towards sale of flats. From the collection of cash from the customers towards sale of flats. From the collection of cash from the customers towards sale of flats. From the admission of the Managing Director, it is observed that, he had only admission of the Managing Director, it is observed that, he had only admission of the Managing Director, it is observed that, he had only admitted to receipt of on admitted to receipt of on-monies from sale of flats and nowhere had he monies from sale of flats and nowhere had he stated that this entire receipt constitutes the undisclosed income of the that this entire receipt constitutes the undisclosed income of the that this entire receipt constitutes the undisclosed income of the assessee. Also, later on, in the return(s) of income filed in response to assessee. Also, later on, in the return(s) of income filed in response to assessee. Also, later on, in the return(s) of income filed in response to notice(s) issued u/s 148 of the Act, the assessee is noted to have notice(s) issued u/s 148 of the Act, the assessee is noted to have notice(s) issued u/s 148 of the Act, the assessee is noted to have 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India admitted and offered to tax 20% of the cash coll admitted and offered to tax 20% of the cash collections by way of the ections by way of the income element embedded therein and paid taxes thereon as well. The income element embedded therein and paid taxes thereon as well. The income element embedded therein and paid taxes thereon as well. The case of the Revenue however is that, the entire on case of the Revenue however is that, the entire on-monies collected upon monies collected upon sale of flats ought to be brought to tax. According to us, however, sale of flats ought to be brought to tax. According to us, however, sale of flats ought to be brought to tax. According to us, however, it cannot be a matter of an argument in the given facts of the present case an argument in the given facts of the present case an argument in the given facts of the present case that, the amount as receipts/sales by itself would represent the income of receipts/sales by itself would represent the income of receipts/sales by itself would represent the income of the assessee. For this, we gainfully rely on the following findings rendered the assessee. For this, we gainfully rely on the following findings rendered the assessee. For this, we gainfully rely on the following findings rendered by the Hon’ble Gujarat High Court in the case of ble Gujarat High Court in the case of CIT CIT Vs President Industries (258 ITR 654). Industries (258 ITR 654).

“3. Having perused the assessment order made by the Assessing Officer, “3. Having perused the assessment order made by the Assessing Officer, “3. Having perused the assessment order made by the Assessing Officer, the order made by the Commissioner (Appeals) and the Tribunal, we are the order made by the Commissioner (Appeals) and the Tribunal, we are the order made by the Commissioner (Appeals) and the Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under satisfied that the Tribunal was justified in rejecting the application under satisfied that the Tribunal was justified in rejecting the application under section 256(1). It cannot be a matter of an argument that the amount of section 256(1). It cannot be a matter of an argument that the amount of section 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not sales by itself cannot represent the income of the assessee who has not sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represent the price received by the disclosed the sales. The sales only represent the price received by the disclosed the sales. The sales only represent the price received by the seller of the goods for the acquisition seller of the goods for the acquisition of which it has already incurred of which it has already incurred the cost. It is the the cost. It is the realization of excess over the cost incurred of excess over the cost incurred thatonlyforms part of the profit included in the consideration of sales. thatonlyforms part of the profit included in the consideration of sales. thatonlyforms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way Therefore, unless there is a finding to the effect that investment by way Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold has been ng cost in acquiring goods which have been sold has been ng cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the made by the assessee and that has also not been disclosed, the made by the assessee and that has also not been disclosed, the question, whether entire sum of undisclosed sale proceeds can be question, whether entire sum of undisclosed sale proceeds can be question, whether entire sum of undisclosed sale proceeds can be treated as income of the relevant assessment year answers by itself in treated as income of the relevant assessment year answers by itself in treated as income of the relevant assessment year answers by itself in the negative. The record goes to show that there is no finding nor any the negative. The record goes to show that there is no finding nor any the negative. The record goes to show that there is no finding nor any material has been referred to about the suppression of investment in material has been referred to about the suppression of investment in material has been referred to about the suppression of investment in acquiring the goods which have been found subject of undisclosed acquiring the goods which have been found subject of undisclosed acquiring the goods which have been found subject of undisclosed sales.”

4.13 According to the Ld. CIT DR however, t According to the Ld. CIT DR however, the search did not reveal he search did not reveal incurrence of any expenses qua such cash collections and therefore, he incurrence of any expenses qua such cash collections and therefore, he incurrence of any expenses qua such cash collections and therefore, he argued that the AO had rightly brought the entire on argued that the AO had rightly brought the entire on-monies to tax. On monies to tax. On 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India the other hand, the Ld. AR brought to our notice that, the assessee had the other hand, the Ld. AR brought to our notice that, the assessee had the other hand, the Ld. AR brought to our notice that, the assessee had demonstrated before the lower authorities that, they were required to re the lower authorities that, they were required to re the lower authorities that, they were required to incur expenses viz., (i) miscellaneous & incidental Expenses during incur expenses viz., (i) miscellaneous & incidental Expenses during incur expenses viz., (i) miscellaneous & incidental Expenses during registration process, (ii) provide additional amenities provided as per the registration process, (ii) provide additional amenities provided as per the registration process, (ii) provide additional amenities provided as per the customer’s requirements, (iii) additional expenses for furn customer’s requirements, (iii) additional expenses for furn customer’s requirements, (iii) additional expenses for furnishing the flats like Welcome kits to the customers, Apartment activities etc. & (iv) make like Welcome kits to the customers, Apartment activities etc. & (iv) make like Welcome kits to the customers, Apartment activities etc. & (iv) make pooja arrangements during House pooja arrangements during House-warming ceremonies. The Ld. AR warming ceremonies. The Ld. AR further contended that, had the assessee collected such huge on further contended that, had the assessee collected such huge on further contended that, had the assessee collected such huge on-monies and not incurred any expenses, and not incurred any expenses, then such cash collections ought to have then such cash collections ought to have been found in the form of some unexplained investment or asset, in the been found in the form of some unexplained investment or asset, in the been found in the form of some unexplained investment or asset, in the course of search. We observe that, apart from these excel notings, the course of search. We observe that, apart from these excel notings, the course of search. We observe that, apart from these excel notings, the Investigating Officer did Investigating Officer didn’t find any unaccounted cash or assets of such t find any unaccounted cash or assets of such magnitude which would justify the addition of entire on magnitude which would justify the addition of entire on-monies as income monies as income of the assessee. And as rightly pointed out by the Ld.AR And as rightly pointed out by the Ld.AR that if the entire that if the entire on-monies is treated as the income of the assessee, then the monies is treated as the income of the assessee, then the monies is treated as the income of the assessee, then the profits of the assessee would show unrealistic the assessee would show unrealistic outcome. We therefore find merit in We therefore find merit in the assessee’s plea that the entire cash receipts cannot be said to the assessee’s plea that the entire cash receipts cannot be said to the assessee’s plea that the entire cash receipts cannot be said to constitute its income.

4.14 The Ld. CIT, DR for the Revenue further contended that, the The Ld. CIT, DR for the Revenue further contended that, the The Ld. CIT, DR for the Revenue further contended that, the assessee was unable to provide the exact details of cash expens assessee was unable to provide the exact details of cash expens assessee was unable to provide the exact details of cash expenses incurred out of these cash collections and therefore the benefit of same incurred out of these cash collections and therefore the benefit of same incurred out of these cash collections and therefore the benefit of same 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India should not be given and thus the entire proceeds ought to be taxed as should not be given and thus the entire proceeds ought to be taxed as should not be given and thus the entire proceeds ought to be taxed as undisclosed income of the assessee. undisclosed income of the assessee. In this regard, we find that, on same In this regard, we find that, on same set of facts, similar contention was set of facts, similar contention was raised by the Revenue before this raised by the Revenue before this Mumbai Tribunal in the case of Tribunal in the case of M/s. Prime Developers Vs ACIT ( Prime Developers Vs ACIT (ITA Nos.175 – 178/Mum./2010 by order dated 22.03.2013 178/Mum./2010 by order dated 22.03.2013 178/Mum./2010 by order dated 22.03.2013) viz., the set-off/benefitof expenses against on benefitof expenses against on-monies shouldn’t be allowed as the t be allowed as the assessee was unable to substantiate the incurrence of expenses with to substantiate the incurrence of expenses with to substantiate the incurrence of expenses with evidences. This Tribunal is noted to have rejected this plea of the evidences. This Tribunal is noted to have rejected this plea of the evidences. This Tribunal is noted to have rejected this plea of the Revenue and upheld the assessee Revenue and upheld the assessee’s plea for estimation of profit element s plea for estimation of profit element embedded in on-monies by observing as monies by observing as under: -

“42. Scope of Reasonable Expenditure: Assessee needs to expend in Reasonable Expenditure: Assessee needs to expend in Reasonable Expenditure: Assessee needs to expend in order to earn income/profit and it is basic and universal principle in any order to earn income/profit and it is basic and universal principle in any order to earn income/profit and it is basic and universal principle in any business. This principle applies to both accounted and unaccounted business. This principle applies to both accounted and unaccounted business. This principle applies to both accounted and unaccounted profits. In a case of unaccounted profits, due to its very nat profits. In a case of unaccounted profits, due to its very nat profits. In a case of unaccounted profits, due to its very nature of unaccounting, normally, the parties do not maintain evidences and unaccounting, normally, the parties do not maintain evidences and unaccounting, normally, the parties do not maintain evidences and therefore, evidencing such unaccounted evidences is impossibility. therefore, evidencing such unaccounted evidences is impossibility. therefore, evidencing such unaccounted evidences is impossibility. Probably, for this reason, the courts have taken conscious view that it is Probably, for this reason, the courts have taken conscious view that it is Probably, for this reason, the courts have taken conscious view that it is for the assessing authority to quantify r for the assessing authority to quantify reasonable expenditure easonable expenditure considering the facts of the case and industry. Legally speaking, the considering the facts of the case and industry. Legally speaking, the considering the facts of the case and industry. Legally speaking, the judgments are uniform in asserting that entire sale proceeds should not judgments are uniform in asserting that entire sale proceeds should not judgments are uniform in asserting that entire sale proceeds should not be added as income. Hon be added as income. Hon’ble High court of Ahmadabad ruled in the case ble High court of Ahmadabad ruled in the case of Panna Corporation t of Panna Corporation that the " assessee ought to have spent hat the " assessee ought to have spent reasonable amount for the purpose of receiving such gross profit' (para reasonable amount for the purpose of receiving such gross profit' (para reasonable amount for the purpose of receiving such gross profit' (para 14 of Tax Appeal No 325 of 2000 dt. 16.6.2012). Further, Hon'ble High 14 of Tax Appeal No 325 of 2000 dt. 16.6.2012). Further, Hon'ble High 14 of Tax Appeal No 325 of 2000 dt. 16.6.2012). Further, Hon'ble High Court OF Madya Pradesh held in the case of President Industries 258 ITR Court OF Madya Pradesh held in the case of President Industries 258 ITR Court OF Madya Pradesh held in the case of President Industries 258 ITR 654 that ' entire sale proceeds of the assessee should not be added in that ' entire sale proceeds of the assessee should not be added in that ' entire sale proceeds of the assessee should not be added in his income'. Further, from the judgment in case of Panna Corporation his income'. Further, from the judgment in case of Panna Corporation his income'. Further, from the judgment in case of Panna Corporation (supra), it is settled proposition that there is no need for the assessee to (supra), it is settled proposition that there is no need for the assessee to (supra), it is settled proposition that there is no need for the assessee to demonstrate the genuineness of the claim o demonstrate the genuineness of the claim of unaccounted expenditure f unaccounted expenditure in the cases of this kind. The underlined logic is that the unaccounted in the cases of this kind. The underlined logic is that the unaccounted in the cases of this kind. The underlined logic is that the unaccounted expenditure is always unevidenced and never maintained.Therefore, expenditure is always unevidenced and never maintained.Therefore, expenditure is always unevidenced and never maintained.Therefore, transferring onus on to the assessee in matters of this kind is not transferring onus on to the assessee in matters of this kind is not transferring onus on to the assessee in matters of this kind is not approved. Ex consequenti approved. Ex consequenti, it is for the AO allow necessarily reasonable , it is for the AO allow necessarily reasonable 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India deduction towards such unaccounted expenditure without demanding deduction towards such unaccounted expenditure without demanding deduction towards such unaccounted expenditure without demanding evidences, considering the nature of industry and also evidences relating evidences, considering the nature of industry and also evidences relating evidences, considering the nature of industry and also evidences relating to extents of net profits earned by the assessee. Considering the abo to extents of net profits earned by the assessee. Considering the abo to extents of net profits earned by the assessee. Considering the above legal position on the matter, we are of the clear legal position on the matter, we are of the clear-cut opinion, the AO's cut opinion, the AO's conclusions on this issue are certainly erroneous. In principle, we uphold conclusions on this issue are certainly erroneous. In principle, we uphold conclusions on this issue are certainly erroneous. In principle, we uphold the views of the CIT(A) in this regard. Therefore, relevant grounds the views of the CIT(A) in this regard. Therefore, relevant grounds the views of the CIT(A) in this regard. Therefore, relevant grounds raised in the revenue's appeals are di raised in the revenue's appeals are dismissed.”

“4. On the question of assessment, we notice that “4. On the question of assessment, we notice that on search conducted on search conducted what was recovered is the undisclosed receipts, which the assessee what was recovered is the undisclosed receipts, which the assessee what was recovered is the undisclosed receipts, which the assessee received by way of sale consideration in various projects undertaken by received by way of sale consideration in various projects undertaken by received by way of sale consideration in various projects undertaken by the assessee. The assessee was an Architect and builder, who constructs the assessee. The assessee was an Architect and builder, who constructs the assessee. The assessee was an Architect and builder, who constructs apartment complexes and apartment complexes and sells them to purchasers. Specific details of sells them to purchasers. Specific details of such sale consideration received from certain purchasers were recovered such sale consideration received from certain purchasers were recovered such sale consideration received from certain purchasers were recovered at the time of search, on which basis the assessment proceedings were at the time of search, on which basis the assessment proceedings were at the time of search, on which basis the assessment proceedings were carried out under Section 158BC of the Act. Admittedly these were no carried out under Section 158BC of the Act. Admittedly these were no carried out under Section 158BC of the Act. Admittedly these were not returned nor did it find a place in the accounts. The Assessing Officer returned nor did it find a place in the accounts. The Assessing Officer returned nor did it find a place in the accounts. The Assessing Officer treated the entire sale consideration received by the assessee, as treated the entire sale consideration received by the assessee, as treated the entire sale consideration received by the assessee, as revealed from the materials recovered, as the undisclosed income and revealed from the materials recovered, as the undisclosed income and revealed from the materials recovered, as the undisclosed income and levied tax on it. In first appeal, the assessm levied tax on it. In first appeal, the assessment order for the block ent order for the block period was confirmed. period was confirmed.

7. Here, the sale consideration, which was detected on search and 7. Here, the sale consideration, which was detected on search and 7. Here, the sale consideration, which was detected on search and seizure, was not reflected in the books of accounts no seizure, was not reflected in the books of accounts nor the profit r the profit returned as income for the subject years. The sale consideration was returned as income for the subject years. The sale consideration was returned as income for the subject years. The sale consideration was also for the purchase of apartments in different complexes, the also for the purchase of apartments in different complexes, the also for the purchase of apartments in different complexes, the development of which was promoted by the respondent/assessee. In development of which was promoted by the respondent/assessee. In development of which was promoted by the respondent/assessee. In such circumstances, the income of the assesse such circumstances, the income of the assessee, which stood e, which stood undisclosed, has to be determined for the purpose of levying income undisclosed, has to be determined for the purpose of levying income undisclosed, has to be determined for the purpose of levying income tax. The Tribunal, after looking into the net profit of the assessee in the tax. The Tribunal, after looking into the net profit of the assessee in the tax. The Tribunal, after looking into the net profit of the assessee in the different projects, directed 15% of the total undisclosed receipts to be different projects, directed 15% of the total undisclosed receipts to be different projects, directed 15% of the total undisclosed receipts to be taken as the undisclosed taken as the undisclosed income. We are of the opinion that the said income. We are of the opinion that the said direction was perfectly in tune with the provision under Section 150BB of direction was perfectly in tune with the provision under Section 150BB of direction was perfectly in tune with the provision under Section 150BB of the Act and Section 158BH, which specifies that unless otherwise the Act and Section 158BH, which specifies that unless otherwise the Act and Section 158BH, which specifies that unless otherwise provided all the provisions of the Act, applicable to assessments under provided all the provisions of the Act, applicable to assessments under provided all the provisions of the Act, applicable to assessments under Chapter XIVB. We answer the questions of law framed in Chapter XIVB. We answer the questions of law framed in Chapter XIVB. We answer the questions of law framed in I.T.A. No. 1549 of 2009 in favour of the assessee and against the Revenue and we of 2009 in favour of the assessee and against the Revenue and we of 2009 in favour of the assessee and against the Revenue and we reject the appeal."

6.5.31 As brought out by the appellant, the search has not As brought out by the appellant, the search has not As brought out by the appellant, the search has not resulted in identifying any unexplained expenditure or investment. Only resulted in identifying any unexplained expenditure or investment. Only resulted in identifying any unexplained expenditure or investment. Only the unaccounted cash receipts were found. In s the unaccounted cash receipts were found. In such a scenario, the best uch a scenario, the best option available before the undersigned is to estimate the profit margin option available before the undersigned is to estimate the profit margin option available before the undersigned is to estimate the profit margin that can be attributed as additional business income for the respective that can be attributed as additional business income for the respective that can be attributed as additional business income for the respective assessment years. Naturally any estimation should have some basis. assessment years. Naturally any estimation should have some basis. assessment years. Naturally any estimation should have some basis. The Income Tax Act, The Income Tax Act, 1961 provides certain presumptive provision(s) to 1961 provides certain presumptive provision(s) to tax income when books of accounts are not maintained. Some of these tax income when books of accounts are not maintained. Some of these tax income when books of accounts are not maintained. Some of these are envisaged in section 44AD, 44AAD of the Act wherein the income is are envisaged in section 44AD, 44AAD of the Act wherein the income is are envisaged in section 44AD, 44AAD of the Act wherein the income is allowed to be estimated upon percentage. The provisions of section allowed to be estimated upon percentage. The provisions of section allowed to be estimated upon percentage. The provisions of section 44AD allows to taxation @ 8% of total receipts as taxable income. 44AD allows to taxation @ 8% of total receipts as taxable income. 44AD allows to taxation @ 8% of total receipts as taxable income. Whereas in section 44AAD of the Act, tax is not a fixed rate; it is based Whereas in section 44AAD of the Act, tax is not a fixed rate; it is based Whereas in section 44AAD of the Act, tax is not a fixed rate; it is based on the presumptive income calculated at 8% or 6%, and then the on the presumptive income calculated at 8% or 6%, and then the on the presumptive income calculated at 8% or 6%, and then the individual tax rates are applied based on total recei individual tax rates are applied based on total receipts. Thus, the pts. Thus, the undersigned placing reliance upon the above judicial decisions of the undersigned placing reliance upon the above judicial decisions of the undersigned placing reliance upon the above judicial decisions of the view that only the profits embedded in such receipts should be taxed view that only the profits embedded in such receipts should be taxed view that only the profits embedded in such receipts should be taxed and not the entire receipts as a whole and therefore disagrees to the and not the entire receipts as a whole and therefore disagrees to the and not the entire receipts as a whole and therefore disagrees to the action of the AO in adding the e action of the AO in adding the entire cash receipts. During the course of ntire cash receipts. During the course of appellate proceedings, the appellant has made a submission in this appellate proceedings, the appellant has made a submission in this appellate proceedings, the appellant has made a submission in this regard, the relevant extract of the same is reproduced here as under. regard, the relevant extract of the same is reproduced here as under. regard, the relevant extract of the same is reproduced here as under.

6.5.33 It is observed that for the AY 2018 It is observed that for the AY 2018-19, the AO has brought 19, the AO has brought on record the claim of the assessee about the admission of Rs. on record the claim of the assessee about the admission of Rs. on record the claim of the assessee about the admission of Rs. 70,70,146/-. In this regard the AR contended that during the course of . In this regard the AR contended that during the course of . In this regard the AR contended that during the course of 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India assessment proceedings, the Computation of total income was re assessment proceedings, the Computation of total income was re assessment proceedings, the Computation of total income was re- worked and the additional income offered was incorporated and the worked and the additional income offered was incorporated and the worked and the additional income offered was incorporated and the consequent taxes were paid, whereas in the assessment proceedings consequent taxes were paid, whereas in the assessment proceedings consequent taxes were paid, whereas in the assessment proceedings completed the re- working of additional income admitted was not working of additional income admitted was not considered by the AO. Further, the AR during the course of ap considered by the AO. Further, the AR during the course of ap considered by the AO. Further, the AR during the course of appellate proceedings, submitted that on the basis of the survey conducted on proceedings, submitted that on the basis of the survey conducted on proceedings, submitted that on the basis of the survey conducted on 24.01.2019, the AO issued a notice u/s 148 of the Act on 05.04.2022 24.01.2019, the AO issued a notice u/s 148 of the Act on 05.04.2022 24.01.2019, the AO issued a notice u/s 148 of the Act on 05.04.2022 and the assessee filed the return of income in response to the notice and the assessee filed the return of income in response to the notice and the assessee filed the return of income in response to the notice issued u/s 148 of the Act on 04.05.2022 wh issued u/s 148 of the Act on 04.05.2022 which is before the date of ich is before the date of search. Consequent to the search u/s 132 of the Act on 14.02.2023, the search. Consequent to the search u/s 132 of the Act on 14.02.2023, the search. Consequent to the search u/s 132 of the Act on 14.02.2023, the AO issued another notice u/s 148 of the Act, however, the assessee AO issued another notice u/s 148 of the Act, however, the assessee AO issued another notice u/s 148 of the Act, however, the assessee could not file any return in response to the second notice issued u/s 148 could not file any return in response to the second notice issued u/s 148 could not file any return in response to the second notice issued u/s 148 of the Act on acco of the Act on account of technical glitches. Therefore, the assessee unt of technical glitches. Therefore, the assessee admitted 20% of the EB quantified during the course of search as admitted 20% of the EB quantified during the course of search as admitted 20% of the EB quantified during the course of search as additional income in the revised computation during the course of additional income in the revised computation during the course of additional income in the revised computation during the course of assessment proceedings before the AO. assessment proceedings before the AO.

6.5.35 In view of the above findings, discussions and judicial In view of the above findings, discussions and judicial In view of the above findings, discussions and judicial decisions, when the appellant has admitted voluntarily an amount of decisions, when the appellant has admitted voluntarily an amount of decisions, when the appellant has admitted voluntarily an amount of 20% of the undisclosed cash receipts as additional business 20% of the undisclosed cash receipts as additional business 20% of the undisclosed cash receipts as additional business income , which stands to be over and above the percentage prescribed in the which stands to be over and above the percentage prescribed in the which stands to be over and above the percentage prescribed in the presumptive sections of the Act as well as the percentage considered by presumptive sections of the Act as well as the percentage considered by presumptive sections of the Act as well as the percentage considered by various judicial forums ( 8%, 12.5%, 15% etc ) the undersigned is of various judicial forums ( 8%, 12.5%, 15% etc ) the undersigned is of various judicial forums ( 8%, 12.5%, 15% etc ) the undersigned is of the considered view that the appellan the considered view that the appellant company has adequately t company has adequately admitted its undisclosed income arising out of the unaccounted cash admitted its undisclosed income arising out of the unaccounted cash admitted its undisclosed income arising out of the unaccounted cash receipts collected from customers of various projects carried out by the receipts collected from customers of various projects carried out by the receipts collected from customers of various projects carried out by the appellant for the assessment years under consideration and therefore no appellant for the assessment years under consideration and therefore no appellant for the assessment years under consideration and therefore no further addition is warranted to the facts and circumstances of the case is warranted to the facts and circumstances of the case is warranted to the facts and circumstances of the case of the appellant company. Accordingly, all the grounds raised by the of the appellant company. Accordingly, all the grounds raised by the of the appellant company. Accordingly, all the grounds raised by the appellant upon this issue for all the years under consideration are appellant upon this issue for all the years under consideration are appellant upon this issue for all the years under consideration are hereby treated as hereby treated as allowed and the AO is directed to delete the and the AO is directed to delete the addition(s) made in the respec addition(s) made in the respective assessment years as under: tive assessment years as under:

6.5.36 For the AY 2018 For the AY 2018-19, the undersigned has observed that the 19, the undersigned has observed that the appellant has not admitted additional income in the return of income appellant has not admitted additional income in the return of income appellant has not admitted additional income in the return of income filed in response to the notice u/s 148 of the Act for the AY 2018 in response to the notice u/s 148 of the Act for the AY 2018 in response to the notice u/s 148 of the Act for the AY 2018-19 due to certain technical glitches as brought out in para 6. to certain technical glitches as brought out in para 6.5.33. As the 5.33. As the appellant had no occasion to admit the additional income in the return of appellant had no occasion to admit the additional income in the return of appellant had no occasion to admit the additional income in the return of income filed, the appellant during the course of assessment proceedings income filed, the appellant during the course of assessment proceedings income filed, the appellant during the course of assessment proceedings has admitted additional income in its revised computation by admitting has admitted additional income in its revised computation by admitting has admitted additional income in its revised computation by admitting Rs. 70,70,146/- being 20% of unaccounted cash receipts, therefore, the being 20% of unaccounted cash receipts, therefore, the being 20% of unaccounted cash receipts, therefore, the undersigned is constrained to undersigned is constrained to sustain (20% of Rs. 3,53,50,730/ Rs. 3,53,50,730/- of the addition made by the AO) Rs. 70,70,146/ addition made by the AO) Rs. 70,70,146/- and the AO is directed to and the AO is directed to delete the balance amount of Rs. 2,82,80,584/ the balance amount of Rs. 2,82,80,584/- for the AY 2018 Y 2018-19. Similarly for the AY 2022 Similarly for the AY 2022-23, the appellant company has not admitted 23, the appellant company has not admitted additional income in the return of income filed u/s 139 of the Act, additional income in the return of income filed u/s 139 of the Act, additional income in the return of income filed u/s 139 of the Act, however the appellant, during the course of assessment proceedings has however the appellant, during the course of assessment proceedings has however the appellant, during the course of assessment proceedings has admitted additional income of Rs. 4,9 admitted additional income of Rs. 4,99,00,478/- being 20% of the being 20% of the unaccounted cash receipts from various projects for the AY 2022 unaccounted cash receipts from various projects for the AY 2022 unaccounted cash receipts from various projects for the AY 2022-23 in the revised computation. Therefore, the undersigned is constrained to the revised computation. Therefore, the undersigned is constrained to the revised computation. Therefore, the undersigned is constrained to sustain 20% 20% of24,95,02,394/ of24,95,02,394/- of of the the addition addition amounting amounting Rs. Rs. 4,99,00,478/- and the AO is d and the AO is directed to delete the balance amount of the balance amount of Rs. 19,96,01,916/- for the AY 20 for the AY 2022-23.”

5 Issue 2: Addition made on account of cash collections from Addition made on account of cash collections from Addition made on account of cash collections from sale of plots in Project Residencia plots in Project Residencia Ground Nos. 6 for the Revenue’s appeal and Ground Nos. 3 of the Ground Nos. 6 for the Revenue’s appeal and Ground Nos. 3 of the Ground Nos. 6 for the Revenue’s appeal and Ground Nos. 3 of the assessee’s appeal for AY 2021 assessee’s appeal for AY 2021-22 Ground Nos. 6 for the Revenue’s appeal and Ground Nos. 3 of the Ground Nos. 6 for the Revenue’s appeal and Ground Nos. 3 of the Ground Nos. 6 for the Revenue’s appeal and Ground Nos. 3 of the assessee’s appeal for AY for AY 2022-23 5.1 These grounds relate to the addition made on account of cash on These grounds relate to the addition made on account of cash on These grounds relate to the addition made on account of cash on- monies received upon sale of plots in the project “Residencia”. The facts monies received upon sale of plots in the project “Residencia”. The facts monies received upon sale of plots in the project “Residencia”. The facts as noted are that, the assessee had undertaken “ that, the assessee had undertaken “RESIDENCIA" project RESIDENCIA" project which is a plotted development at Thaiyur consisting of 190 plots. which is a plotted development at Thaiyur consisting of 190 plots. which is a plotted development at Thaiyur consisting of 190 plots. In the course of search, the Investigating Officer found another excel course of search, the Investigating Officer found another excel course of search, the Investigating Officer found another excel sheet named "Project Payables Final (EB).xlsx" found in "E named "Project Payables Final (EB).xlsx" found in "E- -Drive" of Smt Karthika's Laptop as well as in 'Kingston Data Traveller 16GB Pendrive Karthika's Laptop as well as in 'Kingston Data Traveller 16GB Pendrive Karthika's Laptop as well as in 'Kingston Data Traveller 16GB Pendrive’, from which it was gathered that, from which it was gathered that, the assessee had received the assessee had received payments towards “EB” viz., cash cash(as already held by us above)towards sale of towards sale of certain plots, aggregating certain plots, aggregating Rs.1,02,48,505/- across AYs 2021 across AYs 2021-22 & 2022-

6.1 This ground relates to addition made by way of deemed sales This ground relates to addition made by way of deemed sales This ground relates to addition made by way of deemed sales consideration in relation to plots sold at the project “Residencia” in terms consideration in relation to plots sold at the project “Residencia” in terms consideration in relation to plots sold at the project “Residencia” in terms of Section 43CA of the Act. Briefly stated the facts relating to this issue of Section 43CA of the Act. Briefly stated the facts relating to this issue of Section 43CA of the Act. Briefly stated the facts relating to this issue are that, the AO had ob are that, the AO had observed that, the assessee had sold 23 plots out of served that, the assessee had sold 23 plots out of the 190 plots at project “Residencia” which was below the guideline value the 190 plots at project “Residencia” which was below the guideline value the 190 plots at project “Residencia” which was below the guideline value of Rs.2500/- per sq.ft. The AO accordingly tabulated the actual sale per sq.ft. The AO accordingly tabulated the actual sale per sq.ft. The AO accordingly tabulated the actual sale consideration of these 23 plots and the deemed sales considera consideration of these 23 plots and the deemed sales considera consideration of these 23 plots and the deemed sales consideration as per guideline value in terms of Section 43CA of the Act and added the guideline value in terms of Section 43CA of the Act and added the guideline value in terms of Section 43CA of the Act and added the differential sum of Rs. 51,36,281/ differential sum of Rs. 51,36,281/- & Rs. 58,75,349/- in AYs 2021 in AYs 2021-22 & 2022-23. On appeal, the Ld. CIT(A) observed that the AO had failed to 23. On appeal, the Ld. CIT(A) observed that the AO had failed to 23. On appeal, the Ld. CIT(A) observed that the AO had failed to allow the benefit of the tolerance li allow the benefit of the tolerance limit of 10% set out in Section 43CA of mit of 10% set out in Section 43CA of the Act, which was increased to 20% for the period 12.11.2020 to the Act, which was increased to 20% for the period 12.11.2020 to the Act, which was increased to 20% for the period 12.11.2020 to 30.06.2021 in terms of first and second proviso to Section 43CA of the 30.06.2021 in terms of first and second proviso to Section 43CA of the 30.06.2021 in terms of first and second proviso to Section 43CA of the Act. The Ld. CIT(A) accordingly analyzed and compared the actual rates Act. The Ld. CIT(A) accordingly analyzed and compared the actual rates Act. The Ld. CIT(A) accordingly analyzed and compared the actual rates with the guideline rates, after allowing the benefit set out in first and ideline rates, after allowing the benefit set out in first and ideline rates, after allowing the benefit set out in first and second proviso to Section 43CA of the Act and found that the actual sale second proviso to Section 43CA of the Act and found that the actual sale second proviso to Section 43CA of the Act and found that the actual sale value of 15 plots fell within the tolerance limit and thus deleted the value of 15 plots fell within the tolerance limit and thus deleted the value of 15 plots fell within the tolerance limit and thus deleted the notional addition made u/s 43CA of the Act in rel notional addition made u/s 43CA of the Act in relation thereto. Since the ation thereto. Since the actual sale value of the remaining actual sale value of the remaining eight (8) [23-15] plots fell outside the 15] plots fell outside the tolerance limit, the Ld. CIT(A) accordingly re tolerance limit, the Ld. CIT(A) accordingly re-computed and upheld the computed and upheld the addition in respect to these plots, by observing as addition in respect to these plots, by observing as under: - 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India ::31 ::

In respect of those cases, the AO should have re In respect of those cases, the AO should have re- computed the sale computed the sale consideration in respect of the cases which are below 10% of the guide consideration in respect of the cases which are below 10% of the guide consideration in respect of the cases which are below 10% of the guide line value (Rs. 2500/ line value (Rs. 2500/- per sq ft) i.e. Rs. 2250/- per sq ft to arrive at the per sq ft to arrive at the Short admission of business income arisi Short admission of business income arising out of sale of plots in project ng out of sale of plots in project Residencia as per the provisions of section 43CA of the Act for the AY(s) Residencia as per the provisions of section 43CA of the Act for the AY(s) Residencia as per the provisions of section 43CA of the Act for the AY(s) 2021-22 & 2022-23. The undersigned has worked out the sale 23. The undersigned has worked out the sale 23. The undersigned has worked out the sale consideration after providing 10% benefit as provided under the consideration after providing 10% benefit as provided under the consideration after providing 10% benefit as provided under the proviso to section 43CA (1) of the Act. Accordingly, the short admission is to section 43CA (1) of the Act. Accordingly, the short admission is to section 43CA (1) of the Act. Accordingly, the short admission is worked out for the AY 2021 worked out for the AY 2021-22 at Rs. 41,37,325/- and for the AY 2022 and for the AY 2022- 23 is at Rs. 31,06,100/ 23 is at Rs. 31,06,100/- as against the addition of Rs.51,36,281/ as against the addition of Rs.51,36,281/- & 58,75,349/- contemplated by the AO. Therefore, contemplated by the AO. Therefore, out of the addition of out of the addition of Rs.51,36,281/- & 58,75,349/ & 58,75,349/- for the AY(s) 2021-22 & 2022- -23 a sum of Rs. 41,37,325/- & Rs. 31,06,100/ & Rs. 31,06,100/- are hereby sustained and the AO and the AO is directed to delete the balance addition of Rs.9,98,956/ is directed to delete the balance addition of Rs.9,98,956/ is directed to delete the balance addition of Rs.9,98,956/- & Rs.27,69,249/- for the AY(s) 2021 for the AY(s) 2021-22 & 2022-23 respectively.” ”

6.4 Now we take up the additions of Now we take up the additions of Rs. 41,37,325/- & Rs. 31,06,100/ & Rs. 31,06,100/- sustained by the Ld. CIT(A) in relation to the remaining sustained by the Ld. CIT(A) in relation to the remaining eight ( eight (8) plots in AYs 2021-22 & 2022-23 23. It is not in dispute that, the actual sales value o . It is not in dispute that, the actual sales value of these plots was lesser than the tolerance range of 10% set out in Section lesser than the tolerance range of 10% set out in Section lesser than the tolerance range of 10% set out in Section 43CA of the Act and therefore the AO was legally entitled to add the 43CA of the Act and therefore the AO was legally entitled to add the 43CA of the Act and therefore the AO was legally entitled to add the differential sum as deemed sales consideration of the assessee. The Ld. differential sum as deemed sales consideration of the assessee. The Ld. differential sum as deemed sales consideration of the assessee. The Ld. AR for the assessee has however asserte AR for the assessee has however asserted that, the lower authorities d that, the lower authorities ought to have referred the matters to the DVO as mandated in Section ought to have referred the matters to the DVO as mandated in Section ought to have referred the matters to the DVO as mandated in Section 43CA(2) of the Act. According to Ld. CIT, DR however, the assessee had 43CA(2) of the Act. According to Ld. CIT, DR however, the assessee had 43CA(2) of the Act. According to Ld. CIT, DR however, the assessee had not raised such a plea before the AO and therefore the Ld. CIT(A) had not raised such a plea before the AO and therefore the Ld. CIT(A) had not raised such a plea before the AO and therefore the Ld. CIT(A) had rightly rejected the same. We however do not agree with this action of the the same. We however do not agree with this action of the the same. We however do not agree with this action of the 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India ::33 ::

“8. For the aforesaid “8. For the aforesaid reasons, we are of the opinion that the valuation reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, by the departmental valuation officer, contemplated under Section 50C, by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend is required to avoid miscarriage of justice. The legislature did not intend is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis o that the capital gain should be fixed merely on the basis of the valuation f the valuation to be made by the District Sub Registrar for the purpose of stamp duty. to be made by the District Sub Registrar for the purpose of stamp duty. to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a The legislature has taken care to provide adequate machinery to give a The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the fair treatment to the citizen/taxpayer. There is no reason why the fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legi machinery provided by the legislature should not be used and the slature should not be used and the benefit thereof should be refused. Even in a case where no such prayer benefit thereof should be refused. Even in a case where no such prayer benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may is made by the learned advocate representing the assessee, who may is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, not have been properly instructed in law, the assessing officer, not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly i judicial function, has the bounden duty to act fairly i judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course and to give a fair treatment by giving him an option to follow the course and to give a fair treatment by giving him an option to follow the course provided by law.

7.3 Now we address the dispute relating to the i Now we address the dispute relating to the income attributable in ncome attributable in relation to the unaccounted proceeds received from sale of scrap. Having relation to the unaccounted proceeds received from sale of scrap. Having relation to the unaccounted proceeds received from sale of scrap. Having regard to the specific nature & magnitude of work of the assessee, regard to the specific nature & magnitude of work of the assessee, regard to the specific nature & magnitude of work of the assessee, numerous project sites, we agree with the assessee’s alternative numerous project sites, we agree with the assessee’s alternative numerous project sites, we agree with the assessee’s alternative submission that, the scrap ge submission that, the scrap generated at project sites are usually sold the nerated at project sites are usually sold the employee(s) working there and there is a likelihood that the actual scrap employee(s) working there and there is a likelihood that the actual scrap employee(s) working there and there is a likelihood that the actual scrap sale proceeds would not fully reach the coffers of the assessee. Reason sale proceeds would not fully reach the coffers of the assessee. Reason sale proceeds would not fully reach the coffers of the assessee. Reason being, there is no fixed or rationale basis for ascertaining the being, there is no fixed or rationale basis for ascertaining the being, there is no fixed or rationale basis for ascertaining the price of scrap. The scrap is usually valued by the vendor at the time of removal scrap. The scrap is usually valued by the vendor at the time of removal scrap. The scrap is usually valued by the vendor at the time of removal and the scrap price communicated by the employee(s) to the head office and the scrap price communicated by the employee(s) to the head office and the scrap price communicated by the employee(s) to the head office is generally accepted at its face value. It is common in such businesses is generally accepted at its face value. It is common in such businesses is generally accepted at its face value. It is common in such businesses that, the scrap is sold partly that, the scrap is sold partly in cheque and cash and that, the cheque in cheque and cash and that, the cheque component ordinarily reaches the assessee and portion of the cash component ordinarily reaches the assessee and portion of the cash component ordinarily reaches the assessee and portion of the cash proceeds are siphoned off by the employee(s) selling the scrap. We thus proceeds are siphoned off by the employee(s) selling the scrap. We thus proceeds are siphoned off by the employee(s) selling the scrap. We thus find force in the assessee’s submission that, the excel sheet found from find force in the assessee’s submission that, the excel sheet found from find force in the assessee’s submission that, the excel sheet found from the possession of employee, Shri possession of employee, Shri Ananda Padmanabhan may have been may have been maintained by him for his own personal records and it is not necessary maintained by him for his own personal records and it is not necessary maintained by him for his own personal records and it is not necessary that the cash notings found therein would have been fully passed on by that the cash notings found therein would have been fully passed on by that the cash notings found therein would have been fully passed on by him to the assessee. The Ld. AR further pointed out him to the assessee. The Ld. AR further pointed out that, Shri that, Shri Ananda Padmanabhan also left the company immediately post search without any also left the company immediately post search without any also left the company immediately post search without any explanation, which further strengthens the assessee’s case that, these explanation, which further strengthens the assessee’s case that, these explanation, which further strengthens the assessee’s case that, these cash proceeds from scrap sale were never received by it. On this aspect, cash proceeds from scrap sale were never received by it. On this aspect, cash proceeds from scrap sale were never received by it. On this aspect, 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India we find that, the Ld. CI we find that, the Ld. CIT(A) has examined the gamut of facts, as T(A) has examined the gamut of facts, as discussed in the foregoing, and accordingly estimated the addition on discussed in the foregoing, and accordingly estimated the addition on discussed in the foregoing, and accordingly estimated the addition on account of unaccounted sale of scrap at 20%, by observing as account of unaccounted sale of scrap at 20%, by observing as account of unaccounted sale of scrap at 20%, by observing as under: -

“In the present case the facts reveals that there exists some scrap which “In the present case the facts reveals that there exists some scrap which “In the present case the facts reveals that there exists some scrap which were sold and a part of the sale consideration was brought into the were sold and a part of the sale consideration was brought into the were sold and a part of the sale consideration was brought into the books. The AR during the course of appellate proceedings, has made a books. The AR during the course of appellate proceedings, has made a books. The AR during the course of appellate proceedings, has made a strong plea that such sale of scrap are being generally usurped by the strong plea that such sale of scrap are being generally usurped by the strong plea that such sale of scrap are being generally usurped by the company staff itself and it was not generally in company staff itself and it was not generally insisted or monitored and sisted or monitored and pleaded that only a reasonable portion can be made as income. The pleaded that only a reasonable portion can be made as income. The pleaded that only a reasonable portion can be made as income. The undersigned has carefully examined the scenario brought out by the AR. undersigned has carefully examined the scenario brought out by the AR. undersigned has carefully examined the scenario brought out by the AR. In this back ground after considering all the facts and circumstances of In this back ground after considering all the facts and circumstances of In this back ground after considering all the facts and circumstances of the case, the undersig the case, the undersigned is of the considered view that 20% of the ned is of the considered view that 20% of the addition made requires to be sustained and the balance 80% requires to addition made requires to be sustained and the balance 80% requires to addition made requires to be sustained and the balance 80% requires to be deleted. Thus, out of the addition of Rs. 74,45,751/ be deleted. Thus, out of the addition of Rs. 74,45,751/- for AY 2021 for AY 2021-22 and Rs. 75,44,678/ and Rs. 75,44,678/- for AY 2022-23 a sum of Rs. 14,89,150/ 23 a sum of Rs. 14,89,150/- for AY 2021-22 and Rs. 15,08,936/ 22 and Rs. 15,08,936/- for AY 2022-23 are hereby sustained and 23 are hereby sustained and the AO is directed to delete the balance addition of Rs. 59,56,601/ the AO is directed to delete the balance addition of Rs. 59,56,601/ the AO is directed to delete the balance addition of Rs. 59,56,601/- for AY 2021-22 and Rs. 60,35,742/ 22 and Rs. 60,35,742/- for AY 2022-23 respectively.” 23 respectively.”

8.1 These grounds relate to the disallowance of purchases of steel made These grounds relate to the disallowance of purchases of steel made These grounds relate to the disallowance of purchases of steel made by the assessee from M/s M/s PK Vaduvammal. The facts as noted are that, PK Vaduvammal. The facts as noted are that, during the course of search, a pen drive was seized from the possession of search, a pen drive was seized from the possession of search, a pen drive was seized from the possession of Shri. Ananda Padmanabhan, DGM, purchase department Shri. Ananda Padmanabhan, DGM, purchase department Shri. Ananda Padmanabhan, DGM, purchase department of the assessee which contained a folder named “PKV” comprising of several assessee which contained a folder named “PKV” comprising of several assessee which contained a folder named “PKV” comprising of several excel sheets. Upon perusal of the excel sheets, the Investigating Officer excel sheets. Upon perusal of the excel sheets, the Investigating Officer excel sheets. Upon perusal of the excel sheets, the Investigating Officer suspected that M/s PK Vaduvammal was issuing bogus invoices of sale of PK Vaduvammal was issuing bogus invoices of sale of PK Vaduvammal was issuing bogus invoices of sale of steel to the assessee. When confronted, steel to the assessee. When confronted, Shri. Ananda Padmanabhan Shri. Ananda Padmanabhan in his statement recorded u/s 132(4) of the Act is noted to have stated that statement recorded u/s 132(4) of the Act is noted to have stated that statement recorded u/s 132(4) of the Act is noted to have stated that M/s PK Vaduvammal was genuinely supplying PK Vaduvammal was genuinely supplying steel to the assessee but at the steel to the assessee but at the same time was also issuing bogus invoices. He is noted to have explained same time was also issuing bogus invoices. He is noted to have explained same time was also issuing bogus invoices. He is noted to have explained that, the genuine invoices were identifiable based on the corresponding that, the genuine invoices were identifiable based on the corresponding that, the genuine invoices were identifiable based on the corresponding transport challans and weighment slips and that the bogus invoices did transport challans and weighment slips and that the bogus invoices did transport challans and weighment slips and that the bogus invoices did not have these supporting documents. He thus is noted to have stated e these supporting documents. He thus is noted to have stated e these supporting documents. He thus is noted to have stated that, excel sheet contained details of the payments made through cheque that, excel sheet contained details of the payments made through cheque that, excel sheet contained details of the payments made through cheque for both genuine and bogus purchases and cash recovered from the for both genuine and bogus purchases and cash recovered from the for both genuine and bogus purchases and cash recovered from the supplier. ShriAnanda Padmanabhan ShriAnanda Padmanabhan is noted to have provide is noted to have provided the details of bogus invoices booked in the name of of bogus invoices booked in the name of M/s PK Vaduvammal, which PK Vaduvammal, which aggregated to Rs.31,13,06,763 31,13,06,763/- for AY2020-21 to AY 2022 2022-23 (infra)

8.3 The AO, in the course of assessment, is noted to have The AO, in the course of assessment, is noted to have The AO, in the course of assessment, is noted to have show caused the assessee as to why the entire purchases value was not disallowed in the assessee as to why the entire purchases value was not disallowed in the assessee as to why the entire purchases value was not disallowed in the return(s) of income. In response, the assessee is found to have the return(s) of income. In response, the assessee is found to have the return(s) of income. In response, the assessee is found to have submitted that, the statement of Shri submitted that, the statement of Shri Ananda Padmanabhan Ananda Padmanabhan was unreliable and that he had made false assertion unreliable and that he had made false assertions before the search team s before the search team and had thereafter left the assessee company without offering any and had thereafter left the assessee company without offering any and had thereafter left the assessee company without offering any explanation for doing so. The assessee controverted the statement of Shri explanation for doing so. The assessee controverted the statement of Shri explanation for doing so. The assessee controverted the statement of Shri Ananda Padmanabhan by submitting that, the purchases which were by submitting that, the purchases which were 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India being alleged to be bogus w being alleged to be bogus were supported by GST invoices whose ere supported by GST invoices whose payments were also discharged through proper banking channel. The payments were also discharged through proper banking channel. The payments were also discharged through proper banking channel. The assessee is noted to have furnished copies of the invoices, bank assessee is noted to have furnished copies of the invoices, bank assessee is noted to have furnished copies of the invoices, bank statements, GSTR returns etc. to substantiate the genuineness of the statements, GSTR returns etc. to substantiate the genuineness of the statements, GSTR returns etc. to substantiate the genuineness of the purchases. According to the assessee, the artificial bifurcation made in to the assessee, the artificial bifurcation made in to the assessee, the artificial bifurcation made in relation to the purchases made from M/s PK Vaduvammal to identify relation to the purchases made from M/s PK Vaduvammal to identify relation to the purchases made from M/s PK Vaduvammal to identify genuine & bogus purchases, by segregating the purchases which were genuine & bogus purchases, by segregating the purchases which were genuine & bogus purchases, by segregating the purchases which were supported by transportation challans and weighment slips and those supported by transportation challans and weighment slips and those supported by transportation challans and weighment slips and those purchases which were not supported by such documentation, was chases which were not supported by such documentation, was chases which were not supported by such documentation, was unjustified. According to the assessee, not all the transportation challans unjustified. According to the assessee, not all the transportation challans unjustified. According to the assessee, not all the transportation challans and weighment slips were maintained in the head office and that most of and weighment slips were maintained in the head office and that most of and weighment slips were maintained in the head office and that most of these documents were retained at the respective p these documents were retained at the respective project sites and thus roject sites and thus the reasoning given by Shri Anand the reasoning given by Shri Anand Padmanabhan in his statement was in his statement was based on mistaken / wrong assumption of fact. In so far as the statement based on mistaken / wrong assumption of fact. In so far as the statement based on mistaken / wrong assumption of fact. In so far as the statement of Shri P.C. Shyamsundar P.C. Shyamsundar was concerned, the assessee submitted that it was concerned, the assessee submitted that it didn’t getopportunity to cross to cross-examine Shri. P.C. Shyamsundar examine Shri. P.C. Shyamsundar and therefore the reliance being placed on this therefore the reliance being placed on this third-party statement was bad statement was bad in law. The AO is noted to have given his detailed reasoning rejecting in law. The AO is noted to have given his detailed reasoning rejecting in law. The AO is noted to have given his detailed reasoning rejecting these contentions of the assessee and thereafter disallowed the ent these contentions of the assessee and thereafter disallowed the ent these contentions of the assessee and thereafter disallowed the entire value of purchases which was identified to be bogus in nature. On appeal, value of purchases which was identified to be bogus in nature. On appeal, value of purchases which was identified to be bogus in nature. On appeal, the Ld. CIT(A) though upheld in principle that the purchases identified by the Ld. CIT(A) though upheld in principle that the purchases identified by the Ld. CIT(A) though upheld in principle that the purchases identified by Shri Ananda Padmanaban Ananda Padmanaban and also confirmed by Shri. P.C. Shyamsundar, Shri. P.C. Shyamsundar, 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India ::41 ::

When enquired in the course of search, the employee of the assessee, When enquired in the course of search, the employee of the assessee, When enquired in the course of search, the employee of the assessee, Shri Ananda Padmanaban Ananda Padmanaban is noted to have also admitted ted and identified the bogus purchases made from M/s PK Vaduvammal and that he did the bogus purchases made from M/s PK Vaduvammal and that he did the bogus purchases made from M/s PK Vaduvammal and that he didn’t retract from his statement. Thereafter, the search team made retract from his statement. Thereafter, the search team made retract from his statement. Thereafter, the search team made independent enquiry u/s 131 of the Act from the supplier as well, who independent enquiry u/s 131 of the Act from the supplier as well, who independent enquiry u/s 131 of the Act from the supplier as well, who also confirmed the statement of Shri also confirmed the statement of Shri P.C. Shyamsunder Shyamsunder. We agree in principle with the submission of the Ld. AR that an admission/ statement principle with the submission of the Ld. AR that an admission/ statement principle with the submission of the Ld. AR that an admission/ statement alone is not sufficient to justify an addition but at the same time the onus alone is not sufficient to justify an addition but at the same time the onus alone is not sufficient to justify an addition but at the same time the onus is on the assessee to rebut the statement rebut the statement with corroborative evidence. On with corroborative evidence. On the given facts, it is noted that the assessee has only been able to furnish given facts, it is noted that the assessee has only been able to furnish given facts, it is noted that the assessee has only been able to furnish the relevant tax invoices, ledgers and bank statements in support of the relevant tax invoices, ledgers and bank statements in support of the relevant tax invoices, ledgers and bank statements in support of 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India purchases. The AO, on the other hand, , on the other hand, is noted to have shown that, the shown that, the supplier had also admitted to have issued b supplier had also admitted to have issued bogus invoices and that these ogus invoices and that these invoices were not supported by weighment slips and transportation invoices were not supported by weighment slips and transportation invoices were not supported by weighment slips and transportation challans and that the seized electronic data also suggested that these challans and that the seized electronic data also suggested that these challans and that the seized electronic data also suggested that these purchases were suspicious. Overall, therefore, we are in agreement with suspicious. Overall, therefore, we are in agreement with suspicious. Overall, therefore, we are in agreement with the authorities below that the assessee was unable to fully discharge the that the assessee was unable to fully discharge the that the assessee was unable to fully discharge the genuineness of the purchases genuineness of the purchases which were identified to be bogus which were identified to be bogus.

From the material available on record, From the material available on record, we find that it is not the case that we find that it is not the case that the supplier is a bogus or shell entity. M/s PK Vaduvammal is indeed a the supplier is a bogus or shell entity. M/s PK Vaduvammal is indeed a the supplier is a bogus or shell entity. M/s PK Vaduvammal is indeed a steel supplier and it is also not in di steel supplier and it is also not in dispute that the said supplier had spute that the said supplier had genuinely supplied steel to the assessee. Instead, it is a case that some of genuinely supplied steel to the assessee. Instead, it is a case that some of genuinely supplied steel to the assessee. Instead, it is a case that some of the invoices issued by M/s PK Vaduvammalwere not fully backed by the invoices issued by M/s PK Vaduvammalwere not fully backed by the invoices issued by M/s PK Vaduvammalwere not fully backed by supporting documentation and therefore have been held to bogus. It thus supporting documentation and therefore have been held to bogus. It thus supporting documentation and therefore have been held to bogus. It thus appears to be a case that, the assessee would have o be a case that, the assessee would have purchased these purchased these materials from the grey market and obtained the bills/invoices from this from the grey market and obtained the bills/invoices from this from the grey market and obtained the bills/invoices from this supplier. In this regard, t In this regard, the Ld. AR has rightly pointed out that, the he Ld. AR has rightly pointed out that, the quantitative details, consumption of raw materials, quantitative details, consumption of raw materials, construction of the nstruction of the buildings, corresponding sales and the book results have not been corresponding sales and the book results have not been corresponding sales and the book results have not been 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India rejected by the AO. It is also not the case of the Revenue that It is also not the case of the Revenue that It is also not the case of the Revenue that in the given facts of this case, given facts of this case, the volume of purchases made by the assessee the volume of purchases made by the assessee was excessive or that the stee was excessive or that the steel shown to have consumed in the l shown to have consumed in the construction of real estate was unreasonably high. Rather, the AO is construction of real estate was unreasonably high. Rather, the AO is construction of real estate was unreasonably high. Rather, the AO is noted to have accepted the overall book results of the assessee. noted to have accepted the overall book results of the assessee. noted to have accepted the overall book results of the assessee.

According to us therefore, it is a case According to us therefore, it is a case where the purchases were indeed where the purchases were indeed made for the business, but , butalbeit from different parties in grey market, from different parties in grey market, and the assessee had obtained invoices from M/s PK Vaduvammal in and the assessee had obtained invoices from M/s PK Vaduvammal in and the assessee had obtained invoices from M/s PK Vaduvammal in relation thereto. In this regard, we may gainfully refer to the decision of In this regard, we may gainfully refer to the decision of In this regard, we may gainfully refer to the decision of the Hon'ble Gujarat High Court in the case of the Hon'ble Gujarat High Court in the case of CIT Vs Bholanat CIT Vs Bholanath Polyfab (P.) Ltd. (355 ITR 290) (P.) Ltd. (355 ITR 290) wherein similar issue was involved. In that case wherein similar issue was involved. In that case also, it is noted that this Tribunal was of the opinion that the purchases also, it is noted that this Tribunal was of the opinion that the purchases also, it is noted that this Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves might have been made from bogus parties but the purchases themselves might have been made from bogus parties but the purchases themselves were not bogus. Considering s were not bogus. Considering such a situation, this Tribunal was of the uch a situation, this Tribunal was of the opinion that not the entire amount of purchases but the profit margin opinion that not the entire amount of purchases but the profit margin opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. On appeal by the embedded in such amount would be subjected to tax. On appeal by the embedded in such amount would be subjected to tax. On appeal by the Revenue, the Hon'ble High Court is noted to have upheld this finding of Revenue, the Hon'ble High Court is noted to have upheld this finding of Revenue, the Hon'ble High Court is noted to have upheld this finding of the Tribunal.

8.6 We find that the above decision was followed with approval by the We find that the above decision was followed with approval by the We find that the above decision was followed with approval by the Hon’ble jurisdictional Madras High Court in the case of Hon’ble jurisdictional Madras High Court in the case of Hon’ble jurisdictional Madras High Court in the case of CIT Vs SPL Infrastructure Limited (274 taxman 292) Infrastructure Limited (274 taxman 292). In the decided case, the . In the decided case, the 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India assessee was engaged in the business of dev assessee was engaged in the business of development of civil elopment of civil infrastructure. The assessee had incurred expenses by way of payments infrastructure. The assessee had incurred expenses by way of payments infrastructure. The assessee had incurred expenses by way of payments made to sub-contractors. According to the AO, the assessee was unable contractors. According to the AO, the assessee was unable contractors. According to the AO, the assessee was unable to discharge the identity, credibility and genuineness of the Sub identity, credibility and genuineness of the Sub identity, credibility and genuineness of the Sub- Contractors and therefore disall and therefore disallowed the entire expenditure. On appeal owed the entire expenditure. On appeal the Tribunal restricted the disallowance to 10% of the expenditure the Tribunal restricted the disallowance to 10% of the expenditure the Tribunal restricted the disallowance to 10% of the expenditure incurred towards sub-contractors. Aggrieved by the action of the Tribunal, contractors. Aggrieved by the action of the Tribunal, contractors. Aggrieved by the action of the Tribunal, the Revenue had inter alia raised the following questions of law before the the Revenue had inter alia raised the following questions of law before the the Revenue had inter alia raised the following questions of law before the Hon’ble jurisdictional High Court. Hon’ble jurisdictional High Court.

“12. A bare perusal of the compared results of the Gross Profit and Net 12. A bare perusal of the compared results of the Gross Profit and Net 12. A bare perusal of the compared results of the Gross Profit and Net Profit by the Assessee given in para 7 of the Tri Profit by the Assessee given in para 7 of the Tribunal's order clearly bunal's order clearly shows that the said Gross Profit at the rate of 14.21% and Net Profit at shows that the said Gross Profit at the rate of 14.21% and Net Profit at shows that the said Gross Profit at the rate of 14.21% and Net Profit at the rate of 3.83% declared by the Assessee, with the addition of 10% the rate of 3.83% declared by the Assessee, with the addition of 10% the rate of 3.83% declared by the Assessee, with the addition of 10% agreed by the Assessee before the learned Commissioner of Income agreed by the Assessee before the learned Commissioner of Income agreed by the Assessee before the learned Commissioner of Income-tax (Appeals), resulted in (Appeals), resulted in a much better result of profits declared by the a much better result of profits declared by the Assessee in the present Assessment Year viz., A.Y. 2010 Assessee in the present Assessment Year viz., A.Y. 2010 Assessee in the present Assessment Year viz., A.Y. 2010-11 as compared to the previous years. The Net Profit rate in the previous compared to the previous years. The Net Profit rate in the previous compared to the previous years. The Net Profit rate in the previous three years was less than 3%, whereas the Assessee himself declared three years was less than 3%, whereas the Assessee himself declared three years was less than 3%, whereas the Assessee himself declared the net profit at the rate of 3.83% before the aforesaid addition of 10% ofit at the rate of 3.83% before the aforesaid addition of 10% ofit at the rate of 3.83% before the aforesaid addition of 10% of Rs. 4,41,08,210/- -. Therefore, the estimation of profit by the Appellate . Therefore, the estimation of profit by the Appellate Authorities even on the premise taken by the Assessing Authority that Authorities even on the premise taken by the Assessing Authority that Authorities even on the premise taken by the Assessing Authority that some of the Sub- -Contractors could not be produced before the d before the Assessing Authority, does not result in any perversity in the findings of Assessing Authority, does not result in any perversity in the findings of Assessing Authority, does not result in any perversity in the findings of the learned Commissioner of Income the learned Commissioner of Income-tax (Appeals) as well as the tax (Appeals) as well as the learned Tribunal.

16. In fact, the results declared by the Assessee of the net profit rate at 16. In fact, the results declared by the Assessee of the net profit rate at 16. In fact, the results declared by the Assessee of the net profit rate at the rate of 3.83% was much bette the rate of 3.83% was much better as compared to previous three years r as compared to previous three years and only marginally less than the previous two years of 2005 and only marginally less than the previous two years of 2005 and only marginally less than the previous two years of 2005-06 and 2006-07, which were at the rate of 4.20% and 3.94%. In these 07, which were at the rate of 4.20% and 3.94%. In these 07, which were at the rate of 4.20% and 3.94%. In these circumstances, no disallowance was called for. Still, if the Assessee circumstances, no disallowance was called for. Still, if the Assessee circumstances, no disallowance was called for. Still, if the Assessee agreed to such addi agreed to such addition to apparently buy peace with the Department, tion to apparently buy peace with the Department, we fail to understand as to why the Revenue has filed these Appeals to we fail to understand as to why the Revenue has filed these Appeals to we fail to understand as to why the Revenue has filed these Appeals to drag cases further in the High Court incurring the loss of man hours and drag cases further in the High Court incurring the loss of man hours and drag cases further in the High Court incurring the loss of man hours and cost of litigation. Such unnecessary litigation on the part of cost of litigation. Such unnecessary litigation on the part of the Revenue the Revenue Authorities deserves to be strongly deprecated, but, the Revenue Authorities deserves to be strongly deprecated, but, the Revenue Authorities deserves to be strongly deprecated, but, the Revenue Authorities do not seem to be seeing the sense behind this and keep on Authorities do not seem to be seeing the sense behind this and keep on Authorities do not seem to be seeing the sense behind this and keep on filing Appeals under section 260A of the Act, as a matter of routine.” filing Appeals under section 260A of the Act, as a matter of routine. filing Appeals under section 260A of the Act, as a matter of routine.

6. We find that the respondent/assessee is a private limited company 6. We find that the respondent/assessee is a private limited company 6. We find that the respondent/assessee is a private limited company engaged in business of civil contract. During the assessment year 2009 engaged in business of civil contract. During the assessment year 2009 engaged in business of civil contract. During the assessment year 2009- 10 the assessee executed two projects as 'sub contractor' on behalf of 10 the assessee executed two projects as 'sub contractor' on behalf of 10 the assessee executed two projects as 'sub contractor' on behalf of M/s. Hindustan Steel M/s. Hindustan Steel Works Ltd. and M/s. Engineering Projects of India Works Ltd. and M/s. Engineering Projects of India Ltd. for construction of road under 'Prime Minister Gramin Sadak Yojana Ltd. for construction of road under 'Prime Minister Gramin Sadak Yojana Ltd. for construction of road under 'Prime Minister Gramin Sadak Yojana and construction of central jail at Vishalgarh, Tripura'. During the and construction of central jail at Vishalgarh, Tripura'. During the and construction of central jail at Vishalgarh, Tripura'. During the assessment year in question the assessee had made purchase of assessment year in question the assessee had made purchase of assessment year in question the assessee had made purchase of Rs.13,85,34,422/- from various parties which were claimed as deduction from various parties which were claimed as deduction from various parties which were claimed as deduction in its profit and loss account. The details of parties were furnished in its profit and loss account. The details of parties were furnished in its profit and loss account. The details of parties were furnished during the assessment proceedings. The assessing officer issued notice during the assessment proceedings. The assessing officer issued notice during the assessment proceedings. The assessing officer issued notice under Section 133(6) of the Income Tax Act, 196 under Section 133(6) of the Income Tax Act, 1961 (hereinafter referred 1 (hereinafter referred to such Act, 1961) to the parties for verification of the transaction with to such Act, 1961) to the parties for verification of the transaction with to such Act, 1961) to the parties for verification of the transaction with the assessee. Assessing officer found certain mismatch in the figure of the assessee. Assessing officer found certain mismatch in the figure of the assessee. Assessing officer found certain mismatch in the figure of purchase disclosed by the assessee from the parties and the reply purchase disclosed by the assessee from the parties and the reply purchase disclosed by the assessee from the parties and the reply received from the parties in response to notices under Section 133(6) of arties in response to notices under Section 133(6) of arties in response to notices under Section 133(6) of the Act, 1961. It was also found that several parties had not responded the Act, 1961. It was also found that several parties had not responded the Act, 1961. It was also found that several parties had not responded to the notices under Section 133(6) of the Act, 1961. Under the to the notices under Section 133(6) of the Act, 1961. Under the to the notices under Section 133(6) of the Act, 1961. Under the circumstances, the assessing officer rejected the books of account circumstances, the assessing officer rejected the books of account circumstances, the assessing officer rejected the books of accounts and the disclosed profit and determined total income at Rs.10,14,99,264/ the disclosed profit and determined total income at Rs.10,14,99,264/ the disclosed profit and determined total income at Rs.10,14,99,264/- as against the disclosed total income of Rs.85,49,460/ as against the disclosed total income of Rs.85,49,460/-. The assessing . The assessing officer made addition in income of Rs.9,29,49,804/ officer made addition in income of Rs.9,29,49,804/-, as under: , as under:

10. It has not been disputed by the assessing officer that the assessee 10. It has not been disputed by the assessing officer that the assessee 10. It has not been disputed by the assessing officer that the assessee carried civil work and in view thereof he received a certain amount as carried civil work and in view thereof he received a certain amount as carried civil work and in view thereof he received a certain amount as consideration. The materials in execution of contract have not been consideration. The materials in execution of contract have not been consideration. The materials in execution of contract have not been disbelieved by the assessing officer. In this regard, the CIT(A) and ITAT disbelieved by the assessing officer. In this regard, the CIT(A) and ITAT disbelieved by the assessing officer. In this regard, the CIT(A) and ITAT have also recorded findings of fact. The ITAT has also noticed net profit have also recorded findings of fact. The ITAT has also noticed net profit have also recorded findings of fact. The ITAT has also noticed net profit rate of last seven years which ranged fr rate of last seven years which ranged from 0.45% to 3.84%. The ITAT om 0.45% to 3.84%. The ITAT has also noticed net profit rate determined in matters of others in the has also noticed net profit rate determined in matters of others in the has also noticed net profit rate determined in matters of others in the same line of trade, to be about 4%. The assessee himself has agreed same line of trade, to be about 4%. The assessee himself has agreed same line of trade, to be about 4%. The assessee himself has agreed before the CIT(A) for net profit at the rate of 8% on the gross receipts before the CIT(A) for net profit at the rate of 8% on the gross receipts before the CIT(A) for net profit at the rate of 8% on the gross receipts under the contract. Learned Counsel for the appellant could not place act. Learned Counsel for the appellant could not place act. Learned Counsel for the appellant could not place any material before us on the basis of which determination of net profit any material before us on the basis of which determination of net profit any material before us on the basis of which determination of net profit at the rate of 8% in the line of trade of the respondent/assessee can be at the rate of 8% in the line of trade of the respondent/assessee can be at the rate of 8% in the line of trade of the respondent/assessee can be said to be perverse or insufficient under the facts and said to be perverse or insufficient under the facts and circumstances of circumstances of the present case. The findings recorded by the CIT(A) and the ITAT for the present case. The findings recorded by the CIT(A) and the ITAT for the present case. The findings recorded by the CIT(A) and the ITAT for applying the net profit rate of 8% on the gross receipts under the applying the net profit rate of 8% on the gross receipts under the applying the net profit rate of 8% on the gross receipts under the contract, cannot be said to suffer from any apparent illegality in the contract, cannot be said to suffer from any apparent illegality in the contract, cannot be said to suffer from any apparent illegality in the facts and circumstances of th facts and circumstances of the present case.”

8.10 Our above view is also supported by the decision of Hon’ble Gujarat Our above view is also supported by the decision of Hon’ble Gujarat Our above view is also supported by the decision of Hon’ble Gujarat High Court in the case of High Court in the case of CIT v. Simit P. Sheth (356 ITR 451) CIT v. Simit P. Sheth (356 ITR 451)wherein the facts and circumstances involved were similar to the present case. In the facts and circumstances involved were similar to the present case. In the facts and circumstances involved were similar to the present case. In the decided case also, the purchase of steel made by the assessee were also, the purchase of steel made by the assessee were also, the purchase of steel made by the assessee were held to be bogus because though the assessee was unable to produce held to be bogus because though the assessee was unable to produce held to be bogus because though the assessee was unable to produce invoices and details of payments but was unable to demonstrate the invoices and details of payments but was unable to demonstrate the invoices and details of payments but was unable to demonstrate the movement of goods. The AO disallowed the entire purchases holding it movement of goods. The AO disallowed the entire purchases holding it movement of goods. The AO disallowed the entire purchases holding it to be bogus. On appeal, the Hon’ble High Court noted that, the be bogus. On appeal, the Hon’ble High Court noted that, the be bogus. On appeal, the Hon’ble High Court noted that, the corresponding sales, book results of the assessee had not been rejected corresponding sales, book results of the assessee had not been rejected corresponding sales, book results of the assessee had not been rejected and therefore it was held to be a case where purchases and therefore it was held to be a case where purchases made from parties made from parties other than those mentioned in books of account, other than those mentioned in books of account, for which bogus invoices for which bogus invoices had been obtained from different parties. The Court thus held that, had been obtained from different parties. The Court thus held that, had been obtained from different parties. The Court thus held that, not entire purchase price but only profit element embedded in such purchases entire purchase price but only profit element embedded in such purchases entire purchase price but only profit element embedded in such purchases could be added to income of assessee. could be added to income of assessee. The relevant findings which are The relevant findings which are applicable to the present case as well, is as he present case as well, is as under: - 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India ::50 ::

“5. We are broadly in agreement with the reasoning adopted by the 5. We are broadly in agreement with the reasoning adopted by the 5. We are broadly in agreement with the reasoning adopted by the Commissioner (Appeals) with respect to the nature of disputed Commissioner (Appeals) with respect to the nature of disputed Commissioner (Appeals) with respect to the nature of disputed purchases of steel. It may be that the three suppliers from whom the purchases of steel. It may be that the three suppliers from whom the purchases of steel. It may be that the three suppliers from whom the assessee claimed to assessee claimed to have purchased the steel did not own up to such have purchased the steel did not own up to such sales. However, the vital question while considering whether the entire sales. However, the vital question while considering whether the entire sales. However, the vital question while considering whether the entire amount of purchases should be added back to the income of the amount of purchases should be added back to the income of the amount of purchases should be added back to the income of the assessee or only the profit element embedded therein was to ascertain assessee or only the profit element embedded therein was to ascertain assessee or only the profit element embedded therein was to ascertain whether the purchases themselves were completely bogus and non ther the purchases themselves were completely bogus and non ther the purchases themselves were completely bogus and non- existent or that the purchases were actually made but not from the existent or that the purchases were actually made but not from the existent or that the purchases were actually made but not from the parties from whom it was claimed to have been made and instead may parties from whom it was claimed to have been made and instead may parties from whom it was claimed to have been made and instead may have been purchased from grey market without proper billing or have been purchased from grey market without proper billing or have been purchased from grey market without proper billing or documentation.

10. Considering Considering Considering the the the submissions submissions submissions made made made by by by learned learned learned advocate advocate advocate Mr.Sanghani as well as the finding of facts recorded by the CIT(A) and Mr.Sanghani as well as the finding of facts recorded by the CIT(A) and Mr.Sanghani as well as the finding of facts recorded by the CIT(A) and the Tribunal, it appears that so far as the Question No. the Tribunal, it appears that so far as the Question No.1 is concerned, 1 is concerned, the CIT(A) has noted the fact that the Assessing Officer while making the CIT(A) has noted the fact that the Assessing Officer while making the CIT(A) has noted the fact that the Assessing Officer while making addition of the entire purchases has accepted the sales. Therefore, the addition of the entire purchases has accepted the sales. Therefore, the addition of the entire purchases has accepted the sales. Therefore, the CIT(A) considering the fact that the Assessing Officer could not have CIT(A) considering the fact that the Assessing Officer could not have CIT(A) considering the fact that the Assessing Officer could not have disallowed the entire purcha disallowed the entire purchases in absence of any finding on correctness ses in absence of any finding on correctness of the amount paid/payable to creditors, the possibility of purchasing the of the amount paid/payable to creditors, the possibility of purchasing the of the amount paid/payable to creditors, the possibility of purchasing the goods from grey market at lower rates and recording the same at goods from grey market at lower rates and recording the same at goods from grey market at lower rates and recording the same at inflated price in books of account cannot be ruled out and hence, made inflated price in books of account cannot be ruled out and hence, made inflated price in books of account cannot be ruled out and hence, made an addition of gross profit @ 13.05%. The CIT(A), in support of its n addition of gross profit @ 13.05%. The CIT(A), in support of its n addition of gross profit @ 13.05%. The CIT(A), in support of its findings, relied upon the following decisions: findings, relied upon the following decisions:

According to the assessee, Smt. he assessee, Smt.Viswanathan was educationally qualified was educationally qualified viz., holding M.A. degree degree in literature from Stella Maris College in literature from Stella Maris College and was 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India assisting the company with all literature works, company with all literature works, content, project pitching, content, project pitching, promotional material, company’s website etc., promotional material, company’s website etc., being proficient in English being proficient in English language. Due to the digitization of work, she was given Due to the digitization of work, she was given flexibility to work flexibility to work from home. The assessee submitted that, only because she was a family The assessee submitted that, only because she was a family The assessee submitted that, only because she was a family member, that the search team presumed that the salary was being paid member, that the search team presumed that the salary was being paid member, that the search team presumed that the salary was being paid to her, without her actually doing any work. The assessee also hout her actually doing any work. The assessee also hout her actually doing any work. The assessee also furnished Form 16 issued to Smt. issued to Smt.Viswanathan and showed that regular and showed that regular PF contributions were also being were also being from her monthly salary. The assessee . The assessee further submitted that, having regard to her educational qualific further submitted that, having regard to her educational qualific further submitted that, having regard to her educational qualification and work profile, the salary being paid to her was commensurate to the work profile, the salary being paid to her was commensurate to the work profile, the salary being paid to her was commensurate to the market rates and that it was not excessive or unreasonable in terms of market rates and that it was not excessive or unreasonable in terms of market rates and that it was not excessive or unreasonable in terms of Section 40A(2) of the Act as well. The AO however rejected the Section 40A(2) of the Act as well. The AO however rejected the Section 40A(2) of the Act as well. The AO however rejected the contention of the assessee and disallowed the contention of the assessee and disallowed the salary payment(s) made to salary payment(s) made to her, by solely relying on the statement of Smt. her, by solely relying on the statement of Smt.Viswanathan Viswanathan wherein she had admitted that she was not rendering any services in lieu of the salary had admitted that she was not rendering any services in lieu of the salary had admitted that she was not rendering any services in lieu of the salary payment. Aggrieved by the action of the AO, the assessee preferred payment. Aggrieved by the action of the AO, the assessee preferred payment. Aggrieved by the action of the AO, the assessee preferred appeal before the Ld. CIT(A) who deleted the impugned disallowance. e Ld. CIT(A) who deleted the impugned disallowance. e Ld. CIT(A) who deleted the impugned disallowance.

9.2 Heard both the parties. The case of the Revenue is that, once Heard both the parties. The case of the Revenue is that, once Heard both the parties. The case of the Revenue is that, once Smt.Viswanathan had admitted in her statement that she was not doing had admitted in her statement that she was not doing had admitted in her statement that she was not doing any work for the assessee and that she was being paid salary because any work for the assessee and that she was being paid salary because any work for the assessee and that she was being paid salary because she was a family member, then the action of AO disallowing the salary she was a family member, then the action of AO disallowing the salary she was a family member, then the action of AO disallowing the salary 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India payment(s) was justified, since the salary expense(s) was not business payment(s) was justified, since the salary expense(s) was not business payment(s) was justified, since the salary expense(s) was not business but personal in nature. The Ld. AR has however has rightly pointed out but personal in nature. The Ld. AR has however has rightly pointed out but personal in nature. The Ld. AR has however has rightly pointed out that, disallowance could not have been sole that, disallowance could not have been solely based on the statement of ly based on the statement of Smt.Viswanathan and that some corroborative evidence ought to have and that some corroborative evidence ought to have and that some corroborative evidence ought to have been brought on record to justify the impugned disallowance. We note been brought on record to justify the impugned disallowance. We note been brought on record to justify the impugned disallowance. We note that, the Ld. CIT(A) had taken cognizance of the educational qualification that, the Ld. CIT(A) had taken cognizance of the educational qualification that, the Ld. CIT(A) had taken cognizance of the educational qualification of Smt.Viswanathan and the work profile explained by the assessee. The and the work profile explained by the assessee. The and the work profile explained by the assessee. The Ld. CIT(A) having regard to her work profile, also noted that her daily Ld. CIT(A) having regard to her work profile, also noted that her daily Ld. CIT(A) having regard to her work profile, also noted that her daily attendance was not necessitated and that she could have indeed worked attendance was not necessitated and that she could have indeed worked attendance was not necessitated and that she could have indeed worked from home as well. He also took note of the Form 16 issued from home as well. He also took note of the Form 16 issued from home as well. He also took note of the Form 16 issued by the assessee and the PF contributions made from the monthly salary. Having assessee and the PF contributions made from the monthly salary. Having assessee and the PF contributions made from the monthly salary. Having taken note of these contemporaneous material and evidences placed on taken note of these contemporaneous material and evidences placed on taken note of these contemporaneous material and evidences placed on record by the assessee disproving on fact the statement obtained by the record by the assessee disproving on fact the statement obtained by the record by the assessee disproving on fact the statement obtained by the search team from Smt. search team from Smt.Viswanathan, we are in agreement with the are in agreement with the following reasoning given by the Ld. CIT(A) deleting the disallowance of following reasoning given by the Ld. CIT(A) deleting the disallowance of following reasoning given by the Ld. CIT(A) deleting the disallowance of salary paid to Smt.Viswanathan Viswanathan. The relevant extracts are as under: . The relevant extracts are as under:-

“6.8.6The undersigned has carefully examined the issue under 6.8.6The undersigned has carefully examined the issue under 6.8.6The undersigned has carefully examined the issue under consideration. As evident consideration. As evident in the assessment order, the AO has in the assessment order, the AO has attempted to disallow, the expenditure claimed towards salary without attempted to disallow, the expenditure claimed towards salary without attempted to disallow, the expenditure claimed towards salary without referring to any of the provisions of the Act. Obviously, the AO could referring to any of the provisions of the Act. Obviously, the AO could referring to any of the provisions of the Act. Obviously, the AO could have invoked the provisions of section 40A(2) of the Act. The provisions have invoked the provisions of section 40A(2) of the Act. The provisions have invoked the provisions of section 40A(2) of the Act. The provisions of Section 40A(2) of the Act, deals with disallowance of excessive or tion 40A(2) of the Act, deals with disallowance of excessive or tion 40A(2) of the Act, deals with disallowance of excessive or unreasonable payments made by an assessee to related parties. The unreasonable payments made by an assessee to related parties. The unreasonable payments made by an assessee to related parties. The section allows the AO to scrutinize payments made to specific persons or section allows the AO to scrutinize payments made to specific persons or section allows the AO to scrutinize payments made to specific persons or entities related to the assessee, to ensure that such entities related to the assessee, to ensure that such payments are not payments are not excessive or unreasonable compared to the fair market value of goods, excessive or unreasonable compared to the fair market value of goods, excessive or unreasonable compared to the fair market value of goods, 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India services, or facilities provided. The AO has the authority to disallow any services, or facilities provided. The AO has the authority to disallow any services, or facilities provided. The AO has the authority to disallow any portion of the expenditure that is considered excessive or unreasonable portion of the expenditure that is considered excessive or unreasonable portion of the expenditure that is considered excessive or unreasonable in relation to: - The fair market value of the goods, services, or facilities, air market value of the goods, services, or facilities, - The legitimate needs of the business, or The legitimate needs of the business, or - The benefits derived by the assessee from such services. The benefits derived by the assessee from such services.

10. Issue 7: Disallowance u/s 40A(3) and 37 Disallowance u/s 40A(3) and 37 Ground Nos. 2 for the for the Revenue’s appeal and Ground Nos. ’s appeal and Ground Nos. 8 of the assessee’s cross-objection objection for AY 2018-19 10.1 This ground relates to This ground relates to addition of Rs.5,00,00,000/- made by the AO made by the AO on the basis of the adhoc admission made by Shri on the basis of the adhoc admission made by Shri Varun Manian Varun Manian in his statement recorded in the course of survey u/s 133A of the Act dated statement recorded in the course of survey u/s 133A of the Act dated statement recorded in the course of survey u/s 133A of the Act dated 24.01.2019. The facts as noted are that, a survey w 24.01.2019. The facts as noted are that, a survey was conducted upon as conducted upon the assessee on 24.01.2019 in which he had agreed to offer a further sum the assessee on 24.01.2019 in which he had agreed to offer a further sum the assessee on 24.01.2019 in which he had agreed to offer a further sum of Rs.10.18 crores by way of additional income of the assessee, over and of Rs.10.18 crores by way of additional income of the assessee, over and of Rs.10.18 crores by way of additional income of the assessee, over and above the income already admitted, in order to cover any errors or above the income already admitted, in order to cover any errors or above the income already admitted, in order to cover any errors or omissions later on found omissions later on found in the course of assessment. The said offer inter in the course of assessment. The said offer inter alia included sum of Rs.5,00,00,000/ alia included sum of Rs.5,00,00,000/- which was offered to tax in AY which was offered to tax in AY 2018-19. The assessee however in the return of income filed for AY 2018 19. The assessee however in the return of income filed for AY 2018 19. The assessee however in the return of income filed for AY 2018- 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India ::58 ::

19 didn’t offer the aforesaid sum to tax. The AO, in the course o t offer the aforesaid sum to tax. The AO, in the course o t offer the aforesaid sum to tax. The AO, in the course of assessment, required the assessee to explain as to why it did assessment, required the assessee to explain as to why it did assessment, required the assessee to explain as to why it didn’t offer the additional sum of Rs.5 crores which it had admitted in the course of additional sum of Rs.5 crores which it had admitted in the course of additional sum of Rs.5 crores which it had admitted in the course of survey. After considering the submissions of the assessee, the AO survey. After considering the submissions of the assessee, the AO survey. After considering the submissions of the assessee, the AO rejected the same and held that this volunta rejected the same and held that this voluntary disclosure was given by ry disclosure was given by the Managing Director without being under any duress or pressure and the Managing Director without being under any duress or pressure and the Managing Director without being under any duress or pressure and that once he had admitted to offer the impugned sum voluntarily on that once he had admitted to offer the impugned sum voluntarily on that once he had admitted to offer the impugned sum voluntarily on account of improper vouchers u/s 37 and/or cash expenses incurred account of improper vouchers u/s 37 and/or cash expenses incurred account of improper vouchers u/s 37 and/or cash expenses incurred beyond limits set out in Se beyond limits set out in Section 40A(3) of the Act, the assessee ought to ction 40A(3) of the Act, the assessee ought to have offered to tax the same. Accordingly, the AO added the impugned have offered to tax the same. Accordingly, the AO added the impugned have offered to tax the same. Accordingly, the AO added the impugned sum to the total income of the assessee. On appeal, the Ld. CIT(A) was sum to the total income of the assessee. On appeal, the Ld. CIT(A) was sum to the total income of the assessee. On appeal, the Ld. CIT(A) was pleased to delete the same. Now the Revenue is in appeal before us an pleased to delete the same. Now the Revenue is in appeal before us an pleased to delete the same. Now the Revenue is in appeal before us and the assessee has filed cross objections in support of the action of the assessee has filed cross objections in support of the action of the assessee has filed cross objections in support of the action of Ld.CIT(A).

10.2 Heard both the parties. The case of the Revenue hinges solely on Heard both the parties. The case of the Revenue hinges solely on Heard both the parties. The case of the Revenue hinges solely on the admission made by Shri the admission made by Shri Varun Manian in his statement recorded u/s in his statement recorded u/s 133A of the Act wherein he made a b 133A of the Act wherein he made a bald disclosure of Rs.5 crores in ald disclosure of Rs.5 crores in relation to AY 2018-19 on account of any errors or omissions which could 19 on account of any errors or omissions which could 19 on account of any errors or omissions which could be discovered u/s 37 / 40A(3) of the Act. I be discovered u/s 37 / 40A(3) of the Act. It is trite law that the statement t is trite law that the statement recorded u/s 133A of the Act (survey) cannot be equated with the recorded u/s 133A of the Act (survey) cannot be equated with the recorded u/s 133A of the Act (survey) cannot be equated with the statement recorded u/s. 132 (search) and evidentiary value of statement t recorded u/s. 132 (search) and evidentiary value of statement t recorded u/s. 132 (search) and evidentiary value of statement 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India recorded u/s 133A of the Act [survey] stands on a lower pedestal and the recorded u/s 133A of the Act [survey] stands on a lower pedestal and the recorded u/s 133A of the Act [survey] stands on a lower pedestal and the statement u/s. 133A of the Act cannot be even recorded on oath, which if statement u/s. 133A of the Act cannot be even recorded on oath, which if statement u/s. 133A of the Act cannot be even recorded on oath, which if recorded cannot be admissible/relied upon or a recorded cannot be admissible/relied upon or acted upon. For this we rely cted upon. For this we rely on the decision of the Hon'ble Supreme Court in the case of on the decision of the Hon'ble Supreme Court in the case of on the decision of the Hon'ble Supreme Court in the case of CIT vs Khader Khan Son (352 ITR 480 352 ITR 480)wherein it has been held that section wherein it has been held that section 133A does not empower any income tax authorities to examine any 133A does not empower any income tax authorities to examine any 133A does not empower any income tax authorities to examine any person on oath, hence any such person on oath, hence any such statement lacks evidentiary value and statement lacks evidentiary value and any admission made during the survey cannot by itself be made the basis any admission made during the survey cannot by itself be made the basis any admission made during the survey cannot by itself be made the basis of addition. We thus countenance the following findings of the Ld. CIT(A) We thus countenance the following findings of the Ld. CIT(A) We thus countenance the following findings of the Ld. CIT(A) in this regard, which are as under: in this regard, which are as under:-

“6.4.6 The undersigned has carefully examined the issue under The undersigned has carefully examined the issue under The undersigned has carefully examined the issue under consideration. While going through the assessment order, it can be seen consideration. While going through the assessment order, it can be seen consideration. While going through the assessment order, it can be seen that the AO has contemplated the disallowance only based upon the that the AO has contemplated the disallowance only based upon the that the AO has contemplated the disallowance only based upon the statement recorded u/s 133A of the Act. During the course of su statement recorded u/s 133A of the Act. During the course of su statement recorded u/s 133A of the Act. During the course of survey, the appellant has admitted to offer the appellant has admitted to offer Rs. 10.18 Cr as additional income Rs. 10.18 Cr as additional income over and above the income already admitted and the additional income over and above the income already admitted and the additional income over and above the income already admitted and the additional income is made on the omissions and commissions made on the part of the is made on the omissions and commissions made on the part of the is made on the omissions and commissions made on the part of the assessee company with respect to the write off assessee company with respect to the write off of loan, claim of certain of loan, claim of certain expenses without proper supporting documents / proof and expenses expenses without proper supporting documents / proof and expenses expenses without proper supporting documents / proof and expenses made through cash above the prescribed limits in the statement made through cash above the prescribed limits in the statement made through cash above the prescribed limits in the statement recorded u/s 133A of the Act from Shri. Varun Manian, MD of the recorded u/s 133A of the Act from Shri. Varun Manian, MD of the recorded u/s 133A of the Act from Shri. Varun Manian, MD of the assessee company. In the present as assessee company. In the present assessment proceedings, t sessment proceedings, the only reason for the AO to make such a disallowance is that the appellant reason for the AO to make such a disallowance is that the appellant reason for the AO to make such a disallowance is that the appellant company has not admitted the agreed amount of Rs. 5 Crores in its company has not admitted the agreed amount of Rs. 5 Crores in its company has not admitted the agreed amount of Rs. 5 Crores in its return of income filed in response to the notice u/s 148 of the Act. Now return of income filed in response to the notice u/s 148 of the Act. Now return of income filed in response to the notice u/s 148 of the Act. Now the issue before the undersigned is whether the disallowance made u/s he undersigned is whether the disallowance made u/s he undersigned is whether the disallowance made u/s 40A(3) and 37 of the Act in the case of the appellant company is correct 40A(3) and 37 of the Act in the case of the appellant company is correct 40A(3) and 37 of the Act in the case of the appellant company is correct or not. Any disallowance u/s 40A(3) / 37 of the Act can be made only or not. Any disallowance u/s 40A(3) / 37 of the Act can be made only or not. Any disallowance u/s 40A(3) / 37 of the Act can be made only by making a specific by making a specific findings with reference to any particula findings with reference to any particular expenditure claimed, Obviously such disallowance cannot be made on expenditure claimed, Obviously such disallowance cannot be made on expenditure claimed, Obviously such disallowance cannot be made on the basis of the admission made during the course of survey. Further, the basis of the admission made during the course of survey. Further, the basis of the admission made during the course of survey. Further, the statement recorded u/s 133A cannot have any binding force unlike a the statement recorded u/s 133A cannot have any binding force unlike a the statement recorded u/s 133A cannot have any binding force unlike a statement recorded u/s 132(4) of the Act. In a statement recorded u/s 132(4) of the Act. In addition, as evident from ddition, as evident from 2978-2984/Chny/2024 & Others (Assessee & Revenue) (Assessee & Revenue) (AY 20 (AY 2016-17 to 2022-23) Radiance Realty Developers India Ltd. M/s. Radiance Realty Developers India the assessment order passed by the AO for the AY 2018 the assessment order passed by the AO for the AY 2018-19, it can be 19, it can be seen that the disallowance was not based upon any material evidence seen that the disallowance was not based upon any material evidence seen that the disallowance was not based upon any material evidence found during the course of survey but only based upon statement found during the course of survey but only based upon statement found during the course of survey but only based upon statement recorded u/s 133A of the Act. recorded u/s 133A of the Act.

6.4.8 Further even if it is presumed that the assessee has ad Further even if it is presumed that the assessee has ad Further even if it is presumed that the assessee has admitted about the offering additional income in the statement recorded during about the offering additional income in the statement recorded during about the offering additional income in the statement recorded during the course of survey, the same cannot survive since the AO is not the course of survey, the same cannot survive since the AO is not the course of survey, the same cannot survive since the AO is not expected to record the statement u/s 133A of the Act. It is significant to expected to record the statement u/s 133A of the Act. It is significant to expected to record the statement u/s 133A of the Act. It is significant to bring on record upon the validity of s upon the validity of statement recorded during the tatement recorded during the course of survey. The Hon'ble High Court of Kerala in the case of course of survey. The Hon'ble High Court of Kerala in the case of course of survey. The Hon'ble High Court of Kerala in the case of Paul Mathews & Sons vs Commissioner of Income Tax Mathews & Sons vs Commissioner of Income Tax (2003) 263 ITR 101 (2003) 263 ITR 101 (Ker.), has observed that “ (Ker.), has observed that “though Section 133A of the Act enables an of the Act enables an Income Tax authority to record Income Tax authority to record statement of any person which may be of any person which may be useful in the course of the said proceedings but the same does not useful in the course of the said proceedings but the same does not useful in the course of the said proceedings but the same does not authorize him for taking any sworn authorize him for taking any sworn statement.” The Hon'ble High Court .” The Hon'ble High Court had observed that a had observed that a statement recorded u/s 133A of the Act is not to be is not to be given given any any evidentiary evidentiary value value because because the the officer officer recording such statement is not authorized to admi is not authorized to administer oath and take any nister oath and take any sworn statement which alone has evidentiary value in the eyes of law. which alone has evidentiary value in the eyes of law. which alone has evidentiary value in the eyes of law. Also, the order of the ITAT, Raipur Bench in the case of Tikam Das Also, the order of the ITAT, Raipur Bench in the case of Tikam Das Also, the order of the ITAT, Raipur Bench in the case of Tikam Das Jivnani Vs. Assistant Commissioner of Income Tax, Jivnani Vs. Assistant Commissioner of Income Tax, Smt. Neetu Sharma Smt. Neetu Sharma Vs. DCIT-1(1) & Smt. Asha 1(1) & Smt. Asha Sharma Vs. DCIT-1(1)

"Instances have come to the notice of the Board "Instances have come to the notice of the Board where assessee have where assessee have claimed that they have been forced to confess the undisclosed income claimed that they have been forced to confess the undisclosed income claimed that they have been forced to confess the undisclosed income during the course of search and seizure and survey operation. Such during the course of search and seizure and survey operation. Such during the course of search and seizure and survey operation. Such confession, if not based upon credible evidence, are later retracted by confession, if not based upon credible evidence, are later retracted by confession, if not based upon credible evidence, are later retracted by the concerned assessee while the concerned assessee while filing returns of income. In these filing returns of income. In these circumstances, such confessions during the course of search and seizure circumstances, such confessions during the course of search and seizure circumstances, such confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, and survey operations do not serve any useful purpose. It is, therefore, and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of advised that there should be focus and concentration on collection of advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been nce of income which leads to information on what has not been nce of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax disclosed or is not likely to be disclosed before the Income Tax disclosed or is not likely to be disclosed before the Income Tax Department. Similarly, while recording statement during the course of . Similarly, while recording statement during the course of . Similarly, while recording statement during the course of search and seizure and survey operations no attempt should search and seizure and survey operations no attempt should be made to be made to obtain confession as to the undisclosed income. Any action on the obtain confession as to the undisclosed income. Any action on the obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. contrary shall be viewed adversely.

"5. We have duly considered the rival contentions made by learned "5. We have duly considered the rival contentions made by learned "5. We have duly considered the rival contentions made by learned advocates for both the sides. advocates for both the sides. It is true that the addition was made by It is true that the addition was made by the Assessing Officer pursuant to the statement recorded u/s 132(4) of the Assessing Officer pursuant to the statement recorded u/s 132(4) of the Assessing Officer pursuant to the statement recorded u/s 132(4) of the Act. The assessee has retracted from the said disclosure which has the Act. The assessee has retracted from the said disclosure which has the Act. The assessee has retracted from the said disclosure which has not been accepted by the revenue. It is required to be borne in mind not been accepted by the revenue. It is required to be borne in mind not been accepted by the revenue. It is required to be borne in mind that the revenue ought to have collected enough evidence during the t the revenue ought to have collected enough evidence during the t the revenue ought to have collected enough evidence during the search in support of the disclosure statement. It is a settled position of search in support of the disclosure statement. It is a settled position of search in support of the disclosure statement. It is a settled position of law that if an assessee, under a mistake, misconception or on not being law that if an assessee, under a mistake, misconception or on not being law that if an assessee, under a mistake, misconception or on not being properly instructed, is over properly instructed, is over-assessed, the authorities are required to authorities are required to assist him and ensure that only legitimate taxes are collected. The assist him and ensure that only legitimate taxes are collected. The assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the Act Assessing Officer cannot proceed on presumption u/s 134(2) of the Act Assessing Officer cannot proceed on presumption u/s 134(2) of the Act and there must be something more than bare suspicion to support the and there must be something more than bare suspicion to support the and there must be something more than bare suspicion to support the assessment or addition assessment or addition. In the present case, though the revenue's case . In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during is based on disclosure of the assessee stated to have been made during is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any the search u/s 132(4) of the Act, there is no reference to any the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents undisclosed cash, jewellery, bullion, valuable article or documents undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the ining any undisclosed income having been found during the ining any undisclosed income having been found during the search."