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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM
आदेश / ORDER PER S. S. GODARA, JM :
The instant batch of twin appeals pertains to a single assessee herein M/s. Sairung Developers & Promoters P.Ltd. This taxpayer’s appeal for AY 2011-12 is directed against the CIT(A)-4 Pune’s order dated 20.03.2020 passed in case No. PN/CIT(A)-4 Circle-6/312/2015-16 where as the Revenue’s appeal ITA No.256/PN/2018 for AY 2012-13 has arisen against the very CIT(A)’s order dated 27/10/2017 passed in PN/CIT(A)- 4/202 /2015-16/630; respectively. Relevant proceedings in both these cases are u/s.143(3) of the IT Income Tax Act, 1961; in short "the Act”.
Heard both the parties. Case files perused.
We note at the outset that both these assessee’s and Revenue’s appeals involving different assessment years hardly require us to delve deeper in the relevant factual matrix. This is for the precise reason that the assessee as well as the department raise a common issue of surplus/suppressed sales addition of Rs.4,35,69,208/- in AY 2011-12 and Rs.7,49,12,026/- in latter AY 2012-13; respectively. We further note that the four residential projects i.e. 6 Acres, City, Avenue, Samruddhi, Srushti and Villa are common whereas two projects each vary in rival pleadings before us. Both the learned representatives next stated qua the assessee’s first and foremost substantive ground that it challenges correctness of alleged surplus sales addition A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., amount of Rs.4,35,69,208/-, in AY 2011-12 made in both the lower proceedings as against the Revenue’s sole grievance in AY 2012-13 that the CIT(A) has erred in law and on facts in deleting suppressed sales addition of Rs.7,49,12,026/- in his lower appellate order.
We notice in this factual background that the department had carried out a section 133(A) survey exercises in assessee’s case on 30.09.2013 coming across various incriminating documents and loose sheets, registers, diaries etc. revealing suppress on-money(ies) regarding various residential projects. It is this seized material admittedly forms the basis for the impugned additions in these rival appeals before us.
3. We next find that the Assessing Officer’s assessment order in AY 2011- 12 involving assessee’s appeal makes it clear that page 3 para 4.3(ii) that he had not come across any specific entries pertaining to FY 2010-11 which could suggests any on-money or suppress sales, as the case may be. There is further no dispute between the parties he proceeded to calculate the assessee’s alleged suppressed sales based on the relevant incriminating material on “reverse calculation” basis and arrived at the impugned addition of Rs.4,35,69,208/- . The CIT(A) has confirmed the same lower appellate order.
Both the learned lower representatives at this stage invited our attention to Revenue’s appeal for AY 2012-13 wherein A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., the CIT(A) has deleted addition of Rs.7,49,12,026/- made by the Assessing Officer’s vide following lower appellate discussion:-
“17. DECISION: I have carefully considered the findings of the AO and the submissions made by the ld. AR. The AO, after analyzing the impounded materials, came to the conclusion that the appellant had been suppressing the sales by accepting „on money‟ in cash and not recorded in the regular books of account. The AO also held that there were huge rate differences on the sale of plots. Therefore, the AO worked out peak rate of particular plots and adopted the same for all the plots thereby making addition of Rs.7,49,12,026/-.
17.1 On the other hand the Id. AR contended that the peak rate adopted by the AO has no factual & legal standing because the rate difference in various agreement can be attributed to the following factors;
1) The plots sold in the same project were not identical in shape, size & location. 2) Location of the plot is not uniform as shape of land was uneven. 3) The flat purchaser booked the plot in launching of the project which is much earlier than actual project. 4) Variation in rate due to references by old customers. 5) Sale of open spaces, plot under road and plot under amenity space. 6) Group bookings & multiple booking by same customers 7) Terms of payments of consideration and urgency of A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., funds. 8) Market Condition of the economy & recession & boom in real estate. 9) Individual negotiations & bargaining power of customers. 10) Government Incentive & Prohibitions Policies.
17.2 Further, the ld. AR vehemently explained the conduct of assessee‟s business that initially the assessee launches the project after identification of sites. Then the assessee advertised the project and bookings are accepted for that project. After the receipt of booking to the extent of 20% of the total project, land is purchased by the assessee and sales are made to 1st tranches of booking holders. The sale rate offered to the initial customers is far less than the proposed rate at the end of the project of the assessee. After handing over of 1st phase of the project the assessee usually takes the booking of 2nd phase of the project in which break even rate is quoted by the assessee to the customers. In the cost quoted by the assessee includes cost of plot as well as development expenses of the project. In 3rd Phase the assessee sell the plot at market value. The market value depends on the economic conditions and demand of the plots. The sale price also affected by paucity of the funds and time of need. For example, if there is short of funds at a crucial stage of the project, it is not unnatural that the sale of plots will be at less price which can be called as distress sale. Therefore, adopting peak rate has no legs to stand.
17.3 The appellant further contended that the addition on account of on-money and addition on account of A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., suppression of sale is one and same. The addition on account of both these grounds will amount to be double addition as the sales is accounted in the books of accounts at lower value than value received by the appellant. The book value plus on-money will be the actual sale value of the plots for the appellant. In this case, if suppressed sales resultant from peak rate method considered by Assessing Officer is added, the sale value will get inflated to that extent. Hence, addition on account of on-money and suppressed sales is mutually exclusive to each other. At a time only one addition can survive. The appellant has given plot wise instances of suppression of sales and on- money receipt.
17.4 I have carefully perused the argument of the ld. AR. In the instant case peak rate cannot be adopted due to the reasons elucidated by the ld. AR above. In that circumstances, the question that arise is what is the actual sale value of the plot and how much sales suppression has been done by the appellant. In my view, Actual value of the plot = Sales shown in the books + On money received. The impounded documents clearly indicated that the appellant has been receiving on money and not disclosing it for the purpose of taxation. The appellant has given plot wise instances of suppression of sales and on-money receipt from which the undisclosed „on money‟ can be deduced and taxed. Another factor that need mention is that the AO had not rejected books of a/c. before making such addition. However, the impounded A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., documents clearly evidenced that the appellant has been receiving on money and not disclosing for taxation purposes. Therefore, the addition of on money receipt by the appellant to the income is definitely sustainable. For the A.Y. 2012-13, the AO made addition on account of suppress sale of Rs. 7,49,12,026/- by adopting peak rate is not sustainable in the eyes of law and in view of the parameters narrated in Para 17.1 & 17.2 above. Thus, keeping in view, the above contention and various decision relied by the ld. AR, I am inclined to agree with the claim of the appellant for deleting the addition of suppression of sales of Rs. 7,49,12,026/- made by the Assessing Officer. However, corresponding on money received if any in cash should be taxed. In the instant A.Y., the AO has not noted in the assessment order whether the appellant had receipt on money. Accordingly, the Ground No. 1 To 9 raised by the appellant for the A.Y.2012-13 are allowed.”
There could be hardly any issue in light of the forgoing clinching facts that both these additions are not based on any incriminating material carrying statutory presumption of correctness regarding contents thereof as envisaged in section 292C of the Act. This is thus an instance wherein the learned lower authorities; and more particularly, the Assessing Officer has adopted extrapolation method only so as to draw the necessary inference of reverse calculation and peak rate presumption in all of the assessee’s A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., respectively projects in AY 2012-13; respectively. Faced with this situation we are of the opinion that the such addition(s) based on extrapolation, assumption and presumptions do not deserve to be sustained in light of stricter interpretation of section 292C as per Commissioner V/s. Dilip Kumar & Co. 2018(9) SCC page 1 (SC)(FB), 379 ITR 160 (Bom.), Harish Textile Engineers Ltd. V/s DCIT, B. Nagendra Belgia Vs DCIT. 363 ITR 410 (Kar.) & (2013) 215 Taxman 659) (Guj.) M/s. Standard Tea Processing Co.Ltd. This is indeed coupled with the fact that even the CBDT’s twin circulars dated 10.03.2003 and 18.02.2014 also re-iterate that even admissions and confessions made during the course of search and survey; as the case may be, do not carry any significance in absence of actual incriminating material. The very factual position continues herein-as-well since the learned lower authorities have adopted extrapolation and presumptive calculations only as indicated in preceding paragraphs. And further that the CIT(A)’s order in Revenue’s appeal has already upheld the on-money addition (supra). This first and foremost issue of the alleged surplus addition of Rs.4,35,69,208/- is decided in assessee’s favour and the Revenue’s sole substantive ground as well as its main appeal regarding suppressed sales of Rs.7,49,12,026/-, fail.
We are now left with the assessee’s 2nd and 3rd substantive ground regarding additions of Rs.8,89,200/- and Rs.10,82,620/- involving sale of plots to Mr.Ganesh R. Palleria in former and similar transactions comprising of three customers Shri B.V. Kolambikar, Mrs. Shweta K. Mudaliyar and Shri A.Y. : 2011-12 & 2012-13 M/s. Sairung Developers & Promoters P.Ltd., D.D. Dhobale in latter instance as well as the 4th customer Ms. Aasha Gaonkart for sum of Rs.8,00,000/-; respectively. The assessee’s sole case before us is that all these sums represent double taxation as it had recognized the revenue therefrom in the corresponding years to sale deeds only. Faced with this situation, we are of the view this latter substantive issue raised at the Assessee’s behest requires the Assessing Officer factual verification. Ordered accordingly. Needful may be done within three effective opportunities of hearing.
No other argument or ground has been pressed before us.
To sum up the assessee’s appeal is partly allowed and Revenue’s appeal ITA No.256/PN/2018 is dismissed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the Open Court on this 30th day of September, 2022.