DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE vs. MARUTI ENTERPRISE, RAJKOT

आदेश / O R D E R Per Bench: This is bunch of fifteen appeals, consisting appeals filed by the Revenue and Assessee, relating to decora group, for assessment years (AYs) 2013-14 to 2019-20 (assessment year-wise), all these appeals are directed against the separate orders, under section 250 Income-tax Act, 1961(hereinafter referred to as ‘the Act’), passed by the Ld. Commissioner of Income-tax(Appeals)-11, Ahmedabad [in short ‘Ld.CIT(A)’ on different dates, which in turn arise out of separate assessment orders passed by the Assessing Officer under sections 153A/ 153C/ 143(3)/ 144 of the Act.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 4. The revenue/ assessee filed the following appeals, which pertain to partners of the above partnership-firms, and associated persons of the above firms/partners: (i). Dhirajlal Raviji Rokad,A.Y 2013-14, IT(ss)A No. 17/RJT/2024-Revenue appeal (ii). Chetan Dhirajlal Rokad,A.Y 2014-15, IT(ss)A No. 12/RJT/2024-Revenue appeal (iii). Rohit Kumar M Sanepara, A.Y. 2017-18,IT(ss)A No.19/RJT/2024- Revenue appeal (iv). Rohit Kumar M Sanepara, A.Y. 2018-19,IT(ss)A No.20/RJT/2024- Revenue appeal (v). Nikhilbhai J Patel, A.Y. 2018-19, IT(SS)A No.13/RJT/2024-Revenue appeal (vi). Chirag Arvindbhai Patel, A.Y. 2017-18, IT(ss)A No.22/RJT/2024- Revenue appeal (vii) Jamnadas Purshottam Patel, A.Y. 2013-14, IT(ss)A No.15/RJT/2024- Revenue appeal (viii). Jamnadas Purshottam Patel, A.Y. 2018-19, IT(ss)A No.16/RJT/2024- Revenue appeal (ix). Jamnadas Purshottam Patel, A.Y. 2017-18, IT(ss)A No.16/RJT/2024- Assessee`s appeal

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 6.Grounds of appeal raised by the Revenue (in lead case) in IT(SS)A No.60/RJT/2023, are as follows: “1. On the facts and in the circumstances of the case and in law, learned Commissioner (Appeals) erred in deleting the addition of Rs.12,28,16,100/- in respect of unaccounted on-money receipts, ignoring the facts that during the course of search proceedings, various incriminating materials pertaining to “Decora Westhill Project” found and seized from the premise of Himanshu Raiyai (accountant of the assessee as well as group concerns of the DECORA group), which contained unaccounted investment for possession of land, unaccounted expenditure in development of the project and on- money receipts from sale and also certain excel sheets named as DWH.xls. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in adopting real estate business income @ 15% of unaccounted cash on-money receipts in place of @ 100% without appreciating the facts, evidences found and seized during the course of search and circumstances of the peculiar case. 3. On the facts an in the circumstances of the case and in law, the ld. CIT(A) has erred in determining business income on account of receipts of on-money from the real estate business on accrual basis (i.e. in the year of transfer of title and possession of property) instead of year of receipts without appreciating the facts, evidences found and seized during the course of search and circumstances of the peculiar case. 4. In the facts and on the circumstances of the case and in law the ld. CIT(A) ought to have upheld the order of the A.O.”

The partnership firm developed DECORA WEST HILL PROJECT, which is a luxurious type residential project, developed by the assessee- firm. This Project is having 7 Tower (A to G tower) each tower comprising of 12 storey and total

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 flats in the project is 162. This project is having 4 BHK residential flats. During the course of search at the residential premises of Shri Himanshu Raiyani (accountant and key person and cash handler of the group), various incriminating materials pertaining to DECORA WESTHILL PROJECT starting from unaccounted investment for possession of land to unaccounted expenditure in development of the project and on money receipts by suppressing the sale price (over and above the documented price) were found and seized. The incriminating data so found was in the form of EXCEL sheets named as DWH.xls. The concerned excel files consisted of 9 worksheets viz, Collection, Payment, July- 16, AUG-16, land, WH WRK, NP-CP, CP FLAT and NP FLAT. The evidences revealed payments made towards possessing land to the tune of Rs. 49,59,08,110/-, in cash and unaccounted on- money receipts leading to suppressed sale to the tune of Rs.38,77,24,212/-.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 on 19.11.2019. The assessee filed its return of income on 30.11.2019 showing therein income of Rs. 2,48,320/-. The notice u/s 143(2) was issued on 13.11.2020. Thereafter, due to change of incumbent, a notice u/s 142(1) r.w.s. 129 was sent on 09.11.2020. A detailed questionnaire was issued on 21.11.2020. Copies of seized documents and relevant statements and annexures were provided to the assessee vide DIN NO. ITBA/AST/F/12/2020-21/1029150102(1). A letter dated 04.01.2021 was issued to the assessee, requesting it to furnish the details called for vide the questionnaire issued by the assessing officer. Another notice u/s. 142(1) was issued on 17.01.2021. Another questionnaire and notice u/s 142(1) was issued on 28.01.2021. Thereafter, two detailed show cause notices were issued on 07.04.2021. The assessee -firm was furnished copy of satisfaction note as and when requested. In the present case, there are two issues. One is unaccounted investment in order to possess land to the tune of Rs. 49,59,08,110/- and another is unaccounted on money receipts on booking of flats to the tune of Rs. 38,77,24,212/-. The ‘on money’ receipt is also in cash and the unaccounted investments made in acquiring land, is also paid in cash.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 officer is pasted on page no.7 of assessment order, which relates to Decora West Hill project developed by the assessee- firm. The project DECORA WESTHILL has been developed on a land situated at Village Munjka RS No. 37 Paiki 8 and 37 Paiki 9 TP Scheme NO. 9 admeasuring 8469.44 and 8257.44 sq meter. Relevant part of digital data seized from the residential premises Shri Himanshu Raiyani, the key person and accountant of the Decora group was printed and annexured into file. The file was later confronted to Shri Nikhil Patel during his post search proceedings, the said page No.2 of the said file is pasted in the assessment order, page No.7. From the said pasted file it can be seen that, the land in question has been purchased for a total consideration of Rs. 60,02,08,110/-. The payments have been made on Jan 2016 (Rs. 10,01,00,000); April 2016 (Rs. 8,00,00,000); Aug 2016 (Rs. 8,00,00,000/-) and October 2016 (Rs. 12,00,00,000/-). The second vertical column shows cash payment of Rs. 38,01,00,000/-. The second vertical column shows the registered value of the land viz., Rs. 10,43,00,000/- (Rs.5,75,00,000/- + Rs. 4,68,00,000/-). This matches with the actual registered document. From the said seized material, it is clear that the contents of page No. 2, shows Rs. 60,02,08,110/-. Out of this, cash component is Rs. 38,01,00,000/- and cheque component is Rs. 10,43,00,000/-. The total works out to Rs. 48,44,00,000/-. The balance sum of Rs. 11,58,08,110/- has been adjusted against the outstanding of one another land known as Bedi land.

10 Brief discussion of Bedi Land and why it has been referred in the above paper is that the land at Bedi was purchased by those persons who had sold land to the assessee. On the right hand side of the said page No 2, of seized paper, there is reference of the Bedi Land. This land at Bedi belonged to Jamanbhai Patel (father of Nikhil Patel and key founder of DECORA HOUSING LLP and Kuldeep Rathod) with equal share of 50% each. As per this data, there were two lands at Bedi, both valued at Rs. 6,50,63,700/- each totalling to Rs. 13,01,27,400/-. Out of this, cheque of Rs 2.00 crore was paid to the sellers. If this cheque amount is 8

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 reduced then the cash component of Bedi Land works out to Rs. 11,01,27,400/-. This is thus adjusted against the outstanding payment in respect to the DECORA WESTHILL land of Rs.11,58,08,110/-, and leaving behind balance of Rs.56,80,710/-. It is obvious that this cash of Rs.56,80,710/- has also been paid to the land owners as the final registered document has already been executed. The documents of Bedi Land sold by Shri Jamanbhai Patel and Kuldip Rathod was executed on 02/03/2017 and document price is Rs.2,00,00,000/- It is for this reason that there is mention of BEDI land in the paper seized from the residence of the accountant Shri Himanshu Raiyani. During the course of post search proceedings, Shri Nikhil Patel (son of Jamanbhai Patel) had admitted that the digital data so found from the residential premises of Shri Himanshu Raiyani, related to Decora West Hill Projects developed by Maruti Enterprise. He has also admitted that in the above page no.2, some transactions are reflected in the books of accounts and some transactions are not reflected in the books of accounts. It is further seen from Page No. 2 (supra) of the digital document that the contribution towards unexplained investment in cash, has been made by Shri CP (Chirag Patel), Shri UV (Shri Ujjas Vachhani), KPR (Shri Kaushik Popatlal Rathod), RS (Shri Rohit Maganlal Patel), JP (Shri Jamanbhai Patel). The share of Jaman Patel is further bifurcated amongst the Jaman Patel family and Kuldeep Rathod, wherein the stake of Kuldip Rathod is 10% at the inception of the project. Thereafter, the entire stake of Kuldeep Rathod was taken over by Shri Malay Mehta. If the second column is bifurcated as per the profit sharing ratios, then the following picture emerges. (i)Chirag Patel and his farther Shri Arvind Patel, both together holding 10% (ii)Shri Ujjas Vachhani being 5%. (iii)Shri Kaushik Popatlal Rathod being 5%. (iv).Shri Rohit Maganlal Patel being 10%. (v)Shri Jamanbhai Patel being 60% (DECORA HOUSING LLP) (vi)Shri Malay Mehta being 10%. 9

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 11. The assessing officer noticed from the above, that the above stake matches with the partnership deed wherein the stake of each of the partners are in consonance with the above. Shri Kuldeep Rathod had stake in this land dealing because he had sold his Bedi land and the cash was settled with this deal. Therefore, it is very clear that at the time of purchase of land for DECORA WESTHILL, Shri Rathod had made his capital contribution of Rs. 6,00,20,811/- being 10%. Later on, Shri Malay Mehta took over as the partner with stake of 10% replacing Shri Kuldeep Rathod. This can be seen from the statement of Shri Nikhil Patel that Kuldeep Rathod is not the partner and his name appears only in the initial stages of planning for the project, subsequently he withdrew himself from the project and in his place Malay Mehta became partner. This is factually / partly correct. The relevant part of the statement of Sri Nikhil Patel is reproduced by the assessing officer on page No.9 of the assessment order. Further, from page No. 1-A of the said file which was confronted to Shri Nikhil Patel, this aspect is made very clear.The seized page clearly shows internal transactions between Malay Mehta and Kuldeep Rathod. Therefore, it is very clear that Shri Kuldeep Rathod had made initial investment. Thus, from the above seized documents, it is very clear that the assessee, had paid cash to possess the land in question. Hence, the assessee was asked to show cause as to why the unexplained cash investment made in acquiring the land should not be treated as unexplained cash.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 i.e. Shri Himanshu Raiyani in the present case and not in the case of third party. Presumption drawn against the assessee is not available to the Assessing Officer based on loose paper found from the possession of Shri Himanshu Raiyani because presumption u/s 132(4A) and u/s 292C is a rebuttable presumption.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 names of partners of Maruti Enterprise. Among these-KR (Kuldip Rathod) is not the partner, his name appears only in the initial stages of planning for the project, subsequently he withdrew himself from the project and in his place MALAY(Malay Mehta) became partner. According to my memory out of the above transactions, certain are accounted in our regular books of accounts and certain are not recorded in our regular books of accounts which are made in cash. We are in the process of analysing the same between accounted and unaccounted transactions. We will furnish the details after quantification.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 “According to the assessee, any document without any corroboration is a dump document and cannot be considered in relied upon for the purpose of making addition and that too on assumptions and presumptions. This is demonstrated in following manner: Ratio of partners as per loose paper and as per partnership is not matching:

12.1.1 This contention is lame because, the discrepancy in sharing ratio as per partnership deed and as per the loose paper is due to internal adjustments. For example, the ratio of DECORA HOUSING LLP is 60% as per the partnership deed, whereas, it is 0 as per the seized loose paper. This is because, DECORA HOUSING LLP is represented by the family members of Jamanbhai Patel and his son. They are holding 60% stake. Therefore, the share of Jamanbhai Patel as per loose sheet @ 70% 13

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 is justified because, this 70% includes the stake of Malay Mehta(MM) / Kuldeep Rathod(KR) of 10%. If this 10% is excluded, then the share written of 60% matches with the actual partnership deed. Further, in the seized data, the cheque component written below Jamanbhai Patel is 60% only. 12.1.2 Similarly, Arvind Patel is the father of Chirag Patel and they are staying together. While making the entries, the cash was provided by Chirag Patel. The combined stake of father and son works out to 10%. Therefore, the seized paper and the actual partnership deed matches. Since there is mention of CP in the seized data, therefore it is clear that the cash has been contributed by Shri Chirag Patel in entirety. 12.2 The assessee further contends that, this sheet of document was prepared for the purpose of valuation of developed land including available FSI, goodwill of Decora Housing LLP etc. on account of proposed exit of Decora Housing LLP, Shri Arvind Parshottambhai Patel, Shri Rohit Maganbhai Patel and Shri Malay Bharatbhai Mehta; increase in share of Chiragbhai Arvindbhai Patel from 5% to 10% and proposed entry of new partners namely Shri Rohit Sonepara (RS) and Shri Jamnadas Patel. The sheet was prepared to negotiate contribution mainly form Shri Rohit Sonepara. In order to justify higher valuation, hypothetical notings and jottings were inserted in the excel sheet which does not carry any specific date of payment. 12.2.1 This theory is also hypothesis because, no evidence of such stake sale is noticeable from the seized documents. Besides, had this been a projection and had there been transfer of stakes, then this would have come in the statement of Shri Nikhil Patel, who had spontaneously stated about Kuldeep Rathod being replaced by Shri Malay Mehta. 12.3 It is further contended that, Differential amount of Rs. 11,58,08,110/- was claimed to be contributed by Shri Jamnadas Patel [who is a partner of Decora Housing LLP] and Shri Kuldip Rathod who sold their lands located at Bedi Village to the land owners and needed to be considered for valuation purposes in order to indicate as to how much amount is to be brought in by the incoming partners which in turn was to be passed on to the existing partners and outgoing partners in proportion to change in the partnership ratios. 12.3.1 This argument is also not acceptable because, if this paper is meant to work out the valuation and share contribution of incoming and outgoing partners, then what was the need to making noting of BEDI land. Since the cash of Bedi Land was adjusted here, therefore, this reference was mandatory. 12.3.2 Also, if contention of the assessee firm is considered true, then the share contribution of Shri Jamandas Patel and Shri Kuldip Rathod must have been written their names in the vertical column. 12.4 It is further contended that, during the course of search and seizure proceedings at the residence of Shri Himanshu Raiyani various systematic notings and jottings in relation to Maruti West Hill Project were found. These notings and jottings pertain to the period 04-04-02- 2016 to 28-10-2017. These notings contain minutest noting for Rs. 150/- and extreme noting for payment of Rs. 10,00,00,000/- towards settlement of dispute in the land. Therefore, if payments as appearing in the excel sheet referred to in the show cause notice been paid by your assessee, such payments would have certainly been appearing in the seized documents. Absence of any such noting establish the fact that excel noting does not indicate actual cash payments towards purchase of 14

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 land but indicate the circumstances in which said sheet was prepared as indicated in Para 3.3 above. 12.4.1 Here the assessee admits that meticulous entries are made from minutest of entry of Rs 150/- to a large entry of Rs. 10,00,00,000/-. By virtue of the above contention it becomes clear that the assessee agrees that payment of Rs. 10 crore has been made towards acquisition of land. The assessee has vide para no. 7.3 of his reply to show cause notice has accepted the said payment of Rs.10,00,00,000/- towards land dispute. Therefore, it is conclusively proved that there has been unaccounted investment for possession of land. Further, it is not necessary that the contents of each paper should be noted in all the papers. If the contents are not appearing in all the papers, that does not weaken the sanctity of the papers so found. 12.5 It is further contended that, Partners representing majority share in the firm including the partners of Decora Housing LLP as well as accountants of the firm were subjected to search and seizure proceedings and site of the firm was also covered u/s 133A and therefore, had alleged cash payments been made as per excel sheet such notings and jottings must have been found either in the possession of the partners of the firm or in possession of the accountants of the firm. No incriminating documents indicating any unaccounted investment were found in their possession. Therefore, notings and jottings in the excel sheet remain uncorroborated and unproved. 12.5.1 It is not necessary that the incriminating papers found at one place should also be corroborated with some evidence at the residence of the partners or their personal offices. In any case, the incriminating document has been seized from the residence of accountant of Decora group. This has been accepted by Shri Nikhil Patel himself and explanation for the same has been provided by him. 12.6 It is further contended that, Revenue authorities at the time of registration of sale deeds in respect of lands on which ‘Decora West Hill’ Project is executed and also in respect of ‘Bedi’ Lands have not charged any additional stamp duty which indicates that there was no suppression in disclosure of purchase consideration of lands so acquired from the original land owners and also sold to them i.e.Bedi Lands. Still if your honour intend to hold that there was unaccounted investment in purchase of lands, we request your honour to make necessary inquiries with the Revenue Authorities as well as sellers of the said land. 12.6.1 The stamp duty authorities are only concerned with the value of the property as per the prevailing Circle rate. Therefore, there is no mechanism legally available to arrive at the actual rate of land from the Sub-registrar. Further, the seized incriminating document is speaking in itself which proves that cash in addition to the value of and recorded in the books of accounts, have been invested for acquiring the land. Also, the need for cross examining the seller does not arise, as the addition is being made on the basis of independent document found and seized from the accountant of the assessee and admitted to be incriminating by Shri Nikhil Patel. 12.7 It is further submitted that, it is obligatory for the Assessing Officer to establish that the document pertains or belongs to the assesse and alleged unaccounted investment was made by the assessee by corroborating loose paper found with other seized material. From the show cause notice so issued no such correlation or substantiation is noticed.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 12.7.1 Once when Shri Nikhil Patel, partner and key promoter of DECORA HOUSING LLP, having 60% stake in the firm Maruti Enterprise, admits that the papers so found and seized belongs to and pertains to the assessee, and that some of the entries are accounted and some are unaccounted, there is no further requirement to establish that the document pertains to or belongs to the assessee. 12.7.2 Hon’ble SC in the case of CIT vs. Best & Co. (P.) Ltd. [1966] 60 ITR 11/AIR 1966 SC 1325, observed that although the burden of proof that a receipt is income lies on the revenue, it is not always so. It was held that the doctrine of shifting onus is applicable to income-tax proceedings and when sufficient evidence, either direct or circumstantial, is disclosed by the revenue, adverse inference can be drawn against the assessee, if he as suppressed documents or evidence, for his failure to place before the department the material which is exclusively within his knowledge and keeping. 12.8 It is further contended that, Data found in possession of the searched person has to be considered in accordance with the provisions of section 132(4A) and section 292C of the Act to be true in the hands of searched person i.e. Shri Himanshu Raiyani in the present case and not in the case of third party. Presumption drawn against the assessee is not available to the Assessing Officer based on seized data found from the possession of Shri Himanshu Raiyani because presumption u/s 132(4A) and u/s 292C is a rebuttable presumption and which has been successfully rebutted by the assessee 12.8.1 This contention is on a weak footing because, Shri Himanshu Raiyani had discharged his onus, by stating that the same belonged to and pertained to the assessee. This is further corroborated by the statement of Shri Nikhil Patel. Albeit, the assessee has failed to discharge the onus, as to why the documents found are not belonging to or pertaining to the assessee. 12.9 It is further contended that, in dealing with circumstantial evidence there is always a danger that conjecture or suspicion lingering on mind of the person which may take in place of proof. Suspicion, howsoever, strong cannot be allowed to take place of proof and, therefore, the Court has to be watchful and ensure that conjectures and suspicions do not take place of legal proof. 12.9.1 The proceedings under the Income tax laws are civil proceedings and in the proceedings under Civil laws, reasonable element of doubt is sufficient. On the contrary in the present case, there is sufficient proof to establish that the seized loose papers corroborates with the regular books of accounts. The cost of land mentioned in the loose sheets is the actual payment made as per books, the share holding of the partners matches, there is mention of cash exchange by virtue of sale of BEDI land, etc. Hence, there is sufficient evidence to hold that the seized papers are true and correct and they represent the real nature of transactions. 13. From the above it is clear that the firm had paid cash towards possession of land. The land was purchased with a documented price of Rs. 10,43,00,000/- and the above seized documents reveals that the assessee had spent Rs. 60,02,08,110/-. The difference works out to Rs. 49,59,08,110/-. However, from the seized document it is seen that, the first two installments have been brought in by the partners. This is added in their individual hands of Partners. The relevant page is as under.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

13.1 The remaining cash payment of Rs. 8 crore on Aug 2016 and Rs. 12 crore on Oct 2016 has been made by the firm out of distribution. The source of the same is the on money received in cash. Therefore, no separate addition of Rs. 20 crore is being made. The issue of on money receipt and its taxation is discussed below.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

During the course of search, the statement of Shri Himanshu Raiyani was recorded, who had admitted that he was maintaining accounting at the behest of Shri Nikhil Patel and that he was maintaining two different accounts, one for accounted transactions and another for unaccounted transactions. Therefore, it is proved beyond doubt that the group is maintaining parallel books of accounts. Further, during the course of post search proceedings, statement of Shri Nikhil Patel was recorded who had admitted as under:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 The assessing officer noticed that it is clear that the above receipts are cash receipts towards booking advances and the same are not recorded in the regular books of accounts.

17.The assessee, in response to the show cause notice, had filed the following reply, before the assessing officer: “Unexplained ‘on money’ receipts-Rs. 23,13,62,112/- 8.1 This amount is proposed to be taxed vide Para 4 of the show cause notice. Your honour would appreciate that against Rs. 23,13,62,112/- on ‘on money’ receipts identified by your honour, your assessee has made efforts to verify and reconcile receipts as well as payments after going through the entire seized material by digging into each and every noting and jotting and also by analyzing the same with reference to transaction which has ultimately been culminated into actual transactions. Details of receipts and payments are as under:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

Out of the aforesaid expenses, an amount of Rs. 57,91,400/- has been incurred prior to formation of the firm and the same has been incurred by the key partners of Decora Housing LLP from the funds available in their possession. Breakup of expenses incurred of Rs. 57,91,400/- is given below:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

8.2 Breakup of Rs. 9,73,74,100/- received for purchase of flats as well as execution of interior on turnkey basis is as under:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

Income in respect of the aforesaid flats would accrue and become assessable in the year in which turnkey work is completed, sale deed is executed and possession of the flat with completed work is handed over to the buyer in terms of AS-9. 8.3 Breakup of Rs. 2,65,58,111/- received towards extra work to be done simultaneously with the progress and construction of the flat is as under:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

Income in respect of these flats would accrue at the time of execution of sale deeds in favour of the buyer because during intervening period buyer has right to cancel the booking of flat. However, if extra work is considered to be in the nature of contract then income would accrue on straight line basis over a period of tenure of the construction work and would be equally assessable in each of the year tenure of the contract through not written but is exceeding the period of 90 days considering its nature and, therefore, provisions of AS-7, ICDS-III and Section 43CB would apply. However, since this nature of work is executed on almost on cost to cost basis, your assessee does not earn any amount in these activities which are nothing but provided to the customer in order to get the booking in the project. Your assessee under such circumstances retains only administrative cost which ranges from 1%-3%. The assessable income during the contract period works out minimum at Rs. 2,65,581/- [i.e. 1% of Rs. 2,65,58,111/-] and maximum at Rs. 7,96,743/- [i.e. 3% of Rs. 2,65,58,111/-] and the same needs to be spread over on straight line basis in all the years and till completion of the project. 8.4 In respect of following flats, purchasers have opted not to avail services of additional work and have not sought any execution of additional work and therefore, no extra amount has been paid by them. One of the customer in order to inflate value of flat for the purpose of availing bank loan paid higher amount by cheque and taken back cash which is indicated below:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

8.5 In following cases, bookings have been cancelled by the respect persons and therefore, amounts received have been paid back as they have not retained any right in the property under development and therefore, these amounts cannot be brought to tax in the hands of your assessee. Income in respect of respective flats shall be offered to tax as and when these flats are booked and sold after execution of sale deed in favour of the purchaser of respective unit:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 Your assessee, therefore, requests your honour to tax income in respect of the receipts referred to in Para 8.3 above and the manner indicated herein. The income of 3% is admitted in order to get the assessment completed in a peaceful and judicious manner.”

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

17.2 Here the right hand side shows inflow and the left hand side shows outflow. The total of the inflow, according to the assessee is Rs 36,54,56,212/-. Thus, the assessee admits that the total on money receipt is Rs 36,54,56,212/-. However, this figure is also not correct. The actual cash on money receipt is Rs 39,02,96,212/-. This is derived from the soft data contained in excel sheet known as DWH.xls and the details are as under:-

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

17.3 Now coming to the rebuttal of the above table, row wise rebuttal is made as under:- Row-1 The assessee has stated as under:-

17.4 It can be seen from the first row that the assessee has shown cash on money receipt of Rs. 24,15,24,001/- on the right hand side, and in the same row on the left hand side there is cash refund / return of on money. Thus, according to the assessee, admittedly the on money has been received but it cannot be taxed in the hands of the assessee as the same has been refunded back. This contention is false and misleading and is contrary to what has been found in the DWH.xls data, which is reproduced hereunder.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

17.5 This is the cash book of NP/CP. NP stands for Nikhil Patel, key member of the partner M/s. DECORA HOUSING LLP. CP stands for Chirag Patel (cousin brother of Nikhil Patel) who is owning 10% stake along with his father Shri Arvind Patel. Thus, both NP and CP hold 70% stake in the firm and are key members who are handling cash. Here, any customers from whom cash is charged, is kept (taken home) by either NP or CP. The assessee contends that, the receipt is immediately shown as payment which means that the amount is refunded. However, this is not the real picture. The receipt is shown from the customers from whom cash is charged and the same is taken home by NP. One such example is as under.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

Here, the cash is collected and on same date it goes to Nikhil Patel. But the assessee contends that, the cash is given and Nikhil is returning. 17.7 Additionally, if it is refund of cash, then the person who is cancelling the deal and claiming refund, will claim the entire refund. However, the same is not observed in several of the entries found in the seized digital data. One such example is as under.

On perusal of the above produced extract it can be inferred that one of the buyer Smt. Bhavnaben Makadia has paid booking amount in various transche. However, if the make believe story of the assessee is accepted then the buyer Smt. Bhavnaben Makadia has booked and then cancelled and then again booked and then again cancelled and then again booked and then again cancelled. Thus it is clear that, the claim of the assessee that mentioning of NP means that the cash so collected has been refunded back by NP, is not correct. Actually it is cash collected and given to NP and when NP collects such cash, there is mention of ‘OK’ in the cash book. Row-2 17.8 The second row of the above table is as under. 50

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

17.8.1 Here on the outflow side (LHS) the assessee is admitting cash of Rs. 10,00,00,000 as payment made for settlement of pending litigation in relation to land. Thus the assessee is admitting payment of Rs. 10 crore. On the other hand, in the upper part of the assessment order, when there is discussion made of unaccounted cash paid for acquiring land, the assessee had vehemently denied each of the entries. Interestingly, for similar set of seized documents, the assessee is denying the same, and on the other hand is also admitting part of the same. 17.8.2 The RHS contains inflow of Rs. 9,73,74,100/-, for which the assessee admits cash receipts for handing over fully furnished flat on turnkey basis. The assessee contends as under. Income in respect of the aforesaid flats would accrue and become assessable in the year in which turnkey work is completed, sale deed is executed and possession of the flat with completed work is handed over to the buyer in terms of AS-9. The assessee has given break up of this as under:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

17.8.3 From the above chart it can be seen that, this is clear receipt of on money and it is to be taxed in the year of receipt. The assessee says that, this cash of Rs. 9,73,74,100/- is for turnkey completion including interiors. However, the cash portion is too large and higher than the cheque which is nothing but on money receipts, which otherwise would have remained suppressed, had there been no search. Interestingly, the brochure of the project reads as under.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

The above features are the standard features. What remains is the interiors and furniture. The cash collected for such trivial work is far more than the cost of the entire flat. Besides, no agreements, details of such extra work, statement of the buyer who paid cash, what type of work is sought, etc have not been filed. Row-3 17.9 The assessee justified the on money entries by virtue of the above table. The first two rows of the above table have been discussed supra. The third row is as under.

Here the LHS is expenses incurred by one of the partner. On the RHS there is cash receipt of Rs. 2,65,58,111/- for carrying out extra work. The assessee contends as under:- Income in respect of these flats would accrue at the time of execution of sale deeds in favour of the buyer because during intervening period buyer has right to cancel the booking of flat. However, if extra work is considered to be in the nature of contract then income would accrue on straight line basis over a period of tenure of the construction work and would be equally assessable in each of the year tenure of the contract through not written but is exceeding the period of 90 days considering its nature and, therefore, provisions of AS-7, ICDS-III and Section 43CB would apply. However, since this nature of work is executed on almost on cost to cost basis, your assessee does not earn any amount in these activities which are nothing but provided to the customer in order to get the booking in the project. Your assessee under such circumstances retains only 53

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 administrative cost which ranges from 1%-3%. The assessable income during the contract period works out minimum at Rs. 2,65,581/- [i.e. 1% of Rs. 2,65,58,111/-] and maximum at Rs. 7,96,743/- [i.e. 3% of Rs. 2,65,58,111/-] and the same needs to be spread over on straight line basis in all the years and till completion of the project. 17.9.1 Here it is interesting to note that, the firm came into existence on 6.7.2016 and the land for the said project has been purchased on 13.10.2016, whereas, the cash collection started as under.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 Now, the contention of the assessee implies that it was in receipt of payment for extra work, when even the partnership firm has not been constituted and the land for the said project has not been purchased. Again, as discussed supra, the only extra work as per the brochure would be interior and furniture. For this, huge cash has been collected. No details of such extra work, agreement, etc have been filed. Thus it is clear that this is not cash for extra work but cash on money.”

The total of cash expenses works out to Rs. 11,10,36,800/- which includes land expenses of Rs. 10,00,00,000/-. Further, as per the discussion supra the assessee-firm has also made cash expenses for the possession of the land on which the project is developed. The total cash expense made in cash for the possession of the land by the assessee firm is Rs. 49,59,08,110/-. As, Rs.10,00,00,000/- expense on legal dispute has already been considered in the above discussion, therefore, remaining Rs.39,59,08,110/- expense in cash also has been incurred for the purpose of business. Therefore, the overall expenses incurred by the assessee firm as per seized material is as follows:

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

Since these are forming part of the seized documents and as these are incurred for the business of the assessee, hence, the same are recognized as expenditure. These expenses are however made in cash which renders them liable for disallowance either u/s 37 or Section 40A(3) of the Income Tax Act, 1961. Furthermore, the onus is upon the assessee to prove the genuineness of the expenses and the assessee has failed to discharge this onus. To add to this, violation of provisions of section 40(a)(ia); 40A(2), etc also needs to be factored in. Besides loss of revenue due to evasion of tax by third parties viz., the contractors, unaccounted cash flow flowing due to cash loans, etc are also required to be factored in. Further, expenses pertaining to purchase of Land (other than Rs.10,00,00,000/-) has not been claimed by the assessee. Therefore, these expenses are not allowed.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

SN Work sheet details Amount 1 CP-NP FLAT 13,1,16,100.00 Gross On-money Collected 13,91,16,100.00 LESS Cheque Received 1,63,00,000.00 Net cash on-money during the year 12,28,16,100.00 an addition of Rs.12,28,16,000/- is and as business income of the assessee during the year.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20

11.10 Considering above facts, the AO is directed to tax undisclosed income as per tabular chart in para 11.9 & 11.9.1 herein above on year-to-year basis and also relief would be provided accordingly. 11.11 In view of the above discussion and factual matrix of the case, the AO is directed to delete the addition made for the year under consideration i.e. A.Y.2017-18. Thus, the grounds of appeal no. 12 to 25 are partly allowed.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 the assessee, without application of mind and reduced the 100% addition made by the assessing officer to 15% only, without providing an opportunity to the assessing officer to examine, the extrapolated figures/ new figures, so submitted by the assessee. Therefore, learned DR prayed the Bench, that matter may be remitted back to the file of the learned CIT(A) with the direction to the learned CIT(A) to call a proper remand report in respect of extrapolated figures/ new figures.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 evidences, which clearly speak about on- money and black money introduced by the partners in the partnership firm and on money taken by the assessee from its customers, on which, assessee has never paid the tax, therefore, 100% percent addition made by the assessing officer may be sustained, as the regular expenses had already been claimed by the assessee in the audited books of accounts.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 documents found during search action at the premises of the partners of the respondent and survey action at the premises of the firm. Therefore, under no circumstances such third party document could be used against the respondent. Since the assessee has accepted the ownership of the documents and evidences found by the search team, and based on these documents, the assessee submitted extrapolated figures/ new figures before the ld CIT(A). These extrapolated figures/ new figures are based on future projection, therefore, addition sustained by the ld. CIT(A) at the rate of 15%, based on such extrapolated figures/ new figures, may be sustained in the hands of the assessee.

29.The Ld. Counsel for the assessee further submitted that an opportunity of cross examination, was not provided to the assessee, which violates the principle of natural justice.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 on the basis of which assessment have been framed pertain to the assessee. A mere disagreement in interpretation of documents cannot be a ground to state that there has been any violation of grounds of natural justice. The ld.CIT(A) also observed that entire addition has been made based upon investigation report/ search report in case of search carried out in the case of Decora Group including the assessee's case from which it is revealed that the assessee had unaccounted cash transaction, which has bearing on the undisclosed income of the assessee. For this, ld. CIT(A) placed reliance on decision of Hon'ble Gujarat High court in the case of Amrapali Fincap Ltd. V/s Income Tax Settlement Commission [2016] 73 taxmann.com 97 wherein it is held that "Where Settlement Commission denied assessee for cross-examination of different witnesses, whose statements were recorded behind its back, and relying upon statements of these witnesses to some extent rejected application for settlement, since Settlement Commission had also taken into consideration other facts available on record, there was no scope for interference." It is pertinent to note that even jurisdictional ITAT and High court on identical facts have decided similar issue in favour of department. In this case, the assessee had requested the Settlement Commission for cross-examination of one Somish C. Shah(S), accommodation entry provider, whose statements had been relied upon by the Department. Hon'ble Settlement Commission had rejected application of assessee who filed a writ against order of Settlement Commission raising denial of cross-examination as one of the contentions. The Hon'ble Jurisdictional High Court held that since Settlement Commission, besides relying upon statements of 'S' and other witnesses, had also taken into consideration other facts available on record, there was no scope for interference in order of Settlement Commission." In this case, issue was also before Hon'ble High court that Hon'ble Settlement Petition has rejected contention of assessee for Cross examining Mr. Shirish Shah and such order was upheld by Hon'ble High court.Allahabad High Court in the case of Motilal Padampat Udyog Ltd. Vs. CIT 293 ITR 565 after considering the judgment of Supreme Court in the case of 73

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 Krishna Chand Chela Ram v CIT has held that right of cross examination from whom the AO has collected the evidence is not required under the income tax law and such assessment was valid under the Act. In the instant case, the copies of the rough cash books and the statements of the partners of 'V' which were recorded, had been provided to the assessee and, in fact the assessee had also submitted its reply. In the letter an opportunity to cross examine was asked for only in case the statements had not been recorded. As in the instant case, the assessee had proper opportunity to controvert the material gathered by the assessing authority and used against it, there had been compliance of the principle of natural justice.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 made by the assessing officer based on the seized documents and after giving proper opportunity of explanation and hearing to the assessee, therefore, opportunity of cross examination is not required and hence we confirm the findings of the learned CIT(A) in this regard.

We note that there is no finding of the learned CIT( A) that the above said working submitted by the assessee is based on the seized documents or evidences. What are the sources of the data mentioned in the above working, has also not been

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 examined by the ld CIT(A). The data mentioned in the above working are from seized documents or evidences or from the third-party evidences or from the audited books of accounts of the assessee, there is no such findings of the ld. CIT(A) and therefore we find that ld. CIT(A) has accepted the above working blindly and without examination thereof. As per section 250(6) of the Income Tax Act, it is the duty of the CIT(A) that while writing order there should be points for determination, the decision, thereon and the reasons for the decision. Therefore, we find that order passed by the Ld. CIT(A) is not as per the mandate of the provisions of section 250(6) of the Act. The learned CIT (A) has not himself, examined the source data in the above working, with help of seized documents and evidences, nor given an opportunity to the assessing officer to examine the above working. Therefore, based on the above working, the addition reduced by the ld CIT(A) from 100% ( addition made by AO) to 15%, is not acceptable and therefore rejected.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 estimation without basis is impermissible. While appellate authorities can resort to estimation, such estimation must be based on material on record, supported by reasoning or comparable cases, and not arbitrary or thumb-rule based. Ad-hoc reduction of additions without cogent reasoning is unsustainable in law. The action of the CIT(A) in reducing from 100% addition to 15%, purely on estimation, without examining the working himself and without giving proper opportunity, to AO, is not acceptable. Based on these facts, we should set aside the order of CIT(A), and restore the matter back to the file of CIT(A) for fresh adjudication.

11.8.2 In view of the above, the average net profit comes 9.45% as per the books of account. However, it is also a fact that the assessee has made certain unaccounted

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 expenses and unaccounted sale proceeds also which could not be denied. So, considering the unaccounted transactions and to pluck the leakage of revenue the books of accounts are rejected invoking the provisions of section 145 of the I.T. Act. 11.9 Hence, looking to the nature of various business, various discrepancies found during the search proceedings, various judicial pronouncements (supra), a settled issue that in case of unrecorded sales, the profit margin remains higher than the recorded sales, the lower profit margin shown in the books of account as compared to peers, the location and type of project taken by the assessee, the net income on account of the grounds of appeal relating to Real Estate business is taken at 15% which comes to Rs.14,71,73,145/- is confirmed. The year wise income under the head business is arrived accordingly and detailed hereunder:

11.10 Considering above facts, the AO is directed to tax undisclosed income as per tabular chart in para 11.9 & 11.9.1 herein above on year-to-year basis and also relief would be provided accordingly. 11.11 In view of the above discussion and factual matrix of the case, the AO is directed to delete the addition made for the year under consideration i.e. A.Y.2017- 18. Thus, the grounds of appeal no. 12 to 25 are partly allowed.”

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 38. From the above findings of the learned CIT(A), it is vivid that assessee had submitted during the appellate proceedings, suo-moto, ( not asked by ld.CIT(A) to submit the extrapolated figures/ new figures). These suo-moto, extrapolated figures/ new figures, were neither examined by the assessing officer, during the assessment proceedings, nor ld.CIT(A) has himself examined the same. Whether these extrapolated figures/ new figures are taken from the seized documents or not, or these extrapolated figures/ new figures are taken from third-party data, have not been ascertained by the learned CIT (A), and there is no finding of learned CIT(A) to that effect in the appellate order hence no source of these extrapolated figures/ new figures have neither been examined by the ld.CIT(A) nor by assessing officer. Therefore, based on these extrapolated figures/ new figures, the findings given by the learned CIT(A) for reducing the addition made by the assessing officer from 100% to 15%, is not acceptable.

“…..the assessee has suo moto extrapolated the same and has adopted amount at Rs.98,11,54,300/- as reproduced supra…..”

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 From the above, it is clear that the assessee has suo moto extrapolated the same and has adopted amount at Rs.98,11,54,300/-, which has been accepted by the learned CIT( A), without application of mind. This clearly shows non- application of mind by the learned CIT(A), hence, we find that there is a loss to the revenue because of non-application of mind by ld CIT(A), as the addition made by the assessing officer at the rate of 100%, was reduced by the learned CIT(A) to 15% without application of mind. Hence, findings of the learned CIT(A), on merit, is rejected, as amount adopted by assessee Rs.98,11,54,300/- was accepted by CIT(A), without examine the same.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 acquiring land, is also paid in cash. However, Learned CIT(A) did not examine the issue in the light of the findings given by the assessing officer and completely overlooked the findings of the assessing officer.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 back to the file of CIT(A) with a direction to pass fresh order in accordance with law after granting adequate opportunity of hearing to assessee. In addition to the main issue, there are some small grounds of appeals raised by the revenue, such as receipt of cash in lieu of cheque Rs.1,14,22,121/-, reimbursement of expenses Rs.57,000/- and Satakhat expenses, vide appeals pertaining to M/s Shubham Enterprises, these grounds pertain to on-money, hence remitted back to the file of the ld.CIT(A) for fresh adjudication. The assessee is directed to be vigilant and to furnish all details and explanation as needed by Ld.CIT(A) and should not seek adjournment without valid reason. With this direction, the grounds of appeal raised by the Revenue are treated as allowed for statistical purposes.

(i). M/s Shubham Enterprises-A.Y. 2015-16- IT(ss)A No. 61/RJT/2023. (ii). M/s Shubham Enterprises-A.Y. 2016-17- IT(ss)A No. 62/RJT/2023. (iii). M/s Shree Ram Enterprises-A.Y.2016-17- IT(ss)A No. 58/RJT/2023. (iv). M/s Maruti Enterprises-A.Y.2017-18-IT(ss)A No.59/RJT/2023. (v). M/s Maruti Enterprises-A.Y.2018-19-IT(ss)A No.60/RJT/2023. (vi). M/s Maruti Enterprises-A.Y.2019-20-IT(ss)A No.228/RJT/2023.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 unexplained cash investment in the firm M/s. Garden Enterprise for purchase of land. The learned CIT (A) did not consider the findings of the assessing officer and did not mention that why the assessing officer was wrong in making the addition, whereas assessing officer has given the elaborate finding taking into account seized material and corroborative evidence, however, ld.CIT(A) failed to consider the same. Besides, since we have already remitted the case of M/s. Garden Enterprise, to the file of learned CIT(A) for fresh adjudication, and since the issue in this appeal is interconnected and mix, with the appeal of M/s. Garden Enterprise, therefore, this Revenue`s appeal is also remitted back to the file of the learned CIT(A) for fresh adjudication in accordance with Law. For statistical purposes, the appeal of the Revenue, in IT(ss)A No. 17/RJT/2024, is allowed.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 IT(ss)A No.20/RJT/2024-Revenue appeal. We have heard both the parties and noted that in assessment year 2018–19, the Ld.CIT(A) deleted cash investment of Rs.2,20,00,000/- for purchase of land. The assessing officer made addition u/s. 115BBE of the Act, and ld.CIT(A) did not consider the elaborate findings of the assessing officer mentioned in the assessment order. The assessing officer reached on the conclusion based on the seized documents, which were corroborated by the assessing officer with statements and other documents.

For assessment year 2017–18, we note that Ld.CIT(A) has deleted the unexplained cash investment of Rs. 100,00,000/- in the firm M/s Maruti Enterprise for purchase of land. The assessing officer made addition u/s. 69B r.w.s. 115BBE of the Act. However, we note that ld.CIT(A) ignored the fact that assessee and firm M/s. Maruti Enterprise as failed to discharge the onus. Besides, since we have already remitted the case of M/s. Maruti Enterprise, to the file of learned CIT(A) for fresh adjudication, and since the issue in this appeal is interconnected and mix, with the appeal of M/s. Maruti Enterprise, therefore, this Revenue`s appeal is also remitted back to the file of the learned CIT(A) for fresh adjudication in accordance with Law. For statistical purposes, the appeal of the Revenue, in IT(ss)A No. 19/RJT/2024 and in IT(ss)A No. 20/RJT/2024, are allowed.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 wrong in making the addition, whereas assessing officer has given the elaborate finding taking into account seized material and corroborative evidence, however, ld.CIT(A) failed to consider the same. Since we have remitted the cases of the partnership- firms, to the file of the ld. CIT(A) for fresh adjudication, therefore, this issue is also restored back to the file of the learned CIT(A) for fresh adjudication, as the issue is interconnected and mix with partnership firms, referred above. For statistical purposes, the appeal of the Revenue, in IT(ss)A No. 13/RJT/2024, is allowed.

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 (ii). Jamnadas Purshottam Patel, A.Y. 2018-19, IT(ss)A No.16/RJT/2024-Revenue appeal

(iii). Jamnadas Purshottam Patel, A.Y. 2017-18, IT(ss)A No.60/RJT/2025- Assessee`s appeal

The appeal filed by the assessee in IT(ss)A No.60/RJT/2025 for Assessment Year 2017-18, is barred by limitation by 117 days. The assessee has moved a petition requesting the Bench to condone the delay. We have gone through the petition for condonation of delay, and the sufficient cause explained by the assessee, in the petition for condonation of delay. The learned Counsel adverted our attention to the reasons for condonation of delay before this Tribunal and urged for a benign view and sought condonation of delay of 117 days in filing the appeal before the Tribunal. On the other hand, learned DR for the revenue, opposed the prayer of the assessee for condonation of delay. A perusal of the reasons and sufficient cause explained by the ld. Counsel for the assessee, gives us an impression of existence of mitigating circumstances to enable us to exercise our discretion in favour of the assessee. Accordingly, the delay of 117 days is condoned in filing the appeal.

(a) On merit, we note that in assessee`s appeal in IT(ss)A No.60/RJT/2025 for Assessment Year 2017-18, the solitary grievance of the assessee is that the assessing officer has erred in making addition u/s. 48 of the Act for alleged land swapping of Bedi Land for purchase of project land of M/s Maruti Enterprise, inspite of the fact that the alleged land swapping had never actually happened, therefore, there can be no possibility of receipt of enhanced consideration by assessee for sale of Bedi Land. Accordingly, the assessee is not liable to any enhanced capital gains. Since the case of M/s Maruti Enterprise, has already been remitted back to the file of the learned CIT(A) for fresh adjudication, therefore, this issue is also restored back to the file of the learned CIT(A) for fresh

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 adjudication, as the issue is interconnected and mix with partnership firms, M/s Maruti Enterprise, referred above.

(b) In case of Revenue`s appeal in Jamnadas Purshottam Patel, A.Y. 2013-14, IT(ss)A No.15/RJT/2024, the Ld.CIT(A) has deleted the addition of Rs.2,66,80,000/- made, by the assessing officer, on account of unexplained cash investment in firm M/s. Garden Enterprise for Purchase of land. The learned CIT (A) did not consider the findings of the assessing officer and did not mention that why the assessing officer was wrong in making the addition, whereas assessing officer has given the elaborate findings taking into account seized material and corroborative evidence, however, ld.CIT(A) failed to consider the same. Besides, since we have already remitted the case of M/s. Garden Enterprise, to the file of learned CIT(A) for fresh adjudication, and since the issue in this appeal is interconnected and mix, with the appeal of M/s. Garden Enterprise, therefore, this Revenue`s appeal is also remitted back to the file of the learned CIT(A) for fresh adjudication in accordance with Law.

(C ) In case of Revenue`s appeal in Jamnadas Purshottam Patel, A.Y. 2018-19, IT(ss)A No.16/RJT/2024, we note that the Ld.CIT(A) has deleted the addition of Rs.5,50,00,000/- made, by the assessing officer, on account of unexplained investment u/s. 68B r.w.s. 115BBE of the Act for purchase of land at Madhapar. We note that learned CIT (A) did not consider the findings of the assessing officer and did not mention that why the assessing officer was wrong in making the addition, whereas assessing officer has given the elaborate finding taking into account seized material and corroborative evidence, however, ld.CIT(A) failed to consider the same. Since we have remitted the cases of the partnership- firms, to the file of the ld. CIT(A) for fresh adjudication, therefore, this issue is also restored back to the file of the learned CIT(A) for fresh adjudication, as the issue is interconnected and mix with partnership firms, referred above. Therefore, this

IT(SS)A Nos.12-13, 17, 19-20, 22, 58-59 and 62/RJT/23 & ITA 228/Rjt/2023 A.Ys.13-14 to 19-20 Revenue`s appeal is also remitted back to the file of the learned CIT(A) for fresh adjudication in accordance with Law.

For statistical purposes, the appeal of the assessee, and revenue pertaining to Jamnadas Purshottam Patel, are allowed.

Order is pronounced in the open court on 22/12/2025. Sd/- Sd/- (DINESH MOHAN SINHA) (DR.ARJUN LAL SAINI) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER राजकोट /Rajkot //True Copy// �दनांक/Date: 22/12/2025 आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :  अपीलाथ�/ The Assessee  ��यथ�/ The Respondent  आयकर आयु�त/ CIT  आयकर आयु�त(अपील)/ The CIT(A)  �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, राजकोट/ DR, ITAT, RAJKOT  गाड� फाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपील�य अ�धकरण ,राजकोट