Gujarat High Court
Principal Commissioner Of Income Tax 1 vs Shri Pushkar Construction Co on 7 March, 2023
Author: N.V.Anjaria
Bench: N.V.Anjaria
NEUTRAL CITATION
C/TAXAP/583/2022 ORDER DATED: 07/03/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 583 of 2022
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PRINCIPAL COMMISSIONER OF INCOME TAX 1
Versus
SHRI PUSHKAR CONSTRUCTION CO.
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Appearance:
MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 07/03/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned advocate Mr. Varun Patel for the appellant.
2. The present appeal under section 260A of the Income Tax Act, 1961 arises out of order dated 14th March, 2022 of the Income Tax Appellate Tribunal, Ahmedabad 'A' Bench, Ahmedabad in Income Tax Appeal No. 1452 of 2018 in respect of Assessment Year 2015-2016.
2.1 The following substantial questions of law are proposed by the Revenue claimed to be arising as substantial questions of law, extracting from memorandum of appeal, "(A) Whether on the facts and in circumstances of the case, the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs.3,15,77,644/- made on account of on-money holding Page 1 of 6 Downloaded on : Sun Sep 17 22:29:23 IST 2023 NEUTRAL CITATION C/TAXAP/583/2022 ORDER DATED: 07/03/2023 undefined that the seized document which was made basis for addition, does not carry the on- money receipts pertaining to the year under consideration?
(B) Whether on the facts and in circumstances of the case, the Appellate Tribunal has erred in law and on facts in not giving due consideration to the fact that the assessee has been proved to have engaged in regularly accepting on-money in A.Y.2010-11 to A.Y.2014-15 and therefore as per the proposition of law extrapolation can be made in a situation when the document gives an indication that there was a regular occurrence in a systematic manner?
(C) Whether on the facts and in circumstances of the case, the Appellate Tribunal has erred in law and on facts in not giving due consideration to all the surrounding circumstances, the preponderance of human probabilities and ground realities with regard to receipt of on-money by the assessee based on the seized documents pertaining to AY 2010-11 to AY 2014-15?
(D) Whether on the facts and in circumstances of the case, the Appellate Tribunal has erred in law and on facts in not considering the fact that allegations against the assessee can be informed by a logical reasoning from totality of attending facts and circumstances surrounding the estimation made by the Assessing Officer when direct evidences are not available?"
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3. The facts are that a search was conducted under section 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') against one Ashit Haribhai Vora, who was active partner of the assessee firm of Batter Group. When the search was conducted on 4.12.2014 at the residence, according to the department, certain documents containing 37 pages were found and seized, which were incriminating documents relating to the project called Pushkar-III and Pushkar-IV developed by the assessee. According to the department, the documents reflected that the said documents contained certain details, including the details of cash as well as cheque received by the assessee firm in relation to the sale of the units in the project Pushkar-III and Pushkar-IV. They were unaccounted money transactions pertaining to the period from Assessment Year 2011- 2012 to Assessment Year 2014-2015.
3.1 The Assessing Officer found that the cash received by the assssee against the sale of the units in the aforesaid projects was not referred in the regular books of account and ratio of on-money was about 41% of the actual sale consideration as recorded in the books pertaining to Assessment year 2010-2011 to 2014-2015. On-money consideration was worked out to be Rs. 3,15,77,644/-. Consequentially, addition under section 143(3) of the Act was made in the income of the assessee by order dated 29.12.2016.
4. The assessee appealed against the said order of addition before the Commissioner of Income Tax (Appeals). The appellate authority by order dated 28.3.2018 directed the assessing officer to delete the addition. The Revenue referred appeal before the appellate Tribunal. The appeal came to be dismissed, which order is brought under challenge in this appeal proposing aforesaid substantial questions of law.
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5. While deleting the addition on the ground of on-money transaction as above, the appellate authority observed that the seized documents carry receipt of on-money in relation to the previous assessment years, that is 2010-2011 to 2014-2015 only. It was found that for the year under consideration, that is Assessment Year 2015-2016, there was no clinching evidence of receipt of on-money against the units sold in that year. Any statement of any of the buyers was also not recorded, noticed the appellate authority. Therefore, according to the appellate authority. in absence of any clinching evidence excepting the receipt of on-money against the units sold in Assessment year 2015-2016, extrapolation of income was not justified.
5.1 While dealing with the controversy before it, the appellate Tribunal recorded in para-6 thus, "...It appears that the AO has taken into consideration Rs. 1,81,72,500/- for Pushkar - III and Rs. 1,69,49,500/- for Pushkar - IV as on-money received by the assessee. The AO has computed ratio of on-money at 41% based upon on-money receipts in comparison with total receipt for few units reflected in seized material and such ratio has been applied on total tumover shown in regular books of account for all the Assessment Years which includes scheme of Pushkar III and Pushkar-IV and all the other schemes. Therefore, the AO has extrapolated on-money receipts of 41% of entire turnover which according to us is not sustainable on assumption and presumption basis particularly when the cheque receipts for two schemes is Rs. 3.24 crores as reflects from the loose papers as against gross receipts shown in the books of account from A.Y. 2010-11 to 2015- 16 for Rs. 53.32 croes. According to the Ld. AO similar material related to Pushkar Infrastructure was also found during the course of search at third party which proves that the appellant is taking on- money on all the units but such contention cannot be accepted as Pushkar Infrastructure is altogether a different entity and have no relevance on the appellant's case.
Page 4 of 6 Downloaded on : Sun Sep 17 22:29:23 IST 2023 NEUTRAL CITATION C/TAXAP/583/2022 ORDER DATED: 07/03/2023 undefined 5.2 The Tribunal also found that there was no evidence of receipt of
on-money from the entire sales and the addition of income on some flimsy instances were not justified, extracting from para-7, "Further taking into consideration this particular fact that the search was carried out in the case of one Ashit Vora on 04.12.2014 and the notices are issued in the case of the appellant on 18.06.2016 followed by the assessment order passed on 29.12.2016 we do not find any recording of statement of buyers whose sales have been recognized all the years by the Ld. AO. No clinching evidence of receipt of on-money on the entire sales made by the appellant is found in the absence of which extrapolation of income simply based on few flimsy instances is not sustainable."
5.3 The Tribunal thereafter held that the Assessing Officer was required to confine himself on the incriminating material found during the course of search and that the Revenue could not have extrapolated the amount of on-money merely on presumption based on the instances which too did not relate to the year under consideration. The reliance on the loose papers to treat the amounts as un-disclosed income in absence of any other evidence supporting it for the relevant assessment year, was not justified and the addition in that regard deserve to be deleted. The Tribunal dismissed the appeal on merits.
6. The appellate Tribunal confirmed the decision of the Commissioner of Income Tax by firstly observing that statement of buyers whose sales had been recognised in all the years were not recorded by the Assessing Officer. Secondly it found that there was dearth of evidence about the receipt of on-money on the until as well as made by the assessee and in absence of any clinching evidence additions were not sustainable. It was also observed by the Tribunal that no material was found in the possession of the assessee which would closely demonstrate that the assessee in respect of the flats/units other than those recorded in Page 5 of 6 Downloaded on : Sun Sep 17 22:29:23 IST 2023 NEUTRAL CITATION C/TAXAP/583/2022 ORDER DATED: 07/03/2023 undefined the seized documents were also charged on money from the customers. It was observed that there was no material which could lead to the conclusion that the assessee was in practice of charging on-money for sale of flats/units.
6.1 In other words, the appellate authority as well as the Tribunal concurrently found that there was total dearth of evidence to come to conclusion that there was on-money transaction and that on such count it would not entitle the assessing officer to make addition in the income. The material in the nature of loose papers were not reliable, it was observed. More particularly, it was not related to the Assessment Year 2015-2016 and nothing was there to show that the on-money was received in respect of sale of units/flats recognised to be the sale of assessment year concerned. The findings of the appellate authority and Tribunal are based on ground of absence of evidence. The decision is based on appreciation of evidence.
6.2 No question of law therefore could be said to be arising, much less any substantial question of law.
7. The appeal of the Revenue is devoid of merits. Therefore, it is dismissed.
(N.V.ANJARIA, J) (NIRAL R. MEHTA,J) C.M. JOSHI Page 6 of 6 Downloaded on : Sun Sep 17 22:29:23 IST 2023