Global Enterprise, Surat vs Department Of Income Tax

"i) On the facts and circumstance of the case and in law, the Ld CIT(A) erred in law and in facts in deleting the addition at Rs.85,53,656 made on account of on-

money received by the assessee on sale of flats in the Surya Enclave Project without appreciating the documentary evidence regarding the on-money received by the assessee and also the valuation report of the valuer.

ii) On the facts and circumstance of the case and in law, the Ld CIT(A) erred in law and in facts in holding that the on-money received in one flat in the sister concern cannot be the basis for holding that same on-money was received by the assessee on the sale of other flats ignoring that the Ld CIT(A) himself in his order has held that the books of accounts maintained by the assessee firm were not proper and not reliable as complete receipts were not shown. In the circumstances, the estimation done by the Assessing Officer for other flats based on the evidence of on- money in the project of the sister concern of the assessee in the vicinity as well as based on the valuer's report and also considering the assessee's own admission of on-money during the course of search in the same project and the market trend in real estate ought to have been upheld by the Ld CIT(A).

iii) On the facts and circumstance of the case and in law, the Ld CIT(A) erred in law and in facts in restricting the estimation of N.P at 15 % from 16% estimated by the Assessing Office relying upon the decision of Hon,ble ITAT in other cases, where the facts are quite different from the facts of the instant case and also ignoring that the Assessing Officer had made the estimation considering the valuation report, and assessee's own admission of on-money in the project."

2. Assessee is a partnership firm and engaged in the construction activity. A search operation took place in assessee's case, one file BS-20 was seized which indicated that documentation price agreed in respect of flat no. D-507 of built I.T.A. No. 722/Ahd/11 A.Y. 08-09 [DCIT vs. M/s. Global Ente rprise ) Page 3

up area 3500 sq.ft. in Surya Palace was of Rs.31,50,000/- whereas price valued by Government approved registered valuer was Rs.57,75,000/- thus, there was difference of Rs.750/- per sq.ft. which was received as on money. Assessing Officer further observed that in a sister concern, on money of Rs.1,296/- per sq.ft. was received in Surya Enclave. Therefore, Assessing Officer adopted rate of on money received at the average rate of Rs.1,023.50 per sq.ft. for 92 flats and Rs.750/- per sqft. For 40 flats (purchased by the partner) and estimated on money turnover of Rs.44,28,35,350/- and applied net proit rate of 16% giving total profit of Rs.7,08,53,656/-. As assessee has offered income of Rs.6,23,00,000/-, Assessing Officer has made addition for difference of Rs.85,53,656/-.

2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to assessee.

2.2 Same has been opposed on behalf of Revenue inter alia learned Departmental Representative Shri Subhash Bains submitted that CIT(A) was not justified in deleting addition of Rs.85,53,656/- made on account of on money received by assessee on sale of flats in Surya Palace Project without appreciating documentary evidence regarding on money received by assessee and also the valuation report of valuer. CIT(A) erred in holding that on money received in one flat in sister concern cannot be the basis for holding that same on I.T.A. No. 722/Ahd/11 A.Y. 08-09 [DCIT vs. M/s. Global Ente rprise ) Page 4

money received by assessee on sale of other flats ignoring that CIT(A) himself in his order has held that books of accounts maintained by assessee were not proper and not reliable as complete receipts were not shown. In the circumstances, estimation done by Assessing Officer for other flats based on evidence of on money in the project of sister concern of assessee in the vicinity as well as based on valuer's report and also considered assessee's own admission of on money during course of search in same project and market trend in real estate ought to have been upheld by CIT(A). CIT(A) further erred in restricting the estimation of net profit @ 15% from 16% estimate by Assessing Officer. In sum and substance, ld. Departmental Representative submitted that order of CIT(A) be set aside and that of Assessing Officer on the issue be restored. On other hand, learned Authorized Representative Shri Rajesh Shah relied on the decision of CIT(A).

2.3 After going through rival submissions and material on record, we find it is undisputed that books of accounts maintained by assessee were not proper and not reliable as complete receipts were not shown. Assessee himself admitted receipt of on money and disclosed an amount of Rs.6,23,00,000/- as unaccounted income on this account. In view of above, CIT(A) held that Assessing Officer was justified in rejecting books of accounts. It is not issue before us. However, the estimation of on money done by Assessing Officer was not found correct as figures of on money received in one I.T.A. No. 722/Ahd/11 A.Y. 08-09 [DCIT vs. M/s. Global Ente rprise ) Page 5

flat of sister concern cannot be the basis for holding that same on money was received by assessee for all flats. At the best, on money received on the basis of valuation report for flat of assessee's project, can only be considered which is only Rs.750/- per sq.ft. By taking this, total on money received on total sq. ft. area of 470800 sq.ft. for 132 flats gives on money of Rs.35,31,00,000/- on which assessee himself has disclosed profit of Rs.6,23,00,000/- which gives net profit rate of 17.64%. Hence, there was no justification for making any addition. This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same.

3. In the result, appeal filed by Revenue is dismissed.

Pronounced in the open Court on this the 30th day of January, 2015.

Sd/- Sd/- (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER True Copy S.K.SINHA

आदे श क ूितिल(प अमे(षत / Copy of Order Forwarded to:-

1. राजःव / Revenue

2. आवेदक / Assessee

3. संबंिधत आयकर आयु1 / Concerned CIT

4. आयकर आयु1- अपील / CIT (A)

5. (वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड: फाइल / Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।