Om Construction , Mumbai vs Assessee
- CitationI.T.A. No.6234/Mum/2012
Ratio decidendi
The rule this decision rests on
Where the assessee's on-money receipts are shown to have been earned alongside unaccounted expenses, and the Settlement Commission has already accepted that only a net profit element should be estimated on such receipts, the same estimation of net profit at 12% of the on-money receipts is applied to a later assessment year whose facts are identical, namely an assessment based solely on survey operations. An estimate of net profit at a percentage of undisclosed receipts, once accepted by the Settlement Commission on the assessee's own working, is not displaced by a reference to a different percentage in that order where the reference is unconnected to the basis on which the estimate was made.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM) सव ी एच.एल. कावा, अ य एवं बी.आर.बा करन, लेखा सद य आयकर अपील सं./I.T.A. No.6234/Mum/2012 ( नधारण वष / Assessment Year :2006-07)
Asstt. Commissioner of Income बनाम/ M/s Om Construction, Tax 25(2), Vs. 5, Sai Sadan, Roshan Nagar, C-11, Room No.108, Borivali (W), Pratyakshakar Bhavan, Mumbai-400092 Bandra-Kurla Complex, Bandra (E), Mumbai-400051. (अपीलाथ /Appellant) .. ( यथ / Respondent)
Cross-objection No.264/Mum/2013 arising out of
आयकर अपील सं./I.T.A. No.6234/Mum/2012 ( नधारण वष / Assessment Year :2006-07)
M/s Om Construction, बनाम/ Asstt. Commissioner of Income 5, Sai Sadan, Roshan Nagar, Vs. Tax 25(2), Borivali (W), C-11, Room No.108, Mumbai-400092 Pratyakshakar Bhavan, Bandra-Kurla Complex, Bandra (E), Mumbai-400051. (अपीलाथ /Appellant) .. ( यथ / Respondent)
थायी ले ख ा सं . /जीआइआर सं . /PAN/GIRNo. :AAAFO9196K
अपीलाथ ओर से / Appellant by : Shri Premanand J यथ क ओर से/Respondent by : Shri Vijay Mehta.
सन ु वाई क तार ख / Date of Hearing : 1.1.2015 घोषणा क तार ख /Date of Pronouncement : 9.01.2015 ITA No.6234/M/12 2 C O N o . 2 6 4 / Mu m / 2 0 1 3
आदे श / O R D E R Per B.R.BASKARAN, Accountant Member:
The appeal of the revenue and the cross objection filed by the assessee are directed against the order dated 06-07-2012 passed by Ld CIT(A)-35, Mumbai and they relate to the assessment year 2006-07.
2. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition relating to on-money receipt of Rs.1,40,00,000/- and instead estimating the net profit thereon. In the cross objection, the assessee is supporting the decision of Ld CIT(A).
3. We heard the parties and perused the record. The assessee is a member of Gangar Group and is engaged in the business of builders and developers. The revenue carried out survey operations at the business premises of the above said group. During the course of survey operations, it was noticed that the assessee company have been receiving money outside the books of account ranging from 40% to 55% of the sale agreement value. Further the Gangar group of cases also admitted additional income of Rs.5.00 crores at the time of survey operation. During the course of assessment proceedings, the assessing officer determined the on-money receipts at Rs.1.40 crores and assessed the same as income of the assessee.
4. In the mean time, the assessee as well as other group concerns filed settlement petition before the Hon'ble Settlement Commission. The assessee's petition filed for AY 2005-06 was admitted. The order was passed by the Settlement Commission subsequently, i.e., subsequent to the date of passing of assessment order. In its order, the Settlement Commission accepted the contentions of the assessee that the impounded papers itself show that there are numerous instances of unaccounted expenses and also the builders have to incur lots of expenses outside books of account. The assessee had offered profit @ 12% of the undisclosed receipts. It was further submitted that the above said net profit amount along with the value of scrap sales and adhoc disclosures work out to more than 35%. The Hon'ble Settlement Commission accepted the submissions of the assessee and accordingly upheld the estimation of net profit at 12% of the on-money receipts in assessment year 2005-06.
ITA No.6234/M/12 3 C O N o . 2 6 4 / Mu m / 2 0 1 3
5. In the appeal filed by the assessee before Ld CIT(A) challenging the assessment order of AY 2006-07, the first appellate authority considered the order of the Hon'ble Settlement Commission and accordingly held that the net profit calculated at 12% (it was stated that it was wrongly mentioned as 17% by Ld CIT(A)) on the on-money receipts should only be assessed. The revenue is aggrieved by this decision.
6. We have already noticed that the Hon'ble Settlement Commission has accepted the contentions of the assessee that it has incurred expenses outside the books of accounts and further the impounded materials also show that many expenses have not been accounted for. Under these set of facts, the Hon'ble Settlement Commission has accepted the contention of the assessee that only net profit should be estimated on the amounts received outside the books of account. Accordingly, the Hon'ble Settlement Commission has estimated the net profit at 12% of thereon. The assessments of AY 2005-06 and also the year before us, viz., AY 2006-07 have been taken up for scrutiny only on the basis of survey operations and hence the facts prevailing in both the cases are identical in nature. Hence, we do not find it necessary to take a different view from that one taken by the Hon'ble Settlement Commission. Accordingly, we are of the view that the Ld CIT(A) was justified in estimating the profit at 12% (it is stated that the rate of profit was wrongly mentioned as 17% in the order of Ld CIT(A)).
7. During the course of hearing, the Ld D.R submitted that there is a reference of 35% in the Settlement Commission's order. However, on a perusal of the said order, we notice that the assessee has given a working of the profit of the project by considering the value of scrap sales and adhoc disclosure in order to substantiate the offer of 12%. Hence, in our view, the said reference of 35% is not relevant here.
8. In view of the foregoing discussions, we do not find any reason to interfere with the order passed by Ld CIT(A).
9. The cross objection has been filed by the assessee only to support the order of Ld CIT(A). Since we have confirmed the order of Ld CIT(A), the same does not require any adjudication.
ITA No.6234/M/12 4 C O N o . 2 6 4 / Mu m / 2 0 1 3
10. In the result, the appeal of the revenue and the cross objection of the assessee are dismissed.
The above order was pronounced in the open court on 9th Jan,2015. घोषणा खुले यायालय म दनांकः 9th Jan 2015 को क गई ।
sd sd (एच.एल. कावा/ H.L. KARWA) (बी.आर. बा करन,/ B.R. BASKARAN) अ य / PRESIDENT लेखा सद य/Accountant Member मब ुं ई Mumbai: 9th Jan, 2015.
व. न.स./ SRL , Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आयु त(अपील) / The CIT(A)- concerned 4. आयकर आयु त / CIT concerned 5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ुं ई / DR, ITAT, Mumbai concerned 6. गाड फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai
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