The present appeal by the Revenue is directed against order dated 28.07.2011 of the Income Tax Appellate Tribunal, Ahmedabad Bench ‘A’ in ITA No.1844 of 2009 in relation to Assessment Year 2005-06. 1.1 The following question is raised by the appellant proposing it as a substantial question of law.
“Whether the Appellate Tribunal is right in law and on facts in deleting the addition made by the Assessing Officer on account of `On-Money' amounting to Rs.1,52,53,128/-”
2. We heard learned Senior Counsel Mr. Manish R Bhatt assisted by learned advocate Ms. Mauna Bhatt for the appellant.
3. The relevant facts emerging from the record of the appeal are that the assessee partnership firm, engaged in the business of real estate, developed the project namely ‘Amarjyot Apartment’ and ‘Amardham’ during the financial years 1997-98 to 2003-04. For the year under consideration being assessment year 2005-06, the assessee showed the sale of 39 flats for the total price of Rs.2,18,11,872/-. Net profit of Rs.16,79,144/- was shown and deduction under section 80-IB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for sake of brevity) was claimed for that amount. A search was carried out under section 132 of the Act on 18.06.2003 in which certain loose papers and documents were found and were seized. The statement of Vimal Chimanbhai Shah, partner of the assessee firm, and that of one Chimanbhai Shah, whose proprietary concern had carried out the construction work, came to be recorded. In the initial statement, undisclosed income was admitted, but that was retracted in statement under section 132(4) of the Act by way of affidavit.
3.1 From the loose papers being page No.19, page No.80 and page No.65 found during the search, the Assessing Officer came to a conclusion that the assessee had received On-money at the rate of Rs.180/- per sq. ft. On that basis, he worked out the `On-money' additions for all the Assessment Years 1988-99 to 2004-05, the amounts of Rs.96,50,613/-, Rs.10,54,695/-, Rs.11,95,195/-, Rs.1,58,17,291/-, Rs.41,23,447/- and Rs.1,03,18,945/-
respectively. In respect of the year under consideration i.e. 2005-06, in course of assessment proceedings under section 143(3), the Assessing Officer made addition of Rs.1,52,53,128/-.
3.2 The aggrieved assessee approached before the Commissioner of Income-tax (Appeals) by way of an appeal, who deleted the addition. The department preferred appeal before the Income Tax Appellate Tribunal in respect of all the Assessment Years. The Tribunal in the impugned order held in favour of the assessee on the ground that in assessee’s own case in ITA No.2041 for the previous Assessment Year 2004-05, it had held that in absence of any cogent evidence, no extrapolation could be made.
4. The following observations in the impugned order reflect the reasoning adopted by the Tribunal while dismissing the Department’s appeal.
“After hearing both the sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that in para 10, the ITAT, Ahmedabad 'D' Bench in assessee's own case in ITA No.2041/A/2007 for the assessment year 2004- 05, has held that in the absence of any cogent evidence, there was no scope for extrapolation. On this basis, it was held that addition cannot be made in other years. Admittedly, evidence of 'on money' alleged to be received pertains to earlier assessment year and not for the assessment year under appeal. We, therefore, following the decision of the Tribunal in assessee's own case for the assessment year 2004-05 (supra), uphold the view taken by the ld. CIT(A), who has deleted the addition of Rs. 1,52,53,128/-. Resultantly, this ground of appeal is rejected.”
5. It could be seen from the facts that the housing projects were developed during the years prior to Assessment Year 2004-05. The search was conducted on 18.06.2003 wherein the loose papers or the documents were seized. The material seized in form of loose paper was qua one flat No. A/204 only in respect of which taking of `on-money' could be alleged. It was on the basis of such loose papers, the addition on On-money account was sought to be made. That material could not have been used for the subsequent years for making addition on the same count. The addition in the Assessment Year 2004-05 was not sustained by the Tribunal in the appeal before it on the ground that the Assessing Officer ought to have confined himself in respect of sale transaction of one particular flat and he could not have on that basis calculated the addition for all flats. Accordingly, in respect of previous Assessment Year 2004-05, it was held by the Tribunal that the addition for On-money, made in the said year was not proper inasmuch as such addition could have been made only in respect of the flat in respect of which the evidence of On-money was found at the time of search. The said decision dated 31.03.2011 of ITAT, Ahmedabad was relied on, on behalf of the assessee.
5.1 Even as for the year 2004-05 also, the addition on account of On- money was held to be on the basis of guess work and extrapolation, again in the next year 2005-06 being year under consideration the addition of Rs.1,52,53,128/- was made repeating the same story. When in respect of previous Assessment Year 2004-05 also the Tribunal had dismissed the Department’s appeal on the ground that the addition in that year also was based on extrapolation, it emerged beyond pale of doubt that for the addition made for the year 2005-06 there was no evidence whatsoever and the same was presumptive in nature.
6. In above view, the findings recorded by the Tribunal were proper and legal flowing logically from the facts on record. The Tribunal has not committed any error in passing the impugned order. The appeal is devoid of merit, and raises no substantial question of law required to be considered.
7. Accordingly, the appeal is dismissed.
(V.M. SAHAI, J.)
(N.V. ANJARIA, J.)
(sn devu pps)