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Asstt. Commissioner of Income Tax 25(2), C-11, Room No.108, Pratyakshakar Bhavan, Bandra-Kurla Complex, Bandra (E), Mumbai-400051. Vs. M/s Om Construction, 5, Sai Sadan, Roshan Nagar, Borivali (W), Mumbai-400092
January, 12th 2015
                    ,                  ""          

         .. ,                           .. ,   
                   ./I.T.A. No.6234/Mum/2012
                (   / Assessment Year :2006-07)

  Asstt. Commissioner of Income   /        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),
        ( /Appellant)             ..       (    / Respondent)

                   Cross-objection No.264/Mum/2013
                             arising out of

                   ./I.T.A. No.6234/Mum/2012
                (   / Assessment Year :2006-07)

  M/s Om Construction,            /        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),
        ( /Appellant)             ..       (    / Respondent)

               . /   . / PAN/GIRNo. :AAAFO9196K

            / Appellant by             :   Shri Premanand J
              /Respondent by :             Shri Vijay Mehta.

              / Date of Hearing
                                               : 1.1.2015
             /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

                                   / 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.
            9th Jan 2015    

          sd                                          sd
(.. / H.L. KARWA)                          (..  ,/ B.R. BASKARAN)
  / PRESIDENT                                /Accountant Member
  Mumbai: 9th Jan, 2015.

. ../ SRL , Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent.
3.      () / The CIT(A)- concerned
4.       / CIT concerned
5.       ,     ,                   /
      DR, ITAT, Mumbai concerned
6.      / Guard file.

                                                             / BY ORDER,
             true copy
                                                    (Asstt. Registrar)
                                      ,  /ITAT, Mumbai
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