Nivin A. Aswani Surat

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IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH ? B ? (CAMP AT SURAT )

Before Shri DEEPAK R. SHAH, ACCOUNTANAT MEMBER and
Shri D.T. GARASIA, JUDICIAL MEMBER

Date of hearing : 08/01/2010 Drafted on: 03/02/2010
ITA No.2724/AHD/2007
Assessment Year : 2005-06

Asstt.CIT Vs. Shri Navin A.Aswani
Central Circle-1 Prop.Surya Plaza Developer
Surat J-133, J.J. A/c.Market
Ring Road, Surat
PAN/GIR No. : AECPA 9591 G
(APPELLANT) .. (RESPONDENT)
And
CO No.281/Ahd/2007
(arising out of ITA No.2724/Ahd/2007)

Shri Navin A.Aswani, vs. The ACIT
Surat Surat
( Cross Objector ) ( Respondent )

Assessee by : Shri Rajesh Kumar Shah
Revenue by: Smt. Jothi Lakshmi Nayak, Sr.AR

O R D E R

PER SHRI DEEPAK R.SHAH, AM:

This appeal filed by the Revenue against the order of the Learned

CIT(Appeals)-II, Ahmedabad dated 28/03/2007 passed for Assessment

Year 2005-06 on the following ground(s):-

1. The Learned CIT(Appeals) has erred on the facts and
circumstances of the case and in law in deleting the addition of
Rs.13,77,760/- which was made by the A.O. by correctly adopting
the rate of profit @ 14.28% as against the profit @ 12% shown by
the assessee.
2. On the facts and in the circumstances of the case and in law,
the CIT(A)ought to have upheld the order of the A.O.

———————Page 2———————

ITA No.2724/Ahd/2007
& CO No.281/Ahd/2007 (By Assessee)
Asstt.CIT vs. Shri Navin A. Aswani
Asst.Year ? 2005-06
– 2 –

3. It is, therefore, prayed that the order of the CIT(A) be set
aside and that of the A.O. be restored to the above extent.

2. In response to this appeal, assessee has filed Cross Objection,

wherein following ground(s) has been taken:-

1. That on the facts and on the circumstances of the case, Hon’ble
CIT(A) has erred in upholding the additions on account of profit on
unaccounted receipts for Rs.13,77,760/-.

2. We crave to leave to add, alter or modify any grounds of cross
objection.

3. A search was carried out on 30/06/2004 at the business premises as

well as residential premise of the assessee. During the course of search,

evidences were found showing ?on-money? to the tune of Rs.2,93,45,086/-

from Surya Plaza Project. The assessee disclosed unaccounted income of

Rs.125 lacs in respect of the said project. During the assessment

proceedings, the assessee submitted that maximum ?on-money? derived

from the said project was Rs.12,16,73,000/- and assessee has already

disclosed income of Rs.125 lacs which works out to be 10.27% of

unaccounted receipts. The Assessing Officer held that in one of the

associated cases, namely,Shri Jay Prakash Aswani of Aswani group had

disclosed a sum of Rs.50 lacs from the unaccounted receipt of Rs.350 lacs

from the project named ?Somnath Enclave? this works out to 14.28%.

Therefore, this estimate was applied to unrecorded receipt of

Rs.12.16crores by the assessee and undisclosed income was worked out at

Rs.1,73,74,904/- against Rs.125 lacs disclosed by the assessee. This

resulted into addition of Rs.48,74,904/-.

———————Page 3———————

ITA No.2724/Ahd/2007
& CO No.281/Ahd/2007 (By Assessee)
Asstt.CIT vs. Shri Navin A. Aswani
Asst.Year ? 2005-06
– 3 –

4. The Learned CIT(Appeals) held that Shri Jay Prakash Aswani made

a disclosure of Rs.50 lacs but it was not by way of percentage of

unrecorded receipt. In the said case, the project was ?Somnath Enclave?

which is of a different style than that of ?Surya Plaza? developed by the

assessee. Applying the decision of ITAT Ahmedabad Bench in the case

of Gurukripa Developers vs. ACIT (ITA No.243/Ahd/2003 vide order

dated 09/02/2007), wherein Net Profit rate of 12% was applied to ?on-

money? collection, the Learned CIT(Appeals) directed to apply 12% Net

Profit to the excess collection of Rs.11,56,48,000/-. Accordingly, income

was worked out at Rs.1,38,77,600/-. The Revenue challenges partial

deletion of addition whereas, the assessee challenges sustenance of

addition.

5. The Learned Departmental Representative submitted that the

percentage of Net Profit on unaccounted ?on-money? cannot be different

based on the nature of the project and size or location of the project. Shri

Jay Prakash Aswani declared income of Rs.50 lacs when it was found that

?on-money? received by him from the project were Rs.350 lacs. Thus,

there is sound basis for computing the income as per connected case.

Accordingly, the same has to be upheld.

6. The ld. counsel for the assessee, on the other hand, submitted that

the profit of ?on-money? was estimated in comparison to other project of

———————Page 4———————

ITA No.2724/Ahd/2007
& CO No.281/Ahd/2007 (By Assessee)
Asstt.CIT vs. Shri Navin A. Aswani
Asst.Year ? 2005-06
– 4 –

same group in the name of ?Somnath Enclave?. The comparison is not

justifiable because both the projects were constructed in different areas.

The project in ?Somnath Enclave? is in posh locality of Surat, whereas

the project by the assessee is in the slum area and, hence, not likely to

fetch more profit. Even in another group cases of Shri Manharbhai

M.Kakadia & Others (AOP), the same Assessing Officer has estimated

the profit at 12% of the ?on-money? received. The selling rate in the case

of Manharbhai M.Kapadia, it was estimated at Rs.960/- per sq.ft., whereas

in the case of assessee, the rate is estimated at Rs.811/-. This itself

proved that the project of the assessee was in low grade and, hence, the

profit in such cases will be lower because selling rate are lesser and basic

construction cost does not vary much. He accordingly submitted that the

income estimated by assessee estimated being 10.27% of ?on-money? is to

be accepted.

7. We have heard the rival submissions and perused the orders of the

lower authorities and the materials available on record. In the instance

case, the issue is only to estimate the income from on-money receipts.

ITAT Ahmedabad in the case of Gurukripa Developers vs. ACIT (supra)

on identical facts of the case directed to adopt rate of 12% of the ?on-

money? collection. Since the Learned CIT(Appeals) has applied the Net

Profit rate at 12% based on the decision of Tribunal and since no contrary

decision has been cited, the order of the Learned CIT(Appeals) needs no

interference which is confirmed.

———————Page 5———————

ITA No.2724/Ahd/2007
& CO No.281/Ahd/2007 (By Assessee)
Asstt.CIT vs. Shri Navin A. Aswani
Asst.Year ? 2005-06
– 5 –

9. As a result, appeal of the Revenue and Cross Objection filed by the

assessee are dismissed.

Order signed, dated and pronounced in the Court on 05 /02 /2010.

Sd/- Sd/-
( D.T.GARASIA ) ( DEEPAK R.SHAH )
JUDICIAL MEMBER ACCOUNTANT MEMBER

Ahmedabad; Dated 05/ 02 /2010

T.C. NAIR

Copy of the Order forwarded to :
1. The Appellant.
2. The Respondent
3. The CIT Concerned.
4. The ld. CIT(Appeals)-II, Ahmedabad
5. The DR, Ahmedabad Bench
6. The Guard File.
BY ORDER,

//True Copy//

(Dy./Asstt.Registrar), ITAT, Ahmedabad

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