SKZ Developers LLP Vs ACIT/DCIT Cent. (ITAT Ahmedabad)
ITAT Ahmedabad Deletes ‘On-Money’ Additions in Real Estate Projects: Loose Sheets & Offer Rates Cannot Replace Evidence
The Ahmedabad Bench of the ITAT allowed the assessee’s appeals and dismissed the Revenue’s appeals for AYs 2021-22 and 2022-23, holding that additions on account of alleged “on-money” receipts in real estate projects Privilon and Paarijat Eclate were unsustainable. The Tribunal found that the Assessing Officer’s case rested entirely on loose excel sheets, internal cost workings, broker data and WhatsApp chats seized during search, which merely reflected offer/indicative rates and budget estimates, not actual concluded sale transactions. There was no corroborative evidence such as confirmation from buyers, proof of cash flow, unaccounted investments, or utilisation of alleged on-money.
The ITAT held that suspicion and commercial assumptions—such as sale below estimated construction cost—cannot substitute proof. It rejected both the AO’s approach of taxing the entire alleged on-money and the CIT(A)’s method of estimating a flat sale rate of ₹6,500 per sq. ft. and taxing 17% profit thereon, observing that even such estimation lacked evidentiary support. Relying on settled law that loose papers without corroboration have no probative value, the Tribunal deleted the entire on-money additions. However, it upheld the CIT(A)’s view on deemed rent under section 23(5) for unsold units, sustaining estimation at 3% of value. Overall, assessee’s appeals were allowed on on-money issues, and Revenue’s appeals were dismissed
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
