Ginger Properties Private Limited Vs ACIT (ITAT Ahmedabad)
Ginger Properties Private Limited, a real estate developer involved in the “Sankalp Grace-II” commercial project, is embroiled in a tax dispute with the Assistant Commissioner of Income Tax (ACIT), as cross-appeals for the assessment years 2018-19 and 2019-20 were heard and decided by the Income Tax Appellate Tribunal (ITAT) Ahmedabad. The core of the contention stems from a search and seizure operation conducted on October 30, 2018, which unearthed handwritten diaries, loose papers, and other documents pointing to significant unaccounted cash receipts (termed “on-money”) from property sales and corresponding unaccounted cash expenditures.
The Assessing Officer (AO), based on the seized material and statements from group employees, alleged that Ginger Properties was engaged in a syndicate of unaccounted transactions, charging cash over and above the registered value of units. The AO sought to tax the entire “on-money” receipts as business income in the years they were received and also disallowed unaccounted cash expenses. The assessee, however, argued that only the net profit element from such transactions should be taxed, that the full unaccounted receipts should not be added, and that related expenses should be allowed. They also contested the disallowance of interest expenses, asserting sufficient own funds for interest-free advances. The Commissioner of Income Tax (Appeals) [CIT(A)] had previously provided partial relief to the assessee, estimating the net profit at 14% of the on-money receipts and allowing the telescoping of unaccounted expenses against these receipts.
