Silver Infra Vs DCIT (ITAT Ahmedabad)
Assessee, a partnership firm, filed its return for AY 2020-21 declaring a loss of ₹10.33 lakh. A survey u/s 133A in April 2019 led to seizure of loose papers, documents, & digital data, revealing unaccounted “on-money” receipts of ₹9.63 crore from unit bookings in its Silver Spring project & cash payment of ₹11 crore for purchase of land. The partner admitted these facts in his statement u/s 131. AO treated the cash land payment as unexplained investment u/s 69 & added ₹11 crore, completing assessment at income of ₹11.10 crore.
On appeal, CIT(A) held that the entire land payment could not be treated as unexplained investment since source of ₹9.63 crore was already explained from on-money receipts & balance was contributed by partners. Instead, he estimated profit on such on-money at 15%, sustaining addition of ₹1.65 crore as business income.
Both sides appealed. Revenue argued that the entire ₹11 crore was unexplained investment based on seized documents & partner’s admission. Assessee contended that the cash was sourced from on-money receipts & partners’ contribution, & that no addition should survive; alternatively, profit estimation should be lower.
Tribunal held that AO himself had found the assessee received ₹9.63 crore in on-money receipts & used it for land purchase, while the balance ₹1.36 crore came from partners’ cash contribution, duly reflected in seized ledgers. Thus, the ₹11 crore payment could not be added in assessee’s hands as unexplained investment. However, Tribunal accepted that on-money receipts constituted unaccounted income. It clarified that only the receipts pertaining to FY 2019-20 (01.04.2019 to 20.04.2019) could be taxed in AY 2020-21, & earlier receipts were taxable in relevant years subject to limitation. It upheld CIT(A)’s approach of taxing only estimated profit at 15% on such receipts. Accordingly, Revenue’s appeal was dismissed, & assessee’s appeal was partly allowed for statistical purposes, with direction to AO to recompute income by applying 15% profit rate only on on-money receipts of FY 2019-20.
