DCIT Vs Hindva Builders (ITAT Ahmedabad)
On-Money Can’t Be Taxed in Full: Gross Receipts Not Income: ITAT Ahmedabad Upholds 17% Estimation & IDS Telescoping; ITAT Confirms Profit-Only Tax on Real-Estate On-Money
The Ahmedabad Bench of the ITAT, vide common order dated 01.01.2026, dismissed the Revenue’s appeals in DCIT v. Hindva Builders (ITA Nos. 1450 & 1451/Ahd/2024 and 1562 & 1563/Ahd/2024) relating to AYs 2015-16, 2016-17 and 2017-18, arising from additions on alleged receipt of on-money in the assessee’s real-estate projects “Dreamland” and “Sicilia”.
For AY 2015-16, the Tribunal quashed the reassessment itself, holding that the notice u/s 148 issued after 01.04.2021 was barred by limitation, following the Supreme Court decisions in Union of India v. Rajeev Bansal and allied cases. Consequently, the entire reassessment was held invalid without going into merits.
For AY 2016-17, while accepting that on-money was received, the Tribunal upheld the CIT(A)’s finding that entire on-money receipts cannot be taxed as income. Relying on settled Gujarat HC and ITAT jurisprudence, the Tribunal confirmed estimation of net profit @ 17% of gross on-money receipts as reasonable, rejecting the AO’s approach of taxing 100% u/s 69A r.w.s. 115BBE. Importantly, the Tribunal also upheld telescoping/set-off of income disclosed under IDS-2016, noting that the assessee had already declared ₹3 crore under the scheme, which exceeded the estimated profit addition. Allegations regarding acceptance of demonetised currency were held to be unsupported by reliable evidence.
For AY 2017-18, the Tribunal again sustained taxation of only the profit element @ 17% on on-money receipts and rejected the Revenue’s challenge. It further upheld deletion of addition on account of unsecured loans and corresponding interest, accepting that the assessee had discharged the burden regarding identity, creditworthiness and genuineness.
Overall, the ITAT reaffirmed that in real-estate on-money cases, tax is leviable only on the real income (profit element) and not on gross receipts, and that valid disclosures under IDS are entitled to telescoping benefit. All Revenue appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
