On-Money Taxable Only on Profit Basis; IDS Telescoping Allowed- ITAT Barred Reopening by Limitation:

On-Money Taxable Only on Profit Basis; IDS Telescoping Allowed- ITAT Barred Reopening by Limitation A survey under Section 133A in the Hindva Builders group revealed diaries showing receipt of unaccounted on-money in real estate projects for AYs 2015–16 to 2017–18. The AO reopened assessments and taxed the entire on-money under Sections 69A/115BBE, denying telescoping of IDS-2016 disclosures. The CIT(A) restricted taxation to 17% profit embedded in on-money, allowed telescoping of IDS income, and deleted additions on unsecured loans and cash deposits. The Revenue appealed. Issues Before Court:  (i) Whether reassessment for AY 2015–16 initiated after 01.04.2021 was barred by limitation in view of Union of India v. Rajeev Bansal; (ii) Whether entire on-money receipts could be taxed or only the profit element; (iii) Whether IDS-2016 disclosures were eligible for telescoping; and (iv) Whether additions on unsecured loans and the questioned unexplained cash deposits were sustainable. ITAT's Decision: The ITAT held that the reassessment for AY 2015-16 was invalid and time-barred, following the Supreme Court’s ruling in Rajeev Bansal, and quashed the reopening without examining merits. For AYs 2016-17 and 2017-18, the Tribunal upheld the CIT(A)’s approach of taxing only the profit in on-money receipts, confirming a 17% estimation as reasonable in the real estate context where unaccounted expenses are inherent. The Tribunal also confirmed the grant of telescoping against income disclosed under IDS-2016, noting absence of evidence that demonetised currency was accepted post-declaration. The unexplained cash deposits were also deleted after verification of the opening cash balance and cash books. All four Revenue appeals were dismissed. To Read Full Judgment, Download PDF Given Below