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Case: Susneh Infrapark (P.) Ltd. v. Assistant Commissioner of Income-tax Citation: [2026] 190 taxmann.com 1208 (Mumbai – Trib.) Bench: ITAT Mumbai Bench 'F' Assessment Years: 2021-22 to 2024-25 Date of Order: 24 September 2026 Result: In favour of the assessee **Facts of the Case** The assessee, a real estate developer, was subjected to search proceedings in connection with the Runwal Group. During the search, the Department found a diary, retrieved WhatsApp and Signal communications and recorded statements of certain employees and group functionaries. Based on this material, the Assessing Officer (AO) alleged that the assessee had received on-money in cash over and above the recorded sale consideration for certain residential and commercial units. The AO treated the entire alleged on-money receipts as undisclosed business income for Assessment Years 2021-22 to 2024-25, without allowing any deduction towards related business expenditure. The Commissioner (Appeals) accepted that only the profit component of such receipts could be taxed but estimated the same at 15%. The AO also disallowed subcontracting expenditure incurred through M/s Senghani Creators Pvt. Ltd., alleging that the subcontracting chain was not genuine. Further, additions were made under section 43CA by substituting the stamp-duty value for the agreement consideration in respect of units sold in projects under construction. Aggrieved, both the assessee and the Revenue preferred appeals before the Tribunal. **Tribunal's Ruling** 1. Only profit element of identified on-money receipts taxable at 8%; no extrapolation to other units The Tribunal observed that the seized diary, digital communications and statements, when considered cumulatively, established a discernible pattern of collection of on-money in certain identified transactions. However, the evidence could not justify presuming that an identical cash component had been received in respect of every other flat or commercial unit sold by the assessee. The Tribunal held that the Revenue could not extrapolate the alleged on-money receipts to transactions not specifically reflected in the seized material without transaction-specific or other reliable supporting evidence. It further held that gross unaccounted business receipts could not automatically be treated as net taxable income, since the receipts could correspond to project-related expenditure. Accordingly, only the profit component embedded in the identified receipts could be brought to tax. Finding no comparable instance, project-specific margin or empirical basis supporting the 15% estimation adopted by the CIT(A), the Tribunal considered estimation of profit at 8% of the identified on-money receipts to be fair and reasonable. 2. Subcontracting expenditure cannot be disallowed merely on account of third-party irregularities The assessee had capitalised subcontracting charges paid to Senghani Creators Pvt. Ltd. to Work-in-Progress (WIP). The AO questioned the genuineness of the expenditure based on irregularities noticed during a separate search in the contractor's case and non-traceability of certain downstream subcontractors. The Tribunal noted that the assessee had furnished work orders, invoices, measurement and quantity records, material reconciliation statements, payment certificates, compliance documents, ledger accounts and bank statements, and deleted the disallowance. 3. Section 43CA cannot be invoked in a year when corresponding revenue has not been recognised The assessee followed the Project Completion Method and had not recognised revenue from the concerned residential units during the relevant assessment years, as the projects were still under construction. The Tribunal upheld the deletion of additions under section 43CA. **Key Takeaway** The ruling reiterates that tax additions must be supported by evidence having a rational nexus with the transactions under consideration. Gross receipts cannot automatically be treated as taxable income, and third-party irregularities cannot justify disallowance where primary evidence has been furnished.