Sri.K.P.Varghese, Cochin V. DCIT, Cochin

CO 23/COCH/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9694 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C B M WARRIER
• Assessee Lawyers: LATHA V KUMAR
• Keywords: Document seized; Documents seized
• Section: 143(3); 133A; 153A; 132; 15

Judgement Text

1 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 438 & 439/COCH/2013 (ASSESSMENT YEARS 2007-08 & 2008-09) THE DY.CIT, CENT.CIR.2 VS SHRI K.P. VARGHESE ERNAKULAM A-43, ASHOKA APARTMENT MARINE DRIVE, ERNAKULAM PAN : AAQPV2431C (APPELLANT) (RESPONDENT) C.O. NOS 22 & 23/COCH/2014 (ARISING OUT OF I.T.A NO. 438 & 439/COCH/2013) (ASSESSMENT YEARS 2007-08 & 2008-09) SHRI K.P. VARGHESE VS DY.CIT, CENT.CIR.2 MARINE DRIVE, KOCHI CHITTOOR ROAD, KOCHI-11 (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SMT. LATHA V KUMAR RESPONDENT BY : SHRI C.B.M WARRIER DATE OF HEARING : 05-03-2014 DATE OF PRONOUNCEMENT : 06-06-2014 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED THE APPEALS AGAINST THE COMM ON ORDER PASSED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2007-0 8 AND 2008-09 AND THE ASSESSEE HAS FILED THE CROSS OBJECTIONS. SINCE COMMON ISSUE ARISES 2 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 FOR CONSIDERATION IN BOTH THE APPEALS AND THE CROSS OBJECTIONS THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON O RDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ESTIM ATION PROFIT IN REAL ESTATE BUSINESS. 3. SMT. LATHA V KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSEE ENGAGED HIMSELF IN THE BUSINESS OF FASHION JEWELLER Y. IN ADDITION TO THE BUSINESS OF FASHION JEWELLERY, HE ENGAGED HIMSELF I N REAL ESTATE BUSINESS DURING THE ASSESSMENT YEARS UNDER CONSIDERATION. A CCORDING TO THE LD.DR, A SEARCH CONDUCTED AT THE RESIDENTIAL PREMISES OF S HRI K.M. NASSARUDDIN AND SHRI C. A LATHEEF, WHO ARE PARTNERS OF M/S NL P ROPERTIES & DEVELOPERS. A CONSEQUENTIAL SEARCH WAS ALSO CONDUC TED AT THE PREMISES OF THE ASSESSEE ON 22-01-2008. ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIONS, THE ASSESSING OFFI CER ISSUED NOTICE U/S 158BC OF THE ACT. ACCORDING TO THE LD.DR, THE ASSE SSEE ACTED AS AN AGGREGATOR OF LAND FOR ETL INFRASTRUCTURE SERVICES LTD. AS PER THE MEMORANDUM OF UNDERSTANDING EXECUTED BETWEEN THE AS SESSEE AND M/S ETL INFRASTRUCTURE SERVICES LTD, THE ASSESSEE AGREE D TO ARRANGE SALE OF 3,000 ACRES OF LAND AT MULANTHURUTHY AND POOTHOTTA. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT UPTO THE FINANCIAL YEAR 2007 -08, AROUND 800 ACRES OF 3 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 LAND WAS TRANSFERRED TO M/S ETL INFRASTRUCTURE SERV ICES LTD EITHER BY EXECUTING THE SALE DEED OR BY EXECUTING THE POWER O F ATTORNEY BY THE RESPECTIVE OWNERS AFTER RECEIVING THE FULL SALE CON SIDERATION. ACCORDING TO THE LD.DR, DURING THE FINANCIAL YEAR 2006-07 RELEVA NT TO ASSESSMENT YEAR 2007-08 THE ASSESSEE HAS RECEIVED RS.67,40,93,530 F ROM M/S ETL INFRASTRUCTURE SERVICES LTD AS ADVANCE FOR PURCHASI NG THE LAND. THE ASSESSEE CLAIMED CERTAIN EXPENDITURE AS COMMISSION PAID TO M/S NL PROPERTIES & DEVELOPERS, SALARY, OFFICE EXPENSES, E TC. THE ASSESSEE HAS ALSO CLAIMED EXPENDITURE FOR LAND DEVELOPMENT. ACC ORDING TO THE LD.DR, THE ASSESSEE IS GETTING MONEY IN ADVANCE FROM THE C OMPANY FOR PURCHASING THE LAND AND PAID TO THE RESPECTIVE LAND OWNERS. AROUND 800 ACRES OF LAND WAS ALREADY TRANSFERRED TO THE COMPAN Y. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HA S EARNED PROFIT IN THESE TRANSACTIONS. IN THE ABSENCE OF PROPER BOOKS OF AC COUNT, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER ESTIMATED THE PROFIT A T 5% OF THE TOTAL RECEIPT. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) WITH OUT ANY BASIS REDUCED THE PROFIT AT 2.5%. 4. REFERRING TO THE REMAND REPORT FILED BY THE DEPU TY COMMISSIONER OF INCOME-TAX, THE LD.DR SUBMITTED THAT THE COMMISSION SAID TO BE PAID TO M/S NL PROPERTIES & DEVELOPERS WAS DISALLOWED SINCE TAX DEDUCTED WAS 4 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 NOT DEPOSITED INTO THE GOVERNMENT ACCOUNT. MOREOVE R, THE EXPENSES CLAIMED BY THE ASSESSEE WAS MAINLY INCURRED IN CASH , THEREFORE, IT COULD NOT BE VERIFIED BY THE ASSESSING OFFICER. THEREFOR E, THE ASSESSEE COULD HAVE USED THE EXPENSES CLAIMED EITHER FOR OWN PURPO SES OR FOR ANY OTHER INVESTMENTS. HENCE, ACCORDING TO THE LD.DR, THE CI T(A) IS NOT JUSTIFIED IN RESTRICTING THE INCOME AT 2.5% OF THE TOTAL RECEIPT S. 5. IN RESPECT OF TRANSACTIONS WITH JAIN HOUSING & C ONSTRUCTION PVT LTD, THE LD.DR SUBMITTED THAT IN ADDITION TO ACTING AS A BROKER, THE ASSESSEE HAS ALSO ACTED AS A CIVIL CONTRACTOR. ACCORDING TO THE LD.DR, AS PER THE AGREEMENT WITH M/S JAIN HOUSING & CONSTRUCTIONS PVT LTD, THE ASSESSEE HAS TO FILL UP THE LAND, CONSTRUCT COMPOUND WALL, R OAD AND BRIDGE, ETC. SINCE THE ASSESSEE IN ADDITION TO FACILITATING THE PURCHASE OF LAND HAS ENGAGED HIMSELF AS A CIVIL CONTRACTOR, THEREFORE, T HE PROFIT WOULD BE MORE THAN THE LAND DEALING TRANSACTIONS WITH M/S ETL INF RASTRUCTURE SERVICES LTD. THEREFORE, ACCORDING TO THE LD.DR, CONSIDERIN G THE SERVICES RENDERED BY THE ASSESSEE S A CIVIL CONTRACTOR, THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT AT 10% OF THE TOTAL RECEIPTS. HOWEVER, ON APPEAL, THE CIT(A) RESTRICTED THE SAME TO 5% WITHOUT ANY BASIS. 5 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 6. REFERRING TO THE REMAND REPORT FILED BY THE DEPU TY COMMISSIONER OF INCOME-TAX, THE LD.DR SUBMITTED THAT THE PROJECTS U NDERTAKEN BY THE ASSESSEE IS A COMPOSITE ONE INVOLVING TO ARRANGE TH E PURCHASE OF LAND, LAND FILLING, FORMATION OF ROAD, CONSTRUCTION OF BR IDE, ETC. THEREFORE, THE ROLE OF THE ASSESSEE IS NOT BROKER ALONE. THE ASSESSEE ACTED AS A CIVIL CONTRACTOR ON BEHALF OF M/S JAIN HOUSING & CONSTRUC TION PVT LTD. HENCE, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER HAS R IGHTLY ESTIMATED THE PROFIT AT 10% OF THE TOTAL RECEIPT. 7. ON THE CONTRARY, SHRI CBM WARRIER, THE LD.REPRES ENTATIVE SUBMITTED THAT THE ASSESSING OFFICER PASSED THE ASSESSMENT OR DER U/S 153BC R.W.S. 143(3) OF THE ACT. ACCORDING TO THE LD.REPRESENTAT IVE, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. IN TH E ABSENCE OF ANY SEIZED MATERIAL, ACCORDING TO THE LD.REPRESENTATIVE, PROCE EDINGS INITIATED U/S 153C IS ILLEGAL AND VOID. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THERE WAS A SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND NO EVIDENCE WAS FOUND WITH REGARD TO EARNING OF INCOME. IN THE CAS E OF JAIN HOUSING AND CONSTRUCTION CO PVT LTD, ACCORDING TO THE LD.REPRES ENTATIVE, THERE WAS A SURVEY U/S 133A OF THE ACT ON 06-08-2009. ACCORDIN G TO THE LD.REPRESENTATIVE, THE MATERIAL FOUND DURING THE CO URSE OF SURVEY OPERATIONS IN THE HANDS OF JAIN HOUSING & CONSTRUCT ION CO PVT LTD CANNOT 6 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 BE A BASIS FOR FRAMING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE U/S 153BC OF THE ACT. ACCORDING TO THE LD.REPRESENTATI VE, THE ASSESSING OFFICER ISSUED NOTICE U/S 153BC ON 13-02-2009 ASKING THE AS SESSEE TO FILE THE RETURN OF INCOME WITHIN 30 DAYS. HOWEVER, THE ASSE SSEE FILED THE RETURN OF INCOME ONLY ON 19-08-2009. HENCE, ACCORDING TO THE LD.REPRESENTATIVE, THE RETURN FILED BY THE ASSESSEE ON 19-08-2009 CANNOT B E ACTED UPON. THE LD.REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSING OFFICR HAS NOT RECORDED ANY SATISFACTION BEFORE HAN DING OVER THE SEIZED MATERIAL OR INITIATING THE PROCEEDINGS IN THE CASE OF THE ASSESSEE. REFERRING TO SECTION 153C OF THE ACT, ACCORDING TO THE LD.REPRESENTATIVE, SECTION 153C IS IN PARI MATERIA TO SECTION 158BD OF THE ACT. THEREFORE, RECORDING OF SATISFACTION BEFORE INITIATING THE PRO CEEDINGS IS MANDATORY. THE LD.REPRESENTATIVE PLACED RELIANCE ON THE UNREPO RTED DECISION OF THE CHENNAI BENCH OF THIS TRIBUNAL IN P SATHYNARAYANAN VS ACIT ITA NOS 717, 718 & 719/MDS/2008 ORDER DATED 21-01-2011, THE COPY OF WHICH IS FILED BY THE LD.REPRESENTATIVE FOR THE ASSESSEE. ON A QUERY FROM THE BENCH, WHETHER THE ASSESSING OFFICER IN THE CASES OF SHRI K.M.NASSARUDDIN AND SHRI C.A. LATHEEF AND THE ASSESSEE ARE ONE AND THE SAME OFFICER OR DIFFERENT OFFICER, THE LD.REPRESENTATIVE COULD NOT CLARIFY THE POSITION. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE PROJEC T WAS NOT COMPLETED, THEREFORE, THE PROFIT, IF ANY, COULD BE ASCERTAINED ONLY AFTER COMPLETION OF 7 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 PURCHASE OF LAND AS REQUIRED THE RESPECTIVE COMPANI ES. THE ACQUISITION OF LAND IS ONGOING DURING THE YEAR UNDER CONSIDERATION , THEREFORE, NO PROFIT COULD BE ASCERTAINED DURING THE YEAR UNDER CONSIDER ATION. HENCE, ACCORDING TO LD.REPRESENTATIVE, THERE CANNOT BE ANY ESTIMATION OF PROFIT DURING THE YEAR UNDER CONSIDERATION. THE LD.REPRES ENTATIVE ALTERNATIVELY SUBMITTED THAT THE PROFIT ESTIMATED BY THE ASSESSIN G OFFICER AND THE CIT(A) IS HIGHLY EXCESSIVE, THEREFORE, THE ORDER OF THE LO WER AUTHORITIES ARE NOT JUSTIFIED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. LET US F IRST DEAL WITH THE LEGAL OBJECTION RAISED BY THE ASSESSEE. ACCORDING TO THE LD.REPRESENTATIVE, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION, THEREFORE, THE PROCEEDINGS U/S 153BC IS ILLEGAL AND INVALID. 9. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 153C OF THE ACT WHICH READS AS FOLLOWS: 153C (1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF 8 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSES S OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A: PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PRO VISO TO SUB- SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS R EFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFF ICER HAVING JURISDICTION OVER SUCH OTHER PERSON. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZE D OR REQUISITIONED AS REFERRED TO IN SUB-SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNI SHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SE CTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RE SPECT OF SUCH ASSESSMENT YEAR (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB-SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM, OR 9 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON BUT NO NOTICE UNDER SUB-SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB-SECTION (2) OF SECTIO N 143 HAS EXPIRED, OR ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MADE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT O R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVIDED IN SECTION 1 53A. A BARE READING OF SECTION 153C CLEARLY SHOWS THAT T HE ASSESSING OFFICER HAS TO SATISFY HIMSELF THAT THE MONEY, BILLION, JEW ELLERY, VALUABLE ARTICLE OR THING OR ENTRIES IN THE BOOKS OF ACCOUNT, DOCUMENT SEIZED BELONGS TO THE PERSON OTHER THAN THE PERSON REFERRED IN SECTION 15 3A. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER HAS TO EMERGE FROM THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. IN THIS CAS E, ADMITTEDLY, THERE WAS A SEARCH IN THE PREMISES OF SHRI K.M. NAZIRUDDIN AN D SHRI C.A. LATHEEF. DURING THE COURSE OF SEARCH OPERATION IT WAS FOUND THAT SHRI K.M. NAZIRDUDDIN AND C.A. LATHEEF ARE PARTNERS OF N.L PR OPERTIES & DEVELOPERS. A CONSEQUENT SEARCH WAS ALSO CONDUCTED IN THE PREMI SES OF THE ASSESSEE ON 22-01-2008. IT WAS FOUND DURING THE COURSE OF S EARCH OPERATION THAT THE 10 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 ASSESSEE HAS PAID COMMISSION TO M/S NL PROPERTIES & DEVELOPERS AGAINST PURCHASE OF LANDS ON BEHALF OF ETL INFRASTRUCTURE S ERVICES LTD. DURING THE COURSE OF SEARCH IN THE PREMISES OF JAIN HOUSING & CONSTRUCTIONS PVT LTD, DOCUMENTS DISCLOSING THE RECEIPT OF 6.5 CRORES BY A SSESSEE WAS FOUND AND SEIZED. ON THE BASIS OF THIS INFORMATION, THE ASSE SSING OFFICER ISSUED NOTICE U/S 153C OF THE ACT SINCE THE ASSESSEE IS NO T THE SEARCHED PERSON. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT NO M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION IS NOT CORREC T. 9. NOW COMING TO THE QUESTION OF SATISFACTION OF TH E ASSESSING OFFICER, THE KERALA HIGH COURT, TIME AND AGAIN, AFTER REFERR ING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF MANISH MAHESHWARI HEL D THAT IF THE ASSESSING OFFICER IS THE SAME FOR THE SEARCHED PERS ON AND THE PERSON OTHER THAN SEARCHED, THEN THE QUESTION OF TRANSFER OF REC ORDS MAY NOT ARISE, THEREFORE, THE NON RECORDING OF SATISFACTION MAY NO T VITIATE THE ASSESSMENT PROCEEDINGS. IN VIEW OF THIS JUDGMENT OF THE KERAL A HIGH COURT WHICH IS BINDING ON THIS TRIBUNAL, THE CONTENTION OF THE ASS ESSEE THAT THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION, HAS NO M ERIT AT ALL. 10. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 153C ON 13-02-2009 ASKING THE ASS ESSEE TO FILE RETURN OF 11 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 INCOME WITHIN 30 DAYS, HEREFORE, THE RETURN FILED O N 19-08-2009 CANNOT BE ACTED UPON. WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD.REPRESENTATIVE FOR THE ASSESSEE. THE OFFICER WH O IS EMPOWERED TO ISSUE NOTICE FIXING A TIME LIMIT FOR FILING THE RETURN OF INCOME HAS INHERENT POWER TO EXTEND THE TIME LIMIT ALLOWED FOR FILING THE RETURN OF INCOME OR MODIFY THE DATE FOR FILING OF THE RETURN OF INCOME. THEREFORE , THE ASSESSING OFFICER HAS EVERY JUSTIFICATION TO EXTEND THE DATE OF FILING OF THE RETURN EVEN THOUGH IT WAS NOT FILED WITHIN THE TIME PRESCRIBED IN THE NOT ICE ISSUED U/S 153C OF THE ACT. APART FROM THAT IN A SEARCH PROCEEDING LIKE T HIS, THE ASSESSMENT HAS TO BE COMPLETED U/S 153A IN CASE OF SEARCHED PERSON AND THE PERSON OTHER THAN SEARCHED. THOUGH SECTION 153C MANDATES SATISF ACTION OF THE ASSESSING OFFICER, THE ASSESSMENT HAS TO BE NECESSA RILY COMPLETED ONLY U/S 153A OF THE ACT. THEREFORE, ONCE THE ASSESSING OFFICER VALIDLY INITIATED THE ASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMAT ION AND MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, HE CAN VERY WELL CONSIDER ALL THE MATERIAL INFORMATION AVAILABLE ON RECORD INCLUD ING THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THEREFORE, THE BELATED RETURN FILED BY THE ASSESSEE AFTER THE EXPIRY OF THE TIME LIMIT FOR FILING RETURN OF INCOME GIVEN IS ALSO AN INFORMATION CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THEREF ORE, THE INFORMATION CONTAINED IN SUCH BELATED RETURN CAN ALSO BE CONSID ERED FOR COMPLETING THE 12 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 ASSESSMENT. IN VIEW OF THIS DISCUSSION, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT THE CONTENTION OF THE ASSESSING OFFICE R THAT THE ASSESSING OFFICER CANNOT ACT UPON THE BELATED RETURN FILED BY THE ASSESSEE ON 19-08- 2009 HAS NO MERIT AT ALL. 11. THE NEXT CONTENTION OF THE ASSESSEE IS THAT PRO FIT COULD NOT BE ESTIMATED DURING THE ASSESSMENT YEAR SINCE THE PROJ ECT WAS NOT COMPLETED. THIS TRIBUNAL IS OF THE OPINION THAT TH E ASSESSEE IS A GLORIFIED REAL ESTATE AGENT FOR AGGREGATION OF LAND BY TWO MA JOR COMPANIES. THEREFORE, THE PROFIT CAN BE ASCERTAINED YEAR-WISE. HENCE, THIS TRIBUNAL DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD.REPR ESENTATIVE FOR THE ASSESSEE. 12. NOW THE ONLY ISSUE LEFT TO BE DECIDED IS ESTIMA TION OF PROFIT. ADMITTEDLY, THE ASSESSEE IS ENGAGED HIMSELF IN THE BUSINESS OF FASHION JEWELLERY. IN ADDITION TO THIS BUSINESS OF FASHION JEWELLERY, THE ASSESSEE ALSO ENGAGES HIMSELF IN REAL ESTATE BUSINESS. ADMI TTEDLY, HE ACTED AS AGGREGATOR OF LAND FOR ETL INFRASTRUCTURE SERVICES LTD AND JAIN HOUSING & CONSTRUCTION CO PVT L:TD. IN THE CASE OF ETL INFRA STRUCTURE SERVICES LTD THE ASSESSEE ARRANGED PURCHASE OF 800 ACRES OF LAND DURING THE FINANCIAL YEAR 2007-08 AND RECEIVED AROUND RS.67,40,93,530 FR OM THEM. THE 13 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT FO R REAL ESTATE BUSINESS. BUT THE FACT THAT THE ASSESSEE IS ACTING AS A BROKE R FOR ETL INFRASTRUCTURE SERVICES LTD AND JAIN HOUSING & CONSTRUCTION CO PVT LTD IS NOT IN DISPUTE. THEREFORE, THE ENTIRE MONEY RECEIVED BY THE ASSESSE E CANNOT BE TREATED AS HIS INCOME. WHAT IS TO BE TAKEN AS INCOME IS ON LY THE PROFIT ELEMENT EMBEDDED IN THIS TRANSACTION. THE ASSESSING OFFICE R HAS ESTIMATED 5% OF THE TOTAL RECEIPT AS PROFIT IN THE CASE OF ETL INFR ASTRUCTURE SERVICES LTD. HOWEVER, THE SAME WAS REDUCED TO 2.5% BY THE CIT(A) . IT IS COMMON KNOWLEDGE THAT IN REAL ESTATE TRANSACTION THE PERCE NTAGE OF COMMISSION FOR ACTING AS A BROKER / FACILITATOR BETWEEN THE VENDOR AND THE VENDEE RANGES FROM 0.5% TO 3% DEPENDING UPON THE TRANSACTIONS. T HE ASSESSING OFFICER IN THIS CASE HAS ESTIMATED 5% AS COMMISSION. THERE FORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ESTIMATION OF PROFIT AT 5% IS ON THE HIGHER SIDE. EVEN THOUGH THE CIT(A) HAS MODIFIED THE PROF IT AT 2.5% ON THE TOTAL RECEIPTS, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE ASSESSEE HAS INCURRED EXPENDITURE FOR DEVELOPMENT, SALARY AND OF FICE EXPENDITURE WHICH ALSO HAS TO BE TAKEN INTO CONSIDERATION WHILE ESTIM ATING THE PROFIT. THEREFORE, THE EXPENDITURE INCURRED BY THE ASSESSEE FOR MAINTAINING AN ESTABLISHMENT FOR DOING HIGH VOLUME OF TRANSACTIONS IS ONE OF THE FACTORS WHICH IS TO BE CONSIDERED. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT ESTIMATION OF PROFIT AT 2.5% BY THE CI T(A) IS ALSO HIGHLY 14 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 EXCESSIVE. TAKING INTO CONSIDERATION THE TOTAL VOL UME OF TRANSACTIONS AND THE EXPENDITURE INCURRED BY THE ASSESSEE FOR DEVELO PMENT OF LAND,ETC. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ESTIMATI NG THE NET PROFIT AT 1.25% ON THE RECEIPTS FROM ETL INFRASTRUCTURE LTD WOULD M EET THE ENDS OF JUSTICE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE NET P ROFIT AT 1.25% ON TOTAL RECEIPTS FROM ETL INFRASTRUCTURE SERVICES LTD. 13. NOW COMING TO TRANSACTION WITH JAIN HOUSING & C ONSTRUCTION CO PVT LTD, THE ASSESSING OFFICER ESTIMATED THE PROFIT AT 10% OF THE TOTAL RECEIPTS. HOWEVER, THE SAME WAS RESTRICTED TO 5% BY THE CIT(A ). IN THE CASE OF JAIN HOUSING & CONSTRUCTION PVT LTD, THE ASSESSEE, IN AD DITION TO ACTING AS AN AGENT / FACILITATOR IN PURCHASING THE LAND HAS TO F ILL UP THE LAND, CONSTRUCT COMPOUND WALL, ROAD, BRIDGE, ETC. SINCE THE ASSESS EE HAS TO CARRY OUT SOME DEVELOPMENTAL WORK ON THE LAND LIKE CONSTRUCTI ON OF COMPOUND WALL, BRIDGE, ETC. IN ADDITION TO FACILITATING THE PURCHA SE OF LAND THE PROFIT RATIO WOULD BE LITTLE MORE THAN THAT OF ACTING A MERE BRO KER. THE ASSESSEE IS NOT A CIVIL CONTRACTOR. IN THE COURSE FACILITATING THE PURCHASE OF LAND BY JAIN HOUSING & CONSTRUCTION CO PVT LTD, THE ASSESSEE HAS TO FILL UP THE LAND, CONSTRUCT COMPOUND WALL, ROAD, BRIDGE, ETC TO HAVE A BETTER VIEW OF THE LAND. BY TAKING INTO CONSIDERATION THE NATURE OF D EVELOPMENT UNDERTAKEN 15 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 BY THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ESTIMATION OF PROFIT AT 10% BY THE ASSESSING OFFICER IS HIGHLY EXCESSIVE. THE ASSESSEE IS NOT A REGULAR CIVIL CONTRACTOR. HE IS DOING FIL LING UP OF THE LAND, CONSTRUCTING COMPOUND WALL, ROAD, BRIDGE, ETC. IN T HE COURSE OF FACILITATING THE PURCHASE OF LAND. THE ASSESSEE IS ALSO CREATIN G INTERNAL ROADS WITHIN THE LAND PURCHASED BY JAIN HOUSING & CONSTRUCTION C O LTD. CONSIDERING THE VOLUME OF TRANSACTION BETWEEN THE ASSESSEE AND JAIN HOUSING & CONSTRUCTION CO PVT LTD AND THE NATURE OF WORK UNDE RTAKEN BY THE ASSESSEE LIKE FILLING UP OF THE LAND, CONSTRUCTING COMPOUND WALL, ROAD AND BRIDGE, ETC THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE ASSESSEE CERTAINLY WOULD HAVE EARNED A PROFIT MARGIN OF 5%. THEREFORE, THE CIT(A) HAS RIGHTLY TAKEN INTO CONSIDERATION ALL THE MATERI AL FACTS WITH REGARD TO THE NATURE OF TRANSACTION AND WORK UNDERTAKEN BY THE AS SESSEE AND RIGHTY RESTRICTED THE PROFIT AT 5%. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, ESTIMAT ION OF PROFIT AT 5% IN THE CASE OF JAIN HOUSING & CONSTRUCTION CO PVT LTD IS C ONFIRMED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 16 ITA NO.438 & 439/COCH/2014 COS 22 23/COCH/2013 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 TH JUNE, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 06 TH JUNE, 2014 PK/- COPY TO: 1. DY.CIT, CENT.CIR.2, ERNAKULAM 2. SHRI K.P. VARGHESE, A43, ASOKA APARTMENT, MARINE DRIVE, ERNAKULAM 3. THE COMMISSIONER OF INCOME-TAX (CENTRAL), KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-III, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH