Asst. Commissioner of Income Tax, Central Circle-2(3), Hyderabad V. Sri Sri Gruhanirman India Private Limited, Hyderabad

ITA 2274/Hyd/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6464 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PALLAVI AGARWAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure; Assessment record
• Section: 40A(3); 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 2237/HYD/17 2010-11 SRI SRI GRUHANIRMAN INDIA PVT. LTD., HYDERABAD [PAN: AALCS2721G] ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), HYDERABAD 2238/HYD/17 2011-12 2239/HYD/17 2012-13 2240/HYD/17 2013-14 2241/HYD/17 2014-15 2273/HYD/17 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), HYDERABAD SRI SRI GRUHANIRMAN INDIA PVT. LTD., HYDERABAD [PAN: AALCS2721G] 2274/HYD/17 2013-14 2275/HYD/17 2014-15 FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SMT. PALLAVI AGARWAL, DR DATE OF HEARING : 27-06-2018 DATE OF PRONOUNCEMENT : 27-07-2018 O R D E R PER BENCH : THERE ARE FIVE APPEALS BY ASSESSEE FOR THE AYS. 2010 -11 TO 2014-15 AND THREE CROSS-APPEALS BY REVENUE FOR THE AYS. SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 2 - : 2012-13, 2013-14 & 2014-15 AGAINST THE RESPECTIVE ORD ERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-12, HYDERAB AD. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEAL S, THEY WERE HEARD TOGETHER AND DISPOSED-OFF BY THIS COMMON OR DER. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE HEREIN IS INVOLVED IN THE BUSINESS OF REAL ESTATE AND CONSTRUCT ION. THERE WERE SEARCH AND SEIZURE OPERATIONS CONDUCTED IN THE GR OUP CASES OF M/S. SRI SRI GRUHA NIRMAN INDIA PVT. LTD., O N 24-12- 2014 AND CONSEQUENT TO THAT, NOTICE U/S. 153A OF THE AC T HAVE BEEN ISSUED. ASSESSEE HAS FILED RETURNS OF INCOME I N RESPONSE TO NOTICES MOSTLY, ADMITTING THE SAME INCOMES WHICH WE RE ADMITTED IN THE RETURNS ORIGINALLY. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, AO HAS MADE AN ADDITION OF RS. 11,53,810/- FOR VIOLATION OF SECTION 40(A)(IA) OF THE ACT. IN ADDITION, AO NOTICED THAT ASSE SSEE HAS SUPPRESSED ITS RECEIPTS OVER A PERIOD OF TIME AND QUAN TIFIED THE SUPPRESSED RECEIPTS AT RS. 10,60,25,463 AND DISTRIBUT ED OVER THE ASSESSMENT YEARS AS UNDER: A.Y. SUPPRESSED INCOME (RS) 2010 - 11 8,40,000 2011 - 12 32,44,000 2012 - 13 95,19,850 2013 - 14 1,98,99,770 2014 - 15 3,53,54,958 2015 - 16 3,71,66,885 TOTAL: 10,60,25,463 SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 3 - : 3.1. AFTER CONSIDERING THE SUPPRESSED RECEIPTS IN THE RESPECTIVE ASSESSMENT YEARS AS ABOVE, AO TREATED THE EN TIRE AMOUNT AS INCOME OF ASSESSEE IN RESPECTIVE ASSESSMENT YEARS. 4. BEFORE THE LD.CIT(A), ASSESSEE HAS MADE SUBMISSIONS THAT THE DISALLOWANCE U/S. 40(A)(IA) OF T HE ACT DOES NOT ARISE AND THAT THE SUPPRESSED TURNOVER IS NOT BA SED ON ANY VALID MATERIAL AND FURTHER, THERE WERE MISTAKES IN THE COMPUTATION OF SUPPRESSED TURNOVER AND THAT ENTIRE RECEIP T CANNOT BE CONSIDERED AS INCOME. ON THESE ISSUES CIT( A) ALLOWED THE CONTENTIONS ON SECTION 40(A)(IA), CONFIRMED THE ESTIMATION OF SUPPRESSED TURNOVER BUT DIRECTED THE AO T O REDUCE CERTAIN ACCOUNTED TURNOVER [PARTLY ALLOWED THE G ROUND] AND FURTHER REDUCED THE INCOME ESTIMATION TO 40% OF THE SUPPRESSED TURNOVER AS AGAINST 100% ADOPTED BY AO. 4.1. ASSESSEE IS AGGRIEVED ON - (A) ESTIMATION OF SUPPRESSED TURNOVER; (B) NON-GRANTING OF AMOUNTS ACC OUNTED FOR/FUTURE RECEIPTS; (C) ESTIMATION OF INCOME WHEREAS REVENUE IS AGGRIEVED ON MAJOR ISSUE OF ESTIMATION OF INCOME W HEN AO ESTIMATED THE ENTIRE SUPPRESSED TURNOVER AS INCOME. TH ERE IS ONE ISSUE OF 40(A)(IA) TO THE EXTENT OF RS. 22,000/- IN THE AY. 2013-14. REVENUE APPEALS FOR OTHER ASSESSMENT YEARS ARE NOT PLACED BEFORE US AND WE WERE NOT INFORMED WHETHER REV ENUE HAS PREFERRED APPEALS OR NOT IN THOSE YEARS. THESE ISSUES ARE CONSIDERED AFTER HEARING THE ARGUMENTS OF LD. COUNSEL AND LD.DR AND THEIR ARGUMENTS ARE CONSIDERED ISSUE-WISE: SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 4 - : ESTIMATION OF SUPPRESSED TURNOVER: 5. ASSESSEE HAS RAISED CONTENTIONS THAT QUANTIFICATION OF UNDISCLOSED TURNOVER IS ONLY AN ESTIMATE BASED ON F IGURES IN PENCIL WITH RESPECT TO FEW PLOTS ONLY AND THAT THERE IS NO CORROBORATIVE EVIDENCE AND FURTHER IT WAS SUBMITTED THAT A O ADOPTED UNIFORM VALUE FOR ALL THE PLOTS, IGNORING THE F ACT THAT IN THIS LINE OF BUSINESS, THE CONSIDERATION DIFFERS F ROM CASE TO CASE, CUSTOMER TO CUSTOMER. IT IS ALSO SUBMITTED THAT WHE N COMPARED TO THE DECLARED TURNOVER, ESTIMATED TURNOVER IS VERY MEAGRE AND CONSIDERING THAT THE TOTAL VOLUME OF ADMITTED TURNOVER, THE WORKING OF AO IS ONLY ASSUMPTIONS AND PRESUMPTIONS. ON THIS ISSUE, LD.CIT(A) AFTER CONSIDE RING ASSESSEES SUBMISSIONS HAS REJECTED THE SAME AS UND ER: 8.1 AS REGARDS THE FIRST CONTENTION OF THE APPELLA NT'S AR, THAT THE ENTIRE QUANTIFICATION OF SUPPRESSED TURNOVER MADE B Y THE AO IS INVALID, BEING BASED ON ASSUMPTIONS, PRESUMPTIONS A ND ESTIMATES, THIS GROUND IS FOUND TO BE DEVOID OF ANY MERITS. TH E QUANTIFICATION HAS BEEN MADE BY THE AO AFTER CAREFUL EXAMINATION A ND ANALYSIS OF THE SEIZED MATERIAL, CONTAINING DETAILS OF SALE OF PLOTS PERTAINING TO NINE VENTURES CARRIED ON BY THE ASSESSEE COMPANY. T HE AO HAS PAINSTAKINGLY QUANTIFIED THE SALE VALUE OF EACH OF THE NINE VENTURES, IN EACH OF THE SUB-CATEGORIES, I.E. (I) WHERE EVIDE NCE OF RATE OF PLOT IS AVAILABLE, (II) WHERE EVIDENCE OF DATE OF BOOKING I S AVAILABLE, AND (III) WHERE NEITHER IS AVAILABLE, REGISTERED SALE VALUE I S ADOPTED. THE METHODOLOGY OF QUANTIFICATION ADOPTED BY THE AO IS THEREFORE ENTIRELY LOGICAL AND CORRECT, AND IS BACKED BY SOLID FACTS A ND EVIDENCES FOUND IN THE SEIZED MATERIAL DURING THE COURSE OF THE SEA RCH. THE METHODOLOGY OF THE QUANTIFICATION IS DISCUSSED IN G REAT DETAIL BY THE AO IN PARA 4 OF THE ASSESSMENT ORDER (WHICH IS REPR ODUCED IN PARA 6.2 OF THIS ORDER). I THEREFORE FIND NO MERITS IN T HE CONTENTIONS OF THE APPELLANT ON THIS ACCOUNT, AND GROUND NOS.4 & 5 REL ATED TO THIS ISSUE ARE DISMISSED. 5.1. BEFORE US ALSO ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO COUNTER THE WORKING OF AO. SINCE THERE IS SOME SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 5 - : BASIS FOR WORKING OUT THE SO CALLED SUPPRESSED TURNOVE R AND ASSESSEES MAIN CONTENTIONS ARE ON THE RECONCILIATION OF THE SAID WORKING, WE ARE OF THE OPINION THAT ESTIMATION OF TURNOVER BASED ON THE SO CALLED REGISTERS/ENTRIES IN PENCIL C ANNOT BE FAULTED. THUS, THE GROUNDS ON THIS ISSUE (GROUND NOS . 1 TO 6) ARE ACCORDINGLY REJECTED. DETERMINATION OF SUPPRESSED TURNOVER: 6. AS SEEN FROM THE ASSESSMENT ORDER, AO HAS WORKED OUT THE GROSS RECEIPTS AT RS. 123.51 CRORES AND GAVE C REDIT FOR THE ADMITTED RECEIPTS AT RS. 92.43 CRORES. FROM THE AB OVE AMOUNT, AO ALSO GAVE CREDIT TO THE VACANT PLOTS/FUTURE COLLECTIONS AT RS. 20.47 CRORES AND THEREBY ARRIVED AT SUPPRESSED TURNOVER OF RS. 10.60 CRORES IN ABOUT NINE VENTURES TILL THE DATE OF SEARCH. ASSESSEE WHILE OBJ ECTING TO THE ESTIMATION OF GROSS RECEIPTS, HOWEVER, FURNISHED RECON CILIATIONS THAT AO HAS NOT TAKEN THE CORRECT ADMITTED RECEIPTS I.E., ADMITTED RECEIPTS ON AY. 2008-09 WHICH ARE ALREADY ACC OUNTED FOR IN THE BOOKS OF ACCOUNT. LD.CIT(A) HAS CONSIDERED THIS CONTENTION AND VIDE PARA 8.2, DIRECTED THE AO TO ADOPT TOTAL DISCLOSED RECEIPTS AT RS. 95,13,63,302/- AS AGAINST RS . 92,43,84,125/- TAKEN BY THE AO. ON THIS ISSUE, THERE IS NO APPEAL OF REVENUE. 6.1. HOWEVER, THE OTHER ISSUE, ABOUT THE RECEIPTS ACCOUNTED FOR IN LATER YEAR I.E., POST SEARCH PERIOD I S IN DISPUTE. IT WAS THE CONTENTION BEFORE THE AO THAT IN RES PECT OF 79 PLOTS, THERE WERE NO SALES EVEN AS ON THE DATE OF SEARCH AND SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 6 - : THE SALABLE VALUE IN RESPECT OF THOSE PLOTS TO AN EXTENT O F RS. 26,67,61,465/- WAS ALSO INCLUDED IN THE GROSS RECEIP TS OF RS. 1,23,51,16,787/- WHICH SHOULD BE REDUCED. AO, HOWE VER, HAS REDUCED THE AMOUNT TO AN EXTENT OF RS. 18,30,57,700/- AN D WHILE ADOPTING THE VALUES, HE HAS NOTED DOWN THAT ASSE SSEE HAS ONLY SHOWN THE REGISTERED VALUE AND ACCORDINGLY ADOPTED THE REGISTERED VALUE. HE HAS GIVEN RELIEF TO AN EXTEN T OF RS. 20,47,07,200/-. IT WAS THE ASSESSEES CONTENTION THAT AO HAS WRONGLY CONSIDERED THE REGISTERED VALUE AS AGAINST THE ACTUAL VALUE RECORDED POST SEARCH AND THEREFORE, FURTHER RE DUCTION HAS TO BE GIVEN. 6.2. ANOTHER CONTENTION RAISED BEFORE THE LD.CIT(A) W AS THAT THE SO CALLED RECEIPTS OF FUTURE PERIOD COULD NOT BE BROUGHT TO TAX AS UNACCOUNTED RECEIPTS DURING THE PRE-S EARCH PERIOD, AS THE PLOTS TO THAT EXTENT HAVE NOT BEEN SOLD AS ON THE DATE OF SEARCH. ASSESSEE HAS FURNISHED THE FOLLOWING RECONCILIATION BEFORE THE LD.CIT(A): 3.5.5 IN THIS REGARD IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER HAS GIVEN CREDIT ONLY TO THE EXTENT OF REGI STERED VALUE WHEREAS THE ASSESSEE HAS ACCOUNTED FOR THE TOTAL RECEIPTS F ROM THE PLOT OWNERS AND ADMITTED THE SAME AS SALES IN THE RETURNS FOR T HE ASST.YEAR'S.2015-16 AND 2016-17. AS ALREADY EXPLAIN ED, THOUGH THE REGISTERED VALUE IS MUCH LESS THE AMOUNT ACTUAL REC EIVED IS ACCOUNTED FOR AND ADMITTED TO TAX AS SALES. HENCE THE ACTUAL AMOUNTS ADMITTED IN THE BOOKS OF ACCOUNTS POST SEARCH IN RESPECT OF THESE PLOTS ON THE BASIS OF THE RECEIPTS SHOULD HAVE BEEN REDUCED FROM THE FIGURE OF RS.1,23,51,16,787 AS AGAINST RS.2,16,49,500 ALLOWED AS REDUCTION BY THE ASSESSING OFFICER. THUS THE TOTAL REDUCTION SHOULD BE RS.23,74,76,163 (RS.26,67,61,465 - RS.2,92,85,302) AS AGAINST RS.20,47,07,200 BY ASSESSING OFFICER. SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 7 - : 3.6 FURTHER, EVEN ACCORDING TO THE ASSESSING OFFICE R, THESE PLOTS WERE REGISTERED AFTER THE DATE OF SEARCH I.E, IN THE ASS T.YEAR'S.2015-16 OR 2016-17. WITHOUT CONCEDING THE FACT THAT THE THERE IS NO SUPPRESSED TURNOVER AT ALL, EVEN IF SOME SUPPRESSION IN TURNOV ER IS ALLEGED IN RESPECT OF THESE PLOTS WHICH WERE REGISTERED IN SUB SEQUENT ORDERS NO ADDITION CAN BE MADE IN THE ASST. YEARS UNDER CONSI DERATION. ANY ADDITION IN THIS REGARD CAN BE MADE IN RELEVANT POS T ASST. YEARS ONLY AND NOT PRIOR TO THE DATE OF REGISTRATION. 3.7.1. IT IS HUMBLY SUBMITTED THAT, WITHOUT CONCEDI NG THAT THERE IS NO SUPPRESSION AT ALL, IF THE ABOVE RECTIFICATIONS WER E CARRIED OUT, THE ALLEGED SUPPRESSED TURNOVER WOULD WORKOUT TO RS. 4, 62,77,422 AS PER THE DETAILS FILED BEFORE ASSESSING OFFICER AND EXTRACTED AT PAGE 6 OF THE ASSESSMENT ORDER. HENCE, AT THE OUTSET, IT IS SUBMITTED THAT FOR THE ASST. YEARS 2010-11 TO 2015-16, THE SUPPRESSED TURNOVER, IF ANY, BE WORKED OUT AT RS. 4,62,77,422 AND NOT AT RS. 10, 60,25,463 AS CONSIDERED BY THE ASSESSING OFFICER AT PAGE 9 OF HI S ORDER PERIOD. THE COMPARATIVE TABLE OF FINAL COMPUTATION OF SUPPR ESSED TURNOVER, IF ANY IS AS UNDER: 3.7.2. ASSESSING OFFICER APPELLANT GROSS RECEIPTS 1,23,51,16,787 1,23,51,16,787 LESS: ADMITTED RECEIPTS 92,43,84,124 ---------------------- 31,07,32,663 (*) 95,13,63,202 ----------------------------------- 28,37,53,585 LESS: VACANT PLOTS/ FUTURE COLLECTIONS 20,47,07,200 (**) 23,74,76,163 SUPPRESSED TURNOVER 10,60,25,463 4,62,77,422 (*) DETAILED SUBMISSIONS ARE AT PARAS 3.3.2 & 3.4 (**) DETAILED SUBMISSIONS ARE AT PARAS 3.5 THUS, ASSESSEE SUBMITTED THAT ESTIMATED SUPPRESSED TURNO VER WOULD WORK OUT TO RS. 4,62,77,422/-. HOWEVER, LD.CI T(A) DID NOT AGREE AND DISMISSED THE CONTENTIONS, STATING AS UNDER : 8.3 THE SECOND CONTENTION OF THE APPELLANT'S AR RE GARDING CALCULATION OF THE SUPPRESSED TURNOVER PERTAINS TO THE REDUCTIO N OF RS.20,47,07,200/- ON ACCOUNT OF VACANT PLOTS/FUTURE COLLECTION, SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 8 - : ALLOWED BY THE AO WHILE MAKING THE COMPUTATION OF S UPPRESSED TURNOVER. THIS PLEA OF THE AR IS EXAMINED BUT IS FO UND TO BE BASELESS. IT IS HIS CONTENTION THAT IN RESPECT OF FUTURE SALE S, THE AO SHOULD HAVE GIVEN CREDIT FOR THE TOTAL RECEIPTS FROM THE PLOT O WNERS, WHEREAS CREDIT HAS BEEN GIVEN ONLY TO THE EXTENT OF REGISTERED VAL UE. THIS ASPECT HAS BEEN DEALT WITH BY THE AO IN GREAT DETAILS ON PAGES 6 TO 9 OF THE ASSESSMENT ORDER, WHERE, AFTER REPRODUCING AND DULY CONSIDERING THE APPELLANT'S SUBMISSIONS, THE AO HAS GIVEN PROJECT W ISE AND PLOT WISE CALCULATION OF VACANT PLOTS, AND HAS OBSERVED AS UN DER: 'THUS, TO THIS EXTENT, THE EVIDENCE VALUE OF SUCH PLOTS AMOUNTING TO RS.18,30,57,700/- IS EXCLUDED WHILE COM PUTING SUPPRESSION OF RECEIPTS. HOWEVER IN RESPECT OF SOME PLOTS WHICH WERE REGISTERED IN SUBSEQUENT YEARS IN THE NAME OF THE SAM E PARTIES WHO HAD BOOKED THE PLOTS (FOR WHICH EVIDENCE IN THE FORM OF BOOKING RATE WAS FOUND), THE ASSESSEE HAS SHOWN ONLY THE REGISTERED VALUE OF THE SAID PLOTS AS SALE VALUE IN THE SUBSEQUENT YEARS. AS A RESULT, ONLY THE REGISTERED VALUE OF THE SAID PLOTS AMOUNTING TO RS.2, 16,49,500/- IS ALLOWED TO BE REDUCED FOR SUCH PLOTS WHILE COMPUTING SUPPRESSION OF RECEIPTS. FINALLY, THE TOTAL VALUE OF RELIEF TO THE A SSESSEE ON THIS ISSUE WORKS OUT TO RS.20,47,07,200/- AS PER ANNEXURE H. THE AO HAS THUS CLEARLY OBSERVED THAT IN RESPECT OF SOME PLOTS ACCOUNTED FOR IN FUTURE SALES, THE APPELLANT HAS SH OWN ONLY REGISTERED VALUE OF THE SAID PLOTS AS SALE VALUE IN SUBSEQUENT YEARS, AND THEREFORE, ONLY REGISTERED VALUE OF THE SAID PL OTS AMOUNTING TO RS.2,16,49,500/- IS BEING REDUCED WHILE COMPUTING S UPPRESSION OF RECEIPTS. I FIND NO INFIRMITY IN THE ORDER OF THE A O ON THIS ISSUE. GROUND NO.6 RELATED TO THIS ISSUE IS THEREFORE DISM ISSED. 6.3. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT ASSESSEE HAS CORRECTLY ACCOUNTED THE AMOUNTS POST SEARCH IN BOOKS OF ACCOUNT WHICH SHOULD HAVE BEEN EXCLUDED WH ILE ARRIVING AT THE GROSS RECEIPTS. IN THE ALTERNATE, SINCE THE SALES WERE ACCOUNTED FOR AT A LATER PERIOD, ANY DIFFERENCE IN SALE AMOUNT, IF ANY CAN ONLY BE TAXED IN THE POST SEARCH ASSESSMENTS BUT NOT IN THE PRE-SEARCH ASSESSMENT AS MA NY PLOTS HAVE NOT BEEN SOLD ON THE DATE OF SEARCH AND SO THE QUESTION OF SUPPRESSED TURNOVER DOES NOT ARISE. SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 9 - : 6.4. LD.DR, HOWEVER, RELIED ON THE ORDERS OF AO AND CIT(A). 6.5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. AS SE EN FROM THE WORKING OF AO, AO HAS CONSIDERED ALL PLOTS IN NINE VENTURES IN ARRIVING AT THE GROSS RECEIPTS. WHATEVER MAY BE THE RATE ADOPTED BUT THE FACT IS THAT ALL THE PLOTS IN A VEN TURE HAVE BEEN CONSIDERED IN ARRIVING AT GROSS COLLECTIONS. I T IS ADMITTED THAT ABOUT 79 PLOTS HAVE NOT BEEN SOLD AS ON THE DATE OF SEARCH, EVEN THOUGH SOME ADVANCES HAVE BEEN RECEIVED AGAINST FUTURE SALE AS PER THE RECONCILIATION FURNISHE D BY ASSESSEE. AO ADMITTED THAT SOME OF THE PLOTS HAVE BEEN U NSOLD AS ON THE DATE OF SEARCH AND REDUCED ONLY THE REGIS TERED VALUE FROM THE GROSS COLLECTIONS. IT MEANS THAT THE GROSS VA LUE ADOPTED INCLUDES THE FUTURE SALE AMOUNTS ALSO, WHICH CA NNOT BE BROUGHT TO TAX DURING THE SEARCH/BLOCK PERIOD. THU S, PRIMA-FACIE THERE IS VALID CONTENTION OF ASSESSEE THAT THE FUTURE SALES ON THE UNSOLD PLOTS ON THE DATE OF SEARCH CAN NOT BE BROUGHT TO TAX. HOWEVER, IT IS NOT CLEAR WHETHER ANY O F THE PLOTS WERE SOLD IN AYS. 2015-16, BECAUSE THAT APPEAL I S NOT BEFORE US FOR CONSIDERATION. MOREOVER, IT IS ALSO TO BE EXAMINED WHETHER ASSESSEE HAS ACCOUNTED ONLY THE REGISTERED VALU E AS SALE PRICE AS CONSIDERED BY AO OR THE ACTUAL PRICE I. E., MORE THAN THE REGISTERED VALUE AS SUBMITTED BY ASSESSEE IN THE RECONCILED STATEMENT. THIS ASPECT HAS NOT BEEN EXAMINED BY THE AO OR BY THE LD.CIT(A), EVEN THOUGH ASSESSEE RAISE D THE CONTENTIONS. SINCE PRIMA-FACIE FUTURE SALES CANNOT BE CONSIDERED AS SUPPRESSED TURNOVER FOR THE PERIOD UPTO DATE OF SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 10 -: SEARCH, THE GROSS RECEIPTS TO THAT EXTENT REQUIRES TO BE EXCLUDED IN QUANTIFYING THE SUPPRESSED TURNOVER FOR TH E IMPUGNED ASSESSMENT YEARS. SINCE THIS ASPECT REQUIRES EXAMINATION BY THE AO, WE DIRECT THE AO TO EXCLUDE THE AMOUNTS PERTAINING TO PLOTS UNSOLD AS ON DATE OF SEARC H, SO AS TO QUANTIFY THE SUPPRESSED TURNOVERS UPTO AY. 2014-15. IN THE YEAR 2015-16 & 2016-17 I.E., OF SUBSEQUENT YEARS, AO IS FREE TO VERIFY THIS ASPECT BUT THE UNSOLD PLOTS AS ON DATE OF SE ARCH CANNOT BE CONSIDERED FOR SUPPRESSED TURNOVER PARTICULA RLY FOR QUANTIFYING THE TURNOVERS ON THE RATIO OF ACCOUNTED TURNO VER IN THE IMPUGNED ASSESSMENT YEARS. AO IS DIRECTED TO EXAMI NE THIS ASPECT AND EXCLUDE THE TURNOVER AS DIRECTED ABOVE WHILE DETERMINING THE SUPPRESSED TURNOVER. GROUNDS ARE CONS IDERED ALLOWED FOR STATISTICAL PURPOSES. RATE OF PROFIT: 7. COMING TO ESTIMATION OF PROFIT, AS SEEN FROM THE ORDER OF LD.CIT(A), LD.CIT(A) RELIED ON THE JUDGMEN T OF THE HON'BLE MADHYA PRADESH AND GUJARAT HIGH COURTS IN DETERMINING THE PROFIT PERCENTAGE AT 40%. THERE IS NO BASIS FOR ARRIVING AT THAT PERCENTAGE. IT IS AN ADMITTED PROPOSITION THAT THERE CANNOT BE ANY FIXED PROFIT PERCENTAGE IN ANY BUSI NESS. IT DEPENDS ON CASE TO CASE ON THE FACTS. AS SEEN FROM THE TURNOVERS DECLARED BY ASSESSEE IN THE BOOKS OF ACCOUN T, THESE ARE THE TURNOVERS IN RESPECTIVE ASSESSMENT YEARS. SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 11 -: A.Y. TURNOVER (RS) 2010-11 10,63,08,947 2011-12 13,03,97,300 2012-13 10,29,96,427 2013-14 13,29,76,651 2014-15 14,69,66,161 2015-16 11,42,81,441 TOTAL: 73,39,26,927 7.1. COMPARED TO THE ABOVE TURNOVER, THE SUPPRESSED TURNOVER DETERMINED BY THE AO WAS ROUGHLY AT ABOUT 14.5 % OF THE TOTAL TURNOVER DECLARED. ASSESSEE HAS ADMITTEDLY DEC LARED ONLY 4% OF THE PROFIT ON THE DECLARED TURNOVERS WHICH WAS NOT DISPUTED BY AO. CONSEQUENTLY, THERE CANNOT BE 40% PROF IT ON THE SO CALLED SUPPRESSED TURNOVER. WE ARE OF THE OPIN ION THAT A REASONABLE PROFIT HAS TO BE ESTIMATED CONSIDERING T HE FACTS OF THE CASE. THERE ARE VARIOUS JUDGMENTS RELIED ON BY THE PARTIES, WHEREIN NET PROFIT WAS ESTIMATED FROM 4% TO GROSS PROFI T OF 40%. THERE ARE VARIOUS HIGH COURT JUDGMENTS ALSO ESTIM ATING THE INCOME AT 25% OF THE SUPPRESSED TURNOVERS, BUT MOST O F THE RATES ARE DETERMINED ON GIVEN FACTS OF THE CASE AN D THE NATURE OF SUPPRESSION. IN THIS CASE, THE QUANTIFICATIO N ITSELF WAS DONE ON THE THIRD PARTY REGISTERS, WHERE ONLY THE I NDICATIVE SALE PRICES WERE RECORDED. SINCE MORE THAN 70% OF THE TURNOVER WAS RECORDED AND THE PROFIT AT 4% WAS ACCEPTED BY AO, WE ARE OF THE OPINION THAT ESTIMATION AT 12.5% IS SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 12 -: REASONABLE ON THE FACTS OF THE CASE. HONOURABLE JURISD ICTIONAL HIGH COURT IN THE CASE OF ACIT VS. RAVI FOODS PVT. LTD. , HAS CONFIRMED NET PROFIT RATE OF 3.91%. THAT CASE HOWEVER, PERTAIN TO A FOOD BUSINESS CASE, BUT NOT REAL ESTATE. GENERALL Y IN REAL ESTATE/CONTRACT CASES, PROFIT IS ESTIMATED AT 12.5%. AS ASSESSEE HAS MOSTLY SOLD REAL ESTATE PLOTS, WE ARE OF THE OPINION THAT ESTIMATION OF INCOME AT 12.5% ON THE SUPPRES SED TURNOVER WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, MODIFYING THE ORDER OF CIT(A), WE DIRECT THE AO TO DETERMINE THE P ROFIT AT 12.5% OF THE DETERMINED SUPPRESSED TURNOVER. GROUND O N THIS ISSUE IS CONSIDERED PARTLY ALLOWED. 8. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. REVENUE APPEALS: 9. REVENUE IS CONTESTING THAT THE ENTIRE SUPPRESSED TURNOVER SHOULD HAVE BEEN TREATED AS INCOME BY THE LD. CIT(A). THIS ARGUMENT OF THE REVENUE CANNOT BE ACCEPTED. HON' BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRESIDENT IND USTRIES [258 ITR 654] (GUJARAT HC) HAS HELD THAT IT CANNOT BE T HE MATTER OF AN ARGUMENT THAT THE AMOUNT OF SALES BY ITSELF CANNOT REPRESENT THE INCOME OF ASSESSEE. IT IS THE REALI ZATION OF EXCESS OVER THE COST INCURRED THAT ONLY FORMS PART OF THE PROFIT INCLUDED IN THE CONFIGURATION OF SALE. SIMILAR VIEW WAS TAKEN IN THE CASE OF CIT VS. GURUBACHHAN SINGH J. JUNEJA [215 CTR 509] (GUJARAT HC) AND CIT VS. SHARDA REAL ESTATE (P) LTD., [99 SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 13 -: DTR 100] (MP-HC) AND IN THE CASE OF JYOTIBHAICHAND BHAICHAND SARAF & SONS (P) LTD., VS. DCIT [139 ITD 1 0] THE CO-ORDINATE BENCH AT PUNE HAS CONFIRMED THE ADDITION CO ULD ONLY BE MADE ONLY TO AN EXTENT OF GROSS PROFIT EARNED ON AN UNACCOUNTED/SUPPRESSED SALES AND NOT ON THE ENTIRE SALE S ITSELF. SIMILAR VIEW WAS ALSO TAKEN IN THE CASE OF AC IT VS. M/S. ARCHANA TRADING CO., IN ITA NOS. 351 & 352/COCH/2011, DT. 28-02-2013 AND ALSO ACIT VS. PAHAL FOOD [IT (SS) A NO. 42/HYD/2005, DT. 30-09-2009] BY ITAT, HYDERABAD. 9.1. RESPECTFULLY FOLLOWING THE DECISIONS, WE ARE OF THE OPINION THAT THE ENTIRE TURNOVER CANNOT BE BROUGHT TO TAX AS SUCH AND THERE CAN ONLY BE AN ESTIMATION OF REASONABL E PROFIT ON THE SO CALLED SUPPRESSED TURNOVER. THEREFORE, THERE IS NO MERIT IN REVENUE GROUNDS, ACCORDINGLY, THEY ARE DISMI SSED. 10. ONE MORE ISSUE WHICH WAS RAISED IN AY. 2013-14 IS WITH REFERENCE TO DISALLOWANCE OF AN AMOUNT OF RS. 22 ,000/- U/S. 40(A)(IA) OF THE ACT MADE BY THE AO, BUT DELETED B Y THE LD.CIT(A) FOR THE FOLLOWING REASONS: 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE APPELLANT AS WELL AS THE OBSERVATIONS OF THE AO IN THE IMPUGNED ORDER. THE ASSESSMENT ORDER, AS REPRODUCED IN PARA 5.1 ABOVE, ON THIS ISSUE, DOES NOT CONTAIN ANY REFERENCE TO THE O UTCOME OF THE SEARCH OR ANY INFERENCE DERIVED FROM THE SEARCH THA T RESULTED IN THE IMPUGNED ADDITION. PERUSAL OF THE ASSESSMENT RECORD ALSO DOES NOT SUGGEST ANYTHING TO THE CONTRARY. THE ASSESSEE HAS PLACED RELIANCE ON A PLETHORA OF JUDICIAL PRONOUNCEMENTS, INCLUDING THE DECISION OF THE JURISDICTIONAL BENCH OF THE ITAT IN THE CASE OF DCI T VS. LINGAM TULSI PRASAD [2016] [49 ITR(T)-218 (HYDERABAD - TRIB.)], MUMBAI HIGH COURT IN CASE OF ALL CARGO GLOBAL LOGISTICS AND DELHI HIG H COURT IN THE CASE OF KABUL CHAWLA (380 ITR 0573). THE SAID ORDERS HAV E BEEN PERUSED. SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 14 -: THE JURISDICTIONAL ITAT HAS NOTICED SEVERAL PRECEDE NTS INCLUDING THE SPECIAL BENCH DECISION OF THE ITAT, MUMBAI IN THE C ASE OF ALL CARGO GLOBAL LOGISTICS LTD. (137 ITO 287) AS WELL AS DECI SION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWL A, TO HOLD THAT THE ADDITION IN AN ASSESSMENT UNDER SECTION 143(3) R.W. S.153(A)/153C CAN BE BASED ONLY ON SOME INCRIMINATING MATERIAL UN EARTHED DURING THE COURSE OF THE SEARCH, UNLESS IT IS AND ABATED A SSESSMENT OR WHERE TIME LIMIT FOR ISSUE OF NOTICE U/S. 143(2) HA S NOT EXPIRED. THE RELEVANT PORTION OF THE ITATS ORDER IS REPRODUCED HEREWITH: IT HAS BEEN HELD THAT WHERE ASSESSMENTS ARE NOT PENDIN G, THERE CANNOT BE ANY ABATEMENT OF THE ASSESSMENTS AND HENCE, THE A.O. HAS NO POWER TO BRING TO TAX ANY INCOME ON THE BASIS OF THE MATERIAL OR RETURN OF INCOME FILED BY THE ASSESSEE PRIOR TO T HE DATE OF SEARCH. THE FACTS OF THE CASE BEFORE US ARE SIMILAR TO THE FAC TS OF THE CASES IN THESE DECISIONS AND THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE JUDGEMENTS, THE ASSESSEES GROUND NO. 3 IS ALLOWED. THE FACTS OF THE CASE AT HAND BEING SIMILAR, THE LE GAL GROUND RAISED BY THE ASSESSEE VIDE SR.NO.2 HAS TO BE ALLOWED. THE ADDITION/DISALLOWANCE OF RS. 22,000/- MADE BY THE A O IS THEREFORE ORDERED TO BE DELETED. 10.1. IT WAS THE CONTENTION OF REVENUE THAT AO CAN TAKE NOTE OF INCOME DISCLOSED IN THE EARLIER RETURN AND ALS O ANY DISCLOSED INCOME FOUND DURING THE COURSE OF SEARCH AND RELIED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH CO URT IN THE CASE OF GOPAL LAL BADRUKA VS. DCIT [346 ITR 106] FO R THE CONTENTION THAT AO CAN TAKE INTO CONSIDERATION MATERIAL OTH ER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZURE OPERATION. 10.2. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) . FIRST OF ALL, AO HAS NOT SPECIFIED WHETHER THE ASSESSMENT ORDER HAS BEEN PASSED EARLIER FOR AY. 2013-14. EVEN OTHERWISE BY THAT SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 15 -: TIME THE SEARCH HAS HAPPENED AND ASSESSMENTS HAVE BEEN TAKEN UP, THE PROCEEDINGS FOR AY. 2013-14 HAVE ALREAD Y BECOME CRYSTALLISED AND AO CAN ONLY CONSIDER THE UNDI SCLOSED INCOME ON THE BASIS OF THE SEIZED MATERIAL OR ANY OTH ER INFORMATION WHICH HAS COME TO THE KNOWLEDGE OF AO. SI NCE THERE IS NO EVIDENCE PERTAINING TO THE ISSUES ON WHIC H DISALLOWANCE WAS MADE, WE AGREE WITH THE FINDINGS OF LD.CIT(A). AS SEEN FROM THE TABLE MENTIONED IN THE ASS ESSMENT ORDER REGARDING VARIOUS DISALLOWANCES, IT IS ALSO NO T VERIFIABLE ON WHAT BASIS AO HAS QUANTIFIED THE VIOLATIONS U/S. 40( A)(IA) AND 40A(3) OF THE ACT, THE DETAILS OF WHICH ARE NOT FORTHCOMING FROM THE ORDER. THERE IS NO MERIT IN THE CONTENTIONS OF REVENUE. ACCORDINGLY GROUND IS DISMISSED. 11. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DISM ISSED. 12. TO SUM-UP, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ALL THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018 SD/- SD/- (V. DURGA RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH JULY, 2018 TNMM SRI SRI GRUHANIRMAN INDIA PVT. LTD., (CROSS APPEALS) :- 16 -: COPY TO : 1. SRI SRI GRUHANIRMAN INDIA PVT. LTD., HYDERABAD C /O. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE- 2(3), HYDERABAD. 3. CIT(APPEALS)-12, HYDERABAD. 4. PR.CIT(CENTRAL)-HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.