Asst. Commissioner of Income Tax, Central Circle-2(3), Hyderabad V. Sri Sri Estates, Hyderabad

ITA 228/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6434 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 02-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PALLAVI AGARWAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure; Loose papers
• Section: 10

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 2242/HYD/17 2012-13 SRI SRI ESTATES, HYDERABAD [PAN: ABEFS1693N] ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), HYDERABAD 2243/HYD/17 2013-14 2244/HYD/17 2014-15 2245/HYD/17 2015-16 228/HYD/18 2013-14 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), HYDERABAD SRI SRI ESTATES, HYDERABAD [PAN: ABEFS1693N] 229/HYD/18 2014-15 230/HYD/18 2015-16 FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR FOR REVENUE : SMT. PALLAVI AGARWAL, DR DATE OF HEARING : 27-06-2018 DATE OF PRONOUNCEMENT : 25-07-2018 O R D E R PER BENCH : THESE ARE ASSESSEES APPEALS FOR THE AYS. 2012-13 TO 2015-16 AND CROSS-APPEALS BY REVENUE FOR THE AYS. 20 13-14 TO 2015-16 AGAINST THE RESPECTIVE ORDERS OF THE COMMISSI ONER SRI SRI ESTATES (CROSS APPEALS) :- 2 - : OF INCOME TAX (APPEALS)-12, HYDERABAD. SINCE COMMO N ISSUE IS INVOLVED IN ALL THESE APPEALS, THEY ARE HEARD TOGE THER AND DISPOSED-OFF BY THIS COMMON ORDER. 2. BRIEFLY STATED, THERE WERE SEARCH AND SEIZURE OPERATIONS IN THE CASE OF M/S. SRI SRI GRUHA NIRMAN I NDIA PVT. LTD., ON 24-12-2014 IN WHICH CERTAIN INCRIMINATING MAT ERIAL BELONGING TO ASSESSEE-FIRM WERE FOUND AND SEIZED. N OTICES U/S. 153C OF THE ACT WERE ISSUED AFTER DULY RECORDING THE SATISFACTION. ASSESSEE HAS ALREADY FILED RETURNS OF I NCOME FOR SOME OF THE IMPUGNED YEARS ADMITTING INCOMES WHICH WE RE REITERATED IN THE RETURNS FILED IN RESPONSE TO NOTICES U/S. 153C OF THE ACT. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, BASED ON CERTAIN ENTRIES IN THE REGISTERS IMPOUNDED/SEIZED, AO H AS ARRIVED AT SUPPRESSED GROSS RECEIPTS AT RS. 6,93,31,76 4/- PERTAINING TO TWO VENTURES OF ASSESSEE. HE HAS QUANTIF IED THE GROSS SALE RECEIPTS OF BOTH ACCOUNTED AND UNACCOUNTED ON THE BASIS OF EVIDENCES AVAILABLE ON THE REGISTERS IMPOUND ED OR ON THE BASIS OF THE SALE VALUE NOTED AND THUS QUANTIFIED THE TOTAL GROSS RECEIPTS AT RS. 21.96 CRORES. THE ACCOUNTED TURN OVER FROM AYS. 2012-13 TO 2015-16 (UPTO THE DATE OF SEARCH ) HAVE CONSIDERED AT RS. 15.03 CRORES AND THEREFORE THE DIFFE RENCE OF RS. 6.93 CRORES IS CONSIDERED AS SUPPRESSION OF INC OME AND DISTRIBUTED TO THE IMPUGNED ASSESSMENT YEARS AS UNDER: SRI SRI ESTATES (CROSS APPEALS) :- 3 - : A.Y. SUPPRESSED INCOME (RS) 2012-13 45,57,000 2013-14 2,97,12,880 2014-15 2,74,59,784 2015-16 76,02,100 TOTAL: 6,93,31,764 4. IT WAS THE CONTENTION OF ASSESSEE THAT THE QUANTIFICATION OF THE INCOME WAS NOT CORRECT AND THE QUANTIFICATION OF THE TURNOVER BASED ON THE REGISTERS IS ALSO NOT CORRECT AS THOSE REGISTERS ARE MAINTAINED BY AGENTS AND THE PRICES MENTIONED AGAINST THE SALE OF PLOTS ARE SUGGESTIVE/COMPETITIVE RATES AND NOT ACTUAL SALE PRICE. AO, HOWEVER, DID NOT AGREE AND QUANTIFIED THE AMOUNTS AS S UCH. HE TREATED THE ENTIRE DIFFERENCE OF RECEIPTS AS INCOME OF ASSESSMENT YEARS INVOLVED. 5. BEFORE THE LD.CIT(A), ASSESSEE HAS RAISED ISSUES ON QUANTIFICATION OF INCOME AND DETERMINATION OF SUPPR ESSED TURNOVER AS WELL AS TREATING THE ENTIRE SUPPRESSED RECEI PTS AS INCOME BY THE AO. IT RELIED ON VARIOUS CASE LAW AS L ISTED BY THE LD.CIT(A) IN THE SUBMISSIONS OF ASSESSEE IN PARA 5 OF THE ORDER. 6. AFTER CONSIDERING THE ORDER OF AO AND SUBMISSION S OF ASSESSEE, LD.CIT(A) CONFIRMED THE TURNOVER/RECEIPT S AND SRI SRI ESTATES (CROSS APPEALS) :- 4 - : AGREED WITH ASSESSEE FOR ESTIMATION OF INCOME. BUT AS A GAINST 4% AGREED BY ASSESSEE IN THE WRITTEN SUBMISSIONS IN P ARA 4.14, THE LD.CIT(A) DETERMINED THE PROFIT PERCENTAGE AT 40%, RELYING ON VARIOUS CASE LAW. THE ORDER OF LD.CIT(A ) ON TWO ISSUES FOR AY. 2012-13 IS AS UNDER: 6.1 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 TWO VENTURES CARRIED ON BY THE ASSESSEE COMPANY. TH E AO HAS PAINSTAKINGLY QUANTIFIED THE SALE VALUE OF EACH OF THE TWO VENTURES, IN EACH OF THE SUB-CATEGORIES, I.E., (I) WHERE EVIDENC E 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 3 OF THE ASSESSMENT ORDER (WHICH IS REPR ODUCED IN PARA 5.2 OF THIS ORDER). I THEREFORE FIND NO MERITS IN T HE CONTENTIONS OF THE APPELLANT ON THIS ACCOUNT, AND GROUND NOS.3 TO 7 RE LATED TO THIS ISSUE ARE DISMISSED. 6.2 THE OTHER GROUNDS RAISED BY THE APPELLANT PERTA INS TO THE QUANTIFICATION OF INCOME ON SUPPRESSED TURNOVER. WH ILE THE AO HAS TREATED THE ENTIRE SUPPRESSED TURNOVER AS THE SUPPR ESSED INCOME OF APPELLANT, THE APPELLANT'S PLEA IS THAT ONLY PROFIT ELEMENT ON THE ALLEGED SUPPRESSED TURNOVER CAN BE BROUGHT TO TAX. IN SUPPORT OF THIS CONTENTION, THE APPELLANTS AR HAS PLACED RELIANCE O N A NUMBER OF CASE LAWS. THE SAID DECISIONS HAVE BEEN PERUSED. NO NE OF THE DECISIONS RELIED UPON BY THE APPELLANT'S AR ARE OF THE JURISDICTIONAL HIGH COURT. FURTHER, BOTH THE DECISIONS OF GUJARAT HIGH COURT WHICH HAVE BEEN RELIED UPON, AND ALL THE DECISIONS OF HON 'BLE HYDERABAD ITAT RELIED UPON, ARE SEEN TO BE PERTAINING TO ASSE SSEES IN LINES OF BUSINESS, COMPLETELY DIFFERENT FROM THE LINE OF BUS INESS OF THE APPELLANT HERE. SINCE THE PROFIT-ELEMENT WOULD VARY HUGELY FROM ONE LINE OF BUSINESS TO ANOTHER, THESE DECISIONS DO NOT HELP THE CASE OF THE APPELLANT IN ANY MANNER. ONLY ONE DECISION OF THE M P HIGH COURT, VIZ, CIT VS. SHARDA REAL ESTATE (P) LIMITED (2014) 099 D TR 100 (MP-HC) SRI SRI ESTATES (CROSS APPEALS) :- 5 - : PERTAINS TO AN ASSESSEE IN THE BUSINESS OF SALE OF REAL ESTATE AND FLATS, WHEREIN THE MP HIGH COURT, AFTER DISCUSSING DECISIONS OF VARIOUS OTHER HIGH COURTS, HELD AS UNDER: 11. HON'BLE GUJARAT HIGH COURT IN THE CASE OF DY. CI T V. PANNA CORPORATION (2012) 74 DTR (GUJ) 89, WHERE ASSESSEE WAS ENGAGED IN BUSINESS OF CONSTRUCTION OF FLAT AND DURING COURSE OF SEARCH, IT WAS OBSERVE D THAT THE LOOSE PAPERS FOUND AT THE PREMISES OF PARTNERS INDICATED THAT ASSESSEE WAS COLLECTING UNACCOUNTED CASH FROM THE PURCHASERS OF THE FLATS. ACCORDINGLY, THE ASSESSING OFFICER MADE ADDITION IN RESPECT OF ON-MONEY OF RS. 62 LACS RECE IVED. IN AN APPEAL FILED BEFORE THE HIGH COURT, THE HONBLE HIGH COURT OBSERVED THAT: IT CAN THUS, BE SEEN THAT CONSISTENTLY, THIS COURT AN D SOME OTHER COURTS HAVE BEEN FOLLOWING THE PRINCIPLE THAT EVEN UPON DETECTION OF ON-MONEY RECEIPTS OR UNACCOUNTED CASH RECEIPTS, WHAT CAN BE BROUGHT TO TAX IS THE PROFIT EMBEDDED IN SUCH RECEIPTS AND NOT THE ENTIRE RECEIPTS, THEMSELVE S. IF THAT BE THE LEGAL POSITION, WHAT SHOULD BE ESTIMATED AS A REASONABLE PROFIT OUT O F SUCH RECEIPT MUST BEAR AN ELEMENT OF ESTIMATION. IN VIEW OF THE LEGAL POSITION THAT NOT THE ENTIRE RE CEIPTS, BUT THE PROFIT ELEMENT EMBEDDED IN SUCH RECEIPTS, CAN BE BROUGHT TO TAX, IN OUR VIEW, NO INTERFERENCE IS CALLED FOR IN THE DECISION OF THE TRIBUNAL ACCEPTING SUCH ELEMENT OF PROFIT AT RS. 26 LACS OUT OF TOTAL UNDISCLOSED RECEIPTS OF RS. 52 LACS. IN THE INSTANT CASE BEFORE US, THE ASSESSEE WAS ENGA GED IN THE BUSINESS OF REAL ESTATE, WHEREIN PART OF THE AMOUNT OF SALE CONSIDERAT ION WAS RECEIVED THROUGH CHEQUE AND BALANCE IN CASH AND ONLY CHEQUE AMOUNT WAS ENTERED IN THE REGULAR BOOKS ..................................... ................................................... ............................ AS PER OUR CONSIDERED OPINION ADDING ENTIRE AMOUNT OF SALE CONSIDERATION RECEIVED IN CASH WILL NOT SERVE THE END OF JUSTICE. SALE PROCEEDS COMPRISE OF COST, EXPENSES AND PROFITS. OUT OF ENTIRE SALE PROCEEDS, ONLY PROFIT ELEMENT IS LIABLE TO TAX. WHEN THE ASSESSEE IS FOUND TO HAVE NOT INCORPORA TED ENTIRE SALE PROCEEDS IN THE REGULAR BOOKS OF ACCOUNT AND THE ASSESSING OFFICE R IS NOT SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS OF ASS ESSEE, THE SAME ARE LIABLE TO BE REJECTED. UNDER THESE CIRCUMSTANCES ESTIMATION O F PROFIT IS TO BE MADE IN RESPECT OF SALE PROCEEDS NOT ACCOUNTED FOR. ACCORDI NGLY, PROFIT ELEMENT IN THE UNACCOUNTED SALE PROCEEDS RECEIVED IN CASH IS TO BE BROUGHT TO TAX NET. KEEPING IN VIEW THE PROPOSITION LAID DOWN BY THE JURISDICTION AL HIGH COURT AS WELL AS OTHER HIGH COURTS AS DISCUSSED HEREINABOVE AND TOTALIT Y OF FACTS AND CIRCUMSTANCES OF THE CASE, MORE PARTICULARLY, KEEPIN G IN VIEW THE NATURE OF THE ASSESSEES BUSINESS OF PURCHASE AND SALE OF REAL ESTA TE AND FLATS, WE DIRECT THE ASSESSING OFFICER TO TAKE 25 PER CENT OF SALE PROCE EDS RECEIVED IN CASH AS ASSESSEES SRI SRI ESTATES (CROSS APPEALS) :- 6 - : INCOME RATHER THAN MAKING ADDITION OF ENTIRE AMOUNT O F SALE PROCEEDS RECEIVED IN CASH. WE DIRECT ACCORDINGLY.' FROM THE JUDGEMENT REPRODUCED ABOVE, IT CAN BE SEEN THAT WHILE ALL COURTS-HAVE UNANIMOUSLY HELD THAT ONLY PROFIT ELEME NT OUT OF THE SUPPRESSED TURNOVER SHOULD BE TAXED, THE ESTIMATION OF THAT PROFIT ELEMENT WOULD DEPEND ON THE FACTS OF THE PARTICULAR CASE. IN THE CASE OF THE APPELLANT AT HAND, THE AO IS OF THE VIEW THA T LITHE UNDISCLOSED RECEIPTS ARE OUTRIGHT INCOME FORMING PART OF ALREAD Y SOLD PLOTS FOR WHICH ASSESSEE HAS ALREADY BOOKED EXPENSES,' AND TH EREFORE, THE AO HAS TAXED 100% OF THE AMOUNT AS SUPPRESSED INCOME. THE APPELLANT ON THE OTHER HAND CONTENDS THAT THE AVERAGE NET PRO FIT RATE OF 4% RETURNED BY IT SHOULD BE APPLIED. THE CONTENTION OF THE APPELLANT TO APPLY 4% NP RATE IS OBVIOUSLY BASELESS. THE HUGE UN ACCOUNTED SALES AND SUPPRESSED TURNOVER UNCOVERED DURING SEARCH IS SUFFICIENT EVIDENCE THAT THE NET PROFIT BEING RETURNED WAS GRO SSLY SUPPRESSED. IN SIMILAR CIRCUMSTANCES, IN THE CASE OF DCIT VS. P ANNA CORPORATION (2012)/74 DTR (GUJ) 89, WHERE THE ASSESSEE WAS ENGA GED IN THE BUSINESS OF CONSTRUCTION OF FLATS, AND LOOSE PAPERS EVIDENCING COLLECTION OF UNACCOUNTED CASH WERE FOUND DURING CO URSE OF SEARCH, THE GUJARAT HIGH COURT UPHELD DETERMINATION OF INCO ME AT RS.26 LACS OUT OF TOTAL UNDISCLOSED RECEIPTS OF RS.62 LACS (I. E.,42%). IN THE DECISION OF SHARDA REAL ESTATE REPRODUCED ABOVE, TH E MP HIGH COURT UPHELD THE DETERMINATION OF INCOME @25% OF UNACCOUN TED RECEIPTS. THEREFORE, KEEPING IN VIEW THE FACTS OF THE CASE IN ENTIRETY AND THE PROPOSITION LAID DOWN BY VARIOUS HIGH COURTS AS DIS CUSSED ABOVE, AND MORE PARTICULARLY, KEEPING IN VIEW THE NATURE O F THE ASSESSEE'S BUSINESS AND THE EVIDENCES UNCOVERED DURING SEARCH OPERATIONS, THE ASSESSING OFFICER IS DIRECTED TO TAKE 40% OF THE SU PPRESSED TURNOVER AS THE APPELLANT'S INCOME, RATHER THAN TREATING THE ENTIRE AMOUNT AS SUPPRESSED INCOME. GROUND NO.8 RAISED BY THE APPELL ANT IS THEREFORE PARTLY ALLOWED. 7. CONTESTING THE ABOVE, BOTH ASSESSEE AND REVENUE ARE AGGRIEVED. ASSESSEE IS AGGRIEVED ON THE ISSUES THAT ARE OF THE QUANTIFICATION OF TURNOVER AND RATE OF PROFIT, WHERE AS REVENUE IS IN APPEAL ON TREATMENT OF SUPPRESSED RECEIP TS AS INCOME WHICH WAS NOT ACCEPTED BY THE LD.CIT(A). SRI SRI ESTATES (CROSS APPEALS) :- 7 - : 8. IT WAS THE SUBMISSION OF LD. COUNSEL THAT THE QUANTIFICATION OF THE TURNOVER ITSELF IS NOT CORRECT AN D BASED ON THE REGISTERS MAINTAINED BY THE SALES AGENTS, THE QUANTIFI CATION CANNOT BE DONE IN THE HANDS OF ASSESSEE. IT WAS ALSO CONTENTION THAT ASSESSEE HAS NOT EARNED THAT MUCH PROFIT A ND REFERRED TO THE TURNOVERS DISCLOSED BY ASSESSEE WHICH IS MUCH MORE THAN THE SO CALLED SUPPRESSION TURNOVER. IT WAS SUBMITTED THAT ASSESSEE HAS EARNED PROFITS AT AROUND 4% O N THE RECORDED TURNOVER AND THEREFORE, ON THE UNRECORDED TURNOVER WHICH IS A SMALL PERCENTAGE WHEN COMPARED TO RECORDED TURNOVER, THE PROFITS CANNOT BE AT 40%. IT WAS THE SUBMISSION THAT THE PROFITS CAN BE REASONABLY ESTIMATE D AT 4% OR AT BEST DOUBLE OF THE AMOUNT AT 8% BUT NOT AT 40% AS WA S DONE BY THE LD.CIT(A). LD. COUNSEL RELIED ON THE F OLLOWING CASE LAW: I. ITAT BANGALORE BENCH IN THE CASE OF ITO VS. M/S. KARTHIK POULTRY FARM, IN ITA NO. 1106(B)/2014, DT. 06- 11-2015; II. CIT VS. SHARDA REAL ESTATE (P) LTD., [99 DTR 100] (MP-HC); III. ITAT COCHIN BENCH IN THE CASE OF ACIT VS. M/S. ARCH ANA TRADING CO., IN ITA NOS. 351 & 352/COCH/2011, 28-02 - 2013; SRI SRI ESTATES (CROSS APPEALS) :- 8 - : IV. ITAT HYDERABAD BENCH IN THE CASE OF SRI KATAKAM SRINIVAS VS. ITO, IN ITA NO. 517/HYD/2017, DT. 30-11 - 2017; V. ITAT HYDERABAD BENCH IN THE CASE OF SRI NARENDAR RE DDY MADDI VS. ITO, IN ITA NO. 871/HYD/2016, DT. 25-04- 2018; VI. ORDER OF THE HON'BLE HIGH COURT OF AP IN THE CASE OF R AVI FOODS PVT. LTD., IN ITTA NO. 35 OF 2015, DT. 16 TH JUNE, 2015; 9. LD.DR HOWEVER, SUBMITTED THAT THERE IS NO EVIDENCE OF HAVING SPENT ANY AMOUNT OUTSIDE THE BOOKS OF ACCOUNT AND THEREFORE AO WAS CORRECT IN TREATING THE SUPPRESSED RECE IPTS AS INCOME OF ASSESSEE. HE RELIED ON THE ORDERS OF AO I N SUPPORT OF THE REVENUE APPEALS. WITH REFERENCE TO QUANTIFICATIO N OF TURNOVER, IT WAS SUBMITTED THAT THE TURNOVERS QUANTIFIED ON THE BASIS OF THE EVIDENCE AVAILABLE IN THE COURSE OF SE ARCH AND CONSEQUENTLY, THE LD.CIT(A) CONFIRMED THE TURNOVER ON W HICH THERE CANNOT BE ANY DISPUTE. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS ON RECORD. EVEN THOUGH A PAPER B OOK HAS BEEN FILED, WITH REFERENCE TO THE ADMITTED TURNOVERS AND THE RATE OF PROFIT TO BE ESTIMATED RELYING ON VARIOUS CASE LAW, NO MATERIAL HAS BEEN PLACED CONTESTING THE TURNOVER DETERM INED BY THE AO AS TOTAL TURNOVER AND THE SUPPRESSED TURNOVER . SINCE NO EVIDENCE HAS BEEN PLACED BY ASSESSEE TO DIF FER FROM SRI SRI ESTATES (CROSS APPEALS) :- 9 - : THE FINDINGS OF THE LD.CIT(A), WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) IN PARA 6.1 WITH REFERENCE TO DETE RMINATION OF SUPPRESSED TURNOVER. CONSEQUENTLY, THE IMPUGNED SUPPRESSED TURNOVER RS. 6.93 CRORES STANDS CONFIRMED AND GROUNDS OF ASSESSEE ON THIS ISSUE ARE REJECTED. 11. 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 CANNOT BE ANY FIXED PROFIT PERCENTAGE. IT DEPENDS ON CASE TO CASE ON THE FACTS. AS SEEN FROM THE TURNOVERS DECLARED BY ASSESSEE IN THE BOOKS OF ACCOUNT, THESE ARE THE TURNOVERS IN RESPECTIVE ASSES SMENT YEARS. A.Y. TURNOVER (RS) 2012-13 2,78,74,389 2013-14 8,80,92,909 2014-15 6,09,76,795 2015-16 3,39,08,707 TOTAL: 21,08,52,800 11.1. COMPARED TO THE ABOVE TURNOVER, THE SUPPRESSED TURNOVER DETERMINED BY THE AO WAS ROUGHLY AT ABOUT 33% 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% PROFI T ON SRI SRI ESTATES (CROSS APPEALS) :- 10 -: THE SO CALLED SUPPRESSED TURNOVER. WE ARE OF THE OPI NION THAT A REASONABLE PROFIT HAS TO BE ESTIMATED CONSIDERING T HE FACTS OF THE CASE. IT IS TRITE LAW THAT THERE CANNOT BE ANY FIXED RA TE OF ESTIMATION AND THAT DEPENDS ON FACTS OF THE CASE. IN FAC T, THERE ARE VARIOUS JUDGMENTS RELIED ON BY THE PARTIES, WHEREI N NET PROFIT WAS ESTIMATED FROM 4% TO GROSS PROFIT OF 40%. TH ERE ARE VARIOUS HIGH COURT JUDGMENTS ALSO ESTIMATING THE INCOME AT 25% OF THE SUPPRESSED TURNOVERS, BUT MOST OF THE RATES ARE DETERMINED ON GIVEN FACTS OF THE CASE AND THE NATURE O F SUPPRESSION. IN THIS CASE, THE QUANTIFICATION ITSELF WAS DONE ON THE THIRD PARTY REGISTERS WHERE ONLY THE INDICATIVE SA LE PRICES WERE RECORDED. SINCE MORE THAN 70% OF THE TURNOVER WA S RECORDED AND THE PROFIT AT 4% WAS ACCEPTED BY AO, WE A RE OF THE OPINION THAT ESTIMATION AT 12.5% IS REASONABLE ON TH E FACTS OF THE CASE. LD. JURISDICTIONAL HIGH COURT IN THE CA SE OF ACIT VS. RAVI FOODS PVT. LTD., HAS CONFIRMED NET PROFIT RATE OF 3.91%. THAT CASE HOWEVER, PERTAIN TO A FOOD BUSINESS C ASE, BUT NOT REAL ESTATE. GENERALLY IN REAL ESTATE/CONTRACT CA SES, PROFIT IS ESTIMATED AT 12.5%. AS ASSESSEE HAS MOSTLY SOLD R EAL ESTATE PLOTS, WE ARE OF THE OPINION THAT ESTIMATION OF INCOME AT 12.5% ON THE SUPPRESSED TURNOVER WILL MEET THE ENDS OF JUSTIC E. ACCORDINGLY, MODIFYING THE ORDER OF CIT(A), WE DIRE CT THE AO TO DETERMINE THE PROFIT AT 12.5% OF THE DETERMINED SUPPRE SSED TURNOVER. 12. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE CONSIDERED PARTLY ALLOWED. SRI SRI ESTATES (CROSS APPEALS) :- 11 -: REVENUE APPEALS: 13. 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 THE 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 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/201 1, DT. 28-02-2013 AND ALSO ACIT VS. PAHAL FOOD [IT (SS) A NO. 42/HYD/2005, DT. 30-09-2009] BY ITAT, HYDERABAD. 13.1. RESPECTFULLY FOLLOWING THE DECISION, 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. SRI SRI ESTATES (CROSS APPEALS) :- 12 -: 14. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DISMISSED. 15. TO SUM-UP, ALL THE APPEALS OF ASSESSEE ARE PARTL Y ALLOWED AND ALL THE APPEALS OF REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2018 SD/- SD/- (V. DURGA RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 25 TH JULY, 2018 TNMM SRI SRI ESTATES (CROSS APPEALS) :- 13 -: COPY TO : 1. SRI SRI ESTATES, CH. 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.