Sri Surakshitha Homes, Hyderabad V. ITO, Ward 11(2), Hyderabad

ITA 784/HYD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98408 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SRINIVAS; PRABHAT KUMAR GUPTA
• Assessee Lawyers: S RAMA RAO
• Keywords: Cost of acquisition
• Section: 263; 11; 40A(3); 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A : HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.784/HYD/2013 ASSESSMENT YEAR 2008-2009 SRI SURAKSHITHA HOMES, HYDERABAD. PAN ABFFS1769L VS. THE INCOME TAX OFFICER, WARD 11(2) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. D. SRINIVAS & MR. PRABHAT KUMAR GUPTA DATE OF HEARING : 29 .07.2015 DATE OF PRONOUNCEMENT : 28 .0 8 .2015 ORDER PER P.M. JAGTAP, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT-V, HYDERABAD DATED 28.03.2013 PASSED UNDER SECTION 263 OF THE I.T. ACT , 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS O F REAL ESTATE. IT PURCHASES LANDS AND AFTER DEVELOPING THE SAME INTO RESIDENTIAL AND COMMERCIAL PLOTS, SELLS SUCH P LOTS. A SURVEY UNDER SECTION 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 04.09.2008. 2 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. THEREAFTER, ON 28.05.2009, THE ASSESSEE FIRM FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS.1,06,95,780. IN THE SA ID YEAR, TWO PROJECTS WERE DEVELOPED BY THE ASSESSEE NAMELY SAI ROYAL RESIDENCY (SRR) AND HIGHWAY HEIGHTS. FOR TH E FIRST PROJECT I.E., SAI ROYAL RESIDENCY (SRR), TO TAL LAND OF AC.23.07 GTS WAS PURCHASED BY THE ASSESSEE AND THE SAME WAS CONVERTED INTO 325 PLOTS OF 200 SQ. YARDS EACH. OUT OF THESE 325 PLOTS, 207 PLOTS WERE SOLD DURING THE YEA R UNDER CONSIDERATION AND THE REMAINING 118 PLOTS HAD REMAINED UNSOLD OUT OF WHICH 78 PLOTS WERE UNDER LITIGATION. IN THE P & L ACCOUNT FILED ALONG WITH T HE RETURN OF INCOME, TOTAL SALE CONSIDERATION OF THE PLOTS SO LD IN THIS PROJECT WAS SHOWN BY THE ASSESSEE AT RS.12.26 CRORE S. THE MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY HOWEVER REVEALED THAT THE TOTAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE FROM THE SAID PROJECT WAS RS.15.33 CRORES. ACCORDINGLY, ADOPTING THE SAID SALE CONSIDERATION O F RS.15.33 CRORE AND DEDUCTING THE CORRESPONDING PURC HASE COST OF LAND AMOUNTING TO RS.10.03 CRORES, THE DIFF ERENCE OF RS.5.30 CRORES WAS TREATED BY THE A.O. AS THE GR OSS PROFIT OF THE ASSESSEE FROM THE PROJECT OF SAI ROYA L RESIDENCY. HE ALSO FOUND THAT PAGE NOS. 29 TO 32 OF ANNEXURE-A/SH/02 OF THE IMPOUNDED MATERIAL CONTAINE D INDIVIDUAL PARTNERS ACCOUNTS AND AS PER THE WORKING GIVEN THEREIN, WHICH WAS SIGNED BY ALL THE PARTNERS, THE PROFIT OF SRR PROJECT WAS ARRIVED AT RS.2.90 CRORES UP TO NOVEMBER, 2007 AND RS.1,08,88,000 FROM DECEMBER 7 T O MARCH, 2008. THESE TWO AMOUNTS AGGREGATING TO 3 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. RS.3,98,88,000 WERE TAKEN BY THE A.O. AS REPRESENTI NG THE NET PROFIT OF THE ASSESSEE FROM SRR PROJECT AND TREATING THE DIFFERENCE BETWEEN RS.5.33 CRORES AND RS.3,98,88,000 AS EXPENSES INCURRED BY THE ASSESSEE ON LAY OUT FORMATION, DEVELOPMENT, MARKETING COMMISSIO N ETC., HE PROPOSED TO TAX A SUM OF RS.3,98,88,000 IN THE HANDS OF THE ASSESSEE BEING THE PROFIT OF SRR PROJE CT FOR THE YEAR UNDER CONSIDERATION. WHEN THIS PROPOSAL WA S CONFRONTED BY THE A.O. TO THE ASSESSEE, THE LATER O BJECTED TO THE SAME BY SUBMITTING THAT THE ESTIMATION OF PR OFIT PROPOSED TO BE MADE BY HIM ON THE BASIS OF PAPERS IMPOUNDED DURING THE COURSE OF SURVEY WAS NOT CORRE CT. IT WAS CLAIMED BY THE ASSESSEE THAT IT HAS INCURRED A LOT OF EXPENSES AND FACED LEGAL/SOCIAL DISPUTES AND DIFFIC ULTIES IN EXECUTION OF WORK AND THAT HAS TO BE TAKEN INTO CONSIDERATION FOR ESTIMATING THE PROFIT OF THE SRR PROJECT. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS INCURRED A LOT OF EXPENDITURE ON ACCOUNT OF BANK INTEREST, DEVELOPMEN T CHARGES, REGISTRATION ETC., AND SINCE THE SAME ARE NOT CONSIDERED IN THE RELEVANT WORKING OF PROFIT GIVEN IN THE IMPOUNDED DOCUMENT, THE PROFIT SHOWN THEREIN WAS NO T THE ACTUAL PROFIT AND IT WAS ONLY A FIGURE OF PROJECTED/EXPECTED PROFIT FROM THE SRR PROJECT. THI S EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABL E BY THE A.O. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE TO SUPPORT AND SUBSTANTIATE THE SAME AND ACCORDINGLY, A SUM OF RS.3,98,88,000 WAS BROUGHT TO TAX BY HIM IN THE HANDS OF THE ASSESSEE AS THE ESTIMATED PROFIT FROM SRR PROJECT. 4 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. 3. THE OTHER PROJECT NAMELY HIGHWAY HEIGHTS WAS DEVELOPED BY THE ASSESSEE ON A LAND OF AC.15.06GTS WHICH WAS CONVERTED INTO 176 PLOTS. OUT OF THE SAID 176 P LOTS, 33 PLOTS WERE SHOWN TO HAVE BEEN SOLD BY THE ASSESS EE FOR CONSIDERATION OF RS.1.45 CRORES. AS FOUND BY THE A. O., THE TOTAL CONSIDERATION RECEIVED BY THE ASSESSEE FROM H IGHWAY HEIGHTS PROJECT AS PER THE RELEVANT IMPOUNDED MATER IAL HOWEVER WAS RS.1,54,16,000. HE ALSO FOUND FROM THE WORKING OF INDIVIDUAL PARTNERS ACCOUNTS GIVEN IN TH E RELEVANT IMPOUNDED MATERIAL THAT THE PROFIT OF HIGH WAY HEIGHTS WAS ARRIVED AT RS.24,50,105. ADOPTING THE S AME METHOD AS ADOPTED BY HIM IN THE CASE OF SRR PROJECT , THE PROFIT OF THE ASSESSEE FROM HIGHWAY HEIGHTS PROJECT WAS TAKEN BY THE A.O. AT RS.24,50,105 BY TREATING THE DIFFERENCE BETWEEN RS.154 LAKHS AND RS.24.50 LAKHS AS EXPENDITURE INCURRED BY THE ASSESSEE IN CONNECTION WITH LAY OUT AS WELL AS SALE OF PLOTS IN HIGHWAY HEIGHTS PROJECT AND ACCORDINGLY, THE SAID AMOUNT WAS ALSO BROUGHT T O TAX BY HIM IN THE HANDS OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 4. DURING THE COURSE OF SURVEY, CERTAIN DOCUMENTS WERE FOUND SHOWING THAT THE ASSESSEE HAS SOLD 5.00 ACRES OF LAND TO ONE M/S. ETA STAR PROPERTIES. IN HIS STATEMENT, MR. BALRAJ GOUD, THE PARTNER OF THE ASSE SSEE FIRM STATED THAT ASSESSEE FIRM HAS SOLD 5.00 ACRES OF LAND TO ETA STAR PROPERTIES P. LTD., FOR RS.3.45 CRORES OUT OF WHICH A SUM OF RS.1.05 CRORES ONLY WAS RECEIVED AND THE BALANCE AMOUNT WAS IN DISPUTE. A STATEMENT OF MR. A SHRAJ 5 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. ABDUL REHMAN BUKARI, DIRECTOR OF M/S. ETA STAR PROPERTIES DEVELOPMENT P. LTD., WAS ALSO RECORDED B Y EDIT, UNIT-II(3), BANGALORE WHEREIN HE STATED THAT ONE STRETCH OF 5.00 ACRE IN SURVEY NO.12 AT USHAPUR (V) WAS PURCHASED FROM SMT. E. RAMADEVI AND OTHERS FOR A CONSIDERATION OF RS.1.25 CRORES WHILE ANOTHER STRET CH OF 5.00 ACRE IN THE SAME SURVEY NUMBER WAS PURCHASED F ROM THE ASSESSEE FIRM FOR A SUM OF RS.1.25 CRORES. FROM THE BANK ACCOUNT OF M/S. ETA STAR PROPERTIES DEVELOPMEN T P. LTD., IT WAS NOTICED BY THE A.O. THAT THE SAID FIRM HAS PAID RS.3.75 CRORES TO ONE M/S. PURNADAYA INDUSTRIES LTD ., HYDERABAD. THE SAID AMOUNT WAS STATED TO BE PAID FO R DEVELOPMENT OF FUTURE PROPERTY DEALS IN FAVOUR OF M /S. ETA STAR PROPERTIES DEVELOPMENT P. LTD., BUT BECAUS E OF THE DISPUTE BETWEEN THE PARTIES, THE BANK ACCOUNTS OF M/S. POORNADAYA INDUSTRIES LIMITED HAVING BALANCE AMOUNT OF RS.2.07 CRORES WAS ATTACHED AS PER THE OR DER OF THE COURT. KEEPING IN VIEW OF ALL THESE FACTS AN D CIRCUMSTANCES OF THE CASE, THE SALE CONSIDERATION O F LAND OF 5.00 ACRE SOLD BY THE ASSESSEE TO M/S. ETA STAR PROPERTIES DEVELOPMENT P. LTD. WAS TAKEN BY THE A.O . AT RS.1.25 CRORES AND AFTER DEDUCTING THE COST OF ACQU ISITION OF THE SAID LAND AMOUNTING TO RS.45,35,500, THE PRO FIT OF RS.79,62,500 WAS BROUGHT TO TAX BY THE A.O. IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE TOTAL INCOME OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS DETER MINED BY THE A.O. AT RS.5,03,00,605 IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 31.12.2010. 6 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. 5. THE RECORD OF THE ASSESSMENT COMPLETED BY THE A.O. UNDER SECTION 143(3) CAME TO BE SUBSEQUENTLY EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION, HE WAS OF THE VIEW THAT THE ORDER PASSED BY THE A.O. U NDER SECTION 143(3) SUFFERED FROM THE FOLLOWING ERRORS W HICH WERE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. A) THE ASSESSING OFFICER (HEREIN AFTER TERMED AS A.O.) DID NOT TAKE INTO CONSIDERATION THE VALUE OF THE UNSOLD PLOTS WHILE ESTIMATING THE GROSS PROFIT OF THE ASSESSEE AT RS.5,33,38,000/- IN RESPECT OF THE 'SAI ROYAL RESIDENCY PROJECT'. B) THE A.O. ALLOWED THE EXPENDITURE OF RS.L,34,50,000/- TOWARDS LAND DEVELOPMENT EVEN THOUGH THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN RESPECT OF THE SAID EXPENDITURE AND THE AO ALSO DID NOT VERIFY WHETHER THE EXPENDITURE WAS ACTUALLY INCURRED BY THE ASSESSEE AND ALSO DID NOT EXAMINE THE APPLICABILITY OF PROVISIONS OF SECTION 40A(3). C) THE A.O. ALLOWED THE ENTIRE AMOUNT OF RS.7,20,00,000/- & RS.7,66,00,000/- PAID IN CASH TOWARDS ACQUISITION OF LANDS WITHOUT EXAMINATION OF THE APPLICABILITY OF PROVISIONS OF SECTION 40A(3 ) OF THE INCOME TAX ACT,1961. D) THE A.O. ALSO ADOPTED VALUE OF THE SALE OF THE LAND SITUATED AT AUSHAPUR (V), GHAT KESAR MANDAL, R.R. DISTRICT AT RS.1.25 CRORES AGAINST THE SALE CONSIDERATION OF RS.3.75 CRORES AS PER THE SALE DEED. SECONDLY, THE AO ALSO, FAILED TO CONSIDER THE ACTUAL SALE CONSIDERATION OF RS.4.25 CRORES I.E., RS.85 LAKHS PER ACRE AS PER IMPOUNDED MATERIAL. 6. ACCORDINGLY, NOTICE UNDER SECTION 263 WAS ISSUED BY THE LD. CIT ON 31.01.2003 POINTING OUT TH E ABOVE ERRORS AND CALLING FOR THE EXPLANATION OF THE 7 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. ASSESSEE AS TO WHY THE ORDER PASSED BY THE A.O. UND ER SECTION 143(3) SHOULD NOT BE REVISED BY EXERCISING HIS REVISIONAL POWERS UNDER SECTION 263. IN REPLY, THE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE V IDE ITS LETTER DATED 06.03.2013. A) THE ACTUAL ACQUIRED LAND IS ONLY 23 ACRES 26 GUNTAS AGAINST THE PLOTTED AREA OF 25 ACRES 15 GUNTAS. THE ASSIGNED LAND OF 2 ACRES PURCHASED COULD NOT BE SOLD IN THE MARKET HENCE IT HAS NO VALUE. THE ACTUAL CONSIDERATION ADOPTED BY THE A.O. OF RS.15,33,38,000/- ALSO INCLUDES ADDITIONAL AMOUNTS COLLECTED BY THE AGENTS TOWARDS THEIR COMMISSION. THEREFORE, IT CAN NOT BE SAID THERE WAS ERROR IN THIS REGARD. B) WITH REGARD TO ALLOWANCE OF RS.L,34,50,000/- IT IS STATED THAT ALL THE EXPENDITURE INCURRED IS LESS THAN RS.20,000/-PER DAY ON EACH OCCASION OF PAYMENT, THEREFORE, PROVISIONS OF SECTION 40A(3) COULD NOT APPLY. C) THE ASSESSEE IS EXCLUDED FROM APPLICABILITY PROVISIONS OF SEC 40A(3) OF THE ACT IN VIEW OF THE RULE 6DD(G) OF I.T. RULES IN RESPECT OF CASH PAYMENTS MADE TO LAND OWNERS. D) WITH REGARD TO ADOPTION OF RS.L.25 CRORES AS SALE CONSIDERATION IN RESPECT OF PROPERTY SOLD TO ETA- STAR PROPERTY, THE ASSESSEE STATED THAT THE AO AFTER CONSIDERATION OF ALL MATERIAL ADOPTED AT THE SALE VALUE OF RS.1.25 CRORES, HENCE, THERE IS NO MISTAKE WHICH NEEDS RECTIFICATION U/S.263. 6.1. THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT FOR THE FOLLOWING R EASONS GIVEN IN PARAGRAPH NO.6 OF HIS IMPUGNED ORDER. 8 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. I AM OF THE OPINION THAT THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT THERE IS NO CASE FOR THE REVISION U/S 263 OF THE IT ACT AS IT IS A WELL SETTLED RULE THAT THE COMMISSIONER CAN REGARD AN ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, ON THE FACTS/CIRCUMSTANCES OF THE CASE, IF HE IS OF THE OPINION THAT THE ASSESSING OFFICER HAS PASSED THE ORDER WITHOUT APPLYING HIS MIND TO ANY ISSUE REGARDING CLAIM OR CONTENTION OR THE ASSESSING OFFICER COMPLETED THE ASSESSMENT WITHOUT CARRYING OUT THE REQUISITE ENQUIRIES. RELIANCE IS PLACED ON THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF A) GEE VEE ENTERPRISES VS ADDL.C1T & OTHERS 99 ITR 375 (DELHI) B) THALIBAI F JAIN AND OTHERS VS ITO 101 ITR 1 (KARNATAKA) 1975 AND C) SMRUTI TRADING COMPANY VS ITO (2001) 70 TTJ (MUMBAI TRIBUNAL) 114. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND IN RESPECT OF THE ISSUES, DETAILED IN THE SHOW CA USE NOTICE. THEREFORE, THE PROVISIONS OF SECTION 263 APPLY TO THE FACTS OF THE ASSESSEE'S CASE AND THE CONTENTION OF THE ASSESSEE IS REJECTED. 6.2. FOR THE REASONS GIVEN ABOVE, THE LD. CIT HELD THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 143 (3) ON 31.12.2010 WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND SETTING ASIDE THE SAME , HE DIRECTED THE A.O. TO PASS A FRESH ASSESSMENT ORDER AFTER EXAMINING THE ISSUES POINTED OUT BY HIM IN THE NOTI CE ISSUED UNDER SECTION 263. AGGRIEVED BY THE ORDER OF LD. CIT PASSED UNDER SECTION 263, THE ASSESSEE HAS PREF ERRED THIS APPEAL BEFORE THE TRIBUNAL. 9 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. 7. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT UNDER SECTION 263 HOLDING THE ORDER PASSED BY THE A .O. UNDER SECTION 143(3) TO BE ERRONEOUS AS WELL AS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE. AS REGARDS THE FIR ST THREE ERRORS ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE COMPUTATION OF INCOME OF THE ASSESSEE MADE BY THE A .O. IN RESPECT OF SAI ROYAL RESIDENCY, HE CONTENDED THA T THE METHOD ADOPTED BY THE A.O. WHILE FINALLY ESTIMATING THE INCOME OF THE ASSESSEE FROM THE SAID PROJECT WAS NO T PROPERLY APPRECIATED BY THE LD. CIT. HE INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER AS APPEARING AT PAGE NO.7 AND POINTED OUT THAT ALTH OUGH THE FIGURES OF SALE CONSIDERATION, LAND COST AND DEVELOPMENT EXPENSES WERE REFERRED TO BY THE A.O., THE INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PRO JECT WAS FINALLY ESTIMATED BY THE A.O. ON THE BASIS OF DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY WHEREIN THE PROFIT FROM THE SAID PROJECT AS GIVEN I N THE WORKING OF PARTNERS ACCOUNTS WAS SHOWN AT RS.3,98,88,000 FOR THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE PROFIT OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT THUS WAS NOT WORKED OUT BY THE A. O. ON THE BASIS OF BOOKS OF ACCOUNT AND EVEN THE CLAIM OF THE ASSESSEE THAT THE PROFIT APPEARING IN THE RELEVANT IMPOUNDED MATERIAL WAS SUBJECT TO FURTHER EXPENDITU RE WAS NOT ACCEPTED BY THE A.O. HE CONTENDED THAT IT W AS THUS A CASE OF ESTIMATION OF INCOME OF THE ASSESSEE FROM THE PROJECT OF SAI ROYAL RESIDENCY AND CONSEQUENTLY THERE 10 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. WERE NO ERRORS IN THE ORDER OF THE A.O. AS ALLEGEDL Y POINTED OUT BY THE LD. CIT. HE CONTENDED THAT THE PROVISION S OF SECTION 40A(3) WERE ALSO NOT APPLICABLE IN THE CASE OF ESTIMATION OF INCOME AND AS EXPLAINED BY THE ASSESS EE BEFORE THE LD. CIT DURING THE COURSE OF PROCEEDINGS UNDER SECTION 263, THE RELEVANT PAYMENTS IN CASH HAVING B EEN MADE BY THE ASSESSEE UNDER EXCEPTIONAL CIRCUMSTANCE S, THE DISALLOWANCE UNDER SECTION 40A(3) EVEN OTHERWIS E WAS NOT CALLED FOR. 7.1. AS REGARDS THE 4 TH ERROR ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE ORDER OF THE A.O. IN ADOPTING THE SALE CONSIDERATION OF LAND AT RS.1.25 CRORES INSTEAD OF RS.3.75 CRORES, THE LD. COUNSEL FOR THE ASSESSEE INVITED OU R ATTENTION TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER AT PAGE NO.11 TO POINT OUT THAT THE SALE CONSIDERAT ION AS PER THE RELEVANT AGREEMENT WAS RS.1.25 CRORES ONLY AND AFTER HAVING FOUND THAT THE ASSESSEE HAS RECEIVED O NLY RS.1.10 CRORES FROM THE PURCHASER OF M/S. ETA STAR, THE A.O. RIGHTLY ADOPTED THE SALE CONSIDERATION OF RS.1 .25 CRORES FOR THE PURPOSE OF DETERMINING THE CAPITAL G AIN. HE CONTENDED THAT THERE WAS THUS NO ERROR IN THE ORDER OF THE A.O. ON THIS COUNT ALSO AS ALLEGED BY THE LD. CIT A ND THE A.O. HAVING TAKEN A POSSIBLE VIEW AFTER APPLYING HI S MIND TO ALL THE FACTS AND CIRCUMSTANCES, IT IS NOT PERMI SSIBLE TO THE LD. CIT TO SUBSTITUTE HIS OWN VIEW IN THE GUISE OF REVISION UNDER SECTION 263. 11 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. 8. THE LEARNED D.R. ON THE OTHER HAND, STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT UNDER SECTION 263. HE RELIED ON THE VARIOUS JUDICIA L PRONOUNCEMENTS TO EXPLAIN THE SCOPE OF POWERS WHICH THE LD. CIT CAN EXERCISE UNDER SECTION 263. HE CONTENDE D THAT SUCH REVISIONAL POWER IS AN EXTRAORDINARY POWE R THAT IS TO BE INVOKED AND EMPLOYED FOR THE PURPOSE OF SE TTING RIGHT DISTORTION AND PREJUDICE CAUSED TO THE REVENU E AND IF THE LD. CIT, ON EXAMINATION OF THE RECORDS OF TH E ASSESSMENT PROCEEDINGS, IS OF THE OPINION THAT THE ORDER PASSED BY THE A.O. IS ERRONEOUS CAUSING PREJUDICE T O THE INTERESTS OF THE REVENUE, HE CAN EXERCISE HIS POWER S UNDER SECTION 263 TO SET ASIDE SUCH ORDER. HE CONTE NDED THAT AN INCORRECT ASSUMPTION OF FACTS AND INCORRECT APPLICATION OF LAW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS. HE CONTENDED THAT THESE INGREDIENT S WERE VERY MUCH THERE IN THE ASSESSMENT ORDER PASSED BY THE A.O. IN THE PRESENT CASE, AS POINTED OUT BY THE LD. CIT MAKING THE SAID ORDER ERRONEOUS AS WELL AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE AND THE LD. CIT THEREF ORE WAS FULLY JUSTIFIED IN SETTING ASIDE THE SAID ORDER BY EXERCISING THE POWERS CONFERRED UPON HIM UNDER SECTION 263. HE ALSO CONTENDED THAT THE LD. CIT VIDE HIS IMPUGNED O RDER PASSED UNDER SECTION 263 HAS FINALLY SET ASIDE THE ORDER PASSED BY THE A.O. WITH A DIRECTION TO THE A.O. TO RE-DO THE SAME AFTER AFFORDING A REASONABLE OPPORTUNITY T O THE ASSESSEE AND THE ASSESSEE WILL GET AN OPPORTUNITY T O PUT- FORTH ALL HIS CONTENTIONS BEFORE THE A.O. ON MERIT DURING THE COURSE OF SET ASIDE PROCEEDINGS. 12 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ORDER PASSED BY THE A.O. UNDER SE CTION 143(3) FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2 008-09 IN THE CASE OF THE ASSESSEE IS SET ASIDE BY THE LD. CIT BY HIS IMPUGNED ORDER HOLDING THE SAME TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . IN THIS CONTEXT, THE LD. CIT HAS ALLEGEDLY POINTED OUT FOUR ERRORS IN THE ORDER OF THE A.O. WHICH WERE DULY COMMUNICAT ED BY HIM TO THE ASSESSEE IN THE NOTICE ISSUED UNDER SECT ION 263. OUT OF THESE FOUR ERRORS, THREE ERRORS ARE IN RELATION TO THE DETERMINATION OF THE INCOME OF THE ASSESSEE BY THE A.O. FROM SAI ROYAL RESIDENCY (SRR) PROJECT. ACCO RDING TO THE LD. CIT, WHILE DETERMINING THE INCOME OF THE ASSESSEE FROM THE SAID PROJECT, THE A.O. FAILED TO TAKE INTO CONSIDERATION THE VALUE OF UN-SOLD PLOTS AS WELL AS TO MAKE DISALLOWANCE UNDER SECTION 40A(3) AND ALSO ALL OWED DEDUCTION ON ACCOUNT OF LAND DEVELOPMENT EXPENDITUR E WITHOUT VERIFYING ANY DOCUMENTARY EVIDENCE. THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESS EE BEFORE US IS THAT THE INCOME OF THE ASSESSEE FROM S AI ROYAL RESIDENCY PROJECT WAS DETERMINED BY THE A.O. ON ESTIMATED BASIS AND THEREFORE, THERE WERE NO ERRORS IN THE ORDER OF THE A.O. AS ALLEGEDLY POINTED OUT BY THE L D. CIT. IN THIS REGARD, HE HAS INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE A.OS ORDER AS APPEARING ON PAGE NO. 7, A PERUSAL OF WHICH SHOWS THAT SALE CONSIDERATION OF S AI ROYAL RESIDENCY PROJECT FOR THE YEAR UNDER CONSIDER ATION WAS SHOWN BY THE ASSESSEE AT RS.12.88 CRORES WHEREA S, 13 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. THE SAME AS PER THE RELEVANT IMPOUNDED DOCUMENTS WA S FOUND TO BE RS.15.33 CRORES. BY ADOPTING THE SAID A MOUNT OF RS.15.33 CRORES AS SALE CONSIDERATION AND DEDUCT ING THE PURCHASE COST OF LAND OF RS.10.03 CRORES, THE B ALANCE AMOUNT OF RS.5.30 CRORES WAS TAKEN BY THE A.O. AS REPRESENTING THE GROSS PROFIT OF THE ASSESSEE FROM THE PROJECT OF SAI ROYAL RESIDENCY. HE HOWEVER FOUND TH AT AS PER THE WORKING OF PARTNERS ACCOUNTS GIVEN IN THE R ELEVANT IMPOUNDED MATERIAL IDENTIFIED AS PAGE NO.29 TO 32 O F ANNEXURE-IA/SH/02, THE PROFIT OF SAI ROYAL RESIDENC Y PROJECT FOR THE YEAR UNDER CONSIDERATION WAS SHOWN AT RS.3,98,88,000. WHEN THE A.O. PROPOSED TO ADOPT THI S PROFIT AS THE NET PROFIT OF SAI ROYAL RESIDENCY PRO JECT BY ASSUMING THE DIFFERENCE AMOUNT OF RS.134.50 LAKHS (RS.5.30 CRORES TAKEN AS GROSS PROFIT (-) RS.3,98,8 8,000) AS THE LAND DEVELOPMENT EXPENDITURE, THE ASSESSEE T OOK A STRONG OBJECTION BY STATING THAT THE SAME IS SUBJEC T TO LOT OF EXPENDITURE INCURRED ON LITIGATION, SOCIAL DISPU TES/ DIFFICULTIES IN EXECUTION OF WORK AS WELL AS INTERE ST AND OTHER EXPENSES. THE A.O. HOWEVER, DID NOT ACCEPT TH IS STAND OF THE ASSESSEE AND PROCEEDED TO COMPUTE THE INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PRO JECT FOR THE YEAR UNDER CONSIDERATION AT RS.3,98,88,000. IT IS THUS CLEAR THAT THE PROFIT OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT WAS NOT DETERMINED OR COMPUTED BY THE A.O. ON THE BASIS OF BOOKS OF ACCOUNT OR ANY OTHER WORKING, BUT THE SAME WAS ESTIMATED BY ADOPTING THE FIGURE OF PROFIT AS GIVEN IN THE WORKING OF PARTNER S ACCOUNTS IN THE IMPOUNDED MATERIAL AS FOUND DURING THE 14 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. COURSE OF SURVEY. IT IS PERTINENT TO NOTE HERE THAT THE BASIS ON WHICH THE SAID FIGURE WAS ARRIVED AT IS NEITHER GIVEN IN THE RELEVANT IMPOUNDED MATERIAL (COPIES PLACED AT P AGE NOS.83 TO 87 OF THE PAPER BOOK) NOR THE A.O. HAS MA DE ANY ATTEMPT TO FIND OUT OR ASCERTAIN THE DETAILS OF CORRESPONDING INCOME AND EXPENSES GIVING SUCH PROFI T. ALTHOUGH HE HAS TREATED THE DIFFERENCE BETWEEN SALE CONSIDERATION OF RS.15.33 CRORES AND LAND COST OF RS.10.03 CRORES AS GROSS PROFIT OF THE ASSESSEE AND PRESUMED THE DIFFERENCE BETWEEN SUCH GROSS PROFIT A ND RS.3,98,88,000 AS THE EXPENDITURE INCURRED ON LAND DEVELOPMENT, THE FACT REMAINS THAT THE PROFIT FIGUR E OF RS.3,98,88,000 AS REFLECTED IN THE WORKING OF THE P ARTNERS ACCOUNT AS FOUND RECORDED IN THE IMPOUNDED MATERIAL WAS FINALLY ADOPTED BY HIM TO ESTIMATE THE INCOME OF TH E ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT AND WHATE VER WORKING THAT WAS GIVEN BY HIM INVOLVING ASSUMPTIONS AND PRESUMPTIONS WAS JUST TO SUPPORT AND SUBSTANTIATE S UCH ESTIMATION OF INCOME MADE BY HIM. 10. ONCE IT IS FOUND THAT THE INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT FOR THE Y EAR UNDER CONSIDERATION WAS DETERMINED BY THE A.O. ON ESTIMATED BASIS, THE NEXT QUESTION THAT ARISES FOR OUR CONSIDERATION IN THE PRESENT CONTEXT IS WHETHER THE RE WERE ERRORS IN SUCH DETERMINATION AS ALLEGEDLY POINTED O UT BY THE LD. CIT IN HIS NOTICE ISSUED UNDER SECTION 263 AS ERROR NO. 1 TO 3. IN SO FAR AS THE FIRST ERROR ALLEGEDLY POINTED OUT BY THE LD. CIT THAT THE A.O. DID NOT TAKE INTO 15 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. CONSIDERATION THE VALUE OF UN-SOLD PLOTS WHILE ESTI MATING THE GROSS PROFIT OF THE ASSESSEE AT RS.5,33,38,000, WE HAVE ALREADY NOTED THAT THE INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT WAS ESTIMATED BY THE A. O. ON THE BASIS OF THE FIGURES OF PROFIT APPEARING IN THE WORKING OF PARTNERS ACCOUNTS FOUND RECORDED IN THE RELEVAN T IMPOUNDED MATERIALS AND THE WORKING OF THE GROSS PR OFIT BY THE A.O. WAS JUST TO SUPPORT THE SAID ESTIMATION . THE PROFIT AS INDICATED IN THE SAID WORKING AMOUNTING T O RS.3,98,88,000 WAS ADOPTED BY THE A.O. AS NET PROFI T OF THE SAI ROYAL RESIDENCY PROJECT REJECTING THE STAND OF THE ASSESSEE THAT FURTHER EXPENDITURE ON ACCOUNT OF LIT IGATION, BANK INTEREST ETC., WAS INCURRED BY IT. IN THE WORK ING OF PARTNERS ACCOUNT, THE SAID PROFIT WAS STATED TO BE TAKEN AS PER P & L ACCOUNT, BUT NO SUCH P & L ACCOUNT GIVING THE DETAILS OF WORKING OF THE SAID PROFIT WAS EITHER FO UND DURING THE COURSE OF SURVEY OR WAS BROUGHT ON RECOR D BY THE A.O. EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE IS THUS NOTHING AVAILABLE ON REC ORD TO SHOW THAT THE ESTIMATION OF INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT AS FINALLY DONE BY THE A.O. WAS WITHOUT TAKING INTO CONSIDERATION THE VALUE OF THE UN- SOLD PLOTS. MOREOVER, THE FIGURE OF PROFIT APPEARIN G IN THE RELEVANT WORKING OF PARTNERS ACCOUNTS WAS A NET PRO FIT FOR THE YEAR UNDER CONSIDERATION AVAILABLE FOR DISTRIBU TION TO THE PARTNERS AS INDICATED IN THE RELEVANT IMPOUNDED DOCUMENTS AND THE SAME OUGHT TO HAVE ARRIVED AT AFT ER TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS AN D FIGURES INCLUDING THE VALUE OF UN-SOLD PLOTS. IT THEREFORE CANNOT BE 16 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. SAID THAT THE INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT AS FINALLY ESTIMATED BY THE A.O. DID NOT TAKE INTO CONSIDERATION THE VALUE OF UN-SOLD PLOTS AS ALLEGED BY THE LD. CIT. 11. REGARDING THE EXPENDITURE OF RS.1,34,50,000 ON ACCOUNT OF LAND DEVELOPMENT ALLEGEDLY ALLOWED BY THE A.O., WE HAVE ALREADY OBSERVED THAT THE INCOME OF T HE ASSESSEE FROM THE SAI ROYAL RESIDENCY PROJECT WAS ESTIMATED BY THE A.O. ON THE BASIS OF THE WORKING O F PARTNERS CAPITAL ACCOUNT FOUND RECORDED IN THE RELE VANT IMPOUNDED DOCUMENTS AND THE WORKING MADE BY THE A.O . TAKING GROSS PROFIT AT RS.5,33,38,000 AND PRESUMING THE BALANCE AMOUNT OF RS.1,34,50,000 BEING DIFFERENCE BETWEEN THE GROSS PROFIT AND NET PROFIT AS EXPENDIT URE INCURRED TOWARDS LAND DEVELOPMENT WAS JUST TO SUPPO RT THE SAID ESTIMATION. THE SAID BALANCE AMOUNT TREATE D AS LAND DEVELOPMENT EXPENDITURE THUS WAS NEVER CLAIMED BY THE ASSESSEE AND IT THEREFORE CANNOT BE SAID THAT T HERE WAS AN ERROR IN THE ORDER OF THE A.O. IN ALLOWING T HE SAME. 12. AS REGARDS THE ERROR ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE ORDER OF THE A.O. IN ALLOWING TH E LAND DEVELOPMENT EXPENDITURE AND LAND COST PAID IN CASH WITHOUT CONSIDERING THE APPLICABILITY OF THE PROVIS IONS OF SECTION 40A(3), IT IS OBSERVED THAT THE HONBLE ALL AHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSH IDHAR (1998) 229 ITR 229 HAS HELD THAT WHEN THE INCOME OF THE ASSESSEE WAS COMPUTED ON ESTIMATE BASIS, THERE WAS NO 17 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. NEED TO LOOK INTO THE PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD(J). IN THE CASE OF ITO VS. MR. M. SRI DHAR PANICKER 7 TTJ 573, IT WAS HELD BY THE COORDINATE B ENCH OF THIS TRIBUNAL THAT WHEN ESTIMATIONS ARE MADE, IT IS NOT POSSIBLE TO SAY THAT SPECIFIC ITEMS OF EXPENDITURE IN CASH HAVE GONE INTO COMPUTATION OF THOSE ESTIMATIONS SO THAT SUCH ITEMS CAN BE DISALLOWED UNDER SECTION 40A(3). IN THE CASE OF INDWELL CONSTRUCTION VS. CIT 232 ITR 776 (A P), A SIMILAR ISSUE AROSE FOR CONSIDERATION BEFORE THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CONTEXT OF SECTION 40A(B) AND WHILE DEALING WITH THE SAME, IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT THE PATTERN OF ASSESSMENT U NDER THE INCOME TAX ACT IS GIVEN BY SECTION 29 WHICH STA TES THAT THE INCOME FROM PROFITS AND GAINS OF BUSINESS SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTA INED IN SECTION 30 TO 43D. IT WAS HELD THAT WHEN AN ESTI MATION OF INCOME IS MADE, IT IS IN SUBSTITUTION OF THE INC OME THAT IS TO BE COMPUTED UNDER SECTION 29 AND ALL THE DEDU CTIONS WHICH ARE REFERRED TO UNDER SECTION 29 ARE DEEMED T O HAVE BEEN TAKEN INTO CONSIDERATION WHILE MAKING SUCH ESTIMATE. IT WAS HELD THAT THIS WILL ALSO MEAN THAT THE EMBARGO PLACED IN SECTION 40 IS ALSO TAKEN INTO ACC OUNT WHILE MAKING AN ESTIMATION AND IT IS NOT CORRECT IN LAW TO MAKE A SEPARATE ADDITION BY WAY OF DISALLOWANCE UND ER SECTION 40. KEEPING IN VIEW THE LEGAL POSITION EMAN ATING FROM THESE JUDICIAL PRONOUNCEMENTS AND HAVING REGAR D TO THE FACT THAT THE INCOME OF THE ASSESSEE FROM SAI R OYAL RESIDENCY PROJECT IN THE PRESENT CASE WAS DETERMINE D BY THE A.O. ON ESTIMATED BASIS, WE ARE OF THE VIEW THA T NO 18 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. SEPARATE DISALLOWANCE UNDER SECTION 40A(3) WAS CALL ED FOR AND THERE WAS NO ERROR IN THE ORDER OF THE A.O. IN NOT MAKING SUCH DISALLOWANCE SEPARATELY AS ALLEGED BY T HE LD. CIT. WE THEREFORE AGREE WITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MANNER AND METHOD IN WHICH THE INCOME OF THE ASSESSEE FROM SAI ROYAL RESIDENCY PROJECT WAS DETERMINED BY THE A.O. ON ESTIMATED BASIS WAS NOT APPRECIATED BY THE LD. CIT IN PROPER PERSPECTIVE WHILE POINTING OUT ERROR NOS. 1 TO 3, WHICH WERE ACTUALLY NOT THERE. 13. AS REGARDS THE FOURTH AND LAST ERROR ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE ORDER OF THE A.O. IN TAKING THE SALE CONSIDERATION OF LAND AT AUSHAPUR A T RS.1.25 CRORES INSTEAD OF RS.3.75 CRORES FOR THE PU RPOSE OF COMPUTING THE PROFIT, IT IS OBSERVED THAT THIS ISSU E WAS DULY EXAMINED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON SUCH EXAMINATION, THE FOLLOWING MATERIAL FACTS RELEVANT TO THE ISSUE WERE NOTED BY HIM. A) M/S. ETA HAS PURCHASED FIVE ACRES OF LAND FROM M/S. SRI SURAKSHITHA HOMES WHICH IS REGISTERED ON 21.05.2007 AS DOCUMENT NO 5644/07. B) THE CONSIDERATION AS PER THE REGISTERED DEED IS RS 125 LAKHS FOR 5 ACRES WHICH IS PAID THROUGH CHEQUE TO M/S. SURAKSHITHA HOMES. C) M/S. ETA HAS PAID 3.75 CRORES TO M/S. PURNODAYA INDUSTRIES LTD., D-12. INDUSTRIAL ESTATE. MOULALI, HYDERABAD THROUGH CHEQUE. 19 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. D) M/S. ETA HAS GONE TO COURT AGAINST M/S. PURNODAYA INDUSTRIES AND AN AMOUNT OF RS.2.7 CR LYING IN THE THREE BANK ACCOUNTS OF M/S. PURNODAYA INDUSTRIES AND ITS ASSOCIATES IS UNDER ATTACHMENT OF THE COURT. 14. AFTER TAKING INTO CONSIDERATION THE ABOVE FACT S AS WELL AS THE MATERIAL AVAILABLE ON RECORD AND THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, THE A.O . IDENTIFIED THE PROBABLE EVENTS THAT TOOK PLACE IN CONNECTION WITH THE RELEVANT TRANSACTIONS AS UNDER : A) FROM THE IMPOUNDED COPY OF THE UNDERTAKING THE CONSIDERATION APPEAR TO BE 85 LAKHS PER ACRE OF WHICH THE REGISTERED VALUE IS RS.25 LAKHS AND THE BALANCE RS.65 LAKH APPEARS ON MONEY. B) THE AMOUNT OF 3.75 CR PAID TO M/S. PURNODAYA INDUSTRIES LTD APPEAR TO HAVE BEEN DEBITED AS EXPENDITURE BY M/S. ETA INCURRED TOWARDS LAND LEVELING AND DEVELOPMENT OF THE LAND AT AUSHAPUR. C) THE UNDERSTANDING BETWEEN M/S. ETA AND PURNODAYA INDUSTRIES IS THAT PURNODAYA INDUSTRIES SHOULD WITHDRAW THE AMOUNT AND PAY TO THE ASSESSEE FIRM I.E. M/S. SURAKSHITHA HOMES. THEY HAVE PAID ONLY SOME AMOUNT AS THE BALANCE IS UNDER ATTACHMENT. D) THIS KIND OF ROUTING OF MONEY WAS ATTEMPTED BY M/S. ETA AS THE ON MONEY WAS TO BE PAID IN CASH AND M/S. ETA BEING A COMPANY MAY HAVE NO CASH TO PAY. 15. THE ABOVE PROBABLE EVENTS THEN WERE CONFRONTED BY THE A.O. TO THE ASSESSEE AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE THEREON, HE FOUND THAT THE 5.00 ACRE OF LAND AT AUS HAPUR 20 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. WAS SOLD BY THE ASSESSEE TO M/S. ETA STAR PROPERTY DEVELOPERS LTD., FOR AN APPARENT CONSIDERATION OF R S.1.25 CRORES AND ALTHOUGH THE AMOUNT OF RS.3.75 CRORES WA S PAID BY ETA STAR PROPERTY DEVELOPERS LTD. TO M/S. POORNODAYA INDUSTRIES LIMITED, WHAT THE ASSESSEE ACTUALLY RECEIVED WAS ONLY RS.1.1 CRORE WHILE THE B ALANCE AMOUNT WAS LYING IN THE THREE BANK ACCOUNTS OF M/S. POORNODAYA INDUSTRIES AND ITS ASSOCIATES WHICH WERE UNDER ATTACHMENT OF THE COURT. ACCORDINGLY, THE SAL E CONSIDERATION OF THE PROPERTY WAS TAKEN BY THE A.O. AT RS.1.25 CRORES AND AFTER REDUCING THE COST OF ACQUI SITION OF THE LAND AMOUNTING TO RS.45,37,500, THE BALANCE AMOUNT OF RS.79,62,500 WAS BROUGHT TO TAX BY HIM IN THE HANDS OF THE ASSESSEE. THE SALE CONSIDERATION OF RS .1.25 CRORES THUS WAS ADOPTED BY THE A.O. BY APPLYING HIS MIND TO ALL THE RELEVANT FACTS OF THE CASE INCLUDING ESP ECIALLY THE FACT THAT THE CONSIDERATION AS STATED IN THE RELEVA NT AGREEMENT WAS RS.1.25 CRORES OUT OF WHICH THE ASSES SEE HAD ACTUALLY RECEIVED ONLY RS.1.10 CRORES. AS RIGHT LY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, A PO SSIBLE VIEW IN THE MATTER THUS WAS TAKEN BY THE A.O. AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS OF THE CA SE WHILE ADOPTING THE SALE CONSIDERATION OF RS.1.25 CRORES A ND IT IS NOT PERMISSIBLE TO THE LD. CIT TO SUBSTITUTE HIS OW N VIEW IN PLACE OF THE POSSIBLE VIEW TAKEN BY THE A.O. UND ER SECTION 263. 16. FOR THE REASONS GIVEN ABOVE, WE ARE OF THE VIE W THAT THERE WERE NO ERRORS IN THE ORDER OF THE A.O. AS 21 ITA.NO.784/HYD/2013 SRI SURAKSHITHA HOMES, HYDERABAD. ALLEGEDLY POINTED OUT BY THE LD. CIT CALLING FOR RE VISION UNDER SECTION 263 AND THE LD. CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE SAID ORDER OF THE A.O. PASSED UND ER SECTION 143(3) BY EXERCISING THE POWERS CONFERRED U PON HIM UNDER SECTION 263. THE IMPUGNED ORDER OF THE LD . CIT PASSED UNDER SECTION 263 IS THEREFORE, SET ASIDE AN D THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) IS RE STORED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.0 8.2015. SD/- SD/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 28 TH AUGUST, 2015 VBP/- COPY TO : 1. SRI SURAKSHITHA HOMES, HYDERABAD. C/O. S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, WARD 11(2), HYDERABAD. 3. CIT - V, HYDERABAD 4 . ADDL. CIT, RA NGE - 1 1, HYDERABAD. 5 . D.R. ITAT A BENCH, HYDERABAD. 6 . 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