ACIT, Hyderabad V. M/s Mani Deelopers, Secunderabad

ITA 929/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61890 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 18-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GOPINATH
• Assessee Lawyers: A V RAGHURAM
• Keywords: Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 133A; 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.929/HYD/2010 ASSESSMENT YEAR 2003-04 THE ACIT, CIRCLE 10(1), HYDERABAD VS M/S MANI DEVELOPERS, SECUNDERABAD (PAN AAGFM 2542B) APPELLANT RESPONDENT APPELLANT BY : SHRI GOPINATH RESPONDENT BY : SHRI A.V. RAGHURAM DATE OF HEARING : 6.3.2012 DATE OF PRONOUNCEMENT : 04/05/2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL PREFERRED BY THE REVENUE IS D IRECTED AGAINST THE ORDER PASSED BY THE CIT(A) VI, HYDERAB AD DATED 18.3.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2003-04. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM CARRYING ON THE BUSINESS IN REAL ESTATE. FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE FILED RETURN O F INCOME ON 1.12.2003 DECLARING TOTAL INCOME OF RS.25,82,030/- AND THE SAME WAS PROCESSED U/S 143(1 ). SUBSEQUENTLY, THERE WAS A SURVEY OPERATION U/S 133A IN THE BUSINESS PREMISES OF THE ASSESSEE. THEREAFTER, THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04 WAS TAKE N UP FOR SCRUTINY. THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE SOLD 23363 SQ. YARDS OF PLOTTED SITES DURI NG THE 2 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS ACCOUNTING YEAR RELEVANT FOR THE ASSESSMENT YEAR 20 03- 04. THE ASSESSING OFFICER ALSO OBSERVED THAT DURIN G THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE SOL D SOME PLOTS AT A RATE HIGHER THAN WHAT WAS MENTIONED IN T HE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER FURTHER MENTIONED THAT WHEN THE SAME WAS POINTED OUT, THE ASSESSEE IN ORDER NOT TO ENTER INTO LITIGATION WITH THE DEPARTMENT AND ALSO TO BUY PEACE AND AVOID PENAL AC TION, CAME FORWARD VOLUNTARILY TO ADOPT THE SALE OF THE L AND AT RS.400 PER SQ. YARD AT A RATE HIGHER THAN THE PRICE RECORDED IN THE BOOKS AND ALSO REQUESTED HIM TO ALL OW THE CONNECTED EXPENDITURE FOR DEVELOPMENT OF PLOTS. TAKING THE SAME INTO CONSIDERATION THE EXCESS SALE VALUE OF 23263 SQ. YARDS AT RS.400 PER SQ. YARD, THE ASSE SSING OFFICER WORKED OUT THE SALE VALUE AT RS.93,45,200/- AND ESTIMATING THE PROFIT AT 15% ON THE SAME THE ASSESS ING OFFICER WORKED OUT THE PROFIT AT RS.14,01,780/-. T HUS, THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME OF THE ASSESSEE AS UNDER: INCOME FROM SALE OF PLOTS AND DEVELOPMENT RS.25,82 ,030 ADD: EXTRA PROFIT AS DISCUSSED RS.14,01,780/- ------------------- TOTAL INCOME RS.39,83,810 =========== THUS, THE FINAL INCOME WAS COMPUTED U/S 143(3) AT RS.39,83,810/- AND TAX WAS LEVIED. SUBSEQUENTLY, T HE ASSESSMENT WAS REOPENED U/S 147 BY ISSUING NOTICE U /S 148 ON 14.11.2007. ON A REQUEST MADE BY THE ASSESS EE 3 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS THE ASSESSING OFFICER COMMUNICATED THE REASONS RECO RDED U/S 148(2) INFORMING THAT THE ASSESSEE FIRM SUPPRES SED THE SALE RECEIPTS OF RS.93,45,200/- IN RESPECT OF S ALE OF PLOTS ADMEASURING 23363 SQ. YARDS AT THE SALE PRICE OF RS.400/-. IT WAS ALSO COMMUNICATED THAT THE ASSESS ING OFFICER ESTIMATED THE PROFIT AT 15% ON THE SUPPRESS ED SALE RECEIPT OF RS.93,45,200/- INSTEAD OF ADDING TH E ENTIRE AMOUNT AS THE ASSESSEE ALREADY DEBITED AN AM OUNT OF RS.96,80,229/- AS EXPENDITURE IN RESPECT OF SAME PLOTS. IT WAS THE FINAL CONCLUSION OF THE ASSESSIN G OFFICER THAT ONCE THE EXPENDITURE WAS ALLOWED THERE WAS NO NECESSITY OF ALLOWING FURTHER EXPENDITURE ON THE SUPPRESSED SALE AMOUNT AND THUS THERE WAS ESCAPEMEN T OF INCOME TO THE TUNE OF RS.79,43,420/- (RS.93,45,2 00 ADDITIONAL SALES INCOME DECLARED RS.14,01,780). T HUS THE ASSESSING OFFICER FINALLY COMPUTED THE TOTAL IN COME U/S 143(3) R.W.S. 147 VIDE ORDER DATED 22.5.2008 AT RS.1,19,27,230/. 3. DURING THE COURSE OF HEARING BEFORE THE CIT(A), THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT SECTION 147 CLEARLY STATES THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEVE T HAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT TO INITIATE ACTION U/S 147 OF THE IT ACT. HE ALSO SUB MITTED THAT AN ASSESSMENT ONCE COMPLETED CAN ONLY BE REOPE NED UNDER COMPELLING CIRCUMSTANCES AND ACCORDING TO THE EXPRESSED STATUTORY PROVISIONS OR NECESSARY INTENDM ENT TO BE GATHERED FROM THE PROVISIONS OF THE STATUTE. IN THIS CONNECTION THE AR DREW ATTENTION OF THE CIT(A) TO THE 4 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS FOLLOWING PORTION OF THE ASSESSMENT ORDER U/S 143(3 ) OF THE IT ACT : DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE HAS SOLD SOME PLOTS AT A RATE HIGHER THAN WHAT WAS MENTIONED IN THE BOOKS OF ACCOUNTS. WHEN THIS WAS POINTED OUT, IN ORDER NOT TO ENTER LITIGAT ION WITH THE DEPARTMENT AND ALSO TO BUY PEACE AND AVOID PENAL ACTION, THE ASSESSEE HAS COME FORWARD VOLUNTARILY TO ADOPT THE SALE VALUE OF THE LAND AT RS.400/- PER SQ. YARDS AT A RATE HIGHER THAN THE PRICE RECORDED IN THE BOOKS OF ACCOUNTS AND REQUESTED TO ALLOW THE CONNECTED EXPENDITURE FOR DEVELOPMENT OF THE PLOTS. ACCORDINGLY, THE EXCESS SALE VALUE OF 23363 PLOTS AT RS.400/- PER SQ. YARD WORKS OUT TO RS.93,45,200/- ESTIMATING THE PROFIT AT 15% ON THE SAME, THE PROFIT TO BE ADOPTED WORKS OUT TO RS.14,01,780/-. 4. THE AR FURTHER ARGUED BEFORE THE CIT(A) THAT, IT WAS CLEAR FROM THE ABOVE DISCUSSION OF THE ASSESSI NG OFFICER THAT HE CONSIDERED ALL THE RELEVANT FACTS A ND SATISFIED HIMSELF THAT THE ASSESSEES REQUEST FOR A LLOWING CONNECTED EXPENDITURE NEEDS TO BE CONSIDERED AND THEREFORE THE ASSESSING OFFICER PROCEEDED TO ESTIMA TE 15% PROFIT IN RESPECT OF ADDITIONAL TURNOVER DECLARED BY THE ASSESSEE. THE AR FURTHER CONTENDED THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IT WAS CLEAR THAT THE REASON TO BELIEVE RELIED UPON BY THE ASSES SING OFFICER FOR INITIATION OF PROCEEDINGS U/S 147 OF TH E IT ACT AMOUNTS TO CHANGE OF OPINION. THEREFORE, THE CONTE NTION OF THE AR WAS THAT BASING ON SUCH CHANGE OF OPINION THE ASSESSING OFFICER CANNOT ARRIVE AT A CONCLUSION THA T INCOME CHARGEABLE TO TAX AS ESCAPED ASSESSMENT WI THIN THE MEANING OF SECTION 147 OF THE ACT. THE AR ALSO SUBMITTED THAT THE POWERS OF ASSESSING OFFICER FOR 5 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS INITIATION OF PROCEEDINGS U/S 147 VITALLY CONTROLLE D BY THE WORDS REASONS TO BELIEVE EMPLOYED BY THE SECTION AND SUCH REASON FOR FORMATION OF BELIEF FOR REOPENING O F AN ASSESSMENT MUST HAVE A RATIONAL CONNECTION OR RELEV ANT BEARING ON THE FORMATION OF THE BELIEF. THUS, THE AR ARGUED THAT THE WORDS REASON TO BELIEVE IMPORT TH E PRESENCE OF THE FOLLOWING ELEMENTS AND TRIED TO EXP LAIN THOSE ELEMENTS WITH REFERENCE TO THE FACTS OF THE PRESENT CASE AS UNDER: 1. THERE MUST BE SOME MATERIAL ON RECORD TO ENABLE TO ASSESSING OFFICER TO ENTERTAIN THE NECESSARY BELIE F FOR INITIATING REASSESSMENT PROCEEDINGS: IN THE PRESENT CASE WHATEVER MATERIAL AVAILABLE ON RECORD WAS TAKEN INTO CONSIDERATION BY THE ASSESSIN G OFFICER WHILE COMPLETING THE ORIGINAL ASSESSMENT U/ S 143(3). THE FACT IS EVIDENCED BY THE OBSERVATION O F THE ASSESSING OFFICER CONTAINED IN THE ASSESSMENT ORDER . THEREFORE, THERE IS NO MATERIAL ON RECORD TO ENTERT AIN THE NECESSARY BELIEF FOR INITIATING REASSESSMENT PROCEE DINGS. 2. INFERENCE OF ESCAPEMENT OF INCOME SHOULD BE BA SED ON INFORMATION ON WHICH THE ASSESSING OFFICER CAN F ORM AN HONEST AND REASONABLE BELIEF OF ESCAPEMENT OF IN COME. THE ASSESSING OFFICER SHOULD ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON THE BASIS OF SUR MISES OR CONJECTURES. IN THE PRESENT CASE, THE ASSESSING OFFICER ASSUMING THAT THE EXPENDITURE IN RESPECT OF THE REC EIPTS OF RS.93,45,200/- WAS ALREADY ALLOWED IN THE ORIGIN AL 6 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS ASSESSMENT PROCEED TO INITIATE PROCEEDINGS U/S 147. SUCH ASSUMPTION OF THE ASSESSING OFFICER IS BASED O N IMPROPER APPRECIATION OF THE RELEVANT FACTS. 3. AS PER THE PROVISIONS, THE ASSESSING OFFICER SH OULD APPLY HIS MIND TO MATERIAL BEFORE FORMING A BELIEF REGARDING ESCAPEMENT OF INCOME. IN THE PRESENT CASE AS SUBMITTED THE ASSESSING OFFICER DID NOT APPRECIATE ALL THE RELEVANT FACTS I .E. CONTENTS OF THE STATEMENT OF THE MANAGING PARTNER RECORDED AT THE TIME OF SURVEY U/S 133A AND RECORDE D ON 3.3.2005. IT APPEARS THAT THE ASSESSING OFFICER DI D NOT APPRECIATE THE RELEVANT FACTS WHICH WERE DISCUSSED BY THE ASSESSING OFFICER IN THE ORIGINAL ORDER WHILE ARRIV ING AT A CONCLUSION WITH REGARD TO ESTIMATION OF PROFIT AT 1 5% ON THE DECLARED/ESTIMATED TURNOVER. 4. THE INFERENCE DRAWN BY THE ASSESSING OFFICER MU ST BE BASED ON BELIEF FOR INITIATION OF PROCEEDINGS U/ S 147. IN THE PRESENT CASE, EXAMINATION OF RELEVANT FACTS CLEARLY INDICATE THAT THE ASSESSING OFFICER WITHOUT TAKING ALL THE RELEVANT FACTS INTO CONSIDERATION FORMED TH E BELIEF THAT INCOME CHARGEABLE TO THAT HAS ESCAPED ASSESSME NT. THUS, THE ASSESSING OFFICER WITHOUT APPRECIATION OF ALL THE RELEVANT MATERIAL FACTS ARRIVED AT A CONCLUSIO N THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. T HUS, THE REASON TO BELIEVE FORMED BY THE ASSESSING OFF ICER WAS WITHOUT APPRECIATION OF FACTS AND THE SAME WAS 7 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS FORMED IN A ROUTINE MANNER AND THEREFORE THIS AMOUN TS TO CHANGE OF OPINION ONLY. 5. THE AR FINALLY CONCLUDED THAT THE PROCEEDINGS INITIATED U/S 147 DOES NOT HAVE THE LEGAL SANCTITY AND THEREFORE LIABLE TO BE QUASHED. IN THIS CONNECTION THE AR RELIED UPON THE FOLLOWING DECISIONS: I. PARISHRAM POTTERY WORKS VS. ITO (1976, 106 ITR 1 SC) II) INDIAN AND EASTERN PAPER SOCIETY VS. CIT (119 I TR 996) III) CIT VS. SIMON CRAVES LTD. (105 ITR 112). 5. AFTER TAKING ALL FACTS INTO CONSIDERATION, THE CIT(A) OBSERVED THAT SUBSEQUENT INTERPRETATION OF FACTS WH ICH WERE ALREADY CONSIDERED WHILE COMPLETING THE ASSESS MENT U/S 143(3) AMOUNTS TO CHANGE OF OPINION. SUCH CHAN GE OF OPINION CANNOT BE A BASIS AND CANNOT BE MENTIONE D AS REASON TO BELIEVE FOR INITIATION OF PROCEEDINGS U /S 147 OF THE IT ACT. HENCE, INITIATION OF PROCEEDINGS U/S 1 47 IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE IS NO T PROPER AND THEREFORE HELD AS INVALID. 6. DURING THE COURSE OF APPEAL PROCEEDINGS BEFORE THE CIT(A) MERELY THE AR ARGUED THAT THE ADDITIONAL TU RNOVER THAT WAS PROPOSED FOR DECLARATION BY THE ASSESSEE F IRM WAS RS.93.45 LAKHS. IT WAS ALSO MENTIONED THAT IT WAS AGREED UPON BY THE ASSESSEE AS WELL AS THE ASSESSIN G OFFICER THAT THE PROFIT IN RESPECT OF SUCH AGREED A DDITIONAL TURNOVER SHOULD BE ESTIMATED AT 15% AND THUS THE 8 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS ADDITIONAL INCOME WAS ARRIVED AT RS.14.01 LAKHS. I N THE WRITTEN SUBMISSIONS THE AR ALSO SUBMITTED AS UNDER: IT IS SUBMITTED THAT THE ASSESSEE FIRM FILED AUDIT ED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET PREPARED ON THE BASIS OF REGULAR ACCOUNT BOOKS MAINTAINED BY THEM. ALL THE RECEIPTS EARNED BY THE ASSESSEE DURI NG THE ACCOUNTING YEAR RELEVANT FOR THE ASSESSMENT YEA R 2003-04 WERE CREDITED TO THE PROFIT AND LOSS ACCOUN T. SIMILARLY THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE PROCESS OF EARNING SUCH RECEIPTS WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT. HOWEVER, SUBSEQUENT T O SURVEY OPERATION U/S 133A THE DEPARTMENT DID NOT SATISFY WITH THE EXPLANATION OFFERED BY THE ASSESSE E FIRM WITH REGARD TO RECEIPTS DECLARED BY THEM AS RECORDED IN THE ACCOUNTS. HENCE THE ASSESSEE FIRM WAS MADE TO DECLARED ADDITIONAL RECEIPTS BY ADOPTING ESTIMATED RATE PER SQ. YARD. THUS THE ESTIMATED SALE RECEIPTS WERE WORKED OUT TO RS.93,45,200 (23363 X RS.400). THOUGH IN THE STRIC T SENSE IT WAS NEVER MENTIONED THAT PROVISIONS OF SECTION 145 WERE APPLIED, IT IS CLEAR THAT ONLY ON THE BASIS OF THAT PROVISION THE ASSESSING OFFICER WHILE RECORDING THE STATEMENT AGREED WITH THE MANAGING PARTNER FOR SUCH ESTIMATION OF INCOME AT 15% ON THE ESTIMATED RECEIPTS. 7. IN THIS CONNECTION THE AR FURTHER ARGUED THAT T HE ASSESSING OFFICER WAS READY TO ACCEPT THE ADDITIONA L RECEIPTS DECLARED BY THE ASSESSEE BUT WAS NOT READY TO ACCEPT THE CLAIM THAT THE ASSESSEE WAS BOUND TO INC UR CERTAIN EXPENDITURE IN THE PROCESS OF EARNING SUCH RECEIPTS. FURTHER ARGUMENT OF THE AR IS THAT WHILE ARRIVING AT SUCH A CONCLUSION THE ASSESSING OFFICER DID NOT APPRECIATE THE FACT THAT WHEN ESTIMATED SALES W ERE TAKEN INTO CONSIDERATION THE ASSESSEE SHOULD ALSO B E ALLOWED ESTIMATED EXPENDITURE FOR ARRIVING AT THE REASONABLE PROFIT THAT THE ASSESSEE MIGHT HAVE EARN ED. 9 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS THE CONTENTION OF THE AR IS THAT ALL THOSE ASPECTS AMOUNT TO GUESS WORK, BY SUCH GUESS WORK SHOULD HAVE SOME RATIONAL AND BASIS. THE AR FURTHER CONTENDED THAT THE PROVISIONS OF THE ACT I.E. THE CHARGING SECTION 4 O F THE IT ACT EMPOWERS THE ASSESSING OFFICER TO TAX ONLY THE INCOME I.E. THE PROFIT INVOLVED IN THE SALES EFFECT ED BY THE ASSESSEE BUT NOT ENTIRE SALES. IT WAS FURTHER MENT IONED THAT THE ASSESSING OFFICER NEVER POINTED OUT ANY INSTANCES TO MENTION THAT THE EXPENDITURE DEBITED T O PROFIT AND LOSS ACCOUNT WAS NOT IN RESPECT OF RECEI PTS ALREADY CREDITED TO THE PROFIT AND LOSS ACCOUNT BUT ALSO EXPENDITURE INCURRED IN RESPECT OF ESTIMATED RECEIP TS. IN THE ARGUMENT OF THE AR THAT WHEN THE ASSESSING OFFI CER HIMSELF AGREED THAT THE RECEIPTS OF RS.93.45 LAKHS CONSTITUTE ESTIMATED RECEIPTS AND WERE NOT WORKED O UT ON THE BASIS OF ACCOUNT BOOKS MAINTAINED BY THE ASSESS EE THERE WAS NO BASIS TO CONCLUDE THAT THE ESTIMATED EXPENDITURE INCURRED IN RESPECT OF ESTIMATED RECEIP TS WAS ALREADY DEBITED TO PROFIT AND LOSS ACCOUNT. THE CONTENTION OF THE AR IS THAT BY THE TIME THE ASSESS EE PREPARED THE ORIGINAL PROFIT AND LOSS ACCOUNT ON TH E BASIS OF ACCOUNT BOOKS MAINTAINED THE RECORDED RECEIPTS A ND RELEVANT EXPENDITURE FIGURES ONLY AVAILABLE AND ONL Y SUBSEQUENT TO SURVEY U/S 133A THE FIGURE OF ESTIMAT ED RECEIPTS WAS WORKED OUT. THUS THE AR ARGUED THAT T AKING THE FACT THAT EXPENDITURE WAS NECESSARY FOR EARNING SUCH ESTIMATED RECEIPTS WAS NEVER FORMED PART OF EXPENDI TURE RECORDED IN THE ACCOUNTS BOOKS. THEREFORE, THE AR FINALLY CONCLUDED THAT THE ASSESSING OFFICER WAS CORRECT WH ILE PASSING THE ORDER U/S 143(3) TO BRING 15% OF THE RE CEIPTS AS PROFIT CONSIDERING THE BALANCE 85% AS THE RELEVA NT 10 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS EXPENDITURE FOR EARNING SUCH RECEIPTS FOR WHICH AGREEMENT BOTH THE ASSESSING OFFICER AS WELL AS THE ASSESSEE WERE PARTIES. IN THIS CONTEXT THE AR ALSO DRAWN BY ATTENTION THAT EVEN FOR ARGUMENT SAKE IF IT IS A CCEPTED THAT RS.93.45 LAKHS CONSTITUTE INCOME OF THE ASSESS EE THAN THE PROFIT RATE WOULD BE WORKED OUT AT 51.05% WHICH WAS NOT POSSIBLE IN REAL ESTATE BUSINESS. IN SUPPORT OF HIS CONTENTION THE AR RELIED UPON VARIO US CASE LAWS. 8. CONSIDERING VARIOUS FACTS AND CIRCUMSTANCES AND VARIOUS LEGAL DECISIONS, THE CIT(A) HELD THAT IT I S CLEAR THAT THE GROSS RECEIPTS CAN NEVER BE TREATED AS INC OME OF THE ASSESSEE FIRM. IT IS AN UNDENIABLE FACT THAT F OR EARNING SUCH RECEIPTS THE ASSESSEE FIRM WAS BOUND T O INCUR CERTAIN EXPENDITURE. FROM THE GIVEN FACTS, T HERE IS NO SCOPE FOR THE ASSESSING OFFICER TO PRESUME THAT THE EXPENDITURE RELATABLE TO SUCH RECEIPTS WAS ALREADY DEBITED TO THE PROFIT AND LOSS ACCOUNT. THEREFORE, THE CIT(A) WAS OF THE VIEW THAT THE ASSESSING OFFICER C AN ONLY BRING THE PROFIT ELEMENT IN THE ESTIMATED UNACCOUNT ED SALES TO TAX AS PER PROVISIONS OF THE IT ACT. 9. THEREFORE, THE CIT(A) HELD THAT THE ADDITION MA DE BY THE ASSESSING OFFICER ESTIMATING THE PROFIT AT 15% IN RESPECT OF ESTIMATED RECEIPTS WORKING OUT SUBSEQUEN T TO SURVEY OPERATION U/S 133A IS IN ORDER AND FURTHER ADDITION OF (RS.93,45,200 RS.14,01,780) IS NOT CA LLED FOR. ACCORDINGLY THE ADDITION OF RS.79,43,420/- WA S 11 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS DELETED. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 10. WE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW. THE FACTS ARE THAT THE ASSESSEE HAD SOLD LAND MEASURING 23263 SQ. YARDS AND HAD OFFERED PROFITS FOR TAX. SUBSEQUENTLY, A SURVEY OPERATION WAS CARRIED OUT, IN WHICH, IT WAS FOUND THAT THE ASSES SEE HAD SOLD THE LAND AT A HIGHER PRICE THAN RETURNED. THE ASSESSEE CAME FORWARD AND OFFERED ADDITIONAL SALE P RICE OF RS. 93,45,200/- AND THE ASSESSING OFFICER TREATE D 15% OF THE SAME AT RS. 14,01,780/- AS UNDISCLOSED INCOM E. SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE GROUND THAT THE ENTIRE ADDITIONAL RECEIPTS OFFERED OF RS. 93,45,200/- SHOULD BE BROUG HT TO TAX AND NOT MERELY 15% OF THE ADDITIONAL RECEIPTS A S HAS BEEN DONE. THIS IS SO BECAUSE THE EXPENDITURE RELAT ING TO THE SALE OF THE PLOTS HAS ALREADY BEEN DEDUCTED IN COMPUTING THE PROFITS AT THE FIRST INSTANCE. THE CI T(A) FOR THE REASONS STATED IN HIS ORDER, ALLOWED THE ASSESS EES CONTENTION HOLDING THAT ONLY THE NET PROFITS AND NO T THE FULL CONSIDERATION SHOULD BE BROUGHT TO TAX. 11. IN THIS CASE THE ASSESSEE HAS SOLD A PIECE OF L AND AND OFFERED THE PROFITS FOR TAX IN HIS RETURN OF IN COME. IN ARRIVING AT THE PROFITS HE HAS CLAIMED ALL THE EXPE NDITURE THAT HE HAS INCURRED IN CONNECTION WITH THE SALE OF THE LAND. NOW THE ASSESSEE HAS ACCEPTED THE SALE PRICE TO BE AN ADDITIONAL RS 400 PER SQ.YRD. IT IS AN ADDITIONA L PRICE 12 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS REALISED FOR THE SAME LAND SOLD OVER AND ABOVE THE ORIGINAL SALE PRICE. IN SUCH A SITUATION WE ARE UN ABLE TO UNDERSTAND AS TO HOW A FURTHER DEDUCTION OF 85% OF THE ADDITIONAL SALE PRICE CAN BE ALLOWED AS A DEDUCTION . THERE IS NO WHISPER OF PROOF OR EVIDENCE FURNISHED BY THE ASSESSEE EITHER BEFORE THE LOWER AUTHORITIES OR BEF ORE US ABOUT ANY ADDITIONAL EXPENDITURE HE HAS INCURRED IN CONNECTION WITH THE SALE OF THIS LAND WHICH WAS NOT CLAIMED WHEN THE ORIGINAL PROFITS WERE COMPUTED. IN THE CIRCUMSTANCES WE ARE UNABLE TO SUBSCRIBE TO THE CLA IM OF THE ASSESSEE THAT ONLY 15% OF THE ADDITIONAL UNDISC LOSED SALE PRICE SHOULD BE BROUGHT TO TAX. AS REGARDS REOPENING, THE REASON FOR REOPENING IS THAT EXTRA ALLOWANCE OF EXPENDITURE TO THE TUNE OF 85% OF THE SALE PRICE HAS BEEN ALLOWED AS A DEDUCTION AND HENCE TO THAT EXTENT THE INCOME HAS ESCAPED ASSESSMENT. THEREFORE , IN OUR OPINION THE ASSESSMENT HAS BEEN VALIDLY REOPENE D. 12. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE ORD ER OF THE CIT(A) AND RESTORE THE ORDER OF THE AO THAT THE ENTIRE UNDISCLOSED ADDITIONAL SALE PRICE OF LAND AMOUNTING TO RS. 93,45,200/- SHOULD BE ASSESSED AS UNDISCLOSED INCOME AND NOT MERELY 15% OF THE SAME. 13 ITA NO. 929/HYD/2010 M/S MANI DEVELOPERS 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/05/2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED 4 TH MAY, 2012. KV COPY FORWARDED TO: 1. THE ACIT, CIRCLE 10(1), HYDERABAD 2. M/S MANI DEVELOPERS, 8-44, JJ NAGAR COLONY, YAPRAL, SECUNDERABAD 3. THE CIT(A)-VI, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD