9911796707
TMI Blog2014 (3) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 8%, net of all deductions, on the turnover declared by the assessee – Decided partly in favour of Assessee. Disallowance of expenditure u/s 40(a)(ia) of the Act – Held that:- The decision in Commissioner Of Income-Tax Versus Banwari Lal Banshidhar 1997 (5) TMI 37 - ALLAHABAD High Court] followed - When a net profit rate is applied, there remains no scope for further disallowance of any expenditure – thus, no separate disallowance u/s 40(a)(ia) of the Act can be made when the profit of the assessee has been estimated – thus, the AO is directed to delete the addition made – Decided partly in favour of Assessee. Addition on account of incorrect credits in bank accounts - Chit loss - Held that:- The CIT(A) was justified in deleting the addition as the so-called unexplained credits in the bank have been reconciled by the assessee and considered as a turnover in the return filed in response to section 153A of the Act - the addition would not survive - Similarly with regard to chit loss of the CIT(A) has noted the fact that the chit in fact was subscribed by him with Margadarshi Chit Fund Pvt. Ltd. - the bid amount was taken to the books of account – thus, when the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion work estimation of profit after rejection of books of accounts is to be made at 12.5% before depreciation or at 8% net of depreciation - a net profit rate of 8% net of all deductions would be just and reasonable – thus, net profit rate of 8% will be fair and reasonable – thus, the AO is directed to estimate the net profit at the rate of 8% on the total turnover disclosed by the assessee – Decided partly in favour of Assessee. Addition on account of difference in bank balance – Held that:- It was incumbent on the part of the Assessing Officer as well as CIT (A) to verify the actual cash balance as shown in the bank account vis-a-vis reconstructed books of accounts on the basis of which return was filed in response to notice issued u/s 153A of the Ac - The revenue authorities having not made any effort to verify this aspect, the addition cannot be sustained – Decided in favour of Assessee. Addition on account of unexplained expenditure – Held that:- The CIT (A) was not justified in sustaining the addition which was made on the basis of old set of books of accounts - Without verifying the revised books of accounts, and claim of the assessee that as per which there is no ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats - by applying the single instance of suppression of receipt, if at all there be any, the AO could not have quantified the unaccounted receipt that too by assuming that receipts shown by the assessee represents 60% of the total consideration - the assessee taking into consideration the information available in the seized materials has declared the gross receipts of Rs. 1,20,10,000/- in the return furnished in response to notice issued u/s 153C as against the receipts of Rs. 26,40,000/- shown in the original return – thus, the conclusion drawn by the CIT(A) that the unaccounted receipts from sale of flat has already been taken care of by enhancing gross receipt of Rs. 1,20,10,000/- cannot be disregarded – thus, there was no infirmity in the order of the CIT(A) in deleting the addition – Decided against Revenue. Addition of 10% of expenses – Held that:- The CIT(A) has held that no disallowance can be made u/s 40(a)(ia) as the AO has not established the default by assessee - Even so far as allegation of non-furnishing of bills and vouchers are concerned, the CIT(A) has observed that though vouchers were available with the assessee, the AO refused to verify them and made the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as under: 2003-04 Rs. 10 lakhs 2005-06 Rs. 10 lakhs 2006-07 Rs. 03 lakhs 2007-08 Rs. 06 lakhs 2008-09 Rs. 01 lakh 4. During the search and seizure proceedings, various bank accounts which were not disclosed to the Department were unearthed where deposits were found to be made at regular intervals. Deposits at various bank accounts for all the assessment years put together was quantified at Rs. 2,51,71,713/-, which mostly represented the receipts from real- estate business. It appeared from the seized material that the assessee had routed proceeds of real estate business and sizable portion of such receipts/turnover appeared to have not accounted for the purpose of tax. The total of the turnover recorded for 7 years was quantified at Rs. 6,96,90,994/- including an amount of Rs. 4,04,550/- shown for the assessment year under consideration. It was stated by the assessee that these amounts were considered while furnishing return of income u/s 153A as against which the total amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluding the transactions in books of account, which resulted in additions under the head 'undisclosed bank account', although, the transactions were recorded in the books of account which in turn were relied upon by the assessee for filing returns of income u/s 153A. The various additions made by the AO in the aforesaid manner in different assessment years on the basis of the special audit report are as under:- 8. On the basis of the submissions made by the assessee as well as materials submitted before him, the CIT(A) called for a remand report from the AO. In the remand report dated 20/10/2011, the AO stated as under: 1. The assessee in his written submission has claimed that the cash deposits amounting to Rs. 19,750/- in bank account which were already included in cash books and reflected as Contra entries were treated as undisclosed income by the AO. In support of his claim the assessee has produced the copies of Andhra Bank Joint a/c (100088) book, copy of cash book in the books of the assessee. On verification of the above account copies it is found that the above amounts were reflected by the assessee in his cash book. 2. The assessee in his written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the amount of Rs. 6,93,669/- as unexplained credit. With regard to addition of Rs. 19,03,447/- representing the amount shown to have been received in cash from Shri CH. Janardhan Reddy and Smt. CH. Rohini towards balance amount receivable on sale of hotel, the CIT(A) noted that the AO has made the addition solely on the basis of the observations made by the special audit and without considering the reply of the assessee that the parties who have purchased the hotel have arranged for payments by way of pay orders in cash, therefore, the same was not appearing in the bank account. On the basis of the submissions made by the assessee, remand report was called for from the AO. From the remand report as well as other materials on record, it was noted by the CIT(A) that the amount of Rs. 19,03,447/- actually represent sale consideration of the hotel located at Nellore and there are indeed some entries wrongly passed in the books of account indicating the said receipts, which led to the AO to conclude that the same represents unexplained cash resulting in addition. The CIT(A) after examining copies of the sale deed as well as other related details furnished found that the amount act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted that the special audit report as well as remand report indicate that while making additions under the head 'credits in bank accounts', neither the original books of account nor reconstructed books of account have been considered in assessing the business income. The remand report was confined to only issues of 'undisclosed bank accounts' and 'on money receipts' and did not make any comment/observations on the adequacy of bills and vouchers in support of return filed u/s 153A. He noted that though bills and vouchers supporting return filed u/s 153A were furnished in course of assessment proceedings, which appears to have not been examined by AO. The CIT(A) noted that additions made by the AO in respect of unaccounted investments, unexplained expenditure etc. were found to have been influenced by seized material and special audit report, rather than the contents of books of account maintained and returns of income filed by the assessee. He observed that assessee was admitting cash receipts as income without considering the commencement and stages in completion of the projects on hand, in spite of the fact that assessee is engaged in various projects at di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years put together worked out to 15.47% including the business loss for AY 2002-03. He further noted that aggregate percentage of 15.47% was worked out due to significant amount adjusted/treated under the heads such as disallowances u/s 40A(3) amounting to Rs. 10,05,676/- for AY 2004-05 and negative cash balance of Rs. 19,52,902/- for AY 2005-06, which was on the basis of skeletal information available in old books of account relied upon by the AO and special audit whereas the return of income filed by the assessee in response to section 153A was on the basis of revised set of books of accounts. He, therefore, opined that there is a possibility of duplication of tax on account of disallowances of few expenses. The CIT(A), therefore, relying upon his finding in assessee's own case for the AY 2006-07 with regard to on money/extra receipts from the projects, Viz., 'Pavani Prestige', 'Pavani Classic proceeded to adopt the rate of net profit at 16% for all 7 assessment years including the impugned assessment year. 8.4 On the aforesaid line, the CIT(A) directed the AO to estimate the income of the assessee at 16% on the total turnover. 9. The only contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ground is partly allowed. 13. In the result, appeal in ITA No. 616/H/12 is partly allowed. ITA No. 617/Hyd/12 for AY 2004-05 in case of P. Pavani. 14. Ground No. 1 5 do not require any adjudication as they are general in nature. . Ground No. 3 was not pressed and the same is dismissed as not pressed. 15. Ground No.4 is pertaining to estimation of profit @ 16%. This ground is materially identical to that of the ground decided by us in AY 2002-03 in ITA No. 615/H/12 vide paras 2 to 10 (supra) and, therefore, following the conclusions drawn therein we direct the AO to estimate the profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 16. Ground No. 2 relates to disallowance of expenditure amounting to Rs. 10,05,676/- u/s 40(a)(ia) of the Act. 17. Briefly the facts are, during the course of assessment proceedings, the AO noted that the special audit in its report has pointed out that an amount of Rs. 10,05,676/- was paid through cheques/cash to creditors for expenses towards labour/material without deducting tax at source. W hen asked to reply, the assessee submitted that the assessee has not given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as allowed to and claimed by the assessee. When the gross profit rate was applied, that would take care of everything and there was no need for the Assessing Officer to make scrutiny of the amount incurred on the purchases made by the assessee. The above decision of the hon'ble Allahabad High Court would be squarely applicable to the case of the assessee. When a net profit rate is applied, there remains no scope for further disallowance of any expenditure. In view of the above, we respectfully following the above decision of the hon'ble Allahabad High Court hold that the Commissioner of Income-tax (Appeals) was justified in deleting the disallowance under Section 40A(3) made by the Assessing Officer. Accordingly, we uphold the order of the Commissioner of Income-tax (Appeals) and dismiss the Revenue's appeal. 19.1 The coordinate bench of this Tribunal in case of M/s Teja Constructions Vs. ACIT in ITA No. 308/Hyd/2009, dated 23/10/2009 while considering identical issue of disallowance u/s 40(a)(ia) of the Act in case of estimation of profit following the decision of the coordinate bench of the Tribunal in case of Indwell (supra) and in case of ITO Vs. Kenaram Sah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken into consideration while filing return of income in response to notice u/s 153A of the Act. He has further stated that on verification of the account copies, it was found that the receipts were reflected by the assessee in the reconstructed books of account and were included in the turnover shown by the assessee during the year. That being the case, the CIT(A) was justified in deleting the addition as the so-called unexplained credits in the bank have been reconciled by the assessee and considered as a turnover in the return filed in response to section 153A of the Act. In that view of the matter, the addition would not survive. Similarly with regard to chit loss of Rs.1,28,513/-the CIT(A) has noted the fact that the chit in fact was subscribed by him with Margadarshi Chit Fund Pvt. Ltd. and as such the bid amount was taken to the books of account, therefore, when the amount was utilized for the purpose of business, the chit loss arising becomes allowable expenditure. That apart, when considering the defects/deficiencies/shortcomings in the accounts of the assessee profit has been estimated then the estimation made takes care of all such defects and deficiencies, therefore, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vised books of account on the basis of which return u/s 153A was filed. The CIT(A), though, accepted the fact that the negative book balance was on the basis of original set of books of account and as per the reconstructed books of account based on the seized material and the resultant incremental turnover as well as incremental expenditure, there is no negative cash balance, however, sustained the addition by observing that the assessee has not explained such deficit with the help of reconstructed information including the old and new cash books of account of the relevant branches of the assessee, with further help of related receipts and payments. 31. Having heard the parties, we are of the view that addition of Rs. 19,52,902/- is not justified, as it is not disputed that book cash negative balance of Rs. 19,52,902/- was on the basis of original set of books. The CIT(A) has also not disputed the fact that as per the revised books of account based on the seized material the resultant incremental turnover as well as the incremental expenditure have been considered and there is no negative cash balance. It is also a fact that assessee has filed the return of income in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. ITA No. 679/H/12 for AY 2006-07 by revenue appeal in case of Smt. P. Pavani 41. The only issue raised by the department is with regard to the action of the CIT(A) in deleting the additions made by the AO and resorting to estimation of profit by applying the rate of 16% on the turnover 42. This issue has been decided by us in ITA No. 677/H/12 for AY 2004-05 vide paras 20 to 24 and therefore following the decision therein we do not find any reason to interfere with the order of the CIT(A) in resorting to estimation of profit while deleting the additions made by the AO. Accordingly, revenue appeal is dismissed. 43. In the result, appeal in ITA No. 679/H/12 is dismissed. ITA No. 620/H/12 for AY 2007-08 in case of Smt. P. Pavani. 44. Ground Nos. 1 7 are general in nature. Ground No. 5 is not pressed. 45. Ground No. 6 is with regard to estimation of profit at 16%. This ground is materially identical to that of the ground decided by us in AY 2002-03 in ITA No. 615/H/12 vide paras 2 to 10 (supra), therefore, following the conclusions drawn therein we direct the AO to estimate the profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT Circular as unaccounted investment of assessee in absence of any evidence towards the date of acquisition and added it to the income of the assessee. 53. Before the CIT(A) it was contended by the assessee that the gold jewellery belonged to 10 family members including assessee, who are living together in the assessee's house. It was also contended that the quantum of gold jewellery was accumulated over a period of time and also included the jewellery received from ancestors and friends in the form of gifts on various occasions by all members residing with him. The CIT(A) after considering the submissions of the assessee, though, accepted the fact that gold jewellery belonged to other family members also, who are staying with the assessee, but, at the same time, he estimated the unaccounted jewellery belonging to the assessee to 460.08 grams, valued at Rs. 4,89,600/-, thereby sustaining the addition to that extent. 54. We have heard both the parties and perused the materials on record. It is very much evident from the observations made by the CIT(A) that he did not dispute the fact that gold jewellery belongs to the assessee as well as other family members who are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the seized material, special audit report and other materials on record, the Assessing Officer proceeded to complete assessment by making following additions:- i) On money receipts in respect of flats of M/s Pavani Homes Rs.5,22,964/- ii) undisclosed amount in the bank account Rs.12,67,371/- iii) Estimated disallowance of expenditure at 20% out of the total expenditure towards coolies and materials purchases of Rs.25,65,013/-, Rs.Rs.4,41,675/- 63. Being aggrieved of the additions made in the assessment order, the assessee preferred an appeal before the CIT (A). The CIT (A) totally deleted the additions made on account of on-money received and undisclosed amount in the bank account. However, the CIT (A) was of the view that books of accounts of the assessee cannot be considered to be reliable due to various defects and deficiencies hence deemed to have been rejected. He therefore proceeded to estimate the profit from business of construction work at the rate of 15% of the turnover. So far as disallowance of expenditure claimed by the assessee on account of payments to coolies and purchases as made by the Assessing Officer on estimate basis, the CIT (A) restricted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction business hence, net profit rate of 15% adopted by the CIT (A) is high and excessive. It was submitted by the learned AR that the co-ordinate benches of this Tribunal had consistently held that in case of rejection of books of accounts in case of civil construction work profit is to be estimated at 12.5% before depreciation or 8% net of depreciation. Having considered the submissions of the parties, we are of the view that net profit of 15% adopted by the CIT (A) is on the higher side. It is a fact that this Tribunal is consistently holding the view that in case of civil construction work estimation of profit after rejection of books of accounts is to be made at 12.5% before depreciation or at 8% net of depreciation. In tune with the consistent view of the Tribunal, we hold that a net profit rate of 8% net of all deductions would be just and reasonable. While deciding similar issue in case of Smt. P. Pavani ITA No. 615/H/12 in para to 2 to 10, we have held that net profit rate of 8% will be fair and reasonable. Accordingly, we direct the Assessing Officer to estimate the net profit at the rate of 8% on the total turnover disclosed by the assessee. Hence, this ground is part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of accounts supporting the return of income filed in response to notice u/s 153A wherein the amount of Rs.11,647/- was shown as the cash balance. It was submitted that even the bank statement also shows the balance as on 31-3-2004 at Rs.11,647/-. In view of the aforesaid contention of the assessee it was incumbent on the part of the Assessing Officer as well as CIT (A) to verify the actual cash balance as shown in the bank account vis a vis reconstructed books of accounts on the basis of which return was filed in response to notice issued u/s 153A of the Act. The revenue authorities having not made any effort to verify this aspect, the addition of Rs.20,000 cannot be sustained. Accordingly, we delete the same. Hence, this ground is allowed. 75. In ground No.4, the assessee has challenged addition of Rs.10,71,499/- made by the Assessing Officer and sustained by the CIT(A) on account of unexplained expenditure. 76. Briefly the facts are, during the assessment proceedings, the Assessing Officer while going through the special audit report noted that the Special Audit has pointed out that the balance as per cash book is negative on 31-3-2004 at Rs.10,67,710/-. W hereas the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover disclosed by the assessee net of all deductions. 79. In the result, appeal in ITA No. 624/H/12 is partly allowed. ITA No.681/Hyd/12 for AY 2004-05 by the revenue in case of Shri P.V. Raghava Rao. 80. The only issue raised by the department is with regard to the action of the CIT(A) in deleting the additions made by the AO and resorting to estimation of profit by applying the rate of 15% on the turnover. 81. Similar issue has been decided by us in ITA No. 677/H/12 in case of Smt. P. Pavani for AY 2004-05 vide paras 20 to 24. Facts being identical, following the decision therein we do not find any reason to interfere with the order of the CIT(A) in resorting to estimation of profit while deleting the additions made by the AO. We may note that revenue has accepted such estimation of profit made by CIT(A) by deleting additions in assessment years 2002-03, 2003-04, 2007-08 and 2008-09. Accordingly, revenue appeal is dismissed. 82. In the result, appeal of revenue in ITA No. 681/H/12 is dismissed. ITA No. 625/H/12 for AY 2005-06 in case of Shri P.V. Raghava Rao 83. Ground Nos. 1 6 are general in nature. 84. Ground No. 4 is not pressed and the same is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 is allowed. 93. Ground No. 3 relates to confirmation of the addition of Rs. 7,57,837/- by the CIT(A) on account of negative cash balance. Similar issue has been decided by us in ITA No. 618/H/12 for AY 2005-06 in case of Smt. Pavani vide paras 28 to 31 (supra). Following the decision therein we direct the AO to delete the addition of Rs. 7,57,837/- made on account of negative cash balance. 94. Ground No. 5 relates to estimation of profit at 15%. This ground is materially identical to that of the ground decided by us in assessee's own case for AY 2002-03 in ITA No. 622/H/12 vide paras 65 66 (supra), therefore, following the conclusions drawn therein we direct the AO to estimate the net profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 94.1 In the result appeal in ITA No. 626/H/12 is partly allowed. ITA No. 683/H/12 for AY 2006-07 by the revenue in case of Shri P.V. Raghava Rao. 95. The only issue raised by the department is with regard to the action of the CIT(A) in deleting the additions made by the AO and resorting to estimation of profit by applying the rate of 15% on the turnover. 96. Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had explained that the extra money received towards which the addition was made was duly accounted and formed part of the total contract receipts reflected in the return filed u/s 153A. It was also explained by the assessee that extra money received are duly accounted for is further evident from the fact that it is on account of the extra receipts, the turnover as per the return u/s 153A have shown an increase over the turnover as compared to the original return. The AO on verifying the aforesaid contention of the assessee stated that on verification of books of account found that there is an increase of Rs. 66,34,981/- in the turnover shown in the return u/s 153A as compared to the original return. The CIT(A) on considering the submissions of the assessee, vis- -vis, remand report of the AO noted that out of the total sale consideration of Rs. 57,89,250/- stated to have been received on sale of flat from Shri Raja Praveen Reedy, an amount of Rs. 40,50,000/- was received in FY 2006-07 and the balance amount in the subsequent years. He further noted that out of balance of Rs. 17,39,250/-, an amount of Rs. 9,04,750/- was treated as unaccounted receipts for the AY 2008-09 lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 104. Ground No. 5 relates to estimation of profit at 15%. This ground is materially identical to that of the ground decided by us in assessee's own case AY 2002-03 in ITA No. 6622/H/12 vide paras 65 66 (supra), therefore, following the conclusions drawn therein we direct the AO to estimate the net profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 105. In the result, appeal in ITA No. 627/H/12 is partly allowed for statistical purposes. ITA No. 628/H/12 for AY 2008-09 in case of Shri P.V. Raghavan Rao. 106. Ground No. 1 7 are general in nature. Ground No. 5 is not pressed. 107. Ground No. 2 relates to disallowance u/s 40A(3) of Rs. 35,85,735/- and Ground No. 3 relates to disallowance of Rs. 25,14,408 u/s 40(a)(ia). This issue has been decided by us in ITA No. 617/H/12 for AY 2004-05 in case of P. Pavani vide paras 16 to 19.1. Following the decision therein we hold that no separate disallowance u/s 40a(ia)/40A(3) of the Act can be made when profit of the assessee has been estimated. We, therefore, direct the AO to delete the additions made on this count. Thus, ground Nos. 2 3 are allowed. 108. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY 2006-07, it was found that the assessee has shown Rs. 40,50,000/- as received from R.P. Reddy for sale of flat No. 203, HUDA Enclave, Jubilee Hills, Hyd. However, as per the sworn statement of the assessee dated 18/03/2008, the assessee himself stated that the total cost of the flat was Rs. 57,89,250/-. He, therefore, stated in the remand report that since assessee has shown Rs. 40,50,000/- as received from the buyers, the balance amount of Rs. 17,39,250/- is not disclosed by the assessee. On being confronted with the remand report, the assessee submitted that an amount of Rs. 8,34,500/- was received towards undivided share of land and recorded in the books of account in FY 2008-09 towards sale of flat No. 203 to Mr. P. Reddy, which has been totally overlooked by the AO. Thus, the total amount of Rs. 48,84,500/- were accounted during the FY 2006-07 and 2008-09 leaving the balance of Rs. 9,04,750/- representing the cost of extra work, which has not been paid by the customer. The CIT(A) after considering the submissions of the assessee, in the light of the material on record accepted the amount of Rs. 48,84,500/- as explained while sustaining the addition to the extent of Rs. 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponse to section 153C as against Rs. 22,85,000/- disclosed in the original return. However, he noticed that the assessee, though, had enhanced his gross receipts but, at the same time, computed his income at Rs. 42,875/- by claiming addition as expenses. The AO noted that though some material evidencing suppression of gross receipts was found, but, there was no material indicating additional expenses. The AO noted that in the original return assessee only admitted the gross receipts which are received in cheques and omitting to declare the amount received in cash. The AO further examining the heads under which the additional expenditure was claimed, noted that the assessee has not produced any bills and vouchers in support of his claim. Therefore, out of the total expenditure of Rs. 40,87,307/- claimed by the assessee, the AO disallowed an amount of Rs. 19,67,000/- and added it to the income of the assessee. The AO also made an addition of an amount of Rs. 7,844/- towards income tax wrongly debited to the P L a/c and an amount of Rs. 30,375/- being contribution to chits wrongly debited to the P L A/c. Being aggrieved of the additions made by the AO, assessee challenged the same in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of an amount of Rs. 30,375/- representing contribution of chit. W hile making the aforesaid addition, the AO noted that the assessee has wrongly debited to Margardarshi Chit to the sale and cement account. 119. During the appeal proceedings before the CIT(A), it was contended by the assessee that the AO has made the addition purely on the basis of observing made by the special audit which is based on the books of account supporting the original return of income whereas the assessee has rightly claimed in the revised return which was neither examined by the AO nor by the special audit. CIT(A), however, did not accept the contention of the assessee by observing that the assessee has not furnished any information in support of his incurring of such expenditure during the appeal proceeding also. 120. We have heard both the parties and perused the materials on record. It is not disputed that the CIT(A) has estimated the profit at a fixed rate. It is further noted that the CIT(A) himself has commented that since the assessee's income has been quantified on estimate basis no further allowance of expenditure can be allowed. That being the case, no separate addition of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA No. 677/H/12 for AY 2004-05 vide paras 20 to 24 read with para 117 of ITA No. 1388/H/12, therefore following the decision therein we do not find any reason to interfere with the order of the CIT(A) in resorting to estimation of profit while deleting the additions made by the AO. 132. In Ground No. 3(a) and (b), revenue has challenged the deletion of addition of Rs. 1,14,65,740/- being the difference between the actual and admitted consideration of sale of flats. 133. Briefly stated, during the course of assessment proceeding, the AO referring to the seized document marked as 'A/VPR/RES/PO/3' noted that assessee has received consideration over and above the consideration reflected in the books of account and registered amount. AO referring to few instances, such as consideration received in respect of flat bearing No. A-202 from Shri G. Sivakumar was shown as Rs. 5,93,969/- as per the seized document. During post search details of sale consideration stated to have been received in respect of each of the flats, however, no books of account were produced before the ADIT (Inv.) The AO examining the register and other details noted that the sale consideration receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the seized material was shown at Rs. 5,93,969/- as against the amount of Rs. 3,55,500/- admitted by the assessee, which according to the AO resulted in suppression of receipts to the extent of Rs. 2,38,469/-, which worked out to 40% of the total consideration of Rs. 5,93,969/-. The CIT(A) noted that applying the same yardstick, the AO quantified the unaccounted receipts at Rs. 1,14,65,740/-. The CIT(A) noted that as per the material on record only on the basis of sale of one flat as appeared in the seized material, the AO has quantified the addition and no such information was relatable to any other transaction involving sale of flats was found or made out. The CIT(A) noted that the AO has not examined the purchasers or sellers for arriving at the conclusion that the assessee has not accounted 40% of the receipts from the sale of flats. The CIT(A) was of the view that if at all, the unaccounted receipts have to be quantified it could have been confined to the transaction of flat No. A-202 only in absence of any material to show that the assessee has unaccounted receipts from other flats. He further held that the unaccounted receipts of the assessee were already subjected to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 and 5 are general in nature. 138. Ground Nos. 2 3 are against the addition made when no material was found during search and seizure operations and without considering the fact that the assessment is made u/s 153C of the Act. Similar has been decided by us in ITA No. 1388/H/12 for AY 2002-03 vide paras 114 to 117 (supra). Following the decision therein we dismiss these grounds of appeal of the assessee. 139. Ground No. 4 is regarding estimation of profit @ 16%. This ground is materially identical to that of the ground decided by us in AY 2002-03 in ITA No. 1388/H/12 in assessee's own case vide para 117 (supra), therefore, following the conclusions drawn therein we direct the AO to estimate the profit by applying rate of 8% on the turnover declared by the assessee. Accordingly, this ground is partly allowed. 140. In the result, appeal in ITA No. 1390/H/12 is partly allowed. ITA No. 1446/H/12 for AY 2004-05 by the Revenue in case of Pavani Towers 141. The issue raised in Ground No. 2(a) (b) by the Department is relating to the issue of estimation of net profit by the CIT(A) by deleting the addition of Rs. 14,30,000/- made by the AO towards unaccounted rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was justified in disallowing the amount of 10% and accordingly, there is no reason to interfere with the order of the CIT(A), which is hereby upheld. Accordingly, the grounds raised in this regard are therefore dismissed. 149. In the result, assessee's appeal in ITA No. 1385/H/12 is dismissed. ITA No. 1386/H/12 for AY 2007-08 in case of Pavani Constructions. 150. Ground No. 1 6 are general in nature. 151. In Ground Nos. 2 3 the assessee has raised the issue of sustaining the addition in absence of seized material. Similar issue has been decided by us in ITA No. 1388/H/12 for AY 2002-03 vide paras 114 to 117 (supra). Following the decision therein we dismiss these grounds of appeal of the assessee. 152. In Ground No. 4, the assessee has challenged the disallowance of 10% expenses claimed under the head 'direct expenses and wages salaries. Similar issue was raised in ITA No. 1385/H/12 for AY 2006-07, hence, following the decision therein we direct the AO to restrict the disallowance to 10% of the total expenditures claimed under both the heads. This ground is partly allowed. 153. Ground No. 5 relates to the action of the CIT(A) in confirming the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head 'direct expenses and wages salaries. Similar issue was raised in ITA No. 1385/H/12 for AY 2006-07, hence, following the decision therein we confirm the order of the CIT(A) on this count and dismiss the grounds raised by the assessee. 162. In the result, appeal in ITA No. 1387/H/12 is partly allowed. ITA Nos. 1448 1449/H/12 for AYs 2007-08 and 2008-09 by the revenue in case of Shri B. Krishna Rao 163. The revenue has raised the following grounds, which are common in both the appeals: Ground No. 1 6 are general in nature. 2. CIT(A) is not correct to conclude that substantive additions were made in the case of Sri P.V. Raghava Rao in respect of the bank transactions of Sri B. Krishna Rao. 3.The CIT(A) wrongly deleted the addition by stating that Sri P.V. Raghava Rao has owned up all the bank account transactions relating to Sri B. Krishna Rao. 4. The CIT(A) ought to have sustained the additions though the assessment was made on protective basis. 5. The CIT(A) is not correct to conclude that the credits do not represent the income of the assessee apart from representing the income of Sri P.V. Raghavan Rao. 164. We find that the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure claimed. In our view, considering the facts and circumstances of the case, we direct the AO to disallow 5% in stead of 10%, considering the fact that some amount of inflation on expenditure cannot be ruled out. Accordingly, this ground is partly allowed. 172. In the result, appeal in ITA No. 1391/H/12 is partly allowed. ITA No. 1392/H/12 for AY 2006-07 in case of Pavani Estates 173. Ground Nos. 1 6 are general in nature. 174. Ground Nos. 2 3 are against the addition made when no material was found during search and seizure operations and without considering the fact that the assessment is made u/s 153C of the Act. Similar issue has been decided by us in ITA No. 1388/H/12 for AY 2002- 03 vide paras 114 to 117 (supra). Following the decision therein we dismiss these grounds of appeal of the assessee. 175. In Ground No. 4, the assessee has challenged the disallowance of 5% expenses claimed under the head 'direct expenses and wages salaries. Similar issue was raised in ITA No. 1385/H/12 for AY 2006-07, hence, following the decision therein we confirm the order of the CIT(A) on this count and dismiss the grounds raised by the assessee. 176. Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in ITA No. 1385/H/12 for AY 2006-07, hence, following the decision therein we confirm the order of the CIT(A) on this count and dismiss the grounds raised by the assessee. 186. Ground No. 5 relates to the action of the CIT(A) in confirming the addition of 10% of the expenses of Rs. 6,65,875/-. CIT(A)'s order is confirmed. Similar issue has been decided by us in ITA No. 1392/H/12 for AY 2006-07 in assessee's own case vide para 171 (supra) Following the decision therein we confirm the order of the CIT(A) by dismissing the ground raised by assessee. 187. In Ground No. 6, assessee has challenged the action of the CIT(A) in sustaining the addition of Rs. 2,84,160/- out of total addition of Rs. 27,63,500/-. 188. Briefly stated, during the course of assessment proceedings, the AO noted that in course of search and seizure operation, certain agreements referring to construction of independent house, were found and seized, which are as under:- 189. He noted that agreements have been entered with these persons were for construction of the buildings and constructed buildings as per the agreements were handed over. He also noted that payments in respect of house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted on 01/10/2008 i.e. subsequent to the date of search all receipts were considered and there cannot be any suppression of receipts. 191. The CIT(A) after considering the submissions of the assessee in the light of the materials on record, found that there are subsequent developments with regard to the agreements originally entered by the assessee with Smt. Vani and Smt. Srilatha basing on which the difference of Rs. 27,63,500/- was treated as suppressed sale receipts. The CIT(A) was convinced with the fact that in case of Smt. Vani the actual amount was Rs. 4,34,000/-, which was also accounted for in the assessment year 2007-08 and the balance amount as per the original agreement was never realized, which also ultimately stood cancelled. In case of Smt. Srilatha also the assessee actually received an amount of Rs. 11,62,500/- and the balance amount of Rs. 9,85,500/- was never received by the assessee. However, the CIT(A) noted that the assessee has not been able to explain the status of the flat/house, which was supposed to have been purchased by Smt. Vani but the amount paid by her was forfeited. Since the assessee failed to furnish information with regard to the sale of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby confirmed. 197. In Ground No. 3, the revenue has challenged the action of the CIT(A) in estimating profit on the receipt of Rs. 17,76,000/- from Smt. Vani in terms of agreement. 198. In view of our finding in assessee's appeal in ITA No. 1394/H/12 (supra), this ground of the Revenue is dismissed. 199. In Ground No. 4, the revenue raised the issue of consideration of fresh evidence by the CIT(A). We find such contention of the revenue is devoid of merit as the CIT(A) is conferred with appeallate jurisdiction and his power is coterminous with that of the AO, therefore, he can decide the appeal considering the totality of the facts and circumstances of the case. We find that the Department could not substantiate what fresh evidence/information was submitted before the CIT(A), which was not before the AO. In the aforesaid view of the mater, this ground of department cannot be entertained and accordingly dismissed. 200. In the result, appeal in ITA No. 1447/H/12 is dismissed. 201. To sum up, the result of all the appeals under consideration as follows: Sl. No. ITA No. AY Appellant Respondent Result 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Shri P.V. Raghava Dismissed Income-tax, Central Rao, Nellore Circle, Tirupathi (PAN - AKPPP0576P) 18 626/H/12 2006-07 Shri P. V. Raghava Rao, Asst. Commissioner of Partl y Nellore Income-tax, Central Allowed (PAN - AKPPP0576P) Circle, Tirupathi 19 683/H/12 2006-07 Asst. Commissioner of Shri P.V. Raghava Dismissed Income-tax, Central Rao, Nellore Circle, Tirupathi (PAN - AKPPP0576P) 20 627/H/12 2007-08 Shri P. V. Raghava Rao, Asst. Commissioner of Partl y Nellore Income-tax, Central allowed (PAN - AKPPP0576P) Circle, Tirupathi for statistical purposes. 21 628/H/12 2008-09 -do- -do- Partl y Allowed 22 1388/H12 2002-03 M/s Pavani Towers, Asst. Commissioner of Partl y Nellore. Income-tax, Central Allowed Circle, Tirupathi (PAN - AAFFP1143G) 23 1444/H/12 2002-03 Asst. Commissioner of M/s Pavani Towers, Dismissed Income-tax, Central Nellore. Circle, Tirupathi (PAN - AAFFP1143G) 24 1389/H/12 2003-04 M/s Pavani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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