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TMI Blog2018 (8) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period upto date of search, the gross receipts to that extent requires to be excluded in quantifying the suppressed turnover for the impugned assessment years. Since this aspect requires examination by the AO, we direct the AO to exclude the amounts pertaining to plots unsold as on date of search, so as to quantify the suppressed turnovers upto AY. 2014-15. In the year 2015-16 & 2016-17 i.e., of subsequent years, AO is free to verify this aspect but the unsold plots as on date of search cannot be considered for suppressed turnover particularly for quantifying the turnovers on the ratio of accounted turnover in the impugned assessment years. AO is directed to examine this aspect and exclude the turnover as directed above while determining the suppressed turnover. Grounds are considered allowed for statistical purposes. Estimation of profit - Held that:- In this case, the quantification itself was done on the third party registers, where only the indicative sale prices were recorded. Since more than 70% of the turnover was recorded and the profit at 4% was accepted by AO, we are of the opinion that estimation at 12.5% is reasonable on the facts of the case. Honourable Jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices mostly, admitting the same incomes which were admitted in the returns originally. 3. In the course of assessment proceedings, AO has made an addition of ₹ 11,53,810/- for violation of Section 40(a)(ia) of the Act. In addition, AO noticed that assessee has suppressed its receipts over a period of time and quantified the suppressed receipts at ₹ 10,60,25,463 and distributed over the assessment years as under: A.Y. Suppressed Income (Rs) 2010-11 8,40,000 2011-12 32,44,000 2012-13 95,19,850 2013-14 1,98,99,770 2014-15 3,53,54,958 2015-16 3,71,66,885 Total: 10,60,25,463 3.1. After considering the suppressed receipts in the respective assessment years as above, AO treated the entire amount as income of assessee in respective assessment years. 4. Before the Ld.CIT(A), assessee has made submissions that the disallowance u/s. 40(a)(ia) of the Act does not arise and that the suppressed turnover is not based on any valid material and further, there were mistakes in the computation of suppressed turnover and that entire receipt cannot be considered as income. On these issues CIT(A) allowed the contentions on Section 40(a)(ia), confirmed the estimation of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO is therefore entirely logical and correct, and is backed by solid facts and evidences found in the seized material during the course of the search. The methodology of the quantification is discussed in great detail by the AO in para 4 of the assessment order (which is reproduced in para 6.2 of this order). I therefore find no merits in the contentions of the appellant on this account, and ground nos.4 & 5 related to this issue are DISMISSED". 5.1. Before us also assessee has not furnished any evidence to counter the working of AO. Since there is some basis for working out the so called suppressed turnover and assessee's main contentions are on the reconciliation of the said working, we are of the opinion that estimation of turnover based on the so called registers/entries in pencil cannot be faulted. Thus, the grounds on this issue (Ground Nos. 1 to 6) are accordingly rejected. Determination of suppressed turnover: 6. As seen from the assessment order, AO has worked out the gross receipts at ₹ 123.51 Crores and gave credit for the admitted receipts at ₹ 92.43 Crores. From the above amount, AO also gave credit to the vacant plots/future collections at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en reduced from the figure of ₹ 1,23,51,16,787 as against ₹ 2,16,49,500 allowed as reduction by the Assessing Officer. Thus the total reduction should be ₹ 23,74,76,163 (Rs.26,67,61,465 - ₹ 2,92,85,302) as against ₹ 20,47,07,200 by Assessing Officer. 3.6 Further, even according to the Assessing Officer, these plots were registered after the date of search i.e, in the Asst.Year's.2015-16 or 2016-17. Without conceding the fact that the there is no suppressed turnover at all, even if some suppression in turnover is alleged in respect of these plots which were registered in subsequent orders no addition can be made in the Asst. Years under consideration. Any addition in this regard can be made in relevant post asst. years only and not prior to the date of registration. 3.7.1. It is humbly submitted that, without conceding that there is no suppression at all, if the above rectifications were carried out, the alleged suppressed turnover would workout to ₹ 4,62,77,422 as per the details filed before Assessing Officer and extracted at page 6 of the assessment order. Hence, at the outset, it is submitted that for the Asst. Years 2010-11 to 2015- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e "H". The AO has thus clearly observed that in respect of some plots accounted for in future sales, the appellant has shown only Registered value of the said plots as sale value in subsequent years, and therefore, only Registered value of the said plots amounting to ₹ 2,16,49,500/- is being reduced while computing suppression of receipts. I find no infirmity in the order of the AO on this issue. Ground No.6 related to this issue is therefore DISMISSED". 6.3. It was the contention of the Ld. Counsel that assessee has correctly accounted the amounts post search in books of account which should have been excluded while arriving at the gross receipts. In the alternate, since the sales were accounted for at a later period, any difference in sale amount, if any can only be taxed in the post search assessments but not in the pre-search assessment as many plots have not been sold on the date of search and so the question of suppressed turnover does not arise. 6.4. Ld.DR, however, relied on the orders of AO and CIT(A). 6.5. We have considered the rival contentions. As seen from the working of AO, AO has considered all plots in nine ventures in arriving at the gross receipts. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arriving at that percentage. It is an admitted proposition that there cannot be any fixed profit percentage in any business. It depends on case to case on the facts. As seen from the turnovers declared by assessee in the books of account, these are the turnovers in respective assessment years. A.Y. Turnover (Rs) 2010-11 10,63,08,947 2011-12 13,03,97,300 2012-13 10,29,96,427 2013-14 13,29,76,651 2014-15 14,69,66,161 2015-16 11,42,81,441 Total: 73,39,26,927 7.1. Compared to the above turnover, the suppressed turnover determined by the AO was roughly at about 14.5% of the total turnover declared. Assessee has admittedly declared only 4% of the profit on the declared turnovers which was not disputed by AO. Consequently, there cannot be 40% profit on the so called suppressed turnover. We are of the opinion that a reasonable profit has to be estimated considering the facts of the case. There are various judgments relied on by the parties, wherein net profit was estimated from 4% to gross profit of 40%. There are various High Court judgments also estimating the income at 25% of the suppressed turnovers, but most of the rates are determined on given facts of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of reasonable profit on the so called suppressed turnover. Therefore, there is no merit in Revenue grounds, accordingly, they are dismissed. 10. One more issue which was raised in AY. 2013-14 is with reference to disallowance of an amount of ₹ 22,000/- u/s. 40(a)(ia) of the Act made by the AO, but deleted by the Ld.CIT(A) for the following reasons: "5.3 I have carefully considered the submissions made by the appellant as well as the observations of the AO in the impugned order. The assessment order, as reproduced in para 5.1 above, on this issue, does not contain any reference to the outcome of the search or any inference derived from the Search that resulted in the impugned addition. Perusal of the assessment record also does not suggest anything to the contrary. The assessee has placed reliance on a plethora of judicial pronouncements, including the decision of the jurisdictional bench of the ITAT in the case of DCIT vs. Lingam Tulsi Prasad [2016] [49 ITR(T)-218 (Hyderabad - Trib.)], Mumbai High Court in case of All Cargo Global Logistics and Delhi High Court in the case of Kabul Chawla (380 ITR 0573). The said orders have been perused. The Jurisdictional ITAT has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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