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TMI Blog2018 (9) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... e deduction of 60% allowed against such suppressed receipts - Held that:- We are in agreement with the CIT(A) that only income should be estimated and not the whole suppressed turnover as income - income estimation should be realistic and based on the trend in the industry - the income has to be realistic and appropriate to the kind of business of assessee. As noted, assessee has declared only 5.12% of the declared turnover as profit. The coordinate bench has opined that in the general scenario income is estimated at 12.5% in the case of big contracts. In the interest of justice and fairness to both the parties, in our considered view, 10% is reasonable and in line with the Villa Projects in the real estate industry. Accordingly, we direct the AO to estimate income @ 10% of the undisclosed turnover. Accordingly, ground raised by the assessee is partly allowed. Addition made on account of unexplained investment in land - addition in an assessment u/s 143(3) rws 153C without reference to any seized material - Held that:- Since no incriminating material was unearthed during the search regarding the purchase of the above land, no addition could have been made to the income already a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 8,88,10,000/- and AO allowed the sale value as per the agreement to the extent of ₹ 2,07,63,500/- 2.2 Assessee appealed against the above quantification of undisclosed turnover by the AO overlooking the turnover disclosed in the return of income, which has two parts, viz. a) sales and b) contract receipts for the constructions of Villas to the extent of ₹ 3,76,56,378/-. Further, AO treated the whole undisclosed sales as income of the assessee. Against the above two issues, assessee preferred an appeal before the CIT(A). 3. The CIT(A) dismissed the grounds raised by the assessee with regard to quantification of the suppressed turnover and with regard to treatment of suppressed turnover as income of the assessee, he partly allowed the ground raised by the assessee and quantified @ 40% as income of the assessee by relying on the decision of the Hon ble MP High Court in the case of CIT Vs. Sharda Real Estate (P) Ltd. 99 DTR 100. 4. Aggrieved with the above order, assessee as well as revenue are in appeal before us raising the following grounds of appeal: 4.1 The assessee has raised the following grounds of appeal, which are common in the three AYs under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, and in law, the ld. CIT(A) was correct in holding that the sources are self-evident when the land is reflected in balance sheet without appreciating the fact that the land in balance sheet is different from the land in question ? 5. Whether on the facts and circumstances of the case, and in law, the Id. CIT(A) was correct in holding that the sources are self-evident when the land is reflected in balance sheet without appreciating the fact that the land in question has already shown as consumed in P L account and it has no relation with the land shown in balance sheet? 7. Whether on the facts and circumstances of the case, and in law, the Id CIT(A) was erred in not appreciating that payments towards the land was made through various Demand Drafts, the sources of such demand drafts are clearly not explained by the assessee either before the AD or before the CIT(A), it being the first year of business? The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary. 5. Ld. AR of the assessee referring to the facts sheet filed before us submitted that assessee has accepted the turnover found during the search and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and not accepted the turnover declared by the assessee in the return of income. Assessee has filed return of income declaring total turnover of sale and contract receipts to the extent of ₹ 3.77 crores and paid the due tax. Therefore, the turnover already declared by the assessee as per the return of income should be taken as declared turnover. Therefore, we are in agreement with the submissions of the ld. AR that the suppressed turnover should be the difference between the turnover found in the document seized and the turnover declared in the return of income i.e. to the extent of ₹ 5,11,00,000/-. Hence, ground raised by the assessee in this regard is allowed. 7.1 With regard to estimation of income in this line of business, we notice that AO has treated the whole suppressed turnover as supressed income of the assessee, whereas, ld. CIT(A) has estimated the suppressed income @ 40%. We notice that assessee has declared the income @ 5.12% whereas ld. CIT(A) has estimated the income @ 40%. We are in agreement with the CIT(A) that only income should be estimated and not the whole supressed turnover as income. However, the income estimation should be realistic and base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has already offered @ 10% profit on the accounted turnover, we are of the opinion that income can be determined on the balance of the turnover at 12.5% of the turnover. AO is directed to do so. Accordingly, assessee's ground are partly allowed. 7.2 In the above case, we notice that assessee has already declared profit @10% on the accounted turnover, whereas, in the given case, assessee has declared 5.12%. In our considered view, the income has to be realistic and appropriate to the kind of business of assessee. As noted, assessee has declared only 5.12% of the declared turnover as profit. The coordinate bench has opined that in the general scenario income is estimated at 12.5% in the case of big contracts. In the interest of justice and fairness to both the parties, in our considered view, 10% is reasonable and in line with the Villa Projects in the real estate industry. Accordingly, we direct the AO to estimate income @ 10% of the undisclosed turnover. Accordingly, ground raised by the assessee is partly allowed. 8. As the facts and issues are materially identical in the AYs 2012-13 and 2014-15 to AY 2013-14, following the conclusions drawn therein, the appeals in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g cases: 1. Cargo Global Logistics Ltd. Vs. DCIT, 137 ITD 287 SB 2. DCIT Vs. Lingam Tulasi Prasad 49 ITR (T 218) (Hyd ITAT) 3. Kabul Chawla 380 ITR 573 (Delhi) 13.1 Further, ld. AR submitted that since the assessee had already filed its return of income for the AY 2012-13 in the regular course much before the date of search, the AO without referring to any part of the seized material is not justified in making an addition of ₹ 30,61,000/- without giving any further details. He submitted that the document referred to by the AO is only part of the total land purchased by the assessee. 14. Considered the rival submissions and perused the material on record. Since no incriminating material was unearthed during the search regarding the purchase of the above land, no addition could have been made to the income already assessed u/s 143(3) of the Act, as held by the Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). Even the CIT(A) held that when the land is reflected in the balance sheet, which forms a part of the return of income filed by the assessee, the sources are self-evident. He further held that neither does the assessment record show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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