9911796707
TMI Blog2024 (1) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... of account are rejected and the net profit rate is estimated. Since in the instant case also the profit of the assessee has been estimated, therefore, the decision of the Hon ble jurisdictional High Court relied on by the learned CIT (A) is squarely applicable to the facts of the case of the assessee and therefore, we do not find any infirmity in the order of the CIT (A) in deleting the addition u/s 40A(3). Validity of assessment u/s 153A in absence of any incriminating material - HELD THAT:- It is an admitted fact that various payments details and name of individual customers were found during the course of search which contain receipts in cash as well as through Bank. When these documents were confronted to the Directors of the Company, they have admitted that these were cash payments received from customers which were reflected in the consolidated statement found during the course of search. Therefore, it cannot be said that no incriminating material was found during the course of search. CIT (A) has thoroughly discussed this issue while upholding the addition made in the return filed in response to notice u/s 153A. Under these circumstances, we do not find any infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew disallowance can be made on this issue. Order of the learned CIT (A) deleting the addition of income on account of unsubstantiated cash expenditure is upheld and the ground raised by the Revenue on this issue is dismissed. Non granting of TDS credit - HELD THAT:- It is an admitted fact that this issue was neither raised before the AO nor before the CIT (A) and therefore, there was no occasion for either of the authorities to adjudicate the issue. However, since it is the case of the assessee that the TDS has been deducted by the customers in the name of M/s Skill Promoters (Firm) which was subsequently changed to M/s. Skill Promoters (P) Ltd and such TDS is supported by Form 26AS, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to verify the claim of such TDS credited and decide the issue as per law after giving due opportunity of being heard to the assessee. The grounds raised by the assessee are accordingly allowed for statistical purposes. Disallowance of personal expenditure - HELD THAT:- Admittedly, the so-called expenditure which according to the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common order for the sake of convenience. 2. First, we take up ITA No.628/Hyd/2022 filed by the assessee and ITA 686/Hyd/2022 filed by the Revenue for the A.Y 2014-15 in the case of Skill Promoters as the lead case. 3. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of construction and land development and derives income from house property and income from business. It filed its original return of income u/s 139(4) for the A.Y 2014-15 on 25.9.2014 declaring total income of Rs. 3,37,12,080/-. A search and seizure operation u/s 132 of the I.T. Act was conducted in the case of the assessee's group on 22.10.2019. In response to notice u/s 153A, the assessee filed its return of income on 26.2.2021 declaring total income of Rs. 3,37,12,080/-. Statutory notices u/s 143(2) and 142(1) were issued by the Assessing Officer to which the A.R of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. 4. During the course of assessment proceedings, the Assessing Officer observed from the seized documents that the ITA Nos 628 and others Skill Promoters & Skill Promoters (P) Ltd assessee is maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived as income, the assessee company cannot absolve itself of the willful defaults made in adhering to certain provisions of the I.T. Act. After considering the survey u/s 133A on 10.12.2015 and the search that took place on 22.10.2019, the Assessing Officer computed the disallowance to be made u/s 40A(3) for various years, the details of which are as under: A. Survey u/s 133A on 10.12.2015 in the hands of M/s. Skill Promoters: S. No A.Y FY Amount 1 2014-15 2013-14 26,93,878 2 2015-16 2014-15 20,08,200 3 2016-17 2015-16 6,24,39,186 TOTAL 6,71,41,264 B. Search u/s 132 conducted on 22.10.2019 (including survey material at construction site) in the hands of M/s. Skill Promoters Private Ltd: S. No A.Y FY Amount 1 2017-18 2016-17 5,96,690 2 2018-19 2017-18 14,33,00,785 3 2019-20 2018-19 14,07,71,562 4 2020-21 2019-20 4,11,48,625 Total 32,58,17,662 The Assessing Officer accordingly made addition of Rs. 26,93,878/- in the hands of the assessee for the A.Y 2014-15. 6. The Assessing Officer similarly noted that during the course of search proceedings, it was found that there is a price variation between the actual sale consideration received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.41 9.02 25.43 2018-19 40.18 27.51 67.70 2019-20 25.32 12.42 37.74 Sub-Total(A) 219.98 101.48 321.46 2020-21 -do- 43.72 10.93 54.66 Sub Total (B) 43.72 10.93 54.66 Total (A+B) 263.70 112.41 376.11 8. The Assessing Officer verified from the books of accounts maintained by the assessee in Tally accounting package that the company is recognizing sale consideration only to the extent of amounts received though banking channel. According to him, it is clearly evident from the seized incriminating evidences that the company has received sale consideration over and above the registered sale deed, in cash, which is not accounted for in the books of account of the company. Therefore, he treated an amount of Rs. 13,61,00,000/- as undisclosed income for the year under consideration and added back the same to the income returned by the assessee. 9. The Assessing Officer accordingly determined the total income of the assessee at Rs. 17,25,05,958/-. 10. Before the learned CIT (A), the assessee apart from challenging the addition on merit, challenged the validity of the assessment u/s 153A in absence of any incriminating material found during the course of search a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the profit and loss account, only estimated profit is taken and the gross collection and construction cost along with estimated profits is directly taken to Balance Sheet. For the financial year 2015-16, we have estimated a profit of Rs. 1,48,29,259, which is 8% of gross receipts of Rs. 18,53,65,740 as shown in point 40(a) of Audit Report". 6.3 While accepting the estimating of income @8% on the advances received, the AO has mentioned that the actual profit on the construction activity is yet to be worked out as the project is still in work-in-progress stage and therefore the estimation of 8% on advances received was found to be acceptable. In other words, it is an ad hoc estimation of profits by the assessee @8% on the advances received since the project Was still in the work in progress stage. This was accepted by the A0. This was so done since the final profit of its construction activity is yet to be worked out by the assessee. This ad hoc estimation by the assessee @8% cannot be accepted as the final profit earned by the assessee. This also cannot be seen as a binding precedent on the AO to follow this estimation even after discovery of receipt of unaccounted on-mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also found from the seized material at pages 1-35 of Annexure A/SPPL/OFF/02 that certain customer wise details of sale consideration received in cash & cheque, agreement of sale reference number & financial year, name of the buyer etc., which confirms that cash and cheque were received from various buyers. Shri Mohd Yousuf Jaffer, Marketing Manager was confronted with these findings while recording his statement dated 26-11-2019. His reply to Q.No.11 provides details of buyer and the reference to agreement of sale and the cash and cheque amount. This directly contradicts the AR's argument that the seized material is dumb, unauthenticated material. For ready reference Q.No.11 of his reply is reproduced below: "Q. 11.1 I am showing you the pages bearing Nos. 1-35 of Annexure-A/ SPPL/Off/02 which were found and seized at your chamber during the search and seizure operation conducted in the business premises of M/s. Skill Promoters Pvt. Ltd located at 6th Floor, City Central Mall, Road No.1, banjara Hills, Hyderabad on 22.10.2019 and explain the said material in detail. Ans. I have gone through the above material seized vide Annexure No. A/ SPPL/Off/02 and also confirm that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les made during the F.Y 2008-09 to 2019-20 wherein it is also mentioned the mode of receipts i.e. cash or bank. Q.12. I am showing you the pages bearing Nos. 1-35 of Annexure A/ SPPL/OFF/02 which were found and seized at your chamber during the search and seizure operation conducted in the business premises of M/s. Skill Promoters Pvt. Ltd located at 6th Floor, City Central Mall, Road No.1, banjara Hills, Hyderabad on 22.10.2019 wherein it has been mentioned that most of the amount received in cash from the customers towards sale of commercial space belongs to M/s. Skill Promoters Pvt. Ltd. Please offer your comments. 7.5.2 A.Y. 2014 The above reply shows the agreement wise cash & cheques received from the buyers. Further, the evidences found during search were confronted which Shri Syed Mohammed Aslam, Managing Director/ Partner who in his statement dated 20-12-2019 and in reply to Question no.38 confirmed that these pertain to sale consideration received by the company from the customers during the period FYs 2008- 09 to 2019-20. Similarly, the other Director/partner of the company viz. Shri Syed Naveeduddin Ahmed Quadri, in his reply to Question No.23 of his statement dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss basis without setting off the unrecorded cash expenses is contradicting his own stand and is not correct. This is more so when the A0 himself has taken cognizance of these unrecorded cash expenses and disallowed the same. The Hon'ble Supreme Court in CIT vs Williamson Financial Services [2007] 165 taxmann 638 (SC) has observed as under: "It is important to bear in mind that u/s.4, the levy is on total income of the assessee computed in accordance with and subject to the provisions of the Income Tax Act. What is chargeable to tax under Income Tax Act is not the gross receipt but the income under the Income Tax Act. The tax is on income but not on gross receipts". 7.5.4 There cannot be a selective use of the seized material that only favours the revenue. It is not correct to utilize some notings of on-money receipts on the loose sheets that are against the assessee and in the nature of income and ignore the other seized material which are not favourable to the revenue. A seized document should be read as a whole. This was so held in Chander Mohan Mehta vs.ACIT [1997] 71 ITD 245 (Pune-Trib) and Dhanvarsha Builders and Developers (P.) Ltd. v. DCIT[2006] 102 ITD 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss basis without giving the benefit of cash expenses is not as per the harmonious interpretation of Section 292C of the Act. 7.5.6 The question now arises as to what extent of the cash expenses the assessee is entitled to set off against the on-money receipts? To put differently, what is the best estimate of the profit on the cash receipts, that have to be arrived since the books are now rejected. The AO has recognized cash expenses found during the course of search of Rs. 39.29 crores. The Appellant has stated that its claim for cash expenses of Rs. 18.68 crores on the same project was accepted by the AO during earlier survey proceedings which should also be given benefit. The A0's argument in the remand report that there is no proof that the impounded survey material and the material seized during search are on the same project, reflects lack of understanding of the facts of the case. The AO himself in AY 2016-17 has taken cognizance of the expenses of Rs. 18.68 crores allowed during survey on the same project and has restricted these expenses to Rs. 5,53,56,091/- for want of evidences. Therefore, the contention of the AO in the remand report has no basis and is rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind any error in the book results the same are not disturbed. Even in the assessment order, only the on-money receipts were brought to tax and the book results were not disturbed. As a corollary, the assessee is not entitled to set off the profits declared on book results against the estimated income @30% on on-money receipts. However, the assessee's argument that during survey operation, it has declared profit on on-money receipts of Rs. 32 crores on the same project and hence set off should be given against the survey income that was offered to tax has some merit. It is not in dispute that the survey was also done on the same project and income was offered and assessed by the AO after survey. Thus, the income offered on the same project during the survey cannot again be added in search proceedings as it would result in double taxation of the same income. Since the assessee has disclosed income on cash turnover of Rs. 32 crores during survey, this turnover needs to be excluded from the on- money receipts of Rs. 112.41 crores. The additional income of Rs. 32 crores admitted during survey was assessed up to AY 2016-17 in the hands of the firm viz, M/s. Skill Promoters and the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... totaling to Rs. 39,29,58,926/- was found during search. The AO disallowed an amount of Rs. 26,93,878/- u/s.40A(3) of the Act pertaining to the current year out of the same. The AR contended that the disallowance u/s.40A(3) has to be made only when expenses are reflected in the books of account and debited to Profit & loss account. As per the AR, since the cash expenses were not debited to the profit and loss account, the disallowance u/s.40A(3) does not apply to the same. It was also contended that the AO merely disallowed payment u/s.40A(3) without possessing any substantive evidence of a single payment to a single party exceeding the stipulated limit of Rs. 20,000/- Therefore, the AR requested for deletion of the said addition. 8.5.1 I have considered the contentions of the AR and the assessment order of the A0. Disallowance of expenditure u/s.40A(3) of the Act is made when the assessee incurs any expenditure in a day in cash exceeding the specified amount (Rs.20,000/ prior to AY 2018-19 and Rs. 10,000/- after that). For ready reference Section 40A(3) of the Act is reproduced below: "Where the assessee incurs any expenditure in respect of which a payment or aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowances made in the order of assessment and if the higher rate was taken into consideration, one could assume that certain expenditure has been incurred and claimed. We are not persuaded to accept this submission in so far as there is no necessity to consider any other valuation except that relating to the subject disallowance, being Rs. 500 per gram adopted by the Assessing officer after due consideration and application of mind. We are thus of the view that the provisions of 40 A(3) are wholly inapplicable to the facts and circumstances of this case. The substantial question of law is answered in favour of the assessee and against the Revenue. No costs". However, the High court of Andhra Pradesh in S. Venkata Subba Rao [173 ITR 340] (Andhra Pradesh) (1988) held that Section 40A(3) applies to a business carried on illegally. It was held that once the Act applies to illegal income, the taxable income has to be determined in accordance with the provisions of the Act that includes Section 40A(3). It was further held that unless the assessee's claim falls within one or the other clauses of Rule 6DD, he has to necessarily comply with the requirements of Section 40A(3). Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so establish the genuineness of the payment and the identity of the payee. Unless he does that, he cannot take advantage of clause (j). It is not open to the assessee to say that he will only partly satisfy the requirements of clause (j) and would still be entitled to the benefit of the said clause. We may make it clear that the satisfaction that is relevant in such cases is the satisfaction of the ITO". In view of the binding decision of the jurisdictional High court of Andhra Pradesh in the above cited case, it is held that the provisions of Section 40A(3) would apply even when the expenses are not routed through the profit and loss account. Hence this argument of the AR is rejected. 8.5.3 Further, as held in the earlier paras, the profit on cash on-money receipts were estimated @30% of the on-money received during the year. The question now is whether the provisions of Section 40A(3) would apply when the income is estimated after rejecting the books of account? The jurisdictional High court of Andhra Pradesh in M/s. Indwell Corporation vs CIT [1998] (232 ITR 776) (AP) held that no disallowance u/s.40A(3) can be made when the books of account are rejected and the net p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es how the contention of the Revenue, that Section 40[(b) makes a difference in the situation, is untenable. In our considered opinion, the answer to the question has to be in the negative and in favour of the assessee " Similar view was advocated by various judicial fora in the following decisions: (i) CIT VS Smt.Santosh Jain [2007] 159 Taxmann 392 CIT VS Gobind Ram (Punjab & Haryana) (ii) CIT vs. Gobind Ram (2014) 48 taxmann.com 14/(2015) 229 (Punjab & Haryana) (iii) CIT vs. Banwari Lal Banshidhar (1998) 229 ITR 229 (All) (iv) CIT VS Bahubali Neminath Muttin [2016] 73 taxmann.com 100/242 Taxman 279 (Kar) Respectfully, following the decision of the jurisdictional High Court in Corporation Indwell (cited supra), since the net profit of the appellant was estimated after rejecting the books of accounts, it is held that no further u/s.40A(3) of the Act. In view of disallowance can be made the above arguments, the addition of Rs. 26,93,878/ u/s. 40A(3) is directed to be deleted. Accordingly, Ground No4 of the appellant is ALLOWED". 13. Aggrieved with such order of the CIT (A), the assessee as well as the Revenue are in appeal before the Tribunal by raising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the above, the learned CIT (A) erred in estimating the income @30% on the on-money receipts only by rejecting the books of account and accepting the book results of the assessee, where the percentage of profit offered by the assessee is 8% only." 13.4 After hearing both the sides and considering the fact that all material facts necessary for adjudication of the additional grounds are already available on record and no new facts are required to be investigated, therefore, following the decisions of the Hon'ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383 and Jute Corporation of India Ltd reported in 187 ITR 688 the additional grounds raised by the Revenue are admitted for adjudication. 13.5 We have heard the rival arguments made by both the sides and perused the record. We have also considered the various decisions cited by both sides. Grounds of appeal No.1 & 4 by the Revenue being general in nature are dismissed. 13.6 In Ground of appeal No.2, the Revenue has challenged the order of the learned CIT (A) in rejecting the books of account and thereby holding that the addition made by the Assessing Officer on account of undisclosed sale consideration receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to the total income of the assessee. 2.1.2. The Id.CIT(A) held that the audited books of account are defective and cannot be relied upon as they do not give a correct picture of the profits earned. The Id.CIT(A) has therefore rejected the books of accounts u/s. 145 of the Act and estimated the income on on-money receipts at the rate of 30% following the percentage adopted in assessee's case of survey assessment for the year. 2.1.3. Accordingly, the ld.CIT(A) concluded that since the profit on on- money receipts of Rs. 32 crores were already offered during survey in the hands of the assessee and assessed in Asst. Year 2015-16 & 2016-17. no additional profit on account of on money receipts remained to be taxable in the current year in the hands of the assessee. Hence, the CIT(A) has directed to delete the addition of Rs. 13.61 crores. 2.1.4. The decision of the Id.CIT(A) in estimating the income by rejecting the books of accounts u/s. l45 is not acceptable in view of the following reasons: (i) The CIT(A) has called for a remand report during the course of appeal proceedings and asked to examine the information/ evidences filed by the assessee. Accordingly, remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A) and estimating the income of the assessee, as the addition made relates to the unaccounted income found during the search action. Further, there is a clearcut evidence and bifurcation of amounts received by the assessee in cash and through banking channels as mentioned below: A.Y Name of the entity Cash receipts in crores Pro rata % of cash Income on cash received (Bx80.41 crores) Profit on cash receipts @ 30% of Rs. 80.41 crores (B &C) Additional income offered in ITA u/s 153A (Rs. crores) Net taxable income on on- money receipts (C -D) A B C D E F 2008-09 to 2013-14 Skill Promoters (Partnership Firm) 14.74 - - - - - 2014-15 13.61 2015-16 10.81 2016-17 5.08 2016-17 Skill Promoters Pvt Ltd 8.29 21.16% 9.78 2.93 1 1.93 2017-18 9.02 13.23% 10.64 3.19 1 2.19 2018-19 27.51 40.36% 32.45 9.73 2 7.73 2019-20 12.42 18.22% 14,65 4.40 2 2.40 2020-21 10.93 16.03% 12.89 3.87 - 3.87 Total 112.41 100% 80.41 24.12 6 18.12 The decision of the Ld. CIT(A) is not acceptable and the entire amount of addition made by the Assessing Officer of Rs. 31.61 crores has to be brought to tax. 2.2 Addition toward disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific works, modifications have been carried out over and above the original specifications as extra services for cost. Thus, the so called on money receipts consist of these payments which were incurred as additional expenditure for providing specified additional features. There is no additional gain for assessee, but it is a part of service for reputation of company. (iii) Repetition of entries; It is further submitted that in the so-called seized documents, there are repetition of entries causing huge swelling of receipts causing wrongful estimation of income. As the details found in u authenticated documents are not foolproof, not checked by anyone. 13.9 The learned Counsel for the assessee drew the attention of the Bench to the copy of the seized documents and submitted that it clearly shows receipt of registration charges, additional specifications and repetition/duplication of entries. 13.10 He submitted that the Assessing Officer at para 4 of the assessment order in the 9th line has observed interalia that the impugned cash transactions were not accounted for in the books of account of the assessee company. This according to him clearly shows that the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the learned CIT (A) has estimated the same @ 30% as against 8% declared by the assessee and accepted by the Assessing Officer in the scrutiny proceedings. 13.13 Relying on various decisions, he submitted the Coordinate Benches of the Tribunal under identical circumstances have estimated such profit at 10% to 12%. Since the assessee in the instant case is regularly showing 8% profit which has been accepted in the past in the scrutiny assessment, therefore, considering the totality of the facts of the case, profit estimated by the CIT (A) at 30% be reduced to 8%. For the above proposition, he relied on the following decisions: i) Sampada Homes vs. ACIT (ITA No.95-97/Hyd/2018) & 236 to 238/Hyd/2018 ACIT vs. Sampada Homes. ii) Sri Sri Estates vs. ACIT (ITA No.2242-2245/Hyd/2017) iii) Damodar Reddy Kaiti vs. ACIT (ITA No.1630- 1631/Hyd/2018) 13.14 The learned DR in his rejoinder submitted that the learned CIT (A) on his own adopted a method of 30% estimated profit which is not at all justified under the facts and circumstances of the case. He submitted that the entire on- money, evidences of which were found during the course of search, should be added to the total income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the detailed reasonings given by the learned CIT (A) on this issue, we do not find any infirmity in his order in rejecting the books of account. The ground raised by the Revenue on this issue is accordingly dismissed. 14.1.1 So far as the deletion of Rs. 13.61 crores for the A.Y 2014-15 is concerned, we find the assessee during the survey has already offered the income from such on-money which has been taxed by the Assessing Officer. Therefore, we concur with the findings of the learned CIT (A) holding that no additional profit on account of on-money receipt is required to be taxed in the hands of the firm for the current year. Following similar reasonings, we hold that the additions for the A.Ys 2015-16 and 2016-17 in the hands of the firm are rightly deleted by the learned CIT (A). The grounds raised by the Revenue on this issue are also dismissed. 14.2. So far as the arguments of the learned Counsel for the assessee on the issue of distribution of on-money receipts among various AYs and the estimation of income on the same is concerned, we find it is an admitted fact that survey was also done on the same project and the income was offered and assessed by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) on suppressed turnover of the assessee shown in the return of income u/s 153A by observing as under: 8.3. In our view, the turnover pertains to for A.Ys. 2013-14 and 2014-15 as per AO in remand report was 1,94,36,250/- and suppressed turnover was Rs. 1,11,76,750/- . In our view, though the assessee has declared the business income u/s 44AD @ 8%, for the year 2013-14 however, in our view, the finding of the ld.CIT(A) was not correct whereby he had directed to compute the income of the assessee by applying the rate of 40% on the entire turnover. Moreover, the ld.CIT(A) in para 9.5 had categorically recorded as under : "During the course of appellate proceedings, the contention of the assessee's AR is that the assessee has shown the profits and capital gains from the sale of the said 11 independent houses and 7 plots in the respective AYs from AY 2011-12 to AY 2015-16, in the Returns filed u/s,153A. The detailed statement showing the year wise sales with regard to the 11 independent houses and 7 plots, AY wise, was furnished, along with supporting evidences, which were forwarded to the Assessing Officer, for examination and report thereon. The Assessing Officer, vide his Rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l issue wherein profit rate of 10% as against 40% adopted by the CIT (A) on suppressed income was held to be reasonable. The relevant observation of the Tribunal vide para 7.1 and 7.2 read as under: 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 based on the trend in the industry. In the case of Sri Narendar Reddy Maddi Vs. ITO in ITA No. 871/Hyd/2016 for AY 2011-12, on similar issue, the coordinate bench has held as under: "6. We have considered the rival contentions and perused the statements placed on record and the case law relied upon. As seen from the order of the AO, the order was an ex-parte order, therefore assessee was not in a position to explain the nature of receipt. Before the Ld.CIT(A), necessary explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 14.6. Considering the totality of the facts of the case and considering the fact that the assessee has already offered the additional income to the tune of Rs. 6.00 crores in the return of income filed for A.Y 2016-17 to 2019-20, we modify the order of the learned CIT (A) and direct the Assessing Officer to adopt the profit rate of 15% on the unaccounted receipts of Rs. 68.17 crores for the A.Y 2016-17 to 2020-21, the details of which are already given at Para No.13.11. The grounds raised by the Revenue on this issue are accordingly dismissed and the grounds raised by the assessee are partly allowed. 15. Ground of appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search. 17.1 He submitted that during the course of survey operation u/s 133A which was conducted on assessee firm on 9.9.2015, the assessee has offered income on the same project during the survey and assessments were completed by the AO after the survey. However, in the instant case, no incriminating material, whatsoever, was found during the course of search. Therefore, no addition can be made in 153A assessment. For the above proposition, the learned Counsel for the assessee relied on the decision of the Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (P) Ltd reported in (2023) 149 Taxmann.com 399. 17.2 The learned DR, on the other hand, strongly supported the order of the learned CIT (A) in upholding the validity of proceedings u/s 153A. Referring to Para 1.1.1.5 of the order of the learned CIT (A), the learned DR drew the attention of the Bench to the findings given by learned CIT (A) where he had given exhaustive details while upholding the validity of the assessment u/s 153A. He submitted that apart from the statements from various persons, independent customers and their payments received in cash was found during the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer examined the same by calling for the impounded material and noted that the actual cash expenditure available in cash book maintained from 23.08.2018 to 9.10.2015 was only Rs. 9,83,81,122/- as against the claim of the assessee at Rs. 18.68 crores. The Assessing Officer confronted the same to the M.D of the assessee company to which the M.D replied as under which has been extracted by the Assessing Officer which reads as under: "Q.15: As per your earlier submissions and during the PO proceedings in the case of M/s. Skill Promoters Pvt Ltd, you have claimed the cash expenditure of Rs. 18.68 crores against the cash receipt of Rs. 32 crores found out during survey proceedings. However, upon verification of impounded material found during the survey operations conducted by DCIT, Circle 14(1), it is noticed that the cash expenditure found in impounded material is only at Rs. 9,83,81,222/-. Please explain the discrepancy and submit from where the expenditure of Rs. 18.68 cr was arrived at by your concern and also show-cause why the difference of Rs. 8,84,18,778/- claimed as excess expenditure by your firm should not be brought to tax as additional income on account of cash r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed to have received on-money of Rs. 32 crores and claimed cash expenses of Rs. 18.68 resulting in taxable income of Rs. 13.32 crores. The assessments for AY 2015-16 and AY 2016-17 have been completed by the then AO wherein a total sum of Rs. 13.32 crores was offered by the assessee to tax as income on the on-money receipts. However, after search, the assessee was asked once again to provide evidences in support of the cash expenditure of Rs. 18.68 crores found during the survey proceedings. The impounded material during survey was called for and examined again. Upon verification of the said impounded material, it was noticed by the Assessing Officer that the actual expenditure available in cash books was only Rs. 9,83,81,222/- as against the claim of the assessee at Rs. 18.68 crores. On being questioned, the Managing Director Shri Syed Mohd Aslam stated that the claim of expenditure of Rs. 18.68 crores on cash receipts of Rs. 32 crores during survey was accepted by the A0 and assessments were completed. However, as no proper books being maintained with regard to cash expenditure, they have not maintained record of expenditure incurred for various miscellaneous expenses and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view his own decision directly or indirectly unless there is material evidence to show that the earlier decision arrived at was incorrect or new facts were discovered during search. This principle was elucidated by the Hon'ble Supreme Court in the case of CIT vs Sun Engineering Works Pvt. Ltd., (1992) 198 ITR 297. The ratio of the Hon'ble Supreme Court is directly applicable to the facts of the present case. It is evident from the impugned assessment order that the AO sought to re-examine the impounded material during survey to arrive at a different conclusion which is nothing but reviewing one's own decision which is impermissible in law. Therefore, the addition made on account of unsubstantiated cash expenditure of Rs. 5,53,56,091/- does not sustain. 7.5.3 Even otherwise, the income on account of on-money receipts/ cash receipts was estimated @30% on the gross receipts while adjudicating the appeal on this issue by rejecting the books of account. It was held by the jurisdictional High court of Andhra Pradesh in M/s. Indwell Corporation vs CIT (1998] (232 ITR 776) (AP) that once the books are rejected and the income is estimated, no new disallowance can be made on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier decision arrived at was incorrect or new facts were discovered during search. However, we find from the impugned assessment order that the AO sought to re- examine the impounded material during survey to arrive at a different conclusion which is nothing but reviewing one's own decision which is impermissible in law. Therefore, we concur with the finding of the learned CIT (A) that the addition made on account of unsubstantiated cash expenditure of Rs. 5,53,56,091/- cannot be sustained. 18.4 We further find the income on account of on-money receipts/cash receipts was estimated @15% on the gross receipts while adjudicating the appeal on this issue by rejecting the books of account the details of which are given in the preceding paragraphs. It has been held by the Hon'ble jurisdictional High court in the case of M/s. Indwell Corporation vs CIT (1998] (232 ITR 776) (AP) that once the books are rejected and the income is estimated, no new disallowance can be made on the same set of books. Since in the instant case the income has been estimated @15% of the gross cash receipts, therefore, it is deemed that the assessee has incurred the remaining 85% as its expenses. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorities to adjudicate the issue. However, since it is the case of the assessee that the TDS has been deducted by the customers in the name of M/s Skill Promoters (Firm) which was subsequently changed to M/s. Skill Promoters (P) Ltd and such TDS is supported by Form 26AS, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to verify the claim of such TDS credited and decide the issue as per law after giving due opportunity of being heard to the assessee. The grounds raised by the assessee are accordingly allowed for statistical purposes. 20. The next issue which is common for A.Y 2017-18 to A.Y 2020-21 relate to the order of the CIT (A) in deleting the disallowance of personal expenditure made by the Assessing Officer at Rs. 50,000/-, Rs. 46,50,000/-, 1,53,10,000/- and Rs. 18,00,000/- for A.Y 2016-17 to 2019-20 respectively. 20.1 Facts of the case, in brief, are that as per the seized material, the Assessing Officer noted that the total cash expenditure found as per Annexure - A/SPPL/SMA/05 to A/SPPL/SMA/38 was at Rs. 36,06,09,309/- from 09.01.2017 to 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personal in nature and cannot be allowed as a business expenditure. The amount of Rs. 5,00,000/- out of the total amount of Rs. 2,24,60,000/- pertains to this year. We find the learned CIT (A) deleted the additions, the reasons of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the CIT (A) on this issue. Admittedly, the so-called expenditure which according to the Assessing Officer is personal in nature was found from the seized documents which contain both income as well as expenditure. The income from such unrecorded sales has already been estimated in the preceding paragraphs. It has been held by the Hon'ble jurisdictional High Court in the case of M/s. Indwell Corporation vs. CIT (1998) 232 ITR 776 (A.P). Once the books were rejected and the profit was estimated no further disallowance can be made on the same rejecting the books as the expenses gets subsumed in the estimation of profit. Since the learned CIT (A) while deleting the addition has followed the decision of the Hon'ble jurisdictional High Court, therefore, in absence of any contrary material brought to our notice by the learned DR, the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly argued that there would not be any difference between the sale receipts of Rs. 5620.71/- sq.ft and the estimated cost of Rs. 5659.72/- sq.ft. It was further, submitted that there is no conversion of stock in trade into capital asset in the current year. The assessee company has only leased the property as a builder as a business model to attract the customers so that the property can be easily sold out which does not amount to conversion to capital asset. It was pointed out that nowhere in the provisions of sec 28(via) it is mentioned that leasing out the property leads to conversion of stock in trade to capital asset. Also it was argued that there is no commercial exploitation of the property by the assessee company. It was accordingly argued to delete the addition of Rs. 78,24,80.921/-. 21.3 Based on the arguments advanced by the assessee, the learned CIT (A) called for a remand report from the Assessing Officer. After considering the remand report of the Assessing Officer and rejoinder of the assessee to such remand report, the learned CIT (A) deleted the addition by observing as under: 21.4 Aggrieved with such order of the learned CIT (A), the Revenue is in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair market value of space area to the semi constructed area. Referring to the provisions of section 28(vi)(a) and Rule 11UAB, he submitted that the method adopted by the Assessing Officer is totally wrong and based on incorrect appreciation of facts. He submitted that after appreciating the facts properly, the learned CIT (A) has given relief which is in accordance with law and therefore, the same should be upheld and the grounds raised by the Revenue should be dismissed. 24. We have heard the rival arguments made by both sides, perused the orders of the AO and the CIT (A) and the Paper Book filed on behalf of the assessee. We find the assessee in the instant case has received total commercial space of 14,42,896 sft in Block A as consideration for developing the entire project. Out of the above, the assessee sold 669150 sft and leased out 532376 sft in different floors. We find the Assessing Officer applying the provisions of section 28(vi)(a) held that the assessee has converted the unsold inventory of 532376 sft into fixed asset and therefore, brought the same to tax as business income. While doing so, the Assessing Officer took the fair market value of the area sold at Rs. 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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