Estimated profit taxation for land aggregators upheld as unaccounted developer cash receipts were not treated as entire income.

Unaccounted cash received by land aggregators from a developer was treated as income only to the extent of estimated profit, rather than as their entire undisclosed income. The agreements, statements and transaction pattern showed that the aggregators pooled land, used funds for land procurement and related development, and acted as intermediaries rather than owners trading in the full land value. Taxing all cash receipts as income was inconsistent with that business model and the developer's estimated-profit assessment. Income was estimated at 10% of unaccounted cash receipts, inclusive of income already admitted where applicable; a lower 4% estimate was not accepted.

---

---

Issues: Whether unaccounted cash received by land aggregators from the developer was taxable wholly as undisclosed income or only on an estimated profit basis.

Analysis: The agreements, statements and transaction pattern established that the assessees pooled land for the developer, with land being transferred substantially from landowners to the developer and funds received being used for land procurement and related development. The assessees were therefore mediators/aggregators rather than owners trading in the entire land. Taxing the full cash receipts as income was inconsistent with this business model and with the developer's own estimated profit assessment. The estimation of 10% of the unaccounted cash receipts, inclusive of income already admitted where applicable, was found reasonable; the assessees' claim for restriction to 4% was not accepted.

Conclusion: The estimation of income at 10% of unaccounted cash receipts was sustained, against both the Revenue and the assessees.

---