AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 908
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....f ac.23.07 gts was purchased by the assessee and the same was converted into 325 plots of 200 sq. yards each. Out of these 325 plots, 207 plots were sold during the year under consideration and the remaining 118 plots had remained unsold out of which 78 plots were under litigation. In the P & L account filed along with the return of income, total sale consideration of the plots sold in this project was shown by the assessee at Rs. 12.26 crores. The material impounded during the course of survey however revealed that the total sale consideration received by the assessee from the said project was Rs. 15.33 crores. Accordingly, adopting the said sale consideration of Rs. 15.33 crore and deducting the corresponding purchase cost of land amounting to Rs. 10.03 crores, the difference of Rs. 5.30 crores was treated by the A.O. as the gross profit of the assessee from the project of Sai Royal Residency. He also found that page Nos. 29 to 32 of Annexure-A/SH/02 of the impounded material contained individual partners accounts and as per the working given therein, which was signed by all the partners, the profit of SRR Project was arrived at Rs. 2.90 crores up to November, 2007 and Rs. 1,08,8....
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....nce between Rs. 154 lakhs and Rs. 24.50 lakhs as expenditure incurred by the assessee in connection with lay out as well as sale of plots in Highway Heights project and accordingly, the said amount was also brought to tax by him in the hands of assessee for the year under consideration. 4. During the course of survey, certain documents were found showing that the assessee has sold 5.00 acres of land to one M/s. ETA Star Properties. In his statement, Mr. Balraj Goud, the partner of the assessee firm stated that assessee firm has sold 5.00 acres of land to ETA Star Properties P. ltd., for Rs. 3.45 crores out of which a sum of Rs. 1.05 crores only was received and the balance amount was in dispute. A statement of Mr. Ashraj Abdul Rehman Bukari, Director of M/s. ETA Star Properties Development P. Ltd., was also recorded by EDIT, Unit-II(3), Bangalore wherein he stated that one stretch of 5.00 acre in survey No.12 at Ushapur (v) was purchased from Smt. E. Ramadevi and others for a consideration of Rs. 1.25 crores while another stretch of 5.00 acre in the same survey number was purchased from the assessee firm for a sum of Rs. 1.25 crores. From the bank account of M/s. ETA Star Properti....
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....Deed. Secondly, the AO also, failed to consider the actual sale consideration of Rs. 4.25 crores i.e., Rs. 85 lakhs per acre as per impounded material." 6. Accordingly, notice under section 263 was issued by the Ld. CIT on 31.01.2003 pointing out the above errors and calling for the explanation of the assessee as to why the order passed by the A.O. under section 143(3) should not be revised by exercising his revisional powers under section 263. In reply, the following explanation was offered by the assessee vide its letter dated 06.03.2013. a) "The actual acquired land is only 23 acres 26 guntas against the plotted area of 25 Acres 15 guntas. The assigned land of 2 acres purchased could not be sold in the market hence it has no value. The actual consideration adopted by the A.O. of Rs. 15,33,38,000/- also includes additional amounts collected by the agents towards their commission. Therefore, it can not be said there was error in this regard. b) With regard to allowance of Rs.l,34,50,000/- it is stated that all the expenditure incurred is less than Rs. 20,000/-per day on each occasion of payment, therefore, provisions of section 40A(3) could not apply. c) The assessee is exc....
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....sed by the A.O. under section 143(3) to be erroneous as well as prejudicial to the interests of the Revenue. As regards the first three errors allegedly pointed out by the Ld. CIT in the computation of income of the assessee made by the A.O. in respect of Sai Royal Residency, he contended that the method adopted by the A.O. while finally estimating the income of the assessee from the said project was not properly appreciated by the Ld. CIT. He invited our attention to the relevant portion of the assessment order as appearing at page No.7 and pointed out that although the figures of sale consideration, land cost and development expenses were referred to by the A.O., the income of the assessee from Sai Royal Residency project was finally estimated by the A.O. on the basis of documents impounded during the course of survey wherein the profit from the said project as given in the working of partners accounts was shown at Rs. 3,98,88,000 for the year under consideration. He submitted that the profit of the assessee from Sai Royal Residency Project thus was not worked out by the A.O. on the basis of books of account and even the claim of the assessee that the profit appearing in the rele....
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....t application of law would satisfy the requirement of order being erroneous. He contended that these ingredients were very much there in the assessment order passed by the A.O. in the present case, as pointed out by the Ld. CIT making the said order erroneous as well as prejudicial to the interests of the Revenue and the Ld. CIT therefore was fully justified in setting aside the said order by exercising the powers conferred upon him under section 263. He also contended that the Ld. CIT vide his impugned order passed under section 263 has finally set aside the order passed by the A.O. with a direction to the A.O. to re-do the same after affording a reasonable opportunity to the assessee and the assessee will get an opportunity to putforth all his contentions before the A.O. on merit during the course of set aside proceedings. 9. We have considered the rival contentions and also perused the relevant material on record. It is observed that the order passed by the A.O. under section 143(3) for the year under consideration i.e. A.Y. 2008-09 in the case of the assessee is set aside by the Ld. CIT by his impugned order holding the same to be erroneous as well as prejudicial to the intere....
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....and proceeded to compute the income of the assessee from Sai Royal Residency project for the year under consideration at Rs. 3,98,88,000. It is thus clear that the profit of the assessee from Sai Royal Residency project was not determined or computed by the A.O. on the basis of books of account or any other working, but the same was estimated by adopting the figure of profit as given in the working of partners accounts in the impounded material as found during the course of survey. It is pertinent to note here that the basis on which the said figure was arrived at is neither given in the relevant impounded material (copies placed at page Nos.83 to 87 of the paper book) nor the A.O. has made any attempt to find out or ascertain the details of corresponding income and expenses giving such profit. Although he has treated the difference between sale consideration of Rs. 15.33 crores and land cost of Rs. 10.03 crores as gross profit of the assessee and presumed the difference between such gross profit and Rs. 3,98,88,000 as the expenditure incurred on land development, the fact remains that the profit figure of Rs. 3,98,88,000 as reflected in the working of the partners account as found....
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....plots. It therefore cannot be said that the income of the assessee from Sai Royal Residency project as finally estimated by the A.O. did not take into consideration the value of un-sold plots as alleged by the Ld. CIT. 11. Regarding the expenditure of Rs. 1,34,50,000 on account of land development allegedly allowed by the A.O., we have already observed that the income of the assessee from the Sai Royal Residency project was estimated by the A.O. on the basis of the working of partners capital account found recorded in the relevant impounded documents and the working made by the A.O. taking gross profit at Rs. 5,33,38,000 and presuming the balance amount of Rs. 1,34,50,000 being difference between the gross profit and net profit as expenditure incurred towards land development was just to support the said estimation. The said balance amount treated as land development expenditure thus was never claimed by the assessee and it therefore cannot be said that there was an error in the order of the A.O. in allowing the same. 12. As regards the error allegedly pointed out by the Ld. CIT in the order of the A.O. in allowing the land development expenditure and land cost paid in cash witho....
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....1 to 3, which were actually not there. 13. As regards the fourth and last error allegedly pointed out by the Ld. CIT in the order of the A.O. in taking the sale consideration of land at Aushapur at Rs. 1.25 crores instead of Rs. 3.75 crores for the purpose of computing the profit, it is observed that this issue was duly examined by the A.O. during the course of assessment proceedings and on such examination, the following material facts relevant to the issue were noted by him. a) "M/s. ETA has purchased five acres of land from M/s. Sri Surakshitha Homes which is registered on 21.05.2007 as document no 5644/07. b) The consideration as per the registered deed is Rs. 125 lakhs for 5 acres which is paid through cheque to M/s. Surakshitha Homes. c) M/s. ETA has paid 3.75 crores to M/s. Purnodaya Industries Ltd., D-12. Industrial Estate. Moulali, Hyderabad through cheque. d) M/s. ETA has gone to Court against M/s. Purnodaya Industries and an amount of Rs. 2.7 Cr lying in the three bank accounts of M/s. Purnodaya Industries and its associates is under attachment of the Court." 14. After taking into consideration the above facts as well as the material available on record and the sub....