TaxTMI 
TaxTMI 
2023 (5) TMI 277
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....e the issues raised in the assessee's appeals as well as the Revenue's appeals are interconnected therefore, for the sake of convenience, all these appeals are clubbed, heard together and disposed off in this consolidated order. Appeal wise adjudication is given in the following paragraphs. I I.T.A. Nos.9, 10 & 11/Viz/2023 (AYs: 2017-18, 2018-19 & 2019-20) (Assessee's appeals) 2. The assessee filed these appeals for the AYs 2017-18, 2018-19 & 2019-20. In these appeals, the assessee has raised six similar grounds of appeal therefore, for the sake of convenience, we shall take up ITA No. 09/Viz/2023 (AY 2017-18) as a lead appeal. 3. Brief facts pertaining to the assessee's appeal for the AY 2017-18 are that the assessee is a firm deriving income from Real Estate business filed its original return of income for the AY 2017-18 on 27/10/2017 admitting a total income of Rs. 52,28,070/-. A search and seizure operation U/s. 132 of the Act was conducted on 28/03/2019 in the case of the assessee-firm at its registered premises wherein certain incriminating material was found and seized. Subsequently, the case was centralized by the order of the Ld. Principal Commissioner of Income Tax-....
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....ficer has made the addition without proper jurisdiction since the addition made on the basis of incriminating material found in the third party premises but not in the premises of the appellant. 3. The Ld. CIT(A) ought to have considered that the Assessing Officer has made additions on mere dumb documents and rough notings which do not have any evidentiary value and would have allowed the contention of the assessee firm. 4. The Ld.CIT (A) is not justified in holding that the assessment made by the Assessing Officer as valid without bringing any substantial evidence that the assessee has received the sale consideration over and above consideration received as per the sale. 5. The Ld. CIT(A) is not justified in upholding the assessment made as valid which was completed on mere surmises and conjectures. 6. The appellant craves to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary." 6. At the outset, the Ld. Authorized Representative [Ld. AR] submitted that the assessee has entered into two agreements with customers ie., one for sale of flats and another for additional works. The Ld. AR furth....
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....arious contractors, they have denied carrying out of any additional work as per the agreements and stated that these documents were signed as per the directions of the Managing Partner of the assessee-firm Mr. Chindripu Murali. The Ld. DR therefore submitted that the assessee has diverted its income through his employees and contractors and therefore pleaded that the order of the Ld. AO be upheld. The Ld DR also referred to sworn statements recorded by various contractors stating that they have not performed any work but has only acted only on the directions of the Managing Partner Shri Chindrippu Murali. Countering the arguments of the Ld. DR, the Ld. AR submitted that the details of agreement with contractors with whom it was entered into and who are in receipt of the funds directly from the customers have filed their return of income by admitting the Net Profit of 8% on the agreement values. The Ld. AR therefore pleaded that since the contractors have already admitted the income while filing their return of income, again it cannot be added in the hands of the assessee. 7. We have heard both the sides and perused the material available on record as well as the orders of the Ld. ....
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....in their bank accounts. In the light of the discussions as above, we find that the Ld. AO has no material justification for adopting the uniform rate of Rs. 3,400/- per sq ft in the hands for the assessee as its turnover for the impugned assessment year. We also find from the arguments put forth by the Ld. AR as well as the material placed before us, there are two different agreements entered into by various customers ie., one for the sale of flat and another agreement is for carrying out the additional works. It is also clearly demonstrated and established by the Ld. AR that the customers have directly made the payments to the contractors as per the additional works agreement. The only contention of the Revenue is that since the additional works are carried out through the employees of the assessee, therefore the Revenue considered it as diversion of turnover of the assessee. However, we find that since the customers have directly made the payments to the contractors for the additional works carried on by them and either the receipts or payments have not been passed through the assessee's books of account, it cannot be considered as a turnover of the assessee. Therefore, consideri....
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....se, the assessee filed return of income on 06/02/2021 admitting the same income of Rs. 81,46,560/-. Subsequently, notice U/s. 143(2) of the Act dated 13/2/2021 and notice U/s. 142(1) of the Act dated 17/3/2021 were issued and served on the assessee. In response to the notices, the assessee furnished the information as called for by the Ld. AO. Considering and examining the information furnished by the assessee, the Ld. AO found that the assessee-firm has suppressed its receipts for its various projects. The Ld. AO therefore framed the assessment by making an addition of Rs. 2,47,75,250/- to the returned income and determined the assessed income at Rs. 3,29,21,810/-. The Ld. AO while making the above addition, rejected the books of accounts of the assessee and adopted the uniform rate of Rs. 3,400/- per sq ft as sold by the assessee and proposed the net profit @ 12.5% considering the income admitted by the similar business concerns. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). 14. Before the Ld. CIT(A), the assessee submitted various documents and pleaded that uniform rate of Rs. 3,400/- per sq ft cannot be adopted by the Ld. AO. After c....
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....respect of profit percentage adopted at 12.5% and not otherwise. Also the seized material contained details of cash receipts on sale of residential units in the venture Hasini Platinum County in addition to the payments received through banks, which was not repudiated by the assessee firm. 4. The Ld. CIT(A) erred in overlooking the fact that, the assessee firm had entered into two agreements with the customers for sale of each flat, one for sale of basic structure and other for additional works. The additional works agreements were normally in the names of workers or employees of the assessee firm, who are receiving payments from customers and transferring the money to parties to whom the payments were due from the firm as per the directions of the Managing Partner of the firm. Sworn Statements were recorded from the employees of the assessee firm and all of them had denied to have undertaken such works or even did not have idea of any such agreements. Thus, it was obvious that the receipts from additional works were effectively used by the firm only, but that the same were not disclosed in the returns. 5. The Ld. CIT (A) erred in not appreciating the AO's action of rejection o....