TaxTMI 
TaxTMI 
2024 (1) TMI 542
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....e 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 maintaining a cash book of cash received from time to time wherein the details of the expenditure made in cash by the Site Supervisor Mr. Sujath Ali are mentioned. He observed that the assessee was confronted about these materials and Mr. Sujat Ali, in his statement recorded u/s....
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....icer 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 the buyers and the sale value at which the commercial space is being registered. Further during the search operation, a pen dr....
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....2 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 ....
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.... filing our return. (ii) In 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 discove....
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....FYs 2008 09 to 2019-20 along with workings. It was 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 ....
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....ddin & Husna Jabeen Rs. 37,00,000/- out of which an amount of Rs. 23,00,000/- received in cash and Rs. 14,00,000/- through bank 36-51 Sale Register for the FYs 2008-09 to 2019- 20 along with year-wise receipts In this register, all the details of sales 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 ....
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....account of these cash expenses to the tune of Rs. 39.29 crores in various years. In other words, the fact that there were unrecorded cash expenses was accepted by the AO in the assessment order. Therefore, the action of the A0 in bringing to tax the entire on-money receipts on gross 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 ....
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....lier paras, the disallowance u/s.40A(3) of cash expenditure by the AO himself goes on to prove that AO recognizes the incurring of cash expenditure, which otherwise could not be disallowed if the same were not recognized as expenditure. In other words, the AO taxing the cash receipts on gross 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 ca....
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....Hence the profits on on-money receipts are estimated at 30% of the total cash receipts. This would be in tune with the principle of consistency between survey and search proceedings. This estimate is applied only to the on-money receipts and not to the book results. Since the search team or the AO did not find 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 ....
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....ey receipts remained to be taxable in the current year in the hands of the firm. Hence the Assessing Officer is directed to delete the addition of Rs. 13.61 crores on this issue. Accordingly, the grounds of appeal related to this issue are PARTLY ALLOWED". 12. So far as the addition u/s 40A(3) is concerned, the learned CIT (A) directed the Assessing Officer to delete the same by observing as under: "8.5. I have carefully considered the submissions of the appellant, the order of the Assessing Officer, the evidence filed by the appellant's AR, as well as the comments of the Assessing Officer thereon. Briefly the facts are, seized material indicating cash expenses 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 mer....
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.... apply only where expenditure in question has been incurred and claimed in the computation of income. The Supreme Court, in the case of Attar Singh Gurmukh Singh Vs. Income Tax Officer, Ludhiana (191 ITR 667), reiterates this position as well. In the present case, the Tribunal confirms as a finding of fact at para 17 of its order that no expenditure has been incurred except the investment in gold The consideration paid towards the investment has been duly brought to tax as unexplained income, such income not having been claimed as expenditure in the computation of income The objection of the Revenue is that the valuation of the gold per gram is not Rs. 500 but more as revealed by to her disallowances 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 whol....
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.... in which compliance with the requirements contained in section 4OA(3) can be dispensed with are those stated in rule 600 of the income-tax Rules Unless a person falls within one or the other clauses of rule 600, he has necessarily to comply with the requirements of section 40A(3) Further, if an assessee says that he is entitled to take advantage of a particular clause in rule 6DD, he must satisfy the requirements of that clause, which means that, in this case, the assessee who is seeking to claim the benefit of clause () in rule 6DD, has not only to satisfy that having regard to the nature of the business there was a genuine difficulty in complying with the requirements of section 40A(3) he must also 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 ....
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....ignored by the income-tox officer, there may not have been any difficulty in upholding that order. But, when he proposes to add back an exact item in the profit and loss account, he was relying on the rejected books which he could not do as held by the Bench of this court in Maddi Sudarsanam Oil Mills Co. v. CIT (1959] 37 ITR 369. There is also further difficulty if Section 40, as argued by learned counsel, is to be taken into account even after making an estimate. When there are certain other deductions which are to be disallowed such as wealth-tax payment in section 40, can it be said that after making an estimate, the wealth tax charged in the P&L A/c should again be added back to the profit. This example illustrates 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) 2....
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..... The Ld. CIT(A) erred on facts and in law in rejecting the books of accounts and holding that the addition made by the AO on account of undisclosed sale Consideration received in cash is not correct as the assessee has failed to demonstrate its eligibility for telescoping and resultant rejection of books of accounts. 3. Ld. CIT(A) erred on facts and in law by deleting disallowance u/s 40A(3) in view of the fact that the rejection of books of account by the CIT(A) is not accepted. 4. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary. 13.3 The Revenue has filed the following additional grounds: "1. The learned CIT (A) erred in rejecting the books of account on one side and accepting the books results on the other side. 2. Without prejudice to 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 adjudica....
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....sh receipts on sale of property) 13,61,00,000/- 2 Disallowance u/s 40A(3) 26,93,878/- 2. Aggrieved by the above additions / disallowances, the assessee filed an appeal before CIT(A)-12, Hyderabad. The decision of the ld. CIT(A) is analyzed issue-wise under: 2.1. Addition towards undisclosed income w.r.t. cash receipts on sale of property Rs. 13,61.00,000/-. 2.1.1. It was found from the seized material that the assessee has received cash over and above the registered value of the property, which was not accounted for in the books of account. It was verified from the books of accounts maintained in Tally by the assessee that it is recognizing sale consideration only to the extent of amount received through banking channel. Hence, an amount of Rs. 13,61,00,000/ - was treated as undisclosed income w.r.t. cash receipts (on money receipts) and added back 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....
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....eived through banking channels. Hence, the non- entry of the sale consideration received by the assessee in cash cannot be the basis for rejecting the books of accounts. Further, in respect of the books of account maintained by the assessee, where it accounting is only the receipts routed through banking channel, there were no discrepancies noticed. Generally, books of accounts would be rejected if any discrepancies have been found. In the assessee's case, assessments have been completed u/s. 143(3) and 147 and the Assessing Officer has not found any discrepancies so as to reject the books of accounts. The addition on account of undisclosed income with reference to cash receipts (on money receipts) on sale of property was made on the basis of incriminating material found during the course of search, which was out of the books of account. Hence, there is no point of rejecting the books of account by the learned 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 menti....
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....'ble Bench to consider the above and pass necessary orders in favour of the Department. 13.8 The learned Counsel for the assessee, on the other hand, while partially supporting the order of the learned CIT (A) to the extent of rejection of book results submitted that estimation of profit at 30% in the hands of the assessee is on the higher side. He filed the following written submission stating that while the rejection of books of account of the assessee and the estimation of income of the unrecorded receipts by the CIT (A) is justifiable, however, such estimation at abnormal rate of profit is not justified for the following reasons: i) Registration charges:- The alleged-on money receipts found to have been recorded in the so-called Seized material includes registration charges relating to the buyer. They were received from the respective buyers and were paid to the registrar as registration charges and stamp duties on behalf of the clients. Though they are not part of the sale consideration, for the sake of convenience registration charges were received from the buyers and paid back towards statutory payment. ii) Cost of additional services; The above said....
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.... Officer after the survey. Thus, the income offered on the same project during the survey cannot again be added in search proceedings as it would amount to double taxation. He submitted that since the assessee has disclosed income of Rs. 13.00 crores on cash receipts during the survey, the ld CIT (A) has rightly excluded these turnover from the on-money receipts of Rs. 112.41 crores. However, he should have also excluded the on-money receipts of Rs. 14.74 crores relating to A.Y 2008-09 to 2013-14 since these A.Ys are not covered under the search assessment. The learned Counsel for the assessee accordingly requested to exclude an amount of Rs. 44.24 crores i.e. Rs. 29.50 crores (AYs 2014-15 to 2016-17) + Rs. 14.74 crores (i.e. A.Y 2008-09 to 2013-14) from the turnover of Rs. 112.41 crores since the assessee has offered Rs. 13.00 crores net income on the receipts. He accordingly submitted that the on-money receipts of Rs. 14.74 crores should also have been excluded and only Rs. 68.17 crores should have been distributed among the AYs 2016-17 to 2020-21 in the hands of the company which is as under: A.Y Cash Receipts (Cr.) (A) Additional Income offered (B) 2016-17 8.29 ....
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....ioned that the assessee has incurred expenses to the extent of Rs. 39.29 crores which were found during the course of search and which were not recorded in the books of account. We find the Assessing Officer after going through the entries in the seized documents, which were not recorded in the books of account, made disallowance u/s 40A(3) of the Act on account of cash expenses exceeding the specified limit to the tune of Rs. 39.29 crores. Since there cannot be a selective use of the seized material that only favours the Revenue ignoring the other evidences found during the course of search showing incurring of expenditure, the learned CIT (A), in our opinion, is justified in rejecting the books of account and estimating the profit. 14.1 As per the provisions of section 292C of the Act where any books of account, other documents etc., are found in the possession or control of any person in the course of a search u/s 132 or survey u/s 133A of the Act, it is presumed that such books of account, other documents etc., belong to such person and that the contents of such books of account and other documents are true. Since in the instant case admittedly unaccounted cash receipts as w....
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....14). We accordingly direct the Assessing Officer to distribute the cash receipts of Rs. 68.17 crores among the A.Y 2016-17 to A.Y 2020-21. 14.3 Now coming to the question of estimation of income on such cash receipts is concerned, we find while the Assessing Officer taxed the entire cash receipts as income, the learned CIT (A) restricted the same to 30% of the cash receipts. It is the contention of the learned Counsel for the assessee that estimation @ 30% on such receipts is very high especially when such cash receipts are on account of registration charges received from customers, cost of additional services rendered by the assessee at the request of the customers and repetition of entries. We find some force in the above argument of the learned Counsel for the assessee. A perusal of the seized documents containing the on- money receipts shows that it includes registration charges received from the buyers as per bill, cost of additional services provided as per specification by the buyers etc. Further, there are also certain repetition of entries in the seized documents. The learned DR also fairly conceded that the seized documents contain registration charges and certain expe....
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....las issues hence cannot be relied upon. Nonetheless, it is an undisputed fact that the assessee received its share in the project which has duly been mentioned by the Assessing Officer in para 6 of his order, wherein it was mentioned that M/s. Sri Nilaya Constructions developed a venture at Badangapet in an area of 24 acres and in the return of income on pages 62, 66, the assessee had duly mentioned the profit from Sampada homes which was calculated by the assessee based on estimating the profit at 8% of the turnover. 9. In our view, though the co-ordinate Bench of the Tribunal had applied the rate of 10% as against 40% applied by CIT(A) on the suppressed turnover, however considering the totality of the peculiar facts of the present case, when the assessee had Admitted the total turnover in the return of income filled under section 153A and had shown profit at the rate of 8%, whereas Assessing Officer held total turnover as income of the assessee and CIT(A), we are of the opinion that rate of 15% is required to be applied as against 40% as applied by CIT(A) on the suppressed turnover of the assessee shown in the return of incomes filed under section 153A of the Act for es....
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.... in the case of CIT Vs. Gurubachhan Singh J. Juneja [215 CTR 509] (Gujarat-High Court) and CIT Vs. Sharda Real Estate (P.) Ltd., [99 DTR 100] (MP-HC). In the case of Jyotichand Bhaichand Saraf & Sons (P.) Ltd., Vs. DCIT [139 ITD 10] the Co-ordinate Bench at Pune has confirmed that the addition could only be made only to an extent of gross profit earned on an unaccounted/ suppressed sales and not on the entire sales itself. Similar view was also taken in the case of ACIT, Cir1 Vs. M/s. Archana Trading Co in ITA No. 351 & 352/Coch/2011, dt. 28-02-2013 and also ACIT Vs. Pahal Food in ITSSA No. 42/Hyd/2005, dt. 30-09-2009, ITAT, Hyderabad. 6.1. Respectfully following the principles laid down by various High Courts and Co-ordinate Bench decisions, we are of the opinion that the entire turnover cannot be brought to tax as such and there can be reasonable profit estimation on the above amount. Generally income is estimated at 12.5% in the case of big contracts and since assessee 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. Accordingl....
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....e find the learned CIT (A) while deleting the addition held that the provisions of section 40A(3) do not apply when the income is estimated. While doing so he relied on the decision of the Hon'ble jurisdictional High Court in the case of M/s Indwell Constructions (1998) reported in 232 ITR 776 (A.P) where it has been held that no disallowance u/s 40A(3) can be made when the books 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) of the Act. Thus, the ground raised by the Revenue on this issue is also dismissed. 17. So far as the appeals filed by the assessee for the A.Ys 2014-15 to 2016-17 are concerned, the same relate to the validity of assessment u/s 153A in absence of any incriminating material. The learned Counsel for the assessee submitted that the initiation of proceedings u/s 153A is not in accordance with law....
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....cannot be accepted. 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. The learned CIT (A) at Para 5.1.1.5 of his order 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 order of the learned CIT (A) on this issue and the grounds raised by the assessee are dismissed. 18. So far as the ground of appeal No.4 by the Revenue for the A.Y 2016-17 is concerned, the same relates to deletion of Rs. 5,53,56,091/- by the learned CIT (A) which was added by the Assessing Officer on account of excess expenditure. Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedi....
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....ee and made addition of Rs. 5,53,56,091/- by observing as under: "5.2. However, the claim of assessee on account of miscellaneous and obligatory expenditure is not acceptable without any evidence as the assessee company does not have any evidence of all such cash expenses, except the expenditure claimed on account of Jewellery worth Rs. 3,30,62,687/- given to members given to Sri Sarath Gopal and family on account of which Sri Sarath & family members have admitted the additional undisclosed income of Rs. 3,30,62,687/- based on certain loose papers and bills found and seized bearing Page Nos 20 to 24 of Annexure- A/BSG/RES/03 received by them from Sri Syed Mohd Aslam during the search and seizure proceedings. Accordingly, difference of Rs. 5,53,56,091/- (8,84,18,778 - 3,30,62,687/-) is brought to tax as additional income on account of Rs. 112.26 crores cash receipts received by assessee company over and above cheque receipts reflected in the books of accounts for the assessment year 2016-17 relevant to financial year 2015-16 in which such expenditure was claimed against the cash receipts of Rs. 112.26 crores found during the search and seizure proceedings." 18.2 In appea....
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....eedings on an earlier occasion cannot again be subject to the proceedings u/s.153A without fresh evidences. It was pointed out that the provisions u/s.153A do not permit the income Tax authority to conduct roving enquiries without there being any incriminating material found during search. In view of the same, the AR requested for deletion of the said addition. 7.5.2 The contentions of the A0 and the AR were perused. It is not in dispute that during the survey proceedings the then A0 i.e, DCIT, Circle 14(1) has passed an assessment order assessing income of Rs. 13.32 crores against cash/on-money receipt of Rs. 32 crores for AYs 2015-16 & 2016-17. This implies that cash expenditure of Rs. 18.68 crores (Rs.32 crores - Rs. 13.32 crores) has been allowed during survey proceedings. During the proceedings u/s.153A, the A0 called for the material impounded during survey available with the DCIT, Circle-14(1) and on verification of the impounded material he has noticed that the cash expenditure of Rs. 9,83,81,222/- was found in the books as against Rs. 18.68 crores that was allowed during the survey assessment. From the above it is evident that the Assessing Officer sought to re-ex....
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.... on the basis of cash expenditure incurred between April, 2008 to December, 2015 as per survey proceedings and actual cash expenditure as per books of account. We find the learned CIT (A) deleted the addition, the reasons of which are already reproduced in the preceding paragraph. We do not find any infirmity in the order of the learned CIT (A) on this issue. It is an admitted fact that during the survey proceedings the then A0 i.e, DCIT, Circle- 14(1) has passed an assessment order assessing income of Rs. 13.32 crores against cash/on-money receipt of Rs. 32 crores for AYs 2015-16 & 2016-17. We find the Assessing Officer during the proceedings u/s 153A, called for the material impounded during survey available with the DCIT, Circle-14(1) and on verification of the impounded material noticed that the cash expenditure of Rs. 9,83,81,222/- was found in the books as against Rs. 18.68 crores that was allowed during the survey assessment. From the impounded survey material, he arrived at a different conclusion on the same facts that were used to assess income during survey. This in our opinion, is a change of opinion by the A0 in interpreting the material impounded during survey during t....
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.... 2020-21 2,33,353 19.2 He submitted that the customers have deducted the above TDS in the name of M/s. Skill Promoters (firm) which was subsequently dissolved and changed to M/s. Skill Promoters (P) Ltd. He submitted that since the firm has been succeeded by the impugned company, therefore, the assessee is entitled to get credit for the TDS deducted in the firm's name. He further submitted that the TDS so deducted by the customers is supported by Form 26AS. Referring to the decision of the Coordinate Bench of the Tribunal in the case of CES Ltd vs. DCIT vide ITA No.2088/Hyd/2018 he submitted that under identical circumstances, the Tribunal has restored the issue to the file of the AO with a direction to verify the claim of TDS credit and advance tax paid by the amalgamating company and allow the same. He accordingly submitted that this matter may be restored to the file of the AO with a direction to verify the same and give necessary credit of the tax so deducted by the customers. 19.3. The learned DR, on the other hand, submitted that since the tax has not been deducted in the name of the Company, therefore, the assessee is not entitled to get any credit of the same. He, ....
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.... addition of Rs. 2,34,60,000/- in various years the details of which are as under: S. No F.Y A.Y Personal expenditure 1 2016-17 2017-18 5,00,000 2 2017-18 2018-19 46,50,000 3 2018-19 2019-20 1,55,10,000 4 2019-20 2020-21 18,00,000 TOTAL 2,24,60,000 20.2 Before the learned CIT (A), the assessee filed certain evidences and made elaborate arguments based on which the learned CIT (A) called for a remand report from the Assessing Officer. The Assessing Officer in his remand report submitted that the assessee has not submitted any material or evidence with respect to the claim so made during the remand proceedings except merely submitting a note. The learned CIT (A) confronted the same to the assessee and after considering the remand report of the Assessing Officer and the comments of the assessee to such remand report deleted the addition by observing as under: 20.3. Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal. 20.4 We have heard the rival arguments made by both sides, perused the orders of the Assessing Officer and the learned CIT (A) and th....
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....ased out 5,32,376 sft in different floors. During the assessment proceedings, the A0 observed that the amended provisions of section 28(via) of the Act are applicable to the facts of the present case and the unsold inventory of 5,32,376 sft, that was converted into fixed asset or treated as fixed asset should be brought to tax as business income of the assessee. For calculating the business income on conversion to capital asset, the Assessing Officer took the fair market value of the area sold i.e. Rs. 5620.71 per sft as the value for calculating the fair market value for the stock in trade that was treated as fixed asset. The AO also calculated the expenditure incurred per sq.ft at Rs. 4150.92/- by estimating the additional expenses on the project at Rs. 80 crores. Thus, the AO worked out the fair market value of the stock in trade at Rs. 299,23,31,106/- (5,32,376* Rs. 5620.71) and total expenditure at Rs. 220,98,50,185/- (5,32,376*Rs.4150.91). Accordingly, the A0 calculated business income as the difference between the two at Rs. 78,24,80,92 1/- (Rs.299,23,31,106/- less Rs. 220,98,50,185/-) on account of stock- in trade being treated as fixed asset u/s.28(via) of the Act and adde....
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....lf in the activity of real estate. It has not completed the construction of the stock-in-trade and has not converted the stock-in-trade as fixed asset. Therefore, absolutely there is no reason for treating the stock-in-trade and bringing the same to tax u/s 28 of the I.T. Act. 23.1 Referring to the extracts of the balance sheet, he submitted that the assessee has shown work-in-progress of Rs. 3,465,702.166.78 and finished goods of Rs. 2.19 crores. The learned Counsel for the assessee further submitted that the assessee has additionally incurred cost of Rs. 297.00 crores after 31.03.2019 which has been incorrectly estimated by the Assessing Officer at Rs. 80.00 crores as further expenditure required for completion of pending work. He submitted that the computation of rate per sft by the Assessing Officer by considering the further expenditure at Rs. 80.00 crores is absolutely wrong. He submitted that if the additional expenditure as incurred totaling to Rs. 297.00 crores is considered, then the cost per sft would be Rs. 5659.72. He submitted that since the assessee has received Rs. 5620.71 per sft on account of sale as computed by the Assessing Officer, even then the cost per sft....
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....pursuance of the JDA would be a business asset and has been continuously treated as stock-in- trade. From the balance sheet filed by the assessee, we find that the entire expenses towards development of the project area shown as "work in progress" since inception and continues to be shown as such even for the impugned A.Y. The fixed asset as on 31.3.2019 in the balance sheet is Rs. 4.18 cores whereas the inventory is shown at Rs. 348.76 crores. We further find the assessee has not claimed any depreciation on the inventory. Further, the assessee has offered the sale of built-up area as income from business and not as a capital gain and the Assessing Officer has accepted the same. We are of the considered opinion that the nature of the built-up area that was received by the assessee being a Developer in lieu of development of the land is stock-in-trade and this nature would continue to be so unless specifically converted into a capital asset. We concur with the findings of the learned CIT (A) that merely because some of the built-up area was leased out for earning rental income does not alter the nature of the asset and it would tantamount to exploitation of the unsold inventory to e....
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....penses in the cash book were incurred in the regular course of business and are not personal in nature. Hence, the AR requested for deletion of the said addition. 7.5.2 I have considered the submissions of the AR and the order of the AO. It is not in dispute that the cash book maintained at the construction site of the appellant contains certain entries that are in the name of the director Shri Syed Mohd Aslam & Others. These expenses vary over several years and were collated by the AO which totalled to Rs.2,24,60,000/-. The year wise amounts were mentioned in the assessment order. The question now is whether the alleged personal expenditure is allowable as a business expense u/s.37 of the Act? In the earlier paras of this order, the profit on on- money or cash receipt was estimated at 30% implying that 70% of the cash receipts were deemed as cash expenditure. Since, the profit was estimated @30% by rejecting the books of account there cannot be further additions on account of cash expenses reflected in the cash book of the appellant. This was so held by the jurisdictional High court of Andhra Pradesh in the case of M/s.Indwell Corporati....
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....estimate, the wealth-tax charged in the profit and loss account should again be added back to the profit. This example illustrates 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 assesses". In view of the binding decision of the Hon'ble jurisdictional High court of Andhra Pradesh cited above, the addition of Rs.5 lakhs made on account of personal expenditure is directed to be deleted. Accordingly, the grounds pertaining to this issue are ALLOWED. Document 3 9.5.4 (ii) clause (24) of section 2 so as to include such fair market value in the definition of income; (iii) section 49 so as to provide that for the purposes of computation of capital gains arising on transfer of such capital assets, the fair market value on the date of conversion shall be the cost of acquisition; (iv) clause (42A) of section 2 so as to provide that the period of holding of such capital asset shall be reckoned from the date of conversion or treatment. These amendments will take effect, from 1st April, 2019 and ....
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....n income. The appellant's argument that thre is a higher chance of sale of unsold inventory of pre-leased property cannot be brushed aside. Hence, it is held that the stock-in-trade continues to be treated as inventory in the appellant's books and the appellant has not converted it into capital asset in the current year for Section 28(via) to apply. Therefore, it is held that Section 28(via) does not apply to the facts of the appellant. 9.5.5 The AR has taken a without prejudice contention that the working of fair market value as on the date of conversion was incorrectly computed by the AO. It was stated that under Rule 11UAB(1)(i) of the IT Rules, the fair market value of the inventory being immovable property shall be the stamp duty as on the date of conversion and not the average sale price adopted by the AO. Secondly, it was stated that the AO erroneously estimated additional expenditure for completion of the project at Rs.80 crores, whereas, as per the AR, the estimated additional expenditure is to the tune of Rs.297 crores. If re-computed with the revised expenditure estimate the cost per sq.ft would work out to Rs.5659.72 which is....