TaxTMI 
TaxTMI 
2026 (1) TMI 121
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....Tax (Appeals)-12, Hyderabad, relating to the respective assessment years tabulated hereinabove in the above cause title. Since common issues are involved in all these 30 appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity. 2. First, we take up assessee's appeal in ITA. No. 518/Hyd/2025 for the assessment year 2019-2020 and Revenue's appeal in ITA.No. 308/Hyd/2025 for the assessment year 2019-2020 as "lead" appeals. ITA.No. 518/Hyd./2025 - A.Y. 2019-2020 [Assessee's Appeal] : 3. The assessee has more or less raised common grounds of appeal in all these appeals. Therefore, for the sake of brevity, the grounds of appeal filed by the assessee in ITA.No. 518/Hyd./2025 for the assessment year 2019- 2020 in the case M/s Skandhanshi Infra Projects India Private Limited are reproduced as under: 1. "On the facts and in the circumstances of the case, the order passed by the Id. CIT(A) allowing the appeal only in part is erroneous and unsustainable on facts and in law. The Id. CIT(A) ought to have allowed the appeal in entirety, as prayed for. 2. On the facts and in....
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....hat, M/s Skandhanshi Infra Projects India Private Limited is part of 'Skandhanshi Group', is engaged in the business of real estate development, filed its return of income for the assessment year under consideration u/sec. 139 of the Income Tax Act, 1961. A search and seizure operation u/sec.132 of the Income Tax Act, 1961 was conducted in the case of assessee and it's group concerns on 05.01.2022 and the last of the prohibitory orders u/sec.132(3) of the Income Tax Act, 1961 was lifted on 08.03.2022 and simultaneous survey action u/sec. 133A of the Income Tax Act, 1961 was also conducted in respect of related business entities. In the course of the proceedings relating to search and survey operations, certain material was seized/impugned. The seized / impounded material is in the nature of loose sheets, electronic data, books and documents. Statements from various persons including Sri Suresh Kumar Reddy, Chairman and Managing Director of the Skandhanshi Group were also recorded u/sec.132(4), 132(1) and 132(1A) of the Income Tax Act, 1961. 6. During the course of search and seizure operations at various premises of the assessee, after analysis of seized materials to....
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....ortage of skilled and professional manpower, high attrition rate, thin attendance, unbridled access to computer systems in various business location of the assessee. The assessee further submitted that, during the course of assessment proceedings, an exercise was done to extract the books of accounts from ERP back-up taken during the course of search. However, it was found that, many of the financial statements like purchase account, sales account, P & L A/c and balance-sheet could not be completely retrieved due to software issues. Further, during the course of search and seizure operation, back-up of ERP data was taken in a pen-drive and in HDD. Further, print- outs and extracts were also taken and seized as Annexure ANNX/SIPIPL/OFF/01. The assessee further submitted that, the details of cash receipts as well as cash expenses are available in the seized material which throws light on the fact of the existence of cash transactions. Since, there is no data for day-to-day specific record of cash transactions, either in the seized material, estimation become an inevitable method for computation of additional income. Therefore, considering the overall facts of cash transactions record....
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....e the registered value also has a bearing on the profit margin of the undisclosed turnover of the assessee. Further, nature of part of expenses not actually attributable for the purpose of business activity which required to be disallowed u/sec.37(1) of the Income Tax Act, 1961 and claim of expenses paid to Commission Agents for marketing sale of flats are appears to be high and not subjected to TDS, which attracts disallowance u/sec.40(a)(ia) of the Income Tax Act, 1961. Therefore, considering the overall scenario including relevant books of accounts maintained by the assessee and incriminating material found during the course of search observed that, the profit percentage of undisclosed turnover found during the course of search proceedings should be more than the profit percentage on the turnover admitted in the return of income filed u/sec. 139(1) of the Income Tax Act, 1961. Therefore, estimated 14% on disclosed turnover of Rs. 8,20,95,569/- and further estimated 18% profit on suppressed receipts of Rs. 13,83,12,000/- and determined the total income of the assessee at Rs. 22,03,07,569/- vide order dated 24.08.2023 u/sec.147 of the Income Tax Act, 1961. The relevant findings of....
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....correct and true picture of the affairs of the business of the assessee so as to arrive at the correct turnover and income of the assessee during the year. In this regard the provisions of section 145(3) are reproduced hereunder : "Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in section-section (1) [ has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under section (2)], the Assessing Officer may make an assessment in the manner provided in section 144.] 6.5. In view of the discrepancies noticed and also in the absence of any evidence, the books of accounts maintained by the assessee cannot be relied upon. Hence, the assessee was issued a showcause notice requiring to showcause as to why the same should not be rejected u/s. 145(3) of the Act. 7. In response to the showcause notice dated 20.06.2023, the assessee has furnished a reply on 23.06.2023 through mail, which is reproduced as under : "Gist of the case 1. In response to the Show Cause Notice dt. 12.0....
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....e computed with reference to the seized material, then, all the entries, relating to the receipts and expenses, need to be considered. Going by all of this, the workings and estimate of the additional income, made by the assessee, is more than reasonable. 2.1 It is submitted that even in a case where there is suppressed turnover, with no seized material / with no expenditure related entries in the seized material, it is only a reasonable profit earned, and not the entire turnover, which gets taxed. 2.2 The average net profit rate as per the regular returns filed is around 7.8 %. The average net profit rate declared (against the additional income) in the returns filed in pursuance of the notices issued u/s 148 as a consequence of search action is around 9.3 %. This net profit rate is reasonable and duly backed by the seized material. It may also be kindly noted that while estimating the additional profit, based on the seized material, the assessee has not considered the refunds (advance returned to the customers, on cancellation of bookings) and discounts offered, which are substantial. If these amounts are considered, the additional profit will fall, significantly....
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....ages with regard to actual turnover and suppressed turnover. The extract of the same for the assessment year under consideration is reproduced as under: ITR Turnover ITR Net profit % of Net profit on turnover Undisclosed receipts Addl. Income declared % of Addl. Income on undisclosed turnover 58,63,96,923 4,69,11,754 8% 76,84,00,000 8,05,00,000 10.48% 8. The submission of the assessee is not acceptable since as stated in the previous paragraphs, it is clear that based on the system of accounting followed by the assessee, as there are entries which are altogether omitted or incorrect, as admitted by the assessee vide submissions as well as the statements recorded during the course of search action u/s. 132 of the I.T.Act, in the group, the correctness and completeness of the accounts cannot be vouched for and therefore the correct profit or income of the assessee cannot be deduced from the books of accounts maintained by the assessee, and therefore, I am satisfied that it is a fit case for the rejection of books of accounts as provided for vide the provisions of section 145(3) of the I.T.Act. The books of accounts maintained by the assess....
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....atutorily allowable expenses claimed in original ROI has to be same for disclosed and undisclosed turnover as no separate establishments are found to allow any additional claim. The non-substantive nature of the claim of expenses towards payments to landlords over and above registered value also has a bearing on the profit margin of the undisclosed turnover of the assessee. Nature of part of expenses not actually attributable for the purpose of business activity are required to be disallowed u/s 37(1) and claim of expenses paid to Commission Agents for marketing sale of Plots are apparently high and not subjected to TDS which attracts disallowance u/s.40(a)(ia) of IT Act 1961 by which the profit percentage should be more for undisclosed turnover found during the search & seizure operation u/s.132 of the I.T.Act than that of the profit percentage admitted in return of income filed u/s 139(1) of IT Act 1961. 9. During the assessment proceedings, the assessee filed a reply on 23.06.2023 through e-mail submitting reasons for lower profit in response to show cause notice dated 20.06.2023. The relevant extract of which is reproduced as under: "2.2 The average net profit....
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....s examined on average profits of Real Estate Plotting business activity. However, considering the fact that though the accounted turnover quantified during the course of search operation was only to the extent of Rs. 95.95 crores at the time of search, credence has to be given to the fact that the assessee himself has come forward and admitted that the unaccounted turnover stood at Rs. 76.84 crores. As detailed supra, considering regular administrative and statutorily allowable expenses claimed in original Return of Income which has to be same for disclosed and undisclosed turnover, non- substantive nature of the claim of expenses towards payments to landlords over and above registered value and keeping in view the nature of expenses not actually attributable for the purpose of business activity, the profit percentage on undisclosed turnover found during the course of search proceedings should be more than the profit percentage on the turnover admitted in the return of income filed u/s. 139(1) of the I.T.Act. 9.2. It is seen during the year under consideration the assessee had shown turnover of Rs. 58,63,96,923/- in its return of income. The suppressed receipts for the ass....
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....documents found during the course of search, the net profit of undisclosed/suppressed turnover works-out at 9.3%. However, the Assessing Officer considered income from the seized material as sacrosanct, but, disputed the expenditure which is also part of very same seized material on the ground that, it lacks evidentiary value because of supporting evidence and estimated the profit @ 18% on total undisclosed turnover. The assessee further contended rejection of books of accounts and estimation of 14% net profit of disclosed turnover on the ground that, Assessing Officer has rejected the books of accounts without pointing- out any discrepancy in the books of accounts, even though, the books of accounts maintained by the assessee are audited by an Accountant in terms of sec.44AB of the Income Tax Act, 1961 by general observation that, in suppressed turnover the profit margin is more, even though, there is no basis for the Assessing Officer to come to the conclusion that, the profit declared by the assessee in the regular books of accounts is incorrect. 10. The learned CIT(A) after considering the relevant submission of the assessee and also taking note of certain judicial precedent....
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....nts is on lower side nor justified estimation of 14% profit on disclosed turnover. Therefore, held that, disturbing profit margin on the disclosed receipts is not justified when profit has been estimated on the undisclosed receipts separately by the Assessing Officer. Thus, the CIT(A) has directed the Assessing Officer to delete the addition made towards 14% profit estimation on disclosed turnover. 12. Coming back to estimation of 18% profit on undisclosed turnover. The learned CIT(A) observed that, the appellant has disclosed Rs. 60 crores additional undisclosed income towards profit from suppressed turnover of Rs. 625.95 crores which comes to around 9.3% of the total turnover. As can be seen from the working submitted by the assessee, the undisclosed turnover worked-out based on the seized material is at Rs. 625.95 crores. Similarly, the unaccounted business expenditure as per the seized material is Rs. 567.69 crores. Accordingly, the total net profit derived based on the seized material as presented in the post-search investigation was at Rs. 58.26 crores which is 9.3% of an average. It is further noted that, in the assessment order, the Assessing Officer has not recorded any....
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....closed/suppressed turnover. The ld CIT(A) further noted that, although, there is a basis for the assessee to argue that, the estimation of 18% profit is on the higher side, but, the fact remains that, the Corodinate Bench of ITAT, Hyderabad Benches, Hyderabad in the case of Skill Promoters vs., DCIT ITA.No. 628/Hyd/2022 held that, the net profit on the undisclosed receipts should be estimated at 15%. Therefore, by taking note of relevant facts and also by following the decision of ITAT, Hyderabad Bench in the case of Skill Promoters (supra), has directed the Assessing Officer to estimate net profit margin of 15% on the undisclosed turnover. The Relevant findings of the ld. CIT(A) are as under : 6. Decision: The brief facts in this case are that assessee filed original return u/s 139(1) on 23.09.2019, declaring total income of Rs. 4,68,16,160/ -. A Search and seizure operations u/s 132 was conducted on 05.01.2022, and the case was centralized to Central Circle-2(3), Hyderabad on 07.04.2022. During the search action the CMD of the group disclosed unaccounted income of Rs 60 Crs for all the entries of the group for 5 assessment years. Notice u/s 148 was issued on 19.....
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....t cycles and significant expenses incurred for projects located in rural areas. The appellant further contended that the COVID-19 pandemic adversely impacted their business, leading to increased fixed costs while revenues * declined. The appellant claimed that no substantial profits or cash accumulation were discovered during the search, further supporting their argument of thin margins. vii) The Assessing Officer, however, observed that the ERP data retrieved during the search reflected unaccounted cash transactions, which rendered the books of accounts unreliable. Consequently, the AO invoked the provisions of Section 145(3) of the Income Tax Act and rejected the books of accounts, citing omissions and incorrect entries. * The AO proceeded to estimate profits @ 14%, on the disclosed turnover of Rs. 58.63 Crores, resulting in a profit of Rs. 8.20 Crores for AY 2019-20. * The AO estimated profits @ 18%, on suppressed turnover of Rs. 76.84 Crores, resulting in a profit of Rs. 13.83 Crores for AY 2019-20. viii) The AO further observed that the assessee failed to substantiate the expenses claimed against the suppressed turnover with any credible evi....
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....ly by declaring the seized ERP data unreliable yet relying on the same data to determine suppressed turnover. iv) It was further submitted that the disclosure of additional income of Rs. 60 crores were made voluntarily, without any concrete basis, during the course of the search proceedings to "buy peace" and avoid protracted litigation. The appellant contends that the seized material lacks critical details such as entity-wise, project-specific, and customer-wise particulars, rendering the admission conditional and unsubstantiated. In support of this submission, the appellant relied on: * Pullangode Rubber Produce Co., 1973 91 ITR 18 SC, wherein the Hon'ble Supreme Court held that admissions are not conclusive evidence and can be rebutted to show that admission is incorrect. * Naresh Kumar Agarwal, (2015) 53 taxmann.com 306 where it was held that statements made without supporting evidence lack any probative value. v) The appellant further argued that while the AO accepted the receipts recorded in the seized material, the corresponding expenditure entries in same seized material were summarily rejected. Such selective reliance, the appellant ....
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....cause notice is silent on proposed profit rates), which constitutes a violation of the principles of natural justice. The appellant contended that the AO's conclusions are not based on reliable evidence and he failed to adhere to established legal principles. 6.2 I have considered the assessment order, the submission of the appellant and the case laws relied by the AO and the appellant. The ground wise adjudication is as under: 6.2.1. The ground no-1 and 13 are general in nature. 6.2.2. In the ground of appeal No. 2, the appellant has contested that the Assessing Officer grossly erred in totally ignoring the detailed facts and the relevant legal position, submitted by the assessee, and passing the assessment order which is not a speaking order. Upon careful review of the assessment order and the submissions of the appellant, the following findings are made: i) The Assessing Officer has drawn conclusions based on seized materials, statements recorded during the search proceedings, and voluntary disclosure made by the appellant during the search. ii) The appellant's claim that the assessment order lacks specific r....
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....he appellant. ii) The seized material contains substantial details of cash receipts, agreements of sale, and payments to landlords that were not accounted for in the books of accounts. The seized material was sufficiently specific to establish that suppressed turnover existed. Further, statements from key individuals, including the appellant's managing director and tax consultant, admitted to receiving cash over and above registered amounts and acknowledged discrepancies in accounting records. Loose sheets such as Annexure- A/SIPIPL/OFF/06, A/SIPIPL/OFF/08 and A/SIPIPL/OFF/09 provided details of cash receipts and payments outside the regular books of accounts. iii) The legal presumption of correctness under Sections 132(4A) and 292C of the Income Tax Act applies to the seized material. These provisions allow the AO to presume that the documents found during the search belong to the appellant, contain true details of the appellant's transactions, and are reliable unless the appellant provides contrary evidence. The appellant failed to rebut these presumptions effectively. iv) While the appellant claimed that the seized materials were unreliable, no....
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....ppressed turnover. The appellant's own admissions during the search proceedings, coupled with the seized material, provide a strong basis for AO's conclusions. The ERP data's unreliability, as claimed by the appellant, does not invalidate the findings from corroborative evidence in the seized material, which included, Agreements of sale, Cash receipts, Documents showing payments to landlords and middlemen. ii) The AO relied on significant corroborative evidence in the form of loose sheets, documents, and statements recorded during the search proceedings. These documents explicitly revealed Cash receipts outside the regular books of accounts. Suppressed turnover and unrecorded transactions, payments and receipts that were not accounted for in the appellant's books. Even if business entity-wise, project wise, customer wise details were not present, the aggregate data from the seized material provided evidence of large-scale unaccounted transactions. - iii) Sections 132(4A) and 292C of the Income Tax Act allow a presumption of correctness for the seized material unless disproved by the appellant. The appellant's claim that the seized material lack....
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....al income was voluntary, conditional, and made in good faith to avoid litigation and penalties. In the Ground No. 6, the appellant contended that the Assessing Officer failed to appreciate that the additional income was an estimate based on the seized material which was adjusted to reflect higher profits for certain years, despite the seized material indicating losses in some years. After a detailed examination of the assessment order and the appellant's submissions, the following findings are made. i) The appellant has argued that the additional income disclosed was voluntary, conditional, and made in good faith to avoid litigation and penalties. However, this argument fails to hold weight as during the search conducted under Section 132 of the Income Tax Act, the Managing Director and Tax Consultant of the appellant, made key admissions acknowledging discrepancies in income reporting. These admissions pertained to unrecorded cash transactions, suppressed turnover, and undisclosed income. Importantly, these admissions were not conditional but were direct acknowledgments of income irregularities. ii) Subsequently, the appellant filed revised ....
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....h, the appellant made an estimate of the additional income, the same is based on seized material which formed the basis for admission of additional income in the statement recorded u/s 132(4). Thus, the appellant's claim that the disclosure of additional income was voluntary and conditional is unsupported by the facts. The disclosure was made in response to incriminating evidence uncovered during the search, and the subsequent filing of returns in consequence of search action corroborates this. Thus, grounds of Appeal No. 5 and 6 are dismissed. 6.6 In the Ground of Appeal No. 7, the appellant has challenged the rejection of regular books of accounts by the Assessing Officer, contending that no specific discrepancies were pointed out in the said books. However, this contention of the appellant is not tenable. During the search action conducted under section 132 of the Income-tax Act, 1961, evidence of large-scale cash transactions conducted outside the books of accounts was unearthed. It is evident that under the accounting system followed by the appellant, certain entries were either omitted entirely or recorded inaccurately. This fact was admitted by....
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.... these expenditures, the appellant claimed, would lead to an inflated assessment of income, distorting the principle of real income taxation. Additionally, the appellant relied on various judicial precedents to argue that a fair and consistent approach must be adopted when dealing with seized material, and selective reliance on receipts without considering corresponding expenditures was unjustified. On the other hand, the AO rejected the appellant's claims regarding expenditure, citing insufficient documentary evidences. The AO observed that while the receipts recorded in the seized material were corroborated by independent evidence, such as sale deeds, customer agreements, and statements recorded during the search, the expenditure entries lacked similar corroborative material. The AO maintained that the appellant did not discharge the onus of substantiating the expenditure claims by providing verifiable evidence. According to the AO, the presumption under Section 132(4A) is not absolute and can be rebutted if the surrounding circumstances do not support the entries in the seized documents. In this case, the absence of supporting evidence for the expenditure rebutted t....
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....hat the some of the entries pertaining to receipts were corroborated by evidence, such as sale agreements, monthly cash receipts etc while still majority of the receipts were not supported by the corroborated evidence and the quantum of the undisclosed receipts has been derived from the annual summary sheet and monthly collection details for 4 months found during the search action. Even, the details of the business entities, projects, customers and units sold were also not mentioned in the seized document. Therefore, the claim of the AO that entire unreported turnover is backed by the complete corroborative evidences is not correct. This fact is evident from the Assessment order itself (Para 6 of the assessment order): "6. During the assessment proceedings, an exercise was done to extract the books of accounts from ERP backup taking during the search. However, it was found that many of the financial statements like purchases account, sales account, profit & loss account, and balance sheet could not be completely retrieved due to software issues. 6.1. Further, during the course of Search and Seizure operation, back up of ERP data was taken in a pen drive and in HDD....
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.... be read as they exist. Therefore, there is merit in the claim of the appellant that all the receipts are not supported by the corroborative evidence and have been considered as unaccounted receipts on the face of it based on few loose sheet indicating the monthly collection only for four months out of five years in question, without having complete details of the customer, project and the entity, then the AO is not fair in totally ignoring the seized documents which has details of expenditure incurred in connection with same unaccounted receipts. A perusal of the seized Annexure 8 and 9 indicate details of expenditure incurred by the appellant in correction with various projects of the group. The expenditure incurred and claimed by the appellant were found during the search, therefore, complete dismissal of all expenditure without considering the appellant's business model and industry norms is inconsistent with the principle of reasonableness. Business activities, especially in real estate development, inherently involve unavoidable expenses such as payments towards land, commissions, development costs, and other operational expenditures. Ignoring such expen....
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....income on the disclosed turnover by way of booking of unsupported/bogus expenditure against accounted receipts. No additional profit estimation on disclosed turnover is justified as neither any evidence of inflation of expenses against the disclosed receipts have been found during the course of search nor has been brought on record by the AO in the assessment order. Hence, disturbing profit margin on the disclosed receipts is not justified when profit has been estimated on the undisclosed receipts separately by the AO. Therefore, estimation of profit @14% on the disclosed turnover is without any basis, hence the AO is directed to delete the addition made on account of estimation of profit on the disclosed turnover. B. Estimation of profit on undisclosed turnover: It is seen that the during the search action in the statement recorded u/s 132(4) the appellant, based on the seized material had disclosed net profit income over and above the normal income as Rs. 60 Crs on the unaccounted receipts of Rs 625.95 Crs, which comes to around 9.6%. In the course of post search investigation, based on the statements recorded and the workings and estimate prepared by t....
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....ot recorded any objections against this working of net profit on account of cash transactions in the seized material. The only objection raised by the AO is that the appellant has not substantiated the unaccounted expenditure by independent evidences. Therefore, the AO proceeded to make independent estimation of the net profit and ignored the working/estimate provided by the appellant, both, before the investigation wing and in the assessment proceedings. As discussed in respect of ground of appeal no-8, that the AO's selective reliance on receipts recorded in the seized material and ignoring the expenditure found in the same sized material is not justified. Since both the receipts and expenditure are not completely supported by the corroborative evidences, equal weightage needs to be given to both. It is also seen from the assessment order that the net profit against the undisclosed turnover is estimated @18% without giving detailed reasoning. In the assessment order, the AO has noted that regular administrative and statutorily allowable expenses have already been claimed and allowed and that there are no separate establishments in respect of the und....
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....ess of the assessee also endorses the reasonableness of the additional profit worked out and declared in the returns filed in pursuance of the search action. Purchase of land, development and sale of plotted area constitutes 75% of the total business. The profit margin in this segment is on a lower side. The time period from purchase of land to sale is very short and there is not much scope to take advantage of appreciation in price which is linked to period of holding. Once the land is purchased, development starts immediately and with these bookings also commence. Out of the remaining volume of business, development / construction of commercial units is of 15% and residential sector makes up only to 10%. Here also. bookings commence carly, and projects are completed in shortest possible time. 20.4 where margins are thin. Due to the interior geographical locations, the assessee Importantly, business of the assessee is spread in districts / rural areas incurred substantial expenditure, additionally, to develop roads and related infrastructure from the main roads to the sites of projects. During the COVID period of 2020 and 2021, while the business got adversely affected, a....
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....ncome estimation at 10% for villa projects in the real estate sector was deemed realistic. vii) Shri Narendar Reddy Maddi: A reasonable profit estimation (e.g., 12.5%) should be applied only to unaccounted turnover, not the entire turnover. It is noted from the case laws relied by the appellant that best judgement assessment should have nexus with the facts on record and should not be arbitrary. The jurisdictional ITAT decided that profit rate between 8% and 12.5% is reasonable for the purpose of estimation in real estate sector. Therefore, after considering the facts peculiar to the case of the assessee, relating to the expenditure in the seized material, business being carried out in rural areas, and the sales which are majorly on account of development and sale of plots, and the profit rates in the previous years, are considered, the net profit rate on the undisclosed receipts @15 % to be reasonable to meet the ends of justice. Reliance is placed on the recently delivered judgment of the Jurisdictional ITAT in the case of Skill Promoters Vs DCIT, ITA no 628/Hyd/2022, wherein the Hon'ble ITAT held that the net profit on the undisclosed receipts @15% to be ju....
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.... the Income Tax Act, 1961, but, said presumption is a rebuttal presumption, which is not automatic. Further, whether presumption arises in the first place depends upon the facts of the case. In the case of the assessee, as the seized documents are non-speaking and dumb, the legal presumption u/sec.132(4A) (ii), in respect of the truth of contents of the document, cannot be drawn. In this regard, he relied on the decisions of Hon'ble Supreme Court in the case of Central Bureau of Investigation vs., VC Shukla [1998] 3 SCC 410 (SC) and also in the case of Common Cause vs., Union of India [2017] 394 ITR 220 (SC). 15. Learned Counsel for the Assessee further referring to lose sheets found during the course of search submitted that, apart from the fact that, the seized loose sheet No. 5 lacks evidentiary value, the same is also not reliable when considered in the company of other seized documents. In this connection, he invited to the material seized from the corporate office, at Kurnool, marked as Ann/SIPIPL/OFF/01, containing pages 1 to 6, which reflects net loss worked out, in the case of the main business entity i.e, the appellant-company viz., Skandhanshi Infra Projects India....
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....ide is that, the assessee is not in a position to substantiate it's claim of expenses by producing supporting vouchers and other documentary evidences, but, the fact remains that, the Assessing Officer has grossly erred in not recognizing the details of expenditure contained in the seized material. Further, as per the said seized material, the year-wise expenditure is also recorded. The entries relating to the expenditure are similarly placed to those relating to the receipts. Just as there is no corroborative evidence in respect of entries [relating to receipts], there is also no corroborative evidence in respect of entries relating to the expenditure and that, the legal presumption contained u/sec.132(4A) and 292C of the Income Tax Act, 1961 in respect of the truth of the contents of the seized documents applies equally to all the entries in the seized material. Therefore, as the Assessing Officer has considered the receipt related notings for the purpose of computation of income, the expenditure related notings also should have been considered. The Learned Counsel for the Assessee further submitted that, it is not open for the Assessing Officer to consider that part of the seize....
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....ulali [1973] 90 ITR 271 (SC). Therefore, he submitted that, the addition made by the Assessing Officer towards 18% estimation of profit and sustained by the learned CIT(A) to the extent of 15% profit should be deleted. 18. Sri Narender Kumar Naik, learned CIT-DR along with Dr. Sachin Kumar, Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the Assessing Officer estimated 18% profit on suppressed turnover/undisclosed turnover by assigning valid reasons and as per the Assessing Officer there are certain administrative and establishment expenses which are common for disclosed and undisclosed turnover and once the administrative and other over-head expenses are accounted in the regular books of accounts against disclosed turnover, then, obviously, the profit margin in undisclosed turnover is on higher side. The Assessing Officer had also brought-out various other reasons including application of provisions of sec.40(a)(ia) of the Act in respect of certain expenses. The Assessing Officer after considering the relevant seized documents and also regular books of accounts of the assessee, has rightly estimated 18% profit on undisclosed....
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....untant. The learned CIT(A) after considering the relevant facts, has rightly deleted the addition made by the Assessing Officer towards 14% profit on disclosed turnover. Therefore, he submitted that, the order of the learned CIT(A) should be upheld and addition made by the Assessing Officer should be deleted. 21. We have heard both the parties, perused the material on record and the orders of the authorities below. During the course of search, certain documents were found including loose sheets, books of accounts and computer data which contain details of gross receipts and expenditure of the appellant group as a whole. The documents found during the course of search were confronted to Shri K. Suresh Kumar Reddy, Chairman and Managing Director of the appellant group company, where he stated that the said document contains abstract of gross receipts and expenditure and net profit of the entire group as a whole without any bifurcation as to the year, entity and nature of receipts and expenditure. The documents found during the course of search has been examined during post-search investigation and the assessee has submitted the details of total turnover as per the seized documents....
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....suppressed turnover of Rs. 625.95 crores with corresponding suppressed profit of Rs. 58.26 crores. The assessee had also apportioned suppressed/unaccounted turnover among group entities for relevant assessment years and also offered additional income @ 9.3% of total suppressed turnover for all these assessment years in respect of various entities. Further, the Assessing Officer had also considered very same seized materials for estimation of 18% profit on undisclosed turnover. The one side considered unaccounted turnover recorded in seized materials as sacrosanct, but rejected other part of seized material which contains expenditure by assigning general reasons. Since the assessee and the assessing officer, both considered the seized material and arrived at suppressed turnover and corresponding undisclosed income, in our considered view, the arguments of the Counsel for the Assessee that, the seized document is a dumb document and lacks evidentiary value, is devoid of merit and cannot be accepted. The learned CIT(A) after considering the relevant facts, has rightly rejected the ground taken by the assessee on the issue of evidentiary value of seized documents found during the cours....
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.... by the Assessing Officer and the learned CIT(A) to estimate 18% and 15% profit respectively, on suppressed turnover in light of various arguments of the Counsel for the Assessee. 24. There is no dispute with regard to the fact that, the seized documents found during the course of search contains total receipts of the appellant-company and other associated Firms and Companies for the financial years 2017-2018, 2018-2019, 2019-2020, 2020-2021 and 2021- 2022. The said document also contains the total expenditure of the appellant-company's and its group entities. We have gone through relevant seized documents considered by the appellant-company and the Assessing Officer for declaration of additional income on suppressed turnover and estimation of 18% profit on suppressed turnover. The said document contains cash receipts and cash payments pertain to financial years 2017-2018 to 2021-2022. The assessee on the basis of said documents has arrived at unaccounted/suppressed turnover of Rs. 625.95 crores and unaccounted income of Rs. 58.26 crores. The Assessing Officer considered the gross receipts from the seized material for the purpose of estimation of 18% profit on suppressed turnove....
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....ectness of the contents of books and other materials is to be presumed, such a deemed state of affairs would have to be assumed in respect of all entries in the books, and not merely the entries of income or receipts alone." The Hon'ble High Court categorically held that, "if the Revenue was of the opinion that, the expenses claimed were inadmissible or were excessive, or not genuine, in order to reject the entries in the books of account or seized documents found during the course of search, it ought to have relied on other materials. Having once drawn the presumption that, the contents of documents of the assessee taken into possession during the search were true, the Revenue could not have, consistently with that presumption, proceeded to require the assessee to produce materials in support of expenditure entries. Such an inconsistent approach, in respect of the contents of the same appears to have been founded only on suspicion that, they were not genuine. However, suspicion cannot replace proof. Moreover, the full effect of the presumption should be given effect to, whenever the statute directs a particular non-existent state of affairs to be assumed. Therefore, presumption in....
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....n the expenditure recorded from the seized material. In our considered view, unless there is a clear-cut finding with reference to the nature of expenditure that, said expenditure is recorded in the regular books of accounts also finds place in the seized documents, the conclusion drawn by the Assessing Officer that, this is the reason for estimating higher profit on suppressed turnover is totally based on suspicion and surmises, but, not on the basis of any evidence. Further, although, the Assessing Officer has discussed the issue in light of provisions of sec.40(a)(ia) of the Act and consequent disallowance, but, once again failed to record any clear-cut finding with reference to any of the expenditure that, particular expenditure incurred by the assessee has been paid without deducting TDS, which attracts provisions of sec.40(a)(ia) of the Act, in our considered view, the reasons given by the Assessing Officer to reject the seized documents in part and estimating 18% profit on suppressed turnover cannot be accepted. It is further noted that, although, the Assessing Officer has given one more reason that, matching of expenditure with reference to entity wise and year wise is not ....
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....ized materials by ignoring expenditure recorded in very same seized material is accepted, then there is no material for the AO to estimate 18% profit on undisclosed turnover, because if you reject seized material, then there is no material or basis for AO to consider unaccounted turnover. We, therefore cannot accept reason given by the AO for rejecting part of seized material which pertains to expenditure and estimate profit on unaccounted turnover. 27. Coming back to the observations of the learned CIT(A) for estimating 15% profit on the suppressed turnover. Admittedly, the learned CIT(A) very candidly held that, presumption contained u/sec.132(4A) and 292C is equally applicable to the assessee and the Assessing Officer. The learned CIT(A) having noticed that presumption contained u/sec.132(4A) is equally applicable to both sides, but, erred in not considering the seized document in toto for the purpose of assessment of undisclosed income, even though, said document contains both income and expenditure of the assessee group for the relevant assessment years. The learned CIT(A) had also like Assessing Officer had considered part of the seized material which contains suppressed t....
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....n estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him was not arbitrary and has nexus with facts discovered, the same could not be questioned." The Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. vs., CIT[1954] 26 ITR 775 (SC), held that, the Assessing Officer has to act in a judicial manner and proceed with judicial spirit and came to a judicial conclusion, while recognising that, the Assessing Officer is not fettered by technical rules of evidence, but, the Assessing Officer has to act fairly as a reasonable person and not arbitrarily or capriciously. An assessment based on no material at all or based on inadequate material is, therefore, bad in law and liable to be set aside. The issue relating to method of accounting or estimation of profit was also considered in the case of Vrajlal Manilal and Co. vs., CIT[1973] 92 ITR 287 (Madhya Pradesh). The Hon'ble Madhya Pradesh High Court while considering an identical issue has held that, "the previous orders of assessment would form good material or good evidence for the purpose of computing assessment for the year in question. The Coordinate Bench of ITAT,....
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....idering the facts and circumstances of the case, we are of the considered view that, the Assessing Officer has erred in estimating 18% profit on suppressed turnover and the learned CIT(A) without considering the relevant facts, has simply estimated 15% profit on suppressed turnover. Thus, we set-aside the order of the learned CIT(A) and direct the Assessing Officer to accept the suppressed turnover and relevant profit computed by the assessee on the basis of seized document found during the course of search. Accordingly, the grounds of appeal of Assessee are allowed and grounds of appeal of Revenue are rejected. 29. Coming back to the estimation of profit on disclosed turnover in the books of accounts maintained for the relevant assessment years. Admittedly, the AO had estimated 14% profit on disclosed turnover. Further, estimation of 14% profit on disclosed turnover is not based on any show cause notice issued to the assessee. The Assessing Officer during the course of assessment proceedings neither issued any show cause notice to the assessee indicating reasons for rejection of books of accounts u/sec.145(3) of the Income Tax Act, 1961 and estimation of 14% profit on disclosed....
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....3 are allowed and appeals filed by the Revenue ITA.Nos.308, 309, 310 and 311/Hyd./2025 for the assessment years 2019-2020 to 2022-2023 are dismissed. 31. The facts and issues involved in the following appeals i.e., ITA.Nos.514 to 517/Hyd./2025 in the case of M/s Skanda Infra Projects Private Limited, Kurnool for the assessment years 2019-2020 to 2022-2023, ITA.Nos.522 to 525/Hyd./2025 in the case of M/s Skanda Infra Projects, Kurnool for the assessment years 2019-2020 to 2022-2023, ITA.Nos.526 to 529/Hyd./2025 in the case of M/s Skandhanshi Developers, Kurnool, for the assessment years 2019- 2020 to 2022-2023, ITA.Nos.530 to 532/Hyd./2025 in the case of M/s Skanda Builders, Kurnool, for the assessment years 2019-2020 to 2021-2022, ITA.No.533/Hyd./2025 in the case of M/s Skanda Developers & Builders, Kurnool, for the assessment year 2019-2020, ITA.Nos.534 and 535/ Hyd./2025 in the case of M/s Skandhanshi Infra Projects, Kurnool, for the assessment years 2019-2020 and 2020-2021 and ITA.Nos.536 to 539/Hyd./2025 in the case of Shri Suresh Kumar Reddy Krishnapuram, Kurnool, for the assessment years 2019-2020 to 2022-2023, are identical to the facts and issues which we have considered....
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....al, Birlo Gate ,Kurnool -518002 AP. Accounting Year : 2020-2021 PAN : AAWCS0746E || LLPIN : GST NO : 37AAWCS0746E22% GST NO Liabilities AMOUNT Assets AMOUNT capital Accounts 14200000.00 Cr Fixed Assets 41517755.45 Dr Dans (Llabillity) 5841503.03 Dr Current Assets 154045542.20 Cr Current Labliltles 8769999499.26 Cr Investments 125761522.42 Dr Credit Total 8778357996.23 Cr Debit Total 13233735.67 Dr Diff. In Opening Bal. 3774641883.04 Cr Net Loss 4990482377.52 Cr otal 8778357996.23 Cr Total 8778357996.23 Dr GST NO Liabilities T35 ERP ANDHANSHI INFRA PROJECTS INDIA PVT LTD PREandhansli Empire , Near CN hospital, Biria Gate Jamoul-518002 .A.P. Accounting Year : 2019-2020 PAN : AAWCS0746E [ LLPIN : GST NO : 37AAWCS0746E173. GST NO : 37AAWCS0746E173. PARTICULARS AMOUNT . Opening Stock Purchase Accounts 1,59,23,14,447 Dr Direct Expenses 55,84,30,332 Dr Total 2,15,07,44,779 |Dr PARTICULARS 11,67,788 Dr Sales Accounts Closing Stock 2,23,06,09,634 Dr Gross Loss 2,23,17,77,422 Dr 13,77477 Cr income (Revenue) Capenditure Accounts 45,51,50,702 Or i .. Document 2 The seized materia....
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....000 105,000 6,282.76 20 5.599.750 145.817 1,640,482 350.000 449,000 650,009 . 50,000 8,885.04 21st 1,669.000 580,000 30,000 1,451,000 895.000 4,625.00 22nd 3,291,855 410.900 110.000 308.322 713,650 4,025,000 200,000 9,959,72 23rd 1,751,025 610,000 1,780,000 . 3,042.000 4,306,450 440,000 . 11,929,47! 24th 8,627,900 600.000 2,520,000 . 1,166,000 2,354,000 115.000 15,382,900 25th 9,413.683 2,015,780 . 660,000 3,154,000 60,000 15,323,45: 4,250,016 1,145,000 100,000 1,982,000 3,116,505 10,593,52° 27th 6,234,577 3.671,777 979,000 459,507 1,481,832 20,000 12,845,59 28th 355,300 246,100 411,000 800,000 -1,812,40€ 29th 11,933,849 111,001 1,737.500 867,423 1,185.000 50,000 15,934,77: 30th 9,884,600 499,000 511,657| 10.000 290,000 3,935,375 30,000 15,160,64; Tote! 163,354,463 | 12,913,850 : 42,075,645 7,102 717 ' 41,001,850 50,376,557 529,527 3,111,455 323,476.70: Document 3 action report for the Month of October - 2021 10,000 660,000 -836,000 20,000 7,601,063 043.000 178-329 500,010 37.500 -5,978,859 22:100,000 $151.00 20.000 1235.000 250,000 :100,000 40.000 5.365,000 6,177,500 ,....
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....58,085 2nd 3618.500 190,000 1,690,000 509,500 550,000 1,166.500 100,000 200.000 8,024,500 2.501.062 1,313,37 2,368.632 3,538,04 187,000 118,000 100,000 . 10,126,112 3,293.000 1.579,478 3.611,864 782.732 839,415 1,705,000 650,000 12,471,439 1 223.374 100.000 5,213,911 515.000 265.000 2.190.000 100.000 25,000 9,833,285 4,503.000 1.053,44 3,499.000 4.649,820 1,015.636 360.000 . . 15,181,104 4,160.000 ! 270,000 2,185,000 1,513,000 278.000 360.000 373,000 150.000 9.289.000 7,055,350 1,731,577 6,155,453 1,636,220 603.000 80,000 170.000 17,641,700 5.674 644 524.999 2.825.000 1,949,500 995,800 1,005,000 . 15.000 12,589,943 10 3.945.570 959.457 3.585,065 2 305,400 100,000 1,400.000 . 125,575 12,452.097 110% 3.128.100 32,720 2,412.500 873.654 283.500 2,650,000 . 152.000 9,732,474 12 4,440.000 680.030 1,600,000 250,000 400.000 1,313,700 426,240 . 9.318,87C 1,972.500 . 4,077,600 505.000 810,000 1,690.000 75.000 9,130,300 14p 150,000 1.050.000 2,079,025 250,000 1,130,000 530.000 50,000 . 5.238,625 15: 5,072.500 1,057,873 4.211,838 1,110,000 1,522. 000 3,531,000 48,800 667,000 17,218,011 2,590,500 395,453 5,527,500 510,000 2.282.684 85,000....
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....5,000 42.500 904.000 2.200,000 4.731,5 15h 2,045.000 415.000 7,043.000 1,665,000 1,459,500 5,061,400 17.719.9 18h 3,129,125 230,000 4,127,000 $35.000 1,572,000 4,933,100 45,000 14,871,2 17h 1,778,250 163.595 1,670,000 510.000 403.000 1,310,100 26,832 961,500 6,823.2 18h 3,200,152 550,000 2.626.256 1,629,343 200,000 905,000 9.110,7! 19h 2,035,000 600,000 2,786.000 839,120 271,000 1,240,000 450.000 100,000 8.321.1; 20th 4,074,155 740,000 6,990,000 841,400 300,000 911.300 100.000 725,000 14,681,8: 21st 2.999,725 1.222.441 3,636,000 1,699,397 1.122.200 865.000 550.000 700.000 12,383,71 22nd 2.475,750 1,535,535 3,370,000 800.000 1,330,000 200,000 9,711,20 23rd 5,110,456 606,500 3,125,053 1,336,418 1,659,000 1,665,000 67,000 180.000 13,749,4 24th 1,125.000 1,979,549 410,000 1,935,000 2,970,500 100,000 400.000 8.920,04 25th 7,032.002 2.232,171 3.616.000 1,153,426 550.000 2,219,586 3,100,000 20,000 19,923,18 265 1.240,630 578,136 4,338.450 120,000 560.000 76,000 30.000 6,943,21 27th 3,793,314 1,126.87 2,677,500 537,000 2.145.500 2,730,30 175,000 52.000 13,237,49 8.620,200| 1,489.084 3,261,500 1,675.840 1,195,000 3,849,344 66,000 20,156....
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....ses 14,42,244 19,78,127 400184-Soltvaro Renewal and AMC 3,67,018 5,03,388 400168-Staff Welfaro 9,22,875 12,65,780 400190-Traveling end conveyance 9,733 13,349 400192-Vehicle Maintenance 8,43,524 11,56,945 400153-Watch man Salaries - Office 1,80,234 2,47,202 400195-Telephone Charges 7,88,832 10,81,932 400214-Loading & Unbeding Charges 22,761 31,218 400215-Business Promotion Expenses 6,67,183 9,15,083 400219-Other charges . 1,90,432 2,61,189. 400221-Secunty Salaries 4,06,807 5,57,961 400227-interest on Secured Loans 9,11,639 12,50,370 KUN United Motors (P) Lis 2,71,029 3,71,733 Property Tax 36,46€ 50.018 Reagir and Afaintaisance 11,25.179 16,20,938 Total 192 2,72,33,536 : Document 7 193 300107-Compound Wall Work 11,29,543 15,49,238 300108-Concrete Work 38,52,310 52,83,660 300109-Consultancy charges 1,42,02,547 - 1,94,79,670 300115-Doors & Windows Fixing Work 28,66,832 39,32,036 300117-Earth Work Excavation 44,82,624 61,48,195 300118-Electricity Charges Sde · 36,85,797 50,55,298 300120-Electrical Works 1,94,79,052 2,67,16,722 300121-Fabrication works 91,76,989 1,25,86,807 ....
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....oors & Windows Purchase 75,55,226 1,03,62,458 500114-Electrical Materials Purchase 2,07,22,065 2,84,21,591 600115-Aggregates Purchase 26,56,060 36,42,950 500117-General Materials Purchase 69,66,137 95,54,487 500118-Granite purchase 16,55,428 22,70,522 500119-Gravel Purchase 13,29,117 18,22,956 500120-Hardware & Fixures Purchase 19,35,907 26,55,215 500121-Interior Items 7,96,797 10,92,857 500122-Lift & Elevator 8,74,606 11,99,576 500125-Painting Materials Purchase 3,13,296 4,29,705 500126-Plumbing Materials Purchase 1,21,21,410 1,66,25,252 500127-Plywood & Laminates Purchase 5,36,341 7,35,625 600128-Red Bricks 15,50,308 21,26,344 500129-RMC Purchase 75,718 1,03,852 500132-Safety Materials 14,88,843 20,42,040 500133-Sand Katakam 7,53,245 10,33,122 500135-Sanitary Materials Purchase 28,53,482 39,13,727 600136-Ties Purchase 78,57,812 1,07,77,474 500137-TMIT & Steel Purchase 9,79,55,221 13,43,51,631 500138-Water Proofing Materials Purchase 1,57,997 2,16,703 500140-Wooden Materials 4,18,750 5,74,341 500141-UGD Materials Purchase 16,66,271 22,85,394 500143-RR Stone 59,881 82,131 500144-Sand Plaster....
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.... of M/s. Skandhanshl Infra. Projects, India , Pis.Ltd., "Beside" CN Hospitals, ' Goory, Road, Kurnool, These loose contains the details of payments 'in cash and through bank to land lords of various real estate projects executed by. your group entities/individuals. In' view of the same, you are requested to furnish' complete details of the payments made by your group entries and individuals in cash and through bank to landlords of all the real estate projects executed by your group entitles/individuals from their Inception to till date. Ans. T'es. L'agree that these loose sheets are workings of land payments retrieved from the computer system of one of our staff. As stated earlier, we lost. some data, wlille . shifting. our accounts froin . Tally, to ERP and some of. the' transactions related to cash payments were not maintained in the ERP. Hence, the details mentioned in these loose sheets cannot be verified further. Payments related to Landlon's were finalisel at the end of each year and the same were already submitted at the fline of search opemtion conducted. In our corporate office, Your attention'Is requested in the expenditure ledgers submitted and selzed jas Annexure-9, ....