TaxTMI 
TaxTMI 
2026 (4) TMI 1387
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.... had claimed entire expenditure in its books of account and they were audited also. The LD. CIT(A) ought to have considered the fact that allowance of any further expenditure other than recorded in the regular books of account, shall be supported by documentary evidence conclusively, but in the present case it is not so. 5. The Ld. CIT(A) is erred in not appreciating the fact that the receipts of Rs. 3,46,24,374/- were unearthed during the course of Survey operation u/s 133A and evidenced by impounded material. The Ld CIT(A) ought to have appreciated the fact that the same impounded material has no indication of any corresponding expenditure that was not recorded in the regular books of accounts. 6. The Ld CIT(A) ought to have appreciated the fact that evidence was unearthed at the time of Survey in relation to un-admitted receipts, but there was no running account/ cash book available, containing both the unaccounted receipts and unaccounted expenditure. 7. The Ld. CIT(A) is erred in allowing relief of Rs. 3,10,09,614/- towards amounts collected against un sold flats more than the sale consideration holding that the said amount was admitted by the Partne....
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....ars 2017-2018 and 2018-2019 only to the tune of Rs. 12,22,10,605/- and a closing stock of Rs. 28,77,500/-. Therefore, there was a difference of Rs. 3,46,24,374/- which was added by the Assessing Officer for the year under consideration. The learned CIT(A) has restricted the said addition by taking the profit element @ 12% of the unaccounted/undeclared turnover. The learned DR has submitted that the learned CIT(A) failed to consider the fact that, had the Department not conducted survey u/sec. 133A of the Act, the fact of non-admission of sale proceeds would not have come to the light and the modus operandi of the assessee firm would not have unearthed. He has relied upon the Judgment of Hon'ble Supreme Court in the case of B Kishore Kumar vs. DCIT [2015] 234 Taxman 771 (SC) and submitted that the statement recorded on oath also constitutes an incriminating material and is having an evidentiary value. The partner of the assessee firm at the time of survey proceedings admitted in the statement that he was unable to produce all the bills/vouchers for the expenditure incurred and also surrendered the income of Rs. 1,50,00,000/-. Thus, without considering the statement of the partne....
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.... Representative of the Assessee has further submitted that since most of the buyers availed the bank loan for financing the transactions which is based on the agreement and agreed sale consideration, therefore, it was not possible for the assessee to do the extra work over and above the agreed consideration which was already submitted to the banks for availing the loan by the buyers. The learned Authorised Representative of the Assessee has thus, submitted that the extra work was carried out by the partners and is also part of the gross total receipts as per the details. However, the assessee has declared the turnover in the return of income to the extent of the consideration received by the assessee as well as some amount of extra work carried out by the assessee which is part of the agreed amount and sale consideration already declared as per the agreement between the parties. Thus, the learned Authorised Representative of the Assessee has submitted that though the assessee has not challenged the Order of the learned CIT(A) restricting the addition to 12%, however, the addition made by the Assessing Officer itself is not justified and therefore, the grounds raised by the Revenue ....
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....iness premises of the assessee. On verification of the information submitted by the assessee, it found that during course of survey operation in the case of assessee, the assessee stated in his statement recorded on 15.02.2018 in his answer to question No. 12 as follow. 12 On perusal of Profit and Loss Account, it is seen that you are showing Net Profit of only Rs. 14,36,674/- on total turnover of Rs. 4,40,36,942/- 1. e, 3.26% for A.Y. 2017-18 which seems to be on the lesser side in the field of construction of houses. In addition to that, your books of accounts for the current year are also not found updated and bills/vouchers are not fully verifiable. Please offer your comments Sir, I prayed earlier that the firm has incurred expenses but due to poor record keeping, I am not able to produce all the bills/vouchers before you right now. Hence, to cover up all the discrepancies/deficiencies, I voluntarily offer an additional income of Rs. 1.5 Crores (Rs. 1,50,00,000/-) for the A.Y. 2017-18 and A.Y. 2018- 19 in M/s. Apoorva Sarovar. For A.Y. 2017-18, I voluntarily offer additional income of Rs. 1 Cr and the rest Rs. 0.5 Cr for A.Y. 2018-19. I will pay the entire ta....
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....considered the list furnished by the assessee regarding the total consideration received against 51 houses and again arrived to the net difference of Rs. 4,15,34,850/- proposed to be added to the return of income. The Assessing Officer again after considering the reply of the assessee has modified the net difference amount to Rs. 3,46,24,374/-. All these observations and details given by the Assessing Officer clearly manifest that the Assessing Officer has not verified the actual facts and details but keep on changing the amount of difference in the turnover declared by the assessee and the turnover as per the details of registration as well as other details of turnover furnished by the assessee along with extra work done. It is pertinent to note that the assessee in the reply which was considered by the Assessing Officer while arriving at the final figure of difference at Rs. 3,46,24,314/-, has shown gross receipts declared in the return of income for the assessment years 2016-2017 to 2020-2021 as under: Assessment Year Gross Receipts 2016-17 1,78,000 2017-18 4,40,36,942 2018-19 7,79,95,655 2019-20 1,20,66,809 2020-21 4,91,071 Total 13,47,....
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.... consideration of Rs. 3,44,27000/- and construction / contract income of Rs. 96,09,942/- and Rs. 7,79,95,663/- for the asst year 2018-19, totalling to Rs. 12,22,10,605/- and the assessee confirmed the total sale consideration of Rs. 14,61,65,000 and extra work receipt of Rs. 1,06,69,979 totalling to Rs. 15,68,34,979 but unable to explain the difference of Rs. 3,46,24,3741- (Rs. 15,68,34,979 minus Rs. 12,22,10,605). Hence it is proposed to add the difference of Rs. 3,46,24,374/-. 6.4.1. In this regard, the Ld. AR had submitted that the aggregate sale consideration pertaining to the firm and its partners (in their individual capacity) is Rs. 15,68,34,974/-. Of the said amount, the firm had declared total receipts of Rs. 13,47,70,487/-. Further the Ld. AR had stated that the balance pertains to amount/ projected amount to be received by the partners of the firm in their individual capacity However, the Ld. AR could not reconcile the actual amount received for the said project and the amount declared in the hands of the firm and partners. It has to be noted here that the additional income of Rs. 3,10,09,614/- which was made in the assessment order was already decided in favour....
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.... the AO has merely relied on the sworn-in statement recorded by the Managing Director of the assessee-company admitting the total income of Rs. 27,45,12,189/- for various assessment years but has failed to give deduction for the unaccounted expenditure by the assessee for earning unaccounted income. Hon'ble Gujarat High Court in the case of CIT vs. President Industries [258 ITR 654] (Gujarat HC) has held that it cannot be the matter of an argument that the amount of sales by itself cannot represent the income of the assessee. It is the realization of excess over the cost incurred that only forms part of the profit included in the configuration of sale. Similar view was taken in the case of CIT vs. Gurubachhan Singh J. Juneja [215 CTR 509) (Gujarat HC) and CIT vs. Sharada Real Estate (P) Ltd., [99 DTR 100] (MP-HC) and in the case of Jyotibhaichand BhaichandSaraf & Sons (P) Ltd., vs. DCIT [139 ITD 10] the Coordinate Bench at Pune has confirmed 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 taken in the case of ACIT vs. M/s. Archana Trading Co., in ITA Nos. 351 & 352/....
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....the decision of this Tribunal which was also based on the various decisions of Hon'ble High Courts and Hon'ble Supreme Court as relied upon by the learned Authorised Representative of the Assessee before us. We further note that when the Assessing Officer has initially pointed out that there is a discrepancy in respect of the sales of plots and assessee has not shown the sale of atleast 8 plots which were also not shown in in the closing stock therefore, the alleged unaccounted turnover would not be considered as undisclosed income of the assessee without taking the corresponding expenditure into consideration. The Assessing Officer has not given the finding that the assessee has booked all the expenditure in respect of the differential turnover treated as unaccounted/undisclosed turnover of the assessee and hence, in the facts and circumstances of the case, we do not find any reason to interfere with the impugned order of the learned CIT(A) qua on this issue. 8. Ground nos.7 to 11 are regarding the addition of Rs. 3,10,09,614/- made by the Assessing Officer on account of the amount collected against the unsold flats. 9. The learned DR has submitted that the Assessing Off....
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....,614/- has been separately shown and admitted by the partners in their individual capacity and also paid tax as per their returns of income filed for the year under consideration. The learned Authorised Representative of the Assessee has referred to the details of the returns of income filed by the three partners which is reproduced by the learned CIT(A) as well as placed in the paper book and submitted that the partners have declared the turnover in question in their individual capacity and also paid the taxes and therefore, when this amount was already offered to tax by the partners the same cannot be added in the hand of the assessee. He has supported the impugned order of the learned CIT(A). 11. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has considered this issue in Para nos.5.4 to 5.5.3 as under: "5.4. As per individual files maintained by you: As per the customers registration details furnished as per list, the total consideration of 51 house were shown at Rs. 14,61,65,000 and extra work done was shown at Rs. 1,06,69,979 totalling to Rs. 15,68,34,979/-. You have claimed that the customers paid Rs. 3,33,98....
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.... xxxxx xxxxx xxxxx xxxxx 5.5.1. The assessee has not furnished the details of work executed by each partner in their individual capacity and has not furnished the copy of the returns of income reconciling their turnovers with the amount of Rs. 3,10,09,614/-. 5.5.2. The amount of Rs. 3,10,09,614/- was received by the assessee towards unsold houses and also more than the sale consideration. In the absence of proof and considering the fact that advances received for the unsold houses and more than the sale consideration, it cannot be accepted that the partners have executed the extra works worth of Rs. 3,10,09,614/-. 5.5.3. The amount of Rs. 3,10,09,614/- was received by the assessee in his bank account but the assessee has not filed any evidence to the effect that the amount of Rs. 3,10,09,614/- has been transferred from its bank account to the accounts of the partners. In view of the above it is proposed to add Rs. 3,10,09,614/- to the returned income." 12. Thus, the Assessing Officer has recorded the facts that the customers have paid part amount and balance consideration was arranged through ....
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.... unsold flats over and above the sale consideration. The AO had tabulated such extra collections made by the appellant vide page no. 7 to page 14 of the assessment order. The AO had given each flat number against which the total collection was made and the amount declared by the appellant firm and found out the difference between the two. The total of the difference in the amount collected and amount offered in the return of income of the firm comes to Rs. 3,10,09,614/-. In this regard, the Ld.AR before the AO had replied that: "In this regard we submit that the most of the customers have been provided with respective figures for consideration. As the extra works being anticipated by the customers and requested to execute by our firm was not possible as the total consideration may exceed the agreed contractual figures provided with the bankers. In such scenario the extra work have been executed by the partner in their individual capacity and the alleged suppressed turnover of Rs. 3,10,09,614/- has been admitted and paid the taxes in the individual capacity of the partners which can be verified from the individual tax returns of the partners Mr. M. Sree Ramulu and Mrs. M. V....
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....,97,881 6.3.3. Further the Ld. AR had submitted that the additional income earned with respect to each flats were offered in the hands of the partners. The Ld. AR had tallied the total amount received from each flat against the total consideration said to be received by the firm specified in page no. 7 to 14 of the assessment order. Against the same flat nos mentioned in the assessment order i.e. for flat no's AS-1 to AS-58 of Apoorva Sarovar project, the partners had also offered certain additional income which is part of turnover. 6.3.4. At page no. 5 of the assessment order, the AO had computed the total amount received by the firm towards the Apoorva Sarovar and the consolidated figures are extracted as below: Flat Nos. Total Turnover Extra Work Total Amount AS-1 to 58 14,61,65,000/- 1,06,69,979/- 15,68,34,976/- As seen from the above table, the AO had computed the total amount received/ receivable towards Apoorva Sarovar project is Rs. 15,68,34,976/-. The appellant submitted the year wise turnover declared by the firm as under: In this regard we submit that the most of the customers have been provided with respect....
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....e consideration pertaining to the firm and its partners (in their Individual capacity) is Rs. 15,68,34.979. Of the said amount, the firm has declared total receipts of Rs. 13,47,70,487. The balance pertains to amount (projected amount to be received by the partners of the firm in their individual capacity. In support of this, we submit the details of turnover and profits declared by the Partners in their individual hands along with relevant extracts from their Income tax Returns as per Annexure 2 of the Paper book)." 6.3.6. When the total receipts from the project is Rs. 15.68 Crs and the appellant had offered already Rs. 13.74 Cr, it is not known how the sum of Rs. 3.10 Crore was said to be received in appellant's bank account. The AO could not specify any reasons why the additional income offered in the hands of partners could not be considered as the part of the sales turnover of Apoorva Sarovar project. Since the appellant had offered the additional receipts of Rs. 3,10,09,614/- in the hands of the partners against the sale of flats, i.e. AS-1 to AS-58 mentioned in the assessment order, I find no merits to tax the same in the hands of the firm. I hereby direct the ....
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....ties & bank accounts. Immovable Properties :- I have a own house at H No 43-262-1-M-1 at Sankal Bagh, Kurnool. I have an agricultural land of 5 acres at Veldurthy. Movable properties :- I have 25 tulas of gold jewellery. Bank accounts: I am herewith submitting list of all bank accounts. Document 2 5. Please give brief details of Modus Operandi of your business. We purchase land after taking permission from Municipal authorities/ Gram panchayat. We divide the land into plots, then sell the plots to the buyers with the agreement of constructing the house on the plot. 6. Please give details of the M/s Apoorva Sarovar project. The venture is situated at Pasupala Panchayat Board, Kurnool. The project has 57 plots. 7. Please give details of the firms in which you are a partner other than M/s Apoorva Sarovar. I am a partner in the following firms: 1. M/s Apoorva Amaravathi 2. M/s Apoorva Akshardham 3. M/s Apoorva Shilparamam 4. M/s Apoorva Rohini Builders & Developers I am director in the following companies: 1. M/s Apoorva Avenues India Pvt Ltd. 8. On examination of the Profit & Loss Account for the year ending 31.03.2017, you have debited a direct expen....