TaxTMI 
TaxTMI 
2024 (9) TMI 1954
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....2/H/23), 398/Hyd/2023, CO6/Hyd/2023 (ITA 398/H/23), 400/Hyd/2023, 401/Hyd/2023, 402/Hyd/2023, 403/Hyd/2023, 404/Hyd/2023, 405/Hyd/2023, CO14/Hyd/2023 (ITA 400/H/2023), CO15/Hyd/2023 (ITA 401/H/23), CO16/Hyd/2023 (ITA 402/H/2023), CO17/Hyd/2023 (ITA 403/H/2023), CO18/Hyd/2023 (ITA 404/H/23), CO19/Hyd/2023 (ITA 405/H/23) SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI MANJUNATHA, G. ACCOUNTANT MEMBER For the Assessee : Shri Ravi Bharadwaj, CA For the Revenue : Smt.TH Vijaya Lakshmi, CIT(DR) ORDER Per Bench: These Appeals filed by the Revenue and Cross objections filed by different assessee's are directed against separate, but identical orders of the learned CIT (A) - 12 Hyderabad, all dated 31/05/2023 and pertain to A.Ys. 2016-17, 2017-18, 2018-19, 2019-20, 2020-21 and 2021-22 respectively. Since facts are identical and the issue is common, for the sake of convenience, these appeals and cross objections are being heard and disposed off, by this common consolidated order. ITA Nos 381 & 382/Hyd/2023 & C. Os 7 & 8/Hyd/2023 2. The Revenue has, more or less raised common grounds of appeal for both the Asst. years, therefore, for the sake of brevity, the grounds of ....
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....arious survey numbers situated at Cherukuru and Peddapur, Weldanta Mandal, Nagarkurnool Distt. for an amount of Rs.170,60,00,000/-. Further, the seized material also contains a cash receipt acknowledged by Shri P. Shashikant Reddy representative of Bhoomika Agro Farms (P) Ltd. During the course of search at the office premises of Spectra India Eco Projects (P) Ltd, a Scan Disk Pen Drive of 8 GB was found and seized vide Annexure A/SIEPL/OFF/PenD/01, which contains day sheets in the form of excel sheets which reveals cash receipts and cash payments made by Spectra India Eco Projects (P) Ltd, related to its business. On verification of the day sheet, it was found that certain cash payments aggregating to Rs.60,18,16m000/- were paid to M.s Bhoomika Agro Farms (P) Ltd for the period financial year 2018- 19 to 2020-21. It was further noticed that the appellant has received an amount of Rs.60,18,16,000/- by way of cash and Rs.44,30,00,000/- through cheques/RTGS. During the post search investigation, Shri P. Shashikant Reddy was summoned and a statement u/s 131 of the I.T. Act, 1961 was recorded on 23.07.2021 and confronted with the seized documents. In response to a specific question, he....
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....as a supervisor for the projects developed by Spectra India Eco Projects (P) Ltd, and cash payments received from Spectra India Eco Projects (P) Ltd, pertains to amount payable to landowner for purchase of land or otherwise for development expenses carried out in the site. 5. The Assessing Officer after considering the relevant submission of the assessee and also taken note of material found during the course of search, observed that although the appellant claims to have acted as a Mediator/Aggregator for pooling land to Spectra India Eco Projects (P) Ltd, but failed to prove the nature and purpose of receiving funds from Spectra India Eco Projects (P) Ltd, with proper documentary evidence. Since the assessee has not filed any evidence to prove amount received from Spectra India Eco Projects (P) Ltd, has been paid to farmers towards purchase of land or any other development work, and in absence of any evidence, in support of the contention of the assessee that it is a mediator for Spectra India Eco Projects (P) Ltd, the arguments of the assessee cannot be accepted. Therefore, rejected the explanation of the assessee and made addition towards the amount received in cash from Spec....
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....esee had not submitted any proof of payment to landlords and also proof for incurring development expenses for Spectra Group. In absence of the evidence the contention of the assesee that it is a mediator for Spectra Group cannot be accepted. In the light of the above conclusion, it is seen that the assesee is engaged in the business of trading of land and not a mediator/land aggregator. Further, these cash receipts are not accounted in the books of account of the assessee. As no evidence was submitted for payments to land lords from the receipts of Spectra Group, the receipts of Rs.38,33,00,000/- for the A.Y. 2020-2l are treated as undisclosed receipts and added to the income of the assessee Addition: Rs. 38,33,00,000/- 10.5 The assessee in his reply staled that a commission of Rs.1,53,32,000/ was received for mediation for lands which is nothing but camouflaging of total receipts as commission and hence this argument of the assessee cannot be accepted. Penalty u/s. 270A are initiated for mis-reporting of income." 6. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A), the as....
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....ce for rendering the said services. Therefore, opined that the appellant is a service provider based on the fact that whatever land was acquired by the appellant through the funds of Spectra Group was ultimately transferred back to Spectra Group. The learned CIT(A) further observed that as per the agreement dated 14/08/2019 which was seized during the course of search operation, the appellant was to procure about 300 acres land at various places from landowners and in turn transferred to M/s Spectra Group. As per the recitals of the agreement, the land does not belong to the appellant and the appellant is only a custodian with mutual understanding. The land was not registered in the name of the appellant, and it was to transfer to Spectra Group on the funds provided by them. Therefore, taking note of the fact that the appellant works as a Mediator/Aggregator of land for Spectra Group and also taking note of fact that M/s. Spectra Group also confirmed payment to appellant company towards purchase of land from farmers opined that, since the appellant is just rendering services to Spectra Group, the amount received from Spectra Group cannot be taxed on the whole as its income as has b....
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....parties including the appellant were recorded only u/s. 131 and the said statement has not been found to be false by the AO. It is seen that the order in the case of SIG Group namely M/s Spectra India Eco Projects Private Ltd, M/s Spectra India Mega Projects Private Limited and M/s Spectra India Housing Private Limited have not been passed for the purpose of assessment of income. On the basis of expenditure or the books of accounts but on account of total receipts which included the accounted cheque and unaccounted cash. The AO realized the futility of considering the picture of the day sheets found in toto as it would distort the determination of income of the payer i.e. the SIG Group. The AO in the case of assessing the entities of SIG group had the benefit of the seized material which was incriminating and unaccounted. The AO considered the same as true within the meaning of section 132(4) and section 292C on presuming that the day sheet found is true and has thus assessed the income of the entities of SIG group on the basis of the said day sheets and concluding that the estimation of income would be the best proposition to determine the taxable income of the entities o....
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....been recorded by the AO in this regard. In view of the above discussion, the addition made in this regard for AYs 2020-21 and 2023-22 is to be restricted to 10% of the unaccounted receipts considering that the most of these kind of entities under consideration on similar issue, have reported an average of 6-7%o net profit over the years. It is mentioned in the assessment orders that the appellant had already admitted 4% of the unaccounted receipts. However, the AO is directed to verify such admission in the income returned and restrict the addition in this regard to 10% of the unaccounted cash receipts including the admission by the appellant, if any. The ground no. 2 of both the appeals is partly allowed accordingly subject to the above direction." 8. The learned CIT-DR, Mrs. TH Vijayalakshmi, submitted that the learned CIT (A) is erred in granting relief to the assessee by restricting additions made by the Assessing Officer towards the amount received from Spectra Group to 10% income on total unaccounted cash receipts without appreciating the fact that the appellant has failed to file the relevant evidences to prove outward movement of cash portion of transactions to ....
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....the learned CIT (A) submitted that the learned CIT (A) has recorded categorical finding that from the bank statement of the assessee, the entire amount has come from Spectra Group and immediately paid to land owners/farmers and therefore, after considering relevant facts has held that the appellant can be considered as an aggregator/mediator for M/s. Spectra Group and the amount received from Spectra Group cannot be entirely treated as income of the assessee. 10. The learned Counsel for the assessee further referring to the grounds of Cross Objections filed by the assessee submitted that although the learned CIT (A), in principle agreed that the appellant working as a mediator/aggregator and earns only commission income, but erred in estimating 10% income on total unaccounted cash received from M/s. Spectra Group even though the Director of the appellant company in his statement recorded u/s 131 of the Act dated 29.07.2021 clearly stated that the appellant works as a mediator/aggregator and also do supervisory work for development work on behalf of Spectra Group and therefore, this activity earns very meagre income and also admitted 4% additional income on unaccounted cash recei....
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....om the land was aggregated. Therefore, he opined that in absence of any evidence, it is difficult to accept the argument of the assessee that it was acting as a Mediator/Aggregator for M/s. Spectra Group and the amount received from them is towards payment to landowners/farmers for purchase of land and also for various expenditure incurred at site. 13. We have given our thoughtful consideration to the reasons given by the Assessing Officer to make additions towards undisclosed amount received in cash from M/s. Spectra Group as income of the appellant and also reasons given by the learned CIT (A) to estimate 10% income on total undisclosed cash receipts received from above company in light of the argument of the learned Counsel for the assessee. We have also carefully gone through the sale of agreement dated 14.8.2019 between the appellant company and M/s Spectra Group. As per recitals of the sale agreement 14/08/2018, the appellant is having land bank in the name of respective owners mentioned in the registered document being entered into MOU and sale agreement with them and are the absolute owners of parcels of land being entered into sale deeds and peaceful possession and enjo....
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....hat, the learned CIT (A) has recorded a categorical finding in light of certain sample sale deeds between the appellant and Spectra Groups and observed that in many cases, the land has been directly registered in the name of Spectra Group by the land owners and in few cases land has been registered through AGPA by appellant company to Spectra Group and in very few cases the land has been directly registered by the appellant company to Spectra Group. The learned CIT (A) further observed that the consideration as per sale deed between landowners and Spectra Group and the appellant and Spectra Group is almost similar with minor difference. Therefore, in our view, going by the modes operandi of Spectra Group and role of appellant, there is no doubt of whatsoever in our mind to the argument of the learned Counsel for the assessee that, the appellant only works as a mediator/aggregator for land and whatever amount received from Spectra Group including unaccounted cash receipts is on behalf of Spectra Group to be paid to land owners for purchase of land. This fact is further strengthened by the statement recorded from Shri P Shashikant Reddy representative of Bhoomika Agro Farms (P) Ltd, ....
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....s other companies. Further, the Assessing Officer of the Spectra Group has estimated profit at 15% of total turnover/gross receipts reported by the company for various A.Ys. Therefore, going by the above facts, we are of the considered view that when the ultimate beneficiary itself is not able to make more than 15% profit on its total business, it is difficult to accept the reasons given by the Assessing Officer that the appellant makes such a huge profit from purchase and sale of land within a short period. Therefore, we are of the considered view that the learned CIT (A), after considering relevant facts, has rightly estimated 10% income on total undisclosed cash receipts from Spectra Group as income of the assessee. Thus, we are inclined to uphold the findings of the learned CIT (A) and reject the grounds taken by the Revenue as well as the grounds of Cross Objections taken by the assessee. 16. In the result, appeals filed by the Revenue and Cross Objections filed by the assessee for both the Asst. years are dismissed. ITA 385, 386 and 387/Hyd/2023 - A.Ys 2019-20 to 2021-22 (Revenue) and C.O Nos.3,4 and 5/Hyd/2023 (Assessee) -Sunshine Estate Construction India LLP, Hyderab....
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....en Drive of 8GB was found and seized vide annexure A/SIEPL/OFF/PenD/01 and it contains day sheets in the form of excel sheets which contain the cash receipts and cash payments made by the spectra group related to its business. On verification of the same it was found that certain cash payments aggregating to Rs. 31,42,19,500/- was paid to M/s Sunshine Estate Construction India LLP for the period F.Y 2018-19 to 2020-21. According to the assessee they operate as a mediator for the land pooling and procure land from the farmers and enter into an agreement with the farmers for the land parcels identified for the development. At the beginning of the project, the land parcel is identified where Spectra Group is proposing to undertake development of land into plots. Then, they identify the land lords owning that land parcel and commence negotiation process with the land lords. The assessee had also stated that in their case, they have mediated the acquisition of land parcels by Spectra and the registration was done in the name of Spectra Group directly from the land lords. 20. The Assessing Officer noted from the seized material i.e. day sheets show that the assessee has received an am....
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....y the Revenue in ITA 385, 386 and 387/Hyd/2023 for the A.Ys 2019-20 to 2021-22 as well as the cross objections filed by the assessee are dismissed. ITA Nos 388 to 392/Hyd/2023 & C.Os 9 to 13/Hyd/2023 - Krishi Housing (P) Ltd, Hyderabad for A.Y 2017-18 to 2021-22 25. The Revenue raised similar grounds of appeals in the above 5 appeals with that of M/s. Sunshine Estate Construction India LLP, Hyderabad. 26. The assessee, a company, deriving income from business and filed its original return of income on 10/01/2018, declaring total income of Rs. 19,44,140/- prior to search. A Search and Seizure operation in the Spectra Group of Cases was initiated on 23.03.2021. During the course of search and seizure proceedings conducted at the residential premises of Sri Arun Kumar Gampa director of M/s Spectra Group certain agreement of sales and cash receipts were seized vide annexure A/GAK/RES/02. On verification of seized material vide Page no 130 to 133 of annexure A/GAK/RES/02 an agreement of sale dated 26.06.2015 was found. The agreement of sale was executed between Sri M.Ugandhar Reddy of M/s Krishi Housing Pvt Ltd and 3 others with M/s Spectra India Eco Projects Pvt Ltd to sell de....
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....on of land parcels by Spectra and the registration was done in the name of Spectra Group directly from the land lords. In this regard it is seen that the seized material i.e. agreement of sale, cash receipts and day sheets show that the assessee has received an amount of Rs. 7,40,00,000 through Cheque/RTGS and also received cash receipts of Rs. 28,76,91,000/- from M/s. Spectra Group. Hence, the onus is on the assessee to prove the nature and purpose of receiving those receipts with proper documentary evidence. It is seen that if the assessee is only acting as a mediator the amounts should not have received by the assessee through bank. However, the assessee had not submitted any proof of payment to land lords and also proof for incurring development expenses for Spectra Group. In absence of the evidence the contention of the assessee that it is a mediator for Spectra Group cannot be accepted. In the light of the above the Assessing Officer concluded that the assessee is engaged in the business of trading of land and not a mediator/land aggregator. Further, these cash receipts are not accounted in the books of accounts of the assessee. As no evidence was submitted for payments to la....
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....e I.T. Act, 1961 was issued and served on the assessee to which the assessee appeared before the Assessing Officer and furnished the requisite information as called for. 34. Before the Assessing Officer, the assessee stated that they operate as a mediator for the land pooling and procure land from the farmers and enter into an agreement with the farmers for the land parcels identified for the development. At the beginning of the project, the land parcel is identified where Spectra Group is proposing to undertake development of land into plots. Then, they identify the land lords owning that land parcel and commence negotiation process with the land lords. The assessee had also stated that in their case, they have mediated the acquisition of land parcels by Spectra and the registration was done in the name of Spectra Group directly from the land lords. In this regard the Assessing Officer observed that that the seized material i.e. receipts show that the assessee has received an amount of Rs.5,67,86,000/- by way of cash and Rs.3,50,50,000/- by way of Cheque aggregating to Rs.9,18,36,000/- from M/s. Spectra Group. Hence, the onus was on the assessee to prove the nature and purpose ....
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.... 40. The assessee is a company deriving income from business and filed its original return of income on 17/10/2016, declaring total income of Rs. 1,67,540/- prior to search. During the course of Search and Seizure operations conducted in the residential premises of M/s. Spectra India Eco Projects Pvt. Ltd., certain incriminating material were seized in the case of the assessee. Statutory notices u/s 143(2) & 142(1) of the I.T. Act, 1961 was issued and served on the assessee to which the assessee appeared before the Assessing Officer and furnished the requisite information as called for. 41. The Assessing Officer did not accept the reply furnished by the assessee. According to the Assessing Officer, search and seizure proceedings conducted at the office premises of M/s Spectra Group, a SANDISK Pen Drive of 8GB was found and seized vide annexure A/SIEPL/OFF/PenD/01 and it contains Day Sheets in the form of excel sheets. The Day Sheets contains the cash receipts and cash payments made by the spectra group related to its business. On verification of the same it was found that certain cash payments aggregating to Rs. 178.49 crores was paid to M/s SYLNS Agro Developers Pvt Ltd for the....