TaxTMI 
TaxTMI 
2026 (10) TMI 522
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..... Since common issues are involved in all these appeals, the appeals filed by both the assessee's were heard together and are being disposed of by this common consolidated order for the sake of convenience and brevity. 2. The assessee's have more or less raised common grounds of appeal in all the captioned appeals. Therefore, for the sake of brevity, the grounds of appeal filed by the assessee i.e., Oorjitha Projects Private Limited in ITA.No.1004/Hyd/2026 for the assessment year 2014-15 are reproduced as under: "1. The Order of the Ld. CIT (A) u/s 250 of the Act dt. 31.01.2026 for the AY the AY 2014-15 is erroneous both on facts and in law to the extent the order is prejudicial to the interests of the appellant. 2. The Ld. CIT(A) has erred in dismissing the appeal, without actually considering the submissions of the assessee and without appreciating the facts and circumstances of the case, which is invalid and bad in law. 3. a. The Ld. CIT(A) failed to appreciate the fact that, the notice U/s 148 of the Act dt. 07.12.2023 issued by Central Circle 1(1), Hyderabad is invalid and without Jurisdiction, as the said notice has to be issued by the National F....
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....en such income attains finality and cannot be again subjected to addition of Rs. 77,82,000/- and is unwarranted for this AY 2014-15, which leads to double taxation, and is invalid and bad-in-law. 10. The Ld. CIT(A) ought to have appreciated that the AO has erred in making the addition solely based on the receipts reflected in the seized documents without giving effect to the corresponding expenses, is not justified. 11. The Ld. CIT(A) ought to have decided the appeal based on the decision of the assessee's group concerns, wherein, the corresponding expenditure to the alleged cash receipts were also considered. 12. The Ld. CIT(A) ought to have appreciated that the AO has erred in initiating the penalty proceedings u/ s 271(1)(c) of the Act without appreciating the facts of the case and without considering the submissions of the appellant, wherein, no concealment of income is in existence. 13. The appellant may add or alter or amend or modify or substitute or delete and/ or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal." 3. In all the captioned appeals, both the assessee's have raised the ....
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.....2026, the assessee filed the appeal before the Tribunal on 23.02.2026. Accordingly, it was submitted that the delay in filing the appeals was due to circumstances beyond the control of the assessee and was neither wilful nor deliberate. Accordingly, it was prayed that the delay of 25 days in filing the appeals before the Tribunal may kindly be condoned in the interest of justice. 5. The Ld. CIT-DR for the Revenue, on the other hand, opposed the condonation petitions filed by the assessee. She submitted that the assessee had failed to file the appeals within the prescribed period and, therefore, the delay may not be condoned. However, he fairly submitted that the issue may be decided in accordance with law on the basis of the facts and material available on record. 6. We have heard both the parties and perused the petitions and affidavits filed by the assessee seeking condonation of delay of 23 days in filing the appeals before the Tribunal. We find that, the reasons explained by the assessee in the affidavits constitute sufficient cause for the delay and that the delay was neither wilful nor deliberate. We further find that the Hon'ble Supreme Court in the case of Collec....
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....fication of the books of account of the assessee, the A.O. observed that the cash receipts reflected in the seized sheet were not accounted for in the regular books of account of the assessee company. Accordingly, the A.O. observed that the assessee had received unaccounted cash of Rs. 14,01,80,571/- from the sale of Armonia Villas. 9. The A.O. further referred to the other seized sheets relating to the projects of the group concerns. Sheet-2, seized vide page No.44 of Annexure-A/TR/OFF/08, contained details of sales made and advances received in cash in respect of the Trident Galaxy-III apartment project of M/s. Trident Properties Pvt. Ltd., wherein unaccounted cash receipts of Rs. 4,89,88,402/- were identified. Similarly, Sheets-3, seized vide pages Nos.51 and 52 of Annexure-A/TR/OFF/08, contained details of sales made and advances received in cash in respect of the Istana project of the assessee company, wherein unaccounted cash receipts of Rs. 11,97,46,000/- were identified. Thus, the total unaccounted cash receipts reflected in the seized material relating to the aforesaid projects amounted to Rs. 30,89,14,973/-. The A.O. also considered the statements recorded during the s....
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....ts Pvt. Ltd. 2019-20 23.10.2019 Rs. 1,34,76,440/- Rs. 1,00,00,000/- Rs. 2,34,76,440/- Oorjitha Projects Pvt. Ltd. 2020-21 28.01.2021 Rs.(-)77,83,175/- Rs. 1,00,00,000/- Rs. 22,16,825/- Oorjitha Projects Pvt. Ltd. 2021-22 [not stated in retrieved WS] Rs.(-)22,80,421/- Rs. 1,00,00,000/- Rs. 77,19,580/- Oorjitha Projects Pvt. Ltd. 2022-23 07.11.2022 Rs.(-)77,57,178/- Rs. 3,00,00,000/- Rs. 2,22,42,820/- Oorjitha Projects Pvt. Ltd. 2023-24 30.12.2023 Rs. 3,60,78,360/- Rs. 1,00,00,000/- Rs. 17,60,78,360/- Trident Properties Pvt. Ltd. 2022-23 18.10.2022 Rs. 2,09,61,530/- Rs. 6,30,000/- Rs. 3,09,61,530/- Trident Properties Pvt. Ltd. 2023-24 06.10.2023 Rs. 4,85,69,640/-/- Rs. 28,00,000/- Rs. 8,85,69,640/-. 12. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A.) challenging the addition of Rs. 77,82,000/- made by the A.O. towards undisclosed business income. The assessee submitted that the A.O. had made the addition merely on the basis of the entries reflected in the seized loose sheets, without properly appreciating the facts an....
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...., pertaining to the relevant assessment years. It was submitted that the disclosure made under the said Scheme related to the same real estate business and that the additional income declared thereunder had been determined after considering the related business expenditure. The assessee submitted that the A.O. had granted credit only to the extent of Rs. 2,89,50,000/-, as against the total disclosure of Rs. 4,00,00,000/-, and that the balance disclosure ought to have been adjusted against the alleged undisclosed receipts. It was further submitted that failure to grant such adjustment would result in double taxation of the same income. 15. During the appellate proceedings, the Ld. CIT(A.) called for a remand report from the A.O. to examine the specific contention of the assessee regarding the expenditure and losses reflected in the seized material. The A.O. was directed to furnish project-wise and year-wise details of the receipts and expenditure recorded in the seized documents, along with a comparative working showing the net position of the receipts and expenditure. In response, the A.O. submitted a remand report dated 10.02.2026, wherein it was stated that the seized material....
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.... of a clear and reliable reconciliation of the receipts and expenditure, the Ld. CIT(A.) held that the contention of the assessee that the entire cash receipts could not be treated as undisclosed income was not acceptable. 17. The Ld. CIT(A.) further examined the additional income declared by the assessee under the Income Declaration Scheme, 2016. It was observed that the disclosure made under the Scheme related to A.Ys. 2013-14 and 2015-16, whereas no amount had been declared under the Scheme for A.Y. 2014-15 against the undisclosed cash receipts of Rs. 77,82,000/- considered in the assessment order. The Ld. CIT(A.) therefore held that the assessee had failed to establish that the undisclosed cash receipts pertaining to A.Y. 2014-15 had already been offered to tax or covered by the disclosure made under the Income Declaration Scheme, 2016. Accordingly, the Ld. CIT(A.) confirmed the addition of Rs. 77,82,000/- made by the A.O. towards undisclosed business income. 18. The Ld. CIT(A.) also rejected the alternative contention of the assessee that only the profit element embedded in the unaccounted receipts should be brought to tax. The Ld. CIT(A.) observed that the assessee had ....
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....gal grounds, there is no necessity to re-look into the facts, as the same can be adjudicated on the basis of the facts already available on record. Therefore, respectfully following the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (supra), we admit the additional grounds filed by the assessee for adjudication. 23. The learned counsel for the assessee, submitted that, the assessment order passed by the A.O. u/s 147 of the Income-tax Act, 1961 dated 30.03.2025, in light of notice issued u/s 148 of the Act, is bad in law and is liable to be quashed, because the A.O. had not taken proper sanction as required under the provisions of Section 151 of the Act, so as to conclude that, the income has escaped assessment as per the provisions of Section 149(1)(b) and 149(1)(b)(iii) of the Act. The Ld. Counsel for the assessee further submitted that, the approval granted u/s 151 of the Act, does not disclose any independent application of mind and the approval appears to have been accorded in a mechanical and routine manner without examining relevant seized materials in light of provisions of Section 149(1)(b) and 149(1)(b)(iii) of the Act, ....
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....ed upon the following judicial precedents: (i) Madhava Reddy Baddevolu Vs. DCIT, ITA No. 1552/Hyd/2025, order dated 27.03.2026. (ii) Pilot Industries Limited Vs. DCIT, ITA No. 6123/Del/2025 dated 16.03.2026. (iii) Homelife Buildcon Private Limited Vs. DCIT, ITA No. 880/Chd/2024 dated 17.07.2025. 25. The Ld. CIT-DR, on the other hand, referring to the grounds of appeal taken by the assessee challenging the validity of the assessment order passed by the A.O. u/s 147 of the Act, dated 26.03.2025, pursuant to the notice issued u/s 148 of the Act, submitted that the assessment was reopened pursuant to the search conducted u/s 132 of the Act, based on incriminating material found during the course of search, which indicated escapement of income within the meaning of Section 147 of the Act. She further submitted that, the A.O. had recorded reasons in accordance with the provisions of Section 149(1)(b)(i) and Section 149(1)(b)(iii) of the Act, and was satisfied that sufficient material was available for issuing notice u/s 148 of the Act. Therefore, she submitted that, the argument of the learned counsel for the assessee that the A.O. had issued notice u/s 148 ....
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....) of the Act, and also obtained sanction from the competent authority in terms of Section 151 of the Act, before issuing such notice. Therefore, in our considered view, the arguments of the learned counsel for the assessee in light of certain judicial precedents, including the decisions in the cases of Exel Rubber Private Ltd Vs. DCIT (supra) and Ace Tyres (P) Ltd. Vs. ACIT (supra) are devoid of merit and cannot be accepted. 28. We further note that, whether the A.O. formed a reasonable belief regarding escapement of income and whether such belief was based on relevant material found during the course of search are questions to be examined with reference to the facts of each case. Therefore, the observations of the Court or Tribunal in other cases cannot be applied as a judicial precedent unless the assessee establishes that the facts of the present case are identical to those facts considered by the Court or Tribunal in arriving at the relevant conclusion. In the present case, considering the material available on record, we are of the considered view that the reopening of the assessment, based on the reasons recorded by the A.O. and the consequential sanction obtained u/s 151 ....
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....ve to be rejected. Therefore, we reject the grounds taken by the assessee challenging the approval accorded u/s 148B of the Act. Accordingly, the legal grounds raised by the assessee are dismissed. 30. We further find that, the assessee's have raised additional grounds in the respective appeals challenging the validity of the assessment proceedings on the aforesaid legal issues. The additional grounds so raised by the assessee's were admitted by us for adjudication, and since the issues raised therein are identical to the legal issues already considered and adjudicated upon by us in the lead appeal, the findings given by us in the preceding paragraphs shall mutatis mutandis apply to the additional grounds raised in the respective appeals as well. Accordingly, the additional grounds raised by the assessee's in the respective appeals are dismissed. 31. Coming back to the issue of estimation of profit, which arises in ITA Nos.1004 to 1007/Hyd/2026 for A.Ys. 2014-15 to 2016-17 and 2023-24 in the case of Oorjitha Projects Pvt. Ltd. and ITA Nos.845 & 846/Hyd/2026 for A.Ys. 2022-23 and 2023-24 in the case of Trident Properties Pvt. Ltd., the Ld. Counsel for the assessee submitted th....
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....s upon the facts of each case and the nature of the assessee's business. Therefore, the profit rate adopted in other cases cannot be applied to the assessee's case unless the facts are comparable. He submitted that, the Ld. CIT(A) neither brought any comparable cases of a similar nature on record nor considered the profit declared by the assessee and arbitrarily adopted a profit rate of 15% without any basis. Therefore, he submitted that, a reasonable profit rate may be adopted by considering the assessee's own results for the earlier assessment years or the industry average. Accordingly, he submitted that, the profit estimated by the Ld. CIT(A) may be reduced by considering the above facts and the judicial precedents relied upon by the assessee. 33. The learned counsel for the assessee further submitted that, the assessee had offered additional income at a lower rate based on the receipts and the discrepancies found during the search. He submitted that, the estimation of income should be fair and reasonable and should have a rational basis. He further submitted that, the estimation of profit at 15% was excessive and was not supported by any material on record. In this regard, h....
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....pon the initial admission without examining the subsequent explanation furnished by the assessee. He further submitted that, the assessee had also filed the retraction affidavit before the Ld. CIT(A), but the Ld. CIT(A) had failed to consider and adjudicate the same. The learned counsel for the assessee further submitted that, the assessee had filed revised computations offering additional income of Rs. 6,30,000/- for the assessment year 2022-23 and Rs. 28,00,000/- for the assessment year 2023-24. He submitted that, the Ld. CIT(A) had estimated the profit at 15% without properly considering the revised computations. Therefore, he submitted that, the revised income offered by the assessee may be accepted and the balance additions made on the basis of the 15% estimation may be deleted. 35. The Ld. CIT-DR, Ms. Seema Meena, on the other hand, further supporting the order of the Ld. CIT(A), submitted that, although the A.O. had made additions towards unaccounted business income and business assets, the Ld. CIT(A), after considering the relevant seized material, had fairly estimated the profit at 15% of the total unaccounted business receipts, based on certain judicial precedents. The....
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....t years. However, the assessee's disputed the income estimated by the Ld. CIT(A) by adopting a profit rate of 15%, considering the nature of the assessees' business, the relevant incriminating material found during the course of search and certain judicial precedents, including the decisions of the ITAT, Hyderabad, in the cases of Skanda Infra Projects India Private Limited Vs. ACIT (supra) and Sri Aditya Homes Private Limited Vs. ACIT (supra) and argued that, the Ld. CIT(A) ought to have adopted a reasonable profit rate of 10%, which is fair in this line of business, based on various judicial precedents, including the decisions in the cases of Skanda Infra Projects India Private Limited (supra) and Sri Aditya Homes Private Limited (supra). 37. We further note that, the material considered by the A.O. for the purpose of assessment of undisclosed income from business includes certain loose sheets and Excel sheets found during the course of search, which contain details of unaccounted receipts and unaccounted expenditure incurred for the purpose of business. The Ld. CIT(A), after noticing the fact that the very same seized material contained details of unaccounted receipts and exp....
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.... reasonable. In the present facts of the case, the Ld. CIT(A) except relying upon judicial precedents, has not adopted any basis for considering 15% profit on unaccounted business receipts. But, fact remains that the facts of the cases relied upon by the Ld. CIT(A) are totally different when compared to the facts of the assessees' cases. At the same time, although the assessee's canvassed for a profit rate of 7% on the basis of the average profit declared by the assessee's, in our considered view, the assessees' own book results and the profit declared therein cannot be considered as a basis, because the books of the assessee's cannot be considered true and correct, considering the unaccounted business transactions conducted outside the books of accounts of the assessee's. Since both the parties, i.e., the Ld. CIT(A) and the assessee's, have not offered any valid reasons for justifying their respective cases for estimating profit at 15% or 7%, in our considered view, considering the nature of the business of the assessee's and the relevant incriminating material found during the course of search, a reasonable profit should be estimated to settle the dispute between the assessee's a....
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....ised by the assessee's on this issue are partly allowed. 40. Coming back to Ground Nos. 3 to 9 in ITA No.548/Hyd/2026 for A.Y. 2022-23, pertaining to the disallowance of loss of Rs. 77,57,180/- u/s 79A of the Income-tax Act, 1961, the learned counsel for the assessee submitted that, the assessee had admitted additional business income of Rs. 3,00,00,000/- in the return of income filed in response to notice u/s 148 of the Act, based on a prudent and fair estimation of the sales turnover from plot transactions, to cover the deficiencies and discrepancies in the receipts and expenditure and also income on estimation basis. He submitted that, after considering the business loss of Rs. 77,57,180/-, the assessee had offered net business income of Rs. 2,22,42,820/- for the relevant assessment year. He further submitted that the additional business income offered by the assessee was not in the nature of undisclosed income and, therefore, the provisions of Section 79A of the Act were not applicable. Accordingly, he submitted that the disallowance of loss of Rs. 77,57,180/- may be deleted and the assessee may be allowed to set off the said loss against the additional business income offer....