TMI Blog2017 (4) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... e : Shri K.C. Devdas ORDER PER S. RIFAUR RAHMAN, A.M.: This is an appeal of the Revenue directed against the order of the learned Commissioner of Income-tax(A) - 3, Hyderabad, dated 02/06/2016 for AY 2012-13. 2. Briefly the facts of the case are that assessee is engaged in the business of real estate. It purchases the land, develops the land into plots and sells the same. It filed return of income of ₹ 45,54,920/- for AY 2012-13 on 01/10/2012. In the scrutiny assessment, the income was determined at ₹ 1,75,87,884/- by estimating the profits at 15% of gross sales. 2.1 The reasons given by the AO for rejecting the books of accounts and estimating the profits at 15% of turnover are as under: (a) That there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleteness of accounts, therefore held that true and correct income cannot be determined from the books, therefore the same were rejected u/s 145(3) of Income Tax Act and income was estimated at 15% of gross sales. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee submitted as under: (a) That the books of accounts were maintained which was also confirmed by Assessing Officer in the assessment order. The same were subjected to audit by Chartered Accountant, based on which financial statements were prepared and return of income was filed. (b) The Assessing Officer made only general observations with regard to maintenance of accounts and did not specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the past record of the case. 5. After considering the submissions of the assessee the CIT(A) observed that the Assessing Officer did not point any specific defects in the books of accounts before arriving at the conclusion that the true and correctness of income could not be determined in the books of accounts. He further observed that except stating that the commission paid during the years is on higher side compared to commission paid in immediate previous year, and also stating that most of the expenses were in cash and supported by self made vouchers, no specific or serious lapse in maintaining the accounts is quoted by the Assessing Officer. The CIT(A) was of the view that self made vouchers are unavoidable as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee. For the sake of clarity, we reproduce the observations of the coordinate bench in assessee s own case for AYs 2000-1 to 2006-07 as under: 13.2 There is no doubt that the book keeping adopted by the assessee was complex and the relevant data generated by the assessee based on Bills and Vouchers were not available with the assessee and part of the documents were seized by the department, which was used by the special auditor to recast the P L A/c. The degree of reliance and reliability of information adopted by the special auditor is the main grounds of appeal by the assessee. There is no dispute that the special auditor had to rely on the information available with him with the AO which were acquired due to search a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot adopt 15% of sales simply because the coordinate bench treated the business of the assessee as civil contract business and the same was not controverted by the assessee. But from the records submitted before us by both assessee DR as the business of assessee is in real estate dealing only in buying, developing and selling lands. 13.5 The relevant data before us are (extracted from paper book Submitted by the assessee) Cumulative figures a) Cumulative turnover for 7 AYs 100.61 crores (As per special audit report accepted by the assessee) b) Income assessed by ACIT 21.20 crores (21.07%) c) Income assessed by CIT(A) 11.64 crores (11.57%) d) Income computed by special auditor 9.71crores(9.65%) While a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cannot be relied. 13.6 We are left with income computed by special auditor at 9.65%. But this income arrived by special auditor by adopting presumptions and modifying the values of purchase, sales, opening and closing stock. Based on the submissions of DR and assessee, we are of the view that the reliability of the special audit could be in between 80- 85%. On applying the reliability factor to the income determined by special auditor of 9.65%, we will end up arriving the income at 8%, which is similar to section 44AD. 13.7 On the other hand, the provisions of section 44AD proposed to adopt 8% of the total turnover or gross receipts of the assessee shall be deemed to be profits gains of the business chargeable to tax. This sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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