TMI Blog2018 (7) TMI 1756X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of ACIT Vs. Ravi Foods Pvt. Ltd., has confirmed net profit rate of 3.91%. That case however, pertain to a food business case, but not real estate. Generally in real estate/contract cases, profit is estimated at 12.5%. As assessee has mostly sold real estate plots, we are of the opinion that estimation of income at 12.5% on the suppressed turnover will meet the ends of justice. Accordingly, modifying the order of CIT(A), we direct the AO to determine the profit at 12.5% of the determined suppressed turnover. - ITA No. 2242/Hyd/17, 2243/Hyd/17, 2244/Hyd/17, 2245/Hyd/17, 228/Hyd/18, 229/Hyd/18 And ITA No. 230/Hyd/18 - - - Dated:- 25-7-2018 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER For The Assessee : Shri K.A. Sai Prasad, AR For The Revenue : Smt. Pallavi Agarwal, DR ORDER PER BENCH : These are assessee s appeals for the AYs. 2012-13 to 2015-16 and cross-appeals by Revenue for the AYs. 2013-14 to 2015-16 against the respective orders of the Commissioner of Income Tax (Appeals)-12, Hyderabad. Since common issue is involved in all these appeals, they are heard together and disposed-off by this common order. 2. Brie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f AO and submissions of assessee, Ld.CIT(A) confirmed the turnover/receipts and agreed with assessee for estimation of income. But as against 4% agreed by assessee in the written submissions in para 4.14, the Ld.CIT(A) determined the profit percentage at 40%, relying on various case law. The order of Ld.CIT(A) on two issues for AY. 2012-13 is as under: 6.1 As regards the first contention of the appellant's AR, that the entire quantification of suppressed turnover made by the AO is invalid, being based on assumptions, presumptions and estimates, this ground is found to be devoid of any merits. The quantification has been made by the AO after careful examination and analysis of the seized material, containing details of sale of plots pertaining to two ventures carried on by the assessee company. The AO has painstakingly quantified the sale value of each of the two ventures, in each of the sub-categories, i.e., (i) where evidence of rate of plot is available, (ii) where evidence of date of booking is available, and (iii) where neither is available, registered sale value is adopted. The methodology of quantification adopted by the AO is therefore entirely logical and correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts, what can be brought to tax is the profit embedded in such receipts and not the entire receipts, themselves. If that be the legal position, what should be estimated as a reasonable profit out of such receipt must bear an element of estimation. In view of the legal position that not the entire receipts, but the profit element embedded in such receipts, can be brought to tax, in our view, no interference is called for in the decision of the Tribunal accepting such element of profit at ₹ 26 lacs out of total undisclosed receipts of ₹ 52 lacs . In the instant case before us, the assessee was engaged in the business of real estate, wherein part of the amount of sale consideration was received through cheque and balance in cash and only cheque amount was entered in the regular books .................................................................................................................... As per our considered opinion adding entire amount of sale consideration received in cash will not serve the end of justice. Sale proceeds comprise of cost, expenses and profits. Out of entire sale pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income @25% of unaccounted receipts. Therefore, keeping in view the facts of the case in entirety and the proposition laid down by various High Courts as discussed above, and more particularly, keeping in view the nature of the assessee's business and the evidences uncovered during search operations, the Assessing Officer is directed to take 40% of the suppressed turnover as the appellant's income, rather than treating the entire amount as suppressed income. Ground No.8 raised by the appellant is therefore PARTLY ALLOWED . 7. Contesting the above, both assessee and Revenue are aggrieved. Assessee is aggrieved on the issues that are of the quantification of turnover and rate of profit, whereas Revenue is in appeal on treatment of suppressed receipts as income which was not accepted by the Ld.CIT(A). 8. It was the submission of Ld. Counsel that the quantification of the turnover itself is not correct and based on the registers maintained by the sales agents, the quantification cannot be done in the hands of assessee. It was also contention that assessee has not earned that much profit and referred to the turnovers disclosed by assessee which is much more than the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Ld.CIT(A), Ld.CIT(A) relied on the judgment of the Hon'ble Madhya Pradesh and Gujarat High Courts in determining the profit percentage at 40%, there cannot be any fixed profit percentage. It depends on case to case on the facts. As seen from the turnovers declared by assessee in the books of account, these are the turnovers in respective assessment years. A.Y. Turnover (Rs) 2012-13 2,78,74,389 2013-14 8,80,92,909 2014-15 6,09,76,795 2015-16 3,39,08,707 Total: 21,08,52,800 11.1. Compared to the above turnover, the suppressed turnover determined by the AO was roughly at about 33% of the total turnover declared. Assessee has admittedly declared only 4% of the profit on the declared turnovers which was not disputed by AO, consequently, there cannot be 40% profit on the so called suppressed turnover. We are of the opinion that a reasonable profit has to be estimated considering the facts of the case. It is trite law that there cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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