TMI Blog2020 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... and arrive at the cost of construction. From the total sale proceeds i.e. cash receipts as well as bank receipts, cost of construction required to be reduced and net profit required to be brought to tax. AO may also go into the details of unaccounted expenditure and make addition invoking the relevant provisions of the Act. AO has not done such exercise in this case. AO also did not consider the unaccounted expenditure incurred though the evidences are available in the impounded material. AO also did not refer the cost of construction to the departmental valuation and simply estimated the unaccounted receipts @1000/- per sq.ft in respect of residential area and ₹ 1500/- per sq.ft in respect of commercial area without arriving at the actual cost of construction with accounted expenditure and the unaccounted expenditure which is baseless. Also incumbent upon the AO to arrive at the accounted receipts and unaccounted receipts and the actual expenditure incurred. No such exercise was done by the AO and simply taxed the entire unaccounted receipts which were offered by the assessee at the time of survey. When there is evidence available with regard to unaccounted expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived in cash which remained unaccounted. A statement was recorded during the course of survey covering the incriminating material page No.1 to 19 of Annexure A/KC/Guntur/1 which contain the details of flat wise sales and one of the partners, Shri Kakumanu Madhava Rao stated that they have accepted cash over and above the registered value which was not accounted in the books of accounts. The assessee quantified the total sum of unaccounted cash receipts at ₹ 7,37,04,000/- and admitted the additional income of ₹ 8 crores, clear of all the expenditure debited to profit loss account and agreed to pay taxes. Later a statement u/s 131 was recorded by DDIT (Inv). During the course of recording the statement u/s 131, another partner Sri Rajendra Babu appeared and confirmed the contents of the statement recorded from Shri Kakumanu Madhava Rao during the course of survey and confirmed the additional income of ₹ 8.00 crores as declared during the survey. However, subsequently, the assessee did not file the return of income admitting the additional income declared during the course of survey. Therefore, notice u/s 148 was issued by the AO and in response to the notice issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al building for working additional receipts, without any basis and the assessee has signed the statements without understanding the same. He further submitted that there was no corroborating evidence found to establish that the entire additional receipts constitute income, whereas the evidences found during the survey indicated the unaccounted expenditure met out of unaccounted receipts. Therefore, the assessee submitted before the AO to accept the additional income admitted by the assessee @30% of the undisclosed receipts. However, the AO not being impressed with the explanation of the assessee, treated the entire additional receipts as undisclosed income, accordingly, assessed the sum of ₹ 2,28,51,910/- for the A.Y.2015-16 and ₹ 2,40,34,830/- for the A.Y.2016-17. 3. Against which the assessee went on appeal before the CIT(A) and reiterated the submissions before the CIT(A). The Ld.CIT(A) considered the submissions of the assessee and found that in this line of business, certain expenditure was incurred outside the books of accounts, therefore, there is no justification to hold that the entire unaccounted receipts as unaccounted income. Accordingly, viewed that esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the undisclosed income assessed by the AO is supported by the evidences found during the course of survey and also fortified by the statement recorded from the partners, therefore, the Ld.CIT(A) erred in allowing the appeal of the assessee and accepting the profit of 30% offered by the assessee, hence, requested to set aside the order of the Ld.CIT(A) and uphold the order of the AO. 5. On the other hand, the Ld.AR vehemently supported the order of the Ld.CIT(A). 6. We have heard both the parties and perused the material placed on record. In the instant case, survey u/s 133A was conducted and during the course of survey, loose sheets were found disclosing the unaccounted receipts which were received in cash as well as cheque. Cash the receipts worked out to ₹ 7,93,95,000/- as discussed in the assessment order. The assessee had admitted the entire undisclosed receipts as income for various assessment years, however, offered only 30% of the undisclosed receipts as income in the return filed in response to notice issued under section 148 of the act. The Ld.CIT(A) accepted the income admitted by the assessee as justified in his order. For the sake of clarity and convenienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contain certain details of cash expenditure in form of payment for electrician Mr. Narasimha Rao to the true of ₹ 4,14,350/- up to 30/09/2013 which shows that such expenditure i s incurred by the appellant. The Annexure A/KC/GUNTUR/7 also contain details of certain cash expenses though no such claim was made during the statement recorded of the appellant , the claim cannot be negated keeping in view the nature of business of the appel lant and also the detai ls contained in the not ings as ment ioned above. In view of the above, there is some justification in the claim of the appellant that the entire additional receipts cannot constitute income of the appellant. The decision relied on by the appellant also lay down the above proposition subject to facts of the case. On the basis of factual position as above and the legal position as above and the legal position as contended by the appellant, it is held that offer of income on estimated basis, not the entire receipt s , by the appel lant i s jus t i f ied. Next ques t ion that consideration is what percentage of such receipts is to be est imated as income. Going by the trade practice of the real estate business and the perce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including cash expenditure and arrive at the cost of construction. From the total sale proceeds i.e. cash receipts as well as bank receipts, cost of construction required to be reduced and net profit required to be brought to tax. The AO may also go into the details of unaccounted expenditure and make addition invoking the relevant provisions of the Act. The AO has not done such exercise in this case. The AO also did not consider the unaccounted expenditure incurred though the evidences are available in the impounded material. The AO also did not refer the cost of construction to the departmental valuation and simply estimated the unaccounted receipts @1000/- per sq.ft in respect of residential area and ₹ 1500/- per sq.ft in respect of commercial area without arriving at the actual cost of construction with accounted expenditure and the unaccounted expenditure which is baseless. Similarly it is also incumbent upon the AO to arrive at the accounted receipts and unaccounted receipts and the actual expenditure incurred. No such exercise was done by the AO and simply taxed the entire unaccounted receipts which were offered by the assessee at the time of survey. Therefore, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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