TMI Blog2024 (1) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account are rejected and the net profit rate is estimated. Since in the instant case also the profit of the assessee has been estimated, therefore, the decision of the Hon'ble jurisdictional High Court relied on by the learned CIT (A) is squarely applicable to the facts of the case of the assessee and therefore, we do not find any infirmity in the order of the CIT (A) in deleting the addition u/s 40A(3). Validity of assessment u/s 153A in absence of any incriminating material - HELD THAT:- It is an admitted fact that various payments details and name of individual customers were found during the course of search which contain receipts in cash as well as through Bank. When these documents were confronted to the Directors of the Company, they have admitted that these were cash payments received from customers which were reflected in the consolidated statement found during the course of search. Therefore, it cannot be said that no incriminating material was found during the course of search. CIT (A) has thoroughly discussed this issue while upholding the addition made in the return filed in response to notice u/s 153A. Under these circumstances, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the same. Therefore, in our opinion, no new disallowance can be made on this issue. Order of the learned CIT (A) deleting the addition of income on account of unsubstantiated cash expenditure is upheld and the ground raised by the Revenue on this issue is dismissed. Non granting of TDS credit - HELD THAT:- It is an admitted fact that this issue was neither raised before the AO nor before the CIT (A) and therefore, there was no occasion for either of the authorities to adjudicate the issue. However, since it is the case of the assessee that the TDS has been deducted by the customers in the name of M/s Skill Promoters (Firm) which was subsequently changed to M/s. Skill Promoters (P) Ltd and such TDS is supported by Form 26AS, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to verify the claim of such TDS credited and decide the issue as per law after giving due opportunity of being heard to the assessee. The grounds raised by the assessee are accordingly allowed for statistical purposes. Disallowance of personal expenditure - HELD THAT:- Admittedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved in all these appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. 2. First, we take up ITA No.628/Hyd/2022 filed by the assessee and ITA 686/Hyd/2022 filed by the Revenue for the A.Y 2014-15 in the case of Skill Promoters as the lead case. 3. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of construction and land development and derives income from house property and income from business. It filed its original return of income u/s 139(4) for the A.Y 2014-15 on 25.9.2014 declaring total income of Rs. 3,37,12,080/-. A search and seizure operation u/s 132 of the I.T. Act was conducted in the case of the assessee s group on 22.10.2019. In response to notice u/s 153A, the assessee filed its return of income on 26.2.2021 declaring total income of Rs. 3,37,12,080/-. Statutory notices u/s 143(2) and 142(1) were issued by the Assessing Officer to which the A.R of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. 4. During the course of assessment proceedings, the Assessing Officer observed from the seized doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground that the assessee has violated several provisions of the I.T. Act and by admitting portion of cash received as income, the assessee company cannot absolve itself of the willful defaults made in adhering to certain provisions of the I.T. Act. After considering the survey u/s 133A on 10.12.2015 and the search that took place on 22.10.2019, the Assessing Officer computed the disallowance to be made u/s 40A(3) for various years, the details of which are as under: A. Survey u/s 133A on 10.12.2015 in the hands of M/s. Skill Promoters: S. No A.Y FY Amount 1 2014-15 2013-14 26,93,878 2 2015-16 2014-15 20,08,200 3 2016-17 2015-16 6,24,39,186 TOTAL 6,71,41,264 B. Search u/s 132 conducted on 22.10.2019 (including survey material at construction site) in the hands of M/s. Skill Promoters Private Ltd: S. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of sale consideration of commercial space amounting to Rs. Rs. 357.00 crores, which includes an amount of Rs. 244.74 crore that was received through banking channel and an amount of Rs. 112.26 crore that was received by way of cash. 7. During the post search proceedings, the assessee company furnished the Corrected/rectified figures in respect of actual advances received by the firm/company towards sale consideration of commercial space during the F.Ys. 2008-09 to 2019-2020 after reconciling the books of account of the firm/company, as under: A.Y Name of the entity Bank Receipts (Rs.) Cash Receipts (Rs.) Total Receipts 2008-09 to 2013-14 Skill Promoters (Partnership firm) 61.56 14.74 76.31 2014-15 31.91 13.61 45.52 2015-16 35.20 10.81 46.01 2016-17 8.68 5.08 13.76 2016-17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) called for a remand report from the Assessing Officer. After considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, the learned CIT (A) dismissed the grounds challenging the validity of assessment u/s 153A in absence of any incriminating material found during the course of search. He also rejected the request of the assessee to follow 8% as net profit which is being consistently adopted in the past by observing as under: 6.2 I have perused the submissions of the AR. It is seen that a survey operation u/s.133A was conducted on 09-09-2015 in the business premises of M/s. Skill Promoters, Hyderabad. Subsequently assessment orders were passed by the AO for AY 2015-16 and 2016-17. In these orders, it was stated that the appellant was estimating profit @8% of the advances received since the project is a long gestation project and was yet to be completed. In the assessment order of AY 2016-17 u/s.143(3) passed on 14-12-2018, the assessee himself submitted at para (d) that only estimated profit is taken on the advances received and the gross construction cost is directly taken to the balance sheet. It was also stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts on sale of property is concerned, the learned CIT(A) after considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, directed the Assessing Officer to delete the addition by observing as under: 7.5. I have carefully considered the submissions of the appellant, the order of the Assessing Officer, the evidence filed by the appellant's AR, as well as the remand report and the counter-comments thereon. The AR contended that the AO erred in treating the undisclosed income on account of cash receipts (on-money receipts) at Rs. 13,61,00,000/- as its income. It was argued by the AR that the loose sheets are nothing but an un-authenticated, unsigned, unreliable dumb material, which do not co relate with any sale proceeds. It was stated that the seized material and pen drive are dumb documents and the AO erred by relying on the same. It was also pointed out that the seized material was not considered in totality and the AO ought to have computed only the profits of the firm and not the entire gross receipts of the firm. The AR also stated that the AO ought to have caused further enquiries with the parties making the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) Mohd. Najeeb Sadia Fathima) Rs. 70,00,000 through bank 37/2017-18 Mohd. Ahsanuddin Khan Syeda Najeeba Fatima Rs.1,29,00,000/- out of which an amount of Rs. 79,00,000/- received in cash and Rs. 50,00,000/- through bank 38/2017-18 Mohd. Najeeb Sadia Fathima Rs. 25,42,000/- out of which an amount of Rs. 10,00,000/- received in cash and Rs. 15,42,000/- through bank 39/2017-18 Narayana Rao P Syamala Devi Rs. 67,00,000/- out of which an amount of Rs. 42,00,000/- received in cash and Rs. 25,00,000/- through bank. 40/2017-18 Amanur Rasheed Zaina Mohd. Abdul Raofe Rs. 1,87,50,000/- out of which an amount of Rs. 1,12,50,000/- received in cash and Rs. 75,00,000 through Bank. 12-25 06/2017-18 Javed, Pranitha Reddy, Rakshi Pranav Reddy, Muddireddy Nikhita Reddy Rs. 2,25,00,000/- out of which Rs. 1,00,00,000/- through bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Mohammed Aslam, Managing Director/ Partner who in his statement dated 20-12-2019 and in reply to Question no.38 confirmed that these pertain to sale consideration received by the company from the customers during the period FYs 2008- 09 to 2019-20. Similarly, the other Director/partner of the company viz. Shri Syed Naveeduddin Ahmed Quadri, in his reply to Question No.23 of his statement dated 20-12-2019 has also confirmed that these pertain to the receipt from customers towards sale consideration of commercial space at Sarat Capital Mall. It was also mentioned in the statement that they have reconciled the above figures and have arrived at actual receipts towards sale of commercial space to the extent of Rs. 357.05 crores which includes cash receipts of Rs. 112.41 crores. Accordingly, Shri Mohd Aslam filed an affidavit dated 20-12-2019 wherein he has disclosed Rs. 42.45 crores by way of additional income by computing profit @19% on the gross receipts. However, the appellant has retracted the admission and had filed return u/s.153A declaring additional income of only Rs. 6 crores across four years. 7.5.3 Secondly, it is not in dispute that the appellant has not recorded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to utilize some notings of on-money receipts on the loose sheets that are against the assessee and in the nature of income and ignore the other seized material which are not favourable to the revenue. A seized document should be read as a whole. This was so held in Chander Mohan Mehta vs.ACIT [1997] 71 ITD 245 (Pune-Trib) and Dhanvarsha Builders and Developers (P.) Ltd. v. DCIT[2006] 102 ITD 375 (Pune-Trib). The Hon'ble ITAT, Pune has eloquently explained this concept in Dhanvarsha Builder (cited supra), the relevant extract of which is reproduced below: 6.2. It was also the argument of the learned Counsel that the impugned papers not only to show the receipts but also the expenditure. Therefore, it was argued that the document should be read as a whole and deduction for the expenditure incurred should be given to the assessee while computing undisclosed income. We have considered this argument also. We are of the view that the seized document should be read as a whole if it has to be relied upon. It cannot be read only to the extent it is advantageous to the revenue and not read when it becomes disadvantageous to the revenue. In other words, if we do not read the fig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial seized during search are on the same project, reflects lack of understanding of the facts of the case. The AO himself in AY 2016-17 has taken cognizance of the expenses of Rs. 18.68 crores allowed during survey on the same project and has restricted these expenses to Rs. 5,53,56,091/- for want of evidences. Therefore, the contention of the AO in the remand report has no basis and is rejected. The appellant further claimed evidence of cash expenses of Rs. 14 crores which was not seized by the search team. This shows that there is no certainty or authenticity in the claims of cash expenses as these were based on the notations on the rough sheets found during the search survey. There is no foolproof evidence to authenticate these cash expenses by way of bills, third party confirmation etc. Hence, this method of computing profit after setting off of cash expenses found during search cannot be relied upon and is discarded. 7.5.7 A better method to find out the true position of profit is to take recourse to a reasonable estimation of income on fair basis after factoring the evidences that were found during search survey. It is seen that during survey, the assessee has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in search proceedings as it would result in double taxation of the same income. Since the assessee has disclosed income on cash turnover of Rs. 32 crores during survey, this turnover needs to be excluded from the on- money receipts of Rs. 112.41 crores. The additional income of Rs. 32 crores admitted during survey was assessed up to AY 2016-17 in the hands of the firm viz, M/s. Skill Promoters and the remaining on-money receipts excluding the survey income i.e., Rs. 80.41 crores (Rs. 112.41- Rs. 32 crores) is distributed among the assessment years i.e., AYs 2016-17 to 2020-21 on pro-rata basis as a percentage of cash receipts in the hands of the successor company viz, Skill Promoters Private Limited. Accordingly, the profit on the cash receipts is worked out for all the years of the appellant firm and its successor company viz. Skill Promoters Pvt Ltd as per the table below: A.Y Name of the entity Cash receipts in crores Pro rata % of cash Income on cash received (Bx80.41 crores) Profit on cash receipts @ 30% of Rs. 80.41 crores (B C) Additional income offered in ITA u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of on money receipts remained to be taxable in the current year in the hands of the firm. Hence the Assessing Officer is directed to delete the addition of Rs. 13.61 crores on this issue. Accordingly, the grounds of appeal related to this issue are PARTLY ALLOWED . 12. So far as the addition u/s 40A(3) is concerned, the learned CIT (A) directed the Assessing Officer to delete the same by observing as under: 8.5. I have carefully considered the submissions of the appellant, the order of the Assessing Officer, the evidence filed by the appellant's AR, as well as the comments of the Assessing Officer thereon. Briefly the facts are, seized material indicating cash expenses totaling to Rs. 39,29,58,926/- was found during search. The AO disallowed an amount of Rs. 26,93,878/- u/s.40A(3) of the Act pertaining to the current year out of the same. The AR contended that the disallowance u/s.40A(3) has to be made only when expenses are reflected in the books of account and debited to Profit loss account. As per the AR, since the cash expenses were not debited to the profit and loss account, the disallowance u/s.40A(3) does not apply to the same. It was also contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly where expenditure in question has been incurred and claimed in the computation of income. The Supreme Court, in the case of Attar Singh Gurmukh Singh Vs. Income Tax Officer, Ludhiana (191 ITR 667), reiterates this position as well. In the present case, the Tribunal confirms as a finding of fact at para 17 of its order that no expenditure has been incurred except the investment in gold The consideration paid towards the investment has been duly brought to tax as unexplained income, such income not having been claimed as expenditure in the computation of income The objection of the Revenue is that the valuation of the gold per gram is not Rs. 500 but more as revealed by to her disallowances made in the order of assessment and if the higher rate was taken into consideration, one could assume that certain expenditure has been incurred and claimed. We are not persuaded to accept this submission in so far as there is no necessity to consider any other valuation except that relating to the subject disallowance, being Rs. 500 per gram adopted by the Assessing officer after due consideration and application of mind. We are thus of the view that the provisions of 40 A(3) are wholly inapp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the requirements contained in section 4OA(3) can be dispensed with are those stated in rule 600 of the income-tax Rules Unless a person falls within one or the other clauses of rule 600, he has necessarily to comply with the requirements of section 40A(3) Further, if an assessee says that he is entitled to take advantage of a particular clause in rule 6DD, he must satisfy the requirements of that clause, which means that, in this case, the assessee who is seeking to claim the benefit of clause () in rule 6DD, has not only to satisfy that having regard to the nature of the business there was a genuine difficulty in complying with the requirements of section 40A(3) he must also establish the genuineness of the payment and the identity of the payee. Unless he does that, he cannot take advantage of clause (j). It is not open to the assessee to say that he will only partly satisfy the requirements of clause (j) and would still be entitled to the benefit of the said clause. We may make it clear that the satisfaction that is relevant in such cases is the satisfaction of the ITO . In view of the binding decision of the jurisdictional High court of Andhra Pradesh in the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, there may not have been any difficulty in upholding that order. But, when he proposes to add back an exact item in the profit and loss account, he was relying on the rejected books which he could not do as held by the Bench of this court in Maddi Sudarsanam Oil Mills Co. v. CIT (1959] 37 ITR 369. There is also further difficulty if Section 40, as argued by learned counsel, is to be taken into account even after making an estimate. When there are certain other deductions which are to be disallowed such as wealth-tax payment in section 40, can it be said that after making an estimate, the wealth tax charged in the P L A/c should again be added back to the profit. This example illustrates how the contention of the Revenue, that Section 40[(b) makes a difference in the situation, is untenable. In our considered opinion, the answer to the question has to be in the negative and in favour of the assessee Similar view was advocated by various judicial fora in the following decisions: (i) CIT VS Smt.Santosh Jain [2007] 159 Taxmann 392 CIT VS Gobind Ram (Punjab Haryana) (ii) CIT vs. Gobind Ram (2014) 48 taxmann.com 14/(2015) 229 (Punjab Haryana) (iii) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts and holding that the addition made by the AO on account of undisclosed sale Consideration received in cash is not correct as the assessee has failed to demonstrate its eligibility for telescoping and resultant rejection of books of accounts. 3. Ld. CIT(A) erred on facts and in law by deleting disallowance u/s 40A(3) in view of the fact that the rejection of books of account by the CIT(A) is not accepted. 4. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary. 13.3 The Revenue has filed the following additional grounds: 1. The learned CIT (A) erred in rejecting the books of account on one side and accepting the books results on the other side. 2. Without prejudice to the above, the learned CIT (A) erred in estimating the income @30% on the on-money receipts only by rejecting the books of account and accepting the book results of the assessee, where the percentage of profit offered by the assessee is 8% only. 13.4 After hearing both the sides and considering the fact that all material facts necessary for adjudication of the additional grounds are already available on record and no new facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 2. Aggrieved by the above additions / disallowances, the assessee filed an appeal before CIT(A)-12, Hyderabad. The decision of the ld. CIT(A) is analyzed issue-wise under: 2.1. Addition towards undisclosed income w.r.t. cash receipts on sale of property Rs. 13,61.00,000/-. 2.1.1. It was found from the seized material that the assessee has received cash over and above the registered value of the property, which was not accounted for in the books of account. It was verified from the books of accounts maintained in Tally by the assessee that it is recognizing sale consideration only to the extent of amount received through banking channel. Hence, an amount of Rs. 13,61,00,000/ - was treated as undisclosed income w.r.t. cash receipts (on money receipts) and added back to the total income of the assessee. 2.1.2. The Id.CIT(A) held that the audited books of account are defective and cannot be relied upon as they do not give a correct picture of the profits earned. The Id.CIT(A) has therefore rejected the books of accounts u/s. 145 of the Act and estimated the income on on-money receipts at the rate of 30% following the percentage adopted in assessee's case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be the basis for rejecting the books of accounts. Further, in respect of the books of account maintained by the assessee, where it accounting is only the receipts routed through banking channel, there were no discrepancies noticed. Generally, books of accounts would be rejected if any discrepancies have been found. In the assessee's case, assessments have been completed u/s. 143(3) and 147 and the Assessing Officer has not found any discrepancies so as to reject the books of accounts. The addition on account of undisclosed income with reference to cash receipts (on money receipts) on sale of property was made on the basis of incriminating material found during the course of search, which was out of the books of account. Hence, there is no point of rejecting the books of account by the learned CIT(A) and estimating the income of the assessee, as the addition made relates to the unaccounted income found during the search action. Further, there is a clearcut evidence and bifurcation of amounts received by the assessee in cash and through banking channels as mentioned below: A.Y Name of the entity Cash receipts in crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as incurred expenditure in cash towards payments to labour, purchase of material such as sand, cement, steel and miscellaneous expenditure relating to construction activity, which amounts to Rs. 26,93,878/- by violating the provisions of section 40A(3) of the Act. Hence, the Assessing Officer has disallowed the same u/s.40A(3) of the Act. 2.2.2. The learned CIT(A) held that since the profit was estimated @ 30% by rejecting the books of account, there cannot be further additions on account of cash expenses reflected in cash book. 2.2.3. The decision of CIT(A) is not acceptable in view of the fact that the rejection of books of account by the CIT(A) is not being accepted. Hence, when the rejection of books of account was not being accepted, the decision relied upon by the CIT(A) in the case of M/s. Indwell Corporation vs. CIT [1998] [232 ITR 776 (AP)] will not be applicable. In view of the above submission, it is humbly requested that the Hon'ble Bench to consider the above and pass necessary orders in favour of the Department. 13.8 The learned Counsel for the assessee, on the other hand, while partially supporting the order of the learned CIT (A) to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of books of account though not specifically spelt out in the assessment order. He submitted that neither the cash income received nor the cash expenses incurred have been incorporated in the books. The learned CIT (A) in his order has specifically mentioned that by applying the wednesbari principle, i.e, the principle of reasonableness is applied only to on money receipts and not to book results. 13.11 So far as the additional ground raised by the Revenue and all appeals for A.Ys 2016-17 to 2020-21 are concerned, the learned Counsel for the assessee referring to Para No.8.5.8 of the order of learned CIT (A) submitted that the learned CIT (A) has incorrectly distributed the on-money receipts among the A.Ys 2016- 17 to 2020-21 on prorata basis as a percentage of cash receipts in the hands of the company i.e. Skill Promoters (P) Ltd. He submitted that the survey was also conducted on the same project and income was offered and assessed by the Assessing Officer after the survey. Thus, the income offered on the same project during the survey cannot again be added in search proceedings as it would amount to double taxation. He submitted that since the assessee has disclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the learned CIT (A) on his own adopted a method of 30% estimated profit which is not at all justified under the facts and circumstances of the case. He submitted that the entire on- money, evidences of which were found during the course of search, should be added to the total income of the assessee as done by the Assessing Officer. He submitted that the order of the learned CIT (A) be reversed and that of the Assessing Officer be restored. 14. We have heard the rival arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs. 13,61,00,000/- with respect to cash receipt on sale of property and Rs. 26,93,878/- u/s 40A(3). We find the learned CIT (A) deleted the additions, the reasons of which are already reproduced in the preceding paragraph. So far as the addition of unaccounted cash receipt is concerned, it is an admitted fact that the assessee has not recorded the entire sale receipts (i.e. cash and cheque) in the books of account nor has it recorded the cash expenses. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the learned Counsel for the assessee on the issue of distribution of on-money receipts among various AYs and the estimation of income on the same is concerned, we find it is an admitted fact that survey was also done on the same project and the income was offered and assessed by the Assessing Officer after survey. We therefore, find merit in the arguments of the learned Counsel for the assessee that the income offered on the same project during the survey cannot again be added in search proceedings as it would result in double taxation. Since the assessee has disclosed income of Rs. 13.00 crores on the unaccounted receipts during the survey, the learned CIT (A) has rightly excluded the cash receipts of Rs. 29.50 crores from on-money receipts of Rs. 112.41 crores. However, he failed to exclude the cash receipt of Rs. 14.74 crores relating to A.Y 2008-09 to 2013-14, since these AYs are not covered under the search assessment. Therefore, we find merit in the arguments of the learned Counsel for the assessee that the total on-money receipts that has to be distributed among the A.Ys 2016-17 to 2020-21 is only Rs. 68.17 crores i.e. Rs. 112.41 crores Rs. 44.24 crores (29.54 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Returns filed u/s,153A. The detailed statement showing the year wise sales with regard to the 11 independent houses and 7 plots, AY wise, was furnished, along with supporting evidences, which were forwarded to the Assessing Officer, for examination and report thereon. The Assessing Officer, vide his Remand Report dated 22-03-2018, which is reproduced in para 9.3 above, has verified the statement and the evidences furnished by the appellant, and has confirmed that the total consideration of Rs. 2.45 crores has been reflected in the Returns filed u/s.153A for the respective AYs 8.4. In our view, once it was agreed by the Assessing Officer based on the evidence that the entire sale consideration pertaining to 11 independent houses and 7 plots in the respective AYs from A.Y 2011-12 to A.Y. 2015-16 were duly shown by the assessee then the correct course would be to tax the turnover for these two years which pertain to AYs.2013-14 and 2014-15 only. At this stage, it is useful to mention that the co-ordinate Bench of the Tribunal in the case of Sampada Homes had revised the rate of 40% on the total turnover and had reduced it to 10%. However, the said decision was contested b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: 6. We have considered the rival contentions and perused the statements placed on record and the case law relied upon. As seen from the order of the AO, the order was an ex-parte order, therefore assessee was not in a position to explain the nature of receipt. Before the Ld.CIT(A), necessary explanation was given. CIT(A) in his order has partly accepted the turnovers to the extent they are accounted for and the balance was treated as unexplained cash credit. Since the nature of receipts are pertaining to the contract works, it is not correct on the part of the authorities to bring to tax the entire receipt as income. As seen from the nature of deposits in the bank accounts, there were corresponding withdrawals also and these seems to be petty cash receipts in the small contract works undertaken by assessee. Hon'ble Gujarat High Court in the case of CIT Vs. President Industries [258 ITR 654] (Gujarat- HC) has held that it cannot be matter of an argument that the amount of sales by itself cannot represent the income of assessee, who has not disclosed the sales. It is the realization of excess over the cost incurred that only forms part of the profit included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to adopt the profit rate of 15% on the unaccounted receipts of Rs. 68.17 crores for the A.Y 2016-17 to 2020-21, the details of which are already given at Para No.13.11. The grounds raised by the Revenue on this issue are accordingly dismissed and the grounds raised by the assessee are partly allowed. 15. Ground of appeal No.3 by the Revenue relates to the order of the learned CIT (A) in deleting the disallowance made u/s 40A(3). 16. After hearing both sides, we do not find any infirmity in the order of the learned CIT (A) on this issue. It is an admitted fact that during the course of search, seized material indicating cash expenses totalling to Rs. 39,29,58,926/- were found out of which the Assessing Officer disallowed an amount of Rs. 26,93,878/- u/s 40A(3) relevant for the current year on the ground that the unaccounted expenditure reflected the violation of provisions of section 40A(3). We find before the learned CIT (A) the assessee argued that the expenses were not debited in the books of account maintained during regular course but outside the regular books and the disallowance u/s 40A(3) was made without pointing out any substantive evidence to a single payment or to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed DR drew the attention of the Bench to the findings given by learned CIT (A) where he had given exhaustive details while upholding the validity of the assessment u/s 153A. He submitted that apart from the statements from various persons, independent customers and their payments received in cash was found during the course of search. It has been admitted that the cash details were not disclosed in the regular books of accounts maintained. Therefore, the arguments advanced by the assessee that no incriminating material was found during the course of search is incorrect. 17.3 We have heard the rival arguments made by both sides, perused the orders of the AO and the CIT (A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The assessee in the grounds of appeal Nos. 2, 3, 4 for the above 3 A.Ys has basically challenged the validity of assessment u/s 153A in absence of any incriminating material found during the course of search. It is the argument of the learned Counsel for the assessee that no addition can be made in absence of any incriminating material found during the course of search. However, the arguments so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in impounded material is only at Rs. 9,83,81,222/-. Please explain the discrepancy and submit from where the expenditure of Rs. 18.68 cr was arrived at by your concern and also show-cause why the difference of Rs. 8,84,18,778/- claimed as excess expenditure by your firm should not be brought to tax as additional income on account of cash received over and above the registered value of commercial space sold by your company. Ans: I submit that, we have claimed expenditure of Rs. 18.68 crores on account of expenditure incurred in cash between April, 2008 to December 2015. However, as we have not maintained proper books of account with regards to cash expenditure and we have not maintained record of expenditure incurred in cash for various miscellaneous expenses and for meeting various obligations. Hence, we request for allowing such miscellaneous expenses incurred during the beginning of our projects. Part of this unrecorded expenditure was incurred on purchasing of jewellery worth 3.3 crores given to our landlords, Sri Sarath Gopal and Family as goodwill amount for entering into Joint Development Agreement during 2009 . 18.1. However, the Assessing Officer was not satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Syed Mohd Aslam stated that the claim of expenditure of Rs. 18.68 crores on cash receipts of Rs. 32 crores during survey was accepted by the A0 and assessments were completed. However, as no proper books being maintained with regard to cash expenditure, they have not maintained record of expenditure incurred for various miscellaneous expenses and for meeting various obligations. It was also stated that the part of this cash expenditure was utilized for purchasing jewellery worth Rs. 3.30 crores given to the landlord Shri Sarath Gopal and family as a good will amount. The AO after reducing the jewellery worth of Rs. 3.30 crores added an amount of Rs. 5,53,56,091/- as unverified expenditure during survey. The appellant is aggrieved and is in appeal. 7.5.1 The AR vehemently contested the said addition during appellate proceedings stating that the issue has already been considered by the AO during earlier survey proceedings in the year 2015 for the AYs 2015- 16 and 2016-17 u/s.143(3) of Act. It was contended that the same issue which has been dealt with and examined u/s.143(3) cannot be re- examined in the proceedings u/s.153A of the Act. It was stated that the issue has alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts/ cash receipts was estimated @30% on the gross receipts while adjudicating the appeal on this issue by rejecting the books of account. It was held by the jurisdictional High court of Andhra Pradesh in M/s. Indwell Corporation vs CIT (1998] (232 ITR 776) (AP) that once the books are rejected and the income is estimated, no new disallowance can be made on the same set of books. In this case when the income was estimated at 30% of the gross cash receipts, it is deemed that the assessee has incurred the remaining 70% as its expenses. The above disallowance of cash expenses gets subsumed in the same. Therefore, no new disallowance can be made on this issue. In view of the same, the addition of income on account of unsubstantiated cash expenditure of Rs. 5,53,56,091/ is directed to be deleted. Accordingly, the ground related to this issue is ALLOWED. 18.3 We have heard the rival arguments made by both sides, perused the orders of the Assessing Officer and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by both sides. We find the Assessing Officer in the instant case made addition of Rs. 5,53,56,09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of M/s. Indwell Corporation vs CIT (1998] (232 ITR 776) (AP) that once the books are rejected and the income is estimated, no new disallowance can be made on the same set of books. Since in the instant case the income has been estimated @15% of the gross cash receipts, therefore, it is deemed that the assessee has incurred the remaining 85% as its expenses. The above disallowance of cash expenses gets subsumed in the same. Therefore, in our opinion, no new disallowance can be made on this issue. In view of the above discussion, the order of the learned CIT (A) deleting the addition of income on account of unsubstantiated cash expenditure of Rs. 5,53,56,091/ is upheld and the ground raised by the Revenue on this issue is dismissed. 19. There is one more issue which is common for A.Y 2017- 18 to 2020-21 in ITA Nos.623/Hyd/2022 to ITA No.626/Hyd/2022 is regarding non granting of TDS credit in the assessment order. 19.1 The learned Counsel for the assessee submitted that while passing the assessment order u/s 143(3) r.w.s. 153A on 26.09.2021, the AO failed to give credit of the TDS of the following amounts: A.Y Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly allowed for statistical purposes. 20. The next issue which is common for A.Y 2017-18 to A.Y 2020-21 relate to the order of the CIT (A) in deleting the disallowance of personal expenditure made by the Assessing Officer at Rs. 50,000/-, Rs. 46,50,000/-, 1,53,10,000/- and Rs. 18,00,000/- for A.Y 2016-17 to 2019-20 respectively. 20.1 Facts of the case, in brief, are that as per the seized material, the Assessing Officer noted that the total cash expenditure found as per Annexure A/SPPL/SMA/05 to A/SPPL/SMA/38 was at Rs. 36,06,09,309/- from 09.01.2017 to 21.10.2019. Out of the said expenditure the Assessing Officer noted that the expenditure amounting to Rs. 2,24,60,000/- is relating to Shri Syed Aslam. He therefore, confronted the same to the assessee in reply to which it was submitted that whatever expenditure entries made in the cash book maintained at the construction site are genuinely related to the construction expenses and the same should be allowed as business expenditure. However, the Assessing Officer noted that the expenditure, the details of which are given at Para 5.1 of his order relates to personal in nature and cannot be allowed as business expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, the reasons of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the CIT (A) on this issue. Admittedly, the so-called expenditure which according to the Assessing Officer is personal in nature was found from the seized documents which contain both income as well as expenditure. The income from such unrecorded sales has already been estimated in the preceding paragraphs. It has been held by the Hon'ble jurisdictional High Court in the case of M/s. Indwell Corporation vs. CIT (1998) 232 ITR 776 (A.P). Once the books were rejected and the profit was estimated no further disallowance can be made on the same rejecting the books as the expenses gets subsumed in the estimation of profit. Since the learned CIT (A) while deleting the addition has followed the decision of the Hon'ble jurisdictional High Court, therefore, in absence of any contrary material brought to our notice by the learned DR, the order of the learned CIT (A) on this issue is upheld and the grounds raised by the Revenue is dismissed. Similar grounds have been raised by the Revenue for the AYs 2017-18 to 2019-20. Following similar reasonings the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock in trade into capital asset in the current year. The assessee company has only leased the property as a builder as a business model to attract the customers so that the property can be easily sold out which does not amount to conversion to capital asset. It was pointed out that nowhere in the provisions of sec 28(via) it is mentioned that leasing out the property leads to conversion of stock in trade to capital asset. Also it was argued that there is no commercial exploitation of the property by the assessee company. It was accordingly argued to delete the addition of Rs. 78,24,80.921/-. 21.3 Based on the arguments advanced by the assessee, the learned CIT (A) called for a remand report from the Assessing Officer. After considering the remand report of the Assessing Officer and rejoinder of the assessee to such remand report, the learned CIT (A) deleted the addition by observing as under: 21.4 Aggrieved with such order of the learned CIT (A), the Revenue is in appeal before the Tribunal. 22. The learned DR heavily relied on the order of the Assessing Officer. 23. The learned Counsel for the assessee, on the other hand, while supporting the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer is totally wrong and based on incorrect appreciation of facts. He submitted that after appreciating the facts properly, the learned CIT (A) has given relief which is in accordance with law and therefore, the same should be upheld and the grounds raised by the Revenue should be dismissed. 24. We have heard the rival arguments made by both sides, perused the orders of the AO and the CIT (A) and the Paper Book filed on behalf of the assessee. We find the assessee in the instant case has received total commercial space of 14,42,896 sft in Block A as consideration for developing the entire project. Out of the above, the assessee sold 669150 sft and leased out 532376 sft in different floors. We find the Assessing Officer applying the provisions of section 28(vi)(a) held that the assessee has converted the unsold inventory of 532376 sft into fixed asset and therefore, brought the same to tax as business income. While doing so, the Assessing Officer took the fair market value of the area sold at Rs. 5620.71 per sft and accordingly made addition of Rs. 78,24,80,921/- to the total income of the assessee details of which are given at Para 21.1 of this order. We find in appeal, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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