K.S.VELUSAMY,CHENNAI vs. ITO NON CORPORATE WARD 22(5), CHENNAI

These three appeals filed by the assessee are delayed by 114 days in filing the appeal and filed a petition for condonation of delay in the form of an affidavit to which; the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of 114 days in filing of the appeal stands condoned and the appeal is admitted for adjudication.

Brief facts of the case are that the assessee is an individual, carrying on business in real estate under the name and style of M/s. SVS Enterprises, Tambaram. A survey under section 133A of the Income Tax Act, 1961 [“Act” in short] was conducted in the assessee’s business premises on 30.03.2012 and the assessee has admitted total undisclosed income of ₹.3,35,40,100/- for the assessment years 2010-11 to 2012-13. The entire income admitted by the assessee was income from his business. The assessee had purchased a land for business for a consideration of ₹.2,85,00,000/- declaring a total net profit of ₹.3,61,15,693/- from real estate business in 3 years i.e., assessment year 2010-11, 2011-12 and 2012-13. The assessee filed his return of income for the assessment year 2010-11 on 04.08.2011 under section 139(4) of the Act. However, the assessee has not filed any return of income for the assessment years 2011-12 and 2012-13. After following due procedures, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 28.03.2015 for the assessment years 2010-11 & 2011-12 and for the assessment year 2012-13, the assessment was completed on 31.03.2015. The assessee has not filed any balance sheet or statement of affairs disclosing his investments in movable and immovable assets. Based on the impounded materials and since the assessee has not maintained proper books of accounts even though his transactions in real estate are voluminous, the Assessing Officer has arrived at the total net profit earned by the assessee for the assessment years 2010-11, 2011-12 and 2012-13 at ₹.6,51,83,493/- as against ₹.3,61,15,693/- admitted during the course of survey. On appeal, by granting relief as proposed in the second remand report of the Assessing Officer dated 19.06.2017, the ld. CIT(A) partly allowed the appeals of the assessee.

On being aggrieved, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the Assessing Officer made the additions based on only survey admission and there was no incriminating material found during the course of survey to make the addition.

On the other hand, the ld. DR has submitted that the assessee has not maintained any books of account, in fact, the assessee has maintained one note book and based on that, the addition was made.

Per contra, the ld. Counsel for the assessee has submitted that for earlier assessment years returns were filed by the assessee and the net profit ratio was 17.03%, 18.40% and 16.38% in the year ended 31.03.2007, 31.03.2008 and 31.03.2009 respectively. Therefore, the ld. Counsel for the assessee has submitted that at the most, the higher ratio of net profit accepted by the Department may be taken for the assessment years under consideration. However, the ld. DR has strongly objected to the above submissions of the ld. Counsel.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Based on the impounded materials during the course of survey under section 133A of the Act, the assessment was completed under section 143(3) r.w.s. 147 of the Act for all the assessment years under consideration. After considering the remand reports and reply of the assessee, the ld. CIT(A) has directed the Assessing Officer to recompute the total income after giving relief as suggested by the Assessing Officer in the second remand report for all the three assessment years under appeal.

7.1 Before us, the ld. Counsel for the assessee has filed turnover profit ratio comparison chart, wherein, the net profit ratio adopted in the appellate order for the assessment years 2010-11, 2011-12 and 2012-13 are 23.29%, 43.15% and 51.75%, which appears to be very high as compared to previous years comparison of the net profit ratio of 17.03%, 18.40% and 16.38% in the year ended 31.03.2007, 31.03.2008 and 31.03.2009 respectively. In the absence of regular books of accounts of the assessee, the assessments as per survey report are very high. The ld. CIT(A) has allowed some relief as proposed by the Assessing Officer in his second remand report, which has no basis for arriving such higher figures. Considering the previous years’ comparison, we are of the considered opinion that the net profit ratio at 18.40%, which was highest among the three previous years, would be very reasonable to meet the ends of natural justice. Accordingly, we direct the Assessing Officer to recompute the income of the assessee by adopting the net profit ratio at 18.40% for all three assessment years under appeal.

So far as additional ground raised by the assessee with regard to reopening of the assessment under section 147 r.w.s. 148 of the Act is concerned, by making endorsement in the grounds of appeal, the ld. Counsel for the assessee has stated that “the legal ground with respect to 148 not pressed for all 3 years”. Accordingly, the additional ground raised by the assessee is dismissed as not pressed.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on 12th May, 2023 at Chennai.