VANAVIL ESTATE,CHENNAI vs. PCIT(CENTRAL), CHENNAI

आयकर अपीलीय अिधकरण, ’सी’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी जगदीश, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकरअपीलसं./ITA Nos.925 & 926/Chny/2024
िनधारणवष/Assessment Years: 2017-18 & 2018-19
Vanavil Estate,
4/20, Duraiswamy Reddy Street,
West Tambaram,
Chennai-600 045. v.
The PCIT (Central),
Chennai-1. [PAN: AALFV 0770 H]

(अपीलाथ/Appellant)

(यथ/Respondent)

अपीलाथ क ओर से/ Appellant by :
Shri S. Sridhar, Advocate
यथ क ओर से /Respondent by :
Shri R. Clement Ramesh-
Kumar, CIT
सुनवाईकतारीख/Date of Hearing
:
19.11.2024
घोषणाकतारीख /Date of Pronouncement
:
12.02.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

These are appeals preferred by the assessee against the orders of the Learned Principal Commissioner of Income Tax, (hereinafter in short
"the Ld. Pr.CIT”) (Central), Chennai-1, both dated 22.03.2024 for the Assessment Years (hereinafter in short "AY”) 2017-18 & 2018-19 passed u/s.263 of the Income Tax Act, 1961 (hereinafter in short "the Act”).
2. Brief facts as noted are that, the assessee is a partnership firm engaged in the business of real estate. A survey operation u/s.133A of the Act was conducted course of which a lapto was gathered that the g business was substantia regular books of accou the potential escapemen
On the basis of the surv assessments for AYs 2
reasons recorded for re belief that, the income receipts had escaped respectively. Thereafter noted to have disput impounded laptop. Afte the assessee, the AO is gross receipts as per b laptop and treated the s
AO is noted to have est rate of 11.59% and 12
AYs 2017-18 & 2018-
31.03.2022. The details follows:-
ITA Nos.92
(AYs 2
:: 2 ::

in the case of the assessee on 07.0
op was impounded. Upon analysis gross receipts of the assessee from ally higher than the gross receipts nts. The survey team is noted to h nt of income at 11.59% of the differ vey findings, the AO is noted to hav
2017-18 & 2018-19 u/s 148 of th eopening these assessments, the AO element of 11.59% and 12.56% of d assessment for AYs
2017-18
r, in the reassessment proceedings, ed the AO’s reliance on the co er considering the submissions and s noted to have computed the diffe books of accounts and the gross r same as undisclosed turnover of the imated the profit element embedded
.56% and accordingly framed the a 19 respectively, u/s 147 of the A s thereof, as noted from the assessm

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate
08.2019, in the of the same, it the real estate reported in the have quantified rential receipts.
ve reopened the he Act. In the O had formed a the differential
8
&
2018-19
the assessee is ontents of the d objections of erence between receipts as per e assessee. The d therein at the assessments for Act both dated ment order is as Sl. No.
Particu
1. Gross
Receipt impounded laptop
2. Gross Receipts a accounts (accordi
3. Differential Receip
4. Profit element therein added income by AO
3. Aggrieved by the preferred appeals befo pendency of the appeal,
263 of the Act, both d tax assessments comple
2018-19. In the notice,
AO’s action of adding o was erroneous. Accord claimed all the expendi was adduced for any a him, the entire suppres is noted that while qua
Pr.CIT had computed
Rs.45,43,54,220/- as ITA Nos.92
(AYs 2
:: 3 ::

ulars
AY 2017-18
s as per p
Rs.11,96,19,541
R s per books of ng to the AO)
Rs.3,22,02,272
pts
Rs.8,74,13,269
R t embedded to the total
Rs.1.01 crores
(8,74,13,269 x
11.59%) action of the AO, the assessee is re the Ld. CIT(A) in both the yea
, the Ld. Pr.CIT is noted to have iss ated 15.02.2024, proposing to rev eted u/s 147 of the Act for both the the Ld. Pr.CIT is noted to have obs nly the profit element qua the diffe ing to the Ld. Pr.CIT, the assesse ture in the Profit & Loss Account a additional expenditure and therefore sed receipts ought to have been bro antifying the value of suppressed re the differential receipts at Rs.5,80
opposed to the figures of Rs.8,

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate
AY 2018-19
Rs.57,56,06,658
Rs.5,13,18,170
Rs.52,42,88,488
Rs.6.58 crores
(52,42,88,488 x
12.56%) noted to have ars. During the ued notices u/s vise the income
AYs 2017-18 &
served that the erential receipts ee had already nd no evidence e, according to ought to tax. It eceipts, the Ld.
0,42,094/- and ,74,13,269/- &

Rs.52,42,88,488/- ado respectively.
4. The assessee is n cause notices issued u/
lines. The copies of the and 163-168 of the Pa with the explanations p revisionary orders u/s 2
dated 22.03.2024, direc receipts between the to laptop and the declare
Pr.CIT, the assessee is n
5. Having regard to that the appeals for No.925/Chny/2024 for which will be followed in 6. Assailing the actio submitted that, the imp therein, which was soug challenge before the Ld of invocation of the re
ITA Nos.92
(AYs 2
:: 4 ::

pted by the AO, for AYs 2017- noted to have furnished their replie
/s 263 of the Act for both the AY ese replies are found to be placed a aper-book. The Ld. Pr.CIT however ut forth by the assessee and passed
263 of the Act for both the AYs 2017
cting the AO to bring to tax the en otal receipts from business as per ed receipts. Aggrieved by the ord now in appeal before us.
the facts taken note of above, bot both the years are similar and AY 2017-18 is taken as the lead ca n the appeal for AY 2018-19. on of the Ld. Pr.CIT, the Ld. AR fo pugned reassessment order and the ght to be set aside by the Ld. Pr.CIT d. CIT(A) and pending for adjudicati visionary juri iction. The Ld. AR

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate
18 & 2018-19
es to the show
Ys on the same at Pages 78-83
r did not agree d the impugned
7-18 & 2018-19
ntire differential the impounded ders of the Ld.
th sides agreed therefore, ITA ase, decision of or the assessee e addition made
T was already in ion on the date brought to our notice that the assesse the disputed seized mat and therefore, since th
CIT(A), who has co-te unjustified in simultane
Act on the very same i fetter/bar set out in Exp
Ld. AR placed reliance o
High Court in the case o
7. The Ld. AR furthe already been critically a AO. Taking us through t u/s 142(1) of the Act a orders passed u/s 147 o lack of enquiry on thi interfere with these com
AR further brought to o been held that, where unearthed in the cours cannot be brought to therein which can be as view adopted by the ITA Nos.92
(AYs 2
:: 5 ::

ee had disputed the reliance placed terial i.e. the laptop as well as the c he matter was already challenged erminus powers of the AO, the L eously invoking revisionary powers issue and that such action was in v planation 1 to Section 263 of the Ac on the decision of the Hon’ble juri of Smt. Renuka Philip vs ITO (40
er argued on merits that the impug nalyzed in detail by the survey team the reasons recorded for reopening, as well as the findings recorded in t of the Act, the Ld. AR contended tha s issue and therefore, the Ld. Pr mpleted assessments u/s 263 of th our notice a plethora of judgments e details of any undisclosed rec se of any search/survey, then the tax but it is only the profit elem ssessed to tax. He accordingly sub AO bringing to tax the profit e

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate d by the AO on ontents thereof before the Ld.
Ld. Pr.CIT was u/s 263 of the violation of the ct. For this, the dictional Madras
9 ITR 567).
gned issue had m as well as the , notices issued the assessment at there was no r.CIT could not he Act. The Ld.
wherein it has eipts/sales are whole amount ment embedded mitted that the element of the differential receipts was upon the decision of th
Industrial Co. Ltd. v.
order passed u/s 263 of cancelled.
8. Per contra, the Ld supported the order of Ld. Pr.CIT, he argued t appellate order on the is bar set out in Explanati
He further submitted discussion on the impu basis as to how he a element instead of the reassessment order was DR therefore urged us n
9. We have heard bo record before us. It is invoked juri iction u/s that there was failure t case required the AO t
ITA Nos.92
(AYs 2
:: 6 ::

s a permissible view in law and the he Hon’ble Supreme Court in the ca
CIT (243 ITR 83),he urged that f the Act was bad in law and therefo d. CIT, DR appearing for the Reven the Ld. Pr.CIT. Reiterating the obse that since the Ld. CIT(A) had not ssue impugned in the order u/s 263
ion 1 to Section 263 of the Act can that the assessment order lacked ugned issue and that the AO did rrived at a conclusion to assess gross receipts and therefore, this s s passed without application of min not to interfere with the order of the oth the parties and perused the mat noted that, in the case in hand,
263 of the Act principally on the b to conduct proper enquiries which t o make. According to Ld. Pr.CIT, t

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate erefore, relying ase of Malabar t the impugned ore ought to be nue vehemently ervations of the yet passed the 3 of the Act, the not be applied.
d any detailed not record any only the profit howed that the d. The Ld. CIT, e Ld. Pr.CIT.
terial placed on the Ld. Pr.CIT broad allegation the facts of the the assessment order suffered from lack facts of the case resulti the opinion of Ld. Pr. CI the interests of the Rev the Act. Before us, the order both on legality as 10. We first take up the Ld. Pr.CIT was proh of the Act, in directing entire supressed receip therein. It is noted tha down certain circumsta
Act is not exercisable b
Section 263, which is in "Revision of ord
263(1)...
(a) to (b)**
(c) Where any o
Assessing Officer before or after
Commissioner un always to have e and decided in su
ITA Nos.92
(AYs 2
:: 7 ::

k of enquiry as also non-application ng in a patently erroneous addition
IT, the AO's order was erroneous an venue and therefore liable for revis e assessee has seriously contested s well as on its merits.
the legal challenge of the assessee hibited in terms of Explanation 1(c) revision of the impugned issued v pts as opposed to the profit elem at Explanation (1) to Section 263
nces in which the power under Sec by the Ld. Pr.CIT.The relevant Expl dispute in the present case, reads a ders prejudicial to revenue
**
**
rder referred to in this sub-section and p had been the subject matter of any appea the 1st day of June, 1988], the po nder this Sub-section shall extend and sha extended to such matters as had not bee uch appeal."

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate of mind to the . As a result, in nd prejudicial to sion u/s 263 of the impugned e which is that to Section 263
viz., addition of ment embedded of the Act lays ction 263 of the anation 1(c) to as follows:
assed by the al [filed on or wers of the ll be deemed en considered

o our notice that the Hon’ble juri of Renuka Philip (supra) has held anation 1(c) provides that, when
Commissioner (Appeals), then juri t cannot be exercised. In the dec y filed the return of income disclo aimed the entire sum as exempt u/s see was reopened u/s 147 of the A e was not eligible for exemption u/
he same, however, at the same time gible for exemption u/s 54F of the claim. Aggrieved by this action o the matter in appeal before the g the pendency of the appeal, th i iction u/s 263 of the Act wherei by the AO u/s 54F of the Act was the AO to disallow the same. O
Court found that the larger issue n u/s 54 of the Act as opposed to S
(A) and therefore the CIT could not e Act for denying the deduction u/s 25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate ictional Madras that the above the appeal is i iction under cided case, the sing long term s 54 of the Act.
Act and the AO s 54 of the Act e, the AO found e Act and thus of the AO, the CIT(A). In the e Ld. CIT had n he held that, also erroneous
On appeal, the which was the Section 54F was have exercised
54F of the Act, which was already in d the Hon’ble High Court t
“22. The above pending before t
Section 263 of th
14.03.2012 state assessee under S the order passed
The said finding r since the assess dated 31.12.2009
of the Act should
23. Therefore, i assessee is entit entitled to claim certain reasons fo the Commission
Commissioner co account of the assumption of ju erroneous.”
12. In light of the ab the facts of the present survey action conducte laptop, which contained from its real estate bus than what was reporte same, the AO had rec suppressed receipts a percentage qua such Thereafter, after maki
ITA Nos.92
(AYs 2
:: 9 ::

ispute before the CIT(A). The relev taken note of by us, is as follows:- explanation makes it clear that when t the Commissioner, the exercise of juri he Act is barred. The Commissioner in the es that the appeal pertains to the claim
Section 54 of the Act and it has got nothin by the Assessing Officer under Section 54
rendered by the Commissioner is wholly u see went on appeal against the re-asses
9 stating that his claim for deduction unde be accepted.
n the process of considering as to wh led to, the Assessing Officer held that the deduction under Section 54F of the Act a or that. Therefore, the larger issue was pe ner of Appeals, and in such circums uld not exercise power under Section 263
statutory bar. Therefore, on this groun uri iction under Section 263 of the Act ove binding legal position, we now t case. As noted in the preceding p d upon the assessee resulted in im d purported details of the receipts o siness, which was found to be subs d in the books of accounts. Upon corded specific reasons computing and also working out the und supressed receipts which had ng enquiries in the reassessment

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate vant findings of the appeal is diction under e order dated made by the ng to do with 4F of the Act.
nsustainable, ssment order er Section 54
at relief the e assessee is and assigned ending before stances, the of the Act on nd also, the t was wholly revert back to paragraphs, the mpounding of a of the assessee stantially higher analysis of the g the value of isclosed profit escaped tax.
t, the AO had framed the assessment profit embedded in the that, the assessee had the laptop itself, on the test of the provisions
Evidence Act. The asse have been made on the assessee is noted to ha in relation to the sup meantime, it is observe of the Act and passed undisclosed profit was have been added to emerging from the abo which was the reliability and pending before the the AO was required to passing the appellate o assessee that, in terms of the Act and in light o
High Court (supra), the juri iction u/s 263 of t
ITA Nos.92
(AYs 2
:: 10 ::

t order wherein he had brought to t supressed receipts. It was brough disputed the reliability of the mate e ground that the data therein was of Section 65A and Section 65B ssee had therefore claimed that no e basis of such unreliable material. A ave disputed the addition of the un pressed receipts, before the Ld.
ed that the Ld. Pr.CIT had exercised the impugned order holding that unjustified and that the entire rec the total income. Applying the r ove decision (supra), we find that t y of the impounded material itself,
Ld. CIT(A), who having the co-term o look into the entire gamut of th rder. Accordingly, we find merit in s of bar set out in Explanation 1(c) f the above binding decision of the e Ld. Pr.CIT was unjustified in exerc the Act on the impugned issue, whi

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate tax undisclosed ht to our notice erial found from not put to the of the Indian o addition could
Accordingly, the disclosed profit
CIT(A). In the power u/s 263
the addition of ceipts ought to ratio decidendi the larger issue was in dispute minus powers of he issue before the plea of the to Section 263
Hon’ble Madras cising revisional ch was already pending in appeal, and directed to be cancelled
13. For completeness, assessee objecting the the Act and that the L juri iction vested in h examine the scope of re let us take the guidanc
Apex Court in Malaba wherein their Lordships before juri iction u/s 2
conditions, which need
Assessing Officer must an erroneous order,
Revenue. In the followin to be erroneous, i.e. ( assumption of incorrec
Assessing Officer's orde or (iii) if the AO's orde the AO has not investig circumstances enumera
Assessing Officer can b
ITA Nos.92
(AYs 2
:: 11 ::

therefore the impugned order bein
.
, we also take up the other argumen merits of the impugned order pas
Ld. Pr.CIT had exceeded the scope himu/s 263 of the Act.For this, we evisionary juri iction u/s 263 of th ce of judicial precedence laid down ar Industrial Co. Ltd. v. CIT ( have held that twin conditions sho
263 of the Act is exercised by the Ld d to be satisfied, are that (i) the be erroneous and (ii) as a conseque prejudice is caused to the int ng circumstances, the order of the A i) if the Assessing Officer's order ct facts; or assumption of incorre er is in violation of the principles of r is passed without application of m gated the issue before him. It is on ated in the foregoing, that an order e termed as erroneous for the pur

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate ng bad in law is nt raised by the sed u/s 263 of e of revisionary e have to first e Act. For that, by the Hon'ble
243 ITR 83) uld be satisfied d. CIT. The twin e order of the ence of passing terests of the AO can be held was passed on ect law; or (ii) natural justice; mind; or (iv) if nly under these r passed by the pose of Section 263 of the Act. Coming be revised by the Ld.
prejudicial to the interes has to understand what
Hon'ble Supreme Court held that this phrase i.e be read in conjunction w
Officer. The Hon'ble S conferred by Section 26
order is erroneous as a but the CIT must also fu some loss is caused to t said judgment held tha order of Assessing Offic of the Revenue. It was adopts one of the cours the Revenue, or where has taken one view wit treated as an order pre view taken by the Asses
14. We note that both impugned order, it is no ITA Nos.92
(AYs 2
:: 12 ::

to the second limb, the AO's erron
CIT only when it is shown that th sts of Revenue. When this aspect is t is prejudicial to the interest of the t in the case of Malabar Industrial e. "prejudicial to the interest of the r with an "erroneous" order passed by Supreme Court, held that for in 63; the CIT should not only show result of any of the situations enu urther show that as a result of an er the interests of the Revenue. Their L t, every loss of revenue as a cons cer cannot be treated as prejudicial further observed that, when the As se permissible in law and it has res two views are possible and the As th which the Ld. CIT does not agre ejudicial to the interests of the Reve ssing Officer is unsustainable in law.
h in the Show Cause Notice [SCN] a ot the case of the Ld. Pr.CIT that, t

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate neous order can e said order is examined, one e Revenue. The Co. Ltd (supra) revenue'' has to y the Assessing voking powers w that the AO's merated above rroneous order,
Lordships in the sequence of an to the interests ssessing Officer sulted in loss to ssessing Officer ee, it cannot be enue unless the as well as in the the AO had not made enquiry into the AO had not applied his assessment. According assessment order or th any details and that th estimating the profits o tax the entire receipts.
already claimed the en therefore there was no but the entire receipts o the AO, according to th erroneous and prejudici
15. From the materia in his recorded reasons the seized material and embedded in the suppr belief, had escaped a reopening the assessme under:
Survey u/s 133A of the assessee on 0
firm has disclosed the gross receipt is ITA Nos.92
(AYs 2
:: 13 ::

issue. Instead, the case of Ld. Pr.C mind at all to the facts gathered i to the Ld. Pr.CIT, there was no info he file to indicate that the assessee he AO had applied his mind to th on the undisclosed receipts, instead
In the opinion of the Ld. Pr.CIT, th tire expenditure in the Profit & Los question of taxing only the profit ought to have been brought to tax.
e Ld. Pr.CIT, rendered the assessm al to the interests of the Revenue.
l placed on record before us, we fin s, had explicitly set out his mind a d the survey team’s analysis that it essed receipts found from the lapto assessment. The relevant reasons ent for AY 2017-18 (lead case) is f the Income-tax Act, 1961 has been conducted
7.08.2019. For the FY 2016-17 (AY 2017-18) receipts of Rs.3.22 Crores but as per the impo
Rs.11.96 Crores.

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate
CIT is that, the n the course of ormation in the e had furnished e same before d of bringing to e assessee had ss Account and in the receipts
This inaction of ent order to be nd that the AO, after examining t was the profit op, which in his s recorded for noted to be as d in the case of , the assessee ounded laptop,

No entries found r laptop. The appare adopting the net pr receipts), the diffe
ITR, it is clear that 16. Thereafter, it is not 22.03.2022 had set out receipts found in the impo questioned the absence relevant requisition of the “1. Please furnish during the year.
2. Please furnish a schedules/notes to 3. Please furnish a 4. Please reconcile and the tax credit
26AS.
5. Survey u/s 133A of the assessee on firm has disclosed the gross receipt is No entries found r laptop. The appare adopting the net pr receipts), the diffe
ITR, it is clear that As against the inc
37,33,880/- as inco not the additional ascertained based o
The assessee has statement recorded assessee is not ma net profit to the tun
ITA Nos.92
(AYs 2
:: 14 ::

regarding expenditures were found in registers nt difference in the receipts worked out to Rs.8
rofit @ 11.59% (after deducting the partner's s rence in net profit arrived at 1.01 Crore. On the assessee has not disclosed the same.
ed that the AO in his notice u/s 142(1) t a detailed questionnaire regarding ounded laptop. The AO is noted to hav of entries regarding expenditure in AO is noted to be as under:
statement of computation of your income fro a copy of audit report, Profit and Loss accou accounts, Balance Sheet.
copy of the partnership deed.
e the income declared in the Income tax retur claimed in the return of income for A.Y. 2017
A of the Income-tax Act, 1961 has been conduct
C7.08.2019. For the FY 2016-17 (AY 2017-18) receipts of Rs.3.22 Crores but as per the impo
Rs. 11.96 Crores.
regarding expenditures were found in registers nt difference in the receipts worked out to Rs.8
rofit ® 11.59% (after deducting the partner's s rence in net profit arrived at 1.01 Crore. On the assessee has not disclosed the same.
come, it is seen that the assessee has adm ome under the head 'profit and gains from the receipts amounting to net profit of Rs. 1.01 C on the average profit percentage.
not disclosed the additional receipts admitt d u/s 133A. It is also evident from the survey fin aintaining proper books of accounts. Further, t ne of Rs.1.01 Crores. Therefore, the income cha

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate s / computer /
.74 Crores and salary from the perusal of the of the Act dated the suppressed ve also inter alia the laptop. The om all sources unt along with rn filed by you
7-18 with Form ted in the case
), the assessee ounded laptop, s / computer /
.74 Crores and salary from the perusal of the mitted only Rs.
e Business' and Crore which is ed during the ndings that the he ascertained argeable to tax of Rs. 1.01 Crores the same.”
17. It is noted that th above notice u/s 142(1)
23-26 of the Paper-book another notice u/s 142
noted to have called fo the Profit & Loss Accou framed the reassessme reassessment order, it findings for bringing undisclosed receipts. Th noted to be as follows:-
9. The assessee's a for the following rea
The impounde been handed o has been base during the cou
The assessee was worked ou arrived at afte available with provided durin assessee is ta statements, lo
There is no ev the course of s assessee to r
C.Balakrishnan the Income-ta
C.Balakrishnan be accepted. I not just on me
ITA Nos.92
(AYs 2
:: 15 ::

has escaped assessment as the assessee has he assessee had furnished a detail
) of the Act, copy of which has been k. The AO thereafter, is noted to hav
2(1) of the act dated 28.03.2022
r the complete details of the expen nt. After these enquiries, the AO is ent order u/s 147 of the Act. On is noted that the AO had set o to tax the profit element emb he relevant discussion in the asses arguments are duly considered and found not to asons:
d materials necessary for arriving at the incom over to the assessee firm on 23.08.2019. The ed on the books and documents, electronic devic rse of survey proceedings.
has not reconciled the apparent difference in ut to Rs. 8.74 crores and net profit of Rs. 1.01 c er adopting the net profit 11.59%, till date, de the assessee from 23.08.2019 and despite the ng the post survey/ assessment proceedings.
aking an unfounded prayer that the assessmen ose sheets/excel sheets/pen drives, etc.
idence whatsoever that the assessee was under survey proceedings and it has taken more than retract from the findings admitted by the a n (one of the partners of the firm) in stateme ax Act, 1961. Therefore, the plea of the asse n (one of the partners of the firm) was under In fact, the findings are based on impounded ere statements recorded.

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate s not disclosed ed reply to the placed at Page ve again issued wherein he is nses claimed in s noted to have perusal of the ut his detailed bedded in the ssment order is o be acceptable me has already e quantification ces impounded receipts which crore has been espite the time e opportunities
Presently, the nt is based on r duress during
4 years for the assessee, Shri.
nt u/s.133A of ssee that Shri duress cannot materials and 10. The assessee regarding land own have been produce
26.03.2022 has st
Rs.6.15 Crores an amount of Rs.3.22
and loss account af the Land owner re regarding land own
11. With the mate arrived at 1.01 C material evidences been added to the t
18. In light of the ab examined the survey m reopening the assessm from the assessee and undisclosed profit qua material. Having taken subscribe to the Ld. Pr.C assessment without ap
Rather, we find that, recorded his findings for 19. Before us the Ld adopted by the AO for which showed that he h this regard, it is noted t laptop made by the AO noted that, the dispute
ITA Nos.92
(AYs 2
:: 16 ::

firm was also requested to produce document ners payments, details of the land owners. N ed by the assessee till date. The assessee vid ated that the Gross Receipts declared by the nd not Rs. 3.22 Crores. The assessee has st
2 Crores represents the net surplus transferred fter deducting Land owner payment of Rs.2.93
ceipts of Rs.6.15 Crores. However, in the abse ner payments, the argument cannot be accepted erials available on record, the difference in rore. The assessee has not controverted the s/reconciliation. Therefore, an amount of Rs.1
total income of the assessee.
bove narrated facts, it is noted tha material, applied his mind, recorded ment, and thereafter, he made sp then, recorded his findings for brin the suppressed receipts found in note of these facts, we are there
CIT’s finding that the AO had framed plying his mind to the facts of the the AO had made specific enqu r assessing the undisclosed profit.
d. CIT, DR however had argued th working out the suppressed profits ad not applied his mind to the facts that the quantification of gross rece
O has not been disputed by the L e relates the computation of gross

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate tary evidences
No such details de letter dated assessee was tated that the d to the profit
Crores against ence of details d.
net profit was e finding with 1.01 crore has at, the AO had his reasons for ecific enquiries ging to tax the the impounded efore unable to d the impugned e present case.
uiries and also hat the figures s was incorrect, s of the case. In eipts as per the Ld. Pr.CIT. It is receipts as per books of accounts. Acco then he would have accounts at Rs.6,15,77, assessment order. It wa had been pointed out b
142(1) of the Act, wher receipts as per book
Rs.3,22,02,272/-. The A contention but rejected above. However, for th made by the AO, in this “.. The assessee
Receipts declared
Crores. The asse represents the n after deducting L owner receipts o regarding land ow
20. In light of the ab line of argument by the the facts of the case computing the additio specifically considered cannot be said to be a rightly pointed out by t
ITA Nos.92
(AYs 2
:: 17 ::

ording to Ld. Pr.CIT, had the AO ap noted that the gross receipts as ,447/- and not Rs.3,22,02,272/-, a as brought to our notice that, this p by the assessee itself in their reply rein it was submitted before the AO ks of accounts was Rs.6,15,77,4
AO is noted to have specifically tak d the same, which have already he sake of convenience, the relevan regard, are being again reproduced vide letter dated 26.03.2022 has stated th d by the assessee was Rs.6.15 Crores and essee has stated that the amount of Rs net surplus transferred to the profit and and owner payment of Rs.2.93 Crores aga of Rs.6.15 Crores. However, in the absen wner payments, the argument cannot be ac ove, we are therefore unable to co e Revenue that the AO had not appl and had ex-facie adopted incorre on. Instead, it is observed that this aspect and rejected the same a case of non-application of mind the Ld. AR of the assessee that, th

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate pplied his mind, per books of as stated in the articular aspect y to notice u/s that, the gross
447/- and not ken note of this taken note of nt observations d hereunder: - hat the Gross not Rs. 3.22
s.3.22 Crores loss account inst the Land nce of details ccepted.”
ountenance this lied his mind to ct figure while t the AO had e and hence it . Moreover, as he action of the AO did not cause any p he had resultantly comp relevant AY 2017-18. I would result in reduct cannot be done u/s 26
particular line of conten
21. We further note t aspect that, as the ass regarding incurrence of have taxed the profit e action of the AO showe noted to have proceede already been recorded incurred outside the bo brought to tax. The observations of the Ld.
not backed by any coge the Ld. AR that, the Ld own view with the view noted in the precedin demonstrate that the unsustainable view in l
ITA Nos.92
(AYs 2
:: 18 ::

prejudice to the interests of the Rev puted a higher value of suppressed
If this action of the AO is interfere tion in the value of suppressed r
63 of the Act. For these reasons, tion of the Revenue.
hat the Ld. Pr.CIT had laid much em sessee was unable to bring on re f expenses outside the books, the element but the entire value of rece ed his non-application of mind. The d on the assumption that, the entire in the P&L A/c and that there wer ooks and therefore the entire recei
Ld. AR has rightly pointed ou
Pr.CIT is based on his own subjectiv ent material or evidence. We are in a d. Pr.CIT has essentially sought to w adopted by the AO. However, fo ng paragraphs, the Ld. Pr.CIT e view adopted by the AO wa law. But, if there are two views p

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate venue, because receipts in the ed with, then it receipts, which we reject this mphasis on the cord evidences
AO should not eipts, and such e Ld. Pr. CIT is e expenses had re no expenses pt ought to be ut that, these ve notion and is agreement with o substitute his or doing so, as is required to as a patently possible on this aspect, and the AO had then such action of the Section 263 of the Act
Hon’ble Supreme Court
CIT (supra).
22. It was brought to bringing to tax the prof on the proposition tha amount of receipts/ sa assessee. For this, our rendered by the Hon’b
President Industries
"3. Having peruse the order made b satisfied that the section 256(1). It sales by itself can disclosed the sale seller of the goo the cost. It is the forms part of the unless there is incurring cost in by the assessee whether entire s income of the negative. The re material has bee acquiring the go sales."
ITA Nos.92
(AYs 2
:: 19 ::

d adopted the view which favoured e AO cannot be termed as ‘erroneo
. This proposition is supported by t in the case of Malabar Industri o our notice that, the view entertai fit element qua the undisclosed rece at it cannot be a matter of argum ales by itself would represent the r attention was invited to the fol ble Gujarat High Court in the ca
(258 ITR 654).
ed the assessment order made by the Asse by the Commissioner (Appeals) and the Trib
Tribunal was justified in rejecting the appl t cannot be a matter of an argument that t nnot represent the income of the assessee es. The sales only represent the price rec ds for the acquisition of which it has alre e realisation of excess over the cost incur profit included in the consideration of sale a finding to the effect that investment acquiring goods which have been sold ha and that has also not been disclosed, t sum of undisclosed sale proceeds can b relevant assessment year answers by ecord goes to show that there is no find en referred to about the suppression of in oods which have been found subject of 25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate d the assessee, ous’ in terms of the decision of ial Co. Ltd. v.
No. 175-178/M/2010
should not be estimated able to substantiate th
Tribunal is noted to ha profit element embedde by observing as under:-
"42. Scope of Re order to earn inc business. This p profits. In a cas unaccounting, no therefore, evide
Probably, for this for the assessi considering the f judgments are un be added as inco of Panna Corpo reasonable amou
14 of Tax Appeal
Court Of Madhya
ITR 654 that ' en in his income'. Fu
(supra), it is settl demonstrate the in the cases of t expenditure is a transferring onus approved. Ex con deduction toward evidences, consid to extents of net legal position on conclusions on th
ITA Nos.92
(AYs 2
:: 20 ::

ht to our attention that, on similar s he case of M/s Prime Developers
0) had rejected the Revenue’s plea d on the undisclosed sales unless th he incurrence of expenses with e ave upheld the assessee’s plea fo ed in suppressed receipts in real e
- easonable Expenditure: Assessee needs t ome/profit and it is basic and universal pr principle applies to both accounted and se of unaccounted profits, due to its ve ormally, the parties do not maintain ev ncing such unaccounted evidences is reason, the courts have taken conscious v ing authority to quantify reasonable facts of the case and industry. Legally s niform in asserting that entire sale proceed me. Honble High court of Ahmadabad rule oration that the " assessee ought to nt for the purpose of receiving such gross
No 325 of 2000 dt. 16.6.2012). Further, a Pradesh held in the case of President In ntire sale proceeds of the assessee should urther, from the judgment in case of Panna led proposition that there is no need for the genuineness of the claim of unaccounted his kind. The underlined logic is that the lways unevidenced and never maintained s on to the assessee in matters of this nsequenti, it is for the AO allow necessaril ds such unaccounted expenditure withou dering the nature of industry and also evide profits earned by the assessee. Consideri the matter, we are of the clear-cut opin his issue are certainly erroneous. In princip

25 & 926/Chny/2024
2017-18 & 2018-19) view that it is expenditure speaking, the ds should not ed in the case have spent s profit' (para
Hon'ble High ndustries 258
not be added a Corporation e assessee to d expenditure unaccounted d. Therefore, s kind is not ly reasonable t demanding ences relating ng the above ion, the AO's le, we uphold the views of the raised in the reve
24. It was brought to have been affirmed by rendered in ITA No.245
2003] was also dismisse
"Dismissed the sp judgment dated J
52 of 2002 where on the ground tha law raised in th
Appellate Tribuna only 8 per cent taxing it, in the stated to be perv
25. The Ld. AR also b
Gujarat High Court in t
[(2020) (9) TMI 97
justified in considering amount for the purpose
ITA Nos.92
(AYs 2
:: 21 ::

e CIT(A) in this regard. Therefore, relev enue's appeals are dismissed."
our notice that the above findings the Hon’ble Bombay High Court in 2 of 2013. Likewise, it is noted tha ers(ITA No.52 of 2002), this Trib that, 8% of the unaccounted on-m ntire unaccounted on-money receipt d payments. The above decision of held by the Hon’ble Gujarat High Cou ent before the Supreme Court [SLP( ed and reported in 265 ITR 37 as un pecial leave petition filed by the Departmen
January 21, 2002 of the Gujarat High Cou eby the High Court dismissed the Departm at no substantial question of law arose. Th he appeal before the High Court was al's finding while directing the Assessing O of the unaccounted on money receipt ins absence of any evidence of expenditure, erse."
3] wherein it was held that, the that the assessee ought to have sp e of receiving the amount of on-mo

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate vant grounds of this Tribunal n their decision t in the case of bunal in similar money could be ts since there is this Tribunal is urt and the SLP
(C) no 14166 0f nder;- nt against the urt in ITA No.
ment's appeal e question of whether the Officer to tax stead of fully could not be sion of Hon’ble am Organiser e Tribunal was pent reasonable onies and thus, what could be brought and not the entire recei
26. In light of the a adopted by the AO of n but only the profit elem view in law, in the facts
27. For the reasons s view that the order dat the profit element of t taxing the entire value, noted above, the cours
143(3)/147 of the Act w therefore of considered passed u/s 147 cannot mind or on incorrect as passing the assessment a plausible view in law,
In the aforesaid facts a u/s 263 of the Act date we cancel the same by a ITA Nos.92
(AYs 2
:: 22 ::

to tax was the profit embedded in pts.
above decisions (supra), we find not taxing the entire value of supp ment embedded therein, was indeed and circumstances of this case.
set out above, we therefore are of ted 31.03.2022 passed by the AO the undisclosed / suppressed rece cannot also be said to be unsustain se adopted by the AO while passing was one of the permissible views in view that the assessment order dat be said to have been passed withou ssumption of facts. As noted above t order had discharged the dual role
, which cannot be said to be unsust and circumstances therefore, the im ed 22.03.2024 is held to be unsusta allowing the appeal of the assessee.

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate n such receipts that the view ressed receipts d a permissible the considered bringing to tax eipts instead of nable in law. As g the order u/s law. We are of ted 31.03.2022
ut application of e, the AO while e and has taken tainable in law.
mpugned order ainable. Hence,
.

Order pronounced (जगदीश)
(JAGADISH)
लेखासदय/ACCOUNTANT
चेई/Chennai,
दनांक/Dated: 12th February
TLN, Sr.PS
आदेशक ितिलिपअेिषत/Copy

ITA Nos.92
(AYs 2
:: 23 ::

and circumstances in the lea
2017-18 are identical to the facts &
, our above decision shall apply mu al in ITA No. 926/Chny/2024 as w e impugned order u/s 263 of t
8-19 as well.
e appeal for both AYs 2017-18 & 2
d on the 12th day of February, 2025,
MEMBER (एबीटी.
(ABY T. VA
याियकसदय/JUDICIA y, 2025. to:
nai / Madurai / Salem / Coimbatore.

25 & 926/Chny/2024
2017-18 & 2018-19)
Vanavil Estate d case under & circumstances utatis mutandis well. Hence, we the Act dated
2018-19 stands in Chennai.
/-
वक
)
ARKEY)
AL MEMBER