SKANDA BUILDERS,KURNOOL vs. ACIT., CENTRAL CIRCLE - 2(3), HYDERABAD

ITA 531/HYD/2025Status: DisposedITAT Hyderabad20 August 2025AY 2020-21106 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the AO rejected the assessee's books of accounts under Section 145(3) due to discrepancies found in ERP data and seized material, which indicated cash payments to landlords and substantial cash transactions outside the regular books. The AO estimated 14% net profit on disclosed turnover and 18% on suppressed turnover. The CIT(A) reduced the profit rate on undisclosed cash receipts to 15% and directed the AO not to disturb the profit margin on disclosed turnover. The Tribunal found that the seized material, consisting of loose sheets, contained details of receipts and payments not entered in the books of accounts, rendering them unreliable. The AO's rejection of books under Section 145(3) was justified. However, the Tribunal found merit in the assessee's argument that the profit rate on undisclosed turnover should not be higher than on disclosed turnover, especially when the seized material was not specific. The Tribunal held that the CIT(A) erred in not considering the profit rate on disclosed turnover while estimating profit on undisclosed turnover. The Tribunal set aside the orders of the lower authorities and remanded the matter back to the AO for fresh adjudication, directing the AO to re-examine the issue of suppressed turnover and estimation of profit by considering the profit rate on disclosed turnover as a benchmark and also considering the nature of seized material.

What were the facts?

This case involves a batch of 30 appeals filed by various assessees and the Revenue against orders of the CIT(A)-12, Hyderabad, for assessment years 2019-20 to 2022-23. The appeals concern M/s Skandhanshi Infra Projects India Private Limited and other group entities. A search and seizure operation under Section 132 of the Income Tax Act, 1961, was conducted on January 5, 2022, at the premises of the assessee and its group concerns. This was followed by survey actions under Section 133A. During the search, loose sheets, electronic data, books, and documents were seized. Statements were recorded from various individuals, including the Chairman and Managing Director. The Assessing Officer (AO) quantified total receipts for the Skandhanshi Group for FY 2017-18 up to the search date at Rs. 1144 crores, identifying Rs. 625.95 crores as suppressed sales turnover. The assessee group voluntarily admitted additional income of Rs. 60 crores.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in allowing the appeal only in part, and ought to have allowed it in entirety, as prayed for by the assessee? 2. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in dismissing the grounds raised by the assessee regarding the lack of evidence in seized material for cash receipts and the unreliable nature of the seized material, which were described as non-speaking loose sheets without corroborative evidence? 3. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in concluding that suppressed turnover was detected during the search, when the seized documents were allegedly "dumb"? 4. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in dismissing the ground regarding the nature of admission of additional income, which was claimed to be general and conditional, not based on specific evidence? 5. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in holding a net profit rate of 15% as reasonable against undisclosed cash receipts, ignoring facts peculiar to the assessee's case? Revenue's Contentions: 1. Whether the CIT(A) was correct in holding that income should be estimated at 15% of undisclosed cash receipts, as against the 18% estimated by the AO? 2. Whether the CIT(A) erred in directing the AO not to disturb the profit margin declared by the assessee on disclosed turnover, despite a finding of inflation of expenses against the disclosed turnover? 3. Whether the CIT(A) erred in not upholding the estimation of income at 14% on the disclosed receipts when the AO had rejected the books of accounts?

Which sections of the Income-tax Act were involved?

Section 132,Section 132(4),Section 132(1),Section 132(1A),Section 133A,Section 139,Section 145(3),Section 147,Section 37(1),Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER Sl.

No. I.T.A.No.

Name of Appellant Name of Respondent A.Y.

Appealed against the Order of the CIT(A)-12, Hyderabad Dated 1. 514/Hyd./2025 Skanda Infra Projects India Private Limited, KURNOOL. PIN – 518 002 Andhra Pradesh PAN AAOCS8382G The ACIT, Central Circle- 2(3), HYDERABAD. PIN – 500 004 2019-20 26.12.2024 2. 515/Hyd./2025 2020-21 26.12.2024 3. 516/Hyd./2025 2021-22 06.01.2025 4. 517/Hyd./2025 2022-23 26.12.2024 5. 518/Hyd./2025 Skandhanshi Infra Projects India Private Limited, KURNOOL. PIN – 518 002 Andhra Pradesh PAN AAWCS0746E The ACIT, Central Circle- 2(3), HYDERABAD. PIN – 500 004 2019-20 26.12.2024 6. 519/Hyd./2025 2020-21 Appeal No.CIT(A), Hyderabad 12/10611/2 019-20 dated NIL 7. 520/Hyd./2025 2021-22 Dated 26.12.2024 8. 521/Hyd./2025 2022-23 26.12.2024 9. 308/Hyd./2025 The ACIT, Central Circle-2(3), HYDERABAD. PIN – 500 004 Skandhanshi Infra Projects India Private Limited, KURNOOL. PIN – 518 002 Andhra Pradesh PAN AAWCS0746

The order continues below.

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