SHRI PRAPHULL KALURAM SHIVALE,PUNE vs. CENTRAL CIRCLE 2(3), PUNE

The Assessing Officer, therefore, reopened the case of the assessee within the meaning of section 147 of the Act. Accordingly, a notice u/s 148 of the Act was issued to the assessee on 08.03.2021 after recording the reasons and obtaining the approval from the competent authority. The assessee in response to the same vide letter dated 06.04.2021 stated that the return of income filed on 14.02.2018 may be treated as return in response to the notice issued u/s 148 of the Act. The Assessing Officer thereafter issued and served statutory notices u/s 143(2) and 142(1) of the Act on the assessee in response to which the AR of the assessee appeared before the Assessing Officer and filed the requisite details.

During the course of assessment proceedings the Assessing Officer noted that during the course of second survey on 13.09.2019 evidences of unaccounted receipts on account of sale of lands received through cheque and cash were found and impounded as Bundle No.1. He noted that pages 1 to 83 of Bundle No.1 contains the charts of sale of land in various schemes floated by the assessee group. The details maintained in the charts included details of sale consideration received for the land sold by way of cheque and in cash. The Assessing Officer observed that during survey proceedings, the assessee Shri Praphull Shivale, husband of Smt. Anjali Shivale had stated that all the receipts appearing in the chart were accounted for in the books of account maintained. However, he could not demonstrate the same with reference to the books of account maintained or with reference to the return of income filed. He noted that as per the summary of sales offered by the assessee group, the total sales received both in cheque and in cash in the hands of the assessee and his wife for assessment years 2014-15 to 2018-19 are of Rs.97,82,05,971/-. However, the assessee, during the first survey action on 28.09.2017, had disclosed the gross receipts of Rs.58,60,79,094/- in his hands and in the hands of his wife pertaining to assessment years 2014-15 to 2017-18 which has been offered subsequently by them in their respective returns filed after the survey action. The Assessing Officer compared the figure of unaccounted sales appearing in the impounded papers in Bundle No.1 and noted that the assessee has received sale consideration in cash amounting to Rs.1,30,23,386/- over and above the consideration of Rs.2,44,06,563/- taxed in the hands of the assessee in the order passed earlier. Thus, the assessee has offered less sales to the extent of Rs.1,30,23,386/- in his return. He, therefore, asked the assessee to explain the difference. The assessee in response to the same submitted that he had already offered the income of Rs.61,02,250/- @ 25% on the sales of Rs.2,44,06,563/- as disclosed during the survey action conducted on 28.09.2017. It was further submitted that during the course of next survey action conducted on 13.09.2019 when the query was raised relating to the entries found to be mentioned in Bundle No.1, he instantaneously could not demonstrate that such receipts were already disclosed in the books of account and the return of income filed against the notice issued u/s 148 of the Act in the earlier assessment proceedings. It was submitted that due to very little time allowed to reconcile the regular books of account and impounded documents in Bundle No.1 which were voluminous containing as many as 83 pages, the assessee had offered such income on estimate basis. It was further submitted that the assessee had declared more sales in the first survey undertaken in 2017 as compared to those which were found during the course of second survey. The assessee has also tried to reconcile the same. It was further submitted that the profit @ 25% offered during the course of survey action was also in the higher side since the profit in such type of business is usually less than 20%.

However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs.32,55,846/- being the profit @ 25% on the suppressed sale receipts of Rs.1,30,23,386/- by observing as under: “7.6 The reconciliation chart as well as the explanation furnished by the Assessee has been considered in view of the material and information provided by the Investigation Wing. On perusal of the reconciliation statement, the assessee has given the chart reconciling the project wise figure of sale made in cash and cheques vis-à-vis sales receipt shown in the books of account, along with duly

In appeal the Ld. CIT(A) upheld the action of the Assessing Officer by observing as under: “3.1 I have gone through the Assessment Order, the statement of facts, submissions made by the appellant during the assessment as well as the appellate proceedings, the findings of both the surveys conducted on 28.09.2017 as well as 13.09.2019 and the appeal is decided as under. 3.2 Brief facts of the case are that a survey action u/s 133A was conducted in the case of the appellant and his wife Smt. Anjali Praphull Shivale who are engaged in the business of land development, plotting and selling on 13/09/2019. There was one more survey conducted in the case of the appellant on 28.09.2017. During the course of survey proceedings, evidences of unaccounted receipts on account of sale of lands received through cheques and cash were found and impounded as per Bundle No.1. pages No.1 to 83 of the Bundle No.1 contain the charts of sale of land in various schemes floated by the Appellant group. The details maintained in the chart included details of sale consideration received for the land sold by way of cheque and in cash. During the course of the survey proceedings, Shri. Praphull Shivale and Smt. Anjali Shivale submitted that all the receipts appearing in the chart were accounted for in the books of accounts maintained. However, they could not demonstrate the same with reference to the books of accounts maintained or with reference to the return of income filed. As per the summary of sales offered by the appellant group the total sales (Cheque & cash) in hands of Shri. Praphull Shivale and Smt. Anjali Shivale for A.Y. 2014-15 to 2018-19 were of Rs.97,82,05,971/-.

Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case and in law the Ld. DCIT, (Central) Circle-2(3), Pune (the Assessing Officer) erred in making addition of Rs.32,55,846/ on account of net profit considering the net profit @ 25% merely on the basis of statement recorded during survey action u/s.133A of the Act and not based on any incriminating documents found and impounded during survey and without bringing any materials on record for such addition ignoring and without appreciating the facts that the appellant had truly and correctly declared the net profit @15.10% which could be the maximum profit from such land transaction business after incurring expenses for acquisition of land and incurring other incidental expenses. The addition so made being arbitrary, illegal and bad- in-law be deleted.

The Ld. Counsel for the assessee at the outset submitted that the assessee has disclosed more sales / receipts during the course of first survey action which was based on estimate basis. Further, in the second survey report, the Investigation Officer has time and again stated that there are lot of duplicate entries which must be ruled out while arriving at the correct figure of unrecorded / under-reported sales / receipts. He drew the attention of the Bench to para 6 of the assessment order and submitted that the assessee has explained that after considering all the duplicate entries in the impounded material, the gross receipt comes to Rs.1,75,18,759/- against the sale receipt to the tune of Rs.2,44,06,563/- offered earlier after the first survey which was on estimate basis. However, the Assessing Officer disbelieved the same on the ground that there is no reason for the assessee to disclose such higher figure during the course of first survey that was conducted in 2017. He submitted that during the course of first survey the assessee had declared such sales / receipts on estimate basis, has honoured the same and paid the taxes. However, merely because the assessee has declared the higher receipts during the course of first survey, the same cannot be a ground to make addition on the basis of duplicate entries found during the second survey. He submitted that the assessee has duly reconciled and has proved before the Assessing Officer that the gross receipts / sales offered in the return in response to the notice issued u/s 148 of the Act on the basis of first survey was higher than the actual sales / receipts found during the course of second survey. Further, there are a lot of duplicate entries and the Assessing Officer without properly analyzing the material in hand has made the addition which is not justified. Further, the Ld. CIT(A) is also equally unjustified in sustaining the addition made by the Assessing Officer. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be deleted.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). He submitted that the assessee could not explain with cogent reasons regarding the excess turnover / sales found by the Assessing Officer to the extent of Rs.1,30,23,386/-. Since the Assessing Officer has estimated the profit @ 25% which was declared by the assessee as the profit rate of the unaccounted sales / receipts during the first survey, therefore, the Assessing Officer was justified in making addition of Rs.32,55,846/- to the total income of the assessee.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. It is an admitted fact that the assessee was not maintaining regular books of account and on the basis of first survey conducted on 28.09.2017 the assessee had declared the additional income of Rs.61 lakhs being 25% of the estimated gross receipts of Rs.2,44,06,563/- for assessment year 2014-15. We find during the course of second survey conducted on 13.09.2019 the Assessing Officer found that gross receipts to the tune of Rs.1,30,23,386/- was suppressed over and above the amount of Rs.2,44,06,563/- declared by the assessee during the course of first survey for which he made the addition of Rs.32,55,846/- being the profit @ 25% of such suppressed sales / receipts. It is the submission of the Ld. Counsel for the assessee that the assessee has already declared more receipts / sales in the return filed in response to the notice issued u/s 148 of the Act after the first survey which was on estimate basis and therefore, the addition made by the Assessing Officer by estimating the profit @ 25% on the suppressed turnover of Rs.1,30,23,386/- is not justified. Further, the Ld. CIT(A) without appreciation of the facts properly has sustained the addition which is also not justified.

A perusal of the assessment order shows that the assessee had given a chart reconciling the project-wise figure of sales made in cash and cheque vis-à-vis sale receipts shown in the books of account duly highlighting the duplication of entries as appearing in the impounded material. Although the assessee had explained that the gross receipts as per the impounded material comes to Rs.1,75,18,759/- as against the amount already offered to the tune of Rs.2,44,06,563/-, however, we find the Assessing Officer disbelieved the same on the ground that the assessee has not justified as to why he has offered more sales / receipts in the first survey undertaken in 2017. It is an admitted fact that the receipts / sales were disclosed on estimate basis on the basis of first survey action. Merely because the assessee had offered more sales / receipts as against actual receipts the assessee in our opinion cannot be penalized for declaring higher figure. It is the settled proposition of law that no addition can be made merely based on assumption, suspicion, guesswork or conjuncture or irrelevant inadmissible material. In our opinion, the income which is to be estimated should be based on the actual receipts / sales especially when the assessee has reconciled the same and has given the actual receipts / sales as per the impounded material by excluding the duplicate entries. Even the survey team had also accepted that there are lot of duplicate entries which must be ruled out while arriving at the right figure of un-recorded or under-reported sale receipts. Under these circumstances, the action of the Assessing Officer in rejecting the reconciliation statement submitted by the assessee is not justified. The Ld. CIT(A) also is equally unjustified in upholding the action of the Assessing Officer. Since the matter requires thorough verification, 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 Assessing Officer with a direction to make accurate computation of the receipts / sales year-wise removing duplicate entries, find out the gross receipts / sales declared in the return filed in response to the first notice issued u/s 148 of the Act and only if there remains any suppressed sales / receipts, then estimate the profit on the same @ 25% as has been done. Needless to say the Assessing Officer shall provide due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

After hearing both sides, we find the grounds raised by the assessee in are identical to the grounds raised in ITA No.1582/PUN/2024. We have already decided the issue and restored the same to the file of the Assessing Officer for fresh adjudication, therefore, following similar reasonings, we restore the issue to the file of the Assessing Officer for fresh adjudication. The grounds raised by the assessee are accordingly allowed for statistical purposes.

The assessee in the instant case has challenged the order of the Ld. CIT(A) in confirming the penalty of Rs.15,66,960/- levied by the Assessing Officer u/s 271(1)(c) of the Act.

After hearing both parties, we find we have already restored the quantum addition to the file of the Assessing Officer for fresh adjudication. Therefore, the issue of levy of penalty u/s 271(1)(c) of the Act is also restored to his file for fresh adjudication after completion of the assessment. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

The assessee in the instant case has challenged the order of the Ld. CIT(A) in confirming the levy of penalty of Rs.58,88,200/- u/s 271(1)(c) of the Act.

After hearing both sides, we find the Ld. CIT(A) confirmed the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act by following his order for assessment year 2014-15. Since the order of the Ld. CIT(A) sustaining the penalty has been restored to the file of the Assessing Officer for fresh adjudication, therefore, this issue is also restored to the file of the Assessing Officer for fresh adjudication. The grounds raised by the assessee are accordingly allowed for statistical purposes.

After hearing both sides, we find the grounds raised by the assessee in are identical to the grounds raised in ITA No.1582/PUN/2024. Since we have already decided the issue and restored the same to the file of the Assessing Officer for fresh adjudication, therefore, following similar reasonings, we restore the issue to the file of the Assessing Officer for fresh adjudication. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, all the appeals filed by the assessee are allowed for statistical purposes.