Deputy Commissioner of Income-tax,, v. Shri Sadanand Kuddu Shetty,, Pune

ITA 304/PUN/2015 | misc
Pronouncement Date: 08-11-2017 | Result: Dismissed

Appeal Details

RSA Number 30424514 RSA 2015
Assessee PAN AAIPS5833M
Bench Pune
Appeal Number ITA 304/PUN/2015
Duration Of Justice 2 year(s) 7 month(s) 15 day(s)
Appellant Deputy Commissioner of Income-tax,,
Respondent Shri Sadanand Kuddu Shetty,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-11-2017
Date Of Final Hearing 01-11-2017
Next Hearing Date 01-11-2017
Assessment Year misc
Appeal Filed On 23-03-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE . BEFORE SHRI D.KARUNAKARA RAO AM AND SHRI VIKAS AWASTHY JM . / ITA NO.304/PUN/2015 BLOCK PERIOD : 1997-98 TO 2003-04 DCIT CENTRAL CIRCLE-2(1) PUNE . /APPELLANT VS. SHRI SADANAND KUDDU SHETTY A-1/101 KARISHMA APARTMENTS KOTHRUD PUNE 411 029 PAN : AAIPS5833M . / RESPONDENT . / ITA NO.312/PUN/2015 BLOCK PERIOD : 1997-98 TO 2003-04 SHRI SADANAND KUDDU SHETTY A-1/101 KARISHMA APARTMENTS KOTHRUD PUNE 411 029 PAN : AAIPS5833M . /APPELLANT VS. ACIT CENTRAL CIRCLE-2(1) PUNE . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SMT. NIRUPAMA KOTRU / DATE OF HEARING : 01.11.2017 / DATE OF PRONOUNCEMENT: 08.11.2017 / ORDER PER D. KARUNAKARA RAO AM : THESE ARE THE CROSS APPEALS FILED BY THE REVENUE AN D THE ASSESSEE AGAINST THE ORDER OF CIT(A)-12 PUNE DATED 31-12-2014 BLOCK ASSESSMENT WAS MADE U/S.158BC (C) OF THE ACT FOR THE BLOCK PERIOD 1997 -98 TO 2003-04. ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 2 2 BEFORE US AT THE OUTSET LD. COUNSEL FOR THE ASS ESSEE BRINGING OUR ATTENTION TO THE GROUND NOS. 1 2 2.1 3.1 4.1 AN D 5 SUBMITTED THAT THE SAME ARE NOT PRESSED. IN CONNECTION WITH THE GROUNDS NOT PRESSED WE HEARD BOTH THE PARTIES ON THESE GROUNDS AND PROCEED TO DISMISS THE SAME AS NOT PRESSED. FURTHER HE SUBMITTED THAT GROUND NOS. 6 AND 6.1 IS CONNECTED TO THE SOLITARY GROUND RAISED BY THE REVENUE IN ITS APPEAL IN ITA N O.304/PUN/2015. 3. THAT LEAVES GROUND NOS. 3 4 4.2 6 AND 6.1 RAI SED BY THE ASSESSEE FOR ADJUDICATION AND THE SAME ARE EXTRACTED HERE AS UND ER : 3. THE LD.CIT(A) ERRED IN CONFIRMING AN ADDITION O F RS.5 74 294/- ON ACCOUNT OF ALLEGED EXCESS CLAIM OF AGRICULTURAL INCOME. 4. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS.51 20 486/- ON ACCOUNT OF ALLEGED UNDER VALUATION OF THE HOTEL BUI LDING ON THE BASIS OF THE SUMMARY REPORT SUBMITTED BY THE DVO 4.2 THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT TH ERE WERE VARIOUS DEFECTS IN THE REPORT OF THE DVO AND HENCE THE ADDITION CONFI RMED WITHOUT APPRECIATING THE VARIOUS DEFECTS SHOULD BE DELETED. 6. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION O N ACCOUNT OF G.P. ON UNDISCLOSED SALES FOR A.Y. 2003-04 WITHOUT APPRECIA TING THAT NO SUCH ADDITION WAS WARRANTED ON THE FACTS OF THE CASE. 6.1 THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.45 80 012/- BEING THE ADDITION MADE ON ACCOUNT OF G.P. ON UNDISCLOSED SAL ES FOR THE A.Y. 1997-98 TO 2003-04 ON THE GROUND THAT THE BENEFIT OF TELESCOPI NG GIVEN BY THE LD. AO WOULD NOT BE AVAILABLE AND THEREFORE THE ADDITION WAS TO BE MADE WITHOUT APPRECIATING THAT HE HAD ALREADY CONFIRMED SOME OF THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS AND HENCE THERE WAS NO REA SON TO SEPARATELY CONFIRM THE ADDITION MADE ON ACCOUNT OF G.P. ON UNDISCLOSED SALES FOR A.Y. 1997-98 TO 2002-03 WHICH HAS BEEN DECLARED BY HIM ON MERITS. 4. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO I N A.YRS. 1997-98 TO 2002-03 ON THE BASIS OF ESTIMATION ON ACCOUNT OF SUPPRESSED SA LES WITHOUT APPRECIATING THE FINDING OF ITAT PUNE BENCH PUNE IN THE CASE OF KH OPADE KISANRAO MANIKRAO (2000) 74 ITD 25 WHEREIN THE JURISDICTIONAL BENCH HAD HELD THAT THE AO WAS ENTITLED TO ESTIMATE UNACCOUNTED FOR ON MONEY TAK EN BY ASSESSEE ON SALE OF PLOTS FOR ENTIRE BLOCK PERIOD ON BASIS OF ENTRIES MADE IN RESPECT OF CERTAIN SALE TRANSACTIONS FOUND IN SEIZED RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO I N A.YRS. 1997-98 TO 2002-03 ON THE BASIS OF ESTIMATION ON ACCOUNT OF SUPPRESSED SA LES WITHOUT APPRECIATING THE FACT THAT THE SAID ADDITION WAS MADE ON THE BASIS O F ESTIMATION MADE RELYING ON ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 3 THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH. R ELIANCE IS PLACED ON FOLLOWING DOCUMENTS : I. STC VS. HM YUSUF ALLY HM ABDALI 90 ITD 271 (SC) II. RAJNIK & CO. VS. ACIT (2001) 117 TAXMAN 675 (ANDHRA PRADESH) 5. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSE SSEE IS AN INDIVIDUAL AND HE WAS SEARCHED U/S.132 OF THE ACT ON 26-06-2002. DUR ING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS THE ISSUES RELATING TO (1) QUANTUM OF AGRICULTURAL INCOME; (2) UNACCOUNTED INVESTMENT IN THE RUNNING O F HOTEL NAMED SADASHIV RESIDENCY AT KARVE ROAD; AND (3) THE TURNOVER AND RELATED PROFITS OF THE HOTEL BUSINESS ARE THE CORE ISSUES. WHILE THE ASSESSEE FILED RETURN OF INCOME DECLARING NIL AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD THE AO MADE ADDITION OF RS.5 74 294/- UNDISCLOSED AGRICULTURAL INCOME. FUR THER AN AMOUNT OF RS.51 20 486/- WAS ADDED ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE HOTEL BUILDING (3 RD AND 4 TH FLOORS OF THE BUILDING). FURTHER THE AO ALSO MADE ANOTHER ADDITION OF RS.45 80 012/- AS THE UNACCOUNTED PROF IT OUT OF ESTIMATED TURNOVER OF ASSESSEES HOTEL BUSINESS. AO ASSESSED THE UNDISC LOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD AT RS. 70 92 116/- AGAINST N IL UNDISCLOSED INCOME. 6. IN THE BLOCK ASSESSMENT THE SAID SUM OF RS.45 8 0 012/- WAS NOT SEPARATELY CONTEMPLATED FOR ADDITION. HOWEVER AO DEEMED IT F IT TO GRANT TELESCOPING BENEFIT OF SAID SUM OF RS.45 80 012/- AGAINST THE UNACCOUNT ED INVESTMENT OF RS.51 20 486/- IN THE HOTEL CONSTRUCTION. AO ARRI VED AT THE SAID UNACCOUNTED PROFIT OF RS.45 80 012/- EQUIVALENT OF 36.25% ON TH E NET UNACCOUNTED TURNOVER OF RS.1 24 46 946/- (ESTIMATED TURNOVER OF RS.4 24 60 000 ACCOUNTED TURNOVER OF RS.3 00 13 054). CONTENTS OF PARA NO.4.10 ARE RELE VANT TO THE MANNER OF ESTIMATION OF TURNOVER FOR ARRIVING AT THE SAID FIG URE OF RS.4 24 60 000/- IS TABULATED YEAR-WISE FOR THE ENTIRE BLOCK PERIOD. D ETAILS ARE AVAILABLE ON PAGE 18 OF THE ASSESSMENT ORDER. THE BASIS FOR THIS ESTIMA TION IS THE DOCUMENTS SEIZED BY THE DEPARTMENT DURING THE SEARCH ACTION. ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 4 7. THE SAID SEIZED DOCUMENTS INCLUDE THE SALE TURNO VER FOR 4 DAYS I.E. 22-06- 2002 23-06-2002 24-06-2002 AND 26-06-2002. THESE PAPERS WERE SEIZED FROM THE POCKET OF HIS OWN SHIRT (ASSESSEE). THE FIGURE S FOR THE SAID 4 DAYS ARE RS.33 408/- RS.44 575/- RS.35 998/- AND RS.25 036 /- RESPECTIVELY. AGAINST THE SAME ASSESSEE RECORDED THE AVERAGE SALES @18 000/- PER DAY. REJECTING THE BOOKS OF ACCOUNT THE AO EXTRAPOLATED AND ESTIMATED THE SALES FOR THE BLOCK PERIOD AND THE DETAILS ARE GIVEN IN THE TABLE CITED ON PAGE 18 OF THE ASSESSMENT ORDER. 8. DURING THE FIRST APPELLATE PROCEEDINGS ASSESSEE CONTESTED AGAINST THE ISSUE OF EXTRAPOLATION OF THE SALE FIGURES OF THESE 4 DAYS TO THE ENTIRE BLOCK PERIOD ON ESTIMATION BASIS AND RELIED ON VARIOUS PRECEDENT S. CIT(A) RESTRICTED THE EXTRAPOLATION TO THE ASSESSMENT YEAR TO WHICH THE S EIZED BILLS BELONG I.E. F.Y. 2005-06. CIT(A) DELETED THE OTHER ESTIMATIONS AND EXTRAPOLATIONS FOR THE REST OF THE YEARS OF THE BLOCK PERIOD. FURTHER THE CIT(A) CONFIRMED THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE HOTEL BUSI NESS AS WELL AS THE ADDITION ON ACCOUNT OF AGRICULTURAL INCOME. 9. AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT(A) ON THE ISSUE OF TURNOVER THE REVENUE IS IN APPEAL BEFORE US WITH THE GROUNDS REFERRED ABOVE. SIMILARLY AGGRIEVED WITH THE DECISION OF CONFIRMING OF THE AD DITIONS THE ASSESSEE IS IN APPEAL. ITA NO. 312/PUN/2015 (BLOCK PERIOD 1997-98 TO 2003-04 - BY ASSESSEE) 10. A WE SHALL NOW TAKE UP THE ASSESSEES APPEAL FIRST. THE FIRST ISSUE FOR ADJUDICATION ARISES FROM THE GROUND NO.3 AND IT REL ATES TO THE EXTENT OF AGRICULTURAL INCOME OF THE ASSESSEE. WITHOUT GOING INTO THE LEGALITY OF ADDITION ON ACCOUNT OF AGRICULTURAL INCOME IN THE BLOCK ASSE SSMENT IN ABSENCE OF ANY INCRIMINATING MATERIAL AND WITHOUT PRESSING THE RE LATED LEGAL GROUND RAISED ON THIS ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 5 ISSUE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HONBLE BENCH MAY DECIDE THE ISSUE OF ALLOWABLE AGRICULTURAL INCOME BASED ON THE MERITS. I. ON FACTS LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE OWNS 4 ACRES OF LAND IN SOUTHERN STATES OF KERALA WHICH CO NTAINS 450 COCONUT TREES AS STANDING CROP. ON ESTIMATION BASIS OUT OF IT THE ASSESSEE GETS YIELD OF AROUND 90 000 COCONUTS IN A YEAR. THEREFORE ASSESSEE DIS CLOSED RS.20 74 000/- AS THE AGRICULTURAL INCOME FROM THE SAID COCONUT TREES. A GAINST THE SAME AO RESTRICTED THE AGRICULTURAL INCOME TO RS.15 LAKHS ONLY I.E. @RS.2.5 LAKHS PER ANNUM. ASSESSMENT YEAR-WISE DETAILS ARE GIVEN IN PARA 4.5 OF THE ASSESSMENT ORDER. II. FROM THE ABOVE IT IS EVIDENT THAT THE AGRICULT URAL INCOME OUT OF THE 450 COCONUT TREES AS DISCLOSED BY THE ASSESSEE IN THE R ETURNS OF INCOME FOR OVER THE YEARS OF BLOCK PERIOD ARE NOT UNIFORM. THE REASONS FOR THE VARIATION ARE ALSO NOT GIVEN IN THE ORDERS. IT IS THE FINDING OF THE AO I N PARA 4.5 THAT THE FIGURES GIVEN IN THE RETURN ARE NOT IN TUNE WITH THE FIGURES IN THE STATEMENT GIVEN DURING THE SEARCH PROCEEDINGS. CONSIDERING THE INCONSISTENCY AND ADHOCISM THE AO ESTIMATED THE EXEMPT AGRICULTURAL INCOME @ RS.2.5 L AKHS PER ANNUM AND ARRIVED AT THE FIGURE OF RS.15 LAKHS FOR THE BLOCK PERIOD A S AGAINST RS.20 74 294/-. THUS THE DIFFERENCE OF RS.5 74 294/- IS TREATED AS THE U NDISCLOSED INCOME OF THE ASSESSEE. III. ON HEARING BOTH THE SIDES ON THIS ISSUE CONSI DERING THE ADHOCISM INVOLVING BOTH THE ASSESSEE AS WELL AS THE REVENUE WE ARE OF THE VIEW THE RESTRICTION OF RS.2.5 LAKHS PER ANNUM SET BY THE AO MAY BE MARGINA LLY INCREASED TO RS.3 LAKHS PER ANNUM ON ADHOC BASIS TO BRING THE ISSUE TO THE FINALITY. ACCORDINGLY AFTER GIVING OPPORTUNITY TO THE ASSESSEE THE AO IS DIREC TED TO ADOPT THE AGRICULTURAL INCOME RS. 3 LAKHS PER ANNUM INSTEAD OF RS.2.5 LAKH S PER ANNUM. ACCORDINGLY ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 6 AO IS DIRECTED TO COMPUTE THE ADDITIONAL INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. THUS GROUND NO.3 RAISED BY THE ASSESSEE I S PARTLY ALLOWED. B. REGARDING THE UNEXPLAINED INVESTMENT OF RS.51 20 486/- IN THE HOTEL BUILDING NAMED SADASHIV RESIDENCY AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE NEEDS TO REVISIT TO THE F ILE OF THE AO/DVO FOR CORRECTING THE VARIOUS INADEQUACIES IN THE ORDER OF THE DVO. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CONSTRUCTED CO UPLE OF FLOORS TO THE EXISTING SADASHIV RESIDENCY HOTEL AT KARVE ROAD. DURING T HE SAID SEARCH ACTION ON FINDING THE CONSTRUCTION WAS IN PROGRESS THE MATTE R WAS REFERRED TO THE DVO FOR VALUATION. WITHOUT GETTING INTO THE NITTY GRITTY O F THE LEGAL ASPECTS RELATING TO VALIDITY OF REFERENCE OF THE SAID PROPERTY TO THE D VO LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE SHALL BE SATISFIED IF THE OBVIOUS INADEQUACIES AND INCONSISTENCIES IN VALUATION OF PROPERTY ARE REMANDED TO THE FILE O F THE AO/DVO FOR REMOVAL OF THE SAME IN THE REMAND PROCEEDINGS. I. FIRSTLY REFERRING TO THE VALUATION REPORT COP Y OF WHICH IS PLACED FROM PAGE 79 ONWARDS OF THE PAPER BOOK LD. COUNSEL FOR THE A SSESSEE BROUGHT OUR ATTENTION TO PAGE 88 OF THE PAPER BOOK WHICH CONSISTS SUMMAR Y OF THE VALUATION REPORT AND SUBMITTED THAT THE PROPERTY WAS VALUED AT THE F IGURE OF RS.99 34 686/- BEFORE GRANTING REBATE FOR SELF SUPERVISION. REFERRING TO THE SAID FIGURE LD. COUNSEL SUBMITTED THAT THE SAME WAS ARRIVED AT BY THE DVO W ITHOUT ADJUDICATING THE OBJECTIONS RAISED BY THE ASSESSEE WHICH WORKS OUT T O AROUND RS.22 36 080.81. DETAILS ARE GIVEN IN PAGES 128 AND 129 OF THE PAPER BOOK. ABSENCE OF ANY SPECIFIC ADJUDICATION ON THESE ISSUES POINTED BY THE ASSESSE E BEFORE THE CIT(A) AS WELL AS THE DVO IS EVIDENT IN THE ORDERS OF THE INCOME-TAX AUTHORITIES. IN OTHER WORDS IT IS THE CASE OF THE ASSESSEE THAT THE SAID FIGURE OF RS.99 34 686/- HAS TO BE REDUCED TO THE EXTENT OF RS.22 36 080/- OR ANY OTHE R FIGURES AS THE OFFICERS DEEM FIT. ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 7 II. AFTER HEARING BOTH THE SIDES ON THIS FIRST OBJE CTION ON FINDING THAT THE ORDERS OF THE AO CIT(A) AND DVO DO NOT CONTAIN REL EVANT REASONS FOR DENIAL OF THE ASSESSEES DEMANDS SPECIFIED IN PAGES 128 AND 1 29 OF THE PAPER BOOK WE ARE OF THE OPINION THAT AS DESIRED BY THE LD. COUNSEL F OR THE ASSESSEE IT IS A FIT CASE FOR REMANDING THIS ISSUE TO THE FILE OF THE AO/DVO FOR WANT OF A SPEAKING ORDER AND CLARITY ON THE RELEVANT FACTS. WE ORDER ACCORD INGLY. III. SECONDLY BRINGING OUR ATTENTION TO PAGE 88 OF THE PAPER BOOK LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DVO HAS GRANTED REB ATE OF ONLY 1% FOR PURCHASE COST OF RAW MATERIAL. BRINGING OUR ATTENTION TO VA RIOUS DECISIONS LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS A SETTLED LEGAL P ROPOSITION THAT MINIMUM 10% REBATE IS GRANTED TOWARDS SELF-SUPERVISION OF THE P ROJECT. IN THIS REGARD LD. COUNSEL FOR THE ASSESSEE SEEKS DIRECTION OF THE TRI BUNAL FOR CONSIDERING THE SAID DECISIONS AND GRANTING THE HIGHER PERCENTAGE OF THE REBATE AFTER CONSIDERING THE EXTENT OF SELF-SUPERVISION OF THE PROJECT BY THE AS SESSEE. FOR THIS PROPOSITION HE RELIED ON THE DECISION OF PUNE BENCH OF THE TRIBUNA L IN THE CASE OF ACIT VS. HERPREET HOTELS PVT. LTD. IN ITA NO. 1156 TO 1160/P N/2000 ORDER DATED 16-08- 2005. ON FINDING THE MERITS AND ALSO ON FINDING TH E REASONS FOR GRANTING REDUCED REBATE WE ARE OF THE OPINION THAT THIS ISSUE ALSO SHOULD RE-VISIT TO THE FILE OF AO/DVO FOR FRESH ADJUDICATION IN THE MATTER. ASSES SEE IS DIRECTED TO DEMONSTRATE BEFORE THE AO THAT THERE IS SIMILAR EXTENT OF SUPER VISION AS IN THE CASES CITED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. ACCORD INGLY THE ARGUMENT IS ALLOWED FOR STATISTICAL PURPOSES. IV. THIRDLY AND FINALLY BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE DVOS ESTIMATION OF THE COST OF CONSTRUCTION THE RATES ADOPTED FOR WORKING ARE TAKEN OUT FROM THE CPWD MANUALS. ON THIS ISSUE IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT STATE PWD RATES A RE REQUIRED TO BE ADOPTED AND ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 8 RELIED ON THE DECISION OF THE TRIBUNAL ON THIS ISSU E. IN THAT CASE ASSESSEE IS ENTITLED TO ADDITIONAL REBATE. HE RELIED ON VARIOU S DECISIONS IN SUPPORT OF THE SAID SUBMISSION. FINALLY LD. COUNSEL SUBMITTED THAT TH IS ISSUE MAY ALSO BE REMANDED TO THE FILE OF THE AO/DVO FOR FRESH ADJUDICATION IN THE MATTER. 11. ON HEARING BOTH THE SIDES ON THESE 3 ASPECTS W E ARE OF THE VIEW THAT GROUND NO.4 RAISED BY THE ASSESSEE IS REQUIRED TO B E REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION FOR WANT OF SPEAKING ORDE R ON THE 3 SUBMISSIONS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE. AO IS DIRECTE D TO CALL FOR REMAND REPORT IF ANY FROM THE DVO AND GRANT REASONABLE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE AND CONSIDER THE BINDING DECISIONS IN THIS ISSUE AND PASS A SPEAKING ORDER. AO IS ALSO DIRECTED TO QUANTIFY THE REVISED UNEXPLAINED INVESTMENT IN THE HOTEL BUILDING. ACCORDINGLY GROUND NO.4 BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. REGARDING GROUND NOS. 6 AND 6.1 FILED BY THE AS SESSEE IT IS THE SUBMISSION OF THE ASSESSEE THAT THESE GROUNDS ARE LINKED TO TH E SOLITARY ISSUE RAISED BY THE REVENUE IN ITS APPEAL. FURTHER LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE CHANGES IF ANY TO THE UNEXPLAINED INVESTMENT WILL NOT IN ANY WAY AFFECT THE ESTIMATED PROFITS/ADDITIONS OUT OF THE SALES IN THE HOTEL BUSINESS. ACCORDINGLY THE TELESCOPING BENEFIT GRANTED BY THE AO/CIT(A) WILL N OT IN ANY WAY BE AFFECTED ADVERSELY AGAINST THE INTEREST OF THE REVENUE. AO IS DIRECTED TO EXAMINE THIS ISSUE AFTER THE AFORESAID ISSUES WITH REFERENCE TO THE DVOS REPORT IS FINALIZED AND THE FIGURES ARE ARRIVED AT. 13. WHILE ADJUDICATING THE REVENUES APPEAL WE HAV E DELETED THE ONLY ISSUE RAISED BY THE REVENUE THEREBY CONFIRMED THE DECISIO N OF THE CIT(A) ON THE MATTER OF EXTRAPOLATION FOR THE A.Y. 203-04. CONSEQUENTLY THIS PART OF GROUND NO.6 IS DISMISSED. REGARDING GROUND NO.6.1 WHICH DEALS WIT H BENEFIT OF TELESCOPING WE ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 9 HAVE HELD THAT TELESCOPING OF THE PROFITS ESTIMATED FROM THE HOTEL BUSINESS AGAINST THE UNEXPLAINED INVESTMENT IN THE HOTEL CON STRUCTION HAS RIGHTLY BEEN ALLOWED BY THE AO AND THE SAME STANDS APPROVED BY U S. THE EXCESS OF PROFITS OF HOTEL BUSINESS IF ANY ARRIVED BY THE AO AFTER PAS SING A SPEAKING ORDER ON GROUND NO.4 OF THE ASSESSEES APPEAL WILL BE SEPARATELY TA XED AFTER GRANTING TELESCOPING BENEFIT TOWARDS THE INVESTMENT IN HOTEL CONSTRUCTIO N. ACCORDINGLY GROUND NO.6.1 BY THE ASSESSEE IS DECIDED PRO TANTO . 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.304/PUN/2015 (BLOCK PERIOD 1997-98 TO 2003-04 BY REVENUE) 15. THE ONLY ISSUE RAISED BY THE REVENUE IN THE APP EAL RELATES TO ESTIMATION OF THE SALES TURNOVER FOR THE BLOCK PERIOD A.YRS. 1997 -98 TO 2002-03. DURING THE SEARCH AND SEIZURE ACTION ON 26-06-2002. THE SEARC H PARTY SEIZED THE BILLS FOR 4 DAYS I.E. 22 ND TO 24 TH JUNE 2002 (RELEVANT A.Y. 2003-04). AO EXTRAPOLAT ED THESE SALES TO THE ENTIRE BLOCK PERIOD AND DETERMINED THE TURNOVER OF THE BLOCK PERIOD AT RS.4 24 60 000/-. AFTER REDUCING THE ACCOUNTED TUR NOVER OF RS.3 00 13 054/- THE UNACCOUNTED TURNOVER FOR THE BLOCK PERIOD IS ARRIVE D AT RS.1 24 46 946/-. CONSIDERING THE PER DAY TURNOVER AVAILABLE ON THE S AID SEIZED SALE BILLS THE AO CONSIDERED RS.30 000/- IS THE TURNOVER PER DAY ON ESTIMATION BASIS. REDUCING THE SAME OVER THE YEARS THE AO BACK CALCULATED THE SAM E AND ARRIVED AT THE AVERAGE SALE OF RS.15 000/- PER DAY FOR THE A.Y. 1997-98. THUS IN THE BLOCK PERIOD 1997- 98 TO 2003-04 THE AVERAGE SALES IS TAKEN AT RS.15 0 00/- PER DAY TO RS.30 000/- PER SAY SALES RESPECTIVELY. 16. IN THE FIRST APPELLATE PROCEEDINGS THE CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE ON THE CORRECTNESS OF EXTRAPOLATION OF THE SALES TO THE ENTIRE BLOCK PERIOD ON ONE SIDE AND ALSO THE DECISION OF REJECTI NG THE RECORDED SALES OF THE ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 10 ASSESSEE FOR THE CURRENT YEAR ON THE OTHER. THE CI T(A) APPROVED THE AVERAGE SALES OF RS.30 000/- PER DAY IN THE CURRENT YEAR AN D ALSO APPROVED THE EXTRAPOLATION OF THE 4 DAYS SALES TO 88 DAYS OF THE CURRENT YEAR (TO THE DATE OF SEARCH I.E. 22-06-2002). HOWEVER THE CIT(A) REJE CTED THE EXTRAPOLATION OF SALES OUTSIDE THE CURRENT YEAR I.E. 1997-98 TO 2002-03 17. AGGRIEVED WITH THE SAID RELIEF GRANTED BY THE C IT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE GROUNDS EXTRACTED ABOVE. 18. BEFORE US IT IS THE ARGUMENT OF THE LD. DR FOR THE REVENUE THAT THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIONS BY WAY O F EXTRAPOLATIONS MADE FOR THE A.YRS. 1997-98 TO 2002-03 OF THE BLOCK PERIOD. REL YING ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KHOPADE KISANR AO MANIKRAO VS. ACIT 74 ITD 25 (PUNE) (TM). LD. DR ALSO QUOTED THE APEX COURT JUDGMENT IN THE CASE OF CIT VS. H.M. ESUFALI H.M. ABDULALI 90 ITR 271 ON THE I SSUE. 19. HOWEVER LD. COUNSEL FOR THE ASSESSEE BROUGHT O UR ATTENTION TO THE FACT THAT THE SAID DECISION OF THE TRIBUNAL WAS DECIDED ON THE FACTS THAT UNACCOUNTED SALES WAS NOTED DURING THE SEARCH ACTION FOR ALL TH E ASSESSMENT YEARS WHICH FORMED PART OF THE ENTIRE BLOCK PERIOD. THEREFORE THE SAID DECISION OF PUNE BENCH (SUPRA) IS DISTINGUISHABLE ON FACTS. FURTHER REFE RRING TO THE 4 DAYS SALE BILLS LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEIZED PAPERS ARE RELEVANT ONLY FOR THE CURRENT A.Y. 2003-04 AND NOT RELEVANT FOR A.YRS . 1997-98 TO 2002-03. LD. COUNSEL FOR THE ASSESSEE FAIRLY MENTIONED THAT HE H AS NOT QUESTIONED THE EXTRAPOLATION MADE BY THE AO FOR THE PERIOD OF 88 D AYS OF THE CURRENT YEAR BASED ON THE SEIZED PAPERS RELEVANT FOR 4 DAYS OF JUNE 20 02. 20. WE HEARD BOTH THE PARTIES ON THE ISSUE OF CORRE CTNESS OF EXTRAPOLATION OF SALE BILLS FROM THE HOTEL BUSINESS TO THE ENTIRE BL OCK PERIOD BASED ON 4 DAYS SALES TURNOVER PERTAINING THE MONTH OF JUNE 2002. IT IS UNDISPUTED FACT THAT BARRING THE ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 11 4 DAYS THE SUPPRESSED SALES ARE NIL FOR ANY OTHER M ONTH OR OTHER YEARS WHICH FORM PART OF THE BLOCK PERIOD. FURTHER WE HAVE ALSO EX AMINED THE JUDGMENTAL LAW THAT SUPPORTS THE VIEW THAT THE EXTRAPOLATION IF ANY SHO ULD BE RESTRICTED TO THE YEAR TO WHICH THE SEIZED PAPERS BELONG. ON FINDING THE ABO VE FACTS AS WELL AS THE LEGAL PROPOSITIONS WE ARE OF THE OPINION THAT THE DECISI ON GIVEN BY THE CIT(A) WITH REGARD TO THIS UNACCOUNTED TURNOVER EXTRAPOLATION BEYOND THE CURRENT ASSESSMENT YEAR ETC. IS FAIR AND REASONABLE AND IT DOES NOT CA LL FOR ANY INTERFERENCE. AS SUCH THERE IS NO DISPUTE ABOUT THE G.P. RATE OF 36.25% ADOPTED BY THE AO FOR WORKING OUT THE ESTIMATED GP ON THE ESTIMATE D SALES TURNOVER. ACCORDINGLY THE ONLY ISSUE RAISED BY THE REVENUE I S DISMISSED. 21. BEFORE PARTING WITH THIS ORDER WE FIND RELEVAN T TO MENTION THAT THE AO SHOULD MAKE SURE THAT THE ESTIMATED PROFITS OUT OF THE HOTEL BUSINESS IS ADEQUATE ENOUGH TO ACCOUNT FOR UNACCOUNTED INVESTMENT IN THE CONSTRUCTION ACTIVITY OF THE HOTEL BUILDING (3 RD AND 4 TH FLOORS). AO IS DIRECTED TO PASS A SPEAKING ORDER ON THIS ASPECT ALSO WHILE DECIDING THE GROUND NO.4 OF THE A SSESSEES APPEAL. IN EFFECT GROUND NO.6 OF THE ASSESSEES APPEAL IS DISMISSED A ND GROUND NO.6.1 IS SET ASIDE FOR STATISTICAL PURPOSES. 22. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 23. TO SUM UP THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF NOVEMBER 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 08 TH NOVEMBER 2017. ITA NOS. 304 AND 312/PUN/2015 SHRI SADANAND KUDDU SHETTY 12 / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY / ITAT PUNE THE APPELLANT THE RESPONDENT THE CIT(A) - 1 2 PUNE CIT - 1 2 PUNE B BENCH PUNE; / GUARD FILE.