Per CHANDRA POOJARI, AM: This appeal filed by the Revenue and the Cross Objection filed by the assessee are directed against the order of the CIT(A)-IV, Kochi dated 29/01/2016 and pertain to the assessment year 2012-13.

1.1 There was a delay of 17 days in filing the cross objection by the assessee before the Tribunal. The Ld. AR has filed condonation petition accompanied by an affidavit stating the reasons for the delay in filing the cross objection. After perusal of the petition, we find that there is good and sufficient cause for the delay in filing the cross objection. Accordingly, we condone the delay of 17 days and admit the cross objection. The cross objection filed by the assessee is only supportive of the CIT(A) order.

2. The Revenue has raised the following grounds:

1) The ld. CIT(A) erred in deleting the addition of Rs. 1,30,48,402/- made on account of unexplained net worth of the assessee for the AY 2012-13.

2) The Ld. CIT(A) is not justified in allowing 30% rebate from the cost of the land towards roads and common amenities when the assessment was completed on the basis of "net worth" as per the balance sheet prepared by the assessee found and seized during the course of search proceedings in this case.

3) The Ld. CIT(A) ought to have appreciated that the onus of proving that the closing stock shown in the seized material at Rs. 8,96,89,988/- does not exclude 30% area for roads and other infrastructure facilities is on the I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 3 assessee but the assessee has not discharged the same with documentary evidence.

4) The Ld. CIT(A) erred in not appreciating the fact that generally a developer provides common utilities and collects proportionate cost of common amenities from all the apartment owners at the time of sale of undivided share of land to them.

5) The Ld. CIT(A) ought to have appreciated that the assessee has not brought in any evidence in the form of agreement with the buyers of the flats and confirmation of the said buyers that the cost of land/flat did not include the charges towards road and amenities.

6) It was prayed that the order of the learned CIT(Appeals) may be set aside and that of the Assessing Officer restored.

3. The facts of the case are that a search u/s. 132 of the I.T. Act was conducted at the premises of the assessee on 12-07-2011. Evidence gathered during the course of search revealed that this group of the assessee was systematically concealing the actual sale consideration received on sale of flats and villas and was also making huge payments towards the purchase of landed properties. As per the sworn statements recorded, the employees of one of the business premises also admitted that the figures of various transactions entered in the computer were shown in such a manner that the actual figure will be equal to the figure in the computer multiplied by 100. Proceedings u/s. 153A were initiated against the assessee for the assessment years 2006-07 to 2011-12 and as the assessee company had not furnished the return of income for the assessment year 20012-13, notice under section 142(1) was issued to the assessee on 11/6/2012 in response to which the assessee filed the return on 1/6/2013 disclosing a total income of Rs.14,15,670/-. I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 4

3.1 During the course of search, it was noticed that the assessee did not maintain regular books of accounts. During course of, balance sheet showing the net worth of the assessee at Rs.13,25,342.75 for the period 01/04/2011 to

09.07.2011 was found and seized which according to the statements of the employees was to be read Rs.13,25,34,275/-. The assessee was requested to explain the various entries mentioned in the balance sheet and in its letter dated 18.11.2013, the assessee claimed 30% deduction from the value of land sold while determining income from real estate as so much of land had to be left out for roads and other common areas. The Assessing Officer rejected the assessees claim since the assessment was completed on the basis of the "net worth" as per the balance sheet prepared by the assessee adopting the same figures.

3.2 According to the assessee there were certain other mistakes in the seized accounts. According to the assessee the following revenue expenditure was wrongly shown in the balance sheet as assets while actually these should have been debited to the profit and loss account as they are revenue in nature. The total of revenue items wrongly included in the balance sheet works out to Rs. 2,48,01,202/- as per details given below. I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 5 Sl. No. Particulars Amount In Rupees a College construction / development 82,97,589 b Land owners account 20,01,059 c Land development & construction costs, legal fees, document writing fees etc. 67,42,859 d Material Purchase 38,32,519 e Advertisement and hoarding expenses 39,27,176 Total 2,48,01,202

3.3 On verifying the details filed by the assessee, it was found that these are actually revenue expenses which should have been debited to the profit and loss account but have been wrongly included in the asset side of the balance sheet. The assessee attributed these mistakes to the inexperience of the staff. The Assessing Officer found that the claim made by the assessee was genuine and appeared to be a bona fide mistake and the said sum of Rs.2,48,01,202/- was, therefore, allowed to be reduced from the net worth of the assessee as per the balance sheet for determining the income earned.

3.4 On the perusing the details available, the Assessing Officer found that the net worth of the assesses prior to the date of search was Rs. 4,74,44,246/-. After the search some of the members of the group requested that the additional income offered be treated towards any undisclosed income that was going to be determined on the basis of the assessments to be completed. It was also I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 6 submitted that the accounts found and seized by the department at the time of search represented the profit of the Chathamkulam Group as a whole and does not pertain to a particular entity. The seized accounts also included the profits derived by some of the directors from activities in their personal capacity. On perusing the various details gathered at the time of the search and during the course of the assessment proceedings, the Assessing Officer noticed that the accounts maintained by the assessee represented all the accounted and unaccounted business activities of the entire group and the exact income earned by each entity cannot be considered separately and, as such, the undisclosed income was assessed in the hands of the company, which is the principal assessee of the group. In the circumstances, the Assessing Officer allowed such additional income offered by the various assessees in the group to be set off against the undisclosed income assessed in the hands of the assessee company. As per the returns filed, the assessees mentioned below have offered the following additional income:- I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 7 Sl. No. Name of the Assessee Addl. income offered in Rupees

1. C.R.Bhavadas 1,55,50,000

2. Sumesh Babu 96,62,210

3. Rajeesh Babu 1,19,62,210

4. Soudamini 49,88,555

5. Chathamkulam Projects 50,77,450 & Developers P. Ltd Grand total 4,72,40,425

3.5 As per the explanation furnished by the assessee, the Assessing Officer found that there was no case for disallowance u/s. 40(a)(ia) and 40A(3). In the light of the above findings, the balance assessable income, after considering the income already offered, was determined as under: Net worth of the group as per the seized balance sheet 13,25,34,275 Less: Reduction claimed as per assessees letter Dated 18/11/2013 (Copies of relevant pages attached) (para 3) 2,48,01,202 Balance Net Worth 10,77,33,073 Less; Net worth of the group including additional income offered i) Net worth prior to search 4,74,44,245 ii). Additional income offered by the group after search 4,72,40,425 9,46,84,671 Balance 1,30,48,402 9,46,84,671 Addl. Income offered by the company for AY 2012-13 14,15,670 Total income assessed (rounded off) 1,44,64,070 I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 8

4. On appeal, the CIT(A) found that the AO in his working had accepted that the sum of Rs.13,25,34,275/-, considered as net worth, based on the seized paper, also included some of the revenue items such as college construction, land owners account, land development and construction costs, legal fees, document writing fees etc., which have been treated as revenue expenditure, which sums up to Rs.2,48,01,202/-, and was reduced from the above net worth. According to the CIT(A), the sanctity of the sum of Rs.13,25,34,2757- as net worth was not established which means that the value contained in the search paper cannot be a true reflection of the net worth of the assessee. The assessee had placed emphasis on the statement of Shri Sumesh Babu, Managing Director of the Company recorded u/s. 132(4) dated 12.07.2011 and in response to Question No.12 had stated as under:

12. Do you have anything else to say a) I am aware of the fact that the accounts kept by us are not accurate. It is not possible to show actual amount in registration deed during purchase and Sale of Property hence the statements given to Income Tax Department are not correct. The net worth as per Balance sheet dated 09.07.2011, taken from the Computer at our office in Das Complex was Rs.13.25 crores. However, the closing stock shown in the balance sheet is not correct. When we are dividing the land into different units, approximately 30% of land has been used for making roads and other common amenities and the value of such land amounting to Rs.2.70 crores also included in the closing stock. Hence it is requested to reduce the value of such land from the closing stock amount. The income shown in our return filed upto this year may amount to Rs.4.5 crores. We have earned the remaining wealth of approximately Rs.6 crores from our business since 01/04/2010. We will verify the accounts and records once again and disclose the income by allocating to our family members. We are ready to disclose all wealth hence prayed not to initiate any legal actions against us. I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 9

4.1 Therefore, it was pleaded that the valuation of closing stock shown in the seized paper is Rs.8,96,89,988/- which is not correct as it does not exclude 30% of land value, which was meant for creating roads and common infrastructure and it should be reduced from the net value of the land. According to the CIT(A) the stand taken by the assessee was consistent, as what it was explained at the time of search in the statement of the Managing Director recorded u/s. 132(4) of the. According to the CIT(A), the AO had not mentioned the retraction letter filed by the assessee and the statement recorded u/s.132(4), should have been taken into consideration, in order to have arrived at the working of the differential amount of the net worth. In view of this, the CIT(A) deleted the addition made by the AO for a sum of Rs.1,30,48,402/-.

5. Against this, both the Revenue as well as the assessee are in appeal before us.

6. We have heard the rival contentions and perused the record. It is a fact that incriminating material taken from the computer printout is an unsubstantiated document and these facts have not been established either by the search party or by the Assessing Officer. Being so, unsubstantiated document cannot be used for the purpose of assessment. It is also noted that in the statement recorded u/s. 132(4), the assessee has stated that 30% of the land value has been used for roads and common amenities and the value of such land amounting to I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 10 Rs.2.70 crores was also included in the closing stock as mentioned in the balance sheet from 1 st April, 2011 to 9 th July, 2011. This fact has not been controverted by the Assessing Officer by bringing in any evidence that the assessee has charged any price for roads and common amenities separately. Being so, in our opinion, the CIT(A) has taken correct view in deleting the addition made by the Assessing Officer. We do not find any infirmity in the order of the CIT(A) and the same is confirmed. Thus, the appeal of the Revenue is dismissed.

7. Since we have disposed of the Revenues appeal, the Cross Objection filed by the assessee has become infructuous and is dismissed as infructuous.

8. In the result, both the appeal filed by Revenue as well as the Cross Objection filed by the assessee are dismissed. Order pronounced in the open Court on this 13 th November, 2018. sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Kochi Dated: 13 th November, 2018 GJ Copy to:

1. M/s. Chathamkulam Projects & Developers Pvt. Ltd., 8/799, Chathamkulam Chambers, P.O. Chandra Nagar, Palakkad-678 007.

2. The Joint Commissioner of Income-tax(OSD), Central Circle-1, Kozhikode. I.T.A. No.170/Coch/2016 & CO No.23/Coch/2016 11

3. The Commissioner of Income-tax(Appeals)-II, Kochi

4. The Commissioner of Income-tax, Central, Kochi.

5. D.R., I.T.A.T., Cochin Bench, Cochin.

6. Guard File. By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin