Assessment completed by AO relying on estimations cannot be remanded back by CIT to reverify some aspects of estimation relied on

Brief of the case:

• The ITAT Hyderabad in the case of Sri Surakshitha Homes vs. ITO held that where the AO has assessed income on estimation basis then CIT cannot order to revise the assessment by picking and choosing some aspects of estimation to be re-verified.
• Therefore, the assessment cannot be remanded back to AO to afresh examination of some aspects of estimation made by AO.

Facts of the case:

• The assessee is a partnership firm engaged in the business of real estate. It purchases lands and after developing the same into residential and commercial plots, sells such plot.
• A survey under section 133A was carried out at the business premises of the assessee on 04.09.2008.the assessee firm filed its return of income for the year under consideration declaring total income of Rs.1,06,95,780.
• During the course of scrutiny assessment AO utilized the material impounded during the course of survey.AO observed that sale consideration of Sai Royal Residency project for the year under consideration was shown by the assessee at Rs.12.88 crores whereas the same as per the relevant impounded documents was found to be Rs.15.33 crores.

• AO adopted said amount of Rs.15.33 crores as sale consideration and deducted the purchase cost of land of Rs.10.03 crores, the balance amount of Rs.5.30 crores was taken by the A.O. as representing the gross profit of the assessee from the project of Sai Royal Residency.
• AO also observed that as per the working of partners accounts given in the relevant impounded material identified, the profit of Sai Royal Residency project for the year under consideration was shown at Rs.3,98,88,000. Accordingly, the AO adopted the same as the net profit of the project.
• The assessee finally accepted the assessment made by AO . Later on the case was revisited by CIT u/s 263 wherein he pointed out four errors in the order of the A.O. which were duly communicated by him to the assessee in the notice issued under section 263.
• CIT pointed out that AO failed to take into consideration the value of un-sold plots as well as to make disallowance under section 40A(3) and also allowed deduction on account of land development expenditure without verifying any documentary evidence.
• Therefore, CIT remanded back the case to AO to consider these issues afresh.

 Contention of the Assessee: