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ITO, Ward-2 (2) , Vijayawada Versus Sri Sai Krishna Constructions

2017 (10) TMI 378 - ITAT VISAKHAPATNAM

Addition u/s 69 - survey u/s 133A - Held that:- It is the assessee, who has to prove the contents are false or incorrect. In this case the assessee has not discharged its burden. The ld. A.R further argued that the AO has not given the survey statement which was sought by them on 14/02/2011 and 21/02/2011. It is settled issue that during the pendency investigation the statements would not be supplied to the assessee and the copies will be given when the evidences are used against the assessee. .....

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rded in the seized material was incorrect. The assessee should produce Mr. B. Babujee and B. Srinivas with relevant evidences to prove the hand writing and explain the contents of noting in full. The A.O. is directed to supply the copies of statements recorded and the impounded material and allow the assessee to explain the case, and also examine both Mr. B. Babujee and B. Srinivas in detail and decide the issue afresh on merits. Accordingly the assessment is set aside with direction to re do th .....

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ection filed by the assessee is in support of order of the CIT(A), Vijayawada for the assessment year 2008-09. 2. All the grounds of appeal are related to the deletion of addition towards unexplained investment amounting to ₹ 2,05,59,255/-. The assessee is engaged in the business of real estate i.e. construction and sale of residential plots of its own and on development basis. The assessee filed the return of income declaring total income of ₹ 6,01,420/- on 30.9.2009. A survey u/s 1 .....

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the assessment proceedings, the assessing officer made the addition of ₹ 2,05,59,255/-, which is the challenged by the assessee. During the course of survey, the A.O. impounded the books of accounts & loose sheets. From the books of accounts impounded by the A.O. marked as Annexure SSKC/23 page 59, it was revealed that the assessee had purchased a site admeasuring 1393.4 Sq.yds. located at Tadigadapa village of re-survey No.11/8 from Ponnam Venkateswara Rao for a consideration of S .....

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otal consideration of ₹ 2,36,30,135/- as per the details contained in the loose sheet No.SSKC/23/59. However, subsequently in the statement recorded u/s 131 of the Act on 25.3.2011, the assessee has retracted the statement and denied having made the payment of cash to the vendor of the site. However, the assessee did not produce any evidence to disprove the payment of ₹ 1,95,00,000/- in cash and the contents mentioned in the page Nos.59 & 60 of the spiral note book of SSKC/23 was .....

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CIT(A) deleted the addition made by the A.O. Before the Ld. CIT(A), the assessee filed an affidavit from B. Babujee who stated to be an ex-employee of Sri Sai Krishna Constructions stating that the noting in the loose sheet was in the hand writing of B. Srinivas who has left the organization. For clarity and convenience, we extract the relevant part of the affidavit as under: 5. Subsequently I am doing some part time jobs as accountant and recently met Sri K.V. Narsaiah, managing partner of SSKP .....

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him some of the notings in my handwriting in the same Xerox copy of the spiral notebook for example at pages 43, 44 etc. 7. He again has shown me a Xerox of page no. 59 of another spiral notebook, which contained the following notings: 8. I again confirmed the notings therein to be in the writing of Sri B. Srinivas and again shown him some of the writings in my own handwriting in the said Xerox copy of the spiral notebook for example at pages 3, 4 & etc. I also explained him that the figure .....

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o are in the clerical cadre to note down anywhere any site cost in any of the books or papers as our job is concerned with gathering of information regarding payments made at site towards construction cost for control purpose and also as, the management might have felt the information regarding site purchase cost to be sensitive to be known to a person of clerical cadre like me. I also do not know how Sri B. Srinivas came to note such things or on what basis he has arrived at such figures. The s .....

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ndor and in case of discrepancy, the assessee should have allowed to cross examine the vendor. Further, the A.O. should have gathered the information as to what were the prices of the similar properties that have fetched in and around the places of Tadigadapa, where the impugned property was situated and in case of discrepancy, the A.O. should have called for the explanation from the assessee. The Ld.CIT(A) further observed that the A.O. should have referred the property to Departmental valuatio .....

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elf is conclusive and it gives clue only. The CIT(A) held that A.O. made the addition on the guess work, imagination, etc. and accordingly deleted the addition made by the A.O. For the sake of clarity and convenience we extract the relevant paragraph of the Ld.CIT(A) s order which reads as under: 7. It transpires from records that as per the impounded document being at Page No. 59 of Annexure SSKC/23 on which details of total expenses incurred for purchase of the impugned plot at Tadigadapa belo .....

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statement, then he has retracted from the earlier statement and struck to his guns that the total amount paid to the vendor was ₹ 27,86,900 only which was paid through banking channels. At this stage, the proper course of action on the part of the AG could be to (i) verify the actual amount received by the vendor and in case of discrepancy in light of the findings of the survey, allowing the appellant to cross examine the vendor, which has not been made in the case on hand; (ii) to gather .....

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the recipient, so that with such material and evidences, the appellant could have been confronted. This is so, because when the AO has made addition under section 69, the onus lies on the Revenue to substantiate the point at issue, i.e., the appellant has paid the impugned amounts. In fact, the impounded document is the first step to probe the impugned investments. The document found would not in itself be conclusive. It gives a clue only. From this clue, the AG has to develop the case and bring .....

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deleted. The other 3 additions made by the AO, which were also contested, are adjudicated as under 5. Aggrieved by the order of the Ld. CIT(A), the revenue is in appeal before this Tribunal. 6. Appearing for the revenue, the Ld. D.R. argued that a survey u/s 133A of the Act was conducted in the case of the assessee and during the course of survey, evidences found in the form of spiral note book containing the details of the expenditure incurred for purchase of site at Tadigadapa at page No.59 an .....

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ed which includes sand, steel, painting, tiles, labour, chips, miscellaneous expenses, electrical insurance, etc. In page No.60, it was recorded that the aggregate expenditure was at ₹ 5,14,42,684/- inclusive of site cost of ₹ 2,36,30,135/-. The item-wise detail of expenses was recorded in the loose sheet found at the time of survey establishes the expenditure incurred by payment of on money of ₹ 1,95,00,000/-. Therefore, the Ld.DR argued that the retraction is nothing but an a .....

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pts some of the contents of the documents are true, there is no reason to dispute the remaining items of expenditure. The Ld. D.R. further argued that as per section 292C of the Act, the burden is on the assessee to disprove the contents of the seized material but not on the revenue. The Ld. CIT(A) erroneously held that the onus is on the revenue to prove the payment of ₹ 1,95,00,000/-. The Ld. DR further argued that the assesse had filed the affidavit from Mr. Babujee, without verifying t .....

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assessee to prove that the seized document was in fact written by Mr.Srinivas. It was not explained how Mr.Babujee can identify the hand writing of srinivas. Therefore, no credence required to be given to the affidavit filed by the assesse from Mr.Babujee. The assessee also did not furnish any evidence in the form of appointment letter and contribution made to PF, ESI and the attendance register, etc. to prove both Mr. Babujee and B. Srinivas in fact have worked in the assessee s firm, therefor .....

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tents of the material found during the course of the survey as untrue. In the assessee s case, the assessee has initially accepted the payment of ₹ 2,36,30,135/- and subsequently retracted from the statement. Therefore, the Ld. D.R. argued that the assessee has not discharged the burden cast on him as per section 292C of the Act. Therefore, as per the provisions of section 292C of the Act, unless otherwise proved by the assessee, whether any books of accounts, other documents, money, bulli .....

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he other hand, the Ld. A.R. argued that the A.O. simply relied on the dumb documents, which were found and seized at the time of survey. Regarding page No.1 of the paper book, the Ld. A.R. argued that it is a dumb document without the date of the payment and the cash payment recorded was extrapolated and overwritten. Though the assessee has accepted the payment during the survey, subsequently the assessee had retracted from the statement given at the time of survey. The Ld. A.R. argued that A.O. .....

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e documents found at the time of survey cannot be taken as conclusive evidence and the A.O. should bring cogent material on record for substantiating the addition. The survey was conducted on 09/02/2011, much later date of purchase and no name was mentioned against the amount of ₹ 2,36,35,035/- except the site purchase. It was not even stated that cash was paid to the vendor. The said impounded book was not in the hand writing of the assessee or the partners. Due to the discrepancies menti .....

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urvey, books of accounts, note books, scribbling pads, other miscellaneous books, sale and purchase documents, etc were found and impounded u/s 133A(3) clause (ia) of the Act. During the course of survey, the A.O. found that the assessee had purchased a site admeasuring 1393.44 Sq.yds. located at Tadigadapa village in re-survey No.11/8 from Sri Ponnam Venkateswara Rao for a consideration of ₹ 2,36,30,135/- inclusive of registration expenses, commission, UDA plans, UDA license and bank char .....

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re SSKC/23 and confronted with him. In the statement recorded u/s 133A of the Act, the Managing partner agreed that the site was purchased for a total consideration of ₹ 2,36,30,135/-. The relevant part of the extract of statement was reproduced in the assessment order in para No.3.3, which is extracted as under: 10. I am showing you a spiral note book captioned as Shri Bhavani, Tadigadapa, wherein at Page No.52 the details of Site purchased was mentioned as under: 12.12.07 By Syndicate ba .....

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ent. Ans. So far I have done my business transactions through the means raised by Syndicate Bank during the year 2007-08 worth ₹ 50 lakhs. The loan has been taken at Syndicate Bank at Labbipet, Vijayawada and also Siddhartha Branch, Vijayawada. Thus, the total loan amounts to ₹ 1 Crore. Also I would like to mention that I have raised advances from the flats purchasers which were duly recorded. These served the purpose of raising revenues for the acquisition of sites at Tadigadapa and .....

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to support his statement. Therefore, the A.O. placed reliance on section 292C of the Act, which places presumption and held that the assessee has not discharged the presumption laid in the section 292C of the Act and accordingly made the addition of ₹ 2,05,59,255/- which includes the cash component of ₹ 1,95,00,000/-, commission of ₹ 1,11,520/- and other expenses, which were not accounted in the books of accounts. Thus, the amount of ₹ 2,05,59,255/- was made the addition .....

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to him, Identity card, PF, ESIC paid for him, etc. Mr. B. Babujee was not produced during the assessment proceedings. This affidavit was filed before the CIT(A) and the Ld.CIT(A) has admitted the additional evidence without recording the reasons and verifying the credentials of Babujee and Mr.Srinivas. Mr. B. Babujee has stated in the affidavit that the noting was said to be in the hand writing of Mr. B. Srinivas who also left the organization. There was no evidence filed along with the affidavi .....

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B. Babujee but did not explain how Mr. Babujee can confirm the hand writing of Mr. B. Srinivas and this issue needs further enquiry to find out the factual position. 11. In this case survey u/s 133A was conducted and the incriminating material was found evidencing the unaccounted payments. The Ld.CIT(A) has completely shifted the burden on the revenue ignoring the provisions of section 292C of the Act. As per section 292C of the Act, material found during the course of survey or search, which i .....

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