9911796707
TMI Blog2021 (9) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... orm 36 and later revised the grounds through letter dated 20.05.2021. As per the request of the Revenue, the revised grounds of appeal are taken for adjudication : The revised grounds raised by the department as under: 1. The Ld.CIT(A) erred in deleting the addition on unaccounted income from sale of Villas of Rs. 3,94,47000/- by relying on the ITATs order in the assessee's case for the AY 2016 -17, wherein ITAT has held that employee of the assessee Sri Lanka Anil Kumar as third party, without giving credence to the evidences found in his residence. 2. The Ld.CIT(A) erred in deleting the addition on unaccounted income from sale of plots of R5.24,80,88,660/- by relying on the JTATs order in the assessee's case for the AY 2016-17, wherein ITAT failed to appreciate the fact that the then CIT(A) deleted the additions by admitting additional evidence i.e., MOU entered into with M/S Kranthi Properties, without giving opportunity to AO. 3. The Ld.CIT(A) erred in deleting the addition of Rs. 8,99,900/- on account of bogus sub-contract expenses by ignoring the fact that Sri K.S.N.Murthy in his statement has admitted that cash withdrawn through bearer cheques and was handed over to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allotted the land admeasuring 150 sq.yds with individual duplex home with uniform design for all villas at Chepalauppada. The assessee started selling villas in the F.Y. 2013-14. Search u/s 132 was conducted in the business premises of Lanka Anil Kumar, the marketing executive of the firm and survey u/s 133A was conducted on 24.11.2015 in the case of Navaratna Estates at D.No.10-1-29, Sampath Vinayaka Temple Road, Visakhapatnam. Certain incriminating material was found and impounded as per order No.ACIT/Kkd/Survey/133A(3)(ia)/2015-16 dated 25.11.2015. Statement was recorded from Sri Manchukonda Yethiraja Subrahmanyam, one of the partners of the assessee firm. Statement is also recorded and subsequently on 11.12.2015 from Sri Manchukonda Yethiraja Subrahmanyam. On the basis of incriminating material found during the course of survey and the statements recorded, the AO worked out the unaccounted receipts on estimation basis at Rs. 9,84,55,000/-. Search u/s 132 was conducted in the case of Lanka Anil Kumar and found certain incriminating material. The AO worked out the unaccounted receipts to the extent of Rs. 3,94,47,000/- for sale of 45 villas for the Financial Year 2014-15 relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the material found and statement recorded from the employee is very much relevant to the assessee's case. As per the statement recorded there was an element of cash component in sale of villas which was not accounted in the books of accounts, hence, argued that the addition needs to be sustained. 6. On the other hand, the Ld.AR relied on the orders of the Ld.CIT(A) and argued that no interference is called for in the order of the Ld.CIT(A). 7. We have heard both the parties, perused the material placed on record. Identical issue has come up before this Tribunal in the assessee's own case for the A.Y. 2016-17 and after having discussed the issue in detail, the Hon'ble ITAT has deleted the addition holding that there was no material to support the order of the AO for assessment of unaccounted income. For the sake of clarity and convenience, we extract relevant para No.17 to 17.6 in I.T.A. No. 618/Viz/2018 and 612/Viz/2018 dated 22.01.2020 for the A.Y.2017-18. "17. We have heard both the parties and perused the material placed on record. The AO has taken reference to seized material found during the course of search and initially proposed to make the addition of Rs. 3,66,75,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 lakhs. At the end the AO also did not place reliance on the above documents for arriving at the undisclosed income. During the appeal hearing also the department could not place any evidence to controvert the finding of the Ld.CIT(A). We also observe from the seized material or impounded material marked as Annexure NRE/Survey/buss/01 , BMHP/133A/Navaratna, page No.50 and other email correspondence that there was no indication or evidence to support the receipt of on money by the assessee. Therefore, we do not find any reason to disagree with the Ld.CIT(A). With regard to seized or impounded documents mentioned in para No.17 of this order, the Department also did not place any material to controvert the findings of Ld.CIT(A) on this issue. Further though the AO referred the above impounded or seized material and ultimately dropped the proposal and relied on page No.6 to 8 of LAK/01 found and seized from the residence of Sri Lanka Anil Kumar for assessment of undisclosed income in respect of Blue Marino Project. The AO estimated the undisclosed income at Rs. 263.03 lakhs comprising of 25 villas and Rs. 237 lakhs comprising of 15 villas on the basis of page No.6 to 8 of annexure L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted. Sri Suresh Kumar Jain in the statement, confronted with him, completely denied having received any on money and stated that statement given by Anil kumar has no relevance to affairs of the firm and whatever stated by Lanka Anil Kumar was wrong. The AO did not make any cross verification of the statement given by Sri Suresh Kumar Jain with Sri Lanka Anil Kumar or with any of the buyers of the villas to ascertain the receipt of on money. The above scribbling found and seized as annexure LAK/01 does not indicate any on money except giving leads to consider the total sale consideration could be Rs. 52.00 lacs in case of Villa No.122 and Rs. 44.25 lacs in the case of villa No.139. Since the material was found in the residence of Lanka Anil Kumar the presumption is not available to hold that contents were related to the assessee firm unless it is established by the revenue. Therefore, merely on the basis of scribbling, it cannot be presumed that the assessee had received the on money without having support of the corroborating evidence. Since the total consideration in page No.6 (reversed side) tallies with the registered document, which was registered before Sub Registrar Office a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed consideration of Rs. 65 lakhs by the assessee. The property has been registered and the sale deed was executed for a consideration of Rs. 65 lakhs on 21st Aug., 2006 which consideration has been accepted by the State registration authorities. Further nothing was brought on record to show that there was any invoking of s. 50C while completing the assessment in the case of the seller. There is no evidence other than the seized material marked as 'A/CRK/104' where relevant entries are made at Rs. 1,65,00,000. The seized material was not found at the premises of the assessee and there is no corroborative material to suggest that the assessee has actually paid Rs. 1.65 crores towards purchase consideration of the property. The assessee and her brother categorically denied the payment of any money over and above Rs. 65 lakhs. The AO placed his reliance on the statement of S, who is a third party. The evidence brought on record by the Department is not enough to fasten additional tax liability on the assessee. As seen from the above document this is just a handwritten loose document and the handwriting is also not of the assessee and the loose document was found at the premises o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spicion, conjectures and surmises. Suspicion, however strong cannot take place of material in support of the finding from the A0. The A0 should act in a judicial manner, proceed with judicial spirit and come to a judicial conclusion. The A0 is required to act fairly as a reasonable person and not arbitrarily and capriciously. The assessment made should have enough material and it should stand on its own legs. The basis for addition cannot be only the loose sheet or a third party statement. In the absence of corroborative material, and/or circumstantial evidence, the addition cannot be sustained. Thus, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence on record and the evidence on record is not sufficient to support the Revenue's action. In a block assessment undisclosed income has to be determined on the basis of the material and evidence detected in the course of the search action. The circumstances surrounding the case are not strong enough to justify the addition made by the Department. The burden of proving the actual consideration in the purchase of property is on the Revenue. Considering the entire facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had paid the amount of Rs. 3,81,414/- to OD. No document containing signature of the assessee or handwriting of the assessee to corroborate the above making of payment by the assessee was found during the course of the search. Even at time of cross examination by the assessee the partner of OD could not produce any evidence that the amount written in the seized document was in fact received from the assessee. As the assessee has categorically denied to have made any payment in excess of Rs. 1,01,687/- upto 31st March, 1999 in respect of purchase of flat the said denial cannot be brushed aside without bringing any positive material on record. Merely recording made by a third party or statement of a third party cannot be treated as so sacrosanct so as to read as a positive material against the assessee. In view of the above the CIT(A) was not justified in confirming addition to the extent of Rs. 3,81,414/- in the hands of the assessee. Therefore the addition of Rs. 3,81,414/- is deleted. Asst. CIT Vs. Prabhat Oil Mills (1995) 52 TTJ (Ahd) 533 relied on; K.P. Varghese Vs. ITO (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC) applied" 21. In yet another case, the ITAT Hydera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement seized at the time of search and seizure operations. Smt. P. Nalini Devi also in her statement further clearly stated that the property was sold at Rs. 23.50 lakhs and not at the rate of Rs. 1.68 crores. The Hon 'ble Supreme Court in the case of K.P. Verghese reported in 131 ITR 597 has held that onus is on the department to prove that the assessee has understated the value of the property and has paid more than what is mentioned in the registered sale deed. The Hon'ble Supreme Court in the case of Moosa S. Madha and Azam S. Madha vs. CIT( 89 ITR 65) has held that photo copies have little evidentiary value. Therefore, photocopies of any document cannot by itself be considered as evidence for purpose of making addition in assessment proceedings. The AO is required to bring further evidence on record to show that the sale agreement was actually acted upon by the parties. This is because of the fact when the AO is going to make an addition, there should be sufficient evidence brought on record to support such addition. No addition can be made on conjectures and surmises. As seen from the assessment order, the AO has adopted value of the property at the Rs. 7000/- per sq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and gone through the impugned judgement and order of the learned Tribunal. It appears, the Assessing Officer had relied on a photocopy of an unsigned sale agreement in order to find that consideration amount has been paid at Rs. 1,68,00,000/-. Therefore, this amount was not disclosed. The learned Tribunal has correctly concluded that unsigned photocopy of the agreement for purchase of the property cannot be a material to rely on, when the registered sale deed has been produced and the same shows that the property was purchased at a price of Rs. 23,50,000/-. This registered sale deed was disclosed at the time of original assessment. According to us, the agreement of sale loses its force, the moment registered sale deed is executed. If the property has been purchased at a higher price than that of mentioned in the purchase deed, then the onus is on the Assessing Officer to establish that as has been rightly concluded by the Tribunal on this issue. Moreover, photocopy of the unsigned agreement has got no evidentiary value. The Assessing Officer has done a guess work while coming to the conclusion that the price of the property is more than mentioned in the sale deed. There mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 17.6. Though the above decisions are rendered in respect of on money payment, the same findings and observations are equally applicable for on money receipts also. In 15 villas, which were neither sold nor registered, there is no case for addition of undisclosed income, hence the same required to be deleted. In the remaining 25 villas there is no evidence brought on record to show that the assessee has received on money except the scribbling paper seized or impounded at the time of survey or the loose sheets seized from third party, Sri Lanka Anil Kumar. The scribbling also does not indicate the on money receipt with date and name of the party. No other evidence was brought on record by the revenue to establish that the assessee had received on money for sale of villas. Therefore, we hold that there is no case for assessment of unaccounted income on account of on money receipt on sale of villas. Hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. In the result, appeal of the revenue is dismissed on this ground." Since the issue is identical and there is no change in the facts, respectfully following the view taken by the coordinate bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of project Sea Pearl. The AO made the addition on the basis of sale price of plots to 61 to 64 which were adjacent to Sea Pearl Project and has no connection with the project Sea Pearl. The plot No.61 to 64 and the Sea Pearl projects were completely different and not inter linked. As explained by the assessee, it has sold the bulk of plots to M/s Kranthi Properties @4000/- per sq.yd and any amount received over and above the agreed rate would accrue to Kranthi Properties, but not to the assessee. The assessee placed copy of MoU reached between the assessee and the Kranthi Properties in page No.190 to 192 of the paper book. No other evidence was brought on record by the department to controvert the finding of the Ld.CIT(A) or to controvert the contents of MoU between the assessee and the Kranthi properties dated 25.07.2013. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed and the cross objections filed by the assessee becomes infructuos on this issue, hence dismissed." Though the Ld.DR argued that the Ld.CIT(A) deleted the addition admitting the additional evidence of MOU with M/s Kranthi Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission made by the assessee on the evidences filed before the AO. 15. Against which the department is in appeal before this Tribunal. During the appeal hearing, the Ld.DR supported the order of the AO, whereas, the Ld.AR relied on the order of the Ld.CIT(A) and argued that the amount paid to Sri K.S.N.Murty was genuine expenditure incurred for the sub contract works and it was never received back by the assessee. The self withdrawals made by Sri K.S.N.Murty were for their own purpose and it was not received back by the assessee. In addition to the above, the assessee submitted that Sri M.Y.Subrahmanyam has retracted the statement. There was no evidence found during the course of survey or search with regard to receipt of money back from Sri K.S.N.Murty. Further, the Ld.AR argued that the assessee has requested for cross examination of Sri K.S.N.Murty which was not afforded by the AO inspite of specific request made. Therefore, argued that there is no case for making the addition and the Ld.CIT(A) has rightly deleted the addition and hence, no interference is called for. 16. We have heard both the parties and perused the material placed on record. In the instant case, the sums ..... X X X X Extracts X X X X X X X X Extracts X X X X
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