TMI Blog2021 (9) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... self cheques, the AO, failed to collect the information regarding the exact sub contract works carried on by Dinakar Sai Constructions and the expenditure incurred for such civil contracts. AO also did not bring any material to show that the expenditure was claimed twice through sub contract works and by the assessee themselves debiting the expenditure separately to the P L account. There was no evidence found by the AO, except the statement recorded u/s 131 of the Act, inspite of conducting the survey in the business premises of Sri Dinakar Sai Constructions. AO also did not allow cross examination inspite of specific request made by the assessee. In the absence of any positive evidence to show that the expenditure was not incurred or debited twice, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. The appeal of the revenue is dismissed. - I.T.A.No.241 & 242/Viz/2020, Cross Objection No.20 & 21/Viz/2021 (Arising out of I.T.A.No.241 & 242/Viz/2020) - - - Dated:- 8-9-2021 - Shri N.K.Choudhry, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Revenue : Shri D.K.Sonowal, CIT(DR) For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein he has admitted ₹ 8,99,900/-ad additional income. 3. Any other ground of appeal that may arise at the time of hearing. 1.2. Original assessment was completed for the 2015-16 u/s 153C by an order dated 29.12.2017 and the assessee filed appeal and the matter travelled to the ITAT. The ITAT following the order of the jurisdictional High court in the case of CIT Vs.Shetty s Pharmaceuticals Biologicals Ltd. [2015] 57 taxmann.com 282 (Andhra Pradesh) and the case of CIT-III Vs. Sri Rao Subba Rao (HUF) in ITTA No.254 of 2014 dated 15.04.2014 and other decisions discussed in the order held that the assumption of jurisdiction u/s 153C without recording the reasons is invalid, accordingly upheld the order of the Ld.CIT(A) and dismissed the appeal of the revenue. Since, the abated assessment got revived as per the provisions of section 153A of the Act, the AO completed the revived assessment on the basis of information available on record. Originally, the case was selected for limited scrutiny and later the case was converted to complete scrutiny with the approval of the Pr.CIT. 2. Identical issues are involved for the A.Y.2015-16 and 2017-18 in respect of on money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. on one side of the page (front page) and on reverse side of the page, hand written notings of Anil Kumar were made with villa no, amount paid, document value etc.. which was discussed in detail in the assessment order by the AO. As per the statement given by Shri Lanka Anil Kumar, page No.6,7 and 8 contained the details of registered sale price and on reverse side of the page contain the details of agreed price. On the basis of above material and the statement recorded from Shri Lanka Anil Kumar, the AO estimated the receipt of on money @ ₹ 3,94,47,000/- on sale of villas and issued show cause notice. Mr.Suresh Kumar Jain, Managing Partner, objected for estimation of unaccounted sale price and also did not accept the statement of Shri Lanka Anil Kumar stating that the statement of Shri Lanka Anil Kumar has no relevance with the assessee s affairs. Mr.Suresh Kumar Jain, Managing Partner also stated that the statement of Shri Manchukonda Yatiraja Subrahmanyam is invalid since, he was not in good health. Shri Suresh Kumar Jain bluntly stated that the entries made in the books of accounts are correct and he does not know the entries in the loose sheets found in the residence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Kalyan Suri on 17.02.2014 (d) Soft copy of email dt.10.11.2014 to Kalyan Mannuru of Brick and Mortar (e) Reverse side of page No.50 of Annexure-BMHP/133A/Navaratna 17.1. The Ld.CIT(A) examined the above seized documents and found that none of the documents evidence the receipt of on money by the assessee. The Ld.CIT(A) in para No.6.2(v) discussed in detail with regard to facts of page Nos.48 and 54 of Annexure-A/NRE/Survey/Buss/01 and given a finding that it does not contain the details like villa number, name of the customer, date of agreement, date of payment etc. and it is a quotation for sale of villas. The assessee also explained that the price mentioned on the seized paper was a quotation to the customers which is subject to negotiations and inclusive of the stamp duty, registration fee etc.. Hence, the Ld.CIT(A)viewed that the same cannot be taken as an evidence for receipt of on money over and above the registered price. 17.2. The next document was soft copy of email addressed to Kalyan Mannuru of Brick and Mortar, wherein Lanka Anil Kumar had asked to change the price from ₹ 53 lakhs to ₹ 54 lakhs. The Ld.CIT(A) observed that Brick ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of plot No.122 and plot No.139. In respect of plot No.122 sale price was assessed at ₹ 52.50 lakhs against the registered price of 36.25 lakhs, showing the difference amount of ₹ 16.25 lakhs which was confirmed by the Ld.CIT(A) holding that there was on money receipt to the extent of ₹ 16.25 lakhs. Similarly in the case of plot No.139, sale price was assessed at ₹ 44.25 lakhs against the document price of ₹ 36.25 lakhs. Thus there was a difference of ₹ 8 lakhs which was confirmed by the Ld.CIT(A). 17.3. Mr.Yethiraja Subramanyam admitted the receipt of on money on sale of villas and admitted the undisclosed income of ₹ 1.90 crores for the impugned assessment year but later on retracted from the admission. Other partner, Sri Suresh Kumar Jain did not accept the admission stating that he was not in good health. The AO also did not consider the admission given by Mr.M.Y.Subramanyam for making the addition. Mr.Subramanyam also did not give the details of on money received with details of villa No, name of the customer, sale price, the document price etc.. the assessing officer also did not make any cross enquiries to ascertain the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unjustified to hold that the assessee had received the on money and make addition as undisclosed income on the basis of material found during the course of search from the premises of Sri Lanka Anil Kumar, who is a marketing executive and not even a partner. Section 292C of the Act presumes that the material found during the course of search belongs to the assessee in the case of the searched person. In the instant case, the searched person was Sri Lanka Anil Kumar, whereas Navaratna Estates is the assessee, a different partnership firm. Therefore, the material found during the course of search from the residence of Sri Lanka Anil Kumar cannot be attached with the assessee without having sufficient evidence. Though Sri Lanka Anil Kumar had stated that the material found during the course of search was relatable to the assessee he has not furnished the complete details with date of receipt whether it was over and above the registered price or not or whether the receipts mentioned on the reverse side of page No.6 was part of total sale consideration, registered consideration or over and above the registered sale consideration etc. In any case, the AO cannot solely depend on the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the loose document belongs to the assessee. There is no presumption in law that the assessee has actually paid ₹ 165 lakhs towards purchase of the property. The undisclosed income in this case is to be computed by the A0 on the basis of the available material on record. It should not be based on conjectures and surmises. As of now the material considered by the A0 for making the addition of ₹ 1 crore is seized material marked as A/CRK/104 and the statement of S. This loose sheet found at the premises of CRK is not enough material to sustain this addition. The seized material found during the course of search and the statement recorded is some piece of evidence to make the addition. The A0 has to establish the link between the seized material and other books of account to the assessee. The seized material and statement of CRK cannot be conclusive evidence to make this addition. The entire case herein is depending upon the rule of evidence. There is no conclusive presumption to say that actual consideration passed on between the parties is actually ₹ 165 lakhs. The assessee as well as her brother stated in their respective statements that the consideration passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty, instead made up a case on surmises and conjectures which cannot be allowed. Under these circumstances, there is no reason to confirm the addition of ₹ 100 lakhs towards on-money payment. Accordingly, the addition of ₹ 100 lakhs is deleted. -CIT vs. P. V. Kalyanasundaram (2006) 203 CTR (Mad) 449: (2006) 282 ITR 259 (Mad) relied on 19. The Hon'ble A.P. High Court in the case of Smt. K.V. Lakshmi Savitri Devi Vs. ACIT in ITTA 563 of 2011, upheld the order of the ITAT Hyderabad Bench. The Hon'ble High Court while, deciding the issue in favour of the assessee held as under: We are of the view that the Tribunal has rightly held that the registered document dt. 21.8.2006 under which the respondent purchased the above property showed that only ₹ 65.00 lakhs was paid to the vendor by the respondent; that there was no evidence to show that the respondent had paid ₹ 1.00 crore in cash also to the vendor; that no presumption of such payment of R..1.00 crore in cash can be drawn on the basis of an entry found in a diary/loose sheet in the premises of C. Radha Krishna Kumar which is not in the respondent's handwriting and which did not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the ITAT Hyderabad 'B' bench in the case of DCIT (Central Circle)-6 Vs. B. Vijay Kumar in ITA No.930 931 of 2009 held the issue in favour of the assessee as under: 11. We have heard rival submissions, perused the material submitted before us and also perused the orders of the revenue authorities. On a reading of the assessment order, it is absolutely clear that the addition has been made entirely on the basis of the photocopy of the sale agreement seized from the residence of the assessee in course of search and seizure operation. Undisputedly, the sale agreement is only photocopy and has not been signed by the assessee. The assessee has also raised serious allegation regarding the seizure of the impugned document and filed affidavit before DDIT (Inv.) asserting that the said document was planted by an officer of the department also named by the assessee in the affidavit. However, such allegation of the assessee has not at all been enquired into and has been met with complete silence by the department. From the materials on record, it is very clear that the AO has failed to lay his hands on any credible evidence to establish the fact that the assessee has pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property at the ₹ 7000/- per sq. yard on the date of transaction. For adopting such a valuation, the AO has not conducted any enquiry or brought any materials on record to show that the value of the property on the date of transaction was actually Ps. 7000 per sq. yard. On the other hand, the assessee has demonstrated with supporting evidence that the value of the land on the date of transaction was the rate mentioned in the registered sale deed and for which the property was sold. The assessee has also produced sufficient evidence to show that the - re was dispute going on regarding the legal right over the property which also had an effect on the fair market value of the property. It is also pertinent to mention here that the assessee had filed his return f income for the assessment years under dispute much prior to the date of search declaring the purchase of land in question at the consideration mentioned in the registered sale deeds, so far as the AO's observations on the loose sheets recovered from the residence of Smt. Nailni Devi are concerned, the CIT (A) after duly examining them has given a conclusive finding that the assessee's name has no where be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the property is more than mentioned in the sale deed. There must be some material and basis to conclude that the purchase has been made at an under valuation. 23. The Hon'ble Supreme Court in the case of CIT Vs. P.V. Kalyana Sundaram (2007) 294 ITR 49, under the similar circumstances held in favour of the assessee. The Hon'ble Supreme Court, while deciding the issue in favour of the assessee held as under: We have heard learned counsel for the parties and have gone through the record. It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal and the Commissioner and passed them off as if they were themselves the author(s). We feel that quoting from an order of some authority particularly a specialized one cannot per se be faulted as this procedure can often help in making for brevity and precision, but we agree with Mr. Vahanvati to the extent that any borrowed words used in a judgement must be acknowledged as such in any appropriate manner as a courtesy to the true author(s). Be that as it may, we are of the opinion that the three questions reproduced above can, in no way, be called substantial ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no change in the facts, respectfully following the view taken by the coordinate bench of ITAT in the assessee s own case, we hold that there is no case for assessment of unaccounted income on account of on money received on sale of villas. Accordingly, we, uphold the order of the Ld.CIT(A) and delete the addition made by the AO. Revenue s appeals on this ground for the A.Y.2015-16 and A.Y.2017-18 are dismissed. 8. Ground No.2 is related to the addition of ₹ 24,80,88,660/-. The AO made the addition of ₹ 24,80,88,660/- towards on-money on sale of plots. The assessee sold 4 plots bearing No.61 to 64 @13,000/- per sq.yard. The AO on the basis of the sale price of plot No.61 to 64 which are adjacent project Sea Pearl estimated the sale price @13,000/-per square yard of each plot in Sea Pearl as against the registered sale deed document price of ₹ 4,000/- per sq.yd and arrived at the total unaccounted receipts of ₹ 25,45,44,808/- after reducing the unaccounted income of F.Y.2015-16 and assessed the sum of ₹ 24,80,88,660/- to the year under consideration. For the A.Y.2017-18, the AO made the addition of ₹ 51,94,450/- on identical facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dismissed. Though the Ld.DR argued that the Ld.CIT(A) deleted the addition admitting the additional evidence of MOU with M/s Kranthi Properties, for the A.Y. 2016-17 without giving opportunity to the AO, the said MoU was very much available with the AO at the time of completing the present abated assessment, which was completed after the Ld.CIT(A) s order. Inspite of the fact that the Ld.CIT(A) deleted the addition basing on the MoU entered into with M/s Kranthi Properties, the AO did not bring any new facts or issue in the present assessment proceedings also controverting the recitals of MoU. No examination was made with Kranthi properties or the buyers of the flats. Therefore, argument of the Ld.DR is unacceptable and hence, rejected. Since facts are identical and no change in the facts we find no reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Appeals of the revenue for the A.Y.2015-16 and 2017-18 are dismissed. 13. Ground No.3 to 3.2 are related to the bogus contract payment stated to be made to Mr.KSN Murthy. In the assessment order, the AO made the addition of ₹ 8,99,900/- relating to the payments made to Shri K.S.N.Murthy for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 were credited in the bank account for the purpose of executing the sub contract works. It is also fact that Dinakar Sai Constructions is executing the sub-contract works and Sri KSN Murty is a managing partner of Dinakar Sai Constructions. Though the AO made an effort to establish that the assessee firm made the payments to Dinakar Sai Constructions and received the amounts back by way of self cheques, the AO, failed to collect the information regarding the exact sub contract works carried on by Dinakar Sai Constructions and the expenditure incurred for such civil contracts. The AO also did not bring any material to show that the expenditure was claimed twice through sub contract works and by the assessee themselves debiting the expenditure separately to the P L account. There was no evidence found by the AO, except the statement recorded u/s 131 of the Act, inspite of conducting the survey in the business premises of Sri Dinakar Sai Constructions. The AO also did not allow cross examination inspite of specific request ..... X X X X Extracts X X X X X X X X Extracts X X X X
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