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TMI Blog2014 (6) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... or was confronted with the statement of Mr. P. Shankara Rao and the assessee has admitted to have paid Rs. 1.78 crores vide statement dated 09.11.2006 whereas, search was conducted on 07.11.2006 - the statement of the assessee was recorded much after the search, thus, it cannot be said that the assessee was under the state of utter confusion or not in a proper state of mind while making the statement on account of pressure from the Department - the statement of the assessee was not even recorded during the course of search - it cannot be said that the statement was recorded under utter confusion as he has sufficient time to consult the professionals - Moreover the assessee has filed the affidavit retracting from his earlier statement – there was no infirmity in the order of the CIT (A) who has rightly treated the receipt of on money – Decided against Assessee. - ITA.No.273/Hyd/2011, ITA.No.393 & 394/Hyd/2011 - - - Dated:- 16-5-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Mr. S. Rama Rao For the Petitioner : Mr. P. Somasekhar Reddy ORDER Per B. Ramakotaiah, A.M. These three appeals by Assessee and Revenue for assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions decided in favour of assessee by stating as under : 4 In response to the case posted for hearing, Sri S V Rao, CA. attended and discussed the case. With regard to the disallowance of Rs,1,88,00,917 u/s 80-IB of the I.T Act, 1961, it is submitted by the Authorized Representative that the appellant had undertaken projects called Jayadarshini Residency' wherein 65 flats in 3 buildings are constructed. Out of the 65 flats, 5 flats are having area of 1689.65 sq.ft each and all other 60 flats are having area below 1500 sq.ft each. Therefore, it is the argument of the Authorized Representative that the Assessing Officer could have utmost disallowed 80-IB(10) benefit with regard to 5 flats only whereas he should have allowed the benefit in case of 60 flats. Hence, it is argued by the Authorized Representative that in view of decision of Hon ble Kolkata High Court and also in view of the decision of Hon ble ITAT Nagpur Bench, the appellant should have been given proportionate deduction. The gist of the decision of the Hon ble Kolkata High Court and ITAT, Nagpur Bench is as under : In the case of Bengal Ambuja Housing Development Ltd., Kolkata High Court in ITA.No. 453 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been perused. It is seen that out of 65 flats constructed, only 5 flats each are exceeding the area of 1500 sq.ft whereas the others are within 1500 sq.ft area. Therefore, considering the details with regard to the facts constructed, I am of the view that out of 65 flats only 5 are above 1500 sq.ft. area, therefore, the Assessing Officer is not justified to deny the benefit of deduction u/s 80-IB for the entire project completed for the assessment year under consideration. Therefore. following the above decision of Honble High Court and ITAT, the Assessing Officer is directed to give proportionate benefit of deduction for 60 flats out of 65 flats constructed. Therefore, this ground of appeal is partly allowed . 7. Learned D.R. contended that assessee has not furnished any information before A.O. and CIT(A) without examining the details allowed the deduction. He referred to the order of A.O. 8. Ld. Counsel, however, supported the order of the CIT(A) both on facts and law. 9. We have considered the issue and examined the rival contentions. We are not in agreement with order of CIT(A). As can be seen from the order, assessee has not furnished any details of Built-up area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Issue of addition of Rs.1.78 Crores : 10. The facts leading to addition are as follows. During the course of search, it was found that the company has purchased a vacant site situated at Kanuru in Vijayawada and Ac. 20.00 of agricultural land at Medchal from one Sri Peddu Shankar Rao during FY 2004-05. The vacant site at Kanuru was purchased for a registered price of Rs.l.07 crores in cash and a consideration of Rs.15 lakhs has been paid for the agricultural land at Medchal. However, during recording of statement of Sri G. Saibabu, Managing Director of the company, it was stated that the two transactions above were negotiated together and the company has paid an amount of Rs.3 crores in cash for the two properties. It was further explained that there was no exact bifurcation and the value recorded in books was Rs.1.22 crores for both the properties. It was stated that the difference amount of Rs.1.78 crores was also paid in cash by the company and it was admitted as undisclosed income for the FY 2004-05. However in the return of Income filed u/s 153A, no amount as admitted was shown as income. So G. Saibabu, Managing Director when confronted stated that at the time of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and panic and to buy peace with the department the assessee initially admitted about the receipt of Rs.3 crores without verifying the books and records and also due to the fact that it was claimed by the IT officials that the other party has admitted receipt of Rs.3 crores. After verifying the books of accounts, it was clearly ascertained that no payment was made beyond Rs.1.22 crores. Further, the assessee company has also filed a letter of confirmation from the seller Sr. Peddu Sankara Rao, that no payment was received in excess of Rs.1.22 crores. Hence, the Managing Director Mr G. Saibabu has retracted from his statement during the course of assessment. It is further respectfully submitted that according to Sec.158BB of the I.T Act, 1961 undisclosed income shall be the aggregate of the total Income of the previous years falling within the block period computed in accordance with the provisions of the Income tax Act, on the basis of the evidence found as a result of search or any other material or Information available with the Assessing Officer and relatable to the evidence found during the search. In the instant case there was no evidence or material found during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng paid and received sale consideration of Rs. 3 crores. The appellant company have recorded for Rs.1.22 crores only. 5.3 In view of the above observation of the Assessing Officer and also in view of the written submission furnished by the Authorized Representative, I am of the view that the Managing Director of the appellant company having agreed to have paid Rs.3 crores for the purchase of above two properties and also in view of the fact that other party also have agreed to have received an amount of Rs.3 crores as sale consideration. I am of the view that the Assessing Officer is justified to make the addition of difference amount of Rs.1.78 crores. Therefore, after verifying the facts and circumstances of the case, I am inclined to confirm the addition made by the Assessing Officer . 13. Ld. Counsel submitted that there is no evidence whatsoever for making the addition, there is no incriminating material in the search and an admission by Managing Director cannot be taken as basis. He also submitted that assessee- Managing Director had filed an affidavit later withdrawing the statement. He relied on the principles laid down by Hon ble Bombay High Court in the case of RR G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f on money is concerned, we find that the search was conducted upon the residential premises of the assessee along with the business premises of M/s. Subhadarshi Chit Funds (P) Ltd., and Subhadarshi Estates on 07.11.2006 and during the course of search various incriminating materials were found suggesting the sale and purchase of land or properties outside the books of accounts. 34. With regard to the impugned properties i.e. 20 acre agricultural land at Ravalakool village and the land measuring 1930 sq. yards at Vijayawada, the buyer of the property Shri G. Sai Babu, Managing Director of Jaidarshini Housing Pvt. Ltd., was examined and in his statement recorded on 9.11.2006, much after the date of search has admitted categorically that he had paid Rs.1.78 crores to the assessee Shri P. Sankara Rao over and above the sale consideration recorded in the sale document. This statement of buyer was confronted to the assessee and in his statement recorded on 21.12.2006 the assessee has admitted the receipt of Rs.1.78 crores in excess of the registered value of the transactions of both the sales. The relevant question No.6 and its answer is extracted hereunder for the sake of reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er statement at the earliest opportunity available to it. 36. We do not rule out the possibility that sometimes during the course of search the assessee may not be in a proper state of mind under various pressure and he admits income under different heads though he has reasonable explanation for those incomes. But in such circumstances the assessee should come forward and retract from the earlier statement recorded during the course of search at the earliest opportunity available to it. He should not wait for the start of assessment proceedings. As and when the search is over, the assessee has every right to consult the professionals on the statement made by it during the course of search and if he is advised so, he may retract from the statement recorded during the course of search and furnish valid explanation either to the search party or to the Assessing Officer or to the Commissioner having jurisdiction over the concerned Assessing Officer. In such circumstances, the contention of the assessee can be expected that his statement might have been recorded under the influence of coercion or under utter confusion. But if the assessee tried to retract from his earlier statement a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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