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TMI Blog2018 (10) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... unted receipts. The revenue did not bring any material to establish that there was no expenditure incurred by the assessee relating to the unaccounted receipts. In the absence of the books of accounts it is unascertainable whether the assessee had booked the entire expenditure relating to accounted and unaccounted receipts. In the absence of any specific material with regard to the expenditure relating to unaccounted receipts, we hold that it is judicious to estimate the income on total receipts inclusive of unaccounted sales instead of making separate addition. The returned income of ₹ 1,00,93,430/- was after admission of additional income of ₹ 99,65,600/-, but not the original income as per Profit & Loss account found during the course of survey. Therefore, we hold the Ld.CIT(A) has rightly deleted the separate addition. For estimation of income @12.5% and scaled down @11% byCIT-A - Held that:- In this case no books of accounts were produced and the evidences were found in the premises of the assessee showing the unaccounted sales. The assessee could not prove the expenditure incurred with relevant books and the vouchers. Therefore, we hold that the estimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the earlier assessment year, there is no case for making the addition in the year under consideration. Accordingly, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. - I.T.A.No.380/Viz/2017, I.T.A.No.487-489/Viz/2017, I.T.A.Nos.433/Viz/2017, 499/Viz/2017 -503/Viz/2017 And Cross Objection Nos.80-85/Viz/2017 - - - Dated:- 5-10-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Assessee : Shri G.V.N.Hari, AR For The Revenue : Shri Ch.Sanjeev, DR ORDER Per Bench : These appeals are filed by the revenue and the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Vijayawada and the cross objections filed by the assessee against the order of the Ld.CIT(A). Since the issues involved in all the appeals are common, the appeals are clubbed, heard together and disposed off in a common order for the sake of convenience. I.T.A.No.433/Viz/2017, CO No.80/Viz/2017 I.T.A. No.380/Viz/2017 2. Facts in Brief: The assessee is an individual carrying on business in civil construction. A surve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total income assessed Rs.3,96,50,930 Accordingly computed the total income of ₹ 3,96,50,930/- against the returned income of ₹ 1,00,93,430/-. 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) determined the turnover at ₹ 13,84,64,334/- (i.e 12,61,34,334+1,23,30,000) consisting of accounted receipts as well as the unaccounted receipts and directed the AO to estimate the income at 11% on total sales which worked out to ₹ 1,52,31,076/- against the assessed income of ₹ 3,96,50,930/-. Against the order of the Ld.CIT(A), both the revenue and the assessee have filed the cross appeals and the assessee also filed the cross objections against the order of the Ld.CIT(A) which are decided as under: 4. Ground No.1 and 5 are general in nature which does not require specific adjudication. 5. Ground No.2 is related to the estimation of income @ 11% on total sales against the income estimated by the AO @12.5% on sales of ₹ 13,61,00,000/- and a separate addition of unaccounted sales or suppressed receipts of ₹ 1,23,30,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consideration as per the agreement are as under : Names Bundle No. Agreement Vale Sale Deed Value Difference Gita Sasidharan GNR/BNDL-1 (Page No.35) 1,20,00,000 94,00,000 26,00,000 Vallamkonda Chandra Sekhar GNR/BNDL-1 (Page No.13 to 18) 29,00,000 4,90,000 24,10,000 Syed Nazeer GNR/BNDL- 12 57,00,000 43,80,000 13,20,000 Smt.Ramanadham Sasikala 45,00,000 21,00,000 24,00,000 Boyapati Kishore Kumar 56,00,000 20,00,000 36,00,000 Total 3,07,00,000 1,23,70,000 1,23,30,000 5.2. The total amount of unrecorded sale consideration stated to have been received by the assessee but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which was confirmed by the assessee in the statement recorded during the course of survey and the assessee has not filed the return of income till the date of survey and no books of accounts were produced either before the AO or even during the appeal proceedings before the Ld.CIT(A). During the remand stage also, the assessee failed to produce the books of accounts. Therefore, the Ld.CIT(A) held that the AO has rightly rejected the books of accounts and estimated the income. 6.1 With regard to the additional receipts of ₹ 1,23,30,000/-, the assessee filed explanation before the AO as well as Ld.CIT(A) stating that after registering the sale deed, due to delay in completion of project and lack of progress in construction, the buyers have refused to honour the agreement unilaterally and constructed the unfinished structure themselves and the assessee had not undertaken the job and did not receive the consideration as recorded in the sale agreement. The assessee also submitted the confirmation from the flat buyers in couple of cases, where the buyers have accepted that they have entered into agreements for bank loans and after getting the bank loans, they have cancelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.00 24.00 (-) 5.00 (-) 5.00 on 26.03.2011 24.00 19.00 before 18.04.2011 Due to inconsistencies, contradictions and the nature of transactions recorded in sale deeds and the sale agreements, the Ld.CIT(A) held that much reliance cannot be placed on the confirmation letters of the buyers. As stated earlier the assessee failed to get his books of accounts audited and also not furnished the report in Form 3CD/3CB even during the appeal proceedings, Therefore, the Ld.CIT(A) upheld the rejection of books of accounts and determined the assessee s total turnover and the sale consideration at ₹ 13,84,64,334/- as under : Contract work sale of flats as per P L A/c Rs.12,61,34,334 Additional sale consideration as per Impounded materials (additional receipts) ₹ 1,23,30,000 Total sale consideration Rs.13,84,64,334 6.2 Against the total turnover determined at ₹ 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not found during the course of survey. The books of accounts were neither produced before the AO at the time of assessment nor produced before the Ld.CIT(A) during the appeal proceedings. The Ld.DR further argued that during the remand proceedings also, the assessee failed to produce the books of accounts and the incriminating material found shows the unaccounted receipts in the business of the assessee. Therefore, the Ld.DR argued that the estimation of income @12.5% was rightly made by the AO and requested to uphold the addition. 8.0 Supporting ground No.3 related to separate addition of ₹ 1,23,30,000/-, the Ld.DR argued that the Ld.CIT(A) should not have deleted the addition relating to the additional receipts which was evidenced by the sale agreement. The agreement of the assessee with regard to the non receipt of the consideration as per the sale agreements is not proved by the assessee with relevant books of accounts, bills, vouchers and by production of the respective parties. No other tangible evidence was placed by the assessee before the lower authorities to show that the buyers have cancelled the sale agreements and constructed the semifinished structure by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt.Ramanadham Sasikala 21,00,000 45,00,000 24,00,000 Boyapati Kishore Kumar 20,00,000 56,00,000 36,00,000 Total 1,83,70,000 3,07,00,000 1,23,30,000 12.1. The Ld.CIT(A) did not accept the contention of the assessee that he did not receive the additional receipts, since the assessee has failed to produce the books of accounts and also did not produce the buyers before the AO for verification of the facts. The fact of non receipt of the additional receipts should be supported by the books of accounts and with the relevant expenditure. The Ld.CIT(A) held that for arriving the total sales the additional receipts also required to be considered but no separate addition required to be made on account of unaccounted receipts and accordingly included the sum of ₹ 1,23,30,000/- in the total turnover and estimated the income thereon. In this case, the assessee has not produced the audit report and the books of accounts either before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was ₹ 12,61,34,334/- , the assessee increased the turnover with a sum of ₹ 99,65,600/- to compensate the deficiencies of survey and filed the return of income. Otherwise the return would have resulted in lesser income to that extent. Neither the revenue nor the assessee could place the material relating to the expenditure claimed with regard to the unaccounted receipts. The revenue did not bring any material to establish that there was no expenditure incurred by the assessee relating to the unaccounted receipts. In the absence of the books of accounts it is unascertainable whether the assessee had booked the entire expenditure relating to accounted and unaccounted receipts. In the absence of any specific material with regard to the expenditure relating to unaccounted receipts, we hold that it is judicious to estimate the income on total receipts inclusive of unaccounted sales instead of making separate addition. The returned income of ₹ 1,00,93,430/- was after admission of additional income of ₹ 99,65,600/-, but not the original income as per Profit Loss account found during the course of survey. Therefore, we hold the Ld.CIT(A) has rightly deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, ground Nos. 3 and 4 of the appeal of the assessee are dismissed. In the result, appeal of the assessee is dismissed. Cross Objection No.80/Viz/2017 17. Ground Nos. 1 and 5 are general in nature which does not require specific adjudication. 18. Ground No.2 is related to the estimation of income at ₹ 1,52,31,076/- by estimation of income @ 11% on total turnover. This ground is adjudicated by us in revenue s appeal and upheld the order of the Ld.CIT(A), therefore, this ground is dismissed. 19. Ground No.3 is related to the addition of ₹ 2,15,000/- unrecorded interest. This ground is not pressed by the Ld.AR during the appeal hearing, therefore, this ground is dismissed as not pressed. 20. Ground No.4 is related to the separate addition of ₹ 1,23,30,000/- This issue was decided against the revenue and in favour of the assessee in revenue s appeal. Hence, no further adjudication considered necessary. 21. In the result, appeal of the revenue, cross appeal filed by the assessee are dismissed and the cross objections of the assessee are partly allowed. I.T.A.No.499/Viz/2017, CO No.81/Viz/2017 I.T.A.No.487/Viz/2017 22. A surve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addl.CIT, Vijayawada has issued the notice u/s 271D for a sum of ₹ 61,19,000/- in case of P Prabhakar Rao and ₹ 6.00 lakhs in case of Sri TSVG Naga Prasad for the financial year 2007-08 relevant to the assessment year 2008-09, for violation of provisions of section 269SS of the Act. In response to the show cause notice issued by the Addl.CIT, the assessee filed explanation stating that the assessee along with Sri Prabhakar Rao and Sri TSVG Naga Prasad have come to an understanding to start a business venture in BRP Road for which Sri Prabhakar Rao and TSVG Naga Prasad have contributed the amounts as their share capital. Cash receipt issued by the assessee represents the share capital contribution for the joint business venture to be promoted by three of them. The assessee also submitted that on the face of the receipt purpose of the cash received was also noted as share capital but not as a loan. Since the assessee could not contribute his share of capital immediately to start the proposed business venture both Sri P Prabhakar Rao and Sri Naga Prasad have asked the assessee to treat the said amounts as advance for purchase of flats and accordingly the flats were sold to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hakar Rao and Prasad are extracted from page No.10 of the penalty order which reads as under : The assessee's submissions that the amounts received from the above persons (i.e. P.Prabhakar Rao T.V.S.G.Nagaprasd) are towards capital in the firm M/s SK Constructions cannot be accepted for the following reasons 1. As seen from the impounded material(receipt dated 18.02.2008) (scanned copy at page No.6) it clearly mentions the amounts to be returned after the project loan is obtained and the amount bears interest at the rate of ₹ 2.50 per month till the repayment. If the amount is received as capital contribution from Shri P.Prabhakar towards capital for BRP projects or as capital contribution in M/s SK Constructions as claimed by the assessee the question of returning the amount after project loan is obtained does not arise. Also it is to be noted that there is clear prescription of interest payment mentioned at ₹ 2.50 per month till the repayment. Hence the amount taken is clearly a loan. 2. Ledger account as available is in the impounded material SS SK/A/1 at page no. 19 of P.Prabhakar clearly mentions that the amounts are given In cash and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No.7 2 24.07.2007 4,14,000 S S S K/1/1 Page No.8 3. 31.07.2007 8,10,000 S S S K/1/1 Page No.9 4. 05.08.2007 5,50,000 S S S K/1/1 Page No.10 5. 07.11.2007 2,00,000 S S S K/1/1 Page No.11 6. 11.11.2007 6,15,000 S S S K/1/1 Page No.12 7. 19.12.2007 30,000 S S S K/1/1 Page No.13 8. 28.12.2007 6,50,000 S S S K/1/1 Page No.14 9. 18.02.2008 15,00,000 S S S K/1/1 Page No.6 10. 23.02.2008 5,00,000 S S S K/1/1 Page No.17 11. 15.03.2008 2,29,000 S S S K/1/1 Page No.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and Sri Naga Prasad are friends and Sri Naga Prasad and the assessee proposed to do joint venture called Harish Towers, Ring Road Vijayawada. For the said purpose, Sri TSVG Prasad has given an amount of ₹ 25 lakhs , out of which an amount of ₹ 15 lakhs was received in cash vide impounded material GNR/Bundle 9, page No.8-12. Sri Prasad had lent a sum of ₹ 10 lakhs through cheque at ICICI Bank. However, the Addl.CIT while passing the order has mentioned only ₹ 6 lakhs. As per the books of accounts of the assessee, the amount of loan was ₹ 25 lakhs and the amount of ₹ 9.00 lakhs received on 05.04.2007 and ₹ 6.00 lakhs on 08.06.2007. The assessee submitted that due to various reasons the assessee could not take up the proposed business venture with Shri Prasad and returned the amounts to Sri TSVG Prasad as per the details given here under : Date Amount Mode of Payment 09.02.2009 2,50,000 Cheque No.209479 Andhra Bank 1538 23.06.2009 50,000 Cheque No.812162 Andhra Bank 05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 83,48,000 Impounded material obtained during survey and books of account of appellant confirmed the above. (a) The loan amounts received by appellant from Shri P.Prabhakar Rao in cash are evidenced by the impounded materials detailed below which were found in the premises of Shri P.Prabhakar Rao. S. No. Date of Receipt Amount (Rs.) Impounded Material Number 1 19.07.2007 13,50,000 S S S K/1/1 Page No.7 2 24.07.2007 4,14,000 S S S K/1/1 Page No.8 3. 31.07.2007 8,10,000 S S S K/1/1 Page No.9 4. 05.08.2007 5,50,000 S S S K/1/1 Page No.10 5. 07.11.2007 2,00,000 S S S K/1/1 Page No.11 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. P. Prabhakar Rao to M/s, SK Interiors Constructions has nothing to do for the relevant Assessment Year 2008-09 i.e. for the period ending on 31.03.2008 as the firm itself came into existence only on 05.09.2009 and corresponding bank account in the name of MIs. SK Interiors was opened only on 19.10.2009 with opening balance of ₹ 5,000/- by cash (A/c No.545401010050201 with Union Bank of India, Labbipet). 5.4.4. The claim of appellant that Mr. P. Prathakar Rao gave his site for development to appellant and appellant had spent ₹ 22,70,000/- for development expenses on behalf of Shri P. Prabhakar Rao was not established either before Addl. Commissioner of Income Tax or during appeal proceedings i.e., no evidence in respect of this claim was produced either before Addl. Commissioner of Income Tax or during appeal proceedings. With regard to the sale of flats, the Ld.CIT(A) observed that the evidence is available for sale of flats to Sri P.Prabhakar Rao for sale consideration of ₹ 37,45,000/-, for two flats and the same required to be allowed thus, confirmed the penalty of ₹ 31,03,000/- out of the loans accepted from Sri P Prabhakar Rao. 28.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead mentioning on the face of it stating the amounts were received towards share capital of the syndicate. However in this aspect also the assessee failed to furnish any evidence with regard to the details of the syndicate, members of the syndicate, objects of the syndicate, common bank account and the income tax return etc. The assessee also did not open any bank account to deposit the pooled funds and to make the transactions. Therefore, argued that mention of syndicate and contribution to capital is nothing but an effort made by the assessee to circumvent the provisions of section 269 SS of the Act, and the Ld.DR argued that the amounts received by the assessee are nothing but the cash loans which attracts the provisions of section 269SS and consequent penalty u/s 271D of the Act. The receipt of ₹ 15 lakhs on 18.02.2008 and ₹ 5 lakhs on 26.02.2008, though mentioned towards BRP road project, the assessee has not furnished the details of the BRP project, partners, the capital account, pattern of capital and the relevant documentation etc. Further in the receipt it was clearly mentioned that the amount was a project loan which bears the interest @2.50 per month. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.07.2007 Rs.8,10,000 Share capital for syndicate 24.07.2007 Rs.4,14,000 Share capital for syndicate 19.07.2007 Rs.13,50,000 Capital for construction syndicate 18.02.2007 Rs.15 lakhs Capital for BRP Road Project belonging to Smt. And others interest payable @Rs.2.50 per month. 18.02.2007 Rs.5 lakhs For the capital in addition to the above mentioned single receipt. The Ld.AR further argued that the above amounts were received either for the specific project or for the capital for syndicate. Since the impounded material clearly indicates that the amounts were received towards share capital or capital contribution of the various projects, there is no case for holding that they are the loans for contravening the provisions u/s 269SS of the Act. The Ld.AR further stated that subsequently the amounts were adjusted towards the sale of flats as mentioned by the Ld.CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the decision of the Ld.CIT(A) became final. 31.3. The Ld.A.R. supported his case very strongly stating that the sums received w ere for the purpose of share capital of the syndicate but not the loans. Though on the face of the receipts, it was mentioned as Royal Hotel Project for a sum of ₹ 5 lakhs on 23.02.2009, the details of the Royal Hotel Project, the names of the partners, the common bank account and any documentary evidence was not made available. Therefore, merely mentioning Royal Hotel Project does not support the case of the assessee that sum was received towards the share capital. The assessee had received the sum of ₹ 5 lakhs on 23.02.2009 from Sri P Prabhakar Rao and the same was utilized by him in his own business and the assessee has not opened separate bank account for the purpose of specific project of Royal Hotel project which establishes that there was no such project and the amount of ₹ 5 lakhs was a cash loan advanced by Sri P.Prabhakar Rao to the assessee. Similarly the amounts received vide page No.26 to 35 were mentioned as syndicate capital or share capital of syndicate also not supported by any evidence with the documentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again no details were furnished and it was mentioned in the letter head that the loan bears interest rate of ₹ 2.50 per month which clearly establishes that the said sum was also a loan, but not for any project. The assessee has furnished the copy of partnership deed dated 05.09.2009 relating to SK Interiors. The Ld.CIT(A) held that the partnership deed of S.K. Interiors has nothing to do with the cash loans, since the advances were taken in 2007-08 and there was no partnership deed executed by both of them before accepting the loan. As rightly held by the Ld.CIT(A), we hold that the assessee s claim of capital contribution by Sri P Prabhakar Rao to M/s SK Construction has nothing to do with the relevant assessment year 2008-09 as the firm itself has come into existence on 05.09.2009 and the bank account of SK Interiors was opened on 19.10.2009. 32. Had the assessee received the sums towards share capital or for specific project the assessee would have opened the common bank account in the name of the firm or the shareholders or the partners for the benefit of the syndicate of respective project and operated the same for common business venture. In case of non-commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds sale of flats is repayment of loan for which the provisions of section 269T are applicable and required to be dealt with separately. In the instant case, during the financial year 2007-08, the assessee had received a sum of ₹ 68,48,000/- which are held to be loans but not the share capital or the capital contribution. Therefore, we hold that the Ld.CIT(A) erred in deleting the penalty of ₹ 37,45,000/- representing the sale of flats to the assessee and we are unable to accept the contention of the Ld.CIT(A) and accordingly we set aside the order of the Ld.CIT(A) and confirm the penalty levied by the Addl.CIT. In this case though the Ld.CIT(A) held that the cash loan was ₹ 68,48,000/- he has not given enhancement notice, therefore, we confirm the penalty levied by the Addl.CIT to the extent of ₹ 67,19,000/-. 34. In respect of the loan taken from Sri TSVG Naga Prasad for a sum of ₹ 6 lakhs it was mentioned on the face of in receipt in page No.51 that the amount was received for construction of the flat or house. The same fact was recorded in the sale deed. Therefore, we do not find any infirmity in the Ld.CIT(A) order and the same is upheld. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputation Gross total income 1,68,84,108 Less : Deduction u/s 80C 1,00,000 Total income 1,67,84,108 During the course of survey conducted u/s 133A in this case on 10.10.2013 the assessee had admitted the income of ₹ 3.00 crores spreading over for three years and accordingly for the year under consideration, the income admitted by the assessee was ₹ 1.00 crore. Accordingly the assessee filed the return of income admitting the total income of ₹ 95,80,310/-. During the assessment proceedings, the AO held that the admission of income ₹ 1.00 crore was additional income over and above the normal profits, and accordingly computed the income estimating the net profit at 12.5% on gross receipts of ₹ 3,37,80,000/- and separately made the addition of ₹ 17,76,000/- relating to the unsecured loan of Ms. V Malleswari and made separate additions representing other receipts of income, income from house property, interest received, professional fee received etc,, admitted by the assessee in the return and determined the total income at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n profit and loss account while appellant arrived at net profit. For the same reason, other addition of ₹ 4,73,608/- (interest of ₹ 17,952/-, professional fee receipt ₹ 1,500/- + other income of ₹ 4,54,156/-) is not required, Hence, Ground of appeal Nos.2, 3 5 are allowed. The Ld.CIT(A) also deleted the addition made in respect of the balance outstanding in the name of V.Malleswari for ₹ 17,76,000/-. While deleting the addition, the Ld.CIT(A) held that the said sum of ₹ 17,76,000/- of V.Malleswari is related to the opening balance, but not the sum received during the year under consideration and relied on the decision of Hon ble ITAT Bangalore in the case of Glen Williams Vs. ACIT and accordingly deleted the addition. 38. Aggrieved by the order of the Ld.CIT(A), the revenue carried the matter before the Tribunal. 39. We have heard both the parties and perused the material placed on record. In revenue s appeal, ground No.1 and 5 are general in nature which does not require specific adjudication. 40. Ground No. 2 is related to the addition of ₹ 17,76,000/- unsecured loan taken from V.Malleswari. The revenue s case is that a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that the assessee had earned income over and above the returned income, the AO cannot resort for separate estimation of the profits and to tax the additional income stated to have admitted in the survey. In this case, the AO estimated the income @12.5% on the gross receipts of ₹ 337.80 lakhs which worked out to be 42.12 lakhs and the remaining income from all other sources i.e. income from property, professional fee and other income was ₹ 7,85,608/- and the aggregate of ₹ 42.12 lakhs and the sum of ₹ 7,85,608/- worked out to ₹ 49,97,608/- which was less than the returned income. Therefore, we do not see any reason to interfere with the order of the Ld.CIT(A) which is fair and reasonable. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Cross Objection No.85/Viz/2017 42. The Cross Objection filed by the assessee was not pressed during the appeal hearing, therefore the Cross Objection is dismissed. I.T.A.No.500/Viz/2017, CO No.82/Viz/2017 43. The Addl.CIT initiated penalty u/s 271D against the assessee for accepting the loan from Sri S.Ram Prasad for a sum of ₹ 1,20,00,000/- in vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire amount was received through cheque, the Ld.CIT(A)deleted the penalty. 46. Aggrieved by the order of the Ld.CIT(A), the revenue has filed appeal before this Tribunal. We have heard both the parties and perused the material placed on record. During the course of survey loose sheets marked as annexure:GNR/Bndl/2 page No.28 to was found and impounded u/s 133A of the act. A statement was recorded during the course of survey from the assessee and the assessee had accepted that he had taken loans of ₹ 1,20,00,000/- from Shri Ramprasad. For ready reference, we extract, relevant part of the statement which was reproduced in the penalty order and the same reads as under: 36. Please go through the Bundle-2 of impounded material and explain the contents and transactions therein? Ans. Therese are the amounts representing loan taken from Sri Surapaneni Ram Prasad of ₹ 1,20,00,000/-. The total amount including interest come to ₹ 1,92,00,000/- out of which an amount of ₹ 20,50,000/- was paid as interest upto 23.08.2011. Regarding the balance payment the same was settled by giving away 2(Two) Flats in Sri Satya Towers. 46.1. The material found du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... + So far given - Rs.48,80,000 Total Amount Paid - Rs.1,84,65,000.00 Loose sheet No.30 (scanned copy annexed in the penalty order) 01.11.2010 - Loan of ₹ 1,20,00,000/- - Rs.1,20,00,000 Interest @Rs.3/- per month Rs.3,60,000 x 19 months - Rs.68,40,000 Total (Principal + Interest) - Rs.1,88,40,000 3683 sft. 1142 sft. 400 sft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a sum of ₹ 20,50,000/- was paid as interest up to 23.08.2011. Out of the contents recorded on the loose sheet the assessee did not dispute the sale of flats and the adjustment of the loan taken towards the sale of flat and disputing the acceptance of loan ₹ 1,20,00,000/-. It is settled principle that contents found during the course of survey on loose sheet is true and correct in entirety but cannot be partially correct and partially false. The assessee had accepted the contents as true and correct in the statement recorded during the course of survey on 10.10.2013 and did not retract till the penalty proceedings are initiated i.e for nearly for three years. The assessee is permitted to retract the statement within reasonable time but not after long time. Since the assessee has not retracted the statement immediately we hold that the statement recorded during the survey is valid and retraction is an afterthought to overcome the provisions of section 269SS of the act. The Ld.AR relied on the decision of Hon ble apex court in the case of Commissioner of Income-tax, Salem, Vs. Khader Khan Son*[2012] 25 taxmann.com 413 (SC). The facts of the case are distinguishable wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated to confirming the penalty of ₹ 8,00,000/- for violation of provisions u/s 269T levied under section 271E of the Act. The assessee had made the repayment of ₹ 8,00,000/- to Shri P.Prabhakar Rao in violation of the provisions of section 269T of the Act, Therefore, the Ld.Addl.CIT invoked the provisions of Section 271E and levied the penalty of ₹ 8,00,000/-. On appeal the Ld.CIT(A) confirmed the penalty. 50. In this order, in revenue s appeal in ITA 499/Viz/2017, as per the detailed reasoning given, we have held that the amounts received from Shri P Prabhakar Rao were the loans, accepted in cash otherwise than by cheque and the same attracts penalty u/s 271D of the Act. The assessee made the repayment of the loan of ₹ 8,00,000/- in cash during the year under consideration in violation of section 269T of the Act. Though the Ld.AR argued that it represents the interest payment, the same was not supported by the ledger account copy which was extracted by the Ld.CIT(A) in para No.5.4 of the order. In the letter dated 19.02.2015 addressed to Asst.CIT, Circle-2(1), Visakhapatnam, Shri P.Prabhakar Rao has confirmed that he has received part payment of advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of principal or principal along with the interest, otherwise than crossed cheque. For ready reference, we extract section 269T of the Act which reads as under : Mode of repayment of certain loans or deposits. 269T. No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit or paid the specified advance, or by use of electronic clearing system through a bank account if- (a) the amount of the loan or deposit or specified advance together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, or (c) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Ld.CIT(A) and dismiss the appeal of the revenue. Cross Objection No.84/Viz/2017 53. Appeal No.502/Viz/2017 is related to the levy of penalty of ₹ 38,75,000/-, representing sum of ₹ 36,60,000/- for repayment of loan in cash to Shri S.Ramprasad and ₹ 2,15,000/- to Shri P.Prabhakar Rao. The Ld.CIT(A) deleted the penalty in the case of Shri S.Ramprasad, therefore, the assessee filed cross objection supporting the order of the Ld.CIT(A). With regard to the penalty of ₹ 36,60,000/- paid to Shri S.Ram Prasad, the order of the Ld.CIT(A) is confirmed in Revenue s appeal No.502/Viz/2017, therefore the cross objection is allowed.. Though the Ld.AR filed cross objection for ₹ 2,15,000/- paid to Shri V.Prabhakar Rao, the Ld.AR did not make any argument in respect of ₹ 2,15,000/-. Therefore, assessee s cross objection on this ground is dismissed. In the result cross objection of the assessee is partly allowed. 54. In the result, (i) Appeal of the revenue in I.T.A No. 433/Viz/2017 is dismissed, Cross Objection of the Assessee in C.O.No.80/Viz/2017 and Cross Appeal No.380/Viz/2017 is dismissed. (ii) Appeal of the revenue in I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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