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TMI Blog2021 (9) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on sale of villas of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of Shri Lanka Anil Kumar and he further stated that whatever Shri Lanka Anil Kumar has stated in the statement were not relevant to the affairs of Navratna Estates, hence submitted that the addition cannot be made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and Mortar is web based advertising agency for real estate transactions and the assessee had requested them to mention price quotation at ₹ 54 lakhs which does not indicate payment of on money or receipt of on money. The documents bearing No. Annexure BMHP/133A/N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 consideration received over and above the documented price from the buyer. In the circumstances the statement and quotations referred by the AO cannot be taken at it's face value to hold that the assessee had received the on money over and above the sale price. 17.4. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 material found from the residence of Sri Lanka Anil Kumar and loose sheets to make the addition of undisclosed income. In this connection we find that similar view was expressed by the coordinate bench of ITAT, Hyderabad in respect of on money payment and the jurisdictional High court on identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 between the parties is only ₹ 65 lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at ₹ 165 lakhs. The Department herein is required to establish the nexus of the seized material to the assessee. As stated ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad) 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 contain the name of the respondent or any date of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities. 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 purchased the property for a consideration of ₹ 1,68,00,000/ - as mentioned in the photo copy of sale agreement seized in course of search and seizure operation. The assessee has produced before the AO registered sale deeds in support of its claim that they had purchased the property for a consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 been mentioned in those documents nor the amount of ₹ 109.48 lakhs represents the expenditure incurred by Smt Nalini Devi. However, the amount was found to be the summary of the balance of various accounts operated by the family members of Smt. Nalini Devi. We find that the CIT (A) in his elaborate and we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 questions of law. The fact as to the actual sale price of the property, the implication of the contradictory statements made by Rajarathinam or whether reliance could be placed on the loose sheets recovered in the course of the raid are all question of fact. We therefore find no infirmity in the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition 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. 9. Against which the assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition following the order of this Tribunal for the A.Y.2016-17. 10. Against which the revenue is in appeal before this Tribunal. During the appeal hearing, the Ld.DR vehemently supported the order of the AO and argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 executing sub contract works. Survey u/s 133A was conducted in the case of M/s Dinakar Sai Constructions on 30.11.2015 and during the course of survey, statement was recorded from Sri KSN Murty, who has stated that the amounts were paid into his bank account in Kotak Mahindra Bank by way of cheques and later withdrawn by self cheques by Mahe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed. 17. For the A.Y.2015-16, the assessee filed cross objections supporting the order of the Ld.C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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