9911796707
TMI Blog2023 (3) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... search and seizure operation u/s 132 of the Income Tax Act, 1961 (in short "Act") was conducted on 28.01.2021 in the group cases of M/s Ushabala Group in order to unearth the undisclosed income. A notice u/s 153C was issued to the assessee AOP, calling for the return of income. In response to the same, the AOP filed it's return of income, declaring total income of Rs.2,25,34,620/-. During the search & seizure operation, a separate premises at Raja Rammohanroy Street, Powerpet, Eluru was identified, where books containing the date wise receipts and payments, locker keys, blank signed cheques, blank signed promissory notes, blank signed stamp papers, original sale deeds and other documents were found and seized vide Annexures UPF/RP/E/1. The locker keys were identified to be in the name of several individuals who were the employees and relatives of key persons of Ushabala Group. A total cash of Rs.14.77 crores was seized from such lockers. A statement of Shri Harinath Babu was recorded u/s 132(4) of the Act, wherein, it was confirmed by him, that the loose sheets / books of accounts and all the documents were found and seized vide annexures Ann/UPE/RP/EL-1 to 155 during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts with respect to Usha Bala Group. I submit that these transactions pertaining to the group entities in the above mentioned annexure are rough version of the daily cash receipts and payments. Sir, I declared an amount of Rs.33.37 crores towards IDIS scheme and paid taxes in the F.Y.2016-17. Sir, Now as a result of search u/s 132 of Income Tax Act, I am admitting an estimated income of Rs.40 crores for all the entities in Ushabala Group put together for the assessment years 2015-16 to 2021- 22. The breakup of admission year wise and entity wise will be disclosed at the time of filing of the returns u/s 153A. Sir, I request the department to adjust the seized cash of Rs.15.26 crores against the admitted income. Please take a lenient view in initiation of penalty proceedings." It was further observed by the AO in the assessment order as under : "The sister concerns of M/s Ushabala Group, M/s L.V.Beach City Property Promoters and M/s LS Property Promoters are deriving income from the assessee AOP, M/s Dollars Colony, towards share of profit from real estate activity. As per the tripartite agreement entered into, the lands belonging to M/s LV Beach City Property Promoters and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of search, vide annexures UPF/RP/EL/41,74,81,82,90 to 155. In response to the above, the assessee stated as under : a. There is duplication of entries and transactions which were not materialized. b. Rough version of daily cash receipts and payments which contain some duplicate entries, most of the transactions are recorded in the regular books of accounts. c. These books are made for internal purpose and to have the idea of the transactions, rather than the amount of transactions. d. Rough workings and hence cannot be categorised as real and authentic. e. The receipts and payments which were written on some loose papers / slips were considered as real transactions by the department and the notings on such loose papers cannot constitute cogent evidence. 2.4. After considering the submissions, the AO did not accept the above objections / explanation of the assessee by holding that he had already discussed the modus operandi of unaccounted income earned by the assessee on the basis of seized material and also the failure of the assessee to furnish any evidence in support of his claim about duplication of entries, rough books and some transactions. The AO f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and LS Property promoters and vouchers / acknowledgements signed by Shri V.V.Balakrishna Rao, indicating receipt of certain amounts through cheque. The rest of the papers are simple scribbling made on certain papers, which do not contain any description, author of the document, signature of any party etc. and therefore, they are only dumb documents carrying no evidentiary value. It was the further contention of the assessee that the department has only estimated excess consideration received which could not derive any concrete evidence out of such scribbling found in the impounded diaries which itself shows that they are only rough estimates and same version was also deposed and stated by Shri V.V.Balakrishna Rao. Further the member of AOP, Shri V.V.Balakrishna Rao, at the time of recording statements u/s 132(4) of the Act dated 29.07.2021 and 18.08.2021, reiterated the fact that the receipts and payments in the seized annexure are rough version of cash book and it also includes certain bank transaction shown in the regular books of accounts, certain transactions which were not materialized and duplication of entries. Further the assessee AOP in it's reply had stated that it had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration shown in the sale deed are observed with regard to the sale of plots in Dollars Colony Phase-1 and he has given the details of excess consideration received in cash as observed from the narration of the receipt entries in the handwritten books. On this aspect, the main contention of the assessee is that there is no mention of name of assessee AOP in the above mentioned seized material. Therefore, the AO has wrongly came to a conclusion that the assessee AOP has received on money to the extent of Rs.1.6 crores. He further contended that the share of Shri V.V.Balakrishna Rao and Smt. V.Usha Rani is 55.5% and the Directors of AOP are having 44.5% share. Accordingly, the AO has bifurcated the excess sale consideration received at Rs.2,69,59,755/- and made the addition in the hands of AOP at Rs.1,60,41,171/- towards it's share. He further contended that there is no single piece of evidence to establish that the assessee AOP has received on money and the AO also failed to examine the purchasers of the plots. Therefore, he pleaded that in the absence of any incriminating material regarding on money transaction, the AO is not justified to make addition in the hands of assessee AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not contain the name of the assessee, establishing that the assessee received on money beyond the sale consideration mentioned in the sale deeds. The assessee also relied on the decision in the case of K.V.Laxmi Savitri Devi Vs. ACIT 60 DTR 148, wherein it was held by the ITAT Hyderabad Bench that " no addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dumb document or loose sheets. Therefore, he pleaded that the orders passed by the AO as well as the Ld.CIT(A) be set aside. 5. On the other hand, the Ld.DR submitted that Shri V.V.Balakrishna Rao, Ushabala Group, LV Beach City Property Promoters and LS Property Promoters are members of AOP and the documents which were seized by the revenue clearly establish that the on money received over and above the sale consideration mentioned in the sale deeds and the AO has rightly made the addition of Rs.1.6 crores in the hands of the assessee. He further contended that the Ld.CIT(A) also erred in estimating at 12.5% on the addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be permitted to withdraw the appeal. 8. We have heard the Ld.DR. As submitted by the revenue, it is observed, the appeal was filed before the Tribunal since the tax effect was inadvertently reported at Rs.52,09,794/- as against the correct tax effect of Rs.49,87,701/-, which is below the threshold limit as per the CBDT Circular No.17 of 2019 dated 08.08.2019. Keeping in view the CBDT Circular and also since the case does not fall under any of the exceptions cited in the CBDT Circular No.3 of 2018, dated 11.07.2018, the appeal filed by the revenue is not maintainable and hence, dismissed. I.T.A.No.177/Viz/2022, A.Y.2018-19 9. The revenue filed cross appeal against the order of the Ld.CIT(A) vide DIN & Order No.ITBA/APL/S/250/2022-23/1043801301(1), saying that the Ld.CIT(A) is not correct in estimating the profit @12.5% on the addition made by the AO to the extent of Rs.1,60,41,171/-. On this aspect, we have already given finding in I.T.A. No. 218-220/Viz/2022 for the A.Y.2018-19 to 2020-21. Since the appeals filed by the assessee are allowed as adjudicated above, the cross appeal filed by the revenue are dismissed. 10. In the result, appeals filed by the assessee are allowed an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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