DEPUTY COMMISSIONER OF INCOME TAX, HYDERABAD V. M/S PRESTIGE AVENUES LIMITED, HYDERABAD

ITA 763/HYD/2011

AI Insights

The case involves the Deputy Commissioner of Income Tax, Circle \\u2013 16(2), Hyderabad as the appellant and M/s. Prestige Avenues Limited as the respondent. The Revenue appealed against the order of the CIT(A) which had deleted several additions made by the Assessing Officer regarding unexplained investments in real estate projects. The Assessing Officer had based these additions on seized documents and materials, which he interpreted to suggest that the actual purchase prices of lands were significantly higher than those recorded in the official documents. The CIT(A) found that the additions were made on surmises and lacked concrete evidence, leading to their deletion. The Tribunal, after reviewing the submissions and evidence, concurred with the CIT(A) and dismissed the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29113 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2006-2007
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.BALAKRISHNA
• Assessee Lawyers: K.C.DEVDAS
• Keywords: Unexplained investment; Document seized; Documents seized; Search and seizure; Source of fund
• Section: 143(3); 143(2); 143(1); 132; 153A; 22; 13; 92

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER ITA No.763/Hyd/2011 Assessment Year: 2006-07 The Deputy Commissioner of Income Tax, Circle – 16(2), Hyderabad. Vs. M/s. Prestige Avenues Limited, Hyderabad. PAN : AADCP3698P. (Appellant) (Respondent) Assessee by: Shri K. C. Devdas, C.A. Revenue by: Shri B. Bala Krishna, CIT-DR Date of hearing: 11.12.2024 Date of pronouncement: 24.02.2025 O R D E R PER LALIET KUMAR, J.M: This appeal is filed by the Revenue feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals) – VII, Hyderabad dated 15.02.2011 for the AY 2006-07. 2 ITA 763/Hyd/2011 2. The grounds raised by the Revenue read as under : “1. On the circumstances and facts of the case, the CIT(A) erred in allowing the appeal of the assessee. 2. The learned CTT(A) erred in deleting the addition of Rs. 1,32,00,000/- towards unexplained investment in meerkhanpet project even though the same was added on the basis of evidentiary value of seized material and surrounding, circumstances. 3. The learned CIT(A) erred in deleting the addition of Rs. 1,90,88,225/- towards unexplained investment in the purchase of Khadthal/ Maisigandi lands even though the same was added on the basis of evidentiary value of seized material and surrounding circumstances. 4. The learned CIT(A) erred in deleting the addition of Rs. 87,00,000/- towards unexplained investment in the purchase of Salaravulapalli village lands even though the same was added on the basis of evidentiary value of documents and surrounding circumstances. 5. The learned CIT(A) erred in deleting the addition of Rs. 43,56,000/- towards unexplained investment in the purchase of Pinjerla lands even though the same was added on the basis of evidentiary value of documents and surrounding circumstances. 6. The learned CIT(A) erred in deleting the addition of Rs. 1,35,49,825/- towards unexplained investment in the purchase of Subhanpur lands even though the same was added on the basis of evidentiary value of documents and surrounding circumstances. 7. The learned CIT(Appeals) ought to have appreciated the fact that the assessee failed to furnish the corroborative evidence to substantiate that the investment towards acquisition of lands was made from out of known sources of income. 8. The learned CIT(A) ought to have appreciated the fact that the assessee failed to discharge the onus lied upon it to prove that the contents in the seized documents were incorrect and the rebutted the presumption with evidence that the details in the seized documents does not relate to him. 9. The learned CIT(A) ought to have appreciated the fact that the tax authorities are entitled to pierce the veil of a transaction secreted behind a legal document and look at the reality of the transaction going behind the legal façade and the recital in the registered document cannot be a 3 ITA 763/Hyd/2011 guiding factor when it is a usual experience that payment of on money is a part of real estate transaction and fact of life.” 3. The brief facts of the case are that assessee is a company filed its return of income for A.Y. 2006-07 through e-filing on 29.11.2006 declaring a total income of Rs.14,35,980/-. The return was processed u/s 143(1) of the Act on 28.07.2007. Search operation u/s 132 of the Act was conducted in Prestige Avenues Group of cases on 30.11.2006, wherein this case was covered u/s 153A of the I.T. Act. Accordingly, notice u/s 153A of the Act was issued calling for return of income. In response, assessee filed its return of income on 15.12.2008 declaring an income of Rs.30,15,050/-. In response to notices issued u/s 143(2) and 142(1) of the Act, assessee submitted information as called for. After verifying all the information provided by the assessee and the material available on record, Assessing Officer completed the assessment. During the assessment, Assessing Officer found that assessee had made unexplained investments in Meerkhanpet Project to the tune of Rs.1,32,00,000/- and accordingly, added the same to the returned income. Assessing Officer also found that assessee made unexplained investments to the tune of Rs.1,90,88,225/- in purchase of Kadthal / Maisigandi lands, Rs.2,45,000/- in Prestige Rai Towers, Rs.70,93,332/- in purchase of Karkal Pahad lands, Rs.87,00,000/- in purchase of Sarlaravulapalli lands, Rs.43,56,000/- for purchase of Pinjerla lands and Rs.1,35,49,825/- for purchase of Subhanpur lands and hence, added all these to the total income returned and thereby 4 ITA 763/Hyd/2011 assessed the total income at Rs.6,92,47,423/-. Accordingly, passed assessment order on 31.12.2008 u/s 143(3) r.w.s. 153A of the Act. 4. Aggrieved with such assessment order, the assessee has filed an appeal, before the LD.CIT(A), who granted part relief to the assessee. 5. Aggrieved with the order of LD.CIT(A), the Revenue is now in appeal before us. 5.1. Ground no.1 is general in nature and requires no adjudication. GROUND NO.2 6. With respect to Ground No. 2, the Ld.DR submitted that the addition of Rs. 1,32,00,000/- towards unexplained investment in the Meerkhanpet project was based on credible evidence found during the search and seizure operation. The Ld.DR has drawn our attention to 4.2 of the order of LD.CIT(A), which is to the following effect : “4.2. I have considered the assessee's arguments/submissions. The appellant's representative had also drawn my attention to the copies of all the seized papers as also the sworn deposition referred to by the Assessing officer. As rightly stated by the appellant, the seized document 5 ITA 763/Hyd/2011 did not contain any details to suggest that the purchase of lands under consideration was made at the rate of Rs. 13,00,000/- per acre as assumed by the Assessing officer. The Assessing Officer had apparently picked up the figure of 13000 noted in seized document PRK/New Folder/Meeting/Networth and adopting the encoding of figures suspected by him to have taken place, interpolated the figure of 13000 to 13,00,000 and had accordingly adopted the purchase consideration of the lands at Rs. 13,00,000/-, per acre. As argued by the assessee's representative, the said sheet of paper do not contain any details such as date, month or year and whether the figures related to transaction in rupees, etc. As such it is difficult to conclude that the notings made therein related to the assessment year under consideration; and that as argued by the assessee's representative, if the figures noted therein were added with two zeros as was done by the Assessing Officer, they do not measure up to any reality. Apart from this the A.O. could not conduct any other investigation such as examining the parties concerned (which even the appellant requested) bring in any other positive material so as to substantiate his conclusions. That apart for purposes of assuming he encoding theory the A.O. relied upon certain transactions noted in a piece of paper which lack authenticity since correctness of either the said paper nor the entries noted therein was never put to proof by the Assessing Officer. Instead of taking the issue to its logical end, obviously, the AO had struck to his assumption to encoding of figures. Even while quoting from the averments from the sworn deposition the AO stated something against the appellant based on what was never admitted either in the sworn statement or in any other submissions filed before the Assessing officer. Since the A.O. relied upon only these documents (discussed above) which do not support his stand and as the A.O. could not gather any other positive evidence for estimating the purchase consideration at Rs. 13 lakhs per acre as against Rs. 1 lakh per acre accounted by the assessee, it is apparent that the addition of Rs. 1,32,00,000/- is made on pure surmise and assumption. The addition of Rs. 1,32,00,000/- is therefore deleted. Hence, this ground of appeal is allowed.” 6.1 The Ld.DR contended that the seized documents, including MOUs and spreadsheets recovered from the laptop of Sri P. Ravi Kumar, a director of the assessee company, clearly indicated that the actual purchase price of the land was Rs. 13,00,000/- per acre, as opposed to the Rs. 1,00,000/- per acre recorded in the registered sale deeds. The DR emphasized that duplicate books of 6 ITA 763/Hyd/2011 accounts maintained by the assessee, corroborated by the seized material, established that the disclosed figures were encoded at 1/100th of the actual amounts paid. 6.2. On the other hand, ld.AR mainly submitted that the addition of Rs. 1,32,00,000/- towards alleged unexplained investment in the Meerkhanpet project is unjustified, as the figures relied upon by the Assessing Officer are based on assumptions and interpretations of seized documents, which lack corroborative evidence. The seized documents do not provide sufficient details to support the AO’s assumption that the purchase of lands was made at Rs. 13,00,000 per acre, as they lacked essential information such as dates and whether the amounts were in rupees. The AO incorrectly interpolated the figure of 13000 to Rs. 13,00,000, which does not align with any reality. Further, the ld.AR submitted that the registered sale deeds clearly reflect the actual consideration paid, and there is no material evidence to suggest otherwise. The ld.AR pointed out that the seized documents, being unauthenticated, cannot form the sole basis for additions. Additionally, the AO failed to conduct further investigations, such as examining the concerned parties or providing any positive material to substantiate his conclusions, leading to a conclusion based purely on assumptions and surmise, without any concrete evidence and therefore, the addition made by the Assessing Officer should be deleted. 7 ITA 763/Hyd/2011 6.3. We have heard the rival submissions and perused the material on record. In the present case, the assessee submitted that the purchase of the impugned property was evidenced by 5 registered documents registered with the Sub-Registrar Hyderabad; the sellers of the property and the relevant registered documents being: a) P.Ramesh, S/o. P.Venkaiah, Do. 1813/2006 b) M.V.Ramana, S/o. Late M.Shankara Rao Doc. No.1848/2006 c) N.Paramesh, S/o. Late Doc. No.2521/2006 d) N.Ramesh S/o. N.Babu Doc. No.2522/2006 e) P.Ramesh, S/o.P.Venkaiah, Doc. No.2523/2006 6.4. The source of the said investment was by way of withdrawal from business funds, which is also evidenced by entries recorded in the books of accounts maintained by the appellant/assessee before us. It was duly supported by reliable evidence such as conveyance deeds and relevant extracts from the books of accounts. The Assessing Officer has not disputed the contents of these documents. Quite contrary to this, the AO made the addition based on the following: 8 ITA 763/Hyd/2011 A. Sworn deposition of Sri P.Ravi kumar recorded on 6/3/2007 (replies to Q.Nos. 11, 12 & 15) B. MOU between PAL, KVA, BVPL & PRK (page Nos. 14 to 17, 29 & 33 of A/BV/1) C. Documents (PRK/New Folder/Meeting/NETWORTH) in the form of CD seized as a back up of laptop belonging to Sri P.Ravi Kumar (annexure A/PAL/MEL/P0/2 and page 127 of Ann. A/PAL/MEL/P01/4 which are seized from premises of Prestige Avenues Ltd., Hyderabad wherein the details of Meerkahnpet project has been discussed. D. Page Nos. 63, & 65 of impounded material Ann. A/BV/3 during the course of survey on 5.43.2007 in M/s.Bhuvi Ventures P. Ltd., which is a connected case of Prestige. 6.5. Apart from these, the AO also presumed certain encoding of figures and, based on this presumption, adopted a higher purchase consideration, bringing the difference to tax as unexplained investment in the acquisition of properties. 6.6. Now, we will discuss in detail the basis on which the AO made the addition, as mentioned in points A to D above and validity of them. Each of these aspects is examined in the following paragraphs. A. Sworn deposition of Sri P.Ravi Kumar recorded on 6/3/2007 (replies to Q. Nos. 11, 12 & 15): 9 ITA 763/Hyd/2011 6.7. The AO relied on the replies furnished by Sri P. Ravi Kumar during the recording of his sworn deposition on the date of the search, i.e., 06/03/2007. The questions posed by the revenue were answered by Sri P. Ravi Kumar as follows: “Q.11 Please give the details of Meerkhanpet project and the “Buy back Scheme” relating to that? Ans. Meerkhanpet property is being developed by M/s.Bhuvi Ventures, M/s. K.V.A.Crystal Estates and P.Ravi Kumar. The extent of land under Bhuvi’s project approx. & acres (40% ) out of the total land holding of approx. 22 acres, as out of total land of 22 acres, 2 acres of the 60% (comes to 3 acres of 22 acres). Buy back scheme is an offer to the buyers of plots where the buyers have an option to resale the land to M/s.Bhuvi Ventur3es for a mutually agreed higher rate. Q.12. Please explain the saleable area of Meerkhanpoet by the land owners (i.e. M/s.Prestige Avenues and M/s.K.V.A. Crystal Estates and Ravi Kumar? Ans.) Once acre is 4840 sq. yds and as per DTCP norms, the saleable area per acre is 2899 sq. yds. Approx. So, the saleable area in the share of the land owners, i.e. M/s.Prestige Avenues, M/s.KVA Crystal Estates and P.Ravi Kumar will be 12 acres x 2800 sq. yds = 33,600 sq. yds. (approx.) Q.15 I am showing you page no.127 of the Annexure A/PAL/MEL/PO1/4 NARRATING THE DETAILS OF INVESTMENTS MADE IN Meerkahanpet and Mysigandi projects. Please go through the same and explain? Ans.) I have gone through the material shown by you and I state that I am unable to explain its contents of the page 127 of the Annexure A/PAL/MEL/P01/4. 10 ITA 763/Hyd/2011 FINDINGS ON POINT “A” 6.8. As can be seen from the replies given by Sri P. Ravi Kumar, it is apparent that while answering the above-mentioned questions, he only referred to the MOU entered into by certain parties in connection with the Meerkhanpet project and the probable outcome of the project upon its completion. At no point in his replies did Sri Ravi Kumar state that the Meerkhanpet lands were purchased at a consideration of ₹13 lakhs per acre, as assumed by the AO. It is unclear how the AO placed reliance on Sri Ravi Kumar’s replies, which in no way support the AO’s findings. Thus, the conclusions drawn by the AO are factually incorrect. Hence we sustain the order passed by CIT A and hold that addition on the basis of such an incomplete and incoherent statement of Sri Ravi Kumar are not sustainable . B. MOU between PAL, KVA, BVPL & PRK (Page Nos. 14 to 17, 29 & 33 of A/BV/1). 6.9. A bare reading of the MOU makes it clear that it was entered into by four individuals for the execution of the Meerkhanpet Project. The salient features of this MOU are as follows: a) It is an agreement entered into between (1) M/s.Prestige Avenues Ltd. (2) M/s.KVA Crystal Estates; (3) Bhuvi Ventures P. Ltd. An (4) P.Ravi Kumar. 11 ITA 763/Hyd/2011 b) The agreement is for development of land owned by the according to which Bhuvi Ventrues had undertaken to develop the Ac. 22-21 gts. Of land owned by the other 3 parties to the agreement; c) The agreement stipulates the proportion at which the developed plots are to be shared by all the parties. FINDINGS ON POINT “B” : 6.10. The assessee before us has not denied the execution of this agreement; however, the mere acceptance of the MOU does not lead to the conclusion that the assessee had agreed to purchase the land at ₹13 lakhs per acre, as wrongly assumed by the Assessing Officer. No term of this agreement has been brought to our notice by the Ld. DR to support the conclusion drawn by the Assessing Officer. Therefore, in our considered opinion, no addition can be made based on this MOU. In view of the above, the revenue's submission in this regard is devoid of merit. C. Documents (PRK/New Folder/Meeting/NETWORTH. Annexure A/PAL/MEL/P0/2 and page 127 of Ann. A/PAL/MEL/P01/4: 6.11. We have gone through the rough sheet, Annexure A/PAL/MEL/P0/2, and have given our thoughtful consideration to its contents. In our view, this is merely a rough working statement titled “Company Net Worth Statement,” showing certain figures related to land and finance. Neither does the assessee- company own all the lands mentioned in the paper, nor does it 12 ITA 763/Hyd/2011 possess any information regarding the figures in the said statement. Although the heading suggests that it is a company- related statement, it does not specify to which company it pertains. A reference to this loose paper indicates that it neither contains the date nor the year of any transaction concerning the properties mentioned therein. Moreover, the figures in the said sheet do not specify whether they are in rupees or any other denomination. On the contrary, it appears to be a rough noting sheet, possibly prepared by a staff member as a memory aid or as a document intended to present a rosy picture of the state of affairs. Otherwise, the figures noted therein do not correspond to any reality. To cite an example, if the purchase value of the Meerkhanpet property is shown as 13,000, its market value is shown as 30,000. Since the Meerkhanpet properties were purchased during the current year only, there is no scope for a 15% increase in their market values. The same applies to lands at Maisigandi, Sarlaravulapally, and other locations. 6.12. If the AO’s decoding or encoding theory is to be accepted, the net value of the properties noted in the sheet would work out to a staggering ₹124.83 crores. This inordinate and exorbitant net assets of the company cannot be accepted as during the course of the search, the department did not find any unaccounted assets. Additionally, at no place, in the document is it mentioned that the Meerkhanpet lands were actually purchased for ₹13,00,00,000/- or that the assessee paid such consideration for their acquisition. Therefore, in our considered opinion, no addition can be made 13 ITA 763/Hyd/2011 based on Annexure A/PAL/MEL/P0/2. In view of the above, the revenue’s submission in this regard is devoid of merit. D. Page Nos.63 & 65 of impounded material Ann. A/BV/3 during the course of survey on 05/03/2007 in Bhuvi Ventures, which is a connected case of Prestige Avenue group of cases: FINDGS ON POINT “D” 6.13. In this regard, it is worthwhile to mention here that Page Nos. 63 and 65 of Annexure A/BV/3 (referred to above) consist of copies of cash receipts for amounts ranging from ₹2,000/- to ₹3,500/-, said to have been received from Sri K. Srinivasa Reddy and G. Chandrasekhara Rao. Admittedly, these papers were seized during the course of a survey on 05/03/2007 in M/s. Bhuvi Ventures, and therefore, in our view , it is for the said company to explain the nature or correctness of the entries in these receipts. Merely because the assessee-company has some common directors with M/s. Bhuvi Ventures, it does not make the assessee accountable for these papers. The assessee can't be held liable for incorrect maintenance of account by the M/s Bhuvi ventures. Notwithstanding the same, in any case, a perusal of these slips of paper does not indicate the rate at which the property was sold, making the AO’s conclusions purely presumptive. In view of the above findings, we are of the considered opinion that no addition can be made based on these documents either. 14 ITA 763/Hyd/2011 A.O’S PRESUMPTION OF ENCODING: 6.14. We find that on the basis of findings on uncorroborated information, Assessing Officer assumed that the appellant had resorted to encoding of figures, unilaterally, concluding that the assessee might have paid a total sale consideration of ₹1,43,00,000/- as against the actual payment of ₹11,00,000/- for the purchase of the said land. The issue for consideration is whether the AO’s assumption regarding the decoding or encoding of figures is correct. The AO's assumption is based on (i) the entries made in a seized paper called the “Company Net Worth Statement,” (ii) entries in page 127 of the seized material, and (iii) certain transactions specified on pages 4 and 5 of the assessment order. Upon examination, we noticed that the scribblings in the seized papers, mentioned in column 3 of the statement in the assessment order, were evidently rough notings. In fact, as stated by the AO himself, in respect of all 11 transactions, the correct figures were duly recorded in the books of accounts, which serve as the basis for income computations. Since only the correct figures were recorded in the books, there is neither room nor scope for suspicion of concealment. 6.15. That apart, out of the 11 transactions specified by the AO, 10 transactions were conducted through cheque or bank transfers. Since bank transactions are easily verifiable at any time, no prudent person would resort to encoding such figures, and in fact, there would be no need to do so, as bank accounts reflect the 15 ITA 763/Hyd/2011 actual amounts. It is thus apparent that the scribblings on these sheets have no evidentiary value and were likely the handiwork of some employee. The moot question to be considered is whether the AO’s assumptions can override other documents that hold evidentiary value, such as the solemn affirmations made by sellers in the sale deeds and the duly maintained books of accounts. 6.16. In our considered opinion, assumption or presumption cannot take the status of proof or evidence. In other words, presumption alone cannot be the basis for making additions in the hands of the assessee, more particularly, when there exists contemporaneous and other more credible evidence in favour of the assessee rebutting the presumption, in the form of registered documents, statements, etc., which are primary documents/ evidence. Moreover, these documents have not been contradicted by any contrary evidence brought on record by the Assessing Officer. The AO has merely assumed that certain transactions took place involving certain amounts, without any corroborating evidence, either oral or documentary, in his possession. No papers were found during the course of the search and seizure operation to support the AO’s conclusion that the appellant had made a payment of ₹1,43,00,000/- and that the sellers of the property had received the said amount, as presumed by the AO. In other words, there is no justification for substituting the figure of ₹11,00,000/- with the imaginary figure of ₹1,43,00,000/-. That apart, the Assessing Officer’s assumption of encoding/decoding of figures, based on the instances/ transactions referred to at pages 4 & 5 of 16 ITA 763/Hyd/2011 the assessment order, is purely a surmise and not based on facts. Furthermore, we may also draw support from the provisions of Sections 91 & 92 of the Evidence Act, which uphold the proposition that in the presence of a duly executed and registered document, no uncorroborated evidence can be relied upon to discredit the original registered documentary evidence concerning the sale of a property. 6.17. It is interesting to note that, besides the above-mentioned documents/evidence, the Assessing Officer has also based his findings on his own imagination and decoding of figures found in certain documents. The Assessing Officer did not summon any of the sellers or buyers of the property to ascertain the correct value of the property sold by the assessee. Instead, the entire emphasis was on decoding figures, and based on this decoding, the AO disregarded the value mentioned in the registered documents and the value substantiated by the assessee through comparable instances of properties in adjoining areas. Hence, in our considered opinion, the assumption of the Assessing Officer is without any acceptable evidence. 6.18. Additionally, it had not been brought on record about page 127 of Annexure A/PAL/MEL/P01/4, seized during the search, has to who have been written this document and in which context it was written. Right from the date of seizure, the assessee has categorically denied ownership of the said paper, stating that it was neither in his handwriting nor that of any of his employees. 17 ITA 763/Hyd/2011 Even the Department did not conduct any enquiries in this regard. When the assessee denied ownership of the document, it was the responsibility of the Department to establish that the assessee had made an unexplained investment in the purchase of the property, which they failed to do. If the AO had any doubt about the correctness of the consideration recorded in the sale deed, and if he intended to reject the evidence available in the registered conveyance deed, he ought to have examined the sellers, i.e., the above-mentioned parties, to ascertain the exact amount received by them as sale consideration. Further the assessing officer has not invoked the provision of section 292C of the act to draw the inference against the assessee. Unfortunately, the AO did not conduct any enquiry regarding the presumed payment of premium in the purchase of the property, nor did he make any attempt in this regard. Normally, one of the standard methods of verification is by citing comparable sales in the area to substantiate the market rate assumed by the AO. However, the AO did not refer to any such comparable sales to demonstrate that the land in Meerkhanpet commanded a market value of Rs. 13 lakhs per acre at the relevant time. On the contrary, based on the information gathered by the appellant, certain instances of comparable sales reported in the area and the rates at which the lands were sold are mentioned in the following form: 18 ITA 763/Hyd/2011 6.19 As evident from the above, the properties in the area were sold at a rate of Rs. 1 lakh per acre. The land value in the region never commanded the sale rate assumed by the Assessing Officer, as evidenced by the registered documents. In light of the foregoing discussion, we find no reason to interfere with the order passed by the Ld. CIT(A). Accordingly, Ground No. 2 raised by the Revenue stands dismissed. GROUND NO.3 7. With respect to Ground No. 3, the Ld.DR submitted that that the addition of Rs. 1,90,88,225/- for unexplained investment in Kadthal/Maisigandi lands was justified. In this connection, the Ld.DR has drawn our attention to paragraph 5.5. of the order of the LD.CIT(A), which is to the following effect : “5.5 I have considered the assessee's submissions. The appellant's representative had also drawn my attention to the copies of the seized paper PRK/New Folder/Meeting/NETWORTH, Annexure A/PAL/MEL/PO/2 as also copy of the sworn deposition recorded on 18- 4-2007. As rightly stated by the appellant, the seized document did not contain details such as date, month or year and as such it is difficult to conclude that the notings made therein related to the assessment year under consideration. Apart from this the A.O. could not conduct any other investigation such as examining the parties concerned (which even the appellant requested) bring in any other positive material so as to substantiate his conclusions. Instead of taking the issue to its logical end, Sl.No. Documen t No. Name of the vendor Description & rate at whch sold 1 3716/06 Mangali Ramulu A.0.31 gts. At Rs.1 lac per acre 2 570/06 B.Sureder Reddy & Meda Lakshmi Ac. 10.06 gts. At Rs. 1 lackh per acre 19 ITA 763/Hyd/2011 obviously, the AO slipped into an error in quoting a piece on the admission dated 18-4-2007. The AO stated something against the appellant based on what was never admitted either in the sworn statement dt 18-4-2007 or in any other submissions filed before the Assessing officer. Coming to the inferences drawn from the seized material, it has to be stated that the only facts are that certain papers were found in the business premises of the assessee (and others) and they contained certain calculations and no intelligible inference there from can be drawn. No sensible inference of any fact can be drawn from such known facts. In view of the matter and since the A.O. relied upon only these documents which do not support his stand and as the A.O. could not gather any other positive evidence for making addition of Rs. 1,90,88,225/-, it is apparent that the addition is made on pure surmise and assumption. The addition of Rs. 1,90,88,225/- is therefore deleted. Hence, this ground of appeal is allowed.” 7.1. The Ld.DR submitted that with respect to this issue, Assessing Officer relied on seized materials, including spreadsheets and sworn depositions, which revealed that the purchase consideration was Rs. 3.5 to Rs. 4 lakhs per acre instead of the Rs. 16,000 per acre reflected in the registered sale deeds. The Ld.DR further contended that these materials, combined with evidence of cash payments, provided a reasonable basis to conclude that the assessee had under-reported the actual purchase prices of these lands, warranting the addition. 7.2. On the other hand, the ld.AR submitted that the addition of Rs. 1,90,88,225/- for alleged unexplained investments in Kadthal/Maisigandi lands is erroneous. Regarding the impugned addition, ld.AR submitted that the alleged amount forms part of legitimate business transactions and should not be considered 20 ITA 763/Hyd/2011 unexplained income. The ld.AR further submitted that that the addition made by the Assessing Officer is based on incorrect assumptions and without fully considering the context of the case. The amount is duly recorded in the books of accounts, and relevant supporting documents have been provided to establish its authenticity. Furthermore, ld.AR argued that there was no discrepancy in the financial records or any evidence of underreporting income that could have justified such an addition. 7.3. It is also contended by the ld.AR that the AO relied on rough notes and spreadsheets without substantiating how these documents directly relate to the transactions in question and that independent verification was conducted to establish the accuracy of the alleged higher consideration, rendering the addition speculative and baseless. The AO failed to properly examine the evidence and consider the business nature of the transactions, leading to an unfair conclusion. The ld.AR further argued that there is no clear or specific evidence to show that the amount represents undisclosed or unreported income and hence, the addition be deleted. 7.4. We have heard both parties and perused the material on record. The contentions of the Revenue with respect to the present ground are not new, as a similar argument was already adjudicated while deciding Ground No. 2 of the Revenue’s appeal (supra). In that context, we have extensively analyzed the findings 21 ITA 763/Hyd/2011 of the Assessing Officer and the conclusions drawn by the Ld. CIT(A), and we found no merit in the Revenue’s claims. Since the present ground is based on the same reasoning and does not bring forth any fresh material or substantive evidence to warrant a different view, we see no justification to interfere with the well- reasoned findings recorded by the Ld. CIT(A). Accordingly, in line with our earlier decision, Ground No. 3 raised by the Revenue stands dismissed. GROUND NO. 4 8. With respect to Ground No. 4, the Ld.DR submitted that the addition of Rs.87,00,000/- towards unexplained investment in Sarlaravulapalli lands was made after careful examination of a sale agreement involving a third party. In this connection, Ld.DR has drawn our attention to paragraph 8.3 of the order of LD.CIT(A), which is to the following effect : “8.3 I have considered the assessee's contentions. I have considered the assessee's submissions. The appellant's representative had also drawn my attention to the copies of the seized paper i.e., agreement of sale Page Nos. 23 to 26 of Annexure A/PAL/MEL/PO1/2. The said document is an agreement executed on 20-10-2005 by one Sri Vieeslavath Hariya, represented by agreement holders, Sri G. Suhan Lal in favour of Sri T. Rajasekhar Reddy and 4 others. The said agreement stipulates that the executants have agreed to sell 10 acres of land out of survey number 86/1A situated at Sarlaravulapally revenue village. As rightly stated by the appellant, the assessee did not purchase property from either of the executants of the said agreement. The property to the extent of 30 acres was purchased by the assessee-company which was registered vide document nos. 6972/05 and 6977/05 (both dated 17-11-2005) and another document no. 7985/05 dated 12-12-2005. The seized document did not contain any separate receipt for cash payment. The assessee's 22 ITA 763/Hyd/2011 contention to the effect that while the sale agreement was in respect of 10 acres of land out of survey no. 86/1A, the land purchased by the assessee was of the order of 30 acres covering in different areas out of survey no. 86/1; and as such the same cannot be considered as comparable prevailing market rate. He thus argued that in real estate business existence of such sham documents with a view to just jack up rates and to quote the rate for other parties are common. Apart from this the A.O. could not conduct any other investigation such as examining the parties concerned (which even the appellant requested) bring in any other positive material so as to substantiate his conclusions. Instead of taking the issue to its logical end, obviously, the AO had merely adopted the same rate quoted in the said agreement. In view of this and since the A.O. relied upon only the said document which do not support his stand and as the A.O. could not gather any other positive evidence for making addition of Rs. 87,00,000/-, it is apparent that the addition is made on pure surmise and assumption. The addition of Rs. 87,00,000/- is therefore deleted and this ground of appeal is allowed accordingly.” 8.1. The Ld.DR submitted that the agreement referred to a purchase price of Rs. 3.5 lakhs per acre, significantly higher than the Rs. 60,000/- per acre disclosed in the registered sale deeds. The Ld.DR further contended that this disparity highlighted the under-reporting of purchase prices and justified the addition made by the AO, even though the agreement did not directly involve the assessee. 8.2. On the other hand, ld.AR submitted that addition of Rs. 87,00,000 for the Sarlaravulapalli lands are centered around the argument that the reliance on a third-party agreement is misplaced and cannot be used to impute higher land values to transactions carried out by the assessee. The ld.AR submitted that the consideration recorded in the registered sale deeds reflects the true transaction values, which are supported by proper 23 ITA 763/Hyd/2011 documentation. The ld.AR has drawn our attention to the seized documents, specifically the agreement of sale (Page Nos. 23 to 26 of Annexure A/PAL/MEL/PO1/2), executed on 20-10-2005 by Sri Vieeslavath Hariya, represented by agreement holders Sri G. Suhan Lal, in favor of Sri T. Rajasekhar Reddy and 4 others, which pertains to the sale of 10 acres of land from Survey No. 86/1A, situated at Sarlaravulapally revenue village. The ld.AR further emphasized that assessee did not purchase property from the executants of this agreement but instead acquired 30 acres of land under registered documents Nos. 6972/05, 6977/05 (both dated 17-11-2005), and document No. 7985/05 (dated 12-12-2005). The seized document does not contain any receipt for cash payment, and that the sale agreement for 10 acres is not comparable to the 30 acres of land purchased by the company, which was spread across different areas of Survey No. 86/1A. The ld.AR further pointed out that in the real estate business, it is common to have sham documents created to artificially inflate rates for quoting purposes. 8.3. The ld.AR also contended that the Assessing Officer failed to conduct any other investigations, such as examining the parties involved, or provide any positive evidence to substantiate the addition of Rs. 87,00,000/- and instead of thoroughly investigating the matter, the A.O. merely adopted the rate quoted in the third-party agreement, Given that the A.O. relied solely on this document without any additional positive evidence. Therefore, the ld.AR submitted that the addition is based on pure 24 ITA 763/Hyd/2011 surmise and assumption and therefore, the same should be deleted. 8.4. We have heard the rival submissions and perused the material on record. This addition pertains to the alleged unexplained investment in the purchase of Sarlaravulapalli lands. The appellant acquired 30 acres of land through three registered sale deeds at a rate of ₹60,000 per acre. However, the Assessing Officer, relying on the contents of a sale agreement executed by a third party—specifically, a sale agreement entered into by Veeslavath Harliya, represented by T. Rajasekara Reddy and others—concluded that the appellant had actually paid ₹1,05,00,000 (@ ₹3.50 lakhs per acre) instead of the registered sale consideration of ₹18,00,000/-. Based on this assumption, A.O determined an addition of Rs.87,00,000/- as unexplained investment in purchase of the said property. In this regard, we had considered the copies of the seized paper i.e., agreement of sale (Page Nos. 23 to 26 of Annexure A/PAL/MEL/PO1/2). The said document is an agreement executed on 20-10-2005 by one Sri Vieeslavath Hariya, represented by agreement holders Sri G. Suhan Lal, in favor of Sri T. Rajasekhar Reddy and four others. The said agreement stipulates that the executants have agreed to sell 10 acres of land out of Survey Number 86/1A, situated at Sarlaravulapally revenue village. It is a matter of fact that the assessee did not purchase the property from either of the executants of the said agreement or the witnesses to this agreement. The property, to the extent of 30 acres, was purchased 25 ITA 763/Hyd/2011 by the assessee-company, which was registered vide document numbers 6972/05 and 6977/05 (both dated 17-11-2005) and another document number 7985/05 dated 12-12-2005. The seized document did not contain any separate receipt for cash payment. 8.5. As observed by us while deciding Ground No.2 hereinabove, the Assessing Officer had not conducted any independent investigation or inquiry from the sellers of the property to ascertain its correct value and had merely made additions based on assumptions. We are of the considered opinion that when positive evidence, in the form of registered/primary documents, is available to contradict the findings of the AO, there is no justification for making the addition in the hands of the assessee. In view of the above and our findings hereinabove in paragraphs 6.3 to 6.19 while deciding Ground No.2 of the Revenue appeal, we uphold the order passed by the Ld. CIT(A) in deleting the addition of Rs.87,00,000/-. Accordingly, Ground No.4 of the Revenue stands dismissed. GROUND NO.5 9. With respect to Ground No. 5, the Ld.DR submitted that the addition of Rs. 43,56,000/- related to the Pinjerla lands was based on strong evidence derived from the seized materials. The Ld.DR has drawn our attention to para 9 of the order of LD.CIT(A) which is to the following effect : 26 ITA 763/Hyd/2011 “9. The next ground of appeal is in respect of addition made by the Assessing Officer at Rs. 43,56,000/- This addition of Rs. 43,56,000/- is made as unexplained investment in Pinjeria lands. During the year the appellant purchased 4-16 guntas of land at Pinjerla for a consideration of Rs. 44,000/- The Assessing Officer on the premise of 'encoding' of figures had adopted the sale consideration at Rs. 44,00,000/- and brought the difference of Rs. 43,56,000/- to tax. So far as the encoding theory presumed by the Assessing Officer is concerned, as already held by me while nealing with the addition in respect of Meerkhan lands, the it was held by me that there is also no basis for this encoding observation for the reasons stated against the addition specified at Para 3 above. Coming to the inferences drawn from the seized material, it has to be stated that the only facts are that certain papers were found in the business premises of the assessee (and others) and they contained certain calculations and no intelligible inference there from can be drawn. No sensible inference of any fact can be drawn from such known facts, in view of the matter and since the A.O. relied upon only these documents which do not support his stand and as the A.O. could not gather any other positive evidence for making addition of Rs. 43,56,000/-, it is apparent that the addition is made on pure surmise and assumption. The addition of Rs. 43,56,000/- is therefore deleted.” 9.1 Before us, the Ld.DR pointed out that the AO determined the per-acre rate as Rs. 10,00,000/- as reflected in spreadsheets found on the laptop of Sri P. Ravi Kumar, despite the assessee showing only Rs.10,000/- per acre in the sale deeds. It was contended that this pattern of under-reporting land values, combined with the encoded figures in duplicate accounts, strongly supported the addition as unexplained investment. 9.2. On the other hand, the ld.AR submitted that the addition of Rs. 43,56,000 towards unexplained investment in the Pinjerla lands is also incorrect. The project in Pinjerla was launched in FY 2005-06, and the assessee provided an explanation regarding the 27 ITA 763/Hyd/2011 seized material (PRK/New Folder NETWORTH) that was allegedly from Sri P. Ravi Kumar’s laptop. The assessee stated that the material was not related to M/s. Prestige Avenues Ltd. and that the purchase of land was reflected in the sale deed at a rate of Rs. 10,000 per acre, as acknowledged before the Sub-Registrar. The AO, however, relied on the seized material and a statement made by Sri P. Ravi Kumar, which suggested that the actual purchase price was Rs. 10,00,000 per acre. The ld.AR argued that the AO's reliance on this material was incorrect, as the document was not directly related to the transaction. The assessee further explained that the spread sheet document referred to the figure of Rs. 10,00,000 per acre as a coded figure, and no actual evidence supported the claim of unexplained investment. The addition was therefore made without proper verification, and as such, the unexplained investment of Rs. 43,56,000/- should not be added. 9.3. We have heard the rival submissions and perused the material on record. A similar argument raised by the Revenue has already been adjudicated by us hereinabove from paragraphs 6.3 to 6.19 while deciding Ground No.2 of the Revenue’s appeal. Furthermore, as rightly noted by the Ld. CIT(A), the transaction in question does not pertain to the assessee before us, and therefore, there was no justification for making the addition in the hands of the assessee. In view of the above, and considering the reasoning provided while dealing with the identical argument in Ground No.2, we find no reason to interfere with the findings recorded by 28 ITA 763/Hyd/2011 the Ld. CIT(A). Accordingly, Ground No.5 of the Revenue’s appeal stands dismissed. GROUND NO.6 10. With respect to Ground No.6 relating to the deletion of the addition of Rs.1,35,49,825/-, the Ld.DR submitted that the LD.CIT(A) erred in deleting the addition made by the Assessing Officer towards unexplained investment in Subhanpur Lands. He has drawn our attention to para 9 at page 17 of the order of LD.CIT(A), which is to the following effect : “9. The last ground of appeal is in respect of addition made by the Assessing Officer at Rs. 1,35,49,825/-. This addition of Rs. 1,35,49,825/ was brought to tax as unexplained investment in Subhanpur lands. The appellant purchased these lands at Rs. 1,50,000/- per acre as evidenced by the Sale Deeds, the Assessing Officer based his inference on the information gathered from the backup of the Laptop belonging to a third party. Even while assuming the said information to be correct, the Assessing officer had added two zeroes to the figures nated in the said document and estimated the purchase consideration of the property at Rs. 1,55,48,575/- and deducting there from the admitted consideration of Rs. 19,98,750/- brought to tax the difference of Rs. 1,35,49,25/- as unexplained-investment in purchase of the said property. A detailed explanation was furnished by the appellant on 8-12-2008 and assessing officer merely rejected the same relying on the information available with a third party even without verifying correctness of the same. Thus the addition made by the Assessing Officer is purely on surmises, presumption and is not based on any acceptable evidence and is much less on flimsy grounds.” 29 ITA 763/Hyd/2011 10.1. The Ld.DR submitted that the AO's findings were based on seized documents and materials, including rough workings, spreadsheets, and other corroborative evidence that indicated discrepancies in the declared investment figures. The Ld.DR contended that the AO had identified encoded figures in the seized documents, suggesting that the actual investments made were significantly higher than those disclosed in the assessee’s books and reflected in the registered documents. The AO had reasonably estimated the unexplained investment at Rs. 1,35,49,825/- based on this evidence, and the Ld.DR further contended that the deletion of this addition by the CIT(A) overlooked the evidentiary value of the seized materials and the patterns of under-reporting observed in the assessee’s dealings. It was submitted that the Tribunal should restore the addition made by the AO to uphold the principle of proper disclosure and accountability. 10.2. Per contra, the ld.AR submitted that the ld.CIT(A) has rightly deleted the addition made by the Assessing Officer. The ld.AR explained that the Assessing Officer's addition of Rs. 1,35,49,825/- as unexplained investment in the Subhanpur lands was based on surmises and assumptions, and not on any direct, verifiable evidence. The ld.AR submitted that the Assessing Officer relied on the seized documents, specifically the backup of Sri P. Ravi Kumar's laptop, and assumed a higher value for the land, adding two zeroes to the amounts in the documents, which led to an inflated purchase consideration. The ld.AR emphasized that 30 ITA 763/Hyd/2011 there was no verification of these documents, nor was any effort made to corroborate the information with direct evidence or other relevant inquiries. The ld.AR pointed out that the appellant had furnished a detailed explanation on 8-12-2008, stating that the land purchases were properly recorded in the books of account, and no payments were made outside the books. The ld.AR also referred to comparable sales in the area that showed land prices in Subhanpur were around Rs. 1.50 lakhs per acre, and not the inflated rate assumed by the Assessing Officer. 10.3. The ld.AR submitted that the seized documents found did not contain dates or concrete details to link them to the relevant assessment year. Furthermore, the Assessing Officer failed to examine the parties involved or provide any substantial positive evidence to support the addition. Hence, the ld.CIT(A) rightly concluded that no reliable inferences could be drawn from the seized documents, and as no further investigation was conducted by the Assessing Officer, the addition was rightly deleted. Therefore, the action of the ld.CIT(A) is correct, and the decision of the ld.CIT(A) to delete the addition should be upheld. 10.4. We have heard the rival submissions and perused the material on record. A similar argument raised by the Revenue has already been adjudicated by us, hereinabove from paragraphs 6.3 to 6.19 while deciding Ground No.2 of the Revenue’s appeal. Therefore, following the same reasoning, we find no justification to 31 ITA 763/Hyd/2011 interfere with the findings recorded by the Ld. CIT(A). Accordingly, Ground No.3 of the Revenue’s appeal stands dismissed. GROUND NOS.7 TO 9 11. The core issue in these grounds revolves around the validity of the Assessing Officer's reliance on seized documents and the assessee’s failure to substantiate their claims regarding the purchase consideration of lands. 12. Before us, the Ld.DR submitted that the Assessing Officer has rightly made additions based on seized documents indicating higher land values than those recorded in sale deeds. The AO observed a pattern of under-reporting, where recorded figures were allegedly reduced through encoding practices. The Ld.DR contended that the assessee failed to rebut the presumption arising from the seized documents and did not furnish any substantive evidence to prove that the details did not pertain to them. Despite multiple opportunities, the assessee merely denied the authenticity of the documents without providing corroborative proof. The Ld.DR further submitted that tax authorities are entitled to look beyond registered documents when there is reason to believe that actual payments exceeded disclosed amounts. The Ld.DR further pointed out that the AO’s analysis, particularly in cases like the Meerkhanpet transaction, revealed that the real purchase price was significantly higher than the recorded amount. 32 ITA 763/Hyd/2011 Thus, the LD.CIT(A) erred in deleting the additions, and the AO’s findings should be restored. 13. On the other hand, the ld.AR submitted that the AO’s additions were based on mere assumptions without independent verification. The seized documents lacked crucial details such as dates and references to the assessee, making them unreliable for assessment purposes. The ld.AR further submitted that the AO failed to conduct any independent inquiries or examine third parties to substantiate the alleged under-reporting. The presumption under Section 292C is rebuttable, and in the absence of further evidence, mere rough notings cannot justify additions. Regarding lifting the corporate veil, the ld.AR submitted that while tax authorities can go beyond legal documents, such actions must be based on concrete evidence, however, in the present case, the AO’s conclusions were not backed by bank transactions, cash flow mismatches, or independent confirmations. As such, the LD.CIT(A) has rightly deleted the additions made by the Assessing Officer. 14. We have heard the rival submissions and perused the material on record. We observe that the argument raised by the Revenue in these grounds has already been addressed while adjudicating Ground No.2. Since the reasoning remains the same, we see no basis to deviate from our earlier findings or to interfere 33 ITA 763/Hyd/2011 with the conclusions reached by the Ld. CIT(A). Consequently, Ground Nos. 7 to 9 of the Revenue’s appeal are dismissed. 15. In the result, the appeal of Revenue is dismissed. Order pronounced in the Open Court on 24th February, 2025. Sd/- Sd/- Sd/- Sd/-Sd/ Sd/- Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 24.02.2025. TYNM/sps Copy to: S.No Addresses 1 The Deputy Commissioner of Income Tax, Circle – 16(2), Hyderabad. 2 M/s. Prestige Avenues Limited, 3-6-262, 4th Floor, Tirumala Estates, Himayat Nagar, Hyderabad. 3 The CIT (Central), Hyderabad. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "