Asst. Commissioner of Income Tax, Central Circle-3(2), Hyderabad V. Western constructions, Hyderabad

ITA 1320/Hyd/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0801 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 05-10-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 22-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Revised return; Documents seized; Set aside
• Section: 132; 153A; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad Before Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member O R D E R Per Shri Rama Kanta Panda, A.M. This appeal filed by the revenue is directed against the order dated 29.04.2019 of Learned Commissioner of Income Tax (Appeals)-11, Hyderabad relating to AY 2016-17. 2. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of construction of residential flats/commercial buildings etc. It filed its return of income for the impugned assessment year on 17.10.2016 declaring total income at Rs.8,32,78,470/-. A search was conducted on 2.11.2016 in the case of firm M/s.Western constructions and its four partners, being the developer of the commercial project Western Pearl and related group. Search was also conducted in the case of confirming parties namely M/s. Pavani Structurals (P) Ltd, Sri T.Harishchandra Prasad (MD of M/ s.YKH Builders Pvt Ltd) along with related persons of M/s. Pavani structurals Pvt Ltd namely Sri R.Narasimha Reddy, R Abhijit ITA No.1320/Hyd/2019 Assessment Year: 2016-17 ACIT,CC-3(2) 7 th Floor Aaykar Bhawan Hyderabad-500 001 Vs. Western Constructions 8D, 8 th Floor Western Pearl Sy.No.13(p), Kondapur Hyderabad-500 084 PAN : AAAFW8454A (Appellant) (Respondent) Assessee by: Shri K.C.Devdas, CA Revenue by : Shri P.Chandrasekhar, CIT-DR Date of hearing: 06.10.2022 Date of pronouncement: 14.10.2022 2 ITA 1320/Hyd/2019 Reddy, R.Archit Reddy and R.Neelima Reddy along with their other two concerns M/s. Pavani estates (P) Ltd and M/s. YNS Infra (P) Ltd. As part of the group, the other consenting parties namely Sri Atluri Bala Prasad, Atluri Sree charan, Atluri Sree Varun were also covered. Apart from these cases, other individuals and their concerns Sri Tarun Kumar Goyal, Sri Arun Kumar goyal, M/s. Venkateswara Holographic Films Pvt ltd, M/s. Venkateswara Flexo Pack Private Ltd and M/s. Venkateswara Roto Pack Pvt.Ltd. were also covered as part of western constructions group search. All the cases of this group search, totaling to 22 cases were centralized with central circle-3(2) as per relevant 127 orders of Pr.CIT. In response to notice u/s. 153A assessee filed return of income declaring total income at Rs.14,35,76,830 on 15.03.2017 3. During the course of assessment proceedings, the AO noted that at the time of search u/s. 132 of the Act the department officials have found and seized a black pen drive in which certain excel sheets were found showing the consideration received from the customers, the details of which are as under:- S.No. Floor Number Sft. Name of the Party Amount admitted 1 6 38,700 V.Ramesh & Others 15,48,93,302 2 7 38,700 V.Mahesh & Others 12,72,55,368 3 8 4,815 P.Ravi prasad & Others 1,00,00,000 4 11 38,700 Narender Kumar Goel 9,64,40,400 5 12 9,000 K.Sudheer & Others 2,07,00,000 totals 40,92,89,070 4. The above additional considerations received was worked out after verification of the seized material i.e information from the pen drive at the time of search. The managing partner of the assessee firm accepted the above amounts as received and admitted the income to buy peace and settle the issue amicably to avoid penalties and prosecution proceedings etc. The AO noted 3 ITA 1320/Hyd/2019 that the managing partner of the firm Shri R.Sudharshan Reddy in his statement recorded u/s. 132(4) on 31.12.2016 had admitted additional income of Rs.50 crores over and above the regular income of the firm. However, the assessee firm had not declared such additional income in the return of income filed. He noted that despite accepting the additional income in the statement recorded on 31.12.2016, the managing partner filed an affidavit dated 03.01.2017 retracting from the statement declaring additional income. The AO, therefore confronted the same to the assessee. He noted that Mr. R.Sudharshan Reddy in his statement in answer to question No.16 on 31.12.2016 has arrived at the additional receipts of Rs.40,92,89,070/- and admitted additional income of Rs.50 crores out of which an amount of Rs.73 lakh relates to AY 2015-16 and Rs.40,27,00,000/- relate to AY 2016-17. He further noted that R.Sudharshan Reddy has admitted additional income of Rs.41crores in his hands as unexplainable capital/investment brought into the firm which being used for construction of the project in the AY 2015-16 and 2016-17 with applicable amounts of Rs.73 lakhs and Rs.40,27,00,000/- respectively. Further, the firm M/s. Western Constructions has also admitted additional income of Rs.41 crores for the AY 2015-16 and 2016-17 put together as per the relevant sales reconciled involving additional cash receipts of Rs.40.92 crores. The total admission made by the assessee as admitted by its managing partner and additional income of the firm as declared was tabulated by the AO , the details of which are as under:- Asst.Year Name of the assessee Additional income admitted at Rs. Issue involved in admission of additional income as reconciled with seized references brought out in oath statements 4 ITA 1320/Hyd/2019 discussed supra 2015-16 R.Sudershan Reddy 73,00,000 Unexplained investment/capital brought in by the Managing partner for this year 2016-17 R.Sudershan Reddy 40,27,00,000 Unexplained investment/capital brought in by the Managing partner for this year 2015-16 M/s. Western Constructions 73,00,000 The additional income earned by the firm over and above the book profit in cash involving sale of commercial space over and above the registered and accounted sale consideration etc. 2016-17 M/s. Western Constructions 40,27,00,000 The additional income earned by the firm over and above the Book profit in cash involving sale of commercial space over and above the registered and accounted sale consideration etc. 5. However, he noted that the assessee and the partners have not fully admitted the income so declared as verifiable from the returns filed in response to notice u/s. 153A, the details of which are as under:- Asst.Year Name of the assessee Additional income admitted at Rs. Income actually admitted in the Return of income filed in response to 153A notice Difference of admission in Rs. 2015-16 R.Sudershan Reddy 73,00,000 73,00,000 NIL 5 ITA 1320/Hyd/2019 2016-17 R.Sudershan Reddy 40,27,00,000 40,19,89,070 7,10,930 2015-16 M/s. Western Constructions 73,00,000 10,95,000 62,05,000 2016-17 M/s. Western Constructions 40,27,00,000 6,04,05,000 34,22,95,000 6. The AO, therefore confronted the same to the assessee. Rejecting the various explanations given by the assessee and observing that assessee failed to offer the undisclosed additional income of Rs.40,27,00,000/- fully, the AO made addition of Rs. 34,22,95,000/- to the total income of the assessee. 7. Before the ld.CIT(A), the assessee made elaborate arguments based on which the ld.CIT(A) restricted the addition by estimating the income at 16% of the undisclosed income by observing as under:- 7. I have considered the assessment order, and submissions of the appellant. The following position emerge on consideration of the above. i) During the course of search, evidences were found and seized showing unaccounted transactions/ receipts. Rs. 41,00,00,000/-was offered in total for A.Yrs- 2015-16 (Rs .13,00,000) and A'.Y 2016-17 (Rs. 40,27 ,00,000) as income u/s.132(4) of the 1. T Act. This was offered as additional income in the individual hands of the firm initially and later on in the hands of Mr, R.sudershan Reddy. ii) The appellant has shown Rs.73,00,000/- and Rs.40,19,89,010/- as additional income in the return filed in response to notice u/s.153A of the I.T.Act, 1961 and paid taxed thereon in the hands of Mr. R sudershan Reddy, iii) The appellant firm has treated the above amounts as receipts in their hands and after setting off the claim of expenditure incurred, has offered Rs.10,95,000/- and Rs.6,04,05,000/- for tax in their return filed in response to notice u/s.153A of the I.T act, 1961. The appellant's claim is that the evidences for expenditure is part of the seized material. iv) The AO has treated entire receipts as income and addition was made for the differences between the total additional receipts as per seized material and the additional income offered by the appellant firm. The addition made is based on seized material and admission made by the appellant. 6 ITA 1320/Hyd/2019 v) The contention of the appellant is two fold. The additional income as evidenced by the seized material has been offered to tax and assessed in the case of Mr. R. Sudershan Reddy, partner. Taxing the same receipts again in firm’s hands amounts to double taxation. Secondly, the expenditure details are also part of the seized material and the same needs to be allowed and only the income part and not entire receipts are liable to tax. vi) It is seen from the facts of the case that the receipts as evidences by the seized material have been offered to tax in the individual hands of the partner and the same has been assessed. Further, the evidence for additional receipts and the expenditure are part of same seized material. There is no dispute as to details of quantum of receipts as contained in seized material. When a part of the material is relied upon for bringing to tax as additional income, other part of the seized material can't be ignored. The seized material has to be considered as a whole. Only the income not the receipts are liable to be taxed. vii) considering the material seized during the search and the fact that receipts as contained in the material are already taxed in individual hands and the fact that there is some material to show that certain expenses which are not part of the regular accounts have been incurred by the appellant, it is proper and justifiable to estimate the income thereon. The income on the receipts be estimated @16% to meet the ends of justice. Accordingly, the income on the receipts be estimated @16% thereon as against assessing the whole receipts as income by the AO. The grounds are disposed with above directions. 8. Aggrieved with such order of the ld.CIT(A), the revenue is in appeal before the Tribunal by raising the following grounds. i). The Ld.CIT(A) erred both in law and on facts of the case in allowing relief to the assessee. ii) The Ld.CIT(A) erred in not appreciating the fact that the Managing Partner of the assessee firm himself admitted an amount of Rs.40,27,00,000/. as additional income during the course of search proceedings on account of discrepancies found as per the seized annexures. (iii) The Ld.CIT(A) erred in not appreciating the fact that the A.O has made disallowance on account of unaccounted sales basing on the evidence available in the seized material gathered during the course of search. (iv) The Ld.CIT(A) ought not to have estimated the income at 16% o[ the undisclosed income when the Managing partner of the assessee firm himself admitted additional income of Rs.40, 27,00,000/- (v) The Ld.CIT(A) erred in estimating the income at 16% of the undisclosed income without any basis when the addition was made on the basis of 7 ITA 1320/Hyd/2019 incriminating material found during the search which was the basis of admission by the Managing Partner during the search. (vi) The Ld.CIT(A) failed to appreciate the fact that the receipts as evidenced by the seized material have been offered to tax in the individual hands of the partner as unexplained investment! capital and not the unaccounted sales. (vii) The ld.CIT(A) ought to have appreciated that the principle estople is applicable to the fact of the case as the assessee firm prevented by department form causing further investigation by giving voluntary admission at the time of search. 9. The ld. DR strongly challenged the order of the ld.CIT(A) in deleting the additions made by the AO substantially by sustaining small addition by estimating the income at 16% of the undisclosed receipt. He submitted that the managing partner as well as the partners of the assessee firm in their respective statements have declared additional income of Rs.41 crores in the hands of the firm out of which an amount of Rs.73 lakhs relate to AY 2015-16 and an amount of Rs.40,27,00,000/- to AY 2016-17. He submitted that when the assessee was confronted to give the names of the persons who have given such unaccounted money over and above the registered sale value, the managing partner himself had owned up such income by stating that the customers should not be harassed which in turn will bring bad reputation to the business of the assessee firm. Therefore, the so called amount admitted by the managing partner in his hands is the unaccounted money of the customers who have purchased the flats/commercial space from the assessee firm by paying extra money over and above the registered sale value. However, the assessee firm has not admitted the income so declared in the statement recorded u/s. 132(4) of the I.T.Act. He submitted that when the assessee firm has received on money, the assessee firm is liable to pay the tax on the same and when the on money was paid by the buyers such extra money has to be taxed in the hands of the buyers. However, the on money paid by the buyers has been owned up by the managing partner. Therefore, merely 8 ITA 1320/Hyd/2019 because the on money paid by the buyers was owned up by the managing partner, it cannot absolve the assessee firm from disclosing such extra money received over and above the registered sale value in its hands. Referring to the order of the ld.CIT(A), the ld.DR submitted that he has estimated the income which under no stretch of imagination is applicable to the facts of the present case. He accordingly submitted that the order of the ld.CIT(A) is not only perverse but also contrary to facts on record which has to be rejected outright. He accordingly submitted that the order of the ld.CIT(A) be set aside and that of the order of the AO be restored. 10. The ld. Counsel for the assessee on the other hand strongly supported the order of the ld.CIT(A) in estimating the income of the assessee firm @ 16% of the additional income disclosed. He submitted that the department at the time of search also found certain expenses, which were spent outside the books of accounts and therefore, such expenses so incurred outside the books of accounts should have been deducted from the on money so received. He submitted that once such expenses are reduced from the income admitted by the managing partner, the profit that remains has already been offered to tax. Therefore, under the facts and circumstances of the case, the ld.CIT(A) was fully justified in estimating the income at 16% as against roughly 13% declared by the assessee on the undisclosed income. 11. Referring to the decision of the co-ordinate Bench of the Tribunal in the case of Sri Tarun Kumar Goyal and Arun Kumar Goyal vide ITA No.456 to 458/Hyd/2020 order dated 20.04.2021 for AY 2014-15 to 2016-17, he drew the attention of the Bench to para 10 to 13 of the assessment order and submitted that the Tribunal has deleted the addition in the hands of Mr. Tarun Goyal and Arun Goyal on the ground that no on money has been 9 ITA 1320/Hyd/2019 paid to M/s. Western Constructions. Referring to the copy of the assessment order, he submitted that none of the buyers have been examined by the revenue who according to the Revenue had paid any on money over and above the registered sale value. He submitted that the AO by making the addition has made double addition of the same amount since the managing partner of the assessee firm has already admitted the income in his own hands for the impugned assessment year. The ld. counsel for the assessee also relied on the following decisions i.CIT vs. Calcutta discount Co.Ltd. reported in 91 ITR 08 (SC) ii. CIT vs. A.Raman & Co. reported 67 ITR 11 (SC) iii.CIT vs. S.M.Aggarwal reported in 293 ITR 42 (Del.HC) iv.CIT vs. Vatika Landbase (P) Ltd. reported in 383 ITR 320 (Del.HC) v.Choodambikai Mills Ltd. vs. CIT reported in 28 ITR 952 (Madrs.HC) vi. Nishant Construction Pvt.Ltd. vs. ACIT in ITA No.1502/Ahd/2015 order dated 14.02.2017 (Ahd.Trib.) vii. CIT vs. President Industries reported in 258 ITR 654(Guj.HC) viii. CIT vs Balchand Ajit Kumar reported in 263 ITR 610(MP.HC) 12. In his alternate contention, he submitted that the matter may be restored to the file of the AO with direction to examine the persons who have purchased flats/commercial space from the assessee firm and also to go through the various expenses found but not recorded in the books of accounts at the time of search and decide the issue afresh. 13. The ld. DR in his rejoinder submitted that the case is so crystal clear that it need not be restored back to the file of the AO. He submitted that the managing partner of the assessee firm by owning up the amount paid by the buyers over and above the registered value as extra money had restrained the department from making any further enquiry. Further, the amount declared by the managing partner in his own hands belongs to the extra money paid by the buyers, whereas the extra money earned by the assessee firm has not been fully offered to tax. Further, the 10 ITA 1320/Hyd/2019 assessee firm has already brought such amount to the books of account and therefore, it cannot be said that there is double taxation of the amount. So far as the decisions relied on by the ld.Counsel for the assessee are concerned, he submitted that these decisions are distinguishable and not applicable to the facts of the present case. He accordingly submitted that the order of the ld.CIT(A) be set aside and the grounds raised by the revenue should be allowed. 14. We have considered the rival arguments made by both the sides, perused the orders of the AO and ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee is a partnership firm engaged in the business of construction of residential flats/commercial buildings. During the course of search u/s. 132 of the I.T.Act on 02.11.2016, it was found that certain parties have paid excess consideration over and above the sale price recorded in the books of accounts, the details of which came to Rs.40,92,89,070/-. The managing partner of the firm in his initial statement recorded u/s. 132(4) had declared additional income of Rs. 50 crores which was subsequently reduced to Rs.41 crores out of which an amount of Rs.73 lakhs pertains to AY 2015-16 and an amount of Rs.40,19,89,070/- to AY 2016-17. However, for the year under consideration, the assessee firm while filing the return of income has offered additional income of Rs.6,04,05,000/- only as against Rs.40,27,00,000/-declared as additional income in the statement recorded u/s. 132(4). We find the AO in absence of any satisfactory explanation given by the assessee firm made addition of Rs.34,22,95,000/- being the difference between Rs.40,27,00,000/- admitted as additional income and Rs.6,04,05,000/- actually declared as additional income in the return filed in response to notice u/s. 153A. We find the ld,CIT(A) deleted such addition made by the AO by 11 ITA 1320/Hyd/2019 restricting the same to 16% of the total receipts, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the ld.CIT(A)-DR that when the assessee firm has declared an amount of Rs.40,27,00,000/- as additional income related to this year out of the total additional income of Rs.41 crores for both the years, the assessee firm cannot retract from the same especially when full details were found at the time of search regrading the receipt of on money which was further fortified by the statements recorded u/s. 132(4) of the Act, of all the partners wherein they have admitted such income. It is also his submission that the ld.CIT(A) without any basis has deleted the addition by merely estimating the income at 16% of the additional income declared, which is not only perverse but also not in accordance with the facts and circumstances of the case. 15. We find merit in the above argument of the ld. DR for the Revenue. We find Shri R.Sudharshan Reddy, managing partner of the firm, in his statement recorded u/s. 132(4) on 03.11.2016 in his reply to question no.8 has stated as under:- “Answer: In the line of real estate business, the actual sale price in the initial period of the launching of project will be lower to attract funds from the prospective buyers to start the project. As the project progresses the sale price will be fixed as per the prevailing market conditions. The sale price also depends on the requirement of the buyer with regards to the interiors/vastu compliance act. As seen from the above data, it is evident that we have sold commercial space in the project Western Pearl to various customers at different rates based on the requirements and circumstances. It is also evident in the real estate business that actual price will be little higher than the value adopted for the registration purposes. Ideally the actual price received should have been recorded in the books of accounts. However, we have recorded the values adopted for registration purpose in our books of accounts instead of actual receipts. Further, I submit that in the real estate business certain inevitable expenditure must be made in cash. Considering all the above discrepancies, we admit an additional income of Rs.2500 per SFT on the commercial space sold by the firm till date of about 2 lakhs. SFT in the project Western pearl. After consulting the other partners of the firm, we admit additional income of Rs.50 crores over and above the regular income of the firm. We shall submit the assessment year wise breakup of the additional income admitted by tomorrow.” 12 ITA 1320/Hyd/2019 16. We find Shri G.Sivarama Raju, partner of the assessee firm in his statement recorded u/s. 132(4) on 03.11.2016 in his reply to question no.4 has stated as under:- “Answer: I have gone through the statement of our managing partner Shri. R.Sudarshan Reddy and confirm his answers given to Q.6,7,& 8 with regards to the maintenance of certain receipts and payments in the laptop, pen drives not being recorded in regular books of accounts and voluntary admission of additional income o fRs.2500 per SFT on commercial space sold till date in western pearl of about 2 lakh SFT in his statement. I confirm the admission of Rs.50 crores of additional income in addition to the regular income in the hands of M/s. Western constructions. We shall submit the assessment year wise break up of additional income admitted by tomorrow.” 17. We find Shri S.Krishna Murthy, partner of the assessee firm in his statement recorded u/s. 132(4) on 03.11.2016 in response to question no.4 has stated as under:- “Answer: I have gone through the statement of our managing partner Shri. R.Sudarshan Reddy and confirm his answers given to Q. with regards to the maintenance of certain receipts and payments in the laptop, pen drives not being recorded in regular books of accounts and voluntary admission of additional income of Rs.2500 per SFT on commercial space sold till date in western pearl of about 2 lakh SFT in his statement. I confirm the admission of Rs.50 crores of additional income in addition to the regular income in the hands of M/s. Western constructions. We shall submit the assessment year wise break up of additional income admitted by tomorrow.” 18. Similarly Shri K.Ravi Varma, partner of the assessee firm in his statement recorded u/s. 132(4) on 03.11.2016 in response to question no.4 has stated as under:- “Answer: I have gone through the statement of our managing partner Shri. R.Sudarshan Reddy and confirm his answers given to Q. with regards to the maintenance of certain receipts and payments in the laptop, pen drives not being recorded in regular books of accounts and voluntary admission of additional income of Rs.2500 per SFT on commercial space sold till date in western pearl of about 2 lakh SFT in his statement. I confirm the admission of Rs.50 crores of additional income in addition to the regular income in the hands of M/s. Western 13 ITA 1320/Hyd/2019 constructions. We shall submit the assessment year wise break up of additional income admitted by tomorrow.” 19. We find the managing partner of the firm Shri R.Sudharshan Reddy in his subsequent statement recorded u/s. 132(4) on 31.12.2016, copy of which is placed at page no.11 to 21 of the paper book in his reply to question no.16 has stated as under:- “Ans: I have gone through the loose sheets shown to me and the discrepancies pointed out by you are as under:- Pg No.in annexure A/GSRR/0 2 Extent and Floor Name of the customer Rate per SFT as per Annexure A/GSRR/0 2 Rate per SFT as per Regd.Sal e deed Suppression of Receipt in Rs. 34 9000 SFT, 12 th Floor K. Sudheer & Others 5300 3000 2,07,00,000 48 387000 SFT 11 th Floor Narende r Goel, Tarun K.Goel, Arun K.Goel 5492 3000 9,64,40,400 51 4815SF T 8 th Floor P.Ravi Prasad 4860 3095 1,00,00,000 62 38700 7 th Floor Pradeep, Mahesh, Umadevi , Ravinde r Agarwal 6800 3400 12,72,55,36 8 67 387000 6 th Floor Mahesh, Pradeep, Sailsh, Ravinde r Agarwal , KB Ramesh 7323 3400 15,48,93,30 2 I take this opportunity to submit that my duty as managing partner is more concentrated on overseeing the construction activities. I am not fully conversant with accountancy. For this purpose I depended in our accounting personnel. On the date of search I could not discuss various issues with them. After search I tried to correlate the matter with the 14 ITA 1320/Hyd/2019 noting in the pen drive. They were not in a position to explain me the details. It is submitted that the noting’s in the pen drive may not depict a correct picture of income. I have discussed with Shri G.Siva Rama Raju as to what the excel sheet, data found in the pen drives, laptop in his residence depict. He has denied the completeness or correctness of the information, which he had noted in a cryptic manner just to show and discuss with his children as he is not well educated. However, as you have stated certain receipts in cheque are matching wth the considerations mentioned registered sale deeds in which certain rate per SFT was also mentioned. Though the figures and names written in the excel sheets, loose sheets seized from residence of Shri G. Siva Rama Raju are based on surmises and projections, I would like to bring certain practical situations in the real estate business for your consideration like variation of prices based on level of completion of projects, variation of rates based on the customer requirements like vastu compliance/interiors etc. It is also worth mentioning that considerable expenditure would be incurred in cash in real estate field out of the cash receipts if any. During the day of search on 02.11.2016 on confrontation of the discrepancies to the tune of Rs. 37 Cr., I have offered a round figure of Rs. 50 Cr as additional income on the sold commercial space as on that date without referring to our records and other details. However, after considering the records / and other details confronted by you, I would like to revise the additional income offered as below. Considering the whole facts and circumstances under which real estate business works, after discussing with my partners I hereby admit the following additional income in the hands of M/s Western Constructions to cover up omissions and commissions including the claim of on-money receipts and unaccounted turnover and other issues in the books of accounts A.Y. Additional Income admitted 2015-16 73,00,000 2016-17 40,27,00,000 20. Similarly, in his answer to question No.17, he has admitted the on money paid by the customers as his additional income by stating as under:- Ans. I have discussed the issues with my partners including Shri. G. Siva Rama Raju, who had in possession of the pendrives, laptop seized. I have also discussed with all the buyers of the commercial space in our project Western Pearl. All the buyers had denied the claimed payment of on-money. Even Shri G. Siva Rama Raju could not explain the cryptic notings in the excel sheets, documents in the pendrives and laptop. In spite of unanimous denial of the correctness of the data, cryptic notings mentioned in various excel sheets and other documents in the pen drives and laptop, the firm in its nascent stage cannot afford to risk its budding reputation if the buyers are entangled with protracted litigation. After considering the holistic perspective of the business and protection of the 15 ITA 1320/Hyd/2019 buyers against protracted litigation, I hereby voluntarily offer to admit the source of claimed on-money receipts by MIs Western Constructions in my individual hands as follows:- A.Y. Additional Income admitted Remarks 2015-16 73,00,000 Cash recorded against the names of purchasers of commercial space in Western pearl. 2016-17 40,27,00,000 21. We further find shri G.Shivarama Raju in his subsequent statement recorded u/s. 132(4) on 31.12.2016 in response to question no.4 and 5 has stated as under:- Q.4. Please refer to the answer given by Shri R. Sudarshan Reddy to Q.16, 17 & 18 and confirm the same. A. I have gone through the answer given by our managing partner Shri R. Sudarshan Reddy, to the Q.16, 17 & 18 in his sworn statement and confirm his answers as true and correct. I confirm the admission of Rs.4l crores of additional income in addition to the regular income in the hands of M/s. Western Constructions. We shall submit the revised returns and pay taxes applicable, accordingly. Q.5. Do you want to say anything else. A. I submit that that neither my partners, nor I are well educated. We depend upon the accountants who maintain 'the books of accounts on regular basis. We came to know about certain omissions and commissions /mistakes in our books of accounts, which are mostly unintentional. To cover up the deficiencies noticed, we voluntarily admit additional income of Rs.41 Crores in addition to the regular income in the hands of the firm M/ s Western Constructions. We shall submit the revised returns and pay taxes applicable, accordingly. Since, we are coming forward to declare additional income voluntarily, we request you not to initiate any penal proceedings. 22. In view of the above statements recorded from the partners of the assessee firm and in view of the documents seized at the time of search from the premises of the assessee firm and its partners continuing on money received over and above the amounts recorded in books, it is crystal clear that assessee has received on money from the buyers. Since the buyers have not declared such on money in their return of income, the managing partner of the 16 ITA 1320/Hyd/2019 assessee firm, to protect the business interest and its reputation, has offered such payment of on money by the buyers in his individual hands as his additional income. Similarly, the assessee firm has also declared the additional income of Rs.41 crores for AY 2015-16 and 2016-17, which is received from the buyers out of which an amount of Rs.40,27,00,000/- relates to the impugned assessment year. Despite such admission and the clinching evidences found during the course of search, the assessee firm did not declare the full amount of Rs.40,27,00,000/- but declared an amount of Rs.6,04,05,000/- only which in our opinion is not justified. Therefore, the AO had rightly brought to tax the amount of Rs.34,22,95,000/- as income for the impugned assessment year u/s.69A of the I.T.Act. The submission of the ld. counsel for the assessee that addition of the same amounts to double taxation is not correct since the amount offered by the managing partner as additional income relates to the extra money paid by the buyers whereas the extra money received by the assessee firm remained untaxed to the extent of Rs.34,22,95,000/-. So far as the argument of the ld.Counsel for the assessee that there are certain expenses incurred outside the books of account is concerned, the ld. counsel for the assessee could not categorically state which of the expenses have not been recorded in the books of the account. Further, it was also never stated either during the search or before the Ld.AO or ld.CIT(A) that expense were incurred outside books of account but not recorded. Therefore, the ld.CIT(A) was not justified by estimating the receipts at 16% and in our opinion, thereby deleting the addition of Rs.34,22,95,000/- under the facts and circumstances of the case. The various decisions relied on by the ld. Counsel for the assessee are distinguishable and not applicable to the facts of the present case, in view of the clinching evidences found during the course of search and the statements recorded of the partners. In this view of the matter, we set aside the order of the ld.CIT(A) and the order 17 ITA 1320/Hyd/2019 of the AO is restored. The grounds raised by the revenue are accordingly allowed. 23. In the result, the appeal filed by the revenue is allowed. Order pronounced in the Open Court on 14 th October, 2022. Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (RAMA KANTA PANDA) ACCOUNTANT MEMBER Hyderabad, dated 14 th October, 2022. Thirumalesh/sps Copy to: S.No Addresses 1 ACIT,CC-3(2) 7 th Floor Aaykar Bhawan Hyderabad-500 001 2 Western Constructions 8D, 8 th Floor Western Pearl Sy.No.13(p), Kondapur Hyderabad-500 084 3 CIT(A)-11, Hyderabad 4 Prl.CIT(Central), Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order