DCIT., Central Circle-2(3,) Hyderabad, Hyderabad V. Sri M.Samabasiva Rao, Hyderabad

ITA 1852/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6242 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 1852 & 1853/HYD/2014 ASSESSMENT YEARS: 2006-07 & 2009-10 DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 2(3), HYDERABAD. VS. M. SAMBASIVA RAO, HYDERABAD. PAN AFNPM 4891 H (ASSESSEE) (RESPONDENT) REVENUE BY : SHRI A. SITARAMA RAO ASSESSEE BY : SHRI S. RAMA RAO DATE OF HEARING 07-09-2016 DATE OF PRONOUNCEMENT 21-09-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: BOTH THESE APPEALS PREFERRED BY THE REVENUE ARE DI RECTED AGAINST A COMMON ORDER OF CIT(A)-I, HYDERABAD DATED 25/09/2014 FOR AYS. 2006-07 AND 2009-10. ITA NO. 1852/HYD/14 FOR AY 2006-07 2. BRIEFLY THE FACTS OF THE CASE ARE DURING THE COU RSE OF SEARCH OPERATION IN THE ASSESSEE'S PREMISES, A NOTE BOOK C ONTAINING PURCHASE DETAILS WAS FOUND AND SEIZED VIDE ANNEXURE NO.A/MSR/RES/16. AT PAGE NOS. 21 & 22, ACCORDING TO WHICH, THE ASSESSEE ALONG WITH MR. RAMAKRISHNA HAVE PURCHASED A PLOT ADMEASURING 600 SQ.YDS (EACH 300 SQ. YDS) LOCATED A T PLOT NO.174, ROAD NO.10C, JUBILEE HILLS, HYDERABAD FROM NSK PRAS AD. THE TOTAL CONSIDERATION WORKS OUT TO RS.2,40,00,000/- AND CAS H OF RS.1,64,00,000/- WAS PAID ON THE DATE OF REGISTRATI ON I.E., ON 6-2- 2 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO 2006. THE COMMISSION PAYMENT OF RS.2,40,000/- WAS A LSO CORROBORATED THAT THE SALE CONSIDERATION WAS RS.2,4 0,00,000/- AS PER THE MARKET PRACTICE OF 1% COMMISSION ON TOTAL SALE CONSIDERATION. WHEN THIS WAS PUT TO THE ASSESSEE, HE REPLIED THAT HE, ALONG WITH SRI RAMAKRISHNA HAVE PURCHASED THE LAND FOR RS.75 LAKHS ONLY THROUGH DEMAND DRAFTS AND HAVE NOT PAID THE CASH OF RS.1,64 ,00,000/-. THE SELLER OF THE LAND WAS MR.NSK PRASAD IN HIS HUF CAP ACITY AND WAS EXAMINED ON OATH. HE ALSO DENIED THAT HE RECEIVED C ASH COMPONENT OF RS.1,64,00,000/- FOR THE SALE OF LAND TO MR. M.S AMBASIVA RAO AND R. RAMAKRISHNA. THE ASSESSEE'S CONTENTION WAS NOT A CCEPTED BY THE ASSESSING OFFICER AND TAKING INTO THE CIRCUMSTANTIA L EVIDENCES, HE CONCLUDED THAT THE ASSESSEE HAS PAID RS.1,64,00,000 /- IN CASH ALONG WITH SRI RAMAKRISHNA. HENCE 50% OF THE ABOVE AMOUNT WHICH COMES TO RS.82,00,000/- WAS TREATED AS UNACCOUNTED INVEST MENT OUTSIDE THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE SAME WAS A DDED TO THE RETURNED INCOME. 3. ON AN APPEAL BEFORE THE CIT(A), THE ASSESSEE SU BMITTED THAT IT IS A FACT THAT HE ALONG WITH RAMAKRISHNA HAD PURCHA SED THE ABOVE MENTIONED PLOT, BUT THE CONSIDERATION AS PER THE SA LE DEED IS RS.75,00,000/-- ONLY. THE ASSESSING OFFICER HAS EXA MINED THE ASSESSEE AND MR. RAMAKRISHNA ON OATH AND BOTH HAVE DENIED THE TRANSACTION OF PAYMENT IN CASH. THE ASSESSING OFFIC ER HAS ALSO EXAMINED MR.N.S.K.PRASAD, THE PURCHASER WHO HAS ALS O DENIED RECEIVING ANYTHING IN CASH OVER AND ABOVE THE PURCH ASE CONSIDERATION AS MENTIONED IN THE SALE DEED. THE ASSESSEE RELIED ON THE CASE LAWS VIZ. CIT VS SMT. K.C.AGNES 262 ITR 354 KERALA AND C IT VS SINGLA ENCLAVE DEVELOPERS LTD. 156 TTJ 1 (UO) CHD, WHERE I T HAS BEEN HELD THAT ADDITION ON PRESUMPTION CANNOT BE SUSTAINED, W HEN THERE IS A VALID SALE DEED. IT WAS ALSO ARGUED THAT WHILE MAKI NG AN ASSESSMENT U/S 143(3) R.W.S.153A, THE ASSESSING OFFICER CANNOT RESORT TO CIRCUMSTANTIAL EVIDENCE AND SURMISES AND CONJECTURE S CANNOT BE THE BASIS FOR AN ASSESSMENT BEING MADE U/S.143(3) R.W.S .153A. MERE NOTING IN THE DIARY CANNOT BE THE BASIS, WHEN NO CA SH HAS BEEN FOUND 3 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO NOR ANY OTHER DOCUMENT EVIDENCING THE PAYMENT WAS F OUND. THE DIARY CANNOT BE TAKEN TO BE SACROSANCT AND ACTED UPON, WH EN CORROBORATIVE EVIDENCE IS NOT FOUND. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT AT THE TIME OF SEARCH, A DIARY WAS FO UND AT THE RESIDENCE OF THE ASSESSEE IN WHICH SOME TRANSACTION S ARE RECORDED AS PER WHICH, THE ASSESSING OFFICER CAME TO THE CON CLUSION THAT THE ASSESSEE ALONG WITH SRI RAMAKRISHNA HAVE PAID CONSI DERATION FOR THE PROPERTY PURCHASED AT 174, MLA-MP COLONY, ROAD NO. 10, JUBILEE HILLS, HYDERABAD BY DEMAND DRAFTS AMOUNTING TO RS. 75 LAKHS AND ALSO BY CASH OF RS.1.64 CRORES AND TAKING THE CIRCU MSTANTIAL EVIDENCE INTO CONSIDERATION THAT THE COMMISSION PAID OF RS.2 ,40,000/- WOULD SUPPORT THE THEORY THAT THE TOTAL CONSIDERATION PAI D WAS RS.2,40,00,000/- AND THE COMMISSION AT MARKET RATE BEING 1% OF THE SAME. IT IS ALSO GATHERED FROM THE ASSESSMENT ORDER THAT BOTH THE ASSESSEE AND SRI RAMA KRISHNA, THE PURCHASERS AND S RI NSK PRASAD, THE SELLER HAVE VEHEMENTLY DENIED PAYMENT/RECEIPT O F CONSIDERATION IN CASH. EVEN AT THE TIME OF SEARCH ALSO, THE ASSESSEE AND SRI RAMAKRISHNA HAVE DENIED ANY KNOWLEDGE OF PAYMENT OF CONSIDERATION IN CASH. DURING THE APPEAL PROCEEDINGS, THE ASSESSE E HAS FILED A COPY OF THE ORDER PASSED BY THE HON'BLE ITAT, VISAKHAPAT NAM BENCH IN THE CASE OF SRI NSK PRASAD WHEREIN THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS CONSIDERATION RECEIVED IN CASH OF RS.1,64,00,000/ -, DELETED BY THE CIT( A) HAS BEEN CONFIRMED. THOUGH THE DECISION WAS BASED ON TECHNICAL GROUNDS I.E., T HE ASSESSMENT PROCEEDINGS U/S.153C WERE NOT VALID SINCE THE PROCE EDINGS U/S.153C WERE INITIATED ON THE BASIS OF SEIZED MATERIAL WHIC H BELONGS TO A THIRD PARTY AND NOT TO SRI NSK PRASAD. BUT, THE HON'BLE T RIBUNAL IN THE SAID ORDER WHILE DECIDING THE ISSUE ON TECHNICAL GROUNDS HAVE MADE AN OBSERVATION WHICH IS REPRODUCED AS UNDER: 'FURTHER, ON GOING THROUGH THE STATEMENTS RECORDED FROM SAMBASIVA RAO WHICH HAS BEEN EXTENSIVELY EXTRACTED IN THE ASSESSMENT ORDER WOULD SHOW THAT HE HAS CATEGORICAL LY DENIED OF 4 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO HAVING PAID THE AMOUNT OF RS.1,64,00,000/- TO THE A SSESSEE IN CASH TOWARDS SALE CONSIDERATION. THE ASSESSEE ALSO IN THE STATEMENT RECORDED FROM HIM EMPHATICALLY DENIED OF HAVING RECEIVED THE CASH PAYMENT OF RS.1,64,00,000/-. APAR T FROM THE SEIZED NOTE BOOK, THERE IS NO OTHER CORROBORATIVE E VIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE CASH PAYMENT OF RS.1,64,00,000/- TO THE ASSESSEE. ON A P LAIN READING OF THE PROVISION CONTAINED U/S.153C OF THE I.T. ACT , IT BECOMES CLEAR THAT THE PRECONDITION FOR INVOKING THE PROVIS ION OF SECTION 153C OF THE ACT IS, VALUABLE ARTICLES, BOOKS OF ACC OUNTS, DOCUMENTS ETC. MUST BELONG TO THE ASSESSEE. HOWEVER , IN THE PRESENT CASE, NEITHER THE NOTE BOOK BELONGS TO THE ASSESSEE NOR THE ENTRIES MADE THEREIN ARE BY THE ASSESSEE. THERE FORE, WHEN THE SEIZED MATERIAL DOES NOT BELONG TO THE ASSESSEE , BUT TO A THIRD PARTY, PROCEEDINGS U/S.153C OF THE ACT CANNOT BE INITIATED AGAINST THE ASSESSEE. THAT TOO, WHEN THE OWNER OF S UCH SEIZED MATERIAL HAS DENIED OF HAVING PAID ANY CASH TO THE ASSESSEE. IN ABSENCE OF ANY OTHER MATERIAL TO CORROBORATE THE EN TRIES MADE IN THE NOTE BOOK, PROCEEDING U/S.153C OF THE ACT CANNO T BE INITIATED BY THE ASSESSING OFFICER.' 6.1 THE CIT(A) OBSERVED THAT IN THE PRESENT CASE, T HE ASSESSING OFFICER MERELY MADE THE ADDITION ON THE BASIS OF TH E NOTE BOOK ENTRY, BUT DID NOT BRING ANY CORROBORATIVE EVIDENCE TO SUB STANTIATE THE ARGUMENT THAT THE ASSESSEE ALONG WITH SRI RAMAKRISH NA PAID RS.1,64,00,000/- IN CASH TOWARDS PURCHASE CONSIDERA TION. IT MAY BE NOTED THAT HON'BLE ITAT, VISAKHAPATNAM HAS ALSO MAD E AN OBSERVATION THAT BOTH THE PARTIES HAVE DENIED OF MA KING PAYMENT/RECEIPT IN CASH AND THERE HAS BEEN NO CORRO BORATIVE EVIDENCE BROUGHT ON RECORD TO SUBSTANTIATE THE CLAI M THAT THERE WAS CASH CONSIDERATION PASSED ON BETWEEN THEM. AS HELD BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS SATHINDER KUMAR (2001) 250 ITR 484, THE ASSESSING OFFICER IS NOT COMPETENT TO MAKE ADDITION IN THE ABSENCE OF CREDIBLE EVIDENCE I N RESPECT OF INVESTMENT MADE OVER AND ABOVE THE CONSIDERATION RE CORDED IN THE REGISTERED SALE DEED. AS PER THE SALE DEED, THE SAL E CONSIDERATION FOR THE ASSESSEE'S SHARE OF THE PROPERTY WORKS OUT TO R S,41,08,000/- (RS.37,50,000/-TOWARDS PROPERTY COST + RS.3,55,450/ - TOWARDS STAMP DUTY + RS.2,550/- TOWARDS DRAFTING CHARGES) AND WHE N A DOCUMENT SHOWS A FIXED PRICE, THERE WILL BE A PRESUMPTION TH AT, THAT IS THE 5 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO CORRECT PRICE AGREED UPON BY THE PARTIES. WHEN THE SELLER CLAIMS THAT HE HAS NOT RECEIVED ANY CONSIDERATION IN CASH, IT I MPLIES THE PURCHASER HAS ALSO NOT PAID ANY CONSIDERATION IN CA SH. IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(A) DELETED THE ADDITION MADE BY THE AO. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF UNDISCLOSED INVESTMENT. 2. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT TH E ENTRY IN THE SEIZED NOTE BOOK' TO NSK PRASAD CASH RS.1,64,00,000 /- IS A CASH TRANSACTION. IT IS CLEAR THAT THE ADDITIONAL A MOUNT OF RS.1,64,00,000/- (TOTAL CONSIDERATION :RS.2,40,00,0 00/- RS.76,00,000 [RS.1,00,000(ADVANCE) + RS.75,00,000 ( 2DDS)] WAS NOT AN INVALID ENTRY IN THE SEIZED NOTE BOOK BU T THE DIFFERENCE PERTAINS TO DISCREPANCY ON THE CASH PAYM ENT. 3. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT TH E ASSESSEE (PURCHASER) AND THE SELLER HAVE MADE AN ATTEMPT TO PROJECT THAT THERE WAS NO CASH TRANSACTIONS IN THE CONSIDERATION BUT THE FACT REMAINS THAT EXCESS CASH ENTRY WAS IDENTIFIED IN TH E SEIZED NOTE BOOK OF THE ASSESSEE. 4. THE ASSESSEE PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 8. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND PERUSED THE MATERIAL FACTS ON RECORD. DURING SEARCH, A NOTE BOOK WAS FOUND AND AO NOTICED THAT THERE IS CASH TRANSACTION AMOUN TING TO RS. 1.64 CRORES WAS MENTIONED. RELYING ON THIS NOTE BOOK ENT RY, AO MADE THE ADDITION. BUT FACT OF THE MATTER IS, BOTH THE PURCH ASER AND SELLER HAD DENIED OF SUCH CASH TRANSACTION BETWEEN THEM. AO HA D MADE THE ADDITION MERELY ON SUSPICION AND PRESUMPTION. APART FROM THE DIARY NOTING, NO OTHER MATERIAL WAS BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE THE ADDITION. AS SUBMITTED BEFORE US, THE ORDER OF THE COORDINATE BENCH OF VISAKHAPATNAM IN THE CASE OF MR . NSK PRASAD, IN WHICH IT WAS CATEGORICALLY OBSERVED THAT THERE IS N O CASH TRANSACTION BETWEEN THE PARTIES. SINCE, AO HAS NOT BROUGHT ANY THING ON RECORD TO SUBSTANTIATE THE ADDITION OTHER THAN THE NOTE BOOK SEIZED DURING THE 6 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO SEARCH OPERATION. MERE ENTRY IN THE NOTE BOOK CANNO T BE PROPER EVIDENCE. ACCORDINGLY, WE ARE NOT IN A POSITION TO APPRECIATE THE ARGUMENT OF LD. DR. WE AGREE WITH THE FINDINGS OF L D. CIT(A) AND ACCORDINGLY DELETE THE ADDITION. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO. 1853/HYD/2014 FOR AY 2009-10 10. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF UNEXAMINED CASH FOUND DURING THE COURSE OF SEARCH. 2. THE LEARNED CIT(A) SHOULD HAVE NOTICED THAT THE SIMILAR ADDITION MADE IN THE HANDS OF ASSESSEE FIRM I.E. M/ S.SRI SAI VENKATESHWARA REALTORS IS PENDING BEFORE THE LEARNE D CIT(A). 3. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT TH E ASSESSEE HAS MADE AN ATTEMPT TO PROJECT THAT THE SEIZED CASH BELONG TO HIS FIRM. 4. THE ASSESSEE PRAYS THAT THE ORDER OF THE CITIA) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 5. THE ASSESSEE CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 11. IN BRIEF, DURING THE COURSE OF SEARCH OPERATIO N ON 16-7-2008 IN ROOM NO.209 OF HOTEL EXECUTIVE COURT, VIZAG, WHICH WAS OCCUPIED BY THE ASSESSEE AND S. YELLAIAH, A CASH OF RS.1,70,00, 000/- WAS FOUND. WHEN THIS WAS CONFRONTED, THEY HAVE SUBMITTED THAT THE CASH BELONGS TO SRI SAI VENKATESWARA REALTORS IN WHICH THEY ARE PARTNERS AND ALSO STATED IN THE STATEMENT RECORDED U/S.132( 4) THAT R EGULAR BOOKS OF ACCOUNT ARE NOT MAINTAINED AND THE CASH IS NOT ACCO UNTED FOR IN ANY BOOKS OF ACCOUNT. HOWEVER, DURING POST-SEARCH PROCE EDINGS, THEY SUBMITTED AN UPDATED BALANCE SHEET OF THE FIRM AS O N 14-7-2008 TO THE DDLT, ACCORDING TO WHICH, THE CASH IN HAND WAS AT RS.2,02,32,499/-. THE ASSESSEE SUBMITTED THAT THE C ASH SEIZED OF RS.1.70 CRORES FOUND AT EXECUTIVE COURT HOTEL, VIZA G AND THE SEIZED 7 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO CASH OF RS. 31,50,000/- FOUND AT HIS RESIDENCE BELO NG TO THE FIRM, SRI SAI VENKATESWARA REALTORS. HOWEVER, DURING THE ASSE SSMENT PROCEEDINGS, THE ASSESSEE REITERATED THE SAME POINT AS MENTIONED BEFORE THE DDLT AND RELIED UPON THE UPDATED BALANCE SHEET OF THE FIRM AS ON 14-7-2008. THE ASSESSING OFFICER HAS NOT ACCE PTED THE TRIAL BALANCE SUBMITTED BY THE ASSESSEE SINCE THE ASSESSE E PRODUCED BOOKS OF ACCOUNT NEITHER DURING THE SEARCH NOR DURI NG THE ASSESSMENT PROCEEDINGS AND THE ASSESSEE HIMSELF HAS ACCEPTED T HAT THE CASH WAS NOT RECORDED IN ANY OF THE BOOKS OF ACCOUNT. AC CORDINGLY, THE ASSESSING OFFICER TREATED RS.2,00,00,000/- AS UNACC OUNTED CASH IN THE HANDS OF THE ASSESSEE AS THE CASH WAS FOUND IN THE POSSESSION OF THE ASSESSEE AND THE SAME WAS NOT ACCOUNTED FOR IN HIS RETURNS OF INCOME. 12. DURING THE COURSE OF APPEAL PROCEEDINGS, IT WA S SUBMITTED THAT THE ASSESSEE AND MR. S. YELLAIAH HAVE GIVEN A STATE MENT ON 16-7- 2008 THAT THE ABOVE CASH BELONGS TO THE FIRM, SRI S AI VENKATESHWARA REALTORS, IN WHICH BOTH OF THEM ALONG WITH SRI RAMA KRISHNA, P. MADHUSUDAN, A. NARENDER AND Y. SWAMY REDDY ARE PART NERS. SINCE THE PARTNERS IN THE FIRM HAVE OWNED UP THE CASH IN THEIR BOOKS, THE SAME SHOULD HAVE BEEN TAKEN IN THE HANDS OF THE FIR M AND NOT IN THE HANDS OF THE ASSESSEES. WITHOUT PREJUDICE TO THE AB OVE, THE ASSESSEE SUBMITTED THAT IF AT ALL AN ADDITION HAS TO BE MADE , IT SHOULD BE SUBSTANTIVE IN THE HANDS OF THE FIRM AND PROTECTIVE IN THE HANDS OF THE ASSESSEES. THE ASSESSEE PLACED RELIANCE ON THE DECI SION OF THE SUPREME COURT IN THE CASE OF ITO VS ATCHAIAH 218 IT R 239, WHEREIN IT HAS BEEN HELD THAT THE INCOME SHOULD BE TAXED IN TH E HANDS OF THE RIGHT PERSON AND NOT AS PER THE INTERESTS OF THE RE VENUE. 13. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE CIT(A) DELETED THE ADDITION MADE BY THE AO OBSERVING AS UN DER: 09.3 THE ASSESSMENT ORDER AND THE ASSESSMENT RECORD S AND THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN PERUSED AND I T IS NOTED THAT AT THE TIME OF SEARCH ON 16-7-2008, AT ROOM NO .209, HOTEL EXECUTIVE COURT, VISAKHAPATNAM, CASH OF RS.1,70,00, 000/- WAS 8 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO FOUND IN THE POSSESSION OF THE ASSESSEE AND SRI S. YELLAIAH. IT WAS SUBMITTED THAT THEY WERE IN VISAKHAPATNAM TO NE GOTIATE AND PURCHASE LANDS OF ABOUT 7 ACRES AT RAVADA VILLAGE A ND THE CASH FOUND ACTUALLY BELONGS TO M/S.SRI SAI VENKATESWARA REALTORS IN WHICH THEY ARE PARTNERS, AND THAT REGULAR BOOKS OF ACCOUNTS WERE NOT MAINTAINED AND THE CASH WAS NOT ACCOUNTED FOR I N THE BOOKS OF ACCOUNTS. IN THE STATEMENTS RECORDED FROM THE AS SESSEE AND SRI S.YELLAIAH U/S.132( 4) ON 16-7-2008, THEY HAVE CATEGORICALLY STATED THAT THE CASH BELONGS TO SRI SAI VENKATESWAR A REALTORS FOR ASST. YEAR 2009-10 AND THEY WERE NOT MAINTAINING AN Y BOOKS OF ACCOUNTS AND THE SAID AMOUNT ALONG WITH THE CASH FO UND AND SEIZED OF RS.31,50,000/- AT THE RESIDENCE OF THE AS SESSEE AMOUNTING TO RS.2,01,50,000/- BELONGS TO M/S. SRI S AI VENKATESWARA REALTORS. IT IS ALSO NOTED THAT DURING THE POST- SEARCH PROCEEDINGS, THE ASSESSEE AND OTHER PARTNERS SUBMITTED AN UPDATED BALANCE SHEET/TRIAL BALANCE OF M/S.SRI S AI VENKATESWARA REALTORS AS ON 14-7-2008 ACCORDING TO WHICH THE CASH ON HAND WAS AT RS.2,02,32,499/-. DURING THE AS SESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE, THE ASSESS ING OFFICER HAS REFERRED TO THE SAID UPDATED BALANCE SHEET OF T HE FIRM AND GAVE HIS OBSERVATIONS FOR NOT ACCEPTING THE SAME AS AUTHENTIC AND MADE THE ADDITION IN THE HANDS OF THE ASSESSEE WHO IS A PARTNER OF THE SAID FIRM ON SUBSTANTIVE BASIS AND I N THE HANDS OF THE FIRM ON PROTECTIVE BASIS. THE ASSESSING OFFICER HAS NOT GIVEN ANY REASONS EXCEPT STATING THAT THE SAME WAS FOUND IN THE POSSESSION OF THE ASSESSEE. IT HAS BEEN CONTENDED R IGHT FROM THE BEGINNING WHICH HAS BEEN ACCEPTED BY THE AUTHORITIE S THAT THE CASH FOUND AT THE HOTEL ROOM AND AT THE RESIDENCE O F THE ASSESSEE BELONG TO THE FIRM, THE SAME NEEDS TO BE T AXED IN THE HANDS OF THE FIRM ON SUBSTANTIVE BASIS AND NOT IN T HE HANDS OF THE ASSESSEE WHO IS ONE OF THE PARTNERS OF THE FIRM . ACCORDINGLY, THE ADDITION MADE IN THE HANDS OF THE ASSESSEE IS O RDERED TO BE DELETED. 14. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL FACTS ON RECORD. THERE IS NO DOUBT, THE CA SH WAS SEIZED AT HOTEL IN THE HANDS OF THE ASSESSEE AND MR. YELLAIAH . BOTH THE PARTNERS OF THE FIRM, SRI SAI VENKATESWARA REALTORS , HAVE CONFIRMED THAT THE CASH BELONGS TO THE FIRM. BUT, THE AO CHOS E TO MAKE ADDITION IN THE HANDS OF ASSESSEE INSTEAD OF THE FIRM AND PA RT OF THE SEIZED AMOUNT IN THE HANDS OF THE OTHER PARTNER MR. YELLAI AH. BOTH PARTNERS OF THE FIRM CONFIRMED THAT THE SEIZED CASH BELONGS TO THE FIRM AND THERE IS NO OTHER EVIDENCE TO SHOW THAT THE CASH IN FACT BELONGS TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE CASH CERTAINL Y BELONGS TO THE FIRM. AO HAS EXPRESSED IN HIS ORDER THAT BOTH PARTN ERS HAVE CONFIRMED 9 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO THAT THERE IS NO BOOKS OF ACCOUNT MAINTAINED OR THE CASH IS NOT RECORDED IN THE BOOKS OF THE FIRM, THEN, IT SHOULD BE CONSIDERED AND ADDRESSED IN THE ASSESSMENT OF THE FIRM AND THE SAM E REASON APPLIED TO JUSTIFY THAT THE ADDITION MADE IN THE HANDS OF T HE ASSESSEE IS NOT PROPER. AS THERE IS NO MATERIAL EVIDENCE AVAILABLE WITH THE AO TO SUBSTANTIATE THAT THE CASH BELONGS TO THE ASSESSEE, WE ARE OF THE VIEW THAT THE ADDITION MADE IN THE HANDS OF THE ASS ESSEE IS NOT PROPER AND WE ACCEPT THE CONCLUSION DRAWN BY THE LD . CIT(A) IN THIS MATTER. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 16. TO SUM UP, BOTH THE APPEALS UNDER CONSIDERATION ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 21 ST SEPTEMBER, 2016 KV COPY TO:- 1) DCIT, CENTRAL CIRCLE 2(3), 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD - 4 2) SRI M. SAMBASIVA RAO, H.NO. 8-2-293/83/174, MLA & MP COLONY, ROAD NO. 10C, JUBILEE HILLS, HYDERABAD. 3) CIT(A) - I, HYDERABAD 4 CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 10 ITA NOS. 1852 & 1853/H/14 M. SAMBASIVA RAO S.NO. DESCRIPTION DATE INTLS DS1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER