THE ITO, WARD - 2(2), Vijayawada V. M/s Sri Sai Krishna Constructions, Vijayawada

ITA 220/VIZ/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6623 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SATYANANDAM
• Assessee Lawyers: R PRASAD
• Keywords: Unexplained investment; Loose papers; Additional evidence; Cost of acquisition; Retraction
• Section: 133A; 147; 131; 69; 148

Judgement Text

ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.220/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) ITO, WARD - 2(2), VIJAYAWADA SRI SAI KRISHNA CONSTRUCTIONS VIJAYAWADA [PAN NO. ABFFS3667M ] ( ' / APPELLANT) ( ()' / RESPONDENT) C.O. NO.83/VIZAG/2013 (ARISING OUT OF I.T.A.NO.220/VIZAG/2013) ( / ASSESSMENT YEAR: 2008-09) SRI SAI KRISHNA CONSTRUCTIONS VIJAYAWADA ITO, WARD - 2(2), VIJAYAWADA ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI T. SATYANANDAM, DR / RESPONDENT BY : SHRI M.S.R. PRASAD, AR / DATE OF HEARING : 19.09.2017 / DATE OF PRONOUNCEMENT : 06.10.2017 ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 2 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, VIJAYAWADA VIDE ORDER NO.430/CIT(A)/VJA/11-12 DATED 22.1.2013 AND T HE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF ORDER OF THE CIT(A), VIJAYAWADA FOR THE ASSESSMENT YEAR 2008-09. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE DEL ETION OF ADDITION TOWARDS UNEXPLAINED INVESTMENT AMOUNTING TO RS. 2,05,59,255/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE I.E. CONSTRUCTION AND SALE OF RESIDENTIAL PLOTS OF ITS OWN AND ON DEVELOP MENT BASIS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF ` 6,01,420/- ON 30.9.2009. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') WAS CONDUCTE D IN THE ASSESSEES CASE AND DURING THE COURSE OF SURVEY, THE ASSESSING OFFICER FOUND CERTAIN INCRIMINATING MATERIAL INDICATING UNACCOUNTED PAYME NTS FOR PURCHASE OF THE PROPERTY. ON THE BASIS OF THE INFORMATION COLL ECTED DURING THE SURVEY U/S 133A OF THE ACT, THE ASSESSMENT WAS RE- OPENED U/S 147 OF THE ACT BY ISSUE OF NOTICE U/S 148 AND COMPLETED TH E REASSESSMENT ON TOTAL INCOME OF ` 2,17,97,350/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE THE ADDITION OF ` 2,05,59,255/-, WHICH IS THE ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 3 CHALLENGED BY THE ASSESSEE. DURING THE COURSE OF S URVEY, THE A.O. IMPOUNDED THE BOOKS OF ACCOUNTS & LOOSE SHEETS. FR OM THE BOOKS OF ACCOUNTS IMPOUNDED BY THE A.O. MARKED AS ANNEXURE S SKC/23 PAGE 59, IT WAS REVEALED THAT THE ASSESSEE HAD PURCHASED A S ITE ADMEASURING 1393.4 SQ.YDS. LOCATED AT TADIGADAPA VILLAGE OF RE- SURVEY NO.11/8 FROM PONNAM VENKATESWARA RAO FOR A CONSIDERATION OF ` 2,36,30,135/- INCLUSIVE OF REGISTRATION EXPENSES, COMMISSION, UDA PLAN, UDA LICENSE FEE AND BANK CHARGES AND GOT IT REGISTERED ON 14.12 .2007. IN PAGE NO.59, IT WAS ALSO MENTIONED THAT THE CASH PAYMENT FOR SITE PURCHASE WAS ` 1,95,00,000/-. THE SAID SITE WAS REGISTERED FOR A SUM OF ` 27,86,900/-. DURING THE COURSE OF SURVEY, A STATEM ENT WAS RECORDED FROM MR. KUNDARAVALLI VENKATA NARASAIAH, MANAGING P ARTNER OF THE FIRM, WHO HAS CONFIRMED THAT THE FIRM HAS PURCHASED THE S ITE FOR A TOTAL CONSIDERATION OF ` 2,36,30,135/- AS PER THE DETAILS CONTAINED IN THE LOOSE SHEET NO.SSKC/23/59. HOWEVER, SUBSEQUENTLY IN THE STATEMENT RECORDED U/S 131 OF THE ACT ON 25.3.2011, THE ASSES SEE HAS RETRACTED THE STATEMENT AND DENIED HAVING MADE THE PAYMENT OF CASH TO THE VENDOR OF THE SITE. HOWEVER, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO DISPROVE THE PAYMENT OF ` 1,95,00,000/- IN CASH AND THE CONTENTS MENTIONED IN THE PAGE NOS.59 & 60 OF THE SPIRAL NOT E BOOK OF SSKC/23 WAS NOT TRUE. THEREFORE, PLACING RELIANCE ON THE P RESUMPTION U/S 292C ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 4 OF THE ACT, THE A.O. TREATED THE CONTENTS OF THE MA TERIAL FOUND DURING SURVEY AS TRUE AND ACCORDINGLY, MADE THE ADDITION OF ` 2,05,59,255/- I.E. ` 2,36,30,135/- (-) ` 30,70,880/- {I.E ` 27,86,900/- (+) REGISTRATION EXPENSES ` 2,83,960/-)} INCLUDING THE CASH PAYMENT OF RS.1,95,00,000/- WAS BROUGHT TO TAX. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DELETED THE AD DITION MADE BY THE A.O. BEFORE THE LD. CIT(A), THE ASSESSEE FILED AN A FFIDAVIT FROM B. BABUJEE WHO STATED TO BE AN EX-EMPLOYEE OF SRI SAI KRISHNA CONSTRUCTIONS STATING THAT THE NOTING IN THE LOOSE SHEET WAS IN THE HAND WRITING OF B. SRINIVAS WHO HAS LEFT THE ORGANIZATIO N. FOR CLARITY AND CONVENIENCE, WE EXTRACT THE RELEVANT PART OF THE AF FIDAVIT AS UNDER: 5. SUBSEQUENTLY I AM DOING SOME PART TIME JOBS AS ACC OUNTANT AND RECENTLY MET SRI K.V. NARSAIAH, MANAGING PARTNE R OF SSKP AND SSKC IN JUNE, 2012 REQUESTING HIM TO ENTRUST ME ANY PART TIME ACCOUNTS JOB OF HIS CONCERNS OR ANY KNOWN CONCERNS TO HIM. THEN, SRI K. V. NARSAIAH HAS SHOWN ME XEROX COPY OF PAGE NUMBERED 58 OF A SPIRAL NOTE BOOK AND ASKED ME WHETHER THE SAME WAS WRITTEN BY ME. I RECOGNISED TH E WRITING IN WHICH THE FOLLOWING FIGURES WERE MENTION ED AGAINST THE FOLLOWING NAMES: 6. I CONFIRMED THE SAID WRITINGS TO BE THAT OF MR. B. SRINIVAS WHO LEFT THE ORGANIZATION AND EXPLAINED THE SAME TO HIM AND ALSO SHOWN HIM SOME OF THE NOTINGS IN MY HANDWRITING IN THE SAME XEROX COPY OF THE SPIRAL NOTEBOOK FOR EXAMPLE AT PA GES 43, 44 ETC. 7. HE AGAIN HAS SHOWN ME A XEROX OF PAGE NO. 59 OF ANO THER SPIRAL NOTEBOOK, WHICH CONTAINED THE FOLLOWING NOTINGS: 8. I AGAIN CONFIRMED THE NOTINGS THEREIN TO BE IN THE WRITING OF SRI B. SRINIVAS AND AGAIN SHOWN HIM SOME OF THE WRI TINGS IN MY OWN HANDWRITING IN THE SAID XEROX COPY OF THE SP IRAL NOTEBOOK FOR EXAMPLE AT PAGES 3, 4 & ETC. I ALSO EX PLAINED HIM THAT THE FIGURE OF RS. 2,36,30,135/- WAS SIMPLY COPIED BY ME FROM PAGE NUMBER 59 ABOVE INTO SOME OTHER LOOSE SHEETS ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 5 WHILE CALCULATING PROJECT COST. I SIMPLY COPIED THE SAID FIGURE AS IT IS NOTED IN THE SAID PAGE NUMBER 59 AS WRITTE N BY SRI B. SRINIVAS. I DID NOT KNOW THE ACTUAL SITE COST OF EI THER PATAMATA LANKA SITE OR TADIGADAPA SITE. I SIMPLY CO PIED THE SAID FIGURES BECAUSE THEY WERE WRITTEN BY SRI B. SR INIVAS PUTTING THE HEADING 'SITE COST'. THE MANAGEMENT NEV ER REQUIRED PERSONS LIKE MYSELF WHO ARE IN THE CLERICA L CADRE TO NOTE DOWN ANYWHERE ANY SITE COST IN ANY OF THE BOOK S OR PAPERS AS OUR JOB IS CONCERNED WITH GATHERING OF IN FORMATION REGARDING PAYMENTS MADE AT SITE TOWARDS CONSTRUCTIO N COST FOR CONTROL PURPOSE AND ALSO AS, THE MANAGEMENT MIG HT HAVE FELT THE INFORMATION REGARDING SITE PURCHASE COST T O BE SENSITIVE TO BE KNOWN TO A PERSON OF CLERICAL CADRE LIKE ME. I ALSO DO NOT KNOW HOW SRI B. SRINIVAS CAME TO NOTE S UCH THINGS OR ON WHAT BASIS HE HAS ARRIVED AT SUCH FIGU RES. THE SPIRAL NOTE BOOKS ARE PRIMARILY AND SOLELY MAINTAIN ED BY SRI B. SRINIVAS AND SUBSEQUENTLY MYSELF TO NOTE DOWN PA YMENTS IN FLOW AND OUT FLOW REGARDING APARTMENTS BOOKING A ND CONSTRUCTION EXPENSES, BOTH THAT TOOK PLACE AT SITE . 4. THE LD. CIT(A) FORWARDED THE AFFIDAVIT TO THE A. O. AND THE A.O. SUBMITTED THE REMAND REPORT REITERATING THE FINDING S IN THE ASSESSMENT ORDER. THE LD. CIT(A) IN THE ORDER HELD THAT HAVIN G RETRACTED FROM THE STATEMENT, THE A.O. SHOULD HAVE RECORDED THE STATEM ENT FROM THE VENDOR AND IN CASE OF DISCREPANCY, THE ASSESSEE SH OULD HAVE ALLOWED TO CROSS EXAMINE THE VENDOR. FURTHER, THE A.O. SHOULD HAVE GATHERED THE INFORMATION AS TO WHAT WERE THE PRICES OF THE SIMIL AR PROPERTIES THAT HAVE FETCHED IN AND AROUND THE PLACES OF TADIGADAPA , WHERE THE IMPUGNED PROPERTY WAS SITUATED AND IN CASE OF DISCR EPANCY, THE A.O. SHOULD HAVE CALLED FOR THE EXPLANATION FROM THE ASS ESSEE. THE LD.CIT(A) FURTHER OBSERVED THAT THE A.O. SHOULD HAV E REFERRED THE PROPERTY TO DEPARTMENTAL VALUATION AND DIGGED THE S OURCES OF FUNDS FOR MAKING THE INVESTMENT. HAVING NOT TAKEN THE ACTION S MENTIONED ABOVE, ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 6 THE A.O. HAS NOT COLLECTED THE REQUIRED EVIDENCES A ND THE BURDEN OF THE A.O. HAS NOT BEEN DISCHARGED. THE LD. CIT(A) WAS O F THE OPINION THAT THE ONUS LIES ON THE REVENUE TO SUBSTANTIATE THE PO INT AT ISSUE THAT THE ASSESSEE HAS PAID THE ON MONEY. THE LD. CIT(A) WAS OF THE VIEW THAT THE IMPOUNDED DOCUMENT IS THE FIRST STEP TO PROBE T HE IMPUGNED INVESTMENTS AND THE DOCUMENT FOUND WOULD NOT ITSELF IS CONCLUSIVE AND IT GIVES CLUE ONLY. THE CIT(A) HELD THAT A.O. MADE TH E ADDITION ON THE GUESS WORK, IMAGINATION, ETC. AND ACCORDINGLY DELET ED THE ADDITION MADE BY THE A.O. FOR THE SAKE OF CLARITY AND CONVENIENCE WE EXTRACT THE RELEVANT PARAGRAPH OF THE LD.CIT(A)S ORDER WHICH R EADS AS UNDER: 7. IT TRANSPIRES FROM RECORDS THAT AS PER THE IMPOU NDED DOCUMENT BEING AT PAGE NO. 59 OF ANNEXURE SSKC/23 ON WHICH D ETAILS OF TOTAL EXPENSES INCURRED FOR PURCHASE OF THE IMPUGNED PLOT AT TADIGADAPA BELONGING TO SRI PONNAM VENKATESWARA RAO AMOUNTING TO RS. 2,36,30, 135 WAS MENTIONED. THE ITEM WISE DETAILS O F THIS AMOUNT WERE MENTIONED AT PAGE NO 2 & 3 OF THE ASSESSMENT O RDER, THE HIGHLIGHT BEING PAYMENT OF CASH BEING RS. 1,95,00,0 00. AS SPELT OUT ALREADY, DURING THE COURSE OF SURVEY PROCEEDINGS, T HE MANAGING PARTNER HAS ACCEPTED THAT ON MONEY WAS PAID, BUT HO WEVER, WHEN HE WAS SUMMONED TO THE INCOME TAX OFFICE ON 25.03.2 011 IN COURSE OF THE POST SURVEY INVESTIGATIONS AND RECORD ED A STATEMENT, THEN HE HAS RETRACTED FROM THE EARLIER STATEMENT AN D STRUCK TO HIS GUNS THAT THE TOTAL AMOUNT PAID TO THE VENDOR WAS R S. 27,86,900 ONLY WHICH WAS PAID THROUGH BANKING CHANNELS. AT TH IS STAGE, THE PROPER COURSE OF ACTION ON THE PART OF THE AG COULD BE TO (I) VERIFY THE ACTUAL AMOUNT RECEIVED BY THE VENDOR AND IN CAS E OF DISCREPANCY IN LIGHT OF THE FINDINGS OF THE SURVEY, ALLOWING TH E APPELLANT TO CROSS EXAMINE THE VENDOR, WHICH HAS NOT BEEN MADE IN THE CASE ON HAND; (II) TO GATHER INFORMATION AS TO WHAT ARE THE PRICE S THAT SIMILAR PROPERTIES HAVE FETCHED IN AND AROUND THE PLACES, W HERE THE IMPUGNED PROPERTY WAS SITUATED AND INCASE OF DISCRE PANCY, CALLING FOR EXPLANATION FROM THE APPELLANT, WHICH HAS NOT B EEN DONE; (III) AT LEAST REFERRING THE MATTER TO THE DV FOR HIS OPINIO N, WHICH HAS ALSO NOT BEEN DONE; (IV) DIGGING OUT FOR THE SOURCES O S UCH FUNDS FOR THE APPELLANT TO INVEST AND AT THE SAME TIME ALSO FINDI NG OUT THE ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 7 DESTINATION OF THE IMPUGNED ON MONEY IN THE HANDS O F THE RECIPIENT, SO THAT WITH SUCH MATERIAL AND EVIDENCES, THE APPEL LANT COULD HAVE BEEN CONFRONTED. THIS IS SO, BECAUSE WHEN THE AO HA S MADE ADDITION UNDER SECTION 69, THE ONUS LIES ON THE REV ENUE TO SUBSTANTIATE THE POINT AT ISSUE, I.E., THE APPELLAN T HAS PAID THE IMPUGNED AMOUNTS. IN FACT, THE IMPOUNDED DOCUMENT I S THE FIRST STEP TO PROBE THE IMPUGNED INVESTMENTS. THE DOCUMEN T FOUND WOULD NOT IN ITSELF BE CONCLUSIVE. IT GIVES A CLUE ONLY. FROM THIS CLUE, THE AG HAS TO DEVELOP THE CASE AND BRING COGENT MAT ERIAL ON RECORD SO AS TO MAKE A SUSTAINABLE ADDITION. WHEN THE APPE LLANT HAS RETRACTED, THEN IT IS FOR THE AG TO REBUT IT BY BRI NGING MATERIAL ON RECORD, MORE SO WHEN THE MATERIAL ON RECORD POINTS TO THE CORRECTNESS OF THE CLAIM MADE BY THE APPELLANT. IN THE ABSENCE OF SUCH A POSTURE TAKEN BY THE AG, THE ADDITION MADE B Y THE REVENUE TANTAMOUNT TO AN ADDITION BASED ON GUESSWORK, IMAGI NATION ETC, WHICH CANNOT BE SUSTAINED. THUS, THE ADDITION MADE BY THE AO AT RS. 2,05,59,255 STANDS DELETED. THE OTHER 3 ADDITIO NS MADE BY THE AO, WHICH WERE ALSO CONTESTED, ARE ADJUDICATED AS U NDER 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 6. APPEARING FOR THE REVENUE, THE LD. D.R. ARGUED T HAT A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE CASE OF THE AS SESSEE AND DURING THE COURSE OF SURVEY, EVIDENCES FOUND IN THE FORM O F SPIRAL NOTE BOOK CONTAINING THE DETAILS OF THE EXPENDITURE INCURRED FOR PURCHASE OF SITE AT TADIGADAPA AT PAGE NO.59 AND THE COST OF PURCHASE O F THE SITE WAS ` 2,36,30,135/- INCLUSIVE OF OTHER EXPENDITURE INCURR ED THEREIN AND OUT OF WHICH A SUM OF ` 1,95,00,000/- WAS PAID BY THE ASSESSEE IN CASH. T HE NOTING GIVES CLEAR PICTURE AND THE COMPLETE DETAILS OF ITEM WISE PAYMENTS OF EXPENDITURE INCURRED. THIS EVIDENCE WAS FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE. FURTHER, IN PAG E NO.60, WHICH WAS ENCLOSED AS PAGE NO.2 OF THE PAPER BOOK OF THE ASSE SSEE, ITEM WISE ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 8 DETAILS OF VARIOUS EXPENSES WERE RECORDED WHICH INC LUDES SAND, STEEL, PAINTING, TILES, LABOUR, CHIPS, MISCELLANEOUS EXPEN SES, ELECTRICAL INSURANCE, ETC. IN PAGE NO.60, IT WAS RECORDED THA T THE AGGREGATE EXPENDITURE WAS AT ` 5,14,42,684/- INCLUSIVE OF SITE COST OF ` 2,36,30,135/-. THE ITEM-WISE DETAIL OF EXPENSES WA S RECORDED IN THE LOOSE SHEET FOUND AT THE TIME OF SURVEY ESTABLISHES THE EXPENDITURE INCURRED BY PAYMENT OF ON MONEY OF RS.1,95,00,000/- . THEREFORE, THE LD.DR ARGUED THAT THE RETRACTION IS NOTHING BUT AN AFTER THOUGHT AND THERE IS NO REASON TO DISBELIEVE THE EXPENDITURE IN CURRED FOR PURCHASE OF THE SITE. THE TOTAL EXPENDITURE INCURRED FOR PURC HASE OF THE SITE WAS RS. 2,36,30,135/- AND THE ASSESSEE HAS NOT DISPUTED T HE PAYMENT OF ` 27,86,900/- PAID BY DD, REGN EXPENSES, UDA PLAN EX PENSES, UDA LICENSE FEE AND BANK CHARGES ETC. MENTIONED IN TH E IMPOUNDED DOCUMENT FOR PURCHASE OF THE SITE AND THE DISPUTE W AS ONLY WITH REGARD TO THE CASH PAYMENT. THE LD. DR ARGUED THAT ONCE TH E ASSESSEE ACCEPTS SOME OF THE CONTENTS OF THE DOCUMENTS ARE TRUE, THE RE IS NO REASON TO DISPUTE THE REMAINING ITEMS OF EXPENDITURE. THE L D. D.R. FURTHER ARGUED THAT AS PER SECTION 292C OF THE ACT, THE BUR DEN IS ON THE ASSESSEE TO DISPROVE THE CONTENTS OF THE SEIZED MAT ERIAL BUT NOT ON THE REVENUE. THE LD. CIT(A) ERRONEOUSLY HELD THAT THE ONUS IS ON THE REVENUE TO PROVE THE PAYMENT OF ` 1,95,00,000/-. THE LD. DR FURTHER ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 9 ARGUED THAT THE ASSESSE HAD FILED THE AFFIDAVIT FRO M MR. BABUJEE, WITHOUT VERIFYING THE CREDENTIALS OF MR. BABUJEE THE CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCE. IT WAS NOT KNOWN WHETHER BABUJ EE WAS REALLY WORKING WITH THE ASSESSE OR NOT? FURTHER WHO WAS S RINIVAS AND WHAT WAS THE LOCUS STANDI OF THE AFFIDAVIT OF BABUJEE CE RTIFYING THE HAND WRITING WAS THAT OF SRINIVAS WAS NOT VERIFIED BY TH E CIT(A) BEFORE ADMITTING THE ADDITIONAL EVIDENCE. THERE WAS NO EFF ORT MADE BY THE ASSESSE TO PRODUCE MR.SRINIVAS AND MR.BABUJEE AT TH E TIME OF ASSESSMENT. THERE IS NO EVIDENCE PLACED BY THE ASSE SSEE TO PROVE THAT THE SEIZED DOCUMENT WAS IN FACT WRITTEN BY MR.SRINI VAS. IT WAS NOT EXPLAINED HOW MR.BABUJEE CAN IDENTIFY THE HAND WRIT ING OF SRINIVAS. THEREFORE, NO CREDENCE REQUIRED TO BE GIVEN TO THE AFFIDAVIT FILED BY THE ASSESSE FROM MR.BABUJEE. THE ASSESSEE ALSO DID NOT FURNISH ANY EVIDENCE IN THE FORM OF APPOINTMENT LETTER AND CONT RIBUTION MADE TO PF, ESI AND THE ATTENDANCE REGISTER, ETC. TO PROVE BOTH MR. BABUJEE AND B. SRINIVAS IN FACT HAVE WORKED IN THE ASSESSEES FIRM , THEREFORE, THE AFFIDAVITS FILED BY THE ASSESSEE CANNOT BE HELD AS VALID PIECE OF EVIDENCE. THE LD. DR ARGUED THAT IN CASE THE AFFIDAVIT HAS TO BE CONSIDERED AS A VALID EVIDENCE IN THE ABSENCE OF ANY ENQUIRY CONDUC TED BY THE LD.CIT(A) AND THE ASSESSING OFFICER, THE ISSUE SHOULD BE REMI TTED BACK TO THE FILE OF THE AO TO CONDUCT THE DETAILED ENQUIRIES WITH RE GARD TO THE CONTENTS ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 10 OF THE IMPOUNDED DOCUMENT AS WELL AS THE AFFIDAVIT. THE LEGAL POSITION IS, THE BURDEN IS CAST ON THE ASSESSEE TO DISPROVE THE CONTENTS OF THE MATERIAL FOUND DURING THE COURSE OF THE SURVEY AS U NTRUE. IN THE ASSESSEES CASE, THE ASSESSEE HAS INITIALLY ACCEPTE D THE PAYMENT OF ` 2,36,30,135/- AND SUBSEQUENTLY RETRACTED FROM THE S TATEMENT. THEREFORE, THE LD. D.R. ARGUED THAT THE ASSESSEE HA S NOT DISCHARGED THE BURDEN CAST ON HIM AS PER SECTION 292C OF THE ACT. THEREFORE, AS PER THE PROVISIONS OF SECTION 292C OF THE ACT, UNLESS O THERWISE PROVED BY THE ASSESSEE, WHETHER ANY BOOKS OF ACCOUNTS, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG FOUND IN THE POSSESSION OR IN THE CONTROL OF ANY OTHER PERSON IN THE COURSE OF SEARCH OR SURVEY U/S 133A OF THE ACT PRESUMED THAT SUCH BO OKS OF ACCOUNTS, DOCUMENTS, MONEY BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING BELONGS TO SUCH PERSON AND CONTENTS OF SUCH BOOKS O F ACCOUNTS AND OTHER DOCUMENTS ARE TRUE. THEREFORE, FOLLOWING THE PRESUMPTION U/S 292C OF THE ACT, THE A.O. HAS RIGHTLY MADE THE ADDI TION, WHICH REQUIRES TO BE UPHELD. 7. ON THE OTHER HAND, THE LD. A.R. ARGUED THAT THE A.O. SIMPLY RELIED ON THE DUMB DOCUMENTS, WHICH WERE FOUND AND SEIZED AT THE TIME OF SURVEY. REGARDING PAGE NO.1 OF THE PAPER BOOK, THE LD. A.R. ARGUED THAT IT IS A DUMB DOCUMENT WITHOUT THE DATE OF THE PAYMENT AND THE ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 11 CASH PAYMENT RECORDED WAS EXTRAPOLATED AND OVERWRI TTEN. THOUGH THE ASSESSEE HAS ACCEPTED THE PAYMENT DURING THE SURVEY , SUBSEQUENTLY THE ASSESSEE HAD RETRACTED FROM THE STATEMENT GIVEN AT THE TIME OF SURVEY. THE LD. A.R. ARGUED THAT A.O. SHOULD VERIFY THE ACT UAL AMOUNT PAID TO THE VENDOR AND CONFRONT THE FINDING WITH THE ASSESS EE. FURTHER, THE LD. A.R. ARGUED THAT THE A.O. FAILED TO GATHER MARKET I NFORMATION OF SIMILAR PROPERTIES SOLD IN AND AROUND THE IMPUGNED PROPERTY AND REFERRED THE MATTER TO THE DVO FOR VALUATION OF THE PROPERTY BEF ORE MAKING THE ADDITION. THE LD. A.R. ARGUED THAT ONUS LIES ON TH E REVENUE TO SUBSTANTIATE THAT THE ASSESSEE HAD INVESTED THE IMP UGNED AMOUNT U/S 69 OF THE ACT. THE LD. AR FURTHER ARGUED THAT THE D OCUMENTS FOUND AT THE TIME OF SURVEY CANNOT BE TAKEN AS CONCLUSIVE EV IDENCE AND THE A.O. SHOULD BRING COGENT MATERIAL ON RECORD FOR SUBSTANT IATING THE ADDITION. THE SURVEY WAS CONDUCTED ON 09/02/2011, MUCH LATER DATE OF PURCHASE AND NO NAME WAS MENTIONED AGAINST THE AMOUNT OF ` 2,36,35,035/- EXCEPT THE SITE PURCHASE. IT WAS NOT EVEN STATED T HAT CASH WAS PAID TO THE VENDOR. THE SAID IMPOUNDED BOOK WAS NOT IN THE HAND WRITING OF THE ASSESSEE OR THE PARTNERS. DUE TO THE DISCREPAN CIES MENTIONED, THE SAME CANNOT BE CONSIDERED AS AN INCRIMINATING EVIDE NCE. THEREFORE, THE LD. A.R. ARGUED THAT THE EVIDENCE FOUND DURING THE COURSE OF SURVEY ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 12 SHOULD NOT BE HELD AGAINST THE ASSESSEE, AND HENCE NO INTERFERENCE IS CALLED FOR IN THE ORDERS OF THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THIS CA SE BY THE A.O. ON 9.2.2011 AND DURING THE COURSE OF SURVEY, BOOKS OF ACCOUNTS, NOTE BOOKS, SCRIBBLING PADS, OTHER MISCELLANEOUS BOOKS, SALE AND PURCHASE DOCUMENTS, ETC WERE FOUND AND IMPOUNDED U/S 133A(3) CLAUSE (IA) OF THE ACT. DURING THE COURSE OF SURVEY, THE A.O. FOU ND THAT THE ASSESSEE HAD PURCHASED A SITE ADMEASURING 1393.44 SQ.YDS. LO CATED AT TADIGADAPA VILLAGE IN RE-SURVEY NO.11/8 FROM SRI P ONNAM VENKATESWARA RAO FOR A CONSIDERATION OF ` 2,36,30,135/- INCLUSIVE OF REGISTRATION EXPENSES, COMMISSION, UDA PLANS, UDA LICENSE AND BA NK CHARGES AND GOT IT REGISTERED ON 14.12.2007. OUT OF THE TOTAL E XPENSES A SUM OF RS.1,95,00,000/- WAS PAID IN CASH. THE DETAILS OF THE PURCHASE COST OF THE SAID SITE IS EVIDENT FROM PAGE NO.59 OF ANNEXUR E SSKC/23 FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY. THE SITE WA S REGISTERED AT ` 27,86,900/-.THE A.O. RECORDED THE STATEMENT FROM TH E MANAGING PARTNER OF THE FIRM MR. K. VENKATA NARASAIAH WHO WA S PRESENT AT THE TIME OF SURVEY. THE A.O. BROUGHT THE CONTENTS OF T HE PAGE NO.59 OF ANNEXURE SSKC/23 AND CONFRONTED WITH HIM. IN THE S TATEMENT RECORDED ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 13 U/S 133A OF THE ACT, THE MANAGING PARTNER AGREED TH AT THE SITE WAS PURCHASED FOR A TOTAL CONSIDERATION OF ` 2,36,30,135/-. THE RELEVANT PART OF THE EXTRACT OF STATEMENT WAS REPRODUCED IN THE ASSESSMENT ORDER IN PARA NO.3.3, WHICH IS EXTRACTED AS UNDER: 10. I AM SHOWING YOU A SPIRAL NOTE BOOK CAPTIONED A S SHRI BHAVANI, TADIGADAPA, WHEREIN AT PAGE NO.52 THE DETAILS OF SI TE PURCHASED WAS MENTIONED AS UNDER: 12.12.07 BY SYNDICATE BANK DD RS. 27, 86,900 REGISTRATION DOC RS. 2,65,200 COMMISSION RS. 1,11,520 UDA PLAN EXP. RS. 10,000 UDA LICENSE RS. 6,515 CASH GIVEN RS.1,95,00,000 TOTAL RS.2,36,30,135 THEREFORE, IT IS CLEAR FROM THE ABOVE THAT APART F ROM THE AMOUNT WHICH WAS PAID BY YOU AS PER THE REGISTERED SALE DEED IS ONLY RS.27,86,000/- AND WHEREAS YOU HAVE PAID CASH ONLINE AMOUNT OF RS.1,95,00,000/- TO THE SAID SELLER. DO YOU CONFIRM IT AND IF YES PLEASE EXPLAIN THE SOURCES OF SUCH ONLIN E PAYMENT. ANS. SO FAR I HAVE DONE MY BUSINESS TRANSACTIONS T HROUGH THE MEANS RAISED BY SYNDICATE BANK DURING THE YEAR 2007 -08 WORTH RS.50 LAKHS. THE LOAN HAS BEEN TAKEN AT SYNDICATE BANK AT LABBIPET, VIJAYAWADA AND ALSO SIDDHARTHA BRANCH, VI JAYAWADA. THUS, THE TOTAL LOAN AMOUNTS TO RS.1 CRORE. ALSO I WOULD LIKE TO MENTION THAT I HAVE RAISED ADVANCES FROM THE FLATS PURCHASERS WHICH WERE DULY RECORDED. THESE SERVED THE PURPOSE OF RAISING REVENUES FOR THE ACQUISITION OF SITES AT TADIGADAPA AND PATAMATA LANKA. YES, I CONFIRM THE ABOVE PAYMENT. 9. SUBSEQUENTLY, SUMMONS U/S 131 OF THE ACT WAS ISS UED TO THE ASSESSEE AND THE STATEMENT WAS RECORDED ON 25.3.201 1. DURING THE COURSE OF THE STATEMENT RECORDED ON 25.3.2011, THE ASSESSEE RETRACTED FROM THE STATEMENT AND STATED THAT THE ASSESSEE HAS NOT PAID THE CASH OF ` 1,95,00,000/- TO THE VENDOR OF THE SITE AND THE AC TUAL AMOUNT PAID ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 14 WAS ONLY ` 27,86,900/-, NO EXTRA AMOUNT WAS PAID. NO OTHER E VIDENCE WAS FURNISHED BY THE ASSESSEE TO SUPPORT HIS STATEM ENT. THEREFORE, THE A.O. PLACED RELIANCE ON SECTION 292C OF THE ACT, WH ICH PLACES PRESUMPTION AND HELD THAT THE ASSESSEE HAS NOT DISC HARGED THE PRESUMPTION LAID IN THE SECTION 292C OF THE ACT AND ACCORDINGLY MADE THE ADDITION OF ` 2,05,59,255/- WHICH INCLUDES THE CASH COMPONENT OF ` 1,95,00,000/-, COMMISSION OF ` 1,11,520/- AND OTHER EXPENSES, WHICH WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS. THUS, THE AMOUNT OF ` 2,05,59,255/- WAS MADE THE ADDITION U/S 69 OF THE A CT. 10. DURING THE APPEAL PROCEEDINGS BEFORE THE CIT(A ), THE ASSESSEE FURNISHED AN AFFIDAVIT FROM B. BABUJEE STATED TO BE THE EX-EMPLOYEE OF THE ASSESSEE FIRM DURING THE PERIOD FROM JUNE, 2008 TO MARCH, 2011. SURPRISINGLY IDENTICAL AFFIDAVIT WAS FILED FROM MR. BABUJEE IN THE CASE OF SAI KRISHNA PROMOTERS ALSO. THE ASSESSEE HAS NOT F URNISHED ANY EVIDENCE TO PROVE THAT MR. B. BABUJEE WAS THE EX-EM PLOYEE OF THE ASSESSEE COMPANY WITH THE APPOINTMENT LETTER AND RE LIEVING LETTER ISSUED TO HIM, IDENTITY CARD, PF, ESIC PAID FOR HIM, ETC. MR. B. BABUJEE WAS NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS. TH IS AFFIDAVIT WAS FILED BEFORE THE CIT(A) AND THE LD.CIT(A) HAS ADMIT TED THE ADDITIONAL EVIDENCE WITHOUT RECORDING THE REASONS AND VERIFYIN G THE CREDENTIALS OF BABUJEE AND MR.SRINIVAS. MR. B. BABUJEE HAS STATED IN THE AFFIDAVIT THAT ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 15 THE NOTING WAS SAID TO BE IN THE HAND WRITING OF M R. B. SRINIVAS WHO ALSO LEFT THE ORGANIZATION. THERE WAS NO EVIDENCE FILED ALONG WITH THE AFFIDAVIT WITH REGARD TO THE PERIOD OF EMPLOYMENT O F B. SRINIVAS, THE EMPLOYMENT LETTER, RELIEVING LETTER OF B. SRINIVAS WAS ALSO NOT PRODUCED BEFORE THE A.O OR BEFORE THE CIT(A). FURTHER, MR. B. BABUJEE AND B. SRINIVAS WERE NEITHER EXAMINED BY THE A.O. NOR BY L D. CIT(A). THE ASSESSEE ALSO HAS NOT PLACED ANY EVIDENCE TO PROVE THAT MR. B. SRINIVAS AND B. BABUJEE WERE IN FACT THE EX-EMPLOYEES OF THE ASSESSEE FIRM BEFORE US. THE LD. A.R. HEAVILY PLACED RELIANCE ON THE AFFIDAVIT FILED BY THE EX-EMPLOYEE MR. B. BABUJEE BUT DID NOT EXPLAIN HOW MR. BABUJEE CAN CONFIRM THE HAND WRITING OF MR. B. SRINIVAS AND THIS ISSUE NEEDS FURTHER ENQUIRY TO FIND OUT THE FACTUAL POSITION. 11. IN THIS CASE SURVEY U/S 133A WAS CONDUCTED AND THE INCRIMINATING MATERIAL WAS FOUND EVIDENCING THE UNACCOUNTED PAYME NTS. THE LD.CIT(A) HAS COMPLETELY SHIFTED THE BURDEN ON THE REVENUE IGNORING THE PROVISIONS OF SECTION 292C OF THE ACT. AS PER SECT ION 292C OF THE ACT, MATERIAL FOUND DURING THE COURSE OF SURVEY OR SEARC H, WHICH IS IN THE POSSESSION OF THE PERSONS SEARCHED BE PRESUMED THAT THE CONTENTS ARE TRUE AND BOOKS OF ACCOUNTS, DOCUMENTS, MONEY, BULLI ON, JEWELLERY, BELONGING TO SUCH PERSON. IN THE ASSESSEES CASE, DURING THE COURSE OF ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 16 SURVEY, A SPIRAL NOTE BOOK WAS FOUND WHICH GAVE ITE M WISE DETAILS PAYMENTS FOR SITE PURCHASE AS UNDER: SITE PURCHASE 12. IT IS THE ASSESSEE, WHO HAS TO PROVE THE CONT ENTS ARE FALSE OR INCORRECT. IN THIS CASE THE ASSESSE HAS NOT DISCHAR GED ITS BURDEN. THE LD. A.R FURTHER ARGUED THAT THE AO HAS NOT GIVEN THE SU RVEY STATEMENT WHICH WAS SOUGHT BY THEM ON 14/02/2011 AND 21/02/20 11. IT IS SETTLED ISSUE THAT DURING THE PENDENCY INVESTIGATION THE ST ATEMENTS WOULD NOT BE SUPPLIED TO THE ASSESSE AND THE COPIES WILL BE G IVEN WHEN THE EVIDENCES ARE USED AGAINST THE ASSESSE. THIS VIEW I S SUPPORTED BY THE HONBLE MADRAS HIGH COURT JUDGEMENT IN THE CASE OF ADVANTAGE STRATEGIC CONSULTING (P.) LTD [2017] 82 TAXMANN.COM 97 (MADRA S). IN THIS CASE NEITHER THE ASSESSE NOR THE DR COULD INFORM US WHEN THE COPIES OF STATEMENTS WERE SUPPLIED TO THE ASSESSE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE CASE SHOULD BE REMITTED BACK TO THE FILE OF THE A.O. TO GIVE SUFFICIENT OPPORTUNITY TO THE ASSE SSEE TO PROVE HIS CASE OF EXCESS PAYMENT AND THE CONTENTS RECORDED IN THE SEIZED MATERIAL WAS 12/12/2007 SY. BANK DD 27,86,900.00 REGISTRATION 2,65,200.00 COMMISSION 1,11,520.00 UDA PLAN 9,50,000.00 UDA LICENSE 10,000.00 BANK CHARGE+STAMP 6,515.00 CASH 1,95,00,000.00 2,36,30,135.00 ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 17 INCORRECT. THE ASSESSEE SHOULD PRODUCE MR. B. BABU JEE AND B. SRINIVAS WITH RELEVANT EVIDENCES TO PROVE THE HAND WRITING A ND EXPLAIN THE CONTENTS OF NOTING IN FULL. THE A.O. IS DIRECTED TO SUPPLY THE COPIES OF STATEMENTS RECORDED AND THE IMPOUNDED MATERIAL AND ALLOW THE ASSESSEE TO EXPLAIN THE CASE, AND ALSO EXAMINE BOTH MR. B. BABUJEE AND B. SRINIVAS IN DETAIL AND DECIDE THE ISSUE AFRESH O N MERITS. ACCORDINGLY THE ASSESSMENT IS SET ASIDE WITH DIRECTION TO RE DO THE SAME DE NOVO. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 14. IN VIEW OF THE PRECEDING PARAGRAPHS, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOS ES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 6 TH OCT17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-2(2), VIJAYAWADA 2. / THE RESPONDENT M/S. SRI SAI KRISHNA CONSTRUCTI ONS, D.NO.40-25-17/11, FF-3C, MARUTHI TOWERS, VIJAYAWADA 3. + / THE CIT, VIJAYAWADA ITA NO.220/VIZAG/2013 SRI SAI KRISHNA CONSTRUCTIONS, VIJAYAWADA 18 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM