M/s Ahura Holdings, Hyderabad V. DCIT, Hyderabad

ITA 363/HYD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6064 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-10-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 05-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Document seized; Block assessment; Documents seized
• Section: 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NOS.354 TO 357/HYD/2010 ASSESSMENT YEARS 2004-05, 2005-06, 2006-07 & 2007-0 8 SHRI GOPAL LAL BADRUKA, HYDERABAD. (PAN AFWPB 2297 R) VS DCIT, CENTRAL CIRCLE-2, HYDERABAD (APPELLANT) (RESPONDENT) ITA NOS.583 TO 585/HYD/2010 ASSESSMENT YEARS 2004-05, 2005-06 & 2006-07 THE DCIT, CENTRAL CIRCLE-2, HYDERABAD VS SHRI GOPAL LAL BADRUKA, HYDERABAD. (PAN AFWPB 2297 R) (APPELLANT) (RESPONDENT) ITA NOS.358 TO 361/HYD/2010 ASSESSMENT YEARS 2004-05, 2005-06, 2006-07 & 2007-0 8 SHRI AVADESH BADRUKA, HYDERABAD. (PAN AFWPB 2296 R) VS DCIT, CENTRAL CIRCLE-2, HYDERABAD (APPELLANT) (RESPONDENT) ITA NOS.580 TO 582/HYD/2010 ASSESSMENT 2004-05, 2005-06 & 2006-07 THE DCIT, CENTRAL CIRCLE-2, HYDERABAD VS SHRI AVADESH BADRUKA, HYDERABAD. (PAN AFWPB 2296` R) (APPELLANT) (RESPONDENT) ITA NOS.362 TO 366/HYD/2010 ASSESSMENT YEARS 2003-04, 2004-05, 2005-06, 2006-07 & 2007-08 M/S AHURA HOLDINGS, HYDERABAD (PAN AAJFA 0644 D) VS THE DCIT, CENTRAL CIRCLE-2, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.V. RAGHURAM RESPONDENT BY: SHRI V. SRINIVAS ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 2 2 O R D E R PER BENCH : THESE 19 APPEALS ARE DIRECTED AGAINST DIFFERENT OR DERS PASSED BY THE CIT(A)-I, HYDERABAD DATED 22-12-2009 AND THEY PERTA IN TO THE ASSESSMENT YEARS 2003-04, 2004-05, 2005-06, 2006-07 & 2007-08 . SINCE CERTAIN COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THEY ARE CLUB BED AND HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. NOW, FIRST WE WILL TAKE UP ASSESSEES APPEALS IN THE CASE OF M/S. AHURA HOLIDAYS FOR THE ASSESSMENT YEARS 2003-0 4 TO 2006-07, VIZ. ITA NO.362, 363, 364, 365 & 366/H/2010. ASSESSEES APPEALS: M/S. AHURA HOLDINGS : ASSESSMENT YEAR S 2003-04 ITA NOS.362 TO 366/HYD/2010 TO 2006-07 3. THE FIRST GROUND IN ITA NO.362/H/2010 IS WITH REGARD TO DISALLOWANCE OF LOSS CLAIMED AT RS.1,73,191/-. 4. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF REAL ESTATE. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE RESIDENTIAL CUM BUSINESS PREMISES OF SRI GO PAL LAL BADRUKA PARTNER OF THE ASSESSEE FIRM U/S 132 OF I.T ACT 19 61 ON 27-6-2006. IT WAS FOUND THAT THE ASSESSEE ACTIVELY ENGAGED IN DEVELOP ING A PROPERTY SITUATED AT NO. 205, TARBUND, SECUNDERABAD CANTONMENT AND TH EREAFTER ASSESSMENT WAS FRAMED U/S 153A OF ACT IN HANDS OF S RI GOPAL LAL BADRUKA IN WHOSE NAME WARRANT U/S 132 WAS ISSUED AND ALSO A SSESSMENT WAS FRAMED IN NAME OF THIS FIRM AND ALSO IN THE NAME OF OTHER PARTNER VIZ SRI AVADESH BADRUKA U/S 153C OF THE IT ACT AS ASSESSME NT OF INCOME OF ANY OTHER THAN THE PERSON REFERRED TO IN SECTION 153A O F THE I.T.ACT. THE ASSESSEE HEREIN FILED RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2003-2004 ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 3 3 ADMITTING A LOSS OF RS.1,73,191/-. THE ASSESSING O FFICER FOUND THAT THE DOCUMENTS SEIZED VIDE ANNEXURE/GLB/22B/2(PAGE NO.12 ) REVEAL THAT THE FIRM WAS REGISTERED IN THE YEAR 2003. THE COPY OF THE ACKNOWLEDGEMENT OF REGISTRATION ISSUED BY THE REGISTRAR OF FIRMS, GOVT . OF AP WAS FOUND AND SEIZED AS PART OF THIS ANNEXURE. SHRI GOPAL LAL BADRUKA, THE PARTNER OF THE FIRM HAD OBTAINED GPA TO DEVELOP A PROPERTY BEL ONGING TO MRS. SIMONIL NARGOLWALA AND MRS. FIRO COLAH SITUATED AT 205, TAR BUND, SECUNDERABAD CANTONMENT. THE LAYOUT WAS SANCTIONED IN FAVOUR OF SHRI GOPAL LAL BADRUKA IN THE CAPACITY OF GPA HOLDER FOR A PART OF THE LAND IN APRIL 2003. THE ASSESSING OFFICER AFTER ANALYZING SEIZED PAPERS WAS OF THE VIEW THAT THE ASSESSEE FIRM COMMENCED ITS BUSINESS ONLY IN THE FI NANCIAL YEAR 2003-04 RELEVANT ASSESSMENT YEAR 2004-05. ACCORDINGLY, THE EXPENDITURE OF RS.1,73,191/- THAT WAS INCURRED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04 SHOULD NOT BE ALLOWED AS A LOSS SINCE THE S AME IS TO BE CAPITALIZED OR HAS TO BE TREATED AS PRIOR PERIOD EXPENDITURE. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE LOSS CLAIMED AND A SSESSED THE INCOME AT RS. NIL. BEING AGGRIEVED AGAINST THE AFORESAID ASS ESSMENT ORDER, THE ASSESSEE HAS FILED APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THE MAIN CONTENTION OF THE ASSESSEES COUNSEL IS THAT THE EX PENDITURE IS DISALLOWED ON THE REASONING THAT BUSINESS OF THE ASSESSEE IS C OMMENCED ONLY IN THE FINANCIAL YEAR 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05 AND ACCORDING TO THE LEARNED AR THE BUSINESS IS SAID TO BE COMMEN CED AS SOON AS THE EXPENDITURE IS INCURRED AND ENTERING INTO GPA FOR D EVELOPMENT AGREEMENT IN APRIL, 2003 IS NOT RELEVANT TO DECIDE THE COMMEN CEMENT OF THE BUSINESS. THE LEARNED AR RELIED ON THE FOLLOWING JUDGEMENTS: 1. AGROCARGO TRANSPORT LTD. VS. CIT (MDS. HC) (224 ITR 90) ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 4 4 2. AAA FUN-N-FOOD (P) LTD. VS. JCIT (MP HC) (279 ITR 219) 3. CIT VS. GOVIND GRAH NIRMAN SAHAKARI SAMITI LT D. (258 ITR 208) RAJ. HC). 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDER OF THE CIT(A). IN THE PRESENT CASE, THE FIRM WAS GOT REGISTERED IN THE YEAR 2003 AND THE GPA AGREEMENT FOR DEVELOPMENT OF THE P ROPERTY WAS EXECUTED IN FAVOUR OF SHRI GOPAL LAL BHADRUKA , THE PARTNER OF THE FIRM TO DEVELOP A PROPERTY BELONGING TO MRS. SIMONIL NARGOL WALA AND MRS. FIROZ COLAH SITUATED AT 205, TARBUND , SECUNDERABAD CANTO NMENT. IN OUR OPINION, TO ALLOW ANY EXPENDITURE, IT IS NOT AD EQUATE JUST INCURRING OF THE EXPENDITURE. THE COMMENCEMENT AS WELL AS CARR YING ON OF THE BUSINESS BY THE ASSESSEE IS ESSENTIAL EVEN IN CASES WHERE THERE IS A DIRECT LINK BETWEEN THE LOSS INCURRED AND THE BUSINESS. IN ANY CASE, THE ASSESSEE HAS CARRIED ON BUSINESS OR NOT, MUST BE EXAMINED W ITH REFERENCE TO THE FACTS OF EACH CASE AND NO GENERALIZATION CAN BE MAD E. IN THE PRESENT CASE, THE LOWER AUTHORITY HAS GIVEN A FINDING THAT THE AS SESSEE HAS NOT COMMENCED AS WELL AS CARRIED ON THE BUSINESS DURING THE YEAR UNDER CONSIDERATION. AS SUCH, THIS EXPENDITURE CANNOT BE ALLOWED AS BUSINESS DEDUCTION. IN THE RESULT, ITA NO.362/H/2010 IS DIS MISSED. 7. THE NEXT COMMON GROUND IN ITA NOS.363 TO 366/H /2010 IS WITH REGARD TO ADDITION OF ON MONEY FOR ALL THE PLO TS AND ALSO ESTIMATING THE SAME IN THE RATIO AS IN THE OTHER PLOTS FOR WHI CH EVIDENCE IS FOUND WITHOUT APPRECIATING THE FACT THAT NO SUCH ON MONEY IS RECEIVED IN RESPECT OF OTHER PLOTS AND TREATMENT OF ENTIRE ON MONEY REC EIPT AS INCOME WITHOUT GIVING DEDUCTION TOWARDS EXPENSES INSTEAD OF TREATI NG THE ONLY PROFIT PORTION ON SUCH UNRECORDED RECEIPTS. ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 5 5 8. BRIEF FACTS OF THE ISSUE ARE THAT THE FIRM IS ENGAGED IN THE BUSINESS OF REAL ESTATE. A SEARCH AND SEIZURE OPER ATION WAS CONDUCTED AT THE PREMISES OF THE PARTNER OF THE ASSESSEE, NAMELY , SHRI GOPAL LAL BADRUKA UNDER S.132 OF THE ACT ON 26.7.2006 AND 27. 7.2006. CONSEQUENTLY, ASSESSMENTS WERE FRAMED IN THE CASE OF THE PARTNER SHRI GOPAL LAL ON PROTECTIVE BASIS UNDER NOTICE U/S 153A OF THE IT ACT AND ASSESSMENTS WERE FRAMED UNDER S.153C OF THE ACT IN THE CASE OF THE OTHER PARTNER, SHRI AVADESH BADRUKA. FURTHER, NOTICE UN DER S.153C WAS ISSUED TO THE FIRM, M/S. AHURA HOLDINGS. IN RESPONSE TO T HE SAID NOTICE THE ASSESSEE-FIRM FILED THE RETURNS OF INCOME FOR THE Y EARS UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND THAT THE DOCUMENT SEIZE D VIDE ANNEXURE A/GLB/22B(PAGE NO.12) REVEALS THAT THE FIRM WAS REG ISTERED IN THE YEAR 2003. SHRI GOPAL L. BHADRUKA, THE PARTNER OF THE F IRM HAD OBTAINED GPA TO DEVELOP A PROPERTY BELONGING TO MRS. SIMONIL NA RGOLWALA AND MRS. FIROZ COLAH SITUATED AT 205, TARBUND, SECUNDERABAD CANTON MENT. THE LAYOUT WAS SANCTIONED IN FAVOUR OF SHRI G.L. BADRUKA IN TH E CAPACITY OF GPA HOLDER FOR A PART OF THE LAND IN APRIL, 2003. THE TOTAL LAND AVAILABLE FOR SALE WAS 16803.39 SQ. YARDS WHICH WAS SOLD BY THE A SSESSEE FIRM M/S AHURA HOLDINGS IN VARIOUS FINANCIAL YEARS COMMENCIN G FROM 2003-04 AFTER DEVELOPING THE SAID LAND INTO 32 PLOTS. THE REAR S IDE OF THE LAND WAS DEVELOPED AS A LAYOUT AFTER OBTAINING NECESSARY PER MISSION FROM MINISTRY OF DEFENCE AND THE SAID LAYOUT CONSISTED OF 16 PLOT S. 9. IN THE ASSESSMENT YEAR 2004-05, THE ASSESSEE H AD ADMITTED A TOTAL INCOME OF RS.2,11,91,490/- IN THE RETURN. AS PER THE TRADING AND P&L ACCOUNT, THE NET PROFIT FROM THE LAND TRANSACTI ON FOR THE YEAR WAS RS.2,13,64,681/- WHICH WAS ARRIVED AS BELOW: ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 6 6 RS. RS. OPENING STOCK NIL COST OF LAND RS.2,00,000 SALE LAY OUT PLOT OPEN PLOT 1,51,97,088,60 1,98,98,937.00 DEVELOPMENT EXPENSES 42,27,650.98 CLOSING STOCK 16,71,438.47 OTHER EXPENSE 1,09,75,132.00 NET PROFIT 2,13,64,681.00 THE ASSESSING OFFICER HAS GIVEN THE DETAILS OF THE PLOTS SOLD DURING THE FINANCIAL YEAR 2003-04 TO 2006-07 AS PER THE TABLES BELOW: FINANCIAL YEAR 2003-04 S.NO. PLOT NO. AREA (IN SQ.Y.) PURCHASER DATE OF SALE DEED DOC.NO./ AMOUNT AS PER SALE DEED 1 1&2 1619.05 M. SURANA 16.6.2003 1024/03 4209530 2 3&4 1598.35 D.SURANA 17.7.2003 717/2003 4155580 3 5 482 P.D. PULLA 29.8.2003 1460/03 1301400 4 6 25.8 SITARAMA RAJU 30.1.2004 155/04 107640 5 7 331.76 AG KUMARASWAMY 26.5.2003 922/03 862578 6 8 300 K RAMESH 14.5.2003 847/03 750000 7 9 300 A. SRINIVAS 14.5.2003 846/03 750000 8 10/PART 166.66 PS REDDY 9.7.2003 1137/03 417000 9 10/PART & 11 166.66 GS REDDY 9.7.2003 1138/03 417000 10 11/PART 166.66 G. G. REDDY 9.7.2003 1139/03 4170 00 11 12 250 MS. NS REDDY 29.8.2003 144/03 625000 12 13PART A 13 PART B 189.91 133 MS.GOPAMMA MS.K. GOPAMMA 23.2.2003 8.3.2004 276/04 357/04 760000 532000 TOTAL 15304728 13 205 OPEN 586.66 GV B RAO 19.2.2004 256/2004 26399 70 14 205 OPEN 586.66 G. PAWAN 19.2.2004 257/2004 263 9970 15 205 OPEN 171.11 GV BHASKARA RAO 19.2.2004 258/2004 769995 16 205 OPEN 493.33 MS.U/L. SANGHANI 11.3.2004 378/04 19223962 17 205 OPEN 538.33 KB R KUMAR 23.10.2003 1763/03 1901000 18 205 OPEN 427.50 SANJEEVITHA & AJAY HARINATH 3.2.2004 159/04 2170000 19 205 OPEN 513.00 MAJ.K. VIVEK 7.1.2004 22/04 22340 40 20 205 OPEN 1405.00 RK JAIN - 5620000 TOTAL 21822899 ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 7 7 FINANCIAL YEAR 2004-05 SL.NO. PLOT NO AREA(SQ.YD.) PURCHASER DATE OF DEED DOC.NO. AMOUNT AS PER SALE DEED 21 OPEN PLOT 242.47 SMT.M.V. LAKSHMI & M PHANIKUMAR 15.10.04 2052/04 970000 22 OPEN PLOT 85.56 SANDEEP SONI & SANDESH SONI 27.10.04 2094/04 385020 23 OPEN PLOT 586.66 SANDEEP SONI & SANDESH SONI 27.10.04 2093/04 2639970 24 OPEN PLOT 1119.33 SMT. KOKILABEN J KADAKIA 7.2.05 193/05 5400000 25 OPEN PLOT 324 MK VIVEK 24.5.04 1187/04 1342980 26 OPEN PLOT 720 T.ANAND SINGH 20.1.05 79/05 3240000 27 OPEN PLOT 693 SMT.MAHATHI SINGH 20.1.05 78/05 3118500 28 OPEN PLOT 85.33 SMT.U.L. SANGHANI 22.2.05 302/05 384000 TOTAL 3856.35 17480470 FINANCIAL YEAR 2005-06 29 OPEN PLOT 586.26 SMT.SUBHADRA 7.10.05 1596/05 29 30000 30 OPEN PLOT 166.04 MS.P. INDIRA 19.10.05 1640/05 8 25000 3755000 FINANCIAL YEAR 2006-07 31 OPEN PLOT 1640.44 M.SANDHYA RANI & M SUBRAMANYAM 13.7.2006 1431/06 12467344 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A NUMBER OF OPPORTUNITIES HAD BEEN AFFORDED BY THE ASSESSING OF FICER TO THE ASSESSEE BUT THE ASSESSEE SOUGHT ADJOURNMENTS TIME AND AGAIN AND FAILED TO FURNISH THE DETAILS CALLED FOR. ACCORDINGLY, THE A SSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT BASED ON THE EVIDENCES F OUND AND SEIZED DURING THE SEARCH AND SEIZURE, INFORMATION GATHERED IN COURSE OF POST SEARCH INVESTIGATIONS AND IN COURSE OF THE ASSESSME NT PROCEEDINGS AS ALSO ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 8 8 STATEMENTS RECORDED DURING THE SEARCH, POST SEARCH AND ASSESSMENT PROCEEDING AND COMPLETED THE ASSESSMENTS. WHILE DO ING SO, AFTER DETAIL ANALYSIS THE ASSESSING OFFICER MADE THE FOLLOWING A DDITIONS TO THE RETURNED INCOME OF THE ASSESSMENT YEAR 2003-04. 1. EXPENDITURE NOT SUPPORTED BY ANY PROOF RS.1,46,94 ,901 2. SUPPRESSION OF SALE RECEIPTS ON LAND SALE RS.7,01 ,23,094 11. AT THE SAME TIME THE ASSESSING OFFICER ADDED BACK THE BUSINESS LOSS WHICH WAS SET OFF BY THE ASSESSEE WHI LE FILING THE RETURN OF INCOME SINCE THE BUSINESS LOSS CLAIMED FOR THE ASSE SSMENT YEARS 2003-04 WAS DISALLOWED IN THE SAID ASSESSMENT PROCEEDINGS. THUS, THE TOTAL INCOME ASSESSED FOR ASSESSMENT YEARS 2004-05 TO 200 7-08 AS FOLLOWS- ASSESSMENT YEAR 2004-05 RS.10,61,82,676 ASSESSMENT YEAR 2005-06 RS. 4,63,83,800 ASSESSMENT YEAR 2006-07 RS. 99,08,94 0 ASSESSMENT YEAR 2007-08 RS. 3,32,39,00 0 12. BEING AGGRIEVED AGAINST THE AFORESAID ASSESSM ENTS, THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) WHO HAS AGREE D WITH THE ORDER OF ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005-06, 2006-07 AND 2007-08. HOWEVER, HE HAS GIVEN PARTIAL RELIEF FOR THE ASSESS MENT YEAR 2004-05. WHILE GIVING THE PARTIAL RELIEF, IN CASE OF LAYOUT PLOTS THE CIT(A)CONSIDERED THE RATIO OF UNACCOUNTED RECEIPTS TO ACCOUNTED RECE IPTS AT 1.80: 1 AND DETERMINED THE UNACCOUNTED RECEIPTS IN RESPECT OF LAYOUT PLOTS AT RS. 2,48,48,523/- AS BELOW: ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 9 9 NAME OF THE PURCHASER AMOUNT AS PER SALE DEED (RS.) ESTIMATED UNACCOUNTED RECEIPTS (RS.) DEVENDER SURANA 4155580 7480044 MANISH SURANA 4209530 7577154 A.GAURI KUMARASWAMY 862579 1552642 P.SATYAJIT REDDY 417000 750600 GOVARDHAN REDDY 417000 750600 SUKESH REDDY 417000 750600 SAILAJA REDDY 625000 1125000 PAUL D.P. 1301400 2342520 V.SITARAMA RAJU 107646 1368000 GOPAMMA 760000 1368000 GOPAMMA 532000 957600 TOTAL 13804735 24848523 13. FURTHER, WITH REGARD TO OPEN PLOTS, EVIDENCE REVEALING UNACCOUNTED MONEY IN THE FORM OF SEIZED DOCUMENTS I S AVAILABLE IN RESPECT OF 2 PLOTS IN CASE OF K.B.RAMESH KUMAR AND SRI RAJ KUMAR JAIN. IN THIS CASE, SEIZED DOCUMENTS A/GLV/684/A/1(PAGE NO. 194 T O 205) IS AN AGREEMENT BETWEEN THE ASSESSEE AND SRI RAJ KUMAR J AIN FOR PURCHASE OF OPEN PLOT NO. 205/10 MEASURING 1521 SQ.YD AT 11,750 PER SQ. YD. THE ACTUAL SALE CONSIDERATION WORKED OUT TO RS. 1,79,65 ,750/- AS AGAINST THE REGISTERED VALUE OF RS. 56,20,000. THUS 1405 SQ. YD WAS TRANSFERRED FOR A TOTAL CONSIDERATION OF RS. 1,65,08,750/- RESULTING IN A SUPPRESSION OF RS.1,08,88,750/-. SIMILARLY IN CASE OF K.B.RAMESH K UMAR A MONEY RECEIPT WAS FOUND IN THE SEIZED DOCUMENT VIZ A/GLB/684/A/2 (PAGE NO.22 TO 24) WHERE THE SALE CONSIDERATION FOR PLOT BEARING NO. 2 05/03 WAS SHOWN AT RS. 63,00,000/- WHEREAS THE PLOT WAS ACTUALLY REGISTERE D FOR RS.19,01,000/-. THE RECEIPT INDICATES THAT THE ASSESSEE HAD ACTUALL Y RECEIVED APPROXIMATELY RS. 11,250/- PER SQ. YARD WHEREAS IT WAS REGISTERED AT RS. 3530/- PER SQ. YARD. THIS PLOT WAS REGISTERED IN OCTOBER 2003. THE OTHER POTS IN THE OPEN PLOT SCHEME SOLD DURING THE YEAR WERE REGISTERED MU CH AFTER THE ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 10 10 TRANSACTION OF SRI K.B. RAMESH KUMAR. ACCORDINGLY, THE UNACCOUNTED RECEIPT IN RESPECT OF PLOT WHERE NO SPECIFIC EVIDEN CE HAS BEEN FOUND WAS AS UNDER: NAME OF THE PURCHASER AMOUNT AS PER SALE DEED (RS.) ESTIMATED UNACCOUNTED RECEIPTS (RS.) G.V.BHASKAR RAO (1 ST PLOT) 769995 1539990 USHA SANGHANI 1923962 3847924 SANJEEVITHA 2170000 4340000 G.PAVAN 2639970 5279940 G.V.BHASKAR RAO (2 ND PLOT) 2639970 5279940 MAJOR VIVEK 2234040 4468060 TOTAL 12377937 24755874 HOWEVER, THE UNACCOUNTED RECEIPTS AS ABOVE DO NOT I NCLUDE ON MONEY RECEIPTS WHERE SPECIFIC EVIDENCE WERE FOUND DURING THE SEARCH AND ALSO ADMITTED BY THE ASSESSEE HAS BEEN DETERMINED AS BEL OW: SL. NO. NAME OF THE PURCHASER ACTUAL SALE PRICE AS PER THE SEIZED DOCUMENT QUANTIFIED RS. SALE PRICE AS PER THE REGISTERED SALE DEED RS. ON MONEY CONSIDERATION RS. 1. AKULA SRINIVAS 2100000 750000 1350000 2. KANDAY RAMESH 2100000 750000 1350000 3. K.B.RAMESH KUMAR 6070000 1901000 4169000 4. RAJ KUMAR JAIN 16508750 5620000 10888750 26778750 9021000 17757750 AS AGAINST RS. 7,01,23,094 DETERMINED BY THE ASSESS ING OFFICER AS UNACCOUNTED INCOME BY WAY OF ON-MONEY, THE CIT(A) ESTIMATED THE UNACCOUNTED RECEIPTS ON ACCOUNT OF ON-MONEY IN RESP ECT OF PLOTS SOLD DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 2004-05 AT RS.6,73,62,147 AS UNDER- ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 11 11 RS. A) UNACCOUNTED RECEIPTS ON LAYOUT PLOTS 2,48,48,523/- B) UNACCOUNTED RECEIPTS ON OPEN PLOTS 2,47,55,874/- C) UNACCOUNTED RECEIPTS AS PER DOCUMENTARY EVIDENCE 1,77,57,750/- TOTAL 6,73,62,147/- FOR THE OTHER ASSESSMENT YEARS UNDER APPEAL, THE UN ACCOUNTED ON-MONEY DETERMINED BY THE ASSESSING OFFICER, WHICH IS CONFI RMED BY THE CIT(A) AS FOLLOWS- FOR THE A.Y 2005-2006 A) UNACCOUNTED RECEIPTS ON OPEN PLOTS 1,14,43,940/- B)UNACCOUNTED RECEIPTS AS PER DOCUMENTARY EVIDENCE 2,03,44,400/- TOTAL 3,17,88,340/- FOR THE A.Y 2006-07 UNACCOUNTED RECEIPTS AS PER DOCUMENTARY EVIDENCE 68,45,000 TOTAL 68,45,00 0 FOR THE A.Y 2007-2008 UNACCOUNTED RECEIPTS AS PER DOCUMENTARY EVIDENCE 2,18,32,656 TOTAL 2,18 ,32,656 AGGRIEVED BY THE ORDERS OF THE CIT(A), , ASSESSEE PREFERRED THESE APPEALS BEFORE US. 14. THE LEARNED AR SUBMITTED THAT THERE IS EVIDEN CE IN RESPECT OF RECEIPT OF ON MONEY ON 8 PLOTS, OUT OF BUYERS OF 8 PLOTS, THREE PERSONS ADMITTED THE PAYMENT OF ON- MONEY, 5 PERSONS DENIED THE SAME AND THERE IS NO EVIDENCE FOR RECEIPT OF ON MONEY RELATING TO OTHER 24 PLOTS. NO SEIZED ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 12 12 MATERIALS WERE FOUND FOR THE RECEIPT OF THE ON MONE Y ON 24 PLOTS. NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO CROSS EXAMINE THE BUYERS WHO HAVE CONFIRMED THE PAYMENT OF ON MONEY. NO COR RESPONDING ASSETS WERE FOUND FOR THE INVESTMENT OF ON MONEY RECEIPTS. THE SWORN STATEMENT WAS RECORDED U/S 131 OF THE ACT ON 7.11.2008, 14.11 .2008 AND 21.11.2008 AFTER A LONG TIME OF THE SEARCH ACTION W HICH WAS TOOK PLACE ON 26.7.2006 AND 27.7.2006. ACCORDING TO LEARNED AR, THE STATEMENT RECORDED U/S 131 OF THE ACT HAS NO EVIDENTIAL VALUE . FURTHER, THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT THE EN TIRE ON MONEY RECEIPT CANNOT BE CONSIDERED IN THE HANDS OF THE FIRM AND T HE FIRM HAS NOTHING TO DO WITH THE SAME AND THAT ONLY THE PARTNERS SHRI GO PAL LAL BADRUKA AND SHRI AVADESH BADRUKA WERE RECEIVED THE ON MONEY AND THE SAME WAS OFFERED TO TAX IN THEIR INDIVIDUAL HANDS. MORE SO, OTHER PARTNERS DISOWNED THE RECEIPT OF THIS ON MONEY BY THE FIRM AND THEY H AVE FILED CONFIRMATION TO THAT EFFECT. EVEN, IT WAS STATED BY THE PARTNERS S HRI GOPAL LAL BHADRUKA IN HIS STATEMENT RECORDED U/S 132(4) THAT THE UNRECOR DED RECEIPTS AND THE INCOME FOR THE SAME BELONG TO HIM AND TO HIS SON AN D NOT TO THE PARTNERSHIP FIRM. WITHOUT PREJUDICE TO THE ABOVE A RGUMENTS, THE LEARNED AR SUBMITTED THAT THE ENTIRE ON MONEY CANNOT BE CON SIDERED AS INCOME IN THE HANDS OF THE ASSESSEE-FIRM. FURTHER, THERE IS NO EVIDENCE OR SEIZED MATERIAL REGARDING THE RECEIPT OF ON MONEY IN RESPE CT OF ALL PLOTS AND THERE IS ONLY EVIDENCE/SEIZED MATERIAL IN RESPECT OF ONLY 8 PLOTS OUT OF 32 PLOTS. ACCORDING TO HIM, THE ASSESSING OFFICER IS NOT JUST IFIED IN ESTIMATING RECEIPT OF ON MONEY IN RESPECT OF ALL PLOTS. HE SUBMITTED T HAT THE ASSESSING OFFICER WRONGLY ESTIMATED THE UNRECORDED SALE CONSIDERATION WITHOUT REFERRING TO ANY SEIZED MATERIAL. ACCORDING TO LEARNED AR, SOME OF THE BUYERS DENIED THE PAYMENT OF ON MONEY AND THE PAYMENT OF ON MONEY CANNOT BE UNIFORM TO ALL PLOTS AND IT CHANGES FROM PLOT TO PLOT DEPEN DING UPON MARKETING CONDITIONS. HE SUBMITTED THAT THE RELIANCE PLACED BY ASSESSING OFFICER ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT VS. H.M. ESUFALI H.M. ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 13 13 ABDULALI (90 ITR 271) (SC) IS MISPLACED. FURTHER, HE SUBMITTED THAT THE NET WORTH METHOD OF DETERMINATION OF UNDISCLOSED TO BE CONSIDERED IN THE ABSENCE OF PROPER MAINTENANCE OF BOOKS OF ACCOUNT O N THE BASIS OF WHICH PROFITS OF THE ASSESSEE CAN BE DETERMINED. FOR THI S PURPOSE, HE RELIED ON THE ORDER OF THE VISAKHAPATNAM BENCH OF THE TRIBUNA L IN THE CASE OF K.V. SRINIVASA RAO & ORS. VS. ACIT (125 TTJ 560). 15. ON THE OTHER HAND, THE DR SUBMITTED THAT THE ASSESSEE SOLD 32 PLOTS DURING THE BLOCK PERIOD AND THERE IS DIREC T EVIDENCE IN RESPECT OF RECEIPT OF ON MONEY IN CASE OF 8 PLOTS AND IT IS IR RELEVANT AS TO HOW MANY PARTIES HAVE CONFIRMED THE PAYMENT OF ON MONEY. TH E STATEMENT RECORDED FROM THE MANAGING PARTNER SHOWS THAT THE ASSESSEE H AS RECEIVED ON MONEY WITH REFERENCE TO ALL PLOTS AND THE SWORN STATEMENT IS NOT GIVEN BY THE PARTNER UNDER DURESS AND NO COERCION WAS EXERTED ON THE MANAGING PARTNER WHILE RECORDING HIS STATEMENT. HE DREW OUR ATTENTION TO THE SWORN STATEMENT OF SHRI GOPAL LAL BADRUKA RECORDED U/S 131 OF THE ACT ON 7.11.2008 SPECIFICALLY TO THE QUESTION NOS.11, 2 6 & 28 WHEREIN THE MANAGING PARTNER HAS CONFIRMED THE RECEIPT OF ON MO NEY ON MORE THAN ONE OCCASION. THE DEVELOPMENT ACTIVITIES ON LAND WERE CARRIED BY THE FIRM ONLY AND NOT BY PARTNERS. THE PARTNERS HAVE NOTHING TO DO WITH THE RECEIPT OF THE ON MONEY. THE REAL ESTATE BUSINESS WAS CARRIED ON BY THE FIRM AND NOT BY THE PARTNERS. WHEN THE REGULAR INCOME GENERATED FROM THE BUSINESS IS SHOWN IN THE HANDS OF THE FIRM, ON SAME LOGIC THE U NDISCLOSED INCOME ALSO TO BE BROUGHT TO TAX IN THE HANDS OF FIRM ONLY. HE SUBMITTED THAT THERE IS A SUPPRESSION OF INCOME BY THE ASSESSEE. WHEN THE ME THODOLOGY OF SUPPRESSION HAS BEEN IDENTIFIED AND THE PARTNER ALS O HAS ACCEPTED THE SUPPRESSION, THERE IS NO QUESTION OF CONFINING THE DETERMINATION OF THE INCOME BY WAY OF ON-MONEY ONLY TO THE EXTENT OF EVI DENCE FOUND DURING THE COURSE OF SEARCH, AND BASED ON SUCH MATERIAL EVIDEN CE ON RECORD, RECEIPT OF ON MONEY HAS TO BE DETERMINED BY INTERPOLATING T O ALL THE TRANSACTIONS ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 14 14 RELATING TO 32 PLOTS. THE UNDISCLOSED INCOME CANNO T BE DETERMINED ON THE BASIS OF INVESTMENT, SINCE THERE IS NO NECESSITY OF UNEARTHING ALL THE INVESTMENTS OR UNRECORDED ASSETS DURING THE COURSE OF SEARCH ACTION. ENTIRE UNRECORDED INCOME MAY NOT RESULT IN THE MAKI NG OF INVESTMENTS BY THE ASSESSEE. NEXUS OF INCOME WITH THE ASSETS NEED NOT BE PROVED BY THE DEPARTMENT, WHILE DETERMINING THE UNDISCLOSED INCOM E. AS FOR THE ALLOWABILITY OF EXPENSES OUT OF SUCH UNDISCLOSED IN COME, HE SUBMITTED THAT THERE IS NO EVIDENCE FOR INCURRING OF EXPENDITURE. REGARDING ASSESSMENT OF UNDISCLOSED INCOME IN THE HANDS OF THE PARTNERS INS TEAD OF FIRM, HE SUBMITTED THAT THE FIRM IS CARRIED ON THE BUSINESS AND NOT THE PARTNERS AND THE LAND IS ALSO POSSESSED BY THE FIRM WHICH IS EVIDENT FROM THE AGREEMENT FOR SALE WHICH IS PLACED ON RECORD IN PB NO.1 AT PAGE NOS. 32 TO 47. FURTHER THE LEARNED DR RELIED ON THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF RAJNIK & CO., VS. ACIT (251 ITR 561) (AP HC) AND IN THE CASE OF CIT VS. H.M. ESUFALI H.M. ABDULALI (90 ITR 271) (SC). 16. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE . THE FIRST CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE IS THAT FOR THE PURPOSE OF COMPUTING THE INCOME UNDER SECTION 153A/153C OF THE I T ACT, THE ASSESSING OFFICER HAS TO CONFINE ONLY TO THE INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIONS. LET US NOW EXAMINE WHETHER THE ASSESSING OFFICER HAS TO CONFINE HIMSELF TO THE INC RIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION FOR THE PURPO SE OF COMPUTING THE INCOME UNDER SECTION 153A/C OF THE I T ACT. WE HAVE CAREFULLY GONE THROUGH THE SECTION 153A/C OF THE I T ACT. SECTION 153A IS INCORPORATED IN THE STATUTE BOOK BY FINANCE ACT, 2003 W E F 1-6-200 3. THIS SECTION VIZ., SECTION 153A IS APPLICABLE IN RESPECT SEARCH CONDUC TED ON OR AFTER 1-6- 2003 AND S.153C OF THE ACT IS APPLICABLE IN THE CAS ES OF ASSESSMENT OF PERSONS, OTHER THAN THE SEARCHED PARTY, AS IN THE C ASE OF THE ASSESSEE FIRM. ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 15 15 BY THE VERY SAME FINANCE ACT, 2003 THE LEGISLATURE INCORPORATED SECTION 158BI OF THE ACT WHICH READS AS FOLLOWS:- THE PROVISIONS OF THIS CHAPTER SHALL NOT APPLY WHER E A SEARCH IS INITIATED UNDER SECTION 132, OR BOOKS OF ACCOUNT, O THER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFT ER THE 31 ST DAY OF MAY, 2003. IN VIEW OF SECTION 158BI, IT IS VERY CLEAR THAT CHA PTER XIVB WHICH PRESCRIBES SPECIAL PROVISION FOR ASSESSING OF INCOM E IN SEARCH CASES IS NOT APPLICABLE IN RESPECT OF CASES WHERE SEARCH WAS INI TIATED ON AND FROM 1ST JUNE, 2003. IN THE CASE BEFORE US ADMITTEDLY THE S EARCH WAS CONDUCTED ON 26TH JULY, 2006 AND 27 TH JULY, 2006 AT THE RESIDENTIAL AND BUSINESS PREMISES OF SHRI GOPAL LAL BADRUKA UNDER S.132 OF T HE ACT. THEREFORE THE PROVISIONS OF CHAPTER XIV B ARE NOT APPLICABLE TO T HE PRESENT ASSESSEE. IN OTHER WORDS THE INCOME HAS TO BE COMPUTED UNDER SEC TION 153A/153C WHICH FALLS UNDER CHAPTER XIV OF THE I T ACT. THER EFORE, S.158 BB(1) WHICH FALLS IN CHAPTER XIV B IS NOT APPLICABLE TO T HE FACTS OF THE PRESENT CASE. 17. NOW COMING TO THE CONTENTION OF THE ASSESSEE THAT THE INCOME UNDER SECTION 153A/153C HAS TO BE COMPUTED ONLY ON THE BASIS OF THE SEARCH MATERIAL, IN OUR OPINION, THIS CONTENTION OF THE ASSESSEE IS MISCONSTRUED. SECTION 158BB IN CHAPTER XIV B PROVI DES PROCEDURE FOR COMPUTATION OF UNDISCLOSED INCOME IN RESPECT OF SEA RCHES CARRIED OUT TILL 31-5-2003. IN VIEW OF THIS SPECIFIC PROVISION IN S ECTION 158BB(1) THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE COM PUTED ON THE BASIS OF THE EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISI TION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIAL OR INFOR MATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABL E TO SUCH EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. LEGISLATURE BY FINANCE ACT, 2003 W.E.F. 1-6-2003 SPECIFICALLY EXCLUDED THE OPERATION OF SECTION 158BB (1) IN ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 16 16 RESPECT OF SEARCHES INITIATED ON AND AFTER 1-6-2003 . THIS IS EXPLICITLY MADE CLEAR BY INCORPORATING SECTION 158BI W.E.F. 1-6-200 3. IN VIEW OF THIS, IN OUR OPINION, THE PROVISIONS OF SECTION 158BB (1) WH ICH REQUIRES THE ASSESSING OFFICER TO COMPUTE THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD ON THE BASIS OF THE MATERIAL FOUND DURING THE COURS E OF SEARCH OPERATION AND THE INFORMATION WHICH ARE RELATABLE TO THE MATE RIAL FOUND DURING THE COURSE OF SEARCH OPERATION IS NOT APPLICABLE TO THE CASES WHERE THE SEARCH WAS INITIATED ON AND AFTER 1-6-2003. IN THE CASE B EFORE US ADMITTEDLY THE SEARCH WAS CONDUCTED ON 26-7-2006 AND 27-7-2006, AN D THEREFORE, THE PROVISION OF SECTION 158BB(1) IS NOT APPLICABLE. IN OTHER WORDS, THE ASSESSING OFFICER IS NOT REQUIRED TO CONFINE HIMSEL F TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION OR THE INFORM ATION WHICH IS RELATABLE TO THE SEARCH MATERIAL. IN OUR OPINION, THE ASSESS ING OFFICER IS WELL WITHIN HIS POWERS TO COMPUTE THE TAXABLE INCOME ON THE BAS IS OF THE MATERIAL ON RECORD EVEN THOUGH SUCH MATERIAL WAS NOT FOUND DURI NG THE COURSE OF SEARCH OPERATION. IN VIEW OF THE ABOVE, WE ARE UNA BLE TO FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE INCOME UNDE R SECTION 153A/153C HAS TO BE COMPUTED ONLY ON THE BASIS OF THE MATERIA L FOUND DURING THE COURSE OF SEARCH OPERATION. IN OTHER WORDS, IT IS N OT NECESSARY FOR THE ASSESSING OFFICER TO CONFINE HIMSELF ONLY TO THE MA TERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE ASSESSING OFFICER CAN ALSO PLACE RELIANCE ON ALL MATERIAL AVAILABLE EVEN THOUGH IT IS NOT FOU ND DURING THE COURSE OF SEARCH OPERATIONS. 18. FOR THE PURPOSE OF MAKING ADDITION, THE ASSESS ING OFFICER CONSIDERED THE AVAILABLE SEIZED MATERIAL, BUYERS S TATEMENTS AND PARTNER S STATEMENTS WHICH ARE AVAILABLE ON RECORD AND THESE STATEMENTS CLEARLY SHOW THAT THE ASSESSEE HAS ALSO EARNED INCOME BY ME ANS OF ON MONEY ON SALE OF PLOTS AND ASSESSING OFFICER HAS RELIED ON T HE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF RAJNIK & CO., VS. ACIT (251 ITR ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 17 17 561) (AP ) AND ALSO THE JUDGMENT OF THE SUPREME COU RT IN THE CASE OF CIT VS. H.M. ESUFALI H.M. ABDULALI (90 ITR 271) (SC). I N THE CASE OF RAJNIK & COMPANY, THE REVENUE FOUND MATERIAL RELATING TO SUP PRESSION OF SALES FOR THE FINANCIAL YEAR 1995-96 AND 1996-97 AND 1997-98. DURING THE COURSE OF SEARCH OPERATION, ONE OF THE PARTNERS ADMITTED T HAT THE ASSESSEE HAD PRACTICED SUPPRESSION OF SALES TURNOVER FOR ALL THE ASSESSMENT YEARS WHICH FALL IN THE BLOCK PERIOD. IN THESE CIRCUMSTANCES, THE HONBLE HIGH COURT FOUND THAT THE EVIDENCE OF THE PARTNER CLEARLY SHOW S THAT THE FIRM HAS SUPPRESSED TURNOVER EVEN FOR THE OTHER YEARS, THE A DDITION MADE BY THE LOWER AUTHORITIES WAS CONFIRMED BY THE HIGH COURT. IN THE CASE OF CIT VS. H.M. ESUFALI H.M. ABDULALI, CITED SUPRA, IT WAS HEL D THAT IN ESTIMATING ANY ESCAPED TURNOVER, IT IS INEVITABLE THAT THERE IS SO ME GUESS-WORK. THE ASSESSING OFFICER WHILE MAKING THE BEST JUDGMENT AS SESSMENT, NO DOUBT, SHOULD ARRIVE AT HIS CONCLUSION WITHOUT ANY BIAS AN D ON A RATIONAL BASIS. THAT AUTHORITY SHOULD NOT BE VINDICTIVE OR CAPRICIO US. IF THE ESTIMATE MADE BY THE ASSESSING AUTHORITY IS A BONA FIDE ESTIMATE AND IS BASED ON A RATIONAL BASIS, THE FACT THAT THERE IS NO GOOD PROO F IN SUPPORT OF THAT ESTIMATE IS IMMATERIAL. PRIMA FACIE, THE ASSESSING AUTHORITY IS THE BEST JUDGE OF THE SITUATION. IT IS HIS BEST JUDGMENT AN D NOT ANY ONE ELSES. 19. IN VIEW OF THE ABOVE JUDGMENTS, IN OUR OPINION , THE ASSESSING OFFICER WAS WELL WITHIN HIS POWERS IN INTERPOLATING THE RECEIPT OF ON MONEY ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD, E VEN IN RESPECT OF OTHER TRANSACTIONS FOR WHICH NO DIRECT MATERIAL WAS FOUND AT THE TIME OF SEARCH. 20. THE NEXT CONTENTION OF THE LEARNED CO UNSEL FOR THE ASSESSEE IS THAT THE STATEMENTS OF MANAGING PARTNERS WERE TAKE N UNDER COERCION AND MADE TO ACCEPT THE SAME AND IT WAS STATED THAT THE STATEMENTS WERE RECORDED FROM BUYERS WHEREIN SOME OF THE BUYERS HAV E DENIED THAT THEY HAVE PAID ANY EXTRA CONSIDERATION. IN FACT, SOME O F THE BUYERS HAVE ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 18 18 FURNISHED THE DETAILS OF THE ON MONEY PAID AND SOUR CES THEREOF AND THEY HAVE SUBSEQUENTLY REVISED THEIR RETURN OF INCOME. N O EVIDENCE AS TO THE EXERTION COERCION BY THE DEPARTMENT AT THE TIME OF RECORDING THE STATEMENTS OF THE ASSESSEES PARTNER WAS BROUGHT ON RECORD BY THE LEARNED COUNSEL FOR THE ASSESSEE. SAME IS THE POSITION EV EN WITH REGARD TO THE ALLEGATION THAT THE ASSESSEES PARTNER WAS UNDER DU RESS WHILE THE STATEMENT WAS RECORDED FROM HIM. FURTHER, GRIEVANC E OF THE ASSESSEE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, IS THAT THE ESTIMATION OF UNRECORDED CONSIDERATION CANNOT BE MADE UNIFORMLY S INCE THE PRICE OF THE PLOT DIFFERS FROM YEAR TO YEAR DEPENDING ON THE MAR KET CONDITIONS. IN OUR OPINION, PLOTS ARE SITUATED AT THE SAME LOCATION HA VING SAME FACILITIES AND AMENITIES AND THE PLOT PRICE IN ALL PRACTICAL PURPO SES WILL GO ON INCREASING FROM YEAR TO YEAR INSTEAD OF DECREASING. FURTHER, IT WAS CATEGORICALLY ADMITTED BY THE PARTNER THAT ON MONEY WAS RECEIVED ON ALL PLOTS AND ALSO IT WAS STATED THAT HOW THE ON MONEY WAS SPENT BY THE A SSESSEE. ACCORDING TO THE PARTNER OF THE ASSESSEE FIRM, THE UNDISCLOSE D INCOME GENERATED OUT OF SALE OF PLOTS WAS MADE FOR INVESTMENT IN ACQUISI TION OF FOLLOWING PROPERTIES: I) HOUSE PROPERTY OWNED BY GOPAL LAL BADRUKA AT PLOT NO.684/A, ROAD NO.33, JUBILEE HILLS, HYDERABAD ACQUIRED ON 18 -2-05 FOR CONSIDERATION OF RS. RS.80 LAKHS. LATER THE PROPER TY WAS RENOVATED WITH THE COST AROUND RS.5 TO 6 CRORES. II) PURCHASE OF 1.05 ACRES OF LAND AT COONOOR, TAMILNAD U BY ONE OF THE PARTNERS SRI AVADESH BADHRUKA . III) PAYMENT OF RS.51 LAKHS TO MIRZA BAIG BY SHRI GOPAL LAL BADRUKA TO SETTLE CERTAIN DISPUTES IV) PURCHASE OF HOUSE PROPERTY AT COONOOR FOR RS.15LAKH S BY SHRI AVADESH BADRUKA ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 19 19 V) CASH SEIZURE OF RS.1,43,34,500 AT THE RESIDENCE S HRI GOPAL LAL BADRUKA. VI) JEWELLERY SEIZED OF RS.11,20,116 AT THE RESIDEN CE OF SHRI SRIKANTH GANERIWAL OWNED UP BY SHRI GOPAL LAL BADRUKA AND FA MILY MEMBERS . 21. FURTHER, IT IS NOT IN DISPUTE THAT THE ASSESS ING OFFICER PROCEEDED ON THE BASIS OF SEIZED MATERIAL WHICH WAS FOUND DURING THE COURSE OF SEARCH ACTION IN RESPECT OF 8 PLOTS WHICH ARE AS FOLLOWS- SL. NO. NAME OF THE PURCHASER ACTUAL SALE PRICE AS PER THE SEIZED DOCUMENT QUANTIFIED RS. SALE PRICE AS PER THE REGISTERED SALE DEED RS. ON MONEY CONSIDERA- TION RS. RELEVANT FINANCIAL YEAR REFERENCE SEIZED MATERIAL NATURE OF SEIZED MATERIAL 1 AKULA SRINIVAS 2100000 750000 1350000 2003-04 A/GLB/684/A /1 PAGE NO.143 TO 154 AGREEMENT OF SALE DATED 24-1-2003 2 KANDAY RAMESH 2100000 750000 1350000 2003-04 A/GLB/684/A /1 PAGE NO.183 TO 193 AGREEMENT OF SALE DATED 24-1-2003 3 KB.RAMESH KUMAR 6070000 1901000 4169000 2003-04 A/GLB/684/A /2 PAGE NO.22 TO 24 RECEIPTS DATED 17.8.2003 4 RAJ KUMAR JAIN 16508750 5620000 10888750 2003-04 A/GLB/684/A /1 PAGES NO.194 TO 205 COPY OF AGREEMENT OF SALE DATED 26.8.2003 5 KOKILABEN KODAKIA 14600000 5400000 9200000 2004-05 A/GLB/684/A /1 PAGE NO.155 TO 161 AGREEMENT OF SALE DATED 8-1-2005 6 P.ANAND SINGH & HIS WIFE 17502900 6358500 11144400 2004-05 A/SG/01 PAGE NO.2 RECEIPTS DATED 11.11.2004 7 MYDEM SUBRAHMANY AM/MYDEM SANDHYA DEVI 34300000 12467344 21832656 2006-07 A/GLB/684/A /1 PAGE NO.125 TO 130 AGREEMENT OF SALE DATED 9.3.2006 8. P.SUBHADRA/ P.INDIRA 10600000 3755000 6845000 2005-06 A/SG/01 PAGE NO.1 RECEIPT DATED 8.5.2003 ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 20 20 TOTAL 103781650 37001844 66779806 FURTHER, WHEN THE PARTNER OF THE ASSESSEE FIRM NAME LY, SRI GOPAL LAL BADRUKA DEPOSED IN THE STATEMENTS UNDER S.131 OF TH E ACT ON VARIOUS DATES, I.E. ON 711.2008, 14.11.2008 AND 21.11.2008 IN THE PRESENCE OF HIS SON (WHO IS ALSO A PARTNER), ACCEPTING RECEIPT OF O N MONEY OVER AND ABOVE THE REGISTERED PRICE, THERE IS NO REASON TO OVERLOO K THIS STATEMENT SINCE THESE ADMISSIONS BY THE ORAL STATEMENTS CAN ALSO FO RM PART OF THE MATERIAL FOR THE PURPOSES OF MAKING ASSESSMENT. FOR NON-CO NSIDERATION OF THIS STATEMENT, THE ASSESSEE IS REQUIRED TO PROVE WITH M ORE SUBSTANTIAL MATERIAL THAT THE ADMISSION MADE ON EARLIER OCCASIONS ARE CO NTRARY TO MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CANNOT GET AWAY FROM THE STATEMENT, SIMPLY BY SAYING THAT THE ADMISSION MADE BY THE PAR TNER IS ON ACCOUNT OF COERCION THERE IS NO MATERIAL BEFORE US TO SHOW THAT THE ASSESSEE HAS MADE SUCH STATEMENT CONTRARY TO ANY MATERIAL OR ON ACCOUNT OF COERCION. THE MATERIAL AVAILABLE ON RECORD SUGGESTED THAT THE ASSESSEE IS IN THE HABIT OF RECEIPT OF ON-MONEY OVER AND ABOVE THE REGISTERE D PRICE OF THE PLOT, AND THIS ON-MONEY RECEIPT NOT RECORDED IN THE REGULAR B OOKS OF ACCOUNT AND THEREFORE, IT IS A CLEAR CASE OF SUPPRESSION OF ON- MONEY RECEIPTS, WHICH HAS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE F IRM IN THE IMPUGNED BLOCK ASSESSMENT UNDER S.153C OF THE INCOME-TAX ACT . THEREFORE, THE ASSESSING OFFICER IS JUSTIFIED IN MAKING THE ASSESS MENT IN THE HANDS OF THE FIRM ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE ON-MONEY RECEIPT TO BE ASSESSED IN THE HANDS OF THE FIRM SINCE THE FIRM IS ENGAGED IN THE BUSINESS OF LAND TRANSACTIONS AND ALSO SINCE REGULA R INCOME GENERATED FROM DISCLOSED BUSINESS OF SALE OF PLOTS HAS BEEN O FFERED FOR ASSESSMENT IN THE HANDS OF THE FIRM. THE ON-MONEY RECEIPTS, THOU GH RECEIVED BY THE PARTNERS, THE PARTNERS HAVE RECEIVED ON BEHALF OF T HE FIRM IN THEIR REPRESENTATIVE CAPACITY AND AS ITS AGENTS, AND THEY HAVE NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE FIRM, OTHER THAN AS A PARTNER. THE ON-MONEY IS HAVING DIRECT NEXUS WITH THE LAND BUSINESS TRANS ACTIONS OF THE ASSESSEE ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 21 21 FIRM. IT LEADS TO ABSURD RESULTS, IF THE REGULAR INCOME FROM THE SALE OF PLOTS IS ASSESSED IN THE HANDS OF THE FIRM AND THE ON-MONEY IN RELATION TO THE VERY SAME TRANSACTIONS OF THE FIRM WAS ASSESSED IN THE HANDS OF THE PARTNERS FIRM DIRECTLY. THUS, THERE IS NO MERIT IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE, THAT THE ON-MONEY RECEIPT IS TO BE ASSESSED IN THE HANDS OF THE PARTNERS. MORE SO, IT IS AN ADMITTED FACT THAT ON-MONEY RECEIPT WAS SIGNED BY THE PARTNERS OF THE FIRM ON BEHALF OF THE ASSESSEE FIRM, AS A REPRESENTATIVE OF THE FIRM. AS SUCH, IT IS ONLY THE FIRM WHICH HAS TO BE ASSESSED EVEN IN RESPECT OF INCOME BY WAY OF ON-MONEY. 22. IN THE CIRCUMSTANCES, IT HAS TO BE CONCLUDED THAT T HE ASSESSEE IS IN THE HABIT OF RECEIVING ON MONEY ON THE SALE O F ALL THE PLOTS, IRRESPECTIVE OF THE YEAR OF SALE AND IT IS TO BE AS SESSED ON INCOME BASIS AND NOT ON THE NET WORTH BASIS AS CLAIMED BY THE ASSESS EE. IN THE PRESENT CASE, NET WORTH METHOD IS NOT APPROPRIATE AS SEARCH ACTION HAS NOT RESULTED IN THE UNEARTHING OF ALL THE UNACCOUNTED A SSETS AND IT HAS RESULTED IN THE IDENTIFICATION OF ONLY THE UNRECORD ED ON-MONEY RECEIPTS. 23. THE NEXT QUESTION BEFORE US IS WITH REGARD TO THE QUANTIFICATION OF ON-MONEY RECEIPTS. FOR THE ASSES SMENT YEAR 2004-05, ASSESSING OFFICER HAS DETERMINED THE RATIO OF UNACC OUNTED RECEIPTS TO ACCOUNTED RECEIPTS AT 1.8:1 IN RESPECT OF LAY OUT P LOTS AND DETERMINED THE SAME AT RS.2,48,48,523. WITH REGARD TO THIS COMPUT ATION, WE DO NOT FIND ANY INFIRMITY, SINCE THE SEIZED MATERIAL IN THE CAS E OF PLOT NO.8 RELATING TO SHRI A.SRINIVAS, AND PLOT NO.9 RELATING TO SHRI KAN DAY RAMESH, INDICATE THAT THOSE PLOTS WERE REGISTERED AT RS.2,500 PER SQ . YARD FOR CONSIDERATION OF RS.7,50,000 IN EACH CASE, THOUGH THE SEIZED MATE RIAL (SALE AGREEMENT) SUGGESTS THE RECEIPT OF ON-MONEY OF RS.21,00,000 FR OM EACH, WITH THE DIFFERENTIAL ON-MONEY OF RS.13,50,000 IN EACH CASE. IN THE CIRCUMSTANCES, THE RATIO OF UNACCOUNTED RECEIPT TO ACCOUNTED RECEI PT WORKS OUT TO 1.8 : 1. ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 22 22 IN THE SAME RATIO, THE UNACCOUNTED ON-RECEIPTS IN R ESPECT OF OTHER LAY OUT PLOTS WAS DETERMINED. WE FIND NO INFIRMITY IN THI S APPROACH OF THE LOWER AUTHORITIES. WE ACCORDINGLY CONFIRM THE ORDER OF TH E CIT(A) ON THIS ASPECT. 24. IN THE CASE OF REMAINING OPEN PLOTS, THE RATIO OF UNACCOUNTED RECEIPTS TO ACCOUNTED RECEIPTS WAS DETERMINED AT 2: 1 AND UNACCOUNTED RECEIPTS WAS DETERMINED AT RS.2,47,55,874. THIS IS ALSO BASED ON THE SEIZED MATERIAL, WHICH HAS BEEN DISCUSSED BY THE CI T(A) IN PARA-4.3 OF HIS ORDER ON PAGES 13 AND 14 THEREOF, WHICH WE HAVE ALR EADY DISCUSSED HEREINABOVE. EVEN IN RESPECT OF THESE OPEN PLOTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A), WHICH IS ACCO RDINGLY CONFIRMED. THE BALANCE ADDITION OF RS.1,77,57,750 IS ON ACCOUNT OF ON-MONEY RECEIPT IS BASED ON THE ACTUAL SEIZED MATERIAL AND IN THE ABSE NCE OF ANY MATERIAL TO THE CONTRARY BROUGHT ON RECORD BY THE ASSESSEE, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ASPE CT. 25. FOR THE ASSESSMENT YEAR 2005-06, ESTIMATED UN ACCOUNTED RECEIPTS IN RESPECT OF OPEN PLOTS IS RS.1,14,43,94 0/- AND SUCH UNACCOUNTED RECEIPTS AS PER DOCUMENTARY EVIDENCE SE IZED AT THE TIME OF SEARCH IS RS.2,03,44,400/-, WITH THE TOTAL ADDITIO NS IN THIS RESPECT AGGREGATING TO RS. 3,17,88,340/-. THE SEIZED DOCU MENTARY EVIDENCE SUGGESTS THAT THE RATIO OF UNACCOUNTED RECEIPTS TO THE ACCOUNTED RECEIPTS IN THE CASE OF SMT.KOKILABEN IS 1.94:1 AND IN CASE OF SHRI ANAND SINGH THE RATIO IS 1.75:1 . IN OUR OPINION, THE PLOTS ARE RE GISTERED AT THE SAME TIME, AND IT IS APPROPRIATE TO ADOPT THE AVERAGE OF THESE TWO RATIOS, INSTEAD OF CONSIDERING A RATIO OF 2:1 AS DONE BY THE CIT(A). WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE ADDITION ON ACCO UNT OF ON-MONEY RECEIPT IN RESPECT OF OTHER PLOTS BY APPLYING THE AVERAGE O F ABOVE TWO RATIOS, I.E. 1.85:1. THUS, THE ADDITION OF RS.2,03,44,400/- IN RESPECT OF UNACCOUNTED ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 23 23 RECEIPTS BASED ON EVIDENCE IS CONFIRMED AND UNACCOU NTED RECEIPTS ON OTHER PLOTS SUSTAINED TO THE EXTENT OF RS.1,05,85,644/- T OTALLY RS.3,09,300,044/- 26. FOR THE ASSESSMENT YEAR 2006-07, THERE WAS SE IZED MATERIAL, MARKED AS A/SG/01(P1)) IN THE FORM OF MONEY RECEIPT GIVEN BY SHRI GOPALLAL BADRUKA AND SHRI AVDESH BADRUKA TO SMT. P. SUBHADRA FOR SALE OF OPEN PLOT ADMEASURING APPROXIMATELY 747 SQ. YARDS, WHEREIN THE TOTAL CONSIDERATION WORKED OUT AT RS.1,06,00,000. LATER , TWO PLOTS WERE REGISTERED FOR RS.29,30,000 AND RS.8,25,000 IN THE NAME OF SMT.P.SUBHADRA AND HER DAUGHTER, MS.P.INDIRA. SO, T HERE WAS ADDITION ON ACCOUNT OF UNACCOUNTED ON-MONEY, WHICH WAS DETERMIN ED AT RS.68,45,000, WHICH IS BASED ON THE SEIZED MATERIAL . WE FIND THE SAID ADDITION TO BE IN ORDER AND ACCORDINGLY CONFIRM TH E SAME, REJECTING THE GROUNDS OF THE ASSESSEE ON THIS ASPECT. 27. FOR THE ASSESSMENT YEAR 2007-08, UNACCOUNTED ON-MONEY RECEIPTS AS PER DOCUMENTARY EVIDENCE WAS WORKED OUT AT RS.2,18,32,656. THE DOCUMENTARY EVIDENCE SEIZED DURING THE COURSE O F SEARCH ACTION, VIDE MARKED A/GLB/684/A/1(P.125 TO 130) WHICH IS AN AGRE EMENT ENTERED BETWEEN SHRI M.SUBRAHMANYAM AND HIS WIFE SMT.M.SAND HYA RANI WITH THE ASSESSEE FIRM, M/S. AHURA HOLDINGS FOR PURCHASE OF OPEN PLOT ADMEASURING 1640 SQ. YARDS AT THE RATE OF RS.20,910 PER SQ. YARD. THE ACTUAL CONSIDERATION THUS WORKED OUT TO RS.3,43,00, 000. THIS AGREEMENT WAS SIGNED BY SHRI GOPAL LAL BADRUKA, SHRI AVADESH BADRUKA AND THE BUYER. HOWEVER, THE SAME WAS REGISTERED SUBSEQUENT LY FOR A CONSIDERATION OF RS.1,24,67,L344, I.E. AT THE RATE OF RS.7,600 PE R SQ. YARD. THERE WAS A SUPPRESSION TO THE EXTENT OF RS.2,18,32,656. BASED ON THIS, THE ASSESSING OFFICER QUANTIFIED THE SUPPRESSION OF SALE RECEIPTS AND MADE THE ADDITION OF RS.2,18,32,656. WE FIND THE SAID ADDITION TO BE IN ORDER AND ACCORDINGLY CONFIRM THE SAME, REJECTING THE GROUNDS OF THE ASSE SSEE ON THIS ASPECT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO TAKEN A PLEA BEFORE US THAT ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 24 24 AN OPPORTUNITY OF CROSS-EXAMINING THE BUYERS WHOSE STATEMENTS WERE RELIED UPON BY THE DEPARTMENT FOR THE PURPOSES OF A SSESSMENT HAS NOT BEEN GIVEN TO THE ASSESSEE. IN OUR OPINION, THE AS SESSMENTS HAVE BEEN MADE NOT ONLY ON THE BASIS OF STATEMENTS RECORDED F ROM THE BUYERS BUT ALSO ON THE BASIS OF SEIZED MATERIALS AND STATEMENT S RECORDED FROM THE MANAGING PARTNER, SHRI GOPAL LAL BADRUKA. FURTHER, THOUGH THE ASSESSEE WAS GIVEN OPPORTUNITY TO PUT FORTH ITS CASE BEFORE THE LOWER AUTHORITIES ON VARIOUS OCCASIONS, THE ASSESSEE HAS NOT ASKED FOR A NY OPPORTUNITY TO CROSS-EXAMINE THE BUYERS. FURTHER, THE ASSESSEE COU LD NOT LEAD ANY EVIDENCE BEFORE US ALSO TO POINT OUT AS TO HOW THE DEPARTMENT HAS DENIED THE OPPORTUNITY OF CROSS-EXAMINATION TO IT. THE AS SESSEE, HAVING NOT SOUGHT OPPORTUNITY OF CROSS-EXAMINATION AT THE APPR OPRIATE STAGES BEFORE THE LOWER AUTHORITIES, CANNOT NOW MAKE OUT A GRIEVA NCE ON THIS SCORE. 28. THE OTHER GROUND COMMON IN THESE APPEALS IS W ITH REGARD TO ALLOWABILITY OF AD-HOC UNRECORDED EXPENSES. THE CO NTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE EXPENDITURE IS TO BE ALLOWED ON ADHOC BASIS AND ONLY PROFIT PORTION IN RELATION TO THE UN RECORDED RECEIPTS HAS TO BE CONSIDERED AND IT IS NOT POSSIBLE TO HAVE ANY EV IDENCE FOR EXPENDITURE THAT IS NOT RECORDED IN THE BOOKS OF ACCOUNT. 29. WE HAVE HEARD RIVAL SUBMISSIONS. ACCORDING T O REVENUE THE ASSESSEE HAS NOT KEPT OR PRODUCED ANY SEPARATE ACCO UNTS FOR SUCH UNACCOUNTED EXPENSES. ALL THE EXPENSES ACTUALLY INC URRED BY THE ASSESSEE HAVE BEEN TAKEN CARE BY REGULAR BOOKS AND THE SAME HAVE ALREADY BEEN ALLOWED. ACCORDING TO THE REVENUE, THE ASSESSEE DE ALT WITH THE LAND WHERE ROADS AND OTHER AMENITIES WERE ALREADY PROVIDED. AS SUCH, THE ASSESSEE HAS ONLY CARRIED OUT THE WORK OF DIVIDING THE LAND INTO PLOTS WITH DEMARCATION OF ROAD AND THEREAFTER THE PLOTS WERE S OLD. IN OUR OPINION, AD-HOC DEDUCTIONS TOWARDS UNRECORDED EXPENSES CANNO T BE GIVEN UNLESS ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 25 25 THERE IS EVIDENCE ON RECORD REGARDING INCURRING OF SUCH EXPENDITURE FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE DECLARED THE UNDISCLOSED INCOME IN THE HANDS OF THE PARTNERS AND CLAIMED DEDUCTION TOWARDS UNRECORDED EXPENSES. THE ASSESSING OFFICER HAVING ASSESSED THE UNDISCLOSED INCOME SUBSTANTIVELY IN THE HANDS OF TH E FIRM, AND IN THE HANDS OF THE PARTNERS ONLY ON PROTECTIVE BASIS, DIS ALLOWED THE CLAIM FOR AD- HOC EXPENSES. HE HAS BROUGHT TO TAX THE UNRECORDED ON-MONEY RECEIPTS IN THE HANDS OF THE FIRM. IF THERE ARE ANY UNACCOUNT ED EXPENSES, EVIDENCE IN SUPPORT OF EXISTENCE OF SUCH EXPENDITURE IS TO BE O N RECORD OF THE ASSESSING OFFICER AND THEREAFTER REASONABLENESS AND GENUINENE SS OF SUCH EXPENDITURE HAS TO BE PROVED WITH EVIDENCE. HENCE, THE ASSESSI NG OFFICER IS REQUIRED TO RE-EXAMINE THE RECORD AVAILABLE WITH HIM, SUCH AS S EIZED MATERIAL, SWORN STATEMENTS OF PARTNERS, STATEMENTS RECORDED FROM TH IRD PARTIES AND ANY OTHER CONTEMPORANEOUS RECORD ALREADY AVAILABLE ON T HE RECORDS OF THE REVENUE, REGARDING THE CLAIM OF THE ASSESSEE THAT T HE ASSESSEE HAS ACTUALLY INCURRED ANY SUCH UNACCOUNTED EXPENDITURE AS CLAIMED BY IT, AND ACCORDINGLY DECIDE THE ALLOWABILITY THEREOF, IN ACC ORDANCE WITH LAW AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 30. THERE IS ONE MORE GROUND IN ITA NO.363/H/2010 WHICH IS WITH REGARD TO DISALLOWANCE OF RS.1,02,67,250/- BEI NG AMOUNT PAID TOWARDS CONSULTANCY CHARGES PAID TO SHRI SRIDEV SHA RMA IN SPITE OF THE FACT THAT ALL THE EVIDENCE AVAILABLE ON MERE SURMIS E THAT IT IS NOT PROVED THAT IT IS FOR BUSINESS PURPOSE WITHOUT APPRECIATIN G THE FACT THAT WITHOUT HIS SERVICE THE ASSESSEE FIRM COULD NOT HAVE OBTAIN ED APPROVALS FROM DEFENCE ESTATE OFFICE, PUNE. 31. BRIEF FACTS OF THE ISSUE ARE THAT THE ABOVE E XPENDITURE NOT SUPPORTED BY ANY PROOF. THIS INCLUDED RS.2 LAKH T OWARDS COST OF LAND, ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 26 26 RS.42,27,651/- TOWARDS DEVELOPMENT EXPENSES AND RS. 1,02,67,250 AS CONSULTANCY CHARGES. THIS AMOUNT WAS SAID TO BE PA ID TO SHRI SRIDEV SHARMA. IT WAS DISALLOWED ON THE REASON THAT NO DO CUMENTARY EVIDENCE HAS BEEN FILED IN THE COURSE OF ASSESSMENT PROCEED INGS. BEFORE THE CIT(A) THE ASSESSEE FILED COPY OF LEDGER ACCOUNT AS WELL AS COPY OF AGREEMENT WITH SHRI SRIDEV SHARMA OF DELHI. SINCE THE AGREEMENT W AS ON PLAIN PAPER HAVING NO SIGNATURE OF ANY WITNESS AND BEARING NO S TAMP OF SHRI SRIDEV SHARMA, WHO HAS SIGNED ON BEHALF OF M/S SD CONSTRUC TIONS. AGAINST THIS ASSESSEE IS IN APPEAL BEFORE US. 32. THE LEARNED AR SUBMITTED THAT THE PAYMENT TO SHRI SRIDEV SHARMA IS SUBJECT TO TDS AND THE AMOUNT RECEIVED BY SHRI SRIDEV SHARMA WAS ASSESSED TO TAX . THE EXPENDITURE INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE DEPARTMENT HAS NOT DO UBTED THE PAYMENT BUT DOUBTED THE RENDERING OF SERVICES BY MR. SHARMA . THE ASSESSEE WAS ABLE TO GET ALL LICENSE IN CONNECTION WITH THE PROP ERTY ONLY BECAUSE OF VALUABLE SERVICES RENDERED BY SHRI SHARMA. 33. ON THE OTHER HAND THE DR SUBMITTED THAT BECAU SE SOME TDS HAS BEEN DONE ON THE PAYMENT MADE TO MR. SHARMA, TH AT PAYMENT ITSELF DOES NOT ENTITLED FOR DEDUCTION. THE ASSESSEE HAS NOT ABLE TO PROVE THE NATURE OF SERVICES RENDERED BY SHRI SHARMA. HE SUB MITTED THAT NO CREDIBILITY COULD BE GIVEN TO THE AGREEMENT ENTERED BY THE ASSESSEE WITH MR. SHARMA. IT IS SELF SERVING DOCUMENT. THEY ARE NOT SERIOUS ABOUT THE ENFORCEMENT OF THIS AGREEMENT. SHRI SHARMA IS NEIT HER HAVING CAPACITY OR EXPERIENCE IN THE LINE OF REAL ESTATE BUSINESS. THE RENDERING OF SERVICE BY SHRI SHARMA IS DOUBTFUL. HE RELIED ON THE ORDER O F THE CIT(A). 34. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL. THE PAYMENT OF THE ABOVE IMPUGNED AMOUNT TO MR. SRIDEV SHARMA TOWARDS ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 27 27 OTHER EXPENSES IS TO BE SUBSTANTIATED WITH REFEREN CE TO THE SERVICE RENDERED BY MR.SHARMA FOR THE PURPOSE OF BUSINESS O F THE ASSESSEE. ONCE THE ASSESSEE ESTABLISHED THE NEXUS BETWEEN THE EXPE NSES AND THE SERVICE RENDERED FOR THE BUSINESS OF THE ASSESSEE, REASONAB LENESS OF THIS EXPENDITURE HAS TO BE ESTABLISHED. THE ASSESSEE FIR M FAILED BEFORE THE LOWER AUTHORITIES TO PRODUCE PROOF FOR THE SAID EXP ENDITURE AND ALSO FAILED TO SHOW THAT IT WAS INCURRED FOR THE PURPOSE OF B USINESS. HOWEVER, BEFORE US, THE ASSESSEE PRODUCED THE ASSESSMENT IN THE CAS E OF SHRI SHRIDEV SHARMA FOR THE ASSESSMENT YEAR 2004-05 AND SUBMITTE D THAT THE PAYMENT WAS OFFERED TO TAX BY THE RECIPIENT AND THE SAME WA S ALSO ASSESSED TO TAX VIDE ORDER OF ASSESSMENT DATED 20.3.2006 PASSED UND ER S.143(3) OF THE ACT, BY ACIT CIRCLE 24(1), NEW DELHI. HENCE, IN TH E INTEREST OF JUSTICE, WE ARE INCLINED TO SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO PROVE THE GENUINENESS AND REASONABLENESS OF THIS EXPENDITURE AS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ASSESSEES BUSINESS AND THEREAFTER THE ASSESSING O FFICER IS REQUIRED DECIDE THE ISSUE ACCORDINGLY. 35. IN THE RESULT, AS FAR AS THESE FIVE APPEALS O F THE FIRM ARE CONCERNED, WHILE APPEAL ITA NO.362/HYD/2010 IS DISM ISSED, THE APPEALS ITA NOS.363 TO 366/HYD/2010 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. APPEALS CONCERNING INDIVIDUAL PARTNERS: CROSS APPEALS FOR ASSESSMENT YEARS 2004-05 TO 2006- 07 AND ASSESSEES APPEALS FOR ASSESSMENT YEAR 2007-08 36. NOW WE WILL TAKE UP THE OTHER 14 APPEALS CONC ERNING THE INDIVIDUAL PARTNERS, VIZ. ITA NO.354/H/09, 583/H/2 010, 355/H/2009, 584/H/2010, 356/H/2009, 585/H/2010, 357/H/2009, 358 /H/2010, 580/H/2010, 359/H/2010, 581/H/2010, 360/H/2010, 582 /H/2010 & 361/H/2010, WHICH ARE CROSS APPEALS FILED BY THE AS SESSEE AS WELL AS THE ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 28 28 REVENUE FOR THE ASSESSMENT YEAR 2004-05 TO 2006-07 AND THE APPEALS FOR ASSESSMENT YEAR 2007-08 FILED ONLY BY THE ASSESSEE. 37. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR 2 004-05 TO 2006- 07 AND ASSESSEES APPEALS FOR ASSESSMENT YEAR 2007- 08. THE ASSESSEES GRIEVANCE IN THEIR APPEALS ARE WITH REGARD TO DIREC TION OF THE CIT(A) TO ASSESS THE INCOME FROM UNRECORDED RECEIPTS IN THE H ANDS OF THE FIRM M/S AHURA HOLDINGS INSTEAD OF ACCEPTING THE UNDISCLOSED INCOME ADMITTED BY THE PARTNERS NAMELY SHRI GOPAL LAL BADRUKA AND SHRI ADVESH BADRUKA AND ALSO THE GRIEVANCE REGARDING THE DISALLOWANCE O F AD HOC EXPENDITURE CLAIMED BY THE ASSESSEE AT 40% OF THE ON MONEY. TH E DEPARTMENTS GRIEVANCE IS WITH REGARD TO DELETION OF THE ADDITIO N MADE ON PROTECTIVE BASIS IN THE HANDS OF THE INDIVIDUAL PARTNERS I.E. SHRI GOPAL LAL BADRUKA AND SHRI ADVESH BADRUKA. 38. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT IN VIEW OF OUR DECISION IN THE CONTEXT OF THE SUBSTANT IVE ASSESSMENTS MADE IN THE HANDS OF THE FIRM, WE FIND ANY INFIRMITY IN THE DIRECTION OF THE CIT(A) TO ASSESS THE INCOME FROM UNRECORDED RECEIPTS IN THE H ANDS OF THE FIRM M/S. AHURA HOLDINGS. CONSEQUENTLY, THERE IS NO MERIT IN THE GROUNDS RAISED IN THESE CROSS APPEALS BY THE APPELLANTS IN THESE INDI VIDUAL PARTNERS CASES. ACCORDINGLY, ALL THESE 14 APPEALS IN THESE INDIVIDU AL PARTNERS CASES ARE DISMISSED. 39. TO SUM UP, AS FAR AS APPEALS OF THE FIRM ARE C ONCERNED, WHILE APPEAL ITA NO.362/HYD/2010 IS DISMISSED, THE APPEAL S ITA NOS.363 TO 366/HYD/2010 ARE PARTLY ALLOWED FOR STATISTICAL PUR POSES. THE CROSS APPEALS IN THE CASES OF INDIVIDUAL PARTNERS FOR ASS ESSMENT YEARS 2004-05 TO 2006-07 AND THE TWO APPEALS FILED BY THE INDIVID UAL PARTNERS ALONE FOR ASSESSMENT YEAR 2007-08, VIZ. ITA NO.354/H/09, 583/ H/2010, ITA NO.354 TO 357/H/2010 & 15 OTHERS M/S GOPAL LAL BADRUKA & 2 OTHERS, HYD. 29 29 355/H/2009, 584/H/2010, 356/H/2009, 585/H/2010, 357 /H/2009, 358/H/2010, 580/H/2010, 359/H/2010, 581/H/2010, 360 /H/2010, 582/H/2010 & 361/H/2010 ARE DISMISSED AS INFRUCTUOU S. ORDER PRONOUNCED IN THE COURT ON 26. 11. 2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 26 TH NOVEMBER , 2010 COPY FORWARDED TO: 1. SHRI GOPAL LAL BADRUKA, C/O. SRI VASANT KUMAR, SHRI AV RAGHURAM & SHRI B. PEDDI RAJULU, ADVOCATES, FLAT NO .403, MANISHA TOWERS, 10-1-18/31, SHYAM NAGAR, HYDERABAD. 2. SHRI AVADESH BADRUKA, C/O. SRI VASANT KUMAR, SHR I AV RAGHURAM & SHRI B. PEDDI RAJULU, ADVOCATES, FLAT NO .403, MANISHA TOWERS, 10-1-18/31, SHYAM NAGAR, HYDERABAD. 3. M/S AHURA HOLDINGS, C/O. SRI VASANT KUMAR, SHRI AV RAGHURAM & SHRI B. PEDDI RAJULU, ADVOCATES, FLAT NO .403, MANISHA TOWERS, 10-1-18/31, SHYAM NAGAR, HYDERABAD. 4. THE DCIT, CIRCLE 2, HYDERABAD 5. CIT(A)-I HYDERABAD. 6. CIT, HYDERABAD 7. THE D.R., ITAT, HYDERABAD. BVS