The Assistant Commissioner of Income Tax, Central Circle-1, , Visakhapatnam V. Navaratna Estates, , Visakhapatnam

ITA 612/VIZ/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8239 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 13-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D.K.SONOWAL
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of cross examination; Fair market value; Corroborative evidences; Third party statement; Block assessment; Documents seized; Set aside
• Section: 132; 143(3); 50C; 142(1); 133A; 153A; 201; 143(2); 192; 64; 43; 48; 13; 153; 22; 153C; 20

Judgement Text

, , 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. 618/VIZ/2018 AND 612/VIZ/2018 ( / ASSESSMENT YEAR : 201 5 - 1 6 AND 2016 - 17 RESPECTIVELY ) ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. M/S NAVARATNA ESTATES 3 RD FLOOR, D.NO.10 - 1 - 29 CVSV RAGHU CHAMBERS SAMPATH VINAYAK TEMPLE ASILMETTA, VISAKHAPATNAM [PAN :AAJFN5785A] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019 ARISING OUT OF I.T. A.NO.618/VIZ/2018 AND 612/VIZ/2018 RESPECTIVELY ( / ASSESSMENT YEAR : 201 5 - 1 6 AND 2016 - 17 RESPECTIVELY ) M/S NAVARATNA ESTATES 3 RD FLOOR, D.NO.10 - 1 - 29 CVSV RAGHU CHAMBERS SAMPATH VINAYAK TEMPLE ASILMETTA, VISAKHAPATNAM [PAN :AAJFN5785A] VS. ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : SHRI D.K.SONOWAL, CIT, DR / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 07 . 01 .20 20 / DATE OF PRONOUNCEMENT : 22 .01.2020 2 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3, VISAKHAPATNAM IN APPEAL NO.219 & 220/2017 - 18/CIT(A) - 3/VSP/2018 - 19 DATED 24.08.2018 AND THE CROSS OBJECTIONS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR (A.Y.) 2015 - 16 AND 2016 - 17. FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE CLUBBED, HEARD TOGETHER AND A COMMON ORDER IS BEING PASSED AS UNDER : DELAY: FOR THE A.Y.2015 - 16, T HE APPEAL WAS FILED BY THE ASSESSING OFFICER (AO) WITH A DELAY OF 10 DAYS AND FOR THE ASSESSMENT YEAR 2016 - 17 APPEAL WAS FILED WITH THE DELAY OF FIVE DAYS. THE ASSESSING OFFICER HAS FILED THE CONDONATION PETITION , EXPLAINING THE REASONS FOR DELAY . AFTER HEARING BOTH TH E SIDES WE CONDONE THE DELAY AND ADMIT THE APPEALS OF THE REVENUE . ITA NO.ITA/618/V/2018 - A.Y. 2015 - 16 2. GROUND NO.(I) TO (IV), (VII), (VIII) AND (IX) ARE RELATED TO THE VALIDITY OF ISSUE OF NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS AND CONSTRUCTION OF V ILLAS ETC. A SEARCH AND SEIZURE ACTION WAS CONDUCTED U/S 132 OF THE ACT IN SVBC GOLD GROUP AND SIMULTANEOUSLY SURVEY U/S 3 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 133A OF THE ACT WAS CONDUCTED IN THE CASE OF ASSESSEE FIRM M/S NAVARATNA ESTATES ON 24/11/2015. M/S NAVARATNA ESTATES IS A PARTNERS HIP FIRM CONSISTING OF SEVEN PARTNERS I.E.(I) SHRI SURESH KUMAR JAIN, (II) SHRI MAHENDRA KUMAR JAIN,(III) SHRI RANJITH KUMAR JAIN,(IV) SHRI MANCHUKONDA YETIRAJA SUBRAMANYAM, (V) SHRI MANCHUKONDA SHYAM, (VI) SHRI MANCHUKONDA A.SRIRANGA AND (VII) SHRI MANCHU KONDA MOULIKRISHNA. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED IN THE CASE OF SHRI MANCHUKONDA SHYAM, ONE OF THE PARTNERS OF THE ASSESSEE FIRM AT HIS RESIDENCE IN 8 - 1 - 27/63/4, NAUKA NAGAR, VISAKHAPATNAM, CERTAIN INCRIMINATING MATERIAL WA S FOUND AND SEIZED AS ANNEXURE MKS/1 & MKS/2 EVIDENCING THE UNDISCLOSED INCOME . PAGE NO.6 OF MKS/1, PAGE NOS.12 TO 14 AND PAGE NO.20 OF MKS/2 SHOW S THE LAND TRANSACTIONS OF NAVARATNA ESTATES, VISAKHAPATNAM MADE OUTSIDE THE BOOKS OF ACCOUNTS. AS STATED EAR LIER, SIMULTANEOUS SURVEY U/S 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON THE SAME DAY I.E. ON 24.11.2015, DURING THE SURVEY, LOOSE SHEETS WERE FOUND INDICATING THE ON MONEY RECEIPTS ON SALE OF PLOTS/VILLAS. SINCE THE CONDITIONS FO R ISSUE OF NOTICE U/S 153C R.W.S. 153A OF THE ACT WERE SATISFIED, THE AO ISSUED THE NOTICE U/S 153C OF THE ACT TO THE ASSESSEE ON 31.10.2016 CALLING FOR THE RETURN OF INCOME AND THE SAME WAS SERVED ON THE ASSESSEE ON 01.11.2016. IN RESPONSE TO THE NOTICE ISSUED, THE 4 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y.2015 - 16 ON 19.06.2017 ADMITTING TOTAL INCOME OF RS.15,30,21,580/ - . SUBSEQUENTLY, NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND THE CASE WAS HEARD AND THE ASSESSMENT WAS COMPLETED U/S 1 43(3) R.W.S. 153C OF THE ACT ON TOTAL INCOME OF RS.44,14,57,140/ - . IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER (AO) MADE THE ADDITION OF RS.24,80,88,660/ - AS UNACCOUNTED SALES FOR THE A.Y.2015 - 16 IN RESPECT OF PLOTS SOLD IN SEA PEARL PROJECT AND THE SUM OF RS.3,94,47,000/ - WAS MADE ON ACCOUNT OF SALE OF VILLAS IN BLUE MARINO PROJECT. THE AO QUANTIFIED TH E AGGREGATE UNACCOUNTED SALES OF RS.25,44,44,809/ - IN RESPECT OF SALE OF PLOTS IN SEA PEARL PROJECT IN TOTAL AND OUT OF WHICH THE SUM OF RS.24,80,88,660/ - WAS APPORTIONED FOR THE A.Y.2015 - 16 AND RS.63,56,149/ - FOR THE A.Y.2016 - 17. THE OTHER ADDITION MADE BY THE AO WAS RS.8,99,900/ - IN RESPECT OF UNACCOUNTED EXPENDITURE PAID TO M/S DINAKAR SAI CONSTRUCTIONS. 3. AGAINST THE ORDER OF THE A O THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) QUASHED THE NOTICE ISSUED U/S 153C OF THE ACT HOLDING THAT THERE WAS NO INCRIMINATING MATERIAL FOR INITIATION OF PROCEEDINGS U/S 153C OF THE ACT AND PLAC ED RELIANCE ON THE DECISION OF HONBL E APEX COURT IN THE CASE OF CIT VS SINHGAD TECHNICAL EDUCATIONAL SOCIETY IN [2017] 84 TAXMANN.COM 290 (SC). THE LD.CIT(A) OBSERVED THAT 5 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM THERE WERE TOTAL FIVE DOCUMENTS WHICH WERE MENTIONED IN THE SATISFACTION NOTE OF THE AO FOR INITIATION OF PROCEEDINGS U /S 153C , I.E. PAGE NO.6 OF MKS/1 AND PAGE NOS.12 TO 14 AND PAGE NO.20 OF MKS/2. THE LD.CIT (A) FURTHER OBSERVED THAT IN THE STATEMENT RECORDED ON 13.01.2016, SRI MANCHUKONDA SHYAM STATE D THAT PAGE NO.6 OF ANNEXURE MKS/1 AND PAGE NO.20 OF MKS/2 WERE RELATE D TO THE TRANSACTIONS PERTAINING TO SALE OF LAND IN NERELLAVALASA BY FARMERS TO SOME BUYERS AND H E ACTED AS A MEDIATOR IN THE ABOVE TRANSACTION AND ADMITTED THE INCOME OF RS.50 LAKHS AS ADDITIONAL INCOME IN HIS HANDS. THUS, THE LD.CIT(A) HAS GIVEN A FINDI NG THAT PAGE NO.20 OF MKS/2 AND PAGE NO.6 OF MKS/1 WERE NOT BELONGING OR PERTAINING TO THE ASSESSEE FIRM, BUT THEY ARE PERTAINED TO SHRI MANCHUKONDA SHYAM. THE REMAINING THREE DOCUMENTS I.E. PAGE NOS.12 TO 14 OF ANNEXURE MKS/1, PERTAINED TO A.Y.2016 - 17 AND THE AO ALSO MADE A SPECIFIC ADDITION OF RS.51,75,650/ - FOR THE A.Y.2016 - 17, HENCE , THE LD.CIT(A) VIEWED THAT THE SAID DOCUMENTS MENTIONED IN THE SATISFACTION NOTE NEITHER BELONGED/PERTAINED TO TH E ASSESSEE FIRM NOR PERTAINED TO THE IMPUGNED ASSESSMENT YEAR, HENCE HELD THAT THERE IS NO CASE FOR INITIATION PROCEEDINGS U/S 153C OF THE ACT. THE LD.CIT(A) RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATIO N SOCIETY IN CIVIL APPEAL NOS.1101 TO 11083 OF 2017 AND THE DECISION OF THIS TRIBUNAL 6 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM IN THE CASE OF LALITHA DEVI VS. ASSISTANT COMMISSIONER OF INCOME TAX (2018) 52 CCH 0472 AND HELD THAT INVOKING THE PROVISIONS OF SECTION 153C WITHOUT HAVING INCRIMINATING MATERIAL IS BAD IN LAW, ACCORDINGLY QUASHED THE NOTICE HOLDING THAT THE ENTIRE PROCEEDINGS ARE VOID AB INITIO. AGAINST WHICH THE DEPARTMENT FILED APPEAL BEFORE THIS TRIBUNAL. 4. DURING THE APPEAL HEARING, THE LD.DR SUBMITTED THAT THE ASSESSMENT WA S NOT A CONCLUDED ASSESSMENT AND THE TIME LIMIT IS AVAILABLE FOR THE AO TO ISSUE NOTICE U/S 143(2), THEREFORE, ARGUED THAT THE AO HAS RIGHTLY ISSUED THE NOTICE U/S 153C OF THE ACT. THE LD.DR FURTHER SUBMITTED THAT THERE WAS AN AMENDMENT TO SECTION 153C OF THE A CT W.E.F. 01.06.2015, WHERE THE WORDS BELONGS TO WERE SUBSTITUTED BY PERTAINS TO WHICH HAS WIDER CONNOTATION THAN BELONGS TO AND HENCE ARGUED THAT THE CASE LAW RELIED UPON BY THE LD.CIT(A) IN THE CASE OF HONBLE SUPREME COURT IN COMMISSIONER OF INCOM E TAX - III, PUNE VS. SINHGAD TECHNICAL EDUCATION SOCIETY (SUPRA) HAS NO APPLICATION. THE LD.DR FURTHER SUBMITTED THAT THE LD.CIT(A) HAS IGNORED THE EVIDENCE BROUGHT ON RECORD BY THE DEPARTMENT REGARDING THE UNACCOUNTED INCOME ON SALE OF VILLAS IN BLUE MARI NO PROJECT IN THE FORM OF SEIZED MATERIAL IN PAGE NO.6, 7 AND 8 OF ANNEXURE - LAK/01 PERTAINING TO THE ASSESSEE FIRM SEIZED DURING SEARCH AND SEIZURE ACTION U/S 132 ON 24.11.2015 FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR, MARKETING HEAD 7 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM AND KEY ASSOCIATE OF THE ASSESSEE FIRM. THE LD.DR FURTHER SUBMITTED THAT THE LD.CIT(A) ERRED IN DECIDING THAT THE SEIZED DOCUMENT NO.6 OF ANNEXURE MKS/1 AND PAGE NO.20 OF ANNEXURE MKS/2 DOES NOT BELONG TO THE ASSESSEE FIRM AS THEY WERE OWNED UP BY SRI SHYAM MANCHOKONDA , EVEN THOUGH , THE TRANSACTIONS CONTAINED THEREIN RELAT ED TO UNACCOUNTED LAND PURCHASE TRANSACTION BY THE ASSESSEE FIRM WITH THE MEDIATION OF SRI MANCHUKONDA SHYAM, PARTNER OF THE ASSESSEE FIRM. THUS, THE LD.DR ARGUED THAT THERE WAS SUFFICIENT MATERIAL AVAILABLE FOR INITIATING PROCEEDINGS U/S 153C OF THE ACT WHICH WAS NOT PROPERLY APPRECIATED BY THE LD.CIT(A), THUS SUBMITTED THAT THE AO HAS RIGHTLY INITIATED THE PROCEEDINGS U/S 153C, HENCE REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND UPHOLD THE NOTICE IS SUED U/S 153C OF THE ACT AND REMIT THE ISSUE BACK TO THE FILE OF CIT(A) FOR DECIDING THE APPEAL ON MERITS. 5. T HE ASSESSEE FILED CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD.CIT(A) AND ALSO RAISED ADDITIONAL GROUND IN CROSS OBJECTIONS CHALLENGING THE VALIDITY OF ISSUE OF NOTICE U/S 153C OF THE ACT, WITHOUT HAVING RECORDED SATISFACTION IN THE CASE OF SEARCHED PERSON . THE AR SUBMITTED THAT THERE WAS NO INCRIMINATING MATERIAL FOR ISSUE OF NOTICE U/S 153C OF THE ACT AND ARGUED THAT THE AO OF THE SEARCHED PERSON HAS NOT RECORDED THE SATISFACTION FOR ISSUE OF NOTICE U/S 153C IN THE ASSESSEES CASE. THEREFORE REQUESTED TO 8 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ADMIT THE ADDITIONAL GROUND WHICH IS PURELY LEGAL ISSUE AND NO VERIFICATION IS REQUIRED. THE LD.AR SUBMITTED THAT THE LD.CIT(A) HAS PROVIDE D THE COPIES OF TWO SATISFACTION NOTES RECORDED BY THE AO PRIOR TO ISSUE OF NOTICE U/S 153C OF THE ACT IN THE CASE OF THE ASSESSEE. THE TWO SATISFACTION NOTES DATED 24.11.2015 IN RESPECT OF SVBC GROUP AND THE OTHER ONE IS DATED 15.09.2016 FOR THE A.Y 20 14 - 15. AS PER 153C OF THE ACT, TWO SEPARATE SATISFACTION NOTES ARE TO BE RECORDED, ONE BY THE AO OF THE SEARCHED PERSON AND THE OTHER BY THE AO OF THE PERSON WHOSE DOCUMENTS WERE FOUND IN THE CASE OF SEARCHED PERSON. FROM THE SATISFACTION NOTES FURNISHED BY THE LD.CIT(A) IN THE CASE OF RESPONDENT, BOTH THE SATISFACTION NOTES WERE RECORDED BY THE AO OF THE ASSESSEE, BUT NOT BY THE AO OF THE SEARCHED PERSON. THE AO ALSO DID NOT EXPLAIN AS TO WHY THE TWO SATISFACTION NOTES WERE RECORDED BY THE AO OF THE ASSE SSEE. IN THE INSTANT CASE, SEARCH U/S 132 WAS CONDUCTED IN THE CASE OF SRI MANCHUKONDA SHYAM AND INITIATION OF PROCEEDINGS U/S 153C WERE CONSEQUENT TO THE DOCUMENTS SEIZED FROM SRI MANCHUKONDA SHYAM IN ANNEXURE MKS/1 AND MKS/2 AND THE AO OF SRI MANCHUKONDA SHYAM REQUIRED TO BE SATISFIED THAT THE DOCUMENTS FOUND IN THE RESIDENCE PERTAINED/BELONGED TO THE ASSESSEE, BUT THERE WAS NO SUCH SATISFACTION WAS RECORDED IN THE CASE OF SRI MANCHUKONDA SHYAM, HENCE, ARGUED THAT THE ADDITIONAL GROUND RAISED BY THE ASSES SEE GOES TO THE RO OT OF 9 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM THE ASSESSMENT AND REQUESTED TO ADMIT THE ADDITIONAL GROUND AND ADJUDICATE THE SAME. THE ASSESSEE ALSO ENCLOSED THE ORDER SHEET COPIES OF NAVARATNA ESTATES DATED 24.11.2015 AND 15.09.2016. ON THE OTHER HAND, THE DEPARTMENT COULD NOT PLACE ANY EVIDENCE TO SHOW THAT THE SATISFACTION WAS RECORDED IN THE CASE OF THE SEARCHED PERSON ESTABLISHING THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH WAS RELATED TO THE ASSESSEE AND HAS AN IMPACT ON THE ASSESSMENT OF INCOME OF THE ASSESSEE. THEREFORE, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND TAKE UP FOR ADJUDICATION. 6. ADVANCING THE ARGUMENT, THE LD.AR SUBMITTED THAT IT IS CONCLUSIVELY ESTABLISHED THAT NO SATISFACTION WAS RECORDED BY THE AO OF THE SEARCHED PERSON I.E. THE AO OF SRI MANCHUKONDA SHYAM, WITH REGARD TO THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AS PERTAINED OR RELATED TO THE ASSESSEE, THEREFORE, AS PER THE DECIDED CASE LAWS AND AS PER THE PROVISIONS OF THE ACT, THERE IS NO CASE FOR INITIATING THE PROCEEDINGS U/S 153C OF THE ACT, HENCE, THE NOTICE ISSUED U/S 153C IS INVALID AND REQUIRED TO BE QUASHED. EVEN OTHERWISE, THE LD.AR SUBMITTED THAT THE AO HAS PASSED A SEPARATE ORDER FOR THE A.Y.2015 - 16 VIDE ORDER 30.10.2019 AFTER THE REVIVAL OF THE ABATED ASSESSMENT BY AN ORDER U/S 143(3) R.W.S. 153C OF THE 10 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ACT. THUS ARGUED THAT THE NOTICE U/S 153C REQUIRED TO BE QUASHED AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A). 7. RESPONDING TO THE ARGUMENT OF THE ASSESSEE , THE LD.DR SUBMITTE D THAT THE AO OF THE ASSESSEE AS WELL AS OF THE SEARCHED PERSON ARE ONE AND THE SAME AND THE AO OF THE ASSESSEE HAS RECORDED THE SATISFACTION STATING THAT INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE RESIDENCE OF SRI MANCHUKONDA SHYAM P ERTAINS TO NAVARATNA ESTATES. SINCE THERE WAS A CATEGORICAL FINDING GIVEN BY THE AO IN THE CASE OF THE NAVARATNA ESTATES, THE LD.DR ARGUED THAT THE AO HAS RIGHTLY INITIATED PROCEEDINGS U/S 153C, THEREFORE, REQUESTED TO UPHOLD THE VALIDITY OF ISSUE OF NOTI CE U/S 153C AND REMIT THE MATTER BACK TO THE FILE OF THE LD.CIT(A) TO DECIDE THE APPEAL AFRESH ON MERITS.. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN THE CAS E OF SRI MANCHUKONDA SHYAM WHO HAPPENS TO BE ONE OF THE PARTNERS OF THE ASSESSEE FIRM AND DURING THE COURSE OF SEARCH, INCRIMINATING MATERIAL WAS FOUND EVIDENCING THE TRANSACTIONS MADE BY THE ASSESSEE FIRM OUTSIDE THE BOOKS OF ACCOUNTS I.E. COLLECTION OF O N MONEY. THEREFORE, THE AO INITIATED PROCEEDINGS U/S 153C OF THE ACT. THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WAS MARKED AS ANNEXURE MKS/1 AND MKS/2. 11 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM PAGE NO.6 OF MKS/1 AND PAGE NO.12 TO 14 AND PAGE NO.20 OF MKS/2 STATED TO BE RELATING TO THE TRANSACTIONS PERTAINING TO THE ASSESSEE WITH REGARD TO THE MONIES COLLECTED OUTSIDE THE BOOKS OF ACCOUNTS. AS PER THE PROVISIONS OF 153C OF THE ACT, MONEY, BULLION, JEWELLERY FOUND DURING THE COURSE OF SEARCH PERTAINING OR RELATED TO ANY OTHER PERSON O THER THAN THE SEARCHED PERSON, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THE AO OF THE OTHER PERSON SHALL PROCEED TO ISSUE NOTICE IN THE CASE OF SUCH OTHER PERSON. FOR THIS PURPOSE, THE AO OF THE SEARCHED PERSON REQUIRED TO BE SATISFIED THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH WAS NOT PERTAINING/BELONGING TO TH E SEARCHED PERSON AND IDENTIFY THE CORRECT PERSON TO WHOM THE MATERIAL IS BELONGED TO OR PERTAINED TO . AS PER SECTION 132(4A)/292C OF THE ACT, PRESUMPTION IS AVAILABLE TO THE AO OF THE SEARCHED PERSON THAT MONEY, BULLION, JEWELLERY BOOKS OF ACCOUNTS AND D OCUMENTS FOUND DURING THE COURSE OF SEARCH ARE RELATED TO THE SEARCHED PERSON. THEREFORE, SATISFACTION REQUIRED TO BE RECORDED BY THE AO OF THE SEARCHED PERSON BEFORE TRANSFERRING OR HANDING OVER THE INCRIMINATING MATERIAL TO THE AO OF SUCH OTHER PERSON. I N THE INSTANT CASE, SEARCH U/S 132 WAS CONDUCTED IN THE CASE OF MANCHUKONDA SHYAM ON 24.11.2015 AND THE NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE ASSESSEE ON 31.10.2016 12 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM WITHOUT RECORDING THE SATISFACTION IN THE CASE OF SHRI MANCHUKONDA SHYAM. IDENTICA L ISSUE HAS COME UP BEFORE THE COORDINATE BENCH OF ITAT HYDERABAD IN THE CASE OF SUDHIR KUMAR D.SHAH VS. DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2, HYDERABAD IN I.T.A NO . 1871 TO 1877/HYD/2013 FOR ASSESSMENT YEARS 2002 - 03 TO 2008 - 09 DATED 25.10.2019 AND THE COORDINATE BENCH HAS CONSIDERED THE IDENTICAL ISSUE FOR WHICH THE BOTH OF US ARE THE SIGNATORIES OF THE ORDER. THE COORDINATE BENCH OF ITAT AFTER CONSIDERING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHETTYS PHARMAC EUTICALS & BIOLOGICALS LTD., (2015) 57 TAXMANN.COM 282) (ANDHRA PRADESH) AND THE CASE OF CIT - III VS. SRI RAO SUBBA RAO (HUF) IN ITTA NO.254 OF 2014, DT.15 . 04 . 2014 AND THE DECISION OF THIS TRIBUNAL IN THE CASE OF SRI PADMAVATHI VENKATESWARA CONSTRUCTIONS IN ITA NO.47/VIZ/2019 DATED 26 . 06 . 2019 HELD THAT IT IS MANDATORY TO RECORD SATISFACTION IN THE CASE OF SEARCHED PERSON TO ASSUME THE JURISDICTION FOR INITIATING PROCEEDINGS U/S 153C IN THE CASE OF SUCH OTHER PERSON AND ACCORDINGLY QUASHED THE NOTICE ISSUED U/S 153C OF THE ACT FOR NOT RECORDING THE SATISFACTION. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT THE RELEVANT PART OF THE ORDER OF THIS TRIBUNAL IN THE CASE OF SRI PADMAVATHI VENKATESWARA CONSTRUCTIONS (SUPRA) IN PARA NO.9 TO 9.3 WHICH READS AS UNDER : 13 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 9. WE HAVE HEARD BOTH THE P ARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE CONTENTION OF THE ASSESSEE IS THAT THE AO HAS NOT RECORDED SATISFACTION IN THE CASE OF THE SEARCHED PERSON FOR TRANSFERRING THE INCRIMINATING MATERIAL TO THE AO OF THE ASSESSEE. T HE LD.CIT(A) HAS CALLED FOR THE REMAND REPORT, IN THE REMAND REPORT ALSO, THE AO MENTIONED REGARDING RECORDING OF SATISFACTION IN THE CASE OF THE ASSESSEE, BUT NO MENTION WAS MADE IN RESPECT OF THE SATISFACTION RECORDED IN THE CASE OF SEARCHED PERSON I.E. R.VENKATRAMAIAH. THE DEPARTMENT ALSO DID NOT PLACE ANY EVIDENCE TO SHOW THAT SATISFACTION WAS RECORDED IN THE CASE OF SEARCHED PERSON, R.VENKTRAMAIAH, WHILE TRANSFERRING THE INCRIMINATING MATERIAL. AS OBSERVED FROM THE CBDT CIRCULAR NO.24/2015 DATED 31.1 2.2015 WHICH IS PLACED IN PAGE NO.9 8 OF THE PAPER BOOK , THE CBDT HAS GIVEN GUIDELINES TO ALL THE AOS TO RECORD SATISFACTION EVEN IF THE AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS ONE AND THE SAME. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRAC T PARA NO.4 AND 5 OF THE CIRCULAR WHICH READS AS UNDER : 4. THE GUIDELINES OF THE HONBLE SUPREME COURT AS REFERRED TO IN PARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACTION NOTE, MAY BE BROUGHT TO THE NOTICE OF ALL FOR STRICT COMPLIANCE. IT IS FURTH ER CLARIFIED THAT EVEN IF THE AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS ONE AND THE SAME, THEN ALSO HE IS REQUIRED TO RECORD HIS SATISFACTION AS HAS BEEN HELD BY THE COURTS. 5. IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE ISSUE OF RECORDING O F SATISFACTION NOTE SHOULD ALSO BE DECIDED IN THE LIGHT OF THE ABOVE JUDGEMENT. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT PENDING LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C SHOULD BE WITHDRAWN / NOT PRESSED IF IT DO ES NOT MEET THE GUIDELINES LAID DOWN BY THE APEX COURT. 9.1. HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. SUPRA HELD THAT RECORDING OF SATISFACTION BY BOTH THE AOS IS A PRE CONDITION FOR INVOKING JURISDICTION U/S 153C OF THE ACT. FOR THE SAKE OF CLARITY AND CONVENIENCE WE EXTRACT PARA NO. 5 TO 7 OF THE HONBLE JURISDICTIONAL HIGH COURT WHICH READS AS UNDER. 5 . THE ARGUMENT APPARENTLY IS VERY ATTRACTIVE, BUT THE LAW IS OTHERWISE AND THE LEARNED TRIBUNAL HAS CORRECTLY APPLIED. WE THEREFORE APPROPRIATELY SET OUT SECTION 153C OF THE ACT. '153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON. (1) NOTWITHSTANDING ANYTHING CONTAINED IX SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLER Y OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOC UMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON 14 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM OTHER THAN THE PERSON REFERRED TO IN SECTION 153 A THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER S UCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR - OR YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A (EMPHASIS SUPPLIED) 6 . IT IS THEREFORE CLEAR THAT FIRSTLY SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER WHO CONDUCTED SEARCH, THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BEL ONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. THEREAFTER, THE ASSESSING OFFICER HAVING JURISDICTION OVER THIRD PARTY ON RECEIPT OF THE SEIZED MATERIAL OR BOOKS OF ACCOUNTS OR DOCUMENT BEING HANDED OVER TO HIM SHALL RECORD HI S OWN SATISFACTION AFTER EXAMINING THE SAME INDEPENDENTLY WITHOUT BEING INFLUENCED BY THE SATISFACTION OF THE SEIZING OFFICER. IN OTHER WORDS IT IS NOT AN AUTOMATIC ACTION. WE FIND SATISFACTION OF TWO OFFICERS IS MISSING. IN THIS CONNECTION WE SET OUT THE TEXT OF THE ORDER OF THE ASSESSING OFFICER WHICH IS AS FOLLOWS: A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIED OUT IN THE GROUP EASE OF DR. T. YADHAIAH GOUD AND OTHERS ON 25.3.2010. DURING THE COURSE OF SEARCH OPERATION DOCUMENTS BELONGING TO SHETTY PHARMACEUTICALS & BIOLOGICAL LTD., HAS BEEN SEIZED. HENCE IT IS CONSIDERED TO INITIATE PROCEEDINGS U/S. 153C OF THE I.T. ACT.' 7. THE AFORESAID SECTION MANDATES RECORDING OF SATISFACTION OF THE ASSESSING OFFICER(S) IS A PRE - CONDITION FOR INVOKING JURISDIC TION AND IT IS NOT A MERE FORMALITY BECAUSE RECORDING OF SATISFACTION POSTULATES APPLICATION OF MIND CONSCIOUSLY AS THE DOCUMENTS SEIZED MUST BE BELONGING TO THE ANY OTHER PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153 - A OF THE ACT IT IS CONTENDED THAT THE SAME ASSESSING OFFICER IS INVOLVED IN THE MATTER. THIS FACT DOES NOT DISPENSE WITH ABOVE REQUIREMENT. IT IS SETTLED POSITION OF LAW THAT WHEN A THING IS TO BE DONE IN ONE PARTICULAR MANNER UNDER LAW THIS HAS TO BE DONE IN THAT MANNER ALONE AND NO T OTHER WAY (SEE NAZIR AHMED & KING EMPEROR). WE THINK THE LEARNED TRIBUNAL HAS CORRECTLY FOLLOWED THE PRINCIPLE. WE DO NOT FIND ANY ELEMENT OF LAW TO BE DECIDED. 15 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 9.2. SIMILAR ISSUE HAS COME UP BEFORE THIS TRIBUNAL IN THE CASE OF SRI SESHASAI TOWNSHIP P.LTD. VS. ACIT IN I.T.A. NO.301 & 302/VIZ/2015 DATED 11.01.2019, WHEREIN THE COORDINATE BENCH OF ITAT, VISAKHAPATNAM HAS TAKEN THE SIMILAR VIEW. FOR THE SAKE OF CLARITY AND CONVENIENCE WE EXTRACT RELEVANT PART OF THE ORDER OF THIS TRIBUNAL WHICH READS AS UNDER: 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE INFORMATION PLACED IN THE PAPER BOOK, THE ASSESSEE HAS REQUESTED FOR SUPPLY OF REASONS AND SATISFACTION OF THE AO OF THE SEARCHED PERSON AND THE AO HAS REPLIED VIDE LETTER DATED 23.11.2017, STATING THAT THE AO OF THE SAI TEJA HOUSING & ESTATES HAS RECORDED THE SATISFACTION THAT THERE WERE DOCUMENTS FOUND / IMPOUNDED DURING THE COURSE OF SEARCH BELONGED TO THE ASSESSEE. IN RESPONSE TO QUESTION NO. 2 AND 3 RELATING T O PROVIDING THE COPIES OF THE SATISFACTION RECORDED BY THE AO OF SAITEJA HOUSING & ESTATES FOR INITIATING THE PROCEEDINGS U/S 153C OF THE ACT, IN THE CASE OF THE ASSESSEE STATING THAT THE QUERY IS SIMILAR TO THAT OF THE EARLIER QUERY AND ENCLOSED ANNEXUR E A, COPY OF THE ORDER SHEET OF THE SRI SESHASAI TOWNSHIP PVT. LTD., RELATING TO THE ASSESSEE. THE AO DID NOT SUPPLY THE SATISFACTION NOTE OF THE ASSESSING OFFICER OF THE SEARCHED PERSON, I.E. SAI TEJA HOUSING & ESTATES LTD.. AS THE ORDER SHEET PERTAIN S TO THE ASSESSEE BUT NOT PERTAINING TO THE AO OF THE SEARCHED PERSON, IT IS CLEAR THAT THE AO OF THE SEARCHED PERSON HAS NOT RECORDED A SEPARATE SATISFACTION FOR TRANSFER OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE DEPARTMENT DID NOT PLACE A NY MATERIAL TO SUBSTANTIATE THAT THE AO OF THE SEARCHED PERSON HAS RECORDED SEPARATE SATISFACTION FOR TRANSFERRING THE MATERIAL TO THE AO OF THE ASSESSEE AND TO INITIATE PROCEEDINGS U/S 153C. THE LD.DR CONTENDED THAT IF THE AOS OF BOTH THE SEARCHED PERSON AND THE ASSESSEE ARE ONE AND THE SAME NO SEPARATE SATISFACTION IS REQUIRED TO BE RECODED AND RELIED ON THE DECISION HONBLE DELHI HIGH COURT IN CASE OF INSTRONICS LTD AND GANAPATI FINCAP SERVICES PVT. LTD. IN THE CASE OF INSTRONICS LTD THE HONBLE HIGH CO URT OF DELHI RESTORED THE MATTER BACK TO THE FILE OF THE ITAT SINCE THERE IS NO DISCUSSION ON WHETHER THE DOCUMENTS REFERRED TO IN THE ITATS ORDER IN FACT INCRIMINATING AND THE AO OF THE SEARCHED PERSON HAS RECORDED THE SATISFACTION THAT THE SEIZED DOCUM ENTS BELONGED TO THE ASSESSEE. THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF GANAPATI FINCAP SERVICES PVT. LTD. VS. CIT (SUPRA) IS AGAINST THE WRIT PETITION AND THE FACTS OF THE ASSESSEES CASE ARE DISTINGUISHABLE, THEREFORE, THE CASE LAWS RELIED UPON BY THE LD.DR ARE NOT APPLICABLE IN THE ASSESSEES CASE. 11. IN THIS CONNECTION, IT IS PERTINENT TO MENTION SECTION 292C OF THE ACT PLACES PRESUMPTION THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH BELONGS TO THE SEARCHED PERSON AND THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND 16 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM OTHER DOCUMENTS ARE TRUE. SO IT IS THE OBLIGATION OF THE AO AS WELL AS THE SEARCHED PERSON TO PROVE THAT THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN FACT DOES NOT BELONG TO THE SEARCHED PERSON, BUT BELONGED TO THE OTHER PERSON. THEREFORE, UNLESS THERE IS SATISFACTION RECORDED WITH VALID REASONS IT CANNOT BE SIMPLY PRESUMED THAT THE SEIZED MATERIAL DOES NOT BELONG TO THE SEARCHED PERSON, BUT IN FACT BELONGED TO THE OTHER PERSON. THEREFORE, SATISFAC TION OF THE ASSESSING OFFICER OF THE SEARCHED PERSON IS MANDATORY REQUIREMENT TO TRANSFER THE RECORDS AND TO HOLD THAT THE INCRIMINATING MATERIAL FOUND IN THE PREMISES OF THE SEARCHED PERSON IN FACT BELONGED TO SUCH OTHER PERSON. 12. SIMILAR VIEW IS EXPR ESSED BY THE COORDINATE BENCH OF ITAT, HYDERABAD IN THE CASE OF SHRI SRINIVAS BABU, HYDERABAD VS. ACIT SUPRA RELIED UPON BY THE ASSESSEE. FOR READY REFERENCE, WE EXTRACT PARA NO.6 OF THE ORDER OF THE COORDINATE BENCH OF ITAT IN THE CASE OF SHRI SRINIVAS BABU CITED SUPRA. 6. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN LINE WITH THE VIEW TAKEN BY THE APEX COURT AND THE BINDING CIRCULAR ISSUED BY THE CBDT(BINDING UPON THE REVENUE), WE ARE OF THE VIEW THAT THE PROCEEDINGS INITIATED UNDER S.153C OF THE ACT FOR THESE TWO YEARS DESERVE TO BE QUASHED IN AS MUCH AS THE CONCERNED ASSESSING OFFICER HAS ADMITTEDLY NOT RECORDED ANY SATISFACTION BEFORE FORWARDING THE FILES TO THE ASSESSING OFFICER IN WH OSE CHARGE, THE ASSESSEE HEREIN IS ASSESSED. IN OTHER WORDS, THE ASSESSMENTS MADE UNDER S.153C OF THE ACT ARE HEREBY QUASHED. IN THIS VIEW OF THE MATTER, THE OTHER GROUNDS URGED BY THE REVENUE AS WELL AS THE ASSESSEE HAVE NO LEGS STAND, SINCE THE ASSESSMEN TS FOR BOTH THE YEARS ARE QUASHED. THE ASSESSEE ALSO RELIED ON THE DECISION OF COORDINATE BENCH OF ITAT, DELHI IN THE CASE OF NARSI CREATIONS VS.DEPUTY COMMISSIONER OF INCOME TAX, (2016) 70 TAXMANN.COM 156, WHEREIN, THE COORDINATE BENCH OF ITAT HELD THAT THE SATISFACTION OF THE AO OF SEARCHED PERSON HAS TO RECORD SATISFACTION EVEN IF HE IS ALSO THE AO OF THE OTHER PERSON U/S 153C. 13. SIMILAR ISSUE WAS CONSIDERED BY THE COORDINATE BENCH OF ITAT AHMEDABAD IN PARSHWA CORPORATION. V. DEPUTY COMMISSIONER OF I NCOME - TAX, CENTRAL CIRCLE2, BARODA [2017] 88 TAXMANN.COM 43 (AHMEDABAD - TRIB.) AND HELD THAT 18. FROM THE ABOVE, IT IS CLEAR NO SATISFACTION IS RECORDED BY THE ASSESSING OFFICER OF PERSON SEARCHED. THE ASSESSING OFFICER OF ASSESSEE DID NOT RECORD ANY SATISFACTION PRIOR TO ISSUE OF NOTICE U/S 153C. THE SO - CALLED SATISFACTION RECORDED IN THE NOTICE U/S 153C IS TOTALLY VAGUE. IT HAS NOT SPECIFIED WHICH VALUABLE ARTICLES/THINGS/BOOKS OF ACCOUNTS/DOCUMENTS WERE FOUND FROM SHRI RAMESHBHAI B. SHAH WHICH 17 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM BELONGS TO THE ASSESSEE. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS MENTIONED THAT IN THE LAPTO P OF SHRI RAMESHBHAI B. SHAH THE DATA PERTAINING TO THE ASSESSEE WERE FOUND AND ON THAT BASIS NOTICES U/S 153C HAVE BEEN ISSUED. HOWEVER, IN THE NOTICE U/S 153C, WHEREIN THE ASSESSING OFFICER IS CLAIMED TO HAVE BEEN RECORDED THE SATISFACTION FOR ISSUE OF T HE NOTICE, THERE IS NO MENTION ABOUT SUCH LAPTOP OR THE ALLEGED DATA IN SUCH LAPTOP WHICH IS CLAIMED TO BE BELONGED TO THE ASSESSEE. IN VIEW OF ABOVE, WE HAVE NO HESITATION TO HOLD THAT THE BASIC CONDITION FOR ISSUE OF NOTICE U/S153C HAS NOT BEEN SATISFIED . 14. THE DEPARTMENTAL CIRCULAR DATED 31.12.2015 ALSO DIRECTED THE AO TO RECORD THE SATISFACTION, EVEN IF THE AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS ONE AND THE SAME AND THE CIRCULAR IS BINDING ON THE ASSESSING OFFICERS. NON RECORDING OF SATIS FACTION OF THE ASSESSING OFFICER OF THE SEARCHED PERSON RENDERS THE ASSESSMENT PROCEEDINGS U/S 153C AS INVALID. THIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE HIGH COURT OF DELHI IN PEPSI FOODS (P.) LTD.V. ASSISTANT COMMISSIONER OF INCOME - TAX, [2014] 5 2 TAXMANN.COM 220 (DELHI).HONBLE HIGH COURT OF DELHI HELD AS UNDER: 6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDENT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE 'SATISFIED' THAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONED 'BELONGS TO' A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ONLY THEN THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HANDOVER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUCH HANDING OVER THAT THE ASSESSING OFFICER OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR RE - ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THEREFORE, BEFORE A NOTICE UNDER SECTION 153C CAN BE ISS UED TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SECOND STEP IS - AFTER SUCH SATISFACTION IS ARRIVED AT - THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICER OF THE PERSON TO WHOM THE SAID DOCUMENT 'BELONGS'. IN THE PRESENT CASES IT HAS BEEN URGED ON BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVISIONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH IT MA Y BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PERSON. IT IS SIMILARLY PROVIDED IN SECTION 292C(1)(I). IN OTHER WORDS, WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THAT THE SAID DOCUMENT BELONGS TO THAT PERSO N. IT IS FOR THE ASSESSING OFFICER TO REBUT THAT PRESUMPTION AND COME TO A CONCLUSION OR 'SATISFACTION' THAT THE 18 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM DOCUMENT IN FACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND CONJECTURE CANNOT TAKE THE PLACE OF 'SATISFACTION'. ------- 11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETITIONER AND THAT THE ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE IS NOTHING WHICH WOULD INDICATE AS TO HOW THE PRESUMPTIONS WHICH ARE TO BE NORMALLY RAISED AS INDICATE D ABOVE, HAVE BEEN REBUTTED BY THE ASSESSING OFFICER. MERE USE OR MENTION OF THE WORD 'SATISFACTION' OR THE WORDS 'I AM SATISFIED' IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 153C OF THE SAID AC T. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRAID, THAT GOING THROU GH THE CONTENTS OF THE SATISFACTION NOTE, WE ARE UNABLE TO DISCERN ANY 'SATISFACTION' OF THE KIND REQUIRED UNDER SECTION 153C OF THE SAID ACT. 12. THIS BEING THE POSITION THE VERY FIRST STEP PRIOR TO THE ISSUANCE OF A NOTICE UNDER SECTION153C OF THE SAID A CT HAS NOT BEEN FULFILLED. INASMUCH AS THIS CONDITION PRECEDENT HAS NOT BEEN MET, THE NOTICES UNDER SECTION 153C ARE LIABLE TO BE QUASHED. IT IS ORDERED ACCORDINGLY. HONBLE S UPREME C OURT DISMISSED THE SLP FILED BY THE REVENUE AGAINST DECISION OF HONBLE HIGH COURT RULING THAT BEFORE ISSUE OF NOTICE UNDER SECTION 153C, ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A CONCLUSIVE SATISFACTION THAT DOCUMENTS BELONGS TO A PERSON OTHER THAN SEARCHED PERSON IN[201 8] 89 TAXMANN.COM 10 (SC). THEREFORE, THE COURTS HELD THAT THE SATISFACTION NOT ONLY SHOULD BE RECORDED BUT ALSO SHOULD BE WRITTEN IN DETAIL WITH VALID REASONS AND IT SHOULD NOT BE VAGUE. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE DEPARTMENT COULD NOT ESTABLISH THAT THE AO OF THE SEARCHED PERSON HAS RECORDED SATISFACTION BEFORE ISSUE OF NOTICE U/S 153C OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE DECISIONS HONBLE COURTS CITED SUPRA AND AS PER THE DISCUSSION IN PRECEDING PAR AGRAPHS, WE HOLD THAT THE NOTICE ISSUED U/S 153C IS UNSUSTAINABLE. 9.3. SINCE THE FACTS ARE IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF ANDHRA PRADESH AND THE VIEW TAKEN BY THIS TRIBUNAL IN THE CASE CITED SUPRA, WE HOLD THAT T HE ISSUE OF NOTICE U/S 153C WITHOUT RECORDING THE REASONS IN THE CASE OF SEARCHED PERSON RENDERS THE NOTICE ISSUED U/S 153C AS INVALID. ACCORDINGLY, WE QUASH THE NOTICE ISSUED U/S 153C AND THE CANCEL THE CONSEQUENT ASSESSMENT MADE U/S 143(3) R.W.S. 153C . SINCE WE HAVE 19 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM QUASHED THE NOTICE ISSUED U/S 153C AND CANCELLED THE CONSEQUENT ASSESSMENT, WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE REVENUES APPEAL WHICH IS ON QUANTUM OF ADDITIONS AND THE REMAINING GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN T HIS APPEAL. ACCORDINGLY, THE APPEALS OF THE ASSESSEE IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. 9. SINCE THE FACTS ARE IDENTICAL AND THE DEPARTMENT COULD NOT ESTABLISH THAT THE REASONS WERE RECORDED IN THE CASE OF SEARCHED PERSON, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THIS TRIBUNAL AND THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CIT ED SUPRA, WE HOLD THAT THE ASSUMPTION OF JURISDICTION WITHOUT RECORDING THE REASONS IN THE CASE OF SEARCHED PERSON IS INVALID. ACCORDINGLY, UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 10. ADDITIONAL GROUND RAISED BY THE ASSES SEE IN CROSS OBJECTION IS ALLOWED. SINCE THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE IN SUPPORT OF THE ORDER OF THE LD.CIT(A), THE SAME BECOMES INFRUCTUOUS AND HENCE DISMISSED. SINCE WE DISMISSED THE APPEAL OF THE REVENUE HOLD ING THAT THE AO HAS ASSUMED JURISDICTION WRONGLY WITHOUT HAVING SATISFACTION, WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE OTHER GROUNDS RAISED BY THE REVENUE IN THE APPEAL. 11. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION S OF THE ASSESSEE ARE PARTLY ALLOWED. 20 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM I.T.A. 612/VIZ/2018 , A.Y.2016 - 17 12. THIS APPEAL IS RELATED TO THE A.Y.2016 - 17. GROUND NO.(XVI), (XVII) AND (XVIII) ARE GENERAL IN NATURE AND NO SEPARATE ADJUDICATION IS CONSIDERED NECESSARY. 13. GROUND NO. (I) TO (VIII) ARE RELATED TO THE ADDITION MADE BY THE AO IN RESPECT OF BLUE MARINO PROJECT AMOUNTING TO RS.5,00,37,000/ - FROM SALE OF 40 VILLAS. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 132 WAS CONDUCTED IN THE CASE OF SVBC GOLD GROUP AND SIMULTANEOUSLY SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE CASE OF M/S NAVARATNA ESTATES. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING MATERIAL WAS FOUND IN THE RESIDENCE OF SRI MANCHUKONDA SHYAM, ONE OF THE PARTNERS OF THE FIRM. SEARCH U/S 132 WAS ALSO CONDUCTED IN THE CASE OF SRI LANKA ANIL KUMAR , MARKETING EXECUTIVE OF THE ASSESSEE FIRM SIMULTANEOUSLY AND FOUND CERTAIN INCRIMINATING MATERIAL EVIDENCING UNACCOUNTED CONSIDERATION O N SALES OF VILLAS, THEREFORE, THE AO HAS ISSUED NOTICE U/S 14 3(2) AND TAKEN UP THE CASE FOR ASSESSMENT. DURING THE COURSE OF SURVEY U/S 133A, THE AO FOUND THAT THE ASSESSEE FIRM HA D CONSTRUCTED 154 VILLAS IN CHEPALAUPPADA AREA UNDER THE PROJECT NAME CALLED BLUE MARINO PROJECT . THE PROJECT WAS DEVELOPED IN TWO PH ASES I.E. PHASE I AND PHASE II. EACH VILLA IS HAVING THE LAND ADMEASURING 150 SQ.YDS AREA WITH INDIVIDUAL DUPLEX HOME IN UNIFORM 21 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM DESIGN FOR ALL VILLAS AT CHEPALAUPPADA, VISAKHAPATNAM. IT STARTED SELLING VILLAS IN THE F.Y.2013 - 14AND THE SURVEY U/S 133A WA S CONDUCTED IN THE CASE OF M/S NAVARATNA ESTATES ON 24.11.2015. THE INCRIMINATING MATERIAL FOUND WAS IMPOUNDED AS PER THE ORDER IN F.NO.ACIT/KKD/SURVEY/ 133A(3)(IA)/2015 - 16 DATED 25.11.2015. DURING THE COURSE OF SURVEY AND SUBSEQU ENT TO SURVEY S TATEMENT S W ERE RECORDED FROM SRI MANCHUKONDA YETHIRAJA SUBRAHMANYAM, ONE OF THE 7 PARTNERS OF THE ASSESSEE FIRM I.E. ON 24.11.2015 , U/S 131(1A) ON 07.12.2015 AND ON 11.12.2015. THE INCRIMINATING MATERIAL FOUND DURING THE SURVEY SHOWS THAT THE ASSESSEE HA D COLLECTED ON MONEY OVER AND ABOVE THE REGISTERED VALUE TOWARDS THE SALE OF VILLAS AND PLOTS AND EXCESS AMOUNT WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE FIRM. TH EREFORE , THE AO VIEWED THAT THE ASSESSEE FIRM HA D ACCEPTED ON MONEY ON S ALE S. THE AO REFERRING TO PAGE NO.54 OF ANNEXURE - A/NRE/SURVEY/BUSS/01 RELATING TO THE MODE OF PAYMENT FOR VILLAS AT BLUE MARINO PROJECTS AND VIEWED THAT THE TOTAL SALE CONSIDERATION OF VILLA IS RS. 53.00 LACS. THE SAID LOOSE SHEET READS AS UN DER : 1. THE PURCHASER HAS TO PAY SUM OF RS.5,00,000/ - (RUPEES FIVE LAKHS ONLY) AT THE TIME OF BOOKING. 2. THE PURCHASER HAS TO PAY THE REMAINING BALANCE IN THE FOLLOWING SCHEDULE : A . RS.21,50,000/ - AT THE TIME OF REGISTRATION OF THE SALE DEED B . RS.5,00,000/ - AT THE TIME OF CONSTRUCTION OF THE PLINTH BEAM C . RS.5,00,000/ - AT THE TIME OF CONSTRUCTION OF GROUND FLOOR SLAB 22 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM D . RS.5,00,000/ - AT THE TIME OF CONSTRUCTION OF FIRST FLOOR SLAB E . RS.5,00,000/ - AT THE TIME OF CONSTRUCTION OF BRICK WORK F . RS.1,50,000/ - AT THE TIME OF HANDING OVER OF THE DUPLEX VILLA 3. TOTAL CONSIDERATION OF VILLA RS.53,00,000/ - 13.1. SIMILARLY, THE AO HAS REFERRED ANOTHER LOOSE SHEET IN PAGE NO.48 OF THE IMPOUNDED MATERIAL IN A/NRE/SURVEY/BUSS/01 WHICH WA S ALSO THE SCHEDULE OF PAYMENT FOR TOTAL CONSIDERATION OF RS.53.00 LACS FOR SALE OF EACH VILLA . THE SURVEY TEAM SEIZED THE COPY OF HARD DRIVES FROM THE BUSINESS PREMISES OF THE ASSESSEE FROM WHICH THE CERTAIN EMAILS WERE ALSO EXTRACTED. FROM THE IMPOUNDED MATERIAL AN D THE E MAIL SENT FROM NAVARATNA ESTATES TO [e-mail], THE AO OBSERVED THAT VILLA NOS.83 AND 95 WERE VACANT AT THAT TIME AND OUT OF WHICH VILLA NO.83 WAS SOLD TO SURI RADHIKA KALYANI VIDE DOCUMENT NO.4819/2014 DATED 26.09.2014 AND REGISTER ED AT SRO, BHEEMILI FOR A CONSIDERATION OF RS.36,25,000/ - AGAINST THE QUOTED RATE OF RS.53.00 LACS AS PER THE IMPOUNDED MATERIAL IN PAGE NO.54 OF ANNEXURE - A/NRE/01 . HENCE , THE AO WAS OF THE VIEW THAT THE ASSESSEE HA D UNDERSTATED THE SALE CONSIDERATION AND SHOWN THE REGISTERED PRICE OF RS.36.25 LAKHS IN THE BOOKS AGAINST THE ACTUAL SALE CONSIDERATION OF RS.53.00 LAKHS. THE AO FURTHER EXAMINED THE IMPOUNDED MATERIAL IN ANNEXURE A/NRE/SURVEY/BUSS/6, THE MAIL SENT FROM EMAIL ID [e-mail] TO THE EMAIL ID OF KALYANMANNURU>SUPPORT 23 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM @BRICK AND MORTAR.IN< AS PER WHICH A COMMUNICATION WAS SENT TO BRICK AND MORTAR INFORMING THE CHANGE IN PRICE OF BLUE MARINO PROJECT TO RS.54 LAKHS FROM E RSTWHILE PRICE OF RS.53 LAKHS . THE AO FURTHER VERIFIED THE BUNDLE OF LOOSE SHEETS SEIZED AS BMHP/133A/NAVARATNA AND FOUND THAT A MAIL WAS SENT TO BRICK AND MORTAR INTIMATING THEM THAT OUT OF 110 ACRES OF LAYOUT 40 VILLAS WERE SOLD AT RS.50 LAKHS AND 100 VILLAS W ERE SOLD AT RS.60 LAKHS AND 23 VILLAS WERE VACANT . THUS THE AO UNDERSTOOD THAT THE SALE PRICE OF 40 VILLAS WAS RS.50 LAKHS AND 100 VILLAS WAS RS.60 LAKHS WITH THE CONSTRUCTED AREA OF 1850 SQ.FT ON 150 SQ.YARDS OF SITE. ACCORDINGLY, THE AO HAS TAKEN THE R EGISTERED CONSIDERATION, ACTUAL SALE PRICE AS PER THE ABOVE INFORMATION FOUND FROM THE SEIZED MATERIAL AND ARRIVED AT THE DIFFERENCE IN PAGE NO.12 TO 18 OF THE ASSESSMENT ORDER A T RS.9,84,55,000/ - WHICH WAS TREATED AS UNACCOUNTED INCOME AND PROPOSED FOR ADDITION FOR THE ASSESSMENT YEARS INVOLVED IN RESPECT OF BLUE MARINO PROJECT. 13.2. THE AO ISSUED SHOW CAUSE NOTICE DATED 02.11.2017 PROPOSING TO MAKE THE ADDITION OF RS.3,66,75,000/ - FOR THE F.Y.2015 - 16 FOR SALE OF 25 VILLAS CONSIDERING THE UNACCOUNTED R ECEIPTS AT RS.9.84 CRORES DISCUSSED ABOVE, FOR WHICH THE ASSESSEE FILED OBJECTIONS FOR THE PROPOSED ADDITION AND ALSO DISPUTED THE RELEVANCE OF IMPOUNDED MATERIAL IN ASSESSEES CASE. DURING THE COURSE OF SURVEY A STATEMENT WAS RECORDED FROM SRI M.YETHIRAJA 24 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM SUBRAHMANYAM WHO HAS ADMITTED THE RECEIPT OF ON MONEY IN SALE OF VILLAS @RS.2.00 LACS PER VILLA FOR THE F.Y.2013 - 14 @RS.6.00 LACS PER VILLA DURING THE F.Y.2014 - 15 AND RS.10.00 LACS PER VILLA FOR THE A.Y.2015 - 16. HE FURTHER STATED THAT 13 VILLAS WERE SOL D IN F.Y.2013 - 14, 49 VILLAS IN F.Y.2014 - 15 AND 19 VILLAS IN F.Y.2015 - 16 . HOWEVER HE RETRACTED THE STATEMENT SUBSEQUENTLY STATING THAT HE WAS NOT IN GOOD HEALTH AND NO POSITIVE EVIDENCE WAS BROUGHT ON RECORD BY THE DEPARTMENT FOR ALLEGED ON MONEY RECEIPTS O N SALES . THE ASSESSEE SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS THAT THE DOCUMENTS RELIED UP ON BY THE AO PROPOSING THE ADDITION WAS BLIND AND INCOMPLETE DOCUMENTS AND ON THE BASIS OF THE SAID DOCUMENTS NO ADDITION CAN BE MADE. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE STATING THAT IT WAS AN AFTERTHOUGHT . THE AO ALSO DID NOT MAKE ADDITION AS PROPOSED IN SHOW CAUSE NOTICE DT.02.11.2017 AND AT THE END THE SAID PROPOSED ADDITION WAS DROPPED. 13.3. A SEARCH U/S 132 WAS ALSO CONDUCTED IN THE CASE OF SRI LANKA ANIL KUMAR, A KEY EMPLOYEE OF THE ASSESSEE FIRM WHO IS STATED TO BE THE AUTHORIZED PERSON TO DEAL WITH ALL THE AFFAIRS OF MARKETING. DURING THE COURSE OF SEARCH ON 24.11.2015 IN THE RESIDENCE O F SRI LANKA ANIL KUMAR, INCRIMINATING MATERIAL WAS FOUND AND SEIZED AS ANNEXURE LAK/01 AND A STATEMENT WAS ALSO RECORDED FROM SRI LANKA ANIL KUMAR ON THE SAID DATE . 25 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM SRI LANKA ANIL KUMAR WITH REGARD TO PAGE NO.6, 7 AND 8 OF ANNEXURE LAK/01 STATED THAT THE DETAILS ARE RELATED TO THE AMOUNTS DUE FROM THE CUSTOMERS OF BLUE MARINO PROJECT OF M/S NAVARATNA ESTATES AND THE SAME WERE TAKEN FROM THE BOOKS OF ACCOUNTS OF THE FIRM. THE REVERSE SIDE OF PAGE NO.6 CONTAIN THE DETAILS OF VILLA NO, SALE AMOUNT, TOTA L AMOUNT AND THE AMOUNT PAID AND OUTSTANDING ETC.. WHICH READS AS UNDER : FRONT SIDE PAGE NUMBER 6 CONTAIN THE HAND WRITTEN NOTINGS WITH VILLA NO., ABBREVIATED NAME, AMOUNT PAID AND THE AMOUNT DUE. AGAINST SOME CASES 26 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM LUMPSUM AMOUNT WAS WRITTEN AS 43.50 / 40.00 ETC..THE AO INFERRED THAT THE DETAILS OF REVERSE SIDE PAGE WERE ACCOUNTED SALE CONSIDERATION AND THE FRONT SIDE OF PAGE CONTAIN ED THE DETAILS OF ACTUAL SALE CONSIDERATION. THE L UMP SUM CONSIDERATION WRITTEN AGAINST THE FEW VILLAS WAS EXTRAPOLAT ED TO OTHER VILLAS ALSO AND INFERRED THAT ASSESSEE HAD RECEIVED THE ON MONEY IN ALL THE VILLAS. THE AO OBSERVED THAT THE DETAILS OF THE REVERSE SIDE PAGE IN THE SEIZED MATERIAL WAS TALLIED WITH THE BOOKS OF ACCOUNTS OF THE RESPECTIVE VILLA. IN PAGE NO. 7 AND 8 OF ANNEXURE LAK/01 SEIZED FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR CONTAIN THE DETAILS OF LUMP SUM AMOUNT VILLA WISE. THE AO VIEWED THAT THE ASSESSEE HA D COLLECTED ON MONEY AS PER THE ENTRIES MADE IN THE LOOSE SHEETS MARKED AS LAK/01 , PAGE NO.6 T O 8 FOR SALE OF VILLAS. IN THE STATEMENT RECORDED FROM SRI LANKA ANIL KUMAR U/S 131(1) OF THE ACT ON 22.12.2017, HE STATED THAT HE WAS LOOKING AFTER THE MARKETING OF VILLAS AND INVOLVED IN ARRANGING FINANCE UNDER HOUSING SCHEME. WITH REGARD TO PAGE NO.6 OF THE ANNEXURE, HE HA D STATED THAT HE DOES NOT KNOW WHO HA D WRITTEN THE PAGES 6 TO 8 AND IT WAS NOT IN HIS HAND WRITING. I N RESPONSE TO QUESTION NO.22 OF THE STATEMENT RECORDED , HE STATED THAT NUMBERS MENTIONED AS 114,118 AND 154 APPEAR ED TO BE VILLA NU MBERS AND THE TRANSACTIONS APPEAR TO BE RELATING TO THE VILLAS OF NAVARATNA ESTATES AND HE WAS NOT AWARE , WHETHER THE ENTRIES WERE RECORDED IN THE BOOKS OF 27 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ACCOUNTS OR NOT SINCE HE WAS NOT ASSOCIATED WITH THE MAINTENANCE OF BOOKS OF ACCOUNTS. IN RESPONSE TO QUESTION NO.24, HE HA D REPLIED THAT THE ENTRIES IN PAGE NO.7 AND 8 WE RE IN HIS HAND WRITING AND THESE WERE THE SUMMARY OF TRANSACTIONS OF PAGE NO.6. THUS HE REPLIED THAT THE NOTINGS MADE IN PAGE NO.6, 7 AND 8 WERE RELATED TO THE TRANSACTIONS OF NAVARAT NA ESTATES FOR SALE OF VILLAS AND THE NOTINGS WE RE RELATED TO THE AMOUNTS AGREED, AMOUNTS COLLECTED AND THE AMOUNTS OUTSTANDING FOR SALE OF VILLAS. THE STATEMENT RECORDED FROM SRI LANKA ANIL KUMAR WAS CONFRONTED WITH SRI SURESH KUMAR JAIN U/S 131(1) OF TH E ACT ON 26.12.2017. HE BLUNTLY REJECTED STATING THAT HE DOES NOT KNOW THE ENTRIES MADE IN PAGE NO.6 TO 8 SEIZED FROM SRI LANKA ANIL KUMAR AND DOES NOT MATCH THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS OF M/S NAVARATNA ESTATES. IN A NUT SHELL, SRI SURESH KU MAR JAIN HAS REJECTED THE CONTENTION OF SRI LANKA ANIL KUMAR AND THE AO THAT THE NOTINGS MADE IN PAGE NO.6, 7 AND 8 WERE RELATED TO NAVARATNA ESTATES AND HE FURTHER SUBMITTED THAT THE STATEMENT GIVEN BY SRI LANKA ANIL KUMAR HAS NO RELEVANCE TO NAVARATNA ES TATES AND WHATEVER HE TOLD WAS WRONG TO THE EXTENT OF NAVARATNA ESTATES . SRI SURESH KUMAR JAIN FURTHER STATED , THE STATEMENT RECORDED U/S 131(1) FROM SRI SUBRAHMANYAM CANNOT BE TAKEN INTO COGNIZANCE SINCE HE WAS NOT IN GOOD HEALTH AT THE TIME OF GIVING THE STATEMENT, T HE AO FOUND FROM THE SEIZED DOCUMENTS OF ANIL KUMAR THAT THE 28 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ENTRIES MADE IN THE NOTINGS OF PAGE NO.6, 7 AND 8 OF ANNEXURE LAK/01 WE RE MATCHING WITH THE SALE OF VILLAS WITH VILLA NUMBER, CUSTOMER NA ME AND THE TOTAL SALE AMOUNT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS EXCEPT ON MONEY RECEIVED OUTSIDE THE BOOKS OF ACCOUNTS. TH E AO VIEWED THAT SRI SURESH KUMAR JAIN IS PRETENDING AS IF HE WAS NOT AWARE OF THE NOTINGS IN PAGE NO.6 TO 8 TO AVOID THE INCOME TAX ON UNACCOUNTED SALE CONSIDERATION, HENCE, HELD THAT THE NOTINGS MADE IN THE LOOSE SHEETS WERE CORRECT WHICH SHOWS THE ACTUAL SALE CONSIDERATION IN RESPECT OF VILLAS INCLUDING THE ON MONEY RECEIVED, HENCE, THE EXCESS AMOUNT COLLECTED OVER AND ABOVE THE REGISTERED VALUE AS RECORDED IN PAGE NO.6 TO 8 OF LAK/01 REQUIRED TO BE BROUGHT TO TAX FOR THE RELEVANT ASSESSMENT YEAR S . THUS, THE AO WORKED OUT THE DIFFERENCE AMOUNT OF SALE CONSIDERATION FOR 25 VILLAS SOLD DURING THE YEAR AT RS. 263.03 LACS AND 15 VI LLAS WHICH WERE NOT REGISTERED , BUT ON MONEY RECEIVED WAS RS. 237.34 LACS AGGREGATING TO RS.5,00,37,000/ - FOR THE A.Y.2016 - 17 AS PER THE DETAILED WORKING IN PAGE NO.51 TO 53 OF ASSESSMENT ORDER. THOUGH VILLA NOS 5,9 TO 16, 33,103,115,116,117 AND 149 FOUND TO BE NOT SHOWN AS SOLD DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y.2013 - 14, 2014 - 15, 2015 - 16 AND 2016 - 17, THE AO VIEWED AS PER NOTING IN PAGE NO.6, 7 AND 8 ON MONEY WAS RECEIVED AGAINST THE ABOVE VILLAS ALSO AS ON 28.07.2015. HENCE, THE AO TREATED THE TRANSACTION AS COMPLETED TRANSACTION DURING THE FINANCIAL YEAR 29 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 2015 - 16 AND THE TOTAL ON MONEY OF RS.237.34 LAKHS WAS HELD TO BE RECEIVED, BUT NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS. THUS, THE TOTAL SUM OF RS.5,00,37,000/ - WAS ADDED TO THE INCOME FOR THE A .Y.2015 - 16 ON ACCOUNT OF SALE OF VILLAS. 14. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO AND ALLOWED THE APPEAL OF THE ASSESSEE. 15. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.DR SUBMITTED THAT THERE IS AMPLE EVIDENCE FOUND DURING THE COURSE OF SEARCH EVIDENCING THE ACCEPTANCE OF ON MONEY IN RESPECT OF SALE OF VILLAS IN BLUE MARINO PROJE CT. THE MATERIAL IMPOUNDED IN LOOSE SHEETS PAGE NO.48, PAGE NO.54 AND 50 OF ANNEXURE A/NRE/SURVEY/BUSS/01 AND LOOSE SHEETS IMPOUNDED AS PER PAGE NO.50 OF ANNEXURE BMHP/133A/NAVARATNA, SEIZED DOCUMENTS MARKED AS ANNEXURE LAK/01 PAGE NO.6 TO 8, AND THE E - MAILS DATED 17.02.2014 SENT FROM EMAIL ID [e-mail] TO [e-mail] ARE NOT DUMB DOCUMENTS AND THEY CLEARLY EVIDENCE THE TOTAL SALE CONSIDERATION FOR SALE OF VILLA. THE AMOUNT OF TOTAL CONSIDERATION WAS RS.53 LAKHS TO BE PAID BY THE EACH BUYER AND THE TIME 30 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM SCHEDULE OF THE PAYMENT BY THE BUYER FROM BOOKING OF VILLA TO HANDING OVER THE VILLA WAS GIVEN IN PAGE NO.54 AND 48 OF ANNEXURE A/NRE/SURVEY/BUSS/01. EMAIL DATED 17.02.2014 SHOWS THAT WEST FACING VILLA NO.83 WAS SOLD TO MS.SURI RADHIKA KALYANI VIDE DOCUMENT NO.4819/2014 DATED 26.09.2014 REGISTERED AT SRO, BHEEMILI, FOR A CONSIDERATION OF RS.36,25,000/ - AGAINST THE ACTUAL VALUE OF RS.53,00,000/ - AS FOUND IN THE IMPOUNDED MATERIAL IN ANNEXURE/NRE/SURVEY/BUSS/01. THE LD.DR FURTHER ARGUED THAT THE OTHER LOOSE SHEETS ALSO SHOWS THAT THE ASSESSEE HA D SOLD THE VILLAS FOR RS.50 LAKHS AND ABOVE, HOWEVER, REGISTERED AT RS.36,25,000/ - UNDERVALUING THE ACTUAL SALE PRICE OF THE VILLA. IN THE E - MAIL SENT TO KALYAN MANNURU ON 10.11.2014 IN ANNEXURE - A/NRE/SURVEY/BUSS/6 AND ANIL KUMAR LANKAS COMMUNICATION REQUESTING M/S BRICK AND MORTAR TO CHANGE THE PRICE OF BLUE MARINO TO RS.54 LAKHS ESTABLISHES THAT THE SALE CONSIDERATION WAS NOT LESS THAN 50.00 LACS FOR EACH VILLA. FURTHER DURING THE COURSE OF SURVEY U/S 133A, BUNDLE OF LOOSE SHEETS WERE FOUND AND SEIZED AS ANNEXURE BMHP/133A/ NAVARATNA. ON PERUSAL OF THE PAGE NO.50, IT IS FOUND THAT OUT OF 110 ACRES OF LAY OUT, 40 VILLAS WERE SOLD @RS.50 LAKHS PER VILLA AND 100 VILLAS WERE SOLD AT RS.60 LAKHS AND 23 VILLAS WERE AVAILABLE. THE ENTIRE MATERIAL SEIZED DURING THE COURSE OF SEARCH AND IMPOUNDED DURING THE SURVEY CLEARLY SHOWS THAT THE ASSESSEE 31 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM HAS SOLD THE VILLAS WITH 150 SQ.YDS OF SITE AND BUILT UP AREA OF 1850 SQ.FT., DUPLEX VILLAS IN THE PRICE RANGE OF RS.50 LAKHS TO RS.60 LAKHS. EVEN, SRI M.Y.SUBRAHMAN YAM, ONE OF THE PARTNERS HAD ADMITTED THE ON MONEY RECEIPT IN SALE OF VILLAS AND ALSO OFFERED THE ADDITIONAL INCOME. THEREFORE, THE LD.DR SUBMITTED THAT THERE WAS UNDISPUTED FACT THAT ON MONEY WAS INVOLVED IN SALE OF VILLAS. THE LD.DR FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH IN THE CASE OF SRI LANKA ANIL KUMAR, CHIEF EXECUTIVE OF THE ASSESSEE FIRM, HEADING MARKETING DIVISION, LOO SE SHEETS WERE FOUND AND SEIZED, MARKED AS ANNEXURE LAK/01 AND PAGE NO.6,7,8 CLEARLY SHOWS THAT THE ASSESSEE HAD RECEIVED THE ON MONEY, HOWEVER, ACCOUNTED THE SALE CONSIDERATION TO THE EXTENT OF REGISTERED PRICE INSTEAD OF ENTIRE ACTUAL SALE CONSIDERATION IN THE BOOKS OF ACCOUNTS. THE LD DR FURTHER SUBMITTED THAT THE AO COMPILED THE ASSESSMENT YEAR WISE, SALE PRICE AS PER BOOKS OF ACCOUNTS AND UNACCOUNTED MONEY RECEIVED WHICH WORK ED OUT TO RS.263.03 LAKHS FOR THE VILLAS ALREADY REGISTERED AND RS.237.34 LAK HS IN THE CASE OF VILLAS WHICH WERE NOT YET REGISTERED, BUT THE ON MONEY WAS RECEIVED. THE LD.DR ARGUED THAT T HE LD.CIT(A) DID NOT CONSIDER THE ENTIRE SEIZED MATERIAL AND IMPOUNDED MATERIAL , BEFORE HOLDING THAT ON MONEY RECEIVED WAS ONLY RS.24.25 LAKHS I N RESPECT OF TWO VILLAS AGAINST THE ADDITION OF RS.500 . 00 LAKHS. THE LD.DR ARGUED THAT T HE CONJOINT READING OF PAGE NO.6, 7 AND 8 AND 32 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM THE MATERIAL SEIZED FROM SHYAM AND IMPOUNDED FROM NAVARATNA ESTATES CLEARLY SHOWS THAT THE ASSESSEE HAD RECEIVED THE ON M ONEY IN ALL THE VILLAS AND THUS ARGUED THAT THE LD.CIT(A) OUGHT TO HAVE CONFIRMED THE ENTIRE ADDITION INSTEAD OF CONFIRMING PARTLY. THEREFORE, THE LD.DR SUBMITTED THAT THE LD.CIT(A) HAD ERRED IN DELETING THE ADDITION, HENCE REQUESTED TO SET ASIDE THE ORDE R OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE DEPARTMENT. THE LD.DR ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF SALES TAX, MADHYA PRADESH VS. H.M.ESUFALI H.M.ABDULALI [90 ITR 271(SC)] AND ARGUED THAT THE A O IS PERMITTED TO MAKE THE BONAFIDE ESTIMATE OF ON MONEY IN SALE OF VILLAS BASED ON A RATIONAL BASIS EVEN THOUGH THERE IS NO GOOD PROOF IN SUPPORT OF THE ESTIMATE. 16. PER CONTRA, THE LD.AR SUBMITTED THAT THE AO REFERRED THE SEIZED MATERIAL FOUND AND SEI ZED IN THE BUSINESS PREMISES OF THE ASSESSEE MARKED AS ANNEXURE NRE/01, PAGE NO.54,48 EMAIL DATED 17.02.2014, EMAIL SENT TO BRICK AND MORTAR ON 10.11.2014 AND THE LOOSE SHEETS FOUND DURING THE COURSE OF SURVEY IN CHEPALUPPADA MARKED AS BMHP/133A/NAVRATNA A ND OTHER EVIDENCES FOUND DURING THE COURSE OF SEARCH AND SURVEY IN THE BUSINESS PREMISES OF THE ASSESSEE AS WELL AS IN THE RESIDENTIAL PREMISES OF THE PARTNERS , BUT MADE THE ADDITION BASING ON THE SEIZED MATERIAL FOUND 33 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM DURING THE COURSE OF SEARCH FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR MARKED AS LAK/01 IN PAGE NO.6, 7 AND 8. THEREFORE, LD.A.R ARGUED THAT THE OTHER MATERIAL FOUND DURING THE COURSE OF SURVEY OR SEARCH IN THE BUSINESS PREMISES OR IN THE RESIDENCE OF PARTNER HAS NO RELEVANCE TO THE ASSESSM ENT AND SHOULD NOT BE TAKEN COGNIZANCE OF. THE LD.AR FURTHER STATED THAT THE AO HAD ISSUED SHOW CAUSE NOTICE DT.02.11.2017 AND THERE WAS NO MENTION OF LAK/01 SEIZED FROM LANKA ANIL KUMAR IN THE SHOW CAUSE NOTICE . ASSESSEE HAS OBJECTED FOR THE PROPOSED ADDITION OF RS.3.66 CRORES, OUT OF TOTAL SUM OF RS.9.84 CRORES ESTIMATED AS TOTAL UNACCOUNTED SALE CONSIDERATION AND THE AO DID NOT PROCEED FURTHER HENCE ARGUED THAT THE SAID MATERIAL IS NOT RELEVANT. HENCE, SUBMI TTED THAT THE ISSUE NEEDS TO BE DECIDED BASING ON THE EVIDENCE RELIED UPON BY THE AO I.E. LAK/01 SEIZED FROM L.ANIL KUMAR. THE LD . AR FURTHER SUBMITTED THAT OU T OF 40 VILLAS, THE INCOME ESTIMATED BY THE AO FOR 15 VILLAS BEARING NO.5, 9 TO 16, 33, 103, 115 , 116, 117 AND 149 , FOUND FROM PAGE NO.53 OF THE ASSESSMENT ORDER WERE REMAINED UNSOLD. THE SE VILLAS WERE NEITHER SOLD NOR REGISTERED TO THIRD PARTIES, HENCE THE QUESTION OF RECEIPT OF ON MONEY DOES NOT ARISE AND NO CASE FOR MAKING THE ADDITION. IN RES PECT OF 25 VILLAS FOR WHICH THE ADDITION WAS MADE AMOUNTING TO RS.263.03 LAKHS AS PER PAGE NO.6 OF THE LOOSE SHEETS NO ON MONEY WAS MENTIONED AGAINST ANY OF THE VILLA. ONLY THE 34 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM AMOUNT PAID WAS MENTIONED WHICH WAS LESS THAN THE TOTAL CONSIDERATION. THEREF ORE , THE LD.AR ARGUED THAT NO EVIDENCE WAS FOUND ESTABLISHING THE RECEIPT OF ON MONEY. THE LD.AR FURTHER ARGUED THAT, THESE PAPERS WERE FOUND IN THE PREMISES OF SRI LANKA ANIL KUMAR VIDE ANNEXURE LAK/01, BUT NOT IN THE PREMISES OF THE ASSESSEE. THE ASSESSE E HAD ALREADY DENIED AND DID NOT ACCEPT THE SUBMISSIONS MADE BY SRI LANKA ANIL KUMAR DURING THE STATEMENT RECORDED U/S 132(4) AND 131(1A). THEREFORE, ARGUED THAT THE STATEMENT RECORDED FROM SRI LANKA ANIL KUMAR CANNOT BE RELIED UPON BY THE AO TO DRAW ADVE RSE INFERENCE , SINCE, SRI SURESH KUMAR JAIN STATED THAT THE DOCUMENTS DO NOT CONTAIN ANY INFORMATION RELATING TO ON MONEY RECEIVED ON SALE OF VILLAS AND IT HAS NO RELEVANCE WITH THE AFFAIRS OF THE FIRM AND WHATEVER STATED BY SRI LANKA ANIL KUMAR WAS WRONG . THEREFORE, ARGUED THAT IN THE ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH EVIDENCING THE RECEIPT OF CASH OVER AND ABOVE THE SALE CONSIDERATION, THERE IS NO CASE FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. THE LD.AR FURTHER ARGUED THAT THE AO PLACED RELIANCE ON PAGE NO.54 OF ANNEXURE/NRE/BUSS/01 WHICH WAS A QUOTATION AND TIME SCHEDULE FOR PAYMENT OF SALE CONSIDERATION BUT THE EVIDENCE FOR SALE OF VILLA . THE QUOTATION CANNOT BE TAKEN AS A SALE PRICE UNLESS IT IS MATERIALIZED . THE QUOTATION IS SUBJECT TO NEGOTIATION AND FIXATION OF SALE PRICE AND CANNOT 35 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM BE TAKEN AS AN EVIDENCE AND INFER AGAINST THE ASSESSEE. SIMILARLY EMAIL DATED 17.02.2014 ALSO DOES NOT INDICATE ANY SALE PRICE AND RECEIPT OF ON MONEY. ENHANCING OF PRICE FROM RS.53 LAKHS TO RS.54 LAKHS IN THE MAIL SENT TO BRICK AND MORTAR IS NOTHING BUT BUSINESS AND MARKETING STRATEGY FOR GETTING THE BETTER PRICE. THERE IS NO INDICATION OR EVIDENCE FOR SALE OF VILLAS AT HIGHER THAN THE REGISTERED PRICE AND SAME IS CASE WITH P AGE NO.50/BMHP/133/NAVARATHA, THEREFORE, ARGUED THAT NONE OF THE SEIZED MATERIAL OR THE IMPOUNDED MATERIAL SHOWS THAT THE ASSESSEE HAD RECEIVED ON MONEY FOR SALE OF VILLAS. THE QUOTATIONS AND RATES QUOTED BY THE ASSESSEE CANNOT BE TAKEN AS A CONCLUSIVE P ROOF FOR RECEIPT OF CONSIDERATION WHEN THERE IS REGISTERED DOCUMENT SHOWING THE SALE PRICE OF VILLAS BEFORE SUB REGISTRAR OFFICE, BHEEMILI. HENCE, ARGUED THAT THE ACTUAL SALE PRICE IS AS PER THE REGISTERED DOCUMENT AND THERE IS NO ON MONEY RECEIVED BY THE ASSESSEE, HENCE REQUESTED TO DELETE THE ADDITION MADE BY THE AO INSTEAD OF CONFIRMING THE ADDITION PARTLY. THE LD.AR FURTHER SUBMITTED THAT THE FACTS OF THE CASE LAW RELIED UPON BY THE AO AS WELL AS THE LD.DR IN THE CASE OF H.M.ESUFALI H.M.ABDULALI ARE COMPLETELY DIFFERENT AND DISTINGUISHABLE AND HAS NO APPLICATION IN ASSESSEES CASE. ACCORDINGLY , THE LD.A.R REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE AND ALLOW THE CROSS OBJECTIONS FILED BY THE ASSESSEE. 36 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE AO HAS TAKEN REFE RENCE TO SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH AND INITIALLY PROPOSED TO MAKE THE ADDITION OF RS.3,66,75,000/ - AS PER PAGE NO.25 OF THE ASSESSMENT ORDER RELYING ON THE FOLLOWING DOCUMENTS : ( A ) PAGE NO.54 OF ANNEXURE A/NRE/SURVEY/BUSS/01 ( B ) PAGE NO .48 OF ANNEXURE - A/NRE/SURVEY/BUSS/01 ( C ) SOFT COPY OF EMAIL TO KALYAN SURI ON 17.02.2014 ( D ) SOFT COPY OF EMAIL DT.10.11.2014 TO KALYAN MANNURU OF BRICK AND MORTAR ( E ) REVERSE SIDE OF PAGE NO.50 OF ANNEXURE - BMHP/133A/NAVARATNA 17.1. THE LD.CIT(A) EXAMINED THE ABOVE S EIZED DOCUMENTS AND FOUND THAT NONE OF THE DOCUMENTS EVIDENCE THE RECEIPT OF ON MONEY BY THE ASSESSEE. THE LD.CIT(A) IN PARA NO.6.2(V) DISCUSSED IN DETAIL WITH REGARD TO FACTS OF PAGE NOS.48 AND 54 OF ANNEXURE - A/NRE/SURVEY/BUSS/01 AND GIVEN A FINDING THAT IT DOES NOT CONTAIN THE DETAILS LIKE VILLA NUMBER, NAME OF THE CUSTOMER, DATE OF AGREEMENT, DATE OF PAYMENT ETC. AND IT IS A QUOTATION FOR SALE OF VILLAS. THE ASSESSEE ALSO EXPLAINED THAT THE PRICE MENTIONED ON THE SEIZED PAPER WAS A QUOTATION TO THE CU STOMERS WHICH I S SUBJECT TO NEGOTIATIONS AND INCLUSIVE OF THE STAMP DUTY, REGISTRATION FEE ETC.. HENCE, THE LD.CIT(A)VIEWED THAT THE SAME CANNOT BE TAKEN AS AN EVIDENCE FOR RECEIPT OF ON MONEY OVER AND ABOVE THE REGISTERED PRICE. 37 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 17.2. THE NEXT DOCUMEN T WAS SOFT COPY OF EMAIL ADDRESSED TO KALYAN MANNURU OF BRICK AND MORTAR, WHEREIN LANKA ANIL KUMAR HA D ASKED TO CHANGE THE PRICE FROM RS.53 LAKHS TO RS.54 LAKHS. THE LD.CIT(A) OBSERVED THAT BRICK AND MORTAR IS WEB BASED ADVERTISING AGENCY FOR REAL ESTATE TRANSACTIONS AND THE ASSESSEE HAD REQUESTED THEM TO MENTION PRICE QUOTATION AT RS.54 LAKHS WHICH DOES NOT INDICATE PAYMENT OF ON MONEY OR RECEIPT OF ON MONEY. THE DOCUMENTS BEARING NO. ANNEXURE BMHP/133A/NAVARATNA DOES NOT CONTAIN ANY SPECIFIC INFORMATION REGARDING RECEIPT OF ON MONEY ON ACCOUNT OF SALE OF VILLAS. THEREFORE, THE LD.CIT(A) FOUND THAT ON T HE BASIS OF ABOVE DOCUMENTS IT CANNOT BE PRESUMED THAT THE ASSESSEE HAD RECEIVED ON MONEY WITHOUT HAVING THE CORROBORATING EVIDENCE. THE AO HAS CONSIDERED THE SALE PRICE OF RS.53 LAKHS FOR 23 VILLAS FOR THE A.Y.2016 - 17 ON THE BASIS OF PAGE NO.54 OF ANNEXU RE - A/NRE/SURVEY/BUSS/01 AND ISSUED SHOW CAUSE NOTICE BUT DID NOT TAKE THE SAME FOR COMPUTING THE INCOME OR FOR ARRIVING AT UNACCOUNTED INCOME. D IFFEREN T AMOUNTS WERE MENTIONED IN THE MATERIAL FOUND DURING THE COURSE OF SEARCH REGARDING THE SALE PRICE OF T HE VILLAS. ONE QUOTATION SHOWS 53.00 LACS AND ANOTHER DOCUMENT SHOWS AT RS.50 LAKHS AND 60 LAKHS. AT THE END THE AO ALSO DID NOT PLACE RELIANCE ON THE ABOVE DOCUMENTS FOR ARRIVING AT THE UNDISCLOSED INCOME. DURING THE APPEAL HEARING ALSO THE 38 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM DEPARTMENT CO ULD NOT PLACE ANY EVIDENCE TO CONTROVERT THE FINDING OF THE LD.CIT(A). WE ALSO OBSERVE FROM THE SEIZED MATERIAL OR IMPOUNDED MATERIAL MARKED AS ANNEXURE NRE/SURVEY/BUSS/01 , BMHP/133A/NAVARATNA, PAGE NO.50 AND OTHER EMAIL CORRESPONDENCE THAT THERE WAS NO INDICATION OR EVIDENCE TO SUPPORT THE RECEIPT OF ON MONEY BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY REASON TO DISAGREE WITH THE LD.CIT(A). WITH REGARD TO SEIZED OR IMPOUNDED DOCUMENTS MENTIONED IN PARA NO.17 OF THIS ORDER, THE DEPARTMENT ALSO DID NOT PLACE ANY MATERIAL TO CONTROVERT THE FINDING S OF LD.CIT(A) ON THIS ISSUE. FURTHER THOUGH THE AO REFERRED THE ABOVE IMPOUNDED OR SEIZED MATERIAL AND ULTIMATELY DROPPED THE PROPOSAL AND RELIED ON PAGE NO.6 TO 8 OF LAK/01 FOUND AND SEIZED FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR FOR ASSESSMENT OF UNDISCLOSED INCOME IN RESPECT OF BLUE MARINO PROJECT. THE AO ESTIMATED THE UNDISCLOSED INCOME AT RS.263.03 LAKHS COMPRISING OF 25 VILLAS AND RS.237 LAKHS COMPRISING OF 15 VILLAS ON THE BASIS OF PAGE NO.6 TO 8 OF ANNEXURE LAK/01 FOUND AND SEIZED FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR. THE LD.CIT(A) FOUND FROM THE SEIZED MATERIAL THAT THERE WAS INDICATION OF ON MONEY RECEIVED IN RESPECT OF PLOT NO.122 AND PLOT NO.139. IN RESPECT OF PLOT NO.122 SALE PRICE WAS ASS ESSED AT RS.52.50 LAKHS AGAINST THE REGISTERED PRICE OF 36.25 LAKHS, SHOWING THE DIFFERENCE AMOUNT OF RS.16.25 LAKHS 39 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM WHICH WAS CONFIRMED BY THE LD.CIT(A) HOLDING THAT THERE WAS ON MONEY RECEIPT TO THE EXTENT OF RS.16.25 LAKHS. SIMILARLY IN THE CASE OF PLO T NO.139, SALE PRICE WAS ASSESSED AT RS.44.25 LAKHS AGAINST THE DOCUMENT PRICE OF RS.36.25 LAKHS. THUS THERE WA S A DIFFERENCE OF RS.8 LAKHS WHICH WAS CONFIRMED BY THE LD.CIT(A). 17.3. MR.YETHIRAJA SUBRAMANYAM ADMITTED THE RECEIPT OF ON MONEY ON SALE OF VILLAS AND ADMITTED THE UNDISCLOSED INCOME OF RS.1.90 CRORES FOR THE IMPUGNED ASSESSMENT YEAR BUT LATER ON RETRACTED FROM THE ADMISSION. OTHER PARTNER , SRI SURESH KUMAR JAIN DID NOT ACCEPT THE ADMISSION STATING THAT HE WAS NOT IN GOOD HEALTH. THE AO ALSO D ID NOT CONSIDER THE ADMISSION GIVEN BY MR.M.Y.SUBRAMANYAM FOR MAKING THE ADDITION . MR.SUBRAMANYAM ALSO DID NOT GIVE THE DETAILS OF ON MONEY RECEIVED WITH DETAILS OF VILLA NO, NAME OF THE CUSTOMER, SALE PRICE, THE DOCUMENT PRICE ETC.. THE ASSESSING OFFICER ALSO DID NOT MAKE ANY CROSS ENQUIRIES TO ASCERTAIN THE CONSIDERATION RECEIVED OVER AND ABOVE THE DOCUMENTED PRICE FROM THE BUYER. IN THE CIRCUMSTANCES THE STATEMENT AND QUOTATIONS REFERRED BY THE AO CANNOT BE TAKEN AT ITS FACE VALUE TO HOLD THAT THE ASSE SSEE HAD RECEIVED THE ON MONEY OVER AND ABOVE THE SALE PRICE. 40 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 17.4. THE ASSESSING OFFICER MAINLY PLACED HIS RELIANCE ON THE DOCUMENT SEIZED FROM SRI LANKA ANIL KUMAR IN ANNEXURE:LAK/01 PAGE NO.6 TO 8. PAGE NO.6 REVERSE SIDE SHOWS THE SALE PRICE AND REGI STERED PRICE OF THE VILLAS . FRONT SIDE PAGE SHOWS SOME NOTINGS AND LUMPSUM AMOUNT AGAINST THE VILLA NO.122 AND 139 WHICH READS AS UNDER: 122 VO 52.00 16.00 PAID 139 DT VT 44.25 8.25 PAID 17.5. ON THE BASIS OF ABOVE NOTINGS, T HE LD.CIT(A) CONSIDERED THAT THERE WAS AN ELEMENT OF ON MONEY RECEIPT, AS RECORDED ON PAGE NO.6 OF THE SEIZED MATERIAL WHICH WAS FOUND FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR MARKED AS LAK/01. DURING THE COURSE OF STATEMENT RECORDED FROM SRI LANKA ANIL KUMAR, HE HA D STATED THAT PAGE NO.6 TO 8 RELATED TO THE INFORMATION OF VILLA OF BUYERS AND MAJOR PART OF THE AMOUNTS WERE COLLECTED. SRI SURESH KUMAR JAIN IN THE STATEMENT, CONFRONTED WITH HIM, COMPLETELY DENIED HAVING RECEIVED ANY ON MONEY AND STATED THAT STATEMENT GIVEN BY ANIL KUMAR HAS NO RELEVANCE TO AFFAIRS OF THE FIRM AND WHATEVER STATED BY LANKA ANIL KUMAR WAS WRONG. THE AO DID NOT MAKE ANY CROSS VERIFICATION OF THE STATEMENT GIVEN BY SRI SURESH KUMAR JAIN WITH SRI LANKA ANI L KUMAR OR WITH ANY OF THE BUYERS OF THE VILLAS TO ASCERTAIN THE RECEIPT OF ON MONEY. THE ABOVE SCRIBBLING FOUND AND SEIZED AS ANNEXURE LAK/01 41 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM DOES NOT INDICATE ANY ON MONEY EXCEPT GIVING LEAD S TO CONSIDER THE TOTAL SALE CONSIDERATION COULD BE RS.52.00 L ACS IN CASE OF VILLA NO.122 AND RS.44.25 LACS IN THE CASE OF VILLA NO.139. SINCE THE MATERIAL WAS FOUND IN THE RESIDENCE OF LANKA ANIL KUMAR THE PRESUMPTION IS NOT AVAILABLE TO HOLD THAT CONTENTS WERE RELATED TO THE ASSESSEE FIRM UNLESS IT IS ESTABLISHED BY THE REVENUE. THEREFORE, MERELY ON THE BASIS OF SCRIBBLING, IT CANNOT BE PRESUMED THAT THE ASSESSEE HAD RECEIVED THE ON MONEY WITHOUT HAVING SUPPORT OF THE CORROBORATING EVIDENCE. SINCE THE TOTAL CONSIDERATION IN PAGE NO.6 ( REVERSED SIDE) T ALLIES WITH T HE REGISTERED DOCUMENT, WHICH WAS REGISTERED BEFORE SUB REGISTRAR OFFICE AND THERE WAS NO OTHER EVIDENCE TO SHOW THAT THE ASSESSEE HAD RECEIVED ON MONEY ON SALE OF VILLAS, IT IS UN JUSTIFIED TO HOLD THAT THE ASSESSEE HAD RECEIVED THE ON MONEY AND MAKE ADDI TION AS UNDISCLOSED INCOME ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF SRI LANKA ANIL KUMAR, WHO IS A MARKETING EXECUTIVE AND NOT EVEN A PARTNER. SECTION 292C OF THE ACT PRESUMES THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH BELONGS TO THE ASSESSEE IN THE CASE OF THE SEARCHED PERSON. IN THE INSTANT CASE, THE SEARCHED PERSON WAS SRI LANKA ANIL KUMAR, WHEREAS NAVARATNA ESTATES IS THE ASSESSEE , A DIFFERENT PARTNERSHIP FIRM. THEREFORE, THE MATERIAL FOUND DURING THE CO URSE OF SEARCH FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR 42 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM CANNOT BE ATTACHED WITH THE ASSESSEE WITHOUT HAVING SUFFICIENT EVIDENCE. THOUGH SRI LANKA ANIL KUMAR HA D STATED THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH WAS RELATABLE TO THE ASSESSEE HE HAS NOT FURNISHED THE COMPLETE DETAILS WITH DATE OF RECEIPT WHETHER IT WAS OVER AND ABOVE THE REGISTERED PRICE OR NOT OR WHETHER THE RECEIPTS MENTIONED ON THE REVERSE SIDE OF PAGE NO.6 WAS PART OF TOTAL SALE CONSIDERATION, REGISTERED CONSIDERATION OR OVER AND ABOVE THE REGISTERED SALE CONSIDERATION ETC . IN ANY CASE, THE AO CANNOT SOLELY DEPEND ON THE MATERIAL FOUND FROM THE RESIDENCE OF SRI LANKA ANIL KUMAR AND LOOSE SHEETS TO MAKE THE ADDITION OF UNDISCLOSED INCOME. IN THIS CONNECTION WE FIND THAT SIMILAR VIEW WAS EXPRESSED BY THE COORDINATE BENCH OF ITAT, HYDERABAD IN RESPECT OF ON MONEY PAYMENT AND THE JURISDICTIONAL HIGH COURT ON IDENTICAL FACTS. FOR THE SAKE OF CLARITY WE EXTRACT THE RELEVANT PART OF THE ORDERS OF THE TRIBUNAL WHICH READS AS UNDER: 1 8. THE A.R. RELIED UPON ITAT HYDERABAD 'A' BENCH DECISION IN THE CASE OF SMT. K.V. LAKSHMI SAVITRI DEVI VS. ACIT (2012) 148 TTJ 517, WHEREIN THE TRIBUNAL UNDER SIMILAR CIRCUMSTANCES HELD AS UNDER: ADMITTEDLY THERE WAS NO SEARCH ACTION IN THE CASE OF THE ASSESSEE. IT IS A LOOSE SLIP CONTAINING CERTAIN ENTRIES RECORDING THE PAYMENT WHICH WAS FOUND AT THE PREMISES OF CRK. IT DOES NOT CONTAIN EITHER DATE OF PAYMENT OR NAME OF THE PERSON WHO HAS MADE THE PAYMENT. ACCORDING TO THE DEPARTMENT, CRK DENOTES C. RAD HA KRISHNA KUMAR AND KRK DENOTES K. RAJANI KUMARI. HOWEVER, NO NAME OF THE ASSESSEE WAS FOUND IN THE LOUSE SHEET. THE P ROPERTY WAS PURCHASED FROM P W/O CRK FO R A DISCLOSED CONSIDERATION OF R S. 65 LAKHS BY THE ASSESSEE. THE PROPERTY HAS BEEN 43 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM RE GISTERED AND THE SALE DEED WAS E XECUTED FOR A CONSIDERATION OF R S. 65 LAKHS ON 21 ST AUG., 2006 WHICH CONSIDERATION HAS BEEN ACCEPTED BY THE STATE REGISTRATION AUTHORITIES. FURTHER NOTHING WAS BROUGHT ON RECORD TO SHOW THAT THERE WAS ANY INVOKING OF S. 50C WHILE COMPLETING THE ASSESSMENT IN THE CASE OF THE SELLER. THERE IS NO EVIDENCE OTHER THAN THE SEIZED MATERIAL MARKED AS A /CRK / 104' WHERE RELEVANT ENTRIES ARE MADE AT RS.1,65,00,000. THE SEIZED MATERIAL WAS NOT FOUND AT THE PREMISES O F THE ASSESSEE AND T HERE IS NO CORROBORATIVE MATERIAL TO SUGGEST THAT THE ASSES SEE HAS ACTUALLY PAID RS. 1.65 C RORES TOWARDS PURCHASE CONSIDERATION OF THE PROPERTY. THE ASSESSEE AND HER BROTHER CATEGORICALLY DENIED THE PAYMENT OF ANY MONEY OVER AND ABOVE RS. 65 LAKHS. THE AO PLACED HI S RELIANCE ON THE STATEMEN T OF S , WHO IS A THIRD PARTY. THE EVIDENCE BROUGHT ON RECORD BY THE DEPARTMENT IS NOT ENOUGH TO FASTEN ADDITIONAL TAX LIABILITY ON THE ASSESSEE. AS SEEN FROM THE ABOVE DOCUMENT THIS IS JUST A HANDWRITTEN LOOSE DOCUMENT AN D THE HANDWRITING IS ALSO NOT OF THE ASSESSEE AND THE LOOSE DOCUMENT WAS FOUND AT THE PREMISES OF A THIRD PARTY. THE BURDEN IS ON THE DEPARTMENT TO PROVE CONCLUSIVELY THAT THE LOOSE DOCUMENT BELONGS TO THE ASSESSEE. THERE IS NO PRESUMPTION IN LAW THAT THE ASSESSEE HAS ACTUALLY PAID R S. 165 LAKHS TOWARDS PURCHASE OF THE PROPERTY. THE UNDISCLOSED INCOME IN THIS CASE IS TO BE COMPUTED BY THE A 0 ON THE BASIS OF THE AVAILABLE MATERIAL ON RECORD. IT SHOULD NOT BE BASED ON CONJECTURES AND SURMISES. AS OF NOW THE M ATERIAL CONSIDERED BY THE A0 FOR MAKING THE ADDITION OF R S. 1 CRORE IS SEIZED MATERIAL MARKED A S A/CR K / 1 04 AND THE STATEMENT OF S. THIS LOOSE SHEET FOUND AT THE PREMISES OF CRK IS NOT ENOUGH MATERIAL TO SUSTAIN THIS ADDITION. THE SEIZED MATERIAL FOUND DUR ING THE COURSE OF SEARCH AND THE STATEMENT RECORDED IS SOME PIECE OF EVIDENCE TO MAKE THE ADDITION . THE A0 HAS TO ESTABLISH THE L INK BETWEEN THE SEIZED MATERIAL AND OTHER BOOKS OF ACCOUNT TO THE ASSESSEE. THE SEIZED MATERIAL AND STATEMENT OF CRK CANNOT BE CONCLUSIVE EVIDENCE TO MAKE THIS ADDITION. THE ENTIRE CASE HEREIN IS DEPENDING UPON THE RULE OF EVIDENCE. THERE IS NO CONCLUSIVE PRESUMPTION TO SAY THAT ACTUAL CONSIDERATION PASSED ON B ETWEEN THE PARTIES IS ACTUALLY R S. 165 LAKHS. THE ASSESSEE AS WELL AS HER BROTHER STATED IN THEIR RESPECTIVE STATEMENTS THAT THE CONSIDERATION PASSED BETWEEN THE PARTIES IS ONLY RS. 65 LAKHS. IN SPITE OF THIS THE AO PROCEEDED TO CONCLUDE THAT THE SEIZED MATERIAL IS CONCLUSIVELY REFLECTING THE PAYMENT OF CONSIDERATION AT RS. 165 LAKHS. THE DEPARTMENT HEREIN I S REQUIRED TO ESTABLISH THE NEXUS OF THE SEIZED MATERIAL TO THE ASSESSEE. AS STATED EARLIER THERE IS NO DATE AND NAME OF THE ASSESSEE. THE ALLEGATION OF THE DEPARTMENT IS THAT THE SEIZED MATERIAL DENOTES THE PAYMENT MADE B Y THE ASSESSEE TO THE PURCHASER FOR PURCHASE OF THE PROPERTY. HOWEVER, NO SUCH NARRATION OR NAME OF THE ASSESSEE WAS FOUND IN THE SEIZED MATERIAL. THE DEPARTMENT IS NOT ABLE TO UNEARTH ANY DOCUMENT OR MATERIAL OR ANY CORROBORATIVE MATERIAL TO SHOW THAT THE ASSESSEE HEREIN ACTUALLY PAID R S. 165 LAKHS 44 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM FOR PURCHASE OF THE PROPERTY. THE DEPARTMENT HAS NOT BROUGHT ON RECORD THE DATE ON WHICH THE PAYMENT WAS M ADE AND THE SOURCE FROM WHICH IT IS PAID AND/OR ANY DETAILS OF BANK ACCOUNT FROM WHERE THE CASH WAS WITHD RAWN. WITHOUT ANY OF THESE DETAILS, THE DEPARTMENT HAS TAKEN A V IEW THAT THE ASSESSEE HAS PAID R S.165 LAKHS FOR PURCHASE OF THE PROPERTY. THE DEPARTMENT CANNOT DRAW INFERENCE ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. SUSPICION, HOWEVER STRONG CA NNOT TAKE PLACE OF MATERIAL IN SU PPORT OF THE FINDING FROM THE A 0. THE A0 SHOULD ACT IN A JUDICIAL MANNER, PROCEED WITH JUDICIAL SPIRIT AND COME TO A JUDICIAL CONCLUSION. THE A0 IS REQUIRED TO ACT FAIRLY AS A REASONABLE PERSON AND NOT ARBITRARILY AND CAPRI CIOUSLY. THE ASSESSMENT MADE SHOULD HAVE ENOUGH MATERIAL AND IT SHOULD STAND ON ITS OWN LEGS. THE BASIS FOR ADDITION CANNOT BE ONLY THE LOOSE SHEET OR A THIRD PARTY STATEMENT. IN THE ABSENCE OF CORROBORATIVE MATERIAL, AND/OR CIRCUMSTANTIAL EVIDENCE, THE AD DITION CANNOT BE SUSTAINED. THUS, NO ADDITION CAN BE MADE ON A DUMB DOCUMENT AND NOTING ON LOOSE SHEET. IT SHOULD BE SUPPORTED BY THE EVIDENCE ON RECORD AND THE EVIDENCE ON RECORD IS NOT SUFFICIENT TO SUPPORT THE REVENUE'S ACTION. IN A BLOCK ASSESSMENT UND ISCLOSED INCOME HAS TO BE DETER MINED ON THE BASIS OF THE MATERIAL AND EVIDENCE DETECTED IN THE COURSE OF THE SEARCH ACTION. THE CIRCUMSTANCES SURROUNDING THE CASE ARE NOT STRONG ENOUGH TO JUSTIFY THE ADDITION MADE BY THE DEPARTMENT. THE BURDEN OF PROVING T HE ACTUAL CONSIDERATION IN THE PURCHASE OF PROPERTY IS ON THE REVENUE. CONSIDERING THE ENTIRE FACTS OF THE CASE, THE REVENUE HAS FAILED TO DISCHARGE ITS DUTY, INSTEAD MADE UP A CASE ON SURMISES AND CONJECTURES WHICH CANNOT BE ALLOWED. UNDER THESE CIRCUMSTA NCES, THERE IS NO REASON TO CONFIRM THE ADDITION OF RS. 100 LAKHS TOWARDS ON - MONEY PAYMENT. ACCORDINGLY, THE ADDITION OF RS. 100 LAKHS IS DELETED. CIT VS. P. V. KALYANASUNDARAM (2006) 203 CTR (MAD) 449: (2006) 282 ITR 259 (MAD) RELIED ON' 19. THE HON'BL E A.P. HIGH COURT IN THE CASE OF SMT. K.V. LAKSHMI SAVITRI DEVI VS. ACIT IN ITTA 563 OF 2011, UPHELD THE ORDER OF THE ITAT HYDERABAD BENCH. THE HON'BLE HIGH COURT WHILE, DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HELD AS UNDER: 'WE ARE OF THE VIEW THAT T HE TRIBUNAL HAS RIGHTLY HELD THAT THE REGISTE RED DOCUMENT DT. 21.8.2006 UNDE R WHICH THE RESPONDENT PURCHASED THE ABOVE PROPERTY SHOWED THAT ONLY RS. 65.00 LAKHS WAS PAID TO THE VENDOR BY THE RESPONDENT; THAT THERE WAS NO EVIDENCE TO SHOW THAT THE RESPONDEN T HAD PAID RS. 1.00 CRORE IN CASH ALSO TO THE VENDOR; THAT NO PR ESUMPTION OF SUCH PAYMENT OF R. .1.00 CRORE IN CASH CAN BE DRAWN ON THE BASIS OF AN ENTRY FOUND IN A DIARY/LOOSE SHEET IN THE PREMISES OF C. RADHA KRISHNA KUMAR WHICH IS NOT IN THE 45 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM RESPONDENT'S HANDWRITING AND WHICH DID NOT CONTAIN THE NAME OF THE RESPONDENT OR ANY DATE OF PAYMENT OR THE NAME OF THE PERSON WHO MADE THE PAYMENT. IT RIGHTLY HELD THAT THE REVENUE FAILED TO ESTABLISH THE NEXUS OF THE SEIZED MATERIAL TO THE RESPONDENT AND HAD DRAWN I NFERENCES BASED ON SUSPICION, CONJECTURES AND SURMISES WHICH CANNOT TAKE THE PLACE OF PROOF WE ALSO AGREE WITH THE TRIBUNAL THAT THE ASSESSING OFFICER DID NOT CONDUCT ANY INDEPENDENT ENQUIRY RELATING TO THE VALUE OF THE PROPERTY PURCHASED AND THE BURDEN OF PROVING THE ACTUAL CONSIDERATION IN THE PURCHASE OF THE PROPERTY IS ON THE REVENUE AND IT HAD FAILED TO DISCHARGE THE SAID BURDEN.' 20. THE A.R. FURTHER RELIED UPON THE ITAT AHMEDABAD 'C' BENCH DECISION IN THE CASE OF JAWAHARBHAI ATMARAM HATHIWALA VS. ITO REPORTED IN (2010) 128 TI] 36, WHEREIN UNDER SIMILAR SET OF FACTS, THE HON'BLE ITAT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 'THE ASSESSEE HAS CLAIMED TO HAVE MADE PAYMEN T OF RS. 1,01,687/ - ONLY UPTO 31 ST MARCH, 1999 AND HAS CONSISTENTLY TAKEN THE STAND THAT IT HAS NOT PAID BALANCE AMOUNT OF RS.3,81,414/ - AS STATED IN THE SEIZED DOCUMENT. NO EVIDENCE COULD BE BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT IN FACT THE ASSESSEE HAD PAID THE AMOUNT OF RS. 3,81,414/ - TO OD. NO DOCUMENT CONTAINI NG SIGNATURE OF THE ASSESSEE OR HANDWRITING OF THE ASSESSEE TO CORROBORATE THE ABOVE MAKING OF PAYMENT BY THE ASSESSEE WAS FOUND DURING THE COURSE OF THE SEARCH. EVEN AT TIME OF CROSS EXAMINATION BY THE ASSESSEE THE PARTNER OF OD COULD NOT PRODUCE ANY EVID ENCE THAT THE AMOUNT WRITTEN IN THE SEIZED DOCUMENT WAS IN FACT RECEIVED FROM THE ASSESSEE. AS THE ASSESSEE HAS CATEGORICALLY DENIED TO HAVE MADE ANY PAYMENT IN EXCESS OF RS. 1,01,687/ - UPTO 31 ST MARCH, 1999 IN RESPECT OF PURCHASE OF FLAT THE SAID DENIAL C ANNOT BE BRUSHED ASIDE WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORD. MERELY RECORDING MADE BY A THIRD PARTY OR STATEMENT OF A THIRD PARTY CANNOT BE TREATED AS SO SACROSANCT SO AS TO READ AS A POSITIVE MATERIAL AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING ADDITION TO THE EXTENT OF RS.3,81,414/ - IN THE HANDS OF THE ASSESSEE. THEREFORE THE ADDITION OF R S .3,81,414 / - IS DELETED. ASST. CIT VS. PRABHAT OIL MILLS (1995) 52 TTJ (AHD) 533 RELIED ON; K.P. VARGHESE VS. ITO ( 1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC) APPLIED' 21. IN YET ANOTHER CASE, THE ITAT HYDERABAD 'B' BENCH IN THE CASE OF DCIT (CENTRAL CIRCLE) - 6 VS. B. VIJAY KUMAR IN ITA NO.930 & 931 OF 2009 HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 11. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MATERIAL SUBMITTED BEFORE US AND ALSO PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. ON A READING OF THE ASSESSMENT ORDER, IT IS 46 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ABSOLUTELY CLEAR THAT THE ADDITION HAS BEEN MADE ENTIRELY ON THE BASIS OF THE PHOTOCOPY OF THE SALE AGREEMENT SEIZED FROM THE RESIDENCE OF THE ASSESSEE IN COURSE OF SEARCH AND SEIZURE OPERATION. UNDISPUTEDLY, THE SALE AGREEMENT IS ONLY PHOTOCOPY AND HAS NOT BEEN SIGNED BY THE ASSESSEE. THE ASSESSEE HAS ALSO RAISED SERIOUS ALLEGATION REGARDING THE SEIZURE OF THE IMPUGNED DOCUMENT AND FILED AFFIDAVIT BEFORE DDIT (INV.) ASSERTING THAT THE SAID DOCUMENT WAS PLANTED BY AN OFFICER OF THE DEPARTMENT ALSO NAMED BY THE ASSESSEE IN THE AFFIDAVIT. HOWEVER, SUCH ALLEGATION OF THE ASSESSEE HAS NO T AT ALL BEEN ENQUIRED INTO AND HAS BEEN MET WITH COMPLETE SILENCE BY THE DEPARTMENT. FROM THE MATERIALS ON RECORD, IT IS VERY CLEAR THAT THE AO HAS FAILED TO LAY HIS HANDS ON ANY CREDIBLE EVIDENCE TO ESTABLISH THE FACT THAT THE ASSESSEE HAS PURCHASED THE PROPERTY FOR A CONSIDERATION OF RS.1,68,00,000/ - AS MENTIONED IN THE PHOTO COPY OF SALE AGREEMENT SEIZED IN COURSE OF SEARCH AND SEIZURE OPERATION. THE ASSESSEE HAS PRODUCED BEFORE THE AO REGISTERED SALE DEEDS IN SUPPORT OF ITS CLAIM THAT THEY HAD PURCHASE D THE PROPERTY FOR A CONSIDERATION OF RS. 23.50 LAKHS. WHEN THE AO ALLEGES THAT THE ASSESSEE HAS PAID MORE THAN WHAT HAS BEEN DECLARED IN THE REGISTERED SALE DEED BECAUSE THE FAIR MARKET VALUE OF THE ASSET AS ON THE DATE OF TRANSACTION EXCEEDS FULL VALUE O F CONSIDERATION DECLARED BY THE ASSESSEE THEN IT IS FOR THE AO TO PROVE THAT THE VALUE DECLARED BY THE ASSESSEE IS UNDERSTATED. IN THE APPEAL BEFORE US, EXCEPTING THE PHOTO COPY OF SALE AGREEMENT, THERE IS NO OTHER EVIDENCE ON RECORD FOUND AS A RESULT OF S EARCH OR BROUGHT ON RECORD ON THE BASIS OF ENQUIRY CONDUCTED BY THE AO WHICH COULD ESTABLISH THE FACT THAT THE ACTUAL CONSIDERATION PASSED BETWEEN THE PARTIES IS NOT AS MENTIONED IN THE REGISTERED SALE DEED BUT AS PER THE SALE AGREEMENT FOUND DURING SEARCH OPERATION. IT IS ALSO AN INTERESTING FACT TO NOTE THAT IN THE STATEMENT RECORDED FROM THE ASSESSEE U/S 132(4) THE REVENUE AUTHORITIES HAVE NOT PUT ANY QUESTION WITH REGARD TO THE SALE AGREEMENT SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERATIONS. SMT. P. NALINI DEVI ALSO IN HER STATEMENT FURTHER CLEARLY STATED THAT THE PROPERTY WAS SOLD AT RS.23.50 LAKHS AND NOT AT THE RATE OF RS.1.68 CRORES. THE HON 'BLE SUPREME COURT IN THE CASE OF K.P. VERGHESE REPORTED IN 131 ITR 597 HAS HELD THAT ONUS IS ON THE DEPART MENT TO PROVE THAT THE ASSESSEE HAS UNDERSTATED THE VALUE OF THE PROPERTY AND HAS PAID MORE THAN WHAT IS MENTIONED IN THE REGISTERED SALE DEED. THE HON'BLE SUPREME COURT IN THE CASE OF MOOSA S. MADHA AND AZAM S. MADHA VS. CI T ( 89 ITR 65) HAS HELD THAT PHOTO COPIES HAVE LITTLE EVIDENTIARY VALUE. THEREFORE, PHOTOCOPIES OF ANY DOCUMENT CANNOT BY ITSELF BE CONSIDERED AS EVIDENCE FOR PURPOSE OF MAKING 47 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ADDITION IN ASSESSMENT PROCEEDINGS. THE AO IS REQUIRED TO BRING FURTHER EVIDENCE ON RECORD TO SHOW THAT THE SALE AGREEMENT WAS ACTUALLY ACTED UPON BY THE PARTIES. THIS IS BECAUSE OF THE FACT WHEN THE AO IS GOING TO MAKE AN ADDITION, THERE SHOULD BE SUFFICIENT EVIDENCE BROUGHT ON RECORD TO SUPPORT SUCH ADDITION. NO ADDITION CAN BE MADE ON CONJECTURES AND SURMISES . AS SEEN FROM THE ASSESSMENT ORDER, THE AO HAS ADOPTED VALUE OF THE PROPERTY AT THE RS.7000/ - PER SQ. YARD ON THE DATE OF TRANSACTION. FOR ADOPTING SUCH A VALUATION, THE AO HAS NOT CONDUCTED ANY ENQUIRY OR BROUGHT ANY MATERIALS ON RECORD TO SHOW THAT THE VALUE OF THE PROPERTY ON THE DATE OF TRANSACTION WAS ACTUALLY PS. 7000 PER SQ. YARD. ON THE OTHER HAND, THE ASSESSEE HAS DEMONSTRATED WITH SUPPORTING EVIDENCE THAT THE VALUE OF THE LAND ON THE DATE OF TRANSACTION WAS THE RATE MENTIONED IN THE REGISTERED SA LE DEED AND FOR WHICH THE PROPERTY WAS SOLD. THE ASSESSEE HAS ALSO PRODUCED SUFFICIENT EVIDENCE TO SHOW THAT THE RE WAS DISPUTE GOING ON REGARDING THE LEGAL RIGHT OVER THE PROPERTY WHICH ALSO HAD AN EFFECT ON THE FAIR MARKET VALUE OF THE PROPERTY. IT IS AL SO PERTINENT TO MENTION HERE THAT THE ASSESSEE HAD FILED HIS RETURN F INCOME FOR THE ASSESSMENT YEARS UNDER DISPUTE MUCH PRIOR TO THE DATE OF SEARCH DECLARING THE PURCHASE OF LAND IN QUESTION AT THE CONSIDERATION MENTIONED IN THE REGISTERED SALE DEEDS, SO FAR AS THE AO'S OBSERVATIONS ON THE LOOSE SHEETS RECOVERED FROM THE RESIDENCE OF SMT. NAILNI DEVI ARE CONCERNED, THE CIT (A) AFTER DULY EXAMINING THEM HAS GIVE N A CONCLUSIVE FINDING THAT THE ASSESSEE'S NAME HAS NO WHERE BEEN MENTIONED IN THOSE DOCUMENTS NO R THE AMOUNT OF RS.109.48 LAKHS REPRESENTS THE EXPENDITURE INCURRED BY SMT NALINI DEVI. HOWEVER, THE AMOUNT WAS FOUND TO BE THE SUMMARY OF THE BALANCE OF VARIOUS ACCOUNTS OPERATED BY THE FAMILY MEMBERS OF SMT. NALINI DEVI. WE FIND THAT THE CIT (A) IN HIS E LABORATE AND WELL REASONED ORDER HAS DEALT WITH ALL THESE ASPECTS AND CAME TO A FINDING ON FACT THAT THE AO HAS MADE THE ADDITION PURELY ON CONJECTURES AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL OR EVIDENCE BROUGHT ON RECORD. ON EXAMINING THE FACTS AND MATERIALS BEFORE US, WE ARE OF THE VIEW THAT THE FINDING ARRIVED BY THE CIT (A) IS JUST AND PROPER AND IN ACCORDANCE WITH THE PRINCIPLES OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT AND HON'BLE HIGH COURTS WHICH ARE CITED BEFORE HIM. WE THEREFORE FIND NO NECESSITY TO INTERFERE WITH THE FINDING OF THE CIT (A) ON THIS ISSUE. HENCE THE GROUNDS RAISED BY THE REVENUE FOR THE YEARS UNDER CONSIDERATION ARE DISMISSED.' 22. THE HON'BLE A.P. HIGH COURT IN ITA NO.232 OF 2013 IN THE CASE OF CIT VS. SMT. R. NALINI DE VI HAS UPHELD THE ORDER OF THE IT AT HYDERABAD BENCH. THE HON'BLE HIGH COURT WHILE, CONSIDERING THE ISSUE HELD AS UNDER: 48 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 'WE HAVE HEARD THE LEARNED COUNSEL FOR THE APPELLANT AND GONE THROUGH THE IMPUGNED JUDGEMENT AND ORDER OF THE LEARNED TRIBUNAL. IT AP PEARS , THE ASSESSING OFFICER HAD RELI ED ON A PHOTOCOPY OF AN UNSIGNED SALE AGREEMENT IN ORDER TO FIND THAT CONSIDERATION AMOUNT HAS BEEN PAID AT RS. 1,68,00,000/ - . THEREFORE, THIS AMOUNT WAS NOT DISCLOSED. THE LEARNED TRIBUNAL HAS CORRECTLY CONCLUDED THAT UNSIGNED PHOTOCOPY OF THE AGREEMENT FOR PURCHASE OF THE PROPERTY CANNOT BE A MATERIAL TO RELY ON, WHEN THE REGISTERED SALE DEED HAS BEEN PRODUCED AND THE SAME SHOWS THAT THE PROPERTY WAS PURCHASED AT A PRICE OF RS.23,50,000/ - . THIS REGISTERED SALE DEED WAS DISCLOSED AT THE TIME OF ORIGINAL ASSESSMENT. ACCORDING TO US, THE AGREEMENT OF SALE LOSES ITS FORCE, THE MOMENT REGISTERED SALE DEED IS EXECUTED. IF THE PROPERTY HAS BEEN PURCHASED AT A HIGHER PRICE THAN THAT OF MENTIONED IN THE PURCHASE DEED, THEN THE O NUS IS ON THE ASSESSING OFFICER TO ESTABLISH THAT AS HAS BEEN RIGHTLY CONCLUDED BY THE TRIBUNAL ON THIS ISSUE. MOREOVER, PHOTOCOPY OF THE UNSIGNED AGREEMENT HAS GOT NO EVIDENTIARY VALUE. THE ASSESSING OFFICER HAS DONE A GUESS WORK WHILE COMING TO THE CONCL USION THAT THE PRICE OF THE PROPERTY IS MORE THAN MENTIONED IN THE SALE DEED. THERE MUST BE SOME MATERIAL AND BASIS TO CONCLUDE THAT THE PURCHASE HAS BEEN MADE AT AN UNDER VALUATION.' 23 . THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. P.V. KALYANA SUNDARAM (2007) 294 ITR 49, UNDER THE SIMILAR CIRCUMSTANCES HELD IN FAVOUR OF THE ASSESSEE. THE HON'BLE SUPREME COURT, WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HELD AS UNDER: 'WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES AND HAVE GONE THROUGH THE RECORD. IT IS TRUE THAT THE DIVISION BENCH OF THE HIGH COURT HAS BORROWED EXTENSIVELY FROM THE ORDERS OF THE TRIBUNAL AND THE COMMISSIONER AND PASSED THEM OFF AS IF THEY WERE THEMSELVES THE AUTHOR(S). WE FEEL THAT QUOTING FROM AN ORDER OF SOME AUTHORITY PARTICULA RLY A SPECIALIZED ONE CANNOT PER SE BE FAULTED AS THIS PROCEDURE CAN OFTEN HELP IN MAKING FOR BREVITY AND PRECI S ION, BUT WE AGREE WITH MR. VAHANVATI TO THE EXTENT THAT ANY 'BORROWED WORDS' USED IN A JUDGEMENT MUST BE ACKNOWLEDGED AS SUCH IN ANY APPROPRIATE MANNER AS A COURTESY TO THE TRUE AUTHOR(S). BE THAT AS IT MAY, WE ARE OF THE OPINION THAT THE THREE QUESTIONS REPRODUCED ABOVE CAN, IN NO WAY, BE CALLED SUBSTANTIAL QUESTIONS OF LAW. THE FACT AS TO THE ACTUAL SALE PRICE OF THE PROPERTY, THE IMPLICATION OF THE CONTRADICTORY STATEMENTS MADE BY RAJARATHINAM OR WHETHER RELIANCE COULD BE PLACED ON THE LOOSE SHEETS RECOVERED IN THE COURSE OF THE RAID ARE ALL QUESTION OF FACT. WE THEREFORE FIND NO INFIRMITY IN THE ORDER OF THE HIGH COURT. ACCORDINGLY, WE DISMISS THE APPEAL.' 24. CONSIDERING THE TOTAL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGEMENTS CITED ABOVE, WE ARE OF THE OPINION THAT THE 49 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM A.O. IS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE ON MONEY IS EXCHANGED BETWEEN TH E PARTIES BASED ON A LOOSE SHEET FOUND IN THE PREMISES OF A THIRD PERSON AND ALSO ADMISSION BY A THIRD PERSON. TO SUSTAIN THE ADDITION, THE A.O. SHOULD HAVE CONDUCTED AN INDEPENDENT ENQUIRY ABOUT THE VALUE OF THE PROPERTY AND ASCERTAIN WHETHER ANY UNDER VA LUATION IS DONE, IF SO WHAT IS THE CORRECT VALUE OF THE PROPERTY. FURTHER, THE A.O. DID NOT BROUGHT ON RECORD ANY EVIDENCE TO SUPPORT HIS CONTENTION TO SAY THAT THERE IS ON MONEY EXCHANGED BETWEEN THE PARTIES. IN THE ABSENCE OF PROPER ENQUIRY AND SUFFICIEN T EVIDENCES, WE FIND NO REASON TO CONFIRM THE ADDITION MADE BY THE A.O. THEREFORE, WE REVERSE THE CIT(A) ORDER AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. 17.6. T HOUGH THE ABOVE DECISIONS ARE RENDERED IN RESPECT OF ON MONEY PAYMENT, THE SAME FINDINGS AND OBSERVATIONS ARE EQUALLY APPLICABLE FOR ON MONEY RECEIPTS ALSO. IN 15 VILLAS, WHICH WERE N EITHER SOLD NOR REGISTERED, THERE IS NO CASE FOR ADDITION OF UNDISCLOSED INCOME , HENCE THE SAME REQUIRED TO BE DELETED . IN THE REMAINING 25 VILLAS THER E IS NO EVIDENCE BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAS RECEIVED ON MONEY EXCEPT THE SCRIBBLING PAPER SEIZED OR IMPOUNDED AT THE TIME OF SURVEY OR THE LOOSE SHEETS SEIZED FROM THIRD PARTY , SRI LANKA ANIL KUMAR . THE SCRIBBLING ALSO DOES NOT INDICA TE THE ON MONEY RECEI PT WITH DATE AND NAME OF THE PARTY. NO OTHER EVIDENCE WAS BROUGHT ON RECORD BY THE REVENUE TO ESTABLISH THAT THE ASSESSEE HAD RECEIVED ON MONEY FOR SALE OF VILLAS . THEREFORE, WE HOLD THAT THERE IS NO CASE FOR ASSESSMENT OF UNACCOUNTED INCOME ON ACCOUNT OF ON MONEY RECEIPT ON SALE OF VILLAS . HENCE, WE SET ASIDE THE ORDER OF THE 50 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED ON THIS GROUND. 18. GROUND NO.(IX) TO (XII) ARE RELATED TO THE ADDITION OF RS.63,56,149/ - ON ACCOUNT OF UNACCOUNTED SALE PRICE OF PLOTS IN SEA PEARL PROJECT. FROM PAGE NO.55 OF ANNEXURE A/NRE/SURVEY/BUSS/01 OF IMPOUNDED MATERIAL FOUND DURING THE COURSE OF SURVEY, THE AO FOUND THAT PLOT NO.63 LOCATED TOWARDS THE NORTH WEST CORNER OF PROJECT SEA PEARL WAS QUOTED AT RS.65 LAKHS AS UNDER : 18.1. THE EXTENT OF PLOT WAS 500 SQ.YARDS AND QUOTED PRICE OF RS. 13,000/ - PER SQ.YD, AND THE TOTAL PRICE WAS FIXED AT RS.65 LAKHS. DURING THE COURSE OF SURVEY, A STATEMENT WAS RECORDED FROM SRI M.Y.SUBRAHMANYAM, WHEREIN, 51 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM HE HAD ACCEPTED THAT PLOT NO.61 TO 64 W ERE SOLD AT RS.13,000/ - PER SQ.YD AND ACCOUNTED THE SUM OF RS.6000 PER SQ.YD IN THE BOOKS OF ACCOUNTS AND THE DIFFERENCE AMOUNT OF RS.1,22,50,000/ - WAS OFFERED TO TAX. THE AO OBSERVED THAT PLOT NO.63 AND OTHER PLOTS WERE IN THE VICINITY OF SEA PEARL PROJECT. THEREFORE, TAKING CUE FROM PLOT NO.63 HE WAS OF THE VIEW THAT SINCE THE PLOT NO.61 TO 64 ARE IN THE VICINITY OF SEA PEARL PROJECT THE SAME RATES ARE APPLICABLE TO THE PLOTS OF SEA PEARL PROJECT ALSO. AS PER THE BOOKS OF ACCOUNTS, NAVARATNA ESTATES HA D ADMITTED THE SUM OF RS.4000/ - PER SQ.YARD FOR SEA PEARL PROJECT AGAINST THE SALE PRICE OF RS.13, 000/ - IN THE ADJOINING AREA OF SEA PEARL PROJECT. HENCE, THE AO ADOPTED THE RATE OF RS.13,000/ - PER SQ.YD AGAINST THE ACTUAL SALE PRICE OF RS.4,000/ - PER SQ.YD AND COMPUTED THE TOTAL CONSIDERATION OF RS.36,79,32,500/ - AND WORKED OUT THE DIFFERENCE AMOUNT OF RS.25,44,44,809/ - INVOLV ING ASSESSMENT YEARS 2015 - 16 AND 2016 - 17 AND THE DIFFERENCE AMOUNT OF RS.25 CRORES WAS BROUGHT TO TAX. THE SUM OF RS.24,80,88,660/ - WAS TREATED AS UNACCOUNTED INCOME FOR THE A.Y.2015 - 16 AND RS.63,56,149/ - WAS TREATED AS UNACCOUN TED INCOME FOR THE A.Y.2016 - 17. 18.2. DURING THE APPEAL HEARING, THE LD.DR SUBMITTED THAT EVIDENCE WAS FOUND IN RESPECT OF PLOT NO.63 WHICH WAS ADJOINING PLOT OF SEA PEAL PROJECT 52 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM INDICATING THAT PLOT OF 500 SQ.YDS WAS SOLD AT RS.65 LAKHS @ 13,000/ - PER S Q.YD. THE PLOT WAS LOCATED AT NORTHWEST CORNER OF PROJECT SEA PEARL. THE STATEMENT WAS RECORDED FROM SRI M.Y. SUBRAHMANYAM, WHEREIN HE HAS STATED THAT THEY HAVE PURCHASED FOUR PLOTS FROM SVR TOWNSHIP AT CHEPALUPPADA, MARKED AS PLOT NOS.61 TO 64 NEAR THE VILLAS WITH LP NO.57/2007. THE TOTAL AREA OF THE PLOTS ACQUIRED WAS 2000 SQ.YDS CONSISTING FOUR PLOTS AND THEY HAVE SOLD 1750 SQ.YDS @13,000/ - PER SQ.YD AND REGISTERED AT RS.6,000/ - PER SQ.YD REFLECTING IN THE BOOKS OF ACCOUNTS AND THE DIFFERENCE AMOUNT OF RS.7,000/ - PER SQ.YD AMOUNTING TO RS.1,22,50,000/ - WAS ADMITTED AS UNDISCLOSED INCOME FOR THE FINANCIAL YEAR 2014 - 15 AND THERE WAS NO DISPUTE. THE SAID PLOT NO.61 TO 64 ARE IN THE VICINITY OF SEA PEARL PROJECT, THEREFORE, ARGUED THAT THE AO EXTENDED TH E SALE PRICE OF RS.13,0 00 / - PER SQ.YD TO THE SEA PEARL PROJECT ALSO AND ESTIMATED THE UNACCOUNTED INCOME WHICH IS FAIR AND REASONABLE. THE LD.DR SUBMITTED THAT SINCE THE PLOT NO.61 TO 64 WERE SOLD AT RS.13,000/ - PER SQ.YD AND SEA PEARL ALSO FETCHES THE SAM E PRICE, HENCE, THE SAME PRICE REQUIRE D TO BE ADOPTED FOR THE SEA PEARL PROJECT ALSO AS HELD BY HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF SALES TAX, MADHYA PRADESH VS. H.M.ESUFALI H.M.ABDULALI (90 ITR 271)(SC). HENCE, ARGUED THAT THE AO HAS RIG HTLY ESTIMATED THE UNACCOUNTED INCOME OF RS.63,56,149/ - AS PER DETAILS GIVEN IN 53 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM PAGE NO.62 TO 68 OF THE ASSESSMENT ORDER WHICH REQUIRED TO BE UPHELD. THUS, ARGUED THAT THE ORDER OF THE LD.CIT(A) REQUIRED TO BE SET ASIDE AND ALLOW THE APPEAL OF THE REVENUE . 19. ON THE OTHER HAND, THE LD.AR SUBMITTED THAT PLOT NO.61 TO 64 ARE LOCATED AT DIFFERENT PLACE S AND NOT IN THE SEA PEARL PROJECT. THE ENTIRE SEA PEARL PROJECT WAS SOLD THROUGH KRANTHI PROPERTIES BY A MEMORANDUM OF UNDERSTANDING (MOU), WHEREIN NAVARATN A ESTATES HAVE SOLD THE PLOTS TO KRANTHI PROPERTIES AT A RATE OF RS.4000/ - PER SQ U ARE YARD AS PER MOU DATED 25 TH DAY OF JULY, 2013. KRANTHI PROPERTIES HAVE TO SELL THE PLOTS AND MAKE THE PAYMENT TO THE ASSESSEE @RS.4000/ - PER SQUARE YARD AND THE AMOUNT RECEIVED OVER AND ABOVE THE SALE PRICE OF RS.4,000/ - WAS THE INCOME OF KRANTHI PROPERTIES, BUT NOT THE ASSESSEE. THE LD.AR F URTHER SUBMITTED THAT NO IOTA OF EVIDENCE WAS FOUND EITHER DURING THE COURSE OF SEARCH OR SURVEY EVIDENCING THE RECEI PT OF ON MONEY OVER AND ABOVE THE SALE PRICE AT RS.4000/ - IN RESPECT OF SEA PEARL PROJECT . THE AR FURTHER SUBMITTED THAT THERE WAS NO WHISPER IN THE SHOW CAUSE NOTICE WITH REGARD TO ESTIMATION OF INCOME IN THE CASE OF SEA PEARL PROJECT. THEREFORE, ARGUE D THAT THERE IS NO CASE FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE, HENCE REQUESTED 54 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM TO UPHOLD THE ORDER OF THE LD.CIT(A) AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD.CIT(A) . 20. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLA CED ON RECORD. IN THE INSTANT CASE, THERE WAS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH/SURVEY WITH REGARD TO RECEIPT OF ON MONEY IN RESPECT OF PROJECT SEA PEARL. THE AO MADE THE ADDITION ON THE BASIS OF SALE PRICE OF PLOTS TO 6 1 TO 64 WHICH W ERE ADJ ACENT TO SEA PEARL PROJECT AND HAS NO CONNECTION WITH THE PROJECT SEA PEARL. THE PLOT NO.61 TO 64 AND THE SEA PEARL PROJECTS WERE COMPLETELY DIFFERENT AND NO T INTER LINKED . AS EXPLAINED BY THE ASSESSEE, IT HAS SOLD THE BULK OF PLOTS TO M/S KRANTHI PROPERT IES @4000/ - PER SQ.YD AND ANY AMOUNT RECEIVED OVER AND ABOVE THE AGREED RATE WOULD ACCRUE TO KRANTHI PROPERTIES, BUT NOT TO THE ASSESSEE. THE ASSESSEE PLACED COPY OF MOU REACHED BETWEEN THE ASSESSEE AND THE KRANTHI PROPERTIES IN PAGE NO.190 TO 192 OF THE P APER BOOK. NO OTHER EVIDENCE WAS BROUGHT ON RECORD BY THE DEPARTMENT TO CONTROVERT THE FINDING OF THE LD.CIT(A) OR TO CONTROVERT THE CONTENTS OF MOU BETWEEN THE ASSESSEE AND THE KRANTHI PROPERTIES DATED 25.07.2013. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE IS 55 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE BECOMES INFRUCTUOS ON THIS ISSUE, HENCE DISMISSED. 21. GROUND NO.12 AND 13 ARE RELATED TO THE ADDITION OF RS.2,69,314/ - ON ACCOUNT OF UNACCOUNTED CASH. DURING THE COURSE OF SURVEY, AGAINST THE BOOK BALANCE OF RS.10,03,364/ - , THE AO FOUND THE PHYSICAL CASH OF RS.7,34,050/ - RESULTING IN DEFICIT CASH OF RS.2,69, 314/ - . DURING THE COURSE OF SURVEY, IN THE STATEMENT RECORDED U/S 131(1), SRI M.Y.SUBRAHMANYAM, MANAGING PARTNER OF THE ASSESSEE FIRM HAD STATED THAT HE HAD WITHDRAWN CASH OF RS.2 LAKHS FOR HIS PERSONAL PURPOSE ON 23.11.2015 WHICH WAS NOT TAKEN INTO ACCOUNT . HOWEVER, T HE AO DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITION OF RS.2,69,134/ - AS UNACCOUNTED INCOME U/S 68 OF THE ACT. 22. AGAINST THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DELET ED THE ADDITION HOLDING THAT THE ASSESSEE HAD EXPLAINED THE DIFFERENCE AND FURTHER HELD THAT THE DEFICIT CASH CANNOT BE BROUGHT TO TAX U/S 68 OF THE ACT. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT PARA NO.6.7 OF THE LD.CIT(A) WHICH READS AS UNDE R : 6.7. GROUND NO.(9) IS WITH REGARD TO ADDITION OF RS.2,69,314/ - TOWARDS DEFICIT CASH IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER ASSESSED IT U/S.68 OF THE ACT. FURTHER, IF THE CASH ACTUALLY FOUND IS LESS THAN THE CASH AS PER THE BOOKS OF 56 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ACCOUNT, THERE IS NO SCOPE FOR ANY ADDITION IN ANY CASE, THE APPELLANT HAS EXPLAINED THE DIFFERENCE BY FILING AN UPDATED CASH BOOK AND THE ASSESSING OFFICER COULD NOT FIND ANY DEFECTS IN THE SAME THEREFORE, I DO NOT FIND ANY MERIT IN THE ADDITION MADE AND THE ASSES SING OFFICER IS DIRECTED TO DELETE THE ADDITION. THIS GROUND OF APPEAL IS ALLOWED. 23. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THERE WAS A DEFICIT CASH, BUT NOT EXCESS CASH.. THEREFORE, THE DEFICIT CASH CANNOT BE TREATED AS INCOME U/S 68 AS RIGHTLY OBSERVED BY THE LD.CIT(A). FURTHER IN THE INSTANT CASE, MANAGING PARTNER OF THE ASSESSEE FIRM HAD STATED THAT HE HAD WITHDRAWN THE AMOUNT. IN RE PLY TO THE SHOW CAUSE NOTICE ALSO, THE ASSESSEE HAD EXPLAINED THAT ON UPDATING THE CASH BOOK, THERE WAS NO DEFICIT CASH AND ALSO FURNISHED THE EXTRACT OF UPDATED CASH BOOK BEFORE THE AO. FROM THE EXPLANATION OF THE ASSESSEE, THERE WAS NO DEFICIT CASH A ND THE AO REJECTED THE EXPLANATION OF THE ASSESSEE WITHOUT GOING INTO FURTHER DETAILS. SINCE THE ASSESSEE HAD EXPLAINED THE DEFICIT CASH FOUND DURING THE SURVEY, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE IS DISMISSED. 24. GROUND NO.14 AND 15 ARE RELATED TO THE ADDITION OF RS.51,75,650/ - TOWARDS UNACCOUNTED SALE OF LAND. DURING THE COURSE OF SEARCH U/S 132 IN THE RESIDENCE OF MANCHUKONDA SHYAM, THREE VOUCHERS WITH THE DATES 57 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM MA RKED AS 14/7, 6/7 AND 14/1 WERE FOUND SEIZED AS PAGE NO.12 TO 14 OF ANNEXURE MKS/2. THE AO FOUND THAT NAME APPEARING IN THE VOUCHER SRI NAGESWARA RAIO WAS THE SAME PERSON TO WHOM THE LAND WAS SOLD ON 14.07.2015 BY NAVARATNA ESTATES. THEREFORE, THE AO VIE WED THAT THE VOUCHERS WERE RELATED TO THE SALE OF LAND OF NAVARATNA ESTATES ON 14.07.2015. THE AO ISSUED SUMMONS TO MANCHUKONDA SHYAM TO EXPLAIN THE TRANSACTIONS. IN HIS REPLY, SRI SHYAM STATED THAT THE VOUCHERS WERE RELATED TO THE TRANSACTIONS OF SRI NA GESWARA RAO AND HE FURTHER STATED THAT SALE CONSIDERATION WAS RS. 5 0,00,000/ - WAS RECEIVED BY CHEQUE AND THE REGISTRATION CHARGES WERE RS.4,50,100/ - AND OTHER CHARGES WERE BORNE BY THE PURCHASER. HE ALSO STATED THAT THE STAMP DUTY AND REGISTRATION CHARGES WERE COLLECTED BY THEM FROM THE CUSTOMER TO PAY ON HIS BEHALF FOR THE PURPOSE OF REGISTRATION. HE ALSO STATED THAT NO UNACCOUNTED MONEY WAS INVOLVED IN THIS TRANSACTION. THE AO OBSERVED THAT THERE WAS INCONSISTENCY IN THE STATEMENT GIVEN BY SRI MANCHUKONDA SHYAM AND HENCE INFERRED THAT THE VOUCHERS WERE RELATED TO THE SALE TRANSACTION MENTIONED IN THE SALE DEED OF SRI NAGESWARA RAO ON 14.07.2015 PERTAINING TO NAVARATNA EST ATES. THUS, HELD THAT THE SUM OF RS.51,75,650/ - CONSISTING OF RS.50,00,000/ - PLUS RS.1,75,650/ - MENTIONED IN PAGE NO.14 DATED 14/1 WAS TREATED AS ON 58 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM MONEY RECEIVED FOR SALE OF LAND ON 14.07.2015, ACCORDINGLY BROUGHT TO TAX AS UNDISCLOSED INCOME. 25. AGAI NST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION OBSERVING THAT THE AO HAS TRIED TO ESTABLISH THE CONTENTS OF THE LAND TO THE SALE TRANSACTION OF 0.80 CENTS SOLD TO SRI NAGESWARA RAO BUT COULD NOT CONTRADICT TH E SUBMISSIONS OF THE ASSESSEE, THEREFORE, DELETED THE ADDITION. FOR THE SAKE OF CLARITY AND CONVENIENCE WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) WHICH READS AS UNDER : 6.8. GROUND NO.(10) THIS GROUND IS TOWARDS ALLEGED ON - MONEY RECEIVED O N SA L E OF 0.80 CENTS OF LAND TO SRI G NAGESWARA RAO TO THE TUNE OF RS 51,75,640/ - THERE WERE CE RTAIN VOUCHERS SEIZED FROM THE RESIDENCE OF SRI MANCHUKONDA SHYAM VIDE ANNEXURE MKS/ 2 . THE ASSESSING OFFICER HAS TRIED TO ESTABLISH THE CONTENTS OF VOUCHERS TO THE SALE OF 0 . 80 CENTS . I HAVE CONSIDERED THE SEIZED MATERIAL, STATEMENT OF MANCH U KONDA SHYAM, OBSERVATIONS OF THE ASSESSING OFFICER AND ALSO THE EXPLANATION OF THE APPELLANT FIRM FIRSTLY, THE VOUCHERS RELIED UPON ARE NOT HAVING COMPLETE DATE AND SIGNATURE. SECONDLY, A VOUCHER IS USED FOR PAYMENT AND NOT FOR RECEIPT . THIRDLY, THERE IS N O SIGNATURE OF EITHER SRI G N A GESWARA RAO OR THE APPELLANT FIRM ON THESE VOUCHERS . IN THE STATEMENT RECORDED FORM SRI M SHYAM, HE DID NOT ACCEPT ANYWHERE THAT THE FIR M RECEIVED ON - MONEY ON SATE OF THE LAND. FURTHER, THE APPELLANT HAS EXPLAINED TO THE ASSES SING OFFICER THAT SRI M.SHYAM IS NOT AWARE OF THE FACTS RELATING TO THE TRANSACTION. THE ASSESSING OFFICER COULD NOT EFFECTIVELY CONTRADICT THE SUBMISSIONS OF THE APPELLANT. THOUGH THE VOUCHERS DEPICTS AS CASH RECEIVED BY THE APPELLANT, THE PAYER SRI G.NAG ESWARA RAO HAS NOT CONFIRMED. FURTHER, THERE WAS NO DOCUMENT TO ESTABLISH THAT THE AMOUNT WAS RECEIVED PRIOR TO THE REGISTRATION. IN VIEW OF THESE INCONSISTENCIES, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION. 26. AGAINST WHICH THE DEPARTMENT FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.DR SUPPORTED THE ORDER OF THE AO. 59 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM 27. ON THE OTHER HAND, THE LD.AR SUBMITTED THAT THE AO MADE THE ADDITION OF RS.51,75,000/ - AS MENTIONED IN VOUCHER NO.14 DATED 14/1 WHICH WAS DUMB D OCUMENT AND NOT HAVING THE SIGNATURE OF THE RECIPIENT AND WITHOUT THE DATE. VOUCHERS ARE USED FOR THE PAYMENT, BUT NOT FOR RECEIPT OF CASH. THE LD.AR FURTHER SUBMITTED THAT THE VOUCHER PRIMA FACIE DOES NOT INDICATE WHETHER IT WAS RELATED TO NAVARATNA ESTATES OR SOME OTHER FIRM. IT DOES NOT BEAR THE SIGNATURE, THE DATE EXCEPT INDICATION FOR DIRECTING THE DRAWER TO MAKE THE PAYMENT TO NAGESWARA RAO KK LAND SUM OF RS.5 1 ,75,000/ - . SINCE THE VOUCHER DOES NOT INDICATE ANY OF THE INFORMATION, THE SAME CANNO T BE INFERRED TO BE RELATED TO M/S NAVARATNA ESTATES TO DRAW ADVERSE INFERENCE . THE LD.AR FURTHER SUBMITTED THAT SRI MANCHUKONDA SHYAM HAS ALREADY EXPLAINED IN THE STATEMENT RECORDED ON 13.01.2016 IN QUESTION NO.3 THAT THE DOCUMENT WA S RELATE D TO 0.80 CEN TS OF LAND AT NIDIGATTU, RAMAJOGI AGRAHARAM TO SRI NAGESWARA RAO BY NAVARATNA ESTATES. THE COST OF LAND PER ACRE WAS RS.70,00,000/ - HENCE THE COST OF 80 CENTS OF LAND COMES TO APPROXIMATELY RS.50,00,000/ - AND THE REMAINING WAS COLLECTED FOR PAYMENT OF ST AMP DUTY AND OTHER EXPENSES. THEREFORE, ARGUED THAT SINCE THE CONTENTS OF THE VOUCHER WERE EXPLAINED AND NO EVIDENCE I S BROUGHT ON RECORD TO DISPROVE THE STA TE MENT GIVEN BY SHYAM, THERE IS NO CASE FOR MAKING THE ADDITION. THE LD.A.R FURTHER SUBMITTED THA T 60 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM THE AO RECORDED THE STATEMENT FROM SRI MANCHUKONDA SHYAM ON THREE OCCASIONS, ON ALL THE OCCASIONS, SRI SHYAM EXPLAINED THAT VOUCHER WAS RELATED TO SALE OF LAND TO SRI NAGESWARA RAO WHICH WAS COLLECTED ALONG WITH OTHER EXPENSES SUCH AS REGISTRATION, STAMP DUTY ETC. AND NOTHING WAS RECEIVED OVER AND ABOVE THE REGISTERED DOCUMENT. THEREFORE, SUBMITTED THAT THERE IS NO CASE FOR MAKING ANY ADDITION SINCE THE TRANSACTION WAS CLEARLY EXPLAINED, HENCE REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS TH E APPEAL OF THE REVENUE. 28. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE AO MADE THE ADDITION OF RS.51,75,000/ - RELATING TO LOOSE SHEETS FOUND DURING THE COURSE OF SEARCH IN THE RESIDENCE OF SHRI SHYAM MARKED AS ANNEXU RE:MKS/ 12 TO 14. THE LOOSE SHEET WAS FOUND IN THE RESIDENCE OF SRI MANCHUKONDA SHYAM, PARTNER OF THE ASSESSEE FIRM. THE LOOSE SHEET DOES NOT INDICATE WHETHER IT WAS RELATED TO NAVARATNA ESTATES OR NOT, IT DOES NOT BEAR THE DATE, ADDRESS , NAME AND THERE WAS NO SIGNATURE ON THE LOOSE SHEET. THEREFORE, THE DOCUMENTS ARE TO BE TAKEN AS A DUMB DOCUMENTS WHICH CANNOT BE INFERRED AGAINST THE ASSESSEE FIRM. WITH REGARD TO THE ASSESSEE FIRM, THE ASSESSEE HA D EXPLAINED THAT THE TRANSACTION WAS RELATED TO THE SA LE OF LAND TO NAGESWARA RAO AND EXPLAINED IN THE 61 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM STATEMENT RECORDED ON 13.01.2016 BY MANCHUKONDA SHYAM THAT NO EXCESS MONEY WAS RECEIVED. NO OTHER EVIDENCE WAS BROUGHT ON RECORD BY THE AO TO CONTROVERT THE STATEMENT GIVEN BY SHRI MANCHUKONDA SHYAM. SINCE THE DOCUMENT WAS FOUND IN THE RESIDENCE OF MANCHUKONDA SHYAM, PRESUMPTION IS AVAILABLE TO THE DEPARTMENT TO HOLD THAT THE CONTENTS OF THE DOCUMENT ARE RELATED TO SRI MANCHUKONDA SHYAM. THE AO DID NOT MAKE ANY CROSS VERIFICATION OR ENQUIRY TO ESTABLISH TH AT NAVARATNA ESTATES HA D RECEIVED ON MONEY. THE VOUCHER IS GENERALLY USED FOR PAYMENT BUT NOT FOR RECEIPT. THE VOUCHER DOES NOT CONTAIN THE DETAILS OF DATE , NAME AND SIGNATURE AND THE AO DID NOT CROSS VERIFY THE TRANSACTION WITH THE BOOKS OF THE ASSESSEE AND SRI NAGESWARA RAO HENCE, A S OBSERVED BY THE LD.CIT(A), THE AO DID NOT EFFECTIVELY CONTRADICT THE SUBMISSIONS OF THE ASSESSEE. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE R EVENUE IS DISMISSED. 28.1. THE ASSESSEE RAISED ADDITIONAL GROUND IN CROSS OBJECTION CHALLENGING THE ISSUE OF NOTICE U/S 153C, WHICH WAS NOT PRESSED DURING THE APPEAL HEARING, HENCE, THE ADDITIONAL GROUND OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 29. IN THE RESULT, APPEAL S OF THE REVENUE ARE DISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE PARTLY ALLOWED FOR BOTH THE ASSESSMENT YEARS . 62 I.T.A. NO. 618/VIZ/2018 AND 612/VIZ/2018 CROSS OBJECTION NO.25/VIZ/2019 AND 23/VIZ/2019, A.Y.2015 - 16 & 2016 - 17 M/S NAVARATNA ESTATES, VISAKHAPATNAM ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY 2020. SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 22. 01.2020 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1 . / THE REVENUE - ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 VISAKHAPATNAM 2. / THE ASSESSEE - M/S NAVARATNA ESTATES , 3 RD FLOOR, D.NO.10 - 1 - 29, CVSV RAGHU CHAMBERS, SAMPATH VINAYAK TEMPLE, ASILMETTA, VISAKHAPATNAM 3. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM