The Deputy Commissioner of Income Tax, Central Circle-1, , Guntur V. Paruchuru Satish Kumar(HUF), Guntur

ITA 698/VIZ/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2911 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 30-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained investment; Unexplained expenditure; Search and seizure; Block assessment; Set aside
• Section: 147; 131; 148; 132; 69C; 143(3); 142(1); 133A; 201; 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM (T HROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER I . T . A . NO S . 69 8 & 69 9 / VIZ /2019 (ASST. YEAR S : 20 1 5 - 1 6 & 201 6 - 1 7 ) DCIT, CENTRAL CIRCLE - 1, GUNTUR. VS. PARUCHURU SATISH KUMAR (HUF) , D.NO. 5 - 93 - 22, WATER TANKS ROAD , 6/13, BRODIPET, GUNTUR. PAN NO. AAMHP 1463 Q (APP ELLANT ) (RESPONDENT) C.O.NOS. 08 & 09/VIZ/2020 (ARISING OUT OF I.T.A. NOS. 698 & 699/VIZ/2019 ) (ASST. YEAR S : 2015 - 16 & 2016 - 17 ) PARUCHURU SATISH KUMAR (HUF), D.NO. 5 - 93 - 22, WATER TANKS ROAD, 6/13, BRODIPET, GUNTUR. VS. DCIT, CENTRAL CIRCLE - 1, GUNTUR. PAN NO. AAMHP 1463 Q (APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI M.V. PRASAD , C A . DEPARTMENT BY : SHRI D.K. SONAWAL , CIT DR DATE OF HEARING : 25 / 0 9 /2020 . DATE OF PRONOUNCEMENT : 23/11/ 20 20 . O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER THESE APPEAL S BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF 2 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM ALL DATED 26 /0 8 /201 9 FOR THE ASSESSMENT YEAR S 20 1 5 - 1 6 & 201 6 - 17 . 2. ALL THE GROUNDS OF APPEAL IN THESE APPEALS RELATED TO DELETION OF ADDITION MADE BY THE AO BY THE LD. CIT(A) WHICH WAS ADMITTEDLY ON THE BASIS OF STATEMENT RECORDED U/SEC. 132(4) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') . SINCE THE FACTS ARE IDENTICAL , FACTS ARE TAKEN FROM ITA NO. 698/VIZ/2019 FOR THE A.Y. 2015 - 16 WHICH IS MADE APPLICABLE TO BOTH THE ASSESSMENT YEARS EXCEPT THE CHANGE IN AMOUNTS. 3 . FACTS OF THE CASE F OR THE A.Y. 2015 - 16 IN BRIEF ARE THAT ASSESSEE FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 23,36,850/ - . A SEARCH U/SEC. 132 WAS CONDUCTED IN THE P REMIER G ROUP CASES ON 29/11/2017 . PREMIER GROUP IS IN THE BUSINESS OF CONSTRUCTION OF APARTMENTS AND COMPLETED 18 PROJECTS IN THE BRAND NAME OF BOMMARILLU . IN THE CASE OF HUF STATUS ALSO , THE ASSESSEE CARRIED ON CONSTRUCTION ACTIVITY IN THE NAME OF M/S.PREMIER PROJECTS AND SHRI PARUCHURU SATISH KUMAR IS THE MAIN PERSON OF THE GROUP. DURING THE COURSE OF SEARCH , IT WAS OBSERVED BY THE DEPARTMENT FROM WHATSAPP MESSAGES OF THE ASSESSEES ACCOUNTANT SHRI MO TAMARRI NAGA ANIL KUMAR RECEIPT OF UNACCOUNTED SALE CONSIDERATION IN RESPECT OF SOME FLATS . A STATEMENT U/SEC. 131 WAS RECORDED ON 29/11/2017 FROM SHRI 3 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) MOTAMARRI NAGA ANIL KUMAR , THE ACCOUNTANT OF THE FIRM , WHEREIN HE STATED THAT W HATS A PP MESSAGES REPRESENT THE CASH RECEIVED BY THE GROUP OVER AND ABOVE THE SALE CONSIDERATION. THE AUTHORISED OFFICER DURING THE SEARCH FOUND TWO DIFFERENT AMOUNTS ON WHATSAPP MESSAGE IN RESPECT OF FLAT SOLD TO ONE OF THE BUYERS BY NAME SHRI T. HANUMANTHA RAO INDICATING THE RECEIPT OF RS.29,92,500/ - SALE DEED AND TOTAL RS.55,75,000/ - , ADDITIONAL RS.27,82,500/ - (I.E. 55,75,000 29,92,500) . IN RESPONSE TO QUESTION NO.8, SHRI ANIL KUMAR STATED THAT SHRI T. HANUMANTHA RAO HAS PURCHASED THE FLAT OF 1575 SQ.FT. BY REGISTERED SALE DEED DATED 16/11/2017 FOR RS.29,92,500/ - . W HEN THE INVESTIGATION TE A M ASKED TO EXPLAI N THE AMOUNT OF RS. 55,75,000/ - WHICH INCLUDES ADDITIONAL AMOUNT OF RS. 2 7 , 8 2,500/ - , THE ACCOUNTANT STATED THAT THE AMOUNT OF RS. 27,82,500/ - WAS RECEIVED FOR ADDITIONAL WORKS FOR THE FLATS . HE FURTHER STATED THAT HE HAD RECEIVED THE AGREEMENT DOCUMENT FOR RS.7,90,000/ - AND DID NOT RECEIVE ANY DOCUMENT FOR THE REMAINING AMOUNT OF RS.19,92,500/ - AND NOR RECEIVED THE BALANCE AMOUNT OF RS. 1 9,92,500 / - . IT WAS ALSO EXPLAINED THAT THE AMOUNT OF RS.7,90,000/ - MENTIONED IN THE AGREEMENT WAS ALSO NOT RECEIVED BY HIM. FROM THE STATEMENT RECORDED FROM SHRI MOTAMARRI NAGA ANIL KUMAR U/SEC. 131 ON 29/11/2017 , THE AO INFERRED THAT THE ASSESSEE HAD RECEIVED SALE CONSIDERATION OF RS.55,75,000/ - FROM 4 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) SHRI T.HANUMANTHA RAO, SBI, SATTENAPALLI AND ACCOUNT ED ONLY A SUM OF RS. 29,92,500/ - AS RECORDED IN REGISTERED SALE DEED DATED 16/11/2017 AND UNDERSTATED THE RECEIPTS TO THE EXTENT OF RS. 27,82,500/ - AND ALSO SUSPECTED THAT IT WAS COMMON PRACTICE OF THE ASSESSEE TO UNDERSTATE THE RECEIPT S . DURING THE SEARCH , F ROM THE TABLE OF ACCOUNTANT, THE AUTHORISED OFFICER OF THE DEPARTMENT FOUND ROUGH NOTING RELATING TO EXPENDITURE / RECEIPTS OF CERTAIN FLATS . A STATEMENT WAS RECORDED FROM THE ACCOUNTANT ON 29/11/2017 WHEREIN HE STATED THAT THE DETAILS OF THE NOTINGS WERE RE LATED TO THE REGISTERED VALUE S AND THE AMOUNTS FOR ADDITIONAL WORKS IN RESPECT OF FLAT NOS. 215, 312 & 404 OF NANDAMURI NAGAR PROJECT, FLAT NO.404 & 307 OF AMARAVATI ROAD PROJECT. A STATEMENT U/SEC. 132(4) WAS ALSO RECORDED ON 30/11/2017 FROM THE ASSESSEE WHEREIN THE ASSESSEE HA D ACCEPTED THAT HE HA D RECEIVED THE ADDITIONAL CASH RECEIPTS FOR ADDITIONAL WORKS OVER AND ABOVE THE REGISTERED VALUE. HE FURTHER ACCEPTED THAT HE HAD RECEIVED CASH WHICH W AS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE G ROUP . SINCE NO INFORMATION OR EVIDENCE IS AVAILABLE WITH REGARD TO RECEIPTS OF CASH WHICH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT , THE ASSESSEE HAD ACCEPTED TH E SUM RS. 10.00 CRORES OF CASH THAT WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND ADMITTED THE SAME AS ADDITIONAL INCOME FOR TAXATION FOR VARIOUS 5 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) ASSESSMENT YEARS . THE AO SUBSEQUENTLY CONDUCTED ENQUIRIES WITH FLAT BUYERS IN BOMMARILLU AMARAVATI PROJECT AND THEIR STATEMENTS WERE RECORDED U/SEC. 131 OF THE ACT. A SIMILAR ENQUIRIES WERE CONDUCTED IN BOMMARILLU @ IPD COLONY , BOMMARILLU NEHRUNAGAR PROJECT , BOMMARILLU @ OLD PATTABHIPURAM AND BOMMARILLU VALLURIVARI THOTA PROJECT ETC. IN EACH PROJECT, THE DEPARTMENT HA D SELECTED 5 - 6 NAMES OF THE FLAT BUYERS AND RECORDED THEIR STATEMENT S AND COLLECTED THE INFORMATION WITH REGARD TO TOTAL CONSIDERATION AND THE AMOUNT IN THE SALE DEED. ACCORDINGLY, THE SAID STATEMENT S WERE CONFRONTED WITH THE ASSESSEE AND T HE ASSESSEE HAS ADMITTED THE ADDITIONAL RECEIPTS OF RS. 2,34,30,000/ - FOR THE A.Y. 2015 - 16 AND RS. 2,58,75,000/ - FOR THE A.Y. 2016 - 17 . SUBSEQUENTLY , THE AO HA S ISSUED THE NOTICE U/SEC. 148 ON 03/04/2019 WITH A DIRECTION TO THE ASSESSEE TO FURNISH THE RETURN OF INCOME WITHIN 30 DAYS. SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE, THE AO ISSUED NOTICE U/SEC. 142 (1) . IN RESPONSE TO THE NOTICE ISSUED U/SEC. 142(1) THE ASSESSEE FILED RETURN OF INCOME ADMITTING ADDITIONAL INCOME OF RS. 70,29, 000/ - ESTIMAT ING THE PROFIT @ 30% ON ADDITIONAL WORK RECEIPTS OF RS.2,34,30,000/ - AND FILED THE RETURN OF INCOME. THE ASSESSEE SUBMITTED THAT IT HAS ADMITTED THE ADDITIONAL RECEIPTS DURING THE SEARCH BUT NO T THE ADDITIONAL INCOME AND FURTHER SUBMITTED THAT T HE ENTIRE ADDITIONAL 6 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) RECEIPTS CANNOT BE TREATED AS INCOME , SINCE, THE ASSESSEE CARRIED OUT THE ADDITIONAL WORK FOR WHICH ASSESSEE INCURRED THE EXPENDITURE . THE ASSESSEE EXPLAINED THAT THE NORMAL PROFIT IN THIS LINE OF BUSINESS WOULD BE AROUND BE 1 2. 5 % , BUT K EEPING IN VIEW OF THE FACT THAT THE RECEIPTS WERE NOT ACCOUNT ED , INCOME WAS ESTIMATED @ 30% WHICH IS FAIR AND REASONABLE. THE AO DID NOT ACCEPT THE ARGUMENT OF THE ASSESSEE SINCE , THE ASSESSEE HAD ADMITTED THE ADDITIONAL INCOME IN A STATEMENT RECORDED U/S. 132(4) WHICH IS HAVING EVIDENTIARY VALUE AND BINDING ON THE ASSESSEE . HENCE , THE AO TREATED THE ENTIRE ESTIMATED UNACCOUNTED RECEIPTS OF RS. 2,34,30,000/ - AS UNDISC L OSED INCOME AND BROUGHT TO TAX. 4 . FOR THE A.Y. 2016 - 17 , THE AO ISSUED NOTICE U/SEC. 148 ON 30/09/2019 AND THE ASSESSEE FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 98,74,400/ - WHICH INCLUDES THE ADDITIONAL INCOME OF RS.70,29,000/ - AND THE AO COMPLETED THE ASSESSMENT ON TOTAL INCOME OF RS. 2,87,20 , 500/ - AND BROUGHT TO TAX THE ENTIRE ADDITIONAL RECEIPTS OF RS. 2,58,75,000/ - . 5. A GAINST THE ORDERS OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DELETED T HE ADDITION S MADE BY THE AO HOLDING THAT THE ADDITIONAL RECEIPTS WERE FOR CARRYING THE ADDITIONAL WORKS EXECUTED BY THE ASSESSEE AND THE ENTIRE 7 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) ADDITIONAL RECEIPTS CANNOT BE TREATED AS INCOME SOLELY ON THE BASIS OF THE STATEMENT RECORDED U/SEC. 132(4) OF THE ACT WITHOUT HAVING CORROBORATING EVIDENCE. THE LD. CIT(A) H E LD THAT THE INCOME ADMITTED BY THE ASSESSEE @ 30% ON ADDITIONAL RECEIPTS IS REASONABLE AND D IRECTED THE AO TO ACCEPT THE SAME AND ACCORDINGLY ALLOWED THE APPEAL. 6 . AGGRI E VED BY THE ORDER OF THE LD. CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE THIS TRIBUNAL. 7 . LD.DR APPEARING FOR THE REVENUE SUBMITTED THAT A SEARCH U/SEC. 132 WAS CONDUCTED IN THE GROUP CASES OF PREMIER GROUP AND THE SHRI SATISH K UMAR, KARTA IS THE MAIN PERSON OF THE GROUP. DURING THE COURSE OF SEARCH EVIDENCE WAS FOUND IN THE FORM OF WHATSAPP MESSAGES FROM SHRI MOTAMARRI NAGA ANIL KUMAR , THE ACCOUNTANT OF THE ASSESSEE WITH REGARD TO RECEIPT OF UNACCOUNTED CASH OVER AND ABOVE THE REGISTERED SALE DEED S . A STATEMENT WAS RECORDED U/SEC. 132(4) FROM THE ASSESSEE WHERE THE ASSESSEE HAS ACCEPTED THE RECEIPT OF CASH OVER AND ABOVE THE REGISTERED SALE CONSIDERATION AND ALSO ACCEPTED THE ADDITIONAL INCOME OF RS.10.00 CRORES FOR VARIOUS ASSESSMENT YEARS AS EVIDENT FROM THE STATEMENT RECORDED U/SEC. 132(4) OF THE ACT WHICH WAS REPRODUCED IN PAGE NO.4 OF THE ASSESSMENT ORDER. THE ASSESSEE ALSO QUANTIF IED THE ADDITIONAL INCOME YEAR WISE IN PAGE NO.11 IN 8 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) RESPONSE TO QUESTION NO.12 OF THE STATEMENT . SINCE THE STATEMENT WAS RECORDED U/SEC. 132(4) , THE SAME IS BINDING ON THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT HE HAD ADMITTED THE ADDITIONAL RECEIPTS FOR ADDITIONAL WORKS IS AN AFTERTHOUGH T WHICH DESERVES TO BE REJECTED. LD.DR FURTHER SUBMITTED THAT THE AVERAGE DIFFERENCE OF CASH RECEIPT OVER AND ABOVE THE REGISTERED VALUE WORKED OUT TO RS. 1,460/ - PER SQ.FT. AS PER QUESTION NO.5 OF THE STATEMENT RECORDED U/SEC. 131 . H OWEVER, THE ASSESSEE HA D ACCEPTED THE SUM RS. 750/ - PER SQ.FT AS ADDITIONAL INCOME, WHICH COVERS ADDITIONAL EXPENDITURE ALSO , HENCE , ARGUED THAT THE ENTIRE ADDITIONAL RECEIPTS OFFERED BY THE ASSESSEE REQUIRED TO BE TAXED AS ADDITIONAL INCOME WHICH WAS RIGHTLY BROUGHT TO TAX BY THE AO HENCE REQUESTED TO SET ASIDE THE O RDER OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE REVENUE. 8 . PER CO NTRA , LD.AR SUPPORTED THE ORDER OF THE LD. CIT(A) AND ARGUED THAT THE ASSESSEE HAS ADMITTED THE INCOME @ 30% OF THE ADDITIONAL RECEIPTS WHICH IS FAIR AND REASONABLE . THE ASSESSEES FURTHER ARGUMENT IS THAT NO EVIDENCE WHATSOEVER WAS FOUND BY THE DEPARTMENT DURING THE COURSE OF SEARCH . THE ONLY EVIDENCE FOUND BY THE DEPARTMENT IS WHATSAPP MESSAGES FROM THE MOBILE PHONE OF SHRI MOTAMARRI NAGA ANIL KUMAR , ACCOUNTANT BUT NOT IN THE PREMISES BELONGING THE ASSESSEE . THE LD.AR FURTHER STATED THAT 9 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) SHRI NAGA ANIL KUMAR ALSO CONFIRMED THE FACT REGARD ING THE ADDITIONAL RECEIPTS WERE FOR MEETING THE EXPENDITURE RELATED TO THE ADDITIONAL WORKS FOR FLATS . LD.AR FURTHER ARGUED TH A T THE WHATSAPP MESSAGES FOUND IN THE MOBILE PHONE OF THIRD PARTY CANNOT BE U SED AS EVIDENCE AGAINST THE ASSESSEE UNLESS THERE IS A COGENT MATERIAL TO PROVE THAT THE ASSESSEE HAS EARNED THE ADDITIONAL INCOME . IN THE INSTANT CASE, THE AO HA S CONDUCTED ENQUIRIES FROM THE FLAT BUYERS ON SAMPLE BASIS AND COLLECTED INFORMATION WITH REGARD TO TOTAL CONSIDERATION AND THE SALE CONSIDERATION AS PER THE SALE DEED BUT THERE WAS NO OTHER EVIDENCE FOUND WITH REGARD TO RATE FOR PER SQUARE FEET , ACTUAL CONSIDERATION RECEIVED AND THE EXPENDITURE INCURRED , EXCEPT THE ORAL STATEMENTS STATED TO HAVE BEE N RECOR D ED FROM THE FLAT BUYERS . T HE DIFFEREN CE IN RATE WHICH WAS ARRIVED BY THE AO IN PAGE NOS. 5 TO 9 IN RESPECT OF BOMMARILLU AMARAVATI PROJECT, BOMMARILLU @ IPD COLONY, BOMMARILLUNEHRUNAGAR PROJECT, BOMMARILLU @ OLD PATTABHIPURAM AND BOMMARILLU VALLURIVARI THOTA PROJECT WERE NOT SUPPORTED BY ANY EVIDENCE WHICH WAS FOUND DURING THE COURSE OF SEARCH . IN QUESTION NO.15 OF THE STATEMENT RECOR D ED, THE ASSESSEE HAS FAIRLY STATED THAT NO INFORMATION WAS AVAILABLE TO THE ASSESSEE WITH REGARD TO UNACCOUNTED RECEIPTS SINCE THE SAME WERE NOT ENTERED IN THE BOOKS AND NO SEPARATE BOOKS WERE MA IN TAINED BY THE ASSESSEE. SIMILARLY NO DETAILS ARE 10 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) AVAILABLE WITH REGARD TO U NACCOUNTED EXPENDITURE AS THE SAME WAS MET OUT OF UNACCOUNTED RECEIPTS. THEREFORE, ARGUED THAT THERE WAS NO BASIS FOR YEAR - WISE BREAK UP OF ADDITIONAL INCOME ADMITTED BY THE ASSESSEE AND NO EVIDENCE WAS FOUND SUPPORTING THE ADDITIONAL RECEIPTS ACCEPTED BY THE ASSESSEE. THE ADDITIONAL EXPENDITURE INCURRED BY THE ASSESSEE OUT OF UNACCOUNTED RECEIPTS NEEDS TO BE CONSIDERED FOR EST I MATION THE INCOME. THEREFORE, SUBMITTED THAT TAKING INTO CONSIDERATION OF ALL THE ASPECTS, THE ASSESSEE HONOURED THE COMMI T MENT GIVEN BY HIM AND ADMITTED THE ADDITIONAL RECEIPTS AND ESTIMATED THE INCOME @ 30% TO AVOID PROTRACTED LITIGATION WHICH IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A) HENCE, REQUESTED TO DISMISS THE APPEAL OF THE REVENU E. 9 . WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. 10 . IN THE GROUP OF PREMIER A SEARCH U/SEC. 132 WAS CONDUCTED AND DURING THE COURSE OF SEARCH INFORMATION WAS FOUND FROM THE MOBILE PHONE OF SHRI MOTAMARRI NAGA ANIL KUMAR IN THE FORM OF WHATSAPP MESSAGE S EVIDENCING UNACCOUNTED CASH RECEIPTS ON WHICH THE DEPARTMENT HAS RECORDED THE STATEMENT U/SEC. 131 ON 29/11/2017 FROM SHRI ANIL K UMAR WHEREIN STATED THAT THE WHATSAPP MESSAGES REPRESENT THE INFORMATION REGARDING THE FLAT 11 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) SOLD TO SHRI T. HANUMANTHA RAO, SBI , SATTENAPALLI . AS PER THE WHATSAPP MESSAGES THE CONSIDERATION AS PER REGISTERED SALE DEED WAS RS. 29,92,500/ - AND THE CASH RECEIPT OF RS. 27,82,500/ - , THE ADDITIONAL AMOUNT OF RS. 27,82,500/ - REPRESENTED THE CHARGES FOR ADDITIONAL WORKS OF THE SAID FLATS . HE FURTHER STATED THAT HE HAD RECEIVED ONLY AGREEMENT FOR RS. 7,90,000/ - , BUT NEITHER RECEIVED THE CASH OF RS. 7,90,000/ - NOR BALANCE AMOUNT OF RS. 19,92,500/ - . THUS, SUBMITTED THAT THE FAC TS REGARDING THE SALE PRICE OF RS. 55,75,000/ - AS PER THE MESSAGE RECEIVED THROUGH WHATSAPP IS KNOWN TO BE SHRI SATISH KUMAR BUT NOT TO HIM. DURING THE COURSE OF SEARCH FROM THE TABLE OF THE ACCOUNTANT , A ROUGH NOTINGS OF RECEIPTS AND EXPENDITURE DETAILS WERE FOUND WHICH REVEAL ED THAT CERTAIN ADDITIONAL AMOUNTS WERE RECEIVED FOR CARRYING OUT ADDITIONAL WORK S IN RESPECT OF FLAT NOS. 215, 312 & 404 OF NANDAMURI NAGAR PROJECT, FLAT NO.404 & 307 OF AMARAVATI ROAD PROJECT. A STATEMENT WAS RECORDED U/SEC. 132(4) FROM THE ASSESSEE IN RESPECT OF FLAT NO. 302 OF AMARAVATI ROAD PROJECT SOLD TO G OLLA VENKATA PITCHAIAH , THE ASSESSEE EXPLAINED THAT COST OF FLAT WAS RS. 41,12,500/ - AS AGAINST THE RECORDED VALUE OF RS. 22,05,000/ - IN THE BOOKS OF ACCOUNTS AND THERE EXISTED UNACCOUNTED CASH RECEIPTS IN SALE OF FLATS. THUS, THE ASSESSEE HA D ACCEPTED THAT THERE WAS CASH RECEIPT S FOR ADDITIONAL WORK S . THE 12 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) ASSESSEE ALSO ADMITTED THE ADDITIONAL INCOME OF RS. 10.00 CRORES AS PER THE STATEMENT RECORDED ON 30/11/2017 COVERING VARIOUS ASSESSMENT YEARS . THE AO HAS CONDUCT ED DETAILED ENQUIRIES FROM THE FLAT BUYERS AND COLLECTED THE INFORMATION WITH REGARD TO TOTAL CONSIDERATION PAID AND THE CONSIDERATION RECORDED IN THE SALE DEED AND THE DIFFERENCE AMOUNT IN RESPECT OF VARIOUS PROJECTS UNDERTAKEN BY THE ASSESSEE. 10.1. THERE IS NO DISPUTE THAT THE ASSESSEE HAS ACCEPTED THE CASH OVER AND ABOVE THE REGISTERED SALE DEED WHICH WAS ACCEPTED BY THE ASSESSEE IN THE STATEM ENT RECORDED U/SEC. 131 OR 132(4) O F THE ACT. THE MOOT QUESTION IN THIS CASE IS WHETHER THE ENTIRE ADDITIONAL RECEIPT CONSTITUTE INCOME OR NOT WHEN UNACCOUNTED EXPENDITURE IS ALSO INVOLVED . THOUGH THE AO COLLECTED THE INFORMATION WITH REGARD TO TOTAL CONSIDERATION RECORDED AND THE AMOUNT RECORDED IN SALE DEED THERE IS NO DOCUMENTARY EVIDENCE AVAILABLE WITH REGARD TO SALE CONSIDERATION FOUND DURING THE COURSE OF SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXCEPT THE STATE MENTS RECORDED U/SEC. 131 FROM THE FLAT BUYERS ON SAMPL E BASIS . THE AO DID NOT FIND OUT WHETHER THE LAND IS OWN LAND OR TAKEN FOR DEVELOPMENT. I N CASE OWN LAND WHAT WAS THE PURCHASE CONSIDERATION OF THE LAND , WHAT WAS THE COST OF CONSTRUCTION , OTHER INCIDENTAL EXPENSES RELATED TO SALE OF FLAT AND 13 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) THE PROFIT THEREON . SIMILARLY, IN CASE OF LAND TAK E N ON DEVELOPMENT THE ASSESSEE HA S TO INCUR THE EXPENDITURE IN RESPECT OF THE ENTIRE BUILDING WHICH INCLUDES THE LAND OWNERS SHARE AS WELL AS THE ASSESSEES SHARE FOR ASCERTAINING TRUE AND CORRECT PROFIT . THEREFORE, IT IS INCUMBENT UPON THE AO , TO ASCERTA IN THE ACTUAL EXPENDITURE AND DETERMINE THE PROF IT THEREON FROM THE GROSS RECEIPTS RECEIVED BY THE ASSESSEE INCLUDING THE RECEIPTS RECEIVED BY THE ASSESSEE OVER AND ABOVE THE REGISTERED VALUE. NO SUCH EXERCISE WAS MADE BY THE AO. T HE AO SIMPLY ASCERTAINED THE TOTAL CONSIDERATION AS PER STATEMENT RECORDED U/SEC. 131 FROM THE FLAT BUYERS AND THE CONSIDERATION RECOR D ED IN THE SALE DEED AND THE DIFFERENCE AMOUNT W AS TREATED AS INCOME . THE AO OUGHT TO HAVE ASCERTAINED WHETHER THE LAND WA S OWN LAND IF SO THE COST OF LAND, COST OF CONSTRUCTION OF THE BUILDING AND OTHER INCIDENTAL EXPENDITURE AND THE PROFIT IN CASE OF LAND TAKEN ON DEVELOPMENT THE EXPENDITURE INCURRED FOR CONSTRUCTION OF THE ENTIRE BUILDING AND THE ASSESSEES SHARE AND LAND OW NERS SHARE THE GROSS RECEIPTS REPRESENTING THE ASSESSEES SHARE MINUS EXPENDITURE IS THE PROFIT WHICH REQUIRED TO BE BROUGHT TO TAX AS INCOME . THE AO DID NOT MAKE ANY SUCH EXERCISE TO ARRIVE AT THE TRUE AND CORRECT PROFIT OF THE ASSESSEE WHICH REQUIRE D TO BE BROUGHT TO TAX. WHEN THERE IS NO INFORMATION AVAILABLE AND AO HA S SUSPECTED THE CASH RECEIPT 14 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) ALTERNATIVELY HE OUGHT TO HAVE REFERRED THE COST OF CONSTRUCTION TO DVO AND TAX ED THE DIFFERENCE U/SEC. 69C OF THE ACT. IN THE INSTANT CASE EXCEPT THE STA TEMENTS RECORDED FROM THE FLAT BUYERS ON SAMPLE BASIS AND THE WHATSAPP MESSAGE IN MOB I LE PHONE OF THE ACCOUNTANT , NO OTHER EVIDENCE IS AVAILABLE TO THE AO . THE SAID INFORMATION WAS RELATED TO THE TOTAL CONSIDERATION AND THE ACCOUNTED IN BOOKS AND UNACCOUN TED CASH RECEIVED FOR SOME FLATS. NO DETAILS ARE AVAILABLE WITH REGARD TO EXPENDITURE INCURRED FROM THE UNACCOUNTED CASH RECEIPT S. THE STATEMENT RECORDED FROM THE FLAT BUYERS DOES NOT INDICATE AT WHAT STAGE SALE DEED WAS REGISTERED WHETHER IT IS SEMI F I N ISHED STAGE OR AT COMPLETED STAGE AND WHAT WAS ADDITIONAL WORK CARRIED OUT BY THE ASSESSEE ETC. IN ABSENCE OF ANY SUCH INFORMATION, THE STATEMENT RECORDED U/SEC. 132(4) CANNOT BE COMPLETE LY RELIED UPON FOR MAKING THE ADDITION . THUS, WE DO NOT SEE ANY REASON TO DISBELIEVE THE CONTENTION OF THE ASSESSEE THAT THE SUM OF RS.10.00 CRORES ADMITTED BY THE ASSESSEE FOR VARIOUS YEARS REPRESEN TE D THE ADDITIONAL RECEIPT . LD.CIT(A) DELETED THE ADDITION HOLDING THAT THE ASSESSEE HAS RECEIVED THE ON MONEY FOR THE ADDITIONAL WORK EXECUTED BY THEM AND THE ENTIRE RECEIPTS CANNOT BE TREATED AS INCOME. THE LD. CIT(A) ALSO GIVEN A FINDING THAT THE ADDITIONAL WORK CARRIED OUT BY THE ASSESSEE WAS EMPHASISED RIGHT FROM THE BEGINNING BY THE 15 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) ACCOUNTANT, BUYERS AS WELL AS APPELLANT. FOR THE SAKE OF CLARITY, WE EXTRACT THE ORDER OF THE LD. CIT(A) IN PARA 6.2 TO 6.2.3 WHICH READS AS UNDER: - 6.2) I HAVE CONSIDERED THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT AND THE MATERIAL PLACED BEFORE ME. THE FACTS EMANATING THERE FROM ARE THAT THE APPELLANT ADMITTED THAT ADDITIONAL AMOUNTS OVER AND ABOVE THE REGISTERED VALUE OF FLATS HAVE BE EN COLLECTED FROM THE CUSTOMERS/ BUYERS. THE CONTENTION OF THE AO IS THAT THE ADDITIONAL RECEIPTS ARE TAXABLE IN E NTIRITY AS ACCEPTED BY THE APPELLANT U/S. 132(4). WHEREAS THE APPELLANT'S CONTENTION IS THAT THE AO HAS RECEIVED SUCH MONEY FOR ADDITIONAL WORKS EXECUTED BY THEM AND ENTIRE RECEIPTS CANNOT BE TREATED AS INCOME SOLELY ON THE BASIS OF STATEMENT U/S.132(4) WH ICH WAS GIVEN ON ERRONEOUS ASSUMPTION. THE APPELLANT HAS INCURRED EXPENDITURE IN EXECUTING THE ADDITIO NAL WORKS UNDERTAKEN/ ASSIGNED TO THEM. THE APPELLANT CONTENDS THAT THEY OFFERED INCOME THEREON @30% WHICH IS REASONABLE AND THE SAME BE ACCEPTED. THE APPE LLANT RELIED ON VARIOUS DECISIONS IN SUPPORT OF THEIR CONTENTION . 6.2. 1) A STATEMENT FROM MR. MOTAMARRI NAGA ANIL KUMAR, ACCOUNTANT OF THE APPELLANT WAS RECORDED ON 29.11.2017, I.E ON THE DAY OF SEARCH ITSELF BEFORE THE APPELLANT WAS EVEN EXAMINED. IN THE STATEMENT WHICH IS REPRODUCED IN THE ORDER, IT IS CLEARLY STATED THAT (ANSWER TO QUESTION 9) THE ADDITIONAL AMOUNT IS TOWARDS ADDITIONAL WORKS. 6.2.2) THE STATEMENTS RECORDED FROM THE BUYERS ALSO REAFFIRMS THE SAME . THE ADDITIONAL AMOUNT PAID IS FOR ADD ITIONAL WORKS AND THE APPELLANT HAS EXECUTED THE ADDITIONAL WORKS IN RELATION TO THE FLAT PURCHASED. 6.2.3) THE APPELLANT DURING THE VARIOUS STATEMENTS RECORDED ON 29.11.2017,08.12.2017, 12.01.2018, 24.01.2018 AND 02.02.2018 HAS MADE DISCLOSURE OF RS.10,00,56,250/ - SAID TO BE ON ACCOUNT OF RECEIPTS FOR ADDITIONAL WORKS. THE FACT OF ADDITIONAL WORK BEING CARRIED BY APPELLANT WAS EMPHASIZED RIGHT THE BEGINNING BY THE ACCOUNTANT, BUYERS AS WELL AS THE APPELLANT. TH E SAME CANNOT BE IGNORED PLACING RELIANCE ONLY ON DISCLOSURE MADE IN THE STATEMENT U/S. 132(4). THE RATIO OF DECISIONS RELIED ON BY THE APPELLANT CANNOT BE IGNORED AND THE DISCLOSURE ITSELF CANNOT BE SOLE BASIS FOR ADMISSION/ ASSESSMENT OF ADDITIONAL INCOM E IGNORING THE 16 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) FACTS/MATERIAL ON RECORD. IN VIEW OF THE ABOVE, THE RECEIPTS FOR ADDITIONAL WORKS HAS TO BE TREATED AS TURNOVER AND REASONABLE PROFIT THERE O N HAS TO BE ESTIMATED. - THE CONTENTION OF THE APPELLANT IS REASONABLE AND ACCEPTABLE IN THE FACTS OF THE CASE. THE INCOME@30% OFFERED BY THE APPELLANT IS REASONABLE AND THE AO IS DIRECTED TO ACCEPT THE SAME AND RESTRICT THE ADDITION TO 30% OF THE ADDITIONAL RECEIPTS. THE GROUNDS ARE DISPOSEDOFF WITH ABOVE DIRECTIONS. 11 . FROM THE ABOVE , WE OBSERVE THAT T HE AO MADE THE ADDITION SOLELY ON THE BASIS OF STATEMENT RECORDED U/SEC. 132(4) WITHOUT CONSIDERING THE OTHER ISSUES AND FACTS INVOLVED IN CONSTRUCTION WITH REGARD TO THE ADDITIONAL EXPENDITURE RELATED TO CONSTRUCTION OF FLATS . NO OTHER EVIDENCE WAS BROUG HT ON RECORD BY THE AO TO CONTROVERT THE STATEMENT REGARDING RECEIPT OF ADDITIONAL RECEIPTS FOR ADDITIONAL WORK CARRIED OUT BY THE ASSESSEE. THIS FACT WAS SUPPORTED BY THE INFORMATION FOUND FROM THE TABLE OF THE A CCOUNTANT INDICATING THE ADDITIONAL RE CEIPT AS WELL AS EXPENDITURE. THE ASSESSEE HAS EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ADDITIONAL INCOME OF RS. 750/ - PER SQ.FT. WAS ACCEPTED WITHOUT TAKING INTO CONSIDERATION OF THE LAND OWNERS SHARE . THE ASSESSEE FROM THE BEGINNING EXPLAINED THAT THE ADDITIONAL RECEIPTS WERE RECEIVED FOR EARNING THE ADDITIONAL WORK . ALL TH ESE FACTS AND CIRCUMSTANCES SUPPORT THAT ONLY PROFIT REQUIRED TO BE BROUGHT TO TAX BUT NOT THE ENTIRE RECEIPTS . T HE ASSESSEE HAD ADMITTED THE INCOME @ 30% ON ADDITIONAL RECEIPT S WHICH APPEARS 17 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) TO BE FAIR AND REASONABLE .T HE AO CANNOT MAKE ADDITION SOLELY ON THE BASIS OF STATEMENT U/SEC. 132(4) WITHOUT CONSIDERING THE ENTIRE FACTS AND THE EXPEN D ITURE , THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE O RDER OF THE LD.CIT(A) AND THE SAME IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED FOR BOTH THE ASSESSMENT YEARS. 12 . IN THE CROSS OBJECTIONS WHILE SUPPORTING THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS CHALLENGED THE VALIDITY OF FRAMING THE ASSESSMENT U/SEC. 147 IN GROUND NOS. 2 & 3 . THE ASSESSEE CONTENDED THAT THIS ISSUE WAS RAISED BEFORE THE LD. CIT(A) IN GROUND NOS. 2 & 3 WHICH WAS ADDRESSED BY THE LD. CIT(A) IN PARA 5 . THE ARGUMENTS PLACED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS REPR ODUCED BY THE LD. CIT(A) IN PARA 5 WHICH READS AS UNDER: - 'THE ASSESSEE IS A SEPARATE LEGAL ENTITY AND NO SEARCH U/S 132 OR SURVEY PROCEEDINGS U/S 133A WERE CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE . THEN INITIATION OF ACTION I.E. U /S 148 FOR THE ASST YEAR 2017 - 18 IS AGAINST THE LAW AND MORE SPECIFICALLY NO INFORMATION IN THE FORM OF MATERIAL WAS FOUND DURING SEARCH PROCEEDINGS CONDUCTED ON THE SISTER CONCERNS OF THE ASSESSEE. ON THE LEGALITY OF THE STATEMENT RECORDED U/S 132(4) OF THE I.T.ACT, RE FERENCE IS INVITED TO THE FOLLOWING CASES ON THE SUBJECT. THE TELANGANA & ANDHRA PRADESH HIGH COURT IN THE CASE OF C.I. T VS. NARESH KUMAF AGARWAL REPORTED IN 369 ITR 171 @ PAGES 177 TO 179 HELD AS UNDER: 11. THE MANDATE UNDER SUB SECTION (4) GETS HONOURED ONLY WHEN THERE IS NO OTHER VERSION FROM THE ASSESSEE, VIS - - VIS THE STATEMENT. IN SUCH A CASE, THE STATEMENT WOULD CONSTITUTE THE BASIS FOR MAKING BLOCK ASSESSMENT EVEN IF THE DEPARTMENT DOES NOT HAVE AN Y OTHER MATERIAL TO BUTTRESS ITS CASE. HOWEVER, IF THE STATEMENT IS RETRACTED BY THE PERSON FROM 18 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) WHOM IT IS SAID TO HAVE BEEN RECORDED, IT HAS TO BE SUBJECTED TO THE SAME TEST, AS IS DONE IN MATTERS OF SIMILAR NATURE. THIS IS PARTICULARLY SO, WHEN THE PERS ON, FROM WHOM IT IS RECORDED, IS GOING TO BE VISITED WITH PENAL CONSEQUENCES. SUB - SECTION (4) OF SECTION 132 OF THE ACT CANNOT BE TAKEN AS A PROVISION LAYING DOWN ANY NEW PRINCIPLE IN THE LAW OF EVIDENCE. '12. FOR ALL PRACTICAL PURPOSES, THE STATEMENT REC ORDED UNDER SUB - SECTION (4) OF SECTION 132 OF THE ACT, PARTAKES THE CHARACTER OF THE ONE RECORDED BY AN INVESTIGATING OFFICER UNDER SECTION 162 OF THE CODE OF CRIMINAL PROCEDURE. HOWSOEVER DESIRABLE, IT MAY APPEAR TO BE; IT CANNOT BE ASCRIBED THE STATUS OF A PROVEN FACT. AT THE MOST, IT WOULD CONSTITUTE THE BASIS FOR THE PROSECUTION TO FRAME ITS CASE AND CORRESPONDINGLY BE A MATERIAL FOR THE DEFENCE TO ENSURE THAT THE PROSECUTION STICKS TO ITS VERSION. THE QUESTION OF A STATEMENT OF THAT NATURE BEING TREATE D AS THE CLINCHING EVIDENCE, BY ITSELF, LEADING TO ANY PENAL ACTION DOES NOT ARISE. 17. THE CIRCUMSTANCES UNDER WHICH A STATEMENT IS RECORDED FROM AN ASSESSEE, IN THE COURSE OF SEARCH AND SEIZURE, ARE NOT DIFFICULT TO IMAGINE. HE IS NOT VIRTUALLY PUT UNDER PRESSURE AND IS DENIED OF ACCESS TO EXTERNAL ADVICE OR OPPORTUNITY TO THINK INDEPENDENTLY. A BATTALION OF OFFICERS, WHO HARDLY FEEL ANY LIMITS ON THEIR POWER, POUNCE UPON THE ASSESSEE, AS THOUGH HE IS A HARDCORE CRIMINAL. THE NATURE OF STEPS, TAKEN D URING THE COURSE OF SEARCH ARE SOMETIMES FRIGHTENING. LOCKS ARE BROKEN, SEATS OF SOFAS ARE MERCILESSLY CUT AND OPENED. EVERY POSSIBLE ITEM IS FORCIBLY DISSECTED. EVEN THE PILLOWS ARE NOT SPARED AND THEIR ACTS ARE BACKED BY THE POWERS OF AN INVESTIGATING OF FICER UNDER SECTION 94 OF THE CODE OF CRIMINAL PROCEDURE BY OPERATION OF SUB - SECTION (13) OF SECTION 132 OF THE ACT. THE OBJECTIVE MAY BE GENUINE , AND THE EXERCISE MAY BE LEGAL . HOWEVER, THE FREEDOM OF A CITIZEN THAT TRANSCENDS, EVEN THE CONSTITUTION CANNO T BE TREATED AS NON - EXISTENT.' 18. IT IS NOT WITHOUT REASON THAT PARLIAMENT INSISTED THAT THE RECORDING OF STATEMENT MUST BE IN RELATION TO THE SEIZED AND RECOVERED MATERIAL, WHICH IS IN THE FORM OF DOCUMENTS, CASH, GOLD, ETC. IT IS OBVIOUSLY TO KNOW THE SOURCE THEREOF, ON THE SPOT. BEYOND THAT, IT IS NOT A LIMITED LICENCE, TO AN AUTHORITY, TO SCRIPT THE FIN ANCIAL OBITUARY OF AN ASSESSEE. ' '19. AT THE COST OF REPETITION, WE OBSERVE THAT IF THE STATEMENT MADE DURING THE COURSE OF SEARCH REMAINS THE SAME, IT CAN CONSTITUTE THE BASIS FOR PROCEED FURTHER UNDER 19 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) THE ACT EVEN IF THERE IS NO OTHER MATERIAL. IF, ON THE OTHER HAND, THE STATEMENT IS RETRACTED, THE ASSESSING OFFICER HAS TO ESTABLISH HIS OWN CASE. THE STATEMENT THAT TOO, WHICH IS RETRACTED FROM THE AS SESSEE CANNOT CONSTITUTE THE BASIS FOR AN ORDER UNDER SECTION I588C OF THE ACT. KIND ATTENTION IS INVITED TO ANOTHER JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF C.I.T. VS. SMT.S.JAYALAKSHMIAMMAL REPORTED IN 390 ITR 189. THE OBSERVATIONS OF THE HON'BLE MADRAS HIGH COURT AT PAGE 197 ARE EXTRACTED BELOW FOR KIND CONSIDERATION OF THE HON'BLE COURT IF THERE IS NO CORROBORATING DOCUMENTARY EVIDENCE, THEN STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961, ALONE SHOULD NOT BE THE BASIS, OR A RRIVING AT ANY ADVERSE DECISION AGAINST THE ASSESSEE. IF THE AUTHORITIES UNDER THE INCOME TAX ACT, 1961, HAVE TO BE CONFERRED WITH THE POWER, TO BE EXERCISED, SOLELY ON THE BASIS OF A STATEMENT, THEN IT MAY LEAD TO AN ARBITRARY EXERCISE OF SUCH POWER. AN O RDER OF ASSESSMENT ENTAILS CIVIL CONSEQUENCES. THEREFORE, UNDER JUDICIAL REVIEW, COURTS HAVE TO EXERCISE DUE CARE AND CAUTION THAT NO MAN IS CONDEMNED, DUE TO ERRONEOUS OR ARBITRARY EXERCISE OF AUTHORITY CONFERRED. THE HON'BLE SUPREME COURT IN THE CASE OF PULLNGODE RUBBERPRODUCTS CO. LTD. VS. STATE OF KERALA (REPORTED IN (1973) 91 ITR 18) HELD AS UNDER: AN ADMISSION IS A EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOWTHAT IT IS INCORRECT. THE ABOVE DECISIONS WOULD ESTABLISH THAT ANY STATEMENT MADE U/S 132(4) OF THE I.T ACT', CANNOT BE TAKEN AS CONCLUSIVE AND IF IT IS RETRACTED IT CANNOT BE CONSIDERED AT ALL FOR MAKING ANY ASSESSMENT. THEY HAVE TO BE INDEPENDENTLY PROVED FOR MAKING ASSESSMENT THAT THE ASSESSEE HAS EARNED THE UNDISCLOSED INCOME ACCEPTED IN SUCH A STATEMENT U/S 132 (4) OF THE I.T.ACT. THE STATEMENT RECORDED U/S 132(4) OF THE IT ACT IF NOT RETRACTED MAY BE USED FOR MAKING THE ASSESSMENT, BUT ONLY TO T HE EXTENT OF INCRIMINATING EVIDENCE/MATERIAL UNEARTHED DURING THE SEARCH. REFERENCE IS ALSO INVITED TO TWO INSTRUCTIONS OF CBDT (CENTRAL BOARD OF DIRECT TAXES) IN RELATION TO STATEMENTS RECORDED U/S. 20 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) 132(4) OF THE I.T.ACT. IT IS SETTLED LAW THAT THE INSTRUCTIONS ARE BINDING ON THE AUTHORITIES. THESE INSTRUCTIONS ARE NUMBERED AS UNDER. A) F.NO.286/2/2003 - IT(INV.II) DT. 10 - 3 - 2003 B) F. NO.286/98/201 3 - IT(INV. II) DT . 18 - 12 - 2014 OBJECTION FOR ISSUE OF NOTICE U/S 148: THE ASSESSEE IS OBJECTING FOR ISSUE OF NOTICE U/S 148 BECAUSE THERE IS NO MATERIAL IN HAND TO THE DEPARTMENT WHICH PROVES THAT THE ASSESSEE HAS CONCEALED THE INCOME WHICH WAS EARTHED DURING SEARCH PROCEEDINGS. THERE IS NO INFORMATION WITH THE DEPARTMENT ALSO THAT PARTICULAR INCOME HAS BEEN ESCA PED FOR WHICH NOTICE U/S 148 IS WARRANTED. IN THE CASE OF AMSA INDIA P. LTD. V. CIT (2017) 393 ITR 157/ 82 TAXMANN.COM 29 (DELHI)( HC) THE COURT HELD THAT THE STATEMENT OF THIRD PERSON NOT HAVING LIVE LINK ASSESSEE'S SUSPE CTED INCOME, THE REASSESSMENT WAS HELD TO BE BAD IN LAW. THE MATERIAL SHOULD HAVE A LIVE LINK WITH THE ASSESSEE'S SUSPECTED INCOME OR NON - DISCLOSURE OF A MATERIAL FACT. THAT KIND OF LIVE LINK WAS ABSENT. THEREFORE THE NOTICE UNDER SECTION 148 READ WITH SEC TION 147 OF THE ACT WAS TO BE QUASHED. THE STATEMENTS RECORDED FROM THIRD PARTIES AND THE RELIANCE ON THE STATEMENT FOR REASSESSMENT IS AGAINST LAW. AS THE INCOME OF THE ASSESSEE CANNOT BE KNOWN TO THE THIRD PARTY THAT TO THAT PARTICULAR INCOME HAS BEEN ESCAPED. THE STATEMENT RECORDED FROM THE THIRD PARTY WITHOUT LINKAGE OF EVIDENCE FOUND IN THE PREMISES OF THE ASSESSEE AND RELYING ON SUCH STATEMENT IS AGAINST THE PROVISIONS OF LAW. THE DEPARTMENT HAS ALSO NOT IDENTIFIED ANY ASSET WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS DURING THE SEARC H PROCEEDINGS. IT: MERELY BECAUSE DURING SEARCH, ASSESSEE SURRENDERED AN AMOUNT IN STIPULATION THAT DETAILS OF SAME WOULD BE GIVEN IN DUE COURSE OF TIME, BUT NO SUCH ASSETS WERE EVER FOUND/IDENTIFIED BY AUTHORITIES, NO ADDITION COULD BE MADE TO ASSESSEE'S INCOME [2019] 104 TAXMANN.COM 371 (ALLAHABAD) HIGH COURT OFALLAHABAD COMMISSIONER OF INCOME - TAX V. DILBAGH RAI ARORA 21 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) BHARATI SAPRU AND PIYUSH AGRA WAL, JJ, IT APPEAL NO . 304 OF 2009 MARCH 15, 2019 SECTION 69, READ WITH SECTION 143OF THE INCOME - TAX ACT, 1961 - UNEXPLAINED INVESTMENT (SEARCH & SEIZURE) - ASSESSMENT YEAR 2006 - 07 - WHETHER WHERE A PERSON CAN EXPLAIN EXCLUSIVELY WITH SUPPORTIVE EVIDENCE/MATERIAL OR OTHERWISE THAT TRUE STATE OF AFFAIRS WA S DIFFERENT FROM THAT HE PRESENTED IN HIS STATEMENT OF ADMISSION, TAX LIABILITY SHOULD BE FIXED ON BASIS OF CORRECT AND TRUE AFFAIRS AS ASCERTAINED FROM MATERIAL ON RECORD - HELD, YES - DURING SEARCH OPERATION, ASSESSEE, IN HIS STATEMENT, SURRENDERED RS.18 CRORES ON ACCOUNT OF INVESTMENT MADE IN PURCHASE OF JEWELLERY, PRECIOUS STONES AND RS. 6 CRORES AS CASH IN HAND DULY SHOWN IN BOOKS OF ACCOUNT RS.7 CRORES WERE SURRENDERED IN STIPULATION THAT DETAILS OF SAME WOULD BE GIVEN IN DUE COURSE OF TIME - HOWEVE R, NO INCRIMINATING MATERIALS OR DOCUMENTS HAD BEEN BROUGHT ON RECORD FOR SAID AMOUNT OF RS. 7 CRORES - NO ASSETS OF RS. 7 CRORES WERE FOUND BY AUTHORITIES, NOR SUCH ASSETS WERE IDENTIFIED OR DECLARED BY ASSESSEE - WHETHER IT COULD BE INFERRED THAT NO SUCH ASSETS ACTUALLY EXISTED HELD, YES - WHETHER TRIBUNAL WAS RIGHT IN HOLDING THAT ADDITION IN RESPECT OF RS. 7 CRORES WAS NOT BASED ON ANY EVIDENCE - HELD, YES [PARES 17 AND 21] [IN FAVOUR OF ASSESSEE] RECEIPT OF ON - MONEY - NO ADDITION ON THE BASIS OF STATEM ENT OF SELLER: NO ADDITION U/S 698 CAN BE MADE BASED ON THE STATEMENT OF THE SELLER ADMITTING RECEIPT OF ON - MONEY WHEN THEY WERE NOT CROSS EXAMINED AND WHEN OTHER EVIDENCE WAS NOT FORTHCOMING IN SUPPORT OF ON MONEY. THIS WAS SO H E LD IN THE CASE OF PR.CIT VS. KANUBHAI MAGANLAL PATEL 79 TAXMANN.COM 257 BY HON'BLE GUJRAT HIGH COURT. NO REOPENING WAS POSSIBLE MERELY ON THE BASIS OF THE STATEMENT. 13 . THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE IN PARA 5.1 WHICH READS AS UNDER: - 5.1 I HAVE PERUSED THE MATERIAL PLACED ON RECORD AND CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THE AO CLEARLY BASED HIS SATISFA C TION ON THE MATERIAL AVAILABLE TO HIM. THE APPELLANT ADMITTED ADDITIONAL RECEIPTS AND INCOME IN RESPECT OF PROJECTS OF HUF ALSO. THE BUYERS ST ATEMENTS ARE ALSO PLACED ON RECORD . THE ABOVE MATERIAL CONSTITUTES VALID EVIDENCES TO ENABLE AO TO HAVE REA S ON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT . IN VIEW OF THE ABOVE THE FACTS OF THE CASE ARE DIFFERENT AND DISTINGUISHABLE FROM THE DECISIONS RELIED ON BY THE APPELLANT. ACCORDINGLY, THE GROUNDS ARE DISMISSED. 22 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) 1 4 . DURING APPEAL HEARING, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ARGUED THAT THE ASSESSMENT MADE U/SEC. 143(3) R.W.S. 147 IS BAD IN LAW. DURING APPEAL HEARING, LD.DR DID NOT PLACE THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT BEFORE US. HOWEVER, AS SEEN FROM THE ASSESSMENT ORDER THE ASSESSEE HAS ACCEPTED THE ADDITIONAL INCOME U/SEC. 132(4) ON THE BASIS OF INFORMATION COLLECTED BY THE AO DURING THE SEARCH PROCEEDINGS THUS THERE WAS ESCAPEMENT OF INCOME AND HENCE , WE H OLD THAT REOPENING OF ASSESSMENT BY ISSUE OF NOTICE U/SEC. 148 IS VALI D . THUS WE DISMISS GROUND NOS. 2 & 3 AS ERRONEOUS. 1 5 . SINCE WE HAVE DISMISSED THE APPEALS ON MERITS, THE CROSS OBJECTIONS FILED BY THE ASSESSEE BECOME ON MERITS INFRUCTUOUS AND, HENCE, DISMISSED. 16 . IN THE RESULT, APPEAL S FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 2 3 / 1 1 / 2020 . S D / - S D / - (V. DURGA RAO) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 3 / 1 1 / 20 20 . VR/ - 23 ITA NO S . 698 & 699/VIZ/2019 C.O.NOS. 08 & 09/VIZ/2020 ( PARUCHURU SATISH KUMAR (HUF) ) COPY TO: 1. THE ASSESSEE - PARUCHURU SATISH KUMAR (HUF), D.NO. 5 - 93 - 22, WATER TANKS ROAD, 6/13, BRODIPET, GUNTUR. 2. THE REVENUE DCIT, CENTRAL CIRCLE - 1, GUNTUR. 3. THE PR. CIT (CENTRAL) , VISAKHAPATNAM. 4. THE CIT(A) - 3 , VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.