K.C.R.Homes & Developers, Tirupathi V. ACIT, Central Circle, Tirupathi

ITA 932/HYD/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5561 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Business income; Income from undisclosed sources; Search and seizure; Document seized; Additional evidence; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.980/HYD/2012 ASSESSMENT YEAR 2005-2006 ACIT, CENTRAL CIRCLE, TIRUPATI VS. M/S. K.C.R. HOMES & DEVELOPERS, TIRUPATI. PAN AAKFK 0179J (APPELLANT) (RESPONDENT) ITA.NO.931/HYD/2012 ASSESSMENT YEAR 2006-2007 M/S. K.C.R. HOMES & DEVELOPERS, TIRUPATI. PAN AAKFK 0179J VS. ACIT, CENTRAL CIRCLE, TIRUPATI (APPELLANT) (RESPONDENT) ITA.NO.981/HYD/2012 ASSESSMENT YEAR 2006-2007 ACIT, CENTRAL CIRCLE, TIRUPATI VS. M/S. K.C.R. HOMES & DEVELOPERS, TIRUPATI. PAN AAKFK 0179J (APPELLANT) (RESPONDENT) ITA.NO.982/HYD/2012 ASSESSMENT YEAR 2007-2008 ACIT, CENTRAL CIRCLE, TIRUPATI VS. M/S. K.C.R. HOMES & DEVELOPERS, TIRUPATI. PAN AAKFK 0179J (APPELLANT) (RESPONDENT) ITA.NO.932/HYD/2012 ASSESSMENT YEAR 2008-2009 M/S. K.C.R. HOMES & DEVELOPERS, TIRUPATI. PAN AAKFK 0179J VS. ACIT, CENTRAL CIRCLE, TIRUPATI (APPELLANT) (RESPONDENT) 2 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. ITA.NO.983/HYD/2012 ASSESSMENT YEAR 2008-2009 ACIT, CENTRAL CIRCLE, TIRUPATI VS. M/S. K.C.R. HOMES & DEVELOPERS, TIRUPATI. PAN AAKFK 0179J (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.C. DEVDAS FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 21.02.2014 DATE OF PRONOUNCEMENT : 28.03.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE ARE SIX APPEALS BY ASSESSEE AND REVENUE FOR ASSESSMENT YEARS 2005-06 TO 2008-09. IN ALL THE YEA RS, REVENUE IS AGGRIEVED WHEREAS, ASSESSEE IS AGGRIEVED ONLY IN ASSESSMENT YEARS 2006-07 AND 2008-09. SINCE COMMON ISSUES ARE THERE AND ALL ARE INTER-RELATED, THESE ARE HEAR D TOGETHER AND DISPOSED OF BY THIS COMMON ORDER. 2. BRIEFLY STATED ASSESSEE FIRM IS CONSTITUTED WIT H MR. K.C. REDDAPPA NAIDU AND SMT. K. ARUNA KUMARI AS PAR TNERS VIDE PARTNERSHIP DEED DATED 20.09.2004. EVEN THOUGH ASSESSEE WAS SHOWN TO HAVE INTENDED TO CARRY OUT REAL ESTATE BUSINESS, THERE SEEMS TO BE NO BUSINESS ACTIVITY. IN THE GROU P CASES OF SRI K.C. REDDAPPA NAIDU, SMT. K. ARUNA KUMARI AND A SSESSEE FIRM, SEARCH AND SEIZURE PROCEEDINGS HAVE TAKEN PLA CE ON 27.09.2007. IN THE COURSE OF PROCEEDINGS, CERTAIN L OOSE SHEETS/DOCUMENTS WERE FOUND AND SRI K.C. REDDAPPA N AIDU HAS MADE CERTAIN DISCLOSURES BASED ON THE FINDINGS IN THE SEARCH. SOME OF THE SEIZED MATERIAL HAS BEEN DISOWN ED BY SRI K.C. REDDAPPA NAIDU STATING THAT THESE MATERIALS WE RE LEFT 3 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. BEHIND IN THEIR PREMISES BY VARIOUS VISITORS AND RE AL ESTATE AGENTS. THE TRANSACTIONS RELATED TO THE REAL ESTATE BUSINESS OF GROUP ARE REFLECTED IN THE INDIVIDUAL STATUS OF SRI K.C. REDDAPPA NAIDU. STATEMENTS WERE ALSO RECORDED. ON T HE BASIS OF THE IMPUGNED DOCUMENTS AND ON THE BASIS OF STATE MENTS FROM THE PARTNER, THE ASSESSING OFFICER MADE VARIOU S ADDITIONS IN THE IMPUGNED ASSESSMENT YEARS VERY CURSORILY, WI THOUT MUCH DISCUSSION AS TO WHY AND WHAT BASIS THE ADDITI ONS HAVE BEEN MADE. THESE WERE SUBJECT MATTER OF APPEAL BEFO RE THE LD. CIT(A) WHO GAVE SUBSTANTIAL RELIEF. THEREFORE, THE REVENUE IS MAINLY AGGRIEVED ON THE RELIEF GRANTED BY THE LD. C IT(A) WHEREAS, ASSESSEE IS AGGRIEVED ON SUSTAINING SOME O F THE ADDITIONS. 3. WE HAVE HEARD THE LEARNED D.R. AND LD. COUNSEL FOR THE ASSESSEE AND PERUSED VARIOUS SEIZED DOCUMEN TS ALONG WITH EXPLANATIONS AND ALSO THE PAPER BOOKS PLACED O N RECORD ASSESSMENT YEAR-WISE. THE APPEALS ARE DECIDED AS UN DER AFTER CONSIDERING THE SUBMISSIONS AND MATERIALS ON RECORD . ITA.NO.980/HYD/2012 A.Y. 2005-06. 4. THIS IS A REVENUE APPEAL AGAINST THE ORDER OF T HE CIT(A)-VII, HYDERABAD DATED 19.03.2012. FOR THE YEA R UNDER REFERENCE, THE ASSESSEE HAS FILED THE RETURN OF INC OME ADMITTING INCOME AT RS. NIL, AS AGAINST WHICH THE A.O. HAS DE TERMINED THE TOTAL INCOME AT RS.3,78,02,970/- BY MAKING CERT AIN ADDITIONS AND THE NOTABLE AMONG THEM ARE THE ADDITI ON ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF PL OTS RS.4,91,000, INCOME FROM SALE OF PLOTS RS.1,38,84,3 00, PETTY EXPENSES DISALLOWED RS.17,000, INCOME FROM PLOTS RS.2,20,21,268/- AND INVESTMENT IN FILM PRODUCTION 4 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. RS.13,89,000/-. THE ASSESSEE HAS CHOSEN TO FILE THE APPEAL ON THE ABOVE ADDITIONS WHILE RAISING THE RELEVANT GROU NDS OF APPEAL BEFORE CIT(A). CONSEQUENT TO THE RELIEF GIV EN BY THE LEARNED CIT(A), REVENUE HAS RAISED THE FOLLOWING GR OUNDS WHICH ARE MATERIAL FOR DECIDING THE ISSUE. 2. THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDI TION MADE TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF PLOTS . 3. THE CIT(A) ERRED IN DELETING THE ADDITION MADE T OWARDS INCOME FROM THE SALE OF PLOTS. 4. THE CIT(A) IS NOT CORRECT IN LAW IN ADMITTING AD DITIONAL EVIDENCE IN THE FORM OF AFFIDAVIT WITHOUT AFFORDING AN OPPORTUNITY TO THE A.O. TO VERIFY THE EVIDENCE THER EBY VIOLATING RULE 46A OF THE I.T. RULES. 5. THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADD ITION MADE TOWARDS INCOME FROM PLOTS. 5. THE ISSUE IN GROUND NO.2 ABOVE IS ON ADDITION O F RS.4,91,000/- TREATING THE AMOUNTS AS UNEXPLAINED INVESTMENTS BASED ON SEIZED MATERIAL BEARING ANNEXU RE- A/KCR/07. ON ENQUIRY BY THE ASSESSING OFFICER ASSES SEE SUBMITTED THAT THE XEROX COPIES OF THE LOOSE SHEETS IN PAGES 3 TO 5 OF THE ANNEXURE A/KCR/7 PERTAIN TO THE BUSINES S IN THE NAME AND STYLE OF VENTURE AS GANESH GARDENS AND A LL THE TRANSACTIONS FROM THIS VENTURE WERE DULY ACCOUNTED FOR IN THE INDIVIDUAL STATUS OF SRI K.C. REDDAPPA NAIDU AND IN COMES WERE ADMITTED IN RELEVANT ASSESSMENT YEARS 2006-07 TO 2008- 09. HOWEVER, THE ASSESSING OFFICER DISBELIEVED AND MADE ADDITION OF RS.4,91,000/-. LD. CIT(A) AFTER OBTAINI NG THE REPORT FROM THE ASSESSING OFFICER DELETED THE SAME STATING AS UNDER : 4.3. THE OBSERVATIONS OF THE A.O. AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. AS COULD BE SEEN FROM THE OBSERVATIONS OF THE A.O. IN THE ASSESSMENT ORDER, 5 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. THE ONLY BASIS RELIED UPON BY THE A.O. IS THE INDIC ATION IN THE SEIZED MATERIAL MENTIONING THE AMOUNTS. AS PER THE EXPLANATION OF THE APPELLANT, THE AMOUNTS MENTIONED THEREIN ARE THE RECEIPTS ON SALE OF PLOTS BUT NOT THE INVES TMENTS AS PRESUMED BY THE A.O. THERE IS NO CONTRARY INFORMATI ON RELATED TO THIS ISSUE TO DISPROVE THE SUBMISSIONS M ADE BY THE APPELLANT. THE JUDICIAL RULINGS ALL ALONG HELD THE VIEW THAT THE ADDITION COULD NOT BE MADE ON THE BASIS OF A SEIZED MATERIAL PRESUMED TO BE CODED FIGURES OR THE ACTUAL FIGURES, WITHOUT BRINGING ANY CORROBORATIVE MATERIAL EVIDENC E, IN SUPPORT THEREOF, AND NO ADDITION CAN BE MADE, IF PR IMARY BURDEN IS DISCHARGED BY THE APPELLANT. IT WAS ALSO HELD BY VARIOUS JUDICIAL RULINGS THAT ADDITION BASED ON LOO SE SHEETS AND PRESUMPTIONS OF THE A.O. BASED THEREON COULD NO T BE SUSTAINED IN ABSENCE OF ANY CORROBORATIVE MATERIAL OR EVIDENCE BROUGHT ON RECORD. IN THIS CASE, THE FACTS ARE THAT THE INFORMATION IN SEIZED MATERIAL WAS NOT PUT TO F URTHER TESTS OR EXAMINATIONS AND THE EXPLANATION OF THE AS SESSEE HAS BEEN REJECTED BY THE A.O. SUMMARILY. UNDER THE CIRCUMSTANCES, THE ADDITION MADE BY THE A.O. DO NOT SURVIVE AND ACCORDINGLY THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 5.1. NOTHING WAS BROUGHT ON RECORD TO COUNTER THE FINDINGS OF THE LD. CIT(A). SINCE THE AMOUNTS ARE A LREADY ASSESSED IN THE HANDS OF INDIVIDUAL AND AS THERE IS NO BUSINESS IN THE HANDS OF THE FIRM AS SUCH, THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. IN VIEW OF T HIS, GROUND NO.2 IS REJECTED. 6. GROUND NO.3 PERTAINS TO ADDITION TOWARDS INCOME FROM SALE OF PLOTS. THE ASSESSING OFFICER MADE ADDI TION OF RS.1,38,84,300/- TREATING THE INCOME FROM SALE OF P LOTS AS UNEXPLAINED BASED ON THE MATERIAL SEIZED IN ANNEXUR E- A/KCR/17. IT WAS THE SUBMISSION OF THE ASSESSEE THA T THE RELEVANT PAPERS BELONG TO THE PROPRIETARY BUSINESS UNDER THE NAME AND STYLE OF VENTURE AS GAJALAKSHMI NAGAR AND ALL THE TRANSACTIONS FROM THIS VENTURE WERE DULY ACCOUNTED FOR IN 6 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. INDIVIDUAL STATUS AND INCOMES WERE ADMITTED FROM AS SESSMENT YEARS 2005-06 TO 2007-08. ASSESSING OFFICER, HOWEVE R, MADE THE ADDITION IN THE FIRMS HAND. LD. CIT(A) AFTER T AKING DETAILED EXPLANATION FROM THE ASSESSEE AND CONFRONTING TO TH E ASSESSING OFFICER DELETED THE SAME STATING AS UNDER : 5.3 THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE OBSERVATIONS OF THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS GONE BY THE MERE INDICATION OF THE DETAILS INSCRIBED AT THE REF ERRED PAGES OF THE ANNEXURE WITHOUT GETTING INTO THE DETAILS RE LATED TO THE NATURE OF THE TRANSACTIONS AND THEIR RELEVANCE EITH ER IN THE BOOKS OF THE APPELLANT OR ANY OTHER ENTITY OF THE G ROUP. IN ORDER TO DISBELIEVE THE INFORMATION AND EXPLANATION OFFERED BY THE APPELLANT, THERE COULD HAVE BEEN A CONTRARY EVIDENCE OR INFORMATION WITH THE ASSESSING OFFICER TO COME T O A CONCLUSION THAT THE CONSIDERATION RECEIVED FROM SAL E OF PLOTS, AS REFERRED IN THE SEIZED MATERIAL REALLY BELONG TO THE APPELLANT FIRM. HOWEVER, THERE IS .NO SUCH INDICATI ON OR INFORMATION GATHERED BY THE ASSESSING OFFICER TO IN DICATE THAT THE SALES BELONG TO THE APPELLANT FIRM. IN ADD ITION, THE APPELLANT HAS FURNISHED THE INFORMATION RELATED TO THE SALE OF THE PLOTS IN THE HANDS OF SRL K.C.REDDEPPA NAIDU IN INDIVIDUAL CAPACITY AND THE DETAILS FURNISHED INDIC ATING THE NAMES OF THE BUYERS OF EACH OF THE PLOT, INDICATE I T TO BE A RELIABLE INFORMATION WHICH CANNOT BE BRUSHED ASIDE. IN ABSENCE OF ANY SPECIFIC INFORMATION OR THE EVIDENCE GATHERED AGAINST THE SUBMISSIONS OF THE APPELLANT, THE ASSES SING OFFICER IS NOT JUSTIFIED IN TREATING THE ENTIRE AMO UNT BY ESTIMATION AND PRESUMPTION IN THE HANDS OF THE APPE LLANT FIRM. FURTHER, THE INFORMATION RELATED TO THE PLOTS AT GAJALAKSHMI NAGAR INDICATE AND PROVES CONSISTENTLY THAT PLOT NO.61 TO 139 ARE RELATABLE TO THE REAL ESTATE BUSINESS CARRIED OUT IN THE INDIVIDUAL STATUS OF SRI K.C.RED DAPPA NAIDU, WHICH WAS NOT DISPUTED BY THE ASSESSING OFFI CER. IT MAY BE RELEVANT HERE TO MENTION THAT ONCE THE ASSES SEE FURNISHES EXPLANATION, IT IS FOR THE ASSESSING OFFI CER TO PROVE THE INCOME OR TRANSACTION RELATE TO THE ASSESSEE, S O AS TO ASSESS IN THE HANDS OF ASSESSEE. UNDER THE CIRCUMST ANCES, I AM OF THE OPINION THAT THE ADDITIONS MADE MERELY BA SED ON THE INFORMATION IN SEIZED MATERIAL WITHOUT A CORROB ORATIVE EVIDENCE IS NOT SUSTAINABLE. IN THIS CONNECTION, TH E APPELLANT 7 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. HAS NOT DENIED THE TRANSACTION BUT HAS EXPLAINED TH E SAME IN THE HANDS OF OTHER ENTITY WHICH IS NOT DISPUTED BY THE ASSESSING OFFICER. HENCE, THE ADDITION MADE IN THE HANDS OF THE APPELLANT FIRM IS DELETED AND THIS GROUND OF AP PEAL IS TREATED AS ALLOWED. 7. WE HAVE ALSO PERUSED THE RELEVANT SEIZED PAPERS AND THE EXPLANATIONS GIVEN IN THIS REGARD AND WE DO NOT FIND ANY REASON TO INTERFERE WITH THE WELL REASONED ORDE R OF THE LD. CIT(A). ASSESSING OFFICER WAS NOT CORRECT IN MAKIN G THE ADDITION IN THE HANDS OF THE FIRM. OBVIOUSLY FIRM H AS NOT DONE ANY REAL ESTATE BUSINESS AND ENTIRE BUSINESS WAS DO NE BY THE INDIVIDUAL IN HIS INDIVIDUAL CAPACITY. THEREFORE, T HE ORDER OF THE CIT(A) IS SUSTAINED. GROUND NO.3 OF THE REVENUE IS REJECTED. 8. GROUND NO.4 IS WITH REFERENCE TO THE ADMISSION OF ADDITIONAL EVIDENCE. WE DO NOT SEE ANY REASON TO CO NSIDER THIS GROUND. THE ASSESSEE HAS NOT FURNISHED ANY ADDITION AL EVIDENCE WHICH WAS NOT FILED BEFORE THE ASSESSING O FFICER AND ONLY AN AFFIDAVIT WAS FILED BEFORE THE CIT(A), WHIC H CANNOT BE CONSIDERED AS ADDITIONAL EVIDENCE ON THE FACTS OF T HE CASE. THEREFORE, GROUND NO.4 OF THE REVENUE IS REJECTED. 9. GROUND NO.5 PERTAIN TO THE ADDITION OF RS.2,20,21,668/-. THIS ADDITION MADE BY THE ASSESSI NG OFFICER WAS ON THE BASIS OF THE RECEIPTS/CONSIDERATION FROM SALE OF PLOTS REFLECTED IN SEIZED MATERIAL BEARING ANNEXURE - A/KCR/HAD/02. THE ASSESSEE PARTNER EXPLAINED THAT T HESE PAPERS PERTAIN TO PROPRIETARY BUSINESS UNDER THE NA ME AND STYLE OF VENTURE GAJALAKSHMI NAGAR-II AND PLOT NOS. 61 TO 140 UNDER THIS VENTURE. THESE TRANSACTIONS WERE DULY RE FLECTED IN THE INDIVIDUAL STATUS AND INCOMES WERE ADMITTED FRO M ASSESSMENT YEARS 2005-06 TO 2007-08. IT WAS ALSO FU RTHER 8 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. SUBMITTED THAT PLOT NOS. 1 TO 60 DOES NOT BELONG TO SRI K.C. REDDAPPA NAIDU WHICH ARE ONLY ADJACENT PLOTS IN THE LAY OUT AND ONLY TRANSACTIONS OF PLOT NOS. 61 TO 140 PERTAI N TO THE ASSESSEE KCRN WHICH WERE REFLECTED IN HIS INDIVIDUA L HANDS. LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSES SEE DELETED THE ADDITION BY OBSERVING AS UNDER : 7.2. THE APPELLANT OBJECTED TO THE ABOVE ADDITION AND WHILE FURNISHING THE WRITTEN SUBMISSIONS, IT WAS SU BMITTED BY THE APPELLANT THAT IT WAS EXPLAINED BEFORE THE A .O. IN WRITING AT THE TIME OF HEARING THAT THE DETAILS OF PAYMENTS MENTIONED IN THE SEIZED MATERIAL BELONG TO THE BUSI NESS OF MR.K.C.REDDEPPA NAIDU UNDER THE NAME AND STYLE OF VENTURE 'GAJALAXMI NAGAR-II', WHERE HE PURCHASED TH E LAND, DEVELOPED AND SOLD IN THE FORM OF PLOTS NUMBERING 5 1 TO 139 AND THE AMOUNT PERTAINING TO THE SALE OF PLOTS WAS INCLUDED IN THE INDIVIDUAL STATUS OF MR. K.C. REDDEPPA NAIDU WHEREIN HE MAINTAINED THE BOOKS OF ACCOUNTS, VOUCHERS AND O BTAINED AUDIT REPORT U/S 44AB OF THE I.T.ACT, 1951, WHILE P LOT NO. L TO 50 ARE INDICATED TO BE BELONGING TO MR. ADINARAYANA & OTHERS. IT WAS STATED AND CLARIFIED BY THE APPELLAN T THAT PLOT NOS. L TO 139 BELONG TO MR. K.C. REDDAPPA NAIDU KEP T UNDER THE VENTURE NAME 'GAJALAXMI NAGAR-II' AND INSPITE O F SUBMISSIONS AND INFORMATION FURNISHED, THE ASSESSIN G OFFICER CONCLUDED THE TRANSACTION TO BE THAT OF THE APPELLANT WITHOUT ANY EVIDENCE. IT WAS ALSO SUBMITTED THAT TH E AMOUNT OF RS.1,38,84,300 WHICH WAS ADDED BY THE ASSESSING OFFICER SEPARATELY, IS A PART OF THE AMOUNT OF RS.2 ,20,21,558 AND AS SUCH IT IS DUPLICATION OF WHAT WAS ALREADY A DDED. IT IS ALSO A FACT THAT THE APPELLANT HAS FURNISHED THE COPY OF AFFIDAVIT BY MR. K. ADINARAYANA FOR OWNING UP THE CONSIDERATIONS RELATED TO THE PLOT NO.1 TO 50. 7.3 THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE INFORMATION BROUGHT ON THE RECORD BY VIRTUE OF SUBMISSIONS MADE BY THE APPELLANT, THE PROCEEDS OF THE SALE OF PLOTS NUMBERED FROM 1 TO 50 BELONG TO MR. K . ADINARAYANA & OTHERS AND THE CONSIDERATION RECEIVED FROM PLOT NO.51 TO 139 ARE STATED TO BE ACCOUNTED IN THE HANDS OF SRI K.C.REDDEPPA NAIDU IN INDIVIDUAL STATUS. THE BA SIS FOR MAKING THE ADDITION BY TREATING THE AMOUNTS INSCRIB ED IN THE SEIZED MATERIAL REFERRED ABOVE IS THE MERE INDICATI ONS OF 9 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. FIGURES OF AMOUNTS MADE IN THE SEIZED MATERIAL AND THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRIES OR INVESTIGATIONS TO DISPROVE THE CLAIM OF THE APPELLA NT THAT AMOUNTS DO NOT BELONG TO THE FIRM. REGARDING THE OW NERSHIP AS WELL AS THE ACCOUNTING OF RECEIPTS FOR PLOTS BEA RING NO.1 TO 50, IT IS PROVED IN AN AFFIRMED MANNER THAT THEY BE LONG TO MR. K. ADINARAYANA AND OTHERS BY VIRTUE OF AFFIDAV IT FILED IN THIS REGARD. REGARDING THE CONSIDERATION FOR THE PL OTS BEARING NO.51 TO 139, WHICH HAS BEEN CLAIMED TO HAVE ACCOUN TED IN THE HANDS OF MR. K.C. REDDEPPA NAIDU AND THERE IS N O ADVERSE INFORMATION TO DISPUTE THE CLAIM OF THE APP ELLANT. IN ADDITION, THE APPELLANT DURING THE COURSE OF THE AS SESSMENT AS WELL AS APPELLATE PROCEEDINGS HAVE SUBMITTED THE DETAILS OF SALES OF THE PLOTS BEARING NO.51 TO 139 WHICH AR E ACCOUNTED IN THE HANDS OF SRI K.C. REDDEPPA NAIDU I N INDIVIDUAL CAPACITY AND THE SAME WERE FORMED PART O F THE DISCUSSION IN THIS ORDER WHILE DEALING WITH THE SUB JECT OF ADDITION OF RS.1,38,84,300. UNDER THE CIRCUMSTANCES , THERE IS NO FURTHER BASIS FOR MAKING THE ADDITION OF RS.2 ,20,21,558 IN THE HANDS OF THE APPELLANT FIRM UNDER THE HEAD ' INCOME FROM PLOTS'. ACCORDINGLY, THE ADDITION IS NOT SUSTA INED AND THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 10. AFTER CONSIDERING THE DETAILED FACTS PLACED ON RECORD BY THE LD. CIT(A), WE DO NOT SEE ANY REASON TO DIFFER FROM THE FINDINGS OF THE LD. CIT(A). IN FACT, ASSES SING OFFICER SEEMS TO HAVE NOT APPLIED HIS MIND TO ANY OF THE SU BMISSIONS AND HAS IN FACT MADE ADDITION AGAIN (WHICH WAS CONS IDERED AGAINST GROUND NO.3 ABOVE). SINCE THE ADDITIONS WER E MADE PURELY ON PRESUMPTIONS AND SURMISES AND AS LD. CIT( A) HAS EXAMINED THE ISSUE IN DETAIL, WE CONFIRM THE ORDER OF THE CIT(A) AND REJECT THE GROUND NO. 5 OF THE REVENUE. 11. IN THE RESULT, ITA.NO.980/HYD/2012 OF THE REVENUE IS DISMISSED. 10 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. ITA.NO. 931/HYD/2012 & ITA.NO.981/HYD/2012 A.Y. 2006-2007 : 12. ITA.NO.981/HYD/2012 BY THE REVENUE IN WHICH REVENUE IS CONTESTING THE FOLLOWING ISSUES : 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIO N MADE TOWARDS COMMISSION FROM CHITS, INVESTMENT IN LOANS. 3. THE CIT(A) ERRED IN DELETING THE ADDITION MADE TOWA RDS UNEXPLAINED PAYMENTS. 12.1. ITA.NO.931/HYD/2012 IS BY THE ASSESSEE IN WH ICH ASSESSEE IS CONTESTING THE SUSTAINING OF ADDITION T O AN EXTENT OF RS.2,62,452/- BY THE CIT(A) AND ALSO THE DIRECTIONS GIVEN BY THE CIT(A) WHICH WAS CONTESTED BY REVENUE IN GROUND NO.3. 12.3. FOR THE YEAR UNDER REFERENCE, THE ASSESSEE H AS FILED THE RETURN OF INCOME ADMITTING AN INCOME OF R S. (-) RS.1908/- AS AGAINST WHICH THE A.O. HAS DETERMINED THE TOTAL INCOME AT RS.1,10,21,610 BY MAKING CERTAIN ADDITION S AND THE NOTABLE AMONG THEM ARE THE ADDITION ON ACCOUNT OF I NCOME FROM CHITS RS.10,49,810/-, ADDITION ON ACCOUNT OF P ETTY EXPENSES RS.34,000, ADDITION ON ACCOUNT OF MISCELLA NEOUS EXPENSES RS.5,08,000, ADDITION ON ACCOUNT OF UNEXPL AINED PAYMENTS RS.68,000 AND TREATMENT OF PAYMENTS RECEIV ED FROM BUYERS AS UNACCOUNTED INCOME RS.93,97,710/-. THE AS SESSEE HAS CHOSEN TO FILE THE APPEAL ON THE ABOVE ADDITION S, WHILE RAISING THE RELEVANT GROUNDS OF APPEAL BEFORE CIT(A ). 13. GROUND NO.2 IN REVENUE APPEAL AS WELL AS GROUN D NO.2 IN ASSESSEES APPEAL IS ON THE ADDITION ON ACC OUNT OF 11 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. UNEXPLAINED INCOME FROM CHITS OF RS.10,49,810/-. WH ILE COMPUTING THE TAXABLE INCOME, THE ASSESSING OFFICER HAS MADE AN ADDITION OF THE ABOVE AMOUNT TREATING THE AMOUNT S AS COMMISSION FROM CHITS AND AS UNEXPLAINED INCOME AND INVESTMENT BASED ON THE MATERIAL IN A/KVR/18. ON A QUERY BY THE ASSESSING OFFICER WITH REFERENCE TO THE FOLDER CONTAINING 43 LOOSE SHEETS HAVING DETAILS OF DAILY FINANCE IN CHI TS, IT WAS THE SUBMISSION OF THE ASSESSEES PARTNER THAT HE HAS ST OPPED FINANCE BUSINESS FROM F.Y. 2004-05 IN HIS INDIVIDUA L STATUS. AS THERE WAS NO REAL ESTATE BUSINESS IN THE FIRMS HAND S HE HAS STARTED SOME FINANCE BUSINESS WITH A VIEW TO MEET R ECURRING EXPENSES OF THE FIRM. THE INTEREST EARNED THEREON W AS DULY ADMITTED IN THE RETURN OF INCOMES REGULARLY FILED. AS REGARDS THE NAMES OF PERSONS AND CHIT AMOUNTS NOTED IN THE COMPUTER STATEMENT, IT WAS SUBMITTED THAT THESE ARE ONLY PRO JECTED FIGURES AND NO CHIT BUSINESS WAS CARRIED OUT EITHER BY THE INDIVIDUAL OR BY THE FIRM AT ANY POINT OF TIME. THE ASSESSING OFFICER HOWEVER, DID NOT AGREE AND MADE ADDITION OF RS.10,49,810/- TREATING THE SAME AS INCOME FROM THE CHITS. LEARNED CIT(A) CONSIDERED THE ISSUE AS UNDER : 4.3. THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE OBSERVATIONS OF THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER, THE AMOUNT OF RS.10,49,810/- REPRESENTED THE INCOME OF THE APPELLANT IN THE FORM OF COMMISSION FROM CHITS AND INVESTMENT IN LOANS. HOWE VER, THE FIGURE OF RS.10,49,810/- WAS NOT BIFURCATED TO INDICATE WHAT CONSTITUTES COMMISSION FROM CHITS AND INVESTME NT IN LOANS. AS PER THE APPELLANT'S EXPLANATION, THERE IS NO BUSINESS OF CHIT BEING CARRIED BY THE APPELLANT FIR M OR MR. K.C. REDDAPPA NAIDU, THE PARTNER OF THE FIRM, AT AN Y POINT OF TIME, AND AS SUCH DERIVING INCOME FROM CHIT BUSINES S DOES NOT ARISE. IT WAS ALSO EXPLAINED BY THE APPELLANT T HAT NO CHIT FUND BUSINESS WAS CARRIED BY THE APPELLANT FIRM THO UGH SOME INSCRIPTIONS INDICATING THE PROPOSED CHIT BUSI NESS WERE 12 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. FOUND DURING THE SEARCH & SEIZURE PROCEEDINGS. THER E IS NO INDICATION IN THE SEIZED MATERIAL TO INDICATE THAT THE APPELLANT HAS CARRIED ON THE ACTIVITIES OF THE CHIT FUND BUSINESS AND AS SUCH, THE QUESTION OF EARNING THE COMMISSION FROM CHIT MAY NOT ARISE. THE ASSESSING O FFICER FAILED TO BRING ANY ADDITIONAL EVIDENCE IN THIS REG ARD TO INDICATE THE ACTIVITY OF CHIT BUSINESS BEING CARRIE D ON BY THE APPELLANT. UNDER THE CIRCUMSTANCES, TAXING THE INCO ME UNDER THE HEAD 'COMMISSION FROM CHITS' DO NOT ARISE. FURT HER, THERE IS NO QUANTIFICATION OF SUCH AMOUNTS IN THE ASSESSM ENT ORDER. 4.4 AS REGARDS TO THE INCOME GENERATED BY THE FINANCIAL ACTIVITY OF THE APPELLANT FIRM, AGAIN THERE IS NO Q UANTIFICATION OF EITHER INVESTMENT OR THE INTEREST EARNED BY THE APPELLANT. IT IS A FACT THAT THE APPELLANT HAS ACCEPTED TO HAV E CARRIED OUT SOME BUSINESS OF FINANCING IN A SMALL WAY AND T HE INVESTMENTS AS INDICATED IN THE BOOKS WAS QUANTIFIE D THE AT RS.1,51,500/-. HOWEVER, SUCH INFORMATION FURNISHED BY THE APPELLANT DO NOT INDICATE THE INTEREST EARNED BY TH E APPELLANT ON THE SAID INVESTMENT. SINCE THE INVESTM ENTS ARE TRACED, THE INTEREST ON SUCH INVESTMENTS ARE ALSO T O BE THERE. HOWEVER, THE INFORMATION FURNISHED BY THE APPELLANT DO NOT INDICATE THE INTEREST EARNED BY SUCH INVESTMENTS. S INCE THE INFORMATION AS APPEARED IN THE SEIZED MATERIAL AND THE CONFIRMATION BY THE APPELLANT INDICATE THAT THE APP ELLANT FIRM CARRIED ON THE BUSINESS OF FINANCE BUT THE REAL PIC TURE OF THE INVESTMENT AND THE INTEREST EARNED FROM THERE IS NO T FULLY DISCLOSED AS PER THE INFORMATION BROUGHT ON THE REC ORD AS WELL AS THE SUBMISSIONS MADE BY THE APPELLANT. UNDE R THE CIRCUMSTANCES. I AM OF THE OPINION THAT A PORTION O F THE AMOUNTS THAT FORMED PART OF SEIZED MATERIAL DO REPR ESENT THE UNACCOUNTED INVESTMENTS MADE BY THE APPELLANT IN THE BUSINESS OF FINANCE AND ALSO EARNED INTEREST FROM T HE SAID INVESTMENTS WHICH IS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS MAINTAINED OR RETURN OF INCOME FURNISHED. IN ABSENC E OF CLEAR BIFURCATION OF THE FIGURES IN THE SEIZED MATERIAL, OF THE SAID AMOUNTS CAN TREATED AS THE UNACCOUNTED INVESTMENTS IN BUSINESS OF FINANCE, AND THE INTEREST EARNED BY SUC H INCOME, AS APPEARED IN THE SEIZED MATERIAL. ACCORDINGLY, AN AMOUNT OF RS.2,62,452/- BEING OF RS.10,49,810/- GETS CON FIRMED AND THE APPELLANT GETS PART RELIEF ON THE BALANCE A DDITION. HENCE, THE GROUND OF APPEAL IS TREATED AS PARTLY AL LOWED. 13 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. 14. REVENUE IS AGGRIEVED ON THE DELETION OF THE 3/ 4 TH OF THE AMOUNT WHEREAS, THE ASSESSEE IS AGGRIEVED ON THE CONFIRMATION OF 1/4 TH OF THE AMOUNT. LEARNED . D.R. SUBMITTED THAT THE CIT(A) WAS NOT CORRECT IN DELETING THE AMO UNT WHICH WAS BASED ON THE SEIZED MATERIAL WHEREAS, LEARNED C OUNSEL SUBMITTED THAT THE CIT(A) HAS GIVEN A FINDING THAT THERE IS NO INDICATION IN THE SEIZED MATERIAL THAT THE ASSESSEE HAS CARRIED ON THE ACTIVITIES OF THE CHIT FUND BUSINESS AND AS SUCH, QUESTION OF EARNING COMMISSION FROM CHIT BUSINESS M AY NOT ARISE. REFERRING TO THE DOCUMENTS SEIZED AND COPIES PLACED ON RECORD, IT WAS THE SUBMISSION OF THE LD. COUNSEL TH AT NO BUSINESS WAS CARRIED AND THOSE PROJECTIONS IN THE CHITS/PAPERS DO NOT INDICATE THAT ASSESSEE HAS DONE ANY BUSINESS. THESE DOCUMENTS ARE NOT PERTAINING TO ANY BUSINESS CONDUCTED BUT ONLY PROJECTIONS MADE OUT FOR THE PUR POSE OF ANALYZING CHIT BUSINESS. SINCE NO DATES OR DETAILS OR PARTIES ARE AVAILABL,E IT DOES NOT REFLECT THE ACTUAL BUSINESS. THEREFORE, CIT(A) ERRED IN CONFIRMING 1/4 TH AMOUNT. 14.1. ON A QUERY BY THE BENCH AS TO HOW THE AMOUNT OF RS.10,49,810/- WAS ARRIVED AT BY AO, LD. D.R. FAIRL Y EXPRESSED HIS INABILITY TO QUANTIFY THE AMOUNT. 15. WE HAVE SEEN THE DOCUMENTS PLACED ON RECORD AN D PERUSED THE ORDERS OF THE AUTHORITIES. AS SEEN FROM THE ORDER OF THE ASSESSING OFFICER THERE IS NO QUANTIFICATION OF ANY CHIT FUND BUSINESS ACTIVITY NOR EARNING OF INCOME AND HOW THE AMOUNT OF RS.10,49,810/- WAS ARRIVED AT IS ALSO NOT FORTHCOMI NG EITHER FROM THE ORDER OR FROM THE SEIZED DOCUMENTS. IN THE ABSENCE OF ANY SUCH EXPLANATION FROM THE ORDER OF ASSESSING OF FICER, IT IS VERY DIFFICULT TO SUSTAIN THE ADDITIONS SO MADE BY THE ASSESSING 14 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. OFFICER. EVEN THOUGH THE LD. CIT(A) GAVE A FINDING THAT THERE IS NO QUANTIFICATION OF ANY INVESTMENT OR INTEREST EAR NED BY THE ASSESSEE, WE ARE OF THE OPINION THAT LD. CIT(A) ERR ED IN CONFIRMING THE 1/4 TH OF THE AMOUNT WHEN IN FACT, THE BASIS FOR ARRIVING AT THE AMOUNT ITSELF IS NOT FORTHCOMING FR OM THE ORDERS. MOREOVER, ASSESSEES INVESTMENT AS DISCLOSE D IN THE BOOKS OF ACCOUNTS WAS CORRECTLY ARRIVED AT RS.15,15 ,100/- AND TRANSACTIONS SUPPOSED TO BE OF CHIT FUND DO NOT IND ICATE THAT ASSESSEE HAS DONE ANY CHIT BUSINESS OR EARNED ANY COMMISSION THEREON. IN THE ABSENCE OF ANY MATERIAL TO ESTABLISH THAT ASSESSEE HAS DONE ANY BUSINESS QUES TION OF CONFIRMING 1/4 TH OF THE ESTIMATED AMOUNT DOES NOT ARISE. IN VIEW OF THIS, WHILE REJECTING THE REVENUES GROUND, WE ALLOW ASSESSEES GROUND WITH A DIRECTION TO DELETE THE AM OUNT OF RS.2,62,452/- CONFIRMED BY THE CIT(A) ON THIS ISSUE . 16. THE OTHER ISSUE CONTESTED BY THE REVENUE AS WE LL AS BY THE ASSESSEE IN GROUND NO.3 PERTAIN TO THE AD DITION OF RS.93,63,710/-. THIS ISSUE WAS DISCUSSED BY THE CIT (A) IN PARA 8 OF THE ORDER. IN THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER ISSUED A QUESTIONNAIRE ASKING THE ASSESSEE TO EXPLAIN THAT A NOTE BOOK CONTAINING OF 85 PAGES WAS FOUND AND SEIZED VIDE ANNEXURE-A/KCR/49 WHICH CONTAINS PARTIC ULARS OF BUYERS OF PLOTS WITH DATE OF REGISTRATION, PLOT NO, DOCUMENT NO., EXTENT OF AREA AND VALUE. ASSESSEE EXPLAINED T HAT THESE PAPERS DOES NOT BELONG TO HIS BUSINESS AS HE HAS NO T SOLD THESE PLOTS AT ANY TIME. IT WAS SUBMITTED THAT ONE OF THE BROKERS MIGHT HAVE BROUGHT THE NOTE BOOK TO THE PRE MISES TO DISCUSS A PROPOSAL AND MIGHT HAVE LEFT THE PAPERS I N HIS PREMISES. HOWEVER, ASSESSING OFFICER WITHOUT EITHER EXAMINING THE SUBMISSIONS OR MAKING DETAILED ANALYSIS OF THE CONTENTS OF 15 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. THE NOTE BOOK SIMPLY MADE ADDITION OF RS.93,63,710/ - IN THE ASSESSMENT ORDER AT PAGE 3. 16.1. BEFORE THE LD. CIT(A), ASSESSEE CONTENDED TH AT PART OF THE TRANSACTIONS RELATES TO THE SALES MADE BY SHRI K.C. REDDAPPA NAIDU AS PARTNER IN THE VENTURE OF GAJALAK SHMI GARDENS TO AN EXTENT OF RS.39,49,500/- WHEREAS AN A MOUNT OF RS.52,52,000/- RELATE TO THE SALES MADE BY M/S. SRI NIVASA HOMES AND DEVELOPERS (RS.18,43,000/-), M/S. SRINIVA SA PAPER AND BOARD MILLS PVT. LTD. RS.23,14,000/- AND OTHERS RS.10,95,000/-. THEREAFTER, AS EXTRACTED BY CIT(A) IN PAGE 14 TO 18, HE HAS RECONCILED THE DETAILS OF THE TRANSAC TIONS. LD. CIT(A) AFTER CONSIDERING DETAILED TRANSACTIONS DECI DED THE ISSUE AS UNDER : 8.3 THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE DETAILS FURNISHED BY THE OF THE TR ANSACTIONS AS FIGURED IN THE SEIZED MATERIAL BEARING ANNEXURE A/KCR/49 DO BELONG TO THE GROUP OF THE APPELLANT BE ING THE SALES MADE BY MR. K.C. REDDAPPA NAIDU IN THE VENTUR E OF M/S GAJALAKSHMI GARDENS, FALLING IN THE ASSESSMENT YEAR 2006-07 & 2007-08. HOWEVER, THIS INFORMATION CONTRA DICT THE SUBMISSION OF THE APPELLANT MADE IN THE EARLIER PART OF THE PROCEEDINGS I.E. AT THE STAGE OF THE ASSESSMENT PROCEEDINGS AND SUBMISSIONS MADE THROUGH THE STATEM ENT OF FACTS, WHEREIN IT WAS MENTIONED THAT PAPER FOUND DO NOT RELATE TO THE APPELLANT AND THE SAID FIGURES ARE NE ITHER IN THE HAND WRITING OF THE PARTNERS OF THE APPELLANT NOR I N THE HAND WRITING OF ANY OF THE EMPLOYEES OF THE APPELLANT. I T IS NOT KNOWN HOW THE TRANSITION IN EXPLAINING THE CONTENTS OF SEIZED MATERIAL WAS SO QUICK AND THE APPELLANT COUL D FURNISH THE INFORMATION RELATED TO THE OTHER CONCER NS SUCH AS M/S SRINIVASA HOMES & DEVELOPERS, M/S SRINIVASA PAPER BOARD PVT LTD, ETC. THIS IS ALSO QUITE CONTRARY TO THE SUBMISSIONS MADE BY THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS THE SUBMISSIONS M ADE ALONG WITH THE GROUNDS OF APPEAL. THE INFORMATION A S ENSHRINED IN SEIZED DOCUMENTS ALSO INDICATE THE DOC UMENT 16 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. NUMBER, PLOT NUMBER AND THE AMOUNTS RELATED TO THE SALE OF THE PLOTS. UNDER THE CIRCUMSTANCES, IT WAS NOT A DI FFICULT TASK FOR THE APPELLANT AND THE ASSESSING OFFICER TO EXAM INE THE TRANSACTIONS WITH REFERENCE TO THE NAME OF THE VEND OR AND VENDEE. FURTHER, THERE IS A RESPONSIBILITY CAST ON THE ASSESSEE TO OWN UP AND EXPLAIN THE CONTENTS OF THE EVIDENCE/SEIZED MATERIAL FOUND DURING IN POSSESSION OF THE ASSESSEE WITH THE REASONABLE CLARITY AND EVIDENCE, AS PER THE PROVISIONS OF SEC.132(4A) OF THE LT. ACT, 1961. IN THIS CASE, THE APPELLANT FAILED TO DISCHARGE HIS RESPONS IBILITY AND THE INFORMATION FOUND THROUGH THE SEIZED MATERIAL I NDICATE CERTAIN POSSIBILITIES OF LINKING THE TRANSACTION TO THE APPELLANT OR ONE OF THE GROUP ENTITY. HOWEVER, THIS WAS NOT D ISCHARGED FULLY BY THE APPELLANT AND ASSESSING OFFICER, ALSO FAILED TO MAKE THE NEEDED INVESTIGATIONS AND ENQUIRIES INTO T HIS ASPECT. 8.4 THE TRANSACTIONS RELATED TO SRI K.C. REDDAPPA N AIDU TO THE EXTENT OF RS.39,41,000, ARE SHOWN TO HAVE BEEN ACCOUNTED IN THE AY 2006-07 AND 2007-08 AND THE DET AILS FURNISHED IN THIS REGARD CONFIRM THE SAME. HOWEVER, IN THIS CONTEXT, IT MAY BE RELEVANT TO MENTION THAT, THE EN TIRE SALE RECEIPTS/CONSIDERATION IN REAL ESTATE BUSINESS DO N OT CONSTITUTE PROFIT TO THE ASSESSEE AND A PORTION OF SUCH SALE PROCEEDS CONTRIBUTE TO THE PROFITS AND THIS ASPECT ALSO NEED TO KEEP IN MIND IN ASCERTAINING THE UNACCOUNTED INC OME RELATED TO THE REAL ESTATE TRANSACTION, IF ANY. APP ARENTLY, IN THIS CASE, THE ASSESSING OFFICER HAS NOT FOLLOWED T HIS AND AS SUCH ENDED UP IN TREATING THE ENTIRE AMOUNTS AS APP EARED IN SEIZED MATERIAL AS THE UNACCOUNTED INCOME OF THE AP PELLANT. 17. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A). AS FAR AS THE TRANSACTIONS PERTAINING TO THE INDIVIDUA L SHRI K.C. REDDAPPA NAIDU, THE SAME CANNOT BE BROUGHT TO TAX I N THE HANDS OF THE FIRM. THEREFORE, DELETION BY THE CIT(A ) IS CORRECT. TO THAT EXTENT, HIS ORDER IS CONFIRMED. AS FAR AS T HE VERIFICATION TO BE DONE WITH REFERENCE TO TRANSACTIONS OF OTHERS AS DIRECTED BY THE LD. CIT(A), THIS VERIFICATION IS REQUIRED AS THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRIES. IN FACT, AS SEE N FROM THE ORDER, THERE IS NO DISCUSSION ALSO ABOUT THE QUANTI FICATION OF 17 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. THE AMOUNTS, DETAILS OF THE ENTRIES MADE IN THE SEI ZED MATERIAL AND VERY CURSORILY THE ASSESSING OFFICER MADE THE A DDITION. THEREFORE, IN THE INTEREST OF JUSTICE, LD. CIT(A) D IRECTED CORRECTLY TO MAKE THE VERIFICATION OF THE SAME TO B RING IT TO TAX IN THE RESPECTIVE HANDS. SINCE ASSESSEE IS NOT HAVI NG ANY BUSINESS ON ITS OWN IN REAL ESTATE, NOTHING CAN BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AS SUCH. TO THAT E XTENT, THE DELETION BY THE CIT(A), OF THE AMOUNT WHICH WAS CON TENDED BY THE REVENUE IN ITS GROUND, IS CONFIRMED. SIMILARLY, ASSESSEES GROUND IS ALSO UPHELD AS THE SAME NEED TO BE ASSESS ED IN THE RESPECTIVE PERSONS HANDS AND NOT IN THE HANDS OF TH E ASSESSEE. THIS GROUND IS ACCORDINGLY PARTLY ALLOWED. HOWEVER, ASSESSEE IS DIRECTED TO EXPLAIN THE DIFFERENCE OF AMOUNT AS QUA NTIFIED BY THE CIT(A) TO THE ASSESSING OFFICER. WITH THESE DIR ECTIONS, THE ASSESSEES GROUND IS CONSIDERED AS PARTLY ALLOWED. 18. IN THE RESULT, ITA.NO.981/HYD/2012 OF THE REVENUE IS DISMISSED AND ITA.NO.931/HYD/2012 OF THE ASSESSEE IS PARTLY ALLOWED TO THE EXTENT INDICATED ABOVE. ITA.NO.982/HYD/2012 A.Y. 2007-08 : 19. THIS IS REVENUE APPEAL IN WHICH THE LD. CIT(A) GAVE RELIEF ON ALL THE ADDITIONS MADE BY THE A.O. B RIEFLY STATED, FOR THE YEAR UNDER REFERENCE, THE ASSESSEE HAS FILE D THE RETURN OF INCOME ADMITTING AN INCOME OF RS.1,08,820 AS AGA INST WHICH THE A.O. HAS DETERMINED THE TOTAL INCOME AT RS.88,27,980 BY MAKING CERTAIN ADDITIONS AND THE NO TABLE AMONG THEM ARE THE ADDITION ON ACCOUNT OF UNACCOUNT ED RECEIPTS RS.87,26,000, AMOUNTS BORROWED BY THE ASSE SSEE RS.60,800, LOANS AND ADVANCES GIVEN TO STAFF RS.1,0 0,000 AND 18 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. AMOUNT EXPENDED FOR GIFT ITEMS RS.50,000. THE REVEN UE HAS RAISED THE FOLLOWING GROUNDS : 2. THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIO N MADE TOWARDS AMO0UNT EXPENDED FOR GIFT ITEMS. 3. THE CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS AMOUNTS BORROWED BY THE ASSESSEE. 4. THE CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS UNACCOUNTED RECEIPTS. 20. GROUND NO.2 PERTAINS TO ADDITION ON ACCOUNT OF EXPENDITURE FOR GIFT ITEMS AT RS.50,000/-. WHILE C OMPUTING THE TAXABLE INCOME OF THE ASSESSEE, THE ASSESSING OFFIC ER HAS MADE AN ADDITION OF RS.50,000/- DISALLOWING THE EXPENDIT URE SHOWN TO BE MEANT FOR THE GIFT ITEMS, BASED ON THE FINDINGS/INFORMATION, AS REFLECTED IN THE SEIZED MA TERIAL BEARING ANNEXURE NO.A/KCR/24. THE ITEM NO.2 OF THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER ON TH E SAID ISSUE, RUN AS UNDER : 'DURING THE COURSE OF SEARCH OPERATION IN YOUR BUSI NESS PREMISES, A DELUXE NOTE BOOK, WHICH CONTAINS DETAIL S OF NUMBER OF GIFT ITEMS AND ITS DISTRIBUTION WAS FOUND AND SEIZED VIDE ANNEXURE NO. A/KCR/24. PLEASE EXPLAIN WHETHER YOU HAVE ACCOUNTED FOR THE SAME IN YOUR BOO KS OR NOT? 20.1. IN REPLY OF THE TO THE ABOVE QUESTION ON THE ISSUE OF GIFTS, ASSESSEE PARTNER SUBMITTED THAT THE DETAI LS OF GIFTS WERE MEANT TO BE DISTRIBUTED TO CUSTOMERS OF THE RE GISTERED CHIT TO BE CONDUCTED, BUT NEITHER THE CHITS WERE CO NDUCTED NOR PURCHASED THE GIFTS AT ANY TIME IN THE PAST. ON THE LINES OF THE GENERAL OBSERVATIONS, FOR ALL THE ISSUES FOR ALL TH E ASSESSMENT YEARS AS REFERRED AT PARA 3.1, THE ASSESSING OFFICE R HAS 19 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. DISBELIEVED THE SUBMISSION OF THE APPELLANT AND MAD E THE ADDITION OF RS.50,000/-, TREATING THE AMOUNT AS THE UNACCOUNTED EXPENDITURE. 20.2 AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND FILED WRITTEN SUBMISSIONS. IT WAS THE CO NTENTION OF THE ASSESSEE BEFORE THE CIT(A) THAT THE SEIZED MATE RIAL REPRESENTS THE FIGURES ESTIMATED FOR DISTRIBUTION O F GIFT ARTICLES AS AND WHEN THE BUSINESS COMMENCES AND SINCE THE AP PELLANT DID NOT COMMENCE ANY VENTURE, NO GIFTS HAVE BEEN GI VEN. ACCORDINGLY, IT WAS CONTENDED THAT UNDER THE CIRCUM STANCES, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING TH E ADDITION OF RS.50,000/- BY ESTIMATION. 20.3. AFTER PERUSING THE OBSERVATIONS OF THE ASSES SING OFFICER AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE , THE LD. CIT(A) HELD IN PARA 4.3 OF THE ORDER AS UNDER : AS COULD BE SEEN FROM THE OBSERVATIONS OF THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER, THE ONLY BASIS REL IED UPON BY THE ASSESSING OFFICER IS THE INDICATION OF THE C OST OF GIFTS TO THE EXTENT OF RS. 50,000 AS REFLECTED IN THE SEI ZED MATERIAL WHEREIN IT WAS NOT CLEARLY SHOWN TO HAVE INDICATED WHETHER THESE AMOUNTS REPRESENT THE EXPENDITURE ON GIFT ART ICLES BY THE APPELLANT FIRM. IN ABSENCE OF THE SPECIFIC INFO RMATION, THE ADDITIONS MADE BY THE ASSESSING OFFICER DO NOT REFL ECT THE CORRECT FACTS, SO AS TO BECOME A BASIS FOR THE ADDI TION AND AS SUCH, IT IS DIFFICULT TO BE SUSTAINED. THERE IS NO OTHER INFORMATION BROUGHT ON THE RECORD BY THE ASSESSING OFFICER OTHER THAN THE INDICATION IN THE SEIZED MATERIAL AS REFERRED AT ANNEXURE A/KCR/24 AND THE NARRATION OF THE SEIZED MATERIAL IS NOT INDICATED TO PIN POINT THE EXPENDIT URES RELATED TO THE APPELLANT. WHEN THE INFORMATION WAS PUT TO THE APPELLANT, IT WAS EXPLAINED THAT THE EXPENSES WERE MEANT FOR THE GIFTS FOR THE NEW BUSINESS OF CHIT FUND, WH ICH WAS NOT STARTED YET. HENCE, INCURRING OF SUCH EXPENSES DO N OT ARISE AS PER THE APPELLANT, WHICH WAS NOT REFUTED BY THE ASSESSING OFFICER, WITH A CONCRETE AND CORRECT 20 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. INFORMATION/EVIDENCE. THE JUDICIAL RULINGS ALL ALON G HAVE EXPRESSED THE VIEW THAT ADDITIONS COULD NOT BE MADE ON THE BASIS OF SEIZED MATERIAL PRESUMED TO BE CODED FIGUR ES OR THE ACTUAL FIGURES, WITHOUT BRINGING ANY CORROBORATIVE MATERIAL EVIDENCE IN SUPPORT THEREOF AND NO ADDITION CAN BE MADE IF THE PRIMARY BURDEN IS DISCHARGED BY THE APPELLANT. IT IS ALSO HELD BY THE JUDICIAL RULINGS THAT THE ADDITION BASE D ON LOOSE SHEETS AND PRESUMPTIONS OF THE ASSESSING OFFICER BA SED THEREON COULD NOT BE SUSTAINED IN ABSENCE OF ANY CORROBORATIVE MATERIAL OR EVIDENCE BROUGHT ON RECOR D. UNDER THE CIRCUMSTANCES, THE ADDITION OF RS.50,000/- IS N OT SUSTAINABLE AND ACCORDINGLY, THE ADDITION IS DELETE D. HENCE, THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 21. WITH RESPECT TO GROUND NO.3 ON THE BORROWED AMOUNTS, THE A.O. HAS MADE AN ADDITION OF RS.60,800 /- TREATING THE AMOUNT AS UNEXPLAINED BORROWALS WHILE REFERRING TO THE INFORMATION AS APPEARED IN THE SEIZED MATERI AL AT ANNEXURE A/KCR/48. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ISSUED A QUE STIONNAIRE FOR THE YEAR UNDER REFERENCE WAS REFERRING TO THIS ISSUE AT ITEM NO.5 AND THE SAME RUN AS UNDER; 'DURING THE COURSE OF SEARCH OPERATION IN YOUR BUSI NESS PREMISES, A DIARY CONTAINING 25 PAGES WAS FOUND AND SEIZED VIDE ANNEXURE A/KCR/48. THIS CONTAINS DETAIL S OF AMOUNTS BORROWED BY THE ASSESSEE WITH DATES. PLEASE EXPLAIN WHETHER THIS TRANSACTION IS ACCOUNTED FOR I N YOUR BOOKS OF ACCOUNTS. 21.1. IN RESPONSE TO THE QUESTION ISSUED BY THE ASSESSING OFFICER ON THE ABOVE ISSUE, ASSESSEE SUBM ITTED BEFORE THE A.O. THAT THE DIARY CONTAINING 25 PAGES IN ANNEXURE A/KCR/48, HAS SOME NAMES, SMALL AMOUNTS WITH DATES NOTED AND THIS BOOK WAS MAINTAINED BY THE STAFF AND SMALL ADVANCES WERE GIVEN TO THE STAFF INCLUDING MR. K.C. REDDAPPA NAIDU AND RECOVERED BY THE CASHIER FROM TIME TO TIME. IT WAS ALSO SUBMITTED THAT IN SOME PAGES, THE INTEREST RECEIVED ON SOME 21 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. SMALL FINANCES WERE ALSO NOTED AND ALL THESE ITEMS WERE ACCOUNTED FOR IN THE ACCOUNTS. ASSESSING OFFICER HAS DISBELIEVED THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITION OF RS.60,800/- TREATING THE BORROWALS ACCE PTED BY THE ASSESSEE, AS UNEXPLAINED. 21.2 AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND ALSO FILED WRITTEN SUBMISSIONS CONTENDIN G THAT THE SAID AMOUNTS DO NOT REPRESENT THE BORROWALS BUT REP RESENT AMOUNTS OF SMALL ADVANCES MADE BY THE ASSESSEE THAT WERE COLLECTED BACK AND THESE AMOUNTS ARE THE ADVANCES O UT OF THE PERSONAL DRAWINGS OF SRI K.C. REDDAPPA NAIDU AND TH EREFORE, THE ADDITION MADE BY THE A.O. IS NOT JUSTIFIED IN T HE HANDS OF THE ASSESSEE-FIRM. AFTER PERUSING THE ASSESSMENT OR DER AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE ON THE ISSUE, T HE LD. CIT(A) HELD AS UNDER : 6.3 THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE ASSESSMENT ORDER, THE DETAILS RELATED TO THE SAID AMOUNTS AS INSCRIBED IN THE SEIZED MATERIAL WE RE NOT BROUGHT ON RECORD WHICH WAS TREATED AS THE GROUND F OR MAKING THE ADDITION BY THE ASSESSING OFFICER. FURTH ER, AS PER THE SUBMISSIONS OF THE APPELLANT, IT HAS BEEN CONTE NDED THAT THE SAID AMOUNTS REPRESENT THE AMOUNTS OF ADVANCES GIVEN BY MR. K.C. REDDAPPA NAIDU IN HIS INDIVIDUAL CAPACI TY FOR THE ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08 BUT NOT THE BORROWALS BY THE APPELLANT FIRM, AS PRESUMED BY THE ASSESSING OFFICER AND THE TOTAL AMOUNTS ADVANCED PU T TOGETHER FOR THE THREE YEARS WAS QUANTIFIED AT RS.1 ,68,900 AS AGAINST AN AMOUNT OF RS.1,36,950 RECOVERED AND THES E AMOUNTS WERE STATED TO BE THE TOTAL OF THE ADVANCES AS INDICATED IN THE SEIZED MATERIAL OF ANNEXURE A/KCR/ 45 (RS.1,00,000) AND THE AMOUNTS AS REFLECTED IN THE A NNEXURE A/KCR/48 (RS.60,800). ON VERIFICATION OF THE SAME, IT IS FOUND THAT THE AMOUNTS MORE OR LESS MATCHING WITH T HE AMOUNTS INDICATED BY THE INFORMATION AS ABOVE AND A S SUCH IT IS RELEVANT TO HOLD THAT THERE IS NO GROUND TO MAKE THE 22 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. ADDITION BASED ON THE SAID INFORMATION, IN THE HAND S OF THE APPELLANT FIRM. THE JUDICIAL RULINGS ALL ALONG HELD THE VIEW THAT THE ADDITION COULD NOT BE MADE ON THE BASIS OF A SE IZED MATERIAL PRESUMED TO BE CODED FIGURES OR THE ACTUAL FIGURES, WITHOUT BRINGING ANY CORROBORATIVE MATERIAL EVIDENC E, IN SUPPORT THEREOF, AND NO ADDITION CAN BE MADE, IF PR IMARY BURDEN IS DISCHARGED BY THE APPELLANT. IT WAS ALSO HELD BY VARIOUS JUDICIAL RULINGS THAT ADDITION BASED ON LOO SE SHEETS AND PRESUMPTIONS OF THE ASSESSING OFFICER BASED THE REON COULD NOT BE SUSTAINED IN ABSENCE OF ANY CORROBORAT IVE MATERIAL OR EVIDENCE BROUGHT ON RECORD. IN THIS CAS E, THE FACTS ARE THAT THE INFORMATION IN SEIZED MATERIAL WAS NOT PUT TO FURTHER TESTS OR EXAMINATIONS AND THE EXPLANATION O F THE ASSESSEE HAS BEEN REJECTED BY THE ASSESSING OFFICER SUMMARILY. UNDER THE CIRCUMSTANCES, THE ADD ITION IS NOT SUSTAINED. FURTHER, THE SAME WERE EXPLAINED THR OUGH THE BOOKS OF MR. K.C. REDDAPPA NAIDU. HENCE, THIS GROUN D OF APPEAL IS TREATED AS ALLOWED. 22. GROUND NO.4 PERTAINS TO UNACCOUNTED RECEIPTS O F RS.87,26,000/-. THE A.O. HAS MADE THE ADDITION AS R EFLECTED IN VARIOUS PAGES OF ANNEXURE A/KCR/58, AS RECEIPTS OF REAL ESTATE BUSINESS WHICH ARE NOT ACCOUNTED BY THE ASSESSEE. O UT OF RS.87,26,000/- REPRESENT AN AMOUNT OF RS.45,00,000/ - SHOWN TO HAVE BEEN RECEIVED FROM MR. K.C. REDDAPPA NAIDU AND TO THAT EFFECT ON THE LETTER HEAD OF M/S. KCR HOMES & DEVELOPERS A LETTER DATED 26.08.2006 AS APPEARING AT PAGE NO.1 6 OF A/KCR/58 ALONG WITH RS.1,86,000/-, RS.40,000/- AND RS.5,00,000/- FOR WHICH CASH RECEIPTS WERE SHOWN T O BE REFLECTED AT PAGE NO. 19, 20 AND 21 OF ANNEXURE A/K CR/58. FURTHER, A SUM OF RS.34,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE FOR WHICH THE RECEIPT WAS SIGNED BY ONE MR . K. RANGA REDDY, AS APPEARING AT PAGE NO.23 OF A/KCR/58 ALONG WITH FURTHER AMOUNT OF RS.1,00,000/- RECEIVED FOR THE PR OPOSED SALE OF FIVE PLOTS AT GANESH GARDENS AS APPEARING AT P AGE NO. 32 OF A/KCR/58. HOWEVER, THE A.O. DISBELIEVED THE SUBMISS IONS OF THE ASSESSEE AND MADE THE ADDITION OF RS.87,26,000/ - TREATING 23 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. THE RECEIPTS AS BUSINESS RECEIPTS RELATED TO THE RE AL ESTATE BUSINESS OF THE ASSESSEE, AS UNEXPLAINED. 22.1. AGGRIEVED BY THE ORDER OF THE A.O. THE ASSES SEE FILED AN APPEAL BEFORE THE CIT(A) AND ON PERUSAL OF THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS FILED BEFORE HIM, THE LD. CIT(A) OBSERVED AS UNDER : 7.3. THE OBSERVATIONS OF THE A.O. AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. AS COULD BE SEEN FROM THE INFORMATION THAT HAS BEEN BROUGHT ON RECOR D, THE ADDITION OF RS.87,26,000/- REPRESENT THE ADDITIONS ON ACCOUNT OF SIX PIECES OF INFORMATION AS AVAILABLE F ROM THE SEIZED MATERIAL WHICH HAVE BEEN RELIED UPON BY THE ASSESSING OFFICER. ACCORDINGLY, THE SAME ARE DISCUS SED SEPARATELY WITH REFERENCE TO THE OBSERVATIONS MADE BY THE ASSESSING OFFICER, INFORMATION AVAILABLE IN THE SEI ZED MATERIAL AND THE SUBMISSIONS OF THE APPELLANT, ON E ACH OF THE ADDITIONS. (I) THE FIRST ADDITION RELATED TO THE INFORMATI ON AVAILABLE ON PIECE OF THE PAPER TAKEN AS PAGE NO.16 OF ANNEXURE A/KCR/58 WHICH IS THE LETTER HEAD OF M/S KCR HOMES & DEVELOPERS WHEREIN THERE IS A MENTION OF RECEIPT OF A SUM OF RS.45,00,000, TOWARDS SURVEY NO.260 FOR THE COMMITM ENT OF EARLIER AGREEMENT AND THE DATE INSCRIBED ON IT IS 2 6.8.2006. THE ASSESSING OFFICER HAS DISBELIEVED THE CONTENTIO N OF THE APPELLANT THAT THE TRANSACTION DO NOT BELONG TO THE M THOUGH IT IS WRITTEN ON LETTER HEAD OF M/S KCR HOMES & DEVELOPERS, SINCE NO NAME OF THE PAYER IS MENTIONED IN THE RECE IPT AND SURVEY NO.260 DO NOT BELONG TO THE APPELLANT. THERE IS NO OTHER INFORMATION FOR THE ASSESSING OFFICER TO CONC LUDE THAT THE AMOUNT BELONG TO THE APPELLANT EXCEPT THE COPY OF THE RECEIPT SEIZED. IT WAS CONTENDED BY THE APPELLANT T HAT THERE IS NO CORROBORATIVE EVIDENCE TO LINK THE TRANSACTIO N AS MENTIONED IN THE SEIZED MATERIAL TO THE TRANSACTION THAT HAS TAKEN PLACE ACTUALLY AND IN ABSENCE OF SUCH CORROBO RATIVE EVIDENCE, THE APPELLANT IS OF THE OPINION THAT THE ADDITIONS CANNOT BE MADE IN THE HANDS OF THE APPELLANT FIRM T REATING THE AMOUNT AS FIGURED IN THE SEIZED MATERIAL AS THE UNACCOUNTED INCOME. IT IS ALSO A FACT THAT STATEMEN TS WERE RECORDED FROM MR. K.C. REDDEPPA NAIDU, THE MAIN PER SON OF THE GROUP WHO IS ALSO A PARTNER IN THE APPELLANT FI RM, 24 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. WHEREIN IT WAS NEVER QUESTIONED ON THE TRANSACTIONS AS INSCRIBED ON THE SEIZED MATERIAL REFERRED FOR THE P URPOSE OF MAKING THIS ADDITION. ON CLOSE EXAMINATION OF THE C OPY OF THE SEIZED MATERIAL ALSO INDICATE THAT THE RECEIPT HAS BEEN SIGNED BY ANOTHER PERSON ON THE CORNER OF THE LETTE R HEAD INDICATING RECEIPT OF THE SAME AMOUNT OF RS.45,00,0 00 AND NO NAME IS TRACEABLE TOWARDS RECEIPT OF THE SAME. T HE EASIEST AND RIGHT THING FOR THE ASSESSING OFFICER W AS TO EXAMINE THE OWNERSHIP OF LAND AT SURVEY NO.260 SO A S TO ARRIVE AT THE CORRECT RELATION OF THE RECEIPT OF RS .45,00,000 WITH THE TRANSACTION AT SURVEY NO.260. HOWEVER, NO SUCH ATTEMPT APPEARS TO HAVE BEEN MADE BY THE ASSESSING OFFICER TO BRING THE ADDITIONAL INFORMATION ON THE RECORD T O LINK THE RECEIPT OF THE AMOUNTS OF RS.45,00,000 TO A PARTICU LAR TRANSACTION OR INDIVIDUAL. UNDER THE CIRCUMSTANCES, IT MAY NOT BE CORRECT ON THE PART OF THE ASSESSING OFFICER TO LINK THE AMOUNTS TO THE APPELLANT FIRM WITHOUT BRINGING THE ADDITIONAL EVIDENCE ON THE RECORD. ON THE FACTS AS REFERRED ABOVE, LINKING THE TRANSACTION TO THE APPELLANT'S F IRM IS NOT JUSTIFIED AND AS SUCH THE ADDITION OF RS.45,00,000 IS NOT SUSTAINABLE. (II) THE SECOND ADDITION OF RS.1,86,000 RELATED TO THE INFORMATION AVAILABLE ON PIECE OF LOOSE PAPER TAKEN AS PAGE NO.19 OF ANNEXURE A/KCR/58. AS COULD BE SEEN FROM T HE COPY OF THE SEIZED MATERIAL THAT THE SAID PIECE OF PAPER NARRATE A TRANSACTION THAT ONE MR. S.K. SUBHANI OF KAMAL JEWELLERY OF TENALI SHOWN TO HAVE TAKEN RS.1,86,000 FROM THE ACCOUNT OF ONE MR. MADANAPALLI NARSAIAH NAIDU. THE APPELLANT'S SUBMISSION IS THAT IT IS COMMON TO FIND SUCH LOOSE SHEETS IN THE BUSINESS OF REAL ESTATE THAT WA S CARRIED ON BY MR. K.C. REDDEPPA NAIDU AND NONE OF THE PERSO NS WHOSE NAMES AS APPEARING IN THE LOOSE SHEET ARE REL ATABLE TO THE APPELLANT FIRM AND AS SUCH THE APPELLANT DIS OWNED THE INFORMATION INSCRIBED ON THE SEIZED MATERIAL. T HE ROLE OF THE ASSESSING OFFICER APPEARS TO BE ONLY CONFINED T O THE REFERENCE TO THE SEIZED MATERIAL AND DISBELIEVING T HE EXPLANATION OFFERED BY THE APPELLANT AS NO ENQUIRIE S OR INVESTIGATION RELATED TO THE INFORMATION IS CARRIED OUT AS PER THE INFORMATION AVAILABLE ON THE RECORD. AS THE APP ELLANT HAS DISCHARGED THE RESPONSIBILITY OF EXPLAINING THE TRA NSACTION, IT WAS FOR THE ASSESSING OFFICER TO CONCLUDE THE EXAMINATION/INVESTIGATION, WITH THE HELP OF MORE CORROBORATIVE EVIDENCE, FOR TREATING THE SAID AMOUN TS AS THE INCOME OF THE APPELLANT. AS OBSERVED EARLIER, NONE OF THIS SEIZED MATERIAL WAS PUT TO THE APPELLANT FOR FURTHE R 25 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. EXAMINATION AND EXPLANATION EXCEPT MAKING A REFEREN CE IN THE QUESTIONNAIRE ISSUED AT THE TIME OF SCRUTINY ASSESSMENTS. IT WAS HELD BY VARIOUS JUDICIAL RULING S THAT ADDITIONS BASED ON LOOSE SHEETS AND PRESUMPTIONS OF THE ASSESSING OFFICER BASED THEREON, COULD NOT BE SUSTA INED IN ABSENCE OF ANY CORROBORATIVE MATERIAL OR EVIDENCE O N RECORD. IT WAS ALSO HELD THAT ADDITIONS COULD NOT BE MADE O N THE BASIS OF SEIZED MATERIAL PRESUMED TO BE CODED FIGUR ES OR ACTUAL FIGURES, WITHOUT BRINGING ANY CORROBORATIVE MATERIAL EVIDENCE IN SUPPORT THEREOF, AND NO ADDITION CAN BE MADE, IF PRIMARY BURDEN IS DISCHARGED BY THE APPELLANT. UNDE R THE CIRCUMSTANCES, WHERE THE ASSESSING OFFICER HAS NOT BROUGHT IN ANY ADDITIONAL EVIDENCE RELATED TO THE SAID INFO RMATION, THE SUBMISSIONS OF THE APPELLANT ARE ACCEPTABLE AND AS SUCH, IT IS HELD THAT THERE IS NO GROUND FOR THE AS SESSING OFFICER TO MAKE THE ADDITION WITHOUT BRINGING ANY A DDITIONAL EVIDENCE ON RECORD. (III) THE ADDITIONS OF RS.40,000, RS.5,00,000 & RS.34,00,000 RELATED TO THE INFORMATION AVAILABLE ON PIECE OF TH E PAPERS TAKEN AS PAGE NOS.20, 21 & 23 OF ANNEXURE A/KCR/58. AS COULD BE SEEN FROM THE COPIES OF THE SEIZED MATERIA L, PAGE NO.20 IS A MANUAL RECEIPT FOR HAVING RECEIVED RS.40 ,000 BY ONE MR.KVS MADHU AND NO NAME OF THE PERSON WHO PAID THE AMOUNT WAS INDICATED ON THE RECEIPT. ACCORDINGLY, I T WAS ARGUED BY THE APPELLANT THAT THERE IS NO INDICATION IN THE RECEIPT THAT THE AMOUNT WAS PAID BY THE APPELLANT A ND THE PURPOSE FOR WHICH IT WAS PAID AND IN ABSENCE OF THE EVIDENCE WITH THE ASSESSING OFFICER TO SHOW THAT TH E SAME AMOUNT WAS PAID BY THE APPELLANT, IS NOT JUSTIFIED. PAGE NO.21 IS ANOTHER MANUAL RECEIPT DT.22.11.2006 FOR RS.5,00,000, SHOWN TO HAVE SIGNED BY ONE SRI G. SHA NKER. THE APPELLANT ARGUED AND SUBMITTED THAT THE RECEIPT DOES NOT INDICATE THE NAME OF THE APPELLANT AND A PERSON BY NAME MR.SHANKER HAS NO DEALING WITH THE APPELLANT. PAGE NO.23 IS AN ESTIMATION SLIP BEARING THE NAME OF M/S GBR ASSOCIATES WITH D.NO.142, NETAJI ROAD, TIRUPATI, WH EREIN THE FIGURES OF RS.34 LAKHS, INDICATED IN WORDS AS 'RECE IVED THIRTY FOUR LAKHS ONLY' AND SPLITTING THE FIGURES A S 11, 18, 5 TOTALLING TO 34, SHOWN TO HAVE SIGNED BY ONE MR.K.R ANGA REDDY. ON THE LINES OF THE ABOVE ARGUMENT, THE APPE LLANT CONTENDED THAT THE PIECE OF PAPER DO NOT BELONGING TO THE APPELLANT FIRM SINCE THE NAME OF OTHER CONCERN BY N AME M/S GBR ASSOCIATES IS MENTIONED IN THE RECEIPT ITSELF A ND ACCORDINGLY DISOWNED THE TRANSACTION THAT WAS USED AGAINST THE APPELLANT, BY THE ASSESSING OFFICER. 26 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. AS COULD BE SEEN FROM THE INFORMATION AS INDICATED IN THE SEIZED MATERIAL AND THE ARGUMENTS OF THE APPELLANT, THOUGH THE SEIZED MATERIAL WAS FOUND IN THE PREMISES OF TH E APPELLANT, NO INFORMATION ON THE SEIZED MATERIAL IN DICATE THE NAME AND TRANSACTIONS OF THE APPELLANT. ON TOP OF I T, THERE WAS NO ENQUIRIES OR FURTHER INVESTIGATIONS BY THE A SSESSING OFFICER TO LINK THE INFORMATION TO THE APPELLANT AS PER THE INFORMATION BROUGHT ON THE RECORD. AS INDICATED, TH IS INFORMATION WAS NEVER EXAMINED IN DETAIL EITHER DUR ING THE COURSE OF SEARCH PROCEEDINGS OR THE ASSESSMENT PROC EEDINGS SO AS TO BRING THE TRUTH ON THE RECORD, SO AS TO MA KE IT A FIT CASE FOR MAKING THE ADDITION AS AGAINST THE ADDITIO NS BASED ON MERE ENTRIES ON THE SEIZED MATERIAL. UNDER THE CIRCUMSTANCES, I AM OF THE CONSIDERED OPINION THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER BASED ON TH E ENTRIES ON THE SEIZED MATERIAL WHERE THE NAME OF TH E APPELLANT OR THE TRANSACTIONS RELATED 0 THE APPELLANT ARE NOT INDICATED EITHER DIRECTLY OR INDIRECTLY, IS NOT JUS TIFIED AND AS SUCH, THE ADDITIONS OF RS.40,000, RS.5,00,000 AND RS.34,00,000 DO NOT SURVIVE. (IV) THE ADDITION OF RS.1,00,000 RELATED TO THE RECEIPTS OF 'GANESH GARDENS' AS PER THE INFORMATION AVAILABLE O N PIECE OF THE PAPER TAKEN AS PAGE NO.32 OF ANNEXURE A/KCR/ 58. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AS WELL AS THE APPELLATE PROCEEDINGS, IT WAS SUBMITTED BY THE APPELLANT THAT THE AMOUNTS RELATED TO THE REAL ESTATE BUSINES S OF MR. K.C. REDDEPPA NAIDU AND THE AMOUNT NOTED THEREIN WA S SHOWN TO HAVE BEEN DULY DECLARED UNDER THE VENTURE NAMED 'GANESH GARDENS' IN THE INDIVIDUALS HANDS OF MR. K. C. REDDEPPA NAIDU. THE INFORMATION RELATED TO SUCH TRANSACTION IN THE BOOKS OF MR. K.C. REDDEPPA NAIDU INDICATE THE SAME. SINCE THE AMOUNTS WERE ALREADY ACCOUNTED FOR IN THE BOOKS OF MR. K.C. REDDEPPA NAI DU, THE SAME CANNOT BE ADDED IN THE HANDS OF THE FIRM. ACCO RDINGLY, THE ADDITION OF RS.1,00,000 IS NOT SUSTAINABLE. IT MAY BE RELEVANT TO TAKE THE HELP OF JUDICIAL DEC ISIONS ON THE ISSUE OF RELEVANCE OF THE CONTENTS OF THE SEIZE D MATERIAL, WHERE THE ASSESSEE SUBMITS THE EXPLANATION, WHICH I S NOT REBUTTED WITH FURTHER EVIDENCE OR FINDINGS. IN THE CASE OF CIT VS DURGA PRASAD MORE, (82 ITR 540), THE HON'BLE SUP REME COURT HELD THAT IN A CASE WHERE THE PARTY RELIED ON SELF- SERVING RECITALS IN DOCUMENTS, IT WAS FOR THE PARTY TO ESTABLISH THE TRUTH OF THE RECITALS AND THE TAXING AUTHORITY WILL ENTITLE TO LOOK INTO THE SURROUNDING CIRCUMSTA NCES AND 27 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. FIND OUT THE REALITY OF SUCH RECITALS. IN THE CASE OF MANSUKLAL NANJIBHAI PATEL VS DCLT (251 ITR 341), THE HON'BLE HIGH COURT OF GUJARAT HAS HELD THAT THE PRESUMPTION AS A PPLICABLE IN SEARCH PROVISIONS CANNOT JUSTIFY THE ASSESSMENT WITHOUT ANY ENQUIRY AS TO THE TRUE NATURE OF THE PAPERS SEI ZED. FURTHER, THE HON'BLE SUPREME COURT IN THE CASE OF P.R.METRANI VS CIT (287 ITR 209) HAS EXPRESSED THE VIEW THAT PRESUMPTION U/S 132{4A) IS A REBUTTABLE PRESUM PTION SINCE THE EXPRESSION USED 'MAY BE PRESUMED'. ON THE LINES OF THE ABOVE DISCUSSION AS REGARDS TO THE FACTS OF THE CASE INVOLVED ON EACH OF THE ABOVE ISSUE REFERRED AND AL SO BASED ON THE RATIO OF THE DECISIONS OF HON'BLE APEX COURT AS WELL AS THE HIGH COURT SUPRA, IT IS HELD THAT THE ASSESSING OFFICER HAS MERELY RELIED ON THE CONTENTS OF THE SEIZED MAT ERIAL WITHOUT PUTTING THEM TO FURTHER ENQUIRY OR INVESTIG ATIONS TO BRING THE ADDITIONAL EVIDENCE ON RECORD AND TO REBU T THE EXPLANATION OFFERED BY THE APPELLANT DURING THE COU RSE OF THE ASSESSMENT PROCEEDINGS. BASED ON THE INFORMATION AN D FACTS OF THIS CASE, THE RATIO OF THE ABOVE DECISION ARE C LEARLY APPLICABLE AND AS SUCH, THE ADDITION OF RS.87,26,00 0 MADE ON ACCOUNT OF TREATING THE RECEIPTS FROM THE REAL E STATE BUSINESS AS UNEXPLAINED WITHOUT BRINGING THE FURTHE R EVIDENCE ON RECORD BY THE ASSESSING OFFICER IS DELE TED AND THE APPELLANT SUCCEEDS ON THIS GROUND OF APPEAL. HE NCE, THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 22.2. AS CAN BE SEEN FROM THE ABOVE, IN ALL THE AB OVE GROUNDS THE REVENUE IS CONTESTING THE FACTUAL ASPEC TS DECIDED BY THE LD. CIT(A). THE A.O. DID NOT CONSIDER THE AS SESSEES PARTNER SUBMISSIONS THAT MOST OF THE AMOUNTS WERE A CCOUNTED FOR IN THE HANDS OF INDIVIDUAL AND ENTRIES ARE NOT BELONGING TO THE FIRM. SINCE THE FIRM DID NOT DO ANY BUSINESS EI THER IN REAL ESTATE OR IN CHIT BUSINESS, QUESTION OF MAKING ADDI TIONS IN THE HANDS OF THE FIRM DOES NOT ARISE. THEREFORE, THE OR DER OF THE CIT(A) ON ALL THE ABOVE GROUNDS IS CONFIRMED AS HE HAS EXAMINED THE ISSUES FACTUALLY. ACCORDINGLY, GROUNDS OF THE REVENUE ARE DISMISSED. 23. IN THE RESULT, ITA.NO.982/HYD/2012 OF THE REVENUE IS DISMISSED. 28 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. ITA.NO.932/HYD/2012 & 983/HYD/2012 - A.Y. 2008-09 24. BRIEFLY STATED, FOR THE YEAR UNDER REFERENCE T HE ASSESSEE HAS FILED THE RETURN OF INCOME ADMITTING A N INCOME OF RS.1,34,080/- AS AGAINST WHICH THE A.O. HAS DETERMI NED THE TOTAL INCOME AT RS.2,82,46,021/- BY MAKING VARIOUS ADDITIONS SUCH AS DISALLOWANCE OF PETTY EXPENSES, EXPENSES ON GIFT ARTICLES, EXPENDITURE ON FILM PRODUCTION, UNACCOUNT ED INCOME FROM SALE OF PLOTS ETC., 25. LEARNED CIT(A) GAVE RELIEF ON ALL THE ISSUES THEREBY, REVENUE IS AGGRIEVED AND ASSESSEE IS AGGRI EVED ON THE DIRECTION OF THE CIT(A) TO MAKE FRESH ENQUIRY ON ON E OF THE ADDITION CONTENDING THAT LD. CIT(A) DIRECTION AMOUN TED TO SETTING ASIDE THE ASSESSMENT ORDER WHICH IS NOT LEG ALLY PERMISSIBLE. 26. THE ONLY GROUND IN ASSESSEES APPEAL AND CONNECTED REVENUE GROUND NO. 2 AND 4 IS ON ACCOUNT OF ADDITION OF CHIT BUSINESS OF RS.6,47,658/- AND COMM ISSION AT RS.7,77,015/-. A.O. BASED ON THE MATERIAL IN ANNEXU RE- A/KCR/21 AND 35 MADE THE ADDITIONS OF THE ABOVE AMO UNTS. EVEN THOUGH IT WAS SUBMITTED THAT IT HAD NOT DONE A NY CHIT BUSINESS AO MADE ADDITION OF THE AMOUNTS. THE LD. C IT(A) GAVE RELIEF BY STATING AS UNDER : 5.4. THE OBSERVATIONS OF THE ASSESSING OFFICER IN ASSESSMENT ORDER AS WELL AS IN REMAND REPORT AND TH E WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE INFORMATION BROUGHT ON RECORD THRO UGH THE OBSERVATIONS OF THE ASSESSING OFFICER AS WELL AS TH E CONTENTS OF THE SEIZED MATERIAL, NOWHERE NAMES OF ANY PERSON S /SUBSCRIBERS ARE INDICATED IN THE SHEETS AND THE TI TLE MENTIONED ON EACH AND EVERY SHEET INDICATE THE CAPT ION OF 29 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. 'PROPOSED CHITS DURING AUGUST 2007', 'PROPOSED CHIT S EXPECTED TO BE LAUNCHED' ETC. IT APPEARS THE ASSESS ING OFFICER AS WELL AS THE APPELLANT MISSED TO READ THE CAPTION WHICH IS CLEARLY MENTIONED ON EACH AND EVERY SHEET AND NOWHERE IN THE SEIZED MATERIAL/SHEETS, THE NAMES OF THE SUBSCRIBERS ARE INDICATED WHICH IS A STRONG SIGN TO CONCLUDE THAT THESE ARE THE PROPOSED CHITS ONLY. HAD IT BEEN THE REGULAR CHIT BUSINESS, THERE COULD HAVE BEEN SOME E VIDENCE WITH SO MANY CHITS SUBSCRIBED IF ANY, AND NO SUCH INFORMATION APPEARS TO HAVE BEEN FOUND OR SEIZED TO INDICATE THE AMOUNTS COLLECTED TOWARDS THE CHIT SUBSCRIPTION S. THE JUDICIAL RULINGS ALL ALONG HELD THE VIEW THAT THE A DDITION COULD NOT BE MADE ON THE BASIS OF A SEIZED MATERIAL PRESUMED TO BE CODED FIGURES OR THE ACTUAL FIGURES, WITHOUT BRINGING ANY CORROBORATIVE MATERIAL EVIDENCE, IN SU PPORT THEREOF, AND HO ADDITION CAN BE MADE, IF PRIMARY BU RDEN IS DISCHARGED BY THE APPELLANT. IT WAS ALSO HELD BY VA RIOUS JUDICIAL RULINGS THAT ADDITION BASED ON LOOSE SHEET S AND PRESUMPTIONS OF THE ASSESSING OFFICER BASED THEREON COULD NOT BE SUSTAINED IN ABSENCE OF ANY CORROBORATIVE MA TERIAL OR EVIDENCE BROUGHT ON RECORD. IN THIS CASE, THE RATIO OF THE JUDICIAL DECISION ARE VERY MUCH APPLICABLE AS TO TH E FACTS OF THE CASE AND AS SUCH, THE ADDITIONS MADE MERELY BAS ED ON THE NOTINGS IN THE SEIZED MATERIAL WITHOUT BRINGING ANY ADDITIONAL EVIDENCE ON RECORD OR WITHOUT CONTROVERT ING THE SUBMISSIONS OF THE APPELLANT ARE NOT SUSTAINABLE. ACCORDINGLY, THE ADDITIONS OF RS.6,47,658 TOWARDS T HE RECEIPTS FROM CHIT BUSINESS AND RS.7,77,015 TOWARDS THE COMMISSION FROM CHIT BUSINESS ARE DELETED AND THESE GROUNDS OF APPEAL ARE TREATED AS ALLOWED. 27. AFTER CONSIDERING THE RIVAL CONTENTIONS, PERUS ING THE SEIZED MATERIAL, WE AFFIRM THE ORDER OF THE LD. CIT(A) WHICH IS BASED ON FACTS. REVENUE HAS NOT BROUGHT ANYTHING ON RECORD THAT ASSESSEE HAS DONE ANY CHIT BUSINESS IN THE IMP UGNED YEARS. ACCORDINGLY, THE GROUND IS REJECTED. 28. GROUND NO.3 PERTAINS TO ADDITIONS TOWARDS EXPENDITURE OF GIFT ARTICLES OF RS.20,000/- BASED O N ENTRIES REFLECTED IN THE SEIZED MATERIAL A/KCR/32 AND 33 A. O. WAS OF THE OPINION THAT ASSESSEE HAS SPENT AN AMOUNT OF RS .20,000/- 30 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. TOWARDS GIFT ARTICLES. LD. CIT(A) DELETED THE SAME STATING THAT THE EXPENDITURE OF RS.20,000/- REPRESENTS THE PROPO SED EXPENDITURE OF UNACCOUNTED GIFT ARTICLES RELATED TO THE VENTURES OF THE REAL ESTATE OR SUBSCRIBERS TO THE CHIT BUSIN ESS. SINCE IT WAS HELD THAT ASSESSEE HAS NO REAL ESTATE BUSINESS OR CHIT BUSINESS DURING THE YEAR UNDER REFERENCE OR IN THE EARLIER YEARS AS SUCH, QUESTION OF LINKING THE EXPENDITURE TO THE ASSESSEE BUSINESS IS NOT JUSTIFIED. ACCORDINGLY, THE ADDITIO N WAS DELETED. 29. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE C IT(A) AS ASSESSEE HAS NOT DONE ANY BUSINESS EITHER OF REAL E STATE OR OF CHIT BUSINESS. THEREFORE, THE REVENUE GROUND IS REJ ECTED. 30. GROUND NO.5 IN REVENUE APPEAL PERTAINS TO ADDITION OF RS.56,12,000/- ON ACCOUNT OF ADVANCE RE CEIVED ON SALE OF LAND. A.O. MADE ADDITION OF RS.56,12,000/- BASED ON MATERIAL IN ANNEXURE A/KCR/58. IN THAT MATERIAL THE RE WAS A RECEIPT ON 31.07.2007 FOR RS.2.5 LAKHS FOR SALE OF TWO FLATS OF HATHIRAMJI COLONY OUT OF TOTAL CONSIDERATION OF RS. 56.12 LAKHS. A.O. MADE THE ADDITION OF THE ENTIRE AMOUNT WHEREAS , ASSESSEE SUBMITTED THAT IT DOES NOT PERTAIN TO THE ASSESSEE BUT STATED TO HAVE BEEN ISSUED BY ONE P. RAMAKRISHNAIAH AND OTHER S AND TRANSACTION DOES NOT PERTAIN TO ASSESSEE OR ITS PAR TNER. A.O. HOWEVER, MADE THE ADDITION, WHICH THE LD. CIT(A) DE LETED BY STATING AS UNDER : 10.2. THE APPELLANT OBJECTED TO THE ABOVE ADDITIO N AND WHILE FURNISHING THE WRITTEN SUBMISSIONS, IT WAS SU BMITTED THAT THE APPELLANT EXPLAINED IN WRITING BEFORE THE ASSESSING OFFICER THAT THE PAPER/SEIZED MATERIAL DOES NOT REL ATE TO THE BUSINESS OF THE APPELLANT WHILE SUBMITTING THAT NEI THER THE APPELLANT FIRM NOR THE PARTNER IN INDIVIDUAL STATUS HAVE MADE ANY VENTURE IN THE PAST OR AT PRESENT, AT HATH IRAMJI 31 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. COLONY, TIRUPATI. IT WAS FURTHER ARGUED BY THE APPE LLANT THAT EVEN IN THE SEIZED MATERIAL, THERE IS NO MENTION AB OUT THE RECEIPT OF AMOUNT OF RS.56,12,000 WHICH ITSELF CLEA RLY SHOW THAT ASSESSING OFFICER HAS ADDED THE AMOUNT WITHOUT APPLYING HIS MIND AND THE PERSON WHO SIGNED ON THE PAPER IS NOT IDENTIFIABLE. HOWEVER, IT HAS BEEN SUBMITTED LATER BY THE APPELLANT THAT THE RECEIPT WAS SIGNED BY ONE PE RSON BY NAME MR. P. RAMAKRISHNA WHICH INDICATES THE RECEIPT OF RS.2,50,000 OUT OF THE SAID AMOUNT OF RS.56,12,000 AND THE ASSESSING OFFICER COULD NOT PROVE THAT APPELLANT HA S CARRIED OUT AT ANY ACTIVITY AT HATHIRAMJI COLONY, TIRUPATI. IT WAS ALSO ARGUED BY THE APPELLANT THAT WHEN THE AMOUNT OF RS.2,50,000 WAS THE ONLY AMOUNT RECEIVED, THE AMOUN T OF RS.56,12,000 CAN NOT REPRESENT THE INCOME. WHILE FU RNISHING THE SUBMISSION, THE APPELLANT SUBMITTED A COPY OF T HE SEIZED MATERIAL BEARING PAGE NO. 57 OF ANNEXURE A/KCR/58. 10.3 THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE EXAMINED, THE OBSERVATIONS OF THE ASSESSING OFFI CER ARE THE NOTHING BUT INTERPRETATION OF THE CONTENTS OF S EIZED MATERIAL INSCRIBED AT THE ABOVE REFERRED SEIZED MAT ERIAL, WITHOUT LOOKING INTO THE NAME OF THE PERSONS WHO AP PENDED THE SIGNATURE AND RELEVANCE OF THE TRANSACTION IN T HE ACTIVITIES ATTRIBUTABLE TO THE APPELLANT. AS ARGUED BY THE APPELLANT, THE RECEIPT WAS SIGNED BY ONE MR. P. RAMAKRISHNA AND THERE IS NO NAME OF THE PERSON WHO WAS PAYING THE AMOUNTS. FURTHER, THE AMOUNT SHOWN TO HA VE BEEN RECEIVED IS RS.2,50,000 TOWARDS THE PART PAYME NTS FOR TWO PLOTS AT HATHIRAMJI COLONY AND THERE IS NO INDI CATION OF PLOT NUMBERS EITHER, ON IT. 10.4 THE PROVISIONS OF SEC.132(4A) CAST A RESPONSI BILITY ON THE ASSESSEE TO EXPLAIN THE TRANSACTIONS/CONTENT S OF THE SEIZED MATERIAL FOUND IN THEIR POSSESSION AND IN TH IS CASE, THE APPELLANT HAS FULFILLED ITS OBLIGATION BY EXPLA INING THAT THE SAID TRANSACTION DO NOT BELONG TO THE FIRM AND FIRM DO NOT HAVE ANYTHING WITH THE TRANSACTION OF SALE OF PLOTS AT HATHIRAJI COLONY SINCE NO BUSINESS OR TRANSACTIONS WERE CARRIED OUT EITHER BY THE FIRM OR BY ITS PARTNER, I N THE PAST OR IN THE PRESENT AT SUCH LOCALITY. HAVING EXPLAINED T HE MATTER, THE ONUS SHIFTED TO THE ASSESSING OFFICER TO DISPRO VE THE SUBMISSIONS OF THE APPELLANT AND TO PROVE THAT THE SAID TRANSACTIONS ARE RELATED TO THE APPELLANT. HOWEVER, IN THIS CASE, NO SUCH INFORMATION OR EVIDENCE WAS BROUGHT O N RECORD TO INDICATE THAT SUCH TRANSACTION RELATED TO THE AP PELLANT. 32 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. FURTHER, AS ARGUED BY THE APPELLANT, SINCE THE CONS IDERATION WAS ONLY RECEIVED TO THE EXTENT OF RS.2.5 LAKHS, EV EN IF THE CONTENTS OF THE DOCUMENTS ARE TO BE BELIEVED AS TRU E, THE ENTIRE AMOUNT OF RS.56,12,000 CANNOT CONSTITUTE THE INCOME FOR THE APPELLANT. THE ASSESSING OFFICER WHILE FRAM ING THE QUESTIONNAIRE WAS ALSO INDICATING ABOUT THE CAPITAL GAINS RELATED TO THE TRANSACTION BUT IN FINALIZING THE OR DER, NO SUCH INFORMATION OR DISCUSSION WERE PUT BEFORE THE APPEL LANT. THE JUDICIAL RULINGS ALL ALONG HELD THE VIEW THAT THE A DDITION COULD NOT BE MADE ON THE BASIS OF A SEIZED MATERIAL PRESUMED TO BE CODED FIGURES OR THE ACTUAL FIGURES, WITHOUT BRINGING ANY CORROBORATIVE MATERIAL EVIDENCE, IN SU PPORT THEREOF, AND NO ADDITION CAN BE MADE, IF PRIMARY BU RDEN IS DISCHARGED BY THE APPELLANT. IT WAS ALSO HELD BY VA RIOUS JUDICIAL RULINGS THAT ADDITION BASED ON LOOSE SHEET S AND PRESUMPTIONS OF THE ASSESSING OFFICER BASED THEREON COULD NOT BE SUSTAINED IN ABSENCE OF ANY CORROBORATIVE MA TERIAL OR EVIDENCE BROUGHT ON RECORD. KEEPING THE CIRCUMSTANC ES AND FACTS OF THE CASE AND THE RATIOS OF THE JUDICIAL DE CISIONS ON THE SUBJECT IN MIND, I AM OF THE CONSIDERED OPINION THAT THERE IS NO GROUND FOR THE ASSESSING OFFICER TO ASSESS SU CH AMOUNTS INSCRIBED ON A LOOSE SHEET AS UNACCOUNTED I NCOME IN THE HANDS OF THE APPELLANT FIRM WITHOUT BRINGING THE CORROBORATIVE EVIDENCE ON RECORD OR BY DISPROVING T HE SUBMISSIONS/EXPLANATION OF THE ASSESSEE/APPELLANT. ACCORDINGLY, THE ADDITION OF RS.56,12,000 IS DELETE D AND THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 31. SINCE THERE IS NO BASIS FOR MAKING THE ADDITIO N ON ENTIRE AMOUNT WHICH DOES NOT PERTAIN TO THE ASSESSE E, WE AFFIRM THE ORDER OF THE CIT(A) IN DELETING THE ABOV E AMOUNT. REVENUE GROUND IS ACCORDINGLY REJECTED. 32. GROUND NO.6 PERTAINS TO DELETION OF RECEIPTS F ROM REAL ESTATE BUSINESS. THIS GROUND PERTAINS TO THE A DDITION OF RS.50,15,000/- TREATING THE RECEIPTS OF REAL ESTATE BUSINESS AS UNACCOUNTED RECEIPTS BASED ON PAPERS IN A/KCR/HYD/3 . IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE TRANSAC TIONS IN THE IMPUGNED PAPERS PERTAIN TO THE VENTURE GAJALAKS HMI NAGAR AND ALL THE TRANSACTIONS WERE DULY ACCOUNTED FOR. 33 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. HOWEVER, A.O. MADE THE ADDITION WHICH THE LD. CIT(A ) DELETED AFTER EXAMINING THE DETAILS OF ACCOUNTING IN VARIOU S HANDS AS EXPLAINED BY THE ASSESSEE PARTNER. THE FINAL CONCLU SION OF THE LD. CIT(A) IN PARA 11.3 IS AS UNDER : 11.3 THE OBSERVATIONS OF THE ASSESSING OFFICER A ND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSE D. AS COULD BE SEEN FROM THE INFORMATION THAT HAS BEEN BR OUGHT ON RECORD, THE EXPLANATION OFFERED BY THE APPELLANT AR E NOT CONTROVERTED BY THE ASSESSING OFFICER TO PROVE THAT THE TRANSACTIONS RELATED TO RECEIPT OF RS.50,15,000 ARE ASSOCIATED WITH THE APPELLANT FIRM AND TO DISPROVE THAT THE SAME ARE NOT RELATED TO THE BUSINESS OF REAL ESTATE CARRIED ON BY MR. K.C. REDDAPPA NAIDU IN HIS INDIVIDUAL STATUS . THE SAID PROCEEDS WERE SHOWN TO BE PRECISELY RELATED TO 'GANESH GARDENS' VENTURE, WHOSE RECEIPTS ARE ACCOUNTED FOR IN THE ASSESSMENT YEARS 2006-07 TO 2008-09. THE APPELLANT ALSO EXPLAINED THE CORRECTIONS IN THE FIGURE ON ACCOUNT OF THE DUPLICATION OF CERTAIN SALE VALUES THEREBY ARRIVING AT THE CORRECT FIGURE RELATED TO THE SAID TRANSACTIONS AT RS.44,65,000. SINCE THE AMOUNTS ARE EXPLAINED TO BE RELATED TO SRI K.C.REDDAPPA NAIDU IN HIS INDIVIDUAL STATUS, THE ADDITION OF THE SAME AMOUNTS IN THE HANDS OF THE AP PELLANT FIRM ARE NOT JUSTIFIED. HENCE, THE ADDITION OF RS.5 0,15,000 IN THE HANDS OF APPELLANT FIRM IS NOT SUSTAINABLE BASE D ON THE FACTS AND AS SUCH THE SAME IS DIRECTED TO BE DELETE D. ACCORDINGLY, THIS GROUND OF APPEAL IS TREATED AS AL LOWED. 33. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE SEIZED MATERIAL INCLUDING THE RECONCIL IATION EXTRACTED BY THE CIT(A) IN PAGE 19 OF THE ORDER, WE DO NOT SEE ANY REASON TO DIFFER FROM THE FINDINGS OF THE LD. C IT(A). REVENUE HAS NOT MADE OUT ANY CASE TO MAKE THE ADDIT ION IN THE FIRMS HAND WHEN IT IS ALREADY A FACT ON RECORD THAT FIRM HAS NOT DONE ANY REAL ESTATE BUSINESS AND THEREFORE , REVENUE GROUND IS DISMISSED. 34. ASSESSEE IN ITS GROUNDS OBJECTED TO THE DIRECT ION GIVEN BY CIT(A) TO MAKE ENQUIRIES. WHILE COMPUTING THE 34 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. TAXABLE INCOME THE A.O. MADE ADDITION OF RS.98,99,1 00/- ON ACCOUNT OF UNACCOUNTED ADVANCES BASED ON CHIT SEIZE D IN ANNEXURE A/KCR/44. IT WAS THE SUBMISSION OF THE ASS ESSEE THAT THESE ARE NOT THE ADVANCES RECEIVED BUT PLOT NOS. 98, 99 AND 100. THE A.O. HOWEVER, DID NOT ACCEPT AND TREAT ED THE PLOT NOS. AS AMOUNT OF RS.98,99,100/- AS ADDITION. LD. C IT(A) AFTER GIVING OPPORTUNITY TO THE ASSESSEE AND PERUSING TH E SEIZED MATERIAL DELETED THE SAME AND STATED AS UNDER : 8.3 THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE APPELLANT ARE PERUSED. A S COULD BE SEEN FROM THE SUBMISSION OF THE APPELLANT WHICH IS VERY ROUTINELY DESCRIBED THE SEIZED MATERIAL AS DOCUMENT S LEFT BEHIND IN THEIR OFFICE BY SOMEONE ELSE, APPEARS TO BE AN EXPLANATION NOT READILY ACCEPTABLE. SINCE THE INFOR MATION FOUND IN THE PREMISES OF THE APPELLANT, IT HAS MORE RESPONSIBILITY TO EXPLAIN AND THE EXPLANATION COULD HAVE BEEN DEFINITELY WITH REFERENCE TO THE PLOT NO.98, 9 9, 100 WHICH WERE DEALT BY SRI K.C. REDDAPPA NAIDU IN HIS REAL ESTATE VENTURE OF GAJALAKSHMI NAGAR-IL, WHEREIN IT WAS SHOWN THAT HE WAS DEALING WITH PLOT NUMBER 61 TO 13 9. THIS APPEARS NECESSARY TO PRESUME THAT THE FIGURE OF 98,99,100 IS NOT A CUMULATIVE FIGURE, SINCE THE FIG URE OF 98,99,100 DO NOT HAVE PREFIX OF RS (RUPEES) AND THE SAID LOOSE SHEET ALSO HAVE SOME OTHER FIGURES, WHICH ARE CONVENIENTLY IGNORED BY THE ASSESSING OFFICER AND T HE APPELLANT. THE ASSESSING OFFICER ALSO COULD HAVE LO OKED INTO THESE ASPECTS. COMING TO THE MATTER /INFORMATI ON THAT INDICATED ON THE LOOSE SHEET BEARING PAGE NO.5 OF ANNEXURE A/KCR/44, IT IS PERTINENT TO MENTION HERE THAT WORD 'DUMMY' IS USED AND AN AMOUNT OF 8,56,750 IS INDICATED ON TOP OF THE SHEET WITH A FURTHER AMOUNT OF RS.4,650 INDICATED WHICH APPEARS TO BE THE RATE OF THE LAND SOLD. AT THE BOTTOM OF THE SHEET, THE AMOUNT O F 2.50 PAID AS ADV. WAS ALSO INDICATED AND ALL THESE INSCR IPTIONS CERTAINLY INDICATE THAT IT IS THE REAL ESTATE TRANS ACTION OF PRIMA FACIE, THE FIGURES OF 98,99,100 APPEARS TO BE THE PLOT NUMBERS OF LAND UNDER SALE. HOWEVER, IT MAY BE RELEVANT TO STATE THAT WHAT IS APPARENT MAY NOT BE REAL. IN A SITUATION, WHERE THE INFORMATION IN A SEIZED MATE RIAL IS EQUIVOCAL OR VAGUE, IT NEEDS TO BE SUPPORTED AND STRENGTHENED BY THE FURTHER ENQUIRIES AND VERIFICAT ION. 35 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. NOW IT IS FOR THE ASSESSING OFFICER TO EXAMINE WITH REFERENCE TO THE SAID PLOT NUMBERS AND THE RELEVANC E OF TRANSACTIONS IN THE BOOKS OF MR. K.C. REDDAPPA NAID U AND EXAMINE THE RELEVANCE OF THE AMOUNTS RELATED TO SUCH TRANSACTIONS AND TO DECIDE THE TAXABILITY OF THE SA ME ON COMPLETING THE NECESSARY AND RELEVANT ENQUIRIES. SU BJECT TO THE ABOVE VERIFICATION, THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. 35. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE RECORD, WE DO NOT SEE ANY REASON TO IN TERFERE WITH THE ORDER OF THE CIT(A) AS IT IS VERY CLEAR THAT TH E FIGURES 98,99,100 DOES NOT REFLECT ANY MONEY BUT NUMBERS OF PLOTS UNDER SALE. THEREFORE, THE ADDITION PER SE OF THE P LOT NUMBERS CANNOT BE MADE AS ADVANCE RECEIVED. THIS SHOWS THE NON- APPLICATION OF MIND BY THE A.O. WHILE MAKING THE AD DITION. MORE SO, THE FACT IS THAT THE ASSESSEE FIRM HAS NOT INVOLVED ITSELF IN ANY REAL ESTATE BUSINESS AND THE TRANSACT IONS PERTAINING TO INDIVIDUAL SHRI K.C.REDDAPPA NAIDU OR OTHER PERSONS. THEREFORE, TO THAT EXTENT OF DELETION OF T HE AMOUNT, WE CONFIRM THE ORDER. WITH REFERENCE TO THE DIRECTION OF THE CIT(A) TO VERIFY, THIS IS A GENERAL DIRECTION AS THE A.O. HAS NOT EXAMINED TO WHOM THE PAPER PERTAIN TO AND TO WHICH PROJECT OR WHETHER IT PERTAIN TO ANY OF THE TRANSACTIONS OF TH E ASSESSEE PARTNER. THEREFORE, A CURSORY DIRECTION GIVEN TO TH E A.O. TO EXAMINE SEPARATELY DOES NOT AMOUNT TO SETTING ASIDE OF THE ORDER. IN VIEW OF THIS, WHILE REJECTING THE REVENUE GROUND, WE ALSO REJECT THE ASSESSEES GROUND ON THE ISSUE. 36. IN THE RESULT, ITA.NO.983/HYD/2012 OF THE REVENUE AND ITA.NO.932/HYD/2012 OF THE ASSESSEE ARE DISMISSED. 36 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. 37. BEFORE PARTING WITH THE ORDERS, WE WOULD LIKE TO MENTION THAT ADDITIONS MADE BY THE A.O. IN RESPECTI VE ASSESSMENT YEARS IS NOT JUSTIFIABLE AT ALL AS THERE IS NO REFERENCE TO ANY OF THE ENTRIES THEREIN OR THE SUBM ISSIONS. AS SEEN FROM THE ORDERS, A.O. SIMPLY MADE ADDITIONS WI THOUT ANY VERIFICATION INSPITE OF THE FACT THAT ASSESSEE SUBM ITTED NO BUSINESS WAS DONE IN THE HANDS OF THE FIRM. AS SEEN FROM THE ORDER OF THE CIT(A), CIT(A) HAS TAKEN PAINS TO EXAM INE THE ISSUES IN DETAIL AND DELETED VARIOUS ADDITIONS. REV ENUE SHOULD HAVE ACCEPTED THE ORDERS OF THE CIT(A) WHICH ARE BA SED ON FACTS AND NO LAW WAS INVOLVED IN IT. EVEN THOUGH COSTS AR E REQUIRED TO BE LEVIED ON REVENUE MAKING UNNECESSARY APPEALS, WE REFRAIN DOING SO. WITH THESE OBSERVATIONS, REVENUE S APPEALS ARE DISMISSED AND ASSESSEES APPEALS ARE ALSO DISMISSED/PARTLY ALLOWED TO THE EXTENT INDICATED AB OVE. 38. TO SUM-UP, ITA.NO. 980, 981, 982 & 983/HYD/2012 OF THE REVENUE ARE DISMISSED, ITA.NO.931/HYD/2012 OF THE ASSESSEE IS PARTLY ALLOW ED AND ITA.NO.932/HYD/2012 OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.03.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH MARCH, 2014 VBP/- 37 ITA.NO.980,981,982,983/HYD/2012 & ITA.NO.930 & 931/HYD/2012 M/S/ KCR HOMES & DEVELOPERS, HYDERABAD. COPY TO : 1. M/S. KCR HOMES & DEVELOPERS, PLOT NO.8, 2 ND FLOOR, BESIDE PASSPORT OFFICE, ANAMAYYA CIRCLE, AIR BYE PASS ROAD, TIRUPATI. 2. ACIT, CENTRAL CIRCLE, 3 RD FLOOR, AAYAKAR BHAVAN, K.T. ROAD, TIRUPATI. 3. CIT-VII, HYDERABAD. 4. CIT (CENTRAL), HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.