Bhagawan Sri Bala Sai Baba Central Trust, Kurnool, Hyderabad V. ACIT, Central Circle-6, Hyderabad

ITSSA 22/HYD/2011

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8182 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASREE ANANT KRISHNAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Loose papers; Document seized; Source of fund; Retrospective amendment; Additional evidence; Question of law; Cost of acquisition; Fair market value; Accommodation entries; Competent authority; Block assessment; Documents seized
• Section: 68; 69; 145; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER IT(SS)A NO. 22/HYD/2011 BLOCK PERIOD: 1.4.1996 TO 5.9.002 M/S. BHAGWAN SRI BALASAIBABA CENTRAL TRUST KURNOOL PAN: AAATB3818R VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-6, HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI S. RAMA RAO RESPONDENT BY: SMT. SUBHASREE ANANT KRISHNAN DATE OF HEARING: 18.04.2012 DATE OF PRONOUNCEMENT: 04.07.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-I, HYDERABAD DATED 20.7.2011 FOR THE BLO CK PERIOD 1.4.1996 TO 5.9.2002. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, HYDERABAD IN ITS ORDER IT(SS)A. NO. 98/HYD/06 DATED 16-07-2007 SET ASIDE THE ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER FOR BEING COMPLETED AND, THEREFORE, ALL THE FACTS SHOULD HAVE BEEN CONSIDERED BOTH BY THE ASSESSING OFFICER AND THE CIT (APPEALS). 3. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT THE GROUND WITH REGARD TO INITIATION OF PROCEEDINGS U/S 158BD CANNOT BE RAISED BY THE APPELLANT AT THE PRESENT STAGE. THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT THIS IS A LEGAL ISSUE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 2 AND CAN BE RAISED AT ANY POINT OF TIME INCLUDING BEFORE THE HON'BLE CIT(A) DURING THE COURSE OF APPEAL PROCEEDINGS. THE CIT (A) OUGHT TO HAVE SEEN THAT NOTICE U/S 158BD IS NOT VALID AND THE CONSEQUENTIAL ASSESSMENT IS BAD IN LAW. 4. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ARRIVING AT THE CONSIDERATION PAID FOR ACQUISITION OF THE PROPERTY AT RS. 10,11,50,000/- AND FURTHER ERRED IN CONFIRMING THE COMPUTATION OF UNDISCLOSED INCOME AT RS. 7,23,86,915/-. 5. THE LEARNED CIT (A) OUGHT TO HAVE CONSIDERED THE FACT THAT APPELLANT PAID A CONSIDERATION OF ONLY RS. 2,87,63,085/- BESIDES INCURRING AN EXPENDITURE OF RS. 1,14,11,200/- ON BEHALF OF THE LAND OWNERS BUT DID NOT MAKE PAYMENT OF RS. 10,11,50,000/- AS PRESUMED BY THE ASSESSING OFFICER. 6. 6) THE LEARNED CIT (A) ERRED IN CONFIRMING THE COST AS PER THE BOOKS OF ACCOUNT AT RS. 2,87,63,085/- AGAINST THE AMOUNT OF RS. 4,01,74,285 RECORDED IN THE BOOKS OF ACCOUNT. 7. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DETERMINING THE UNDISCLOSED INCOME AT RS. 7,23,86,910/- 8. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT INTEREST U/S. 158BFA IS NOT APPEALABLE AND FURTHER ERRED IN DISMISSING THE APPEAL FILED IN THI S REGARD. 3. BEFORE US, GROUND NO. 3 WAS NOT PRESSED AND THE SAM E IS DISMISSED AS NOT PRESSED. 4. BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH OPERATION IN THE CASE OF M/S. SAI SUNDER CHIT FUND (P) LIMITED, ONE DOCUMENT IDENTIFIED AS 'ASSS/RO/4' WAS SEIZED. PAGE NOS. 88 TO 90 OF THE SAID DOCUMENT IS AN AGREEMENT OF SALE DATED 06.02.1998 BETWEEN THE ASSESSEE TRUST (VENDOR) AS O NE PARTY AND SRI SHAIKH HAMEED PATEL AND SRI G. SIVA RAMAKRISHNA , THE OTHER PARTY. SRI G. SIVA RAMAKRISHNA IS THE SON OF THE MA NAGING IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 3 DIRECTOR OF M/S. SAI SUNDER CHIT FUNDS (P) LIMITED. THIS AGREEMENT ALSO REFERS TO ANOTHER AGREEMENT (RELEASE DEED) OF SAME DATE, I.E., 06.02.1998, WHEREIN THE ASSESSEE (VENDO R) TRUST ENTERED INTO A SEPARATE AGREEMENT WITH RESPECTIVE OWNERS RE PRESENTED BY THEIR GPA HOLDER SRI M. THIMMAIAH FOR PURCHASE OF 1 04 ACRES OF LAND IN SURVEY NOS. 104, 105, 106, 107, 108, 109/1, 109/2 AT KONDAPUR VILLAGE, R.R. DISTRICT. THIS SALE AGREEMEN T MENTIONED AS UNDER: 'WHEREAS SRI KSV PRASAD RAO AND SRI KVNV PRASAD RAO, BOTH AS POSSESSION HOLDERS OF THE SAID SCHEDUL ED LAND HAVE RELINQUISHED THEIR CLAIMS, DEMANDS, TITLE AND INTEREST AND RELEASED THE SAME IN FAVOUR OF THE VEN DOR TRUST THROUGH A REGISTERED RELEASE DEED DATED 06.02.1998.' 5. SRI SIVA RAMAKRISHNA AND SRI HAMEED PATEL WERE THE MEDIATORS BETWEEN THE ASSESSEE TRUST AND SELLERS RE PRESENTED BY SRI M. THIMMAIAH, GPA HOLDER FOR SELLER. THE COMMIS SION PAYABLE TO THE MEDIATORS WAS TO BE PAID IN THE FORM OF CONV EYING A PART OF THE LAND @ RS. 12.25 LAKHS PER ACRE, I.E., THE ASSE SSEE TRUST WAS TO PAY RS. 10 LAKHS PER ACRE TO THE OWNERS OF THIS LAN D AND @ RS. 2.25 LAKHS PER ACRE TO THE MEDIATORS. AFTER ANALYSI NG THE ISSUES IN DETAIL AND MAKING DETAIL DISCUSSION IN THE ASSESSME NT ORDER, THE ASSESSING OFFICER COMPUTED THE COST OF 85 ACRES 32 GUNTAS @ RS. 12.25 LAKH PER ACRE AT RS. 10,51,05,000/- INCLUSIVE OF COMMISSION PAID TO MIDDLEMEN, PARTLY IN CASH AND PARTLY IN THE SHAPE OF LAND. SINCE AN AMOUNT OF RS. 2,87,03,085/- WAS RECORDED I N THE BOOKS OF ACCOUNTS TOWARDS THE COST OF LAND, THE BALANCE A MOUNT OF RS. 7,63,41,915/- (RS. 10,51,05,000 - RS. 2,87,03,085/- ) WAS COMPUTED AS THE UNDISCLOSED INCOME. 6. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEAL) -I HYDERABAD. THE CIT(A) AFTER DISCUSSING THE ISSUES IN DETAIL DISMISSED THE APPEAL FILED BY THE ASSESSEE IN ITA N O. 0434/CC-6, IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 4 HYD./CIT(A)-I/05-06 DATED 14TH AUGUST, 2006. THE AS SESSEE FILED AN APPEAL BEFORE THE ITAT. DURING THE PROCEEDING B EFORE THE ITAT, APPARENTLY THE ASSESSEE FILED CERTAIN ADDITIONAL EV IDENCE AND REQUESTED THE HON'BLE ITAT TO ADMIT THE SAME. THE H ON'BLE ITAT 'A' BENCH, HYDERABAD ADMITTED THE ASSESSEE'S PETITI ON FOR ADMISSION OF ADDITIONAL EVIDENCE AND SENT BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW CONSIDERING THE ADDIT IONAL EVIDENCE AS WELL AS OTHER MATERIALS AND AFTER PROVIDING OPPO RTUNITY OF HEARING TO THE ASSESSEE. IN PURSUANCE OF THE DIRECT ION OF ITAT CONTAINED IN IT(SS)A NO. 98/HYD/06 THE ASSESSING OF FICER RE- COMPUTED THE INCOME OF THE ASSESSEE IN THE ASSESSME NT ORDER DATED 31.12.2008 WHEREIN THE TOTAL UNDISCLOSED INCO ME WAS ARRIVED AT RS. 7,23,86,915/-. IT IS AGAINST THIS AS SESSMENT ORDER THAT THE ASSESSEE HAS FILED THE APPEAL BEFORE THE C IT(A). 7. THE CIT(A) OBSERVED THAT THE ITAT, HYDERABAD 'A' BE NCH HAS SET ASIDE THE CASE TO THE ASSESSING OFFICER IN VIEW OF THE ADDITIONAL EVIDENCE FILED BEFORE THE BENCH. AT PAGE 2 AND 3 O F THE APPELLATE ORDER PASSED BY ITAT, THE PETITION OF THE ASSESSEE REQUESTING FOR ADMISSION OF ADDITIONAL EVIDENCE HAS BEEN MENTIONED . APPARENTLY, THE ADDITIONAL EVIDENCE PUT FORTH BY THE ASSESSEE R ELATED TO NON- PAYMENT OF RS. 5 CRORES TO THE SELLER/GPA HOLDER. H OWEVER, WHILE GOING THROUGH THE ORIGINAL ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A) DATED 14 TH AUGUST, 2006 THE CIT(A) OBSERVED THAT THE ISSUE OF NON-PAYMENT OF RS. 5 CRORE WAS ALREADY PLA CED BEFORE THE ASSESSING OFFICER AND THE SAME HAS ALSO BEEN DISCUS SED IN DETAIL BY THE CIT(A) IN HIS APPELLATE ORDER. IN FACT, THE ASSESSING OFFICER AT PAGE 3 (PARA 3) OF THE ASSESSMENT ORDER DATED 28 -2-2006 HAS GIVEN THE LIST OF DOCUMENTS REFERRED TO BEFORE PASS ING OF THE ASSESSMENT ORDER. ONE OF THE DOCUMENTS REFERRED TO BY THE ASSESSING OFFICER WAS COPIES OF THE CHEQUE RETURNED MEMOS ISSUED IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 5 BY SYNDICATE BANK AND FIVE DISHONOURED/UN-CASHED CH EQUES BEARING NOS. 303192 TO 303196 FOR RS. 1 CRORE EACH. THUS, IT IS NOT THAT THE SO CALLED ADDITIONAL EVIDENCE OF NON PAYME NT OF RS. 5 CRORE WAS NOT BEFORE THE ASSESSING OFFICER OR BEFOR E THE FIRST APPELLATE AUTHORITY. AGAINST THIS ORDER OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER WRONGLY COMPUTED THE INCOME OF THE ASSESSEE AS FOLLOWS: 1. SALE CONSIDERATION @ RS. 10 LAKH PER ACRE FOR 91.15 ACRES. 9,11,50,000 2. AMOUNT PAID TO SMT. SAVITRAMMA AS EVIDENCED BY THE SEIZED DOCUMENT 1,00,00,000 10,11,50,000 LESS: CONSIDERATION RECORDED IN THE BOOKS OF ACCOUNT DURING FYS 1997-98 & 1998-99 AT RS. 2,07,40,000 AND RS. 80,23,085 RESPECTIVELY TOWARDS COST OF LAND 2,87,63,085 TOTAL UNDISCLOSED INCOME 7,23,86,910 9. THE AR SUBMITTED THAT WHILE DETERMINING THE UNDISCL OSED INCOME AT RS. 7,23,86,910, THE ASSESSING OFFICER IS OF THE VIEW THAT THE TOTAL AREA OF THE LAND IS AC. 91.15 GUNTAS INCL UDING AC. 5.0 GUNTAS REGISTERED BY OUTSIDERS IN FAVOUR OF SHAIK H AMID PATEL, THAT THE SALE CONSIDERATION WAS RS. 10.0 LAKHS PER ACRE AND THE TOTAL SALE CONSIDERATION WAS RS. 9,11,50,000, THAT THE EN TIRE AMOUNT OF RS. 9,11,50,000 WAS PAID BY THE ASSESSEE HEREIN; TH AT AN AMOUNT OF RS. 1.0 CRORE WAS PAID TO SMT. SAVITRAMMA BY THE ASSESSEE HEREIN. THE AR SUBMITTED THAT THE PRESUMPTION OF T HE ASSESSING OFFICER IS NOT CORRECT. 10. THE AR SUBMITTED THAT THE AREA ORIGINALLY THOUGHT O F BEING TRANSFERRED BY SRI THIMMAIAH TO THE ASSESSEE TRUST WAS 86 ACRES AND NOT AC. 91.15 GUNTAS. HE SUBMITTED THAT THE SAID AC. 5 .15 GUNTAS WAS REGISTERED BY THIRD PARTIES IN FAVOUR OF OTHERS AND NEITHER THE ASSESSEE HEREIN NOR SRI THIMMAIAH, THE GPA HOLDER ARE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 6 PARTIES TO IT. THE ASSESSING OFFICER IS OF THE VIEW THAT AC. 5.23 GUNTAS OF LAND WAS TRANSFERRED TO MIDDLE MEN IN LIE U OF COMMISSION AND, THEREFORE, THE ASSESSING OFFICER ME NTIONED THAT THE TOTAL AREA IS AC. 91.15 GUNTAS. HE SUBMITTED TH AT THE ASSESSEE DID NOT TRANSFER AC. 5.23 GUNTAS TO ANYONE. EVEN SR I THIMMAIAH WAS NOT THE PARTY TO THE SAID SALE. THERE FORE, THE LAND OF AC. 5.23 GUNTAS CANNOT BE CONSIDERED AS ACQUIRED BY THE ASSESSEE HEREIN. THEREFORE, THE LAND TO BE CONSIDER ED FOR THE PURPOSE OF THE PRESENT ASSESSMENT IS ONLY AC. 85.32 GUNTAS. 11. THE AR FURTHER SUBMITTED THAT WHEN PHYSICAL MEASURE MENTS WERE TAKEN, THE LAND WAS ONLY 70 ACRES AND THE BALA NCE AC. 15.32 GUNTAS COULD NOT BE LOCATED IN THE AREA. EVEN CONSI DERING THE SALE CONSIDERATION TO BE RS. 10.0 LAKHS PER ACRE FOR AC. 85.32 GUNTAS, THE TOTAL SALE CONSIDERATION WOULD BE RS. 8,58,00,0 00. OUT OF THE SAID AMOUNT, THE ASSESSEE PAID RS. 2,87,63,085 AND DID NOT PAY BALANCE OF AMOUNT. THERE IS NO EVIDENCE WITH THE AS SESSING OFFICER TO SHOW THAT THE ASSESSEE PAID ANY AMOUNT I N ADDITION TO WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT OF THE AS SESSEE OF RS. 2,87,63,085. IN THIS REGARD, THE AR SUBMITTED THAT THE FOLLOWING EVENTS THAT HAVE TAKEN PLACE LATER WOULD PROVE CLEA RLY THAT THE ASSESSEE DID NOT PAY THE BALANCE OF CONSIDERATION T O EITHER THE LAND OWNERS OR TO SRI THIMMAIAH. A) THE LAND ADMEASURING AC. 85.32 GUNTAS WAS REGISTERE D BY SRI THIMMAIAH AND OTHER OWNERS TRANSFERRING IN FAVO UR OF THE ASSESSEE HEREIN. THE BALANCE OF AMOUNT PAYABLE WAS RS. 5,72,36,915. HOWEVER, THE AREA THAT WAS FOUND WAS O NLY 70 ACRES AND, THEREFORE, THE ASSESSEE HAS GIVEN FIVE C HEQUES FOR RS. 1.0 CRORE EACH IN FAVOUR OF SRI THIMMAIAH. THE ASSESSEE ALSO KEPT THE ORIGINAL DOCUMENTS WITH SRI THIMMAIAH . THE ASSESSEE EXECUTED A DEED OF MORTGAGE AGAINST THE LA ND IN IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 7 FAVOUR OF SRI THIMMAIAH. THIS CLEARLY INDICATES THA T THE AMOUNT OF RS. 5.0 CRORES ARRIVED AT TO BE PAYABLE W AS NOT PAID BUT ONLY CHEQUES HAVE BEEN ISSUED. B) ALL THE FIVE CHEQUES WERE BOUNCED. IT WAS SUBMITTED THAT SRI THIMMAIAH, THE GPA HOLDER MISREPRESENTED THE FACTS BEFORE THE ASSESSEE WITH REGARD TO THE LANDED PROPERTY AND , THEREFORE, THE ASSESSEE THOUGHT THAT THE MATTERS HA VE TO BE CLARIFIED BY HIM AND DID NOT HONOUR THE CHEQUES. I) THE ASSESSEE FOUND THAT OUT OF SEVEN LAND OWNERS, T WO OF THEM APPROACHED THE COURT AGAINST SRI THIMMAIAH AND THE OTHER 5 VENDORS MADE THE ASSESSEE ALSO A PARTY TO THE LITIGATION. THE SAID TWO OWNERS HAVE F ILED PARTITION SUIT IN O.S. NO. 13/1998 IN R.R. DISTRICT COURT WHICH IS STILL PENDING. AS LONG AS THE SAID LITIGATION IS NOT SETTLED, IT IS DIFFICULT FOR THE ASSESSEE HEREIN TO GET THE TITLE FOR THE ENTIRE PROPERTY. II) IT IS THE AGREEMENT BETWEEN SRI THIMMAIAH AND THE ASSESSEE HEREIN THAT THE ENTIRE PROPERTY HAS TO BE GOT SURVEYED FROM THE OFFICIAL SURVEYOR AND A CERTIFICA TE HAS TO BE OBTAINED AND ALL THE CLEARANCES INCLUDING THE URBAN LAND CEILING HAD TO BE OBTAINED. SRI THIMMAIAH DID NOT OBTAIN NECESSARY APPROVALS OR THE PERMISSION AND ALSO DID NOT GET THE LAND SURVEYED THROUGH THE OFFICIAL SURVEYOR. AS SRI THIMMAIAH FAI LED TO HONOUR THE COMMITMENT, THE ASSESSEE ALSO DID NOT HONOUR THE CHEQUES. THEREFORE, THE CHEQUES WERE BOUNCED. C) SRI THIMMAIAH, AT THAT STAGE, ON 04-06-1999 APPROAC HED THE MEDIATORS HEADED BY SRI K.E. PRATAP OF KURNOOL. THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 8 ASSESSEE REFUSED TO PAY THE BALANCE OF CONSIDERATIO N TO SRI THIMMAIAH. IT WAS SETTLED BY THE MEDIATORS THAT THE ASSESSEE WOULD RETAIN AC. 43.20 GUNTAS AND THAT THE ASSESSEE WOULD EXECUTE AN AGREEMENT OF SALE IN FAVO UR OF SRI K.E. PRATAP OF KURNOOL FOR THE BALANCE OF AC. 42.12 GUNTAS. ACCORDING TO THE SAID AGREEMENT, SRI THIMMAIAH AND SRI K.E. PRATAP WOULD CLEAR ALL THE PERMISSIONS NECESSA RY FROM GOVERNMENT AND WOULD NOT ASK FOR ANY BALANCE FROM O UT OF THE SALE CONSIDERATION. ACCORDING TO THE SAID AGREE MENT, THE ASSESSEE SHOULD GET CLEAR TITLE OVER AC. 43.20 GUNT AS OF LAND WITH ALL CLEARANCES AND WITHOUT ANY LIABILITY AGAIN ST THE SAID LAND FOR THE AMOUNT WHICH WAS ALREADY PAID. AFTER T HE SAID AGREEMENT WAS ENTERED INTO, THE ORIGINAL FIVE CHEQU ES AND THE MORTGAGE DEED EXECUTED IN FAVOUR OF SRI THIMMAI AH WERE RETURNED TO THE ASSESSEE HEREIN. THERE WAS NO ACTIV ITY OR ACTION BY EITHER PARTY TILL THE YEAR 2005. D) ON 28-08-2005, SRI THIMMAIAH UNILATERALLY FILED A C OMPLAINT AGAINST SRI T. RAMA RAO, MANAGING TRUSTEE AND THE T RUST IN THE POLICE STATION, KURNOOL II TOWN. AN FIR DATED 28.08.2005 WAS LODGED IN THE DISTRICT COURT KURNOOL BY THE INSPECTOR POLICE, KURNOOL II TOWN. IN THE SAID COMP LAINT SRI THIMMAIAH MENTIONED CLEARLY THAT HE WAS PAID ONLY R S. 3.0 CRORES AS ADVANCE AND THE BALANCE AMOUNT WAS NOT PA ID TO HIM. E) AT THAT STAGE ON 31-08-2005, THE ASSESSEE, SRI K.E. PRATAP AND SRI M. THIMMAIAH HAVE APPROACHED M/S ESWARI PRO JECTS LTD., SRINAGAR COLONY, HYDERABAD AND ENTERED INTO A N MOU. ACCORDING TO THE SAID MOU, THE ASSESSEE AGREED TO P AY A SUM OF RS. 15.25 CRORES TO SRI THIMMAIAH AND M/S ES WARI PROJECTS LTD., FOR THE ENTIRE LAND OF 70 ACS. WITH A VIEW TO IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 9 IMPLEMENT THE SAID MOU, THE ASSESSEE ON THE SAME DA TE ALONG WITH SRI K.E. PRATAP, SRI M. THIMMAIAH AND M/ S. ESWARI PROJECTS LTD., TOGETHER ENTERED INTO AN MOU WITH SRI A. VENKATARAMI REDDY. ACCORDING TO THE SAI D AGREEMENT, SRI A. VENKATARAMI REDDY AGREED TO PAY R S. 49.0 CRORES AS SALE CONSIDERATION FOR THE ENTIRE 70 ACS. OF LAND CALCULATED AT THE RATE OF RS. 70.0 LAKHS PER ACRE. OUT OF THE SAID AMOUNT, A SUM OF RS. 6,56,28,150 WAS PAID BY S RI A. VENKATARAMI REDDY TO THE COMPETENT AUTHORITY & SPEC IAL OFFICER, URBAN LAND CEILING, HYDERABAD. 12. THE AR SUBMITTED THAT AS THE ASSESSEE AGREED TO PAY RS. 15.25 CRORES AS PER THE MOU MENTIONED EARLIER, SRI A. VENKATARAMI REDDY AGREED TO PROVIDE THE SAID SUM OF MONEY BY MAKING VARIOUS PAYMENTS AS LISTED THEREIN. IT IS AL SO MENTIONED IN THE SAID AGREEMENT THAT ON REALIZATION OF THE SALE CONSIDERATION FROM SRI A. VENKATARAMI REDDY, THE ASSESSEE HAD TO CLEAR THE MORTGAGE LOAN OF RS. 10.0 CRORES OBTAINED FROM M/S RASULA SECURITIES LTD., TOWARDS THE EQUITABLE MORTGAGE CRE ATED. THE SAID AMOUNT OF RS. 10.0 CRORES WAS PROPOSED TO BE TAKEN BY SRI A. VENKATARAMI REDDY IN CLEARING THE AMOUNTS AS ENUNCI ATED IN THE MOU. ALL THESE FACTS HAVE BEEN STATED BEFORE THE A SSESSING OFFICER AND MENTIONED THAT: A) THE CHEQUES ISSUED ON SYNDICATE BANK, SOMAJIGUDA BRANCH, HYDERABAD WERE RETURNED AND NOT HONOURED; B) THE MORTGAGE DEED WAS EXECUTED IN FAVOUR OF SRI THIMMAIAH AND KEPT THE ORIGINAL DOCUMENT WITH HIM; C) THE FACT THAT ONLY AN AMOUNT OF RS. 3.0 CRORES WAS RECEIVED BY HIM AS CATEGORICALLY MENTIONED IN THE COMPLAINT LODGED BY HIM BEFORE THE POLICE AUTHORITI ES IN THE FIR; SRI THIMMAIAH HAS ALSO STATED IN THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 10 COMPLAINT THAT THE BALANCE OF AMOUNT WAS NOT PAID AND THE SAID COMPLAINT WAS MADE IN THE YEAR 2005. 13. THE AR SUBMITTED THAT ALL THE LATER DEVELOPMENTS AR E THE CONSEQUENCE OF SUCH COMPLAINT MADE BY SRI THIMMAIAH . THEREFORE, THERE IS AMPLE EVIDENCE TO SHOW THAT THE ASSESSEE DID NOT PAY THE AMOUNT, AS PRESUMED BY THE ASSESSING OF FICER, TO SRI THIMMAIAH. IN VIEW OF THE ABOVE, THE ASSESSEE REQUE STED THE ASSESSING OFFICER TO SUMMON ALL THE CONCERNED PERSO NS I.E. SRI THIMMAIAH, SRI K.E. PRATAP, M/S ESWARI PROJECTS LTD ., AND ALL OTHERS CONCERNED SO AS TO ENABLE HIM TO COME TO A C ONCLUSION THAT THE AMOUNTS WERE NOT PAID. WHEN HE SUMMONED ONLY SR I THIMMAIAH, HE CATEGORICALLY STATED THAT HE DID NOT RECEIVE ANY AMOUNT BEYOND RS. 3.0 CRORES. A COPY OF THE STATEME NT IS ALSO NOT PROVIDED TO THE ASSESSEE HEREIN. 14. THE AR SUBMITTED THAT IN VIEW OF THE ABOVE, IT IS A MPLY CLEAR THAT THE ASSESSEE PAID ONLY RS. 3.0 CRORES IN ALL A ND DID NOT PAY ANY AMOUNT IN ADDITION TO THE SAME TO SRI THIMMAIAH OR TO ANYONE. THEREFORE, IT IS NOT CORRECT FOR THE ASSESS ING OFFICER TO PRESUME THAT AN AMOUNT OF RS. 9,11,50,000 WAS PAID BY THE ASSESSEE HEREIN. 15. THE AR FURTHER SUBMITTED THAT THE TRIBUNAL MAY HOLD THAT ONLY RS. 3 CRORES WAS PAID TO SRI THIMMAIAH. THE AS SESSING OFFICER MENTIONED THAT AN AMOUNT OF RS. 1.0 CRORE WAS PAID TO SMT. SAVITRAMMA. ACCORDING TO THE ASSESSING OFFICER, THE SEIZED DOCUMENTS ALSO REVEALS SUCH MAKING OF SUCH PAYMENT ON 06.02.1998. THIS AMOUNT IS FOUND, ACCORDING TO THE ASSESSING OFFICER, IN THE SO CALLED AGREEMENT OF SALE EXECUTE D ON 06.02.1998 BY THE ASSESSEE HEREIN IN FAVOUR OF SHAIK AMIN PATE L AND SRI G. SIVARAMA KRISHNA. THE SALE IS STATED TO BE IN RESPE CT OF IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 11 AC. 18.28 GUNTAS OUT OF 104 ACRES. THE AR SUBMITTED IN THIS REGARD SUBMITS THAT: A) THE AGREEMENT OF SALE DATED 06-02-1998 IS ONLY A XEROX COPY AND THE ORIGINAL WAS NOT FOUND; B) THE SAID AGREEMENT OF SALE WAS SIGNED BY THE ASSESSEE ALONE AND NOT BY THE VENDEES; C) ACCORDING TO THE AGREEMENT, THE SAID AMOUNT REPRESENTS THE COMMISSION PAYABLE TO THE PARTIES AT RS. 2.25 LAKHS PER ACRE FOR 104 ACRES OF LAND AND I T IS SUBMITTED THAT THE SAID COMMISSION WAS NEVER PAID AS THE DEAL WAS FINALLY INCOMPLETE EVEN TILL T HIS DATE. THE LITIGATIONS IN THE PROPERTY AND IN THE TRANSFER ARE STILL NOT CLEAR; 16. THE AR SUBMITTED THAT THERE IS A CLAUSE IN THE SAID AGREEMENT THAT AN AMOUNT OF RS. 1.0 CRORE WAS PAID BY THE VENDEES TO THE ASSESSEE HEREIN ON THE DATE OF AGREE MENT. THIS AMOUNT IS NOT ACTUALLY RECEIVED BY THE ASSESSEE HER EIN. SIMILARLY, THE PAYMENT STATED TO HAVE BEEN MADE TO SMT. SAVITR AMMA OF RS. 1.0 CRORE WAS ALSO NOT PAID. IF THE AGREEMENT WERE TO BE BELIEVED TO BE TRUE, THERE, IS NO OUTGOING FROM THE ASSESSEE AS IN FACT THE VENDEES MENTIONED THAT THEY PAID RS. 1.0 CRORES TO THE ASSESSEE AND ASSESSEE PAID RS. 1 CRORE TO SMT. SAVITRAMMA. I F THE AGREEMENT WERE TO BE BELIEVED TO BE TRUE, ALL THE C LAUSES OF THE AGREEMENT ARE TO BE BELIEVED AS TRUE AND THE PAYMEN T WILL BE OUT OF RECEIPT. IT IS ALSO SUBMITTED THAT SHAIK HAMID P ATEL AND SRI G. SIVARAMA KRISHNA DID NOT GET THE AC. 13.28 GUNTAS O F LAND REGISTERED IN THEIR FAVOUR AS WAS AGREED IN CLAUSE 2 BEFORE 31-03- 1998. AL THESE FACTS WOULD CLEARLY INDICATE THAT TH E PAYMENT OF RS. 1.0 CRORE TO SMT. SAVITRAMMA AND FIVE OTHERS IS NOT CORRECT AND NO SUCH PAYMENTS WAS MADE TO THEM. IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 12 17. THE AR SUBMITTED THAT THAT SHAIK HAMID PATEL, SRI G . SIVARAMA KRISHNA AND SMT. SAVITRAMMA COULD HAVE BEE N EXAMINED BY THE OFFICER WHEN THE ASSESSEE DENIED TH E TRANSACTION. THE AR SUBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 1.0 CRORE IN VIEW OF THE ABOVE FACTS. 18. THE LEARNED DR SUBMITTED THAT IN THE ORIGINAL PASSE D U/S. 158BD, THE ASSESSING OFFICER HAS CONSIDERED 85 ACRE S 32 GUNTAS OF LAND @ RS. 12.25 LAKHS PER ACRE WHICH INCLUDED COMM ISSION TO BE PAID TO THE MEDIATORS @ RS. 2.25 LAKHS PER ACRE. HO WEVER THE RECORD REVEALS THAT IN LIEU OF THE COMMISSION TO BE PAID IN CASH, THE MEDIATORS SHRI G. SIVA RAMA KRISHNA AND SHAIK H AMID PATEL PREFERRED TO GET 5 ACRES 23 GUNTAS OF LAND IN THEIR NAME / THEIR NOMINEES. THE RECORD ALSO SHOWS THAT THAT AS PER TH E SALE DOCUMENT 85 ACRES 32 GUNTAS OF LAND WAS ACTUALLY RE GISTERED IN THE NAME OF THE ASSESSEE TRUST. THIS MEANS THAT IF THE ENTIRE COMMISSION WOULD HAVE BEEN PAID IN CASH, THE LAND C ONVEYED TO THE MEDIATORS WOULD HAVE BEEN REGISTERED IN THE NAM E OF THE TRUST AND THE TOTAL LAND WOULD HAVE GONE UP BY 5 ACRES 23 GUNTAS. IN ANY CASE, WHAT WAS INVESTED BY THE ASSESSEE WAS THE LAND COST FOR 85 ACRES 32 GUNTAS AS ALSO THE COMMISSION TO BE PAI D TO BE MEDIATORS WHICH WAS PAID IN THE FORM OF LAND. THUS, IN THE ASSESSMENT ORDER PASSED IN PURSUANCE OF THE DIRECTI ON OF ITAT, THE ASSESSING OFFICER HAS RIGHTLY CONSIDERED THE INVEST MENT IN LAND FOR 91 ACRE 15 GUNTAS OUT OF WHICH 85 ACRES 32 GUNTAS W ERE REGISTERED IN THE NAME OF THE TRUST, AND THE BALANCE LAND WAS PAID IN KIND TO THE MEDIATORS SHAIK HAMID PATEL AND G. SIVARAMA KRI SHNA. IT IS FOR THIS REASON THAT IN THE SECOND ORDER PASSED BY THE ASSESSING OFFICER THE ASSESSING OFFICER HAS CONSIDERED THE QU ANTUM OF LAND TO BE 91 ACRES 15 GUNTAS. IT MAY ALSO BE MENTIONED THAT WHILE IN THE FIRST ORDER, THE RATE OF LAND WAS TAKEN AT RS. 12.25 LAKHS PER IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 13 ACRE INCLUSIVE OF THE COMMISSION, IN THE SECOND ORD ER, THE COST HAS BEEN TAKEN AT RS. 10 LAKHS SINCE THE TOTAL LAND HAS BEEN TAKEN AT 91 ACRES AND 15 GUNTAS INCLUSIVE OF THE LAND CONVEY ED TO THE MEDIATORS AS COMMISSION. THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A) HOLDING THAT THE LAND ACQUIRED WAS 91 ACRES 15 GUNTAS. 19. REGARDING THE RATE ADOPTED BY THE ASSESSING OFFICER WHILE ESTIMATING THE PURCHASE CONSIDERATION, THE LEARNED DR SUBMITTED THAT IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER ERRED IN ESTIMATING THE PURCHASE CONSIDERATION AT R S. 10 LAKHS PER ACRE AS AGAINST THE ACTUAL CONSIDERATION PAID OF RS . 3.34 LAKHS PER ACRE. THE CIT(A) HAS DEALT WITH THIS ISSUE IN DETAI L BY WHILE DISPOSING THE APPEAL FILED AGAINST THE ORDER PASSED U/S. 158BD. IN THAT ORDER, THE ASSESSING OFFICER HAD ADOPTED RS . 12.25 LAKHS PER ACRE. THE CIT(A) ALSO REFERRED TO THE AGREEMENT OF SALE DATED 04-06-99 WHERE THE PRICE OF THE LAND HAS BEEN MENTI ONED AT RS. 10 LAKHS PER ACRE EXCLUDING THE COMMISSION OF RS. 2 .25 LAKHS PER ACRE PAYABLE TO THE NEGOTIATOR. THE CIT(A) HAS ALSO REFERRED TO THE FINDING OF THE ASSESSING OFFICER RELATING TO COMPAR ABLE PRICE OF LAND IN THE NEAR VICINITY WHERE THE LAND COST HAS BEEN S TATED TO BE RS. 15.05 LAKHS PER ACRE AND RS. 10.65 LAKHS PER ACRE. IN FACT, THE MANAGING TRUSTEE OF THE ASSESSEE TRUST WAS A WITNES S IN THE SALE DEEDS FOR THE ABOVE REFERRED COMPARABLE LAND DEALS. THE CIT(A) ALSO REFERRED TO THE APPELLATE ORDER PASSED IN THE CASE OF THE NEGOTIATORS WHO WERE TO RECEIVE COMMISSION I.E. SRI G. SIVARAMA KRISHNA ETC. EVEN IN THE PRESENT ASSES SMENT ORDER PASSED BY THE ASSESSING OFFICER IN PURSUANCE TO THE DIRECTION OF ITAT, THE ASSESSING OFFICER HAS DEALT IN DETAIL AS TO WHY THE RATE OF LAND TO BE TAKEN AT RS. 10 LAKHS PER ACRE EXCLUSIVE OF THE COMMISSION PAYABLE. THE DR ARGUED THAT THE ASSESSI NG OFFICER WAS JUSTIFIED IN TAKING THE LAND PRICE AT RS. 10 LA KHS PER ACRE. IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 14 20. REGARDING THE ASSESSEE'S CONTENTION THAT THE ASSESS ING OFFICER ERRED IN RELYING ON THE COMPLAINT LODGED B Y SRI THIMMAIAH BEFORE THE POLICE AUTHORITIES WHICH CANNOT BE CONSI DERED AS THE BASIS FOR DETERMINING THE SALE CONSIDERATION AND AC CORDINGLY ERRED IN ARRIVING AT THE COST OF ACQUISITION OF THE PROPE RTY AT RS. 10,11,50,000 THE LEARNED DR SUBMITTED THAT THE FIR FILED BY SRI THIMMAIAH WAS ONE OF THE MANY DOCUMENTS REFERRED TO BY THE ASSESSING OFFICER WHILE COMPUTING THE UNDISCLOSED INCOME OF THE APPELLANT AND IT IS NOT THE ONLY DOCUMENT THAT THE ASSESSING OFFICER HAS RELIED UPON TO COMPUTE THE UNDISCLOSED INCOME. IT IS ALSO PERTINENT TO NOTE THAT THE APPELLANT IS ALSO R ELYING ON THE SAME COMPLAINT FILED BY SHRI THIMMAIAH TO DEFEND HI S STAND. THEREFORE, IT CANNOT BE SAID THAT THE COMPLAINT LOD GED BY SHRI THIMMAIAH IS IRRELEVANT AND NOT TO BE RELIED UPON. THE DR SUBMITTED THAT RELIANCE PLACED BY THE ASSESSING OFF ICER ON THE FIR LODGED BY SHRI THIMMAIAH BEFORE THE POLICE AUTHORIT IES IS NOT WITHOUT BASIS. HOWEVER, WHILE COMPUTING THE UNDISCL OSED INCOME THE ASSESSING OFFICER, APART FROM THE COMPLAINT BY THIMMAIAH, HAS ALSO REFERRED TO VARIOUS OTHER DOCUMENTS TO ARR IVE AT THE UNDISCLOSED INCOME. WHILE ARRIVING AT THE COST OF A CQUISITION OF THE PROPERTY AT RS. 10,11,50,000/-, THE ASSESSING OFFIC ER HAS CONSIDERED THE TOTAL QUANTUM OF LAND AT 91 ACRES AN D 15 GUNTAS @ RS. 10 LAKHS PER ACRE WHICH GIVES THE ACQUISITION P RICE AT RS. 9,11,50,000/-. TO THIS, HE HAS ADDED ANOTHER RS. 1 CRORE PAID TO SMT. SAVITRAMMA AS EVIDENCED BY SEIZED DOCUMENT. TH IS RS. 1 CRORE WAS PAID TO SMT. SAVITRAMMA ON 6-2-1998 AS PE R THE SEIZED DOCUMENT. THE ISSUE WAS ALSO DISCUSSED IN THE FIRST ASSESSMENT ORDER PASSED U/S. 158BD. HOWEVER, IN THE FIRST ASSE SSMENT ORDER, THE QUANTUM OF LAND WAS CONSIDERED AT 85 ACRES 32 G UNTAS AND THE RATE WAS ADOPTED AT RS. 12.25 LAKHS PER ACRE IN CLUSIVE OF COMMISSION. WHILE PASSING THE FIRST ASSESSMENT ORDE R, THE ASSESSING OFFICER AT PARA 2.3 HAS DISCUSSED THAT OU T OF THE TOTAL IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 15 COMMISSION PAYABLE TO THE MEDIATORS RS. 1 CRORE WAS PAID TO SMT. SAVITHRAMMA AND OTHERS. SINCE IN THE PRESENT ORDER 5 ACRES 23 GUNTAS OF LAND HAS BEEN CONSIDERED AS COMMISSION PA ID TO THE MEDIATORS, A SEPARATE ADDITION OF RS. 1 CRORE HAS B EEN MADE WITH REGARD TO THE PAYMENT MADE TO SMT. SAVITHRAMMA. AFT ER ANALYZING THE ISSUE IN DETAIL, WITH REFERENCE TO THE ASSESSME NT ORDERS PASSED AS ALSO THE APPELLATE ORDERS PASSED BY MY PREDECESS OR, THE ADDITION OF RS. 1 CRORE MADE BY THE ASSESSING OFFIC ER IS JUSTIFIED. THUS, THE COMPUTATION OF TOTAL ACQUISITION PRICE AT RS. 10,11,50,000 IS JUSTIFIED. 21. REGARDING THE CONTENTION OF THE ASSESSEE THAT THE A SSESSING OFFICER HAS ERRED IN DETERMINING THE UNDISCLOSED IN COME AT RS. 7,23,86,910, THE LEARNED DR SUBMITTED THAT UNDISCL OSED INCOME IS THE RESULTANT FIGURE AFTER REDUCING THE CONSIDER ATION RECORDED IN THE BOOKS BY THE ASSESSEE FROM THE ACQUISITION PRIC E OF RS. 10,11,50,000. SINCE THE ACQUISITION PRICE OF RS. 1 0,11,50,000 ARRIVED AT BY THE AO IS JUSTIFIED, CONSEQUENTLY, TH E COMPUTATION OF UNDISCLOSED INCOME AT RS. 7,23,86,915 IS ALSO JUSTI FIED. 22. REGARDING CHARGING OF INTEREST U/S. 158BFA(1) THE L EARNED DR SUBMITTED THAT NO APPEAL LIES AGAINST CHARGING O F INTEREST. OTHERWISE ALSO CHARGING OF INTEREST IS CONSEQUENTIA L IN NATURE. THE ASSESSEE HAS ALSO NOT GIVEN ANY SPECIFIC REASON AS TO HOW THE INTEREST COMPUTED BY THE ASSESSING OFFICER IS ERRON EOUS. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IS JUSTIFIED ON THIS COUNT. 23. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE, ON SEARCH ACTION CONDUCTED U /S. 132 OF THE ACT IN THE PREMISES OF SUMAN CHIT FUND PVT. LTD. ON 5.9.2002, THE ASSESSEE WAS ALSO COVERED AND DURING THE SEARCH ACT ION SEIZED MATERIAL MARKED ASSS/RO/04 CONTAINING A DOCUMENT AT PAGE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 16 NOS. 88-90 WAS FOUND WHICH IS AN AGREEMENT OF SALE DATED 6.2.1998 BETWEEN SHRI SRI BHAGWAN BALASAI BABA CENT RAL TRUST, KURNOOL AS ONE PARTY AND SHAIK HAMID PATEL AND SHRI G. SIVARAMA KRISHNA ON THE OTHER SIDE. AS PER THIS SEIZED MATE RIAL THE ASSESSEE ENTERED INTO AN AGREEMENT OF SALE WITH RESPECTIVE O WNERS REPRESENTED BY THEIR GPA HOLDER SHRI M. THIMMAIAH F OR PURCHASE OF LAND OF 104 ACRES IN SY. NOS. 104, 105, 106,107, 108, 109/1 AND 109/2 SITUATED AT KONDAPUR VILLAGE, SERILINGAMP ALLY MANDAL, R.R. DISTRICT FOR WHICH CONSIDERATION WAS RS. 12.25 LAKHS PER ACRE. DURING THE FIRST ASSESSMENT PROCEEDINGS ON 28.2.200 6 THE ASSESSING OFFICER FOUND THAT THE TOTAL LAND IS ONLY 91 ACRES 15 GUNTAS. OUT OF THIS 5 ACRES 23 GUNTAS WAS REGISTER ED BY OUTSIDER IN FAVOUR OF SHRI HAMID PATEL AND BALANCE 85 ACRES 32 GUNTAS WAS REGISTERED BY THE ASSESSEE. AS PER THE BOOKS OF AC COUNT RECORDED CONSIDERATION IS RS. 2,87,63,085. HOWEVER, THE ASS ESSING OFFICER CONSIDERED THE INFORMATION ABOUT TWO INSTANCES OF S ALE OF LAND AT THE RELEVANT PERIOD IN THE YEAR UNDER CONSIDERATION IN THE NEAR VICINITY, AS PER WHICH ONE DOCUMENT DATED 25.6.1996 SHOWS THE CONSIDERATION AT RS. 10.65 LAKHS PER ACRE AND ANOTH ER DOCUMENT DATED 21.10.1998 SHOWS THE CONSIDERATION AT RS. 15. 05 LAKHS PER ACRE. THE ASSESSING OFFICER CONSIDERED THE CONSIDE RATION AT RS. 12.25 LAKHS PER ACRE AND COMPUTED THE TOTAL CONSIDE RATION FOR 85 ACRES 32 GUNTAS AT RS. 10,51,05,000 AND DEDUCTED TH E DISCLOSED CONSIDERATION OF RS. 2,87,63,085. ACCORDINGLY, HE WORKED OUT THE UNDISCLOSED INCOME AT RS. 7,63,41,915 IN THE ORIGIN AL ASSESSMENT. 24. DURING THE COURSE OF SET ASIDE ASSESSMENT PROCEEDIN GS THE ASSESSEE PRODUCED MOU DATED 31.8.2005. THE SAID MO U IS BETWEEN THE ASSESSEE TRUST, M/S. BHOOPATI ASSOCIATE S AND SHRI K.E. PRATAP AS FIRST PART, (A) SHRI THIMMAIAH AND ( B) M/S. ESWARI PROJECTS AS SECOND PART AND SHRI A. VENKATARAMI RED DY AS THIRD PART. AS PER THIS MOU THE ASSESSEE SOUGHT COOPERAT ION OF SRI IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 17 THIMMAIAH IN SETTLING THE PENDING COURT LITIGATION AND IN THE SALE OF 70 ACRES OF LAND AT RS. 70 LAKHS PER ACRE TO SHR I A. VENKATARAMI REDDY. IT HAS ALSO SOUGHT COOPERATION OF THE SECON D PART IN DELIVERING THE AMOUNTS DUE TO OTHERS CONSEQUENT TO REALISATION OF THE SALE PROCEEDS OF THE LAND IN QUESTION. THE AS SESSING OFFICER BRUSHED ASIDE THIS MOU. HE RELIED UPON THE POLICE COMPLAINT LODGED BY SHRI THIMMAIAH AND HIS SWORN STATEMENT RE CORDED ON 8.12.2008 WHEREIN HE HAD STATED THE CONSIDERATION I S RS. 10 LAKHS PER ACRE. IN THE SET ASIDE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ALSO CONSIDERED AN AMOUNT OF RS. 1 CRORE RE PAID TO SMT. SAVITRAMMA AND THUS THE ASSESSING OFFICER COMPUTED THE TOTAL AMOUNT AS FOLLOWS: SALE CONSIDERATION AT RS. 10 LAKHS PER ACRE FOR 91 ACRES 15 GUNTAS RS. 9,11,50,000 AMOUNT PAID TO SMT. SAVITRAMMA RS. 1,00,00,000 TOTAL RS. 10,11,50,000 (-) CONSIDERATION DECLARED IN THE BOOKS OF ACCOUNT RS. 2,87,63,085 UNDISCLOSED INCOME RS. 7,23,86,915 25. THOUGH THE ASSESSING OFFICER COMPUTED TWO DIFFERENT AMOUNTS OF UNDISCLOSED INCOME AT TWO ASSESSMENTS ST AGE, HE FAILED TO ESTABLISH THE GENUINENESS OF THE DOCUMENT S. THE DOCUMENT FOUND WAS A XEROX COPY OF A SALE AGREEMENT . THE XEROX COPY OF THE AGREEMENT FOUND DURING THE COURSE OF SE ARCH ONLY BEARS THE SIGNATURE OF THE MANAGING TRUSTEE AND NOT THAT OF OTHER PARTIES TO THE AGREEMENT. THE ASSESSING OFFICER WA S UNABLE TO TRACE THE ORIGINAL AGREEMENT. THE ASSESSING OFFICE R VERY MUCH RELIED ON THE FIR FILED BY SHRI THIMMAIAH WHO HAPPE NED TO BE THE GPA HOLDER OF THE LAND SOLD TO THE ASSESSEE. IN OU R HUMBLE OPINION, THE FIR ITSELF CANNOT BE CONSIDERED AS CON CLUSIVE EVIDENCE TO COME TO A CONCLUSION THAT THE CONSIDERATION HAS PASSED BETWEEN THE PARTIES. IT IS A FACT THAT THE LAND WAS SUBJEC TED TO LITIGATION IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 18 AND THE ASSESSEE AGREED TO PAY RS. 5 CRORES FOR OBT AINING CLEARANCE FROM ULC AUTHORITIES AND SETTLE THE DISPUTE. ALSO IT IS A FACT THAT POSTED DATED CHEQUES WERE GIVEN TO HIM. 26. A MORTGAGE DEED ALSO WAS EXECUTED WHEREIN THE DETAI LS OF POST DATED CHEQUES GIVEN BY THE ASSESSEE ARE CLEARL Y MENTIONED. COPY OF THE MORTGAGE DEED IS PLACED ON RECORD. IF T HE AMOUNT OF RS. 5 CRORES WERE TO BE SALE CONSIDERATION IT WOULD HAVE BEEN MENTIONED SO IN THE MORTGAGE DEED. IT ONLY STATES T HAT SRI M. THIMMAIAH HAS ADVANCED RS. 5 CRORES TO THE ASSESSEE TRUST. NO SUCH AMOUNT IS RECEIVED FROM HIM AND HE IS NOT CAPA BLE ALSO. LATER, SRI M. THIMMAIAH RETURNED THE CHEQUES WHICH WERE IN HIS POSSESSION AND EXECUTED A DECLARATION ON 4-6-1999. A COPY OF THE DECLARATION IS ON RECORD. AS PER THIS DECLARATION SINCE THE ASSESSEE TRUST ENTERED INTO AN AGREEMENT OF SALE WI TH SRI K.E. PRATAP ON 4-6-1999 FOR SALE OF AGRICULTURAL LANDS T O AN EXTENT OF AC. 43 IN SY. NO. 104/1, 104/2, 105(PART) AND 108, SITUATED AT KONDAPUR VILLAGE, SERILINGAMPALLY MANDAL, R.R. DIST RICT, IN WHICH HE ALSO SIGNED AS WITNESS, HE HAS HANDED OVER THE C HEQUES IN HIS POSSESSION AND HAS ALSO CATEGORICALLY STATED THAT H E HAS NO CLAIM OR CHARGE ON THE SAID TRUST WHATSOEVER FROM THEN ON WARDS. THE ASSESSEE TRUST HAD TO ENTER INTO AN AGREEMENT OF SA LE TO SRI K.E. PRATAP ONLY TO CONVINCE SRI THIMMAIAH TO DO HIS WOR K. IT WAS LIKE A GUARANTEE TO MR. THIMMAIAH, WHO HAS SELECTED MR. K.E. PRATAP AS MEDIATOR. THE AGREEMENT ALSO DOES NOT CONTAIN AN Y CONSIDERATION FOR SUCH TRANSFER. A COPY OF THE AGRE EMENT IS ON RECORD. 27. THE FIR LODGED BY SRI M. THIMMAIAH RELIED UPON BY T HE ASSESSING OFFICER, IS ALSO PLACED ON RECORD. THIS F IR IS CONTRARY TO THE DECLARATION SIGNED BY SRI M. THIMMAIAH. THIS FI R IS LODGED ONLY SAID TO BE STEPS TO PERSUADE THE ASSESSEE TO C OMPLETE THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 19 TRANSACTION. AS PER THE DECLARATIONS THE CHEQUES WE RE RETURNED TO THE TRUST AND HE HAS STATED THAT HE WILL HAVE NO CL AIM WHATSOEVER THEREAFTER. BUT IN THE FIR HE HAD STATED THAT HE HA S TO GET MONEY. THE ASSESSING OFFICER HAVING RELIED ON THIS FIR HAS NOT EXAMINED HIM TO FIND OUT THE TRUTH IN SPITE OF BRINGING ON R ECORD THE DECLARATION AND THE AGREEMENTS REFERRED TO ABOVE. T HE ASSESSING OFFICER MERELY CONCLUDED BASED ON SUCH FIR THAT THE ASSESSEE TRUST HAS INCURRED RS. 5,80,10,000 IN SPITE OF REPE ATED ASSERTIONS BY THE ASSESSEE THAT IT HAS NOT INCURRED ANYTHING M ORE THAN WHAT IS RECORDED IN THE BOOKS OF ACCOUNT. IT IS NOT KNO WN HOW A STATEMENT BY THIRD PARTY WITHOUT ANY SUPPORTING EVI DENCE COULD BE RELIED UPON TO HOLD THAT THE ASSESSEE TRUST HAS PAI D RS. 5,80,10,000. THE ASSESSING OFFICER THOUGH IN HIS AS SESSMENT ORDER STATED THAT THE CONTENTS OF THE COMPLAINT ARE ONLY A SOURCE OF INFORMATION AND THAT THE COMPUTATION OF UNDISCLOSED INCOME IS NOT BASED ON THESE FIGURES BUT ON THE FACT AND DOCUMENT ARY EVIDENCE SUPPLIED BY THE ASSESSEE ONLY. THIS STATEMENT OF TH E ASSESSING OFFICER IS FAR FROM TRUTH. NONE OF THE FACTS SUBMIT TED BY THE ASSESSEE OR THE DOCUMENTS SUPPLIED BY THE ASSESSEE PROVES THAT THE ASSESSEE HAS PAID MORE THAN WHAT IS RECORDED IN THE BOOKS OF ACCOUNT. WHATEVER EVIDENCES CITED BY THE ASSESSING OFFICER ARE NOT AUTHENTICATED AND NOT SUPPORTED BY EXAMINING THE CO NCERNED PARTIES. THE ASSESSEE ON THE OTHER HAND SUBMITTED T HAT IT HAS NO ACTIVITY WHICH CAN GENERATE INCOME AND THAT ITS ONL Y SOURCE IS CONTRIBUTIONS FROM DEVOTEES AND IT ENJOYS EXEMPTION AND HAS NO NECESSITY TO HAVE UNDISCLOSED INCOME. THE ASSESSING OFFICER IN HIS ORDER STATED THAT IT IS NOT FOR HIS CONSIDERATION. WHEN THE ASSESSING OFFICER PROPOSES TO HOLD THAT THE ASSESSE E HAS UNDISCLOSED INCOME IT IS ALSO REQUIRED TO STATE AS TO HOW THE INCOME COULD HAVE BEEN GENERATED. WHEN UNDISCLOSED INCOME IS TO BE ASSESSED EITHER IT SHOULD BE BASED ON THE ASSETS ACQUIRED OR BASED ON THE SOURCES OF INCOME. IN THE ASSESSEE'S C ASE AS PER THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 20 DOCUMENTS THE LAND OF NEARLY 86 ACRES IS ACQUIRED F OR THE CONSIDERATION RECORDED IN THE BOOKS OF ACCOUNT. TH ERE IS NO EVIDENCE WHICH CAN BE RELIED UPON TO PROVE THAT IT HAS PAID MORE THAN THAT. WHATEVER BEING RELIED UPON BY THE ASSES SING OFFICER ARE UNPROVED DOCUMENTS AND UNAUTHENTICATED, MORE ON PRE SUMPTIONS AND WITHOUT ANY EVIDENCE. WITH REGARD TO THE SUBMI SSION THAT WHEN THE CHEQUES OF RS. 5 CRORES IS RETURNED THE QU ESTION OF THE ASSESSEE HAVING PAID THE AMOUNT DOES NOT ARISE THE ASSESSING OFFICER STATES THAT THE ASSESSEE WOULD HAVE MADE GO OD THE SAID PAYMENT TO THE LAND OWNERS AGAINST THE DISHONOURED CHEQUES. THIS IS ONLY A PRESUMPTION AND NOT SUPPORTED WITH A NY EVIDENCE. IT IS SETTLED LAW THAT DETERMINATION OF UNDISCLOSED INCOME COULD BE DETERMINED ONLY ON THE BASIS OF' EVIDENCE AND NOT O THERWISE. 28. THE ASSESSING OFFICER ALSO RELIED ON THE STATEMENT DATED 18.12.2008 RECORDED FROM SRI THIMMAIAH TO SUGGEST T HE SALE CONSIDERATION IS AT RS. 12.25 LAKHS. SHRI THIMMAIA H LODGED A COMPLAINT AGAINST THE ASSESSEE AND HE IS HAVING A G RIEVANCE AGAINST THE ASSESSEE. HOW FAR HIS STATEMENT CAN BE RELIED THAT IS ALSO RECORDED ON 8.12.2008 IN THE COURSE OF SET ASI DE ASSESSMENT PROCEEDINGS. IN OUR OPINION, IT CANNOT BE BASIS TO COME TO THE CONCLUSION THAT THE CONSIDERATION IS AT RS. 12.25 L AKHS PER ACRE. 29. FURTHER, THIS IS A BLOCK ASSESSMENT FRAMED U/S. 158 BD OF THE ACT. THE BLOCK ASSESSMENT IS BASED ON SEIZED M ATERIAL FOUND DURING THE COURSE OF SEARCH ACTION. THE PROVISIONS OF SECTION 158BC(B) WHICH HAVE BEEN AMENDED BY FINANCE ACT, 2 002 WITH RETROSPECTIVE EFFECT FROM 1 ST JULY, 1995, AS PER WHICH SS 144 AND 145 HAVE BEEN SPECIFICALLY MADE APPLICABLE TO BLOCK ASSESSMENT. HOWEVER, WE MAKE IT CLEAR THAT IF NO MATERIAL WAS F OUND DURING THE SEARCH WHICH COULD SHOW SUPPRESSION OF INCOME, NO E STIMATION OF UNDISCLOSED INCOME OF BLOCK PERIOD BY RESORTING TO SECTION 145 IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 21 COULD BE MADE. IN OTHER WORDS, WHERE THERE IS A MA TERIAL, SUCH AN ESTIMATION OF INCOME CAN BE MADE. THIS VIEW OF OUR S IS FORTIFIED BY THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CA SE OF RAJNIK & COMPANY VS. ACIT (251 ITR 561) WHEREIN HELD THAT ON CE THE SUPPRESSION IS ESTABLISHED, ESTIMATE CANNOT BE AVOI DED. IT IS NOT NECESSARY THAT ADDITION SHOULD BE LIMITED TO WHAT I S FOUND DURING THE SEARCH IF THE CIRCUMSTANCE WARRANTING AN ESTIMA TE. WE HAVE ALSO NOTICED THAT PUNJAB & HARYANA HIGH COURT IN TH E CASE OF VEDPRAKASH VS. CIT (265 ITR 642) WHEREIN HELD THAT WHEN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE N OT RELIABLE AND VERIFIABLE, THE BLOCK ASSESSMENT HAS TO BE MADE IN THE LIGHT OF MATERIAL RECOVERED DURING THE SEARCH AND IN SUCH CI RCUMSTANCES, SOME ELEMENT OF ESTIMATE WAS UNAVOIDABLE. 30. THE BLOCK ASSESSMENT IS NOT A SUBSTITUTE FOR A REG ULAR ASSESSMENT. BOTH THE ASSESSMENTS ARE STANDING ON D IFFERENT FOOTINGS. ITS SCOPE AND AMBIT IS LIMITED IN THAT SE NSE TO MATERIALS UNEARTHED DURING SEARCH. IT IS AN ADDITION TO THE REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE. THE ASSESSME NT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDE NCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT S OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAI LABLE WITH THE ASSESSING OFFICER. EVIDENCE FOUND AS A RESULT OF SE ARCH IS CLEARLY RELATABLE TO SECTION 132 AND 132A OF THE I.T. ACT. THE CLAUSE (A) OF THE EXPLANATION TO SECTION 158BFA(2) POSTULATES THA T ASSESSMENT MADE UNDER CHAPTER XIV-B SHALL BE IN ADDITION TO TH E REGULAR ASSESSMENT OF EACH PREVIOUS YEAR INCLUDED IN THE BL OCK PERIOD. CLAUSE (B) OF THE EXPLANATION FURTHER CLARIFIED THE POSITION THAT THE TOTAL UNDISCLOSED INCOME RELATING TO THE BLOCK PERI OD SHALL NOT INCLUDE THE INCOME ASSESSED IN ANY REGULAR ASSESSME NT AS INCOME OF THE RELATED BLOCK PERIOD. CLAUSE (C) PUTS A BAN ON TREATING ANY INCOME ASSESSED UNDER THE BLOCK ASSESSMENT SO AS TO FORM PART IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 22 OF REGULAR ASSESSMENT OF ANY PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD. THE SPECIAL PROCEDURE OF CHAPTER XIV-B IS INTENDED TO PROVIDE A MODE OF ASSESSMENT OF UNDISCLOSED INCOME, WHICH HAS BEEN DETECTED AS A RESULT OF SEARCH. IT CANNOT BE A SUBSTITUTE FOR REGULAR ASSESSMENT. CIT V. N.R. PAPERS AND BOARDS LTD., 248 ITR 526 (GA UHATI) 'IF PRIOR TO THE DATE OF SEARCH, THE ASSESSEE HAD DISCLOSED THE PARTICULARS OF INCOME OR EXPENDITURE EITHER IN THE RETURN OR IN THE BOOKS OF ACCOUNT OR IN THE COURSE OF PROCEEDINGS TO THE ASSESSING OFFICER OR WHERE TH E RETURN HAD NOT BECOME DUE, THEY ARE DUTY RECORDED I N THE REGULAR BOOKS OF ACCOUNT, THEN SUCH INCOME CANN OT BE TREATED AS UNDISCLOSED INCOME SO AS TO TAX A PER SON FT THE RATE OF SIXTY PER CENT. UNDER CHAPTER XIV. CIT V. N.R. PAPERS AND BOARDS LTD., 248 ITR 526 (GA UHATI) 'UNDER THE SCHEME OF THE PROVISIONS FOR BLOCK ASSESSMENT IT IS APPARENT THAT IT RELATED TO ASSESS MENT OF 'UNDISCLOSED INCOME' OF THE ASSESSEE EXCLUDING T HE INCOME SUBJECTED TO, REGULAR ASSESSMENT IN PURSUANC E OF THE RETURNS FILED BY THE ASSESSEE FOR SUCH PERIO D. FROM A PERUSAL OF SECTION 158BB OF THE INCOME-TAX A CT, 1961, IT IS CLEAR THAT THE RETURNS ARE REQUIRED TO BE FILED IN PURSUANCE OF A NOTICE UNDER SECTION 158BC(A) AND THE ASSESSMENT HAS TO BE FRAMED ON THAT BASIS IN TH E LIGHT OF MATERIAL THAT HAD COME INTO THE POSSESSION OF THE ASSESSING AUTHORITY DURING THE COURSE OF SEARCH WHICH WAS THE FOUNDATION OF PROCEEDINGS. THE CORRECTNESS OR OTHERWISE OF THE RETURNS FILED IN PURSUANCE OF THE NOTICE UNDER SECTION 158BC(A) HAS TO BE EXAMINED WITH REFERENCE TO THE MATERIAL IN THE POSSESSION OF THE ASSESSING AUTHORITY HAVING NEXUS TO ASSESSMENT OF 'UNDISCLOSED INCOME'. ' BHAGWATI PRASAD KEDIA V. CIT, 248 ITR 562 (CALCUTTA ) 'THE EXPLANATION TO SECTION 158BA OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE LEGISLATURE THOU GHT IT FIT TO MAKE A DISTINCTION, BETWEEN THE BLOCK ASSESS MENT AND THE REGULAR ASSESSMENT. IN THE CASE OF REGULA R ASSESSMENT, THE ASSESSING OFFICER IS FREE TO EXAMIN E THE VERACITY OF THE RETURN AS WELL AS THE CLAIMS MA DE BY IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 23 THE ASSESSEE, WHEREAS THE UNDISCLOSED INCOME IS TAX ED BY WAY OF BLOCK ASSESSMENT AS A RESULT OF SEARCH AN D SEIZURE. THE LOGIC BEHIND THE TWO DIFFERENT MODES OF ASSESSMENT IS THAT CONCEALMENT OF INCOME AND CLAIMI NG DEDUCTION OR EXEMPTION IN RESPECT OF A DISCLOSED IN COME CANNOT BE TREATED AT PART. THE FORMER IS AN OFFENCE WHICH GOES TO THE ROOT OF THE MATTER AND THE OTHER IS ON THE BASIS OF THE CAUSES SHOWN BY THE ASSESSEE WHERE THE ASSESSING OFFICER IS FREE TO ACCEPT THE JUSTIFI CATION SHOWN OR REJECT THE SAME.' CIT VS. VIKRAM A. DOSHI, 256 ITR 129 (BOM) 'BLOCK ASSESSMENT - UNDISCLOSED INCOME-UNDISCLOSED TRANSACTIONS ASSESSED IN BLOCK ASSESSMENT-TRIBUNAL FINDING TRANSACTIONS DISCLOSED IN RETURN WHICH WERE SUBJECT-MATTER OF REGULAR ASSESSMENTS-TRANSACTIONS IN QUESTION NOT TO BE CONSIDERED IN BLOCK ASSESSMENT - INCOME;-TAX ACT, 1961, SS. 143, 158B.' CIT VS. SHAMLAL BALRAM GURBANI, 249 ITR 501 (BOM) 'A SEARCH WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON MARCH 25,1996, AND A NOTICE UNDER SECTION 158BC OF THE INCOME-TAX ACT, 1961, WAS ISSU ED; THE ASSESSEE DID NOT FILE THE RETURNS FOR THE YEARS 1993-94, 1994-95 AND 1995-96. THE ASSESSING OFFICER TREATED THE INCOME OF THE THREE YEARS AS THE INCOME OF THE BLOCK PERIOD. ON APPEAL, THE TRIBUNAL FOUND THA T THE ASSESSEE'S INCOME FROM INTEREST, SALARY AND RENT WA S REFLECTED IN THE AUDITED BALANCE-SHEET OF THE RESPE CTIVE ASSESSMENT YEARS OF THE FIRM AND, THEREFORE, THE TRIBUNAL DELETED THE ADDITION.' ON APPEAL THE HON'BLE BOMBAY HIGH COURT DID NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF F ACTS RECORDED BY THE TRIBUNAL. IT WAS HELD: 'HELD DISMISSING THE APPEAL, THAT THE CONCLUSION OF THE TRIBUNAL THAT THERE WAS NO REASON FOR TREATING THE SAID INCOME AS UNDISCLOSED INCOME FOR THE PURPOSES OF BL OCK ASSESSMENT WAS BASED ON FACTS. NO SUBSTANTIAL QUESTION OF LAW AROSE.' CIT V. VINOD DANCHAND GHODAWAT, 247 ITR 448 (BOM) 'WHERE THE VALUE OF THE GOLD AND SILVER ARTICLES. A ND JEWELLERY HAD BEEN DISCLOSED IN THE ASSESSEE'S WEAL TH- TAX RETURN WHICH WAS ACCEPTED BY THE DEPARTMENT: IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 24 HELD THAT CHAPTER XIV-B OF THE INCOME-TAX ACT 1961, HAD NO APPLICATION TO THE FACTS OF THE CASE AND THE ADDITION MADE BY THE DEPARTMENT ON THE GROUND OF UNDISCLOSED INCOME WAS ERRONEOUS. DURING THE SEARCH, IT WAS FOUND THAT THE ASSESSEE H AD CONSTRUCTED A BUNGALOW. IT WAS FOUND THAT THE ASSESSEE HAD INCURRED AN EXPENSE OF RS. 4.16 LAKHS. THE ASSESSING OFFICER, THEREAFTER, REFERRED THE MAT TER TO THE DEPARTMENT VALUER, WHO VALUED THE PROPERTY AT R S. 6. 66 LAKHS AND ACCORDINGLY, THE DIFFERENCE HAD BEE N ADDED TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME: HELD, THAT THE ABOVE BASIS CLEARLY SHOWED THAT THE DEPARTMENT HAD NOT UNDERSTOOD THE SCOPE OF CHAPTER XIV-B OF THE ACT. THE ADDITION DID NOT FALL WITHIN THE CHAPTER XIV-B.' (A) EVEN IF IT IS PRESUMED THAT POST-SEARCH ENQUIRIES HAVE RESULTED IN DETECTION OF CERTAIN UNDISCLOSED INCOME, THOUGH IT IS NOT RELATABLE TO THE EVIDENCE FOUND AS ON THE DATE OF SEARCH THEN ALSO, MUMBAI BENCH OF THE TRIBUNAL, IN THE CASE OF MORARJI GOKULDAS SPG. & WVG. CO. LTD. V. DCIT, 95 ITD 1 (MUM) (TM), WHILE CONSIDERING AN IDENTICAL SITUATION, HELD AS FOLLOWS:- '8. BLOCK PERIOD FOR WHICH THE ASSESSMENT IS TO BE MADE UNDER CHAPTER XIV-8 MEANS THE PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO TEN ASSESSMEN T YEARS PRECEDING A PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UNDER SECTION 132 OR ANY REQUISITION WAS MADE UNDER SECTION 132A, AND ALSO INCLUDES IN T HE PREVIOUS YEAR IN WHICH SUCH SEARCH WAS CONDUCTED OR REQUISITION MADE THE PERIOD UP TO THE DATE OF THE COMMENCEMENT OF SUCH SEARCH OR AS THE CASE MAY BE THE DATE OF SUCH REQUISITION. THEREFORE, THE ASSESS MENT FOR THE BLOCK PERIOD UNDER CHAPTER XIV-8 CAN BE MAD E OF THE UNDISCLOSED INCOME ONLY UP TO THE DATE OF COMMENCEMENT OF SEARCH OR THE DATE OF THE REQUISITI ON AND NOT OF THE PERIOD THEREAFTER. SECTION 1588A PROVIDES FOR ASSESSMENT OF UNDISCLOSED INCOME AS RESULT OF SEARCH FOR THE BLOCK PERIOD AND COMPUTATI ON OF INCOME AND THE COMPUTATION OF UNDISCLOSED INCOME FO R THE BLOCK PERIOD TO BE MADE AS PER THE PROVISIONS O F SECTION 158BE AND ASSESSMENT HAS ALSO TO BE MADE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 25 UNDER SECTION 158BC OF THE BLOCK PERIOD. THE 'UNDISCLOSED INCOME' FOR WHICH THE ASSESSMENT IS TO BE MADE IS DEFINED IN SECTION 158B(B) WHICH INCLUDE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE S UCH MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES, THING S, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT AND AFTER THE AMENDMENT BY FINANCE ACT, 2002 W.E.F. 1-7-1995 IT INCLUDES ALSO ANY EXPENSES, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS TO BE FOUND TO BE F ALSE. 31. FURTHER, IT IS NOT ENOUGH TO SAY THAT THE ASSESSEE PAID OVER AND ABOVE THE DECLARED CONSIDERATION BECAUSE THE FA IR MARKET VALUE (FMV) OF THE IMPUGNED ASSET AS ON DATE OF TRA NSACTION EXCEEDS THE FULL VALUE OF CONSIDERATION DECLARED BY THE ASSESSEE. IT IS FURTHER MORE NECESSARY THAT THE ACTUAL VALUE OF CONSIDERATION IN RESPECT OF ASSETS INVOLVED IS UNDERSTATED OR IN OTH ER WORDS, SHOWN AT A LESSER FIGURE THAN THAT ACTUALLY PAID BY THE A SSESSEE. IF THE REVENUE SEEKS TO BRING INTO TAX ANY UNDERSTATED VAL UE OF THE ASSETS, IT MUST SHOW NOT ONLY THAT THE FMV OF THE A SSETS AS ON THE DATE OF TRANSFER EXCEEDS THE FULL VALUE OF CONSIDER ATION DECLARED BY THE ASSESSEE BUT ALSO THAT CONSIDERATION HAS BEEN U NDERSTATED AND THE ASSESSEE HAS ACTUALLY PAID MORE THAN WHAT IS DE CLARED BY HIM. IF THE REVENUE HAVING FAILED TO SHOW THAT THE ACTUA L CONSIDERATION PASSED IN THIS CASE IS MORE THAN THAT WAS STATED BY THE ASSESSEE THEN IT CANNOT CLAIM TO HAVE DISCHARGED THE BURDEN CAST UPON IT BY MERELY ESTABLISHING THAT THE FMV OF THE CAPITAL ASS ET AS ON DATE OF TRANSFER EXCEEDS THE VALUE OF CONSIDERATION DECLARE D BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE REVENUE MUST GO FURTHER AND PROVE THAT IT IS THE CONSIDERATION PASSED BETWE EN THE PARTIES EXCEEDS THE VALUE DISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. MERELY BECAUSE SOME PROPERTY IN THE NEAR BY VICINITY HAVING BEEN SOLD AT HIGHER VALUE, IT CANNOT BE PRES UMED THAT THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 26 ASSESSEE PROPERTY ALSO SOLD AT THE SAME RTE. THE R EVENUE SHOULD INDEPENDENTLY ESTABLISH THAT ACTUAL CONSIDERATION P ASSED BETWEEN THE PARTIES IS HIGHER THAN THE DISCLOSED IN THE BOO KS OF ACCOUNT. THIS IS A BLOCK ASSESSMENT. AS WE HAVE DISCUSSED I N EARLIER PART OF THIS ORDER, THIS SHOULD BE BASED ON SEIZED MATER IAL AND NOT ON THE BASIS OF PRESUMPTION. 32. WE PLACE RELIANCE ON THE JUDGEMENT OF THE SUPREME C OURT IN THE CASE OF K.P. VARGHESE VS. ITO (131 ITR 597) WHE REIN IT WAS HELD THAT SECTION 52(2) OF THE INCOME-TAX ACT, 1961 , CAN BE INVOKED ONLY WHERE THE CONSIDERATION FOR THE TRANSF ER OF A CAPITAL ASSET HAS BEEN UNDERSTATED BY THE ASSESSEE, OR, IN OTHER WORDS, THE FULL VALUE OF THE CONSIDERATION IN RESPECT OF T HE TRANSFER IS SHOWN AT A LESSER FIGURE THAN THAT ACTUALLY RECEIVE D BY THE ASSESSEE, AND THE BURDEN OF PROVING UNDERSTATEMENT OR CONCEALMENT IS ON THE REVENUE; AND THE SUB-SECTION HAS NO APPLICATION IN THE CASE OF A BONA FIDE TRANSACTION WHERE THE CONSIDERATION RECEIVED BY THE ASSESSEE HAS BEEN COR RECTLY DECLARED. IN VIEW OF THE FINDING OF FACT RECORDED BY THE TRIB UNAL, THERE WAS NO QUESTION OF INVOKING SECTION 52(2) OF THE ACT. T HE HIGH COURT WAS, THEREFORE, RIGHT IN REFUSING TO CALL FOR THE R EFERENCE FROM THE TRIBUNAL AND REJECTING THE APPLICATION UNDER SECTIO N 256(2) OF THE ACT. 33. FURTHER, THE EVIDENCE COLLECTED BY THE REVENUE AUTH ORITIES WAS NOT SUFFICIENT TO ESTABLISH THEIR STAND THAT TH E TOTAL CONSIDERATION PASSED BETWEEN THE PARTIES WAS AT RS. 10,11,50,000 INSTEAD OF RS. 2,87,63,085. THE ENTIRE EVIDENCE HA S TO BE APPRECIATED IN A WHOLESOME MANNER AND EVEN WHERE TH ERE IS DOCUMENTARY EVIDENCE, THE SAME CAN BE OVERLOOKED IF THERE ARE SURROUNDING CIRCUMSTANCES TO SHOW THAT THE CLAIM OF THE ASSESSEE IS OPPOSED TO THE NORMAL COURSE OF HUMAN THINKING A ND EVEN IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 27 APPLYING THIS PRINCIPLE TO THE INSTANT CASE THERE A RE SOME DIFFICULTIES IN REJECTING THE ASSESSEE'S PLEA AS OP POSED TO THE NORMAL COURSE OF HUMAN THINKING, CONDUCT AND HUMAN PROBABILITIES. FOR THIS PURPOSE, WE RELY ON VARIOU S DECISION AS FOLLOWS: 1. ORDER OF ITAT, DELHI SPECIAL BENCH IN THE CASE OF MANOJ AGARWAL V. DCIT WHEREIN THE TRIBUNAL HELD AS FOLLOWS: ' HELD, THE EVIDENCE COLLECTED BY THE REVENUE AUTHORITIES WAS NOT SUFFICIENT TO ESTABLISH THEIR STAND THAT TH E JEWELLERY TRANSACTIONS CARRIED ON BY BEMCO WERE ONL Y PAPER TRANSACTIONS OR BOGUS, AND THAT ASSESSEE, WHO WAS ONE OF THE DIRECTOR OF THE COMPANY AT THE RELEV ANT TIME, CONTROLLED AND PUT THROUGH THESE TRANSACTIONS DIFFERENT ACCOMMODATION ENTRIES AND EARNED COMMISSION INCOME THEREFROM. THE ENTIRE EVIDENCE H AS TO BE APPRECIATED IN A WHOLESOME MANNER AND EVEN WHERE THERE IS DOCUMENTARY EVIDENCE, THE SAME CAN B E OVERLOOKED IF THERE ARE SURROUNDING CIRCUMSTANCES T O SHOW THAT THE CLAIM OF THE ASSESSEE IS OPPOSED TO T HE NORMAL COURSE OF HUMAN THINKING AND CONDUCT OR HUMAN PROBABILITIES. EVEN APPLYING THIS PRINCIPLE TO THE INSTANT CASE, THERE WAS SOME DIFFICULTY IN REJECTIN G THE ASSESSEE S PLEA AS OPPOSED TO THE NORMAL COURSE OF HUMAN CONDUCT. THE CIRCUMSTANCES SURROUNDING THE CASE WERE ALSO NOT STRONG ENOUGH TO JUSTIFY THE REJ ECTION OF ASSESSEE'S PLEA AS FANTASTIC OR OUTRAGEOUS. THE BACKGROUND OF THE ASSESSEE AND HIS FATHER WAS CONSIDERED AS IT WAS RELEVANT TO THE CASE. THE ADMISSION OF THE ASSESSEE THAT ONLY THE TRANSACTION S IN THE SHARES WERE ACCOMMODATION ENTRIES AND THAT BEMCO JEWELLERY TRANSACTIONS WERE GENUINE WAS ALSO CONSIDERED AND THERE WAS REASON AS TO WHY IT WAS SO . MOST OF THE QUESTIONS PUT TO THE ASSESSEE WHILE RECORDING SEVERAL STATEMENTS FROM HIM RELATE TO THE SHARE TRANSACTIONS PUT THROUGH ANOTHER COMPANY ''F' HARDLY ANY RELEVANT QUESTION REGARDING THE ACTIVITI ES OF BEMCO WAS ASKED. THE TURNOVER SHOWN IN THE SHARE TRANSACTIONS, WHICH WERE ADMITTED TO BE BOGUS, WAS ABOUT THREE AND HALF TIMES THE PURCHASES OF RS. 36.69 CRORES SHOWN BY BEMCO IN ITS JEWELLERY BUSINESS. ADDED TO THESE WERE THE FACTS THAT EVEN IN THE SEIZ ED IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 28 MATERIAL THERE WAS A LETTER HEAD OF BEMCO WHICH SHOWED JAI SIDHI APARTMENTS AT AHMEDABAD AS THE BRANCH OFFICE OF BEMCO WHICH MEANT THAT THE CLAIM O F BEMCO THAT IT HAD A BRANCH OFFICE AT AHMEDABAD WHER E THE GOLD BARS WERE SOLD WAS RIGHT, AS ALSO THE SALE S-TAX ASSESSMENT ORDER UNDER THE GUJARAT SALES-TAX ACT WHERE THE ASSESSEE DECLARED RS. 24.07 CRORES AS TOT AL SALES AND EXEMPTED. SALES. THERE WAS NO EVIDENCE OF ANY CONSEQUENCE WHICH WAS UNEARTHED DURING THE SEARCH TO DIRECTLY SHOW THAT BEMCO WAS CARRYING ON ONLY ACCOMMODATION ENTRY BUSINESS FOR JEWELLERY. TH E PERSON WHO WAS PROJECTED AS ONE OF THE WITNESSES O F THE DEPARTMENT TO SUPPORT THEIR STAND THAT BEMCO'S JEWELLERY BUSINESS WAS BOGUS, HAD BEEN FOUND TO HAV E ACTED AS SUB-MEDIATOR IN THE SHARE ACCOMMODATION ENTRY BUSINESS CARRIED ON BY ASSESSEE THROUGH 'F' O NLY AND HE HAD ALSO BEEN PAID COMMISSION IN THAT BUSINESS. FURTHER, BEMCO HAD BEEN FOUND TO HAVE A SHOP OR SHOWROOM AT KUCHA MAHAJANI, DELHI AND THAT HAD BEEN CONFIRMED BY THE REPORT OF THE SALES-TAX INSPECTOR AS ALSO BY THE RENTAL RECEIPT STARTING FR OM JANUARY, 1998. THUS, THE SURROUNDING CIRCUMSTANCES, APART FROM THE DIRECT EVIDENCE IN THE INSTANT CASE DID NOT CONTAIN ANYTHING WHICH BELIED THE CLAIM OF ASSE SSEE THAT THOUGH HIS SHARE TRANSACTION BUSINESS WAS ONLY AN ACCOMMODATION ENTRY BUSINESS FOR COMMISSION, THE JEWELLERY BUSINESS CARRIED ON BY BEMCO HAD NOT BEEN PROVED TO BE SO. THEREFORE, NO ADDITION COULD BE MA DE ON ACCOUNT OF 'COMMISSION INCOME IN THE HANDS OF TH E ASSESSEE BY TREATING ENTIRE PURCHASE OF BEMCO AS PERTAINING TO ACCOMMODATION ENTRY BUSINESS. 2. CIT VS. ATAM VALVES (P) LTD. (332 ITR 468 (P&H) WHEREIN HELD THAT EVEN THOUGH THE EXPLANATION OF TH E ASSESSEE THAT THE LOOSE PAPER DID NOT RELATE TO PAYMENT OF WAGES DURING THE YEAR IN QUESTION MAY NO T BE ACCEPTED, IN THE ABSENCE OF ANY OTHER MATERIAL, THE LOOSE SHEETS BY THEMSELVES WERE NOT ENOUGH TO MAKE ADDITION AS PER THE ESTIMATE OF THE ASSESSING OFFIC E AND TO THAT EXTENT ASSESSED BY THE ASSESSING OFFICE R, WAS NOT CALLED FOR AND IT WAS PARTLY LIABLE TO SET ASIDE. 3. CIT VS. SMT. P.K. NOORJAHAN (237 ITR 570) WHEREIN HELD THAT IN THE INSTANT CASE, THE TRIBUNAL HAD HEL D THAT THE DISCRETION HAD NOT BEEN PROPERLY EXERCISED BY THE INCOME TAX OFFICER AND THE APPELLATE ASSISTANT COMMISSIONER TAKING INTO ACCOUNT THE CIRCUMSTANCES IN IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 29 WHICH THE ASSESSEE WAS PLACED AND THE TRIBUNAL HAD FOUND THAT THE INVESTMENTS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. THE HIGH COURT HAD AGREED WITH THE SAID VIEW OF THE TRIBUNAL. THERE WAS NO E RROR IN THE FINDINGS RECORDED BY THE TRIBUNAL. SECTION 69 COULD NOT BE INVOKED IN RESPECT OF THE INVESTMENTS OF THE ASSESSEE. 4. MM FINANCES PVT. LTD. VS. DCIT (107 TTJ CHENNAI 200) WHEREIN HELD THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE STATEMENT MADE BY THE THIRD PARTY AND THE UNSIGNED AGREEMENT AND DUMB LOOSE SLIPS SEIZED FROM HIS RESIDENCE, IN THE ABSENCE OF ANY CORROBORATIVE MATE RIAL TO SHOW PAYMENT OF ANY UNDISCLOSED CONSIDERATION BY THE ASSESSEE TOWARDS PURCHASE OF LAND. 5. BANSAL STRIPS (P) LTD. VS. ACIT (100 TTJ 665) (DEL. ) WHEREIN HELD THAT ADDITION U/S 68 BASED ON LOOSE PAPERS FOUND DURING SEARCH THOUGH AUTHENTICITY WHER E OF BEING DOUBTFUL HELD THAT IN THE ABSENCE OF ADEQU ATE MATERIAL AS TO THE NATURE AND OWNER SHIP OF TRANSACTION, THE ALLEGED UNDISCLOSED INCOME COULD N OT BE ADDED U/S 68 TO THE INCOME TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, MERELY BY ARITHMETICALLY TOTALLING THE VARIOUS FIGURES JOTTED DOWN ON LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH. 6. HONBLE SUPREME COURT IN THE CASE OF CIT VS. P.V. KALYANASUNDARAM (294 ITR 49) (SC) WHEREIN OBSERVED THAT RELIANCE ON THE CONTRADICTORY STATEME NT MADE BY THE VENDOR OR LOOSE SHEETS CANNOT BE PLACED AND THEREBY CONFIRMED THE JUDGEMENT OF MADRAS HIGH COURT WHEREIN HELD THAT THE BURDEN OF PROVING ACTUA L CONSIDERATION IN SUCH A TRANSACTION WAS THAT OF THE REVENUE. THE ASSESSING OFFICER DID NOT CONDUCT ANY INDEPENDENT ENQUIRY RELATING TO THE VALUE OF THE PROPERTY PURCHASED. THE DELETION OF ADDITION WAS JUSTIFIED. 34. AS SEEN FROM THE IMPUGNED DOCUMENT, IT IS JUST A S IGNED BY A SINGLE PARTY WHICH WAS FOUND IN THE COURSE OF SEA RCH ACTION AT THE ASSESSEE PREMISES. THE IMPUGNED DOCUMENT IS ONL Y CIRCUMSTANTIAL EVIDENCE WHICH REQUIRED TO BE CORROB ORATED WITH OTHER EVIDENCE. THOUGH THERE IS NO NECESSITY IN LA W THAT THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 30 ASSESSING OFFICER IS SUPPOSED TO DISCHARGE TAX LIAB ILITY BY DIRECT EVIDENCE ONLY, THERE SHOULD BE ENOUGH EVIDENCE TO S UPPORT THE ADDITION. THE ADDITION IS TO BE MADE BY THE ASSESS ING OFFICER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. IT IS V ERY IMPORTANT TO HAVE ENOUGH EVIDENCE OR CONCLUSIVE EVIDENCE TO SUST AIN THE ADDITION. WHEN THE ASSESSEE GIVES AN EVASIVE REPLY THE ASSESSING OFFICER HAS TO MAKE CERTAIN ESTIMATION OF THE INCOM E. BUT THE ASSUMPTION SHOULD BE REASONABLE CORRESPONDING TO TH E MATERIAL AVAILABLE ON RECORD. IT SHOULD NOT BE BASED ON CON JECTURES AND SURMISES. IN THE PRESENT CASE, THE IMPUGNED DOCUME NT IS NOT DULY SIGNED DOCUMENT. THE CIRCUMSTANCES SURROUNDIN G THE CASE WERE ALSO NOT STRONG ENOUGH TO JUSTIFY THE REJECTIO N OF ASSESSEE'S PLEA AS OUTRAGEOUS. ON CONSIDERATION OF THE ASSESSE E'S ARGUMENTS, WE ARE NOT IN A POSITION TO REJECT THE SAME ON THE REASON THAT THE SALE AGREEMENT DATED 6.2.98 IS ONLY A XEROX COPY SI GNED BY THE ASSESSEE ALONE AND NOT BY THE VENDEES. IN OUR OPIN ION, AS HELD BY THE SUPREME COURT IN THE CASE OF MOOSA MADHA & AZA M S. MADHA VS. CIT (89 ITR 65) THAT PHOTOSTAT COPIES HAVE VERY LITTLE EVIDENTIARY VALUE. BEING SO, XEROX COPIES OF ANY D OCUMENT CANNOT BE ITSELF CONSIDERED AS EVIDENCE FOR THE PURPOSE OF MAKING ADDITION IN THIS ASSESSMENT. FURTHER THE CONSIDERATION AT RS. 12.25 LAKHS PER ACRE CANNOT BE SAID TO HAVE BEEN PAID AS THE TR ANSFER HAS NOT MATERIALISED AND LITIGATION IS GOING ON. FURTHER T HE PAYMENT OF RS. 1 CRORE TO SMT. SAVITRAMMA IS ALSO NOT SUPPORTED BY PROPER EVIDENCE TO BRING THE SAME INTO TAXATION IN THE BLO CK ASSESSMENT. IN OUR OPINION, THE UNSIGNED DOCUMENT IS A DUMB DOC UMENT AND CANNOT BE RELIED UPON FOR MAKING ADDITION IN THIS C ASE. THE DEPARTMENT CANNOT DRAW INFERENCE ON THE BASIS OF SU SPICION CONJECTURE AND SURMISE. SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF MATERIAL IN SUPPORT OF THE FINDINGS OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHOULD ACT IN A JUDICIAL MANN ER, PROCEED WITH JUDICIAL SPIRIT AND SHOULD COME TO A JUDICIAL CONCL USION. THE IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 31 ASSESSING OFFICER IS REQUIRED TO ACT FAIRLY AS A RE ASONABLE PERSON AND NOT ARBITRARY AND CAPRICIOUSLY. ASSESSMENT M ADE SHOULD HAVE ADEQUATE MATERIAL AND IT SHOULD STAND ON ITS O WN LEGS. THE UNSIGNED DOCUMENT OR SIGNED BY ONLY ONE PARTY FOUND DURING THE COURSE OF SEARCH IS REQUIRED TO BE SUPPORTED BY OTH ER CORROBORATED EVIDENCE. FURTHER, THE STATEMENTS REQUIRED TO BE R ECORDED FROM ALL THE PARTIES CONCERNED MENTIONED IN THE DOCUMENTS FO UND IN THE COURSE OF SEARCH AND THOSE STATEMENTS SHOULD BE CON FRONTED TO THE ASSESSEE AND THE ASSESSEE HAS TO BE GIVEN AN OPPORT UNITY FOR CROSS EXAMINATION. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, IT IS NO T POSSIBLE TO SUSTAIN THE ADDITION. ACCORDINGLY, THE SAME IS DEL ETED. 35. GROUND NOS. 6 AND 7 DO NOT REQUIRE ADJUDICATION AS WE HAVE DECIDED THE CONSIDERATION AS DECLARED BY THE ASSESS EE HAS TO BE ACCEPTED. 36. THE NEXT ISSUE IS LEVY OF INTEREST U/S. 158BFA. LE VYING OF INTEREST U/S. 158BFA IS CONSEQUENTIAL AND MANDATORY AND NO ADJUDICATION IS REQUIRED ON THIS ISSUE. 37. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY, 2012. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 4 TH JULY, 2012 COPY FORWARDED TO: 1. M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, C/O . SHRI S RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S RESIDENC Y, ROAD NO. 9, HIMAYATHNAGAR, HYDERABAD. IT(SS)A NO. 22/HYD/2011 M/S. BHAGAWAN SRI BALASAIBABA CENTRAL TRUST, KURNOOL ====================== 32 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-6, HYDERABAD. 3. THE CIT(A)-I, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO