GOVIND R. NAIDU, MUMBAI V. DCIT CIR 23(2), MUMBAI

ITSSA 38/MUM/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0824 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 25-02-2015
• Assessment Year: misc
• Appeal Filed On: 21-06-2010
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SHRIVASTAVA
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Document seized; Block assessment; Documents seized
• Section: 143(3); 133A; 37; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ( ) ./ IT (SS) A NO S . 37 / MUM/20 1 0 ( BLOCK PERIOD 1.4.1996 TO 26 - 3 - 2003 ) DCIT,CIRCLE - 23(2), MUMBAI VS. GOVIND RAJULUPAPA NAIDU, C - 10, SHANTI BHAWAN, DR.R.P.ROAD, MULUND (W), MUMBAI - 400080 ./ ./ PAN/GIR NO. : A AAPN 5829 L ( / APPELLANT ) .. ( / RESPONDENT ) AND ( ) ./ IT(SS)A NO.38/MUM/201 0 ( BLOCK PERIOD 1.4.1996 TO 26 - 3 - 2003 ) GOVIND RAJULUPAPA NAIDU, C - 10, SHANTI BHAWAN, DR.R.P.ROAD, MULUND (W), MUMBAI - 400080 VS. DCIT,CIRCLE - 23(2 ), MUMBAI ./ ./ PAN/GIR NO. : A AAPN 5829 L ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI AJIT KUMAR SHRIVASTAVA /ASSESSEE BY : SHRI SUBODH RATNAPARKHI / DATE OF HEARING : 0 6 /0 5 / 2015 / DATE OF PRONOUNCEMENT 26/06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT(A) - 33 , MUMBAI , DATED 31 - 3 - 2 010 FOR THE BLOCK PERIOD FROM 1.4.1996 TO 26.3.2003, IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.158BD OF THE I.T.ACT . IT (SS) A NO. 37&38 /1 0 2 2 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD, WE FOUND THAT AN A CTIO N U/S 132 OF THE INCOME TAX ACT, 1961 WAS UNDERTAKEN BY THE DEPARTMENT ON 26.3.2003 IN THE CASE OF ONE SHRI A C CHENNA REDDY. ON INQUIRY THAT TOOK PLACE DURING THE COURSE OF THIS ACTION, SHRI A C CHENNA REDDY ADMITTED A TR ANSACTION AMOUNTING TO RS.1,18, 9 8, 000/ - WITH THE ASSESSEE SHRI GOVIND R NAIDU STATING THAT THIS AMOUNT REPRESENTED HIS UNDISCLOSED INVESTMENT IN FLATS PURCHASED FROM SHRI G R NAIDU. SU BSEQUENTLY, PROCEEDINGS U/S 158BD WAS T AKEN UP IN THE CASE OF THE ASSESSEE SHRI G R NAIDU IN RESPECT OF TH E BLOCK PERIOD 1.4.96 TO 26.3.2003 BY ISSUE OF NOTICE ON 8.2.2008. THE ASSESSEE FILED RETURN OF INCOME IN RESPECT OF THE BLOCK PERIOD DECLARING INCOME AT NIL. VIDE ORDER DATED 29.12.2008, THE RETURN OF INCOME FILED WAS ASSESSED U/S 143(3) RWS 158B D OF THE I. TACT 1961 AT A TOTAL INCOME OF RS.1, 74,36,3001 - . THE ASSESSING OFFICER AFTER EXAMINING THE SEIZED DOCUMENTS, THE SUBMISSIONS OF THE ASSESSEE , THE STATEMENTS GIVEN BY THE ASSESSEE AND SHRI A C CHENNA REDDY, HAS MADE THE FOLLOWING ADDITIONS: UNDISCLOSED IN COME OFFERED IN THE BLOCK RETURN BY THE ASSESSEE: NIL UNDISCLOSED INCOME ESTIMATED AS PER DISCUSSION ON ACCOUNT OF ON - MONEY RECEIVED IN CASH TOWARDS SALE OF FLAT 72,00,000 UNDISCLOSED INCOME ESTIMATED AS PER DISCUSSION ON ACCOUNT OF ON - MONEY RECEIVED IN CASH TOWARDS SALES OF FLAT 68,00,000 UNDISCLOSED INCOME IN RESPECT OF SEIZED PAPERS 34,36,300 TOTAL UNDISCLOSED INCOME 1,74,36,300 3 . BY THE IMPUGNED ORDER THE CIT(A) UPHELD THE INITIATION OF PROCEEDINGS U/S.158BD. THE CIT(A ) ALSO CONFIRMED THE ADDITION OF RS. 72 IT (SS) A NO. 37&38 /1 0 3 LAKHS ON ACCOUNT OF UNDISCLOSED INCOME IN THE FORM OF ON MONEY RECEI VED FROM SHRI A.C.CHENNA REDDY FOR SALE OF PREMISES AT MANISHA TOWERS, MULUND (E), MUMBAI. HOWEVER, THE CIT(A) HAS DELETED THE ADDITION OF RS. 34,36,3 00/ - IN RESPECT OF UNDISCLOSED INCOME FOUND IN THE SEIZED PAPERS. THE CIT(A) ALSO DELETED THE ADDITION OF RS.15 LAKHS OUT OF DISCLOSURE OF INCOME MADE DURING THE SURVEY. AGAINST THIS ORDER OF CIT(A) BOTH THE REVENUE AND ASSESSEE ARE IN APPEAL BEFORE US WIT H THE FOLLOWING GROUNDS: - THE REVENUE IN ITS APPEAL HAS TAKEN THE FOLLOWING GROUNDS : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF - RS. 34,36,300/ - 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE ID. CIT ( A) ERRED IN ALLOWING BENEFIT OF RS. 15.00 LAKHS OUT OF DISCLOSURE OF INCOME MADE DURING THE SURVEY WHILE AGREEING WITH THE AO AS PER PARA 9.5 OF THE APPELLATE ORDER, THAT NO BENEFIT OF INCOME DISCLOSED DURING THE COURSE OF SU RVEY SHOULD BE GIVEN. THE ASSESSEE IN ITS APPEAL HAS TAKEN THE FOLLOWING GROUNDS : - 1. THE HON. CIT (APPEALS) ERRED IN NOT APPRECIATING THAT THE 'SATISFACTION' AS REQUIRED TO BE RECORDED AS TO THE EXISTENCE OF UNDISCLOSED INCOME OF THE APPELLANT PRIOR TO ISSUE OF NOTICE U/S 158BD BEING ABSENT, THE NOTICE U/S 158BD ISSUED ON 29.03.07 WAS BAD - IN - LAW AND THE ASSESSMENT FLOWING THEREFROM INVALID AND VOID - AB-INITIO. 2. THE HON. CIT (APPEALS) ERRED IN NOT APPRECIATING THAT THE DOCUMENTS ON THE BASIS OF WHIC H ADDITION HAS BEEN MADE IN THE HANDS OF THE APPELLANT WERE NOT WITHIN THE KNOWLEDGE OF THE ID A.O. PRIOR TO ISSUE OF NOTICE U/S 158BD ON 29.03.07 AND ACCORDINGLY THE ASSUMPTION OF JURISDICTION U/S 158BD BY THE ID A.O. WAS NOT VALID. 3. THE HON. CIT (APP EALS) ERRED IN NOT APPRECIATING THAT THE ASSUMPTION OF JURISDICTION U/S 158BD BY THE ID A.O., BEING NOT VALID THE BLOCK ASST. ORDER WAS BAD- IN - LAW AND WAS REQUIRED TO BE QUASHED. 4. THE HON. CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE BLOC K ASSESSMENT ORDER WAS INCORRECTLY FRAMED U/S 143(3) R.W.S. IT (SS) A NO. 37&38 /1 0 4 158BD OF THE LT. ACT 1961 WHEN IN FACT THE SAME SHOULD HAVE BEEN FRAMED U/S 158BC(C) OF THE LT. ACT 1961. 5. THE HON. CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 72,00,000/- (AS REDUCE D BY A SUM OF RS. 15,00,000/ - SEPARATELY) AS 'UNDISCLOSED INCOME' FOR THE BLOCK PERIOD ON ACCOUNT OF ALLEGED ON - MONEY RECEIVED FROM SHRI. A.C. CHENNA REDDY FOR SALE OF PREMISES AT MANISHA TOWERS, MULUND (E) TO THE REDDY/GAIKWAD FAMILY BY RELYING ON THE PAP ERS SEIZED FROM THE PREMISES OF SHRI. A.C. CHENNA REDDY AS WELL AS THE STATEMENT OF SHRI. A.C. CHENNA REDDY WHICH WAS NOT TESTED BY CROSS EXAMINATION. 6. THE HON. CIT (APPEALS) FAILED TO APPRECIATE THAT THE APPELLANT HAD EXECUTED CERTAIN CIVIL CONSTRUCTIO N AND INTERIOR WORK SUPERVISION AT THE INSTANCE OF SHRI. A.C CHENNA REDDY AT THE MANISHA TOWER PREMISES AND THAT THE AMOUNTS RECEIVED OVER AND ABOVE THE AGREEMENT PRICE FOR SALE - OF PREMISES DID NOT CONSTITUTE ON MONEY RECEIPT BUT WERE AMOUNTS RECEIVED FOR MEETING EXPENSES ON BEHALF OF SHRI. A.C. CHENNA REDDY. 7. THE HON. CIT (APPEALS) FAILED TO APPRECIATE THAT IF ANY AMOUNT IS CONSIDERED AS 'ON MONEY RECEIPT' THEN THE ENTIRE ON MONEY RECEIPT WOULD NOT BE THE INCOME OF THE APPELLANT BUT ONLY A REASONABLE P ERCENTAGE THEREOF CAN BE CONSIDERED AS INCOME LIABLE TO TAX. 8. THE HON. CIT (APPEALS) ERRED IN CONSIDERING THE INCOME FROM SALE OF PREMISES AT MANISHA TOWERS BUILDING, MULUND, IN THE BLOCK ASSESSMENT, IGNORING THE FACT THAT THE APPELLANT HAD ALREADY OFF ERED SUCH INCOME TO TAX IN THE ASSESSMENT FOR A.Y. 03 - 04 PURSUANT TO A SURVEY ACTION U/S 133A CARRIED OUT ON THE APPELLANT ON 27.12.02 AND ACCORDINGLY THE CONCERNED INCOME BEING 'DISCLOSED INCOME' WAS OUTSIDE THE PREVIEW OF 'UNDISCLOSED INCOME' LIABLE TO T AX IN A BLOCK PERIOD ASSESSMENT UNDER CHAPTER XIVB OF THE IT. ACT. 9. THE HON. CIT (APPEALS) ERRED IN NOT DECIDING THE GROUND IN RESPECT OF LEVY OF SURCHARGE ON TAX DETERMINED FOR THE BLOCK PERIOD. 4. AS PER LD. AR THE A O ERRED IN ISSUING NOTICE U/S 1 58 BD ON 29.03.07 WITHOUT THERE BEING ANY 'SATISFACTION' RECORDED AS TO THE EXISTENCE OF ANY UNDISCLOSED INCOME BELONGING TO THE ASSESSEE PRIOR TO ISSUE OF NOTICE AS PROVIDED U/S 158 BD . THE PRE - REQUISITE CONDITION FOR ISSUE OF NOTICE AS PROVIDED U/S 158 BD N OT BEING IN EXISTENCE, THE NOTICE ISSUED ON 29.03.07 IS BAD IN LAW AND THE ASSESSMENT FLOWING THEREFROM BE HELD TO BE INVALID A ND VOID - AB - INITIO. RELIANCE WAS PLACED ON THE DECISION OF HONBLE IT (SS) A NO. 37&38 /1 0 5 SUPREME COURT IN THE CASE OF CALCUTTA KNITWEARS, 267 CTR 105(SC ), DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF JYOTI SALT INDUSTRIES , 45 TAXMANN.COM 146, DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RADEHY SHAYM BANSAL & ORS., 337 ITR 217. LD. AR DREW OUR ATTENTION TO THE OBSERVATION MADE BY THE CIT(A ) AT PARA 4.7, WHEREIN WITH REGARD TO RECORDING OF SATISFACTION THE CIT(A) HAS OBSERVED AS UNDER : - 4.7 I FIND IN THE SAID LETTER DATED 13.2.2007 THE DCIT HAS CLEARLY MENTIONED AS UNDER: 'ON PERUSAL OF THE SEIZED MATERIAL, IT WAS FOUND THAT THE FOLLOWIN G ASSESSES HAVE RECEIVED MONEY FROM THE SEARCHED PARTIES WHICH COULD REPRESENT CONCEALED INCOME. A. G R NAIDU B. SHRI D S GAIKWAD. YOU ARE ALSO REQUESTED TO GO THROUGH THE APPRAISAL REPORT AND OTHER DOCUMENTS SEIZED WHICH ARE AVAILABLE IN THIS OFFICE BEFORE FINALIZING THE ASSESSMENT'. 4.8 THE ABOVE REPRODUCED LETTER IS CLEARLY INDICATIVE OF THE FACT THAT THE DC IT THANE WAS SATISFIED THAT THE INCRIMINATING DOCUMENTS PERTAINED TO THE APPE LL AN TS UNDISCLOSED INCOME, HE HAD BY WAY OF A LETTER RECORDED T HE SAME AND THEREBY INFORMED THE ASSESSING OFFICER. HE HAD ALSO HANDED OVER THE SAID DOCUMENTS TO THE ASSESSING OFFICER OF THE APPELLANT. IN FACT, HE HAD REQUESTED THE ASSESSING OFFICER TO GO THROUGH THE OTHER DOCUMENTS SEIZED AND ALSO THE APPRAISAL REPORT IN THE CASE OF SHIR A C CHENNA REDDY SO THAT THE ASSESSMENT IS FRAMED IN A PROPER MANNER. I FIND THAT THE APPELLANT HAS RAISED THESE GROUNDS OF APPEAL SIMPLY TO DIGRESS FROM THE MAIN ISSUE I.E. HIS UNDISCLOSED INCOME. THE APPELLANT HAS CHOSEN AND PICKED U P PHRASES TO SUIT HIS SAY AND HAS RESORTED TO INTERPRETING FACTS ACCORDINGLY. HOWEVER, FACTS CLEARLY SHOW THAT I) SATISFACTION OF THE ASSESSING OFFICER OF THE PERSON SEARCHED WAS VERY MUCH THERE II) MATERIAL RELATING TO THE APPELLANT REGARDING HIS UNDI SCLOSED INCOME FOUND DURING THE SEARCH HAD BEEN FORWARDED TO THE ASSESSING OFFICER OF THE APPELLANT BY THE ASSESSING OFFICER OF THE PERSON SEARCHED. IN FACT THE ASSESSING OFFICER HAD BEEN REQUESTED TO EXAMINE THE OTHER DOCUMENTS ALSO TO ENSURE CORRECT ASSE SSMENT. IT (SS) A NO. 37&38 /1 0 6 4.9 THEREFORE, PROCEEDINGS U/S 158 BD RWS 158 BC AGAINST THE APPELLANT WAS WITHIN JURISDICTION AND PERFECTLY VALID. 5. ON MERIT OF THE ADDITION, THE CONTENTION OF LD. AR WAS THAT THE AMOUNT ALLEGED TO BE RECEIVED BY THE ASSESSEE WAS ON ACCOUNT OF EXTRA WORK IN THE BUILDING AND THE ASSESSEE HAS INCURRED NECESSARY EXPENDITURE FOR COMPLETING EXTRA WORK UNDERTAKEN BY THE ASSESSEE. AS PER LD. AR ENTIRE AMOUNT CANNOT BE ADDED AS UNACCOUNTED INCOME AND ONLY NET INCOME OUT OF THE RECEIPT SHOULD BE ADDED . BY INVITING OUR ATTENTION TO DOCUMENT PLACED AT PAGE 27 OF THE PAPER BOOK, LD. AR CONTENDED THAT THERE IS NO SIGNATURE OF SHRI A.C.CHENNA REDDY, NOR ANY OPPORTUNITY TO CROSS - EXAMINE WAS GIVEN TO ASSESSEE. 6. ON THE OTHER HAND, CONTENTION OF LD. DR WAS TH AT RECORDING OF SATISFACTION TO THE EFFECT THAT THERE IS UNDISCLOSED INCOME OF ASSESSEE IS SUFFICIENT. HE PLACED ON RECORD COPY OF THE SATISFACTION RECORDED BY THE AO WHILE ISSUING NOTICE U/S.158BD. HE FURTHER SUBMITTED THAT THE STATEMENT OF SEARCHED PERSO N WAS COUNTERSIGNED BY THE ASSESSEE, THEREFORE, THERE IS NO NEED OF CROSS - EXAMINATION. LD. DR FURTHER SUBMITTED THAT T HE ASSESSING OFFICER HAS RIGHTLY ISSUED THE NOTICE U/S 158 BD AS IN THE CASE OF THE ASSESSEE THIS ASSESSMENT WAS A CONSEQUENCE OF THE SEARC H ACTION CARRIED OUT ON SHRI A C CHENNA REDDY ON 26.3.03 WHEREIN INCRIMINATING DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND. THE ACTION U/S 132 NOT BEING ON THE ASSESSEE, THE CASE OF THE ASSESSEE WAS TO BE COVERED U/S.158BD ONLY. THE AO WAS TO ISSUE NOTIC E U/S.158BD AND WAS THEN REQUIRED TO PROCEED IN THE CASE AS PER PROVISIONS OF SECTION 158BC. IT (SS) A NO. 37&38 /1 0 7 THE FINANCE ACT, 2002 HAS BY AMENDING THE SECTION 158BD W.E.F.1.6.2002 MADE THIS VERY CLEAR. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE SATISFACTI ON RECORDED BY THE AO TO SEARCHED PERSON WAS SUFFICIENT TO INITIATE PROCEEDINGS U/S.158BD. WE FOUND THAT THE DCIT, THANE WAS SATISFIED WITH THE INCRIMINATING DOCUMENT PERTAINING TO THE ASSESSEES UNDISCLOSED INCOME, ACCORDINGLY, HE INFORMED THE AO OF THE A SSESSEE AND ALSO HANDED OVER THE SAID DOCUMENTS TO THE ASSESSEES AO. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF LD. AR THAT THERE WAS NO SATISFACTION AS REQUIRED U/S.158BD OF THE ACT. 8 . WITH REGARD TO MERIT OF ADDITION, WE FOUND THAT DEPA RTMENT HAS CONDUCTED ACTION U/S.132 ON 26 - 3 - 2003 AT THE PREMISES OF SHRI A.C.CHENNA REDDY DURING WHICH CERTAIN LOOSE PAPERS/DOCUMENTS WERE SEIZED IN WHICH THERE WAS RECORDINGS OF THE DEALINGS OF THE ASSESSEE WITH THE SAID PARTY. HOWEVER, NO UNDISCLOSED INC OME HAS BEEN ADMITTED BY THE ASSESSEE IN THE BLOCK RETURN FILED . I N ORDER TO ASSESS THE UNDISCLOSED INCOME FOR THE PURPOSE OF COMPLETION OF BLOCK ASSESSMENT , WHILE FRAMING THE ASSESSMENT ORDER, THE AO NOTICED THAT AS PER RECORDING IN LOSE PAPERS , PAGES 33 & 34 IN BUNDLE NO. 1 , WHICH HAVE BEEN WRITTEN IN THE HAND WRITTEN OF G R NAIDU IN RESPECT OF DEAL FOR FLAT SOLD OF 601 IN MANISHA TOWERS & DUPLEX FLAT TO GAIKWAD FAMILY IN THE SAID BUILDING. IT IS CONCLUDED THAT THE DUPLEX FLAT IN MANISHA TOWERS HAS BEEN P URCHASED BY THE SAID SHRI CHENNA REDDY ON BEHALF OF SHRI D S GAIKWAD AT R S .61,92,000/ - . A SUM OF RS.61,92,000/ - WAS ADDED IN HIS HANDS AS HIS IT (SS) A NO. 37&38 /1 0 8 UNACCOUNTED INVESTMENT AS THE SAID AMOUNT HAS BEEN PAID TO SHRI G R NAIDU. FURTHER AS PER THE NOTINGS IN PAGE 33 ( 34) IT WAS HELD BY THE ASSESSING OFFICER IN THE CASE OF SHRI A C CHENNA REDDY THAT THE SAID ASSESSEE HAS PAID RS.57,06,000/ - TOWARDS INVESTMENT AND PURCHASE OF FLAT AT 103 & 601. SUCH INVESTMENT BY SHRI A C. CHENNA REDDY HAS BEEN TAXED IN HIS HANDS AS HIS UNDISCLOSED INCOME. SINCE THE SAID AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE, THIS AMOUNT IS ALSO LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE. THE SAID ADDITION IS BASED ON THE BASIS OF STATEMENT OF SHRI A C CHENNA REDDY RECORDED ON 10 - 07 - 2003, WHEREIN, HE HAS STATED THAT HE HAD PAID IN CASH ON BEHALF OF SHRI D S GAIKWAD AND HIMSELF. THE RECIPIENT BEING THE ASSESSEE SHRI G R NAIDU, THE SAID AMOUNT IS ALSO TO BE TAXED IN THE HANDS OF THE ASSESSEE. THE RELEVANT PORTION OF THE STATEMENT IS REPRODUCED AS UND ER : - Q.NO.6 I AM SHOWING YOU PAGE NO.5 OF BUNDLE NO. 1, WHICH INDICATE PAYMENT OF RS.2,40,000/ - . IN RESPECT OF RAVINDRA DILIP GAIKWAD, MRS. ANAMIKA GAIKWAD AND MISS SHEETAL GAIKWAD. HOW THESE ENTRIES APPEARING IN YOUR NOTE BOOK? AND : SHRI RAVINDRA GAI KWAD/E MRS.' ANAMIKA GAIKWAD AND MISS. SHEETAL DILIP GAIKWAD HAVE PURCHASE TWO FLATS AT MANISHA TOWER, 60FT ROAD, TATA COLONY, MULUND FROM SHRI G R NAIDU, PROP. MANISHA DEVELOPERS. OUT OF THE TOTAL COST OF RS.25,40,000/ - THEY HAVE PAID RS.1 0, 00, 0001 - B Y CHEQUE AND RS.1S, 40, 0001 - BY CASH. Q.NO.7 I AM SHOWING YOU PAGE NO.1 OF BUNDLE NO.1 WHEREIN PAYMENT OF RS.68 LAKHS IN CASH IS RECORDED. TO WHOM THIS CASH WAS GIVEN AND WHAT WAS THE PURPOSE OF GIVING THE ABOVE CASH? ANS: THE ABOVE CASH PAYMENT OF RS.68 LAKHS IS MADE TO SHRI NAIDU PROPRIETOR OF MANISHA DEVELOPERS OF MULUND FOR PURCHASE OF FLAT NOS. 1 03 IN MY NAME FLAT NO. 1 04 IN THE NAME OF SHRI KONDA REDDY . AND 1001 AND 1002 BELONGING TO SHRI RAVINDRA D GAIKWAD SON OF SHRI D S GAIKWAD. I DO NOT KNOW THE AGREEMENT VALUE OF THESE FLATS. OUT OF THIS AMOUNT OF RS. 68 LAKHS, RS.14 LAKHS WAS GIVEN TO ME BY SHRI RAUINDRA D GAIKWAD FOR PURCHASE OF FLATS SITUATED ON 10TH AND 11TH FLOORS.' IT (SS) A NO. 37&38 /1 0 9 8) IN VIEW OF THE ABOVE, IN RESPECT OF THE ABOVE TRANSACTION RS. 1 .18 CRORES WAS ADDED IN THE HANDS OF SHRI A C CHENNA REDDY AND THE CORRESPONDING AMOUNT WAS ADDED IN THE HANDS OF SHRI G R NAIDU. FURTHER, IN THE POST SEARCH OPERATION IN THE CASE OF SHRI A C CHENNA REDDY, SHRI G R NAIDU HAS ALSO BEEN SUMMONED AND EXAMI NED ON OATH AND HE HAS ACCEPTED THE FACT THAT PAGE NO.34 & BACKSIDE IS IN HIS HANDWRITING. SHRI A C CHENNA REDDY HAS ALSO ACCEPTED THAT HE HAD MADE THE PAYMENTS ON THIS PAGE. IN VIEW OF THE ABOVE AMOUNT OF RS.1, 18,98,000/ - HAS BEEN ADDED IN THE HANDS OF SH RI A C CHENNA REDDY AND IN VIEW OF ACCEPTANCE BY SHRI G R NAIDU THAT THE SAID RECORDING IN THE LOOSE PAPERS ARE IN HIS HAND WRITING, WHICH HAS ALSO BEEN AGAIN RE-ADMITTED DURING HIS ASSESSMENT PROCEEDINGS, THE SAID AMOUNT IS REQUIRED TO BE TAXED IN THE HAN DS OF THE ASSESSEE. ACCORDINGLY, THERE IS NO INFIRMITY IN THE ORDER OF LOWER AUTHORITIES. FURTHER, THERE IS NOTHING ON RECORD TO SUGGEST THAT AMOUNT WAS RECEIVED BY THE ASSESSEE FOR DOING ANY EXTRA WORK NOR THERE IS ANY EVIDENCE TO SUGGEST THAT ASSESSEE HA S INCURRED ANY EXPENDITURE ON SUCH EXTRA WORK. ACCORDINGLY, WE UPHOLD THE ACTION OF LOWER AUTHORITIES FOR MAKING THE IMPUGNED ADDITION. 9 . REGARDING THE ADDITION OF RS.34,36,300 / - THE ASSESSING OFFICER IN HIS ORDER HAS STATED AS UNDER: 'IT IS ALSO NOTICED THAT THERE ARE TRANSACTIONS RECORDED IN THE LOOSE PAPERS IN BUNDLE NO. 36 PAGE NO. S 30 - 35 & 46, WHERE TRANSACTIONS RECORDED RELATED TO ASSESSEE SHIR GOVIND NAIDU. IN THE APPRAISAL IT WAS STATED THAT IN PAGE NO.31 THE AMOUNTS RELATE TO 2.8.98 TO 8.4.2000 AMOUNTING TO RS.45, 36, 300. FURTHER IT IS STATED THEREIN THAT IN PAGE NO.30 ALSO MOST OF THE TRANSACTIONS RECORDED IN PAGE NO.31 HAS BEEN REPEATED. FURTHER INTERPRETATION HAS BEEN GIVEN IN RESPECT OF PAGE NO.30 THAT FROM RS.21,06,300 A SUM OF RS.18,500 IS REDUCED WHICH APPEARS TO BE ON ACCOUNT OF FLAT NO. 403 AT IT (SS) A NO. 37&38 /1 0 10 AMBIKA PLAZA OF NOTINGS IN PAGE NO.33 (BACK SIDE) OF BUNDLE NO .. THERE IS NO ADDITION MADE IN RESPECT OF NOTING IN THESE PAGES IN THE HANDS OF SHIR A C CHENNA REDDY AND HENCE NO ADDITION IS MADE I N RESPECT OF RECORDING IN THIS PAGE AFTER TAKING INTO ACCOUNT ALL THE FACT, THOUGH THERE IS AN ADDITION IN THE HANDS OF SHRI A C CHENNA REDDY ON ACCOUNT OF NOTING AS PER APPRAISAL REPORT IT IS SEEN THAT RS. 56, 36, 300 ON ACCOUNT OF RECORDING IN PAGE NO.31 OF RS.45, 36, 30010 (FOR THE PERIOD OF 2.8.98 TO 8.4.2000 (G R NAIDU) AND PAGE NO. 35 RS. 11 TEES (MANISHA DEVELOPERS). IN THE EXPLANATION OFFERED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ILL RESPECT OF RECORDINGS IN PAGE NO.30 AND 31 OF RS.45,36 ,300/ - TWO ENTRIES (RS.5,57,000 AND RS.5,43,000 ON 8.4.2000 ARE THE CHEQUE AMOUNTS RECEIVED BY THE ASSESSEE FROM A C CHENNA REDDY FROM BANK. SINCE PART OF THESE ENTRIES ARE ADMITTED BY THE ASSESSEE IT CANNOT BE SAID OR DENIED THAT OTHER ENTRIES ARE NOT REL ATING TO HIM. HENCE, OTHER THAN THE PAYMENTS RECEIVED BY CHEQUE OFFERED BY THE ASSESSEE IN THE BOOKS BALANCE AMOUNT OF RS.34, 36, 300 (RS. 45, 36, 300 - RS.11,00,000) IS TAXED AS ASSESSEE'S UNDISCLOSED INCOME, AS THE SAID AMOUNTS ARE ALSO NOT EXPLAINED BY SHRI A C CHENNA REDDY AND ONLY PART OF TRANSACTION IS RECORDED BY ASSESSEE IN HIS ACCOUNT. 10 . BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS : - 7.2 I FIND THAT REGARDING THIS ISSUE, THE ADDITION MADE CANNOT SUSTAIN. IN THE FIRST INSTANCE, THE SAID PAPER WAS SEIZED FROM THE PREMISES OF SHRI A C CHENNA REDDY AND NOT THE APPELLANT. THE ASSESSING OFFICER, I FIND, HAS BROUGHT NOTHING ON RECORD TO SHOW THAT THE PAPER RELATED TO THE APPELLANT. I FIND THAT IN THE SAI D DOCUMENT THERE ARE TWO ENTRIES FOR RS.11, 10 ,000 RELATED TO THE APPELLANT BEING CHEQUES OF THAT AMOUNT RECEIVED WHICH HAS BEEN ACKNOWLEDGED BY THE APPELLANT ALSO. REGARDING THE OTHER ENTRIES IT IS SEEN THAT THE CARRY THE LEGEND AS UNDER: DATE NAME AM OUNT VARIOUS DATES ACCR/ACNR VARIOUS AMOUNTS THE ASSESSING OFFICER HAS CONSIDERED ALL THE ENTRIES MADE AS RELATED TO THE APPELLANT ON THE BASIS OF THE ENTRY RELATED TO RS.11 ,00,000 BY THIS LOGIC. 7.3 IF THE ENTRY RELATED TO THE APPELLANT IN WHICH THE APPELLANT FEATURES RELATES TO MONEY RECEIVED BY HIM BY LOGIC .IT IS TO BE CONCLUDED THAT THE OTHER ENTRIES REGARDING ACCR / ACNR RELATE TO MONIES BEING RECEIVED BY THEM. UNLESS PROVED THAT ALL THE ENTRIES IN THE SAID PAPER PERTAIN TO THE APPELLANT THEY CAN NOT BE CONSIDERED IN HIS HANDS ON T HE BASIS OF PRESUMPTION AND SURMISES. AS THE IT (SS) A NO. 37&38 /1 0 11 ASSESSING OFFICER HAS BROUGHT (1) NOTHING ON RECORD TO SHOW THAT T HE SUMS REPRESENT THE APPELLANT 'S UNDISCLOSED INCOME (2) HAS NOT ESTABLISHED WITH EVIDENCE TO WHOM THE PAPER ACTUALLY BELONGED. (3) HAD NOT ESTABLISHED THE REAL NATURE OF THE DOCUMENT. THE ADDITION MADE ON PRESUMPTION CANNOT BE UPHELD AND IS THEREFORE BEING D ELETED. 11. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE PAPER ON THE BASIS OF WHICH ADDITI ON WAS MADE BY THE AO WAS NOT SEIZED FROM THE PREMISES OF THE ASSESSEE. AFTER ANALYZING THE FULL PAPER THE CIT(A) RECORDED A CATEGORICAL FINDING TO THE EFFECT THAT THE ENTRIES IN THE SAID PAPER DO NOT PERTAIN TO THE ASSESSEE AND AO HAS BROUGHT NOTHING ON R ECORD TO SHOW THAT THE SUM REPRESENTS ASSESSEES UNDISCLOSED INCOME, NOR ANY CORROBORATIVE MATERIAL WAS BROUGHT BY THE AO TO SUBSTANTIATE ITS STAND THAT ENTRIES FOUND IN THE DOCUMENT SEIZED FROM THE PREMISES OF A.C.CHENNA REDDY REPRESENTS UNDISCLOSED INCOM E OF THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ACTION OF THE CIT(A) FOR DELETING THE ADDITION OF RS. 34,36,300/ - . 12. THE REVENUE IS ALSO AGGRIEVED BY THE ACTION OF THE CIT(A) FOR ALLOWING BENEFIT OF RS. 15 LAKHS OUT OF THE DISCLOSURE MADE DURING THE SURVEY . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE CIT(A) HAS NOT GIVEN ANY BENEFIT OF DISCLOSURE OFFERED DURING THE SURVEY EXCEPT THAT OF RS. 15 LAKHS WHICH FINDS MENTION IN THE DISCLOSURE LETTER ADDRESSED TO THE ACIT BY THE ASSESSEE DATED 30 - 6 - 2006 . FROM THE RECORD WE FOUND THAT AT THE TIME OF SURVEY ASSESSEE HAS DISCLOSED RS. 15 LAKHS AS A RECEIPT FROM A.C.CHENNA REDDY AGAINST FLAT NO. 601. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR GIVING BENEFIT OF RS. 15 LAKHS AS IT (SS) A NO. 37&38 /1 0 12 ALREADY DISCLOSED DURING THE SURVEY FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. 13 . IN THE RESULT, BOTH APPEAL S OF THE ASSESSEE AND REVENUE ARE DISMISSED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 26/06 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 26/06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//