ACIT, Hyderabad V. Sri Shaik Hamid Patel, Hyderabad

ITSSA 40/HYD/2006

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7512 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-06-2011
• Assessment Year: misc
• Appeal Filed On: 18-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained investment; Search and seizure; Salary income; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER IT (SS)A NO. 24/HYD/2006 BLOCK ASST. PERIOD FROM 1-4-1996 TO 5- 9-2002. SHAIK HAMID PATEL DCIT, CENTAL HYDERABAD. CIRCLE- 6, (H-701/CC-6) HYDERABAD. (APPELLANT) (RESPONDENT) IT (SS)A NO. 25/HYD/2006 BLO CK ASST. PERIOD FROM 1-4-1996 TO 5- 9-2002. SRI G.SIVARAMA KRISHNA, ACIT, CENTAL HYDERABAD. CIRCLE- 6, (PAN:ACAPG 4006 -C HYDERABAD. (APPELLANT) (RESPONDENT) IT (SS)A NO. 40 & 41/HYD/2 006 BLOCK ASST. PERIOD FROM 1997-98 TO 2002-03 UPTO 5-9- 2002. ACIT, CENTRAL CIRCLE-6, HYDERABAD. -DO- VS 1) SHAIK HAMID PATEL, HYDERABAD. (H-701/CC-6) 2) SRI G. SIVARAMA KRISHNA, HYDERABAD. PAN:ACAPG 4006-C (APPELLANT) (RESPONDENT S ) ASSESSEES BY : SRI K.A. SAI PRASAD DEPARTMENT BY SRI TH. LUCAS PETER DATE OF HEARING : 14-03-2012. DATE OF PRONOUNCEMENT : 04 -05-2012. ORDER PER SAKTIJIT DEY, J.M. THESE FOUR APPEALS, TWO BY DIFFERENT ASSESSES AND OTHER TWO BY THE DEPARTMENT ARE DIRECTED AGAINST TH E IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 2 ORDER DATED 16-2-2005 OF THE CIT (A)-I, HYDERABAD PASSED IN ITA NO.0316/CC-6,HYD./CIT(A)-I/04-05 PERTAINING TO THE BLOCK PERIOD 1997-98 TO 2002-03 AND ORDER DATED 23-2-2006 PASSED IN ITA NO.0317/CC- 6,HYD./CIT(A)-I/05-06 PERTAINING TO THE BLOCK PERIO D 1997-98 TO 2002-03. SINCE COMMON ISSUES ARE INVOLVE D IN ALL THESE APPEALS, THESE ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. IT (SS)A NO.24/HYD/06 (ASSESSEES APPEAL) :- 2. THE ASSESSEE HAS FILED THE AFORESAID APPEAL RAIS ING 5 GROUNDS AND GROUNDS NOS. 1 TO 4 ARE BASICALLY ONE GROUND. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE W AS AN ERSTWHILE DIRECTOR OF SRI SAI SUNDER CHIT FUND PRIV ATE LIMITED. A SEARCH AND SEIZURE OPERATION WAS CONDUC TED IN THE PREMISES OF M/S SAI SUNDER CHIT FUND PVT. LTD., ON 5- 9-2002. ON THE DATE OF SEARCH HOWEVER THE ASSESSEE WAS NOT HOLDING THE POST OF DIRECTOR OF SRI SAI SUNDER CHIT FUND PRIVATE LIMITED. IN THE COURSE OF SEARCH OPER ATIONS, CERTAIN DOCUMENTS RELATING TO THE ASSESSEE WERE FOU ND AND SEIZED. ONE OF SUCH DOCUMENTS SEIZED WAS AN AGREEMENT TO SALE DATED 6-2-1998 BETWEEN BHAGAWAN SRI BALA SAI BABA CENTRAL TRUST (BSBSBC TRUST SHORT LY) REPRESENTED BY ITS MANAGING TRUSTEE SRI RAMA RAO ON ONE HAND AND SRI M. THIMMAIAH THE GENERAL POWER OF ATTORNEY HOLDER REPRESENTING THE ASSESSEE AND SRI G . SIVA RAMA KRISHNA ON THE OTHER HAND FOR PURCHASE OF 104 ACRES OF LAND IN SURVEY NOS. 104 TO 109 AT KONDAPUR IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 3 VILLAGE, R. R DISTRICT. AS PER THE TERMS OF THE AG REEMENT TO SALE, THE PURCHASERS I.E. HAMID PATEL AND SIVA RAMA KRISHNA SHALL NEGOTIATE FOR SALE OF 104 ACRES OF LA ND IN SURVEY NOS. 104 TO 109 IN FAVOUR OF SRI BSBSBC TRUS T. FOR THEIR EFFORTS IN NEGOTIATING THE PURCHASERS, TH EY WILL GET AN AMOUNT OF RS.12,25,000/- PER ACRE AS COMMISSION, TOTAL AMOUNTING TO RS.2.34 CRORES FOR 1 04 ACRES OF LAND. THE AGREEMENT FOR SALE FURTHER PRO VIDED THAT IN LIEU OF THEIR COMMISSION, THE TRUST SHALL S ELL LAND ADMEASURING 18.28 ACRES IN SURVEY NO.109 FOR CONSIDERATION OF RS.12.25 LAKHS PER ACRE. THE AGR EEMENT FURTHER PROVIDED THAT THE VENDOR SHALL GET 5 ACRES OF LAND IN THE SCHEDULED PROPERTY REGISTERED IN THE NAMES O F THE PURCHASERS ON THE DATE OF AGREEMENT AND THE REMAIN ING LAND IN SURVEY NO.109 WILL BE REGISTERED BEFORE 31- 3- 1998. IN STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE DENIED OF HAVING RECEIVED ANY COMMISSION IN CONNECTION WITH THE AFORESAID TRANSAC TION. 3. IN COURSE OF ASSESSMENT PROCEEDINGS UNDER SECT ION 158BC OF THE ACT FOR THE BLOCK PERIOD 1997-98 TO 20 02- 03, THE AO FOUND THAT THE LAND TO THE EXTENT OF AC. 5.23 GUNTAS IN SURVEYNO.109 WAS REGISTERED IN THE NAME O F THE ASSESSEE AND SRI G. SIVARAMA KRISHNA AND THEIR NOMI NEES ON 11-2-1998 AND THE ASSESSEE ALONG WITH G. SIVARAM A KRISHNA AND HIS NOMINEES HAVE FORMED A PARTNERSHIP CONCERN IN THE NAME OF M/S VAISHALI ESTATES. THE A O ON THE BASIS OF THE AGREEMENT TO SELL SEIZED DURING TH E SEARCH OPERATIONS AND TWO REGISTERED DOCUMENTS ALSO SEIZED DURING THE SEARCH AND SEIZURE OPERATIONS FOU ND IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 4 THAT SHRI SIVARAMA KRISHNA AND ONE SRI KSV PRASAD W ERE OWNERS OF THE IMMEDIATELY NEARBY LAND IN SURVEY NOS . 109/1/C. THE AO FURTHER FOUND THAT THE PARTNERSHIP FIRM M/S. VAISHALI ESTATES WAS FORMED WITH SEVEN PARTNER S WHO ARE NONE OTHER THAN THE NOMINEES OF THE ASSESSEE. ON THE AFORESAID FINDING OF FACTS, THE AO CAME TO A CO NCLUSION THAT THE LAND TO THE EXTENT OF AC.5.22 GUNTAS IN SU RVEY NO.109 WHICH WAS REGISTERED IN THE NAME OF THE ASSE SSEE AND SRI SIVARAMA KRISHNA AND THEIR NOMINEES ON 11-2 - 1998 WERE IN FACT RECEIVED IN LIEU OF COMMISSION FR OM SRI BSBSBC TRUST FOR NEGOTIATING PURCHASE OF LAND BY TH EM. THE AO VALUED THE COST OF THE LAND AT RS.68,29,374/ - AT THE RATE OF RS.12.25 LAKHS PER ACRE AND DETERMINED 50% SHARE COMING TO RS.34,14,687/- AS THE UNDISCLOSED INCOME OF THE ASSESSEE. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS ALSO MADE CERTAIN OTHER ADDITIONS. THE ASSESSEE CHALLENGED THE ORDER PASSE D U/S 158BC BY FILING AN APPEAL BEFORE THE CIT (A). THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS MADE BY HE ASSESS EE AND EXAMINING THE MATERIALS AVAILABLE BEFORE HIM GA VE HIS FINDING IN PARA 2(C) OF HIS ORDER DATED 16-2-2005. THE CIT (A) FOUND THAT THOUGH AS PER THE AGREEMENT OF SALE, THE ASSESSEE AND G. SIVARAMA KRISHNA WERE REQUIRED TO NEGOTIATE FOR 104 ACRES OF LAND FOR SRI BSBSBC TRUS T BUT ONLY 86 ACRES OF LAND COULD BE REGISTERED IN THE NA ME OF THE TRUST AND AGAINST THE AFORESAID TRANSACTION, TH E ASSESSEE ALONG WITH SHRI G. SIVARAMA KRISHNA RECEIV ED LAND ADMEASURING AC.5.23 GUNTAS IN LIEU OF COMMISSI ON RECEIVABLE AS PART OF THE TRANSACTION. IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 5 4. THE CIT (A) OBSERVED THAT THOUGH THE AGREEMENT OF SALE WAS NOT SIGNED BY THE ASSESSEE OR BY SHRI G . S SIVARAMA KRISHNA OR ANY WITNESSES, THE CONTENTS OF THE SAID AGREEMENT ARE VERIFIABLE FROM OTHER DOCUMENTS AVAILABLE ON RECORD. THE CIT (A) OBSERVED THAT ALL THE SALE AGREEMENT RELATING TO LAND ADMEASURING AC.5.23 GUNTAS WAS WITNESSED BY THE MANAGING TRUSTEE OF SRI BSBSBC TRUST. THE CIT (A) HAS FURTHER OBSERVED THA T THE FACTS WERE FURTHER CORROBORATED FROM THE ORDER DATE D 8-9- 2005 PASSED BY THE PRINCIPAL SESSIONS JUDGE, KURNOO L WHILE REJECTING THE ANTICIPATORY BAIL OF THE MANAGI NG TRUSTEE OF SRI BSBSBC TRUST. FROM THE AFORESAID FI NDING, THE CIT (A) CAME TO THE CONCLUSION THAT THE ASSESSE E ALONG WITH SRI G. SIVARAMA KRISHNA HAS RECEIVED COMMISSION IN THE FORM OF LAND AC.5.23 GUNTAS VALUI NG THE SAME AT RS.68,29,375/- AND SUSTAINED THE ADDITI ON OF RS.34,14,687/- BEING 50% SHARE OF THE ASSESSEE. 5. THE LEARNED AR FOR THE ASSESSEE SUBMITS THAT NO VALUE CAN BE ATTACHED TO THE SAID AGREEMENT OF SALE DT. 6- 2-1998 SINCE THE SAID AGREEMENT HAS NOT BEEN SIGNED EITHER BY THE ASSESSEE OR SRI G. SIVARAMA KRISHNA OR ANY WITNESSES, IT WAS CONTENDED BY THE LEARNED AR THA T THE DEAL WITH SRI BSBSBC TRUST WAS FOR NEGOTIATING 104 ACRES OF LAND TO BE PURCHASED BY THEM. SINCE THE DEAL; N EVER CAME UP, THEY HAVE NOT RECEIVED ANY COMMISSION FROM SRI BSBSBC TRUST. 6. THE LEARNED AR SUBMITTED THAT THE LAND OF AC.5.2 3 GUNTAS WAS PURCHASED BY THE ASSESSEE ALONG WITH SRI IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 6 SIVARAMA KRISHNA AND OTHER PERSONS BY MAKING THEIR OWN INVESTMENTS AND IT HAS NO CONNECTION WITH THE COMMI SSION RECEIVABLE FROM SBBS TRUST. IN SUPPORT OF HIS CONT ENTION, THE LD. AR INVITED OUR ATTENTION TO THE COPY OF THE SALE DEED DATED 11-2-1998 WHICH IS AT PAGE-7 OF THE PAPE R BOOK AND SUBMITTED THAT 23 GUNTAS OF LAND UNDER SUR VEY NO.109 WAS PURCHASED FROM ONE K. SRAVANI AND IT IS IN NO WAY CONNECTED WITH SBBS TRUST,. THE LD. AR, IN THE ALTERNATIVE SUBMITTED THAT EVEN IF IT IS HELD THAT THE LAND ADMEASURING AC.5.23 GUNTAS WAS RECEIVED IN LIEU OF COMMISSION, THE VALUE OF THE LAND CANNOT BE TAKEN A T RS.12.25 LAKHS PER ACRE BUT IT HAS TO BE TAKEN AT T HE VALUE MENTIONED IN THE REGISTERED SALE DEED. 7. THE LEARNED DR CONTROVERTING THE ARGUMENT OF THE ASSESSEE SUBMITS THAT THE INCRIMINATING MATERIAL SE IZED DURING THE SEARCH OPERATIONS CLEARLY ESTABLISHES TH E FACT THAT LAND ADMEASURING AC.5.234 GUNTAS WERE RECEIVED BY THE ASSESSEE ALONG WITH SRI G. SIVARAMA KRISHNA AS COMMISSION FOR NEGOTIATING PURCHASE OF LAND BY SRI BBS TRUST AND THE AO AS WELL AS THE CIT (A) ARE JUSTIFI ED IN REJECTING THE ASSESSEES CLAIM. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTI ES AND PERUSED THE RELEVANT MATERIAL ON RECORD. FACT S NOT DISPUTED ARE, IN THE COURSE OF SEARCH AND SEIZURE OPERATION IN THE BUSINESS PREMISES OF SRI SUNDER CH IT FUND LTD., AN AGREEMENT TO SALE DATED 6-2-1998 ALON G WITH OTHER INCRIMINATING MATERIAL WERE SEIZED BY TH E DEPARTMENT. IN THE AGREEMENT TO SALE, IT HAS BEEN CLEARLY IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 7 PROVIDED THAT THE ASSESSEE ALONG WITH SRI G. SIVARA MA KRISHNA WERE TO BE SOLD THE LAND ADMEASURING AC.18. 28 GUNTAS IN SURVEY NO.109 FOR NET CONSIDERATION OF RS .12.25 LAKHS PER ACRE. IT IS NOT DISPUTED THAT THE ASSESS EE ALONG WITH SRI SIVARAMA KRISHNA IN FACT HAS GOT REGISTERE D LAND ADMEASURING AC.5.23 GUNTAS IN THEIR NAMES UNDER SUR VEY NO.109. THIS CLEARLY ESTABLISHED THE FACT THAT THE ASSESSEE ALONG WITH SHRI SIVARAMA KRISHNA HAS GOT THE LAND REGISTERED IN THEIR NAMES UNDER THE SAME SURVEY NUM BER WHICH HAS BEEN REFERRED TO IN THE AGREEMENT TO SALE BETWEEN THEM AND SRI BBS TRUST SEIZED BYTHE DEPT. IT IS ALSO A FACT THAT SRI BBS TRUST HAS PURCHASED 86 ACR ES OF LAND THROUGH NEGOTIATIONS MADE BY THE ASSESSES AND AS PER THE TERMS OF AGREEMENT FOR SALE , THE ASSESSEE ALONG WITH SRI G. SIVARAMA KRISHNA HAVE RECEIVED AC.5.23. GUNTAS OF LAND IN LIEU OF COMMISSION OUT OF AC.18.2 8 GUNTAS WHICH THEY WOULD HAVE GOT IF THEY WOULD HAVE FULFILLED NEGOTIATIONS FOR THE TOTAL LAND OF 104 A CRES AS MENTIONED ABOVE. THESE FACTS CLEARLY PROVE THAT TH E ASSESSEE ALONG WITH SRI G. SIVARAMA KRISHNA HAVE RECEIVED LAND TO THE EXTENT OF AC.5.23 GUNTAS IN SU RVEY NO.109 TOWARDS COMMISSION FOR NEGOTIATING AC 86 OF LAND PURCHASED BY SRI BBS TRUST. HOWEVER, WE FIND FORCE N THE CONTENTION OF LD. AR THAT THE VALUATION OF THE LAN D SHOULD BE MADE ON THE BASIS OF THE VALUE MENTIONED IN THE REGISTERED SALE DEED. WHEN LAND HAS BEEN TRANSFERR ED TO THE ASSESSEE BY VIRTUE OF A SALE DEED REGISTERED BEFORE THE REGISTERING AUTHORITY THEN VALUE MENTIONED THER EIN SHOULD FORM THE BASIS FOR DETERMINING THE UNDISCLOS ED IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 8 INCOME. WE DIRECT THE AO TO RECOMPUTE IT ACCORDING LY. HENCE GROUNDS NOS. 1 TO 4 ARE PARTLY ALLOWED. 9. GROUND NO.5 RELATES TO THE ADDITION OF RS.5,95,000/- BEING THE ASSESSEES SHARE IN INVESTM ENT FOR PURCHASE OF LAND WITH THE PARTNERSHIP FIRM M/ S VAISHALI ESTATES. THE FACTS ARE IN COURSE OF SEARC H AND SEIZURE OPERATIONS, CERTAIN MATERIALS WERE SEIZED O N THE BASIS OF WHICH IT WAS FOUND THAT THE ASSESSEE HAD PURCHASED 34 GUNTAS OF LAND IN SURVEY NO.113 AT KONDAPUR FOR TOTAL CONSIDERATION OF RS.11,90,000/-. IN THE CAPITAL ACCOUNT FILED WITH THE BLOCK RETURN, TH E ASSESSEE DISCLOSED THE VALUE OF HIS SHARE AT RS.1,7 0,000 ONLY. IN COURSE OF ASSESSMENT PROCEEDINGS WHEN ASK ED TO EXPLAIN BY THE AO THE ASSESSEE SUBMITTED THAT HE WA S PARTNER IN M/S VAISALI ESTATES WHICH HAD PURCHASED THE LAND OF 34 GUNTAS IN KONDAPUR. THE ASSESSEE SUBMIT TED THAT THE FIRM HAD SEVEN PARTNERS AND ALL OF THEM HA VE CONTRIBUTED FOR PURCHASE OF THE LAND AND THE ASSESS EES SHARE IN INVESTMENT IS ONLY TO THE EXTENT OF 17.5%. THE ASSESSEE BY REFERRING TO THE PARTNERSHIP DEED, CONT ENDED THAT THE INVESTMENT IN PURCHASE HAS TO BE TAKEN INT O ACCOUNT BY APPLYING THE PROFIT SHARING RATIO AS MEN TIONED IN THE PARTNERSHIP DEED. THE AO HOWEVER REJECTING THE ASSESSEES CONTENTION TREATED 50% OF THE TOTAL INVE STMENT I.E., RS,5,95,000 AS THE ASSESSEES SHARE IN INVEST MENT IN PURCHASE OF THE SAID LAND AND TREATED THE SAME AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IN THE C OURSE OF HEARING BEFORE THE CIT (A), THE ASSESSEE REITERATED THE STAND TAKEN BEFORE THE AO. THE CIT (A) AFTER CONS IDERING IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 9 THE CONTENTIONS OF THE ASSESSEE FOUND THAT IN THE C APITAL ACCOUNT SUBMITTED WITH THE BLOCK RETURN, THE ASSESS EE HAS HIMSELF HAD ADMITTED HIS SHARE OF INVESTMENT IN THE LAND AT 50%. THE CIT (A) FURTHER OBSERVED THAT THE SEI ZED DOCUMENTS DO NOT REFLECT THE RATIO IN WHICH THE INVESTMENT HAS BEEN MADE BY VARIOUS PARTNERS. THE CIT (A) OBSERVING THAT THE ASSESSEE HAVING NOT BEEN ABL E TO PRODUCE ANY EVIDENCE TO SHOW THAT HIS INVESTMENT WA S ONLY TO THE EXTENT OF 17.5% VALUED AT RS.1,70,000/- HIS CLAIM CANNOT BE ACCEPTED. ON THIS CONCLUSION, THE CIT (A) UPHELD THE ADDITION OF RS.5,95,000/-. 10. THE LEARNED AR SUBMITS THAT THE PARTNERSHIP DEE D SEIZED DURING THE SEARCH AND SEIZURE OPERATIONS CLE ARLY MENTIONED THE PROFIT SHARING RATIO OF THE PARTNERS. ACCORDING TO THE SAID PARTNERSHIP DEED, THE ASSESSE E SHARE IN PURCHASE OF LAND HAS TO BE TAKEN AT THE SA ME RATE AS THE PROFIT SHARING RATIO IN THE HAND OF THE INDIVIDUAL PARTNERS AND NOT AT 50% OF THE TOTAL INVESTMENT. 11. THE LEARNED DR , ON THE OTHER HAND, SUBMITS THA T THE AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING T HE ASSESSEES CONTENTIONS AND HE FULLY SUPPORTED THE O RDERS OF LOWER AUTHORITIES. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES ON THIS ISSUE. AFTER GOING THROUGH THE ASSESSMENT O RDER AND ORDER OF THE CIT (A), IT IS EVIDENT THAT THE AS SESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO ESTABLISH THE FACT IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 10 THAT HE HAS INVESTED A SUM OF RS.1,17,000/- ONLY AS MENTIONED IN THE CAPITAL ACCOUNT FILED BY HIM IN TH E BLOCK RETURN. THE ASSESSEE HAS NOT BROUGHT ANY OTHER MAT ERIAL ON RECORD TO SHOW THAT THE OTHER PARTNERS HAVE ALSO INVESTED FOR PURCHASE OF THE LAND. WHEN NO MATERIA L IS FORTHCOMING FROM THE ASSESSEE REGARDING INVESTMENT IN THE LAND AND WHEN IT IS ESTABLISHED ON RECORD THAT THE OTHER PARTNERS ARE MERELY THE NOMINEES OF THE ASSES SEE AND MR. G. SIVA RAMA KRISHNA, THE AO AS WELL AS CIT (A) ARE QUITE JUSTIFIED IN HOLDING THAT 50% OF THE INVE STMENT MADE IN PURCHASE OF THE LAND HAS TO BE TAKEN IN THE HANDS OF THE ASSESSEE. IN THE AFORESAID VIEW OF THE MATT ER, THE ADDITION MADE IS SUSTAINED AND ACCORDINGLY GROUND N O. 5 IS DISMISSED. IT (SS)A NO.25/HYD/06 (ASSESSEES APPEAL) : 13. IN VIEW OF THE REASONING GIVEN IN GROUND NOS. 1 TO 4 OF THE ASSESSEES APPEAL I.E., IN IT (SS)A NO.24/HY D/2006 (SHAIK HAMEED PATEL (SUPRA), WE PARTLY ALLOW THE GR OUND RAISED BY THE ASSESSEE IN THIS APPEAL ALSO AND DIR ECT THE AO TO RECOMPUTE UNDISCLOSED INCOME ON THE BASIS OF THE VALUE MENTIONED IN THE REGISTERED SALE DEED. 14. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEES ARE PARTLY ALLOWED. IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 11 IT (SS) A NO.40/HYD/06 (REVENUES APPEAL) :- 15. THE DEPARTMENT HAS FILED THIS APPEAL CHALLENGIN G THE DELETION MADE BY THE CIT (A) OF THE FOLLOWING ADDIT IONS:- 1. INVESTMENT IN M/S SAI SUNDER CHIT FUNDS PVT. LTD. RS.1,35,000 2. OPENING CASH BALANCE AS ON 1-4-1996 RS.3,85,000 3. AGRICULTURAL INCOME FOR VARIOUS YEARS RS.2,30,000 4. SALARY INCOME FOR FIVE YEARS RS. 90,000 16. AFTER HEARING THE RIVAL CONTENTIONS AND GOING THROUGH THE ASSESSMENT ORDERS AND ORDER OF THE FIRS T APPELLATE AUTHORITY AS WELL AS THE OTHER MATERIAL P LACED BEFORE US, IT IS EVIDENT THAT THE AFORESAID ADDITIO NS WERE NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL SEIZED IN THE COURSE OF SEARCH AND SEIZURE OPERATIO NS. THE CIT (A) HAS GIVEN A CATEGORICAL FINDING THAT TH E ADDITIONS HAVE BEEN MADE NOT ON THE BASIS OF ANY SE IZED MATERIAL. AFTER GOING THROUGH THE ASSESSMENT ORDE R, WE ALSO FAIL TO FIND ANY NEXUS BETWEEN THE SEIZED MATE RIALS AND THE AFORESAID ADDITIONS MADE BY THE AO. IN TH E AFORESAID VIEW OF THE MATTER, WE FIND THE REASONING OF THE CIT (A) WHILE DELETING THE ADDITIONS ARE ON SOUND B ASIS AND THEREFORE NEEDS NO INTERFERENCE. WE THEREFORE DISMISS THE APPEAL FILED BY THE REVENUE. IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 12 IT (SS) A NO.41/HYD/06 (REVENUES APPEAL) 17. THE DEPARTMENT HAS FILED THIS APPEAL ON THREE EFFECTIVE GROUNDS. THE FIRST GROUND RELATES TO THE DELETION OF AN AMOUNT OF RS.1,17,00,000/- BY THE CIT (A). BR IEFLY THE FACTS OF THE CASE ARE THAT IN THE COURSE OF SEA RCH AND SEIZURE OPERATION, AN AGREEMENT TO SALE DATED 6-2-1 998 BETWEEN SRI BHAGWAN BALA SAI BABA CENTRAL TRUST (SBBSBC TRUST IN SHORT) AND THE PRESENT ASSESSEE AL ONG WITH HAMEED PATEL WAS FOUND AND SEIZED AS PER THE AGREEMENT TO SALE, THE ASSESSEE ALONG WITH HAMEED P ATEL IS TO NEGOTIATE IN PURCHASE OF 104 ACRES OF LAND I N SURVEY NOS. 104 TO 109 AT KONDAPUR VILLAGE, RANGA REDDY DISTRICT FOR SBBSBC TRUST. IT WAS PROVIDED IN THE A BOVE SAID AGREEMENT OF SALE THAT FOR NEGOTIATING FOR PUR CHASE OF 104 ACRES OF LAND, THE ASSESSEE ALONG WITH HAMEED P ATEL WILL BE PAID COMMISSION AT THE RATE OF RS.2,25,000/ - PER ACRE TOTALLING TO RS.2.34 CRORES FOR 104 ACRES. ON THE BASIS OF THE AFORESAID FACTS FOUND FROM THE SEIZED AGREEMENT TO SALE, THE AO COMPLETED THE ASSESSMENT U/S 158BD READ WITH SECTION 158BC OF THE ACT BY HOLDING THAT 50% OF THE TOTAL COMMISSION OF RS.RS.2.34 CRORES HA S ACCRUED TO THE ASSESSEE AND ADDED AN AMOUNT OF RS.1 .17 CRORES AS UNDISCLOSED INCOME. 18. IN APPEAL PROCEEDINGS, BEFORE THE CIT (A), IT WAS CONTENDED BY THE ASSESSEE THAT THE COMMISSION OF RS.1.17 CRORES WAS NEVER RECEIVED BY THE ASSESSEE S INCE THE NEGOTIATION BETWEEN SBBSBC TRUST ON ONE HAND AN D THE PRESENT ASSESSEE ALONG WITH HAMEED PATEL ON THE IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 13 OTHER HAND FOR PURCHASE OF 104 ACRES OF LAND COULD NOT BE FULFILLED. THE CIT (A) FOUND FROM THE AGREEMENT TO SALE SEIZED DURING THE SEARCH OPERATION THAT FOR ARRANGI NG THE TOTAL 104 ACRES OF LAND, THE ASSESSEE ALONG WITH HA MEED PATEL WERE TO BE GIVEN COMMISSION OF RS.2.34 CRORE S WHICH WAS TO BE ADJUSTED AGAINST THE SALE OF LAND T O THE EXTENT OF AC.18.28 GUNTAS BY THE TRUST IN FAVOUR OF THE ASSESSEE AND HAMEED PATEL. SINCE THE ENTIRE 104 AC RES OF LAND COULD NOT BE ARRANGED FOR SALE BY THE ASSES SEE AND HAMEED PATEL, THEY RECEIVED AC.5.23 GUNTAS OF L AND WHICH WAS REGISTERED IN THEIR NAMES AND THE VALUE O F THAT LAND HAS ALREADY BEEN ASSESSED AS UNDISCLOSED INCOM E AT THE HANDS OF THE ASSESSEE AND HAMEED PATEL. IT WAS FOUND BY THE CIT (A) THAT THE BALANCE PORTION OF TH E LAND ADMEASURING ABOUT 13 ACRES WHICH THE ASSESSEE ALONG WITH HAMEED PATEL WOULD HAVE GOT IN LIEU OF COMMISS ION WAS NEVER REGISTERED IN THE NAME OF THE ASSESSEE AN D HAMEED PATEL SINCE THEY WERE NOT ABLE TO NEGOTIATE FOR PURCHASE OF 104 ACRES OF LAND BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE CIT (A) CAME TO THE CONCLUS ION THAT IT CANNOT BE SAID THAT RS.1.17 CRORES BEING TH E ASSESSEES COMMISSION HAS ACCRUED AS INCOME. THE CIT (A) FURTHER FOUND THAT THOUGH THE ASSESSEE ALONG WI TH HAMEED PATEL SUPPOSED TO HAVE RECEIVED COMMISSION OF RS.2.34 CRORES FROM THE TRUST, 50% OF THE ABOVE I .E. RS.1.17 CRORES, THE ASSESSEES SHARE HAS BEEN TREAT ED AS UNDISCLOSED INCOME WHEREAS IN THE CASE OF HAMEED PA TEL THE SAME AMOUNT HAS NOT BEEN TREATED AS UNDISCLOSED INCOME BY THE AO EVEN THOUGH HE RELIES ON THE SAME IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 14 SEIZED DOCUMENT. ON THE AFORESAID REASONS, THE CIT (A) DELETED THE ADDITION OF RS.1.17 CRORES. 19. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS CLEAR FROM THE AGREEMENT TO SALE WHICH WAS SEIZED DURING THE SEARCH AND SEIZURE OPER ATION THAT FOR ARRANGING 104 ACRES OF LAND TO BE PURCHASE D BY THE TRUST, THE ASSESSEE ALONG WITH HAMEED PATEL WER E TO GET COMMISSION AT THE RATE OF RS.2.25 LAKHS PER ACR E TOTAL AMOUNTING TO RS.2.34 CRORES. THIS AMOUNT OF RS.2.3 4 CRORES WOULD HAVE BEEN ADJUSTED AGAINST THE SALE OF AC.18.28 GUNTAS BY THE TRUST TO THE ASSESSEE AND HAMEED PATEL. THE ASSESSEE HAVING FAILED TO ARRANG E PURCHASE OF THE ENTIRE 104 ACRES OF LAND BY THE TRU ST, HE ALONG WITH HAMEED PATEL WERE GIVEN AC.5.23 GUNTAS O F LAND IN LIEU OF COMMISSION. THERE IS NO MATERIAL O N RECORD EITHER FROM THE SEIZED DOCUMENTS OR FROM ANY OTHER SOURCE TO PROVE THAT THE ASSESSEE HAS IN FACT RECEI VED AN AMOUNT OF RS.1.17 CRORES TOWARDS COMMISSION. THIS B EING THE FACT FOUND ON RECORD, NO ADDITION COULD HAVE BE EN MADE BY THE AO ON THIS COUNT. IT IS ALSO A VITAL F ACT THAT IN CASE OF HAMEED PATEL, THE AO HAS NOT MADE SIMILA R ADDITION THOUGH BOTH THE ASSESSEE AND HAMEED PATEL WERE SUPPOSED TO HAVE RECEIVED THE COMMISSION FROM THE TRUST. IN VIEW OF THE AFORESAID FACTS, WE HOLD THA T THE CIT (A) WAS CORRECT IN DELETING THE ADDITION OF RS. 1.1 7 CRORES. HENCE, THE GROUND RAISED BY THE DEPARTMENT IS REJEC TED. 20. THE SECOND GROUND RELATES TO ADDITION MADE BY T HE AO OF AN AMOUNT OF RS.8,50,000/- BEING THE PURCHASE IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 15 VALUE OF HOUSE AT CHADERGHAT, HYDERABAD. THE AO FO UND THAT THE ASSESSEE HAD PURCHASED THE AFORESAID HOUSE ON 28-9-2001 FROM ONE MOHD. ABDUL RASHEED FOR CONSIDERATION OF RS.8,50,000/-. IN COURSE OF SEARC H ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED BEFO RE THE AO THAT MOHD. ABDUL RASHEED WAS A DEFAULTER OF SRI SAI SUNDER CHIT FUNDS OWNED BY THE ASSESSEES FAMIL Y MEMBER. SINCE THE SAID ABDUL RASHEED COULD NOT MAK E PAYMENT TO SAI SUNDER CHIT FUND, HE GOT THE HOUSE REGISTERED IN ASSESSEES NAME. THE ASSESSEE HOWEV ER COULD NOT TAKE THE POSSESSION OF THE PROPERTY SINCE THE SAME WAS SOLD TO MANY PERSONS. THE ASSESSEE HAD AL SO FILED CIVIL SUIT FOR RECOVERY OF THE AMOUNT FROM SR I ABDUL RASHEED. IN THIS REGARD, THE ASSESSEE PRODUCED THE ACCOUNT COPY OF SRI SAI SUNDER CHIT FUNDS WHERE TH E MONEY ADVANCED TO ABDUL HAMID WAS RECORDED. THE ASSESSEE ALSO CONTENDED THAT THE STAMP DUTY FOR REGISTRATION OF THE PROPERTY WAS ALSO PAID BY SRI SAI SUNDER CHIT FUNDS, WHICH HAS ALSO BEEN DULY RECORDE D IN ITS BOOKS. THE AO ASKED THE ASSESSEE TO PRODUCE AB DUL HAMID BEFORE HIM. SINCE THE ASSESSEE COULD NOT PROD UCE ABDUL HAMID BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS, THE SUM OF RS.8,50,000/- WAS ADDED TO THE TOTAL INCOME AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE. 21. BEFORE THE CIT (A), THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS OF SRI SAI SUNDER CHIT FUNDS AND CONTENDED THAT A TOTAL AMOUNT OF RS.17,59,620/- WAS RECEIVABLE FROM ABDUL RASHEED. THE ASSESSEE ALSO FILED IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 16 AN AFFIDAVIT OF ABDUL RASHEED WHEREIN THE SAID ABDU L RASHEED ADMITTED OF HAVING TAKEN MONEY FROM SRI SAI SUNDER CHIT FUNDS AND ALSO ADMITTED THE FACT THAT H E HAS GOT THE HOUSE REGISTERED IN THE NAME OF THE ASSESSE E TOWARDS PART PAYMENT OF THE DEFAULTED AMOUNT PAYABL E TO SRI SAI SUNDER CHIT FUNDS. THE CIT (A) ALSO DIREC TED THE AO TO EXAMINE ABDUL RASHEED ON OATH. BEFORE THE AO , THE ASSESSEE PRODUCED MOHD. RASHEED FOR EXAMINATIO N. IN THE STATEMENT RECORDED BY THE AO, MOHD. ABDUL RASHEED CATEGORICALLY ADMITTED THAT HIS FATHER M.A. GAFOOR WHO WAS DOING BUSINESS IN THE NAME OF ALLIAN CE STEEL ENTERPRISES CONTRIBUTED TO ONE CHIT OF RS.25 LAKHS AND THREE CHITS OF RS.10 LAKHS EACH WITH SRI SAI SU NDER CHIT FUND PVT. LIMITED. AFTER THE DEATH OF MOHD. M. A GAFOOR, THE AMOUNT COULD NOT BE PAID AND AN OUTSTA NDING AMOUNT OF RS.17.6 LAKHS REMAINED DUE TO BE PAID TO THE CHIT FUND COMPANY. ABDUL RASHEED FURTHER STATED TH AT TOWARDS PART SETTLEMENT OF DEBT, THE HOUSE WAS REGI STERED IN THE NAME OF THE ASSESSEE BY TAKING THE VALUE AT RS.8.50 LAKHS. SHRI RASHEED ALSO CATEGORICALLY STA TED THAT HE HAS NOT RECEIVED THIS AMOUNT OF RS.8.5 LAKHS FRO M THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, THE CIT ( A) DELETED THE ADDITION OF RS.8.50 LAKHS. 22. AFTER GOING THROUGH THE REASONING OF THE CIT ( A), WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. THE STA TEMENT RECORDED FROM ABDUL RASHEED AND ALSO THE BOOKS OF ACCOUNTS OF SRI SAI SUNDER CHIT FUNDS CLEARLY CORRO BORATES THE FACT THAT THE ASSESSEE HAD NOT MADE ANY PAYMENT TO ABDUL RASHEED TOWARDS PURCHASE OF THE HOUSE. IN TH E IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 17 AFORESAID VIEW OF THE MATTER, NO INTERFERENCE IS CA LLED FOR SO FAR AS THE DELETION OF RS.8.50 LAKHS IS CONCERNE D. 23. THIRD GROUND RELATES TO AN ADDITION OF RS.3,68, 000/- BEING THE OPENING BALANCE IN THE CAPITAL ACCOUNT OF THE ASSESSEE. FROM THE FACTS ON RECORD, IT IS SEEN THA T THE AFORESAID ADDITION HAS NOT BEEN MADE ON THE BASIS O F ANY SEIZED MATERIAL. THEREFORE, THE AO COULD NOT HAVE MADE SUCH AN ADDITION IN AN ASSESSMENT U/S 158BD READ WI TH SECTION 158BC OF THE ACT. AN AMOUNT OF RS.3,68,000/ - WAS SHOWN AS AN OPENING CAPITAL IN THE BALANCE-SHEE T OF THE ASSESSEE AND IT IS NOT RELATABLE TO ANY SEARCH MATERIAL. WE THEREFORE HOLD THAT THE CIT (A) WAS J USTIFIED IN DELETING SUCH ADDITION. HENCE, THIS GROUND OF T HE REVENUE IS REJECTED. 24. IN THE RESULT, APPEALS FILED BY THE ASSESSES AR E ALLOWED IN PART AND THE APPEALS FILED BY THE DEPA RTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 04-05-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER DATED THE 4 TH MAY, 2012. IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 18 COPY FORWARDED TO: 1. ASSESSEES C/O CH. PARTHASARATHY & CO., 1-1- 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, STREET NO.1, ASHOKNAGAR, HYDERABAD. 2. ACIT/DCIT, CC-6, HYDERABAD. 3. CIT (A)-I, HYDERABAD. 4. THE CIT CONCERNED, HYDERABAD 5. THE DR, ITAT, HYDERABAD JMR* IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 19 IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 20 IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 21 IT(SS) 24& 25 AND 40 & 41 OF 2006 SHAIK HAMID PATEL & G. SIVA RAMA KRISHNA, HYDERABAD. =============================== 22