DCIT, Hyderabad V. M/s Sai Sree Developers Pvt.Ltd, Hyderabad

ITSSA 60/HYD/2004

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9138 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-05-2010
• Assessment Year: misc
• Appeal Filed On: 15-05-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T VENKAT REDDY
• Keywords: Block assessment
• Section: 133A; 132

Judgement Text

1IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER IT(SS)A NO.48/HYD/ 2004 BLOCK PERIOD M/S SAI SREE DEVELOPERS (P) LTD. HYDERABAD (AAFCS0223H) (APPELLANT) VS DY.CIT, CIRCLE 4, HYDERABAD (RESPONDENT) IT(SS)A NO.60/HYD/ 2004 BLOCK PERIOD 1997-98 TO 2001-02 FROM 1.4.2001 TO 12.10.2001 DY.CIT, CIRCLE 4, HYDERABAD (APPELLANT) VS M/S SAI SREE DEVELOPERS (P) LTD., HYDERABAD (AAFCS0223H) (RESPONDENT) APPELLANT BY : SHRI A. SRINIVAS RESPONDENT BY : SHRI T. VENKAT REDDY, CIT O R D E R PER: CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) I, HYDERABAD DATED 17/2/2004 AND PERTAI NS TO THE BLOCK PERIOD CONSISTING OF ASSESSMENT YEARS 1996-97 TO 2001-2002 AND FROM 1.4.2001 TO 12.10.2001. 2. THE ISSUES INVOLVED IN THESE TWO APPEALS ARE WITH REGARD TO SOURCES OF PAYMENT OF RS.1.15 CRORES IN CASH TO M/S HYDERABA D POTTERIES (P) LTD. THE ASSESSING OFFICER MADE AN ADDITION OF RS.1 .15 CRORES ON ACCOUNT OF CASH PAYMENT AS UNEXPLAINED MONEY U/S 69B OF THE IT ACT. IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 2 2 ON APPEAL, THE CIT(A) SUSTAINED THE ADDITION TO THE TUNE OF RS.60 LAKHS OUT OF THIS. AGAINST THE SUSTAINING THE ADDITION OF RS.24.5 LAKHS THE ASSESSEE IS IN APPEAL BEFORE US. THE REVENUE IS IN APPEAL BEFORE US FOR DELETING THE ADDITION OF RS.55 LAKHS. 3. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE DECLARED UNDISCLOSED INCOME IN ITS RETURN AT RS.35.50 LAKHS ON ACCOUNT OF MONEY RECEIVED FROM ONE VENTURE KNO WN AS HIMA SAI ENCLAVE DURING THE YEAR 1997-98 TO 2000-01. THE SAME WAS OFFERED AS UNDISCLOSED INCOME. THE BALANCE AMOUNT WAS ACTUALLY R EPRESENTING THE EXPLAINED SOURCES AS FOLLOWS: I. PAYMENT OF SHARE APPLICATION MONEY AND FLAT ADVANCE. OUT OF THIS RS.44,08,000/- WAS OFFERED BY DIRECTORS AND SHARE HO LDERS IN THEIR INDIVIDUAL RETURNS PRIOR TO ACTION U/S 132 IN THE CASE OF THE ASSESSEE COMPANY. THESE RETURNS ARE FILED ON 20/9/200 1, 13/9/2001, 14/9/2001 AND 28/12/2001 - RS.44,08,000/ - II. BALANCE SAME WAS EXPLAINED IN THE CASH FLOW STATEMENT, CA PITAL ACCOUNT, BALANCE SHEET FILED IN THE REGULAR RETURN OF I NCOME AT RS.35,42,000/-. 4. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, RS.7 9.50 LAKHS WAS ALREADY OFFERED TO TAX AND THIS CANNOT BE ONCE AGAIN TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. ACCORDIN G TO THE COUNSEL, THE ABOVE TRANSACTIONS ARE REFLECTED IN THE REGU LAR BOOKS OF ACCOUNTS ON THE BASIS OF WHICH RETURNS WERE FILED FOR THE ASSESSMENT YEAR 2001-02 ON 30.4.2001 BEFORE THE DATE OF SEARCH I .E. 12.10.2001. MORE SO, THE ASSESSEE HAS FILED FINANCIAL STATEMENTS, ANNU AL ACCOUNTS TO REGISTRAR OF COMPANIES BEFORE THE DATE OF SEARCH. TH E INVESTMENT BY IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 3 3 THE DIRECTORS AND SHARE HOLDERS ARE ALSO DISCLOSED BY TH EM IN THE RETURN OF INCOME. HE FURTHER SUBMITTED THAT THE TRANSACTIONS RE FLECTED IN THE REGULAR BOOKS OF ACCOUNT AND REGULAR RETURN OF INCOME CA NNOT BE CONSIDERED ONCE AGAIN IN THE BLOCK ASSESSMENT TO TAX THE SAME WHICH IS NOT PERMITTED BY LAW. HE RELIED ON THE FOLLOWING JU DGEMENTS: 1. MANOJ AGGARWAL VS. DCIT (113 ITD 377) (SB) (DELHI IT AT) 2. VALUE LINE SECURITIES INDIA LTD. VS. ACIT (HYD.) (108 IT 639) 3. CIT VS. SUNITA AGGARWAL (293 ITR 292) (DELHI HC) 4. MANGE RAM MITTAL VS. ACIT (103 ITD 389) (SB) DELH I 5. DCIT VS. BHOGILAL MULCHAND (96 ITD 344) ITAT B BENCH AHEMADABAD 6. HOTEL KIRAN VS. ACIT (82 ITD 453) (ITAT PUNE BENCH) 7. MANGE RAM MITTAL VS. ACIT (103 ITD 389) (SB) DELH I. 5. ON THE OTHER HAND THE DEPARTMENTAL REPRESENTATI VE SUBMITTED THAT THERE WAS A SEARCH ACTION AT THE PREMISES O F THE ASSESSEE U/S 132 OF THE IT ACT ON 12.10.2001. CONSEQUENT TO THE SEARCH ACTION IN THE CASE OF SHRI S. SUNIL ON 5/9/2001 A S PER SEIZED MATERIAL, THERE WAS A CASH PAYMENT OF RS.1.15 CRORES TO S HRI S. SUNIL AND SHRI S. RAMESH, DIRECTORS OF M/S HYDERABAD POTTERIES (P) LTD. TOWARDS SECURITY DEPOSIT. DURING THE COURSE OF SEARCH, S HRI BABU REDDY, MD OF M/S M/S SAI SREE DEVELOPERS (P) LTD. ADMITTED A T RS.60 LAKHS AS UNDISCLOSED INCOME WHICH IS UTILIZED TOWARDS PAYMENT OF SE CURITY ADVANCE TO THE ABOVE PERSONS. HE DREW OUR ATTENTION TO THE SWORN STATEMENT RECORDED ON VARIOUS DATES IN THE COURSE OF SEAR CH ACTION. SWORN STATEMENT RECORDED ON 12.10.2001: Q.16: PLEASE EXPLAIN THE SOURCES FOR THE CASH PAYMENT OF RS.1.15 CRORES MADE TO M/S HYDERABAD POTTERIES (P) LTD. AS DEPOSIT ? IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 4 4 ANS: WE HAVE SHOWN THIS PAYMENT IN THE BOOKS OF ACCOUNT OF M/S SAI SREE DEVELOPERS (P) LTD. AS FOLLOWS: 1. ADVANCE RECEIVED FROM PROSPECTIVE PURCHASERS RS.35,00,0 00 2. SHARE APPLICATION MONEY RS.44,50,000 3. FLAT ADVANCE BY SHARE HOLDERS RS.35,50,000 TOTAL RS.1,15,00,000 6. OUT OF THE ABOVE AN AMOUNT OF RS.35,00,000/- W HICH WAS SHOWN AS ADVANCES RECEIVED FROM 23 PROSPECTIVE PURCHASERS IS ACTUALLY UNDISCLOSED INCOME EARNED BY M/S SAI SREE DEVELOPERS (P) LTD. IN CONSTRUCTION BUSINESS DURING THE LAST 3 YEARS. BUT THIS AMO UNT IS SHOWN AS ADVANCES FROM PROSPECTIVE PURCHASERS IN THE BOOKS OF ACCOUN T OF M/S SAI SREE DEVELOPERS (P) LTD.. THE ASSESSEE AS ADMITTED A N AMOUNT OF RS.35 LAKHS AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 7. FURTHER OUT OF THE AMOUNT OF RS.80 LAKHS WHICH WA S SHOWN AS SHARE APPLICATION MONEY AND FLAT ADVANCES BY SHARE HOL DERS, RS.25 LAKHS WAS UNDISCLOSED INCOME EARNED BY M/S SAI SREE DEVELO PERS (P) LTD. IN THE CONSTRUCTION BUSINESS IN THE LAST 3 YEARS. IN THE BALANCE AMOUNT SOME AMOUNT IS ADMITTED AS UNDISCLOSED INCOME FOR THE ASSESSMENT 2001-02 BY INDIVIDUAL SHARE HOLDERS AND FILED RETURN ACCORDINGLY. THE BALANCE AMOUNT IS OUT OF THEIR INCOME. AN AMOUNT OF RS.25 LAKHS WHICH IS ACTUALLY, THE UNDISCLOSED INCOME OF CON STRUCTION BUSINESS BUT SHOWN AS ADANCES FROM SHARE HOLDERS AND SHARE APPLICATION MONEY, HE HAS ADMITTED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD DECLARING AN AMOUNT OF RS.60 LAKHS AS UNDISCLOSED INCOME OF M/S SAI SREE DEVELOPERS (P) LTD.. IN THE CONSTRUCTION BUSIN ESS FOR THE LAST 3 YEARS AND HE HAS FILED THE RETURN AND PAID THE TAXES A CCORDINGLY. IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 5 5 8. SHRI K. BAPU REDDY CONFIRMED THE ABOVE ONCE AGAI N IN THE SWORN DEPOSITION RECORDED ON 16.10.2001 IN THE POST SEAR CH INVESTIGATIONS. THE RELEVANT PORTION IS REPRODUCED WHI CH READS AS UNDER: 9. Q.5 : PLEASE EXPLAIN THE SOURCES FOR THE AMOUNT O F RS.60 LAKHS WHICH IS ADMITTED BY YOU AS UNDISCLOSED INCOME? ANS: THIS AMOUNT GENERATED FROM ON MONEY RECEIPTS FRO M THE VENTURE HIMA SAI ENCLAVE AT BARKATPURA DEVELOPMENT BY M/S S AI SREE DEVELOPERS (P) LTD. DURING THE YEAR 1998-2001 FOR WH ICH THE FLAT WISE DETAILS ARE NOT AVAILABLE. 10. Q.6: PLEASE EXPLAIN THE APPLICATION OF ABOVE U NDISCLOSED INCOME? ANS: THIS AMOUNT WAS UTILIZED TOWARDS CASH PORTION OF SECU RITY DEPOSIT AMOUNTING TO RS.1.15 CRORES WAS PAID BY THE COMPANY M/S S AI SREE DEVELOPERS (P) LTD. WELL BEFORE 4.8.2000. THIS FACT WAS CONFIRMED BY RECEIVERS OF THE ABOVE AMOUNT SRI SUNIL AND SRI RAME SH, DIRECTORS OF M/S HYDERABAD POTTERIES (P) LTD. THE RELEVANT PORTIONS OF THE STATEMENTS ARE REPRODUCED BELOW: 11. SWORN DEPOSITION OF SUNIL RECORDED ON 14.9.2001: 12. Q.11 PLEASE EXPLAIN THE TRANSACTION WITH MR. B OOKS OF ACCOUNT[I REDDY OF M/S SAI SREE DEVELOPERS (P) LTD. ? ANS: M/S HYDERABAD POTTERIES (P) LTD. ENTERED INTO AN AGREEMENT FOR CONSTRUCTION OF RESIDENTIAL COMPLEX AT BAKARAM. FOR THA T, HE HAS GIVEN RS.75 LAKHS IN THE FORM OF CHEQUE AND AN AMOUNT OF RS.1 .15 CRORES IN THE FORM OF CASH AS ADVANCE TO US. THE CHEQUE PORTION O F RS.75 LAKHS IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 6 6 WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF M/S HYDERA BAD POTTERIES (P) LTD. THE CASH PORTION OF RS.1.15 CRORES WHICH WAS RECE IVED BY MYSELF AND MY BROTHER SHRI S. RAMESH AND S. SUNIL WAS NOT RECORDED IN MY BOOKS OF ACCOUNT. AS ALL THE AMOUNTS WERE TAKEN APPR OXIMATELY IN THE MONTHS OF JUNE, JULY OF 2000 WE COULD NOT PAY IMM EDIATELY AND RETURNED AN AMOUNT OF RS.35 LAKHS LATER. 13. SWORN DEPOSITION OF SRI RAMESH RECORDED ON 7.9.2 001: 14. Q.18: PLEASE GIVE THE DETAILS OF TRANSACTION WIT H BABU REDDY? ANS: M/S M/S HYDERABAD POTTERIES (P) LTD. ENTERED INTO A DEVELOPMENT AGREEMENT WITH MR. BABU REDDY FOR THE CONSTRUCTION OF RESIDENTIAL FLATS IN A LAND ADMEASURING 10000 SQ. YARDS AT 365/A, BAKAR AM, HYDERABAD, 1 YEARS BACK. 15. THE FACT OF RECEIPT OF SECURITY DEPOSIT OF RS.1.15 CRORES DURING THE PERIOD FROM JUNE TO AUGUST 2000 IS FURTHE R CORROBORATED BY THE CASH FLOW STATEMENT SUBMITTED BY SRI SIDDAMSETTY SUN IL DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS. 16. THE ABOVE FACT WAS ALSO CONFIRMED BY SRI BABU RE DDY IN HIS DEPOSITION RECORDED ON 12.10.2001. THE RELEVANT EXTR ACT OF HIS SWORN DEPOSITION IS REPRODUCED WHICH READS AS UNDER: 17. Q.15 : PLEASE GIVE THE COMPLETE DETAILS OF TRAN SACTION IN RELATION TO LAND PERTAINING TO M/S HYDERABAD POTTERI ES (P) LTD. ANS: M/S HYDERABAD POTTERIES (P) LTD. IS OWNER FOR THE LAND ADMEASURING 10,000 SQ. YARDS AT BAKARAM, HYDERABAD. W E ENTERED INTO IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 7 7 A DEVELOPMENT AGREEMENT FOR CONSTRUCTION OF RESIDENTIAL FLATS IN THE RATIO OF 45:55 FOR THIS, MR. S. SUNIL AND MR. RAMESH DIR ECTORS OF M/S HYDERABAD POTTERIES (P) LTD. DEMANDED RS.1.90 CRORES AS D EPOSIT WITHOUT INTEREST. IN RESPONSE TO THIS, I HAVE PAID THE M RS.1.15 CRORES BY WAY OF CASH AND RS.75 LAKHS BY WAY OF CHEQUE BETWEEN JUNE TO AUGUST 2000. ON 4 TH AUGUST, WE ENTERED INTO A DEVELOPMENT AND MOU. 18. FURTHER HE SUBMITTED THAT OUT OF RS.1.90 CRORES O F THE ABOVE PAYMENT ONLY RS.1.15 CRORES WAS NOT RECORDED IN THE BOOK S OF ACCOUNTS OF THE ASSESSEE FROM 1/6/2000 TO 4/8/2000 AND ONLY AFTE R THE DATE OF SEARCH ON 13.12.2004, THE ASSESSEE PASSED JOURNAL ENTRY BY DEBITING IN THE ACCOUNTS OF SHRI S. SUNIL AND SHRI S. RAMESH (GANDH INAGAR A/C) TO THE EXTENT OF RS.1.15 CRORES AND CREDITING FLAT ADVAN CE ACCOUNT TO THE TUNE OF RS.70.50 LAKHS AND CREDITING SHARE APPLICATION MONEY ACCOUNT TO THE TUNE OF RS.44.50 LAKHS. HE SUBMITTED THAT THESE AR E MADE TO BELIEVE ENTRY AS SUCH THE ENTIRE AMOUNT OF RS.1.15 CRORE S WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND IT CANNOT BE CONSIDE RED AS SOURCES AS EXPLAINED BY THE ASSESSEE. THE JOURNAL ENTRIES WERE PA SSED AFTER THE CLOSE OF THE FINANCIAL YEAR AND ALSO THERE WAS OVER WRI TING AND INTERPOLATION IN THE BOOKS OF ACCOUNTS. THE VOUCHERS R ECEIVED FOR THE ASSESSEE COMPANY TO BRING THE ABOVE ENTRIES IN THE JOURNA L FOR THE MONTH OF DECEMBER 2000 AND NOT IN THE JOURNAL FOR TH E MONTHS WHEN ACTUAL TRANSACTIONS OCCURRED I.E. IN JUNE 2000 TO AUGUST 2 000 THOUGH A SEARCH OPERATION U/S 133A OF THE ACT WAS CONDUCTED IN THE MONTH OF DECEMBER 2000. HE SUBMITTED THAT THE ENTIRE EXERCISE THA T WAS UNDERTAKEN BY THE ASSESSEE COMPANY SHOWS ITS ANXIETY TO RED UCE INCIDENCE OF THE TAX AND THIS FACT WAS CORROBORATED BY FILING OF RETURN OF INCOME BY THE DIRECTORS, SHARE HOLDERS AND ALLEGED CUSTOM ERS AFTER THE DUE DATE ON 31.7.2001 AND BETWEEN THE PERIOD 5/9/20 01 TO THE DATE ON WHICH FACT THE DATE OF PAYMENT OF SECURITY DEPOSIT IN CA SH CAME TO THE IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 8 8 LIGHT AND AS A RESULT SEARCH IN THE GROUP CASES OF M/S GK P ROPERTIES (P) LTD. 12.10.2001 I.E., SEARCH CONDUCTED ON THE PREMISES O F M/S SAI SREE DEVELOPERS (P) LTD. HE SUBMITTED THAT THE ASSESSEE HAS NO T EXPLAINED ITS FAILURE TO RECORD THE ENTRIES. THE PAYMENT OF RS.1 .15 CRORES IN THE BOOKS OF ACCOUNTS DURING THE ACTUAL PERIOD WHEN THE TRAN SACTIONS TOOK PLACE I.E., FROM JUNE 2000 TO AUGUST, 2000. HE SUBMITT ED THAT THE FILING OF RETURN OF ACTUAL ACCOUNT WITH THE REGISTRAR OF COMP ANIES IS NOT AT ALL MATERIAL WHILE DETERMINING THE UNDISCLOSED INCOME. WHA T IS MATERIAL IS DISCLOSURE BY THE ASSESSEE UNDER THE IT ACT. HE SUBMITTED TH AT THE ASSESSEE HAS NOT EXPLAINED THE SOURCES FOR PAYMENT OF RS.1.1 5 CRORES. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATE RIAL AVAILABLE ON RECORD. THERE WAS A SEARCH ACTION AT THE OFFICE PREMISES OF THE ASSESSEE ON 12.10.2001. THIS WAS CONSEQUENT TO THE SEA RCH IN THE CASE OF M/S GK PROPERTIES (P) LTD. AND M/S HYDERABAD POTT ERIES (P) LTD. ON 5/9/2001. DURING THE COURSE OF SEARCH IN THE RESIDEN TIAL PREMISES OF SHRI S. SUNIL, DIRECTOR OF M/S HYDERABAD POTTERIES (P) LTD., CERTAIN INCRIMINATED MATERIALS IN THE FORM OF MOU WAS FOUND RE LATING TO TRANSACTIONS OF LAND SITUATED AT BAKARAM BETWEEN M/S HY DERABAD POTTERIES (P) LTD. AND M/S SAI SREE DEVELOPERS (P) LTD .. AS PER THIS AGREEMENT, TOTAL AMOUNT TOWARDS SECURITY DEPOSIT IS AT RS.1.90 CRORES COMPRISING CHEQUE PORTION AND RS.75 LAKHS IN CASH PORTION OF RS.1.15 CRORES. IT WAS REVEALED THAT CHEQUE PORTION WAS ACCOUNTED IN THE BOOKS OF M/S HYDERABAD POTTERIES (P) LTD. THEY CONFIRMED THA T OF THE DIRECTOR, THEY HAVE RECEIVED CASH PORTION AT RS.1.15 CRORES FROM TH E ASSESSEE COMPANY. FURTHER, ON SEARCH ACTION ON 12.10.2001 AT THE PREMISES OF THE ASSESSEE A STATEMENT WAS RECORDED FROM THE MANAGING DI RECTOR OF THE COMPANY SHRI BABU REDDY WHERE DISCLOSURE OF RS.60 LA KHS OUT OF IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 9 9 RS.1.15 CRORES AS UN DISCLOSED INCOME. HOWEVER, LATER ON R ETRACTED THE SAME AND EXPLAINED THE PAYMENT AT RS.1.15 CRORES AS FOL LOWS: SL.NO. DETAILS AMOUNT(IN RS.) 1 PAYMENT OUT OF UNDISCLOSED INCOME OF HIMA SAI ENCLAVE OFFERED TO TAX IN THE BLOCK RETURN RS.35,50,000 2 PAYMENT OUT OF SHARE APPLICATION MONEY AND FLAT ADVANCE. OUT OF THIS RS.44,08,000 WAS OFFERED BY DIRECTORS AND SHAREHOLDERS IN THE INDIVIDUAL RETURNS PRIOR TO ACTION U/S 132 IN THE CASE OF THE ASSESSEE COMPANY RS.44,08,000 3 BALANCE SUM WAS EXPLAINED IN THE CASH FLOW STATEMENT CAPITAL ACCOUNT, AND BALANCE SHEET FILED WITH REGULAR RETURNS AS INDICATED IN ITEM (II) ABOVE RS.35,42,000 TOTAL 1,15,00,000 20. FURTHER, THE ASSESSEE MADE AN ATTEMPT TO EXPLAIN IT BY PASSING JOURNAL ENTRY ON 31.12.2001 AS FOLLOWS: 1. SHRI SUNIL AND SHRI S. RAMESH A/C DR RS.1 .15 CRORES 2. TO FLAT ADVANCE A/C CR. RS.70.50 LAKHS 3. TO SHARE APPLICATION MONEY A/C -- CR. RS.44.50 LAKHS 21. HOWEVER, CONTRARY TO THIS, THE SEIZED MATERIAL AT PAGE NO.168 A/KBR/9 WHICH IS A CASH BOOK VOL.II OF M/S SAI SR EE DEVELOPERS (P) LTD. FOR THE ACCOUNTING YEAR 2000-01 WAS PUT BEFOR E THE ASSESSEE CALLED FOR EXPLANATION. THE ASSESSEE STATED THAT EXCEPT RS.10.50 LAKHS THE BALANCE OF RS.60 LAKHS IS BOGUS ENTRY SHOWN AS FLAT ADVANCE AND ACTUALLY THIS REPRESENTS THE UNDISCLOSED INCOME OF THE ASSESSEE DURING THE BLOCK PERIOD BUT INTRODUCED IN THE BOOKS OF ACCOUNTS OF AS FLAT ADVANCE FOLLOWING THE DETAILS OF FLAT ADVANCE: S.NO. NAME AMOUNT SHOWN AS FLAT ADVANCE (IN LAKHS) UNDISCLOSED INCOME OF THE COMPANY (IN LAKHS) 1 CH. VEERESHAM 1.6 LAKHS 1.6 LAKHS 2 NAGAPPA 1.5 LAKHS 1.5 LAKHS 3 K. RAM REDDY 1.6 LAKHS 1.6. LAKHS IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 10 10 4 P. KAMALAMMA 1.5 LAKHS 1.5 LAKHS 5 K. DAMODAR REDDY 1.5 LAKHS 1.5 LAKHS 6 KRISHNA REDDY 1.6. LAKHS 1.6 LAKHS 7. C. SATYANARAYANA 1.5 LAKHS 1.5 LAKHS 8 N. YADAGIRI REDDY 1.5 LAKHS 1.5 LAKHS 9. CH. RAMACHANDRA REDDY 1.5 LAKHS 1.5 LAKHS1 10 A. SATYANARAYANA 1,5 LAKHS 1.5 LAKHS 11 K. AJAYU RUDRA 1.5 LAKHS 1.5. LAKHS 12 J. DHARMAIAH 1.5 LAKHS 1.5 LAKHS 13 P. HANUMANTHA REDDY 1.2 LAKHS 1.2 LAKHS 14 G. ARUNA 1.9 LAKHS 1.9 LAKHS 15 K. ARUNA 1.6. LAKHS 1.6 LAKHS 16 P. BHUVANESWAR 1.6 LAKHS 1.6. LAKHS 17 G.V. PAPI REDDY 1.95 LAKHS 1.95 LAKHS 18 P.V. LAXMI 1.8 LAKHS 1.8 LAKHS 19 K.M. NARAYANA 1.6 LAKHS 1.6 LAKHS 20 I. SUBBAIAH 1.5 LAKHS 1.5 LAKHS 21 K. RAM REDDY 1.6 LAKHS 1.6 LAKHS 22 K. CHANNAIAH 1.5 LAKHS 1.5 LAKHS 23 A. ADIREDDY 1.5 LAKHS 1.5 LAKHS 24 K. LAXMA REDDY 1.5 LAKHS 1.5 LAKHS 25 K. LACHI REDDY 1.5 LAKHS 1.5 LAKHS 26 P. DASARADHA REDDY 2.55 LAKHS 2.55 LAKHS 27 P. JANARDHAN REDDY 1.5 LAKHS 1.5 LAKHS 28 D. RAMALINGAMMA 3 LAKHS 3 LAKHS 29 M. SIVA REDDY 2 LAKHS 2 LAKHS 30 P. NADAMMA 2 LAKHS 2 LAKHS 31 G. RAMANUJAMMA 2 LAKHS 2 LAKHS 32 K. SRINIVASA REDDY 1.9 LAKHS 1.9 LAKHS 33 S. RAJENDRA REDDY 1.5 LAKHS 1.5 LAKHS 34 NARASIMHA GOUD 1.5 LAKHS 1.5 LAKHS 35 P. MOHAN REDDY 1.5 LAKHS 1.5 LAKHS 36 M. SURESH REDDY 1.5 LAKHS 1.5 LAKHS 36 M. SURESH REDDY 1.5 LAKHS 1.5 LAKHS TOTAL 60 LAKHS 60 LAKHS 21.1. THE SAME WAS ADMITTED BY THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY ON 16.12.2001 AS UNDISCLOSED INCOME OF THE ASSESSEE. ALSO IT WAS STATED BY THE ASSESSEE THAT IT IS ON MON EY RECEIPTS FROM THE VENTURE OF HIMA SAI ENCLAVE AT BARA KATPURA DEVELOPED BY THE ASSESSEE DURING THE YEAR 1998 TO 2001. THE SAME MONEY WAS USED TO MAKE PAYMENT TO SHRI SUNIL AND SHRI S. RAMESH OF M/S HYDERABAD POTTERIES (P) LTD. THESE FACTS EVEN IF I T IS RETRACTED BY THE ASSESSEE, HAVE NO EVIDENTIAL VALUE UNLESS THERE IS MAT ERIAL EVIDENCE TO SHOW THAT THE STATEMENT WERE MADE BY COERCION OR UN DUE INFLUENCE IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 11 11 ARE IN DURESS OR ASSESSEE BROUGHT ANY MATERIAL TO SHOW TH AT THE TRANSACTIONS ARE DULY EXPLAINED. THE PROVISION OF SEC.1 32(4) IS SUBSTANTIVE PROVISIONS OF THE ACT. IT PERMITS INTERROGA TION OF PERSONS NOT ONLY RELATION TO BOOKS OF ACCOUNT ETC. FOUND AS A RE SULT OF SEARCH BUT ALSO ON ANY OTHER MATTER RELEVANT FOR ANY PROCEEDINGS UNDER THE IT ACT. THE AUTHORIZED OFFICER HAD THE POWER TO RECORD THE STA TEMENTS OF OATH ON ALL MATTERS PERTAINING TO THE SUPPRESSED INCOME. THE STATEMENT CANNOT BE CONFINED ONLY THE BOOKS OF ACCOUNTS. IF A MANA GING DIRECTOR OF THE ASSESSEE COMPANY CAME FORWARD TO DISCLOSE ABOUT THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH, THERE IS NO REASON WHY THE ASSESSING OFFICER SHALL NOT MAKE USE OF IT. IN THE P RESENT CASE, THE STATEMENT WAS MADE VOLUNTARILY BY THE MANAGING DIRECTO R OF THE ASSESSEE COMPANY. IN OUR OPINION, IT IS THE BEST AND INDE PENDENT EVIDENCE IN THE MATTER AND THERE WAS NO MATERIAL TO S HOW THAT THE STATEMENT WAS OBTAINED BY COERCION OR INTIMIDATION. TH ERE WAS NO CASE HAS BEEN MADE OUT THAT THE STATEMENT WAS MADE UNDER MI STAKEN BELIEF OF FACT OR LAW AND THE STATEMENT BEING A VOLUNTARY O NE, THERE IS NO SCOPE FOR THE ASSESSEE TO CHALLENGE THE CORRECTNESS OF THE USI NG OF THAT VERY STATEMENT. IF A STATEMENT IS GIVEN UNDER THREAT OR DURESS, THE ASSESSEE CAN RETRACT FROM ITS STATEMENT GIVEN UNDER THREAT OR DURESS DURING THE SEARCH BUT THE MATERIAL FACT SHOWS OTHERWISE. WHEN THE STATEMENTS WERE TAKEN, THE ASSESSEE HAS ADMITTED THAT IS U NDISCLOSED INCOME AT ITS FREE WILL HAD WITHOUT ANY THREAT. THE ASSESSEE IN THE STATEMENT CATEGORICALLY STATED THAT IT WAS NOT IN A POSI TION TO EXPLAIN THE ENTIRE AMOUNT OF RS.1.15 CRORES THE CASH PAYMENT MADE BY THE ASSESSEE AND IT WAS OFFERED RS.60 LAKHS AS UNDISCLOSED INCOME AND THE STATEMENT RECORDED DURING THE SEARCH WERE NOT TAKEN UND ER COHERSION OR DURESS. THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS WAS ACCE PTED BY THE ASSESSEE AS BOGUS ENTRIES AND NOT GENUINE AND THE INCOME FR OM SUCH BOGUS ENTRY IS OFFERED AS UNDISCLOSED INCOME OF THE ASSESSEE . IN THESE IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 12 12 CIRCUMSTANCES, THIS TYPE OF BOOKS OF ACCOUNTS THOUGH MAINTAI NED IN REGULAR COURSE CANNOT BE ACCEPTED AS GENUINE ENTRIES AND O N THE BASIS OF THESE BOGUS ENTRIES THE INCOME TO BE ASSESSED IN THE HAN DS OF THE ASSESSEE AS UNDISCLOSED INCOME UNDER CHAPTER XIV OF THE ACT IN THE HANDS OF THE ASSESSEE. THEREFORE, WE CANNOT AGREE WITH THE ARGUMENT OF THE ASSESSEES COUNSEL THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ENTRY SHOWS THE RECEIPTS IN THE NAME OF DIFFER ENT PERSONS AS MENTIONED IN THE ABOVE TABLE WHICH IS NOT GENUINE AND IT IS TO BE TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE ONLY. WHE N THE ENTRIES ARE FOUND NOT GENUINE, THERE IS NO QUESTION DE LETING THAT ADDITION WHICH HAS BEEN CONFIRMED BY THE CIT(A) AND THE SAME IS CO NFIRMED. FURTHER, THERE IS A SEARCH ACTION IN THE CASE OF THE ASSESSE E ITSELF U/S 132 READ WITH 158BC OF THE ACT AND THIS IS AN INDEPEND ENT SEARCH ACTION AND CONSEQUENT TO THIS SEARCH ACTION, THE ASSESSMENT WAS FRAM ED U/S 132 READ WITH SEC.158BC ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMEN TS OF SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. THE PROVISIONS OF CL AUSE (B) TO SEC.158B AS OPERATIVE PRIOR TO FIRST JUNE 2002 UNDISCLO SED INCOME INCLUDES ANY MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUN T OR OTHER DOCUMENTS OF TRANSACTIONS, WERE SUCH MONEY, BULLION, JEW ELLERY OR VALUABLE ARTICLE, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTIONS REPRESENTS WHOLLY OR PARTLY INCOME OR PR OPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURP OSE OF IT ACT. SUCH CLAUSE (B) OF SEC.158B HAS BEEN AMENDED W.,E.F. SAI D DATE THERE IS SPECIFICALLY PROVIDED THAT ANY EXPENSE, DEDUCTION OR AL LOWANCE CLAIMED UNDER THE SAID ACT WHICH IS FOUND TO BE FALSE SHALL BE IN CLUDED IN THE UNDISCLOSED INCOME AS DEFINED IN THAT CLAUSE. IN OUR OP INION, THE CIT(A) IT(SS)A-48 & 60/HYD/2004 SHRI SAI SREE DEVELOPERS (P) LTD., HYD. 13 13 HAS TAKEN THE CORRECT VIEW IN CONFIRMING THE UNDISCLOSED INCOME AT RS.60 LAKHS AND THE SAME IS CONFIRMED. 22. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS THAT OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 30 : 6.2 010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 30 TH THE JUNE, 2010 COPY FORWARDED TO: 1. M/S SAI SREE DEVELOPERS (P) LTD., 3-4-417 TO 422, VARAKANTHAM COMPLEX, TOP FLOOR, KACHIGUDA, HYDERABAD. 2. DY. CIT, CIRCLE 4, HYDERABAD 3. CIT(A)-I, HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP