AI Insights
The case involves a series of appeals by the assessee, Sri G. Rajender Reddy, against the additions made by the Assessing Officer following a search and seizure operation under section 132 of the Income Tax Act, 1961. The additions pertained to undisclosed income from land transactions, unexplained cash credits, and donations to Vinobha Development Society. The Tribunal examined the evidence, including the 'Lokpriya' book and statements from the assessee and his employees, and upheld most of the additions while allowing some relief through telescoping of additions. The Tribunal's decision emphasized the lack of credible evidence from the assessee to substantiate his claims and the legal presumptions under sections 132(4A) and 114 of the Indian Evidence Act.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 717445 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 year(s) 7 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-08-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB-A
Assessment Year
2008-2009
Appeal Filed On
23-12-2019
Judgement Text
"IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA.No.1846, 1847, 1848, 1849, 1850 & 1851/Hyd./2019 Assessment Years 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 & 2007-2008 Sri G. Rajender Reddy, Hyderabad – 500 035 PAN AHGPG2242M vs. The ACIT, Central Circle-6, HYDERABAD – 500 004. Telangana. (Appellant) (Respondent) For Assessee : CA, P. Murali Mohan Rao For Revenue : Shri Gurpreet Singh, Sr. AR Date of Hearing : 30.07.2025 Date of Pronouncement : 13.08.2025 ORDER PER MANJUNATHA G. : The above batch of 6 appeals are filed by the assessee against the separate orders all dated 24.09.2019 of the learned Commissioner of Income Tax-(Appeals)-6, Hyderabad, relating to the assessment years 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 and 2007-08. Since common issues are involved in all these three appeals, these appeals were heard together and are being disposed of by this single consolidated order for the sake of convenience Printed from counselvise.com 2 ITA.Nos.1846 to 1851/Hyd./2019 and brevity. First, we take-up appeal of the Assessee ITA.No.1848/Hyd./2019 for the assessment year 2007-2008 as “lead” appeal, in which, the assessee has raised the following grounds : 1. “The order of the learned CIT(A) in confirming the order of the AO is not only erroneous both on facts and in law but is without application of mind as none of the submissions that are made are considered and dealt with. 2. The learned CIT(A) failed to appreciate that there was nothing in the seized material of the AO has brought on record any evidence in the form of purchase deed or sale deed to demonstrate that the assessee is engaged in land purchase and sale to hold that the receipts recorded in the seized material A/SBS/BUS/14 relate to such income and has not conducted any enquiry whatsoever from the date of search to the date of competition of assessment in spite of there being references of mobile numbers in the seized material and thereby erred in confirming the addition of Rs.3,44,22,300 without considering the submissions. 3. The learned CIT(A) further failed to appreciate that it is settled law that every receipt cannot be revenue receipt or that it is income and further erred in not considering the submissions about the discrepancy by the AO in considering the amount as against the claim of the assessee that the receipts are considered in the hands of the firm and amount is also not correctly arrived at. 4. The learned CIT(A) further failed to appreciate the settled principle of law that not only there should be a source for income but also there should be evidence as to where the same is appearing as investment or otherwise to determine the undisclosed income and in the absence of books of account as per CBDT's circular \"Net worth basis should be followed to determine the undisclosed income and thereby erred in rejecting such plea by the assessee on the ground that there are no assets whatsoever to hold that the assessee earned any undisclosed income. 5. The learned CIT(A) though states that the AO has discussed the reasons elaborately in the assessment order failed to deal with Printed from counselvise.com 3 ITA.Nos.1846 to 1851/Hyd./2019 the submissions of the assessee both at the time of assessment and in appeal and erred in not discussing about it except reproducing them and not passing a reasoned order as to why such submissions are not tenable. 6. The learned CIT(A) erred in confirming the amount paid for admission to Engineering College of Rs.5,00,000 as unexplained without considering the submissions. 7. The learned CIT(A) erred in confirming the addition of Rs.45,00,000 as Commission income without considering the submissions that are made merely based on AO's version and without dealing with the submissions as to why the same is not correct and without any evidence except statement at the time of search and without enquiry with the land owner (Tax effect - Rs.1,62,27,691). 8. For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.” 2. Brief facts of the case are that, the assessee is an individual, running a xerox shop in the name of M/s SVS Xerox, 11-13-193/3/1B, Dwarka Nagar, R.K. Puram, Hyderabad by engaging some employees. The assessee had filed his return of income for the assessment year 2007- 2008 admitting total income of Rs.4,33,020/-. A search and seizure operation under section 132 of the Income Tax Act, 1961 [in short “the Act”] was conducted at the business and residential premises of the assessee on 22.08.2018. Consequent to search and seizure operation, notice under section 153A of the Act were issued for assessment years Printed from counselvise.com 4 ITA.Nos.1846 to 1851/Hyd./2019 2003-2004 to 2008-2009. In response to the said notice, the assessee filed his return of income for the assessment year 2007-2008 on 11.08.2010 declaring total income of Rs.4,33,020/-. The assessment has been completed under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 on 30.12.2010 and determined the total income of the assessee at Rs.5,29,49,820/- by, inter alia, making additions towards unexplained cash credit of Rs.1,30,14,500/-; undisclosed income from land transactions of Rs.3,44,22,300/-; donation to CBIT from undisclosed income of Rs.5 lakhs and undisclosed commission income of Rs.45 lakhs. 3. The assessee carried the matter in appeal before the First Appellate Authority-CIT(A) and challenged various additions made by the Assessing Officer. The learned CIT(A)- 7, Hyderabad, for the reasons stated in the other dated 24.09.2019 rejected the arguments of the assessee and sustained the addition made by the Assessing Officer towards unexplained cash credit, undisclosed income from land transaction, donation to CBIT out of undisclosed income and undisclosed commission income. Printed from counselvise.com 5 ITA.Nos.1846 to 1851/Hyd./2019 4. Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal. 5. The first issue that came-up for consideration from ground nos.2 to 5 of assessee’s appeal is addition of Rs.3,44,22,300/- towards undisclosed income from land transactions. 6. The facts with regard to the impugned issue are that, during the course of survey at the business premises of the assessee one ‘Lokpriya’ book containing 381 machine numbered of pages Annexed as A/SVS/BUS/14 was found and impounded. On going through the same, it was noticed that, it contains lot of entries like “VDS amount bill paid”, “Rajasekhar”, “VDCV Chari Water Tank purpose bill”, etc., against whom certain figures were also mentioned. On noticing the entries in the said book, Sri B. Sriramulu, employee of the assessee Sri G. Rajender Reddy was asked to identify the handwriting in the book and explain the contents therein, where he stated that, different people came to Sri G. Rajender Reddy for the purpose of purchase Printed from counselvise.com 6 ITA.Nos.1846 to 1851/Hyd./2019 of plots and on the basis of instruction of Sri G. Rajender Reddy from time to time about the moneys received, the entries were made by him in the said notebook. Sri B. Sriramulu was asked to explain the contents of Page-3 of A/SVS/BUS/14. In response, he stated that, one Mr.Chittaranjan Das had paid Rs.1,10,000/- on 18.10.2006 to Sri G. Rajender Reddy towards plots at Taramatipet at which place 78 acres of land were being plotted by Bhoodan Yagna Board. Similarly, on 16.10.2006, another amount of Rs.1,00,000/- was paid by Mr.Chittaranjan Das to the assessee, which was informed to Sri B. Sriramulu for making entry in the said notebook. Sri B. Sriramulu has also stated that, Shri Raghav Rao whose name appears at many places in the said notebook, is into real estate business and he has also associated with Vinoba Nagar Development Society. He further stated that, Sri Raghava Rao has paid an amount of Rs.2,15,80,000/- on different dates to Sri G. Rajender Reddy for sites located in different locations as marked in the notebook. The notebook found during the course of survey and statement of Sri B. Printed from counselvise.com 7 ITA.Nos.1846 to 1851/Hyd./2019 Sriramulu was confronted to the assessee and statement was recorded on 22.08.2018 and asked him to explain the contents of the said notebook. In response, he has admitted that, entries in the account book have been maintained by Sri B. Sriramulu under his personal supervision and further, the amounts recorded therein are pertains to sale of his share of plots in the Hayatnagar venture of approximately 10 acres of “Mithra Associates”. Further, as per the agreement between Mithra Associates and myself, I did the development work of 10 acres of land, in lieu of which, Mithra Associates gave him 200 plots. The Assessing Officer has analysed the impounded book and observed that, the book contains the details of amount received from different persons, who approached the assessee for settlement of their disputes arising out of their land transactions. Further, the said book also contains payment of donations by different individuals to M/s. Vinoba Nagar Development Society and details of certain expenditure incurred by the assessee for different purposes. The Assessing Officer on the analysis of the said documents, Printed from counselvise.com 8 ITA.Nos.1846 to 1851/Hyd./2019 came to the conclusion that, most of the funds are in relation for getting land by the said individuals from the Society or from Andhra Pradesh Bhoodan Yagna Board. The total receipts as per Lokpriya book comes to Rs.11,85,19,331/-. It is also seen that, said register contains details of certain payments and the amounts has been worked out to Rs.34,16,031/-. The Assessing Officer had also cross-examined Mr. N. Raghava Rao, one of the persons whose name appears in the said book and statement under section 131 of the Act was recorded. In response to specific questions, Sri N. Raghava Rao admitted that, he has paid amount to Sri G. Rajender Reddy for the purpose of allotment of land by Sri G. Rajender Reddy as Coordinator of Andhra Pradesh Bhoodan Yagna Board and Chairman of M/s. Vinoba Nagar Development Society. 7. During the course of assessment proceedings, the assessee was again given an opportunity to explain the impounded book A/SVS/BUS/14. In response, the assessee submitted that, these are receipts from various persons for carrying-out their work and what we received is only Printed from counselvise.com 9 ITA.Nos.1846 to 1851/Hyd./2019 commission and the same is admitted in the return of income filed by the Firm. He further stated that, some of the receipts and expenses recorded in the seized book relates to M/s. Vinoba Nagar Development Society and the same is recorded in the books of the Society. The assessee once again vide his written submissions dated 24.01.2021 has contended that, whatever income is derived from the transactions written in the impounded book, is reflected in the Firm's return of income and part of the transactions are related to M/s. Vinoba Nagar Development Society. 8. The Assessing Officer after considering the relevant submissions of the assessee and also taken note of impounded book observed that, the assessee could not explain the contents recorded in the document with relevant evidences. Although, the assessee and his employees initially admitted that, the amounts recorded in the book pertains to receipts towards allotment of land to beneficiaries from Andhra Pradesh Bhoodan Yagna Board or M/s. Vinoba Nagar Development Society, but, subsequently the assessee changed his stand and argued that, the Printed from counselvise.com 10 ITA.Nos.1846 to 1851/Hyd./2019 amounts recorded in the book relates to receipts from various persons for settlement of their land disputes and he incurred various expenses and offered net commission income in his return of income filed for the relevant year. Further, the assessee once again changed his stand and came with an argument that, credits appearing in the seized material are of the Firm. The Assessing Officer after considering the relevant explanations of the assessee had come to the conclusion that, the assessee has received various amounts from different parties for land transactions and the same has not been recorded in his books of accounts. Although, the assessee claims to have recorded receipts in the name of the Firm, but, upon perusal of relevant details submitted by the assessee, it is noticed that, the Firm claims to have been formed on 25.03.2007, but, the return for the assessment year 2008-2009 was filed only on 12.11.2009 i.e., almost 15 months after the date of survey/search. Further, the Firm has obtained PAN vide their application dated 09.10.2009 i.e., after the date of search and survey. Though, the assessee claims that, return Printed from counselvise.com 11 ITA.Nos.1846 to 1851/Hyd./2019 was filed in the status of “Firm” considering the contents of the impounded book, but the fact remains that, the receipt in the book starts from 11.01.2005 pertains to assessment year 2005-2006. Since the assessee has failed to offer proper explanation with regard to the contents of book found during the course of search, the Assessing Officer observed that, the amount recorded in the books pertains to receipts towards land transactions and the same has not been offered for taxation. The Assessing Officer had also took support from the provisions of Section-132(4A) of the Income Tax Act, 1961 and Section-114 of the Indian Evidence Act and observed that, once a document or books of account are found in the possession of the assessee in the course of search, it will be presumed that, such document belongs to searched-person and contents of the searched documents are true. Therefore, rejected the arguments of the assessee and made addition of Rs.3,44,22,300/- towards undisclosed income from land transactions. The relevant observations of the Assessing Officer are as under: Printed from counselvise.com 12 ITA.Nos.1846 to 1851/Hyd./2019 “4.8. Proposal and reply of the assessee: As no satisfactory clarifications on the contents of the impounded book are coming from the assessee, the total contents of the book are proposed for addition in the hands of Sri G. Rajender Reddy. For this, the assessee contended that based on his net wealth statements filed, his income be assessed. For this, he relied on the decision in the case of K.V. Srinivasa Rao & others v Assistant Commissioner of Income-tax, ITAT Visakhapatnam Bench 125 TTJ, and Circular No.F.No.2/48/68- IT(Inv), dated 26.02.1969. The submissions of the assessee are gone through. The cash flow statements submitted by the assessee cannot be taken cognizance of as they do not show the date-wise details of inflow and outflow. Though this made clear vide this show cause dated 21.12.2010, the assessee has not furnished any other reply and information on the cash availability. As regards the seized material, except stating that the contents of the impounded book are considered in the hands of the firm, the assessee has not furnished any other evidence. Assuming, without conceding that the above credits are considered in the hands of firm, the basis for admitting these are not explained during his submissions are in the said return of income filed. The claim of credits appearing in the seized material are of the firm was not a stand taken by the assessee during the course of survey on 22.08.2008 (where the assessee admitted that the credits appearing in the impounded book are his transactions) or not even in the statement recorded on 01.09.2008 & 15.09.2008 (where he stated that these are details of amounts received from different persons who approach him for settlement of their dispute arising out of their land transactions). The question of the status of the firm, and the employees becoming partners in the firm, is totally a new issue that was never uttered by the assessee or the employees at any point of time till the search proceedings are over. The assessee further mentioning the impounded book and the details of the transactions like page number and amount mentioned therein, under different heads has admitted the gross receipts and went on claiming some expenditure and finally shown that they have collected service charges /reimbursement for the services rendered by them. The background for such activities by the assessee was explained through an organization 'S.V.S. Workers Paradise', the assessee being proprietor of this Printed from counselvise.com 13 ITA.Nos.1846 to 1851/Hyd./2019 organization. The assessee tried to camouflage his land settlement receipts, transacted with various persons as were done through this organization and to add colour to this act, he has given a copy of the 'Roll (to be read of role) of Organization\". Without going into all the frivolous and unrelated roles this organization has donned for itself on a simple white paper, the 'conclusion' of this organization attracts attention, which reads as under : \"In view of the above stated elaborate funds it is farmed beyond duly that I solemnly declared that the S.V.S. Workers Paradise had not collected unlawfully amounts from anybody. But we satisfactory provide service exteance to needy person who approached voluntarily with good faith finally conclusive that this organization was established under Gandhian Concepts to serve the poor and need\". On the date of initiation of the organization, the role speaks of collection of unlawful amounts. This clause was apparently to cover up the land settlement disputes received by the assessee from various persons as evidenced by the impounded book. Though the same was admitted by the assessee during survey and in his statements, now he is trying to take a chance of explaining the receipts as of an organization formed on Gandhian principles, and owned by him as Proprietor. All these devices adopted by the assessee to explain the contents of the impounded book are certainly self-serving without any basis. This can be proved as under : 1. The existence of the status of a firm was not at all articulated during survey or completion of search proceedings. 2. The employees of the assessee in their initial sworn statements dated 22.08.2008 avowed that the receipts belong to Sri G. Rajender Reddy. Even subsequently in the statements recorded on 29.08.2008, it was stated that they acted on the direction of their employer and the money belongs to the assessee only. 3. The said firm is claimed to have been formed on 25.03.2007 but the return for the Assessment Year 2008- 09 was filed only on 12.11.2009, i.e., almost 15 months after the date of survey / search. Printed from counselvise.com 14 ITA.Nos.1846 to 1851/Hyd./2019 4. The role of organization furnished claims that it was established in the year 2003 under the Chairmanship of Rajender Reddy and other partners. The terminology of 'chairman' 'partners' and 'proprietor' are inter-contradictory and each of these statuses mentioned denote certain status to this organization. 5. One more intriguing fact to show that the status of the firm is a clear after-thought of the assessee is that after forming the firm in the year 2007, the PAN for the said firm was obtained vide their application dated 09.10.2009, i.e., before filing the returns of income. It is not understood why the firm has taken such a long time to get its PAN, though it started its activities from 25.03.2007, going by the assessee's version. 6. Though the assessee claims that a return was field return in the status of firm considering the contents of the impounded book for the Assessment Year 2008-09, the receipts in the book start from 11.01.2005, 1.e., right from the Assessment Year 2005-06. However, no returns of income for the Assessment Years 2005-06 to 2007-08 are not filed. The reason for not filing the return of income for the earlier Assessment Years is obvious as the time for filing the return of income has lapsed by the time the assessee pretended to file the return as status of firm. 7. Even the returns filed for the Assessment Year 2008-09 and 2009-10 are belated and the assessee clearly mentions the number of seized material in the said returns. The reasons for filing such return shows the intention of the assessee to distract the attention from the main issues involved in the seized material. 8. The assessee instead of explaining the contents of the seized material found in his premises, throwing the onus on the Department to prove the seized book and the contents therein as belonging to him. As was said by the assessee himself in the above written submission dated 24.12.2010, the seized book was found in his premises containing the writings of his employees, who admitted that the transactions were noted as per the direction of their employer and the funds they dealt with belong to the assessee only. Therefore, the seized material and the analysis made above testifies that the contents therein Printed from counselvise.com 15 ITA.Nos.1846 to 1851/Hyd./2019 belong to the assessee only in his individual capacity and not to any other persons in any other capacity. 4.9. Legal position: Here reference can be made to sub-section (4A) of Section 132 of the Income Tax Act, 1961, where the statute provides when any documents or books of Account are found in the possession of the assessee in the course of Search it will be presumed that i. such document belongs to such person ii. the contents of the such documents are true iii. The signature and every other parts of such documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed are in that persons handwriting. Thus the argument of the assessee disowning the transactions is misrepresentation of facts. Under these circumstances, the seized books A/SVS/BUS/01 and A/SVS/BUS/14 are to be held as RELEVANT and MATERIAL. The evidentiary nature of such entries have also been admitted and incorporated in the Income Tax Act, 1961 for which reference may be made to entries in books of account and documents as mentioned in section 132(4A). Further reference can be made to section 58 of the Indian Evidence Act, insofar as the admissions are concerned. The assessee had made evasive replies to specific queries. Under these circumstances the assessee is clearly resorting to these tactics because the facts are overwhelmingly stacked against him. These kinds of presumptions are also sanctioned under the law for which a reference can be made to illustration 'h' under 114 of the Indian Evidence Act. The assessee thus cannot disown the entries in the seized books seized from the business premises of the assessee. All the above clearly show that the assessee is taking a chance in explaining away the contents of the seized material as not belonging to his individual capacity but to a firm, formed after a long time it started its activities. With these remarks it can be conclusively held that the status of the firm is a clear after- thought of the assessee to circumvent the impeding tax liability of Printed from counselvise.com 16 ITA.Nos.1846 to 1851/Hyd./2019 accepting the receipts appearing in a book written under his supervision. 4.10. Quantification: On totalling the amounts received as per the entries made in A/SVS/BUS/14, the receipts therein for different periods are as follows, after excluding the donations made by certain individuals in the name of Vinoba Nagar Development Society :- Financial Year Amount (Rs.) 2004-05 13,00,000 2005-06 31,26,000 2006-07 3,44,22,300 2007-08 2,69,73,000 1.4.08 to 21.8.08 1,16,44,500 Total 7,74,65,800 Accordingly, the total receipts in the impounded book for the period relevant for the Assessment Year are quantified at Rs.3,44,22,300/- and the same are assessed as undisclosed income of the assessee from land transactions.” 9. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee has filed detailed written submissions on the issue which has been reproduced at para 4.1 at page 10 to 14 of the CIT(A) order. The sum and substance of the arguments of the assessee before the learned CIT(A) are that, the Assessing Officer erred in making addition of Rs.3,44,22,300/- towards undisclosed income from the land transactions on the basis of Lokpriya book found during the survey, even though, the entries Printed from counselvise.com 17 ITA.Nos.1846 to 1851/Hyd./2019 contained in the said book does not belongs to the assessee and further, the same has been offered in the hands of the Firm for the assessment year 2008-2009. The learned CIT(A) after considering the relevant submissions of the assessee and also taken note of relevant book called Lokpriya found and impounded during the search observed that, the assessee has failed to offer any explanation with regard to amount received from various persons for allotment of land from Andhra Pradesh Bhoodan Yagna Board or M/s. Vinoba Nagar Development Society. Although, the assessee claimed to have received the amount in the name of the Firm and offered to tax, but, upon perusal of the relevant reasons given by the Assessing Officer, it appears that, the introduction of Firm in the subsequent stage of proceedings is only an afterthought which is evident from the date of creation of the Firm, subsequent filing of return of income after obtaining the Firm's PAN. Therefore, the learned CIT(A) observed that, the mere submissions of the assessee during appellate proceedings is not acceptable in view of clear findings from the Assessing Officer that, the document Printed from counselvise.com 18 ITA.Nos.1846 to 1851/Hyd./2019 found during the survey clearly shows unaccounted income pertains to land transactions. Thus, rejected the arguments of the assessee and sustained the addition made by the Assessing Officer towards undisclosed income from land transactions. The relevant observations of the learned CIT(A) are as under: “4.3. I have carefully considered the findings of the Assessing Officer in the order of the assessment, remand report and submissions made by the appellant. The assessing officer elaborately discussed this issue in the order of the assessment. The assessing officer observed that the appellant did business in the real estate activity and earned undisclosed Income of Rs.3,44,22,300/- from land transactions based on evidence collected during the course of survey action at the business premises of the appellant by impounding note book called \"Lok Priya\" containing 381 machine numbered pages annexed as A/SBS/BUS/14, in the statement recorded of Sri B. Sriramulu, employee of the appellant on 22-08-2008, admission of Sri G. Rajendra Reddy dated 22-08-2008, analysis of the impounded book, the cross examination of Sri N. Raghav N. Raghav Rao, the analysis of the cross-examination and rejecting the contention of the appellant that he received only commission income. When the assessing officer confronted the appellant about the business of land purchase and sale in the individual capacity, the appellant came out with the different plea stating that he earned only commission income and balance transactions belong to firm. The assessing officer has rejected the contention of the appellant that Printed from counselvise.com 19 ITA.Nos.1846 to 1851/Hyd./2019 the transactions recorded in the impounded material belongs to firm for want of documentary evidence. During the course of the appellate proceedings also, the appellant did not bring out any material in support of the claim that the transaction recorded in the material belongs to firm and the same were reflected in the income tax return filed by the firm if any. The mere submissions made by the appellant during the course of the appellate proceedings is not acceptable evidence. The AR of the appellant did not rebut the findings of the assessing officer in the order of the assessment and remand report with any documentary evidence. I fully agree with view of the assessing officer in the remand report. The assessing officer correctly came to conclusion based on statement recorded u/s.132(4) of the IT Act and other evidences. The assessing officer rightly given due importance to the statements recorded by various people. The retraction made by the appellant and B. Sriramulu the employee of the appellant at behest of the appellant is not acceptable for the reasons that the statements were recorded voluntarily without any pressure or without undue influence. In other words, the appellant did not substantiate the grounds of appeal filed in this regard with any plausible reasons and documentary evidence. Hence, I confirm the addition made by the assessing officer. These grounds of appeal are dismissed.” 10. CA, P Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) was erred in sustaining the addition of Rs.3,44,22,300/- towards undisclosed income from land transactions, even though, as per seized book, the total receipts were at Rs.2,18,69,800/-. Printed from counselvise.com 20 ITA.Nos.1846 to 1851/Hyd./2019 The Learned Counsel for the Assessee referring to Lokpriya book found and impounded during the course of search submitted that, the assessee has analysed each and every entry contained in the book and noticed that, the total receipts as per the said book is only Rs.2,18,69,800/-. Against these receipts, the assessee has incurred various expenditure which is also recorded in the very same notebook. The assessee has offered net commission income from the transactions and the same has been reported in the return of income filed for the relevant assessment year. Further, the amount recorded in the notebook is partly pertains to Firm and partly pertains to M/s. Vinoba Nagar Development Society. The assessee has explained the above entries in light of return of income filed by the Firm by filing relevant details. The Assessing Officer and the learned CIT(A) without considering the relevant details, simply made addition only on the basis of statement of employees and the assessee, even though, the statements given by the employees and the assessee, has been subsequently withdrawn by filing retraction statement. In this regard, he Printed from counselvise.com 21 ITA.Nos.1846 to 1851/Hyd./2019 relied upon certain judicial precedents including decision of Hon'ble High Court of Telangana and Andhra Pradesh in the case of Gajjam Chinna Yellappa vs., ITO [2015] 370 ITR 671 (AP & Telangana) and the decision of Hon’ble Supreme Court in the case of CIT vs., S. Khader Khan Son [2013] 350 to ITR 480 (SC). 11. Sri Gurpreet Singh, Learned DR for the Revenue, on the other hand, supporting the order of the Assessing Officer and CIT(A) submitted that, Lokpriya book containing 381 pages found during the course of survey clearly shows unaccounted land transactions of the assessee. Sri B. Sriramulu employee of the assessee very categorically explained the entries contained in the notebook and stated that, certain people have come and paid money for the purpose of allotment of land at Andhra Pradesh Bhoodan Yagna Board or M/s. Vinoba Nagar Development Society. He further stated that, one Mr. Raghava Rao has paid an amount of Rs.2,50,80,000/-. The Assessing Officer has cross-examined Mr. Raghava Rao and recorded his statement under section 131 of the Act, where he has Printed from counselvise.com 22 ITA.Nos.1846 to 1851/Hyd./2019 confirmed amount paid to the assessee for land transactions. The Assessing Officer has analysed the transactions and came to the conclusion that, the assessee has received money from various people for land transactions, but, same has not been reported in the return of income for the relevant assessment years. Although, the assessee has come out with different versions at subsequent stages and introduced a Firm, but, the fact remains that, the Firm has taken PAN in the year 2009 after search and survey and has filed return of income for the assessment year 2008-2009, but, the transactions in the notebook is from assessment year 2005-2006. The assessee could not explain the relevant facts. Therefore, the Assessing Officer has rightly assessed the undisclosed income from land transactions and thus, the order of the Assessing Officer and CIT(A) should be upheld. 12. We have heard both the parties, perused the material on record and the orders of the authorities below. We have also carefully considered the relevant documents found during the course of survey titled ‘Lokpriya’ book Printed from counselvise.com 23 ITA.Nos.1846 to 1851/Hyd./2019 containing 381 pages, which is available in the paper book filed by the assessee. It is an admitted fact that, during the course of survey, a book containing 381 pages with various entries has been found and impounded. A statement from Sri B. Sriramulu, the Author of the book has been recorded, where he has explained the contents of book and admitted that, entries relates to amount received by the assessee towards land transactions. A statement from the assessee was also recorded where he has confirmed the statement of Sri B. Sriramulu and also explained that, he has received amounts towards land transactions. Although, the assessee came to a different argument at subsequent stages of proceedings, but, the fact remains that, the arguments of the assessee that, he has received money from various people for settlement of land disputes and paid various amounts for the purpose of various expenditure and only receives commission income, is not substantiated with relevant evidences. Although, the Counsel for the Assessee refers to certain entries contained in very same book and claimed that, these are the expenditure pertains to land Printed from counselvise.com 24 ITA.Nos.1846 to 1851/Hyd./2019 transactions, in our considered view, unless the assessee reconcile each and every entry recorded in the said book with reference to nature of expenditure, the arguments of the assessee that, he has incurred various expenditure out of amount received from various persons, cannot be accepted. Further, the assessee has once again changed his stand and come-out with the explanation that, entries contained in Lokpriya book is relates to a Firm and the same has been considered for the assessment year 2008- 2009 and also part of the transactions pertains to M/s. Vinoba Nagar Development Society. We, once again do not agree with the arguments of the Counsel for the Assessee for the simple reason that, the assessee is making an oral argument without any documentary evidences to substantiate his claim with entries contained in the book pertains to Firm and M/s. Vinoba Nagar Development Society either by filing the financial statements of society or explaining the entries contained in the book with reference to the books of accounts of the Firm. Further, as narrated by the Assessing Officer, the so-called Firm was Printed from counselvise.com 25 ITA.Nos.1846 to 1851/Hyd./2019 incorporated or formed on 25.03.2007 and the return of income for the assessment year 2008-2009 was filed only on 12.11.2009 i.e., almost 15 months after the date of survey/ search. Further, the Firm has obtained PAN vide their application dated 09.10.2009 i.e., before filing the return of income, whereas the transactions recorded in the Lokpriya book starts from 11.01.2005 i.e., right from assessment year 2005-2006. If at all the arguments of the assessee is correct that, the transactions pertains to Firm, the assessee should have filee the return of income of the Firm from assessment year 2005-2006 onwards. Therefore, in our considered view, the assessee could not explain the transactions with relevant evidences and, therefore, the arguments advanced by the Learned Counsel for the Assessee in light of Partnership Firm and M/s. Vinoba Nagar Development Society is only an afterthought and cannot be accepted. Further, in respect of the arguments of the Learned Counsel for the Assessee that, the total amount recorded in the seized book is only Rs.2,18,69,800/-, but, not Rs.3,49,22,300/- as claimed by the AO, in our Printed from counselvise.com 26 ITA.Nos.1846 to 1851/Hyd./2019 considered view, once again the Counsel for the Assessee made an argument on the basis of abstract prepared from the seized book without there being any reconciliation with reference to each and every entry in the said book. Therefore, in our considered view, the assessee has failed to reconcile the entries to arrive at a receipt of Rs.2,18,69,800/- and thus, the arguments of the Counsel for the Assessee on this ground are rejected. 13. Coming back to the arguments of the assessee that, the Assessing Officer has made addition only on the basis of statement of employees and the assessee. We once again reject the arguments of the Counsel for the assessee on the ground that, the addition made by the Assessing Officer is not only on the basis of statement of Mr. B. Sriramulu, an employee or the Appellant, but, it is based on the documents found during the course of survey, where a clear explanation has been given by the Author of the document with reference to the cash received from various parties for the purpose of land transactions. This fact has been further strengthened by the cross-examination of Mr. Printed from counselvise.com 27 ITA.Nos.1846 to 1851/Hyd./2019 Raghava Rao, where, in a statement recorded under section 131 of the Act, he has admitted payment of money to the assessee for land transactions. Further, the assessee had also in his initial statement has admitted that, he has developed 10 acres of land and received 200 plots from Mithra Associates and the amount recorded in the books pertains to the land transactions. Although, the assessee claims that, statement given by the employee and assessee has been subsequently withdrawn by filing a retraction statement, in our considered view, the retraction filed by the assessee without any valid explanation, cannot be accepted. Moreover, as per the legal presumption contained under section 132(4A) of the Act, when a document or books of accounts are found in the possession of an assessee in the course of search or survey, it will be presumed that, such documents belongs to searched-person and the contents of such documents are true and further, the signature or every other part of such document is in the handwriting of any particular person. Therefore, in our considered view, the arguments of the Counsel for the Assessee in light of Printed from counselvise.com 28 ITA.Nos.1846 to 1851/Hyd./2019 decision of Hon’ble High Court of Telangana and Andhra Pradesh in the case of Gajjam Chinna Yellappa (supra) and decision of Hon’ble Supreme Court in the case of CIT vs., S. Khader Khan Son (supra), is devoid of merit and cannot be accepted. 14. In this view of the matter and considering he facts of the case, we are the considered view that, the Assessing Officer has rightly made addition towards undisclosed income from land transactions on the basis of ‘Lokpriya’ book found and impounded during the course of survey. The learned CIT(A) after considering the relevant facts, has rightly sustained addition made by the Assessing Officer. Thus, we are inclined to uphold the order of the learned CIT(A) on this issue and reject the ground taken by the assessee. 15. The Next issue that came-up for consideration from ground nos.2 to 5 of assessee’s appeal is addition of Rs.1,30,94,500/- towards unexplained cash credits. Printed from counselvise.com 29 ITA.Nos.1846 to 1851/Hyd./2019 16. During the course of search, a Register A/SVS/ BUS/01 was found and seized, which contains details of bank account statement of four individuals viz., Mr. V. Sreenu, Mr. S. Shyam Kumar, Mr. B. Sriramulu and Mr. K. Srinivas Reddy in three different banks i.e., in Corporation Bank, Andhra Bank and HDFC Bank at Hyderabad. On going through the said book, it was noticed that, it contains certain entries made from 03.11.2006 to 13.06.2018. During the course of survey, the four individuals i.e., Mr. V. Sreenu, Mr. S. Shyam Kumar, Mr. B. Sriramulu and Mr. K. Srinivas Reddy were questioned, and their statements were recorded on oath on 22.08.2018. All the four persons in their statement recorded during the course of search admitted that, the bank accounts are opened and operated by Sri G. Rajender Reddy in their names and credits in the bank accounts pertains to amount received towards land transaction. The Assessing Officer analysed the bank accounts maintained with Corporation Bank, Andhra Bank and HDFC Bank and observed that, the assessee has periodically deposited cash into bank accounts and there Printed from counselvise.com 30 ITA.Nos.1846 to 1851/Hyd./2019 are certain withdrawals. On analysis of the withdrawals, it is seen that, all the withdrawals are made for the purpose of B.Ed college construction and M/s. Vinoba Nagar Development Society purpose [indicates M/s. Vinoba Nagar Development Society] etc. The document found during the course of search and statements of individuals were confronted to the assessee and statement under section 132(4) was recorded, where he has admitted that, credits in the said bank account is his own money, which was deposited in the names of his employees and accepted the credits in the said account as unaccounted income. 17. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain the credits in the bank account of four individuals and also as to why the same should not be treated as unexplained cash credit. In response, the assessee submitted that, credits in bank accounts pertains to Partnership Firm of Sri G. Rajender Reddy and others and the same has been considered for assessment years 2008-2009 to 2009-2010. The Assessing Officer after considering the relevant Printed from counselvise.com 31 ITA.Nos.1846 to 1851/Hyd./2019 submissions of the assessee and also taking note of relevant bank accounts found during the course of search observed that, the assessee and his employees in their statements recorded during the course of search and survey admitted that, these credits pertains to the assessee for his land transactions. Although, the assessee claims to have accounted the said receipts in the hands of Partnership Firm, but, upon perusal of relevant details, it was noticed that, the Firm is claimed to have been formed on 25.03.2007, but, the return of income for the assessment year is 2008-2009 was filed only on 12.11.2009 i.e., almost 15 months after the date of survey/search. The Assessing Officer further noted that, the Firm had taken PAN vide their application dated 09.10.2009 i.e., before filing return of income. Therefore, observed that, if at all the bank account transactions pertains to Firm, then, the assessee could not explain as to why the said credits not rooted through the bank account of the Firm and also the return of income of the Firm has not been filed from the assessment year 2005- 2006. The Assessing Officer rejected the Printed from counselvise.com 32 ITA.Nos.1846 to 1851/Hyd./2019 arguments of the assessee and also took support from the legal presumption contained under section 132(4A) of the Act and observed that, the assessee has failed to offer any explanation with regard to credits appearing in the bank account of employees and thus, quantified the amount of Rs.1,30,94,500/- and made addition as unexplained cash credits of the assessee. The relevant findings of the Assessing Officer are as under: Printed from counselvise.com 33 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 34 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 35 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 36 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 37 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 38 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 39 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 40 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 41 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 42 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 43 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 44 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 45 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 46 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 47 ITA.Nos.1846 to 1851/Hyd./2019 Printed from counselvise.com 48 ITA.Nos.1846 to 1851/Hyd./2019 18. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A) and filed detailed written submissions on the issue which has been reproduced at para-5.2 at pages-27 and 28 of the learned CIT(A) order. The sum and substance of the arguments of the assessee before the learned CIT(A) are that, credits appearing in bank account of employees pertains to Partnership Firm and the same has been offered in the hands of the Firm for the assessment year 2008-2009. The learned CIT(A) after considering the relevant submissions of the assessee and also taken note of relevant bank accounts Printed from counselvise.com 49 ITA.Nos.1846 to 1851/Hyd./2019 found during the course of survey observed that, although, the assessee claims to have accounted credits in bank account in the name of the Firm, but, failed to prove his contentions with credible evidence. The so-called Firm was formed on 25.03.2007 and the Firm has obtained PAN in the year 2009 i.e., before filing the return of income. If at all the Firm was in existence, then, there is no necessity for the assessee to credit the Firm receipts, in the bank account of the employees. Since, the assessee is unable to explain the credits in the bank account of the employees with relevant details, the Assessing Officer has rightly assessed the credits in bank account as unexplained credits of the assessee. Thus, rejected the arguments of the assessee and sustained the addition made by the Assessing Officer. The relevant observations of the CIT(A) are as under: “5.3. I have carefully considered the findings of the Assessing Officer in the order of the assessment, remand report and submissions made by the appellant. The assessing officer made an addition on the ground that the appellant did not satisfactorily explain the sources of credits in 4 bank accounts operated by 4 individuals at the instructions of the appellant and voluntarily confessions made by the appellant on 22-08-2008, Printed from counselvise.com 50 ITA.Nos.1846 to 1851/Hyd./2019 statements recorded in the case of B. Sriramulu, V Srinivasa Reddy and K. Srinivas Reddy the employees of the appellant on 22-08-2008, analysis of the bank accounts etc. It is pertinent to mention here that appellant in the statement recorded u/s. 132(4) on 22.08.2008 stated that credits in said bank accounts were his own money which was deposited in the names of employees. The total income admitted was Rs.1.78 Crores. When the assessing officer confronted the appellant about the credits in the bank accounts, the appellant came out with the different plea stating that he earned only commission income and balance transactions belong to firm. The assessing officer has rejected the contention of the appellant that the transactions recorded in the impounded material belongs to firm for want of documentary evidence. During the course of the appellate proceedings also, the appellant did not bring out any material in support of the claim that the transaction recorded in the material belongs to firm and the same were reflected in the income tax return filed by the firm if any. The mere submissions made by the appellant during the course of the appellate proceedings is not acceptable evidence. The AR of the appellant did not rebut the findings of the assessing officer in the order of the assessment and remand report with any documentary evidence. I fully agree with view of the assessing officer in the remand report. The assessing officer correctly came to conclusion based on statement recorded u/s.132(4) of the IT Act and other evidences. The assessing officer rightly given due importance to the statements recorded by various people. The retraction made by the appellant and B. Sriramulu the employee of the appellant at behest of the appellant is not acceptable for the reasons that the statements were recorded voluntarily without any pressure or without undue influence. In other words, the appellant did not substantiate the grounds of appeal filed in Printed from counselvise.com 51 ITA.Nos.1846 to 1851/Hyd./2019 this regard with any plausible reasons and documentary evidence. Hence, I confirm the addition made by the assessing officer. These grounds of appeal are dismissed.” 19. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) is erred in sustaining the addition made towards unexplained cash credits on the basis of credits in bank account of employees, even though, the assessee has made-out a case that, said credits are pertains to Partnership Firm and the same has been offered for the assessment year 2008-2009. Learned Counsel for the Assessee further submitted that, the credits in the bank accounts is out of cash receipts recorded in ‘Lokpriya’ book found during the course of survey which is evident from periodic cash deposits into bank account of employees and periodic withdrawals from said bank accounts. Although, the assessee has reconciled above cash deposits with reference to the receipts in the ‘Lokpriya’ book and corresponding Bank credits in the employees bank accounts, but, the Assessing Officer has made separate additions for entries in the ‘Lokpriya’ book and also credits Printed from counselvise.com 52 ITA.Nos.1846 to 1851/Hyd./2019 in the bank account. He, therefore, submitted that, the additions made by the Assessing Officer towards credits in bank account of employees should be either telescoped to the additions made towards undisclosed income from land transactions or should be deleted. 20. Sri Gurpreet Singh, Learned DR for the Revenue, on the other hand, supporting the order of the Assessing Officer and CIT(A) submitted that, during the course of search/survey a book ‘Lokpriya’ containing 381 pages found and impounded wherein it was noticed that there are certain unaccounted land transactions of the assessee. Further, during the course of search or survey, a Register A/SVS/BUS/01 was found and seized, which contains details of bank account statement of four individuals viz., Mr. V. Sreenu, Mr. S. Shyam Kumar, Mr. B. Sriramulu and Mr. K. Srinivas Reddy in three different banks i.e., in Corporation Bank, Andhra Bank and HDFC Bank at Hyderabad and the Assessing Officer has recorded their statements on oath on 22.08.2018. All the four persons in their statement recorded during the course of search Printed from counselvise.com 53 ITA.Nos.1846 to 1851/Hyd./2019 admitted that, the bank accounts are opened and operated by Sri G. Rajender Reddy in their names and credits in the bank accounts pertains to amount received towards land transaction. The Assessing Officer has analysed the bank account maintained with Corporation Bank, Andhra Bank and HDFC Bank and observed that, the assessee has periodically deposited cash into bank accounts and there are certain withdrawals. On analysis of the withdrawals, it is seen that, all the withdrawals are made for the purpose of B.Ed college construction and M/s. Vinoba Nagar Development Society purpose [indicates M/s. Vinoba Nagar Development Society] etc. Further, during the course of assessment proceedings, the Assessing Officer has confronted the documents found during the course of search and statements of four individuals also and statement of the assessee under section 132(4) of the Act was recorded, where he has admitted that, credits in the said bank account is his own money, which was deposited in the names of his employees and accepted the credits in the said account as unaccounted income. Since, the Printed from counselvise.com 54 ITA.Nos.1846 to 1851/Hyd./2019 assessee was not able to prove the cash deposits with supporting documentary evidence, the Assessing Officer made addition on account of cash deposited into bank accounts in the name of employees to the tune of Rs.1,30,94,500/- as unexplained cash credit. During the course of appellate proceedings also, in absence of supporting documentary evidence filed by the assessee to substantiate his case, the learned CIT(A) has sustained the addition made by the Assessing Officer. He, therefore submitted that, the argument of the assessee that, the cash receipts are pertains to Partnership Firm is an afterthought as the Firm has been incorporated subsequently and the Firm has taken PAN in the year 2009 after search and survey and has filed return of income for the assessment year 2008-2009. The Learned DR submitted that, the transaction in the notebook is from assessment year 2005- 2006. The assessee could not explain the relevant facts. Therefore, the Assessing Officer has rightly assessed the undisclosed income from land transactions and Printed from counselvise.com 55 ITA.Nos.1846 to 1851/Hyd./2019 unexplained cash credits separately and thus, the order of the Assessing Officer and CIT(A) should be upheld. 21. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. During the course of search, bank account in the name of four individuals viz., Mr. V. Sreenu, Mr. S. Shyam Kumar, Mr. B. Sriramulu and Mr. K. Srinivas Reddy in three different banks i.e., Corporation Bank, Andhra Bank and HDFC Bank were found. A statement was recorded from all four individuals, where they have admitted that, credits in bank account pertains to the assessee. The bank account found during the course of search and statement of four individuals were confronted to assessee and statement under section 132(4) of the Act was recorded, where he has admitted that, credits in bank account of employees is unaccounted income and also agreed to pay tax on the same. The Assessing Officer made addition towards credit in bank account on the basis of admission of employees coupled with the statement recorded from the assessee. Although, the assessee came-out with a different Printed from counselvise.com 56 ITA.Nos.1846 to 1851/Hyd./2019 argument at subsequent stages that, credits in bank account pertains to Partnership Firm, but, the Assessing Officer has negated the arguments of the assessee, in light of date of formation of Partnership Firm and subsequent application filed for obtaining PAN and date of filing the return of income for the assessment year and noted that, assessee has filed return of income for the Firm for the assessment year 2008-2009, after the date of search and it is only an afterthought. Therefore, from the findings recorded by the Assessing Officer in light of documents found during the course of search, it is very clear that, the credits in the bank accounts of the employees of the assessee are pertains to unaccounted transactions of the assessee for the relevant assessment year. 22. Having said so, let us come back whether credits in the bank accounts of the assessee are standalone transactions pertains to uncounted income of the assessee or it was out of unaccounted income from land transactions. Learned Counsel for the Assessee referring to relevant bank account statements and ‘Lokpriya’ book found during the Printed from counselvise.com 57 ITA.Nos.1846 to 1851/Hyd./2019 course of survey argued that, there are periodic deposits and withdrawals from the bank account of the employees and if we go through the entries contained in ‘Lokpriya’ book found during the course of search with corresponding cash deposit in bank account of the employees, there is one- to-one nexus between the receipts and credits in bank account and, therefore, the Assessing Officer is erred in making separate addition for undisclosed income from land transactions on the basis of ‘Lokpriya’ book and separate addition on the basis of credits found in the bank account of the employees. We find that, the transactions recorded in the ‘Lokpriya’ book and credits appearing in the bank account of employees are pertains to same period. Further, upon verification of credits in the bank account, we find that, there are periodical cash deposits and other credits and also periodical withdrawals from the said bank accounts. Since, there is a nexus between the credits in bank account of the employees and entries recorded in ‘Lokpriya’ book, in our considered view, the arguments of the assessee that, credits in bank account of employees is Printed from counselvise.com 58 ITA.Nos.1846 to 1851/Hyd./2019 out of receipts recorded in the ‘Lokpriya’ book is acceptable. Further, upon perusal of withdrawal from bank account, the Assessing Officer himself has admitted the fact that, the assessee has withdrawn amounts from bank account of the employees for the purpose of construction of B.Ed College and also for construction of M/s. Vinoba Nagar Development Society. From the observations of the Assessing Officer, it is undisputedly clear that, there is a nexus between the undisclosed income from land transactions as per ‘Lokpriya’ notebook and credits in the bank account of the employees. Thus, in our considered view, the arguments of the assessee that, telescoping benefit should be given to additions made towards credits in bank account against addition made towards undisclosed land transactions should be allowed. Thus, we direct to the Assessing Officer to allow the benefit of telescoping towards additions made on account of unexplained cash credit of Rs.1,30,94,500/- towards additions made on account of undisclosed income from land transactions on the basis of ‘Lokpriya’ notebook found during the course of survey. Printed from counselvise.com 59 ITA.Nos.1846 to 1851/Hyd./2019 23. The next issue that came-up for consideration is addition towards donation of Rs.5,00,000/- from undisclosed income. 24. During the course of search at the residential premises of the assessee, certain photocopies of donor cheques in favour of CBIT and letters addressed to CBIT, Gandipet, Hyderabad were found. The assessee was asked to explain the banker cheques and in response to question no.11, he stated that, he has paid an amount of Rs.5,00,000/- as donation to CBIT for admission of his son Mr. Krishna Chandra for BE course. This amount of Rs.5,00,000/- was paid by 10 individuals who are his friends and relatives. The assessee had also given details of persons who gave money. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain the source for donation paid to CBIT. In response, the assessee submitted that, he has paid donation in financial year 2006-2007 and refunded the money to 10 persons during the financial year under consideration. The Assessing Officer after considering the relevant submissions Printed from counselvise.com 60 ITA.Nos.1846 to 1851/Hyd./2019 of the assessee observed that, on-going through the photocopies of banker chequs for Rs.50,000/- each in 10 numbers, totalling to Rs.5,00,000/- it is noticed that, they are all issued by ICICI Bank, Dilsukhnagar Branch, Hyderabad. Further, only the letters accompanying them are signed by different individuals. This fact clearly demonstrates that, the assessee has only given 10 different names to explain the source for the payment of donation for admission to his son, whereas the entire amount is paid by assessee out of his unexplained and unaccounted sources. He, therefore, rejected the arguments of assessee and made addition of Rs.5,00,000/- towards donation paid to CBIT out of undisclosed income. 25. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A). the assessee has reiterated his submissions made before the Assessing Officer. The CIT(A) after considering the relevant submissions of the assessee, sustained the addition made by the Assessing Officer on the ground that, the assessee could not explain the source for Printed from counselvise.com 61 ITA.Nos.1846 to 1851/Hyd./2019 donation paid to CBIT and further the so-called 10 persons who claimed to have been paid donation could not file any evidence to prove the source. Therefore, the learned CIT(A) sustained the addition made by the Assessing Officer. 26. Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal. 27. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) erred in sustaining the addition made by the Assessing Officer towards donation, even though, the assessee has explained the source out of known source of income and amount received from friends and relatives. Learned Counsel for the Assessee further made an alternative argument and submitted that, the Assessing Officer has made addition towards unaccounted income from land transactions, and the said money is available for explaining source for donation. Therefore, he submitted that, addition made by the Assessing Officer should be deleted. Printed from counselvise.com 62 ITA.Nos.1846 to 1851/Hyd./2019 28. Sri Gurpreet Singh learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the assessee could not explain the source with known source of income. Further, although, the assessee claims to have received amount from 10 individuals, but, could not file any evidence. In absence of relevant details, the Assessing Officer has rightly made addition and thus, the addition made by the Assessing Officer should be sustained. 29. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. The assessee has paid Rs.5,00,000/- donation to CBIT for getting admission to his son in BE course. Although, initially the assessee claims to have explained the source out of money received from 10 individuals and also furnished their names, but, could not substantiate his claim with relevant evidences. Even before us, the assessee could not furnish any details to substantiate his claim that, 10 people have paid Rs.50,000/- each towards donation. Therefore, we cannot Printed from counselvise.com 63 ITA.Nos.1846 to 1851/Hyd./2019 accept the argument of the assessee. Further, in so far as alternative argument of the assessee that, if at all, the addition is sustained towards donation paid to CBIT, then, benefit of telescoping should be allowed out of addition made towards undisclosed income from land transactions, in our considered view, the Assessing Officer has made addition towards undisclosed income from land transactions of Rs.3,44,22,300/- which is available with the assessee to explain the source for donation of Rs.5,00,000/- paid to CBIT. Further, the benefit of telescoping can be allowed, in case, any addition is made towards income and expenditure on the basis of seized material. Since, the addition towards donation is also from the very same seized material, which is the basis for making addition towards undisclosed income from land transactions, in our considered view, the alternative submission of the assessee for the benefit of telescoping should be accepted. Thus, we direct the Assessing Officer to allow benefit of telescoping out of undisclosed income from land transactions to donation paid to CBIT for Rs.5,00,000/- and delete the addition. Printed from counselvise.com 64 ITA.Nos.1846 to 1851/Hyd./2019 30. The next issue the came-up for our consideration from ground no.7 of assessee’s appeal is addition of Rs.45 lakhs towards commission from land settlements. 31. During the course of statement recorded under section 131 of the Act on 11.02.2008, the assessee in his reply to question no.17 stated that, he has received an amount of Rs.45 lakhs by way of cash from Sri Murali Goud in the financial year 2006-2007 for settlement of litigation of land of 45 acres owned by Sri Murali Goud at Guntur village Hayat Nagar Mandal, Ranga Reddy District in Survey Nos. 278/2, 278/3, 278/9, 278/5 and 278/6. During the course of assessment proceedings, the Assessing Officer called- upon the assessee to explain as to why addition shall not be made towards commission received from land settlement. In response, the assessee submitted that, amount mentioned in his statement is Rs.4-5 lakhs and not Rs.45 lakhs and further, this amount pertains to the financial year 1999- 2000 and was already admitted in the return of income filed for the relevant assessment year. The Assessing Officer after considering the relevant submissions of the assessee and Printed from counselvise.com 65 ITA.Nos.1846 to 1851/Hyd./2019 also taking note of statement recorded during the course of search under section 131 of the Act on 01.12.2008 observed that, the explanation of the assessee with regard to commission income are contradictory and are far from truth. The assessee in the statement very clearly admitted having received Rs.45 lakhs for land settlement. The subsequent argument that, it is not Rs.45 lakhs, but, only Rs.4-5 lakhs is devoid of merit. Further, the argument of the assessee that, the amount pertains to financial year 1999- 2000 and the same was admitted in the Firm's return is also incorrect. Thus, rejected the arguments of the assessee and made addition of Rs.45 lakhs towards undisclosed income from commission. On appeal, the learned CIT(A) sustained the addition made by the Assessing Officer. 32. Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal. 33. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee referring to the return of income filed by the assessee for the assessment year 2007-2008 submitted that, the assessee has admitted gross receipt of Printed from counselvise.com 66 ITA.Nos.1846 to 1851/Hyd./2019 Rs.89,22,582/- which includes commission from real estate business. Further, the assessee has explained the relevant details to the Assessing Officer, but, the Assessing Officer without considering the relevant details, has simply made the addition. The learned CIT(A) without giving any reasons sustained the addition towards commission income from land transactions. Therefore, he submitted that, the addition made by the Assessing Officer and sustained by the learned CIT(A) should be deleted. 34. Sri Gurpreet Singh, learned Sr. AR for the Revenue, on the other hand supporting the order of the learned CIT(A) submitted that, the assessee has admitted receipt of Rs.45 lakhs from one Sri Murali Goud for land settlement and the same is outside the books of accounts of the assessee. The argument of the Counsel for the Assessee that, this amount is included in the gross receipts offered for the year under consideration is devoid of merit going by the statement recorded from the assessee. The Assessing Officer and the learned CIT(A) after considering the relevant facts, has rightly made addition towards undisclosed Printed from counselvise.com 67 ITA.Nos.1846 to 1851/Hyd./2019 income from commission and thus, the order of the learned CIT(A) should be upheld. 35. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. During the course of search, in the statement recorded under section 131 of the Act, dated 01.12.2018, the assessee, in reply to question no.17 stated that, he has received an amount of Rs.45 lakhs by way of cash from one Sri Murali Goud for settlement of litigation in land admeasuring 45 acres owned by Sri Murali Goud at Kuntloor Village, Hayat Nagar Mandal, Ranga Reddy District, bearing Survey Nos. 278/2, 278/3, 278/9, 278/5 and 278/6, which is very clear from the statement recorded, which is part of the assessment order. During the course of assessment proceedings, the assessee has taken a new argument and claimed that, amount mentioned in his statement is not Rs.45 lakhs, but, it is only Rs.4-5 lakhs and further, the amount pertains to financial year 1999- 2000 and was already admitted in the return of income filed for the relevant assessment year in the capacity of G. Printed from counselvise.com 68 ITA.Nos.1846 to 1851/Hyd./2019 Rajender Reddy and others Partnership Firm. We find that, the subsequent averments of the assessee that, the amount mentioned in the settlement is not Rs.45 lakhs and it is only Rs.4-5 lakhs is only an afterthought, without any supporting evidence. Therefore, the same cannot be accepted. In so far as argument of the assessee that, this amount pertains to financial year 1999-2000 and the same was admitted in the Firm’s return is also devoid of merit going by the date of formation of the Firm and subsequent PAN taken by the Firm by filing application in the year 2009. Therefore, we are of the considered view that, there is no error in the addition made by the Assessing Officer towards undisclosed income from commission because, the assessee could not explain the said transaction with relevant details to prove his claim that, said income has been already offered to tax. The learned CIT(A) after considering relevant facts, has rightly sustained the addition made by the Assessing Officer. Thus, we are inclined to uphold the order the learned CIT(A) and reject the ground taken by the assessee. Printed from counselvise.com 69 ITA.Nos.1846 to 1851/Hyd./2019 36. In the result, appeal ITA.No.1848/Hyd./2019 of the assessee for the assessment year 2007-2008 is partly allowed. ITA.No.1846/Hyd./2019 – A.Y. 2005-2006 : 37. The assessee has raised the following grounds in the instant appeal : 1. “The order of the learned CIT(A) in confirming the order of the AO is not only erroneous both on facts and in law but is without application of mind as none of the submissions that are made are considered and dealt with. 2. The learned CIT(A) failed to appreciate that there was nothing in the seized material of the AO has brought on record any evidence in the form of purchase deed or sale deed to demonstrate that the assessee is engaged in land purchase and sale to hold that the receipts recorded in the seized material A/SBS/BUS/14 relate to such income and has not conducted any enquiry whatsoever from the date of search to the date of competition of assessment in spite of there being references of mobile numbers in the seized material and thereby erred in confirming the addition of Rs.13,00,000, without considering the submissions. 3. The learned CIT(A) further failed to appreciate that it is settled law that every receipt cannot be revenue receipt or that it is income and further erred in not considering the submissions about the discrepancy by the AO in considering the amount as against the claim of the assessee that the receipts are considered in the hands of the firm and amount is also not correctly arrived at. 4. The learned CIT(A) further failed to appreciate the settled principle of law that not only there should be a source for income but also there should be evidence as to where the same is appearing as investment or otherwise to determine the undisclosed income and in the absence of books of account as per Printed from counselvise.com 70 ITA.Nos.1846 to 1851/Hyd./2019 CBDT's circular \"Net worth basis should be followed to determine the undisclosed income and thereby erred in rejecting such plea by the assessee on the ground that there are no assets whatsoever to hold that the assessee earned any undisclosed income. 5. The learned CIT(A) erred in confirming the addition of Rs.9,08,650 as unexplained investment in purchase of flat held by son Sri Krishna Chandra though there is no evidence that the assessee has invested the same. 6. The learned CIT(A) though states that the AO has discussed the reasons elaborately in the assessment order failed to deal with the submissions of the assessee both at the time of assessment and in appeal and erred in not discussing about it except reproducing them and not passing a reasoned order as to why such submissions are not tenable. (Tax effect - Rs.6,82,473) 7. For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.” 38. The first issue that came-up for consideration from ground nos.2 to 4 of assessee’s appeal is addition towards undisclosed income from land transactions of Rs.13,00,000/-. 39. We find that, an identical issue has been considered by us in assessee’s own case for the assessment year 2007-2008 in ITA.No.1848/Hyd/2019. But for the figures and facts, the issues involved in this appeal are identical to the issue which we have considered for the assessment year 2007-2008. The reasons given by us in Printed from counselvise.com 71 ITA.Nos.1846 to 1851/Hyd./2019 preceding paragraph nos.12 to 14 shall mutatis mutandis apply to this appeal ITA.No.1846/Hyd./2019 for the assessment year 2005-2006 as well. Therefore, for similar reasons we are inclined to uphold the order of the learned CIT(A) and sustained addition made by the assessing officer towards undisclosed income from land transactions. 40. The next issue that came-up for consideration from ground nos.5 and 6 of assessee’s appeal is addition towards unexplained investment in house property for Rs.9,08,650/- 41. During the course of search proceeding, it is noticed that, Mr. Krishna Chandra, son of the assessee had made an investment for purchase of residential Flat-404, 5th Floor, Subhalaxmi Apartments, Green Hills Colony, Kothapet, Hyderabad in January 2005. The assessee was asked to clarify the source for such investment and in response, the assessee admitted that, investment was made by him and that, the total consideration including the registration fee and modification of Flat comes to Rs.9.08 lakhs. The assessee further stated that, source for the above Printed from counselvise.com 72 ITA.Nos.1846 to 1851/Hyd./2019 investment is paid out of the HUF funds of Rs.2,15,000/- was paid by his mother Smt. Andalamma and balance of Rs.93,650/- was made by his wife Smt. Vijaya Lakshmi. The Assessing Officer after considering the submissions of the assessee observed that, the claim of the assessee that, his mother handled the funds of HUF and the HUF has the sources of Rs.6,00,000/- cannot be accepted. From the assessment years 2003-2004 to 2009-2010, the assessee has filed return of income in the status of HUF and Sri G. Rajendra Reddy being has Karta of the HUF. The income returned in the earlier assessment year is very meagre going by the return of income filed for the assessment years 2003- 2004 to 2005-2006. From the above, it is seen that, the argument of the assessee that, HUF was having funds of Rs.6,00,000/-, lacks credibility and, therefore, the argument of the assessee cannot be accepted. Thus, rejected the arguments of the assessee and made addition of Rs.9,08,650/- to the total income of the assessee. Printed from counselvise.com 73 ITA.Nos.1846 to 1851/Hyd./2019 42. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) sustained the addition made by the Assessing Officer. 43. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) erred in sustaining the addition of Rs.9,08,650/- as unexplained investment in purchase of Flat held by assessee’s son Mr. Krishna Chandra, though, there is no evidence that, the assessee has invested the same. Therefore, he submitted that, the addition made by the Assessing Officer should be deleted. 44. Sri Gurpreet Singh learned Sr. AR for the Revenue, on the other hand. supporting the order of the Assessing Officer and the learned CIT(A) submitted that, in the statement recorded during the course of search, the assessee has clearly stated that, he has made investment for purchase of house property and also explained the source out of funds received from HUF and amount paid by his wife and mother. However, could not file any evidence to Printed from counselvise.com 74 ITA.Nos.1846 to 1851/Hyd./2019 justify his case. Therefore, the Assessing Officer has made the addition towards unexplained investment in house property and the learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer. Therefore, he submitted that, the addition made by the Assessing Officer should be upheld. 45. We have heard both the parties, perused the materials on record and through the orders of the authorities below. We have also considered relevant reasons given by the Assessing Officer to make addition of Rs.9,08,650/- as unexplained investment in purchase of Flat held in the name of Mr. Krishna Chandra, the son of the assessee. In the statement recorded during the course of search, the assessee clearly stated that, he has made the investment in Flat in the name of his son and the source was, out of amount received from HUF, from his wife and mother. Therefore, the argument of the assessee that, there is no evidence with the Assessing Officer to come to the conclusion that, investment is made by the assessee is not based on any evidence is incorrect and cannot be accepted. Printed from counselvise.com 75 ITA.Nos.1846 to 1851/Hyd./2019 Further, the assessee has clearly admitted having invested the money for purchase of Flat in the name of his son, but, could not explain the source with relevant evidences. Although, the assessee claims to have paid consideration for purchase of Flat out of amount received from HUF, but, going by the ITRs filed by the HUF for the relevant assessment years, we find that, HUF has reported very meagre income, which is not sufficient to explain investment made in purchase of house property. Further, the assessee also could not be able to justify the amount received from his wife and mother. In absence of any evidence, the arguments of the assessee that, source for purchase of property, is out of amount received from HUF, mother and wife cannot be accepted. The Assessing Officer after considering the relevant facts, has rightly made the addition towards unexplained investment in purchase of property and the learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Assessing Officer. Thus, we are inclined to uphold the Order of the learned CIT(A) and reject the ground taken by the assessee. Printed from counselvise.com 76 ITA.Nos.1846 to 1851/Hyd./2019 46. In the result, appeal, ITA.No.1846/Hyd./2019 of the assessee for the assessment year 2005-2006 is dismissed. ITA.No.1847/Hyd./2019 – A.Y. 2006-2007 : 47. The assessee has raised the following grounds in the instant appeal : 1. “The order of the learned CIT(A) in confirming the order of the AO is not only erroneous both on facts and in law but is without application of mind as none of the submissions that are made are considered and dealt with. 2. The learned CIT(A) failed to appreciate that there was nothing in the seized material of the AO has brought on record any evidence in the form of purchase deed or sale deed to demonstrate that the assessee is engaged in land purchase and sale to hold that the receipts recorded in the seized material A/SBS/BUS/14 relate to such income and has not conducted any enquiry whatsoever from the date of search to the date of competition of assessment in spite of there being references of mobile numbers in the seized material and thereby erred in confirming the addition of Rs.31,26,000 without considering the submissions. 3. The learned CIT(A) further failed to appreciate that it is settled law that every receipt cannot be revenue receipt or that it is income and further erred in not considering the submissions about the discrepancy by the AO in considering the amount as against the claim of the assessee that the receipts are considered in the hands of the firm and amount is also not correctly arrived at. 4. The learned CIT(A) further failed to appreciate the settled principle of law that not only there should be a source for income but also there should be evidence as to where the same is appearing as investment or otherwise to determine the undisclosed income and in the absence of books of account as per CBDT's circular \"Net worth\" basis should be followed to determine the undisclosed income and thereby erred in rejecting such plea Printed from counselvise.com 77 ITA.Nos.1846 to 1851/Hyd./2019 by the assessee on the ground that there are no assets whatsoever to hold that the assessee earned any undisclosed income. 5. The learned CIT(A) though states that the AO has discussed the reasons elaborately in the assessment order failed to deal with the submissions of the assessee both at the time of assessment and in appeal and erred in not discussing about it except reproducing them and not passing a reasoned order as to why such submissions are not tenable. (Tax effect-Rs.9,65,934) 6. For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal”. 48. The only issue that came-up for consideration from ground nos.2 to 5 of assessee’s appeal is addition towards undisclosed income from land transactions for Rs.31,26,000/-. 49. We find that, an identical issue has been considered by us in assessee’s own case for the assessment year 2007-2008 in ITA.No.1848/Hyd./2019. But for the figures and facts, the issues involved in this appeal are identical to the issue which we have considered for the assessment year 2007-2008. The reasons given by us in preceding paragraph nos.12 to 14 shall mutatis mutandis apply to this appeal ITA.No.1847/Hyd./2019 for the assessment year 2006-2007 as well. Therefore, for similar Printed from counselvise.com 78 ITA.Nos.1846 to 1851/Hyd./2019 reasons we are inclined to uphold the order of the learned CIT(A) and sustain addition made by the assessing officer towards undisclosed income from land transactions. 50. In the result, appeal ITA.No.1847/Hyd./2019 of the assessee assessment year 2006-2007 is dismissed. ITA.No.1849/Hyd./2019 – A.Y. 2008-2009 : 51. The assessee has raised the following grounds in the instant appeal : 1. “The order of the learned CIT(A) in confirming the order of the AO is not only erroneous both on facts and in law but is without application of mind as none of the submissions that are made are considered and dealt with. 2. The learned CIT(A) failed to appreciate that there was nothing in the seized material of the AO has brought on record any evidence in the form of purchase deed or sale deed to demonstrate that the assessee is engaged in land purchase and sale to hold that the receipts recorded in the seized material A/SBS/BUS/14 relate to such income and has not conducted any enquiry whatsoever from the date of search to the date of competition of assessment in spite of there being references of mobile numbers in the seized material and thereby erred in confirming the addition of Rs.2,69,73,000 without considering the submissions. 3. The learned CIT(A) further failed to appreciate that it is settled law that every receipt cannot be revenue receipt or that it is income and further erred in not considering the submissions about the discrepancy by the AO in considering the amount as against the claim of the assessee that the receipts are considered in the hands of the firm and amount is also not correctly arrived at. Printed from counselvise.com 79 ITA.Nos.1846 to 1851/Hyd./2019 4. The learned CIT(A) further failed to appreciate the settled principle of law that not only there should be a source for income but also there should be evidence as to where the same is appearing as investment or otherwise to determine the undisclosed income and in the absence of books of account as per CBDT's circular \"Net worth basis should be followed to determine the undisclosed income and thereby erred in rejecting such plea by the assessee on the ground that there are no assets whatsoever to hold that the assessee earned any undisclosed income. 5. The learned CIT(A) though states that the AO has discussed the reasons elaborately in the assessment order failed to deal with the submissions of the assessee both at the time of assessment and in appeal and erred in not discussing about it except reproducing them and not passing a reasoned order as to why such submissions are not tenable. 6. The learned CIT(A) erred in confirming the addition of Rs.42,41,280 as unexplained deposits into bank accounts of employees without appreciating the submission that all of such receipts relate to the entries in the seized book for survey and plotting work done by the firm and were drawn and spent for such work by them and are considered in the firm's returns that are filed. 7. The learned CIT(A) erred in confirming the addition of Rs.50,00,000 as unexplained donation to Vinobha Development Society without appreciating that the such society is registered u/s.12A of 1.T.Act and nothing is reflected in its books as donation by the assessee and further relying only on statement that the assessee donated Rs.50 lakh though clarified that he helped the society getting donation of Rs.50 lakh. This is enough example to demonstrate that there is lack of application of mind while confirming the orders of the AO. (Tax effect Rs.1,11,90,212) For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.” 52. The first issue that came-up for consideration from ground nos.2 to 5 of assessee’s appeal is, addition Printed from counselvise.com 80 ITA.Nos.1846 to 1851/Hyd./2019 towards undisclosed income from land transactions for Rs. 2,69,73,000/-. 53. We find that, an identical issue has been considered by us in assessee’s own case for the assessment year 2007-2008 in ITA.No.1848/Hyd./2019. But for the figures and facts, the issues involved in this appeal are identical to the issue which we have considered for the assessment year 2007-2008. The reasons given by us in preceding paragraph nos.12 to 14 shall mutatis mutandis apply to this appeal ITA.No.1849/Hyd./2019 for the assessment year 2008-2009 as well. Therefore, for similar reasons we are inclined to uphold the order of the learned CIT(A) and sustain addition made by the assessing officer towards undisclosed income from land transactions. 54. The next issue that came for consideration from ground no.6 of assessee’s appeal is, addition of Rs.42,41,280/- towards unexplained cash credit. 55. We find that, an identical issue has been considered by us in assessee’s own case for the assessment Printed from counselvise.com 81 ITA.Nos.1846 to 1851/Hyd./2019 year 2007-2008 in ITA.No.1848/Hyd./2019. But for the figures and facts, the issues involved in this appeal are identical to the issue which we have considered for the assessment year 2007-2008. The reasons given by us in preceding paragraph nos.21 and 22 shall mutatis mutandis apply to this appeal ITA.No.1849/Hyd./2019 for the assessment year 2008-2009 as well. Thus, we direct to the Assessing Officer to allow the benefit of telescoping towards additions made on account of unexplained cash credit of Rs.42,41,280/- towards additions made on account of undisclosed income from land transactions on the basis of ‘Lokpriya’ notebook found during the course of survey. Accordingly, ground no.6 of the assessee is allowed. 56. The next issue that came-up for consideration from ground no.7 of assessee’s appeal is, addition towards donation from undisclosed income of Rs.50,00,000/- lakhs paid to M/s Vinoba Development Society. 57. The facts with regard to the impugned dispute are that, during the course of search at the residence of the Printed from counselvise.com 82 ITA.Nos.1846 to 1851/Hyd./2019 assessee it was found finding that, the assessee is acquainted with the land dealings as Coordinator of Andhra Pradesh Bhoodan Yagna Board and also actively engaged with M/s. Vinobha Nagar Development Society, dealing in real estates. Further, the contents in the impounded material A/SVS/BUS/14, shows donation payment to M/s Vinoba Development Society. Sri G. Rajender Reddy was asked about his contribution to the above society. In the statement under section 132(4) recorded on 22.08.2008, he stated that, he has made total contribution of Rs.50 lakhs to M/s. Vinobha Nagar Development Society for the period from December 2005 to till the year 2008. He has neither given any further details on the expenditure, manner in which he has contributed the said amount of Rs.50 lakhs to the Society. He has also not given any source from where he has drawn this amount and made the said contribution to the Society. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to explain the source for donations paid to M/s. Vinobha Nagar Development Society. In response, the assessee submitted Printed from counselvise.com 83 ITA.Nos.1846 to 1851/Hyd./2019 that, he is only an Office Bearer of the Society, and he was instrumental in Society get substantial amount of funds, but he has not made any donation to the Society. The Assessing Officer after considering the relevant submissions of the assessee observed that, except making some vague claims about his stature and his principal's, the assessee has not replied to the points raised on the statement given under oath under section 132(4) of the Act and thus, rejected the explanation of the assessee and made addition of Rs.50 lakhs towards donation from undisclosed income. 58. On appeal, the learned CIT(A) sustained the addition. 59. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) erred in sustaining the addition towards donation from undisclosed income without appreciating the fact that, there is no evidence with the Assessing Officer to allege that, the assessee has made donations for the year under consideration. Further, the so-called donations claimed to have been paid by the assessee, is not based on any Printed from counselvise.com 84 ITA.Nos.1846 to 1851/Hyd./2019 evidence found during the course of search and only based on the admission of the assessee in the statement. Going by the reply of the assessee, it is vague in nature, where the assessee claims to have paid donation from December 2005 to till 2008 that is up-to the date of the search. The Assessing Officer without even taking any details about the payment, has simply made the addition on the basis of statement of the assessee. In this regard, he relied upon decision of Hon’ble High Court of Telangana and Andhra Pradesh in the case of Gajjam Chinna Yellappa vs., Income Tax Officer [2015] 370 ITR 671 and also the Judgment of Hon’ble Supreme Court in the case of CIT, Salem vs., S. Khader Khan Son [2013] 352 ITR 480 (SC). The Learned Counsel for the Assessee has further made an alternative argument and submitted that, if at all the addition towards donation from undisclosed income is sustained, then, the benefit of telescoping should be allowed out of additions made towards undisclosed income from land transactions. 60. Sri Gurpreet Singh learned Sr. AR for the Revenue, on the other hand supporting the order of the Printed from counselvise.com 85 ITA.Nos.1846 to 1851/Hyd./2019 CIT(A) submitted that, the assessee could not explain the nature and source for donations paid to M/s. Vinobha Nagar Development Society. In absence of any explanation from the assessee, the Assessing Officer has rightly treated donations as undisclosed income of the assessee and the learned CIT(A) after considering the facts, has rightly sustained the addition made by the Assessing Officer. Therefore, he submitted that, the addition made by the Assessing Officer should be upheld. 61. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to fact that, the addition made by the Assessing Officer towards donations from undisclosed income is neither based on any evidence collected during the course of search nor clear admission from the assessee, which is evident from the statement recorded during the course of search, where the assessee has given a vague reply and stated that, he has paid donation of Rs.50 lakhs from December 2005 to 2008 i.e., up-to the date of search. Further, there is no clear Printed from counselvise.com 86 ITA.Nos.1846 to 1851/Hyd./2019 particulars as to date, on which, such donation was paid by the assessee and further, whether said donation was paid in cheque or cash. In absence of any evidence, in our considered view, the addition made by the Assessing Officer only on the basis of statement of the assessee, cannot be sustained. This principle is supported by the decision of Hon’ble High Court of Telangana and Andhra Pradesh in the case of Gajjam Chinna Yella vs., ITO (supra), where, it has been clearly held that, “where assessment order was passed on sole basis of statements recorded during the course of survey and after retraction of the statements, the Assessing Officer did not produce any other material to support understatement of sale consideration of land, the assessment order was to be set aside”. Similar view has been taken by the Hon’ble Supreme Court in the case of CIT, Salem vs., S. Khader Khan Son (supra), where it has been clearly held that, “addition made solely on the basis of statement recorded during the course of survey, cannot be sustained, unless the said statement is supported by corroborative evidence”. In the present case, there is no dispute with Printed from counselvise.com 87 ITA.Nos.1846 to 1851/Hyd./2019 regard to the fact that, the addition made by the Assessing Officer towards donations, out of undisclosed income, is neither supported by any evidence nor based on admission of the assessee. Therefore, the addition made by the Assessing Officer towards donation from undisclosed income cannot be sustained. 62. Further, assuming for a moment, the donations out of undisclosed income need to be sustained, still the assessee can get the benefit of telescoping towards additions made on account of undisclosed income from land transactions, where the Assessing Officer has made addition of Rs.2,69,73,000/- for the year under consideration. If we consider the addition towards undisclosed income from land transactions, which is sufficient to explain the so-called donations paid to M/s. Vinobha Nagar Development Society. Therefore, on this count also, addition made by the Assessing Officer cannot be sustained. The learned CIT(A) without considering the relevant facts, has simply sustained the addition made by the Assessing Officer. Therefore, we set-aside the order of the learned CIT(A) and direct the Printed from counselvise.com 88 ITA.Nos.1846 to 1851/Hyd./2019 Assessing Officer to delete the addition made towards donation from undisclosed income. 63. In the result appeal ITA.No.1849/Hyd./2019 of the assessee for the assessment year 2008-2009 is partly allowed. ITA.No.1850/Hyd./2019 – A.Y. 2009-2010 64. The assessee pleads the following substantial grounds in the instant appeal : 1. “The order of the learned CIT(A) in confirming the order of the AO is not only erroneous both on facts and in law but is without application of mind as none of the submissions that are made are considered and dealt with. 2. The learned CIT(A) failed to appreciate that there was nothing in the seized material of the AO has brought on record any evidence in the form of purchase deed or sale deed to demonstrate that the assessee is engaged in land purchase and sale to hold that the receipts recorded in the seized material A/SBS/BUS/14 relate to such income and has not conducted any enquiry whatsoever from the date of search to the date of competition of assessment in spite of there being references of mobile numbers in the seized material and thereby erred in confirming the addition of Rs.1,16,44,500 without considering the submissions. 3. The learned CIT(A) further failed to appreciate that it is settled law that every receipt cannot be revenue receipt Printed from counselvise.com 89 ITA.Nos.1846 to 1851/Hyd./2019 or that it is income and further erred in not considering the submissions about the discrepancy by the AO in considering the amount as against the claim of the assessee that the receipts are considered in the hands of the firm and amount is also not correctly arrived at. 4. The learned CIT(A) further failed to appreciate the settled principle of law that not only there should be a source for income but also there should be evidence as to where the same is appearing as investment or otherwise to determine the undisclosed income and in the absence of books of account as per CBDT's circular \"Net worth\" basis should be followed to determine the undisclosed income and thereby erred in rejecting such plea by the assessee on the ground that there are no assets whatsoever to hold that the assessee earned any undisclosed income. 5. The learned CIT(A) though states that the AO has discussed the reasons elaborately in the assessment order failed to deal with the submissions of the assessee both at the time of assessment and in appeal and erred in not discussing about it except reproducing them and not passing a reasoned order as to why such submissions are not tenable. (Tax effect Rs.38,17,686) 6. For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.” 65. The only issue that came-up for consideration from ground nos.2 to 5 of assessee’s appeal is addition towards undisclosed income from land transactions for Rs. 1,16,44,500/-. Printed from counselvise.com 90 ITA.Nos.1846 to 1851/Hyd./2019 66. We find that, an identical issue has been considered by us in assessee’s own case for the assessment year 2007-2008 in ITA.No.1848/Hyd./2019. But for the figures and facts, the issues involved in this appeal are identical to the issue which we have considered for the assessment year 2007-2008. The reasons given by us in preceding paragraph nos.12 to 14 shall mutatis mutandis apply to this appeal ITA.No.1850/Hyd./2019 for the assessment year 2009-2010 as well. Therefore, for similar reasons we are inclined to uphold the order of the learned CIT(A) and sustain addition made towards undisclosed income from land transactions. 67. In the result, appeal ITA.No.1850/Hyd./2019 of the assessee for the assessment year 2009-2010 is dismissed. ITA.No.1851/Hyd./2019 – A.Y. 2007-2008 : 68. The assessee has raised the following grounds in the instant appeal : 1. “The order of the learned CIT(A) in confirming the order of the AO is not only erroneous both on facts and in law. Printed from counselvise.com 91 ITA.Nos.1846 to 1851/Hyd./2019 2. The learned CIT(A) failed to appreciate that the assessee is dealing with only laying out of plots, survey fixing of boundaries and therefore would not have paid amounts exceeding the threshold limit for advertisement and thereby erred in not accepting the ledger extract produced about payments for advertisements which are for writing on walls etc., and erred in confirming the disallowance of Rs.1,13,000. (Tax effect - Rs.34,917) For these and other grounds that may be urged, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal.” 69. Brief facts of the case are that, during the course of assessment proceedings, the Assessing Officer has disallowed capital expenditure of Rs.84,695/- towards purchase of mobile phones, further, since TDS has not been made on certain payments, the AO disallowed a sum of Rs.89,000/- and Rs.1,13,680/- towards accounting charges and advertisement respectively, u/s 40(a)(ia) of the Income Tax Act, 1961 which have been debited in the P & L A/c and added to the total income of the assessee vide order dated 22.03.2013 u/sec.143(3) r.w.s.147 of the Income Tax Act, 1961. 70. On being aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) after considering the relevant submissions of Printed from counselvise.com 92 ITA.Nos.1846 to 1851/Hyd./2019 the assessee, partly allowed the appeal of the assessee by directing the Assessing Officer to allow depreciation at the rates allowable to a computer on mobile phone of Rs.84,695/-. Further, the learned CIT(A) directed the Assessing Officer to allow accounting charges amounting to Rs.89,000/- and with regard to advertisement expenses, the learned CIT(A) sustained the addition made by the Assessing Officer. 71. Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal challenging the addition of Rs.1,13,680/- sustained by the learned CIT(A) on account of advertisement expenses. 72. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) was failed to appreciate that the assessee is dealing with only laying out of plots, survey, fixing of boundaries and, therefore, the assessee had not paid amounts exceeding the threshold limit for advertisement and thereby, erred in not accepting the ledger extracts produced about the payments for Printed from counselvise.com 93 ITA.Nos.1846 to 1851/Hyd./2019 advertisements which are writing on walls etc. Learned Counsel for the Assessee submitted that, although, the Assessing Officer has applied provisions of sec.40(a)(ia) of the Income Tax Act, 1961 and disallowed the expenditure for non-deduction of TDS, but, the fact remains that, in none of the cases the amount paid by the assessee does not exceed the specified limit and thus, there is no requirement of TDS and consequently, the addition cannot be made u/sec.40(a)(ia) of the Income Tax Act, 1961. Therefore, he submitted that, the addition sustained by the learned CIT(A) should be deleted. 73. Sri Gurpreet Singh learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, for advertisement expenses, the assessee could not furnish any evidence to prove that payment to individual person does not exceed the specified limit for deducting TDS u/sec.194C of the Income Tax Act, 1961. The learned CIT(A) after considering the relevant facts, has rightly sustained the addition made by the Printed from counselvise.com 94 ITA.Nos.1846 to 1851/Hyd./2019 Assessing Officer and thus, the order of the learned CIT(A) should be upheld. 74. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. The assessee has debited an amount of Rs.1,13,680/- towards advertisement expenses. The Assessing Officer disallowed advertisement expenses on the ground that, assessee has failed to deduct TDS u/sec.194C of the Income Tax Act, 1961. The assessee claims that payment to individual persons does not exceed the sum specified u/sec.194C of the Act for making TDS and, therefore, when the assessee has furnished relevant ledger extract copies and proved that, all payments are below the threshold limit for application of sec.194C, then, the learned CIT(A) ought to have deleted the addition made by the Assessing Officer. We find that, assessee except making oral statement that, payment made to individual person does not exceed the specified limit by furnishing ledger account, but, could not file any evidence to justify his case that, amount debited under the Head “Advertisement Expenses” does not Printed from counselvise.com 95 ITA.Nos.1846 to 1851/Hyd./2019 come under the provisions of sec.194C of the Income Tax Act, 1961. Therefore, we are of the considered view that, there is no error in the reasons given by the learned CIT(A) to sustain the addition made by the Assessing Officer towards advertisement charges. Thus, we are inclined to uphold the order of the learned CIT(A) and reject the ground taken by the assessee. 75. In the result, appeal ITA.No.1851/Hyd./2019 of the assessee for the assessment year 2007-2008 is dismissed. 76. To sum up, appeals ITA.Nos.1848 and 1849/ Hyd./2019 of the Assessee are partly allowed and ITA.Nos.1846, 1847, 1850 and 1851/Hyd./2019 of the Assessee are dismissed. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 13.08.2025. Sd/- Sd/- [VIJAY PAL RAO] [MANJUNATHA G] VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, Dated 13th August, 2025 VBP Printed from counselvise.com 96 ITA.Nos.1846 to 1851/Hyd./2019 Copy to 1. Sri G. Rajender Reddy, Flat No.404, B-Block, Shubhalaxmi Apartments, Road No.2, Dwarka Nagar, Kothapet, R K Puram, Hyderabad – 500 035. 2. The ACIT, Central Circle-6, Aayakar Bhavan, Basheerbagh, HYDERABAD – 500 004. Telangana. 3. The CIT(A)-7, Hyderabad 3. The Pr. CIT-[Central], Hyderabad 4. The DR ITAT “A” Bench, Hyderabad. 5. Guard File. //By Order// //True Copy// Printed from counselvise.com "
Other Referred Cases
Gajjam Chinna Yellappa vs. ITO [2015] 370 ITR 671 (AP & Telangana), CIT vs. S. Khader Khan Son [2013] 350 ITR 480 (SC)
Laws Referred To
Income Tax Act, 1961
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