ITAT affirms CIT(A)'s decision, rejects Revenue's appeals for AY 2015-16 & 2017-18.

The ITAT upheld the CIT(A)'s orders, dismissing the Revenue's appeals and the assessee's cross objections for both AY 2015-16 and AY 2017-18. The Tribunal found no evidence to support the AO's additions for unaccounted income from the sale of villas and plots and bogus sub-contract expenses. The ITAT emphasized the need for corroborative evidence and proper cross-examination to substantiate such claims.

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Issues Involved:
1. Addition on unaccounted income from the sale of villas.
2. Addition on unaccounted income from the sale of plots.
3. Addition on account of bogus sub-contract expenses.

Issue-wise Detailed Analysis:

1. Addition on Unaccounted Income from Sale of Villas:

Ground No.1 is related to the addition of Rs. 3,94,47,000/- representing on-money received by the assessee for the sale of plots and villas of Blue Marino project. The AO estimated the unaccounted receipts based on incriminating material found during a search at the residence of Lanka Anil Kumar, the marketing executive. The material included loose sheets with details of villas, customer names, amounts paid, and amounts due. The assessee contested the relevance of Anil Kumar's statement and the validity of the material found. The AO, however, made the addition based on these documents.

The CIT(A) deleted the addition following the ITAT's order for AY 2016-17, which held that there was no material to support the AO's assessment of unaccounted income. The ITAT reiterated that the documents found during the search did not conclusively prove the receipt of on-money by the assessee. The Tribunal emphasized that the burden of proof lies with the Revenue to establish the link between the seized material and the assessee. The presumption under Section 292C of the Act applies to the searched person, not the assessee firm. The ITAT upheld the CIT(A)'s order and dismissed the Revenue's appeal for AY 2015-16 and AY 2017-18.

2. Addition on Unaccounted Income from Sale of Plots:

Ground No.2 pertains to the addition of Rs. 24,80,88,660/- towards on-money on the sale of plots. The AO estimated the sale price of plots in the 'Sea Pearl' project based on the sale price of adjacent plots, which the assessee contested. The CIT(A) deleted the addition, following the ITAT's order for AY 2016-17, which found no evidence of on-money receipt for the 'Sea Pearl' project. The Tribunal noted that the plots were sold to M/s Kranthi Properties at an agreed rate, and any amount received over the agreed rate would accrue to Kranthi Properties, not the assessee. The ITAT upheld the CIT(A)'s order, dismissing the Revenue's appeal for AY 2015-16 and AY 2017-18.

The ITAT rejected the Revenue's argument that the CIT(A) admitted additional evidence without giving the AO an opportunity to respond. The Tribunal noted that the MoU with M/s Kranthi Properties was available with the AO during the abated assessment, and no new facts were brought to light in the present assessment. The ITAT upheld the CIT(A)'s order and dismissed the Revenue's appeals.

3. Addition on Account of Bogus Sub-Contract Expenses:

Ground No.3 to 3.2 relate to the addition of Rs. 8,99,900/- for bogus sub-contract expenses. The AO based the addition on a statement from Sri K.S.N.Murthy, who claimed that the amounts paid into his bank account were withdrawn by an accountant of the assessee firm. The assessee denied these claims and requested a cross-examination of Murthy, which was not provided by the AO. The CIT(A) deleted the addition, finding that the AO did not properly appreciate the evidence provided by the assessee.

The ITAT upheld the CIT(A)'s order, noting that the AO failed to establish that the expenditure was not incurred or debited twice. The Tribunal emphasized the lack of positive evidence to support the AO's claims and the failure to provide a cross-examination opportunity. The ITAT dismissed the Revenue's appeal on this ground.

Other Grounds:

For the A.Y. 2015-16, the assessee filed cross objections supporting the CIT(A)'s order. Grounds No.2, 3, and 4 were related to the additions made by the AO and deleted by the CIT(A). Since these grounds were decided on merits against the Revenue, the cross objections became infructuous and were dismissed. Ground No.5 was a general objection and was also dismissed.

Ground No.1 concerned the validity of the assessment made u/s 143(3) in light of the ITAT quashing the notice issued u/s 153C. The assessee challenged the revival of the abated assessment pending the Revenue's appeal before the Hon'ble High Court of Andhra Pradesh. As the Revenue's appeal was dismissed on merits, the ITAT did not find it necessary to adjudicate this ground but allowed the assessee to take up the issue after the High Court's order.

For A.Y. 2017-18, the assessee's cross objections supporting the CIT(A)'s order were also dismissed as the Revenue's appeal was dismissed.

Conclusion:

In conclusion, the ITAT upheld the CIT(A)'s orders, dismissing the Revenue's appeals and the assessee's cross objections for both AY 2015-16 and AY 2017-18. The Tribunal found no evidence to support the AO's additions for unaccounted income from the sale of villas and plots and bogus sub-contract expenses. The ITAT emphasized the need for corroborative evidence and proper cross-examination to substantiate such claims.

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