TaxTMI 
TaxTMI 
2021 (7) TMI 11
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....atives. Case files perused. 2. We notice at the outset that all these Revenue's six appeals seeks to revive Assessing Officer's action inter alia adding additional income amount(s) of Rs. 2 Crores in ITA No.743/Hyd/2018 on "substantive" basis in ITA No.743/Hyd/2018, Rs. 1.5 Crores each on protective basis in ITA Nos.747 to 750/Hyd/2018 and Rs. 7 Crores in ITA No.752/Hyd/2018 on "substantive basis"; respectively made in the corresponding assessment orders and deleted in the CIT(A)'s detailed discussion in lead case ITA No.743/Hyd/2018, reading as under: "2. The appellant has filed the return of income on 16.03.2015 by disclosing an income of Rs. Nil for the Asst. Year 2013-14. The assessment was completed by determining the total income of Rs. 2,00,00,000/- under the following heads of income: i) Income returned Nil ii) Add: Income admitted 2,00,00,000 Total: 2,00,00,000 3. Against the above order the appellant has filed an appeal by raising the following grounds: GROUNDS OF APPEAL 1.The assessment order passed by the Assessing officer is against the facts of the case. 2.The assessing officer erred in making....
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....Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions / Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers f....
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.... recorded on oath during survey proceedings. Hence, the addition made on the basis of the statement recorded during survey proceedings cannot be taken as a basis for making addition of income without any corroborative evidence found in survey proceedings. 4. Further, the appellant has 'filed written submissions in paper book and mentioned the following issues raised by the assessing officer in the assessment order and filing the replies to the issues raised by the assessing officer. BRIEF NOTE ON FACTS OF THE CASE The appellant firm M/s.Legend Developers & Constructions, Kurnool is a Partnership firm formed on 09.04.2008 to do business in Real Estate. The appellant is constituted with the following partners namely 1] Sri. A.Jayaramudu 2] Smt. B. Mangala 3] Sri. K.E. Jayachandrudu 4] Sri. K.S. Narayana Gupta and 6] Sri. R. Aravind Kumar Jain. The partners have executed a Partnership deed on 09.04.2008. The partnership firm has purchased 12.24 Acres of Ariculture land at Tadipatri, Anantapur dist. with an intention to develop the said land and divided into residential house plots and sale of the same. The appellant has got approval of 144 re....
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....s from 2008-2009 to 2012-2013 and the unsold plots as on 31.03.2013 was 73 only. Thus the appellant firm has sold only 50% of the plots till 31.03.2013. The appellant firm "has sold, only 1 plot for Rs. 1,96,000/-" in the financial year 2012-2013 and earned income of Rs. 9,307/- only in the relevant assessment year 2013-2014. The appellant has also received development charges of Rs. 1,07,400/- from the party. The appellant firm has still closing stock of 73 plots [50% of the plots approved as unsold as on 31.03.2013]. The appellants partner was in confusing state of mind and under stress and the statement was given under pressure and in odd hours. The appellant firm submits that there was no any evidence or incriminating material found in survey operations at the firms office premises. Even the assessing officer has not mentioned concealment of income or suppression of receipts (or) inflation of expenditure (or) undisclosed investments etc by the firm during the financial year 2012-2013 relevant to the assessment year 2013-2014. It is a fact that the appellant firm has made sale of only one plot and received sale value of Rs. 1,96,000/- in the financial ....
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.... and against the CBDT Circulars and various case laws referred. Hence addition made of Rs. 2,00,00,000/- is to be set aside. Being aggrieved with heavy addition of Rs. 2,00,00,000/- to the return of income and raised high demand tax of Rs. 95,17,200/- in the Asst.Year 2013-2014, the appellant firm preferred an appeal against the assessment order and prays for justice. 5. The appellant has filed the issues raised by the assessing officer in the assessment order and his replies to the issues raised in Written Submissions and Paper Book. The following issues are raised by the assessing officer in the assessment order and submission of the appellant to the issues. ISSUES RAISED BY THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT ISSUE NO.1 OFFERING OF ADDITIONAL INCOME AT THE TIME OF SURVEY OPERATIONS: The assessing officer has mentioned at Page No.4, Para No.2.1 of the Assessment order that, "Sri, A. Jayaramudu came up with a decision and filed a letter with a plan to split up the additional income of Rs. 10,00,00,000/- which he declared in his statement recorded under section 131 of the IT Act on 03.12.2013". He has agreed to....
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....Hence, the addition of income of Rs. 2,00,00,000/- not justified and against the CBDT Circular No. F.No. 286/2/2003-IT(INV) that, dated 10.03.2003 and CBOT circulars No. F.No.286/98/2013- IT(INV.II) Dt. 18.12.2014 various case laws filed, hence the addition of income of Rs. 2,00,00,000/- is to be set aside. ISSUE NO.3 DISCLOSURE OF ADDITIONAL INCOME IS NOT VOLUNTARY The assessing officer has referred at Page No.6, Para No. 1. Of the assessment order that, "the assessee has not proved any threat or coercion by the officer before whom the declaration was given. In view of the above judicial decisions, the addition agreed by the assessee is added to the total income of the assessee". SUBMISSION OF THE APPELLANT The appellant submits that as per books of accounts of the firm for the F.Y.2012-2013 relevant to the Asst. Year 2013-2014, the firm has earned net profit of Rs. 9,307/- only. The appellant firm has sold only one plot for Rs. 1,96,000/- during the F. Y. 2012-2013 relevant to the Asst. Year 2013-2014. The appellant firm partner Sri. A.Jayaramudu has offered income of Rs. 2,00,00,000/- in the hands of the appellant for the Asst. Year 2....
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....er] The transactions are related to M/s.Pavan Developers and Constructions, Kurnool regarding the purchase of Agricultural land at Yemmiganur in the F.Y. 2010-2011. These papers are related to M/s. Pavan Developers and Constructions, Kurnool and not to the appellant firm. The transactions in the Paper No. AJ 23 are not related to the appellant firm and not took place in the F.Y. 2012-2013 relevant to the A.Y. 2013-2014. Query No.3 In fact the assessing officer has not raised I sought any explanation on the material impounded at the time of survey operations from "AJ 01 to AJ 60" either at the time of recording of the sworn statement [Sworn statement taken immediately on the following day of the survey operations i.e., 03.12.20131 or at the time of scrutiny proceedings in the A.Y. 2013-2014. The appellant firm did not get any opportunity to explain the noting in the said impounded material during the assessment proceedings in the A.Y. 2013-2014. Subsequently, the Asst. Commissioner of Income Tax, Circle-1, Kurnool has issued summons and asked for explanations and clarifications on each file / paper / material / documents etc impounded at the time of sur....
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.... a letter dt. 03.01.2014 with a plan to split of the additional income of 10 Crores. The appellant submits that, the income tax officer has brought pressure to file a letter about the disclosure of 10 Crores. In fact, the appellant firm has not been given proper time to discuss the survey operations with their partners to take a decision. The appellant has filed return of income on the basis of the books of accounts 1 records of the firm related to the F.Y. 2013-2014. In fact, the firm sold only one plot for a sale consideration of Rs. 1,96,000/- and disclosed total income of Rs. 9,3071- for the Asst. Year 2013-2014. There was no any basis 1 evidence for disclosure of heavy additional income of Rs. 2 Crores in the Asst. Year 2013-2014. Query No.6 The assessing officer has mentioned at Page No.5, Para No. 2.2 that As seen from the statement given by the A. Jayaramudu, Managing Partner of the firm U/s 131 of IT Act, he has declared to pay the taxes an additional income offered. But he has revised firms income. This clearly shows that he has retracted to his declaration given u/s 131 of the IT Act for additional income he has admitted. Hence the income of....
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....e of Rs. 2 Crores to the return of income. MARITS OF THE APPELLANTS CASE The appellant firm has filed the return of income on the basis of the regular books of accounts maintained during the F.Y. 2012-2013 relevant to the Asst.Year 2013-2014. It is a fact that the appellant firm has sold 1 Plot only for Rs. 1,96,000/- during the F.Y. 2012-2013 and earned Net Profit of Rs. 9 307/- only. This fact is supported and evidenced by the Stamps and Revenue Department Government of Andhra Pradesh at S. No. 1/33 statement No. 13550934 Dated 19.08.2015. The Assessing officer has not found the following during the F.Y. 2012-2013 relevant to the Asst. Year 2013-2014 in the impounded material - a. Any concealment of income; b. Any suppression of Sale / Receipts; c. Any undisclosed income; d. Any new Credits / loans found; e. No incriminating material found; f. No un explained expenditure found; g. No new investments made / found; h. Not specified / identified any reason for determination of income of Rs. 2 Crores; i. The Assessment order was passed against the CBDT Circular; j. ....
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....al income. CASE LAWS ON LEVY OF TAX ON REAL INCOME ONLY AND NOT ON HYPOTHETICAL INCOME 1. Supreme Court of India Commissioner Of Income-Tax, vs Shoorji Vallabhdas And Co. on 27 March, 1962 Equivalent citations: 1962 46 ITR 144 SC 2. Supreme Court of India Commissioner Of Income-Tax ... vs Bokaro Steel Limited, Bokaro on 18 December, 1998 3. Supreme Court of India The Godhra Electricity Co. Ltd .*** vs The Commissioner Of Income Tax, on 3 April, 1997 7. The only Ground of Appeal arises on account of addition of income of Rs. 2,00,00,000/- on the basis of statement given by A. Jayaramudu. Considering the facts, issues, circumstances of the instant case and keeping in view of the evidences submitted by the appellant and CBDT Circulars and Judicial pronouncement by the Hon'ble High Court of Telangana and Andhra Pradesh in the case of Gajjam Chinna Yellappa Vs. Income Tax Officer, IITA No. 268, 273 & 308 of 2003 and 287, 291 & 294 of 2006 Dt. 06 November 2014, the addition of Rs. 2,00,00,000/- is deleted on the following ground. (i) The Assessing Officer did not find any corroborative evidence or inc....