TaxTMI 
TaxTMI 
2023 (5) TMI 1486
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....e of Rs. 5,07,48,000/- under the head "business & profession" 3. During the course of assessment proceedings, the AO observed that during the course of search proceedings, certain loose sheets were seized vide Annexure YSH/PDR/RES/01. Page number 38 of the Annexure YSH/PDR/RES/01 is a voucher which represents an amount of Rs. 1,50,00,000/- paid to Dr. G. Abhinav in cash. Page number 37 represents the details of sale of land at Malakpet, Hyderabad wherein an amount of Rs. 2,58,98,100/- was received in cash. Further a loose sheet numbered 31A represents Rs. 1,00,00,000/- in the name of Shri G. Devender Rao. On perusal of the above it was noticed that, a sum of Rs. 5,08,98,100/- (Rs. 1,50,00,000 + 2,58,98,100 + 1,00,00,000) are cash payments pertaining to various concerns and individuals of the group for the current financial year 2020-21, which are related to Shri G. Devender Rao. 3.1 The AO further noted that when the assessee Shri Devender Rao Gorukanti was confronted with the above details of cash receipts/payments pertaining to current financial year 2020-21, he, in his sworn statement u/s 132(4), Primafacie stated that these payments and receipts are yet to be accounted in....
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....ot be equated with undisclosed income by any reckoning being a part of regular income. ● It is clarified that the provisions of section 115BBE which appear in Chapter VI [68,69,69A,69B,69C and 69D] cannot be applied in this case as the income falls under section 14 which appears in Chapter-IV. The income can only be assessed as business income. Hence the provisions of 115BBE shall not be applicable as there is a direct nexus between source of income and outgo of such income duly evidenced by books of accounts." 5. However, the AO was not satisfied with the arguments advanced by the assessee. He noted that Shri G. Devender Rao (Director) takes care of all the financial activities of Yashoda Group. Yashoda Group, apart from providing healthcare services also invested in real estate through number of legal entities who are regularly filing returns of income. In the process of negotiating real estate transactions on behalf of the group companies, the assessee came to be associated with a number of persons within and outside Hyderabad who regularly transact in real estate. During the FY. 2020-21, the assessee claimed that he had an opportunity to involve and negotiate ....
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....their returns on income. It is not as if the appellant was a stranger to the business. Being intimately associated with real estate business over the years, in the process of negotiating real estate transactions on behalf of the group companies and others the appellant came to be associated with a number of persons who regularly transact in real estate. During the Fin. Year 2020-21, the appellant had an opportunity to involve and negotiate a real estate deals involving certain parties from outside Hyderabad. During some of these negotiations, the appellant was persuaded to withdraw from the transactions in consideration for a lump-sum amount in different occasions and earned about Rs. 5 Crores in various land deals. Hence, this amount received by the appellant, which could be in the nature of noncompete fees and taxable under section 28 which has close nexus with real estate business. The amount was of Rs 5,07,48,000/- was accounted for in regular books of the appellant for the Fn. Year 2020-21 relevant to the Asst. Year 2021-22. This Income from real estate business was included in the return for Asst. Year 2021-22 and taxes were paid on the same before the end of the previous yea....
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....m his business associates..................................................................... From the facts of the case at hand, it is clear that the AO has acted unreasonably in rejecting the genuine explanations offered by the appellant in respect of the source of income without any enquiry for the source of income and application thereof. Such recourse primarily hedged on surmises, conjecture, assumptions, presumptions. The addition so made is unsustainable in the eyes of law and thus deserves to be quashed". 8. Based on the arguments advanced by the assessee, the ld. CIT(A) directed the AO to tax the amount of Rs. 5,08,98,100/- under normal provisions of the I.T. Act by observing as under:- 6.3 I have carefully considered the submissions of the appellant, the order of the Assessing Officer, the evidence filed by the appellant's AR. Briefly the facts are, consequent to the search & seizure operation conducted in the case of Yashoda group on 22.12.2020, certain loose sheets were found and seized, which represent cash receipts/payments of Rs. 5,08,98,100/- pertaining to various concerns related to the appellant. The appellant has admitted cash receipts/payme....
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....rovisions of section 115BBE on the amount of Rs. 5,08,98,100/-. 6.5 I have considered the submissions of the AR and the order of the AO. It is seen r that the appellant has filed his return of income in response to the notice u/s. 153A for the current year on 28.12.2021, admitting additional income of Rs. 5,08,98,100/- as income from real estate business. The AO taxed this income as per the provisions of section 115BBE of the Act. Now, the question is whether this additional business income attracts the provisions of section 115BBE of the Act or not. To answer this, the provisions of sections 115BBE of the Act are reproduced as below: 11588E(1). Where the total income of an assessee - a. includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 690 and reflected in the return of income furnished under section 139; or b. determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 690, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of- i. the amount of income-ta....
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....urred any expenditure and offers no explanation about the sources for such expenditure or the explanation offered was not found to be satisfactory by the AO. In the present case, there is no expenditure incurred by the appellant and the appellant claimed to have received the additional income from the real estate activities and recorded this income as income from real estate activity in the books of account. During the current year, the appellant was involved in the real estate activities and this fact was mentioned in the sworn statement of the appellant dated 25.12.2020 during search, affidavit filed by the appellant on 26.02.2021 and affidavits filed by the other parties who were also involved in real estate business. These statements and affidavits cannot be ignored. The AO has not brought out any material on record to controvert these evidences. The AO has accepted the return of income of the assessee wherein the additional income was declared as business income and no new additions were made. The higher tax rate u/s.115BBE is not applicable to business income declared u/s.28 of the Act. Since the additional income is not covered under the provisions of Section 69C of the Act,....
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....aising the following grounds:- 1. The Ld CIT(Appeals) erred both in law and on facts of the case In granting relief to the assessee. 2. On the facts and in the circumstances of the case, and 10 law, whether the Id. CIT(A) is correct in in directing to treat the amount Rs.5,08,98,100-* as business Income when the same was admitted by the assessee as additional income to explain the unaccounted expenditure Incurred 10 cash as recorded In the material seized during search and seizure operation 3. On the facts and in the circumstances of the case, and in law, the Id CIT(A) erred in not appreciating that the amount of Rs 5,08,98,100/- was rightly taxed u/s. 115BBE towards unexplained expenditure as on the date of the search neither the unaccounted cash payments, nor the Income claimed to have been earned from land deals were recorded in the regular books of accounts of the assessee. 4. On the facts and in the circumstances of the case, and in law, the Id CIT(A) erred in holding that the additional income of Rs. 5,08,98,100/* was earned from business when assessee could not produce specific details of the business such as details of the land dealt with....
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....ed that the above provision is applicable when the source of income is not disclosed or source of expenditure is not disclosed. He submitted that the assessee in the instant case has disclosed the source of income and applied the real-estate income for meeting the outflow appearing in the seized papers. He submitted that the real-estate business income does not fall in the ambit of sections 68 to 69D. Therefore, the provisions of section 115BBE cannot be invoked. He submitted that the initial burden of proving the real-estate income is discharged by the assessee. The AO thereafter did not make any enquiry and disbelieved the fact of receipt of business income from the real estate. Referring to the copy of the assessment order, he submitted that the AO in the assessment order himself has accepted the fact that the Yashoda group is in the business of real-estate. 11.2 Referring to the following decisions, he submitted that the order of the ld. CIT(A) being in accordance with law should be upheld and the grounds raised by the revenue should be dismissed. i. Hon'ble Mardas High Court in the case of A.J. Ramesh Kumar Vs DCIT reported in 441 ITR 495 ii. ITAT Chandiga....
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....hri Bommanagiri Jaipal, Shri Circoori Prabhakar and Shri Srinivas Telugu have filed their affidavits individually before the AO stating that the assessee Shri G. Devender Rao is into real-estate business since past 10 years and was involved in the real-estate settlements deals for purchase and sale of lands situated at Velimela, Vikrabad, Sangaraddy etc. We find the AO thereafter, has not conducted any further enquiry to disprove the various evidences filed by the assessee during the course of assessment proceedings as well as before the DDIT(Inv.). Further, the assessee has paid advance tax thereon prior to the date of search. Therefore, under these circumstances, once the assessee has proved the initial burden that he is engaged into real-estate business and has earned income from such real-estate, therefore, without making any further enquiry to disprove the various evidences filed before him, the AO could not have treated the amount of Rs. 5,08,98,100/- as unexplained expenditure. In our opinion, the provisions of section 115BBE are applicable when the source of income is not disclosed or source of expenditure is not disclosed. However, in the instant case, the assessee has dis....
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....oceed on the basis that such statement is correct and represents the true state of affairs and the burden is on the deponent to demonstrate by letting cogent, convincing and material evidence that the statement was incorrect. Therefore, the statement made under section 132(4) of the Income tax Act, 1961 has a strong evidentiary value and is binding on a person, who makes it. 13.1 We find the Chandigarh Bench of the Tribunal in the case of Bhuwan Goyal (supra) while deciding an identical case at para 10 of the order has observed as under:- 10. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is not in dispute that the assessee surrendered the income of Rs. 3.64 Crores in the statement recorded under section 132(4) of the Act the said surrender was made on the basis of the entries in the pocket diary found & seized during the course of search in which certain transactions relating to the Real Estate business were noted and profit as well as commission was earned thereon. The aforesaid facts had been mentioned by the A.O. at page no. 4 of the assessment order dt. 30/12/2018 wherein copy of the s....
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....d 05/04/2016 was found from residence at the time of search on 31/08/2016 which was executed by Mr. Sumit Thaper on my behalf and Sh. Hernek Singh S/o Sh. Daulat Singh for an amount of Rs. 1,10,00,000/-. Out of this amount of Rs. 10 Lacs was transferred from my bank account to Mr. Sumit Thaper which is duly accounted for (proof of this will be submitted later on) and rest of the amount has been paid in cash. The source of Rs. 1 Cr. Paid in cash are out of commission income and profit earned from real estate transaction in past. However no documentary evidence is available with me. Hence to BUY peace of mind and to avoid litigation. I hereby voluntarily offer Commission income as well as profit earned on real estate transactions as an additional income of Rs. 1 Cr. (One Crore) over and above my normal income for the F.Y. 2016-17 relevant to A.Y. 2017-18 subject to no penal action. I hereby reiterated that these transactions were entered by me in Individual capacity and nothing to do with the company i.e. M/s A.P. Refinery Pvt. Ltd." The said explanation given by the assessee to the Ld. CIT(A) has not been rebutted, therefore the provisions of Section 69 of the Act were not ....