ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, VISAKHAPATNAM vs. VIJAYNAGAR INVESTMENT AND INFRA DEVELOPERS PVT LTD, VISAKHAPATNAM

PER S. BALAKRISHNAN, Accountant Member :

The captioned appeal is filed by the Revenue against the

order of the Ld. Commissioner of Income Tax (Appeal)-3,

Visakhapatnam [Ld. CIT(A)] in DIN & Order No.

ITBA/APL/S/250/2022-23/1044460595(1), dated 3/8/2022

arising out of the order passed by the Ld. AO U/s. 153A of the

Income Tax Act, 1961 dated 26/9/2021 for the AY 2017-18.

engaged in the business of manufacturing and processing of

coconut husk based products filed its return of income for the AY

2017-18 on 31/10/2017 admitting a total loss of Rs. 21,66,184/.

Subsequently, a search action U/s. 132 of the Act was conducted

in the case of the assessee at the registered office of the assessee

along with its group concerns of M/s. Vijayanagar Biotech Pvt

Ltd. Consequent to the search action U/s. 132, this case was

centralized with Central Circle-1, Visakhapatnam vide order of

the Pr. CIT-1, Visakhapatnam U/s. 127 of the Act in F.No. Pr.

3 CIT/1/VSP/127/2020-21, dated 4/11/2020. The Ld. AO issued

a notice U/s. 153A of the Act on 25/2/2021 calling for the return

of income. As there was no response, another notice U/s. 142(1)

was issued calling for the information along with the detailed

questionnaire. In response to the notice U/s. 142(1), the

assessee partly submitted the information as required by the Ld.

AO on 11/9/2021. During the course of assessment proceedings,

the assessee claimed that it has filed its return of income on

26/8/2021 at the e-filing portal but the Ld. AO observed that the

assessee has not verified the return electronically / physically.

During the course of search at the registered premises of the

assessee, the Ld. AO noticed that certain incriminating material

was found and seized vide Annexure-A/VBPL/OFFICE/02

regarding the sale of land admeasuring 1250.83 sq yds at

Madhurawada, Visakhapatnam. The Director of the company Sri

Datla Raghava Raju was required to explain about the details of

sale where he has submitted the sale documents. The Ld. AO on

perusal of the sale documents submitted by the Director observed

that the assessee has sold land into 4 parts to 4 buyers for a

consideration of Rs. 46,90,315/- each aggregating to Rs.

1,87,62,450/-. The Ld. AO found that the assessee has disclosed

this amount while filing the return of income. Further, the Ld.

4 AO noticed that the SRO value as per section 50C of the Act for

the plot of land is Rs. 56,29,000/- per document and concluded

that the assessee has disclosed Rs. 9,38,385/- less than the

stamp duty value and issued a show cause notice as to why this

difference of Rs. 37,53,540/- (Rs. 9,38,385 X 4) cannot be taxed

as capital gains. Since the assessee did not furnish any

agreement, as claimed by the assessee, with respect to the said

property, the Ld/ AO added back Rs. 37,53,540/- to the total

income of the assessee as per the provisions of section 50C of the

Act. Further, the Ld. AO observed that as per page 66 of the

seized material in A/DVR/VSP/02 seized at the residence of D.

Vivekananda Raju, the assessee has received Rs. 1,62,60,700/-

in “black” from the four buyers of the above mentioned land. The

Ld. AO not accepting the explanation of the assessee added Rs.

1,62,60,700/- to the total income of the assessee under the head

‘income from other sources’. Further, Annexure seized vide

A/DVR/VSP/02, the Ld. AO found that the assessee has sold Flat

No. 302 in the multi-storied apartment of V.I.P. Towers for a

consideration of Rs. 1,01,19,000/-which was disclosed in the

return of income filed by the assessee. However, based on the

seized material, the Ld. AO found that an amount of Rs.

31,40,000/- has been received by way of cash which is mentioned

5 as “black” in the above mentioned seized material and the same

was added to the total income of the assessee as unexplained

receipts. Aggrieved by the order of the Ld. AO, the assessee filed

an appeal before the Ld. CIT(A), Visakhapatnam.

ground that the assessment was completed by the Ld. AO u/s.

143(3) r.w.s 153A of the Act without issuing notice U/s. 143(2) of

the Act. The assessee’s Representative also made written

submissions before the Ld. CIT(A) regarding the additions made

by the Ld. AO. Considering the written submissions made by the

assessee’s Representative, the Ld. CIT(A) allowed the appeal of

the assessee. Aggrieved by the order of the Ld. CIT(A), the

Revenue is in appeal before the Tribunal.

(i) The Ld. CIT(A) erred in not appreciating the fact that the assessee company had filed the return of income on 26/8/2021 to the notice u/s. 153A issued on 25/2/2021 and the same was e-verified on 19/9/2021 ie a few days before the due date for finalization of search assessment, during which period the minimum time of 15 days required for the assessee to comply to a notice U/s. 143(2) was not available. (ii) The Ld. CIT(A) erred in not appreciating the fact that the assessee company had never furnished any such alleged agreement between the parties in the month of March, 2016 for verification with

6 regard to the addition made U/s. 50C of Rs. 37,53,540/- during the course of assessment proceedings and this fact was clearly mentioned in para 6.7 of the assessment order. Accordingly, there is a clear infringement of Rule 46A as the AO has not been provided with an opportunity to examine the fresh evidence. (iii) The Ld. CIT(A) erred in not appreciating the fact that there was a clear documentary evidence in the form of material seized from the residence of Director of the company, wherein the contents were also clear about the property and the registered sale price exactly matched with the amount mentioned under the column “while” though the dates were not mentioned in the said document. It was clearly mentioned in the said document that part of the amount was “already received” against both white and black amounts, at a particular point of time. Further, the facts of this case are totally different from that of the case relied upon by the Ld. CIT (A) wherein there was no identification of the property. In the instant case, the immovable property was clearly identified as ‘Madhurawada Plots’. (iv) The Ld. CIT(A) erred in failing to appreciate that there was a clear documentary evidence in the form of seized material with regard to the addition of Rs. 31,40,000/- on sale of flat bearing No. 302, VIP Towers, wherein the sale consideration of Rs. 1,01,19,000/- was mentioned as while and the corresponding cash potion (over and above the sale consideration admitted in the registered sale deed) was mentioned at Rs. 31,40,000/-. (v) Any other ground that may be urged at the time of hearing.”

assessee has entered into 4 registered sale deeds during

December, 2016 and January, 2017. The Ld. DR further

7 submitted that the SRO value as per section 50C of the Act as on

1/6/2016 was Rs. 15,000/- per sq yd and hence this rate should

be adopted while computing the capital gains. The Ld. DR relied

on the order of the Ld. AO and pleaded that the decision of the

Ld. AO on this ground may be upheld.

Per contra, the Ld. AR submitted that the assessee has

entered in to an agreement with the prospective buyers and

advance consideration was received by the assessee during the

March 2016 itself. The Ld. AR further submitted that the SRO

value of the property as on March, 2016 stood at 1,87,62,450/-

for the four plots. The Ld. AR further pleaded that the receipt of

advances was also mentioned in the sale deeds submitted before

the Ld. AO. The Ld. AO just relied on the date of registration of

the sale deed but has failed to appreciate the date of agreement /

date of advance received by the assessee during March, 2016

wherein the value as per section 50C stood at Rs. 1,87,62,450/-

as admitted by the assessee while filing the return of income. He

therefore pleaded that the order of the Ld. CIT (A) be upheld.

available on record as well as the orders of the Ld. Revenue

Authorities. We find that the Ld. AO has relied on the date of

8 registration of the sale deed for making the addition U/s. 50C of

the Act while framing the assessment U/s. 143(3) r.w.s 153A of

the Act. The Ld. AO has merely relied on the loose sheets seized

during the search operations. The Ld. AO also failed to record

any corroborative evidences in his findings with respect to the

additions made by him. The fact that the advance received by

the assessee is mentioned in the sale deed entered into by the

assessee was ignored by the Ld. AO. The Ld. AO has merely

relied on the date of registration of sale deed while making the

addition U/s. 50C of the Act which was registered during

December, 2016 and January, 2017. Since the agreement to sell

has been entered into as early as March 2016, and the

consideration agreed and advance of Rs. 80,00,000/- has been

received by the assessee, the delay in registering the sale deed,

and in the mean time increase in the value for the purposes of

Section 50C, shall not alter the agreed consideration. The Ld.

CIT(A) has rightly considered the advances received by the

assessee during March 2016 for the sale of 4 plots and

accordingly has directed the Ld. AO to adopt the Fair Market

Value as on the date of the agreement between the assessee and

the vendees. We are therefore in concurrence with the decision

of the Ld. CIT(A) and find that no interference is required in the

9 decision of the Ld. CIT(A) on this issue and this ground no.2

raised by the Revenue is dismissed.

revenue that the Ld. CIT(A) has violated the provisions of Rule

46A by not providing an opportunity to the Ld. AO to examine the

fresh evidence, the Ld. CIT(A) in his order has observed that the

advance amount was recorded in the sale deeds which was

available before the Ld. AO at the time of assessment

proceedings. In the absence of any additional evidence filed

before the Ld. CIT(A), we find that there is no requirement of

complying with the provisions of Rule 46A by the Ld. CIT (A) and

hence we find that the Ld. CIT(A) has acted within his powers.

1,62,60,700/- towards alleged on-money, the Ld. DR submitted

that the Ld. AO has relied on the loose sheets vide Annexure-

A/DVR/VSP/02 as per the screen shot available in page 8 of the

Assessment Order. The Ld. DR invited our attention to the

screen shot and submitted that the assessee has received an

amount of Rs. 1,62,60,700/- for the sale of Madhurawada Plot in

“Black”. He therefore pleaded that the Ld. AO has rightly

considered the amount as on-money and has added it to the total

10 income of the assessee. Further, the Ld. DR submitted that the

same screen shot vide “white” portion mentions the consideration

as 1,87,62,450/-, which matches with the four sale deed entered

into by the assessee and hence it pertains to the same plot of

land sold by the assessee. The Ld. DR pleaded that the order of

the Ld. AO be upheld.

Per contra, the Ld. AR submitted that the loose sheets does

not contain any details regarding the date of payments and the

amount to whom it was paid. Therefore, the Ld. AR submitted

that it is a dumb document and the addition cannot be made on

such incomplete document. The Ld.AR also referred to the sworn

in statement by Vivekananda Raju who has stated that the loose

sheets was not either written by him or any one of the employees

of the assessee-company. The Ld. AR therefore pleaded that the

order of the Ld. CIT(A) be upheld.

available on record. We find that the loose sheets, extracted as

screen shot in the Ld. AO’s order, are undated and no details like

date of payment or to whom the amount was paid is not

mentioned in the loose sheets. Further, the sale deeds executed

by the assessee clearly mentions the consideration received and

admitted by the assessee while filing the return of income. The

Ld.CIT(A) in para 7.2 of his order relied on the case of Sri Badam

Bhogalinga Swamy and others of the jurisdictional Bench of the

Tribunal in ITA Nos. 6 to 10/Viz/2021. We reproduce herein

below the findings of the Ld. CIT(A) on this ground:

“7.2 From the loose sheet as was submitted by the counsel it cannot be ascertained as to the details of payments and date of payment and to whom the amount was paid as was pointed out by the appellant. It was brought to my notice the consideration admitted by the appellant is clearly appearing in the registered sale deeds and hence under the circumstances there is no merit in ignoring the value appearing on the registered sale deeds and considering the amount appearing in the loose sheet that does not contain any relevant details. In the case of ACIT, Central Circle-1, Visakhapatnam v. Badam Bhogalinga Swamy reported in ITA Nos. 06 & 09/VIZ/2021 the Hon'ble jurisdictional Tribunal, Visakhapatnam held in para 6 of the order as under:

We have heard both the parties and perused the material placed on record. In the instant case, the assessees have purchased the plots for a consideration of Rs.6,42,000/- each from R.K. Megastructures P. Ltd., at Dakamarri each admeasuring 183.33 sq.yds. The sale consideration registered in the sale deed was Rs.6,42,000/- for each plot. According to the AO, the assessee has made the payment of Rs. 10,08,315/- over and above the sale consideration registered in the sale deed. The AO heavily placed reliance on the loose sheets found during the course of search marked as page no.35 of annexure- A/PDPPL/Vskp/Office/01, wherein certain rough notings were made. It is settled issue that loose sheets does not convey any meaning without having corroborative evidence: In the instant case, though certain notings were made with regard to cash payment, however, no details were mentioned with regard to plot number, payer, payee and the purpose of payment etc. The assessee has denied having made any payment over and above the sale consideration recorded in the sale deed. Unless there is tangible evidence, merely on the basis of loose sheet which does not have any details do not convey any meaning for making the addition. It is settled issue that the sale consideration recorded in the sale deed needs to be adopted for the purpose of payments made to the vendor as decided by Hon'ble Punjab and Haryana High Court in the case of Paramjit Singh vs. ITO (185 taxman 273) and the order of the coordinate bench of ITAT, Hyderabad in ITA No.1472/2016 dated 13.07.2017. Therefore, we hold that the Ld. CIT(A) has rightly deleted the

12 addition and we uphold the order of the Ld.CIT(A) and the dismiss the ground of the revenue on this issue. Considering the above facts of records and the judicial pronouncements ground no.6 is allowed.”

We find that the Ld. CIT(A) has relied on the various judicial

pronouncements and has deleted the addition made by the Ld.

AO in the absence of any corroborative evidence brought in by

the Ld. AO. We therefore are of the view that no interference is

required in the order of the Ld. CIT(A) on this ground and hence

the Ground No.3 raised by the Revenue is dismissed.

31,40,000/-, the Ld. AO again relied on the seized Annexure –

A/DVR/VSP/02 which mentions Rs. 31,40,000/- as Black Money

received. We have adjudicated Ground No.3 in the preceding

paragraphs of this order where the Ld. AO has relied on the

dumb document while making additions. The Ld. CIT(A) again

relying on the jurisdictional Bench in the case of Badam

Bhogalinga Swamy & Others (supra) has deleted the addition and

hence we find no reason to interfere in the order of the Ld. CIT(A)

on this ground.

13 11. Ground No.5 is general in nature and therefore needs no adjudication.

Pronounced in the open Court on the 29th March, 2023.

Sd/- Sd/- (दु�वू� आर.एल रे�डी) (एस बालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

Dated : 29.03.2023 OKK - SPS

14 आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – M/s. Vijaynagar Investment and Infra 1. Developers Private Limited, Flat No. 403, 4th Floor, Vijay Jyothi Arcade, Opp. NHAI Office, Hanumanthawaka, Visakhapatnam, Andhra Pradesh – 530043. राज�व/The Revenue – Asst. Commissioner of Income Tax, Central Circle- 2. 1, 5th Floor, Direct Taxes Building, Sector-8, MVP Double Road, Visakhapatnam, Andhra Pradesh-530 017. 3. The Principal Commissioner of Income Tax (Central), Visakhapatnam. आयकर आयु�त (अपील)/ The Commissioner of Income Tax (A)-3, 4. Visakhapatnam. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, 5. Visakhapatnam गाड� फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam