TaxTMI 
TaxTMI 
2013 (10) TMI 608
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.... of appeal for assessment years 2003-04, 2004-05 & 2005-06. "The learned CIT(A) erred in confirming the addition made of Rs. 25,000/- as the Assessing Officer did not base such an addition on any seized material." 3. Relying on the decision of the jurisdictional High Court in the case of DCIT, C.C.2, Hyderabad vs. Ahura Holdings 2012- TIOL-357-HC-AP-IT, we dismiss the additional ground for assessment years 2003-04, 2004-05 & 2005-06. 4. The assessee is an individual. The I.T. Authorities conducted a search and seizure operations under section 132 of the Income Tax Act in the case of Radha Realty Corporation on 17.10.2007, thereafter, issued notice under section 153C to the assessee. The assessee filed returns of income for the A.Y. 2003- 2004, 2004-05 and 2005-06 admitting income as under:- Asst. Year Income returned (Rs.) Agricultural Income (Rs.) 2003-04 81,000 25,000 2004-05 48,000 25,000 2005-06 1,00,700 30,000 5. The assessee furnished details of agricultural lands held by him but the Assessing Officer treated the said amount as other than agriculture on the ground that the assessee did not produce the sale bills of crops or purc....
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....d determine the consequential interest u/s 234A, 234B and 234C. 9. In the result, the appeals being ITA Nso. 653, 654, & 655/Hyd/12 are partly allowed for statistical purposes. ITA NO. 656/HYD/12 for AY 2006-07 10. For the assessment years 2006-07, 2007-08 and 2008-09, the CIT(A) had passed a consolidated order as identical issues were involved in the same. 11. The fact in these assessment years are that Search and seizure operation u/s.132 of the I.T. Act was conducted at the residential premises of Radha Realty group of cases on 17-10- 2007. Consequent to search and seizure operations, notice u/s.153C was issued in response to which the assessee filed his returns of income admitting income as under. Asst. Year Income returned (Rs.) Agricultural Income (Rs.) 2006-07 115312 30,000 200-08 167570 2008-09 5149430 12. During assessment proceedings, the AO noticed that in AY 2007-08 the assessee had shown certain credits in the bank account maintained with Andhra Bank, Kokapet branch. When asked to explain these credits, the assessee had not offered any explanation. Assessee had also shown Rs.20 lakhs as liability in the b....
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....eturned and balance of Rs. 89,747/- is retained as the assessee had no explanation to offer to substantiate the amounts deposited in his bank account during the year. Since explanation with production of proper evidences has not been given by the assessee with respect to entries in the bank account, the CIT(A) sustained the addition to the extent of Rs. 89,747/-. 16. Aggrieved, the assessee is in appeal before us and as also raised additional ground as follows: "The learned CIT(A) erred in confirming the addition made of 30,000/- as the Assessing Officer did not base such an addition on any seized material." 17. Relying on the decision of the jurisdictional High Court in the case of DCIT, C.C.2, Hyderabad vs. Ahura Holdings 2012- TIOL-357-HC-AP-IT, we dismiss the additional ground for all the three years under appeal. 18. The learned counsel for the assessee relied upon the submissions made with respect to agricultural income in the earlier assessment years. Besides, it was brought to our notice that the assessee has also acquired 8 acres of land during previous years. 19. We have heard the parties and perused the material on record. Since the property has been class....
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.... nature, therefore, the Assessing Officer is directed accordingly. 23. In the result, the appeal being 656/Hyd/12 is partly allowed for statistical purposes. 24. For AY 2007-08, the assessee has raised two substantial grounds, which are as under: "2. The learned CIT(A) erred in confirming the addition of Rs. 20 lakhs disbelieving the explanation with regard to the amount received from M/s Radha Realty Corporation (India) Pvt. Ltd. 3. The learned CIT(A) erred in confirming the levy of interest charged by the Assessing Officer u/s 234A, 234B and 234C of the IT Act." 25. As regards the addition of Rs. 20 lakhs is concerned, the Assessing Officer noted that on the basis of the details furnished by the assessee, it was noticed that there were certain credits in the bank account of the assessee in Andhra Bank, Kokapet Branch during the year under consideration. The assessee was asked vide letter dated 31/08/2009 to explain the nature of the receipts/credits. The AR of the assessee had not submitted any explanation in this regard. Hence, the peak of credits is Rs. 14,52,320/-. However, the assessee shown land advance of Rs. 20,00,000/- in the balance sheet as liability as o....
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....bmitted that the assessee has also registered the said property in favour of Radha Realty Corporation India Pvt. Ltd. acting as GPA agent. He, therefore, submitted that the amount received does not represent the income of the assessee and cannot be added u/s 68 of the Act. It was also submitted that while initiating proceedings u/s 153C the Assessing Officer himself has mentioned that there is a relationship between the assessee and Radha Realty Corporation India Pvt. Ltd. and signed papers relating to the assessee and Radha Realty Corporation India Pvt. Ltd. were found during the course of search and seizure operation. It was further submitted that the Radha Realty Corporation India Pvt. Ltd. is also assessed to tax by the same Assessing Officer, who should have verified the fact of receipt of Rs. 20 lakhs from Radha Realty Corporation India Pvt. Ltd, which he failed to do so. The learned counsel for the assessee relied on the decision of the Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia Vs. ITO, 208 CTR 208/298 ITR 349 wherein it has been held that advances received during the course of business are not covered by the provisions of section 68 of the IT Act. He....
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....f the assessee regarding this liability but the assessee could not explain. Therefore, the AO treated RS.22 lakhs as unexplained income of the assessee. 34. The AO further observed that for the AY 2008-09, assessee has shown commission earned on sale of lands amounting to RS.4,50,12,50l/- and claimed Rs.3,66,68,2S0/- as payments to various claimants. Most of these payments are in cash. The AO required the assessee to explain the payments and called for the copies of agreements entered into by the assessee with various parties for surrendering of their rights in landed properties situated in Mancherevula and Puppalguda villages and also asked the assessee to show cause as to why these payments should not be disallowed u/s.40A(3). The assessee replied that the commission earned by him is to be assessed under the income 'income from other sources'; and as such the provisions of sec. 4OA(3) are not applicable. It was further stated by the assessee that the payments made are based on oral agreements and there is no documentary evidence to prove the rights of the claimants. To a specific query raised by the AO through notice u/s.142( 1) dated 20- 11-2009 to submit at least the names o....
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.... the amounts were received as advances and not as income, the fact of which is not disputed by the department. The said amounts were returned to the persons concerned, therefore, neither at the time of receipt nor at the time of payment, they represent revenue items. 41. The learned DR, on the other hand relied upon the orders of the revenue authorities. 42. We have heard the arguments of both the parties and perused the record. We find that the assessee filed letters of confirmation which are placed at page Nos. 73 to 77 of the paper book. It is made clear by the above mentioned persons that they paid the amounts for securing a property suitable for them. As no such suitable property could be located, the amounts were returned to them. We are of the view that i) the normal principles of cash credits should not be applied to the amounts received as advances in the process of business activity, ii) the amount was received as an agent for the purpose of acquiring a property on their behalf, and iii) the assessee could furnish the letters of confirmation, the names and addresses of the persons, the purpose for which the amount was received and the fact of return of the amount. I....
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....e credits, the identity of the creditor and his creditworthiness by establishing some plausible evidence...The assessee's duty to prove that an unexplained entry in his account books does not represent undisclosed income is not discharged by merely showing that the entry appears in the account of third party and that the party in whose name the amount is credited is not a fictitious party but a real party but the assessee also has to prove further that the entry made in the account book is a genuine entry. It can be said that if the creditors are close relatives of the assessee or his employees the burden of the assessee to prove the creditworthiness of the creditors and genuineness of the transactions will be heavier in relative terms than in a case where the creditors are the outsiders. Therefore, the contention of the learned Counsel for the petitioner that under Section 68 of the Act the assessee is not expected to establish the capacity of the creditors to advance money and genuineness of the transactions is not acceptable to us, and we hold that the assessee is expected to establish proof of identity of his creditors, capacity of his creditors to advance money and genuinen....
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.... fact that such payments were made on behalf of others is also not disputed by the Assessing Officer. Therefore, the payments do not represent expenditure incurred by the assessee. The learned counsel submitted that the CIT(A) accepted the fact that the amount received is commission or brokerage. He invited our attention to para 8.3 of the order of the CIT(A) wherein it was mentioned by the learned CIT(A) that 'it is a fact that the assessee is acting as a commission agent to M/s Radha Realty Ltd and in fact he purchases and sells properties on their behalf for commission. The learned counsel therefore submitted that the payments do not represent the expenditure but represents the payments made on behalf of and for the purpose of acquisition of the property by DLF and others and, therefore, the provisions u/s 40A(3) have no application to the facts of the case. The amounts paid to various persons is on behalf of the principal and not on his own behalf. Each of the receipt as contained from pages 26 to 72 clearly indicate that they have been paid the amount only for clearing the property which was purchased by DLF. The learned counsel, therefore, submitted that the payments do not r....
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....year under consideration, the assessee offered the income from commission under other sources. We find from the record that the gross income was Rs. 61,44,501/- and from their expenses to the tune of Rs. 10,50,149/- were allowed. The Assessing Officer while completing the assessment accepted the computation made by the assessee. We find from the order of the Assessing Officer that the income admitted is adopted as Rs. 51,49,430/- as arrived at in the computation of total income. Therefore, the Assessing Officer accepted the fact that only the net amount is to be assessed and also accepted the fact that the assessee is a mere agent. In the return of income the assessee did not claim the amount paid as expenditure, as the assessee is a mere agent and paid the amounts on behalf of others, therefore, it cannot be considered for the purpose of disallowance. As submitted by the learned counsel for the assessee the Assessing Officer accepted the fact that the assessee received the amount as commission or brokerage on sale of lands form various parties and the fact that such payments were made on behalf of others is also not disputed by the Assessing Officer. Even, the learned CIT(A) that ....