TaxTMI 
TaxTMI 
2014 (10) TMI 209
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....ed u/s 153A of the Act calling upon the assessee to file a return of income. In response to the notice issued u/s 153A of the Act, the assessee filed his return of income on 29/08/2008 declaring total income of Rs. 1,57,920/-. During the assessment proceeding, Assessing Officer on verification of the seized material noticed that assessee had made several investments in land, which is evident from the sale deeds found and seized at the time of search and seizure operation. Investments made in land was found to be to the extent of Rs. 7,31,900/-. Assessing Officer noticing that assessee has not reflected the investments in his return of income treated the amounts as mentioned in the sale deeds, as unrecorded investment and added it to the income of Assessee. Further, the Assessing Officer noticed that Assessee has credited an amount of Rs. 2,30,601/- to his capital accounts as gifts received. As mentioned by the Assessing Officer in assessment order in absence of any details submitted by the assessee in that regard, the amount was treated as unexplained credit and added to the income of Assessee. 4. Being aggrieved of the additions made in the assessment order, assessee preferred ....
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....ne of his employee Shri S. Vijaya Kumar but actually the expenditure was booked in the books of the assessee since investment was made by the assessee. In this context, the learned AR referred to a copy of the registered sale deed at page 15 of the paper book. Further, the learned AR referring to the ledger account of the said land in the books of the assessee submitted that debit balance of Rs. 85,571/- was recorded. In this context, he referred to page 21 of the paper book. It was submitted by the learned AR that when the Assessing Officer has accepted the opening balance in the ledger account there is no reason why he should have disputed the investment made by the assessee in the land. The learned AR referring to sale deed dated 14/12/2001 submitted that assessee invested the amount of Rs. 1,34,000/- towards purchase of land. It was submitted that this investment was also reflected in the books of the assessee. It was submitted that in his balance sheet, assessee has shown both the lands as his assets. In this context, he referred to the copy of the balance sheet as at 31/03/2012 at page 77 of the paper book. 9. The learned DR, on the other hand, supporting the orders of the....
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.... assessee had furnished all information relating to the gifts in response to the questionnaire issued by the Assessing Officer. It was, therefore, contended that addition was unjustified. Further, assessee contended that the person who had given gifts have also confirmed the gifts in sworn affidavits. 15. The CIT(A) after considering the submissions of the assessee along with the facts and materials on record, noticed that the gifts were received from relatives of the assessee, who have also furnished affidavits accepting gifts made by them. However, he noted that the affidavits filed by all the donors are in the month of November and December, 2009 and one of the affidavit is as late as 24/12/2009, which is almost nearing the limitation for the assessment proceedings. He noted that in some of the affidavits dates are not clearly mentioned. He further noted that donors are not family members having creditworthiness or sufficient source of income to make the gift as the only source of income of the donors is agricultural income. He noted that as per the income certificate issued by VRO and other documents relating to the details of land and crop the donors are not having sufficie....
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.... 19. The first issue in the present appeal relates to addition of an amount of Rs. 7,76,500/- being sustained by the CIT(A) out of the addition of Rs. 12,05,000/- made by the Assessing Officer towards unaccounted investment. 20. Briefly the facts are, during the assessment proceedings, on the basis of seized material, the Assessing Officer noticed that the assessee has made investment in land amounting to Rs. 12,05,000/-as per the sale deeds found at the time of search. By observing that the assessee has not reflected the investment in its return of income, the Assessing Officer added the amount of Rs. 12,05,000/- to the income of the assessee for the assessment year under consideration . Being aggrieved of such addition, assessee preferred appeal before the CIT(A). 21. In course of hearing appeal before the CIT(A), assessee contended that the amount of Rs. 12,05,000/- is towards investment in land by S/Shri D. Mahesh, S. Vijaya Kumar and Smt. K. Aruna Kumari. It was submitted by the assessee that the Assessing Officer was totally unjustified in making the addition by observing that the assessee has not reflected investments in the return of income whereas the assessee in his....
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.... on record . On going through the orders of the revenue authorities, it becomes clear that while the Assessing Officer has added the amount in question with the remark that the assessee has not reflected them in the returns filed, the CIT(A) sustained part of the addition on the ground that though the assessee has reflected the investments in the books of account but the lands have been purchased by third parties. So far as the Assessing Officer's observation is concerned, we find it to be without any basis as Assessee has not only reflected the investments in its books of account but has also shown it in the balance sheet accompanying the return of income. The finding of the CIT(A) is also on the basis of presumptions and surmises considering the fact that merely because the investments have been made in the name of some other persons, the additions have been made by totally ignoring the fact that the assessee recorded the investments in its books of account as well as balance sheet furnished along with the return. Therefore, the investments cannot be considered as unexplained. In the aforesaid circumstances, we do not find any reason to sustain the addition made and accordingly w....
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.... perused the material on record as well as the orders of the revenue authorities on this issue. The expenditure claimed by the assessee on various dates towards Gajalakshmi Nagar - II project, on account of gravel purchase, JCB hire charges, labour charges, land development charges, watering charges etc. It is also a fact that the entire expenditure has been incurred in cash and supported by only self-made vouchers. Though it may be a fact that the expenditure has been recorded in the books of account, that cannot by itself prove the fact that the entire expenditure is genuine. Considering the nature of expenditure and the fact that it is incurred in cash and being supported by only self-made vouchers, some amount of inflation in the expenditure cannot be ruled out. Now it is well settled that search assessment u/s 153A of the Act cannot be confined to seized material alone. The Assessing Officer while making search assessment in a case where assessment has not been made in regular course can consider all aspects of income accruing to the assessee during the relevant AY. Therefore, the assessee is required to prove the genuineness of the expenditure. As the assessee has not proved ....
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....s not pressed. 36. Next issue raised in Ground No. 4 relates to the action of the CIT(A) in confirming addition of Rs. 26,19,750/- out of addition of Rs. 26,69,750/- on account of unexplained investment. 37. Briefly the facts are, as noted by the Assessing Officer in the assessment order as per the materials found during the course of search and seizure operation, an unregistered sale agreement dated 15/04/2005 indicated that the assessee has purchased vacant land for a consideration of Rs. 26,69,750/-. W hen the assessee was asked to explain during the assessment proceeding, he submitted that the document found and seized at the time of search is a fake document created by land owner by mentioning him as a purchaser without his knowledge. He further stated that neither the document belongs to him nor he has made any payment as mentioned in the said document. The Assessing Officer disbelieving the claim of the assessee added the amount of Rs. 26,69,750/- to the income of the assessee. Being aggrieved of the addition so made, the assessee preferred appeal before the CIT(A). 38. In course of hearing before the CIT(A), it was contended by the assessee that unregistered sale d....
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....to some other persons is only an afterthought to get over the incriminating material i.e. unregistered sale agreement found at the time of search. However, the CIT(A) was of the view that as per the unregistered sale agreement an amount of Rs. 26,19,750/- was found to have been paid, hence, he restricted addition to that amount. 40. The learned AR submitted before us that unregistered sale agreement found at the time of search was not singed by the assessee, therefore, it cannot be considered to be a genuine document. It was further contended that vendors have categorically stated in the affidavits submitted as well as statement recorded from them that they have neither sold the property to the assessee nor received any consideration in cash from the assessee. It was further stated by them that they have sold the properties to some other persons and not to assessee. In this context, the learned AR referred to the affidavits of land owners. It was contended by the assessee that even vendees of the property have submitted affidavits confirming that they purchased land from the original owners. It was therefore contended that the assessee being noway related to the transaction, add....
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....e purely relying upon unregistered sale agreement when the fact remains that land in question was ultimately sold to some other persons by the original land owners. In this view of the matter, we hold that addition made at the hands of the assessee cannot be sustained. Accordingly, we direct the Assessing Officer to delete the same. 42.1 In the result appeal in ITA No. 1465/H/12 is partly allowed. ITA NO. 1466/HYD/2012 FOR AY 2007-08. 43. First issue as raised in ground No. 2 relates to addition of an amount of Rs. 1,19,37,000/- on account of unexplained investment in land. 44. Briefly stated during the assessment proceeding, Assessing Officer on the basis of materials available with him noticed that the assessee and his wife Smt. K. Aruna Kumari have purchased three acres of land at Yellamandam Village for a consideration of Rs. 1,19,37,000/- from Sri G. Sreenivasulu Reddy & Others vide a deed of absolute transfer-cum-GPA on 19/12/2006. He noticed that the said deed was signed by all the agreement holders on behalf of the owners of the property. He further noticed that in course of recording of statement during the search proceedings, the assessee also confirmed the tr....
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....ddy, M. Kameshwar Reddy, etc., but he held that the document found at the time of search cannot be considered to be a fake document as full details relating to the transactions are clearly inscribed therein. The CIT(A) held that subsequent registration of land in the name of some other persons is only an after thought to avoid payment of tax. On the aforesaid consideration, the CIT(A) sustained the addition of Rs. 1,19,37,000/-. 46. The learned AR contesting the addition made submitted that apart from the seized material, which is not signed by the assessee, there is no other evidence brought on record to conclusively prove the fact that the assessee has purchased the land or has paid the consideration as mentioned in the said document. The learned AR referring to the statement recorded from the vendors in course of post search proceedings before the ADIT, submitted that the vendors have categorically stated that the land was never sold to the assessee nor any consideration was received from the assessee in that regard. The learned AR referring to the affidavits of the vendees and copy of the registered sale deeds in favour of vendees to whom the land was actually sold submitted....
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....o follow our finding in Paragraph 42 (supra) while deciding identical issue. Therefore, in our view, the addition cannot be sustained. Accordingly, we direct the AO to delete the same. 49. Ground No. 3 relates to the action of the CIT(A) in confirming the addition of Rs. 7,70,000/- out of total addition of Rs. 66,60,500/-. 50. Briefly, the facts are in course of assessment proceedings, the AO on verifying the seized material noticed that the assessee has made investment of Rs. 66,60,500/- in purchase of land as per the sale deeds found at the time of search by mentioning that the amount of Rs. 66,60,500/- invested by the assessee has not been shown in the return of income. He, therefore, added the same to the income of the assessee. The assessee challenged the addition before the CIT(A). The CIT(A) deleted all the additions except an amount of Rs. 7,70,000/- representing the amount invested in land registered in the name of Shri Vijay Kumar. The CIT(A) held that as the investments have been made in the name of Shri S. Vijay Kumar, they cannot be considered to be the investment of the assessee. 51. We have heard the submissions of the parties and perused the materials on re....
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....iability as on 31/03/2007. It was submitted that sale document relating to the transaction was verified by the AO. So far as the loan of Rs. 2,55,823/- standing in the name of Shri K. Nagi Reddy, it was submitted that no loan was raised from the creditor during the assessment year under consideration and there is no change in the brought forward balance of Rs. 1,58,996/- standing in the name of the said creditor. The CIT(A) after considering the submissions of the assessee in the light of materials on record, deleted the additions representing loan of Rs. 12,68,165/- from Shri K. Adi Narayana Reddy and Rs. 2,55,823/- standing in the name of Shri T. Nagi Reddy. However, so far as the credit of Rs. 36 lakhs is concerned, the CIT(A) was of the view that though the assessee has explained the amount to be relating to shri K. Harinath Reddy and received by him on account of holding GPA but relevant information such a GPA signed by shri K. Harinath Reddy and copy of the sale document are not brought on record, therefore, transaction is not explained fully. It was further held by him that the amount was kept with the assessee by depositing in the bank account. He, therefore, was of the opi....
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....ained cash credit. It is necessary to ascertain the fact as to whether the assessee's claim that the amount represents consideration towards sale of property as GPA holder on behalf of Shri Harinath Reddy. This could have been established had Shri Harinath Reddy been examined. No enquiry has been taken up with shri Harinath Reddy to ascertain whether the assessee had repaid the amount of Rs. 36 lakhs as claimed by the assessee. Therefore, considering the facts of the case, we think it proper to remit this issue to the file of the AO for deciding afresh after making necessary enquiry. The AO shall afford reasonable opportunity of being heard to the assessee before deciding the issue. 58.1 In the result, appeal in ITA No. 1466 is partly allowed for statistical purposes. ITA No. 1467/Hyd/2012 for AY 2008-09 59. Assessee has raised 4 grounds. Ground Nos. 1 & 4 are general in nature, hence, not required to be adjudicated. Ground No. 2 was not pressed by the learned AR at the time of hearing before us. Hence, this ground is dismissed as not pressed. The only surviving issue as raised in Ground No. 3 relates to disallowance of expenditure of an amount of Rs. 2,69,181/- sustained ....
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....dits were for short time and the creditors are either relatives or associates, hence, did not charge any interest from the assessee. Therefore, there cannot be anything unusual in not charging interest. It was further submitted that the assessee has not only produced confirmations/affidavits from the creditors but has also submitted all other evidences to establish not only the identity of the creditors but their creditworthiness as well as genuineness of the transaction. Hence, the Assessing Officer without considering the evidence in proper perspective has treated the loans as unexplained merely on presumptions and surmises. 65. The CIT(A) after considering the submissions of the assessee, deleted the addition made by the Assessing Officer with the following observations: "6.3 I have gone through the observations of the Assessing Officer along with the submissions of the appellant. As indicated by the appellant, there is an arithmetical mistake in totaling the additional credits in the form of loans from the existing creditors and such amount has been quantified at Rs. 2,69,460/- . Hence, the appellant gets relief to this extent. Regarding the addition related to the balanc....
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.... treatment of credits as unexplained and the addition made without any verification or the required evidence, is not sustainable and as such the addition of Rs .13,77,S86/- stand deleted. This ground of appeal is thus allowed." 66. We have considered the submissions of the parties and perused the orders of the revenue authorities as well as other materials on record. It is very much evident from the assessment order itself that the assessee has not only produced confirmations/affidavits of the creditors confirming loan but has also produced other evidences like pattadar passbooks of the creditors, details of their land holdings, details of crops grown, income derived from agricultural activities, etc. Therefore, when the assessee has fulfilled all the ingredients, Viz.,, identity of the creditors, their creditworthiness and genuineness of the transactions, it is not known on what basis Assessing Officer has come to the finding that identity of the creditors are not established, hence, credits are not verifiable. The finding of the Assessing Officer in this regard, in our considered opinion is without any basis and opposed to the facts and evidences available on record. In the af....
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....essee that the Assessing Officer has taken the entire amount of Rs. 17,31,252/- as the investment of the assessee where as the assessee has actually invested Rs. 2,28,595/- and the balance amount of Rs. 15,02,657/- was invested towards construction of the house belonging to Shri V. Mallesh. The CIT(A) after considering the submissions of the assessee in the light of the materials on record deleted the addition by holding as under: "7.3 The observations of the Assessing Officer and the submissions of the appellant are perused. As noticed from the assessment order and the submissions of the appellant, there is no dispute on the amount of Rs. 17,31,252/ - as appearing in the seized material and the issue arisen out of the same, is on account of tagging the figures of amounts of investment by the neighbour of the appellant to the amounts of investment by the appellant, which has been explained by the appellant with illustration. The total investment by the appellant at the end of the AY 2004- 05 was shown at Rs. 27,40,957/- including the investment of Rs. 2,28,595/-, made during the FY 2002- 03, which was not disputed by the Assessing Officer and in fact the amount of Rs. 27,40,957/....
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....Shri V. Mallesh and the details of construction expenses are in pages 1 to 38 of the seized material. The total expenditure recorded as per the seized material is to the tune of Rs. 44,74,683 as noted by the search party on the date of search i.e. 27/09/2007. The total expenditure of Rs. 44,74,683/-, comprised of an amount of Rs. 17,31,252/- for AY 2002-03 and Rs. 27,43,431/- for AY 2003-04. It was further submitted that the contention of the learned DR that the expenditure relating to house construction of Shri V. Mallesh is recorded at pages 40 to 47 of the seized material is not correct as they were found to have been struck off when the document was seized at the time of search itself. It was further submitted by the learned AR that so far as the second method adopted by the Assessing Officer is concerned, DVO has determined at the cost of construction of assessee's house at Rs. 30.04 lakhs as against Rs. 27,40,957/- declared by the assessee. It was submitted that these facts were also examined by the CIT(A) while considering similar addition made by the Assessing Officer for AY 2004-05 and the CIT(A) after considering the DVO's report deleted the addition. It was thus submitte....
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....mount to the income of the assessee with the observation that the assessee could not submit any details to substantiate the gifts. The assessee challenged the addition made in appeal before the CIT(A). The CIT(A) deleted the addition by holding as under: "5.3 The observations of the Assessing Officer and the submissions of the appellant are perused and as could be seen from the assessment order, the observations of the Assessing Officer are brief and without much of discussion on the subject . Further, the information which was shown to have not furnished by the appellant was refuted by the appellant and the same was shown to have been furnished during the assessment proceedings, which were ignored by the A. O. Coming to the facts of the case, the said gifts were shown to have been received from the following persons, as per the information available in the affidavit furnished, whose sources of income are shown to be only from agriculture (i) K. Chinnamma (Mother) Rs. 40,000/- (ii) K. Reddappa Naidu (Father) Rs. 45,000/- (iii) M . Siddaiah Naidu Rs. 35,500/ - (iv) K. Venkataiah Naidu Rs. 34,516/ - (v) K. Sreenivasulu Naidu Rs. 30,000/....
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....ion and surmises will not survive. Hence the addition of Rs. 1,85,016/ - is directed to be deleted. This ground of appeal is allowed." 77. We have heard the parties and perused the orders of the revenue authorities as well as other materials on record . As can be seen, the Assessing Officer has given absolutely no reason why he considers gifts to be unexplained inspite of the fact that the assessee has furnished confirmations/affidavits along with other details like land holding of the donors their source of income etc. It is to be seen from the facts discussed at para 5.3 of the CIT(A)'s order that gifts are of small amounts of Rs. 30,000/- to Rs. 45,000/- from different donors and most of them are close relatives of the assessee. Therefore, when the assessee has established the identity of the donors, their source of income and the donors have also confirmed of having gifted the amounts to the assessee, it is unreasonable on the part of the Assessing Officer to ignore the evidences brought on record and make addition by treating the gifts as unexplained. Therefore, considering the totality of the facts and circumstances of the case, we are of the view that the CIT(A) was justi....
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....as well as other materials on record. So far as the addition of Rs. 5,04,800/- is concerned, as rightly observed by the CIT(A), the Assessing Officer without properly verifying the facts has made the addition in a summary manner. On perusal of the ledger account relating to the purchase of land, a copy of which is placed at page 62 & 63 of the paper book, it is to be noted that the assessee has reflected the investment made in purchase of land in his books of account along with registration charges, therefore, the conclusion drawn by the Assessing Officer that the assessee has not disclosed the investment in the return of income is without any basis. Furthermore, this fact has not been controverted by the department by bringing any other material on record. Therefore, the conclusion drawn by the Assessing Officer that assessee has not reflected the investment in land is without any basis. Due to the aforesaid reason, the CIT(A) in our view, was justified in deleting the addition. 82. In ground No. 5, the department has challenged the action of the CIT(A) in deleting the addition of an amount of Rs. 7,64,112/- in construction of building. 83. Briefly the facts are, on th....
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....sessing Officer based on the inference of the contents of the seized material, is held to be not sustainable . 8.4 As regards to the addition of Rs. 2,63,043/ -, being the difference (Rs. 27,40,957/ -) and the valuation as arrived by the valuation officer (Rs. 30,04,000/ - ), it has been observed that the Assessing Officer has simply added the difference amounts as an unaccounted investment by the appellant, without making any discussion and without bringing any additional information on the record . This being a search related case and the information found during the course of the seized material, do not indicate any angle of unaccounted investment over and above the investments reflected in the books of accounts. The valuation report assumes importance in this background and the difference between the value as arrived by the Valuation officer and the amount reflected in the return of income is not considerable and as explained by the appellant, the cost of the material procured by the appellant was on the lower side on account of his personal knowledge on the subject of procurement of construction material and the appellant also deserve the concession for self - supervision, ....
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....k indicating their land holdings, details of crops grown income earned by the creditors, mode of payment etc. but the Assessing Officer by simply observing that creditors are not identifiable and credits are not verifiable treated the entire loan as unexplained and added it to the income of the assessee. 88. On appeal, the CIT(A) deleted the addition made by the Assessing Officer by observing as follows: "9.3 I have gone through the observations of the Assessing Officer along with the submissions of the appellant . As could be seen from the information that was produced before the Assessing Officer and the appellate authority, loans were obtained from five parties, whose sources of income were shown to be from agriculture and are not assessed to tax. However, the amounts were shown to have been obtained in cheques/DOs and confirmations furnished by the said parties in the form of affidavits make the transaction verifiable, with further indication of mode of payment along with the identification of the loan vendor. In such a case, the relevant question would be the examination of the creditworthiness of the creditor, before arriving at the conclusion about such credits to trea....
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.... the addition made of Rs. 16,32,958/- and Rs. 26,30,000/- as unexplained credits. 92. Briefly the facts are, during the assessment proceeding, Assessing Officer while examining the capital account noticed that the assessee has credited an amount of Rs. 16,32,958/- and Rs. 26,30,000/- toward advance received. As alleged by the Assessing Officer in the assessment order, since the assessee could not furnish any details, such as, names, addresses, mode of payment, etc. the Assessing Officer added the amounts in question to the income of the assessee. Being aggrieved of such additions, the assessee challenged in appeal preferred before the CIT(A). 93. So far as the first addition of Rs. 16,32,958/- is concerned, assessee submitted before CIT(A) that the actual advance indicated in the capital account is Rs. 6,50,000/- as against Rs. 16,32,958/-adopted by the Assessing Officer. Further, explaining the advance of Rs. 6,50,000/-, it was stated that the amount represents advances received from parties towards sale of plots of Gajalakshmi Gardens and the said amounts were later transferred to the 'sales account' when sale actually took place and was shown as income of the assessee in t....
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....ed in stages and the amounts received in advance are generally shown as advances, till the sale of the plot/property is completed and assessee's case is no exception to this kind of practice. Further, the account extracts related to the transaction clearly indicate that the amounts found to be accounted and formed part of receipts of the business as and when the sales are completed and till such time the amounts were shown as 'advances' and such amounts for the year ending in the case of Ganesh Gardens stood at Rs. 26,30,000/ -. Based on the facts, it is held that the credits represent the amounts received as advances against sale of plots and there is no information or ground for the Assessing Officer to presume that the same are unexplained credits, so as to be treated as unaccounted income of the appellant. Hence, the addition of Rs. 26,30,000/- made is not justified and is ordered to be deleted. This ground of appeal is treated as allowed. " 95. We have heard the submissions of the parties and perused the orders of the revenue authorities as well as other materials on record. As can be seen from the assessment order, the Assessing Officer has made additions in a ....
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....id parties in the form of affidavits make the transaction verifiable, with further indication of mode of payment along with the identification of the loan vendor. In such a case, the relevant question would be the examination of the creditworthiness of the creditor, before arriving at the conclusion about such credits and to treat them as explained or unexplained. In this case, no such examination appears have been made by the Assessing Officer and the affidavits were summarily brushed aside without any examination of the creditors or verification of their creditworthiness. Further, the stand of the appellant was consistent and non-charging of interest on the loans cannot be the ground for treating the credits as unexplainable. Accordingly, the explanation of the appellant that the loans were obtained by cheques/DC's and supported by the affidavits along with the supporting evidence for showing the sources for such credit cannot be denied without controverting the same with relevant evidence by the Assessing Officer. Thus, based on the facts of the case and the judicial decisions referred supra, the argument of the appellant is found to be in order and the addition made by the ....
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.... assessee and his wife Smt. K. Aruna Kumari purchased the property to the extent of 30.15 acres in Kothapalem Village from Sri K. Hemanth Babhjee, K. Damodhar, P. Satyanarayana and G. Srinivasulu Reddy for a consideration of Rs. 5,15,42,595/-. As mentioned by the Assessing Officer in the assessment order, when the assessee was questioned about this investment, he admitted the transaction and offered Rs. 2 crores as undisclosed investment and the balance investment out of loan taken from various persons. The Assessing Officer alleging that as per the seized document Rs. 1,25,00,000/- was paid as advance on 02/02/2006 made the addition. Assessee challenged the addition before the CIT(A). In course of hearing of appeal before the CIT(A), assessee submitted that during post search proceedings, the land owners were examined on oath by the departmental authorities and in the statement recorded, they clearly stated that they have not received the consideration mentioned in the said agreement and the lands were also not purchased by the assessee and in fact the lands were purchased by some other persons namely N. Sunitha, A. Lokanatha Reddy, M. Shamsunder Reddy, K. Bhuvaneswara Naidu, P. A....
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....tion and shown to have made submissions that during the course of search operation, various slips, copies of documents, rough books, old diaries found in the premises and the search team has seized them irrespective of the fact that they relate to his business or not and in total confused state of mind and in pressure and tension created by search team in persuading in admitting extra income in respect of loose slips as found at that time, he could not explain in detail with his inability to apply mind, in distinguishing various slips and material found in his premises. Regarding the declarations made, it has been submitted that he had initially admitted an amount of Rs. 2,00,00,000/- inrespect ofthe transaction for Rs. 5,52,42,595/- during the course of the search operations i.e. on 27.09.2009 but ultimately on the very next day thoroughly checked and found that there was no such business transaction carried and no money was passed on and accordingly on the very next day, the declaration made originally was denied in respect of the transaction for Rs. 5.15 crores. 9.4 It is a fact that the appellant made a declaration during the course of the search proceedings based on the inf....
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....ncluded and the amounts have changed hands, the information brought on the record in the form of the affidavits from the vendees, who were shown to be the buyers of the said land assume significance in this regard. As per the statement recorded from Sri . P. Satyanarayana on 13 . 10. 2007, one of the vendors, land admeasuring 5. 42 acres was shown as land sold and registered in the month of March, 2007, with the remaining land stood unsold. Further, as per the affidavits filed by the new vendees such as N . Sunitha, A. Lokanatha Reddy, M . Shamsunder Reddy, K. Bhuvaneswara Naidu, P. Ananda Naidu, Madala Chaitanya, B. Muni Rami Reddy, N. Ekambara Naidu, etc, almost the entire land has been registered in their names by the considered to support the claim of the appellant, since they have not been produced before the Assessing Officer, the information furnished therein remained worth examining from the point of view of the verification of the facts as regards to the real nature of the transaction involved in transfer of the land under reference. 9.6 As indicated above, the statement of Sri P . Satyanarayana, recorded by the ADIT indicate that a portion of the land under reference w....
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....The learned AR strongly contesting the contentions of the argument of the Department submitted that the seized material marked as A/KCRN/05 cannot be said to be authentic as the correctness and the entries made in the said document was enquired into by the department in two stages i.e. firstly by the ADIT during the course of search proceedings and finally by the Assessing Officer in the questionnaire issued on 19/10/2009. It was submitted that immediately after search when K. Hemanth Babhji was examined on oath 13/10/2007 by the ADIT, Tirupathi, Shri K. Hemanth Babji in reply to specific query made in respect of the receipt of the alleged sale consideration of Rs. 5,15,42,595/- as mentioned in the seized material marked as A/KCRN/05, categorically stated that the said document was only created for business promotion purposes and he has not received any money. He further stated that he has not sold the property to the assessee. Similarly, another land owner Shri P. Satyanarayana in response to the question put to him stated in his sworn deposition recorded on 13/10/2007 that he has not received any consideration towards sale of property to the assessee and Smt. K. Aruna Kumar....
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....d vide annexure No. A/KCR/58. During the assessment proceeding when the Assessing Officer confronted the seized material and called for the explanation, the assessee stated that the entries made in the paper are only with regard to discussions and estimations prepared by some brokers by updating the value of lands and expecting probable corrections and actually no transaction has taken place. The Assessing Officer, however, mentioning that the explanation of the assessee is not acceptable in absence of any evidence adduced by the assessee added the amount of Rs. 4,82,32,313/-. Aggrieved, assessee challenged the addition before the CIT(A). In course of hearing before the CIT(A), it was contended by the assessee that loose slips found and seized during the search and seizure operation do not pertain to assessee's transactions as they are prepared by brokers and also written by assessee's staff with regard to valuation of land, initial payments, structured period of payment and interest in case of delay in payments etc. However, actually no such transaction has taken place nor monies were passed on. It was submitted that the writing on these papers were only notings and estimation pre....
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.... the last date shown as 28.03. 06. On the nature of entries, the precise observations of the Assessing Officer was that when this was questioned, the assessee replied that the above papers are only discussion and estimation prepared by some brokers by updating the value of land and expecting probable collections. However, at no point of time, the Assessing Officer has indicated such amounts to be the amount of loan obtained either from Sri .Y .Siddaiah Naidu or others, which was assumed and submitted by the appellant. If the assumption of the amounts represents the notings out of discussion and estimation prepared by some brokers, as indicated by the appellant, there is no connectivity between the amounts noted and the narration indicated appended to the figures/amounts. Similarly, if the figures are to be assumed to be unrecorded investments, as observed by the Assessing Officer, there is no basis as well for such assumption. In fact, there is no related or corroborative information indicating such investments with reference to the dates indicated therein, were noticed or found. Neither the papers are signed by the appellant nor any of his employees to gauge the relevance of the c....
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....ficer in the assessment order. Accordingly, the addition of Rs. 4,22,30,313/- is ordered to be deleted. This ground of appeal is thus a llowed." 107. We have heard the parties, perused the relevant materials on record and have gone through the orders of the revenue authorities. It is apparent form the assessment order that addition of Rs. 4,82,30,313/- was made solely on the basis of page No. 45 of seized material marked as annexure A/KCR/58 found and seized in course of search and seizure operation in case of KCR Homes and Developers. A perusal of the seized material, a copy of which is at page 262 of the assessee's paper book, shows certain amounts along with dates having been noted there in totalling to Rs. 4,22,30,313/- including interest of Rs. 15,30,313/-. Nothing has been indicated whether the figures mentioned denote receipts or payments. The document also does not bear signature of either the assessee or anyone else. It is also a fact that this paper was seized from KCR Homes and Developers and not the assessee. There is also no allegation that the entries in the loose paper was made by the assessee . In these circumstances it is not at all possible to treat the figures....
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....ound and seized. As per the agreement assessee has purchased flat Nos. 101 to 106 and 201 to 206 in Sri Vignesh Towers for a consideration of Rs. 1,21,84,000/- and the payments were to be made in the following manner: On or before 03/12/2006: Rs. 18 lakhs On or before 03/03/2007: Rs. 18 lakhs On or before 03/06/2007: Rs. 67.84 lakhs. In response to query made by the AO, as stated by the AO in the assessment order, the assessee admitted to have paid Rs. 18 lakhs and not paid the balance amount. On further query the assessee explained that the transaction was made only for the purpose of business promotion and not real. The AO however did not accept the explanation of the assessee and added the amount of Rs. 18 lakhs to the income by treating it as unaccounted investment. The addition was challenged in appeal before CIT(A). 114. In course of hearing before CIT(A), the assessee submitted that the investment of Rs. 18 lakhs was accounted for in the cash flow statement on 03/06/2006 and produced before the AO. It was submitted that assessee also received back the amounts on 02/02/2008 and 06/02/2008 as the assessee cancelled the agreement for poor quality of the flats. Th....
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....s not questioned or rejected by the A .O. Thus, based on the facts of the case, I am of the considered opinion that there is no ground for treating the amount of Rs. 18,00,000/- as unexplained investment, since stand explained by the appellant. This ground of appeal is treated as allowed." 115. We have heard the parties and perused the orders of the revenue authorities as well as other materials on record. On a perusal of the agreement of sale seized at the time of search it is seen that though the document is not signed by the assessee but the assessee paid advance of Rs. 18,00,000/- to Shri Vignesh constructions for purchase of flats. This payment of advance has been recorded in books of the assessee which is evident from the ledger account copy at page 69 of assessee's paper book. It is also a fact that the agreement was not acted upon as the assessee withdrew from the deal for poor quality of flats. The advance paid was also refunded back to the assessee through banking channel. In the aforesaid circumstances we fail to understand how addition can be made by treating the advance of Rs. 18 lakhs as unaccounted investment. Accordingly, we uphold the order of the CIT(A) on this....
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.... the affidavit filed by the vendor and the submissions of the appellant. Under the circumstances, I am of the opinion that there is no ground for the A.O., without bringing full facts on record and without controverting the submissions under this head for making the said addition. Accordingly, the addition of Rs. 36,00,000/-stand deleted . " 119. Having heard the parties and perused the materials on record, we do not find any infirmity in the order of the CIT(A). Undisputedly, the addition has been made by the AO solely on the basis of the sale agreement allegedly executed by Smt. Kalavatamma, the owner of the property. However, not only the document is not signed by the assessee but Smt. Kalavatamma has also disowned the document by stating in an affidavit that she never signed any such document nor has received any money from the assessee towards sale of the property. The ld. DR has not brought any material before us to controvert these facts. In the aforesaid view of the matter, the finding of the ld CIT(A) deserves to be upheld. The ground raised is dismissed. 120. In ground No. 6 the department has challenged the action of the CIT(A) in deleting the addition of Rs.....
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.... the materials on record. The AO has made the addition in a summary manner without discussing anything. On the other hand the CIT(A) has given a categorical finding on considering the facts and materials on record that assessee has transferred the advances to 'sales account' on actual sale of plots and shown them as income in the concerned assessment year when sale has actually taken place. The books of account of the assessee also justify the aforesaid finding. The department has not been able to bring any adverse material to disturb the aforesaid finding of fact. Hence, we affirm the order of the CIT(A) on this issue by dismissing the ground raised. 124. The next issue as raised in ground No. 7 relates to deletion by CIT(A) of unexplained credits of Rs. 12,68,164/-. 125. Briefly the facts are, during the assessment proceeding the AO noticed that the assessee during the year has availed loans from creditors as under: K. Adinarayana Reddy Rs. 12,68,164 K. Harinath Reddy Rs. 36,00,000 He further noticed that assessee has taken fresh loan of Rs. 2,55,823 during the year from an existing creditor namely Sri T. Nagi Reddy. The total loan taken during the year is Rs. 51,2....
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....able and as such the addition of Rs. 12,68,165/- , treating the loan from Sri K .Adinarayana Reddy, as unexplained credit, stand deleted." 127. We have heard the parties and perused the materials on record. On perusal of the order of the CIT(A) we do not find any infirmity in the finding of the CIT(A). As is obvious from the assessment order the assessee has discharged the initial burden cast upon him by producing evidences to establish the identity of the creditor, their creditworthiness and genuineness of the transaction. If the AO had any doubt with regard to the loan transaction he should have made proper enquiry to establish that the creditors are not identifiable or they do not have creditworthiness or the transaction is not genuine. It is not forthcoming from record whether the AO at all has made any such enquiry in this regard. Therefore, without making enquiry the AO cannot treat the loans as unexplained by simply making some sweeping remarks. We therefore see no reason to interfere with the order of the CIT(A). The ground is dismissed. 128. Ground No. 8 is in respect of addition of Rs. 65.50 lakhs deleted by the CIT(A). 129. Facts in brief are on the basis of pag....
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....ate hours of the day during the course of search proceedings that too without verifying the records concerned. This appear to be a fact, based on the information borne from the seized material, which was heavily relied upon by the Assessing Officer . The submission of the appellant also gains strength from the fact that the figures mentioned in seized material could not be linked to 'any transaction/business of the appellant in any manner . Further, the lender of the amount Sri Subramanayam Naidu, has denied having lent the amount to the appellant and the addition made in the case of the said lender relying on the same seized material has been deleted by the CIT(A) - VII, Hyderabad, for want of enough evidence on this issue. Thus, it can be held that notwithstanding the deposition of the appellant given at the time of search proceedings, the facts indicate otherwise and there is no other proof that amount of Rs. 65,500 mentioned in the seized material represent the figure of Rs. 65,50,000/- as interpreted by the A .O. The judicial decision relied upon by the appellant support the submissions taken by the appellant. It is also a fact that the amount of loan whether remaine....
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.... totality of facts and materials on record we are of the view that Ld CIT(A)'s order on this issue deserves to be upheld. The ground raised is dismissed. 132. In the result, appeal in ITA No. 1453/Hyd/12 is dismissed. ITA No. 1454/Hyd/2012 by the revenue for AY 2008-09 133. In ground No. 3 with its sub-grounds the department has challenged the action of the CIT(A) in deleting addition of Rs. 12,92,266 being unexplained credits. 134. We have heard the parties, perused the record and have gone through the orders of the revenue authorities. Similar issue came up for consideration in ITA No. 1453/Hyd/2012(supra) wherein we have confirmed order of CIT(A) dismissing revenue's ground. Following the decision therein, we confirm the order of CIT(A) and dismiss the ground raised by the revenue on this issue. 135. Ground No. 4 relates to deletion of Rs. 40 lakhs added by the AO treating it as unaccounted investment. 136. Briefly the facts are, on the basis of an agreement found and seized at the time of search, the AO concluded that the assessee has made investment of Rs. 1,21,84,000 in purchasing flats in Sri Vignesh Towers. Investment relating to impugned assessment year w....
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....e by the appellant. Accordingly, the addition made on the lines of the incorrect inferences drawn from the seized material, by the A. O is held to be not sustainable and accordingly the addition of Rs. 40,00,000/- is deleted. This ground of appeal is treated as allowed." 137. We have heard the parties and perused the orders of the revenue authorities as well as other materials on record. This issue is materially same to the issue raised in ground No. 4 of ITA No. 1453/Hyd/12 (supra). On going through the order of the CIT(A), we are of the view that the finding of fact arrived at by the CIT(A) cannot be disturbed as the department has failed to bring any material to controvert such finding. In this view of the matter, we uphold the order of the CIT(A) on this issue and dismiss the ground raised. 138. In ground No. 5 Revenue has challenged deletion of amount of Rs. 40,40,000/- added by the AO as unaccounted investment. 139. On the basis of certain seized material being sale deeds and other documents the AO concluded that assessee has invested an amount of Rs. 42,37,000 as under: 9.1 While computing the taxable income of the appellant, the Assessing Officer made a consolid....
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....of any adverse information brought on the record by the A .O., to indicate such investments of the appellant are unexplained, the addition made will not stand to the test of judicial scrutiny and as such the addition of Rs. 3,90,OOOj- is held to be not sustainable. (c) & (d) Rs . 34,OO,OOO/ - & Rs. 2,5O,OOO/ - : As per the information brought on record, the said amounts represent the registered rights of properties as reflected through the sale deeds, evidenced through the any additional evidence to indicate that such amounts represents the investments of the appellant since the details indicated in such document are related to the persons other than the appellant.Theappellantstoutlydeniedthat such transactions do not relate to him and there is no adverse information to indicate that the said amounts belonged to him. In absence, of the relevant information, which can be linked to the appellant, the amounts cannot be attributed to the appellant and as such cannot be treated as unexplained investment/income of the appellant. Hence, the addition of Rs. 34,00,000/ - and Rs. 2,50,000/ - stand to be deleted. (e) Rs . l,33,OOO: Represent the investment standing in the name of wife o....
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....claimed stood explained through the books maintained by the appellant. In absence of any contrary information brought on record or any adverse findings made on maintenance of books, the expenditure which was explained through the books, cannot be denied. Based on the above facts, I am of the considered opinion that there is no basis for the Assessing Officer to make the addition c Rs. 2,20,000/- . Accordingly the addition is ordered to be deleted . This ground of appeal is thus allowed." 145. We have heard the parties. On a perusal of the order passed by the CIT(A) it becomes clear that the expenditure is reflected in the books of account of the assessee. Hence, in our view, the CIT(A) was justified in deleting the addition. The ground raised is dismissed. 146. In Ground No. 7 department has challenged deletion of an amount of Rs. 57,19,495/-. 147. As mentioned by the AO, seized materials revealed expenditure incurred by the assessee in production of a movie by name 'Sindoor'. The assessee explained that investment made is reflected in the balance sheet. However, the AO alleging that assessee could not produce evidence to explain source of such investment added the a....
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....he sources, which in all probability were tagged to the liabilities of the balance sheet, it is not justified to assume that the said expenditure is not explained by the sources. Since the expenditure is reflected in the books of account, the same could not have been disbelieved only on the basis of lack of sources that too without making verification regarding the sources. Accordingly, the ground taken by the A.O. for making the addition on account of treating the expenditure in film production as unaccounted/unexplained investment, is not substantiated. Further, having accepted the balance sheet as submitted by the appellant, the right course for the A.O. could have been the examination of the sources that have been brought into the books of accounts and since such exercise was not carried out by the A.O., the addition of Rs. 57,19,495/ - is held to be unsustainable. Accordingly, this ground of appeal is treated as allowed." 149. We have heard the parties and perused the materials on record. It is very much clear from the assessment order that in course of the assessment proceeding the assessee has brought to the notice of the AO that the expenditure emanating from the seiz....