TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 209
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....le 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 appeal before the CIT(A). 5. So far as the first additi....
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....re 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 revenue authorities submitted that when the land in question has no....
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.... 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 sufficient income to advance the gift. He, therefore, sustained the addition of Rs. 1,99,2....
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....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 cash flow statement accompanying the return has accounted for all these investments. It was, ther....
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....sing 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 we direct the Assessing Officer to delete the same. 26. The next issue is with regard to CIT(A) sustaining....
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....med 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 the genuineness of the entire expenditure claimed to have been incurred, in our view, the order passed by the CIT(A)....
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....0/- 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 deed found at the time of search was created by the land owners for enabling them to hike the price. However, the assessee has neither ....
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....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, addition cannot be made at the hands of the assessee. It was submitted that solely relying upon unregistered sale agreement not signed by the....
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.... 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 transaction. However, in the post search proceeding, when statement was recorded from GPA holders, they denied of having sold the properties and stated ....
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....ting 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 that since the assessee has never purchased the land nor paid any consideration, the addition made is totally unsubstantiated and merely on the basis of ....
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....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 record. Similar issue came up for consideration in assessee's appeal in ITA No 1462/Hyd/2012 (supra). Following the decision therein we delete the addition. 52. Grou....
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....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 opinion that it is not known under what circumstances amounts of cash was deposited in the bank account as it does not belong to the assessee and having deposited the same there was no necessity for refund of cash af....
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....ve 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 by the CIT(A) out of total disallowance of Rs. 3.00 lakhs made by the Assessing Officer. 60. We have heard the parties and perused the orders of the revenue authorities as well as the relevant materials on record. Similar is....
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....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 balance of the credit amounting to Rs. 13,77,586/- (Rs. 1647046 - 269460), it is observed that the relevant information produced before the Assessing Officer regarding the loans obtained from fresh creditors as well as the existing creditors, whos....
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....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 aforesaid view of the matter, we do not see any reason to interfere with the finding of the CIT(A), which is accordingly confirmed. Grounds raised on this issue are, therefore, dismissed. 67. In Ground No. 4, the Department is aggrieved with th....
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.... 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/- was given credit while calculating the unexplained investments vis- a- vis the investments as worked out by the Valuation Officer. Thus, the amount of RS . 27,40,957/- include the amount of Rs. 2,28,595/- incurred by the appellant during the AY 2003- 04. Thus, on this count, there is no gro....
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....3/-, 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 submitted that there is no reason to interfere with the finding of the CIT(A). 72. W e have considered the arguments of the parties as well as materials on record . At the outset we would like to mention that the finding of the Assessing Officer is cryptic and non-speaking as the Assessing Officer has n....
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....e 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/ - Rs. 1,85,016/ - 5.4 As could be seen from the submissions and information furnished by the appellant, all the affidavits filed by the donors are dated 10. 11 . 2009 and in some of the affidavits the gifts were shown to have been given on earlier occasions, such as 13. 11. 01 and 13. 11. 03 and the affidavits are suppor....
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.... 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 justified in deleting the addition made by the Assessing Officer. This ground of appeal is dismissed. 78. In ground No. 4, the department has challenged the deletion of addition of Rs. 5,04,800/- being unexplained investment made in land. 79. Briefly the facts relating to the issue are, the Assessing Officer on going through the seized material noted t....
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.... 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 the basis of a document seized at the time of search marked as A/KCRN/03, the Assessing Officer noted that the assessee had constructed a residential house at Door No. 8-17-1 and incurred expenditure of Rs. 27,43,431/-. However, on verifying the return of income filed, the Assessing Officer noticed that the assessee has reflected investment of Rs. 22,42,362/- in construction of the ho....
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....estment 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, which is allowable as per the provisions. Under the circumstances, I am of the considered opinion that there is no substantial ground for the AO to make the addition based on the valuation by the valuation officer. Accordingly, the addition of Rs. 2,63,043/ - is held to be not sustainable and deserve to be deleted. Hence, this ground of appeal is a l l o w e d." 84. We have heard the s....
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.... 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 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 rejected without any examination of the creditors or verification of their creditworthiness. In this case, the appellant's confirmation were not mere paper confirmations but were supported by affidavits which cannot be ignored or brushed aside without bringing the cont....
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....mes, 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 the respective assessment year. It was further submitted that the Assessing Officer without appreciating the fact that the advances do not represent the income by itself and whenever sale of flats are effected the amount of advances were transferred to sales account, has made the addition. The CIT(A) after considering the submissions of the assessee deleted the addition with the following observations: "6.3 The observations of the As....
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....nces' 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 summary manner without discussing the issue elaborately. The CIT(A) on considering the facts that the amounts reflected in the capital account are only advances received from parties towards sale of plots and subsequently when sale has actually taken place the amount was transferred to the sales account and offered as income by the assessee has deleted the addition. This fact has not been controverted by the learned DR. In that view of the m....
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....ts 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 Assessing Officer without making basic verification/enquiries, tantamount to additions without justification. Under the circumstances, the additions made by the Assessing Officer amounted to the addition based on the presumptions and surmises and as such are not justified. Under the circumstances, I am of the considered opinion that the addition made without any verification or the \ required evidence, is not sustainable and as such the addition of Il Rs. 64,23....
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....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. Ananda Naidu, Madala Chaitanya, B. Muni Rami Reddy, N. Ekambara Naidu, etc. It was submitted by the assessee that no other material except unregistered document not signed by the assessee, was found to show that the assessee has become owner of the property and the amount of Rs. 1.25 crores was actually paid by the assessee to the vendor on 02/02/2006. Assessee also submitted that as the agreement was not signed by the assessee and the vendors have asserted that the tra....
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....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 information found. It is also a fact that the investigation authorities have examined the vendor namely K.Hemant Babji and P . Satyanarayana by recording a statement, in which they have not only denied to have sold the property to the appellant and his wife, but also identified the buyers who have brought the land separately, holding that such documents were created for inflating the value of the property in the market. It is also relevant to note that the A.O. has not brough....
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....ed 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 was sold and registered in the month of March, 2007 and as per the copy of the affidavit furnished from one of the vendees, part of the land under reference was purchased by one Sri Madala Chaitanya, 5/0 M .Ratnagiri Babu, D .No.3- 1-3A, Rajendra Nagar, Guntur Town and the total land purchased was to the extent of acre 6.95 cents for a consideration of RS .6.96 lakhs executed by Sri K .Hemant Babji, one of the vendor, who shown to have signed the document under reference. This ....
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....anth 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 Kumari and the property was not registered in the name of the assessee or Smt. K. Aruna Kumari. It was submitted that even in response to the query made by the Assessing Officer during the assessment proceeding relating to the AY 2007-08, it was clearly stated by the assessee that the transaction did not take place and the so called receipts does not bear any date. Therefore, the conclusion drawn by the Assessing Officer is not correct. 104. We have heard the parties and peruse....
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....le 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 prepared by brokers by inflating the value of the land, who have been guided by his employer Shri Y. Siddaiah Naidu. It was submitted that according to the Assessing Officer the said amount represent the amount given by one Sri Siddaiah Naidu. However, it was not the case as the assessee has not raised any loan from Sri Y. Siddaiah Naidu either in cash or through bank and as Sri Y. Siddaiah Naidu was employed with him during that time and scribbling might have been made in his presen....
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.... 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 contents of the said seized material. In absence of any clear evidence, either directly or in the form of corroborative evidence, there is no ground for the Assessing Officer to assume the amounts indicated in the said seized material to be an unrecorded investment of the appellant and such assumptions may amount to mere surmises. Alternatively, if the amounts are assumed to be the loans obtained from Sri Siddaiah, it was noticed that there was search and seizure operations carried out in hi....
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....peration 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 mentioned in the seized document as transactions of the assessee in absence of any other corroborative evidence brought on record to corelate the entries made in the seized material to the assessee. In these circumstances explanation of the assessee with regard to the seized document cannot be rejected on mere presumptions and surmises. On going through the order of the CIT(A) it becomes crystal clear that CIT(A) after considering all aspects of the matter has arrived at a finding of fac....
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.... 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. The CIT(A) after considering the submissions of the assessee along with materials on record deleted the addition by holding as under: "6.3 The observations of the Assessing Officer and the written submissions of the appellant are perused. As seen from the information in the form of seized material, the appellant has entered into agreement with Mjs Shree Vignesh Constructions, for purchase of six flats at Vignesh Towers for a total consideration of Rs.l,39,84,000/- , out of which, an amount of Rs. 18,00,000/- was shown to hav....
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....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 issue . 116. In ground No.5 department has raised the issue of deletion of addition of Rs. 36,00,000/- made on account of unrecorded investment in land. 117. Briefly the facts are, during search and seizure operation a number of sale deeds were found indicating investment made in land by the assessee in his own name as well as in the name of others. By alleging that assessee has not reflected the investments in his return of income the assessee added the amount of Rs. 66,60,500 as unrecorded investment. The assessee challeng....
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....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. 75,74,097/- made by the AO. 121. Fact in brief are, during the assessment proceedings the AO noticed that the assessee has credited an amount of Rs. 75,74,097 to the capital account as advance received. By alleging that the assessee could not furnish any details such as names, addresses, amount, mode of payment etc., the AO added the advance received to the income of the assessee. Assessee challenged the addition in appeal before the CIT(A). 122. Before the CIT(A), the assessee submitted that the amount represent advances received from pa....
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....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. 51,23,987/-. Though the assessee produced affidavits from the creditors confirming the loans as well as other evidences like pattadar passbooks indicating extent of land, crops grown and approximate income earned in respect of the creditors, but, the AO treated the entire loan as unexplained credit by alleging that the creditors being agriculturists are not identifiable, therefore, credits are not verifiable. 126. The addition made was challenged by the assessee in appeal before the CIT(A). The CIT(A) on considering the submissions of the assessee as well as mat....
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.... 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 page no. 43 of seized material marked as annexure No. A/KCR/58 the AO noted that assessee had taken loan of Rs. 65.50 lakhs from M. Subramanyam Naidu. By alleging that the assessee has confirmed it in statement recorded on 27/09/2007, the AO treated the amount mentioned in the seized document as undisclosed income of the assessee. The addition was challenged by the assessee before CIT(A). Before the CIT(A) the assessee submitted that there is no such name or figure appearing in the seized material referred to by the AO. It was submitted that assessee had never taken....
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....n 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 remained to be explained or the explanations offered is not accepted by the A.O., unless taken into the books cannot be treated as unexplained credit and in this case, no such entry was there in the books of the accounts of the appellant. Further, in absence of any entry taken in the books, the amounts appearing as hypothetical figures cannot be presumed as loans and even in such case of assuming the said amount as loan, cannot represent the income of the appellant. On the lines of the above facts and interpretation, I am of the considered opinion that the sworn statement given b....
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....yd/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 was quantified at Rs. 40 lakhs and added to the total income. The CIT(A) after considering the submissions of the assessee along with facts and materials on record deleted the addition by concluding as under: "8.3 The observations of the Assessing Officer and the written submissions of the appellant are perused. As seen from the information in U- form of seized material, the appellant has entered into agreement with MJ Shree Vignesh Constructions, for purchase of six flats at Vignesh Towers for total consideration of Rs.l,39,84,000/- , out of which, an amount Rs. 18,00,000/- was shown to have been paid on the ....
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....s 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 consolidated addition of Rs. 42,37,000/- holding that the said amounts were invested in properties by the appellant as reflected in the seized material found during the course of the search proceedings, but were not reflected in the return of income. The additions were made in a summary manner by merely referring to the seized material and the amount reflected therein, with a single comment that the assessee has not reflected the above investments in returns of income and as such are treated as unrecorded investment to be added to the total income of the appellant. The information and the relevant amounts reflected in the seized material, were menti....
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....uch 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 of the appellant Smt.K. Aruna Kumari, as per the information brought on the record, who is assessed to tax in her own right and such investments are explained through her books of account. Since, the investments are already explained, there is no basis for making further additions in the hands of appellant. Hence, the addition of Rs.l,33,OOO stand deleted. This ground of appeal related to the addition of Rs. 42,37,OOO/ - is allowed." 141. We have heard the parties and considered the materials on record. On perusal of the order of the CIT(A) extracted hereinabove it becomes absolutely clear that CIT(A) after considering evidences brought on record in respect of each item of alleged investment has rec....
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.... 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 amount to the income of the assessee. 148. The addition made was challenged by the assessee before the CIT(A). Before the CIT(A) assessee submitted that in response to the questionnaire issued by the AO the assessee has explained that the expenditure in film production has been duly accounted for in the books of the assessee. It was submitted that not only the expenditure was reflected in the cash flow statement and balance sheet submitted along with the return but details of expenditure was also furnished before the AO. The CIT(A) after considering the submissions of the assessee in the context of materials on record deleted the addition on the following finding: "11. 3 The Observations of the Assessing Officer on t....