TaxTMI 
TaxTMI 
2015 (3) TMI 708
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....on consolidated order for the sake of convenience. 2. Facts of the case in brief leading to the filing of the present appeals are that the assessee is an individual engaged in real estate business and has been deriving income from business, house property and agriculture. A search and seizure operation under S.132(1) of the Income Tax Act,1961 was conducted at the residence of the assessee on 12.9.2009. Subsequently, notice under S.153A was issued on 16.9.2009, calling for returns of income for the assessment years 2003-04 to 2008-09. In response to the said notice, assessee filed return for the assessment year 2003-04 on 4.10.2010 admitting total income of Rs. 1,33,129 and agricultural income of Rs. 4,98,500. After making the following additions/disallowances, assessment was completed determining taxable income at Rs. 16,87,987, besides agricultural income at Rs. 2,49,250, vide order of assessment dated 31.12.2010 passed under S.143(3) read with S.153A of the Act (a) Disallowance of expenditure on purchase of land u/s. 40A(3) Rs.4,32,036 (b) Disallowance of other expenditure Rs.1,78,572 (c) Agricultural income treated as income from other sources Rs.2....
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....ional ground raised by the assessee claiming telescoping the income of the group against the expenditure of the group, we do not find merit in the same, inasmuch as it is only any item/items of income added which can be telescoped against the addition made on account of any item/items of expenditure. Even in such a case, telescoping can be accepted only if the assessee establishes nexus between the same. What the assessee is claiming is telescoping of income/expenditure additions made in the assessee group. Since the group consists of different taxable entities, viz. assessees, each assessee and assessment are independent, and no telescoping could be allowed for the expenditure additions made in the hands of one assessee by virtue of income additions made in the hands of a different assessee, even if both belong to the same group. Hence this ground of the assessee is rejected. 8. Now turning to the grounds of the assessee originally raised in this appeals, on the merits of additions/disallowances made, the first effective grievance of the assessee relates to disallowance of Rs. 4,32,036 made by the Assessing Officer under Section 40A(3) of the Act, which has been confirmed by th....
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....ks were available in the villages where payments were made by the assessee. In the circumstances, it is submitted that the provisions of S.40A(3) are not attracted to the payments in question, which are covered by the exceptional circumstance contained in Rule 6DD(g) of the I.T. Rules. 13. Learned Departmental Representative on the contrary, strongly supported the impugned orders of the Revenue authorities and submitted that the disallowance in terms of S.40A(3) made by the Assessing Officer is in order, and the same should be upheld. 14. We have considered the rival submissions and perused the impugned orders of the Revenue authorities and other material available on record. It is the case of the assessee that the payments in question were made in villages where banking facilities are not available and as such, the same are covered by the exceptional circumstances envisaged in Rule 6DD(g) of the Income -tax Rules. In support of this plea, assessee has submitted details with respect to the names of the villages where the lands were purchased and also the list of major banks in Chittoor District. The Revenue authorities have rejected the plea of the assessee in this behalf by ....
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....expenditure claimed, it is submitted that the record, being very old and voluminous, the same was destroyed, and as such though vouchers were maintained, they are not available now. He therefore, submitted the entire disallowance made by the Assessing Officer is deleted. 19. Learned Departmental Representative, on the contrary, supported the orders of the Revenue authorities. 20. We have considered the rival submissions and perused the orders of the Revenue authorities and other material on record. We find that the CIT(A), after considering all the facts and circumstances of the case and corresponding expenditure claimed and allowed in the earlier years, has restricted the disallowance made by the Assessing Officer at 10%. We find that the disallowance sustained by the CIT(A) is fair and reasonable and there is no justification for interference with the order of the CIT(A) on this issue. We accordingly uphold the order of the CIT(A) reject the grounds of the assessee on this issue. 21. The next grievance of the assessee in this appeal relates to the addition made by treating part of the agricultural income claimed by the assessee as income from other sources. 22. Facts ....
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....n this issue. The Assessing Officer is directed to verify the records of the agricultural land owned by the assessee and Adangal Patti and other records to ascertain the crops grown and the income derived by the assessee, and thereafter arrives at any reasonable amount of disallowance, if any, warranted out of the agricultural income claimed by the assessee. The Assessing Officer shall give reasonable opportunity of being heard to the assessee, while determining this issue. This ground is allowed for statistical purposes. 27. The next grievance of the assessee in this appeal relates to the addition of Rs. 2,63,000 made by the Assessing Officer and sustained by the CIT(A) on account of unexplained cash credit. 28. Facts of the case in relation to this issue are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee had introduced Rs. 6,95,000 in his capital account on 1.4.2002. Since the assessee could not offer any explanation with regard to introduction of cash, the Assessing Officer treated the said amount as unexplained cash credit and accordingly made addition of Rs. 6,95,000 under S.68 of the Act. 29. On appeal before the CIT....
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....nt of Rs. 2,63,500 sustained by the CIT(A) as well, we find that the assessee claimed before the CIT(A) rental income and agricultural income of his mother as constituting the sources for the capital introduced on 1.4.2002. Mere possession of agricultural land by the assessee's mother or her deriving substantial agricultural income there from does not establish the sources for the cash credit introduced by the assessee, unless it is established by the assessee that the said income of his mother constituted source for the capital introduced by him by way of cash. At the same time, the learned counsel for the assessee has also furnished before us, a cash flow statement, for explaining the sources of the capital introduced. These aspects of the matter have not been examined by the CIT(A) and the same have to be verified by the Assessing Officer. Considering totality of facts and circumstances of the case, we find it just and proper to remit this issue to the file of the Assessing Officer for re-deciding the same, after verifying the cash-flow statement furnished by the assessee and in the light of the explanation of the assessee with regard to the sources for the capital introduced by....
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....e for the assessment year 2003-04, additional ground of the assessee in the matter of telescoping of the additions/disallowances made in the assessment is also rejected. 36. Now turning to the grounds raised originally in this appeal, the first effective grievance of the assessee covered by ground No.2 relates to the disallowance made in terms of S.40A(3). We have decided identical ground of the assessee for the assessment year 2003-04. Facts and circumstances of the case for the assessment year 2004-05 being identical, for the reasons discussed while dealing with the corresponding ground of the assessee for assessment year 2004-05 herein above, we remit this matter to the file of the Assessing Officer with directions identical to the ones given herein above for assessment year 2003-04, for fresh decision in accordance with law and after giving reasonable opportunity of hearing to the assessee. 37. The next effective grievance of the assessee, covered by ground No.3 of this appeal relates to disallowance of 10% of total expenditure claimed, amounting to Rs. 73,083. We have decided identical ground of the assessee for the assessment year 2003-04 vide Para No.20. Facts and circ....
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.... purchase of 3.23 acres of land @ Rs. 4,05,000/- per acre was found and seized and placed at page Nos. 134 & 135 of A/SJC/RES/04. As per the agreement, the total consideration for the said land was Rs. 13,08,150/-. Copy of the agreement is photocopies and enclosed along with this order as Annexure-2. However, the assessee has furnished his reply on 22.11.2010 stating that it is an agreement entered between him and only a sum of Rs. 3,50,000/-. Cash was paid as advance to the landlords on 23.08.2003 and subsequently the agreement was cancelled. He has also replied that the advance amount of Rs. 3,50,000/- was received back from the landlord on 20.09.2003. However, on examination of the cash books submitted by the assessee, neither the advance given by him on 23.08.2003 nor advance received on 20.09.2003 was reflected. The copy of relevant pages of the cash book is enclosed as Annexure-3 of the order. Hence it is evident that the explanation offered by the assessee is false and not acceptable. In this connection, another seized document Annexure A/SJC/RES/PO-1 also contains agreement entered by the assessee for purchase of the same land and it is placed at page No.60 of the said anne....
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.... needs to first explain the source of this money on 23.08.2003 and subsequent return of the same does not become source of the money on a prior date. The AO has categorically pointed out that the cash book does not indicate either payment of Rs. 3,50,000 or subsequent receipt. Hence, keeping the above in view, what emerges is that the evidence available indicates payment of Rs. 3,50,000 as advance and that the property in question has not been transferred to the appellant or his family members and hence there is no evidence of any payment beyond the initial payment of Rs. 3,50,000. The appellant has failed to offer satisfactory explanation regarding the payment of Rs. 3,50,000 and hence it remains unexplained. Out of the addition of Rs. 13,08,150 an amount of Rs. 3,50,000 is being confirmed and the balance is being deleted. 9.4 As regards the second property, the appellant has submitted that the purchase transaction never took place and an advance of Rs. 9000/- was paid on 23.08.2003 which was returned on 28.8.2003. The appellant has further stated that the AO in his order, has mentioned that the property was negotiated and purchased for Rs. 61,000 vide document No.4606/2008 dat....
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....ubmitted in the paper book. It can be seen in the cash flow statements wherein amount of Rs. 3.50 lakhs and Rs. 9,000/- are shown respectively before the name of Sr. T. Venkat Reddy and Smt. M. Mangamma respectively in application of funds in rows 32 and 33 at page 2. Advance returned back is reflected at row 36 of page 1 of consolidated cash flow statement under cash inflow. 46. We are in confirmity with the order of the CIT (A) as the claim of the assessee that it received back this amount of Rs. 3,50,00 on 1.11.2003 is not relevant. The assessee has not explained the source of this money and the AO has clearly pointed out that the cash book does not indicate either payment of Rs. 3.50 lakhs or subsequent receipt. Hence, the CIT (A) was right in holding that the payment of Rs. 3.50 lakhs is unexplained in the absence of satisfactory explanation. 47. As regard the 2nd property, there is no evidence of subsequent payment or registration of this land in favour of assessee or his family members. The assessee has no offered explanation for the source of Rs. 50,000, hence we confirm the order of the CIT (A), in sustaining the addition of Rs. 50,000. Hence the sum of Rs. 4.00 lakh....
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.... of Rs. 4,98,500 is being treated as explained and addition on this account is being deleted. However, no evidence has been brought on record to suggest that the appellant's mother Smt. S. Basamma carried out agricultural operations and/or generated agricultural income and that this agricultural income was made available to the assessee. Hence an amount of Rs. 1,76,500 is being confirmed as an unexplained cash credit appearing in the books of the appellant and appeal in respect of Ground No.4 is partly allowed". 53. We heard both the parties. Since no evidence has been brought to our record that Smt. S. Basamma, mother of the assessee was having agricultural income and carrying out agricultural operations, for the past several years and had given the same to the assessee, we set aside this issue to the file of the AO to verify this fact and decide accordingly. ITA No.1767/Hyd/2013: A.Y. 2005-06 54. The additions/disallowances sustained by the CIT (A) are: Disallowance of expenditure on purchase of land u/s 40A(3) Rs.8,86,100 Disallowance of expenditure Rs. 78,780 Unexplained investment Rs. 84,500 Addition on account of unexplained cash credit Rs.8,47,8....
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....ld be seen from the cash flow statement for investment in purchase of land, we set aside this issue to the file of the AO to verify whether the names of Smt. Sayamma and Shri Chinnappa are reflected in the cash flow statement against the figure of Rs. 60,500 and Rs. 24,000 respectively and decide the issue in accordance with law. This ground of the appeal of the assessee is set aside for statistical purposes. 62. Hence, for the A.Ys 2003-04, 2004-05 and 2005-06, are partly allowed for statistical purposes. Addition of Rs. 8,47,873/- as unexplained cash credit. 63. With respect to addition of Rs. 11,73,323/- treated by the AO as unexplained cash credit u/s 68, the assessee had submitted that out of total amount of Rs. 11,73,323/-, Rs. 3,25,450 is agricultural income claimed in the return of income filed for AY 2004-05, rental income of Rs. 48,000, compensation received as political prisoner from A.P. Govt. amounting to Rs. 3.00 lakhs, compensation received from A.P. Govt. for residential house which was destroyed - Rs. 2,99,350/- and other gifts and savings totaling to Rs. 2,00,523. As regards agricultural income, the AO, in his remand report has said that it cannot be conc....
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....(A) has erred in upholding the addition of Rs. 3,79,300/- towards unexplained expenditure u/s 69C of the I.T. Act, 1961. (7) The ld CIT (A) has erred in sustaining the addition of Rs. 57,600/- towards agricultural income which is not correct and justified. (8) The assessee may add............" 68. Ground No. 1 is general, hence no adjudication is called for. 69. With respect to Ground Nos. 2 & 3, the AO has discussed at page 6 & 7 of his order and concluded as follows: "The assessee has accepted that the entire investment/purchases were made by him during the relevant A.Y. However, it is stated by him that all the transactions are duly reflected in the return of income. It discussed in the earlier paragraphs that even though the assessee purchased and sold several properties, he has not filed any profit and loss account and balance sheet in order to verify the sources of investment. It is not clear on what sense the assessee is stating that the transactions are reflected in the return of income. The return of income filed by the assessee for the relevant year on 4.10.2010 contains a statement of computation of total income only. Accordingly the A.O treated the purcha....
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....owards income from business and profession. It was submitted that the assessee has received a sum of Rs. 4,05,000/- towards the sale of land and against that after reduction of the cost of acquisition of Rs. 1,46,500/- the balance amount of Rs. 2,58,500/- has been offered to tax as capital gain. However, during the assessment proceedings, the AO observed that since the assessee was engaged in the business of purchase and sale of lands in previous assessment years, the income out of sale of agricultural land was treated as income from business. 76. In this regard it was submitted that during the year under consideration the assessee has sold several agricultural lands and claimed the capital gain thereon as exempt u/s 54B of the Act. It was also submitted that the assessee is having various agricultural lands and is deriving agriculture income consistently. It was further submitted that the AO has changed the head of income of the receipt merely on the basis of suspicion and surmises without bringing anything on record to show that the lands sold were not agricultural lands. The assessee stated that he has submitted all the relevant details of the agriculture lands before the AO ....
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....ord. There can be no dispute with regard to the land holding of the assessee. Considering the extent of land holding and the claim of the assessee as to the agricultural operations carried thereon during the relevant period, we find it just and proper to set aside the impugned orders of the Revenue authorities and restore this issue to the file of the Assessing Officer for fresh examination this issue. The Assessing Officer is directed to verify the records of the agricultural land owned by the assessee and Adangal Patti and other records to ascertain the crops grown and the income derived by the assessee, and thereafter arrive at any reasonable amount of disallowance, if any, warranted out of the agricultural income claimed by the assessee. The Assessing Officer shall give reasonable opportunity of being heard to the assessee, while determining this issue. This ground is allowed for statistical purposes". Hence, similar direction as above will apply to this year also. 82. In the result appeal for AY 2006-07 is partly allowed for statistical purposes. ITA No.92/Hyd/2014 - AY 2007-08 83. The assessment was completed by the AO under sec. 143(3) r.w.s. 153A of the I.T. Act an....
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....Smt. P.Rama Lakshmamma was not available at the time of signing the confirmation letter in page 64, she issued a receipt towards sale of the respective agricultural land mentioning total sale consideration of Rs. 3,21,000. 87. It was submitted that the assessee along with two other parties have agreed to buy a land and construct a facility for mango storage for a cost of Rs. 38,34,000 (including cost of land). Accordingly land was purchased from Smt. P. Rama Lakshmamma & Others at a cost of Rs. 3,21,000. Assessee's 1/3rd share in the cost of land was at Rs. 1,07,000 and the same was recorded by the assessee in his books of accounts. 88. Later the storage facility for Mango could not materialize and therefore the land was purchased and no godown was constructed on the said land. The argument of the assessee was further substantiated from the fact that a portion of the said land in question was acquired by the Govt. of A.P. u/s 11 the Land Acquisition Act, 1894 for the purpose of construction of road. The compensation paid by the Govt. was at the rates nearby to purchase cost of the land by the assessee by order dated 25.2.2008. Therefore, taking the cost of land at Rs. 38,34,0....
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....as unexplained results in double additions of income is not correct. Hence it was submitted that the assessee be allowed telescoping of his income for the current year as well as earlier years against his expenditure/investment. Further telescoping should also be allowed for the income of the assessee group against the investment/expenditure of the assessee. Reliance was placed on the order of the ITAT Hyderabad Bench in the case of Anil Kishore Agarwal & Others vs. DCIT in ITA No.493-95/Hyd/2011. It was also submitted that the advances were made by the assessee out of explained income of assessee and his family and are duly reflected in the consolidated cash flow statements submitted before the CIT (A) and in the paper book submitted before us. Hence, no addition can be sustained in this regard. 95. We have heard both the parties. With respect to land purchase from Smt. P. Rama Lakshmamma and other amounting to Rs. 38,34,000 and purchase of land from Shri Venkat Krishnaiah, the assessee has relied on the decision of ITAT Hyderabad Bench in the case of DCIT vs. B. Vijaya Kumar (ITA Nos.930 & 931/Hyd/2009 for A.Ys 2003-04 and 2004-05 dated 18.9.2012). The Hon'ble Delhi High Court....
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....de the issue in accordance with law. 99. With respect to 6th & 7th grounds, are with respect to Rs. 55,900 towards unexplained investment in chit funds. It was submitted during the year under consideration, the assessee has made investment in chit funds out of his income from the year and also previous year earnings. 100. The ld Counsel for the assessee submitted that in the cash flow statement, this amount has been reflected at Row No.23 of Page 3. Hence, we set aside this issue to the file of the AO to verify the details submitted by the assessee and decide the issue in accordance with law. 101. The last ground of appeal is with respect to addition of Rs. 1,75,000 made towards agricultural income. Similar issue has already been adjudicated by us at Para No.26 for A.Y 2003-04 and the same conclusion shall be followed in this appeal also. 102. In the result, the appeal for A.Y. 2007-08 is partly allowed for statistical purposes. ITA No.127/Hyd/2014 - A.Y. 2008-09 Grounds raised by the assessee in this appeal is reproduced below: "1. The ld CIT(A) Guntur erred both in law and on facts in upholding the following additions. 2. The ld CIT(A) Guntur ought to have....
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....ncome to other source of income which is not correct and not justified". 103. The grounds 1 & 2 are general in nature, hence no specific adjudication is required. 104. With respect to Ground Nos. 3 & 4, similar issue has already been decided by us at Para Nos.77 & 78 in ITA No.91/Hyd/2014 for A.Y 2006-07. The same shall be followed in this appeal also. Unexplained investment in land Rs. 33,34,733 105. With respect to Ground Nos.5 & 6 it was submitted that during the assessment proceedings, the AO made several additions as unexplained investment in land out of which the following amounts were sustained by the CIT (A): Particulars Amount (Rs.) added by AO Receipt issued by Chinna Garitappa Naidu 3,31,000 Receipts issued by M Gopala Chowdhary 1,56,000 Receipt issued by E. Ramachandra Naidu 1,25,000 Receipt issued by Talluri Muniratnam Naidu 10,000 Stamped Receipt cum agreement by N. Balarami Reddy - Land at Renigunta Mandalam 2,40,000 Stamped Receipt cum agreement-A Muni Reddy & Others 7,06,000 Stamped receipt cum agreement issued by Venugopal Reddy 3,00,000 Agreement cum receipt by N Sudhakar 17,80,000 Cash Receipt cum ag....
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....ourse of search. The CIT (A) sustained the additions for the need of source of income for making the alleged additions. * It was submitted by the assessee that the above transactions are duly reflected in the books of accounts and the income arising out of it was offered to tax in the return of income of the assessee for the year under consideration. * It was submitted that the advances made by the assessee are made out of explained income and duly reflected in the cash flow statements submitted before the CIT (A) and to the ITAT vide paper book (document No.5656/2007, 5655/2007, 4971/2007 and 4063/2007 - Row 5, 6 of page 3, Row 29 of page 2, Row 11 and 12 of Page 3). * Purchase of land from V.Venugopal Reddy * CIT (A) sustained an amount of Rs. 3,00,000 made towards unexplained investment in purchase of land for A.Y 2008-09, as the explanation offered by the assessee does not match the cash reflected in the seized documents and hence the investment made is treated as unexplained. * It was submitted that during the year under consideration, the assessee made payments of Rs. 3,00,000 to V.Venugopal Reddy which was duly reflected in the books of accounts and the income....
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....A) ought to have appreciated the fact that when original sale deed was available, then no addition can be made based on the photocopy of the agreement to sale as observed by ITAT Hyderabad in the case of DCIT v. B.Vijaya Kumar (ITA No.930,931/Hyd/2009). * It was further submitted that the of Rs. 61,000 made by the assessee are made out of explained income and duly reflected in the cash flow statements submitted before the CIT (A) and to the ITAT vide paper book vide document No.4606/2008 at Row 7 of page 3 under application of funds. Purchase of land from K. Niranjan Reddy: * The ld CIT (A) sustained an addition of Rs. 5,70,000 towards unexplained investment in land based in the agreement copy found during the course of search proceedings. In this regard, it was submitted that: * The addition is made based on the agreement to sale copy found during the time of search which was not original and was not implemented upon. * The agreement was made for purchase of land with storage facility and therefore, price was fixed at Rs. 5,70,000. * However, the agreement was cancelled and only land was purchased at Rs. 61,000/- which is duly reflected in the books of account an....
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....amount. During the appellate proceedings, the assessee stated that these amounts were installments towards purchase of residential plots and were subsequently refunded since permission for developing the plot were not received by them. The CIT (A) held that this does not explain the source of initial investment of Rs. 46,700 as unexplained investment and sustained the addition. It was submitted that in the consolidated cash flow statement at Row No.23 of page No.3, the amount is reflected. Hence we set aside this issue to the file of the AO to verify the same and decide accordingly. 111. Ground No.9 is with respect to addition of Rs. 1,22,160 towards political expenditure. It was submitted that during the years under consideration, the assessee has made certain political expenditures amounting to Rs. 33,840 for AY 2008-09 and the same is reflected in the books of accounts of the assessee and is made out of the explained source of income. It was submitted that the AO made the addition based on the invoices found during the search which does not belong the assessee and contained names of some other parties not belong the assessee group. Since it was submitted by the ld Counsel tha....
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....o paid are duly reflected in the books of accounts of S.Siva Chaitanaya. * The AO ought to have appreciated the fact that Mr.S.Siva Chaitanya during his studies in USA has taken cash in forex and a DD for his first quarter fees from SBI Tirupathi Branch out of his income. The same was duly recorded in his book of accounts and was available for scrutiny before the AO at the time of assessment proceedings. However, the AO without considering the same has made addition which is not correct. * The AO ought to have considered the fact that Dr.Deepathi and Dr. I Srinivas, aunt and uncle of Mr.S.Siva Chaitanya have sponsored his studies in USA for amount of Rs. 23,00,000. Dr. Deepthi and Dr. Srinivas have already submitted affidavit stating payment of Rs. 23.00 lakhs, their return of income filed in USA identity card in this regard. The AO has found no adverse finding in relation to the submission of the assessee in his remand report. The AO ought to delete the addition made in this regard. * The AO erred in not considering the fact that Mr. Siva Chaitanya while returning back to India has returned the excess cash borrowed from Dr. Deepthi amounting to Rs. 1.50 lakhs which is dul....
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....follows: "12.3 ..... The document in question clearly indicates that it has been recorded by Siva Chaitanya, since the reference is to "Dad and Deepthi Akka". Secondly the entire amount has been paid in cash. Thirdly since the amount has been paid in Indian Rupees for conversion into US Dollars, it indicates that the amount was generated in India and does not pertain to money spent by Dr.Deepthi, who is a non-resident. Further, there is clear reference to cash being sent by the appellant, wherein entries with the narration "Cash by dad" have been recorded. The document indicates that the amount spent during F.Y 2008- 09 relevant to AY 2009-10 is Rs. 17.00 lakhs. Hence, the entire amount of Rs. 17.00 lakhs is unexplained and the document clearly indicates that unaccounted cash has been utilized towards purchase of US Dollars and remitted for education of Siva Chaitanya. Appeal in respect of Ground No.6 is dismissed". 117. We perused the reconciliation statement and found that: (i) Rs. 1,10,000 has been wrongly taken by the AO from the loose slip found during search as Rs. 40,10,000 instead of Rs. 39,00,000 as can be seen from the seized document (Annexure A/SJC/REC/04). ....
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....a Govt. approved valuer. AO noted that both reports mentioned the cost of construction at around Rs. 700 per sft. AO hence adopted Rs. 87.50 lakhs as the cost of construction and to this figure he added Rs. 14,27,728 being bills and cash receipts seized during the search which have been mentioned above. AO was of the opinion that this amount of Rs. 14,27,728 reflected expenditure other than civil construction, which is included in the figure of Rs. 87.50 lakhs. Thus, the AO held that the cost of construction was Rs. 1,01,77,728 and treated the entire amount as unexplained investment. 119. During the appellate proceedings, the assessee stated that the valuation report was obtained to enable his son Siva Chaitanya to get a visa for USA. The valuation report indicates the asset value as on date and not the cost of construction. Assessee further stated that he and his wife Smt. S. Sai Ramani have obtained housing loan of Rs. 50.00 lakhs from the SBI, Settipalli Branch, Tirupati for which relevant documents have been submitted. The assessee has further stated that the ledger account for house construction was submitted to the AO during the assessment proceedings and a copy of the sam....
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....respect to Ground No.4 & 5, the facts are as follows: * During the assessment proceedings, the AO made several additions as unexplained investment in land out of which the following amounts were sustained by CIT (A): Addition Amount Purchase of land at Gaju Mandalam 9,000 Land at Pankam Village 9,000 Receipts cum agreement from Venkata Muni Reddy 9,000 Receipts cum agreement from Giri Govardhan Reddy 9,000 Receipt cum agreement by O. Subramanyam 9,84,000 Total 10,20,000 Less: Adjustment towards undisclosed income 7,83,258 Additions towards unexplained investment in land 2,36,742 * It was submitted that the investments are made out of the income of the assessee and therefore, adding the same as unexplained results in double additions of income which is not correct. Hence, prayed that assessee may be allowed telescoping of income for the year under consideration as well as earlier years against his expenditure/investment. Further telescoping should also be allowed for the income of the assessee group against the investment/expenditure of the assessee. Reliance was placed on the order of the ITAT Hyderabad Bench in the case of Anil Kishore Agarwal & Ot....
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....h flow statement under application of funds. 128. Ground No.7 is with respect to contribution to chit funds which has already been adjudicated by us vide Para 77 for the A.Y. 2008-09. Hence the same shall be followed for this A.Y also. 129. Ground No.8 is regarding addition of Rs. 1,03,350 towards purchase of residential plot. We have adjudicated similar issue for the A.Y 2008-09 vide Para 78. Hence the same shall be followed for this A.Y also. 130. The Ground No.9 is with respect to Rs. 98,880/- was for political expenditure which has already been adjudicated by us vide Para No.111 For A.Y 2008-09 and the same shall be followed for this A.Y also. 131. Ground No.10 is with respect to addition of Rs. 17.00 lakhs towards son's education. This issue has been adjudicated by us vide Para Nos.112-117 in ITA No. and the same shall be followed in this A.Y. also. 132. Ground No.11 is with respect to addition of Rs. 5,61,263 towards unexplained personal and miscellaneous expenditure. The facts are that the AO while completing the assessment have added an amount of Rs. 5,61,263 towards unexplained expenditure towards personal and miscellaneous expenditure. It was submitted that....
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....out of the plot sales at Peruru and Avilal for Rs. 22,66,100. However the CIT (A) erred in not allowing the cost of acquisition and development of above properties of Rs. 2,40,935. Therefore, the CIT (A) ought to have allowed an amount of Rs. 2,40,935 as deduction from sale proceeds of Rs. 6,45,282. 5. It was further submitted that the AO and the CIT (A) erred in not allowing the cost of acquisition as deduction while bringing to tax the entire sales proceeds which was against the provisions of the Act and the same needs to be corrected. In this regard reliance was placed on the judgment of the Hon'ble Supreme Court in the case of CIT vs. B.C. Srinivas Shetty (1981) 128 ITR 294. 6. The CIT (A) held that during the course of assessment, it was noticed that the assessee has sold several lands in the year 2001-02, 2002-03 and 2003-04. As per the seized document A/SJC/RES/04 at Page No.116, it is clearly written "S.S.CHAITANYA-SALES". The assessee has sold several properties situated at Peruru and Avilala. The total sales between 17.06.2002 to 12.12.2002 and the assessee's share on the said sales were quantified at Rs. 22,66,100 and Rs. 6,76,588 respectively. The assessee's s....
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....I.T. Act, 1961. 4. The ld CIT (A) Guntur erred in restricting the claim of agricultural income to Rs. 3,60,000 and confirming the balance amount of Rs. 20,000 as income from other sources. 5. The ld CIT (A) Guntur ought to have appreciated that the assessee has already furnished certificates and documents pertaining to the agricultural land from respective revenue authorities in support of his claim". 13. First two grounds are general in nature, hence no specific adjudication is required.. 14. Third ground we have already adjudicated at Para Nos. 6 & 7 (ITA No.1765/Hyd/2013) for AY 2003-04 and the same conclusion shall be followed in this year also. 15. Ground Nos. 4 & 5 are common grounds for the A.Y. 2004-05 to 2009-10. Agriculture income treated as income from other sources (A.Y 2004-05 to 2009-10) 16. The common ground for the A.Y 2004-05 to 2009-10 is with respect to treatment of agriculture income as income from other sources. It was submitted that the AO while passing the assessment has treated the following agriculture income of the assessee as income from other sources: Assessment year Added by AO(Rs.) Sustained by CIT (A)(Rs.) 2004-05 3....
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....e. But the AO has treated the exempt agricultural income as income from other sources and taxed such income, which is not correct and not justified. The addition in this regard is purely on the assumptions and surmises which are baseless and are detrimental to the interest of the assessee. Further, the AO has not brought in any proof which has evidentiary value. In this regard the assessee has relied on the following case laws for erroneous addition of agricultural income by treating it as income from other sources: "It was held in the case of Mr.T.C. Reddy in ITA No.469/Hyd/2009 and ITA No.228/Hyd/2010 that were the land holding and cultivation thereof is not in dispute, the AO cannot be simply reject the claim of the assessee with regard to the agricultural income. It was further held that as agriculture in this country is an unorganized sector and sale of agricultural produce is also not properly organized, one cannot blame the assessee for not maintaining the books of accounts for the purpose of cultivation and therefore, non maintenance of books of accounts cannot be a ground to reject the claim of the assessee" . It is to further submit that the assessee has already ....
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....,60,000 2006-07 7,60,000 7,60,000 3,60,000 2007-08 7,88,000 7,88,000 3,60,000 2008-09 20,64,000 20,64,000 3,60,000 2009-10 7,26,500 7,26,500 3,60,000 6.5 It may be noted that the AO has considered Rs. 20,64,000 as agricultural income claimed by the appellant in A.Y 2008-09. On the other hand, the appellant has stated that the agricultural income claimed in the relevant year is only Rs. 7,38,000 and has furnished a copy of the return and tax computation sheet for A.Y 2008-09. The appellant's contention appears correct. However, the AO may verify from the original records to arrive at the correct agricultural income claimed by the appellant. Irrespective of the same, agricultural income to the extent of Rs. 3,60,000 is being accepted in the case of the appellant for each year including A.Y 2008-09". 20. Before the Tribunal, in this regard it was submitted that the assessee and his family members are having agriculture land and are carrying out agricultural activity around Tirupati. The assessee inherited agricultural lands from his grandfather in Madhavaram and Yandapalla Villages after his expiry. Moreover ass....
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.... unexplained investment in purchase of land which is not correct and not justified. 5. The ld CIT (A) Guntur erred in sustaining the addition of Rs. 3,60,000 made towards agricultural income which is not correct and not justified. 6. The ld CIT (A) Guntur ought to have appreciated the fact that the appellant has already enclosed the certificates of the land". 25. First ground is general in nature, hence no specific adjudication is required. 26. Ground No.2 is regarding addition towards Long Term Capital Gain of Rs. 2,15,449/-. Brief facts of the ground are that during the course of search, a document was seized as page No.116 of Annexure A/S3/RES/04. This is a hand written sheet of paper with a title 'S.S.Chattanya-SALES' and contains a list of plots and land parcels sold by the assessee i.e. S.Siva Chaitanya. The AO noted that during the financial year 2004-05 relevant to the A.Y 2005-06 there was one sale of land at Avilala Village vide document No.4385 for a total consideration of Rs. 7,04,000. The share of the assessee was recorded as ½ and hence an amount of Rs. 3,52,000 was treated as income of the assessee. 27. During the appellate proceeding, assessee ....
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....nt of unexplained investment in purchase of land. Page No.115 of Annexure A/SIC/RES/04 is a hand written sheet with the heading 'S.S.CHAITANYA - PURCHASES'. The sheet contains a date-wise list of land parcels purchased and the share of the appellant S. Siva Chaithnya in the same. The share of the assessee has been determined at Rs. 30,08,592 and out of the same Rs. 20,65,325 pertains to A.Y 2005-06. During the assessment proceedings, the assessee stated that the total amount of Rs. 30,08,592 is out of the amount inherited from his grandfather Sri Saikam Basi Reddy as well as sale of some inherited properties and business income. AO found the reply vague and unsupported by any evidence. He also noted that the assessee's grandfather was not assessed to tax and hence treated the entire amount of Rs. 20,65,352 as unexplained investment in purchase of land. 31. During the appellate proceedings, the assessee stated that Sri S. Basi Reddy had filed returns of income for A.Ys 2000-01, 2001-02 & 2002-03, copies of which were furnished by him. Moreover, details of land owned by Sri S. Basi Reddy at Madhavaram Village were also furnished. In his counter submissions to the remand report, th....
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.... of the explained source of income of the assessee and therefore no addition can be made as unexplained investment in the hands of the assessee. It was further submitted that the investments made by the assessee are made out of explained income of the assessee and his family and are duly reflected in the cash flow statements submitted before the CIT (A) and before the ITAT in the paper book. 34. Since the ld Counsel has submitted that the amount of Rs. 9,93,325 and Rs. 9,43,267 for the AYs 2005-06 & 2006-07 appear against investment in land at Row No.28 of page No.3 under application of funds in the cash flow statements, we direct the AO to verify the same and decided the issue in accordance with law. The AO shall give an opportunity to the assessee to submit the details of the inheritance from grandfather Shri Basi Reddy while deciding this issue under appeal. 35. Ground Nos. 5 & 6 are regarding sustaining addition by CIT (A) for an amount of Rs. 3,60,000 made towards agricultural income. We have held in the earlier that the amount sustained by the CIT (A) being only Rs. 20,000/- is to be deleted. However, in all the AYs from 2004-05 to 2009-10, this issue is common and appr....
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....Reddy". 38. First two grounds are general in nature, hence no adjudication is called for. 39. Ground No. 3 is in respect of issuance of notice u/s 153C. This issue has already been adjudicated by us in ITA No.1765/Hyd/2013 vide Para No.6 and the same shall be followed in this A.Y also. 40. Ground Nos. 4 & 5 are regarding treatment of agricultural income as income from other sources. We have already adjudicated similar issue in ITA No.90/Hyd/2014 (Para No.160) for A.Y 2005-06 in Ground Nos. 5 & 6 and the same shall be followed in this A.Y also. 41. With regard to Ground No.6, 7 & 8 pertains to addition of unexplained investment in purchase of land. Page No.115 of Annexure A/SJC/RES/04 is a hand written sheet with the heading 'S.S.CHAITANYA-PURCHAES'. The sheet contains a date-wise list of land parcels purchased and the share of the assessee S. Siva Chaitanya in the same. The share of the assessee has been determined at Rs. 30,08,592 and out of the same, Rs. 9,43,267 pertains to A.Y 2006-07. During assessment proceedings, the assessee stated that the total amount of Rs. 30,08,592 is out of the amount inherited from his grandfather Sri Saikam Basi Reddy as well as sale of ....
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....nvestments are made out of the explained source of income of the assessee and hence no addition can be made as unexplained investment in the hands of the assessee. It was further submitted that the investments made by the assessee are made out of explained source income of the assessee and his family and are duly reflected in the cash flow statements submitted before the CIT (A) and also submitted before the ITAT vide paper book at Row No.28 of page No.3 under application of money. 45. This is a common issue for AY 2005-06 & 2006-07. We have already held in A.Y 2005-06 as follows: "Since the ld Counsel has submitted that the amount of Rs. 9,93,325 and Rs. 9,43,267 for the AYs 2005-06 & 2006-07 appear against investment in land at Row No.28 of page No.3 under application of funds in the cash flow statements, we direct the AO to verify the same and decided the issue in accordance with law. The AO shall give an opportunity to the assessee to submit the details of the inheritance from grandfather Shri Basi Reddy while deciding this issue under appeal". The same shall be followed in this A.Y also. 46. In the result, appeal is partly allowed for statistical purposes. ITA No.3....
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....nce amount of Rs. 3,78, 000 (Rs.7,38,000 - Rs. 3,60,000) as income from other sources. 7. The ld CIT (A) Guntur ought to have appreciated the assessee has already furnished certificates and documents pertaining to the agriculture land from respective revenue authorities in support of his claim" 53. Ground No.1 & 2 are general in nature, hence no adjudication is called for. 54. With respect to Ground Nos. 3 to 7, the ld Counsel argued that only the amount of agricultural income as per the revised return is to be taken and therefore, the CIT (A) has erred in confirming the amount of Rs. 3,78,000 as income from other sources. The assessee reiterated its arguments that the details produced as well as the MRO certificates has to be taken into consideration before deciding the issue. We have already decided the issue in ITA No.90/Hyd/2014 (Para No.160) for A.Y 2005-06 and the same shall be followed in this year also. 55. In the result, appeal is partly allowed for statistical purposes. ITA No.343/Hyd/2014 - A.Y. 2009-10: 56. Grounds preferred by the assessee read as under: "1. The ld CIT (A) Guntur erred both in law and on facts in upholding the addition. 2. The l....
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.....T. Act. Similar issue has already been adjudicated at Para No. 6 in ITA No.1765/Hyd/2013 in the case of S. Jayachandra Reddy and the same shall be followed in this A.Y also. Ground Nos.4 to 6 are with respect to treatment of agricultural income as income from other sources. it was submitted that: * The assessee is having various agriculture lands around Tirupathi which have been acquired through inheritance and some through purchases. These lands have been cultivated for many years and assessee is deriving agriculture income out of it. * AO has not disputed the fact regarding the holding of agriculture lands by the assessee. AO has treated the income of the assessee by stating that assessee has failed to produce evidence regarding sale of agriculture produce, purchase of various chemicals and fertilizers, etc. * Assessee is holding several agriculture lands around Tirupati. Assessee has submitted Pattedar Pass Books for various land holdings, income certificate in favour of the assessee by MRO of Rayachoty Mandal, Renigunta Mandal and Tirupati Rural for different A.Ys. * It was submitted that it is a common practice to employ labours on daily wages for doing day to ....
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.... of various chemicals and fertilizers etc. The CIT (A) has sustained part addition. 7. The ld Counsel for the assessee has submitted Pattadar Pass Books for various landholdings, income certificate in favour of assessee by MRO of Rayachoti Mandal, Renigunta Mandal, Tirupati Rural for various AYs in the paper book before us. 8. The ld Counsel for the assessee also relied was placed in the case of T.C. Reddy vs. DCIT in ITA No.469/Hyd/2009 and ITA No.228/Hyd/2010. 9. It was further submitted by the ld Counsel for the assessee that is a common practice to employ labours on daily wages for doing day to day activities of the cultivation and as the labourers are generally illiterate, it is difficult for any agriculturist to keep the documentation of every transaction. 10. CIT (A) while passing the order has accepted that the assessee possess some agricultural lands and carried on agricultural activities upon such land. But while coming to the conclusion upon the income derived from such agricultural land accepted the income only to certain extent. 11. The fact is that the assessee is deriving agricultural income out of the agricultural lands held by the assessee. The certi....
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.... u/s 153A of the Act should be limited to incriminating material found during the search only. We have already adjudicated this issue in the case of S.Jayachandra Reddy (ITA No.1765/Hyd/2013 - A.Y 2003- 04) vide Para Nos. 6 3. The additional ground with respect to telescoping of income of the assessee group against the expenditure of the assessee, common for the AYs 2003-04 to 2009-10. We have already adjudicated the same at Para No.7, hence the same conclusions shall be drawn in this year also. 4. First ground is general in nature, needs no adjudication. 5. Ground Nos. 2 & 3 are with respect to disallowance of land purchase u/s 40A(3) of the I.T. Act amounting to Rs. 3,53,903. We have already adjudicated similar ground in ITA No.1765/Hyd/2013 for A.Y. 2003-04 vide Para No.14 and the same conclusion shall be followed in this year also. 6. Ground No.4 is an alternate ground and not adjudicated. 7. Ground Nos. 5 & 6 are with respect to CIT (A) Guntur sustaining 10% disallowance amounting to Rs. 54,500 towards other expenditure. It was submitted that the expenditure is required to be allowed in full because of the fact that payments have been made to different individua....
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.....14 and the same shall be followed in this year also. 13. Ground No.4 is an alternate ground, hence not adjudicated. 14. Ground No.5 is with respect to sustaining 10% disallowance amounting to Rs. 35,800 towards other expenditure. We have already adjudicated this issue in ITA No.284/Hyd/2014 for A.Y. 2003-04 in assessee's own case at Para No.190. 15. Ground No.6 is against the CIT (A) sustaining the addition of Rs. 50,589 towards unexplained cash credits. It was submitted that the cash credit appearing in the capital account of the assessee is out of the income of the assessee of the previous years as well as amount received from his mother. It was further submitted that the amount was duly reflected in the cash flow statements of the assessee submitted in the paper book which were already submitted before the CIT (A) also. Therefore, the amount credited in the capital account remains completely explained and therefore, no addition could be made. 16. Since the ld Counsel has submitted that in the consolidated cash flow statements submitted by the assessee a sum of Rs. 2,81,339 and Rs. 6.00 lakhs are shown at Row 32 on page 3 for A.Y 2004-05 and 2005-06 respectively as t....
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....e with respect to disallowance u/s 40A(3). Similar issue has already been decided by us in ITA No.1765/Hyd/ 2013, vide Para No.14 and the same conclusion shall be followed in this A.Y also. 22. Ground No.4 is alternate ground and not decided. 23. Ground No.5 is with regard to CIT (A) sustaining 10% disallowance amounting to Rs. 44,800 towards other expenditure, has been adjudicated by us in ITA No.284/Hyd/2014 for A.Y 2003- 04 in assessee's own case at Para No.190 and the same shall be followed in this ground also. 24. Ground No.6 with respect to addition of Rs. 1,15,000 towards unaccounted income. AO while completing the assessment proceedings have treated 50% of agriculture income as income from other sources of which a part is sustained by the CIT (A) which is as under: A.Y Amount (Rs.) 2005-06 1,15,000 2006-07 1,92,560 2007-08 1,39,350 2008-09 3,60,000 2009-10 4,78,000 25. It was submitted that: * The assessee is having various agriculture lands around Tirupati which have been cultivated for many years and assessee is deriving agriculture income out of it. * AO has not disputed the fact regarding the holding of agr....
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.... opportunity to produce the land holdings and the proof for the income from the sale of agricultural commodities as well as the expenses incurred in the course of cultivating the land. The AO shall decide the issue after examining the records and vouchers. Hence this ground of appeal is set aside for statistical purposes. 28. Ground No.7 is with respect to sustaining addition of Rs. 3,95,000 towards unexplained cash credits. Brief facts of the issue are that Rs. 6,00,000 being addition to the capital account, which the AO treated as unexplained cash credit. At the assessment stage, no reply was filed by the assessee and hence the AO treated the entire amounts as unexplained cash credit. 29. At the appellate stage it was submitted that the cash credit represents agricultural income received by way of cash for financial year 2003-04 i.e. A.Y 2004-05, rental income of Rs. 60,000 inheritance of Rs. 3,30,000 after death of her father Kasireddy Ranga Reddy and balance is from her personal savings. 30. The CIT (A) held as under: "6.6.3 I have perused the submissions made. The agricultural income was reflected in her return. Although part of the agricultural income had been add....
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....ted that the order of the AO is based on the suspicions, conjectures and surmises which is not correct and not justified". 34. Ground No.1 is general in nature. 35. With respect to Ground Nos. 2 & 3, the issue is Treating Long Term Capital Gain as income from business. 36. It was submitted that AO while completing the assessment proceedings has made certain additions by treating the LTCG upon the sale of agril. Land as income from business and profession of which CIT (A) has sustained the following: A.Y Amount(Rs.) 2006-07 1,01,500 2007-08 8,52,977 2008-09 6,99,100 2009-10 4,52,800 37. On perusal of the record, we find that: * The lands sold are agricultural lands from which the assessee is deriving the agricultural income and the LTCG upon the sale of such agricultural land are claimed as exemption u/s 54B. * The assessee is an agriculturist having various agril. Lands around Tirupati which have been cultivated for many years and assessee is deriving agricultural income out of it which has been duly reflected in the return of income filed by assessee from time to time. * AO has not disputed the fact regarding the ....
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....4 (Para No.77 & 78) and the same conclusion shall be followed in this AY also. 44. Ground No.4 and 5, similar issue has been decided by us in ITA No.1765/Hyd/2013 for A.Y 2003-04 vide Para No. 26 and the same conclusions shall be followed in this AY also. 45. In the result appeal is partly allowed ITA No.126/Hyd/2014 - A.Y 2008-09 46. Grounds preferred by the assessee are given below: "1. The ld CIT (A) Guntur erred both in law and on facts in upholding the following additions. 2. The ld CIT (A) Guntur erred in sustaining the addition of Rs. 28,86,400 towards unexplained investment for purchase of land. 3. The ld CIT (A) Guntur ought to have appreciated the fact that appellant has submitted the books of accounts and ledger copies in respect of purchases of properties which are registered in the appellant's name. 4. The ld CIT (A) Guntur erred in confirming the addition of Rs. 3,60,000 towards unaccounted income by changing the source of agricultural income to other source income, which is not correct and not justified. 5. The ld CIT(A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises which is n....
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....ndly refer to the cash flow statements wherein, amount of Rs. 9,51000/-is shown before document number 5922/2007 at Row 1 of Page 4 under application of funds. b. Purchase of agricultural land from A. Bhanu Prakash & Others (Rs.4,85,OOO / -) * that the land was purchased by the assessee from A. Bhanu Prakash & Others vide doe. no. 5923/07. It is further submitted that the transaction was cancelled and the amount has been subsequently returned. * The Land purchased was out of the savings of the assessee. * that the land in question is reflected in the ROI & Statement of affairs filed before the ITAT. * that the advances made by the assessee are made out of explained income of the assessee and his family and are duly reflected in the cash flow statements submitted before the CIT(A) and are again submitted before your honour vide paper book. Kindly refer to the consolidated cash flow statements wherein, amount of Rs. 4,85000/-is shown before document number 5923/2007 at Row 2 of Page 4 under application of funds. c. Purchase of agricultural land from P.Nagoor & Others(Rs.l,96,OOO/-) * that the land was purchased by the assessee from P.Nagoor & others vide doe. no.....
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....r added the difference of Rs. 6,64.400/- (Rs. 24.44.400 - 17,80,000) upon the same property, in the case of the appellant which is not correct and not justified. * It is further submitted that the Land in question has been reflected in the ROI and statement of affairs filed in the case of S. Jayachandra Reddy vide cash flow statements of Sri jayachandra Reddy wherein amounts of Rs. 2,14,000/- is shown before the document number 966/2007 Row 7 of Page 3 under application of funds. f. Purchase of agricultural land from D. Krishnaiah (Rs.l,OO,OOO) * The Land was never purchased by the assessee. Only an advance payment of Rs. 1,00,000/- has been made and balance amount was agreed upon to be paid at the time of registration. * It is further submitted that the advances made by the assessee are made out of explained income of the appellant and his family and are duly reflected in the cash flow statements submitted before the (ITAT) and are again submitted before your honour vide paper book. It is also submitted that the land in question is reflected in the ROI & Statement of affairs filed before ITAT. g. Purchase of agricultural land from A. Muni Reddy & Others (Rs.6,79,500....
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....hri P. Munar - source is from past savings. (v) Purchase of land from Shri N Venkatappa Naidu - The land was never purchased by the assessee and no agreement has been made for the land. (vi) Purchase of agricultural land from Shi D.Krishnaiah - land was never purchased, only advance was paid. (vii) Purchase of land from A. Muni Reddy - source is from sale of other lands and past savings. (vii) Purchase of land from Shri S. Nagoor - source is from other lands and past savings. 53. From analyzing the documents, we are of the opinion that for verification of the amount of funds available with the assessee, as submitted by the ld Counsel the cash flow statement of the assessee has to be thoroughly examined. It is also a fact that the lands are reflected in the return of income filed and statement of facts filed before us. In these circumstances, we direct the AO to verify the cash flow statement and examine whether the amounts shown for the purchase of documents are reflected in the cash flow statement under application of funds and decide the issue in accordance with law. 54. With respect to Ground No.4 & 5, we have already adjudicated similar issue at Para 26 in ITA....
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....-initio and issue of notice u/s 153C is not correct. 4. The ld CIT (A) Guntur ought to have accepted the fact that presumption u/s 132(4A) is applicable in respect of persons from whose custody or possession seized material was found and it cannot be applied to third parties. 5. The ld CIT (A) Guntur erred in sustaining the addition of Rs. 2,95,574 towards cheque deposits appearing in the savings bank account of the appellant, which is not correct and not justified. 6. Without prejudice to the above, the ld CIT (A) Guntur erred in rejecting the documents submitted by the appellant like copies of order u/s 11 of the Land Acquisition Act, 1894 and copy of bank statement pertaining to Andhra Bank Account No.20267 the same was rejected on the basis of suspicions and surmises. 2. Ground Nos.1 & 2 are general in nature. 3. Ground Nos.3 & 4 are with confirming the assessment u/s 144 r.w.s. 153C. This issue has already been adjudicated by us in ITA No.1765/Hyd/2013 for A.Y 2003-04 (Par No.6) and the same conclusion shall be followed in this AY also. 4. Ground No.5 is with respect to sustaining the addition of Rs. 2,95,574 by the CIT (A). 5. It was submitted that during....
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....f Rs. 2,95,574 by cheque. 9. The ld CIT (A) held as under: "8.3 I have perused the submissions made. The appellant has submitted agricultural land ownership details as well as agricultural income certificates. The income certificates pertain to financial year 2005-06 onwards. However, it is not denied that the appellant was in ownership of agricultural land in financial year 2002-03 and earlier years and hence generation of agricultural income in A.Y 2003-04 cannot be denied. As regards cheque deposit of Rs. 2,95,574 the appellant has submitted copy of the proceedings carried out by the land acquisition officer on 30.04.2003. In the case of Shobha Rani, the amount reflected is Rs. 1,01,731 in respect of Plots No.10, 11 & 67 measuring 619.500 sq. yards. There is no other amount recorded in her case and hence the document submitted does not furnish evidence regarding the cheque deposit of Rs. 2,95,574. Hence, out of the total addition of Rs. 3,95,574 an amount of Rs. 1,00,000 being cash deposit out of agricultural income is allowed and the balance Rs. 2,95,574 is sustained as unexplained deposit appearing in the bank account. The appellant's appeal in respect of Ground No.3 is ....
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.... of the assessee. 16. Before the CIT (A) it was stated by the assessee that the amount of Rs. 1,30,700 was paid out of streedhan received from her parents. Subsequently the assessee stated that this amount has been withdrawn on 16.07.2003 for purchase of a plot of land. In the remand report, AO stated that bank account details have not been furnished so as to verify whether such withdrawal has taken place. 17. The ld CIT (A) held as under: "8.3 I have perused the bank account statement and there is no withdrawal on 16.07.2003 which would justify the investment made. Secondly, it appears that the contention regarding receipt of streedhan is also not backed by any evidence. In the counter submissions to the remand report, the appellant has raised an additional ground stating that the document in question was found at the premises of the appellant's brother in law Sri S. Jayachandra Reddy and cannot be considered as evidence against the appellant. This contention of the appellant can also not be accepted in that the document in question reflects a property which has been purchased and registered in the name of the appellant. The amount in question is the consideration recorde....
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....book filed we find that an amount of Rs. 20,69,646 appears in the opening cash balance as on 30.05.2003 which the CIT (A) has not considered. Hence, we delete this addition made by the CIT (A). 24. In the result appeal is partly allowed for statistical purpose. ITA No.477/Hyd/2014 - A.Y. 2005-06: 25. Grounds preferred by the assessee are given below: "1. The ld CIT (A) Guntur erred both in law and on facts while partly allowing the appeal. 2. The ld CIT(A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises which is not correct and not justified. 3. The ld CIT (A) Guntur erred in confirming the assessment u/s 144 r.w.s. 153C which is invalid ab-initio and issue of notice u/s 153C is not correct. 4. The ld CIT (A) Guntur ought to have accepted the fact that presumption u/s 132(4A) is applicable in respect of persons from whose custody or possession seized material was found and it cannot be applied to third parties. 5. The ld CIT (A) Guntur erred in sustaining the addition of Rs. 8,25,588 towards unexplained investment in land, which is not correct and not justified. 26. Ground No.1 & 2 are general....
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.... of Rs. 17,33,088 towards unexplained bank deposits out of which Rs. 8,25,588 has been sustained by the CIT (A) for the need of source. It was further submitted that during the year under consideration, assessee received an amount of Rs. 8,25,588 from one Sri Muni Reddy s/o Ambati Nagulu Reddy towards repayment of loan advance by the assessee to him. In this regard, a confirmation letter from Sri Muni Reddy was filed by the assessee vide page No.33 of the paper book. It was also submitted that the assessee group is having enough cash balance and telescoping has to be given to the deposits made by the assessee. We set aside this issue to the file of the AO to analyze if the assessee has enough cash balance and decide in the light of the decision of R.B. Mittal wherein it has been held as follows: " we hold that the assessee is expected to establish proof of identity of his creditors, capacity of his creditors to advance money and genuineness of the transactions in order to discharge the onus imposed on him under section 68. " 32. In the result appeal is partly allowed for statistical purposes. ITA No.478/Hyd/2014 - AY 2007-08 33. Grounds raised by the assessee in this A.....
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....ained bank deposit in ITA No.475/Hyd/2014 for A.Y 2004-05 as follows: "We have perused the record and at pages 10 & 11 of the paper book filed we find that an amount of Rs. 20,69,646 appears in the opening cash balance as on 30.05.2003 which the CIT (A) has not considered. Hence, we delete this addition made by the CIT (A)". 40. In the result appeal is partly allowed for statistical purpose. 41. To sum up, appeals are partly allowed for statistical purposes. ITA No.431/Hyd/2015 : A.Y 2007-08 (Smt. P. Deepthi) 1. Grounds of appeal preferred by the assessee are as under: "1. The ld CIT (A) Guntur erred both in law and on facts while disallowing the appeal. 2. The ld CIT(A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises which is not correct and not justified. 3. The ld CIT (A) Guntur erred in confirming the assessment u/s 144 r.w.s. 153C which is invalid ab-initio and issue of notice u/s 153C is not correct. 4. The ld CIT (A) Guntur ought to have accepted the fact that presumption u/s 132(4A) is applicable in respect of persons from whose custody or possession seized material was found and it ca....
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....le deeds bearing No.1212/07 and 1213/07 dated 22.02.2007. The assessee has stated that only an amount of Rs. 4.00 lakhs had been received as advance, which was subsequently returned to the original buyer Smt. C. Tulasi on 24.12.2006. 7. The CIT (A) held as under: "9.3 I have perused the submissions made. The agreement in question fixes the price of the land at Rs. 16,89,200 and also states that an advance of Rs. 4,00,000 has been paid while the balance amount of Rs. 12,89,200 has to be paid by 12.02.2007. It is a common practice in land transactions that the person who originally enters into an agreement to buy is not the actual buyer or the final buyer, but instead merely an agent or a trader in land. Having paid an advance amount, this agent/trader scouts for buyers at a price higher than the one agreed by him. Once, such a buyer is located, the sale deed is drawn between the land owner and the final buyer and it is this sale deed, which is registered. The land owner in such cases receives the amount, which has been determined in the original agreement for sale. It is clear that the plot had been valued at Rs. 16,89,000 as late as on 13.12.2006. There appears to be no reaso....
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.... property and has paid more than what is mentioned in the registered sale deed. The Hon'ble Supreme Court in the case of Moosa S. Madha and Azam S. Madha vs. CIT (89 ITR 65) has held that photocopies have little evidentiary value. Therefore, photocopies of any document cannot by itself be considered as evidence for purpose of making addition in assessment proceedings". 10. Subsequently a registered sale deed was entered with other parties upon the same land and the sale agreement dated 13.12.2006 on the basis of which the addition has been made was cancelled on 24.12.2006 and the advance was returned back. In support of the cancellation, the assessee has filed evidence of cancellation letter dated 24.12.2006 signed by Smt. C. Tulasi W/o B. Somasekhar in the paper book filed. Hence we are of the opinion that no addition of undisclosed income can be made (i) merely on the basis of a cancelled agreement found during the course of search (2) relying on the photocopy and not on the actual sale deed. Hence, we allow this ground of the assessee. 11. In the result, assessee's appeal is partly allowed for statistical purposes. ITA No. 433/Hyd/2014 : A.Y 2007-08 (P. Vamshi Krishna) ....
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....age Avilala, Tirupati for a sum of Rs. 16,89,200. 5. During the appellate proceedings, the assessee stated that the said sale agreement was cancelled on 24.12.2006 and the advance was returned back to the party. In support of her claim, the assessee has filed cancellation letter dated 24.12.2006 signed by Smt. C. Tulasi, w/o B. Somasekhar vide page 4 of the paper book filed on 30.05.2011. The assessee also stated that the said property was subsequently sold to Sri Abdul Rahaman, S/o Sulemaan Saheb, Tirupati and Sri Gollapalli Guruswami Reddy, S/o Narayana Reddy, Tirupati for Rs. 3,57,000 and Rs. 3,54,500 respectively vide registered sale deeds bearing No.1212/07 and 1213/07 dated 22.02.2007. The assessee has stated that only an amount of Rs. 4.00 lakhs had been received as advance, which was subsequently returned to the original buyer Smt. C. Tulasi on 24.12.2006. 6. The CIT (A) held as under: "9.3 I have perused the submissions made. The agreement in question fixes the price of the land at Rs. 16,89,200 and also states that an advance of Rs. 4,00,000 has been paid while the balance amount of Rs. 12,89,200 has to be paid by 12.02.2007. It is a common practice in land trans....
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....n the decisions of the Hyderabad ITAT in the case of DCIT vs. Shri B.Vijaya Kumar (ITA Nos.930 & 931/Hyd/2009) and the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Fairdeal Textile Park (P) Ltd. 8. We heard both the parties. We find that the sale agreement found during the course of search is only a photocopy. In the case of DCIT vs. B. Vijaya Kumar, the Coordinate Bench of ITAT Hyderabad has held as follows: "11................ The Hon'ble Supreme Court in the case of K.P. Verghese reported in 131 ITR 597 has held that onus is on the department to prove that the assessee has understated the value of the property and has paid more than what is mentioned in the registered sale deed. The Hon'ble Supreme Court in the case of Moosa S. Madha and Azam S. Madha vs. CIT (89 ITR 65) has held that photocopies have little evidentiary value. Therefore, photocopies of any document cannot by itself be considered as evidence for purpose of making addition in assessment proceedings". 9. Subsequently a registered sale deed was entered with other parties upon the same land and the sale agreement dated 13.12.2006 on the basis of which the addition has been made was c....
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....or Rs. 3.00 lakhs. Assessee stated that he has purchased this land from Venugopal Reddy for Rs. 3.00 lakhs vide document No.4574/2007 on 28.06.2006 and this purchase has been reflected in the relevant A.Y 2007-08. AO held that the returns of income do not reflect investment of both Rs. 1.00 and Rs. 3.00 lakhs and added the entire amount of Rs. 4.00 lakhs. 4. In his counter submissions, the assessee stated that this property was purchased for Rs. 3.00 lakhs out of which Rs. 1.00 lakhs by cheque and Rs. 2.00 lakhs by cash and both pages 65 & 66 of the seized documents referred to the same property purchased from V. Venugopal Reddy. Assessee also in his counter submissions filed a copy of the registered document which shows that the property in question was purchased for Rs. 3.00 lakhs out of which Rs. 1.00 lakhs was paid by ICICI Bank Cheque No.651397 dated 28.06.2007 while the balance of Rs. 2.00 lakhs by way of cash. This registered document supports the seized document at page No.65 of Annexure A/SJC/RES/04. Thus, it is clear that the property in question was purchased for Rs. 3.00 lakhs. The assessee stated that the payments took place on 28.6.2006. However, the registered doc....
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....pellant and it is clear that this transaction has not gone through since on a day subsequent to the search, the property remains recorded in the name of the original seller in the land revenue records. The seized agreements mentions only Rs. 9,000 as advance and there is no evidence of any further payment in this regard. Thus, the amount of Rs. 6,66,000 treated as unexplained investment by the AO is being deleted". 10. As regards, Ground No.4, it was submitted that page 82 of Annexure A/SJC/RES/04 is a document evidencing payment of Rs. 1,95,000 in cash as advance for purchase of plywood and laminates on 26.03.2008. The assessee stated that this pertains to house construction expenses incurred out of loans and savings. AO held that the sources remained unexplained and added this as unexplained investment. 11. At the appellate stage, assessee had stated that this amount has been paid towards supply of granites for construction of the building and has been accounted for in the books of accounts maintained in respect of house construction. 12. The CIT (A) held that "The appellant has reflected Rs. 35.89 lakhs towards house construction as on 31.03.2008 and hence the contentio....
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....was stated that at Page No.145 of Annexure A/SJC/RES/04 is a receipt cum agreement for Rs. 12,86,000 issued by Venkata Muni Reddy towards sale of 36 cents of land to the assessee. During the assessment proceedings, it was stated that only Rs. 9000 was paid as an advance and no further payments have been made. AO did not agree with the contention of the assessee and added the entire amount as unexplained investment. 18. During the appellate proceedings, the assessee has furnished an encumbrance certificate regarding the said property located in Village Thukivakam bearing Survey Nos. 482 & 484. It shows that on 20.11.2009 the land remained in the name of S. Venkata Reddy, father of S.Venkata Muni Reddy, Nagi Reddy & Kumaraswamy Reddy, the three signatories to the receipt seized as page No.145. In view of the same, there was no evidence that the transaction was concluded and the property registered in the name of the assessee. The only evidence is regarding payment of advance of Rs. 9000 and hence the addition made of Rs. 12.86 lakhs stands deleted. 19. We have dealt with similar issue in ITA No.479/Hyd/2014 in the Revenue's appeal for A.Y 2008-09 and adjudicated at Para No.13 a....