AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 786
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....tal introduction in the name of partners of the assessee firm relying on the decision of Hon'ble High Court of Andhra Pradesh reported in 232 Taxmann 123 in the case of CIT vs. Venkateswara Rao." 3. Facts of the case in brief are that during the course of assessment proceedings, the Assessing Officer has noted from the balance sheet that as on 31/03/2010, a sum of Rs. 56,55,000/- & Rs. 16,75,000/- was introduced into the business as partners capital contribution and partners current account, the details of which are as follows:- Name of the partner Capital contribution Partners current account Total Sathi Ramakrishna Reddy 2001000 Sathi Achiyamma 801000 Sathi Venkayamma 1401000 Sathi Rani 1001000 Tadi Satyanarayana Reddy 451000 S. Achiyamma 975000 S. Venkayamma 700000 Total 5655000 1675000 73,30,000 The Assessing Officer has called upon the assessee to explain the source for the amounts brought into the business by the partners towards capital contribution and current account contribution. The Assessing Officer also called for identity and ....
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.... of the Income Tax Officer, ward-1, Kakinada by enclosing the affidavits stated to be obtained from the respective partners. As per the information filed by the firm the partners have allegedly introduced the following amounts in the firm. Name of the Partner Amount invested in F.Y 2009-10 relevant to A.Y 2010-11 Amount invested in F.Y 2010-11 relevant to AY 2011-12 Sathi Ramakrishna Reddy 2001000 0 Sathi Achiyamma 801000 1200000 Sathi Venkayamma 1401000 600000 Sathi Rani 1001000 1000000 Tadi Satyanarayana Reddy 451000 - 1550000 However neither the assessee firm nor its partners Smt S. Achiyamma and Smt. S. Venkayamma have explained anything about the amounts invested by the above two partners at Rs. 9,75,000 and Rs. 7,00,000/- respectively aggregating Rs. 16,75,000/-. The assessee firm's explanation along with the copies of affidavits filed by the respective partners of the firm are carefully examined and found the explanation ) offered by the firm and the partners towards the sources for the introduction of such huge capitals is not acceptable in view of the following reasons. All the partners in their affidavits have stated that alleged capitals in....
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....I was not having taxable income for all these years. Therefore as discussed above: In the absence of any proof towards the sources for the partners in introducing the capital in cash as alleged by the assessee firm, in the light of the deposition of the Managing Partner of the assessee that does not have any sources of income and also in view of the fact that he assessee firm was not maintaining any books of account on the date of survey and also in view of the fact that the assessee firm has filed its return of income for the Asst. Year 2010-11 only in response to the notice issued u/s 148 of the IT Act., subsequent to the survey operation conducted in its business premises, the assessee firm's contention towards the partners introduction of capital in cash during the year under consideration aggregating Rs. 56,55,000/- is not acceptable and hence the same has been treated as unexplained cash credit in the assessee firm's books of account and brought the same to tax as per sec. 68 of the IT Act. Further as discussed above as neither the assessee firm nor the respective partners viz. Smt. S. Narasayamma and Smt. S.Venkayamma have explained the sources towards amounts ....
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....fore the Assessing Officer that the contributions are made by them. However the Assessing Officer has not accepted the explanation given by the partners and came to a conclusion that the partners did not have sufficient source for introducing the amounts into the business towards their capital contribution and current account contribution and the investments made by the partners are added in the name of the firm as unsubstantiated cash credits under section 68 of the Act. On appeal before the ld.CIT(A), it was submitted that all the partners filed their affidavit and having PAN numbers and also their return of incomes, and therefore, if at all addition has to be made, it is to be made in the hands of the partners and not in the hands of the firm. Ld. CIT(A) by considering the submissions of the assessee and also by following the judgment of the Hon'ble Jurisdictional High Court in the case of M. Venkateswara Rao (supra), deleted the addition made by the Assessing Officer and given liberty to the Assessing Officer to examine and consider these amounts in the respective partners. The relevant portion of the order is extracted as under:- "7.3 I have carefully considered the abov....
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.... cannot be assessed in the hands of the firm Respectfully following the decision of the Hon'ble Jurisdictional High Court, the AO is directed to delete the addition of Rs. 73.30,000/-. However, the AG is at liberty to examine and consider these amounts (contribution to capital accounts and current accounts) in the hands of the respective partners. 10. We find that ld. CIT(A) by flowing the decision of the Hon'ble Jurisdictional High Court in the case of M. Venkateswara Rao (supra) deleted the addition made in the hands of the firm. Therefore, respectfully following the above referred to judgment of the Hon'ble Jurisdictional High Court, we find no infirmity in the order of the ld. CIT(A). Thus, this appeal filed by the Revenue is dismissed. ITA No. 392/VIZ/2017 11. 11. The revenue has raised a similar ground as has been raised in Assessment Year 2010-11, which reads as under:- "2. The ld. CIT(A)-1 erred in deleting the addition of Rs. 43,50,000/- made towards unexplained capital introduction in the name of partners of the assessee firm relying on the decision of Hon'ble High Court of Andhra Pradesh reported in 232 Taxmann 123 in the case of CIT vs. Venkateswa....
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....e under section 142(1) dated 23-01-2014, besides asking the names and complete addreses of the parties from whom the loans were alleged to be raised, the assessee firm was asked to explain the sources and creditworthiness of the lenders and genuineness of the transactions along with verifiable supporting evidences. In response to the same vide its letter submitted on 06/02/2014, the firm has furnished copies of the confirmation letters alleged to be given by the lenders. Except the confirmation letters the firm has not furnished any evidences towards the identification, sources and creditworthiness of the lenders and the genuineness of the transactions. Therefore In the- absence of any supporting evidences towards the identification, sources and creditworthiness of the alleged lenders and also genuineness of the transactions it was proposed to treat the entire amount of Rs. 1,68,99,450/- brought into the assessee firm's, in the guise of unsecured loans, as unexplained investment and bring the same to tax. Accordingly vide this office letter dated 07-03-2014 the assessee firm was requested to file its objections for the same along with necessary supporting evidences In response ....
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....e assessee has borrowed Rs. 19,00,000/- from four parties namely G. Syam, Kota Ayyappa Gupta, Tetali Subbirami Reddy & Datla Sitaram Raju. He further submitted that all the details in respect of loan creditors are available and once the assessee has filed all the details in respect of loan creditors, the assessee has discharged his onus and therefore, if at all any doubt, the Assessing Officer has to make enquiries. In this case, without making any enquiry, simply addition is made, therefore same may be deleted. 20. On the other hand, ld. Departmental Representative relied on the orders passed by the authorities below. 21. We have heard both the sides, perused the material available on record and orders of the authorities below. 22. The assessee has borrowed an amount of Rs. 19,00,000/- from four loan creditors. From Datla Sitaram Raju, assessee has borrowed Rs. 1,00,000/- through State Bank of Hyderabad cheque No. 258080 dated 21/12/2009, the same was returned on 28/09/2010 through Indian Bank, Visakhapatnam by Cheque No. 3357201. In his confirmation letter, complete address is available. He also submitted that he is an income tax assessee. When the assessee has filed confirmat....
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....order passed by the ld. CIT(A) and hold that the assessee has discharged burden in respect of loan received from four creditors and Assessing Officer failed to make enquiries, therefore we reverse the order of the ld. CIT(A). Thus, this ground of appeal raised by the assessee is allowed. 23. The next ground of appeal relating to difference between the rates of CPWD & PDW. 24. In the assessment order, the Assessing Officer has noted that the assessee has not maintained any books of account and any construction account of the complex, i.e. Gowthami Complex, constructed by the assessee. The Assessing Officer referred the building valuation to the Departmental Valuation Officer (DVO) to estimate the total cost of construction of the said property. The DVO vide his report dated 03/06/2013 estimated the cost of construction at Rs. 2,49,10,606/- as against the cost of construction admitted by the assessee-firm at Rs. 211.62 lakhs. The Assessing Officer from the DVO's report, arrived at the cost of construction incurred during the previous year relevant to the Assessment Year 2010-11 at Rs. 29,89,272/-. However, the assessee has shown construction expenditure for the year at Rs. 23,77,41....
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....ground raised by the revenue." 29. By respectfully following the order of the coordinate bench of the tribunal, we allow further deduction of 10% in addition to 5% which has already been granted by the ld. CIT(A) to meet the ends of justice. Accordingly, Assessing Officer is directed to allow deduction of 15% on variation of rates between CPWD and PWD. Thus, this ground of appeal raised by the assessee is partly allowed. 30. Ground No.5 relates to sustenance of addition of Rs. 9,75,000/- towards unexplained flat advances from customers. 34. In the assessment order, the Assessing Officer has noted that there was a negative balance of Rs. 9,75,000/- under the head sundry debtors. The Assessing Officer called upon the assessee to furnish the explanation for the above. The assessee firm submitted before that Assessing Officer that an amount of Rs. 9,75,000/- was received from one Sri W. Raju towards advance for purchase of flat. It was also submitted that the said person had withdrawn the proposal and received back money on 15/12/2010. The Assessing Officer noted that the assessee firm had not filed any proof in support of the said claim. The Assessing Officer, thus, treated the im....
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....he bankers were also unable to clarify the same. Therefore as the assessee firm was unable to explain the deposit, as proposed the cash deposit of Rs. 9,00,000/- made in the aforesaid bank account on 27-09-2014, has been treated as assessee firm's unexplained Investment and brought the same to tax accordingly. It is noticed from the analysis of remittances made into the firms bank account held with M/s. Indian Bank, Maharanipet, Visakhapatnam Vide A/c No. 858761196, filed on 11-02-2014, that sources for an amount of Rs. 45,000/- credited in the bank account was on account of receipt of the said amount from one Sri BS Patnaik towards flat advance. As the assessee firm has not filed any proof in support of the same it was, proposed to treat the same as assessee firm's unexplained credit in the books of account and bring the same to tax. Accordingly, vide this office letter dated 07-03-2014 the assessed-firm was requested to file its objections for the same along with necessary supporting evidences. In response to the same the assessee firm submitted a letter on 18-03-14, stating that the amount was received from one Sri BS Patnaik towards advance for the flat and the same ....
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....or on 27/09/2009. Under these facts and circumstances of the case, the Assessing Officer as well as ld.CIT(A) is not correct in taking the date as 27/09/2009 contrary to the bank statement on 27/10/2009. Thus, this addition made by the Assessing Officer and confirmed by the ld. CIT(A) are deleted by reversing the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the assessee is allowed. 36. So far as addition of Rs. 45,000/- is concerned, the assessee has not placed any evidence before the Assessing Officer nor before the ld. CIT(A), even before us also. Under these circumstances, we find no infirmity in the order passed by the ld.CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. ITA No. 323/VIZ/2017 37. The assessee has raised the following grounds of appeal:- "1. The order of the learned Commissioner of income Tax(Appeals) is contrary to the facts and also the law applicable to the facts of the case. 8. The learned Commissioner of income Tax (Appeals) is not justified in sustaining the addition of Rs. 3,03,000/- made by the Assessing Officer towards alleged unexplained advance from Sri Surya Rao. 9. The learned Commissioner o....
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.... Ramakrishna Reddy & Sathi Subbi Reddy and the balance amount of Rs. 18,61,355/- was debited to the profit & loss account and claimed as expenditure. This is evidenced from the construction material account placed in the paper book. Therefore, the actual expenditure debited to the profit & loss account towards construction material was Rs. 18,61,355/- and not Rs. 34,36,489/- If at all, the expenditure required to be disallowed under section 40A(3) in respect of construction material, the aggregate amount of Rs. 18,61,355/- should be disallowed but not Rs. 34,36,489/- as worked out by the ld. Assessing Officer. The Assessing Officer has disallowed the entire amount of Rs. 34,36,489/- stating that the amount of expenditure was incurred in excess of Rs. 20,000/- in cash, which is incorrect. The actual expenditure was only Rs. 18,61,355/-. 45. Even otherwise also, on verification of the construction material account, the assessee has debited the construction material account month-wise, but not item-wise or party-wise. As per the provisions of section 40A(3), the payment in excess of Rs. 20,000/- to the individual parties required to be disallowed, but not the monthly expenditure incu....