TaxTMI 
TaxTMI 
2018 (10) TMI 1220
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....ment Years 2002-03 to 2007-08. In response to the notice, the assessee had filed return of income admitting total income of Rs. 1,50,91,490/- on 21/08/2009. During the course of search, some incriminating materials were found regarding investment made by the firm M/s. Classique Farm & Estates for acquisition of land to that extent of 84. 29 acres in Maddi. The documented consideration for such acquisition was Rs. 1,33,23,000/-, and the seized materials indicated extra amount of Rs. 4,43,00,000/- was paid in cash for such acquisition. With regard to the source for the unexplained investment of Rs. 4,43,00,000/-, the individual partners admitted unexplained investment of Rs. 2,21,50,000/- as their unaccounted income each for the Financial Year 2006-07. The unaccounted investment was quantified at Rs. 2,32,61,450/-, in respect of which, the assessee had admitted Rs. 2,21,50,000/- as his unaccounted income. But out of that amount, the assessee had retracted to the tune of Rs. 1,45,00,000/-. During the course of assessment proceedings, stating that he had received advance of Rs. 1,45,00,000/- from Smt. K. Bhanumathi and Mr. N. Ravi Kumar. The Assessing Officer had given various opportun....
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....d in cash comes to Rs. 2,21,50,000/-. Please explain the sources for the same. Ans: We are not in a position to explain my sources. I request you to give me time to explain the sources. However, right now, as no books of account are available with me to explain the sources for Rs. 2,21,50,000/-. I am agreeing that this Rs. 2,21,50,000/- is my unaccounted income. However, I request you to give me some time to explain the sources. Q. No. 28. I am showing you your "ledger account" in Classique Farms and Estates wherein cash paid for land at Maddi is shown at Rs. 1,41,21,215/- and cash paid for "land development charges" is shown at Rs. 57,50,000/- which totally adds upto Rs. 1,98,71,215/- only whereas the amount expended by you is paid to be Rs. 5,68,00,000/- only. Nowhere does the books show the extra amount of Rs. 4,43,00,000/- and as per the books also there is no such cash balance? What is your explanation for this? Ans. The extra amount of Rs. 4,43,00,000/- was paid out of our individual sources. As partner, I have invested this extra Rs. 2,21,50,000/- from my individual sources. Q. No. 31 We have searched your house. We have searched your old ....
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....ts, D. No. 49-54-4, Balayyaasastry layout, Seethammadhara, Visakhapatnam, during the F. Y. 2006-07 which was utilized by him for investment in the above firm. The parties are willing to dispose before you along with their income sources. From the books of account maintained by the assessee an amount of Rs. 1,15,00,000/- has been offered as undisclosed income in respect of investment in the above firm. " 7. 10 Thus, in effect the assessee had made a claim that he had sources to explain an amount of Rs. 1,45,00,000/- in regard to the investments made. The claim made was that he had received an advance of Rs. 1,40,00,000/- from Smt. K. Bhanumathi and Rs. 5,00,000/- from N. Ravi Kumar. From the perusal of the assessment order, it is seen that the AO had given various opportunities to the assessee to prove the said claim by producing the above said two persons. But the assessee failed to produce the said two persons. They were not available at the addresses given by the assessee and the summons issued by the Department retuned unserved. In this regard the AO examined the assessee on 24. 11. 2009. The assessee stated in the deposition that he had received advance in cash from Ra....
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....urn of income filed by M. Viswa Mohan before the authorities as an afterthought. In this regard the following contentions were raised. a) It is quite clear from the statement recorded on the day of the search that the assessee has not given any categorical confession as such. What all he stated was that he would verify the records and explain the position. To this he responded in the return of income filed wherein he offered unaccounted income of Rs. 1. 15 cr. This aspect has not been appreciated and considered by the learned AO. b) It is very pertaining to note, as can be seen from the remand report that the assessing officer has not negated the evidences filed with regards to the advance received. This goes to prove the credentials of the assessee in so far as the evidences furnished. c) The only reason cited by the AO, whi'e negating the claim is that the letter posted to Smt. K. Bhanumathi has been returned as unserved. The submission of the assessee is that this by itself cannot be sole reason for making such huge addition of as much as Rs. 1. 40 cr. especially when the assessee has furnished all the evidences in this regard which are not dispute....
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....l statement is not justified. I have considered the various pleas raised. 7. 16 At the outset, the search operation took place on 12. 09. 2007. In the sworn statement recorded on 12. 09. 2007, the assessee has not stated anything about the advance received from K. Bhanumathi. It is seen from the statement that he had requested time to explain the sources but no explanation was given within reasonable time. Further, I do not find any reasonable justification for not disclosing the availing of advance from K. Bhanumathi during the search proceedings or immediately thereafter. The amount is not too small to be forgotten or ignored. 7. 17 It is seen that subsequently on 24. 11. 2007 i. e after nearly two months from the date of search the assessee had filed an affidavit confirming that his unaccounted income was Rs. 2,33,50,000/- and would pay taxes on the same. Even at that juncture, the assessee has not revealed any information or whispered about the advance said to be received from K. Bhanumathi. On the other hand, he had sworn and confirmed that his unexplained income was Rs. 2,33,50,000/- and he would pay taxes on them. It is only on 07. 09. 2009, nearly two year....
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....ntral Circle-1, Visakhapatnam, but it is not clarified why this letter was not posted to him directly. There is no mention in this letter as to the dates on which the advances were made, and on which dates the amounts were withdrawn from the bank account to make the impugned advances. It is pertinent to note that even the assessee did not furnish information as to the dates on which the amount was received by him from the said K. Bhanumathi. It is relevant to note that in his statement recorded on 24. 11. 2009 by the AO, he has deposed that the amounts were received from April 2006 to May 2007. A perusal of bank statement held in the name of Vishwa Mohan with ICICI Bank Ltd Hyderabad, there were cash withdrawals in September, 2005, for which BCCT was deducted. There was no withdrawal during the whole of the year 2006. Copy of the statement was not submitted for the period 2007. Prima-facie there is no withdrawal during 2006-07 to support the claim of the assessee. Even otherwise, neither Vishwa Mohan nor the said Bhanumathi have specified the withdrawals from which the money was said to be advanced to the assessee. The return of income filed by Viswa Mohan, son-in-law of K. Bhanuma....
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....called transaction of advance of money against sale of property do not appear to be genuine from the details filed. Hence I am of the view that the AO is justified in rejecting the assessee's claim and making the impugned addition of Rs. 1,40,00,000/- towards unexplained investment. The impugned addition made is confirmed. 8. In the result, the appeal of the assessee for A. Y2007-08 is dismissed. " 4. On being aggrieved, assessee carried the matter in appeal before the Tribunal. 5. Ld. counsel for the assessee has submitted that the Assessing Officer as well as ld. CIT(A) without considering the confirmation letters of Mrs. K. Bhanumathi and Sri M. Viswa Mohan and also copy of unregistered sale agreement dated 23/09/2006, addition was made only on the basis of the statement recorded during the course of search under section 132(4). He further submitted that addition cannot be made only on the basis of statement recorded during the course of search under section 132(4), unless there is a substantial evidence to show that there is an unaccounted money in the hands of the assessee and submitted that addition made by the Assessing Officer and confirmed by the ld. CIT....
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....t of Rs. 1,45,00,000/- from two parties namely; Mrs. K. Bhanumathi & Sri N. Ravi Kumar and the addresses of the parties are also given. The Assessing Officer by considering the explanation given by the assessee, issued summons to both the parties, which were returned 'un-served' with an endorsement that the addresses given, are newly constructed apartments and no such persons are residing in such plots. Again a letter addressed to the assessee dated 01/10/2009 asking him to produce the two persons before the undersigned on 12/10/2009, which was followed by another letter dated 30/10/2009, but no response from the assessee. On 11/11/2009, the assessee filed a letter, wherein he furnished new addresses of the above two parties. The Assessing Officer again issued summons under section 131, dated 12/11/2009 to above two parties, which were returned 'un-served'. Subsequently, the Assessing Officer has issued summons to the assessee under section 131 on 14/11/2009 to appear before him on 24/11/2009, in response to which, the assessee had appeared before the Assessing Officer. The Assessing Officer asked the assessee to explain his unaccounted investment in M/s. Classique Farms & Estates ....
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....ich is placed at page Nos. 21 to 48 in paper book. The ld. CIT(A) has admitted the same under Rule 46A and forwarded to the Assessing Officer for his remand report. The Assessing Officer has filed a remand report before the ld. CIT(A) on 11/03/2013. During the course of remand proceedings before the Assessing Officer, the assessee is not able to produce Mrs. K. Bhanumathi. We find that during the course of remand proceedings, the Assessing Officer has addressed a letter to Mrs. K. Bhanumathi to appear before him, however, letter was returned 'un-served' and the same was informed to the assessee to produce Mrs. K. Bhanumathi. However, the assessee has not produced Mrs. K. Bhanumathi before the Assessing Officer. Therefore, the Assessing Officer has submitted remand report to the ld. CIT(A) that due to non-availability of required information, it is no possible to verify the admissibility of the additional evidence filed by the assessee. The ld. CIT(A) has considered the same and observed that the sworn statement recorded on 12/09/2007, the assessee has not stated anything about the advance received from Mrs. K. Bhanumathi. In the affidavit dated 24/11/2007 also, he only confirmed th....
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....not clear from his statement that what is the amount received from Mrs. K. Bhanumathi and Mr. N. Ravi Kumar. It is only submitted that he has received advances collectively from both the parties. Subsequently, he only confined to Mrs. K. Bhanumathi that he received Rs. 1. 40 crores from her, but not submitted anything with reference to Mr. N. Ravi Kumar. Before the ld. CIT(A), it was submitted that an amount Rs. 1. 40 crores was received only from Mrs. K. Bhanumathi, but he filed confirmation letters from Mrs. K. Bhanumathi and Sri M. Viswa Mohan (paper book at page Nos. 26 & 27) both dated 27/01/2007. Even before the Assessing Officer, he has not made a mention that he received advance from Mrs. K. Bhanumathi and Mr. N. Ravi Kumar in respect of sale of immovable property. He has also not specified the details of the scheduled property, date of unregistered sale agreement and total consideration. From the perusal of the unregistered sale agreement, (paper book at page Nos. 21) it appears that one Sri Kuna Annaji Rao, GPA holder of the assessee entered into unregistered agreement with Mrs. K. Bhanumathi. These facts were not stated before the Assessing Officer. The assessee for the ....
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....ee on behalf of Mr. M. Viswa Mohan, who is Non-Resident and the amount drawn from NRI funds relating to her son-in-law. To this effect, the ld. CIT(A) already gave a categorical finding that from the account of Mr. M. Viswa Mohan, no withdrawals from the period mentioned by the assessee i. e. April, 2006 till May, 2007. There were not withdrawals from the whole period of 2006 and he also gave a finding that in the return of income, no reference is made in respect of loan advanced to the assessee. Therefore, confirmation letters cannot be believed. Insofar as, confirmation letter issued by M/s. M. Viswa Mohan dated 27/01/2010 (paper book at page No. 27) wherein he stated that his mother-in-law Mrs. K. Bhanumathi has advanced an amount of Rs. 1. 40 crores in respect of acquiring the scheduled property and unregistered agreement was signed by his mother-in-law on behalf him. We find that in the unregistered agreement dated 23/09/2006, there is no reference to Mr. M. Viswa Mohan. It is only entered by Mrs. K. Bhanumathi. That apart, ld. CIT(A) gave a categorical finding that there were no withdrawals from his bank account; that apart neither Mrs. K. Bhanumathi nor Mr. M. Viswa Mohan ha....