TaxTMI 
TaxTMI 
2021 (1) TMI 359
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....the assessment was completed u/s 144 rws 147 of the Act on a total income of Rs. 1,04,57,680/-. In the assessment order framed u/s 144 r.w.s.147 of the Act, the AO made the following additions: (i) Income from house property as admitted In the computation of total income filed During the assessment proceedings Rs. 7,57,680 (ii) Unexplained investment made in purchase of land at Shaikpet assessed to tax u/s 69 Rs. 97,00,000 Out of the above additions, the dispute is with regard to the unexplained investment made in purchase of land at Shaikpet, which is assessed u/s 69 of the Act. 4.1 During the assessment proceedings, the AO found that the assessee has advanced the amount of Rs. 97,00,000/- for purchase of land admeasuring 1800 sq.yds. in Shaikpet and made the payments as under: i) Paid through cash on 21/07/2008 Rs. 45,00,000 ii) Paid through cas on 05/08/2008 Rs. 45,00,000 iii) Paid through Ch. No. 430219, dt. 21/07/08 of ABN AMRO Bank, Banjara Hills. Rs. 2,00,000 iv) Paid through Ch.No. 430221, dt. 05/08/2008 of ABN AMRO Bank, Banjara Hills. Rs. 5,00,000 Total Rs. 97,00,000 The assessee has explained the source for purchase of the land by way of ca....
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....ana Rao in support of the advance. However, since the assessee failed to establish creditworthiness of the said crditors, the AO did not believe the source of Rs. 15.00 lakhs advance received from Shri G. Balakishan Rao and G. Narayana Rao.With regard to Sri. E. Madan Mohan Rao also since, the assessee failed to file confirmation from Sri E. Madan Mohan Rao, the AO rejected the claim of the assessee with regard to sources. Accordingly the AO disbelieved the source of entire investment of Rs. 97,00,000/- towards purchase of land and made the addition u/s 69 of the Act. 5. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and received part relief from the ld. CIT(A). The ld. CIT(A) worked out the cash balance as on 01/04/2007 at Rs. 11,36,502/- as under: Opening cash balance on 01/04/2001 Rs. Nil Add: Receipt from Aparna Construction Rs. 4,00,000 Advance from Husband Rs. Nil Loan from HSBC Rs. 39,50,000 Total Rs. 43,00,000 Less: Outflow during FYs 2002-03 to 2005-06 Rs. 31,63,498 Cash balance as on 01/04/2007 Rs. 11,36,502 With regard to Rs. 20 lakhs received from Shri G. Balakishan Rao, G. Narayana Rao and Sri. E. Madan Mohan Rao wa....
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....they have filed confirmation letters and the sources were explained by the respective creditors before the AO. He, therefore, submitted that there is no reason to suspect the genuineness of the receipts from Shri G. Balakishan Rao, and G. Narayana Rao, who have deposed the statement u/s 131 of the Act. The ld. AR of the assessee explained that the source in the hands of the assessee stands explained and if, the genuineness of the source of source is suspected, the same is required to be taxed in the hands of the respective creditors, but, not in the hands of the assessee. The ld. AR further argued that the Ld.CIT(A) considered the cash flow statement and accepted the loan from HSBC, but, rejected the opening cash as on 01.04.2001 and the remaining entries which is incorrect and contradictory to her own observation. Since the assessee has filed the cash flow statement, the CIT(A) ought to have taken entire cash flow statement instead of considering the statement in piecemeal. He submitted that the Ld.CIT(A) allowed the credit of Rs. 4 lakhs receipt from Aparna construction and Rs. 39,50,000/- from HSBC as the source and reduced the cash out flow for the entire period of 2002-03 to 2....
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....ee's case: 1. CIVT Vs. Dinesh Jain, HUF, 352 ITR 629 (Del.) 2. CIT Vs. Kulwinder Singh [2019] 415 ITR 49 (P&H) 7. The ld. DR, on the other hand, vehemently opposed the contentions of the ld. AR and argued that there is no basis for cash flow statement submitted by the assessee. He argued that assessee has shown opening cash balance of Rs. 75,70,268/-, which was rejected by the ld. CIT(A) in her reasoned order. He submitted that the CIT(A) has rejected the source of Rs. 20,00,000/- advance received by the assessee during the year and the sums received from her husband amounting to Rs. 25 lakhs and, therefore, he argued that the opening balance claimed in the cash flow statement deserves to be rejected for want of evidence. Ld. DR further submitted that the AO did not have any occasion to verify the cash flow statement filed by the assessee for AY 2008-09, since, the assessment was taken up for scrutiny for limited purpose. In the limited scrutiny, AO required to examine the issue for which the case was selected for scrutiny, thus, he argued that the CIT(A) has rightly rejected the contention of the assessee that the AO has not examined the correctness of the cash flow statement....
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.... cash flow statement was furnished to the AO, if there is any doubt or suspicion regarding the entries in the cash flow statement, the AO is having mandatory obligation to verify the correctness of entries converting the case in to full scrutiny after obtaining the approval from competent authorities. If there was an understatement of income relating to the A.Y.2008-09, the AO has to examine and make addition in the A.Y.2008-09 itself but not in the subsequent assessment years. Having not verified the entries and accepted the same, the AO is not permitted to agitate and revisit the same issues under the pretext of non verification. There must be an ending for litigation and it should not be prolonged after completing the scrutiny assessment without sufficient reasons. AO in his remand report, furnished at page 140 of the paper book, clearly spelt out that the assessee has filed cash flow statement for the FY 2007-08 and, thus, the contention of the CIT(A) with regard to non-verification of the cash flow statement for the AY 2008-09 by the AO does not hold waters. Even though, the case was taken up for limited scrutiny, during the assessment proceedings, if any entries are suspiciou....
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....he amount of Rs. 5.00 lakhs received from Shri E. Madan Mohan Rao, as seen from the paper book page No.73 and 74 the creditor has issued the legal notice for recovery of the loan with the dates of amounts lent. Since the legal notice is available the AO should have caused necessary enquiries instead of pressing the assessee to produce the creditor. Having not caused the enquiries and did not bring any material to show that the advance received from E.Madan Mohan Rao was bogus, the AO is not permitted to make the addition in the hands of the assessee. Thus we direct the AO to accept the credit from E.Madan Mohan Rao. 8.3. In respect of Rs. 25 lakhs received from her husband, the same was reflected in the balance sheet of her husband and he is assessed to tax. Her husband Shri Ram Gopal Rao also filed confirmation having given the loans to the assessee, therefore, there is no reason to suspect the source. Even if it is to be suspected, the same is required to be examined in the AY 2005-06, but, not in the impugned assessment year. 8.4 From the cash flow statement, we find that the payment of Rs. 97 lakhs on account of advance for land was clearly explained by the assessee and there....
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....payment. Therefore, the CIT(A) confirmed the addition made by the AO. Hence, the assessee is in appeal before us. 13. During the appeal hearing, ld. AR submitted that the amount in question was received form a tenant for letting out the property located in MLA Colony. He further submitted that the receipt of the amount of advance was supported by the lease deed dated 28/11/2009. The assessee had let out the house located at MLA Colony, Road No. 12, Banjara Hills to Shri M. Venkata Srinivasa Prasad and as per the lease deed, a deposit of Rs. 20 lakhs was received. However, the details of deposit were not mentioned with date and mode of payment etc. The ld. AR argued that, in this regard, there was a dispute going on in the Civil Court, as per the plaintiff copy in OS No. 308 of 2007, annexed as page Nos. 5 to 7 of paper book, assessee had acknowledged the adjustment of advance of Rs. 20 lakhs towards monthly rents paid till the end of the December, 2013. In the counter filed by the respondent Shri M. Venkata Srinivas Prasad, he has not disputed the adjustment of rent. Thus the Ld. AR of the Assessee submitted that the assessee had received the sum of Rs. 20 lakhs as advance, which ....