TaxTMI 
TaxTMI 
2022 (4) TMI 171
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....ax (Appeals) 18, Chennai dated 20.11.2017 in I.T.A.No.479/16-17 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in enhancing the assessment in recomputing the taxable total income in para 18 of the impugned order without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the recomputation of the taxable total income which resulted in enhancement was wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) failed to appreciate that the order of assessment under consideration passed u/s 153C read with section 143(3) of the Act was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law 5. The CIT (Appeals) failed to appreciate that the reasons given in the enhancement notice, reproduced in para 10 of the impugned order were not correct as well as recorded perverse factual findings/observations thereby vitiating the recomputation of taxable total income in para 18 of the impugned order. 6. The CIT (Appeals) failed to appreciate that having n....
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....ance of Rs. 1 crore for purchase of very same property and the said sale agreement was cancelled on 07.02.2014, because Mr. Ashok Kumar could not arrange funds. Since, Mr. Ashok Kumar is relative to the assessee, he made over advance paid to seller of the property to the assessee and agreed to take back advance subsequently. The recital of Rs. 1 crore advance mentioned in sale agreement between the assessee and Mr. K.Thangavelu was in fact, Rs. 1crores advance paid by Mr. Ashok Kumar and same has been returned to Mr. Ashok Kumar, out of sale proceeds of property owned by Mr. E.Anandan, husband of the assessee at Chennai. 4. During the course of assessment proceedings, the Assessing Officer however, was not convinced with explanation furnished by the assessee and according to Assessing Officer, on perusal of confirmation letter given by Mr. Ashok Kumar, it is noticed that said advance of Rs. 1 crore was paid on 07.02.2014 as per registered sale deed as well as agreement of sale. If it is a case of Mr. Ashok Kumar make over his advance paid by him to Mr. K.Thangavelu to the assessee, same should have been reflected as a creditor in the balance sheet of Mrs. A.Latha. Further, conte....
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....e has made payment of Rs. 1,42,50,000/-, but, the Assessing Officer has not considered above amount for addition. Therefore, after analyzing various documents found during the course of search, including agreement between the assessee and Mr. K.Thangavelu has issued enhancement notice to the assessee and proposed to make addition of Rs. 1,83,50,000/- towards unexplained investments in purchase of property. According to the learned CIT(A), evidences filed by the assessee, including so called agreement between M/s. Green Home Landscape Pvt.Ltd with Mr. K Thangavelu dated 22.06.2012 and subsequent agreement between Mr. Ashok Kumar with Mr. K.Thangavelu are make belief stories. Therefore, the learned CIT(A) opined that the assessee had entered into agreement for purchase of property and made various payments to Mr. K.Thangavelu and thus, after considering necessary submissions of the assessee has enhanced assessment to the extent of Rs. 1,83,50,000/- being various payments made by the assessee for purchase of property as unexplained money u/s.69A of the Income Tax Act, 1961. The learned CIT(A), in the process, has deleted additions made by the Assessing Officer towards advance paid by ....
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....dor Shri K.Thangave!u has authenticated the same by his signature. In addition, signature of a witness (Shri.D.Karthik) has also been affixed. These entries are made on the reverse of the agreement entered between M/s Green Home Landscape Pvt.Ltd., and Shri Thangavelu. 17.5. If the agreement between Shri Ashok Kumar and Shri K.Thangavelu was really genuine and existing, then Shri Anandan would not have made payments during the period when this agreement was live. 17.6. Thus, it can be concluded that, Shri Ashok Kumar was only a benami and his name was unnecessarily dragged into this transaction. An inference can easily be drawn that, the money passed on from the Appellant to Shri K.Thangavetu is still lying with Shri K.Thangavelu till Smt.Latha enters into the agreement with Shri K.Thangavelu. This itself inexplicably proves that, there was no real transaction between Shri Ashok Kumar and Shri K.Thangavelu. Had there been such a transaction, this document should find a place only in the premises of Shri Ashok Kumar and not that of the appellant, as it happened in reality. 17.7. As per the observation made by the AO in the Asst.Order, regarding the additio....
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....ver to the assessee. He further submitted that the learned CIT(A) without appreciating facts has simply enhanced the assessment only on the basis of some jottings found in loose papers. 8. The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that in fact, there is no enhancement from the learned CIT(A), because if you see issue in total, whole issue is on account of unexplained investments in purchase of property. As per seized documents found during the course of search, the assessee had purchased property from Mr. K. Thangavelu for a consideration of Rs. 6.67crores, including stamp duty and registration. The assessee could explain source to the extent of Rs. 2.5 crores only, out of loan borrowed from bank. The balance amount has been added as unexplained investment, because the assessee could not explain source for investments. Although, the Assessing Officer had considered balance amount of Rs. 4,17,00,000/- as unexplained investments, but made addition of Rs. 1 crore for the assessment year 2014-15 on the basis of agreement between the assessee and Mr. K. Thangavelu and balance amount of Rs. 3,17,00,000/- has been added for the assessment year ....
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....ngavelu before the assessee had entered into agreement with Mr. K.Thangavelu for purchase of very same property. The sole reason for learned CIT(A) to disbelieve claim of the assessee was relationship between the assessee and Shri Ashok Kumar. According to learned CIT(A), Shri Ashok Kumar being related to the assessee, he had created document to make believe story, but in fact, Mr. E.Anandan had entered into agreement with Mr. K.Thangavelu for purchase of property in the name of his wife Smt. A.Latha, present assessee before us. The learned CIT(A) has given various reasons to disregard arguments advanced by the learned A.R for the assessee and according to him, when the agreement between Shri Ashok Kumar and Mr. K. Thangavelu was subsists, there is no reason for the assessee to make payment to Mr. K. Thangavelu. The learned CIT(A) has considered various facts and has also assumed certain facts and inferred that claim of the assessee that Shri Ashok Kumar had entered into agreement is a make believe story and therefore, rejected arguments and went on to discuss the issue in light of various evidences and concluded that the assessee has purchased property from Mr. K.Thangavelu for a ....
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....er said advance to the assessee. Therefore, we are of the considered view that the learned CIT(A) has erred in making enhancement of assessment only on the basis of certain entries in loose sheets without any further evidence to prove that said transactions are in fact taken place. Hence, we are of the considered view that the learned CIT(A) has erred in making enhancement of assessment on the basis of jottings recorded in loose sheets found during the course of search and assumed that the assessee has purchased property for a consideration of Rs. 6,65,00,000/-, even though sale agreement between the assessee and Mr. K.Thangavelu and subsequent registered sale deed clearly proves fact that property has been purchased for consideration of Rs. 4,10,00,000/-. Thus, we reject reasons given by the learned CIT(A) to enhance the assessment on the basis of incriminating materials found during the course of search. Further, in our considered view, explanation of the assessee that advance mentioned in sale agreement between the assessee and Mr. K.Thangavelu was paid by Mr.Ashok Kumar and make over to the assessee is proved beyond doubt with necessary evidences, including confirmation letter ....
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....No.479/2016-17 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in imposing maximum penalty u/s 271(1)(c) of the Act at 300% of the tax sought to be evaded for the reasons stated from para 8.6 of the impugned order without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the initiation of the penalty proceedings u/s 271(1)(c) of the Act and passing the consequential penalty order at the appellate stage after enhancing the assessment in the quantum appeal was completely erroneous & bad in law and ought to have appreciated that the order imposing penalty was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 4. The CIT (Appeals) failed to appreciate that the conclusions reached based on the sworn statements were not correct and further ought to have appreciated that the presumption of payment of Rs. 1,83,50,000/- from undisclosed sources of the Appellant to Shri K.Thangavelu for purchase of property at Vadavalli was wrong, erroneous, unjustified, incorrect and not sustainable in law.....
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....by us in preceding paragraph in ITA No.3/Chny/2018, where we have clearly held that additions made by the Assessing Officer and sustained by the learned CIT(A) on the basis of jottings recorded in loose sheets cannot be sustained, when the assessee has clearly established purchase of property for Rs. 4,10,00,000/- and has also explained source. Therefore, additions made by the Assessing Officer and sustained by the learned CIT(A) on the basis of loose sheets cannot be sustained. 17. Coming back to the investments made in property and source for such investments. The assessee has purchased property for a consideration of Rs. 4,47,00,000/-, including registration expenses. The assessee has explained source for investments in purchase of property, as per which the assessee has taken loan from bank amounting to Rs. 2,50,00,000/- Further, the assessee had taken loan from Mr. Anthonysamy amounting to Rs. 60,00,000/-. The assessee also availed jewellery loan from Karur Vysaya Bank amounting to Rs. 7,54,000/-. The assessee has also availed jewellery loan from Axis Bank for Rs. 17,00,000/-. The assessee had taken loan from Mr. E.Anandan out of jewellery loan from Karur Vysaya Bank amount....
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....nt made to Mr. K. Thangavelu for purchase of property. Therefore, we are of the considered view that the learned CIT(A) has erred in sustaining additions made by the Assessing Officer for unexplained investments towards purchase of property. 20. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that the Assessing Officer as well as the learned CIT(A) were completely erred in making additions towards unexplained investments in property disregarding various evidences filed by the assessee to prove source for said investments. Hence, we reverse findings of the learned CIT(A) and direct the Assessing Officer to delete additions made u/s.69 of Income Tax Act, 1961, amounting to Rs. 2,33,50,000/- for the assessment year 2015-16. 21. The next issue that came up for our consideration from ground no.9 & 10 of assessee appeal is addition of Rs. 39,51,560/- towards unexplained cash credits in the bank account of the assessee on various dates. The Assessing Officer has made addition of Rs. 39,51,560/- being cash deposits found in bank account on various dates. It was explanation of the assessee that these cash deposits were paym....