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2014 (10) TMI 320 - AT - Income TaxValidity of proceedings initiated u/s 153C – Addition of STCG – Held that:- The seized material on the basis of which the AO has initiated the proceedings u/s 153C - A reference to the seized material indicates that the same is an account relating to Sri S. Venkateswara Rao in which certain payments have been recorded – the seized material was not seized from assessee but from Sri D. Nagarjuna Rao in whose case search and seizure operation was conducted u/s. 132 - seized material has neither any reference to the assessee, even remotely, nor to the property sold by her - the seized material cannot be said to be belonging to assessee - Hence the pre-condition for initiating proceedings u/s 153C is not satisfied – following the decision in M/s Shouri Constructions, T. Jaipal Reddy Versus Asst. Commissioner of Income-tax [2013 (9) TMI 486 - ITAT HYDERABAD] - as the seized material was neither seized from assessee nor has any reference to her or her property, it cannot be said to be belonging to assessee - the proceedings initiated u/s. 153C is not valid - the assessment order passed in is also invalid - the AO without allowing an opportunity to assessee to cross examine Sri S. Venkateswara Rao was not correct in making the addition by relying upon the statement of Sri S. Venkateswara Rao - The AO having not brought any other corroborative evidence on record to establish that assessee had actually received the sale consideration, the computation of short term capital gains made by him cannot be sustained. Unexplained investment in purchase of property – Held that:- It is not justified in considering the fact that assessee has explained the source of such investment by producing necessary evidence - assessee at the time of assessment proceedings as well as before the CIT(A) had stated that the amount of ₹ 3 lakhs was received from her uncle who is an agriculturist and she has also filed a confirmation in support of such claim - it is not understood what more supporting evidence assessee could have produced in support of her claim - When assessee has explained her source by producing evidence in the form of confirmation it is duty of the Departmental authorities to make enquiry and ascertain whether assessee's claim is correct or not - assessee's claim cannot be rejected merely on doubts and suspicion - the addition of ₹ 3 lakhs sustained by the CIT(A) is to be deleted – Decided in favour of assessee.
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