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2019 (12) TMI 671 - AT - Income TaxAssessment u/s 153A - addition in respect of the loan advanced to Smt. Naragoni Radha - HELD THAT - AO has made the addition on the ground that pro-notes as well as receipts of the amount found in the premises of the assessee by rejecting the submission of the assessee that he has not advanced any amount to Smt. Naragoni Radha. As per section 292C of the IT Act any document is found in the possession of the assessee he has to explain that it is not belonging to him. In this case the assessee denied that he has not advanced the amount but the documentary evidence by way of promissory notes and receipts from the borrower shows that the assessee has advanced the amount. That part nobody signs a promissory note without receiving the money. In view of these observations we are of the opinion that assessee has failed to discharge burden cast upon him to establish that he has not advanced amount to Smt. Naragoni Radha. No infirmity in the order of the CIT(A) in confirming the addition made by the AO and accordingly upholding the order of CIT(A) we dismiss the ground raised by the assessee on this issue. Unexplained investment - HELD THAT - We find that the assessee himself has admitted by filing an affidavit that he has advanced an amount of Rs. 5 lakhs to Shri K. Naganatham but we do not know what is the reason for denial of the same. Before the AO CIT(A) and even before us the assessee failed to explain the source for advancing the amount of Rs. 5 lakhs hence the assessee failed to discharge the burden cast upon him to prove that he has not advanced the amount. We find no infirmity in the order of the CIT(A) in confirming the addition made by the AO therefore upholding the order of CIT(A) we dismiss the ground raised by the assessee on this issue. Unexplained investment in jewellery - We are of the view that CIT(A) has reasonably held that 500 grams of gold by the wife of the assessee is reasonable and hence we confirm the decision of the CIT(A) and dismiss the grounds raised by the assessee on this issue. Unexplained investment in construction of house based on the valuation report of the DVO - AO to ascertain the investment in the house property referred the case to the Valuation Cell and the Valuation cell had estimated the cost of construction at Rs. 75.53 lakhs which was contested by the assessee who worked out the estimated construction at Rs. 66.10 lakhs - HELD THAT - CIT(A) directed the AO to verify the rate adopted by the Valuation Cell whether the same is based on CPWS rate and if so the AO should give a deduction of 15% thereon to bring at par on the state PWD rate. Further he directed that in terms of the judicial pronouncements as above including that of the jurisdiction Tribunal a 10% should be allowed for self supervision charges to arrive at the cost of construction instead of 7.5% allowed by the Valuation Cell. In other words the AO should work out the cost of construction afresh keeping in view the direction as above. We are of the view that the directions given by the CIT(A) to AO are proper and no interference is called for in the directions of the CIT(A) and accordingly the ground raised by the assessee is dismissed.
Issues Involved:
1. Addition of Rs. 45,00,000 as unexplained investment. 2. Addition of Rs. 5,00,000 as unexplained investment. 3. Addition of Rs. 78,00,000 as unexplained investment. 4. Addition of Rs. 21,65,282 as unexplained investment in jewelry. 5. Addition of Rs. 75,73,000 as unexplained investment in house construction. 6. Charging of interest under Section 234B. Detailed Analysis: Issue 1: Addition of Rs. 45,00,000 as Unexplained Investment The case involved a search and seizure operation under Section 132 of the Income Tax Act at the assessee's premises, leading to the discovery of promissory notes and cash receipts indicating a loan of Rs. 45,00,000 advanced to Smt. Naragoni Radha. The Assessing Officer (AO) added this amount as unexplained investment under Section 68 of the Act. The assessee contended that the documents were merely xerox copies and that no actual loan was advanced. However, the AO and subsequently the Commissioner of Income Tax (Appeals) [CIT(A)] rejected this defense, noting that the documents were found in the possession of the assessee, and under Section 292C of the Act, the burden of proof was on the assessee to disprove the documents' authenticity. The Tribunal upheld the CIT(A)'s decision, confirming the addition of Rs. 45,00,000. Issue 2: Addition of Rs. 5,00,000 as Unexplained Investment During the assessment proceedings, the AO noted that the assessee had filed an affidavit admitting to advancing Rs. 5,00,000 to Shri K. Nagantham without explaining the source of this amount. The AO added this amount as unexplained investment. The CIT(A) confirmed this addition, citing the assessee's failure to explain the source of funds. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had admitted to the loan but failed to provide a satisfactory explanation for its source. Issue 3: Addition of Rs. 78,00,000 as Unexplained Investment The AO found documents indicating loans totaling Rs. 155 lakhs during the search. The assessee denied some loans, admitted others, and claimed partial amounts for some. The AO added Rs. 78,00,000 as unexplained investments based on promissory notes and receipts found in the assessee's possession. The CIT(A) confirmed the addition, emphasizing that the documents were found during the search and the assessee failed to disprove their authenticity. The Tribunal upheld the CIT(A)'s decision, noting that the promissory notes and receipts were clear evidence of the loans advanced by the assessee. Issue 4: Addition of Rs. 21,65,282 as Unexplained Investment in Jewelry During the search, gold jewelry weighing 1,482 grams and silver articles weighing 14.88 kgs were found, valued at Rs. 18,08,162 and Rs. 3,57,120, respectively. The assessee claimed that the jewelry belonged to his family members and some to his brothers. The AO added Rs. 21,65,282 as unexplained investment due to lack of evidence. The CIT(A) allowed a deduction for 500 grams of gold, considering it reasonable for the assessee's wife to possess this amount. The Tribunal upheld the CIT(A)'s decision, confirming the addition of the remaining amount as unexplained investment. Issue 5: Addition of Rs. 75,73,000 as Unexplained Investment in House Construction The AO referred the case to the Valuation Cell, which estimated the cost of construction at Rs. 75.53 lakhs, contested by the assessee who estimated it at Rs. 66.10 lakhs. The AO adopted the Valuation Officer's estimate. The CIT(A) directed the AO to verify the rates and allow deductions for self-supervision charges and CPWD rates. The Tribunal upheld the CIT(A)'s directions, confirming the addition based on the revised calculations. Issue 6: Charging of Interest under Section 234B The interest under Section 234B is consequential in nature. The Tribunal directed the AO to adjust the interest accordingly based on the final assessed income. Conclusion: The Tribunal dismissed all the appeals filed by the assessee, upholding the additions made by the AO and confirmed by the CIT(A) on all issues. The decisions were based on the evidence found during the search and the assessee's failure to provide satisfactory explanations for the unexplained investments.
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