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2015 (7) TMI 682 - ITAT HYDERABAD

2015 (7) TMI 682 - ITAT HYDERABAD - TMI - Concealed income of assessee - what should be the sale consideration deemed to have been received by assessee for the purpose of computation of capital gain? - Held that:- there is no dispute to the fact that while assessee in registered sale deed has shown sale consideration at ₹ 21,65,000, registering authority has valued the property for stamp duty purpose at ₹ 24,07,000. Therefore, the sale consideration as per section 50C, which assessee .....

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me of assessee. We are at loss to understand under what provision of law such amount can be treated as income of assessee when the only provision under which the SRO value can be considered as deemed sale consideration received is section 50C of the Act. Therefore, once, ld. CIT(A) deleted the addition made by AO u/s 50C of the Act, under no other provision such amount can be assessed. Accordingly, we hold that the amount of ₹ 2,42,000 cannot be treated as concealed income of assessee. - D .....

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his children and other household activities, AO has no evidence to back his quantification of monthly expenditure of ₹ 70,000. Considering the expenditure incurred by assessee on the education of his children as well as the fact that assessee is staying in his own house, expenditure shown by assessee towards household expenditure, in our view, is just and reasonable. On the other hand, monthly expenditure of ₹ 70,000 adopted by AO, in our view, is high and excessive and has no nexus .....

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y alleging that bills and vouchers to that extent was not produced by assessee. In our view, when AO has accepted almost 99.9% of the expenditure claimed by assessee by treating it as genuine, there is hardly any scope to believe that assessee would have inflated the expenditure to the extent of ₹ 26,700 only. Therefore, assessee’s explanation that considering the nature of expenditure and volume of transaction some of the vouchers might have been lost is believable. Accordingly, we delete .....

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i Brothers and also the confirmation letter submitted by M/s MBG Commodities Pvt. Ltd. appears to be credible. As far as the balance cash of ₹ 3,83,250 is concerned, on perusal of the cash book extract of Shiva Shakti Transport, it is seen that the proprietary concern is also having sufficient cash balance in its books. Therefore, assessee’s explanation cannot be brushed aside lightly. Moreover, as could be seen from the order of ld. CIT(A) in the concluding part of her finding she has obs .....

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essee that cash found belong to M/s Maheswari Brothers, whereas, the claim of assessee being backed by evidence, we are of the view that addition of ₹ 43,83,250 representing cash found at the time of search is not justified. Accordingly, we delete the same.- Decided in favour of assessee. - ITA Nos. 1639, 1640 & 1641/Hyd/2014 - Dated:- 15-7-2015 - Shri B. Ramakotaiah and Shri Saktijit Dey, JJ. For the Petitioner : Shri K.A. Sai Prasad For the Respondent : Shri Rajat Mitra ORDER PER SAKTIJI .....

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has raised six grounds. Ground Nos. 1 & 6 being general in nature, do not require any specific adjudication. Ground Nos. 2 & 3 do not pertain to any specification addition sustained by ld. CIT(A), Thus, these grounds are of mere academic interest, hence, are not required to be adjudicated upon. 3. Therefore, the only issue ( as raised in Ground Nos. 4 & 5) which survives for consideration is in respect of the direction of ld. CIT(A) to treat the amount of ₹ 2,42,000 as conceale .....

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e calling for returns of income. Though, originally assessee has filed return of income for the impugned AY on 11/09/09 admitting income of ₹ 7,62,839, however, in response to the notice u/s 153A, assessee filed return of income on 14/08/12 declaring income of ₹ 30,72,169 including additional income offered by assessee as a result of search. During the assessment proceeding, AO noticed that assessee has sold land at Tirupathi through a registered sale deed executed on 25/07/08 for a .....

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hough, assessee objected for adopting SRO value for computation of capital gain, but, AO rejecting the objections of assessee, treated the difference between the value determined by SRO and the value as per the sale deed amounting to ₹ 2,42,000 as extra sale consideration received by assessee and assessed it to capital gain. Accordingly, he made addition of ₹ 2,42,000. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A). 5. In course of hearing of appeal, it .....

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However, she deleted the addition by observing that as addition is not based on any incriminating material, no such addition can be made in assessment made u/s 153A. Having held so, she further directed AO to treat the amount of ₹ 242,000 as concealed income of assessee and bring to tax as per the provisions of incometax Act. 6. Challenging the aforesaid direction of ld. CIT(A), ld. AR submitted before us, the direction is not only irrelevant but is totally against statutory provisions. Ld .....

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e is no dispute to the fact that while assessee in registered sale deed has shown sale consideration at ₹ 21,65,000, registering authority has valued the property for stamp duty purpose at ₹ 24,07,000. Therefore, the sale consideration as per section 50C, which assessee could be deemed to have received is the value adopted by SRO. In fact, not only AO adopted the said value for computing capital gain, but, ld. CIT(A) has also endorsed the view of AO. However, in spite of having held .....

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received is section 50C of the Act. Therefore, once, ld. CIT(A) deleted the addition made by AO u/s 50C of the Act, under no other provision such amount can be assessed. Accordingly, we hold that the amount of ₹ 2,42,000 cannot be treated as concealed income of assessee. The grounds raised are, therefore, allowed. 9. In the result, assessee s appeal is allowed. ITA No. 1640/Hyd/2015 for AY 2010-11 10. In this appeal, assessee has raised in total six grounds. Ground Nos. 1 & 6 being ge .....

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that the amount shown by assessee towards household expenses are inadequate considering the social status of assessee, size of his family, expenses on education of children as well as lifestyle. He, therefore, called upon assessee to submit a detailed note with necessary evidence to substantiate the drawings made by him for household expenses. Though, assessee furnished details explaining that the drawings made towards household expenses is sufficient to meet the expenditure but the AO was not c .....

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e social status and other relevant factors, the average monthly household expenditure of assessee would be ₹ 70,000 per month. Accordingly, he estimated the household expenses of assessee for the year under consideration at ₹ 8,40,000. Resultant difference of ₹ 3,35,153 was added to the income of assessee. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A). Ld. CIT(A) also confirmed the addition by agreeing with the observations of AO. 13. Ld. AR subm .....

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education of his son for the impugned AY was ₹ 12,000. Therefore, in the aforesaid facts and circumstances, it cannot be said that household expenditure of ₹ 42,070 per month shown by assessee is either insufficient nor inadequate. Ld. AR submitted, there is no material before AO to come to a conclusion that per month household expenditure of assessee is ₹ 70,000. He, therefore, submitted that addition made on this account should be deleted. 14. Ld. DR relied upon the observat .....

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e assessee has brought material on record to demonstrate the actual expenditure incurred by assessee towards education of his children and other household activities, AO has no evidence to back his quantification of monthly expenditure of ₹ 70,000. Considering the expenditure incurred by assessee on the education of his children as well as the fact that assessee is staying in his own house, expenditure shown by assessee towards household expenditure, in our view, is just and reasonable. On .....

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ng assessee s claim of expenditure in respect of his proprietary business observed that assessee was not able to produce proper bills & vouchers for expenditure on freight. He, therefore, called upon assessee to show cause why the expenditure incurred should not be disallowed. In response to the query raised by AO, it was submitted by assessee that he generally maintains proper freight bills, however, considering the volume of transactions some bills tend to be misplaced and or lost. Therefo .....

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ing the year has claimed the total expenditure of ₹ 1,58,41,375 on account of freight. Whereas, AO has disallowed only negligible amount of ₹ 26,700 out of the expenditure claimed by alleging that bills and vouchers to that extent was not produced by assessee. In our view, when AO has accepted almost 99.9% of the expenditure claimed by assessee by treating it as genuine, there is hardly any scope to believe that assessee would have inflated the expenditure to the extent of ₹ 26 .....

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an amount of ₹ 3,23,500 on account of low withdrawals towards household expenditure. This ground is similar to ground Nos. 2 & 3 of AY 2010- 11 in ITA No. 1640/Hyd/2011. Therefore, following the conclusions drawn in that year vide para 15(supra), we delete the addition of ₹ 3,23,500 made on this count. 22. In ground No. 4 assessee has challenged the disallowance of an amount of ₹ 4,78,500 out of freight expenditure. This ground is similar to the ground No. 4 raised in AY 20 .....

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regard to addition of an amount of ₹ 43,80,250 on account of cash found during the course of search and seizure operation. 24. Briefly the facts relating to this issue are, in course of search and seizure operation at the residential premises of assessee, cash amounting to ₹ 44,83,250 was found. As assessee was not present at his residence at the time of search, assessee s wife was called upon to explain the source of cash found. However, as stated in the assessment order, in the sta .....

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essee submitted a letter of confirmation from M/s MBG Commodities Pvt. Ltd. wherein it was stated that out of the cash found at the residence of assessee ₹ 40 lakhs belong to the firm M/s MB Brothers. It was further stated, as per the normal practice the firm keep excess cash on hand at the residential premises of the Director. To substantiate its claim, ledger extract of the company from 01/04/2010 to 31/03/2011 was also submitted before AO. AO on perusing the ledger extract found that op .....

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far as the balance amount of ₹ 3,83,250 is concerned, assessee claimed that it was out of his own proprietary concern and reflected in his books. AO, however, rejecting the explanation of assessee treated the entire amount of cash seized of ₹ 43,83,500 as income of assessee and added it to the year under consideration. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A). Ld. CIT(A) also confirmed the addition by observing as under: 7.3 The assessment order .....

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ellant claimed that he did not have any knowledge of the ledger account maintained by Maheswari Group in Sri Ganesh Talley, even though the appellant is one of the directors of the group companies. He claimed that he was not aware of the ledger account maintained in his name by the group companies. It is also noted that in the ledger account, the Maheswarl Brothers group has claimed to have paid ₹ 6o lakhs during the Financial year 2009-10 and ₹ 20 lakhs during the Financial year 201 .....

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Santosh Kumar Agarwal in lieu of remuneration from Maheswari Brothers Group. The appellant's contention is that out of cash found from his residence of Rs .43,83,250, an amount of ₹ 40 lakhs belongs to Maheswari Brothers group and he offered the balance amount of ₹ 3,83,250 as additional income. If it is a regular practice as per the confirmation, there were only 2 entries, one, the opening balance as on 1-4-2010 and the other after the cash found at Santosh Kumar Agarwal's .....

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o accept the contention that the company has kept the monies with him for safe custody. As claimed by the appellant, if he had got cash balance in Maheswari Brothers and Shiv Shakti Transport company of ₹ 54,26,503 and Rs..28,81,113 respectively, it is not understood why he offered the cash of ₹ 3,83,2S0j- as his undisclosed income and did not claim that it was this cash available with him. This also goes to prove that the contention of the appellant about RsAO lakhs is an afterthoug .....

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see backs evidence which is not trust worthy and even if the department does not lead any evidence on such an issue. Though he filed a ledger copy which is only a self-serving document, he has not asked for confrontation or confirmation with Sri Bijay Kumar Mandhani to support his contention. The Managing Director of the Group companies has categorically stated that the appellant has been paid his remuneration in cash, the availability of cash at the residence of the appellant at the time of sea .....

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Maheswari Brothers as assessee has taken this stand consistently from the time of search. Ld. AR referring to the statement of assessee recorded in course of post search proceeding submitted that assessee has categorically stated that amount of ₹ 40 lakh belong to M/s Maheswari Brothers and the rest of cash amounting to ₹ 3,83,250 belong to assessee. Ld. AR drawing our attention to the extract from cash book of M/s Maheswari Brothers submitted, as on 07/09/10 there is a closing balan .....

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safe custody and similarly, no entry is made when assessee returns the cash back to the firm on the next day. It was submitted, when cash was seized on 08/09/10 assessee could not return the cash to the firm on 09/09/10, therefore the firm has to record entry in its books debiting the amount in the name of assessee. Ld. AR submitted, even assessee is having enough cash balance to the extent of ₹ 28 lakh in the books of his proprietary concern to explain the rest of the amount of ₹ 3 .....

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and perused the orders of revenue authorities as well as other materials on record. As could be seen, during the post search proceeding in response to summons issued u/s 131(1), assessee appeared before the departmental authorities and a statement was recorded from him wherein, with reference to a specific question, assessee stated that out of cash seized of ₹ 43,83,250 an amount of ₹ 40 lakh belongs to Maheswari Brothers group and the balance amount of ₹ 3,83,250 is out of ass .....

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