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2016 (3) TMI 451 - ITAT LUCKNOW

2016 (3) TMI 451 - ITAT LUCKNOW - TMI - Applicability of provisions of section 56(1)(vii)(b) - income from other sources - market value of the property for stamp duty purpose is higher than the consideration paid by the assessee - undisclosed investment - Held that:- Property at Bhilawan, Lucknow has been shown at ₹ 3 lac + stamp duty ₹ 1,74,500/- and legal fees ₹ 10,000/-, total ₹ 4,84,500/- and we do not know from where the CIT(A) has noted the actual sale consideration .....

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It may be that market value of the property for stamp duty purpose is higher than the consideration paid by the assessee but section 50C is not applicable in respect of acquisition of property and amendment in section 56(1) has been made by the Finance Act, 2015 with effect from 01/04/2014 as per which, if any immovable property is purchased for a consideration which is less than the stamp duty value of the property by an amount exceeding ₹ 50,000/-, addition should be made as income in r .....

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the eyes of law unless evidence is brought on record to show that extra price was paid by the assessee to acquire the property in question. In the present case, no such evidence has been brought on record by the A.O. to show that extra price was paid by the assessee to acquire the property in question. Hence, we delete this addition. - Decided in favour of assessee

Disallowance of agricultural income - treating the same to be from undisclosed source - Held that:- an amount of ₹ .....

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cs should be considered as agricultural income on the same basis of ₹ 20,000/- per Bigha per anumn. In this manner, total agricultural income of ₹ 14.00 lacs out of the claim of ₹ 35.25 Lacs deserves to be accepted. - Decided partly in favour of assessee

Addition on unsecured loan from Shri C. P. Goel - Held that:- In remand proceedings, summon u/s 131 issued by the A.O. was served on Shri C. P. Goel and reply was filed by him directly to the A.O. in which he has con .....

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credit worthiness for advancing loan of ₹ 39.50 Lacs to the assessee also deserves to be accepted. Regarding non providing of detail of Cheque Nos. etc., it is worth noting that it is stated by Shri C.P. Goel in his letter dated 18.09.2014 that he is suffering from Glaucoma and Hernia and was advised complete bed rest. Medical certificate is also enclosed with this letter and therefore only because details of Cheque Nos. etc. could not be provided by him because of his bad health position, .....

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rom HDFC Bank and ₹ 96,954/- from Standard Chartered Bank. The relevant bank statements are available in paper book to which our attention was drawn and therefore, these three credit amounts has to be accepted as explained. Regarding the balance amount of ₹ 2.10 lac, it is noted by CIT(A) that this amount was stated to be not traceable. Hence, we confirm this amount of ₹ 2.10 lac and delete the balance amount of ₹ 3,20,715/-.- Decided partly in favour of assessee - ITA .....

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roceedings u/s 143(3)/147 of the Act. The third appeal is filed by the Revenue, which is arising out of the proceedings u/s 143(3)/147 of the Act. All these three appeals are arising out of a common order of CIT(A)-I, Lucknow dated 02/03/2015 and all these three appeals were heard together and are being disposed of by this common order for the sake of convenience. 3. First, we take up the appeal of the assessee arising out of the assessment proceedings u/s 143(3) i.e. I.T.A. No.382/Lkw/2015. Gro .....

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wholly on notions, conjectures and surmises. II. On the facts and in the peculiar circumstances of the present case the Ld. CIT (A)'s was not at all justified in conforming the addition of ₹ 81,29,522/- without bringing any material on record or demonstrating as to how or on what basis the same have been treated to be not explained and further in holding that the opening capital is not explained and thus the addition so confirmed on irrelevant considerations is bad-in-law and void-ab- .....

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assets is available in the balance sheet itself, making addition of 20% of assets on ad hoc basis is not justified. 5. Learned D. R. of the Revenue supported the orders of the authorities below. 6. We have considered the rival submissions. We find that in Para No. 5 of the assessment order, the Assessing Officer says that the assessee has shown investment under various heads, such as land and building ₹ 294.65 lac, fixed assets of ₹ 13,85,948/- and current assets and loans & adva .....

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, which he failed to furnish. After making this observation, the Assessing Officer made addition of 20% of total investment and in this manner, he made addition of ₹ 81,29,500/-. In the impugned order, it is stated by CIT(A) that the assessee is purchasing the properties at fraction of market value and in some cases, by making payment of token advance. He has noted down some instances on page No. 23 of his order, as per which a property at Hydergarh Barabanki was purchased as per deed of a .....

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#8377; 33 lac and the amount paid is ₹ 21,000/-. These two properties were purchased in financial year 2005-06 relevant to assessment year 2006-07 and therefore, in respect of these two properties, no addition can be made in the present year, being assessment year 2007-08. The third property at Bhilawan, Lucknow is said to be acquired on 17/04/2006 and stamp duty for this property is stated to be ₹ 1,74,500/- and the market value of this property for stamp duty purposes is stated to .....

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- and we do not know from where the CIT(A) has noted the actual sale consideration of ₹ 43,55,200/- in his chart on page No. 23 of his order. Regarding a property at Habibullah Estate, Hazaratganj, Lucknow said to have been acquired by the assessee on 19/10/2006, the value appearing in the above chart is ₹ 20.50 lac + stamp duty ₹ 12,68,500/- + legal fees ₹ 10,000/- and cost of construction ₹ 1 lac, total ₹ 44,28,500/- but CIT(A) has stated in the chart on pag .....

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ty by an amount exceeding ₹ 50,000/-, addition should be made as income in respect of stamp duty value of such property in excess of the stated consideration. Hence, the provisions of section 56(1)(vii)(b) are not applicable in the present year because the same are applicable from assessment year 2014-15. In the similar manner, for the remaining properties also, the basis of CIT(A) is that market value for stamp duty purposes is higher than the value of consideration paid by the assessee a .....

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connected, which read as under: III. The Ld. CIT (A)'s further grossly erred on facts and in law in conforming the addition of ₹ 35,25,000/- made by the AO by disallowing the agricultural income so claimed and in treating the same to be from undisclosed sources and adding it under the head Other Sources only on notions, conjectures and surmises. IV. In conforming the addition of ₹ 35,25,000/-, the Ld. AO chose to ignore the fact that documentary evidence regarding purchase of Agr .....

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ttention to pages 381 to 413 of the paper book where copy of agreement and purchase deed of agricultural land at village - Kamlapur, Haidargarh Barabanki is available. He also submitted copy of Fasli of agricultural land as available on pages 414 to 415 of the paper book. He further submitted that even if it is felt that the agricultural income shown by the assessee is excessive, reasonable estimate may be made in this regard. 9. Learned D. R. of the Revenue supported the orders of the authoriti .....

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l total ₹ 12.24 Lacs. Agreement with both these persons are available on pages 416 to 417 of the paper book. The objection was this that land area given on batai to these persons is not mentioned in these agreements. In remand proceedings, the A.O. summoned these persons u/s 131 and as per Remand report available on pages 421 to 425, it is reported by the A.O. that Sri Virendra Kumar grandson of Shri Maiku lal and Shri Ram Karan appeared before him. The A.O. also reported that Sri Virendra .....

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00/- is correct but the same is per month and not per anumn and on this aspect, there is either a mistake committed by the A.O. in the remand report or by Shri Ram Karan while recording his statement before the A.O. because he is an illiterate person. We find force in this contention because when the agreements are for per anumn payment and one party is confirming payment of ₹ 50,000/- per month for 17 - 18 bighas, the payment by second party of ₹ 50,000/- for 12 bighas cannot be per .....

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nt received from these two persons of ₹ 12.24 Lacs, an amount of ₹ 6.00 Lacs should be considered agricultural income. The balance land is about 40 Bighas because one hectare is equal to about 6.2 Bighas. Hence total 11.737 Hectares of land is about 70 Bighas. After excluding 30 Bighas from it, the balance land is about 40 Bighas. From this balance land, income of ₹ 8.00 Lacs should be considered as agricultural income on the same basis of ₹ 20,000/- per Bigha per anumn. .....

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t proceedings. In course of hearing before us, it was submitted by Learned A. R. of the assessee that these grounds are not pressed and accordingly, these grounds are rejected as not pressed. 14. Ground No. 8 is regarding confirming the addition of an amount of ₹ 48,650/- as provisions & expenses payable. It was submitted by Learned A. R. of the assessee that this ground is also not pressed and accordingly, ground No. 8 is also rejected as not pressed. 15. Ground No. 4 & 5 are in r .....

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es 27 to 34 of the paper book. It was contended by him that since the repayment has been made later by way of account payee cheques, addition is not justified u/s 68 of the Act. He also submitted that this is alleged that the assessee has not given details about mode of receipt of unsecured loans from Shri C. P. Goel. He submitted that in this regard, on page No. 26 of the paper book, the details are given regarding cheque number, amount and name of bank along with date of receipt of loan of  .....

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bmitted that the same is also by way of cheques but the relevant details and bank statement of the assessee and lenders are not traceable and the lender is sick. He submitted that the remand report is available on pages 421 to 425 of the Paper Book and the relevant page is 422. E pointed out that in remand proceedings, the A.O. issued a summon u/s 131 to Shri C. P. Goel asking for his personal appearance. He submitted a copy of his reply dated 18.09.2014 submitted to the A.O. i.e. DCIT Range - 1 .....

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the identity of Shri C. P. Goel stands established because summon u/s 131 was served on him and he confirmed the transaction by writing a letter directly to the A.O. Regarding is credit worthiness, he submitted that in view of Bank overdraft of ₹ 40,85,584.29 on 26.03.2007 as per Bank Statement of Shri C. P. Goel from Bank of India, Indira Nagar Branch, it should also be accepted that he was having creditworthiness to give loan of ₹ 39.50 Lacs to the assesse. 16. Learned D. R. of the .....

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k statement of the lender furnished before us, all these entries are appearing in addition to two more cheques. He has further noted that this is also not known whether Shri C. P. Goel is assessed to tax or not and hence, his capacity to give such huge loan is doubtful. Assessment of tax is not conclusive about creditworthiness. A person assessed to tax may be without creditworthiness to give the amount in question and a person not assessed to tax may be having credit worthiness to give the amou .....

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13, it is not sufficient to prove that the identity and capacity of the lender and genuineness of loan transaction of ₹ 39.50 lac is established. On this basis, CIT(A) has sustained this addition of ₹ 39.50 lac. We are in agreement with learned CIT (A) that subsequent refund is immaterial for deciding the applicability of section 68 but about non furnishing of details such as cheque nos. etc., we feel that only because details of Cheque Nos. etc. could not be provided by the lender b .....

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ilarly, on 22/07/2006 also, after clearing of the cheque of ₹ 35,000/-, the bank is showing overdraft balance of ₹ 19.28 lac to Shri C. P. Goel. In view of this fact that these cheques are given by Shri C. P. Goel to the assessee out of overdraft from bank and the bank statement of Shri C. P. Goel is made available to the assessee showing a huge amount of overdraft, in our considered opinion, the identity of the loan creditor and his creditworthiness stand established because this mu .....

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lso requested the A.O. to depute some body for recording his Statement at his residence but the A.O. did not do so but under these facts, his identity cannot be doubted. Regarding his creditworthiness, this fact that he was enjoying overdraft of ₹ 40,85,584.29 on 26.03.2007 as per Bank Statement of Shri C. P. Goel from Bank of India, Indira Nagar Branch, in our considered opinion, his credit worthiness for advancing loan of ₹ 39.50 Lacs to the assessee also deserves to be accepted. R .....

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has been able to establish the identity of the lender and his creditworthiness as well as genuineness of the transaction and therefore the addition u/s 68 is not justified. Accordingly, grounds No. 4 & 5 are allowed. 18. Ground No. 6 is as under: VI. The Ld. CIT (A)'s grossly erred on facts and in law in partly conforming the unsecured loans for an amount of ₹ 12,41,524/- and in not accepting the loans outstanding of State Bank of India for an amount of ₹ 9,60,000/- and Stand .....

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and as per the same, the amount of ₹ 12,41,524/- for which addition has been upheld by CIT(A) is in respect of loan from State Bank of India, Ashok Marg Branch of ₹ 9.60 lac and Standard Chartered Bank of ₹ 28,15,370/-. He submitted that for these two loans, the addition upheld by CIT(A) is not justified. 20. Learned D.R. of the Revenue supported the order of learned CIT(A). 21. We have considered the rival submissions. We find that it is noted by CIT(A) in Para 6.5 of his orde .....

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llowed. 22. Ground No. 7 is as under: VII. The Ld. CIT(A) again erred on facts and in law in conforming the addition made of ₹ 5,30,765/- as Sundry Creditors for expenses by stating that the liabilities are not properly verifiable from the statements despite the fact that the entire details of expenses payable is available on record and thus the addition so made may kindly be ordered to be deleted. 23. It was submitted by Learned A. R. of the assessee that the details of this amount of  .....

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8377; 84,455.84. Regarding outstanding amount of ₹ 93,594/- from Standard Chartered Bank, he drawn our attention to page No. 45 of the paper book where the statement of this bank is available showing outstanding amount of ₹ 97,355.96. He submitted that in the light of these evidences, the addition confirmed by CIT(A) is not justified. 24. Learned D. R. of the Revenue supported the orders of the authorities below. 25. We have considered the rival submissions. We find that in Para 6.6, .....

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7; 2.10 lac and delete the balance amount of ₹ 3,20,715/-. This ground is partly allowed. 26. Ground No. 9 is as under: IX. The Ld. AO further grossly erred on facts and in law in conforming the addition of ₹ 35,25,000/- by disallowing the agricultural income so claimed and in treating the same to be from undisclosed sources and adding it under the head Other Sources only on notions, conjectures and surmises. 27. This ground is same as ground No. 3 & 4 in I.T.A. No.382/Lkw/2015. .....

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hat the income should be computed in the order u/s 147 starting with the figure of income assessed in the assessment order u/s 143(3) and if that is done, there is no need to make addition of ₹ 35.25 lac. 28. Learned D. R. of the Revenue supported the orders of the authorities below. 29. We have considered the rival submissions. We find force in the submissions of Learned A. R. of the assessee that when the assessment was completed u/s 143(3), in the order passed by him u/s 147, he should .....

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reafter, he should make the addition, which were not made in proceedings u/s 143 (3) and are made in the proceedings u/s 147 of the Act and which stands confirmed by us. Once this process is adopted by Assessing Officer, then addition of ₹ 35.25 lac will not figure again in the assessment order u/s 147 of the Act and hence, no separate adjudication is called for regarding this ground No. 9 because this issue is already decided by us partly in favour of the assessee while deciding ground No .....

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