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2016 (4) TMI 1045 - ITAT HYDERABAD

2016 (4) TMI 1045 - ITAT HYDERABAD - TMI - Addition u/s 69 - Held that:- Assessee has enough funds to repay the sundry creditors to the extent of ₹ 11.63 lakhs. Therefore, we are of the view that assessee has already submitted the confirmations from the creditors and they are from the small farmer community and the assessee is hailing from a small village and moreover no involvement of bank. In our view, the assessee has already established the genuineness of the creditors and the transact .....

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ition to accept the genuineness of the transaction as the assessee has claimed to have received ₹ 6.5 lakhs and also continue to hold the land. There is no evidence to show that the above land was transferred or the money taken as advance is returned. Also in the sale agreement clause, it was stated “that it is agreed between the parties that the balance sale consideration shall be paid within three years from the date mentioned above or at the time of registration whichever is earlier” an .....

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s also as the assessee was in the possession of residential property from 1983 onwards i.e. for a period of 19 years and on an average, five portions of the house property were on lease, therefore, assessee could have made the savings to the extent of ₹ 6.2 lakhs over this period. Hence, we delete the total addition of ₹ 6.2 lakhs.

Past salary savings - Held that:- The assessee had not brought any cogent materials before us to prove that he had made the above savings out o .....

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able for AY 2003-04. We, therefore, reject the submissions of assessee and confirm the action of the CIT(A).

Addition towards unexplained expenditure u/s 69 C - Held that:- Assessee has not brought anything on record to show that any additional income to cover payment of interest to bank. Therefore, we confirm the action of the CIT(A) in sustaining the addition made by the Assessing Officer. - ITA No. 1619/Hyd/2011, ITA No. 1620/Hyd/2011 - Dated:- 16-3-2016 - SMT. P. MADHAVI DEVI, JUD .....

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ince the issues in both the appeals are similar, for the sake of convenience, we dispose of these appeals by way of a common order. 2. To dispose of these appeals, we consider the facts in ITA No. 1619/Hyd/2011. 3. Briefly the facts are, assessee filed her return of income for the AY 2003-04 on 25/02/2005 declaring loss of ₹ 16,143/- along with agricultural income of ₹ 84,000/-. Subsequently, a notice u/s 148 of the Income-tax Act, 1961 (in short Act ) was issued to the assessee on 2 .....

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roper compliance from the assessee and the Assessing Officer after considering the evidence available on record made the following additions: 1. ₹ 39,04,888/- as unexplained investment u/s 69 of the Act. 2. 1,89,330/- towards unexplained expenditure for repayment of interest on bank loan u/s 69C of the IT Act. 4. Aggrieved by the order of Assessing Officer, the assessee preferred an appeal before the CIT(A). 5. In the course of appeal proceedings, the assessee had submitted that to constru .....

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tural income of ₹ 84,000 3. Past rental income income & household savings to the extent of ₹ 3,00,000/- 4. Gift from Shri K. Suryanarayana of ₹ 3,00,000 6.1 The CIT(A) sustained the following additions: 1. Part of rental income & household savings ₹ 3,20,000 2. Gift from Shri D. Rammohan Rao ₹ 75,000 3. Advance on sale of plot ₹ 6,50,000 4. Hand loans Rs. 1,50,000 5. Sundry creditors ₹ 18,13,888 6.2 CIT(A) also sustained addition made by the Asse .....

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e considered the fact that all the amounts have been proper ly explained as from the receipts; own funds out of savings, sundry creditors, etc. , which should have been accepted by the Assessing Off icer. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the addition of Rs. l,83,330/- on the ground that interest on the loan taken form ICICI Bank is not properly explained. 8. With regard to ground No. 2, the ld. AR submitted that assessee has claimed ₹ 6.20 lakhs as pa .....

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e sundry creditors were genuine and the advances taken from the creditors were incurred for construction of warehouse building. These sundry creditors are consist of small agents, who are dealing with the construction materials. There is a total of 38 creditors and confirmations from them were already filed before the Assessing Officer. These are all small farmers in and around the village of the assessee. These sundry creditors were genuine because these creditors were settled in the subsequent .....

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r and the gift is genuine and the assessee established the identity of the donor and also before the Assessing Officer. 8.3 Ld. AR submitted that cash credit entries in the first year of its business did not represent the income or profit of the assessee. For this proposition, he relied on the decision in the case of CIT Vs. Bharat Engg. Construction Company, 83 ITR 187. 9. The Learned Departmental Representative, on the other hand, submitted that the CIT(A) and Assessing Officer has given lot o .....

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₹ 6,50,000 4. Gift ₹ 75,000 10.1 With regard to sundry creditors outstanding as on 31/03/2003 at ₹ 18.14 lakhs, the CIT(A) has confirmed the said addition, but, the assessee has completed warehouse building with her own source of funds and taking construction material on credit. She has also submitted the confirmations from the 38 small creditors who are basically small farmers, who were dealing with the construction material as small time agents. What is important is, the ass .....

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9.25 lakhs. From the above surplus of rental income and additional loan from bank as well as agriculture income, she had settled the sundry creditors to the extent of ₹ 11.63 lakhs. From the above, it is clear that assessee has enough funds to repay the sundry creditors to the extent of ₹ 11.63 lakhs. Therefore, we are of the view that assessee has already submitted the confirmations from the creditors and they are from the small farmer community and the assessee is hailing from a sm .....

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s, the assessee has submitted agreement for sale executed in favour of Smt. Y. Nalini, who is stated to be residing in USA. We are not in a position to accept the genuineness of the transaction as the assessee has claimed to have received ₹ 6.5 lakhs and also continue to hold the land. There is no evidence to show that the above land was transferred or the money taken as advance is returned. Also in the sale agreement clause, it was stated that it is agreed between the parties that the bal .....

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on this count. 10.3 With regard to past rental income and house hold savings to the extent of ₹ 6.2 lakhs claimed by the assessee, the CIT(A) has already agreed to delete ₹ 3 lakhs. In our considered view, the CIT(A) could have allowed the balance of ₹ 3.2 lakhs also as the assessee was in the possession of residential property from 1983 onwards i.e. for a period of 19 years and on an average, five portions of the house property were on lease, therefore, assessee could have ma .....

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the following additions: 1. ₹ 38,39,337/- as unexplained investment u/s 69 of the Act. 2. 1,75,995/- towards unexplained expenditure for repayment of interest on bank loan u/s 69C of the IT Act. 14. Before the CIT(A), the assessee had claimed the following sources for making investment in the construction of warehouse: 1. Professional income ₹ 78,000 2. Agricultural income ₹ 68,000 3. Past salary savings ₹ 8,80,000 4. Gift from his brother, Sri JRK Rao ₹ 6,50,000 5. .....

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ppeal before us and has raised the grounds pertaining to the above claims, which were confirmed by the CIT(A). 17. As regards the past salary savings, the facts are that the assessee worked as Dy. Executive Engineer with the Govt. of AP and retired in February, 2002. He produced his last pay certificate indicating his last pay draw at ₹ 21,321/-. For the month of February, 2002. He furnished year-wise particulars of pay drawn by him including the net pay after deductions. During the period .....

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of assessee. 18. The CIT(A) observed that the claim of the assessee was found to be disproportionate when compared to his net salary received in the last 10 years. Just because the assessee did not maintain bank account, it cannot be said that he did not have any saving from salary at all. Considering all the circumstances, CIT(A) held that the assessee s salary savings would be about 30% of net salary received by him in the last 10 years which works out to ₹ 4.30 lakhs (30% of ₹ 14, .....

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he had made the above savings out of the salary income. The assesseealso had to meet the domestic expenses. As per records, the only reported income was salary. In our considered view, it is not possible to make savings to that extent of ₹ 8.80 lakhs. The CIT(A) had properly considered the addition and we sustain the findings of the CIT(A). 22. As regards GPF amount, the assessee claimed that this amount was utilized for construction of the warehouse. Assessing Officer verified the claim a .....

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