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Commissioner of Income-Tax Versus K. Sundaramoorthy (Individual) , K. Sundaramoorthy (HUF)

2016 (11) TMI 791 - MADRAS HIGH COURT

Undisclosed income - fixed deposit in the names of the assessee and his son - Held that:- The agreement was for the sale of a property, which was worth only ₹ 1.5 lakhs whereas the total sale consideration was ₹ 20 lakhs. Secondly, Mr. Kannappan, the alleged purchaser, did not have sufficient source of income or surplus income for purchase of the property. Further, admittedly, the said Kannappan did not affix his signature in the agreement. Therefore, the finding of the Tribunal that .....

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d income is restored. - Seizure of cash from raid - accumulation of agricultural income - Held that:- No books of account were maintained by the trust and the trust was also found to be an unregistered one and no sale bills were produced by the assessee to show that the agricultural income from the said lands amounted to ₹ 12 lakhs. The burden was on the assessee to prove that ₹ 12 lakhs got accumulated out of the agricultural income from the trust lands, by producing supportive .....

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e facts, stated that the brothers have accepted the advance amounts paid by them and that they have also established their source. The said finding is perverse. Therefore, the conclusion of the Tribunal that the assessee did not possess any undisclosed income is liable to be set aside. - Further, the Tribunal was of the opinion that the assessee produced necessary materials in support of his claim and that it would be sufficient for discharge of his initial burden. But, the said finding is e .....

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Ramasubramanian And N. Kirubakaran, JJ. For the Appellant : M. Swaminathan For the Respondent : R. Krishnamurthy, Senior Counsel for R. Srinivasan JUDGMENT N. Kirubakaran, J. 1. The above appeals have been preferred by the Revenue as against the order of the Income-tax Appellate Tribunal dated August 25, 2006 holding that the fixed deposit receipts, to the tune of ₹ 13.35 lakhs, in the name of the assessee and his son and cash of ₹ 20.66 lakhs seized, at the time of search in his re .....

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not choose to file return in his individual status. The assessment was completed under section 158BC read with section 144, in the hands of the assessee (individual) and a separate assessment was made regarding HUF including investment in bank deposits and cash. The assessee had filed return of income in the status of HUF i.e., on August 5, 1996 declaring undisclosed income of ₹ 1,50,764 for the previous years 1991-92 to 1994-95 comprised in the block period furnishing the details of sour .....

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e search is not a genuine one and treated ₹ 13.35 lakhs as unexplained investment of the assessee and treated as undisclosed income of the assessee for the block period. The Assessing Officer, further concluded that the creditors of the assessee could not have advanced the amount as he has not explained the various other transactions and that the said property offered for sale may not fetch the agreed sale consideration. The Assessing Officer treated ₹ 20,66,337 seized from the asses .....

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not amount to undisclosed income by accepting the assessee's explanation that the money came out of the advance given by Kannappan, with whom the assessee entered into an agreement of sale of shop in Cumbum. The Tribunal also held that ₹ 12 lakhs is the accumulations of agricultural income derived from own lands and trust lands and from loan amounts received from other parties. Further, the Tribunal held that there was no corroboratory material in the possession of the Revenue to hold .....

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d was right in holding that the fixed deposit of ₹ 13.35 lakhs in the names of the assessee and his son is not undisclosed income ? 2. Whether in the facts and circumstances of the case, the Tribunal had enough material to hold and was right in holding that the amount of cash of ₹ 20.66 lakhs found at the time of search did not amount to undisclosed income ?" 5. Heard Mr. M. Swaminathan, learned standing counsel for the appellant and Mr. R. Krishnamurthy, learned senior counsel .....

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nd his younger brother, by name, K. Chandrasekaran, for a total consideration of ₹ 20 lakhs, as per the sale agreement dated November 20, 1994, which was also seized during the search. The Assessing Officer rightly suspected the genuineness of the said agreement. The signature of Kannappan found in the sale agreement and signatures found in the sworn statement filed before the authorities were different and in fact, he had admitted that he did not affix his signature in the agreement as th .....

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mud and lime mortar, with no doors and windows available, except one folded plate shutter. The total measurement of the property was only 333.5 sq. ft. The market value of the property, as per the recent enquiry, revealed that it would not exceed ₹ 2.5 lakhs, as on date. Therefore, the Assessing Officer found that in the year 1994, when the agreement was entered into, the value of the property would have been only ₹ 1.5 lakhs. 7. That apart, it was found that Mr. Kannappan was not a .....

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e Assessing Officer rightly found that the sale was not a genuine one and the contention made by the assessee was only a make-believe affair. Further, the said Kannappan had no surplus money to pay an advance of ₹ 14 lakhs, that too, for the purchase of the property, which was worth, only about 1.5 lakhs. Therefore, the Assessing Officer rightly treated ₹ 13.35 lakhs as unexplained investment of the assessee. 8. However, the Tribunal, contrary to the material evidence available, erro .....

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ty, which was worth only ₹ 1.5 lakhs whereas the total sale consideration was ₹ 20 lakhs. Secondly, Mr. Kannappan, the alleged purchaser, did not have sufficient source of income or surplus income for purchase of the property. Further, admittedly, the said Kannappan did not affix his signature in the agreement. Therefore, the finding of the Tribunal that the assessee has discharged his burden of proving the source, nature and character of the credit is erroneous. The materials availa .....

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0.66 lakhs in cash, was seized during the raid on November 24, 1995 and the amount was found in different covers with certain notings on them showing contract payment, percentage of premium reduced thereon, etc. The contention of the assessee was that the said amount was out of his agricultural income and loans received from brothers and close relatives. "10. In the statement filed along with the return, the assessee furnished the following details of sources in order to explain the cash fo .....

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ers and close relatives, the Assessing Officer enquired the respondent's brother, who had categorically stated that he did not advance any amount to the respondent or to any other per son, as per his sworn statement dated November 25, 1995. Moreover, the other relatives of the assessee were not capable of giving such a huge amount as loan. Therefore, the Assessing Officer rightly found that the creditors did not advance money nor they had the capacity to lend money. Therefore, the sum of  .....

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ome from these lands as they were leased out all these years for lump sum amounts received by the assessee as loan or lease advance. Further, the sum of ₹ 60,000, as income from house property, was also not accepted by the Assessing Officer. With regard to the agricultural income of ₹ 12 lakhs from trust lands, the contention of the assessee was that he kept on hand ₹ 12 lakhs out of the accumulations of the agricultural income derived during the past 4 years from 10.70 acres o .....

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ncome-tax Act and non-production of any sale bills of agricultural produce and on personal visit, rightly found that the agricultural income from the trust lands would not be more than ₹ 1 lakh, after meeting the expenses of cultivation. Therefore, the sum of ₹ 12 lakhs, said to be agricultural income derived from trust lands, amounts to undisclosed income. 11. Moreover, the sum of ₹ 20,66,637 was found kept in different covers with certain notings. Considering the status of th .....

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₹ 20,000 standing in the name of the assessee and his wife, the assessee did not adduce any evidence with regard to the source for the aforesaid deposit. 12. The finding reached by the Tribunal that the Revenue was not able to bring any material on record to conclude that the claim of the assessee that he kept on hand ₹ 12 lakhs, out of the accumulations of the agricultural income from 10.70 acres of agricultural land owned by private discretionary trust created by the assessee's .....

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