TMI Blog2016 (12) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... re - Held that:- CIT(A) has accepted only the amounts pertaining to Sri Teju Maaraju, Sri Rana Pratapu Maaraju and Sri Sukhender Reddy, whereas Sri Muralidhar Reddy, Shri Yadi Reddy and Raghuveer Singh also have contributed to an extent of ₹ 24 Lakhs. Accordingly, no amount could be brought to tax in the hands of assessee. Moreover, assessee has admitted an amount of ₹ 9 Lakhs in his cash flow statements which the AO has not given credit. Even if the amount of ₹ 19 Lakhs is to be considered as expenditure spent by assessee towards election, the amount of ₹ 9 Lakhs which he himself has admitted should have been given credit. That leaves us with a balance of ₹ 10 Lakhs for which the entries in the diary itself shown that he has received more than ₹ 24 Lakhs from others. In view of this, we are of the opinion that no amount can be brought to tax in the hands of assessee. In view of that, grounds raised by assessee are allowed. AO is directed to delete the amount of ₹ 19 Lakhs as the same was received from others as noted in the diary. Unexplained investment in the house - Held that:- Bringing the entire amount to tax in this assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ys. 2003-04, 2007-08 2008- 09. Since common issues are involved, these three appeals are taken up together. ITA No. 1195/Hyd/2014 (AY. 2003-04): 3. The only issue agitated by assessee in this appeal is with reference to addition of commission of ₹ 5 Lakhs received as an advance in AY. 2003-04 but offered to tax in AY. 2008-09. The grounds are accordingly raised on that issue. In this assessment year, based on the entries in the diary, AO noted that assessee has received an amount of ₹ 5 Lakhs towards commission of a transaction undertaken by assessee and brought the same to tax in this year, despite assessee s contention that the transaction was finalised vide document No. 1163/07 dt. 14-12-2007 and the commission was offered in the FY. 2007-08 relevant to AY. 2008- 09. 4. Ld.CIT(A) after considering the submissions however, has taken a peculiar stand that there is no correlation between the agreement of ₹ 5 Lakhs received during the year and subsequently admitted amount but however, directed the AO to give relief in AY. 2008-09 after verification. The order of the Ld.CIT(A) is as under: 4.5 I have perused the submissions made. It is seen that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., [358 ITR 295]. 6. Ld. DR however, supported the orders of the AO and CIT(A). 7. After considering the rival contentions and perusing the documents placed on record, we are of the opinion that assessee has correctly declared the commission in AY. 2008-09. Assessee is not maintaining any books of account and has noted down in the diary on the basis of the receipts and payments. Admittedly, the transaction between Shri Phoolchand Singh and others and Shri Sukender Reddy and others regarding 20 acres in Parvathapur village was being negotiated and ultimately finalised in 2007 only by way of final registration. Accordingly, the commission is accounted for by assessee in AY. 2008-09. The Hon'ble Supreme Court in the above case of CIT Vs. Excel Industries Ltd., [358 ITR 295] (supra), has held that it is well settled that income tax cannot be levied on hypothetical income. Income accrues when it becomes due but it must also be accompanied by a corresponding liability of the other party to pay the amount only, then can it be said that for the purpose of taxability that the income is not hypothetical and it has really accrued to the assessee . Keeping the principles in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them, Ld.CIT(A) gave relief to the extent of ₹ 21 Lakhs and sustained the balance ₹ 19 Lakhs. Assessee is aggrieved on this amount. 11. Ld. Counsel referring to the entries in the diary placed in paper book, submitted that most of the amounts were received from various people and referred to the entry dt. 26-07-2006, wherein there are receipts from seven people totaling to ₹ 45 Lakhs. The receipts from Shri Muralidhar Reddy, Shri Jaipal Reddy and Shri Yadi Reddy etc., were not taken into account either by the Ld.CIT(A) or by the AO. It was the contention that the entries do indicate that the amounts were received from various people and assessee admitted that he has spent only ₹ 9 Lakhs which was reflected in his statement of accounts. It was submitted that when the expenditure was accepted with the entries in the diaries, the receipts were also to be accepted as received from third parties as noted. In view of this, it is submitted that no amount can be added in assessee s hands. 11.1. Ld. DR however, submitted that the expenditure of ₹ 40 Lakhs was undisputed and the sources were not properly explained, therefore, the amounts were added by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by assessee. AO has noted that assessee has constructed a house and has shown an investment of ₹ 15,92,300/-. He asked assessee various details. Since assessee has not maintained any books of account, he could not furnish the necessary vouchers. The building was referred to Valuation Cell who valued the same at ₹ 25,27,165/-. AO has brought the difference of amount of ₹ 9,34,865/- as unexplained investment of the year. 15. Before the Ld.CIT(A), assessee contended that there existed an old house on which only first floor was constructed and that too in the village and so the valuation by the Valuation Officer adopting CPWD rates is not correct. Assessee asked for relief from the valuation relying on the decision of the ITAT in the case of Salma A Mehdi, wherein a deduction of 15% should be allowed on cost of construction arrived at, in view of the higher rates adopted by the CPWD and a further 10% should be allowed towards personal supervision. Ld.CIT(A) however, has only allowed 10% rebate towards personal supervision and 5% towards CPWD rates as the construction activity happened in the village. Thus, an amount of ₹ 3,79,075/- was given relief and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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