TMI Blog2017 (12) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... he maximum limit. Thus, the grounds of appeal for all the A.Ys on this issue are treated as allowed for statistical purposes. Enhancement of income as accretion to capital - Held that:- The assessee has not been maintaining any books of account prior to the date of search and has prepared the capital a/c and statement of affairs only from the A.Y 2005-06 onwards. It is seen that from the A.Y 2005-06 onwards, the assessee has shown opening capital and there is increase in capital year after year. The source is also explained as income from chit fund business and past savings. We therefore, deem it fit and proper to remand this issue in both the A.Ys to the file of the AO for verification of the above sources for increase in the capital. Addition made as unexplained investment based on the documents other than relating to chits, found during the course of search - Held that:- We find that the documents now filed by the assessee are only bank statements and the encumbrance certificates which are issued by the bank authorities and the govt. agencies respectively. In our opinion, these documents, being third party records, can be admitted. Similarly, for the A.Y 2011-12 also, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below. 4. Having regard to the rival contentions and the material on record, we find that in the case of A. Pandu Ranga Reddy, the Tribunal at Para 13 to 15, has held as under: Addition based on Promissory Notes: 13. AO made addition of ₹ 6 Lakhs in AY. 2009-10 and 1,50,000/- in AY. 2010-11 on two promissory notes found in the course of search proceedings. AO was of the opinion that an amount of ₹ 6 Lakhs was lent on 03-07-2008 against cash receipt to Shri A. Rajavardhan Reddy, which was brought to tax in AY. 2009-10 and an amount of ₹ 1,50,000/- lent on 31-12-2009 against promissory note to Shri V. Ravi Kumar was brought to tax in AY. 2010-11. Similar to the 'agreements of sale' seized by the department, assessee contended that promissory notes were also obtained for securing the chit business. On the reason that assessee has not substantiated with any documentary evidence, Ld. CIT(A) confirmed above amounts. 14. Before us, Ld. Counsel submitted that in the un-organised chit business conducted by the assessee and his family members, sometimes security was taken in the form of agreement of sale if the bidders are having propertie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT in para 6 of its order has held as under: 6. We have considered the rival contentions. There is no dispute with reference to the fact that assessee owns agricultural land and also purchased 4.71 guntas of land in September, 2004. Considering the value of the land purchased and the extent of agricultural income offered, the AO's contentions seems to be partially correct. Since assessee is not in a position to furnish any evidence to substantiate the incomes earned and returned, we have no option than to estimate the agricultural income at a reasonable basis. Assessee's submission that it has grown Paddy, Grapes and Vegetables on a piece of land of 1.27 acres cannot be accepted as it is not possible to cultivate all the three in small piece of land. However, since assessee owns some agricultural land in the impugned years, we are of the opinion that income at ₹ 10,000/- per acre can be justified as a reasonable income earned on the said lands. Accordingly, AO is directed to accept income at ₹ 10,000/- per acre for AY. 2005-06, 2006-07, 2007-08. The balance of the income in each year is confirmed as 'income from other sources' as was done by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone through the certificate issued by the Bank of India and find that the loan is given for purchase of a flat. The nature of the said flat purchased by the assessee, is not mentioned in the certificate. It could be a residential flat also. In view of the same, we deem it fit and proper to remand this issue to the file of the AO with a direction to verify the nature of the property, and if it is found to be a residential property purchased by the assessee against which the assessee has been given loan by the Bank of India, then irrespective of the use of the building, the claim of deduction u/s 80C of the Act shall be allowed in respect of the repayment of the principal amount, of course subject to the maximum limit. Thus, the grounds of appeal for all the A.Ys on this issue are treated as allowed for statistical purposes. 9. Fourth issue only for the A.Ys 2008-09 2009-10 is enhancement of income as accretion to capital. Brief facts are that during the appellate proceedings, from the capital account furnished by the assessee, the CIT (A) observed that as on 31.3.2007, there is an increase of ₹ 6.38 lakhs in its capital account for A.Y 2008-09. He observed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained investment. Brief facts are that during the course of search and seizure operation u/s 132 of the I. T. Act, certain property documents were found and seized. The assessee was asked to explain the nature of the transaction and the source of funds for such investments in the respective A.Ys. 12. For the A.Y 2006-07, The assessee explained that the assessee has purchased agricultural land measuring 1.22 acres in survey No.371 371 E of Mangalapalli Village, Ibrahimpatnam for a sum of ₹ 2.00 lakhs which is being reflected in his HUF return of income, and that an extent of Ac 5.02 gts of agricultural land in survey No.7, Sahubguda, Mangalapaly, Ibrahimpatnam was purchased for a sum of ₹ 6,31,500 and the same is also being reflected in his HUF returns of income. The AO, however, held that the assessee has not produced any evidence in support of his contention that these investments are declared in the assessee s HUF returns. He therefore, made the addition of ₹ 8,31,500. The CIT (A) also confirmed this addition. 13. For the A.Y 2007-08, the assessee has stated that he has purchased Ac 2.11. gts of agricultural land in survey No.285, 284, 284A and 283 in P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,26,500 is reflected in the HUF return of the assessee. Therefore, we confirm the addition of ₹ 1,26,500. 18. As regards addition of ₹ 8.00 lakhs, we find that at pages 60 to 62 of the paper book, the assessee has filed the copy of the capital a/c and the statement of affairs as on 31.3.2006 to demonstrate that as on 1.4.2005, the assessee had an opening capital amount of ₹ 30,87,987 and the closing balance of ₹ 53,46,710. The assessee has explained this amount to be the source for investment of ₹ 8.00 lakhs. We find that neither the CIT (A) nor the AO have actually verified this claim of the assessee. Therefore, we deem it fit and proper to remit this issue to the file of the AO for verification of the assessee s claim and if it is found that the assessee had sufficient capital for making the investment of ₹ 8.00 lakhs during the previous year relevant to the A.Y 2007-08, then no such addition shall be made. In the result, the grounds against the addition of ₹ 8.00 lakhs are treated as allowed for statistical purposes. 19. As regards the addition of ₹ 30,35,000 in the the A.Y 2009-10, the assessee has explained the source a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted that he had given a loan of ₹ 80.00 lakhs to one Mr. Mohd. Suleman and as a security for the said loan, Mr.Suleman through his partner, has offered the property bearing Municipal No.16-6-33/P, Chaderghat, Hyderabad and an agreement of sale from GPA was executed to protect the assessee s interest. The AO was not convinced with the assessee s contention and treated the amounts mentioned in the GPA, MOU and also the receipts as unexplained investment. The said addition was confirmed by the CIT (A). 22. The assessee has filed an application dated 8.4.2017 before us, requesting us to admit the additional evidence filed by the assessee and to remand the same to the file of the AO for verification. In the additional evidence, the assessee has filed copies of (1) bank a/c statement of Bank of India, Malakpet Branch, Hyderabad for the period Feb. 2009 to Jan. 2011 and (2) Encumbrance certificate dated 22.3.2013 reflecting that the GPAcum- POA dated 23.2.2010 was cancelled in March, 2011. It is submitted that if these two documents are considered, it would be evident that the assessee has advanced the loan of ₹ 80 lakhs to Mr. Mohd. Suleman and further that al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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