TMI Blog2018 (10) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhanumathi and Mr. M. Viswa Mohan cannot be considered as evidence that the assessee has received amount from the above parties. In view of the above, we are of the opinion that the Assessing Officer has rightly made the addition as unaccounted income of the assessee and the same is confirmed by the ld. CIT(A). - decided against assessee. - ITA No. 28/VIZ/2014 - - - Dated:- 12-10-2018 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, HON BLE ACCOUNTANT MEMBER For The Assessee : Shri C. Subrahmanyam FCA. For The Department : Shri Ch. Sanjeev Sr. DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Visakhapatnam, dated 26/11/2013 for the Assessment Year 2007-08. 2. Facts of the case, in brief, are that assessee is an individual engaged in the business of interior decoration through his proprietary concern Etcetra Interiors and is also a partner in M/s. Classique Farms Estates along with one Sri M. V. V. Satyanarayana. A search operation was conducted under section 132 of the Income Tax Act, 1961 (hereinafter referred to as &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the ld. CIT(A) s order is extracted as under:- 7. 6 I have considered the submissions made, the additional evidence filed, the report of the AO on the additional evidence and other materials available on record for adjudicating the issues raised in the appeal. 7. 7. From the details on record, it is seen that on account of the search in the purchase of immovable property at Maddi by M/s. Classique Farms Estates which came into existence during the previous year relevant to the assessment year under consideration. Both the partners to the firm have admitted during the course of search that the land of an extent of nearly 86. 5 acres was purchased at a price of ₹ 7. 10 per acre, and that the amount recorded in the books were the documented consideration of ₹ 1,25,00,000/and that the balance consideration of ₹ 4,43,00,000/- was paid in cash. In this regard, each of the partner have admitted ₹ 2,21,50,000/- to be their unaccounted investment in Maddi land, which was by way of their capital contribution to the firm. The relevant statement recorded on 12. 09. 2007 has been extracted by the AO at para 5 in the impugned assessment order. The extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of each partner. However, the assessee has admitted only ₹ 2,21,50,000/- in his statement recorded on 12. 09. 2007. Further the assesssee has filed an affidavit dtd. 24. 11. 2007 confirming that hi-, 'cd income for the F. Y. 2006-07 was ₹ 2,33,50,000/- and would pay taxes on the same while filing the return of income. 7. 9 However, the assessee has not filed return of income as per declaration. The AO called upon the assessee why the unaccounted investment of ₹ 2,32,61,450/- should not be assessed to tax by letter dtd. 25. 08. 2009. In response, the AR filed letter dtd. 07. 09. 2009 stating: The assessee has invested an amount of ₹ 2,81,00,000/- in the above said firm as on 31. 03. 2007. It is also observed from your remarks that the assessee has invested an unaccounted amount of ₹ 2,32,61,450/- in the above firm and the assessee has agreed for ₹ 2,25,00,000/- as unaccounted income for the A. Y. 2007-08. However, this fact is not true since during the course of recording the statement u/s. 132(4), the assessee has clearly mentioned that he has also received advances from parties against properties held by him and has inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l proceedings with the C1T(A), Visakhapatnam the assessee has filed additional evidence viz copy of the confirmation letter for land advance of ₹ 1. 40 cores given by Smt. K. Bhanumathi to R. Govind. To verify the veracity of the assessee's claim that advance was taken from Smt. K. Bhanumathi, a letter was addressed to her to submit the details of the above said investment, sources for the same and income tax returns by 17. 12. 2012. But the letter was returned unserved. Sri R. Govind was also informed repeatedly about the same and asked to produce the necessary information but in vain. Hence, due to non availability of the required information it is not possible to verify the admissibility and merits of the additional evidence filed by Sri R. Govind . 7. 12 Thus it could be seen that even during the remand proceedings the appellant could not produce the said parties for examination before the AO. The letter addressed to K. Bhanumathi had been returned unserved. I do not find any merit in the pleas raised by the appellant that sufficient opportunity was not granted to prove his claim. I find that enough opportunities were granted to discharge the same. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded during the course of search on the alleged admission. In this regard the assessee submits that CBDT has issued a Circular in file no. 286/2/2003 dt. 11th March, 2003. Wherein the Board has instructed the officers of the Department, while making additions not to relay on the confession unless the same is substantiated with incriminating material. Whereas, in several cases the judiciary has held that additions cannot be sustained merely on the basis of confessional statement alone. 7. 14 At the outset, the plea raised that the confirmation letter of Viswa Mohan dtd. 04. 04. 2013 return of income filed by him was not considered by the AO is untenable, as the confirmation letter dtd. 04. 04. 2013 and such copy of return of income was not filed as additional evidence in the petition dtd. 27. 03. 2012 filed Under Rule 46A. These papers were filed as part of written submissions in the paper-book flied on 03. 10. 2013. As such these two documents deserve to be rejected in limine. However, the veracity of these documents are also discussed in the succeeding paras. 7. 15 The assessee's primary contention is that he had received ₹ 1. 40 crores as advance from K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the assessee's books. It was contended that it is not that assessee had made a make-believe arrangement I have claimed this plea. It is seen that on earlier occasion the assessee had received certain sum from K. Bhanumathi and it is seen that amounts were advanced only by way of cheque. Being so, it is not understandable, why the so called advance for purchase of property should be totally a cash transaction when such a huge amount is involved. And again why the said Bhanumathi should not come forward to explain the transaction to Department if it were genuine. Thus the genuineness of the transaction remains in doubt. 7. 19 I have gone through the copy of confirmation letter dtd. 27. 01. 2010 said o be signed by K. Bhanumathi. In this letter it is stated that she has given an advance of ₹ 1,40,00,000/- to the assessee for his Beach site sale, and the amount was given on behalf of her son-in-law Viswa Mohan, and was given out of NRI funds related to her son-in-law and for the purpose copy of ICICI Bank statement was enclosed. However the bank statement was not enclosed in the petition for additional evidence but was filed along with paper-book on 03. 10. 2008. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. If a non-resident wants to make an investment in India in immovable, it is clear why such amounts should be advanced in cash through an unregistered document if the transaction is genuine. 7. 22 The AR had also contended that the addition should not be made on mere admission and relied on CBDT Circular No. 286/2003. I do not find any merit in the contention. It is on the basis of incriminating materials found during the search as to unexplained investments that the assessee had admitted about his unexplained investment. The other partners have also admitted to the unexplained investment in the light of incriminating material seized. Hence, there is no merit in the argument that impugned addition was made merely on the basis of admission and was not valid in law. 7. 23 The non-mention of the transaction with K. Bhanumathi during the search proceedings or immediately thereafter, the failure of the assessee to produce the said Bhanumathi, the failure of said Bhanumathi to appear to the summon issued, the absence of details as to the dates on which advances made with reference to date of withdrawal, the absence of any withdrawal in the said bank statement throughout th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of search, the assessee chose to make a claim that he had received advance from Mrs. K. Bhanumathi. It is only an afterthought and the same cannot be considered as evidence to delete the addition made by the Assessing Officer. He further submitted that assessee has also not able to substantiate that he has received amount from Mrs. K. Bhanumathi and also not filed any evidence before the Assessing Officer. Therefore, the order passed by the ld. CIT(A) may be upheld. 7. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. 8. A search operation was conducted under section 132 of the Act in the residential premises of the assessee on 12/09/2007 and also in the MVV group. During the course of search, a sworn statement of the assessee was recorded, wherein he admitted that his unexplained investment is of ₹ 2,21,50,000/- and he filed return of income by admitting total income of ₹ 1,50,91,490/- on 21/08/2009. Subsequently, the Assessing Officer issued notices under section 143(2) 142(1) to the assessee on 25/08/2009 for calling explanation as to why the quantified unaccounted investment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced after some days. The Assessing Officer asked the assessee to produce both the parties, who are advanced money to the assessee. The Assessing Officer has given various opportunities to the assessee, but of no avail. Even, assessee could not furnish any evidence with regard to the advance of ₹ 1,45,00,000/- received from both the parties. Before the Assessing Officer, the assessee by filing a letter on 24/11/2007 asked some more opportunities to substantiate his case and also promised to produce both the parties before him. The Assessing Officer has given opportunity to the assessee to produce the parties, however, the assessee could not produce them. He only filed a letter on 10/12/2009 and submitted that ₹ 1. 40 crores was received from Mrs. K. Bhanumathi, who resides at Guntur and frequently visits her daughter and son-in-law, who are residing in US, but not filed any evidence in this regard. In earlier statements, it is submitted before the Assessing Officer that he received funds from Mrs. K. Bhanumathi Mr. N. Ravi Kumar. Now assessee says that he has received ₹ 1. 40 crores only from Mrs. K. Bhanumathi. Therefore, the Assessing Officer by considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Vishwa Moham with ICICI Bank Ltd. , Hyderabad, there were no cash withdrawals in September, 2005, for which BCCT was deducted. There were no withdrawals during the whole of the year 2006. As per the bank statement, there were no withdrawals during 2006-07 to support the claim of the assessee. He also pointed out that even in the bank statements Mr. M. Viswa Mohan Mrs. K. Bhanumathi there were no withdrawals to give advance to the assessee. He further pointed out that even from the return filed by Mr. M. Viswa Mohan, he has not declared any information about the money advanced to the assessee. Therefore, the ld. CIT(A) came to a conclusion that the confirmation letters given by Mrs. K. Bhanumathi and M. Viswa Mohan are no way to prove the contention of the assessee. Accordingly, he confirmed the addition of ₹ 1. 40 crores as unexplained investment in the hands of the assessee. We find from the assessee s statement recorded on 12/09/2007 that he admitted his unaccounted share of investment in the property is of ₹ 2,21,50,000/-. There is no reference of advance received from Mrs. K. Bhanumathi. Subsequently, on 24/11/2007 nearly two months from the date of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... you have entered into unregistered agreement with Mrs. K. Bhanumathi on 23/09/2006, why this has not been filed before the Assessing Officer and why after such a huge delay it was submitted before the ld. CIT(A). The assessee is not able to explain the same except stating that buyer frequently visits to USA to meet her daughter and son-in-law. During the course of hearing, we specifically asked the assessee what was happened subsequently to the sale unregistered agreement in respect of scheduled property, the assessee s counsel has submitted that nothing is happened. It shows that the assessee neither returned the amount nor executed the sale deed. If sale unregistered agreement is a genuine one, the assessee has to execute the sale deed as per the unregistered agreement dated 23/09/2006. Now we are in 2018. From the date of unregistered agreement, now the time has passed near about 12 years, if the transaction is a genuine transaction, the assessee either repay the same or execute the sale deed. The assessee neither established the repayment nor executed the sale deed. In view of the above, we are of the opinion that the entire transaction is not a genuine transaction and it is o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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