TMI Blog2016 (7) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee at all. In view of the aforesaid reasonings, the plea of the assessee on merits also deserves to be discarded. We simultaneously notice that the CIT(A) has enhanced the income by ₹ 70 lakhs whereas the controversy revolves around non-availability of ₹ 61.65 lakhs only. The source of balance unaccounted investment of ₹ 8.46 lakhs has already been duly offered and assessed by the Assessing Officer. Thus, the enhancement of assessed income requires to be restricted to ₹ 61.65 lakhs only. Thus, the assessee gets partial relief on this issue on merits. - ITA No.923/PN/2011 - - - Dated:- 29-7-2016 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri M. K. Kulkarni For The Respondent : Shri J. P. Chandrakar (CIT) ORDER PER PRADIP KUMAR KEDIA, AM : The captioned appeal filed by the assessee is against the order of CIT(A)-II, Nashik dated 24.05.2011 relating to assessment year 2003-04 passed under section 153A r.w.s. 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. In this appeal, the assessee raised several Grounds of Appeal and also raised Additional Grounds of Appeal under Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration forming part of on cash disclosure of ₹ 14,75,000/- made by the assessee. The assessee preferred an appeal before the CIT(A) and assailed the order of the Assessing Officer on various additions made. 4. The CIT(A) in the first appellate proceedings re-examined the seized material and observed that an important issue has emerged from the perusal of the seized documents marked as Annexure A-34 which relates to payment of ₹ 70,11,000/- in cash by the assessee for buying a piece of land at Phalke Samarak property, Nashik. The CIT(A) also observed that the issue has been dealt in great detail in the assessment order for the assessment year 2002-03. He noted with reference to the aforesaid seized documents that assessee paid ₹ 11,000/- on 26.03.2002 relevant to assessment year 2002-03 and thereafter ₹ 60,00,000/- on 09.04.2002 and ₹ 10,00,000/- in August 2002 in cash relevant to assessment year 2003-04 for buying aforesaid piece of land at Phalke Samarak property, Nashik. This cash payment was on money in addition to ₹ 55,00,090/- declared in the books. The seized documents also revealed that the purchase was made jointly with other per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy of loans and advances made to friends and relatives in cash in the earlier year. In the light of the seized material, he concluded that cash payment of ₹ 70,00,000/- in the impugned assessment year towards purchase of land has not been subjected to taxation and thus calls for enhancement of assessed income to the extent of ₹ 70,00,000/- for assessment year 2003-04 on account of unexplained investment for purchase of impugned land. The enhancement show cause notice dated 24.03.2011 was accordingly issued to the assessee seeking his explanation as to why it should not be concluded that ₹ 61.65 lakhs reflected at page 2 and 3 of Annexure A-1 was not the loans and advances and therefore it was not available to him for making cash payment of ₹ 70,00,000/- in assessment year 2003-04. The premise for such show cause was that aforesaid amount of ₹ 61.65 lakhs was already invested in cash on Road Constructions Project and same was not returned by Shri Vijay Luthra and consequently not available towards cash payment involved in purchase of land. 5. The relevant enhancement notice in this regard is extracted from para 19 of the CIT(A) order as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made and noted on page no. 2 and 3 were the payments made to some persons but did not remember the names of those persons out of cash available with the assessee and family members which were made in cash. He expressed his inability to produce any documentary evidence in support. The assessee further tried to explain that out of total cash amount of ₹ 61.65 lakhs about ₹ 15 lakhs cash was contributed by his deceased wife and his sons Rajiv and Amit who were major and regular assessees to income tax. The amount of ₹ 61.65 lac was paid as an advance and the loans already paid to some personal friends were returned by them making available the cash for the payment of ₹ 70.11 lakhs on 26/03/2002 and 09/04/2002 for the purchase of land and balance of ₹ 8.46 lac was contributed by his family members being co-owners of the said property. He also stated that being unable to produce documentary evidence and therefore in order to buy piece of mind and to avoid any litigation in the matter and for the sake of clarity admitted the undisclosed income of ₹ 61.65 lakhs for F.Y. 2001-02 and ₹ 8.46 lakhs for F.Y. 2002-03 . 6. From the above, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthra Construction. You have very clearly stated that investment (as given at Page 2 3 of Ann A-1) was made in cash (Page 13 backside - 2nd and 6th line from top). Page 12 reveals that you agreed to do W.B.M. work of Tapovan, Rasbihari and Pathardi. This leaves no doubt whatsoever that ₹ 61.65 lacs was your investment in cash for undertaking the above referred work. Since you had tried to mislead the department stating that this amount represented advance given to various persons/friends, you could not produce the documentary evidence and left with no option but to offer the same ₹ 61.65 lac) as undisclosed income for AY 2002-03. You then tied to get the benefit of this disclosure by stating that this money was received back from friends and utilized for making undisclosed cash payment of ₹ 70.11 lac for purchase of Phalke Smarak Property in AY 2003-04 (Rs. 60 lac on 09/04/2002 and ₹ 10 lacs in August 2002). The fact that you did not receive back money from Shri Vijay Luthra is also evident from Page No. 12 of Ann. A-1 wherein you have written I assumed that Vijay will return my full amount up to 31/03/2002 and for time-being he will return required amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/9 (Kar)] explaining the scope of power of the CIT(A) and noted that his action of proposed enhancement is in accordance with the provisions of the Act. The CIT(A) observed that in the present case, both Annexure A-1 showing details of cash payment with reference to impugned sum of ₹ 61.65 lakhs in aggregate and Annexure A-34 showing details of payment made for purchase of piece of land at Phalke Samarak property, Nashik are vital to invalidate the assessee s contentions. The CIT(A) observed that the question towards source of cash for making unaccounted cash payments towards acquisition of land is not a case of finding new source of income but to unearth or rebut the assessee s concocted contention of source with the help of the evidences available in the seized documents. The CIT(A) noted that it is a simple case of demolishing the assessee s theory that loans and advances given to friends relatives in assessment year 2002-03 were recovered in assessment year 2003-04 were available for impugned cash payments towards purchase of land out of said recovered loans/advances so recovered. 8. Similarly, on merits, the CIT(A) drew adverse inference against the assessee and ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus concluded that the enhancement of assessed income by ₹ 70 lakhs as unexplained investment under section 69 of the Act is justified. The relevant findings of the CIT(A) on the issue is extracted hereunder :- 22. I have carefully gone through the assessment order for AY 2002- 03, appeal orders, seized documents and other material on record. The appellant has not produced any documentary evidence in regard to recovery of loans in AY 2003-04 (stated to have been given to friends and relatives in AY 2002-03). Further, there was no such evidence in the seized documents which could substantiate the claim of the appellant that he received back loans and advances in AY 2003-04. On the contrary the seized documents (A-1) clearly establish that cash investments amounting to ₹ 61.65 lac was mode by the appellant towards road construction projects in AY 2002-03. The appellant's contention, that the cash payment of ₹ 70.11 lac on account of purchase of Phalke Samarak Property was out of withdrawals from M/s Luthra construction has already been rejected by the Hon'ble ITAT in their order No. 016/PN/2010 dt.3I/01/2011. Various cases quoted by the appellant in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of recovery of loans/advances amounting to ₹ 61.65 lac that he had given to his friends/relatives in AY 2002-03 is devoid of any documentary evidence and hence not acceptable. Appellant's contention that ₹ 47.21 lac came from Luthra Construction and ₹ 16.45 lac from Late Smt Urmila Luthra has already been considered by CIT(A) and hon'ble ITAT and rejected holding that the entire explanation of the appellant was an afterthought exercise to explain the source of cash payments in AY 2003-04. Under the facts and circumstances of the case as mentioned above I hold that the appellant's cash payments amounting to ₹ 70 lacs in AY 2003-04 remain unexplained. Appellant income is therefore enhanced by ₹ 70 lac as unexplained investment u/s 69 of the IT Act. In view of the facts of the case I also hold that there was no relationship between the transactions reflected on page no. 2 3 of Annexure A-1 and page 26 27 of annexure A-34 as claimed by the appellant. AO rightly added ₹ 61.65 lac on the basis of page 2 3 of Annexure A-1 as undisclosed income of the appellant for AY 2002-03. For AY 2003-04, I enhance income of the appellant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 70,00,000/- by invoking section 69 of the Act emanates out of material seized during the course of search action under section 132 of the Act. The Ld. DR accordingly submitted that no new source of income can be said to be involved in the present facts. The seized material were available with the Assessing Officer which were not purportedly appreciated by him while accepting the investment in land at Nashik. The CIT(A) by virtue of his coterminous power with that of Assessing Officer was entitled in law to look into seized material and correctly appreciate the same and determine the correct assessed income in the light of decision of the Hon ble Karnataka High Court in the case of K. S. Dattatraya (supra) relied upon by the CIT(A). He next referred to the decision of the Co-ordinate Bench of the ITAT in assessee s own case in assessment year 2002-03 (supra) and submitted that the ITAT has appreciated the fact in perspective and decided against the assessee. The Ld. DR submitted that onus squarely lies on the assessee to establish that the source of cash payment of ₹ 70.11 lakhs was out of cash recovery of loans and advances purportedly given to friends and relatives. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is not in consonance with the powers confers under section 251(1)(a) in so far as discovery of new source of income is concerned has considerable force. 12.2 However, the pertinent question is whether re-appreciation of the seized material placed before the Assessing Officer in a search assessment and redetermining the enhanced assessed income tantamounts to discovery of new source of income or not. As noted, the assessment has been carried out pursuant to search action wherein several incriminating documents were found and seized. The assessment for assessment year 2002-03 and 2003-04 were inter-alia framed with reference to these seized documents. The assessee has also heavily relied upon the assessment order relevant to assessment year 2002-03 as well as the order of ITAT relevant to assessment year 2002-03 and addition of ₹ 61.65 lakhs, among others, that were made in the assessment pertaining to assessment year 2002-03 and confirmed by the ITAT by dismissing the appeal of the assessee. The assessee has sought to advance a plea that this amount of ₹ 61.65 lakhs assessed by the Assessing Officer as undisclosed income was purportedly given as advance to friends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(a) of the Act. The decision of the Co-ordinate Bench of the Tribunal in the case of M/s National Auto World (supra) relied upon by the assessee only lays down the proposition of law that new source of income cannot be discovered in the enhancement proceedings by the CIT(A). There can be no quarrel to this legal proposition. However, as noted, instant case is not about discovery of new source of income but re-appreciation of seized material placed before Assessing Officer to probe the source of income towards investment claimed by the assessee. Therefore, we find no reason to entertain the plea of lack of jurisdiction towards enhancement raised by the assessee. 12.4 We concurrently note that the Ld. Counsel for the assessee could not demonstrate on merits by any tangible evidence on record in rebuttal that the purported loans were given to the friends and relatives and were actually recovered in cash to establish the nexus of loans recovered qua the investments toward land acquisition. We accordingly find it difficult to hold the case in favour of the assessee on merits since the primary onus has not been discharged by the assessee at all. In view of the aforesaid reasoning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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