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TMI Blog2019 (7) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... here was a search and seizure operation conducted u/s. 132(1) of the Act, 1961 on 29-10-2007, in the case of Sri D. Nagarjuna Rao, partner in the firm M/s. SVK Sri Sitaramanjaneya Constructions. Shri D. V. Krishna Reddy, is also one of the partners in M/s. SVK Sri Sitaramanjaneya Constructions (SCKSSC). During the course of search and seizure proceedings, page 23 of the ledger account books seized vide Annexure "AIDNRI04" dated 29-10-2007 was enquired into. Shri D. Nagarjuna Rao has stated in his statement that M/s. SVK Projects against whom the ledger account was maintained is a group persons represented by Shri D. V. Krishna Reddy, who in turn a partner in the firm M/s. SVK Sri Sitaramanjaneya Constructions also. He also stated that the assessee Shri D. V. Krishna Reddy (in short 'DVKR'), has invested the amount of Rs. 3,58,90,000/- on behalf of M/s. SVK Projects. When confronted with the above statement, DVKR accepted that he has contributed the amount on various dates as partners capital to M/s. SVK Sri Sitaramanjaneya Constructions and the source of funds being received from M/s. SVK Projects, a firm formed on 21-06-2006. Shri Satyanarayana Reddy, Shri Ch. Sitaramu, D. Sriniv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be amounts received from overseas, there is no reason why the advances were received only in cash . 5. In the light of the discussion made above, the claim of the assessee regarding receipt of advances in cash from the above persons aggregating to Rs. 2,42,00,000/- and investment of the same as partners' capital to M/s Sri SVK Sri Sitaramanjaneya Constructions by the assessee stood unexplained. Therefore, the same is considered as unexplained investment u/s 69 of the I.T. Act, and added to the total income. " 2.4 Aggrieved by the order of the Assessing Officer, Mr. DVKR filed appeal before the CIT(A) and the main theme of the submissions are that M/s SVK Projects is a firm and whose existence is proved beyond doubt, and receipt of the advances were also provided and confirmations were furnished. The learned CIT(A) not only considered the submission of Assessee and rejected them, but also enhanced the addition to Rs. 3,00,00,000/- on the ground that the assessee Shri D. V. Krishna Reddy, in his statement recorded on 14-11-2007, while referring to the statement of Sri D. Nagarjuna Rao (in whose case search & seizure operation u/s. 132(1) was conducted on 29-10-07), confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects and could have made the addition in the hands of M/s. SVK Projects, if doubted. We are also of the opinion that the learned CIT(A) on frivolous presumptions enhances the addition to Rs. 3.00 crores from Rs. 2.42 crores, comprising of cheque receipts which AO has accepted and not doubted. In our view, when the receipts by way of cheques have not even doubted by the AO or by the investigation team, the order of CIT(A) in enhancing the amount cannot be justified at all on the facts of the case. Therefore, to the extent of addition enhanced by the CIT(A), the same stands deleted." 10. Coming to the addition made by the AO of Rs. 2.42 crores, which is part of the investment made by assessee in M/s. SVK SSC, the explanation given was that they have withdrawn the funds from M/s. SVK Projects and invested in the firm and to that extent the source of funds stand explained as withdrawals from the firm. Page 28 of the ledger, which was narrated by the AO also mentions that contribution from M/s. SVK Account. The copy of Annexure "A/DNR/04 consisting pages 1 to 71 were placed in paper book. Paper book which is copy of note book was also perused by us and page 1 is account of Shri D.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is without jurisdiction and is not within time. The proceedings may, therefore be dropped." The AO has not responded to the above letter and proceeded as below: 2.8 The AO observed that the assessee's contention that provisions of "Sec. 150 have no application as the Hon'ble Tribunal made it very clear that the order cannot be read as a "direction" for initiating the proceeding in the case of partnership firm" is not accepted. The Hon'ble ITAT is a final fact finding authority, and it has observed vide order in ITA NO.79/Hyd/2012 dated 29-11-2013 (page 3), that Shri D.V. Krishna Reddy had received Rs. 3,00,50,000/- in cash from various parties in the months of November and December, 2006, and the amounts received by way of cheques to an extent of Rs. 58,90,000/- in the month of January 2007, and confirmed that they have advanced the funds on various dates to M/s. SVK Projects. Further as seen from para 10 of page 9 of Hon'ble ITA T's order, there is credit of Rs. 3 crore on 30-12-2006, which is said to be withdrawal from M/s. SVK Projects and investment in M/s. SVK SSC on behalf of M/s. SVK Projects. 2.9. The AO referring to the provisions of section 150 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee did not dispute the fact at any juncture up to the appeal proceedings at ITAT, that. the amount is invested in M/s SVK Sri Sitaramanjaneya Constructions. Hence, it is clear that the receipt of money by the assessee is true and beyond doubt. Thus the amount of Rs. 3,00,50,000/- stands to be unexplained credit in the books of the assessee as contemplated under section 68 of the Act, and which is in turn invested in M/s SVK SSC. As such the amount so credited is not offered to tax by the assessee, the same is added to the income returned." 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) and made elaborate submissions which were extracted by the CIT(A) in his order at pages 10 to 14. 4. After considering the submissions of the assessee, the CIT(A) confirmed the addition made by the AO by holding that during the appeal proceedings, the observations and findings of the AO were not clarified by the AR and the assessee has not satisfactorily explained the genuineness of the transactions in respect of the said investment of Rs. 3,00,50,000/-. 5. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch collection of advances were already explained, hence, there is no possibility of making any addition in the assessee's hand. He relied on the following decisions: a) ITO Vs. Arun Kumar Kapoor [2011] 16 Taxman.com 373 (Amritsar) b) CIT Vs. Bharat Engineering & Construction Co. [1972] 83 ITR 187 7. Ld. DR relied on the orders of AO/CIT(A). 8. Considered the rival submissions and perused the material on record. We notice from the records submitted before us that in the case of Mr. D.V. Krishna Reddy, who is the partner in the assessee firm, in whose hands the additions were made for making investment in the partnership firm M/s SVK Sri Sitaramanjaneya Constructions. The source for such investments were from the advances collected by the assessee. The coordinate bench in its order in ITA No. 79/Hyd/2012, dated 29/11/2013, deleted the addition in the hands of Mr. D.V. Krishna Reddy and made observation that revenue is free to enquire in the hands of assessee, if required. They made it clear that it is only an observation but not a direction. The ITAT order in the case of Mr. D.V. Krishna Reddy prompted the AO to initiate the proceedings u/s 147 in the case of assessee. At the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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