9911796707
TMI Blog2019 (9) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... the income as under: A.Y Income returned (Rs.) Agrl. Income returned (Rs.) 2001-02 1,18,500 2,00,000 2002-03 1,20,000 1,00,000 2003-04 1,83,000 1,00,000 2004-05 3,48,900 1,00,000 2005-06 3,48,900 1,00,000 2006-07 4,53,900 1,00,000 2007-08 4,54,400 2,50,000 2008-09 3,87,613 ---- 3. During the assessment proceedings u/s.153A of the Act, the Assessing Officer found that during the course of search and survey, evidence of undisclosed income of the assessee for various assessment years in the form of cash deposits into his bank accounts, unexplained cash credits, undisclosed investment in construction of house property etc. were found but the assessee has not admitted these incomes to tax either before the DDIT (Inv.) or in his returns of income filed in response to notices u/s.153A of the Act for the relevant assessment years. Therefore, during the assessment proceedings, show cause notices were issued to the assessee asking the assessee to file the cash flow statement, receipt and payments statements, Balance Sheet/statement of affairs and copies of bank accounts with documentary evidences explaining the cash credits/other credits, exceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these cheques were signed by one Shri K. Krishna Murthy Naidu in favour of one Shri S. Sridhar. He observed that these two cheques were found in the residence of assessee and therefore, the amount mentioned therein belonged to the assessee. Accordingly, he treated the sum of Rs. 4 Lakhs as unexplained investment u/s.69 of the Act for the A.Y. 2001-02 and brought it to tax. 3.4. During the assessment for the A.Y. 2003-04, the A.O. noticed that the assessee had purchased a plot of 539 sq. yards in the month of September, 2002 for Rs. 6,50,000/- and when the source for the consideration paid was asked, the assessee explained it to be out of his agricultural income. The A.O. did not accept the same and treated the same as an unexplained investment u/s 68 of the Act in the A.Y. 2003-04. 3.5. During the assessment for the A.Y. 2006-07, the A.O. found that the assessee has constructed a duplex house on the above mentioned plot by making a total investment of Rs. 58 lakhs in the said house till 10.09.2006. Assessee had explained that the loans taken from banks were the source for the above investment. But, the AO found the claim to be false. He found that a sum of Rs. 22 lakhs was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the cheques found in his possession, but the cheques were neither signed by him nor were they issued in his name. He, therefore, submitted that the documents did not pertain to the assessee and hence the addition could not be made in the hands of assessee. 5. Ld.DR, however, supported the orders of authorities below. 6. Having regard to the rival contentions and material on record, we find that the Assessing Officer has recorded that there was no documentary evidence of agricultural land in the status of HUF and therefore, the income offered in the hands of HUF has to be treated as 'income of assessee from other sources'. On the other hand, the CIT(A), at para 7 of her order, observed that there was land in the name of joint family at Ramtek Village in the names of seven family members. Therefore, in the course of appellate proceedings, she forwarded it to the Assessing Officer for his comments. It was also observed that though sisters and brothers of the appellant are appearing in the said list, the name of the appellant is conspicuous by its absence and therefore, she negatived the contention of assessee that he had share in the joint family property and the same is appor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n addition of Rs. 2,01,515/- as unexplained expenditure u/s.68 of the Act was made. 8. As regards the unexplained cash credits, we find that assessee had filed cash flow statement covering the period 2001-02 to 2008-09 and after taking into account the opening balance as on 1.4.2000 at Rs. 6,26,500/- and income from commission, agricultural income, income from father, hand loans, income from dividend and other sources as well as cash withdrawal from the HSBC a/c and Bank of India, the assessee computed receipts for each year. Similarly, he has worked out payments under drawings, rent expenses, purchase of plot, payments to labour contractor, payment to chit funds, advance tax (income tax), cash deposited in both the banks HSBC and Bank of India, etc. By considering both the receipts and payments, closing cash balances have been arrived at for each of the assessment year by the assessee, before the CIT(A), showing the opening balance as on 01-04-2000 at Rs. 6,26,500/-. The CIT(A) required the assessee to file proof of existence of opening balance of Rs. 6,26,500/- as on 1.4.2000 by filing necessary documents. In reply, assessee contended that in the earlier assessment years , busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) should have considered these facts and accepted the opening cash balance as on 1.4.201. He further drew our attention to the revised cash flow statement drawn by the CIT(A), wherein the CIT(A) has taken Rs. 5 lakhs as payment to labour contractor during the F.Y. 2001-02, which according to him is not correct as the construction of the house commenced only in A.Y. 2003. He submitted that if these two figures are considered properly, then there would not be any deficit for the A.Y. 2001-02 or for the subsequent A.Ys. 8.3. We find that the assessee has declared agricultural income of Rs. 2,00,000/- for the A.Y. 2001-02. Going by the same, the agricultural income for the earlier years from 1992 can be estimated at Rs. 50,000/ per year i.e. Rs. 4,50,000/-. The marriage expenses incurred outside the books of accounts have already been brought to tax as unaccounted income of the assessee. Therefore, the agricultural income from the earlier years can be accepted as the source for the opening cash balance claimed by the assessee. The peack cash credit of Rs. 4,94,665/- also should be considered as cash available with the assessee. Further, as regards the payment to labour contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.Y. 200102 and respectfully following the same, the additions made during the relevant A.Y. are deleted subject to the directions given above. Thus, the appeal for A.Y. 2002-03 is partly allowed for statistical purposes. 12. In the A.Y. 2003-04, there is an addition of agricultural income and also addition on account of cash deficit. The argument of the assessee is that if the opening balance as on 1.4.2000 is taken into consideration and the expenditure being payment to labour which was considered in A.Y. 2001-02 is also deleted, then there would not be any cash deficit for the relevant A.Y. otherwise, it is submitted that if drawings totalling to Rs. 72,000/- is also considered, there would be no addition. We find that the Cash Flow Statement of the assessee has shown drawings of Rs. 72,000/- in the A.Y. 2003-04. The CIT(A) has considered the drawings of Rs. 1,15,000/- which are the figures submitted by the assessee as revised house hold withdrawals. The AO has already been directed to re-draw Cash Flow Statement in the order for the A.Y. 2001-02 and consequently the same has to be followed for the relevant A.Y. also. Therefore, the appeal of the assessee for A.Y. 2003-04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cit brought to tax, there are other additions of Rs. 15 lakhs as unexplained income, Rs. 7 lakhs as unsecured loans and Rs. 12 lakhs as unexplained investment in house property. The first two grounds on addition of agricultural income and cash deficit are covered by the decision in the earlier AYs and therefore these grounds are treated as partly allowed for statistical purposes. 15.1. In so far as addition of Rs. 15 lakhs is concerned, the assessee has stated that these are amounts involved in the cheques which have been bounced totaling to Rs. 15 lakhs and AO has erroneously taken as fresh credit each time. 15.2. We find that at para 8.6.1 of her order CIT(A) has discussed the same in detail and for the sake of ready reference the said paragraph is reproduced hereunder. "As regards the receipts by cheques it is found that sum of the cheques have been bounced totalling to Rs. 15 lakhs repeatedly but the AO has taken the same as fresh credit each time. It requires verification by the AO and he should reach to the correct amount for the purpose of quantifying the loan amount. It is argued that the sum of Rs. 14,78,000/- representing cheque no. 25808 dated 15-4-2005 for Rs,1,76,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to DVO who determined the value of property at Rs. 75,31,536/- as against the valuation report of registered valuer who had determined the value at Rs. 36 lakhs. The AO treated the difference as unexplained investment in the property. The AO did not accept assessee's contention of receipt of Rs. 10 lakhs from Smt. Radha Rao and also did not consider the payments of Rs. 8 lakhs to Shri Srinivasa Reddy and Rs. 4 lakhs to Shri G.Madan Mohan as spent for construction. Therefore, he excluded Rs. 22 lakhs from the explained sources and made addition of Rs. 39.32 lakhs which was confirmed by the CIT(A). The Ld.Counsel for the assessee submitted that valuation cell did not allow any deduction towards self-approval or towards rate difference. He sought deduction of 15% towards rate difference and 10% towards self-approval and if the same is taken into consideration the total investment in the property would come to around Rs. 57,61,626/- which is less than the expenditure incurred by the assessee. Therefore, he sought deletion of addition of Rs. 17.32 lakhs. 17.1. The Ld.Counsel for assessee submitted that the sum received from Smt Radha Rao was through cheques and letter of confirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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