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TMI Blog2019 (12) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A read with section 143(3) of the Act by making an addition of Rs. 45,00,000/- in respect of the loan advanced to Smt. Naragoni Radha. After considering the submission of the assessee, the AO observed that pronotes and cash receipts were found in the possession of the assessee and it was also very much evident that based on the above documents, the assessee had advanced loan to Smt. Naragoni Radha. Accordingly, the AO made the addition u/s 68 of the Act treating the amount of Rs. 45,00,000/- as unexplained investment. 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the order of AO. 4. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1. The order of the learned CIT(A) is erroneous both on facts and in law. 2. The learned CIT(A) erred in confirming the addition of Rs,45,00,000/- on the ground that there is material to suggest that the assessee has advanced loans without appreciating the fact the investigation wing during post search enquires has enquired and found that there was no such advances and that what is found during the search is only copies and not originals and that suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO based on the document seized during the course of search which was in possession of the appellant. It is the contention of the appellant hat since the conditions of the MoU were not satisfied, the alleged amount of Rs. 45 lakhs was not advanced by the appellant. I have gone through the said MoU filed by the appellant. At page 3 of the said MoU it is clearly mentioned that the party of the second part i.e. Naragoni Radha have received a sum of Rs. 45 lakhs from the parties of the first part i.e. the appellant on 23-1-2007. It is also declared and affirmed that the parties of the second part had received the said amount on 23-1-2007 and on the said date, they have executed a promissory note and received the said amount in favour of the first party as collateral security. They have also affirmed that the second party being the lawful owners of the scheduled properties, have deposited the original title deeds relating to the properties with the first party on 23-1-2007 with an intention to create equitable mortgage thereof and for securing the said advance amount of Rs. 45 lakhs. Thus it is proved beyond doubt that the appellant had paid Rs. 45 lakhs to Naragoni Radha on recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. I have also gone through the assessment record. It is not disputed that the addition has been made by the AO based on the document seized during the course of search which was in possession of the appellant. It is the contention of the appellant that the addition made by the AO is no justified since no such loan was advanced. I do not agree with the contention of the appellant. In fact, during the course of search, as stated earlier, a statement was recorded from the appellant u/s.132( 4) wherein the appellant had submitted that he had advanced an amount of Rs. 5 lakhs to Sri K.Naganatham but the sources are not explainable. Apparently, he had admitted this sum as his undisclosed investment. Assessment records also indicate that the appellant had filed an affidavit before the AO wherein he had affirmed on oath as under. I do hereby declare that I admitted income in the assessment year 2008-09 is Rs. 15 lakhs and assessment year 2009-10 as Nil instead of AY 2008-09 is Rs. 5 lakhs and AY 2009-10 is Rs. 10 lakhs. I further state that I have given Rs. 5 lakhs to K.Naganatham in the FY 2007-08 i.e. AY 2008-09 and Rs. 10 lakhs to B.fv1anohar for the FY 2008-09 i.e. AY 2009- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the posting of the ~se for hearing itself was only on few dates and not many and posting was there even on 31-12-2010 the last date of time barring. 7. The learned CIT(A) erred in not directing to delete the addition on account of difference in valuation if the difference is less than 10% after reworking the value and further erred in not directing to enquire About the value of unfinished works . 8. The learned CIT(A) erred in not giving directions to delete the interest u/s.234 B which is not leviable if the department fail to adjust the seized cash towards advance tax in spite of request to do so. 9. Any other ground that may be urged at the time of hearing 15. Ground Nos. 1 & 9 are general in nature, hence, need no adjudication. 16. As regards ground Nos. 2 & 3 relating to the addition of Rs. 78,00,000/-, in the assessment order, the AO observed that during the course of search proceeding, certain documents were found and seized from the residential premises of the appellant and placed at page No.1, 2, 4, 8, 20, 25, 26 and 29 of annexure A/BRR/RES/3. These pages contained several pro-notes and cash receipts amounting to Rs. 155 lakhs. The same are listed below. S.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, ld. DR submitted that the addition is not based on the pronotes alone, but, the receipts show that the assessee has paid the amount to the third parties and signature of the third parties were found in the receipts found in the possession of the assessee, therefore, the addition has to be confirmed. 20. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. In this case, the AO made the addition in relation to the loan advanced to Sri K. Anjaneyulu as per page 1 and page 2 of the seized document and to Smt. B. Madhavi as per page no. 8 of the seized document No. A/BRR/RES/3. The case of the assessee before the AO was that the said loans were not advanced since certain conditions were not fulfilled by the persons to whom the loan amount was to be advanced. However, it was found in the possession of the assessee that pro-notes as well as receipts in respect of the loans advanced by the assessee duly signed by the third parties. In the pro-note, it is very clear that Shri K. Anjaneyulu has received an amount of Rs. 15 lakhs and on the pro-note it is clearly mentioned that repayment will be made al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the appellant that the said loans were not advanced since certain conditions were not fulfilled by the persons to whom the loan amount was to be advanced. I do not agree with the contention raised by the appellant. I find that as per page No.1 of the seized books referred to above, Shri K.Anjaneyulu had issued a pro note for Rs. 15 lakhs. The money receipt .dated 5-7-2008 forming part of the pro note clearly indicates that Sri Anjaneyulu had received a sum of Rs. 15 lakhs. On the pro note, it is reaffirmed by Sri Anjaneyulu who had promised to pay the said amount with interest @ 24%. In fact, one Sri K.Gowtham stood security/personal guarantee for the said pro note. Page No.3 of the seized document is a copy of an undated signed cheque by Sri K.Anjaneyulu of Rs. 15 lakhs. The said cheque is drawn on Bank of India A/c No.86433011000005. The cheque is in favour of B.Rajeswara Rao which further substantiates the fact of payment of Rs. 15 lakhs by the appellant. Similarly, in page No.2 of the seized document, an identical pro note and money receipt for Rs. 50 lakhs received by K.Anjaneyulu is available. In this pro note also, Sri K.Gowtham, S/o K.R.Rao residing at 266A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. After hearing both the parties and perusing the material on record as well as going through the orders of revenue authorities, we are of the view that CIT(A) has reasonably held that 500 grams of gold by the wife of the assessee is reasonable and hence, we confirm the decision of the CIT(A) and dismiss the grounds raised by the assessee on this issue. 24. As regards ground No. 7 relating to the addition of Rs. 75,73,000/- as unexplained investment in construction of house based on the valuation report of the DVO, the AO to ascertain the investment in the house property, referred the case to the Valuation Cell and the Valuation cell had estimated the cost of construction at Rs. 75.53 lakhs which was contested by the assessee who worked out the estimated construction at Rs. 66.10 lakhs. The AO declined to interfere with the finding of the Valuation officer and adopted the cost of construction as arrived at by the DVO and treated Rs. 73.53 lakhs as undisclosed investment in the house property. 25. On appeal, the CIT(A) directed the AO to verify the rate adopted by the Valuation Cell whether the same is based on CPWS rate and if so, the AO should give a deduction of 15% thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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