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TMI Blog2019 (12) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... not pressed. Ground No.6 is consequential in nature and not pressed, therefore same is dismissed as not pressed. The only grounds for adjudication before us are as follows:- 3. a) The ld. CIT(A) is not justified in sustaining the addition of Rs. 76,20,000/- towards on money received on sale of flats. Rs. 23,54,580/- b) Without prejudice to the above, the ld.CIT(A) ought to have directed the Assessing Officer to tax only the net profit in respect of the above receipts. 4. The ld. CIT(A) ought to have estimated profit @8% in respect of Rs. 3,22,560/- received from Sri M.K.S. Pratap. Rs. 7,974/- 5 a) The ld. CIT(A) is not justified in making addition of Rs. 56,70,000/- towards unexplained investment in purchase of property. Rs. 17,52,030/- b)Without prejudice to the above, the ld.CIT(A) ought to have telescopes the addition. 3. Facts of the case in brief are that the assessee is a partnership firm consisting of 04 partners. A survey in the case of SVBC group u/sec. 133A was conducted in the business premises of the assessee. During the course of survey operation, certain incriminating material was found and impounded as Annexure-A/DSC/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the financial year 2011-12 for a sum of Rs. 22,86,000 and one flat was sold during the financial year 2012-13 for a sum of Rs. 15,36,000, The assessing officer included the sale value of the 2nd flat also in the financial year 2012-13. Accordingly, the assessing officer considered the value of additional works in respect of the 2 flat amounting to Rs. 10,64,000 also for the financial year 2011-12, Thus, the assessing officer considered the total additional amount atRs. 76,20,000 (Rs. 65,56,000+Rs. 10,64,000) and proposed to consider, the some as on money in the hands of the appellant. The appellant submitted that the alleged on money is the consideration paid by the customers towards additional works and these additional works were carried out by Sri KSN Murthy who is the managing partner of the firm in his individual capacity. Further, it was submitted that Sri KSN Murthy admitted income towards these additional works in the returns of income filed by him. The assessing officer rejected the explanation for the reason that the total turnover admitted by Sri KSN Murthy for the A. Y.2012-13 is only Rs. 27,50,000 and further the appellant failed to submit the books of account of Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation of appellant do not hold any ground and addition made by the AO is confirmed and the ground raised is rejected." 7. On being aggrieved, assessee carried the matter in appeal before this Tribunal. 8. Ld. counsel for the assessee has submitted that the Assessing Officer added the entire amount as addition, which was confirmed by the ld. CIT(A), but only profit has to be added. 9. On the other hand, ld.DR has submitted that assessee has not given any evidence before the Assessing Officer and even before the ld. CIT(A), therefore addition is made. 10. We have heard both the sides, perused the material available on record and orders of the authorities below. 11. It is undisputed fact that the assessee has received on money to the extent of Rs. 76,20,000/-. It is not clear neither from the order of the Assessing Officer nor from order of the ld.CIT(A) that this amount is received by the assessee over and above the sale consideration and in which mode. Therefore, we are of the opinion that the Assessing Officer cannot make the entire addition, only profit has to be estimated. Accordingly, we set aside the order of the ld. CIT(A) and remit the matter back to the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm but not the amount of Rs. 56.70 lakhs. Further on verification of balance sheet of Sri Kotagri Suryanarayana Murthy, it is seen that he has neither any investment nor drawing from said firm. Moreover, on verification of balance sheet for the A.Y. 2013-14 of Sri Kotagri Suryanarayana Murthy it was found that he has invested an amount of Rs. 1,55,040/- but not the amount of Rs. 56.70 lakhs in the said firm. Here it is worth to mention that assessment proceedings in the case of Sri Kotagri Suryanarayana Murthy are also going on for the A.Y. 2011-12, 2012-13 & 2013-14. He was asked to furnish the books of account, source of investment of assets, copies of bank statements and cash flow statements for the Financial Years 2008-09 to 2011-12, but failed to produce the same for verification. Therefore, the claim of the assessee firm that the cash payment made in the books of partner Sri Murthy is found false and afterthought and it cannot be believed. 14. Before the ld.CIT(A), the assessee has submitted that the property was purchased on 10/12/2014, however, the amount paid by Sri Kotagri Suryanarayana Murthy is disclosed in his balance sheet on 31/03/2012 filed during the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 44AD of the Act. The appellant did not maintain any books of account. Therefore, the assessing officer is not justified in inferring that the expenditure was from explained source. Further, the profit having been assessed on estimate basis in terms of S.44AD of the Act, the assessing officer is not justified in making separate addition u/s 40A(3) of the Act. Thus, on both the counts the addition is not justified and deserves to be deleted." 19. The ld. CIT(A) after considering the explanation of the assessee observed that the only explanation of the assessee is that on money received is shown as gross receipt (turnover) in the individual hands of the partner and income @ 8% is shown by the concerned partner in the return filed u/sec. 44AD in the hands of the partner and the income returned by the assessee is assessed as 'income from other sources' by the Assessing Officer. The same was also subject matter of appeal which was decided in ITA No. 273/2017-18/CIT(A)/Vsp/2019-20, dated 14/06/2019. The ld.CIT(A) further observed that assessee has not filed any evidence to support the contention raised by the him nor produced during the assessment proceedings, therefore same is rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in a single day aggregate to more than Rs. 20,000/- during the above mentioned financial years is correct and true. When it was confronted to Sri Kotagiri Suryanarayana Murthy who is the partners of the assessee firm, he failed to offer any explanation. Moreover, on verification of the books of account it is found that assessee has not reflected the source as well as expenditure in the books of account. From the facts found in course of survey u/sec. 133A and during the course of assessment proceedings, the assessee failed to substantiate the source of expenditure as mentioned in the above narrated impounded note books, khatas, pocket diaries etc. Hence, considering the nature of business as well as practice followed by the assessee it is ascertained that the assessee is having unexplained expenditure of Rs. 34.73 lakhs during the year under consideration. Even otherwise, this expenditure amount of Rs. 34.73 lakhs should be disallowed u/sec. 40A(3) of the Act as the payment or aggregate payments were made to a person in a single day in cash. The burden lies on the assessee to offer the explanation in respect of the concerned expenditure. Therefore, it is the duty of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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