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2013 (10) TMI 608 - AT - Income TaxAssessment u/s 153C - Unexplained income - Cash credit in bank account - CIT sustained partial addition - Held that - assessee derived income from job receipts of Rs. 1,15,312/- and agricultural income of Rs. 30,000/- and the said incomes were admitted in the return of income filed. The Assessing Officer completed the assessment u/s 153C on 18/12/2009 determining the total income at Rs. 3,50,370/- which included agricultural income of Rs. 30,000/- treating the same as income from other sources and he also added Rs. 2,05,059/- being the amount credited in the bank account holding that such credits were not explained. We are of the opinion that the Assessing Officer while making addition of Rs. 2,05,059/- did not consider the fact that the assessee was carrying on business and such receipts were available for depositing in the bank account. The gross amount, therefore, would be much higher and was available for the assessee to be deposited and the assessee also receiving agricultural income of Rs. 30,000/-. Hence, taking into facts of the case, we delete the addition of Rs. 89,747/- as against the addition of Rs. 2,05,059/- made by the Assessing Officer - Decided in favour of assessee. Assessee located the property only in April, 2007 i.e. immediately after the end of the previous year. The agreement of sale cum general power of attorney was executed by Smt. A Renuka in favour of the assessee wherein it is mentioned that an amount of Rs. 15 lakhs was paid by the assessee, a copy of which has been filed at pages 88 to 98. It is clear from the above that the assessee paid Rs. 15 lakhs and incurred expenses in acquisition of the property by way of General Power of Attorney. The said property was ultimately transferred in favour of Radha Realters vide sale deed dated 01/01/2009 for a consideration of Rs. 18,15,000/-. Also the expenditure on stamp duty is to be considered, the cost would be more than Rs. 20 lakhs. Therefore, this clearly indicates that the amount of Rs. 20 lakhs received during the previous year is for the acquisition of the property. In our considered opinion, the transaction is genuine as the property was registered in favour of the person, who has advanced the amount. Advance given for land - Held that - It can be said that if the creditors are close relatives of the assessee or his employees the burden of the assessee to prove the creditworthiness of the creditors and genuineness of the transactions will be heavier in relative terms than in a case where the creditors are the outsiders. Therefore, the contention of the learned Counsel for the petitioner that under Section 68 of the Act the assessee is not expected to establish the capacity of the creditors to advance money and genuineness of the transactions is not acceptable to us, and we hold that the assessee is expected to establish proof of identity of his creditors, capacity of his creditors to advance money and genuineness of the transactions in order to discharge the onus imposed on him under Section 68 of the Act - Assessee has established identity of his creditors, capacity of his creditors to advance money and genuineness of the transactions in order to discharge the onus imposed on him under Section 68 of the Act - Following decision of R.B. Mittal Vs. CIT 2000 (8) TMI 54 - ANDHRA PRADESH High Court - Decided in favor of assessee. Disallowance u/s 40A - Held that - amounts paid to various persons is on behalf of the principals and not on his own behalf and each of the receipt clearly indicate that they have been paid the amount only for clearing the property which was purchased by DLF. Therefore, the payments do not represent the expenditure but represents the payments made on behalf of and for the purpose acquisition of the property by DLF and hence, the provisions of u/s 40A(3) have no application to the facts of the case of the assessee. The addition of Rs. 2,95,50,000/- sustained by the CIT(A) on account of amounts paid in cash on behalf of the principals is hereby deleted - Decided in favour of assessee.
Issues Involved:
1. Admission of additional grounds of appeal. 2. Treatment of agricultural income. 3. Levy of interest under sections 234A, 234B, and 234C. 4. Unexplained credits in bank accounts. 5. Addition of unexplained liabilities. 6. Disallowance under section 40A(3). Detailed Analysis: Issue 1: Admission of Additional Grounds of Appeal - The assessee filed a petition for admission of additional grounds of appeal for assessment years 2003-04, 2004-05, and 2005-06. The additional ground was that the CIT(A) erred in confirming the addition of Rs. 25,000/- as the Assessing Officer did not base such an addition on any seized material. - The Tribunal, relying on the decision of the jurisdictional High Court in DCIT, C.C.2, Hyderabad vs. Ahura Holdings, dismissed the additional ground for these assessment years. Issue 2: Treatment of Agricultural Income - The assessee claimed agricultural income for various assessment years, which was disallowed by the Assessing Officer due to lack of evidence such as sale bills of crops or purchase bills of fertilizers. - The CIT(A) upheld the disallowance, stating that the existence of agricultural land was not followed up by evidence of its ancestral nature or income derived from it. - The Tribunal remitted the issue back to the Assessing Officer, allowing the assessee another opportunity to substantiate the claim with relevant material and proof of agricultural income. This ground was allowed for statistical purposes. Issue 3: Levy of Interest under Sections 234A, 234B, and 234C - The assessee challenged the levy of interest under these sections. The Tribunal held that since the levy of interest is consequential to the order to be passed by the Assessing Officer on the remitted issue, the Assessing Officer should rework the same and determine the consequential interest. Issue 4: Unexplained Credits in Bank Accounts - For assessment years 2006-07 and 2007-08, the Assessing Officer made additions based on unexplained credits in the assessee's bank accounts. - The CIT(A) partially upheld these additions, allowing relief to the extent of the income returned by the assessee and retaining the balance due to lack of explanation. - The Tribunal, after considering the facts and submissions, deleted the addition of Rs. 89,747/- for AY 2006-07, recognizing that the gross amount received would be much higher and was available for deposit in the bank account. Issue 5: Addition of Unexplained Liabilities - For AY 2008-09, the Assessing Officer added Rs. 22 lakhs shown as liability in the balance sheet as unexplained income. - The CIT(A) confirmed this addition, but the Tribunal deleted it, accepting the assessee's explanation that the amounts were received as advances for the purchase of properties and were returned to the concerned parties. The Tribunal found that the assessee had established the identity, capacity, and genuineness of the transactions. Issue 6: Disallowance under Section 40A(3) - The Assessing Officer disallowed Rs. 3,66,68,250/- claimed by the assessee as payments made to various persons, treating it as non-genuine and applying section 40A(3) for cash payments. - The CIT(A) reduced the disallowance to Rs. 2,95,50,000/-. - The Tribunal deleted the entire addition, holding that the payments were made on behalf of principals (DLF, Demi Realtors, and Radha Realtors) and not as the assessee's expenditure. The Tribunal concluded that section 40A(3) did not apply as the payments were not the assessee's own expenditure but were made as an agent. Conclusion: - Appeals for ITA Nos. 653, 654, 655/Hyd/12, and 656/Hyd/12 were partly allowed for statistical purposes. - Appeals for ITA Nos. 657 & 658/Hyd/12 were allowed.
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