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TMI Blog2014 (10) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... all these appeals are that that the assessees herein, as noted above, are practicing doctors by profession and are related to each other as husband and wife. A search and seizure operation under S.132(1) of the income Tax Act was conducted at the residence of the assessees on 12.2.2009. Subsequently, notice under S.153A was issued on 16.9.2009, calling for returns for the assessment years 2003-04 to 2008-09. In response thereto and subsequent notices, assessees filed their returns, inter alia for the years under appeal on 25.10.2010, admitting income under various heads, including agricultural income. Against the additions made by the Assessing Officer while completing the assessments made, vide orders dated 29.12.2010 under S.143(3) read with S.153A of the Act, for the years under appeal, which were sustained by the CIT(A) by the impugned orders, assessees preferred the present appeals, which we shall deal with in seriatim. Appeals of Dr.K.Ramachandra: ITA No.374/Hyd/14 : Assessment year 2003-04 3. Only effective grievance of the assessee in this appeal relates to an addition, by way of unexplained credit, of Rs. 3,00,000 made by the Assessing Officer under S.68 of the Act, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 95,444 as total income for the assessment year 2003-04. Hence, it was observed that she could not have credit-worthiness to make such a huge amount of loan of Rs. 3 lakh to the assessee. It was also noticed form the bank account of Smt.Sujatha (State Bank of India, puttoor Branch A/c. No.01190008824) that a sum of Rs. 3,00,000 was credited by cash on 24.8.2002 and on 6.9.2002 the same amount was given as loan to the assessee, and there are no other credits appearing in the bank account. In this view of the matter, concluding that Smt.K.Sujatha was not having creditworthiness to give loan of Rs. 3,000,000 to the assessee, the Assessing Officer made addition on this count under S.68 of the Act. Before the CIT(A), it was submitted that Smt.Sujatha had gone to USA, where her son was employed, and hence, her husband had signed the confirmation letter filed before the Assessing Officer. It was also submitted that the loan transaction in question was reflected in her financial statement field alongwith her return of income. The CIT(A), however, taking further note of the fact that the income disclosed by the creditor Smt.K.Sujatha in earlier years was less than the income disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal relates to an addition of Rs. 2,00,000 made towards unexplained cash credits under S.68 of the Act. 11. Facts in brief relating to this issue are that the Assessing Officer noticed that the assessee claimed to have received an amount of Rs. 2,00,000 from K.Venkateswarlu (HUF) and credited it to his capital account. It was observed that Shri K.Venkteswarlu was the father of the assessee and the confirmation letter on behalf of K.Venkateswarlu (HUF) has been filed by the assessee himself. Shri K.Venkateswarlu passed away on 16.3.2003 and the assessee filed a return for K.Venkateswarlu(HUF) for assessment year 2004-05 on 18.11.2010 in the Office of Joint Commissioner of Income-tax Range- 1 Tirupati. In the said return, it was noticed that the income returned was only Rs. 82,000, and through a balance sheet as on 31.3.2004 enclosed to the said return, assessee tried to explain the source of funds in the hands of K.Venkateswarlu (HUF) by way of capital account brought forward, agricultural income and sundry loans. Not convinced as to the creditworthiness of the alleged creditor, the Assessing Officer treated the above amount of Rs. 2,00,000 as unexplained cash credit and accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z. 2004-05. 16. Facts of the case in relation to this issue are that the assessee purchased a property for Rs. 8,92,000 during the financial year 2002-03. Simultaneously, his wife, Dr.B.Manoharamma purchased the adjacent plot. The total area of the two plots, working out to 8639 sq. ft. was given for development vide a joint venture agreement with P.Rajasekhar Rao of Tirupati. The Development agreement, executed on 2.8.2003, envisaged that a residential complex was to be constructed on the plot of land covering 56,000 sq. ft. Out of the same, the assessee and his wife were entitled to 28,000 sq. ft. each in the built up area coming to their share. The assessee as well as his wife offered capital gains on the same, in the returns of income filed by them for the assessment year 2007-08. However, the Assessing Officer held that the property was transferred on 2.8.2003, when the possession was handed over to the builder, and hence capital gains has arisen in the assessment year 2004-05 and not 2007-08, and accordingly brought to tax the capital gains in the assessment year 2004-05 itself, computing the same at Rs. 41,72,782, and making additions of that amount in the hands of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or the year in which the construction of the property was completed and the constructed area coming to the share of the owner has been handed over to the assessee. Though there are a number of judicial pronouncements on this issue, there is a cleavage of judicial opinion, with the settled position being that year of assesability of capital gains arising out of a development agreement, depends on facts and circumstances of each case, more importantly terms and conditions of the development agreement and flow of consideration in terms of the development agreement. In the facts of the present case, the development agreement, admittedly, has not envisaged any consideration to be passed on to the land owner, viz. the assessee, at the time of signing of the development agreement. The development agreement categorically declared the assessee and his wife to be the owners of the property being developed until the completion of all the development work and till the handing over of the completed portion coming to the share of the assessee and his wife, with the title in relation to the other constructed areas being transferred by the assessee himself, to the nominees of the developer. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue authorities, and delete the addition of Rs. 41,72,782 made by the Assessing Officer on this count. Assessee's grounds on this issue are allowed. 22. In the result, this appeal of the assessee for assessment year 2004-05, being ITA No.375/Hyd/2014, is allowed. Appeals of Dr.B.Manoharamma: ITA No.376/Hyd/2014 : Assessment year 2004-05 23. The only effective grievance of the assessee in this appeal relates to the addition of Ras.41,72,782 made under the head 'capital gains' by the Assessing Officer and confirmed by the CIT(A), and the issue is as to the year in which the said capital gains are liable to be taxed, viz. the year in which the development agreement was signed, viz. assessment year 2004-05 or the year in which constructed area coming to the share of the assessee was handed over by the developer. Facts and circumstances of the case are identical to the ones considered by us in the context of the appeal of the assessee's husband, Dr.K.Ramachandra, in ITA No.375/Hyd/2014, hereinabove. Hence, for the detailed reasons discussed in that context in para 19 hereinabove, we hold that the capital gains in question have to be brought to tax only in the assessment year 2007-08, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of S.40(a)(ia) in the original assessment has been accepted by the assessee and there was no dispute as to the nature of the payment made in those proceedings, and consequently, the change in the version of the assessee was not only not acceptable but also not correct. Even with regard to the alternative contention with regard to applicability of the provisions of S.40(a)(ia) since the payment has already been made, the CIT(A) found no merit in the same, observing that the decision of the Special Bench (Visakhapatnam Bench) of the Tribunal in the case of Merilyn Shipping & Transports (2012) 016 ITR 0001) has been kept in abeyance and subsequent decisions of the Calcutta High Court in the case of CIT V/s. Crescent Exports Syndicate and the Gujarat High Court in the case of CIT vs. Sikander Khan Tunvar Tax Appeal No. 905 and Ors of 2012 order dated 2.05.2013 are in favour of the Revenue. 28. Aggrieved by the order of the Commissioner of Incometax( Appeals) on this issue, assessee is in second appeal before us. 29. We have considered the rival submissions and perused the impugned orders of the Revenue authorities and other material available on record. There is a change in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed investment in jewellery under S.69 of the Act, stating as under- "During the course of search operations carried out in the residence of the assessee, the lockers maintained by her were also operated. Dr.B.Manoharamma holds the locker no.6 at State Bank of India, TTD Administrative Office Branch, Tirupati. Another locker by No.13 is also jointly held alongwith her husband at State Bank of Hyderabad, Main Branch, Tirupati. On the date of search, the jewellery was valued by an approved valuer. The total gross weight of jewellery found in the locker was quantified into 2031.480 grams. The approved valuer had also determined net weight of this gold jewelery at 1856.660 grams and it was valued at Rs. 27,84,990/-. None of the members of the assessee family are assessed to wealth tax. The assessee was asked to explain sources of the same. In her sworn statement she had stated that part of the jewellery belongs to her late grand mother who had bequeathed it through a will to herself, her daughter and her mother. Her mother and father also cohabitate at the same residence and part of the jewellery belongs to them. She further stated that she along with her daughter had inherited a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdnra, allowance of 100 grams is not called for since he himself has filed a return of income showing total jewellery of only l400 grams, for which credit has already been given. Hence, the unexplained jewellery after giving further credit of 350 grams works out to 492 grams, which @ Rs. 1,500 per gram is Rs. 7,38,000/-. Hence out of the total addition of Rs. 12,57,000/-, an amount of Rs. 7,38,000/- is sustained. The appellant's appeal is partly allowed." 34. Still aggrieved, assessee is in second appeal before us. 35. We have considered the rival submissions and perused the orders of the Revenue authorities and other material available on record. Admittedly, the wills of testament on which reliance was placed by the assessee for explaining the jewellery in question, have been found/furnished by the assessee at the time of search. The wills thus found at the time of search may not be registered documents. But non-registration of the will by itself does not warrant any adverse inference against the assessee. In fact, the fact that a will was found at the time of search itself, leaves no scope for implying it to be a fabricated or non-genuine document, and being a document produced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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