9911796707
TMI Blog2015 (2) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... see an individual is an ex-service man deriving income from pension. Subsequently, as stated by assessee, he joined as a manager in a real estate concern and receiving salary. A search and seizure operat ion was conducted in case of Sri Vemireddy Prabhakar Reddy on 23/01/2008. As a consequence of search and seizure operation, a notice u/s 153A of the Act was issued to assessee. In response to the said notice, assessee filed return of income on 29/08/2008 declaring total income of Rs. 2,97,900. During the assessment proceeding, AO noticed that assessee has shown the following loans: 1. Syndicate bank mortgage loan Rs. 3,35,000 2. Loan from Giri, Singapore (NRI) Rs. 1,00,000 As observed by AO, since assessee failed to produce any evidence to substantiate such loan, loan amount was treated as unexplained credit and added to income of assessee. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A). 4. Ld. CIT(A) accepted assessee's explanation with regard to mortgage loan of Rs. 3,35,000 from Syndicate Bank. However, in so far as loan of Rs. 1.00 lakh claimed to have been taken from Shri L. Giri Babu, ld. CIT(A) conf irmed the addition by obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ource of income of the creditor, mode of payment, income-tax particulars etc., he treated the loan as unexplained credit and added it to the income of the year. Assessee challenged the addition in appeal preferred before ld. CIT(A). 9. Before the first appellate authority, it was submitted by assessee that the loan creditor is having 10 acres of agricultural land, out of which, six acres are having mango garden and in other four acres sugar cane and tomato cultivation is going on. It was submitted that loan creditor derives annual agricultural income of Rs. 6,50,000. Assessee also furnished an affidavit of the loan creditor stating the aforesaid facts. Ld. CIT(A), however, rejected assessee's explanation and held that loan given cannot be accepted as genuine as the loan amount was three to four times more than the creditor's annual income. Accordingly, he confirmed the addition. 10. The ld. AR referring to the affidavit of the loan creditor Shri A. Subramanyam and income certificate issued by VRO submitted that assessee was having agricultural income as well as past savings to advance loan. Further, it was submitted by assessee that loan was received through banking channel as cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same was compared with the seized material marked as "A/KCR/58" containing pages 45 to 47 seized from the business premises of Shri K.C. Reddappa Naidu, it was found that not only the name of assessee and his wife were mentioned in the seized material but they contain details of monies lent to K.C. Reddappa Naidu by assessee and the same has been duly signed by assessee. AO noted that hand-writing and stationary used in both the seized materials were found to be the same. Though, assessee disowned the seized materials but AO was not convinced with the same. Accordingly, he calculated the peak amount of the cash f low in the seized material at Rs. 4,30,22,313 and treated it as undisclosed income of assessee. Being aggrieved of such addition made by AO, assessee preferred appeal before ld. CIT(A). 16. Before ld. CIT(A), assessee submitted that firstly the figure of Rs. 4,30,22,313 is due to addition mistake of the AO of the figures in the seized material which actually should be Rs. 4,22,30,313. It was further argued that the seized material relied upon by AO is a dumb document as it does not have any narration about the transaction. It was also argued that neither the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reddappa Naidu on the basis of the same seized material, ITAT upheld the ld. CIT(A)'s order in deleting such addition by treating the seized material as dumb documents. 19. Having heard the parties and perused the materials on record, we do not find any infirmity in the order of ld. CIT(A) while deleting the addition. On a perusal of seized material which also form part of the ld. CIT(A)'s order, it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction as no names have been mentioned. In these circumstances, no addition can be made on the basis of such a dumb document. It is worth mentioning that while considering similar nature of addition made in case of Shri K.C. Reddappa Naidu on the basis of same seized material, the coordinate bench of Tribunal in ITA No. 1450/Hyd/2012 and others dated 16/05/2014, held as under: "107. We have heard the parties, perused the relevant materials on record and have gone through the orders of the revenue authorities. It is apparent form the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, considering the facts and materials on record in the light of the ratio laid down in the aforesaid decisions, we do not see any reason to unsettle the finding of the CIT(A). The ground is dismissed." In view of the aforesaid finding of the coordinate bench, we do not see any reason to interfere with the order of ld. CIT(A). Accordingly, order of ld. CIT(A) on this issue is upheld and this ground of revenue is dismissed. 20. The next issue is with regard to deletion of an amount of Rs. 4,38,000 by ld. CIT(A). 21. Briefly the facts are, during the assessment proceeding, AO on the basis of seized material marked as Annexure No. A/SSVG/2 came to a conclusion that assessee has purchased a land in his wife's name for a consideration of Rs. 4,38,000. Since, according to AO, the consideration paid was not accounted for, the same was treated as undisclosed investment and added to the income of assessee. Assessee challenged the addition before ld. CIT(A). 22. Before the first appellate authority, it was submitted by assessee that he and his wife had jointly purchased a land for a consideration of Rs. 4,38,000 and both of them have disclosed this fact in the return filed by them prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), however, was not convinced with the explanation of assessee and confirmed the addition made by AO. 27. The learned AR referring to the affidavit of the loan creditor as well as the details of his land holdings, submitted that as the said loan creditor was having sufficient agricultural income to advance the loan, the addition made should be deleted. He further submitted that loan was received through banking channel, hence, the genuineness of the transaction should not be doubted. Ld. AR submitted, without examining the creditor, AO could not have treated the loan as unexplained credit. 28. The ld. DR, on the other hand, justified the addition made in absence of evidences. 29. Having considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record, we are of the view that the matter requires re-examination by AO. Though, it is a fact that the loan creditor has confirmed of having advanced the loan and he may be having land holding, but, whether he has the capacity to advance loan of Rs. 4,24,000 requires to be verified by examining the creditor, which has not been done. Further, assessee's claim that the loan was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted for the first time, ld. CIT(A) should have give an opportunity to AO to verify the same. That being the case, there is violation of provision contained under Rule 46A. Therefore, we consider it appropriate to remit this issue to the file of the AO for examining the evidence afresh and taking a decision in the matter. However, we make it clear if on examination of the bank account, it is found that the loan transaction was through cheque and has been reflected in the respective bank accounts, the same has to be accepted. This ground is allowed for statistical purposes. 37. The next issue in the department's appeal is with regard to addition of Rs. 1,52,72,000 as unexplained investment in purchase of plots. 38. Briefly, the facts are, during the assessment proceeding, AO noticed that as per the seized material marked as "Annexure A/YSN/RES/1 and A/SSVG/2", assessee has advanced money towards purchase of plots at Rs. 1,52,72,000 and Rs. 4,38,000 while the first seized material relate to investment made by assessee, the second one contains land purchased in the name of his wife. When assessee was confronted with the seized materials, he totally disowned them and submitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income' can be made, the Assessing Officer has to bring on record material to show that on evidence found as a result of search there is undisclosed income represented by the credits appearing in the books of account. The premises of a company in which the assessee was a director and those of the assessee were the subject of search operations on January 18, 2000 and a document was seized and marked. On the basis of this document the Assessing Officer took Rs. 48 lakhs as the assessee's income from undisclosed sources. The assessee filed an appeal before the Commissioner (Appeals) who deleted this addition. The Department appealed to the Tribunal which dismissed the appeal holding that no attempt whatsoever had been made to link any of the entries in the seized book with any transact ion carried out by 'the assessee in his capacity as director or by his wife or by the company to show the amount in figure as assessable undisclosed income and that no proper use of seized material had been made to establish that the entries in the seized document related to undisclosed income of Rs. 48 lakhs. On further appeal: Held, accordingly, dismissing the appeal, that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said view of the matter, we uphold the order of ld. CIT(A) on this by dismissing the ground raised by revenue. 43. In the result, appeal in ITA No. 1879/hyd/2011 is partly allowed for statistical purposes. ITA No. 1910/Hyd/2011 for AY 2008-09 by assessee 44. The first issue raised by assessee is in relation to addition of Rs. 5 lakhs as unexplained credit. 45. Briefly the facts are, during the assessment proceeding, AO noticed that during the relevant previous year, assessee has obtained the following loans: i) Sri Sriramulu Rs. 5,00,000 ii) Sri M.V. Ramana Rs.10,00,000 iii) Sri Nageswara Rao, NRI Rs. 3,00,000 iv) Smt. Radhika Rs. 5,00,000 v) Rental advance from tenants Rs. 5,00,000 Total Rs.28,00,000 By observing that assessee could not produce address, sources of income, mode of payment, income-tax particulars etc. of the loan creditors, AO treated the entire amount of Rs. 28 lakhs as unexplained credit and added it to the income of assessee. Being aggrieved of such addition, assessee challenged the same before ld. CIT(A). Ld. CIT(A), though, accepted loans standing in the name of Sri M.V. Ramana, Smt. Radhika and rental advance from tenants, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of assessee was found on the bill. Accordingly, by observing that assessee has failed to explain the source of investment in jewellery, AO treated the amount of Rs. 91,618 as unaccounted investment and added it to the income. Addition made by AO was challenged before ld. CIT(A). Ld. CIT(A) after verifying the seized material confirmed the addition by holding that assessee had purchased some jewellery, the source of investment of which was not properly explained. 51. We have heard the parties and perused the material on record. It is the contention of ld. AR that the seized material is only an estimate and does not actually represent jewellery purchased by assessee. The ld. DR on the other hand justified the addition. 52. Having considered the submissions of the parties in the context of materials on record, we are of the view that assessee has not properly explained the contents of the seized material. As can be seen, while before the AO, he has completely disowned the seized material, before the first appellate authority, he has stated that the seized material is only an estimate. In these circumstances, we do not find any infirmity in the order of ld. CIT(A) in confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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