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TMI Blog2015 (2) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to be genuine. Remit the issue back to the file of AO to examine it afresh - Decided in favour of assessee for statistical purposes. Unaccounted cash credit for AY 2004-05 - Held that:- matter requires re-examination by AO. Though it is a fact that the loan creditor has confirmed of advancing the loan and to some extent it is also proved that the loan creditor was having income from agricultural activities, but, it requires to be examined whether the creditor was having creditworthiness to advance loan of ₹ 29.70 lakhs. Further, genuineness of the transaction also requires to be proved. In this context, ld. AR submitted before us that loan transaction was through banking channel, but, it appears from the orders of the departmental authorities, assessee never brought such fact to their notice.- Decided in favour of assessee for statistical purposes. Peak amount of the cash flow in the seized material - CIT(A) deleted addition of ₹ 4,30,22,313 - Held that:- nfirmity 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 ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is also neither in the name of assessee nor bears his signature. The AO has not brought on record any other corroborat ive evidence to substant iate the allegation that notings in seized material represent undisclosed investment of assessee. In these circumstances, conclusion of ld. CIT(A) that it is merely a dumb document and no addition can be made on the basis of such dumb document, in our view, is totally justif ied and cannot be interfered with. - Decided in favour of assessee. Undisclosed investment in gold ornaments - Held 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 confirming the addition - Decided against assessee. Unaccounted loan - Grievance of the department that evidences were produced for the first time before ld. CIT(A) and without giving an opportunity to AO to verify the same, ld. CIT(A) has deleted the addition on the basis of those evidences - Held that:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Loan from Giri, Singapore (NRI) ₹ 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 ₹ 3,35,000 from Syndicate Bank. However, in so far as loan of ₹ 1.00 lakh claimed to have been taken from Shri L. Giri Babu, ld. CIT(A) conf irmed the addition by observing that assessee has failed to correlate the receipt of loan from Shri L. Giri Babu by producing specific details like bank statement, hence, he held that as genuineness of the loan is not proved, addition to that extent needs to be confirmed. 5. We have heard the parties and perused the materials on record as well as the orders of the revenue authorities. Ld. AR submitted before us that confirmation given by the said creditor by way of an affidavit clearly establishes the fact that loan is genuine. He further submitted, the fact that the said creditor was working abroad is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of ₹ 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 creditor has issued 3 cheques, all dated 29/07/2007 of ₹ 9,90,000 each. Thus, it was submitted, as the creditor has confirmed the loan and the genuineness of the transaction cannot be doubted as it is through banking channel, addition made is not justified. 11. The learned DR, on the other hand, submitted that before AO, assessee did not submit any evidence to prove the loan transaction. It was submitted that even before ld. CIT(A) also, assessee did not bring on record the fact that loan amount was received through cheques. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 4,30,22,313 is due to addition mistake of the AO of the figures in the seized material which actually should be ₹ 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 party nor the AO had sought any explanation from assessee with regard to seized material. Therefore, when no enquiry was conducted with regard to the nature of the notings made in the seized material, AO should not have presumed the figures mentioned therein as undisclosed income of assessee. It was submitted that assessee is working with Shri K.C. Reddappa Naidu as an employee and has got a very limited role in the business transactions, therefore, AO should not have presumed that assessee would hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt 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 assessment order that addition of ₹ 4,82,30,313/- was made solely on the basis of page No. 45 of seized material marked as annexure A/KCR/58 found and seized in course of search and seizure operation in case of KCR Homes and Developers. A perusal of the seized material, a copy of which is at page 262 of the assessee s paper book, shows certain amounts along with dates having been noted there in totalling to ₹ 4,22,30,313/- including interest of ₹ 15,30,313/-. Nothing has been indicated whether the figures mentioned denote receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his wife s name for a consideration of ₹ 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 ₹ 4,38,000 and both of them have disclosed this fact in the return filed by them prior to the search as well as in pursuance to notice issued u/.s 153A. Ld. CIT(A) after verifying the facts and materials on record, found the aforesaid statement of assessee to be correct. He observed that in the balance sheet assessee had disclosed ₹ 2,44,238 as his share in purchase of site. He also noted that assessee s wife Smt. Y. Pranayati had furnished similar information in the return filed by her. Therefore, considering the fact that investment was disclosed to the department, ld. CIT(A) deleted the addition. 23. We have heard the parties and perused the materials on record. On a perusal of return of income filed by assessee originally as well as in pursuance to notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition 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 ₹ 4,24,000 requires to be verified by examining the creditor, which has not been done. Further, assessee s claim that the loan was received through regular banking channel also needs examination. If assessee can establish the creditworthiness of the creditor, then, the loan cannot be treated as unexplained credit. With the aforesaid observations, we remit the issue back to the file of AO. 30. The next issue is with regard to the loan amount of ₹ 9 lakhs treated as unexplained cash credit by AO and confirmed by ld. CIT(A). 31. As can be seen, assessee has not been able to prove the aforesaid loan amount by bringing any evidence on record. Even a confirmation letter has not be obtained from the creditor. As assessee has failed to establish the three ingredi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in the department s appeal is with regard to addition of ₹ 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 ₹ 1,52,72,000 and ₹ 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 they are rough sheets and do not pertain to him. AO, however, rejecting the claim of assessee, treated the amount of ₹ 1,52,72,000 and ₹ 4,38,000 as undisclosed investment of assessee and added it to the income of the year. 39. As far as ₹ 4,38,000 is concerned ld. CIT(A) after verifying the details found that same addition made in the preceding AY was repeated again. Since the amount was deleted in AY 2006-07 and the present addition being a repetition of the addition made earlier, ld. CIT(A) deleted it. As far as the amount of ₹ 1,52,72,000 is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal 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 ₹ 48 lakhs. On further appeal: Held, accordingly, dismissing the appeal, that there was no material on record to show on what basis the Assessing Officer had reached the conclusion that the figure 48/1 was to be read as ₹ 48 lakhs. The document recovered during the course of search was a dumb document and led nowhere. The Tribunal had rightly deleted the addition of ₹ 48 lakhs made by the Assessing Officer and the order of the Tribunal did not give rise to a question of law, much less a substantial question of law. 4.3 Therefore, having perused the facts of the case and also following the decision of Hon'ble Delhi High Court cited as above, I am of the view that the seized material is not self explanatory and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Ramana Rs.10,00,000 iii) Sri Nageswara Rao, NRI ₹ 3,00,000 iv) Smt. Radhika ₹ 5,00,000 v) Rental advance from tenants ₹ 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 ₹ 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, he confirmed additions of ₹ 5 lakhs being loan in the name of Sri Sriramulu and ₹ 3 lakhs in the name of Sri Nageswara Rao. 46. As far as loan of ₹ 5,00,000 from Sriramulu is concerned, it was submitted before ld. CIT(A) that the said creditor was having agricultural land and is engaged in agricultural activities. It was submitted that the creditor was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 confirming the addition. Accordingly, this ground is dismissed. 53. In the result, appeal in ITA No. 1910/Hyd/11 is partly allowed for statistical purposes. ITA No. 1880/Hyd/2011 for AY 2008-09 by revenue 54. As stated earlier, during the assessment proceeding, AO has made addition of ₹ 28 lakh representing the loan t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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