9911796707
TMI Blog2015 (3) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... eptional circumstances envisaged in Rule 6DD(g) of the Income -tax Rules. In support of this plea, assessee has submitted details with respect to the names of the villages where the lands were purchased and also the list of major banks in Chittoor District. The Revenue authorities have rejected the plea of the assessee in this behalf by general observations. Since the assessee has furnished details of the villages and the details of the branches of major banks in Chittoor District, we deem it just and proper to set aside the impugned orders of the Revenue authorities on this aspect, and remit the matter to the file of the Assessing Officer for proper examination of the claim of the assessee that banking facilities were not available where lands have been purchased and payments have been made and consequently, these payments are covered by the exceptional circumstance envisaged in Rule 6DD(g) of the I.T. Rules - Decided in favour of assessee for statistical purposes. Disallowance of expenditure on adhoc basis - Held that:- CIT(A), after considering all the facts and circumstances of the case and corresponding expenditure claimed and allowed in the earlier years, has restricted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same time, the learned counsel for the assessee has also furnished before us, a cash flow statement, for explaining the sources of the capital introduced. These aspects of the matter have not been examined by the CIT(A) and the same have to be verified by the Assessing Officer. Considering totality of facts and circumstances of the case, we find it just and proper to remit this issue to the file of the Assessing Officer for re-deciding the same, after verifying the cash-flow statement furnished by the assessee and in the light of the explanation of the assessee with regard to the sources for the capital introduced by the assessee. He shall of course, re-decide this issue after giving reasonable opportunity of hearing to the assessee to substantiate his claim with regard to the sources, other than the agricultural income of ₹ 4,32,500 which has been accepted by the CIT(A).- Decided in favour of assessee for statistical purposes. Unexplained investment in purchase of land - Held that:- We are in confirmity with the order of the CIT (A) as the claim of the assessee that it received back this amount of ₹ 3,50,00 on 1.11.2003 is not relevant. The assessee has not exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration. Hence we are of the opinion that the advances made by the assessee are out of explained income of the assessee - Decided in favour of assessee. Contribution to chit fund - Held that:- The AO held that the payment of the amount of ₹ 21,700/- and ₹ 25,000/- to Shri Chamundi Group of companies has not been explained and added the amount. During the appellate proceedings, the assessee stated that these amounts were installments towards purchase of residential plots and were subsequently refunded since permission for developing the plot were not received by them. The CIT (A) held that this does not explain the source of initial investment of ₹ 46,700 as unexplained investment and sustained the addition. It was submitted that in the consolidated cash flow statement at Row No.23 of page No.3, the amount is reflected. Hence we set aside this issue to the file of the AO to verify the same - Decided in favour of assessee for statistical purposes. Addition towards political expenditure - Held that:- It was submitted that during the years under consideration, the assessee has made certain political expenditures amounting to ₹ 33,840 for AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 as income from other sources. Since the assessee has not produced evidence for the ownership of the remaining (20.9 - 14 acres = 5.1), we set aside the issue to the file of the AO to give one more opportunity to produce the land holdings and the proof for the income from the sale of agricultural commodities as well as the expenses incurred in the course of cultivating the land. - Decided in favour of assessee for statistical purposes. Advance for purchase of plywood and laminates - CIT (A) held that “The appellant has reflected ₹ 35.89 lakhs towards house construction as on 31.03.2008 and hence the contention is accepted and the addition is deleted - Held that:- We find that the construction account has shown an expenditure of ₹ 35.89 lakhs as on 31.03.2008. Hence payment of ₹ 1,95,000 being part of construction accounts is only a small portion of the entire amount spent towards construction. We find that the amount of ₹ 35.89 lakhs towards house construction has been reflected in the accounts of the assessee. Whether the amount has been paid towards granites or plywood and laminates, is not relevant as the payment is part of the construction account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Addition on account of unexplained cash credit Rs.6,95,000 3. Aggrieved by the above additions/disallowances, assessee preferred appeal before the CIT(A), who confirmed disallowance made by the Assessing Officer in terms of S.40A(3) in its entirety, but gave some relief out of the other three additions/disallowances made by the Assessing Officer, and thus partly allowed the appeal of the assessee. 4. Still aggrieved, assessee preferred appeal, ITA No.1765/Hyd/2013 before this Tribunal. 5. In addition to the grounds raised in the appeal originally, contesting the additions/disallowances sustained by the CIT(A), to which we shall advert later, the following additional grounds have been raised, with a petition for admission and adjudication on the same- (1) The Ld. Assessing Officer ought to have appreciated the fact that no incriminating/seized material was found during the course of search in order to make the addition to the returned income. (2) The Ld. Assessing Officer ought to have followed the ITAT Mumbai Special bench decision in ITA Nos.5018 5059/M/10 dated 06.07.2012 in the case of M/s. All Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, which has been confirmed by the CIT(A). 9. Facts of the case in relation to this issue are that the assessee showed purchase of land related to real estate business amounting to ₹ 23,76,020 during the year, which comprised of cost of land of ₹ 21,60,180 and registration charges paid to government of ₹ 2,16,020. Since the entire purchases were made in cash, the Assessing Officer held that these purchase were in violation of the provisions of Section 40A(3) and hence, disallowed 1/5th of the same amounting to ₹ 4,32,036. 10. On appeal before the CIT(A), it was submitted that the lands purchased by the assessee are agricultural lands and payments have been made to farmers/agriculturists. It was also stated that agriculturists normally do not maintain any bank account and as per their request, assessee had made payments in cash. Placing on record certificates from Tahsildar of Tirupati Rural Mandal and Renigunta Mandal stating that the villages in question were located outside Tirupati municipal limits and their population was below 10,000, assessee claimed that the payments made for purchase of land was covered by Rule 6DD(g) of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es have rejected the plea of the assessee in this behalf by general observations. Since the assessee has furnished details of the villages and the details of the branches of major banks in Chittoor District, we deem it just and proper to set aside the impugned orders of the Revenue authorities on this aspect, and remit the matter to the file of the Assessing Officer for proper examination of the claim of the assessee that banking facilities were not available where lands have been purchased and payments have been made and consequently, these payments are covered by the exceptional circumstance envisaged in Rule 6DD(g) of the I.T. Rules. The Assessing Officer shall accordingly re-decide this issue in accordance with law and after giving reasonable opportunity of hearing to the assessee. This ground is allowed for statistical purposes. 15. The next grievance of the assessee in this appeal relates to disallowance of expenditure on adhoc basis. 16. Facts of the case in relation to this issue are that during the course of assessment proceedings, it was noticed that the assessee has claimed a total expenditure of ₹ 8,92,861 in respect of his real estate business. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come claimed by the assessee as income from other sources. 22. Facts of the case in relation to this issue are that the Assessing Officer noticed that the assessee has claimed agricultural income amounting to ₹ 4,98,500, but failed to furnish evidence regarding agricultural operations carried out by him or regarding sale of agricultural produce. He, however, submitted an income certificate obtained from MRO/Tahsildar for the year 2005-06. Holding that it was not clear whether the assessee was in ownership of the agricultural lands in the year 2002-03, the Assessing Officer disallowed 50% of the agricultural income claimed by the assessee and accordingly made an addition of ₹ 2,49,250. 23. On appeal, the CIT(A), taking note of the fact that the agricultural income claimed by the assessee works out to ₹ 30,000 is on higher side considering the fact that the lands in question are situated in Chittoor District which is not known for its agricultural productivity, estimating the agricultural income at ₹ 15,000 per acre, worked out the agricultural income on the land-holding of the assessee on 17.25 acres owned by him, determined the same at ₹ 2,58,750 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit and accordingly made addition of ₹ 6,95,000 under S.68 of the Act. 29. On appeal before the CIT(A), it was explained that this amount of ₹ 6,95,000 included agricultural incomes generated in the financial year 2001-02 of ₹ 4,32,500 and credited on1.4.2002, relevant to assessment year 2003-04. As for the balance, it was stated that the same represented rental and agricultural income of his mother, Smt. S.Basamma. In support of agricultural income of Smt.Basamma, assessee furnished a certificate dated 13.9.2002 from MRO Rayachoti, stating that Smt.Basamma has agricultural income amounting to ₹ 2,00,000. The assessee has also filed a copy of his return for assessment year 2002-03 filed on 14.8.2002, which reflected the net agricultural income of ₹ 4,35,200. The CIT(A) remanded the matter to the Assessing Officer for verifying the correctness of the explanation of the assessee before him in the light of evidence adduced. After considering the remand report of the Assessing Officer in response and the submissions of the assessee thereon, the CIT(A) gave the benefit of agricultural income of the year 2001-02 of ₹ 4,32,500 to the assessee, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh-flow statement furnished by the assessee and in the light of the explanation of the assessee with regard to the sources for the capital introduced by the assessee. He shall of course, re-decide this issue after giving reasonable opportunity of hearing to the assessee to substantiate his claim with regard to the sources, other than the agricultural income of ₹ 4,32,500 which has been accepted by the CIT(A). 33. In the result, this appeal of the assessee, viz. ITA No.1765/Hyd/2013 for the assessment year 2003-04, is treated partly allowed for statistical purposes. ITA No.1766/Hyd/2013: Assessment year 2004-05 34. Assessee has raised as many as five effective grounds besides two general grounds which do not require specific adjudication, contesting the following additions/disallowances made by the Assessing Officer and confirmed by the CIT(A). (a) Disallowance of 20% of land purchases under S.40A(3) amounting to ₹ 4,76,230 (b) Disallowance of 10% of total expenditure amounting to ₹ 73,083 (c) Addition of ₹ 4,00,000 (Rs.3,50,000 + ₹ 50,000) as unexplained investment. (d) Addition of ₹ 1,76,500 as unexplained cash credit ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of 10% of total expenditure claimed, amounting to ₹ 73,083. We have decided identical ground of the assessee for the assessment year 2003-04 vide Para No.20. Facts and circumstances of the case for the assessment year 2004-05 being identical, for the reasons discussed while dealing with the corresponding ground of the assessee for assessment year 2004-05 herein above, we do not find merit in the grievance of the assessee on this aspect and accordingly confirm the impugned order of the CIT(A) and reject ground No.3 of the assessee in this appeal. 38. The next effective grievance of the assessee, covered by ground Nos.4 and 5 of this appeal relates to addition of ₹ 4,00,000 made by the assessee treating the same as unexplained investment. Similar issue has already been adjudicated by us in ITA No.1765/Hyd/20013 vide Para No.32, hence the same shall also be followed for this A.Y. 39. The next effective grievance of the assessee, covered by ground No.6 of this appeal relates to an addition of ₹ 1,76,500 made by the assessee as unexplained cash credit appearing in the books of account. 40. We find that the CIT(A), after considering all the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not acceptable. In this connection, another seized document Annexure A/SJC/RES/PO-1 also contains agreement entered by the assessee for purchase of the same land and it is placed at page No.60 of the said annexure. Accordingly, the entire amount of ₹ 13,08,150/- is added as the unexplained investment of the assessee in purchase of the said land. 2.2 In the same annexure, page No.136 is the receiptcum- agreement for ₹ 1,57,950/- issued by M. Mangamma towards sale of her land admeasuring 0.39 cents. As per the receipt the landlord has acknowledged the amount of ₹ 1,57,950/- received from the assessee on 23.08.203. However, the assessee has replied that this transaction has been negotiated and purchased the land for only ₹ 61,000/- vide document No.4606/2008 on 07.07.2008. Hence it is claimed that it is not the unexplained investment of the assessee for the A.Y 2004-05. It is pertinent to mention here that as per the stamped receipt a sum of ₹ 1,57,950/- was paid by the assessee and it is also evidenced from the seized document. The said payment was also not reflected in the cash book of the assessee. Accordingly the entire amount of ₹ 1,57,950/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase transaction never took place and an advance of ₹ 9000/- was paid on 23.08.2003 which was returned on 28.8.2003. The appellant has further stated that the AO in his order, has mentioned that the property was negotiated and purchased for ₹ 61,000 vide document No.4606/2008 dated 7.7.2008. According to the appellant, the transaction vide document No.4606/2008 is with one K Mangamma who is entirely different from the present M. Mangamma. I have perused the seized document as well as the submissions made by the appellant and the assessment order. The seized document mentions that land at survey No.503/5A measuring acres 0.39 cents has been negotiated for ₹ 1,57,950 and that ₹ 50,000 has been paid in cash as advance. There is no evidence of subsequent payment and/or registration of this land in favour of the appellant or his family members. Thus, the evidence available is only regarding ₹ 50,000 paid in cash and the appellant has offered no explanation for the source of this ₹ 50,000. Hence out of the total addition of ₹ 1,57,950 an amount of ₹ 50,000 is being sustained. Thus, keeping in view both the transactions referred to abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfactory explanation. 47. As regard the 2nd property, there is no evidence of subsequent payment or registration of this land in favour of assessee or his family members. The assessee has no offered explanation for the source of ₹ 50,000, hence we confirm the order of the CIT (A), in sustaining the addition of ₹ 50,000. Hence the sum of ₹ 4.00 lakhs is being held as unexplained investment. The appeal of the assessee on this issue is dismissed. 48. The next issue is with respect to unexplained cash credit appearing in the books of the assessee. The AO noted that the assessee had introduced ₹ 3,75,000 and ₹ 3.00 lakhs in his capital account on 30.06.2003 and 16.11.2003 respectively. The assessee offered no explanation regarding this introduction of cash and hence the AO treated this as unexplained cash credit u/s 68. 49. In his written submissions, the assessee had stated that out of this amount of ₹ 6,75,000, ₹ 4,98,500 is agricultural income generated in the financial year 2002-03 i.e. A.Y 2003-04 and credited on 1.4.2003 i.e. relevant to A.Y 2004-05. The balance ₹ 1,76,500 is rental and agricultural income of his mother Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we set aside this issue to the file of the AO to verify this fact and decide accordingly. ITA No.1767/Hyd/2013: A.Y. 2005-06 54. The additions/disallowances sustained by the CIT (A) are: Disallowance of expenditure on purchase of land u/s 40A(3) Rs.8,86,100 Disallowance of expenditure ₹ 78,780 Unexplained investment ₹ 84,500 Addition on account of unexplained cash credit Rs.8,47,873 Agricultural income treated as income from other sources ₹ 61,150 55. The issue with respect to disallowance of expenditure u/s 40A(3) of ₹ 8,86,100/- towards purchase of land and disallowance of expenditure of ₹ 78,780/- has already been adjudicated in the AY 2003-04 at Paras 14 and 20 respectively and the same conclusion shall be followed in this appeal also. 56. The issue with respect to agricultural income treated as income from other sources amounting to ₹ 61,150/- has been adjudicated at Para 26 in AY 2003-04 and the same conclusion shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit. 63. With respect to addition of ₹ 11,73,323/- treated by the AO as unexplained cash credit u/s 68, the assessee had submitted that out of total amount of ₹ 11,73,323/-, ₹ 3,25,450 is agricultural income claimed in the return of income filed for AY 2004-05, rental income of ₹ 48,000, compensation received as political prisoner from A.P. Govt. amounting to ₹ 3.00 lakhs, compensation received from A.P. Govt. for residential house which was destroyed - ₹ 2,99,350/- and other gifts and savings totaling to ₹ 2,00,523. As regards agricultural income, the AO, in his remand report has said that it cannot be concluded whether the capital account of the assessee for AY 2004-05 included the said agricultural income or not. 64 The ld CIT (A) after perusing the evidence furnished by the assessee, deleted the amount of ₹ 3,25,450 representing agricultural income for AY 2004-05 and as regards the balance addition to the capital account, since the assessee has not furnished any details regarding the claims made, the CIT (A) was not convinced. Two credits amounting to ₹ 3.00 lakhs and ₹ 2,99,350 were claimed as receipts from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has accepted that the entire investment/purchases were made by him during the relevant A.Y. However, it is stated by him that all the transactions are duly reflected in the return of income. It discussed in the earlier paragraphs that even though the assessee purchased and sold several properties, he has not filed any profit and loss account and balance sheet in order to verify the sources of investment. It is not clear on what sense the assessee is stating that the transactions are reflected in the return of income. The return of income filed by the assessee for the relevant year on 4.10.2010 contains a statement of computation of total income only. Accordingly the A.O treated the purchases as unexplained investment of the assessee and added the entire amount of ₹ 7,43,000/- to the income returned. 70. The CIT (A) has sustained an amount of ₹ 7,11,000/- made towards unexplained investment in purchase of land for the A.Y 2006-07. The ld CIT (A) observed that the explanation offered by the assessee does not match the cash reflected in the seized documents and hence the investment made is treated as unexplained. 71. In this regard it was submitted that during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years, the income out of sale of agricultural land was treated as income from business. 76. In this regard it was submitted that during the year under consideration the assessee has sold several agricultural lands and claimed the capital gain thereon as exempt u/s 54B of the Act. It was also submitted that the assessee is having various agricultural lands and is deriving agriculture income consistently. It was further submitted that the AO has changed the head of income of the receipt merely on the basis of suspicion and surmises without bringing anything on record to show that the lands sold were not agricultural lands. The assessee stated that he has submitted all the relevant details of the agriculture lands before the AO including the sale deeds. 77. We heard both the parties. We find that the action of the CIT (A) is not correct in treating the capital gains on sale of agriculture lands as income from business for the following reasons as the CIT (A) should have considered the important features of land: All the lands are classified in the revenue records as agricultural and are subject to payment of land revenue. The lands were actually used for agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to verify the records of the agricultural land owned by the assessee and Adangal Patti and other records to ascertain the crops grown and the income derived by the assessee, and thereafter arrive at any reasonable amount of disallowance, if any, warranted out of the agricultural income claimed by the assessee. The Assessing Officer shall give reasonable opportunity of being heard to the assessee, while determining this issue. This ground is allowed for statistical purposes . Hence, similar direction as above will apply to this year also. 82. In the result appeal for AY 2006-07 is partly allowed for statistical purposes. ITA No.92/Hyd/2014 - AY 2007-08 83. The assessment was completed by the AO under sec. 143(3) r.w.s. 153A of the I.T. Act and the income was assessed at ₹ 1,50,91,148/-. On appeal before the CIT (A), the CIT (A) sustained the following additions: - Addition of ₹ 3,79,230 as undisclosed business income - Addition of ₹ 83,14,000 made towards unexplained investment for purchase of land - Addition of ₹ 7,66,918 towards unexplained investment in furniture - Addition of ₹ 55,900 towards contribution to Chit Fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 3,21,000. 87. It was submitted that the assessee along with two other parties have agreed to buy a land and construct a facility for mango storage for a cost of ₹ 38,34,000 (including cost of land). Accordingly land was purchased from Smt. P. Rama Lakshmamma Others at a cost of ₹ 3,21,000. Assessee s 1/3rd share in the cost of land was at ₹ 1,07,000 and the same was recorded by the assessee in his books of accounts. 88. Later the storage facility for Mango could not materialize and therefore the land was purchased and no godown was constructed on the said land. The argument of the assessee was further substantiated from the fact that a portion of the said land in question was acquired by the Govt. of A.P. u/s 11 the Land Acquisition Act, 1894 for the purpose of construction of road. The compensation paid by the Govt. was at the rates nearby to purchase cost of the land by the assessee by order dated 25.2.2008. Therefore, taking the cost of land at ₹ 38,34,000 is not justified and is against the facts of the case. 89. It was submitted that the CIT (A) ought to have appreciated the fact that when original registered sale deed was available be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrent year as well as earlier years against his expenditure/investment. Further telescoping should also be allowed for the income of the assessee group against the investment/expenditure of the assessee. Reliance was placed on the order of the ITAT Hyderabad Bench in the case of Anil Kishore Agarwal Others vs. DCIT in ITA No.493-95/Hyd/2011. It was also submitted that the advances were made by the assessee out of explained income of assessee and his family and are duly reflected in the consolidated cash flow statements submitted before the CIT (A) and in the paper book submitted before us. Hence, no addition can be sustained in this regard. 95. We have heard both the parties. With respect to land purchase from Smt. P. Rama Lakshmamma and other amounting to ₹ 38,34,000 and purchase of land from Shri Venkat Krishnaiah, the assessee has relied on the decision of ITAT Hyderabad Bench in the case of DCIT vs. B. Vijaya Kumar (ITA Nos.930 931/Hyd/2009 for A.Ys 2003-04 and 2004-05 dated 18.9.2012). The Hon ble Delhi High Court in the case of CIT vs. Kulwant Rai (291 ITR 36) and CIT vs. Ved Prakash Choudhary (305 ITR 245) held that no addition can be made in the hands of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d investment in chit funds. It was submitted during the year under consideration, the assessee has made investment in chit funds out of his income from the year and also previous year earnings. 100. The ld Counsel for the assessee submitted that in the cash flow statement, this amount has been reflected at Row No.23 of Page 3. Hence, we set aside this issue to the file of the AO to verify the details submitted by the assessee and decide the issue in accordance with law. 101. The last ground of appeal is with respect to addition of ₹ 1,75,000 made towards agricultural income. Similar issue has already been adjudicated by us at Para No.26 for A.Y 2003-04 and the same conclusion shall be followed in this appeal also. 102. In the result, the appeal for A.Y. 2007-08 is partly allowed for statistical purposes. ITA No.127/Hyd/2014 - A.Y. 2008-09 Grounds raised by the assessee in this appeal is reproduced below: 1. The ld CIT(A) Guntur erred both in law and on facts in upholding the following additions. 2. The ld CIT(A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises which is not correct and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds 1 2 are general in nature, hence no specific adjudication is required. 104. With respect to Ground Nos. 3 4, similar issue has already been decided by us at Para Nos.77 78 in ITA No.91/Hyd/2014 for A.Y 2006-07. The same shall be followed in this appeal also. Unexplained investment in land ₹ 33,34,733 105. With respect to Ground Nos.5 6 it was submitted that during the assessment proceedings, the AO made several additions as unexplained investment in land out of which the following amounts were sustained by the CIT (A): Particulars Amount (Rs.) added by AO Receipt issued by Chinna Garitappa Naidu 3,31,000 Receipts issued by M Gopala Chowdhary 1,56,000 Receipt issued by E. Ramachandra Naidu 1,25,000 Receipt issued by Talluri Muniratnam Naidu 10,000 Stamped Receipt cum agreement by N. Balarami Reddy - Land at Renigunta Mandalam 2,40,000 Stamped Receipt cum agreement-A Muni Reddy Others 7,06,000 Stamped rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in purchase of land for A.Y 2008-09. The CIT (A) observed that the assessee made payments of ₹ 1,56,000, ₹ 1,25,000, ₹ 10,000, ₹ 2,40,000 and ₹ 7,06,000 to M.Gopala Chowdhary, E. Ramachandra Naidu, T. Muniratnam Naidu, N. Balarami Reddy and A. Munni Reddy respectively towards purchase of land based on the seized documents found during the course of search. The CIT (A) sustained the additions for the need of source of income for making the alleged additions. It was submitted by the assessee that the above transactions are duly reflected in the books of accounts and the income arising out of it was offered to tax in the return of income of the assessee for the year under consideration. It was submitted that the advances made by the assessee are made out of explained income and duly reflected in the cash flow statements submitted before the CIT (A) and to the ITAT vide paper book (document No.5656/2007, 5655/2007, 4971/2007 and 4063/2007 - Row 5, 6 of page 3, Row 29 of page 2, Row 11 and 12 of Page 3). Purchase of land from V.Venugopal Reddy CIT (A) sustained an amount of ₹ 3,00,000 made towards unexplained investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of sale agreement and not on original agreement. The agreement was made for purchase of land with digging of pond and construction of storage facility, hence price was fixed at ₹ 5,79,500. However, the agreement was canceled and only land was purchased at ₹ 61,000 only, which was reflected in the books of accounts and also in sale deed vide document No.4606/2008. It was submitted that the ld CIT (A) ought to have appreciated the fact that when original sale deed was available, then no addition can be made based on the photocopy of the agreement to sale as observed by ITAT Hyderabad in the case of DCIT v. B.Vijaya Kumar (ITA No.930,931/Hyd/2009). It was further submitted that the of ₹ 61,000 made by the assessee are made out of explained income and duly reflected in the cash flow statements submitted before the CIT (A) and to the ITAT vide paper book vide document No.4606/2008 at Row 7 of page 3 under application of funds. Purchase of land from K. Niranjan Reddy: The ld CIT (A) sustained an addition of ₹ 5,70,000 towards unexplained investment in land based in the agreement copy found during the course of search proceedings. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law. We bring to the notice of the AO that with respect to unsigned document, we have already given our finding at Para 95 in ITA No.92/Hyd/2014 for A.Y 2007- 08 and the same shall be followed in this appeal also. 110. Ground Nos.7 8 is with respect to contribution to chit fund. The AO held that the payment of the amount of ₹ 21,700/- and ₹ 25,000/- to Shri Chamundi Group of companies has not been explained and added the amount. During the appellate proceedings, the assessee stated that these amounts were installments towards purchase of residential plots and were subsequently refunded since permission for developing the plot were not received by them. The CIT (A) held that this does not explain the source of initial investment of ₹ 46,700 as unexplained investment and sustained the addition. It was submitted that in the consolidated cash flow statement at Row No.23 of page No.3, the amount is reflected. Hence we set aside this issue to the file of the AO to verify the same and decide accordingly. 111. Ground No.9 is with respect to addition of ₹ 1,22,160 towards political expenditure. It was submitted that during the years under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to be added as it was repeated twice in loose sheet seized. This fact can be established from the face of loose slip as this entry is reflected twice in the slip and therefore, it is market off. The AO ought to have appreciated the fact that the entries reflected in the loose slip as Cash via Dad amounting to ₹ 3.50 lakhs (Rs.1.00 lakh + ₹ 2.50 lakhs) were paid by the assessee out of the income of Siva Chatinaya towards his credit card payments in India. The amounts so paid are duly reflected in the books of accounts of S.Siva Chaitanaya. The AO ought to have appreciated the fact that Mr.S.Siva Chaitanya during his studies in USA has taken cash in forex and a DD for his first quarter fees from SBI Tirupathi Branch out of his income. The same was duly recorded in his book of accounts and was available for scrutiny before the AO at the time of assessment proceedings. However, the AO without considering the same has made addition which is not correct. The AO ought to have considered the fact that Dr.Deepathi and Dr. I Srinivas, aunt and uncle of Mr.S.Siva Chaitanya have sponsored his studies in USA for amount of ₹ 23,00,000. Dr. Deepthi and Dr. Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti as an education loan on 8.8.2007 is acceptable and it explains the entry dated 15.8.2007 for ₹ 7,00,000. The balance amount of ₹ 16.10 lakhs is unexplained and the document clearly indicates that unaccounted cash has been utilized towards purchase of US Dollars and remitted for education of Siva Chaitanya by the appellant and hence addition of ₹ 16.10 lakhs as unexplained expenditure is upheld. Appeal, in respect of Ground No.6 is partly allowed . 116. For the A.Y 2009-10 the CIT (A) held as follows: 12.3 ..... The document in question clearly indicates that it has been recorded by Siva Chaitanya, since the reference is to Dad and Deepthi Akka . Secondly the entire amount has been paid in cash. Thirdly since the amount has been paid in Indian Rupees for conversion into US Dollars, it indicates that the amount was generated in India and does not pertain to money spent by Dr.Deepthi, who is a non-resident. Further, there is clear reference to cash being sent by the appellant, wherein entries with the narration Cash by dad have been recorded. The document indicates that the amount spent during F.Y 2008- 09 relevant to AY 2009-10 is ₹ 17.00 lakhs. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent for valuation u/s 142A of the I.T. Act. The valuation report having not been received, the AO proceeded to determine the total investment in construction of the house based on documents seized. AO noted that as per page 174 of annexure A/SJC/RES/04, TRK Rao, an approved valuer has valued the construction of the house at ₹ 87,50,000. The plinth area has been worked out at ₹ 12,500 per sft and the cost of construction at ₹ 700/- sft. The entire valuation report has been seized at pages 166 to 176. Pages 158 to 165 is another report by C. Raghavendra Rao, also a Govt. approved valuer. AO noted that both reports mentioned the cost of construction at around ₹ 700 per sft. AO hence adopted ₹ 87.50 lakhs as the cost of construction and to this figure he added ₹ 14,27,728 being bills and cash receipts seized during the search which have been mentioned above. AO was of the opinion that this amount of ₹ 14,27,728 reflected expenditure other than civil construction, which is included in the figure of ₹ 87.50 lakhs. Thus, the AO held that the cost of construction was ₹ 1,01,77,728 and treated the entire amount as unexplained investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the source of agricultural income to income from other sources. This has already been dealt with by us at Para 26 of our order for the AY 2003-04 in the case of Jayachandra Reddy and the same shall be followed in this ground also. 123. In the result appeal is partly allowed for statistical purposes. ITA No.128 /Hyd/2014 (A.Y 2009-10): 124. The first ground is general in nature, hence no adjudication is required. 125. With regard to Ground Nos 2 3, similar issues have already been adjudicated by us at Para No.77-78 in ITA No.91/Hyd/2014 for A.Y 2006-07. The same shall be followed in this appeal also. 126. With respect to Ground No.4 5, the facts are as follows: During the assessment proceedings, the AO made several additions as unexplained investment in land out of which the following amounts were sustained by CIT (A): Addition Amount Purchase of land at Gaju Mandalam 9,000 Land at Pankam Village 9,000 Receipts cum agreement from Venkata Muni Reddy 9,000 Receipts cum agreement from Giri Govardhan Reddy 9,000 Receipt cum agreement by O. Subramanyam 9,84,000 Total 10,20,000 Less: Adjustment towards undisclosed income 7,83,258 Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO is for the original purchase of silver articles. Also during the search AO has not found physically any of these items. Hence, AO added the estimate as well as the purchase invoice for the same items which was not correct, not justified and bad in law. It was further submitted that the expenditure made by the assessee are out of the explained income of the assessee and his family and are duly reflected in the cash flow statements submitted before the CIT (A) and are again provided in the paper book. Therefore, we set aside this issue to the file of the AO to verify whether the amount of ₹ 12,30,743/- is shown before purchase of jewellery in the cash flow statement under application of funds. 128. Ground No.7 is with respect to contribution to chit funds which has already been adjudicated by us vide Para 77 for the A.Y. 2008-09. Hence the same shall be followed for this A.Y also. 129. Ground No.8 is regarding addition of ₹ 1,03,350 towards purchase of residential plot. We have adjudicated similar issue for the A.Y 2008-09 vide Para 78. Hence the same shall be followed for this A.Y also. 130. The Ground No.9 is with respect to ₹ 98,880/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication is called for. 3. Ground No.2 is with respect to confirmation of the action of the AO in respect of issuance of notice u/s 153C of the I.T. Act. We have already adjudicated this issue in the case of Shri Jayachandra Reddy, for AY 2003-04 vide Para Nos.6 and 7 (ITA No.1765/Hyd/2014). Hence the same shall be followed in this year also. 4. It was submitted that the AO while completing the assessment proceedings u/s 143(3) r.w.s. 153C of the Act have made an addition of ₹ 6,45,282 towards income of the assessee as undisclosed income on sale of land. In this regard it was submitted that the AO passed order u/s 144 r.w.s. 153C of the Income Tax Act, 1961 by quantifying the share amount, out of the plot sales at Peruru and Avilal for ₹ 22,66,100. However the CIT (A) erred in not allowing the cost of acquisition and development of above properties of ₹ 2,40,935. Therefore, the CIT (A) ought to have allowed an amount of ₹ 2,40,935 as deduction from sale proceeds of ₹ 6,45,282. 5. It was further submitted that the AO and the CIT (A) erred in not allowing the cost of acquisition as deduction while bringing to tax the entire sales proceeds wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome on account of sale of land. In these circumstances, we set aside the issue to the file of the AO to give one more opportunity to the assessee to produce the correct details and thereafter the AO shall decide the issue in accordance with facts and the law. 11. In the result, appeal is partly allowed for statistical purposes. ITA No.340/Hyd/2014 - AY. 2004-05 12. Grounds preferred by the assessee is as follows: 1. The ld CIT (A) Guntur erred both in law and on facts while partly allowing the appeal. 2. The ld CIT (A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises. 3. The ld CIT (A) Guntur erred in confirming the action of the AO in respect of issuance of notice u/s 153C of the I.T. Act, 1961. 4. The ld CIT (A) Guntur erred in restricting the claim of agricultural income to ₹ 3,60,000 and confirming the balance amount of ₹ 20,000 as income from other sources. 5. The ld CIT (A) Guntur ought to have appreciated that the assessee has already furnished certificates and documents pertaining to the agricultural land from respective revenue authorities in support of his claim . 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has derived income from this land. AO further reiterated that the agricultural income claimed by the assessee cannot be accepted. 18. In his counter submissions, the assessee stated as under: The AO has added the entire amount declared under agricultural income in the assessee s return of income as income from other sources without considering the explanations offered by the assessee. It is to submit that the addition is incorrect as the assessee is in receipt of agricultural income from the lands viz., from the assessee s grandfather Mr.Saikam Basi Reddy from whom the assessee has inherited the agricultural lands in Madhavaram Village of Rayachoti Mandal and assessee purchased agricultural lands in Tirupathi Rural Mandal as well as in Renigunta Mandal. It is to bring to your kind notice that the assessee has produced certificate of Tahasildar (from Land Revenue Officials) of Renigunta Mandal to prove the genuineness of the agricultural income received. This certificate stands as a corroborative evidence to substantiate the genuinity of the assessee s claim to prove that the amount received is agricultural income. But the AO has treated the exempt agricultural income as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total land holding is approximately 38 Acres other than the inherited lands, whereas the pattadar pass books submitted reflect only 14 acres (approx.). Out of the same 14 acres, there are certain plots of land, which are much too small for regular agricultural activity. Thus what the appellant has is approximately 12 Acres of agricultural land along with land inherited from his grandfather Late Sri Saikam Basi Reddy. Keeping in view the agricultural income reflected by late Sri Saikam Basireddy and also the fact that it is now distributed between the appellant and his sister as well as keeping in view the 12 acres (approx.) of land owned by him, the agricultural income acceptable in the case of the appellant is arrived at ₹ 3,60,000 per year. The year-wise agricultural income reflected, the amount treated as income from other sources and the amount now held as agricultural income is as per table below: Assessment year Agril. Income reflected Agril. Income treated as income from other sources Amount now held as agril. Income 2004-05 3,80,000 3,80,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.27 65,000 128 Tirupati Rural Mandal Durgasamudram 239/1 6.78 2,03,400 129 Tirupati Rural Mandal Durgasamudram 239/7 0.55 16,500 130 Tirupati Rural Mandal Thanapalle Others 260-B Others 4.47 1,29,366 131 Rychoty Mandal (inherited from Basi Reddy) Madhavaram Others 247 others 14.96 3,00,000 4 Rychoty Mandal Madhavaram Others 230/1B Others 27.89 9,42,150 5 133 16,56,416 22. We find for the A.Y 2004-05, the CIT (A) has confirmed an amount of ₹ 20,000/- as income from other sources. With the prices of agricultural com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 3,52,000 has been taken into account and long term capital gains determined at ₹ 1,25,371 after reducing indexed cost of acquisition at ₹ 2,26,629. In the remand report, AO has reiterated his contention that the purchase document has not been submitted by the assessee and hence his amount should be treated as undisclosed income. In his counter submissions the assessee pointed out that an amount of ₹ 1,25,371 has already been offered as long term capital gains. Hence the entire amount of ₹ 3,52,000 cannot be treated as undisclosed income. The assessee has also filed encumbrance certificates for this property to indicate the cost of acquisition. 28. In this regard, the CIT(A) held as under: 8.3 I have perused the submissions made. It is apparent that long term capital gains amounting to ₹ 1,25,371 has been offered by the appellant in his return income. The encumbrance certificate for Survey No.484/1 shows that on 7.12.2000, this land was sold by A. Guruswamy to the appellant and his father Saikam Jayachandra Reddy for ₹ 2,31,000. Subsequently, the encumbrance certificate shows that land at survey No.484/1 has been sold for ₹ 7,04, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument stated to be a family settlement after the death of Sri Saikam Basi Reddy has been filed, according to which the assessee has received ₹ 25.80 lakhs. 32. The CIT (A) in this regard held as under: 9.3 I have perused the above documents including land ownership certificates in respect of land owned by Sri Saikam Basi Reddy, the grandfather of the appellant. While it is not denied that Sri S. Basi Reddy had substantial agricultural land holdings, the returns filed by him indicate agricultural income in the region of ₹ 1 lakh to ₹ 3 lakh in different years. He had nominal other income and it would be fair to assume that with the level of agricultural and other income returned by him, there would have been hardly any accumulation of capital. Moreover, the agreement stated to be a family settlement cannot be relied upon, since it mentions all amounts in cash, it was not found during the course of search or presented during the search and the amounts mentioned cannot have been accumulated with the limited income reflected by late Sri S. Basi Reddy, in his returns of income. In view of the same, the appellant s claim that investment in purchase of land is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs. The assessee has inherited agricultural lands from his father at Madhavaram and Yandapalla villages after the death of his grandfather. The assessee has also purchased lands in and around Tirupati and Renigunta which are evidenced by documents submitted in the paper book. The assessee has also admitted agricultural income as he has been carrying on agricultural operations for the AYs 2004-05 to 2009-10 which are under appeal. The relevant documents such as Pattadar Pass Books and income certificates from MRO has been submitted. Hence we set aside this issue to the file of the AO to consider the MRO certificates wherein the agricultural income has been accepted by the local authority. After giving an opportunity to the assessee, the AO may determine the amount of agricultural income which is to be treated as income from other sources. 36. In the result, the appeal is partly allowed for statistical purposes. ITA No.432/Hyd/2014 - A.Y 2006-07: 37. Grounds preferred by the assessee in this A.Y read as under: 1. The ld CIT (A), Guntur erred both in law and facts while partly allowing the appeal. 2. The ld CIT (A), Guntur ought to have appreciated that the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted properties and business income. AO found the reply vague and unsupported by any evidence. He also noted that the assessee s grandfather was not assessed to tax and hence treated the entire amount of ₹ 9,43,265 as unexplained investment in purchase of land. 42. During the appellate proceedings, assessee stated that Sri S. Basi Reddy had filed returns of income for A.Ys 2000-01, 2001-02 2002-03, copies of which were furnished by him. Moreover, details of land owned by Sri S. Basi Reddy at Madhavaram village were also furnished. In his counter submissions to the remand report, the assessee stated that the amount is met out of agricultural incomes of earlier years and given details of land owned by Sri Saikam Basi Reddy as well as incomes returned by him. Moreover, a document stated to be a family settlement after the death of Sri Saikam Basi Reddy has been filed, according to which the assessee has received ₹ 25.80 lakhs. 43. In this regard, the ld CIT (A) held as under: 8.3 I have perused the above documents including land ownership certificates in respect of land owned by Sri Saikam Basi Reddy, the grandfather of the appellant. While it is not denied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. ITA No.341/Hyd/2014 - A.Y. 2007-08: 47. Grounds preferred by the assessee read as under: 1. The ld CIT (A) Guntur erred both in law and on facts while partly allowing the appeal. 2. The ld CIT (A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises. 3. The ld CIT (A) Guntur erred in confirming the action of the AO in respect of issuance of notice u/s 153C of the I.T. Act, 1961. 4. The ld CIT (A) Guntur erred in restricting the claim of agricultural income to ₹ 3,60,000 and confirming the balance amount of ₹ 4,28,000 as income from other sources. 5. The ld CIT (A) Guntur ought to have appreciated that the assessee has already furnished certificates and documents pertaining to the agriculture land from respective revenue authorities in support of his claim . 48. Ground No.1 2 are general in nature, hence no specific adjudication is required for. 49. With regard to Ground Nos. 3 similar issue has already been adjudicated by us in ITA No.1765/Hyd/2013 for A.Y 2003-04 at Para No.6 and the same shall hold for this A.Y also, 50. With regard to Ground Nos.4 5, similar issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both in law and on facts in upholding the addition. 2. The ld CIT (A) Guntur erred in confirming the action of the AO in respect of issuance of notice u/s 153C of the I.T. Act, 1961. 3. The ld CIT (A) Guntur erred in upholding the addition of ₹ 6,45,282 made towards undisclosed income on account of sale of land. 4. The ld CIT (A) Guntur ought erred in not allowing the purchase and development expenses of ₹ 2,41,935 from the sale value. 5. The ld CIT (A) Guntur erred in rejecting the submissions and encumbrance certificates for land at Avilala and Peruru 57. Ground Nos.1 2 are general in nature. 58. Ground No.3, we have already adjudicated the issue in ITA No.1765/Hyd/2013 vide Para No.6 and the same shall be followed in this year also. 59. Ground No.4 5, we have already decided this issue in ITA No.90/Hyd/2014 (Para No.160) the same shall be followed in this year also. 60. In the result, appeal is partly allowed for statistical purposes. 61. To sum up, appeals are partly allowed for statistical purposes. ITA NO.362, 363 364/Hyd/2014 -A.Ys 2007-08 to 2009-10 - Ms. Saikam Saiswetha 1. Grounds preferred by the assessee for all the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a common practice to employ labours on daily wages for doing day to day activities of the cultivation. However, as the labourers are generally illiterates, it is difficult for any agriculturist to keep the documentation of every transaction. AO erred in appreciating this fact before passing the order which is not correct. It was further submitted that the CIT (A) while passing the order has accepted that the assessee possess some agricultural lands and carried on agricultural activities upon such land. But while coming to the conclusion upon the income derived from such agricultural land has accepted the income only to certain extent which is not correct and not justified. Hence, assessee submitted that assessee is deriving agricultural income out of the agricultural lands held by it. Certificates of land holdings and agricultural income certificates were produced before us as per the paper book filed. Assessee further relied on the case law in the case of T.C. Reddy vs. DCIT in ITA No.469/Hyd/2009 and ITA No.228/Hyd/2010 wherein it has been held that where the land holding and cultivation thereof is not in dispute, AO cannot be simply reject the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from such agricultural land accepted the income only to certain extent. 11. The fact is that the assessee is deriving agricultural income out of the agricultural lands held by the assessee. The certificates of landholdings and agricultural income certificates are produced before the ITAT in the paper book filed. We have perused the same. 12. In the case of T.C. Reddy (Supra), it was held that where the landholding and cultivation thereof is not in dispute, the AO cannot simply reject the claim of the assessee with regard to the agricultural income. It was further held that as agriculture in this country is an unorganized sector and sale of agricultural produce is also not properly organized, one cannot blame the assessee for not maintaining the books of account for the purpose of cultivation and therefore, non-maintenance of books of accounts cannot be a ground to reject the claim of the assessee. Taking the totality of the situation into account, we delete the addition made by the CIT (A) under the head income from other sources for an amount of ₹ 1,50,000 for all the AYs under appeal i.e. 2007-08 to 2009-10. This ground of the assessee is allowed. 13. In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur sustaining 10% disallowance amounting to ₹ 54,500 towards other expenditure. It was submitted that the expenditure is required to be allowed in full because of the fact that payments have been made to different individual labourers, most of whom live in rural areas and they insist on payments to be made only in cash. Since such expenditure is unavoidable, it was submitted that the claim is to be allowed. Similar issue has been adjudicated by us at Para No.20 in the case of S.Jayachandra Reddy (ITA No.1765/Hyd/2013 - A.Y. 2003-04) and the same conclusion shall be followed in this year also. 8. In the result appeal of the assessee is partly allowed for statistical purposes. ITA No.285/Hyd/2014 - A.Y. 2004-05 9. Grounds preferred by the assessee read as under: 1. The ld CIT (A) Guntur erred both in law and on facts while partly allowing the appeal. 2. The ld CIT (A) Guntur erred in sustaining the addition of ₹ 3,03,055 towards disallowance of land purchase u/s 40A(3) which is not correct and not justified. 3. The ld CIT (A) Guntur ought to have appreciated the fact that the disallowance u/s 40A(3) cannot be made when banking facilities are not ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, no addition could be made. 16. Since the ld Counsel has submitted that in the consolidated cash flow statements submitted by the assessee a sum of ₹ 2,81,339 and ₹ 6.00 lakhs are shown at Row 32 on page 3 for A.Y 2004-05 and 2005-06 respectively as transferred to capital a/c in the application of income, we direct the AO to verify the consolidated cash flow statement and decide the issue accordingly. 17. In the result, appeal in ITA No.285/Hyd/2014 is partly allowed for statistical purposes. ITA No.366/Hyd/2014 - A.Y. 2005-06 18. Grounds preferred by the assessee is as follows: 1. The ld CIT (A) Guntur erred both in law and on facts while partly allowing the appeal. 2. The ld CIT (A) Guntur erred in sustaining the addition of ₹ 5,61,750 towards disallowance of land purchase u/s 40A(3) which is not correct and not justified. 3. The ld CIT (A) Guntur ought to have appreciated the fact that the disallowance u/s 40A(3) cannot be made when banking facilities are not available to the place of business. 4. Without prejudice to the above, the ld CIT (A) Guntur ought to have appreciated the fact that the assessee has purchased agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,15,000 2006-07 1,92,560 2007-08 1,39,350 2008-09 3,60,000 2009-10 4,78,000 25. It was submitted that: The assessee is having various agriculture lands around Tirupati which have been cultivated for many years and assessee is deriving agriculture income out of it. AO has not disputed the fact regarding the holding of agriculture lands by the assessee. AO has treated the income of the assessee by stating that assessee has failed to produce evidence regarding sale of agricultural produce, purchase of various chemicals and fertilizers etc. The assessee is holding several agril. Lands around Tirupati and assessee submitted pattedar pass books for various land holdings, income certificate in favour of the assessee by MRO of Rayachoty Mandal, Renigunta Mandal, Tirupati Rural for various A.Ys, purchase bills for fertilizers and chemicals in paper book filed vide Page Nos.42-44, 49-61, 67-75, 81, 113- 117, 123-137. Assessee also submitted the following table showing the certificates from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and holdings and the proof for the income from the sale of agricultural commodities as well as the expenses incurred in the course of cultivating the land. The AO shall decide the issue after examining the records and vouchers. Hence this ground of appeal is set aside for statistical purposes. 28. Ground No.7 is with respect to sustaining addition of ₹ 3,95,000 towards unexplained cash credits. Brief facts of the issue are that ₹ 6,00,000 being addition to the capital account, which the AO treated as unexplained cash credit. At the assessment stage, no reply was filed by the assessee and hence the AO treated the entire amounts as unexplained cash credit. 29. At the appellate stage it was submitted that the cash credit represents agricultural income received by way of cash for financial year 2003-04 i.e. A.Y 2004-05, rental income of ₹ 60,000 inheritance of ₹ 3,30,000 after death of her father Kasireddy Ranga Reddy and balance is from her personal savings. 30. The CIT (A) held as under: 6.6.3 I have perused the submissions made. The agricultural income was reflected in her return. Although part of the agricultural income had been added back as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises which is not correct and not justified . 34. Ground No.1 is general in nature. 35. With respect to Ground Nos. 2 3, the issue is Treating Long Term Capital Gain as income from business. 36. It was submitted that AO while completing the assessment proceedings has made certain additions by treating the LTCG upon the sale of agril. Land as income from business and profession of which CIT (A) has sustained the following: A.Y Amount(Rs.) 2006-07 1,01,500 2007-08 8,52,977 2008-09 6,99,100 2009-10 4,52,800 37. On perusal of the record, we find that: The lands sold are agricultural lands from which the assessee is deriving the agricultural income and the LTCG upon the sale of such agricultural land are claimed as exemption u/s 54B. The assessee is an agriculturist having various agril. Lands around Tirupati which have been cultivated for many yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal are identical to that in ITA No.286/Hyd/2014 for A.Y.2006-07. 43. Ground No.1 is general. With regard to Ground Nos. 2 3, similar issue has been decided by us in ITA No.1765/hyd/2013 for A.Y.2003-04 (Para No.77 78) and the same conclusion shall be followed in this AY also. 44. Ground No.4 and 5, similar issue has been decided by us in ITA No.1765/Hyd/2013 for A.Y 2003-04 vide Para No. 26 and the same conclusions shall be followed in this AY also. 45. In the result appeal is partly allowed ITA No.126/Hyd/2014 - A.Y 2008-09 46. Grounds preferred by the assessee are given below: 1. The ld CIT (A) Guntur erred both in law and on facts in upholding the following additions. 2. The ld CIT (A) Guntur erred in sustaining the addition of ₹ 28,86,400 towards unexplained investment for purchase of land. 3. The ld CIT (A) Guntur ought to have appreciated the fact that appellant has submitted the books of accounts and ledger copies in respect of purchases of properties which are registered in the appellant s name. 4. The ld CIT (A) Guntur erred in confirming the addition of ₹ 3,60,000 towards unaccounted income by changing the source o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Land purchased was out of compensation received from the Government of A.P towards acquisition of agricultural lands and out of the savings of the assessee. The compensation received is duly reflected in the bank statements. that the land in question is reflected in the ROI Statement of affairs filed before your honour. the advances made by the assessee are made out of explained income of the assessee and his family and are duly reflected in the cash flow statements submitted before the CIT(A) and are again submitted before your honour vide paper book. Kindly refer to the cash flow statements wherein, amount of ₹ 9,51000/-is shown before document number 5922/2007 at Row 1 of Page 4 under application of funds. b. Purchase of agricultural land from A. Bhanu Prakash Others (Rs.4,85,OOO / -) that the land was purchased by the assessee from A. Bhanu Prakash Others vide doe. no. 5923/07. It is further submitted that the transaction was cancelled and the amount has been subsequently returned. The Land purchased was out of the savings of the assessee. that the land in question is reflected in the ROI Statement of affairs filed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee upon the said land. The document seized is an agreement between S. Jayachandra Reddy (husband of the assessee) and three others for land in Vemuru Village. The agreement value of ₹ 24,44,400/- was upon the construction of storage facility. The same has been negotiated and agreed upon by the parties at ₹ 17,26,600/-. However as there was no storage facility constructed on the said land, the property was purchased for ₹ 2,14,000/-. The Ld. CIT(A) has considered an amount of ₹ 17,80,000/- as unexplained in the case of S. Jayachandra Reddy upon the said property. The Id. CIT(A) however added the difference of ₹ 6,64.400/- (Rs. 24.44.400 - 17,80,000) upon the same property, in the case of the appellant which is not correct and not justified. It is further submitted that the Land in question has been reflected in the ROI and statement of affairs filed in the case of S. Jayachandra Reddy vide cash flow statements of Sri jayachandra Reddy wherein amounts of ₹ 2,14,000/- is shown before the document number 966/2007 Row 7 of Page 3 under application of funds. f. Purchase of agricultural land from D. Krishnaiah (Rs.l,OO,OOO) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The assessee submitted the documents for the purchase of various properties as stated above. We find the following facts from the record: (i) Purchase of agricultural land from Shri Nada Muni and Smt. Vijayalakshmi ... Source is from compensation received from the Govt. Of A.P. And past savings. (ii) Purchase of land from Banu Prakash and others - the transaction was cancelled and the amount has been subsequently returned. (iii) Purchase of agricultural land from Shri P. Nagoor and others - source is from compensation from the Govt. Of A.P. Towards acquisition of agricultural land and past savings. (iv) Purchase of agricultural land from Shri P. Munar - source is from past savings. (v) Purchase of land from Shri N Venkatappa Naidu - The land was never purchased by the assessee and no agreement has been made for the land. (vi) Purchase of agricultural land from Shi D.Krishnaiah - land was never purchased, only advance was paid. (vii) Purchase of land from A. Muni Reddy - source is from sale of other lands and past savings. (vii) Purchase of land from Shri S. Nagoor - source is from other lands and past savings. 53. From analyzing the documents, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly allowed for statistical purposes. 61. To sum up, appeals are treated as partly allowed for statistical purposes. ITA Nos.475 to 478/Hyd/2014 - A.Y. 2003-04, 2004-05, 2005-06 2007-08: Smt. Panjam Shobha Rani ITA No.475/Hyd/2014 - A.Y 2003-04 1. Grounds of appeal preferred by the assessee read as under: 1. The ld CIT (A) Guntur erred both in law and on facts while partly allowing the appeal. 2. The ld CIT(A) Guntur ought to have appreciated that the order of the AO is based on the suspicions, conjectures and surmises which is not correct and not justified. 3. The ld CIT (A) Guntur erred in confirming the assessment u/s 144 r.w.s. 153C which is invalid ab-initio and issue of notice u/s 153C is not correct. 4. The ld CIT (A) Guntur ought to have accepted the fact that presumption u/s 132(4A) is applicable in respect of persons from whose custody or possession seized material was found and it cannot be applied to third parties. 5. The ld CIT (A) Guntur erred in sustaining the addition of ₹ 2,95,574 towards cheque deposits appearing in the savings bank account of the appellant, which is not correct and not justified. 6. Without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la village, Tirupati. In his remand report AO stated that the agricultural income certificates submitted by the assessee are for financial year 2005-06 to 2009-10 and not relevant to A.Y 2003-04. Secondly, the only evidence submitted in support of land acquisition compensation is a ledger extract, which cannot be treated as valid evidence. In her counter submissions, the assessee has stated that she has consistently been deriving agricultural income for several years prior to A.Y 2003-04. In support of her claim, she stated that pattadar pass book for survey No.261/A2 and 273/A1 was submitted. Thirdly, assessee has submitted copies of order u/s 11 of the Land Acquisition Act, 1894 by the competent authority showing details of land acquisition and payments made thereto. Besides, a copy of the bank statement pertaining to the Andhra Bank A/c No.20267 has been submitted which shows deposit of ₹ 2,95,574 by cheque. 9. The ld CIT (A) held as under: 8.3 I have perused the submissions made. The appellant has submitted agricultural land ownership details as well as agricultural income certificates. The income certificates pertain to financial year 2005-06 onwards. However, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 13,51,000 towards unexplained deposits in saving bank account, without appreciating the fact that the appellant has already explained the same . 13. Ground No.1 is general in nature 14. Ground Nos. 2 3 4 are with respect to assessment u/s 144 r.w.s 153C. We have already adjudicated this issue in ITA No.1765/Hyd/2013 (AY 2003-04) vide Para No.6 and the same conclusion shall be followed in this AY also. 15. Ground No.5 6 are with respect to addition of ₹ 1,30,700 as unexplained investment. It was submitted that the AO noted that page 61 of the document No.A/SJC/RES/01 seized from the residence of Sri S. Jayachandra Reddy reflected purchase of 0.09 acres of land at Tiruchanoor by the assessee for ₹ 1,30,700 on16.07.2003 vide document No.2483/03. The assessee did not submit any reply to the show cause notice issued by the AO seeking source of the investment made. Hence this amount was added to the income of the assessee. 16. Before the CIT (A) it was stated by the assessee that the amount of ₹ 1,30,700 was paid out of streedhan received from her parents. Subsequently the assessee stated that this amount has been withdrawn on 16.07.2003 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, the CIT (A) made the analysis of the withdrawals and deposits of the assessee s bank account and arrived at the negative cash balance of ₹ 13,51,000 (Rs.1,00,000 on 2.7.2003 + ₹ 1,01,000 on 6.11.2003 + ₹ 10,00,000 on 17.11.2003 + ₹ 1,50,000 received from Madhava Rao towards repayment of loan). 21. It was stated before us that the CIT (A) erred in not taking the opening bank balance of ₹ 20,69,646 while analyzing the deposits and withdrawals of the assessee s bank account. In support of this contention, assessee submitted detailed analysis of assessee s bank account for all the years. 22. It was further submitted that the assessee has received an amount of ₹ 1,50,000 from one Sri Madhava Rao towards repayment of loan advance earlier and the same is deposited in the Bank. In this connection, an affidavit from Shri Madhava Rao was filed vide Page No.32 of the paper book. 23. We have perused the record and at pages 10 11 of the paper book filed we find that an amount of ₹ 20,69,646 appears in the opening cash balance as on 30.05.2003 which the CIT (A) has not considered. Hence, we delete this addition made by the CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any confirmation regarding the same nor has he submitted any document indicating sale of land at Tiruchanoor village, which would confirm receipt of advance. The CIT (A) further held that the assessee s own contention has changed regarding deposit of ₹ 6.00 lakhs by cheque and in the earlier submission during the appellate proceedings, it was stated that this amount represents repayment of earlier advance given, while, subsequently the CIT (A) concluded that while making counter submissions to the remand report, it has been claimed as an advance against sale of land received from Sri Muni Reddy. The CIT (A) observed that the assessee has not been able to satisfactorily explain the nature and sources of ₹ 8,25,588. Thus, the CIT (A) held hence, out of the total addition of ₹ 17,33,088 on account of unexplained deposits in bank account, an amount of ₹ 8,25,588 is confirmed while the balance of ₹ 9,07,500 stands deleted . 31. Before us it was submitted that in the assessment proceedings the AO made an addition of ₹ 17,33,088 towards unexplained bank deposits out of which ₹ 8,25,588 has been sustained by the CIT (A) for the need of sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of the assessment proceedings, AO made an addition of ₹ 38,00,000 towards unexplained bank deposits out of which ₹ 6,50,000 has been sustained by the CIT (A) for the need of source. In this connection, it was submitted that during the appellate proceedings, the CIT (A) made analysis of the withdrawals and deposits of the assessee s bank account and concluded that the assessee is not having the source for the deposit of ₹ 6,50,000. 38. It was submitted that the ld CIT (A) erred in not taking the opening bank balance of ₹ 20,69,646 on 30.05.2003 while analyzing the deposits and withdrawals of the assessee s bank account. In support, detailed analysis of the assessee s bank account for all the years wherein opening balance of ₹ 20,69,646 is clearly seen which is not considered by the CIT (A). The same is reflected in page Nos. 10 11 of the paper book. Hence, if the opening bank balance of ₹ 20,69,946 is considered, the assessee has enough source for the bank deposits. 39. We have already decided similar issue with respect to unexplained bank deposit in ITA No.475/Hyd/2014 for A.Y 2004-05 as follows: We have perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t adjudicated. 5. Ground Nos. 5 to 7 and 9 are with respect to addition of ₹ 8,44,600 towards income from sale of land. During the course of search, a photocopy of sale agreement dated 13.12.2006 executed by the assessee and her brother was found and seized. As per page Nos. 198 to 200 of Annexure A/SJC/RES/04, the assessee and her brother have entered into a sale agreement with one Smt. C. Tulasi w/o B. Somasekhar for sale of 88.90 ankanams of land situated at Avilala Village, Tirupati for a sum of ₹ 16,89,200. 6. During the appellate proceedings, the assessee stated that the said sale agreement was cancelled on 24.12.2006 and the advance was returned back to the party. In support of her claim, the assessee has filed cancellation letter dated 24.12.2006 signed by Smt. C. Tulasi, w/o B. Somasekhar vide page 4 of the paper book filed on 30.05.2011. The assessee also stated that the said property was subsequently sold to Sri Abdul Rahaman, S/o Sulemaan Saheb, Tirupati and Sri Gollapalli Guruswami Reddy, S/o Narayana Reddy, Tirupati for ₹ 3,57,000 and ₹ 3,54,500 respectively vide registered sale deeds bearing No.1212/07 and 1213/07 dated 22.02.2007. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed was entered into with other parties upon same land in question. In support, assessee filed evidence of cancellation letter dated 24.12.2006 signed by Smt. C. Tulasi w/o B. Somashekhar vide Page No.4 of the paper book 1 filed on 30.05.2011. Assessee vide paper book has also filed the original sale deed copies upon the land in question. Hence no addition of undisclosed income can be made merely on the basis of cancelled sale agreement found during the course of search. Reliance was placed on the decisions of the Hyderabad ITAT in the case of DCIT vs. Shri B.Vijaya Kumar (ITA Nos.930 931/Hyd/2009) and the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Fairdeal Textile Park (P) Ltd. 9. We heard both the parties. We find that the sale agreement found during the course of search is only a photocopy. In the case of DCIT vs. B. Vijaya Kumar, the Coordinate Bench of ITAT Hyderabad has held as follows: 11................ The Hon ble Supreme Court in the case of K.P. Verghese reported in 131 ITR 597 has held that onus is on the department to prove that the assessee has understated the value of the property and has paid more than wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant, cancellation letter dated 24.12.2006, sale agreement dated 21.02.2007 based on suspicious and surmises. 9. The ld CIT Guntur (A) without having any evidence in possession erred in holding that the appellant had received sales consideration as per original agreement for sale while the registered sale deed only reflected the stated consideration and not the actual sale price . 2. First ground is general in nature, hence no specific adjudication is called for. 3. Ground Nos. 2 3 and 4 are with respect to assumption of jurisdiction. Similar issue has been adjudicated by us in ITA No.1765/Hyd/2013 for A.Y 2003-04 in the case of S. Jayachandra Reddy, at Para No.6. 4. Ground No.5 6 7 and 9 are with respect to CIT (A) upholding the addition of ₹ 844600 towards the income from sale of land. During the course of search, a photocopy of sale agreement dated 13.12.2006 executed by the assessee and his sister was found and seized. As per page Nos. 198 to 200 of Annexure A/SJC/RES/04, the assessee and his sister have entered into a sale agreement with one Smt. C. Tulasi, W/o B. Somasekhar for sale of 88.90 ankanams of land situated at Village Avilala, Tirupati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel that AO while completing the assessment made addition by treating 50% of the total consideration as the undisclosed income of the assessee amounting to ₹ 8,44,600 on the basis of a photocopy of sale agreement. In this regard it was further submitted that: The sale agreement found during the course of search is only a photocopy and not the actual sale deed. Sale agreement was towards sale of 88.90 ankanam of land situated at Avilala Village, Tirupati for a sum of ₹ 16,89,200. Sale agreement dated 13.12.06 on the basis of which addition have been made was cancelled on 24.12.2006 and the advance was returned back to the party. Subsequently, a registered sale deed was entered into with other parties upon same land in question. In support, assessee filed evidence of cancellation letter dated 24.12.2006 signed by Smt. C. Tulasi w/o B. Somashekhar vide Page No.4 of the paper book 1 filed on 30.05.2011. Assessee vide paper book has also filed the original sale deed copies upon the land in question. Hence no addition of undisclosed income can be made merely on the basis of cancelled sale agreement found during the course of search. Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of transaction and agreement during the remand report proceedings; the CIT (A) should not have been relied upon the submission which was not submitted before the AO during the remand report proceedings; 4. The ld CIT (A) ought not to have deleted the addition of ₹ 1,95,000 made on the basis of seized document of page No.82 of A/SJC/RES/04. The assessee has simply filed the ledger extract of construction account and the sources has not explained during the remand report proceedings; The CIT (A) should not have been relied upon the house construction account and sources has not examined. 5. The ld CIT (A) ought not to have deleted the addition ₹ 2.00 lakhs made on the basis of page No.37 of A/SJC/RES/03 without verifying the seized material . 2. Ground No.1 is general nature which is against the order of the ld CIT (A) in not considering the remand report. 3. With regard to Ground No.2, it was stated that as per page Nos. 65 66 of Annexure A/SJC/RES/04, two receipts issued by V.Venugopal Reddy have been seized. The receipt at page No.65 is for ₹ 1,00,000 paid by the assessee by cheque and the receipt at Page No.66 is with regard to purchase of 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of the amount arrived at ₹ 4.00 lakhs by the AO as ₹ 1.00 lakhs has been given by cheque. Hence, we find no infirmity in the order of the CIT (A) and confirm the same. This ground of the Revenue is dismissed. 7. With regard to Ground No.3, it was submitted that at Page No.146 which is a receipt cum agreement of ₹ 6,66,000 for 20 cents of land @ ₹ 33,000/- per cent on 10.05.2007, whereby R. Venkata Reddy has sold the land to the assessee. At the assessment stage, the assessee stated that he has only paid ₹ 9000 as advance and no further payment has been made. AO did not agree with the assessee and added the entire amount as unexplained investment. 8. During appellate proceedings, the assessee has submitted the encumbrance certificate regarding this piece of land which shows that as on 20.11.2009 the property in question remained in the name of R.Venkata Reddy and had been mortgaged to Gajulamandalam Primary Agricultural Cooperative Society. 9. We are in agreement with the order of the CIT (A) since he has observed that the property remained recorded in the name of the original seller and the seized document also mentions only payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to have deleted the addition of ₹ 12,86,000 made on the basis of seized document of page No.145 of A/SJC/RES/04. The assessee has not produced any documentary evidence in support of cancellation of transaction and agreement during the remand report proceedings; the CIT (A) should not have been relied upon the submission which was not submitted before the AO during the remand report proceedings; 3. The ld CIT (A) ought not to have deleted the addition of ₹ 13,06,000 made on the basis of seized document of page No.82 of A/SJC/RES/04. The assessee has not produced any documentary evidence in support of cancellation of transaction and agreement during the remand report proceedings; The CIT (A) should not have been relied upon the house construction account and sources has not examined. 4. The ld CIT (A) ought not to have deleted the additions of ₹ 38,400 and ₹ 60,000 made on the basis of seized document of page Nos. 73 75 of A/SJC/RES/04. The assessee has simply filed the ledger extract of construction account and the sources has not explained during the remand report proceedings; The CIT (A) should not have been relied upon the house construction ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded and the only evidence is regarding payment of ₹ 9000 as advance. The CIT (A) deletion the addition of ₹ 13.06 lakhs made by the AO . The Department is in appeal before us. 22. We hard both parties. From the encumbrance certificate submitted by the assessee it can be gathered that the land holdings remained in the names of Tyagaraja Reddy, Venkatadri Reddy, Giri Govardhana Reddy and other minors as on 20.11.2009. Hence the sale has not been concluded and only an advance payment of ₹ 9000 has been paid. Therefore, we confirm the order of the CIT (A) in deleting the addition of ₹ 13.06 lakhs. 23. With regard to Ground No.4, it was stated that pages 73 75 of Annexure A/SJC/RES/04 being receipts of ₹ 38,400 ₹ 60,000 have been stated as pertains to construction of house, which have been wrongly added as unexplained investment in purchase of land. 24. The ld CIT (A) held as under: 8.10.2 I have perused the documents and the contention of the appellant appears correct. Moreover, the appellant has shown substantial investment towards construction of the house and hence the addition of ₹ 98,400 in respect of these two docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-09 17 364/Hyd/2014 2009-10 18 284/Hyd/2014 2003-04 Partly allowed for statistical purposes in the case of Smt. S. Sai Ramani. 19 285/Hyd/2014 2004-05 20 366/Hyd/2014 2005-06 21 286/Hyd/2014 2006-07 22 125/Hyd/2014 2007-08 23 126/Hyd/2014 2008-09 24 287/Hyd/2014 2009-10 25 475/Hyd/2014 2003-04 Partly allowed for statistical purposes in the appeals of Smt. Panjam Shobha Rani, 26 476/Hyd/2014 2004-05 27 477/Hyd/2014 2005-06 28 478/Hyd/2014 2007-08 29 431/Hyd/2014 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
