9911796707
TMI Blog2015 (3) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... ience. 2. Facts of the case in brief leading to the filing of the present appeals are that the assessee is an individual engaged in real estate business and has been deriving income from business, house property and agriculture. A search and seizure operation under S.132(1) of the Income Tax Act,1961 was conducted at the residence of the assessee on 12.9.2009. Subsequently, notice under S.153A was issued on 16.9.2009, calling for returns of income for the assessment years 2003-04 to 2008-09. In response to the said notice, assessee filed return for the assessment year 2003-04 on 4.10.2010 admitting total income of Rs. 1,33,129 and agricultural income of Rs. 4,98,500. After making the following additions/disallowances, assessment was completed determining taxable income at Rs. 16,87,987, besides agricultural income at Rs. 2,49,250, vide order of assessment dated 31.12.2010 passed under S.143(3) read with S.153A of the Act (a) Disallowance of expenditure on purchase of land u/s. 40A(3) Rs.4,32,036 (b) Disallowance of other expenditure Rs.1,78,572 (c) Agricultural income treated as income from other sources Rs.2,49,250 (d) Addition on account of unexplained cash credit Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure of the group, we do not find merit in the same, inasmuch as it is only any item/items of income added which can be telescoped against the addition made on account of any item/items of expenditure. Even in such a case, telescoping can be accepted only if the assessee establishes nexus between the same. What the assessee is claiming is telescoping of income/expenditure additions made in the assessee group. Since the group consists of different taxable entities, viz. assessees, each assessee and assessment are independent, and no telescoping could be allowed for the expenditure additions made in the hands of one assessee by virtue of income additions made in the hands of a different assessee, even if both belong to the same group. Hence this ground of the assessee is rejected. 8. Now turning to the grounds of the assessee originally raised in this appeals, on the merits of additions/disallowances made, the first effective grievance of the assessee relates to disallowance of Rs. 4,32,036 made by the Assessing Officer under Section 40A(3) 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 purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that the provisions of S.40A(3) are not attracted to the payments in question, which are covered by the exceptional circumstance contained in Rule 6DD(g) of the I.T. Rules. 13. Learned Departmental Representative on the contrary, strongly supported the impugned orders of the Revenue authorities and submitted that the disallowance in terms of S.40A(3) made by the Assessing Officer is in order, and the same should be upheld. 14. We have considered the rival submissions and perused the impugned orders of the Revenue authorities and other material available on record. It is the case of the assessee that the payments in question were made in villages where banking facilities are not available and as such, the same are covered by the exceptional 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 br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such though vouchers were maintained, they are not available now. He therefore, submitted the entire disallowance made by the Assessing Officer is deleted. 19. Learned Departmental Representative, on the contrary, supported the orders of the Revenue authorities. 20. We have considered the rival submissions and perused the orders of the Revenue authorities and other material on record. We find that the CIT(A), after considering all the facts and circumstances of the case and corresponding expenditure claimed and allowed in the earlier years, has restricted the disallowance made by the Assessing Officer at 10%. We find that the disallowance sustained by the CIT(A) is fair and reasonable and there is no justification for interference with the order of the CIT(A) on this issue. We accordingly uphold the order of the CIT(A) reject the grounds of the assessee on this issue. 21. The next grievance of the assessee in this appeal relates to the addition made by treating part of the agricultural income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Patti and other records to ascertain the crops grown and the income derived by the assessee, and thereafter arrives 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. 27. The next grievance of the assessee in this appeal relates to the addition of Rs. 2,63,000 made by the Assessing Officer and sustained by the CIT(A) on account of unexplained cash credit. 28. Facts of the case in relation to this issue are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee had introduced Rs. 6,95,000 in his capital account on 1.4.2002. Since the assessee could not offer any explanation with regard to introduction of cash, the Assessing Officer treated the said amount as unexplained cash credit and accordingly made addition of Rs. 6,95,000 under S.68 of the Act. 29. On appeal before the CIT(A), it was explained that this amount of Rs. 6,95,000 included agricultural incomes generated in the financial year 2001-02 of Rs. 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of his mother as constituting the sources for the capital introduced on 1.4.2002. Mere possession of agricultural land by the assessee's mother or her deriving substantial agricultural income there from does not establish the sources for the cash credit introduced by the assessee, unless it is established by the assessee that the said income of his mother constituted source for the capital introduced by him by way of cash. At 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so rejected. 36. Now turning to the grounds raised originally in this appeal, the first effective grievance of the assessee covered by ground No.2 relates to the disallowance made in terms of S.40A(3). We have decided identical ground of the assessee for the assessment year 2003-04. 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 remit this matter to the file of the Assessing Officer with directions identical to the ones given herein above for assessment year 2003-04, for fresh decision in accordance with law and after giving reasonable opportunity of hearing to the assessee. 37. The next effective grievance of the assessee, covered by ground No.3 of this appeal relates to disallowance of 10% of total expenditure claimed, amounting to Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the said land was Rs. 13,08,150/-. Copy of the agreement is photocopies and enclosed along with this order as Annexure-2. However, the assessee has furnished his reply on 22.11.2010 stating that it is an agreement entered between him and only a sum of Rs. 3,50,000/-. Cash was paid as advance to the landlords on 23.08.2003 and subsequently the agreement was cancelled. He has also replied that the advance amount of Rs. 3,50,000/- was received back from the landlord on 20.09.2003. However, on examination of the cash books submitted by the assessee, neither the advance given by him on 23.08.2003 nor advance received on 20.09.2003 was reflected. The copy of relevant pages of the cash book is enclosed as Annexure-3 of the order. Hence it is evident that the explanation offered by the assessee is false and 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 Rs. 13,08,150/- is added as the unexplained investment of the assessee in purchase of the said land. 2.2 In the same annexure, pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that the cash book does not indicate either payment of Rs. 3,50,000 or subsequent receipt. Hence, keeping the above in view, what emerges is that the evidence available indicates payment of Rs. 3,50,000 as advance and that the property in question has not been transferred to the appellant or his family members and hence there is no evidence of any payment beyond the initial payment of Rs. 3,50,000. The appellant has failed to offer satisfactory explanation regarding the payment of Rs. 3,50,000 and hence it remains unexplained. Out of the addition of Rs. 13,08,150 an amount of Rs. 3,50,000 is being confirmed and the balance is being deleted. 9.4 As regards the second property, the appellant has submitted that the purchase transaction never took place and an advance of Rs. 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 Rs. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. M. Mangamma respectively in application of funds in rows 32 and 33 at page 2. Advance returned back is reflected at row 36 of page 1 of consolidated cash flow statement under cash inflow. 46. We are in confirmity with the order of the CIT (A) as the claim of the assessee that it received back this amount of Rs. 3,50,00 on 1.11.2003 is not relevant. The assessee has not explained the source of this money and the AO has clearly pointed out that the cash book does not indicate either payment of Rs. 3.50 lakhs or subsequent receipt. Hence, the CIT (A) was right in holding that the payment of Rs. 3.50 lakhs is unexplained in the absence of satisfactory 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 Rs. 50,000, hence we confirm the order of the CIT (A), in sustaining the addition of Rs. 50,000. Hence the sum of Rs. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried out agricultural operations and/or generated agricultural income and that this agricultural income was made available to the assessee. Hence an amount of Rs. 1,76,500 is being confirmed as an unexplained cash credit appearing in the books of the appellant and appeal in respect of Ground No.4 is partly allowed". 53. We heard both the parties. Since no evidence has been brought to our record that Smt. S. Basamma, mother of the assessee was having agricultural income and carrying out agricultural operations, for the past several years and had given the same to the assessee, 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 Rs. 78,780 Unexplained investment Rs. 84,500 Addition on account of unexplained cash credit Rs.8,47,873 Agricultural income treated as income from other sources Rs. 61,150 55. The issue with respect to disallowance of expenditure u/s 40A(3) of Rs. 8,86,100/- towards purchase of land and disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of Rs. 60,500 and Rs. 24,000 respectively and decide the issue in accordance with law. This ground of the appeal of the assessee is set aside for statistical purposes. 62. Hence, for the A.Ys 2003-04, 2004-05 and 2005-06, are partly allowed for statistical purposes. Addition of Rs. 8,47,873/- as unexplained cash credit. 63. With respect to addition of Rs. 11,73,323/- treated by the AO as unexplained cash credit u/s 68, the assessee had submitted that out of total amount of Rs. 11,73,323/-, Rs. 3,25,450 is agricultural income claimed in the return of income filed for AY 2004-05, rental income of Rs. 48,000, compensation received as political prisoner from A.P. Govt. amounting to Rs. 3.00 lakhs, compensation received from A.P. Govt. for residential house which was destroyed - Rs. 2,99,350/- and other gifts and savings totaling to Rs. 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 Rs. 3,25,450 representing agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee may add............" 68. Ground No. 1 is general, hence no adjudication is called for. 69. With respect to Ground Nos. 2 & 3, the AO has discussed at page 6 & 7 of his order and concluded as follows: "The assessee 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 Rs. 7,43,000/- to the income returned. 70. The CIT (A) has sustained an amount of Rs. 7,11,000/- made towards unexplained investment in purchase of land for the A.Y 2006-07. The ld CIT (A) observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain. However, during the assessment proceedings, the AO observed that since the assessee was engaged in the business of purchase and sale of lands in previous 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estore this issue to the file of the Assessing Officer for fresh examination this issue. The Assessing Officer is directed 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 Rs. 1,50,91,148/-. On appeal before the CIT (A), the CIT (A) sustained the following additions: - Addition of Rs. 3,79,230 as undisclosed business income - Addition of Rs. 83,14,000 made towards unexplained investment for purchase of land - Addition of Rs. 7,66,918 towards unexplained inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a cost of Rs. 38,34,000 (including cost of land). Accordingly land was purchased from Smt. P. Rama Lakshmamma & Others at a cost of Rs. 3,21,000. Assessee's 1/3rd share in the cost of land was at Rs. 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 Rs. 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 before the AO, then no addition can be made basing on a photocopy of agreement to sale without having any corroborative evidence as observed by the ITAT Hyderabad Bench in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 assessee on the basis of unsigned agreement found as a result of search. The Delhi High Court in the CIT vs. D.K. Gupta (308 ITR 230) held that in the absence of corroborative or direct evidence to presume that the notings or jottin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 justified. 3. The ld CIT(A) Guntur erred in upholding the addition of Rs. 14,53,267 towards income from business & profession by changing the head of income which had been offered to tax as capital gains by the assessee in the return of income. 4. The ld CIT(A) Guntur erred in conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 receipt cum agreement issued by Venugopal Reddy 3,00,000 Agreement cum receipt by N Sudhakar 17,80,000 Cash Receipt cum agreement by Pattabi Rami Reddy 5,79,500 Cash Receipt cum agreement by K. Niranjan Reddy 5,70,000 Total 47,97,500 Less: Adjustment towards undisclosed income 14,54,267 Addition towards unexplained investment 33,44,233 106. It was submitted that the advances were made out of the income of the assessee, hence adding the same as unexplained results in double additions of income is not correct. Hence it was submitted that the assessee be allowed teles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted 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 Rs. 3,00,000 made towards unexplained investment in purchase of land for A.Y 2008-09, as 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. * It was submitted that during the year under consideration, the assessee made payments of Rs. 3,00,000 to V.Venugopal Reddy which was 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 A.Y 2008-09. 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 vide document No.4574/2007 at Row 8 of page 3 under application of funds. * Purchase of land from N. Sudhakar Naidu * It was submitted that the CIT (A) sustained an addition of Rs. 17,80,000 towards unexplained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of funds. Purchase of land from K. Niranjan Reddy: * The ld CIT (A) sustained an addition of Rs. 5,70,000 towards unexplained investment in land based in the agreement copy found during the course of search proceedings. In this regard, it was submitted that: * The addition is made based on the agreement to sale copy found during the time of search which was not original and was not implemented upon. * The agreement was made for purchase of land with storage facility and therefore, price was fixed at Rs. 5,70,000. * However, the agreement was cancelled and only land was purchased at Rs. 61,000/- which is duly reflected in the books of account and even the same amount is reflected in sale deed vide document No.5281/2008. * The CIT (A) ought to have appreciated the fact that when original sale deed was available, then no addition can be made basing on a photocopy of agreement to sale as observed by the decision of ITAT Hyderabad Bench in the case of DCIT vs. Shri B. Vijay Kumar (ITA No.930,931/Hyd/2009). * It was further submitted that the advances made by the appellant are made out of explained income of the appellant and his family and are duly reflected in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO to verify the same and decide accordingly. 111. Ground No.9 is with respect to addition of Rs. 1,22,160 towards political expenditure. It was submitted that during the years under consideration, the assessee has made certain political expenditures amounting to Rs. 33,840 for AY 2008-09 and the same is reflected in the books of accounts of the assessee and is made out of the explained source of income. It was submitted that the AO made the addition based on the invoices found during the search which does not belong the assessee and contained names of some other parties not belong the assessee group. Since it was submitted by the ld Counsel that the same is reflected in the cash flow statement filed before us, we set aside the issue to the file of the AO to verify the cash flow statement and decide accordingly. 112. With respect to Ground No.10 which is a common ground for AY 2008-09 and 2009-10. The next common issue for AYs 2008-09 and 2009-10 is with regard to unexplained expenditure towards son's education. Brief facts of this issue are that assessee's son Mr. S. Sivachaitanya has done his higher education in USA and major expenditure of his education was sponsored by his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thi and Dr. I Srinivas, aunt and uncle of Mr.S.Siva Chaitanya have sponsored his studies in USA for amount of Rs. 23,00,000. Dr. Deepthi and Dr. Srinivas have already submitted affidavit stating payment of Rs. 23.00 lakhs, their return of income filed in USA identity card in this regard. The AO has found no adverse finding in relation to the submission of the assessee in his remand report. The AO ought to delete the addition made in this regard. * The AO erred in not considering the fact that Mr. Siva Chaitanya while returning back to India has returned the excess cash borrowed from Dr. Deepthi amounting to Rs. 1.50 lakhs which is duly reflected bottom of the seized loose slip. A reconciliation statement of the above is given below: Particulars Amount Amount(Rs.) Total addition made by the AO Less: 40,10,000 Amount added instead of deleting - as per point (i) 1,10,000 Amount entered twice - as per point (ii) 4,00,000 Credit card payments in India - As per point (iii) 3,50,000 DD taken from SBI (as per point iv) 7,00,000 Money received from cousin (as per point -v) 23,00,000 Amount returned back (as per point vi) 1,50,000 40,10,000 Net addition Nil 114. Without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the amount spent during F.Y 2008- 09 relevant to AY 2009-10 is Rs. 17.00 lakhs. Hence, the entire amount of Rs. 17.00 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. Appeal in respect of Ground No.6 is dismissed". 117. We perused the reconciliation statement and found that: (i) Rs. 1,10,000 has been wrongly taken by the AO from the loose slip found during search as Rs. 40,10,000 instead of Rs. 39,00,000 as can be seen from the seized document (Annexure A/SJC/REC/04). (ii) Amount of Rs. 4,00,000 has entered twice. The AO erred in not considering that an amount of Rs. 4.00 lakhs marked as "Cash via Kuldeep" dated 23.10.2008 was not to be added as it was repeated twice in loose sheet seized. (iii) Credit card payments in India amounting to Rs. 3,50,000 reflected in loose slip as "Cash via Dad" were paid by the assessee out of the income of Siva Chaitanya and the amounts paid are duly reflected in the books of account of Siva Chaitanya. (iv) DD of Rs. 7.00 lakhs was taken from SBI Tirupati Bank from out of his income and the same is recorded in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate proceedings, the assessee stated that the valuation report was obtained to enable his son Siva Chaitanya to get a visa for USA. The valuation report indicates the asset value as on date and not the cost of construction. Assessee further stated that he and his wife Smt. S. Sai Ramani have obtained housing loan of Rs. 50.00 lakhs from the SBI, Settipalli Branch, Tirupati for which relevant documents have been submitted. The assessee has further stated that the ledger account for house construction was submitted to the AO during the assessment proceedings and a copy of the same has also been submitted during the appellate proceedings. In the remand report AO has mentioned that Rs. 51.00 lakhs has been obtained from SBI, Settipalli and has stated that the assessee's contention cannot be acceptable. In his counter submissions, the assessee stated that the addition was made provisionally since the valuation report has not been received from the valuation cell. Subsequently, the valuation report from the DVO was received and the assessment for the present A.Y was reopened u/s 147 and assessment proceedings completed on 18.03.2013. In the said re-assessment order, the cost of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestments are made out of the income of the assessee and therefore, adding the same as unexplained results in double additions of income which is not correct. Hence, prayed that assessee may be allowed telescoping of income for the year under consideration 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 further submitted that the ld CIT (A) has sustained the above addition in need of source of income. Assessee reiterated that the assessee group was having enough explained source of money for making the above payments and therefore, no addition can be made in this regard. The same were duly reflected in the cash flow statements submitted before the CIT (A) and ITAT. * The ld Counsel for the assessee stated that in the cash flow statements, amounts of Rs. 9,000/-, Rs. 9000/ Rs. 9000/- Rs. 9000/- and Rs. 9,84,000 are shown before the names of Gaju Mandalam, Panakam Village, Muni Reddy, Goverd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. Ground No.10 is with respect to addition of Rs. 17.00 lakhs towards son's education. This issue has been adjudicated by us vide Para Nos.112-117 in ITA No. and the same shall be followed in this A.Y. also. 132. Ground No.11 is with respect to addition of Rs. 5,61,263 towards unexplained personal and miscellaneous expenditure. The facts are that the AO while completing the assessment have added an amount of Rs. 5,61,263 towards unexplained expenditure towards personal and miscellaneous expenditure. It was submitted that the assessee is having enough explained sources to meet such expenses. Further it was submitted that the assessee group is drawing income for personal expenses. We set aside the issue to the file of the AO to verify the cash flow statement and whether the amount added is duly reflected in the consolidated cash flow of the assessee at Row 26 of Page 3 and decide the issue accordingly. 133. Ground No.12 is with respect to agriculture income being treated as income from other sources. We have already adjudicated the same for the A.Y 2003-04 vide Para No.26 in ITA No1765/Hyd/2013 in the case of S.Jayachandra Reddy and the same shall be followed for this assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT (A) held that during the course of assessment, it was noticed that the assessee has sold several lands in the year 2001-02, 2002-03 and 2003-04. As per the seized document A/SJC/RES/04 at Page No.116, it is clearly written "S.S.CHAITANYA-SALES". The assessee has sold several properties situated at Peruru and Avilala. The total sales between 17.06.2002 to 12.12.2002 and the assessee's share on the said sales were quantified at Rs. 22,66,100 and Rs. 6,76,588 respectively. The assessee's share of Rs. 6,76,588 was treated as undisclosed income for the A.Y 2003-04. 7. During the appellate proceedings, it has been stated by the assessee that the AO has adopted 1/3rd of the total sales figure of Rs. 22,66,100 whereas the seized document itself indicates that in some of the properties, the assessee's share is 1/4th and 1/7th. Moreover, purchase cost and development expenses on the plots amounting to Rs. 2,41,935 has not been reduced. 8. In the remand report, the AO stated that the correct share of the assessee has been adopted to arrive at the amount of undisclosed income and where the share has been stated as 1/4th or 1/7th the same has been adopted. Further the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 to 2009-10. Agriculture income treated as income from other sources (A.Y 2004-05 to 2009-10) 16. The common ground for the A.Y 2004-05 to 2009-10 is with respect to treatment of agriculture income as income from other sources. It was submitted that the AO while passing the assessment has treated the following agriculture income of the assessee as income from other sources: Assessment year Added by AO(Rs.) Sustained by CIT (A)(Rs.) 2004-05 3,80,000 20,000 2005-06 7,20,000 3,60,000 2006-07 7,60,000 4,00,000 2007-08 7,88,000 4,28,000 2008-09 20,64,000 3,78,000 2009-10 7,26,500 3,64,500 Total 54,38,500 19,52,500 17. Before the CIT (A) it was submitted that the appellant's grandfather Saikam Basi Reddy was in ownership of land in Madhavaram and Yandapalli villages and after his expiry, assessee inherited his agricultural lands. His grandfather was earlier reflecting agricultural income from such lands in his returns of income. Moreover assessee also purchased some agricultural land in Tirupati Rural mandal as well as Renigunta Mandal. Assessee submitted pattadar passbooks in respect of land in villages Krishnapuram, Thanapalle and Vemuru to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 accounts for the purpose of cultivation and therefore, non maintenance of books of accounts cannot be a ground to reject the claim of the assessee" . It is to further submit that the assessee has already furnished a paper book as additional evidence which consists of the income certificate issued by the Mandal Revenue Officer, Rayachoti in the name of Basi Reddy with details of the extent of land holding, Ryothwari Pass Books for respective lands which may please be considered in favour of the assessee and the addition in this regard may please be deleted" 19. The CIT (A) adjudicated the issue as under: "6.4. I have perused the submissions and counter submissions made as well as documents submitted in support of the contentions raised by the appellant. Late Sri Saikam Basi Reddy was in possession and ownership of agricultural lands and till the A.Y 2002-03, agricultural income from such land was reflected in his returns. Subsequently, the land in question, is stated to have been divided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng A.Y 2008-09". 20. Before the Tribunal, in this regard it was submitted that the assessee and his family members are having agriculture land and are carrying out agricultural activity around Tirupati. The assessee inherited agricultural lands from his grandfather in Madhavaram and Yandapalla Villages after his expiry. Moreover assessee also purchased agricultural lands in Tirupati Rural Mandal as well as Renigunta Mandal. All the relevant documents including pattadar pass books, income certificates from MRO etc., were submitted. Hence it was submitted that the action of the CIT (A) in treating part of agriculture income admitted as income from other sources is not justified. 21. Assessee submitted another table showing the certificates from MRO for A.Y 2009-10 showing the agriculture income from the agriculture lands held by the assessee: Details of agricultural income for A.Y 2009-10 Income Certificate Village S.No Acre Amount(Rs.) Paper Book Page No. Fasli 1418 Krishnapuram 108/3B 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 Thanapal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total consideration of Rs. 7,04,000. The share of the assessee was recorded as ½ and hence an amount of Rs. 3,52,000 was treated as income of the assessee. 27. During the appellate proceeding, assessee stated that the sale of this property was admitted in the return of income filed on 4.10.2010 in response to notice u/s 153C. Assessee pointed out that the entire sale consideration of Rs. 3,52,000 has been taken into account and long term capital gains determined at Rs. 1,25,371 after reducing indexed cost of acquisition at Rs. 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 Rs. 1,25,371 has already been offered as long term capital gains. Hence the entire amount of Rs. 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 amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 has 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 Rs. 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 Rs. 1 lakh to Rs. 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have held in the earlier that the amount sustained by the CIT (A) being only Rs. 20,000/- is to be deleted. However, in all the AYs from 2004-05 to 2009-10, this issue is common and approximately range from Rs. 3.60 to Rs. 4.28 lakhs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings, the assessee stated that the total amount of Rs. 30,08,592 is out of the amount inherited from his grandfather Sri Saikam Basi Reddy as well as sale of some inherited 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 Rs. 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 Rs. 25.80 lakhs. 43. In this regard, the ld CIT (A) held as under: "8.3 I have perused the above do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue under appeal". The same shall be followed in this A.Y also. 46. In the result, appeal is partly allowed for statistical 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 Rs. 3,60,000 and confirming the balance amount of Rs. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: "1. The ld CIT (A) Guntur erred 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 Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 assessee with regard to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 result appeal is partly allowed for statistical purposes. ITA No.284/Hyd/2014 - A.Y 2003-04 Smt.S. Sai Ramani 1. Grounds preferred by the assessee read as under: "1. The ld CIT (A) Guntur erred both in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 Rs. 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 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 agricultural lands and already furnished certificates issued by MRO, Tirupati Rural and MRO, Renigunta stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 agricultural lands and already furnished certificates issued by MRO, Tirupati Rural and MRO, Renigunta stating that the lands purchased are agricultural lands. 5. The ld CIT (A) Guntur erred in sustaining the 10% of disallowance amounting of Rs. 44,800 towards other expenditure, without any basis and considering the facts submitted by the assessee. 6. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 MRO for 2009-10 showing agricultural income from agriculture lands held by the assessee: Saikam Sai Ramani Details of Agricultural Income - A.Y 2009-10 Income certificate Village S.No Acre Amount(Rs.) Paper Book Page Nos. AGRICULTURE INCOME FOR WHICH CERTIFICATES PRODUCED Raychoty Mandal Madhavaram 149 & others 5.09 1,27,250 123 Fasali 1418 Karakambadi & Others 290/2A & Others 3.43 56,000 124 Fasali 1418 Thanapalle & Others 261-A1 & others 4 1,75,941 125 Fasali 1418 Gajulamandyam 1060/1 6.79 ½ 90,000 126 Fasali 1418 Thandlam 253/1B 9.82 ½ 1,35,000 127 Fasali 1418 Surrappakasam 251/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence regarding receipt of Rs. 3,30,000 on the demise of her father. In fact at the time of filing counter submissions to the remand report, the appellant has stated that Rs. 3,30,000 reflects gift from her father while Rs. 65,500 is gifts from others. This claim of the appellant is not backed with any evidence and further is contradictory to the earlier claim made during the assessment proceedings. Hence an amount of Rs. 3,95,000 is sustained as unexplained cash credit". 31. We have heard both the parties. We set aside the issue to the file of the AO to give one more opportunity to the assessee to substantiate her claim by producing proper evidence for the source of funds as she has stated that a sum of Rs. 3,30,000 has been received from her father as gift while a sum of Rs. 65,500 as gifts from others. The assessee has contradicted herself while explaining the source of the amounts available with her, before the lower authorities while challenging the addition of unexplained cash credits amounting to Rs. 3,95,000. Hence we set aside this issue to the file of the AO to verify whether the assessee has received a sum of Rs. 3.30 lakhs from her father who has expired and other gifts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r various land holdings, income certificate in favour of assessee by MRO Rayachoty Mandal, Renigunta Mandal and Tirupati Rural for various A.Ys. Purchase bills for fertilizers and chemicals in the paper book filed vide Page Nos.42-44, 49-61, 67-75, 81, 113-117, 123- 137. 38. Similar issue has already been decided by us in the case of S. Jayachandra Reddy (ITA No.1765/Hyd/2013 - A.Y 2003-04) Para No.77 & 78 and the same conclusion shall be followed in this A.Y also. 39. Fourth and fifth ground is with respect to the CIT (A) confirming the addition of Rs. 1,92,560 towards unaccounted income by changing the source of agricultural income to other source of income. Similar issue has already been decided by us in ITA No.1765/Hyd/2013 for A.Y.2003-04 (Para No.26) and the same conclusion shall be followed in this AY also. 40. In the result appeal No.366/Hyd/2014 is partly allowed for statistical purposes. ITA No.125/Hyd/2014 - A.Y 2007-08 41. Grounds preferred by the assessee is as follows: "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 Rs. 8,52,977 towards income from busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount Receipt issued by T. Nadamuni & Vijayalakshmi 9,51,OOO Receipt issued by A. Bhanuprakash, B. Keshav Reddy, B. Shashidhar 4,85,OOO Reddy Receipt cum agreement issued by P. Nagoor & P. Shah l,96,OOO Receipt cum agreement issued by D. Munnar l,70,OOO Agreement by N. Venkatappa Naidu 6,64,OOO Agreement by D. Krishnaiah 1,00,000 Receipt cum agreement issued by A Muni Reddy 6,79,500 Receipt issued by S. Nagoor & Others 3,40,000 Total 35,85,500 49. It was submitted that the investments are made out of the income of the assessee and therefore adding the same as unexplained results in double additions of income which is not correct. Therefore, we request your honours to kindly allow the appellant the telescoping of his income for current year as well as earlier years against his expenditure/investment. Further telescoping should also be allowed for the income of the appellant group against the investment/expenditure of the appellant. In this regard, we place our reliance on the order of Hyderabad ITAT in the case of Anil Kishore Agarwal & others vs DCIT CC-4 in ITA No.493-95/H/2011. 50. Further, assessee submitted the addition wise reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 consolidated cash flow statements wherein, amount of Rs. 1,96,000/-is shown before document number 6711/2007 at Row 3 of Page 4 under application of funds. d. Purchase of agricultural land from P.Munar (Rs.l,70,OOO/-) * that the land was purchased by the assessee from P.Munar vide doe. no. 6705/07. * The Land purchased was out of the sale proceeds of other lands and out of past savings of the assessee. * It is also submitted that the land in question is reflected in the ROI & Statement of affairs filed before the ITAT. * that 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 consolidated cash flow statements wherein, amount of Rs. 1,70000/-is shown before document number 6705/2007 at Row 4 of Page 4 under application of funds. e. Purchase of agricultural land from N. Venkatappa Naidu (Rs.6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflected in the cash flow statements submitted before the ITAT and are again submitted before your honour vide paper book. Kindly refer to the cash now statements wherein, amount of Rs. 6,79,SOO/-is shown before document number 8062/2007 at Row 6 of Page 4 under application of funds. h. Purchase of agricultural land from S. Nagoor &others(Rs.3,40,OOO/-) * In this regard it is submitted that the land was purchased by the assessee from S. Nagoor & others vide document. no. 7067/07. * The Land purchased was out of the sale proceeds of other lands and out of past savings of the assessee. * It is also submitted that the land in question is reflected in the ROI & Statement of affairs filed before the ITAT. * that 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 under cash flow statements wherein, amount of Rs. 3,40,000/-is shown before document number 7067/2007 at Row 7 of Page 4 under application of funds. 51. It was, therefore, prayed to delete the additions made for the years under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en offered to tax as capital gains by the assessee in the return of income. 3. The ld CIT (A) Guntur erred in confirming the disallowance u/s 54B claimed by the assessee in respect of capital gain. 4. The ld CIT (A) Guntur erred in confirming the addition of Rs. 4,78,000 towards unaccounted income by changing the source of agricultural income to other source income, which is not correct and not justified. 5. 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". 57. Ground No.1 is general, needs no adjudication. 58. With regard to Ground No.2 & 3 regarding the CIT (A) sustaining the addition of Rs. 4,52,800/- & Rs. 4,78,000 towards income from business and profession by changing the head of income. We find that similar issue has been decided by us at Para No.77 & 78 in ITA No.1765/Hyd/2013 for AY 2003-04 and the same conclusions shall be followed in this AY also. 59. Ground No. 4 & 5, similar issue has been decided by us at Para No.26 (ITA No.1765/Hyd/2013 AY 2003-04) and the same conclusions shall be followed in this AY also. 60. In the result, appeal is partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits. During the course of assessment, AO noted that the assessee had maintained a savings bank account at Andhra Bank, Tirupati bearing account No.20267. The bank account reflected the following deposits which were treated as unexplained and added to the income of the assessee. Date Amount (Rs.) Mode 20.02.2003 1,00,000 Cash 17.03.2003 2,95,574 Cheque Total 3,95,574 8. Before the CIT (A) assessee submitted that out of the amount of Rs. 3,95,574, Rs. 1,00,000 in cash was deposited by her son Vamsi Krishna, out of her agricultural income. She filed agricultural income certificates in support of her claim regarding agricultural income and stated that she had 10 acres of land in Koduri village in Kadapa. As regards the cheque deposit of Rs. 2,95,574 it was stated that this represented receipt from Govt. of Andhra Pradesh towards acquisition of land located at Avilala 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, 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 Rs. 1,30,700 towards unexplained investment in land, which is not correct and not justified. 6. The ld CIT (A) Guntur ought to have appreciated the fact that the assessee has already explained the source of income that the amount invested has got from the loan taken from the close relative. 7. The ld CIT (A) Guntur erred in sustaining the addition of Rs. 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 2003-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of cash to meet the investment which was reflected in the cash flows statement of the assessee group. We find the explanation of the assessee is reasonable, since an amount of Rs. 1,30,700 could be a gift received by the assessee from her parents and we also find that the sale deed has been registered in her name. Hence, we delete the addition made by the CIT (A). 19. Ground Nos. 6 is with respect to unexplained Bank Deposits amounting to Rs. 13,51,000 sustained by the CIT (A). 20. Before us, it was submitted by the ld Counsel that during the course of the assessment proceedings, AO made an addition of Rs. 68,30,731 towards unexplained bank deposits out of which Rs. 13,51,000 has been sustained by the CIT (A) for the need of source. It was further submitted that during the appellate 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 Rs. 13,51,000 (Rs.1,00,000 on 2.7.2003 + Rs. 1,01,000 on 6.11.2003 + Rs. 10,00,000 on 17.11.2003 + Rs. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by cheque No.0241832 was repayment of an earlier advance of Rs. 6.00 lakhs while Rs. 2,25,588 was received by cheque from one Sri Muni Reddy as advance for sale of land at Tiruchanoor village. 29. The AO held that in support of this claim, the assessee has not furnished any evidence except a computer generated ledger print out. AO in the remand report observed that no evidence has been submitted except a ledger extract. In the subsequent written submissions as well as counter submissions to the remand report, the assessee stated that both the amounts represent advances received from Sri Muni Reddy for sale of land at Tiruchanoor village. 30. The CIT (A) held that neither the assessee furnished 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 Rs. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld CIT (A) Guntur erred in sustaining the addition of Rs. 7,50,000 towards unexplained cash deposit in saving bank account, without appreciating the facts that the appellant has already explained the same". 34. Ground No.1 & 2 are general, hence no adjudication is called for. 35. Ground Nos. 3 & 4 are with regard to assumption of jurisdiction u/s 144 r.w.s 153C. Similar issue has already been adjudicated by us at Para No.6 (ITA No.1765/Hyd/2013 AY 2003- 04) in the case of S. Jayachandra Reddy and the same shall be followed in this A.Y also. 36. Ground no.5 is with respect to Unexplained Bank Deposits of Rs. 6,50,000. 37. During the course of the assessment proceedings, AO made an addition of Rs. 38,00,000 towards unexplained bank deposits out of which Rs. 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 Rs. 6,50,000. 38. It was submitted that the ld CIT (A) erred in not taking the opening bank balance of Rs. 20,69,646 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of appeal is general in nature, hence no specific adjudication is called for. 3. Ground Nos. 2, 3 & 4 are with respect to assumption of jurisdiction u/s 153C as similar issue has already been adjudicated by us in A.Y 2003-04 in ITA No.1765/Hyd/2013). 4. Ground No.10 is an alternate ground, not adjudicated. 5. Ground Nos. 5 to 7 and 9 are with respect to addition of Rs. 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 Rs. 16,89,200. 6. During the appellate proceedings, the assessee stated that the said sale agreement was cancelled on 24.12.2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of a photocopy of sale agreement. In this regard it was 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 Rs. 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. * 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,44,600 towards the income from sale of land. 6. The ld CIT (A) Guntur ought to have appreciated the fact that the sale agreement was cancelled on 24.12.2006 and the advance was returned back to the party. 7. The ld CIT (A) Guntur ought to appreciated the fact that the appellant has already filed cancellation letter of sale agreement dated 24.12.2006. 8. Without prejudicial to above the ld CIT (A) Guntur erred in rejecting the documents submitted 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) up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pparent that the appellant has received sales consideration as per the original agreement for sale while the registered sale deed only reflects the stated consideration and not the entire sale price. Hence the contention of the appellant is not acceptable and the addition made is sustained. The appeal in respect of Ground No.3 is dismissed". 7. On further appeal before it was submitted by the ld Counsel that AO while completing the assessment made addition by treating 50% of the total consideration as the undisclosed income of the assessee amounting to Rs. 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 Rs. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleting the addition made of Rs. 43,04,733. 2. The ld CIT (A) has deleted the addition of Rs. 1.00 lakhs without any grounds. 3. The ld CIT (A) ought not to have deleted the addition of Rs. 6,66,000 made on the basis of seized document of page No.146 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; 4. The ld CIT (A) ought not to have deleted the addition of Rs. 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 Rs. 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 consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has shown an investment in his Books of Accounts, in the F.Y 2006-07, whereas the investment has taken place in the F.Y. 2007-08 and hence the assessee submission is unreliable and therefore, he sustained the amount of Rs. 3.00 lakhs instead of the amount arrived at Rs. 4.00 lakhs by the AO as Rs. 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 Rs. 6,66,000 for 20 cents of land @ Rs. 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 Rs. 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 Coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) has not taken into consideration the remarks of the AO in the remand report while deleting the addition made of Rs. 1,16,40,625/-. 2. The ld CIT (A) ought not to have deleted the addition of Rs. 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 Rs. 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 Rs. 38,400 and Rs. 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 accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdhana Reddy and other minors as on 20.11.2009 indicating thereby that the transaction has not been concluded and the only evidence is regarding payment of Rs. 9000 as advance. The CIT (A) deletion the addition of Rs. 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 Rs. 9000 has been paid. Therefore, we confirm the order of the CIT (A) in deleting the addition of Rs. 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 Rs. 38,400 & Rs. 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
