9911796707
TMI Blog2016 (2) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- per acre for AY. 2005-06, 2006-07, 2007-08. The balance of the income in each year is confirmed as ‘income from other sources’ as was done by the AO. - Decided partly in favour of assessee Disallowance u/s. 80C - CIT(A) while allowing the payment to LIC in AYs. 2006-07 & 2007-08, did not allow the repayment of principal amount on the housing loan obtained - Held that:- . Before us, Ld. Counsel fairly admitted that assessee did not have any evidence of payment of these amounts. Since assessee is not forthcoming with any evidence, we do not find any reason to interfere with the order of the CIT(A). Accordingly, the grounds on disallowance u/s.80C are dismissed. Additions based on agreement of sale - Held that:- Assessee not only submitted various evidence, but also affidavits in support of the contentions that the document of agreement of sale is only a security obtained for chit fund business. AO did not make any enquiry, the fact of which is also noted by the Ld. CIT(A). In view of this, since assessee’s modus oparandi was accepted by the CIT(A), we are of the opinion that the additions cannot be made simply on the basis of agreement of sale found with the assessee, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given due opportunity, before taking any decision adverse to the interest of assessee. - Decided in favour of assessee for statistical purposes. - 797/Hyd/2015, 798/Hyd/2015, 799/Hyd/2015, 800/Hyd/2015, 801/Hyd/2015, 802/Hyd/2015, 803/Hyd/2015 - - - Dated:- 20-1-2016 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri A.V. Raghu Ram, AR For The Revenue : Shri M. Sitaram, DR ORDER PER BENCH : These are seven appeals by assessee from AYs. 2006-07 to 2011-12 against the orders of the Commissioner of Income Tax (Appeals)-XI, Hyderabad dated 12-03-2015 and for AY. 2005-06 dated 23-03-15. There are various issues but commonly arising in all the years. Hence, these appeals are decided issue-wise: 2. We have heard Ld. Counsel and Ld.DR and their arguments are incorporated, wherever necessary. 3. Briefly stated, assessee is an individual and along with others were covered in operations u/s. 132 of the Income Tax Act [Act] conducted on 02-09-2010. Assessee is running un-registered chit businesses and in the course of search proceedings, various incriminating documents, certain property documents, certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be partially correct. Since assessee is not in a position to furnish any evidence to substantiate the incomes earned and returned, we have no option than to estimate the agricultural income at a reasonable basis. Assessee s submission that it has grown Paddy, Grapes and Vegetables on a piece of land of 1.27 acres cannot be accepted as it is not possible to cultivate all the three in small piece of land. However, since assessee owns some agricultural land in the impugned years, we are of the opinion that income at ₹ 10,000/- per acre can be justified as a reasonable income earned on the said lands. Accordingly, AO is directed to accept income at ₹ 10,000/- per acre for AY. 2005-06, 2006-07, 2007-08. The balance of the income in each year is confirmed as income from other sources as was done by the AO. Assessee s grounds are partly allowed. Disallowance u/s. 80C of the Act: 7. Assessee claims certain investments and repayments u/s. 80C which the AO disallowed. Ld.CIT(A) while allowing the payment to LIC in AYs. 2006-07 2007-08, did not allow the repayment of principal amount on the housing loan obtained, claimed at ₹ 1 Lakh and ₹ 68,042/- resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made any inquiry with respect to the claim made by the appellant. He has summarily rejected the appellant's contention. The party to the transactions have not been summoned or examined, nor any third party enquiry was conducted. As already mentioned, taking of property as security is a norm in this kind of business. Further, no finding has been given by the Assessing Officer in Contradiction to the claim made by the appellant that the transaction entered into and affidavits submitted were not genuine. It is, therefore, held that the agreements are documents constituting security collected by the assessee/his father in normal course of the chit business; they do not represent any investment. Hence, there is no occasion to treat is as unexpiained Investment and deem the same to be the assessee's income. The addition of ₹ 8,00,000/- is deleted. 9. In AY. 2006-07 on similar lines, Ld. CIT(A) accepted an amount of ₹ 22 Lakhs, but confirmed an amount of ₹ 16 Lakhs out of ₹ 38 Lakhs added by the AO. The reason for confirming the amount of ₹ 16 Lakhs is that assessee did not furnish necessary evidences in support of the contentions. Like-wise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty was for of total consideration of ₹ 6 lakhs against which ₹ 1 lakh was purported to have been paid in advance. He has also given an affidavit from Mohammad Sharfudin s/o. Md. Naseeruddin who was the party to the agreement. On perusal of the same it is seen that Shri Raheem had subscribed for chit amounting to ₹ 5,00,000/-, and for that the property was given as security by his relative. The Agreement of sale for the said property was for of total consideration of ₹ 16 lakhs against which ₹ 6 lakhs was purported to have been paid in advance. According to the affidavit there was no movement of money. Regarding the third document of Agreement of Sale for property at H.No. 16-11/677 at Yasrabnagar, for a consideration of ₹ 16 lakhs, no affidavit, etc. has been filed by the appellant. Though the affidavits and encumbrance certificates which were filed as additional evidence were sent to the Assessing Officer, he has not made any inquiry with respect to the claim made by the appellant and has merely stated that no additional evidence was brought on record and has offered no comments. He has summarily rejected the appellant's contention. The pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business and grant necessary relief after due enquiry. Assessee should be given due opportunity to substantiate the claim and assessee is free to furnish necessary documents/evidences/confirmations/affidavits in support of his contentions. With these observations, balance of addition as raised by assessee for AYs. 2006-07, 2007-08 and 2010-11 are restored to the file of AO for proper enquiry and adjudication. Grounds are accordingly allowed for statistical purposes. Addition based on Promissory Notes: 13. AO made addition of ₹ 6 Lakhs in AY. 2009-10 and 1,50,000/- in AY. 2010-11 on two promissory notes found in the course of search proceedings. AO was of the opinion that an amount of ₹ 6 Lakhs was lent on 03-07-2008 against cash receipt to Shri A. Rajavardhan Reddy, which was brought to tax in AY. 2009-10 and an amount of ₹ 1,50,000/- lent on 31-12-2009 against promissory note to Shri V. Ravi Kumar was brought to tax in AY. 2010-11. Similar to the agreements of sale seized by the department, assessee contended that promissory notes were also obtained for securing the chit business. On the reason that assessee has not substantiated with any documentary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he additional evidence before the Ld. CIT(A), which was also admitted by the Ld. CIT(A). However, stating that assessee has not commented about this and has not furnished additional evidence before him, the amount was confirmed by the Ld. CIT(A). 17. We are of the opinion that the assessee contention cannot be rejected simply because AO did not comment on the issue. There is evidence that assessee has obtained Over Draft from the bank. If the amount was utilized for the purpose of business, the interest paid thereon should be allowed as a deduction while computing income from profits and gains of business . Since the AO has not examined this claim, we set aside the issue to the file of AO to examine the claim of the assessee and the purpose for which the borrowed funds were utilized. Assessee should be given due opportunity, before taking any decision adverse to the interest of assessee. Accordingly, this issue in AY. 2011-12 is restored to the file of AO for fresh consideration. 18. In the result, appeal in AY. 2005-06 is partly allowed and appeals in AYs. 2006-07 to 2011-12 are partly allowed for statistical purposes. Order pronounced in the open Court on 20th January, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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