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TMI Blog2016 (7) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by the HUF, but, without disproving the same AO simply brought to tax all those investments also in the hands of assessee. There is evidence on record that assessee also offered incomes in HUF status, having its own sources of income and those were not disproved. In view of the above, keeping in mind the limited jurisdiction for making assessment u/s 158BD and the fact that assessee could explain various investments in cash flow statement itself which was accepted by the AO in the proceedings, we have no hesitation in allowing grounds taken by the assessee. Since all the investments brought to tax are either explained in the cash flow statement or belonging to third parties which have brought to tax as benami, we direct the AO to delete all of them - Decided in favour of assessee. - IT (SS) A. No. 28/HYD/2009 - - - Dated:- 13-5-2016 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For the Assessee : Shri S. Rama Rao, AR For the Revenue : Shri B. Kurmi Naidu, DR ORDER Per B. Ramakotaiah, A. M. This is an appeal filed by assessee, who is a partner of M/s. Padmavathi Oil Producers, Warangal. Briefly stated, the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 1992-93 1) Opening cash balance - ₹ 1,51,241/- 2) Gifts received by the appellant herein- ₹ 6,07 ,852/- Assessment Year 1993-94 1) Investments in Ushodaya Oil Producers - ₹ 5,21,180/- 2) Investment in Balaji Oil Producers - ₹ 20,000/- 3) Investments in Chits - ₹ 13,850/- Assessment Year 1994-95 1) Investments in shares of Ushodaya Agro Products - ₹ 23,85,000/- 2) Investment in purchase of property - ₹ 8, 17,741/ - 3) Investments in Chits - ₹ 85,000/- 4) Investments in Plots at Shivnagar and fort Road, Warangal - ₹ 1,48,040/- Assessment Year 1995-96 1) Investments in shares of Ushodaya Agro Products - ₹ 13,00,000/- 2) Investment in Chits - ₹ 19,750/- 3)Investments in Plots at Fort Road, Warangal - ₹ 5,16,800/- 3) Investment in Padmavathi Cotton Corporation - ₹ 35,000/- Assessment Year 1996-97 1) Investments in shares of Ushodaya Agro Products - ₹ 11,51,000/- 2) Investment in purchase or property - ₹ 14,22,071/- 4. The Assessing Officer erred in arriving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he partnership firm Ushodaya Oil Producers, which was treated as income of assessee; ii) Investment made by Shri V. Chandra Mohan of ₹ 2 Lakhs in the same partnership firm is also treated as income of assessee; 4.1. In explanation to the above ground, Ld. Counsel submitted that investment by Smt. M. Vijaya Lakshmi of ₹ 2 Lakhs with Ushodaya Oil Producers cannot be added as the income of assessee, since a statement was appended to the return of income of Ushodaya Oil Producers. The capital contribution of ₹ 2 Lakhs by Smt. Vijaya Lakshmi was confirmed by her. She stated that ₹ 1 Lakh was received as a gift at the time of marriage and another ₹ 1 Lakh was received as a loan from her father-in-law Shri M. Lakshmi Narayana. The AO held that the said amount was taxable in the assessment of assessee. Ld. Counsel submitted that there is no evidence during the course of search that the amount was paid by assessee. There is no material to show that Smt. Vijaya Lakshmi is not a real partner of the firm. No evidence is available to show that Smt. Vijaya Lakhsmi acted as a benami of assessee. The partnership deed of Ushodaya Producers was available at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of ₹ 4,90,496/- and agricultural income of ₹ 1,25,000/-. The amount of ₹ 13,850/- was paid to chit fund companies and assessee was having sufficient funds on that date. Therefore, the AO was not justified in holding that ₹ 13,850/- represents the undisclosed income of assessee. Ld. Counsel submitted that this addition is also made based on the receipts and payments account and not based on seized material. AY. 1994-95: 7. As far as investments in shares of Ushodaya Agro Products are concerned, the Ld. Counsel submitted that in so far as the investment of ₹ 9,00,000/- made by the assessee is concerned, the same is recorded in the receipts and payments account. He submitted that the assessee is having sufficient funds in the receipts and payments account during the year and the sources are explained the receipts and payments account. He further submitted that the AO added the amount as found in the receipts and payments account and not based on the seized material. 7.1 With regard to the investment of ₹ 6,85,000/- by the wife of the assessee is concerned, Ld. Counsel submitted that she made the investment from her own sources of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-. He submitted that the said amounts of ₹ 85,000/-- are shown on the Receipts side of the receipts and payments account. 10. As regards the investments in plots at Shivnagar and Fort Road, Warangal, which consists of plot of the value of ₹ 70,440/- purchased by the assessee, property of the value of ₹ 38,000/- each in the names of the assessee and his wife Smt. Uma at For road, Warangal, are concerned, Ld. Counsel submitted that the Source for acquisition of plots are shown in receipts and payments accounts of the assessee and his wife. AY 1995-96 11. As far as investments in shares of Ushodaya Agro Products, which consists of investment in the shares of Ushodaya Agro Products in the name of the assessee of ₹ 9,00,000/- and in the name of his wife Smt. Um of ₹ 4,00,000/-, are concerned, the ld. Counsel submitted that an amount of ₹ 9 lakhs was invested by the assessee in Ushodaya Agro Products through Demand Draft. The said amount was paid by Chemicfabs through DD directly to Ushodaya Oil Refineries. Copy of the DD is at page No. 35 of the paper book. The amount was sent directly by the company to Ushodaya Oil Refineries for payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. There is no evidence in the seized material to show that the investment was made by the assessee. 16. The ld. DR on the other hand defended the order of AO and also filed written submissions as follows: A survey operation u/s 133A of the Income Tax Act was initiated against the firm, M/s Padmavathi Oil Producers, in which above assessee is Managing Partner on 31-1-1996 when it was noticed that the firm filed the returns of income for the assessment years 1993-4, 199~95 and 1995-96 on 29-01-1996 without enclosing the profit and loss accounts and Balance Sheets along with necessary annexures as also the challans for the payment of self assessment tax u/s 140A. During the course of survey operation, discrepancy of stock of ₹ 7,46,956/-, certain unexplained investments and excess cash of ₹ 2 lakhs was found. Then the survey operations were converted into search under section 132 of the Income Tax Act. During the course of search, documents relating to the investment made by the assessee were found and seized. 2. Notice u/s 158BD was issued to the assessee. The assessee filed the return of income declaring undisclosed income of ₹ 4 lakhs for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z, Smt. M. Vijaya Lakshmi and Sri V. Chandra Mohan are the benamis of the assessee who had no means to invest and are not genuine partners. With regard to investment in chits, it may be observed that the assessee has not offered any explanation. 6. For the assessment year 1994-95 and 95-96, the investment made in shares of M/s. Ushodaya Agro Products ltd., and purchase of properties, plots in Warangal and investment in chits of ₹ 34,35,781/- and ₹ 18,71,580/- respectively were added in the absence of credible explanation by the assessee. During the assessment proceedings, it was found that most of the share-holders of the company are benamis of the assessee who have no means to invest. Further, it was also noticed that the assessee purchased certain properties in benami names and offered them as security for obtaining loans from SBH, Warangal and he has not explained the sources for certain other properties. 7. For the assessment year 1996-97, the investment made by the assessee and his Benami, Sri V. Chandra Mohan, in the shares of Ushodaya Agro Products and purchase of properties of ₹ 25,73,071/- was added after analyzing the material available on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons reiterated by assessee in the submissions, assessee has filed returns of income before the so-called survey proceedings it self. As seen from the orders of the AO also, most of the additions are made on the basis of the cash flow statement furnished on the basis of assessee s recorded transactions. In view of that, we are of the opinion that many of the additions made by the AO cannot be sustained as such. 17.3 Not only that, as seen from the copies of the panchnama and the list of the documents found in the search and the statements recorded from the parties concerned, it is evident that there is no evidence whatsoever to establish that assessee is benami of his wife and others whose amounts have been brought to tax in the hands of the assessee. As submitted by the Ld. Counsel and also placed on record, AO has initiated proceedings u/s 147/158BD in all the cases including the case of V. Chandra Mohan, whose substantial investment is considered to be assessee s investment. Even though, Ld. DR tried to justify that investments made by the assessee and his benami Shri V. Chandra Mohan, in the shares of Usha Agro Products and purchase of properties of ₹ 25,73,071/- was ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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