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TMI Blog2017 (12) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... o this issue are that during the course of search u/s 132 of the Act in the case of the assessee and others on 2.9.2010, certain promissory notes for the amount lent by him were found. The assessee's contention that these promissory notes were obtained as security from the chit members, was not accepted by the AO and accordingly, he made the addition. The CIT (A), on the other hand, held that they are not cash credits, but represent unexplained investment and is to be brought to tax u/s 69. Aggrieved, the assessee is in appeal before us for the relevant A.Ys. The learned Counsel for the assessee submitted that similar issue had arisen in assessee's brother's case and ITAT has remanded the issue to the AO with some directions and reconsideration of the issue on merits. The learned DR, however, relied upon the orders of the authorities below. 4. Having regard to the rival contentions and the material on record, we find that in the case of A. Pandu Ranga Reddy, the Tribunal at Para 13 to 15, has held as under: "Addition based on Promissory Notes: 13. AO made addition of Rs. 6 Lakhs in AY. 2009-10 and 1,50,000/- in AY. 2010-11 on two promissory notes found in the course of search p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue and restore the matter to the file of AO for fresh enquiry. Assessee should be given due opportunity and assessee is free to furnish the necessary evidences in support of his claim. With these directions/observations, the grounds in these two years are considered allowed for statistical purposes". For the reasons given in ITAT order in the case of Shri A. Pandu Ranga Reddy in ITA Nos.797/Hyd/2015 to 803/Hyd/2015 for the A.Ys 2005-06 to 2011-12 vide order dated 21.9.2016 as above, this issue in the assessee's appeals for 2005-06 to 2008-09 is remitted to the file of the AO with similar direction. 5. The second issue in all the A.Ys is the treatment of agricultural income as "income from other sources". We find that this issue also has arisen in the case of A. Panduranga Reddy and ITAT in para 6 of its order has held as under: "6. We have considered the rival contentions. There is no dispute with reference to the fact that assessee owns agricultural land and also purchased 4.71 guntas of land in September, 2004. Considering the value of the land purchased and the extent of agricultural income offered, the AO's contentions seems to be partially correct. Since a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the same, the CIT(A) restricted the claim of deduction u/s 80C of the Act to LIC premium only and the assessee is in appeal before us against the relief denied by the CIT (A). 7. The learned Counsel for the assessee has drawn our attention to the certificate issued by the Bank to state that the loan was taken for a residential property and therefore, repayment of principal of such loan is to be allowed u/s 80C of the Act subject to the maximum of Rs. 1.00 lakh. We find that the CIT (A) has held that the interest certificate given by Bank of India does not establish that the said property was used as a commercial property and also that the assessee has not filed any rental agreement during the appellate proceedings to substantiate his claim. 8. We have gone through the certificate issued by the Bank of India and find that the loan is given for purchase of a flat. The nature of the said flat purchased by the assessee, is not mentioned in the certificate. It could be a residential flat also. In view of the same, we deem it fit and proper to remand this issue to the file of the AO with a direction to verify the nature of the property, and if it is found to be a residential prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of affairs only from the A.Y 2005-06 onwards. It is seen that from the A.Y 2005-06 onwards, the assessee has shown opening capital and there is increase in capital year after year. The source is also explained as income from chit fund business and past savings. We therefore, deem it fit and proper to remand this issue in both the A.Ys to the file of the AO for verification of the above sources for increase in the capital. 11. The fifth issue arising in these appeals is the addition made as unexplained investment based on the documents other than relating to chits, found during the course of search. We find that for the A.Ys 2006-07, 2007-08, 2009-10, 2010-11 & 2011- 12, the AO has made the additions towards unexplained investment. Brief facts are that during the course of search and seizure operation u/s 132 of the I. T. Act, certain property documents were found and seized. The assessee was asked to explain the nature of the transaction and the source of funds for such investments in the respective A.Ys. 12. For the A.Y 2006-07, The assessee explained that the assessee has purchased agricultural land measuring 1.22 acres in survey No.371 & 371 E of Mangalapalli Village, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Ys. 16. For the A.Y 2006-07, the learned Counsel for the assessee reiterated the submissions made before the AO but has not been able to produce any evidence in support of his contention that they are reflected in HUF returns. In the absence of any evidence in support of his claim, we are not inclined to interfere with the order of the CIT (A). The assessee's grounds of appeal relating to the additions of Rs. 8,31,500 are therefore, rejected. 17. In the A.Y 2007-08, there are two additions. As regards the sum of Rs. 1,26,500, we find that the assessee has not been able to produce the balance sheet of the HUF to demonstrate that the property worth of Rs. 1,26,500 is reflected in the HUF return of the assessee. Therefore, we confirm the addition of Rs. 1,26,500. 18. As regards addition of Rs. 8.00 lakhs, we find that at pages 60 to 62 of the paper book, the assessee has filed the copy of the capital a/c and the statement of affairs as on 31.3.2006 to demonstrate that as on 1.4.2005, the assessee had an opening capital amount of Rs. 30,87,987 and the closing balance of Rs. 53,46,710. The assessee has explained this amount to be the source for investment of Rs. 8.00 lakhs. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HUF return and that the sum of Rs. 8.00 lakhs was deposited by his uncle in his Bank A/c and the assessee has drawn the DD in favour of Matrusri Education Society. In the absence of any evidence to prove this contention, both the AO and the CIT (A) did not accept the contention of the assessee. The assessee has not filed any evidence even before us. Therefore, the addition of Rs. 12,02,000 is confirmed. 21. For the A.Ys 2010-11, the addition u/s 69 of the Act is to an extent of Rs. 1,37,63,400. The assessee had explained the source as the amount received back from his debtor. It was submitted that he had given a loan of Rs. 80.00 lakhs to one Mr. Mohd. Suleman and as a security for the said loan, Mr.Suleman through his partner, has offered the property bearing Municipal No.16-6-33/P, Chaderghat, Hyderabad and an agreement of sale from GPA was executed to protect the assessee's interest. The AO was not convinced with the assessee's contention and treated the amounts mentioned in the GPA, MOU and also the receipts as unexplained investment. The said addition was confirmed by the CIT (A). 22. The assessee has filed an application dated 8.4.2017 before us, requesting us to admit the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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