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TMI Blog2019 (9) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... t family property is established, then on partition, the assessee becomes the owner of such share in his individual capacity. In the paper book filed by the assessee, we find that there are copies of revenue records, wherein the name of the assessee is recorded as the owner of agricultural land in Ramtek. Therefore, it is to be accepted that the oral partition, subsequently reduced into writing has been given effect to. The assessee has filed the returns in the status of HUF admitting agricultural income in 2012, i.e. after the search. Thus, there cannot be any doubt that the assessee or the HUF possessed agricultural land. Therefore the income from agricultural land is available with the assessee to the extent of his share. As held by the Hon ble Supreme Court in the case of Gurucharan Singh vs. Kamla Singh [ 1975 (9) TMI 183 - SUPREME COURT] there can be oral partition of joint family property. Therefore, agricultural income offered by the assessee has to be accepted and cannot be treated as income from other sources . Assessee gets relief accordingly in all the A.Ys before us - Disallowance of agricultural income and consequential additions for all the A.Ys in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect the AO to consider if the deposits were by the cheques whose numbers are mentioned by assessee and if they are found to be by way of cheques, then no addition as unexplained deposits into bank account shall be made. The assessee gets relief accordingly and the grounds of appeal on account of unexplained deposits into bank account by way of cheques are treated as allowed for statistical purposes. - ITA No. 1698-1705/Hyd/13 - - - Dated:- 24-9-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri A. Mohan Alankamony, Accountant Member For the Assessee : Shri S. Rama Rao, AR For the Revenue : Dr. Rajendra Kumar, DR ORDER PER BENCH : All these assessee s appeals are for the AYs.2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 2008-09 respectively, against the common and consolidated order of the CIT(A)-1, Hyderabad, dated 12.09.2013. 2. Brief facts of the case are that there was a search and seizure operation u/s.132 of the Income Tax Act [Act] in the group cases of M/s. Sree Ravi Teja Restaurants Resorts Pvt. Ltd., on 27-09-2006, during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not file any information even to the notice u/s.142(1) of the Act stating that since the sources of his income were only salary and agriculture, he was unable to prepare the Balance Sheet, Cash Flow Statement etc. Taking the same into consideration, the Assessing Officer sought to complete the assessments ex-parte u/s.144 of the Act for all the assessment years i.e., AYs.200102 to 2007-08 and accordingly issued the notice to the assessee and also issued notices for levy of penalty u/s 271(1)(b) of the Act. 3.1. In response to the same and before the completion of assessment, the assessee represented by his Chartered Accountant, appeared on 17-10-2008 and furnished copies of certain bank accounts only, but did not file any other documents required by the Assessing Officer. The Assessing Officer observed that assessee has disclosed meagre income under the head salary and Agriculture for all the assessment years i.e., AYs.2001-02 to 2008-09. Thereafter, again the AR of the assessee appeared and furnished the cash flow statements as appearing in the SB A/cs of Bank of India and HSBC Bank. The Assessing Officer, however, was not convinced with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be false. He found that a sum of ₹ 22 lakhs was not spent for construction, but was advanced to various other persons. Further, as per the valuation report, the house was valued at ₹ 75.32 lakhs. Therefore, AO quantified the undisclosed investment in the house at ₹ 17.32 lakhs (i.e. ₹ 75.32 58 lakhs=17.32 lakhs) and worked out the total undisclosed investment in the house at ₹ 39.32 lakhs (17.32 + 22 lakhs) and brought it to tax u/s 69 of the Act in the A.Y. 2006-07. 3.6. In all the relevant A.Ys, the Assessing Officer observed that the assessee has not furnished any specific explanation regarding various cash credits exceeding ₹ 20,000/- into bank account. He therefore quantified such deposits at ₹ 6,30,000/- for the A.Y. 2001-02, ₹ 2,50,000/- for A.Y. 2003-04, ₹ 11,53,300/- for A.Y. 2004-05, ₹ 42,67,700/- for A.Y. 2005-06, ₹ 50,48,990/- for A.Y. 2006-07, ₹ 27,30,000/- for A.Y. 2007-08 and ₹ 5,30,000/- for A.Y. 2008-09 and treated them as unexplained cash credits and brought them to tax u/s.68 of the Act in the relevant A.Ys. 3.7. Aggrieved, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h sisters and brothers of the appellant are appearing in the said list, the name of the appellant is conspicuous by its absence and therefore, she negatived the contention of assessee that he had share in the joint family property and the same is apportioned by an oral partition which has been reduced into writing thereafter and that the same has passed on to the assessee. The CIT(A) held that the assessee cannot create a status of HUF for the purpose of taxation. We are, however, not in agreement with this contention of CIT(A). The moment a person is born into a family, HUF is created and if the land holdings were in the joint names of the family members, the assessee also being part of the HUF, would have a right in the income there from. We find that the Revenue is taking contrary stands. Assessing Officer has taken the stand that there is no evidence filed in proof of land in the name of the HUF and therefore, the income has to be treated as assessee s individual income under the head income from other sources while CIT(A) held that the assessee is not part of the HUF and therefore, the income cannot be held to be belonging to the assessee. The existence of the joint family p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, before the CIT(A), showing the opening balance as on 01-04-2000 at ₹ 6,26,500/-. The CIT(A) required the assessee to file proof of existence of opening balance of ₹ 6,26,500/- as on 1.4.2000 by filing necessary documents. In reply, assessee contended that in the earlier assessment years , business income and dividend income etc., have been assessed and therefore, credit should be given for the same as opening cash balance available as on 01-04-2000. The CIT(A), however, did not accept the said contention. She observed that the assessee has incurred marriage expenditure outside the books of account and that the same has been assessed as unaccounted income of the assessee and therefore, the question of existence of cash balance does not arise at all. She further observed that the business income and dividend income have been accounted through bank entries only and therefore held that the availability of cash has not been proved by the assessee. 8.1. Thereafter, the CIT(A) asked the assessee to furnish supporting evidence of cash returned from father for all the assessment years. Assessee expressed his inability to support the contention of cash r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-. The marriage expenses incurred outside the books of accounts have already been brought to tax as unaccounted income of the assessee. Therefore, the agricultural income from the earlier years can be accepted as the source for the opening cash balance claimed by the assessee. The peack cash credit of ₹ 4,94,665/- also should be considered as cash available with the assessee. Further, as regards the payment to labour contractor also, we are of the opinion that it should be taken into consideration in A.Y. 2004-05 as the construction of the house commenced in August, 2003. Therefore, AO is directed to redraw the cash flow statement for all the AYs by accepting the opening cash balance as on 1.4.2000 at ₹ 6,26,500/- and considering the labour contractor payment of ₹ 5,00,000/ in the A.Y. 2004-05 and if there is any negative closing cash balance for any of the A.Ys, only such negative cash balance shall be considered as unexplained expenditure of the assessee for such A.Y. and can be brought to tax. The grounds against such additions for all the AYs are accordingly partly allowed for statistical purposes 9. The other addition in the A.Y. 2001-02 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... totalling to ₹ 72,000/- is also considered, there would be no addition. We find that the Cash Flow Statement of the assessee has shown drawings of ₹ 72,000/- in the A.Y. 2003-04. The CIT(A) has considered the drawings of ₹ 1,15,000/- which are the figures submitted by the assessee as revised house hold withdrawals. The AO has already been directed to re-draw Cash Flow Statement in the order for the A.Y. 2001-02 and consequently the same has to be followed for the relevant A.Y. also. Therefore, the appeal of the assessee for A.Y. 2003-04 is partly allowed for statistical purposes. 13. For the A.Y. 2004-05 also, the only additions made are of agricultural income and negative cash balances. For the detailed reasons given in A.Y. 2001-02, appeal for A.Y. 2004-05 is treated as partly allowed for statistical purposes. 14. For A.Y. 2005-06, in addition to agricultural income and cash deficit, there are certain other additions such as unexplained deposits into bank account of ₹ 3 lakhs vide cheque no.121611 dated 7.6.2004, of ₹ 3 lakhs vide cheque no.121612 dated 11.6.2004, ₹ 3 lakhs vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 15 lakhs is concerned, the assessee has stated that these are amounts involved in the cheques which have been bounced totaling to ₹ 15 lakhs and AO has erroneously taken as fresh credit each time. 15.2. We find that at para 8.6.1 of her order CIT(A) has discussed the same in detail and for the sake of ready reference the said paragraph is reproduced hereunder. As regards the receipts by cheques it is found that sum of the cheques have been bounced totalling to ₹ 15 lakhs repeatedly but the AO has taken the same as fresh credit each time. It requires verification by the AO and he should reach to the correct amount for the purpose of quantifying the loan amount. It is argued that the sum of ₹ 14,78,000/- representing cheque no. 25808 dated 15-4-2005 for Rs,1,76,000/-, cheque No.748161 dated 5-1-06 for ₹ 3,02,000/-, cheque No.25802 dated 8-42005 for ₹ 7,00,000/-, cheque No. 530412 dated 2-9-2005 for ₹ 1,00,000/-, cheque no.530420 dated 24-9-2005 for ₹ 2,00,000/- received from Muktheswari Bosco and the same have been refunded by cheques; therefore it is not correct on the part of the Revenue to treat these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO did not accept assessee s contention of receipt of ₹ 10 lakhs from Smt. Radha Rao and also did not consider the payments of ₹ 8 lakhs to Shri Srinivasa Reddy and ₹ 4 lakhs to Shri G.Madan Mohan as spent for construction. Therefore, he excluded ₹ 22 lakhs from the explained sources and made addition of ₹ 39.32 lakhs which was confirmed by the CIT(A). The Ld.Counsel for the assessee submitted that valuation cell did not allow any deduction towards self-approval or towards rate difference. He sought deduction of 15% towards rate difference and 10% towards self-approval and if the same is taken into consideration the total investment in the property would come to around ₹ 57,61,626/- which is less than the expenditure incurred by the assessee. Therefore, he sought deletion of addition of ₹ 17.32 lakhs. 17.1. The Ld.Counsel for assessee submitted that the sum received from Smt Radha Rao was through cheques and letter of confirmation was also filed wherein she mentioned that she had gifted this from the amount received by her from her brother. He also drew our attention to the gift deed and the copy of her ..... X X X X Extracts X X X X X X X X Extracts X X X X
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