LAXMI NARAYAN AGARWAL, HYD,HYDERABAD vs. ACIT, CIRLCE-6(1), HYD, HYDERABAD

Learned counsel stated at the Bar that the assessee has aggrieved only three substantive grounds in the instant appeal challenge correctness of both the lower authorities’ action adding unexplained loan of Rs.9 lakhs to Shri K.B. Chary, estimation of profits @ 6% of gross sales; coming to Rs.93,999 followed by section 80U deduction disallowance of Rs.50,000; respectively. He next submitted that the foregoing third issue may be declined as not pressed keeping in mind smallness of the amount involved. Rejected accordingly.

We next deal with the assessee's first and foremost substantive ground seeking to delete unexplained loan addition of Rs.9 lakhs. Mr. Murali Mohana Rao took us to the assessee's detailed discussion in assessment order dt.30.11.2009; and more particularly in page 2 para 3 thereof that the departmental authorities found/seized the loan receipt issued by Shri Chary to the tune of Rs.9 lakhs as Annexure A/LNA/I. The assessee produced the said loanee before the department; who, although admitted to have been issued the receipt, declined that he had ever received any such loan. We make it clear that it was not receipt simpliciter but with a receipt stamp carrying presumption of correctness u/s. 292C of the Act.

Learned counsel vehemently contended that both the lower authorities have erred in law and on facts in making the impugned addition based on the alleged loan receipt. He stated that suits for recovery filed u/s.18 and 19 of the Limitation Act, 1963 had becomes time barred as the date of search thereby invalidating the loan receipt itself. We find no merit in the assessee's instant argument as the position as to the validity of the document in issue has to be seen not on the date of search but on the day it was executed whilst taking into consideration the relevant period u/s.153A of the Act. Coupled with this, we make it clear that once Shri Chary had admitted the issue of receipt in his statement, the assessee's instant oral assessment/statement deserves to be declined. We Rs.9 lakhs made by both the lower authorities.

Now comes the second issue of estimation of profit @ 6% in both the lower proceedings. Suffice to say, that it has come on record that this tribunal’s co-ordinate bench order in assessee's own case for Assessment Year 2005-06 and 2007-08 in & 1391/Hyd/2010 has already decided the issue in his favour that such an addition not based on the incriminating material found during the course of search deserves to be sustained. We order accordingly. The assessee succeeds in this second substantive ground. No other ground has been pressed before us.

This assessee's appeal is partly allowed in above terms. Order pronounced in the open court on 24th Nov., 2021.