GURUKUVARI NAROTHAM REDDY,KANCHIPURAM vs. ITO, CENTRAL CIRCLE-3(1), CHENNAI

The brief facts of the case are that the assessee filed his return of income on 28.08.2012 declaring total income at Rs. 40,52,018/-. A search and seizure operation u/s. 132 of the Act was conducted on 05.01.2016 at the residence of the assessee, as the assessee was also covered u/s. 132 of the Act alongwith the Apollo Group. Consequent to the search, a notice u/s. 153A of the Act was issued on 27.032017, in response to the same, the assessee filed a letter on 01.09.2017 and requested to treat the original return filed as return filed in response to the notice issued u/s. 153A of the Act. Ultimately, the case of the assessee was assessed u/s. 143(3) r.w.s. 153A of the Act after making an addition of Rs. 24 Lacs. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn partly allowed the appeal and an addition of Rs. 8 Lacs was deleted by sustaining the balance addition of Rs. 16 Lacs. The assessee being further aggrieved with the same preferred the present appeal before us.

We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee alongwith grounds taken before us. It is observed that the returned income filed by the assessee in compliance to section 153A of the Act was duly accepted by the AO and the issue under consideration was emanated out of the loose sheets found and seized during the search vide Annexure ANN/RP/GNR/LS/S wherein it was noted that cash payments were made for construction of the property at Valasaravakkam to the extent of Rs. 34 Lacs upto 04.02.2012. The assessee himself has offered Rs. 10 Lacs during the A.Y. 2011-12 as income from other sources against expenditure of Rs. 34 Lacs as mentioned (supra). Gurukuvari Narotham Reddy

It is observed through the withdrawal statements furnished by the assessee that total withdrawal was Rs. 19.55 lacs during the period 02.06.2009 to 12.11.2010, whereas the incidence of cash payments on account of construction started from 13.06.2010 to 31.05.2012. The Ld. CIT (A) has already given a relief of Rs. 8 Lacs in his order mentioned (supra). Although, there was no allegation on the assessee of having any other income under any head of income other than salary and total of withdrawals immediate before 13.06.2010 was Rs. 9.9 Lacs on 18.05.2010 and so on, totaling Rs. 15.80 Lacs and out of the same the Ld. CIT (A) has already given the relief of Rs. 8 Lacs, whereas the total of withdrawals were 15.80 Lacs. In view of the observations (supra), as there is no stand of the Revenue is there on records alleging that the assessee has any other income also other than salary, we deem it fit to further delete the addition of Rs. 7 Lacs [Rs. 15.8 Lacs (-) Rs. 8 Lacs already deleted by the Ld. CIT(A)].

As far as the plea of the assessee that total expenditure on construction was Rs. 29 Lacs only and the figure of Rs. 34 Lacs taken by the Revenue is not correct, there is no satisfactory explanation/evidence produced by the assessee; hence the same claim of the assessee is rejected. In above terms the AO is directed to further delete the addition of Rs. 7 Lacs as discussed (supra). In view of the above, the grounds raised by the assessee are partly allowed with our observations and directions (supra).

In the result, the appeal of the assessee is partly allowed.