RAMCHANDRA REDDY,,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME TAX,, PUNE

PER D. KARUNAKARA RAO, AM:

There are 3 appeals filed by the assessee under consideration involving Assessment Years 1998-99 to 2000-01. They are filed against the consolidated order of Commissioner of Income Tax (Appeals)-13, Pune dated 22.02.2017.

We shall take up the appeal ITA No.1148/PUN/2017 first.

ITA No. 1148/PUN/2017 A.Y.1998-99

2 ITA Nos.1148 to 1150/PUN/2017 Ramchandra Reddy

“1. The Ld.CIT(A) erred in law and on facts in confirming the addition of Rs.4,32,800/- as unexplained investment in property.”

individual and filed the return of income on 04-10-2004 declaring

income of Rs.80,840/-. On 11-02-2003, there was a raid by the ACB

Department, Jalgaon at the residence of the assessee at 4616,

Chinchban, Mate building, Makhamala Baug Naka, Panchwati, Nashik –

422 003. The said raid resulted in seizure of various incriminating

papers relating to undisclosed investments made by the assessee. It

was alleged that the assessee was involved in the stamp paper scam too

popularly known as ‘Telgi Stamp Paper Scam”. On these facts, a notice

u/s.148 was issued to the assessee. In response to the said notice, the

assessee filed the return of income on 04-10-2004 showing income of

Rs.80,840/-. However, the assessee could not attend before the AO

despite the issue of statutory notices more than once. In the ex-parte

assessment proceedings u/s.144 of the Act, AO noticed that assessee

along with his wife Mrs. Swati Shankar Kurade jointly purchased a land

for Rs.4,15,800/- from Shri Rajaram Salwaram Borade and others vide

agreement dated 02-01-1998. Further, it was noticed by the AO that

assessee made payment of Rs.17,000/- for purchase of another Plot at

Survey No.56 and 61/4. In absence of any clarification from the side of

the assessee qua the sources of investment, AO made cumulative

addition of Rs.4,32,800/- (i.e. Rs.4,15,800 + Rs.17,000) on account of

the said investments and treated the same as “undisclosed investment”.

At the end of assessment proceedings u/s.144 r.w.s. 147 of the Act, the

AO assessed the income of the assessee at Rs.5,13,640/- (Rs.4,32,800 +

Rs.80,840) as against Rs.80,840/- returned by the assessee.

3 ITA Nos.1148 to 1150/PUN/2017 Ramchandra Reddy

benefit to the extent of Rs.15,550/- and sustained the balance amount of

Rs.4,15,800/-.

appeal with the aforementioned ground.

despite service of notice as per the procedure. Relevant

acknowledgement is placed on record. After perusing the facts of the

case and the orders of the Revenue, I am of the view that the appeals

can be adjudicated with the assistance of Ld. DR for the Revenue. As

such, the assessee has the history of non-co-operation and conduct of

ignoring the notices from the authorities for any reason. Not even the

request for adjournment was filed by the assessee.

material available on record, I find it is a case of assessee’s failure to

explain the sources for investing in the immovable properties. Assessee

has the history of non-compliance before the AO and before CIT(A).

Assessee did not file any evidences explaining the sources of funds for

investment. Even before the Tribunal, the assessee chose not to appear

before me despite the service of notice on the assessee.

7.1 On merits, to start with, I perused the operational paragraph of

the order of CIT(A) and find the same is relevant for extraction as follows:

“3.2.14 As stated above, the Appellant has failed to furnish the evidence for each credit entries and debit entries with any contemporaneous evidence. Therefore, I do not accept the Appellants, explanation. With the result, I confirm the addition of Rs.4,15,800/- made by the learned AO towards the Appellant’s unexplained investment in land.”

4 ITA Nos.1148 to 1150/PUN/2017 Ramchandra Reddy

From the above, it is evident that the assessee filed some written

submissions and however, the claims are not substantiated. CIT(A)

granted part relief to the extent of Rs.15,570/- and confirmed the

balance. In my view, the CIT(A) has fairly adopted a judicious approach

and granted part relief and confirmed the balance of Rs.4,15,800/-. In

my opinion, the view taken by the CIT(A) is fair and reasonable.

Accordingly, the ground raised by the assessee is dismissed.

ITA No.1149/PUN/2017 A.Y.1999-2000

“1. The Ld.CIT(A) erred in law and on facts in confirming the addition of Rs.1,62,475/- as unexplained investment.”

the land is the issue. In absence of any explanation from the assessee’s

side, the AO completed the assessment u/s.144 r.w.s. 147 of the Act and

made addition of Rs.1,62,475/- as unexplained investment in purchase

of land.

of Rs.1,62,475/- by observing as under :

“4.2.5 As stated, the Appellant has not established the genuineness of the entries made in his cashbook. The Appellant’s cash book cannot be accepted as an evidence explaining the Appellant’s investment made in land. In view of these facts, I hold that the addition is correctly made by the learned AO. I confirm the addition of Rs.1,62,475/- made by the learned AO as the Appellant’s undisclosed investment.”

appeal with the aforementioned ground.

5 ITA Nos.1148 to 1150/PUN/2017 Ramchandra Reddy

available on record. On going through the facts, I find the assessee has

not discharged the onus cast on him. Assessee neither produced

evidences of source of income nor gave plausible explanation for

considering the investment as genuine one. Mere statement that the

capital balance available with his wife is not sufficient to hold the

investment as legitimate. The statement given by the assessee should be

corroborated with proper evidence. In the absence of any supporting

documents proving the source of income, I hold that the CIT(A) has

rightly confirmed the addition made by the AO. Accordingly, the ground

raised by the assessee is dismissed.

ITA No.1150/PUN/2017 A.Y.2001-02

“1. The Ld.CIT(A) erred in law and on facts in confirming the addition of Rs.9,64,105/- as unexplained investment.”

the records before me include that assessee purchased a flat No.13 and

14 for Rs.59,500/- on 24-04-2000 purchased from M/s. Vastu

Constructions in the name of his wife Smt. Swati Shankar Kurade.

Details garnered by the AO in connection with the purchase of flat

include :

6 ITA Nos.1148 to 1150/PUN/2017 Ramchandra Reddy

At the end of assessment proceedings u/s.144 r.w.s. 147 of the Act, the

AO made addition of Rs.9,64,105/- treating the same as undisclosed

investment.

made by the AO by observing as under :

“5.2.5 The Appellant’s explanation is difficult to accept. The Appellant’s investments and deposits in the bank account are disproportionate for any ordinary salaried person. If the Appellant’s financial affairs were as clear as he is trying to argue, he would not have spent long time in jail after being arrested by the Special Task Force and the ACB in Telgi Stamp Paper Scam. 5.2.6 As far as the additions made in the assessment orders are concerned, the Appellant’s explanation that the same have been made out of his cash balance is absurd as no salaried person keeps cash of Rs.1,00,000 and of Rs.2,00,000 with him to be deposited later in the bank account. The onus is on the assessee to explain the source of money found in his possession in his bank account or to establish the source of the investment made by him. The Appellant has not explained the reasons of the withdrawal of such large amounts. Further, I have already held that the genuineness of the cash flow is not established without proving the dates of the credit and debit with evidence for each entry. 5.2.7 In view of the above discussion, I hold that the Appellant’s explanation is far fetched and accordingly, I confirm the total addition of Rs.9,64,105/- made by the learned AO.”

available on record. It is undisputed fact that despite giving ample

opportunities, assessee did not attend before the revenue authorities.

He only chose to give routine explanation through the letter

dt.11-05-2016 that the capital balance available with his wife Mrs. Swati

Kurade is sufficient to make the above said investments in the

immovable properties/deposits in savings bank. Unless and until the

7 ITA Nos.1148 to 1150/PUN/2017 Ramchandra Reddy

assessee produces corroborative evidence regarding the sources of income and the onus cast on him is discharged by him, the addition

made by the AO is sustainable. In the absence of any plausible

explanation from the assessee, I hold that assessee failed to prove the

genuineness of the investment in the immovable property/deposits/withdrawal made by him. Therefore, the reasoning

given by the CIT(A) in sustaining the addition made by the AO is fair and

reasonable and it does not call for any interference. Accordingly, the

ground raised by the assessee is dismissed.

Order pronounced on this 22nd day of June, 2018.

Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; िदनांक Dated : 22nd June, 2018. Satish आदेश की !ितिलिप अ#ेिषत/Copy of the Order is forwarded to : अपीलाथ� / The Appellant; 1. ��थ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-13, Pune 3. आयकर आयु� / The PCIT, Central, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” 5. / DR ‘SMC’, ITAT, Pune; गाड# फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER,स

स�ािपत �ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune