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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SMT. ASHA VIJAYARAGHAVAN & SHRI INTURI RAMA RAO
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE
BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
ITA Nos.1405 to 1408/Bang/2013 Assessment years : 2001-02 & 2003-04 to 2005-06
Shri K.R. Paramahamsa, Vs. The Deputy Commissioner of No.56/40, 40th Cross, 8th Block, Income Tax, Jayanagar, Central Circle 1(1), Bangalore – 560 093. Bangalore. PAN: AGDPP 4676N APPELLANT RESPONDENT
Appellant by : Shri H.N. Khincha, CA Respondent by : Shri Neera Malhotra, CIT(DR)
Date of hearing : 17.11.2015 Date of Pronouncement : 20.01.2016 O R D E R Per Bench
These are appeals by the assessee directed against the separate orders, each dated 14.03.2012 of the CIT(Appeals), Mysore for the assessment years 2001-02 & 2003-04 to 2005-06. All these appeals were heard together and they are disposed of by this consolidated order.
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In all these appeals, there is a delay of 96 days in filing the appeals before the Tribunal. The assessee has filed petition and affidavit for condonation of delay stating that the CIT(A)’s order dated 14.3.2012 was served on the assessee on 7.5.2012 and the appeals before the Tribunal should have been filed on or before 6.7.2012. Meanwhile, the office of the assessee was shifted from AMC College, Jayanagar to City College, Jayanagar and in the course of shifting the appellate order was misplaced and lost sight of. The earlier account had also left the assessee in June, 2012. Thereafter, the appellate orders were located in October, 2015, found in the drawer of the accountant and consequently these appeals were filed. The delay in filing the appeals is due to reasonable cause and therefore it is prayed for condonation of delay.
We find that the delay in filing these appeals has occurred due to reasonable cause and hence we condone the delay and admit the appeals.
AY 2001-02
The facts are that consequent to search u/s. 132 of the Income-tax Act, 1961 [“the Act”] on 24.8.2006 at the residential premises of the assessee, notice u/s. 153A was issued and in response to the same, the assessee filed return of income declaring an income of Rs.4,87,539 and agricultural income of Rs.7,23,579. The AO concluded the assessment u/s. 143(3) r.w.s. 153A of the Act and assessed total income at Rs.52,62,985 making the following additions:-
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Unproved agricultural income 7,23,579
Unexplained credits appearing in the capital account (4,34,131 + 25,000 + 1,36,106) 5,95,237 Difference in the balance sheet 1,10,110
Expenses disallowed under income from business 55,520
Capital gains 32,91,000 ------------ 47,75,446 ------------
The assessee preferred appeal before the CIT(Appeals) on the various additions made by the AO. The CIT(Appeals) partly allowed the appeal of the assessee.
In further appeal before us, the assessee has filed ten grounds of appeal. At the time of hearing, the ld. counsel for the assessee did not press the grounds of appeal, except for ground Nos.5 & 6, which read as under:-
a) The learned assessing officer has erred in treating sums of Rs. 4,34,131/- + 25,000/- + 136,106/- as unexplained credits appearing in Capital Account and the learned CIT(A) has erred in confirming the same. All the sums are explainable and verifiable. b) The assessing officer has erred in treating amount received on sale of shares of Rs. 4,34,131/- as unexplained credits and the learned CIT(A) has erred in confirming the same. Such treatment is contrary to facts and evidence available and is to be rejected. c) The appellant had correctly shown the proceeds of sale of share as earned by him. There is no wrong claim at all and is duly explained.
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d) On the facts and circumstances of the case, the position as declared in the return is correct and the same is to be accepted and the addition made is required to be deleted. e) The learned assessing officer has erred in treating a sum of”Rs.25,000 representing money received on account of LIC Policy as unexplained credit and the learned CIT(A) has erred in confirming the same. Such treatment is contrary to facts and evidence available and against law and is to be rejected. f) The assessing officer has erred in treating a sum of Rs. 1,36,106/- as unexplained credit on account of difference in accounts and the learned CIT(A) has erred in confirming the same. There is no difference in account at all. In any case the addition made is excessive. The facts of the case and the accounts as filed have not been properly appreciated at all. There is no scope for addition and the addition having been made erroneously is to be deleted. 6. The assessing officer has erred in adding a sum of Rs.1,10,110/- on account of difference in books representing excess of assets over liabilities as ‘Difference in Balance Sheet’ and the learned Commissioner of Income-tax (Appeals) has erred in confirming the same. Such treatment is contrary to facts and evidence available and is to be rejected. There is no difference in Balance Sheet at all. The facts of the case and the accounts as filed have not been properly appreciated at all. There is no scope for addition and the addition having been made erroneously is to be deleted.”
The assessee had credited Rs.4,34,131 in the capital account on account of sale of shares. The AO has discussed this issue at para 5 of his order. In response to AO’s query, the assessee by letter dated 30.12.2008 stated as under:-
“List of shares as on 31.3.2000: The schedule of shares as on 31.3.2000 is enclosed herewith and also a copy of block
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assessment order where a sum of Rs.9,68,0000 was declared as shares.”
However, the AO noted that list of shares held as on 31.3.2000 and proof regarding sale of shares or receipt of sale proceeds was not furnished nor short/long term capital gain/loss in respect of shares sold was disclosed. He also observed that the figures of opening and closing balance in capital account as appearing in the balance sheet filed along with the original return and those appearing in the balance sheet filed along with the return filed u/s. 153A do not match. In the absence of any explanation from the assessee for the discrepancy, the AO treated the credit of Rs.4,34,131 to the capital account as undisclosed income under the head other sources.
The AO further noticed that in the balance sheet filed along with the return filed u/s. 153A, there is a credit of Rs.25,000 claimed as receipt on account of LIC money back policy. Before the AO, it was submitted that the policy documents in original were submitted at the time of original assessment and the assessee did not have a copy of the same which was applied for from LIC and requested to accept its claim. Copy of the bank account reflecting the amount received was furnished. The AO however observed that there is no proof for having furnished the original policy document in the original assessment and the there was no indication in the copy of bank account furnished by the assessee that the credit is on
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account of money received from LIC. In the absence of any proof, the AO treated the credit of Rs.25,000 as undisclosed income under the head other
sources.
The AO noticed another credit of Rs.1,36,106 to the capital account as “additions made”. The AO pointed out that in the balance sheet filed
along with the return filed u/s. 153A, the capital account has been debited to the extent of Rs.1,10,110 on account of transfer to assessee’s capital
account in the books maintained for nursery called Orchids. The assessee submitted that this credit is an entry made to reconcile the difference in the
opening balance and debit is also made to reconcile the balance of Orchids
as there was a difference in opening balance. The assessee expressed no objection if the difference between Rs.1,36,106 and Rs.1,10,110 is added.
The AO found the assessee’s explanation to be vague and he was of the view that entries are made to artificially tally the accounts and the assessee
is indirectly admitting that there is mistake in the accounts. The AO
therefore treated the credit of Rs.1,36,106 as undisclosed income under the head other sources and treated the debit as excess of assets over
liabilities and made the additions.
Before the CIT(Appeals), regarding the addition of Rs.4,34,131, the
assessee submitted that this credit was made to the capital account on
account of sale of shares which was reflected in the original return. This return was selected for scrutiny and the above credit was accepted.
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Therefore it was contended that the AO ought not to have added this amount.
The CIT(A) observed that even before him the assessee could not
address the vital questions raised by the AO like non-admission of any capital gain/loss on account of sale of shares and the proof for transactions
and therefore the CIT(A) upheld the addition.
Before us, the contention of the ld. counsel for the assessee was
that having accepted the books of account, the revenue authorities should
not have treated the entry as undisclosed income of the assessee.
We find that in response to the AO’s query, the assessee had not
furnished actual proof regarding sale of shares or receipt of sale proceeds
nor short/long term capital gain/loss disclosed in respect of shares sold. The AO also found mismatch between the balance sheet filed along with
the original return and the balance sheet filed along with the return filed u/s. 153A. Since the credit of Rs.4,34,131 to the capital account stood
unexplained, the AO treated it as undisclosed income. We are of the opinion that one more opportunity is to be provided to the assessee to
explain the credit to the capital account as appearing in the balance sheet.
We therefore set aside this issue to the file of the Assessing Officer to decide the issue afresh after due opportunity to the assessee.
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With respect to the addition of Rs.25,000 representing credit on account of money back policy from LIC, the assessee has merely filed copy
of bank account before the AO and could not substantiate its claim. In order to provide another opportunity to the assessee, we set aside this
issue to the file of Assessing Officer. The assessee is directed to file proof
with regard to the amount of Rs.25,000 received on account of money back policy from LIC and the AO may on examination of the same decide the
issue afresh.
Regarding the addition of Rs.1,36,106 on account of credit to the
capital account, the assessee’s explanation was that the credit was an
entry made to reconcile difference in opening balance and assessee agreed to addition of difference of the amounts (1,36,106 – 1.10,110). The
AO rejected the same and held that additions are warranted on separate counts and not on the net of two amounts. In the interest of justice, we set
aside this issue to the Assessing Officer and the assessee is provided with
one more opportunity to explain the source of credit of Rs.1,36,106 before the AO.
With respect to the amount of Rs.1,10,110 as appearing in the balance sheet filed along with the return filed u/s. 153A, in the capital
account this debit is on account of transfer made to the assessee’s capital
account in the books maintained for the nursery called Orchids. The assessee’s explanation is that this debit is nothing but entry made to
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reconcile the difference of Orchids as there was difference in the opening balance. We agree with the view taken by the lower authorities that the figures of opening or closing balance are made to tally artificially. However, since the books of accounts have been admitted, the mistake in the accounts being pointed out by the revenue authorities is futile. Hence, we are of the opinion that the issue is to be set aside to the file of Assessing Officer to give one more opportunity to the assessee to substantiate its claim.
As already stated, the other grounds of appeal were not pressed by the assessee and hence they are dismissed as not pressed.
In the result, the appeal is allowed for statistical purposes.
AY 2003-04
Consequent to search u/s. 132 of the Act, at the residential premises of the assessee, notice u/s. 153A was issued and in response to the same, the assessee filed return of income declaring an income of Rs.50,42,461 and agricultural income of Rs.1,31,777. The AO concluded the assessment u/s. 143(3) r.w.s. 153A of the Act and assessed total income at Rs.72,49,560 making the following additions:-
Unproved agricultural income 13,11,777
Disallowance of interest payment under the head house property 3,55,566
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Disallowance out of travelling and advertisement 4,04,652 expenses
Unproved LIC maturity amount 1,35,000 ------------ 22,06,995 ------------ 21. The AO treated the agricultural income declared by the assessee as income from other sources as he was of the view that the assessee could not prove his claim of deriving agricultural income. After going through the documentary evidence filed by the assessee, the CIT(Appeals) was convinced that the assessee had enough land holding on lease and since the income for subsequent years were also accepted under scrutiny by the department, the CIT(A) deleted the addition on account of agricultural income.
With respect to disallowance of interest of Rs.3,55,566 out of house property income, the ld. counsel for the assessee stated that the CIT(Appeals) had sustained the addition of Rs.2,12,735 out of Rs.3,55,566. However, since the assessee was not able to establish the nexus between the loan and its utilization clearly, the ld. counsel for the assessee stated before the Bench that this ground is not pressed. We therefore dismiss this ground as not pressed.
With respect to disallowance of Rs.4,04,652 out of expenses claimed under the head income from business, the CIT(Appeals) sustained the addition of Rs.2,80,546. The ld. counsel for the assessee stated that all
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expenses were incurred in the course of and carrying on of business and are duly vouched and hence are to be allowed as such. The expenses are genuine expenditure incurred for the purpose of business.
We set aside this issue back to the Assessing Officer who shall examine the vouchers and verify the genuineness of expenses claimed by the assessee and decide the issue after giving reasonable opportunity of being heard to the assessee.
In the result, the appeal is partly allowed for statistical purposes.
AY 2004-05
Consequent to search u/s. 132 of the Act, at the residential premises of the assessee, notice u/s. 153A was issued and in response to the same, the assessee filed return of income declaring an income of Rs.59,41,974 and agricultural income of Rs.13,49,339. The AO concluded the assessment u/s. 143(3) r.w.s. 153A of the Act and assessed total income at Rs.1,05,90,262 making the following additions:-
Unproved agricultural income 13,49,339
Disallowance of interest payment and municipal tax under the head house property (607290 + 22709) 6,29,999
Long term capital gain 24,68,950
Unexplained cash credit in capital account 2,00,000 ------------ 46,48,288
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------------ 27. The only ground which is pressed before us is ground No.6(a) which reads as under:-
“The learned assessing officer has erred in holding that the Gain on sale of land is taxable. The land sold being not a “Capital Asset” at all, the gain is not taxable.”
During the relevant previous year, the assessee sold 1 acre 29 guntas to Paramahamsa Foundation Trust on 27.8.2003 for a sum of Rs.27 lakhs. This transaction had not been disclosed in the return filed u/s. 153A. However, in the original return filed by the assessee on 1.11.2004, the income from sale of this land has been arrived at Rs.24,68,950, but the same was not offered to tax on the ground that the proceeds will be utilized for purchase of agricultural land. On query by the AO, the assessee stated that the amount was utilized for purchase of agricultural land during FY 2003-04 and copies of purchase deeds of agricultural land was enclosed.
The AO observed that no purchased deeds were enclosed by the assessee and in the details of capital gains furnished, the assessee claimed that the land was situated in green belt at a village which is more than 8 Kms. from city limits and hence it does not constitute capital asset. In the absence of any evidence, the AO rejected the assessee’s claim as unproved. Further the assessee had also claimed that exemption on the ground that he sale consideration has been utilised for house construction
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at 8th Block, Jayanagar. The AO held that assessee is not eligible for exemption u/s. 54F as the assessee appeared to own more than one residential house during the previous year as per the statements and details filed along with the return. The AO found that the utilization of sale proceeds supported by evidences were not furnished. Therefore, the AO disallowed the assessee’s claim for exemption u/s. 54B and 54F and accordingly a sum of Rs.24,68,950 was brought to tax as long term capital gain.
Before the CIT(Appeals), the assessee submitted that he had sold some sites as well as agricultural lands, the details of which are as under:-
Particulars Purchase Cost Extent Sale Sale Price Date Date Sy.No.24/2, 10.11.1994 2,12,952 1.31 guntas 27.8.2003 17,25,000 Kalkere Village Sy.No.20, 10.07.1997 2,31,050 0.39 guntas 27.8.2003 9,75,000 Kalkere Village 27,00,000
Copies of purchase deeds and sale deeds were furnished and the assessee submitted that the above lands sold were agricultural lands situated beyond 8 Kms. from local municipal limits which were outside the purview of capital asset and hence the gain on agricultural land was not liable to tax. A copy of certificate issued by Secretary, Mantapa Grama Panchayat and English translation therefore was filed before the CIT(A).
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Without prejudice to the above claim of agricultural land, the assessee submitted that the correct cost of acquisition is to be considered and indexation benefit is to be given while computing the capital gains. It was also stated that assessee is eligible for deduction u/s. 54B as he had purchased agricultural lands within the specified time limit mentioned section 54B.
The CIT(Appeals) remanded the documents of sale and purchase to the AO and called for his remand report. The CIT(A) noted that the AO in the remand report observed that working of long and short term capital gain arising out of the transactions along with the transactions statement based on evidences filed, appeared to be in order and the claim of the assessee may be decided on merits. Further, the CIT(Appeals) held as follows:-
“13.4 The appellant has originally admitted capital gains on account of sale of these lands. However, during the last proceedings before the AO, it was claimed through a letter that the capital gain was admitted erroneously since the lands sold were agricultural lands and beyond 8 kms. The claim of the appellant that the agricultural land sold is not a capital asset at all cannot be accepted since the appellant himself has admitted the capital gains in the original return. Any such fresh claims should be through revised return in view of the decision of Hon’ble Supreme Court in the case of Goetz (India) Ltd. v. CIT, 284 ITR 323. Hence, I agree with the AO’s finding on this point. 13.5 On the issue of exemption u/s. 54B/54F in view of the evidences filed by the appellant, I find that the appellant is eligible for the exemption and direct the AO to re-work the same as per law.”
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We have heard both the parties. 34.
With respect to exemption u/s. 54B / 54F, we find that the CIT(Appeals)’s order is not clear as to whether those documents which were produced before the CIT(A) were produced before the AO. The AO has clearly stated that the assessee is not entitled to exemption u/s. 54F as the assessee is owning more than one residential house. Further the claim u/s. 54B was also disallowed due to lack of evidence with respect to details of utilization of sale proceeds. Hence we are of the opinion that the entire submission made before the CIT(Appeals) supported by documentary evidence has to be produced before the AO in order to decide the issue of exemption u/s. 54B and 54F. The AO shall after examination of the same, decide the issue de novo.
In the result, the appeal is partly allowed for statistical purposes.
AY 2005-06
Consequent to search u/s. 132 of the Act, at the residential premises of the assessee, notice u/s. 153A was issued and in response to the same, the assessee filed return of income declaring an income of Rs.53,69,249 and agricultural income of Rs.11,19,603. The AO concluded the
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assessment u/s. 143(3) r.w.s. 153A of the Act and assessed total income at Rs.2,67,45,090 making the following additions:-
Unproved agricultural income 11,19,603 Short term capital gain from sale of shares 37,58,320 Long term capital gains 1,06,65,000 Unexplained investment in flat 36,00,000 Unexplained credits to capital account 17,64,329 Unexplained investment in land and site 3,93,590 Unproved gifts 75,000 --------------- 2,13,75,842 --------------- 38. Gain on sale of land : During the relevant previous year, the assessee sold lands for Rs.1,06,65,000/-. In the original return filed on 31.10.2006, the appellant had declared an amount of Rs.52,65,000 as sale proceeds of site. However, in the returned filed u/s 153A on 1.9.2008 the assessee declared the sale consideration at Rs.106,65,000/- and claimed exemptions. The land was sold to Paramahamsa Foundation.
The assessee was asked to prove the claim of exemption of capital gain arising from this sale and the details of sale of the capital assets. The assessee stated that the land sold is agricultural land situated at Kalkere Village in Jigani, Hobli Anekal Taluk and the land is situated more than 8 kms from the city limits and hence does not constitute capital asset. The claim was not accepted by the A.O because the lands sold are converted land which was evident from the copy of sale deed furnished before A.O. The Schedule 1 & 2 clearly mentions the description of property as Site no.
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153 & 154 measuring 35100 sq ft. and 36000 sq ft respectively. Therefore, the assessee’s contention that the land sold is agricultural land was found not tenable. The assessee’s claim of 54F was also not accepted for the reason that the assessee appears to be owning more than one residential house during the previous year as per the statements and details filed along with the return. The assessee is owning the following residential properties.
Residential house at No. 188, 5th Main, 4th block, Jayanagar. 2. Flat at Hyderabad 3. 3 flats in NS English County. 4. Farm house at Sy. No. 32, Golahalli Village owned jointly along with his father.
As the assessee did not fulfill the conditions mentioned in the proviso to Section 54F(1), exemption u/s 54F claimed by the assessee was disallowed by the A.O. Further, since the assessee did not file cost of acquisition, the AO treated the entire sale consideration as long term capital gains.
Before the CIT(Appeals), the assessee submitted that the assessee sold two sites the details of which are as under:-
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The assessee furnished copies of purchase deeds and sale deeds and contended that the above lands were agricultural lands situated beyond 8 kms. from local municipal limits. km from local municipal limits and hence outside the purview of capital assets and not liable to capital gain tax. A copy of certificate issued by Secretary Mantapa Grama Panchayat and English Translation thereof was filed.
Without prejudice to the above claim of agricultural land, the assessee submitted that the correct cost of acquisition is to be considered and indexation benefit is to be given while computing the capital gains. It was also stated that assessee is eligible for deduction u/s. 54B as he had purchased agricultural lands within the specified time limit mentioned section 54B.
The CIT(Appeals) held as follows:-
“11.5 I have considered the issue very carefully. Undisputedly, the appellant has sold converted lands as mentioned above. These are not agricultural lands to claim exemptions u/s 54B. For the detailed reasons mentioned by the AO I am in complete agreement with the AO that the appellant is not eligible for exemption u/s 54F as well. Hence, I find no infirmity in the
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action of the AO in denying the exemption. However, in view of the purchase deed cost, the appellant is eligible for the purchase cost with indexation if any, and other incidentals. The AO is directed to rework the capital gain after taking into consideration this aspect. In effect the appeal on this ground is partly allowed,”
Aggrieved by the order of CIT(Appeals), the assessee has raised ground No.5 before us, which read as follow:-
“5. a) The assessing officer has erred in holding that Gain on sale of land is taxable and the learned CIT(A) has erred in confirming the same. The land sold being not “Capital Asset”, the gain is not taxable. b) In any case the assessing officer has erred in not accepting the claim of the appellant regarding exemption u/s. 54F of the I.T. Act, 1961 and the learned CIT(A) has erred in confirming the same. The appellant had invested money for construction of new residential house and in accordance with law is entitled to exemption u/s. 54F of .I.T. Act, 1961. The appellant is entitled to exemption u/s. 54F of I.T. Act, 1961 and the same should have been allowed to the appellant. c) While computing the gain the learned assessing officer has erred in the following and the learned CIT(A) has erred in confirming the same In recomputing/reworking the capital gain at Rs. 1,06,65,000/- as Short Term Capital Gain. In disallowing the deduction claim in respect of land conversion charges. The above calculation being bad in law and on facts are required to be ignored.”
We have heard both the parties. The assessee has claimed that he has sold agricultural lands. The claim was not accepted by the AO
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because the land sold was converted land which was evident from copy of sale deed furnished before the AO. The assessee’s claim for exemption u/s. 54F was not accepted by he AO and the CIT(Appeals). However, at the time of hearing before us, the ld. counsel for the assessee furnished details of agricultural lands purchased along with copies of purchase deeds which may be verified by the AO. The AO shall examine whether the lands sold are converted land or agricultural lands in order to give benefit of exemption u/s. 54B to the assessee, as the CIT(A) had held that the assessee is eligible for purchase cost with indexation if any and other incidental expenditure while working out the capital gain. The AO shall after affording reasonable opportunity of hearing to the assessee to present his case, pass an order in accordance with law.
Undisclosed purchase of sites: In the course of search on 24.8.2006, certain documents relating to investments made in certain properties were seized which included the following:- (a) Document marked as Exhibit A/AMCD/15 relating to purchase of land measuring 3 acres and 96 cents in Survey No.224-1A and 224-2 in Andhra Pradesh from Shri Kalindi Srinivasa Raju on 21.6.2004 for a sum of Rs.3,71,090. (b) Document marked as Exhibit A/AMCD/14 relating to purchase of a vacant site bearing No.3-57 measuring 367 sq.ft. in Purushothapatnam from Shri M. Nani Babu on 28.1.2005 for a sum of Rs.22,500. 48. As the above two properties were not reflected in the schedule of fixed assets filed along with the return, the AO proposed to make an addition on account of unexplained investment and the assessee was
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asked to offer his explanation. In reply, the assessee stated with regard to purchase of land from Kalindi Srinivasa Raju that the same has been accounted on 21.6.2004 under “land at Bhimavaram” in the books of account and enclosed ledger extract for the same. With regard to purchase of site at Purshothapatnam from Shri M. Nani Babu, the assessee stated that the property was purchased from his father and not from Nani Babu. It was further stated as follows:- “Sri Nani Babu is only a witness to the deed. I have not paid this amount to my father and hence not accounted in the books of account.”
The AO found that assessee had originally filed a return of income on 30.10.2005 and schedule of fixed assets to the said return did not reflect the above two assets. The total value of fixed assets was disclosed at Rs.63,788,610 in the schedule furnished along with the original return. In the return filed u/s. 153A, the total value of fixed assets has been disclosed at Rs.64,753,139 which is at variance to the disclosure in the original return. The AO was of the view that the entries original books have been atlered and a new set of books appears to have been written up, since no reason was adduced by the assessee as to why the land at Bhimavaram was not included in the fixed assets filed along with original return. Accordingly the AO held the books of accounts relied upon by the assessee to be defective and treated the purchase of land at Bhimavaram
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as made from undisclosed sources and made an addition of Rs.3,71,090 under income from other sources.
Even with regard to the purchase of site at Purushothapatnam on
28.1.2005 for Rs.22,500, the AO rejected the assessee’s contention that site was purchased from his father and Nani Babu was only a witness since
the document in Telugu indicated that the same was executed by Sri Nani Babu and each page of the said document has been signed by Sri Nani
Babu in his capacity as the Vendor and the witnesses in the document are different persons, in the absence of an English translation furnished by the
assessee. He observed that the document mentioned the receipt of sale
consideration by the Vendor and therefore rejected the claim of the assessee that money towards the purchase has not been paid.
Accordingly the AO held the purchase of site from undisclosed sources and made an addition of Rs.25,000 under income from other sources. Thus the
addition on account of unexplained investment in land and site was
Rs.393,590 (3,71,090 + 22,500).
Before the CIT(Appeals), the assessee argued that the purchase of
land at Bhimavaram was made out of money withdrawn on 18.6.2014 vide cheque No.358628 from Union Bank of India A/c No.21062. Copy of bank
statement and extract of cash book was filed. The assessee conceded to
the addition of Rs.22,500.
The CIT(Appeals) held as follows:-
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“14.6 I have carefully verified the assessment records as well as the details filed by the appellant. The appellant’s basic argument is that in view of the revised balance sheet filed, the asset as per the revised balance sheet should be taken. I have examined the issue carefully. As seen from the original return as well as return u/s. 153A, this asset is not reflected in the original balance sheet. However the same is reflected in the return filed u/s. 153A. Obviously, as far as original return is concerned this asset is undisclosed which surfaced only after the search. However, as seen from the income statement, the value of this asset is not disclosed as part of income but taken to balance sheet. The appellant could not explain with substantiating evidence that the asset is covered by any of the incomes disclosed in the return u/s 153A. Hence, I am in agreement with the argument of the AO and confirm both the additions.”
Aggrieved by the order of CIT(Appeals), the assessee is in appeal before us raising ground No.7 which reads as follows:-
“7. The additions made by the learned assessing officer as Unexplained Investments in land and sites amount Rs. 3,93,590/- and as confirmed by the learned CIT(A) is not correct. b) The sources out of which investments made in lands and sites are duly explained and genuine. There is no unaccounted / unexplained investment at all. c) The explanation offered and details submitted and evidences available have not been appreciated at all by the assessing officer and the learned CIT(A). d) The addition is adhoc and purely on imagination and surmises, without properly considering the explanation and the statement produced by the appellant. e) The addition of Rs. 3,93,590/.being erroneous on facts and on law applicable is to be deleted. In any case and without prejudice, it is submitted that the addition is double addition.”
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We have heard both the parties. We find that the CIT(Appeals) has correctly held that the asset is not reflected in the original balance sheet, but the same is reflected in the return filed u/s. 153A and in the income statement the value of this asset is not disclosed as part of income but taken to balance sheet. Since the assessee has not proved even before us that the asset is covered by any of the income disclosed in the return u/s. 153A, we are of the opinion that the additions have to be confirmed. We therefore find no infirmity in the order of the CIT(Appeals) on this issue.
Ground Nos.1, 2, 3 & 4 are general in nature and do not require adjudication. Ground Nos. 6, 8, 9 & 10 are not pressed before us and they are dismissed as not pressed.
In the result, the appeal is partly allowed for statistical purposes.
Thus, ITA No.1405/Bang/2014 is allowed for statistical purposes and the appeals in ITA Nos.1406 to 1408/Bang/2014 are partly allowed.
Pronounced in the open court on this 20th day of January, 2016.
Sd/- Sd/-
( INTURI RAMA RAO ) (ASHA VIJAYARAGHAVAN ) Accountant Member Judicial Member
Bangalore, Dated, the 20th January, 2016.
/D S/
ITA No.1405 to 1408/Bang/2013 Page 25 of 25
Copy to:
Appellant 2. Respondents 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file
By order
Assistant Registrar, ITAT, Bangalore.