Sri Lakhan Singh, Bangalore V. ACIT, Bangalore

ITA 1/BANG/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8705 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 01-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Additional evidence
• Section: 143(3); 153A; 68; 69; 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE DR. O.K NARAYANAN, VICE PRESIDENT AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NOS.462, 463,1 & 4 64/BANG/2010 (ASST. YEAR 2002-03, 2003-04,2005- 06 & 2006-07) SRI LAKHAN SINGH, 2, R.R CHAMBERS, IV FLOOR, 11 TH MAIN, VASANTHNAGAR, BANGALORE. . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(2), BANGALORE. . RESPONDENT APPELLANT BY : SHRI V SRINIVASAN, CHARTERED ACCOUNTANT RESPONDENT BY : SHRI G.V GOPALA RAO, COMMISSIONER OF INCOME-TAX O R D E R PER BENCH : THIS IS A BUNCH OF FOUR APPEALS. ALL THE APPEALS AR E FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 2002-0 3, 2003-04, 2005- 06 AND 2006-07. THE APPEALS ARE DIRECTED AGAINST T HE ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS) - VI AT BANGAL ORE DATED 30/10/2009 AND 09.02.2010. ALL THESE APPEALS ARISE OUT OF THE ITA NOS.462, 463, 1 & 464/B/10 2 ASSESSMENTS COMPLETED U/S 143(3) READ WITH SEC. 153 A OF THE INCOME- TAX ACT 1961. 2. THE FACTS AND CIRCUMSTANCES SURROUNDING IN ALL T HESE APPEALS ARE THE SAME, RELATING TO A SEARCH CARRIED OUT U/S 132 OF THE INCOME-TAX ACT. THE DISPUTES RAISED IN THESE APPEALS ARE MAIN LY CENTERED AROUND THE ADDITIONS SUSTAINED UNDER SECTIONS 68 AND 69. THERE IS ALSO A DISPUTE REGARDING THE ADDITION MADE AGAINST CASH FO UND IN THE COURSE OF SEARCH. AS THE FACTS AND CIRCUMSTANCES OF THESE APPEALS ARE SIMILAR AND THE GROUNDS RAISED ARE COMMON, THESE APPEALS AR E DISPOSED OFF BY THIS COMMON ORDER. 3. FIRST, WE WILL CONSIDER THE APPEAL FILED FOR THE ASSESSMENT YEAR 2002-03 IN ITA NO.462/BANG/2010. 4. THE FIRST GROUND RAISED IN THIS APPEAL IS GENERA L IN NATURE AND DOES NOT CALL FOR ANY SPECIFIC ADJUDICATION. 5. THE SECOND GROUND IS THAT THE ASSESSMENT COMPLET ED U/S 143(3) READ WITH SEC. 153A IS BAD IN LAW AND VOID-AB-INITIO , AS THERE WAS NO ITA NOS.462, 463, 1 & 464/B/10 3 JUSTIFICATION TO ISSUE WARRANT TO SEARCH THE RESIDE NTIAL PREMISES OF THE ASSESSEE, AS THE CONDITIONS SPECIFIED U/S 132(1) DI D NOT EXIST. 6. A NUMBER OF DECISIONS HAVE BEEN DELIVERED ON T HE ISSUE AS TO WHETHER THE CIRCUMSTANCES LEADING TO THE SEARCH SHO ULD BE THE SUBJECT MATTER OF SCRUTINY IN APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL. IT HAS BEEN CONSISTENTLY HELD THAT SUCH A SCRUTINY IS NOT CALLED FOR. THEREFORE, THIS GROU+ND RAISED BY THE ASSESSEE IS R EJECTED. 7. THE THIRD ISSUE RAISED BY THE ASSESSEE IS THAT T HE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.60,000/- U/S 68 IN RESPECT OF THE AMOUNT DUE TO M/S SRINIVASA AGENCIES. 8. IN THE NAME OF M/S SRINIVASA AGENCIES THERE WAS A CREDIT BALANCE OF RS.10,60,000/-. THIS WAS ADDED BY THE A SSESSING AUTHORITY AS UNEXPLAINED. IN FIRST APPEAL, THE CIT(A) CONSID ERED CERTAIN ADDITIONAL MATERIALS PRODUCED BY THE ASSESSEE AND S OUGHT FOR THE REPORT OF THE ASSESSING AUTHORITY AND ON EXAMINATIO N OF THE DETAILS AND ACCOUNTS, HE FOUND THAT THERE WAS EVIDENCE AVAILABL E ON RECORD TO PROVE THE RECEIPT OF RS.10 LAKHS IN THE MONTH OF MA R, 2002. BUT THERE WAS NO PROOF REGARDING THE BALANCE AMOUNT OF RS.60, 000/-. THEREFORE, ITA NOS.462, 463, 1 & 464/B/10 4 THE CIT(A) DELETED THE AMOUNT OF RS.10 LAKHS AND SU STAINED THE ADDITION OF THE BALANCE AMOUNT OF RS.60,000/-. 9. ON CONSIDERING THE FACTS OF THE CASE, WE FIND T HAT THE CIT(A) IS JUSTIFIED IN SUSTAINING THE ADDITION OF RS.60,000/- FOR WANT OF EVIDENCE. THIS GROUND IS REJECTED. 10. THE NEXT GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) IS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS.12,50,000 /- IN RESPECT OF THE TRANSACTION WITH M/S PRAKRUTHI NEST. 11. IN PAGE 11 OF THE ORDER OF THE CIT(A), HE HAS O BSERVED THAT A SIMILAR ADDITION WAS MADE IN THE HANDS OF SHRI RAMA KRISHNA GUPTA, BUSINESS ASSOCIATE OF THE ASSESSEE WHICH WAS DELETE D IN FIRST APPEAL BY THE CIT(A) FOR WHICH A SECOND APPEAL WAS PREFERRED BY THE REVENUE BEFORE THE TRIBUNAL. IN FACT, THE SAID APPEAL FIL ED BY THE REVENUE FOR THE ASSESSMENT YEAR 2002-03 HAS BEEN DISPOSED OFF B Y THE ITAT, BANGALORE A BENCH THROUGH ITS COMMON ORDER DATED 20 TH APR, 2000 PASSED IN ITA NOS.475, 476, 477 AND 478/BANG/2008. ON THIS POINT, THE TRIBUNAL IN PARAGRAPH 5 OF ITS COMMON ORDER HAS HELD AS FOLLOWS: ITA NOS.462, 463, 1 & 464/B/10 5 WE CONSIDERED THIS ISSUE. THE CIT(A) DISCUSSED THE MATTER IN A DETAILED WAY IN THE LIGHT OF THE SUBMISSIONS AND EXPLANATIONS REPEATED BY THE ASSESSEE BEFORE HIM. AS NOTICED BY THE CIT(A), THE LOAN AMOUNTS WERE AVAILED THROUGH CHEQUES. THE ASSESSEE HAS REPAID ALL THOSE LOANS AGAIN THROUGH CROSSED CHEQUES. BOTH THE INCOMING AND OUTGOING AMOUNTS ARE REFLECTED IN THE BANK ACCOUNTS. THE ADDRESS AND THE PARTICULARS OF THE CREDITORS WERE FURNISHED. CONFIRMATION LETTERS ALSO WERE FURNISHE D. IN RESPECT OF INCOME-TAX ASSESSEES PERMANENT ACCOUNT NUMBERS WERE ALSO FURNISHED. WHEN ALL THESE MATERIALS ARE FURNISHED BY AN ASSESSEE, THE NORMAL PRESUMPTION IS THAT THE ASSESSEE HAS DISCHARGED HIS PRIMARY ONUS OF PROVING GENUINENESS OF THE LOAN CREDITS. THIS PRESUMPTION CAN BE OVERLOOKED IF THE ASSESSING OFFICER HAS BROUGHT AN Y CONTRARY MATERIALS ON RECORD. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT MADE ANY FURTHER ENQUIRY OR BROUGHT ANY MATERIAL ON RECORD TO DISCREDIT THE EXPLANATIONS OFFERED BY THE ASSESSEE. 12. THE ABOVE OBSERVATIONS AND THE FINDINGS OF THE TRIBUNAL MADE IN THE APPEAL RELATING TO THE ASSESSEES ASSOCIATE SHRI RAMAKRISHNA GUPTA ARE APPLICABLE TO THE PRESENT CASE, AS THE FA CTS OF THE ISSUE ARE EXACTLY SIMILAR AND THE TOTAL AMOUNT OF CREDIT INV OLVED WAS RS.30 ITA NOS.462, 463, 1 & 464/B/10 6 LAKHS, FOR WHICH THE ASSESSEE AS WELL AS SHRI RAMAK RISHAN GUPTA WERE EQUALLY RESPONSIBLE. UNDER THIS CIRCUMSTANCES AND FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE HOLD THAT THERE IS NO JUSTIFICATION TO SUSTAIN AN ADDITION OF RS.12,50,000/-. THE SAID AD DITION IS HEREBY DELETED. 13. THE LAST GROUND IS REGARDING LEVY OF INTEREST U NDER DIFFERENT SECTIONS. THIS GROUND IS ONLY CONSEQUENTIAL IN NAT URE. 14. THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESS MENT YEAR 2002- 03 IS PARTLY SUCCESSFUL. 15. NEXT, WE WILL CONSIDER THE APPEAL FILED FOR THE ASSESSMENT YEAR 2003-04 IN ITA NO.463/BANG/2010. 16. THE FIRST AND SECOND GROUNDS RAISED FOR THE IMP UGNED ASSESSMENT YEAR ARE THE SAME GROUNDS RAISED FOR THE EARLIER ASSESSMENT YEAR 2002-03. FOR THE REASONS CONSIDERED FOR THE A SSESSMENT YEAR 2002-03, THESE GROUNDS ARE REJECTED. ITA NOS.462, 463, 1 & 464/B/10 7 17. THE THIRD GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.2 LAKHS M ADE U/S 69 OF THE ACT IN RESPECT OF THE INVESTMENT MADE IN PROPERTY A T KANNAMANGALA PALYA. 18. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFF ICER ON THE BASIS OF THE MATERIAL SEIZED IN THE COURSE OF SEARC H, WHEREIN PURCHASE OF PROPERTY BEARING SURVEY NO.32/3, 8 KANNAMANGALAP ALYA WAS FOUND OUT. THE ASSESSEE HAD PAID RS.2 LAKHS IN CASH AGAI NST THE TOTAL CONSIDERATION OF RS.6 LAKHS. THE ARGUMENT OF THE A SSESSEE WAS THAT THE ASSESSEE AND HIS FAMILY MEMBERS HAVE SUFFICIENT SOURCES AVAILABLE IN THEIR HANDS TO MAKE SUCH CASH PAYMENT OF RS.2 LA KHS FOR THE PURCHASE OF PROPERTY. IN FACT, THE ASSESSEE HAD MA DE ADMISSION REGARDING UNACCOUNTED INVESTMENT OF RS.2 LAKHS WHEN STATEMENT WAS RECORDED U/S 131. IN THE ABSENCE OF ANY OTHER DETA ILS, WE FIND THAT THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITION OF R S.2 LAKHS. THIS GROUND IS ACCORDINGLY DISMISSED. 19. THE FOURTH GROUND RAISED BY THE ASSESSEE IS THA T THE CIT(A) IS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS.12 LA KHS U/S 68 OF THE ACT ITA NOS.462, 463, 1 & 464/B/10 8 HOLDING THAT THE ASSESSEE HAD FAILED TO PROVE THE G ENUINENESS OF THE CREDIT STANDING IN THE NAME OF M./S PRAKRUTHI NEST . 20. THE ASSESSEE HAD SHOWN A CREDIT OF RS.39 LAKHS IN THE NAME OF M/S PRAKRUTHI NEST AS ON 31/3/2003. THE ABOVE BALA NCE CONSISTED OF OPENING BALANCE OF RS.2 LAKHS AND ADDITIONAL CREDIT MADE DURING THE PREVIOUS YEAR OF RS.37 LAKHS THE ASSESSING OFFICER HELD THAT AS PER THE DETAILS FILED BY M/S PRAKRUTHI NEST, THE OUTSTA NDING BALANCE AS ON 31.3.2003 WAS RS.24 LAKHS TO BE SHARED BOTH BY THE ASSESSEE AND SHRI RAMAKRISHAN GUPTA. THEREFORE, ACCORDING TO THE ASSE SSING OFFICER, THE SHARE OF THE ASSESSEE COMES TO RS.12 LAKHS ONLY . THE ASSESSING OFFICER MADE AN ADDITION OF RS.37 LAKHS ANY HOW. T HE CIT(A) FOUND THAT IN THE LIGHT OF THE EVIDENCES PRODUCED BY THE ASSESSEE THAT CREDITS TO THE EXTENT OF RS.17 LAKHS HAVE BEEN PROVED AND, THEREFORE, THAT MUCH AMOUNT CANNOT BE ADDED. OUT OF THE COMBINED B ALANCE OF RS.24 LAKHS, THE CIT(A) HELD THAT 50% I.E RS.12 LAKHS BEL ONGS TO THE ASSESSEE AND THE SAME WAS NOT EXPLAINED. ACCORDING LY, THE CIT(A) CONFIRMED THE ADDITION OF RS.12 LAKHS ON THIS GROUN D. 21. THE CONTENTION OF THE ASSESSEE IN THE LIGHT OF THE ADDITIONAL EVIDENCES PRODUCED BEFORE THE CIT(A) IS THAT M/S PR AKRUTHI NEST PAID ITA NOS.462, 463, 1 & 464/B/10 9 THE ASSESSEE A SUM OF RS.37 LAKHS DURING THE PREVIO US YEAR ON VARIOUS DATES FOR THE PURCHASE OF LANDS AT LOTTGOLLALAHALL I. ALL THESE RECEIPTS HAVE BEEN DULY ACCOUNTED BY THE ASSESSEE AND REFLEC TED IN HIS RETURN. M/S PRAKRUTHI NEST DID NOT PURCHASE THE LAND AT LOT TEGOLLALAHALLI AND IN TURN THE LAND WAS LATER ON SOLD TO M/S ANRIYA PROJECTS AND MANAGEMENT PVT. LTD. A SUM OF RS.25 LAKHS WAS PAID BY M/S ANRIYA DIRECTLY TO M/S PRAKRUTHI NEST AS A REFUND OF THE A MOUNT THAT HAS TO BE PAID BY THE ASSESSEE. IN THESE CIRCUMSTANCES, THE ASSESSEE HAD SUBMITTED THAT THE LIABILITY TO M/S PRAKRUTHI NEST IS OVER STATED AND THE LIABILITY TO M/S ANRIYA IS UNDER STATED. 22. THE ADDITIONAL EVIDENCE WAS FORWARDED BY THE CIT(A) TO THE ASSESSING OFFICER. BUT WHILE MAKING HIS VERIFICATI ON, THE ASSESSING OFFICER HAS NOT CONSIDERED THE ABOVE EVIDENCE. THE PAYMENT OF RS.25 LAKHS MADE BY M/S ANRIYA TO M/S PRAKRUTHI NEST WAS ON BEHALF OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER HAS ALSO N OT CONSIDERED THE TRANSPOSITION OF ENTRIES INVOLVING M/S ANRIYA AND P RAKRUTHI NEST THE OVERALL DIFFERENCE OF BALANCE IN THE ACCOUNTS OF M/ S PRAKRUTHI NEST IS EXACTLY THE SAID UNDISPUTED BALANCE IN THE ACCOUNTS OF M/S ANRIYA. WITHOUT LOOKING INTO ALL THESE FACTUAL MATTERS AVAI LABLE ON RECORD, THE ASSESSING OFFICER WAS STILL HARPING ON THE POINT TH AT THE JOINT BALANCE ITA NOS.462, 463, 1 & 464/B/10 10 WAS RS.24 LAKHS AND THE ASSESSEES SHARE WAS ONLY 1 2 LAKHS. THE CIT(A) WENT WRONG IN ACCEPTING THE ABOVE THEORY OF RS.12 LAKHS MADE OUT BY THE ASSESSING AUTHORITY WITHOUT CONSIDE RING THE DOCUMENTS AND EXPLANATIONS OFFERED BY THE ASSESSEE. 23. ONE OF THE MOST INTERESTING ASPECTS OF THIS ISS UE IS THAT THE ENTIRE SUM RECEIVED BY THE ASSESSEE FROM M/S PRAKRU THI NEST WERE PROPERLY RECORDED BY THE ASSESSEE AND REFLECTED IN THE RETURN AND THE SOURCES WAS EXPLAINED. THEREFORE, DEHORSE THE NON RECONCILIATION OF THE OUTSTANDING BALANCE, THE FACT REMAINED THAT THE ENTIRE CREDITS HAVE BEEN EXPLAINED. THEREFORE, WE FIND THAT INVOKING S EC. 68 ITSELF IS A MISNOMER IN THIS CASE. THE REPAYMENT OF THE AMOUNT ON CANCELLATION OF THE CONTRACT TO M/S PRAKRUTHI NEST; THE ROLE OF M/S ANRIYA AND THE PAYMENT MADE BY THEM HAVE BEEN PROVED BY THE ASSESS EE BEFORE THE CIT(A). 24. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION OF RS.12 LAKHS. IT I S DELETED. 25. THE THIRD GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN TREATING A SUM OF RS.2,50,000/- AS UNDISCL OSED INCOME BEING ITA NOS.462, 463, 1 & 464/B/10 11 THE ADVANCE MONEY RECEIVED BY THE ASSESSEE IN CONNE CTION WITH THE ABORTED TRANSFER OF PROPERTY. THE VERY SAME ISSUE WAS CONSIDERED BY THE ITAT, BANGALORE A BENCH IN THE CASE OF SHRI R AMAKRISHNA GUPTA WHO WAS THE BUSINESS ASSOCIATE OF THE ASSESSE E. THE RELEVANCE OF THE SAID TRIBUNAL ORDER HAS BEEN EXPLAINED IN PA RAGRAPH 11 AND 12 OF THIS ORDER. 26. IN THE SAID ORDER, THE TRIBUNAL HAS DELETED THE SAID ADDITION MADE IN THE HANDS OF SHRI RAMAKRISHNA GUPTA. FOLLO WING THE SAID TRIBUNAL ORDER, WE DELETE THE SIMILAR ADDITION OF R S.2,50,000/-. THIS GROUND IS ALLOWED. 27. THE LAST GROUND IS REGARDING THE LEVY OF INTERE ST, WHICH IS CONSEQUENTIAL IN NATURE. 28. THE APPEAL FILED FOR THE ASSESSMENT YEAR 2003-0 4 IS PARTLY SUCCESSFUL. 29. NEXT, WE WILL CONSIDER, THE APPEAL FILED FOR TH E ASSESSMENT YEAR 2005-06 IN ITA NO.1/BANG/2010. ITA NOS.462, 463, 1 & 464/B/10 12 30. GROUNDS 1 AND 2 ARE REJECTED FOR THE SAME GROUN DS STATED FOR THE EARLIER ASSESSMENT YEARS 2002-03 AND 2003-04. 31. THE THIRD GROUND IS THAT THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING A SUM OF RS.2 LAKHS BEING COMMISSION PA ID IN RESPECT OF A PROPERTY AT YELAHANKA SOLD DURING THE PREVIOUS YEAR ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED THE NAME AND ADD RESS OF THE PERSON TO WHOM THE COMMISSION WAS PAID. 32. PAYMENT OF COMMISSION IN REAL ESTATE TRANSACTIO NS ARE QUITE COMMON AND INCURRING OF SUCH EXPENSE CANNOT BE DOUB TED FOR THE SIMPLE REASON THAT DOCUMENTARY EVIDENCES WERE NOT P RODUCED. IN SUCH COMMISSION PAYMENTS, SOME TIMES IT WOULD BE VERY DI FFICULT TO OBTAIN DOCUMENTARY RECEIPTS, AS REAL ESTATE BUSINESS IS BY AND LARGE UNORGANIZED AND RUN ON THUMB RULE BASIS. THEREFORE , WHEN THE ASSESSEE HAS SOLD A PROPERTY, THE PAYMENT OF COMMIS SION CANNOT BE OUT RIGHTLY REJECTED. IN THE PRESENT CASE, THE COM MISSION CLAIMED BY THE ASSESSEE IS RS.2 LAKHS FOR A SALE AMOUNT OF RS. 8 LAKHS. AS FAR AS THE QUANTUM IS CONCERNED, WE ARE NOT IN AGREEMENT W ITH THE ASSESSEE. THERE CANNOT BE A CASE, WHERE THE ASSESSEE MIGHT BE PAYING A COMMISSION TO THE EXTENT OF 25%. THEREFORE, WE ALLO W THE EXPENSES ITA NOS.462, 463, 1 & 464/B/10 13 BUT ONLY TO A REASONABLE EXTENT. WE DIRECT THE ASSE SSING OFFICER TO ALLOW AN AMOUNT OF RS.25,000/- AS COMMISSION. THIS GROUND IS PARTLY ALLOWED. 33. THE NEXT GROUND IS THAT THE AUTHORITIES BELOW H AVE ERRED IN NOT ACCEPTING THE ADDITIONAL INCOME OF RS.3,50,000/- EX PLAINED BY THE ASSESSEE. 34. IT IS THE CASE OF THE ASSESSEE THAT THE PAYMEN TS WERE MADE OUT OF THE RESOURCES AVAILABLE WITH THE ASSESSEE AND HI S FAMILY MEMBERS. IN THE ABSENCE OF EVIDENCE WE ARE NOT ABLE TO ACCEP T THE CONTENTION OF THE ASSESSEE. THE ADDITION OF RS.3,50,000/- IS CO NFIRMED AND THE GROUND IS REJECTED. 35. THE ADDITION OF RS.2 LAKHS IS ALSO CONFIRMED IN THE NATURE OF UNEXPLAINED INVESTMENT FOR WANT OF EVIDENCE. 36. THE SIXTH GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN ASSESSING A SUM OF RS.30 LAKHS IN THE HAND S OF THE ASSESSEE HOLDING THAT THE SAID AMOUNT REPRESENTED UNEXPLAINE D INVESTMENTS. IT IS THE CASE OF THE ASSESSEE THAT HE WAS NEITHER THE OWNER OF THE ITA NOS.462, 463, 1 & 464/B/10 14 PROPERTY IN CONNECTION WITH WHICH THE PAYMENT OF RS .30 LAKHS WAS MADE NOR THE ASSESSEE WAS THE PERSON WHO HAS MADE THE PAYMENT. ACCORDING TO THE ASSESSEE THE ADDITION WAS MADE ONL Y ON SUSPICION AND SURMISE. IT IS ALSO THE CASE OF THE ASSESSEE T HAT THE PAYMENTS WERE MADE OUT OF THE BOOKS OF ACCOUNTS FROM ACCOUNTED FU NDS. 37. THERE WAS A SEARCH ON 30 TH SEPT., 2005. THE STATEMENT WAS THEREAFTER RECORDED. IN A STATEMENT RECORDED, THE ASSESSEE HAD ADMITTED THAT HE HAD PAID AN ADDITIONAL AMOUNT OF R S.30 LAKHS FOR THE PURCHASE OF PROPERTY, WHICH WAS NOT REFLECTED IN TH E DOCUMENT. THE SAID AMOUNT OF RS.30 LAKHS WAS OFFERED BY THE ASSES SEE AS AN ADDITIONAL INCOME. BUT IN THE COURSE OF SEARCH, TH E ASSESSEE DID NOT COMMIT ANYTHING AND WHAT WAS STATED BY HIM WAS THA T HE DID NOT REMEMBER HAVING BEEN PAID ANY SUCH AMOUNT. BUT THE CIT(A) HELD IN HIS ORDER THAT THE ASSESSEE HAD ADMITTED THE ADDITI ONAL PAYMENT OF RS.30 LAKHS BOTH IN THE COURSE OF SEARCH AS WELL AS IN THE STATEMENT MADE AFTER THE SEARCH. ACCORDINGLY, HE CONFIRMED T HE ADDITION. 38. ON EXAMINING THE FACTS OF THE CASE, WE FIND THA T THERE IS A CONTRADICTION IN THE FINDING OF THE FACTS ARRIVED A T BY THE CIT(A). ON THE ONE HAND HE SAYS THAT THE ASSESSEE HAD MADE AN ADDITIONAL ITA NOS.462, 463, 1 & 464/B/10 15 PAYMENT OF RS.30 LAKHS, AND REFLECTED IN THE STATEM ENT OBTAINED AFTER THE SEARCH. ON THE OTHER HAND, HE HIMSELF POINTED OUT THAT THE ADDITIONAL PAYMENT OF RS.30 LAKHS WAS REALLY UNACC OUNTED AND THE ASSESSEE DID NOT REMEMBER PAYMENT OF SUCH AMOUNT. AT THE SAME TIME, THE ASSESSEE HAD STATED THAT THE PAYMENTS WER E AS PER THE ACCOUNTS. WE FIND THAT NOT ONLY THERE IS A CONTRAD ICTION IN THE FINDINGS BUT ALSO AN ABSENCE OF REASONING IN THE FINDINGS. IN THE FACTS AND CIRCUMSTANCES, WE CANNOT UPHELD THE ADDITION OF RS. 30 LAKHS CONFIRMED BY THE CIT(A). THE PAYMENTS HAVE BEEN SU PPORTED BY THE REGULAR ENTRIES MADE IN THE BOOKS OF ACCOUNTS. THO SE ACCOUNTING EVIDENCES WERE AVAILABLE EVEN AT THE TIME OF SEARCH . WHEN THE FUNDS GENERATED FOR PAYMENT OF THE AMOUNT ARE REFLECTED I N THE ACCOUNTS ITSELF, IT IS NOT POSSIBLE TO HOLD THAT THE PAYMENT S WERE NOT UNEXPLAINED. THE ADDITION IS, THEREFORE, DELETED. THIS GROUND IS ALLOWED. 39. THE APPEAL FOR THE ASSESSMENT YEAR 2005-06 IS PARTLY SUCCESSFUL. 40. LASTLY, WE WILL CONSIDER THE APPEAL FOR THE ASS ESSMENT YEAR 2006-07 FILED IN ITA NO.464/BANG/2010. ITA NOS.462, 463, 1 & 464/B/10 16 41. THE FIRST GROUND IS ONLY GENERAL, THEREFORE, IT IS NOT TO BE ADJUDICATED SEPARATELY. 42. THE SECOND GROUND IS THAT THE CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS.2,09,751/- IN RESPECT OF INT EREST PAID ON BANK OVERDRAFT. 43. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESS EE WAS AVAILING THE FACILITY OF OVER DRAFT FROM HIS BANKERS AND THAT O VERDRAFT ACCOUNT WAS UTILIZED FOR HIS BUSINESS PURPOSES. THEREFORE, IT IS NOT POSSIBLE FOR THE ASSESSING OFFICER TO DISALLOW THE CLAIM OF INTEREST DUE ON THE OVERDRAWN ACCOUNT ON THE GROUND OF DIVERSTION OF LO AN FUNDS FOR PURPOSES OTHER THAN BUSINESS. AS RIGHTLY ARGUED BY THE LEARNED CHARTERED ACCOUNTANT, SEC. 36 DOES NOT NECESSITATE THAT BY INCURRING EXPENDITURE BY WAY OF INTEREST, THE ASSESSEE SHOULD BE EARNING CORRESPONDING INCOME. IN THE ABSENCE OF ANY SPECIF IC EVIDENCE AGAINST THE ASSESSEE, WE DO NOT AGREE WITH THE ORD ER OF THE LOWER AUTHORITIES ON THIS POINT. THE DISALLOWANCE OF RS. 2,09,751/- IS DELETED.. THIS GROUND IS ALLOWED. ITA NOS.462, 463, 1 & 464/B/10 17 44. THE THIRD GROUND IS THAT THE CIT(A) IS NOT JUST IFIED IN SUSTAINING THE ADDITION OF RS.3 LAKHS MADE IN RESPECT OF THE C ASH FOUND IN THE OFFICE PREMISES OF THE ASSESSEE. THE SAID AMOUNT O F CASH WAS FULLY SUPPORTED BY THE ACCOUNTED FUNDS AVAILABLE WITH THE ASSESSEE AT THE TIME OF SEARCH. THEREFORE, THE ADDITION IS NOT JUS TIFIED. IT IS DELETED. THIS GROUND IS ALLOWED. 45. THE FOURTH GROUND RAISED BY THE ASSESSEE IS THA T THERE IS NO JUSTIFICATION IN MAKING AN ADDITION OF RS.12,74,000 /- TOWARDS UNEXPLAINED INVESTMENTS MADE IN THE PURCHASE OF PR OPERTY AT MAHADEVAPURA VILLAGE. 46. THE ASSESSEE HAS NOT FURNISHED ANY CONVINCING E XPLANATION REGARDING THE SOURCE FOR PURCHASING OF THE PROPERTY . THEREFORE, THE SAID ADDITION IS JUSTIFIED. THE ADDITION OF RS.12, 74,000/- IS THUS CONFIRMED THIS GROUND FAILS. 47. THE LAST GROUND IS REGARDING LEVY OF INTEREST. THIS IS ONLY CONSEQUENTIAL IN NATURE. ITA NOS.462, 463, 1 & 464/B/10 18 48. THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESS MENT YEAR 2006- 07 IS PARTLY SUCCESSFUL. 49. IN RESULT, ALL THE APPEALS FILED BY THE ASSES SEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY THE 3RD DAY OF NOVEMBER, 2010, AT BANGALORE. SD/- SD/- (P MADHAVI DEVI) (DR. O.K NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF, ITAT, NEW DELHI. BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.