M/s. Laxmi Narayan Agarwal, Hyderabad V. The ACIT, Circle - 6(1), Hyderabad

ITA 1392/HYD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91748 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 28-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-11-2010
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Loose papers; Document seized; Documents seized
• Section: 143(3); 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A. NO. 1392/HYD/2010 ASSESSMENT YEAR: 2008-09 SRI LAXMI NARAYAN AGARWAL, HYDERABAD PAN: ACDPA7791B VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-6(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RA O , AR FOR REVENUE : SHRI D. SUDHAKAR RAO, CIT - DR DATE OF HEARING : 2 8 - 0 5 - 201 5 DATE OF PRONOUNCEMENT : 17 - 0 6 - 2015 O R D E R PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(APPEALS)-IV, HYDERABAD, DATED 30-09-2010 FOR TH E AY 2008-09 RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE HONOURABLE CIT APPEALS - IV, HYDERABAD ERRED WH ILE CONFIRMING THE ORDER PASSED BY ASSESSING OFFICER BY MAKING ADDITIO N OF FOLLOWING AMOUNTS TO THE RETURNED INCOME RELATING TO THE BLANK CHEQUE S FOUND DURING THE SEARCH OPERATIONS AS NO LOAN WAS ADVANCED BY THE AS SESSEE. AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALL THE ABOVE MENTIONED PERSONS ALSO ADMITTED THAT THEY DID NOT RECEIVE ANY AMOUNT TOWARDS THE LOAN. ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 2 -: SI NO NAME OF THE PERSON ISSUED CHEQUE AMOUNT 1 SRI RAM PRATAP AGARWAL 7,00,000 2 SRI RAJA RAJESWARI STEEL TRADERS 54,00,000 3 AGARWAL ENTERPRISES 3,57,000 4 SRI MANISH AGARWAL 4,00,000 2) THE CIT APPEALS - IV, HYDERABAD ERRED WHILE CONFIRM ING THE ORDER PASSED BY ASSESSING OFFICER BY MAKING THE ADDITION OF RS. 44 LAKHS TO THE RETURNED INCOME RELATING TO THE ADVANCES RECEIVED BY THE ASS ESSEE TOWARDS SALE OF SCRAP WITHOUT CONSIDERING THE EXPLANATION OFFERED B Y THE ASSESSEE WHICH IS NOT CORRECT, NOT JUSTIFIED AND BAD IN LAW. 3) THE ASSESSEE HAS RECEIVED THE ABOVE AMOUNT FROM PER SONS ENGAGED IN THE SAME LINE OF BUSINESS. AND IT IS A COMMON PRACTICE IN BUSINESS TO GIVE ADVANCES FOR PURCHASE AND SALE OF SCRAP. IN THE SAM E MANNER ASSESSEE ALSO RECEIVED ADVANCES FROM SAID PERSONS IN THE FORM OF CHEQUES AS A PART OF PRUDENT BUSINESS PRACTICE. HENCE THE ASSESSEE IS PR AYING TO CONSIDER THAT THE CHEQUES WERE RECEIVED AS ADVANCE FOR SCRAP AND TO D ELETE THE ADDITION MADE TO ASSESSED INCOME. 4) THE CIT(A)-IV HAS ERRED WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHEREIN THE A.O. HAS FAILED TO APPRECIATE THAT THE AMOUNT RECEIVED AS COMMISSION ON SALE TRANSACTION BUT CONSIDERED THE S AME AS SALE TRANSACTION OF ASSESSEE WHICH IS NOT CORRECT AND NOT JUSTIFIED. WE, HEREBY, SUBMIT YOU TO KINDLY CONSIDER THE COMMISSION INCOME ONLY AND CALC ULATE TAX ON SUCH INCOME. 5) THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTIO N 80U OF RS 50,000/- FOR PHYSICAL DISABILITY AND SUBMITTED A CERTIFICATE ISS UED BY THE CIVIL SURGEON, GANDHI HOSPITAL IN SUPPORT OF THE CLAIM. THE CIT(A) ERRED BY MAKING THE DISALLOWANCE OF SAID AMOUNT WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE WHICH IS NOT CORRECT, NOT JUSTIFIED AN D BAD IN LAW. 6) THE ASSESSEE IS PRAYING TO GIVE A FRESH OPPORTUNITY TO PRODUCE THE CERTIFICATE REGARDING THE DISABILITY AND TO TAKE THE SAME IN TO ACCOUNT WHILE ASSESSING THE TOTAL INCOME OF THE ASSESSEE AND TO DECIDE THE MATTER IN FAVOUR OF THE ASSESSEE. 7) THE CIT APPEALS - IV, HYDERABAD ERRED WHILE CON FIRMING THE ORDER PASSED BY ASSESSING OFFICER WHILE NOT CONSIDERING THE EXPLANA TION GIVEN BY THE ASSESSEE COMPANY AND INITIATED PENALTY PROCEEDINGS UNDER SEC TION 271 (1)( C) WHICH IS NOT CORRECT, NOT JUSTIFIED AND BAD IN LAW. ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 3 -: 8) THE ORDER OF THE CIT APPEALS MAY BE SET ASIDE A ND SENT BACK TO ASSESSING OFFICER FOR REDOING THE SAME. 9) WE WOULD LIKE TO SUBMIT THAT THE ASSESSEE HAS NO T CONCEALED ANY INCOME OR NOT FURNISHED INACCURATE PARTICULARS TO THE A.O. HE NCE, THE PENALTY PROCEEDINGS U/S. 271(1)(C) MAY NOT BE INITIATED. 10) THE ASSESSEE MAY ADD, ALTER OR SUBSTITUTE ANY O THER POINTS TO THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF TH E CASE / APPEAL'. PRECISE AND ADDITIONAL GROUNDS OF APPEAL: '1. THE LEARNED CIT (A) ERRED IN SUSTAINING THE ADD ITIONS MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR UNDER CO NSIDERATION. 2. THE LEARNED CIT (A) ERRED IN UPHOLDING THE AD DITIONS MADE TO THE INCOME OF THE ASSESSEE BASED ON THE LOOSE SHEETS A ND DUMB MATERIALS WHICH HAS NO EVIDENTIAL VALUE. 3. THE LEARNED CIT (A) OUGHT TO HAVE APPLIED THE P RINCIPLE OF TELESCOPING OF THE INCOME DETERMINED IN THE EARLIER YEARS AGAINST THE EXPENDITURE OF SUBSEQUENT YEARS. 4. THE LEARNED CIT (A) OUGHT TO HAVE APPLIED THE P RINCIPLE OF TELESCOPING OF UNEXPLAINED EXPENDITURE AGAINST THE INCOME OF THE APPELLANT. 5. THE CIT (A) ERRED IN SUSTAINING THE ADDITION OF RS. 1,12,57,000/- MADE TOWARDS UNACCOUNTED LOAN. 6. THE CIT (A) ERRED CONFIRMING THE DISALLOWANCE O F CLAIM OF DEDUCTION US 80U OF THE ACT OF RS. 50,000/-. 7. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT NO ADDITIONS CAN BE MADE TO THE INCOME OF THE ASSESSEE WITHOUT THERE B EING ANY INCRIMINATING MATERIAL IN SEARCH ASSESSMENT. 8. THE ASSESSEE MAY ADD, ALTER OR MODIFY ANY OF TH E POINTS TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIM E OF HEARING OF THE APPEAL'. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT, THE ASS ESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN SCRAP. SEARC H AND SEIZURE OPERATIONS U/S. 132 OF THE ACT WERE CONDUCTED ON 07 -11-2007. SUBSEQUENTLY, NOTICE U/S. 153A WAS ISSUED CALLING U PON THE APPELLANT TO ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 4 -: FILE THE RETURN OF INCOME. IN RESPONSE TO WHICH, T HE APPELLANT FILED RETURN OF INCOME ON 25-09-2009 DISCLOSING INCOME OF RS. 4, 11,320/-. AGAINST THE SAID RETURN OF INCOME, ASSESSMENT CAME TO BE CO MPLETED U/S. 143(3) R.W.S 153A OF THE ACT VIDE ORDER DT. 30-11-2009 AT A TOTAL INCOME OF RS. 1,17,18,320/-. WHILE DOING SO, THE AO MADE ADDITIO N OF RS. 1,12,57,000/- BY HOLDING THAT THE APPELLANT HAD ADV ANCED SUM OF RS. 1,12,57,000/-AS LOAN TO THE FOLLOWING PERSONS: S.NO. NAME OF PERS ON ISSUED THE CHEQUE AMOUNT (RS.) 1. M/S. SREE G ANESH STEEL TRADING CO 5,00,000 2. SRI RAM PRATAP AGARWAL 7,00,000 3. M/S. SANGEETHA ENGG. WORKS 6,00,000 4. M/S. SRI RAJA RAJESWARI STEEL TRADERS 54,00,000 5. M/S. SRI KRISHNA METALS 4,00,000 6. M/S. S REE GANESH STEEL TRADING CO. 6,00,000 7. M/S. AGARWAL ENTERPRISES 3,57,000 8. M/S. SRI PADMAVATI MOTORS 50,000 9. SRI VIRENDERKUMAR PANDAY 15,00,000 10. SMT. SHEELA AGARWAL 2,50,000 11. M/S. VENKATESWARA SCRAP MERCHANTS 5,00,000 12. SRI MANISH AGARWA L 4,00,000 TOTAL: 1,12,57,000 THE ADDITION IS MADE BASED ON THE BLANK CHEQUES AND PROMISSORY NOTICES OBTAINED FROM THE ABOVE PERSONS SEIZED VIDE ANNEXURE A/LNA/RES/01. THE AO HAD CONCLUDED THAT THE APPELL ANT IS ENGAGED IN MONEY LENDING BUSINESS AND ADVANCED A SUM OF RS. 1, 12,57,000/- AND MADE ADDITION OF AMOUNT AS UNEXPLAINED INVESTMENT. 3. ON APPEAL BEFORE THE CIT(A), IT WAS SUBMITTED BE FORE THE CIT(A) THAT THOSE BLANK CHEQUES WERE OBTAINED FROM THE PER SONS, WHO INTENDED TO BORROW FROM HIM. HOWEVER, THE APPELLANT STATED THAT HE NEVER ADVANCED ANY MONEY TO THE SAID PERSON THEREFORE, NO ADDITION WAS CALLED FOR. THE LD.CIT(A) AFTER EXAMINING THE EXPLANATION HAD DISBELIEVED THE ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 5 -: EXPLANATION OFFERED BY THE APPELLANT AND FINALLY HE LD THAT THE APPELLANT WAS USING HIS OWN UNACCOUNTED MONEY IN PROVIDING UN ACCOUNTED LOANS AGAINST SECURITY OF PROMISSORY NOTICE AND CHEQUES A ND THEREFORE, UPHELD THE ADDITION. 4. IT WAS CONTENDED BEFORE US THAT THE DOCUMENTS SE IZED ARE ONLY DUMB DOCUMENTS AND THEREFORE, NO ADDITION CAN BE MA DE. ON THE OTHER HAND, LD.CIT(A) HAD PLACED RELIANCE ON THE LOWER AU THORITIES AND SUBMITTED THAT THE SEIZED DOCUMENTS CANNOT BE CALLE D DUMB DOCUMENTS SINCE THE DOCUMENTS ARE DULY SIGNED AND FILLED UP. SINCE THE ASSESSEE HAD FAILED TO EXPLAIN SATISFACTORILY UNDER WHAT CIR CUMSTANCES, THE BLANK CHEQUES CAME INTO HIS POSSESSION OF THE APPELLANT, THE ADDITION SHOULD BE UPHELD. 5. WE HEARD THE RIVAL PARTIES AND PERUSED THE MATER IAL ON RECORD. IT IS CLEAR FROM THE PERUSAL OF MATERIAL ON RECORD THA T THE SEIZED MATERIAL CONSIST OF BLANK CHEQUES AND PROMISSORY NOTES EXECU TED BY VARIOUS PARTIES. EACH DOCUMENT IS DISCUSSED BELOW: I. M/S. SREE GANESH TRADING CO. : THE AO FOUND TWO CHE QUES BEARING NO. 295713 DT. 03-11-2007 AND CHEQUE NO. 29 5715 DT. NIL DRAWN BY M/S. SREE GANESH TRADING CO. THE XERO X COPIES OF THE ABOVE TWO CHEQUES WERE SEIZED BY THE AO VIDE AN NEXURE NO. A/LNA/RES/01 DT. 07-11-2007. ON QUERY TO THE ASSES SEE AS TO HOW THE ABOVE CHEQUES CAME INTO POSSESSION OF THE A PPELLANT. HE SUBMITTED THAT THE CHEQUES WERE OBTAINED AS SECURIT Y FOR SUPPLY OF STEEL SCRAP BUT THE SUPPLY NEVER TOOK PLACE. EVEN THE AO EXAMINED THE PROPRIETOR OF M/S. SREE GANESH TRADING CO. I.E., SHRI ASHOK KUMAR JAINWAL, WHO CONFIRMED HAVING ISSUED TH OSE TWO CHEQUES IN FAVOUR OF THE APPELLANT AS A SECURITY FO R SUPPLY OF IRON ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 6 -: ORE. HOWEVER, HE DENIED HAVING ISSUED ANY PROMISSO RY NOTE TO THE ASSESSEE. THEREFORE, THE AO DRAWN AN ADVERSE INFER ENCE THAT MR. ASHOK KUMAR JAINWAL'S STATEMENT CANNOT BE RELIED UP ON AND CONCLUDED THAT APPELLANT IS ENGAGED IN THE BUSINESS OF MONEY LENDING AND TREATED RS. 11 LAKHS AS UNEXPLAINED INV ESTMENT AND BROUGHT TO THE TAX. ON APPEAL BEFORE THE CIT(A), T HE PLEA OF THE ASSESSEE WAS NOT ACCEPTED AND ADDITION WAS CONFIRME D BY THE CIT(A) ON THE GROUND THAT THE APPELLANT IS ENGAGED IN MONEY LENDING BUSINESS AND THE CHEQUES AND PROMISSORY NOT ES WERE OBTAINED ONLY AS A SECURITY FOR ADVANCING THE MONEY . ON PERUSAL OF THE SEIZED MATERIAL, IT IS CLEAR THAT PROMISSORY NOTE THOUGH SINGED BY MR. ASHOK KUMAR JAINWAL, WHICH DO NOT CON TAIN THE AMOUNT, DATE, RATE OF INTEREST OR OTHER PARTICULARS . THE STATEMENT GIVEN BY MR. ASHOK KUMAR JAINWAL THAT THE CHEQUES W ERE ISSUED ONLY AS A SECURITY FOR SUPPLY OF THE IRON SCRAP WHI CH IN FACT DID NOT MATERIALIZE REMAIN UNCONTROVERTED. THERE IS NO POS ITIVE EVIDENCE ON THE RECORD TO ESTABLISH THAT THE APPELLANT IN FA CT ADVANCED THE MONEY. PROBABLY, PRESUMPTION CAN BE RAISED IN THE GIVEN CIRCUMSTANCES THAT THE APPELLANT IS ENGAGED IN MONE Y LENDING. BASED ON PRESUMPTIONS, NO DECISIONS CAN BE MADE. T HEREFORE, WE DELETE THIS ADDITION OF RS. 11,00,000/-. II. SRI RAM PRATAP AGARWAL (RPA): CHEQUE BEARING NO. 19 4404 DT. NIL FOR RS. 7 LAKHS WAS FOUND DURING THE COURSE OF SEAR CH AND SEIZURE PROCEEDINGS. IT IS CLEAR FROM THE CHEQUE THAT THE DETAILS OF PAYEE AND DATE WERE NOT MENTIONED. APART FROM THE CHEQUE , A PROMISSORY NOTE FOR EQUIVALENT AMOUNT OF RS. 7 LAKH S DT. 11 TH JULY, 2007 WAS FOUND EXECUTED BY SRI RAM PRATAP AGA RWAL. HE STATED THAT HE ISSUED THE SAID CHEQUES AND EXECUTED THE PROMISSORY NOTES WITH AN INTENTION TO OBTAIN A LOA N. HOWEVER, THE ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 7 -: LOAN WAS NEVER GRANTED BY THE APPELLANT AND HE DENI ED HAVING RECEIVED ANY LOAN FROM THE ASSESSEE. HOWEVER, THE AO HAD NOT BELIEVED THE STATEMENT BY HOLDING THAT THE STATEMEN T WAS GIVEN BY SRI RAM PRATAP AGARWAL WITH AN INTENTION OF HELPING THE APPELLANT. THE CIT(A) ALSO CONFIRMED THE ADDITION. WE NOTICE THAT THE CHEQUE FOUND DID NOT CONTAIN THE DETAILS OF PAYEE AND DATE . IT WAS FURTHER OBSERVED BY THE AO THAT THE SIGNATURE ON THE PROMIS SORY NOTE AND ON THE CHEQUE DOES NOT TALLY. IN OUR CONSIDERED OP INION, THE MATERIAL ON RECORD DOES NOT PROVE CONCLUSIVELY THAT THE APPELLANT HAD ADVANCED THE MONEY OF RS. 7 LAKHS TO SHRI RAM P RATAP AGARWAL AND THEREFORE THE ADDITION IS HEREBY DELETE D. III. M/S. SANGEETHA ENGINEERING WORKS: VIDE PAGE NO. 29 OF ANNEXURE A/LNA/RES/01 DT. 07-11-2007, SIGNED CHEQUE BEARING NO. 375994 DT. NIL FOR RS. 3 LAKHS DRAWN IN FAVOUR OF THE APPE LLANT AND VIDE PAGE NO. 46 & 47, TWO PROMISSORY NOTES WERE EXECUTE D BY ONE MR. DINESH GUPTA FOR RS. 3 LAKHS EACH WAS FOUND. THE P ROMISSORY NOTE SEIZED VIDE PAGE NO. 46 DOES NOT CONTAIN DATE OR OTHER PARTICULARS WHEREAS THE OTHER PROMISSORY NOTE SEIZE D VIDE PAGE NO. 47 DT. 26 TH APRIL, 2006 CONTAINED FULL PARTICULARS. WHEN THIS INFORMATION WAS CONFRONTED WITH THE APPELLANT, THE ASSESSEE STATED THAT THE CHEQUES WERE OBTAINED AS A SECURITY FOR SU PPLY OF IRON SCRAP BUT THE SUPPLY WAS NEVER MADE. EVEN MR. DINE SH GUPTA ON EXAMINATION ON 22 ND SEPT, 2009, CONFIRMED THE SAMETHING. THE AO MADE ADDITION BY HOLDING THAT THE STATEMENT WAS MADE BY MR. DINESH GUPTA UNDER INFLUENCE OF THE APPELLANT AND T HEREFORE NOT BELIEVED THE STATEMENT OF MR. DINESH GUPTA AND BROU GHT TO ADIDITON AN AMOUNT OF RS. 6 LAKHS THE CIT(A) CONFI RMED IT. AFTER PERUSAL OF MATERIAL ON RECORD, WE ARE OF THE OPINIO N THAT THE MATERIAL RELIED UPON BY THE AO DOES NOT CONCLUSIVEL Y PROVE THAT ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 8 -: THE APPELLANT ADVANCED THE SUM OF RS. 6 LAKHS TO MR . DINESH GUPTA. THOUGH A PRESUMPTION CAN BE PROBABLY RAISED THAT THE APPELLANT WOULD HAVE ADVANCED MONEY TO THE APPELLAN T BUT IN THE ABSENCE OF ANY CLINCHING EVIDENCE, THE ADDITION CAN 'T BE UPHELD. MORE PARTICULARLY, WHEN MR. DINESH GUPTA'S STATEMEN T THAT NO LOAN WAS GRANTED TO HIM REMAINS UN-CONTROVERTED. T HUS, THE ADDITION OF RS. 6 LAKHS IS ALSO DELETED. IV. M/S. RAJA RAJESWARI STEEL TRADERS: VIDE PAGE NOS. 3 0 & 31 OF ANNEXURE A/LNA/RES/01 COPIES OF CHEQUE NO. 057007 D T. NIL FOR RS. 12 LAKHS; CHEQUE NO. 436332 DT. 18-05-2007 FOR RS. 5 LAKHS; CHEQUE NO. 151067 DT. 02-09-2007 FOR RS. 10 LAKHS A ND CHEQUE NO. 436345 DT. NIL FOR RS. 27 LAKHS, IT WAS SUBMITT ED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THAT THOSE CHEQUES WERE OBTAINED BY HIM AS SECURITY FOR THE AM OUNT TO BE ADVANCED. HOWEVER, THE AMOUNTS WERE NEVER ADVANCED . IN RESPONSE TO SUMMONS U/S. 131 ISSUED BY THE AO TO SH RI G. RAJESWARA RAO, PROPRIETOR OF M/S. SRI RAJA RAJESWAR I STEEL TRADERS, ONE MR. G. RAM MOHAN APPEARED AND STATED T HAT WHERE ABOUTS OF MR. G. RAJESWARA RAO WERE NOT KNOWN AS H E RAN AWAY FROM HYDERABAD DUE TO PRESSURES FROM THE DEBTORS AN D HE STATED CONFIRMED THAT THE SIGNATURES THAT WERE FOUND ON CH EQUES SEIZED WERE THAT OF MR. RAJESWARA RAO. IN OUR CONSIDERED OPINION, THE MATERIAL ON RECORD DOES NOT CONCLUSIVELY PROVE THAT THE APPELLANT HAD ADVANCED RS. 54 LAKHS TO M/S. RAJA RAJESWARI ST EEL TRADERS ESPECIALLY THE STATEMENT OF THE PROPRIETOR OF THE M /S. RAJA RAJESWARI STEEL TRADERS COULD NOT BE OBTAINED. THE REFORE, THE MATERIAL ON RECORD DOES NOT INDICATE THAT THE APPEL LANT HAD ADVANCED RS. 54 LAKHS TO M/S. RAJA RAJESWARI STEEL TRADERS. HENCE, THE ADDITION IS HEREBY DELETED. ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 9 -: V. M/S. KRISHNA METALS: THE DEPARTMENT HAS SEIZED CHEQ UE NO. 171531 DT. NIL DRAWN IN FAVOUR OF THE APPELLANT FOR A SUM OF RS. 4 LAKHS VIDE PAGE NO. 3 OF ANNEXURE A/LNA/RES/01. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO EXAMINED M R. RAJESH GUPTA, PROPRIETOR, M/S. KRISHNA METAL WHO HAD CONFI RMED HAVING ISSUED THE BLANK PROMISSORY NOTE FOR RS. 4 LAKHS AL ONG WITH THE ABOVE CHEQUE AND HE FURTHER STATED THAT THESE TWO I NSTRUMENTS WERE HANDED OVER AS A SECURITY FOR THE PURPOSE OF O BTAINING THE SCRAP MATERIAL FROM THE APPELLANT. THE STATEMENT W AS DIS-BELIEVED BY THE AO AND MADE ADDITION OF RS. 4 LAKHS AS UN-EX PLAINED INVESTMENT. THE CIT(A) ALSO CONFIRMED THE ADDITION . THE STATEMENT OF MR. RAJESH GUPTA, PROPRIETOR, M/S. KRI SHNA METAL, THAT THOSE INSTEMNETS WERE HANDED OVER TO THE APPEL LANT AS A SECURITY FOR THE PURPOSE OF SCRAP REMAINS UN-CONTRO VERTED AND THE MATERIAL ON RECORD DOES NOT PROVE CONCLUSIVELY THAT THE APPELLANT MADE A LOAN OF RS. 4 LAKHS TO M/S. KRISHNA METALS A ND THEREFORE, THE ADDITION IS DELETED. VI. M/S. AGARWAL ENTERPRISES: THE DEPARTMENT SEIZED CHE QUE NO. 302280 DT. 06-11-2007 DRAWN ON INDIAN OVERSEAS BANK , MG ROAD, SECUNDERABAD FOR RS. 3,57,000/- DRAWN BY M/S. AGARWAL ENTERPRISES. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, MR. SATISH AGARWAL, PROPRIETOR OF M/S. AGARWAL ENTERPRI SES WAS EXAMINED, WHEREIN HE HAS STATED THAT THE SAID CHEQU E FOR RS. 3,57,000/- AND PROMISSORY NOTE WAS HANDED OVER TO T HE APPELLANT AS A SECURITY FOR THE PURPOSE OF OBTAINING LOAN. H OWEVER, THE LOAN WAS NOT ADVANCED AS THE SEARCH AND SEIZURE OPERATIO NS BY THE IT DEPARTMENT WERE CONDUCTED ON THE VERY NEXT DATE. T HE STATEMENT WAS DIS-BELIEVED BY THE AO AND HELD THAT THE AMOUNT OF RS. 3,57,000/- IS UNEXPLAINED INVESTMENT. IN OUR CONSI DERED OPINION, ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 10 -: THE MATERIAL DOES NOT CONCLUSIVELY PROVE THAT THE A PPELLANT HAD ADVANCED THE SAME. THEREFORE, THE ADDITION CANNOT BE UPHELD. VII. M/S. PADMAVATHI MOTORS, SRI VIRENDRA KUMAR PANDEY, SMT. SHEELA AGARWAL, M/S. VENKATESWARA SCRAP MERCHANTS AND SRI MANISH AGARWAL: ALL THE ABOVE PERSONS HAVE CONFIRMED THAT CHEQUES H AVE BEEN HANDED OVER TO THE APPELLANT ONLY AS A MEASURE OF S ECURITY FOR SUPPLY OF SCRAP OR FOR THE PURPOSE OF OBTAINING THE LOAN, BUT ALL OF THEM HAVE DENIED HAVING OBTAINED ANY LOAN FROM THE APPELLANT. THE STATEMENTS GIVEN BY THOSE PEOPLE REMAINS UNCONT ROVERTED. THOUGH THE AO IS JUSTIFIED IN ENTERTAINING DOUBT TH AT THE APPELLANT IS ENGAGED IN THE BUSINESS OF MONEY LENDING AND THE CHEQUES HAVE BEEN OBTAINED, ONLY AFTER THE AMOUNTS WERE ADVANCED SINCE IN THE ABSENCE OF ANY POSITIVE EVIDENCE IN SUPPORT OF THE APPELLANT HAVING LENT MONEY TO THE ABOVE PERSONS, WE ARE NOT IN A PO SITION TO CONFIRM THE ADDITION. ACCORDINGLY, THE ADDITIONS A RE DELETED. 6. ON THE ISSUE OF CLAIM OF DEDUCTION U/S. 80U OF T HE ACT, WE FIND THAT THE CLAIM WAS WITHDRAWN BEFORE THE AO AND THER EFORE, THE CIT(A) IS PERFECTLY JUSTIFIED IN REJECTING THE CLAIM OF THE A PPELLANT. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 7. IN THE RESULT, THIS APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2015 SD/- SD/- (ASHA VIJAYARAGHAVAN) (INTURI RAMA RAO) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED 17 TH JUNE, 2015 TNMM ITA NO. 1392/HYD/2010 SRI LAXMI NARAYAN AGARWAL :- 11 -: COPY TO : 1. SRI LAXMI NARAYAN AGARWAL, C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-6(1 ), HYDERABAD. 3. CIT(APPEALS)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.