K.R. Paramahamsa, Bangalore V. DCIT, Bangalore

ITA 1408/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8684 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 10-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H N KHINCHA
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset; Gift; Opportunity of being heard; Cost of acquisition; Reasonable cause; Wrong claim; Benefit of exemption; Condonation of delay; Revised return
• Section: 143(3); 54B; 54F; 153A; 132

Judgement Text

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, NO.56/40, 40 TH CROSS, 8 TH BLOCK, JAYANAGAR, BANGALORE 560 093. PAN: AGDPP 4676N VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), BANGALORE. 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 AGAINS T THE SEPARATE ORDERS, EACH DATED 14.03.2012 OF THE CIT(APPEALS), MYSORE FOR THE ASSESSMENT YEARS 2001-02 & 2003-04 TO 2005-06. AL L THESE APPEALS WERE HEARD TOGETHER AND THEY ARE DISPOSED OF BY THIS CON SOLIDATED ORDER. ITA NO.1405 TO 1408/BANG/2013 PAGE 2 OF 25 2. IN ALL THESE APPEALS, THERE IS A DELAY OF 96 DA YS IN FILING THE APPEALS BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED PETIT ION AND AFFIDAVIT FOR CONDONATION OF DELAY STATING THAT THE CIT(A)S ORDE R 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. MEAN WHILE, THE OFFICE OF THE ASSESSEE WAS SHIFTED FROM AMC COLLEGE, JAYANAGAR TO CITY COLLEGE, JAYANAGAR AND IN THE COURSE OF SHIFTING THE APPELLA TE ORDER WAS MISPLACED AND LOST SIGHT OF. THE EARLIER ACCOUNT HAD ALSO LE FT THE ASSESSEE IN JUNE, 2012. THEREAFTER, THE APPELLATE ORDERS WERE LOCATE D IN OCTOBER, 2015, FOUND IN THE DRAWER OF THE ACCOUNTANT AND CONSEQUEN TLY THESE APPEALS WERE FILED. THE DELAY IN FILING THE APPEALS IS DUE TO REASONABLE CAUSE AND THEREFORE IT IS PRAYED FOR CONDONATION OF DELAY. 3. WE FIND THAT THE DELAY IN FILING THESE APPEALS H AS OCCURRED DUE TO REASONABLE CAUSE AND HENCE WE CONDONE THE DELAY AND ADMIT THE APPEALS. AY 2001-02 4. THE FACTS ARE THAT CONSEQUENT TO SEARCH U/S. 132 OF THE INCOME-TAX ACT, 1961 [THE ACT] ON 24.8.2006 AT THE RESIDENTI AL PREMISES OF THE ASSESSEE, NOTICE U/S. 153A WAS ISSUED AND IN RESPON SE 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 CONCLU DED THE ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT AND ASSESSED TOT AL INCOME AT RS.52,62,985 MAKING THE FOLLOWING ADDITIONS:- ITA NO.1405 TO 1408/BANG/2013 PAGE 3 OF 25 UNPROVED AGRICULTURAL INCOME 7,23,579 UNEXPLAINED CREDITS APPEARING IN THE CAPITAL ACCOUN T (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 ------------ 5. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APP EALS) ON THE VARIOUS ADDITIONS MADE BY THE AO. THE CIT(APPEALS) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. IN FURTHER APPEAL BEFORE US, THE ASSESSEE HAS FI LED TEN GROUNDS OF APPEAL. AT THE TIME OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE DID NOT PRESS THE GROUNDS OF APPEAL, EXCEPT FOR GROUND NOS. 5 & 6, WHICH READ AS UNDER:- 5. A) THE LEARNED ASSESSING OFFICER HAS ERRED IN TR EATING SUMS OF RS. 4,34,131/- + 25,000/- + 136,106/- AS UNEXPLAINE D CREDITS APPEARING IN CAPITAL ACCOUNT AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME. ALL THE SUMS ARE EXPLAINABLE A ND VERIFIABLE. B) THE ASSESSING OFFICER HAS ERRED IN TREATING AMO UNT RECEIVED ON SALE OF SHARES OF RS. 4,34,131/- AS UNEXPLAINED CREDITS AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME. SU CH 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. ITA NO.1405 TO 1408/BANG/2013 PAGE 4 OF 25 D) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE POSITION AS DECLARED IN THE RETURN IS CORRECT AND THE SAME IS T O BE ACCEPTED AND THE ADDITION MADE IS REQUIRED TO BE DELETED. E) THE LEARNED ASSESSING OFFICER HAS ERRED IN TREA TING A SUM OFRS.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 REJ ECTED. F) THE ASSESSING OFFICER HAS ERRED IN TREATING A S UM OF RS. 1,36,106/- AS UNEXPLAINED CREDIT ON ACCOUNT OF DIFF ERENCE IN ACCOUNTS AND THE LEARNED CIT(A) HAS ERRED IN CONFIR MING THE SAME. THERE IS NO DIFFERENCE IN ACCOUNT AT ALL. IN ANY CASE THE ADDITION MADE IS EXCESSIVE. THE FACTS OF THE CASE A ND THE ACCOUNTS AS FILED HAVE NOT BEEN PROPERLY APPRECIATED AT ALL. THERE IS NO SCOPE FOR ADDITION AND THE ADDITION HAVING BEEN MAD E 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 REP RESENTING 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. TH ERE IS NO SCOPE FOR ADDITION AND THE ADDITION HAVING BEEN MADE ERRO NEOUSLY IS TO BE DELETED. 7. THE ASSESSEE HAD CREDITED RS.4,34,131 IN THE CAP ITAL ACCOUNT ON ACCOUNT OF SALE OF SHARES. THE AO HAS DISCUSSED TH IS ISSUE AT PARA 5 OF HIS ORDER. IN RESPONSE TO AOS QUERY, THE ASSESSEE BY LETTER DATED 30.12.2008 STATED AS UNDER:- LIST OF SHARES AS ON 31.3.2000: THE SCHEDULE OF S HARES AS ON 31.3.2000 IS ENCLOSED HEREWITH AND ALSO A COPY OF B LOCK ITA NO.1405 TO 1408/BANG/2013 PAGE 5 OF 25 ASSESSMENT ORDER WHERE A SUM OF RS.9,68,0000 WAS DE CLARED AS SHARES. 8. HOWEVER, THE AO NOTED THAT LIST OF SHARES HELD A S ON 31.3.2000 AND PROOF REGARDING SALE OF SHARES OR RECEIPT OF SALE P ROCEEDS WAS NOT FURNISHED NOR SHORT/LONG TERM CAPITAL GAIN/LOSS IN RESPECT OF SHARES SOLD WAS DISCLOSED. HE ALSO OBSERVED THAT THE FIGURES OF OP ENING AND CLOSING BALANCE IN CAPITAL ACCOUNT AS APPEARING IN THE BALA NCE 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 T HE 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 UND ISCLOSED INCOME UNDER THE HEAD OTHER SOURCES. 9. 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 CL AIM. COPY OF THE BANK ACCOUNT REFLECTING THE AMOUNT RECEIVED WAS FURNISHE D. THE AO HOWEVER OBSERVED THAT THERE IS NO PROOF FOR HAVING FURNISHE D 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 ITA NO.1405 TO 1408/BANG/2013 PAGE 6 OF 25 ACCOUNT OF MONEY RECEIVED FROM LIC. IN THE ABSENC E OF ANY PROOF, THE AO TREATED THE CREDIT OF RS.25,000 AS UNDISCLOSED INCO ME UNDER THE HEAD OTHER SOURCES. 10. THE AO NOTICED ANOTHER CREDIT OF RS.1,36,106 TO THE CAPITAL ACCOUNT AS ADDITIONS MADE. THE AO POINTED OUT THAT IN T HE 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 ASSESSEES CAPITAL ACCOUNT IN THE BOOKS MAINTAINED FOR NURSERY CALLED ORCHIDS. THE ASSESSEE SUBMITTED THAT THIS CREDIT IS AN ENTRY MADE TO RECO NCILE 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 ASSESSEES EXPLANATION TO BE VAGUE AND HE WAS OF THE VIEW THAT ENTRIES ARE MADE TO ARTIFICIALLY TALLY TH E ACCOUNTS AND THE ASSESSEE IS INDIRECTLY ADMITTING THAT THERE IS MISTAKE IN TH E ACCOUNTS. THE AO THEREFORE TREATED THE CREDIT OF RS.1,36,106 AS UNDI SCLOSED INCOME UNDER THE HEAD OTHER SOURCES AND TREATED THE DEBIT AS EXC ESS OF ASSETS OVER LIABILITIES AND MADE THE ADDITIONS. 11. 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 TH E ORIGINAL RETURN. THIS RETURN WAS SELECTED FOR SCRUTINY AND THE ABOVE CRED IT WAS ACCEPTED. ITA NO.1405 TO 1408/BANG/2013 PAGE 7 OF 25 THEREFORE IT WAS CONTENDED THAT THE AO OUGHT NOT TO HAVE ADDED THIS AMOUNT. 12. THE CIT(A) OBSERVED THAT EVEN BEFORE HIM THE AS SESSEE COULD NOT ADDRESS THE VITAL QUESTIONS RAISED BY THE AO LIKE N ON-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. 13. BEFORE US, THE CONTENTION OF THE LD. COUNSEL FO R THE ASSESSEE WAS THAT HAVING ACCEPTED THE BOOKS OF ACCOUNT, THE REVE NUE AUTHORITIES SHOULD NOT HAVE TREATED THE ENTRY AS UNDISCLOSED INCOME OF THE ASSESSEE. 14. WE FIND THAT IN RESPONSE TO THE AOS 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 SHEE T FILED ALONG WITH THE ORIGINAL RETURN AND THE BALANCE SHEET FILED ALO NG WITH THE RETURN FILED U/S. 153A. SINCE THE CREDIT OF RS.4,34,131 TO THE CAPIT AL ACCOUNT STOOD UNEXPLAINED, THE AO TREATED IT AS UNDISCLOSED INCOM E. 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 APPEAR ING IN THE BALANCE SHEET. WE THEREFORE SET ASIDE THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AFTER DUE OPPORTUNITY TO TH E ASSESSEE. ITA NO.1405 TO 1408/BANG/2013 PAGE 8 OF 25 15. WITH RESPECT TO THE ADDITION OF RS.25,000 REPRE SENTING CREDIT ON ACCOUNT OF MONEY BACK POLICY FROM LIC, THE ASSESSEE HAS MERELY FILED COPY OF BANK ACCOUNT BEFORE THE AO AND COULD NOT SUBSTAN TIATE ITS CLAIM. IN ORDER TO PROVIDE ANOTHER OPPORTUNITY TO THE ASSESSE E, WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER. THE ASSESS EE 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 TH E SAME DECIDE THE ISSUE AFRESH. 16. REGARDING THE ADDITION OF RS.1,36,106 ON ACCOUN T OF CREDIT TO THE CAPITAL ACCOUNT, THE ASSESSEES EXPLANATION WAS THA T THE CREDIT WAS AN ENTRY MADE TO RECONCILE DIFFERENCE IN OPENING BALAN CE 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 WA RRANTED ON SEPARATE COUNTS AND NOT ON THE NET OF TWO AMOUNTS. IN THE I NTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE TO THE ASSESSING OFFICER AND THE A SSESSEE IS PROVIDED WITH ONE MORE OPPORTUNITY TO EXPLAIN THE SOURCE OF CREDI T OF RS.1,36,106 BEFORE THE AO. 17. WITH RESPECT TO THE AMOUNT OF RS.1,10,110 AS AP PEARING 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 T O THE ASSESSEES CAPITAL ACCOUNT IN THE BOOKS MAINTAINED FOR THE NURSERY CAL LED ORCHIDS. THE ASSESSEES EXPLANATION IS THAT THIS DEBIT IS NOTHIN G BUT ENTRY MADE TO ITA NO.1405 TO 1408/BANG/2013 PAGE 9 OF 25 RECONCILE THE DIFFERENCE OF ORCHIDS AS THERE WAS DI FFERENCE 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 T ALLY ARTIFICIALLY. HOWEVER, SINCE THE BOOKS OF ACCOUNTS HAVE BEEN ADMITTED, THE MISTAKE IN THE ACCOUNTS BEING POINTED OUT BY THE REVENUE AUTHORITI ES IS FUTILE. HENCE, WE ARE OF THE OPINION THAT THE ISSUE IS TO BE SET ASID E TO THE FILE OF ASSESSING OFFICER TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSE E TO SUBSTANTIATE ITS CLAIM. 18. AS ALREADY STATED, THE OTHER GROUNDS OF APPEAL WERE NOT PRESSED BY THE ASSESSEE AND HENCE THEY ARE DISMISSED AS NOT PR ESSED. 19. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. AY 2003-04 20. CONSEQUENT TO SEARCH U/S. 132 OF THE ACT, AT TH E 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 IN COME OF RS.50,42,461 AND AGRICULTURAL INCOME OF RS.1,31,777. THE AO CONC LUDED THE ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT AND ASSESSED TOT AL 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 ITA NO.1405 TO 1408/BANG/2013 PAGE 10 OF 25 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 THA T 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 ACCO UNT OF AGRICULTURAL INCOME. 22. WITH RESPECT TO DISALLOWANCE OF INTEREST OF RS. 3,55,566 OUT OF HOUSE PROPERTY INCOME, THE LD. COUNSEL FOR THE ASSESSEE S TATED 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 ESTABLI SH THE NEXUS BETWEEN THE LOAN AND ITS UTILIZATION CLEARLY, THE LD. COUNS EL FOR THE ASSESSEE STATED BEFORE THE BENCH THAT THIS GROUND IS NOT PRESSED. WE THEREFORE DISMISS THIS GROUND AS NOT PRESSED. 23. WITH RESPECT TO DISALLOWANCE OF RS.4,04,652 OUT OF EXPENSES CLAIMED UNDER THE HEAD INCOME FROM BUSINESS, THE CI T(APPEALS) SUSTAINED THE ADDITION OF RS.2,80,546. THE LD. COUNSEL FOR T HE ASSESSEE STATED THAT ALL ITA NO.1405 TO 1408/BANG/2013 PAGE 11 OF 25 EXPENSES WERE INCURRED IN THE COURSE OF AND CARRYIN G ON OF BUSINESS AND ARE DULY VOUCHED AND HENCE ARE TO BE ALLOWED AS SUC H. THE EXPENSES ARE GENUINE EXPENDITURE INCURRED FOR THE PURPOSE OF BUS INESS. 24. WE SET ASIDE THIS ISSUE BACK TO THE ASSESSING O FFICER WHO SHALL EXAMINE THE VOUCHERS AND VERIFY THE GENUINENESS OF EXPENSES CLAIMED BY THE ASSESSEE AND DECIDE THE ISSUE AFTER GIVING REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 25. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. AY 2004-05 26. CONSEQUENT TO SEARCH U/S. 132 OF THE ACT, AT TH E 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 IN COME OF RS.59,41,974 AND AGRICULTURAL INCOME OF RS.13,49,339. THE AO CO NCLUDED THE ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT AND A SSESSED 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 ITA NO.1405 TO 1408/BANG/2013 PAGE 12 OF 25 ------------ 27. THE ONLY GROUND WHICH IS PRESSED BEFORE US IS G ROUND 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 NO T A CAPITAL ASSET AT ALL, THE GAIN IS NOT TAXABLE. 28. 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 ASSESS EE ON 1.11.2004, THE INCOME FROM SALE OF THIS LAND HAS BEEN ARRIVED AT R S.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 TH E AO, THE ASSESSEE STATED THAT THE AMOUNT WAS UTILIZED FOR PURCHASE OF AGRICU LTURAL LAND DURING FY 2003-04 AND COPIES OF PURCHASE DEEDS OF AGRICULTURA L LAND WAS ENCLOSED. 29. THE AO OBSERVED THAT NO PURCHASED DEEDS WERE EN CLOSED BY THE ASSESSEE AND IN THE DETAILS OF CAPITAL GAINS FURNIS HED, 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 ASSESSEES CLAIM AS UNPROVED. FURTHER THE ASSESSEE HAD ALSO CLAIMED T HAT EXEMPTION ON THE GROUND THAT HE SALE CONSIDERATION HAS BEEN UTILISED FOR HOUSE CONSTRUCTION ITA NO.1405 TO 1408/BANG/2013 PAGE 13 OF 25 AT 8 TH BLOCK, JAYANAGAR. THE AO HELD THAT ASSESSEE IS NO T ELIGIBLE FOR EXEMPTION U/S. 54F AS THE ASSESSEE APPEARED TO OWN MORE THAN ONE RESIDENTIAL HOUSE DURING THE PREVIOUS YEAR AS PER T HE 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 ASSESSEES CLAIM FOR EXEMPTION U/S. 54B AND 54F AND ACCORDINGLY A SUM OF RS.24,68,950 WAS BROUGHT TO TA X AS LONG TERM CAPITAL GAIN. 30. BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT HE HAD SOLD SOME SITES AS WELL AS AGRICULTURAL LANDS, THE DETAI LS OF WHICH ARE AS UNDER:- PARTICULARS PURCHASE DATE COST EXTENT SALE DATE SALE PRICE SY.NO.24/2, KALKERE VILLAGE 10.11.1994 2,12,952 1.31 GUNTAS 27.8.2003 17,25,000 SY.NO.20, KALKERE VILLAGE 10.07.1997 2,31,050 0.39 GUNTAS 27.8.2003 9,75,000 27,00,000 31. COPIES OF PURCHASE DEEDS AND SALE DEEDS WERE FU RNISHED AND THE ASSESSEE SUBMITTED THAT THE ABOVE LANDS SOLD WERE A GRICULTURAL LANDS SITUATED BEYOND 8 KMS. FROM LOCAL MUNICIPAL LIMITS WHICH WERE OUTSIDE THE PURVIEW OF CAPITAL ASSET AND HENCE THE GAIN ON AGRI CULTURAL LAND WAS NOT LIABLE TO TAX. A COPY OF CERTIFICATE ISSUED BY SECR ETARY, MANTAPA GRAMA PANCHAYAT AND ENGLISH TRANSLATION THEREFORE WAS FIL ED BEFORE THE CIT(A). ITA NO.1405 TO 1408/BANG/2013 PAGE 14 OF 25 32. WITHOUT PREJUDICE TO THE ABOVE CLAIM OF AGRICUL TURAL LAND, THE ASSESSEE SUBMITTED THAT THE CORRECT COST OF ACQUIS ITION IS TO BE CONSIDERED AND INDEXATION BENEFIT IS TO BE GIVEN WHILE COMPUTI NG THE CAPITAL GAINS. IT WAS ALSO STATED THAT ASSESSEE IS ELIGIBLE FOR DEDUC TION U/S. 54B AS HE HAD PURCHASED AGRICULTURAL LANDS WITHIN THE SPECIFIED T IME LIMIT MENTIONED SECTION 54B. 33. 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 TRAN SACTIONS 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 TH E 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 CLAI M 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 FRE SH CLAIMS SHOULD BE THROUGH REVISED RETURN IN VIEW OF THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD. V. CIT, 284 ITR 323. HENCE, I AGREE WITH THE AOS 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 A PPELLANT IS ELIGIBLE FOR THE EXEMPTION AND DIRECT THE AO TO RE- WORK THE SAME AS PER LAW. ITA NO.1405 TO 1408/BANG/2013 PAGE 15 OF 25 34. WE HAVE HEARD BOTH THE PARTIES. 35. WITH RESPECT TO EXEMPTION U/S. 54B / 54F, WE FI ND THAT THE CIT(APPEALS)S ORDER IS NOT CLEAR AS TO WHETHER THO SE DOCUMENTS WHICH WERE PRODUCED BEFORE THE CIT(A) WERE PRODUCED BEFOR E THE AO. THE AO HAS CLEARLY STATED THAT THE ASSESSEE IS NOT ENTITLE D TO EXEMPTION U/S. 54F AS THE ASSESSEE IS OWNING MORE THAN ONE RESIDENTIAL HO USE. FURTHER THE CLAIM U/S. 54B WAS ALSO DISALLOWED DUE TO LACK OF EVIDENC E WITH RESPECT TO DETAILS OF UTILIZATION OF SALE PROCEEDS. HENCE WE ARE OF T HE OPINION THAT THE ENTIRE SUBMISSION MADE BEFORE THE CIT(APPEALS) SUPPORTED B Y 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 EXA MINATION OF THE SAME, DECIDE THE ISSUE DE NOVO . 36. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. AY 2005-06 37. CONSEQUENT TO SEARCH U/S. 132 OF THE ACT, AT TH E 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 IN COME OF RS.53,69,249 AND AGRICULTURAL INCOME OF RS.11,19,603. THE AO CO NCLUDED THE ITA NO.1405 TO 1408/BANG/2013 PAGE 16 OF 25 ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT AND A SSESSED 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 17,64,3 29 UNEXPLAINED INVESTMENT IN LAND AND SITE 3,93,59 0 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 O RIGINAL 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 FOUNDA TION. 39. THE ASSESSEE WAS ASKED TO PROVE THE CLAIM OF EX EMPTION 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 CONSTIT UTE 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 F URNISHED BEFORE A.O. THE SCHEDULE 1 & 2 CLEARLY MENTIONS THE DESCRIPTION OF PROPERTY AS SITE NO. ITA NO.1405 TO 1408/BANG/2013 PAGE 17 OF 25 153 & 154 MEASURING 35100 SQ FT. AND 36000 SQ FT RE SPECTIVELY. THEREFORE, THE ASSESSEES CONTENTION THAT THE LAND SOLD IS AGR ICULTURAL LAND WAS FOUND NOT TENABLE. THE ASSESSEES CLAIM OF 54F WAS ALSO N OT ACCEPTED FOR THE REASON THAT THE ASSESSEE APPEARS TO BE OWNING MORE THAN ONE RESIDENTIAL HOUSE DURING THE PREVIOUS YEAR AS PER THE STATEMENT S AND DETAILS FILED ALONG WITH THE RETURN. THE ASSESSEE IS OWNING THE F OLLOWING RESIDENTIAL PROPERTIES. 1. RESIDENTIAL HOUSE AT NO. 188, 5TH MAIN, 4TH BLO CK, JAYANAGAR. 2. FLAT AT HYDERABAD 3. 3 FLATS IN NS ENGLISH COUNTY. 4. FARM HOUSE AT SY. NO. 32, GOLAHALLI VILLAGE OWN ED JOINTLY ALONG WITH HIS FATHER. 40. AS THE ASSESSEE DID NOT FULFILL THE CONDITIONS MENTIONED IN THE PROVISO TO SECTION 54F(1), EXEMPTION U/S 54F CLAIME D 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 CONSIDE RATION AS LONG TERM CAPITAL GAINS. 41. BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOLD TWO SITES THE DETAILS OF WHICH ARE AS UNDER:- ITA NO.1405 TO 1408/BANG/2013 PAGE 18 OF 25 42. THE ASSESSEE FURNISHED COPIES OF PURCHASE DEEDS AND SALE DEEDS AND CONTENDED THAT THE ABOVE LANDS WERE AGRICULTURA L 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 . 43. WITHOUT PREJUDICE TO THE ABOVE CLAIM OF AGRICUL TURAL LAND, THE ASSESSEE SUBMITTED THAT THE CORRECT COST OF ACQUIS ITION IS TO BE CONSIDERED AND INDEXATION BENEFIT IS TO BE GIVEN WHILE COMPUTI NG THE CAPITAL GAINS. IT WAS ALSO STATED THAT ASSESSEE IS ELIGIBLE FOR DEDUC TION U/S. 54B AS HE HAD PURCHASED AGRICULTURAL LANDS WITHIN THE SPECIFIED T IME LIMIT MENTIONED SECTION 54B. 44. 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 COMPLE TE AGREEMENT WITH THE AO THAT THE APPELLANT IS NOT ELI GIBLE FOR EXEMPTION U/S 54F AS WELL. HENCE, I FIND NO INFIRMI TY IN THE ITA NO.1405 TO 1408/BANG/2013 PAGE 19 OF 25 ACTION OF THE AO IN DENYING THE EXEMPTION. HOWEVER, IN VIEW OF THE PURCHASE DEED COST, THE APPELLANT IS ELIGIBLE F OR THE PURCHASE COST WITH INDEXATION IF ANY, AND OTHER INCIDENTALS. THE AO IS DIRECTED TO REWORK THE CAPITAL GAIN AFTER TAKING IN TO CONSIDERATION THIS ASPECT. IN EFFECT THE APPEAL ON THIS GROUND IS PARTLY ALLOWED, 45. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASS ESSEE HAS RAISED GROUND NO.5 BEFORE US, WHICH READ AS FOLLOW:- 5. A) THE ASSESSING OFFICER HAS ERRED IN HOLDING T HAT 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 CONSTRUC TION OF NEW RESIDENTIAL HOUSE AND IN ACCORDANCE WITH LAW IS ENT ITLED TO EXEMPTION U/S. 54F OF .I.T. ACT, 1961. THE APPELLAN T IS ENTITLED TO EXEMPTION U/S. 54F OF I.T. ACT, 1961 AND THE SAME S HOULD 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 E RRED 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 LA ND CONVERSION CHARGES. THE ABOVE CALCULATION BEING BAD IN LAW AND ON FACTS ARE REQUIRED TO BE IGNORED. 46. WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE H AS CLAIMED THAT HE HAS SOLD AGRICULTURAL LANDS. THE CLAIM WAS NOT ACC EPTED BY THE AO ITA NO.1405 TO 1408/BANG/2013 PAGE 20 OF 25 BECAUSE THE LAND SOLD WAS CONVERTED LAND WHICH WAS EVIDENT FROM COPY OF SALE DEED FURNISHED BEFORE THE AO. THE ASSESSEES CLAIM FOR EXEMPTION U/S. 54F WAS NOT ACCEPTED BY HE AO AND THE CIT(APPE ALS). 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 EXAM INE WHETHER THE LANDS SOLD ARE CONVERTED LAND OR AGRICULTURAL LANDS IN OR DER TO GIVE BENEFIT OF EXEMPTION U/S. 54B TO THE ASSESSEE, AS THE CIT(A) H AD HELD THAT THE ASSESSEE IS ELIGIBLE FOR PURCHASE COST WITH INDEXAT ION IF ANY AND OTHER INCIDENTAL EXPENDITURE WHILE WORKING OUT THE CAPITA L GAIN. THE AO SHALL AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE TO PRESENT HIS CASE, PASS AN ORDER IN ACCORDANCE WITH LAW. 47. UNDISCLOSED PURCHASE OF SITES : IN THE COURSE OF SEARCH ON 24.8.2006, CERTAIN DOCUMENTS RELATING TO INVESTMENT S MADE IN CERTAIN PROPERTIES WERE SEIZED WHICH INCLUDED THE FOLLOWING :- (A) DOCUMENT MARKED AS EXHIBIT A/AMCD/15 RELATING T O PURCHASE OF LAND MEASURING 3 ACRES AND 96 CENTS IN SURVEY NO.224-1A AND 224-2 IN ANDHRA PRADESH FROM SHRI KAL INDI SRINIVASA RAJU ON 21.6.2004 FOR A SUM OF RS.3,71,09 0. (B) DOCUMENT MARKED AS EXHIBIT A/AMCD/14 RELATING T O PURCHASE OF A VACANT SITE BEARING NO.3-57 MEASURING 367 SQ.FT. IN PURUSHOTHAPATNAM FROM SHRI M. NANI BABU O N 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 PR OPOSED TO MAKE AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT AND T HE ASSESSEE WAS ITA NO.1405 TO 1408/BANG/2013 PAGE 21 OF 25 ASKED TO OFFER HIS EXPLANATION. IN REPLY, THE ASSE SSEE STATED WITH REGARD TO PURCHASE OF LAND FROM KALINDI SRINIVASA RAJU THAT T HE SAME HAS BEEN ACCOUNTED ON 21.6.2004 UNDER LAND AT BHIMAVARAM I N 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 HA VE NOT PAID THIS AMOUNT TO MY FATHER AND HENCE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. 49. THE AO FOUND THAT ASSESSEE HAD ORIGINALLY FILED A RETURN OF INCOME ON 30.10.2005 AND SCHEDULE OF FIXED ASSETS TO THE S AID RETURN DID NOT REFLECT THE ABOVE TWO ASSETS. THE TOTAL VALUE OF FIXED AS SETS 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 FIXE D ASSETS HAS BEEN DISCLOSED AT RS.64,753,139 WHICH IS AT VARIANCE TO THE DISCLO SURE IN THE ORIGINAL RETURN. THE AO WAS OF THE VIEW THAT THE ENTRIES OR IGINAL 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 LA ND AT BHIMAVARAM WAS NOT INCLUDED IN THE FIXED ASSETS FILED ALONG WI TH ORIGINAL RETURN. ACCORDINGLY THE AO HELD THE BOOKS OF ACCOUNTS RELIE D UPON BY THE ASSESSEE TO BE DEFECTIVE AND TREATED THE PURCHASE O F LAND AT BHIMAVARAM ITA NO.1405 TO 1408/BANG/2013 PAGE 22 OF 25 AS MADE FROM UNDISCLOSED SOURCES AND MADE AN ADDITI ON OF RS.3,71,090 UNDER INCOME FROM OTHER SOURCES. 50. EVEN WITH REGARD TO THE PURCHASE OF SITE AT PUR USHOTHAPATNAM ON 28.1.2005 FOR RS.22,500, THE AO REJECTED THE ASSESS EES CONTENTION THAT SITE WAS PURCHASED FROM HIS FATHER AND NANI BABU WA S 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 SI GNED BY SRI NANI BABU IN HIS CAPACITY AS THE VENDOR AND THE WITNESSE S IN THE DOCUMENT ARE DIFFERENT PERSONS, IN THE ABSENCE OF AN ENGLISH TRA NSLATION 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 BE EN PAID. ACCORDINGLY THE AO HELD THE PURCHASE OF SITE FROM U NDISCLOSED SOURCES AND MADE AN ADDITION OF RS.25,000 UNDER INCOME FROM OTH ER SOURCES. THUS THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN LA ND AND SITE WAS RS.393,590 (3,71,090 + 22,500). 51. BEFORE THE CIT(APPEALS), THE ASSESSEE ARGUED TH AT 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.21 062. COPY OF BANK STATEMENT AND EXTRACT OF CASH BOOK WAS FILED. THE ASSESSEE CONCEDED TO THE ADDITION OF RS.22,500. 52. THE CIT(APPEALS) HELD AS FOLLOWS:- ITA NO.1405 TO 1408/BANG/2013 PAGE 23 OF 25 14.6 I HAVE CAREFULLY VERIFIED THE ASSESSMENT RECO RDS 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 ORIGI NAL BALANCE SHEET. HOWEVER THE SAME IS REFLECTED IN THE RETURN FILED U /S. 153A. OBVIOUSLY, AS FAR AS ORIGINAL RETURN IS CONCERNED T HIS ASSET IS UNDISCLOSED WHICH SURFACED ONLY AFTER THE SEARCH. H OWEVER, AS SEEN FROM THE INCOME STATEMENT, THE VALUE OF THIS A SSET IS NOT DISCLOSED AS PART OF INCOME BUT TAKEN TO BALANCE SH EET. THE APPELLANT COULD NOT EXPLAIN WITH SUBSTANTIATING EVI DENCE 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 O F THE AO AND CONFIRM BOTH THE ADDITIONS. 53. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASS ESSEE IS IN APPEAL BEFORE US RAISING GROUND NO.7 WHICH READS AS FOLLOW S:- 7. THE ADDITIONS MADE BY THE LEARNED ASSESSING OFF ICER AS UNEXPLAINED INVESTMENTS IN LAND AND SITES AMOUNT RS . 3,93,590/- AND AS CONFIRMED BY THE LEARNED CIT(A) IS NOT CORRE CT. B) THE SOURCES OUT OF WHICH INVESTMENTS MADE IN LA NDS AND SITES ARE DULY EXPLAINED AND GENUINE. THERE IS NO U NACCOUNTED / UNEXPLAINED INVESTMENT AT ALL. C) THE EXPLANATION OFFERED AND DETAILS SUBMITTED A ND EVIDENCES AVAILABLE HAVE NOT BEEN APPRECIATED AT AL L BY THE ASSESSING OFFICER AND THE LEARNED CIT(A). D) THE ADDITION IS ADHOC AND PURELY ON IMAGINATION AND SURMISES, WITHOUT PROPERLY CONSIDERING THE EXPLANAT ION AND THE STATEMENT PRODUCED BY THE APPELLANT. E) THE ADDITION OF RS. 3,93,590/.BEING ERRONEOUS O N FACTS AND ON LAW APPLICABLE IS TO BE DELETED. IN ANY CASE AND WITHOUT PREJUDICE, IT IS SUBMITTED THAT THE ADDITION IS DOU BLE ADDITION. ITA NO.1405 TO 1408/BANG/2013 PAGE 24 OF 25 54. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT T HE CIT(APPEALS) HAS CORRECTLY HELD THAT THE ASSET IS NOT REFLECTED IN T HE 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 DISC LOSED 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. 55. GROUND NOS.1, 2, 3 & 4 ARE GENERAL IN NATURE AN D DO NOT REQUIRE ADJUDICATION. GROUND NOS. 6, 8, 9 & 10 ARE NOT PRE SSED BEFORE US AND THEY ARE DISMISSED AS NOT PRESSED. 56. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 57. THUS, ITA NO.1405/BANG/2014 IS ALLOWED FOR STAT ISTICAL PURPOSES AND THE APPEALS IN ITA NOS.1406 TO 1408/BANG/2014 ARE P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2016. SD/- SD/- ( INTURI RAMA RAO ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 20 TH JANUARY, 2016. /D S/ ITA NO.1405 TO 1408/BANG/2013 PAGE 25 OF 25 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.