Sri Santosh Kumar Agarwal, Hyderabad V. Dy.CIT., Central Circle-6, Hyderabad

ITA 1641/HYD/2014

• Counselvise Citation: 164122514 RSA 2014
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Search and seizure
• Section: 50C; 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1639, 1640 & 1641/HYD/2014 ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 SRI SANTOSH KUMAR AGARWAL, HYDERABAD. PAN AFCPA8998J VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE - 6, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD REVENUE BY : SHRI RAJAT MITRA DATE OF HEARING : 02-07-2015 DATE OF PRONOUNCEMENT : 15-07-2015 O R D E R PER SAKTIJIT DEY, J.M.: THESE APPEALS BY THE SAME ASSESSEE ARE DIRECTED AG AINST A COMMON ORDER DATED 20/08/2014 OF LD. CIT(A)-I, HYDE RABAD FOR THE AYS 2006-07 TO 2011-12. HOWEVER, PRESENT APPEALS AR E FOR AYS 2009- 10, 2010-11 AND 2011-12. SINCE ISSUES AND FACTS INV OLVED IN THESE APPEALS ARE MORE OR LESS IDENTICAL, THESE APPEALS W ERE CLUBBED AND HEARD TOGETHER, THEREFORE, WE FIND IT TO CONVENIENT TO DISPOSE OF THESE APPEALS BY WAY OF THIS CONSOLIDATED ORDER. ITA NO. 1639/HYD/2014 FOR AY 2009-10 2. ASSESSEE HAS RAISED SIX GROUNDS. GROUND NOS. 1 & 6 BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SPECIFIC ADJU DICATION. GROUND NOS. 2 & 3 DO NOT PERTAIN TO ANY SPECIFICATION ADDI TION SUSTAINED BY 2 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL LD. CIT(A), THUS, THESE GROUNDS ARE OF MERE ACADEMI C INTEREST, HENCE, ARE NOT REQUIRED TO BE ADJUDICATED UPON. 3. THEREFORE, THE ONLY ISSUE ( AS RAISED IN GROUND NOS. 4 & 5) WHICH SURVIVES FOR CONSIDERATION IS IN RESPECT OF THE DIRECTION OF LD. CIT(A) TO TREAT THE AMOUNT OF RS. 2,42,000 AS CONCE ALED INCOME OF ASSESSEE. 4. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, AS SESSEE AN INDIVIDUAL IS CARRYING HIS PROPRIETARY BUSINESS IN THE NAME AND STYLE OF M/S SHIV SHAKTI TRANSPORT COMPANY. ASSESSEE IS ALSO ONE OF THE DIRECTORS OF M/S MAHESWARI BROTHERS COAL LTD. A SEA RCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED AT THE R ESIDENTIAL PREMISES OF ASSESSEE ON 08/09/10 ALONG WITH OTHERS IN THE GROUP. AS A CONSEQUENCE OF SEARCH AND SEIZURE OPERATION, NOTI CE U/S 153A WAS ISSUED TO ASSESSEE CALLING FOR RETURNS OF INCOME. T HOUGH, ORIGINALLY ASSESSEE HAS FILED RETURN OF INCOME FOR THE IMPUGNE D AY ON 11/09/09 ADMITTING INCOME OF RS. 7,62,839, HOWEVER, IN RESPO NSE TO THE NOTICE U/S 153A, ASSESSEE FILED RETURN OF INCOME ON 14/08/ 12 DECLARING INCOME OF RS. 30,72,169 INCLUDING ADDITIONAL INCOME OFFERED BY ASSESSEE AS A RESULT OF SEARCH. DURING THE ASSESSME NT PROCEEDING, AO NOTICED THAT ASSESSEE HAS SOLD LAND AT TIRUPATHI THROUGH A REGISTERED SALE DEED EXECUTED ON 25/07/08 FOR A CON SIDERATION OF RS. 21,65,000 AND HAS ADOPTED THE SAME FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. HOWEVER, ON EXAMINING THE SALE DEED, IT WAS FOUND BY AO THAT FOR STAMP DUTY PURPOSE, VALUE OF THE LAND H AS BEEN TAKEN AT RS. 24,07,000. AO, THEREFORE, CALLED UPON ASSESSEE TO EXPLAIN WHY THE VALUE ADOPTED BY SRO FOR STAMP DUTY PURPOSE SHO ULD NOT BE CONSIDERED TO BE SALE CONSIDERATION DEEMED TO HAVE BEEN RECEIVED BY ASSESSEE, FOR COMPUTING CAPITAL GAIN IN TERMS WITH SECTION 50C OF THE ACT. THOUGH, ASSESSEE OBJECTED FOR ADOPTING SRO VAL UE FOR COMPUTATION OF CAPITAL GAIN, BUT, AO REJECTING THE OBJECTIONS OF ASSESSEE, TREATED THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY SRO AND THE VALUE AS PER THE SALE DEED AMOUNTING TO RS. 2,42,000 AS 3 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL EXTRA SALE CONSIDERATION RECEIVED BY ASSESSEE AND A SSESSED IT TO CAPITAL GAIN. ACCORDINGLY, HE MADE ADDITION OF RS. 2,42,000. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED APPE AL BEFORE LD. CIT(A). 5. IN COURSE OF HEARING OF APPEAL, IT WAS SUBMITTE D BY ASSESSEE THAT DIFFERENCE BETWEEN THE VALUE ADOPTED BY ASSESS EE AND THAT OF THE SRO BEING MARGINAL, PROVISIONS OF SECTION 50C S HOULD NOT HAVE BEEN APPLIED. IN SUPPORT OF SUCH CONTENTION, ASSESS EE ALSO RELIED UPON A NUMBER OF DECISIONS. LD. CIT(A) AFTER CONSID ERING THE SUBMISSIONS OF ASSESSEE WITH REFERENCE TO THE PROVI SIONS CONTAINED U/S 50C OF THE ACT, OBSERVED THAT COMPUTATION OF CA PITAL GAIN BY AO BY TAKING INTO THE VALUE DETERMINED BY SRO FOR STAM P DUTY PURPOSE WAS CORRECT. HOWEVER, SHE DELETED THE ADDITION BY O BSERVING THAT AS ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL , NO SUCH ADDITION CAN BE MADE IN ASSESSMENT MADE U/S 153A. HAVING HEL D SO, SHE FURTHER DIRECTED AO TO TREAT THE AMOUNT OF RS. 242, 000 AS CONCEALED INCOME OF ASSESSEE AND BRING TO TAX AS PER THE PROV ISIONS OF INCOME- TAX ACT. 6. CHALLENGING THE AFORESAID DIRECTION OF LD. CIT(A ), LD. AR SUBMITTED BEFORE US, THE DIRECTION IS NOT ONLY IRRE LEVANT BUT IS TOTALLY AGAINST STATUTORY PROVISIONS. LD. AR SUBMITTED, LD. CIT(A) HAVING DELETED THE ADDITION COULD NOT HAVE DIRECTED AO AGA IN TO TREAT THE SAME AS CONCEALED INCOME OF ASSESSEE. 7. LD. DR, HOWEVER, RELIED UPON THE ORDER OF LD. CI T(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS ORDERS OF REVENU E AUTHORITIES. AS COULD BE SEEN, THE ISSUE IN DISPUTE IS WHAT SHOULD BE THE SALE CONSIDERATION DEEMED TO HAVE BEEN RECEIVED BY ASSES SEE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THERE IS NO DISPUTE TO THE FACT THAT WHILE ASSESSEE IN REGISTERED SALE DEED HAS SHO WN SALE CONSIDERATION AT RS. 21,65,000, REGISTERING AUTHORI TY HAS VALUED THE 4 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL PROPERTY FOR STAMP DUTY PURPOSE AT RS. 24,07,000. T HEREFORE, THE SALE CONSIDERATION AS PER SECTION 50C, WHICH ASSESS EE COULD BE DEEMED TO HAVE RECEIVED IS THE VALUE ADOPTED BY SRO . IN FACT, NOT ONLY AO ADOPTED THE SAID VALUE FOR COMPUTING CAPITA L GAIN, BUT, LD. CIT(A) HAS ALSO ENDORSED THE VIEW OF AO. HOWEVER, I N SPITE OF HAVING HELD SO, LD. CIT(A) IN HER OWN WISDOM HAS CHOSEN TO DELETE THE ADDITION OF RS. 2,42,000. REVENUE HAS ALSO NOT CHAL LENGED THAT DECISION. THAT BEING THE FACTUAL POSITION, WE FAIL TO UNDERSTAND HOW LD. CIT(A) CAN AGAIN DIRECT AO TO TREAT THE AMOUNT OF R S. 2,42,000 AS CONCEALED INCOME OF ASSESSEE. WE ARE AT LOSS TO UND ERSTAND UNDER WHAT PROVISION OF LAW SUCH AMOUNT CAN BE TREATED AS INCOME OF ASSESSEE WHEN THE ONLY PROVISION UNDER WHICH THE SR O VALUE CAN BE CONSIDERED AS DEEMED SALE CONSIDERATION RECEIVED IS SECTION 50C OF THE ACT. THEREFORE, ONCE, LD. CIT(A) DELETED THE AD DITION MADE BY AO U/S 50C OF THE ACT, UNDER NO OTHER PROVISION SUCH A MOUNT CAN BE ASSESSED. ACCORDINGLY, WE HOLD THAT THE AMOUNT OF R S. 2,42,000 CANNOT BE TREATED AS CONCEALED INCOME OF ASSESSEE. THE GROUNDS RAISED ARE, THEREFORE, ALLOWED. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO. 1640/HYD/2015 FOR AY 2010-11 10. IN THIS APPEAL, ASSESSEE HAS RAISED IN TOTAL SI X GROUNDS. GROUND NOS. 1 & 6 BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. AT THE OUTSET, LD. AR SUBMITTED THAT HE DOES NOT WANT TO PRESS GROUND NO.4, ACCORDINGLY THIS GROUND IS DISMI SSED AS NOT PRESSED. 11. IN GROUND NOS. 2 & 3, ASSESSEE HAS CHALLENGED T HE ADDITION OF RS. 3,35,153 MADE BY AO AND SUSTAINED BY LD. CIT(A) ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. 12. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, D URING THE ASSESSMENT PROCEEDING, AO WHILE VERIFYING THE DETAI LS WAS OF THE VIEW THAT THE AMOUNT SHOWN BY ASSESSEE TOWARDS HOUS EHOLD 5 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL EXPENSES ARE INADEQUATE CONSIDERING THE SOCIAL STAT US OF ASSESSEE, SIZE OF HIS FAMILY, EXPENSES ON EDUCATION OF CHILDR EN AS WELL AS LIFESTYLE. HE, THEREFORE, CALLED UPON ASSESSEE TO S UBMIT A DETAILED NOTE WITH NECESSARY EVIDENCE TO SUBSTANTIATE THE DR AWINGS MADE BY HIM FOR HOUSEHOLD EXPENSES. THOUGH, ASSESSEE FURNIS HED DETAILS EXPLAINING THAT THE DRAWINGS MADE TOWARDS HOUSEHOLD EXPENSES IS SUFFICIENT TO MEET THE EXPENDITURE BUT THE AO WAS N OT CONVINCED WITH THE SAME. HE OBSERVED THAT ASSESSEES DAUGHTER IS P URSUING BDS DEGREE IN DENTAL COLLEGE AT WARDHA, MAHARASHTRA FRO M AY 2008-09 AND ASSESSEES SON IS STUDYING IN SCHOOL. HE STATED THAT ASSESSEES FAMILY CONSISTS OF FIVE MEMBERS. THEREFORE, CONSIDE RING THE AFORESAID FACTS, HOUSEHOLD EXPENDITURE OF RS. 5,04,847 CLAIME D TO HAVE BEEN INCURRED BY ASSESSEE DURING THE AY UNDER CONSIDERAT ION, WHICH COMES TO RS. 42,070 PER MONTH IS NOT ADEQUATE. AO W AS OF THE VIEW THAT CONSIDERING THE SOCIAL STATUS AND OTHER RELEVA NT FACTORS, THE AVERAGE MONTHLY HOUSEHOLD EXPENDITURE OF ASSESSEE W OULD BE RS. 70,000 PER MONTH. ACCORDINGLY, HE ESTIMATED THE HOU SEHOLD EXPENSES OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION AT RS. 8,40,000. RESULTANT DIFFERENCE OF RS. 3,35,153 WAS ADDED TO T HE INCOME OF ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, ASSESSE E PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A) ALSO CONFIRMED THE ADDITION BY AGREEING WITH THE OBSERVATIONS OF AO. 13. LD. AR SUBMITTED BEFORE US, IN COURSE OF ASSESS MENT PROCEEDING ASSESSEE HAS FURNISHED ALL DETAILS REGA RDING HOUSEHOLD EXPENDITURE INCURRED BY ASSESSEE DURING THE YEAR. I T WAS SUBMITTED BY LD AR THAT ASSESSEE IS STAYING IN A SELF OCCUPIED P ROPERTY, THEREFORE, DOES NOT BEAR ANY EXPENDITURE TOWARDS RENT. THAT AP ART, THE EXPENDITURE INCURRED BY ASSESSEE FOR THE EDUCATION OF HIS DAUGHTER IN BDS COURSE DURING THE ASSESSMENT YEAR UNDER CONSIDE RATION WAS ONLY RS. 60,000. SIMILARLY, EXPENDITURE INCURRED TOWARD S EDUCATION OF HIS SON FOR THE IMPUGNED AY WAS RS. 12,000. THEREFORE, IN THE AFORESAID FACTS AND CIRCUMSTANCES, IT CANNOT BE SAID THAT HOU SEHOLD EXPENDITURE 6 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL OF RS. 42,070 PER MONTH SHOWN BY ASSESSEE IS EITHER INSUFFICIENT NOR INADEQUATE. LD. AR SUBMITTED, THERE IS NO MATERIAL BEFORE AO TO COME TO A CONCLUSION THAT PER MONTH HOUSEHOLD EXPENDITUR E OF ASSESSEE IS RS. 70,000. HE, THEREFORE, SUBMITTED THAT ADDITION MADE ON THIS ACCOUNT SHOULD BE DELETED. 14. LD. DR RELIED UPON THE OBSERVATIONS OF AO AND L D. CIT(A). 15. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF REV ENUE AUTHORITIES. ON PERUSAL OF THE ASSESSMENT ORDER AND ORDER OF LD. CIT(A), IT IS APPARENT THAT THE ADDITION MADE ON ACCOUNT OF ALLEG ED LOW DRAWINGS FOR HOUSEHOLD EXPENDITURE IS PURELY ON CONJECTURES AND SURMISES. THERE IS NO MATERIAL BEFORE AO TO SHOW THAT THE MON THLY EXPENDITURE OF RS. 42,070 TOWARDS ASSESSEES HOUSEHOLD NEEDS IS INADEQUATE. WHILE ASSESSEE HAS BROUGHT MATERIAL ON RECORD TO DE MONSTRATE THE ACTUAL EXPENDITURE INCURRED BY ASSESSEE TOWARDS EDU CATION OF HIS CHILDREN AND OTHER HOUSEHOLD ACTIVITIES, AO HAS NO EVIDENCE TO BACK HIS QUANTIFICATION OF MONTHLY EXPENDITURE OF RS. 70 ,000. CONSIDERING THE EXPENDITURE INCURRED BY ASSESSEE ON THE EDUCATI ON OF HIS CHILDREN AS WELL AS THE FACT THAT ASSESSEE IS STAYING IN HIS OWN HOUSE, EXPENDITURE SHOWN BY ASSESSEE TOWARDS HOUSEHOLD EXP ENDITURE, IN OUR VIEW, IS JUST AND REASONABLE. ON THE OTHER HAND , MONTHLY EXPENDITURE OF RS. 70,000 ADOPTED BY AO, IN OUR VIE W, IS HIGH AND EXCESSIVE AND HAS NO NEXUS WITH THE MATERIAL ON REC ORD. IN VIEW OF THE AFORESAID, WE ARE UNABLE TO SUSTAIN THE ADDITIO N OF RS. 3,33,151 MADE BY AO. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE SAME. 16. THE NEXT ISSUE AS RAISED IN GROUND NO. 4 IS WIT H REGARD TO ADDITION OF RS. 26,700 FOR NON PRODUCTION OF FREIGH T BILLS. 17. BRIEFLY THE FACTS ARE DURING THE ASSESSMENT PRO CEEDING, AO WHILE EXAMINING ASSESSEES CLAIM OF EXPENDITURE IN RESPECT OF HIS PROPRIETARY BUSINESS OBSERVED THAT ASSESSEE WAS NOT ABLE TO PRODUCE PROPER BILLS & VOUCHERS FOR EXPENDITURE ON FREIGHT. HE, THEREFORE, 7 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL CALLED UPON ASSESSEE TO SHOW CAUSE WHY THE EXPENDIT URE INCURRED SHOULD NOT BE DISALLOWED. IN RESPONSE TO THE QUERY RAISED BY AO, IT WAS SUBMITTED BY ASSESSEE THAT HE GENERALLY MAINTAI NS PROPER FREIGHT BILLS, HOWEVER, CONSIDERING THE VOLUME OF TRANSACTI ONS SOME BILLS TEND TO BE MISPLACED AND OR LOST. THEREFORE, ALL THE BIL LS RELATING TO THE ENTIRE EXPENDITURE CANNOT BE PRODUCED. AO AFTER VER IFYING THE SUBMISSIONS OF ASSESSEE, DISALLOWED AN AMOUNT OF RS . 26,700 OUT OF THE FREIGHT EXPENDITURE. BEING AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A) ALSO CONFIRMED THE AD DITION MADE BY AO BY OBSERVING THAT ASSESSEE HAS FAILED TO PRODUCE TH E BILLS TO THAT EXTENT. 18. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD. AS COULD BE SEEN, ASSESSEE DURING THE YEAR HAS CLAIMED THE TOTAL EXPENDITURE OF RS. 1,58,41,37 5 ON ACCOUNT OF FREIGHT. WHEREAS, AO HAS DISALLOWED ONLY NEGLIGIBLE AMOUNT OF RS. 26,700 OUT OF THE EXPENDITURE CLAIMED BY ALLEGING T HAT BILLS AND VOUCHERS TO THAT EXTENT WAS NOT PRODUCED BY ASSESSE E. IN OUR VIEW, WHEN AO HAS ACCEPTED ALMOST 99.9% OF THE EXPENDITUR E CLAIMED BY ASSESSEE BY TREATING IT AS GENUINE, THERE IS HARDLY ANY SCOPE TO BELIEVE THAT ASSESSEE WOULD HAVE INFLATED THE EXPEN DITURE TO THE EXTENT OF RS. 26,700 ONLY. THEREFORE, ASSESSEES EX PLANATION THAT CONSIDERING THE NATURE OF EXPENDITURE AND VOLUME OF TRANSACTION SOME OF THE VOUCHERS MIGHT HAVE BEEN LOST IS BELIEVABLE. ACCORDINGLY, WE DELETE THE ADDITION OF RS. 26,700. 19. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 1641/HYD/2014 20. IN THIS APPEAL ALSO, ASSESSEE HAS RAISED SIX GR OUNDS. GROUND NOS. 1 & 6 BEING GENERAL IN NATURE DO NOT REQUIRE A NY SPECIFIC ADJUDICATION. 8 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL 21. GROUND NOS.2 & 3 ARE WITH REGARD TO ADDITION OF AN AMOUNT OF RS. 3,23,500 ON ACCOUNT OF LOW WITHDRAWALS TOWARDS HOUSEHOLD EXPENDITURE. THIS GROUND IS SIMILAR TO GROUND NOS. 2 & 3 OF AY 2010- 11 IN ITA NO. 1640/HYD/2011. THEREFORE, FOLLOWING T HE CONCLUSIONS DRAWN IN THAT YEAR VIDE PARA 15(SUPRA), WE DELETE T HE ADDITION OF RS. 3,23,500 MADE ON THIS COUNT. 22. IN GROUND NO. 4 ASSESSEE HAS CHALLENGED THE DIS ALLOWANCE OF AN AMOUNT OF RS. 4,78,500 OUT OF FREIGHT EXPENDITUR E. THIS GROUND IS SIMILAR TO THE GROUND NO. 4 RAISED IN AY 2010-11 (S UPRA). THOUGH IN THE IMPUGNED AY, THE DISALLOWANCE MADE ON ACCOUNT O F FREIGHT EXPENDITURE IS SUBSTANTIALLY MORE THAN THE EXPENDIT URE DISALLOWED IN AY 2010-11, BUT, CONSIDERING THE VOLUME OF TRANSACT ION AND NATURE OF EXPENDITURE THE DECISION TAKEN IN AY 2010-11 WOULD ALSO APPLY TO THE FACTS OF THE PRESENT CASE. FOLLOWING OUR DECISION T HEREIN VIDE PARA NO. 18, WE DELETE THE ADDITION OF RS. 4,78,500. 23. THEREFORE, THE ISSUE REMAINING FOR CONSIDERATIO N AS RAISED IN GROUND NO. 5 IS WITH REGARD TO ADDITION OF AN AMOUN T OF RS. 43,80,250 ON ACCOUNT OF CASH FOUND DURING THE COURSE OF SEARC H AND SEIZURE OPERATION. 24. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, I N COURSE OF SEARCH AND SEIZURE OPERATION AT THE RESIDENTIAL PREMISES O F ASSESSEE, CASH AMOUNTING TO RS. 44,83,250 WAS FOUND. AS ASSESSEE W AS NOT PRESENT AT HIS RESIDENCE AT THE TIME OF SEARCH, ASSESSEES WIFE WAS CALLED UPON TO EXPLAIN THE SOURCE OF CASH FOUND. HOWEVER, AS STATED IN THE ASSESSMENT ORDER, IN THE STATEMENT RECORDED FROM A SSESSEES WIFE U/S 132(4) ON 08/09/10 SHE FAILED TO PROPERLY EXPLA IN THE SOURCE OF CASH FOUND. SUBSEQUENTLY, ASSESSEE WAS ASKED TO EXP LAIN THE SOURCE OF CASH FOUND AT THE TIME OF SEARCH. IN HIS REPLY, ASSESSEE STATED THAT CASH BELONGS TO M/S MBG GROUP AND THE SAME WAS KEP T IN HIS RESIDENCE FOR SECURITY PURPOSE. DURING THE ASSESSME NT PROCEEDING ALSO ASSESSEE WAS AGAIN CALLED UPON TO EXPLAIN THE SOURCE OF CASH 9 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL FOUND AT HIS RESIDENCE. IN RESPONSE TO THE QUERY RA ISED BY AO, ASSESSEE SUBMITTED A LETTER OF CONFIRMATION FROM M/ S MBG COMMODITIES PVT. LTD. WHEREIN IT WAS STATED THAT OU T OF THE CASH FOUND AT THE RESIDENCE OF ASSESSEE RS. 40 LAKHS BELONG TO THE FIRM M/S MB BROTHERS. IT WAS FURTHER STATED, AS PER THE NORMAL PRACTICE THE FIRM KEEP EXCESS CASH ON HAND AT THE RESIDENTIAL PREMISE S OF THE DIRECTOR. TO SUBSTANTIATE ITS CLAIM, LEDGER EXTRACT OF THE CO MPANY FROM 01/04/2010 TO 31/03/2011 WAS ALSO SUBMITTED BEFORE AO. AO ON PERUSING THE LEDGER EXTRACT FOUND THAT OPENING BALA NCE AS ON 09/09/2010 WAS SHOWN AT RS. 14,26,503 AND AN AMOUNT OF RS. 40 LAKH WAS SHOWN AS PAID TO ASSESSEE AND THE BALANCE WAS S HOWN AS RS. 54,26,503. AO, HOWEVER, DID NOT FIND MERIT IN THE S UBMISSIONS OF ASSESSEE. AO WAS OF THE VIEW IF THE CASH SEIZED FRO M ASSESSEE IN COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED ON 08/09/10 INCLUDED THE CASH OF COMPANY, HOW IS IT POSSIBLE FO R M/S MBG COMMODITIES PVT. LTD. TO PAY THE AMOUNT OF RS. 40 LAKH TO ASSESSEE ON 09/09/10. AS FAR AS THE BALANCE AMOUNT OF RS. 3, 83,250 IS CONCERNED, ASSESSEE CLAIMED THAT IT WAS OUT OF HIS OWN PROPRIETARY CONCERN AND REFLECTED IN HIS BOOKS. AO, HOWEVER, RE JECTING THE EXPLANATION OF ASSESSEE TREATED THE ENTIRE AMOUNT O F CASH SEIZED OF RS. 43,83,500 AS INCOME OF ASSESSEE AND ADDED IT TO THE YEAR UNDER CONSIDERATION. BEING AGGRIEVED OF SUCH ADDITION, AS SESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A) ALSO CONFIRME D THE ADDITION BY OBSERVING AS UNDER: 7.3 THE ASSESSMENT ORDER AND THE SUBMISSIONS OF TH E APPELLANT HAVE BEEN CAREFULLY CONSIDERED. THE CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED. IT IS NOTED FROM THE STATEMENT RECORDED ON 28-12-2010 THAT THE APPELLANT HAS ANSWERED TO THE QUESTION NO.48 T O 50 IN RESPECT OF THE PAYMENTS CLAIMED TO HAVE BEEN MADE BY MAHESWARI BR OTHERS GROUP WHERE LEDGER ACCOUNTS MAINTAINED BY THEM IN THE NA ME OF SANTOSH KUMAR AGARWAL 'PERSONAL' AND SANTOSH KUMAR AGARWAL 'HUF' IN THEIR CONSOLIDATED BOOKS OF ACCOUNT. THE APPELLANT CLAIM ED THAT HE DID NOT HAVE ANY KNOWLEDGE OF THE LEDGER ACCOUNT MAINTAINE D BY MAHESWARI GROUP IN SRI GANESH TALLEY, EVEN THOUGH THE APPELL ANT IS ONE OF THE DIRECTORS OF THE GROUP COMPANIES. HE CLAIMED THAT HE WAS NOT AWARE OF THE LEDGER ACCOUNT MAINTAINED IN HIS NAME BY THE G ROUP COMPANIES. IT IS 10 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL ALSO NOTED THAT IN THE LEDGER ACCOUNT, THE MAHESWA RL BROTHERS GROUP HAS CLAIMED TO HAVE PAID RS.6O LAKHS DURING THE FINANC IAL YEAR 2009-10 AND RS.20 LAKHS DURING THE FINANCIAL YEAR 2010-11 IN C ASH TOWARDS THE APPELLANT'S REMUNERATION. EVEN SRI BIJAY KUMAR MAN DHANI, MANAGING DIRECTOR OF MAHESWARL BROTHERS COAL LTD., WHEN QUE STIONED ABOUT THE CASH PAYMENTS MADE TO SRI SANTOSH KUMAR AGARWAL WH ICH WAS EVIDENT FROM THE SEIZED MATERIAL PAGE NOS.83 TO 87 OF A/MB CL/09 HAS STATED THAT SRI SANTOSH KUMAR AGARWAL WAS PAID IN CASH FOR CHI T PAYMENT ALSO. SRI BIJAY KUMAR MANDHANI HAS CATEGORICALLY STATED IN H IS STATEMENT THAT THE AMOUNTS REFLECTED IN THE LEDGER ACCOUNT WERE DRAWN BY SRI SANTOSH KUMAR AGARWAL IN LIEU OF REMUNERATION FROM MAHESWA RI BROTHERS GROUP. THE APPELLANT'S CONTENTION IS THAT OUT OF CASH FOU ND FROM HIS RESIDENCE OF RS .43,83,250, AN AMOUNT OF RS. 40 LAKHS BELONGS TO MAHESWARI BROTHERS GROUP AND HE OFFERED THE BALANCE AMOUNT O F RS.3,83,250 AS ADDITIONAL INCOME. IF IT IS A REGULAR PRACTICE AS PER THE CONFIRMATION, THERE WERE ONLY 2 ENTRIES, ONE, THE OPENING BALANCE AS O N 1-4-2010 AND THE OTHER AFTER THE CASH FOUND AT SANTOSH KUMAR AGARWA L'S RESIDENCE I.E., ON 9-9-2010, AND THERE WERE NO OTHER ENTRIES BEFORE S EARCH AND AFTER SEARCH. MOREOVER, SRI BIJAY KUMAR MANDHANI DID NOT OWN UP THE CASH ON THE DAY OF SEARCH THAT THE COMPANY'S CASH WAS LYIN G WITH SRI SANTOSH KUMAR AGARWAL. IT IS SURPRISING TO NOTE THAT WHILE APPELLANT IS NOT AWARE OF THE ACCOUNTS MAINTAINED BY THE GROUP COMPANIES IN THEIR BOOKS OF HIS PERSONAL AND HUF ACCOUNT WHICH SHOWS THAT HE IS NO T INVOLVED IN THE DAY-TO-DAY ACTIVITIES OF THE COMPANY, HOW IS IT PO SSIBLE TO ACCEPT THE CONTENTION THAT THE COMPANY HAS KEPT THE MONIES WI TH HIM FOR SAFE CUSTODY. AS CLAIMED BY THE APPELLANT, IF HE HAD GO T CASH BALANCE IN MAHESWARI BROTHERS AND SHIV SHAKTI TRANSPORT COMPA NY OF RS.54,26,503 AND RS..28,81,113 RESPECTIVELY, IT IS NOT UNDERSTOOD WHY HE OFFERED THE CASH OF RS.3,83,2S0J- AS HIS UNDISC LOSED INCOME AND DID NOT CLAIM THAT IT WAS THIS CASH AVAILABLE WITH HI M. THIS ALSO GOES TO PROVE THAT THE CONTENTION OF THE APPELLANT ABOUT R SAO LAKHS IS AN AFTER- THOUGHT AND FABRICATED. RELIANCE IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN SUMATI DAYAL VS CIT 214 ITR 80 WH ERE IT HAS BEEN HELD THAT TEST OF HUMAN PROBABILITY AND CIRCUMSTAN TIAL EVIDENCE HAS TO BE KEPT IN MIND WHILE DECIDING THE GENUINENESS OF TRA NSACTIONS. RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF SOMNATH MAINI VS CIT 306 ITR 414 WH ERE IT HAS BEEN HELD THAT THE GENUINENESS OF TRANSACTION CAN BE REJECTE D EVEN IF THE ASSESSEE BACKS EVIDENCE WHICH IS NOT TRUST WORTHY AND EVEN IF THE DEPARTMENT DOES NOT LEAD ANY EVIDENCE ON SUCH AN ISSUE. THOUG H HE FILED A LEDGER COPY WHICH IS ONLY A SELF-SERVING DOCUMENT, HE HAS NOT ASKED FOR CONFRONTATION OR CONFIRMATION WITH SRI BIJAY KUMAR MANDHANI TO SUPPORT HIS CONTENTION. THE MANAGING DIRECTOR OF THE GROUP COMPANIES HAS CATEGORICALLY STATED THAT THE APPELLANT HAS BEEN P AID HIS REMUNERATION IN CASH, THE AVAILABILITY OF CASH AT THE RESIDENCE OF THE APPELLANT AT THE TIME OF SEARCH CORROBORATES THE STATEMENT OF SRI MANDHA NI. THEREFORE, THE CONTENTION OF THE APPELLANT THAT THE AMOUNT OF RS 40 LAKHS FOUND AT HIS RESIDENCE ACTUALLY BELONGS TO THE MAHESWARI BROTHE RS GROUP CANNOT BE 11 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL ACCEPTED AND THE SAME HAS BEEN RIGHTLY TREATED BY THE ASSESSING OFFICER AS THE UNDISCLOSED INCOME OF THE APPELLANT. 25. LD. AR SUBMITTED BEFORE US, THERE CANNOT BE ANY DISPUTE WITH THE AUTHENTICITY OF THE ASSESSEES CLAIM THAT THE A MOUNT OF RS. 40 LAKHS OUT OF CASH SEIZED BELONG TO M/S MAHESWARI BR OTHERS AS ASSESSEE HAS TAKEN THIS STAND CONSISTENTLY FROM THE TIME OF SEARCH. LD. AR REFERRING TO THE STATEMENT OF ASSESSEE RECOR DED IN COURSE OF POST SEARCH PROCEEDING SUBMITTED THAT ASSESSEE HAS CATEGORICALLY STATED THAT AMOUNT OF RS. 40 LAKH BELONG TO M/S MAH ESWARI BROTHERS AND THE REST OF CASH AMOUNTING TO RS. 3,83,250 BELO NG TO ASSESSEE. LD. AR DRAWING OUR ATTENTION TO THE EXTRACT FROM CA SH BOOK OF M/S MAHESWARI BROTHERS SUBMITTED, AS ON 07/09/10 THERE IS A CLOSING BALANCE OF RS. 61,71,760.33, THEREFORE, THE FIRM WA S HAVING SUFFICIENT BALANCE OUT OF WHICH THE AMOUNT OF RS. 40 LAKH WAS GIVEN TO THE DIRECTOR FOR SAFE CUSTODY. EXPLAINING THE ALLEGATIO N OF AO TO THE EFFECT THAT WHEN THE AMOUNT OF RS. 40 LAKH WAS GIVEN TO AS SESSEE AS PER THE BOOKS OF ACCOUNT OF FIRM ON 09/09/10, HOW COULD IT FORM PART OF SEIZED CASH, LD. AR SUBMITTED BEFORE US, AS PER THE GENERA L PRACTICE NO ENTRY IS MADE IN THE BOOKS OF ACCOUNT OF FIRM WHEN CASH I S GIVEN TO ASSESSEE FOR SAFE CUSTODY AND SIMILARLY, NO ENTRY I S MADE WHEN ASSESSEE RETURNS THE CASH BACK TO THE FIRM ON THE N EXT DAY. IT WAS SUBMITTED, WHEN CASH WAS SEIZED ON 08/09/10 ASSESSE E COULD NOT RETURN THE CASH TO THE FIRM ON 09/09/10, THEREFORE THE FIRM HAS TO RECORD ENTRY IN ITS BOOKS DEBITING THE AMOUNT IN TH E NAME OF ASSESSEE. LD. AR SUBMITTED, EVEN ASSESSEE IS HAVING ENOUGH CASH BALANCE TO THE EXTENT OF RS. 28 LAKH IN THE BOOKS O F HIS PROPRIETARY CONCERN TO EXPLAIN THE REST OF THE AMOUNT OF RS. 3, 43,000. THUS, IT WAS SUBMITTED BY ASSESSEE, WHEN THERE IS SUFFICIENT CASH BALANCE BOTH WITH THE FIRM AS WELL AS WITH THE ASSESSEES P ROPRIETARY CONCERN TO EXPLAIN SEIZED CASH ADDITION MADE IS WITHOUT ANY BASIS. 26. LD. DR, HOWEVER, SUPPORTING THE ORDER OF AO AND LD. CIT(A) SUBMITTED, AS ASSESSEE FAILED TO PRODUCE ANY EVIDEN CE TO ESTABLISH 12 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL THE CLAIM THAT CASH FOUND BELONG TO THE PARTNERSHIP FIRM M/S MAHESWARI BROTHERS, ADDITION IS JUSTIFIED. 27. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. AS COULD BE SEEN, DURING THE POST SEARCH PROCEEDING IN RESPONSE TO SUMMONS ISSUED U/S 131(1), ASSESSEE APPEARED BEFORE THE DEPARTMENTAL AUTHORITIES AND A STATEMENT WAS RECOR DED FROM HIM WHEREIN, WITH REFERENCE TO A SPECIFIC QUESTION, AS SESSEE STATED THAT OUT OF CASH SEIZED OF RS. 43,83,250 AN AMOUNT OF RS . 40 LAKH BELONGS TO MAHESWARI BROTHERS GROUP AND THE BALANCE AMOUNT OF RS. 3,83,250 IS OUT OF ASSESSEES OWN CASH BALANCE. EVEN, IN COU RSE OF ASSESSMENT PROCEEDING, ASSESSEE HAS SUBMITTED A LET TER FROM M/S MBG COMMODITIES PVT. LTD. FORMERLY KNOWN AS M/S MAH ESWARI BROTHERS CONFIRMING THAT THE AMOUNT OF RS. 40 LAKH CASH BELONGING TO THE COMPANY WAS KEPT WITH THE DIRECTOR FOR SECURITY PURPOSES. ON PERUSAL OF THE EXTRACT OF CASH BOOK OF M/S MAHESWAR I BROTHERS, COPIES OF WHICH WERE SUBMITTED BEFORE US, IT APPEARS THAT THE FIRM WAS HAVING CLOSING CASH BALANCE OF RS. 69,71,760.33 ON 07/09/1 0. THEREFORE, ASSESSEES EXPLANATION IF CONSIDERED ALONG WITH AVA ILABILITY OF CASH BALANCE AS PER THE CASH BOOK OF M/S MAHESWARI BROTH ERS AND ALSO THE CONFIRMATION LETTER SUBMITTED BY M/S MBG COMMODITIE S PVT. LTD. APPEARS TO BE CREDIBLE. AS FAR AS THE BALANCE CASH OF RS.3,83,250 IS CONCERNED, ON PERUSAL OF THE CASH BOOK EXTRACT OF S HIVA SHAKTI TRANSPORT, IT IS SEEN THAT THE PROPRIETARY CONCERN IS ALSO HAVING SUFFICIENT CASH BALANCE IN ITS BOOKS. THEREFORE, AS SESSEES EXPLANATION CANNOT BE BRUSHED ASIDE LIGHTLY. MOREOV ER, AS COULD BE SEEN FROM THE ORDER OF LD. CIT(A) IN THE CONCLUDING PART OF HER FINDING SHE HAS OBSERVED THAT MANAGING DIRECTOR OF THE GROU P COMPANY SRI BIJAY KUMAR MANDHANI HAS STATED BEFORE THE DEPARTME NT THAT ASSESSEE HAS BEEN PAID HIS REMUNERATION IN CASH. LD . CIT(A), FURTHER OBSERVED, THE STATEMENT OF SRI MANDHANI CORROBORATE S AVAILABILITY OF CASH AT THE TIME OF SEARCH. THAT BEING THE CASE, C ASH FOUND CANNOT 13 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL BE TREATED AS UNEXPLAINED AS IT IS LINKED TO REMUNE RATION RECEIVED IN CASH. THEREFORE, THERE BEING NO POSITIVE EVIDENCE B ROUGHT ON RECORD BY DEPARTMENT TO CONTROVERT THE CLAIM OF ASSESSEE T HAT CASH FOUND BELONG TO M/S MAHESWARI BROTHERS, WHEREAS, THE CLAI M OF ASSESSEE BEING BACKED BY EVIDENCE, WE ARE OF THE VIEW THAT A DDITION OF RS. 43,83,250 REPRESENTING CASH FOUND AT THE TIME OF SE ARCH IS NOT JUSTIFIED. ACCORDINGLY, WE DELETE THE SAME. 28. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. 29. TO SUM UP ASSESSEES APPEALS IN ITA NOS. 1639, 1640 & 1641/HYD/2014 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 15 TH JULY, 2015 KV COPY TO:- 1) SRI SANTOSH KUMAR AGARWAL, C/O CH. PARTHASARATH Y & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2) DCIT, CENTRAL CIRCLE 6, HYDERABAD 3 CIT(A)-I, HYDERABAD 4) CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR SR.P.S 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER VP 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S. 14 ITA NOS. 1639, 1640 & 1641 /HYD/2014 SANTOSH KUMAR AGARWAL 6. KEPT FOR PRONOUNCEMENT ON SR.P S. 7. FILE SENT TO THE BENCH CLERK SR.P.S. 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER