Rajender Kumar Modi, Sec'bad, Secunderabad V. DCIT, Central Circle-5, Hyderabad

ITA 1662/HYD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2775 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M RAVINDRA SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Capital asset; Search and seizure
• Section: 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA L HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1524/HYD/2011 A.Y. 2009-10 ITA NO. 1525/HYD/2011 A.Y. 2007-08 THE DEPUTY CIT, CENTRAL CIRCLE-5, HYDERABAD VS. SRI RAJENDER KUMAR MODI SECUNDERABAD PAN: ACCPA8698J APPELLANT RESPONDENT ITA NO. 1662/HYD/2011 A.Y. 2008-09 ITA NO. 1663/HYD/2011 A.Y. 2009-10 SRI RAJENDER KUMAR MODI SECUNDERABAD PAN: ACCPA8698J VS. THE DEPUTY CIT, CENTRAL CIRCLE-5, HYDERABAD APPELLANT RESPONDENT REVENUE BY: SRI M. RAVINDRA SAI ASSESSEE BY: SRI S. RAMA RAO DATE OF HEARING: 19.03.2013 DATE OF PRONOUNCEMENT: 10.05.2013 O R D E R PER CHANDRA POOJARI, AM: THESE APPEALS BY THE ASSESSEE AS WELL AS BY THE DEPARTMENT FOR ASSESSMENT YEARS 2007-08, 2008-09 AN D 2009-10 ARE DIRECTED AGAINST DIFFERENT ORDERS OF TH E CIT(A)-VII, HYDERABAD. SINCE THE ISSUES INVOLVED I N THESE APPEALS ARE COMMON, THEY ARE CLUBBED TOGETHER, HEAR D TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 2 2. FIRST WE WILL TAKE UP ITA NO. 1525/HYD/11 (DEPT. APPEAL) FOR A.Y. 2007-08. THE REVENUE RAISED THE F OLLOWING GROUNDS: 1) THE LD. CIT(A) ERRED IN FACTS IN ALLOWING THE APPEA L OF THE ASSESSEE. 2) THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ADDITION OF RS. 3,32,000 MADE TOWARDS UNEXPLAINED CASH CREDIT U/S. 68 OF THE IT ACT AS THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS. 3) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE DISALLOWANCE MADE ON ACCOUNT OF SUNDRY CREDITORS AT RS. 10,00,000 AS THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. 4) THE CIT(A) OUGHT TO HAVE UPHELD THE TOTAL DISALLOWANCE OF RS. 13,32,000 AS MADE ON ACCOUNT OF ADVANCES AND SUNDRY CREDITORS AS THE ASSESSEE FAILED TO GIVE ANY EVIDENCE IN SUPPORT OF ITS CLAIM EITHER IN ASSESSMENT OR APPELLATE PROCEEDINGS. 5) THE CIT(A) ERRED IN HOLDING THAT CREDITS AND ADVANCES DISCLOSED U/S. 143(1) ARE NOT AMENABLE FOR VERIFICATION DURING THE COURSE OF PROCEEDINGS U/S. 153A OF THE IT ACT AS THE FACT REMAINS IS THAT THE SAME ARE EXPLAINED BY THE ASSESSEE OR NOT AT ANY STAGE OF VERIFICATION. 3. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION IN THE CASE OF M/S. KRISHNA JEWEL LERY MART AND OTHERS, HYDERABAD ON 5.6.2008. CONSEQUENT THIS SEARCH OPERATION, ASSESSEES RESIDENTIAL PREMISES WERE ALS O SEARCHED. ORIGINALLY THE ASSESSEE FILED A RETURN OF INCOME FO R A.Y. 2007-08 ON 24.10.2007 DECLARING INCOME AT RS. 3,87,240. IN VIEW OF THE SEARCH ACTION, THE NOTICE U/S. 153A WAS ISSUED. TH E ASSESSEE FILED RETURN OF INCOME DECLARING THE SAME INCOME AS DECLARED ON 13.10.2010. HOWEVER, THE ASSESSING OFFICER MADE AD DITION OF RS. 3,32,000 TOWARDS UNEXPLAINED CREDIT U/S. 68 OF THE IT ACT, 1961 AND ALSO RS. 10 LAKHS TOWARDS UNEXPLAINED SUND RY CREDITORS. THUS, THE TOTAL INCOME WAS DETERMINED A T RS. IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 3 17,19,240. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT THESE CREDITS WERE ALREADY DIS CLOSED IN THE ORIGINAL RETURN FILED BY THE ASSESSEE ON 24.10.2007 . THERE BEING NO SEIZED/INCRIMINATING MATERIAL SHOWING THAT THESE ARE UNEXPLAINED CREDITS, THE CIT(A) DELETED THE ENTIRE ADDITION. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR RELIED ON THE JUDGEMENT OF JURISDICT IONAL HIGH COURT IN THE CASE OF AHURA HOLDINGS AND OTHERS REPORTED IN 346 ITR 106, FOR THE PROPOSITION THAT THERE NO S EIZED MATERIAL IS REQUIRED TO SUSTAIN THE ADDITION IN THE ASSESSME NT FRAMED U/S. 153A OF THE ACT. 5. ON THE OTHER HAND, THE LEARNED AR RELIED ON THE ORD ER OF THIS TRIBUNAL MUMBAI SPECIAL BENCH IN THE CASE OF A L CARGO GLOBAL LOGISTICS LTD. VS. DCIT (137 ITD 287) (SB) ( MUM) FOR THE PROPOSITION THAT (A) IN ASSESSMENTS THAT ARE ABATED , THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISD ICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; AND (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASS ESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF IN CRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIO NS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COU RSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL A SSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. ACCORDING TO THE AR, THERE SHOULD BE SE IZED MATERIAL ON THE BASIS OF WHICH ADDITION COULD BE MADE IN THE ASSESSMENT FRAMED U/S. 153A OF THE ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THE PRESENT CASE, ASSESSMENT WAS FRA MED U/S. 153A OF THE ACT AFTER SEARCH ACTION U/S. 132 OF THE ACT. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS ORIGINA LLY FILED IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 4 RETURN OF INCOME BEFORE THE DATE OF SEARCH. THE RE TURN WAS PROCESSED U/S. 143(1) OF THE ACT. THE LEARNED AR T AKEN A PLEA BEFORE US THAT THE ASSESSING OFFICER COULD MAKE ADD ITION IN ASSESSMENT FRAMED U/S. 153A OF THE ACT ONLY IF THER E IS SEIZED MATERIAL OR INCRIMINATING MATERIAL TO MAKE ADDITION . WE HAVE GONE THROUGH THE JUDGEMENTS CITED BY BOTH THE PARTI ES. IN OUR OPINION, THE ASSESSMENT WAS MADE CONSEQUENT TO THE SEARCH ACTION U/S. 132 OF THE ACT. WHILE FRAMING ASSESSME NT, THE ASSESSING OFFICER ALSO CAN TAKE INTO ACCOUNT MATERI AL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZURE OP ERATION FOR MAKING ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. THUS, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO PINPOINT THE MATERIAL ON THE BASIS OF WHICH HE IS MAKING ADDITIO N. NEITHER THE ASSESSMENT ORDER NOR THE CIT(A)S ORDER SPECIFY WHAT MATERIAL WAS CONSIDERED TO DETERMINE THE UNDISCLOSE D INCOME FOR MAKING ASSESSMENT U/S. 153A OF THE ACT. HENCE IN THE INTEREST OF JUSTICE WE REMIT THE ENTIRE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO ESTABLISH THE NEXUS BETWEEN TH E MATERIALS AND ADDITION MADE BY THE ASSESSING OFFICER IN THE A SSESSMENT FRAMED U/S. 153A OF THE ACT. THUS, THIS APPEAL (IT A NO. 1525/HYD/2011) OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. NOW WE TAKE UP ITA NO. 1662/HYD/2011 FOR A.Y. 2008- 09 BY THE ASSESSEE. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 82,00,000 TOWARDS DIFFERENCE IN CONSIDERATION FOR PROPERTY, WHEN THE PROPERTY ITSELF IS PURCHASED FOR RS. 60,00,000 AND THE CONSIDERATION PAID IS ONLY RS. 60,00,000. 2) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE LOAN OF RS. 17,000 TAKEN BY THE APPELLANT FROM SMT. SHAKUNTALA AND THE SAME WAS REPAID IN THE SUBSEQUENT YEAR, THE ADDITION CANNOT BE SUSTAINED WHEN THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 5 8. BRIEF FACTS OF THE CASE ARE THAT DURING THE SEARCH ACTION AN AGREEMENT OF SALE DATED 8.10.2007 WAS FOUND. AS PE R THIS AGREEMENT THE ASSESSEE HAS ENTERED INTO AN AGREEMEN T FOR PURCHASE OF HOUSE MEASURING AREA OF 341.77 SQ. YARD S AT R.P. ROAD, SECUNDERABAD FOR A CONSIDERATION OF RS. 1.42 CRORES. DURING THE COURSE OF RECORDING A STATEMENT U/S. 132 (4) OF THE ACT ON 5.6.2008, THE ASSESSEE CONFIRMED THAT HE HAS ENTERED INTO AN AGREEMENT WITH SRI G. BHASKAR RAO WHO GAVE POWER OF ATTORNEY TO KLN CONSTRUCTIONS FOR PURCHASE OF A PLO T FOR A CONSIDERATION OF RS. 1.42 CRORES AND ALSO PAID RS. 50 LAKHS. LATER THE ASSESSEE ALSO PRODUCED A SUPPLEMENTARY AG REEMENT DATED 8.10.2007 AS PER WHICH THE CONSIDERATION IS R S. 60 LAKHS AND STATED THAT SINCE THERE WAS LITIGATION ON ACCOU NT OF VACATING THE TENANTS AND THE SALE CONSIDERATION WAS REDUCED TO RS. 60 LAKHS. HOWEVER, THE ASSESSING OFFICER NOT AGREED W ITH THE CONTENTION OF THE ASSESSEE AND ADDED RS 82 LAKHS AS UNDISCLOSED INCOME. FURTHER HE ADDED RS. 17,000 TO WARDS UNEXPLAINED CREDIT IN THE NAME OF MRS. SAKUNTALA. AGAINST THIS THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT THERE IS NO MERIT IN THE PLEA OF THE ASSESSEE THAT ON THE SAME DATE I.E., 8.10.2007 THE ASSESSEE ENTER ED INTO TWO SALE AGREEMENTS FOR PURCHASE OF SAME PROPERTY ONE F OR RS. 1.42 CRORES AND ANOTHER FOR RS. 60 LAKHS. ACCORDING TO THE CIT(A),THE ASSESSEE MUST HAVE MADE PAYMENT BY CASH TO THE TUNE OF RS 1.42 CRORES AND HE CONFIRMED THE ADDITION OF RS. 82 LAKHS ON THIS COUNT. SIMILARLY, HE HAS CONFIRMED THE UNEXPL AINED CREDIT OF RS 17,000 IN THE NAME OF SMT. SAKUNTALA. AGAINS T THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LEARNED AR SUBMITTED THAT THE SALE DEED FOR THE PROPERTY WAS REGISTERED ON 30.6.2008 VIDE DOCUMENT NO. 1091/2008 AND 1092/2008 BOOK NO. 1 OF SUB-REGISTRAR OFFICE, SECUNDERABAD. THIS PROPERTY WAS OCCUPIED BY THE TE NANTS FOR IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 6 OVER A PERIOD OF A DECADE AND THERE WAS A LITIGATIO N PENDING FOR VACATION OF THE TENANTS AND WAS ALSO ORDER FOR DEMO LITION SERVED BY THE MUNICIPAL AUTHORITIES AND ALSO THERE WAS CIV IL SUIT BEARING NO. IA 748 OF 2009 IN OS NO. 38 OF 2009 FIL ED BY THE ASSESSEE AGAINST GHMC. ON ACCOUNT OF THIS, CONSIDE RATION WAS RENEGOTIATED AND REDUCED TO RS. 60 LAKHS. FURTHER HE SUBMITTED THAT THE VENDOR FAILED TO EVICT THE TENAN TS WITHIN THE STIPULATED PERIOD AS PER THE AGREEMENT DATED 8.10.2 007 AND ONCE AGAIN ON 24.4.2008 A LEGAL NOTICE WAS ISSUED T O THE VENDOR GIVING HIM FURTHER TIME OF THREE MONTHS FOR EVICTIO N OF TENANTS AND TO HAND OVER THE VACANT POSSESSION AND REGISTRA TION OF THE PROPERTY. HE SUBMITTED THAT THE VENDOR FAILED TO E VICT THE TENANTS WITHIN THE SCHEDULED TIME AS STATED IN THE LEGAL NOTICE. A SUPPLEMENTARY AGREEMENT WAS ENTERED ON 30.5.2008 WHICH WAS ALSO FOUND DURING THE SEARCH ACTION MARKED AS A/RKM/RES/PO/1 FOR A CONSIDERATION OF RS. 60 LAKH S. THE ASSESSING OFFICER MADE WRONG ALLEGATION THAT THE AS SESSEE PAID RS. 45 LAKHS BY CHEQUES (TWO CHEQUES ONE FOR RS. 30 LAKHS AND ANOTHER FOR RS. 15 LAKHS). HE SUBMITTED THAT THESE CHEQUES WERE NOT SUBMITTED FOR PAYMENT AND RS. 45 LAKHS WAS PAID BY CASH ONLY WHICH IS REFLECTED IN THE AGREEMENT. 10. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE GONE THROUGH THE COPY OF THE AG REEMENT OF SALE WITH SRI G. BHASKAR RAO PLACED AT PAGES 91-95 OF THE PAPER BOOK. AS PER THIS AGREEMENT THE ASSESSEE IS TO PUR CHASE A PROPERTY BEARING NO. 7-2-601 TO 603 AND 7-2-625 TO 628 MEASURING 341.77 SQ. YARDS SITUATED AT R.P. ROAD, SECUNDERABAD FOR A CONSIDERATION OF RS. 1.42 CRORES . ORIGINALLY, THE SALE CONSIDERATION WAS MENTIONED IN THE SECOND PAGE OF THE AGREEMENT IN TWO PLACES AS RS. 1.42 CRORES. THIS F IGURE WAS ROUNDED OFF AND OVERWRITTEN AS RS. 60 LAKHS IN TWO PLACES IN THE IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 7 SECOND PAGE. THE AREA OF THE LAND ALSO WAS OVERWRIT TEN AFTER CUTTING THE TYPED FIGURE AS 40.5 SQUARE YARDS. IN VIEW OF THIS OVERWRITING OF THE AGREEMENT, THE ASSESSING OFFICER CONSTRUED THAT THE CONSIDERATION EXCHANGED BETWEEN THE PARTIE S IS RS. 1.42 CRORES INSTEAD OF RS. 60 LAKHS. IT IS NEEDLES S TO SAY THAT THERE IS ONLY ONE AGREEMENT AND IN THAT AGREEMENT, THE CONSIDERATION WAS OVERWRITTEN AND THERE ARE NO TWO SEPARATE AGREEMENTS OF THIS DATE. HOWEVER, THE 2 SALE DEEDS ENTERED FOR PURCHASE OF THE PROPERTY SHOWS AS FOLLOWS: SL. NO. DATE OF SALE DEED DESCRIPTION OF PROPERTY CONSIDERATION (RS.) 1. 30.6.2008 7-2-601 AND 603 MEASURING 322 SQ. YARDS WITH BUILT UP AREA OF 648 SQ. FT., LAKKAR BASTI, ASHOK NAGAR, SECUNDERABAD DOCUMENT NO. 1091/2008 40,00,000 2. 30.6.2008 7-2-602, 625-628, LAKKAR BASTI, SECUNDERABAD 19.36 SQ. YARDS ALONG WITH BUILT UP AREA OF 730 SQ. YARDS DOCUMENT NO. 1092/2008 20,00,000 12. AFTER GOING THROUGH THE ABOVE SALE DEED, WE ARE OF THE OPINION THAT THE SALE CONSIDERATION WHICH WAS ACCEP TED BY THE REGISTRATION AUTHORITY AND THERE WAS NO UNDERVALUAT ION OF THE STAMP DUTY BY REGISTRATION AUTHORITY. HOWEVER, THE SALE AGREEMENT WHICH WAS FOUND DURING THE COURSE OF SEAR CH WAS OVERWRITTEN AS RS. 60 LAKHS IN THE PLACE OF RS. 1.4 2 CRORES AND THIS RS. 60 LAKHS TALLIED WITH THE SALE DEED VALUED AT RS. 60 LAKHS. EVEN AT THE TIME OF SEARCH ACTION, IN THE 1 32(4) STATEMENT RECORDED ON 30.6.2008, THE ASSESSEE CATEG ORICALLY STATED AS FOLLOWS: Q. 3. I AM SHOWING YOU THE ANNEXURE A/RKM/RES/PO/ 01 DATED 20-06-2008 BEING THE SUPPLEMENTARY AGREEMENT DEED DATED 30-05-2008 WHEREIN THE CONSIDERATION FOR THE PROPERTY BEARING HOUSE NO. 7- 2-601 TO 603 AND 7-2-625 TO 628, TAKKAR BASTI, SECUNDERABAD INTENDED TO BE PURCHASED FROM M/S. KLNR CONSTRUCTIONS IS SHOWN AT RS. 60 LAKHS. PLEASE EXPLAIN THE VARIATION BETWEEN THE SALE PRICE IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 8 AS PER THE SALE AGREEMENT DATED 08-10-2007 AND THE SUPPLEMENTARY AGREEMENT DATED 30-05-2008. ANS. THE ABOVE PROPERTY WAS INTENDED TO BE PURCHASE D BY ME FOR A CONSIDERATION OF RS. 1.42 CRORES. THE SAID PROPERTY WAS TO BE HANDED OVER TO ME AS A FREE - HOLD PROPERTY AND IN A VACANT AND PEACEFUL POSSESSION (FREE FROM ALL ENCUMBRANCES). SINCE THERE ARE FOUR TO FIVE TENANTS OCCUPYING THE SAID PREMISES FOR MORE THAN A DECADE WHO ARE REFUSING TO VACATE. I HAVE ENTERED INTO A SUPPLEMENTARY AGREEMENT DATED 30-05-2008 WHEREIN THE SALE PRICE WAS NEGOTIATED AT RS. 60 LAKHS. AS PER THE SUPPLEMENTARY AGREEMENT, THE TENANTS ARE TO BE VACATED BY ME AT MY COST, TO FIGHT THE COURT LITIGATION ALREADY RAISED BY TENANTS ON THE PREVIOU S OWNER (I.E. MR. GUNDA BHASKAR RAO & M/S. KLNR CONSTRUCTIONS) AND TO GET THE CONVERSION OF THE PROPERTY INTO FREE HOLD ARE ALL THE FINANCIAL BURDE NS WHICH I TOOK OVER FROM THE PREVIOUS OWNER. HENCE, THE SALE PRICE WAS REDUCED ACCORDINGLY TO RS. 60 LAKHS THROUGH THE SUPPLEMENTARY AGREEMENT. Q. 4 I AM SHOWING YOU THE ANNEXURE A/RKM/RES/01 DATED 06-06-2008. PLEASE GIVE THE FULL DETAILS OF T HE PAGES NUMBERED 84 TO 89 OF THE ABOVE ANNEXURE? ANS. THE PAGES NUMBERED 84 TO 89 OF THE ABOVE ANNEXURE ARE THE COPIES OF THE AGREEMENT OF SALE OF PROPERTY BEARING NO. 1-8-436/B, CHIKKADPALLY, HYDERABAD AND THE COPY OF THE RECEIPT OF THE SALE CONSIDERATION. Q. 5 I AM SHOWING YOU THE PAGES NUMBERED 84 AND 87 OF THE A/RKM/RES/01 DATED 06-06-2008. PLEASE GO THROUGH THE SAME AND EXPLAIN THE CORRECTIONS MADE THEREIN. ANS. THE ABOVE NUMBERED PAGES ARE DRAFT AGREEMENT O F SALE ENTERED BY ME WITH SRI C. HANUMANTH RAO AND SMT. C. SHARADA. SINCE THERE WAS A MISTAKE IN PARAGRAPH NO. 1 OF PAGE NO. 3 OF THE AGREEMENT OF SALE AND NUMBERED AS 87 AS PER YOUR ANNEXURE AND ALSO AT PAGE NO. 84 OF YOUR ANNEXURE AS THE FIGURE HAS INADVERTENTLY BEEN TYPED WRONGLY BY THE ADVOCATE WHICH WAS CORRECTED IN THE ORIGINAL DEED BY ME AND IN THE XEROX COPY THE SAME CORRECTIONS WERE CARRIED OUT. IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 9 Q. 6 WHERE IS THE ORIGINAL COPY OF THE ABOVE AGREEM ENT? ANS. THE ORIGINAL COPIES OF THE ABOVE AGREEMENT DU LY CORRECTED BY ME ARE WITH THE PURCHASER. Q. 7 I AM SHOWING YOU THE PAGE NOS. 142 & 143 OF TH E ANNEXURE A/RKM/RES/01, DATED 06-06-2008. PLEASE GIVE THE DETAILS OF THE SAME. ANS. PAGE NOS. 142 & 143 OF THE ABOVE ANNEXURE ARE THE DRAFT SALE DEED COPIES OF PROPERTY BEARING NO. 7-2- 601 TO 603, TAKKARA BASTI, R.P. ROAD, SECUNDERABAD. AS THESE ARE THE DRAFT COPIES PREPARED BY THE ADVOCATE, I HAVE CANCELLED THE SAME SINCE A SUPPLEMENTARY AGREEMENT DATED 30.05.2008 WAS ENTERED BY ME WITH THE SELLER I.E., M/S. KLNR CONSTRUCTIONS. AS SUCH THE DRAFT SALE DEED COPIES HAVE GOT NO SIGNIFICANCE DUE TO WHICH I CANCELLED. FURTHER, THE COPIES ARE UNSIGNED. 13. CONSIDERING THE ABOVE EXPLANATION OF THE ASSESSEE A ND SALE DEED, WE ARE OF THE OPINION THAT THERE IS NO P OSITIVE MATERIAL TO SUGGEST THAT THE CONSIDERATION PASSED B ETWEEN THE PARTIES IS AT RS. 1.42 CRORES. FOR THIS PROPOSITIO N, WE PLACE RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE C ASE OF K.P. VERGHESE VS. CIT (131 ITR 597) WHEREIN THE APEX COU RT HELD AS UNDER: 'SECTION 52(2) OF THE INCOME-TAX ACT, 1961, CAN BE INVOKED ONLY WHERE THE CONSIDERATION FOR THE TRANSF ER OF A CAPITAL ASSET HAS BEEN UNDERSTATED BY THE ASSESSEE, OR, IN OTHER WORDS, THE FULL VALUE OF THE CONSIDERATION IN RESPECT OF THE TRANSFER IS SHOWN A T A LESSER FIGURE THAN THAT ACTUALLY RECEIVED BY THE ASSESSEE, AND THE BURDEN OF PROVING UNDERSTATEMENT OR CONCEALMENT IS ON THE REVENUE; AND THE SUB- SECTION HAS NO APPLICATION IN THE CASE OF A BONA FI DE TRANSACTION WHERE THE CONSIDERATION RECEIVED BY THE ASSESSEE HAS BEEN CORRECTLY DECLARED. IN VIEW OF TH E FINDING OF FACT RECORDED BY THE TRIBUNAL, THERE WAS NO QUESTION OF INVOKING SECTION 52(2) OF THE ACT. THE HIGH COURT WAS, THEREFORE, RIGHT IN REFUSING TO CAL L FOR THE REFERENCE FROM THE TRIBUNAL AND REJECTING THE APPLICATION UNDER SECTION 256(2) OF THE ACT, WE ARE INCLINED TO ALLOW THE GROUNDS TAKEN BY THE ASSESSEE ' IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 10 14. WE ALSO PLACE RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT VS. P.V. KALYANASUNDARAM ( 294 ITR 49) WHEREIN THE APEX COURT HELD THAT VAGUE STATEMENT OF VENDOR BY THE THIRD PARTY CANNOT BE RELIED ON. RESPECTFULLY FOLLOWING THE ABOVE JUDGEMENTS OF THE APEX COURT, WE DELETE THE A DDITION. 15. THE NEXT ADDITION IS WITH REGARD TO RS. 17,000 RECE IVED FROM SMT. SAKUNTALA. AS HELD IN ITA NO. 1525/HYD/2 011, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER ON SIMILAR DIRECTION FOR FRESH CONSIDERATION. ITA NO. 1662/HYD/ 2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1663/HYD/2011 (BY ASSESSEE) AND ITA NO. 1524/HYD/2011 (BY REVENUE): 16. THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 4.7.2011. 17. IN THIS CASE CONSEQUENT TO SEARCH ACTION, CASH AMOU NT OF RS. 1,55,26,500 WAS FOUND AT THE RESIDENTIAL PREMIS ES OF THE ASSESSEE. THE ASSESSEE WHILE DEPOSING U/S. 132(4) OF THE ACT ADMITTED AN AMOUNT OF RS. 50 LAKHS AS UNEXPLAINED C ASH AND THE BALANCE WAS DISCLOSED. HENCE, THE ASSESSING OF FICER TREATED RS 105 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER THE ASSESSEE WAS FOUND WITH GOLD JEWELLERY VALUED A T ABOUT RS. 20,22,600 AND SILVER ARTICLES AT RS. 2,10,000. THE ASSESSEE OFFERED RS. 5 LAKHS INCOME FOR A.Y. 2008-09 AND RS. 10 LAKHS INCOME FOR A.Y. 2009-10. THE ASSESSING OFFICER ADD ED BALANCE AMOUNT OF RS. 7,32,600 FOR A.Y. 2009-10 WHICH IS UN DER APPEAL BEFORE US. 18. ON APPEAL, THE CIT(A) OBSERVED WITH REGARD TO UNEXPLAINED CASH THAT THE ASSESSEE HAS EXPLAINED RS . 1 CRORE BY OFFERING RS. 50 LAKHS AS UNDISCLOSED INCOME IN A.Y. 2008-09 AND RS. 50 LAKHS IN A.Y. 2009-10 AND THE BALANCE AM OUNT OF IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 11 RS. 55 LAKHS HAS TO BE VERIFIED WHETHER ENTRY RELAT ING TO THIS AMOUNT OF CASH APPEARING IN THE BOOKS OF ACCOUNT OR NOT. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO V ERIFY THE BOOKS OF ACCOUNT OF THE ASSESSEE. REGARDING JEWELLERY, H E OBSERVED THAT JEWELLERY WORTH RS. 4 LAKHS IS BELONGING TO AS SESSEES WIFE AND BALANCE RS. 3,32,600 IS TO BE TREATED AS INCOME OF THE ASSESSEE. AGAINST THE ABOVE DIRECTION, THE REVENUE IS IN APPEAL BEFORE US. AGAINST SUSTAINING THE ABOVE ADDITION, THE ASSESSEE IS IN APPEAL BEFORE US. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE THE ASSESSEE OFFERED INCOM E TOWARDS CASH FOUND DURING THE COURSE OF SEARCH ACTION AT RS . 50 LAKHS FOR A.Y. 2008-09 AND RS. 50 LAKHS FOR A.Y. 2009-10. BEING SO, THERE CANNOT BE FURTHER ADDITION TOWARDS THIS RS. 1 00 LAKHS CASH FOUND DURING THE COURSE OF SEARCH. REGARDING BALANCE OF RS. 55 LAKHS, THE CIT(A) GIVEN A DIRECTION TO THE A SSESSING OFFICER TO VERIFY WHETHER THERE IS SUFFICIENT BALAN CE AVAILABLE TO THE ASSESSEE SO AS TO EXPLAIN THE BALANCE RS. 55 LA KHS. IF THERE IS SUFFICIENT CLOSING BALANCE AS ON THE DATE OF SEA RCH IN THE BOOKS OF ACCOUNT, DUE CREDIT IS TO BE GIVEN TOWARDS THE AVAILABLE CASH BALANCE IN THE BOOKS OF ACCOUNT. 20. THE LEARNED AR DREW OUR ATTENTION TO THE COPIES BOO KS OF ACCOUNT (PLACED AT PAGE NOS. 72 TO 75 OF THE PAPER BOOK) WHICH WAS PRODUCED BEFORE THE LOWER AUTHORITIES. CONSIDE RING THE BOOKS OF ACCOUNT OF THE ASSESSEE, AS THERE IS SUFFI CIENT CASH BALANCE IN BOOKS OF ACCOUNT OF THE ASSESSEE, IN OUR OPINION, DUE CREDIT HAS TO BE GIVEN. THE CONTENTION OF DEPARTME NT IS THAT AS ON THE DATE OF SEARCH BOOKS OF ACCOUNT ARE INCOMPLE TE. AS SUCH NO CREDIT COULD BE GIVEN TOWARDS THE AVAILABLE CASH BALANCE IN THE BOOKS OF ACCOUNT. HOWEVER, WE FIND THAT THERE IS NO SUCH FINDINGS IN THE ORDERS OF THE LOWER AUTHORITIES THA T BOOKS OF ACCOUNT ARE NOT PLACED BEFORE THEM FOR EXAMINATION. AS SUCH IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 12 WE ARE OF THE OPINION THAT DUE CREDIT IS TO BE GIVE N TO THE AVAILABLE CASH BALANCE IN THE BOOKS OF ACCOUNT. AC CORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. THE GROUND RAIS ED BY THE REVENUE IS DISMISSED. 21. COMING TO THE ADDITION TOWARDS VALUE OF THE GOLD JE WELLERY, IT IS EXPLAINED THAT THIS JEWELLERY BELONGS TO THE FAMILY MEMBERS OF THE ASSESSEE COMPRISING THE ASSESSEE HIMSELF, AS SESSEES WIFE AND UNMARRIED SON AND OTHER FAMILY MEMBERS. IT WAS ALSO STATED THAT THE JEWELLERY WORTH RS. 4 LAKHS IS BELO NGING TO ASSESSEES WIFE AND BALANCE GOLD JEWELLERY WORTH RS . 3,32,600 IS BELONGING TO THE OTHER MEMBERS OF THE FAMILY. OUT OF THE TOTAL VALUE OF GOLD AND SILVER ARTICLES AT RS 20,22,600, THE ASSESSEE ALREADY OFFERED RS. 15 LAKHS AS UNDISCLOSED INCOME IN TWO ASSESSMENT YEARS I.E., A.Y. 2008-09 (RS. 5 LAKHS) A ND A.Y. 2009- 10 (RS. 10 LAKHS) AND THE BALANCE REMAINING IS ONLY A SMALL PORTION. CONSIDERING THE STATUS OF THE ASSESSEE AN D HIS FAMILY MEMBERS AND PLACING RELIANCE ON THE CBDT CIRCULAR D ATED 11.5.1994 BEARING NO. 1916, WE ARE INCLINED TO HOLD THAT FURTHER ADDITION IS NOT WARRANTED AS THE ASSESSEE EXPLANATI ON IS REASONABLE AND BONA-FIDE. ACCORDINGLY, THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. THE GROUND RAIS ED BY THE ASSESSEE IS ALLOWED AND THE GROUND RAISED BY THE RE VENUE IS DISMISSED IN THE RESPECTIVE APPEALS. IN THE RESULT , ASSESSEES APPEAL IN ITA NO. 1663/HYD/2011 IS ALLOWED AND REVE NUE APPEAL IN ITA NO. 1524/HYD/2011 IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 10 TH MAY, 2013. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH MAY, 2013 TPRAO IT A NO. 1524/HYD/2011 SRI RAJENDER KUMAR MODI =================== 13 COPY FORWARDED TO: 1. THE DEPUTY CIT, CENTRAL CIRCLE - 5, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. SRI RAJENDER KUMAR MODI, C/O. M/S. SHARMA & SASTRY, CHARTERED ACCOUNTANTS, NO. 5-3-318/1, JEERA, MG ROAD, SECUNDERABAD-500 003. 3. THE CIT(A) - VII, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD 5. THE DR 'A' BENCH, ITAT, HYDERABAD.