Sri N Maheswara Rao, Visakhapatnam V. The DCIT, Central Circle-2, Visakhapatnam

ITA 261/VIZ/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50190 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Unexplained investment; Depreciation; Search and seizure; Additional evidence

Judgement Text

ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 261 /VIZAG/20 10 ASSESSMENT YEAR: 2006 - 07 N. MAHESWARA RAO, VIZIANAGARAM VS. DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 2 VISAKHAPATNAM (APPELLANT) PAN NO:ABRPN 9214 R (RESPONDENT) APPELLANT BY: SHRI Y.A. RAO, CA RESPONDENT BY: SHRI R.K. SINGH, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.01.2010 PASSED BY LEARNED CIT(A), VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE RELATED T O THE FOLLOWING ISSUES: I) DISALLOWANCE OF DEPRECIATION RS.25,530/- II) ESTIMATION OF AGRICULTURAL INCOME III) UNEXPLAINED INVESTMENT IN ACQUISITION OF PROPERTY RS.17,50,000/- IV) UNDISCLOSED INCOME ON SALE OF PLOTS - RS.37,30,000 /- 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE REVENUE CARRIED OUT SEARCH & SEIZURE OPERATIONS IN THE RESI DENTIAL PREMISES OF ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 2 OF 11 THE ASSESSEE ALONG WITH HIS GROUP CONCERN M/S R.K. REAL ESTATES & CONSTRUCTIONS ON 06-10-2006. CONSEQUENT THERETO A N OTICE UNDER SECTION 153C OF THE ACT WAS ISSUED TO THE ASSESSEE ON 14-8-2007 REQUESTING HIM TO FILE RETURN OF INCOME FOR THE YEA R UNDER CONSIDERATION. IN RESPONSE THERETO THE ASSESSEE FI LED THE RETURN ON 21.7.2008 DECLARING A TOTAL INCOME OF RS.1,21,08,60 4/-; BESIDES AGRICULTURAL INCOME OF RS.1,62,018/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY DETERMINING THE TOTAL INCOME AT R S.1,39,26,135/- BY MAKING ADDITIONS TOWARDS DEPRECIATION, AGRICULTU RAL INCOME AND UNEXPLAINED INVESTMENT ON PURCHASE OF LAND, I.E. ON FIRST THREE ISSUES REFERRED SUPRA. THE ASSESSEE CARRIED THE MATTER BE FORE THE LEARNED CIT (A) AND THE FIRST APPELLATE AUTHORITY, BESIDES CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER, ALSO ENHAN CED THE INCOME BY MAKING ADDITION OF RS.37,30,000/- RELATING TO UNDIS CLOSED INCOME ON SALE OF PLOTS. AGGRIEVED, THE ASSESSEE IS IN APPEA L BEFORE US. 4. THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF D EPRECIATION CLAIM OF RS.23,513/-. THE ASSESSEE IS THE PROPRIETOR OF A RESTAURANT NAMED MAA GARDEN RESTAURANT AND HE CLAIMED DEPRECIATION O F RS.23,513/- AGAINST THE INCOME FROM THE ABOVE SAID RESTAURANT. SINCE THE ASSESSEE DID NOT PRODUCE BILLS IN SUPPORT OF PURCHA SE OF ASSETS, THE ASSESSING OFFICER DISALLOWED THE SAID DEPRECIATION CLAIM. THE LEARNED CIT(A) ALSO CONFIRMED THE SAID DISALLOWANCE. BEFOR E US THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE HAS CLAIMED DEPRECIATION ONLY ON OPENING BALANCES OF ASSETS AND THERE WAS NO NEW ADDITION TO THE FIXED ASSETS DURING THE YEAR UN DER CONSIDERATION. IN THE ASSESSEES HAND, SIMILAR DISALLOWANCE WAS MA DE IN THE IMMEDIATELY PRECEDING YEAR AND THE TRIBUNAL, VIDE I TS ORDER DATED 10 TH ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 3 OF 11 MARCH, 2010 IN ITA NOS. 511 TO 514/VIZAG/2009, HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEPRECIATIO N. THE LEARNED AUTHORISED REPRESENTATIVE ALSO PLACED A COPY OF THE ABOVE SAID ORDER OF THE TRIBUNAL. WE HAVE GONE THROUGH THE SAID ORDE R AND WE EXTRACT BELOW THE RELEVANT OBSERVATIONS OF THE TRIBUNAL FRO M THE SAID ORDER: 7. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, I FIND THAT UNDISPUTEDLY NO INCRIMINATING MATERIAL DOUBTING THE DEPRECIATION OF CLAIM OF THE ASSESSEE WAS FOUND DURING THE COURSE O F SEARCH. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE H AS BEEN FILING THE RETURNS OF INCOME CLAIMING THE DEPRECIATION THEREIN AND THE SAME WERE PROCESSED UNDER SECTION 143(1) OF THE ACT. ONCE THE CLAIM OF DEPRECIATION WAS ORIGINALLY ACCEPTED BY THE REVENUE IN THE ORIGINAL ASSESSMENT IT CANNOT BE REJECTED WHILE FRAMING THE ASSESSMENT CONSEQUENT OF THE SEARCH, WITHOUT ANY INCRIMINATING MATERIAL WHICH DOUBTS OR DISPUTES THE CLAIM RAISED BY THE ASSESSEES. IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED THE DEPRECIA TION IN HIS ORIGINAL RETURN OF INCOME AND THE SAME WAS ALLOWED BY THE REVENUE AUTHORITIES AND UNDISPUTEDLY DURING THE COURSE OF SEARCH, NO INCRIMINATING MATER IAL DISPUTING THE CLAIM OF DEPRECIATION WAS FOUND. IN T HESE CIRCUMSTANCES, I AM OF THE VIEW THAT REVENUE AUTHORITIES HAS NO JURISDICTION TO DENY THE CLAIM O F DEPRECIATION IN THE ASSESSMENT FRAMED CONSEQUENT TO THE SEARCH. I THEREFORE, SET ASIDE THE ORDER OF THE CIT (A) IN THIS REGARD AND DIRECT THE A.O TO ALLOW THE CLAIM OF THE DEPRECIATION OF THE ASSESSEES. CONSISTENT WITH THE VIEW TAKEN IN EARLIER YEARS, WE ALSO SET ASIDE THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE AND DIRE CT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE DEPRECIATION OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 4 OF 11 5. THE NEXT ISSUE RELATES TO THE ESTIMATION OF AGRI CULTURAL INCOME. AS STATED EARLIER THE ASSESSEE HAD DECLARED AGRICUL TURAL INCOME OF RS.1,62,018/- ON 9 ACRES OF LAND. HOWEVER, THE ASS ESSING OFFICER ACCEPTED THE AGRICULTURAL INCOME TO THE TUNE OF RS. 1,20,000/- AND ACCORDINGLY ASSESSED THE DIFFERENCE OF RS.42,018/- AS UNEXPLAINED INCOME OF THE ASSESSEE. THE LEARNED CIT(A) ALSO CO NFIRMED THE SAID ADDITION. BEFORE US, IT WAS SUBMITTED THAT AN IDEN TICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CA SE IN EARLIER YEARS IN ITA NOS.511 TO 514/VIZAG/2009 CITED (SUPRA). WE HAVE GONE THROUGH THE SAID ORDER OF THE TRIBUNAL AND NOTICE T HAT THE ASSESSEE HAD DECLARED AN AGRICULTURAL INCOME OF RS.1,20,000/ - IN THE ASSESSMENT YEAR 1996-97 AND THE SAME WAS ACCEPTED B Y THE DEPARTMENT. IN THE ASSESSMENT YEAR 2005-06, THE AS SESSEE HAD DECLARED AN AGRICULTURAL INCOME OF RS.1,52,093/-. HENCE, ON A CONSIDERATION OF THE AGRICULTURAL INCOME OF RS.1,20 ,000/- ACCEPTED FOR THE ASSESSMENT YEAR 1996-97, THE TRIBUNAL HELD THAT THE AGRICULTURAL INCOME OF RS.1,52,093/- DECLARED FOR THE ASSESSMENT YEAR 2005-06 IS NOT EXCESSIVE. FOR THE YEAR UNDER CONSIDERATION, TH E ASSESSEE HAS DECLARED AN AGRICULTURAL INCOME OF RS.1,62,018/-. HENCE, ON A CONSIDERATION OF AGRICULTURAL INCOME DECLARED IN TH E EARLIER YEARS, WE ARE OF THE VIEW THAT THE AGRICULTURAL INCOME OF RS. 1,62,018/- DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION I S REASONABLE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LEARNED C IT (A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO ACCEPT THE AGRI CULTURAL INCOME DECLARED BY THE ASSESSEE. 6. THE NEXT ISSUE RELATES TO THE ADDITION OF RS.17. 50 LAKHS RELATING TO THE UNEXPLAINED INVESTMENT IN THE PURCHASE OF A PLOT. THE BACK ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 5 OF 11 GROUND OF MAKING THIS ADDITION AS WELL THE ADDITION OF RS.37.30 LAKHS MADE BY THE LEARNED CIT(A) NEEDS LITTLE ELABORATION . DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDING, A PIECE OF PAPER WITH THE FOLLOWING NOTING WAS FOUND. 19,20,000 RDO 9,60,000 SVN 8,50,000 ----------------- 37,30,000 3200000 2000000 ------------- 120000 17,50,000 THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF THE SE ENTRIES AND THE ASSESSEE GAVE THE FOLLOWING REPLY DURING THE COURSE OF SEARCH. REGARDING THE ENTRY RELATING TO RS.9,60,000/- AND SUBTRACTION OF RS.6,00,000/- FROM THIS AMOUNT, I WI LL FURNISH THE DETAILS LATER. (A) ON THE SAME PAGE ON THE BACK SITE, RS.19,20,000/- REPRESENT THE AMOUNT RECEIVED ON ACCOUNT OF SALE OF RDO SITE. (B) BELOW, THE ENTRY OF RS.9,60,000/- OPPOSITE SVN ALSO REPRESENT THE AMOUNT RECEIVED BY ME BY SALE OF SITE AT RDO OFFICE. THE AMOUNT RS.8,50,000/- ALSO REPRESENT THE AMOUNT I RECEIVED ON ACCOUNT OF SALE OF MY SITE TO R.K. CONSTRUCTIONS. THUS I GO T RS.37,30,000/- IN THE YEAR 2005-06. IN THE SAME TIME RS.17,50,000/- IS THE AMOUNT I HAV E PAID TO SOWMYA NATARAJ FOR PURCHASE OF SITE. THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION IN RESPECT RS.37,30,000/- NOTED IN THE PIECE OF PAPER. WITH REGARD TO THE ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 6 OF 11 AMOUNT OF RS.17,50,000/-, THE ASSESSEE EXPLAINED AS UNDER DURING THE ASSESSMENT PROCEEDINGS. ANS. I GOT TOTAL OF RS.37,30,000/- OUT OF THE SALE OF 3 SITES I.E. (A) 19,20,000/- (B) 9,60,000/- (C) 8,50, 000/- OUT OF THIS AMOUNT RS.17,50,000/- WAS GIVEN TO SOWM YA NATARAJ AS ADVANCE FOR PURCHASE OF SITE AS WELL AS BUILDING. BUT WE COULD NOT COME TO AN AGREEMENT WIT H REGARD TO THE PRICE OF THE BUILDING. HENCE, I HAVE PURCHASED THE SITE ONLY FOR WHICH I HAVE INCURRED A COST OF RS.8,37,500/- ONLY. THE REST OF THE AMOUNT WAS REFUNDED BY THE DOCTOR TO ME. THUS, ACCORDING TO THE ASSESSEE, HE ORIGINALLY ENTE RED INTO AN AGREEMENT WITH A LADY NAMED SMT. SOWMYA NATARAJ FOR PURCHASE OF A SITE AND A BUILDING AND IN PURSUANCE THEREOF, HE PA ID THE SUM OF RS.17.50 LAKHS AS ADVANCE. HOWEVER, THE SAID DEAL WAS ABANDONED AND HE SUBSEQUENTLY PURCHASED ONLY THE SITE FOR A C ONSIDERATION OF RS.8,37,500/-. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ABOVE SAID EXPLANATIONS AND HENCE HE ISSUED A S HOW CAUSE NOTICE ASKING THE ASSESSEE AS TO WHY THE DIFFERENCE OF RS. 9,12,500/- (RS.17.50 LAKHS (-) RS.8.37 LAKHS) AS THE UNEXPLAIN ED INVESTMENT. AFTER RECEIVING THE REPLY FROM THE ASSESSEE, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAD PAID THE CONSIDERATIO N OF RS.8,37,500/- BY WAY OF CHEQUE. HENCE THE ASSESSING OFFICER INFE RRED THAT THE ENTIRE AMOUNT OF RS.17.50 LAKHS REPRESENTS ON MONEY PAID OVER AND ABOVE THE CONSIDERATION OF RS.8,37,500/-. ACCORDIN GLY, THE ASSESSING OFFICER ADDED THE ENTIRE AMOUNT OF RS.17.50 LAKHS I N THE HANDS OF THE ASSESSEE. 6.1 BEFORE THE LEARNED CIT(A), THE ASSESSEE FIL ED AN AFFIDAVIT OBTAINED FROM THE SELLER OF THE SITE, VIZ., SMT. SO WMYA NATARAJ ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 7 OF 11 CONFIRMING THE EXPLANATIONS OF THE ASSESSEE. THE L EARNED CIT(A) HELD THAT THE ASSESSEE SHOULD HAVE PROVED HIS CLAIM BY SOME OTHER EVIDENCE, APART FROM THE AFFIDAVIT OBTAINED FROM TH E SELLER OF THE SITE. ACCORDINGLY, THE FIRST APPELLATE AUTHORITY CONFIRME D THE ADDITION OF RS.17.50 LAKHS MADE BY THE ASSESSING OFFICER. 6.2 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. FIRST OF ALL, THE IMPUGNED ADDITION HAS BEEN MADE ON THE BASIS OF AN ENTRY OF RS.17.50 LAKHS FOUND IN A PIECE OF PAPER. THE ASSE SSEE HAS EXPLAINED THE ABOVE SAID AMOUNT OF RS.17.50 LAKHS AS AN ADVAN CE GIVEN TO A PERSON NAMED SMT. SOWMYA NATARAJ FOR PURCHASE OF A SITE AND A BUILDING. IT WAS FURTHER EXPLAINED THAT THE SAID D EAL WAS ABANDONED LATER AND THE ASSESSEE HAS PURCHASED ONLY THE SITE FOR A CONSIDERATION OF RS.8,37,500/-. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS INITIALLY ISSUED A SHOW CAUSE NOTICE FOR MAKING ADD ITION OF DIFFERENCE AMOUNT OF RS.9,12,500/-. SINCE THE AMOUNT OF RS.8, 37,500/-, BEING THE COST OF SITE WAS GIVEN BY WAY OF CHEQUES, THE A SSESSING OFFICER HAS PRESUMED THAT THE IMPUGNED AMOUNT OF RS.17.50 L AKHS REPRESENTS ON MONEY PAYMENT AND THIS ADVERSE INFERE NCE HAS BEEN DRAWN WITHOUT MAKING ANY FURTHER ENQUIRY. BEFORE T HE LEARNED CIT(A), THE ASSESSEE HAS FILED AN AFFIDAVIT GIVEN B Y THE SELLER OF SITE EXPLAINING THE NATURE OF DEAL BETWEEN THE SELLER AN D THE ASSESSEE. HOWEVER, THE LEARNED CIT(A) HAS ALSO BRUSHED ASIDE THE SAID AFFIDAVIT. 6.3 THERE CANNOT BE ANY DISPUTE THAT, WITHOUT A NY EXPLANATION FROM THE ASSESSEE, NONE COULD HAVE DECIPHERED ANYTH ING ABOUT THE NATURE OF THE ENTRY FOUND IN THE PIECE OF PAPER REF ERRED (SUPRA). IN ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 8 OF 11 THIS KIND OF SITUATION, IN OUR VIEW, IT IS NOT LEGA LLY CORRECT ON THE PART OF TAX AUTHORITIES TO BRUSH ASIDE THE EXPLANATIONS WITHOUT MAKING FURTHER ENQUIRIES OR WITHOUT PROVING THAT THE SAID EXPLANATIONS ARE FALSE. IN THE INSTANT CASE, THE SELLER OF THE SITE WAS NOT AT ALL EXAMINED, DESPITE THE FACT THAT AN AFFIDAVIT GIVEN BY THE SAID SELLER WAS FILED BEFORE THE LEARNED CIT(A). HENCE, IN OU R VIEW, THE ISSUE NEEDS FRESH EXAMINATION AND ACCORDINGLY WE SET ASID E THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME T O THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE I SSUE AFRESH IN ACCORDANCE WITH LAW, BY DULY CONSIDERING THE AFFIDA VIT OF THE SELLER AND ALSO ANY OTHER MATERIAL THAT MAY BE SUBMITTED B Y THE ASSESSEE. 7. THE NEXT ISSUE RELATES TO THE ADDITION OF RS .37.30 LAKHS RELATING TO THE UNEXPLAINED INCOME ON SALE OF SITES. AS STA TED EARLIER, WHILE EXPLAINING THE NOTING ON THE PIECE OF PAPER FOUND D URING THE COURSE OF SEARCH, THE ASSESSEE STATED THAT THE THREE AMOUNTS REPRESENTS MONEY RECEIVED BY HIM ON SALE OF SITE BELONGING TO THE GO VERNMENT OF ANDHRA PRADESH (REFERRED AS RDO). THOUGH THE ASSES SING OFFICER MADE DETAILED ENQUIRIES IN THIS REGARD, HE DID NOT MAKE ANY ADDITION ON THIS ACCOUNT, I.E IT APPEARS THAT HE WAS SATISFI ED WITH THE EXPLANATIONS OF THE ASSESSEE. HOWEVER, THE LEARNED CIT(A) ISSUED THE NOTICE OF ENHANCEMENT TO THE ASSESSEE AND ASKED FOR EXPLANATIONS ON THE AMOUNT OF RS.37.30 LAKHS. THE ASSESSEE STATED BEFORE THE LEARNED CIT(A) THAT THESE TRANSACTIONS ACTUALLY BEL ONG TO A PARTNERSHIP CONCERN NAMED M/S R.K.ASSOCIATES, IN WH ICH THE ASSESSEE WAS ONE OF THE PARTNERS. THE ASSESSEE ALSO EXPLAIN ED THE NATURE OF THE TRANSACTIONS. HOWEVER, THE LEARNED CIT(A) WAS NOT SATISFIED WITH THE SAID EXPLANATIONS. ALTERNATIVELY, THE ASS ESSEE SOUGHT ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 9 OF 11 TELESCOPING OF THE IMPUGNED RECEIPTS AGAINST THE UN DISCLOSED INVESTMENT OF RS.1,18,60,038/- OFFERED BY THE ASSES SEE FOR THE YEAR UNDER CONSIDERATION. THE LEARNED CIT(A) DECLINED T O GIVE THE TELESCOPING BENEFIT SO CLAIMED BY THE ASSESSEE. ACC ORDINGLY, THE LEARNED CIT(A) ADDED THE ENTIRE AMOUNT OF RS.37.30 LAKHS AS THE INCOME OF THE ASSESSEE. 7.1 BEFORE US, THE ASSESSEE HAS FILED CERTAIN A DDITIONAL EVIDENCES, VIZ., THE COPIES OF PARTNERSHIP DEEDS OF TWO PARTNE RSHIP FIRMS NAMED M/S R.K.BUILDERS AND M/S R.K. ASSOCIATES; COPIES OF TWO SALE DEEDS. THE LEARNED A.R SUBMITTED THAT THE IMPUGNED SALE TR ANSACTIONS ACTUALLY BELONG TO THE PARTNERSHIP FIRMS CITED ABOV E AND THE ASSESSEE WAS NOT IN A POSITION TO BRING ALL THE RELEVANT DET AILS BEFORE THE LEARNED CIT(A). ACCORDINGLY, IT WAS PRAYED THAT TH E ADDITIONAL EVIDENCES BE ADMITTED. 7.2 WE NOTICE THAT THE LEARNED CIT(A) HAS MAINL Y TAKEN SUPPORT FROM THE PROVISIONS OF SEC. 132(4A) TO CONCLUDE THA T THE IMPUGNED TRANSACTIONS ACTUALLY BELONG TO THE ASSESSEE. IT I S PERTINENT TO NOTE THAT SEC. 132(4A) MAKES A REBUTTABLE PRESUMPTION AB OUT THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH. BEFOR E THE ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED CIT(A), THE A SSESSEE HAS OFFERED SOME EXPLANATIONS ABOUT THE NATURE OF ENTRIES AGGRE GATING TO RS.37.30 LAKHS AND HAS FILED A COPY OF SALE DEED AL SO BEFORE THE LEARNED CIT(A). NOW BEFORE US, THE ASSESSEE HAS FI LED CERTAIN ADDITIONAL EVIDENCES. IN ESSENCE, THE CONTENTION OF THE ASSESSEE IS THAT THESE ENTRIES ACTUALLY BELONG TO THE PARTNERSH IP FIRMS IN WHICH HE WAS A PARTNER. HOWEVER, ALL THESE CLAIMS REQUIRE VERIFICATION. ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 10 OF 11 7.3 ALTERNATIVELY, THE ASSESSEE CONTENDS THAT T HE IMPUGNED RECEIPTS SHOULD BE TELESCOPED AGAINST THE UNDISCLOS ED INVESTMENT OF RS.1,18,60,038/- OFFERED BY HIM IN HIS RETURN OF IN COME. IT IS NOTICED THAT THE ASSESSEE, ALONG WITH ANOTHER PERSON NAMED SHRI DEVAKI NANDAN JALAN, HAD PURCHASED A LAND FOR A CONSIDERAT ION OF RS.3.00 CRORES. HOWEVER THE ACTUAL CONSIDERATION WAS DISCL OSED AT RS.62,79,925/-. THUS THERE WAS DIFFERENCE OF RS.2,3 7,20,075/- BETWEEN THE ACTUAL CONSIDERATION AND APPARENT CONSI DERATION. ACCORDINGLY THE ASSESSEE OFFERED 50% OF THE DIFFERE NCE AMOUNT, I.E. RS.1,18,60,038/- AS HIS INCOME IN THE RETURN FILED BY HIM. NOW, THE CONTENTION OF THE ASSESSEE IS THAT SALE AMOUNT OF R S.37.30 LAKHS HAS BEEN ALLEGED TO BELONG TO THE ASSESSEE AND THE SAME SHOULD BE TELESCOPED AGAINST THE ADDITIONAL INVESTMENT OF RS. 1.18 CRORES OFFERED BY THE ASSESSEE. WE FIND FORCE IN THE ALTERNATIVE CONTENTION OF THE ASSESSEE. UNDER THE INCOME TAX ACT, EITHER THE SOU RCE OR THE INVESTMENT SHOULD BE BROUGHT TO TAX. IF BOTH THE S OURCE AS WELL AS INVESTMENT IS BROUGHT TO TAX, IT WOULD LEAD TO DOUB LE TAXATION OF THE SAME AMOUNT WHICH IS NOT PERMISSIBLE UNDER THE INCO ME TAX ACT. IN THE INSTANT CASE, THE ASSESSEE HAS OFFERED THE SUM OF RS.1,18,60,038/- AS THE SOURCES OF THE INVESTMENT I N LAND COULD NOT BE PROPERLY EXPLAINABLE. IF THE SALE AMOUNT OF RS. 37.30 LAKHS IS TAKEN AS THE AMOUNT BELONGING TO THE ASSESSEE, THEN THE S AID SOURCE SHOULD BE AVAILABLE WITH THE ASSESSEE FOR MAKING THE ABOVE SAID INVESTMENT OF RS.1.18 CRORES. IN THAT CASE, THERE IS NO REQUI REMENT OF ADDING THE AMOUNT OF RS.37.30 LAKHS SEPARATELY. HENCE WE ARE CONVINCED WITH THE ALTERNATIVE CONTENTION OF THE ASSESSEE. ACCORD INGLY, WE ARE UNABLE TO AGREE WITH THE VIEWS OF LEARNED CIT(A) TH AT THE ABOVE SAID ITA NO 261 OF 2010 N MAHESWARA RAO VIZIANAGARAM PAGE 11 OF 11 SOURCE OF RS.37.30 LAKHS CANNOT BE TELESCOPED WITH THE UNEXPLAINED INVESTMENT. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH MAY, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT M EMBER PVV/SPS VISAKHAPATNAM, DATE:10-05-2011 COPY TO 1 SHRI N. MAHESWARA RAO OF VIZIANAGARAM C/O M/S ROW E & PAL, CHARTERED ACCOUNTANTS, 14-36-1 KRISHNANAGAR, VISAKH APATNAM 2 THE DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE- 2 VISAKHAPATNAM 3 4. THE CIT CENTRAL. HYDERABAD THE CIT(A),VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM