IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.374/HYD/14 : ASSESSMENT YEAR 2003 - 04 ITA NO.375/HYD/14 : ASSESSMENT YEAR 2004 - 05 DR. K. RAMACHANDRA, TIR U PATI ( PAN - AENPK 1476 M) V/S. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE, TIRUPATI (APPELLANT) (RESPONDENT) ITA NO.376/HYD/14 : ASSESSMENT YEAR 2004 - 05 ITA NO.377/HYD/14 : ASSESSMENT YEAR 2006 - 07 ITA NO.378/HYD/14 : ASSESSMENT YEAR 2009 - 10 DR.B.MANOHA R AMMA, TIRUPATI ( PAN - ABLPB 6682 M) V/S. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE, TIRUPATI (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI K.A.SAI PRASAD RESPONDENT BY : SHRI P.SOMASEKHAR REDDY DATE OF HEARING 21 .0 7 .2014 DATE OF PRONOUNCEMENT 16.09.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THE RE ARE FIVE APPEALS IN THIS BUNCH, WHICH ARE FILED BY TWO ASSESSEES, WHO ARE DOCTORS BY PROFESSION AND RELATED TO EACH OTHER AS SPOUSES. THEY ARE DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR , BOTH DATED 21.11.2013 F OR ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 IN THE CASES OF DR.RAMACHANDRA ; AND COMMON CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR, DATED 31.12.2013 IN THE CASES OF DR.B.MANOHARAMMA INSOFAR AS IT RELATED TO ASSESSMENT YEARS 2004 - 05, 2 0 0 6 - 07 AND 2009 - 10 . SINCE COMMON ISSUE S ARE ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 2 INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS OF THE CASE IN BRIEF COMMON IN ALL THESE APPEALS ARE THAT THAT THE ASSESSEES HEREIN, AS NOTE D ABOVE, ARE PRACTICING DOCTORS BY PROFESSION AND ARE REL A TED TO EACH OTH E R AS HUSBAND AN D WIFE. A SEARCH AND SEIZURE OPERATION UNDER S.132(1) OF THE INCOME TAX ACT WAS CONDU C TED AT THE RESIDENCE OF THE ASSESSEES ON 12.2.2009. SUB S EQUENTLY, NOTICE UNDER S .153A WAS ISSUED ON 16.9.2009, CALLING FOR RETURNS FOR THE ASSESSMENT YEARS 2003 - 04 TO 2008 - 09. IN RESPONSE THERETO AND SUBSEQUENT NOTICES , ASSESSEES FILED THEIR RETURNS , INTER ALIA FOR THE Y E ARS UNDER APPEAL ON 25.10.2010, ADMITTING INCOME UNDER VARIOUS H EADS, INCLUDING AGRICULTURAL INCOME. AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENTS MADE , VIDE ORDERS DATED 29.12.2010 UNDER S.143(3) READ WITH S.153A OF THE ACT, FOR THE YEARS UNDER APPEAL, WHICH WERE SUSTAINED BY THE CIT(A) BY THE IMPUGNED ORDERS, ASSESSEES PREFERRED THE PRESENT APPEALS, WHICH WE SHALL DEAL WITH IN SERIATIM. APPEALS OF DR.K.RAMACHANDRA: ITA NO.374/HYD/14 : ASSESSMENT YEAR 2003 - 04 3 . ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO AN ADDITION, BY WAY OF UNEXPLAINED CREDIT, OF RS.3,00,000 MADE BY THE ASSESSING OFFICER UNDER S.68 OF THE ACT , WHICH HAS BEEN SUSTAINED BY THE CIT(A) . 4 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED FROM THE CAPITAL ACCOUNT AND THE BALANCE SHEET THAT YEAR AFT E R Y E AR, HUGE AMOUNTS O F GIFTS AND UN S E C URED LOANS ARE CREDITED AND THE SAME HAS BEEN EXPLAINED AS THE SOUCES FOR INVESTMENT OF SEVERAL PROP E RTIES PURCHA S ED BY THE ASSESSEE. TAKING NOTE OF THE TOTAL ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 3 INCOME AND THE PERSON AL DRAWINGS RETURNED BY TH E ASSESSEE PRIOR TO THE DATE O F SEARCH AND SEIZURE OP ER ATION S , AND ALSO SEVERAL CASH CREDITS IN TH E FORM OF GIFTS AND UN S EC U RED LOANS RECEIVED AND INTRODUCED IN THE BOOKS OF ACCOU N T YEAR AFTER YEAR, THE ASSESSING OFFICER OBSERVED THAT MAJORITY O F THE L OANS AND GIFTS ARE ALLEGEDLY RE C EIVED FROM N RIS, AND THE GIFTS AND LOA N S ARE RE CEIVED AND CREDITED IN TH E BOOKS O F AC C OUNT AND BALANCE SHEET OF THE ASSESSEE, DID NO T A PPEAR TO B E GENUINE ON ACCOUNT OF SEVERAL REASONS. AFTER ANALYSIN G THE EVIDENCE AND THE SEIZED MATERIAL , AND THE EXPLANATION OF THE ASSESSEE IN RESPONSE TO THE SHOW - CAUSE NOTICE ISSU E D PROPOSING ADDITIONS, TREATING THE LOANS AND GIFTS IN QUESTION AS UNEXPLAINED, IN TERMS OF S.68 OF THE ACT, THE ASSESSING OFFICER MADE AN AGGREGATE ADDITION OF RS.7,15,000, WHICH COMPRISED OF THE FOLLOWING ITEMS - SL. NO. NATU R E OF TRANSACTION DONOR AMOUNT (RS.) 1 GIFT SHRI K.R A DHAKARISHNA 1,00,000 2 GIFT DR.K.VEKATARATNAM 15,000 3 LOAN SHRIS.CHANGAL RAJU(HUF) 3,00,000 4. LOAN SMT. SUJATHA 3,00,000 TOTAL 7,15,000 5 . ON APPEAL, THE CIT( A), SUSTAINED THE ADDITION MADE ONLY IN RESPECT OF LOAN OF RS.3,00,000 CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM SMT.SUJATHA. 6 . AGGRIEVED BY THE ABOVE ADDITION SUSTAINED BY THE CIT(A), ASSESSEE IS IN SECOND APPEAL BEFORE US. 7 . WE HAVE CONSI DERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 4 RECORD. TO SUBSTANTIATE THE CLAIM OF RECEIPT OF LOAN OF RS. 3,00,000 FROM SMT.K.SUJATHA, ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER, A CONFI RMATION LETTER SIGNED BY HER HUSBAND, SHRI K .RAMESH . IT IS STATED THEREIN THAT SMT.SUJATHA WAS ASSESSED TO TAX AND HER PAN WAS ACZPK 5415 K. IN ORDER TO VERIFY THE CREDITWORTHINESS AND GENUINENESS O F THE TRANSAC T ION, ASSESSEES AUTHORISED REPRESENTATIVE WAS ASKED TO SUBMIT THE BANK ACCOUNT COPIES, COPIES OF RETURN OF INCOME ETC. O N EXAMINATION OF RETURN OF IN C OM E OF SMT. K. SUJATHA, IT WAS FOUND THAT SHE HAS DISCLOSED A SUM OF R S .95,444 AS TOTAL IN C OM E FOR THE ASSESSMENT YEAR 2003 - 04. HENCE, IT WAS OBSER VED THAT SHE COULD NO T HAVE CREDIT - WORTHIN E SS TO MAKE SUCH A HUGE AMOUNT O F LOAN OF RS.3 LAKH TO THE ASSESSEE. IT WAS ALSO NO T I C ED FORM THE BANK ACCOUNT OF SMT.SUJATHA (STATE BANK OF INDIA, PUTTOOR BRANCH A/C. NO.01190008824) THAT A SUM OF RS.3,00,000 WAS CREDITED BY CASH ON 24.8.2002 AND ON 6.9.2002 THE SAME AMOUNT WAS GIVEN AS LOAN TO THE ASSESSEE, AND THERE ARE NO OTHER CREDITS APPEARING IN THE BANK ACCOUNT. IN THIS VIEW OF THE MATTER, CONCLUDING THAT SMT.K.SUJATHA WAS NOT HAVING CREDITWORTHINESS TO GI VE LOAN OF R S .3,000,000 TO THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION ON THIS COUN T UNDER S.68 OF THE ACT. BEFORE THE CIT(A), IT WAS SUBMITTED THAT SMT.SUJATHA HAD GONE TO USA, WHERE HER SON WAS EMPLOYED, AND HENCE, HER HUSBAND HAD SIGNED THE CONFIRMATION LETTER FILED BEFORE THE ASSESSING OFFICER. IT WAS ALSO SUBMITTED THAT THE LOAN TRANSACTION IN QUESTION WAS REFLECTED IN HER FINANCIAL STATEMENT FIELD ALONGWI TH HER RETURN OF INCOME. THE CIT(A), HOWEVER, TAKING FURTHER NOTE OF THE FACT THAT THE INCOME DISCLOSED BY THE CREDITOR SMT.K.SUJATHA IN EARLIER YEARS WAS LESS THAN THE INCOME DISCLOSED IN THE ASSESSMENT YEAR 2003 - 04 OF RS.95,444, CONCURRED WITH THE VIEW T AKEN BY THE ASSESSING OFFICER THAT SHE HAS NO CREDITWORTHINESS TO GIVE A LOAN OF RS.3,00,000 TO THE ASSESSEE. ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 5 8 . ON CAREFUL CONSIDERATION OF THE MATTER, WE FIND THAT THERE IS NO DISPUTE WITH REGARD TO THE IDENTITY OF THE CREDITOR, FROM WHOM THE ASSESSEE CLAIMED TO HAVE RECEIVED THE LOAN IN QUESTION. THERE IS ALSO NO DISPUTE THAT THE ALLEGED CREDITOR IS AN INCOME - TAX ASSESSEE , AND THE AMOUNT OF LOAN OF RS.3,00,000 HAS BEEN RECEIVED THROUGH BANKING CHANNELS. IT MAY BE TRUE THAT THIS IS ONLY AN ISOLATED TRANSACTION IN THE RELEVANT BANK ACCOUNT, BUT AS FAR AS THE ASSESSEE IS CONCERNED, IT IS DEMONSTRATED THAT THE ASSESSEE HAS RECEIVED THE MONEY THROUGH BANKING CHANNELS, VIZ. THROUGH THAT ACCOUNT. T HE ALLEGED CREDITOR MIGHT HAVE DECLARED SMALLER AMOUNTS OF INCOME IN THE RETURNS FILED , BUT MERELY ON THAT COUNT ALONE, CREDIT - WORTHINESS OF THE CREDITOR CANNOT BE BRUSHED ASIDE, AS SHE MAY BE HAVING RECEIPTS BY WAY OF AGRICULTURAL INCOME AND CAPITAL GAINS WHICH ARE TAX FREE . THOSE FACTORS MAY GIVE RISE TO A DOU BT AS TO THE GENUINENESS OF THE TRANSACTION, BUT CANNOT CLINCH THE ISSUE AGAINST THE ASSESSEE. THE IMPUGNED ADDITION HAS BEEN MADE BY THE REVENUE AUTHORITIES BY EXPECTING THE ASSESSEE TO ESTABLISH THE SOURCE OF THE SOURCE, WHICH IS NOT PERMISSIBLE UNDER L AW. AS FAR AS THE ASSESSEE IS CONCERNED, HE HAS DONE ALL THAT HE COULD TO ESTABLISH THE SOURCE FOR THE CREDIT, BY ESTABLISHING IDENTITY OF THE CREDITOR AS WELL AS HER CREDIT - WORTHINESS AND GENUINENESS OF THE TRANSACTION. IF AT ALL ANY ADDITION IS WARRANT ED, IT MAY BE IN THE HANDS OF THE ALLEGED CREDITOR, IF SHE IS NOT ABLE TO EXPLAIN THE CREDIT IN HER BANK ACCOUNT, BUT NOT IN THE HANDS O F THE ASSESSEE, WHO HAS DISCHARGED THE ONUS ON HIM, BY DEMONSTRATING THAT THE AMOUNT IN QUESTION HAS BEEN RECEIVED BY HI M FROM THE BANK ACCOUNT OF THE CREDITOR , THEREBY ESTABLISHING NOT ONLY IDENTITY, BUT ALSO THE CREDIT - WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION . WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DELETE THE ADDITION OF RS.3,00,000 MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A). ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 6 9 . IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003 - 04, BEING ITA NO.374/HYD/2014 IS ALLOWED . ITA NO.375/HYD/2014 : ASSESSMENT YEAR 2004 - 05 10 . THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO AN ADDITION OF RS.2,00,000 MADE TOWARDS UNEXPLAINED CASH CREDITS UNDER S.68 OF THE ACT. 1 1 . FACTS IN BRIEF RELATING TO THIS ISSUE ARE THAT THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS .2,00,000 FROM K .VENK A TESWARLU (HUF) AND CRE D I T ED IT TO HIS CAPITAL ACCOUNT. IT WAS OBSERVED THAT SHRI K .VENKTESWARLU WAS THE FATHER OF THE ASSESSEE AND THE CONFIRMATION LETTER ON BEHALF OF K.VENK A TESWARLU (HUF) HAS BEEN FILED BY THE ASSESSEE HIM S EL F . SHRI K.VENK AT ESWARLU PASSED AWAY ON 16.3.2003 AND THE ASSESSEE FIL E D A RETURN FOR K.VENKATESWARLU ( HUF) FOR ASSESSMENT YEAR 2004 - 05 ON 18.11.2010 IN THE OF F ICE OF JOINT COMMISSIONER OF INCOME - TAX RANGE - 1 TIRU PATI. IN THE SAID RETURN, IT WAS NOTICED THAT THE INCOME RETURNED WAS ONLY RS.82,000, AND THROUGH A BALANCE SHEET AS ON 31.3.2004 ENCLOSED TO THE SAID RETURN, ASSESSEE TRIED TO EXPLAIN THE SOURCE OF FUNDS IN THE HANDS OF K.VENK A TESWARLU (HUF) BY WAY OF CA PITAL ACCOUNT BROUGHT FORWARD, AGRICULTURAL INCOME AND SUNDRY LOANS. NOT CONVINCED AS TO THE CR E DITWORTHI N ESS OF THE ALLEGED CREDITOR, THE ASSESSING OFFICER TREATED THE ABOVE AMOUNT OF RS.2,00,000 AS UN E XPLAIN E D CASH CREDIT AND ACCORDINGLY MADE ADDITION UNDER S.68 OF THE ACT. 1 2 . ON APPEAL, THE CIT(A), NOT CONVINCED WITH REGARD TO THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE SOURCE OF FUNDS IN THE HANDS OF THE HUF, UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 7 1 3 . AGGRIEVED BY THE SUSTENANCE OF THE ABOVE ADDITION OF RS.2,00,000, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 1 4 . WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD. THE IMPUGNED ADDITION OF RS.2,00,000 IS MADE WITH REGARD TO THE SAID AMOUNT CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM SHRI K.VENKATESWARLU (HUF) . SINCE SHRI K.VENKATESWARLU, FATHER OF THE ASSESSEE PASSED AWAY 16.3.2003, CONFIRMATION LETTER IN SUPPORT OF THE LOAN TAKEN BY THE ASSESSE E HAS BEEN SIGNED BY THE ASSESSEE HIMSELF. SO ALSO, RETURN FOR THE ASSESSMENT YEAR 2004 - 05 ON BEHALF OF THE ALLEGED CREDITOR/HUF WAS FILED BY THE ASSESSEE HIMSELF ON 18.11.2010 IN THE OFFICE OF JOINT COMMISSIONER OF INCOME - TAX RANGE - 1 TIRUPATI. THOUGH THE INCOME RETURNED FOR THAT YEAR WAS ONLY RS.82,000 , THE BALANCE SHEET ENCLOSED TO THE SAID RETURN, DISCLOSED ENOUGH SOURCES, TO ENABLE THE HUF, TO LEND THE AMOUNT OF RS.2,00,000 CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM THE HUF. THUS, THERE IS NO DISPUTE EITHER WITH REGARD TO THE IDENTITY OF THE CREDITOR OR THE CREDIT - WORTHINESS OF THE CREDITOR, AND MERELY BECAUSE, SUBSEQUENT TO THE PASSING AWAY OF THE FATHER OF THE ASSESSEE, SHRI K.VENKATESWARALU, THE CONFIRMATION LETTER ISSUED BY THE HUF WAS SIGNED BY THE ASSESSEE HIMSELF, OR THE RETURN FIELD FOR THE ASSESSMENT YEAR 2004 - 05 WAS SIGNED BY THE ASSESSEE HIMSELF, GENUINENESS OF THE TRANSACTION OF LOAN OF RS.2,00,000 CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE CANNOT BE DOUBTED. IN ANY EVENT , ASSESSEE HAS DONE ALL THAT HE COULD DO, TO ESTABLISH THE GENUINENESS OF THE CREDIT, AND IN THE ABSENCE OF ANYTHING TO THE CONTRARY BROUGHT ON RECORD BY THE REVENUE, ASSESSING OFFICER, IN OUR CONSIDERED OPINION , IS NOT JUSTIFIED IN DISBELIEVING THE ALLEGE D LOAN CLAIMED BY THE ASSESSEE AND MAKING ADDITION OF RS.2,00,000 UNDER S.68 OF THE ACT. WE ACCORDINGLY DELETE THE SAME, ALLOWING THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 8 1 5 . THE NEXT EFFECTIVE GROUND OF THE ASSESSEE IN THIS APPEAL RELATES OF AN ADDIT ION OF RS.41,72,782 MADE UNDER THE HEAD CAPITAL GAINS IN THE ASSESSMENT YEAR UNDER APPEAL, VIZ. 2004 - 05. 1 6 . FACTS OF THE C AS E IN RELATION TO THIS ISSUE ARE THAT THE ASSESSEE PU R CHA S ED A PROPERTY FOR RS.8,92,000 DURIN G THE FINANCIAL YEAR 2002 - 03. S I MULTANEOUSLY, HIS WIFE, DR. B .MANOHARAMMA PURCHASED THE ADJACENT PLOT. THE TOTAL AREA OF THE TWO PLOTS, WORKING OUT TO 8639 SQ. FT. WAS GIVEN FOR DEVELOPMENT VIDE A JO I N T VENTURE AGREEMENT WITH P .RAJASEKHAR RAO OF TIRUPATI. THE DEVELOPMENT AGREEMENT , EXECUT ED ON 2.8.2003, ENVISAGED T HAT A RESIDENTIAL COMPLEX WAS TO B E CON S TRUCTED ON THE PL O T OF LAND COVERING 56,000 SQ. FT. OUT OF THE SAME, THE ASSESSEE AND HIS WIFE WERE ENTITLED TO 28,000 SQ. FT. EACH IN THE BUILT UP AREA COMING TO THEIR SHARE. THE ASSESSEE AS WELL AS HIS WIFE OFFERED CAPITAL GAINS ON THE SAME, IN THE RETURNS OF INCOME FIL E D BY THEM FOR THE ASSESSMENT YEAR 2007 - 08. HOW E VER, THE ASSESSING OFFICER HELD THAT THE PROPERTY WAS TRANSFERRED ON 2.8.2003, WHEN THE POSSESSION WAS HANDED O V ER TO THE B UILDER, AND HENCE CAPITAL GAINS HAS ARISEN IN TH E ASSESSMENT YEAR 20 0 4 - 05 AND NOT 2007 - 08, AND ACCORDINGLY BROUGHT TO TAX THE CAPITAL GAINS IN THE ASSESSMENT YEAR 2004 - 05 ITSELF, COMPUTING THE SAME AT RS.41,72,782, AND MAKING ADDITIONS OF THAT AMOUNT IN TH E HANDS OF THE ASSESSEE AS WELL AS HIS WIFE, WHILE COMPLETING THE ASSESSMENTS UNDER S.143(3) OF THE ACT, VIDE ORDERS OF ASSESSMENT DATED 29.12.2010. 1 7 . ON APPEAL BEFORE THE CIT(A), THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELYING ON VARIO US CLAUSES OF THE DEVELOPMENT AGREEMENT EMPHASIZED THAT THE LAND OWNER CONTINUED TO BE THE OWNER OF THE L A ND TILL THE COMPLETION AND HANDING O V ER OF THE CON S T R U C TED APARTMENTS IN FULL SHAPE AND NO RIGHT AND INT E R E ST IN ANY PO R TION OF THE L A ND HAS BEEN PASSED WITH THE PERMISSION GIVEN TO ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 9 THE D EVELOPER FOR THE DEVELOPMENT OF THE LAND AND NO SH I ELD OF S.53A OF THE T RANSFER OF PROPERTY ACT WAS AVAILABLE TO THE DEVELOPER. HOWEVER, THE CIT(A), OBSERVING THAT IT IS NOT THE LANGUAGE/EXACT WORDING IN THE DEVELOPMENT AGREEMENT ALONE THAT MATTERS, BUT THE TONE AND TENOR OF THE AGREEMENT AS A WHOLE THAT HAS TO B E TAKEN INTO ACCOUNT AND RELYING ON THE DECISIONS OF THE MUMBAI H IGH C OU R T IN TH E CASE OF CHATURBHUJ DWARKADAS K APADIA V/S. CIT(260 ITR 491), UPHELD THE ACTION OF THE ASSESSING OFFICER IN BRINGING TO TAX THE CAPITAL GAINS IN THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO, VIZ. ASSESSMENT YEAR 2004 - 05 IN THE PRESENT CASE . 1 8 . AGGRIEVED, ASSESSEE PREFERRED THIS SECOND APPEAL BEFOR E US ON THIS ISSUE. 1 9 . THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE REVENUE AUTHORITIES SUBMITTED THAT THE CAPITAL GAINS, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, ARE NOT CHARGEABLE TO TAX IN THE YEAR UNDER APPEAL, BUT IN THE ASSESSMENT YEAR 2007 - 08, IN THE RETURNS FILED FOR WHICH, ASSESSEE AS WELL AS HIS WIFE, HAVE OFFERED THE SAID CAPITAL GAINS TO TAX. AS SUCH, IT IS SUBMITTED THAT THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER WITH REGARD TO T HE CAPITAL GAINS IN QUESTION, IS UNJUSTIFIED AND UNWARRANTED. 20. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL H IGH C O URT IN THE CASE OF POTLA NAGESWARA RAO V/S. DCIT(365 ITR 249). 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T H E ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THE ISSUE IN DISPUTE BEFORE US IS THE YEAR IN WHICH THE CAPITAL ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 10 GAINS ARISING OUT OF A PROPERTY GIVEN FOR DEVELOPMENT ARE LIABLE TO BE TAXED, VIZ. WHETHER THE YEAR IN WHICH DEVELOPMENT AGREEMENT WAS SIGNED OR THE YEAR IN WHICH THE CONSTRUCTION OF THE PROPERTY WAS COMPLETED AND THE CONSTRUCTED AREA COMING TO THE SHARE OF THE OWNER HAS BEEN HANDED OVER TO THE ASSESSEE. THOUGH THERE ARE A NUMBER OF JUDICIAL PRONOUNCEMENTS ON THIS ISSUE, THERE IS A CLEAVAGE OF JUDICIAL OPINION, WITH THE SETTLED POSITION BEING THAT YEAR OF ASSESABILITY OF CAPITAL GAINS ARISING O UT OF A DEVELOPMENT AGREEMENT, DEPENDS ON FACTS AND CIRCUMSTANCES OF EACH CASE, MORE IMPORTANTLY TERMS AND CON D ITIONS OF THE DEVELOPMENT AGREEM E N T AND FLOW OF CON S I D ERATION IN TERMS OF THE DEVELOPMENT AGREEMENT. IN THE FACTS OF THE PRESENT CASE, THE DEVEL OPMENT AGREEMENT, ADMITTEDLY, HAS NOT ENVISAGED ANY CONSIDERATION TO BE PASSED ON TO THE LAND OWNER, VIZ. THE ASSESSEE, AT THE TIME OF SIGNING OF THE DEVELOPMENT AGREEMENT. THE DEVELOPMENT AGREEMENT CATEGORICALLY DECL A RED THE ASSESSEE AND HIS WIFE TO BE T HE OWNERS OF THE PROPERTY BEIN G DEVELOPED UNTIL THE COMPLETION OF ALL THE DEVELOPMENT WORK AND TILL THE HANDING OVER OF THE COMPLETED PORTION COMING TO THE SHARE OF THE ASSESSEE AND HIS WIFE, WITH THE TITLE IN RELATION TO THE OTHER CONSTRUCTED AREAS BEING TRANSFERRED BY THE ASSESSEE HIMSELF, TO THE NOMINEES OF THE DEVELOPER. THE DEVELOPMENT AGREEMENT HAS SP EC IFICA L LY PROVIDED THAT THE POSSESSION HANDED OVER TO THE DEVELOPER BY THE LAND OWNERS WAS ONLY A PERMISSIVE ONE, FOR THE LIMITED PURPO S E OF DEVELOPING THE PROPERTY IN TERMS OF THE AGREEMENT, AND THE SAME SHALL NOT BE CONSTRUED OR TREATED AS PART PERFORMANCE OF THE AGREEMENT UNDER S.53A OF THE TRANSFER OF PROPERTY ACT. NOTWITHSTANDING THESE EXPRESS TERMS OF THE DEVELOPMENT AGREEMENT, WHI CH CLEARLY ASSERT THAT THE TITLE OVER THE PROPERTY CONTINUES TO REST WITH THE LAND OWNERS IRRESPECTIVE OF HANDING OVER OF THE POSSESSION TO THE DEVELOPER, AND PASSES FROM THE LAND OWNERS ONLY ON THE COMPLETION OF THE CONSTRUCTION BY THE DEVELOPER AND REGIS TRATION OF THE COMPLETED FLATS IN FAVOUR OF THE NOMINEES OF THE DEVELOPER, AND DOES NOT ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 11 INDICATE/PRESCRIBE ANY CONSIDERATION IN TERMS OF MONEY OR OTHERWISE FLOWING TO THE LAND OWNERS BEFORE THE COMPLETION OF CONSTRUCTION AND HANDING OVER OF CONSTRUCTED AR EA COMING TO THE SHARE OF THE LAND OWNERS, BY THE DEVELOPER, IT IS NOT CORRECT FOR THE REVENUE AUTHORITIES TO SAY THAT THE CONSIDERATION FLOWED TO THE ASSESSEE ON ACCOUNT OF THE EXPENDITURE INCURRED BY THE DEVELOPER ON THE DEVELOPMENT OF THE PROPERTY. THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAGESWARA RAO (SUPRA) IS DISTINGUISHABLE ON FACTS, INASMUCH AS IN THE FACTS OF THE PRESENT CASE, APPROVAL FOR THE PLAN HAS BEEN OBTAINED FROM THE MUNICIPAL AUTHORITIES BY THE ASSESSEE ONLY, WHO AL ONE TRANSFERRED THE OTHER AREAS NOT COMING TO ITS SHARE, TO THE NOMINEES OF THE DEVELOPER; AND THE AVERMENTS IN THE DEVELOPMENT AGREEMENT ITSELF SPECIFICALLY STATE THAT HANDING OVER OF POSSESSION OF THE PROPERTY FOR DEVELOPMENT IS ONLY OF PERMISSIVE NATURE , AND NOTWITHSTANDING SUCH HANDING OVER, ASSESSEE CONTINUES TO BE THE OWNER OF THE PROPERTY. AS SUCH THE DECISION OF THE JURISDICTIONAL HIGH COURT, RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . IN THIS VIEW OF THE MATTER, CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE ON HAND, WE HOLD THAT THE CAPITAL GAINS HAVE TO BE BROUGHT TO TAX ONLY IN THE ASSESSMENT YEAR 2007 - 08, WHEN THE DEVELOPMENT OF THE PROPERTY IN TERMS OF THE DEVELOPMEN T AGREEMENT HAS BEEN COMPLETED AND THE CONSTRUCTED AREA COMING TO THE SHARE OF THE LAND OWNERS HAS BEEN HANDED OVER BY THE DEVELOPER. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES, AND DELETE THE ADDITION OF RS.41,72,782 MADE BY THE ASSESSING OFFICER ON THIS COUNT. ASSESSEES GROUNDS ON THIS ISSUE ARE ALLOWED. 2 2 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05, BEING ITA NO.375/HYD/2014, IS ALLOWED. ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 12 APPEALS OF DR.B.MANOHARAMMA: ITA NO.376/HYD/2014 : ASSESSMENT YEAR 2004 - 05 2 3 . THE ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE ADDITION OF RAS.41,72,782 MADE UNDER THE HEAD CAPITAL GAINS BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A), AND THE ISSUE IS AS TO THE YEAR IN WHICH THE SAID CAPITAL GAINS ARE LIABLE TO BE TAXED, VIZ. THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS SIGNED, VIZ. ASSESSMENT YEAR 2004 - 05 OR THE YEAR IN WHICH CONSTRUCTED AREA COMING TO THE SHARE OF THE ASSESSEE WAS HANDED OVER BY THE DEVELOPER. F ACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO THE ONES CONSIDERED BY US IN THE CONTEXT OF THE APPEAL OF THE ASSESSEES HUSBAND, DR.K.RAMACHANDRA, IN ITA NO.375/HYD/2014, HEREINABOVE. HENCE, FOR THE DETAILED REASONS DISCUSSED IN THAT CONTEXT IN PARA 1 9 HEREINABOVE, WE HOLD THAT THE CAPITAL GAINS IN QUESTION HAVE TO BE BROUGHT TO TAX ONLY IN THE ASSESSMENT YEAR 2007 - 08, WHEN THE DEVELOPMENT OF THE PROPERTY IN TERMS OF THE DEVELOPMENT AGREEMENT HAS BEEN COMPLETED AND THE CONSTRUCTED AREA COMING TO THE S HARE OF THE LAND OWNERS HAS BEEN HANDED OVER BY THE DEVELOPER. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES, AND DELETE THE ADDITION OF RS.41,72,782 MADE BY THE ASSESSING OFFICER ON THIS COUNT. ASSESSEES GROUNDS ON THIS ISSUE ARE ALLOWED. 2 4 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05, BEING ITA NO.376/HYD/2014, IS ALLOWED. ITA NO.377/HYD/2014 : ASSESSMENT YEAR 2006 - 07 2 5 . THE ONLY EFFECTIVE GROUND OF THE ASSESSEE IN THIS APPEAL RELATE S TO AN ADDITION OF RS.1,20,000 MADE BY THE ASSESSING OFFICER IN TERMS OF S.40(A)(IA) OF THE ACT, SUSTAINED BY THE CIT(A). ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 13 2 6 . FACTS OF TH E CA S E IN BRIEF ARE THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME IN R E SPONSE TO NOTICE UNDER S.53A OF THE AC T, ADMITTING A TOTAL IN C OM E OF R S .5,88,335 AND AGRICULTURAL INCOME OF RS .3,00,000 FOR THE ASSESSMENT YEAR 2006 - 07. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MADE A ADDITION OF RS .1,20,000 UN D ER S.40(A)(IA) OF THE AC T, STATIN G AS UN D ER - A SCRU TINY ASSESSMENT UNDER S.143(30 OF THE ITA ACT DATED 26.12.2008 WAS CARRIED OUT BY I TO, WARD - 1(2), TIRUPATI, W HERE A SUM OF R S .1,20,000 WAS DISALLOWED UNDER SE C TION 40(A)(IA) AND A SUM O F R S .1,73,014/ - WAS ADDED UNDER SECTION 68 OF THE IT ACT ON ACCOUNT OF UN E XPL A IN E D GIFT. THE ASSESSEE HAS A D MITTED AN AMOUNT OF RS . 1 ,73,014 IN THE RETURN O F INCOME FIL E D IN RESPONSE TO NO T I C E UNDER SECTION 153A OF THE I T ACT. HOW E VER, THE DISALLO W ANCE UNDER SECTION 40(A)(IA) WAS NO T REFLECTED. IT IS TO BE MENTIONED HERE THAT THE ASSESSEE HAS PAID A SUM OF R S .1,20,000/ - TO DR. K. RAMACHANDRA A S CONSULTANCY CHARGES. I N THE RETURN OF IN C OM E FILED IN R E SPON S E TO NO T ICE U/S. 153A OF THE I T ACT, IT WAS DEBITED UNDER THE HEAD SALARIES (RS.5,01,600) WHICH INCLUDES CONSULTANCY CHARGES. 2 7 . ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE AMOUNT PAID WAS A FIXED AMOUNT OF SALARY AND NO T CONSU L TANCY CHARGES AND HENCE PROVISION S OF S.40(A)(IA) ARE NO T ATTRACTED. EVEN OTHERW ISE, IT WAS CLAIMED THAT THE AMOUNT HAS ALREADY BEEN PAID AND HENCE THE P R O V ISION S OF S.40(A ) (IA ) ARE NO T APPLICABLE. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT WHAT WAS PAID WAS A SALARY AND NO T CONSULTANCY CHARGES, OBSERVING THAT THE A DDITION MADE IN TERMS OF S.40(A)(IA) IN THE ORIGINAL ASSESSMENT HAS BEEN ACCEPT E D BY THE ASSESSEE AND THERE WAS NO DISPUTE AS TO THE NATURE OF THE PAYM E N T MADE IN THOSE PROCEEDINGS, AND CON S EQUENTLY , THE CHANGE IN THE VERSION OF THE ASSESSEE WAS NOT ONLY NO T ACCEPTABLE BUT ALSO NO T CORRECT. EVEN WITH REGARD TO THE ALTERNATIVE CONTENTION WITH REGARD TO APPLICABILITY OF THE PROVISIONS OF S.40(A ) (IA ) SINCE THE PAYMENT HAS ALREADY BEEN MADE, THE CIT(A) F O U ND NO MERIT IN THE SAME, OBSERVING THAT THE DECISION OF THE SPECIAL B ENCH ( VIS A KHAPATNAM BENCH) OF THE TRIBUNAL IN THE C A S E OF M ERILYN SHIPPIN G & TRANSPO R TS (2012) 016 ITR 0001) HAS BEEN KEPT IN ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 14 ABEYANCE AND SUBSEQU E N T DECISION S OF THE CALCUTTA H IGH C OU R T IN TH E CA S E OF CIT V/S. CRESCENT EXPO R TS SYN D I C ATE AND THE GUJA R AT HIGH COU R T IN TH E CA S E OF CIT VS. SIKANDER KHAN TUNVAR TAX APPEAL NO. 905 AND ORS OF 2012 ORDER DATED 2.05.2013 ARE IN FAVOUR O F THE REVENUE . 2 8 . AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) ON THIS ISSUE, ASSESSEE IS IN SECOND APPEAL BEFORE US. 2 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THERE IS A CHANG E IN THE VERSION OF THE ASSESSEE AS TO THE NATURE OF THE PAYMENT MADE BY HER TO DR.K.RAMCHANDRA. WHILE THE SAID PAYMENT WAS CLAIMED IN THE FIRST INSTANCE AS CONSULTANCY CHARGES, AND THE SAME STOOD DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS UNDER S. 40(A)(IA) OF THE ACT, IN THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER S.153A OF THE ACT, THE SAID DISALLOWANCE HAS NOT BEEN OFFERED TO TAX, AND IN THE ASSESSMENT PROCEEDINGS THAT ENSUED ASSESSEE CAME WITH THE PLEA THAT WHAT WAS PAID WAS BY WAY OF FIXE D AMOUNT OF SALARY AND NOT CONSULTANCY CHARGES. THE NATURE OF PAYMENT MADE BY THE ASSESSEE TO DR.K.RAMACHANDRA WAS ORIGINALLY CLAIMED BY THE ASSESSEE HERSELF AS CONSULTANCY CHARGES, AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, THERE CAN BE NO DISPUTE WITH REGARD TO THE NATURE OF THE PAYMENT MADE IN ANY SUBSEQUENT PROCEEDINGS. THAT APART, SINCE SUCH CONSULTANCY CHARGES WERE PAID WITHOUT COMPLYING WITH THE TDS PROVISIONS, THE ASSESSING OFFICER MADE DISALLOWANCE OF THE SAID AMOUNT UNDER S.40(A)(I A) OF THE ACT, WHILE ORIGINALLY COMPLETING THE ASSESSMENT. THE SAID DISALLOWANCE HAS ATTAINED FINALITY, SINCE THE ASSESSEE, HAVING NOT FILED ANY APPEAL ON THAT ASPECT, AND HAS ACCEPTED THE SAME. KEEPING THAT FACTUAL BACKGROUND IN MIND, THE REVENUE AUTHOR ITIES IN OUR CONSIDERED OPINION WERE JUSTIFIED IN ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 15 CONCLUDING THE NATURE OF PAYMENT MADE BY THE ASSESSEE TO DR.K.RAMCHANDRA AS BY WAY OF CONSULTANCY CHARGES ONLY, AND CONSEQUENTLY, ADDING THE EARLIER DISALLOWANCE MADE IN TERMS OF S.40(A)(IA) OF THE ACT, AS THE INCOME OF THE ASSESSEE, EVEN IN THE ASSESSMENT PROCEEDINGS INITIATED, SUBSEQUENT TO THE SEARCH ACTION, BY ISSUANCE OF NOTICE UNDER S.153A OF THE ACT. WE ACCORDINGLY REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 30 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07, BEING ITA NO.377/HYD/2014 , IS DISMISSED. ITA NO.378/HYD/2014 : ASSESSMENT YEAR 2009 - 10 31 . THE ONLY EFFECTIVE GROUND OF THE ASSESSEE IN THIS APPEAL RELATES TO AN ADDITION OF RS.12,57,000 MADE BY THE ASSESSING OFFICER UNDER S.69 OF THE ACT, OUT OF WHICH ADDITION TO THE EXTENT OF RS.7,38,000 WHICH HAS BEEN CONFIRMED BY THE CIT(A). 3 2 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER S.143(3) READ WITH S .153A OF THE ACT, VIDE ORDER DATED 29.12.2010, MADE AN ADDITION OF RS.12,57,000 UNDER S.69 OF THE ACT, ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY UNDER S.69 OF THE ACT, STATING AS UNDER - DURING TH E COU R SE OF SEARCH OPERATIONS CARRIED OUT IN THE R E SIDENCE OF TH E ASSESSEE, THE LOCKERS MAINTAINED BY HER WERE ALSO OPE R ATED. DR. B.MANOHARAMMA HOL D S THE LOCKER NO.6 AT STATE B A NK OF INDIA, TTD ADMINI S TRATIVE O FFICE B RANCH, TIRUPATI. ANOTHER LOCKER BY NO.13 IS ALSO JOINTLY HELD A L ONGWITH HER HUSBAND AT STATE BANK OF HYDERABAD, MAIN BRA N CH, TIRUPATI. ON THE D A TE OF SEARCH, THE JEWELLERY WAS VALUED BY AN APPROVED V A LUER. THE TOTAL GROSS W E I G HT OF JEWELLERY FOUND IN THE LOCKER WAS QUANTIFIED INTO 2031.480 GRAMS. THE APPROVED VALUER H A D ALSO DETERMINED NET WEIGHT OF THIS GOLD JEWELERY AT 1856.660 GRAMS AND IT WAS VALUED AT RS.27,84,990/ - . NON E O F THE ME M B E RS OF THE ASSESSEE FAMILY ARE ASSESSED TO WEALTH TAX. ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 16 THE ASSESSEE WAS ASKED TO EXPLAIN SOURCES OF THE SAME. IN HER SWORN STATEMENT SHE HAD STATED THAT PART OF THE JEWELLERY BELONGS TO HER LATE GRAND MOTHER WHO HAD BEQUEATHED IT THROUGH A WILL TO HERSELF, HER DAUGHTER AND HER MOTHER. HER MOTHER AND FATHER ALSO COHABITATE AT THE SAME RESIDENCE AND PART OF THE JEWELLERY BELONGS TO THEM. SHE FURTHER STATED THAT SHE ALONG WITH HER DAUGHTER HAD INHERITED A PART OF THE GOLD JEWELLERY BELONGING TO HER LATE MOTHER - IN - LAW SMT.K.VENKATAMMA. HOWEVER, THE COPIES OF THESE WILLS WERE PRODUCED BEFORE THE ADIT(INV) ON 26.02.2009. IT IS NOTICED THAT THEY ARE REGISTERED W ILL. THE WILL PRODUCED BY THE ASSESSEE ARE NOT APPEARS TO BE GENUINE. IT IS ALSO NOTICED THAT IN THE BALANCE SHEET AS ON 31.3.2008 OF DR.K.RAMACHANDRA REFLECTS OWNERSHIP OF 400 GRAMS OF GOLD JEWELLERY ONLY. THE ASSESSING OFFICER, THUS ACCEPTED 514 GRAMS IN THE HANDS OF DR.K.RAMCHANDRA, MISS CHETANA AND THE ASSESSEE AND A NOTH E R 500 GRAMS AS PER CBDTS INSTRUCTION NO.1916 DATED 11.05.1994, AN THUS, OUT OF THE J E WELLERY WEIGHING 1,856 NET GRAMS, THE ASSESSING OFFICER ACCEPTED 1,014 GRAMS AND TOWARDS THE BAL ANCE 838 GRAMS VALUED AT RS.1,500 PER GRAM, HE MADE ADDITION OF RS.12,57,000, ON ACCOUNT OF UNEXPLAINED INVESTMENT UNDER S.69 OF THE ACT. 3 3 . ON APPEAL, THE CIT(A), AFTER CON S I D ERING THE ELABORATE SUBMISSIONS OF THE ASSESSEE AND THE RECONCILIATION FILED BEFORE HIM, VIDE PARA 7.3 OF THE IMPUGNED ORDER, GAVE CREDIT IN FAVOUR OF THE ASSESSEE TO THE EXTENT OF JEWELLERY WEIGHING 350 GRAMS, AND ARRIVED AT THE UNEXPLAINED JEWELLERY OF 492 GRAMS, AND APPLYING THE RATE OF RS.1,500 PER GRAM SUSTAINED ADDITION ONLY TO THE EXTENT OF RS.7,38,000. RELEVANT PORTION OF THE ORDER OF THE CIT(A) IN THIS BEHALF READS AS FOLLOWS - 7.3 THE APPELL A N T I S RELYING ON THE LAST WILLS AND TESTAMENTS CLAIMED TO BE THOSE OF SMT. K. VENKATAM MA (MOTHER IN LAW OF THE APPELLANT) AND SMT.G. LAKSHMAMMA(GRAND MOTHER OF THE APPELLANT ) . THESE WILLS ARE UNREGISTERED AND HENCE DO NO T FORM CON C LU S IVE PROOF. ME RE LY B E CAU S E THE WILLS WERE AVAILABLE AT THE TIME O F SEARCH DOES NOT INDICATE THAT WHAT IS ST ATED IN TH E WILL IS TRUE AND CORRECT. THE APPELLANT IS NOT THE ONLY CHILD/GRANDCHILD OF SMT G.LAKSHMAMMA AND NOR IS HER HUSBAND DR. RAMACHANDRA THE ONLY CHILD OF SMT. K.V E NK A TAMMA. H ENCE, I T APPEARS SURPRI SI NG THA T THE ENTIRE GOLD JEWELLE R Y BELONGING TO THE DECEASED GRANDMOTHER AND DECEASED MOTHER IN LAW HAS COME ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 17 E N T I R ELY TO THE APPELLANT AND NO T TO ANY OF THE SIBLINGS. HENCE, I DO NOT ACCEPT THE CLAIM OF THE APPELLANT REGA R DING INHERITANCE OF GOLD JEWELLE R Y. HOW E VER, THE SUBMISSION OF TH E APPELLANT THAT AS PER CBDTS INST R U CT ION NO.1916 DATED 11.05.1994, A FURTHER ALLO WA N C E OF 250 GRAMS TO KUMARI K.CHETANA AND 100 GRAMS TO K.HARSHA SHOULD HAVE BEEN GIVEN HAS SOME MERIT. I N TH E CA S E OF DR.K.RAMACHDNRA, ALLOWANCE OF 100 GR A MS IS NOT CALLED FOR SINCE HE HIMSELF HAS FILED A RETURN OF INCOME SHOWING TOTAL JEWELLERY OF ONLY L400 GRAMS, FOR WHICH CREDIT HAS ALREADY BEEN GIVEN. HENCE, THE UN E XPLA I N E D JEWELLERY AFTER GIVING FURTHER CREDIT OF 350 GRAMS WORKS OUT TO 492 GRAMS, WHICH @ RS.1,500 PER G RAM IS RS.7,38,000/ - . HENCE OUT OF THE TOTAL ADDITION OF RS .12,57,000/ - , AN AMOUNT OF RS .7,38,000/ - IS SUSTAINED. THE APP E LLANTS APPEAL IS PARTLY ALLOWED. 3 4 . STILL AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 3 5 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE WILLS OF TESTAMENT ON WHICH RELIANCE WAS PLACED BY THE ASSESSEE FOR EXPLAINING THE JEWELLERY IN QUESTION, H AVE BEEN FOUND/FURNISHED BY THE ASSESSEE AT THE TIME OF SEARCH. THE WILLS THUS FOUND AT THE TIME OF SEARCH MAY NOT BE REGISTERED DOCUMENTS. BUT NON - REGISTRATION OF THE WILL BY ITSELF DOES NOT WARRANT ANY ADVERSE INFERENCE AGAINST THE ASSESSEE. IN FACT, T HE FACT THAT A WILL WAS FOUND AT THE TIME OF SEARCH ITSELF, LEAVES NO SCOPE FOR IMPLYING IT TO BE A FABRICATED OR NON - GENUINE DOCUMENT, AND BEING A DOCUMENT PRODUCED SPONTANEOUSLY TO SUBSTANTIATE THE CONTENTION OF THE ASSESSEE WHILE EXPLAINING THE JEWELL ERY FOUND, LEADS ONE TO BELIEVE IT TO BE AN AUTHENTIC ONE, IN THE ABSENCE OF ANY MATERIAL FOUND TO SUGGEST THE NON - GENUINENESS OF SUCH A DOCUMENT. ONE OF THE REASONS GIVEN FOR DOUBTING THE GENUINENESS OF THE WILL OF GRANDMOTHER OF THE ASSESSEE, SMT. G.LAK SHMAMMA WAS THAT SHE WAS NOT THE ONLY GRAND - DAUGHTER, AND CONSEQUENTLY, SHE COULD NOT HAVE GIVEN HER ENTIRE JEWELLERY TO ONLY ONE GRAND - DAUGHTER, I.E. THE ASSESSEE. THAT REASONING GIVEN IS ALSO NOT CORRECT B E CAUSE THE AVERMENTS MADE IN THE SAID WILL, FREE ENGLISH TRANSLATION OF WHICH HAS BEEN FURNISHED TO US, SPEAK OTHERWISE AND STATE THAT THE ASSESSEE IS ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 18 ONLY GRAND - DAUGHTER OF THE DEPONENT, DR.G.LAKSHMAMMA. THE OTHER AVERMENTS MADE THEREIN, SUCH AS THE SAID LAKSHMAMMA, ON ACCOUNT OF HER OLD AGE, STAYING WITH THE ASSESSEE, WHO ALONGWITH OTHER FAMILY MEMBERS, INCLUDING HER HUSBAND, DR.K.RAMACHANDRA AND DAUGHTER, CHETANA TAKING CARE OF HER AND HER HUSBAND, LATE VENKATAIAH SINCE 1995, AND HER CONTINUING TO STAY WITH THE ASSESSEE AND HER FAMILY EVEN AFTER THE DEATH OF HER HUSBAND, ONLY JUSTIFY THE ACTION OF THE DEPONENT IN BEQUEATHING HER ENTIRE JEWELLERY IN FAVOUR OF THE ASSESSEE AND HER DAUGHTER. IN THIS VIEW OF THE MATTER, WE FIND THAT THERE IS NO JUSTIFICATION FOR THE REVENUE AUTHORITIES TO DISBELIEVE THE VERSION OF THE ASSESSEE, WHICH HAS BEEN SUBSTANTIATED BY THE CIRCUMSTANTIAL EVIDENCE FOUND AT THE TIME OF SEARCH ITSELF. WE ACCORDINGLY, DELETE THE ENTIRE ADDITION OF RS.12,57,000 MADE BY THE ASSESSING OFFICER, ALLOWING THE GROUNDS OF THE ASSESSEE IN THI S APPEAL. 3 6 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10, BEING ITA NO.378/HYD/2014 IS ALLOWED. 3 7 . TO SUM UP - ( A ) BOTH THE A PPEALS OF DR.K.RAMACHANDRA, BEING ITA NO.374/HYD/2014 FOR ASSESSMENT YEAR 2003 - 04 AND ITA NO.375/HYD/2014 FOR ASSESSMENT YEAR 2004 - 05 ARE ALLOWED. ( B ) OUT OF THE THREE APPEALS OF DR.B.MANOHARAMMA, ITA NO.376/HYD/2014 FOR ASSESSMENT YEAR 2004 - 05; AND ITA NO.378/HYD/2014 FOR ASSESSMENT YEAR 2009 - 10 ARE ALLOWED; AND ITA NO.377/HYD/2014 FOR AS SESSMENT YEAR 2006 - 07 IS DISMISSED. ITA NO. 374 /HYD/201 4 & FOUR OTHERS DR.K.RAMACHANDRA AND ANR., TIRUPATI 19 O RDER PRONOUNCED IN THE COURT ON 16 TH SEPTEMBER, 2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 16 TH SEPTEMBER , 2014 COPY FORWARDED TO: 1. 2. DR. K. RAMACHANDRA, ( TIRUPATI ) C/O. M/S CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOK NAGAR, HYDERABAD. DR.B.MANOHARAMMA (TIRUPATI) C/O. M/S CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOK NAGAR, HYDERABAD. 3 . DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE, TIRUPATI 4 . COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR 5 . COMMISSIONER OF INCOME - TAX, CENTRAL, HYDERABAD 6 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S