Smt K Lakshmi Sri Devi, Vijayawada V. The ACIT, Circle-2(1)., Vijayawada

ITA 461/VIZ/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7148 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-10-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 25-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition; Assessment record
• Section: 50C; 142(1); 234B; 68

Judgement Text

ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO S . 461 /VIZAG/ 20 08 ASSESSMENT YEAR : 2005 - 06 KOGANTI LAKSHMI S RIDEVI VIJAYAWADA VS. ACIT CIRCLE - 2(1) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AEVPK 2473A ITA NOS.475/VIZAG/2008 ASSESSMENT YEAR : 2005 - 06 ACIT CIRCLE - 2(1) VIJAYAWADA VS. KOGANTI LAKSHMI SRIDEVI VIJAYAWADA (APPELLANT) (RESPONDENT) APPEL LANT BY: SHRI T. CHAITANYA KUMAR, ADVOCATE RESPONDENT BY: SHRI D.S. SUNDER SINGH, CIT(DR) ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT(A) FOR A.Y. 20 05-06. SINCE THESE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOS ED OF THROUGH THIS CONSOLIDATED ORDER. WE, HOWEVER, PREFER TO ADJUDIC ATE THEM ONE AFTER THE OTHER. ITA NO.475 OF 2008: 2. THIS IS AN APPEAL OF THE REVENUE AGAINST THE ORD ER OF THE CIT(A) ON WHICH FOLLOWING GROUNDS ARE RAISED: 1) THE ORDER OF THE LD. CIT(A) IS OPPOSED TO THE FACTS OF THE CASE. 2) THE LD. CIT(A) HAS ERRED IN STATING THAT AS PER THE RELEVANT DOCUMENTS KEPT IN THE ASSESSMENT RECORD, THE PLOT O F LAND WAS SOLD BY THE APPELLANT ALONG WITH THE THREE STORIED RCC S TRUCTURE HAVING BUILT UP AREA OF 2453 SQ.FT., WHEREAS A PERUSAL OF PAGE NOS.3 & 9 OF THE REGISTERED SALE DEED SHOWS THAT A MAJOR PORTION OF THE RCC BUILDING WAS DEMOLISHED BEFORE THE SALE AND THE BUI LDING TRANSFERRED ALONG WITH THE PLOT CONSISTED OF BUILT UP AREA OF 300 SQ.FT. ONLY. 3) THE LD. CIT(A) ERRED IN ARRIVING AT THE COST OF ACQ UISITION AND INDEXED COST OF ACQUISITION BY CONSIDERING THE CONS TRUCTION COST OF BUILDING HAVING A BUILT UP AREA OF 2453 SQ.FT. INST EAD OF ADOPTING THE CORRECT BUILT UP AREA OF 300 SQ.FT. AND THEREBY GIVING EXCESSIVE ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 2 RELIEF TOWARDS INDEXED COST OF ACQUISITION AMOUNTIN G TO RS.10,33,440/- IN DETERMINING THE INCOME UNDER THE HEAD CAPITAL GAINS. 4) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 2. DURING THE COURSE OF HEARING, THE LD. D.R. HAS A LSO RAISED ONE ADDITIONAL GROUND WHICH IS AS UNDER:- THE LD. CIT(A) OUGHT TO HAVE NOTICED THAT FOR PURPO SES OF DETERMINATION OF INDEXED COST OF ACQUISITION IN THE INSTANT CASE WHICH IS COVERED BY SEC.49 OF THE ACT, THE COST INF LATION INDEX PREVAILING IN THE FINANCIAL YEAR 1998, IN WHICH YEA R THE ASSET IN QUESTION WAS FIRST HELD BY THE ASSESSEE I.E., AT 35 1 IS LIABLE TO BE TAKEN COGNIZANCE AS ADOPTED BY THE ASSESSING OFFICE R INSTEAD OF 100, WHICH IS THE RATE APPLICABLE WITH REFERENCE TO THE ACQUISITION OF THE ASSET BY THE PREVIOUS OWNER, AS PROVIDED BY EXP LANATION (III) APPENDED TO SEC.48 OF THE ACT. 3. SINCE THE ADDITIONAL GROUND IS OF LEGAL IN NATUR E, WE ADMIT THE SAME AND PREFER TO DISPOSE IT OF ALONG WITH OTHER GROUND S OF APPEAL. 4. THE FACTS BORNE OUT FROM THE RECORD IN THIS REGA RD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS SOLD A HOUSE PROPERTY SITUATED AT GOVE RNORPET, KALESWARARAO ROAD, VIJAYAWADA ON 13.1.2005 FOR CONSIDERATION OF RS.10 LAKHS. WHILE ASSESSING THE LONG TERM CAPITAL GAIN, THE A.O. HAS OBSERVED THAT THE COST OF THIS HOUSE AS ON 14.1.1975 HAS BEEN SHOWN AT RS.12, 25,000/- AGAINST RS.29,000/- AS PER DOCUMENT. THE ASSESSEE HAS ALSO SHOWN SOME IMPROVEMENT IN THE SAID HOUSE. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THIS PROPERTY WAS ACQUIRED BY HER THROUGH A WI LL DATED 6.6.1991 EXECUTED BY HER GRAND MOTHER. THE ASSESSEE INHERIT ED THIS PROPERTY ON THE DEATH OF HER GRAND MOTHER ON 8.3.1998. HER GRAND M OTHER PURCHASED A VACANT SITE OF 90 SQ.YDS. ON 14.4.1975 FOR A CONSID ERATION OF RS.29,000/-. HER GRAND MOTHER, SUBSEQUENTLY CONSTRUCTED A HOUSE ON THIS PLOT. THE VALUE OF THE SOLD PROPERTY AS ON 1.4.1981 AS PER S.R.O. I S NOT AVAILABLE SINCE DOCUMENTS OF SUB-REGISTRAR WERE DESTROYED IN FIRE. THE ASSESSEE HAS ESTIMATED THE VALUE AS ON 1.4.1981 AT RS.12,25,000/ -. THE A.O. OBSERVED THAT THERE WAS NO MATERIAL WITH THE ASSESSEE ABOUT THE COST OF IMPROVEMENT OF RS.4 LAKHS. HE HAS ALSO OBSERVED THAT ONLY A VA CANT SITE MEASURING 115 SQ.YDS. WAS SOLD IN THE YEAR 2005. THE CONSIDERATI ON RECEIVED BY THE ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 3 ASSESSEE WAS ONLY FOR THE VACANT SITE AND NOT FOR T HE BUILDING. THE A.O. THEREFORE, CALCULATED THE INDEX COST OF ACQUISITION AT RS.88,068/- AND HAS DETERMINED THE LONG TERM CAPITAL GAIN AT RS.14,83,8 30/-. 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WITH THE SUBMISSION THAT THE PROPERTY WAS SOLD ON 13.1.2005 FOR A CONSIDERATION OF RS.10 LAKHS. THE A.O. HAS ONLY CALCULATED THE INDE X COST OF ACQUISITION AT RS.88,068/- BY ESTIMATING THE MARKET VALUE OF LAND AT RS.560/- PER. SQ.YD. AS ON 1.4.1981 WITHOUT ANY BASIS. IT WAS FURTHER CONT ENDED THAT THE A.O. WAS NOT JUSTIFIED IN VALUING THE PROPERTY ON THE BASIS OF VALUE ADOPTED BY THE REGISTERING AUTHORITY. THE A.O. SHOULD HAVE ADOPTE D THE MARKET VALUE AS ON 1.4.1981 AND APPLIED THE INDEX FROM 1981 TO 2005 OR ADOPT THE MARKET VALUE IN THE YEAR 1998 AND APPLIED INDEXATION OF 1998. T HE MARKET VALUE IN THE YEAR 1998 WAS MORE THAN RS.8,000/- PER SQ.YD. THER EFORE, THE A.O. OUGHT TO HAVE ADOPTED THE AMOUNT OF RS.8,000/- PER SQ.YD. 6. THE CIT(A) HAS RE-EXAMINED THE ISSUE IN THE LIGH T OF THE REPLY OF THE ASSESSING OFFICER IN WHICH HE STATED THAT THE ASSES SEE FILED NO OBJECTION FOR TAKING THE VALUE AT RS.15,71,881/- AS ADOPTED BY TH E S.R.O. RELYING UPON THE REPLY OF THE A.O., THE CIT(A) HAS APPROVED THE INVOCATION OF PROVISIONS OF 50C OF THE I.T. ACT AND NOTED THAT THE PROPERTY WAS ORIGINALLY ACQUIRED BY HER GRAND MOTHER ON 14.1.1975 FOR A CONSIDERATION OF RS .29,000/- AND THERE AFTER SHE DEMOLISHED THE ORIGINALLY ACQUIRED STRUCTURE AN D CONSTRUCTED 3 STORIED RCC STRUCTURE. THE CIT(A) ACCORDINGLY WORKED OUT T HE COST OF CONSTRUCTED PROPERTY AT RS.2,74,300/- AND BY APPLYING INDEXATIO N THE COST OF ACQUISITION WAS ADOPTED TO RS.13,16,640/- AND ACCORDINGLY DIREC TED THE A.O. TO COMPUTE THE LONG TERM CAPITAL GAIN AFTER ADOPTING THE INDEX COST OF ACQUISITION AT RS.13,16,640/-. 7. AGGRIEVED, THE REVENUE IS BEFORE US WITH THE SUB MISSION THAT CIT HAS ACCEPTED THE CONTENTION OF THE ASSESSEE WITHOUT ANY BASIS AND ADOPTED THE COST OF CONSTRUCTED STRUCTURE AT RS.2,74,300/- AND ADOPTED THE INDEXATION COST AT RS.13,16,640/-. THE LD. D.R. DURING THE COURSE OF HEARING INVITED OUR ATTENTION TO THE COPY OF SALE DEED WITH THE SUB MISSION THAT ONLY 300 S.FT. ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 4 CONSTRUCTION WAS THERE AND THE ENTIRE PROPERTY WAS NOT CONSTRUCTED. THE A.O. HAS ADOPTED THE COST OF VALUE OF THE PROPERTY AS ON 1.4.1981 ON ESTIMATE BASIS AS NO DOCUMENTARY EVIDENCE WAS FILED . HE HAS ALSO INVITED OUR ATTENTION THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSEE HAS EXPRESSED HIS NO OBJECTION TO THE INVOCATION OF PRO VISIONS OF SECTION 50C OF THE I.T. ACT. THEREFORE, HE CANNOT TAKE A PLEA THA T PROVISIONS OF SECTION 50C CANNOT BE INVOKED WITHOUT MAKING A REFERENCE TO THE VALUATION OFFICER. 8. THE LD. COUNSEL FOR THE ASSESSEE HAS EMPHATICALL Y ARGUED THAT THE VALUE OF THE PROPERTY ADOPTED BY THE A.O. AS ON 1.4 .1981 WAS ALSO WITHOUT ANY BASIS AS HE HIMSELF HAS ADMITTED THAT THE RATES OF THE PROPERTY WITH S.R.O. AS ON 1.4.1981 WAS NOT AVAILABLE. THEREFORE , THE VALUE ADOPTED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED. HE HOWEVER , PLACED A RELIANCE UPON THE ORDER OF THE CIT(A). 9. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT ASSES SEE AS WELL AS THE ASSESSING OFFICER HAS ESTIMATED THE VALUE OF THE PROPERTY AS ON 1.4.1981 WITHOUT ANY BASIS. DURING THE COURSE OF HEARING OF THE APPEAL, A SPECIFIC QUERY WAS RAISED FROM THE LD. COUNSEL FOR THE ASSESSEE ABOUT THE CON STRUCTED AREA BUT HE COULD NOT FILE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CONTENTIONS THAT TOTAL CONSTRUCTED AREA WAS 2453 SQ.FT. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. D.R. HAS FILED A COPY OF THE SALE D EED EXECUTED BY THE ASSESSEE IN WHICH THE CONSTRUCTED AREA WAS SHOWN AT 300 SQ.FT. WE HAVE ALSO CAREFULLY EXAMINED THE PROVISIONS OF SECTION 5 0C AND WE FIND THAT WHEREVER VALUE OF THE PROPERTY IS DISPUTED THE ASSE SSING OFFICER HAS TO MAKE A REFERENCE TO THE VALUATION OFFICER TO DETERMINE T HE COST OF PROPERTY. BUT IN THE INSTANT CASE, THOUGH THE ASSESSEE IS STICK TO T HE VALUE OF PROPERTY AS DISCLOSED IN THE DOCUMENT, THE ASSESSING OFFICER DI D NOT MAKE A REFERENCE TO DVO TO DETERMINE THE COST OF PROPERTY. BUT FROM A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT AT ONE POINT OF TIME ASSESSEE H AS ACCEPTED THE INVOCATIONS OF PROVISION OF SECTION 50C. THE DISPU TE WAS ONLY RAISED WITH REGARD TO THE COST OF ACQUISITION OF THE PROPERTY. BUT IT WAS ESTIMATED BY THE ASSESSEE AS WELL AS THE A.O. WE THEREFORE, OF THE VIEW THAT IN ORDER TO ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 5 RESOLVE THE DISPUTE THE MATTER SHOULD BE REFERRED T O THE DVO TO DETERMINE THE VALUE OF THE PROPERTY AS ON 1.4.1981, SO THAT P ROPER COST OF ACQUISITION ALONG WITH THE INDEX CAN BE WORKED OUT IN ORDER TO COMPUTE THE LONG TERM CAPITAL GAIN. DISPUTE WAS ALSO RAISED WITH REGARD TO THE CONSTRUCTED AREA BUT THE ASSESSEE DID NOT FILE ANY EVIDENCE BEFORE THE L OWER AUTHORITIES ABOUT THE CONSTRUCTED AREA OF THE PROPERTY. SINCE THE MATTER IS BEING REFERRED TO THE DVO FOR DETERMINATION OF THE COST OF PROPERTY, THE CONSTRUCTED AREA BE ALSO DETERMINED ON THE BASIS OF THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEES. ACCORDINGLY, THE ENTIRE ISSUE IS RESTORED TO THE FI LE OF THE A.O. FOR DETERMINATION OF THE LONG TERM CAPITAL GAIN AFTER M AKING A DUE REFERENCE TO THE DVO. 10. SO FAR AS ADDITIONAL GROUND IS CONCERNED, WE AR E OF THE VIEW THAT SINCE THE MATTER IS RESTORED TO THE A.O. FOR DETERMINATIO N OF THE LONG TERM CAPITAL GAIN, THE ASPECT RAISED THROUGH THIS GROUND SHOULD ALSO BE CONSIDERED BY THE A.O. ACCORDINGLY, THIS GROUND IS DISPOSED OF. 11. IN THE RESULT, THIS APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.461 OF 2008: 12. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1) THE ORDER OF THE LD. CIT(A) IS ERRONEOUS TO THE EXT ENT IT IS PREJUDICIAL TO THE APPELLANT. 2) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MAD E BY THE ASSESSING OFFICER OF RS.17,50,000/- INVESTED IN THE CONSTRUCT ION OF DURGA ESTATES AT PATAMATA LANKA WITHOUT CONSIDERING THE FACT THAT THE APPELLANT HAD NECESSARY RESOURCES FOR INVESTMENT IN THE CONSTRUCT ION. 3) THE LD. CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS.17.50 LAKHS WAS PAID TO FOUR DIFFERENT PERSONS WITHOUT CONSIDERING THE FACT THAT THE SAID CHEQUES WERE ENCASHED BY THE APPELLANT AND WERE UTI LIZED BY HER. 4) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1 LAKH MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT WITHOU T CONSIDERING THE DETAILED EXPLANATIONS SUBMITTED BEFORE HIM. ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 6 5) THE LD. CIT(A) ERRED IN HOLDING THAT THE COST OF AC QUISITION OF THE PROPERTY SITUATED AT 27-21-58, GOVERNORPET, KALESWA RARAO MARKET ROAD HAS TO BE RECKONED WITH EFFECT FROM 8.3.1998 W HEN THE SAID PROPERTY WAS PURCHASED ON 14.1.1975. THE LD. CIT(A ) OUGHT TO HAVE SEEN THAT THE MARKET VALUE OF THE PROPERTY AS ON 1. 4.1981 HAS TO BE TAKEN INTO CONSIDERATION AND THE INDEXATION IS TO B E CALCULATED W.E.F. 1.4.1981 AS THE PROPERTY WAS INHERITED BY THE APPEL LANT HEREIN THROUGH A WILL. 6) THE LD. CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SEC.50C CAN BE INVOKED AND THE VALUE AS PER THE SUB-REGISTRAR CAN BE TREATED AS THE SALE CONSIDERATION OF THE PROPERTY AT THE TIME OF S ALE WITHOUT CONSIDERING SUB SECTION (2) OF SEC.50C OF THE I.T. ACT. 7) THE LD. CIT(A) ERRED IN CONFIRMING LEVY OF INTEREST U/S 234B OF RS.2,91,648/-. 8) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 13. GROUND NO.1 IS OF GENERAL IN NATURE. GROUND NO S.2&3 RELATE TO THE UNEXPLAINED INVESTMENT IN CONSTRUCTION OF DURGA EST ATES AT PATAMATALANKA, VIJAYAWADA. DURING THE COURSE OF HEARING, THE ASSE SSING OFFICER HAS NOTICED THE FOLLOWING UNSECURED LOANS IN THE NAME OF FOLLOW ING PERSONS:- 1. MANNE JHANSI - RS.5.00 LAKH 2. MANNE KUTUMBA RAO - RS.3.50 LAKH 3. MUKKAMALA RATNAKAR - RS.5.00 LAKH 4. M.V. PURNACHANDRA SEKHAR - RS.4.00 LAKH 14. THE A.O. HAS ALSO NOTICED THAT THE ASSESSEE HAS CARRIED OUT RENOVATIONS TO THE BUILDING BY MAKING FOLLOWING INV ESTMENTS: DATE CHEQUE NO. AMOU NT (RS.IN LAKHS) REMARKS 30.3.2005 995144 3.50 ISSUED TO DURGA ESTATES TOWARDS ADVANCE FOR RENOVATION EXPENSES 30.3.2005 995143 5.00 ISSUED TO DURGA ESTATES TOWARDS ADVANCE FOR RENOVATION EXPENSES 30.3.2005 995145 5.00 ISSUED TO DURGA ESTATES TOWARDS ADVANCE FOR RENOVATION EXPENSES 30.3.2005 995146 4.00 ISSUED TO DURGA ESTATES TOWARDS ADVANCE FOR RENOVATION EXPENSES 15. THE ASSESSEE WAS ASKED TO EXPLAIN THESE ENTRIES AND ALSO TO FURNISH THE SOURCE OF INVESTMENT IN THE PROPERTY. IN RESPO NSE THERETO, IT WAS EXPLAINED THAT THE AMOUNTS RECEIVED FROM MANNE JHAN SHI, MANNE KUTUMBA RAO, MUKKAMALA RATNAKAR AND M.V. PURNACHANDRA SEKHA R ON TRANSFER FROM ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 7 ANUPAMA FINANCE AND THE CONFIRMATION ARE NOT AVAILA BLE. HE SOUGHT FURTHER TIME TO FILE THE SAME. THE A.O. VERIFIED THE REPLY WITH REFERENCE TO THE BOOKS OF ACCOUNTS AND BANK STATEMENTS AND NOTICED THAT TH ESE LOANS HAVE BEEN REPAID BACK THROUGH CASH/CHEQUES AS PER GIVEN DETAI LS: CHEQUE NO. AMOUNT NAME 995143 RS.5,00,000 M. JHANSI 995144 RS.3,50,000 M. MUTUMB A RAO 995145 RS.5,00,000 M. RATNAKAR 995146 RS.4,00,000 M.V. PURNACHANDRA SEKHAR 16. THE A.O. FURTHER OBSERVED THAT THE ABOVE UNSECU RED LOANS HAVE BEEN REPAID AS PER THE BANK STATEMENTS BUT IN THE BOOKS OF ACCOUNTS, THEY HAVE BEEN SHOWN OUTSTANDING. HOWEVER, ASSESSEE CLAIMED THAT THESE CHEQUES WERE IN FACT ISSUED TO M/S. DURGA ESTATES AS RENOVA TION ADVANCES. THE A.O., THEREFORE, HELD THAT IT IS NOTHING BUT THE UNDISCLO SED INVESTMENT OF THE ASSESSEE. THESE FACTS WERE BROUGHT TO THE NOTICE O F THE A.O. VIDE NOTICE U/S 142(1) DATED 17.9.2007 AND IN RESPONSE THERETO, THE ASSESSEE HAS SUBMITTED THE FOLLOWING REPLY: REGARDING CREDITS IN THE NAMES OF MANNE JHANSI, MA NNE KUTUMBA RAO, MUKKAMALA RATNAKAR AND M.V. PURNACHANDRA SEKHA R, WERE TRANSFERRED FROM ANUPAMA FINANCE. IT IS SUBMITTED THAT THOSE CREDITS WERE ORIGINALLY RAISED BY M/S. ANUPAMA FINA NCE AND THOSE CREDITS SUBSEQUENTLY STAND TRANSFERRED TO THIS CONC ERN. THE ASSESSEE WAS UNABLE TO FILE CONFIRMATION LETTERS, S INCE THEY ARE UNAVAILABLE TO HER. THE ASSESSEE ALSO REQUESTED YO U TO KINDLY GRANT ONE MONTH TIME TO FILE ABOVE CONFIRMATION LET TERS. THE ASSESSEE IS OUT OF STATION FOR THE PAST SIX MONTHS AS ALL THE CREDITORS INCLUDING BANKS AND INSURANCE COMPANIES A RE PRESSING TO REPLY THE LOANS IMMEDIATELY. IN ORDER TO DISCHARGE THE ABOVE CREDITORS, CHEQUES WERE ISSUED TO THE ABOVE CREDITORS INDIVIDUALLY ON 30.3. 2005 BUT THE CREDITORS WERE NOT INCLINED TO TAKE BACK THE MONEY. IN VIEW OF THIS CONTINGENCY, THOSE CHEQUES WERE ENCASHED BY THE ASS ESSEES CONCERN ONLY AND THOSE FINDS WERE UTILIZED BY THE A SSESSEE ONLY FOR THE PURPOSE OF CONSTRUCTION OF HOUSE AS IT IS EVIDE NCED BY THE ACCOUNT STANDING UNDER THE CAPTION HOUSE AT PATAMA TALANKA WHICH IS REFLECTED IN THE BOOKS OF ACCOUNT. IN THES E CIRCUMSTANCES, IT IS SUBMITTED THAT THOSE CREDITS WERE NOT DISCHAR GED AND STILL REMAINING AS OUTSTANDING CREDITORS. 17. THE REPLY WAS EXAMINED BY THE ASSESSING OFFICER BUT WAS NOT CONVINCED WITH IT. HE ACCORDINGLY MADE THE ADDITIO N OF RS.17,50,000/- AS ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 8 UNEXPLAINED INVESTMENT IN PROPERTY. NOW THE ASSESS EE HAS PREFERRED AN APPEAL BEFORE THE CIT(A) AND REITERATED ITS CONTENT IONS BUT THE CIT(A) WAS NOT CONVINCED WITH IT AND HE CONFIRMED THE ADDITION IN THE LIGHT OF THE OBSERVATION OF THE A.O. THAT COPIES OF THE CHEQUE O BTAINED FROM THE BANK REVEALED CATEGORICALLY THAT THOSE CHEQUES WERE GOT ENCASHED BY THOSE CREDITORS TO WHOM THEY WERE ISSUED AND NOT BY THE A SSESSEES CLERK AS THE SIGNATURES APPEARING ON THE BACK SIDE OF THE CHEQUE WAS THE EVIDENCE FOR THAT. 18. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL WITH THE SUBMISSIONS THAT WHATEVER EVIDENCE WAS COLLECTED BY THE ASSESSI NG OFFICER FROM THE BANK MANAGER, IT WAS NOT CONFRONTED TO THE ASSESSEE. HE AGAIN REITERATED THAT THE CHEQUES WERE ENCASHED BY THE EMPLOYEE OF THE ASSESS EES AND PAYMENTS WERE NOT MADE TO THE AFORESAID CREDITORS AS THEY WE RE DEMANDING THE INTEREST THEREON. THE CONFIRMATION OF THESE CREDIT ORS COULD NOT BE FILED AS THE ASSESSEE HAD STRAINED RELATION WITH THEM. THEREFOR E, THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER TO RE-ADJUDICATE THE ISSUE AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEES. 19. THE LD. D.R. ON THE OTHER HAND HAS PLACED A HEA VY RELIANCE UPON THE ORDER OF THE CIT(A). BESIDES IT WAS ALSO CONTENDED BY THE LD. D.R. THAT THE ASSESSING OFFICER HAS MADE ALL NECESSARY INVESTIGAT IONS BY SUMMONING THE BRANCH MANAGER OF THE BANK WHO HAS PRODUCED THE ORI GINAL CHEQUES AND FROM ITS VERIFICATION, IT WAS NOTICED THAT THE CHEQ UE BEARS THE SIGNATURE ON ITS BACK OF ALL THOSE CREDITORS IN WHOSE NAME THE CHEQU E WAS ISSUED. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY HELD THAT THE LOA NS WERE PAID TO THE CREDITORS AND THE INVESTMENT IN THE PROPERTY WAS UNEXPLAINED. 20. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A C AREFUL PERUSAL OF THE RECORD, WE FIND THAT SINCE BEGINNING, ASSESSEE HAS TAKEN A STAND THAT THE ANUPAMA FINANCE, A PROPRIETARY CONCERN OF THE HUSBA ND OF THE ASSESSEE HAS RECEIVED LOANS OF RS.9,00,000/- AND RS.8,50,000/- F ROM SMT. MANNE SRIKRISHNAVENAMMA AND SHRI MANNE RAMA SASTRULU RESP ECTIVELY. WHILE ACCEPTING LOANS BY HER HUSBAND, THERE WAS NO CONDIT ION FOR PAYMENT OF ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 9 INTEREST. THESE TWO CASH CREDITORS OF M/S. ANUPAMA FINANCE MADE WILL AND ACCORDINGLY THE AFORESAID 4 CREDITORS BECAME ENTITL ED TO RECOVER THE FOLLOWING AMOUNT: 1. SMT. M. JHANSI - RS.5,00,000 2. SRI M. KUTUMBA RAO - RS.3,50,000 3. SRI M. RATNAKAR - RS.5,00,000 4. SRI M.V. PURNACHANDRA SEKHAR - RS.4,00,000 21. THE ASSESSEE PROPOSED TO REPAY BACK THE CASH TO THESE 4 PERSONS AND SHE ACCORDINGLY ISSUED CHEQUES TO THEM. HOWEVER, T HEY DID NOT ACCEPT THESE CHEQUES ON THE GROUND THAT LOANS MUST BE REPAID ALO NG WITH THE INTEREST. THESE CHEQUES WERE BEARER CHEQUES AND SINCE THEY RE FUSE TO ACCEPT THE SAME, IT WAS ENCASHED BY THE ASSESSEE ITSELF THROUG H HIS EMPLOYEE AND THE ENCASHED AMOUNT WAS INVESTED IN RENOVATION OF A HOU SE AT PATAMATA LANKA, VIJAYAWADA. 22. WE HAVE ALSO CAREFULLY EXAMINED THE ASSESSMENT ORDER AND WE FIND THAT THE ASSESSING OFFICER HAS SUMMONED THE MANAGER , STATE BANK OF PATIALA, DURGAPURAM BRANCH, VIJAYAWADA, ASKING HIM TO PRODUC E THE COPIES OF THE ABOVE SAID CHEQUES. THE MANAGER ACCORDINGLY PRODUC ED THE SAME ON 4.10.2007. IT IS NOT CLEAR FROM THE ASSESSMENT ORD ER THAT THE COPIES OF THE CHEQUES OBTAINED BY THE ASSESSING OFFICER WAS EVER CONFRONTED TO THE ASSESSEE. IT WAS USED BY THE ASSESSING OFFICER AGA INST THE ASSESSEE BUT HE WAS NOT ALLOWED TO MAKE COMMENT ON THESE CHEQUES. BEFORE THE CIT(A), THE ASSESSEE HAS REITERATED ITS CONTENTIONS BUT THE CIT (A) DID NOT CALL THE REMAND REPORT ON THESE CHEQUES AS TO WHO HAS GOT IT ENCASH ED. THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING EMPHATICA LLY ARGUED THAT IT WAS ENCASHED BY ITS EMPLOYEES AND NOT BY THE CREDITORS TO WHOM IT WAS ORIGINALLY ISSUED. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT WHILE MAKING THE ADDITIONS, THE ASSESSING OFFICER HAS RELIED UPON TH E STATEMENT OF THE BANK MANAGER AND THE CHEQUES, WHICH WERE NOT CONFRONTED TO THE ASSESSEE FOR HIS COMMENTS. THEREFORE, THE ISSUE REQUIRES A FRESH AD JUDICATION BY THE ASSESSING OFFICER. WE ACCORDINGLY SET ASIDE THE OR DER OF THE CIT(A) IN THIS REGARD AND RESTORE THE MATTER TO THE FILE OF THE A. O. TO RE-ADJUDICATE THE ISSUE AFTER AFFORDING A PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO MAKE ITA NOS.461&475/V/08 K.L. SRIDEVI, VJA 10 COMMENTS ON THE CHEQUES AND ALSO BY MAKING NECESSAR Y VERIFICATION OR ENQUIRY. 23. GROUND NOS.5&6 RELATE TO THE COMPUTATION OF CAP ITAL GAIN BY INVOKING THE PROVISIONS OF SECTION 50C OF THE I.T. ACT. THI S ISSUE HAS ALREADY BEEN ADJUDICATED BY US IN THE REVENUES APPEAL WHERE THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE A.O. FOR RE-EXAMIN ATION. THEREFORE, WE FIND NO MERIT IN THIS ISSUE. ACCORDINGLY, THIS APPEAL I S DISPOSED OF. 24. GROUND NO.7 IS CONSEQUENTIAL NATURE AND NEEDS N O INDEPENDENT ADJUDICATION. 25. THUS APPEALS OF THE REVENUE AS WELL AS THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 2.3.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 2 ND MARCH, 2011 COPY TO 1 KOGANTI LAKSHMI SRI DEVI, D.NO.24 - 1 - 66A, SAMBAMURTHY ROAD, DURGAPURAM, VIJAYAWADA 2 ACIT, CIRCLE - 2(1), VIJAYAWADA 3 THE CI T, VIJAYAWADA 4 THE CIT (A) , VIJAYAWADA 5 THE DR, ITAT, VISAKHAP ATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM