M. Shekhar Reddy, Hyd, Hyderabad V. ACIT, Circle -11(1), Hyd, Hyderabad

ITA 504/HYD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2455 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Source of fund
• Section: 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1392/HYD/16 2005-06 M. SEKHAR REDDY, HYDERABAD [PAN: AFGPM8939K] ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), HYDERABAD 1393/HYD/16 2006-07 1394/HYD/16 2007-08 503/HYD/15 2008-09 504/HYD/15 2011-12 FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI P. SOMASEKHAR REDDY, DR DATE OF HEARING : 07-02-2018 DATE OF PRONOUNCEMENT : 28-02-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE FIVE APPEALS ARE BY ASSESSEE AGAINST THE ORDER (S) OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABA D. SINCE THE ASSESSMENTS ARE CONSEQUENT TO THE PROCEEDINGS U/S. 132 OF THE INCOME TAX ACT [ACT], AND ASSESSMENTS ARE COMPLETED U/S. 143(3) R.W.S. 153A, THESE ARE HEARD TO GETHER AND DISPOSED OFF BY THIS ORDER. M. SEKHAR REDDY (FIVE APPEALS) :- 2 -: 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM AGRICULTURE AND FRO M PARTNERSHIP FIRMS KNOWN AS SIDHIVINAYAKA BUILDERS & DEVELOPERS, S.R. PROJECTS AND TECHNO ESTATES. ASSESSE E WAS APPREHENDED BY THE SUB-INSPECTOR OF POLICE, WADAPALLY P.S., NALGONDA DISTRICT AND FROM HIS POSSESSION CASH OF RS . 47,69,000/- WAS FOUND. A SEARCH WARRANT WAS ISSUED BY THE DIT (INVESTIGATION) ON 18-02-2011 AND THE AMOUNT WAS S EIZED AND INITIATED PROCEEDINGS IN THE CASE OF ASSESSEE AN D FOUR OTHERS. THE AO ISSUED NOTICES U/S. 153A OF THE ACT ON 07-10- 2011 CALLING FOR THE RETURNS OF INCOME. ASSESSEE FILE D THE RETURNS OF INCOME ON 27-04-2012 ADMITTING INCOMES REPRESENTING INCOME FROM CONTRACTS, SALARY AND INTEREST FROM PARTNERSHIP FIRM. ASSESSEE ALSO FILED A STATEMENT OF A FFAIRS FOR THE PERIOD EXPLAINING VARIOUS TRANSACTIONS. AO COMPLE TED ASSESSMENTS MAKING VARIOUS ADDITIONS AND LD. CIT(A) G AVE PARTIAL RELIEF IN SOME YEARS. THESE APPEALS ARE HEAR D IN DETAIL AND ISSUES YEAR-WISE ARE CONSIDERED. AY. 2005-06: 3. IN THIS YEAR, ASSESSEE FILED RETURN OF INCOME ADMITTING AN AMOUNT OF RS. 1,58,130/-. ASSESSEE ALSO ADMITTED INCOME FROM AGRICULTURE BELONGING TO THE HUF AT RS. 8 0,000/-. THE AO PROCEEDED TO COMPLETE THE ASSESSMENT BY ISSUE O F NOTICES U/S. 143(2) AND 142(1) OF THE ACT. AO FOUND THAT AN AMOUNT OF RS. 3,28,000/- WAS SPENT BY ASSESSEE IN PUR CHASE OF 8 ACRES OF AGRICULTURAL LANDS SITUATED AT DACHEPALLY, GUNTUR DISTRICT FROM SRI K. VENKAT REDDY OF MUTHYALAMPADU VILL AGE. M. SEKHAR REDDY (FIVE APPEALS) :- 3 -: AO TREATED THE SAID AMOUNT OF RS. 3,28,000/- AS UNACCO UNTED FOR INVESTMENT BY ASSESSEE. 3.1. BEFORE THE CIT(A), ASSESSEE DID NOT APPEAR BUT F ILED WRITTEN SUBMISSIONS TO CONTEND THAT HE HAS AGRICULTURAL INCOME AND HUF INCOME TO MAKE THE INVESTMENT. 3.2. LD.CIT(A), HOWEVER, DID NOT AGREE. HE REJECTED THE CONTENTIONS BY STATING AS UNDER: 5.3. I DO NOT AGREE WITH ANY OF THE CONTENTIONS OF THE ASSESSE. IT IS PERTINENT TO MENTION HERE THAT THE A SSESSE HAD SHOWN NON-COMPLIANCE TO APPELLATE NOTICES SEVERAL TIMES. CONSEQUENT TO SEARCH OPERATION IT WAS FOUND THAT THE ASSESSE HAD PURCHASED PROPERTY OF 8 ACRES OF AGRICULTURAL LAND FOR A CONS IDERATION OF RS.3,28,000/- ON 21-06-2004. THERE WAS NO EXPLANATI ON FOR THE SOURCE OF ACQUISITION AND NATURE OF POSSESSION OF S UCH PROPERTY. DURING THE APPELLATE PROCEEDINGS A BALANCE SHEET SH OWING THE STATEMENT OF AFFAIRS FOR THE PERIOD ENDED ON 31.03. 2005 WAS SUBMITTED. BUT THE SAME DOES NOT SPEAK OF INVESTMEN TS IN LAND DURING THE YEAR. THE OPENING CASH BALANCE ON 01.04.2004 OF RS. 1,16,561 WAS NEVER EXPLAINED. FURTHER, THE BANK STATEMENT WA S NOT PRODUCED TO SHOW THE AVAILABILITY OF CASH AT BANK. THERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW THAT THE LAND BELONGING TO HUF WA S SOLD AND REALISED AND SUCH REALISATION WERE USED FOR ACQUISI TION OF PROPERTIES. ONE OF THE STRIKING FEATURE OF THE TRANSACTION IS T HAT THE ENTIRE INVESTMENT WAS MADE IN CASH. THE APPELLANT DERIVES INCOME FROM PARTNERSHIP FIRMS SUCH AS M/S SIDDHIVINAYAK BUILDER S & DEVELOPERS AND M/S S.R.PROJECTS AND TECHNO ESTATES. IN SPITE O F HAVING PARTNERSHIP FIRM THE RATIONALE BEHIND CASH INVESTME NTS IN ACQUISITION OF PROPERTIES WAS NEVER EXPLAINED. THUS, I AGREE W ITH THE AO THAT CASH OUT OF UNDISCLOSED SOURCES WERE INVESTED IN AC QUISITION OF LAND AND IT HAS TO BE TREATED AS UNEXPLAINED INVESTMENT . 3.3. AFTER HEARING LD. COUNSEL AND LD.DR, WE ARE OF THE OPINION THAT THE ORDER OF CIT(A) IS TO BE UPHELD AS ASSESSEE DID NOT FURNISH ANY FURTHER EVIDENCE TO SUPPORT THE CONTENTIO NS. IN M. SEKHAR REDDY (FIVE APPEALS) :- 4 -: THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF THE SOURCES, THE INVESTMENT WAS RIGHTLY CONSIDERED AS UNEXPLAINED. THE GROUNDS RAISED BY ASSESSEE ON THIS ISSUE ARE REJECTE D. 3.4. IN THE RESULT, APPEAL IN ITA NO. 1392/HYD/2016 FOR THE AY. 2005-06 IS DISMISSED. AY. 2006-07: 4. ASSESSEE FILED RETURN OF INCOME ON 27-04-2012 I N RESPONSE TO NOTICE U/S. 153A OF THE ACT, DECLARING INC OME OF RS. 2,10,000/- AND AGRICULTURAL INCOME OF RS. 1,60, 000/-. THE AO NOTICED THAT ASSESSEE PURCHASED 17 CENTS OF LAND SITU ATED AT DACHEPALLY VILLAGE, GUNTUR FOR A CONSIDERATION OF R S. 8,500/- AND ALSO PURCHASED 6.09 ACRES OF AGRICULTURA L LANDS LOCATED AT DACHEPALLY VILLAGE, GUNTUR FOR A CONSIDERA TION OF RS. 2,92,500/- AND THAT THE SAID AMOUNT WAS NOT EXPLAINED. THUS, THE AO DETERMINED THE TOTAL INCOME AT RS. 5,11,000/-. 4.1. BEFORE THE LD.CIT(A) ASSESSEE SUBMITTED WRITTEN EXPLANATION ALONG WITH STATEMENT OF AFFAIRS FOR THE PERI OD 31- 03-2006. IT WAS CLAIMED THAT DURING THE YEAR ASSESSEE RECEIVED VARIOUS INCOMES AND AGRICULTURAL INCOME OF RS. 1,60 ,000/-. IT WAS ALSO STATED THAT THERE WAS AN OPENING CASH BALANCE O F RS. 3,62,370/-. THEREFORE , ASSESSEE PLEADED THAT THE AMOUNT OF RS. 3,01,000/- IS EXPLAINABLE. HOWEVER LD. CIT(A) DID N OT ACCEPT THE CONTENTIONS. HE DISMISSED THE CONTENTIONS STATING AS UNDER: IT IS SIGNIFICANT TO MENTION HERE THAT THE OPENING CASH BALANCE AS PER STATEMENT OF AFFAIRS IS SHOWN AT RS. 3,62,37 0/-. IF THE M. SEKHAR REDDY (FIVE APPEALS) :- 5 -: CONTENTION OF ASSESSEE IS ACCEPTED THAT THE INVESTM ENT IN THE FY. 2004-05, WAS MADE OUT OF AVAILABLE CASH IN HAND, TH EN THERE WILL BE NO CASH BALANCE. THUS, I HOLD THAT THE STATEMENT OF AFFAIRS WAS PREPARED SUBSEQUENTLY TO EXPLAIN THE SOURCES OF ACQ UISITION. THUS, I AGREE WITH THE AO THAT CASH OUT OF UNDISCLOSED SOUR CES WERE INVESTED IN ACQUISITION OF LAND AND IT HAS TO BE TREATED AS UNEXPLAINED INVESTMENTS. 4.2. LD. COUNSEL SUBMITTED THAT AO HAS BROUGHT ONLY THE INVESTMENT MADE IN THE AGRICULTURAL LAND TO AN EXTENT O F RS. 3,01,000/-. IT WAS SUBMITTED THAT THE ACTUAL COST INCL UDING REGISTRATION CHARGES WAS RS. 3,33,875/-AND ASSESSEE A LSO PURCHASED ANOTHER LAND OF 9.33 ACRES FOR AN AMOUNT O F RS. 2,47,170/- WHICH WERE SHOWN IN THE STATEMENT OF AFFAIRS FOR THE PERIOD ENDING 31-03-2006. SINCE ASSESSEE HAS VARIO US RECEIPTS TO INVEST IN THE PROPERTIES, THE TREATMENT OF INVESTMENT OF RS. 3,01,000/- AS UNEXPLAINED IS NOT CORRECT. IT WAS FURTH ER SUBMITTED THAT ASSESSEE HAS CLAIMED AGRICULTURAL INCOME OF RS. 1,60,000/- WHICH WAS ACCEPTED BY THE AO. HENCE, THERE ARE ENOUGH SOURCES FOR ADMITTING THE INCOMES. 4.3. LD.DR SUPPORTED THE ORDERS OF LD. CIT(A). 4.4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD. AS CAN BE SE EN FROM THE PAPER BOOK FILED BEFORE US, ASSESSEE HAS ADMITTED THAT THE INVESTMENT IN DACHEPALLY LAND AS WELL AS TUGARPALLY L AND FOR MORE THAN RS. 5.8 LAKHS. IN ADDITION TO THAT ASSESSEE A LSO SHOWN INVESTMENT IN SIDDHI VINAYAKA BUILDERS & DEVELO PERS TO AN EXTENT OF RS. 90,000/-. ASSESSEE, APART FROM OPEN ING CASH BALANCE OF RS. 3,62,370/- HAS RECEIVED REMUNERATION SHARE OF PROFIT AND OTHER AMOUNTS INCLUDING AMOUNTS RECEIVED FRO M SR M. SEKHAR REDDY (FIVE APPEALS) :- 6 -: PROJECTS. NEITHER THE SOURCES WERE ENQUIRED BY THE AO N OR WERE THE INVESTMENTS CONSIDERED PROPERLY. EVEN THE ORDER OF AO INDICATES THAT ONLY THE COST PRICE OF ONE OF AGRICULTURA L LANDS PURCHASED AT DACHEPALLY AT RS. 3,01,000/- WAS CONSIDE RED, WHEREAS THE REGISTRATION CHARGES WERE ALSO NOT CONSIDER ED. LD.CIT(A) ALSO WHILE CONFIRMING THE EARLIER YEARS A DDITION, DID NOT CONSIDER IT NECESSARY TO EXAMINE THESE ASPECTS. AS SESSEE ALSO HAS SHOWN AGRICULTURAL INCOME OF RS. 80,000/- IN THE STATEMENT OF AFFAIRS, THE SOURCES OF WHICH COULD NOT BE CONFIRMED. IN THE PREVIOUS YEAR SUCH SOURCES WERE NO T ACCEPTED. THE SOURCE OF AGRICULTURAL INCOME ALSO HA S NOT BEEN CONSIDERED FOR VERIFICATION BY THE AO. SINCE THE ORD ER OF AO IS NOT BASED EITHER ON FACTS OR ON THE STATEMENT OF AFFAIRS FILED BY ASSESSEE, WE ARE OF THE OPINION THAT THE MATTER REQUIRES RE- EXAMINATION BY THE AO AFRESH, KEEPING IN MIND THE VAR IOUS RECEIPTS OF ASSESSEE STATED IN THE STATEMENT OF AFFAIRS. AO IS DIRECTED TO EXAMINE ALL ASPECTS AND GIVE CREDIT TO THE AMOUNTS RECEIVED BY ASSESSEE FOR VARIOUS SOURCES ON VERIFIC ATION. AO IS ALSO DIRECTED TO EXAMINE THE TOTAL OF THE INVESTMENTS MADE BY ASSESSEE DURING THE YEAR. FOR THIS PURPOSE, THE ISSUE OF ASSESSMENT IN THIS ASSESSMENT YEAR IS RESTORED TO THE FI LE OF AO FOR FRESH CONSIDERATION, AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. GROUNDS ARE CONSIDERED ALLOWED FOR STATIS TICAL PURPOSES. 4.5. IN THE RESULT, APPEAL IN ITA NO. 1393/HYD/2016 FOR THE AY. 2006-07 IS ALLOWED FOR STATISTICAL PURPOSES. M. SEKHAR REDDY (FIVE APPEALS) :- 7 -: AY. 2007-08: 5. IN THIS ASSESSMENT YEAR, ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A ON 27-04-2012 DECLARING AN INCOME OF RS. 4,88,390/- AND AGRICULTUR AL INCOME OF RS. 4,07,000/-. AO COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT, DETERMINING THE TOTAL INCOME AT RS. 5,63,390/-. WHILE DOING SO, THE AO ADDED RS. 75,000 /- ON THE GROUND THAT THE AMOUNT INVESTED IN ACQUISITION OF AGRI CULTURAL LANDS ADMEASURING 1.25 ACRES AT DACHEPALLY, GUNTUR D ISTRICT WAS NOT PROPERLY EXPLAINED. 5.1. BEFORE THE LD.CIT(A), IT WAS CLAIMED THAT DURING THE PREVIOUS YEAR, ASSESSEE HAD OPENING CASH BALANCE OF RS. 21,66,797/-, OPENING BANK BALANCE OF RS. 3,20,839/- AND ALSO DERIVED INCOME OF RS. 4,88,390/- BESIDES AGRICULTURA L INCOME OF RS. 4,07,000/-. LD. CIT(A) DID NOT AGREE AND DISMISSED THE SUBMISSIONS STATING AS UNDER: THE FIGURES WHICH WERE CITED IN STATEMENT OF AFFAI RS ARE DOUBTFUL AND NOT SUPPORTED BY ANY EVIDENCE. THESE A RE FABRICATED TO EXPLAIN THE SOURCES OF ACQUISITION. HUGE AMOUNT OF CASH IN HAND APPEARS TO BE FRAUDULENT SHOWN BY SHOWING AMOUNT RE CEIVED FROM SR PROJECTS. THIS IS NOT SUPPORTED BY ANY EVIDENCE. ON E OF THE STRIKING FEATURES OF ALL THESE TRANSACTIONS IS THAT THE ENTI RE INVESTMENT WAS MADE IN CASH. WHEN ASSESSEE WAS HAVING BANK ACCOUNT , THE RATIONALE BEHIND CASH INVESTMENTS IN ACQUISITION OF PROPERTIE S WAS NEVER EXPLAINED. THUS, I AGREE WITH THE ORDER OF AO THAT CASH OUT OF UNDISCLOSED SOURCES WERE INVESTED IN ACQUISITION OF LAND AND IT HAS TO BE TREATED AS UNEXPLAINED INVESTMENTS. 5.2. IT WAS THE SUBMISSION OF LD. COUNSEL THAT ASSESSE E HAS PURCHASED LAND AT DACHEPALLY FOR AN AMOUNT OF RS. 81,965/-, WHEREAS THE AO HAS CONSIDERED ONLY AN AMOU NT OF RS. 75,000/-. CONSIDERING THAT ASSESSEE HAS RETURNED INCOME M. SEKHAR REDDY (FIVE APPEALS) :- 8 -: OF RS. 4,88,390/- AND ALSO AGRICULTURAL INCOME OF RS . 4,07,000/-, WHICH WAS ACCEPTED BY THE AO, THE INVESTME NT OF RS. 75,000/- IS TO BE CONSIDERED AS PROPERLY EXPLAI NED. 5.3. LD.DR RELIED ON THE ORDERS OF THE AO. 5.4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE PAPER BOOK PLACED ON RECORD. AS CAN BE SEEN FROM THE ORDER, AO HAS CONSIDERED ONLY THE INVESTMENT OF RS. 75,000/-, WHEREAS ASSESSEE HAS ADMITTED IN THE STATEMENT OF AFFAIRS AN AMOUNT OF RS. 81,965/-. EVEN WITHOUT CONSI DERING THE OTHER RECEIPTS AND PAYMENTS, THE INCOMES RECEIVED DU RING THE YEAR INCLUDING THE AGRICULTURAL INCOME, BEING MOR E THAN RS. 8 LAKHS (RS. 48,390/- + 4,07,000/-), WE ARE OF THE O PINION THAT ASSESSEE HAS SUFFICIENT SOURCES TO INVEST IN THE ABOVE PROPERTY. CONSIDERING THE SMALLNESS OF THE AMOUNT COMPARED TO TH E RECEIPTS DURING THE YEAR, WE ACCEPT THE INVESTMENT AS PR OPERLY EXPLAINED. AO IS DIRECTED TO DELETE THE ABOVE AMOUNT. GROUNDS ARE ALLOWED. 5.5. IN THE RESULT, APPEAL IN ITA NO. 1394/HYD/2016 FOR THE AY. 2007-08 IS ALLOWED. AY. 2008-09: 6. A NOTICE U/S. 153A WAS ISSUED TO THE ASSESSEE TO FI LE THE RETURN OF INCOME IN RESPONSE TO WHICH, THE ASSESSEE HAD FILED THE RETURN ADMITTING AN INCOME OF RS. 3,41,016/- AND AGRICULTURAL INCOME OF RS. 4,40,000/-, FOR THE YEAR UNDER REFERENCE. THE ASSESSING OFFICER OBSERVED THAT THE ASS ESSEE HAD M. SEKHAR REDDY (FIVE APPEALS) :- 9 -: MADE INVESTMENTS WORTH RS.10,51,000/- IN AGRICULTURAL LANDS IN HIS NAMES DURING THE YEAR AND ALSO MADE INVESTMENT WORTH RS. 6,43,500/- IN THE NAME OF HIS MINOR SON AND RS. 5,09,000/- IN THE NAME OF HIS MINOR DAUGHTER, FOR WHI CH SOURCES WERE FOUND TO BE NON-EXISTING, AS SUCH WERE TR EATED AS UNEXPLAINED INVESTMENTS IN THE HANDS OF THE ASSESSEE F OR THE YEAR UNDER REFERENCE. 6.1. BEFORE THE LD.CIT(A), ASSESSEE OBJECTED FOR SUC H ADDITION AND SUBMITTED THAT RECEIPTS AND PAYMENTS ACCOUNTS WERE PREPARED AND FURNISHED BEFORE THE AO AT THE TIME OF ASSESSMENTS AND AO WITHOUT CONSIDERING SUCH INFORMATION HAD CONCLUDED THAT SAID INVESTMENT OF RS.22,03,500/- WAS WI THOUT ANY SOURCE. 6.2. LD.CIT(A) ALLOWED THE CONTENTIONS PARTLY BY STATING AS UNDER: 5.3. PERUSED THE SUBMISSIONS OF THE APPELLANT AND THE INADEQUATE OBSERVATIONS BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. AS HAS BEEN OBSERVED, THE APPELLANT MADE CER TAIN INVESTMENTS IN PURCHASE OF LANDS IN HIS NAME (RS.10,51,000) AND IN THE NAMES OF HIS MINOR SON AND DAUGHTER (RS.11,52,500/-) AND IT HAS BEEN PRESUMED THAT ASSESSEE DO NOT HAVE ANY SOURCES FOR SUCH INVESTMENTS, AND ACCORDINGLY, WERE TREATED AS UNEXP LAINED INVESTMENTS FOR THE YEAR, IN THE HANDS OF ASSESSEE/ APPELLANT. HOWEVER, AS PER THE APPELLANT, THERE WERE ADEQUATE SOURCES INCLUDING THE OPENING BALANCE OF RS.25,78,889/- APART FROM AG RICULTURAL INCOMES (RS. 4,40,000/-), RENT (RS.24,000/-), SHARE OF PROFIT FROM SIDDHI VINAYAKA BUILDERS & DEVELOPERS (RS. 4,69,530 /-), INTEREST (RS.1,14,256/-) APART FROM RECOVERY OF HAND LOANS ( RS.6,50,000/-), AS PER THE RECEIPTS AND PAYMENTS ACCOUNT PREPARED FOR THE YEAR, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. UNFORTUNATELY , THERE WERE NO DISCUSSIONS ON THESE ITEMS OF FUNDS AVAILABLE TO TH E ASSESSEE. IN THIS CONTEXT, IT MAY BE RELEVANT TO OBSERVE THAT THESE R ECEIPTS AND PAYMENTS STATEMENTS WERE PREPARED SUBSEQUENT TO THE DATE OF SEARCH AND NOT WELL SUPPORTED BY ANY RELATED DOCUMENTS OR INCOME TAX M. SEKHAR REDDY (FIVE APPEALS) :- 10 -: RETURNS. HENCE, IT MAY NOT HAVE THE SANCTITY, AS SO UGHT BY THE APPELLANT. HOWEVER, IT IS ALSO A FACT THAT, THE APP ELLANT'S CLAIM OF SHARE OF PROFITS, RENTAL INCOME, INTEREST EARNED FR OM THE FIRMS REQUIRED TO BE GIVEN CREDIT. FURTHER, THE ASSESSING OFFICER HERSELF ACCEPTED THE CLAIMS OF ASSESSEE ON AGRICULTURAL INCOMES MORE OR LESS TO THE EXTENT SHOWN AND EXPLAINED IN RETURN OF INCOME FURNISHED B Y THE ASSESSEE AND THE SAME MAY BE CONSIDERED FOR GIVING CREDIT FO R EXPLAINING THE SOURCES FOR THE INVESTMENTS AS ANALYSED BY THE ASSE SSING OFFICER. SUBJECT TO THE ABOVE OBSERVATIONS, IT IS REASONABLE TO HOLD THAT THE RECOGNIZED INCOMES / RECEIPTS, SUCH AS RENTS AND IN TEREST CONSTITUTE THE EXPLAINABLE SOURCES TO THE ASSESSEE AND TO THIS EXTENT THE ASSESSEE GETS CREDIT FOR EXPLAINING THE UNEXPLAINED INVESTMENTS OF RS.22,03,500/-. HOWEVER, THERE IS NO CREDIBLE INFOR MATION AS REGARD TO THE RECOVERY OF HAND LOANS (RS.6,50,000/-) AND A GRICULTURAL INCOME OF RS.4,40,000/-. IT IS ALSO A FACT THAT BOTH AGRIC ULTURAL INCOME AND OPENING BALANCES (RS.25,78,889/-) WERE OFFERED AS E XPLANATION FOR THE INVESTMENTS, WHILE INCORPORATING THE AGRICULTURAL I NCOME IN THE OPENING BALANCES. HENCE, THE EXPLANATION TAKEN BY THE APPELLANT FOR EXPLAINING THE SOURCES IS FALLING SHORT OF THE INVE STMENTS. UNDER THE CIRCUMSTANCES, IT MAY BE REASONABLE TO HOLD THAT TH E INVESTMENTS MADE IN LANDS DURING THE YEAR TO THE EXTENT OF RS.2 2,03,500/- ARE ONLY EXPLAINED PARTLY, MAY BE TO THE EXTENT OF 50% OF SUCH INVESTMENTS, LEAVING A GAP OF 50% OF THE INVESTMENT S WHICH IS EQUIVALENT TO RS.11,01,750/- (50% OF RS.22,03,500/- ). THUS BASED ON THE FACTS AND TO THE EXTENT INFORMATION BROUGHT ON RECORD, IT IS REASONABLE TO HOLD THAT ONLY A PART OF INVESTMENTS ARE EXPLAINED BY THE APPELLANT. ACCORDINGLY, THE ADDITION IS RESTRIC TED TO RS.11,01,750/- BEING 50% OF UNEXPLAINED INVESTMENTS AS QUANTIFIED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. TO THIS EXTENT, TH IS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. 6.3. IT WAS THE SUBMISSION OF LD. COUNSEL THAT IF ASSESSEES CASH FLOW STATEMENTS WERE CONSIDERED, ASSES SEE IS HAVING OPENING CASH BALANCE OF ABOUT RS. 25 LAKHS WH ICH WOULD BE SUFFICIENT FOR EXPLAINING THE INVESTMENTS MAD E DURING THE YEAR. SINCE AO HAS CONSIDERED THE INVESTMENTS WITHO UT CONSIDERING THE RECEIPTS, IT WAS THE SUBMISSION THAT TH E INVESTMENTS ARE TO BE CONSIDERED AS PROPERLY EXPLAINED . 6.4. LD.DR, HOWEVER, RELIED ON THE ORDER OF AO. M. SEKHAR REDDY (FIVE APPEALS) :- 11 -: 6.5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. AS CA N BE SEEN FROM THE STATEMENT OF AFFAIRS, ASSESSEE WAS SHO WING OPENING CASH BALANCE OF MORE THAN RS. 25,78,889/- AN D ALSO RETURN OF LOANS STATED TO HAVE BEEN ADVANCED IN EARLIE R YEAR TO AN EXTENT OF RS. 6,50,000/-. THERE WERE ENOUGH SOURC ES IN THE EARLIER YEAR AND AO HAS MADE ONLY ADDITION OF RS. 75 ,000/- AS UNEXPLAINED WITHOUT CONSIDERING OTHER AMOUNTS. ASSESSE E HAD SUFFICIENT AGRICULTURAL INCOME IN EARLIER YEARS AND ALSO DURING THE YEAR WHICH WERE ACCEPTED BY THE AO AS SUCH. IN V IEW OF THAT CONSIDERING THE STATEMENT OF AFFAIRS PLACED ON RECO RD, THE INVESTMENTS CAN BE CONSIDERED AS PROPERLY EXPLAINED. THE STATEMENTS OF AFFAIRS IS AS UNDER: STATEMENT OF AFFAIRS FOR THE PERIOD ENDED 31.03.200 8 PARTICULARS AMOUNTS PARTICULARS AMOUNTS TO OPENING CASH BALANCE 25,78,889 MUNICIPAL TAX 7,200 OPENING BANK BALANCE 1,061 INCOME TAX-2007- 08 1,50,000 REMUNERATION FROM SIDDIVINAYAKA BUILDERS & DEVELOPERS 2,25,000 INCOME TAX-2008- 09 1,00,000 INTEREST FROM SIDDIVINAYAKA BUILDERS & DEVELOPERS 1,14,256 PERSONNEL DRAWINGS 1,20,000 SHARE OF PROFIT FROM SIDDIVINAYAKA BUILDERS & DEVELOPERS 4,69,530 SCHOOL FEES 16,000 AGRICULTURAL INCOME 4,40,000 LIFE INSURANCE PREMIUM 10,000 RENT 24,000 PURCHASE OF AGRICULTURE LANDS 0.31 GUNTAS TUGARPALLY 11.25 ACRES 33,395 M. SEKHAR REDDY (FIVE APPEALS) :- 12 -: DACHEPALLY 8,22,845 HAND LOAN RETURNED FROM OTHERS 6,50,000 18 ACRES DACHEPALLY 12,60,590 2700 SQ.YARDS OF LAND AT MUTYALAMPADU 3,26,160 1429 SQ.YARDS OF LAND AT SANGAREDDY 9,38,970 BANK BALANCE 1,061 CASH IN HAND 7,16,515 TOTAL 45,02,736 TOTAL 45,02,736 6.5.I. SINCE ASSESSEE HAS EXPLAINED ALL THE INVESTM ENTS, WE ARE OF THE OPINION THAT THE ORDER OF CIT(A) ACCEPTIN G ONLY 50% OF AMOUNTS AS EXPLAINABLE IS NOT CORRECT. SINCE ASSESSEE HAD KNOWN SOURCES FOR INVESTING IN THE PROPERTIES, BAS ICALLY BEING AGRICULTURAL SOURCES AND INCOMES FROM SIDDHI VINAYAKA BUILDERS & DEVELOPERS, WE ARE OF THE OPINION THAT PURC HASE OF AGRICULTURAL LANDS CANNOT BE CONSIDERED AS UNEXPLAIN ED. IT IS SURPRISING TO NOTE THAT THE AO, HAS TREATED THE UNEXPLAINE D INVESTMENT MADE BY ASSESSEE AT RS. 10,51,000/-, EVEN TH OUGH LISTED THE INVESTMENTS IN THE NAMES OF MINOR CHILDREN, TH E TOTAL INCOME WAS HOWEVER, ASSESSED AT RS. 25,44,516/- WITH OUT SPECIFICALLY ADDING THE AMOUNT OF INVESTMENTS MADE IN T HE MINOR CHILDREN NAME. IT SHOWS CASUAL APPROACH OF AO IN MAKING THE ASSESSMENT. THE CASH FLOW STATEMENT FILED BE FORE AO WAS NOT EVEN EXAMINED AND LD.CIT(A) HAS GIVEN CRE DIT TO AN EXTENT OF 50% ONLY, WHEREAS THE CASH FLOW STATEMENT INDI CATES THAT THERE ARE ENOUGH SOURCES FOR INVESTING IN THE PRO PERTIES. IN VIEW OF THAT, WE ALLOW THE GROUNDS OF ASSESSEE AND DELETE BALANCE 50% OF THE AMOUNT CONFIRMED BY THE LD.CIT(A). M. SEKHAR REDDY (FIVE APPEALS) :- 13 -: 6.6. IN THE RESULT, APPEAL IN ITA NO. 503/HYD/2015 FOR THE AY. 2008-09 IS ALLOWED. AY. 2011-12: 7. AN AMOUNT OF RS 47,69,000 WAS FOUND DURING THE YEAR BY POLICE WHICH LED TO IT PROCEEDINGS. NOTICE U/ S. 153A WAS ISSUED TO ASSESSEE TO FILE THE RETURN OF INCOME IN RESPONSE TO WHICH, ASSESSEE HAD FILED THE RETURN ADMITTING AN INC OME OF RS. 16,800/- AND AGRICULTURAL INCOME OF RS. 7,90,00 0/-. WHILE FINALIZING THE ASSESSMENT PROCEEDINGS, AO HAD EXAMIN ED THE SOURCES FOR THE CASH OF RS.47,69,000/- FOUND AND SEI ZED, WHICH WAS ORIGINALLY DISOWNED BY ASSESSEE AND ATTRIBUTED TO 4 OTHER PARTIES, WHO WERE ACCOMPANYING THE CASH. HOWEVER, AS SESSEE OWNED UP THE CASH SEIZED AND AS PER HIS CONTENTION, TH E SOURCES FOR THE SAID CASH WERE : RS. (I) OPENING BALANCE 9,03,499 (II) SALE PROCEEDS OF LAND AT SANGAREDDY 12,86,400 (III) SALE PROCEEDS OF AGRICULTURAL PRODUCE 15,26,795 (IV) SALE PROCEEDS OF AGRICULTURAL LAND AT SANGAREDDY 5,40,000 (V) HAND LOAN RECEIVED BACK FROM MR.SISHIR REDDY, MUTHYALAMPADU 4,00,000 (VI) ADVANCE FOR SALE OF AGRICULTURAL LAND AT TUGARAPALLY, MEDAK DISTRICT 4,00,000 AO HAD ACCEPTED THE EXPLANATION OF ASSESSEE AS REGARD TO THE AGRICULTURAL INCOME, BUT ONLY A PART OF IT, TO THE EXTE NT OF RS.9,69,000/-, WHILE REJECTING ALL THE OTHER EXPLANATI ONS ON THE GROUND THAT THERE WERE INCONSISTENCIES IN THE STATEMENT O F ASSESSEE AT DIFFERENT TIMES OF INVESTIGATIONS, AND THE M. SEKHAR REDDY (FIVE APPEALS) :- 14 -: TRANSACTIONS / SOURCES OFFERED FOR EXPLAINING THE SOUR CES FOR CASH WERE NOT VERIFIABLE. THERE ARE NO BOOKS OF ACCO UNTS, EITHER FOR THE ASSESSEE OR THE FIRMS IN WHICH ASSESSEE CLAIM ED TO BE A PARTNER. SIMILARLY, THE LOANS AND ADVANCES, CLAIMED TO HAVE BEEN RECEIVED BY ASSESSEE FOR EXPLAINING THE CASH FO UND, DID NOT FIND FAVOUR WITH THE AO, AS NO PROOF OR EVIDENCE WERE FURNISHED AND THE EXPLANATIONS WERE TREATED AS MERE PO ST THOUGHT. ACCORDINGLY, RS. 38,00,000/- WAS BROUGHT TO TA X, AGAINST THE CASH OF RS.47,69,000/- SEIZED, AFTER GIVI NG CREDIT OF RS.9,69,000/- FOR THE AGRICULTURAL INCOMES EARNED. 7.1. BEFORE THE LD.CIT(A) ASSESSEE OBJECTED FOR SUCH ADDITION AND SUBMITTED THAT THE REASONS FOR INCONSISTENCY ON THE PART OF ASSESSEE WAS DUE TO THE INTERVENTION OF THE P OLICE IN THE INITIAL STAGES AND NO BOOKS WERE MAINTAINED TO EXPLA IN THE CASH, AS HE COULD NOT REMEMBER THE DETAILS INITIALLY, BUT SUBSEQUENTLY FINANCIAL TRANSACTIONS WERE VERIFIED WITH THE HELP OF RECEIPTS AND PAYMENTS ACCOUNT AND STATEMENT OF AFFAIRS PREPARED AND FILED BEFORE THE AO, ALONG WITH AN AFFI DAVIT FOR EXPLAINING THE CASH FOUND AND SEIZED FOR WHICH THE A O DID NOT CONTRADICT THE AFFIDAVIT AND ACCEPTED VARIOUS INCOMES ADMITTED. IT WAS FURTHER SUBMITTED THAT THE STATEMENT OF AFFAIRS FILED WAS CLEARLY INDICATING THE AVAILABILITY OF ENOUGH CASH I N THE HANDS OF ASSESSEE TO EXPLAIN THE CASH FOUND AND SEIZED AND THERE WERE NO DISPUTES AS REGARD TO THE RECEIPTS AND THE INCOM ES WHICH WERE ASSESSED BY THE AO AND THE MERE INCONSISTE NCY IN STATEMENTS, CANNOT BE THE BASIS FOR MAKING ADDITIONS. WHI LE REITERATING THE SUBMISSIONS MADE BEFORE THE AO, ASSES SEE SUBMITTED THAT AS PER THE RECEIPTS AND PAYMENTS STATEMENT AS M. SEKHAR REDDY (FIVE APPEALS) :- 15 -: ON 31-03-2011, CASH ON HAND WAS RS.48,38,694/-, AS AGAINST THE CASH OF RS.47,69,000/- SEIZED ON 18-02-2011 AND THE SOURCES INCLUDED AN AMOUNT OF RS.9,03,499/- BEING TH E OPENING BALANCE, WITH FURTHER AMOUNTS OF RS.12,86,400 /- REPRESENTED THE SHARE OF THE ASSESSEE(60%) IN M/S.TEC HNO ESTATES, WHICH SHOWN TO HAVE SOLD LAND OF 1329 SQUARE YARDS LOCATED AT SANGAREDDY FOR RS.21,44,000/-. WHILE RS.15,26,795/- REPRESENTED AGRICULTURAL INCOME, RS. 5,40,000/- REPRESENTED THE CONSIDERATION FOR SALE OF LAND, AND RS.4,00,000/- SHOWN TO BE THE REPAYMENT OF HAND LOAN FROM ONE MR. T.SESHI REDDY, WITH A FURTHER BALANCE OF RS.4 ,00,000/- REPRESENTED ADVANCE FOR SALE OF AGRICULTURAL LAND OF AC 04.25 GUNTAS LOCATED IN MEDAK DISTRICT. AS PER ASSESSEE, THERE WAS A CAPITAL GAIN OF RS.1,24,747/- FOR FIRM TOWARDS SALE O F LAND AT SANGAREDDY, BEING 60% PARTNER IN THE FIRM (M/S.TECHNO ESTATES), HIS SHARE OF CAPITAL GAINS WAS QUANTIFIED AT RS.74,850/- WHICH COULD NOT BE OFFERED FOR TAXES FOR THE YEAR, SINCE THERE WAS NO TAXABLE INCOME FOR HIM AND AS SUCH INCOME WAS OFFERED BY FILING A REVISED STATEMENT, DURING THE ASSESSMENT PROCEEDINGS. 7.2. LD.CIT(A) ALLOWED THE CONTENTIONS PARTLY BY STATING AS UNDER: 5.3 PERUSED THE SUBMISSIONS OF THE APPELLANT AND T HE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. AS COULD BE MADE OUT FROM THE FACTS OF THE CASE, AGAIN ST THE CASH OF RS.47,69,000/- SEIZED DURING THE ROADSIDE CHECKING BY POLICE ON 18.02.2011, WHICH WAS BEING PHYSICALLY CARRIED BY 4 PERSONS, WAS ACCEPTED TO BELONGING TO THE ASSESSEE UNDER REFEREN CE, WHO WAS RELUCTANT TO ACCEPT IT AS HIS CASH INITIALLY WHEREI N IT WAS STATED THAT AN AMOUNT OF RS.25,00,000/- BELONGING TO ONE MR.D.V ENKAT REDDY, WHO STATED TO HAVE BEEN HAILING FROM THE VILLAGE OF THE ASSESSEE. IT M. SEKHAR REDDY (FIVE APPEALS) :- 16 -: WAS ONLY SUBSEQUENTLY THE CASH WAS OWNED UP BY THE ASSESSEE AND TRIED TO EXPLAIN THE SAME THROUGH VARIOUS SOURCES, AS NARRATED THROUGH THE RECEIPTS AND PAYMENTS ACCOUNTS PREPARED AND SUBMITTED DURING THE POST-SEARCH PROCEEDINGS AND ASSESSMENT P ROCEEDINGS. OUT OF THEM, THE MAIN SOURCE WAS FROM AGRICULTURE, ABOU T WHICH IT HAS BEEN STATED THAT AN AMOUNT OF RS.15,26,795/- REPRES ENTED SALE PROCEEDS OF AGRICULTURAL PRODUCE. FURTHER, AS PER T HE APPELLANT, RS.5,40,000/- REPRESENTED SALE PROCEEDS OF AGRICULT URAL LANDS AT SANGAREDDY AND RS.4,00,000/- REPRESENTING THE HAND LOAN RECEIVED BACK FROM ONE MR.SESHI REDDY, WITH A FURTHER AMOUNT OF RS. 4,00,000/- RECEIVED AS ADVANCE FOR SALE OF LAND IN MEDAK DISTRICT, APART FROM THE OPENING BALANCE OF RS.9,03,499/-. WH ILE ELABORATING THE SOURCES, THE APPELLANT PREPARED RECEIPTS AND PA YMENTS ACCOUNTS WHICH INCLUDED THE MAIN SOURCES OF INCOME FROM AGRI CULTURE AND MINOR SOURCES AS INTEREST AND PROFITS FROM FIRMS, WHERE H E IS A PARTNER, APART FROM INCOME FROM PROPERTY. THE AGRICULTURAL I NCOME WAS SHOWN AT RS.5,50,000/-, RS.6,00,000/- AND RS.7,90,000/- F OR THE A.YS. 2009-10, 2010-11 AND 2011-12, RESPECTIVELY. HOWEVER , IT IS NOT KNOWN HOW THE OPENING BALANCE OF RS.9,03,499/- ALSO REPRESENT THE EXPLAINABLE SOURCE WHERE AGRICULTURAL INCOMES WERE INCLUDED IN SUCH RECEIPTS AND THE SAME AMOUNTS ARE TAKEN AS ACCUMULA TED AGRICULTURAL INCOME, SEPARATELY. IT WAS ALSO NOT EXPLAINED HOW T HE AGRICULTURAL INCOME HAS INCREASED SUBSTANTIALLY IN THE LAST FEW YEARS, WHICH WAS NEITHER SUPPORTED BY THE NEEDED INFORMATION SUCH AS BILLS FOR EXPENSES AND RECEIPTS FOR SALE OF AGRICULTURAL PROD UCE AND TIMELY SUBMISSION OF INCOME TAX RETURNS. INSPITE OF THE SA ME, THE ASSESSING OFFICER HAD ACCEPTED THE AGRICULTURAL INCOME AS SOU RCE FOR EXPLAINING THE SEIZED CASH ON ESTIMATED BASIS AT RS.9,69,000/, TO QUANTIFY THE UNEXPLAINED CASH / INVESTMENT AT RS.38,00,000/-, AG AINST THE SEIZED CASH OF RS,47,69,000/-. THE APPELLANT'S FURTHER CLA IM OF EXPLAINING THE UNEXPLAINED CASH OF RS.38,00,000/- ARE REVOLVING AR OUND THE FOLLOWING SOURCES: (I) SALE PROCEEDS OF LAND BY THE FIRM, M/S.TECHNO ESTATES : RS.12,86,400/- (II) SALE PROCEEDS OF AGRICULTURAL LANDS AT SANGAREDDY : RS. 5,40,000/- (III) ADVANCE FOR SALE OF AGRICULTURAL LAND IN MEDAK DISTRICT : RS. 4,00,000/- (IV) REPAYMENT OF LOAN FROM SESHI REDDY : RS. 4,0 0,000/- ------------------------ RS.26.26,400/- ------------------------ M. SEKHAR REDDY (FIVE APPEALS) :- 17 -: THE ABOVE EXPLANATION IS IN ADDITION TO THE RELIANC E PLACED ON THE OPENING BALANCE OF RS.9,03,499/-, WHICH WAS NEI THER SUBSTANTIATED WITH RETURN OF INCOME FILED BY THE AS SESSEE NOR WITH THE HELP OF THE TRANSACTIONS ASSOCIATED WITH THE SOURCE S OF INCOMES CLAIMED. FURTHER, THE OPENING BALANCE WAS DUPLICATE D WITH THE HELP OF AGRICULTURAL INCOMES WHICH WERE ALSO CLAIMED REPRES ENTING SEPARATE SOURCE TO THE ASSESSEE FOR EXPLAINING THE CASH SEIZ ED. AS REGARDS TO THE SOURCES AS THE SHARE IN SALE PROCESS OF LAND BY THE FIRM, THE APPELLANT HAD NEITHER EXPLAINED THE STATUS OF FIRM NOR TRANSACTION INVOLVING THE SALE OF LANDS BY FIRM AND RECEIPTS OF PROCEEDS IN THE HANDS OF THE FIRM AND HOW SUCH PROCEEDS REACHED THE ASSESSEE, AS A PARTNER, DIRECTLY. THERE IS NO EXPLANATION AS REGAR DS TO THE TRANSFER OF FUNDS FROM FIRM TO PARTNER, EITHER WITH THE HELP OF BANK ACCOUNT STATEMENT OR THE CONFIRMATION FROM THE PARTNERSHIP FIRM. SIMILAR ARE THE CLAIMS ON RECEIPT OF HAND LOAN FROM SESHI REDDY AND ADVANCE FOR SALE OF LAND IN MEDAK DISTRICT. SIMILARLY, THERE IS NO INFORMATION AS REGARD TO THE SALE OF AGRICULTURAL LAND AT SANGARED DY. IN ABSENCE OF THE REQUIRED INFORMATION, ANY EXPLANATION WOULD AMO UNT TO THE SELF SURVIVING STATEMENT, INCLUDING AFFIDAVIT CLAIMED TO HAVE BEEN FILED BY THE ASSESSEE, BEFORE THE ASSESSING OFFICER. UNDER T HE CIRCUMSTANCES, AND BASED ON THE INFORMATION AND FACTS BROUGHT ON R ECORD, THE CASH FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEE DINGS WAS HELD TO BE NOT FULLY EXPLAINED BY THE ASSESSEE. THE ASSESSI NG OFFICER HAD ALREADY GIVEN CREDIT FOR THE AGRICULTURAL INCOME OF RS.9,69,000/- OUT OF THE TOTAL CLAIM OF AGRICULTURAL INCOME OF RS.15,26, 795/- MADE BY THE ASSESSEE, AND IN ALL PROBABILITY SUCH AMOUNTS ARE R EPRESENTING THE NET AGRICULTURAL INCOMES TO THE ASSESSEE. REGARDING THE RECEIPT OF SALE PROCEEDS OUT OF SALE OF PLOTS AT SANGAREDDY, OUT OF WHICH AN AMOUNT OF RS.12,86,400/- REACHED THE ASSESSEE TOWARDS HIS SHARE, THERE IS NO COMPLETE INFORMATION AS REGARDS TO THE EXISTENCE OF THE FIRM, THE LAND SALE TRANSACTION AND FLOW OF AMOUNTS FROM THE FIRM TO THE PARTNERS. NO RELIABLE INFORMATION WAS FORTHCOMING O N THE ISSUE OF REPAYMENT OF LOAN OF RS.4,00,000/- FROM MR.SESHI RE DDY ALSO, AND THE RECEIPT OF ADVANCE OF RS.4,00,000/- FOR SALE OF AGRICULTURAL LAND IN THUGARAPALLY, MEDAK DISTRICT. UNDER THE CIRCUMSTANC ES, I AM OF THE CONSIDERED OPINION THAT THERE ARE NO RELIABLE OR VE RIFIABLE SOURCES FOR EXPLAINING THE ENTIRE AMOUNTS OF RS.38,00,000/- WHI CH WAS TREATED AS UNEXPLAINED CASH / INVESTMENTS BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, FOR WANT OF EXPLAINING THE SOURCE S FOR CASH OF RS.47,69,000/- SEIZED AND BELONGING TO THE ASSESSEE . HOWEVER, KEEPING THE FACT THAT THE APPELLANT WAS DERIVING GO OD INCOMES FROM AGRICULTURE, AND SOME AMOUNTS OF RENTS AND INTEREST /PROFITS FROM THE FIRMS, AS NOTICED THROUGH THE RETURN OF INCOME FURN ISHED FOR A.YS. 2010-11 & 2011-12, A FURTHER CREDIT FOR RS.5,00,000 /- DESERVED BY THE APPELLANT IN EXPLAINING THE CASH SEIZED BY DEPA RTMENT. THUS, THE APPELLANT GETS PART RELIEF, ON THIS COUNT. WITH THE ADDITION OF RS.33,00,000/- STAND CONFIRMED, A FURTHER CREDIT OF RS.5,00,000/- IS M. SEKHAR REDDY (FIVE APPEALS) :- 18 -: TREATED AS ALLOWED TO THE ASSESSEE FOR EXPLAINING T HE SEIZED CASH OUT OF SOURCES AS FIGURED OUT IN INCOME TAX RETURNS OF THE ASSESSEE. THUS, THE FURTHER AMOUNT OF RS.5,00,000/- WHICH DESERVED TO BE TREATED AS EXPLAINED INVESTMENTS AS SOURCE OF CASH FOUND DURIN G SEARCH, GET SUPPORT FROM THE EXPLAINABLE SOURCES OF AGRICULTURA L INCOMES, RENTS AND INTEREST APART FROM THE PROFITS OF THE FIRM, AS CLAIMED BY THE ASSESSEE WHICH CAN BE FURTHER VERIFIED BY THE ASSES SING OFFICER FROM THE RECORD, WHILE GIVING EFFECT TO THIS ORDER. ON T HESE LINES, THE APPEAL IS TREATED AS PARTLY ALLOWED. 7.3. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS EXPLAINED THE SOURCES OF CASH IN HAND IN THE STATEMENT OF AFFAIR S AND AO HAS NOT DISPROVED ANY OF THOSE AMOUNTS. HENCE, ADDITION MADE BY THE AO AND PARTLY CONFIRMED BY THE CIT(A) IS NOT CO RRECT. IT WAS THE SUBMISSION THAT ASSESSEE HAD VARIOUS SALE PRO CEEDS AND ALSO AGRICULTURAL INCOME TO SUPPORT THE AMOUNTS. 7.4. LD.DR, HOWEVER, REFERRED TO THE STATEMENTS MADE I N EARLIER YEARS TO SUBMIT THAT THERE ARE NO AGRICULTURAL INCOMES IN EARLIER YEAR AND SO RECEIPT OF SO MUCH AGRICULTUR AL INCOME AS WELL AS SALE PROCEEDS OF AGRICULTURAL LANDS ARE NOT BELIEVABLE. 7.5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE PAPER BOOK PLACED ON RECORD. AS CAN BE SEEN FROM THE STATEMENT OF AFFAIRS, THERE IS OPENING CASH BALANCE OF RS. 9,03,499/-. AO HAS ACCEPTED THE RETURNS IN IMMEDIATE LY TWO PRECEDING ASSESSMENT YEARS I.E., AYS. 2009-10 & 2010 -11 WITHOUT ANY ADDITIONS IN THOSE YEARS. THEREFORE, THE OPENING CASH BALANCE AS PER THE STATEMENT OF AFFAIRS HAS TO BE ACCEPTED AS SUCH. HOWEVER, ASSESSEE HAS SHOWN SALE OF LAND A T SANGA REDDY ON WHICH THERE MAY BE A CAPITAL GAIN. THE CAPI TAL GAIN SEEMS TO HAVE NOT BEEN OFFERED, EVEN THOUGH SALE OF P LOT WAS STATED TO BE A SOURCE FOR AMOUNT. IF ASSESSEE HAS SOLD SALE OF M. SEKHAR REDDY (FIVE APPEALS) :- 19 -: LAND AT RS. 12,86,400/- PURCHASED EARLIER FOR AN AM OUNT OF RS. 9,38,970/- IN THE YEAR 2007-08, THEN CERTAINLY THE C APITAL GAINS SHOULD HAVE BEEN EXAMINED BY THE AO. 7.5.I. COMING TO THE SOURCE OF AGRICULTURAL INCOME IN EARLIER YEARS, THE SAME WAS ACCEPTED AROUND RS. 4 TO 5 LAKHS PER YEAR. INTERESTINGLY, THERE IS NO AGRICULTURAL IN COME EITHER IN THE IMMEDIATELY PRECEDING AY. 2010-11 IN THE STATEME NT OF AFFAIRS, WHEREAS IN THE RETURN, ASSESSEE HAS ADMITTED AN AMOUNT OF RS. 6 LAKHS WHICH SEEMS TO HAVE BEEN ACCEPTE D BY THE AO. EVEN AS SEEN FROM THE RETURN OF INCOME FILED FOR THE AY. 2011-12, ASSESSEE HAS OFFERED AGRICULTURAL INCO ME AT RS. 7,90,000/- EVEN AFTER SALE OF AGRICULTURAL LANDS. TH EREFORE, INCOME TO THAT EXTENT MAY NOT BE AVAILABLE TO ASSESSEE AS CLAIMED AT RS. 15,26,795/-, SINCE ASSESSEE HAS SHOWN ANOTHER RS. 9.4 LAKHS AS SALE OF AGRICULTURAL LANDS. THESE REQUIRE EXAMINATION BEFORE GIVING CREDIT. IN OUR VIEW, NEITHE R THE AO NOR THE CIT(A) HAS EXAMINED THE FACTS. THEREFORE, IN TH E INTEREST OF JUSTICE, WE ARE OF THE OPINION THAT THE AVAIL ABILITY OF CASH BALANCE REQUIRES RE-EXAMINATION BY THE AO. AO IS DIRECTED TO EXAMINE THE SALE OF LANDS AND ALSO THE AGRICULTURAL INCOME AND OTHER RECEIPTS CLAIMED BY ASSESSEE AND GIVE CREDI T TO THE AMOUNTS AFTER DUE VERIFICATION. ANY AMOUNT WHICH REMAIN S UNEXPLAINED, CAN BE BROUGHT TO TAX DURING THE YEAR. WITH THESE OBSERVATIONS, THE ORDERS OF AO AND CIT(A) ARE SET ASID E AND THE ISSUE IS RESTORED TO THE FILE OF AO FOR FRESH CONSIDE RATION, AFTER GIVING DUE OPPORTUNITY TO ASSESSEE TO EXPLAIN. GROUN DS ARE ALLOWED FOR STATISTICAL PURPOSES. M. SEKHAR REDDY (FIVE APPEALS) :- 20 -: 7.6. IN THE RESULT, APPEAL IN ITA NO. 504/HYD/2015 FOR THE AY. 2011-12 IS ALLOWED FOR STATISTICAL PURPOSES. 8. TO SUM-UP, APPEAL IN ITA NO. 1392/HYD/2016 (AY. 2005-06) IS DISMISSED, APPEALS IN ITA NOS. 1393/HYD /2016 (AY. 2006-07) & 504/HYD/2015 (AY. 2011-12) ARE ALLO WED FOR STATISTICAL PURPOSES AND APPEALS IN ITA NOS. 1394/HYD /2016 (AY. 2007-08) & 503/HYD/2015 (AY. 2008-09) ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH FEBRUARY, 2018 TNMM M. SEKHAR REDDY (FIVE APPEALS) :- 21 -: COPY TO : 1. M. SEKHAR REDDY, C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), HYDERABAD. 3. INCOME TAX OFFICER, WARD-11(1), HYDERABAD. 4. CIT(APPEALS)-5, HYDERABAD 5. PR.CIT-5, HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.