M.S Dhananjaya, Mysore V. DCIT, Mysore

ITA 527/BANG/2012

• Counselvise Citation: 52721114 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-09-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 16-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Document seized; Bad and doubtful debts; Corroborative evidences; Retraction; Documents seized
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NOS.527,530,531 & 532(B)/2012 (ASSESSMENT YEARS : 2002-03,06-07,07-08 & 08-09) SHRI M.S DHANANJAYA, NO.441, 5 TH CROSS, M BLOCK, KUVEMPUNAGAR, MYSORE APPELLANT PAN NO.AJFPD4130N VS THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, MYSORE RESPONDENT AND (ITA NOS.682,519 & 520(B)/2012 (ASSESSMENT YEARS : 2005-06,06-07 & 2008-09) (BY REVENUE) ASSESSEE BY : SHRI V SRINIVASAN, CA REVENUE BY : MS. PRISCILLA SINGSIT, CIT-III DATE OF HEARING : 10-09-2014 DATE OF PRONOUNCEMENT : 19 -09-2014 O R D E R PER SHRI ABRAHAM P GEORGE, AM: THE APPEALS AND THE ASSESSMENT YEARS FOR WHICH THE APPEALS ARE FILED ARE LISTED HERE UNDER; AY:2002-03 AY: 2005-06 AY:2006-07 AY:2007-08 AY:2008-09 ASSESSEE APPEAL 527(B)/12 - 530(B)/12 531(B)/12 532(B)/12 REVENUE APPEAL 682(B)/12 519(B)/12 - 520(B)/12 ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 2 2. APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002 -03 IN ITA NO.527(B)/12 IS TAKEN UP FOR DISPOSAL FIRST. THE ASSESSEE HAS TAKEN TOTAL SIX GROUNDS. GROUND NO.1 & 6 ARE GENERAL IN NATURE, NEEDING NO ADJUDICATION. GROUND NO.5 IS CHARGING OF INTEREST WHICH IS CONSEQUENTIAL IN NATURE, AGAIN NEEDING NO ADJUDICATION. THIS LEA VES US WITH GROUND NO.2 TO 4. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET SUBMITTED THAT HE WAS NOT PRESSING GROUND NOS.3 & 4 AND THEREFORE, GROUND NO.3 & 4 ARE DISMISSED AS NOT PRESSED. WHAT IS LEFT IS GROUND N O.2 THROUGH WHICH ASSESSEE ASSAILS AN ADDITION MADE AT RS.7,45,954/-, WHICH WAS REDUCED TO RS.5.00 LACS BY THE LEARNED CIT(A). 3. FACTS APROPOS ARE THAT THE ASSESSEE A DOCUMENT WRITER ALSO DOING REAL ESTATE BUSINESS, WAS SUBJECTED TO A SEARCH PRO CEEDINGS U/S 132 OF THE IT ACT, 1961 (THE ACT) ON 31-01-2008. CERTAIN DOC UMENTS, DIARIES AND ACCOUNTS WERE SEIZED AT THE TIME OF SEARCH. FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE HAD NOT FILED ANY RETURN UNDER SECTI ON 139 OF THE ACT. PURSUANT TO A NOTICE ISSUED U/S 153A OF THE ACT, AS SESSEE FILED RETURN DECLARING AN INCOME OF RS.47,860/-. ALONG WITH SUC H RETURN ASSESSEE FILED A BALANCE SHEET AS ON 31-03-2002. THE CURRENT ASSE TS AS PER THE SAID BALANCE SHEET INCLUDED CASH OF RS.7,69,814/-. ASSES SEES CAPITAL ACCOUNT HAD AN OPENING BALANCE OF RS.14,06,890/- AND CLOSIN G BALANCE OF RS.14,30,750/-. THE INCREASE WAS DUE TO NET PROFI T OF RS.47,860/-. AFTER THE SEARCH PROCEEDINGS, BUT PRIOR TO THE FILING OF THE RETURN THE ASSESSEE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 3 HAD BEFORE ADIT, FILED A FINANCIAL STATEMENT, ACCOR DING TO WHICH ITS OPENING CAPITAL AS ON 01-04-2005 WAS RS.9,55,000/-. HOWEVER, IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2005 -06, THE OPENING BALANCE OF CAPITAL ACCOUNT WAS SHOWN AT RS.15,56,80 0/-. BECAUSE OF THESE ANOMALIES THE AO MADE A DETAILED VERIFICATION OF THE BALANCE SHOWN IN THE BALANCE SHEET AS ON 31-03-2002. AS PER THE AO, ASSESSEE WAS BUILDING CASH BALANCE OVER THE YEARS FOR JUSTIFYING THE INVESTMENT IN LATER YEARS. IF THE PROFIT OF RS.47,860/- AND DRAWINGS O F RS.24,000/- WERE EXCLUDED FROM THE CLOSING CASH OF RS.7,69,814/- WHA T WOULD BE LEFT WAS RS.7,45,954/-. AS PER THE AO ASSESSEE HAD SHOWN A HUGE CASH BALANCE AS ON 01-04-2001, ONLY DUE TO A REASON THAT REVENUE CO ULD NOT TAKE ANY ACTION FOR THE EARLIER YEARS. HE WAS THEREFORE, O F THE OPINION THAT THE CASH OF RS.7,45,954/- INCLUDED IN THE CASH BALANCE AS ON 31-03-2002, HAD TO BE CONSIDERED AS UNEXPLAINED CASH. AN ADDITION WAS MADE ACCORDINGLY. THE WORK OUT OF THE ADDITION AS MADE BY THE AO IS P RODUCED HEREUNDER; CASH ON HAND CLAIMED 7,69,814 INCOME OF THE YEAR ADMITTED RS.47,860 LESS: DRAWINGS RS .24,000 BALANCE CASH AVAILABLE BEING THE DIFF. 23,8 60 EXCESS CASH CLAIMED 7,45,954 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE C IT(A). ARGUMENT OF THE ASSESSEE WAS THAT IT HAD PRIOR TO THE DAY OF SEARCH, FILED A RETURN FOR ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 4 THE ASSESSMENT YEAR 2006-07, WHEREIN THERE WAS A OP ENING BALANCE OF RS.15,56,800/-. AS PER THE ASSESSEE, IF A WORK BAC K FROM THIS AMOUNT WAS DONE, THE OPENING CAPITAL AS ON 01-04-2001 STOOD EX PLAINED. FURTHER, AS PER THE ASSESSEE HE WAS A DOCUMENT WRITER IN BUSINE SS, SINCE VERY MANY YEARS AND THE PRESUMPTION TAKEN THAT THERE WOULD BE NO SAVINGS FROM SUCH PROFESSION IN THE EARLIER YEARS WOULD NOT BE F AIR. 5. LEARNED CIT(A) AFTER CONSIDERING THE ABOVE CONTE NTION OF THE ASSESSEE HELD THAT THE ASSESSEE WOULD HAVE SOME POS SIBLE SAVINGS, DUE TO HIS PROFESSION THOUGH RETURNS MIGHT NOT HAVE BEEN F ILED FOR THE EARLIER YEARS, THE INCOME BEING BELOW TAXABLE LIMIT. CONSID ERING THE POSSIBLE SAVINGS, LEARNED CIT(A)GAVE A RELIEF OF RS.2,45,954 /- TO THE ASSESSEE AND SUSTAINED THE ADDITION TO THE EXTENT OF RS.5.00 LAC S. 6. NOW BEFORE US, LEARNED AR STRONGLY ASSAILING THE ADDITION SUBMITTED THAT THE CASH BALANCE SHOWN BY THE ASSESS EE IN ITS BALANCE SHEET AS ON 31-03-2002, WAS NOT USED FOR ANY INVEST MENT FOR THE SAID YEAR. ACCORDING TO HIM, ONLY WHEN THERE WAS AN IN -SUFFICIENCY OF FUNDS FOR JUSTIFYING ANY INVESTMENT, AN ADDITION COULD BE MADE. AS PER THE LEARNED AR INVESTMENT DONE BY THE ASSESSEE WERE IN THE SUBSEQUENT YEARS. EVEN IF IT WAS PRESUMED THAT ASSESSEE HAD SHOWN A C ASH BALANCE IN EXCESS OF WHAT ACTUALLY IT HAD, STILL IT WAS NOT EQUIVALEN T TO ANY INVESTMENTS. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 5 7. PER CONTRA, LEARNED DR SUPPORTED THE ORDERS OF L EARNED CIT(A). ACCORDING TO HIM, CONSIDERABLE RELIEF WAS ALREADY G RANTED TO THE ASSESSEE BY LEARNED CIT(A). 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. CLAIM OF THE ASSESSEE THAT ONLY WHEN AN INVESTMENT IS THERE, DEFICIENCY IN CASH CAN BE CONSIDERED FOR ADDITION, IS IN OUR OPIN ION NOT WELL FOUNDED. ASSESEE ITSELF HAS SHOWN THE CASH OF RS.7,69,814/- . IF THE NET OF DRAWINGS AND PROFITS WERE EXCLUDED, THE OPENING CAS H DEFINITELY CAME TO RS.7,45,954/-. CASH ITSELF BEING AN ASSET UNLESS S OURCE THEREOF IS SHOWN, IT CAN BE CONSIDERED UNEXPLAINED. NEVERTHELESS, AS SESSEE WAS ADMITTEDLY IN THE PROFESSION AS A DOCUMENT WRITER SINCE 1993. IT COULD HAVE HAD A ANNUAL SAVINGS OF RS.30,000/- AFTER MEETING THE PER SONAL AND FAMILY EXPENDITURE AND IF SUCH SAVINGS FOR 8 YEARS ARE CON SIDERED, IT WOULD COME TO RS.2,40,000/-. LEARNED CIT(A) HAD REDUCED THE A DDITION BY RS.2,45,954/-. IN OUR OPINION, LEARNED CIT(A) HAD G IVEN A RELIEF CONSIDERING THE MATTER IN A JUDICIOUS MANNER. WE DO NOT FIND A NY REASON TO INTERFERE. GROUND NO.2 OF THE ASSESSEE STANDS DISMISSED. 9. APPEAL OF THE ASSESSEE IN ITA NO.527(B)/2012 FOR AY: 2002-03 IS DISMISSED. 10. NOW WE TAKE UP APPEAL OF THE REVENUE FOR ASSESS MENT YEAR 2005- 06, IN ITA NO.682(B)/2012. THROUGH ITS GROUNDS 1 TO 6, ESSENCE OF THE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 6 GRIEVANCE RAISED BY THE REVENUE IS THAT THE CIT(A) DELETED AN ADDITION OF RS.17,22,000/- MADE BY THE AO, CONSIDERING CERTAIN ALLEGED UNEXPLAINED INVESTMENTS, IN WHAT HAS BEEN CALLED AS THUMBUNERAL E PROPERTY. 11. FACTS APROPOS ARE THAT THE DOCUMENTS SEIZED AT THE TIME OF SEARCH INCLUDED THEREIN ONE MARKED AS A/MSD/1-3 WHI CH AS PER THE AO HINTED AT PURCHASE OF CERTAIN AGRICULTURAL PROPERTY . ASSESSEE IN ITS STATEMENT GIVEN U/S 132(4) HAD IDENTIFIED THESE TRA NSACTIONS AS RELATED TO ONE SHRI PRABHU. AS PER THE AO ASSESSEE HAD ADMIT TED A SUM OF RS.21.00 LACS AS PAID FOR PURCHASING OF 0.39 ACRES AND 2.18 ACRES OF LAND. FROM CERTAIN NOTINGS MADE AT PAGES 14-24 OF THE SEIZED M ATERIAL IN A/MSD/1 AO CONCLUDED THAT THE ASSESSEE HAD PAID AN AMOUNT O F RS.17,22,000/- TO SHRI PRABHU AND CERTAIN OTHER PERSONS WHO WERE FAMI LY MEMBERS OF ONE CHENNAVEERANNA ARADHYA ON 16-02-2005. AS PER THE AO TOTAL PAYMENTS PAID TO SHRI PRABHU AND OTHER PERSONS CAME TO RS.40 ,80,500/- OF WHICH INVESTMENTS RELATING TO THE IMPUGNED ASSESSMENT YEA R CAME RS.17,22,000/-. 12. FOR THE IMPUGNED ASSESSMENT YEAR ALSO ASSESSEE HAD NOT FILED ANY RETURN OF INCOME UNDER SECTION 139 OF THE ACT. IT HAD FILED RETURN ONLY WHEN NOTICE U/S 153A OF THE ACT, WAS ISSUED WHEREIN AN INCOME OF RS.1,50,000/-ALONE WAS DECLARED. DURING THE COURSE OF THE PROCEEDINGS ASSESSEE WAS REQUIRED TO EXPLAIN WHY THE SUM OF RS. 17,22,000/-SHOWN BY ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 7 IT AS PAID TO SHRI PRABHU AND OTHERS SHOULD NOT BE TAXED. REPLY OF THE ASSESSEE WAS AS UNDER; RELIANCE HAS BEEN PLACED ON TRANSACTIONS BETWEEN ONE MR.PRABHU AND MYSELF IN RESPECT OF LAND AT THUMBUNE RALE AS APPEARING IN THE DOCUMENTS REFERRED TO ABOVE AND SE IZED FROM MY PREMISES. THE NOTINGS MADE BY ME IN PAPER S REFER TO AS EXHIBIT A/MSD ARE CLEARLY HYPOTHECATED. BEF ORE PURCHASING THE PROPERTY IT IS QUITE NATURAL TO CALC ULATE FUTURE SALEABLE VALUE IF THE PROPERTY WERE CONVERTED INTO SITES OR LAY OUT IS FORMED. I HAVE MADE VARIOUS CALCULATIONS TO ENSURE THAT IF I WERE TO BUY THE PROPERTY I WILL BE ABLE T O REALIZE A SUBSTANTIAL PROFIT BY DEVELOPING IT OR SUB DIVIDING IT. IT IS IN THIS CONTRACT (CONTEXT) THAT THE FIGURES HAVE BEEN MENTIONED IN THE SAID NOTE BOOK. I WOULD LIKE TO DRAW YOUR A TTENTION TO THE FACT THAT THE NOTING MADE BY ME ARE FOR MY PERS ONAL BENEFIT ONLY AND DO NOT RELATE ANY THIRD PERSONS LE AST OF ALL THE SELLERS. AS A MATTER OF FACT, I AM NEITHER TH E PURCHASER NOR THE SELLERS OF THE LAND AT THUMBUNERALE. IT IS WHOLLY INCORRECT TO PRESUME THAT I HAVE PAID A TOTAL CONSI DERATION OF RS.40,80,500/- FOR ACQUIRING THE SAID PROPERTY. 13. HOWEVER, AO WAS NOT IMPRESSED BY THE ABOVE REPL Y. ACCORDING TO HIM, ASSESSEE HAD ACCEPTED THE TRANSACTIONS APPE ARING IN THE SEIZED RECORDS, IN HIS STATEMENT GIVEN U/S 132(4) OF THE A CT. THOUGH, ASSESSEE RETRACTED SUCH STATEMENT LATER, THE RETRACTION AS P ER THE LEARNED AO, WAS NOT CORROBORATED. AO NOTED THAT THE FOLLOWING PAYM ENTS WERE CLEARLY ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 8 SHOWN BY THE ASSESSEE AT PAGE-19 OF SEIZED RECORD A /MSD1 ON 16-02- 2005. 1. RS.1. LAKH CHENNAVEERANNARADHYA 2. RS.1.LAKH CHADRASEKHARADHYA 3.RS.10,000/- WRITTEN TO RS.10,000/- AND SCORED OUT 4. RS.1 LAKH PAID TO PRABHU MORNING 5. RS.3 LAKH - INDIRAMMA 6. RS.50,000/- TO PRABHU ON 15-02-2005 EVENING 7. RS.3,70,000/- OLD AGREEMENT TIME PAYMENT 8. RS.7,02,000/- PAID TOP PRABHU BALANCE HE THEREFORE, MADE AN ADDITION OF RS.17,22,000/-. 14. IN ITS APPEAL BEFORE THE CIT(A), ARGUMENT OF T HE ASSESSEE WAS THAT THE NOTINGS IN THE SEIZED MATERIAL DID NOT REP RESENT ANY PAYMENTS EFFECTED BY HIM. AS PER THE ASSESSEE THESE WERE ON LY CERTAIN ANALYSIS MADE BY HIM REGARDING THE VALUE OF THE PROPERTY. A SSESSEE ALSO POINTED OUT THAT IT HAD IN ITS LETTER DATED 23-05-2008 RETR ACTED THE STATEMENTS GIVEN AT THE TIME OF SEARCH, SINCE HE WAS IN A DAZZ LED STATE OF MIND AT THE TIME OF SEARCH. AS PER THE ASSESSEE PAGE NO.9 OF SEIZED MATERIAL A/MSD/1 CLEARLY SHOWED THAT THE PURCHASE OF THE LAN D WAS 3 ACRES 17 GUNTAS FOR WHICH CONSIDERATION PAYABLE WAS RS.17,72 ,435/-. AS PER THE ASSESSEE SALE DEED WAS REGISTERED ON 16-02-2006. AGREEMENT FOR SALE WAS ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 9 ENTERED WITH THE PARTIES ON 20-08-2005 AND SUCH AGR EEMENT FOR SALE WAS ONE AMONG THE SEIZED DOCUMENT MARKED AS A/MSD/15. ARGUMENT OF THE ASSESSEE WAS THAT A SUM OF RS.17,22,000/- CONSIDERE D BY THE AO FOR ADDITION WAS NOTHING BUT PAYMENTS EFFECTED ON 16-0 2-2006, FOR THE SALE EFFECTED ON 16-02-2006. THE DATE 16-02-2005 MENTI ONED IN PAGE-19 OF SEIZED MATERIAL A/MSD/15 WAS ONLY AN ERROR. AS PER THE ASSESSEE, STATEMENT GIVEN UNDER SECTION 132(4) COULD NOT BE C ONSIDERED AS CONCLUSIVE, SINCE THE PURPORTED PAYMENTS FOUND AS P ER THE SEIZED MATERIAL WAS ACTUALLY MADE ON 16-02-2006. IN ANY CASE, AS PER THE ASSESSEE THE AGREEMENT FOR SALE HAVING BEEN ENTERED ON 20-08-200 5 THERE COULD BE NO PAYMENTS PRIOR TO THAT DATE. AO HAD MENTIONED THE DATE OF REGISTRATION OF THE SALE DEED AS 16-02-2005, WHEN THE ACTUAL DATE W AS 16-02-2006. AS PER THE ASSESSEE IN THE ASSESSMENT FOR ASSESSMENT Y EAR 2006-07, AO HAD CONSIDERED THE SAME AGREEMENT AND MADE AN ADDITION FOR THE DIFFERENCE BETWEEN THE VALUE MENTIONED IN THE CONVEYANCE DEED AND SALE AGREEMENT. THEREFORE, ACCORDING TO THE ASSESSEE, THE ADDITION OF RS.17,22,000/- FOR THE IMPUGNED ASSESSMENT YEAR WOULD RESULT IN DOUBLE TAXATION OF THE SAME AMOUNT. 15. LEARNED CIT(A) WAS APPRECIATIVE OF THE ABOVE C ONTENTIONS. ACCORDING TO HIM, AO HAD HIMSELF ANALYSED AGREEMENT OF SALE DATED 20-08- 2005 IN THE ASSESSMENT DONE ON THE ASSESSEE FOR ASS ESSMENT YEAR 2006- 07 WHEREIN A SUM OF RS.17,72,437/- WAS MENTIONED AS THE CONSIDERATION. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 10 THE AMOUNT SHOWN IN THE REGISTERED CONVEYANCE DEED WAS RS.4,80,000/- AND THE DIFFERENCE OF RS.12,92,437/- WAS CONSIDERED AS UNEXPLAINED INCOME FOR THE ASSESSMENT YEAR 2006-07. THE PAYMENT OF RS.17,22,000/- SHOWN IN THE SEIZED MATERIAL ALSO WERE FOR THE SAME LAND MEASURING 3 ACRES 17 GUNTAS. IN OTHER WORDS, AS PER THE LEARNE D CIT(A), THE PAYMENT OF RS.17,22,000/- WAS AGAINST THE LAND PURCHASED BY TH E ASSESSEE ON 16-02- 2006 AND THE DATE 16-02-2005, MENTIONED IN THE SEIZ ED DOCUMENT WAS ONLY AN ERROR. THUS, AS PER THE LEARNED CIT(A), IF THE ADDITION WAS SUSTAINED, IT WOULD RESULT IN TAXING THE AMOUNT IN VOLVED IN THE SAME TRANSACTION TWICE. IN THIS VIEW OF THE MATTER, HE DELETED THE ADDITION. 16. NOW BEFORE US, LEARNED DR STRONGLY ASSAILING T HE ORDER OF THE CIT(A) SUBMITTED THAT THE SEIZED DOCUMENTS BASED ON WHICH THE ADDITION WAS MADE, PLACED AT PAPER BOOK PAGE-103 CLEARLY MEN TIONS THE DATE AS 16- 02-2005. AS PER THE LEARNED DR, THERE WAS NOTHING O N RECORD OR IN ANY SEIZED DOCUMENT WHICH COULD RELATE THESE PAYMENTS T O THE LAND PURCHASED BY THE ASSESSEE ON 16-02-2006. FURTHER, AS PER THE LEARNED DR THERE WAS EVERY POSSIBILITY THAT THE SAME SET OF VENDORS WERE SELLING DIFFERENT LANDS TO THE ASSESSEE. THE LAND WAS ACQUIRED BY THE ASSESSE E FOR A SUM OF RS.17,72,435/- WHEREAS THE AMOUNT SHOWN AS PAID WAS RS.17,22,000/-. IN THE STATEMENT U/S 132(4) OF THE ACT, ASSESSEE HA D HIMSELF ADMITTED PURCHASE OF LAND WORTH RS.21.00 LACS FROM THESE VEN DORS. AS PER THE LEARNED DR WHAT WAS CONSIDERED FOR THE ASSESSMENT Y EAR 2006-07 WAS AN ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 11 ENTIRELY DIFFERENT TRANSACTION. ASSESSEE FOR THE IM PUGNED ASSESSMENT YEAR COULD NOT EXPLAIN THE SOURCE FOR THE PAYMENTS TOTAL ING RS.17,22,000/-. THE LEARNED CIT(A) HAD ERRONEOUSLY DELETED THE ADDI TION. 17. PER CONTRA, LEARNED AR SUBMITTED THAT THE AO H AD GONE BY THE STATEMENT GIVEN BY THE ASSESSEE ON THE DATE OF SEAR CH FOR MAKING ADDITION. ASSESSEE HAD WITHDRAWN SUCH STATEMENT AT THE EARLIE ST POSSIBLE INSTANCE. ACCORDING TO HIM, THE SUM OF RS.17,72,435/- WAS CLE ARLY MENTIONED IN SEIZED DOCUMENTS A/MSD-1 AT PAGE NO.14. RELYING ON THE AGREEMENT DATED 20-08-2005, ENTERED BY THE ASSESSEE WITH THE VENDORS, LEARNED AR SUBMITTED THAT THE VERY SAME PERSONS WHO WERE MENTI ONED THEREIN WERE APPEARING PAGE-19 OF A/MSD/1. THE CONSIDERATION ME NTIONED IN THE AGREEMENT WAS ALSO RS.17,72,435/-. AS PER THE LEARN ED AR THE SAID AGREEMENT ALSO WAS PART OF SEIZED DOCUMENTS. WHEN THIS WAS READ ALONG WITH NARRATION GIVEN IN PAGE 10,14 & 19 OF SEIZED D OCUMENTS A/MSD/1, AS PER THE LEARNED AR, IT WAS CLEAR THAT THE PAYMENTS WERE FOR PURCHASE OF THE PROPERTY WHICH WAS EFFECTED ON 16-02-2006. THE TRANSACTION STOOD ALREADY CONSIDERED IN THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07. MAKING AN ADDITION IN THE IMPUGNED ASSESSMENT YEAR, WOULD DEFINITELY RESULT IN TAXING THE SAME AMOUNT TWICE. THUS, ACCO RDING TO HIM, THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON. 18. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. ALL THE PAYMENTS AT PAGE-19 OF SEIZED DOCUMENTS A/M SD-1 HAS BEEN ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 12 REPRODUCED AT PARA-13. THERE IS NO DISPUTE THAT TH E AGREEMENT DATED 20- 08-2005, COPY OF WHICH HAS BEEN PLACED AT PAPER BOO K PAGES 106-107 WAS PART OF THE SEIZED DOCUMENTS. IT IS NECESSARY TO R EPRODUCE THE FIRST PAGE OF THIS AGREEMENT; AGREEMENT TO SELL AN IMMOVABLE PROPERTY THIS THE 20 TH DAY OF AUGUST, 2005 DATED : 20-08-2005 MYSORE TALUK, VARUNA HOBL;I VILLAGE, RESIDENT SHRI CHIKKAVEERANNA ARADHYA S/O LATE CHIKKA MALLARADHYA ONE SRI DRAKSHAYINI W/O CHENNAVEERANNA ARADHYA ONE, JAYASHANKARA ARQHYA S/O CHIKKA MALLARADHYA ONE SRI MANJUNATHA ARADHYA S/O CHENNA VEERANNA ARADHYA ONE CHAMNDRA SHEKARA ARADHYA S/O CHIKKA MALLARADHYA ONE KARTHIK ARADHYA S/O CHANDRASHEKARA ARADHYA, MINOR O NE REPRESENTED BY HIS NATURAL GUARDINAN MOTHER SMT. MANIYAMMA, SMT. INDRAMMA, D/O CHENNAVEERANNA ARADHY A ONE HEREIN AFTER CALLED THE SELLERS WHICH EXPRESSIO N SHALL INCLUDES THE SELLERS AND THEIR LEGAL HEIRS AND ALSO THEIR LEGAL HEIRS AND ALSO THEIR REPRESENTATIVE ARE CALLED THE FIRST PARTY; MYSORE CITY CHAMARAJA MOHALLA, KUVEMPUNAGAR, M BLO CK, 5 TH CROSS, NO.441, RESIDENT M.S.DHANANJAYA S/O K.M.SHIVASWAMY HEREIN AFTER CALLED THE PURCHASER, H IS HEIRS AND REPRESENTATIVES ARE CALLED SECOND PARTY, ENTERE D INTO AN AGREEMENT TO SELL AN IMMOVABLE PROPERTY IS AS FOLLO WS. SCHEDULE PROPERTY IS BELONGS TO THE FIRST PARTY WI TH ABSOLUTE OWNERSHIP WITH THEIR PEACEFUL POSSESSION A ND ALSO RIGHT TO ALIENATE THE SCHEDULE PROPERTY. THE FIRST PART AND THE SECOND PARTY MUTUALLY AGREE D TO SELL AND ALSO PURCHASE THE PROPERTY FOR INDIAN CURRENCY FO ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 13 RS.17,72,437/-(RS.SEVENTEEN LAKHS SEVENTY TWO THOUS AND AND FOUR HUNDRED THIRTY SEVEN ONLY). THE FIRST PARTY RECEIVED RS.3.00 LACS (RS.THREE LA KHS ONLY) FROM THE SECOND PARTY IN PRESENCE OF WITNESSES. AND FIRST PARTY AGREED TO RECEIVE RS.14,72,437/-(RS .FOURTEEN LAKHS SEVENTY TWO THOUSAND FOUR HUNDRED & THIRTY SE VEN ONLY) FROM THE SECOND PARTY AT THE TIME OF REGISTERING TH E SALE DEED IN PRESENCE OF WITNESSES. THE VALIDITY OF THIS AGREEMENT WILL BE FIVE MONTHS FROM THE DATE OF THIS AGREEMENT ACCORDING TO THE ENGLISH CAL ENDAR THE REGISTRATION EXPENSES LIKE STAMP DUTY REGISTRAT ION FEES AND OTHER EXPENSES WILL BE BORNE BY THE SECOND PART Y. IN THE SCHEDULE TO THIS AGREEMENT THE EXTENT OF LAN D MENTIONED IS 3 ACRES AND 17 GUNTAS. ASSESSEE HAD IN REPLY TO THE QUESTI ONS RAISED AT THE TIME OF SEARCH, IN THE STATEMENT GIVEN U/S 132(4) MENTIO NED THAT HE HAD PURCHASED 2.18 ACRES AND 0.39 ACRES OF LAND AND OFF ERING IT FOR TAXATION FOR ASSESSMENT YEAR 2006-07. 40 GUNTAS OF LAND IS EQUA L TO 1 ACRE HENCE, 2.18 ACRE AND 0.39 WOULD AGGREGATE TO 3.17 GUNTAS. THIS IS EXACTLY THE SAME AREA WHICH HAS BEEN MENTIONED IN THE AGREEMENT . ANALYSIS OF SEIZED MATERIAL NO.A/MSD/1 WAS MADE BY THE AO IN TH E LIGHT OF THE STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF SEAR CH. A LOOK AT THE PARTIES MENTIONED IN PAGE-19 OF A/MSD/1 WHICH IS TH E BASIS OF THE ADDITION WOULD CLEARLY SHOW THAT AT LEAST THE NAMES OF CHANNAVEERANNA ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 14 ARADHYA AND CHANDRASHEKARA ARADHYA ARE APPEARING TH EREIN. A LOOK AT PAGE NO.14 OF THE SEIZED RECORD A/MSD/1 CLEARLY MEN TIONS A SUM OF RS.17,72,435/-. PAGE NO.14 TO 21 ARE CONTINUOUS I N NATURE AND THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT THE SUM OF RS.17, 22,000/- MENTIONED AT PAGE NO.19 WAS ONLY TOWARDS THE TRANSACTIONS EMBODI ED IN AGREEMENT DATED 20-08-2005 CANNOT BE BRUSHED ASIDE. THERE WA S NO DOCUMENTS SEIZED BY THE REVENUE, WHICH WOULD SHOW THAT ASSESS EE HAD MADE ANY OTHER PURCHASE FROM THESE PARTIES. THUS, THE PAYM ENTS SHOWN AT PAGE NO.19 OF A/MSD/1, COULD AT THE BEST BE TREATED AS A DVANCE PAYMENTS MADE BY THE ASSESSEE ON 16-02-2005, FOR THE PROPERT Y WHICH WAS ACQUIRED ON 16-02-2006 BASED ON AGREEMENT DATED 20-08-2005. IT IS AN ADMITTED POSITION THAT THE TRANSACTION DATED 16-02-2006, HAS ALREADY BEEN CONSIDERED FOR THE ASSESSMENT YEAR 2006-07. AN AD DITION HAS ALSO BEEN MADE IN THE SAID YEAR FOR THE DIFFERENCE BETWEEN TH E REGISTERED VALUE AND WHAT WAS SET OUT IN THE AGREEMENT DATED 20-08-2005. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE CIT(A ) WAS JUSTIFIED IN TAKING A VIEW THAT TAXING A SUM OF RS.17,22,000/- IN THE I MPUGNED ASSESSMENT YEAR WOULD RESULT IN DOUBLE JEOPARDY. WE THEREFORE , DO NOT FIND ANY REASON TO INTERFERE WITH THE DIRECTION OF THE CIT(A). APP EAL OF THE REVENUE IN ITA NO.682(B)/2012 FOR AY: 2005-06, STANDS DISMISSED. 19. NOW WE TAKE UP THE CROSS APPEALS OF THE ASSESS EE AND THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NOS. 530 & 519(B)/2011. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 15 ASSESSEE HAS RAISED 11 GROUNDS OF WHICH GROUND NO.1 & 11 ARE GENERAL AND GROUND NO.10 CONSEQUENTIAL IN NATURE NEEDING NO ADJUDICATION. VIDE ITS GROUND NO.2, ASSESSEE IS AGGRIEVED THAT AN ADDI TION OF RS.2.50 LACS WAS SUSTAINED OUT OF A TOTAL ADDITION OF RS.40,80,500/- MADE BY THE AO IN RESPECT OF PURCHASE OF A PROPERTY AT THUMBUNERALE. 20. FACTS APROPOS ARE THAT THE ASSESSEE FOR THE I MPUGNED ASSESSMENT YEAR FILED A RETURN PURSUANT TO NOTICE U /S 153A OF THE ACT, DECLARING AN INCOME OF RS.23,74,810/- THE AO FOUND THAT SEIZED DOCUMENT A/MSD/3 AT PAGE NO.10, CONTAINED THE FOLL OWING ENTRIES. TOWARDS ANWAR TRANSACTION (PRABHU) RS.3,40,000 TOWARDS JOGANAHALLY TRANSACTION (PRABHU) RS.2,25,0 00 TOWARDS THUMBUNERALE(REGD. BY PRABHU) RS.8,00,000 TOWARDS BALU RS.1,20,000 TOWARDS NAJUNDASWAMY (PRQBHU) RS. 50,000 TOWARDS THAMBURI MALAPPA RS.1,50,000 TOWARDS M B HALLY ARADHYA (PRABHU) RS. 50,000 TOWARDS SHAJAHAN ARADHYA RS. 30,000 TOWARDS BENGAHALLY ADVANCE (PRABHU) RS. 20,000 TOWARDS SHIVANNAS REGN DAY (PRABHU) RS.1,00,000 TO GIVE TO PUTTASWAMY (PRABHU) RS. 50,000 RECEIVED BACK BY PRABHU OUT OF RS.4,50,000 RS.1, 50,000 TO VACATE HOUSE (PRABHU) RS.2,00,000 TO MADAPPA KYATHAMARANAHALLY (PRABHU) RS,2,0 5,000 RAJENDRA (PRABHU) RS.1,00,000 ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 16 THUMBANERALE COMMISSION (PRABHU) RS. 50,000 TO PAY TO NANJUNDI-ADVANCE TAKEN BY PRABHU RS.1,50 ,000 THUMBUNERALE MAHADEVU RS. 15,500 DUE FROM MAHADEVU RS. 15,000 EXTRA PAYMENTS TOWARDS THUMBUNERALE LAND RS.6,00 ,000 LOSS INCURRED DUE TO EXTRA PAYMENT RS.6,25,000 RS.40,80,500 AS PER THE AO THESE PAYMENTS WERE MADE BY THE ASSES SEE THROUGH SHRI PRABHU, FOR PURCHASING LAND. EXPLANATIONS WERE SOUG HT FROM THE ASSESSEE. REPLY OF THE ASSESSEE WAS THAT THESE WERE ONLY CALC ULATIONS AND ESTIMATES FOR WORKING OUT THE PROBABLE PROFIT THAT COULD ARIS E IN FUTURE LAND TRANSACTION AND DID NOT RELATE TO ANY ACTUAL PAYMEN TS. HOWEVER, THE AO WAS NOT IMPRESSED. ACCORDING TO HIM, ASSESSEE IN T HE STATEMENT GIVEN U/S 132(4) OF THE ACT ACCEPTED PURCHASE OF AGRICULTURAL PROPERTY THROUGH SHRI PRAHU. FURTHER, ACCORDING TO THE AO THESE PAYMENTS WERE MADE FOR PURCHASE OF PROPERTY AT THUMBUNERALE VILLAGE AND TH E EXPLANATION GIVEN BY THE ASSESSEE WERE NOT SATISFACTORY. HE THEREFOR E, MADE AN ADDITION OF RS.40,80,500/-. 21. ARGUMENT OF THE ASSESSEE IN ITS APPEAL BEFORE THE CIT(A) WAS THAT THERE WAS NO INVESTMENTS OF THE NATURE MENTIONED BY THE AO. AS PER THE ASSESSEE, IT HAD NOT ACQUIRED ANY AGRICULTURAL PROP ERTY OTHER THAN 3.17 GUNTAS OF LAND, WHICH WAS ALREADY CONSIDERED FOR AS SESSMENT. LISTINGS IN ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 17 THE SEIZED DOCUMENT RELIED ON BY THE AO SIMPLY MENT IONED AS DUE TO ME. IT DID NOT SHOW ANY OUT FLOW FOR INVESTMENTS. AS P ER THE ASSESSEE, THE TRANSACTIONS WERE DONE BY PRABHU, AND IT WAS ONLY G ETTING A COMMISSION. ONE OF THE ENTRIES CLEARLY MENTIONED THAT IT WAS A LOSS INCURRED ON EXTRA PAYMENT. THE AO, AS PER THE ASSESSEE WENT WRONG IN CONSIDERING THE WHOLE AMOUNT AS INVESTMENTS DONE BY THE ASSESSEE. AS PER THE ASSESSEE, IT WAS ONLY GETTING COMMISSION OF 2 TO 5% ON LAND D EALS. 22. CIT(A) APPRECIATIVE OF THE ABOVE CONTENTIONS. ACCORDING TO HIM, DUE TO PRABHU DID NOT IN ANY WAY SHOW THE NATURE OF TRANSACTIONS. THERE WAS ONE ENTRY WHICH SPOKE OF COMMISSION. AN ENTRY FOR RS.6.00 LACS APPEARED TO BE CONTRA. THERE WAS NO ASSET IN T HE NATURE OF ANY THUMBUNERALE PROPERTY, FOUND IN ASSESSEES NAME. I N THIS VIEW OF THE MATER, HE HELD THAT ONLY A REASONABLE COMMISSION CO ULD BE ESTIMATED OUT OF THE TRANSACTIONS CONSIDERED BY THE AO. HE ESTIM ATED SUCH COMMISSION AT RS.2.50 LACS AND DELETED THE BALANCE ADDITION. 23. NOW BEFORE US, LEARNED AR ASSAILING THE ORDER OF THE CIT(A) SUBMITTED THAT THERE WAS NOTHING TO SHOW ANY COMMIS SION TO HAVE BEEN RECEIVED BY THE ASSESSEE EXCEPT THE AMOUNT OF RS.50 ,000/-. NARRATION IN PAGE NO.10 OF SEIZED RECORD A/MSD-3 DID NOT SHOW AN Y INCOME ELEMENT AT ALL. AS PER THE LEARNED AR, AO WAS TOTALLY WRONG I N CONSIDERING THE ENTRIES, WITH SPECIFIC NARRATION AS INCOME OF THE A SSESSEE. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 18 24. PER CONTRA, LEARNED DR SUBMITTED THAT THE ADDI TION WAS RIGHTLY DONE BY THE AO. LEARNED DR SUBMITTED THAT ONE OF T HE ISSUES ON WHICH DEPARTMENT WAS IN APPEAL WAS ON THE RELIEF GIVEN BY THE CIT(A). AS PER THE DR, IT WAS THE ONUS OF THE ASSESSEE TO SHOW THA T THE RECORDINGS IN THE SEIZED DOCUMENTS HAD NO ELEMENT OF INCOME. ADMITT EDLY, ASSESSEE WAS IN REAL ESTATE BUSINESS. IT HAD ACQUIRED AT LEAST ON E PIECE OF AGRICULTURAL LAND MEASURING 3.17 ACRES. JUST BECAUSE, DEED FOR ACQUISITION WAS NOT FOUND AT THE TIME OF SEARCH, WOULD NOT MEAN THAT AS SESSEE HAD NOT ACQUIRED ANY ASSET. THUS, ACCORDING TO THE LEARNED DR, THE ADDITION WAS RIGHTLY MADE BY THE AO AND THE CIT(A) FELL IN ERROR IN CONSIDERING ONLY AN ESTIMATED COMMISSION FOR TAXATION. 25. WE HAVE PERUSED THE ORDER AND HEARD THE RIVAL CONTENTIONS. THE NOTINGS IN THE SEIZED DOCUMENTS BASED ON WHICH THE ADDITION WAS MADE HAS BEEN REPRODUCED BY US AT PARA-NINETEEN ABOVE. THE CAPTION FOR THIS NARRATION IS DUE TO ME FROM PRABHU. IN OUR OPINI ON, NONE OF THESE NARRATION CAN SHOW ANY INCOME TO HAVE ACCRUED TO TH E ASSESSEE. SOME OF THE ENTRIES WERE FOR GIVING SOME MONEY, WHEREAS SOM E OF THE ENTRIES WERE FOR RECEIVING BACK MONEY. NO ASSET WHICH WOULD REF LECT THE INVESTMENT IF ANY, MADE BY THE ASSESSEE TO THE TUNE OF RS.40,80,5 00/- WAS FOUND AT THE TIME OF SEARCH. ASSESSEE ADMITTEDLY WAS IN THE BUS INESS OF REAL ESTATE. IT MIGHT HAVE BEEN EARNING SOME COMMISSION ALSO. BEFO RE THE CIT(A), IT HAD ADMITTED RECEIPT OF COMMISSION OF 2% TO 5%. ONE O F THE AMOUNTS ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 19 MENTIONED IN THE SEIZED DOCUMENTS MENTIONED AS THU MBUNERALE COMMISSION OF RS.50,000/-. THIS, IN OUR OPINION W ILL IMPLY THAT ASSESSEE WAS DOING COMMISSION BUSINESS WITH REGARD TO LAND I N THUMBUNERALE. THE AMOUNTS ENTERED WHERE THE NAME OF SHRI PRABHU W AS MENTIONED WAS SUBSTANTIAL. RELIANCE PLACED BY THE AO ON THE STATE MENT GIVEN BY THE ASSESSEE THAT IT HAD PURCHASED PROPERTY WORTH RS.21 .00 LACS, IN OUR OPINION, WILL NOT BE SUFFICIENT TO MAKE AN ADDITION OF THE ENTIRE AMOUNT LISTED IN PAGE 10 OF A/MSD/13, IN THE ABSENCE OF AN Y CORROBORATING EVIDENCE. ESPECIALLY SO SINCE ASSESSEE HAD RETRACTE D SUCH STATEMENT. WE ARE THEREFORE OF THE OPINION THAT THE ADDITION OF R S.40,80,500/-AS DONE BY THE AO WAS NOT WARRANTED. CIT(A), CONSIDERING TH E ENTRIES WAS IN OUR OPINION, JUSTIFIED IN CURTAILING THE ADDITION TO A REASONABLE AMOUNT OF RS.2.50 LACS ESTIMATED AS COMMISSION EARNED BY THE ASSESSEE ON THE LAND TRANSACTIONS. WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE DIRECTIONS OF THE CIT(A). GROUND NO.2 OF THE ASSESSEE STANDS DIS MISSED. 26. VIDE ITS GROUND NO.3 GRIEVANCE MADE BY THE ASS ESSEE IS THAT AN ADDITION OF RS.12,92,472/- IN RESPECT OF PURCHASE O F A PROPERTY FROM SHRI CHANNAVEERA ARADHYA WAS SUSTAINED BY THE CIT(A). 27. FACTS RELATING TO THE ABOVE ADDITION HAVE ALRE ADY BEEN EXPLAINED BY US IN RELATION TO REVENUES APPEAL IN ITA NO.682 (B)/2012, FOR ASSESSMENT YEAR 2005-06. THE ADDITION HAS ITS BASI S ON AN AGREEMENT ENTERED BY THE ASSESSEE WITH SHRI CHANNAVEERA ARAD HYA AND CERTAIN ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 20 OTHERS ON 20-08-2005, FOR PURCHASING 3.17 ACRES OF LAND AT COST RS.17,72,437/-. AN ADDITION OF RS.17,22,000/- MADE FOR ASSESSMENT YEAR 2005-06 HAVING ITS GENESIS ON THE VERY SAME AGREEME NT, WAS DELETED BY THE CIT(A). ONE OF THE REASON THAT LEARNED CIT(A) DELETED WAS THAT THE AGREEMENT WAS ENTERED ON 20-08-2005 WHICH FELL IN F INANCIAL YEAR 2005- 06, RELEVANT TO ASSESSMENT YEAR 2006-07. WE HAVE VIDE PARA-18 ABOVE, UPHELD THE ORDER OF THE CIT(A) IN THIS REGAR D. HOWEVER, WHEN THE CONVEYANCE DEED FOR THE PROPERTY WAS REGISTERED ON 06-02-2006 THE VALUE SHOWN THEREIN WAS ONLY RS.4,80,000/-. THE AGREEMEN T FOR SALE DATED 20- 08-2006 MENTIONED RS.17,72,437/- AS THE CONSIDERATI ON. ASSESSEE IN HIS STATEMENT U/S 132(4) OF THE ACT HAD ACCEPTED THE DI FFERENCE OF RS.12,92,437/- AS UNACCOUNTED INCOME FOR ASSESSMENT YEAR 2006-07. THOUGH, ASSESSEE TRIED TO EXPLAIN THE DIFFERENCE, T HROUGH A STATEMENT OF ACCOUNTS FILED BY HIM, THE AO DID NOT ACCEPT IT. AN ADDITION OF RS.12,92,437/- WAS MADE. 28. ASSESSESSS APPEAL IN THIS REGARD WAS NOT SUCC ESSFUL. THOUGH, IT WAS ARGUED BY THE ASSESEE THAT THERE WAS A CIVIL SUIT NUMBERED AS OS 637/2005 IN RESPECT OF THE SUBJECT PROPERTY, FORCIN G THE VENDORS TO SELL IT TO ASSESEE FOR A LOWER P[RICE OF RS.4,80,000/-, THI S WAS NOT ACCEPTED BY THE LEARNED CIT(A). THE ADDITION WAS CONFIRMED. 29. NOW BEFORE US, LEARNED AR STRONGLY ASSAILING T HE ADDITION SUBMITTED THAT THE LOWER AUTHORITIES OUGHT HAVE CON SIDERED THE EFFECT OF ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 21 CIVIL SUIT WHICH DEPRESSED THE VALUE OF THE PROPERT Y. ACCORDING TO HIM, THE ACTUAL CONSIDERATION WAS ONLY RS.4,80,000/- AND TH E ADDITION FOR THE DIFFERENCE WAS NOT WARRANTED. 30. PER CONTRA, LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 31. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT THE REGISTERED CONVEYANCE DEED REFLECTED THE PRICE OF RS.4,80,000/-. THERE IS ALSO NO DISPUTE THAT A GREEMENT DATED 20-08- 2005 SEIZED FROM THE PREMISES SHOWED THE CONSIDERAT ION AS RS.17,72,437/-. ASSESSEE HAD IN ITS APPEAL FOR TH E ASSESSMENT YEAR 2005-06 ARGUED BEFORE THE CIT(A) THAT A SUM OF RS.1 7,22,000/-, SHOWN AS PAYMENTS MADE TO THE VENDORS, IN PAGE NO.19 OF SEIZ ED MATERIAL A/MSD/1 WAS TOWARDS CONSIDERATION MENTIONED IN THE ABOVE AG REEMENT. HAVING ARGUED SO, IN OUR OPINION, ASSESSEE CANNOT NOW TURN BACK AND TELL THAT THE ACTUAL CONSIDERATION WAS RS.4,80,000/-. WE ARE OF THE OPINION THAT THE ADDITION FOR THE DIFFERENCE RIGHTLY DONE. GROUND NO.3 OF THE ASSESSEE STANDS DISMISSED. 32. VIDE ITS GROUND NO.4 GRIEVANCE OF THE ASSESSEE IS THAT AN ADDITION OF RS.2.00 LACS BEING THE PAYMENT OF LEASE DEPOSIT TO ONE SHRI RAJU WAS CONSIDERED AS UNEXPLAINED INCOME. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 22 33. PAGE -65 OF SEIZED DOCUMENT A/MSD/15 WAS A SALE AGREEMENT ENTERED BY THE ASSESSEE WITH ONE SHRI RAJU FOR PURC HASING A SITE MEASURING 48 X 18 FT.FROM HIM FOR A CONSIDERATION O F RS.10.00 LACS. EXPLANATION OF THE ASSESSEE WAS THAT IT WAS THE LES SEE OF THE SAID PREMISES AND WHEN TAKING IT ON LEASE HAD PAID A SUM OF RS.2. 00 LAKHS IN CASH. WHEN SALE AGREEMENT WAS ENTERED INTO ONLY THE BALAN CE OF RS.8.00 LACS WAS REQUIRED TO BE PAID. THERE WERE TWO OTHER LESS EES IN THE SAME PREMISES, AND DUES OF SHRI RAJU TO SUCH LESSEES WER E ALSO TAKEN OVER BY THE ASSESSEE. IN OTHER WORDS, AS PER THE ASSESSEE, OUT OF THE SUM OF RS.10.00 LACS WHAT WAS PAYABLE TO SHRI RAJU WAS MUC H LESS. 34. HOWEVER, THE AO WAS NOT IMPRESSED BY THE ABOVE EXPLANATION. ACCORDING TO HIM, ASSESSEE HAD MENTIONED NOTHING AB OUT ANY ADVANCE PAID TO SHRI RAJU,IN THE STATEMENT RECORDED AT THE TIME OF SEARCH. BALANCE SHEET AS ON 31-03-2007 SHOWED A SUM OF RS.4 ,68,300/- WHEREAS THE ACTUAL CONSIDERATION WAS RS.10.00 LACS. LEASE ADVANCE OF RS.2.00 LACS PAID ON 17-02-2006 WAS NEVER EXPLAINED. IN TH IS VIEW OF THE MATTER, HE MADE AN ADDITION OF RS.2.00 LACS. 35. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF TH E ASSESSEE WAS THAT THERE WAS NO PAYMENT OF RS.2.00 LACS ON 17-02- 2006. AS PER THE ASSESSEE THE ADDITION OF RS.2.00 LACS WAS MISCONCEI VED. HOWEVER, THE CIT(A) WAS NOT IMPRESSED. ACCORDING TO HIM, ASSES SEE IN HIS STATEMENT DATED 12-02-2008 HAD ADMITTED PAYMENT OF RS.2.00 LA CS IN CASH DURING ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 23 THE RELEVANT PREVIOUS YEAR. AS PER THE LEARNED CI T(A), ASSESSEE COULD NOT BRING ANYTHING ON RECORD TO SHOW THAT NO SUCH PAYME NT WAS MADE. HE THEREFORE, CONFIRMED THE ADDITION. 36. NOW BEFORE US, LEARNED AR SUBMITTED THAT THE AG REEMENT OF SALE DATED 17-02-2006 PLACED AT PAPER BOOK PAGES 129-130 DID NOT MENTION ANYTHING REGARDING ANY ADVANCE OF RS.2.00 LACS PAID BY THE ASSESSEE. AS PER THE LEARNED AR, THIS WAS A PART OF THE SEIZED D OCUMENTS. THE ADDITION WAS MERELY BASED ON THE STATEMENT GIVEN BY THE ASSE SSEE ON 12-02-2008. THERE WAS NO SEIZED MATERIAL TO SHOW ANY PAYMENT OF RS.2.00 LACS. ACCORDING TO HIM, THE BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2007 CLEARLY MENTIONED THE SUM OF RS.4,68,300/- AS PAID FOR THE SUBJECT PROPERTY. 37. PER CONTRA, LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 38. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES A ND HEARD THE RIVAL CONTENTIONS. A READING OF THE AGREEMENT DATED 17-02-2006, CLEARLY SHOW THAT THE AGREED CONSIDERATION IS RS.10.00 LACS . IT IS ALSO MENTIONED THAT OUT OF THE SAID AMOUNT OF RS.4,55,000/- IS TO BE RETAINED BY THE ASSESSEE FOR SETTLING ACCOUNT OF THE OTHER LESSEES. THE AMOUNT OF ADVANCE, MENTIONED IS RS.45,000/- ONLY. THE DESCRIPTION OF THE PROPERTY IS THE SAME, AS WHAT IS STATED IN ITS BALANCE SHEET AS ON 31-03-2007. THE VALUE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 24 OF THE PROPERTY SHOWN IN THE BALANCE SHEET IS RS.4, 68,300/-. HOWEVER, IF THE ADVANCE OF RS.45,000/- MENTIONED IN THE AGREEME NT DATED 17-02- 2006, WAS THE CORRECT AMOUNT, IT SHOULD BE THERE IN THE BALANCE SHEET AS ON 31-03-2006. IN THE BALANCE SHEET AS ON 31-03-200 6 PLACED AT PAPER BOOK PAGE NO.19, NO SUCH AMOUNT IS APPEARING. ASSE SSEE THUS, HAS NOT BEEN ABLE TO CORRECTLY CORRELATE THE AMOUNTS MENTIO NED IN ITS OWN SALE AGREEMENT, WITH ANY OF THE FIGURES SHOWN IN THE BAL ANCE SHEET. IN SUCH CIRCUMSTANCES, WHERE ASSESSEE IS NOT ABLE TO CORREL ATE THE TRANSACTIONS WITH ITS OWN ACCOUNTS, WE HAVE TO GO BY THE STATEME NT GIVEN BY THE ASSESSEE BEFORE THE REVENUE. THERE IS NO DISPUTE TH AT ASSESSEE HAD IN ITS STATEMENT DATED 12-02-2008, ADMITTED PAYMENT OF RS. 2.00 LACS FOR THE LEASE. SUCH AMOUNT WAS NOT REFLECTED ANYWHERE IN TH E STATEMENT OF ACCOUNTS FILED BY IT. IN OUR OPINION, ADDITION WAS RIGHTLY DONE AND NO INTERFERENCE IS CALLED FOR. GROUND NO.4 OF THE AS SESSEE STANDS DISMISSED. 39. WHEN GROUND NO.5 OF THE ASSESSEE WAS TAKEN UP, LEARNED AR SUBMITTED THAT HE WAS NOT PRESSING IT. GROUND NO. 5 IS THEREFORE, DISMISSED AS NOT PRESSED. 40. VIDE ITS GROUND NO.6, GRIEVANCE RAISED BY THE A SSESSEE IS THAT THE CIT(A) UPHELD AN ADDITION OF RS.3,25,000/-, FOR A P ROPERTY PURCHASED IN THE NAME OF ASSESSEES WIFE. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 25 41. FACTS APROPOS ARE THAT THE SEIZED RECORD A/MSD/ 1 REFLECTED ACQUISITION OF 6 ACRES OF LAND IN THE NAME OF ASSES SEES WIFE FOR A SUM OF RS.3.25 LACS ON 23-09-2005. EXPLANATION OF THE AS SESSEE WAS THAT THE DOCUMENT ONLY EVIDENCED REGISTRATION OF PROPERTY IN THE NAME OF HIS WIFE, BASED ON A GENERAL POWER OF ATTORNEY (GPA) EXECUTED BY ONE SMT.NINGAMMA, IN ASSESSEES FAVOUR. AS PER THE ASS ESSEE, HE WAS THE GPA HOLDER OF SMT.NINGAMMA, AND THE GPA WAS EXECUTE D IN FY: 98-99. THE TRANSFER EFFECTED BY HIM, TO HIS WIFE ON 23-09- 2005 WAS IN HIS CAPACITY AS A GPA HOLDER. HOWEVER, THE AO WAS NOT IMPRESSE D. ACCORDING TO HIM, THE GPA WAS EXECUTED BY SMT.NINGAMMA, IN FAVOUR OF ASSESSEE ON 12-04- 2005 AND NOT DURING 1998-99. ASSESSEES WIFE HAD N O SOURCE OF INCOME AND WAS NOT AN ASSESSEE. HE THEREFORE, CONSIDERED THE SUM OF RS.3.25 LACS MENTIONED IN THE REGISTERED DEED AS UNEXPLAINE D INVESTMENT OF THE ASSESSEE. 42. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF TH E ASSESSEE WAS THAT THE POWER ATTORNEY EXECUTED BY SMT.NINGAMMA IN HIS FAVOUR WAS DATED 21-10-2002. THE SUM OF RS.3.25 LACS SHOWN AS PAID TO HIS WIFE IN THE CONVEYANCE DEED EXECUTED BY HIM WAS ONLY ACTUAL LY TO PERFECT THE TITLE. HOWEVER, THE LEARNED CIT(A) WAS NOT IMPRESSED. HE CONFIRMED THE ADDITION. 43. NOW BEFORE US THE LEARNED AR STRONGLY ASSAILING THE ADDITION SUBMITTED THAT THE SALE DEED DATED 23-09-2005 WHICH WAS BASIS FOR THE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 26 ADDITION WAS EXECUTED BY THE ASSESSEE IN HIS CAPACI TY AS THE GPA HOLDER OF SMT.NINGAMMA. ACCORDING TO HIM, THE GPA WAS EXECUTE D BY SMT.NINGAMMA IN FAVOUR OF THE ASSESSEE ON 21-10-200 2. RELYING ON A COPY OF THE POWER OF ATTORNEY PLACED AT PAPER BOOK PAGE NO.141-144, LEARNED AR SUBMITTED THAT THE ADDITION COULD NOT HA VE BEEN DONE IN ASSESSEES HAND. IN ANY CASE, AS PER THE LEARNED AR, THE PAYMENT WAS MADE BY THE ASSESSEES WIFE AND NOT THE ASSESSEE. 44. PER CONTRA, LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 45. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THE DATE OF POWER OF ATTORNEY IS MENTIONED BY THE A O IS 12-04-2005. RELEVANT PARA OF THE SALE DEED DATED 23-09-2006 PLA CED AT PAGE NO.153, IS REPRODUCED HEREUNDER; MYSORE TALUK JAYAPURA HOBLI, BEERIHUNDI VILLAGES RESIDENT LATE MALLACHARIS DAUGHTER KALAMMA ALIAS NINGAMMA AND HER CHILDREN FIRST SON BASAVARAJU, BASAVARAJUS MINOR CHILDREN FIRST SON SWAMY SECOND SON PUTTASWAMY AND THESE CHILDREN ARE MINOR, REPRESENTE D BY THEIR MINOR GUARDIAN AND FATHER BASAVARAJU AND KALA MMA ALIAS NINGAMMAS SECOND SON KULLACHARI AND KULLACHA RIS MINOR CHILDREN FIRST SON RAJESH, SECOND SON NAGANNA , THESE ARE MINOR CHILDREN REPRESENTED BY MINOR GUARDIAN AN D FATHER KULLACHARI, THE ABOVE SAID PERSONS GIVEN A G ENERAL POWER OF ATTORNEY IN FAVOUR OF M.S.DHANANJAYA S/O ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 27 K.M.SHIVASWAMY, RESIDENT OF NO.394, MASJID ROAD, NAZARBAD, MYSORE, THE DOCUMENT REGISTERED VIDE MYN- 4- 00037/2005-06 CD ABOVE SAID PARTIES I M.S.DHANANJAY A EXECUTED A SALE DEED AS FOLLOWS;. 46. THE GPA PLACED AT PAPER BOOK PAGE NO.141 -145 IS DATED 21-10- 2002. ASSESSEES CLAIM BEFORE THE AO WAS THAT THE GPA WAS EXECUTED IN 1999. A READING OF THE NARRATION IN THE SALE DEED DATED23-04-2006, REPRODUCED ABOVE HINTS THAT THE POA WAS REGISTERED IN 2006. THUS, THERE IS ABSOLUTE CONFUSION REGARDING THE DATES. NO DOUB T, IF ASSESSEES WIFE HAD PAID A CONSIDERATION OF RS.3.00 LACS TO THE ASSESSE E, SOURCE WAS TO BE EXPLAINED BY HER AND NOT THE ASSESSEE. IF THE AO C ONSIDERED ASSESSEE HIMSELF TO BE THE OWNER OF THE PROPERTY, THEN THERE WAS NO QUESTION OF ANY MONEY BEING TRANSFERRED FROM ASSESSEES WIFE TO THE ASSESSEE. NEVERTHELESS, THERE IS NO FINDING BY THE LOWER AUTH ORITIES WHETHER ANY AMOUNT WAS PAID BY THE ASSESSEE TO SMT.NINGAMMA, AT THE TIME OF EXECUTION OF THE POWER OF ATTORNEY. THERE IS ALSO C ONFUSION REGARDING THE DATES. WE ARE THEREFORE, OF THE OPINION, THE MATTE R REQUIRES A FRESH LOOK BY THE AO. ORDERS OF THE AUTHORITIES ON THIS ISSUE IS SET ASIDE AND REMITTED BACK TO THE FILE OF THE AO FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. GROUND NUMBER SIX IS ALLOWED FOR STATISTICAL PURPOS ES. 47. VIDE ITS GROUND NO.7, ASSESSEE IS AGGRIEVED ON AN ADDITION TOTALING RS.2,25,000/- MADE BY THE AO WHICH WAS CON FIRMED BY THE CIT(A). ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 28 48. FROM THE SEIZED DOCUMENTS, IT WAS FOUND BY THE AO THAT THE ASSESSEE HAD PAID A SUM OF RS.1.00 LAC TO ONE SHRI CHIKKAMADAIAH ON 26- 10-2005 FOR ACQUIRING 4 ACRES OF LAND. ON SAME DAT E PAID AN ADVANCE OF RS.25,000/- TO ONE SMT RATHNAMMA AND ALSO ANOTHER S UM OF RS.1.00 LAC TO SMT. BASAMMA, AGAIN FOR ACQUIRING PROPERTIES. SI NCE THESE WERE APPEARING IN THE STATEMENT OF ACCOUNT FILED BY THE ASSESSEE, THE AO PROPOSED AN ADDITION OF RS.2.25 LACS FOR WANT OF EV IDENCE. CLAIM OF THE ASSESSEE BEFORE THE AO WAS THAT THESE WERE WRITTEN OFF AS BAD DEBT IN THE VERY SAME FINANCIAL YEAR. HOWEVER, THE AO DID NO T ACCEPT THE CLAIM. AN ADDITION OF RS.2,25,000/- WAS MADE. 49. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF THE ASSESSEE WAS THAT THE ADVANCE PAID TO THESE THREE PARTIES ON 26-10-20 05 COULD NOT BE RECOVERED. THE PROPERTIES FOR WHICH SUCH ADVANCE WE RE GIVEN WERE SUBSEQUENTLY, SOLD BY THE PARTIES TO OTHERS. AS PE R THE ASSESSEE, IT HAD ISSUED NOTICE FOR RECOVERY. CLAIM OF THE ASSESSEE W AS THAT IT SHOULD BE ALLOWED AS BUSINESS LOSS. HOWEVER, THE CIT(A) DID NOT ACCEPT THE ABOVE CONTENTIONS. ACCORDING TO HIM, THE PAYMENT ITSELF H AVING BEEN MADE OUTSIDE THE BOOKS, THERE WAS NO QUESTION OF ANY WRI TE OFF. 50. NOW BEFORE US LEARNED AR STRONG ASSAILING THE ORDERS OF THE AUTHORITIES BELOW SUBMITTED THAT ADVANCES EVEN IF P AID OUTSIDE THE BOOKS, WHEN IT COULD NOT BE RECOVERED RESULTED IN BUSINESS LOSS. ACCORDING TO HIM, ASSESSEE WAS IN REAL ESTATE BUSINESS AND WHEN ADVAN CE GIVEN FOR ACQUIRING ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 29 TRADING ASSETS DID NOT FRUCTIFY, IT HAD TO EFFECT W RITE OFF AS LOSS. ACCORDING TO THE LEARNED AR ACTUAL WRITE OFF IN BOOK OF ACCOUNTS WAS NOT NECESSARY FOR CLAIMING BUSINESS LOSS. 51. PER CONTRA, LEARNED DR SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 52. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. SINCE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACC OUNTS, THERE IS NO QUESTION OF ANY WRITE OFF AS BAD DEBTS. ADMITTEDLY, THE PAYMENTS OF ADVANCES WERE MADE OUTSIDE THE BOOKS. THE ONLY WAY THE CLAIM CAN SURVIVE, IS IF IT IS ALLOWED AS BUSINESS LOSS. THOU GH, ASSESSEE WAS MENTIONING THAT STEPS WERE TAKEN FOR RECOVERY OF MO NEY, THERE IS NOTHING ON RECORD TO SHOW ANY SUCH STEP. FOR CLAIMING A BUSIN ESS LOSS, IT IS REQUIRED TO SHOW SOME EVIDENCE OF INCURRING THE LOSS. IN OU R OPINION, IT IS NOT EQUIVALENT TO A WRITE OFF OF BAD DEBTS. NO EVIDENC E ON THESE LINES ARE FORTHCOMING. WE ARE OF THE OPINION, THAT THE ADDIT ION WAS RIGHTLY DONE BY THE AO AND CONFIRMED BY THE CIT(A) GROUND NO.7 OF T HE ASSESSEE STANDS DISMISSED. 53. VIDE ITS GROUND NO.8, GRIEVANCE OF THE ASSESSE E IS THAT A REBATE U/S 88 OF THE ACT WAS NOT GIVEN ON AN ADDITION OF R S.1.00 LAC MADE FOR INVESTMENT IN MUTUAL FUND. WE FIND THE ABOVE GROUN D TO BE MISPLACED. LEARNED CIT(A) HAS AT PARA-17.1 OF HIS ORDER DIRECT ED THE AO TO ALLOW REBATE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 30 U/S 88 OF THE ACT, IF THE INVESTMENTS WERE ELIGIBL E AS PER THE SAID SECTION. GROUND NO.8 OF THE ASSESSEE IS THEREFORE, DISMISSED . 54. WHEN GROUND NO.9 WAS TAKEN UP, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE WAS NOT PRESSING IT. GRO UNDNO.9 IS DISMISSED AS IT PRESSED. 55. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AY: 2006-07 IN ITA NO.530(B)/12 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. 56. NOW WE TAKE UP THE CROSS APPEAL OF THE REVENUE IN ITA NO.519(B)/12 FOR SAME ASSESSMENT YEAR. GROUND NOS . 1 & 6 ARE GENERAL IN NATURE, NEEDING NO ADJUDICATION. 57. VIDE ITS GROUND NO.2 & 3 GRIEVANCE RAISED BY T HE REVENUE IS THAT THE CIT(A) DELETED AN ADDITION OF RS.40,80,500/- RE LATING TO PURCHASE OF A PROPERTY AT THUMBENERALE, BUT FOR A SUM OF RS.2.50 LACS. 58. THIS ISSUE IS ALREADY BEEN DEALT BY US IN RELA TION TO GROUND NO.2 OF THE ASSESSEE IN ITA NO.530(B)/12 AT PARA 25 ABOV E. FOR THE SAME REASONS MENTIONED THEREIN, WE DISMISS GROUND NO.2 & 3 OF THE REVENUE. 59. VIDE ITS GROUND NO.4 & 5 GRIEVANCE RAISED BY T HE REVENUE IS THAT A SUM OF RS.6.00LACS ADDED BY THE AO AS DEFICIT CASH, WAS DELETED BY THE LEARNED CIT(A). ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 31 60. FACTS RELATING TO THE ABOVE ADDITION HAS BEEN L UCIDLY NARRATED BY THE LEARNED CIT(A) AT PARA-20.1 OF ITS ORDER WHICH IS REPRODUCED HEREUNDER; 20.1 THE ISSUE IS DISCUSSED IN PARA -12 OF THE ASSESSMENT ORDER. AS PER THE SEIZED MATERIAL THE AP PELLANT SOLD AN IMMOVABLE PROPERTY ON 03-011-2007 FOR RS.20 LACS BY CASH. IN THE RETURN OF INCOME FOR THE AY: 2005- 06 THE ASSESSEE SHOWED THE SALE TRANSACTION AT RS.12 LACS AND FOR THE AY; 2007-08 SHOWED THE BALANCE OF RS.8 LACS AGA INST THIS, THE APPELLANT SHOWED AN AMOUNT OF RS.12 LACS AS ADVANCE RECEIVED DURING FY: 2004-05 WHICH WAS ACCEP TED BY THE APPELLANT IN HIS STATEMENT ON 12-12-2008. ON VERIFICATION MADE WITH THE BUYERS TO WHOM THE PROPE RTY WAS SOLD IT IS NOTICED THAT SRI D.B.SURESH OF PERFECT MATCHING CENTRE HAS PAID RS.6.00 LACS BY CASH ON 27-12-2005 AND BALANCE 14 LACS WAS PAID ON 03-01-2007 OF WHICH RS. 8 LACS WAS BY CHEQUES DATED 02-01-2007 AND RS.6 LACS PAID BY SMT.SHEELA SURESH ON 03-01-2007. DURING THE FY: 2006-07 HE ASSESSEE HAS SHOWN RS.12 LACS AS ADVANCE RECEIVE D DURING FY: 2005-06 ITSELF AS AGAINST RS.6 LACS ACTU ALLY RECEIVED FROM SRI D.B.SURESH. IN VIEW OF THIS, TH E APPELLANT WAS ASKED TO SUPPORT THE CLAIM MADE BY HIM FOR HAVI NG RECEIVED RS.12. LACS AS ADVANCE BY CASH DURING FY: 2005- 06. BEFORE THE AO, THE APPELLANT ARGUED THAT THE ENTRIES MADE IN HIS BOOKS HAVE TO BE RELIED THAN THE ENTRIE S APPEARING IN THE CSE OF OTHER PARTIES. SINCE THE A PPELLANT COLD NOT ESTABLISH CREDIT OF RS.12 LACS IN THE BOOK S AS ADVANCE RECEIVED ON 27-12-2005, THE AO HELD THAT TH E APPELLANT Y SHOWING CASH RECEIPT OF RS.12 LACS AS A GAINST RS.6 LACS ACTUALLY RECEIVED BROUGHT INTO HIS BOOKS ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 32 UNEXPLAINED ASH IN THE FORM OF ADVANCE TO ACCOMMODA TE THE CASH OUTGOINGS FROM THE BOOKS ON SUBSEQUENT DAYS. HENCE, THE EXCESS CASH OF RS.6 LACS WAS ADDED. 61. ARGUMENT OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT RECEIPT OF RS.2.00 LACS ON ACCOUNT OF SALE OF 2.11 ACRES WAS ALREADY SHOWN BY IT IN ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YE AR FILED BEFORE THE DATE OF THE SEARCH. LEARNED CIT(A) WAS APPRECIATIVE OF T HIS CONTENTION. ACCORDING TO HIM, IN THE TRADING ACCOUNT FILED BY T HE ASSESSEE THE SALE CONSIDERATION WAS INCLUDED AND OFFERED BY THE ASSES SEE TO TAX. 62. NOW BEFORE US, LEARNED DR SUBMITTED THAT THE C IT(A) FELL IN ERROR IN CONSIDERING THE RETURN OF INCOME FILED BY THE AS SESSEE, EVEN THOUGH, IT WAS FILED PRIOR TO THE SEARCH. ACCORDING TO HIM ASS ESSEE COULD NOT SUBSTANTIATE THE SALE. 63. PER CONTRA, LEARNED AR SUPPORTED THE ORDERS OF THE CIT(A). 64. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT STATEMENT RECORDED FROM TH E ASSESSEE, DID NOT MENTION ANYTHING RELATED TO THE ABOVE ISSUE. ASSES SEE HAD FILED RETURN OF INCOME PRIOR TO THE DATE OF SEARCH, WHERE IT HAD SH OWN THE RECEIPT ON THE SALE OF THE PROPERTY. ONCE THE SALE IS INCLUDED IN THE TURNOVER, AS NOTED BY ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 33 THE LEARNED CIT(A), THERE IS NO SCOPE FOR FURTHER A DDITION. WE ARE THEREFORE, OF THE OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. 65. GROUND NO.4 & 5 OF THE REVENUE STANDS DISMISSE D. 66. IN THE RESULT, THE APPEAL OF THE REVENUE FOR A Y: 2006-07 IN ITA NO.519(B)/12 IS DISMISSED. 67. NOW WE TAKE UP APPEAL OF THE ASSESEE FOR AY: 2 007-08 IN ITA NO.531(B)/12. THERE ARE ALTOGETHER FOUR GROUNDS O F WHICH GROUNDS 1 & 5 ARE GENERAL AND GROUND NO.4 CONSEQUENTIAL, NEEDING NO SPECIFIC ADJUDICATION. 68. LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED TH AT HE WAS PRESSING ONLY GROUND TWO AND GROUND THREE CAN BE DISMISSED A S NOT PRESSED. ACCORDINGLY, GROUND NO.3 IS DISMISSED AS NOT PRESSE D. 69. GROUND NO.2 IS ON AN ADDITION OF RS.10.LACS, I N RELATION TO A LAND TRANSACTION ASSESSEE ENTERED WITH SMT. SIDDHAMMA & SHRI ANNE GOWDA, WHICH WAS ENHANCED TO RS.28 LACS BY THE CIT(A). 70. FACTS APROPOS ARE THAT ONE OF THE SEIZED RECOR DS, INVENTORIZED AS A/MSD/15, INCLUDED A SALE AGREEMENT DATED 18-11-200 6 ENTERED BY THE ASSESSEE WITH SMT.SIDDHAMMA & SHRI ANNE GOWDA. AS PER THIS AGREEMENT SMT.SIDDHAMMA, SHRI ANNE GOWDA & SMT. M.K.SHOBHA AG REED TO SELL 3 ACRES OF DRY LAND AT SY.NO.115/12/-P2 OF KERAGALLI VILLGE OF MYSORE TALUK, ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 34 (HEREIN AFTER REFERRED AS SUBJECT LAND) FOR A CONSI DERATION OF RS.72 LACS. OF THIS, RECEIPT OF RS.25 LACS WAS ALSO ACKNOWLEDGED. HOWEVER, NAME AND DESCRIPTION OF THE ASSESSEE WHO IS THE BUYER HAS NO T BEEN FILLED UP, NOR IS THERE ANY SIGNATURE OF THE ASSESSEE IN IT. IN ADDI TION TO THE ABOVE, CERTAIN OTHER DOCUMENT WERE ALSO FOUND RELATING TO THE SUBJ ECT LAND. ALL THESE DOCUMENTS, THEIR NATURE AND AMOUNTS MENTIONED ARE S UMMARIZED HEREUNDER; SL.NO. DOCUMENT DESCRIPTION PB PAGE RE LEVANCE 1. SALE AGREEMENT DT.18/11/06 172 TO TOTAL CONSIDERATION MENTIONED AS 72 ENTERED BY SMT.SIDDHAMMA, 174 LACS. RECEIPT OF RS.25 LACS SHRI ANNE GOWDA & SMT. SOBHA ACKNOWLEDGED. BUYERS NAME IS LEFT WHEREBY LATTER AGREED TO SELL THE BLANK SUBJECT LAND. 2. CASH RECEIPT DT.5/2/07 1 76 ACK. RECEIPT OF 1.00 LAC FROM SIGNED BY SHRI ANNE GOWDA ASSESSEE FOR SUBJECT LAND, AS PER AGREEMENT FOR SUBJECT LAND. 3. RECEIPT DT.19/2/07 178 ACK. CASH RECEIPT FO RS.1 LAC AND SIGNED BY SHRI ANNE GOWDA CHEQUE RECEIPT OF RS.8. LAC AS PER AGREEMENT FOR SUBJECT LAND 4. AGREEMENT DT.5/3/07 BETWEEN 184 TO ACK. RECEIPT OF RS.20 LACS AND ALSO ASSESSEE & SIDDHAMMA, 18 6 REFERS TO AN EARLIER AGREEMENT ANNE GOWDA,AND SHOBHA FOR SELLING THE SUBJECT LAND TO ASSESSE E FOR RS.72 LACS. ALSO STATES THAT RS.55 LACS RED TILL 5/3/07 INCLUDING RS.20 LACS AND BALANCE PAYABLE IS ONLY 17 LACS 5. CASH RECEIPT DT.9/4/07 180 ACK. RECEIPT OF RS.5 LACS AND ALSO SAY SIGNED BY SHRI ANNE GOWDA THAT RS.60 LACS HAS BEEN TOTALLY RED UPTO 9/4/07 FOR SUBJECT LAND. 6. DEVELOPMENT AGREEMENT DT.24/4/07 187 TO ACK. RECEIPT OF RS.36 LACS FROM BETWEEN ASSESSEE & SIDDHAMMA, 201 ASSESSEE GIVING HIM DEV. RIGHT ANNE GOWDA AND SHOBHA GIVING DEV. RIGHT OF SUBJECT LAND TO ASSESSEE 7. UNREGD. DOCUMENT DT.25/4/07 205 STATES THAT SUBJECT LAND IS CONVEYED TO CAPTIONED AS ABSOLUTE SALE DEED, ASSESSEE FOR TOTAL CONSIDERATION OF TRANSFERRING THE SUBJECT LAND TO RS.65 LACS RECEIPT OF WHICH IS ASSESSEE ACKNOWLEDGED. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 35 BLANK. 71. WHEN ASSESSEE WAS QUESTIONED ABOUT THE ABOVE T RANSACTIONS AT THE TIME OF SEARCH ON 30-01-2008, HE STATED THAT RS .40 LACS WAS PAID OUT OF HIS UNACCOUNTED INCOME AND RS.20 LACS WAS PAID FROM BANK LOANS. IN A SUBSEQUENT STATEMENT DATED 15-02-2008 HE REDUCED TH E PAID AMOUNT TO RS.36 LACS. AO THEREUPON SUMMONED SHRI ANNE GOWDA AND RECORDED HIS STATEMENT. IN SUCH STATEMENT RECORDED ON 26-02-200 8 SHRI ANNEGOWDA, ACCEPTED HIS SIGNATURES IN VARIOUS DOCUMENTS BUT ST ATED THAT HE HAD RECEIVED RS.36 LACS ONLY, OUT OF TOTAL AGREED SUM O F RS.65 LACS. ACCORDING TO HIM, BALANCE OF RS.29 LACS WAS DUE FROM THE ASSESSE E. 72. ASSESSING OFFICER THEREUPON VERIFIED THE BANK DETAILS OF THE ASSESSEE AND FOUND THAT ASSESSEE HAD TAKEN A LOAN O F RS.25,62,930/- FROM CENTURION BANK, WHICH WAS DEPOSITED IN HIS CANARA BANK ACCOUNT ON 06- 02-2007. FROM THE LATTER ACCOUNT, ASSESSEE HAD MA DE FOLLOWING WITHDRAWALS IN THE NAME OF ANNE GOWDA DATE OF WITHDRAWAL AMOUNT 6-01-2007 4.00,000 19-02-2007 8,00,000 07-03-2007 10,00,000 AS PER THE AO, THE WITHDRAWAL OF RS.8 LACS COULD BE CORRELATED TO ITEM NUMBER 3 OF THE TABLE AT PARA-69 ABOVE, AND RS.10 L ACS WITHDRAWAL ON 07- 03-2007 COULD BE CORRELATED TO RS.20 LACS MENTIONED AS ITEM NUMBER 4 OF ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 36 THE SAME TABLE. ACCORDING TO HIM, BUT FOR THIS RS. 18 LACS, THERE WERE FOLLOWING FOUR PAYMENT TOTALING TO RS.37 LACS, FOR WHICH NO SOURCE WAS SHOWN BY THE ASSESSEE. (I) RS.25 LACS PAID N 15-11-2006 ( SL.NO.1 OF THE T ABLE) (II) RS.1 LAC PAID ON 05-02-2007 (SL.NO.2 OF THE TA BLE) (III) RS.1 LAC PAID ON 19-02-2007 (SL.NO.3 OF THE T ABLE) (IV) RS.10 LACS OUT OF RS.20 LACS PAID ON 05-03-207 (SL.NO.4 OF THE TABLE) SINCE THE BALANCE SHEET AS ON 31-03-2007, FILED BY THE ASSESSEE REFLECTED A SUM OF RS.27 LACS AS PAID TO ANNE GOWDA & PRABHUWSW AMY, IN CURRENT ASSETS, BALANCE SUM OF RS.10 LACS WAS CONSIDERED AS UNEXPLAINED INCOME OF THE ASSESSEE. 73. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE CIT(A). LEARNED CIT(A) FOUND THAT OUT OF RS.65 LACS PAID BY THE ASS ESSEE TO THE VENDORS, AS SHOWN IN THE SEIZED DOCUMENTS, ONLY RS.55 LACS (ITE M AT SL.NOS.1 TO 4 OF THE TABLE AT PARA-69 ABOVE) PERTAINED TO THE RELEVANT P REVIOUS YEAR. AGAINST THIS, ASSESSEE HAD CORRELATABLE WITHDRAWALS, TOTALI NG RS.17 LACS FROM BANK. HENCE, HE ISSUED AN ENHANCEMENT NOTICE TO THE ASSES SEE. AS PER THE CIT(A), ADDITION REQUIRED WAS RS.38 LACS AND NOT RS.10 LACS . LEARNED CIT(A) HAD CONSIDERED THE FOLLOWING WITHDRAWALS FROM BANK AS C ORRELATABLE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 37 DATE OF WITHDRAWALS AMOUNT 13-12-2006 8.00,000 06-01-2007 4,00,000 19-02-2007 5,00,000 TOTAL RS. 17,00,000 74. ASSESSEE REPLIED THAT WITHDRAWAL OF RS.10 LACS ON 07-03-2007 WAS ALSO REQUIRED TO BE CONSIDERED. AS PER THE ASS ESSEE, AFFIDAVIT FILED BY SHRI ANNE GOWDA, IN WHICH HE HAD CONFIRMED RECEIPT OF RS.27 LACS ALONE, OUGHT NOT BE IGNORED. FURTHER, AS PER THE ASSESSEE SEIZED DOCUMENTS ITSELF WERE STATING THINGS WHICH WERE CONTRADICTORY TO EAC H OTHER AND COULD NOT BE BELIEVED. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHEO NARAIN DULE CHAND VS CIT 72 ITR 766, IN SUPPORT OF ITS CONTENTION THAT AFFIDAVIT OF SHRI AN NE GOWDA, CANNOT BE TAKEN AS A SELF SUPPORTING EVIDENCE. 75. LEARNED CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE, BUT FOR THE SUM OF RS.10 LACS WITHDRAWN ON 07-03-2007. ACCO RDING TO HIM BOTH ASSESSEE AND SHRI ANNE GOWDA, WERE INTERESTED PARTI ES AND THEY WERE ACTING IN TANDEM TO SAVE TAXES. HE THUS, ENHANCED THE ADDITION TO RS.28 LACS. 76. NOW BEFORE US LEARNED AR STRONGLY ASSAILING TH E ORDER OF THE LEARNED CIT(A) SUBMITTED THAT THE SEIZED DOCUMENTS MENTIONED DIFFERENT AMOUNTS AT DIFFERENT PLACES. ACCORDING TO HIM, SUC H DOCUMENTS WERE ALL ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 38 PREPARED FOR ESCAPING ACQUISITION PROCEEDINGS AND O UGHT NOT HAVE BEEN TAKEN INTO CONSIDERATION, SINCE IT CONTRADICTED EAC H OTHER. TO THE EXTENT ASSESSEE HAD SHOWN THE AMOUNT IN ITS BALANCE SHEET, THERE COULD BE NO QUESTION OF UNDISCLOSED INCOME, AS PER THE LEARNED AR. FURTHER, AS PER THE LEARNED AR, AFFIDAVIT OF THE VENDOR SHRI ANNE GOWDA OUGHT NOT HAVE BEEN DISBELIEVED AS A SELF SERVING DOCUMENT. RELIANCE W AS ONCE AGAIN PLACED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHEO NARAIN DULE CHAND (SUPRA). 77. PER CONTRA, LEARNED DR SUPPORTED THE ORDERS OF THE LEARNED CIT(A). 78. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. NO DOUBT IN THE SALE AGREEMENT DATED 18-11-2006, WHICH IS THE STARTING POINT OF THE SUBJECT TRANSACTION, NAME OF THE ASSESSEE IS NOT SHOWN, NOR IS HIS SIGNATURE AVAILABLE. HOWEVER, ALL THE LATER RECEIP TS, AS WELL AS SUBSEQUENT AGREEMENT HAVE AT ONE PLACE OR THE OTHER, MENTIONED THE NAME OF THE ASSESSEE, AS THE PURCHASER AND ALSO REFLECT REFEREN CE TO THE FIRST AGREEMENT. ALL THESE WERE PART OF RECORDS FOUND AND SEIZED FRO M ASSESSEES PREMISES. WHEN THESE CIRCUMSTANCES ARE CONSIDERED TOGETHER, T HE ONLY REASONABLE CONCLUSION THAT CAN BE REACHED IS THAT THERE INDEED WAS AN AGREEMENT ENTERED BY ASSESSEE WITH SMT.SIDDHAMMA, HER SON SRI ANNE GOWDA AND SMT.M.K.SHOBHA, HER DAUGHTER FOR ACQUIRING THE SUBJ ECT LAND. THE DOCUMENTS CANNOT BE BRUSHED ASIDE ONLY FOR A REASON THAT SHRI ANNE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 39 GOWDA, ALONE HAD SIGNED, THEREIN. PAYMENTS EFFECTED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR CAME TO RS.55 LAC S. (SL.NO.1 TO 4 OF THE TABLE AT PARA-69 ABOVE). TOTAL CONSIDERATION MENTIO NED IN AGREEMENT DATED 18-11-2006 IS RS.72 LACS (SL.1 OF THE TABLE). THIS IS REITERATED IN THE SECOND AGREEMENT DATED 5/3/2007 (SL.4 OF THE TABLE). IN THE CASH RECEIPT FOR RS.5 LACS DATED 9/4/2007(SL.NO.5 OF THE TABLE) THE TOTAL RECEIPT TILL THAT DATE HAS BEEN ACKNOWLEDGED AS RS.60 LACS. IF WE TOTAL THE R ECEIPTS AS PER DOCUMENTS AT SL,NO.1 TO 5 OF THE TABLE, THIS CORRECTLY TALLIE S. IN OTHER WORDS, IN THE VARIOUS RECORDS, UPTO 9/4/2007 THERE WAS NO CONTRAD ICTIONS WHATSOEVER. IF WE EXCLUDE THE SUM OF RS.5 LACS PAID ON 09/4/2007, THE PAYMENTS EFFECTED DURING RELEVANT PREVIOUS YEAR CAME TO RS.55 LACS AN D LEARNED CIT(A) HAS CORRECTLY WORKED OUT THIS FIGURE. IN THE SECOND AG REEMENT DATED 5/3/2007 (SL.NO.4 OF TABLE) IT IS MENTIONED THAT SUM RECEIVE D TILL THAT DATE IS RS.55 LACS AND THIS ALSO TALLIES IF WE TOTAL THE PAYMENTS AS PER RECORDS AT SL,NO.1 TO 4. IN OUR OPINION, THE DEVELOPMENT AGREEMENT DA TED 24/4/2007(SL.NO.6 OF THE TABLE) AS ALSO UNREGISTERED DEED DATED 25/4/ 07 CANNOT CHANGE THE CONSIDERATION ORIGINALLY AGREED ON 18/11/2006, AND RE-ITERATED SUBSEQUENTLY, IN THE AGREEMENT DATED 5/3/2007. D EVELOPMENT AGREEMENT DATED 24/4/2007 IS NOT RELEVANT, WHEREAS THE UNREGI STERED SALE DEED COULD NOT BE CONSIDERED AS VALID EVIDENCE SINCE IT WAS NO T REGISTERED. OUT OF THE TOTAL RS.55 LACS PAID BY THE ASSESSEE, DURING THE R ELEVANT PREVIOUS YEAR. LEARNED CIT(A) HAD ACCEPTED THE BANK WITHDRAWALS TO TALLING RS.27 LACS AS SOURCE AND MADE ADDITION OF RS28/- LACS ONLY. BALA NCE SHEET AS ON 31-03- ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 40 2007 OF THE ASSESSEE. (PB PAGE 23 ) ALSO REFLECT RS.27 LACS ONLY. WHEN ASSESSEE WAS NOT ABLE TO SHOW THE SOURCE FOR BALANC E PAYMENT OF RS.28 LACS, WE CANNOT FAULT THE ADDITION DONE BY THE LEAR NED CIT(A). WE FIND NO REASON TO INTERFERE. GROUND NO.2 OF THE ASSESSEE I S DISMISSED. 79. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AY: 2007-08 IN ITA NO.531(B)/12, IS DISMISSED. 80. NOW WE TAKE UP THE APPEALS OF THE REVENUE AND ASSESSEE FOR AY: 2008-09. ASSESSEES APPEAL IN ITA NO.532(B)/12 I S TAKEN UP FIRST. 81. ASSESSEE HAS RAISED SEVEN GROUNDS IN TOTO OF W HICH GROUNDS 1 & 7 ARE GENERAL AND GROUND 6 CONSEQUENTIAL NEEDING NO SPECIFIC ADJUDICATION. 82. VIDE ITS GROUND NO.2 ASSESSEE ASSAILS AN ADDIT ION OF RS.5,09,450/- MADE BY THE AO, WHICH WAS SCALED DOWN BY THE LEARNED CIT(A) TO RS.9450/- 83. FACTS APROPOS ARE THAT RS.5,09,450/- WAS FOUND IN CASH AT THE TIME OF SEARCH. WHEN AO PROPOSED AN ADDITION OF THI S AS UNACCOUNTED MONEY, ASSESSEE PRODUCED A CASH BOOK PRINT OUT WHIC H REFLECTED THIS CASH BALANCE AS ON 30/01/2008. ASSESSING OFFICER REJECTE D THIS CASH BOOK. ACCORDING TO HIM, SEIZED DOCUMENT MDS/1 REFLECTED C ASH BALANCE OF RS.1095 ON 30/01/2005 AND A/RER/3 REFLECTED A CASH BALANCE OF RS.1700/- ON THE SAME DATE. DOCUMENT MDS/3 REFLEC TED A DEFICIT CASH BALANCE OF RS.4095/-. ACCORDING TO THE LEARNED AO, THE CASH BOOK ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 41 PRODUCED AT THE TIME OF HEARING WAS PREPARED ONLY T O JUSTIFY THE CASH FOUND AT THE TIME OF SEARCH AND COULD NOT BE BELIEVED. I N THIS VIEW OF THE MATTER, HE MADE AN ADDITION OF RS.5,09,450/-. 84. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF TH E ASSESSEE WAS THAT THE 3 DOCUMENTS RELIED ON BY THE AO FOR MAKING THE ADDITION WERE NOT CASH BOOKS AND HAD NO CORRELATION WITH ITS VARIOUS BANK ACCOUNTS. AS PER THE ASSESSEE IF THE FOLLOWING THREE TRANSACTIONS WE RE CONSIDERED THEN THE CASH BALANCE WOULD STAND EXPLAINED. I) WITHDRAWAL DT. 3/3/07 FROM CANARA BANK RS. 65, 000 II) WITHDARWAL DT.29/3/07 FROM CANARA BANK RS.3,00 ,000 III) SALE OF SITE ON 23/01/008 AT HEBBAL RS.2,70, 500 RS.6,35,000 IT WAS ALSO SUBMITTED THAT OPENING CASH AS ON 1-04- 2001 RELEVANT TO AY: 2002-03, WAS CONSIDERED FOR ADDITION IN THAT YEAR, AND HENCE ITS AVAILABILITY IN SUBSEQUENT YEARS CANNOT BE DENIED. 85. LEARNED CIT(A) ACCEPTED THE LAST CONTENTION OF THE ASSESSEE THAT OPENING CASH BALANCE AS ON 01/04/2001, HAVING BEEN TAXED IN AY: 2002- 03, WOULD BE AVAILABLE FOR EXPLAINING THE SUBSEQUEN T YEARS CASH AVAILABILITY. HOWEVER, SINCE HE HAD CONFIRMED ADDI TION OF RS.5 LACS ONLY IN AY: 2002-03, OUT OF THE CLAIM OF OPENING BALANCE OF RS.7,45,954/-, LEARNED CIT(A) HELD THAT RELIEF OF RS.5.00 LACS ALONE COULD BE GIVEN. IN OTHER WORDS, HE SCALED DOWN THE ADDITION FOR UNEXPLAINED CASH TO RS.9450/-. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 42 86. NOW BEFORE US LEARNED AR REITERATED SAME ARGUM ENTS TAKEN BEFORE THE LEARNED CIT(A). ON THE OTHER HAND LEARN ED DR, SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE CIT(A) FELL IN ERROR IN SCALING DOWN THE ADDITION TO A MERE RS.9450/-. 87. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE HAD SHOWN AN OPEN ING CASH BALANCE OF RS.7.45,954/- ON 1/4/2001, WHICH WAS A SUBJECT MATT ER OF ADDITION FOR AY: 2002-03. LEARNED CIT(A) HAD FOR THAT YEAR GIVEN A CLEAR FINDING THAT ASSESSEE BEING A DOCUMENT WRITER SINCE 1993, WOULD HAVE HAD SAVINGS OF AT LEAST RS.2,45,954/- AND SCALED DOWN THE ADDITION TO RS.5.00 LACS. THIS ADDITION HAS BEEN CONFIRMED BY US AT PARA- ABOVE. IN OTHER WORDS, CREDIT FOR OPENING CASH OF RS.7,45,954/- AS ON 1/4/2001, C ANNOT BE DENIED TO THE ASSESSEE. CASH AVAILABILITY IN SUBSEQUENT YEARS HAV E TO BE CONSIDERED TAKING THE SUM OF RS.7,45,954/- AS ON 1/4/2001, AS THE STARTING POINT. IF THAT BE SO, ADMITTEDLY, THE CASH OF RS.5,09,450/- F OUND AT THE TIME OF SEARCH WOULD STAND EXPLAINED. THERE IS NO SCOPE FOR ANY ADDITION ON THIS SCORE. SUCH ADDITION IS DELETED. GROUND 2 OF THE ASSESSEE IS ALLOWED. 88. VIDE ITS GROUND 3, ASSESSEE IS AGGRIEVED ON AN ADDITION OF RS.6,71,550/- MADE BY THE AO FOR JEWELLERY FOUND AT THE TIME OF SEARCH WHICH WAS SCALED DOWN TO RS.1,21,650/- BY THE LEARN ED CIT(A). 89. AT THE TIME OF SEARCH 970 GRAMS OF JEWELLERY W AS FOUND. NET WEIGHT OF THE JEWELLERY WAS CONSIDERED BY THE AO AS 915 GRAMS. AS PER THE AO, THE FAMILY STATUS OF THE ASSESSEE COULD EXPLAIN 250 GRAMS AND THE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 43 BALANCE OF 665 GRAM WAS CONSIDERED FOR ADDITION. A T THE RATE OF RS.1010/- PER GRAM THE ADDITION CAME TO RS.6,71,550/-. 90. IN ITS APPEAL BEFORE THE CIT(A), ARGUMENT OF THE ASSESSEE WAS THAT HIS FAMILY CONSISTED OF HIS WIFE, HIS DAUGHTER APART FROM HIMSELF. AS PER THE ASSESSEE HIS SISTER-IN-LAW HAD KEPT 300 GRA MS OF JEWELLERY AT HIS RESIDENCE. FURTHER, ACCORDING TO HIM, HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF SMT.PATHI DEVI VS ITO 240 ITR 727, HAD HELD THAT 500 GRAMS OF JEWELLERY FOR A MARRIED LADY, 250 GRAMS FOR AN UNMA RRIED WOMEN AND 100 GRAMS FOR A MALE WAS AN ACCEPTED NORM, VIDE CBDT CI RCULAR NO.1916 DATED 11 TH MAY, 1994. CIT(A) ACCEPTED THE ABOVE LINE OF ARG UMENTS AND HELD THAT 850 GRAMS STOOD EXPLAINED. RELIEF TO THAT EXTENT WAS GIVEN. HOWEVER, HE DID NOT ACCEPT THE CLAIM THE ASESSEE THAT 300 GRAMS OF JEWELLERY BELONGED TO HIS SISTER-IN-LAW. 91. NOW BEFORE US LEARNED AR SUBMITTED THAT ASSESS EES SISTER-IN-LAW SMT. SUGUNA WAS UNMARRIED AT THE TIME OF SEARCH AND LIVING WITH THEM. AS PER THE LEARNED AR, SMT. SUGUNA WAS PHYSICALLY PRES ENT AT THE TIME OF SEARCH. HENCE, CREDIT FOR HER JEWELLERY HAD TO BE GIVEN. 92. PER CONTRA, LEARNED DR SUBMITTED THAT CIT(A) F ELL IN ERROR IN RELYING ON CIRCULAR NUMBER 1916(SUPRA). ACCORDING T O HER, THE SAID CIRCULAR APPLIED AS A GUIDELINE WHILE MAKING A SEIZURE AND H AD NOTHING TO DO WITH AN ASSESSMENT. AS PER THE LEARNED DR RELIEF GIVEN TO ASSESSEE BY THE LEARNED CIT(A) WAS NOT WARRANTED. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 44 93. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. CONTENTION OF THE ASSESSEE ALL ALONG WAS THAT HIS S ISTER-IN-LAW WAS ALSO PRESENT AT THE TIME OF SEARCH AND HER JEWELLERY WAS ALSO A PART OF THE JEWELLERY FOUND. ONCE HIS SISTER-IN-LAW IS ALSO CO NSIDERED THE TOTAL JEWELLERY THAT CAN BE THERE, BY VIRTUE OF CBDT CIRCULAR NUMBE R 1916 (SUPRA), WOULD GO UP TO 1100 I.E. FOR ASSESSEE, HIS WIFE, HIS DAUG HTER AND HIS SISTER-IN-LAW. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS KAILASH CHAND SHARMA 198 CTR 201, HAD UPHELD A TRIBUNAL ORDER WHERE A SI MILAR ADDITION WAS DELETED BASED ON CIRCULAR NO.1916(SUPRA). HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS RATANLAL VYAPARILAL JAIN 339 ITR 351(GUJ.) HAS CLEARLY HELD THAT CBDT CIRCULAR NO.1916 DATED 11/5/1992, TO OK INTO ACCOUNT QUANTITY OF JEWELLERY WHICH WOULD GENERALLY HE HELD BY THE FAMILY MEMBERS OF AN ASSESSEE. THEIR LORDSHIP ALSO HELD THAT THE SAID CIRCULAR, THOUGH ISSUED FOR THE PURPOSE OF LAYING DOWN GUIDELINES FO R SEIZURE, UNLESS SOMETHING CONTRARY WAS SHOWN, COULD BE SAFELY PRESU MED THAT SOURCE TO THE EXTENT OF JEWELLERY MENTIONED THEREIN STOOD EXP LAINED. WE ARE THEREFORE, OF THE OPINION THAT THERE WAS NO SCOPE F OR ADDITION SINCE JEWELLERY FOUND WAS ONLY 970 AGAINST 1100 GRAM THAT ASSESSEE AND HIS FAMILY COULD HAVE HAD. ADDITION STANDS DELETED IN FULL. GROUND NO.3 OF THE ASSESSEE IS ALLOWED. 94. VIDE ITS GROUND NO.4 ASSESSEE IS AGGRIEVED ON AN ADDITION OF RS.50,000/- MADE BY THE AO AND SUSTAINED BY THE LEA RNED CIT(A). ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 45 95. DURING THE COURSE OF SEARCH A CHEQUE FOR RS.50 ,000/- OF ONE SMT KAVITHA WAS FOUND. IN HIS STATEMENT UNDER SECTION 1 32(4), ASSESSEE ADMITTED THAT THIS AS AN UNEXPLAINED INVESTMENT. AN ADDITION OF RS.50,000/- WAS MADE BY THE AO. THOUGH ASSESSEE AR GUED BEFORE THE LEARNED CIT(A) THAT THE CHEQUE WAS LEFT BY THE LADY IN HIS OFFICE INADVERTENTLY, THIS WAS NOT ACCEPTED. LEARNED CIT(A ) CONFIRMED THE ADDITION. 96. NOW BEFORE US LEARNED AR SUBMITTED THAT THE CH EQUE BY ITSELF WOULD NOT SHOW ANY AMOUNT TO HAVE BEEN GIVEN BY THE ASSESSEE TO SMT.KAVITHA. SMT.KAVITHA WAS NEVER EXAMINED BY THE AO. ACCORDING TO HIM AN ADDITION COULD NOT BE MADE SOLELY BASED ON A STATEMENT GIVEN UNDER SECTION 132(4). PER CONTRA, LEARNED DR SUPPO RTED THE ORDERS OF THE AUTHORITIES BELOW. 97. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT THE CHEQUE FOR RS.50,000/- SIGNED BY SMT.KAVITHA WAS FOUND AT THE TIME OF SEARCH. ASSESSEE HIMSELF HAS ADMITTED IN HIS LETTER DATED 9/11/2007 THAT THE CHEQUE WAS ACCOMPAN IED BY A PRONOTE. THE CHEQUE WAS NOT FOUND FROM HIS OFFICE BUT FROM H IS RESIDENCE. HENCE, THE EXPLANATION OF THE ASSESSEE THAT SMT.KAVITHA HA D INADVERTENTLY LEFT IT AT HIS OFFICE WOULD NOT HOLD WATER. FURTHER, ASSESSSEE HAD IN THE STATEMENT GIVEN UNDER SECTION 132(4) ADMITTED THIS AMOUNT AS HIS UNDISCLOSED INVESTMENT. IF HE WANTED TO GO BACK ON THIS, THE ONUS RESTED UPON HIM TO PRODUCE SMT.KAVITHA AND PROVE OTHERWISE. ASSESSEE COULD NOT PRODUCE ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 46 HER. IN SUCH CIRCUMSTANCES, IN OUR OPINION, THE AD DITION WAS RIGHTLY DONE AND CONFIRMED BY THE LEARNED CIT(A). NO INTERFERENC E IS REQUIRED. GROUND NO.4 OF THE ASSESSEE IS DISMISSED. 98. WHEN GROUND NO.5 WAS TAKEN UP, LEARNED AR SUBM ITTED THAT HE WAS NOT PRESSING IT. HENCE, GROUND NO.5 IS DISMIS SED AS NOT PRESSED. 99. IN THE RESULT, APPEAL OF THE ASSESSEE FOR AY: 2008-09 IN ITA NO.532(B)/12 IS PARTLY ALLOWED. 100. NOW WE TAKE UP THE CROSS APPEAL OF REVENUE IN ITA NO.520(B)/12 FOR SAME ASSESSMENT YEAR. 101. REVENUE HAS RAISED 14 GROUNDS OF WHICH GROUND S 1 & 14 ARE GENERAL NEEDING NO ADJUDICATION. 102. VIDE ITS GROUNDS 2 TO 3 GRIEVANCE OF THE REVE NUE IS THAT LEARNED CIT(A) GAVE A RELIEF OF RS.5.00 LACS ON AN ADDITION OF RS.5,09,450/- MADE BY THE AO FOR CASH FOUND AT THE TIME OF SEARCH. 103. WE HAVE AT PARA 87 IN RELATION TO ASSESSEES APPEAL FOR THE SAME ASSESSMENT YEAR, HELD THAT NO ADDITION CAN BE MADE FOR ANY UNEXPLAINED CASH. HENCE, GROUNDS 2 & 3 ARE DISMISSED. 104. VIDE ITS GROUND 4 TO 8 GRIEVANCE RAISED BY TH E REVENUE IS THAT CIT(A) GAVE RELIEF OF RS.5,50,450/- TO THE ASSESSEE ON AN ADDITION OF RS.6,71,650/- MADE FOR UNEXPLAINED JEWELLERY. 105. WE HAVE AT PARA 93 ABOVE, IN RELATION TO ASS ESSEES APPEAL FOR SAME ASSESSMENT YEAR HELD THAT THERE CAN BE NO ADDI TION FOR ANY UNEXPLAINED JEWELLERY. HENCE, GROUNDS 4 TO 8 ARE DISMISSED. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 47 106. VIDE ITS GROUNDS 9 & 10 GRIEVANCE RAISED BY THE REVENUE IS THAT AN ADDITION OF RS.3,97,050/- MADE BY THE AO FOR INV ESTMENTS IN PRIVATE CHITS WAS DELETED BY THE LEARNED CIT(A). 107. FACTS APROPOS ARE THAT NOTE BOOK CALLED POCK ET RAJESH NOTE BOOK WAS SEIZED AT THE TIME OF SEARCH. AS PER TH E LEARNED AO, THE SAID BOOK REFLECTED CONTRIBUTION OF RS.3,97,050/- BY THE ASSESSEE TO CHITS DURING THE PERIOD 10/4/2007 TO 10/11/2007. THOUGH THE ASS ESSEE DENIED ANY CONNECTION WITH THIS BOOK, LEARNED AO APPLIED SECTI ON 292C OF THE ACT AND MADE AN ADDITION OF RS.3,97,050/-. 108. ASSESSEES APPEAL BEFORE THE CIT()A) ON THE ABOVE ADDITION WAS SUCCESSFUL. ACCORDING TO THE LEARNED CIT(A) A NAKE D EYE EXAMINATION OF THE NOTE BOOK SHOWED THAT THE HANDWRITINGS THEREIN WERE NOT THAT OF THE ASSESSEE. HE ACCEPTED THE CONTENTION OF THE ASSESS EE THAT THE BOOK MIGHT HAVE BEEN LEFT IN HIS OFFICE BY ONE OF THE MANY PER SONS WHO VISITED IT. 109. NOW BEFORE US LEARNED DR SUBMITTED THAT THE N OTE BOOK WAS FOUND FROM ASSESSEES PREMISES AND HENCE PRESUMPTIO N MANDATED IN SECTION 292C APPLIED. PER CONTRA, LEARNED DR SUPPO RTED THE ORDER OF THE CIT(A). 110. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVA L CONTENTIONS. COPY OF THE SEIZED NOTE BOOK HAS BEEN PLACED AT PB PAGES 210 -220. A PERUSAL OF THESE PAPERS CLEARLY SHOW THAT THERE IS NOTHING THEREIN WHICH WOULD LINK THE ASSESSEE WITH IT. EVEN IF WE ACCEPT THAT THE PRESUMPTION UNDER SECTION 292C WOULD APPLY, SUCH A PRESUMPTION IS A REBUTTABLE ONE. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 48 LEARNED CIT(A) HAS GIVEN A CLEAR FINDING THAT THE H ANDWRITING THEREIN WAS NOT THAT OF THE ASSESSEE. EVEN IF THE CONTENTS THE REIN WERE TRUE, SUCH CONTENTS DO NOT SHOW ANY INVESTMENT DONE BY THE ASS ESSEE. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE LEARN ED CIT(A) WAS JUSTIFIED N DELETING THE ADDITION. GROUNDS 9 & 10 OF THE REVE NUE ARE DISMISSED. 111. VIDE ITS GROUNDS 11 TO 13, GRIEVANCE RAISED B Y THE REVENUE IS THAN AN ADDITION OF RS.28 LACS MADE BY THE AO FOR A N ALLEGED LOAN GIVEN TO ONE SHRI C.M.HULGAR, WAS DELETED BY THE LEARNED CIT (A). 112. FACTS APROPOS ARE THAT 5 CHEQUES TOTALING TO RS.28.5 LACS, SIGNED BY ONE SHRI C.M.HULGAR WAS FOUND AT THE TIME OF SEARCH. IN THE STATEMENT GIVEN U/S 132(4) OF THE ACT, IT SEEMS ASS ESSEE OFFERED THIS AS UNEXPLAINED INVESTMENT. HOWEVER, DURING THE ASSESS MENT PROCEEDINGS, IT WAS ARGUED THAT SHRI HULGAR, WHO VISITED ASSESSEES OFFICE FOR NEGOTIATION HAD LEFT THE CHEQUES BEHIND. AS PER THE ASSESSEE, THE CHEQUES WERE NO MORE VALID AND THERE WERE NO FINANCIAL TRANSACTION WITH SHRI C.M.HULGAR. 113. THE LEARNED AO DID NOT ACCEPT THE ABOVE CONTE NTION. HE CITED THE FOLLOWING REASONS; 1. IN CASE OF PROPERTY TRANSACTIONS, PARTIES COME TO SUB-REGISTRAR OFFICE OR THE APPELLANTS OFFICE ONLY FOR FINALIZATION OF DOCUMENTS AND NOT FOR NEGOTIATIONS. 2. EVEN FROM NAKED EYE EXAMINATION THE SIGNATURE O N THE AFFIDAVIT AND THE SIGNATURE OF THE BANK INSTRUM ENT ARE DIFFERENT. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 49 3. THOUGH IT IS TRUE THAT THE INSTRUMENT SEIZED AR E BARRED BY LIMITATION AS ON THE DATE OF SEARCH THEY WERE STILL VALID. 4. THE APPELLANT COULD NOT PRODUCE MR.HULGAR FOR EXAMINATION. AN ADDITION OF RS.28 LACS WAS MADE. 114. IN ITS APPEAL BEFORE THE CIT(A) ARGUMENT OF T HE ASSESSEE WAS THAT AMOUNTS WERE ALL MENTIONED IN THE CHEQUE ALONG WITH DATES. ACCORDING TO THE ASSESSEE, DATED CHEQUES WITH AMOUN TS, WRITTEN THEREIN, WOULD NEVER BE ACCEPTED AS SECURITY FOR A LOAN. A S PER THE ASSESSEE IT HAD FILED AN AFFIDAVIT OF SHRI HULGAR, WHICH WAS NOT AC CEPTED BY THE AO FOR VARIATION IN SIGNATURE. ASSESSEE ALSO SUBMITTED A FRESH AFFIDAVIT OF SHRI HULGAR, BEFORE THE LEARNED CIT(A), WHICH INTER-ALIA VOUCHED HI SIGNATURE. 115. LEARNED CIT(A) SOUGHT A REMAND REPORT FROM T HE AO AND IN SUCH REMAND REPORT IT SEEMS THE AO SUPPORTED HIS EA RLIER ORDER. 116. LEARNED CIT(A) CONSIDERING THE FRESH AFFIDAVI T BY SHRI HULGAR, AND ALSO FINDING THERE WERE NO SUPPORTING RECORDS, LIKE PRO-NOTE TO PROVE ANY LOAN, DELETED THE ADDITION. ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 50 117. NOW BEFORE US THE LEARNED DR SUBMITTED THAT T HE CIT(A) HAD SIMPLY WENT BY THE AFFIDAVIT OF SHRI HULGAR, IGNORI NG THE CHEQUES FOUND AT THE TIME OF SEARCH. PER CONTRA, LEARNED AR SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW. 118. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVA L CONTENTIONS. ASSESSEE HAD PRODUCED AFFIDAVIT FROM SHRI HULGAR, W HERE THE LATTER HAD AFFIRMED THAT NO LOAN WHATSOEVER WAS RECEIVED BY HI M FROM THE ASSESSEE. A SECOND AFFIDAVIT WAS ALSO FILED IN WHICH SHRI HULGA R, EXPLAINED THE REASONS FOR VARIATION IN HIS SIGNATURE. THE CHEQUES FOUND WERE ALL DATED AND NONE CARRIED ASSESSEES NAME. THE PRESUMPTION THAT THE CHEQUES REPRESENTED LOAN GIVEN BY THE ASSESSEE TO SHRI HULGAR, WAS THUS , EFFECTIVELY REBUTTED BY THE ASSESSEE. IN THE REMAND REPORT THE AO HAD NOTH ING TO SAY ON THE SECOND AFFIDAVIT OF SHRI HLGAR. IN OUR OPINION, A N ADDITION OUGHT NOT HAVE BEEN MADE BASED ON SUCH CHEQUES, ALONE, WITHOUT COR ROBORATION. CIT(A) HAD RIGHTLY DELETED. GROUNDS 11 TO 13 OF THE REVEN UE STANDS DISMISSED. 119. IN THE RESULT, APPEAL OF THE REVENUE IN ITA N O.520(B)/12 FOR AY: 2008-09, IS DISMISSED. 53. TO SUMMARIZE THE RESULT; 1. ASSESSEE APPEAL ITA NO.527(B)/2012 FOR AY: 2002 -03 IS DISMISSED 2. REVENUE APPEAL ITA NO.682(B)/2012 FOR AY: 2005- 06 IS DISMISSED ITA NOS.527,530,531&532-12 AND ITA NOS.682,519 & 520-12 51 3. ASSESSEE APPEAL ITA NO.530(B)/2012 FOR AY: 2006 -07 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4. REVENUE APPEAL ITA NO.519(B)/2012 FOR AY: 2006- 07 IS DISMISSED 5. ASSESSEE APPEAL ITA NO.531(B)/2012 FOR AY: 2007 -08 IS DISMISSED 6. ASSESSEE APPEAL ITA NO.532(B)/2012 FOR AY: 2008 -09 IS PARTLY ALLOWED. 7. REVENUE APPEAL ITA NO.520(B)/2012 FOR AY: 2008- 09 IS DISMISSED SD/- (N.V.VASUDEVAN) SD/- (ABRAHAM P GEORGE) JUDICAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 19-09-2014 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE