Smt. Sumitra Bai Agarwal, Hyderabad V. DCIT, Cir-3(1), Hyderabad

ITA 557/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66577 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARUN KUMAR MALANI
• Keywords: Unexplained investment; Valuation report
• Section: 69C; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.556/HYD/2011 ASSESSMENT YEAR 2005-2006 MR. JUGAL KISHORE AGARWAL HYDERABAD 500 034. VS. DCIT, CIRCLE 3 (1) HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.557/HYD/2011 ASSESSMENT YEAR 2005-2006 SMT. SUMITRA BAI AGARWAL HYDERABAD 500 034. VS. DCIT, CIRCLE 3 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE: MR. ARUN KUMAR MALANI FOR REVENUE: MR. R. MOHAN REDDY DATE OF HEARING: 31.07.2014 DATE OF PRONOUNCEMENT: 13.08.2014 ORDER PER B. RAMAKOTAIAH, A.M. BOTH THESE APPEALS BELONG TO HUSBAND AND WIFE AND ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF T HE LD. CIT(A)- IV, HYDERABAD DATED 30.12.2010 FOR A.Y. 2005-06. OR IGINALLY THESE APPEALS ARE DISMISSED VIDE ORDER DATED 06.12. 2012 FOR WANT OF PROSECUTION BY THE ASSESSEES. CONSEQUENT TO M.A. FILED BY THE ASSESSEES IN M.A.NO.08 & 09/HYD/2012, THE AP PEALS ARE RECALLED AND POSTED FOR FRESH HEARING. 2 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL 2. WE HAVE HEARD THE LD. COUNSEL AND LD. D.R. AND PERUSED THE PAPER BOOK PLACED ON RECORD. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO INVESTMENTS MADE IN ASS ESSEES HOUSE WHICH WERE BROUGHT TO TAX BY THE A.O. CONSEQU ENT TO IMPOUNDING OF CERTAIN DOCUMENTS. 3. BRIEFLY STATED, ASSESSEE IS ONE OF THE DIRECTOR S IN M/S. SHEETAL REFINERIES P. LTD., GAGAN PAHAD, HYDER ABAD. A SURVEY OPERATION UNDER SECTION 133A OF THE I.T. ACT WAS CONDUCTED ON 10.08.2006 AT THE BUSINESS PREMISES OF THE ABOVE COMPANY. AMONGST VARIOUS MATERIAL IMPOUNDED, THERE ARE CERTAIN PAPERS PERTAINING TO CONSTRUCTION ACCOU NT OF A PROPERTY ON WHICH DETAILS OF PAYMENTS WERE RECORDED . A.O. CO- RELATED THE ENTRIES IN THE SAID IMPOUNDED DOCUMENTS TO THE CONSTRUCTION OF THE HOUSE BY THE ASSESSEE MR JUGAL KISHORE AGARWAL AND HIS WIFE SMT. SUMITRA BAI AND ASKED ASS ESSEES TO EXPLAIN THE INVESTMENTS MADE IN THE HOUSE AS PER TH E ABOVE IMPOUNDED DOCUMENTS. IT WAS ASSESSEES STAND THAT T HE DOCUMENTS DO NOT PERTAIN TO THE ASSESSEE AND THEY H AVE NO RELEVANCE TO THE ASSESSEE CONSTRUCTION OF THE HOUSE AND AS ON 31.03.2005 ASSESSEES INVESTMENTS IN THE HOUSE STAN D AT RS.52,63,472. A.O. ENCLOSED THE DOCUMENTS AS ANNEXU RES-1 AND 2 TO THE ASSESSMENT ORDER AND NOTED THE FOLLOWI NG WHILE ATTRIBUTING THE TRANSACTIONS THEREIN TO ASSESSEES CONSTRUCTION OF THE HOUSE. I. THESE DOCUMENTS ARE HANDWRITTEN PERSONALLY BY TH E FAMILY MEMBERS OF THE ASSESSEE OR HIS ACCOUNTANT. DOCUMENTS ANNEXED AS ANNEXURE-1 TO THIS ORDER : II. IT BEARS THE CHECK MARKS THAT ARE USUALLY PUT B Y A PROFESSIONAL ACCOUNTANT. 3 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL III. THE FIGURE GIVEN IN THIS DOCUMENT IS NOT A LU MPSUM FIGURE BUT THE SEQUENTIAL CONSOLIDATION OF A NEATLY WRITTEN DA Y-TO-DAY ACCOUNT. IV. THE DOCUMENT COMMENCES ON 24.05.02 AND RUNS UPT O 25.06.04 TOTALLING UPTO RS.1,90,00,000/- AS THE TOTAL AMOUNT SPENT DURING THAT PERIOD. V. THIS DOCUMENT RUNS THROUGH THREE PAGES WIT H 72 DAY TO DAY ENTRIES SUCH AS 13.06.02 CASH 33,10,000 13.06.02 DD 15,00,000 13.06.02 DD 10,00,000 15.08.02 MCH (RAJAN) 90,000 09.10.02 ARCHITECT (CHEQUE) 2,50,000 14.12.12 ARCHITECT (SRINIVAS) 3,50,000 19.02.14 SUGUNA MARBLES 2,50,000 10.04.04 BANSAL MARBLE 3,25,000 VI. THE DOCUMENT CONTAINS INTIMATE DETAILS OF BOTH CASH PAYMENT AS WELL AS CHEQUE PAYMENTS VII. THIS DOCUMENT IS FOUND IN ASSESSEES OWN BUSIN ESS PREMISES AND NOT ELSEWHERE. 3.1. IN THE LIGHT OF THESE OBSERVATIONS AND ALSO T ALLYING WITH THE BANK ACCOUNTS, A.O. CAME TO CONCLUSION THA T DOCUMENT ARE AUTHENTIC. THE TOTAL INVESTMENT AS PER THE DOCUMENTS IS AT RS.2,45,14,454 I.E., APPROXIMATELY ABOUT RS.2.45 CRORES. ASSESSEES HAVE SHOWN RS.52.63 LAKH S EACH AT 50%. A.O. DETERMINED THE UNEXPLAINED INVESTMENT UND ER SECTION 69C AT RS.69,36,528 EACH AND BROUGHT TO TAX THE SAME AS UNACCOUNTED INVESTMENT IN THE HOUSE. 4 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL 4. BEFORE THE LD. CIT(A), ASSESSEE REITERATED THE SAME STAND THAT THESE DOCUMENTS DO NOT PERTAIN TO ASSESS EE AS THEY ARE IMPOUNDED FROM THE COMPANY AND THE ENTRIES THER EIN DO NOT PERTAIN TO ASSESSEE. IT WAS THE CONTENTION THAT SCRIBBLING PAGES MIGHT HAVE BEEN PREPARED BY ANY PERSON AND I T COULD ALSO BE BY ARCHITECT. IT WAS THE CONTENTION OF ASSE SSEE THAT HE HAS PURCHASED THE LAND IN THE YEAR 2002 AND ORDERED THE ARCHITECT TO CONSTRUCT THE HOUSE AND ASSESSEE HAS N OT MADE THE ENTRIES THEREIN. HE ALSO EXPLAINED THAT THERE A RE CHECK REMARKS APPEARING ON THE SCRIBBLING PAGES LIKE THAT OF PROFESSIONAL ACCOUNTANTS. THEREFORE, IT IS NOT AN A CCOUNT MAINTAINED BY ASSESSEE NOR PERTAINING TO ASSESSEE. 4.1. LD. CIT(A), HOWEVER, DID NOT AGREE AND CO NFIRMED THE ADDITION BY STATING AS UNDER : 6. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. EVEN A CURSORY LO OK AT THE IMPOUNDED MATERIAL ANNEXED TO THE ASSESSMENT ORDER GOES TO SHOW THAT THERE IS NO TRUTH IN THE CONTENTION OF THE APPELLANT THAT THE SAME IS ONLY A 'SCRIBBLING', MADE FOR THE PURPOSE OF ESTIMATING TH E CONSTRUCTION VALUE TO BE SHOWN IN THE VALUATION CERTIFICATE. IT IS SEEN THAT THE ENTRIES THEREIN HA VE BEEN MADE METICULOUSLY AND HAVE ALSO BEEN REVALIDATED BY PUTTING APPROPRIATE 'CHECK MARKS' IN RESPECT OF THE CORRECT ENTRIES. BESIDES, SOME OF THE AMOUNTS HAVE ALSO BEEN 'ROUNDED' OR 'PUT INTO BRACKETS' FOR SPECIFYIN G THE NATURE OF EXPENDITURE OR MAKING CERTAIN VERIFICATIO N IN THIS REGARD. AS NOTED BY THE ASSESSING OFFICER, THE FIGURES APPEARING IN THE DOCUMENT ANNEXURE-I, ARE N OT LUMPSUM FIGURES, BUT ARE SEQUENTIAL CONSOLIDATION O F A NEATLY WRITTEN DAY-TO-DAY ACCOUNT. THE DOCUMENT PERTAINS TO A SPECIFIC PERIOD SPANNING OVER MORE TH AN TWO YEARS, I.E. FROM 24.5.2002 TO 25.6.2004 AND INCLUDES THE PAYMENTS MADE BY CHEQUES AND DEMAND DRAFTS ALSO ON VARIOUS DATES, BESIDES THE PAYMENTS MADE IN CASH. SIMILARLY, THE ANNEXURE-II ALSO RECOR DS THE PAYMENTS FOR A SPECIFIC TIME PERIOD, AND NOTABLY, T HE 5 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL DATE OF COMMENCEMENT SHOWN THEREIN IS IDENTICAL TO THAT SHOWN IN THE ANNEXURE-I, IE. DT 24.5.2002 THE ANNEX URE- II HOWEVER, RECORDS EXPENSES INCURRED EVEN BEYOND 25.06.2004 AND RUNS UPTO 02.12.2004. THIS DOCUMENT ALSO GIVES DATE WISE PAYMENT IN RESPECT OF VARIOUS ITEMS. FURTHER, FIGURES IN RESPECT OF PAYMENTS SHOW N IN BOTH THE DOCUMENTS TALLY WITH EACH OTHER. 6.1. IT CAN BE FURTHER SEEN THAT ON THE LAST PAGE OF THE ANNEXURE-I, A SUMMARY OF PAYMENTS UNDER VARIOUS HEADS HAS ALSO BEEN PREPARED, SHOWING THAT THE PAYMENT TOWARDS LAND WAS RS.68,10,000/-, WHILE TOTA L PAYMENTS OF RS.88,23,000/- WERE MADE TO THE ARCHITE CT. THE AMOUNT IN RESPECT OF PURCHASE OF STONE HAS BEEN ACCURATELY RECORDED AT RS.20,90,060/- WHILE THAT IN RESPECT OF OTHER ITEMS AT RS.9,77,300/-. THE PAYMEN T TO MCH AND DALAL OF RS.2,00,000/- AND RS.1,00,000/- RESPECTIVELY, HAVE ALSO BEEN RECORDED. THE ANNEXURE -II CONTAINS EVEN MORE SPECIFIC DETAILS OF EXPENDITURE, RECORDING EXPENSES TO THE RUPEE, DATE-WISE, AND SPECIFICALLY STATING THE MODE TO BE CASH OR CHEQUE. 6.2. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE DOCUMENTS FOUND AND IMPOUNDED FROM THE BUSINESS PREMISES OF THE APPELLANT HIMSELF CANNOT BE CONSIDE RED TO BE MEANINGLESS 'SCRIBBLINGS' OR 'DUMB MATERIAL'. IN FACT, THESE ARE THE TRUE AND CORRECT RECORD OF THE EXPENDITURE MADE BY THE APPELLANT AND HIS WIFE IN T HE CONSTRUCTION OF THEIR RESIDENTIAL HOUSE. IT IS ALSO CLEAR THAT DESPITE BEING GIVEN MORE THAN SUFFICIENT OPPOR TUNITY TO EXPLAIN THE SAME, THE APPELLANT HAS NOT BEEN ABL E TO PROVIDE ANY SATISFACTORY AND ACCEPTABLE EXPLANATION IN RESPECT OF THE SAID PAPERS. AS REGARDS THE EXPLANAT ION THAT THE PAPERS ARE MERELY AN ESTIMATION MADE FOR PREPARING THE VALUATION REPORT, IT IS CLEAR THAT DE SPITE CONTENDING THAT THE SAME WAS PREPARED BY THE VALUER OR ANY OF HIS PERSONNEL, NO CONFIRMATION IN THIS REGAR D COULD BE FURNISHED BY THE APPELLANT'S REPRESENTATIV E. THE APPELLANT HAS NOT BEEN ABLE TO POINT OUT AS TO HOW THE ENTRIES OF EXPENDITURE MADE IN THE SAID DOCUMENTS W ERE NOT CORRECT OR WERE INCONSISTENT WITH THE ACTUAL EXPENDITURE INCURRED FOR THE CONSTRUCTION OF THE HO USE. FURTHER, DESPITE THE FACT THAT THE NAMES OF VARIOUS PARTIES ARE SPECIFICALLY MENTIONED IN THE SAID ACCO UNTS, THE APPELLANT COULD NOT GET ANY CONFIRMATION FROM A NY OF THEM TO THE EFFECT THAT THEY HAD NOT RECEIVED THE PAYMENTS MENTIONED THEREIN. IT IS ALSO WORTH NOTING THAT THE PAGE NO.3 OF ANNUEXURE-I SPECIFIES THE TOTAL AM OUNT 6 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL PAID TO THE 'ARCHITECT'. THE SAID NOTING CLEARLY BR INGS OUT THE FALSITY IN THE EXPLANATION OF THE APPELLANT. IT IS CLEAR THAT HAD THE NOTINGS BEEN ONLY AN ESTIMATE, THE PER SON PREPARING THE ALLEGED ESTIMATION STATEMENT WOULD HA VE NOTED DOWN THE EXPENDITURE TOWARDS VARIOUS ITEMS OF CONSTRUCTION, SUCH AS BRICK, STEEL, CEMENT ETC., AN D WOULD NOT HAVE ESTIMATED TOTAL PAYMENTS TO BE MADE TO ANY 'ARCHITECT'. 6.4. THE ABOVE ANALYSIS OF THE IMPOUNDED MATERIAL G OES TO ESTABLISH IT BEYOND DOUBT THAT THE 'CONSTRUCTION ACCOUNT' FOUND AND IMPOUNDED DURING THE SURVEY RELATES TO THE ACTUAL TRANSACTIONS OF INVESTMENTS I N THE HOUSE AND DOES NOT DEPICT OR REFLECT ANY ROUGH ESTI MATE OF SUCH COST OF CONSTRUCTION. IT IS ALSO CLEAR THAT THE EXPLANATION OFFERED BY THE APPELLANT IN THIS REGARD HAS BEEN FOUND TO BE GROSSLY INCORRECT AND UNTENABLE. THEREFORE, THE PAPERS SO FOUND AND IMPOUNDED CANNOT BE CONSIDERED AS DUMB PAPERS. IT MAY BE NOTED THAT UNDER SIMILAR CIRCUMSTANCES, THE HON'BLE DELHI HIGH COURT IN THE CASE OF URMILA GAMBHIR VS CIT( 325 ITR 171) HAD CONCLUDED THAT SUCH PAPERS CANNOT BE CONSIDERED AS DUMB PAPERS AND THAT UNDER SUCH CIRCUMSTANCES, THE DECISION IN THE CASE OF GIRISH CHAUDHARY (296 ITR 619) (DELHI) OR THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASES OF VC SHUKLA(199 8 ) 3 SUPREME COURT CASES 410 OR LALCHAND BHAGAT AMBICA RAM (37 ITR 288) WOULD BE OF NO ASSISTANCE. UNDER T HE CIRCUMSTANCES, I AM OF THE VIEW THAT THE DIFFERENCE BETWEEN THE COST OF CONSTRUCTION RECORDED IN THE SA ID PAPERS AND THE VALUE RECORDED IN THE BOOKS OF ACCOU NT OF THE APPELLANT HAS BEEN RIGHTLY CONSIDERED AS UNEXPLAINED INVESTMENT. UPHOLDING THE ADDITION OF RS.69,36,528/- THEREFORE, GROUND NO.2 IS DECIDED AGAINST THE APPELLANT. 5, LD. COUNSEL REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES, SUBMITTED THAT THERE IS NO CO-RELATION TO THE ASSESSEES CONSTRUCTION ACCOUNT. IT WAS SUBMITT ED THAT ASSESSEE HAS INVESTED IN THE FOLLOWING MANNER IN TH E RESPECTIVE ASSESSMENT YEARS. 7 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL S.NO. ACCOUNTING PERIOD ASST. YEAR CONSOLIDATED AMOUNT INCLUDING COST OF LAND A 1.4.2002 TO 31.3.2003 2003-04 18,47,422 B 1.4.2003 TO 31.3.2004 2004-05 41,80,369 C 1.4.2004 TO 31.3.2005 2005-06 52,63,472 5.1. REFERRING TO THE ARCHITECT CERTIFICATE, EXCLU DING THE LAND, IT WAS SUBMITTED THAT EACH ASSESSEES INVESTM ENT EXCLUDING THE COST OF LAND IN RESPECTIVE YEARS IS A S UNDER : S.NO. ACCOUNTING PERIOD ASST. YEAR CONSOLIDATED AMOUNT INCLUDING COST OF LAND A 1.4.2002 TO 31.3.2003 2003-04 9,43,000 B 1.4.2003 TO 31.3.2004 2004-05 17,52,000 C 1.4.2004 TO 31.3.2005 2005 - 06 21,00,000 TOTAL 47,95,000 5.2. AT OUR INSTANCE, LD. COUNSEL ALSO ANALYSED YE AR- WISE DETAILS OF ANNEXURES AND SUBMITTED FOLLOWING TABLE : S.NO. ACCOUNTING PERIOD ASST. YEAR CONSOLIDATED AMOUNT INCLUDING COST OF LAND ANNEXURE 1 ANNEXURE 2 A 1.4.2002 TO 31.3.2003 2003-04 96,65,300 NOT CAPABLE OF BEING SEGREGATED YEAR-WISE AS THE DATES ARE NOT VISIBLE IN PHOTOCOPY B 1.4.2003 TO 31.3.2004 2004-05 66,60,060 C 1.4.2004 TO 31.3.2005 2005-06 26,75,000 TOTAL 1,90,00,360 8 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL 5.3. IT WAS THE CONTENTION THAT FIRST OF ALL, THE ACCOUNT DOES NOT TALLY TO THE ASSESSEES CONSTRUCTION ACCOU NT. NEXT, EVEN THOUGH THE ENTRIES THEREIN SHOW THE INVESTMENT IN DIFFERENT YEARS, A.O. CHOOSE TO MAKE THE INVESTMENT IN ONLY ONE YEAR I.E., A.Y. 2005-06 IGNORING THE INVESTMENTS IN OTHER YEARS. IT WAS THE CONTENTION THAT ENTIRE ADDITION MADE IN THE HANDS OF THE ASSESSEE IS NOT CORRECT. IT WAS FAIRLY SUBMITTE D THAT THEY ARE UNABLE TO SEGREGATE YEAR-WISE INVESTMENTS OF TH E DOCUMENTS IN ANNEXURE-2. 6. LD. D.R. HOWEVER, SUBMITTED THAT A.O. HAS CORRECTLY BROUGHT TO TAX THE ENTIRE INVESTMENT MADE IN THE HOUSE AS THERE IS CO-RELATION BETWEEN THE ENTRIES S HOWN IN THE DOCUMENTS TO THAT OF ASSESSEES OWN INVESTMENT MADE THROUGH BANK ACCOUNTS AND THEREFORE, ASSESSING THE ENTIRE A MOUNT IN THE HANDS OF ASSESSEE UNDER SECTION 69C OF THE ACT IS WARRANTED. 7. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE DOCUMENTS PLACED ON RECORD. COPIES OF SO-CALLED ANN EXURES 1 AND 2 TO THE ASSESSMENT ORDER WERE ALSO PLACED IN T HE PAPER BOOK AT PAGES 42 TO 52. AS SEEN FROM THE ENTRIES TH EREIN, THESE DOCUMENTS MENTIONED UNDER THE HEAD BANJARAHILLS WHERE ASSESSEES HAVE CONSTRUCTED THE HOUSE. ON THAT THER E IS NO DISPUTE. THE ACCOUNT IN ANNEXURE 1 STARTS FROM 24.0 5.2002 ENDS WITH DATED 25.06.2004. THE TOTAL INVESTMENT AS PER THE ABOVE DOCUMENTS IN ANNEXURE 1 WAS TO THE TUNE OF RS.1,90,00,360. THIS WAS FURTHER DEPICTED AS THE FO LLOWING ITEM WISE SUMMARY ON LAST PAGE: 9 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL LAND RS.68,10,000 ARCHITECT RS.88,23,000 STONE RS.20,90,060 MCH RS. 2,00,000 OTHERS RS. 9,77,000 DALAL RS. 1,00,000 7.1. AS FAR AS ANNEXURE-2 IS CONCERNED, IT STARTS WITH AN OPENING FIGURE DATED 02.12.2004 AND THERE IS CU MULATIVE TOTAL TAKEN IN PAGE 4 OF THE DOCUMENT AT RS.2,45,14 ,454. ANOTHER ENTRY IN PAGE-86( SHEET 7) I.E., PAPER BOOK PAGE-51, THE TOTAL COMES TO RS.2,44,62,454, A.O. HAS TAKEN THE A MOUNT OF RS.2,45,12,454/- WHICH WAS THE TOTAL IN PAGE-2( REV ERSE OF PAGE76). 7.2. WE HAVE TO ACCEPT THE REVENUE AUTHORITIES CONTENTION THAT THESE ANNEXURES DO PERTAIN TO THE I NVESTMENT IN THE ASSESSEES HOUSE. THE REASONS ARE (A) IT IS ADMITTED THAT ASSESSEES PURCHASED THE PI ECE OF LAND OF 375 SQ. YARD IN BANJARAHILLS AT A COST OF RS.15,00,000 VIDE REGISTRATION SALE DATED 1961/2002 DATED 13 TH JULY, 2002 AND OBTAINED PERMISSION FROM MCH FOR CONSTRUCTION OF RESIDENTIAL BUILDING VIDE P ERMIT NO.31.51 DATED 12.09.2002. ASSESSEE ENTERED INTO CONSTRUCTION AGREEMENT DATED 10 TH JULY, 2002 WITH MR. PRAVIN TAYAL, PROPRIETOR OF ARCHITECTS ATELIOR, 207 , AHUJA ESTATES, ABIDS, HYDERABAD FOR A COST OF RS.47,85,17 5. THE CONSTRUCTION OF THE BUILDING STARTED IN 2002 AN D COMPLETED IN 2005. THE ANNEXURES-1 AND 2 DO INDICAT E THAT THE AMOUNTS INVESTED STARTED FROM 24.05.2002 A ND ALSO ENDS SOME TIME IN 2004 ONLY. THEREFORE, THE PE RIOD 10 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL OF CONSTRUCTION ON THE TRANSACTIONS IN THIS DOCUMEN TS TALLY AS FAR AS THE CONSTRUCTION PERIOD IS CONCERNE D. (B). THE NEXT IS THE TRANSACTIONS REFERRING TO CHEQUE PAYMENTS. THERE IS NO DISPUTE WITH REFERENCE TO THE PAYMENTS MADE THROUGH THE BANK ACCOUNTS WHICH ARE ALSO TALLIED BY THE A.O. EVEN BEFORE US, IT WAS FAIRLY ADMITTED THAT BANK TRANSACTIONS THERE IN DO TALLY W ITH THE ASSESSEES ACCOUNTED BANK TRANSACTIONS. (C). NOTINGS IN THE ANNEXURE-1 INDICATE PAYMENTS TO ARCHITECT ATELIOR BY CHEQUES AND ALSO T O MR. PRAVIN TAYAL BY WAY OF CASH AND CHEQUES. SINCE MR. PRAVIN TAYAL IS ARCHITECT OF ASSESSEES BUILDING ADMITTEDLY, THESE TRANSACTIONS ALSO PERTAIN TO THE SAME. THEREFORE, CONSIDERING THE NATURE OF THE ENTRIES MA DE IN THE ANNEXURES 1 AND 2 AND THE FACT THAT ASSESSEES PAYMENTS THROUGH CHEQUES ALSO WERE RECORDED IN THES E ANNEXURES, WHICH ARE ALSO ACCEPTED BY THE ASSESSEE, WE ARE OF THE OPINION THAT TRANSACTIONS THEREIN DO PER TAIN TO THE INVESTMENTS OF THE ASSESSEES IN THE HOUSE BEING MAINTAINED ON A DAY-TO-DAY BASIS OR COULD HAVE BEEN A CONSOLIDATED STATEMENT AFTER CONSTRUCTION OF THE HO USE. 7.3 WHATEVER BE THE DISPUTES RAISED BY ASSE SSEE ABOUT NATURE OF ENTRIES THEREIN ABOUT THE PERIOD, HAND WR ITING ETC, THE FACT IS THAT THE ENTRIES DO REFLECT THE INVESTM ENTS MADE IN CONSTRUCTION OF THE HOUSE. THEREFORE, WE ARE OF THE OPINION THAT A.OS CONTENTION, AS APPROVED BY THE LD. CIT(A ), THAT 11 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL THESE DOCUMENTS PERTAIN TO THE ASSESSEES INVESTMENT IN THE HOUSE IS TO BE UPHELD. 8. NOW COMING TO THE ISSUE OF ADDITIONS MADE IN TH E IMPUGNED ASSESSMENT YEAR, IT IS THE ASSESSEES CONT ENTION THAT EVEN IF THE DOCUMENTS PERTAIN TO THE ASSESSEE, THE ENTIRE INVESTMENT CANNOT BE BROUGHT TO TAX IN THE IMPUGNED ASSESSMENT YEAR. THERE IS MERIT IN ASSESSEES CONTE NTION. A.O. RELIED EXCLUSIVELY ON THE IMPOUNDED DOCUMENTS AND A RRIVED AT THE SO-CALLED UNEXPLAINED INVESTMENT. IF ONE GOES B Y THE DATES MENTIONED THEREIN, IT IS OBVIOUS THAT THE ENTIRE IN VESTMENT HAS NOT BEEN MADE IN THE FINANCIAL YEAR STARTING FROM 1 ST APRIL, 2004 TO 31 ST MARCH, 2005 I.E., IMPUGNED ASSESSMENT YEAR. IN FACT, THE INVESTMENT STARTS AS EARLY AS 24.05.2002 AND COVERS THREE ASSESSMENT YEARS I.E., THREE YEARS DURING WHI CH ASSESSEE HAS CONSTRUCTED THE BUILDING. AS PER ANNEXURE-1, SO -CALLED INVESTMENT OF ABOUT RS.1.90 CRORES IS CONCERNED, FR OM THE SUMMARY AS EXTRACTED ABOVE FROM THE THIRD PAGE OF T HE ACCOUNT, INDICATE THE INVESTMENT IN THE LAND WAS T O THE TUNE OF RS.68,10,000. AS ADMITTED BY ASSESSEE, THE LAND WAS PURCHASED ON 13 TH JULY, 2002 AT A CONSIDERATION OF RS.15 LAKHS BY REGISTERED SALE DEED. THEREFORE, THE DIFFERENCE IF ANY, IN INVESTMENT IN LAND CERTAINLY CANNOT BE BROUGHT TO T AX IN THIS ASSESSMENT YEAR. LIKE WISE, THERE WERE PAYMENTS MAD E TO ARCHITECT AND OTHER PERSONS/AMOUNTS WHICH ARE CERTA INLY PERTAINING TO OTHER ASSESSMENT YEARS, NOT ENTIRELY IN THIS FINANCIAL YEAR. AS BRIEFLY STATED ABOVE, ONLY ANNEX URE-1 COULD BE BIFURCATED INTO THREE ASSESSMENT YEARS AND OUT O F RS.1,90,00,360, THE INVESTMENT DURING THE YEAR FROM 01.04.2004 TO 31.03.2005 WAS ONLY AN AMOUNT OF 12 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL RS.26,75,000. AS PER THE ASSESSEE, THEY HAS INVESTE D ONLY TO THE TUNE OF RS.21,00,000 DURING THE YEAR. THE STATE MENTS MADE BY ASSESSEE ARE SUBJECT TO VERIFICATION AS THE DETAILS IN FIRST TABLE IN PARA 5 ON INVESTMENT IN HOUSE YEAR W ISE DO NOT TALLY WITH INVESTMENT EXCLUDING LAND COST IN PARA 5 .1 ABOVE. THEREFORE, SUBJECT TO VERIFICATION ONLY DIFFERENCE IN INVESTMENT DURING THE YEAR CAN BE BROUGHT TO TAX EQUALLY AS AG AINST THE ENTIRE AMOUNT BROUGHT TO TAX BY THE A.O. 9. HOWEVER, THE AMOUNT OF RS.1.90 CRORES WAS NOT THE AMOUNT INVESTED IN THE BUILDING, AS ANNEXURE-2 INDI CATES THE INVESTMENT TO THE TUNE OF RS.2,45,14,454 UP TO DECE MBER, 2004. HOWEVER, THE EXACT DATES/PERIOD TO WHICH THES E ENTRIES ARE MADE COULD NOT BE ASCERTAINED AS DOCUMENTS PLAC ED ON RECORD WERE PERFORATED AND COULD NOT BE ANALYSED AS DATES MENTIONED THEREIN ARE NOT PROPERLY VISIBLE. IT REQU IRES EXAMINATION OF THE ORIGINAL DOCUMENTS. FOR EXAMPLE, IN PAGE- 84 OF ANNEXURE-2 I.E., PAGE 50 OF THE PAPER BOOK, THERE ARE CERTAIN PAYMENTS MENTIONING THE DATES IN 2003 AS WE LL, WHICH MAY PERTAIN TO EARLIER ASSESSMENT YEAR. WE ARE UNAB LE TO GIVE ANY FINDING OF HOW MUCH OF THE AMOUNT IN ANNEXURE-2 WAS INVESTED DURING THE YEAR. THEREFORE, IN ORDER TO AS CERTAIN THE EXACT AMOUNT INVESTED DURING THE YEAR, THE MATTER I S RESTORED TO THE FILE OF A.O. TO EXAMINE THE DOCUMENTS AND TO DETERMINE THE INVESTMENT MADE DURING THE YEAR AND THEN BRING IT TO TAX IN EQUAL PROPORTIONS BETWEEN THE ASSESSEES HEREIN . 8.1. IT IS ALSO A CONTENTION THAT AN AMOUNT OF RS.9,15,060 MADE TO AAKASH STONES ON 25.05.2003/22.07.2003 DOES NOT PERTAIN TO ASSESSEE. IN THE COURSE OF ARGUMENTS, ALONG WITH THE COUNSEL, ASSESS EES SON 13 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL ALSO APPEARED. A.O. IN FACT, HAS RECORDED THE STATE MENT FROM ASSESSEES SON ALSO. THEREFORE, THE FACTS SEEMS TO HAVE BEEN IN THE KNOWLEDGE OF ASSESSEES SON. ACCORDING TO HIS S UBMISSIONS MADE BEFORE US IN THE COURSE OF ARGUMENTS, THIS AMO UNT WAS REFLECTED IN THE BOOKS OF ACCOUNTS OF M/S. SHEETAL REFINERIES LTD AND WHEN THEY TRIED TO EXPLAIN IT TO THE AUTHOR ITIES, THEY REFUSED TO ACCEPT THE EVIDENCE. A.O. IS DIRECTED T O ANALYSE THE TRANSACTIONS, EXAMINE WHETHER ANY OTHER OF THE AMOU NTS THEREIN DO PERTAIN TO ANY OTHER ASSESSEE IN THE GRO UP OR PERTAIN TO ASSESSEES INVESTMENT IN HOUSE AND THEN DETERMINE THE ACTUAL AMOUNT INVESTED IN THE YEAR UNDER CONSID ERATION. 8.2. SINCE A.O. RELIED ON ONLY IMPOUNDED DOCUMENTS WHICH CLEARLY INDICATE THE YEAR OF INVESTMENTS AND DATES OF INVESTMENTS, A.O. IS NOT CORRECT IN BRINGING IT TO TAX THE ENTIRE AMOUNT OF UNEXPLAINED INVESTMENT IN THE YEAR UNDER CONSIDERATION. ASSESSMENT YEAR HAS A SANCTITY AND O NLY THOSE INVESTMENTS WHICH ARE FOUND UNEXPLAINED PERTAINING TO PREVIOUS YEAR CAN BE BROUGHT TO TAX IN THE RELEVANT ASSESSMENT YEAR. ONLY THE PROCEEDINGS FOR A.Y. 2005-06 ARE BEF ORE US AND THEREFORE, WE ARE NOT CONCERNED WITH INVESTMENTS IN OTHER ASSESSMENT YEARS. TO THE EXTENT OF UNEXPLAINED INVE STMENT PERTAINING TO A.Y. 2005-06 CAN ONLY BROUGHT TO TAX AND IN THIS REGARD, ASSESSEES CONTENTION THAT ENTIRE AMOUNT CA NNOT BE BROUGHT TO TAX IN THIS IMPUGNED ASSESSMENT YEAR IS ACCEPTED. A.O. IS DIRECTED TO EXAMINE THE ANNEXURES 1 AND 2, DETERMINE THE AMOUNT OF INVESTMENT MADE DURING THE YEAR BETWE EN 01.04.2004 TO 31.03.2005 AND ARRIVE AT THE UNDISCLO SED AMOUNT AND THEN MAKE THE NECESSARY ADDITION IN THE 14 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL IMPUGNED ASSESSMENT YEAR. WITH THESE DIRECTIONS, AS SESSEES GROUNDS ARE CONSIDERED AS PARTLY ALLOWED. 8.3. IN ORDER TO RE-EXAMINE THE ISSUE, THE ORDERS OF A.O. AND LD. CIT(A) ARE SET ASIDE TO THAT EXTENT AND THE MATTER OF UNEXPLAINED INVESTMENT IN THE HOUSE IS RESTORED TO THE FILE OF THE A.O. WE MAKE IT CLEAR THAT A.O. HAS TO DETERMIN E ONLY TO THE EXTENT OF INVESTMENTS FOUND IN ANNEXURES-1 AND 2 DURING THE YEAR. WITH THESE DIRECTIONS, ASSESSEES GROUNDS ARE PARTLY ALLOWED. ITA.NO.557/HYD/2011 A.Y. 2005-06 : 9. SIMILAR FACTS EXIST IN THIS APPEAL ALSO. THEREF ORE, RESPECTFULLY FOLLOWING THE DIRECTIONS IN ITA.NO.556 /HYD/2011 HEREINABOVE, THE GROUNDS OF THE ASSESSEE ARE ALSO C ONSIDERED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, ITA.NO.557/HYD/2011 OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 10. TO SUM-UP, ITA.NO.556/HYD/2011 AND 557/HYD/2011 OF THE ASSESSEES ARE PARTLY ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.08.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 13 TH AUGUST, 2014 VBP/- 15 ITA.NO.556 & 557/HYD/2011 MR. JUGAL KISHORE AGARWAL & SMT. SUMITRA BAI AGARWAL COPY TO 1. MR. JUGAL KISHORE AGARWAL, 8-2-684/3K (11 &12) R OAD NO.12, BANJARA HILLS, HYDERABAD 500 034. 2. SMT. SUMITRA BAI AGARWAL, 8-2-684/3K (11 &12) RO AD NO.12, BANJARA HILLS, HYDERABAD 500 034. 3. CIT(A)-IV, HYDERABAD 4. CIT-III, HYDERABAD 7. D.R. A BENCH, ITAT, HYDERABAD.