Sri P. R. Gopala Krishna Reddy, Hyderabad V. DCIT, Central Circle-2, Hyderabad

ITA 722/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59131 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MYTHILI RANI
• Assessee Lawyers: DR SHRI C P RAMASWAMY
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Unexplained expenditure; Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Additional evidence; Assessment record; Documents seized
• Section: 143(3); 50C; 153A; 234B; 14A; 147; 69; 132; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. AND SMT. ASHA VIJAYA RAGHAVAN, J.M. ITA NO.296/HYD/2011 ASSESSMENT YEAR 2000-01 ITA NO.297/HYD/2011 ASSESSMENT YEAR 2001-02 ITA NO.298/HYD/2011 ASSESSMENT YEAR 2002-03 ITA NO.299/HYD/2011 ASSESSMENT YEAR 2003-04 SHRI P.R. GOPALA KRISHNA REDDY, HYDERABAD (PAN AAOPP2423 J) VS THE DCIT, CENTRAL CIRCLE-2, HYDERABAD APPELLANT RESPONDENT ITA NO.722/HYD/2011 ASSESSMENT YEAR 2004-05 ITA NO.723/HYD/2011 ASSESSMENT YEAR 2005-06 ITA NO.724/HYD/2011 ASSESSMENT YEAR 2006-07 SHRI P.R. GOPALA KRISHNA REDDY, HYDERABAD (PAN AAOPP2423 J) VS THE DCIT, CENTRAL CIRCLE-2, HYDERABAD APPELLANT RESPONDENT ITA NO.824/HYD/2011 ASSESSMENT YEAR 2005-06 ITA NO.825/HYD/2011 ASSESSMENT YEAR 2006-07 THE DCIT, CENTRAL CIRCLE-2, HYDERABAD VS SHRI P.R. GOPALA KRISHNA REDDY, HYDERABAD (PAN AAOPP2423 J) APPELLANT RESPONDENT APPELLANT BY : (DR.)SHRI C.P. RAMASWAMY RESPONDENT BY : SMT. MYTHILI RANI, DR DATE OF HEARING : 17.10.2011 DATE OF PRONOUNCEMENT : 16.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THESE APPEALS PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY TH E ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 2 CIT(A)-III HYDERABAD AND PERTAINS TO THE ASSESSME NT YEARS 2000-2001 TO 2006-07. SINCE CERTAIN ISSUES INVOLVE D IN THESE APPEALS ARE COMMON IN NATURE, THEY ARE HEARD AND DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL TAKE UP THE APPEALS IN ITA NOS.29 6 TO 299/HYD/2011. THE ASSESSEE IS AN INDIVIDUAL. A SE ARCH OPERATION U/S 132 WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESSEE, DURING THE SEARCH OPERATI ON CONDUCTED ON 24.8.2005, IN THE CASE OF SHRI SUBRAMANESWARA REDDY GROUP. AFTER THE SAID SEARCH OPERATION, THE AO HAS ISSUED A NOTICE U/S 153A OF T HE ACT TO THE ASSESSEE ON 28.2.2006, CALLING FOR RETURNS O F INCOME FOR DIFFERENT ASSESSMENT YEARS. IN RESPONSE TO SUC H NOTICE, THE ASSESSEE HAS FILED RETURNS OF INCOME FOR THOSE ASSESSMENT YEARS ON 1.5.2006. LATER, DURING THE ASSESSMENT PROCEEDINGS, AFTER VERIFYING THE SEIZED DOCUMENTS AND MAKING NECESSARY ENQUIRIES, THE AO HA S MADE ADDITIONS UNDER DIFFERENT HEADS TO THE RETURNE D INCOME OF THE ASSESSEE FOR EACH ASSESSMENT YEAR AND COMPLETED THE ASSESSMENTS FOR THE FOUR ASSESSMENT Y EARS 2000-01 TO 2003-04, ON 28.12.2007 DETERMINING TOTAL INCOME AT RS.30,23,470/- (INCLUDING CAPITAL GAINS O F RS.17,67,360/-), RS.14,92,700/-, RS.17,41,220/- AND RS.24,54,440/- RESPECTIVELY. 3. AGGRIEVED THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A). THE ASSESSEE FILED APPEAL FOR EACH ASSESSM ENT YEAR I.E. 2000-01 TO 2003-04 AND CHALLENGED THE VARIOUS ADDITIONS MADE IN THE RESPECTIVE ASSESSMENTS. THE FIRST ISSUE WHICH IS COMMON FOR ALL THE FOUR ASSESSMENT Y EARS ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 3 RELATES TO THE ADDITION ARISING FROM DISALLOWANCE O F CLAIM OF INTEREST AGAINST THE HOUSE PROPERTY INCOME. 4. FOR THE ASSESSMENT YEAR 2000-01 THE ASSESSEE HA S CLAIMED DEDUCTION OF INTEREST FOR AN AMOUNT OF RS.6,93,190/-. SUCH CLAIM HAS BEEN MADE TOWARDS IN TEREST OF RS.3,98,371/- AND RS.3,02,819/- PERTAINING TO CA NARA BANK AND VYSYA BANK RESPECTIVELY. 5. THE AO HELD THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGARDING THE INTEREST PAID TO BANKS AND T HAT THE LOANS WERE OBTAINED FOR THE PURPOSE OF INVESTING IN THE PROPERTIES FROM WHICH THE ASSESSEE IS GETTING RENTA L INCOME. THE AO FURTHER HELD AS FOLLOWS: IN THIS CONNECTION, IT HAS TO BE BROUGHT ON RECORD THAT A LETTER WAS ISSUED TO THE ASSESSEE FOR THE ASSESSMEN T YEAR 2006-07 ON 23.11.2007 ASKING THE ASSESSEE TO STATE AS TO HOW THE INTEREST IS ALLOWABLE. THE ASS ESSEE FURNISHED A REPLY ON 29.11.2007 WHICH READS AS UNDER: THE AMOUNT OF RS.2,04,866/- IS INTEREST ON A RUNNI NG OVERDRAFT ACCOUNT WITH CANARA BANK AGAINST THE NRI DEPOSIT OF MY DAUGHTER SMT. G.N. SANDHYA REDDY SINCE 1996 OR EVEN EARLIER AND THESE HAVE BEEN USED FOR VARIOUS BUSINESS PURPOSES TO CONSTRUCT OFFICE COMPLEXES IN PREMISES NO.6-3-1107 AND 1108, RAJ BHAVAN ROAD, HYDERABAD AND PREMISES NO.8-2- 120/117, G-2 ROAD NO.2 BANJARA HILLS, HYDERABAD. SIMILARLY, THE AMOUNT OF 194804/- IS A RUNNING OVERDRAFT ACCOUNT AGAINST THE NRI DEPOSIT OF MY ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 4 DAUGHTER AND THE AMOUNTS WERE USED FOR THE PURPOSES OF THE ABOVE CONSTRUCTIONS. 5.1 THE AO NOT SATISFIED WITH THE SUBMISSIONS OF TH E ASSESSEE FURTHER NOTED THAT IN THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1999-2000 THE ASSE SSEE HAS NOT CLAIMED ANY INTEREST FROM INCOME SHOWN UNDE R INCOME FROM HOUSE PROPERTY. THE AO POINTED THAT IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME FILED FOR THE ASSESSMENT YEAR, THE ASSESSEE HAS CLAIMED INTEREST ON OVER DRAFT AMOUNT WITH CANARA BANK AND VYSYA BANK AMOUNTING TO RS.10,84,388/- FROM INCOME FROM OTHER SOURCES. REFERRING TO THIS FACT THE AO NOTED THAT THE ASSESSEE MIGHT HAVE PAID INTEREST TO THOSE BANKS FO R THE ASSESSMENT YEAR 1999-2000 ON THE OVERDRAFT TAKEN FO R HIS OWN PURPOSES. HOWEVER, WHILE FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2000-01 THE ASSESSEE HAS BO OKED SUCH INTEREST EXPENDITURE AGAINST THE PROPERTY INCO ME, SINCE THE PROPERTY INCOME WAS ON THE HIGHER SIDE. THE AO WAS OF THE OPINION THAT THE INTEREST CLAIMED IS NOT HAVING ANY NEXUS WITH THE UTILISATION OF THE MONEY FOR THE CONSTRUCTION OF THE PROPERTIES FROM WHICH THE RENT WAS RECEIVED. THE AO FURTHER HELD THAT LOOKING AT THE STATEMENT OF COMPUTATION OF INCOME FILED, FOR THE ASSESSMENT YEAR 1999-2000, IT CAN BE GATHERED THAT THE OVERDRAFT ACCOUNTS HAVE NOT BEEN UTILISED FOR THE CONSTRUCTION OF THE SAID PROPERTY AND HENCE DEDUCTI ON OF SUCH INTEREST OF RS.6,93,190/- AS CLAIMED IN THE RE TURN FILED FOR THE ASSESSMENT YEAR 2000-01 CANNOT BE ALLOWED. 5.2 FOR THE SAME REASON THE AO DISALLOWED THE AMOUNTS OF RS.6,08,138/-, RS.6,18,639/- AND ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 5 RS.5,38,261/- CLAIMED TOWARDS SUCH INTEREST IN THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2001-02, 2002- 03 AND 2003-04 RESPECTIVELY. 6. AGGRIEVED WITH THE ORDER OF THE AO THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND SUBMITTED TH AT DIRECT NEXUS OF THE AMOUNTS BORROWED FROM BANKS OVER INVESTMENT IN CONSTRUCTION OF OFFICE COMPLEXES HAVE BEEN ESTAB LISHED. IT WAS FURTHER STATED THAT THE ACCOUNT COPY OF THE BANK ACCOUNTS OF THE ASSESSEES DAUGHTER WHOSE FUNDS WER E UTILISED HAD BEEN SUBMITTED AND THEREFORE SUCH AMOU NTS TOWARDS INTEREST CLAIMED AGAINST INCOME FROM HOUSE PROPERTY, IS TO BE ALLOWED. 7. THE CIT(A) DISCUSSED THE ISSUE IN HIS ORDER AT PARA NO.5.4 AND 5.5. AND FURTHER HELD THAT AS POINTED OU T BY THE AO IN THE IMMEDIATE PRECEDING YEARS I.E., FOR THE ASSESSMENT YEAR 1999-2000, THE ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST FOR LOANS ON OVER DRAFT ACCOU NTS IN RESPECT OF CANARA BANK AND VYSYA BANK UNDER THE HEA D INCOME FROM OTHER SOURCES AND NOT CLAIMED ANY INT EREST UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HE FUR THER HELD THAT THIS FACT CLEARLY SHOWS THAT THE BORROWED AMOUNTS FROM SUCH OVER DRAFT ACCOUNTS OF WHICH THE ASSESSEE HAS PAID INTEREST DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2000-01 HAVE NOT BEEN UTILISED FOR THE CONSTRUCTION OF SUCH PROPERTY FROM WHICH THE ASSESS EE DERIVES RENTAL INCOME. THEREFORE, THE CIT(A) CONFI RMED THE DISALLOWANCE MADE BY THE AO IN THIS REGARD FOR THE ASSESSMENT YEAR 2000-01 TO 2003-04. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 6 8. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI C.P. RAMASWAMY REITERATED THE SUBMISSIONS BEFORE THE CIT (A) AND STATED THAT THE EVIDENCES HAVE ALREADY BEEN FIL ED WITH THE ORIGINAL RETURN OF INCOME, IT HAS BEEN IGNORED BY THE LOWER AUTHORITIES AND FURTHER NO ADVERSE EVIDENCE H AS BEEN FOUND IN THE COURSE OF SEARCH. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE AO AND THE CIT(A). 10. WE HEARD BOTH THE PARTIES. IN CASE OF SHRI GO UTAM SIDDHARTHUDU VS. DCIT IN IT A NO.960/HYD/2010, THE CO- ORDINATE BENCH HAS HAD AN OCCASION TO CONSIDER THE CASE WHERE THE ASSESSEE RAISED LOAN FROM ICICI BANK FOR THE PURPOSE OF CONSTRUCTION OF HOUSE. THE ASSESSEE HAD NOT CONSTRUCTED THE HOUSE INSTEAD UTILISED THE SAME BY GIVING THE LOAN TO A COMPANY BY NAME M/S LAKSHMI GANAPATHI PAPER MILLS LTD. THE ASSESSEE CLAIMED DEDUCTION O F INTEREST PAID BY HIM TO THE ICICI ON THE HOUSING LOAN TAKEN BY HIM OUT OF THE INTEREST RECEIVED FROM THE COMPANY WHERE IN THE TRIBUNAL HELD THAT AS FOLLOWS: THE ASSESSEE CLAIMED DEDUCTION OF INTEREST PAID BY HIM TO THE ICICI BANK ON THE HOUSING LOAN TAKEN BY HIM OUT OF INTEREST RECEIVED FROM THE COMPANY. THE LOAN WAS GIVEN BY ICICI FOR THE PURPOSE OF CONSTRUC TION OF THE HOUSE; THE ASSESSEE COULD HAVE CLAIMED DEDUCTION U/S 24. SINCE THE ASSESSEE HAS NOT CONSTRUCTED THE HOUSE OUT OF THE HOUSING LOAN TAKEN BY HIM THE ASSESSEE IS NOT ELIGIBLE DEDUCTION U/S 24 O F THE ACT. ON THE OTHER HAND ASSESSEE CLAIMED DEDUCTION U/S 57(III) OF THE ACT. IN OUR OPINION, THE ASSESS EE IS ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 7 ALSO NOT ENTITLED FOR DEDUCTION U/S 57(III) OF THE ACT. INTEREST ON BORROWING WAS NOT ALLOWABLE AS DEDUCTIO N FROM INTEREST INCOME DERIVED FROM LOAN GIVEN TO COMPANY AS INTEREST PAID HAD NO NEXUS WITH INTEREST EARNED IN AS MUCH AS EXPENDITURE BY WAY OF INTEREST COULD NOT BE SAID TO HAVE BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR EARNING INCOME BY WAY OF INTEREST F ROM LOAN. FOR THE PURPOSE OF ALLOWABILITY OF DEDUCTION U/S 57(III) WHAT HAD TO BE CORRELATED OR CONNECTED WAS NOT THE FUND WITH THE INCOME RECEIVED FROM SUCH LOAN BU T EARLIER BORROWING AND SUBSEQUENT EARNING OF INTERES T FROM THE LOAN. IN THIS CASE, THE ASSESSEE FAILED T O ESTABLISH THAT IT WAS HIS PURPOSE OR ONE OF HIS PURPOSES OF UTILISE THE AMOUNT RECEIVED ON LOAN FOR EARNING INTEREST. FOR EXAMPLE, IF THE ASSESSEE AFT ER BORROWING THE AMOUNT FOR THE PURPOSE OF BUSINESS HA D KEPT PART OF IT IN SHORT TERM DEPOSIT IN THE BANK A ND IT WAS TO BE HELD THAT THE INTEREST PAID ON AMOUNT OF BORROWED WAS NOT DEDUCTIBLE FROM INTEREST EARNED FR OM SHORT TERM DEPOSIT AS BORROWING WAS NOT FOR THE PURPOSE OF EARNINGS, SAID INTEREST INCOME. 11. FURTHER, WHILE DECIDING THE ISSUE THE CO-ORDI NATE BENCH RELIED ON THE DECISION IN THE CASE OF KARNAT AKA FOREST PLANTATIONS CORPORATION LIMITED VS. CIT & AN OTHER (156 ITR 275) (KARNATAKA HC) AND CIT VS. DR. V.P. GOPINATHAN (248 ITR 449 (SC). 12. WE ARE OF THE OPINION THAT THE RATIO OF THE DE CISION OF THE CO-ORDINATE BENCH IN THE CASE OF SHRI GOUTHAM SIDDHARTHUDU (SUPRA) IS TO BE FOLLOWED IN THE PRE SENT CASE. WE FIND THAT IN THIS CASE THE BORROWED AMOUNTS FROM OVER ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 8 DRAFT ACCOUNTS ON WHICH THE ASSESSEE HAD PAID INTER EST HAS NOT BEEN UTILISED FOR THE CONSTRUCTION OF THE SAID PROPERTIES FROM WHICH THE ASSESSEE HAS SHOWN RENTAL INCOME FOR THAT YEAR. HENCE, WE DISMISS THIS GROUND OF THE APPEAL OF THE ASSESSEE FOR ALL THE FOUR ASSESSMENT YEARS. 13. THE NEXT ISSUE WHICH RELATES TO THE ASSESSMENT YEAR 2000-01 IS WITH RESPECT TO THE CIT(A) CONFIRMING TH E CAPITAL GAINS CHARGED FOR A SUM OF RS.22,42,864/- ALLEGEDLY BASED ON AN ORDER U/S 154 DATED 28.5.2002 FOR WHICH ACCOR DING TO THE ASSESSEE THERE WAS NEITHER ANY NOTICE NOR THE O RDER WAS SERVED ON THE ASSESSEE. THE ASSESSEE CAME UP IN AP PEAL BEFORE THE CIT(A) CONTENDING THAT THE DIFFERENCE BE TWEEN RS.22,42,864/- AND RS.20,47,944/- I.E. RS.1,79,001/ - IS TO BE DELETED. THE AO VIDE LETTER DATED 30.11.2009 SU BMITTED THAT THE ORIGINAL RETURN OF INCOME FILED BY THE ASS ESSEE DATED ON 29.6.2000 WAS PROCESSED U/S 143(1) OF THE ACT AND NOTICE U/S 154 DATED 2.4.2002 WAS ISSUED BY THE AO TO RECTIFY THE MISTAKE APPARENT FROM RECORD TO CORRECT THE CAPITAL GAINS AT RS.22,42,864/- INSTEAD OF RS.20,47 ,944/-. THE AO STATED THAT AS THERE WAS NO RESPONSE FROM TH E ASSESSEE, THE ORDER U/S 154 DATED 28.5.2002 WAS PA SSED AND THE SAME WAS DESPATCHED ON 30.5.2002. LATER, A COPY OF THE ABOVE REPORT OF THE AO WAS FORWARDED TO THE ASSESSEE FOR COMMENTS. IN RESPONSE TO THE SAME, THE LEARNED COUNSEL FOR THE ASSESSEE FILED A LETTER DATED 6.5.2 010 SUBMITTING THAT NO SUCH NOTICE DATED 2.4.2002 REFER RED TO BY THE AO WAS RECEIVED BY THE ASSESSEE. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE IM PUGNED ORDER U/S 154 DATED 28.5.2002 WAS PASSED IN VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE. IT WAS FURTHER, SUB MITTED THAT THE ORDER U/S 154 THOUGH STATED TO BE DESPATCHED ON ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 9 30.5.2002 WAS NOT RECEIVED BY THE ASSESSEE. THE LE ARNED COUNSEL FOR THE ASSESSEE HAD RAISED THIS GROUND BY WAY OF ADDITIONAL GROUND BEFORE THE CIT(A). THE CIT(A) HE LD AS FOLLOWS PARA 8.3 OF THE CIT(A) ORDER: I HAVE CAREFULLY CONSIDERED SUCH ADDITIONAL GROUND, THE SUBMISSION OF THE AO WITH REFERENCE TO THE SAME AND THE SUBMISSION OF THE ASSESSEE ON SUCH REPORT OF TH E AO. FIRST OF ALL, IT MAY BE STATED THAT IN THE ORI GINAL GROUNDS OF APPEAL, THE ASSESSEE HAS NOT RAISED SUCH GROUND. FROM THIS, IT APPEARS TO ME THAT THE ASSES SEE IS AWARE OF EXISTENCE OF SUCH AN ORDER PASSED BY TH E AO IN HIS CASE. WITH REFERENCE TO SUCH ADDITIONAL GROUND RAISED IN THIS CASE, THE PRESENT AO HAS CLAR IFIED THE FACTS. HE HAS STATED REGARDING ISSUANCE OF N OTICE U/S 154 DATED 2.4.2002, PASSING OF AN ORDER U/S 154 DATED 28.5.2002 AND DESPATCH OF SAME ON 30.5.2002. AS MAY BE SEEN FROM THE ADDITIONAL GROUND, THE ASSESSEE HAS NOT OBJECTED TO ISSUANCE OF SUCH A NOT ICE IN THEIR CASE. IN THE SAID GROUND, THE ASSESSEE HA S OBJECTED TO SUCH ADDITION ON GROUND OF NON RECEIPT OF SUCH ORDER U/S 154 DATED 28.5.2002. UNDER THIS CIRCUMSTANCE, AFTER CONSIDERING SUCH SUBMISSIONS OF THE AO AND WHEN THE ASSESSEE HAS NOT DENIED THE EXISTENCE OF SUCH AN ORDER PASSED BY THE AO IN HIS CASE, IN MY CONSIDERED VIEW, SUCH PLEA RAISED IN TH E ADDITIONAL GROUND CANNOT BE ACCEPTED, AND HENCE, TH E SAME IS REJECTED. ACCORDINGLY, THE ABOVE ADDITIONA L GROUND IS REJECTED. 14. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US AND THE LEARNED COUNSEL FOR THE ASSESSEE SHRI C.P. RAMASWAM Y ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 10 RELIED ON THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF TIN BOX COMPANY VS. CIT (249 ITR 216 (SC) WHEREIN THE APEX COURT REVERSED THE DECISION OF THE HIGH COURT AND HELD: THAT ONCE THE TRIBUNAL FOUND THAT THE INCOME TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD, THAT THE ASSESSEE COULD HAVE PLACED THE EVIDENCE BEFORE THE APPELLATE AUTHO RITY OR BEFORE THE TRIBUNAL WAS REALLY OF NO CONSEQUENCE FOR IT WAS THE ASSESSMENT ORDER THAT COUNTED, THAT ORDE R HAD TO BE MADE AFTER THE ASSESSEE HAD BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 15. WE HEARD BOTH THE PARTIES. FOLLOWING THE RATI O OF THE DECISION OF THE APEX COURT, WE ARE OF THE OPINION T HAT THE MATTER IS TO BE SET ASIDE AND REMANDED BACK TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT WHO SHALL GIVE THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. HENC E THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 16. THE NEXT ISSUE WHICH IS COMMON FOR ALL THE 4 Y EARS 2000-01 TO 2003-04 IS THAT THE CIT(A) ERRED IN CONF IRMING THE LEVY OF INTEREST U/S 234B(3), IN SPITE OF THE F ACT THAT NO INTEREST WAS LEVIED IN THE ORIGINAL ASSESSMENT U/S 143(1). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE CIT (A) THAT NO INTEREST IS CHARGEABLE U/S 234B IN THIS CASE AND REFERRED TO THE DECISION OF THE TRIBUNAL (MUM) IN THE CASE OF DATAMATICS LTD. VS. ACIT (MUM) (299 ITR 83- 86). THE CIT(A) HELD THAT AS PER EXPLANATION 2, WHEN A N ASSESSMENT IS MADE FOR THE FIRST TIME U/S 153A OF T HE ACT, THE SAME SHALL BE CONSIDERED AS REGULAR ASSESSMENT FOR THE PURPOSE OF LEVYING INTEREST U/S 234B. THUS, THE CI T(A) HELD AS FOLLOWS: ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 11 WHENEVER A SCRUTINY ASSESSMENT IS MADE FOR THE FI RST TIME U/S 153A OF THE ACT, THE SAID ASSESSMENT HAS T O BE CONSIDERED AS A REGULAR ASSESSMENT FOR THE PURPOSE OF CHARGING INTEREST U/S 234B OF THE ACT. THE CIT(A) FURTHER HELD THAT IN THE ASSESSMENT ORDER, WHILE COMPUTING INTEREST U/S 234B, THE AO THOUGH HAS NOT MENTIONED ANY SUB S ECTION, HE CHARGED SUCH INTEREST U/S 234B(1) OF THE ACT. F URTHER, HE OBSERVED THAT THE PRESENT ASSESSMENT BEING A REGULA R ASSESSMENT, MADE FOR THE FIRST TIME, HAVING REGARD TO SUCH EXPLANATION 2, AND RELYING ON THE DECISION OF THE T RIBUNAL, AHMADABAD BENCH, IN THE CASE OF ACIT VS. GUJARAT BI TUMEN LTD. (2002) 82 ITD 614 ON SIMILAR ISSUE, AND RESPEC TFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL IT AT, IN THEIR ORDER IN THE CASE OF DR.A. NARESH BABU, GAJWELL, IN ITA NO.415 TO 421/HYD/2010 ACTION OF THE AO IN CHARGING SUCH INTEREST U/S 234B FOR THIS ASSESSMENT YEAR IS JUSTI FIED. 17. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUGH TO SECTION 234B (3) WHICH READS AS FOLLOWS: (3) WHERE AS A RESULT OF AN ORDER OF REASSESSMENT O R RE- COMPUTATION U/S 147 (OR SECTION 153A), THE AMOUNT O N WHICH INTEREST WAS PAYABLE UNDER SUB SECTION (1) IS INCREASED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMP LE INTEREST AT THE RATE OF ONE PERCENT. 18. THE LEARNED COUNSEL ARGUED THAT WHEN THE RETUR N IS FILED AND THE ASSESSMENT IS PROCESSED U/S 143(1) OR 143(3) AND AS A RESULT INTEREST IS PAYABLE BY VIRTUE OF TH E ORDER ONLY IN SUCH CASES INTEREST U/S 234B(3) IS LEVIABL E AS CAN BE UNDERSTOOD FROM THE PHRASE THE AMOUNT ON WHICH THE ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 12 INTEREST IS PAYABLE UNDER SUB SECTION (1) IS INCREA SED. THE LEARNED COUNSEL SUBMITTED THAT THE WORD INCREASED PRE SUPPOSES THAT SOME INTEREST WAS PAYABLE AND WOULD N OT BE APPLICABLE TO THE CASE WERE THE ASSESSMENT HAS RESU LTED IN REFUND AND HENCE THE ENTIRE LEVY IS NOT CORRECT. T HE LEARNED COUNSEL RELIED ON THE DECISION IN THE CASE OF DATAM ATICS CORPORATION (299 ITR 83-86). 18.1. WE FIND THAT THE BOMBAY HIGH COURT IN THE CASE OF AKBAR TRAVELS OF INDIA (P) LTD. VS. IT SETT LEMENT COMMISSION (332 ITR 72) HAS HELD THAT THE WORDS O N WHICH INTEREST IS PAYABLE HAVE BEEN USED IN A DESCRIPTIVE SENSE. THE WORDS DO NOT IMPOSE A CONDITION THAT FO R INTEREST TO BE ATTRACTED U/S 234B(4) INTEREST SHOUL D ACTUALLY HAVE BEEN LEVIED UNDER THE ORIGINAL ORDER OF ASSESS MENT UNDER SUB SECTION (1). THE WORDS INTEREST SHALL B E INCREASED WOULD CONTEMPLATE BOTH A SITUATION WHERE INTEREST HAS BEEN LEVIED ON THE ASSESSEE IN THE FIR ST INSTANCE AND A SITUATION WHERE NO INTEREST HAS BEEN LEVIED O N THE ASSESSEE IN THE ORIGINAL ORDER OF ASSESSMENT. THER E IS NO REASON OR JUSTIFICATION FOR THE COURT ON THE BASIS OF PLAIN LANGUAGE USED IN SUB SECTION (4) TO EXCLUDE THE LAT TER CATEGORY OF CASES AS CONTENDED ON BEHALF OF THE ASS ESSEE FROM LIABILITY TO PAY INTEREST. THE BOMBAY HIGH CO URT HAD CONCURRED WITH THE DECISION OF THE GUJARAT HIGH COU RT IN THE CASE OF SAHITYA MUDRANALAY VS. ITSC (312 ITR 11 5). IN VIEW OF THE DECISION OF THE BOMBAY HIGH COURT, THE DECISION OF THE MUMBAI TRIBUNAL CAN NO LONGER BE APPLIED. 19. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT (SU PRA) IN ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 13 312 ITR 115, WE DISMISS THIS GROUND RAISED BY THE ASSESSEE. 20. THE NEXT GROUND IS INTEREST U/S 234C. THIS G ROUND WAS NOT PRESSED FOR THE ASSESSMENT YEARS 2000-01 AN D 2001-02. FOR THE ASSESSMENT YEAR 2002-03, GROUND N O.3 BEING INTEREST PAID ON LOAN TAKEN FROM WIFE WAS NO T PRESSED AND ALSO GROUND NO.4 BEING INTEREST LEVIED U/S 234D WAS NOT PRESSED. HENCE THESE GROUNDS ARE DISMISSED A S NOT PRESSED. 21. FOR THE ASSESSMENT YEAR 2003-04, THE 4 TH GROUND OF APPEAL READS AS FOLLOWS: THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST PAID TO BANKS FOR AN AGGREGATE SUM OF RS.8,07,060 ON MONIES BORROWED AND INVESTED IN SECURITIES IN SPITE OF THE FACT THAT THE BANK STATE MENTS WERE PRODUCED BEFORE THE CIT(A) WHO REFUSED TO TAKE THEM FROM THE LEARNED AUTHORIZED REPRESENTATIVE AND ARBITRARILY WROTE IN THE ORDER THAT NO EVIDENCE WAS FILED BEFORE HIM. HE OUGHT TO HAVE TAKEN THE EVIDENCE ON RECORD AND DECIDED THE ISSUE ON MERITS. 22. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS SUBMITTED THAT FULL COPY OF THE BANK A CCOUNT WAS FILED AND THE DEDUCTION HAS BEEN CLAIMED AGAINS T THE INCOME FROM OTHER SOURCES OF RS.8,53,163/-. THE CO UNSEL SUBMITTED THAT LATER, AT THE TIME OF HEARING ON 10. 5.2010, IN THE FURTHER WRITTEN SUBMISSIONS FILED BY THE AR, IT WAS SUBMITTED THAT COPIES OF BANK STATEMENTS FROM HDFC BANK ACCOUNT NO.212100010708 AND ACCOUNT NO.212100003188 ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 14 SHOWING PAYMENTS TO M/S KARVY STOCK BROKING LIMITED ARE SUBMITTED. IN THE SAID WRITTEN SUBMISSION IT WAS S TATED THAT INTEREST IS DEBITED IN ALL THESE ACCOUNT FOR A N AGGREGATE AMOUNT OF RS.4,39,642/-. IT WAS FURTHER SUBMITTED THAT THERE WERE SIMILAR PAYMENTS FROM THE BANK ACCOUNT W ITH IDBI BANK FOR THE BALANCE INTEREST CLAIMED IN ACCOU NT NO.2653750259. 23 THE CIT(A) HELD THOUGH IN THE SAID WRITTEN SUBMISSIONS FILED ON 10.5.2010, IT IS MENTIONED REG ARDING SUBMITTING COPIES OF BANK STATEMENTS FROM HDFC BANK ACCOUNT NOS. 212100010708 AND 2121403188), NO SUCH STATEMENTS HAVE BEEN FILED ALONG WITH THE WRITTEN SUBMISSION. THE CIT(A) STATED THAT THE AR HAS ONL Y FILED TRANSACTION STATEMENT IN RESPECT OF NATIONAL SECURI TIES DEPOSITORY LTD., DP KARVY STOCK BROKING LTD. (IN300 0394) IN 33 PAGES AND A COPY OF THE ASSESSMENT ORDER DATE D 1.7.2009 IN ITA NOS.396 TO 398 PASSED BY THE CIT(A) III, HYDERABAD PASSED IN THE CASE OF M. RAMAKRISHNA REDD Y FOR THE ASSESSMENT YEAR 2004-05 AND 2006-07. HE FURTHE R OBSERVED THAT NO SUCH BANK STATEMENT HAS BEEN FILED SUBSEQUENTLY, AND NO BANK ACCOUNT PERTAINING TO SUC H ACCOUNT IN IDBI BANK IN RESPECT OF THE ASSESSEE, HA S BEEN FILED BEFORE HIM UNDER THESE CIRCUMSTANCES, HE OP INED THAT IT IS NOT POSSIBLE TO VERIFY SUCH CLAIM OF THE ASSESSEE REGARDING PAYMENT OF INTEREST MADE TO THOSE BANKS F OR LOANS OVERDRAFTS TAKEN FROM THOSE BANKS, STATED TO BE FOR THE PURPOSE OF INVESTMENT. 24. THE LEARNED DR RELIED ON THE ORDER OF THE CIT (A). THE LEARNED COUNSEL FOR THE ASSESSEE SHRI C.P. RAMASWAM Y INSISTED THAT THE BANK STATEMENTS WERE PRODUCED BEF ORE THE ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 15 CIT(A) WHO REFUSED TO TAKE THEM FROM THE LEARNED AUTHORIZED REPRESENTATIVE AND ARBITRARILY WROTE IN THE ORDER THAT NO EVIDENCE WAS FILED BEFORE HIM. HE OUGHT TO HAVE TAKEN THE EVIDENCE ON RECORD AND DECIDED THE ISSUE ON MERITS. 25. WE HEARD BOTH THE PARTIES. SINCE THERE SEEMS TO BE DISAGREEMENT BETWEEN THE LEARNED AUTHORIZED REPRESENTATIVE AND THE CIT(A) WITH RESPECT TO THE E VIDENCE FILED BEFORE THE CIT(A), WE DEEM IT FIT TO REMIT TH E MATTER TO THE FILE OF AO TO CONSIDER THE EVIDENCE ON RECORD A ND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 26. THE OTHER ISSUE PERTAINING TO ASSESSMENT YEAR 2003- 04 RAISED BEFORE US IS AS GROUND NO.5 IS AS FOLLOWS : A) THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF LONG TERM CAPITAL LOSS FOR AN AGGREGATE SUM OF RS.37,67,670/- DESPITE THE FACT THAT ALL THE DETAIL S OF THE DP ACCOUNT WERE FILED BESIDES FULL DETAILS FILE D ALONG WITH THE RETURN AND AO COULD NOT FIND TIME TO VERIFY THE SAME. B) HE OUGHT TO HAVE ALLOWED THE LONG TERM CAPITAL L OSS TO BE SET OFF AGAINST SHORT TERM CAPITAL GAIN DECLA RED FOR A SUM OF RS.47,320/- (WHICH WAS BASED ON IDENTICAL DETAILS FILED WITH THE RETURN OF INCOME A ND ALLOWED THE BALANCE LOSS TO BE CARRIED FORWARD. 27. THE AO VIDE HIS LETTER DATED 25.10.2007 HAS A SKED THE ASSESSEE TO FILE PROOF OF SALE OF SHARES, BROKE RS CLIENTS COPY AND HIS BANK ACCOUNTS AND OTHER DETAILS PERTAI NING TO SUCH CLAIM MADE TOWARDS LONG TERM CAPITAL LOSS. HO WEVER, AS NOTED BY HIM, THE ASSESSEE HAS NOT FILED ANY DET AILS. IN THIS REGARD, HE REFERRED TO REPLY FILED BY THE ASSE SSEE IN ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 16 RESPONSE TO HIS QUESTIONNAIRE DATED 23.11.2007 ISSU ED FOR THE ASSESSMENT YEAR 2006-07. AFTER CONSIDERING SUC H REPLY, EXTRACTED IN THE ASSESSMENT ORDER AND REFERRING TO THE REPLY GIVEN BY THE ASSESSEE TO QUESTIONNAIRE IN THAT REGA RD EARLIER ISSUED BY THE DDIT(INV.) HE NOTED THAT THE ASSESSEE HAS NOT FURNISHED FULL DETAILS AS REQUIRED BY THE DEPARTMEN T. HE FURTHER NOTED THAT FOR ESTABLISHING SUCH CLAIM THE ASSESSEE HAS TO PRODUCE THE PURCHASE BILLS OF SHARES, SALE B ILLS OF SHARES AND HIS ACCOUNT COPY FROM HIS STOCK BROKER A ND ALSO HIS D-MAT ACCOUNT. HOWEVER, STATING THAT THE ASSES SEE HAS NOT FILED THOSE DETAILS, HE DISALLOWED SUCH CLAIM O F LONG TERM CAPITAL LOSS SHOWN AT RS.37,67,670/-. 28. DURING THE HEARING OF APPEAL ON 6.5.2010 BEFOR E THE CIT(A), IN THE WRITTEN SUBMISSIONS FILED BY THE LEA RNED COUNSEL FOR THE ASSESSEE IT WAS SUBMITTED THAT LONG TERM CAPITAL LOSS AS COMPUTED WITH REFERENCE TO ALL THE RELEVANT PARTICULARS OF PURCHASE AND SALE OF SHARES WITH DET AILS FURNISHED ALONG WITH THE ORIGINAL RETURN FILED U/S 139, HAS BEEN DISALLOWED BY THE AO IN AN ARBITRARY MANNER. IT WAS STATED THAT FULL PARTICULARS ARE AVAILABLE WITH THE DEPARTMENT AND CROSS VERIFIABLE WITH KARVY CONSULTA NT LTD., THE BROKING FIRM WITH WHOM THE DP ACCOUNT IS MAINTA INED BY THE ASSESSEE. IT WAS REQUESTED, HENCE THE LONG TERM CAPITAL LOSS BE ALLOWED FULLY. 29. LATER DURING THE HEARING OF APPEAL ON 10.5.201 0 THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ORIGINAL RETURN OF INCOME WAS FILED ON 22.9.2003 WI THIN THE SPECIFIED TIME BY DECLARING TOTAL INCOME OF RS.9,75 ,316/- BESIDES SPECIFYING LONG TERM CAPITAL LOSS FOR A SUM OF ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 17 RS.37,67,670/-. THIS RETURN WAS ACCEPTED BY ORDER DATED 18.3.2003 BY WHICH REFUND ORDER FOR A SUM OF RS.1,73,380/- WAS GRANTED. THE SAME FIGURES OF INC OME AND LONG TERM CAPITAL LOSS HAVE BEEN REPEATED IN RE SPONSE TO THE NOTICE U/S 153A. HOWEVER, THE AO DENIED THE CLAIM FOR CARRY FORWARD. FURNISHING COPIES OF TRANSACTIO N STATEMENTS IN RESPECT OF NATIONAL SECURITIES DEPOSI TORY LTD., DP KARVY STOCK BROKING LIMITED (IN3000394) IN 33 PA GES, IN SUPPORT OF CLAIM FOR LONG TERM CAPITAL LOSS, THE AR SUBMITTED THAT THE SAID STATEMENTS FROM DP COULD NO T BE PRODUCED DUE NOT LACK OF TIME. IN THE SAID WRITTEN SUBMISSION IT WAS FURTHER SUBMITTED THAT THE ASSESS EES SUCH CLAIM AHS ITS IMPACT ON THE INCOME TO BE ASSES SED IN THE IMMEDIATELY SUCCEEDING YEARS FOR BEING SET OFF AGAINST THE LONG TERM CAPITAL GAINS IN BOTH THE YEARS. 30. THE CIT(A) AFTER CONSIDERING SUCH SUBMISSION O F THE AR THE SAID TRANSACTION STATEMENTS FILED DURING THE APPEAL, WHICH CONSTITUTE ADDITIONAL EVIDENCES, WERE FORWARD ED TO THE AO VIDE THIS OFFICE LETTER DATED 11.5.2010 REQU ESTING HIM TO VERIFY AND EXAMINE THE SAME TO FINISH HIS CO MMENTS THEREON VIDE A REMAND REPORT, THROUGH HIS RANGE ADD L. CIT BY 31.5.2010. IN RESPONSE TO THIS THE DCIT CENTRAL CIRCLE, HYDERABAD VIDE HIS LETTER DATED 18.11.2010 FURNISHE D A REPORT WHICH WAS FORWARDED BY THE ADDL. CIT, CENTRA L RANGE-1, HYDERABAD VIDE HIS LETTER DATED 19.11.2010 . IN HIS REPORT, REFERRING TO NON COOPERATION FROM THE A SSESSEE DURING THE REMAND PROCEEDINGS, HE SUBMITTED THAT SU CH ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE ARE NOT VERIFIABLE. 31. A COPY OF THE ABOVE REMAND REPORT OF THE AO WA S FORWARDED TO THE ASSESSEE VIDE THIS OFFICE LETTER D ATED ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 18 11.5.2010 FOR SUBMITTING COMMENTS. IN RESPONSE TO THIS, IN THE WRITTEN SUBMISSIONS FILED BY THE A R, IT WAS SU BMITTED THAT SUCH REPORT FROM THE AO IS SUPERFICIAL AND CIRCUMVENTING THE ISSUES REFERRED TO HIM. IT WAS S TATED, WHEN THE AO WAS REQUIRED TO LOOK INTO THE CLAIM OF LONG TERM CAPITAL GAINS ON SALE OF SHARES, THE SAME COUL D HAVE BEEN EASILY VERIFIED BY REFERENCE TO THE SHARE HOLD ING FOR ONE OR TWO YEARS PRIOR TO THE DATE OF SALE. FOR REASON S BEST KNOWN TO HIMSELF, THE AO WANTED HISTORIC RECORDS EV EN DATING BACK THE YEARS 1996 TO 1998. IT WAS SUBMITT ED THAT ONE IS NOT EXPECTED TO RETAIN RECORDS BEYOND EVEN A PERIOD OF SIX YEARS IN TERMS OF THE PROVISIONS OF THE ACT. FURTHER, THE ASSESSEE IS NOT IN BUSINESS. CONSEQUENTLY, THE RE IS NO BALANCE SHEET PREPARED AS SUCH FROM YEAR TO YEAR. IN FACT, SUCH DETAILS ARE NOT REQUIRED TO VERIFY THE PERIOD OF HOLDING OF SHARES BEYOND ONE YEAR FOR DETERMINING LONG TERM CAPITAL GAINS ON SALE OF SHARES WHICH ARE EXEMPT U/S 10(38) . IT WAS FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2007 -08, THE APPEAL OF THE ASSESSEE WAS HEARD BY THE CIT(A) I, HYDERABAD, WHO VERIFIED THE SHAREHOLDING FROM THE STATEMENTS FURNISHED BY THE DP AND WAS CONVINCED AB OUT THE GENUINENESS OF THE CLAIM BY THIS ASSESSEE. THE A R REQUESTED FOR TAKING SIMILAR VIEW OF THE MATTER. R EFERRING TO THE OBSERVATIONS OF THE AO REGARDING NO APPEARANCE OF THE ACCOUNTANT OF THE ASSESSEE BEFORE HIM, THE A R SUBM ITTED THAT ON MANY DATES OF HEARING, THE ACCOUNTANT WAS P RESENT BUT COULD NOT BE HEARD DUE TO PRE OCCUPATION OF THE AO WITH SUDDEN TIME BARRING WORK TRANSFERRED TO HIM FROM DI FFERENT CHARGES. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 19 32. THE CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE A R, THE FACTS OF THE CASE, THE REMAND REPORT OF THE AO AND FURTHER SUBMISSIONS MADE BY THE ASSESSEE WITH REFERENCE TO SUCH REPORT. AS SEEN FROM THE ASSESSMENT ORDER, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS NOT FURNIS HED THE DESIRED DOCUMENTS AND OTHER DETAILS, IN SUPPORT OF HIS SUCH CLAIM FOR LONG TERM CAPITAL LOSS. EVEN THOUGH, DU RING THE HEARING OF APPEAL, IT WAS SUBMITTED THAT ASSESSEE H AS FILED COMPUTATION OF SUCH LOSS WITH THE ORIGINAL RETURN O F INCOME FILED U/S 139 OF THE ACT, WHEN DURING THE ASSESSMEN T PROCEEDINGS, INITIATED CONSEQUENT UPON SUCH SEARCH CONDUCTED IN THE CASE OF THE ASSESSEE, THE AO HAS A SKED THE ASSESSEE TO FILE EVIDENCES/DOCUMENTS IN THAT REGARD , THE LATTER IS BOUND TO FURNISH THE SAME CALLED FOR BY A O FOR VERIFYING SUCH CLAIM. LATER, DURING THE HEARING OF APPEAL, AFTER FILING THE SAID TRANSACTION STATEMENTS ISSUED BY KARVY STOCK BROKING LTD., THE A R HAS REQUESTED FOR ALLOW ING THE CLAIM OF LONG TERM CAPITAL LOSS. HOWEVER, SINCE TH E SAME CONSTITUTE ADDITIONAL EVIDENCES, TO EXAMINE AND VER IFY THE SAME AND ALSO FOR VERIFYING SUCH CLAIM OF THE ASSES SEE, THE MATTER WAS REMANDED TO THE AO. HOWEVER, AS STATED BY THE AO IN HIS ABOVE REMAND REPORT, THE ASSESSEE HAS NOT PRODUCED THE BANK ACCOUNT COPIES AND OTHER DETAILS ASKED FOR BY HIM, DURING THE REMAND PROCEEDINGS. POINTIN G OUT SUCH NON COOPERATION FROM THE ASSESSEE, HE HAS STATED TH AT SUCH ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE ARE UNVERIFIABLE. IN MY VIEW, IN THE FACE OF SUCH ADVE RSE REPORTED FURNISHED BY THE AO IN THIS CASE AND WHEN HE HAS NOT BEEN ABLE TO VERIFY SUCH CLAIM OF THE ASSESSEE, THE SAID CLAIM TOWARDS LONG TERM CAPITAL LOSS OF RS.37,67,67 0/- ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 20 CANNOT BE ALLOWED. THEREFORE THE DISALLOWANCE OF T HE AMOUNT MADE BY THE AO IN THE ASSESSMENT IS JUSTIFIED. HEN CE THE SAME IS UPHELD. 33. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 34. THE LEARNED COUNSEL FOR THE ASSESSEE DR. C.P. RAMASWAMY SUBMITTED THAT HEARING WAS COMPLETED IN A HURRY DUE TO TIME BARRING DATE AND VOLUMINOUS INFOR MATION WAS CALLED FOR WITHOUT GRANTING ADEQUATE DATA. SIN CE THE CIT(A) HAS OBSERVED THAT IN THE REMAND REPORT, THE AO HAS STATED THAT THE ASSESSEE HAS NOT PRODUCED THE BANK A/C COPIES AND OTHER COPIES ASKED BY HIM DURING THE REM AND PROCEEDINGS. FURTHER, THE AO HAD POINTED OUT NON COOPERATION OF THE ASSESSEE WHICH PREVENTED THE VERIFICATION OF ADDITIONAL EVIDENCES SUBMITTED BY T HE ASSESSEE. IN THESE CIRCUMSTANCES, THE MATTER SHALL BE REMANDED BACK TO THE AO IN ORDER TO EXAMINE AND VER IFY THE EVIDENCES AND OTHER DETAILS AND DOCUMENTS ETC. FURN ISHED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM FOR LONG TE RM CAPITAL LOSS. THIS GROUND IS ALLOWED FOR STATISTICAL PURPO SES. 35. NEXT WE WILL DEAL WITH THE ISSUES IN ITA 722/HYD/2011 FOR THE ASSESSMENT YEAR 2004-05, ITA NO.723/HYD/2011 FOR THE ASSESSMENT YEAR 2005-06 AND ITA 724/HYD/2011 FOR THE ASSESSMENT YEAR 2006-07. 36. THE FIRST COMMON GROUNDS OF APPEAL FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07 IS DISALLOWANCE OF INTEREST AGAINST THE PROPERTY INCOM E. THIS ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 21 ISSUE HAS BEEN DECIDED IN ITA NOS.296-299/HYD/2011 AT PARA 12 PAGE 8 WHICH IS AS FOLLOWS: WE ARE OF THE OPINION THAT THE RATIO OF THE DECISIO N OF THE CO-ORDINATE BENCH IN THE CASE OF SHRI GOUTHAM SIDDHARTHUDU (SUPRA) IS TO BE FOLLOWED IN THE PRE SENT CASE. WE FIND THAT IN THIS CASE THE BORROWED AMOUN TS FROM OVER DRAFT ACCOUNTS ON WHICH THE ASSESSEE HAD PAID INTEREST HAS NOT BEEN UTILISED FOR THE CONSTRU CTION OF THE SAID PROPERTIES FROM WHICH THE ASSESSEE HAS SHOWN RENTAL INCOME FOR THAT YEAR. HENCE, WE DISMI SS THIS GROUND OF THE APPEAL OF THE ASSESSEE FOR ALL T HE FOUR ASSESSMENT YEARS. 38. IN ITA NO.722, 723 AND 724/HYD/2011, THE ISSUE RELATING TO GROUND NO.3 IS THAT INTEREST PAID TO WI FE IS DISALLOWED. THIS ISSUE WAS NOT PRESSED BEFORE US A ND HENCE DISMISSED AS NOT PRESSED. 39. ANOTHER COMMON GROUND OF APPEAL IN ITA NOS.722 & 723/HYD/2011 & ITA 724/H/2011 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 IS AS FOLLOWS: THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS DESPITE THE FACT THAT ALL T HE DETAILS OF THE DP ACCOUNT WERE FILED BESIDES FULL D ETAILS FILED ALONG WITH THE RETURN AND THE AO COULD NOT FI ND TIME TO VERIFY THE SAME. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING SET OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSS FROM THE ASSESSMENT YEAR 2003-04 AGAIN ST TAXABLE LONG TERM CAPITAL GAINS OFFERED. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 22 THE CITA FAILED TO APPRECIATE THAT ON SAME SET OFF FACTS HE CONFIRMED THE CHARGING OF TAX ON LONG TERM CAPIT AL GINS BUT DENIED SET OFF AGAINST SHORT TERM CAPITAL LOSS. 40. FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.724/H/2011, THE ASSESSEE HAS RAISED THE FOLLOWIN G GROUND BEFORE US: THE CIT(A) ERRED IN CONFIRMING THE DENIAL OF CARRY FORWARD SHORT TERM CAPITAL LOSS FOR A SUM OF RS.5,97,966/- (INCLUDING THE BROUGHT FORWARD FIGURE OF RS.92,178/-) DESPITE THE FACT THAT ALL THE DETAILS OF THE DP ACCOUNT WERE FILED, BESIDES FULL DETAILS FILED A LONG WITH THE RETURN, AND THE AO COULD NOT FIND TIME TO VERIFY THE SAME. 41. FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.722/H/2011, THE CIT(A) HELD AS FOLLOWS: I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE LEARN ED AUTHORIZED REPRESENTATIVE THE ABOVE REMAND REPORT O F THE AO AND FURTHER SUBMISSIONS MADE BY THE ASSESSEE WITH REFERENCE TO SUCH REPORT. I MAY MENTION HERE THAT FOR THIS ASSESSMENT YEAR, THE ASSESSEE HAS CLAIMED A SUM OF RS.92,178/- TOWARDS SHORT TERM CAPITAL LOSS ON SALE OF SHARES. SINCE BEFORE THE AO THE ASSESSEE H AS NOT EXTENDED NECESSARY COOPERATION, THE AO HAS NOT BEEN ABLE TO VERIFY VARIOUS CLAIMS OF THE ASSESSEE. HE HAS CLEARLY NOTED THAT SUCH ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE ARE UNVERIFIABLE. FURTHE R, FROM THE SAID TRANSACTION STATEMENTS PERTAINING TO THE ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 23 FINANCIAL YEAR 2003-04 FILED DURING THE HEARING OF APPEAL, IT IS NOT POSSIBLE TO ASCERTAIN THE LOSS SU FFERED ON SALE OF SHARES, AS CLAIMED BY THE ASSESSEE UNDER THE SHORT TERM CAPITAL LOSS. UNDER THE CIRCUMSTANC ES, AND SINCE NO SEPARATE STATEMENT HAS BEEN FILED BEFO RE ME SUBSTANTIATING SUCH CLAIM OF THE ASSESSEE, IN MY VIEW, THE SAME CLAIMED AT RS.92,178/- CANNOT BE ALLOWED. HENCE, DISALLOWANCE OF THE SAID AMOUNT IN THE ASSESSMENT FOR THIS ASSESSMENT YEAR IS UPHELD. AS REGARDS, THE CLAIM OF LONG TERM CAPITAL LOSS PERTAI NING TO THE ASSESSMENT YEAR 2003-04 IS CONCERNED, FOR TH E REASONS STATED IN PARA 14.6 OF THE SAID ASSESSEE OR DER DATED 30.12.2010 PASSED IN THE CASE OF THE ASSESSEE , I HELD THAT THE SAME CANNOT BE ALLOWED. FOLLOWING MY SAID ORDER, I HOLD THAT THE DECISION OF THE AO IN T HE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2004-05 FO R NOT ALLOWING CARRY FORWARD OF THE SAID LOSS PERTAIN ING TO THE FROM ASSESSMENT YEAR 2003-04 IS JUSTIFIED. HENCE SUCH DECISION IS UPHELD. 42. AGAIN BEFORE THE CIT(A) IT WAS CONTESTED THE A O ERRED IN NOT SETTING OFF THE LONG TERM CAPITAL GAIN DECLA RED FOR A SUM OF RS.19,41,179/- AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS FOR A SUM OF RS.31,15,763/-. 43. THE AO NOTED THAT FOR THE REASONS DISCUSSED I N THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003-04 TH E BROUGHT FORWARD CAPITAL LOSS AT RS.31,15,763/- IS DISALLOWED, AS IT WAS NOT ALLOWED TO BE CARRIED FOR WARD IN THE RELEVANT ASSESSEMENT YEAR. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 24 44. THE CITA HELD AS FOLLOWS: I HAVE CONSIDERED SUCH SUBMISSIONS FILED BY THE ASSESSEE. HOWEVER, IT MAY MENTIONED HERE THAT THE DISALLOWANCE OF LONG TERM CAPITAL LOSS CLAIMED BY THE ASSESSEE AT RS.37,67,670/- FOR THE ASSESSMENT YEAR 2003-04, IN THE ASSESSMENT ORDER PASSED FOR THAT ASSESSMENT YEAR, HAS BEEN UPHELD BY ME VIDE MY COMBINED ORDER IN ITA NO.0008 TO 0011/CIT(A)/III/09 - 10 DATED 30.12.2010. IN VIEW OF MY SAID ORDER, THE PRESENT ACTION OF AO IN DISALLOWING SUCH CLAIM OF T HE ASSESSEE FOR SET OFF SUCH LOSS AGAINST THE LONG TER M CAPITAL GAINS SHOWN FOR THE CURRENT YEAR, IS JUSTI FIED, AND HENCE HIS SUCH DECISION IS UPHELD. ACCORDINGLY , THE ABOVE GROUND FAILS. 45. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI CP RAMASWAMY SUBMITTED THAT BENEFIT OF SHORT TERM LOS S WAS DENIED PURELY ON SURMISE. FURTHER, HE SUBMITTED TH AT BENEFIT OF LONG TERM LOSS WAS WRONGLY DENIED AS ON THE SAME SET OF FACTS THE LONG TERM CAPITAL GAINS DECLARED W AS ACCEPTED AS INCOME. 46. FOR THE ASSESSMENT YEAR 2006-07 THE LEARNED CO UNSEL SUBMITTED THAT FOR THE SAME SET OF FACTS LTCG DECLA RED FOR RS.1,77,81,216 TREATED BY AO AS STGG AND RELIEF GRA NTED BY CIT(A). 47. WE HEARD BOTH THE PARTIES. WE FIND THAT THE I SSUES SHOULD BE SENT BACK TO THE CIT(A) AND HE SHALL GIVE AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN IN DETAIL WI TH RESPECT TO THE SHARE TRANSACTIONS AND CIT(A) AFTER APPLICAT ION OF ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 25 MIND AND APPRECIATION OF THE MATERIAL CONSIDER NON DENIAL OF SHORT TERM LOSS, CARRY FORWARD OF LONG TERM LOS S AND CARRY FORWARD OF SHORT TERM CAPITAL LOSS FOR THE AS SESSMENT YEAR 2006-07. THIS GROUND IS ALLOWED FOR STATISTIC AL PURPOSES. 48. THE GROUND NO.4 IN ITA NO.724/H/2011 FOR THE ASSESSMENT YEAR 2006-07 IS WITH RESPECT TO EXPLAINE D INVESTMENT PARTLY TREATED AS UNEXPLAINED. THE ASSESSEE HAS PURCHASED CERTAIN PROPERTY AT MYS ORE FROM ONE SREE VEERABADRAIAH. AS PER PAGE 53, PAGE 87 AND PAGE 77 OF THE SAID SEIZED DOCUMENT, THE ASSESSEE H AS INCURRED TOTAL AMOUNT OF RS.29,40,000/- FOR PURCHAS E OF SAID PROPERTY, MENTIONED BY HIM AS MYSORE-1. DUR ING THE ASSESSMENT PROCEEDINGS, THE AO HAS ASKED THE ASSESS EE TO EXPLAIN AS TO WHY SUCH AMOUNT INCURRED ON PURCHASE OF THE SAID PROPERTY SHOULD NOT BE CONSIDERED AS UNEXPLAIN ED INVESTMENT IN HIS HANDS AND THUS SHOULD NOT BE ADDE D TREATING AS HIS UNDISCLOSED INCOME. IN RESPONSE, T HE ASSESSEE HAS FURNISHED THE DETAILS OF PAYMENTS MADE ON THAT ACCOUNT VIDE LETTER DATED 27.12.2007. HOWEVER , HE NOTED THAT DURING THE ASSESSMENT PROCEEDINGS, HE HA S ASKED THE ACCOUNTANT OF THE ASSESSEE TO PRODUCE THE LATTERS BANK ACCOUNT TO VERIFY SUCH BANK ACCOUNTS AND THEIR SOURCES. HOWEVER, FURTHER STATING THAT THE SAID AC COUNTANT HAS NOT TURNED UP ON 28.12.2007, HE HAS ADDED THE S AID AMOUNT OF RS.29,40,000/- TO THE INCOME OF THE ASSES SEE, TREATING THE SAME AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 26 49. WITH REFERENCE TO ABOVE ADDITION, IN THE WRITT EN SUBMISSIONS FILED BY THE AR, IT WAS SUBMITTED THAT WHEN A SOURCE OF PURCHASE/INVESTMENT STANDS FULLY EXPLAINE D BY PAYMENTS MADE THROUGH BANK CHANNEL, THERE IS NO INS TANCE OF ANY UNEXPLAINED INVESTMENT. THIS ELEMENTARY PRI NCIPLE IS IGNORED BY THE AO. HE MADE THIS ADDITION ARBITR ARILY. IT WAS SUBMITTED THAT, THE ASSESSEE PAID TO HIS SON AS AGGREGATE SUM OF RS.29,40,000/-. THE SITE AT MYSOR E OF ABOUT 8 ACRES OF LAND WAS PURCHASED BY THE ASSESSEE ONLY FOR A SUM OF RS.25 LAKHS AND THE STAMP DUTY AND REGISTRATION CHARGES COST A FURTHER SUM OF RS.2,51, 500/-. THESE INVESTMENTS STAND FULLY EXPLAINED. HOWEVER, THE AO WOULD NOT BE BELIEVE IN THE STATEMENT OF THE ASSESS EE AND MADE AN ADDITION OF RS.29,40,000/- TREATING EVEN TH E BALANCE AMOUNT LYING WITH THE ASSESSEES SON AS UNEXPLAINED INVESTMENT AND FURTHER ADDED A SUM OF RS.2,51,500/- AS UNEXPLAINED EXPENDITURE INCURRED T OWARDS STAMP DUTY AND REGISTRATION CHARGES FOR THE SAID PU RCHASE. 50. THE CIT(A) HELD AS FOLLOWS: I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND THE FACTS OF THE CASE. IN RESPONSE TO QUERY RAISED BY THE AO, FOR EXPLAINING THE SOURCE OF INVESTMENT MADE IN PURCHASE OF THE ABOVE PROPERTY, THE ASSESSEE HAS FURNISHED REPLY ALONG WITH A STATEMENT OF CHEQUE NO S. DDS ETC. ISSUED BY HIM FOR THE SAID PURPOSE. THE SAID REPLY FURNISHED BY THE ASSESSEE, HAS BEEN REPRODUCE D BY THE AO AT PAGE 4 OF THE ASSESSMENT ORDER. HOWEVER, STATING THAT THE BANK ACCOUNTS OF THE ASSESSEE IN THAT REGARD HAS NOT BEEN PRODUCED FOR VERIFICATION BEFORE HIM, THE AO HAS ADDED THE SAID ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 27 AMOUNT INCURRED ON PURCHASE OF THE SAID PROPERTY TREATING THE SAME AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. BEFORE ME, IT HAS BEEN SUBMITTED BY THE AR THAT THE ENTIRE PAYMENTS FOR PURCHASE OF THE SAID PROPERTY WERE MADE THROUGH BANKING CHANNEL AND SUCH INVESTMENTS STAND FULLY EXPLAINED. HOWEVER, IN THIS CONTEXT, I MAY MENTION HERE, THAT AFTER GOING THOROUGH THE SAID REPLY OF T HE ASSESSEE, REPRODUCED BY THE AO IN THE ASSESSMENT AND ALSO THE SAID REPLY LYING IN THE ASSESSMENT REC ORD, I FIND THAT THE ACCOUNT NUMBER I.E. THE SAVINGS BAN K ACCOUNT NO. ETC. FROM WHICH SUCH CHEQUES AND DDS WERE ISSUED HAVE NOT BEEN FURNISHED. EVEN DURING T HE HEARING OF THE APPEAL BEFORE ME, SUCH INFORMATION A ND DETAILS HAVE NOT BEEN FURNISHED. UNDER THESE CIRCUMSTANCES, EVEN THOUGH SUCH PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL, I AM OF THE VIEW THAT THE SOURCES OF SUCH PAYMENTS MADE BY THE ASSESSEE REMAINS UNEXPLAINED IN SECTION 69 OF THE ACT IT SAY , WHERE ANY FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE AO, SATISFACTORY, THE VALUE OF THE INVESTMENT MAY B E DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. THUS, AS PER THE PROVISIONS OF THE ABOVE SECTION, ONUS LIES ON AN ASSESSEE TO EXPLAIN THE SOURCE OF ANY OF INVESTMENT MADE BY HIM DURING ANY FINANCIAL YEAR, BY FURNISHING REQUIRED DETAILS TO T HE SATISFACTION OF THE AO HAVING REGARD TO THE ABOVE PROVISIONS AND SINCE THE SOURCE OF SUCH INVESTMENT ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 28 HAVE NOT BEEN FULLY EXPLAINED BY THE ASSESSEE, I AM CONSTRAINED TO CONFIRM THE SAID ADDITION MADE IN TH E ASSESSMENT IN THIS CASE IN PRINCIPLE. FURTHER, I M AY MENTION HERE, AS NOTED BY THE AO, A TOTAL AMOUNT OF RS.27,51,500/- HAS BEEN INCURRED BY THE ASSESSEE ON PURCHASE OF THE SAID PROPERTY. THIS AMOUNT INCLUDE S A SUM OF RS.2,51,500/- TOWARDS REGISTRATION CHARGES. FROM THIS DETAILS FURNISHED BY THE ASSESSEE, IT IS SEEN THAT RS. 4 LAKHS WERE PAID VIDE CHEQUES FROM BANK DRAWN ON 31.3.2005 AND RS.40,000 WERE PAID IN CASH. I AM OF THE VIEW, THAT THE ASSESSEE WAS HAVING OWN BALANCE FOR MAKING SUCH CASH PAYMENT RELATE TO THE PRECEDING ASSESSMENT YEAR. UNDER THESE CIRCUMSTANCES, AFTER EXCLUDING AN AMOUNT OF RS.4.4 LAKHS I CONFIRM ADDITION OF RS.23,11,500/- TOWARDS UNEXPLAINED INVESTMENT MADE IN THE SAID PROPERTY DURING THE PREVIOUS YEAR. HENCE, OUT OF THE TOTAL ADDITION OF RS.29,40,000 MADE BY THE AO IN THE ASSESSMENT, THE BALANCE AMOUNT OF RS.6,28,500 IS DELETED. 51. AGGRIEVED, THE ASSESSEE WAS IN APPEAL BEFORE U S. 52. WE FIND THAT THE SOURCE OF INVESTMENT HAS BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE. FURTHER, ALL PAYMENTS WERE BY A/C PAYEE CHEQUES AND THE TOTAL AM OUNT OF RS.29,40,000 WAS TRANSFERRED THROUGH BANKING CH ANNEL TO THE ASSESSEES SON AND ONLY RS.21.51,000 WAS UTI LISED BY HIS SON FOR THE PURCHASE OF PROPERTY. THE BALANCE WAS SPENT FOR REGISTRATION AND STAMP DUTY. WE ARE OF T HE OPINION THAT THE ADDITION IS TO BE DELETED AS THE S OURCE OF THE INVESTMENT HAS BEEN PROPERLY EXPLAINED. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 29 53. THE GROUND NO.6 IN ITA NO.723/HYD/2011 IS AS FOLLOWS : A) THE CIT(A) GROSSLY ERRED IN UPHOLDING THE ENHANC ED CAPITAL GAINS FOR A SUM OF RS.63,82,274/- IN TOTAL DISREGARD OF ALL THE EVIDENCE FILED BEFORE HIM AND IGNORING THE PROVISIONS OF SECTION 50C. B) THE CIT(A) FAILED TO APPRECIATE THAT HIS PREDECE SSOR DELETED CORRESPONDING ADDITION OF RS.54,00,000/- MADE IN THE CASE OF BUYER OF THE SAID PROPERTY ON THE SAME SET OF EVIDENCE. CONSEQUENTLY, HE ERRED IN CONFIRMING THE ADDITION OF CAPITAL GAINS. THE COMM ON GROUND FOR THE ASSESSMENT YEARS IS WITH RESPECT TO SECTION 234B(3). 54. THE ASSESSEE HAS OBJECTED TO THE DETERMINATION OF LONG TERM CAPITAL GAIN FROM SALE OF CONSTRUCTED ARE A IN PUNNIAH PLAZA BY THE AO AT RS.63,82,274/- IN PLACE OF RS.6,19,827/- SHOWN BY HIM IN THE RETURN. 55. BRIEF FACTS OF THE ISSUE ARE THAT THE AO NOT ED THAT SUCH AMOUNT TOWARDS SALE CONSIDERATION SHOWN BY THE ASSESSEE IS VERY LOW AND HE HAS UNDERSTATED THE SAM E. ON VERIFYING THE SEIZED DOCUMENTS, HE FOUND THAT THE S EIZED DIARY VIDE ANNEXURE A/PHVR/34, FOUND AT THE RESIDEN CE OF SHRI HARSHAVARDAN REDDY, CONTAINS THE DETAILS OF VA LUATION OF THAT OFFICE SPACE SOLD BY THE ASSESSEE ALONG WIT H HIS SON. HE NOTED THAT AT PAGE 46, 47 AND 48 OF THAT SEIZED DIARY THE VALUE OF THAT CONSTRUCTED AREA HAS BEEN WORKED OUT AT RS.1,48,00,000/-. SUCH VALUATION HAS BEEN MADE IN ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 30 EXCHANGE OF CERTAIN PROPERTIES AT OOTY BELONGING TO SRI P. PRABHAKAR REDDY. SINCE THE ASSESSEE HAS FIRST OFFE RED FOR SALE OF THAT CONSTRUCTED AREA ALONG WITH SUCH PARKI NG SPACE TO SRI PRABHAKAR REDDY, FURNISHING A COPY OF THE SA ID SEIZED DOCUMENTS TO THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS ASKED HIM TO EXPLAIN AS TO WHY THE SELLING PRICE OF THE PROPERTY SHOULD NOT BE ADOPTED AT RS.1,48,00,000/- AND THE TOTAL CAPITAL GAINS FROM S UCH PROPERTY SHOULD NOT BE COMPUTED AT RS.1,27,54,549/- AND CONSEQUENTLY, SUCH GAINS IN HIS HANDS SHOULD NOT BE CONSIDERED AT RS.63,82,274/- (50%). IN RESPONSE TO THIS, THE ASSESSEE HAS SUBMITTED THAT SUCH PROPERTY BELON GING TO HIM IN PUNNAIAH PLAZA WAS TRANSFERRED TO SRI A.M. RAMAKRISHNA REDDY AND SMT. HARINITHA REDDY FOR A TO TAL CONSIDERATION OF RS.40 LAKHS AS PER SALE DEED DATED 14.8.2004. HE STATED THAT HE GOT CERTAIN ASSETS A S PER THE MOU DATED 6.8.2004. THOUGH IN THAT LETTER DATED 27.12.2007THE ASSESSEE HAS MENTIONED THAT HE GOT TH E FOLLOWING ASSETS AS PER THAT MOU, THE DETAILS OF SU CH ASSETS WERE NOT GIVEN IN THAT LETTER, AS EVIDENT FROM THAT REPLY LYING IN THE ASSESSMENT RECORD. WITH THESE SUBMISSIONS A ND REFERRING TO THE SAID COMPUTATION OF CAPITAL GAINS FURNISHED WITH THE RETURN OF INCOME, THE ASSESSEE HAS SUBMITT ED THAT THE LONG TERM CAPITAL GAINS IN HIS HANDS FROM SALE OF THAT PROPERTY COMES TO RS.6,19,827. STATING THAT THE SA LE CONSIDERATION DECLARED IN THE RETURN AT RS.38,99,83 2/- (FOR HIMSELF AND SRI P. HARSHAVARDAN REDDY SHARE) IS IN ACCORDANCE WITH VALUE FIXED IN TERMS OF SECTION 50C , IT WAS SUBMITTED THAT THERE IS NO UNDERSTATEMENT OF CAPITA L GAINS. HOWEVER, THE AO DID NOT ACCEPT SUCH SUBMISSIONS OF THE ASSESSEE. HE NOTED THAT THE WORKINGS OF THE VALUE OF THAT CONSTRUCTED AREA SOLD BY THE ASSESSEE, AS MADE IN T HAT ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 31 SEIZED DIARY IS REASONABLE. HE FURTHER NOTED THAT THE PREVAILING MARKET VALUE IN RESPECT OF THE PROPERTY AT BANJARA HILLS, TALLIES WITH SUCH WORKING MADE BY TH E ASSESSEE. HE FURTHER MENTIONED CERTAIN PROPERTY LO CATED OPPOSITE TO THE ASSESSEES BUILDING WAS AUCTIONED B Y HUDA FOR HUGE AMOUNT OF RS.1,41,000/- PER SQ. YARD IN TH E YEAR 2006. WITH THESE OBSERVATIONS, HE HELD THAT THE SA LE PRICE IN RESPECT OF THAT PROPERTY SOLD BY THE ASSESSEE AL ONG WITH HIS SONS WAS AT RS.1,48,00,000 AND ON THE BASIS, TH E CAPITAL GAINS ASSESSABLE IN THE HANDS OF THE ASSESS EE COMES TO RS.63,82,274/-. ACCORDINGLY, HE ADOPTED THE SAI D AMOUNT, FOR TAXATION IN THE HANDS OF THE ASSESSEE F ORT THIS ASSESSMENT YEAR. 56. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE AMOUNT OF RS.54 LAKHS ADDED TOW ARDS UNDISCLOSED INVESTMENT IN THE CASE OF MR. M. RAMAKR ISHNA REDDY FOR THE ASSESSMENT YEAR 2005-06 WAS DELETED B Y THE CIT(A) III VIDE ORDER DATED 1.7.2009 AND THEREFORE REQUESTED THAT THE ABOVE SAID RS.63,83,274/- MADE B Y THE AO IN THIS CASE MAY BE DELETED. 57. THE LEARNED COUNSEL FOR THE ASSESSEE AGGRIEVED BY THE ORDER OF THE CIT(A) WHEREIN HAD ELABORATELY DISCUSS ED AT PARA NO. 12.32 TO 12.53 AND UPHELD THE ORDER OF THE AO IN DETERMINING THE CAPITAL GAINS OF SALE OF THE SAID P ROPERTY AT RS.63,82,274/- PREFERRED AN APPEAL BEFORE US. THE LEARNED COUNSEL RELIED ON THE JUDGEMENT IN THE CASE OF 263 ITR 75 (DEL.) AND SUBMITTED THAT THE CIT(A) HAS TOTALLY DI SREGARDED THE PREVIOUS PROVISIONS OF SECTION 50C AND THAT THE PREDECESSOR HAS DELETED THE CORRESPONDING ADDITIONS MADE ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 32 IN THE CASE OF THE BUYER OF THE SAID PROPERTY ON TH E SAME SET OF EVIDENCE. 58. THE LEARNED COUNSEL RELIED ON THE DECISION OF SHRI ARJIT SINGH (HUF) VS. ACIT (263 ITR 75) FOR THE PRO POSITION THAT THE ADDITION TO COME BASED ON NOTING ON A SLIP OF PAPER FOUND DURING THE SEARCH OF A 3 RD PERSON IS NOT AN EVIDENCE TO PROVE THE GENUINENESS OF NOTING. THE ENTIRE ADD ITIONS IN THE HANDS OF THE ASSESSEE WAS BASED ON THE DOCUMENT S FOUND BUT THERE WAS NO EVIDENCE TO SUPPORT THE REVE NUES CASE THOUGH A HUGE FIGURE OVER AND ABOVE THE BOOK I N THE RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN THE PART IES, IT WAS HELD THAT NO ADDITION COULD THEREFORE BE MADE T O THE INCOME OF THE ASSESSEE. 59. WE HEARD BOTH THE PARTIES. THIS ISSUE IS DEC IDED IN THE CASE OF SHRI RAMAKRISHNA REDDY FOR THE ASSESSME NT YEAR 2005-06 IN ITA NO.1022/HYD/2009 DATED 27.1.201 1 WHEREIN IT HAS BEEN HELD AS FOLLOWS: THE LEARNED DEPARTM ENTAL REPRESENTATIVE, SMT. MYTHILI RANI RELIED ON THE ORDER OF THE ASSESSING OFFICER. WE HAD HEARD BOTH THE PARTIES. IN THE CASE OF SHRI Y.SHIVARAMA KRISHNA IN ITA NO 969-970/HYD/08, RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE, IT HAS BEEN HELD BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS:- SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED ON 07.10.2004. IN THE PREMISES OF THE PERSON RELATING TO SUJANA GROUP OF COMPANIES, INCLUDING THE ASSESSEE. DURING THE COURSE OF SEARCH OPERATIONS, SOME MATERI AL WAS FOUND FROM THE RESIDENCE OF ONE SHRI C.V.RAMANA REDDY. THE ASSESSING OFFICER ON THE BASIS OF THE PRESUMPTION UNDER SECTION 132(4) OF THE ACT MADE ADDITIONS IN THE HANDS OF THE PRESENT ASSESSEE. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 33 HOWEVER, ON APPEAL, THE CIT(A) HELD THAT PRESUMPTIO N UNDER SEC.132(4) IS APPLICABLE ONLY IN RESPECT OF PERSONS FROM WHOSE CUSTODY OR POSSESSION, SEIZED MATERIAL WAS FOUND AND IT CANNOT BE APPLIED TO THIR D PARTIES THE CIT(A) PLACED RELIANCE ON THE THIRD MEMBER DECISION OF THIS TRIBUNAL IN THE CASE OF RAM A TRADERS V/S, FIRST ITO (1982) 32 TTJ (PATNA) 483 (T M), WHEREIN IT WAS HELD THAT PRESUMPTION PROVIDED IN SECTION 132(4) IS ONLY IN RESPECT OF PERSONS FROM WHOSE CUSTODY THE DOCUMENT WAS SEIZED AND THE PRESUMPTION CANNOT BE EXTENDED TO THIRD PARTIES. SINCE THE CIT(A) FOUND THAT THE PRESUMPTION CANNOT BE EXTENDED TO THIRD PERSONS, FOLLOWING THE THIRD MEMB ER DECISION OF THIS TRIBUNAL CITED ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF REVENUE ON THIS ISSUE INASMUCH AS THE ABOVE DECISION OF THE TRIBUNAL COVE RS THE ISSUE IN FAVOUR OF THE ASSESSEE, RESPECTFULLY FOLLOWING THE SAME, WE FIND NO INFIRMITY IN THE ORD ER OF THE CIT(A). WE ACCORDINGLY REJECT THE GROUNDS OF TH E REVENUE IN THESE APPEALS. IN THE RESULT, THESE TWO APPEALS OF THE DEPARTMENT ARE DISMISSED. 60. WE DIRECT THE AO TO FOLLOW THE ORDER IN THE CA SE OF RAMAKRISHNA REDDY (SUPRA) IN THE PRESENT APPEAL BEF ORE US. 61. ANOTHER ISSUE IN ITA NO.723 IS DISALLOWANCE OF INTEREST PAID TO BANKS. IN THE WRITTEN SUBMISSION FIELD BY THE AR, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS DISALLOWED THE SUM OF RS.2,48,532 IN TERMS OF SECTI ON 14A WHEN SUCH INTEREST WAS PAYABLE AGAINST TAXABLE CAPI TAL GAINS AND NOT CLAIMED AGAINST ANY DIVIDEND INCOME. IT WAS SUBMITTED THAT THE ASSESSEE INCURRED SHORT TERM CAP ITAL LOSS OF RS.5,05,788/- AND SUCH CLAIM OF RS.2,48,532/- WA S ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 34 MADE IN THE REVISED COMPUTATION FILED ALONG WITH TH E RETURN, IN RESPONSE TO NOTICE U/S 153A OF THE ACT. IT WAS STATED THAT SUCH CLAIM HAS BEEN CORRECTLY MADE. 62. THE CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE ASSESSEE. I MAY MENTION HERE THAT SUCH CLAIM OF TH E ASSESSEE THAT HE HAS CLAIMED SUCH AMOUNT AGAINST CAPITAL GAINS IS NOT CORRECT. AS SEEN FROM THE RET URN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO NOTICE ISSUED BY THE ASSESSING OFFICER U/S 153A OF THE ACT , HE HAS CLAIMED SUCH DEDUCTION FOR INTEREST FROM INC OME UNDER THE HEAD INCOME FROM OTHER SOURCES. UNDER THIS CIRCUMSTANCE, AND SINCE THE ASSESSEE HAS FAILE D TO JUSTIFY THE CLAIM OF SUCH DEDUCTION WITH SUPPORTING DETAILS AND MOREOVER HAVING REGARD TO SUCH OBSERVATIONS MADE BY THE ASSESSING OFFICER, UNDER PARA-III AT PAGE 4 OF THE ASSESSMENT ORDER, DISALLOWANCE OF THE SAID AMOUNT MADE IN THE ASSESSMENT ORDER WAS JUSTIFIED. HENCE, THE SAME IS UPHELD. 63. WE HAVE PERUSED THE RECORDS. THE ASEE HAS CLAI MED RS.2,48,532/- IN THE REVISED COMPUTATION FILED ALON G WITH RETURN IN RESPONSE TO NOTICE U/S 153A OF THE ACT. WE SET ASIDE THE ISSUE TO THE FILE OF THE AO TO EXAMINE TH E ISSUE AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE AND DEC IDE IN ACCORDANCE WITH LAW. 64. NOW WE WILL TAKE UP THE REVENUE APPEAL IN ITA 824 & 825/H/2011 ASSESSMENT YEAR 2005-06 & 2006-07. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 35 65. THE REVENUE RAISED THE FOLLOWING GROUNDS IN IT S APPEAL IN ITA NO.824/H/2011: 1. THE CIT(A) HAS MERELY STATED THAT THE COST OF CONSTRUCTION HAS BEEN ESTIMATED BY THE AO IS NOT CORRECT FOR THE REASON THAT THE ESTIMATION IS BASED ON THE ADVANCE OF RS.1.66 CRORES RECEIVED FROM APPLABS TECHNOLOGIES P LTD., WHICH WAS NOT INCLUDED IN THE EXPENDITURE AS PER SEIZED DOCUMENT ANNEXURE PRGR/A/2 PAGE 86 TO 88 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE REASONS FO R ARRIVING AT THE COST OF CONSTRUCTION BY THE AO INST EAD OF PLACING RELIANCE ON CONSTRUCTION OF THE BUILDING BY A THIRD PARTY. 3. THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT I N PUNNAIAH PLAZA OF RS.20,42,289 OUGHT TO HAVE BEEN UPHELD. 66. WE FIND THAT THE ISSUE IS COVERED IN THE CASE OF RAMAKRISHNA REDDY IN ITA NO. /HYD/2011 WHEREIN W E HAVE HELD AS FOLLOWS: WE HAD HEARD BOTH THE PARTIES. IN THE CASE OF SHRI Y.SHIVARAMA KRISHNA IN ITA NO 969-970/HYD/08, RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE, IT HAS BEEN HELD BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS:- SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED ON 07.10.2004. IN THE PREMISES OF THE PERSON RELATING TO SUJANA GROUP OF COMPANIES, INCLUDING THE ASSESSEE. DURING THE COURSE OF SEARCH OPERATIONS, SOME MATERI AL WAS FOUND FROM THE RESIDENCE OF ONE SHRI C.V.RAMANA REDDY. THE ASSESSING OFFICER ON THE BASIS OF THE PRESUMPTION UNDER SECTION 132(4) OF THE ACT MADE ADDITIONS IN THE HANDS OF THE PRESENT ASSESSEE. HOWEVER, ON APPEAL, THE CIT(A) HELD THAT PRESUMPTIO N ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 36 UNDER SEC.132(4) IS APPLICABLE ONLY IN RESPECT OF PERSONS FROM WHOSE CUSTODY OR POSSESSION, SEIZED MATERIAL WAS FOUND AND IT CANNOT BE APPLIED TO THIR D PARTIES THE CIT(A) PLACED RELIANCE ON THE THIRD MEMBER DECISION OF THIS TRIBUNAL IN THE CASE OF RAM A TRADERS V/S, FIRST ITO (1982) 32 TTJ (PATNA) 483 (T M), WHEREIN IT WAS HELD THAT PRESUMPTION PROVIDED IN SECTION 132(4) IS ONLY IN RESPECT OF PERSONS FROM WHOSE CUSTODY THE DOCUMENT WAS SEIZED AND THE PRESUMPTION CANNOT BE EXTENDED TO THIRD PARTIES. SINCE THE CIT(A) FOUND THAT THE PRESUMPTION CANNOT BE EXTENDED TO THIRD PERSONS, FOLLOWING THE THIRD MEMB ER DECISION OF THIS TRIBUNAL CITED ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF REVENUE ON THIS ISSUE INASMUCH AS THE ABOVE DECISION OF THE TRIBUNAL COVE RS THE ISSUE IN FAVOUR OF THE ASSESSEE, RESPECTFULLY FOLLOWING THE SAME, WE FIND NO INFIRMITY IN THE ORD ER OF THE CIT(A). WE ACCORDINGLY REJECT THE GROUNDS OF TH E REVENUE IN THESE APPEALS. 67. THE REVENUE APPEAL IN ITA NO.825/HYD/2011. TH E REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) OUGHT TO HAVE HELD THAT THE SOURCE F OR PURCHASE OF DD FOR RS.27,75,000/- GIVEN TO GRANDSON SHRI P. SRAVAN KUMAR HAS NOT BEEN EXPLAINED BY THE ASSESSEE. 2. THE CIT(A) OUGHT TO HAVE UPHELD THE ADDITION OF RS.27,51,000/- AS UNEXPLAINED INVESTMENT IN THE SIT E AT MYSORE. 68. DURING THE PREVIOUS YEAR THE ASSESSEE HAS MADE AN INVESTMENT OF RS.27,51,500/- IN PURCHASE OF ANOTHER PROPERTY AT MYSORE, MENTIONED IN THE SEIZED DOCUMEN T AS SITE AT MYSORE-2. DURING THE ASSESSMENT PROCEEDING S, THE ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 37 ASSESSING OFFICER HAS ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT IN PURCHASE OF SAID PROPERTY. IN RESPONSE TO THIS, AS NOTED BY THE ASSESSING OFFICER THE ASSESSEE HAS SUBMITTED THAT HIS GRAND SON SRI P. SR AVAN KUMAR REDDY, HAS PURCHASED THE SAID LAND AT RS.25,00,000/- BY TAKING AN INTEREST FREE LOAN FROM HIM. FOR REGISTRATION FEES, HE HAS TAKEN AN INTEREST FRE E LOAN OF RS.2,75,000/- FROM HIS WIFE FROM SMT. P. SUNDARI DE VI ON 6.5.2005. WITH THESE SUBMISSION, WHILE STATING THA T THOSE PAYMENTS ARE THROUGH ACCOUNTS, THE ASSESSEE HAS SUBMITTED THAT THE SAME STANDS FULLY EXPLAINED. HO WEVER, STATING THAT THE ACCOUNTANT OF THE ASSESSEE HAS NOT PRODUCED THE BANK ACCOUNT FOR VERIFICATION, THE ASS ESSING OFFICER DID NOT ACCEPT SUB SUBMISSIONS OF THE ASSES SEE AND ADDED THE SAID AMOUNT OF RS.27,51,500/- TO THE INCO ME OF THE ASSESSEE, TREATING THE SAME AS UNEXPLAINED INVE STMENT FOR THIS ASSESSMENT YEAR. 69. ON APPEAL, THE CIT(A) HAS HELD AS FOLLOWS: I HAVE CONSIDERED SUCH SUBMISSION THE AR. I HAVE PERUSED THE ASSESSMENT RECORD. I FIND THAT WHILE EXPLAINING THE PAYMENT MADE FOR PURCHASE OF THE ABOVE PROPERTY, THE ASSESSEE VIDE LETTER DATED 27.12.2007, HAS FURNISHED A SEPARATE STATEMENT IN RESPECT OF VARIOUS PAYMENTS AGGREGATING TO RS.27,75,000/- MADE FOR PURCHASE OF THE ABOVE PROPERTY. IN THAT STATEMENT, A SUM OF RS.2,75,000/ - IS SHOWN AS PAID BY SMT. P. SUNDARI DEVI TO ABOVE GRAN D SON BY CASH WITHDRAWN FROM CANARA BANK, MASAB TANK, BY CHEQUE NO.344098. THOUGH IN THAT STATEMEN T THE BANK ACCOUNT NUMBER ETC. ARE NOT MENTIONED, IT ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 38 APPEARS THAT SUCH BANK ACCOUNT DETAILS WERE AVAILAB LE WITH THE ASSESSING OFFICER. IT MAY BE MENTIONED HE RE IN PARA 7.2 OF HIS QUESTIONNAIRE DATED 20.12.2007, WHICH IS REFERRED TO BY HIM IN PARA VI OF THE ASSESSMENT ORDER, HE HAS MENTIONED A VERIFICATION OF THE BANK ACCOUNT AND CHEQUE NUMBERS IN RESPECT OF THIS PAYMENT.. FROM THIS OBSERVATION MADE IN THAT LETTER, IT SHOWS THE BANK ACCOUNT DETAILS OF THE ASSESSEE IN THAT REGARD WERE AVAILABLE WITH ASSESSI NG OFFICER. UNDER THESE CIRCUMSTANCES AND IN VIEW OF SUCH EXPLANATION FURNISHED BY THE ASSESSEE VIDE HIS LETTER DATED 27.12.2007, IN MY VIEW, THE SAID AMOUN T INCURRED ON PURCHASE OF THE SAID PROPERTY SITE AT MYSORE-2, SHOULD NOT BE ADDED IN THIS CASE. HENCE, SUCH ADDITION OF RS.27,51,500/- MADE IN THE ASSESSMENT, IT NOT SUSTAINABLE. HENCE, THE SAME IS DELETED. 70. WE FIND THAT THE ASSESSEE VIDE HIS LETTER DATE D 27.12.2007 EXPLAINED THAT THE PROPERTY AT MYSORE H AS BEEN PURCHASED BY HIS GRAND SON SHRI SRAVAN KUMAR BY TAK ING A LOAN OF RS.25 LAKHS FROM HIM. FURTHER THE AMOUNT OF RS.2,75,000/- HAS BEEN TAKEN FOR REGISTRATION AND S TAMP DUTY FROM HIS WIFE SMT. SUNDARI DEVI . THESE ARE R EFLECTED IN THE BANK ACCOUNTS AVAILABLE WITH ASSESSING OFF ICER AND SUBSTANTIATED BY THE ASSESSEE. HENCE WE CONFIRM TH E ORDER OF THE CIT(A) THAT THE ADDITION OF RS.27,51,500 MAD E IN THE ASSESSMENT IS NOT SUSTAINABLE. 71. IN THE RESULT, THE APPEALS OF THE ASSSESSES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE REVENUE AP PEALS ARE DISMISSED. ITA NO.296 OF 2011 & OTHER APPEALS M/S P.R. GOPALA KRISHNA REDDY & OTHERS 39 ORDER PRONOUNCED IN THE OPEN COURT 16.1.2012 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH JANUARY, 2012 COPY FORWARDED TO: 1. DR. CP RAMASWAMI, ADVOCATE, FLAT NO.102 & 303, GITANJALI APARTMENTS, PLOT NO.108, SRINAGAR COLONY, HYDERABAD-73. 2. C/O SHRI P.R. GOPALA KRISHNA REDDY, H.NO.8-2- 674/B/3/2, ROAD NO.12, BANJARA HILLS, HYDERABAD- 34. 3. THE DCIT, CENTRAL CIRCLE 2, HYDERABAD 4. THE CIT(A)-III, HYDERABAD 5. THE CIT, HYDERABAD 6. THE DR, ITAT, HYDERABAD NP/