Mr. V. Ramachandra Rao, Hyderabad V. DCIT,Central Circle-6, Hyderabad

ITA 914/HYD/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69916 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 13-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Unexplained investment; Capital asset; Business income; Search and seizure; Cost of acquisition; Corroborative evidences; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.914/HYD/ 20 11 : ASSESSMENT YEAR 2002 - 03 ITA NO.915/HYD/2011 : ASSESSMENT YEAR 2004 - 05 ITA NO.916/HYD/2011 : ASSESSMENT YEAR 2005 - 06 ITA NO.1052./HYD/2011 : ASSESSMENT YEAR 2006 - 07 ITA NO.1053/HYD/2011 : ASSESSMENT YEAR 2007 - 08 ITA NO.313/HYD/2012 : ASSESSMENT YEAR 2008 - 09 SHRI V.RAMCHANDRA RAO , HYDERABA D (PAN AB KP V 9548 H ) V/S. DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 6 , HYDERABAD (APPELLANT) (RESPONDENT) AND ITA NO.900/HYD/2011 : ASSESSMENT YEAR 2003 - 04 ITA NO.901/HYD/2011 : ASSESSMENT YEAR 2004 - 05 ITA NO. 468 /HYD/1 2 : ASSESSMENT YEAR 2008 - 09 DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 6, HYDERABAD V/S. SHRI V.RAMCHANDRA RAO, HYDERABAD (PAN ABKPV 9548 H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. CHAITANYA KUMAR DEPARTMENT BY : SHRI D.SUDHAKAR RAO, CIT - DR DATE OF HEARING 9 .10.2013 DATE OF PRONOUNCEMENT 22.11.2013 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THERE ARE NINE APPEALS IN THIS BUNCH. SIX OF THEM A R E BY THE ASSESSEE AND THE BALANCE THREE ARE BY THE DEPA RTMENT. THEY ARE DIRECTED AGAINST SIMILAR BUT SEPARATE ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD FOR THE ASSESSMENT YEARS 2002 - 03 TO 2008 - 09. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 2 SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. ASSESSEES APPEAL : ITA NO.914/HYD/2011 : ASSESSMENT YEAR 2002 - 03 2. THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IN ITS APPEAL ITA NO.914/HYD/2011 FOR ASSESSMENT YEAR 2002 - 03 IS WITH REGARD TO ADDITION OF RS.25 LAKHS A S UNEXPLAINED INVESTMENT. THE SAID GROUND, BEIN G GROUND NO.2 READS AS FOLLOWS - THE HONBLE COMMISSIONER OF INCOME - TAX (A PPEALS ) - I, HYDERABAD IS NOT JUSTIFIED CONFIRMING THE ORDER O F THE ASSESSING OFFICER IN RESPECT OF ADDITION OF RS.25 LAKHS TO THE RE TURNED INCOME AS UN E XPLAIN E D INVESTMENT FOR THE AY 2002 - 03. ON THIS VERY ISSUE, THE ASSESSEE HAS ALSO RAISED GROUNDS IN ITS APPEALS FOR THE ASSESSMENT YEAR 2004 - 05 AND 2005 - 06, BEING ITA NOS.915/HYD/2011 AND 916/HYD/2011. 3. FACTS OF THE CASE IN B RIEF AS TAKEN FROM THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2002 - 03, VIZ. ITA NO.914/HYD/2011, IN RELATION TO THIS ISSUE ARE AS FOLLOWS - 4. THE ASSESSEE IS AN INDIVIDUAL. ON 17.10.2007. A SEARCH AND SEIZURE OPERATION UNDER S.132 OF THE ACT WAS CONDUCTE D IN THE RESIDENTIAL PREMISES OF THE ASSESSEE. CONSEQUENT TO THE SEARCH AND SEIZURE OPERATIONS, NOTICES UNDER S.153A WERE ISSUED ON 27.10.2008 FOR ASSESSMENT YEAR 2002 - 03 TO 2007 - 08 TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICES, THE ASSESSEE FILED IT S RETURNS OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 12.11.2009, ADMITTING INCOME OF RS.77,015. I N THE COU R SE OF TH E ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, WHILE EXAMINING THE RECEIPTS AND PAYMENTS OF ACCOUNT O F THE ASSESSEE FOR THE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 3 YEAR UNDER APPEAL NOTICED THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.25 LAKHS AS CASH LOAN FROM HIS HUF. THIS LOAN WAS STATED TO HAVE BEEN UTILISED BY THE ASSESSEE FOR PURCHASING LAND AS PER THE RECEIPTS AND PAYMENTS ACCOUNT. ON QUERY BEING RAISED BY THE ASSESSIN G OFFICER, THE ASSESSEE STATED THAT THE ASSESSEES HUF IS HAVING AGRICULTURAL INCOME AND FROM THE AGRICULTURAL INCOME, THE ABOVE LOAN HAS BEEN ADVANCED. THE ASSESSING OFFICER, AFTER TAKING NOTE OF THE SUBMI S SION S MADE BY THE ASSESSEE OBSERVED THAT THE ASS ESSEE HAS NO T DISCLOSED THE RECEIPT OF LOAN OR INVESTMENTS MADE FR O M THE LOAN EITHER IN THE O R IGIN A L RETURN OF INCOME FILED OR E VEN IN THE RETURN FIL E D IN RESPONSE TO NOTICE UNDER S.153A. THE FACT OF LOAN FROM HUF WAS ONLY SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER FURTHER NOTED THAT THOUGH THE ASSESSEE SUBMITTED INCOME TAX RET URN COPY OF THE HUF FOR THE IMPUGNED ASSESSMENT YEAR, SHOWING AGRICULTURAL INCOME O F RS.4,50,000, BUT WHEN THE ASSESSING OFFICER REQUESTED THE ASSESSEE TO PR ODUCE THE SALE BILLS OF AGRICULTURAL PRODUCE TO V ERIFY THE GENUINENESS OF THE AGRICULTURAL INCOME, NO SUCH BILLS WERE SUBMI T T E D B E FORE HIM. FROM THIS, THE ASSESSING OFFICER CONCLUDED THAT AGRICULTURAL INCOME SHOWN IN THE NAME OF THE HUF IS NO T GEN UINE AND THE SAID HUF HAS NO CAPAC I TY TO ADVANCE CASH LOAN OF RS.25 LAKHS TO THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED THE FACT THAT THE ASSESSEE ALSO HAS NO T FURNISHED EITHER ANY CONFIRMATION LETTER OR ANY OTHER EVIDENCE, WITH REGARD TO RECEIPT OF THE AFORESAID LOAN FROM THE HUF. THE ASSESSING OFFICER RELYING ON TH E RATIO LAID DOWN BY THE CALCUTTA HIGH COURT IN THE CASE OF BHARATI P. LTD. V/S. CIT (111 ITR 951) AND OF THE ORISSA HIGH COURT IN TH E CA S E OF CIT V/S. BAISHNAB CHARAN MOHANTI (212 ITR 195), HELD THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE IDENTITY OF THE CREDITOR, HIS CREDITWORTHINESS AS WELL AS THE GENUINENESS O F THE TRANSACTION. SIN C E THE ASSESSEE COULD NOT ESTABLISH THE AFORESAID THREE CONDITIONS, THE ASSESSING OFFICER HELD THAT CAS H LOAN OF RS.25 LAKHS IS NOT GENUINE AND BY TREATING IT AS UNEXPLAINED, MADE ADDITION OF THAT AMOUNT TO THE INCOME OF THE ASSESSEE. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 4 5. BEING AGGRIEVED OF SUCH ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BE FORE THE FIRST APPELLATE AUTHORITY, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE HUF HAS BEEN RECEIVING AGRICULTURAL INCOME SINCE THE YEAR 1990, AND HAS BEEN SUBMITTING INCOME - TAX RETURNS SHOWING AG R I C ULTURAL INCOME FROM THE YEAR 2000. IT W AS FURTH ER CONTENDED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD ALSO SUBMITTED COPIES OF THE ASSESSMENT ORDER PASSED IN THE CASE OF HUF, ALONGWITH CERTIFICATE FROM MRO TO P R OVE THE FACT THAT THE HUF WAS DERIVING INCOME FROM AGRICULTURAL SOURCES AND THE LOAN OF RS.25 LAKHS WAS F R OM THAT SOURCE ONLY. THE CIT(A), AFTER CONSIDERING THE CON T ENTION S O F THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIALS ON RECORD BEFORE HIM WAS OF THE VIEW THAT THE SUBMISSION MADE BY THE ASSESSEE ARE NOT ACCEPTABLE, B ECAUSE NO PRUDENT PERSON WILL KEEP SUCH HUGE AMOUNT OF CASH WITH HIM FOR EXTENDING THE LOAN. THE CIT(A) FURTHER NOTED THE FACT THAT IT IS NOT THE ONLY INSTANCE OF THE ASSESSEE HAVING RECEIVED CASH LOANS FROM THE HUF . IN SUBSEQUENT ASSESSMENT YEARS ALSO, I.E. ASSESSMENT YEARS 2004 - 05 AND 2005 - 06, THE ASSESSEE HAS SHOWN CASH LOANS OF RS.1,27,00,000 AND RS.1,46,00,000 FROM HUF. THE CIT(A) NOTING THE FACT THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE HUF IN FACT HAD GENERATED AGRICULTURAL INCOME OF ABO UT RS.3 CRORES TO EXTEND THE CASH LOAN TO THE ASSESSEE, UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE YEAR UNDER APPEAL. 6. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE MOSTLY REITERATING THE SUBMISSIONS MADE B EFORE THE LOWER AUTH O R I TI E S CONTENDED THAT THE HUF IS THE OWNER OF LARGE TRACT OF CULTIVABLE LAND AND WAS EARNING SUBSTANTIAL INCOME FROM AGRICULTURAL OP E RATION S SINCE THE YEAR 1990 AND THE CASH LOAN WAS FROM OUT OF SUCH ACCUMULATED AGRICULTURAL INCOME. IN THIS CONTEXT, THE LE ARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE ASSESSMENT ORDER DATED 24.10.2005 PASSED UNDER S.143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2004 - 05 IN RESPECT OF THE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 5 HUF, A COPY OF WHICH IS PLACED AT PAGE 49 OF THE PAPER - BOOK, TO SUBSTANTIATE HIS CONTENTION THAT THE HUF WAS HAVING INCOME FROM AGRICULTURAL SOURCES. FURTHER, REFERRING TO THE RECEIPTS AND PAYMENTS ACCOUNT FOR THE ASSESSMENT YEAR 2002 - 03 AND SUBSEQUENT ASSESSMENT YEARS, STATED TO HAVE BEEN SUBMITTED BEFORE THE LOWER AUTHORITY, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE LOAN RECEIVED WERE ALSO SHOWN BY THE ASSESSEE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDER OF THE LOWER AUTHORITIES SU BMITTED THAT THE ASSESSEE HAVING FAILED TO FURNISH ANY SUBSTANTIVE EVIDENCE TO PROVE THE SOU R CE OF CASH LOAN FROM THE HUF, THE ADDITION IS JUSTIFIED. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE LOAN OF RS.25 LAKHS STATED TO HAVE BEEN RECEIVED FROM THE HUF IS IN CASH. IT IS ALSO A FACT THAT IN SUBSEQUENT ASSESSMENT YEARS ALSO, THE ASSESSEE HAS SHOWN HUGE AMOUNT OF CASH LOANS OF RS.1,27,00,000 AND RS.1,46,00,000 FROM THE HUF, AND EXPLAINED THE SOU R CE FOR THE HUF TO BE ACCUMULATED SAVINGS FROM THE INCOME O F THE HUF FROM AGRICULTURE. HOWEVER, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE REJECTED THE CLAIM BY HOLDING THAT THE ASSESSEE HAS NOT BEEN A BLE TO FURNISH ANY EVIDENCE TO PROVE THE AF ORESAID CASH LOAN. ON THE OTHER HAND, IT IS THE CONTENTION OF THE ASSESSEE THAT THE HUF WAS HOLDING SUBSTANTIAL AGRICULTURAL LAND WHICH GENERATED SUBSTANTIAL INCOME TO EXTEND THE LOANS TO THE ASSESSEE. ON PERUSAL OF THE MATERIAL ON RECORD, THE ASSESSEE S CONTENTION THAT THE HUF WAS HOLDING SUBSTANTIAL AGRICULTURAL LAND AND WAS EARNING INCOME FROM AGRICULTURAL ACTIVITY CANNOT BE TOTALLY RULED OUT. THIS FACT IS FURTHER SUBSTANTIATED NOT ONLY BY THE RETURNS FILED BY THE HUF SHOWING AGRICULTURAL INCOME, BUT ALSO FROM THE FACT THAT THE DEPARTMENT HAS ACCEPTED AGRICULTURAL INCOME SHOWN BY THE HUF IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE ACT, A COPY OF ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 6 WHICH IS PLACED AT PAGE 49 OF THE PAPER - BOOK FILED BY THE ASSESSEE. THEREFORE, THE CONTENTION OF T HE ASSESSEE CANNOT BE REJECTED OUTRIGHT. HOWEVER, WHETHER CASH TO THE EXTENT OF LOAN ADVANCED TO THE ASSESSEE WAS ACTUALLY AVAILABLE WITH THE HUF IS REQUIRED TO BE PROVED BY THE ASSESSEE BY SUBMITTING EVIDENCE IN THE FORM OF EITHER CASH/FUND FLOW STATEMEN T OF THE HUF OR ANY OTHER EVIDENCE, WHICH CAN ESTABLISH THAT THE HUF WAS HAVING FUND AVAILABLE WITH IT TO ADVANCE THE LOAN TO THE ASSESSEE. ALL THESE ASPECTS HAVING NOT BEEN LOOKED INTO EITHER BY THE CIT(A) OR THE ASSESSING OFFICER. WE CONSIDER IT PROPER TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, FOR DECIDING AFRESH AFTER CONSIDERING ALL THE RELEVANT MATERIAL AND EVIDENCE AVAILABLE BEFORE HIM AND AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUND R0AISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. THE ONLY OTHER EFFECTIVE GROUND OF THE ASSESSEE IN THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 IS GROUND NO.3, WHEREIN THE ASSESSEE HAS CHALLENGED THE ADDITION OF AN AMOUNT OF RS.2,74,000 MADE ON ACCOUNT OF UN EXPLAINED INVESTMENT. NO SPECIFIC ARGUMENTS HAVE BEEN ADVANCED BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE FOR THE ASSESSEE ON THIS ISSUE. EVEN OTHERWISE ALSO, ON GOING THROUGH TH E FIN D IN G O F TH E CIT(A) IN PARA 8.2 OF THE IMPUGN E D ORDER, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER ON THIS ISSUE. THIS G R OUND IS ALSO ACCORDINGLY REJECTED. 10. REST OF THE GROUNDS OF THE ASSESSEE IN THE APPEAL FOR ASSESSMENT YEAR 2002 - 03 ARE GENERAL AND NEED NOT BE ADJU DICATED. 11. IN THE RESULT, ASSESSEES APPEAL FOR ASSESSMENT YEAR 2002 - 03, BEING ITA NO.914/HYD/2002 - 03, IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 7 DEPARTMENTS APPEAL ITA NO.900/HYD/2011 : ASSESSMENT YEAR 2003 - 04 12. EFFECTIVE GROUNDS OF THE RE VENUE IN THIS APPEAL, DIRECTED AGAINST THE ORDER OF THE CIT(A) I, HYDERABAD DATED 3.3.2011 READ AS FOLLOWS - 1. THE CIT(A) ERRED ON FACTS AND IN LAW INDIVIDUAL D ELETING THE AMOUNT O F RS.23,651,130 ADDED AS ACCRETION OF ADVANCES, IN TH E ABS E NCE OF ANY DOC UMENTARY EVIDENCE PRODUCED BY TH E ASSESSEE SUBSTANTIATING THE EXPENSES OF MAINTENANCE, TRAVEL, INCIDENTAL LAND LEGAL EXPENSES CLAIMED OUT OF THE ABOVE RECEIPT. 2. THE CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE AMOUNT OF RS.29,65,2790 ADDED AS INCOM E FROM OTHER SOU R CES, IN THE ABSENCE OF ANY DOCUM E N T ARY PRODUCED BY THE ASSESSEE SUBSTANTIATING THE RECEIPT AS EARNED FORM EXECUTING CIVIL WORKS. 13. AS FOR GROUND NO.1, RELATING TO ADDITION OF RS.23,61,130, FACTS IN BRIEF ARE THAT DURING THE ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER , AS DISCUSSED IN THE ASSESSMENT ORDER, NOTICED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR PURCHASE OF 51 ACRES OF LAND IN SURVEY NO.263 TO 270 OF PUPPALGUDA VILLAGE RAJENDRANAGAR MANDAL IN THE YEAR 1999 FR OM SYED NASEER AND P.DILIP KUMAR, WHO WERE GPA HOLDERS OF ORIGINAL LANDLORD FOR A CONSIDERATION OF RS.25,86,250 AND PAID PART OF THE SALE CONSIDERATION AS ADVANCE TO THEM. HE FURTHER NOTED THAT ONLY AGREEM E NT OF SALE WAS EXECUTED AND LAND WAS NOT REGI S TE RED IN THE NAME OF THE ASSESSEE AND ULTIMATELY, THE TRANSACTION DID NO T MATE R IALISE. THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE YEAR UNDER DISPUTE, 25 ACRES OUT OF THE ABOVE LAND WAS SOLD BY SYED NASEER AND DILIP KUMAR AND REGISTERED IN THE NAMES OF K.V.V.BALASUBRAMANIAM AND OTHERS FOR WHICH SYED NASEER AND DILIP KUMAR RECEIVED AN AMOUNT OF RS.36,11,250 FROM THE SAID PARTIES AND THE MONEY WAS REFUNDED TO THE ASSESSEE. TH E ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD SHOWN THE RECEIPT OF T HE ABOVE AMOUNT FROM THE PARTIES CONCERNED IN THE RECEIPT AND PAYMENT ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 8 ACCOUNT AND HAS ALSO FI L ED CONFIRMATION FROM SYED NASEEER AND DILIP KUMAR. THE ASSESSING OFFICER HOWEVER, NOTED THAT THE ASSESSEE HAD NOT ADMITTED THE ADDITIONAL AMOUNT RECEIVED WHICH I S ACCRETION TO THE ADVANCES GIVEN BY HIM IN THE RETURN FILED BY HIM. WHEN THE ASSESSING OFFICER MADE QUERY IN THIS REGARD, THE ASSESSEE CLAIMED THAT THE AMOUNT RECEIVED WAS EXPENDED TOWARDS MAINTEN A NCE, TRAVEL, INCIDENTAL EXPENSES AND LEGAL EXPENSES ETC. THE ASSESSING OFFICER OBSERVING THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE WITH REGARD TO THE CLAIM OF EXPENDITURE, DISALLOWED THE SAME. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS CLAIMED CERTAIN PAYMENTS TO SOME PERSONS, NAMELY, JAGAT SINGH, KAREEMUDDIN AND JAMALUDDIN TO SETTLE THE DISPUTES IN RESPECT OF THE ABOVE LAND, WHEREAS AS PER THE SALE DEEDS ENTERED BY K.V.V.BALASUBRAMAINAM AND NINE OTHERS WITH THE ORIGINAL LANDLORDS, IT COULD BE SEEN THAT THEY HAVE PAID FULL AND FINAL CONSIDER ATION TO THE LANDLORD. THEREFORE, THE PAYMENTS MADE BY THE ASSESSEE TO JAGAT SINGH, KAREEMUDDIN AND JAMALUDDIN CANNOT B E CON SI D E RED AS EXPENDITURE IN RESPECT OF THE LANDS IN QUESTION IN THE HANDS O F THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED THAT THOUGH THE ASSESSEE SUBMITTED THAT HE HAS ENTERED INTO AN AGREEMENT FOR THE PURCHASE OF 50 ACRES IN 1999 WITH SYED NASEER AND DILIP KUMAR, WHO WERE ORIGINAL GPA HOLDERS ON BEHALF OF THE LAND OWNERS, AND OUT O F THE ABOVE, 41 ACRES WERE SOLD BY SYED NASEE R AND DILIP KUMAR, PARTLY IN THE ASSESSMENT YEAR 2003 - 04 AND PARTLY IN ASSESSMENT YEAR 2004 - 05 TO K.V.V.BALASUBRAMANIAM AND NINE OTHERS AND BALANCE 9 ACRES OF LAND WAS RETAINED BY THE ASSESSEE WITH HIM. HOWEVER, THERE WERE DISPUTES REGARDING THE OWNERSHI P IN RESPECT OF THESE NINE ACRES ALSO, AS JAGAT SINGH, MUTYAM REDDY AND THE ORIGINAL PATTADAR, K AREEMUDDIN AND JAMALUDDIN CLAIMED OWNERSHIP RIGHTS IN THESE LANDS. THEREFORE, THE ASSESSEE HAD TO INCUR EXPENDITURE TOWARDS LEGAL CHARGES OR PAYMENTS TO THE A BOVE PARTIES FOR SETTLEMENT OF THE DISPUTES RELATING TO THE NINE ACRES OF LAND RETAINED BY HIM. THE ASSESSING OFFICER THEREFORE, CONCLUDED THAT SINCE THE EXPENDITURE INCURRED WAS NOT IN RESPECT OF 41 ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 9 ACRES OF LAND, WHICH IS ALREADY SOLD BY THE GPA HOLDER TO K.V.V.BALASUBRAMANIAM AND NINE OTHERS IN THE EARLIER ASSESSMENT YEARS, THE ASSESSEE IS NOT ENTITLED TO CLAIM THE EXPENDITURE TOWARDS PAYMENT MADE TO THE SAID PARTIES, AND ACCORDINGLY DISALLOWED THE EXPENDITURE CLAIMED OF RS.23,61,130 AND TREATED IT AS A CCRETION TO THE ADVANCES GIVEN BY THE ASSESSEE, BY ADDING IT TO THE TOTAL INCOME OF THE ASSESSMENT YEAR UNDER CONSIDERATION. 14. THE ASSESSEE CHALLENGED THE ADDITION IN APPEAL FILED BEFORE THE CIT(A). IT WAS CONTENDED BY THE ASSESSEE BEFORE THE CIT (A) THAT VARIOUS LITIGATION AND MAINTENANCE EXPENDITURE WAS INCURRED IN RESPECT OF THE LAND IN QUESTION AND IN THAT CONTEXT, PAYMENT OF RS.31.65 LAKHS WAS MADE TO JAGAT SINGH TOWARDS SETTLEMENT OF THE DISPUTES. THE ASSESSEE CONTENDED THAT ALL THESE EXPENDI TURE W ERE RECORDED IN THE RECEIPT AND PAYMENT ACCOUNT, WHICH HAS NO T AT ALL BEEN CONSIDERED BY THE ASSESSING OFFICER IN SPITE OF THE FACT THAT THE SAME WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS . THE ASSESSEE FURTHER CONTENDED THAT SINCE THE EXPENDIT URE INCLUDING PAYMENT MADE TO JAGAT SINGH WAS INCURRED IN RELATION TO THE ENTIRE LAND, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN OBSERVING THAT THE EXPENDITURE WAS NOT IN RESPECT OF 41 ACRES OF LAND. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT ALL THE E XPENDITURE CLAIMED TOWARDS PAYMENT MADE TO JAGAT SINGH AND O T HERS IN RESPECT OF THE LAND IN DISPUTE HAS BEEN CLAIMED IN THE RETURN FILED FOR THE ASSESSMENT YEAR 2008 - 09, WHERE THE CONSIDERATION RECEIVED TOWARDS SALE OF 41 ACRES OF LAND WAS ALSO SHOWN. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIALS AVAILABLE ON RECORD, NOTED THAT THE ASSESSMENT RECORDS DO INDICATE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FILED VARIOUS DOCUM E N T S AND MON EY RECEIPTS IN RESPECT OF PAYMENTS MADE TO JAGAT SINGH, KAREEMUDDIN GROUP, JAMALUDDIN GROUP, ETC. HE ALSO NOTED THE FACT THAT THE CLAIM OF EXPENDITURE MADE BY THE ASSESSEE WAS DISALLOWED IN ASSESSMENT YEAR 2008 - 09 ON THE GROUND THAT ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 10 THE PAYMENT MADE DID N OT PERTAIN TO 42 ACRES OF LAND . THE CIT(A), REFERRING TO THE DETAILS OF LAND TRANSACTIONS IN RESPECT OF SURVEY NO.262 TO 274 IN PUPPALGUDA VILLAGE NOTED THAT AS PER THE FACTS AVAILABLE ON RECORD, THE LAND UNDER THE SAID SURVEY NO. WAS UNDER VARIOUS LITIG ATIONS AND HAS BEEN SUBJECTED TO SALE IN MULTIPLE TRANSACTIONS WITH VARIOUS PARTIES. HE NOTED THAT ALL THE LI TI GATIONS WERE ULTIMATELY SETTLED BY VIRTUE OF AN ORDER PASSED BY LOK ADALAT IN AUGUST, 2007 WHEREUN D ER THE RIGHTS OVER THE LAND WERE FINALLY PAS SED TO DEMI REALTORS AS PER THE TERMS MENTIONED IN TH E SAID ORDER AND ULTIMATELY. THE LAND WAS REGISTERED IN THE NAMES OF GROUP COMPANIES OF DLF, WHO ARE THE ULTIMATE BUYERS. THE CIT(A) FURTHER NOTED THE FACT THAT THE ASSESSEE AS WELL AS JAGAT SINGH WERE ALSO PARTIES TO THE PROCEEDINGS BEFORE THE LOK ADALAT. FROM THIS, THE CIT(A) CONCLUDED THAT THE FACT THAT THERE WERE VARIOUS LITIGATIONS AND PAYMENTS MADE IN RELATION THERETO CANNOT ALTOGETHER BE RULED OUT. THE CIT(A) ALSO NOTED THE SIMILAR FACTS IN RESP ECT OF THE AGREEMENT OF SALE ENTERED INTO BY THE ASSESSEE WITH SYED NASEER AND DILIP KUMAR. THE CIT(A), ON GOING THROUGH THE AGREEMENT OF SALE DATED 22.2.1999 FOUND THAT THE SAID SALE AGREEMENT CLEARLY MENTIONS THAT THE VENDORS THROUGH GPA HOLDERS HAD OFF ERED TO SELL THE SCHEDULED LAND OF 51 ACRES AND 29 GUNTAS TO THE ASSESSEE AT THE RATE OF RS.50,000 PER ACRE, WITH EXISTING LITIGATIONS WHICH THE ASSESSEE AGREED TO CLEAR AT HIS OWN COST. ACCORDING TO THE CIT(A), THE LI T I GAT ION EXI S TED FOR THE ENTIRE LAND OF 51 ACRES 29 GUNTAS AND NOT RESTRICTED TO 9 ACRES AS HELD BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE CIT(A) ALSO NOTED THAT THE AGREEMENT FURTHER INDICATED THAT THE VENDEE HAS TO BEAR ALL THE MAINTENANCE EXPENDITURE AND COURT FEE ETC. PAYABLE TO REVENUE DEPARTMENT. HENCE, THE ASSESSEES CLAIM OF INCURRING EXPENDITURE CANNOT SIMPLY BE BRUSHED ASIDE AS BASELESS. SO FAR AS THE ASSESSEES CLAIM OF PAYMENT MADE TO JAGAT SINGH AND OTHERS IS CONCERNED, THE CIT(A) NOTED THAT THE ASSESSEE HAS FILED MONEY RECEIPTS IN RESPECT OF PAYMENT OF RS.31.65 LAKHS TO JAGAT SINGH. THE MONEY RECEIPTS ALSO REVEALED THE FACT THAT THE SAID PAYMENT WAS RECEIVED BY JAGAT SINGH IN RESPECT OF 42 ACRES ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 11 OF LAND IN SURVEY NO.262 TO 274 IN P UP P PA LGUDA VILLAGE. THEREFORE, IT CANNOT BE SAID THAT THE PAYMENTS MADE TO JAGAT SINGH AND OTHERS BY THE ASSESSEE HAD NO CONNECTION WITH THE 42 ACRES OF LAND. THE CIT(A) FURTHER HELD THAT THE ASSESSING OFFICER WHILE TREATING THE AMOUNT OF RS.23,61,130 AS ACCRETION TO THE ADVANCE HAD NOT GIVEN THE BASIS ON WHICH HE ARRIVED AT SUCH FIGURE. THE CIT(A) OBSERVED THAT THOUGH IT IS NOT DISPUTED THAT DURING THE YEAR THE ASSESSEE HAS RECEIVED RS.36,11,250 FROM DILIP KUMAR AND SYED NASEER AND THE SAME HAS ALSO BEEN SHOWN IN THE RECEIPTS AND PAYMEN T ACCOUNT BY THE ASSESSEE. FROM THIS FIGURE, THE ASSESSEE HAS REDUCED THE LAND COST TAKEN AT RS.12,51,120 AND ARRIVED AT THE FIGURE OF ACCRETION TO ADVANCE AT RS.23,61,130, IN THE PROCESS DISALLOWING THE PAYMENT MADE TO JAGAT SINGH AND OTHERS TOWARDS LITIG ATION EXPENSES ETC. WHEREAS THE MONEY RECEIPTS SUBMI T TED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, CLEARLY SHOW THAT PAYMENTS WERE IN FACT MADE TO JAGAT SINGH. IT IS ALSO A FURTHER FACT THAT THE SAME ASSESSING OFFICER WHILE FINALIZING THE ASSESSMEN T IN THE CASE OF JAGAT SINGH FOR THE ASSESSMENT YEAR 2008 - 09, HAD MADE AN ADDITION OF RS.31.65 LAKHS IN RESPECT OF PAYMENTS RECEIVED FROM RAMCHANDRA RAO, THE PRESENT ASSESSEE IN THE ASSESSMENT YEAR 2003 - 04. ON CONSIDERING THE AFORESAID FACTS, THE CIT(A) CONCLUDED THAT WHEN THE ASSESSING OFFICER HAS ASSESSED THE AMOUNT OF RS.31.65 LAKHS AT THE HANDS OF JAGAT SINGH, BEING THE AMOUNT RECEIVED FROM THE PRESENT ASSESSEE, CREDIT FOR THE IDENTICAL AMOUNT SHOULD BE GIVEN TO THE ASSESSEE, BY TREATING IT AS AN OUT GOING IN HIS HANDS. THE CIT(A) THUS CONCLUDED THAT IF THE PAYMENT OF RS.31.65 LAKHS MADE TO JAGAT SINGH IS CONSIDERED AS AN EXPENDITURE AT THE HANDS OF THE ASSESSEE, THEN IN EFFECT, THERE WOULD BE NO ACCRETION TO THE ADVANCE RECEIVED AS WORKED OUT BY THE ASSESSING OFFICER. ACCORDINGLY, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 15. WE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE AS WELL AS THE MATERIAL ON RECORD, INCLUDING THE DOCUMENTS SUBMITTED IN THE FORM OF PAPER - BOOK BY ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 12 THE ASSESSEE. AS CAN BE SEEN FROM THE FACTS ELABORATELY DISCUSSED IN THE ORDER OF THE CIT(A), THE LAND IN QUESTION WAS SUBJECTED TO MULTIPLE SALE TRANSACTIONS BETWEEN DIFFERENT PARTIES AND ALSO SUBJECTED TO A SERIES OF LITIGATIONS, WHICH ULTIMATELY ATTAINED FINALITY BY VIRTUE OF AN ORDER PASSED BY THE LOK ADALAT IN AUGUST, 2007, CONFERRING THE RIGHTS OVER THE LAND UPON DEMI REALTORS, AND ULTIMATELY THE LAND WAS FINALLY REGISTERED IN THE NAME OF DLF GROUP OF COMPANIES, WHO WERE THE ULTIMATE BUYERS. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE AS WELL AS OTHER INTERMEDIARIES LIKE JAGAT SINGH AND OTHERS WERE PARTY TO THE PROCEEDINGS BEFORE THE LOK ADALAT. HENCE, THE ASSESSEES CLAIM THAT IT HAS INCURRED EXPEND ITURE TOWARDS LITIGATION EXPENDITURE AND PAYMENTS TO THE INTERMEDIARIES I.E. JAGAT SINGH AND OTHERS, CANNOT BE ALTOGETHER RULED OUT AS BASELESS, WHEN IT IS NOT DISPUTED THAT THE ASSESSEE HAD IN FACT HAD ENTERED INTO AN AGREEMENT OF SALE WITH THE GPA HOLD ERS FOR PURCHASE OF 51 ACRES AND 29 GUNTAS OF LAND UNDER SURVEY NOS.262 TO 274 IN PUPPALGUDA VILLAGE. THE MONEY RECEIPTS SUBMITTED BEFORE THE ASSESSING OFFICER, WHICH FORM PART OF THE PAPER - BOOK SUBMITTED BEFORE US, ALSO ESTABLISH THE ASSESSEES CLAIM OF PAYMENT BEING MADE TO JAGAT SINGH AND OTHERS. IT IS ALSO A FACT THAT THE PAYMENT MADE BY THE ASSESSEE TO JAGAT SINGH AMOUNTING TO RS.31.65 LAKHS HAS BEEN ASSESSED AS INCOME IN HIS HANDS. IN THE AFORESAID CIRCUMSTANCES, THE ASSESSING OFFICER WAS NOT CORRE CT IN TREATING THE AMOUNT OF RS.23,61,130 AS INCOME OF THE ASSESSEE, BEING ACCRETION TO THE ADVANCE GIVEN, IGNORING THE EVIDENCES FURNISHED BY THE ASSESSEE AND OTHER FACTS AND MATERIAL AVAILABLE ON RECORD. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. THE SAME IS ACCORDINGLY UPHELD AND THE FIRST GROUND OF THE REVENUE IN THIS APPEAL IS REJECTED. 16. THE NEXT GROUND IN THE APPEAL OF THE REVENUE IS WITH REGARD TO THE CIT(A) DELETING THE ADDITION OF RS.29,65,279 , BEING INCOME FROM OTHER SOU R CES BY THE ASSESSING OFFICER. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 13 17. BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN RECEIPTS FROM EXECUTION OF CIVIL CONTRACT WORKS AT RS.32,23,129 AND COMPUTED NET PROFIT THEREON AT THE RATE OF 8% UNDER S.44AD AND SHOWN INCOME OF RS.2,57,850. THE ASSESSING OFFICER, OBSERVING THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO PROVE THAT THE ABOVE RECEIPTS WERE FROM EXECUTION OF CIVIL CONTRACT WORKS, TREATED THE SAME AS INCOME FROM OTHER SOURCES AND ADDED IT TO THE TOTAL INCOME O F TH E ASSESSEE , HOLDING IN THE PROCESS THAT THE PROVISIONS OF S.44AD IS NOT APPLICABLE TO SUCH RECEIPTS. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSE E CHALLENGED THE SAME BEFORE THE CIT(A). 18. IN THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSEE HAS IN FACT CARRIED ON CIVIL CONTRACT WORKS ON SUB - CONTRACT BASIS AND RECEIVED AN AMOUNT O F RS.32,23 ,129. IT WAS FURTHER SUBMITTED THAT THE CONTRACTEE HAS ALSO DEDUCTED TAX AT SOURCE ON THE ABOVE RECEIPTS AMOUNTING TO RS.33,843 AND THE ASSESSEE HAS CLAIMED CREDIT FOR THE SAME, AND PAID THE BALANCE A MOUNT O F TAX. IT WAS SUBMITTED BY THE ASSESSEE THAT T HE ASSESSING OFFICER WITHOUT VERIFYING THE TDS CERTIFICATE AS WELL AS CLAIM MADE IN THE RETURN OF INCOME FOR CREDIT IN RELATION THERETO, WAS NO T JUSTIFIED IN TR E ATING THE INCOME AS FROM OTHERS S OU R CES, PARTICULARLY WHEN THE ASSESSEE HAS SHOWN THE AFORESAID RECEIPTS FROM CIVIL CONTRACT WORK IN THE RETURN FILED IN THE NORMAL COURSE PRIOR TO THE SEARCH, AND WHICH WAS ALSO ACCEPTED UNDER S.143(1) OF THE ACT. TH E CIT(A) , ON CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND GOING THROUGH THE MATERIALS ON R E CORD, N OTED THAT THE ASSESSEE ALONGWITH RETURN FILED FOR THE YEAR UNDER APPE A L IN NORMAL COURSE, HAD ENCLOSED FORM NO.16A, BEING THE TDS CERTIFICATE, IN FAVOUR OF SRINIVASA CONSTRUCTIONS, WHICH SHOWS THAT AN AMOUNT OF RS.32,23,129 WAS PAID TO THE ASSESSEE WITH A TDS OF RS.33,843, BY THE CON T RACTEE M/S. SOMA ENTERPRISES LTD. IN THE COMPUTATION OF INCOME ACCOMPANYING THE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 14 R ETURN, THE ASSESSEE HAD SHOWN THE AFORESAID GROSS RECEIPTS OF RS.32,23,129 UNDER THE HAD BUSINESS, AND CALCULATED PROFIT AT THE RATE OF 8% UNDER S.44AD. AFTER AD J U S TIN G THE TDS OF RS.33,843, THE ASSESSEE HAD PAID THE BALANCE AMOUNT O F RS.26,143, BY WAY OF SELF ASSESSMENT TAX. THE CIT(A) FURTHER TOOK NOTE OF THE FACT THAT IN THE INTIMATION ISSUED UNDER S.143(1) OF THE ACT PRIOR TO THE DATE OF SEARCH, THE AFORESAID INCOME RETURNED BY THE ASSESSEE FROM EXECUTION OF CIVIL CONTRACT WORKS WAS ACCEPTED, AND CREDIT FOR SELF - ASSESSMENT TAX AND TDS WAS ALSO GRANTED. THE CIT(A), THEREFORE ON THE BASIS OF THE AFORESAID FACTS HELD THAT WHEN THE ASSESSE E HAD OFFERED THE INCOME FROM THE AMOUNT RECEIVED OF RS.32,23,1290 FROM EXECUTION OF CIVIL CONTRACT WORKS IN THE RETURNS FILED IN THE NORMAL COURSE PRIOR TO THE DATE OF SEARCH, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE SELF - SAME RECEIPT FROM EXECUTION OF CONTRACT WORKS AS INCOME FROM OTHER SOURCES AND ADDING IT TO THE INCOME OF THE ASSESSEE IN THE PROCEEDING UNDER S.153 A OF THE ACT. 19. WE HEARD THE SUBMISSIONS OF THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS OTHER MATE RIAL ON RECORD. AS CAN BE SEEN FROM THE ORDER OF THE CIT(A), THE AMOUNT OF RS.32,23,129 REPRESENTS THE RECEIPTS FROM EXECUTION OF CIVIL CONTRACT WORKS. THIS FACTUAL ASPECT IS BEYOND ANY PALE OF DOUBT, SINCE IT IS SUBSTANTIATED BY THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE. THIS HAS ALSO BEEN ACCEPTED BY THE DEPARTMENT IN THE ASSESSMENT UNDER S.143(1) OF THE ACT, MADE PRIOR TO THE DATE OF SEARCH. A PERUSAL OF THE TDS CERTIFICATE ISSUED BY THE CONTRACTEE, M/S. SOMA ENTERPRISES LIMITED, IN F A VOUR O F M/S. SRINIVASA CON S TRUCTIONS WHICH IS PROPRIETARY CONCERN OF THE ASSESSEE, CLEARLY ESTABLISHES THE FACT THAT THE AFORESAID RECEIPT OF RS.32,23,129 IS TO WA RDS EXECUTION OF CIVIL CONTRACT WORK ENTRUSTED BY THE CONTRACTEE M/S. SOMA ENTERPRISES LTD., TO THE PROPRIETARY CONCERN OF THE ASSESSEE AS A SUB - CONTRACTOR. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAS NOT ONLY DISCLOSED THIS RECEIPT FROM CIVIL CONTRACT WORKS IN THE RETURN OF INCOME FILED ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 15 FOR THE IMPUGNED ASSESSMENT YEAR IN THE NORMAL COURSE, PR IOR TO THE DATE OF SEARCH, BUT HAS ALSO ESTIMATED INCOME FROM SUCH RECEIPTS BY APPLYING THE PROVISIONS OF S.44AD OF THE ACT AND PAID TAXES ON SUCH INCOME. IN THE AFORESAID CIRCUMSTANCES, THE ASSESSING OFFICER COULD NOT HAVE TREATED THE ENTIRE CONTRACT REC EIPTS AS INCOME FROM OTHER SOURCES, MORE SO IN A PROCEEDING UNDER S.153A OF THE ACT, WHEN THE ASSESSEE HAS ALREADY DECLARED SUCH RECEIPTS AND OFFERED INCOME THEREFROM IN THE RETURN FILED IN THE NORMAL COURSE PRIOR TO THE SEARCH. IN THE AFORESAID VIEW OF TH E MATTER, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE APPEAL OF THE R E VENUE FOR THE ASSESSMENT YEAR 2003 - 04. 20. IN THE RESULT, REVENUES APPEAL, ITA NO.900/H Y D/2011, FOR ASSESSMENT YEAR 2003 - 04, IS DIS MISSED. CROSS APPEALS FOR ASSESSMENT YEAR 2004 - 05 21. THESE CROSS APPEALS FOR ASSESSMENT YEAR 2004 - 05 ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD DATED 3.3.2011. ASSESSEES APPEAL : ITA NO.915/HYD/2011 22. LET US FIRST TAKE UP FOR CONSIDERATION THE ASSESSEES APPEAL. 23. FIRST EFFECTIVE GROUND RELATES TO ADDITION OF RS.1,27,00,000, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT OF THE ASSESSEE. FACTS AND CIRCUMSTANCES OF THE CASE AND ARGUMENTS OF THE PARTIES IN RELATION TO THIS GROUND ARE IDENTICAL TO THE ONE CONSIDERED BY US WHILE DEALING WITH THE CORRESPON D ING ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY TH E CIT(A) FOR THE ASSESSMENT YEAR 2002 - 03. HENCE, FOR THE DETAILED REASONS GIVEN BY US, IN THE CONTEXT OF ASSESSEES APPEAL FOR THAT YEAR, BEING ITA NO.914/H Y D/2011 FOR THAT YEAR, VIDE PARA ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 16 NO. 8 , HEREINABOVE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER, TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AND AF TER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 24. THE NEXT EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO ADDITION OF RS.22,80,000 MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A), AS UN E XPLAINED INVESTMENT OF THE ASSESSEE. 25. BRIEFLY THE FACTS OF THE CASE IN RELATION TO THIS GROUND ARE THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICED THAT IN THE RECEIPTS AND PAYMENTS ACCOUNT SUBMITTED BEFORE HIM, THE ASSESSEE HAS SHOWN CERTAIN AMOUNTS RE CEIVED FROM SALE OF LANDS AT DIFFERENT PLACES AS UNDER - ( 1 ) KONDAPUR RS.10,18,500 ( 2 ) GACHCHIBOWLI RS. 3,00,000 ( 3 ) NARSINGI VILL. RS.35,85,000 ( 4 ) PUPPALAGUDA RS.20,00,000 26. THE ASSESSING OFFICER HOWEVER, NOTED THAT THE ASSESSEE NEITHER FURNISHED ANY C ONFIRMATION LETTER NOR ANY OTHER EVIDENCE IN RESPECT OF THE ABOVE RECEIPTS FROM SALE OF LAND TO ESTABLISH THE FACT THAT THE AMOUNTS REPRESENTS SALE CONSIDERATION OF LAND. HE FURTHER NOTED THAT NEITHER IN THE ORIGINAL RETURN OF INCOME NOR IN THE R E TURN FILE D IN RESPONSE TO NOTICE UNDER S.153A, THE ASSESSEE HAD ADMITTED ANY CAPITAL GAIN OR BUSINESS INCOME IN RESPECT OF THE SALE OF THE ABOVE LANDS. ON THE AFORESAID BASIS, THE ASSESSING OFFICER PROCEEDED TO ADD THE AMOUNT OF RS.69,03,500 AS UNEXPLAINED INCOME/I NVESTMENT OF THE ASSESSEE OF THE IMPUGNED ASSESSMENT YEAR. 27. THE ASSESSEE CHALLENGED THE ABOVE ADDITION MADE IN AN APPEAL BEFORE THE CIT(A). IN THE COURSE OF HEARING OF THE APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE DETAILS OF SALE OF LAN D MADE BY HIM. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 17 THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER ON THE BASIS OF DETAILS SUBMITTED BY THE ASSESSEE. IN THE REMAND REPORT SUBMITTED, THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS, STATED THAT AS REGARDS SALE OF LAND AT KO NDAPUR, THE ENCUMBRANCE CERTIFICATE FILED BY THE ASSESSEE SHOWS THAT THE ASSESSEE WAS EXECUTANT ALONGWITH FOUR OTHERS. HENCE, THE CONSIDERATION OF RS.10,18,500 SHOWN AS THE SALE CONSIDERATION HAS TO BE DIVIDED AMONG ALL THE EXECUTANTS AND THE ASSESSEES SHARE BEING 1/6 TH , COMES TO RS.1,69,750. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE LAND IN QUESTION WAS NOT AN AGRICULTURAL LAND AND HENCE THE SALE CONSIDERATION CANNOT BE TREATED AS EXEMPT FROM CAPITAL GAINS. THE CIT(A), ON CONSIDERING THE REPO RT OF THE ASSESSING OFFICER, HELD THE VIEW THAT OUT OF TOTAL AMOUNT OF RS.10,18,500 SHOWN BY THE ASSESSEE IN THE RECEIPTS AND PAYMENTS ACCOUNT TOWARDS SALE OF LAND AT KOPNDAPUR, AN AMOUNT OF RS.1,69,750 REMAINS EXPLAINED AND THE BALANCE AMOUNT OF RS.8,48,7 50 IS TO B E TRE A TED AS UN E XPLAIN E D. SO FAR AS SAL E OF L A N D AT GACHCHIBOWLI IS CONCERNED, THE ASSESSING OFFICER IN THE REMAND REPORT OBSERVED THAT THE ASSESSEE COULD NO T PRODUCE ANY DOCUMENTARY E VI D ENCE IN RESPECT OF THE SALE O F THE SAID LAND. HENCE, HE O PINED THAT THE ENTIRE A MOUN T O F RS.3,00,000 SHOWN TOWARDS SALE OF SUCH LAND IN THE RECEIPTS AND PAYMENTS ACCOUNT, REMAINS UNEXPLAINED AND CONSEQUENTLY, THE ADDITION MADE IS TO BE CONFIRMED. IN ABSENCE OF ANY EVIDENCE FROM THE SIDE OF THE ASSESSE TO CONTROV ERT THE FINDING OF THE ASSESSING OFFICER, THE CIT(A) ACCEPTED THE VIEW OF THE ASSESSING OFFICER. SO FAR AS SALE O F LAND AT NARSINGI VILLAGE IS CONCERNED, THE ASSESSING OFFICER AFTER EXAMINING THE ENCUMBRANCE CERTIFICATE OBSERVED THAT T HE SAID LAND SITUATED AT SURVEY NO.203 AND 204 WAS PURCHASED FOR A CONSIDERATION OF RS.16.31 LAKHS AS GP A HOLDER AND WAS SOLD DURING THE IMPUGNED ASSESSMENT YEAR FOR RS.35,85,000. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER THE CERTIFICATE ISSUED BY HUDA, THE SAID LAND S WERE CATEGORIZED AS AGRICULTURAL LANDS. THOUGH THE ASSESSEE SUBMITTED THAT THE COST OF ACQUISITION OF THE SAID LAND AT NARSINGI VILLAGE DURING THE IMPUGNED ASSESSMENT YEAR WAS ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 18 RS.16,31,250, HOWEVER, ON EXAMINING THE RECEIPTS AND P A YMENT ACCOUNT FILED BY THE ASSESSEE FOR THE VERY SAME ASSESSMENT YEAR, IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN PAYMENT OF RS.5 LAKHS FOR THE SAID LAND AT NARSINGI VILLAGE IN SURVEY NO.203 AND 204. THE CIT(A) THEREFORE, CONCLUDED THAT THE ASSESSEE HAD INFLATED THE COST OF AC QUISITION TO THE EXTENT OF RS.11,31,250. HE ACCORDINGLY, OUT OF THE TOTAL ADDITION OF RS.35,85,000 MADE BY THE ASSESSING OFFICER, IN RESPECT OF THE LANDS AT NARSINGI VILLAGE, THE CIT(A) SUSTAINED AN ADDITION OF RS.11,31,250. AS REGARDS LAND AT PUPPALGUD A , SALE CONSIDERATION OF WHICH WAS SOLD BY THE ASSESSEE AT RS.20 LAKHS, THE ASSESSING OFFICER AFTER EXAMINING THE DOCUMENT STATED IN THE REMAND REPORT THAT THE ASSESSEE HAS PRODUCED TWO SALE DEEDS DATED 2.6.2003 AND 4.6.2003 INDICATING SALE OF TEN ACRES OF LAND FOR A CONSIDERATION OF RS.9 LAKH AND RS.11 LAKH RESPECTIVELY, TOTAL AGGREGATING TO RS.20 LAKHS. THE PURCHASE DEED SUBMITTED BY THE ASSESSEE, INDICATED THAT THESE LANDS WERE PURCHASED ON 28.3.2002. THE CIT(A) ON EXAMINING THE SALE DEEDS, AS WELL AS OTHER MATERIALS AVAILABLE ON RECORD, INCLU D IN G THE R E C E IPTS AND PAYMENTS ACCOUNT FIL E D BY THE ASSESSEE FOUND THAT THE ASSESSEE HAD SHOWN PURCHASE OF AGRICULTURAL LAND IN SURVEY NO.285 AT PUPPALGUDA VILLAGE FOR RS.17,25,000 AND THE RECEIPT OF SALE CONSIDER ATION OF RS.20 LAKHS IS AS PER THE SALE DEED EXECUTED BY THE ASSESSEE. HENCE, THE CIT(A) WAS OF THE VIEW THAT NO ADDITION CAN BE MADE SO FAR AS SALE OF AGRICULTURAL LAND AT PUPPALGUDA VILLAGE IS CONCERNED. THUS, OUT OF THE TOTAL ADDITION OF RS.69,03,500 MADE BY THE ASSESSING OFFICER , THE CIT(A) CONFIRMED THE ADDITION OF RS.22,80,000, DELETING THE BALANCE AMOUNT OF ADDITION MADE BY THE ASSESSING OFFICER. 28. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD, INC LUDING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. IT IS THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE BEFORE US THAT THE ASSESSEE HAD RECEIVED ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 19 ON - MONEY IN EXCESS OF WHAT HAS BEEN SHOWN AS SALE CONSIDERATION IN THE SALE DEED, WHICH HAS BEEN SHOWN IN THE RECEIPTS AND PAYMENTS ACCOUNT. 29. HOWEVER, SUCH CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE IN THE ABSENCE OF ANY SUPPORTING EVIDENCE TO INDICATE ACTUAL RECEIPT OF ON - MONEY. IN OUR VIEW, IT IS ONLY AN ATTEMPT MADE BY THE ASSESSEE TO EXPLAIN AWAY THE SOURCE OF INVESTMENT MADE BY HIM IN THE PURCHASE OF LAND. SINCE THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO CONTROVERT THE FINDING OF THE CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE WITH A THE ORDER OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, THE IMPUGNED ORDER OF THE CIT(A) IS UPHELD AND THE GROUNDS OF THE ASSESSEE ON THIS ISSUE ARE REJECTED. 30. IN THE RESULT, ASSESSEES APPEAL FOR ASSESSMENT YEAR 2004 - 05, BEING ITA NO.915HYD/2011, IS PARTLY ALLOWED FOR STATISTICA L PURPOSES. REVENUES APPEAL : ITA NO.901/HYD/2011 31. THE ONLY EFFECTIVE GROUND OF THE DEPARTMENT IN THIS APPEAL RELATES TO ADDITION OF RS.17,35,173, MADE BY THE ASSESSING OFFICER, BUT DELETED BY THE CIT(A), ON ACCOUNT OF ACCRETION TO ADVANCE. FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS OF THE PARTIES IN RELATION TO THIS GROUND ARE IDENTICAL TO THE ONE CONSIDERED BY US WHILE DEALING WITH THE CORRESPONDING ADDITION MADE BY THE ASSESSING OFFICER AND DELETED BY THE CIT(A) FOR THE ASSESSMENT YE AR 2003 - 04. HENCE, FOR THE DETAILED REASONS GIVEN BY US, IN THE CONTEXT OF REVENUES APPEAL FOR THAT YEAR, BEING ITA NO.900/HYD/2011 VIDE PARA NO. 19 , HEREINABOVE, WE FIND NO INFIRMITY IN THE IMPU G N E D ORDER O F THE CIT(A). WE ACCORDINGLY UPHOLD THE SAME, A ND REJECT THE GROUNDS OF THE REVENUE ION THIS APPEAL. 32. IN THE RESULT, REVENUES APPEAL ITA NO.901/HYD/23011 FOR ASSESSMENT YEAR 2004 - 05 IS DISMISSED. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 20 ASSESSEES APPEAL : ITA NO.916/HYD/2011 : ASSESSMENT YEAR 2005 - 0 6 33. IN THIS APPEAL, DIR ECTED AGAINST THE ORDER OF THE CIT(A) - I, HYDERABAD DATED 3.3.2011, THE ONLY EFFECTIVE GROUND OF THE ASSESSEE RELATES TO ADDITION OF RS.1,46,00,000, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT OF THE ASSESSEE. FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS OF THE PARTIES IN RELATION TO THIS GROUND ARE IDENTICAL TO THE ONE CONSIDERED BY US WHILE DEALING WITH THE CORRESPONDING ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2002 - 03. HE NCE, FOR THE DETAILED REASONS GIVEN BY US, IN THE CONTEXT OF ASSESSEES APPEAL FOR THAT YEAR, BEING ITA NO.914/HYD/2011 FOR THAT YEAR, VIDE PARA NO. 8 , HEREINABOVE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER, TO DECIDE THE SAME AFRESH IN ACCOR DANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 34. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06, BEING ITA NO.916/HYD/2011, IS ALLOWED FOR STATISTICAL PURPOSES. ASSESSEES APPEAL : ITA NO. 1052 /HYD/2011 : ASSESSMENT YEAR 200 6 - 0 7 35. IN THIS APPEAL DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD DATED 21.3.2011, FOR TH E ASSESSMENT YEAR 2006 - 07, THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IS WI TH REGARD TO THE ADDITION OF RS.10,24,033, BEING SUSTAINED BY THE CIT(A) OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF UNEXPLAINED INVESTMENT. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 21 36. D U RIN G THE ASSESSMENT PROCEEDINGS, ON EXAMINING THE RECEIPTS AND PAYMENTS ACCOUNT SU BMITTED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN CERTAIN AMOUNTS FROM SALE OF LAND WHICH ARE AS UNDER - ( A ) PUPPALGUDA LAND AT SURVEY NO.294/2 RS.13,07,500 ( B ) PUPPALGUDA LAND AT SURVEY NO.295/1 RS.10,00,000 ( C ) GOVINDAPUR LAND RS.37,83,500 ( D ) SALE OF LAND TO BHARGAVI CONSTRUCTIONS RS.25,00,000 ( E ) SALE OF LAND IN SURVEY NO.272 TO 274 RS. 7,50,000 THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NEITHER FURNISHED ANY CONFIRMATION LETTER NOR ANY OTHER EVIDENCE WITH REGARD TO THE S ALE OF THE AFORESAID LAND. SIN C E THE AFORESAID AMOUNT STA T ED TO HAVE BEEN FROM OU T O F THE SALE OF LAND WAS USED BY THE ASSESSEE FOR MAKING VARIOUS INVE S TM E NTS AS PER TH E R E C E IPTS AND PAYMENTS ACCOUNT WHICH WAS NEITH E R SHOWN IN THE ORIGINAL RETURN O F INCOM E, NOR IN THE RETURN FILED UNDER S.153A, ADMITTING CAPITAL GAIN/BUSINESS INCOME, THE ASSESSING OFFICER TREATED THE ENTIRE RECEIPTS OF RS.93,41,000 AS UNEXPLAINED INCOME/INVESTMENT OF THE ASSESSEE. 37. DURING THE APPE A L PROCEEDINGS, THE CIT(A) ON THE BASI S O F THE SUBMI S SION S MADE BY THE ASSESSEE, CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICER CONFIRMED THE RECEIPTS SHOWN TOWARDS SALE CONSIDERATION IN RESPECT OF LANDS IN SURVEY NO.294/2 AT RS.13,07,500. IN RESPECT OF SALE CONSIDERATION IN R E SPECT OF SURVEY NO.294/1 AT PUPPULGUDA VILLAGE, THE ASSESSING OFFICER OB SE RVED THAT THE SALE CONSIDERATION RECEIVED WAS RS.5 LAKHS AS PER EVIDENCE. I N RESPECT OF GOVINDPUR LAND, THE ASSESSING OFFICER CONFIRMED THE REC EIPT O F SALE CONSIDERATION OF RS.37,17,800. IN RESPECT OF LAND SOLD TO BHARGAVI CONSTRUCTION, THE ASSESSING OFFICER STATED THE OVERALL SALE CONSIDERATION AT ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 22 RS.32,50,000. THE CIT(A), AFTER CONSI D ERIN G THE SUBMI S SION OF THE ASSESSEE , VIS - A - VIS THE OBSERVA TION MADE BY THE ASSESSING OFFICER IN THE REMAND REPORT AS WELL AS OTHER FACTS AND MATERIAL ON RECORD, FOUND THAT SO FAR AS SALE OF LAND IN SURVEY NO.295/1 AS PER THE SALE DEED RS.5 LAKHS WAS RECEIVED BY TWELVE PERSONS AND FOR THE BALANCE RS.5 LAKHS NO SA LE DEED COULD BE PRODUCED BY THE ASSESSEE. HE THEREFORE, CONCLUDED THAT THE ASSESSEE CAN BE HELD TO BE ENTITLED TO RECEIVE 1/12 TH OF RS.5 LAKHS, I.E. RS.41,667 AS HIS SHARE. HE THEREFORE, HELD THAT OUT O F RS.10 LAKHS SHOWN AS SALE CONSIDERATION IN RESPECT OF LAND AT SURVEY NO.295/1, AN AMOUNT OF RS.41,667 STANDS EXPLAINED AND THE BALANCE AMOUNT REMAINS UNEXPLAINED. SIMILARLY, CONSIDERING THE OBSERVATION MADE BY THE ASSESSING OFFICER IN THE REMAND REPORT, AS WELL AS THE SALE CONSIDERATION MEN T ION E D IN THE R ESPECTIVE SALE DEEDS, THE CIT(A) FOUND THAT OUT OF THE TOTAL SALE CONSIDERATION OF RS.93,41,000, SHOWN IN THE RECEIPTS AND PAYMENTS ACCOUNT, AN AMOUNT OF RS.83,16,967 STANDS EXPLAINED AND THE BALANCE AMOUNT OF RS.10,24,033 REMAINS UNEXPLAINED. HE THEREF ORE, DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO THE AFORESAID AMOUNT OF RS.10,24,033. 38. WE HEARD BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY US, WHILE DEALING WITH SECOND EFFECT IVE GROUND IN THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2004 - 05, VIZ. ITA NO.915/HYD/2011, HEREINABOVE. FOR THE DETAILED REASONS DISCUSSED IN THAT IN PARA S 28 AND 29 HEREINABOVE, WE UPHOLD THE IMPUGNED ORDER OF THE CIT(A), AND REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE FOR THE ASSESSMENT YEAR 2006 - 07 AS WELL. 39. THE NEXT ISSUE AS RAISED IN GROUND NO.3 IS WITH REGARD TO ADDITION OF AN AMOUNT OF RS.1 LAKH MADE BY THE ASSESSING OFFICER BY TREATING THE SAME AS UNEXPLAINED INVESTMENT WHICH WAS ALSO CONFIRMED BY THE CIT(A). BRIEFLY, THE FACTS ARE DURING THE SEARCH PROCEEDINGS, A ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 23 STATEMENT WAS RECORDED FROM ASSESSEES WIFE WITH REGARD TO MOVEABLE AND IMMOVEABLE PROPERTIES OF THE ASSESSEE. AS PER THE STATEMENT RECORDED, IT WAS FOUND THAT THE ASSESSEE HAD INVESTED RS.1 LAKH IN THE FORM OF FIXED DEPOSITS IN THE NAMES OF HIS CHILDREN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH THE SOURCE OF INVESTMENT IN THE FIXED DEPOSITS, THE ASSESSEE S IMPLY REPLIED THAT HE WAS HAVING SUFFICIENT FUND FOR INVESTING IN THE FIXED DEPOSITS. THE ASSESSING OFFICER HAVING NOTED THE FACT THAT THE FIXED DEPOSIT OF RS.1 LAKH DOES NOT FIND PLACE IN THE RECEIPTS AND PAYM ENTS ACCOUNT SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS , TR E ATED THE SAME AS UNEXPLAINED INVESTMENT AND ADDED IT TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL. 40. ON APPEAL, THE ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE SAID FIXED DEPOSIT WAS MADE IN VASAVI CO - OP B ANK, WHICH HAS SINCE BEEN CLOSED. IT HAS FURTHER SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT CASH ACCRUALS TO MAKE THE DEPOSITS AND IT IS IN FACT REFLECTED IN THE RECEIPTS & PAYMENTS ACCOUNT BEING PART OF THE EXPENDITURE OF RS.6,00,000 SHOWN IN THE EXPENDI TURE SIDE. THE CIT(A) , HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BY HOLDING THAT THERE IS NO MENTION OF ANY FIXED DEPOSIT IN THE RECEIPTS & PAYMENTS ACCOUNT SUBMITTED BY THE ASSESSEE, AND THE ASSESSEES CLAIM OF THE FIXED DEPOSIT BEING INCLUDE D IN THE EXPENDITURE OF RS.6 LAKHS IS NOT VERIFIABLE. HE ACCORDINGLY UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 41. WE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD, INCLUDING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. THE LEARNED A UTHORISED REPRESENTATIVE FOR THE ASSESSEE, EXCEPT FOR REITERATING THE CONTENTIONS TAKEN BEFORE THE LOWER AUTHORITIES, HAS NOT PRODUCED ANY MATERIAL BEFORE US TO SUBSTANTIATE THE CLAIM OF ASSESSEE THAT THE INVESTMENT IN FIXED DEPOSIT WAS EITHER OUT OF AVA ILABLE FUND OR FORMED PART ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 24 OF THE EXPENDITURE OF RS.6 LAKHS MENTIONED IN THE RECEIPTS & PAYMENTS ACCOUNT. IN THAT VIEW OF THE MATTER, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. WE ACCORDINGLY UPH OLD THE SAME AND REJECT THE GROUND OF THE ASSESSEE ON THIS ISSUE. 42. IN THE RESULT, THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 200 6 - 0 7 IS DISMISSED. ASSESSEES APPEAL: ITA NO.1053/HYD/2011 : ASSESSMENT YEAR 2007 - 08 43. THIS APPEAL DI RECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD DATED 21.3.2011 . 44. THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO AN ADDITION OF RS.90 LAKH S MADE ON ACCOUN T OF UNEXPLAINED INVESTMENT. 45. BR IEFLY THE FACTS RELATING TO THIS ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, WHILE VERIFYING THE RECEIPTS & PAYMENTS ACCOUNT SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.10 LAKHS RECEIVED FROM S ALE OF LAND AT SURVEY NO.295/1. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE NEITHER PRODUCED ANY CONFIRMATION LETTER OR EVIDENCE IN RESPECT OF THE ABOVE RECEIPT OF RS.10 LAKH. NO OTHER CORROBORATIVE EVIDENCE WAS ALSO PRODUCED BY THE ASSESSEE IN PROVE TH E FACT THAT THE AMOUNT OF RS.10 LAKHS REPRESENTS SALE CONSIDERATION OF LAND. THE ASSESSING OFFICER FURTHER NOTED THE FACT THAT NEITHER IN THE ORIGINAL RETURN NOR IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER S.153A, THE ASSESSEE HAS ADMITTED ANY CAPITA L GAIN OR BUSINESS INCOME IN RESPECT OF SALE OF THE ABOVE LAND. IN THE ABSENCE OF ANY SUPPORTING EVIDENCE BEING PRODUCED BY THE ASSESSEE TO SUBSTANTIATE ITS ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 25 CLAIM OF SALE OF LAND, THE ASSESSING OFFICER TREATED THE AMOUNT AS UNEXPLAINED INCOME OF THE ASS ESSEE. FURTHER, THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,00,00,000 TO M/S. KEDIA OVERSEAS LTD., TOWARDS PURCHASE OF LAND AT MADINAGUDA, WHICH HAS BEEN SHOWN TO BE RECEIVED BY THE ASSESSEE DURING THE IMPUG NED YEAR ITSELF. THE ASSESSING OFFICER HOWEVER, OBSERVING THAT THE ASSESSEE HAD NOT FILED ANY EVIDENCE OR SATISFACTORY EXPLANATION TO EXPLAIN THE SOURCE FOR THE ABOVE PAYMENT TO M/S. KEDIA OVERSEAS LTD. DURING THE YEAR TREATED THE AMOUNT OF RS.1 CRORE AS I NCOME FROM UNEXPLAINED SOURCES, AND ACCORDINGLY MADE AN ADDITION OF RS.1,10,00,000 TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL. 46. THE ASSESSEE CHALLENGED THE ADDITIONS O MADE BY PREFERRING APPEAL BEFORE THE CIT(A). IN THE COURSE OF HEAR ING BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT THE AMOUNT OF RS.10 LAKHS SHOWN IN THE RECEIPTS & PAYMENTS ACCOUNT WAS TOWARDS SALE PROCEEDS OF THE LAND SOLD IN SURVEY NO.295/1 IN PUPPALGUDA VILLAGE. IN RESPECT OF PAYMENT MADE TO KEDIA OVERSEAS LTD., I T WAS CONTENDED BY THE ASSESSEE THAT DURIN G TH E FINANCIAL YEAR 2006 - 07, IT INTENDED TO PURCHASE LAND IN SURVEY NO.46 SITUATED AT MADINAGUDA FROM THE SAID COMPANY, AND HAND PAID AN AMOUNT OF RS.20 LAKHS THROUGH CHEQUE AND THE BALANCE AMOUNT WAS PAID IN CASH . THUS, A TOTAL AMOUNT OF RS.1 CRORE WAS PAID TOWARDS THE SALE CONSIDERATION O F THE SAID LAND. HOWEVER, AS THE TITLE OF LAND WAS NOT CLEAR, THE AGREEMENT WAS CANCELLED AND THE AMOUNT WAS RECEIVED BACK. THE ASSESSEE CONTENDED THAT THE RECEIPT OF THE AFOR ESAID AMOUNT FROM KEDIA OVERSEAS LTD. WAS THROUGH BANKING CHANNELS AND REFLECTED IN THE BANK STATEMENT. WHILE EXPLAINING THE SOURCE OF PAYMENT OF THE AMOUNT O F RS.1 CRORE TO KEDIA OVER S EAS LTD., IT WAS CONTENDED THAT THE SAME WAS PAID FROM OUT O F THE AMO UNT RECEIVED FROM RADHA REALTY CORPORATION, WHICH IS DULY REFLECTED IN THE RECEIPTS & PAYMENTS ACCOUNT. ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 26 OFFICER. IN THE REMAND REPORT, THE ASSE SSING OFFICER STATED THAT THERE WAS NO DOCUMENT SUBMITTED BY THE ASSESSEE INDICATING THE SALE OF LAND IN SURVEY NO.295/1. IN THE ENCUMBRANCE CERTIFICATE FILED BY THE ASSESSEE, HIS NAME APPEARS AS A CLAIMANT ONLY. HE THEREFORE, OPINED THAT THE SALE CONSIDE RATION OF RS.10 LAKHS SHOWN BY THE ASSESSEE REMAINED UNEXPLAINED. IN THE ABSENCE OF ANY EVIDENCE TO CONTROVERT THE AFORESAID FINDING OF THE ASSESSING OFFICER, THE CIT(A) CONFIRMED THE ADDITION OF RS.10 LAKHS. SO FAR AS THE SOURCE OF RS.1 - CRORE TO M/S. KE DIA OVER S EAS LTD. WAS CONCERNED, THE ASSESSING OFFICER IN THE REMAND REPORT STATED THAT AS PER THE BANK ACCOUNT SUBMITTED BY THE ASSESSEE, AN AMOUNT OF RS.20 LAKHS WAS PAID THROUGH CHEQUE DRAWN ON 17.4.2006 AND 18.4.2006. THE BANK STATEMENT ALSO INDICATES THAT THE ASSESSEE HAS RECEIVED BACK AN AMOUNT OF RS.20 LAKHS THROUGH CHEQUE IN JUNE, 2006. HE THEREFORE, OPINED THAT AN AMOUNT OF RS.20 - LAKH F R O M OUT OF RS.1 CRORE STANDS EXPLAINED. SO FAR AS THE BALANCE AMOUNT OF RS.80 LAKHS PAID IN CASH TO M/S. KEDIA O VERSEAS LTD., IT WAS NOTED BY THE CIT(A) THAT THOUGH THE ASSESSEE HAD CONTENDED THAT THE SAME WAS PAID FROM OUT OF CASH RECEI VED FROM M/S. RADHA REALTY AND IT IS ALSO A FACT THAT IN THE RECEIPTS & PAYMENTS ACCOUNT THE ASSESSEE HAS SHOWN A RECEIPT O F RS. 5 CRORE FROM RADHA REALTOR, BUT AT THE SAME TIME, IN THE PAYMENTS SIDE ALSO, THERE ARE EXPENSES LIKE PAYMENT TO DILIP KUMAR, SYED NASEER RENOVATION OF HOUSE, ADVANCE TO HUF ETC. THE CIT(A) FURTHER NOTED THAT IT IS ALSO NOT VERIFIABLE WHETHER THE ASSESSEE HAS CASH BALANCE IN APRIL, 2006 SO AS TO MA K E THE PAYMENT TO M/S. KEDIA OVERSEAS LTD., AS THE OPENING CASH BALANCE AS ON 1.4.2006 WAS ONLY RS.1,41,756 AND THE ASSESSEE HAS NOT SUBMITTED DATE - WISE CASH FLOW STATEMENT TO SHOW CASH AVAILABILITY ON THE DATE OF P AYMENT MADE TO M/S. KEDIA OVERSEAS LTD. HE FURTHER NOTED THAT THERE IS NO EVIDENCE EVEN TO SHOW THAT THERE WAS CANCELLATION OF AGREEMENT WITH M/S. KEDIA OVERSEAS LTD. THEREFORE, TAKING INTO ACCOUNT ALL THESE FACTS, THE CIT(A) CONCLUDED THAT OUT OF THE T OTAL AMOUNT OF RS.1 - CRORE PAID TO M/S. KEDIA OVERSEAS LTD., AN AMOUNT OF RS.20 LAKHS PAID THROUGH CHEQUE REMAINS EXPLAINED, AND THE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 27 BALANCE AMOUNT OF RS.80 LAKHS IS THE UNEXPLAINED INCOME OF THE ASSESSEE. HE ACCORDINGLY SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER TO THAT EXTENT. 47. WE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. SO FAR AS THE RECEIPT TOWARDS SALE CONSIDERATION OF RS.10 LAKHS FROM SALE OF LAND IN SURVE Y NO.295/1 OF POPPULGUDA IS CONCERNED, IT IS THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT THE AMOUNT OF RS.10 LAKHS WAS RECEIVED IN CASH AS ON - MONEY AND HENCE, THERE IS NO MENTION IN THE SALE DEED. HOWEVER, IN THE ABSENCE OF ANY EVIDENCE FURNISHED BY THE ASSESSEE TO ESTABLISH THAT THE SO - CALLED ON MONEY WAS ACTUALLY RECEIVED BY HIM FROM THE PURCHASER OF THE LAND, IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ADDITION OF RS.10 - LAKH S MADE BY THE ASSESSING OFFICER ON THIS COUNT. AS FOR THE BALANCE ADDITION OF RS.80 LAKHS IS CONCERNED, AS CAN BE SEEN FROM THE DISCUSSIONS MADE BY THE CIT(A), THE ASSESSEE WHILE EXPLAINING THE SOURCE OF RS. 1 - CRORE PAID TO M/S. KEDIA OVERSEAS LTD. FOR PU RCHASE OF LAND IN SURVEY NO.46 SITUATED AT MADINAGUDA HAD STAT ED THAT THE AMOUNT WAS PAID OUT OF MONEY RECEIVED FROM M/S. RADHA REALTORS AND HAS BEEN DULY REFLECTED IN THE RECEIPTS & PAYMENTS ACCOUNT SUBMITTED BEFORE THE ASSESSING OFFICER. IT FURTHER AP PEARS FROM THE ORDER OF THE CIT(A) THAT HE ALSO ACCEPTS THE FACT THAT THE RECEIPT OF RS.5 CRORES FROM M/S. RADHA REALTORS HAS BEEN REFLECTED IN THE RECEIPTS & PAYMENTS ACCOUNT, HOWEVER, HE HAS DISBELIEVED THE EXPLANATION OF THE ASSESSEE TO EXPLAIN THE SOU RCE OF PAYMENT TO M/S. KEDIA OVERSEAS LTD. ON THE GROUND THAT THE ASSESSEE HAS INCURRED EXPENDITURE TOWARDS PAYMENT TO VARIOUS PERSONS AND NO DATE - WISE CASH - FLOW WAS FILED TO PROVE THE AVAILABILITY OF CASH TO MAKE PAYMENT OF RS.80 LAKHS TO M/S. KEDIA OVERS EAS LTD. AFTER CONSIDERING THE ISSUE IN DEPTH AND ALSO KEEPING IN VIEW THE EXPLANATION OF THE ASSESSEE TO THE EFF ECT THAT THE SOURCE OF PAYMENT T O M/S. KEDIA OVERSEAS LTD. W AS OUT OF ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 28 THE AMOUNT OF RS.5 CRORES RECEIVED FROM M/S. RADHA REALTORS LTD., WHICH H AS ALSO BEEN REFLECTED IN THE RECEIPTS & PAYMENTS ACCOUNT, WE ARE INCLINED TO GRANT ONE MORE OPPORTUNITY TO THE ASSESSEE , BY REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER, TO SUBSTANTIATE ITS CLAIM BY ADDUCING NECESSARY EVIDENCE, INCLUDING CAS H - FLOW STATEMENT, TO PROVE THAT THE CASH PAYMENT OF RS.80 LAKHS WAS OUT OF THE CASH AVAILABLE WITH HIM ON THE DATE OF MAKING SUCH PAYMENT. ACCORDINGLY, THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS REMITTED TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REDECIDE THE ISSUE ACCORDINGLY, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND BY PASSING A SPEAKING ORDER IN ACCORDANCE WITH LAW ON ALL THE ASPECTS OF THE MATTER. 48. THE NEXT EFFECT IVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO AN ADDITION OF AN AMOUNT OF RS.15,63,500 AS UNEXPLAINED INVESTMENT OF THE ASSESSEE IN THE YEAR UNDER APPEAL. 49. BRIEFLY, THE FACTS ARE IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS SHOWN RECEIPT OF SALE CONSIDERATION OF RS.28,27,000 FROM SALE OF AGRICULTURAL LAND AND CLAIMED IT AS EXEMPT FROM CAPITAL GAINS TAX BY TREATING IT NOT TO BE A CAPITAL ASSET AS D EF INED UNDER S.2(14) OF THE ACT. DURIN G THE AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE, TO PRODUCE EVIDENCE FROM CONCERNED REVENUE AUTHORITIES TO INDICATE THE NATURE OF LAND AND DISTANCE FROM THE CONCERNED MUNICIPALITY SO AS TO QUALIFY IT AS AGRICULTURAL LAND. AS OBSERVED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THE ASSESSEE EXCEPT STATING THAT THE LAND RELATES TO HUF AND WRONGLY SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME, DID NOT FILE ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM EITHER WITH REGARD TO THE NATURE AND CHARACTER OF LAND OR WITH REGARD TO THE OWNERSHIP OF THE LAND. THE ASSESSING OFFICER THEREFORE, TREATED THE ENTIRE SALE CONSIDERATION OF RS.28,27,000 AS PROFIT OF THE ASSESSEE FROM SALE OF NON - AGRICUL T URAL LAND AND ADDED IT TO THE TOTAL ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 29 INCOME OF THE AS SESSEE. THE ASSESSEE CHALLENGED THE SAID ADDITION BY PREFERRING AN APPEAL BEFORE THE CIT(A) . 50. IN THE COURSE OF APPEL LATE PROCEEDINGS BEFORE THE CIT(A), IT WAS CON T ENDED BY THE ASSESSEE THAT HE HAS SOLD AGRICULTURAL LAND IN RAMATEERTHAM AND HADNOOR VILLAGES IN NYALKAL MANDAL OF MEDAK DISTRICT AND SUBMITTED DETAILS IN THAT REGARD. ON THE BASIS OF THE SUBM I SSIONS MADE BY THE ASSESSEE, THE CIT(A) CALLED FOR A REM A N D REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER VERIFYING THE SUBMISSI ON MADE BY THE ASSESSEE, SUBMITTED A REPORT STATING THEREIN THAT THE ASSESSEE HAS FILED THREE SALE DEED COPIES BEFORE HIM, EVIDENCING SALE OF AGRICULTURAL LAND AT RAMTEERTHAM AND HADNOOR VILLAGES AND AS PER THE SALE DEEDS THE ASSESSEE RECEIVED TOTAL CONSID ERATION OF RS.12,63,500 TOWARDS THE SALE OF THE SAID AGRICULTURAL LAND. THE CIT(A), AFTER CONSIDERING THE REPORT OF THE ASSESSING OFFICER AND OTHER MATERIAL ON RECORD, CONCLUDED THAT BY SHOWING THE SALE CONSIDERATION FROM SALE OF LAND AT RS.28,27,000 AS A GAINST ACTUAL SALE CONSIDERATION OF RS.12,63,500, THE EXCESS AMOUNT SHOWN OF RS.15,63,500 REMAINS UNEXPLAINED. HENCE, HE CONFIRMED THE ADDITION TO THAT EXTENT. 51. WE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. THE ONLY CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE BEFORE US IS THAT THE EXCESS AMOUNT RECEIVED IN CASH REPRESENTS O N - MONEY , OVER AND ABOVE WHAT HAS BEEN MENTIONED IN THE SALE DEED, WHICH HAS NO T BEEN MENTIONED IN THE SALE DEED. IN THE ABSENCE OF ANY EVIDENCE FURNISHED BY THE ASSESSEE TO ESTABLISH THAT THE SO - CALLED ON MONEY WAS ACTUALLY RECEIVED BY HIM FROM THE PURCHASER OF THE LAND, IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE LOWER AUTH O RITI E S, IN OUR CON S I D ERED OPINION, AR E JUSTIFIED IN NOT ACCEPTING THE CON T EN T ION OF THE ASSESSEE IN THIS BEHALF. WE ACCORDINGLY UPHOLD THE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 30 ORDER OF THE CIT(A) ON THIS ASPECT. THIS GROUND O F TH E ASSESSEE IS ACCO RD INGLY REJECTED. 52. IN THE RESULT, ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007 - 08, BEING ITA NO.1053/HYD/2011, IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. CROSS APPEALS FOR ASSESSMENT YEAR 2008 - 09 53. NOW, WE MAY TAKE UP FOR CONSIDERATION, THE CROSS APPEALS FOR ASSESSMENT YEAR 2008 - 09, BEING ITA NO.313/HYD/2012 OF THE ASSESSEE AND (ITA NO.468/HYD/2012 OF THE DEPARTMENT, WHICH ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD DATED 4.1.2012. ASSESSEES APPEAL: I TA NO. 313/HYD/2012 54. THE FIRST EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO THE ACTION OF THE CIT(A) IN SUSTAINING AN AMOUNT OF RS.5,35,94,159, OUT OF THE TOTAL ADDITION OF RS.6,04,05,981 MADE BY THE ASSESSING OFFICER. 55. BRIEFLY, THE FACTS ARE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, WHILE VERIFYING THE RETURN OF INCOME FILED BY THE ASSESSEE NOTICED THAT THE ASSESSEE HAD CLAIMED RS.6,04,05,981 AS COST OF INDEXATION, LEGAL EXPENSES AND PAYMENT MADE TO JAGA T SINGH, JAMALUDDIN, KAREEMUDDIN, C.DILIP KUMAR AND SYED NASEER AS WELL AS OTHER INCIDENTAL EXPENSES BEING REGISTRATION CHARGES, LEGAL EXPENSES, MAINTENANCE EXPENSES TRAVELLING EXPENSES ETC. THE ASSESSING OFFICER FURTHER NOTICED FROM THE REGISTERED GPAS FI LED BY THE ASSESSEE IN TH E COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE WAS AUTH O RISED BY THE LAND OWNERS OF THE SUBJECT LAND TO SUPERVISE AND ADMINISTER THE SAID LANDED ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 31 PROPERTY, AND THE ASSESSEE WAS NEVER THE OWNER OF THE SAID PROPERTY. THE AS SESSING OFFICER THEREFORE, CONCLUDED THAT HE IS NOT ENTITLED TO COST OF INDEXATION AND OTHER INCIDENTAL EXPENSES FOR COMPUTING CAPITAL GAINS, AND TREATED IT AS BUSINESS INCOME OF THE ASSESSEE BEING IN THE NATURE OF COMMISSION EARNED FOR THE SERVICES REND ERED AS AN AGENT OF THE LAND OWNERS. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWING THE CLAIM OF THE ASSESSEE ADDED THE ENTIRE AMOUNT O F RS.6,04,05,981 AS THE INCOME O F TH E ASSESSEE FOR THE ASSESSMENT YEAR UNDER APPEAL. 56. BEING AGGRIEVED BY THE ADD ITION MADE AS ABOVE, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). DURING THE PROCEEDINGS BEFORE THE CIT(A), IT WAS CONTENDED BY THE ASSESSEE THAT THE PAYMENTS MADE TO JAGAT SINGH, JAMALUDDIN, KAR EE MUDDIN AS WELL AS DILIP KUMAR AND SYED NASEER AND OTHER R ELATED PARTIES WERE GENUINE EXPENDITURE AND SIMILAR IN NATURE TO THE EXPENDITURE INCURRED FOR VALIDATION OF IRREVOCABLE POWER OF ATTORNEY OF DILIP KUMAR AND SYED NASEER DURING 2003. IT WAS FURTHER SUBMITTED THAT REGISTRATION CHARGES FOR THE RATIFICATION D EED AMOUNT INCURRED TOWARDS PENDING REGISTRATIONS AND OTHER INCIDENTAL EXPENSES INCURRED IN RESPECT OF ACRES 41, 34 GUNTAS IN SURVEY NO.262 TO 274 PUPPALGUDA VILLAGE WERE ALSO GENUINE. IT WAS FURTHER CONTENDED BY THE ASSESSEE, THAT HE IS THE OWNER OF THE LAND SITUAT E D AT SURVEY NO.262 TO 274 AND THEREFORE, ENTITLED TO CLAI M COST OF INDEXATION FOR CALCULATING CAPITAL GAINS. IT WAS FURTHER SUBMI T TED THAT FRO M TIME TO TIME, ASSESSEE HAS BEEN INCURRING EXPENDITURE BY MAKING PAYMENT NOT ONLY TO THE ORIGINAL OW NERS OF THE LAND, BUT ALSO TO MIDDLEMEN WHO ACTED AS AGENTS AND CLAIMED RIGHT OVER THE PROPERTY AT PUPPALGUDA. IT WAS SUBMITTED THAT THESE PAYMENTS WERE MADE RIGHT FROM THE YEAR 1999 ONWARDS , I T WAS SUBMITTED THAT JAMALUDDIN AND HIS BROTHER HAVE EXECUTED A REGISTERED GPA IN FAVOU R OF DILIP KUMAR AND SYED NASEER TOWARDS SALE OF AGRICULTURAL LAND OF 24 ACRES SITUATED IN PUPPALGUDA VILL A GE. IT WAS CONTENDED THAT LIKEWISE ON 28.12.1995, JAMALUDDIN AND HIS BROTHERS HAD GIVEN AN IRREVOCABLE POWER ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 32 OF ATTORNEY WIT H SALE CONSIDERATION TO DILIP KUMAR AND SYED NASEER TOWAR D S SALE OF LAND TO THE TUNE OF 51 ACRES 29 GUNTAS IN SURVEY NO.262 TO 274 AT PUPPALGUDA VILLAGE. IT WAS CONTENDED THAT THE IRREVOCABLE POWER OF ATTORNEY EXECUTED BY THE CONCERNED PARTIES WAS DULY VA LI D ATED BY PAYMENT OF REQUIRED STAMP DUTY BY THE ASSESSEE DURING THE FINANCIAL YEAR 2002 - 03, AND THE EXPENDITURE INCURRED ON STAMP DUTY WAS NO T CLAIMED BY ANY OTHER INDIVIDUAL OTHER THAN THE ASSESSEE. THE ASSESSEE FUR T HE R C ONTENDED THAT HE ENTERED INTO AG REEMENT OF SALE WITH GPA HOLDER DILIP KUMAR AND SYED NASEER ON 22.2.1999 AND AS PER THE AGREEMENT THE TOTAL CONSIDERATION IN RESPECT OF SALE OF 51 ACRES OF LAND AT PUPPALGUDA VILLAGE WAS RS.25,86,250. HE FURTHER CONTENDED THAT THE TERMS OF AGREEMENT ALSO MADE IT CLEAR THAT THE ASSESSEE HAD AGREED TO PU R CHA S E THE LAND WITH EXISTING LITIGATIONS AND HE ALSO AGREED TO BEAR THE EXPENDITURE TOWARDS RESOLVIN G THE LITIGATIONS AND OTHER INCIDENTAL EXPENSES. IT WAS CON T ENDED THAT THE ASSESSEE PAID RS.23 LAKHS TO TH E POWER OF ATTORNEY HOLDERS DILIP KUMAR AND SYED NASEER AT THE TIME OF AGREEMENT, WHICH WAS ALSO DECLARED BY THE SAID GPA HOLDERS IN THEIR RESPECTIVE RETURNS OF INCOME AND ALSO ASSESSED AT THEIR HANDS. IT WAS SUBMITTED THAT AS PER THE AGREEMENT OF SALE, T HESE TWO GPA HOLDERS EXECUTED THE REGISTERED SALE DEED IN FAVOUR OF THE NOMINEES OF THE ASSESSEE, K.V.V.BALASUBRAMANIAM AND NINE OTHERS DURING THE YEARS 2002 - 03 IN RESPECT OF 41 ACRES 34 GUNTAS . IT WAS SUBMITTED THAT AS GPA HOLDER OF SYED NASEER AND DILIP KUMAR, ASSESSEE ALSO EXECUTED SOME OF THE SALE DEEDS IN FAVOUR OF K.V.V.BALASUBRAMANIAM AND OTHERS. IT WAS SUBMITTED THAT ONE MUTYAM REDDY AND OTHER CLAIMANTS FILED VARIOUS SUITS IN DIFFERENT COURTS CLAIMING THEIR RIGHTS, TITLE AND IN T ER E ST IN THE SUBJEC T LAND EVEN AFTER REGISTRATION O F THE SALE DEEDS IN FA VO UR OF THE NOMINEES OF THE ASSESSEE. THEREFORE, IN THE PROCESS OF RESOLVING THE DISPUTES OVER THE LAND, THE ASSESSEE PAID VARIOUS AMOUNTS TO JAGAT SINGH, JAMALUDDIN AND KAREEMUDDIN FAMILY AND INCURRED VA R IOUS OTHER EXPENSE S LIKE GPA REGISTRATION, VALIDATION OF IRREVOCABLE POWER OF ATTORNEY AND OTHER INCIDENTAL EXPENSES. IT WAS SUBMITTED BY THE ASSESSEE THAT THOUGH ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 33 EVIDENCE IN SUPPORT OF PAYMENTS WAS SUBMITTED BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. 57. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND GOING THROUGH THE MATERIAL ON RECORD, UPHELD THE DECISION OF THE ASSESSING OFFICER TO THE EFFECT THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE IS IN THE NATURE OF BUSINESS ONLY AND HENCE, HE IS NOT ENTITLED TO CLAIM THE BENEFIT OF INDEXATION ON TRANSFER OF THE PROPERTY. THE CIT(A) ALSO DID NOT ACCEPT THE ASSESSEES CLAIM WITH REGARD TO EXPENDITURE INCURRED TOWARDS PA YMENT MADE TO VARIOUS PERSONS NAMELY, DILIP KUMAR, SYED NASEEB, JAGAT SINGH AND KAREEMUDDIN AND HIS FAMILY AND JAMALUDDIN AND HIS FAMILY, BY OBSERVING THAT ALL THE AFORESAID PERSONS HAD DIRECTLY RECEIVED THE SUBSTANTIAL AMOUNTS OF CONSIDERATION FROM DLF AT THE TIME OF REGISTRATION OF SALE DEEDS ON 22.8.2007. THE CIT(A) FURTHER HELD THAT SIN C E IN THE FIN A N C IAL YEAR 2002 - 03 AND 2003 - 04, THE ASSESSEE HAD RECEIVED A SUM OF RS.36,11,250 AND RS .25,35,250 RESPECTIVELY TOWARDS TRANSFER OF INTEREST TO K.V.V.BALASUB RAMANIAM AND NINE OTHERS, THE ASSESSEE CANNOT TAKE DOUBLE BENEFIT OF PAYMENT TO VARIOUS GPA HOLDERS, BY CLAIMING THE SAME ONCE AGAIN IN THE YEAR UNDER APPEAL, AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT SHOWN SUCH CONSIDERATION RECEIVED FROM H IS NOMINEES AS INCOME. THE CIT(A) HOWEVER, HELD TH A T THE ASSESSEE IS ENTITLED TO CLAIM REGISTRATION CHARGES INCURRED BY HIM ON VARIOUS OCCASIONS, IN RESPECT OF GPA, IRREVOCABLE POWER OF ATTORNEY, SALE DEEDS, ETC. AND QUANTIFIED THE ALLOWABLE DEDUCTION IN THIS REGARD AT RS.20,71,822. SO FAR AS THE CLAIM OF EXPENSES UNDER VARIOUS OTHER HEADS, LIKE PROFESSIONAL EXPENSES, LEGAL EXPENSES FOR VARIOUS LITIGATIONS FIL E D BEFORE THE HIGH COURT AND SUPREME COURT MAINTENANCE CHARGES, TRAVELLIN G EXPENSES, INCIDENTAL EXPENSES SUPERVISION CHARGES ETC., FROM 1998 ONWARDS TILL 2002, THE CIT(A) THOUGH ACCEPTED THE FACT THAT THE ASSESSEE MIGHT HAVE INCURRED UNDER THE AFORESAID HEADS, BUT HE DID NOT AGREE THAT THE ENTIRE AMOUNT ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 34 CLAIMED BY THE ASSESSEE AS EXPENDITURE IS ALLOW ABLE IN THE ABSENCE OF PROPER EVIDENCE. HE THEREFORE, RESTRICTED THE ALLOWABLE EXPENDITURE TO 30% OF THE TOTAL AMOUNT CLAIMED BY THE ASSESSEE OF RS.1,58,00,000 AND THEREBY ALLOWING DEDUCTION OF RS.47,40,000. THE REFORE, THE TOTAL EXPENDITURE ALLOWED BY THE CIT(A) WORKED OUT TO RS.68,11,822.(RS.47,40,000+RS.20,71,822). 5 8 . THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE HAS SUBMITTED ALL THE DETAILS SUPPORTED BY DOCUMENTARY EVIDENCE WITH REGARD TO THE EXPENDITUR E CLAIMED, NOT ONLY BEFORE THE ASSESSING OFFICER BUT ALSO BEFORE THE CIT(A). HENCE, THE DISALLOWANCE SUSTAINED BY THE CIT(A) IS NOT IN ORDER. HE FURTHER SUBMITTED THAT EXCEPTING THE LEGAL EXPENSES, THE ASSESSEE HAS SUBMITTED EVIDENCE WITH REGARD TO PAYM E N T O F ALL OTHER EXPENSES INCURRED. IN THIS CONTEXT, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE R ECEIPTS FOR THE PAYMENTS MADE TO KAREEMUDDIN AND HIS FAMILY WHICH ARE AT PAGES 188 TO 190 OF THE PAPER - BOOK. THE LEARNE D AUTHORISED REPRESENTATIVE FOR THE ASSESSEE FURTHER, DRAWING OUR ATTENTION TO THE STATEMENT SHOWING THE DETAILS OF EXPENDITURE INCURRED, WHICH WAS SUBMITTED BEFORE THE CIT(A), CONTENDED THAT THOUGH THE ASSESSEE IN FACT HAS, GIVEN ALL THE DETAILS WITH RE GARD TO THE EXPENDITURE CLAIMED OF RS.4,97,32,00 IN THE SAID STATEMENT, THE SAME HAS NOT AT ALL BEEN CONSIDERED BY THE CIT(A). THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS ACCEPTED ASSESSEES CLAIM OF INCURRING E XPENDITURE TOWARDS PAYMENTS BEING MADE TO VARIOUS PERSONS FOR RESOLVING THE DISPUTE IN THE ASSESSMENT YEAR 2003 - 04 AND 2004 - 05 . 5 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDER OF THE CIT(A), SUBMITTED THAT SINCE THE CIT(A) HAS CONSIDERED THE ISSUE IN ITS ENTIRETY AND HAS ALLOWED REASONABLE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 35 DEDUCTION, THERE IS NO JUSTIFICATION FOR GRANTING ANY FURTHER RELIEF TO THE ASSESSEE. 60 . WE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUD ING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. ON A PERUSAL OF THE ORDER PASSED BY THE CIT(A), IT CAN BE SEEN THAT SO FAR AS EXPENDITURE CLAIMED TOWARDS REGISTRATION OF GPA IRREVOCABLE POWER OF ATTORNEY, RATIFICATION SALE DEED, ETC., THE CIT(A) HAS ACCE PTED THE SAME. SO FAR AS THE CLAIM OF EXPENDITURE TOWARDS PAYMENTS MADE TO VARIOUS PERSONS, NAMELY, DILIP KUMAR, SYED NASEEER, JAGAT SINGH, JAMALUDDIN, KAREEMUDDIN ARE CONCERNED, IT IS THE CONTENTION OF THE ASSESSEE THAT SUCH PAYMENTS WERE REQUIRED TO BE M ADE FOR SETTLEMENT OF THE DISPUTES, REGARDING THE LAND IN QUESTION. IN THIS CONTEXT, WE WOULD LIKE TO OBSERVE THAT WHILE CONSIDERING SIMILAR CLAIM OF THE ASSESSEE FOR EXPENDITURE TOWARDS PAYMENTS MADE TO VARIOUS PERSONS, IN THE ASSESSMENT YEARS 2003 - 04 A ND 2004 - 05, THE CIT(A) HAS ACCEPTED THE ASSESSEES CONTENTION, BY HOLDING THAT THE CLAIM OF THE ASSESSEE CANNOT BE HELD TO BE BASELESS AS HE HAS PRODUCED DOCUMENTARY EVIDENCE IN THE FORM OF MONEY RECEIPTS IN SUPPORT OF SUCH CLAIM. THIS FINDING OF THE CIT( A) FOR THOSE YEARS HAS BEEN UPHELD BY US, IN THE CONTEXT OF REVENUES APPEALS, ITA NOS.900 AND 901/HYD/2011, VIDE PARAS 28 AND 29 HEREINABOVE. IN THE YEAR UNDER APPEAL AS WELL, THE ASSESSEE HAS INVITED O U R ATTENTION TO CERTAIN MONEY RECEIPTS CLAIMING TO B E TOWARDS THE PAYMENTS MADE TO KAREEMUDDIN AND FAMILY, ETC. SO FAR AS EXPENDITURE CLAIMED ON ACCOUNT OF LITIGATION PENDING IN DIFFERENT COURTS, TRAVELLING, MAINTENANCE, SUPERVISION, ETC., AS CAN BE SEEN, THE CIT(A) HAS NOT RULED OUT THE FACT THAT THE ASSE SSEE HAS INCURRED SUCH EXPENDITURE. HOWEVER, HE HAS RESTRICTED SUCH EXPENDITURE ALLOWABLE TO 30% OF TOTAL EXPENDITURE CLAIMED. THEREFORE, CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES, WE THINK IT REASONABLE TO DISALLOW 15% OUT OF THE TOTAL EXPENDITURE OF RS.6,04,05,981 CLAIMED BY THE ASSESSEE . ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE BALANCE ADDITION. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 36 61. IN THE LIGHT OF THE ABOVE FINDINGS, ASSESSEES GROUNDS ON THIS ISSUE ARE TREATED AS PARTLY ALLOWED. 62. THE NEXT ISSUE AS RAISED IN GROUND NO.3 IS WITH REGARD TO ADDITION OF AN AMOUNT OF RS.1,65,00,000. 63. BRIEFLY FACTS OF THE CASE IN R E L A TION TO THIS ADDITION ARE THAT DURING THE SEARCH OPERATIONS CONDUCTED IN THE OFFICE PREMIS ES OF M/S. RADHA REALTY CORPORATION, CERTAIN R ECEIPTS ISSUED BY THE ASSESSEE IN TOKEN OF RECEIPT OF CASH WERE FOUND AND SEIZED. IN THIS CONTEXT, A STATEMENT WAS RECORDED FORM THE MANAGING DIRECTOR OF M/S. RADHA REALTY CORPORATION, N.RAVINDRANATH REDDY, WHEREIN HE ADMITTED OF HAVING PAID RS.14 CRORES TO THE ASSESSEE AND HIS ASSOCIATES TOWARDS CONSIDERATION OF SALE OF LAND. THE ASSESSING OFFICER, AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE WITH REGARD TO THE ALLEGED RECEIPT OF RS.14 CRORES FROM M/S. RADHA REALTY CORPORATION LTD., CONCLUDED T HAT THE ASSESSEE IN FACT, HAD RECEIVED THE SAID AMOUNT FROM M/S. RADHA REALTY CORPORATION LTD. AS REVEALED BY THE SEIZED DOCUMENT. THE ASSESSING OFFICER REDUCING AN AMOUNT OF RS.50 LAKHS RECEIVED BY SYED NASEER AND DILIP KUMAR , HELD THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.13.16 CRORES, AS AGAINST THE AMOUNT OF RS.11.50 CRORES DISCLOSED IN THE RETURN OF INCOME. HE THEREFORE, TREATED THE DIFFERENTIAL AMOUNT OF RS.1.55 CRORES AS INCOME OF THE ASSESSEE FROM UNEXPLAINED SOURCES. 64. THE ASSESSEE C HALLENGED THE ADDITION MADE IN AN APPEAL PREFERRED BEFORE THE CIT(A). IN THE COURSE OF HEARING OF THE APPEAL, THE ASSESSEE SUBMITTED THAT THE ENTIRE ADDITION OF RS.1.55 CRORES WAS MADE SOLELY ON THE BASIS OF THE STATEMENT OF N.R A VIN D RANATH REDDY, THE MANA GING DIRECTOR OF M/S. RADHA REALTY CORPORATION LTD. IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID RAVINDRANATH REDDY IN HIS SOWN STATEMENT ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 37 RECORDED ON 12.11.2007, HAD ADMITTED OF HAVING PAID A TOTAL CONSIDERATION OF RS.21 CRORES AS PER AGREEMENT OF SALE ENTERED WITH THEM DURING FINANCIAL YEAR 2005 - 06. HOWEVER, RAVINDRANATH REDDY IN A SUBSEQUENT STATEMENT RECORDED ON 14.12.2007 ADMITTED OF HAVING PAID RS.14 CRORES TO THE ASSESSEE AND HIS ASSOCIATES TOWARDS SALE CONSIDERATION. IT WAS THEREFORE, SUBMITTED THAT MUCH RELIANCE CANNOT BE PLACED ON THE STATEMENT OF RAVINDRANATH REDDY, AS HE CHANGED HIS VERSION WITH REGARD TO THE AMOUNT PAID FROM RS.21 CRORES TO RS.14 CRORES. IT WAS SUBMITTED THAT SOLELY ON THE BASIS OF THE AFORESAID STATEMENTS OF N.RAVINDRANAT H REDDY, NO ADDITION COULD HAVE BEEN MADE BY THE ASSESSING OFFICER, CONSIDERING THE FACT THAT THE PAYMENT OF SUCH AMOUNT WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF M/S. RADHA REALTY CORPORATION LTD. AS WELL AS THE FACT N. RAVINDRANATH REDDY WAS NOT S URE AS TO THE EXACT AMOUNT PAID. IN SUPPORT OF SUCH CONTENTION, THE ASSESSEE ALSO RELIED UPON CERTAIN JUDICIAL PRECEDENTS. 65. THE CIT(A), AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE IN THE LIGHT OF THE OBSERVATION MADE BY THE ASSESSING OFFICE R, WAS OF THE VIEW THAT THE CONTENTIONS OF THE ASSESSEE ARE NOT ACCEPTABLE. THE CIT(A) OPINED THAT WHEN THE MANAGING DIRECTOR OF M/S. RADHA REALTY CORPORATION LTD., N.RAVINDRANATH REDDY, CATEGORICALLY STATED THAT THE ASSESSEE OR HIS NOMINEES HAVE RECEIVE D A SUM OF RS.14 CRORES BY VIRTUE OF AGREEMENT OF SALE ENTERED INTO BY THEM, THERE IS NO REASON FOR NOT BELIEVING THE VERSION OF N.RAVINDRANATH REDDY. THE CIT(A) FURTHER NOTED THAT OUT OF THE AMOUNT OF RS.14 CRORES, WHILE THE ASSESSEE HAS DISCLOSED ONLY RS.11.50 CRORES AND HIS NOMINEES RS.50 LAKHS , AN AMOUNT OF RS.35 LAKHS PAID TO ORIGINAL GPA HOL D ERS SYED NASEER AND DILIP KUMAR, WHO ADMITTED THE SAME AS INCOME IN THEIR RESPECTIVE RETURNS. THE CIT(A) ALSO OBSERVED THAT THE ASSESSEE CANNOT BE ALLOWED TO AC CEPT OR DISCARD THE STATEMENT OF N.RAVINDRANATH REDDY ACCORDING TO HIS CONVENIENCE. THE CIT(A) FINALLY CONCLUDED THAT OUT OF RS.14 CRORES RECEIVED BY THE ASSESSEE AND HIS GROUP, ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 38 AN AMOUNT OF RS.12.35 CRORES WAS ACCOUNTED FOR IN THE NAME OF VARIOUS PERSONS, AND THE BALANCE OF RS.1.65 CRORES REMAINED UNEXPLAINED. HENCE, THE SAME, ACCORDING TO THE CIT(A), WAS RIGHTLY ASSESSED IN THE HANDS OF THE ASSESSEE. HE THUS, CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 66. THE LEARNED AUTHORISED REPRESENTAT IVE FOR THE ASSESSEE REITERATING THE CONTENTIONS RAISED BEFORE THE CIT(A), SUBMITTED THAT ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF THE STATEMENTS RECORDED FROM N.RAVINDRANATH REDDY, MANAGING DIRECTOR OF M/S. RADHA REALTY CORPORATION LTD. WHEN THERE I S INCONSISTENCY BETWEEN THE AMOUNTS STATED TO HAVE BEEN PAID TO THE ASSESSEE AS ADMITTED BY N.RAVINDRANATH REDDY IN THE TWO STATEMENTS RECORDED FROM HIM. IT WAS SUBMITTED THAT WHILE IN THE EARLIER STATEMENT, N.RAVINDRANATH REDDY HAD STATED THE AMOUNT TO B E RS.21 CRORES, IN THE LATER STATEMENT HE STATED THE SAME AS RS.14 CRORES. HENCE, MUCH CREDENCE CANNOT BE GIVEN TO HIS STATEMENT. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT EXCEPTING THE STATEMENT A RECORDED FROM N.RAV INDRANATH REDDY, THE ASSESSING OFFICER HAS NOT BROUGHT ANY OTHER MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS RECEIVED RS.14 CRORES FROM M/S. RADHA REALTY CORPORATION LTD. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSE SSEE HAS NEVER RECEIVED RS.14 CRORES FROM M/S. RADHA REALTY CORPORATION LTD., BUT HAS ACTUALLY RECEIVED RS.11.5 CRORES AS DECLARED IN THE RETURN OF INCOME, AND THE BALANCE RS.50 LAKHS WERE PAID TO HIS ASSOCIATES. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE THAT SO FAR AS THE BALANCE AMOUNT OF RS.2 CRORES OUT OF RS.14 CRORES STATED TO HAVE BEEN PAID BY M/S. RADHA REALTY CORPORATION LTD., ACTUALLY INCLUDES THE AMOUNT OF RS.2 CRORE S RECEIVED FROM DLF GROUP OF COMPANIES. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 39 67. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 68. WE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. IT IS VERY MUCH EVI DENT FROM THE ORDERS OF THE CIT(A) AS WELL AS THE ASSESSING OFFICER THAT THE ADDITION OF RS.1.65 CRORES HAS BEEN MADE SOLELY RELYING ON THE STATEMENT OF N.RAVINDRANATH REDDY. IN OUR VIEW, NO ADDITION COULD BE MADE ONLY ON THE BASIS OF THE STATEMENT OF N.RA VINDRANATH REDDY, MANAGING DIRECTOR OF M/S. RADHA REALTY CORPORATION LTD., WHEN IT IS A FACT ON RECORD THAT THERE IS INCONSISTENCY IN THE TWO STATEMENTS RECORDED FROM N.RAVINDRANATH REDDY ON TWO DATES, WITH REGARD TO THE QUANTUM OF AMOUNTS PAID. IN THE AF ORESAID CIRCUMSTANCES, WITHOUT BRINGING ON RECORD ANY OTHER CORROBORATIVE MATERIAL ON RECORD TO SUBSTANTIATE THE FACT THAT ACTUALLY AN AMOUNT OF RS.14 CRORES, AS STATED BY N.RAVINDRANATH REDDY WAS PAID TO THE ASSESSEE, NO ADDITION CAN BE MADE SIMPLY ON THA T BASIS. FURTHERMORE, THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF RS.14 CRORES ALSO INCLUDES THE AMOUNT OF RS.2 CRORES RECEIVED FROM DLF GROUP ALSO REQUIRES TO BE VERIFIED. IN THIS VIEW OF THE MATTER, WE ARE INCLINED TO REMIT THIS ISSUE TO THE FIL E OF THE ASSESSING OFFICER. WE DO SO SETTING ASIDE THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND DIRECT THE ASSESSING OFFICER TO VERIFY ALL THE ASPECTS OF THE MATTER. HE SHALL ALSO CONSIDER THE EVIDENCES ON RECORD, AS WELL AS EXAMINE THE BOOKS OF A CCOUNT OF M/S. RADHA REALTY CORPORATION LTD. TO ASCERTAIN THE EXACT PAYMENT MADE TO THE ASSESSEE REFLECTED IN THE BOOKS OF ACCOUNT OF THAT COMPANY. THE ASSESSING OFFICER SHALL ACCORDINGLY REDECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OP PORTUNITY OF HEARING TO THE ASSESSEE. 69. IN THE RESULT, ASSESSEES APPEAL, ITA NO.313/HYD/2012 FOR ASSESSMENT YEAR 2008 - 09 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 40 REVENUES APPEAL: ITA NO.468/HYD/2012 : ASSESSMENT YEAR 2008 - 09 70. THE ONLY ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS WITH REGARD TO DELETION BY THE CIT(A), OF AN ADDITION OF RS.13,81,00,000 MADE BY THE ASSESSING OFFICER TO THE INCOME OF THE ASSESSEE. 71. BRIEFLY THE FACTS RELATING TO TH E ISSUE IN DISPUTE ARE THAT DU RING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER BEING CONSCIOUS OF THE FACT THAT AN MEMORANDUM OF UNDERSTANDING (MOU) WAS FOUND AND SEIZED FROM THE ASSESSEES RESIDENTIAL PREMISES, AS PER WHICH THE ASSESSEE ALONGWITH TEN OTHERS AND M/S. RADHA REALT Y CORPORATION LTD. HAD ENTERED INTO AN UNDERSTANDING WITH DEMI REALTORS AND MALI FOREX LTD. FOR SALE OF 41 ACRES OF LAND IN SURVEY NO.263 TO 270 OF PUPPALGUDA VILLAGE, RAJENDRANAGAR MANDAL FOR A TOTAL CONSIDERATION OF RS.68.50 CRORES. HE FURTHER NOTED TH AT THE SAID LAND WAS ULTIMATELY INTENDED TO BE PURCHASED BY DLF GROUP OF COMPANIES THROUGH M/S. DEMI REALTORS AND MALI FOREX LTD. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN THE SALE DEED EXECUTED BY DOCUMENT NO.8379 DATED 22.8.2007, RS.3.30 CRORES AND RS.51.39 CRORES WERE SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE AND HIS ASSOCIATES AND M/S. RADHA REALTY CORPORATION LTD. RESPECTIVELY. THE ASSESSING OFFICER THEREFORE, WAS OF THE VIEW THAT THE BALANCE AMOUNT OF RS.13.81 CRORES WAS RECEIV E D BY THE ASSE SSEE AND HIS ASSOCIATES IN CASH WHICH HAS NOT BEEN RECORDED IN THE BOOK S OF DEMI REALTORS AND MALI FOREX LTD. THE ASSESSING OFFICER ALSO OBSERVED THAT DEMI REALTORS PAID CASH OF RS.8.50 CRORES TO THE ASSESSEE WHICH IS EVIDENCED BY A CASH RECEIPT TAKEN FR OM THE ASSESSEE AND SEIZED DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED ON THE PREMISES OF DEMI REALTORS. THE ASSESSING OFFICER THEREFORE, TREATING THE AMOUNT O F RS.13.81 CRORES AS THE UNACCOUN T ED INCOME OF THE ASSESSEE, ADDED IT TO THE IN C OM E O F THE ASSESSEE FOR THE YEAR UNDER APPEAL. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 41 72. THE ASSESSEE CHALLENGED THE ADDITION IN AN APPEAL FILED BEFORE THE CIT(A). DURING THE APPEAL P R OCEEDIN G S BEFORE THE CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF R S.13.81 CRORES ONLY ON THE BASIS OF A DRAFT AND UNSIGNED MEMORANDUM OF UNDERSTANDING. IT WAS SUBMITTED THAT THE DRAFT MOU SEIZED FROM THE ASSESSEES RESIDENTIAL PREMISES AS WELL AS FROM THE PREMISES OF M/S. RADHA REALTY CORPORATION LTD. CLEARLY REVEAL THE FACT THAT IT IS A DRAFT AGREEMENT ONLY AND THE ASIDE H A S NOT SIGNED ANY AGREEMENT WITH M/S. RADHA REALTY CORPORATION LTD./DEMI REALTORS DURING THE YEAR 2007. HE HAD ONLY ENTERED INTO SALE AGREEMENT WITH N.RAVINDRANATH REDDY ON 5.11.2005. AS PER THE S AID AGREEMENT O F SALE, THE ASSESSEE ENDORSED HIS SIGNATURE ON SALE DEED EXECUTED ON 22.8.2007 IN FAVOUR OF DLF GROUP AND RECEIVED CONSIDERATION BY WAY OF CHEQUE FROM THEM. IT WAS SUBMITTED THAT THERE WAS NO CASH TRANSACTION BETWEEN THE ASSESSEE AND DLF GR OUP DURING THE EXECUTION OF SALE DEED DATED 22.8.2007. IT WAS SUBMITTED THAT FORM THE SALE DEED, IT IS CLEARLY EVIDENT THAT ALL THE PAYMENTS WERE MADE BY CHEQUE ONLY TO THE PERSONS WHO ARE SIGNATORIES TO THE SALE DEED. IT WAS SUBMITTED THAT THE ASSESSEE RECEIVED CASH AND CHEQUE AS ADVANCE CONSIDERATION FROM N.RAVINDRANATH REDDY ONLY. THE ALLEGED PAYMENT OF RS.13.81 CRORES WAS NEITHER REFLECTED IN THE BOOKS OF ACCOUNT OF N.RAVINDRANATH REDDY NOR THE BOOKS OF ACCOUNT OF THE COMPANY M/S. RADHA REALTY CORPOR ATION LTD., AND THIS FACT WAS ALSO CONFIRMED BY N.RAVINDRANATH REDDY IN HIS SWORN STATEMENT, WHEREIN HE STATED THE PAYMENT MADE TO ASSESSEE AND HIS ASSOCIATES IS RS.14 CRORES ONLY. IT WAS SUBMITTED THAT THE THIRD PARTY OF THE DRAFT AGREEMENT M/S. DEMI RE ALTORS HAVE NOT ACKNOWLEDGED THE PAYMENT OF RS.13.81 CRORES TO THE ASSESSEE, WHICH CLEARLY PROVES THAT THE ASSESSEE HAS NOT RECEIVED ANY CONSIDERATION IN CASH TO THE TUNE OF RS.13.81 CRORES FROM EITHER DLF OR DEMI REALTORS. IT WAS SUBMITTED THAT AS PER TH E AGREEMENT ENTERED INTO WITH N.RAVINDRANATH REDDY, RAVINDRANATH REDDY IS ENTITLED TO ENTER INTO NEGOTIATIONS WITH THIRD PARTY FOR SALE OF PUPPALGUDA PROPERTY. IT WAS ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 42 SUBMITTED THAT THE DRAFT MOU SEIZED BY THE DEPARTMENT IS BETWEEN N.RAVINDRANATH REDDY AN D M/S. DEMI RE A LTORS AND M/S. MALI FOREX LTD. ONLY. AS PER THIS DRAFT MOU, THE TWO ENTITIES APPROACHED RAVINDRANATH REDDY ONLY FOR PURCHASE OF PROPERTY. AS THE ASSESSEE AND HIS GP HOLDERS WERE PU R CHASE TO THE SALE WITH RAVINDRANATH REDDY WHICH WAS EX E C UTED ON 5.11.2005, THEIR NAMES WERE CITED ONLY AS PARTIES OF THE FIRST PART IN THE DRAFT MOU. THERE IS NO DIRECT SALE BY THE ASSESSEE TO DEMI REALTORS OR ANY OTHER PARTY. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE DRAFT MOU DID NOT FEATURE THE SALE CONSIDERATION IF ANY PAYABLE TO THE ASSESSEE IN ANY CLAUSES. ONLY BECAUSE ASSESSEE IS A PARTY TO THE SALE WITH RAVINDRANATH REDDY, HE SENT A COPY OF THE MOU TOWARDS INFORMATION ONLY. IT WAS SUBMITTED THAT AS THE AMOUNT OF CONSIDERATION IF ANY, PAYABLE TO THE ASSESSEE IS NOT MENTIONED IN THE MOU, IT CLEARLY PROVES THAT THE ASSESSEE IS NOT A PARTY TO THE DRAFT MOU AND IT WAS FORWARDED TO THE ASSESSEE FOR INFORMATION SAKE ONLY. IT WAS SUBMITTED THAT THIS IS FURTHER CORROBORATED FROM THE FACT THAT THE ASSE SSEE OR ITS ASSOCIATES NAMES WERE NOT FEATURED IN THE NAME OF THE PERSONS WHO RECEIVED THE AMOUNT OF ADVANCES IN THE SALE DEEDS DULY EXECUTED BY ALL PARTIES ON 22.8.2007. IT WAS FURTHER SUBMITTED THAT THE SEQUENCE OF EVENTS LEADING TO THE DEBT ON WHICH RE GISTRATION WAS MADE IN FAVOUR OF DLF WOULD SHOW THAT THE ASSESSEE IS IN NO WAY CONNECTED WITH THE DRAFT MOU. IT WAS SUBMITTED THAT THE ASSESSEE ALONGWITH HIS GPA NOMINEE ENTERED INTO AN AGREEMENT OF SALE WITH N.RAVINDRANATH REDDY OF M/S. RADHA REALTY CORP ORATION LTD. ON 5.11.2005 TOWARDS SALE OF LAND TO THE EXTENT OF 41 ACRES 34 GUNTAS IN SURVEY NOS.262 TO 273 OF PUPPALGUDA VILLAGE FOR A CONSIDERATION OF RS.21 CRORES WITH FULFILLMENT OF CERTAIN TERMS AND CONDITIONS. AS PER AGREEMENT OF SALE THE ASSESSEE HAS TAKEN RESPONSIBILITY TOWARDS SETTLEMENT OF CLAIM EXISTING OVER THE PROPERTY IN RESPECT OF VARIOUS CLAIMANTS, BUT HOWEVER, DUE TO NON - FULFILMENT OF CERTAIN CONDITIONS OF THE AGREEMENT, THE AGREED CONSIDERATION OF RS.21 CRORES COULD NOT BE ENFORCED. CLA USE 10 OF THE SAID AGREEMENT ALSO MADE IT CLEAR THAT PARTY OF THE SECOND PART, I.E. M/S. RADHA REALTY ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 43 CORPORATION LTD., SHALL BE AT LIBERTY TO ENTER INTO NEGOTIATIONS WITH THIRD PARTY FOR SALE OF ANY PART OF THE SCHEDULED LAND. N.RAVINDRANATH REDDY, ON BE HALF OF PARTY OF THE SECOND PART, M/S. RADHA REALTY CORPORATION LTD. PAID AN AMOUNT OF RS.6.50 CRORES TO THE ASSESSEE AND RS.50 LAKHS TO HIS GPA HOLDERS AT THE TIME OF AGREEMENT OF SALE, DURING THE FINANCIAL YEAR 2005 - 06. IT WAS FURTHER SUBMITTED HAT DURIN G JULY, 2007, N.RAVINDRANATH REDDY AGREED TO SELL THE SUBJECT LAND TO M/S. MALI FOREX AND M/S. DEMI REALTORS AND STARTED NEGOTIATING IN THAT REGARD. HOWEVER, M / S. DEMI REALTORS COORDINATED WITH VARIOUS PERSONS WHO CLAIMED OWNERSHIP OVER THE SAID LAND. HE NCE, A COMPROMISE PETITION WAS FILED BEFORE THE LOK ADALAT SIGNED BY ALL PARTIES CLAIMING OWNERSHIP OVER THE LAND, ADME A SURING 41 ACRES 34 GUNTAS IN SURVEY NOS. 262 TO 274 AND ULTIMATELY BY VIRTUE OF THE ORDER PASSED BY THE LOK ADALAT, A SALE DEED WAS EXEC UTED IN FAVOUR OF GRANDBAY ESTATES DEVELOPERS LTD. AND VENEZLA ESTATE DEVELOPERS LTD., BOTH SUBSIDIARIES OF DLF ON 22.11.2007. IT WAS SUBMITTED HAT AS PER THIS SALE DEED ALSO, THE ASSESSEE HAS NO T RECEIVED ANY AD V ANCE FROM THE PU R CHA S ERS. IT WAS THEREFOR E SUBMITTED THAT AS THE ASSESSEE HAS NO T RECEIVED ANY ADVANCE, NOR IT IS PARTY TO ANY AGREEMENT AND UN D E R STANDING BETWEEN RAVINDRANATH REDDY AND DEMI REALTOR, AS ALLEGED IN THE DRAFT MOU IT CANNOT BE SAID THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.13.8 1 CRORES . IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICER WAS ALSO NOT JUSTIFIED IN COMMENTING THAT M/S. D E MI REALTOR S H A S PAID CASH OF RS.8.50 CRORES TO THE ASSESSEE FOR WHICH IT HAS TAKEN CASH RECEIPTS FROM THE ASSESSEE AS PER THE SE IZED DOCUMENT, VIDE ANN E XURE A/DSKR/SR/03 . IT WAS SUBMITTED THAT THE MANAGING DIRECTOR OF M/S. DEMI REALTOR S , D.S.KARUNAKAR REDDY, ACKNOWLEDGED PAYMENT OF RS.8.5 CRORES TO THE ASSESSEE, BUT AT THE SAME TIME, ALSO ACKNOWLEDGED RECEIPT OF RS.8.50 CRORES FRO M THE ASSESSEE WHICHW AS CATEGORICALLY STATED BY HIM AT THE TIME OF RECORDING OF THE STATEMENT DURING THE SEARCH PROCEEDINGS. IT WAS SUBMITTED BY THE ASSESSEE THAT HAD THE ASSESSEE BEEN PAID THE AMOUN T OF RS.13.81 CRORES, THEN, SOME OTHER CORROBORATIVE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 44 E VIDENCE SHOULD HAVE BEEN RECORDED BY THE DEPARTMENT AT THE TIME OF SEARCH, WHICH SHOULD HAVE INDICATED SUCH PAYMENT. IT WAS THUS SUBMITTED THAT MERELY ON THE BASIS OF AN UNSIGNED DRAFT MOU, ADDITION CANNOT BE MADE ON HYPOTHETICAL BASIS AND MERELY ON CON JECTURES AND SURMISES. IN SUPPORT OF SUCH CONTENTION S , THE ASSESSEE RELIED ON VARIOUS DECIS I ON S OF THE APEX COURT , VARIOUS HIGH COU R TS AND THE TRIBUNAL. 73. THE CIT(A), ON CONSIDERATION OF THE SUBMISSIONS OF THE ASSESSEE AND ON GOING THROUGH THE FACT S AND CIRCUMSTANCES ON RECORD, AND PARTICULARLY EXAMINING THE DRAFT MOU, SEIZED FROM THE PREMISES OF THE MOU AND M/S. RADHA REALTY CORPORATION LTD., FOUND THAT THE SAID DRAFT MOU IS MADE BETWEEN THE ASSESSEE AND HIS NOMINEE AS FIRST PARTY AND M/S. RADHA R EALTY CORPORATION LTD. AS SECOND PARTY AND M/S. MALI FOREX LTD AND M/S. DEMI REALTORS AS THIRD PARTY, AND THIS DRAFT MOU IS IN RESPECT OF LAND ADMEASURING 41 ACRES AND 34 GUNTAS IN SURVEY NO.262 TO 274 SITUATED AT PUPPALGUDA VILLAGE. AS PER THE DRAFT MOU , THE FIRST PARTY AND SECOND PARTY HAVE AGREED TO TRANSFER ALL THEIR EXISTING RIGHTS AND CLAIMS IN THE SCHEDULED PROPERTY TO THE THIRD PARTY FOR A TOTAL CONSIDERATION OF RS.68.50 CRORES. HOWEVER, THE DETAILS ABOUT THE NATURE OF PAYMENT AND OTHER PARTICUL ARS HAVE BEEN LEFT BLANK. HE FURTHER NOTED THAT THE DRAFT MOU ALSO WAS NOT SIGNED BY ANY OF THE PARTIES. ON CONSIDERING THE AFORESAID FACT, THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT THE DRAFT MOU WAS SENT TO HIM BY RAVINDRANATH REDDY FOR HIS PERU SAL ONLY, AND THE ASSESSEE IS IN NO WAY ACCOUNTABLE WITH REGARD TO THE CONTENTS OF THE DRAFT MOU. THE CIT(A) FURTHER TAKING NOTE OF THE FACT THAT THOU G H INITIALLY THE ASSESSEE AND ITS NOMINEES ENTERED INTO AN AGREEMENT WITH RAVINDRANATH REDDY ON 5.11.200 5 FOR A CON S I D ERATION OF RS.21 CRORES, SUBJECT TO FULFILLMENT OF CERTAIN CON D I TI ON S WITH REGARD TO THE SETTLEMENT OF DISPUTES BUT SINCE THE CONDITIONS COULD NO T BE FULFILLED, THE AGREEMENT COULD NOT BE PUT THROUGH. FURTHER, THE SALE DEED DATED 22.8.2007 I N FAVOUR OF D \ LF MAKES IT CLEAR THAT PAYM E N T S WERE MADE DIRECTLY BY DLF TO VARIOUS ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 45 PERSONS, WHO WERE SIGNATORIES TO THE SALE DEED AND THE ASSESSEE IS NOT A PARTY TO THAT. HE FURTHER NOTED THAT THERE IS NO CLARITY IN UNSIGNED DRAFT MOU WITH REGARD TO THE S HARE OF THE ASSESSEE AND HIS NOMINEES. AS THE DRAFT MOU SPEAKS OF THE TOTAL CONSIDERATION BEING PAYABLE TO BOTH THE PARTIES OF THE FIRST AND SECOND PART. IN THESE CIRCUMSTANCES, IT IS NOT CORRECT TO ASSESS THE TOTAL DIFFERENCE IN THE HANDS OF THE ASSESSEE , WHEN M/S. RADHA REALTY CORPORATION LTD. IS ALSO A PARTY TO SUCH CONSIDERATION. THE CIT(A) HELD THAT THE DRAFT MOU FOUND AT THE TIME OF SEARCH, BEING AN UNSIGNED ONE, CAN AT BEST BE CONSIDERED AS A DUMB DOCUMENT AND CANNOT BE RELIED UPON FOR THE PURPOSE OF MAKING ANY ADDITION. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED CASH PAYMENT OF RS.8.5 CRORES FROM DEMI REALTORS AS PER SEIZED RECEIPTS IS CONCERNED, THE CIT(A) HELD THAT THE VIEW OF THE ASSESSING OFFICER IS NOT CO RRECT AS D.S.KARUNAKAR REDDY, PARTNER OF M/S. DEMI REALTOR, THOUGH ACKNOWLEDGED PAYMENT OF RS.8.5 CRORES TO THE ASSESSEE, AT THE SAME TIME, HE ALSO ACKNOWLEDGED THE RECEIPT OF RS.8.5 CRORES FROM THE ASSESSEE IN HIS SWORN STATEMENT. THE CIT(A) FURTHER OBS ERVED THAT THE ASSESSING OFFICER HAS ALSO NOT BROUGHT ON RECORD ANY EVIDENCE TO INDICATE THAT ANY CASH PAYMENT WAS MADE TO THE ASSESSEE. HE FURTHER NOTED THE FACT THAT EVEN DURING THE COURSE OF SEARCH CONDUCTED AT DIFFERENT PLACES, CONNECTED WITH THE LAND TRANSACTIONS, NO MATERIAL WAS FOUND INDICATING SUCH CASH PAYMENT TO THE ASSESSEE. HE THEREFORE, CAME TO THE CONCLUSION THAT ONLY ON THE BASIS OF AN UNSIGNED MOU, WITHOUT ANY OTHER INDEPENDENT CORROBORATIVE EVIDENCE, TO SUBSTANTIATE SUCH FACT, NO ADDITION CAN BE MADE BASED ON PRESUMPTIONS ONLY. FOR THESE REASONS, THE CIT(A) DELETED THE ADDITION OF RS.13.81 CRORES MADE BY THE ASSESSING OFFICER, BY HOLDING THAT NO SUCH ADDITION CAN BE MADE BASING ON UNSIGNED MOU ALONE, WHICH HAS NO EVIDENTIARY VALUE. 74. WE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES. AS CAN BE ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 46 SEEN FROM THE MATERIALS ON RECORD, THE ADDITION OF RS.13.81 CRORES WAS MADE BY THE ASSESSING OFFICER ONLY RELYING UPON THE DRAFT MOU WHICH IS AN UNSIGNED ONE. THERE IS NO OTHER CORROBORATIVE EVIDENCE BROUGHT ON RECORD EITHER AS A RESULT OF SEARCH OR ENQUIRY MADE BY THE ASSESSING OFFICER, WHICH COULD ESTABLISH THE FACT THAT THE CONTENTS OF THE DRAFT MOU WERE TRUE AND THE MOU W AS IN FACT ACTED UPON. THEREFORE, IN THE ABSENCE OF ANY SUCH EVIDENCE, THE MOU IS MERELY A DUMB DOCUMENT HAVING NO EVIDENTIARY VALUE AND HENCE CANNOT BE MADE THE BASIS FOR MAKING AN ADDITION. THAT APART, AS HAS BEEN ELABORATELY DISCUSSED BY THE CIT(A), E VEN ASSUMING THE DRAFT MOU TO BE CORRECT, THERE IS NEITHER MENTION OF THE CONSIDERATION PAID NOR MODE OF SUCH PAYMENT. MOREOVER, WHEN AS PER THE DRAFT MOU, THE CONSIDERATION HAS TO BE PAID BOTH TO THE ASSESSEE AND M/S. RADHA REALTY CORPORATION LTD., THE ENTIRE PAYMENT BEING THE DIFFERENTIAL AMOUNT COULD NOT HAVE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE ALONE. IT IS ALSO A FACT TO TAKE NOTE OF, THAT THE FINAL SALE DEED DATED 22.8.2007 IN FAVOUR OF DLF WITH REGARD TO SALE OF LAND IN DISPUTE, DOES NOT ME NTION ABOUT ANY PAYMENT BEING MADE TO THE ASSESSEE OR HIS NOMINEES. THAT BEING THE CASE, IT CANNOT BE SAID THE ASSESSEE HAS RECEIVED THE AMOUNT OF RS.13.81 CRORES IN CASH TOWARDS THE SALE OF LAND MERELY ON THE BASIS OF THE DRAFT MOU. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE REASONS DISCUSSED BY THE CIT(A) IN THE IMPUGNED ORDER WHILE DELETING THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER. WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUNDS OF THE REVENUE IN THIS APPEAL. 75. IN THE RESULT, APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2008 - 09, BEING ITA NO.468/HYD/2012, IS DISMISSED. ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 47 76. TO SUM UP - ( A ) A SSESSEES APPEAL FOR ASSESSMENT YEAR 2002 - 03, BEING ITA NO.914/HYD/2002 - 03, IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ( B ) RE VENUES APPEAL, ITA NO.900/HYD/2011, FOR ASSESSMENT YEAR 2003 - 04, IS DISMISSED. ( C ) OUT OF CROSS APPEALS FOR ASSESSMENT YEAR 2004 - 05, WHILE ASSESSEES APPEAL BEING ITA NO.915HYD/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES, THE REVENUES APPEAL BEING ITA N O.901/HYD/2011 IS DISMISSED. ( D ) ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005 - 06, BEING ITA NO.916/HYD/2011, IS ALLOWED FOR STATISTICAL PURPOSES. ( E ) ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006 - 07, BEING ITA NO.1052/HYD/2011 IS DISMISSED. ( F ) ASSESSEES APPEAL FO R ASSESSMENT YEAR 2007 - 08, BEING ITA NBO.1053/HYD/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ( G ) OUT OF THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2008 - 09, WHILE ASSESSEES APPEAL, BEING ITA NO.313/HYD/2012 IS PARTLY ALLOWED, APPEAL OF THE REVENUE, BEING ITA NO.468/HYD/2012, IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 22.11.2013 SD/ - SD/ - (CHANDRA POOJARI) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED/ - 22 ND NOVEMB ER , 2013 ITA NO. 914/ HYD/201 1 AND EIGHT OTHERS SHRI V.RAMCHANDRA RAO, HYDERABAD 48 COPY FORWARDED TO: 1 SHRI V.RAMCHANDRA RAO, 8 - 2 - 686/8/2, ROAD NO.12,BANJARA HILLS, HYDERABAD 2 DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 6 , HYDERABAD 3 COMMISSIONER OF INCOME - TAX(APPEALS) I, HYDERABAD 4 COMMISSIONER OF INCOME - TAX CENTRAL I , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S