Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 77911 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-05-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Assessment Year
2007-2008
Appeal Filed On
13-05-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. ASST. YR. APPELL ANT RESPONDENT 493,494,495,923 926 /HYD/11 2001 - 02, 02-03,04-05 TO 07-08. M/S JAI BALAJI SANITARY STORES, HYDERABAD. PAN:AABEJ3445F DCIT, C.CIR-4, HYDERABAD. 496,497,1225 &1226/H/2011 2006 - 07,07 - 08,01-02 &02-03 SMT.DEEPA AGARWAL, HYDERBAD. PAN:ABGPA5824 K -DO- 921,1155,1156,1157,1158, 1223 &1224/HYD/11 2001-02 TO 2007-08 MR. ANIL KISHORE AGARWAL, HYDERABAD. PAN:ABGPA5830R -DO- 922/HYD/2011 2006-07 SRI ISHWARLAL AGARWAL, HYDERABAD . PAN:ABFPA5500K -DO- 778/HYD/2011 2004-05 DCIT, CC - 4, HYDERABAD. M/S JAI BALAJI SANITARY STORES, HYDERABAD. 777,1368 TO 1373/HYD/2011 2001-02 TO 2007-08 - DO - MR. ANIL KISHORE AGARWAL, HYDERABAD. ASSESSEES BY SHRI P. MURALI MOH AN RAO DEPARTMENT BY SHRI P. SOMA SEKHAR REDDY DATE OF HEARING 04-04-2014 DATE OF PRONOUNCEMENT 28 - 0 5 - 2014 ORDER PER SAKTIJIT DEY, J.M: THESE ARE BUNCH OF 27 APPEALS RELATING TO FOUR DIFF ERENT ASSESSEES AGAINST SEPARATE ORDERS OF CIT (A). SINC E ASSESSEES ARE OF THE SAME GROUP AND THE ISSUES ARE INTERCONNECTED , ALL THE 2 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. APPEALS ARE CLUBBED TOGETHER AND TAKEN UP FOR DISPO SAL BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. JAI BALAJI SANITARY STORES:- (ITA NOS. 493,494, 495 & 923 TO 926/HYD/11:- 2. THERE ARE EIGHT APPEALS IN THIS GROUP INCLUDING CROSS APPEALS FOR 2004-05. WE WILL FIRST DEAL WITH ASSESSEES AP PEALS. 3. THE ONLY COMMON ISSUE IN ALL THESE APPEALS EXCEP T THE AMOUNT INVOLVED IS ESTIMATION OF PROFIT AT 10% ON U NACCOUNTED TURNOVER. SINE FACTS ARE IDENTICAL, WE WILL DEAL WI TH THE FACTS RELATING TO ASST. YEAR 2001-02 (ITA NO.493/HYD/2011 ). 4. BRIEFLY THE FACTS ARE, THE ASSESSEE A PARTNERSHI P FIRM IS ENGAGED IN BUSINESS OF TRADING IN SANITARY WARES AND PLASTIC TANKS. A SEARCH AND SEIZURE OPERATION WAS CONDUCTE D IN GROUP CASES OF THE ASSESSEE ON 12-9-2006. SIMULTANEOUSLY , A SURVEY OPERATION WAS CONDUCTED IN THE ASSESSEES BUSINESS PREMISES U/S 133A OF THE ACT. SUBSEQUENTLY A NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE CALLING FOR RETURN OF INCOME. IN RESPONSE TO THE NOTICE ISSUED THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ADMITTING TOTAL INCOME OF RS.35,796.91 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT AS PER 3 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THE INVENTORY OF STOCK FOUND AT THE TIME OF SURVEY OPERATION ON 12- 9-2006, THE VALUE OF STOCK WAS RS.32,35,248/-. HOW EVER, CERTAIN LOOSE SLIPS CONTAINING NOTING OF RECEIPTS FOUND AT THE RESIDENCE OF ANIL KUMAR AGARWAL, A PARTNER OF THE ASSESSEE FIRM REVEALED UNACCOUNTED TURNOVER OF THE ASSESSEE FIRM FOR THE A SSESSMENT YEAR 2001-02 TO 2007-08. ON THE BASIS OF THESE SEIZED M ATERIALS, THE ASSESSING OFFICER QUANTIFIED THE UNACCOUNTED TURNOV ER OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR AT RS.1,6 9,56,852/-. WHEREAS, AS PER THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAS ADMITTED TURNOVER O F RS.53,53,040/-. 5. THE ASSESSING OFFICER THEREFORE PROPOSED TO EST IMATE THE PROFIT AT 10% ON THE UNACCOUNTED TURNOVER. THE ASS ESSEE IN ITS EXPLANATION SUBMITTED THAT THE SALES NOTED IN THE L OOSE SHEETS HAVE ALREADY BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE HAS FILED RETURN OF INCOME ON THE BASIS OF SUCH BOO KS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT ON THE BASIS OF LOOSE SHEETS ESTIMATING SALES FOR 365 DAYS OR 300 DAYS IS NOT LE GAL. IT WAS SUBMITTED THAT THE LOOSE SHEETS CANNOT BE RELIED UP ON AS THERE ARE NOT ONLY CALCULATION MISTAKES BUT THERE ARE TOTALLI NG ERRORS, GOODS REFUND AMOUNT ETC. THEREFORE, THE LOOSE SHEETS ARE CLEARLY IN THE 4 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. NATURE OF DUMB DOCUMENTS ON THE BASIS OF WHICH SALE S OR PURCHASES CANNOT BE ESTIMATED. IT WAS SUBMITTED T HAT THE PROPOSED ESTIMATION OF PROFIT ON THE BASIS OF NOTIN G MADE IN THE LOOSE SHEETS WILL NOT BE PROPER. THE ASSESSING OFF ICER HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE FOR THE R EASON THAT THE LOOSE SHEETS ACTUALLY REPRESENT UNACCOUNTED SALES O F THE ASSESSEE WHICH ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCO UNTS. AS THE ASSESSEE HAS NOT PRODUCED REGULAR BOOKS OF ACCOUNTS AT THE TIME OF SEARCH AND SEIZURE OPERATION OR DURING THE ASSESSME NT PROCEEDINGS, REAL PROFIT OF BUSINESS OF THE ASSESSE E CAN ONLY BE ARRIVED AT ON THE BASIS OF ESTIMATION. ACCORDINGLY , THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE PROFIT AT 10% OF THE UNACCOUNTED TURNOVER OF RS.1,69,56,852/-QUANTIFIED ON THE BASIS OF LOOSE SLIPS FOUND AT THE TIME OF SEARCH AND ADDED THE AMOUNT OF RS.16,95,685/-. SIMILAR ADDITIONS WERE MADE IN RES PECT OF OTHER ASSESSMENT YEARS. BEING AGGRIEVED, THE ASSESSEE PR EFERRED APPEALS BEFORE THE CIT (A). 6. BEFORE THE CIT (A), THE ASSESSEE OBJECTING TO TH E ADDITION MADE BY THE ASSESSING OFFICER SUBMITTED THAT THE LO OSE SHEETS FOUND AT THE TIME OF SEARCH AND SEIZURE OPERATIONS BEING NOTHING BUT DUMB DOCUMENTS RELYING UPON THE ENTRIES MADE TH EREIN 5 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. TURNOVERS OF THE ENTIRE YEAR CANNOT BE DEDUCED AND PROFIT CANNOT BE ESTIMATED ON SUCH TURNOVER. THE CIT (A) AFTER C ONSIDERING THE SUBMISSION OF THE ASSESSEE HOWEVER WAS NOT CONVINCE D WITH THE SAME AND SUSTAINED THE ADDITION MADE BY THE ASSESSI NG OFFICER BY OBSERVING THAT AS THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CASE WITH NECESSARY EVIDENCES AND BOOKS OF ACCO UNTS, THERE IS NO ILLEGALITY IN THE ADDITION MADE. 7. THE LEARNED AR REITERATING THE SUBMISSIONS MADE BEFORE THE DEPARTMENT AUTHORITIES CONTENDED THAT THE ADDITIONS HAVING BEEN MADE PURELY ON THE BASIS OF LOOSE SHEETS WHICH DO N OT HAVE ANY EVIDENTIARY VALUE, CANNOT BE SUSTAINED. IT WAS SUB MITTED THAT THE LOOSE SHEETS ONLY CONTAIN ROUGH FIGURES AND ROUGH S TATEMENT SUCH AS GOODS, CASH ACCOUNT, CASH SALES, NUMBERS OF CERT AIN TRADERS ETC. THE LOOSE PAPERS BY THEMSELVES LEAD TO NO CONCLUSIO N AND HENCE ESTIMATION OF TURNOVER ON THE BASIS OF SUCH LOOSE S HEETS IS INVALID. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR PLACE D RELIANCE ON THE FOLLOWING DECISIONS:- I) M/S. ALL CARGO GLOBAL LOGISTICS LIMITED VS. DC IT (ITA NOS 5018 TO 5022 AND 5099/HYD/10 DATED 6/7/2012). II) ATUL KUMAR JAIN VS. DCIT(64 TTJ 786) 6 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 8. THE LEANED AR SUBMITTED THAT PRESUMPTION U/S 132 (4A) IS AVAILABLE TO REVENUE ONLY FOR THE LIMITED PURPOSE O F SEARCH AND SEIZURE AND CANNOT OVER-RIDE THE PROVISIONS OF SECT ION 69 OF THE ACT. HENCE THE ADDITION MADE IS NOT SUSTAINABLE IN LAW. WITHOUT PREJUDICE TO THE AFORESAID CONTENTION, THE LEARNED AR SUBMITTED THAT ON THE BASIS OF THE ENTRIES IN THE LOOSE SHEET S, THE ASSESSING OFFICER HAS WORKED OUT YEARLY TURNOVERS AND ESTIMAT ED INCOME AT THE RATE OF 10% OF SUCH TURNOVER WHICH IS NOT CORRE CT. IT WAS SUBMITTED THAT THOUGH IN LOOSE SHEETS TURNOVER HAS BEEN RECORDED FOR SOME DAYS BUT THE ASSESSING OFFICER BY TAKING I T AS THE BASIS WORKED OUT THE TURNOVERS FOR 300 DAYS. IT WAS SUBM ITTED THAT EXTRAPOLATION OF TURNOVER FOR 300 DAYS IS NOT CORRE CT AS THE BUSINESS OF THE ASSESSEE IS SEASONAL AND THE SALE I S NOT EVEN THROUGHOUT THE YEAR. THEREFORE, THE UNACCOUNTED TU RNOVER, IF ANY, HAS TO BE RESTRICT TO FEW DAYS AS RECORDED IN THE L OOSE SHEETS. THE LEARNED AR SUBMITTED THAT WHILE ESTIMATING THE PROF IT AT 10% ON THE TURNOVERS DETERMINED BASED ON THE SEIZED MATERI AL, THE ASSESSING OFFICER HAS NOT REDUCED THE TURNOVERS ADM ITTED AS PER REGULAR BOOKS OF ACCOUNTS MAINTAINED WHICH ARE VERY MUCH AVAILABLE WITH THE ASSESSING OFFICER IN THE RETURN S OF INCOME FILED. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO SHOW THAT THE TURNOVERS ADMITTED BY THE ASSESSEE ARE IN ADDI TION TO THE 7 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. TURNOVERS ESTIMATED BY THE ASSESSING OFFICER. APAR T FROM THE AFORESAID SUBMISSIONS, THE LEARNED AR SUBMITTED THA T EVEN ASSUMING THAT THE FIGURES RECORDED IN THE LOOSE S HEETS ARE UNACCOUNTED TURNOVERS OF THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION BUT THE ESTIMATION OF PROFIT AT 10% I S NOT ONLY UNREASONABLE BUT HIGH AND EXCESSIVE CONSIDERING THE ACTUAL PROFIT EARNED BY THE ASSESSEE FOR DIFFERENT YEARS WHICH AS REFLECTED IN THE RETURNS OF INCOME ARE AS UNDER:- ASST. YR. SALES (RS.) NET PROFIT (RS.) % OF NET PROFIT 1998-99 54,79,976 16,056 0.29% 1999-00 56,38,609 2,59,708 4.60% 2000-01 43,82,902 21,797 0.50% 2001-02 53,53,040 35,797 0.67% 2002-03 42,69,530 6,103 0.14% 2003-04 50,85,555 14,842 0.29% 2004-05 51,84,644 49,774 0.96% 2005-06 55,07,703 1,91,433 3.48% 2006-07 42,86,632 1,03,280 2.41% 2007-08 42,84,581 1,21,944 2.85% IT WAS THEREFORE CONTENDED THAT THE PROFIT ESTIMATE D AT 10% IS HIGH IN THIS LINE OF BUSINESS AND SHOULD BE CONSIDERED A T AN AVERAGE RATE OF 1.62%. IN THIS CONTEXT, THE LEARNED AR ALSO REL IED UPON THE 8 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. DECISION OF ITAT, HYDERABAD BENCH IN CASE OF ECI EN GG., & CONSTRUCTION CO. LIMITED (ITA NO.2048/HY/11 DT./ 4- 5-2012.). 9. FINALLY, THE LEARNED AR CONTENDED THAT ANY INCOM E ADDED IN THE HANDS OF THE FIRM ON ACCOUNT OF UNEXPLAINED/UNA CCOUNTED TURNOVER SHOULD BE ALLOWED TO BE TELESCOPED IN THE HANDS OF THE PARTNER. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON A DECISION OF ITAT, HYDERABAD BENCH IN CASE OF SRI RAVINDER KU MAR (ITA NOS. 387 TO 389/HYD/12 DT. 17-6-2013.) 10. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING THE VIEW EXPRESSED BY THE REVENUE AUTHORITIES SUBMITTED THAT AS THE LOOSE SLIPS WERE SEIZED FROM THE POSSESSION OF THE MANAGING PARTNER SRI ANIL KUMAR AGARWAL AND AS THEY REVEALED UNACCOUNTED TRANSACTION OF THE ASSESSEE FIRM, THE ADDITION MADE IS JUSTIFIED. 11. WE HAVE HEARD THE PARTIES, PERUSED THE ORDERS O F THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIAL ON RE CORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE LEARNED AR. IT IS NOT DISPUTED THAT DURING THE SEARCH AND S EIZURE OPERATION, CERTAIN DOCUMENTS WERE FOUND IN THE POSSESSION OF S RI ANIL KUMAR AGARWAL WHO HAPPENS TO BE THE PARTNER OF THE ASSESS EE FIRM. THE DOCUMENTS DID REVEAL CERTAIN TRANSACTION RELATING T O SANITARY WARE WITH AMOUNTS AND NAMES OF CERTAIN TRADERS. THOUGH IT IS THE 9 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. CONTENTION OF THE ASSESSEE BEFORE US THAT THESE DOC UMENTS SEIZED FROM SRI ANIL KUMAR AGARWAL ARE DUMB DOCUMENTS HAVI NG NO EVIDENTIARY VALUE, HOWEVER THE FACTS AND MATERIALS ON RECORD CLEARLY PROVES THAT THE ASSESSEE ITSELF HAS ADMITTE D BEFORE THE ASSESSING OFFICER THAT THE ENTRIES MADE IN THE DOCU MENTS SEIZED REPRESENT SALES. THIS IS CLEARLY EVIDENT FROM THE EXPLANATION SUBMITTED BEFORE THE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCEEDINGS WHICH IS EXTRACTED AT PARA 1.2 OF THE ASSESSMENT ORDER. 12. IN FACT IN THE WRITTEN SUBMISSIONS FILED BEFOR E US, IN CASE OF APPEALS RELATING TO PARTNER SRI ANIL KUMAR AGARWAL, THE ASSESSEE HAS CATEGORICALLY ADMITTED THAT ENTRIES IN THE LOOS E SHEETS ARE TRANSACTIONS RELATING TO THE ASSESSEE FIRM. IN TH ESE CIRCUMSTANCES, THE CONTENTION OF THE ASSESSEE THAT THE DOCUMENTS SEIZED ARE DUMB DOCUMENTS HAVING NO EVIDENTIARY VAL UE, CANNOT BE ACCEPTED. NOW COMING TO THE OTHER CONTENTION OF TH E LEARNED AR THAT THE ASSESSING OFFICER WAS WRONG IN EXTRAPOLATI NG THE TURNOVERS FOR FEW DAYS RECORDED IN LOOSE PAPERS TO 300 DAYS I T IS TO BE NOTED THAT THE CONCURRENT FINDING OF THE ASSESSING OFFICE R AS WELL AS THE CIT (A) IS, THE ASSESSEE HAS FAILED TO PRODUCE EITH ER ITS BOOKS OF ACCOUNTS OR ANY OTHER EVIDENCE TO DISPROVE THE TRAN SACTION 10 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. RECORDED IN THE SEIZED DOCUMENTS. FURTHER, IT IS T HE CONTENTION OF THE ASSESSEE THAT THE SALE RECORDED IN THE LOOSE SH EETS HAVE BEEN ACCOUNTED FOR AND ON THAT BASIS RETURNS HAVE BEEN FILED. IN THIS CONTEXT, WE HAVE TO HOLD THAT THOUGH THE ALLEGATIO N OF THE DEPARTMENT IS, THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS, BUT AT THE SAME TIME, EXCEPT THE LOOSE SLIPS THERE ARE NO OTHER MATERIAL BEFORE THE DEPARTMENT TO SUGGEST THAT ASSE SSEE HAD ANY TURNOVER OVER AND ABOVE WHAT IS RECORDED IN THE LOO SE SHEETS. THEREFORE, IT HAS TO BE PRESUMED THAT ASSESSEE HAS DISCLOSED PART OF THE TURNOVER RECORDED IN THE LOOSE SHEETS IN THE RETURNS FILED. 13. THE OTHER CONTENTION OF THE ASSESSEE THAT THE ESTIMATION OF PROFIT AT 10% IS HIGH IN THIS LINE OF BUSINESS, TO SOME EXTENT, APPEARS TO BE CORRECT, CONSIDERING THE AVERAGE RATE OF PROFIT FOR THE PRECEDING YEARS GIVEN IN THE TABLE EXTRACTED HEREIN BEFORE. HOWEVER, PROFIT SHOWN BY THE ASSESSEE ALSO APPEARS TO BE ON LOWER SIDE. AS HAS BEEN HELD BY THE HONBLE SUPREME COUR T IN CASE OF COMMISSIONER OF SALES-TAX VS. H.M.ESUFALI H.M. ABDU LALI ( 90 ITR 271), WHILE ESTIMATING THE PROFIT, SOME AMOUNT OF G UESS WORK IS NECESSARY. HOWEVER, THE ESTIMATION MADE SHOULD BE R EASONABLE AND MUST HAVE REASONABLE NEXUS WITH THE MATERIAL S ON RECORD. IN THE PRESENT CASE, WHEN THE ASSESSEE HAS ADMITTED LY NOT 11 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. PRODUCED ITS BOOKS OF ACCOUNTS BEFORE THE REVENUE A UTHORITIES, THERE IS NO OPTION LEFT WITH THEM BUT TO ESTIMATE T HE PROFIT OF THE ASSESSEE. HOWEVER, PROFIT HAS TO BE ESTIMATED APPLY ING A REASONABLE RATE. IN THE PRESENT CASE SEARCH HAS TA KEN PLACE ON 12-9-2006 I.E., IN FINANCIAL YEAR 2006-07 RELEVANT TO THE ASST. YEAR 2007-08. THEREFORE, TAKING IT AS A BASE WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE PROFIT ON UNACCOUNTED TURNO VER AT DOUBLE THE RATE OF THE AVERAGE NET PROFIT DECLARED BY THE ASSESSEE FOR THE ASST. YEAR 2007-08 AND THE PRECEDING TWO ASSESSMEN T YEARS I.E., ASST. YEAR 2005-06 AND 2006-07. FURTHER, THE ASSES SING OFFICER MUST ENSURE THAT THERE CANNOT BE INCLUSION OF DISCL OSED TURNOVER WHILE ESTIMATING PROFIT FROM UNDISCLOSED TURNOVER A S PER THE SEIZED MATERIAL. IN OTHER WORDS, TURNOVER ALREADY DISCLOS ED SHOULD BE EXCLUDED FROM THE UNACCOUNTED TURNOVER. FOLLOWING T HE DECISION OF CO-ORDINATE BENCH IN CASE OF SRI RAVINDER KUMAR (SU PRA), WE DIRECT THE ASSESSING OFFICER TO ALLOW TELESCOPING OF THE U NACCOUNTED INCOME AT THE HANDS OF THE PARTNERS WHILE CONSIDERI NG INVESTMENTS MADE BY THEM. 14. IN THE RESULT, GROUND RAISED IS PARTLY ALLOWED . ITA NOS. 494,495 & 923 TO 926/HYD/2011 12 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 15. SINCE GROUNDS RAISED IN THESE APPEALS ARE COMMON AND IDENTICAL TO THE GROUND RAISED IN ITA NO.493/HYD/11 , FOLLOWING THE REASONING GIVEN THEREIN, WE GIVE SIMILAR DIRECTION TO THE ASSESSING OFFICER TO ESTIMATE PROFIT ACCORDINGLY ON THE UNAC COUNTED TURNOVER AND ALSO ALLOW TELESCOPING OF SUCH INCOME AT THE HA NDS OF PARTNERS. 16. IN THE RESULT, ALL THESE APPEALS ARE ALLOWED IN PART. ITA NO.778/HYD/2011- DEPARTMENTAL APPEAL FOR 2004-0 5 :- 17. THE ONLY ISSUE IN THE APPEAL OF THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT (A) IN DELETING THE ADDITI ON MADE U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED PURCHASES. 18. BRIEFLY THE FACTS ARE DURING THE ASSESSMENT PRO CEEDINGS ON THE BASIS OF CERTAIN DOCUMENTS/SLIPS SEIZED FROM TH E RESIDENCE OF PARTNER OF SRI ANIL KUMAR AGARWAL, THE ASSESSING OF FICER CONCLUDED THAT THE ENTRIES MADE IN THE LOOSE SHEETS REPRESENT UNACCOUNTED SALES OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER DISPUTE WHICH WAS QUANTIFIED AT RS.2,02,50,912/- AND PROFIT ON S UCH UNACCOUNTED TURNOVER WAS ESTIMATED BY APPLYING THE RATE OF 10% WHICH WORKED OUT TO RS.20,25,091/-. THE ASSESSING OFFICER WAS ALSO OF THE OPINION THAT SINCE THE ASSESSEE FIRM IS INVOLVED IN UNACCOUNTED SALES, THERE WOULD BE UNACCOUNTED PURCH ASES ALSO. 13 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THE ASSESSING OFFICER THEREFORE PROCEEDED TO WORK O UT THE UNACCOUNTED PURCHASES BY REDUCING THE GROSS PROFIT AS SHOWN IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07. ON THE BASIS OF THE AFORESAID WORKING THE PEAK OF THE PURCHASES AMOUNTING TO RS.1,61,33,902/- WAS FOUND T O BE IN THE ASSESSMENT YEAR 2004-05. HE THEREFORE WAS OF THE VIEW THAT THE AMOUNT OF RS.1,61,33,902/- BEING THE PEAK OF THE PU RCHASES HAS TO BE TREATED AS PURCHASES OUTSIDE THE BOOKS OF ACCOUN TS OUT OF WHICH UNACCOUNTED INCOME HAS BEEN GENERATED. HE THEREFOR E PROPOSED TO ADD THE SAME TO THE INCOME OF THE ASSESSEE. THO UGH THE ASSESSEE OBJECTED TO THE PROPOSED ADDITION BY CONTE NDING THAT ESTIMATION OF SALES ON THE BASIS OF LOOSE SHEETS FO R 365 DAYS IS NOT LEGAL AND SALES ALREADY REFLECTED IN THE RETURN OF INCOME SHOULD BE EXCLUDED. IT WAS FURTHER CONTENDED THAT THE WORKI NG OUT OF THE UNACCOUNTED PURCHASES IS ALSO NOT CORRECT AS THE NE T PROFIT OUGHT TO HAVE BEEN ESTIMATED AT 0.96% OF THE UNDISCLOSED TUR NOVER. FURTHER, THE DEPARTMENT CANNOT MAKE ADDITION ON ONE SIDE BY TAKING THE PERCENTAGE OF PROFIT AND AGAIN FOR UNAC COUNTED PURCHASES. THE ASSESSING OFFICER HOWEVER WITHOUT A CCEPTING THE EXPLANATION OF THE ASSESSEE ADDED THE AMOUNT OF RS. 1,61,33,902/- TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, 14 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THE ASSESSEE CHALLENGED THE SAME IN THE APPEAL PREF ERRED BEFORE THE CIT (A). 19. BEFORE THE CIT (A), IT WAS SUBMITTED BY THE ASS ESSEE THAT THE ASSESSING OFFICER SHOULD NOT HAVE MADE ANY ADDITION ON ACCOUNT OF PEAK PURCHASES AS THE ASSESSING OFFICER HAS ARTIFIC IALLY WORKED OUT THE PURCHASES FOR EACH FINANCIAL YEAR MAKING OUT TH E PEAK PURCHASES OF RS.1,61,33,902. IT WAS FURTHER SUBMI TTED THAT THE ASSESSING OFFICER BY MAKING OUT THE TOTAL UNACCOUNT ED SALES AT RS.2,02,50,912/- HAS REDUCED THE NET GROSS PROFIT AMOUNTING TO RS.41,17,010/-. IT WAS SUBMITTED BY THE ASSESSEE T HAT THE ADDITION MADE ON ACCOUNT OF PEAK PURCHASES BEING PU RELY IMAGINARY FIGURES, IT HAS TO BE DELETED. THE CIT ( A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 5.2. THE SUBMISSION MADE BY THE AUTHORIZED REPRESEN TATIVE HAS BEEN CONSIDERED. IT IS SEEN THAT THE ASSESSING OFFIC ER HAS CLAIMED UNACCOUNTED SALES AS PER THE SEIZED MATERIA L AND ALSO ESTIMATED FOR THE ENTIRE PREVIOUS YEAR AT RS.2,02,5 0,092/-. THE ASSESSING OFFICER HAS WORKED OUT GROSS PROFIT ON SAID TURNOVER AT 10% WHICH COMES TO RS.20,25,091/-. FURTHER, AS IT COULD BE SEEN THAT THE ASSESSING OFFICER HAS TAKEN THE SAME T URNOVER AS BASIS AND HE HAS ALLOWED PROFIT OF 20.31% WHICH COMES TO RS.41,17,010 WHICH HAS BEEN DEDUCTED FROM TURNOVER O F RS.2,02,50,912/- AND THEREBY HE HAS ARRIVED THE PUR CHASES 15 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. OUTSIDE OF THE BOOKS OF ACCOUNTS AT RS.1,61,33,,902/- . AFTER HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CA SE, I FIND THAT THE ASSESSING OFFICER HAS NO BASIS TO COMPUTE TH E PURCHASES OF RS.1,61,33,902 AS UNACCOUNTED PURCHASES . THE ASSESSING OFFICER HAS NOT FOUND OUT ANY MATERIAL WIT H REGARD TO THE UNACCOUNTED PURCHASES AND HE CLAIMED THAT THERE WERE UNACCOUNTED SALES, THEREFORE, ON THE SAID SALES, HE HAD COMPUTED THE PROFITS @10%. FURTHER, IT MAY BE SEEN THAT WHEN HE ASSESSING OFFICER HAS TAKEN PROFITS ON UNACCOUNTED SALES AGAIN HE CANNOT MAKE AN ADDITION OF PURCHASES SAYING THAT THERE ARE UNACCOUNTED PURCHASES. IN A NORMAL COURSE OF B USINESS, THE BUSINESSMAN MAKES PURCHASES AND SELLS AND WITH THE SAME PROCEEDS AGAIN PURCHASES AND SELLS. SO UTMOST, THE RE COULD BE ONLY A PROFIT ON THE SALES WHICH COULD BE TAKEN FOR T AX PURPOSE BUT NOT THE PURCHASES ALSO FOR ADDITION PURPOSE. T HEREFORE, HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CA SE, I AM OF THE VIEW THAT THE ASSESSING OFFICER CANNOT TAX THE A PPELLANT ON ACCOUNT OF PURCHASES AS WELL AS ON SALES. THEREFORE , I AM INCLINED TO DELETE THE ADDITION MADE BY THE ASSESSI NG OFFICER AND THIS GROUND OF APPEAL IS ALLOWED ACCORDINGLY. 20. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSING OFFICER HIMSELF HAS ACC EPTED THE FACT THAT THE ENTRIES MADE IN THE LOOSE PAPERS REPRESENT UNACCOUNTED SALES OF THE ASSESSEE. IT IS ALSO A FACT THAT THE ASSESSING OFFICER HAS ESTIMATED PROFIT ON SUCH UNACCOUNTED SALES TURN OVER. THAT BEING THE CASE, IT IS NOT REASONABLE ON THE PART OF THE ASSESSING 16 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. OFFICER TO MAKE ADDITIONS ON ACCOUNT OF UNACCOUNTED PURCHASES ON THE BASIS OF THE SAME ENTRIES AS FOUND RECORDED IN THE SEIZED DOCUMENTS. THEREFORE, THE FINDING OF THE CIT (A) I N THIS REGARD APPEARS TO BE JUST AND REASONABLE. THE LEARNED DR COULD NOT ADVANCE ANY CONVINCING ARGUMENT TO ENABLE US TO TAK E A CONTRARY VIEW. IN AFORESAID VIEW OF THE MATTER, WE ARE INCL INED TO UPHOLD THE ORDER OF THE CIT (A) ON THIS ISSUE BY DETERMINI NG THE GROUNDS RAISED. 21. IN THE RESULT, DEPARTMENT APPEAL IS DISMISSED. ITA NO. 921/HYD/11 ANIL KUMAR AGARWAL (BY ASSESSEE) 22. THE ONLY ISSUE IN THIS APPEAL WHICH IS ALSO A COMMON ISSUE IN OTHER APPEALS OF THE ASSESSEE, IS WITH REGARD TO T HE ADDITION OF UNACCOUNTED INTEREST INCOME. 23. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIV IDUAL. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN CASE OF JAI BALAJI GROUP CASES ON12-9-2006. THE ASSESSEE IS A PARTNER OF J AI BALAJI SANITARY STORES IN WHOSE CASE A SURVEY WAS CONDUCTE D SIMULTANEOUSLY. AS ALLEGED BY THE DEPARTMENT, DURIN G THE SEARCH AND SEIZURE OPERATIONS CONDUCTED, CERTAIN SLIPS/DOC UMENTS WERE FOUND AND SEIZED FROM THE POSSESSION OF THE ASSESSE E WHICH 17 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. REFLECTED UNACCOUNTED SALES OF THE PARTNERSHIP FIRM JAI BALAJI SANITARY STORES. AS A CONSEQUENCE OF THE SEARCH AN D SEIZURE OPERATION, A NOTICE U/S 153A WAS SENT TO THE ASSESS EE CALLING FOR RETURN OF INCOME. IN PURSUANCE TO THE NOTICE U/S 153A, THE ASSESSEE FILED A RETURN OF INCOME ON 12-9-2007 DEC LARING INCOME OF RS.16,560/-SUBSEQUENTLY, THE ASSESSEE FILED A RE VISED RETURN ON 4-11-2008 ADMITTING INCOME OF RS.16,557. DURING TH E ASSESSMENT PROCEEDING THE ASSESSING OFFICER ON THE BASIS OF S EIZED MATERIAL MARKED AS NO.A/HIMA/RES/2,3,4,5,6,7,10,11,16,17,19, 20 AND 21 SEIZED FROM THE ASSESEES RESIDENCE, WAS OF THE VIE W THAT, THE ASSESSEE HAS EARNED INCOME FROM MONEY LENDING BUSIN ESS WHICH WAS NOT DISCLOSED TO THE DEPARTMENT. THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HAS FAILED TO EXPLAIN S UCH INCOME EARNED QUANTIFIED RS.4,13,220/, TREATED IT AS UNEX PLAINED INCOME OF THE ASSESSEE AND ADDED TO HIS TOTAL INCOME. SIM ILAR ADDITIONS OF DIFFERENT AMOUNTS WERE MADE IN OTHER ASSESSMENT YEA R UNDER APPEAL. BEING AGGRIEVED OF THE ADDITION MADE, ASSES SEE CHALLENGED THE SAME BEFORE THE CIT (A). 24. IN COURSE OF HEARING BEFORE THE CIT (A), IT WAS SUBMITTED BY THE ASSESSEE THAT BY RELYING UPON CERTAIN ENTRIES M ADE IN THE SEIZED MATERIAL AGAINST THE NAME OF CERTAIN PERSONS , THE ASSESSING 18 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. OFFICER HAS ASSUMED THAT THE TOTAL SUM IS RS.4,13,2 20/- AND SUCH AMOUNT HAS BEEN TREATED BY THE ASSESSING OFFICER AS THE INTEREST RECEIVED BY THE ASSESSEE FROM THE SAID PERSONS, WHI CH IS NOT AT ALL CORRECT. IT WAS SUBMITTED THAT THE NAMES OF THE PA RTIES INDICATE ONLY SUNDRY DEBTORS, IN OTHER WORDS, THESE PERSONS MIGHT HAVE BOUGHT GOODS ON CREDIT BASIS. THEREFORE, THE ASS ESSING OFFICER BEING UNDER THE MISTAKEN IMPRESSION THAT THE ASSESS EE HAS BEEN COLLECTING INTEREST ON THE MONEY LENT TO THOSE PERS ONS HAVE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HOWEVE R, CONFIRMED THE ADDITION BY OBSERVING THAT NO CONVINCING EXPLAN ATION WITH REGARD TO THE NOTING IN THE LOOSE SHEETS AGAINST T HE NAME OF THE PERSONS COULD BE GIVEN BY THE ASSESSEE. THE CIT (A ) CONCLUDED THAT THE ASSESSEE HAD BEEN CHARGING INTEREST ON SUN DRY DEBTORS WHO HAVE PURCHASED THE GOODS FROM THE ASSESSEE ON C REDIT BASIS. HE THEREFORE HELD THAT IN THE ABSENCE OF ANY VALID EXPLANATION FROM THE ASSESSEE, THE TOTAL SUM APPEARING IN THE SLIPS/ SEIZED DOCUMENTS IS INTEREST CHARGED AGAINST THE SALES SHO WN ON CREDIT BASIS AND ACCORDINGLY UPHELD THE ADDITION. 25. THE LEARNED AR SUBMITTED BEFORE US THAT THE LOO SE SLIPS ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS MADE T HE ADDITION HAS 19 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. NO EVIDENTIARY VALUE. FURTHER, THE CIT (A) HAVING HELD THAT ASSESSEE HAS NOT MADE ANY MONEY LENDING BUSINESS, T HE QUESTION OF EARNING INTEREST FROM MONEY LENDING WOULD NOT AR ISE. THE AR SUBMITTED THAT THE ASSESSING OFFICER HIMSELF HAS ST ATED THAT THE ENTRIES APPEARING IN THE LOOSE SHEETS PERTAINING T O JAI BALAJI SANITARY STORES, THAT BEING THE CASE, NO ADDITION C AN BE MADE IN THE HANDS OF THE ASSESSEE. IT WAS SUBMITTED THAT A S THE ASSESSING OFFICER HAS ALREADY TREATED THE ENTRIES APPEARING IN THE LOOSE SHEETS AS UNDISCLOSED INCOME OF JAI BALAJI SANITA RY STORES ADDING THE SAME IN THE HANDS OF THE ASSESSEE WOULD RESULT IN DOUBLE TAXATION OF THE SAME INCOME. 26. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDER OF THE CIT (A). 27. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIALS ON RECORD. AS IS EVIDENT FR OM THE FINDING OF THE ASSESSING OFFICER ON THE BASIS OF ENTRIES MADE IN THE LOOSE SHEETS REFERRED TO BY HIM HE HAS CONCLUDED THAT THE Y REPRESENT ASSESSEES UNACCOUNTED INCOME FROM MONEY LENDING BU SINESS. HOWEVER, A PERUSAL OF THE SAID SEIZED DOCUMENTS, CO PIES OF WHICH HAVE BEEN PLACED BEFORE US, FOR INSTANCE, ITEM NO. 3 AT PAGE-8 OF THE SEIZED DOCUMENT CLEARLY SHOWS AGAINST THE NAME OF YOGESH, 20 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THE FIGURE 2 HAS BEEN NOTED, WHEREAS THE ASSESSI NG OFFICER HAS TREATED IT TO BE REPRESENTING THE AMOUNT OF RS.2,00 0/-. IT IS FURTHER CONTENTION OF THE LEARNED AR THAT THE ASSES SING OFFICER HAS MISTOOK THE LETTERS ENT AFTER THE NAME YOGESH TO BE INT AND THEREBY CAME TO BELIEVE THAT IT IS INTEREST FROM M ONEY LENDING BUSINESS. WHEREAS THE LETTERS ACTUALLY ARE ENT M EANING ENTERPRISE. ON A PERUSAL OF THE SEIZED DOCUMENTS, THE AFORESAID CONTENTION OF THE ASSESSEE APPEARS TO BE CORRECT. T HAT BESIDES ON WHAT BASIS THE ASSESSING OFFICER HAS CONSIDERED THE FIGURE-2 AS RS.2,000 IS NOT KNOWN AS THE ASSESSING OFFICER HAS NOT MADE ANY DISCUSSION IN THAT REGARD IN THE ASSESSMENT ORDER. ON THE OTHER HAND, THE CIT (A) HAS HELD IN HIS ORDER THAT THE N AME OF THE PARTIES APPEARING IN LOOSE SHEETS ARE TRADE DEBTO RS, WHO HAVE BOUGHT GOODS ON CREDIT BASIS. THAT BEING THE FINDI NG OF THE CIT (A), IT IS TO BE ASSUMED THAT THE DEPARTMENT HAS A CCEPTED THE ENTRIES MADE IN THE LOOSE SHEETS TO BE RELATING TO SALE OF GOODS ON CREDIT BASIS TO DIFFERENT PARTIES. IF THAT IS THE C ASE, IT IS NOT UNDERSTOOD HOW THE ASSESSEE CAN BE HELD TO HAVE CHA RGED INTEREST ON CREDIT WHICH RELATE TO THE SALES MADE BY THE PAR TNERSHIP FIRM. EVEN ASSUMING FOR THE SAKE OF ARGUMENT THAT THE AMO UNTS MENTIONED BY THE ASSESSING OFFICER IS CORRECT, THE N IT ACTUALLY REPRESENT THE SALE SHOWN ON CREDIT BASIS (SUNDRY DE BTORS) AS HELD 21 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. BY THE CIT (A). THAT BEING THE CASE, NO ADDITION C AN BE MADE AT THE HANDS OF THE ASSESSEE ON ACCOUNT OF INTEREST ON SUCH CREDIT SALES AS THE SALES RELATE TO THE FIRM JAI BALAJI S ANITARY STORES AND NOT THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, IN OUR VIEW, THE ADDITION MADE BY THE ASSESSING OFFICER HAS NO LEGS TO STAND. ACCORDINGLY, WE ARE CONSTRAINED TO DELETE THE ADDIT ION MADE. ITA NO.1155/HYD/11- ANIL KISHORE (BY ASSESSEE) GROUND NOS. 1 TO 5 ARE COVERED BY THE DECISION IN ITA NO. 921/HYD/11. THIS ISSUE RAISED IN GROUND NOS. 1-5 ARE SIMILAR TO THE ISSUE RAISED IN ITA NO.921/HYD/2011. FOLLOWING OUR DECISION HERE IN, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER . 28. IN GROUND NO.6 TO 8, THE ASSESSEE HAS CHALLENGE D THE ADDITION OF RS.4,60,000/- AS UNEXPLAINED INVESTMENT . BRIEFLY, THE FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSEE HAD ENTERED INTO AGREEMENT FOR PURCHASE OF LAND AT NAN AKRAMGUDA, SERILINGAMPALLY, RR DISTRICT FROM GULAB SINGH & OT HERS. FURTHER, REVENUE STAMPED RECEIPTS BY GULAB SINGH AND OTHERS WERE ALSO FOUND AND SEIZED IN TOKEN OF RECEIPT OF CASH FROM THE ASSESSEE TOWARDS SALES CONSIDERATION AS PER THE AGREEMENT OF SALE DATED 18- 6-2001. THE TOTAL AMOUNT AS PER THE RECEIPTS IS R S.4,60,000/-. WHEN ASKED TO EXPLAIN THE ASSESSEE SUBMITTED THAT T HOUGH HE 22 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. HAD ENTERED INTO AGREEMENT OF SALE BUT WHEN HE FO UND THAT THE PROPERTY IS A GOVERNMENT LAND, THE DEAL WAS CANCELL ED AND THE AMOUNT WAS RECEIVED BACK. THE ASSESSING OFFICER HO WEVER, MENTIONING THAT THE ASSESSEE HAS NOT BEEN ABLE TO P RODUCE ANY EVIDENCE TO SHOW THAT HE HAS RECEIVED BACK THE AMOU NT AND HE HAS FAILED TO PROVE SOURCE OF SUCH INVESTMENT, TREATED THE AMOUNT OF RS.4,60,000/- AS UNEXPLAINED INVESTMENT FOR THE YEA R UNDER CONSIDERATION AND ADDED IT TO THE INCOME OF THE ASS ESSEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A) . THE CIT (A) ALSO SUSTAINED THE ADDITION BY HOLDING THAT THE PAY MENT OF RS.4,60,000/- BY THE ASSESSEE HAS NOT BEEN DISPUTED . HOWEVER, THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURC E OF INVESTMENT OF RS.4,60,000/- AND ACCORDINGLY, HE CONFIRMED THE ADDITION. 29. THE LEARNED AR SUBMITTED BEFORE US THAT THE ASS ESSEE HAS NEITHER PURCHASED THE PROPERTY IN QUESTION NOR HAS PAID ANY ADVANCE TOWARDS THE PURCHASE OF THE SAID PROPERTY. THEREFORE, NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT OF TH E SAID AMOUNT CAN BE MADE. 30. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT THE AGREEMENT OF SALE COUPLED WITH RECEIPTS FROM THE O WNERS OF THE LAND WHICH ARE FOUND AND SEIZED FROM THE ASSESSEE C LEARLY 23 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. ESTABLISHED THE FACT THAT THE ASSESSEE HAS PAID THE AMOUNT OF RS.4,60,000/-. HENCE, THE ADDITION IS JUSTIFIED. 31. WE HAVE HEARD THE PARTIES AND PERUSED THE MATE RIAL ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORI TIES. IT IS NOT DISPUTED THAT THE AGREEMENT OF SALE DATED 18-6-2001 AND THE RECEIPTS ACKNOWLEDGING CASH PAYMENT RECOVERED FROM THE POSSESSION OF THE ASSESSEE AT THE TIME OF SEARCH DO INDICATE THE FACT THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT F OR PURCHASE OF THE LAND AND HAS PAID THE AMOUNT AS INDICATED IN TH E RECEIPT. HOWEVER, THE LEARNED AR AT THE TIME OF HEARING BEF ORE US AS WELL IN HIS WRITTEN SUBMISSION HAS SUBMITTED THAT ASSESS EE HAS NEITHER PURCHASED THE LAND NOR HAS PAID THE AMOUNT OF RS.4, 60,000/- TO THE PERSONS CONCERNED. IN VIEW OF SUCH SUBMISSION, WE ARE INCLINED TO REMIT THIS ISSUE TO THE FILE OF THE ASS ESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND DECIDE THE ISS UE ACCORDINGLY AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THESE GROUNDS ARE CONSIDERED TO BE ALLOW ED FOR STATISTICAL PURPOSES. 32. THE NEXT ISSUE IN THIS APPEAL IS WITH REGARD T O THE ADDITION OF RS.2,10,000/- AS UNEXPLAINED INVESTMENT. 24 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 33. BRIEFLY THE FACTS ARE, WHILE EXAMINING THE SEIZ ED MATERIAL MARKED AS ANNEXURE NO. A/HIMA/RES/POI/9, WHICH IS A MEMORANDUM OF UNDERSTANDING DATED 8-6-2001 BETWEEN THE ASSESSEE AND SMT. CHANDRAKALA AND OTHERS, REVEALED THAT AS PER THE SAID MOU, THE ASSESSEE WOULD BE PROVIDING FUNDS FOR OBTAINING NECESSARY PERMISSION FOR SALE IN RESPECT OF LAND IN SURVEY NO. 340/7 ADMEASURING 4 ACRES 17 GUNTAS SITUATED AT RAJ ENDRA NAGAR MANDAL, RR DISTRICT. THE GPA DATED 8-6-2001 WHICH WAS ALSO SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERATION ALSO INDICATED THE SAME FACT. WHEN THE ASSESSING OFFICER RAISED T HE QUERY WITH REGARD TO THE PAYMENT OF RS.2,10,000/- AS PER THE M OU AND GPA, THE ASSESSEE EXPLAINED THAT HE WAS TO ENTER INTO A GREEMENT WITH SMT. CHANDRAKALA FOR PURCHASE OF THE LAND FOR WHICH HE HAS PAID THE ADVANCE OF RS.2,10,000/-. HOWEVER, SUBSEQUENTL Y WHEN HE CAME TO KNOW THAT THE LAND IN QUESTION IS A GOVERNM ENT LAND, HE CANCELLED THE AGREEMENT AND THE ADVANCE WAS RETURNE D BACK TO HIM. IT WAS THEREFORE SUBMITTED THAT THE AMOUNT OF RS.2,10,000/- NEED NOT BE ADDED. THE ASSESSING OFFICER HOWEVER ST ATED THAT THOUGH THE ASSESSEE MIGHT HAVE RECEIVED BACK THE AM OUNT ON CANCELLATION OF THE AGREEMENT BUT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE FOR THE AMOUNT OF RS.2,10,000 /- INVESTED BY HIM. HE FURTHER OBSERVED THAT THE ASSESSEE HAD FAI LED TO ESTABLISH 25 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THAT THE AMOUNT IN QUESTION HAS BEEN RECORDED IN TH E BOOKS OF ACCOUNTS. HE THEREFORE TREATED THE AMOUNT OF RS.2, 10,000/- AS UNEXPLAINED INVESTMENT AND ADDED IT TO THE INCOME OF THE ASSESSEE. 34. ON APPEAL, THE CIT (A) ALSO CONFIRMED SUCH ADDI TION. 35. THE LEARNED AR SUBMITTED BEFORE US THAT THE AMO UNT WAS ADVANCED FROM THE CASH BALANCE AVAILABLE WITH THE A SSESSEE AS WELL AS OTHERS IN THE GROUP. IT WAS SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF SUCH ADVANCE IN THE CASH FL OW STATEMENT OF THE ASSESSEE AS WELL AS OTHER MEMBERS OF THE GROUP WHEREIN THE PEAK CASH PAYMENTS AND CASH BALANCE AVAILABLE WITH THE MEMBERS OF THE GROUP WERE SHOWN. FURTHER, IT WAS SUBMITTED THAT EVEN TELESCOPING OF THE INCOME WITHIN THE MEMBERS OF A G ROUP IS ALLOWABLE AND INCOME OF ONE ASSESSEE OF THE GROUP CAN BE TELESCOPED AGAINST THE INVESTMENT MADE BY ANOTHER A SSESSEE OF THE SAME GROUP. IN THIS CONTEXT, THE LEARNED AR REL IED UPON THE FOLLOWING DECISIONS:- I) SRI RAVINDERKUMAR (ITA NO. 387-389/HYD/12 II) RAJ KUMAR HARVAI & OTHERS VS. DCIT, C C-4,HYDERABAD (ITA NO.11/HYD/2005) 26 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. III) DCIT , CC-5, HYDERABAD VS. PV RAMANA REDDY (IT NO.1262-1265/HYD/08) 36. THE LEARNED DR, ON THE OTHER HAND, JUSTIFIED TH E ADDITION MADE BY THE ASSESSING OFFICER. 37. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. ON A PERUSAL OF THE ORDER PASSED BY THE AS SESSING OFFICER, IT IS TO BE SEEN THAT HE HAS MADE THE ADDITION FOR THE REASON THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF IN VESTMENT OF RS.2,10,000/-. HOWEVER, IT IS THE CLAIM OF THE ASS ESSEE THAT THE ASSESSEE AS WELL AS OTHER MEMBERS OF THE FAMILY TOG ETHER ARE HAVING AVAILABLE CASH BALANCE TO MAKE SUCH INVESTME NT. IN THIS CONTEXT, THE LEARNED AR REFERRED TO THE STATEMENT S HOWING AVAILABLE CASH BALANCE WITH THE ASSESSEE AND OTHER MEMBERS OF THE FAMILY AS ON 31-3-2001 AMOUNTING TO RS.17,98,531/- . HE ALSO REFERRED TO A STATEMENT SHOWING PEAK CASH PAYMENT MADE DURING THE FINANCIAL YEAR 2001-02 TO SHOW THAT THE ASSESSE E HAD ADEQUATE CASH BALANCE TO MAKE THE ADVANCE OF RS.2,10,000/-. ON GOING THROUGH THE STATEMENT SHOWING THE AVAILABILITY OF C ASH WITH THE FAMILY MEMBERS AS WELL AS STATEMENT OF PEAK CASH PA YMENT, WE ARE OF THE VIEW THAT THE MATTER REQUIRES TO BE RE -EXAMINED BY THE ASSESSING OFFICER AFRESH AFTER TAKING INTO CONSIDER ATION THE 27 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. INVESTMENT IF ANY MADE BY DIFFERENT MEMBERS OF THE GROUP DURING THE RELEVANT FINANCIAL YEAR. IF ON SUCH VERIFICATIO N IT IS ULTIMATELY FOUND THAT THERE IS ADEQUATE CASH BALANCE AVAILABLE WITH THE FAMILY MEMBERS WITHIN THE GROUP, AS WELL AS PROFIT ON UNAC COUNTED TURNOVER ASSESSED AT THE HANDS OF THE PARTNERSHIP FIRM, JAI BALAJI SANITARY STORES WHICH IS ALSO AVAILABLE FOR TELESCO PING AT THE HANDS OF THE PARTNER, THEN NO ADDITION CAN BE MADE OF THE AMOUNT IN DISPUTE. ACCORDINGLY, THIS ISSUE IS REMITTED TO TH E FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ITA NO.1156/HYD/11 (BY ASSESSEE) 38. THE SOLE ISSUE RAISED IN THIS APPEAL IS SIMILAR AND IDENTICAL TO THE ISSUE DECIDED BY US IN ITA NO.921/HYD/11. FOLLO WING THE SAME, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDIT ION. ITA NO.1157/HYD/11 (BY ASSESSEE) 39. FIRST ISSUE RELATING TO ADDITION OF RS.29,11, 350/- RAISED IN THIS APPEAL IS SIMILAR AND IDENTICAL TO THE ISSUE DECIDE D BY US IN ITA NO.921/HYD/11. FOLLOWING THE SAME, WE DIRECT THE AS SESSING OFFICER TO DELETE THE ADDITION. 40. THE NEXT ISSUE IS WITH REGARD TO THE ADDITION OF RS.10,75,000/- AS UNEXPLAINED INVESTMENT. 28 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 41. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER WHILE EXAMINING THE SEIZED MATERIAL MARKED AS A/H IMA/RES/13 FOUND THAT THE ASSESSEE HAS GIVEN LOAN OF RS.10 L AKH ON 21-4- 2003 AT THE RATE OF 9.25% PER MONTH TO SAI RAGHAVEN DRA CONSTRUCTION REPRESENTED BY SRI M. JANARDHAN. THE A SSESSEE HAS INITIALLY DENIED THAT NEITHER HE HAS ENTERED INTO ANY SUCH TRANSACTION OR HE HAS PAID ANY ADVANCE. THE ASSES SING OFFICER ISSUED SUMMONS TO SRI JANARDHAN AND RECORDED A STAT EMENT FROM HIM. IN THE STATEMENT RECORDED, SRI JANARDHAN ADMI TTED THAT THE SEIZED DOCUMENT IS MEMORANDUM OF UNDERSTANDING BETW EEN M/S RAGHAVENDRA CONSTRUCTIONS, HIMSELF AND ANIL KISHORE AGARWAL IN RESPECT OF HAND LOAN OF RS.10 LAKH ON 21-4-2003. HE FURTHER STATED THAT THE LOAN WAS RECEIVED BY HIM IN CASH FR OM SRI ANIL KISHORE AGARWAL. HE FURTHER STATED THAT THE AMOUNT WAS RECEIVED AT THE INTEREST RATE OF 2.5% PER MONTH FOR A PERIOD OF SIX MONTHS. SRI M. JANARDHAN FURTHER STATED THAT AS PER THE SE IZED DOCUMENT WHICH IS AN AGREEMENT OF SALE BETWEEN SAI RAGHAVAEN DRA CONSTRUCTIONS AND THE ASSESSEE FLAT NO.503, FIRST F LOOR IN RAGHAVNDRA HOLDEN HEIGHTS AT DURGABHAI DESHMUCK COL ONY, BAGH AMBERPET, HYDERABAD WAS GIVEN AS A SECURITY FOR THE HAND LOAN TAKEN BY HIM AND IT WAS NOT PROPOSED TO BE SOLD. W HEN THIS STATEMENT WAS CONFRONTED, THE ASSESSEE SUBMITTED TH AT HE HAS 29 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. RECEIVED BACK THE AMOUNT OF RS.10 LAKH ALONG WITH I NTEREST OF RS.75,000/- FROM THE PERSON CONCERNED. THE ASSESSI NG OFFICER THOUGH ACCEPTED THAT THE AMOUNT OF RS.10 LAKH WAS R ECEIVED BACK BY THE ASSESSEE ALONG WITH INTEREST OF RS.75,000/- HOWEVER, HE ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE ON T HE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCES OF SUCH AMOUNT. THE CIT (A) ALSO CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOUR CE OF SUCH LOAN ADVANCED TO SAI RAGHAVAENDRA CONSTRUCTIONS. 42. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE WAS ALSO RAI SED IN ITA NO.1155/HYD/11 WHEREIN THE ASSESSEE HAS CONTENDED T HAT THE ASSESSEE ALONG WITH OTHER MEMBERS IN THE GROUP HAD ADEQUATE CASH BALANCE AVAILABLE WITH THEM TO MAKE SUCH INVES TMENT. IN THIS CONTEXT, HE REFERRED TO THE STATEMENT SHOWING CASH BALANCE AVAILABLE WITH THE GROUP AS ON 31-3-2003 AND STATEM ENT SHOWING PEAK CASH PAYMENT DURING THE FINANCIAL YEAR 2003-04 . 43. HAVING CONSIDERED THE SUBMISSIONS OF THE PARTIE S, WE FIND THAT THE ISSUE IS SIMILAR TO THE ISSUE RAISED IN IT A NO.1155/HYD/11 AND THEREFORE FOLLOWING OUR DECISION IN PARAGRAPH-3 7, WE REMIT THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH SI MILAR DIRECTION. 30 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 44. THE NEXT ISSUE IS WITH REGARD TO THE ADDITION O F RS.8 LAKH AS UNEXPLAINED INVESTMENT. AS PER THE SEIZED DOCUMEN T I.E., ITEM NO. A/HIMA/RES/POI/9 WHICH IS A DEED DT.12-3-2004 ON A STAMP PAPER EXECUTED BY SRI HARISH KUMAR GOUD INDICATED ADVANCING LOAN OF RS.8 LAKH BY THE ASSESSEE. AS PER THE SAID DEED, LAND BELONGING TO SRI HARISH KUMAR GOUD WAS MORTGAGED. IN RESPONSE TO THE QUERY MADE BY THE ASSESSING OFFICER THE ASSE SSEE STATED THAT THE ASSESSEE HAS ACTUALLY PAID RS.2 LAKH TO T HE PERSON CONCERNED IN THE YEAR 1997-98 TO PURCHASE HIS PROPE RTY. HOWEVER DUE TO SOME FAMILY PROBLEMS, THE DEAL COULD NOT GO THROUGH AND SRI GOUD ALSO DID NOT PAY BACK THE MONEY. THEREFO RE, THE ASSESSEE WAS FORCED TO SETTLE THE AMOUNT BY MAKIN G HIM TO EXECUTE THE SALE DEED AND RETURN BACK THE AMOUNT OF RS.10 LAKH ALONG WITH COMPENSATION AMOUNTING TO RS.8 LAKH. HO WEVER, SRI GOUD DUE TO HIS BAD FINANCIAL POSITION COULD RETURN BACK ONLY RS.2 LAKH WHICH WAS PAID BY THE ASSESSEE TO HIM. IT WAS SUBMITTED THAT THE ASSESSEE NEVER PURCHASED THE PROPERTY IN QUESTI ON. IN THIS CONTEXT, HE PRODUCED ENCUMBRANCE CERTIFICATE. THE ASSESSING OFFICER HOWEVER BELIEVING THE EXPLANATION OF THE AS SESSEE ADDED THE AMOUNT OF RS.8 LAKH. THE CIT (A) ALSO CONFIRME D SUCH ADDITION BY HOLDING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE LOAN ADVANCE OF RS.8 LAKH. 31 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 45. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIAL ON RE CORD. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT DURING THE A SSESSMENT PROCEEDINGS, THE ASSESSEE HAS ONLY ADMITTED OF HAVI NG ADVANCED AN AMOUNT OF RS.2 LAKH WHICH WAS ALSO STATED TO HA VE BEEN RECEIVED BACK BY HIM. HOWEVER, IN THE WRITTEN SUBMI SSION FILED BEFORE US THE ASSESSEE IN FACT HAS ACCEPTED OF HAVI NG ADVANCED THE AMOUNT OF RS.8 LAKH TO SRI HARISH GOUD. HOWEVER, I T IS THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE AND OTHER FAMILY ME MBERS ARE HAVING SUFFICIENT CASH BALANCE TO ADVANCE SUCH AMOU NT. IN THIS CONTEXT, HE REFERRED TO THE STATEMENT SHOWING CASH BALANCE AS ON 31-3-2003 AND STATEMENT SHOWING PEAK CASH PAYMENT M ADE DURING THE FINANCIAL YEAR 2003-04. CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE AND FOLLOWING OUR DECISION IN PARAGRAP H-37 WHILE DECIDING SIMILAR ISSUE RAISED IN ITA NO.1155/HYD/1 1, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CONS IDERING THE SAME AFRESH. ITA NO.1158/HYD/11 (BY ASSESSEE) 46. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION OF RS.35,09,050/-TOWARDS UNDISCLOSED INTEREST INCOME. WE HAVE DEALT WITH SIMILAR ISSUE IN ITA NO.921/HYD/11. FOLLOWING THE REASONING 32 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. GIVEN THEREIN, WE DIRECT THE ASSESSING OFFICER TO D ELETE THE SAID ADDITION. ITA NO.1223/HYD/11 47. FIRST ISSUE IS WITH REGARD TO ADDITION OF RS.30,35, 450/- MADE BY THE ASSESSEE IN MONEY LENDING BUSINESS. THIS IS SUE IS SIMILAR TO THE ISSUE DECIDED IN ITA NO.921/HYD/11. FOLLOWING THE REASONING GIVEN THEREIN IN ITA NO.921/HYD/11 (SUPRA), WE DELE TE THE ADDITION MADE BY THE ASSESSING OFFICER. 48. THE NEXT ISSUE RELATES TO ADDITION OF AN AMOUNT OF RS.2,50,000/- AS UNEXPLAINED INVESTMENT. BRIEFLY THE FACTS ARE, ON THE BASIS OF SEIZED DOCUMENT MARKED AS A/HIMA/RES/ 13 WHICH IS A STAMPED RECEIPT DATED 30-12-2005 ISSUED BY SRI DATT ATREYA AND OTHERS ACKNOWLEDGING RECEIPT OF RS.5 LAKH AS ADVA NCE IN RESPECT OF A PROPERTY AT MADHAPUR AND ANOTHER SEIZED DOCUM ENT IN STREET NO.2 OF ANNEXURE A/HIMA/RES/6 WHICH REVEALED PAYMEN T OF RS.2.50 LAKH TOWARDS PURCHASE OF A PROPERTY AT BAHA DURPURA, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLA IN THE SOURCE OF SUCH PAYMENTS. IN RESPONSE TO THE QUERY MADE BY THE ASSESSING OFFICER, THE ASSESSEE CONTENDED THAT HE HAS WITHDR AWN CASH FROM HIS SAVINGS BANK ACCOUNT AND PAID AN AMOUNT OF RS.2 ,50,000/- TOWARDS HIS SHARE IN THE PROPERTY. HOWEVER, THE AS SESSING OFFICER 33 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. WAS OF THE VIEW THAT THE ASSESSEE HAS NOT ESTABLISH ED ANY NEXUS BETWEEN THE SAVINGS BANK ACCOUNT AND THE INVESTMENT MADE. HE THEREFORE TREATED THE AMOUNT OF RS.2,50,000/- AS UN DISCLOSED INVESTMENT AND ADDED IT TO THE INCOME OF THE ASSESS EE. THE ADDITION MADE WAS CHALLENGED IN APPEAL BEFORE THE C IT (A). 49. THE CIT (A) CONFIRMED THE ADDITION BY STATING T HAT THE ASSESSEE HAS FAILED TO EXPLAIN SATISFACTORILY THE S OURCE OF INVESTMENT. 50. THE LEARNED AR SUBMITTED BEFORE US THAT THE AMO UNT OF RS.2.50 LAKH WAS PAID OUT OF CASH AVAILABLE WITH TH E ASSESSEE AND OTHER MEMBERS OF THE GROUP. IN THIS CONTEXT, HE RE FERRED TO THE STATEMENT SHOWING CASH AVAILABLE WITH THE FAMILY ME MBERS AND STATEMENT SHOWING PEAK CASH PAYMENT. 51. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDERS OF THE CIT (A). 52. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF THE REVENUE AS WELL AS RELEVANT MATERIAL ON RECORD. TH IS ISSUE IS SIMILAR TO THE ISSUE RAISED IN ITA NO.1155/HYD/11. FOLLOWING OUR DECISION GIVEN THEREIN IN PARAGRAPH-37, WE REMIT TH IS MATTER BACK 34 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING A FRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 53. THE NEXT ISSUE IS RELATING TO THE ADDITION OF RS.35,00,000/- AS UNEXPLAINED INVESTMENT. WHILE EXAMINING THE SEI ZED MATERIAL I.E. SHEET NOS. 67 TO 70, THE ASSESSING OFFICER FOU ND THE SAME TO BE AN AGREEMENT OF SALE DATED 13-10-2005 EXECUTED BY SRI P. MALLESWHWARA RAO, GPA OF KHAJA YOUSUFFUDDIN AND OTH ERS TO THE ASSESSEE FOR PURCHASE OF PROPERTY BEARING PLOT NO.8 A, OLD SURVEY NO.129 (OLD SURVEY NO.403) SITUATED AT ROAD NO.2 B ANJARA HILLS, HYDERABAD. AS PER THE SALE AGREEMENT, THE ASSESSEE HAD PAID ADVANCE OF RS.15 LAKH. A RECEIPT ACKNOWLEDGING PAYM ENT OF RS.15 LAKHS TO SRI MALLESWAR RAO BY THE ASSESSEE WAS ALSO SIZED. FURTHER, ANOTHER SEIZED DOCUMENT BEARING SHEET NO.63 DATED 1 5-11-2005 IS A RECEIPT ACKNOWLEDGING RECEIPT OF RS.5 LAKH FRO M THE ASSESSEE IN RESPECT OF THE SAID PROPERTY. THUS, THE TOTAL AMOU NT AS PER THE SEIZED DOCUMENT PAID BY THE ASSESSEE DURING THE FIN ANCIAL YEAR IS RS.35 LAKH. WHEN ASKED TO EXPLAIN, THE ASSESSEE ST ATED THAT NEITHER HE HAS PAID ANY AMOUNT NOR ANY SUCH TRANSA CTION HAS TAKEN PLACE. IT WAS FURTHER EXPLAINED THAT THE MON EY RECEIPTS WERE OBTAINED FOR THE PURPOSE OF SHOWING TO OTHERS AS SE COND SALE. THE ASSESSING OFFICER HOWEVER DISBELIEVED THE EXPLANATI ON OF THE 35 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. ASSESSEE AND ADDED THE AMOUNT AS UNEXPLAINED INVEST MENT. THE CIT (A) SUSTAINED THE ADDITION WITH THE OBSERVATION THAT THE ASSESSEE HAS FAILED TO SUBMIT ANY DETAILS IN SUPPOR T OF HIS CLAIM AND HE FURTHER OBSERVED THAT WHEN THE AGREEMENT OF SALE AND RECEIPTS SEIZED FROM THE ASSESSEE INDICATED PAYMEN T OF ADVANCE BY THE ASSESSEE, WITHOUT SUFFICIENT EVIDENCE, THE A SSESSEE CANNOT DISOWN. 54. THE LEARNED AR CONTENDED BEFORE US THAT THE AS SESSEE HAS NEVER PAID THE AMOUNT OF RS.35 LAKH NOR INTENDED TO PURCHASE THE PROPERTY IN QUESTION. IT WAS SUBMITTED THAT THE RE CEIPTS ARE DUMMY AND ACTUALLY NO SUCH PAYMENT WAS MADE. 55. THE LEARNED DR, ON THE OTHER HAND, SUPPORTING THE ORDER OF THE CIT (A) SUBMITTED THAT WHEN THE AGREEMENT AND R ECEIPTS ARE FOUND SEIZED FROM THE ASSESSEE IT HAS TO BE PRESUME D THAT THE ASSESSEE HAD MADE THE AMOUNT OF RS.35 LAKH AS INDIC ATED IN THE RECEIPTS THEN THE ADDITION MADE IS JUSTIFIED. 56. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. AS CAN BE SEEN IN THE COURSE OF ASSESSM ENT PROCEEDINGS ITSELF THE ASSESSEE HAD EXPLAINED THAT THE DEAL NEVER WENT THROUGH AND THE ASSESSEE CAME TO KNOW THAT THE PROPERTY IN QUESTION IS A GOVERNMENT PROPERTY HAVING MANY PROBL EMS. IT WAS 36 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. SUBMITTED THAT THE AGREEMENT WAS EXECUTED BY THE AS SESSEE ONLY FOR THE PURPOSE OF ATTRACTING SECOND BUYER AND FOR MAKING QUICK PROFIT AND ALSO FOR THE PURPOSE OF OBTAINING BANK L OAN. IT IS FURTHER EVIDENT THAT ASSESSEE HAS ALSO PRODUCED ENCUMBRANCE CERTIFICATE TO SHOW THE PROPERTY WAS NOT TRANSFERRED TO THE ASS ESSEE. THEREFORE, ONLY ON THE BASIS OF THE SO CALLED RECE IPTS, THE ASSESSING OFFICER COULD NOT HAVE MADE THE ADDITION. WHEN THE ASSESSEE HAS DISPUTED THE SEIZED MATERIAL BY STATIN G THAT THEY ARE FORGED DOCUMENT CREATED FOR THE PURPOSE OF ATTRACTI NG PROSPECTIVE BUYERS AND EARNING PROFIT, IT WAS THE DUTY OF THE A SSESSING OFFICER TO MAKE FURTHER ENQUIRY WITH THE CONCERNED PERSONS , WHO ARE SUPPOSED TO HAVE RECEIVED THE AMOUNT IN QUESTION TO ASCERTAIN THE TRUTH AS TO WHETHER THE PAYMENT IS ACTUALLY MADE BY THE ASSESSEE OR NOT. WITHOUT CONDUCTING ANY ENQUIRY, THE ASSESS ING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION. THEREFORE, W E ARE OF THE VIEW THAT THE ADDITION HAVING BEEN MADE WITHOUT PROPER E VIDENCE CANNOT BE SUSTAINED. ACCORDINGLY, WE DIRECT THE AS SESSING OFFICER TO DELETE THE SAME. 57. THE NEXT ISSUE RELATES TO THE ADDITION OF RS.5 LAKH AS UNEXPLAINED INVESTMENT. AN AGREEMENT DATED 3-6-200 5 SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERATION REVEALED T HAT THE 37 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. ASSESSEE HAS GIVEN AN ADVANCE OF RS.5 LAKH TO MOHD . KHURDAT ALI AND OTHERS FOR PURCHASE OF LAND IN SURVEY NOS. 31, 32 & 33 SITUATED AT MADANNAPET VILLGE, CHARMINAR MANDAL. THE ASSESSING OFFICER WHEN CALLED UPON THE ASSESSEE TO EXPLAIN TH E SOURCE OF SUCH INVESTMENT, IT WAS STATED BY THE ASSESSEE THAT THOU GH THE ASSESSEE HAD PAID AN AMOUNT OF RS.5 LAKH AS ADVANCE TOWARDS PURCHASE OF SAID PROPERTY BUT AFTER VISITING THE PROPERTY AND MAKING ENQUIRY, HE CAME TO KNOW THAT THE TITLE OVER THE PROPERTY I S NOT CLEAR AS 27 TO 30 DIFFERENT PERSONS HAVE BEEN CLAIMING OWNERSHI P OVER THE SAID PROPERTY AND 3 TO 4 MURDERS HAVE TAKEN PLACE FOR THE SAID PROPERTY. THEREFORE, THE ASSESSEE WAS NOT INTEREST ED TO PURCHASE THE PROPERTY AND ASKED THE CONCERNED PERSON TO RETU RN THE ADVANCE GIVEN BY HIM AND ACCORDINGLY ADVANCE OF RS. 5 LAKH WAS RETURNED BACK TO THE ASSESSEE. IN SUPPORT OF SUCH CONTENTION, THE ASSESSEE ALSO PRODUCED EC TO SHOW THAT THE PROPERTY HAS NOT BEEN TRANSFERRED IN HIS NAME. THE ASSESSING OFFICER HOW EVER DISBELIEVING THE EXPLANATION OF THE ASSESSEE AND OB SERVING THAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF RS.5 LAKH ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A). THE CIT (A) HOWEVER CONFIRMED THE ADDITION. 38 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 58. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIALS ON RECORD. THE LEARNED AR REFERRING TO THE CASH AVAILABILITY IN THE BOOKS AS WELL AS THE STATEMENT SHOWING THE CASH PAYMENT HAS SUBMITTED THAT THE ASSESSEE WAS HAVING ENOUGH CASH BALANCE TO MAKE THE ADVANCE OF RS.5 LAKH. HENCE, N O ADDITION CAN BE MADE. ON CONSIDERING THE ISSUE, WE FIND THAT IT IS SIMILAR TO THE ISSUE RAISED IN EARLIER GROUNDS RELATING TO ADDITIO N OF RS.2.50 LAKH MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. THEREFO RE, FOLLOWING OUR DECISION THEREIN IN PARAGRAPH 52 READ WITH PARA 37, WE ALSO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER CONSIDERING ALL MATERIAL ON R ECORD AND AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE. THE ADDITIONS OF RS.30,000/- AND RS.4 LAKH WHICH ARE TH E SUBJECT MATTER OF CHALLENGE IN GROUND NO. G AND I ARE ALSO SIMILAR TO TTHIS ISSUE . THEREFORE, FOLLOWING OUR DECISION THEREIN, WE ALSO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECI DING THE SAME AFRESH. 59. THE NEXT ISSUE IS WITH REGARD TO THE ADDITION OF RS.6 LAKH AS UNEXPLAINED INVESTMENT. FACTS RELATING TO THE ISSUE ARE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS ENTERED INTO MEMORANDUM OF UNDERSTANDI NG DATED 39 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 12-8-2005,( SEIZED DURING THE SEARCH AND SEIZURE OP ERATION) WITH SAMAVESAM OF TELUGU BAPTIST CHURCHES (STBC) FOR TH E DEVELOPMENT OF THE PROPERTY BEARING BUNGALOW NO.51 WITH HOUSE NO.9-1-170 TO 177 COMPRISING OF 4600 SQ. YARDS. THE DOCUMENT FURTHER REVEALED THAT THE ASSESSEE HAD PAID AN AMOU NT OF RS.2.50 LAKHS EACH THROUGH SEPARATE DDS DATED 12-8-2005 DR AWN ON AP MAHESH CO-OPERATIVE BANK, SULTAN BAZAAR, HYDERABAD AND ONE LAKH IN CASH. THUS, THE TOTAL AMOUNT PAID IS RS.5 LAKH. WHEN CALLED UPON BY THE ASSESSING OFFICER TO EXPLAIN T HE SOURCE, THE ASSESSEE STATED THAT THE PROPERTY IN QUESTION BELON GING TO STBC WAS TO BE TAKEN BY THE ASSESSEE AND HIS WIFE SMT. D EEPA AGARWAL FOR WHICH THE PAY ORDER OF RS.5 LAKH WAS MADE BY DR AWING FROM THE BANK ACCOUNT OF SMT. DEEPA AGARWAL. HOWEVER, SINCE THE DEAL DID NOT MATERIALIZE, THE DDS ISSUED WERE CANCELLED. TH E ASSESSING OFFICER HOWEVER WAS NOT CONVINCED WITH THE EXPLANAT ION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS NOT EXP LAINED THE SOURCE OF AMOUNT OF RS.6 LAKH AND ACCORDINGLY ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. THOUGH THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A) BUT THE CIT (A) CONFIRM ED THE ADDITION. 60. REITERATING THE SUBMISSIONS MADE BEFORE THE ASS ESSING OFFICER, THE LEARNED AR CONTENDED THAT THE ASSESSEE HAS NEVER PAID 40 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THE AMOUNT OF RS.6 LAKH TO STBC. HENCE, THE ADDITIO N MADE IS NOT JUSTIFIED. 61. THE LEARNED DR, ON THE OTHER HAND, RELIED ON TH E ORDERS OF THE CIT (A). 62. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. AS CAN BE SEEN FROM THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER , THE ASSESSEE HAS STA TED THAT THE AMOUNT REFLECTED IN THE DD WAS BY WITHDRAWALS MADE FROM BANK ACCOUNT OF SMT. DEEPA AGARWAL. BEFORE US ALSO, THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS NEVER PAID ANY AMOU NT TO STBC. CONSIDERING SUCH SUBMISSIONS OF THE ASSESSEE, WE AR E OF THE VIEW THAT THE MATTER NEEDS TO BE VERIFIED BY THE ASSESSI NG OFFICER AGAIN. THE ASSESSING OFFICER SHALL DECIDE THIS ISSUE AFRES H AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 63. THE NEXT ISSUE IS WITH REGARD TO AN AMOUNT OF R S.5 LAKH AS UNEXPLAINED INVESTMENT. AS NOTED BY THE ASSESSING OFFICER, SEIZED MATERIAL MARKED AS A/HIMA/RES/PO1/5 IS A TRANSACTIO N RELATING TO A PROPERTY AT MADANNAPETA, HYDERABAD. THE ASSESSIN G OFFICER HAS ALSO REFERRED TO AN AGREEMENT DATED 3-6-2005 BETWEE N MOHD. KHUDRAT ALI AND 12 OTHERS WITH THE ASSESSEE FOR THE DEVELOPMENT OF PROPERTY AT MADANNAPET VILLAGE, CHARMINAR MANDAL. THE 41 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. AGREEMENT ALSO REVEALED THAT THE ASSESSEE ALSO PAID AN AMOUNT OF RS.5 LAKH ON 3-6-2005 BY CHEQUE. WHEN ASKED TO EXP LAIN THE ASSESSEE IN HIS EXPLANATION IT WAS STATED THAT AS T HE SAME AMOUNT HAS ALREADY BEEN CONSIDERED IT CANNOT BE CONSIDERED AGAIN. THE ASSESSING OFFICER HOWEVER AGAIN ADDED THE AMOUNT O F RS.5 LAKH AS UNEXPLAINED INVESTMENT. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A). DURING THE APPEAL HEARING, IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICER IN THE A SSESSMENT ORDER HAS ALREADY ADDED AN AMOUNT OF RS.5 LAKH IN RESPECT OF THE SAME TRANSACTION, HENCE IT CANNOT BE ADDED AGAIN SEPARAT ELY. THE CIT (A) HOWEVER CONFIRMED THE ADDITION. 64. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. IT IS THE CONTENTION OF THE ASSESSEE THAT THIS AMOUNT OF RS. 5 LAKH HAS BEEN ADDED TWICE CONSIDERING THE TRANSA CTION TO BE TWO SEPARATE TRANSACTIONS. ON PERUSAL OF THE DISCUSSI ON MADE BY THE ASSESSING OFFICER IN PARA-(G) AT PAGE-7 OF THE ASSE SSMENT ORDER AND IN PARA (E) AT PAGE-9 OF THE ASSESSMENT ORDER, IT APPEARS THAT THE INVESTMENT OF RS.5 LAKH RELATES TO THE SAME TRA NSACTION. FURTHER, IT IS VERY MUCH EVIDENT FROM THE COMPUTATI ON OF INCOME THAT THOUGH THE ASSESSING OFFICER HAS CONSIDERED TH E AMOUNT OF RS.5 LAKH FOR ADDITION ON TWO OCCASIONS BUT HE HAS MADE SPECIFIC 42 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. DISCUSSION WITH REGARD TO THE ADDITION OF RS.5 LAKH ONLY ONCE IN PARA (G) AT PAGE-14 OF THE ORDER. SO FAR AS THE SECOND ADDITION OF RS.5 LAKH, THERE IS ABSOLUTELY NO DISCUSSION BY THE ASSESSING OFFICER. THE CIT (A) HAS ALSO FAILED TO VERIFY THE FACTUAL ASPECT OF THE ISSUE AS TO WHETHER TWO SEPARATE ADDITIONS OF R S.5 LAKH RELATES TO THE SAME TRANSACTION. IN ABSENCE OF ANY CLARIFIC ATION ON THIS ISSUE EITHER FROM THE ASSESSEE OR FROM THE DEPARTME NT, WE ARE LEFT WITH LITTLE OPTION BUT TO REMIT THE MATTER TO THE F ILE OF THE ASSESSING OFFICER TO VERIFY THE FACTUAL ASPECT OF THE ISSUE A ND DECIDE THE MATTER AFRESH. HOWEVER, WE MAKE IT CLEAR THAT IF T HE SECOND ADDITION OF RS.5 LAKHS ALSO RELATE TO THE SAME TRAN SACTION, NO ADDITION CAN BE MADE. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE DECIDI NG THE ISSUE. ITA NO. 1224/HYD/2011 (BY ASSESSEE) 65. FIRST ISSUE RELATING TO ADDITION OF RS.90,500/- IS SIMILAR TO THE ISSUE DECIDED IN ITA NO. 921/HYD/11. FOLLOWING THE SAME REASONING GIVEN THEREIN, WE DELETE THE ADDITION. 66. THE NEXT ISSUE RELATE TO THE ADDITIONS OF FOLLO WING AMOUNTS AS UNEXPLAINED INVESTMENTS: RS.1,00,000/-,RS.24,500/- AND RS.26,00,000/- 43 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 67. THE ASSESSING OFFICER ON THE BASIS OF SEIZED MA TERIAL ADDED THE AFORESAID AMOUNTS AS UNEXPLAINED INVESTMENT. T HE CIT (A) CONFIRMED THE ADDITIONS BY OBSERVING THAT THE ASSES SEE HAS FAILED TO EXPLAIN THE SOURCES OF SUCH INVESTMENTS. 68. THE LEARNED AR SUBMITTED BEFORE US THAT SO FAR AS THE AMOUNT OF RS.26 LAKH TOWARDS ADVANCE GIVEN FOR PURC HASE OF PROPERTY AT KACHEGUDA RAILWAY STATION, HYDERABAD I S CONCERNED, THOUGH THE ASSESSEE HAS INITIALLY ENTERED INTO DEA L, BUT IT COULD NOT BE FINALIZED AND THE ADVANCE WAS RETURNED BACK TO T HE ASSESSEE. SO FAR AS THE INVESTMENTS OF RS.1 LAKH AND RS.24,50 0/- ARE CONCERNED, THE LEARNED AR SUBMITTED THAT THE DEALS WERE FINALIZED AND THE ASSESSEE HAD PURCHASED THE PROPERTIES. HOW EVER, IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THESE INVESTMEN TS WERE MADE OUT OF EXPLAINED SOURCES AND REFLECTED IN HIS CASH FLOW STATEMENT AS WELL AS BALANCE-SHEET. IN THIS CONTEXT, HE REFE RRED TO THE STATEMENT SHOWING CASH AVAILABILITY WITH DIFFERENT MEMBERS OF THE GROUP AS WELL AS STATEMENT SHOWING PEAK CASH PAYMEN T FOR THE RELEVANT FINANCIAL YEAR. 69. THE LEARNED DR, ON THE OTHER HAND, JUSTIFIED TH E ADDITION MADE BY THE ASSESSING OFFICER. 44 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 70. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIAL ON RECORD. ON A PERUSAL OF THE ASSESS MENT ORDER AS WELL AS THE ORDER PASSED BY THE CIT (A), IT IS EVID ENT THAT THE ADDITIONS HAVE BEEN SUSTAINED ON THE GROUND THAT TH E ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF SUCH INVESTMENT. HO WEVER, THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE HAS ENOUGH CASH AVAILABILITY TO MAKE THE INVESTMENT WHICH IS P ROVED FROM THE CASH FLOW STATEMENT AS WELL AS BALANCE-SHEET WHEREI N THE TRANSACTION HAVE BEEN REFLECTED. IT IS NOT CLEAR F ROM THE ORDER OF THE DEPARTMENT AUTHORITIES WHETHER THEY HAVE EXAMI NED THE CASH AVAILABILITY AS SHOWN IN THE CASH FLOW STATEMENT AN D BALANCE-SHEET. IN THE AFORESAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE MATTER REQUIRES TO BE EXAMINED AFRESH BY THE ASSESSING OFF ICER WHO MUST VERIFY THE CASH AVAILABILITY WITH THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE. THE ASSESSING OFFICER MUST AFFORD A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE M ATTER. 71. THE NEXT ISSUE IS WITH REGARD TO THE ADDITION O F RS.33,42,500/- BEING UNEXPLAINED CASH FOUND AT THE TIME OF SEARCH. AS NOTED BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER, AT THE TIME OF SEARCH AND SEIZURE OPERATION ON 12-9 -2006 CASH OF RS.33.42,500/- WAS FOUND OUT OF WHICH AN AMOUNT O F RS.32 LAKHS 45 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. WAS SEIZED. IN COURSE OF SEARCH OPERATIONS, THE AS SESSEE MADE DECLARATIONS U/S 132(4) OF AN AMOUNT OF RS.50 LAKH. IN THE COURSE OF SEARCH OPERATIONS, WHEN THE ASSESSEE WAS ASKED T O EXPLAIN ABOUT THE CASH FOUND, HE EXPLAINED THAT OUT OF THE CASH FOUND RS. 4 LAKH BELONGS TO HIS FATHER IN LAW. SO FAR AS THE B ALANCE CASH IS CONCERNED, IT WAS STATED THAT HE IS NOT IN A POSIT ION TO EXPLAIN THE DETAILS IMMEDIATELY. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED CASH FOUND DURING SEARCH AS UNDER:- I) CASH AVAILABLE IN THE CASH BOOK OF M/S JAI BALAJI SANITARY STORES (OPENING CASH BALANCE AS ON 12-9-06 ) -RS.11,36,664 II) CASH BELONGING TO MR. ESWARLAL (INDL.)(FATHER) -R S.1,25,000 III) CASH BELONGING TO MRS. TARA MANI AGARWAL (MOTHER) -RS. 85,000 IV) CASH BELONGING TO ESWARLAL AGARWAL (HUF) -RS.1,50,000 V) CASH BELONGING TO MR. ANIL KISHORE AGARWAL (HUF) -RS. 80,000 _____________ TOTAL - RS.15,76,664 LESS: CASH FOUND AT THE TIME OF SEARCH RS. 33,42,500 INCOME UP TO THE DATE OF SEARCH -RS.17,65,836 ______________ IT WAS SUBMITTED THAT THE BALANCE CASH OF RS.17,65, 836/- WAS OUT OF THE CURRENT YEARS INCOME AND PARTLY OUT OF PAST SAVINGS. THOUGH THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF M/S JAI BALAJI SANITARY STORES FOR THE FINANCIAL YEAR 2004- 05 AND 2005-06 46 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. AND CORRESPONDING BILLS AND VOUCHERS ON THE DATE OF SEARCH OPERATION BUT THE ASSESSEE HAS MERELY PRODUCED CASH BOOK OF JAI BALAJI SANITARY STORES SUBSEQUENT TO THE SEARCH WHI CH SHOWED BALANCE OF RS.11,36,664/-. THE ASSESSING OFFICER NO TED THAT THE EXPLANATION OF THE ASSESSEE REGARDING AVAILABILITY OF CASH WITH DIFFERENT MEMBERS OF THE FAMILY WAS NEVER GIVEN AT THE TIME OF SEARCH BUT WAS EXPLAINED SUBSEQUENTLY. HE THEREFOR E CAME TO A CONCLUSION THAT THE ASSESSEES EXPLANATION IN RESP ECT OF CASH FOUND AND SEIZED IS NOT ACCEPTABLE AND ACCORDINGLY ADDED THE AMOUNT OF RS.33,42,500/- TO THE INCOME OF THE ASSES SEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A) . 72. THE CIT (A) ALSO SUSTAINED THE ADDITION. 73. THE LEARNED AR SUBMITTED BEFORE US THAT THE CA SH FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPER ATION BELONGED TO THE ASSESSEE AND HIS OTHER FAMILY MEMBERS AND T HE SAME IS DULY EXPLAINED IN THE CASH FLOW STATEMENTS OF THE A SSESSEE AND OTHER FAMILY MEMBERS. IT WAS SUBMITTED THAT THE DE PARTMENTAL AUTHORITIES WITHOUT PROPERLY VERIFYING THE CASH AVA ILABILITY HAVE MADE THE ADDITION ON PRESUMPTIVE BASIS. 74. THE LEARNED DR, ON THE OTHER HAND, RELIED ON TH E ORDERS OF THE CIT (A) AND ASSESSING OFFICER. 47 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 75. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MADE THE ADDITION BY SIMPLY OBSERVING T HAT THE ASSESSEE HAS FAILED TO OFFER A REASONABLE EXPLANATI ON WITH REGARD TO THE AVAILABILITY OF CASH WITH DIFFERENT FAMILY MEMB ERS AND ALSO THE FACT THAT AS PER SECTION 132(4A) OF THE ACT, CASH AS FOUND HAS TO BE PRESUMED AS BELONGING TO THE ASSESSEE. IT IS TH E CONTENTION OF THE ASSESSEE THAT THE CASH FOUND HAS BEEN ADEQUATEL Y EXPLAINED IN THE CASH FLOW STATEMENT SUBMITTED BEFORE THE LOWER AUTHORITIES WHICH ARE NOT AT ALL BEEN VERIFIED. ON A PERUSAL O F THE CIT (A)S ORDER WE FIND THAT THE OBSERVATION MADE BY THE CIT (A) IS CRYPTIC AND BEREFT OF ANY REASON. IT IS NOT FORTHCOMING FR OM THE ORDER OF THE ASSESSING OFFICER OR CIT (A) WHETHER THE CASH F LOW STATEMENT SUBMITTED BY THE ASSESSEE HAS BEEN EXAMINED. IN TH ESE CIRCUMSTANCES, WE ARE OF THE OPINION, WITHOUT PROPE RLY EXAMINING CASH FLOW STATEMENT OF THE ASSESSEE AND OTHER FAMIL Y MEMBERS, IT IS NOT PROPER TO ADD THE ENTIRE AMOUNT OF CASH FOUN D AT THE TIME OF SEARCH AT THE HANDS OF THE ASSESSEE CONSIDERING THE FACT THAT NOT ONLY SOME AMOUNT OF CASH MAYBE BELONGING TO THE FA MILY MEMBERS ARE ALSO THERE BUT IT IS ALSO QUITE POSSIB LE THAT THERE MAY BE SOME CASH AVAILABLE RELATING TO THE BUSINESS OF THE PARTNERSHIP FIRM. CONSIDERING THE TOTALITY OF FACTS AND CIRCUM STANCES, WE 48 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. THEREFORE REMIT THE MATTER TO THE FILE OF THE ASSES SING OFFICER WHO SHALL MAKE PROPER VERIFICATION BY EXAMINING THE ENT IRE ISSUE AND OTHER MATERIALS LIKE CASH FLOW STATEMENT OF THE ASS ESSEE AS WELL AS OTHER FAMILY MEMBERS AND TAKE A DECISION AFRESH AFT ER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. DEPARTMENTS APPEALS - ANIL KISHORE AGARWAL (777, 1368 TO 1373/HYD/11) 76. THE ONLY COMMON ISSUE IN ALL THESE APPEALS OF T HE DEPARTMENT RELATES TO THE ACTION OF THE CIT (A) IN DELETING THE ADDITIONS OF DIFFERENT AMOUNTS MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT. SINCE THE ISSUE IS COMMON AND FACTS ARE IDENTICAL, WE DEAL WITH THE FACTS INV OLVED IN ASSESSMENT YEAR 2001-02. 77. BRIEFLY STATED FACTS ARE A SEARCH AND SEIZURE O PERATION WAS CONDUCTED IN CASE OF THE ASSESSEE AND OTHER GROUP C ONCERNS ON 2- 9-2006. SIMULTANEOUSLY A SURVEY U/S 133A WAS ALSO CONDUCTED IN THE BUSINESS PREMISES OF JAI BALAJI SANITARY STORES A PARTNERSHIP FIRM IN WHICH ASSESSEE IS A PARTNER. PURSUANT TO TH E SEARCH AND SEIZURE OPERATION, A NOTICE U/S 133A OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.16,560/-. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER AFTER GOING THR OUGH THE SEIZED 49 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. MATERIAL WAS OF THE VIEW THAT THE ASSESSEE WAS INVO LVED IN MONEY LENDING BUSINESS WHICH FOR THE IMPUGNED ASSESSMENT YEAR AS PER THE SEIZED MATERIAL WAS QUANTIFIED AT RS.27,65,00 0/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AFORESAI D AMOUNT HAS TO BE TREATED AS UNEXPLAINED INVESTMENT OF THE ASSESS EE IN MONEY LENDING BUSINESS. HE THEREFORE PROPOSED TO ADD THE SAID AMOUNT BY ISSUING A SHOW CAUSE NOTICE TO THE ASSESSEE. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE OBJECTED TO SUCH AD DITION BY CONTENDING THAT NO ADDITION CAN BE MADE ON PRESUMPT ION AS THE SEIZED MATERIAL IN NO WAY REVEALED THAT THE ASSESSE E IS INVOLVED IN MONEY LENDING BUSINESS AND THE AMOUNTS ARE INVESTME NTS OF THE ASSESSEE. THE ASSESSING OFFICER HOWEVER DISBELIEVI NG THE EXPLANATION OF THE ASSESSEE PROCEEDED TO ADD AN AM OUNT OF RS.26,15,000/- AS UNEXPLAINED INVESTMENT OF THE ASS ESSEE. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 78. IN COURSE OF HEARING OF APPEAL BEFORE THE CIT ( A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE SEIZED MATERIALS CONTAIN SALES OF SANITARY WARE AND CERAMIC TILES. THE ASSESSIN G OFFICER HAS ADDED THE SAID SALES AFTER MAKING ADJUSTMENT OF RS. 27,65,000/-. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS WOR KED OUT 50 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. UNACCOUNTED PURCHASES OUT OF THESE SALES OF SANITA RY WARE AND CERAMIC TILES AND IN THE SAME MANNER WORKED OUT TH E PEAK UNACCOUNTED PURCHASES IN THE CASE OF THE ASSESSEE F OR ASST. YEAR 2001-02 TO 2007-08 AND HAS MADE SEPARATE ADDITION O N ACCOUNT OF ALLEGED UNDISCLOSED PURCHASES. IT WAS SUBMITTED THA T THE ASSESSING OFFICER HAD TAKEN THE ALLEGED UNACCOUNTED SALES AND AFTER REDUCING ESTIMATED GP THERE FROM HAD WORKED OUT THE PURCHASE S AND HAS MADE ADDITION BY ESTIMATING THE PROFIT IN SUCH UNAC COUNTED SALES IN CASE OF JAI BALAJI SANITARY STORES, A PARTNERSHIP FIRM. HOWEVER, THE ASSESSING OFFICER HAS AGAIN CONSIDERED THE SAME FIGURES AS AMOUNTS GIVEN BY THE ASSESSEE FOR MONEY LENDING AND TREATED AS UNEXPLAINED INVESTMENT IN THE CASE OF THE ASSESSEE. IT WAS THEREFORE CONTENDED BY THE ASSESSEE THAT THE ASSESS ING OFFICER HAS TREATED THE SAME SALES WHICH ARE WORKED OUT FROM LO OSE SHEETS FOR THE PURPOSE OF ESTIMATING THE PROFIT ON UNACCOUNTED SALES AT THE HANDS OF THE PARTNERSHIP FIRM AND AGAIN CONSIDERED THE NOTING MADE IN THE SAME SEIZED MATERIAL WHILE MAKING THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE MONEY LEND ING BUSINESS IN THE HANDS OF THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT THE NAMES AS APPEARING IN THE SEIZED MATERIAL AGAINST WHICH AMOUNTS HAVE BEEN NOTED ARE ONLY TRADE DEBTORS TO W HOM SANITARY WARE AND CERAMIC TILES WERE SOLD AND ACTUALLY THEY HAVE NOT 51 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. BORROWED ANY MONEY FROM THE ASSESSEE. IT WAS THUS CONTENDED THAT THE GOODS WHICH HAVE BEEN PURCHASED, SOME TIM E IN CASH, AND SOMETIMES ON CREDIT, SHOULD NOT HAVE BEEN TRE ATED AS MONEY LENDING BUSINESS OF THE ASSESSEE. THE CIT (A) AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 4.2. THE SUBMISSION MADE BY THE AUTHORIZED REPRESENTATIVE HAS BEEN CONSIDERED. THE DETAILS FURN ISHED IN THIS REGARD ARE ALSO VERIFIED. IT IS SEEN THAT THE APPELLANT HAS GOT BUSINESS LINK WITH PEOPLE LIKE YOGESH, PARV ATHI, S.K. BEAT, KAMAL, SAPNA, J.K.MAHAVEER, RAMESH, JAGGU V. RAM AND AZGAR. IT IS SEEN THAT ALL THESE NAMES ARE ASSO CIATED WITH PEOPLE WHO DEAL WITH SANITARY WARES AND CERAMI C TILES ETC. THEREFORE, IT IS VERY MUCH CLEAR THAT THESE PE OPLE ARE BUYERS OF THE APPELLANT WHO WOULD HAVE TAKEN ON CRE DIT. THEREFORE, IT WOULD BE NATURAL FOR THE APPELLANT TO KEEP THE LIST OF THE NAMES AGAINST WHOM THE SALES HAVE BEEN MADE. THEREFORE, MY UNDERSTANDING FROM THESE ASPECTS IS TH AT THE APPELLANT ONLY HAD DEBTORS TO WHOM APPELLANT IS SAI D TO HAVE MADE SALES, THEREFORE, THE DEBTORS CANNOT BE A DDED TO THE APPELLANTS TOTAL INCOME. IT MAY BE NOTED THAT THE SIMILAR SALES/DEBTORS HAVE BEEN CONSIDERED IN M/S J AI BALAJI SANITARY STORES WHEREIN THESE SALES HAVE BEEN ACCOU NTED AND THEREON PROFIT @ 10% HAS BEEN ADDED BY THE ASSE SSING OFFICER WHICH HAS BEEN CONFIRMED BY ME. HENCE, THE LIST OF THE DEBTORS ARE SALES PERTAINING TO THE FIRM M/S JA I BALAJI SANITARY STORES WHEREIN THE APPELLANT IS ONE OF THE PARTNER. THEREFORE, IN MY VIEW, IT IS UNFAIR TO MAKE THE ADDI TION OF 52 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. SUCH SALES IN THE HANDS OF APPELLANT AS WELL AS FIR M WHERE HE IS A PARTNER. SINCE IT IS ALREADY DISCUSSED IN THE PRECEDING PARAS, THE UNACCOUNTED SALES HAVE BEEN CONSIDERED FOR ASSESSMENT PURPOSE IN M/S JAI BALAJI SANITARY STORES WHICH IS A PARTNERSHIP FIRM OF THE APPELLANT, I AM OF THE VIEW THAT THE SAME ADDITIONS CAN NOT BE BROUGHT IN APPELLANTS CASE. 4.3. HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM INCLINED TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND THIS GORUND OF APPEAL IS ALLO WED ACCORDINGLY. THE LEARNED DR SUBMITTED BEFORE US THAT THE SEIZED MATERIAL CLEARLY INDICATE THAT THE ASSESSEE IS ENGAGED IN MONEY LEND ING BUSINESS AS THEY CLEARLY DISCLOSE INTEREST RECEIVED BY THE ASSE SSEE. 79. THE LEARNED AR, ON THE OTHER HAND, SUBMITTED TH AT THE ADDITION IS MADE ON THE BASIS OF ENTRIES APPEARIN G IN THE LOOSE SHEETS SEIZED AT THE TIME OF SEARCH WHICH ARE TAKEN AS UNDISCLOSED SALES MADE IN THE ASSESSMENT OF PARTNERSHIP FIRM M /S JAI BALAJI SANITARY STORES AND HENCE THE SAME AMOUNT CANNOT BE CONSIDERED TO BE THE ASSESEES INVESTMENT IN MONEY LENDING BUS INESS AND ADDED TO THE INCOME OF THE ASSESSED. THE LEARNED AR SUBMITTED THAT THE ENTRIES MADE IN THE SEIZED DOCUMENT ACTUAL LY REPRESENT SALES MADE TO VARIOUS TRADERS DOING BUSINESS IN S ANITARY WARE, 53 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. HENCE THEY CANNOT BE TREATED AS ASSESSEES INVESTME NT IN MONEY LENDING BUSINESS. 80. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. AS CAN BE SEEN THE ASSESSING OFFICER IN PA RA -1(A) OF THE ASSESSMENT ORDER HAS REFERRED TO CERTAIN SEIZED MATERIAL WHILE QUANTIFYING THE UNACCOUNTED INVESTMENT OF RS.27,65, 000/-. AS CAN BE SEEN, THE CIT(A) AFTER EXAMINING THE SEIZED MATE RIAL AND OTHER EVIDENCE HAS FOUND THAT THE NAMES APPEARING IN THE SEIZED MATERIALS ARE TRADERS IN SANITARY WARES AND CERAMIC TILES, WHO ARE HAVING BUSINESS LINK WITH M/S JAI BALAJI SANITARY S TORES, WHERE ASSESSEE IS A PARTNER. LD. CIT(A) HAS NOTED THAT AL L THESE PERSONS ARE PURCHASING GOODS ON CREDIT BASIS FROM M/S JAI B ALAJI SANITARY STORES. THIS FINDING OF FACT RECORDED BY LD. CIT(A) REMAINS UNCONTROVERTED BY THE DEPARTMENT. NO OTHER CORROBOR ATING EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSIN G OFFICER TO ESTABLISH THE FACT THAT THE ENTRIES IN THE SEIZED M ATERIAL REPRESENT ASSESSEES MONEY LENDING BUSINESS. 81. IT IS ALSO A FINDING OF FACT RECORDED BY THE CIT (A) THAT ON THE BASIS OF THE VERY SAME SEIZED MATERIAL THE ASSE SSING OFFICER HAS QUANTIFIED THE UNACCOUNTED SALE OF PARTNERSHIP FIRM JAI BALAJI SANITARY STORE AND ESTIMATED THE PROFIT. THEREFORE , WHEN THE 54 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. SEIZED MATERIAL IN NO WAY ESTABLISHES THE FACT THA T EITHER THEY REPRESENT THE MONEY LENDING BUSINESS OF THE ASSESSE E OR THE AMOUNTS QUANTIFIED BY THE ASSESSING OFFICER ARE AS SESSEES UNACCOUNTED INVESTMENT, THE ADDITION MADE CANNOT BE SUSTAINED. THAT APART, BASING ON THE VERY SAME SEIZED MATERIAL ADDITION CANNOT BE MADE BOTH AT THE HANDS OF THE FIRM AND TH E PARTNER. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE CIT (A) IN DELETING THE ADDITION. IT MAY FURTH ER BE NOTED THAT THE ASSESSING OFFICER HAS ALSO MADE THE ADDITION OF UNACCOUNTED INTEREST INCOME ON THE ALLEGED MONEY LENDING BUSIN ESS ON THE BASIS OF THE SAID SEIZED MATERIAL AS REFERRED TO BY HIM. WHILE CONSIDERING ASSESSEES APPEALS, WE HAVE HELD THAT THE ENTRIES MADE IN THE LOOSE SHEETS CANNOT BE CONSIDERED TO BE REPRESENTING THE MONEY LENDING BUSINESS OF THE ASSESSEE. THEREF ORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY MERIT IN THE GROUNDS RAISED IN DEPA RTMENTS APPEAL WHICH IS ACCORDINGLY DISMISSED. 82. FACTS AND ISSUES BEING COMMON IN ALL OTHER APPE ALS OF THE DEPARTMENT, FOLLOWING THE REASONING GIVEN ABOVE FOR ASSESSMENT YEAR 2001-02, WE DISMISS ALL THE APPEALS FILED BY T HE DEPARTMENT. 55 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. ITA NOS. 1225, 1226, 496 AND 497/HYD/11- DEEPA AGARWAL(BY ASSESSEE):- 83. ITA NO.496/HYD/11- THE FIRST ISSUE IN THE PRESE NT APPEAL IS WITH REGARD TO ADDITION OF AN AMOUNT OF RS.15 LAKH S ON ACCOUNT OF UNEXPLAINED INVESTMENT. 84. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIV IDUAL. PURSUANT TO THE SEARCH AND SEIZURE OPERATION CONDUCTED IN CA SE OF JAI BALAJI SANITARY STORES ON 12-9-2006 A NOTICE U/S 153C OF T HE ACT WAS ISSUED TO THE ASSESSEE CALLING UPON HER TO FILE TH E RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. IN RESPONSE TO S UCH NOTICE, THE ASSESSEE FILED A RETURN OF INCOME ON 19-11-2008 DECLARING TOTAL INCOME OF RS.1,59,833/-. DURING THE ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER ON VERIFYING THE SEIZED MATERIAL FOUND THAT AS PER THE AGREEMENT OF SALE DATED 22-11-2005 THE ASSESSE E ENTERED INTO AN AGREEMENT WITH ONE SRI D. MANMOHAN TOWARDS PURCHASE OF HOUSE PROPERTY AT DOOR NO.1-2-332/ 2 TO 8 AT GAGANM AHAL ROAD, HYDERABAD. AS PER THE AGREEMENT AN AMOUNT OF RS.5 LAKH WAS PAID BY THE ASSESSEE THROUGH CHEQUE NO.389173 DATED 22-11-2005 DRAWN ON AP MAHESH CO-OP. BANK, HYDERABAD. SIMILAR LY, SOME OTHER DOCUMENTS SEIZED RELATING TO THE AFORESAID TR ANSACTION 56 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. REVEALED THAT THE ASSESSEE HAD PAID TOTAL AMOUNT OF RS.40 LAKH TOWARDS THE PURCHASE OF PROPERTY TO SRI D. MANMOHA N. 85. DURING THE POST SEARCH PROCEEDINGS WHEN THE AS SESSEE WAS ASKED TO EXPLAIN SHE STATED THAT THE CONTENTS OF THE RECEIPTS ARE NOT CORRECT AND ACTUALLY NO SUCH TRANSACTION HAS TA KEN PLACE. HOWEVER, ON THE BASIS OF THE SEIZED MATERIAL THE AS SESSING OFFICER WAS OF THE VIEW THAT AS PER THE PROVISION CONTAINED U/S 132 (4A) OF THE ACT IT HAS TO BE PRESUMED THAT THE ASSESSEE HA S PAID AN AMOUNT OF RS.15 LAKH DURING THE RELEVANT FINANCIAL YEAR TOWARDS PURCHASE OF THE PROPERTY WHICH HAS TO BE TREATED A S UNEXPLAINED INVESTMENT. ACCORDINGLY, HE PROPOSED TO ADD THE S AME. OBJECTING TO THE PROPOSED ADDITION, THE ASSESSEE SUBMITTED TH AT SHE HAS NEVER ENTERED INTO ANY AGREEMENT WITH D. MANMOHAN F OR PURCHASE OF PROPERTY IN QUESTION. SHE ALSO STATED THAT SEI ZED DOCUMENT WAS NOT CORRECT. IT WAS CLAIMED BY HER THAT THE SIGNAT URES IN THE AGREEMENT OF SALE ARE NEITHER OF D. MANMOHAN NOR OF HER AND IN FACT WERE ACTUALLY SIGNED ANIL KISHORE AGARWAL HIM SELF. IT WAS SUBMITTED THAT THE DOCUMENT WAS CREATED BY SRI ANIL KUMAR AGARWAL TO ATTRACT BUYERS FOR THE SAID PROPERTY FOR GETTING SOME EXTRA INCOME. SHE FURTHER STATED THAT CHEQUE NUMBE R MENTIONED IN THE DOCUMENT WAS NEVER GIVEN TO SRI D. MANMOHAN WHICH CAN BE 57 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. VERIFIED FROM THE BANK ACCOUNT. THE ASSESSING OFFIC ER HOWEVER WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. HE WAS OF THE VIEW THAT THE ENTIRE CLAIM OF THE ASSESSEE THAT THE TRANSACTION WAS NOT INTENDED TO BE ACTED UPON IS ONLY AN AFTERTHOU GHT AND ACCORDINGLY MADE THE ADDITION OF RS.15 LAKH AS UNEX PLAINED INVESTMENT OF THE ASSESSEE FOR THE IMPUGNED ASSESSM ENT YEAR. THE ASSESSEE CHALLENGED THE ADDITION IN AN APPEAL B EFORE THE CIT (A). 86. THE CIT (A) HOWEVER CONFIRMED THE ADDITION. 87. THE LEARNED AR REITERATING THE SUBMISSIONS MAD E BEFORE THE DEPARTMENTAL AUTHORITIES HAS CONTENDED THAT THE AGR EEMENT OF SALE FOUND AND SEIZED AT THE TIME OF SEARCH WAS NOT ACC EPTED EITHER BY THE ASSESSEE OR BY THE OWNER OF THE PROPERTY SRI D. MANMOHAN. IN THIS CONTEXT, THE LEARNED AR REFERRED TO THE COPY O F AGREEMENT AT PAGE-23 OF THE PAPER BOOK AND FINAL SALE DEED OF TH E PROPERTY A COPY OF WHICH IS PLACED AT PAGE-35 OF THE PAPER BOO K TO SHOW THAT THE PROPERTY IN QUESTION WAS ACTUALLY SOLD TO ONE SRI AMARJIT SINGH AND NOT TO THE ASSESSEE. FURTHER, REFERRING TO THE SIGNATURE OF SRI D. MANMOHAN IN THE AGREEMENT OF SALE AND THE FINAL SALE DEED, THE LEARNED AR TRIED TO ESTABLISH THAT THE SIGNATURES D IFFER. THE LEARNED AR ALSO REFERRED TO AN AFFIDAVIT, COPY OF WHICH IS AT PAGE- 58 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 42 OF THE PAPER BOOK WHEREIN IT WAS STATED BY D. MA NMOHAN THAT HE HAS NOT RECEIVED ANY AMOUNT FROM THE ASSESSEE TO WARDS SALE OF PROPERTY AT GAGANMAHAL. THE LEARNED AR ALSO REFERR ED TO THE BANK STATEMENT OF AP MAHESH CO.OP. URBAN BANK IN THE NAM E OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM THAT NO CHEQUE MENTIONED IN THE AGREEMENT OF SALE WAS EVER EN-CASHED. THUS, IT WAS CONTENDED THAT THE ADDITION MADE IS WITHOUT ANY BASIS. 88. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDER OF THE REVENUE AUTHORITIES. 89. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIAL ON RE CORD. AS CAN BE SEEN THE ADDITION OF RS.15 LAKH HAS BEEN MADE BY TH E ASSESSING OFFICER AND SUSTAINED BY THE CIT (A) SOLELY ON THE BASIS OF SEIZED MATERIAL I.E., AGREEMENT OF SALE DATED 22-11-2005. HOWEVER, AS WOULD BE EVIDENT FROM THE ASSESSMENT ORDER, DURING THE ASSESSMENT PROCEEDINGS ITSELF THE ASSESSEE HAD DISP UTED THE AUTHENTICITY OF THE AGREEMENT OF SALE BY CLAIMING THAT THE SAID DOCUMENT WAS NEITHER SIGNED BY HER NOR BY SRI D. MA NMOHAN THE OWNER OF THE PROPERTY. IT IS ALSO A FACT THAT THE PROPERTY IN QUESTION HAS BEEN SOLD TO A DIFFERENT PERSON AS WO ULD BE EVIDENT FROM THE COPY OF THE REGISTERED SALE DEED DATED 15- 12-2006, A 59 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. COPY OF WHICH IS PLACED AT PAGE-35 OF THE PAPER BOO K. ON A CAREFUL EXAMINATION OF THE AGREEMENT OF SALE AND FINAL SALE DEED, IT APPEARS THAT THE SIGNATURE OF SRI D. MANMOHAN ARE D IFFERENT. IT IS ALSO A FACT THAT SRI D. MANMOHAN IN HIS SWORN AFFID AVIT DENIED OF HAVING RECEIVED ANY AMOUNT FROM THE ASSESSEE TOWARD S SALE OF THE PROPERTY. THEREFORE, WHEN FROM THE VERY INITIAL S TAGE OF PROCEEDINGS, THE ASSESSEE HAS DISPUTED THE AUTHENTI CITY OF THE DOCUMENT, IT WAS INCUMBENT UPON THE ASSESSING OFFI CER TO MAKE NECESSARY ENQUIRY AND BRING SUFFICIENT MATERIAL ON RECORD TO ESTABLISH THE FACT THAT THE AGREEMENT OF SALE WAS A CTUALLY ACTED UPON AND THE ASSESSEE HAS ACTUALLY PAID THE AMOUNT OF RS.15 LAKH. AS IT APPEARS THE ASSESSING OFFICER HAS NOT EVEN MADE ANY ATTEMPT TO VERIFY CHEQUE PAYMENTS WITH THE CONCERN ED BANK TO ASCERTAIN WHETHER THE CHEQUES HAVE BEEN EN-CASHED O R NOT. IN THE AFORESAID CIRCUMSTANCES, WITHOUT ESTABLISHING THE P AYMENT OF RS.15 LAKH BY BRINGING CORROBORATIVE EVIDENCE THE ASSESSI NG OFFICER COULD NOT HAVE MADE THE ADDITION PURELY ON CONJECTURES OR SURMISES. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CI RCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER OF AN AMOUNT OF RS.15 LAKH IS NOT JUSTIFIE D. ACCORDINGLY, WE DIRECT HIM TO DELETE THE SAME. HENCE, THE GROUND R AISED IS ALLOWED. 60 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 90. THE NEXT ISSUE AS RAISED IN GROUND NO.4 RELATES TO ADDITION OF AN AMOUNT OF RS.25 LAKH AS UNEXPLAINED INVESTMENT. BRIEFLY THE FACTS ARE WHILE EXAMINING THE SEIZED MATERIAL THE A SSESSING OFFICER NOTICED THAT SHEET NO.63 OF SEIZED ITEM NO.A/HIMA/ RES/POI/6 IS A COPY OF RECEIPT DATED 5-6-2005 OF SMT. D. SUKANYA A CKNOWLEDGING FURTHER SUM OF RS.20 LAKHS TOWARDS PART PAYMENT OF SALE OF HOUSE PROPERTY BEARING NO.3-5-824, HYDERGUDA, HYDERABAD A DMEASURING 275 SQ. YARDS FROM THE ASSESSEE. ANOTHER DOCUME NT SEIZED FROM THE RESIDENCE OF THE ASSESSED WHICH IS A RECEIPT DATED 5-6-2005 INDICATED THAT THE ASSESSEE HAS GIVEN FURTHER SUM O F RS.20 LAKH TO SMT. D. SUKANYA TOWARDS PART PAYMENT OF THE SAME H OUSE PROPERTY. WHEN THE MATTER WAS TAKEN UP WITH SMT. D . SUKANYA SHE FILED AN AFFIDAVIT STATING THEREIN THAT ORIGINA LLY THE PROPERTY WAS PROPOSED TO BE SOLD FOR RS.72,35,500/- OUT OF WHICH AN AMOUNT OF RS.25 LAKH WAS RECEIVED IN CASH TOWARDS ADVANCE. I T WAS STATED BY HER THAT AT THE TIME OF REGISTRATION OF THE PROPER TY, THE ASSESSEE AND HER HUSBAND SRI ANIL KISHORE AGARWAL HAVE INSI STED FOR REDUCTION IN SALE PRICE OF THE SAID PROPERTY DUE TO LOSS OF 100 SQ. YARDS OF LAND FOR PROPOSED ROAD WIDENING BY THE MC H. ACCORDINGLY ON MUTUAL CONSENT THE SALE PRICE WAS REDUCED TO RS. 55 LAKH AND THE REGISTRATION WAS MADE AFTER RECEIPT OF THE AMOU NT OF RS.55 LAKH WITH AN ORAL AGREEMENT THAT THE AMOUNT OF RS.25 LAK H RECEIVED IN 61 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. CASH WOULD BE RETURNED BACK TO THE ASSESSEE AFTER THE CHEQUES WERE EN-CASHED. IT WAS ALSO STATED BY SMT SUKANYA THAT AFTER THE REGISTRATION WAS DONE FOR A CONSIDERATION OF RS.55 LAKH, THE AMOUNT OF RS.25 LAKH WAS RETURNED BACK TO THE ASSESSEE ON 6-9-2005 WHICH WAS ALSO ACKNOWLEDGED BY THE ASSESSEE. 91. THE ASSESSING OFFICER BEING OF THE OPINION TH AT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF RS.25 LAKH GIVE N TO SMT. D. SUKANYA PROPOSED TO TREAT THE SAME AS UNEXPLAINED I NVESTMENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION. ASSESSEE SUBMITTED THAT THE PAYMENT MADE TO SMT. D. SUKANYA HAS BEEN REFLECTED IN THE REGULAR RETURNS FILED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE INVESTMENT WAS MADE BY WITHD RAWING FROM DIFFERENT BANK ACCOUNTS AS WELL AS OUT OF OWN CAP ITAL. IT WAS SUBMITTED THAT THE ENTIRE TRANSACTION HAS BEEN DISC LOSED TO THE DEPARTMENT IN THE RETURN OF INCOME FILED BY THE ASS ESSEE FOR THE ASSESSMENT YEAR 2006-07 AND IS ALSO REFLECTED IN HE R BANK STATEMENT. THE ASSESSING OFFICER HOWEVER BEING OF THE OPINION THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS ON LY AFTERTHOUGHT ADDED THE AMOUNT OF RS.25 LAKH TO THE INCOME. THE CIT (A) ALSO SUSTAINED THE ADDITION BY UPHOLDING THE VIEW OF THE ASSESSING OFFICER. 62 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 92. THE LEARNED AR SUBMITTED BEFORE US THAT THE ENT IRE TRANSACTION HAS BEEN REFLECTED NOT ONLY IN THE BOOK S OF ACCOUNTS OF THE ASSESSEE BUT ALSO IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR. IN THIS CONTEXT, THE L EARNED AR REFERRED TO THE CAPITAL ACCOUNT OF THE YEAR ENDED 3 1-3-2006 AND BALANCE SHEET AS ON 31-3-2006 SUBMITTED ALONG WITH RETURN OF INCOME. HE ALSO REFERRED TO THE BANK ACCOUNT COPIE S TO SHOW THAT THE ASSESSEE HAD SUFFICIENT BALANCE TO MAKE THE PAY MENT OF RS.25 LAKH. 93. THE LEARNED DR, ON THE OTHER HAND, JUSTIFYING T HE ADDITION MADE SUBMITTED THAT AT THE TIME OF SEARCH AND SEIZU RE OPERATIONS THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO ESTA BLISH THE SOURCE OF PAYMENT OF RS.25 LAKH AND ONLY AFTER THE SEARCH, THE ASSESSEE HAS PREPARED THE BOOKS OF ACCOUNTS. 94. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS APPARENT THAT THE ASSESSING OFFICER HAS TOTALLY MIXED UP THE FACT S WHILE MAKING THE AFORESAID ADDITION OF RS.25 LAKH. AS CAN BE SEE N FROM THE DISCUSSION MADE BY HIM IN PARA-6 OF THE ASSESSMENT ORDER, HE HAS AGAIN CONSIDERED THE FACT RELATING TO THE INVESTMEN T OF RS.15 LAKH IN RESPECT OF THE TRANSACTION RELATING TO THE PROPE RTY OF SRI D. 63 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. MANMOHAN. THE CIT (A) HAS ALSO CONFIRMED THE ADDIT ION WITHOUT LOOKING INTO THE FACTUAL ASPECTS. BE THAT AS IT M AY ON A PERUSAL OF THE CAPITAL ACCOUNT AND BALANCE-SHEET FOR THE FINA NCIAL YEAR 2005- 06, COPIES OF WHICH ARE AT PAGES 48 AND 49 OF THE P APER BOOK DOES INDICATE THAT NOT ONLY THE ASSESSEE HAS SHOWN THE V ALUE OF THE PROPERTY AT HYDERGUDA IN THE BALANCE-SHEET BUT IT A PPEARS FROM THE CAPITAL ACCOUNT THAT THERE IS SOURCE FOR MAKING IN VESTMENT OF RS.25 LAKH TOWARDS ADVANCE TO SMT. SUKANYA. SO FAR AS PURCHASE OF THE PROPERTY IS CONCERNED, THERE CANNOT BE ANY D ISPUTE WITH REGARD TO THE SAME. THE ONLY DISPUTE, AS IT APPEAR S, IS WITH REGARD TO THE SOURCE OF RS.25 LAKH PAID IN CASH TO SMT. D. SUKANYA. AS IT APPEARS, THE CAPITAL ACCOUNT AND THE BALANCE-SHEET AS WELL AS OTHER RELATED DOCUMENT HAVE NOT BEEN EXAMINED EITHER BY T HE ASSESSING OFFICER OR BY THE CIT (A) BEFORE MAKING THE ADDITIO N. IN THE AFORESAID VIEW OF THE MATTER, WE ARE INCLINED TO RE MIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE SAME AFRESH AFTER CONSIDERING ALL FACTS AND MATERIALS ON RECORD AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. HENCE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPO SES. 95. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ITA NO.497/HYD/11: - 64 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 96. THE ONLY ISSUE IN THE PRESENT APPEAL IS WITH RE GARD TO THE ADDITION OF RS.25 LAKH AS UNEXPLAINED INVESTMENT TO WARDS PURCHASE OF A PROPERTY BELONGING TO SRI D. MANMOHAN AT GAGAN MAHAL. THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED IN GROUND NO .1 OF ITA NO.496/HYD/11. FOLLOWING OUR DECISION WHILE DECIDI NG THE SIMILAR ISSUE IN THAT APPEAL, WE DELETE THE ADDITION MADE B Y THE ASSESSING OFFICER. HENCE, THIS GROUND IS ALLOWED. 97. IN THE RESULT, THE APPEAL IS ALLOWED. ITA NO.1225/HYD/11 - 98. THE ONLY ISSUE IN THE PRESENT APPEAL IS IN RESP ECT OF DENIAL OF EXEMPTION U/S 54F OF THE ACT. BRIEFLY STATED FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT DURING THE RELEVANT FINANCIAL YEAR, THE ASSESSEE HAS SOLD DIAMONDS WORTH RS.9,82,012/- AND CLAIMED EXEMPTION OF CAPITAL GAIN U/S 54F OF THE ACT BY STATING THAT SHE HAS MADE INVESTMENT IN THE CONSTRUCTION OF RESIDENTIAL HOUSE AT SURVEY NO.167, PLOT NO.25 AND 27, RAMACHANDRAPURAM MANDAL DISTRICT, HYDERABAD. THE A SSESSING OFFICER RELYING UPON CERTAIN SEIZED DOCUMENT I.E., A VALUATION REPORT DATED 17-5-2006 OF APPROVED VALUER NOTED THAT AS PE R THE REPORT OF THE VALUER, THE PROPERTY IS A COMMERCIAL PROPERTY. HE THEREFORE PROPOSED TO DISALLOW THE EXEMPTION CLAIMED U/S 54F OF THE ACT. IN 65 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. RESPONSE TO THE SHOW CAUSE NOTICE ISSUED THE ASSESS EE EXPLAINED THAT THE PROPERTY IN QUESTION IS AGRICULTURAL LAND AND WAS PURCHASED FOR RESIDENTIAL PLOTTING. THIS FACT HAS BEEN CLEARLY MENTIONED IN THE PROPOSED RESIDENTIAL LAY OUT PLAN AND ALSO IS EVIDENT FROM APPLICATION SEEKING APPROVAL BEFORE G RAM PANCHAYAT FOR RESIDENTIAL CONSTRUCTION, IT WAS SUBMITTED, B Y THE TIME THE PROPERTY WAS ACQUIRED IT IS BEING TREATED AS RESIDE NTIAL AREA. IT WAS FURTHER SUBMITTED THAT THE RESIDENTIAL HOUSE CO NSTRUCTED BY THE ASSESSEE HAS ALSO NOT BEEN RENTED FOR COMMERCIAL USE. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE EXPLAN ATION OF THE ASSESSEE FOR THE REASON THAT THE NATURE OF THE PROP ERTY HAS BEEN DESCRIBED AS COMMERCIAL PROPERTY BY THE DDIT(INV.) ON ACTUAL INSPECTION AT THE TIME OF SEARCH AND SEIZURE OPERA TION AND ACCORDINGLY HE DISALLOWED THE CLAIM OF EXEMPTION OF AN AMOUNT OF RS.4,04,153/- U/S 54F OF THE ACT. THE DISALLOWANC E WAS CHALLENGED IN APPEAL BEFORE THE CIT (A). 99. THE CIT (A) ALSO CONFIRMED THE DISALLOWANCE BY APPROVING THE VIEW HELD BY THE ASSESSING OFFICER. 100. THE LEARNED AR SUBMITTED BEFORE US THAT THE FI NDING OF THE ASSESSING OFFICER AS WELL AS CIT (A) IS CONTRARY TO THE FACTS AND MATERIALS BROUGHT ON RECORD. THE LEARNED AR REFERR ING TO THE 66 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. PROPOSED RESIDENTIAL LAY OUT PLAN AND PROPOSED PLAN FOR RESIDENTIAL CONSTRUCTION AT PAGES 5 AND 6 OF THE PAPER BOOK SUB MITTED THAT THE AREA IS CLEARLY A RESIDENTIAL AREA AND NOT COMMERCI AL AREA AS REPORTED BY APPROVED VALUER. FURTHER, REFERRING TO THE PERMISSION DATED 8-6-2001 OF GRAMPANCHAYAT, A COPY OF WHICH IS AT PAGE-7 OF THE PAPER BOOK, IT WAS SUBMITTED THAT IT IS PURELY A RESIDENTIAL HOUSE. THE ASSESSEE ALSO REFERRED TO THE ELECTRICI TY BILL AND MUNICIPAL TAX RECEIPT TO IMPRESS UPON THE FACT THAT THE PROPERTY IN QUESTION IS A RESIDENTIAL HOUSE. 101. WE HAVE HEARD THE PARTIES AND PERUSED THE MAT ERIALS ON RECORD AS WELL AS ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. IT IS THE CONTENTION OF THE LEARNED AR THAT NOT ONLY T HE PROPERTY IS SITUATED AT RESIDENTIAL AREAS BUT THE CONSTRUCTION HAS BEEN MADE FOR RESIDENTIAL PURPOSE ONLY. THEREFORE, THE FINDI NG OF THE DEPARTMENTAL AUTHORITIES THAT IT IS A COMMERCIAL PR OPERTY IS WITHOUT ANY BASIS. IN SUPPORT OF SUCH CONTENTION, THE LEAR NED AR HAS RELIED UPON A DECISION OF CO-ORDINATE BENCH IN CASE OF S RI M.V.SUBRAMANYESWARA REDDY (HUF) AND OTHERS ( ITA NO S. 1014- 1022/HYD/09 DATED 27-12-2011) AND IN THE CASE OF S HYAMLAL TANDON VS. ITO (ITA NO.1774/HYD/2012). ON A PERUSAL OF THE PROPOSED RESIDENTIAL LAY OUT PLAN AND PROPOSED RESI DENTIAL PLAN, 67 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. COPIES OF WHICH HAVE BEEN PLACED IN PAPER BOOK, AN D ALSO APPROVAL LETTER OF GRAMPANCHAY AT PAGE-7 OF THE PAPER BOOK, IT APPEARS THAT THE HOUSE IN QUESTION IS A RESIDENTIAL HOUSE C ONSTRUCTED IN A RESIDENTIAL AREA. HOWEVER, THE CONTENTION OF THE D EPARTMENT IS THAT THE ASSESSEE HAS VIOLATED THE PLAN AND HAS MA DE CONSTRUCTION OF A COMMERCIAL BUILDING. ON WHAT BASIS, SUCH CON CLUSION HAS BEEN REACHED IS NOT FORTHCOMING FROM THE MATERIALS ON RECORD. THOUGH THE ASSESSING OFFICER HAS STATED THAT THE DD IT (INV.) HAS FOUND IT TO BE A COMMERCIAL CONSTRUCTION ON PHYSICA L VERIFICATION BUT ON WHAT BASIS HE HAS COME TO SUCH CONCLUSION IS NOT AVAILABLE ON RECORD. IN THE CIRCUMSTANCES, WE ARE NOT ABLE TO ACCEPT THE CLAIM OF THE DEPARTMENT THAT THE BUILDING IS OF COM MERCIAL NATURE. WE THEREFORE DO NOT FIND ANY REASON FOR SUSTAINING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. IT IS WORTHWHILE TO NOTE HERE THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SRI M .V. SUBRAMANYESWARA REDDY AND OTHERS (SUPRA) AND SHYAML AL TANDON VS. ITO (SUPRA) HELD THAT IF THE PROPERTY IS A RESI DENTIAL PROPERTY BUT USED FOR COMMERCIAL PURPOSE THE NATURE AND CHA RACTER OF THE PROPERTY WOULD NOT CHANGE SO AS TO INVALIDATE THE C LAIM OF EXEMPTION U/S 54F OF THE ACT. FOLLOWING THE AFOR ESAID VIEW OF THE CO-ORDINATE BENCH AND CONSIDERING THE FACTUAL ASPEC T OF THIS ISSUE, WE ALLOW THE CLAIM OF THE ASSESSEE U/S 54F OF THE A CT. 68 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 102. IN THE RESULT, THE APPEAL IS ALLOWED. ITA NO.1226/HYD/2011 : - 103. THE SOLE ISSUE IN THE PRESENT APPEAL IS IN RES PECT OF ADDITION OF AN AMOUNT OF RS.1,30,000/- AS UNEXPLAINED INVEST MENT. BRIEFLY THE FACTS ARE, IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE EXAMINING THE SEIZED MATERIAL, NOTICE D THAT AS PER SHEET NO.64 TO 70 OF SEIZED MATERIAL MARKED AS IT EM NO.A/HIMA/RES/POI/9 AND UNSIGNED RECEIPTS ISSUED TO ASSESSEE BY PARTIES (SELLERS) IN RESPECT OF ADVANCE GIVEN BY HE R FOR THE PURCHASE OF PROPERTY BEARING SURVEY NO.115/30 ADMEA SURING 5 ACRES SITUATED AT NANAKRAMGUDA, SERILINGAMPALLY MAN DAL, RR DISTRICT TOTAL AMOUNT PAID BY HER CAME TO RS.1, 30,000/-. WHEN THE ASSESSING OFFICER PROPOSED TO TREAT THE AMOUNT OF RS.1,30,000/- AS UNEXPLAINED INVESTMENT, THE ASSESS EE OBJECTED TO THE SAME BY STATING THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND WHICH WAS PROPOSED TO BE PURCHASED BY SRI ANIL KISH ORE AGARWAL IN HIS INDIVIDUAL STATUS AND HE HAS GIVEN SOME ADV ANCE TO THE OWNERS OF THE PROPERTY. HOWEVER, SUBSEQUENTLY ON ENQUIRY WHEN SRI ANIL KISHORE AGARWAL CAME TO KNOW THE PROPERT Y IN QUESTION IS A GOVERNMENT LAND, HE CANCELLED THE DEAL AND DEMAND ED FOR RETURNING BACK THE ADVANCE GIVEN. IT WAS THUS SUBM ITTED THAT THE 69 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. TRANSACTION RELATING TO THE PROPERTY IN QUESTION DO ES NOT RELATE TO THE ASSESSEE. THE ASSESSING OFFICER HOWEVER DISBEL IEVING THE EXPLANATION OF THE ASSESSEE MADE THE ADDITION BY ST ATING THAT THE UNSIGNED RECEIPTS WERE ISSUED BY THE SELLERS TO THE ASSESSEE AND NOT TO THE ASSESSEES HUSBAND SRI ANIL KISHORE AGAR WAL. THE CIT (A) ALSO CONFIRMED THE ADDITION BY APPROVING THE VI EW OF THE ASSESSING OFFICER. 104. WE HAVE HEARD THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. AS CAN BE SEEN FROM THE ASSESSMENT STAGE I TSELF THE ASSESSEE HAS CLAIMED THAT THE TRANSACTION RELATING TO THE PROPERTY IN QUESTION DOES NOT BELONG TO HER. IT IS ALSO A F ACT THAT THE AS PER THE ASSESSING OFFICERS OWN FINDING, THE SEIZED MAT ERIAL ARE UNSIGNED RECEIPTS. THEREFORE, IT IS NOT UNDERSTOOD HOW THE RECEIPTS WHICH ARE NOT SIGNED CAN BE CONSIDERED TO BE RELAT ING TO THE ASSESSEE WHEN THERE ARE NO OTHER MATERIALS TO SUGGE ST THAT THE ASSESSEE HAS PAID THE AMOUNT OF RS.1,30,000/-. IN THE AFORESAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ADDITION MADE IS WITHOUT ANY BASIS. ACCORDINGLY, WE DIRECT THE ASSE SSING OFFICER TO DELETE THE SAME. 105. IN THE RESULT, THE ASSESSEES APPEAL IS ALL OWED. M/S SRI ISWARLAL AGARWAL (ITA NO.922/HYD/11) 70 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. 106. THE ONLY ISSUE IN THE PRESENT APPEAL IS WIT H REGARD TO THE ADDITION OF AN AMOUNT OF RS.4 LAKH AS UNACCOUNTED INCOME. AS NOTED BY THE ASSESSING OFFICER DURING THE SURVEY OP ERATION U/S 133A OF THE ACT CONDUCTED IN THE FACTORY PREMISES O F JAI BALAJI POLYMERS, A PARTNERSHIP FIRM, A STATEMENT WAS RECOR DED FROM ONE OF THE PARTNERS SRI SRINIVASA REDDY. IT WAS STATED BY HIM THAT THE PARTNERSHIP FIRM WAS STARTED IN THE YEAR 1997 WITH ANOTHER PARTNER SRI SRI RAJ KISHORE AGARWAL. HOWEVER, DURING THE Y EAR 2006-07 THERE WAS DISPUTE BETWEEN THE FAMILY MEMBERS OF SRI RAJ KISHORE AGARWAL AND HIS FATHER SRI ISWARLAL AGARWAL INSIST ED THAT HE HIMSELF WOULD LOOK AFTER THE AFFAIRS OF THE PARTNER SHIP FIRM AND PROFITS SHARE FOR AGARWAL FAMILY WAS RECEIVED BY SRI ISWARLAL AGARWAL. THIS ARRANGEMENT CONTINUED FOR 1 YEAR AND THEREAFTER THE YOUNGER BROTHER OF SRI RAJ KISH ORE AGARWAL WAS LOOKING AFTER THE AFFAIRS OF THE PARTNERSHIP AN D THE PROFITS SHARE WAS TO BE RECEIVED BY HIM. THIS ARRANGEMENT CONTINUED TILL 2003 WHEN THE FACTORY STARTED RUNNING IN LOSS AND REMAINED CLOSED TILL JANUARY, 2006 WHEN SRINIVASA REDDY TOOK OVER 5 0% SHARE OF SRI RAJ KISHORE AGARWAL AND CONTINUED THE BUSINESS AS A PROPRIETARY CONCERN. HE FURTHER STATED THAT 50% SHA RE WAS TAKEN OVER BY HIM ON PAYMENT OF A TOTAL AMOUNT OF RS.8 LA KH OUT OF WHICH RS.4 LAKH WAS ADJUSTED AGAINST THE WORKING CA PITAL WHICH 71 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. WAS IN POSSESSION OF AGARWAL FAMILY AND BALANCE OF RS.4 LAKH WAS PAID BY HIM TO SRI ISWARLAL AGARWAL IN CASH IN THE MONTH OF JANUARY, 2006. 107. THE ASSESSING OFFICER ON THE BASIS OF THE STA TEMENT RECORDED FROM SRI C. SRINIVASA REDDY COMPLETED THE ASSESSMEN T U/S 143(3) READ WITH SECTION 153A OF THE ACT IN CASE OF SRI RA J KISHORE AGARWAL BY ASSESSING THE AMOUNT OF RS.8 LAKH AS UNDISCLOSED INVESTMENT FOR THE IMPUGNED ASSESSMENT YEAR. AT THE SAME TIME , THE ASSESSING OFFICER ALSO ADDED THE AMOUNT OF RS.8 LAK H AS UNDISCLOSED INCOME AT THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A). 108. THE CIT (A) AFTER CONSIDERING THE SUBMISSIO N OF THE ASSESSEE AS WELL AS FACTS AVAILABLE ON RECORD WAS OF THE VIEW THAT THE ASSESSEE AFTER ADJUSTMENT TOWARDS WORKING CAPIT AL HAS ONLY RECEIVED AN AMOUNT OF RS.4 LAKH. HE THEREFORE HELD THAT ONLY AN AMOUNT OF RS.4 LAKH CAN BE ASSESSED AT THE HANDS OF THE ASSESSEE AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO D ELETE THE BALANCE AMOUNT OF RS.4 LAKH. THE LEANED AR SUBMITTED BEFO RE US THAT THE ASSESSEE HAD CONTRIBUTED THE AMOUNT IN QUESTION TO WARDS CAPITAL IN M/S JAI BALAJI POLYMERS. ON THE DISSOLUTION OF THE PARTNERSHIP FIRM, HE HAS ONLY RECEIVED BACK HIS CAPITAL. HENCE, NO INCOME HAS 72 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. ACCRUED O THE ASSESSEE. IN THIS CONTEXT, THE LEARN ED AR REFERRED TO THE ORDER OF THE CO-ORDINATE BENCH IN CASE OF SRI R AJ K. AGARWAL IN ITA NO.1692/HYD/2010 DATED 12-1-2012. 109. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE DEPARTMENTAL AUTHORITIES. 110. WE HAVE HEARD THE SUBMISSION OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS CAN BE SEEN FROM THE STATEMENT OF SRI C. SRINIVASA REDDY THE AMOUNT OF RS.4 LAKH W AS PAID TO THE PRESENT ASSESSEE ON DISSOLUTION OF T HE PARTNERSHIP , TOWARDS 50% SHARE HELD BY RAJ KUMAR AGARWAL. IT IS TO BE NOTED HERE, WHILE DISPOSING OF THE APPEAL FILED BY THE DEPARTMENT IN CASE OF RAJKUMAR AGRWAL IN ITA NO.1692/HYD/2010 DATED 12-1- 2012, THE TRIBUNAL MADE THE FOLLOWING OBSERVATION:- WE HAVE HEARD BOTH THE PARTIES AD PERUSED THE MATER IALS AVAILABLE ON RECORD. WE VERIFIED HE FACTS OF THE C ASED AND FIND THAT THE ASSESSEE HAS REEIVED ONLY RS.2 LAKHS WHICH IS EVIDENT FROM THE RELEASE DEED DATED 25-1-2006, WHEREAS THE OTHER RS.8 LAKHS WAS RECEIVED BY S/SRI ISHWARLAL AGARWAL AND A NIL KUM AR AGARWAL BEING THE CONTRIBUTION MADE BY HEM IN THE B USINESS. IT IS ALSO SEEN THAT THE AMOUNT OF RS.4 LAKHS PAID TO EACH OF THE FAMILY MEMBER VIZ., S/SRI ISHWARLAL AGARWAL AND ANI L KUMAR AGARWAL DO NOT FIGURE AT ALL IN ANY BOOKS OF ACCOUN T. FURTHER, IT WAS STATED THAT RS.4 LAKHS HAS BEEN PAID TO SRI ISH WARLAL AGARWAL AT THE TIME OF RELINQUISHMENT OF ASSESSEES SHARES IN THE PARTNERSHIP FIRM. SRI C. SRINIVAS REDDY IN HIS STA TEMENT CLEARLY STATED THAT RS.4 LAKHS WAS ADJUSTED TOWARDS THE WOR KING CAPITAL WHICH WAS SAID TO HAVE BEEN BROUGHT BY THE ASSESSEE S FATHER AND BROTHER. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) IN 73 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. DELETING THE ADDITION OF RS.10 LAKHS IN THE HANDS O F THE ASSESSEE. FROM THE AFORESAID FINDING OF THE CO-ORDINATE BENCH IT BECOMES CLEAR THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON T HE DISSOLUTION OF THE FIRM WAS TOWARDS CONTRIBUTION MADE BY HIM IN THE PARTNERSHIP BUSINESS. THEREFORE, THE AMOUNT RECEIV ED BY HIM BEING A CAPITAL INVESTED BY HIM EARLIER IN THE PART NERSHIP BUSINESS CANNOT BE TREATED AS INCOME OF THE ASSESSEE. WE TH EREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE SAME. 111. IN THE RESULT, ASSESSEES APPEALS IN ITA NO.921/HYD/2011,1156/HYD/11, 1158/HYD/11 497/HYD/1 1, ITA NOS. 1225-1226/HYD/1`1 AND ITA NO.922/HYD/11 ARE A LLOWED, ITA NOS.493 TO 495/HYD/2011, 923 TO 926/HYD/11, 115 5/HYD/11, 1157/HYD/2011, 1223 & 1224/HYD/2011, 496/HYD/11 ARE PARTLY ALLOWED AND REVENUES APPEALS IN ITA NO.778/HYD/11, 777/HYD/11 AND 1368 TO 1373/HYD/11 ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28 -05-2014. SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 28 TH MAY, 2014. JMR* 74 ITA NOS. 493, 494 AND OTHER GROUP OF 2011 JAI BALAJI SAN ITRY STORES & OTHERS, HYD. COPY TO:- 1. ALL ASSESSEES, C/O P. MURALI & COMPANY, CAS, 6-3- 655/2/3, 1ST FLOOR,SOMAJIGUDA, HYDERABAD. 2) DCIT, CC-4, HYDERABAD. 3) CIT(A)-VII, HYDERABAD. 4) CIT(CENTRAL), HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.
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