Shri RAM NATH SHARMA, Bhopal V. The ACIT 1(2), Bhopal

ITSSA 118/IND/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1351 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-09-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 07-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY
• Assessee Lawyers: N D PATWA
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Business expenditure; Income from undisclosed sources; Search and seizure; Corroborative evidences; Deemed dividend; Tax effect
• Section: 40A(3); 54F; 153A; 69; 54; 132; 139; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER IT(SS)A NOS. 118 TO 123/IND/2014 A.YS.2000-01 TO 2005-06 RAM NATH SHARMA BHOPAL PAN ACUPS4896A ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 1(2) BHOPAL ::: RESPONDENT IT(SS)A NO. 116/IND/2014 A.Y. 2000-01 ASSTT.COMMR. OF INCOME TAX 1(2) BHOPAL ::: APPELLANT VS RAM NATH SHARMA BHOPAL PAN ACUPS4896A ::: RESPONDENT 2 ASSESSEE BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA REVENUE BY SHRI RAJEEV VARSHNEY DATE OF HEARING 8.12 .2015 DATE OF PRONOUNCEMENT 9.12 .2015 O R D E R PER BENCH ALL THESE APPEALS FILED BY THE ASSESSEE AND THE REVENUE EMANATE FROM DIFFERENT ORDERS OF THE LEARNED CIT(A)-I, BHOPAL, DATED 2.1.2014 AND 3.1.2014. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATE D ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO DID NOT FILE ORIGINAL RETURN OF INCOME PRIOR TO 3 THE DATE OF SEARCH I.E.16.9.2005. SEARCH AND SEIZURE OPERATIONS U/S 132(1) OF THE ACT WERE CARRIED OUT AT T HE PREMISES OF THE ASSESSEE AND DURING THE SEARCH CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. THEREAFTER, THE ASSESSING OFFICER ISSUED NO TICE U/S 153A OF THE ACT ON 22.3.2006 REQUIRING THE ASSESSEE T O FILE RETURN OF INCOME FOR 6 ASSESSMENT YEARS, IN RESPONSE TO WHICH THE ASSESSEE FURNISHED RETURN OF INCOME ON 19.2.2007 FOR THE ASSESSMENT YEAR 2000-01 DECLARING INCOME AT RS.80,652/-. AFTER ISSUE OF NOTICE U/S 143 (2) AND 142(1), THE ASSESSING OFFICER ASSESSED THE TAXABLE I NCOME OF THE ASSESSEE AT RS. 13,06,302/- BY HIS ORDER DATED 31.12.2007. ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) WHO GRANTED PART RELIEF. NOW BOTH THE SIDES AR E BEFORE US. ITA NO.118/IND/2014 IS FILED BY THE ASSESSEE AND ITA NO. 116/IND/2014 IS FILED BY THE REVENUE. 4 3. IN ITA NO. 118/IND/2014 GROUND NO. 1 RELATES TO CONFIRMATION OF ADDITION OF RS.2 LACS BY THE LEARNED C IT(A) BY ACCEPTING THE OPENING CASH BALANCE OF RS.65,884/- ON LY OUT OF THE OPENING CASH BALANCE SHOWN BY THE APPELLANT AT RS. 2,65,884/-. 5. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN CASH IN HAND AT RS.2,65,884/- AS ON 1.4.1999 WHEREAS THE TOTAL BANK BALANCES HAD BEEN SHOWN AT RS.4,000/- ONLY IN ALL THE THREE BANK ACCOUNTS OPERATED BY THE ASSESSEE. THE ASSESSEE HAD SHOWN CASH IN HAND TO EXPLAIN THE INVESTMENT IN THE YEAR UNDER CONSIDERATIO N. THE ASSESSING OFFICER ALSO NOTED THAT THE PROFILE OF THE ASSESSEE ALSO DO NOT JUSTIFY AVAILABILITY OF HOLDING OF THE CASH TO THE EXTENT OF RS.2,54,884/- PARTICULARLY WHEN THE INCOME EARNED BY THE ASSESSEE DURING THE YEAR WAS OF RS.1,34,000/- ONLY OUT OF WHICH THE ASSESSEE HAD TO B EAR DAY TO DAY HOUSEHOLD EXPENSES. THEREFORE, THE ASSE SSING 5 OFFICER CONSIDERING THE WHOLESOME VIEW, HELD CASH HO LDING IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF RS. 65, 884/- AS ON 1.4.1999 AND THE BALANCE CASH HOLDING CLAIMED AMOUNTING TO RS. 2 LACS WAS HELD BY HIM AS UNEXPLAINED CASH REPRESENTING THE UNDISCLOSED INCOME OF THE ASSES SEE. THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION O F RS. 2 LACS TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED WI TH THIS FINDING OF THE ASSESSING OFFICER, THE ASSESSEE PREFE RRED FIRST APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER WITH THE FOLL OWING OBSEVATIONS :- 4.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. AS ADMITTED BY THE APPELLANT THAT HE HAS SHOWN TOTAL INCOME OF RS.1,10,780/- FOR THE A.Y.2000-01 ONLY AND THE INCOME IN EARLIER YEARS WAS ALSO IN THE SAME RANGE. THEREFORE, AFTER MEETING OUT HOUSEHOLD EXPENSES, IT WAS 6 HIGHLY IMPROBABLE THAT APPELLANT COULD, HAVE A HUGE AMOUNT OF RS.2,65,884/- IN CASH AS ON 01.04.1999. I T IS ALSO PERTINENT TO NOTE THAT THE APPELLANT HAD BEEN MAINTAINING REGULARLY THREE BANK ACCOUNTS, WHEREIN THE OLD BALANCES WERE ONLY TO THE TUNE OF RS 4,OOO. THE EXPLANATION OR THE APPELLANT THAT THE APPELLANT HAD SOLD A PIECE OF LAND FOR RS.8,29,125/- IN JANUARY, 1998 AND, THEREFORE, HE HAD SAVINGS OUT OF THE SALE CONSIDERA TION AS WELL AS FROM SALARY AND RENTAL INCOME IS ALSO NO T CONVINCING BECAUSE THE LAND WAS SOLD IN JANUARY, 19 98 AND IT IS HIGHLY IMPROBABLE THAT THE APPELLANT WOUL D KEEP THE AMOUNT IN CASH AT HOME FOR SUCH A LONG TIM E WHEN HE WAS REGULARLY MAINTAINING THREE BANK ACCOUNTS. THEREFORE, CONSIDERING THE TOTALITY OF FA CTS AND CIRCUMSTANCES OF THE CASE, IN MY VIEW, THE ESTI MATE OF PAST SAVINGS OF CASH IN RS.65884/- MADE BY THE A O WAS FAIR AND REASONABLE. HENCE, THE ADDITIONAL' THE 7 BALANCE AMOUNT OF RS. 2,00,000/- TREATING THE SAME AS INCOME FROM UNDISCLOSED SOURCES BY THE AO IS CONFIRMED. AGAINST THE ABOVE FINDINGS OF THE LEARNED CIT(A), NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AFTER SEARCH, THE ASSESSEE PREPARED RECEI PTS AND PAYMENT ACCOUNT WHICH WAS ACCEPTED BY THE LD. ASSESSING OFFICER AND THE LD. CIT(A). THE OPENING BAL ANCE- SHEET AS ON 1.4.1999 SHOWS CAPITAL ACCOUNT OF RS.28,62,717. HE SUBMITTED THAT NO EVIDENCE HAS BEEN FOUND THAT ASSESSEE HAS ANY OTHER ASSETS AS ON 1.4.1999 OTHER THAN THE REPORTED IN BALANCE-SHEET. THUS, THE ON LY FIGURE LEFT IS CASH IN HAND OF RS.2,65,884. HE, THERE FORE, SUBMITTED THAT THE LD. ASSESSING OFFICER CANNOT BLOW HOT & COLD AND DENY THIS CASH BALANCE. HE FURTHER SUBMITTED THAT LD. CIT(A) CONFIRMED THE ORDER OF THE LD. ASSE SSING 8 OFFICER HOLDING THAT THE OPENING CASH BALANCE AS ON 1.4.1999 WAS RS.65,884/-. THIS ESTIMATION WAS AD HOC WITHOUT ANY BASIS AND ON PRESUMPTION AND ASSUMPTION. N O SPECIFIC REASON WAS GIVEN BY THE LOWER AUTHORITIES FOR TAKING THE BALANCE AT RS.65,884/-. HE SUBMITTED THAT SPECIFIC SOURCE OF RS.2,65,884/- IS JUSTIFIED BY THE SALE PR OCEEDS OF 25.37 DECIMAL OF LAND AT KHASRA NO.24/25/1/2 IN VILLAGE GEHUKHEDA OUT OF TOTAL 3.5 ACRES OF LAND. THIS LAND WAS PURCHASED BY THE ASSESSEE ON 29.5.1984 IN ABOVE KHASRA NUMBER. THIS LAND WAS SOLD FOR RS.8,29,125/- IN JANU ARY 1998 FOR WHICH THE SALE PROCEEDS WERE RECEIVED. AFTE R THE SAID TRANSACTION, THE ASSESSEE DID NOT ENTER INTO ANY TRANSACTION FOR PURCHASE OF LAND. NO SUCH FINDING WAS GI VEN BY ANY OF THE AUTHORITY. THUS, THIS CASH WAS AVAILABLE W ITH THE ASSESSEE. IT CLEARLY SHOWS THAT THE ASSESSEE HAD RS.2,65,884/- AS OPENING CASH BALANCE AVAILABLE. THE 9 LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTE D THAT THE OPENING CASH BALANCE MAY BE ACCEPTED. 6. ON THE OTHER HAND, THE LD. DR COULD NOT CONTROVER T THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND MERELY SUPPORTED THE FINDINGS OF THE LEAR NED CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. WE FIND THAT BEFORE US THE LEARNED COUNSEL FO R THE ASSESSEE HAS EXPLAINED THE SOURCE OF RS.2,65,884/- FRO M THE SALE PROCEEDS OF 25.37 DECIMAL OF LAND AT KHASRA NO.24/25/1/2 IN VILLAGE GEHUKHEDA WHICH WAS A PART OF TOTAL 3.5 ACRES OF LAND HELD BY THE ASSESSEE. THIS LAND WAS PURCHASED BY THE ASSESSEE ON 29.5.1984. PART OF THE L AND 25.37 DECIMAL WAS SOLD FOR RS.8,29,125/- IN JANUARY 19 98 FOR WHICH THE SALE PROCEEDS WERE RECEIVED. AS SUCH, THIS CASH WAS AVAILABLE WITH THE ASSESSEE. IT CLEARLY ESTABLIS HES THAT THE ASSESSEE WAS HAVING RS.2,65,884/- AS OPENING 10 CASH BALANCE AS ON 1.4.1999. WE, THEREFORE, DELETE THE ADDITION OF RS. 2 LACS. 8. GROUND NO. 2 IN THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS. 53,000/- TOWARDS UNSEC URED LOAN IN THE NAME OF CHANDRA CHATURVEDI OF RS. 23,000/- AND DHARMENDRA VERMA OF RS. 20,000/-. 9. THE AO MADE THIS ADDITION OF RS. 53,000/- TOWARDS UNSECURED LOAN (IN THE NAMES OF CHANDRA CHATRUVEDI AT RS. 23,000/- AND DHARMENDRA VERMA AT RS. 20,000/-) BY HOLDING AS UNDER :- DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS SH OWN UNSECURED LOAN TOTALING TO RS. 53,000/- FROM FOLLOWING TWO PERSONS ;- NAME AMOUNT RS. CHANDRA CHATURVEDI RS. 23,000 DHARMENDRA VERMA RS. 30,000 TOTAL RS. 53,000 11 THE BANK ACCOUNT FILED BY THE ASSESSEE DO NOT REFLE CT ANY SUCH TRANSACTIONS OR CREDIT OF THESE AMOUNTS. THE A SSESSEE. WAS ASKED TO FILED CONFIRMATION AND PROVE THE GENUI NENESS AND CREDITWORTHINESS OF THE LOAN CREDITORS OF THESE TRANSACTIONS. 10. ON APPEAL, THE LEARNED CIT(A) FINDING SUBSTANCE IN THE FINDING OF THE ASSESSING OFFICER, CONFIRMED THE ADDITION BY HOLDING AS UNDER :- 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND FACTS OF THE CASE. IT MAY BE NOTED TH AT THE APPELLANT HAD CLAIMED TO HAVE RECEIVED ADVANCES FROM SHRI CHANDRACHUD CHATURVEDI OF RS.23,OOO/- AND FROM SHRI DHARRNENDRA VERMA 01' RS.30,000/- IN CASH AGAINST THE SALE OF PLOTS. IT M AY BE PERTINENT TO NOTE THAT IN THE REAL ESTATE INDUST RY, IT IS A COMMON PRACTICE THAT IF THE PURCHASER DOES NOT PAY THE TOTAL AMOUNT AND BACK OUT FROM THE 12 TRANSACTION, THE ADVANCE (BAYANA) TAKEN IS NORMALLY FORFEITED AND IF THE SELLER BACKS OUT OF THE TRANSACTION, HE HAD TO PAY DOUBLE OF THE AMOUNT OF ADVANCE (BAYANA) TAKEN. IT IS NOT CONVINCING THAT THE APPELLANT KEPT THE ADVANCE FOR ABOUT EIGHT YEAR S AND, THEREAFTER, REPAID THE SAME AMOUNT TO THE ALLEGED PURCHASER, WHO HAD ADVANCED THE MONEY FOR PURCHASE OF PLOT. FURTHER, THE APPELLANT ALSO FAILE D TO ADDUCE ANY EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE AO WAS JUSTIFIED IN CONCLUDING THAT THE APPELLA NT FAILED TO SATISFACTORILY EXPLAIN THE LOANS OF RS.23,000/- IN THE NAME OF SHRI CHANDRACHUD CHATURVEDI AND OF RS. 30,000/- FROM SHRI DHARRNENDRA VERMA AND, THEREFORE, MAKING ADDITION 13 OF RS.53.000/- U/S 68 OF THE ACT. HENCE, ADDITION O F RS.53,000/- IS CONFIRMED. 11. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNTS IN QUESTION WERE RECEIVED AGAINST THE SALE OF PLOTS AT GEHUKHEDA DURING THE FY 1999-2000 I.E. THE RELEVANT Y EAR. THE PLOTS WERE UNDEVELOPED PLOTS AND THE ASSESSEE INTENDED TO SELL THE PLOTS AS SUCH. HOWEVER, THESE P ERSONS WERE IN NEED OF DEVELOPED PLOTS AND THEY DEMANDED DEVELOPED PLOTS. DUE TO THIS DISPUTE, THE PLOTS COU LD NOT BE TRANSFERRED TO THESE PERSONS AND THE PRICES OF THE PR OPERTY GREW SUBSTANTIALLY. THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE AMOUNT WAS, THEREFORE, RETURNED TO THOSE PERSONS IN FY 2007-08 & 2008-09. HE SUBMITTE D THAT THE CONFIRMATION OF BOTH THE PERSONS IS FILED AT PB 85, 86. THE LD. LOWER AUTHORITIES CHOSE NOT TO CROSS-EXAM INE THEM. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT 14 WITHOUT CROSS-EXAMINATION, THE CONFIRMATIONS FILED BY THESE PERSONS CANNOT BE REJECTED. THE LEARNED COUNSEL FOR T HE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF MEHTA PARIKH & CO. 30 ITR 181 (SC). HE FURTHER SUBMITTED THAT TH ESE AMOUNTS WERE RECEIVED BY CHEQUES. THEY ARE REFLECTED I N THE ACCOUNT OF ASSESSEE AT PB 87. THE LEARNED COUNSEL F OR THE ASSESSEE, THEREFORE, SUBMITTED THAT IT CANNOT BE S AID THAT IT IS AN AFTERTHOUGHT TO INTRODUCE THE CASH CREDI T TO EXPLAIN THE SOURCE OF EXPENSES. THE LEARNED COUNSEL F OR THE ASSESSEE, THEREOFRE, PRAYED THAT ADDITION MAY BE DELET ED. 12. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW. 13. AFTER CONSIDERING THE ARGUMENTS OF THE PARTIES IN THE WAKE OF THE FACTS OBTAINING IN THIS CASE, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW DID NOT VERIFY THE FACTS PR OPERLY AND SIMPLY REJECTED THE CLAIM OF THE ASSESSEE. THESE AMOUNTS WERE RECEIVED BY CHEQUE WHICH IS EVIDENT FROM 15 PAGES 85 AND 86 OF THE PAPER BOOK FILED FOR THE ASSESSM ENT YEAR 2000-01 WHICH ON CONFIRMATION FROM BOTH THESE PERSONS. THIS AMOUNT WAS ALSO RETURNED WHEN DEAL WAS CANCELLED IN THE YEAR 2008. THESE CONFIRMATIONS ALSO HAV E FULL ADDRESS OF THESE PERSONS. NO INQUIRY WAS MADE. TH ESE DOCUMENTS WERE NOT CONSIDERED. WE, THEREFORE, REVER SE THE FINDINGS OF THE AUTHORITIES BELOW AND DELETE THE ADDIT ION. 14. BY WAY OF GROUND NO. 3 THE ASSESSEE HAS ASSAILED TH E ORDER OF THE LEARNED CIT(A) ON THE GROUND THAT HE WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 28,650/ - U/S 2(22)(E) OF THE ACT TOWARDS SOCALLED UNSECURED LOAN RECEIVED FROM THE COMPANY M/S HARE KRISHNA COLONISERS (P) LIMITED. 15. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE RECEIVED AN AMOUNT FROM M/S. HARE KRISHNA COLONISERS PVT. LTD. IN WHICH HE WAS MANAGING DIRECTOR AND HOLDING SUBSTANTIAL INTEREST. THIS AMOUNT WAS RECEIVED TO INCUR EXPENSES ON 16 BEHALF OF THE COMPANY. HOWEVER, THE LD. ASSESSING OFF ICER TREATED THE SAME AS DIVIDEND U/S 2(22)(E) OF THE ACT BY HOLDING AS UNDER :- UNSECURED LOAN FROM MIS. HARE KRISHNA COLONIZERS PVT. LTD. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS SHOWN UNSECURED LOAN OF RS. 28.650/- FROM M/S. HARE KRISHNA COLONIZERS PVT. LTD. WHICH IS A CLOSELY HEL D COMPANY OF THIS GROUP IN WHICH SHRI. RAM NATH SHAMR A THE MANAGING DIRECTOR AND HOLDING SUBSTANTIAL SHARE HOLDING. THIS AMOUNT OF LOAN FROM COMPANY IS TREATE D AS DEEMED DIVIDEND ULS 2(22)(E) OF THE I.T.ACT AS ABOVE SAID COMPANY IS PROFIT MAKING COMPANY HAVING UNDISTRIBUT ED PROFIT OR RS. 1,28540/- AS ON 01.04.1999. THEREFORE, THE AMOUNT OF RS. 28,650/- ADDED TO THE INCOME OF THE ASSESSEE AS DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T. ACT. 17 FELT AGGRIEVED WITH THE ABOVE TREATMENT OF THE ASSESSI NG OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE ACTION OF THE ASSESSING OFF ICER WITH THE FOLLOWING OBSERVATIONS :- 7.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT MAY BE NOTED TH AT FOUR CONDITIONS ARE REQUIRED TO BE FULFILLED TO ATT RACT PROVISIONS OF SECTION 2(22)( E), WHICH ARE AS UNDER : (I) THE COMPANY SHOULD BE ONE IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED; (II) THE PAYMENT SHOULD BE BY WAY OF ADVANCE OR LOAN; (III) SUCH PERSON SHOULD BE A SHAREHOLDER HAVING N OT LESS THAN 10% OF VOTING POWER; AND (IV) THE PAYMENT IS MADE OUT OF ACCUMULATED PROFIT S OR THE COMPANY. IN THE INSTANT CASE, ALL THE ABOVE [OUR CONDITIONS ARE 18 FULFILLED, AS THE COMPANY IS A CLOSELY HELD COMPANY ; THE APPELLANT HAD SHOWN THE AMOUNT AS LOAN RECEIVED FROM THE COMPANY: HE WAS HOLDING SUBSTANTIAL SHARES HAVING MORE THAN 10 % VOTING POWER, AND THE PAYMENT WAS MADE OUT' OF ACCUMULATED PROFITS. THE APPELLANT SUBMITTED THAT THERE WAS AN AMOUNT OF RS.50,000/- RECEIVABLE BY THE APPELLANT FROM THE COMPANY AS ON 31.03.2000 AS THE SALARY ACCRUED FOR THE YEAR. BUT IT IS NOTICED FROM THE BALANCE SHEET AS ON 31.03.2000 FURNISHED BY THE APPELLANT THAT NO SUCH AMOUNT WAS SHOWN AS RECEIVABLE FROM THE COMPANY, WHEREAS THE APPELLANT HAD CLEARLY SHOWN THE AMOUNT OR RS.28,650/- PAYABLE TO M/S. HARE KRISHNA COLONIZERS PVT. LTD. IN THE CASE OF ITO VS. AJANTA CYCLE PVT. LID. 99 TTJ 159, THE HON'BLE ITAT CHANDIGARH BENCH HAS HELD THAT WHERE THERE WAS DEPOSIT IN THE ACCOUNT CREATED AS AN IMPREST AMOUNT, SUCH IMPREST AMOUNT 19 WAS TO BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) I N THE HANDS OR THE DIRECTOR/SHAREHOLDER. THERERORE, T HE ALTERNATE SUBMISSION OF THE APPELLANT THAT THE AMOU NT OR RS.28,650/- WAS RECEIVED BY THE APPELLANT AS IMPREST MONEY AND, THEREFORE, CANNOT BE TREATED AS DEEMED DIVIDEND IS ALSO NOT TENABLE. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , IT IS CLEAR THAT THE APPELLANT'S CASE CLEARLY FALSE UN DER THE MISCHIEF OR DEEMING PROVISIONS OF SECTION 2(22) (E) AND, HENCE, THE LD. AO WAS JUSTIFIED IN ASSESSING T HE AMOUNT OF RS.28,650/- DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. THUS, THE ADDITION OFRS.28,650/- TO THE RETURNED INCOME IS CONFIRMED. 16. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. THE LEAR NED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IN QUESTIO N AMOUNT WAS RECEIVED BY THE APPELLANT AS AN ADVANCE FOR DOING TRANSACTION ON BEHALF OF THE CO. THIS AMOUNT WAS 20 EXPENDED SUBSEQUENTLY BY MAKING PAYMENTS IN THE NEXT YEAR. HE FILED A COPY OF THE ACCOUNT OF THE ASSESSEE AT PAGE 88 OF THE PAPER BOOK. HE ALSO FILED AT PAGE 89 OF THE P APER BOOK THE ACCOUNT OF THE NEXT YEAR JUSTIFYING THE EXPE NSES ON BEHALF OF THE CO. THUS, IT IS CLEARLY EVIDENT THAT THIS AMOUNT CANNOT BE TREATED AS A LOAN OR ADVANCE FOR NON- BUSINESS PURPOSES. HE PLACED RELIANCE ON THE DECISION IN ON CIT VS. HOTEL HILLTOP 313 ITR 116 (RAJ) WHEREIN, IT WAS HELD THAT AN ADVANCE GIVEN FOR NON-BUSINESS PURPOSE CANNOT BE REGARDED AS AN ADVANCE COVERED UNDER SEC. 2(22)(E) ON THE DOCTRINE OF NOSITERU-SOTIS. HE ALSO PLACED RELIANCE ON CIT VS. AMBASSADOR TRAVERS P. LTD. 318 IT R 376 (DEL) AS ALSO ON CIT VS. RAJKUMAR 318 ITR 462 (DE L) WHEREIN IT WAS HELD THAT TRADE ADVANCES CANNOT BE TREATED AS DEEMED DIVIDEND. IN ALTERNATE, THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD AN AMOUNT OF RS.50000 RECEIVABLE FROM THE COMPANY AS HE WAS THE MD 21 OF THE COMPANY. THIS AMOUNT WAS RECEIVABLE AS REMUNERATION FOR THE FY 1999-00. THE COMPANY ADVANCED HIM RS.28,650/- WHICH WAS VERY WELL WITHIN THIS LIMI T AND THEREFORE THE SAME CANNOT BE REGARDED AS DIVIDEND. AT P B PAGE 93, THE LIST OF SUNDRY CREDITORS IS GIVEN IN TH E COMPANYS BALANCE SHEET SHOWING DIRECTORS REMUNERATION PAYABLE AT RS.2,50,000/-. THIS AMOUNT INCLUDED THE AMOUNT RECEIVABLE BY THE ASSESSEE ALSO. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT T HE ADDITION MAY NEEDS TO BE DELETED. 17. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE AUTHORITIES BELO W. 18. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. THE FACTS OF THE CASE LAWS RELIED UPON BY THE LEARNED AR ARE QUITE DIFFERENT. THE ASSESSEE WAS HOLDING SHARES MORE THAN 10% AND THERE WAS ACCUMULATED PROFIT IN THE COMPANY. THE ADVANCE WAS GIVEN TO THE ASSESSEE. THE 22 ASSESSEE FAILED TO ESTABLISH THAT IT WAS NOT AN ADVANCE. TH E FACTS OF THE CASE ARE SIMILAR TO THE FACTS OF THE CASE OF ITO VS. AJANTA CYCLE PVT. LTD.; 99 TTJ 1159 DECIDED BY T HE ITAT, CHANDIGARH BENCH. IN VIEW OF THESE FACTS, WE CO NFIRM THE FINDINGS OF THE AUTHORITIES BELOW. THIS GROUND O F THE ASSESSEE IS DISMISSED. IT(SS) A NO. 116/IND/2014 IN THE REVENUES APPEAL THE TAX EFFECT IS BELOW RS. 3 LACS HENCE NOT MAINTAINABLE. FURTHER, THE ADDITION IS B ASED ON INVESTMENT IN THE FINANCIAL YEAR 1996-97 RELEVANT TO THE ASSESSMENT YEAR 1997-98, THEREFORE, NO ADDITION COULD BE MADE IN THE ASSESSMENT YEAR 2000-01. THE LEARNED DR IS UNABLE TO CONTROVERT THIS FINDING OF LEARNED CIT(A). HENCE, ON MERIT ALSO, NO ADDITION COULD BE SUSTAINED. IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. 23 IT(SS) A NO. 119/IND/2014 19. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 2.1.2014. 20. THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS APPE AL RELATES TO CONFIRMING THE ADDITION OF RS. 6,50,000/- TOWARDS THE ADVANCES RECEIVED AND REFUNDED TOWARDS THE AGREEMENT TO SELL 1/3 RD PORTION OF LAND AT 1.1 ACRES AT CHUNA BHATTA WITH BABULAL SAHU (RS.2,50,000/-), NANHELAL SAHU (RS.2,00,000/-) AND KISHANLAL SAHU RS.2,00,000/-) 21. DURING THIS YEAR, THE ASSESSEE RECEIVED ADVANCE AGAINST THE SALE OF PLOTS. THE SUMMARY OF THE ADVANCES RECEIVED IS AS UNDER: NAME AGREEMENT DATE EARNEST MONEY CANCELATION RETURNE D BABULAL SAHU 02/04/200 0 (PB- 18) RS. 2,00,000/ - (WRONG FIGURE RS. 2,50,000) 31/03/200 5 (PB-19) 2,50,000 (WITH INTEREST) NANHELAL 02/04/200 RS. 31/03/200 2,00,000 24 SAHU 0 (PB-20) 2,00,000/ - 5 (PB-21) KISHANLA L SAHU 02/04/200 0 (PB-22) RS. 2,00,000/ - 31/03/200 4 (PB-23) 2,00,000 THE LD. ASSESSING OFFICER ADDED THE SAME U/S 68 OF TH E ACT WITH THE FOLLOWING OBSERVATIONS :- LAND ADVANCES RECEIVED DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS SH OWN LAND ADVANCES RECEIVED TOTALING TO RS. 6,50,000/- FROM FOLLOWING THREE PERSONS ;- NAME AMOUNT BABULAL SAHU RS. 2,50,000/- NANHELAL SAHU RS. 2,00,000/- KISHANLAL SAHU RS. 2,00,000/- RS. 6,50,000- THE ASSESSEE WAS ASKED TO JUSTIFY THE ABOVE SAID LO AN & ADVANCES ALONGWITH EVIDENCES IN TERMS OF AGREEMENT S UNDER WHICH THESE ADVANCES WERE ALLOWED AND THE MOD E 25 OF ADVANCES WHETHER CASH OR THROUGH CHEQUE OR DEMAN D DRAFT AND ALSO THE PROPERTY IN QUESTION FOR WHICH T HESE LOAN AND ADVANCES TRANSACTIONS WERE EFFECTED. THE B ANK ACCOUNT FILED BY THE ASSESSEE DO NOT REFLECT ANY SU CH TRANSACTIONS OR CREDIT OF THESE AMOUNTS. THE ASSESS EE WAS ASKED TO FILED CONFIRMATION AND PROVE THE GENUINENESS AND CREDITWORTHINESS OF SUCH PERSONS AN D THE LAND ADVANCE TRANSACTIONS THE CONFIRMATION WERE FILED IN RESPECT OF ABOVE TWO PERSON, THE PERUSAL O F WHICH REVEALS THAT THESE TWO PERSON HAVE NOT MENTIONED TH E MODE OF PAYMENT OF ADVANCE NOR THEIR PAN ACCOUNT NUMBER. FURTHER, THE ADDRESS OF THESE TWO PERSON WE RE ALSO NOT MENTIONED. 22. AGAINST THE ABOVE ADDITION, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE FI NDING OF THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVAT IONS :- 26 4.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND FACTS OF THE CASE. THE APPELLANT CONT ENDED THAT HE HAD RECEIVED RS.2,00,000/- EACH FROM SHRI KRISHN ALAL SAHU AND SHRI NANHELAL SAHU AND RS.2,50,000/- FROM SHRI BABULAL SAHU AGAINST AGREEMENT TO SALE ENTERED WITH THEM ON 02.04.2000 FOR SALE OF PLOT MEASURING 4000 SQ.FT.' EACH. BUT THE CONTENTION OF THE APPELLANT WAS NOT FOUND C ONVINCING. FIRST, IN THIS CASE SEARCH AND SEIZURE OPERATIONS W ERE CONDUCTED ON 16.09.2005 BUT NO SUCH AGREEMENTS WERE FOUND AT THE RESIDENCE/ BUSINESS PREMISES OF THE AP PELLANT OR HIS FAMILY MEMBERS. SECOND. ON PERUSAL OF COPY O R THE AGREEMENTS FURNISHED, IT IS NOTICED THAT AS PER THE AGREEMENT TO SALE IN THE CASE OF SHRI BABULAL SAHU IT IS MENT IONED THAT THE APPELLANT HAD RECEIVED AN AMOUNT OF RS.2,00,000 - ONLY IN CASH ON 02.04.2000, WHEREAS THE APPELLANT HAD CLAIM ED TO HAVE RECEIVED RS.2,50,000/-. HENCE, THERE IS CONTRA DICTION IN THE SUBMISSION OF THE APPELLANT VIS-A-VIS THE ALLEG ED COPY OF 27 AGREEMENT TO SALE FURNISHED. THIRD, IT IS PERTINENT TO NOTE THAT THE APPELLANT CLAIMED TO HAVE CANCELLED THE AGREEME NTS WITH THESE THREE PERSONS, I.E. ON 31.03.2005 WITH SHRI B ABULAL SAHU AND SHRI NANHELAL SAHU ON 31.03.2004 WITH SHRI KISHANLAL SAHU, WHICH IS AGAIN HIGHLY IMPROBABLE TH AT THE AGREEMENTS WHICH WERE ENTERED TOGETHER ON ONE DATE WOULD BE CANCELLED IN A GAP OF ONE YEAR. FURTHER 'IT MAY BE NOTED THAT THE APPELLANT ALONGWITH OTHER CO-OWNERS HAD EN TERED INTO AN AGREEMENT TO TO SALE ON 01.03.2003 WITH M/S CI. BUILDERS PVT. LTD. FOR SALE OF LAND AND RECEIVED TH E CONSIDERATION AS PER THE AGREEMENT. HAD THE APPELLANT EARLIER ENTERED INTO AGREEMENT FO R SALE WITH THESE THREE PERSONS FOR THE SAME LAND, HE COUL D NOT HAVE ENTERED INTO AN AGREEMENTS WITH M/S C.I BUILDE RS PVT. LTD. ON 01.03.2003. AS THE EARLIER ALLEGED AGREEMEN T TO SALE WERE IN EXISTENCE AND WERE CLAIMED TO BE CANCELLED MUCH LATER ON 31.03.2004 AND 31.03.2005. THERE IS NO MEN TION OF 28 THESE ALLEGED AGREEMENT TO SALE IN THE 'AGREEMENT T O SALE' ENTERED WITH M/S CI BUILDERS PVT. LTD. THE TOTAL AM OUNTS OF RS.6,50,000/- WERE CLAIMED TO BE RECEIVED IN CASH. NORMALLY, ON TERMINATION OF AGREEMENT ON BEHALF OF THE SELLER , THE SELLER HAD TO REPAY DOUBLE OR THE AMOUNT OF EARNEST MONEY/ ADVANCED BAYANA RECEIVED, WHEREAS IN THIS CASE. THE APPELLANT CLAIMED TO HAVE RETURNED ONLY THE SAME AM OUNT WHICH WAS SHOWN TO BE RECEIVED FROM THESE PERSONS, WHICH IS CONTRARY TO THE NORMAL BUSINESS PRACTICE IN REAL ESTATE BUSINESS. AS MENTIONED BY THE LD. AO IN THE ASSESSM ENT ORDER, THE APPELLANT ALSO FAILED TO ADDUCE ANY EVID ENCE REGARDING CREDITWORTHINESS OF THESE PERSONS FOR PAY MENT OR RS.6,50,000/- IN CASH AND GENUINENESS OF THE TRANSA CTIONS. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES INVOLVED, I AM IN AGREEMENT WITH THE FINDINGS OF THE AO THAT THE APPELLANT FAILED TO SATISFACTORI LY EXPLAIN THE AMOUNT OR RS. 6,50,000/-- SHOWN AS ADVANCE. FRO M SHRI 29 BABULAL SAHU, SHRI NANHELAL SAHU AND SHRI KISHANLAL SAHU. THEREFORE. THE ADDITION OF RS.6,50,000/- MADE BY TH E AO IS CONFIRMED. 23. AGAINST THE ABOVE FINDINGS OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 24. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD RECEIVED THIS AMOUNT ON THE SALE OF LAND AT CHUNA BHATTI. THIS AGREEMENT WAS SUBSEQUENTLY CANCELLED AND THE LAND THEREAFTER SOLD TO CI BUILDER ON 1.3.2003. THE LD. CIT(A) HELD THAT THE SAM E LAND WAS SOLD TO CI BUILDER. IT IS SUBMITTED THAT AFTER THE ADVANCE WAS RECEIVED, THE NEGOTIATIONS WERE GOING ON BETWEEN THE ASSESSEE AND THESE PERSONS. IT WAS CLEAR FR OM THE NEGOTIATIONS THAT THESE PERSONS WERE NOT INTEREST ED IN PURCHASING THE LAND. SINCE THE AMOUNT WAS BOUND TO BE RETURNED AND FURTHER, THEY HAD NO RIGHT IN THE LAND, T HE ASSESSEE SOLD THE LAND TO THE CI BUILDERS SUBSEQUENTLY . 30 THESE PERSONS NEVER CHALLENGED THE ASSESSEE FOR BREACH OF CONTRACT OR FOR SPECIFIC PERFORMANCE. HE SUBMITTED TH AT THE FACT THAT PROPERTY PRICES HAVE RISEN SUBSEQUENTLY IS ESTABLISHED FROM THE FACT THAT THE LAND WAS SOLD SUBSEQUENTLY TO CI BUILDER AT RS.1,42,00,000/- AGAINST THE ADVANCE OF RS.6,50,000 AS ABOVE. THE LEARNED COUNSEL FO R THE ASSESSEE FURTHER SUBMITTED THAT CONFIRMATION LETTE RS WERE FILED BY THESE PERSONS ACCEPTING THE FACT OF RE CEIPT OF ADVANCE AND RETURNING IT BACK ON THE CANCELLATION OF THI S TRANSACTION. THE CANCELLATION DEED IS ALSO FILED FOR ALL THE PARTIES. THESE AGREEMENTS ARE NOTARISED BOTH RECEIPT OF THE AMOUNT AND THE CANCELLATION ARE WITNESSED. HE SUBMITTED THAT THE LD. ASSESSING OFFICER OR LD. CIT(A) CHOOSE NOT TO CROSS EXAMINE THE PARTIES OR THE WITNESS OR VERIFYING FROM, THE NOTARY ABOUT THE TRANSACTION. THE TRANSACTION OF RECE IPT OF THE AMOUNT AS WELL AS CANCELLATION IS PRIOR TO SEARCH. HE 31 SUBMITTED THAT THE SAME CANNOT BE DENIED. HE, THEREFOR E, PRAYED THAT THE THE ADDITIONS NEEDS TO BE DELETED. 25. ON THE OTHER HAND, THE LD. DR OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AN D SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 26. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE F IND FORCE IN THE SUBMISSIONS OF THE ASSESSEE PARTICULARLY THE SUBMISSION THAT THE ASSESSEE HAD RECEIVED ADVANCE AGAINST THE LAND AT CHUNA BHATTI. THE ASSESSEE SUBMITTED CONFIRMATION FROM THESE PERSONS. THE ADVANCE WAS RETURNED ON THE CANCELLATION OF THE DEAL. THE CANCELLATI ON DEEDS WERE ALSO FILED. THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) HAVE NOT EXAMINED THESE DOCUMENTS NOR CROSS EXAMINED THE PERSONS WHO CONFIRMED THE TRANSACTI ON. THE ASSESSEE SUBMITTED SUFFICIENT MATERIAL ON RECORD W HICH HAS NOT BEEN CONTROVERTED BY THE AUTHORITIES BELOW. W E, 32 THEREFORE, REVERSE THE ORDERS OF THE AUTHORITIES BEL OW AND DELETE THE ADDITION. THE APPEAL IS ALLOWED. IT(SS) A NO. 120/IND/2014 27. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 2.1.2014. 28. THE ONLY ISSUE RAISED IN THIS APPEAL IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE AGRICULTURAL INCOME AT RS. 11,150/- ONLY FROM 2.23 ACRE S OF IRRIGATED LAND AND IN TREATING THE BALANCE OF RS. 1,38,8 50/- AS THE INCOME FROM OTHER SOURCES. 29. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1,50,000/- IN RESPECT OF 2.23 ACRES OF AGRICULTURAL LAND OWNED BY THE ASSESSEE A T DEHRI KALA NEAR KOLAR ROAD, BHOPAL WITHOUT SHOWING ANY DETAILS SUCH AS KHASRA KHATONI, GIRDHAVARY CONTAINING THE PARTICULARS OF MUTATION OF AGRICULTURAL LAND, CROP 33 CULTIVATED, ETC. HE, THEREFORE, TREATED AGRICULTURAL IN COME SHOWN BY THE ASSESSEE AT RS. 1,50,000/- AS INCOME FRO M OTHER SOURCES AND ADDED THE SAME U/S 68 OF THE ACT. 30. ON APPEAL THE LEARNED CIT(A) GRANTED RELIEF OF RS.11,150/- AND UPHELD THE ADDITION TO THE EXTENT OF RS.1,38,850/- AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 31. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ACCEPTED THE FACT OF AGRICULTURAL INCOME AT RS.5,000/- PER ACRE. HE HAS, THEREFORE, ACCEPTED RS. 11,150/- FOR 2.2 3 ACRES OF LAND. THE DEPARTMENT HAS NOT CHALLENGED THIS FINDING OF AGRICULTURAL INCOME. HE SUBMITTED THAT THE ONLY ISSUE WHICH REMAINS IS THE ESTIMATION OF AGRICULTURAL INCOME. HE SUBMITTED THAT THE LAND WAS GIVEN ON BATAI T O PADAM MEENA FOR A RENT OF RS.1,50,000/- FOR THREE YEARS . THEREFORE, THE ANNUAL RENT WAS RS. 50,000/-. PER ACRE P ER 34 YEAR RENT WAS RS. 22,421/-. THE AGREEMENT WITH SHRI PADAM MEENA IS PLACED AT PB-31. FURTHER, KHASRA IS ALSO FILED WHICH IS PB 28. TWO CROPS WERE GROWN. THE ASSE SSEE RECEIVED THE ENTIRE AGRICULTURAL INCOME IN THE CURREN T YEAR AND THIS WAS SHOWN IN THE RECEIPTS AND PAYMENT ACCOUNT. THE ASSESSEE SUBMITTED THAT THE AGRICULTURAL INCOME OF RS.15,000/- TO RS. 20,000/- PER ACRE HAS ALREADY BEEN ACCEPTED BY THE HONBLE ITAT, INDORE BENCH, IN THE C ASE OF SMT. SUNITA VINOD; 18 ITJ 630. THE HONBLE ITAT, IND ORE BENCH, ACCEPTED THE AGRICULTURAL INCOME OF RS.22,000/- PER ACRE. HE SUBMITTED THAT IN THE CASE OF BATAI A MAJOR POR TION OF THE AGRICULTURAL INCOME GOES TO THE LANDLORD AND, THEREFORE, CONSIDERING THIS, A REASONABLE ESTIMATE OF AGRICULTURAL INCOME MAY BE TAKEN. 32. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. IT IS A CASE OF ESTIMATION OF AGRICULTURAL INCOME. AFTER CONSI DERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT IT WOULD BE 35 REASONABLE TO ESTIMATE AGRICULTURAL INCOME OF RS. 11,000 /- PER ACRE, AS HAS BEEN DONE BY THIS BENCH OF THE TRIBU NAL IN OTHER SIMILAR CASES. WE, THEREFORE, DIRECT THE ASSESS ING OFFICER TO ALLOW RS.24,530/- AS AGRICULTURAL INCOME @ RS. 11,000/- PER ACRE. THE AGREEMENT WAS FOR 3 YEARS, THEREFORE, THE TOTAL COMES TO RS. 73,590/-. THE BALANC E AMOUNT IS SUSTAINED AS INCOME FROM OTHER SOURCES. IT(SS) A NO. 121/IND/2014 33. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 2.1.2014. 34. GROUND NO. 1 RELATES TO CONFIRMATION OF ADDITION B Y THE LEARNED CIT(A) OF RS. 50,000/- AS MADE BY THE ASSESSING OFFICER TOWARDS ADVANCES FROM SHRI SADANAND SHARMA FOR SHOP IN HARE KRISHNA COMPLEX IN NAYAPURA. 35. THE ASSESSEE WAS CONSTRUCTING A SHOPPING PLACE OF 11 SHOPS IN HARE KRISHNA APARTMENTS. FOR SALE OF ONE OF TH E 36 SHOPS, ASSESSEE RECEIVED RS.50,000/- FROM SHRI SADANAND SHARMA AS AGAINST TOTAL CONSIDERATION OF RS.1,45,000/-. THIS RS.50,000/- WAS ADDED BY THE LD. ASSESSING OFFI CER U/S 68 OF THE ACT BY OBSERVING AS UNDER :- ASSESSEE HAS SHOWN CURRENT LIABILITIES OF RS. 400,000/- DURING THE YEAR ON ACCOUNT OF FOLLOWING PERSONS :- A) SADANAND SHARMA RS. 50,000 B) GOPAL PANDIT RS. 3,50,000 RS. 4,00,000 THIS LIABILITIES STATED TO HAVE BEEN INCURRED/ ON ACCOUNT OF FOLLOWING REASON/WORK. A) RS. 50,000/- WAS RECEIVED ADVANCE FROM SHRI. SADANAND WHICH HAS BEEN USED FOR CONSTRUCTION OF SHOP AT NAYAPURA. B) LAND EXPENSES PAYABLE TO GOPAL PANDIT BESIDES THIS THERE WERE NO OTHER DETAILS WERE FILED NOR ANY EVIDENCE WERE PRODUCED WHICH WOULD JUSTIFY 37 THE GENUINENESS OF THE TRANSACTION AND ITS UTILITY TO ASSESSEE' S INCOME. IT APPEARS THAT ASSESSEE MIGHT HAVE SPEND THIS AMOUNT ON CONSTRUCTION OF NAYAPURA LAND WHERE THE ASSESSEE HAS SHOWN INCREASE IN BOOK VALUE / COST BY RS. 4,11,268/- IN COMPARISON TO LAST YEAR. IN THE ABSENCE OF EVIDENC E FILED IT APPEARS THAT 'ALL THESE LIABILITIES CLAIME D BY THE ASSESSEE REPRESENTS EXPENDITURE INCURRED BY THE ASSESSEE ON HIS OWN OUT OF THE UNDISCLOSED FUND. THEREFORE. THE SOURCE OF THESE LIABILITIES/CREDITS ARE REMAINED UNVERIFIED AND LIA BLE TO BE TREATED AS INVESTMENT /EXPENDITURE MADE FROM UNDISCLOSED SOURCES AND TO BE TAXED AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T.ACT. 36. AGAINST THE ABOVE ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO OBSERVED AS UNDER :- 38 5.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE APPELLANT AND FACTS OF THE CASE. AS REGARDS THE ADVANCE OF RS.50,000/- FROM SHRI SADANAND SHARMA ON VERI FICATION OF DOCUMENTS FURNISHED, BY THE APPELLANT, THE SUBMI SSION OF THE APPELLANT IS NOT FOUND ACEEPTABLE. THE APPEL LANT'S CONTENTION IS THAT SHRI SADANAND SHARMA HAD DEPOSIT ED RS.50.000.DURIN,G .PREVIOUS YEAR RELEVANT TO A.Y.20 03-04 FOR BOOKING A SHOP IN THE SHOPPING COMPLEX IN HARE KRISHNA APARTMENT, NAYAPURA OF THE APPELLANT AND AF TER COMPLETING THE CONSTRUCTION OF SHOPS, THE SALE DEED WAS FINALLY REGISTERED ON 22.08.2007 IN THE NAME OF SMT . SHYAMKALI SHARMA W/O SHRI SADANAND SHARMA FOR A CONSIDERATION OF RS.L,45,000/- ONLY AND, ACCORDINGL Y, THE ADVANCE WAS ADJUSTED. HOWEVER, IT IS NOTICED FROM T HE BALANCE SHEET FURNISHED BY THE APPELLANT THAT THE APPELLANT HAD NOT SHOWN THIS ADVANCE AS LIABILITY I N HIS BALANCE SHEET FURNISHED FOR A.Y.2004-05 AS ON 39 31.03.2004 AND SUBSEQUENT ASSESSMENT YEARS. THUS, T HE CONTENTION OF THE APPELLANT THAT THE ADVANCE OF RS.50,000/- TAKEN FROM SHRI SADANAND SHARMA WAS FINALLY ADJUSTED AGAINST SALE OF SHOP TO HIM FOR W HICH SALE DEED WAS REGISTERED ON 22.08.2007 IN THE NAME OF HIS WI FE IS NOT FOUND CORRECT AND ACCEPTABLE. THUS, THE APPELLANT FAILED TO SATISFACTORILY EXPLAIN THE GENU INENESS OF TRANSACTION OF RS.50.000/-SHOWN AS ADVANCE/DEPOS IT RECEIVED FROM SHRI SADANAND SHARMA AND, THEREFORE, THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS.50.000/- IN THE HANDS OF THE APPELLANT. HENCE, ADDITION OF RS.5O,OO O/- IS CONFIRMED. 37. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE SHOP WAS ULTIMATELY SOLD TO SHRI SADANAND SHARMA AND REGISTRY WAS DONE IN THE NAME OF HIS WIFE SMT. SHYAMKALI. COPY OF SALE DEED IS PLACED AT PAGES 30 TO 35 OF THE PAPER BOOK. THE 40 CONFIRMATION OF SHRI SADANAND WAS ALSO FILED. HE HAS ACCEPTED THE TRANSACTION. THE ADVANCE RECEIVED FROM HIM WAS SHOWN IN THE BALANCE-SHEET WHICH IS PLACED AT PB 10 . THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SU BMITTED THAT NO ADDITION IS CALLED FOR. 38. ON THE OTHER HAND, THE LEARNED DR PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 39. WE HAVE CONSIDERED THE ARGUMENTS OF THE PARTIES IN THE LIGHT OF THE RECORD AVAILABLE. WE FIND THAT SINCE THE CONFIRMATION OF SHRI SADANAND IS ALSO FILED WHEREIN HE H AS ACCEPTED THE TRANSACTION. WE FURTHER FIND THAT THE ADVANC E RECEIVED FROM HIM WAS SHOWN BY THE ASSESSEE IN THE BALANCE-SHEET WHICH IS PLACED AT PB 10 OF THE PAPER BOOK . WE ARE, THEREFORE, OF THE VIEW THAT NO ADDITION IS CALL ED FOR AND WE ACCORDINGLY DELETE THE SAME. 40. THE NEXT GROUND RELATES TO CONFIRMATION OF ADDITIO N OF RS. 3,50,000/- TOWARDS AMOUNT PAYABLE TO GOPAL PANDI FO R 41 THE JOB WORK IN THE CONSTRUCTION OF HOUSE PROPERTY ON NAYAPURA LAND. 41. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD A HOUSE AT GEHUKHEDA. GOPAL PANDIT DID THE JOB WORK AT THE RESIDENCE OF THE ASSESSEE. THIS JOB WORK INCLUDED LAB OUR AS WELL AS MATERIAL. THIS WORK WAS BASICALLY PLASTER WORK. THE ASSESSEE GOT THE JOB WORK DONE BUT THE AMOUNT WAS PAYABLE AT THE YEAR END. THIS WAS NEITHER THE RECEIPT OF THE YEAR NOR THE EXPENSES/PAYMENT FOR THE YEAR. IN ANY CASE , IT WAS A PERSONAL EXPENDITURE. SAME WAS NOT SHOWN IN THE CASH FLOW STATEMENT AS IT WAS NOT PAID DURING THE YEAR. L D. ASSESSING OFFICER, HOWEVER, DISALLOWED THE SAME AND ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 42. AGAINST THE ABOVE ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE ADDITION BY HOLDING AS UNDER :- 42 AS REGARDS LIABILITY OF RS.3,50,000/- ON ACCOUNT O F JOB WORK CLAIMED TO BE DONE BY SHRI GOPAL PANDIT FOR CONSTRUCTION ON NAYAPURA LAND, IT IS NOTICED THAT T HE APPELLANT HAD CLAIMED THAT SHRI GOPAL PANDIT HAD UNDERTAKEN JOBWORK FOR CONSTRUCTION ACTIVITY ON NAYAPURA LAND, WHEREAS AS PER THE AFFIDAVIT FURNISHED BY SHR I GOPAL PANDIT HE STATED THAT HE HAD UNDERTAKEN THE WORK OF SUPPLYING MATERIAL, CONSTRUCTION AND PLASTERING AT THE HOUSE LOCATED AT GEHUNKHEDA I.E. AT A DIFFERENT PLA CE THAN THE PLACE CONTENDED BY THE APPELLANT. FURTHER, IT IS NOTICED THAT THE APPELLANT HAD CLAIMED TO HAVE MADE PAYMENT TO SHRI GOPAL PANDIT IN CASH OF RS.1,OO,OOO/- ON 25.03 .2005, RS.1,00,000/- ON 27.03.2005 . RS.1,OO,OOO/- ON 30.03.2005 AND RS.50,000/- ON 22.12.2005. IT MAY NO T BE OUT OF PLACE TO MENTION HERE THAT THE PAYMENTS OF EXPENDITURE MADE IN EXCESS OF RS.20,000/- IN CASH A RE ALSO NOT ALLOWED U/S 40A(3) O F THE ACT. FURTHER, DURING 43 THE COURSE OF APPELLATE PROCEEDING THE APPELLANT WA S ASKED TO FURNISH THE COPY OF INCOME TAX RETURN OR SHRI GOPAL PANDIT OR ANY OTHER EVIDENCE TO SHOW THAT HE HAD ACTUALLY SHOWN RECEIPTS FROM JOBWORK UNDERTAKEN FOR THE APPELLANT. BUT' THE APPELLANT FAILED TO ADDUCE ANY SUCH EVIDENCE OR /ANY OTHER EVIDENCE TO DEMONSTRATE THAT SHRI GOPAL PANDI T HAD ACTUALLY UNDERTAKEN THE JOBWORK AND THE AMOUNT WAS OUTSTANDING TO BE PAID TO HIM. THUS. IT IS CLEAR TH AT THE APPELLANT HAD SHOWN LIABILITY WHICH WAS NOT EXISTIN G AS ON 31.03.2003. SINCE, THE APPELLANT FAILED TO SATISFACTORILY EXPL AIN THE GENUINENESS OF THE LIABILITY OF RS. 3,50,000/- SHOW N IN THE NAME OF SHRI GOPAL PANDIT, THE AO WAS JUSTIFIED IN MAKING ADDITION OF THE SAME AND, THEREFORE, THE ADDITION D ESERVES TO BE SUSTAINED. 44 43. THE ASSESSEE HAS CARRIED THIS ISSUE TO ITAT BEFORE US. 44. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT WAS NEITHER RECEIVED NOR PAID DURING THE YEAR. IT CANNOT, THEREFORE, BE SAID TO BE UNACCOUNTED INCOME OR EXPENSE OF THE YEAR. THE AMOUNT WAS PAID TO HIM SUBSEQUENTLY. THE DETAILS OF THESE PAYMENTS ARE GIVEN AT PAGE37 OF THE PAPER BOOK. THESE PAYMENTS ARE REFLECTED IN THE CASH FLOW STATEMENT OF T HE RESPECTIVE YEAR I.E. IN THE AY 2005-06 RS.3 LACS HAV E BEEN PAID WHICH IS SHOWN AT PB 11 OF THE PB AY 2005-06. FURTHER, RS.50,000 HAS BEEN PAID IN AY 2006-07 WHICH IS AT PB 20 OF THE AY 2006-07. THUS, NO ADDITION IS CALL ED IN THE CURRENT YEAR. HE FURTHER SUBMITTED THAT AT PAGE 37 OF THE PAPER BOOK IS AN AFFIDAVIT OF SHRI GOPAL PANDIT. SHR I PANDIT HAS NOT BEEN CROSS EXAMINED BY THE REVENUE AUTHORITIES. NO EVIDENCE HAS BEEN BROUGHT TO PROVE T HAT THE AFFIDAVIT OF THE GOPAL PANDIT IS INCORRECT. HE FU RTHER 45 SUBMITTED THAT SHRI GOPAL PANDIT IS AN INCOME-TAX ASSESSEE. HE SUBMITTED THAT LD. CIT(A) CONFIRMED THE ADDITION HOLDING THAT THERE ARE CONTRADICTIONS IN THE FACTS. HE STATED THAT THE ASSESSEE STATES THAT WORK IS DONE AT NAYAPURA SHOP WHEREAS GOPAL PANDIT SAYS THAT WORK HAS BEEN DONE AT GEHUKHEDA RESIDENCE. IT IS SUBMITTED THAT THERE IS NO CONTRADICTION IN THE FACTS THE ASSESSEE NE VER STATED THAT THE WORK WAS DONE AT NAYAPURA SHOP. THE WOR K WAS DONE AT GEHUKHEDA RESIDENCE ONLY. THE CONFUSION AROSE AS THE LD. ASSESSING OFFICER STATED THAT THESE CR EDITS ARE GENERATED SO AS TO CREATE THE SOURCE FOR THE EXPEN SES FOR THE NAYAPURA SHOP. PB 3 IS THE WRITTEN SUBMISSION TO LD. CIT(A) WHERE ASSESSEE HAS STATED THAT THE CONSTRUCT ION WAS DONE AT GEHUKHEDA RESIDENCE. THE LEARNED COUNSEL F OR THE ASSESSEE FURTHER SUBMITTED THAT THE RELIANCE BY TH E LEARNED CIT(A) ON SEC. 40A(3) IS IMPROPER AS SEC. 40A (3) RELATES TO BUSINESS EXPENDITURE WHICH IS ALLOWABLE U/S 37. 46 IN THE PRESENT CASE, THIS EXPENSE PAYABLE DOES NOT RE LATE TO BUSINESS. THERE HAS NEVER BEEN CLAIMED AS BUSINESS EXPENDITURE. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE ADDITIONS MAY BE DELETE D. 45. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 46. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. AFTER HEARING BOTH THE SIDES, WE FIND THAT TH E RELIANCE BY THE LEARNED CIT(A) ON SECTION 40A(3) IS I MPROPER AS SECTION 40A(3) OF THE ACT RELATES TO BUSINESS EXPE NDITURE WHICH IS ALLOWABLE U/S 37. IN THE PRESENT CASE, THIS EXPENSE PAYABLE DOES NOT RELATE TO BUSINESS BUT IT W AS A PERSONAL EXPENDITURE. IT HAS NEVER BEEN CLAIMED AS BUSINESS EXPENDITURE. THE AMOUNT WAS NOT PAID DURING T HE YEARS. IT WAS PAID IN THE SUBSEQUENT YEARS AND EXPLAINED BY THE ASSESSEE. WE, THEREFORE, DELETE THE ADDITION. 47 47. THE APPEAL OF THE ASSESSEE IS ALLOWED. IT(SS) A NO. 122/IND/2014 48. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 2.1.2014. 49. GROUND NO. 1 IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.21,54,53 2/- BY NOT ALLOWING THE DEDUCTION U/S 54F AT RS.21,54,532/- DISALLOWED BY THE ASSESSING OFFICER. 50. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FAMILY SO LD A PLOT OF LAND AT CHUNA BHATTI, BHOPAL TO CI BUILDERS FOR RS.1,42,00,000/-. THE ASSESSEE HAD 1/6 TH SHARE IN THE PLOT I.E. RS.21,54,532/-. THE ASSESSEE INVESTED THE ENTIR E AMOUNT IN THE PURCHASE OF A HOUSE AND, THEREFORE, CLAIME D DEDUCTION U/S 54F OF THE ACT. THE LEARNED ASSESSING OFFICER DENIED THE DEDUCTION BY HOLDING AS UNDER :- 48 LONG TERM CAPITAL GAIN ON CHUNNA MANDI PLOT: DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS SH OWN LONG TERM CAPITAL GAIN OR SALE OF LAND AT CHUNA BHA TTI OF RS. 22,99,330/- AS HER SHARE, THE SAID LAND WAS PURCHASED IN THE YEAR 1994 FOR RS. 81,000/-. THE ASSESSEE HAS CLAIM THE INDEXATION OF LAND AND NET G AIN WERE DETERMINED AS RS. 21,54,532/-. AGAINST THIS ASSESSEE HAS SHOWN TO HAVE CONSTRUCTED RESIDENTIAL HOUSE AT NAYA PURA KOLAR ROAD AT RS. 2299500/- THRO UGH HARE KIRSHNA COLONIZER PVT. LTD. AND HAS CLAIMED DEDUCTION U/S 54F AT RS. 2154532/- AGAINST THE ABOV E CAPITAL GAIN, AND THEREFORE THE LONG TERM CAPITAL G AIN DETERMINED AT NIL IN THIS REGARD ASSESSEE'S CLAIM FOR DEDUCTION U/S 5 4F IS LIABLE TO BE REJECTED DUE TO FOLLOWING REASON: 1. THE INVESTMENT MADE BY THE ASSESSEE FOR CONSTRUCTIO N OF HOUSE FROM HARE KRISHNA DEVELOPER IS NOT A REAL 49 TRANSACTION OF INVESTMENT FOR HOUSE BUT JUST A BOOK ENTRIES PASSED BY THE M/S.HARE KRHSINA COLONIZER PVT. LTD. IN THEIR BOOKS OF ACCOUNT AFTER THE SEARCH. 2. THE ASSESSEE HAS ALSO INVESTED IN VARIOUS OTHER RESIDENTIAL PROPERTIES IN GANCSH NAGAR ETC WITH IN THE THREE YEARS OF TRANSFER OF LAND. DUE TO ABOVE MENTIONED REASONS ASSESSEE FAILED TO F ULL FILL THE CONDITION LAID DOWN IN SECTION 54F OR THE IT AC T. THEREFORE, ASSESSEE'S CLAIMS FOR EXEMPTION U/S 54F AMOUNTING TO RS 2154532/- WOULD BE DISALLOWED AND T HE ENTIRE CAPITAL GAIN OF RS. 21,54,5321- WILL BE CHARGED AS LONG TERM CAPITAL GAIN. ACCORDINGLY, ASSESSEE IS CLAIM FOR EXEMPTION U/S 54 F AMOUNTING TO RS. 14.76,031/- IS DISALLOWED AND THE ENTIRE CAPITAL GAIN OF RS. 21,59,546/- IS CHARGED AS LONG TERM CAPITAL GAIN. 50 51. AGGRIEVED WITH THIS ORDER OF THE ASSESSING OFFI CER, THE ASSESSEE FILED IN APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER WITH T HE FOLLOWING OBSERVATIONS :- 4.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT MAY BE PERTINEN T TO NOTE HERE THE APPELLANT HAD NOT FURNISHED ANY EVIDE NCE OF FILING HIS REGULAR RETURN OF INCOME FOR A.Y.2004 -05 U/S 139 OF THE ACT. AFTER THE SEARCH AND SEIZURE OPERAT IONS U/S 132 WERE CONDUCTED ON 16.09.2005, IN RESPONSE TO NOTICE U/S 153A, THE APPELLANT HAD FURNISHED RETURN OF INCOME FOR A.Y.2004-05 ON 19.02.2007. THE APPELLANT HAD MADE A CLAIM OF DEDUCTION U/S 54F ON THE BASIS OF WORK CONTRACT AGREEMENT ENTERED WITH M/S HARE KRISHNA COLONIZERS PVT. LTD. ON 02.01.2003 FOR CONSTRUCTION OF HOUSE FOR THE APPELLANT. ON HIS LAN D SITUATED IN GEHUNKHEDA FOR A TOTAL CONSIDERATION OF 51 RS30,02,400/-. ON PERUSAL OF THE SAID WORK CONTRACT AGREEMENT, IT IS NOTICED THAT THE AGREEMENT WAS NOT EVEN NOTARIZED. THE IMPORTANT FACT TO NOTE HERE IS THAT WHEN THE SEARCH AND SEIZER OPERATIONS WERE CONDUCTED AT THE RESIDENCE OF THE APPELLANT AS WELL AS AT BUS INESS PREMISES M/S HARE KRISHNA COLONIZERS PVT. LTD., NO SUCH 'WORK CONTRACT/AGREEMENT' WAS FOUND, WHEREAS OTHER AGREEMENTS REGARDING PURCHASE OF LAND BY THE APPELLANT IN GANESH AGAR AND OTHER PLACES WERE FOUN D AND SEIZED. HAD THIS AGREEMENT WAS ALSO ENTERED ON 01.02.2003 AS CLAIMED BY THE APPELLANT, IT WOULD HA VE ALSO BEEN FOUND AT HIS RESIDENCE OR AT THE PREMISES OF M/S HARE KRISHNA COLONIZERS PVT. LTD. IT MAY ALSO BE POINTED OUT HERE THAT M/S HARE KRISHNA COLONIZERS PVT. LTD. IS A CLOSELY HELD COMPANY, WHEREIN SHAREHOLDER S AND DIRECTORS ARE THE FAMILY MEMBERS OF THE APPELLA NT INCLUDING THE APPELLANT AS A MANAGING DIRECTOR. FUR THER, 52 THE APPELLANT HAD ALSO NOT ADDUCED ANY EVIDENCE TO SHOW THAT THE CONSTRUCTION OF THE RESIDENTIAL HOUSE WAS COMPLETED WITHIN SPECIFIED TIME. THEREFORE, CONSIDE RING TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , SUBMISSION OF THE APPELLANT DOCS NOT INSPIRE CONFID ENCE AND IS NOT ACCEPTABLE. THE AO WAS RIGHT IN CONCLUDI NG THAT WORK CONTRACT AGREEMENT SHOWN TO BE ENTERED WI TH M/S HARE KRISHNA 'COLONIZERS PVT. LTD. WAS NOT A RE AL TRANSACTION AND JUST BOOK ENTRIES WERE PASSED TO SH OW THE INVESTMENT BY THE APPELLANT IN CONSTRUCTION OF A RESIDENTIAL HOUSE THROUGH M/S HARE KRISHNA COLONIZERS PVT. LTD. SO AS TO CLAIM DEDUCTION U/S 54F. HENCE, CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE PRINCIPLE OF HUMAN PROBABILITY, THE CONTENTION OF THE APPELLANT REGARDING INVESTMENT OF RS30,02,400/- IN THE CONSTRUCTION OF HOUSE IS NOT F OUND TENABLE. THEREFORE, THE AO WAS JUSTIFIED IN DISALLO WING 53 THE CLAIM OF DEDUCTION U/S 54F OF THE ACT. HENCE, T HE DISALLOWANCE OF APPELLANT'S CLAIM U/S 54F OF RS.21 ,54,532/- IS CONFIRMED. THUS, THE AO WAS JUSTIFIED IN ASSESSING THE ENTIRE GAINS OF RS.21 ,54,532/- AS LONG TERM CAPITAL GAINS. 52. NOW THE ASSESSEE IS IN APPEAL BEFORE US. IT WAS BROUGHT TO OUR NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THE CASE OF ANOTHER FAMILY MEMBER, SMT. KUSUM SHARMA, HONBLE ITAT, INDORE BENCH, IN IT(SS)A 36-40/ IND/ 2013 VIDE ORDER DATED 25.11.2014, HAD SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AS PER THE DIRECTION IN THE ORDER O F THE TRIBUNAL. 53. THE LEARNED DR WHILE SUPPORTING THE ORDERS OF T HE AUTHORITIES BELOW, SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS SET ASIDE TO THE ASSESSING OFFICER. HOWEVER , THE LEARNED AR SUBMITTED THAT IN THOSE CASES THE LIST OF 54 PURCHASE OF HOUSE FROM THE BUILDER HARE KRISHNA COLONISERS PVT. LTD. WAS NOT PROVIDED. IN THIS CASE T HE BUILDER HAS PROVIDED THE LIST AND ASSESSEES NAME IS APPEARING IN THE LIST OF PURHCASE, HENCE, THERE IS NO NEED TO RESTORE FOR VERIFICATION. 54. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. WE FIND THAT THE IN THE CASE OF ANOTHER FAMILY MEMBER, SMT. KUSUM SHARMA, OF THE ASSESSEE, HONBLE ITAT, INDORE BENCH, IN IT(SS)A 36-40/ IND/ 2013 VID E ORDER DATED 25.11.2014, HAD RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE IN VIEW OF DIREC TIONS GIVEN THEREIN. THE OBSERVATIONS OF ITAT ARE AS UNDER :- 7. WE HAVE HEARD BOTH THE SIDES. WE PERUSED THE ORDER OF THE REQUISITE AUTHORITIES. AS FAR AS THE F ACTS IN RESPECT OF SALE OF THE PROPERTY IS CONCERNED, THERE WAS NO DISPUTE THAT THE ASSESSEE HAD PURCHASED THE SAME ALONG WITH FIVE OTHER CO-OWNERS ON 26-08-1994 AND 55 THEREAFTER THE SAID PROPERTY WAS SOLD ON 01-03-2003 FOR A CONSIDERATION FOR RS. 10,38,1000/- TO M/S. CI BUILDERS PVT. LTD. IT WAS NOTED BY THE AO THAT THE SUBSTANTIAL PAYMENT WAS RECEIVED AND THE POSSESSION WAS HANDED OVER THEREFORE IT WAS HELD THAT THE PROPERTY WAS TRANSFERRED AS PER THE MEANING OF SECT ION 2(47) OF THE I.T. ACT. THE CONTROVERSY IS ABOUT THE INVESTMENT OF RS. 9 LACS STATED TO BE ON THE BASIS OF AN AGREEMENT TO SALE OF A HOUSE PROPERTY CONSTRUCTED I N A PROJECT OF M/S. HARE KRISHNA COLONIZERS. THE ASSESS EE HAS CLAIMED THAT THE ASSESSEE WAS TAKEN IN A OVER THEN THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEDU CTION U/S. 54F I.T. ACT AS HELD IN THE FOLLOWING CASES: A) CIT VS. AJIT SINGH LCHAJANCHI (2008)297 ITR M.P. B) CIT VS. PANKAJ SANGHI (2007) 17(1) ITCL 100 MP C) SMT. SHASHI VERMA VS. CIT (2007) 224 ITR 10 6 MP 7.1 BUT ON THE OTHER HAND SUBMISSION OF THE REVENUE DEPARTMENT WAS THAT M/S. HARE KRISHNA 56 COLONIZERS FROM WHOM THE SAID RESIDENTIAL HOUSE WAS PURCHASED HAS ALREADY BEEN TO BE CLOSELY HELD COMPANY WHEREIN THE SHAREHOLDER AND DIRECTORS WERE THE FAMILY MEMBERS OF THE ASSESSEE INCLUDING HER HUSBAND. IT WAS ALSO FOUND BY THE REVENUE DEPARTMEN T THAT EVEN AFTER THE SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES OF M/S. HARE KRISHNA PVT. LTD. NO SUCH AGREEMENT TO SALE OR POSSESSION LETTER WAS DETECTED. ALL OTHER EVIDENCES AND AGREEMENT WERE FOUND APPEARING IN THE EVIDENCE CONNECTED WITH THE CLAIM OF DEDUCTION U/S. 54F OF IT ACT. THEREFORE, I N ALL THE ARGUMENT OF THE REVENUE DEPARTMENT WAS THAT THE SALE AGREEMENT WAS NOTHING BUT AN AFTER THOUGH HENC E THE TRANSACTION WAS NOT A REAL TRANSACTION. 7.2 CONSIDERATION THE PLEADING OF BOTH THE SIDES, WE ARE THE VIEW THAT THE ACQUISITION OF A RESIDENTI AL HOUSE CAN BE PROVED BY AN INVESTOR. A PURCHASER OF THE 57 PROPERTY CAN PLACE ON RECORD SEVERAL COGENT EVIDEN CE TO ESTABLISH THAT A HOUSE PROPERTY HAS BEEN PURCHASED, SUCH AS THE PROOF OF ELECTRICITY CONNECTION, PROOF OF WATER CONNECTION, PROOF OF NUTRITION OF PROPERTY, PAYMENT OF HOUSE TAX ETC. CERTAIN OTHER SUPPORTING EVIDENCES SUCH AS MEMBERSHIP OF THE RESIDENTIAL SOCIETY ETC. COULD ALSO HAVE BEEN PLACED ON RECORD. SINCE ALL THOSE EVIDENCES WERE NOT BEFORE THE AO B UT THE ASSESSEE HAS VEHEMENTLY PLEADED THAT THE PROPER TY WAS PURCHASED THEREFORE IN THE FITNESS OF CIRCUMSTANCES WE DEEM IT PROPER TO RESTORE THIS ISS UE BACK TO THE FILE OF AO FOR AFRESH ADJUDICATION. SAM E VIEW HAS ALREADY BEEN TAKEN BY US IN THE GROUP CAS E OF SMT. KRISHNA SHARMA (IT (SS) A NO. 35/IND/2013) WHEREIN VIDE APPEAL IT WAS DIRECTED AS UNDER: '3. HAVING HEARD THE SUBMISSION BOTH THE SIDES AT THE OUTSET, WE HAVE NOTED THAT AT THE STAGE OF 58 ASSESSMENT THE ASSESSEE HAS NOT FURNISHED ALL THE DETAILS. BEFORE LD. CIT(A), THE DETAILS IN RESPECT O F INVESTMENT IN HOUSE NO. 46 FROM M/S. HARE KRISHNA COLONIZERS WERE FURNISHED. IT WAS ALSO CLAIMED THAT THE POSSESSION OF THE HOUSE WAS TAKEN OVER 2ND APRIL, 2004. THE ASSESSEE'S NEXT CONTENTION WAS THAT ALTHOUGH THE SALE DEED WAS NOT EXECUTED IN RESPECT OF THAT PROPERTY BUR STILL IN A SITUATION WHEN THE CONSIDERATION WAS PAID THEN THE ASSESSEE IS ENTITLE D FOR DEDUCTION U/S. 54F EVEN IN THE ABSENCE OF ANY REGISTERED DEED. IN THIS SITUATION WHEN THE COMPLET E DETAILS WERE NOT FURNISHED BEFORE THE AO THEN NATUR ALLY THE PROPER INQUIRY COULD NOT BE CONDUCTED AT THE ASSESSMENT STAGE. WE THEREFORE DEEM IT PROPER TO RE FER THIS ISSUE BACK TO THE STAGE OF AO BUT SUBJECT TO C ERTAIN DIRECTIONS. THE ONUS IS ON THE ASSESSEE TO FULLY ESTABLISH THAT THE IMPUGNED RESIDENTIAL HOUSE WAS 59 ACTUALLY PURCHASED FROM THE SAID COMPANY. FOR THAT, THE ASSESSEE CAN TO OBTAIN THE RELEVANT RECORDS SUC H AS PROPERTY ACCOUNT OF THE SAID COMPANY AND FURNISH TH E SAME TO THE AO. AO IS REQUIRED TO ASCERTAIN WHETHER THAT COMPANY IS ASSESSED TO TAX BY FILLING THE RETU RN OF INCOME AND WHETHER THE SAID AMOUNT OF RS. 11,67,000/- WAS DULY RECORDED IN THE BOOKS OF ACCOU NT AND ALSO UNDER WHAT HEAD OF ACCOUNT IT WAS RECORDED . THE ASSESSEE CAN ALSO FURNISH A NUMBER OF OTHER EVIDENCES TO ESTABLISH THAT A RESIDENTIAL HOUSE HAS BEEN PURCHASED AND THE ASSESSEE HAD TAKEN OVER THE POSSESSION OF THE SAID PROPERTY BY FILLING ELECTRIC ITY BILL, WATER TAX, PROPERTY TAX, ETC. IF ON THE BASIS OF AL L THOSE EVIDENCES, THE AO IS CONVINCED THAT THE PURCHASE OF THE RESIDENTIAL HOUSE WAS A GENUINE TRANSACTION THE HE IS FREE TO ALLOW THE CLAIM OF DEDUCTION U/S. 54F PER L AW. WITH THESE DIRECTIONS, WE HEREBY RESTORE THIS GROUN D 60 BACK TO THE AO TO BE DECIDED AFTER THAT NEEDLESS TO SAY AFTER PROVIDING AN ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS FURTHER DIRECTED TO F ULLY CO-OPERATE WITH THE NOTICES OF THE AO WITHOUT SEEKI NG FRIVOLOUS ADJOURNMENTS SO THAT THIS CASE CAN BE DEC IDED AT AN EARLY DATE. RESULTANTLY, THIS GROUND OF THE ASSESSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES ONL Y. 7.3 ON THE SAME LINES THIS GROUND OF THE ASSESSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPO SES ONLY. 55. THE ITAT HAS DIRECTED TO VERIFY VARIOUS EVIDENCE S WHICH COULD ESTABLISH THE FACT THAT RESIDENTIAL HOUSE H AS BEEN PURCHASED AND THE CLAIM U/S 54F IS GENUINE. IN TH E CASE UNDER CONSIDERATION THE LIST OF PURCHASERS HAS BE EN PROVIDED BY THE BUILDER M/S HARE KRISHNA COLONISERS P VT. 61 LTD. THE ASSESSEES NAME APPEAR THEREIN. WE, THEREFORE, RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFI CER FOR LIMITED PURPOSE THAT IF THE LIST IS FOUND IN ORDER T HEN THE CLAIM OF THE ASSESSEE SHALL BE ALLOWED. 56. GROUND NO. 2 IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE AGRICULTURAL INCOME AT RS.13,380/- FROM 2.23 ACRES OF IRRIGATED AGRICULTURAL L AND OUT OF S. 59,600/- AND IN TREATING THE BALANCE OF RS.46,220/- AS THE INCOME FROM OTHER SOURCES. 57. WE HAVE HEARD BOTH THE SIDES. WHILE DECIDING IT(S S) A NO. 120/IND/2014 (SUPRA) WE HAVE HELD THAT IT WOULD BE REASONABLE TO ESTIMATE AGRICULTURAL INCOME OF RS. 11,000 /- PER ACRE, AS HAS BEEN DONE BY THIS BENCH OF THE TRIBU NAL IN OTHER SIMILAR CASES. WE, THEREFORE, DIRECT THE ASSESS ING OFFICER TO ESTIMATE AGRICULTURAL INCOME AT RS. 11,000/- PER ACRE . 62 IT(SS) A NO. 123/IND/2014 58. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 3.1.2014. 59. GROUND NO. 1 IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE AGRICULTURAL INCOME AT RS.13,380/- FROM 2.23 ACRES OF IRRIGATED LAND OUT OF R S. 79,505/- AND IN TREATING THE BALANCE OF RS.66,125/- AS THE INCOME FROM OTHER SOURCES. 60. WE HAVE HEARD BOTH THE SIDES. WHILE DECIDING IT(S S) A NO. 120/IND/2014 (SUPRA) WE HAVE HELD THAT IT WOULD BE REASONABLE TO ESTIMATE AGRICULTURAL INCOME OF RS. 11,000 /- PER ACRE, AS HAS BEEN DONE BY THIS BENCH OF THE TRIBU NAL IN OTHER SIMILAR CASES. WE, THEREFORE, DIRECT THE ASSESS ING OFFICER TO ESTIMATE AGRICULTURAL INCOME AT RS. 11,000/- PER ACRE. 63 61. GROUND NO. 2 IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.58,800/- TOWARDS CASH CREDITS FROM KALURAM MEENA (RS.19,800/-) PADAM MEENA (RS.19,500/-) AND SHRI RAJ MAHESHWARI (RS.19,500/-). 62. THE FACTS OF THE CASE ARE THAT THE ASSESSEE RECEIVE D FOLLOWING LOANS:- SHRI KALU RAM MEENA RS.19,800 SHRI PADAM MEENA RS.19,500 SHRI RAJ MAHESHWARI RS.19,500/- TOTAL RS.58,500 IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSE SSEE HAD NOT FILED ANY DETAILS TO PROVE THE IDENTITY AND CRE DIT WORTHINESS OF THE ABOVE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTIONS. HE, THEREFOR, ADDED RS. 58,800/- AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE AC T WITH THE FOLLOWING FINDINGS :- 64 DURING THE YEAR ASSESSEE HAS SHOWN TO HAVE RECEIV ED UNSECURED LOAN TOTAL AMOUNTING TO OF RS.58800/- FRO M FOLLOWING PERSONS: NAME AMOUNT RS. KALU RAM MEENA RS. 19,800 PADAM MEENA RS. 19,500 RAJ MAHESHWARI RS. 19,500 TOTAL RS.58,800 IT MAY BE MENTIONED THAT ASSESSEE HAS NOT FILED AN Y DETAILS AS TO THE IDENTITY AND CREDITABILITY OF THE ABOVE MENTIONED LOANS CREDITOR AND THEREFORE THE GENUINEN ESS OF THESE LOAN TRANSACTIONS AND AVAILABILITY OF RESOU RCES /FUND IN THE HAND OF ASSESSEE REMAIN UNVERIFIED. THEREFORE, THESE UNSECURED LOANS AMOUNTING TO RS. 65 58800/- SHALL BE TREATED AS UNDISCLOSED INCOME OF T HE ASSESSEE U/S 69 OF THE IT. ACT. 63. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 5.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. FROM THE FACTS IT IS: PERTINENT TO NOTE THAT ALL THE LOANS WERE CLAIMED T O BE RECEIVE IN CASH L ESS THAN RS.20,000/- IN THE RANGE OF RS.19,500/- TO RS.19800/-. THE APPELLANT HAD SHOWN THESE LOANS JUST TO CREATE CASH IN HAND TO EXPLAIN THE UNEXPLAINED INVESTMENT EXPENDITURE MADE DURING THE Y.EAR. IT IS HIGHLY IMPROBABLE THAT THE APPELLANT W OULD RECEIVED CASH LOAN OF RS.58,800/- FROM THESE PERSONS I.E. RS.19,500/- TO RS.19,800/- FROM EACH PERSON. IN ORDER TO SHOW THE AMOUNT IN CASH THE APPELLANT HAD EVEN REFLECTED CASH LOANS FROM SON AND FATHER BOTH I.E. SHRI PADAM MEENA AND HIS FATHER SHRI KALURARN MEENA. I F 66 SHRI KALURAM MEENA IS AN AFFLUENT AGRICULTURIST HE WOULD HAVE GIVEN RS.39,300/- TO THE APPELLANT INSTEAD OF SHOWING TWO DIFFERENT PAYMENTS ONE FROM HIS SON AND ANOTHER FROM HIMSELF. IT MAY ALSO BE NOTED THAT THE APPELLANT HAD CLAIMED TO HAVE RECEIVED LEASE RENT O F RS.79,505/- FROM SHRI PADAM MEENA DURING THE YEAR AGAINST LEASE OR AGRICULTURE LAND TO HIM. IF THERE WAS A LOAN OUTSTANDING FROM SHRI PADAM MEENA AND HIS FATH ER SHRI KALU RAM MEENA, HE WOULD HAVE ADJUSTED THESE AMOUNTS FROM LEASE RENT PAYABLE. THESE FACTS ESTABL ISH THAT APPELLANT HAD BEEN USING NAMES OF AGRICULTURIS T SHRI PADAM MEENA AND HIS FATHER SHRI KALU RAM MEENA TO INTRODUCE UNACCOUNTED MONEY INTO HIS ACCOUNTS TO EXPLAIN THE SOURCE OF INVESTMENT/EXPENDITURE. CONSIDERING THE TOTALITY OF FACTS AND SURROUNDING CIRCUMSTANCES, THE EXPLANATION OF THE APPELLANT IS NOT FOUND CONVINCING., THEREFORE, THE ADDITION OF 67 RS.58,800/- IS CONFIRMED. 64. AGAINST THE ABOVE FINDINGS OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 65. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE INITIAL ONUS OF PROVING THE IDENTITY, GENUINENES S AND CREDITWORTHINESS OF THESE PERSONS IS ESTABLISHED. TH EIR CONFIRMATIONS ARE GIVEN, THE SOURCES ARE GIVEN. FURTH ER, THE AMOUNT WAS RETURNED BACK SUBSEQUENTLY, OF WHICH, DETAI LS ARE GIVEN. THUS, THE BURDEN OF PROVING THE CREDITS I S DISCHARGED. HE SUBMITTED THAT THE LEARNED CIT(A) HELD THAT PADAM MEENA HAS ALSO ENTERED INTO AN AGREEMENT WITH THE ASSESSEE FOR LEASE OF AGRICULTURAL LAND. HAD THIS LOAN B EEN GENUINE, HE WOULD HAVE ADJUSTED THE SAME WITH THE LEASE INCOME INSTEAD OF PAYING LEASE RENT SEPARATELY AND KEEPI NG THIS LOAN AS SUCH. IT IS SUBMITTED THAT MERELY ON A PRESUMPTION THAT THE PERSON ENTERED INTO LEASE AGREEME NT AND HE COULD HAVE ADJUSTED THE AMOUNT WITH THE RENT, TH E 68 LD. CIT(A) HAS DISREGARDED THE LOAN. MERELY ON SUCH SURMISES, THE ADDITION COULD NOT BE CONFIRMED WITHOU T BRINGING ANY COGENT MATERIAL ON RECORD TO ESTABLISH THAT THE LOAN WAS NOT GENUINE. LD. CIT(A) HIMSELF HAS ACCEPTED THAT THE AGRICULTURAL INCOME THROUGH BATAI AGREEMENT WITH TH IS PERSON. THE ASSESSEE WAS IN NEED OF THE MONEY THEREF ORE HE RECEIVED THE LEASE RENTAL REGULARLY KEEPING THE AMOU NT OF LOAN INTACT. HE SUBMITTED THAT THE LD. CIT(A) FUR THER STATED THAT THE LOAN WAS CONSCIOUSLY SHOWN TO BE BELOW RS.20,000 TO AVOID THE RIGOURS OF SEC. 269SS. IN TH IS BEHALF IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESS EE THAT THE LOAN WAS TAKEN BELOW RS.20,000/- TO AVOID THE RIGOURS OF SECTION 269SS OF THE ACT. THERE IS NO RE STRICTION IN LAW FOR NOT TO TAKE LOAN FROM SON AND FATHER. PLEADED TO DELETE THE ADDITION. 66. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 69 67. AFTER CONSIDERING THE PLEADINGS OF BOTH THE SIDE S, WE FIND SUBSTANCE IN THE SUBMISSIONS OF THE LEARNED COUN SEL FOR THE ASSESSEE. THE IDENTITY OF THESE LENDERS WAS W ELL ESTABLISHED AS THESE PERSONS WERE ALSO DEALING WITH THE ASSESSEE FOR CULTIVATION OF LAND. THE LOANS WERE OF PET TY AMOUNTS OF RS. 19,500/- EACH SO IT CANNOT BE SAID THAT THESE PERSONS COULD NOT GIVE SUCH SMALL LOAN. THEY HAV E CONFIRMED THE TRANSACTIONS. KEEPING ALL THESE FACTS IN VIEW, WE DIRECT TO DELETE THE ADDITION IN QUESTION. 68. GROUND NOS. 3 AND 4 ARE RELATED TO THE ADDITION OF RS.11,70,000/-. THE LEARNED CIT(A) HAS RETAINED THE ADDITION OF RS.10,53,000/- OUT OF RS.11,70,000/- FRO M THE ADDITION FOR CONSTRUCTION DONE BY THE ASSESSEE ON THE PLOTS OF SHRI GUPTA AND SMT. BABAL. 69. THE FACTS OF THE CASE ARE THAT D URING THE YEAR ASSESSEE HAS SHOWN TO HAVE ADVANCED RECEIVED AMOUNTING TO OR 70 RS.1170000/- FROM FOLLOWING TWO PERSONS FOR CONSTRUC TION OF HOUSES :- NAME AMOUNT RS. D.K. GUPTA RS. 7,00,000 MRS. KARUNA BABAL RS. 4,70,000 TOTAL RS. 11,70,000 THE ASSESSING OFFICER FOUND THAT T HE ABOVE ADVANCES WERE STATED TO HAVE BEEN RECEIVED FOR CONSTRUCTION OF HO USE GULMOHAR AND CHANK PURI. HOWEVER NO EVIDENCE/CONFORMATION HA VE FILED FROM THESE PERSON TO VERIFY THE GENIUNENESS AND THE AVABILITY OF FUND IN THE HAND OF THESE PERSONS FURTHER THERE IS N O LAND AVAILABLE IN THE HAND OF ASSESSEE FOR CONSTRUCTION OF HOUSE AT GULMOHAR AND CHANK PURI AGAINST WHICH THIS ADVANCE CAN BE WARRANTED. THEREFORE, THE SOURCES OF THESE ADVANCES ARE REMAIN UNVERIFIED AND REPRESENT THE UNDISCLOSED INCOME OF THE ASSESSEE, WHICH HAS BEEN CHANNELIZED IN THE FROM OF ADVANCES. THE ASSESSING OFFICER, THEREFORE, TREATED THESE UNSECUR ED LOANS 71 AMOUNTING TO RS. 11,70,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 69 OF THE IT. ACT. 70. AGAINST THE ABOVE ACTION OF THE ASSESSING OFFI CER, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE ADDITION BY OBSERVING AS UNDER :- 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IN REGARD TO ADVAN CES OF RS.7 ,00,000/- FROM SHRI GUPTA (SMT. ANITA GUPTA AND SHRI D.K. GUPTA) AND OF RS.4,70,000/- FROM SMT. KARUNA BABAL, THE APPELLANT'S MAIN CONTENTION IS THAT THESE AMOUN TS WERE RECEIVED ON ACCOUNT OF WORK CONTRACT / AGREEMENT EN TERED WITH THESE PERSONS FOR CONSTRUCTION OF HOUSES ON TH EIR PLOTS BY THE APPELLANT. IT IS PERTINENT TO NOTE THAT AS P ER AGREEMENT WITH SMT. ANITA GUPTA / SHRI D.K. GUPTA AND THE APPELLANT, THE TOTAL COST OF CONSTRUCTION WAS STATED TO BE RS.9,50,000/- AND SMT. ANITA GUPTA! SHRI D.K. GUPTA WERE REQUIRED TO MAKE 72 PAYMENT DEPENDING ON THE STAGE OF CONSTRUCTION MADE BY THE APPELLANT AS UNDER: ! ' '#$%' # & ' )* +% ,-. /012.)* 32 45) & 3 ' . 657 &3 SIMILAR WAS THE POSITION IN THE CASE OF SMT. KARUNA BABAL, WHERE SHE WAS REQUIRED TO MAKE TOTAL PAYMENT OF RS.11,51, OOO/~ AS PER THE AGREEMENT DATED 23.12.2004 AS PER THE FOLLO WING SCHEDULE DEPENDING UPON THE LEVEL OF CONSTRUCTION: 73 38 9 : ;*: 1<=> ' . . 4?@)38A%#3+B 8 ?@8A 18 ' & 5?@ &38A ! C5?@ D &38A& ' +% 45?@) &38A : ,-.)* 32 8 FROM THE ABOVE, IT IS EVIDENTLY CLEAR THAT THE ABOV E PARTIES HAD GIVEN AMOUNTS TO THE APPELLANT FOR THE CONSTRUCTION OF THE HOUSE DEPENDING UPON THE LEVEL OF CONSTRUCTION MADE BY TH E APPELLANT. HOWEVER, IT IS NOTICED THAT APPELLANT HAD NOT SHOWN ANY EXPENDITURE IN HIS RECEIPTS & PAYMENTS ACCOUNT DURING THE YEAR UNDER CONSIDERATION FOR THE INVESTMENT/ EXPENDITURE MADE IN THE CONSTRUCTION ACTIVITIES UND ERTAKEN FOR THESE TWO PARTIES. THE APPELLANT STATED TO HAVE SHO WN INCOME @ 10 % IN THE A.Y.2007-08 FROM THE CONSTRUCTION ACTIVITIES OF THESE 74 TWO HOUSES. THEREFORE, EVEN IF THE PROFIT ELEMENT O F 10 % IS CONSIDERED, THE APPELLANT HAD INCURRED EXPENDITURE IN THE CONSTRUCTION OF THESE BUILDINGS AT LEAST IN THE PRO PORTION OF PAYMENT RECEIVED FROM THESE PERSONS. BUT THE EXPEND ITURE INCURRED WAS METOUT OF UNEXPLAINED SOURCES AS NO EX PENDITURE WAS SHOWN BY THE APPELLANT DURING THE YEAR UNDER CO NSIDERATION. IF THE EXPENDITURE INCURRED BY THE APPELLANT IS CON SIDERED @ 90 % OF PAYMENTS RECEIVED, THE UNEXPLAINED EXPENDITURE W OULD WORK OUT AT RS.10,53,OOO/- (90 % OF RS.7,00,000 + RS4,70,000). THUS, THE APPELLANT HAD INCURRED UNEXPLAINED EXPEND ITURE IN THE CONSTRUCTION OF HOUSES OF RS.L0,53,000/- FOR SMT. A NITA GUPTA AND SMT. KARUNA BABAL. THEREFORE, ADDITION TO THE EXTEN T OF RS.10,53,000/- IS CONFIRMED. IN THE RESULT, THE APP ELLANT GETS A RELIEF OF RS.L1,70,OOO/- (RS.11,70,000 - RS.10,53,0 00). 66. AGAINST THE SUSTENANCE OF THE ADDITION OF RS.10,53,000/- THE ASSESSEE IS IN APPEAL BEFORE US. 75 67. BEFORE US THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSEE RECEIVED ADVANCE AS UND ER: AY 2005-06 RS.11,70,000 AY 2006-07 RS.7,59,788/- TOTAL: RS.19,29,788/- THIS ADVANCE WAS RECEIVED AGAINST CONSTRUCTION ON PLOT S. THE DETAILS OF ADVANCES ARE AS UNDER DURING THE CURRENT YEAR: NAME AMOUNT RS. REMARKS D.K. GUPTA RS. 7,00,000 AGREEMENT WITH ANITA GUPTA AND D.K. GUPTA WITH ASSESSEE. PB 35-37. CONFIRMATION. PB 38-39. CONSTRUCTION AMOUNT TOTAL RS. 9,50,000. PAYMENTS RECEIVED BY CHEQUE. PB 38. ASSESSEE COMPLETED THE CONSTRUCTION AND OFFERED SAME IN A.Y. 2007-08 U/S. 44AD. PB 49-52. SUMMARY OF JOB WORK IS GIVEN AT PB 52. ADDING THE SAME WOULD BE DOUBLE ADDITION. 76 MRS. BABAL RS. 4,70,001 AGREEMENT WITH KARUNA BABAL. PB 40-42. CONFIRMATION PB 43-44. CONSTRUCTION AMOUNT. TOTAL 9,79,789. ALL PAYMENTS RECEIVED THROUGH CHEQUE. SHE OBTAINED A HOUSING LOAN. PB 45-48 ASSESSEE COMPLETED THE CONSTRUCTION IN AND OFFERED SAME IN A.Y. 2007-08 U/S. 44AD. PB 49-52. SUMMARY OF JOB WORK IS GIVEN AT PB 52. ADDITION OF SAME WOULD AMOUNT TO DOUBLE ADDITION. TOTAL 11,70,000 71. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. ASSESSING OFFICER ADDED THE ADVANCES RECEIVED U/S 68. HOWEVER, LD. CIT(A) TREATED THE ADVANCES AS GENUINE AND DELETED THE ADDITIONS. THE LD. CIT(A) HOWEVER HELD THAT THAT THE ASSESSEE HAS SHOWN T HE RECEIPT OF ADVANCE BUT THE ASSESSEE HAS NOT SHOWN TH E 77 EXPENSES FOR CONSTRUCTION OF HOUSE. AS PER THE CONSTRUCTION AGREEMENT, THE ASSESSEE HAD TO RECEIVE THE AMOUNT BASED ON THE STAGE OF CONSTRUCTION. HE THEREFOR E HELD THAT ASSESSEE DID EXPENSES ON THE CONSTRUCTION OF THE HOUSES WHICH TANTAMOUNT TO 90% OF THE RECEIPTS. THESE EXPENSES WERE FROM UNACCOUNTED SOURCES. HE THEREFORE ADDED RS. 10,53,000/-. IT IS SUBMITTED THAT NO EVIDEN CE REGARDING THE EXPENDITURE WAS FOUND DURING THE COURSE OF SEARCH. NOTHING WAS BROUGHT ON RECORD TO PROVE THAT TH E EXPENDITURE WAS DONE. THESE PARTIES WERE NOT EXAMINED. THE ADDITION WAS MERELY BASED ON PRESUMPTION . IT WAS AGREED THAT THE ASSESSEE WOULD RECEIVE PAYMENT IN ACCORDANCE WITH THE LEVEL OF THE CONSTRUCTION BUT THE ASSESSEE DEMANDED THE MONEY AND THEY PROVIDED THE ADVANCE. IT IS A COMMON PRACTICE IN THE REAL ESTATE INDU STRY THAT THE ADVANCE RECEIVED AGAINT ONE PROPERTY ARE USED FO R PURCHASE OR CONSTRICTION OF ANOTHER PROPERTY. ONE TO ONE 78 CORRELATION BETWEEN RECEIPTS AND ADVANCES AND EXPENDITU RE IS NEVER POSSIBLE LOOKING TO THE WORKING CAPITAL CRU NCH WHICH THE REAL ESTATE INDUSTRY FACES. HE SUBMITTED THAT IT IS UNDOUBTED THAT SUBSEQUENTLY THE ASSESSEE DID CONSTRUCTION OF THE HOUSE AND HANDED OVER THE POSSESS ION. IF THIS FINDING THAT THE ASSESSEE HAS DONE COMPLETION IN THE CURRENT YEAR IS ACCEPTED IN TOTO THEN THE ASSESSEE WO ULD BE REQUIRED TO OFFER THE INCOME UNDER PERCENTAGE OF COMPLETION CONTRACT METHOD BASED ON THE LEVEL OF THE CONSTRUCTION. NO ADDITION ON THIS ACCOUNT WAS MADE THU S MAKING THE ORDER SELF CONTRADICTORY. HE SUBMITTED TH AT THE ENTIRE INCOME HAS BEEN ACCEPTED IN THE AY 2007-08 U/S 44AD. THUS, OF THE RECEIPTS, 90% EXPENSES HAVE BEEN ACCEPTED IN AY 2007-08 HOLDING THAT THE EXPENSES WER E ALSO DONE IN THE CURRENT YEAR WOULD AMOUNT TO AN ANOMAL Y LEADING TO DOUBLE DEDUCTION AND THE SAME WOULD HAVE BEE N DISALLOWED WITHOUT ANY FOOTING. HE, THEREFORE, SUBMIT TED 79 THAT THE ADDITION SUSTAINED BY THE LEARNED CIT(A) NEEDS TO BE DELETED. 72. THE LEARNED DR OPPOSED THE ABOVE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE WHILE SUPPORTING THE ORDER OF THE LEARNED CIT(A). 73. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. AFTER CONSIDERING THE ARGUMENTS OF THE PARTIE S AT LENGTH, WE FIND THAT THE ASSESSING OFFICER MADE THE ADDITION U/S 68 OF THE ACT. THE LEARNED CIT(A) HAS ACCE PTED THE SAME AS CASH CREDIT IN BOOKS OF ACCOUNTS AS SUBMITTE D BY THE ASSESSEE BUT MADE AN ADDITION BY INVOKING PROVISIONS OF SECTION 69 OF THE ACT FOR UNEXPLAINED EXPENDITURE ON THE CONSTRUCTION OF HOUSE FOR GUPTAS AND BABAL. THIS AMOUNT ENHANCEMENT OF ADDITION IN TERMS OF SECTION 251(2) OF THE ACT. FROM THE RECORD WE FIND THAT NO SHOW CAUSE WAS ISSUED FOR SUCH ENHANCEMENT. FURTHER THE ADDITION IS BASED ONLY ON THE POSSIBILITY THAT THESE H OUSES 80 MUST HAVE BEEN CONSTRUCTED AS PER AGREEMENT AND THE ASSESSEE MUST HAVE INCURRED EXPENDITURE ON THESE CONSTRUCTIONS OUT OF UNDISCLOSED SOURCES. BUT IN OU R VIEW, ADDITION COULD HAVE BEEN JUSTIFIED ONLY AFTER ASCERTAINI NG THE LEVEL OF CONSTRUCTION ACTUALLY DONE AND THERE WAS N O OUTSTANDING AGAINST THE ASSESSEE FOR SUCH EXPENDITURE. NOTHING SUCH THING HAS BEEN DONE BY THE ASSESSING OF FICER. WE, THEREFORE, FIND NO MERIT IN THIS ENHANCEMENT OF ADDITION BY INVOKING PROVISIONS OF SECTION 69 OF THE ACT. HENCE, WE DIRECT TO DELETE THE SAME. 74. GROUND NO. 5 IS GENERAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. 75. IN THE RESULT, THE APPEAL STANDS PARTLY ALLOWED. PRONOUNCED IN OPEN COURT ON 9 TH DECEMBER, 2015 SD/- SD/-S (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 9 TH DECEMBER, 2015 81 DN/-