Ravulapalli Venkatramaiah, Nellore V. The Assistant Commissioner of Income Tax, Central Circle , Vijayawada

CO 127/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2318 (ITAT-VISAKHAPATNAM)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2018
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER ./ I .T.A.NO S . 449 - 452/VIZ/2018 AND 609/VIZ/2018 ( / ASSESSMENT YEAR S : 2008 - 09 TO 2012 - 13 RESPECTIVELY) THE ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE VIJAYAWADA VS. SRI RAVULAPALLI VENKATRAMAIAH D.NO.24/308 - 2AB MILITARY COLONY , DARGAMITTA NELLORE [PAN : ACKPR1937R ] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NOS. 124 - 127 /VIZ/2018 AND 21/VIZ/2019 (ARISING OUT OF I .T.A.NO S . 4 49 - 4 52 /VIZ/2018 AND 609/VIZ/2018 RESPECTIVELY ) ( / ASSESSMENT YEAR S : 20 08 - 09 TO 201 2 - 1 3 RESPECTIVELY) SRI RAVULAPALLI VENKATRAMAIAH D.NO.24/308 - 2AB MILITARY COLONY, DARGAMITTA NELLORE [PAN : ACKPR1937R ] VS. THE ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE VI JAYAWADA ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO S . 562 - 565/VIZ/2018 AND 567/VIZ/2018 ( / ASSESSMENT YEAR S : 2008 - 09 TO 2012 - 13 RESPECTIVELY) SRI RAVULAPALLI VENKATRAMAIAH D.NO.24/308 - 2AB MILITARY COLONY, DARGAMITTA NELLORE [PAN : ACKPR1937R ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE VI JAYAWADA ( / APPELLANT) ( / RESPONDENT) 2 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE ./ I .T.A.NO S . 566/VIZ/2018 ( / ASSESSMENT YEAR : 2012 - 13) S MT. RAVULAPALLI SULOCHANA DEVI W/O RAVULAPALLI VENKTRAMAIAH D.NO.24/308 - 2AB MEENAKSHI NILAYAM MILITARY COLONY, DARGAMITTA NELLORE [PAN : ACHPR3941C ] THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE VI JAYAWADA ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : SHRI D.K.SONOWAL, CIT DR / ASSESSEE BY : SHRI D.V.ANJANEYULU, AR / DATE OF HEARING : 15 . 0 6 . 201 9 / DATE OF PRONOUNCEMENT : 26 .06. 201 9 / O R D E R PER BENCH : THESE APPEALS ARE FILED BY THE REVENUE, CROSS APPEALS FILED BY THE ASSESSEES AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3, VISAKHAPATNAM VIDE ITA NOS. 127 - 130/201`4 - 15/CIT(A) - 3/VSP/2018 - 19 DATED 31.05.2018 AND CROSS OBJECTION F ILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD.CIT(A). SINCE THE FACTS INVOLVED IN ALL THESE APPEALS ARE IDENTICAL, THESE APPEALS ARE CLUBBED, HEARD TOGETHER, DISPOSED OFF IN A COMMON ORDER FOR THE SAKE OF CONVENIENCE AS UNDER: 3 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 132 WAS CARRIED OUT IN THE RESIDENCE OF THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACT WORKS. THE CASE WAS TAKEN UP FOR SCRUTINY , NOTICES U/S 153A, 143(2) AND 142(1) WERE ISSUED AND THE ASSESSM ENTS WERE COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT. DURING THE SEARCH CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESSEE, INCRIMINATING MATERIAL WAS FOUND AND THE ASSESSMENTS WERE COMPLETED U/S 153A R.W.S.143(3) BY AN ORDER DATED 31 . 03 . 2014. THE YEA R WISE BREAKUP OF THE RETURNS FILED IN RESPONSE TO THE NOTICE U/S 153A FOR THE A.Y.2008 - 09 TO 2011 - 12 ARE AS UNDER: ASST.YEAR DATE OF FILING TOTAL INCOME ADMITTED AGRICULTURAL INCOME 2008 - 09 24.05.2013 23,35,550/ - 7,50,000/ - 2009 - 10 47,40,700/ - 8,50,000/ - 2010 - 11 23.05.2013 99,43,060/ - 8,50,000/ - 2011 - 12 89,12,370/ - 9,00,000/ - 2.1. SIMILARLY THE DETAILS OF THE ADDITIONS MADE TO THE RETURNED INCOME U/S 143(3) R.W.S. 153A OF THE ACT FOR THE A.Y.2008 - 09 TO 2011 - 12 ARE AS UNDER: NATURE OF ADDITION 2008 - 09 2009 - 10 2010 - 11 2011 - 12 UNACCOUNTED INVESTMENT 1,80,00,000 15,00,000 -- -- ILLEGAL PAYMENTS UNDER THE HEAD DIRECT WORK EXPENDITURE 6,65,000 42,65,852 45,10,300 27,68,400 DISALLOWANCE U/S 25,20,000 1,21,37,000 9,27,000 -- 4 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 40(A)(IA) ILLEGAL PAYMENTS UNDER THE HEAD GENERAL EXPENSES 29,74,800 7,63,308 11,71,000 13,95,000 ILLEGAL PAYMENTS UNDER THE HEAD EPI EXPENSES 10,52,500 6,88,000 6,25,000 2,00,000 2.1. FOR THE A.Y.2008 - 09 , GROUND NO.1 AND GROUND NO.2 OF THE REVENUES APPEAL IS RELATED TO THE DELETION OF ADDITION OF RS.1,80,000/ - AND FOR THE A.Y . 2009 - 10 , GROUND NO.1 AND GROUND NO.2 OF THE REVENUES APPEAL IS RELATED TO THE ADDITION OF RS.15.00 LAKHS REPRESENTIN G THE UNEXPLAINED INVESTMENT . DURING THE SEARCH CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESSEE, INCRIMINATING MATERIAL WAS FOUND MARKED AS ANNEXURE A/RV/01 (PAGE NOS.30 - 32) AND IT WAS FOUND THAT SMT.R.SULOCHANA DEVI HAS ENTERED INTO AN AGREEMENT WITH SRI L.MURALI KRISHNA FOR PURCHASE OF PROPERTY LOCATED AT PLOT NO.79, NEW MLAS AND MPS COLONY, JUBILEE HILLS, HYDERABAD FOR A CONSIDERATION OF RS.1.10 CRORES. FURTHER PERUSAL OF THE SEIZED MATERIAL BEARING NO. ANNEXURE A/ RV/01 MARKED AS PAGE NO. FROM 24 TO 29 CONTAIN THE COPIES OF THE RECEIPTS OF CASH PAYMENTS MADE TO SHRI L.MURALI KRISHNA AND SRI SAILABABU FOR PURCHASE OF THE PROPERTY AS PER THE DETAILS GIVEN UNDER : PAGE NO. DATE AMOUNT (RS.) DESCRIPTION 24 04/04/2008 15 LAKHS SRI MURALI KRISHNA RECEIVED THE 5 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE AMOUNT FROM SMT.R.SULOCHANA DEVI 25 02/02/2008 20 LAKHS SRI SRISAILA BABU (GPA HOLDER) RECEIVED THE AMOUNT FROM SMT. R.SULOCHANA DEVI 26 14/01/2008 30 LAKHS SRI SRISAILA BABU (GPA HOLDER) RECEIVED THE AMOUNT FROM SMT. R.SULOCHANA DEVI 27 11/02/2008 1.0 CRORE SRI SRISAILA BABU (GPA HOLDER) RECEIVED THE AMOUNT FROM SMT. R.SULOCHANA DEVI 28 15/03/2008 30 LAKHS SRI SRISAILA BABU (GPA HOLDER) RECEIVED THE AMOUNT FROM SMT. R.SULOCHANA DEVI 29 10 LAKHS DD IN FAVOUR OF SRI MURALI KRISHNA TOTAL 2.05 CR. 2. 2 . DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO EXPLAIN THE TRANSACTIONS. THE ASSESSEE EXPLAINED THAT THE SALE CONSIDERATION OF RS.1,95,00,000/ - WAS PAID IN CASH TO THE SELLER FOR PURCHASE OF A RESIDENTIAL HOUSE. HOWEVER, SUBSEQUENTLY, THE ASSESSEE STATED TO HAVE DECIDED TO PURCHASE THE HOUSE IN SHELL FORM AND TO DO THE INTERIOR WORK THEMSELVES, HENCE THE SELLER RETURNED THE ENTIRE SUM OF RS.1.95 CRORES IN CASH TO THE ASSESSEE. THE ASSESSEE FURTHER STATED THAT HE HA D DECIDED TO REGISTER THE PROPERTY IN THE NAME OF HIS WIFE SMT. R.SULOCHANA DEVI, HENCE PAID RS.1.10 CRORES BY WAY OF CHEQUE FROM HIS WIFE. THE ASSESSEE FURTHER STATED THAT INTERIOR WORK WAS DONE BY THEMSELVES AND THE ENTIRE TRANSACTION WAS RECO RDED IN THE BOOKS OF HIS WIFE. DURING THE POST SEARCH ENQUIRIES, THE ASSESSEE DID NOT PRODUCE ANY 6 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE DOCUMENTARY EVIDENCE TO SUPPORT THE ARGUMENT PUT FORTH BY THE ASSESSEE. FURTHER THE ASSESSEE EVEN FAILED TO PRODUCE THE BOOKS OF ACCOUNTS SHOWING THE RELEVAN T ENTRIES MADE IN THE BOOKS OF ACCOUNTS AND NOR PRODUCED ANY OTHER PROOF. THEREFORE, THE AO ISSUED SHOW THE CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE SAID AMOUNT OF RS.1.95 CRORES SHOULD NOT BE TREATED AS UNDISCLOSED INVESTMENT IN HIS INDIVIDUAL HANDS. IN RESPONSE TO THE SHOW CAUSE NOTICE , THE ASSESSEE FILED EXPLANATION REITERATING THE SUBMISSIONS MADE EARLIER AND FURTHER STATED THAT 15.00 LAKHS WAS PAID IN 04 . 04 . 2008 AS AN ADVANCE FOR INTERIOR WORK. IN HIS EXPLANATION , THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT HE HAD RECEIVED THE CASH FROM THE SELLER AND FAILED TO EXPLAIN THE SOURCES FOR PAYMENT OF RS.1.95 LAKHS . O UT OF WHICH THE PAYMENT OF RS.18 0.00 LAKHS WAS RELATED TO THE F.Y. 2007 - 08, RELEVANT TO THE A.Y.2008 - 09 AND THE PAYMENT OF RS.1 5 LAKHS WAS RELATED TO THE F.Y.2008 - 09, RELEVANT TO THE AY.2009 - 10. THE AO HAS CONSIDERED THE EXPLANATION OF THE ASSESSEE AND GIVEN A FINDING THAT THE ASSESSEE FAILED TO FURNISH ANY CONFIRMATION LETTER FROM SRI L.MURALI KRISHNA AND FAILED TO PROVE THE GEN UINENESS OF THE TRANSACTIONS WITH RELEVANT MATERIAL EVIDENCES. SINCE THE ASSESSEE FAILED TO PROVE THE SOURCES FOR PAYMENT OF RS.195.0 0 LAKHS, THE AO TREATED THE ENTIRE SUM OF RS.195.00 LAKHS AS UNDISCLOSED INCOME FOR THE A.Y.2008 - 09 AND 2009 - 10 AND ASSESSED TO TAX. 7 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE THE AO MADE THE ADDITION OF RS.180.00 LAKHS FOR THE A.Y.2008 - 09 AND RS.15.00 LAKHS FOR THE A.Y.2009 - 10. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) , FILED THE WRITTEN SUBMISSIONS AND THE ADDITIO NAL GROUNDS. THE LD.CIT(A) CALLED FOR THE REMAND REPORT WHICH WAS SUBMITTED BY THE AO . S UBSEQUENTLY THE ASSESSEE FILED REJOINDER ON THE COMMENTS OF AO. THE LD.CIT(A) CONSIDERED THE REMAND REPORT AND HELD THAT THE AO HAS REEXAMINED THE ISSUE WITH THE BOOK S OF ACCOUNTS AND VOUCHERS RELATING TO THE ADDITION OF RS.180 LAKHS AND RS.15 LAKHS AND SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, HENCE, DELETED THE ADDITION OF RS.180 LAKHS FOR THE A.Y. 2008 - 09 AND RS.15 LAKHS FOR THE A.Y. 2009 - 10. 4. AGAINST THE O RDER OF THE LD.CIT(A), THE REVENUE HAS FILED APPEAL BEFORE THIS TRIBUNAL AND THE ASSESSEE FILED CROSS OBJECTIONS. DURING THE APPEAL HEARING, THE LD.DR ARGUED THAT THE ASSESSEE DID NOT EXPLAIN THE SOURCES FOR PAYMENT RS.180.00 LAKHS PAID TO THE BUILDER. T HE ASSESSEE HAS MADE THE PAYMENT OF RS.180 LAKHS RELATING TO THE F.Y.2007 - 08 RELEVANT TO A.Y.2008 - 09 WHICH IS NOT DISPUTED. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE OR EXPLAINED THE SOURCE DURING THE COURSE OF SEARCH OR DURING POST SEARCH PROCEEDINGS, WHI CH IS EVIDENT FROM THE ASSESSMENT ORDER. BEFORE THE AO ALSO, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE WITH REGARD TO THE 8 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE SOURCE OF PAYMENT. FURNISHING OF ADDITIONAL EVIDENCE FROM SRI L.MURALI KRISHNA AFTER EXPIRY OF 9 YEARS, I.E. AFTER EXPIRY OF TIME LI MIT FOR TAKING ANY ACTION IN THE CASE OF SRI L.MURALI KRISHNA IS UNJUSTIFIED AND THE LD.CIT(A) SHOULD NOT HAVE ENTERTAINED THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE AT THE APPELLATE STAGE. APART FROM THE ABOVE, THE LD.DR ARGUED THAT THE ADDL.CIT H AS GIVEN A CLEAR OBSERVATION WHILE FORWARDING THE REMAND REPORT STATING THAT THE REPORT OF THE AO SHOULD NOT BE CONSIDERED, SINCE, THE AO SIMPLY STATED THAT THE EXPLANATION OF THE ASSESSEE IS SELF - SERVING STATEMENT WITHOUT BRINGING ANY FACTS OR EVIDENCE O N RECORD. THE LD.CIT(A) OUGHT TO HAVE ENDORSED THE OBSERVATIONS OF THE ADDL.CIT ALSO WHILE DECIDING THE APPEAL. THE LD.DR FURTHER ARGUED THAT THE AO IN HIS REMAND REPORT REQUESTED THE LD.CIT(A) TO CONSIDER THE ISSUE ON MERITS. IT IS FURTHER ARGUED BY TH E LD.DR THAT THE AO DID NOT MAKE PROPER ENQUIRIES WITH REGARD TO THE GENUINENESS OF THE SOURCES WHILE SUBMITTING THE REMAND REPORT. THEREFORE, ARGUED THAT THE ORDER OF THE LD.CIT(A) BE SET ASIDE AND THE ADDITION MADE BY THE AO TO BE CONFIRMED. 5. ON THE OTHER HAND, THE LD.AR ARGUED THAT THE ASSESSEE HAD ADVANCED A SUM OF RS.195 LAKHS FOR PURCHASE OF HOUSE AND THE SOURCES WERE CLEARLY EXPLAINED IN THE BOOKS OF ACCOUNTS PRODUCED BEFORE THE AO. THE LD.AR ALSO FURNISHED THE ACCOUNT COPY OF SRI L.MURALI KRISH NA IN HIS BOOKS OF ACCOUNTS 9 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE IN PAGE NO.81 OF THE PAPER BOOK, SHOWING THE PAYMENTS AND THE RECEIPTS. THE ASSESSEE ALSO SUBMITTED CONFIRMATION FROM SRI L.MURALI KRISHNA, CONFIRMING THE ADVANCE PAID AND THE AMOUNTS RECEIVED BACK FROM HIM. HE ARGUED THAT IN THE INSTANT CASE, THERE IS NO UNACCOUNTED INVESTMENT OR UNACCOUNTED PAYMENTS. THE ENTIRE PAYMENT OF RS.180 LAKHS FOR THE A.Y.2008 - 09 AND RS.15 LAKHS FOR THE A.Y.2009 - 10 WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF RELEVANT ASSESSMENT YEARS. HENCE, THE P AYMENTS WE RE MADE OUT OF ACCOUNTED SOURCES OF THE ASSESSEE AND THE ENTIRE AMOUNT WAS RECEIVED BACK FROM THE BUILDER, THEREFORE, THERE IS NO CASE FOR MAKING THE ADDITION EITHER AS UNDISCLOSED INVESTMENT OR AS UNEXPLAINED SOURCE. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCE BEFORE THE LD.CIT(A) AND THE LD.CIT(A) HAS CALLED FOR THE REMAND REPORT FROM THE AO. THE AO HAS EXAMINED THE ENTIRE ISSUE AND GIVEN A REPORT STATING THAT AN ADVANCE AMOUNT OF RS.195.00 LAKHS TO SRI L.MURALI KRISHNA WAS DECLARED IN THE RETURN OF INCOME OF THE ASSESSEE AS WELL AS SRI L.MURALI KRISHNA. THE LD.AO FURTHER STATED THAT THE ASSESSEES PLEA ON THIS GROUND OF APPEAL APPEARS TO BE REASONABLE AND MAY BE CONSIDERED ON MERITS. THE COMMENTS OF THE AO CLEARLY SHOW THAT HE HA D SATISFIED REGARDING THE SOURCE AND GIVEN A FINDING IN FAVOUR OF THE ASSESSEE. THE LD.ADDL.CIT HAS MADE THE COMMENTS WITHOUT ANY RECORD AND HENCE, THE 10 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE COMMENTS OF THE ADDL.CIT REQUIRED TO BE IGNORED AND THE ORDER OF THE LD.C IT(A) IS TO BE UPHELD. 6. THE ASSESSEE ALSO FILED CROSS OBJECTION S SUPPORTING THE ORDER OF THE LD.CIT(A) . T HE LD.AR FURTHER SUBMITTED THAT SINCE THE AO HAS EXAMINED THE ENTIRE ISSUE AND SATISFIED WITH REGARD TO THE GENUINENESS OF THE SOURCE OF INVESTME NT AND THE SAID AMOUNT WAS ALSO RETURNED, HENCE THERE IS NO CASE FOR MAKING THE ADDITION AND REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. A SEARCH U/S 132 WAS CARRIED OUT IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AND DURING THE COURSE OF SEARCH, EVIDENCES WERE FOUND IN THE FORM OF RECEIPTS FOR PAYMENT OF RS.180 LAKHS TO SRI SRISAILA BABU, GPA HOLDER IN CASH AND RS.15 LAKHS IN CASH AND RS.1 0 LAKHS BY DD TO SRI MURALI KRISHNA. DURING THE COURSE OF SEARCH AND POST SEARCH ENQUIRIES, THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION, EXPLAINING THE SOURCES OF AMOUNT PAID. THE ASSESSEE NEITHER PRODUCED THE BOOKS OF ACCOUNTS SHOWING RELEVANT ENTRIES NOR PRODUCED ANY PROOF EXPLAINING THE SOURCES. T HE ASSESSEE FILED EXPLANATION STATING THAT HE INTENDED TO PURCHASE THE RESIDENTIAL HOUSE FOR WHICH HE HAD PAID RS.195 LAKHS TO SRI L.MURALI KRISHNA AND LATER ON HE CHANGED HIS MIND AND PLANNED TO PURCHASE A HOUSE FROM SRI L.MURALI 11 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE KRISHNA IN A SHELL FORM AND WANTED TO DO THE INTERIOR WORKS HIMSELF . H ENCE SRI L.MURALI KRISHNA RETURNED THE ENTIRE AMOUNT OF RS.195.00 LAKHS IN CASH TO THE ASSESSEE AND RS.1.10 CRORES WAS PAID BY HIS WIFE. FROM THE ASSESSMENT ORDER, IT IS SEEN THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE WITH REGARD TO THE SOURCES FOR PAYMENT AND RETURN OF THE AMOUNT PAID TO MURALI KRISHNA . HENCE, THE AO MADE THE ADDITION. SUBSEQUENTLY, AT THE APPELLATE STAGE, THE ASSESSEE FILED ADDITIONAL E VIDENCE, EVIDENCING THE RECEIPT OF MONEY BACK FROM SRI L.MURALI KRISHNA AND ON THE BASIS OF WHICH THE AO SUBMITTED THE REMAND REPORT STATING THAT THE CONTENTION OF THE ASSESSEE WITH REGARD TO SOURCE AND RETURN OF MONEY APPEARS TO BE REASONABLE. ON THE BAS IS OF THE REMAND REPORT, THE LD.CIT(A) DELETED THE ADDITION OF RS.195.00 LAKHS . IN THIS CASE, AS OBSERVED FROM THE ASSESSMENT ORDER, THE ASSESSEE NEITHER PRODUCED THE BOOKS OF ACCOUNTS NOR PRODUCED ANY EVIDENCE BEFORE THE INVESTIGATION TEAM DURING THE COUR SE OF SEARCH OR SUBSEQUENT TO THE SEARCH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO, THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO EXPLAIN THE SOURCE FOR PAYMENT . IN THE INSTANT CASE, THE RECEIPTS A RE AVAILABLE EVIDENCING THE PAYMENT TO THE BUILDE R BUT NO OTHER DOCUMENTS A RE AVAILABLE AT THE TIME OF SEARCH IN THE RESIDENTIAL PREMISES, EVIDENCING THE REPAYMENT OF THE AMOUNT S A DVANCED TO SRI L.MURALI KRISHNA. T HERE WAS NO AGREEMENT OR AN 12 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE IOTA OF EVIDENCE AVAILABLE IN THE PREMISES. HAVING NOT PRODUCED ANY EVIDENCE DURING THE COURSE OF SEARCH OR POST SEARCH PROCEEDINGS AND FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND CONFIRMATION DURING ASSESSMENT PROCEEDINGS , MERE ORAL STATEMENTS WITHOUT FURNISHING THE CORROBORATING EVIDENCE IS NOT SUFFICIENT TO HOLD T HAT THE SOURCE FOR THE ADVANCES ARE EXPLAINED OR TO PROVE THAT THE AM O UNT PAID TO THE BUILDER WAS RETURNED . IT IS OBSERVED FROM THE DETAILS OF THE PAYMENTS MADE THAT THE ASSESSEE HAS GIVEN ADVANCES TO THE BUILDER FROM 14 . 01 . 2008 TO 04 . 04 . 2008 PERIODICALLY ON VARIOUS DATES. AS PER THE ACCOUNT COPY PLACED IN PAGE NO.81 OF THE PAPER BOOK , SRI MURALI KRISHNA STATED TO HAVE REPAID THE AMOUNT FROM 23 . 03 . 2008 TO 27 . 03 . 2008 WHICH APPEARS TO BE ILLOGICAL AND UNBELIEVABLE SINCE THE ASSESSEE HAS MADE THE PAYMENT OF R S.15.00 LAKHS , SUBSEQUENTLY ON 04 . 04 . 2008 ALSO I.E. AFTER RETURNING THE ENTIRE AMOUNT OF ADVANCE . THOUGH THE ASSESSEE STATED THAT THE SAID PAYMENT OF RS.15.00 LAKHS WAS MADE FOR INTERIORS , COPY OF THE RECEIPT PLACE D IN PAGE NO.74 CLEARLY SHOWS THAT IT WAS PAID FOR HOUSE OF JUBILEE HILLS AND NOWHERE IT WAS MENTIONED THAT THE AMOUNT WAS PAID FOR INTERIOR WORK. APART FROM THE ABOVE , THE ASSESSEE HAD STATED THAT HE DECIDED TO PURCHASE THE HOUSE IN SHELL FORM AND GET THE INTERIOR WORKS DONE BY THEMSELVES. IN THIS BACK GROUND , THERE IS NO NEED TO MAKE THE ADVANCE PAYMENT FOR INTERIOR WORKS SUBSEQUENT TO RETURN OF THE 13 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE ADVANCE ALREADY PAID. APART FROM THE ABOVE , THE CASH PAYMENTS WERE PAID BY SMT.R.SULOCHANA DEVI AS PER THE R ECEIPTS FOUND DURING THE COURSE OF SEARCH. HENCE , IT IS NOT NECESSARY TO RETURN THE AMOUNTS PAID TO BUILDER AND MAKE THE PAYMENT AGAIN TO REGISTER THE HOUSE IN THE NAME OF SMT.SULOCHANA DEVI. THE AMOUNTS ALREADY PAID DURING 14.01.2008 TO 04.04.2008 CAN AS WELL BE TREATED AS CONSIDERATION FOR PURCHASE OF HOUSE. THE REPLY SUBMITTED BY THE ASSESSEE NEITHER SOUNDS LOGICAL NOR CONVINCING. THE AO SHOULD HAVE EXAMINED THE SOURCE OF BOOKS OF ACCOUNTS WHICH WERE NOT PRODUCED AT THE TIME OF SEARCH / POST SEARCH AS WE LL AS ASSESSMENT PROCEEDINGS BUT PRODUCED LATER ON . APART FROM THE ABOVE, AS PER THE ASSESSMENT ORDER, RS.15 LAKHS WAS PAID TO SRI L.MURALI KRISHNA IN CASH AND RS.180 LAKHS WAS PAID TO SRI SRISAILA BABU, GPA HOLDER. WHEN THE AMOUNT WAS PAID TO SRI SRISAILA BABU, WHY SRI L.MURALI KRISHNA RETURNED THE AMOUNT , W HO IS SRI SAILABABU WAS ALSO NOT EXPLAINED. THE AO NEITHER EXAMINED SRI MURALI KRISHNA NOR EXAMINED SRI SRISAILA BABU AND THE REASONS FOR NOT PRODUCING THE EVIDENCE A T THE TIME OF SEARCH OR POST SEARCH AND THE ASSESSMENT PROCEEDINGS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE WAS NOT PROPERLY VERIFIED BY THE LOWER AUTHORITIES TO FIND OUT THE SOURCE AND THE RECEIPT OF THE AMOUNT. IT IS INCUMBENT UPON TH E AO TO VERIFY THE BANK ACCOUNTS OF THE ASSESSEE WITH MATCHING DATES OF ADVANCE AS WELL AS 14 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE THE BANK ACCOUNTS OF SRI L.MURALI KRISHNA WITH MATCHING DATES FOR THE SOURCES OF BOTH THE PARTIES. THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE NEEDS DETAILED EXAMI NATION TO VERIFY THE SOURCES WITH THE BANK ACCOUNTS OF THE ASSESSEE, SRI MURALI KRISHNA AND OTHER CORROBORATIVE EVIDENCES. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO TO MAKE DETAILED EXAMINATION AN D DECIDE THE ISSUE AFRESH ON MERITS. THE ASSESSEE IS DIRECTED TO SUBMIT THE DETAILS BEFORE THE AO TO COMPLETE THE PROCEEDINGS AT THE EARLIEST. THE AO IS DIRECTED TO GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE CASE. ACCORDINGLY, THE APPEAL S OF THE REVENUE ON THIS GROUND AND CROSS OBJECTION S OF THE ASSESSEE FOR THE A.YS . 2008 - 09 AND THE A.Y.2009 - 10 ARE SET ASIDE AND REMITTED BACK TO THE FILE OF THE AO . AND ALLOWED FOR STATISTICAL PURPOSE S . THE APPEALS OF THE REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE FOR THE A.Y.2008 - 09 AND 2009 - 10 ON THIS ISSUE ARE ALLOWED FOR STATISTICAL PURPOSE S . 8. GROUND NO.3 OF THE REVENUE FOR THE A.Y 2008 - 09 TO 2011 - 12 ARE RELATED TO THE DISALLOWANCE OF EXPENSES UNDER THE FOLLOWING HEADS. ( I ) DIRECT WORK EXPENDITURE ( II ) GENERAL EXPENSES ( III ) EPUI EXPENSES TO 50% 15 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND FROM THE SEIZED MATERIAL MARKED AS A/RV/PO/3, PAGES SERIALLY NUMBERED FROM 200 TO 204, A/RV/PO/4, PAGES SERIALLY NUMBERED FORM 108, 44 TO 47, 19,, 28, A/RV/PO/6, PAGES SERIALLY NUMBERED FROM 35 TO 40, 73, 74 AND A/RV/PO/7, PAGES SERIALLY NUMBERED 193 CONTAINED THE EXPENDITURE INCURRED UNDER THE HEAD DEPARTMENTAL EXPENSES. THE ASSESSEE WAS ASKED TO EXPLAIN THE TRAN SACTIONS IN A STATEMENT RECORDED ON 10.04.2012, THE ASSESSEE SUBMITTED THAT THE EXPENDITURE UNDER DIFFERENT HEADS WERE GROUPED AS DIRECT WORK EXPENDITURE IN THE PROFIT & LOSS ACCOUNT FOR WHICH NO PROPER VOUCHERS WERE MAINTAINED. THE AO REPRODUCED THE RE LEVANT QUESTIONS AND ANSWERS OF THE STATEMENT IN THE ASSESSMENT ORDER, WHEREIN THE ASSESSEE HAD STATED THAT THESE PAYMENTS WERE NOT BACKED BY PROPER VOUCHERS AND WOULD COME FORWARD TO OFFER SUCH EXPENDITURE AS DISALLOWANCE. FOR THE SAKE OF CLARITY AND CON VENIENCE, WE EXTRACT RELEVANT QUESTION S AND ANSWERS OF THE STATEMENT RECORDED BY THE AO FROM QUESTION NO.3 TO 6 WHICH READS AS UNDER : Q .NO.3 : NOW I AM SHOWING YOU THE SEIZED BOOKS OF ACCOUNT SEIZED AT YOUR RESIDENCE AT NELLORE MARKED AS ANNEXURE A/RV/PO/3, A/RV/PO/4, A/RV/PO/6, A/RV/PO/7, A/RV/PO/12, A/RV/PO/13, A/RV/PO/14 AND ALSO THE IMPOUNDED MATERIAL MARKED AS A/RVR/3, A/RVR/4 IMPOUNDED FROM YOUR HYDERABAD OFFICE. PLEASE GO THROUGH THESE BOOKS OF ACCOUNT AND EXPLAIN THE CONTENTS? ANS : THESE BOOKS ARE SEIZED /IMPOUNDED FROM MY RESIDENCE AT NELLORE AND MY OFFICE IN HYDERABAD. THESE BOOKS ARE PERTAINING TO MY BUSINESS RECEIPTS AND PAYMENTS. 16 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE Q.NO.4. : IN THE ABOVE BOOKS, IT WAS NOTICED THAT THERE WERE SOME AMOUNTS MENTIONED AGAINST SOME NAMES. PLEASE GO THROUGH THEM AND EXPLAIN HOW DID YOU ACCOUNT FOR THOSE RECEIPTS /PAYMENTS? PLEASE EXPLAIN THE NATURE OF THOSE EXPENDITURE? ANS : AN A/RV/PO/3 AT PAGE NO. 50 CONTAINS BROKERAGE EXPENSES, PAGE 300 TO 304 CONTAINS WORK RELATED EXPENSES; IN A/RV/P O/6, PAGE 35 TO 40 AND 73 TO 74 CONTAINS WORK RELATED EXPENDITURE, PAGE 207 TO 209 CONTAINS GENERAL EXPENSES; IN A/RV/PO/7, PAGE 14 CONTAINS WORK RELATED EXPENDITURE; IN A/RV/PO/14,, PAGE 16 CONTAINS, WORK RELATED EXPENDITURE. ALL THESE ARE PAYMENT S MADE TO TECHNICALLY QUALIFIED PEOPLE WHO ASSISTED US IN THE EXECUTION OF EPC (ENGG. PROCUREMENT AND CONSTRUCTION) CONTRACTS ALLOTTED TO US. THESE PAYMENTS HAVE BEEN ACCOUNTED IN THE BOOKS OF ACCOUNT UNDER THE RELEVANT EXPENDITURE HEAD AND DISCLOSED UNDE R THE GROUPING DIRECT WORK EXPENDITURE IN THE P & L ACCOUNT. Q.N O .5 : PLEASE PRODUCE THE BIFURCATION OF DIRECT EXPENDITURE? ANS : WE WILL SUBMIT THE DETAILS SHORTLY. Q.NO.6 : DO YOU WANT TO SAY ANYTHING ELSE? ANS : UNDER THE DIRECT WORK EXPENDITURE, I ADMIT THAT THERE WERE CERTAIN PAYMENTS MADE TO INDIVIDUALS. MANY PEOPLE APPROACH US FOR GETTING THE THINGS DONE AND PROMISE TO HELP US IN COMPLETION OF OUR WORK. THESE PAYMENTS WERE MADE TO THOSE PERSONS WHO PROMISED US TO GET THE THINGS DONE FOR US IN E XPEDITIOUS MANNER. HOWEVER, I AM NOT VERY SURE WHETHER THESE PAYMENTS ARE BACKED BY PROPER VOUCHERS. I SHALL COME FORWARD AND OFFER SUCH EXPENDITURE AS DISALLOWABLE . 8.1. THE ASSESSEE FAILED TO GIVE BREAKUP OF THE EXPENDITURE AND ALSO FAILED TO EXPLAIN THE NATURE OF EXPENDITURE. THE AGGREGATE EXPENDITURE WORKED OUT TO RS.1,56,14,302/ - FROM THE F.Y.2007 - 08 TO 2011 - 12 ARE AS UNDER : F.Y. AMOUNT (RS.) 2007 - 08 6,65,000 2008 - 09 42,63,852 2009 - 10 45,10,300 2010 - 11 27,68,400 2011 - 12 34,06,750 TOTAL 1,56,14,302 17 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE THE ASSESSEE EXPLAINED THAT THE EXPENDITURE WAS INCURRED AT THE SITE AND THE PAYMENT WAS MADE USUALLY IN THE NAME OF EMPLOYEE TO WHOM THE MONEY WA S GIVEN FOR INCURRING THE EXPENDITURE . IT WAS RECORDED IN THE ROUGH ACCOUNT BOOK AND AFTER IDENTIFYING THE CORRECT HEAD OF EXPENDITURE, THE SAME WAS S RECORDED IN THE BOOKS OF ACCOUNTS UNDER THE RESPECTIVE EXPENDITURE ACCOUNT. THE ASSESSEE FURTHER SUBMITTED THAT THE ENTIRE EXPENDITURE WAS BOOKED IN T HE RESPECTIVE ASSESSMENT YEARS FROM A.Y.2008 - 09 TO 2012 - 13. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT PRODUCE ANY SUPPORTIVE MATERIAL TO SHOW THAT THE EXPENDITURE WAS INCURRED AT WORK SITE AND FOR THE PURPOSE OF BUSINESS . HENCE, THE AO DISA LLOWED THE SUM OF RS.1,56,14,302/ - AS PER YEAR - WISE DETAILS GIVEN UNDER : F.Y. AMOUNT (RS.) 2007 - 08 6,65,000 2008 - 09 42,63,852 2009 - 10 45,10,300 2010 - 11 27,68,400 2011 - 12 34,06,750 TOTAL 1,56,14,302 8.2. GENERAL EXPENSES . AS PER THE SEIZED MATERIAL MARKED AS ANNEXURE A/RV/PO/3 PAGES SERIALLY NUMBERED FROM PAGE NO.122 TO 129, A/RV/PO/4 PAGES SERIALLY NUMBERED FROM 124 TO 127, 266, 267, 268 TO 271, 424 TO 425, 392, 393, 395, 397 & 59, A/RV/PO/06 PAGE NUMBER 207 TO 18 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 209, A/RV /PO/07 PAGE NO.192 , THE ASSESSEE HAS CLAIMED DEDUCTION TOWARDS GENERAL EXPENSES TO THE EXTENT OF RS.63,04,108/ - AND THE YEAR WISE BREAKUP IS AS UNDER : F.Y. A.Y. AMOUNT (RS.) 2006 - 07 2007 - 08 29,74,800 2007 - 08 2008 - 09 7,63,308 2008 - 09 2009 - 10 11,71,000 2009 - 10 2010 - 11 13,95,000 TOTAL 63,04,108 IN THE STATEMENT RECORDED ON 10.04.2012, IN QUESTION NO.6, THE ASSESSEE ACCEPTED TO COME FORWARD FOR ADMISSION OF EXPENDITURE AS DISALLOWABLE. THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY THE AMOUNT OF RS.63,04,108/ - SHOULD NOT BE DISALLOWED IN THE RESPECTIVE ASSESSMENT YEARS FOR WANT OF PROPER EVIDENCE. THE ASSESSEE SUBMITTED THAT THE EXPENDITURE WAS INCURRED IN THE SITE AND PRODUCED RELEVANT LEDGER EXTRACTS, BUT NO SUPPORTIVE MATERIAL WAS FILED BEFORE THE AO AT THE TIME OF SEARCH OR POST SEARCH PROCEEDINGS AND DURING THE ASSESSMENT PROCEEDINGS . THEREFORE, THE AO DISALLOWED THE ENTIRE AMOUNT OF RS.63,04,108/ - IN THE RESPECTIVE ASSESSMENT YEAR AS PER THE DETAILS GIVEN BELOW : A.Y. AMOUNT (RS.) 2007 - 08 29,74,800 2008 - 09 7,63,308 2009 - 10 11,71,000 19 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 2010 - 11 13,95,000 TOTAL 63,04,108 8.3. EP C EXPENDITURE . THE ASSESSEE HAS DEBITED A SUM OF RS. 25,65,500/ - UNDER THE HEAD EP C EXPENSES FOR THE F.Y. 2007 - 08 TO 2010 - 11 AS UNDER : F.Y. A.Y. AMOUNT (RS.) 2006 - 07 2007 - 08 10,52,500 2007 - 08 2008 - 09 6,88,000 2008 - 09 2009 - 10 6,25,000 2009 - 10 2010 - 11 2,00,000 TOTAL 25,65,500 DURING THE STATEMENT RECORDED ON 10.04.2012, THE ASSESSEE STATED THAT THE PAYMENTS WERE MADE TO TECHNICALLY QUALIFIED PEOPLE WHO HAD ASSISTED IN THE EXECUTION OF THE EPC (ENGG. PROCUREMENT AND CONSTRUCTION) CONTRACTS ALLOTTED TO THEM. THE ASSESSEE FURTHER STATED THAT THESE PAYMENTS HA D BEEN ACCOUNTED IN THE BOOKS OF ACCOUNTS UNDER THE RELEVANT EXPENDITURE HEAD UNDER THE GROUPING DI RECT WORK EXPENDITURE. SINCE THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE OR SUPPORTING MATERIAL FOR VERIFICATION, THE AO DISALLOWED THE SUM OF RS.25,65,500/ - FOR THE F.Y.2007 - 08 TO 2010 - 11 IN THE RESPECTIVE A.Y. FROM 2008 - 09 TO 2011 - 12 AS UNDER : A.Y. AMOU NT (RS.) 2008 - 09 10,52,500 2009 - 10 6,88,000 2010 - 11 6,25,000 2011 - 12 2,00,000 TOTAL 25,65,500 20 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 9. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) HAS CALLED FOR THE REMAND REPORT AND IN THE REMAND REPORT, THE AO STATED IN PA R A NO.7.1, THAT THE ASSESSEE DID NOT FURNISH THE DETAILS OF PERSONS TO WHOM THE ABOVE AMOUNTS WERE PAID FALLING WITHIN THE TERM DIRECT WORK EXPENDITURE WERE PAID, VIZ, NAMES AND ADDRESSES OF THE RECIPIENTS, NATURE O F SERVICES RENDERED BY THEM, CONFIRMATION OF RECEIPT OF SUCH PAYMENTS , WHETHER SUC H EXPENDITURE WA S DIRECTLY RELATED TO BUSINESS OR THOSE REPRESENTED UNLAWFUL PAYMENTS SO AS TO MOTIVATE THE PERSONS CONCERNED WITH THE WORK ALLOTTED TO HIM AND MONITOR SUCH W ORKS . I N VIEW OF THE ASSESSEES FAILURE TO FURNISH THE ABOVE DETAILS WITH EVIDENCE, THE AO CHARACTERIZED THE SAME AS ILLEGAL PAYMENTS WHICH CANNOT BE ALLOWED. ACCORDINGLY, THE AO OBJECTED FOR GIVING RELIEF TO THE ASSESSEE. THE LD.CIT(A) OBSERVED THAT THE AO MADE THE ADDITIONS BY TAKING FIGURES FROM THE SEIZED MATERIAL ARITHMETICALLY. THE LD.CIT(A) OBSERVED THE COMPLEXITY IN THE ACCOUNTS AND OWING TO COMPLEXITY OF THE WORK THE LD.CIT(A) RESTRICTED THE DISALLOWANCE OF EXPENSES TO THE EXTENT OF 50%. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) WHICH READS AS UNDER FOR THE A.Y.2008 - 09 TO 2011 - 12: 21 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE I HAVE CONSIDERED THE ARGUMENTS OF APPELLANT AND FINDINGS OF THE A SSESSING OFFICER WITH REFERENCE TO EACH ADDITIO N, IT IS A FACT THAT THE APPE LL ANT HAS FILED THE RETURNS OF INCOME MUCH BEFORE THE SEARCH ACTION. THE FINANCIAL RESULTS ARE ARRIVED ONLY AFTER STATUTORY AUDIT. IN THIS CONTEXT, THE MAIN I SSUE BEFORE THE ASSESSING O FFICER IS TO SEE OR EXAMINE WHETHER THE EV IDENCE GATHERED IN SEARCH IS IN ACCORDANCE WITH THE BOOKS OF ACCOUNT OR NOT? THE ASSESSING OFFICER HAS ACCORDED REASONAB L E O PPORTUNITY BY ISSUING SHOW - CAUSE NOTICES WITH REFERENCE TO EACH HEAD OF ACCOUNT NAMELY DEPARTMENTAL EXPENSES/BROKERAGE/GENERAL EXPEN SES AND EPL EXPENDITURE F OR ALL THE ASSESSMENT YEARS THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT HAVE P RODUCED COMPARATIVE SUMMARY OF EXPENDITURE AS PER THE SEIZED MATERIAL AND AS PER THE BOOKS OF ACCOUNT AS A SAMPLE TO ASCERTAIN THE EXTENT OF EXPENDITURE BOOKED OR O THERW I SE THE SAME I S PRODUCED HEREUNDER : THERE ARE 25 LEDGER ACCOUNTS. I HAVE PERUSE D THE CONTENTS AND IT IS CLEAR THAT THERE ARE ONLY 10 LEDGER ACCOUNTS NAMELY BANK CHARGES, SHED ACCOUNT, MESS MAINTENANCE, OIL ACCOUNT, TIPPER ACCOUNT, MACHINERY MAINTENANCE, BLASTING ACCOUNT AND SALARY ACCOUNT. REMAINING 15 HEADS OF ACCOUNT WERE APPARENT LY NOT FOUND IN THE BOOKS OF ACCOUNT.. UPON EXAMINATION OF THE SUMMARY, ONE MAY REASONABLY ASSUME THAT NO CONTRACT WORK CAN BE CARRIED OUT WITHOUT PRIMARY EXPENSES SUCH AS FUEL, MATERIAL MAINTENANCE, TRANSPORT, DIESEL, 'STATIONERY ETC. BE IT AS IT MAY, IT IS A FACT THAT THE APPELLANT APPEARS TO HAVE NOT MADE ANY CLAIM FOR THESE EXPENSES IN THE RESPECTIVE HEADS IN THE BOOKS OF ACCOUNT. AT THE SAME TIME, NO PRUDENT BUSINESS MAN CAN ENGAGE IN CONTACT WORK WITHOUT CLAIMING SUCH EXPENDITURE. NATURALLY SUCH SITUA TION IS NOT POSSIBLE IN THIS TINE OF BUSINESS. THEREFORE; IT CAN REASONABLY BE PRESUMED THAT THE 22 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE APPELLANT WOULD HAVE CAMOUFLAGED SUCH EXPENSES (IS HEADS) INTO 10 HEADS. IT IS NOT THE CASE WHERE THE APPELLANT HAS NOT EXPENDED THE MONIES ON THESE HEADS OF A CCOUNT (15). IT IS NOT THE CASE OF ASSESSING OFFICER THAT THE EXPENSES RECORDED IN THE SEIZED MATERIAL HAS NET BEEN FOUND OR PLUGGED INTO THE BOOKS IN SOME ACCOUNT OR OTHER. IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT ANY UNACCOUNTED INVESTMENT W AS MADE OUT OF SUCH EXPENDITURE. THIS FINDING WAS NOT GIVEN BY THE ASSESSING OFFICER IN THE ORDER. I HAVE EXAMINED THE P&L ACCOUNT. THERE ARE TWO MAJOR HEADS NAMELY DIRECT EXPENDITURE AND INDIRECT EXPENDITURE. THE MONIES ARE ULTIMATELY WITHDRAWN FROM THE B ANKS AND EXPENDITURE WAS INCURRED. SUCH EXPENDITURE IS ULTIMATELY BOOKED AS EITHER DIRECT WORK EXPENDITURE OR INDIRECT EXPENDITURE IN THE P&L ACCOUNT. SUCH EXPENDITURE DEBITED TO THE P&L ACCOUNT PER SE IS NOT DISA LLO WAB L E UNLESS PROVED OTHERWISE. IN THE IN STANT CASE, IT IS NOT POSSIBLE TO SAY WITH CERTAINTY THAT THE ENTIRE EXPENDITURE IS ALLOWABLE OR OTHERWISE WITHOUT REMOVING THE VEIL OR CAMOUFLAGE IN THE ACCOUNTS. THE L AW IS VERY CLEAR. ANY EXPENDITURE CLAIMED IN THE BOOKS WIL L NOT BE ALLOWED IF THE NATUR E OF SUCH EXPENSES IS EITHER ILLEGAL OR GRATUITOUS. THE ASSESSING OFFICER THOUGH TERMED IT AS ILLEGAL BUT NOT ESTABLISHED WITH THE BOOKS OF ACCOUNT VIS - A - VIS SEIZED MATERIAL. THE APPELLANT HAD ALSO NOT ESTABLISHED THE NATURE OF EXPENSES WHETHER ALLOWABLE O R OTHERWISE. THIS COULD BE PROBABLE REASON WHY THE APPELLANT WAS NOT ABLE TO IDENTIFY THE PERSONS AND THEIR ASSOCIATION WITH THE BUSINESS OF THE APPELLANT. APPARENTLY, THAT COULD BE THE REASON W HY SUCH EXPENDITURE WAS NOT SUPPORTED WITH B ILL S AND VOUCHERS . AT THE SAME , THE ASSESSING OFFICER HAS NOT GIVEN A CATEGORICAL FINDING REGARDING THE NATURE OF PAYMENT EXCEPT STATING THAT IN THE ABSENCE OF EXPLANATION TO THE SHOW - CAUSE NOTICE, THE EXPENDITURE IS TREATED AS 'UNACCOUNTED INVESTMENT' IT IS NOT A CASE WHER E THE APPELLANT HAS NOT INCURRED THE EXPENDITURE WITHOUT AFFECTING THE WITHDRAWALS FROM THE BANK . IT IS CLE AR THAT THESE EXPENSES HAVE BEEN L OADED INTO THE BOOKS UNDER TWO HEADS AS APPEARING IN THE P &L . ACCOUNT IN THIS SCENARIO, IT IS NOT POSSIBLE TO SEGRE GATE AS TO WHAT IS ALLOWABLE OR OTHERWISE IN THIS CASE. IF ONE INDU LGE S IN THIS EXERCISE, IT MAY LEAD TO RECASTING THE BOOKS OF ACCOUNT WITH REFERENCE TO THE EXPENSES ALONE WHICH IS NOT POSSIBLE AT THIS STATE. OWING TO THESE COMPLEX SITUATIONS, A REASONAB LE CONCLUSION CAN BE ARRIVED WITH A REASONABLE NEXUS TO THE SEIZED MATERIAL AND BOOKS OF ACCOUNT . KEEPING THESE ASPECTS IN MIND; I PROCEED TO DECIDE ,THE APPEAL ON EACH ADDITION MADE BY THE ASSESSING OFFICER AS UNDER: ( I ) ILLEGAL PAYMENTS/DIRECT WORK EXPE NDITURE (A.YRS. 2008 - 09 TO 2010 - I1) (IA) A SEARCH AND SEIZURE WAS CONDUCTED IN THIS CASE BOTH AT RESIDENCE AS WELL AS IN THE OFFICE PREMISES. THERE ARE SEVERAL DOCUMENTS SEIZED DURING THE COURSE OF SEARCH (PAGE 5, PARA 2 OF THE ASSESSMENT ORDER) AND STAT EMENTS WERE ALSO RECORDED FROM THE APPELLANT AND HE WAS UNABLE TO SEGREGATE AND SUBSTANTIATE THE EXPENDITURE MENTIONED THEREIN DURING THE SEARCH AS WELL AS AT THE STAGE OF APPELLATE PROCEEDINGS. THE ASSESSING OFFICER HAS ARRIVED AT SUCH EXPENDITURE FOR 5 A SSESSMENT YEARS OUT O WHICH ONLY 4 ASSESSMENT YEARS ARE CONSIDERED IN THIS ORDER. ASST. YEAR 2012 - 13 WAS NOT CONSIDERED HERE FOR WANT OF INFORMATION FROM THE ASSESSING OFFICER. F INANCIAL YEAR ASSESSMENT YEAR AMOU NT (RS,) 2007 - 08 2008 - 09 6,65,0 00 2008 - 09 2009 - 10 42,63, 852 2009 - 10 201011 45,10, 300 2010 - 11 2011 - 12 27,68, 400 2011 - 12 2012 - 13 34,06, 750 TOTAL 1 ,5 6,1 4,302 23 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE (IB) THE MATERIAL SEIZED VIDE ANNEXURES - A/RV/PO/3 (PAGE NOS 300 TO 304),A/ RV/PO/ 4 (PAGE NOS 108, 44 TO 47, 19, 28), A / RV/P O /6 (PAGE NOS 35 TO 40, 73 & 74), A/RV/PO/ 7 CONTAINS THE EXPENDITURE INCURRED UNDER THE HEAD 'DEPARTMENTAL EXPENSES (IC) I T IS THE CONTENTION OF THE APPELLANT THAT THIS EXPENDITURE IS I NCURRED AT WORK SITE AN D DEBITED UNDER THE HEAD 'DIRECT WORK EXPENDITU RE' IN THE P&L ACCOUNT, AS PER PRACTICE, THE NAME OF IN - CHARGE EMPLOYEE IS MENTIONED IN THE SEIZED DOCUMENTS IN ORDER TO IDENTIFY THE EXPENDITURE AT SITE . THE APPELLANT COULD NOT PRODUCE SUPPORTIVE DOCUMENTS. AT THE SAME TIME, THE ASSESSING OFFICER HAS ALS O NOT GIVEN A CATEGORICAL FINDING WITH REGARD TO WHAT I S ALLOWABLE OR NON - ALLOWABLE EXPENDITURE . IN OTHER WORDS, THE NATURE OF EXPENDITURE I S NOT ESTABLISHED. THE EXPENDITURE PER SE CANNOT BE DISALLOWED IF IT IS RECORDED AGAINST THE NAMES OF THE EMP LO YEES. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT SUCH PERSONS ARE NON EXISTING OR THE ASSESSING OFFICER HAS DISPROVED THE NAMES APPEARING ON THE PAPERS ARE NOT EMPLOYEES. IT CANNOT BE SAID THAT THERE IS NO GENUINE EXPENDITURE IN THE SEIZED MATERIAL. IN TH IS FACTUAL MATRIX , IT IS NOT REASONABLE TO DISALLOW THE ENTIRE AMOUNT OF EXPENDITURE. THE APPELLANT WOULD HAVE DOVETAILED SUCH AMOUNT INTO THE BOOKS OF ACCOUNT. THE MODUS OPERANDI ADOPTED BY THE APPELLANT WHEN SUCH EXPENSES ARE DEBITED IN THE BOOKS IS AL SO NOT FORTH - COMING IN THE ASSESSMENT ORDER. AT THE BEST, THE APPELLANT COULD HAVE INFLATED SUCH EXPENDITURE. IT IS ALSO NOT KNOWN UNDER WHICH HEAD THE EXPENDITURE WAS DEBITED IN DIRECT EXPENDITURE. BE IT AS IT MAY, IT IS NOT POSSIBLE TO FIGURE OUT WHAT I S THE EXTENT OF ALLOWABLE EXPENDITURE OR OTHERWISE. IN SUCH COMPLEX SITUATION, I AM OF THE OPINION THAT IT SERVES BOTH THE PARTIES IF A REASONABLE PERCENTAGE OF SUCH EXPENDITURE IS CONSIDERED FOR DISALLOWANCE. AFTER CAREFUL CONSIDERATION OF SUBMISSIONS AND MATERIAL ON RECORD, THE ASSESSING OFFICER IS DIRECTED TO DISALLOW 50% OF EXPENDITURE IN EACH ASST. YEAR. III) ILLEGAL PAYMENTS / GENERAL EXPENSES (A.YRS 2008 - 09 TO 2010 - 11) : (IIIA) THE ASSESSING OFFICER IS OF THE VIEW THAT THE SEIZED MATERIAL A/RV/PO/3 (PAGE NOS. 122 TO 129), A/RV/PO/4 (PAGE NOS. 124 TO 127, 266, 267 & 268 TO 275, 424 TO 425, 392, 393, 395, 397 & 59, A/RV/P0/6 (PAGE NOS 207 TO 220, A/RV/PO/7 (PAGE NO.192) REPRESENT E XPENDITURE INCURRED UNDER THE HEAD 'GENERAL EXPENSES'. THE ASSESSING OFFICER HAS CALCULATED SUCH EXPENDITURE AS UNDER : F.Y. A.Y. AMOUNT (RS.) 2006 - 07 2007 - 08 29,74,800 2007 - 08 2008 - 09 7,63,308 2008 - 09 2009 - 10 11,71,000 2009 - 10 2010 - 11 13,95,000 TOTAL 63,04,108 (IIIB) IT IS THE CASE OF THE ASSESSING OFFICER THAT THE APPELLANT HAS NOT MAINTAINED ANY VOUCHERS FOR SUCH EXPENSES WHICH FACT WAS CONFIRMED IN THE STATEMENT RECORDED FROM THE APPELLANT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE IN THE ABSENCE OF CORROBORATIVE EVIDENCE. (IIIC) IT IS THE CASE OF THE APPELLANT THAT THE SAID EXPENSES WERE RECORDED 24 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE UNDER THE HEAD 'DIRECT WORK EXPENDITURE' IN THE P&L ACCOUNT FOR THE RESPECTIVE YEARS. THE EXPENSES ARE PART OF MEMORANDA OF BOOKS OF ACCOUNT FORMING PART OF REGULAR BOOKS OF ACCOUNT. THESE ACCOUNTS ARE MEANT FOR VERIFICATION, SUPERVISION, CONTROL AND CONVENIENCE. THERE IS NO INCRIMINATING MATERIAL REGARDING SUPPRESSION OF RECEIPTS. THEY REPRESENT OUTGOINGS WHICH ARE ULTIMA TELY MET OUT OF DRAWINGS FROM THE BANK ACCOUNT AND PARTED TO THE SITE MANAGERS. THIS EXPENDITURE FINALLY FORMS PART OF DIRECT EXPENSES/GENERAL EXPENSES AND NOT ILLEGAL EXPENSES THE ASSESSING OFFICER HAS NOT GIVEN THE FINDING AS TO WHAT ENTRY REPRESENTS NON - ALLOWABLE AND WHAT IS ALLOWABLE. WITHOUT SUCH FIND ING , THE ASSESSING OFFICER TOTALLED THE EXPENSES AND DISALLOWED. THE ASSESSING OFFICER HAS ADOPTED PICK AND CHOOSE METHOD AND DISALLOWED THE ENTIRE EXPENDITURE. PRINCIPLES OF EQUITY AND FAIR PLAY ARE NOT DISPLAYED BY THE ASSESSING OFFICER. IT IS FAIRLY ADMITTED THAT THERE ARE CERTAIN INCONSISTENCIES, DEFECTS, DEFICIENCIES IN THE ACCOUNTS. THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING SPECIFIC ADDITIONS ON THE EXPENSES. (IIID) I HAVE CAREFULLY EX AMINED THE ISSUE AND THE EXPLANATION OF LD. AUTHORIZED REPRESENTATIVE OF THE APPELLANT. I HAVE PERUSED P&L ACCOUNT AND FOUND THAT THERE ARE ONLY TWO MAJOR HEADS OF EXPENDITURE VIZ. DIRECT AND INDIRECT EXPENSES. THE ASSESSING OFFICER CLAIMS THAT THE GENERAL EXPENSES ARE ILLEGAL EXPENSES WITHOUT CLEARLY SPECIFYING THE NATURE OF SUCH EXPENDITURE. THE APPELLANT CLAIMS THAT THE EXPENSES ARE MERGED WITH DIRECT WORK EXPENDITURE WITHOUT CORRELATING TO THE RESPECTIVE WORK SITES AND SUB - HEADS OF EXPENDITURE. THE APPE LLANT HAS ALSO NOT MAINTAINED ANY VOUCHERS FOR SUCH EXPENDITURE. IT IS NOT THE CASE; WHERE THE APPELLANT HAD MADE A CLAIM OF EXPENSES WITHOUT BEING INCURRING THE SAME IT IS NOTICED THAT THE MONIES HAVE BEEN WITHDRAWN AND THEY HAVE GONE OUT OF THE BOOKS. TH E APPELLANT HAD EQUALLY FAILED IN SUBSTANTIATING HIS CASE AS TO WHAT IS ALLOWABLE OR OTHERWISE. EXCEPT MAKING A CLAIM, NO LEADS HAVE BEEN PROVIDED THOUGH THE ENTIRE SEIZED MATERIAL IS IN THE POSSESSION OF APPELLANT. THE AUTHORIZED REPRESENTATIVE OF THE APP ELLANT HAD FAIRLY CONCEDED THAT BILLS AND VOUCHERS CANNOT BE PRODUCED WITH CERTAINTY. IT IS NOT CERTAIN WHETHER SUCH EXPENSES ARE TRULY MEANT FOR BUSINESS OR OTHERWISE THE ASSESSING OFFICER HAS ALSO NOT GIVEN SUCH CATEGORICAL FINDING IN THIS FACTUAL MATRIX , IT WOULD RENDER JUSTICE IF THE EXPENDITURE IS DISALLOWED AT 50% THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO ADOPT 50% OF EXPENDITURE AS NOT ALLOWABLE BEING UNEXPLAINED EXPENDITURE. THE TOTAL EXPENDITURE CLAIMED FOR THE ASST YEAR 2008 - 09 TO 2010 - 11 I S RS 63,04,108/ - ACCORDINGLY, 50% OF IT WOULD BE RS 31,52,054. IV) EPL EXPENDITURE/ ILLEGAL PAYMENTS : - (IVA) IT IS THE CASE OF THE ASSESSING OFFICER THAT THERE ARE CERTAIN EXPENDITURE WHICH IS TERMED AS WORK RELATED SUCH AS EPC EXPENSES (ENGINEERING PROCUREMENT AND CONSTRUCTION) FOR WHICH NO SUPPORTIVE VOUCHERS ARE AVAILABLE. IT IS ALSO THE CASE OF THE ASSESSING OFFICER THAT THE APPELLANT WAS AWARDED CONTRACT WITH MIS ENGINEERING PROJECTS INDIA LTD. THE DETAILS OF EXPENSES ARE RECORDED IN SEIZED MATER IAL VIDE ANNEXURE - A/RV/PO/ 3 TO 14 (PARA 5 OF THE ASSESSMENT ORDER). THE ASSESSING OFFICER HAS MADE THE CALCULATION AS UNDER. F.Y. A.Y. AMOUNT (RS.) 2006 - 07 2007 - 08 10,52,500 25 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 2007 - 08 2008 - 09 6,88,000 2008 - 09 2009 - 10 6,25,000 2009 - 10 2010 - 11 2,00,000 TOTAL 25,65,500 THE ASSESSING OFFICER HAS DISALLOWED RS.25,65,500/ - AS UNDISCLOSED INCOME. (IVB) IT IS THE CASE OF THE APPELLANT THAT THE EXPENSES ARE RELATED TO WORK AND CLUBBED IN DIRECT EXPENSES. THESE PAYMENTS ARE MADE TO THE QUALIFIED PEOPLE WHO ASSIST IN THE EXECUTION OF ENGINEERING PROCUREMENT AND CONSTRUCTION. THE ENTIRE EXPENDITURE IS PART AND PARCEL OF DIRECT EXPENDITURE IN P&L ACCOUNT. THERE ARE NO UNDISCLOSED ASSETS FOUND DURING THE SEARCH ACTION. (IVC) I HAVE CAREFULLY EXAMINED THE FACTS AND SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AND THE REASONS MENTIONED IN THE ORDER OF THE ASSESSING OFFICER. IN ORDER TO APPRECIATE THE FACTS OF THE CASE, ONE NEEDS TO LOOK AT THE NATURE OF THE WORK AND ALSO THE LOCATION OF EXECUTION OF WORK. THIS IS A CASE OF CIVIL CONTRACTOR ENGAGED IN CANAL PROJECTS AT VARIOUS SITES. THERE IS NO DISPUTE REGARDING THE CONTRACT RECEIPTS OF 6.17 CRORES/7.73 CRORES/15.93 CRORES/8.43 CRORES/8.95 CRORES FOR THE ASS T. YEARS 2008 - 09 TO 2011 - 12. THE DISPUTE IS ONLY WITH REGARD TO THE EXPENDITURE CLAIMED BY THE APPELLANT. IT IS THE CASE OF THE ASSESSING OFFICER THAT THE EXPENDITURE CLAIMED BY THE APPELLANT UNDER DIFFERENT HEADS OF THE ACCOUNT AS PER THE SEIZED MATERIAL FOR THE ASST. YEARS 2008 - 09 TO 2011 - 12 IS NOT ALLOWABLE IN TOTALITY. (IVD) IT IS SEEN THAT BOTH THE ASSESSING OFFICER AS WELL AS THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT HAVE NOT ESTABLISHED THEIR ASSERTIONS WITH COGENT EXPLANATION. IN THIS FACT UAL MATRIX, I HAVE ALREADY CONSIDERED DISALLOWANCE OF EXPENSES AT 50% ON THE ISSUE OF GENERAL EXPENSES, UNACCOUNTED EXPENDITURE, ILLEGAL PAYMENTS ETC THE FACTS AND CIRCUMSTANCES BEING SIMILAR, THE ASSESSING OFFICER IS DIRECTED TO DISALLOW 50% (RS.12,82,750 1 - ) OF THE EXPENDITURE TO MEET BOTH THE ENDS OF JUSTICE. A.Y. AMOUNT (RS.) 2007 - 08 5,26,250 2008 - 09 3,44,000 2009 - 10 3,12,500 2010 - 11 1,00,000 TOTAL 12,82,750 9.1. THE ASSESSEE ALSO FILED CROSS APPEALS AGITATING DISALLOWANCE CONFIRMED BY THE CIT(A) AND CROSS OBJECTION SUPPORTING THE ORDER OF THE LD.CIT(A) FOR CONFIRMING 50% OF THE ADDITION FOR ALL THE ASSESSMENT YEARS. 26 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE DURING THE APPEAL HEARING, THE LD.DR ARGUED THA T DURING THE COURSE OF SEARCH, SEIZED MATERIAL WAS FOUND INDICATING THE PAYMENTS, WHICH WAS GROUPED UNDER GENERAL EXPENSES, DIRECT EXPENSES AND EPC EXPENSES. DURING THE COURSE OF SEARCH, THE ASSESSEE ACCEPTED THAT THE PAYMENTS WERE NOT SUPPORTED BY PROPER EVIDENCE AND ALSO AGREED TO COME FORWARD WITH DISALLOWANCE. NO EVIDENCES WERE FILED WITH REGARD TO THE NAME AND ADDRESS OF THE PERSONS TO WHOM THE AMOUNTS WERE PAID, NATURE OF EXPENSES, PURPOSE OF PAYMENT ETC. DURING THE APPEAL PROCEEDINGS ALSO, THE ASSE SSEE DID NOT PRODUCE SUCH DETAILS, WHICH IS EVIDENT FROM THE REMAND REPORT ALSO. NO EVIDENCE WHATSOEVER WAS FILED BY THE ASSESSEE TO PROVE THE GENUINENESS OF THE PAYMENT. THE ASSESSEE FAILED TO ESTABLISH THAT THE PAYMENT WAS MADE FOR THE PURPOSE OF BUSIN ESS. IN RESPECT OF EPC PAYMENTS, THOUGH THE ASSESSEE STATED THAT CERTAIN PAYMENTS WERE MADE TO INDIVIDUALS TO GET THE WORK DONE, HOWEVER, HE DID NOT FURNISH THE NAMES AND ADDRESS OF THE PERSONS, NATURE OF PAYMENT AND REASON FOR PAYMENT, SERVICES RENDERED B Y EACH PERSON ETC. THEREFORE, ARGUED THAT THE EXPENDITURE IS IN THE NATURE OF ILLEGAL PAYMENT WHICH IS NOT ALLOWABLE U/S 37(1) OF THE ACT. SIMILARLY, SINCE THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO SUPPORT THE EXPENDITURE DEBITED TO PROFIT & LOSS AC COUNT, THERE IS NO CASE FOR ALLOWING THE EXPENDITURE AS GENUINE, HENCE ARGUED THAT THE LD.CIT(A) ERRED IN GIVING 27 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE RELIEF TO THE EXTENT OF 50%, HENCE REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE REVENUE. 10. ON THE OTHER HAN D, THE LD.AR ARGUED THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE TO THE EXTENT OF 50% AND THE LD.CIT(A) OUGHT TO HAVE ALLOWED THE ENTIRE EXPENDITURE. LD.AR FURTHER SUBMITTED THAT THE ENTIRE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINESS. THOUGH THE EXPENDITURE WAS NOT SUPPORTED BY PROPER VOUCHERS AND SELF CONTAINED VOUCHERS, THE ENTIRE EXPENDITURE WAS INCURRED DURING THE COURSE OF BUSINESS. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE CIVIL CONTRACT WORKS AND LOT OF EXPENDITURE HAS TO BE INCURRED AT SITE FOR WHICH IT IS NOT POSSIBLE TO GET PROPER VOUCHERS. THE LD.AR FURTHER EXPLAINED THAT THE ASSESSEES INCOME IS MORE THAN THE COMPARABLE CASES AND OFFERED SUFFICIENT INCOME AND PROFIT PERCENTAGE OF THE ASSE SSEE RANGING FROM 7.59% FOR THE A.Y.2008 - 09, 16.06% FOR THE A.Y.2009 - 10, 8.8% FOR THE A.Y.2010 - 11, 13.48% FOR THE A.Y.11 - 12 AND 7.43% FOR THE A.Y.2012 - 13. THE ASSESSEES INCOME IS COMPARABLE WITH ANY OTHER CASES IN THE SIMILAR LINE OF BUSINESS. THEREFORE, ARGUED THAT THE DISALLOWANCE OF 50% OF THE EXPENDITURE IS UNREASONABLE, HENCE, REQUESTED TO ALLOW THE ENTIRE EXPENDITURE OR MAKE REASONABLE ESTIMATION. THE LD.AR 28 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE CONTENDED THAT THE ESTIMATION MADE BY THE LD.CIT(A) IS UNREASONABLE, ARBITRARY AND REQUESTED FOR REDUCTION IN THE ESTIMATION OF INCOME. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. DURING THE COURSE OF SEARCH U/S 132 IN THE RESIDENTIAL PREMISES OF THE ASSESSEE, CERTAIN INCRIMINATING MATERIAL WAS AVAILABLE SHOWI NG EXPENSES INCURRED FOR THE A.Y. 2008 - 09 TO 2012 - 13 WHICH WAS GROUPED UNDER THE HEAD DIR ECT EXPENDITURE, GENERAL EXPEN SES AND EP I EXPENSES. THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO SUPPORT THE PAYMENTS MADE IN RESPECT OF THE VARIOUS PAYMENTS. TH E LD.AR DURING THE APPEAL HEARING ACCEPTED THAT THE ENTIRE EXPENDITURE WAS MADE OUT OF THE SELF CONTAINED VOUCHERS AND THERE WERE NO PROPER VOUCHERS AVAILABLE WITH THE ASSESSEE TO SUPPORT THE GENUINENESS OF THE EXPENDITURE. IN THE STATEMENT RECORDED U/S 1 32, THE ASSESSEE HA D AGREED THAT THE PAYMENTS WERE MADE TO THE PERSONS WHO PROMISED TO GET THE THINGS DONE IN AN EXPEDITIOUS MANNER. NAMES OF THE PERSONS TO WHOM THE PAYMENTS WERE MADE, WHAT WAS THE WORK DONE BY THE PERSON, NATURE OF SERVICE RENDERED BY T HE SAID PERSONS WAS NOT EXPLAINED BY THE ASSESSEE. WHETHER THE PAYMENTS WERE MADE IN REGULAR COURSE OF BUSINESS OR FOR ILLEGAL PAYMENTS WAS ALSO NOT FURNISHED B Y THE ASSESSEE. THOUGH IN RESPONSE TO QUESTION NO.5, THE ASSESSEE STATED THAT THE PAYMENTS WERE MADE TO TECHNICALLY QUALIFIED PEOPLE, WHO ASSISTED IN 29 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE EXECUTION OF THE EPC CONTRACTS, THE ASSESSEE NEITHER FURNISHED THE NAME S AND ADDRESS OF THE PERSONS, NATURE OF THE PAYMENTS AND THE NATURE OF SERVICES RENDERED ETC. PRIMA FACIE, FROM THE STATEMENT OF THE ASSESSEE IT APPEARS THAT THE PAYMENTS WERE MADE TO OUTSIDER TO GET SOME WORK DONE BY THE ASSESSEE EITHER IN THE CONTRACT WORK OR IN THE EPC. THERE WERE NO PROPER VOUCHERS AVAILABLE FOR THE PAYMENTS MADE BY THE ASSESSEE IN RESPECT OF THE DIRECT EXPEND ITURE, GENERAL EXPENSES AND EPC PAYMENTS. THOUGH THE ASSESSEE STATED THAT HE W OULD COME FORWARD FOR DISALLOWANCE OF EXPENDITURE, IT APPEARS THAT THE ASSESSEE HAS NOT ADMITTED ANY INCOME ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE UNDER VARIOUS HEADS. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ENTIRE PAYMENTS WERE MADE WITH S ELF - CONTAINED VOUCHERS. IT IS SETTLED ISSUE THAT THE EXPENDITURE WHOLLY AND EXCLUSIVELY LAID FOR THE PU R POSE OF THE BUSINESS IS TO BE ALLOWED AS DEDUCTION AND IT IS THE OBLIGATION OF THE ASSESSEE TO PROVE THAT THE EXPENDITURE WITH PROPER EVIDENCES. IT I S INCUMBENT UPON THE ASSESSEE TO FURNISH THE NAMES OF THE PERSONS TO WHOM THE PAYMENTS WERE MADE, NATURE OF SERVICES RENDERED BY THEM AND THE SOURCES OF PAYMENT. THOUGH THE ASSESSEE EXPLAINED THE SOURCE OF PAYMENT, THE ASSESSEE FAILED TO FURNISH THE EVIDE NCE WITH REGARD TO PAYMENTS MADE. THE EXPENDITURE OF THE ASSESSEE IS INCOME OF THE RECIPIENT. THEREFORE, FOR ALLOWING THE EXPENDITURE, 30 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE PAYMENT SHOULD BE CAPABLE OF CROSS VERIFICATION. APART FROM THE ABOVE, THE AO OBLIGED TO SEE VARIOUS ISSUES SUCH AS TH E DISALLOWANCE U/S 40A(3) , DEDUCTION OF TDS , THE DISALLOWANCE U/S 40(I)(A) , THE ALLOWABILITY OF EXPENDITURE U/S 37(1) AND THE ILLEGAL PAYMENTS. IN THE ABSENCE OF EVIDENCES FILED BY THE ASSESSEE TO SUPPORT THE EXPENDITURE, THE AO IS INCAPABLE OF MAKING THE CROSS VERIFICATION AND ALSO IT IS IMPOSSIBLE TO DECIDE WHETHER SUCH EXPENDITURE WAS INCURRED IN REGULAR COURSE OF BUSINESS OR NOT. FROM THE ORDER OF THE LD.CIT(A) IT IS OBSERVED THAT THERE WERE HUGE DIFFERENCE OF EXPENSES IN THE FOLLOWING HEADS : SRI R.VENKATRAMAIAH A.Y.2008 - 09 ANNEXURE - 1 COMPARATIVE SUMMARY OF EXPENDITURE AS PER SEIZED MATERIAL AND REGULAR BOOKS OF ACCOUNTS S.NO. NAME OF THE LEDGER A/RV/PO/6 PAGE NOS. AMOUNT AS PER SEIZED MATERIAL AMOUNT AS PER REGULAR BOOKS OF ACCOUNTS DIFFERENCE INCOME TAX RETURN 1. DIESEL ACCOUNT 22,13,128.00 75 TO 78 22,13,128.00 -- 22,13,128.00 OIL ACCOUNT 1,78,410.00 99 1,788,410.00 16,37716.40 15,859,306.40 2. MESS MAINTENANCE ACCOUNT 3,00,602.22 91 TO 93 3,00,602.00 62,3071.00 3,22,469.00 3. TRAVELLING EXPENSES ACCOUNT 83,923.00 180, 189 83,923.00 3,57,265.00 2,73,342.00 4. TIPPERS MAINTENANCE 24,91,176.00 121 TO 124 24,91,176.00 53,38,493.00 28,47,317.00 5. MACHINERY MAINTENANCE ACCOUNT 25,72,303.00 133 TO 137 25,72,303.00 48,19,851.00 22,47,548.00 6. BLASTING MATERIALS ACCOUNT 3,59,328.00 227 3,59,328.00 14,90,800.00 11,31,472.00 7. SALARIES ACCOUNT 19,73,096.00 291 TO 304 19,73,096.00 60,75,000.00 41,01,904.00 31 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE THE ABOVE DIFFERENCES SHOW THE SCALE OF INFLATION OF EXPENDITURE MADE BY THE ASSESSEE FOR WHICH THERE WAS NO EXPLANATION. IN THE NORMAL COURSE THESE EXCESS EXPENSES ALSO REQUIRED TO BE EXPLAINED WITH RELEVANT EVIDENCES AND THE REASONS. IT APPEAR S THAT ASSESSEE NEITHER EXPLAINED BEFORE THE AO NOR BEFORE THE LD.CIT(A). THOUGH GLARING DIFFERENCES WERE FOUND BY THE LD.CIT(A) , THE LD.CIT(A) CONSIDERED THE TRADE PRACTICE S AND THE EXPLANATION OFFERED BY THE ASSESSEE AND REASONABLY ALLOWED 50% OF EXPENDIT URE . CONSIDERING ALL THE FACTS AND MATERIALS PLACED BEFORE US , WE ARE OF THE CONSIDERED OPINION THAT IT IS ALSO UNREASONABLE TO DISALLOW THE ENTIRE EXPENDITURE AND RESTRICTING THE DISALLOWANCE TO THE EXTENT OF 50% IS FAIR AND REASONABLE. ACCORDINGLY, WE U PHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEALS OF THE REVENUE, CROSS OBJECTIONS FILED BY THE ASSESSEE AS WELL AS THE CROSS APPEALS FILED BY THE ASSESSEE FOR THE A.YS 2008 - 09 TO 2012 - 13 . I.T.A.NO.609/VIZ/2018, A.Y.2012 - 13 1 2 . GROUND NO. 1 AND 7 A RE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 1 3 . GROUND NO.2 IS RELATED TO THE DELETION OF ADDITION MADE TOWARDS PRO - NOTES FOR AN AMOUNT OF RS.50.00 LAKHS WHICH WAS SET OFF AGAINST THE DISALLOWANCE OF EXPENDITURE. DURING THE SEARCH U/S 132 IN THE CASE OF THE 32 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE ASSESSEE, CERTAIN PRO NOTES WERE FOUND AND SEI ZED AS ANNEXURE A/RVR/2, PAGES SERIALLY NUMBERED 195, 196, 198 & 199 WHICH CONTAIN THE DETAILS OF AMOUNTS ADVANCED TO SRI R.MUTHAIAH AS PER THE DETAILS GIVEN BELOW : PAGE NO. NAME OF THE LENDER DATE AMOUNT 195 SMT.R.SULOCHANA DEVI 01/07/2011 50 LAKHS 196 SRI R.VENKTRAMAIAH 01/07/2011 50 LAKHS 198 SRI R.VENKTRAMAIAH 07/10/2011 25 LAKHS 199 SRI R.VENKTRAMAIAH 20/10/20 - 11 25 LAKHS IN A STATEMENT RECORDED ON 11.01.2011, THE ASSESSEE STATED THAT THE PRO - NOTES MENTIONED IN PAGE NO.195 & 196 WERE TAKEN FOR SECURITY PURPOSE IN THE TENDER PROCESS OF HSNL WORK. REGARDING THE OTHER PRO - NOTES IN PAGE NOS.198 AND 199, THE ASSESSEE ADMITTED THAT HE HAD ADVANCED THE AMOUNTS TO R.MUTHAIAH AS MENTIONED IN THE PRO - NOTES. SRI MUTHAIAH WAS ALSO SUMMONED AND HIS ST ATEMENT WAS RECORDED ON 19.04.2012 AND HE HAD ACCEPTED THAT HE HAS EXECUTED THE PRO - NOTES MENTIONED IN PG.NOS.195, 196, 198 & 199 FOUND AND SEIZED FROM THE RESIDENCE OF SRI RAVULAPALLI VENKTRAMAIAH. HE FURTHER STATED THAT THE PRO - NOTES EXECUTED ON 01.07.20 11 FOR RS.1.00 CRORE IN FAVOUR OF SRI R.VENKATRAMAIAH AND HIS WIFE, SMT.SULOCHANA DEVI WERE NOT FINANCIAL TRANSACTIONS AND IT WAS ONLY TO SECURE S R I .R.VENTRAMAIAH FOR THE GUARANTEE GIVEN BY HIM FOR ALLOTMENT OF ROAD WORK FOR PARTNERSHIP CONCERN AT DELHI - AG RA ROAD FROM JP ASSOCIATES. SINCE THE WORK WAS NOT MATERIALIZED, THE PRO - NOTES EXECUTED BY HIM S T ATED 33 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE TO BE HAS NO VALUE AND SRI R.VENKARAMAIAH DID NOT TEAR OFF THE PRO - NOTES EVEN AFTER THE FAILURE OF THE TRANSACTIONS. HE HAS CONFIRMED THAT HE HAS TAKEN RS.25 LAKHS EACH ON 07.10.2011 AND 20.10.2011 FROM SRI R.VENKATRAMAIAH AND THEY WERE OUTSTANDING AS ON THE DATE. THE ASSESSEE AS WELL AS THE EXECUTANT OF PRONOTES SUBMITTED THAT THEY HAVE NO DOCUMENTARY PROOF TO SU PPORT THE SUB MISSION MADE BY THEM IN THE STA TEMENTS. THE EXTRACT OF THE STATEMENT RECORDED FROM SRI MUTHAIAH IS REPRODUCED VIDE PAGE NO.3 AND 4 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : SRI MUTHAAH WAS ALSO SUMMONED AND HIS STATEMENT WAS RECORDED ON 19/04/2012, RELEVANT PORTION OF THE STATEMENT IS EXTRACTED BELOW 'Q.NO.8 : I AM SHOWING YOU COPIES OF PRO - NOTES SIGNED BY YOU S. N O, 195, 196, 198 & 199 OF THE SEIZED FOLDER MARKED AS A/R VR/2 FOUND AND SEIZED FROTH THE RESIDENCE OF SRI RAVU L PA LL I VENKATRANIAIAH DURING THE COURSE OF SEARCH OPERATIONS CONDUCTED. AS PER WHICH YOU HAVE TAKEN AMOUNT OF PS. 1.5 CRORES FROM SRI RAVULAPALLI VENKATRAINAIAH, PLEASE EXPLAIN THESE TRANSACTIONS AND CLARIFY WHETHER THESE ARE REFLECTED IN YOUR BOOKS OF ACC OUNT, IF SO PLEASE PRODUCE THE EVIDENCES THERE OF? ANS : I CONFIRM THAT, I HAVE SIGNED AND EXECUTED THE FOLLOWING PRO - NOTES AS MENTIONED AT PAGES SERIALLY NUMBERED 195, 196, 198 & 199 OF SEIZED FOLDER MARKED AS A/RVR/2 FROM THE RESIDENCE OF SRI RAVULAPALLI VENKATRAMAIAH DATE OF PRONOTE AMOUNT SEIZED REFERENCE 01/07/2011 50 LAKHS PAGE 195 01/07/2011 50 LAKHS PAGE 196 07/10/2011 25 LAKHS PAGE 198 20/10/2011 25 LAKHS PAGE 199 ON 01/07/2011, I HAVE EXECUTED TWO PRONOTES WORTH R S, I CRORE IN FAVOUR OF SRI P. VENKATRAMA I AH AND HIS WIFE SMT . SULOCHANA DEVI WHICH ARE NOT FINANCIAL TRANSACTIONS. IT IS ONLY TO SECURE M R. R. VENKATRAMA I AH FOR THE GUARANTEE GIVEN BY HIM FOR ALLOTMENT OF ROAD WORK FOR OUR PARTNERSHIP 34 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE CONCERN AT DELHI - AGRA ROAD FROM JP ASSOCIATES SIN CE THE WORK WAS NOT MATERIALIZED IN THE PM - NOTES EXECUTED BY ME TOWARDS GUARANTEE HAVE NO VALUE AND MR. R. VENKATRAMA I AH HAS NOT TEAR OF THE SAID PRO - NOTES AFTER THE FAILURE OF THE TRANSACTION. I ALSO CONFIRMED THAT I HAVE TAKEN R S. 25 L AKHS EACH ON 07/10/ 2 0 11 AND 20/10/2011 FROM SRI P. VENKARAMA I AH @ 36% INTEREST FOR MY BUSINESS NEEDS AS I ALREADY STATED ABOVE THESE AMOUNTS R S.50 LAKHS IS OUTSTANDING ALONG WI TH INTEREST AS ON DATE. - Q . NO.9 DO YOU HAVE ANY DOCUMENTARY PROOF IN ORDER TO D ELHI THAT THE AMOUNT OF RS. 1 CRORE FOR WHICH YOU HAVE EXECUTED TWO PRO - NOTES IN FAVOUR OF SRI R. VENKATRAMA I AH AND HIS WIFE S M T. SU L OCHANA DEVI TOWARDS GUARANTEE GIVEN FOR THE ALLOTMENT OF ROAD WORK DELHI - AGRA ROAD FROM JP ASSOCIATES. AN S : I DO NOT HAVE ANY DOCUMENTARY PROOF IN SUPPORT OF MY SUBMISSION GIVEN AT ANSWER TO Q. NO. 8 OF THE STATEMENT.' 13.1. THE AO OBSERVED FROM THE STATEMENT OF THE ASSESSEE THAT THE PRO - NOTES WERE TAKEN AS SECURITY FOR THE PURPOSE OF HSNL WORK, WHEREAS SRI MUTHAIAH STATED THAT HE HAD EXECUTED THE PRO - NOTES FOR GUARANTEE GIVEN BY HIM FOR ALLOTMENT OF ROAD WORK FOR THEIR PARTNERSHIP FIRM FOR DELHI - AGRA ROAD WORK FROM JP ASSOCIATES. THERE WAS INCONSISTENCY IN THE STATEMENTS GIVEN BY THE ASSESSEE AND SRI MUTHA IAH WITH REGARD TO THE PURPOSE OF EXECUTING THE PRONOTES. HENCE, THE AO DID NOT BELIEVE THE STATEMENTS MADE BY BOTH THE PARTIES AND HELD THAT THE PRO - NOTES WERE EXECUTED TOWARDS THE GENUINE ADVANCES GIVEN BY THE ASSESSEE AND HIS WIFE. ACCORDINGLY ISSUED S HOW CAUSE NOTICE AND IN RESPONSE TO WHICH THE ASSESSEE FILED EXPLANATION ON 28.03.2014, STATING THAT SRI R.MUTHAIAH IS LONG TIME ASSOCIATE AND CO - CONTRACTOR AND IT IS COMMON IN ASSESSEES BUSINESS TO GUARANTEE THE WORK PERFORMANCE ON BEHALF OF OTHERS OR T O JOIN TOGETHER IN THE FORM OF JOINT 35 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE VENTURES AND EXECUTE BIGGER WORKS WHICH OTHERWISE COULD NOT BE EXECUTED BY THEM INDIVIDUALLY. THE ASSESSEE AND SRI MUTHAIAH ARE JOINTLY EXPLORING VARIOUS WORKS INCLUDING HSNL WORK AND DELHI - AGRA ROAD WORK. AS A PART O F PERFORMANCE GUARANTEE SRI R.MUTHAIAH HAS DEPOSITED TWO PROMISSORY NOTES OF RS.50 LAKHS EACH IN THE NAME OF THE ASSESSEE AND HIS WIFE SMT. R.SULOCHANA DEVI. THEREFORE, STATED THAT THE PRO - NOTES OF RS.50.00 LAKHS DO NOT REPRESENT ANY ADVANCE GIVEN BY THE A SSESSEE AND IT IS ONLY PAPER TRANSACTION AND DOES NOT DESERVE TO BE TREATED AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE, THEREFORE REQUESTED TO DELETE THE ADDITION. HOWEVER, THE AO DID NOT FIND THE EXPLANATION OFFERED BY THE ASSESSEE AS CONVINC ING, HENCE, TREATED THE SUM OF RS.50.00 LAKHS AS UNEXPLAINED INVESTMENT AND TAXED THE SAME IN THE HANDS OF THE ASSESSEE. 14. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. HOWEVER, ALLOWED THE SUM OF RS.50 LAKHS AS TELESCOPIC BENEFIT FOR THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE A.Y.2011 - 12. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE LD.CIT(A) FROM PAGE NO.21 TO 23 WHICH READS AS UNDER: A CURSORY LOOK AT THE PRO - NOTES REVEALS THE FOLLOWING FACTS : THE FIRST SET OF PRO - NOTES WERE EXECUTED ON 07.10.2011. THE RATE OF INTEREST CHARGED AT 24%. APPARENTLY, THE EXECUTANT ACKNOWLEDGED THE RECEIPT OF CASH OF 36 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE RS.50,00,000 / - . PRIMA FA CI E THE PURPOSE OF EXECUTING PRO - NOTES DOES NOT INDICATE ANYTHING ABOUT PERFORMANCE GUARANTEE. THEREFORE , S UCH INTERPRETATION SOUNDS ILLOGICAL AND UNREASONABLE AS THERE IS NO - CORROBORATIVE EVIDENCE. I HAVE GONE THROUGH THE STATEMENT OF SRI R.VENKATARAMAIAH RECORDED U/S.131 OF THE ACT ON 11.01.2012 WHEREIN HE STATED ASUNDER : 'TWO PRONOTES FOR RS50,00,000/ EACH LEND TO R. MUTTA I AH ON 1 - 7 - 2011 BY MY, WIFE R .SU L OCHANA D E VI FOR INTEREST @24%. TH E S E PRONOTES A RE EXECUTED ONLY FOR SECURITY OF THE TENDERS MEDIATION OF HSNL WORK . BUT ACTUALLY THERE IS NO MONEY TRANSACTION I N THIS . 197: PRONOTE FOR R S.4,000/ - LEND TO CHIKURTHI SESHAIOH ON 8 - 11 - 11 BY MY W IFE R. SULOC HA NA D EVI I DO NOT REMEMBER THIS TRANSACTION BUT THIS DATE I S A RENEWAL DATE (INTEREST @24 % ) 198 & 199 : TWO PRONOTES FOR R S . 25,00,000 / - EACH LEND TO P MUTTAIAH ON 1 - 7 - 2011 BY MYSELF. THESE ARE ACTUALLY LEND BY MYSELF AS UNSECURED LOAN WITH INTEREST 36 % .' (D) THE SUM AND SUBSTANCE OF STATEMENT IS CONTRARY TO THE BARE FACTS RECORDED IN THE PROMISSORY NOTES. THESE PRO - NOTES ARE SEIZED FROM THE PREMISES OF THE APPELLANT IN A SEARCH THEREFORE, THE PRESUMPTION WOULD BE THAT IT BELONGS TO THE APPEL LANT AND THE CONTENTS NOTED THEREIN ARE TRUE AND CORRECT UNLESS OTHERWISE CONTRARY IS PROVED THE APPELLANT HAD NOT PRODUCED ANY MATERIAL TO CONSIDER THAT THE PRONOTES ARE ONLY PAPER TRANSACTIONS AND ARE NOT FINANCIAL, TRANSACTIONS. MERE DENIAL IN A STATEME NT WILL NOT ERASE OR GIVE DIFFERENT CONNOTATION TO THE CONTENTS OF THE DOCUMENT. THERE IS NO VARIATION OF FACTS RECORDED IN THE TWO SETS OF PRO - NOTES. IN THE ABSENCE OF VARIATION OF FACTS, IT IS NOT POSSIBLE TO PROVIDE DIFFERENT INTERPRETATION TO THE FIRST SET OF PRO - NOTES AS THAT OF SECOND SET OF PRO - NOTES THE FACTS RELATING TO THE PROJECT OR THE PURPOSE OF THE EXECUTION OF PRO NOTES BEING NON - COMMERCIAL. IS NOT ESTABLISHED. IN THE ABSENCE OF SUCH CORROBORATIVE EVIDENCE, IT IS NOT POSSIBLE TO GET PERSUADED BY THE ARGUMENT THAT THERE IS NO FINANCIAL TRANSACTION IN THE INSTRUMENT THE AFFIDAVIT THOUGH FILED WILL NOT VITIATE OR ERASE THE FACTS RECORDED ON THE PRO - NOTES. A FACT RECORDED CANNOT BE DISPROVED BY AN AFFIDAVIT THOUGH VALID IN THE EYES OF LAW. THE AFF IDAVIT FILED MUST DEMONSTRATE WITH MATERIAL TO THE HIL T THAT WHAT WAS RECORDED IN THE PRO - NOTES IS NOT REAL. THE AFFIDAVIT DOES NOT BRING SUCH FACTS. IT REMAINS A MERE ISOLATED STATEMENT. ( E ) FURTHER, I HAVE ALSO PERUSED THE STATEMENT RECORDED FROM SRI R.MUTTAIAH ON 19/04/2012 WHEREIN HE STATED THAT THE PRO - NOTES WERE NOT TORN SINCE THEY HAVE NO VALUE. I HAVE EXAMINED THIS ASPECT. I AM OF THE OPINION THAT THE EXECUTANT HAS NO LEGAL REMEDY IF THE LENDER PRESSED FOR LEGAL ACTION IN ANY COURT OF LAW OWING TO T H E SIGNATURE APPENDED BY THE EXECUTANT. THE BURDEN OF PROOF SHIFTS ON SRI R.MUTTAIAH TO PROVE THAT MONEY WAS NOT RECEIVED AGAINST THE ACKNOWLEDGEMENT. THUS, THE PROBABILITY OF IGNORING THE INSTRUMENTS IS REMOTE AND UNCONVINCING. THE ASSERTION OF EXECUTANTS OF PRO - NOTE IS DEFINITELY AN AFTERTHOUGHT ENGAGED IN ORDER TO ORCHESTRATE THE VIEW OF THE APPELLANT. FURTHER, THE MATERIAL EVIDENCE AS TO EXECUTANT'S RO L E IN DELHI - AGRA ROAD PROJECT, THE CORROBORATIVE EVIDENCE NECESSITATING THE ALLEGED 37 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE ARRANGEMENT WAS NOT BROUGHT ON RECORD. THERE IS NO LAW PREVENTING MR.MUTTAIAH TO MENTION THE PURPOSE BEING 'GUARANTEE' ON THE PRO - NOTE INSTEAD OF MENTIONING THE RATE OF INTEREST AND 'RECEIPT OF CASH' ON 01/0 7/2011. IN VIEW OF THE FACTS AND I NCONSISTENCIES MENTIONED ABOVE, THE ARGUMENT OF THE APPELLANT IS REJECTED. ( F ) I HAVE FURTHER EXAMINED THE LETTER DT 18/02/2014 FIRED BY SRI R MUTTAIAH BEFORE THE ASSESSING OFFICER WHICH REVEALS THE REASON FOR EXECUTING THE PRO NOTES IT WAS STATED THAT THE APPELLANT CAME FORWARD TO INVEST MORE CAPITAL AND THEREFORE, SRI MUTTAIAH EXECUTED PRO - NOTES AS SECURITY FOR PERFORMANCE GUARANTEE. IT WAS ALSO STATED THAT BO TH THE PARTIES WERE EXPLORING THE POSSIBILITIES OF EXECUTING VARIOUS WORKS AND IT WAS STATED THAT SRI MUTTAIAH HAS CANCELLED THESE PROMISSORY NOTES ( G ) I HAVE EXAMINED THE PRO - NOTES AND NO TRACES OF CANCE LL ATION WAS FOUND. IT IS HARD TO BELIEVE THAT ANY PRUDE NT BUSINESSMAN EXECUTES GUARANTEE WHILE EXPLORING THE POSSIBILITIES OF BUSINESS OPPORTUNITY. IT WAS ALSO NOT CORROBORATED AS TO WHAT WAS THE CAPITAL INVESTED BY THE APPELLANT ON BEHALF OF MR MUTTAIAH FOR THE DELHI - AGRA ROAD WORK FROM JP ASSOCIATES IS ALSO NOT FORTHCOMING. THUS, THESE INCONSISTENCIES ARE NOT CONVINCING TO REASONING THE THEORY OF NON - FINANCIA L IMPLICATION OF PRO - NOTES'. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, I CONCUR WITH THE OPINION OF THE ASSESSING OFFICER. ACCORDINGLY, THE ADDITION OF RS 50,00,000/ - IN THE HANDS OF THE APPELLANT AND RS 50,00,000/ - IN THE HANDS OF SMT R SULOCHA N A DEVI HAVE BEEN CONFIRMED. ( H ) THE ASSESSING OFFICER APPEARS TO HAVE MADE NO ADDITION ON THE SECOND SET OF PRO - NOTES OF RS.25,00,000/ - EACH. OTHERWISE, ON FACTS, SRI R.MUTAIAH HAD ADMITTED THE SAME IN HIS BOOKS OF ACCOUNT AS OUTSTANDING LOANS DETAILS OF PRO - NOTES EX ECUTED ON 07/10/2011 AND ON 20/10/2011 ARE PRODUCED HEREUNDER ; PAGE NO. OF THE SEIZED MATERIAL NAME OF THE LENDER AS PER THE PRO - NOTE DATE AMOUNT IN RS. RATE OF INTEREST SEIZED DOCUMENT ENCLOSED. REFER PAGE NO. 198 SRI R.VENKATRAMAIAH 07/10/2011 25 LAKHS 36% 55 199 SRI R.VENKATRAMAIAH 20/10/2011 25 LAKHS 36% 54 A CURSORY LOO K AT TH E DETAILS OF PRO - NOTES CLEARLY ESTABLISHES THE F ACT THAT THE PRO - NOTES WERE EXECUTED AGAINST THE RECEIPT OF CASH OF RS.25,00,000/ - EACH ON DIFFERENT DATES . THE PRO - NOTES WERE EXECUTED BY SRI MUTTAIAH. THE RATE OF INTEREST IS 36%. THE PRO - NOTES ARE DULY SIGNED BY THE EXECUTANT. I HAVE GONE THROUGH THE STATEMENT RECORDED FROM SRI MUTTAIAH ON 19 / 04/2012 WHEREIN HE CONFIRMED THAT A LOAN OF RS 50,00,000/ - WAS BOR ROWED FROM SRI RAVULAPALLI VENKATRAMAIAH AND IT IS STILL OUTSTANDING. THIS FACT WAS ALSO CONFIRMED BY SRI RAVULAP AL LI VENKATRAMAIAH IN HIS STATEMENT RECORDED ON 11/01/2012 THUS, THE PRO - NOTES ARE CONSIDERED AS EXPLAINED (F) ALTERNATIVELY, THE APPELLANT HAD PLEADED FOR TELESCOPING OF ADDITIONAL INCOME OF RS50,00,000/ - OFFERED BY THE APPELLANT FOR THE ASSESSMENT YEAR 201112. THE APPELLANT HAD RELIED ON THE RATIOS OF FOLLOWING CASES IN SUPPORT OF 38 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE HIS CLAIM : CIT VS. VENKATESWARA TIMBER DEP O T ( 222 I T R 768, A P HC] CIT VS. K.S.M.GURUSWAMY N ADAR & SONS [149 I TR 127, MAD H C ] GOPAL S PANDITH VS DC IT [ 186 TTJ 64, BANG TRIBUNAL ] J M.M.SULATMAN VS.A CI T [ 159 TTJ 746, COCHIN TRIBUNAL ] (J) I HAVE CONSIDERED THE ALTERNATIVE PLEA AND FOUND THAT THE APPELLANT HAD OFFERED RS.50,00,000 / - AS ADDITIONAL INCOME FOR THE A.Y. .2011 - 12 WHILE FILING THE REVISED RETURN OF INCOME ON 23.05.2013. THE ORIGINAL RETURN OF INCOME WAS FILED ON 3009 2011 ADMITTING RS 39,12,370/ COMPARED TO THE INCOME OF RS 89,12,370/ ADMITTED IN THE REVISED RETURN OF INCOME. I HAVE GONE THROUGH THE CASE LAWS CITED ABOVE AND FOUND MERIT IN THE ARGUMENT OF THE LD AUTHORIZED REPRESENTATIVE IN VIEW OF THESE FACTS, THE ALTERNATIVE PLEA OF TELESCOPING IS ADMITTED AND FOUND REASONABLE. ACCORDINGLY, THE ADDITION OF R S.50,00,000/ - ON ACCOUNT OF PRO - NOTES GETS EXPLAINED. THERE WOULD BE NO ADDITION OF RS 50,00,000/ - FOR THE A Y 2012 13 15. THE REVENUE HAS FILED APPEAL CHALLENGING THE ORDER OF THE LD.CIT(A) TO ALLOW SET OFF OF RS.50 LAKHS AGAINST THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE FOR THE A.Y.2011 - 12 AND THE ASSESSEE HA S FILED APPEAL CHALLENGING THE ORDER OF THE CIT(A) BY RAISING ADDITIONAL GROUND RELATING TO CONFIRMATION OF ADDITION OF RS.50.00 LAKHS AND ALSO FILED CROSS OBJECTIONS IN CO NO.21/VIZ/2019 SUPPO RTING THE ORDER OF THE LD.CIT(A) FOR SET OFF OF ADDITION MADE AGAINST THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE FOR THE A.Y.2011 - 12 BY GIVING TELESCOPIC BENEFIT. 16. DURING THE APPEAL HEARING, THE LD.DR ARGUED THAT THE AO FOUND TWO PRO - NOTES OF RS.5 0 LAKHS EACH DRAWN ON 01.07.2011 IN FAVOUR OF SRI R.VENKATRAMAIAH AND SMT. R.SULOCHANA DEVI, SIMILARLY RS.25 LAKHS EACH ON 07.10.2011 AND 20.10.2011. WITH REGARD TO PRO - NOTES OF RS.50 LAKHS EACH DRAWN ON SMT. R.SULOCHANA DEVI AND SRI R.VENKATRAMAIAH WAS STATED 39 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE TO BE TAKEN FOR SECURITY PURPOSE IN THE TENDER PROCESS OF HSNL WORK, WHEREAS BY SRI R.MUTHAIAH STATED THAT IT WAS GIVEN AS A GUARANTEE FOR DELHI - AGRA ROAD WORK FROM JP ASSOCIATES. THE STATEMENTS GIVEN BY THE ASSESSEE AN D THE EXECUTANT OF PRO - NOTE ARE CONTRADICTORY TO EACH OTHER. THE ASSESSEE HAS NEITHER PRODUCED ANY EVIDENCE WITH REGARD TO HSNL WORK NOR FROM JP ASSOCIATES OR ANY OTHER TANGIBLE MATERIAL TO SHOW THAT THE PROMISSORY NOTES WERE OBTAINED / GIVEN FOR THE PURP OSE OF SECURITY FOR THE CONTRACT WORKS AS STATED BY THE ASSESSEE AND THE EXECUTANT OF THE PRO - NOTES. MERE ORAL STATEMENT CANNOT DISCARD THE EVIDENCE FOUND DURING THE COURSE OF SEARCH IN THE PREMISES OF THE ASSESSEE. THEREFORE, IT IS ASSESSEES BURDEN TO PR OVE THAT THE PRO - NOTES ARE NOT FINANCIAL TRANSACTIONS AND THE PRO - NOTES REPRESENT ONLY PAPER TRANSACTIONS FOR THE SAKE OF SECURITY. WITH ORAL STATEMENT AND AFFIDAVITS, THE ASSESSEE CANNOT GET AWAY FROM TAXING THE UNEXPLAINED INVESTMENT. THEREFORE, ARGUED THAT THE LD.CIT(A) RIGHTLY DIRECTED THE AO TO TAX THE SUM OF RS.50 LAKHS IN THE HANDS OF THE ASSESSEE AND THE REMAINING RS.50 LAKHS IN THE HANDS OF SMT.R.SULOCAHNA DEVI. HOWEVER, THE LD.CIT(A) ALLOWED THE ADDITION OF RS.50 LAKHS IN THE HANDS OF THE ASSESSE E TO BE SET OFF AGAINST THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE FOR THE A.Y.2011 - 12 WHICH IS INCORRECT. THE LD.DR FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HA D OFFERED THE ADDITIONAL INCOME FOR 40 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE THE A.Y.2011 - 12, THAT WAS OFFERED FOR THE EXCESS EXPE NDITURE WHICH WAS ALREADY SPENT BY THE ASSESSEE AND THERE WERE NO FUNDS AVAILABLE FOR THE ASSESSEE FOR ADVANCING THE AMOUNTS TO SRI MUTHAIAH. FURTHER, THE LD.DR ARGUED THAT THE ASSESSEES CONTENTION IS CONTRADICTORY. ONE WAY, THE ASSESSEE CONTENDED THAT T HERE WAS NO ADVANCE AND ALTERNATIVELY PLEADED FOR TELESCOPIC BENEFIT WHICH IS CONTRADICTORY TO EACH OTHER AND ONCE THE ASSESSEE ASKS FOR TELESCOPIC BENEFIT, IT GOES AGAINST THE ASSESSEE. IN ANY CASE, SINCE THE ASSESSEE HAS ALREADY SPENT THE AMOUNT FOR THE A.Y.2011 - 12, THERE IS NO CASE FOR ALLOWING TELESCOPIC BENEFIT, HENCE ARGUED THAT THE LD.CIT(A) ERRED IN ALLOWING TELESCOPIC BENEFIT. ACCORDINGLY, REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THE ORDER OF THE AO. 17. ON THE OTHER HAND, THE LD.AR VEHEMENTLY OPPOSED FOR TAXING THE SUM OF RS.50 LAKHS AS ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE AS WELL AS IN THE HANDS OF SMT.SULOCHANA DEVI. THE LD.AR FURTHER ARGUED THAT EVEN IF IT IS PRESUMED THAT RS.50 LAKHS IS ADD ITIONAL INCOME, SINCE THE ASSESSEE HAD OFFERED THE SUM OF RS.50 LAKHS AS ADDITIONAL INCOME FOR THE A.Y.2011 - 12, THE LD.CIT(A) HAS RIGHTLY ALLOWED THE SET OFF AND NO INTERFERENCE IS CALLED FOR. THE LD.AR FURTHER SUBMITTED THAT SRI MUTHAIAH IN HIS STATEMENT RECORDED ON 19.04.2012 VERY CLEARLY STATED THAT THE PRO - NOTES WERE EXECUTED AS GUARANTEE GIVEN BY HIM FOR ALLOTMENT OF WORK IN THE PARTNERSHIP CONCERN AT 41 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE DELHI - AGRA ROAD WORK FROM JP ASSOCIATES AS PERFORMANCE GUARANTEE . FROM THE STATEMENT RECORDED FROM SR I MUTHAIAH, IT IS EVIDENT THAT THE PRO - NOTES WERE NOT FINANCIAL TRANSACTIONS AND NO PHYSICAL EXCHANGE OF CASH TOOK PLACE BETWEEN BOTH THE PARTIES AND IT WAS ONLY PERFORMANCE GUARANTEE . THE ASSESSEE ALSO SUBMITTED THE AFFIDAVIT CONFIRMING THAT THE PRO - NOT ES WERE TAKEN AS SECURITY FOR HSNL WORK. FOR BOTH HSNL WORK AND JP ASSOCIATES, THE ASSESSEE IS NEGOTIATING THE TENDERS, THEREFORE, THERE WAS MISMATCH IN THE STATEMENTS RECORDED FROM BOTH THE PARTIES WHICH CANNOT BE TAKEN SERIOUSLY AS A MAJOR LAPSE AND THE FACT REMAINS THAT BOTH THE ASSESSEE AND SRI MUTHAIAH ARE HAVING BUSINESS RELATIONS FOR LONG TIME AND ENGAGED IN THE CONTRACT WORKS. APART FROM THE ABOVE, THE LD.AR ALSO ARGUED THAT AS SEEN FROM THE PRO - NOTES, THEY DO NOT BEAR SIGNATURES OF THE WITNESSES, W HICH ARE MUST TO CONSIDER THE PRO - NOTE AS VALID. THEREFORE, ARGUED THAT THERE IS NO CASE FOR MAKING ADDITION, HENCE REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION. EVEN OTHERWISE, IF IS PRESUMED THAT THE AO MADE ADDITION CORREC TLY, SINCE THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME , THE SAME REQUIRED TO BE SET OFF AGAINST THE ADDITIONAL INCOME ADMITTED BY THE ASSESSEE FOR THE A.Y.2011 - 12. HENCE, ARGUED THAT EVEN OTHERWISE ALSO, THE LD.CIT(A) HAS RIGHTLY ALLOWED TELESCOPIC BENEFI T AND NO INTERFERENCE IS CALLED FOR. 42 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, DURING THE COURSE OF SEARCH U/S 132, PRO - NOTES DRAWN IN FAVOUR OF SMT. R.SULOCHANA DEVI ON 01.07.2011 FOR RS.50 LAKHS BEARING INTEREST @24% AND SRI R.VENKATRAMAIAH ON 01.07.2011 FOR RS.50 LAKHS @24% AND SRI R.VENKTRAMAIAH ON 07.10.2011 AND 20.10.2011 FOR RS.25 LAKHS @36% WERE FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF THE ASSESSEE. IN THE STATEMENT RECORDED ON 11.01.2012, THE ASSESSEE EXPLAINED THAT THE PRO - NOTES WERE TAKEN FOR THE PURPOSE OF SECURITY IN THE TENDER PROCESS OF HSNL WORK, WITH REGARD TO PRO - NOTES FOR RS.25 LAKHS EACH ON 07.10.2011 AND 20.10.2011 WAS ACCEPTED BY THE ASSESSEE AS WELL AS THE EXECUTANT OF THE PR O - NOTES, THEREFORE, THERE IS NO DISPUTE. A STATEMENT U/S 131 WAS RECORDED FROM SRI R.MUTHAIAH, EXECUTANT OF THE PRO - NOTES WHO HAS STATED THAT THE PRO - NOTES WERE GIVEN AS PERFORMANCE GUARANTEE TO SRI VENKATRAMAIAH FOR ALLOTMENT OF WORK AT DELHI - AGRA ROAD W ORK FROM JP ASSOCIATES. THERE IS NO DISPUTE THAT SRI R.MUTHAIAH HAS AGREED THAT ALL THE PRO - NOTES WERE SIGNED BY SRI MUTHAIAH AND THERE IS NO DISPUTE WITH REGARD TO THE CORRECTNESS OF THE PRO - NOTES. THE CONTENTION OF THE ASSESSEE WAS THAT IT WAS OBTAINED FOR THE SECURITY FOR TENDER WORK OF HSNL, WHEREAS AS PER THE CONTENTION OF THE EXECUTANT, IT WAS GIVEN AS GUARANTEE FOR ALLOTMENT OF WORK AT DELHI - AGRA ROAD FROM JP ASSOCIATES. BE THAT AS IT MAY, THE PRO - 43 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE NOTES WERE FOUND IN THE PREMISES OF THE ASSESSEE A ND AS PER THE PROVISIONS OF SECTION 292C OF THE ACT, THE PRESUMPTION IS THAT THE MATERIAL FOUND DURING THE COURSE OF SEARCH BELONGS TO THE ASSESSEE AND THE CONTENTS IN THE INCRIMINATING MATERIAL IS TRUE AND CORRECT, THEREFORE, BURDEN LIES ON THE ASSESSEE T O PROVE THAT THE CONTENTS ARE INCORRECT. ACCORDING TO THE ASSESSEE, THE PRO - NOTES WERE PAPER TRANSACTIONS, NO MONEY WAS EXCHANGED WITH REGARD TO EXECUTION OF TWO PRO - NOTES OF RS.50 LAKHS EACH AGGREGATING TO RS.1 .00 CRORE AND THE SAID PRO - NOTES WERE GIVEN AS SECURITY. NEITHER THE ASSESSEE NOR SRI MUTHAIAH HAVE PLACED ANY EVIDENCE TO SHOW THAT THE PRO - NOTES ARE NECESSARY FOR TENDER PROCESS IN CASE OF HSNL WORK OR FOR GIVING GUARANTEE FOR TAKING CONTRACT OR ALLOTMENT ROAD WORK OR PARTNERSHIP CONCERN OF SRI R .MUTHAIAH AT DELHI - AGRA ROAD WORK FROM JP AS S OCIATES. NOT EVEN AN IOTA OF EVIDENCE WAS PLACED BEFORE THE AO. THERE WAS NO AGREEMENT OR THERE WAS NO MOU OR THERE WERE NO CONDITIONS FOR HSNL CONTRACT WORK OR FROM JP ASSOCIATES. EXCEPT ORAL STATEMENT, NOT HING WAS PLACED BEFORE THE AO OR BEFORE THE LD.CIT(A) TO ESTABLISH THAT THE PRO - NOTES WERE GIVEN FOR THE PURPOSE OF SECURITY AS PERFORMANCE GUARANTEE . SEARCH U/S 132 WAS CONDUCTED ON 16.11.2011 THAT WAS WITHIN A SHORT PERIOD OF EXECUTING THE PRO - NOTE , BUT NO MATERIAL WAS FOUND WITH REGARD TO SO CALLED SECURITY OF HSNL WORK OR PERFORMANCE GUARANTEE . WHEN THE PRO - NOTES ARE 44 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE AVAILABLE IN THE RESIDENTIAL PREMISES OF THE ASSESSEE, IT GOES WITHOUT SAYING THAT THE RELEVANT DOCUMENT FOR DEMANDING SECURITY OR GUARA NTEE ALSO SHOULD AVAILABLE IN THE RESIDENTIAL PREMISES IF THE EXPLANATION OF THE ASSESSEE IS CORRECT. THOUGH SRI R.MUTHAIAH HAS EXECUTED THE PRO - NOTES, SRI MUTHAIAH ALSO FAILED TO PRODUCE ANY OF THE DOCUMENTS TO SUPPORT HIS STATEMENT. THEREFORE, WE ARE UNABLE TO ACCEPT THE THEORY OF THE ASSESSEE AS WELL AS THE EXECUTANT OF THE PRO - NOTES THAT THE PRO - NOTES WERE NOT FINANCIAL TRANSACTIONS AND THEY ARE ONLY PAPER TRANSACTIONS GIVEN FOR SECURITY IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. ACCORDINGLY WE REJ ECT THE ARGUMENT PLACED BY THE ASSESSEE THAT THE PRO - NOTES ARE NOT FINANCIAL TRANSACTIONS. WE HAVE GONE THROUGH THE PRO - NOTES, THE PRO - NOTES ARE WRITTEN VERY CLEARLY THAT THE RECIPIENT HAS RECEIVED A SUM OF RS.50.00 LAKHS EACH ON 01.07.2011 FROM R.SULOCHAN A DEVI AND SRI R.VENKATRAMAIAH AND AS PER THE CONTENTS OF THE PRO - NOTES, THEY ARE GENUINE TRANSACTIONS WITH COMPLETE DETAILS ON THE PRO - NOTES. IT WAS ALSO MENTIONED THE RATE OF INTEREST, DATE OF RECEIPT, SUM OF RECEIPT AND ACKNOWLEDGED HAVING RECEIVED THE MONEY. THE PRO - NOTES WERE NOT CANCELLED AND THERE WAS NO EVIDENCE TO SHOW THAT THE PRO - NOTES WERE GIVEN AS SECURITY. THE LD.AR ARGUED THAT THE PRO - NOTES DOES NOT CONTAIN SIGNATURE OF THE WITNESSES . AS PER THE NEGOTIABLE INSTRUMENTS ACT, THE WITNESSS SI GNATURE IS NOT MANDATORY TO HOLD THAT THE PROMISSORY NOTE A S 45 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE VALID. AS PER SECTION 4 OF THE NEGOTIABLE INSTRUMENTS ACT, THE REQUIREMENT IS , DRAWER SHOULD SIGN THE PROMISSORY NOTE IN WRITING , PROMISING TO MAKE THE PAYMENT ON DEMAND. THATS WHY IT IS CALLED DEMAND PROMISSORY NOTE. SINCE THE VALID PRO - NOTES ARE AVAILABLE WITH THE ASSESSEE, DURING THE COURSE OF SEARCH, AS PER SECTION 292C OF THE ACT, IT IS PRESUMED THAT THE ASSESSEE HAD GIVEN LOANS TO SRI R.MUTHAIAH . S INCE THE ASSESSEE FAILED TO PROVE T HAT THE PRO - NOTES WERE OBTAINED ONLY FOR THE PURPOSE OF SECURITY, W E HAVE NO HESITATION TO HOLD THAT THE PROMISSORY NOTES OF RS. 1.00 CRORE (50.00 LAKHS EACH) ON 01.0 7 .2011 ARE GENUINE TRANSACTIONS, ACCORDINGLY WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 19. THE NEXT ISSUE IS SET OFF OF ADDITION MADE BY THE AO RELATING TO PRO - NOTES AGAINST THE UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE. THE LD.CIT(A) CONFIRMED THE ADDITION OF RS.50 LAKHS IN THE HANDS OF THE ASSESSEE TOWARDS T HE PAYMENTS. HOWEVER, HE ALLOWED THE SUM OF RS.50 LAKHS AGAINST THE INCOME ADMITTED BY THE ASSESSEE FOR THE A.Y.2011 - 12. THE LD.DR ARGUED THAT ALLOWING OF TELESCOPIC BENEFIT IS AN ERROR COMMITTED BY THE LD.CIT(A) AND THE LD.CIT(A) OUGHT NOT TO HAVE ALLOW ED THE TELESCOPIC BENEFIT. 46 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE 20. ON THE OTHER HAND, THE LD.AR FILED CROSS OBJECTIONS, SUPPORTING THE ORDER OF THE LD.CIT(A) AND VEHEMENTLY SUPPORTED THE ORDER OF THE LD.CIT(A) AS DISCUSSED EARLIER IN THIS ORDER. 21. WE HAVE GONE THROUGH THE ORDER OF THE LD. CIT(A) AS WELL AS THE PAPER BOOK FILED BY THE ASSESSEE FOR THE A.Y.2011 - 12. IN COMPUTATION OF INCOME, THE ASSESSEE HAS ADMITTED THE ADDITIONAL INCOME OF RS.50 LAKHS ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE. NATURE OF EXPENDITURE, THE REASONS FOR DISALLO WANCE ETC..WAS NOT MENTIONED BY THE ASSESSEE. AS PER THE BALANCE SHEET FILED BY THE ASSESSEE, THERE WAS NO CASH BALANCE AVAILABLE AS AT THE END OF THE YEAR. AS PER THE BALANCE SHEET, THE CASH ON HAND WAS RS.82,564/ - AND CASH AT BANK WAS RS.2,03,298/ - . TH E ASSESSEE HAS CLAIMED FOR THE SET OFF OF ADDITION MADE BY THE AO AGAINST THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS. HOWEVER, THE ASSESSEE DID NOT FURNISH THE DETAILS OF EXPENDITURE WHICH WAS BOGUS. THE MODUS OPERANDI OF THE EXPENDITURE AND THE GENERATION OF CASH FLOW OUT OF THE DISALLOWANCE OF EXPENDITURE WERE NOT EXPLAINED BY THE ASSESSEE. AS PER THE STATEMENT OF COMPUTATION OF INCOME , THE ASSESSEE ADMITTED THE ADDITIONAL INCOME DISALLOWING THE EXPENDITURE. I T IS SE EN FROM THE STATEMENT OF COMPUTATION OF INCOME THAT THE SUM WAS SPENT AND THERE WAS NO CASH BALANCE OR GENERATION OF CASH MADE OUT OF THE DISALLOWANCE OF EXPENDITURE. THE 47 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE ASSESSEE, EVEN DURING THE APPEAL HEARING ALSO DID NOT EXPLAIN HOW THE ASSESSEE COULD GENERATE THE CASH BY DISALLOWING THE EXPENDITURE WHICH WAS ALREADY SPENT. THOUGH THE DISALLOWANCE OF EXPENDITURE I S HIDDEN THE ADDITION, THE ASSESSEE MUST EXPLAIN THE MODUS OPERANDI OF INFLATION OF EXPENDITURE UNDER EACH HEAD AND ALSO EXPLAIN THE GENERAT ION OF CASH FOR ADVANCING THE AMOUNT OUT OF SUMS SAVED FROM THE INFLATION OF EXPENDITURE. IN THE ABSENCE OF SUCH DETAILS, IT IS NOT CORRECT TO ALLOW TELESCOPIC BENEFIT, HENCE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THE ORDER OF THE AO. ACCOR DINGLY, APPEAL OF THE REVENUE IS ALLOWED AND CO OF THE ASSESSEE IS DISMISSED. 22. THE NEXT ISSUE IN THIS APPEAL IS CONFIRMATION OF ADDITION ON ACCOUNT OF ILLEGAL PAYMENTS UNDER THE HEAD DIRECT EXPENSES , GENERAL EXPENSES AND EPC EXPENSES . THE AO DISALLOWED THE SUM OF RS.34,06,750/ - FOR NOT PRODUCING THE RELEVANT EVIDENCES. THE LD.CIT(A) RESTRICTED THE DISALLOWANCE TO 50% OF THE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT. 23. AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE FILED CROSS APPEAL CHALLENGING THE CONFIRMATION OF THE ADDITION MADE BY THE AO AND FILED CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD.CIT(A) FOR RESTRICTING THE DISALLOWANCE TO 50%. THE ISSUE IS INVOLVED ON IDENTICAL FACTS IN THE ASSESSEES CASE FOR THE A.Y.2008 - 0 9 TO 2011 - 12 DISCUSSED IN PARA NO.8 TO 11 48 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE OF THIS ORDER. TAKING CONSISTENT VIEW, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND CONFIRM THE DISALLOWANCE TO THE EXTENT OF 50% AS DISCUSSED IN THIS ORDER IN THE PARAGRAPHS CITED SUPRA. ACCORDINGLY, THE APPEAL OF T HE REVENUE, CROSS OBJECTIONS AND CROSS APPEALS FILED BY THE ASSESSEE ARE DISMISSED ON THIS ISSUE. I.T.A.NO.566/VIZ/2018, A.Y.2012 - 13 24. ALL THE GROUNDS OF APPEAL IN THIS CASE ARE RELATED TO RS.50,00,000/ - REPRESENTING PRO - NOTES EXECUTED IN FAVOUR OF THE ASSESSEE BY SRI MUTHAIAH. DURING THE COURSE OF SEARCH U/S 132 IN THE RESIDENCE OF SHRI R. VENKATRAMAIAH, HUSBAND OF THE ASSESSEE, A PRO - NOTE DATED 01.07.2011 FOR RS.50 LAKHS @24% IN PAGE NO.195 OF ANNEXURE - A/RVR/2 WAS FOUND AND SEIZED. THE ASSESSEE HAD STATED THAT THE PRO - NOTE WAS EXECUTED AS A SECURITY FOR TENDER PROCESS OF HSNL WORK AND EXECUTANTS R.MUTHAIAH STATED THAT THE PRO NOTE WAS GIVEN TO SRI R.VENKTRAMAIAH AS A GUARANTEE FOR ALLOTMENT OF ROAD WORK OF DELHI - AGRA FROM JP ASSOCIATES. THE FACTS ARE IDENTICAL TO THE CASE OF SHRI VENKATRAMAIAH AS DISCUSSED IN DETAIL IN THIS ORDER IN I.T.A NO.609/VIZ/2018, A.Y.2012 - 13, DISCUSSED IN GROUND NO.2, PARA NO.13 TO 18. AS PER THE DETAILED DISCUSSION MADE IN TH IS ORDER, WE HAVE HELD THAT THE ASSESSEE FAILED TO DISCHARGE THE BURDEN PLACED ON HIM U/S 292C OF THE ACT AND THE PRO - NOTES EXECUTED BY SRI R.MUTHAIAH IN FAVOUR 49 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE OF THE ASSESSEE ARE VALID PRO - NOTES AND A CCORDINGLY WE CONFIRM ED THE ADDITION MADE BY THE LD.CIT(A) AND DISMISS ED THE APPEAL OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE VIEW TAKEN IN THE CASE OF SHRI R.VENKATRAMAIAH, WE HOLD THAT PRO - NOTE IS GENUINE AND VALID PROMISSORY NOTE, HENCE, UPHOLD THE ORDER OF THE LD.CIT(A) A ND DISMISS THE APPEAL OF THE ASSESSEE. 2 5 . IN THE RESULT, (I) APPEA L OF THE REVENUE IN I.T.A NO.449/VIZ/2018 FOR THE A.Y.2008 - 09 AND CROSS OBJECTIONS OF THE ASSESSEE IN CO NO.124/VIZ/2018 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE . (II) A PPEALS OF THE REVENUE IN I.T.A. NO.450/VIZ/2018 TO 452/VIZ/2018 FOR THE A.Y.2009 - 10 TO 2011 - 12 ARE DISMISSED AND APPEAL VIDE I.T.A NO.609/VIZ/2018 F OR THE A.Y.2012 - 13 IS PARTLY ALLOWED. ( I II) CROSS OBJECTIONS OF THE ASSESSEE AGAINST THE APPEALS OF THE REVENUE VIDE CO NOS.12 5 /VIZ/2018 TO 127/VIZ/2018 AND 21/VIZ/2019 FOR THE A.Y.200 9 - 10 TO 2012 - 13 ARE DISMISSED. (IV) CROSS APPEALS OF THE ASSESSEE S IN I.T.A. NOS.562/VIZ/2018 TO 565/VIZ/2018, 567/VIZ/2018 AND I.T.A NO.566/VIZ/2018 FOR THE A.Y. 2008 - 09 TO 2012 - 13 ARE DISM ISSED. 50 I.T.A NOS.449 - 452/VIZ/2018 & 609/VIZ/2018, 562 - 565/VIZ/2018 & 567/VIZ/2018 CO NOS.124 - 127/VIZ/2018 AND 21/VIZ/2019, A.YS 2008 - 09 TO 2012 - 13 SRI RAVULAPALLI VENKATRAMAIAH AND SMT. RAVULAPALLI SULOCHANA DEVI, NELLORE ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE 2019. SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM /DATED : 26 .06.2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE S (I) SRI RAVULAPALLI VENKATRAMAIAH (II) SMT. RAVULAPALLI SULOCHANA DEVI, W/O SRI RAVULAPALLI VENKATRAMAIAH , D.NO.24/308 - 2AB, MILITARY COLONY, MEENAKSHI NILAYAM, DARGAMITTA , NELLORE 2. / THE REVENUE (I) THE DEPUTY COMMISSIONER OF INCOME TAX (II) THE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, VI JAYAWADA 3. THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), VISAKHAPATNAM 4. THE COMMISSIONER OF TAX (APPEALS) - 3, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM