ACIT, Central Circle-1(1), Hyd, Hyderabad V. AKR Construction Ltd., Hyd, Hyderabad

CO 60/Hyd/2015

AI Insights

The case involves AKR Constructions Ltd, which faced scrutiny following a search and seizure operation under section 132 of the Income Tax Act, 1961, and a subsequent survey under section 133A. The Assessing Officer made several additions to the income of the company for the assessment years 2009-10, 2010-11, and 2011-12, citing unexplained expenditures, unaccounted receipts, and undisclosed investments. The CIT (A) partly upheld these additions, leading to the appeals before the Income Tax Appellate Tribunal. The Tribunal dismissed the appeals, agreeing with the CIT (A)'s findings and rejecting the additional grounds concerning the procedural validity of the assessments under section 153C.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129494 (ITAT-HYDERABAD)
• Duration Of Justice: 7 year(s) 4 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 22-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 22-09-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Document seized; Additional evidence; Tax effect; Documents seized; Capital expenditure; TDS
• Section: 132; 143(3); 143(1); 13; 153; 22; 153C

Judgement Text

ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 1 of 17 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member ITA Nos.1008 & 1009/Hyd/2016 & C.O 60/Hyd/2015 Assessment Years: 2009-10, 2010-11 and 2011-12 AKR Constructions Ltd Hyderabad PAN:AAFCA0649H Vs. Dy. C.I.T Central Circle – 1 Hyderabad (Appellant) (Respondent) Assessee by : N O N E Revenue by: Shri Jeevan Lal Lavidiya, DR Date of hearing: 23/01/2023 Date of pronouncement: 30/01/2023 ORDER Per R.K. Panda, A.M ITA No.1008/Hyd/2016 filed by the assessee is directed against the order dated 12.02.2016 of the learned CIT (A)-11, Hyderabad relating to A.Y.2009-10. ITA No.1009/Hyd/ 2016 is directed against the order dated 24.2.2016 of the learned CIT(A)-11, Hyderabad relating to A.Y 2010-11. The C.O No.60/Hyd/2015 filed by the assessee is directed against the appeal filed by the Revenue vide ITA No.784/Hyd/2015 for the A.Y 2011-12. For the sake of convenience, these two appeals and the C.O were heard together and are being disposed of by this common order. ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 2 of 17 2. None appeared on behalf of the assessee at the time of hearing when the name of the assessee was called. It was seen from the order sheet entries that these appeals were getting adjourned from time to time from 7.11.2016 onwards and in the last few occasions, nobody was appearing from the side of the assessee for which every time notices were issued through RPAD. Although most of the notices were served on the assessee, however, no one was appearing. Finally, on 9.1.2023 one Mr. Almas Mohd appeared by filing the vakalatnama and sought adjournment and it was intimated to him that this being a very old matter, this is the last opportunity to the assessee to appear on 23.1.2023. The notice to the assessee was also sent through RPAD and duly served on the assessee. However, there was no compliance from the side of the assessee. Under these circumstances, we have no other option left but to proceed with the hearing of the appeals and the C.O on the basis of the material available on record and after hearing the learned DR. ITA 1008/Hyd/2016 – A.Y 2009-10 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of civil contract and one of the sub-contractors of M/s NCC Ltd. It filed its original return of income on 24.7.2010 admitting income of Rs.11,50,33,760/-. The return was processed u/s 143(1) of the I.T. Act. A search & seizure operation u/s 132 of the I.T. Act was conducted in the NCC group of cases and a survey operation was conducted at the office premises of the assessee company on 6.10.2020. During the course of survey u/s 133A, incriminating material was found and impounded. During the search and seizure operation, material was seized from the residence of Mr. A. Krishna Reddy out of ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 3 of 17 which page Nos. 124 & 125 of the annexure AKR/R/PO/01 was found to be belonging to the assessee. Similarly, page 71 & 92 of the said annexure were also found to be belonging to the assessee company. Accordingly, the Assessing Officer issued notices u/s 153C of the I.T. Act to the assessee for the A.Y 2005-06 to 20010- 11 on 5.8.2011 which was duly served on the assessee. In response to the same, the assessee filed return of income on 13.09.2012 admitting total income of Rs.11,50,33,760/-. The Assessing Officer completed the assessment determining the total income of the assessee at Rs.18,13,68,464/- by making the following additions: i) Unexplained expenditure - Rs. 34,97,000 ii) Recognized income - Rs. 91,83,544 iii) Unaccounted receipt (i) - Rs. 22,00,000 iv) Unaccounted receipt (ii) - Rs. 11,00,000 v) Disallowing interest - Rs. 17,87,483 vi) Undisclosed investment - Rs. 4,85,66,677 4. In appeal, the learned CIT (A) partly allowed the appeal filed by the assessee wherein he sustained the addition of Rs.34,97,000/- made by the Assessing Officer on account of unexplained expenditure and deleted the remaining additions. 5. Aggrieved with such order of the CIT (A), the assessee is in appeal before us. 6. Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds: “1. The Learned Commissioner of Income Tax (Appeals)-11, Hyderabad [CIT(A)] has erred on facts and in law. ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 4 of 17 2. Learned CIT(A) is not justified in sustaining the addition of Rs. 34,97,000/- on account of each payments towards labour charges at various sites of work executed by the assessee. 3. Learned CIT(A) is not justified in not accepting the explanation that the said amount is part of the amount Rs. 1,50,00,000/- admitted by the assessee consequent to survey operations on the assessee’s premises in March 2010. 4. In any case, as regards Rs. 10,00,000/- out of the above amount, Learned CIT{A) failed to notice that the entry of Rs. 10,00,000/- as cash payment, on 27.10.2008 is a mistaken entry at page 125 and the said amount was paid by way of cheque No. 836777 as could be seen from P 124 of the seized documents in the course of search operations at the residence of Sri. Alluru Krishna Reddy, Managing Director of the appellant company. . 5. For these any other grounds that may be raised at/before the date of hearing, it is prayed that the addition of Rs. 34,97,000/- be kindly deleted.” 7. The assessee has also raised the following additional grounds: “1. Proceedings u/s. 153C are invalid in law. Satisfaction as required before initiating proceedings u/s . 53 C of the Income Tax Act, 1961 has not been recorded by the Assessing Officer in the course of proceedings in the case of the searched person, Sri A. Krishna Reddy. Board circular no. 24/2015, dt.31.12.2015 is applicable to the facts of the case. Proceedings u/s. 153C are invalid in law. 2. A.O has erred in holding that the papers found during the course of search &s seizure proceedings in the case of Sri A. Krishna Reddy, the searched person belong to the assessee. They only pertain to or contain the information about the assessee. Provisions of 153 C(1) before its amendments w.e.f. 01.06.2015 by way of substitution apply. 3. Authorized Representative (A.R) not pressing the grounds of appeal which were filed by the assessee is against law. Consent giving up jurisdictional grounds of appeal which go to the root of the matter is against law. 4. Learned CIT (A) is not justified in not disposing of the jurisdictional grounds raised by the assessee only because A.R did not press those grounds which is against law. Consent cannot confer jurisdiction. 5. Proceedings u/s. 153C are not legally valid also for the reason that a notice u/s. 153C has not been issued for the current assessment year. A single notice u/s. 153C for all the six preceding assessment years 2005- 06 to 2010-11 is not valid in law. ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 5 of 17 6. Learned CIT(A) has erred in holding that Ground No. 1 is general in nature and thereby not considering it.” 8. So far as the additional grounds are concerned, in absence of any explanation offered by the assessee towards the admissibility of the additional grounds, the same are dismissed. Therefore, the grounds that remain to be adjudicated is regarding the order of the learned CIT (A) in sustaining the addition of Rs.34,97,000/- made by the Assessing Officer. 8.1 Facts of the case in brief are that during the course of assessment proceedings, the Assessing Officer asked the assessee to explain the cash payment of Rs.34,97,000/- for the impugned A.Y 2009-10 and cheque payment of Rs.70,30,000/- which are appearing in the seized material found during the course of search. From the books of account and other details furnished by the assessee, the Assessing Officer noted that the cheque payments were duly reflected in the books of account whereas the cash payment are not reflected. He, therefore, confronted the same to the assessee. Rejecting the various explanations given by the assessee and observing that the cash payments were not reflected in the books of account, the Assessing Officer made addition of Rs.34,97,000/. 9. After hearing the learned DR and perused the orders of the authorities below, we find the learned CIT (A) while sustaining the addition of Rs.34,97,000/- has thoroughly discussed the issue including the offer of additional income of Rs.1,50,00,000/- and thereafter sustained the addition by observing as under: “08.3 .I have gone through the facts of the case. The details of the assessees Submissions before the Assessing Officer are at pages 4-6 of the assessment order. The argument of the assessee is that along with payments in cheque, cash payments are a normal incident of the ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 6 of 17 business activity. In the present case the assessee had to incur expenses at locations where the nearest bank was more than 10 km away. The payments are for the purpose of the assessee's business only and not capital expenditure or any personal expenditure. The admitted position emerging is that the cheque payments as well as cash payments indicated by the material seized from the residence of the Managing Director of the company are for the same purpose and no doubts remain over the fact of payments made. It is also clear that the cheque payments are in order as far as the books of account are concerned. The order of assessment does not raise any doubts over the need for cash payments in this line of business or the relevance of these payments for the assessee's business. Both categories of payments recorded in the sheet are identical, and yet one is located in the regular books of account while the other is not. The explanation does not bring out any possible link between these cash payments and cash expenses/withdrawals recorded in the books, if any. The assessee's explanation before the assessing officer was that cash payments are accounted for on a monthly basis by way of journal entries at the sites, and that the seized material in question was a consolidated statement of advances sent to various sites from the Head Office. It was urged before the Assessing Officer that “There is no way that some items are accounted and some are unaccounted, just because they are cash payments." And yet, the cash payments could neither be located in the books of account, nor reasonably correlated with any proximate cash withdrawal and with reference to a given site. 08.4 In the written submissions dated 09-02-2016 it was also urged as under "Without prejudice to the above, we also-submit that there was a survey at the business premises of the Appellant on 05-03-2010. in that survey, some loose sheets like the above were found by the AO. After due consideration of the deficiencies in the accounts and loose sheets like this, the Appellant has offered additional income of Rs 1,50,00,000/- and revised his return of income for the AY 2009-10 from Rs 10,00,33, 760/- to Rs 11,50,33, 760/-. Hence, no further addition need be made on the same ground. " The submission of the assessee do not bring out how the document presently under examination was similar to those that were detected during the survey, The nature of the documents found during. the survey, which obviously predates the search during which the present document was found, the circumstances of the additional income admitted, and adequacy there-of, are not elaborated upon. The material fact is that the document presently under scrutiny cannot be seen as the same document(s) on which additional income was offered in an earlier survey. In addition to the unacceptable nature of the correlation sought to be made between income suggested by the document seized in October 2010 and the income admitted during the an earlier survey in March 2010, the alternative submission also involves consideration of additional evidence that would not have been admissible. In the face of the assessee's inability to identify the payments with any entry in the regular books of account, the probability of the given payments having been accounted somewhere, ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 7 of 17 or the requirement of such expenditure to be incurred in cash, would be to no avail. The addition is, therefore, upheld”. 10. We do not find any infirmity in the order of the learned CIT (A) while sustaining the above addition. He has thoroughly discussed the issue and has given a categorical finding that the assessee was unable to identify the payment with any entry in the regular books of account and the requirement of such expenditure in cash. In view of the detailed order passed by the learned CIT (A) on this issue and in absence of any contrary material before us, we do not find any infirmity in the order passed by the learned CIT (A) on this issue. Accordingly, the same is upheld and the grounds raised by the assessee on this issue are dismissed. ITA No.1009/Hyd/2016 – A.Y 2020-11 11. Facts of the case, in brief, are that the assessee filed the return of income on 30.09.2011 admitting income of Rs.5,71,94,440/-. In response to notice u/s 143(1) of the Act, the assessee filed return on 30.09.2011 admitting an income of Rs.5,71,94,440/-. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 143C determining the total income of the assessee at Rs.12,83,19,811/- wherein he made the following additions: Description Amount (Rs.) Income returned 5,71,94,440 Add: Unaccounted receipt 23,08,280 Add: Unaccounted income 3,24,01,262 Add: Unexplained expenditure 70,000 Add: Income recognized 98,18,497 Add: Hire charges 49,00,000 Add: Hire charges 2,09,64,922 Add: Unexplained cash credit 6,62,410 Total assessed income 12,83,19,811 ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 8 of 17 12. In appeal, the learned CIT (A) gave part relief to the assessee wherein he deleted the additions of Rs.23,08,280/- on account of unaccounted receipts, Rs.49,00,000/- on account of hire charges, Rs.2,09,64,922/- on account of hire charges, Rs.98,18,497/-being non recognition of income and Rs.6,62,410/- being unexplained cash credit. He however, confirmed the amount of Rs.70,000/- being unexplained expenditure and gave part relief out of Rs.3,24,01,262/- being added by the Assessing Officer as unaccounted income. 12.1 Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The Learned Commissioner of Income Tax (Appeals)-11, Hyderabad [CIT(A)] has erred on facts and in law. 2. Learned CIT(A) is not justified in sustaining the addition of Rs. 18,00,000/- in the case of Sri. R. Venugopala Reddy. 3. Learned CIT(A) is not justified in sustaining the addition of Rs. 3,72,726/- out of Rs. 6,47,726/-, although the remand report is silent on this amount. 4. Learned CIT(A) has unreasonably sustained the addition of Rs. 13,25,581/- subject to a relief of Rs. 4,000/- on account of totaling mistake. 5. Learned CIT(A) has erred in upholding an amount of Rs. 3,24,777/- out of Rs. 20,52,117/- in the case of Sri. Sudhakara Reddy, sub- contractor. 6. Learned CIT(A) is not justified in sustaining the additions of Rs. 26,49,111/- and Rs. 3,74,909/- totaling to Rs. 30,24,020/- in respect of Sri. Krishnam Naidu and Sri. Prahlad. 7. Having regard to the submissions of the assessee before the lower authorities, it is prayed that all the above additions sustained by the CIT(A) be kindly deleted.” ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 9 of 17 13. The assessee has also raised the following additional grounds: “1. Proceedings u/s. 153C are invalid in law. Satisfaction as required before initiating proceedings u/s 153 C of the Income Tax Act, 1961 has not been recorded by the Assessing Officer in the course of proceedings in the case of the searched person. Sri A. Krishna Rec dy. Board circular no. 24/2015, dt.31.12.2015 is applicable to the facts of the case. Proceedings u/s. 153C are invalid in law. 2. A.O has erred in holding that the papers found during the course of search & seizure proceedings in the case of Sri A. Krishna Reddy, the searched person belong to the assessee. They only pertain to or contain the information about the assessee. Provisions of 153 C(1) before its amendments w.e.f. 01.06.2015 by way of substitution apply. 3. Authorized Representative (A. R) not pressing the grounds of appeal which were filed by the assessee is against law. Consent giving up jurisdictional grounds of appeal which go to the root of the matter is against law. 4. Learned CIT (A) is not justified in not disposing of the jurisdictional grounds raised by the assessee only because A.R did not press those grounds which is against law. Consent cannot confer jurisdiction. 5. Proceedings u/s. 53C are not legally valid also for the reason that a notice u/s. 153C has not been issued for the current assessment year. A single notice u/s 153C for all the six preceding assessment years 2005-06 to 2010-11 is not valid in law. 6. Learned CIT[A) has erred in holding that Ground No. 1 is general in nature and thereby not considering it”. 14. So far as the additional grounds are concerned, in absence of any explanation offered by the assessee towards the admissibility of the additional grounds, the same are dismissed. 15. So far as the partial relief granted by the learned CIT (A) out of the addition of Rs.3,24,01,262/- is concerned, we find the learned CIT (A) after obtaining a remand report from the Assessing Officer and the rejoinder of the assessee to such remand report gave part relief to the assessee. While doing so, he has thoroughly discussed the issue and gave part relief to the assessee by observing as under: ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 10 of 17 “9.3 The assessment order, remand report of the Assessing Officer and the written submissions of the appellant are carefully considered. In the following 09 cases, the Assessing Officer reported that there is a tally between the entries notices in the seized material, assessee’s explanation offered, entries in the books of account and in the bank statements: S.No Name of the sub- contractor S.No in the assessment order Total addition (in Rs.) 1 K R Ramesh 1 19,21,957 2 K R Ramesh 2 10,00,000 3 R Siddapa 3 15,70,416 4 Srinivasa Reddy 4 10,00,000 5 KLR Constructions 6 9,71,847 6 Arakay Construction 9 80,372 7 Subramanyam Traders 10 16,41,268 8 Nagaraja Reddy 11 1,29,266 9 Pumpa Naick 15 5,88,382 9 Sambasiva Rao 22 27,00,000 TOTAL 1,16,03,508 The inference flowing from the Remand Report is that the transactions cannot be seen as unaccounted. In so far as the transactions in the impugned material are integrated with regular books of accounts, any cash payments made on account or recoveries made cannot have an element or unrecorded income. Consequently, the assessee gets a relief of Rs.1,16,03,508/-. 09.4 In the case of Sri Basavraj Hiremath vide Sl. No. 13 of the. assessment order (recorded as Vasavraj) the Assessing Officer brought to tax Rs.15,00,000/- on account of cash payment and Rs.16,19,277/- on account of recoveries, aggregating to Rs.31.19.277/-. In the Remand Report, the Assessing Officer notes that there is a debit to the bank account on two occasions aggregating to Rs.15,00,000/-, but was unable to state whether it was by crossed cheque or otherwise. In respect of Rs.16,19,277/-it was brought out that this amount mentioned at page no.82 of the Annexure of the seized material that the amount of Rs.15 lakhs added on account of cash payment is again included in it, resulting in a double deduction. On examination it is seen that the sum of Rs.16,19,277/- comprises of Rs.15,00,000/- on account of payment made last year, Rs.82,079/- being withheld amounts and Rs.37,198/- being Tax Deducted at Source. It is seen from the bank account that the cash payment of Rs 15,00,000/- comprise of withdrawals of Rs.8,00,000/- and Rs.7,00,055/- on 14.3.2009 and 16.3.2009, respectively. These two amounts being payments made in the previous year of account are part of the debit balance brought forward and is reflected in the abstract seized vide sheet no. 82 as "Adv paid at site". What emerges from this abstract and the account of Sri Baswaraja Hiremath in the audited accounts of the assessee is that cash paid of Rs.15,00,000/- (which, in any case, is in the earlier year) is included in the sum of Rs.16,19,277/- added under recoveries, and also that both transactions are part of the accounting mainstream of the assessee-company. Being so, the ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 11 of 17 transactions cannot be seen as unaccounted. The addition of Rs.31,19,277/- is, therefore, deleted. 09.5 In the case of Sri Venugopal Reddy vide sl.no.16 of the assessment order, the total addition of Rs,48,75,420/- comprises of a cash payment of Rs.18 lakhs received and a recovery adjustment of Rs.30,75,420/-. In the remand report the Assessing Officer merely stated that Rs.18 lakhs is a cash receipt. Regarding the sum of Rs.30,75,420/-, It is seen that this figure of recoveries as per the abstract on page 71 of Seized material is incorporated into the ledger account of Sri R. Venugopal Reddy In the audited accounts of the assessee under the narration 'other recoveries, “Cement”, ‘hire Charges' and royalty deduction in respect of the cash receipt, however, the Assessing Officer does not offer any comments. It is seen from the lower half of page 69 of the seized material that the amount of Rs.18 lakhs is received from Sri Venugonal Reddy along with two other receipts, totaling Rs.18,87,869/- and is adjusted against total recoveries of Rs.41,45,534/-. The resultant figure or RS 22,57,665/- is targeted for recovery of Rs 17,07,665/- in "This Bill and balance amount of Rs 5,50,000/- in "Next Bill". The figure of Rs 41,45,534/- being recoveries in the upper half of this sheet, on a comparison of items, includes the recoveries comprising the figure Rs.30,75,420/- in abstract vide sheet no 71 noticed by the Assessing officer. This in turn, is included in the ledger account of Sri Venugopal Reddy. In respect of the cash receipt, however, there is no record of a reciprocal credit to Sri Venugopal Reddy's account, either directly or constructively. To this extent, therefore, the receipt of cash from Sri Venugopal Reddy is not satisfactorily explained. Being so, the addition is sustained to the extent of Rs.18 lakhs, while relief allowed is Rs.30,75,420/-. 09.6 In the case of Sri Hanumanthappa vide sl.no.21 of the assessment order, the total addition of Rs.10,62,316/- comprises of a cash payment of Rs.5 lakhs and a recovery adjustment of Rs.5,62,316/-. It is seen from the seized material and bank statement examined by the Assessing Officer that the recovery adjustment of Rs.5,62,316/- included the cash payment made by RTGS on 11.4.2009 along with an amount of Rs.42,882/- withheld and TDS of Rs.19,434/-, It is seen from the abstract vide page 88 of seized material that the total recoveries of Rs.5,62,316/- includes the cash amount of Rs.5 lakhs shown as advance paid at Head Office, along with the other two recoveries of Rs.19,434/- and Rs.42,882/-. It is also clear that these three items are duly debited to Sri Hanumanthappa's account in the audited account of the assessee company. The addition of Rs.10,62,316/- is, therefore, deleted. 09.7 In the case of Sri Sevya Naik vide sl.no.17 in the assessment order the total addition comprises of Rs.6,47,726/- comprising of a cash payment of Rs.2,75, 000/- and recoveries of Rs.3,72,726/-. The report of the Assessing Officer consequent upon the remand merely states as under: "For Rs.2,75,000/- assessee stated that it is cash payment made to labourers". ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 12 of 17 There was no reference to whether the total recovery of Rs.3,72,726/- noticed by the Assessing Officer on sheet No.65 in the seized material was prima facie accounted for in the regular books of account or not. Since nothing was detected in the remand proceedings which has the effect of overturning the conclusion drawn in the assessment order the addition is retained to this extent. In respect of the cash payment of Rs.2,75,000/- it is seen from the same material that this amount of cash being recovery from sub-contractors vide sheet no.64, is debited to the sub-contractor's account extracted from the audited accounts of the assessee-company vide page 55 of Annexure-1I of written submissions. The basic premise of the addition vide page 4 of the assessment order is that cash payments were not recorded in the books of account. Since this sum of Rs.2,75,000/- is part of the accounts, it is deleted. In respect of sl.no.17, therefore, the addition of Rs.6,47,726/- is reduced to Rs.3,72,726/-. The assessee. gets relief of Rs.2,75,000/-. 09.8 In the case of Sri Suresh, an addition of Rs.50,000/- vide sl.no.19 of the assessment order was made on account of a cash payment. The remand report of the Assessing Officer merely states that this is a cash payment. Perusal of page no.61 of Annexure-II of the assessee's written submissions shows that this amount has been debited to the sub- contractor's ledger account in the audited books of the assessee company. The addition is, therefore, deleted. 09.9 In the following 07 cases, the Assessing Officer reported that the amount claimed by the assessee is not verifiable. S.No Name of the sub- contractor S.No in the assessment order Total addition (in Rs.) 1 K Venkata Subba Reddy 5 9,25,873 2 KLR Construction 7 15,25,574 3 Harikrishna Reddy 8 21,89,850 4 PV Krishnam Naidu 12 26,49,111 5 Prahlad 14 3,74,909 6 Mokambika Consts. 18 13,25,581 7 Sudhakar Reddy 20 20,52,117 When confronted with the Remand Report, the assessee in its letter dated 28.1.2016 represented further in the matter contending that the addition should have been made, in respect of the following 05 cases. 09.9.1 In the case of Sri K. Venkat Subba Reddy (SI.No.1 above), it was submitted as under: “In this case, the Assessing Officer failed to appraise the fact that the total work done by the sub-contractor was 12,30,162/- and after deducting the TDS and other deposits, the net amount payable to the sub-contractor is Rs.9,39,665/-. The same is duly accounted for in the books of account of the appellant as per page no.110 and 111 of the seized material A/AKR/R/PO/01, which is extract of the books of account. The Assessing Officer has erred in making the addition on this account". ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 13 of 17 Perusal of the material referred to Indicates that the above statement is factually correct. However, seized material vide sheet no. 111 referred to above as the extract from books of account is not from the audited accounts of the assessee-company. It cannot be concluded, therefore, that the amount has been finally accounted for. The Assessing Officer is directed, therefore, to verify whether the ledgerised extract vide sheet no. 111 above corresponds to the audited books of account and if so, delete the addition. 09.9.2 in the case of KLR Constructions vide sl.no.2 above, the aggregate amount added is Rs.15,25,574/- comprising of cash payment of Rs.3 lakhs and other recoveries of Rs. 12,25,574/-, The assessee-company submitted as under: "The Assessing Officer made the addition based on Page No.105 of A/AKR/R/PO/01. The page is the details of sub-contractor's recovery statement. As per the sheet it is evident that the subcontractor was supplied material of Rs. 12,25,574/-, which shall be recovered from him. It also contains the Amounts of Rs.4,47,580/- including the subcontractor which shall be credited' to him. Thus, the net recovery to be made from him. It also contains the amounts of Rs.4,47,580/- including the amount of Rs.3,00,000/- spent by the subcontractor which shall be credited to him. Thus, the net recovery to be made from him is Rs.7,77,994/-. The same was deducted from the gross bill of Rs.19,50,191/- after making further deductions like royalty and senerage charges as per Page 106, 107 and 108 of the seized materials. Thus, the net amount payable to him was Rs.9,32,843/- and the same was duly accounted for in the books of account". It is seen from page 15 of Annexure-II of the assessee's written submissions that sheet no.109, being the ledger account of KLR Constructions corresponds with the audited accounts. lo this extent, the assessee is correct in maintaining that in so far as the net amount payable worked out at Rs.9,32,843/- stands to the credit of the sub- contractor, the recovery to be made as well as cash spent by sub- contractor have effectively been accounted for. The addition of Rs.15,25,574/- is, therefore, deleted. 09.9.3 In the case of Sri Harikrishna Reddy vide sl.no.3 above, an addition of RS.21,89,8b0/- on account of recoveries not properly accounted was made by the Assessing Officer. This Amount was also considered unverifiable in the Remand Report. The assessee represented as under: “Page no. 98 & 99 of A/AKR/R/PO/01 are relevant in this regard. The total work done by the sub-contractor, Hari Krishna Reddy as per page No. 98 is Rs.62,00,789/-. After deducting TDS and royalty the net bill is Rs.58,17,408/-. The recoveries to be made from the bill are Rs.21,89,850/-. After recovering this amount, the net payment shown as expenditure is Rs.35,63,523/-. The appellant has shown the net amount only as the contractors payments. The recoveries expenditure under the head sub-contractors payments. The recoveries are already deducted ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 14 of 17 from the gross bill and the net amount only is booked as expenditure. The Assessing Officer failed in the fact very much evident from the seized material itself and made the addition”. The assessee is factually correct. The net amount of Rs.36,27,558/- is the sum that is Credited to the sub-contractor's account vide sheet no.99 in the seized material which is a ledgerised account of the sub-contractor. This sheet corresponds to the subcontractor's account in the audited accounts of the company vide page no. 85 of Annexure-II of the written submissions. The addition of Rs.21,89,850/- is, therefore, deleted. 09.9.4 In the case of Mokambika Constructions vide sl.no. 6 of cases considered unverifiable by the Assessing Officer the total addition is Rs.13,25,581/- comprising of two sums of Rs.11 lakhs and Rs.2,21,581/-. The assessee in its letter dated 28.1.2016 represented as under: Page no. 59, 60, 61 & 62 of A/AKR/R/PO/01 are relevant in this regard. Page no.59 is the gross work bill for an amount of Rs.1,03,01,250/- done by. the sub-Contractor after departmental deductions the net bill is Rs.96,07,947/-. From this amount site recoveries are Rs.48,75,331/- and the net payable is Rs.48,49,329/-. The same is duly accounted for in the year 2008-09. Page no.60 is the work abstract. Out of the recoveries of Rs.48,75,331/- there isa cheque payment of Rs.11 lakhs which has been accounted for. This is erroneously added back by the Assessing Officer. Coming to the addition of Rs.2,21,581/- as per page 61 of A/AKR/R/PO/01, the gross bill is Rs.6,14,713/, The deductions there from are Rs.1,63,813/- and RS.2,21,581/-, The net bill comes to Rs.2,29,319/-. These amounts are clearly appearing in page 62, which is the ledger account copy of the sub-contractor. All the gross bill amount, deductions and net payable are perfectly recorded in the books. The Assessing Officer has failed in understanding the same and erred in making the addition. It is the assessee's contention that the net payable amount of Rs.48,49,329/- as per abstract on sheet no.59 includes the payment of Rs.11 lakhs and this amount has been accounted for in 2008-09. While the assessee's explanation does not clarify whether it is Financial year or assessment year, it is seen that sheet no.59 is bill no.1 dated 1.5.2009. It is not clear how this date is relevant to the year 2008-09. The account copy of the sub-contractor’s account in the books of the assessee company evidencing the receipt of Rs.11 lakhs, or for that matter the above mentioned net payable amount of Rs.48,49,329/- has not been furnished. The assessee’s contention that the cheque payment of Rs.11 lakhs has been accounted for, therefore, remains to be established. Regarding the sum of Rs.2,21,581/, the assessee contends that this amount is subsumed in the adjustments from the gross bill of Rs.6,14,713/- as a result of which a net amount of Rs.2,29,319/- remained payable to the sub-contractor, Since this amount is retained to the credit of the sub-contractor in the ledger account vide sheet no.62, ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 15 of 17 the recovery of Rs.2,21,581/- has to be seen as accounted for. In this regard, it is noticed that sheet no.62 is not from the audited accounts of the assessee. The amount also pertains to bill no.2 of the sub-contractor dated 31.3.2010. The correlation between bill no.1 dated 1.5.2009 and bill no.2 dated 31.3.2010 is not clear. The gross value of the bill with reference to respective work order(s), recoveries therefrom and payments made in what should have been a running account of the sub- contractor, has not been identified in any audited ledger account. Under the circumstances, it has to be concluded that the assessee's claim is not satisfactorily explained. The addition, therefore, is retained, subject to the totaling mistake of Rs.4,000/- in respect of which assessee gets relief. 09.9.5. In the case of Sri Sudhakar Reddy total addition made was. Rs.20,52,117/- including cash received of Rs.8,63,670/- and recoveries of Rs.11,88,447/-. The Assessing Officer in the Remand Report considered the matter to be unverifiable. The assessee represented further as under: Page no.49, 50, 52 and 53 of A/AKR/R/PO/01 are relevant in this regard., The gross work done by the sub-contractor is Rs.19,76,576/- as per page 52. The recoveries to be made as per page no.49, for the payments made and materials given are Rs.11,88,447/-. From the recoveries, the amounts spent by the Contractor are sup Rs.8,63,670/- to be allowed as credit. Thus, the statement clearly is showing the net amount recoverable both the above as Rs.3,24,777/- i.e. difference of amounts. In fact, out of the above amounts, the first one is to be given credit and the second one is to be debited his account. Page no. 50, is the abstract of quantities. Page 53 is the ledger extract which reflects all the transactions. There in , in the leger account, the gross bill is credited to the account of the sub-Contractor and the payments and other recoveries are debited to his account. When all the transactions are clearly self-explanatory, the Assessing Officer has erroneously added both the above amounts which are different in nature and not a required to be added. The assessee contends that page 53 of the seized/material is a ledger extract which reflects all the impugned transactions. This is by no means clear from the ledger account in the seized material referred to. In any case, this sheet is not the ledger account from the audited accounts of the assessee-company, However, the assessee is right in stating that the total recoveries of Rs.11,88,447/- and cash received of Rs.8,63,670/- cannot be added together. The cash received from, or expenses incurred by the sub-contractor on behalf of the assessee would go to reduce the receivables on account of site recoveries, unless it is the Assessing Officer's case that they fell under separate accounting periods. In the circumstances, the addition is retained to the extent of the net amount of Rs.3,24,777/- because the assessee could not identify this amount as accounted for in its regular books of account. Consequently, the assessee gets a relief of Rs.17,27,340/ 09.9.6 Out of the 07 cases where Assessing Officer considered matters not verifiable, the assessee's further submissions were made in respect of 05 cases which have been discussed in the preceding paragraphs from 08.9.1 to 08.9.5, In respect of two ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 16 of 17 cases, Sri P.V. Krishnam Naidu and Sri Prahlad, there is no further comment from the assessee-company., In view of matters remaining unverifiable as noticed by the Assessing Officer in his Remand Report the addition of Rs.26,49,111/- and Rs.3,74,909/-; totaling to Rs.30,24,020/- stands confirmed. 09.10 In the light of the above discussion in respect of the total addition of Rs.3,24,01,262/-, made on account of discrepancies noticed between payments and recoveries as per seized material and the regular books of account, it" is therefore, Concluded as under: a) The addition is retained to the extent of Rs.68,43,104/, vide para nos. 09.5; 09.7; 09.9.4; 09.9.5 &. 09.9.6. b) The addition of Rs.9,25,873/- is deleted, subject to verification directed vide ' para no.09.9.1 c)The addition is deleted to the extent of Rs.2,46,32,285/, vide para nos.09.3; 09.4; 09.5; 09.6; 09.7; 09.8; 09.9.2; 09.9.3; 09.9,4 & 09.9.5.” 16. Since the order of the learned CIT (A) is very exhaustive and he has thoroughly examined the issue in detail while partly sustaining the addition, therefore, in absence of any contrary material before us, we do not find any infirmity in the order of the learned CIT (A). Accordingly, the order of the learned CIT (A) on this issue is upheld and the grounds raised by the assessee are dismissed. C.O. No.,60/Hyd/2015 – A.Y 2011-12 17. There is a delay of 45 days in filing of this C.O for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. After hearing the learned DR and after considering the contents of the Condonation Application along with affidavit, such delay in filing of this C.O is condoned and the C.O is admitted for adjudication. 17.1 The grounds raised by the assessee in the Cross objection are under: “1. The learned CIT (A) is not justified in sustaining the addition of Rs.82,66,330/- being the interest received by Sri A. Krishna Reddy, which has been admitted by him in his return and assessed, though, on a protective basis. 2. As the Department received the tax deducted at source in the name of Sri A. Krishna Reddy, the income relating to the TDS is rightly assessable in the hands of the actual ITA Nos 1008 1009 and CO 60 of 2015 AKR Constructions Page 17 of 17 recipient of income. The credit for TDS could be granted only in the hands of Sri A. Krishna Reddy”. 18. After hearing the learned DR and on perusal of the record, we find the appeal filed by the Revenue was dismissed on account of low tax effect. In the appeal folder of the C.O, the copy of the assessment order and the CIT (A)’s order are not enclosed and therefore, not available. In absence of any response from the side of the assessee to explain the reasons for the deletion as per the grounds in the C.O, the addition made by the Assessing Officer and sustained by the learned CIT (A) are upheld. Accordingly, the grounds raised by the assessee are dismissed. 19. In the result, two appeals filed by the assessee and the cross objection filed by the assessee are dismissed. Order pronounced in the Open Court on 30 th January, 2023. Sd/- Sd/- (LALIET KUMAR) JUDICIAL MEMBER (R.K. PANDA) ACCOUNTANT MEMBER Hyderabad, dated 30 th January, 2023. Vinodan/sps Copy to: S.No Addresses 1 M/s. AKR Constructions Ltd, Plot No.8-2-684/J4, Kanaka Durga Temple Lane, Road No.12, Banjara Hills, Hyderabad 500034 2 Dy. CIT, Central Circle-1, Posnett Bhavan, Basheerbagh, Hyderabad 3 CIT (A)- 11, Hyderabad 4 Pr. CIT-Central, Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order