ACIT, Central Circle-1(1), Hyd, Hyderabad V. Alluri Krishna Reddy, Hyd, Hyderabad

CO 64/Hyd/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2470 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 17-09-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 04-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Unexplained investment; Unexplained expenditure; Document seized; Proportionate interest; Tax effect; Documents seized
• Section: 69C; 143(3); 153A; 143(1); 158BC; 13; 153; 119; 147; 132

Judgement Text

ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.902/HYD/2015 ASSESSMENT YEAR: 2007-08 THE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), HYDERABAD. VS. SRI ALLURI KRISHNA REDDY, HYDERABAD. PAN : ACHPA5457C (APPELLANT) (RESPONDENT) ITA NO.927/HYD/2015 ASSESSMENT YEAR: 2007-08 SRI ALLURI KRISHNA REDDY, HYDERABAD. PAN : ACHPA5457C VS. DCIT, CENTRAL CIRCLE 1, HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO.1002/HYD/2016 & C.O.NO.64/HYD/2016 (IN ITA NO.1002/HYD/2016) ASSESSMENT YEAR: 2008-09 THE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), HYDERABAD. SRI ALLURI KRISHNA REDDY, HYDERABAD. PAN : ACHPA5457C (APPELLANT) (RESPONDENT/CROSS-OBJECTOR) ASSESSEE BY: NONE REVENUE BY : SRI Y.V.S.T.SAI, CIT-DR DATE OF HEARING: 17/09/2021 DATE OF PRONOUNCEMENT: 28/10/2021 ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 2 OF 21 O R D E R PER S. S. GODARA, J.M. THE INSTANT BATCH OF FOUR CASES PERTAINS TO A SINGL E ASSESSEE NAMELY SHRI ALLURI KRISHNA REDDY. THE REVE NUE AND ASSESSEE HAVE FILED THEIR CROSS APPEALS ITA NO.902 & 927/HYD/2015 FOR A.Y. 2007-08 AGAINST THE CIT(A)-11, HYDERABADS ORDER DT.30.04.2015 PASSED IN CASE NO.0195/CIRCLE-1(1)/CI T(A)-XI/13-14. THE REVENUES LATTER APPEAL ITA NO.1002/HYD/2016 AN D ASSESSEES CROSS OBJECTION C.O.64/HYD/2016 ARE DIRECTED AGAINS T THE VERY CIT(A)S ORDER DT.09.02.2016 PASSED IN CASE NO.0202 /CC- 1(1)/HYD/CIT(A)-11/13-14/15-16. RELEVANT PROCEEDING S IN BOTH THESE ASSESSMENT YEARS ARE UNDER SEC 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). CASES CALLED TWICE. NONE HAS PUT IN APPEARANCE AT THE ASSESSEES BEHEST. 2. IT TRANSPIRES AT THE OUTSET THAT THE ASSESSEES C.O.NO.64/HYD/2016 SUFFERS FROM 82 DAYS DELAY STATE D TO BE ATTRIBUTABLE TO THE REASON(S) BEYOND HIS CONTROL AS PER CONDONATION PETITION/AFFIDAVIT. NO REBUTTAL HAS COME FROM THE DEPARTMENTAL SIDE. THE IMPUGNED DELAY IS CONDONED THEREFORE. 3. WE MAKE IT CLEAR THAT THE FILE NOTINGS RIGHT FRO M 05.10.2015 ONWARDS INDICATE THE ASSESSEES COUNSEL NAME BUT NOBODY HAS REPRESENTED HIM SINCE 09.05.2018. THESE APPEALS HAD BEEN FIXED ON 03.09.2021 WHEREIN WE HAD DIRECTED TH E DEPARTMENT TO SERVE THE ASSESSEE AFRESH. THE DCIT, CIRCLE 1(1) , HYDERABAD HAS FILED HIS CORRESPONDENCE DATED 14.09.2001 ALONG WIT H SERVICE REPORT THAT THE ASSESSEE STANDS SERVED AT THE SITE OF M/S. AKR CONSTRUCTIONS LIMITED. NOBODY HAS COME PRESENT DESP ITE THE INSTANT ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 3 OF 21 FRESH MODE OF SERVICE. WE THEN PROCEEDED EX-PARTE AGAINST HIM IN ALL THESE CASES. 4. WE ADVERT TO FORMER A.Y. 2007-08 INVOLVING REVEN UES AND ASSESSEES CROSS APPEALS ITA NOS.902 & 927/HYD/ 2015. THE ASSESSEES CROSS APPEAL ITA NO.927/HYD/2015 HAS RAI SED THE FOLLOWING SIX SUBSTANTIVE GROUNDS AT THE FIRST INST ANCE:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - XI, H YDERABAD [CIT(A), HEREINAFTER] AND THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I, HYDERABAD (A.O HEREINAFTER) HAVE ERRED ON FACTS AND IN LAW. 2. LEARNED CIT(A) IS NOT JUSTIFIED IN SUSTAINING TH E ADDITION OF RS. 1,80,12,096/-. 3. OUT OF THE ABOVE AMOUNT LEARNED CIT(A) & A.O HAV E ERRED IN REGARD TO THE ADDITION OF RS. 1,50,00,000/ - ON PRESUMPTIONS AND ASSUMPTIONS WITHOUT DEALING WITH THE EXPLANATION GIVEN IN THE COURSE OF ASSESSMENT PROCEEDINGS. 4. LEARNED CIT(A) AND A.O HAVE NOT APPRECIATED WHET HER THE AMOUNT REPRESENTED PAYMENTS MADE TOWARDS ADVANCES TO LAND OWNERS OR TOWARDS DEVELOPMENT IN TERMS OF MOU. 5. LEARNED CIT(A) HAS ERRED IN NOT DELETING THE DIS ALLOWANCE OF INTEREST ON AMOUNTS OF RS. 50,00,000/- AND RS. 54,00,000/- ADVA NCED TO RAMPA ESTATES AND SRI. M. SAMBA SIVA RAO . 6. FOR THESE AND ANY OTHER GROUNDS THAT MAY BE RAIS ED AT / BEFORE THE TIME OF HEARING, IT IS PRAYED THAT THE ADDITIONS OF RS.1 ,80,12,096/- AND DISALLOWANCE OF INTEREST BE DELETED. HE HAS FURTHER PREFERRED HIS PETITION DATED 13.07.2 016 SEEKING TO PLEAD THE FOLLOWING ADDITIONAL SUBSTANTIVE GROUNDS. 1. IN THE MATTER OF THE ABOVE APPEAL, THE APPELLANT -ASSESSEE (ASSESSEE) CRAVES LEAVE OF THE HON'BLE TRIBUNAL TO FILE ADDITI ONAL GROUNDS OF APPEAL. 2. ADDITIONAL GROUNDS OF APPEAL ARE CONCERNING THE DISALLOWANCE OF INTEREST EXPENDITURE WHICH IS PART OF THE REGULAR ACCOUNTS O N THE BASIS OF WHICH THE ORIGINAL RETURN HAS BEEN FILED. NO INCRIMINATING MA TERIAL IN RESPECT OF THE INTEREST EXPENDITURE HAS BEEN DISCOVERED DURING SEA RCH. THEREFORE NO PART OF INTEREST CAN BE DISALLOWED IN THE ASSESSMENT MADE U /S. 153 A PURSUANT TO THE SEARCH. THIS IS A LEGAL GROUND. 3. THE ASSESSMENT ORIGINALLY MADE U/S. 143(1) HAS N OT ABATED. AS A RESULT THERE IS ALREADY AN ASSESSMENT U/S. 143(1) WHICH HA S NOT ABATED. CONSEQUENTLY IN THE ASSESSMENT NOW MADE THE INCOME DISCLOSED CANNOT BE MADE A PART OF THE TOTAL INCOME DETERMINED U/S. 153 A. AS THE ASSESSMENT HAS BEEN MADE BY INCLUDING THE INCOME U/S. 143(1), THERE IS A DUPLICATE DEMAND IN THE RECORDS AND REGISTERS OF THE DEPARTME NT. ADDITIONAL GROUND ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 4 OF 21 IS NOW BEING TAKEN AGAINST THE LEGALITY OF DUPLICAT ING THE ASSESSMENT AND DEMAND COVERED BY ASSESSMENT U/S. 143(1). THIS IS A LSO A LEGAL GROUND. 4. THE ABOVE LEGAL GROUNDS HAVE NOT BEEN TAKEN AT T HE STAGE OF FIRST APPEAL BY OVERSIGHT AND NOT BY INTENTION. THE OMISSION TO RAISE THE ADDITIONAL GROUNDS WAS FOR BONA FIDE REASONS. NO NEW FACTS ARE INVOLVED NOR ANY FRESH INVESTIGATION IS REQUIRED IN RESPECT OF THE RELEVAN T ADDITIONAL GROUNDS. 5. THE A.O HAS NOTICED THAT THE INTEREST EXPENDITUR E IS RS. 2,55,03,426/- ON SECURED LOANS OF RS. 36,12,99,333/-. THE A.O HAS ER RED IN COMPUTATION OF DISALLOWABLE INTEREST AT RS. 86,34,421/- ON THE LOA NS OF RS.5,75,60,280/- ALLEGEDLY GIVEN OUT OF INTEREST BEARING FUNDS. THE CORRECT DISALLOWABLE AMOUNT IS ONLY RS. 40,63,248/-. THE ASSESSEE DID NO T RAISE THE GROUND ON INCORRECTNESS OF THE COMPUTATION OF THE DISALLOWABL E INTEREST. THIS IS BY OVERSIGHT. A GROUND IS BEING RAISED BY WAY OF AN AD DITIONAL GROUND BEFORE THE HON'BLE TRIBUNAL. 6. ASSESSEE PRAYS THE HON'BLE BENCH TO ADMIT THE AD DITIONAL GROUNDS OF APPEAL FOR ADJUDICATION. IF THEY ARE NOT ADMITTED, THE INTERESTS OF THE ASSESSEE WILL BE IN GREAT JEOPARDY. ASSESSEE WOULD BE PUT TO LOSS OF THE VALUABLE OPPORTUNITY OF THEIR ADJUDICATION BY THE H ON'BLE BENCH. 1. LEARNED CIT(A) HAS ERRED IN SUSTAINING DISALLOWA NCE OF ANY INTEREST NO MATERIAL TO DISALLOW INTEREST HAS BEEN FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. INTEREST IS PART OF THE REGULAR ACCOUN TS ON THE BASIS OF WHICH RETURN WAS ORIGINALLY FILED. A.O HAS ERRED IN NOT REDUCING THE TAX ON THE TOTAL INCOME AS PER INTIMATION U/S. 143(1), AS THE ASSESSMENT U/S. 143(1) HAS NOT ABATED. WITHOUT PREJUDICE TO ADDITIONAL GROUND NO.1 ABOVE, 3. THE INTEREST DEBITED BEING RS. 2,55,03,426/- ON SECURED LOANS OF RS. 36,12,99,333/- AS FOUND BY THE A.O, THE INTEREST DI SALLOWED IN ASSESSMENT OF RS. 86,34,421/- IS WRONGLY CALCULATED . IT WOULD ONLY BE RS. 40,63,248/-. 4. LEARNED CIT(A) HAS ERRED IN NOT QUANTIFYING THE INTEREST DISALLOWABLE WITH REFERENCE TO RS. 1,14,00,000/-. 5. LEARNED CIT-DR VEHEMENTLY CONTENDED DURING THE C OURSE OF HEARING THAT THE ASSESSEES PETITION SEEKING ADM ISSION OF THE FOREGOING ADDITIONAL GROUNDS DESERVES TO BE REJECTE D AS THE SAME TENDS ALTOGETHER A NEW TEXTURE TO THE ALREADY RAISE D PLEADINGS. WE FIND NO MERIT IN THE INSTANT GRIEVANCE IN THE REVEN UES TECHNICAL OBJECTIONS SINCE THE ASSESSEES FOREGOING PETITION HAS EITHER RAISED SUPPORTIVE GROUNDS TO THE MAIN PLEADINGS OR HIS ONL Y OTHER PLEA IS THAT THE IMPUGNED PROCEEDINGS / ASSESSMENTS DESERVE TO BE QUASHED ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 5 OF 21 SINCE NO PROCEEDINGS HAD BEEN ABATED. WE WISH TO MAKE IT CLEAR THAT THE ASSESSEES AVERMENTS IN HIS PRAYER FOR ADM ISSION OF ADDITIONAL GROUNDS IN SR. NOS.1 TO 7 AND ADDITIONAL GROUNDS THEMSELVES IS THAT NO INCRIMINATING MATERIAL HAS BE EN FOUND OR SEIZED DURING THE COURSE OF SEARCH WHICH COULD TRIGGER SEC .153A IN MOTION AND THEREFORE, THESE ASSESSMENT ITSELF ARE NOT SUST AINABLE IN LAW. THIS TRIBUNALS SPECIAL BENCH DECISION IN ALL CARGO GLOBAL LOGISTICS VS. DCIT (2012) 137 ITD 217 (MUM); AFTER CONSIDERIN G HONBLE APEX COURTS LANDMARK DECISION IN NTPC VS. CIT IN 229 IT R 383 (SC), HOLDS THAT WE CAN VERY WELL ENTERTAIN SUCH AN ADDITIONAL GROUND GOING TO ROOT OF THE MATTER SO AS TO DETERMINE CORRECTNESS O F TAX LIABILITY OF AN ASSESSEE PROVIDED ALL THE RELEVANT FACTS ARE ALREAD Y ON RECORD. THERE IS HARDLY ANY QUARREL THAT THE ISSUE HEREIN PERTAINS T O LEGALLY OF THE IMPUGNED ASSESSMENT(S) IN LIGHT OF 143(1) PROCEEDIN GS AND LACK OF INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE C OURSE OF SEARCH. WE THUS ADMIT THE ASSESSEES FOREGOING PLEADINGS CH ALLENGING CORRECTNESS OF SECTION 153A ASSESSMENTS BEFORE US. 6. COMING TO THE FOREGOING LEGAL ISSUE, A PERUSAL O F THE CASE FILE INDICATES THAT THE ASSESSEE HAD SUBMITTED HIS ORIGINAL RETURN OF INCOME ON 02.11.2007 ADMITTING INCOME OF RS.5,39,18 ,400/- WHICH STOOD SUMMARILY PROCESSED UNDER SEC 143(1) ON 25.11 .2008. THIS FOLLOWED THE IMPUGNED SEARCH CARRIED OUT AT ASSESSE ES RESIDENTIAL PREMISES ON 06.10.2010. A PERUSAL OF THE ASSESSMENT ORDER DT.31.03.2013 INDICATES THAT INCRIMINATING MATERIAL IN ANNEXURE AKR/R/PO/01 HAVING PAGE NOS. 119 TO 121 WAS FOUND A ND SEIZED DURING THE COURSE OF SEARCH PIN-POINTING THE ASSESS EE TO HAVE MADE CASH PAYMENTS OF RS.1,50,000,000/- TO ONE MR. SUDAR SHANREDDY FOR LAND DEVELOPMENT ALONG WITH OTHER INVESTMENTS TOTAL ING TO RS.6,41,74,901/- (INVOLVING DIFFERENCE OF RS.1,80,1 2,096/-). THIS MADE THE ASSESSING OFFICER TO INVOKE SEC 153A PROCE EDINGS VIDE ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 6 OF 21 NOTICE(S) DATED 20.02.2011. WE THEREFORE HOLD THAT THE IMPUGNED PROCEEDINGS HAD BEEN RIGHTLY TAKEN RECOURSE TO BY T HE LEARNED LOWER AUTHORITIES IN VIEW OF THE FOREGOING INCRIMINATING MATERIAL ONLY WHERE NO PROCEEDINGS WERE PENDING AS ON THE DATE OF SEA RCH SO AS TO BE ABATED U/S.153A(1) 2 ND PROVISO OF THE ACT. THE ASSESSEES FOREGOING LEGAL GROUND TO THIS EFFECT STANDS DECLINED THEREFO RE. 7. WE FURTHER NOTE THAT THE ASSESSING OFFICER ALSO TOOK UP THE ISSUE(S) OF SEC.36(I)(III) INTEREST DISALLOWANCE OF RS.86,34,421/- AND LABOUR CHARGES PAYMENTS OF RS.285,00,000/-; RESPECT IVELY. THE QUESTION AS TO WHETHER HE COULD HAVE ADOPTED SUCH A COURSE OF ACTION I.E., TAKING OTHER ISSUES AS WELL WHILST FRAMING SE C.143(3) R.W.S 153A ASSESSMENT, CONTESTED BY THE ASSESSEE, IS NO MORE R ES INTEGRA IN VIEW OF HONBLE JURISDICTIONAL HIGH COURTS DECISION IN GOPAL LAL BADRUKA VS. DCIT AND OTHERS (2012) 346 ITR 106(AP). WE THE REFORE DECLINE THE ASSESSEES CORRESPONDING LEGAL GROUND(S) IN HIS CROSS APPEAL ITA NO.927/HYD/2015 TO THIS AFFECT. 8. WE NOW COME TO VARIOUS ISSUES ON MERITS IN BOTH THESE CROSS APPEALS. THE REVENUES FIRST SUBSTANTIVE GRI EVANCE IN ITS APPEAL ITA NO.902/HYD/2015 SEEKS TO REVIVE SECTION 36(I)(I II) INTEREST DISALLOWANCE OF RS.86,34,421/- IN THE COURSE OF ASS ESSMENT HEREIN DT.31.03.2013 AND PARTLY REVISED IN THE CIT(A)S OR DER AS FOLLOWS : 08.0 DISALLOWANCE OF INTEREST THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS O BTAINED LOANS FROM BANKS AND OTHER PERSONS AND DEBITED INTEREST THEREO N IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE HAD CLAIMED DEDUCTION OF INTE REST EXPENDITURE OF RS.2,55,03,426/-. THE ASSESSING OFFICER OBSERVED TH AT HE HAD DIVERTED THE INTEREST BEARING FUNDS TO THE TUNE OF RS.5,75,62,80 6/- TOWARDS INTEREST FREE LOANS/ADVANCES TO FRIENDS AND RELATIVES AND SISTER CONCERNS. THE BREAK UP IS AS BELOW: ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 7 OF 21 SNO NAME OF THE DEBTOR AMOUNT IN RS. 1 AARKAY PROJECTS (ASSESSEE INVESTED AS DIRECTOR IN THE COMPANY) 4,61,62,806 2 RAMPA ESTATES 50,00,000 3 M.SAMBHISA RAO 54,00,000 4 N.PRASANNA KUMAR REDDY 10,00,000 TOTAL 5,75,62,806 HE LIMITED THE INTEREST DEBITED TO THE P&L ACCOUNT TO THE EXTENT OF FUNDS DIVERTED BY CHARGING INTEREST @15% P.A. HENCE, HE D ISALLOWED PROPORTIONATE INTEREST OF RS.86,34,421/-. 08.1 DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT AN INVESTMENT OF RS.4,61,62,806/-WAS MADE IN AARKEY PR OJECTS. THIS FIRM WAS CREATED TO GET SOME WORK FROM THAT PROJECT AND IN T HE COURSE OF BUSINESS THE AMOUNTS WERE PAID TO THE LANDLORDS OF AARKEY PROJEC T. IT WAS ANOTHER MATTER THAT THE PROJECT DID NOT GO THROUGH AND THE AMOUNTS GOT STUCK BECAUSE OF THE DISPUTE. HE FURTHER STATED THAT NO SPECIFIC LOANS W ERE TAKEN FOR INVESTMENT IN AARKEY PROJECT BUT THE AMOUNTS WERE GIVEN OUT OF HI S OWN CAPITAL. WITH REGARD TO OTHER ADVANCES MADE TO RAMPA ESTATE, M.SA MBHISA RAO, N.PRASANNA KUMAR REDDY, THE SUBMISSIONS BEFORE THE ASSESSING OFFICER WERE REITERATED THAT THE AMOUNTS WERE GIVEN IN THE ORDINARY COURSE OF BUSINESS AS ADVANCE TO SUB CONTRACTORS AND THE SAME SHOULD BE DELETED. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT, SINCE THER E WAS NO REFERENCE TO THE SEIZED MATERIAL, THE ADDITION WAS BAD IN LAW. 08.2 DECISION: THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY TH E APPELLANT WERE CAREFULLY CONSIDERED. ACCORDING TO THE PROVISIONS O F SECTION 153A OF THE IT ACT, IF A SEARCH U/S 132 OF IT ACT IS CONDUCTED IN THE C ASE OF A PERSON, ASSESSMENT U/S 153A HAS TO BE MADE. FURTHER, SUCH A SSESSMENT IS MADE TO DETERMINE THE 'TOTAL' INCOME AND NOT ONLY THE 'UNDI SCLOSED' INCOME (AS WAS THE CASE WITH AN ASSESSMENT MADE UNDER THE NOW DELETED SECTION 158BC OF THE IT ACT). THAT IS A REASON THAT PENDING ASSESSMENT P ROCEEDINGS ABATE. AS DISCUSSED ABOVE, THERE IS A DEBATE ABOUT WHETHER PR OCEEDINGS U/S 153A OF THE IT ACT CAN BE INITIATED IF THERE IS NO INCRIMIN ATING EVIDENCE FOUND DURING THE SEARCH. BUT, THERE IS NO CONFUSION ABOUT THE PR OPOSITION THAT, ONCE PROCEEDINGS U/S 153A OF THE IT ACT HAS BEEN INITIAT ED VALIDLY, A COMPLETE ASSESSMENT HAS TO BE MADE, INCLUDING ADDITIONS ON T HE BASIS OF SEIZED MATERIAL AS WELL AS OTHERWISE. THE LEGAL OBJECTION TO THE ADDITION, THEREFORE, FAILS. 08.3 COMING TO THE MERITS OF THE ADDITION, THE ASSE SSEE'S CASE IS THAT THE LOANS/ADVANCES HAD BEEN MADE WHOLLY FOR PURPOSE S OF HIS BUSINESS AND HENCE, DEDUCTION FOR INTEREST ON BORROWED CAPITAL S HOULD BE ALLOWED. THE SUBMISSION HAS BEEN CONSIDERED. THE ASSESSEE IS A C IVIL CONTRACTOR. HE ALSO DIVERSIFIED INTO REAL ESTATE DEVELOPMENT DURING THE PREVIOUS YEAR UNDER CONSIDERATION. IF THE INTEREST BEARING FUND HAD BEE N UTILISED FOR THE PURPOSES ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 8 OF 21 OF HIS BUSINESS, THE INTEREST EXPENDITURE SHOULD BE ALLOWED AS DEDUCTION EVEN IF THE BUSINESS OR ANY PART THEREOF HAD ACTUAL LY NOT YIELDED PROFIT TO HIM. THE FACT OF HIS INVESTMENT IN AARKAY PROJECT HAD BE EN DISCUSSED ABOVE. CONSIDERING THAT THE AMOUNT OF RS.4.62 CRORES HAD B EEN INVESTED FOR PURPOSES OF SUCH BUSINESS BY THE ASSESSEE, INTEREST ON THE BORROWED FUND SHOULD BE ALLOWED AS DEDUCTION AGAINST HIS PROFIT O F BUSINESS. AS REGARDS THE BALANCE LOANS /ADVANCES OF RS.1.14 CRORE (I.E. THOS E RELATING TO RAMPA ESTATES, MR. M.SAMBHISA RAO AND MR. N PRASANNA KR. REEDY) THERE IS NOTHING ON RECORD TO SHOW THAT THE SAME REPRESENTED BUSINESS INVESTMENT FOR THE PURPOSE OF EARNING PROFIT. IT IS ALSO NOTICED T HAT THE ASSESSING OFFICER CONSIDERED A NUMBER OF OTHER SUCH LOANS/ADVANCES BU T REFRAINED FROM DISALLOWING COMMENSURATE INTEREST AS HE WAS PRIMA F ACIE SATISFIED WITH THE ASSESSEE'S EXPLANATION. HIS DECISION THAT INTEREST BEARING BORROWED FUND TO THE EXTENT OF RS.1.14 CRORE HAD BEEN DIVERTED FOR N ON BUSINESS PURPOSES IS, THEREFORE, UPHELD. HE IS DIRECTED TO RE-COMPUTE THE PROPORTIONATE DISALLOWANCE ACCORDINGLY. 9. WE NEXT NOTE THAT THE ASSESSEES CROSS APPEAL IT A NO.927/HYD/2015 ALSO RAISES CORRESPONDING SUBSTANTI VE GROUND NO.5 AND ADDITIONAL GROUND NOS. 3 AND 4; RESPECTIVELY TO THIS EFFECT. IT THUS EMERGES FROM A PERUSAL OF THE CASE RECORDS THAT SO FAR AS THE IMPUGNED INTEREST DISALLOWANCE ON DIVERSION OF INTE REST BEARING FUNDS IS CONCERNED, EVEN THE CIT(A) HAS FIND FORCE IN THE ASSESSING OFFICERS REASONING IN PRINCIPLE. WE FURTHER WISH TO REITERAT E THAT THE ASSESSEE HAD OBTAINED IMPUGNED INTEREST BEARING LOANS AND MA DE ADVANCES THEREOF IN LIEU OF CHARGING INTEREST @ 18%. THE FA CT ALSO REMAINS THAT APART FROM LEGAL ISSUES WHICH WE HAVE ALREADY DECID ED IN REVENUES FAVOUR, THIS IS ESSENTIALLY THE RECONCILIATION ASPE CT OF DIVERSION OF INTEREST BEARING FUNDS WHICH HAS BEEN SET BY THE LE ARNED CIT(A) TO THE ASSESSING OFFICER IN HIS LOWER APPELLATE DISCUSSION . WE THEREFORE UPHOLD THE SAME IN THESE FACTS AND CIRCUMSTANCES. IT IS MADE CLEAR THAT THE ASSESSING OFFICER SHALL COMPUTE THE IMPUGN ED DISALLOWANCE INTER ALIA AFTER TAKING INTO CONSIDERATION THE ASSESSEES NO N-INTEREST AND INTEREST BEARING FUNDS AND MORE PARTICULARLY HI S FUND POSITION ON THE DATE OF ADVANCES MADE AS PER HIS CASH FLOW STAT EMENT, IF ANY, FILED AND PROVED WAY OF EVIDENCE. WE FURTHER DIRECT THE A SSESSING OFFICER TO DISALLOW INTEREST ON THOSE ITEMS WHICH THE ASSESSEE HAD ADVANCED TO ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 9 OF 21 VARIOUS PARTIES IN LIEU OF HIMSELF CHARGING INTERE ST AS WELL. ALL THESE CORRESPONDING GROUNDS IN THESE CROSS-APPEALS BEFORE US ARE ALLOWED FOR STATISTICAL PURPOSES THEREFORE. 10. THE REVENUES LATER SPECIFIC GRIEVANCE SEEKS TO REVIVE LABOUR CHARGES DISALLOWANCE OF RS.2.85 CRORE WHICH HAS BEEN DELETED IN CIT(A)S ORDER AS UNDER : 09.0 LABOUR CHARGES THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA D DEBITED EXPENDITURE OF RS. 6.45 CRORES AS LABOUR CHARGES OUT OF WHICH AMOU NT OF RS. 2.91 CRORES HAD BEEN SHOWN AS PAYABLE AS ON 31.3.2007. HE FOUND IT UNUSUAL AS ACCORDING TO HIM, LABOURERS ARE PAID ON DAILY OR ON WEEKLY BA SIS AND/ HENCE, THERE SHOULD BE NO REASON WHY THE WAGES SHOULD REMAIN PAY ABLE. THE ASSESSEE EXPLAINED THAT HE HAD MOBILISED LABOURERS FROM VILL AGES, THAT HE WAS PAYING THEM' IMMEDIATE REQUIREMENT ON REGULAR BASIS AND TH E BALANCE WAS PAID AS AND WHEN REQUIRED BY THEM. THE ASSESSING OFFICER WA S NOT SATISFIED WITH THE EXPLANATION AND ADDED THAT THE AMOUNT OF RS.2,85,00 ,000/- AS UNEXPLAINED EXPENDITURE. 09.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E APPELLANT STATED THAT HE HAS CREATED A LIABILITY OF RS.2,90,54,406/- TOWARDS THE LABOUR CHARGES PAYABLE AS AT 31.3.2007. THE AMOUNT IS CLAIMED AS A N EXPENSE AND SHOWN AS A LIABILITY. THE LIABILITY WAS SUBSEQUENTLY DISC HARGED BY THE APPELLANT BY PAYMENTS FROM VARIOUS SITES. ON BEING ASKED FOR THE PROOF OF PAYMENTS HE HAD PRODUCED ALL THE LEDGER ACCOUNT COPIES SHOWING THE PAYMENT OF THE LIABILITY IN THE SUBSEQUENT YEAR. IGNORING ALL THE SUBMISSIONS MADE AND EVIDENCES PRODUCED BY HIM, THE ASSESSING OFFICER HA S MADE A N ADDITION OF RS.2,85,00,000/- TOWARDS UNEXPLAINED EXPENDITURE. T HE ASSESSEE HAS CHALLENGED THE ADDITION AND REITERATED HIS SUBMISSI ON IN APPEAL. 09.2 DECISION ASSESSMENT ORDER AND ' THE WRITTEN SUBMISSIONS SUBM ITTED BY THE APPELLANT WERE CAREFULLY CONSIDERED. ACCORDING TO SECTION 69C OF THE IT ACT, AN EXPENDITURE IS HELD TO BE UNEXPLAINED (AND DEEMED T O BE THE INCOME) IF THE NATURE AND SOURCE THEREOF IS NOT EXPLAINED SATISFAC TORILY. THE EXPENDITURE IN QUESTION IS CLAIMED TO BE WAGES. IN SO FAR AS IT WAS RECORDED IN THE REGULAR BOOKS OF ACCOUNT, ITS SOURCE IS ALSO EXPLAINED. IT IS NOT UNDERSTOOD HOW THE ASSESSING OFFICER TREATED IT AS UNEXPLAINED AND ADD ED TO THE ASSESSEE'S INCOME. BASED ON HIS REASONING, HE COULD HAVE TRIED TO HOLD THE AMOUNT AS INFLATED/BOGUS EXPENDITURE AND DISALLOW DEDUCTION O N THE SAME, BUT, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , EVEN THAT WOULD NOT BE PERMISSIBLE. ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 10 OF 21 09.3 THE ASSESSEE HAS BEEN SEARCHED U/S 132 OF THE IT ACT. NO EVIDENCE HAS BEEN BROUGHT UP OF RECORD TO SHOW THAT THE EXPENDIT URE WAS NON-GENUINE. IN THE NORMAL COURSE, WAGES SHOULD NOT REMAIN PAYABLE FOR A LONG TIME. BUT, THE ASSESSEE OFFERED AN EXPLANATION WHICH CANNOT BE REJ ECTED OUT RIGHT. HE ALSO SHOWED THAT THE LIABILITY HAD ACTUALLY BEEN DISCHAR GED AFTER SOME TIME. THE FACT OF WAGES REMAINING PAYABLE MAY BE A GOOD GROUN D OF SUSPICION BUT SUSPICION ALONE CANNOT BE A GOOD GROUND FOR DISALLO WANCE OF EXPENDITURE. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THE ADDITION IS NOT JUSTIFIED AND IS DELETED. 11. WITH THE ABLE ASSISTANCE COMING FROM REVENUE SI DE, IT EMANATES FROM A PERUSAL OF THE CIT(A) FURTHER THAT HE HAS GONE BY SECTION 69C OF THE ACT PRIMARILY ON AN ASSUMPTION T HAT THE ASSESSING OFFICER HAD TREATED THE ASSESSEES EXPENDITURE CLAI M AS UNEXPLAINED WHEREAS WE NOTE THE CORRESPONDING ASSESSMENT DISCUS SION IN PARA 3 PAGE 13 OF THE ASSESSMENT ORDER DT.31.03.2013 HAD T REATED AS NOT A GENUINE EXPENDITURE ONLY. THE ASSESSING OFFICER AP PEARS TO HAVE NOTED FROM A PERUSAL OF THE ASSESSEES LEDGER ACCOU NT COPY THAT HE HAD NOT EVEN FILED THE CORRESPONDING VOUCHERS CONTA INING THE PAGE NUMBERS, NAMES AND DETAILS OF PAYEES MUCH LESS DETA ILED COGENT EVIDENCE. MR.SAI TOOK US TO THE ASSESSING OFFICERS DETAILED DISCUSSION THAT THE ASSESSEE HAD DEBITED THE CORRES PONDING LABOUR EXPENSES AS AND WHEN CASH WAS AVAILABLE WITH HIM. THE FACT ALSO REMAINS THAT PAYMENT OF CASH EXPENSES IN SUCH A BAC KDROP OF REAL ESTATE DEVELOPMENT ACTIVITY ON SITE CANNOT BE ALTOG ETHER RULED OUT. FACED WITH THIS SITUATION, WE DEEM IT APPROPRIATE T HAT A LUMPSUM DISALLOWANCE OF RS.60 LACS THAN RS.2.85 CRORE IN IS SUE WOULD BE JUST AND PROPER WITH A RIDER THAT THE SAME SHALL NOT BE TREATED AS A PRECEDENT. THE REVENUES INSTANT LATTER SUBSTANTIVE INSTANT GROUND AS WELL AS MAIN APPEAL NO.902/HYD/2015 IS PARTLY ACCEP TED IN ABOVE TERMS. ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 11 OF 21 12. WE NOW ADVERT TO THE ASSESSEES REMAINING GROUN DS. HIS SOLE SURVIVING GRIEVANCE CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION MAKING ADDITION OF RS.1,80,12,09 6/- ALLEGEDLY REPRESENTING UNEXPLAINED INVESTMENT MADE IN THE COU RSE OF ASSESSMENT READING AS UNDER : ON VERIFICATION OF BOOKS OF ACCOUNTS IT IS FOUND T HAT AN AMOUNT OF RS.4,61,62,806/- WAS RECORDED IN THE BOOKS OF ACCOU NTS WHEREAS AS PER THE ABOVE INFORMATION AN AMOUNT OF RS.6,41,74,902/- WAS PAID AS CAPITAL IN ARKAY PROJECTS THUS THE DIFFERENCE OF RS.1,80,12,09 6/- WAS INVESTED OUTSIDE THE BOOKS OF ACCOUNTS. ASSESSEE WAS ASKED TO EXPLAI N CALLED FOR. IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE FILED RE PLY ON 18.03.2013 STATED THAT, 'I HAVE ALREADY SUBMITTED THE DETAILS OF ARKE Y PROJECTS IN MY REPLY DATED 09-01-2012. MR. C. RAMA KRISHNA REDDY IS THE OTHER PARTNER IN ARKEY PROJECTS AS EVIDENCED BY PAGE NO. 31-36 OF ANN/ AKR /R/1. IT IS VERY CLEAR FROM PAGE NO.40 AND 41 OF ANN/ AKR/R/1 THAT RS.2-00 CRORES IS PAID BY MR. CRK REDDY VIDE VARIOUS CHEQUES DRAWN ON FEDERAL BAN K AND LORD KRISHNA BANK AS PER PAGE 41 AND ALSO RS.50-00 LAKHS VIDE CH . NO.009906 DATED 06- 11-2006 AS PER PAGE NO.40. THUS, A TOTAL AMOUNT OF RS.250-00 LAKHS IS PAID BY MR. CRK REDDY. THIS BEING SO, IT IS NOT CORRECT TO PROPOSE TO ADD UP THE AMOUNTS TO MY ACCOUNT. AS CAN BE SEEN FROM THE STATEMENT, ALL THE PETTY EX PENSES ALSO ARE RECORDED IN THE STATEMENT AS PER PAGE 119,120 AND 121 OF ANN EXURE AKR/R/01. LAND DEVELOPMENT PAYMENTS ARE APID AS BELOW. ' CASH TO REMESH 1,00,000/- CH 779254 TO RAMESH 20,00,000/- CH 782532 TO RAMESH 15,00,000/- CH 786886 TO UMA MAHESWARAMMA 5,00,000/- CH 786887 TO UMA MAHESWARAMMA 9,75,000/- --------------- IN ADDITION TO THOSE PAYMENTS, AN AMOUNT OF RS.1500 0000/- IS APPEARING AS CASH PAID TO SUDARSHANREDDY ON 10.02.2007 FOR LAND DEVELOPMENT. I AM SURPRISED TO NOTE THAT SUCH BIG FIGURE IS APPEARING IN THE STATEMENT. BY OUR PRACTICE, WE PAY ALL THE BIG AMOUNTS BY ACCOUNT PAY EE CHEQUES. IN THAT CASE PAYMENT OF 150-00 LAKHS TO MR. SUDARSHANREDDY DOES NOT ARISE. IT IS ONLY RS.1,50,000/- THAT IS PAID TO SUDARSHANREDDY AT THE REQUEST OF MR. RAMESH. THIS IS WRONGLY MENTIONED AS 1,50,00,000/- BY THE A CCOUNTANT OR THE PERSON, WHO PREPARED THE STATEMENT. I REQUEST YOU TO EXTEND ME ONE WEEK TIME TO PRODUCE FURTHER EVIDENCE IN THIS REGARD. FURTHER ASSESSEE HAS FILED REPLY ON 25.03.2013 IN R ESPONSE TO SHOW CAUSE NOTICE STATED THAT, WITH REGARD TO THE STATEMENT OF EXPENSES RECORDED IN THE ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 12 OF 21 STATEMENT AS PAGE 119,121 AND 121 OF ANNEXURE AKR/R /01., THE CHRONOLOGICAL EVENTS OF THE AARKEY PROJECTS ARE AS BELOW. 1.FIRST ADVANCES FOR SECURITY PURPOSE GIVEN FOR THE PROJECT AS TOKEN ADVANCE VIDE CH NO. 757763 OF RS.1,00,000/- 08.10.2006 (THE SAME IS RECEIVED BACK ON 30.04.2007) 2. FIRST ADV OF RS. 45 LAKHS GIVEN TO LAND LORD 14. 10.2006 3. DATE OF PARTNERSHIP DEED OF AARKAY PROJECTS PAGE NO.31-36 30.10.2006 4. MOU WITH LAND LORDS ENTERED ON (37-43) 30.1.0.2006 5. DVPT AG CUM GPA REGISTERED AS PER PAGE 80 OF ANN /AKR/R/1 23.11.2006 6. MEETINGS OF THE LANDLORDS AND DEVELOPERS (PAGE 4 4-47 26.12.2007 7. MEETING OF LANDLORDS AND DEVELOPERS (PAGE 48-49) 23.01.2008 AS PER THIS MOU. DATED 30.10.2006, THE AMOUNTS PAID /PAYABLE BY AKR AND CRKR AS BELOW: PAID UP TO 30.10.2006 BY CRK 200 LAKHS PAID BY AKRON 08.10.2006 1.50 LAKHS AGREED TO PAY BY 07.11.2006 100 LAKHS BY PDCS AGREED TO PAY BY 07.12.2006 100 LAKHS BY PDCS AGREED TO PAY PDCS BEFORE 31.12.2006 150 LAKH.BY P DCS AGREED TO PAY PDCS BEFORE 31.01.2007 150 LAKHS BY PDCS AGREED TO PAY PDCS BEFORE 28.02.2007 150 LAKHS BY PDCS TOTAL DEPOSIT AS PER AGREEMENT: 1000 LAKHS CLAUSE 10-10 OF THE MOU CUM AGREEMENT AS PER PAGE 3 7 OF ANNEXURE AKR/R/1 READS AS FOLLOWS: ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 13 OF 21 '10-10. THE FIRST PARTY WILL ALLOW THE SECOND PARTY TO START ANY DEVELOPMENTAL ACTIVITIES ON THE SCHEDULE PROPERTY ONLY AFTER THE PAYMENT OF RS.10,00,00,000/- ON OR BEFORE FEBRUARY 2007' PAGE NO.44 TO 49 OF THE ANNEXURE ERE THE' MINUTES O F THE MEETING OF LANDLORDS AND DEVELOPERS. THE CONTENTS OF THE SAME PAGES CLEA RLY STATE THAT THE AMOUNTS GIVEN SO FAR TO THE LANDLORDS UP TO 26.12.2 007 ARE RS.8 CRORES ONLY AND AFTER 8 CRORES SHALL BE GIVEN IN JAN, FEB AND A PRIL,2008, SUBJECT TO THE FULFILLMENT OF CERTAIN CONDITIONS. THUS, THE TOTAL AMOUNTS ADVANCED TO THE LANDLORDS A RE RS. 8 CRORES ONLY. OUT OF THIS 450 LAKHS IS SPENT BY THE ASSESSEE, WHICH I S FULLY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE TOTAL AMOUNT APPEARING IN THE BOOKS OF THE ASSESSEE AS INVESTMENT IN AARKAY PROJECTS IS RS.489.70 LAKHS. THE BALANCE AMOUNT IS SPENT FOR VARIOUS EXPENSES AS EVI DENT IN THE SEIZED MATERIAL AND ALSO IN THE BOOKS OF ACCOUNT OF THE AS SESSEE. THIS BEING SO, A STATEMENT OF EXPENSES SPENT AT THE SITE WAS PREPARED BY THE SITE ACCOUNTANT, WHO HAS MADE THE WRONG ENTRIES' IN THE STATEMENT. THE AMOUNT OF RS.1,50,000/- WAS WRONGLY ENTERED AS 150 LAKHS. THE ONLY THING HAPPENED IS WHILE FAIRING THE STATEMENT IN TO COMPU TER, HE HAS ENTERED 1,50,000/- AS 1,50,00,000/- I.E THE PAISA ARE ALSO INCLUDED IN THE RUPEES COLUMN. AS NO COMMAS ARE FOLLOWED, THIS' MISTAKE HA S HAPPENED. THE FOLLOWING FACTS MAY BE CONSIDERED. 1. THIS SITE IS TAKEN ON DEVELOPMENT BASIS AND THE ADVANCES ARE ALSO NOT PAID FULLY. 2. THIS IS NOT A SALE TRANSACTION, TO ASSUME ANY ON PAYMENTS TO HAVE BEEN MADE TO THE LANDLORDS. 3. THE VENTURES HAS GONE IT TO DISPUTE AND DID NOT MATERIALIZE TILL DATE. 4. THE PAYMENT IS MENTIONED AS PAID TO SUDARSHANRED DY FOR LAND DEVELOPMENT CHARGES AND NOT TO LANDLORDS. 5. THE PAYMENT IS ENTERED TO HAVE BEEN MADE ON 10.0 2.2007. BUT, AS PER THE AGREEMENT, THE DEVELOPERS ARE NOT ALLOWED TO ENTER THE SITE EVEN. ALREADY SOME AMOUNTS ARE SPENT FOR THE STONE CUTTIN G WITH THE PERMISSION OF THE LANDLORD, WHICH ARE TRULY RECORDED IN THE BOOKS AS DIESEL EXPENSES. 6. THE TIME DURATION BETWEEN THE DATE OF ENTERING I N TO THE AGREEMENT AND THIS ENTRY IS ONLY 2.5 MONTHS. IT IS DIFFICULT TO S PEND THAT MUCH AMOUNT ON THE PROJECT, APART FROM THE OTHER AMOUNTS SPENT. IT CAN NOT BE ANY ADVANCES PAYMENT ALSO AS THE ASSESSEE HIMSELF IS A CONTRACTO R AND WANTED TO TAKE UP THE VENTURE ON HIS OWN AS THE MAIN PARTNER. 7. WHEN EVEN SMALL AMOUNTS ARE ALSO RECORDED IN THE BOOKS, IT IS NOT POSSIBLE FOR THE ASSESSEE TO SPEND THAT MUCH CASH FOR DEVELO PMENT EXPENSES. ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 14 OF 21 8. THERE IS NO STICK ON THE AMOUNT, WHEREAS ALL THE OTHER AMOUNTS ARE TICKED. THAT MEANS THE ENTRY IS DOUBTFUL AND NOT VERIFIABLE . SO, THIS IS NOT TICKED BY THE OFFICE ACCOUNTANT WHILE CHECKING WITH THE CASH BOOK ENTRIES IN HIS BOOK. IT IS EVIDENT FROM THE MATERIAL. 9. IN THE SUBSEQUENT MINUTES OF THE LANDLORDS AND D EVELOPERS ALSO, THERE IS NO MENTION OF THE DEVELOPMENT EXPENSES INCURRED. 10 IN THE COPY OF LEGAL NOTICE DATED 10.02.2010, (A S PER PAGE 140,141 OF THE ANNEXURE) ISSUED BY THE DEVELOPERS TO THE LANDLORDS , THERE IS NO MENTION OF HAVING SPENDING THAT MUCH AMOUNT FOR THE DEVELOPMEN T EXPENSES. THERE IS THE MENTION. OF THE TOTAL AMOUNTS PAID AS RS.850 LA KHS, OUT OF WHICH THE INVESTMENT RELATED TO THE ASSESSEE IS RECORDED IN T HE BOOKS OF THE ASSESSEE. LIKE WISE, THERE IS DUPLICATION IN ENTERING OF THE AMOUNTS AS PER STATEMENT. THE TOTAL AMOUNTS THAT ARE WRONGLY ENTERED ARE: 1. LANDLORDS DEVELOPMENT EXPENSES TO SUDARSHANREDDY : 1,50,00,000/- 2. CASH PAID TO S RAMESH TO DIESEL 1,00,000 3. CASH PAID TO S RAMESH TO DIESEL 4,00,000 4. TRAVELLING EXPENSES TO C V RAO: 11,511 5. MISC EXPENSES TO C V RAO 105 6. MISC EXPENSES TO C V RAO 600 DIFFERENT TOTAL: 1,55,10,705 IT MAY BE NOTED THAT THESE AMOUNTS ARE WRONGLY ENTE RED IN THE STATEMENT. THESE AMOUNTS ARE NOT. VOUCHED AND DO NOT CONTAIN T HE VERIFICATION MARKS AND AFTER. VERIFICATION FOUND WRONG. THE TOTAL IS A PPEARING IN THE TOP OF PAGE NO.121 OF THE ANNEXURE. HENCE, THESE WERE NOT TAKEN IN TO THE MAIN BOOKS OF ACCOUNT OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE, THE STATEMENT MAY BE IGN ORED AS THIS IS ONLY A ROUGH SHEET PREPARED BY SOME SITE ACCOUNTANT CONTAINING W RONG AND DUPLICATE ENTRIES. THE AMOUNT OF THE RS. 1,50,000/- APPEARING IN THE STATEMENT AS RS.1,50,00,000/- ALSO IS A DUPLICATE ENTRY AS WELL AS WRONG ENTRY. THE ASSESSEE'S EXPLANATION 'IS NOT ACCEPTABLE. AS P ER CLAUSE 10-10, 10 CRORE SHOULD BE PAID TO THE LANDLORD ON OR BEFORE FEB,07 TO START DEVELOPMENT ACTIVITY. ON EXAMINATION OF THE SEIZED MATERIAL ABO VE IT IS CLEAR THAT, THE ASSESSEE AND HIS PARTNER STARTED THE DEVELOPMENT AC TIVITIES AND SPENT HUGE AMOUNTS ON DIFFERENT DATES TILL MARCH, 08. AS PER A GREEMENT IT IS CONSTRUED THAT, IT IS NOT POSSIBLE TO START DEVELOPMENT ACTIV ITY WITHOUT PAYING RS.L0 CRORE. SINCE THE ASSESSEE HAS STARTED THE DEVELOPME NT ACTIVITY IT CAN TAKEN THAT THE TOTAL ADVANCE OF RS.10 CRORE WAS ALREADY P AID TO LAND LORDS. FURTHER THE ASSESSEE STATED THAT, THE TOTAL ADVANCE WAS ONL Y RS. 8 CRORE OUT OF WHICH ASSESSEE SHARE SHOULD BE RS.4 CRORE. AS THE DEVELOP MENTAL ACTIVITY IS GOING ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 15 OF 21 ON THE CONTENTION OF THE ASSESSEE IS TOTALLY FALSE AND VIOLATION OF THE CLAUSE 10-10 OF THE AGREEMENT. ASSESSEE FURTHER STATED THAT, THE AMOUNT WAS WRONGL Y ENTERED AS RS.1,50,00,000 INSTEAD OF RS.1,50,000. IF IT IS SO, THE TOTAL AMOUNT COMES TO 4,93,74,601 INSTEAD OF 6,41,74,901. BUT THE INVESTM ENT AS PER BALANCE SHEET AS 31.03.2008 IS RS. 4,85,63,677. SO THESE FIGURES DO NOT TALLYING WITH EACH OTHER. THE AMOUNT WAS PAID OF RS.1,50,00,000 PAID O N 10.02.2007 TO SRI SUDHARSNAN REDDY FOR THE DEVELOPMENT OF AARKAY' PRO JECT SITE. SHRI SUDHARSHAN REDDY IS ONE OF THE DEBTORS IN M/S AKR C ONSTRUCTION FOR AN AMOUNT OF RS.54,90,426. FURTHER HIS NAME REFLECTED IN AKR CONSTRUCTION AS SHARE APPLICATION HOLDER. THEREFORE ITS APPEARED TH AT HE IS A KEY PERSON IN THE ASSESSEE'S BUSINESS ACTIVITY AS ON 10.02.2007.A N AMOUNT OF RS. 1.5 CRORE WAS PAID TO HIM IN CASH AS DEVELOPMENT EXPENSES FOR THE AARKAY PROJECT SITE. AS PER THE CLAUSES 10-10 THE ASSESSEE PAID THE ADVA NCES AND STARTED THE DEVELOPMENTAL ACTIVITY. HENCE ASSESSEE INCURRED THE EXPENDITURE AS REPORTED THE ABOVE ACCOUNT COPY. IN VIEW OF THIS THE DIFFERE NCE AMOUNT OF RS. 1,80,12,096 CAN BE TAKEN TO HAVE INCURRED BY THE AS SESSEE. THEREFORE ENTIRE DIFFERENT AMOUNT OF RS.1,80,12,096/- INCLUDING THE AMOUNT OF RS.1,50,00,000 PAID TO SRI SUDHARSHAN REDDY FOR WHICH THERE IS NO PROPER EXPLANATION OF THE ASSESSEE IS TREATED AS UNEXPLAINED INVESTMENT AND T HE SAME IS ADDED TO THE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULAR OF I NCOME AND CONCEALMENT OF INCOME IN THIS REGARD. (ADDITION: RS.1,80,12,096/-) 13. THE CIT(A)S DETAILED DISCUSSION DEALING WITH T HE INSTANT ADDITION READS AS UNDER : 07.0 UNEXPLAINED INVESTMENT DURING THE SEARCH & SEIZURE OPERATION, CERTAIN INCR IMINATING MATERIAL WAS FOUND AND SEIZED CONSISTING OF PAGE NOS. 119-121 (A NNEXURE AKR/R/PO/01). ON VERIFICATION OF BOOKS OF ACCOUNTS, IT WAS FOUND THAT AN AMOUNT OF RS.4,61,62,806/- WAS RECORDED IN THE BOOKS OF ACCOU NTS WHEREAS' AS PER THE SEIZED DOCUMENTS, AN AMOUNT OF RS.6,41,74,902/- WAS PAID AS CAPITAL IN AARKAV PROJECT, THUS THE DIFFERENCE OF RS.1,80,12,0 96/- WAS CONSIDERED TO BE INVESTED OUTSIDE THE BOOKS OF ACCOUNTS AND THE ASSE SSEE WAS ASKED TO EXPLAIN THE INVESTMENT. 07.1 ACCORDING TO THE ASSESSEE, AN AMOUNT OF RS.1.5 0 CRORES SHOWN TO HAVE BEEN PAID TO MR. SUDARSHAN REDDY FOR LAND DEVELOPME NT IN CASH WAS NOT PAID AS IT WAS A GENERAL PRACTICE TO PAY ALL BIG AM OUNTS BY ACCOUNT PAYEE CHEQUES ONLY. INSTEAD, AN AMOUNT OF RS.L,50,000/- W AS ONLY PAID TO MR. SUDARSHAN REDDY. ACCORDING' TO THE ASSESSEE AS PER THE CLAUSE 10-10, OF THE MOU CUM AGREEMENT, ANY DEVELOPMENT ACTIVITY ON THE SCHEDULED PROPERTY WAS TO START ONLY AFTER THE PAYMENT OF RS.L0 CRORE ON OR BEFORE FEBRUARY, 2007. AND AS PER THE MINUTES OF MEETING OF LAND LOR DS AND DEVELOPERS, RS.8 ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 16 OF 21 CRORES WAS GIVEN UPTO 26.12.2007 AND OUT OF THIS RS .4.50 CRORES WAS SPENT BY HIM WHICH WAS FULLY REFLECTED IN HIS BOOKS OF AC COUNT. THE TOTAL AMOUNT INVESTED BY HIM IN AARKEY PROJECT WAS RS.489.70 LAK HS. THAT BEING SO, THE ASSESSEE STATED THAT STATEMENT OF EXPENSES PREPARED BY THE SITE ACCOUNTANT WAS WRONG AND HE HAD WRONGLY ENTERED RS.1,50,000/- AS RS.1,50,00,000/-. TO REINFORCE HIS ARGUMENTS, THE ASSESSEE STATED THA T THE LAND WAS TAKEN ON DEVELOPMENT BASIS AND THE ADVANCES WERE ALSO NOT FU LLY PAID. THE VENTURE HAD GONE INTO DISPUTE AND HAS NOT MATERIALISED TILL DATE. THE SAID PAYMENT OF RS.L,50,00,000/- WAS SHOWN TO HAVE BEEN PAID ON 10. 2.2007, BUT AS PER THE AGREEMENT THE DEVELOPERS WERE NOT ALLOWED TO ENTER THE SITE. THOUGH, SOME AMOUNT WAS SPENT ON DEVELOPMENT WORK VIZ; STONE CUT TING WHICH WAS RECORDED IN THE BOOKS AS DIESEL EXPENSES. ACCORDING TO THE ASSESSEE EVEN THE LEGAL NOTICE ISSUED BY THE DEVELOPER TO THE LANDLOR DS ON 10.2.2010 MADE NO MENTION OF THE AMOUNT OF RS.L,50,00,0000/- SPENT ON DEVELOPMENT. THERE WAS MENTION OF TOTAL AMOUNT OF RS.8.50 CRORES ONLY, OUT OF WHICH THE INVESTMENT RELATING TO HIM WAS RECORDED IN THE BOOKS OF ACCOUN T. THUS, THE TOTAL AMOUNT OF RS.1,55,10,705/- WAS WRONGLY ENTERED IN THE STAT EMENT. THOSE AMOUNTS WERE NOT VOUCHED AND DID NOT CONTAIN VERIFICATION M ARKS. THE STATEMENT WHICH WAS ONLY A ROUGH SHEET PREPARED BY THE, SITE ACCOUNTANT CONTAINING WRONG AND DUPLICATE ENTRIES SHOULD BE IGNORED. ' 07.2 THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLA NATION GIVEN BY THE ASSESSEE AND STATED THAT AS PER CLAUSE 10-10, RS.10 CRORES WAS TO BE PAID TO THE LANDLORD ON OR BEFORE FEBRUARY, 2007 TO START D EVELOPMENT ACTIVITY. ON EXAMINATION OF THE SEIZED MATERIAL, IT WAS CLEAR TH AT THE ASSESSEE AND HIS PARTNER STARTED THE DEVELOPMENT ACTIVITIES AND SPEN T HUGE AMOUNTS ON DIFFERENT DATES TILL MARCH, 2008. AND ACCORDING TO THE AGREEMENT, IT WAS NOT POSSIBLE TO START DEVELOPMENT ACTIVITY WITHOUT MAKI NG A PAYMENT OF RS.L0 CRORES. SINCE THE ASSESSEE HAD STARTED THE DEVELOPM ENT ACTIVITY, IT COULD BE TAKEN THAT THE TOTAL ADVANCE OF RS.L0 CRORE WAS ALR EADY PAID TO THE LAND LORDS. THE CONTENTION OF THE APPELLANT THAT THE TOT AL ADVANCE WAS ONLY RS.8 CRORES WAS REJECTED AS BEING WRONG IN VIEW OF THE F ACT THAT THE DEVELOPMENT ACTIVITY WAS UNDERTAKEN AND THE CONTENTION WAS VOIL ATIVE OF CLAUSE 10-10 OF THE AGREEMENT. THE ASSESSING OFFICER ALSO REJECTED THE ASSESSEE'S CONTENTION THAT THE AMOUNT WAS WRONGLY ENTERED AS RS.L,50,00,0 00/- INSTEAD OF RS.L,50,000/-. ACCORDING TO THE ASSESSING OFFICER, IF THAT WAS SO, THE TOTAL AMOUNT WOULD COME TO RS.4,93,74,601/- INSTEAD OF RS .6,41,74,901/-. BUT THE INVESTMENT AS PER THE BALANCE SHEET AS ON 31.3.2008 WAS RS.4,85,63,677/-. SO THE FIGURES DID NOT TALLY WITH EACH OTHER. SRI S UDHARSHAN REDDY WAS ONE OF THE DEBTORS IN M/S.AKR CONSTRUCTION FOR AN AMOUN T OF RS.54,90,426/-. FURTHER, HIS NAME WAS REFLECTED IN AKR CONSTRUCTION AS SHARE APPLICATION HOLDER. THEREFORE, IT APPEARED TO THE ASSESSING OFF ICER THAT HE WAS A KEY PERSON IN THE ASSESSEE'S BUSINESS ACTIVITY AS ON 10 .2.2007. THE AMOUNT OF RS.1.5 CRORE WAS PAID TO HIM IN CASH AS DEVELOPMENT EXPENSES FOR THE AARKAY PROJECT SITE. AS PER THE CLAUSE 10-10 OF THE AGREEMENT, THE ASSESSEE HAD TO PAY ADVANCES AND THEREAFTER START THE DEVELO PMENTAL ACTIVITY. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD I NCURRED THE EXPENDITURE AS REPORTED IN THE ABOVE DOCUMENT. THE ENTIRE DIFF ERENCE OF RS.L,80,12,096/- (INCLUDING THE AMOUNT OF RS.L,50,00,000/- PAID TO S RI SUDHARSHAN REDDY) FOR ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 17 OF 21 WHICH THERE WAS NO PROPER EXPLANATION GIVEN BY THE ASSESSEE WAS TREATED AS UNEXPLAINED INVESTMENT AND WAS ADDED TO THE RETURNE D INCOME. 07.3 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E APPELLANT STATED THAT HE CREATED A PARTNERSHIP FIRM IN THE NAME OF M/S AARKA Y PROJECT AND THE FIRM ENTERED INTO A DEVELOPMENT AGREEMENT FOR DEVELOPING 50 ACRES OF LAND WITH THE LANDLORDS AS PER THE MOU DATED 30.10.2006. INTE REST ON CAPITAL @18% WAS TO BE PAID TO THE PARTNERS AS EVIDENT FROM THE DEED OF PARTNERSHIP DATED 30.10.2006' AS PER PAGE NO.36 OF SEIZED MATERIAL A/ AKR/R/1. ALL THE PAYMENTS TO THE LANDLORDS WERE DIRECTLY PAID FROM H IS BANK ACCOUNT. THE APPELLANT HAD INVESTED AN AMOUNT OF RS.4,61,62,806/ - BY 31.3.2007 AND RS.4,85,63,677/- BY 31.3.2008 OUT OF WHICH RS.4,50, 00,000/- WAS INTEREST FREE DEPOSIT TO THE LANDLORDS AND THE BALANCE BEING THE AMOUNT SPENT FOR SITE DEVELOPMENT WORKS. THOSE AMOUNTS WERE DULY ACCOUNTE D FOR IN HIS BOOKS OF ACCOUNTS. DURING THE COURSE OF SEARCH, A STATEMENT RELATING TO THE AARKAY PROJECT WAS FOUND AND IN THAT STATEMENT THERE 6-7 T RANSACTIONS AMOUNTING TO RS.L,55,10,705/- WERE RECORDED AGAINST WHICH A QUES TION MARK WAS PUT AND THEY WERE NOT ACCOUNTED FOR IN THE BOOKS OF THE APP ELLANT. IT WAS EXPLAINED THAT THOSE ENTRIES WERE WRONGLY ENTERED BY THE SITE ACCOUNTANT. THE DIFFERENTIAL AMOUNTS WERE NOT ENTERED IN THE REGULA R BOOKS OF THE APPELLANT.AS THEY WERE WRONG ENTRIES AS OBSERVED BY THE REGULAR ACCOUNTANT. 07.4 THE APPELLANT FURTHER ARGUED THAT THE ASSESSIN G OFFICER HAD NOT APPLIED HIS MIND IN UNDERSTANDING THE FACTS AND IN COMING T O A RATIONAL CONCLUSION. THE ADDITION WAS MADE WITHOUT APPRECIATING THE FACT S ON RECORD. THE AMOUNT OF RS.L,55,10,705/- DID NOT BELONG TO THE APPELLANT AND WAS THEREFORE NOT' ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAD FAILED TO PROVE THAT THE AMOUNT OF RS.L,50,00,000/- AND OTHER AMOUNTS WERE PAID BY THE APPELLANT AND FORMED PART OF HIS INCOME . M/S.AKR CONSTRUCTION LTD. STARTED FUNCTIONING FROM 1.4.2008 AND THERE WA S NO SUDARSHAN REDDY IN THE DEBTORS LIST. THE APPELLANT FURTHER ARGUED T HAT THE ASSESSING OFFICER HAD MADE THE ADDITION WITHOUT CONSIDERING THE FACT THAT SOME OF THE TRANSACTIONS RELATED TO FY 200708 ALSO. RELYING ON THE SUBMISSIONS MADE BEFORE ASSESSING OFFICER, HE STATED THAT THE ASSESS ING OFFICER HAD FAILED TO ESTABLISH BY WAY OF ANY EVIDENCE- THAT THE ENTRIES FOUND IN THE SEIZED DOCUMENTS FORMED UNDISCLOSED INCOME OF THE APPELLAN T. 07.5 DECISION: THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APP ELLANT WERE CAREFULLY CONSIDERED. AS PER THE SEIZED DOCUMENT (ANNEXURE AKR/R/PO/01 PAGES 119-121), THE ASSESSEE HAD SPENT RS. 6,41,74,902/- ON AARKAY PROJECT WHILE, AS PER HIS BOOKS OF ACCOUN T, ONLY AN AMOUNT OF RS. 4,61,62,806/_ HAD BEEN SPENT. WHEN CONFRONTED WITH THIS DISCREPANCY, THE ASSESSEE SUBMITTED THAT THE CORRECT AMOUNT OF EXPEN DITURE HAD BEEN RECORDED IN THE BOOKS OF ACCOUNT AND ADDED THAT THE ENTRIES IN THE SEIZED DOCUMENT WHICH DID NOT MATCH WITH THOSE IN THE BOOK S OF ACCOUNT WERE NOT RELIABLE. PARTICULARLY WITH REFERENCE TO THE ENTRY OF RS. 1,50,00,000/- SHOWN AS AMOUNT PAID TO SUDARSHAN REDDY, IT WAS EXPLAINED THAT THE AMOUNT ACTUALLY PAID WAS ONLY RS. 1,50,000/-, BUT THE ACCO UNTANT, BY MISTAKE, HAD ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 18 OF 21 ADDED TWO ZEROS. THE ASSESSING OFFICER DID NOT ACCE PT THE EXPLANATION AND ADDED THE DIFFERENCE OF RS.L,80,12,096/_ AS UNEXPLA INED INVESTMENT. IN APPEAL THE ASSESSEE REITERATED HIS SUBMISSIONS. HE ALSO CHALLENGED THE ADDITION ON THE GROUND THAT SOURCE OF ENTRIES IN TH E SEIZED DOCUMENT PERTAINED TO THE PERIOD BEYOND THE PREVIOUS YEAR UN DER CONSIDERATION. 07.6 AS PER THE PROVISIONS OF IT ACT (AS ALSO OF GE NERAL LAW), A DOCUMENT /ASSET SEIZED FROM A PERSON IS PRESUMED TO BE BELON GING TO HIM AND THE CONTENTS THEREOF ARE PRESUMED TO BE CORRECT, UNLESS THE CONTRARY IS PROVED BY THAT PERSON. THE SEIZED DOCUMENT IN 'QUESTION' WAS SEIZED FROM THE ASSESSEE'S PREMISES AND CONTAINS DETAILS OF TRANSAC TIONS PERTAINING TO HIS BUSINESS. HENCE, THE LEGAL PRESUMPTION IS SQUARELY APPLICABLE. HIS CONTENTION THAT THE ENTRIES NOT MATCHING WITH THOSE IN THE REG ULAR BOOKS OF ACCOUNTS SHOULD BE IGNORED IS NOT BASED ON ANY PLAUSIBLE EXP LANATION AND, HENCE, IS NOT ACCEPTABLE. WHEN OTHER ENTRIES ARE MATCHING WIT H REGULAR BOOKS OF ACCOUNTS, IT HAS TO BE ASSUMED THAT THOSE NOT MATCH ING REPRESENT EXPENDITURE WHICH WAS NOT RECORDED IN THE REGULAR B OOKS AND, HENCE, IS HELD TO BE UNEXPLAINED EXPENDITURE/INVESTMENT. 07.7 ACCORDING TO THE ASSESSEE, HE HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH OWNERS OF A PIECE OF LAND FOR ITS DE VELOPMENT UNDER THE BANNER OF AARKAY PROJECTS. AS PER THE TERMS OF THE MOU, THE DEVELOPMENT WORK COULD ONLY BE STARTED AFTER THE AGREED SUM S O F RS.L0 CRORES HAD BEEN PAID TO THE LAND OWNERS. SINCE THAT SUM COULD NOT B E PAID TO THE LAND OWNERS AND SOME DISPUTE AROSE, INCURRING OF SUCH HUGE EXPE NDITURE ON THAT PROJECT, ACCORDING TO THE ASSESSEE WAS NOT FEASIBLE. IF THI S EXPLANATION WERE CORRECT, THE ASSESSEE SHOULD INDEED NOT HAVE INCURRED ANY DE VELOPMENT RELATED EXPENDITURE ON THAT PROJECT. BUT, AS PER HIS OWN A DMISSION, HE HAD INCURRED DEVELOPMENT EXPENDITURE. HENCE, THE EXPLANATION IS NOT ACCEPTABLE. IF AN EXPENDITURE HAS BEEN INCURRED IN FACT, IT CANNOT BE SAID NOT TO HAVE BEEN INCURRED SIMPLY BECAUSE THE MOU DID NOT STIPULATE T HE EXPENDITURE AT THAT STAGE. 07.8 ACCORDING TO THE ASSESSEE, SOME OF THE ENTRIES DO NOT RELATE TO THE PREVIOUS YEAR UNDER CONSIDERATION. THE CONTENTION I S PRIMA FACIE CORRECT. THE SEIZED DOCUMENT HAS TO BE APPRECIATED IN ITS ENTIRE TY AND IF, ACCORDING TO IT, SOME EXPENDITURE HAD BEEN INCURRED IN ANY ASSESSMEN T YEAR, ADDITION OF THE SAME SHOULD BE CONSIDERED IN SUCH OTHER ASSESSMENT YEAR ALONE. 07.9 IN VIEW OF THE FOREGOING DISCUSSION, THE ADDIT ION, IS CONFIRMED IN PRINCIPLE. THE ASSESSING OFFICER IS DIRECTED TO ASC ERTAIN THE QUANTUM OF SUCH EXPENDITURE PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND RESTRICT THE ADDITION TO THAT QUANTUM. THE PART WHI CH IS SHOWN TO HAVE BEEN INCURRED IN ANY OTHER A:SESSMENT YEAR(S) WOULD BE L IABLE TO BE TAXABLE IN SUCH ASSESSMENT YEAR(S), AND HE MAY INITIATE PROCEEDING U/S 147 RWS 150 OF THE IT ACT. ACCORDING TO THE ASSESSEE, TOTAL INVESTMENT IN THE AARKAY PROJECT, AS PER HIS BOOKS OF ACCOUNTS WAS RS.489.7O LAKHS WHILE THE ASSESSING OFFICER ADOPTED THE FIGURE OF RS.461.63 LAKHS WHILE CALCULA TING THE DIFFERENT VIS-A-VIS THE AMOUNT RECORDED IN THE SEIZED DOCUMENT. THE ASS ESSING OFFICER WILL VERIFY ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 19 OF 21 THIS CONTENTION ALSO AND ADOPT THE CORRECT FIGURE A S PER THE BOOKS OF ACCOUNTS WHILE RE-COMPUTING THE UNEXPLAINED INVESTMENT. 14. SUFFICE TO SAY, IT HAS ALREADY COME ON RECORD T HAT THE IMPUGNED ADDITION IS VERY MUCH BASED ON THE ALLEGED INCRIMINATING MATERIAL IN ANNEXURE AKR/R/PO/01 (PAGES 119 TO 121) FOUND AND SEIZED DURING THE COURSE OF SEARCH SUFFICIENTLY IND ICATING THE UNEXPLAINED INVESTMENT WHICH CARRIES PRESUMPTION OF CORRECTNESS U/S 292C OF THE ACT. LEARNED CIT-DR HAS RIGHTLY P INPOINTED BEFORE US WHILE REFERRING TO THE ASSESSEES CORRESPONDING EXPLANATION BEFORE THE ASSESSING OFFICER EXTRACTED IN THE PRECEDING PA RAS THAT HE SOUGHT TO SHIFT THE ONUS ON THE DEPARTMENT DESPITE THE FAC T THAT THE MAJOR COMPONENT HEREIN WAS CLAIMED TO BE RS.1,50,000/- ON LY. WE THUS, UPHOLD BOTH THE LEARNED LOWER AUTHORITIES IMPUGNED ACTION TO THIS EFFECT. 15. NEXT COMES EQUALLY IMPORTANT ASPECT OF CORRECTN ESS OF THE CIT(A)S DIRECTIONS TO THE ASSESSING OFFICER TO INI TIATE SECTION 147 PROCEEDINGS (SUPRA). THE SAME ARE FOUND TO BE AGAI NST THE LAW SINCE SECTION 153A IS A SPECIFIC PROVISION APPLICABLE IN CASE OF SEARCH ACTION INITIATED U/S.132 OF THE ACT. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO FRAME HIS CONSEQUENTIAL COMPUTATION ADDI NG THE IMPUGNED SUM(S) OF UN-EXPLAINED INVESTMENT IN THE CORRESPOND ING ASSESSMENT YEAR AS PER THE ENTRIES IN THE SEIZED MATERIAL. TH E ASSESSEE FAILS IN ITS INSTANT GRIEVANCES THEREFORE. HIS CROSS-APPEAL ITA NO.927/HYD/2015 IS PARTLY ACCEPTED FOR STATISTICAL PURPOSES. 16. NEXT COMES TO A.Y. 2008-09 INVOLVING REVENUES APPEAL IN ITA NO.1002/HYD/2016 WITH ASSESSEES CROSS OBJECTIO NS IN C.O.NO.64/HYD/2016. LEARNED CIT-DR IS FAIR ENOUGH I N NOT DISPUTING THE CLINCHING FACT THE TAX EFFECT INVOLVE D IN THE SOLE SECTION 36(I)(III) INTEREST AMOUNT OF RS.72,84,552/- DISALL OWANCE HEREIN AS PER CBDT CIRCULAR NO.03 OF 2018 DATED 11-07-2018 AND CI RCULAR NO.17 ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 20 OF 21 OF 2019 DATED 8 TH AUGUST, 2019; AS THE CASE MAY BE THE TAX LIMIT FOR FILING APPEAL BEFORE THE TRIBUNAL. WE FOUND THAT THIS APPEAL IS COVERED BY THE AFORESAID CIRCULARS AND THEREFORE IS NOT MAINTAINABLE. ITS APPEAL ITA NO.1002/HYD/2016 FAILS. THE ASSESSEE S CROSS OBJECTION C.O.NO.64/HYD/2016 SUPPORTIVE OF THE CIT( A)S ORDER IS RENDERED INFRUCTUOUS. 17. TO SUM UP, REVENUES FORMER APPEAL ITA NO.902/HYD/2015 IS PARTLY ALLOWED AND ITA NO.1002/H YD/2016 IS DISMISSED AND ASSESSEES CROSS APPEAL NO.927/HYD /2015 IS DISMISSED AND C.O.NO.64/HYD/2016 THERETO IS DISMISS ED AS RENDERED INFRUCTUOUS IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2021 SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER HYDERABAD, DATED 28 TH OCTOBER, 2021 TYNM & TNMM ITA NOS 902/HYD/2015, 927/HYD/2015, 1002/HYD/2016 & CO NO.64/HYD/2016 PAGE 21 OF 21 COPY TO: S.NO 1 SRI ALLURI KRISHNA REDDY, H.NO.8-2-684/J4, KANAKA D URGA TEMPLE LANE, ROAD NO.12, BANJARA HILLS, HYDERABAD 2 DCIT, CENTRAL CIRCLE-1, HYDERABAD. 3 THE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), HYDERABAD 4 CIT(A)-XI, HYDERABAD 5 PR. CIT (CENTRAL), HYDERABAD 6 DR, ITAT HYDERABAD BENCHES 7 GUARD FILE BY ORDER