Vijaya Bhavani Constructions Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-3(3), Hyderabad, Hyderabad

ITA 129/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2512 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 11-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-02-2016
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Depreciation
• Section: 40A(3); 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 1313/HYD/15 2010-11 M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., HYDERABAD [PAN: AABCV6770A] DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(3), HYDERABAD 129/HYD/16 2011-12 863/HYD/15 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., HYDERABAD [PAN: AABCV6770A] FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, AR FOR REVENUE : SHRI A. SITARAMA RAO, DR DATE OF HEARING : 11-04-2017 DATE OF PRONOUNCEMENT : 12-05-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE ARE APPEALS BY ASSESSEE FOR THE AYS. 2010-11 A ND 2011-12 AND CROSS-APPEAL BY REVENUE FOR AY. 2011-12 AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS)-5, HYDERABAD. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE HEARD TOGETHER AND DECIDED BY THIS COMMON ORDER. M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 2 - : 2. WE HAVE HEARD THE LD. COUNSEL FOR ASSESSEE AND L D.DR AND PERUSED THE PAPER BOOKS PLACED ON RECORD AND THE CASE LAW RELIED ON. ITA NO. 1313/HYD/2015 - AY. 2010-11: 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESSEE I S ENGAGED IN THE BUSINESS OF CIVIL CONTRACT WORKS. IT FILED RETURN OF INCOME ON 29-09-2010 ADMITTING LOSS OF RS. 79,43,830/ -. WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE INCOME TA X ACT [ACT], THE ASSESSING OFFICER (AO) ADMITTED THE FOLLOWING DISA LLOWANCES/ ADDITIONS: A. ADDITION TO TURNOVER SHOWN RS. 1,53,536/-; B. DISALLOWANCE OF DEPRECIATION ON ASSETS RS. 1,47,843/ -; C. DISALLOWANCE OF EXPENDITURE OF RS. 4,73,63,748/- 3.1. IN ADDITION TO THAT, CREDIT FOR THE TDS WAS ALSO NOT GIVEN ON THE TDS MADE ON MOBILISATION ADVANCES. LD. CIT(A) GAVE RELIEF ON THE FIRST ISSUE BY DELETING THE SAME AND REDUCED TH E DISALLOWANCE OF EXPENDITURE TO 15% AS AGAINST 100% MA DE BY AO. REVENUE IS NOT IN APPEAL ON THE RELIEF GRANTED BY THE CIT(A). THREE ISSUES ARE CONTESTED IN THIS APPEAL. 4. GROUND NOS. 1 & 8 ARE GENERAL IN NATURE. ASSESS EE IN THE COURSE OF PRESENT APPEAL HAS RAISED ADDITIONAL GRO UNDS OF APPEAL ON THE ISSUE OF GIVING CREDIT TO THE TDS, WHICH ARE NOTHING BUT SUBMISSIONS BY ASSESSEE ON THE MAIN GROUNDS RAISE D IN THE APPEAL ITSELF. HENCE, THESE ADDITIONAL GROUNDS ARE AD MITTED AS NO FURTHER FACTS ARE REQUIRED TO BE EXAMINED. M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 3 - : 5. GROUND NOS. 2 & 3 PERTAIN TO THE ISSUE OF DISALLOW ANCE OF EXPENDITURE. WHILE FINALISING THE ASSESSMENT ORDE R, AO NOTICED THAT ASSESSEE-COMPANY HAD WITHDRAWN HUGE CASH FROM THE BANKS AT HYDERABAD, VIJAYAWADA ON THE EXPENDITURES SUPPOSED TO HAVE BEEN SPENT AT ORISSA, NIRMAL, WANAPARTHY AND HYDERABAD . AS PER THE AO, ASSESSEE DID NOT FURNISH ANY DETAILS EXCEPT STATI NG THAT THE PROVISIONS OF SECTION 40(A)(IA) AND SECTION 40A(3) OF THE ACT ARE NOT APPLICABLE. AO WAS OF THE VIEW THAT ASSESSEE HAS INCR EASED THE EXPENDITURE BY DRAWING CASH AND THERE IS NO CORRELATIO N BETWEEN THE AMOUNTS DRAWN AND THE PURPOSE OF SPENDING AND HAS QUOTED CERTAIN INSTANCES OF CASH WITHDRAWN FROM PUNJAB NATION AL BANK, VIJAYAWADA WITHOUT HAVING ANY WORK CONTRACTS THERE. ACCO RDINGLY, HE HAS DISALLOWED THE CASH WITHDRAWALS FROM THE THREE BANK ACCOUNTS TOTALLING TO RS. 4,73,63,748/-. 5.1. BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED THAT IT HAS ACTUALLY UNDERTAKEN VARIOUS SUB-CONTRACT WORKS AND THE EXPENDITURES ARE PERTAINING TO THE PAYMENTS TO LABOUR, PROVISIONS AND LIVING EXPENSES AND ALSO TRAVELLING AND ALL PAYM ENTS HAVE BEEN MADE IN THE NORMAL COURSE OF BUSINESS AND PROPERLY R ECORDED IN THE BOOKS OF ACCOUNT. IT WAS SUBMITTED THAT THE WORK HAS B EEN EXECUTED IN TIME AS PER THE AGREED SCHEDULE AND THE MA IN CONTRACTOR WAS CHARGED WITH VARIOUS WORKS. ACCORDINGL Y, THE SAME COULD NOT HAVE BEEN ACHIEVED WITHOUT INCURRING EXPEND ITURE. IT WAS ALSO FURTHER SUBMITTED BY DISALLOWING THIS MUCH AMOUNT, ASSESSEES PROFITS ON SUB-CONTRACT COULD NOT BE AT 60% O F THE TURNOVER. LD. CIT(A) HAVING CONSIDERED THAT THE BOOKS O F ACCOUNT HAVE NOT BEEN REJECTED BY THE AO, WAS OF THE OPINION TH AT THE ENTIRE EXPENDITURE CLAIM COULD NOT HAVE BEEN DISALLOWED. B Y GIVING M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 4 - : VARIOUS REASONS, HE HAS RESTRICTED THE DISALLOWANCE TO 15% OF THE AMOUNT. ASSESSEE IS AGGRIEVED ON THAT, BUT REVENUE HAS NOT COME IN APPEAL ON THE ORDER OF THE CIT(A). 6. IT WAS THE SUBMISSION OF LD. COUNSEL THAT THE CIT(A) SHOULD NOT HAVE CONFIRMED ANY AMOUNT AND AT BEST HE COULD HAVE RESTRICTED THE 5% OF THE AMOUNT TOWARDS NON-VERIFIABLE N ATURE OF THE EXPENDITURE. IT WAS THE SUBMISSION THAT THE DISALLOW ANCE CONFIRMED BY THE CIT(A) AT 15% WOULD BE EXCESSIVE AND UNREASONABLE AND RELIED ON VARIOUS CASE LAW, INCLUD ING THE ORDERS IN EARLIER YEARS TO SUBMIT THAT ASSESSEE WOULD BE WILL ING TO SUFFER 5% OF THE AMOUNT FOR DISALLOWANCE IN VIEW OF THE DIFFI CULTY IN VERIFYING THE EXPENDITURE. 7. LD.DR, HOWEVER, RELIED ON THE ORDERS OF THE AO AN D CIT(A) TO SUBMIT THAT 15% EXPENDITURE DISALLOWANCE IS RE ASONABLE. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE DETAILS PLACED ON RECORD. THE REVENUE HAS NOT COM E IN APPEAL ON THE ORDER WHERE THE AO HAS DISALLOWED 100% OF THE EXPENDITURE ON THE REASON THAT THE SAID EXPENDITURE IS BOGUS. LD . CIT(A), HOWEVER, HELD THAT THAT EXPENDITURE IS ALLOWABLE, SUBJEC T TO DISALLOWANCE OF EXPENDITURE UPTO 15%. CONSIDERING THE PAST RECORD OF ASSESSEE, NATURE OF EXPENDITURE AND UN-VERIFIABLE NATURE OF THE SAME, WE ARE OF THE OPINION THAT DISALLOWANCE OF EXP ENDITURE AT 10% OF THE SAID AMOUNT WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE RESTRICT THE DISALLOWANCE TO 10% OF THE CASH EXPENDITURE DISALLOWED BY THE AO I.E., 10% OF RS. 4, 73,63,748/-. M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 5 - : AO IS DIRECTED TO RE-COMPUTE THE DISALLOWANCE ACCORDI NGLY. GROUNDS ARE PARTLY ALLOWED. 9. GROUND NOS. 4 & 5 AND ADDITIONAL GROUNDS ARE ON THE ISSUE OF DISALLOWING THE CLAIM OF CREDIT FOR THE ENTIRE AMOUNT OF TDS DEDUCTED OUT OF MOBILISATION ADVANCE RECEIVED DURING THE YEAR. AS ALREADY STATED, ASSESSEE HAS RAISED VARIOUS SUBMISSIO NS IN THE FORM OF ADDITIONAL GROUNDS BUT MORE OR LESS THE ISSUE IS SIMILAR THAT THE TDS DEDUCTED AND PAID DURING THE YEAR SHOULD H AVE BEEN GIVEN CREDIT AS PER THE PROVISIONS OF SECTION 199. WH ILE FINALISING THE ASSESSMENT PROCEEDINGS, AO OBSERVED THAT AS PER 26A S STATEMENT, THE COMPANY REFLECTED RECEIPT OF RS. 6,61,57 ,762/- AS AN ADVANCE FROM M/S. KNR CONSTRUCTIONS LTD., ON WHICH TDS WAS MADE. AN AMOUNT OF RS. 11,52,289/- RELATABLE TO ADVA NCE AMOUNT OF THE ABOVE WAS RESTRICTED AND NOT GIVEN CREDIT ON THE REASON THAT THE SAID AMOUNT WAS NOT OFFERED AS INCOME AS PER THE PR OVISIONS OF SECTION 199. ASSESSEE RELIED ON THE DECISION OF THE IT AT, VISAKHAPATNAM IN THE CASE OF ACIT VS. PEDDU SRINIVAS A RAO IN ITA NO.324/VIZAG/2009 DT. 03-03-2011 FOR THE PURPOSE OF INTERPRETATION OF AMENDED PROVISIONS OF SECTION 199 AN D SUBMITTED THAT ASSESSEE IS ELIGIBLE FOR CREDIT OF TDS. LD. CIT( A), HOWEVER, DID NOT AGREE WITH ASSESSEES CONTENTIONS AND RELIED ON VIE W SUPPORTED BY ITAT IN THE CASE OF ACIT VS. CSCHKSOMA IN ITA NO . 1357/HYD/2010 DT. 29-09-2011. HE UPHELD THE ORDER OF THE AO AND DENIED THE CREDIT OF TDS OF THE ABOVE AMOUNT. IT WA S THE SUBMISSION OF ASSESSEE THAT THE PROVISIONS OF SECTION 1 99 HAVE BEEN AMENDED AND NOW THE TDS IS BEING ALLOWED CREDI T IN THE YEAR OF DEDUCTION SO AS TO AVOID PROBLEMS IN RECONCILIATION . HE RELIED ON THE FOLLOWING CASE LAW AND THE PROPOSITION: M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 6 - : S.NO. NAME OF THE CASE COURT CITATION GIST 1. M/S. TOYO ENGG. INDIA LTD., MUMBAI ITAT 3275/M/2002 THERE IS NO IMMEDIATE NEXUS BETWEEN THE INCOME AND THE TDS MADE OUT OF A PARTICULAR PAYMENT 2. BHOOMRATNAM & CO AP HIGH COURT 29 TAXMANN.COM 275 TDS CREDIT HAS TO BE GRANTED TO THE ASSESSEE BASED ON TDS CERTIFICATE. 3. M/S. CSCHK-SOMA JOINT VENTURE HYDERABAD ITAT 1357/H/2010 TDS CREDIT HAS TO BE GIVEN ON RECEIPTS INCLUDING MOBILIZATION ADVANCES. 4. M/S. AHLCON INDIA PVT. LTD., DELHI ITAT 1924/DEL/2011 IF MOBILIZATION ADVANCES WILL BE ULTIMATELY OFFERED FOR TAX, THEN TDS CREDIT HAVE TO BE GIVEN ON SUCH ADVANCES. 5. M/S. SVEV CONSTRUCTIONS LTD HYDERABAD ITAT 1172/H/2010 TDS CREDIT HAS TO BE GIVEN ON MOBILISATION ADVANCES 6. M/S. SELAN PROJECTS PVT. LTD., HYDERABAD ITAT 1361/H/2013 EVEN IF ASSESSEE DOES NOT OFFERS SOME INCOME TO TAX, THE TDS WHICH HAD BEEN DULY DEPOSITED WITH GOVERNMENT HAS TO BE GIVEN CREDIT. M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 7 - : 10. LD.DR, HOWEVER, SUBMITTED THAT THE CREDIT WILL BE G IVEN IN THE YEAR IN WHICH THE RELEVANT INCOME IS OFFERED TO TAX. 11. IN REPLY, LD. COUNSEL SUBMITTED THAT THERE IS NO PROBLEM IN ANY OF THE EARLIER YEARS ON GETTING CREDIT O N THE MOBILISATION ADVANCES AND A CONSISTENT VIEW CAN BE TA KEN IN GIVING CREDIT FOR THE TDS IN THE YEAR OF DEDUCTION AND PAYMENT. 12. WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE CASE LAW PLACED ON RECORD. THE CO-ORDINATE BENCH IN THE CASE OF ACIT VS. PEDDU SRINIVASA RAO IN ITA NO. 324/VIZA G/2009 DT. 03-03-2011 HAVE ANALYSED THE PRESENT PROVISIONS OF SE CTION 199 AND HELD AS UNDER: 'WE HAVE CAREFULLY PERUSED THE PROVISIONS OF SECTIO N 199 OF THE ACT AND ACCORDING TO THE PRE-AMENDED PROVISIONS OF SECT ION 199, THE CREDIT OF DEDUCTION MADE IN ACCORDANCE WITH THE RELEVANT PROV ISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE AMOUNT SO DEDUCTED ON THE PRODUCTION OF THE CERTIFICATE FURNI SHED U/S 203 FOR THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT Y EAR FOR WHICH SUCH INCOME IS ASSESSABLE. BUT IN THE AMENDED PROVISIONS THE WORDS 'FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE ' HAS BEEN OMITTED. MEANING THEREBY, THAT THE LEGISLATURE WAS QUITE CON SCIOUS ABOUT THE FACTS AND HARDSHIPS FACED BY SOME ASSESSES, WHILE MAKING THE AMENDMENTS IN SECTION 199 AND IN AMENDED PROVISIONS NOTHING HAS B EEN STATED ABOUT THE YEAR IN WHICH THE CREDIT OF TDS IS TO BE CLAIMED. A S PER AMENDED PROVISIONS OF SECTION 199, IN SUB-SECTION 1, IT HAS BEEN STATED THAT ANY DEDUCTIONS MADE IN ACCORDANCE WITH THE FOREGOING PR OVISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME TH E DEDUCTION WAS MADE. THEREFORE, AS PER THE AMENDED PROVISIONS, ONC E THE TDS WAS DEDUCTED, A CREDIT OF THE SAME TO BE GIVEN TO THE A SSESSEE, IRRESPECTIVE OF THE YEAR TO WHICH IT RELATES.' 12.1. SIMILAR VIEW WAS ALSO TAKEN BY AHMEDABAD BENC H IN THE CASE OF SADBHAV ENGINEERING LTD., VS. DCIT. RELY ING ON THE PRINCIPLES LAID DOWN BY THE CO-ORDINATE BENCHES IN TH E ABOVE CASES M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 8 - : AND PAST RECORD OF ASSESSEE, WE HAVE NO HESITATION IN DIRECTING THE AO TO GIVE CREDIT TO THE AMOUNT DEDUCTED FROM MOBILISATI ON ADVANCES. GROUNDS ARE ACCORDINGLY ALLOWED. 13. GROUND NOS. 6 & 7 PERTAIN TO THE ISSUE OF DISALLO WANCE OF DEPRECIATION ON A SUM OF RS. 1,47,830/-. WHILE F INALISING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT PLANT & MACHIN ERY WORTH RS. 19,71,057/- WERE FOUND TO BE IN THE NAME OF M/S. KNR CONSTRUCTIONS LTD., ON WHICH DEPRECIATION AT 7.5% WAS CL AIMED. AO DISALLOWED THE DEPRECIATION AS THE SAID INVOICES AR E NOT IN THE NAME OF ASSESSEE-COMPANY AND ASSESSEE FAILED TO EXPL AIN THE OWNERSHIP OF ASSETS. BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED THAT THE ORDERS WERE PLACED BY M/S. KNR CONSTRUCTIONS L TD., FOR SUPPLY OF MACHINERY ON CREDIT AND AS ASSESSEE WAS A SUB- CONTRACTOR, ASSESSEE TOOK THE MACHINERY AND PAYMENTS WER E MADE BY ASSESSEE-COMPANY, THOUGH BILLS ARE STILL IN THE NA ME OF THE PRINCIPAL COMPANY I.E., M/S. KNR CONSTRUCTIONS LTD. I T WAS SUBMITTED THAT OWNERSHIP LIES WITH COMPANY AND IS ELIGI BLE FOR DEPRECIATION. LD. CIT(A), HOWEVER, DID NOT ALLOW THE CLAIM AS NO FURTHER INFORMATION WAS FURNISHED DURING THE APPELLATE PROCEEDINGS TO INDICATE SUCH OWNERSHIP. LD. COUNSEL, HOWEVER, SU BMITTED THAT ASSESSEE HAS INDEED PAID THE AMOUNTS AND OWNED THE AS SETS EVEN THOUGH THE BILLS ARE IN THE NAME OF THE PRINCIPAL COMP ANY, HE HAS NO OBJECTION FOR PROVIDING THE NECESSARY DETAILS IF TH E MATTER IS SENT BACK TO THE AO. 14. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THIS ISSUE REQUIRES RE-EXAMINATION BY TH E AO. JUST BECAUSE THE BILLS ARE IN THE NAME OF THE PRINCIPAL CO NTRACTOR, IT M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 9 - : DOES NOT MEAN THAT OWNERSHIP LIES WITH SUCH COMPANY. WH AT IS TO BE REQUIRED TO BE EXAMINED IS THE SOURCE OF PAYMENTS M ADE FOR ACQUIRING THE ASSETS AND USE THEREOF. AO HAS NOT DISP UTED THAT SUCH ASSETS ARE NOT USED BY THE COMPANY. THE ONLY ISS UE IS ABOUT THE OWNERSHIP OF THE ASSETS. ASSESSEE IS DIRECTED TO FU RNISH NECESSARY PAYMENTS OF THE AMOUNTS TOWARDS PURCHASE OF A BOVE SAID MACHINERY AND ON FURNISHING NECESSARY DETAILS, AO IS DIRECTED TO EXAMINE THE SAME AND ALLOW IF ASSESSEE-COMPANY PAI D THE AMOUNTS FOR PURCHASE OF MACHINERY, EVEN THOUGH THE BI LLS ARE IN THE NAME OF PRINCIPAL CONTRACTOR. WITH THESE DIRECTIONS, THE GROUND NOS. 6 & 7 ARE RESTORED TO THE FILE OF THE AO. 15. IN THE RESULT, APPEAL IN ITA NO. 1313/HYD/2015 I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 129/HYD/2016 - AY. 2011-12: 16. IN THIS ASSESSMENT YEAR, ASSESSEE HAS FILED RETUR N OF INCOME ADMITTING LOSS OF RS. 72,87,729/-. AO COMPLET ED THE ASSESSMENT U/S. 143(3) MAKING THE FOLLOWING DISALLOW ANCES/ ADDITIONS: A. DISALLOWANCE OF EXPENDITURE OUT OF CASH WITHDRAWALS RS . 1,27,48,000/-; B. DISALLOWANCE OF DEPRECIATION RS. 2,95,660/-; C. UNEXPLAINED INVESTMENT RS. 41,40,000/- AO HAS ALSO NOT GIVEN CREDIT OF TDS OF RS. 10,33,440/ - MADE ON MOBILISATION ADVANCES. M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 10 -: 17. GROUND NOS. 1 & 8 ARE GENERAL IN NATURE AND AS IN EARLIER YEAR, ASSESSEE HAS RAISED ADDITIONAL GROUNDS ON THE ISSUE OF TDS NOT GIVEN CREDIT, CONTESTED IN GROUND NO.7. THE ADDITIONAL GROUNDS ARE NOTHING BUT LEGAL SUBMISSIONS, HENCE THEY ARE ADMITTED. 18. GROUND NOS. 2, 3 & 4 PERTAIN TO THE DISALLOWANCE OF EXPENDITURE TO THE TUNE OF 15% BY THE CIT(A). AS IN EA RLIER YEAR, AO DISALLOWED 100% OF THE EXPENDITURE STATED TO HAVE BE EN SPENT OUT OF CASH WITHDRAWALS FROM BANK ACCOUNTS TO THE TUNE OF RS. 1,27,48,000/-. LD. CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF ASSESSEE, RESTRICTED THE DISALLOWANCE TO 15%. 19. THIS ISSUE IS SIMILAR TO THE ISSUE CONTESTED IN G ROUND NOS. 2 & 3 IN THE ABOVE APPEAL FOR AY. 2010-11. THE SUBMISSIONS ARE ONE AND THE SAME. CONSIDERING THE DECISION TAKEN I N PARA 8 ABOVE, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF TH E AMOUNT WHICH WAS DISALLOWED BY THE AO I.E., 10% OF RS . 1,27,48,000/-. GROUNDS ARE PARTLY ALLOWED. 20. GROUND NOS. 5 & 6 PERTAIN TO DISALLOWANCE OF DEPRECIATION ON THE ASSETS ON WHICH BILLS ARE IN THE NA ME OF M/S. KNR CONSTRUCTIONS LTD. THIS ISSUE IS SIMILAR TO THE GR OUNDS RAISED IN AY. 2010-11 AT GROUND NOS. 6 & 7. FOR THE REASON S STATED THEREIN IN PARA 14 ABOVE, WE DIRECT THE AO TO EXAMINE THE PAYMENT OF AMOUNTS TOWARDS OWNERSHIP OF THE ASSETS AND ALLOW THE DEPRECIATION, EVEN IF THE BILLS ARE IN THE NAME OF TH E PRINCIPAL CONTRACTOR, IF THE AMOUNTS ARE PAID/BORNE BY ASSESSEE. ASSESSEE IS M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 11 -: DIRECTED TO SUBMIT THE RELEVANT EVIDENCE IN SUPPORT OF THE CLAIM TO THE AO. GROUNDS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 21. GROUND NO. 7 PERTAINS TO THE CREDIT OF TDS ON THE MOBILISATION ADVANCES. THIS ISSUE IS ALSO SIMILAR TO THE ISSUE CONTESTED IN EARLIER YEAR IN GROUND NOS. 4 & 5 AND A DDITIONAL GROUNDS. CONSISTENT WITH THE VIEW TAKEN IN EARLIER YEA R VIDE PARA12, AO IS DIRECTED TO GIVE CREDIT FOR THE TDS AMOUN T AFTER DUE EXAMINATIOM. GROUNDS ARE CONSIDERED ALLOWED. 22. IN THE RESULT APPEAL IN ITA NO. 129/HYD/2016 IS CONSIDERED PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 863/HYD/2015 - AY. 2011-12: 23. THIS IS A REVENUE APPEAL ON THE ISSUE OF DELETIO N OF AN AMOUNT OF RS. 41,40,000/- ON ACCOUNT OF UNEXPLAINED I NVESTMENT. AO WHILE COMPLETING THE ASSESSMENT HAS NOTICED THAT ASS ESSEE HAS MADE CERTAIN DEPOSITS BETWEEN MAY TO DECEMBER OF 2010 TOTALLING TO RS. 41,40,000/- IN PUNJAB NATIONAL BANK, SURYA PE T, THE INFORMATION OF WHICH WAS RECEIVED FROM THE CIB/AIR B Y THE AO. AO ISSUED A LETTER DT. 18-06-2013 PROVIDING THE ABOVE INFORMATION AND ASKING ASSESSEE TO SHOW CAUSE WHETHER SUCH DEPOSI TS ARE REFLECTED IN P&L A/C AND BALANCE SHEET. SINCE NO I NFORMATION WAS RECEIVED, AO TREATED THE ABOVE INVESTMENTS IN THE FORM OF DEPOSITS AS UNEXPLAINED INVESTMENTS AND BROUGHT TO TAX. LD.CIT (A) AFTER CONSIDERING ASSESSEES SUBMISSIONS THAT THOSE INVESTMEN TS ARE REFLECTED IN THE BOOKS OF ACCOUNT, HOWEVER, DELETED THE SAME STATING THAT IT IS NOT CLEAR WHAT WAS THE INFORMATION THAT HAVE BEEN M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 12 -: REQUIRED AND WHAT HAS BEEN FURNISHED AND THE ADDITI ON APPEARS TO HAVE BEEN MADE IN CASUAL MANNER. FURTHER, ON THE LI NES OF DISCUSSION IN THE EARLIER PARAGRAPH WHILE REJECTION OF BOOKS OF ACCOUNT WAS UPHELD AND EXPENSES WERE DISALLOWED ON ESTIMATION BASIS WHERE THE ESTIMATION WAS MADE TO ASCERTAIN TH E PROFITS OF THE BASIS BY NOT RELYING ON THE BOOKS, I AM OF THE CONS IDERED OPINION THAT THERE WOULD NOT BE ANY SCOPE FOR MAKING FURTHER SPE CIFIC ADDITIONS, UNLESS IT IS PROVED, THE INVESTMENTS MADE ARE NOT O RIGINATED OUT OF THE ESTIMATED PROFITS. THUS STATING LD. CIT(A) DELETED THE ADDITION. REVENUE IS AGGRIEVED ON SUCH DELETION. 24. LD.DR REFERRING TO THE ORDER OF THE CIT(A) SUBMI TTED THAT THERE IS NO REJECTION OF BOOKS OF ACCOUNT AND THERE IS ONLY DISALLOWANCE OF CERTAIN EXPENDITURE AT 15% OF NON-VERI FIABLE NATURE, WHICH IS A DISALLOWANCE U/S. 37(1) AND NOT O N ESTIMATION OF PROFIT. SINCE NO INFORMATION WAS FURNISHED ON REC ORD TO SUBMIT THAT THE SAID DEPOSITS ARISE OUT OF ASSESSEES BOOKS OF ACCOUNT, THE ORDER OF THE CIT(A) CANNOT BE UPHELD. 25. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT ASSESSEE H AD INDEED FURNISHED THE NECESSARY DETAILS BUT HAS NO OBJ ECTION FOR FRESH VERIFICATION BY THE AO. 26. HAVING CONSIDERED THE RIVAL CONTENTIONS, WE ARE O F THE OPINION THAT THIS ISSUE REQUIRE RE-EXAMINATION BY THE A O. LD. CIT(A) IS NOT CORRECT IN DELETING THE AMOUNT STATING AS Q UOTED ABOVE, AS THERE IS NO REJECTION OF BOOKS OF ACCOUNT NO R ESTIMATION OF PROFITS. DISALLOWANCE OF EXPENDITURE FOR NON-VERI FIABLE NATURE CANNOT BE CONSIDERED AS ESTIMATION OF PROFITS ON THE TOTAL TURNOVER M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 13 -: OF ASSESSEE. THUS, THE DELETION BY CIT(A) ON THE REA SONS STATED IS NOT PROPER. CONSIDERING THAT ASSESSEE HAS SUBMITTED THAT TH E SOURCES ARE FROM THE BOOKS OF ACCOUNT, WE DIRECT THE A SSESSEE TO FURNISH NECESSARY SOURCES FOR THE ABOVE AMOUNTS AND E XPLAIN WHETHER THE SAME WERE ACCOUNTED FOR IN THE BOOKS OF ACC OUNT. AO IS DIRECTED TO EXAMINE THE ISSUE AFRESH AND TAKE NECES SARY DECISION AFTER DUE EXAMINATION OF THE FACTS AND ACCORDING TO LAW. GROUND IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 27. IN THE RESULT, REVENUE APPEAL IN ITA NO. 863/HYD /2015 IS ALLOWED FOR STATISTICAL PURPOSES. 28. TO SUM UP, APPEALS IN ITA NOS. 1313/HYD/2015 & ITA NO. 129/HYD/2016 ARE PARTLY ALLOWED FOR STATISTICAL PUR POSES AND REVENUE APPEAL IN ITA NO. 863/HYD/2015 IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MAY, 2017 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 12 TH MAY, 2017 TNMM M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., :- 14 -: COPY TO : 1. M/S. VIJAYA BHAVANI CONSTRUCTIONS PVT. LTD., HYDERABAD. C/O. P. MURALI & CO., CHARTERED ACCOUNTA NTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3( 3), HYDERABAD. 3. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17 (2 ), HYDERABAD. 4. CIT (APPEALS)-5, HYDERABAD. 5. CIT-5, HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.