Asst..CIT, Circle-2(2), Hyderabad V. M/s Harsha Estates Private Limited, Hyderabad

ITA 1870/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74711 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOLY JOSE T KOTTARAM
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1849/HYD/2012 ASSESSMENT YEAR: 2008-09 HARSHA HOMES & INFRA PVT. LTD. (EARLIER KNOWN AS HARSHA ESTATES PVT. LTD.) HYDERABAD. PAN AABCH4744A VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), HYDERABAD. APPELLANT RESPONDENT ITA NO. 1870/HYD/2012 ASSESSMENT YEAR: 2008-09 ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), HYDERABAD. VS. HARSHA HOMES & INFRA PVT. LTD., HYDERABAD. PAN AABCH4744A APPELLANT RESPONDENT ASSESSEE BY: SRI S. RAMA RAO REVENUE BY: SRI SOLY JOSE T. KOTTARAM DATE OF HEARING: 23/01/2014 DATE OF PRONOUNCEMENT: 28/02/2014 O R D E R PER CHANDRA POOJARI, AM: THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, HYDERABAD DATED 12 TH OCTOBER, 2012 FOR THE ASSESSMENT YEAR 2008-2009. ITA NO. 1849/HYD/2012 APPEAL BY THE ASSESSEE 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A COMPANY WHICH DERIVES INCOME FROM LAND DEVELOPMENT AND SALE OF PLOTS. IT FILED ITS RETURN OF INCOME FOR TH E ASSESSMENT I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 2 YEAR 2008-09 ON 30/09/2008 DECLARING TOTAL INCOME O F RS. 15,38,430/-. THE ASSESSING OFFICER COMPLETED THE AS SESSMENT U/S 143(3) OF THE ACT BY DISALLOWING RS. 1,20,00,00 0/- TOWARDS UNEXPLAINED INCOME INTRODUCED AND DETERMINED THE TO TAL INCOME AT RS. 1,55,38,430/-. 2.1 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE COMPANY INTRODUCED UNSECURED LOANS TO THE TUNE OF R S. 1,38,50,300/- IN THE FOLLOWING NAMES: S.NO. NAME OF THE PERSON S/ SRI/SMT AMOUNT (IN RS.) 1 2 3 4 5 6 7 8 9 10 11 12 DR. B GOPALREDDY MIS NALLA MALLA REDDY ENGG. COLLEGE NALLA DIVYA NALLA SNEHA N CHANDRA SEKHAR REDDY N MOHAN REDDY P DHARMA REDDY P SAMPATH REDDY R SRINIVAS REDDY R VENKAT REDDY V MOHAN REDDY 70,00,000 20,00,000 5,00,000 10,00,000 5,00,000 3,50,000 5,00,000 5,00,000 5,00,000 5,00,000 5,00,000 5,00,000 TOTAL 1,38,50,000 2.2 THE ASSESSEE COMPANY FILED SOME LETTERS OF CONFIRMATIONS SIGNED BY SOME CREDITORS AND ALSO PRO DUCED PHOTO COPIES OF SOME CHEQUES ISSUED BY THE FOLLOWIN G 09 PEOPLE IN FAVOUR OF THE ASSESSEE COMPANY. NAME OF THE PERSON ACCOUNT NO. CHEQUE NO DATE AMOUNT SISRILSMT (RS.) 1 NALLA DIVYA 388 001908 12.10.07 5,00,000 2 NALLA SNEHA 566 001912 12.10.07 5,00,000 3 P SAMPATH REDDY 555 001897 12.10.07 5,00,000 4 N CHANDRA SEKHAR REDDY 355 001885 13.10.07 5,00,000 I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 3 5 P DHARMA REDDY 1145 005581 13.10.07 5,00,000 6 R VENKAT REDDY 1334 005701 16.10.07 5,00,000 7 R SRINIVAS REDDY 1336 005681 16.10.07 5,00,000 8 V MOHAN REDDY 463 002573 16.10.07 5,00,000 9 N MOHAN REDDY 1335 005691 16.10.07 3,50,000 2.3 THEREAFTER, THE ASSESSING OFFICER CONDUCTED EN QUIRIES AND FOUND THAT IN CASE OF THE FOLLOWING CREDITORS T HE RIGOUR OF SECTION 68 WAS NOT SATISFIED. ACCORDINGLY, ASSESSME NT WAS FRAMED AS UNDER: INCOME RETURNED RS. 15,38,430 ADD: 1) UNEXPLAINED INCOME INTRODUCED IN THE NAMES OF (I) SMT NALLA DIVYA 5,00,000 (II) SMT NALLA SNEHA 10,00,000 (III) SRI N CHANDRA SEKHAR REDDY5,00,000 (IV) SRI P SAMPATH KUMAR REDDY 5,00,000 (V) M /S. NALLA MALLA REDDY ENGINEERING COLLEGE 1,50,000 (VI) SRI B GOPAL REDDY 70,00,000 (VII) SRI N MOHAN REDDY 3,50,000 (VIII) SRI P DHARMA REDDY 5,00,000 (IX) SRI R VENKAT REDDY 5,00,000 (X) SRI V MOHAN REDDY 5,00,000 (XI) SRI R SRINIVAS REDDY 5,00,000RS. 1,20,00,000 ADD: 2) ADDITIONAL INCOME OFFERED TAXABLE INCOME RS. 20,00,000 TAXABLE INCOME RS. 1,55,38,430 ============ 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 3.1 AS REGARDS CASH CREDIT FROM SMT NALLA DIVYA, DI RECTOR AMOUNTING TO RS.5,00,000/-, THE CIT(A) OBSERVED THA T THE ASSESSING OFFICER NOTICED THAT THERE WAS VERY LITTL E BALANCE IN THE ACCOUNT OF MRS NALLA DIVYA. JUST BEFORE SHE HAD ISSUED THE CHEQUE REFERRED TO ABOVE, A CHEQUE OF RS. 4,98,000/ - HAD BEEN I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 4 DEPOSITED IN HER ACCOUNT FROM M/S. NALLA MALLA REDD Y EDUCATIONAL SOCIETY AND M/S NALLA REDDY CONFIRMED H AVING RECEIVED THE CHEQUE FROM THE SOCIETY. THIS PART IS CONFIRMED BY THE ASSESSING OFFICER ON PAGE 8 OF HIS ASSESSMENT O RDER. THE CIT(A), THEREFORE, HELD THAT ALL THE 03 INGREDIENTS OF SECTION 68 I.E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION ARE EXPLAINED. THEREFORE, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION SAID ADDITION. 3.2 AS REGARDS THE ADDITION OF RS.10,00,000/- ON A CCOUNT OF CASH CREDIT RECEIVED FROM SMT NALLA SNEHA, THE CIT( A) OBSERVED THAT PRIOR TO THE ISSUE OF CHEQUE OF RS. 10,00,000/- THERE WERE TWO CASH DEPOSITS IN THE ACCOUNT OF SMT SNEHA AND RS. 5,00,000/- WAS DEPOSITED IN CASH WHILE THE PAY ORDER OF AN EQUAL AMOUNT WAS RECEIVED FROM NALLA MALLA REDDY EDUCATIONAL SOCIETY. FURTHER, HE OBSERVED THAT REGA RDING THE CASH OF RS.5,00,000/-, MRS. SNEHA HAS NOT PROVIDED ANY SATISFACTORY EXPLANATION WHATSOEVER AND NO EVIDENCE HAS BEEN ADDUCED IN THIS REGARD. HOWEVER, WITH REGARD TO THE BALANCE AMOUNT, THERE IS A PAY ORDER RECEIVED FROM THE SOCI ETY. HE, THEREFORE, HELD THAT GIVEN THE ABOVE FACTS THE CAP ACITY OF MRS. SNEHA TO DEPOSIT RS.5,00,000/- IN HER ACCOUNT AND T HE GENUINENESS OF THE TRANSACTION TO THIS EXTENT ARE N OT EXPLAINED. HOWEVER, THERE IS NO AMBIGUITY REGARDING THE AMOUNT S RECEIVED FROM THE SOCIETY. THEREFORE, ADDITION TO THE EXTENT OF RS.5,00,000/- IS CONFIRMED AND THE BALANCE ADDITION WAS DELETED BY THE CIT(A). 3.3 AS REGARDS THE CASH CREDIT OF RS.5,00,000/- RE CEIVED FROM MR N CHANDRASEKHAR REDDY, THE CIT(A) OBSERVED THAT IN THIS CASE ALSO THE AMOUNT HAS BEEN RECEIVED FROM THE ACC OUNT OF MR REDDY AND PRIOR TO THAT AN EQUAL AMOUNT HAS BEEN PLACED IN HIS ACCOUNT FROM THE BANK ACCOUNT OF NALLA MALLA RE DDY EDUCATIONAL SOCIETY. HERE ALSO THE ASSESSEES ONUS STANDS I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 5 FULLY DISCHARGED WITH RESPECT TO SECTION 68 AND THI S ADDITION WAS DELETED BY THE CIT(A). 3.4 AS REGARDS THE CASH CREDIT OF RS. 5,00,000/- R ECEIVED FROM MR SAMPATH REDDY, THE CIT(A) OBSERVED THAT THE AMOU NT HAS BEEN RECEIVED FROM THE ACCOUNT OF MR SAMPATH REDDY AND PRIOR TO THAT AN EQUAL AMOUNT HAS BEEN PLACED IN HIS ACCO UNT FROM THE BANK ACCOUNT OF NALLA MALLA REDDY EDUCATIONAL S OCIETY. HE, THEREFORE, HELD THAT O THE APPELLANT'S ONUS STANDS FULLY DISCHARGED WITH RESPECT TO SECTION 68 AND THIS ADDI TION WAS ALSO DELETED BY THE CIT(A). 3.5 AS REGARDS THE ADDITION OF RS. 1,50,000/- ON A CCOUNT OF CASH CREDITS RECEIVED FROM NALLA MALLA REDDY ENGINE ERING COLLEGE, THE CIT(A) BSERVED THAT THE ASSESSING OFF ICER HAS CLEARLY STATED IN HIS ASSESSMENT ORDER THAT INSPITE OF REPEATED EFFORTS THE CHEQUE NUMBER AND THE DETAILS GIVEN BY THE APPELLANT WERE NOT VERIFIED BY THE BANK BECAUSE THE DETAILS MENTIONED BY THE APPELLANT WERE INCORRECT. EVEN DUR ING APPEAL PROCEEDINGS, CORRECT DETAILS WERE NOT FILED. ACCORD INGLY, THE AFOREMENTIONED ADDITION IS CONFIRMED. 3.6 AS REGARDS THE ADDITION OF RS.70,00,000/- ON ACCOUNT OF CASH CREDITS FROM DR. B GOPAL REDDY, THE ASSESSING OFFICER NOTED THAT A CONFIRMATION LETTER PURPORTEDLY SIGNED BY DR. B GOPAL REDDY TO THE EFFECT THAT A SUM OF RS. 70 LAKH S WAS ADVANCED BY HIM TO M/S. HARSHA ESTATES PVT. LTD. AS I NTEREST FREE LOAN VIDE CHEQUE NO. 092843, ICICI BANK DATED 17.10.2007 IS FILED BEFORE THE CIT(A) DURING THE CO URSE OF HEARING ON 29.11.2010. IT IS STATED BEFORE THE CIT( A) THAT SINCE HE IS NRI, NO RETURNS OF INCOME ARE BEING FIL ED IN INDIA. HOWEVER, THE ADDRESS ON THE CONFIRMATION LETTER SIM PLY SAYS AS JUBILEE HILLS, HYDERABAD, WITHOUT MENTIONING ANY DOOR NO./LOCALITY ETC., EXCEPT STATING THE CHEQUE NO. AN D BANK, I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 6 NOTHING IS MENTIONED IN THE CONFIRMATION LETTER REG ARDING THE BRANCH AND ACCOUNT NUMBER. THE ASSESSING OFFICER, THEREFORE, HELD THAT IN THE CIRCUMSTANCES, IT WAS N OT POSSIBLE TO MAKE ANY FURTHER ENQUIRIES REGARDING THE GENUINE NESS OF THE TRANSACTION IN THIS CASE. 3.7 THE CIT(A) OBSERVED THAT DURING APPEAL PROCEEDI NGS, NO FURTHER DETAILS WERE PRODUCED BY THE ASSESSEE AND T HEREFORE, HE HELD THAT NEITHER THE IDENTITY OF DR. B GOPAL R EDDY, NOR HIS CREDITWORTHINESS AND NOT EVEN THE GENUINENESS OF TH E TRANSACTION HAVE BEEN PROVED AND IT IS NOT CLEAR AS TO WHO IS DR. REDDY? WHERE HE IS ASSESSED TO TAX? WHAT ARE TH E DETAILS OF THE BANK ACCOUNT? THE DETAILS OF WORK HE DOES? I N THE ABSENCE OF ANY DETAIL, THE CIT(A) HELD THAT THIS C ASH CREDIT FALLS SQUARELY WITHIN THE PURVIEW OF SECTION 68. IN VIEW OF THE ABOVE OBSERVATIONS, THE ADDITION ON THIS ACCOUNT WA S CONFIRMED BY THE CIT(A). 3.8 AS REGARDS THE ADDITION OF RS.3,50,000/- ON AC COUNT OF CASH CREDITS FROM SRI N MOHAN REDDY, THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE COMPANY FILED A LETTER OF CONFIRMATION PURPORTEDLY SIGNED BY SRI N MOHAN REDD Y, STATING THAT HE HAD INVESTED AN AMOUNT OF RS.3,50,0 00 IN M/S. HARSHA ESTATES PVT. LTD., VIDE CHEQUE NO. 005691 AT ALLAHABAD BANK, BODUPPAL BRANCH, HYDERABAD DATED 16.10.2007, IT IS TO BE NOTED THAT SRI N MOHAN REDD Y IS NOT ASSESSED TO INCOME TAX. HE FURTHER NOTED THAT THE A SSESSEE COMPANY ALSO FILED A COPY OF THE INSTRUMENT BEARING NO.005691, DATED 16.10.2007 ISSUED FROM THE ACCOUNT NO.1335 BY THE SAID SRI N MOHAN REDDY FROM THE ALLA HABAD BANK ACCOUNT, BODUPPAL IN FAVOUR OF THE ASSESSEE COMPANY. ENQUIRIES MADE WITH THE ALLAHABAD BANK REVEALED THA T THERE IS A DEPOSIT OF RS.3,50,000/- BY WAY' OF TRANSFER IN HIS SAID BANK ACCOUNT PRIOR TO ISSUE OF THE CHEQUE. HOWEVER, THE BALANCE I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 7 BEFORE THE DEPOSIT IS MERE RS.1,000/- ONLY. THE ASS ESSING OFFICER NOTED THAT THE BANK ENQUIRIES FURTHER REVEA LED THAT THE SAID DEPOSIT IN THE BANK ACCOUNT IS BY WAY OF DEPOSITING THE PAY ORDER BEARING NO.000012 ISSUED BY SBI, GOWLIGUD A THROUGH CLEARING. FURTHER ENQUIRIES MADE WITH SBI, SMECCC BRANCH, HIMAYAT NAGAR AND SBI, GOWLIGUDA BRANCH REV EALED THAT THE ORIGIN OF THE SAID PAY ORDER IS FROM THE ACCOUNT OF NALLA MALLA REDDY EDUCATIONAL SOCIETY BEARING NO.30051729280. A COPY OF THE SAID PAY ORDER HAS ALSO BEEN FURNISHED BY THE BANK AUTHORITIES. IN THE LIGHT OF THE ABOVE INFORMATION WITH A VIEW TO EXAMINE THE ALLEGED CRED ITOR SRI N MOHAN REDDY, THE ASSESSEE COMPANY WAS ASKED TO PROD UCE HIM BEFORE THE AO. HOWEVER, THE ASSESSEE COMPANY CO ULD NOT PRODUCE SRI N MOHAN REDDY FOR EXAMINATION AS REQUIR ED. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSE E COULD NOT DISCHARGE HIS ONUS OF PROVING THE GENUINENESS, CREDITWORTHINESS AS WELL AS IDENTITY OF THE LOAN CREDITOR. IT IS NOTICED FROM THE INFORMATION FROM BANKS THAT THE SO URCE FOR THE SAID AMOUNT OF RS.3,50,000/- IS M/S NALLA MALLA REDDY EDUCATIONAL SOCIETY ONLY. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT IT IS EVIDENT THAT THE ALLEGED CREDI TOR OF THE ASSESSEE COMPANY HAS NO CREDIT WORTHINESS IN ADVANC ING THE SAID SUM OF RS.3,50,000/-. 3.9 ON APPEAL, THE CIT(A) OBSERVED THAT THE CREDI TOR SHRI MOHAN REDDY IS NOT EVEN AN INCOME TAX ASSESSEE AND HIS WHEREABOUTS ARE UNKNOWN AS WELL AS THE GENUINENESS OF THE TRANSACTION IS IN SEVERE DOUBT. HIS BANK ACCOUNT HA S CLEARLY BEEN USED AS A CONDUCT BY THE APPELLANT. HE, THEREF ORE, CONCLUDED THAT SECTION 68 CLEARLY APPLIES AND THE A DDITION WAS CONFIRMED. 3.10 AS REGARDS THE ADDITION OF RS.5,00,000/- ON A CCOUNT OF CASH CREDITS FROM SRI P DHARMA REDDY, THE ASSESSING OFFICER I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 8 OBSERVED THAT T HE ASSESSEE COMPANY FILED A LETTER OF CONFIRMATION PURPORTEDLY SIGNED BY SRI P DHARMA RED DY, STATING THAT HE HAD INVESTED AN AMOUNT OF RS.5,00,000/-, IN M/S HARSHA ESTATES PVT. LTD, VIDE CHEQUE NO.005581 AT ALLAHABAD BODUPPAL BRANCH, HYDERABAD DATED 13.11.2007 (HOWEVER, A COPY OF THE INSTRUMENT FILED SHOWS THE DATE AS 13.10.2007). THE ASSESSING OFFICER NOTED THAT SRI P DHARMA REDDY IS NOT ASSESSED TO INCOME TAX. THE ASSESSEE COMPANY ALSO F ILED A COPY OF THE INSTRUMENT BEARING NO. 005581, DATED 13.10.2007 ISSUED FROM THE ACCOUNT NO.1145 BY THE SAID SRI P D HARMA REDDY FROM THE ALLAHABAD BANK ACCOUNT, BODUPPAL IN FAVOUR OF THE ASSESSEE COMPANY. ENQUIRIES MADE WITH THE ALLAH ABAD BANK REVEALED THAT THERE IS A DEPOSIT OF RS.5,00,000/- BY WAY OF TRANSFER IN HIS SAID BANK ACCOUNT PRIOR TO ISSUE OF THE CHEQUE. HOWEVER, THE BALANCE BEFORE THE DEPOSIT IS MERE RS.500/- ONLY. THE BANK ENQUIRIES FURTHER REVEALED THAT THE SAID DEPOSIT IN THE BANK ACCOUNT IS BY WAY OF DEPOSITING THE PAY ORDER BEARING NO.000018 ISSUED BY SBI GOWLIGUDA THROUGH CLEARING. FURTHER ENQUIRIES MADE WITH SBI, SMECC BRANCH, HIMAYAT NAGAR AND SBI, GOW/IGUDA BRANCH REV EALED THAT THE ORIGIN OF THE SAID PAY ORDER IS FROM THE ACCOUNT OF NALLA MALLA REDDY EDUCATIONAL SOCIETY BEARING NO.30051729280. IN THE LIGHT OF THE ABOVE INFORMATION WITH A VIEW TO EXAMINE THE ALLEGED CREDITOR SRI P DHARMA R EDDY, THE ASSESSEE COMPANY WAS ASKED TO PRODUCE HIM BEFORE TH E UNDERSIGNED. HOWEVER, THE ASSESSEE COMPANY COULD NO T PRODUCE SRI P DHARA REDDY FOR EXAMINATION AS REQUIR ED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONUS OF PROVIDING THE GENUINENESS, CREDITWORTHINESS AS WELL AS IDENTITY OF THE LOAN CREDITOR. THE AO NOTICED FROM THE INFORMATION FROM THE BANKS THAT THE SOURCE FOR THE SAID AMOUNT OF RS.5,00,000/- IS M/S NALLA MALLA REDDY EDUCATIONAL SOCIETY ONLY. IN VIEW OF THE ABOV E I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 9 OBSERVATIONS, THE ASSESSING OFFICER, THEREFORE, HEL D THAT IT IS EVIDENT THAT THE ALLEGED CREDITOR OF THE ASSESSEE COMPANY HAS NO CREDIT WORTHINESS IN ADVANCING THE SAID SUM OF RS. 5,00, 000/-. 3.11 THE CIT(A) OBSERVED THAT THE CREDITOR SHRI P DHARMA REDDY IS NOT EVEN AN INCOME TAX ASSESSEE. HIS WHER EABOUTS ARE UNKNOWN. THE GENUINENESS OF THE TRANSACTION IS IN SEVERE DOUBT. HIS BANK ACCOUNT HAS CLEARLY BEEN USED AS A CONDUCT BY THE APPELLANT. HE, THEREFORE, HELD THAT SECTION 68 CLEARLY APPLIES AND THE ADDITION WAS CONFIRMED. 3.12 AS REGARDS THE ADDITION OF RS.5,00,000/- ON ACCOUNT OF CASH CREDITS FROM SRI R VENKAT REDDY, THE AO OBSERV ED THAT T HE ASSESSEE COMPANY FILED A LETTER OF CONFIRMATION PURPORTEDLY SIGNED BY SRI R. VENKAT REDDY, STATING THAT HE HAD INVESTED AN AMOUNT OF RS.5,00,000/- M/S. HARSHA ESTATES PVT. LTD, VIDE CHEQUE NO.005701 AT ALLAHABAD BANK, BODUPPAL BRANCH , HYDERABAD DATED 18.11.2007 (HOWEVER, A COPY OF THE INSTRUMENT FILED SHOWS THE DATE AS 16.10.2007). IT IS TO BE NOTED THAT SRI R VENKAT REDDY IS NOT ASSESSED TO IN COME TAX. THE ASSESSEE COMPANY ALSO FILED A COPY OF THE INSTR UMENT BEARING NO. 005701, DATED 16.10.2007 ISSUED FROM TH E ACCOUNT NO.1334 BY THE SEID SRI R VENKAT REDDY FROM THE ALLAHABAD BANK ACCOUNT, BODUPPAL IN FAVOUR OF THE A SSESSEE COMPANY. ENQUIRIES MADE WITH THE ALLAHABAD BANK REV EALED THAT THERE IS A DEPOSIT OF RS.5,00,000/- BY WAY OF TRANSFER IN HIS SAID BANK ACCOUNT PRIOR TO ISSUE OF THE CHEQUE. HOWEVER, THE BALANCE BEFORE THE DEPOSIT IS MERE RS.1,000/- O NLY. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE BANK EN QUIRIES FURTHER REVEALED THAT THE SAID DEPOSIT IN THE BANK ACCOUNT IS BY WAY OF DEPOSITING THE PAY ORDER BEARING NO.00009 IS SUED BY SBI GOWLIGUDA THROUGH CLEARING. FURTHER ENQUIRIES M ADE WITH SBI, SMECC BRANCH, HIMAYAT NAGAR AND SBI, GOWLIGUDA I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 10 BRANCH REVEALED THAT THE ORIGIN OF THE SAID PAY ORDER IS FROM THE ACCOUNT OF NALLA MALLA REDDY EDUCATIONAL SOCIET Y BEARING NO.30051729280. A COPY OF THE SAID PAY ORDER HAS AL SO BEEN FURNISHED BY THE BANK AUTHORITIES. IN THE LIGHT OF THE ABOVE INFORMATION WITH A VIEW TO EXAMINE THE ALLEGED CRED ITOR SRI R VENKAT REDDY, THE ASSESSEE COMPANY WAS ASKED TO PRO DUCE HIM BEFORE THE UNDERSIGNED. HOWEVER, THE ASSESSEE C OMPANY COULD NOT PRODUCE SRI P DHARA REDDY FOR EXAMINATION AS REQUIRED. THE ASSESSING OFFICER, THEREFORE NOTED TH AT THE ASSESSEE COULD NOT DISCHARGE HIS ONUS OF PROVIDING THE GENUINENESS, CREDITWORTHINESS AS WELL AS IDENTITY O F THE LOAN CREDITOR. THE ASSESSING OFFICER HELD THAT IT IS NOT ICED FROM THE INFORMATION FROM THE BANKS THAT THE SOURCE FOR THE SAID AMOUNT OF RS. 5, 00,000/- IS M/S. NALLA MALLA REDDY EDUCATIONAL SOCIETY ONLY AND, THEREFORE, IT IS EVIDENT THAT THE ALLEGED CREDITOR OF THE ASSESSEE COMPANY HAS NO CREDIT WORT HINESS IN ADVANCING THE SAID SUM OF RS.5,00,000/-. 3.13 THE CIT(A) OBSERVED THAT THE CREDITOR SHRI P. VENKAT REDDY IS NOT EVEN AN INCOME TAX ASSESSEE. HIS WHER EABOUTS ARE UNKNOWN. THE GENUINENESS OF THE TRANSACTION IS IN SEVERE DOUBT. HIS BANK ACCOUNT HAS CLEARLY BEEN USED AS A CONDUCT BY THE APPELLANT. HE, THEREFORE, HELD THAT SECTION 68 CLEARLY APPLIES AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. 3.14 AS REGARDS THE ADDITION OF RS.5,00,000/- ON ACCOUNT OF CASH CREDITS FROM SRI V MOHAN REDDY, THE AO OBSE RVED THAT THE ASSESSEE COMPANY FILED A LETTER OF CONFIRMATION PURPORTEDLY SIGNED BY SRI V MOHAN REDDY, STATING THAT HE HAD IN VESTED AN AMOUNT OF RS.5,00,000/- IN M/S. HARSHA ESTATES PVT. LTD, VIDE CHEQUE NO.002573 AT ALLAHABAD BANK, BODUPPAL BRANCH , HYDERABAD DATED 18.10.2007 (HOWEVER, A COPY OF THE INSTRUMENT FILED SHOWS THE DATE AS 16.10.2007). FUR THER, THE ASSESSING OFFICER OBSERVED THAT A PECULIAR FEATURE IN THIS CASE I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 11 IS THAT THE SIGNATURE ON THE INSTRUMENT AND THE SIG NATURE ON THE CONFIRMATION LETTER ARE NOT TALLYING. IT IS TO BE NOTED THAT SRI V MOHAN REDDY IS NOT ASSESSED TO INCOME TAX. THE ASSESSEE COMPANY ALSO FILED A COPY OF THE INSTRUMENT BEARING NO. 002573, DATED 16.10.2007 ISSUED FROM THE ACCOUNT NO .463 BY THE SAID SRI V MOHAN REDDY FROM THE ALLAHABAD BANK ACCOUNT, BODUPPAL IN FAVOUR OF THE ASSESSEE COMPANY. ENQUIRIES MADE WITH THE ALLAHABAD BANK REVEALED THAT THERE IS A DE POSIT OF RS. 5,00, 000/- BY WAY OF TRANSFER IN HIS SAID BANK ACCOUNT PRIOR TO ISSUE OF THE CHEQUE. HOWEVER, THE BALANCE BEFORE THE DEPOSIT IS MERE RS.13,982 ONLY. THE ASSESSING OFFICER NOTED THAT THE BANK ENQUIRIES FURTHER REVEALED THAT THE SAID DEPOS IT IN THE BANK ACCOUNT IS BY WAY OF DEPOSITING THE PAY ORDER BEARING NO.000011 ISSUED BY SBI GOWLIGUDA THROUGH CLEARING. FURTHER ENQUIRIES MADE WITH SBI, SMECC BRANCH, HIMAYAT NAGA R AND SBI, GOWLIGUDA BRANCH REVEALED THAT THE ORIGIN OF THE SAID PAY ORDER IS FROM THE ACCOUNT OF NALLA MALLA REDDY EDUCATIONAL SOCIETY BEARING NO.30051729280. A COPY OF THE SAID PAY ORDER HAS ALSO BEEN FURNISHED BY THE BANK AUTHORITIES. IN THE LIGHT OF THE ABOVE INFORMATION WITH A VIEW TO EXAMINE THE AL LEGED CREDITOR SRI V MOHAN REDDY, THE ASSESSEE COMPANY WA S ASKED TO PRODUCE HIM BEFORE THE UNDERSIGNED. HOWEVER, THE ASSESSEE COMPANY COULD NOT PRODUCE SRI V MOHAN REDD Y FOR EXAMINATION AS REQUIRED. THE ASSESSING OFFICER, THE REFORE, HELD THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONU S OF PROVIDING THE GENUINENESS, CREDITWORTHINESS AS WELL AS IDENTITY OF THE LOAN CREDITOR. FURTHER, THE ASSESSING OFFICER H ELD THAT IT IS NOTICED FROM THE INFORMATION FROM THE BANKS THAT THE SOURCE FOR THE SAID AMOUNT OF RS.5,00,000/- IS M/S NALLA MALLA REDDY EDUCATIONAL SOCIETY ONLY AND, THEREFORE, IT IS EVID ENT THAT THE ALLEGED CREDITOR OF THE ASSESSEE COMPANY HAS NO CREDIT WORTHINESS IN ADVANCING THE SAID SUM OF RS.5,00,000/-. I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 12 3.15. THE CIT(A) OBSERVED THAT THE CREDITOR SHRI V. MOHAN REDDY IS NOT EVEN AN INCOME TAX ASSESSEE. HIS WHER EABOUTS ARE UNKNOWN. THE GENUINENESS OF THE TRANSACTION IS IN SEVERE DOUBT. HIS BANK ACCOUNT HAS CLEARLY BEEN USED AS A CONDUCT BY THE APPELLANT. HE, THEREFORE, HELD THAT SECTION 68 CLEARLY APPLIES AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED. 3.16 AS REGARDS THE ADDITION OF RS.5,00,000/- ON ACCOUNT OF CASH CREDITS FROM SRI R SRINIVAS REDDY, THE AO OBSE RVED THAT T HE ASSESSEE COMPANY FILED A LETTER OF CONFIRMATION PURPORTEDLY SIGNED BY SRI R SRINIVASA REDDY, STATING THAT HE HA D INVESTED AN AMOUNT OF RS.5,00,000/- IN M/S. HARSHA ESTATES PVT. LTD, VIDE CHEQUE NO.005681 AT ALLAHABAD BANK, BODUPPAL BRANCH , HYDERABAD DATED 16.10.2007. THE ASSESSING OFFICER N OTED THAT A PECULIAR FEATURE IN THIS CASE IS THAT THE CONFIRMAT ION LETTER BEARS A THUMB IMPRESSION FROM A SELF-INKING STAMP PAD WHE RE AS THE COPY OF THE INSTRUMENT PRODUCED BY THE ASSESSEE BEA RING NO.005681 FROM ACCOUNT NO. 1336, DATED 16.10.2007 OF ALLAHABAD BANK, BODUPPAL BRANCH CONTAINS SIGNATURE WHICH CAN BE SEEN AS 'R.S.REDDY'. IT IS TO BE NOTED THAT SRI R SRINIVASA REDDY IS NOT ASSESSED TO INCOME TAX. THE ASSESSEE C OMPANY ALSO FILED A COPY OF THE INSTRUMENT BEARING NO. 005 681, DATED 16.10.2007 ISSUED FROM THE ACCOUNT NO.1336 BY THE S AID SRI R SRINIVASA REDDY FROM THE ALLAHABAD BANK ACCOUNT, BO DUPPAL IN FAVOUR OF THE ASSESSEE COMPANY. ENQUIRIES MADE WITH THE ALLAHABAD BANK REVEALED THAT THERE IS A DEPOSIT OF RS.5,00,000/- BY WAY OF TRANSFER IN HIS SAID BANK ACCOUNT PRIOR T O ISSUE OF THE CHEQUE. HOWEVER, THE BALANCE BEFORE THE DEPOSIT IS MERE RS.1,000 ONLY. THE BANK ENQUIRIES FURTHER REVEALED THAT THE SAID DEPOSIT IN THE BANK ACCOUNT IS BY WAY OF DEPOSITING THE PAY ORDER BEARING NO.000010 ISSUED BY SBI GOWLIGUDA THROUGH C LEARING. FURTHER ENQUIRIES MADE WITH SBI, SMECC BRANCH, HIMA YAT NAGAR AND SBI, GOWLIGUDA BRANCH REVEALED THAT THE O RIGIN OF THE SAID PAY ORDER IS FROM THE ACCOUNT OF NALLA MALLA R EDDY I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 13 EDUCATIONAL SOCIETY BEARING NO.30051729280. A COPY OF THE SAID PAY ORDER HAS ALSO BEEN FURNISHED BY THE BANK AUTHORITIES. IN THE LIGHT OF THE ABOVE INFORMATION WITH A VIEW T O EXAMINE THE ALLEGED CREDITOR SRI V MOHAN REDDY, THE ASSESSEE CO MPANY WAS ASKED TO PRODUCE HIM BEFORE THE UNDERSIGNED. HOWEVE R, THE ASSESSEE COMPANY COULD NOT PRODUCE SRI V MOHAN REDD Y FOR EXAMINATION AS REQUIRED. IN VIEW OF THE ABOVE OBSER VATIONS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT DISCHARGE HIS ONUS OF PROVIDING THE GENUINENESS, CREDITWORTHI NESS AS WELL AS IDENTITY OF THE LOAN CREDITOR. HE FURTHER HELD T HAT IT IS NOTICED FROM THE INFORMATION FROM THE BANKS THAT THE SOURCE FOR THE SAID AMOUNT OF RS.5,00,000/- IS M/S. NALLA MALLA REDDY E DUCATIONAL SOCIETY ONLY AND, THEREFORE, IT IS EVIDENT THAT THE ALLEGED CREDITOR OF THE ASSESSEE COMPANY HAS NO CREDITWORTHINESS IN ADVANCING THE SAID SUM OF RS.5,00,000/-. 3.17 THE CIT(A) OBSERVED THAT THE CREDITOR SHRI MOH AN REDDY IS NOT EVEN AN INCOME TAX ASSESSEE AND HIS WHEREABO UTS ARE UNKNOWN AS WELL AS THE GENUINENESS OF THE TRANSACTI ON IS IN SEVERE DOUBT. HIS BANK ACCOUNT HAS CLEARLY BEEN USE D AS A CONDUCT BY THE APPELLANT. HE, THEREFORE, HELD THAT SECTION 68 CLEARLY APPLIES AND THE ADDITION MADE BY THE ASSESS ING OFFICER WAS CONFIRMED. 3.18 AS REGARDS THE ADDITION OF RS.20,00,000/- ON ACCOUNT OF NON-PRODUCTION OF EVIDENCE REGARDING CERTAIN EXPENS ES, THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE V ERIFYING THE BOOKS OF ACCOUNTS AND VOUCHERS, NOTICED THAT TH ERE ARE CERTAIN PAYMENTS LIKE LABOUR, MASON, DUST, SAND ETC ., WHICH ARE MAINLY CASH PAYMENTS. HE NOTED THAT THE ASSESSEE CO ULD NOT PRODUCE THE SUPPORTING BILLS THROUGH VOUCHERS ARE M AINTAINED ON SELF MADE BASIS. WHEN THIS ISSUE WAS RAISED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBS EQUENT TO FILING OF REPLY TO THE SHOW CAUSE LETTER. ON 27.12.2010, FILES A I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 14 LETTER DULY SIGNED BY THE MANAGING DIRECTOR SRI NA/ /A MA//A REDDY, DATED 25.12.2010 BEFORE THE UNDERSIGNED STAT ING THAT DUE TO DIFFICULTY IN MAINTENANCE OF VOUCHERS, IN RESPECT O F CERTAIN EXPENSES ALONG WITH SUPPORTING BILLS, THEY ARE VOLUNTARILY OFFERING AN AMOUNT OF RS. 20, 00, 000/- AS ADDITIONAL INCOME INDEPENDENT OF THE ISSUES INVOLVED IN THE SH OW CAUSE LETTER AND IN ADDITION TO THE OUTCOME OF THE ASSESSMENT AFTER CONSIDERING REPLY TO THE SHOW CAUSE NOTICE. THIS AMOUNT OF RS.20,00,000/- WHICH IS VOLUNTARILY OFFERED BY THE ASSESSEE COMPANY IS ALSO HEREBY BROUGHT TO TAX. 3.19 THE CIT(A) OBSERVED THAT DURING APPEAL PROCEED INGS, THE APPELLANT DID NOT PRODUCE ANY EVIDENCE TO PROVE THA T THE EXPENDITURE HAD BEEN PROPERLY VOUCHED AND WAS GENUI NE AND A GOOD PORTION OF THE EXPENDITURE DID NOT HAVE SUPPOR TING EVIDENCE AND THE MD HAD ADMITTED TO AN ADDITIONAL I NCOME OF RS. 20,00,000/- OVER AND ABOVE ANY OTHER ISSUES INVOLVED. HE, THEREFORE, CONFIRMED THE ADDITION MADE BY THE ASSES SING OFFICER. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 5 LAKHS OUT OF RS. 10 LAKHS MADE BY THE ASSESSING OFF ICER U/S 68 OF THE IT ACT DISBELIEVING THE CREDIT FROM SMT. NALLA SNEHA. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 1,50,000/- DISBELIEVING THE AMOUNT RECEIVED FROM NA LLA MALLA REDDY ENGINEERING COLLEGE. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 70 LAKHS MADE BY THE ASSESSING OFFICER U/S 68 OF THE I T ACT DISBELIEVING THE CREDIT FROM SRI B. GOPAL REDDY. TH E LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE APPELLANT DISCHA RGED THE ONUS CAST ON HIM AND, THEREFORE, THE SAID ADDITION OUGHT TO HAVE BEEN DELETED. I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 15 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 3,50,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT DISBELIEVING THE CREDIT FROM SRI N. MOHAN REDDY. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 5,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT DISBELIEVING THE CREDIT FROM SRI P. DHARMA REDDY 7. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 5,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT DISBELIEVING THE CREDIT FROM SRI R. VENKAT REDDY. 8. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 5,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT DISBELIEVING THE CREDIT FROM SRI V. MOHAN REDDY. 9. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 5,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT DISBELIEVING THE CREDIT FROM SRI R. SRINIVAS REDDY. 10. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 20,00,000/- MADE BY THE ASSESSING OFFICER SEPARATEL Y ON THE GROUND THAT THERE ARE NO PROPER VOUCHERS. 5. THE REVENUE IS ALSO IN APPEAL BEFORE US WITH REG ARD TO THE DELETION OF ADDITIONS RAISING THE FOLLOWING GROUNDS OF APPEAL IN ITS APPEAL IN ITA NO. 1870/HYD/2012: 1. THE CIT(A) ERRED ON FACTS AND IN LAW IN GRANTING RELIEF TO THE ASSESSEE. 2. THE CIT(A) ERRED IN GRANTING RELIEF TO THE ASSES SEE ON THE ADDITION U/S 68 THOUGH THE ASSESSEE COULD NOT PRODU CE ANY FURTHER EVIDENCE BEFORE THE CIT(A) WITH REFERENCE T O THE GENUINENESS OF THE CREDIT AND CIT(A) DID NOT SPECIF ICALLY CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER. 3. THE CIT(A) ERRED IN GRANTING IN RELIEF FOR ADDIT ION U/S 68 THOUGH THERE IS COGENT MATERIAL IN THE ASSESSMENT O RDER TO ESTABLISH THAT THE CREDITS ARE NOT GENUINE. 4. THE CIT(A) ERRED IN GRANTING RELIEF AND AT THE S AME TIME HOLDING THAT IT IS A CASE OF DIVERSION OF UNACCOUNT ED MONEY THROUGH THE MEMBERS OF THE GOVERNING BODY OF THE EDUCATIONAL INSTITUTIONS. I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 16 6. THE LEARNED AR SUBMITTED THAT NALLA MALLA REDDY EDUCATIONAL SOCIETY APPLIED FOR LOAN OF RS. 5 CRORES FROM STATE BANK OF INDIA, CHARMINAR BRANCH, HYDERABAD. THE SAID BANK OBTAINED THE DETAILS OF THE PERSONS/CONCERNS TO WHOM THE AMOUNTS WERE TO BE PAID. THE LEARNED AR FURNISHED THE DETAILS OF BILLS PENDING A ND THAT OF THE UNSECURED LOANS TO BE REPAID. THE STATE BANK OF IND IA DIRECTLY ISSUED CHEQUES IN FAVOUR OF THE CREDITORS. COPIES O F THE CHEQUES ISSUED BY SBI ARE SUBMITTED AND THE AMOUNT PAID BY THE BANK DIRECTLY TO THE CREDITORS WAS TREATED AS LOAN GIVEN TO THE ASSESSEE AND IS DEBITED TO THE ASSESSEES ACCOUNT BY THE BAN K. ALL THE SAID DETAILS HAVE BEEN FILED BY THE ASSESSEE VIDE PAPER BOOK PAGES 1 TO 33. 7. ON THE OTHER HAND, THE LEARNED DR BESIDES RELYIN G ON THE ORDERS OF THE REVENUE AUTHORITIES, SUBMITTED THAT S ECTION 68 SEEKS TO BRING TO TAX ANY CASH CREDITS APPEARING IN THE B OOKS OF ACCOUNTS WHICH ARE NOT SATISFACTORILY EXPLAINED AS THE INCO ME OF THE PREVIOUS YEAR. HE CONTENDED THAT IF THE ASSESSEE DID NOT RE NDER THE SATISFACTORY EXPLANATION WITH REGARD TO THE NATURE AND SOURCE OF THE CASH RECEIVED BY HIM, THEN THE ASSESSING OFFICER WA S ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPTS ARE OF AN INCO ME NATURE AND SUBJECT TO CHARGE U/S 68 OF THE ACT. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, ORIGINALLY THESE CREDITORS, NA MELY, SHRI B. GOPAL REDDY, NALLA DIVYA, NALLA SNEHA, N. CHANDRA SEKHAR REDDY, N. MOHAN REDDY, P. DHARMA REDDY, P. SAMPATH REDDY, R. SRINIVASA REDDY, R. VENKAT RAO AND V. MAHATI ADVANCED THE MON EY TO M/S NALLA MALLA REDDY ENGG. COLLEGE. M/S NALLA MALLA RE DDY ENGG. COLLEGE GOT SANCTIONED A LOAN OF RS. 5.00 CRORES FR OM SBI, CHARMINAR BRANCH, HYDERABAD. AFTER AVAILING THIS LO AN ON 08/10/2007, NALLA MALLA REDDY EDUCATIONAL SOCIETY ( NALLA MALLA I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 17 REDDY ENGG. COLLEGE) REPAID THE LOAN BACK TO THESE PARTIES. ON RECEIPT OF MONEY BY THESE PARTIES, THEY ISSUED CHE QUES ON VARIOUS DATES RANGING FROM 12/10/2007 TO 16/10/2007 AS MENT IONED AT PARA 2.2 OF THIS ORDER. BEING SO, WE FIND THAT THE GENUI NENESS OF THE TRANSACTIONS ARE ESTABLISHED AS THE TRANSACTIONS AR E ROUTED THROUGH BANKING CHANNELS. IT IS SEEN THAT THE LOANS WERE RE CEIVED THROUGH A/C PAYEE CHEQUES, DETAIL OF WHICH HAD BEEN FILED B Y THE ASSESSEE BY FILING THE COPY OF THE BANK A/C OF THE LOAN CRED ITORS. THUS WHERE THE RETURN OF INCOME IS FILED BY THE CREDITORS OF T HE ASSESSEE AND IS ACCEPTED BY THE DEPARTMENT, AND THE PAYMENTS ARE TH ROUGH A/C PAYEE CHEQUES THE GENUINENESS OF THE TRANSACTION CA NNOT BE DOUBTED. BEFORE US, THE ASSESSEE HAS DEMONSTRATED B Y WAY OF MATERIAL EVIDENCE THAT THE CASH CREDITS RECEIVED BY IT ARE GENUINE AND THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN U/S 68 OF THE ACT. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A ) AND DELETE THE ADDITIONS MADE U/S 68 OF THE ACT ON ACCOUNT OF CASH CREDITS RECEIVED BY THE ASSESSEE. 9. ANOTHER GROUND RAISED BY THE ASSESSEE IS PERTAIN ING TO THE ADDITION OF RS. 20,00,000/- MADE BY THE ASSESSING O FFICER SEPARATELY ON THE GROUND THAT THERE ARE NO PROPER V OUCHERS. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTED THAT THERE ARE CERTAIN PAYMENTS LIKE, LABOUR, MASON, DUST, SAND ETC., WHICH WERE MAINLY CASH PAYMENTS AN D THE ASSESSEE WAS UNABLE TO PROVIDE SUPPORTING VOUCHERS, BUT, VOUCHERS ARE MAINTAINED ON SELF-MADE BASIS. SINCE THE ASSESS EE UNABLE TO SUBSTANTIATE ITS CLAIM, VOLUNTARILY OFFERED AN ADD ITIONAL INCOME OF RS. 20 LAKHS. HOWEVER, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT(A). I.T.A. NOS.1849 & 1870/HYD/12 M/S HARSHA ESTATES PVT. LTD. 18 11. BEFORE THE CIT(A), THE ASSESSEE FAILED TO SUBST ANTIATE ITS CLAIM BY WAY OF PROOF/EVIDENCE ETC. AND, HENCE, THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 12. BEFORE US ALSO THE LEARNED AR OF THE ASSESSEE F AILED TO SUBSTANTIATE ITS CLAIM BY PRODUCING DOCUMENTARY EVI DENCE TO ESTABLISH THAT THE PAYMENT IS GENUINE. THEREFORE, W E ARE INCLINED TO CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE AND T HE GROUND RAISED BY THE ASSESSEE IN THIS REGARD IS DISMISSED. 13. IN THE RESULT ASSESSEES APPEAL IN ITA NO. 1849 /HYD/2012 IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IN ITA NO. 1870/HYD/2012 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28/02/2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 28/02/2014 KV COPY FORWARDED TO: 1. M/S HARSHA ESTATES PVT. LTD., 4-52, DIVYA NAGAR, KACHIVANISINGARAM VILLAGE, GHATKESAR MANDAL, RR DIS T. 2. ACIT, CIRCLE 2(2), 8 TH FLOOR, B BLOCK, ROOM NO. 826, IT TOWERS, AC GUARDS, HYDERABAD 500 004. 3. CIT(A)-III, HYDERABAD 4. CIT-II, HYDERABAD. 5. THE DR, ITAT, HYDERABAD