K. Srinvasa Reddy, Hyd, Hyderabad V. ACIT, Circle-8(1), Hyderabad

ITA 2089/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74433 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Salary income; Opportunity of being heard; Corroborative evidences; Assessment record; Onus to prove
• Section: 54F; 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 2063, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 ASSESSMENT YEARS : 2002-03, 2003-04, 2004-05, 2006 -07, 2007-08 & 2008-09 K. SRINIVASA REDDY, HYDERABAD. PAN: ADFPK0105J VS. ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 8(1), HYDERABAD. (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI P. SOMASEKHAR REDDY DATE OF HEARING : 06 -11-2013 DATE OF PRONOUNCEMENT : 01-01-2 014 O R D E R PER BENCH: THESE APPEALS ARE PERTAINING TO ONE ASSESSEE AND S INCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS THEY WERE CLUB BED AND HEARD TOGETHER, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. WE HAVE HEARD LD. COUNSEL AND LD. CIT DR IN DETAIL. 2. ASSESSEE IS A PATNER IN FIRMS WHERE THERE WA S A SEARCH IN THE GROUP OF INDIVIDUALS AND FIRMS. THE ASSESSMENTS WERE COMP LETED CONSEQUENT TO THE SEARCH IN THE GROUP. 3. THERE WAS A DELAY OF THREE DAYS IN FILING APP EALS IN ITA NOS. 2063, 2064 & 2065/HYD/2011 AND TO THIS EFFECT ASSESSEE FI LED A PETITION REQUESTING FOR CONDONATION OF DELAY. ASSESSEE ALSO FILED AN AFFIDAVIT AFFIRMING THE REASONS FOR THE DELAY MENTIONED IN TH E PETITION FOR CONDONATION OF DELAY. AFTER HEARING THE PARTIES AND PERUSING THE RECORD, WE FIND THAT ASSESSEE WAS PREVENTED BY REASONABLE CAUS E FOR FILING THESE APPEALS WITHIN THE STIPULATED TIME, AND, THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEALS FOR ADJUDICATION. 2 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY ITA NO. 2063/HYD/2011 FOR AY 2002-03 4. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CIT (A)-III, HYDERABAD DATED 22-09-2011. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE. GROUND NO. 2 IS AGAINST THE ACTION OF CIT(A) IN CONFIRMING THE A DDITION OF RS. 33,873/- MADE BY THE AO BY DISALLOWING 10% OF THE EXPENSES D EBITED TO THE PROFIT AND LOSS ACCOUNT. GROUND NO. 3 IS THAT THE CIT(A) E RRED IN CONFIRMING THE INTEREST CHARGED U/S 234B AND 234C OF THE IT ACT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE HAD CLAIMED A SUM OF RS. 3,38,725/- TOWARD S LABOUR WAGES. ON VERIFICATION OF SUCH EXPENSES, HE FOUND THAT ASSESS EE HAD MAINTAINED ONLY SELF-MADE VOUCHERS FOR THE SAME. THE AO, THEREFORE, DISALLOWED 10% OF THE SAID EXPENSES, RS. 33,873/- ON THE GROUND THAT SUCH EXPENSES ARE MOSTLY INCURRED IN CASH AND WERE OF NON-VERIFIABLE NATURE. 6. BEFORE THE CIT(A), IT WAS SUBMITTED THAT ALL THE WORKERS WERE ILLITERATE, WORKING ON DAILY WAGE BASIS AND THE WAG ES HAVE TO BE PAID TO THEM IN CASH AT THE END OF THE DAY AND, THEREFORE, IT WAS INEVITABLE TO MAKE SELF-MADE VOUCHERS TO BOOK SUCH EXPENDITURE. AFTER CONSIDERING THE SUBMISSIONS, THE CIT(A) CONFIRMED THE ADDITION BY O BSERVING THAT NO EVIDENCE NOR ANY MATERIAL HAS BEEN FURNISHED IN SUP PORT OF CLAIM. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT SINCE ASSESSEES BUSINESS ITSELF IS LABOUR ORIENTED BEING BRICK MANUFACTURER, THE CLAIM OF EXPENDITURE CANNOT BE DOUBTED OR DISALLOWE D AS THE AO DID NOT FIND ANY REASON FOR REJECTION OF BOOKS OF ACCOUNT. THERE IS NO ALLEGATION OF REDUCTION OF INCOME ON ACCOUNT OF LOWER PROFITS. T HERE IS NO INCRIMINATING MATERIAL ALSO IN THE SEARCH. THE DISALLOWANCE OF 1 0% OF LABOUR EXPENSES CLAIMED IS NOT WARRANTED ON THE FACTS OF THE CASE. IT IS NOTICED THAT THE AO ACCEPTED THE ENTIRE CLAIM, SIMILAR IN NATURE IN AY 2005-06 AND NO DISALLOWANCE HAS BEEN MADE. ACCORDINGLY, IN THE ABS ENCE OF ANY INCRIMINATING MATERIAL FOUND, BEING A SEARCH CASE, WE DELETE THE ADDITION SO MADE BY THE AO ON ESTIMATION. GROUND NO. 2 IS ALLOW ED. 3 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY 8. GROUND NO. 3 IS PERTAINING TO CHARGING OF INTERE ST U/SS. 234B AND 234C OF THE IT ACT. SINCE CHARGING OF INTEREST UNDE R THESE SECTIONS IS CONSEQUENTIAL IN NATURE, THE AO IS DIRECTED TO WORK OUT THE SAME ACCORDINGLY. 9. IN THE RESULT, APPEAL IN ITA NO. 2063/HYD/2011 I S PARTLY ALLOWED. 10. IN ITA NOS. 2064 & 2065/HYD/2011 FOR THE ASSESSMENT YEARS 2003- 04 & 2004-05, ASSESSEE RAISED SIMILAR GROUNDS AS RA ISED IN AY 2002-03. SINCE THE GROUNDS AND THE FACTS IN THESE APPEALS AR E MATERIALLY IDENTICAL TO THAT OF AY 2002-03, EXCEPT THE DIFFERENCE IN THE AM OUNT OF ADDITIONS, FOLLOWING THE DECISION IN THAT APPEAL, WE ALLOW THE GROUNDS OF APPEAL REGARDING ASSESSEES CLAIM OF LABOUR EXPENSES IN TH ESE TWO APPEALS. AO IS DIRECTED TO ALLOW THE CLAIM. CONSEQUENTLY THE ADDIT ION OF RS 39,948 AND RS.30,543 RESPECTIVELY STANDS DELETED. GROUND REGA RDING CHARGING OF INTEREST U/S SEC. 234B & 234C IS CONSEQUENTIAL AND SO AO IS DIRECTED TO CALCULATE ACCORDINGLY. 11. IN THE RESULT, APPEALS IN ITA NOS. 2064 & 2065/ HYD/2011 ARE PARTLY ALLOWED. ITA NO. 2089/HYD/2011 FOR AY 2006-07 12. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CI T(A)-III, HYDERABAD DATED 13-10-2011. GROUND NOS. 1 & 8 ARE GENERAL IN NATURE. GROUND NOS. 2 TO 5 ARE PERTAINING TO THE ADDITIONS U/S 68 OF THE IT ACT. GROUND NO. 6 IS AGAINST DISALLOWANCE OF 10% OF LABOUR CHARGES. GROU ND NO 7 IS ON LEVY OF INTEREST. 13. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO FOUND THAT ASSESSEE HAD SHOWN HAND LOANS OF RS. 4,00,000/-, RS . 2,00,000/- & RS. 2,00,000/- IN THE NAMES OF SRI K. SATYANARAYANA RED DY, SRI M. KRISHNA REDDY & SRI M.V.S. MURALI KRISHNA RESPECTIVELY. FO R SUCH LOAN FROM K. SATYANARAYANA REDDY, ASSESSEE HAD FILED CONFIRMATIO N, AS PER WHICH, THE SAID PERSON WHO IS AN EMPLOYEE IN TELECOM DEPARTMEN T, HAD GIVEN THE SAID AMOUNT OUT OF HIS SALARY SAVINGS. HOWEVER, IN ABSEN CE OF ANY DOCUMENTARY 4 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY EVIDENCE IN SUPPORT OF CREDITWORTHINESS IN THE CASE OF THE SAID PERSON, THE AO DID NOT ACCEPT SUCH LOAN AS GENUINE AND THUS, AD DED THE AMOUNT OF RS. 4,00,000/- TO THE INCOME OF ASSESSEE, TREATING AS U NEXPLAINED CREDIT U/S 68 OF THE ACT. IN CASE OF SHRI M. KRISHNA REDDY, THOU GH HE FILED CONFIRMATION, THE AO TREATED THE AMOUNT OF RS. 2,00,000/- AS UNEX PLAINED CREDIT ON THE GROUND THAT NO DOCUMENTARY EVIDENCE WAS FILED IN SU PPORT OF CREDITWORTHINESS. IN CASE OF SRI M.V.S. MURALI KRIS HNA, ASSESSEE COULD NOT FILE ANY CONFIRMATION LETTER, THEREFORE, THE AO ADD ED THE SUM OF RS. 2,00,000/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. AS REGARDS THE LOAN OF RS. 5,00,000/- SHOWN TO HAVE TAKEN FROM ONE KALPATH ARU CHIT FUNDS, ON THE REASON THAT ASSESSEE FAILED TO PROVE THE IDENTITY A ND CREDITWORTHINESS OF THE SAID CONCERN AND ALSO COULD NOT ESTABLISH THE G ENUINENESS OF THE SAID TRANSACTION THE AO ADDED THE SAID AMOUNT TO THE INC OME OF ASSESSEE AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 14. BEFORE THE CIT(A), IT WAS SUBMITTED THAT ALL TH E LOAN CREDITORS HAVE FILED CONFIRMATION LETTERS WHEREIN THEY HAVE ADMITT ED REGARDING ADVANCING MONIES TO ASSESSEE AND, THEREFORE, ASSESSEE HAD DIS CHARGED THE ONUS TO PROVE SUCH CREDITS. IT WAS CONTENDED THAT THE AO WA S NOT JUSTIFIED IN ADDING THE SAID AMOUNTS TO THE INCOME OF ASSESSEE. REFERRI NG TO LOAN AMOUNT OF RS. 5,00,000/-, THE LOAN WAS OBTAINED THROUGH CHEQU E AND THE SAME WAS ALSO REPAID THROUGH CHEQUE TO KALPATHARUVU FINANCES , ALONG WITH INTEREST OF RS.97,500 SUBSEQUENTLY. AFTER CONSIDERING THE S UBMISSIONS OF ASSESSEE, THE CIT(A) CONFIRMED THE ADDITIONS MADE U /S 68 OF THE ACT, BY OBSERVING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ID . AR. AND HE FACTS OF THE CASE. I HAVE PERUSED THE ASSESSMENT RECORD. 6.1. AS REGARDS, LOANS OF RS. 5,00,000/-, RS. 2,00 ,000/- & RS.2,00,000/-, SHOWN IN THE NAMES OF SRI K. SATYANA RAYANA REDDY, SRI M. KRISHNA REDDY & SRI M.V.S. MURALI KRISHNA ARE CONCERNED, IT HAS BEEN SUBMITTED THAT THE APPELLANT HAS FILED CON FIRMATION LETTERS EXPLAINING SUCH CREDITS. IT HAS BEEN CONTENDED THAT THE APPELLANT HAS DISCHARGED THE ONUS IN EXPLAINING SUCH CREDITS. HOW EVER, THERE IS NO MERIT IN SUCH CONTENTION. BEFORE ADDING THE SAID AM OUNT TO THE INCOME OF THE APPELLANT AS UNEXPLAINED CREDITS U/S 68 OF THE ACT, THE ASSESSING OFFICER HAS MADE ADVERSE OBSERVATIONS IN PARA 4.1, 4.2 & 4.3 OF THE ASSESSMENT ORDER. AS NOTED BY THE ASSESS ING OFFICER, THE APPELLANT HAS NOT FILED ANY CONFIRMATION LETTER FOR THE CREDIT OF RS. 2,00,000/- SHOWN IN THE NAME OF SRI MVS MURALI KRIS HNA. IN THE 5 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY ABSENCE OF ANY EVIDENCE FILED BEFORE ME, ESTABLISHI NG THE GENUINENESS OF SUCH TRANSACTIONS, THE SAID THREE UN SECURED LOANS, CANNOT BE ACCEPTED AS GENUINE. 6.1.1. FURTHER, AS PER THE CONFIRMATION LETTER FILE D IN THE CASE OF SRI K. SATYANARAYANA REDDY, AN AMOUNT OF RS.4,00,000/- WAS GIVEN BY HIM ON 24.01.2006 VIDE CHEQUE NO.687081. HOWEVER, H E HAS NOT FURNISHED HIS BANK ACCOUNT NUMBER AND ALSO THE NAME AND ADDRESS OF THE BANK, ON WHICH SUCH CHEQUE WAS ISSUED BY HIM . IN ABSENCE OF SUCH VITAL INFORMATION, THE SAID TRANSACTION, CANNO T BE ACCEPTED AS GENUINE. FURTHER, THOUGH HE HAS STATED THAT HE HAS GIVEN SUCH AMOUNT OUT OF HIS SALARY SAVINGS, IN ABSENCE OF ANY EVIDENCE TO BACK- UP SUCH CLAIM, THE SAID CONTENTION CANNOT BE ACCEPTED. THE APPELLANT HAS ALSO NOT BEEN ABLE TO ESTABLISH THE C REDITWORTHINESS OF SRI K. SRINIVASA REDDY AND ALSO THE GENUINENESS OF SUCH TRANSACTION IN THIS CASE. HENCE, ADDITION OF THE SAID AMOUNT OF RS. 4,00,000/- MADE BY THE AO, TREATING AS UNEXPLAINED CREDIT UJS. 68 OF THE ACT, IN THE ASSESSMENT, IS JUSTIFIED. HENCE, THE SAME IS UP HELD. 6.1.2. AS PER THE CONFIRMATION LETTER FILED IN THE CASE OF SRI M. KRISHNA REDDY, HE HAS GIVEN AN AMOUNT OF RS. 2,00,0 00/-- TO THE APPELLANT VIDE TWO CHEQUES OF RS.1,00,000/- EACH, B OTH DATED. 23.12.2005. THOUGH THERE IS MENTION OF CHEQUE NO., HE HAS NOT FURNISHED THE BANK ACCOUNTS NUMBER AND ALSO THE NAM E AND ADDRESS OF THOSE BANKS ON WHICH SUCH CHEQUES WERE ISSUED BY HIM. IN ABSENCE OF THESE DETAILS IN THE SAID CONFIRMATION L ETTER, SUCH TRANSACTIONS CANNOT BE ACCEPTED AS GENUINE. FURTHER , THOUGH IN THE SAID LETTER HE HAS STATED REGARDING WORKING AS A SO FTWARE ENQINEER ABROAD AND HAVING ADVANCED SUCH AMOUNTS OUT OF HIS SALARY SAVINGS, IN ABSENCE OF ANY MATERIAL TO BACK- UP SUCH CLAIM, THE SAID CONTENTION CANNOT BE ACCEPTED. FURTHER, THE APPELLA NT HAS ALSO NOT BEEN ABLE TO ESTABLISH THE CREDITWORTHINESS OF THE SAID PERSON AS WELL AS THE GENUINENESS OF SUCH TRANSACTIONS. UNDER THES E CIRCUMSTANCES, ADDITION OF THE SAID AMOUNT OF RS.2, 00,000/- MADE BY THE AO IN THE ASSESSMENT, TREATING THE SAME AS UNEX PLAINED CREDIT U/S.68 OF THE ACT IS JUSTIFIED AND HENCE, THE SAME IS UPHELD. 6.1. 3. AS ALREADY STATED ABOVE, THE APPELLANT HAS NOT FILED ANY CONFIRMATION LETTER FOR THE LOAN AMOUNT OF RS.200,0 00/- SHOWN IN THE NAME OF SRI M.V.S. MURALI KRISHNA. AS SEEN FROM THE ASSESSMENT RECORD, VIDE HIS LETTER DATED.21.12.2009 R WHILE FURNISHING THE DETAILS OF UNSECURED LEANS, THE APPELLANT HAS NOT REFERRED TO SUCH AMOUNT SHOWN IN THE NAME OF M.V.S. MURALI KRISHNA. IN THAT LETTER, HE HAS REFERRED TO THE LOANS SHOWN IN THE CASE OF K. SATYA NARAYANA REDDYV M. KRISHNA REDDY, K VENKATESWARA REDDY K. PRABHAVATHI AND K. ANANTHA LAXMI. HE HAS ALSO FILED CONFIRMATION LETTE RS IN RESPECT OF THOSE FIVE PERSONS. HOWEVER, IN THE LIST OF UNSECUR ED LOANS FURNISHED WITH THE RETURN OF INCOME, THE APPELLANT HAS ALSO S HOWN UNSECURED LOAN OF RS.200,000/- TAKEN ON 23.12.2005, FROM M.V.S. MURALI KRISHNA (USA). HAVING REGARD TO SUCH FACT ON RECORD AND WHE N THE APPELLANT HAS FAILED TO FILE ANY CONFIRMATION LETTER IN SUPPO RT OF SUCH LEAN, THE AO WAS JUSTIFIED IN ADDING THE SAID AMOUNT TREATING THE SAME AS UNEXPLAINED CREDIT U/S.68 OF THE ACT. HENCE, THE SA ID ADDITION OF RS.200,000/- MADE IN THE ASSESSMENT IS CONFIRMED. 6 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY 6.2. IN VIEW OF THE ABOVE DISCUSSIONS, TOTAL ADDITI ON OF RS. 8,00,000/- (RS. 4,00,000/- + RS. 2,00,000/- + RS.2,00,000/-) MADE U/S.68 OF THE ACT, TOWARDS UNEXPLAINED CREDITS IN THE ASSESSMENT, IS UPHELD. 7. AS REQARDS, THE OTHER LOAN AMOUNT OF RS. 5,00,000/- IS CONCERNED, IT HAS BEEN SUBMITTED BY THE ID. AR. R SUCH AMOUNT WAS TAKEN BY THE APPELLANT FROM KALPATHARUVU FINANCES, CHILAKALURIPE T. HOWEVER, IN THE BALANCE SHEET FILED WITH THE RETURN, THE NAME O F THE SAID CONCERN IS SHOWN AS KALPATHARU CHIT FUNDS. WHEN DURING THE ASSESSMENT PROCEEDINGS, ON 16.12.2009, THE AO HAS ASKED THE APPELLANT TO FURNISH CONFIRMATION LETTERS IN RESPECT OF THE UNSE CURED LOANS, HE OUGHT TO HAVE FILED CONFIRMATION FOR THE SAID LOAN. HOWEVER, THE APPELLANT HAS REMAINED SILENT WITH REFERENCE TO SUC H LOAN WHEN FILING REPLY VIDE LETTER DATED. 21.12.2009. DURING THE PRE SENT PROCEEDINGS BEFORE ME WHILE FURNISHING A PHOTOCOPY OF A CONFIRMATION LETT ER, STATED TO BE OBTAINED FROM THAT CONCERN IT HAS BEEN SUBMITTED THAT THE APPELLANT COULD NOT FURNISH THE SAME DU ~QU, TI ME. HOWEVER, I AM UNABLE TO AGREE WITH SUCH CONTENTION OF THE ID. AR. FURTHER, IN THE SAID LETTER FILED BEFORE ME, IT IS STATED REGARDING PAYMENT OF RS.5,00,000J- ON 26.12.2005, VIDE CHEQUE NO.076780J IB TO THE APPELLANT. HOWEVER, THE BANK ACCOUNT NUMBER AND ALS O THE NAME AND ADDRESS OF THAT BANK ON WHICH SUCH CHEQUE WAS I SSUED, HAVE NOT BEEN FURNISHED IN THAT LETTER. IN ABSENCE OF TH OSE DETAILS, THE SAID TRANSACTION CANNOT BE ACCEPTED AS GENUINE. FURTHER DURING HEARING OF APPEAL ON 21.09.2011, THE ID. AR. WAS REQUESTED TO FURNISH THE PAN OF THE SAID FINANCE COMPANY AND ALSO THE ADDRESS OF THE AO OF THAT CONCERN. HOWEVER, HE DID NOT FURNISH THE SAME. UNDE R THESE CIRCUMSTANCES, IT THUS SHOWS, THAT THE SAID TRANSAC TION WAS NOT GENUINE. HENCE, ADDITION OF THE SAID AMOUNT OF RS.5 ,00,000/- MADE BY THE AO, TREATING THE SAME AS UNEXPLAINED CREDIT U/S.68 OF THE ACT, IS JUSTIFIED. THUS, THE SAME IS UPHELD. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. IT IS OBSERVED THAT THOUGH ASSESSEE FILED C ONFIRMATION LETTERS IN SOME CASES, THE REVENUE AUTHORITIES MADE THE ADDITI ONS MAINLY ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY DOCUMENTS IN SUPPORT OF CREDITWORTHINESS AND THEY WERE OF THE VIEW THAT THE GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN ESTABLISHED. WE ARE UNABL E TO UNDERSTAND WHAT FURTHER EVIDENCE IS REQUIRED TO ESTABLISH THE CREDI T WORTHINESS. MOST OF THE AMOUNTS HAVE BEEN RECEIVED BY WAY OF CHEQUE. THOSE PERSONS,EXCEPT ONE HAS FILED CONFIRMATIONS. NO ENQUIRY WAS MADE BY AO TO DISPROVE. SHIFTING THE ONUS AND STATING THAT SUPPORTING EVIDENCES HAVE NOT BEEN FILED CAN NOT BE A REASON TO DISBELIEVE THE CONTENTIONS. AS SEEN FROM THE STATEMENTS OF CONFIRMATIONS, CREDIT FROM K. SATYANARAYANA REDDY O F RS. 4,00,000 AND CREDIT FROM M KRISHNAREDDY OF RS.2,00,000 CAN BE AC CEPTED AS GENUINE CREDITS. TO THAT EXTENT, WE ACCEPT ASSESSEE CONTENT IONS AND DIRECT AO TO ACCEPT THE SAME. 7 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY 15.2 AS REGARDS THE CREDIT FROM MVS MURALIKRISHNA OF RS 2,00,000 ASEESSEE COULD NOT FILE ANY CONFIRMATION AS THE SAI D PERSON IS IN USA. FURTHER THERE IS CONFUSION ABOUT THE LOAN FROM M/S KALPATARU. THE AO MADE ADDITION IN THE NAME OF CREDIT FROM KALPATARU CHITF UNDS WHERE AS CIT MENTIONS KALPATARU FINANCIARS. IN ORDER TO EXAMINE THESE CREDITS, WE ARE OF THE OPINION THAT AO SHOULD ENQUIRE AFRESH THE CLAIM OF GENUINENESS OF THESE AMOUNTS AFTER GIVING DUE OPPORTUNITY TO ASESS EE AND DECIDE AFRESH. FOR THIS PURPOSE THE ADDITION OF THESE AMOUNTS STAN DS DELETED WITH A DIRECTION TO EXAMINE AND DECIDE THE ISSUE AGAIN AS PER FACTS AND LAW. ACCORDINGLY, GROUNDS 2 AND 3 ARE ALLOWED AND GROUND S 4 AND 5 ARE RESTORED TO THE FILE OF AO AND ARE CONSIDERED ALLOWED FOR ST ATISTICAL PURPOSES. 16. AS REGARDS GROUND NO.6 REGARDING 10% DISALLOWAN CE OF LABOUR WAGES, THE AO NOTICED THAT ASSESSEE HAD CLAIMED A S UM OF RS. 7,89,850/- TOWARDS LABOUR WAGES IN THE PROFIT & LOSS ACCOUNT. ON VERIFICATION OF SUCH EXPENDITURE CLAIMED TO HAVE BEEN INCURRED IN CASH, THE AO FOUND THAT ASSESSEE HAD MAINTAINED ONLY SELF-MADE VOUCHERS FOR THE SAME. AS THE SAID EXPENSES WERE NOT FULLY VERIFIABLE, THE AO DIS ALLOWED 1/10 TH OF THE SAID, WHICH COMES TO RS. 78,950/-. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, RESTRICTED THE DISALLOWANC E TO RS. 35,000/- ON THE GROUND THAT THE DISALLOWANCE MADE BY THE AO IS ON HIGHER SIDE. AFTER CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE ACTION OF THE CIT(A) IN SUSTAINING THE ADD ITION TO RS. 35,000/- AND ACCORDINGLY, ORDER OF CIT(A) IS UPHELD ON THIS COUN T. GROUND NO. 6 IS DISMISSED. 17. GROUND NO. 7 IS PERTAINING TO LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE IT ACT. SINCE CHARGING OF INTEREST UNDE R THESE SECTIONS IS CONSEQUENTIAL IN NATURE, THE AO IS DIRECTED ACCORDI NGLY. 18. IN THE RESULT, APPEAL IN ITA NO. 2089/HYD/2011 IS CONSIDERED PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY ITA NO. 1103/HYD/2011 FOR AY 2007-08 19. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CI T(A)-III, HYDERABAD DATED 24-03-2011. GROUND NOS. 1, 2 & 7 ARE GENERAL IN NATURE. GROUND NO. 3 IS PERTAINING TO ADDITION U/S 68 OF THE ACT AND G ROUND NO. 4 IS DISALLOWANCE OF LABOUR CHARGES. GROUND NO. 5 IS DIS ALLOWANCE OF CLAIM FOR DEDUCTION U/S 54F OF THE ACT AND GROUND NO. 6 IS CH ARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 20. AS REGARDS THE ADDITION U/S 68 OF THE ACT, THE AO DISBELIEVED THE CREDITS RECEIVED FROM THE FOLLOWING PERSONS ON THE GROUND THAT ASSESSEE HAD FAILED TO ESTABLISH CREDITWORTHINESS OF CREDITO RS BY FILING DOCUMENTARY EVIDENCES AND MADE THE ADDITION ACCORDINGLY: 1. D. HARINATH REDDY RS. 1,50,000/- 2. A. HARINATH REDDY RS. 2,00,000/- 3. M. PRASANNAKUMAR REDDY RS. 2,90,000/- 4. P. SRINIVASA MURTHY RS. 1,00,000/- 5. G. APPA RAO RS. 9,00,000/- 6. K. NARASA REDDY RS. 1,50,000/- 7. P. SASIDHAR RS. 5,00,000/- TOTAL RS.22,90,000/- =========== 21. BEFORE THE CIT(A), THE AR FILED COPIES OF CONFI RMATION LETTERS STATED TO BE FILED BEFORE THE AO DURING THE ASSESSMENT PRO CEEDINGS AND REQUESTED THAT SUCH CREDITS SHOWN IN THE NAME OF CR EDITORS MAY BE ACCEPTED. AFTER CONSIDERING THE SUBMISSIONS OF ASSE SSEE, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE AO U/S 68 OF THE IT ACT, BY OBSERVING AS UNDER: 4.1 I HAVE CONSIDERED SUCH SUBMISSIONS OF THE ID. AR. AS PER THE CONFIRMATION LETTER FILED FOR THE CREDIT OF RS. 1,50,000/- SHOWN IN THE NAME OF SRI D. HARINATH REDDY IS CONCERNED, IT WAS SUBMITTED THAT THE SAID AMOUNT WAS GIVEN VIDE CHEQU E TO THE APPELLANT. IN THE SAID CONFIRMATION LETTER STATED T O BE FILED BEFORE THE AO A SUM OF RS.1,50,000/- IS SHOWN AS GIVEN VID E CHEQUE NO.312680 ON 28.04.2006. HOWEVER, IN ABSENCE OF THE BANK DETAILS OF SUCH CHEQUE MENTIONED IN THAT LETTER AND FURTHER WHEN THE SAID CONFIRMATION LETTER IS SIGNED BY D. SYAMAL A REDDY AND 9 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY NOT BY THE SAID CREDITOR, SUCH UNSECURED LOAN CANNO T BE ACCEPTED AS GENUINE. THUS, AND FURTHER FOR THE REAS ONS STATED BY THE AO IN PARA 4.1 OF THE ASSESSMENT ORDER, SUCH AMOUNT IS LIABLE FOR ADDITION U/S.68 OF THE ACT. HENCE, ADDITION OF THE SAID AMOU NT OF RS. 1,50,000/- MADE U/S.68 OF THE ACT IN THIS CASE IS C ONFIRMED. 4.2 AS REGARDS, THE CREDIT OF RS.1,50,000/- SHOWN I N THE NAME OF SRI K. NARSA REDDY IS CONCERNED, ALONG WITH THE CON FIRMATION LETTER WHICH WAS FILED BEFORE THE AO, THE ID. AR HA S FURNISHED A PHOTOCOPY OF A BANK STATEMENT A/C.NO.00451515027) I N RESPECT OF THAT PERSON. HE SUBMITTED THAT THE SAID BANK ACC OUNT HAS BEEN FURNISHED BEFORE THE AA. HOWEVER, FROM THE SAI D CONFIRMATION LETTER, I FIND THAT THERE IS OVERWRITI NG IN PEN. THOUGH, IT WAS INITIALLY MENTIONED THAT A CHEQUE NO.0312680 FOR THAT AMOUNT WAS RECEIVED VIDE CHEQUE DATED 28;04.2006, L ATER ON BY OVERWRITING, IT IS MENTIONED THAT THE SAID AMOUNT W AS GIVEN BY HIM VIDE HDFC CHEQUE NO.002012 DATED 05.10.2006. HO WEVER, AS PER THE SAID BANK STATEMENT SUCH CHEQUE FOR THAT AMOUNT WAS CLEARED ON 04.10.2006 I.E., ONE DAY EARLIER. UNDER THE CIRCUMSTANCE, AND SINCE FROM THAT BANK STATEMENT, I T DOES NOT SHOW THAT SAID CHEQUE WAS ISSUED IN THE NAME OF THE APPELLANT, THE SAID CREDIT OF RS.1,50,000/- SHOWN IN HIS NAME CANNOT BE ACCEPTED AS GENUINE. UNDER THE CIRCUMSTANCE AND HAV ING REGARD TO FURTHER REASONS STATED BY THE AO IN PARA 4.6 OF HIS ORDER, ADDITION OF THE SAID AMOUNT MADE U/S.68 OF THE ACT IN THIS CASE IS JUSTIFIED. HENCE, THE SAME IS UPHELD. 4.3 AS REGARDS, CREDIT OF RS.2,90,000/- SHOWN IN TH E NAME OF M. PRASANNA KUMAR REDDY IS CONCERNED, AS PER THE SAID CONFIRMATION LETTER, A CHEQUE NO.898319 DATED 23.04 .2006 FOR THAT AMOUNT HAS BEEN ISSUED. IN THE SAID CONFIRMATI ON LETTER, THOUGH THAT PERSON HAS STATED REGARDING WORKING AS A SOFTWARE ENGINEER IN A PRIVATE CONCERN, HE HAS NOT STATED AB OUT HIS MONTHLY/ANNUAL INCOME FROM SALARY ETC. FURTHER, THO UGH IN THE SAID BANK STATEMENT OF THAT PERSON ISSUED BY STATE BANK OF INDIA, THE SAID CHEQUE IS SHOWN AS CLEARED ON 27.04 .2006, SINCE THERE WAS CASH DEPOSIT OF RS.67,000/- MADE IN THAT ACCOUNT ON 23.04.2006 AND MOREOVER, IT DOES NOT SHOW THAT THE SAID CHEQUE HAS BEEN ISSUED IN THE NAME OF THE APPELLANT, THE S AID CREDIT SHOWN IN HIS NAME, CANNOT BE ACCEPTED AS GENUINE. U NDER THE CIRCUMSTANCE, AND FOR THE REASONS STATED BY THE AA IN PARA 4.3 OF HIS ORDER, ADDITION OF THE SAID AMOUNT MADE IN THIS CASE U/S.68 OF THE ACT IS JUSTIFIED. HENCE, THE SAME IS UPHELD. 4.4 AS REGARDS, CREDIT OF RS.9,00,000/- SHOWN IN TH E NAME OF SRI G. APPA RAO IS CONCERNED, FROM THE SAID CONFIRMATIO N LETTER FILED BEFORE ME, IT IS SEEN THAT SUCH LOAN IS SHOWN AS RE CEIVED VIDE TWO CHEQUES DATED 11.05.2006 AND DATED 28.02.2007 F OR SUMS OF RS.4,00,000/- AND RS.5,00,000/-. THOUGH AS PER THE BANK STATEMENT OF THAT PERSON IN ORIENTAL BANK OF COMMER CE (A/C.NO.5262216030) A CHEQUE FOR OF RS.4,00,000/- W AS ISSUED IN THE NAME OF SRI SRINIVASA REDDY, IT IS SEEN THAT TH E SAID CHEQUE WAS CLEARED ON 10.05.2006 I.E., ONE DAY EARLIER TO THE DATE OF 10 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY SUCH CHEQUE, AS MENTIONED IN THE CONFIRMATION LETTE R. FURTHER, IT IS SEEN THAT BEFORE ISSUANCE OF SUCH CHEQUE, THERE WAS TRANSFER OF FUND OF RS.4,00,000/- TO THAT ACCOUNT, FROM THRE E DIFFERENT ACCOUNTS (THROUGH SWEEP TRANSFER) ON THE SAME DAY. THE SOURCE OF SUCH DEPOSIT/TRANSFER FROM OTHER ACCOUNTS HAVE N OT BEEN EXPLAINED. FURTHER, AS REGARDS, THE OTHER CREDIT OF RS.5,00,000/- IS CONCERNED, IT IS SEEN THAT BEFORE ISSUANCE OF A CHEQUE FOR RS.5,00,000/- WHICH WAS CLEARED ON 27.02.2007 I.E., ONE DAY EARLIER TO THE DATE OF SUCH CHEQUE AS MENTIONED IN THE CONFIRMATION, THERE WAS CASH DEPOSIT OF RS.3,50,000 /- MADE IN THAT BANK ACCOUNT. THE SOURCE OF SUCH CASH DEPOSIT HAS NOT BEEN EXPLAINED. PRIOR TO SUCH CASH DEPOSIT, THERE WERE A LSO HUGE CASH DEPOSITS AND TRANSFER FROM OTHER ACCOUNTS TO THE SA ID BANK ACCOUNT OF THAT PERSON. UNDER THE CIRCUMSTANCE, THE SAID CREDIT OF RS.5,00,000/- SHOWN IN HIS NAME, CANNOT BE ACCEPTED AS GENUINE. UNDER THESE CIRCUMSTANCES, AND FURTHER FOR THE REASONS STATED BY THE AO IN PARA 4.5 OF THE ASSESSMENT ORDE R, ADDITION OF THE SAID AMOUNT OF RS.9,00,000/- TOWARDS UNEXPLAINE D CREDIT MADE U/S.68 OF THE ACT IN THIS CASE, IS JUSTIFIED. HENCE, THE SAME IS UPHELD. 4.5 AS REGARDS, THE CREDIT OF RS.5,00,000/- SHOWN I N THE NAME OF SRI P. SASIDHAR IS CONCERNED, THE ID. AR FILED A CO PY OF LETTER DATED 29.12.2009 SUBMITTED BY THE AR OF THE APPELLA NT DURING THE ASSESSMENT PROCEEDINGS. IN THAT LETTER, IT IS STATE D THAT RS.5,00,000/- WAS RECEIVED FROM P. SASIDHAR THROUGH TWO CHEQUES BEARING NO.888463 AND 888464, FOR SUMS OF RS.3,00,000/- AND RS.2,00,000/- RESPECTIVELY. THOUGH ALONG WITH THAT LETTER, THE APPELLANT HAS FURNISHED PHOTOCOPIE S OF TWO PAY- IN- SLIP FOR DEPOSIT OF SUCH CHEQUES IN ANDHRA BANK ACCOUNT OF THE APPELLANT, IN ABSENCE OF ANY CONFIRMATION LETTE R FROM THE SAID PERSON AND FURTHER IN ABSENCE OF ANY EXPLANATION RE GARDING THE SOURCE OF INCOME IN THE HANDS OF THE SAID P. SASIDH AR, SUCH TRANSACTION SHOWN IN HIS NAME CANNOT BE ACCEPTED GE NUINE. THUS, THE AO WAS JUSTIFIED IN ADDING THE SAID AMOUN T OF RS.5,00,000/- TO THE INCOME OF THE APPELLANT U/S.68 OF THE ACT. HENCE, SUCH ADDITION IS CONFIRMED. 4.6 BEFORE ME, THE ID. AR HAS FILED COPIES OF SUCH CONFIRMATION LETTERS AND OTHER DOCUMENTS ONLY IN RESPECT OF THE ABOVE FIVE CREDITS. HE HAS NOT MADE ANY SUBMISSION OR NOR FURN ISHED ANY DETAILS IN RESPECT OF THE REMAINING TWO CREDITS, SH OWN IN THE NAME OF SRI A. HARINATH REDDY AND SRI P. SRINIVASA MURTHY, IN WHOSE NAMES THE APPELLANT HAS SHOWN UNSECURED LOANS OF RS.2,00,000/- AND RS.1,00,000/-, DURING THE YEAR. I N ABSENCE OF ANY SUBMISSION FROM HIM AND HAVING REGARD TO THE RE ASONS STATED BY THE 'AA IN PARA 4.2 AND 4.4 OF THE ASSESS MENT ORDER, ADDITION OF THE SAID AMOUNTS MADE BY HIM U/S.68 OF THE ACT IN THIS CASE ARE JUSTIFIED. HENCE, THE SAME ARE UPHELD . 4.7 IN VIEW OF THE FOREGOING DISCUSSIONS, THE ENTI RE ADDITION OF RS.22,90,000/- MADE U/S.68 OF THE ACT IN THIS CASE IS JUSTIFIED. HENCE, THE SAME IS UPHELD. 11 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY 22. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES. AS STATED IN EARLIER YEAR ON SIMILAR ADDITIONS, WE ARE NOT IN AG REEMENT WITH ACTION OF AUTHORITIES IN DISBELIEVING THE CREDITS FROM THE PE RSONS WHO HAVE SOURCES AND ARE ASSESSEES ON RECORD. THEREFORE, CREDITS IN THE NAME OF D HARINATH REDDY( RS.1,50,000), M PRASANNAKUMAR REDDY( RS.2,90 ,000), G APPARAO(RS.9,00,000), K NARASA REDDY(RS.1,50,000) ARE TO BE ACCEPTED AS GENUINE. WITH REFERENCE TO OTHER CREDITS WE ARE OF THE OPINION THAT THESE CREDITS REQUIRE FURTHER VERIFICATION BY AO AS ASSES SEE COULD NOT SUBMIT CONFIRMATIONS AND CLAIM OF RECEIPT BY WAY OF CHEQUE IS ALSO REQUIRED TO BE VERIFIED. FOR THIS PURPOSE, VERIFICATION OF THESE C REDITS ARE RESTORED TO THE FILE OF AO. ASESSEE SHOULD BE GIVEN DUE OPPORTUNITY TO SUBSTANTIATE HIS CLAMS. ACCORDINGLY, GROUNDNO.3 IS PARTLY ALLOWED. 23. WITH REGARD TO GROUND NO. 4 DISALLOWANCE OF LAB OUR CHARGES, AGAINST THE CLAIM OF RS. 7,97,820/- TOWARDS LABOUR CHARGES, THE AO DISALLOWED 10% OF THE SAID EXPENSES ON THE GROUND THAT THE EXPENSE S ARE NOT FULLY VERIFIABLE AND ASSESSEE HAD ONLY MAINTAINED SELF-MA DE VOUCHERS. THE CIT(A) CONFIRMED THE SAME. IN AY 2006-07 IN ITA NO. 2089/HYD/2011 (SUPRA), THE CIT(A) RESTRICTED SIMILAR DISALLOWANCE TO RS. 35,000/- AGAINST RS. 78,950/- AND IN THIS YEAR, THE CIT(A)UPHELD THE ENTIRE DISALLOWANCE MADE BY THE AO. SINCE THE ISSUE IS SIMILAR TO THAT OF AY 2006-07, WE RESTRICT THE DISALLOWANCE TO RS. 35,000/- AS AGAINS T THE DISALLOWANCE OF RS. 79,782/-. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWE D. 24. AS REGARDS THE GROUND NO. 5 PERTAINING TO DISAL LOWANCE OF ASSESSEES CLAIM FOR DEDUCTION U/S 54F OF THE ACT, WHILE COMPUTING INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS, ASSESSEE H AD CLAIMED DEDUCTION FOR RS. 10,49,904/- U/S 54F OF THE ACT. ON BEING AS KED BY THE AO TO JUSTIFY THE CLAIM, ASSESSEE VIDE LETTER DATED 16-12-2009, S UBMITTED THAT HE HAD INVESTED THE SALE PROCEEDS OF THE PLOT IN CONSTRUCT ION OF ANOTHER RESIDENTIAL PROPERTY. THE AO, HOWEVER, NOTED THAT ASSESSEE HAS CONSTRUCTED A BUILDING COMPRISING OF 8 SHOPS AND 20 RESIDENTIAL UNITS. HE FURTHER NOTED THAT EXACT PERIOD OF CONSTRUCTION OF THAT BUILDING IS NOT KNOW N AND FURTHER STATING THAT ASSESSEE HAD NOT FILED RETURN OF INCOME FOR THIS AY BEFORE THE DUE DATE I.E. 30-07-2007 AND REFERRING TO THE PROVISIONS OF SECTI ON 54F(4), HELD THAT 12 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY ASSESSEE HAD FAILED TO COMPLY WITH THE PROVISIONS O F THE SAID SECTION AND IS NOT ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. ACCO RDINGLY, DISALLOWED THE CLAIM OF ASSESSEE. CIT(A) CONFIRMED THE SAID DISALL OWANCE FOR THE REASON THAT THE FACTUAL FINDINGS GIVEN BY THE AO HAD NOT B EEN CONTROVERTED BY ASSESSEE. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. IT IS OBSERVED THAT ON THE ISSUE OF PURCHASE OR INVEST MENT IN MORE THAN ONE UNIT OF RESIDENTIAL HOUSE, THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE JUDGEMENTS OF VARIOUS HIGH COURTS AND DECISIONS OF COORDINATE BENCHES. HOWEVER IN THE CASE UNDER CONSIDERATION, SINCE ASSE SSEE HAS NOT FURNISHED DETAILS REGARDING CONSTRUCTION AS WELL AS DEPOSITS IN CAPITAL GAINS SCHEME, IN THE INTEREST OF JUSTICE, WE RESTORE THE ISSUE TO THE FILE OF THE AO TO EXAMINE THE CLAIM OF CONSTRUCTION OF RESIDENTIAL PROPERTY AND DECIDE THE SAME IN ACCORDANCE WITH LAW AND FACTS AFTER PROVIDI NG REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. WE MAKE IT CLEAR THAT HAVING MORE THAN ONE UNIT IN A RESIDENTIAL HOUSE DOES NOT DISEN TITLE ASSESSEE IN CLAIMING THE BENEFIT PROVIDED U/S 54F OF THE ACT, S UBJECT TO SATISFACTION OF OTHER CONDITIONS. THIS GROUND IS ALLOWED FOR STATIS TICAL PURPOSES. 26. GROUND NO. 6 IS CHARGING OF INTEREST UNDER SECT IONS 234A, 234B AND 234C OF THE IT ACT. SINCE CHARGING OF INTEREST UNDE R THESE SECTIONS ARE CONSEQUENTIAL IN NATURE, THE AO IS DIRECTED TO CALC ULATE ACCORDINGLY. 27. IN THE RESULT, APPEAL IN ITA NO. 1103/HYD/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2090/HYD/2011 FOR AY 2008-09 28. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CI T(A)-III, HYDERABAD DATED 13-10-2011. GROUND NO.1 & 5 ARE GENERAL IN NA TURE. GROUND NO. 2 IS PERTAINING TO THE ADDITION OF RS. 2,00,000/- U/S 68 OF THE ACT. GROUND NO. 3 IS WITH REGARD TO THE ADDITION OF RS. 35,000/- TOWA RDS LABOUR CHARGES AND GROUND NO. 4 IS PERTAINING TO CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE IT ACT. 13 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY 29. AS REGARDS GROUND NO. 2 REGARDING ADDITION OF R S. 2,00,000/- U/S 68 OF THE ACT, THE AO NOTED THAT ASSESSEE HAD SHOWN UN SECURED LOAN OF RS. 2,00,000/- FROM ONE SRI PANCHAPTHRU AND EXCEPT FILI NG A COPY OF DEMAND DRAFT DATED 16-102-007, ASSESSEE COULD NO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SAID CREDITOR AND ALSO COUL D NOT EXPLAIN THE GENUINENESS OF SUCH TRANSACTION. HE, THEREFORE, ADD ED THE SAID AMOUNT TO THE INCOME OF ASSESSEE TREATING THE SAME AS UNEXPLA INED CREDIT U/S 68 OF THE ACT. BEFORE THE CIT(A), IT WAS SUBMITTED THAT T HE AO WAS NOT JUSTIFIED IN ADDING THE SAID AMOUNT TO THE INCOME OF ASSESSEE AS DISCHARGED HIS ONUS IN EXPLAINING THE CREDIT BY FILING CONFIRMATION LET TER FROM THE CREDITOR AND THE SAID CREDITOR HAD FURNISHED HIS ADDRESS AND ALSO EX PLAINED THE SOURCE FOR THE INVESTMENT. THE CIT(A) SUSTAINED THE ADDITION M ADE BY THE AO OBSERVING AS UNDER: 5.2 AS PER THE SUBMISSIONS OF THE LEARNED AR, THE A PPELLANT HAS FILED A CONFIRMATION LETTER FOR THE SAID AMOUNT OF RS. 2,00,000/- FROM THAT CREDITOR DURING THE ASSESSMENT PROCEEDINGS. HO WEVER, SUCH CONTENTION IS NOT CORRECT. FROM THE ASSESSMENT RECO RD FOR THIS ASSESSMENT YEAR MADE AVAILABLE TO ME, IT IS SEEN TH AT, WHILE FURNISHING THE LIST OF UNSECURED LOANS AS ON 31-03- 2008, VIDE ANNEXURE-I, WHEREIN A SUM OF RS. 2 LAKHS IS SHOWN A S RECEIVED FROM PANCHAPTHRU, THE APPELLANT HAS MERELY FURNISHED A X EROX COPY OF A DD DATED 16-10-2007 MADE IN ANDHRA BANK, IN FAVOUR OF K. SRINIVASA REDDY. ON THAT DD, IT IS MENTIONED IN REGIONAL LANG UAGE REGARDING ISSUANCE OF SUCH DD IN FAVOUR OF SRI SRINIVASA REDD Y BY PANCHAPTHRU, ORISSA. FROM SUCH MERE, INFORMATION IT CANNOT BE SAID THAT THE APPELLANT HAS ESTABLISHED THE IDENTITY OF THAT PERSON. HE HAS NOT ESTABLISHED THE CREDITWORTHINESS OF THAT PERSON AND ALSO THE GENUINENESS OF SUCH TRANSACTION. UNDER THESE CIRCUM STANCES, ADDITION OF THE SAID AMOUNT MADE BY THE AO, TREATIN G THE SAME AS UNEXPLAINED CREDIT U/S 68 OF THE ACT IS JUSTIFIED. HENCE, THE SAID ADDITION IS CONFIRMED. 30. AFTER HEARING PARTIES AND PERUSING THE RECORD, IT IS OBSERVED THAT SINCE THE ASSESSEE FAILED TO PROVE EVEN THE BASIC I DENTITY AS ALSO THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TION, THE REVENUE AUTHORITIES MADE THE ADDITION U/S 68 OF THE ACT. AF TER CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT TO MEET THE E NDS OF JUSTICE, THE VERIFICATION OF CREDIT IS TO BE RESTORED TO THE FI LE OF THE AO FOR FRESH EXAMINATION AND TO DECIDE THE SAME IN ACCORDANCE WITH LAW, AS ASSESSEE SUBMITTED BEFORE US THAT HE IS IN A POSITION TO FIL E THE DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM. ASSESSEE IS DIREC TED TO PUT FORTH THE 14 ITA NOS. 263, 2064, 2065, 2089, 1103 & 2090/HYD/20 11 M/S K. SRINIVASA REDDY NECESSARY EVIDENCE BEFORE THE AO TO SUBSTANTIATE HI S CLAIM. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 31. WITH REGARD TO GROUND NO. 3 REGARDING SUSTAININ G THE ADDITION OF RS. 35,000/- OUT OF RS. 77,589/- BY THE CIT(A), SIMILA R GROUND RAISED IN AY 2006-07 IN ITA NO. 2089/HYD/2011 (SUPRA), WHEREIN W E HAVE UPHELD THE ACTION OF THE CIT(A) IN RESTRICTING SIMILAR DISALL OWANCE TO RS. 35,000. ACCORDINGLY, WE UPHOLD THE ADDITION OF RS. 35,000/- SUSTAINED BY THE CIT(A) IN THIS YEAR ALSO. THIS GROUND IS DISMISSED. 32. GROUND NO. 4 IS CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. SINCE CHARGING OF INTEREST UNDER THESE SECTION S IS CONSEQUENTIAL IN NATURE, THE AO IS DIRECTED ACCORDINGLY. 33. IN THE RESULT, APPEAL IN ITA NO. 2090/HYD/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 34. TO SUM UP, ITA NOS. 2063, 2064 & 2065/HYD/2011 ARE PARTLY ALLOWED, ITA NO. 2089/HYD/2011, ITA NO. 1103/HYD/20 11 AND ITA NO. 2090/HYD/2011 ARE PARTLY ALLOWED FOR STATISTICAL PU RPOSES. PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RA MAKOTAIAH) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED: 1 ST JANUARY, 2014. KV COPY TO:- 1) M/S K. SRINVAS REDDY, C/O SHRI S. RAMA RAO, ADVO CATE, FLAT NO. 102, SHRIYAS RESIDENCY, ROAD NO . 9, HIMAYATNAGAR, HYDERABAD. 2) ACIT, CIRCLE 8(1), HYDERABAD. 3) CIT(A)-VII, HYDERABAD. 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.