Income Tax Officer, Ward-2, Khammam V. Shri Yelamaddi Srinivasa Rao, Khammam

ITA 226/HYD/2013

• Counselvise Citation: 22622514 RSA 2013
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: S RAMA RAO
• Keywords: Business expenditure; Assessment record
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.226/HYD/13 : ASSESSMENT YEAR 2007 - 08 INCOME TAX OFFICER WARD 2, KARIMNAGAR V/S. SHRI YELAMADDI SRINIVASA RAO, KHAMMAM (PAN AGXPB 4324 M ) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI RAJAT MITRA DR RESPONDENT BY : SHRI S.RAMA RAO DATE OF HEARING 12.3.2015 DATE OF PRONOUNCEMENT 18.3.2015 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : TH IS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) V IJAYAWADA , DATED 1 4 . 12 .201 2 , WHEREBY HE DELETED THE ADDITION S OF RS. 17,89, 5 00 MADE BY THE ASSESSING OFFICER ON ACCOUNT O F UN E XPL A IN E D CASH CREDITS UNDER S.68 AND ALSO RESTRICTED THE DISALLOWANCE OF R S . 1,71,532 MADE BY THE ASSESSING OFFICER OUT OF VARIOUS EXPENSES TO R S .760,000. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL, WHO IS PROPRIETOR OF M/S. HI TECH TOOLS & MORBO ROCKS & GRANITE TILES AT KHAMMAM. THE RETURN OF IN C OM E FOR THE YE A R UN D ER CON S IDERATION WAS FILED BY HIM ON 11.2.2008 DECLARING AN INCOME OF RS .8,19,024 AND AGRICULTURAL INCOME O F RS .1,95,000. DURING TH E COU R SE OF ASSESSMENT PROCEEDINGS, IT WAS NO T ICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED AD V ANCES FROM FOUR PARTIES I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 2 AGGR E GATIN G TO RS .17,89, 500 . SIN C E THE SAID ADVANCES WERE CL A IM E D TO B E RECEI VED BY TH E ASSESSEE FOR SU P PLY OF MATERIALS, HE WAS CALLED UPON BY THE ASSESSING OFFICER TO FURNISH THE DETAILS OF SUPPLIES MADE TO THE CONCERNED OUR PARTIES AGAINST THE AD V ANCES. IN REPLY, IT WAS SU B MI T TED BY THE ASSESSEE THAT NO M A TE R IAL WAS ACTUALLY SUPPLIED A G AIN S T THE SAID ADVANCES, AND THE SAME WERE RETURNED BACK IN TH E SUB S EQUEN T YEAR. SIN C E BOTH THE RECEIPT AND PAYMENT OF ADVANCES W E RE FOUND TO BE MADE IN CASH, THE ASSESSING OFFICER REQUI R ED THE ASSESSEE TO E STABLISH THE ID E N T ITY AND CAPACITY O F TH E CON C ERNED CREDITORS AS WELL AS THE GENUINENESS O F THE TRANSACTIONS. ALT H OUGH THE ASSESSEE PRODUCED CONFIRMATION L E TTERS OF THE CONCERNED FOU R PARTIES, THE ASSESSING OFFICER FOUND THAT TH E RELEVANT PARTICULARS SUCH AS MODE OF PAYMENT, PERMANE N T ACCOUNT NUMBER, ETC. WERE MISSING. HE ALSO FOUN D TH A T ALL THE CONFI R M A TION LETTERS WERE IDENTICALLY WORDED AND THE SAME WERE NO T SUPPORTED BY ANY OTHER DOCUMENTARY EVIDENCE SUCH AS B ALANCE S HEET OF THE CON C E R NED PARTIES REFLECTING THE AD V ANCES MADE TO THE ASSESSE E , TH E I R INCOME - TAX RETURNS, ETC. THE ASSESSING OFFICER , THEREFORE, HELD THAT THE CREDITWORTHINESS O F THE CON C ERNED FOUR PARTIES WAS NO T SATISFACTOR I LY ESTABLI S H E D BY THE ASSESSEE AND RELYING ON THE DECISION OF THE HON'BLE KERALA HIGH COU R T IN TH E CA S E OF C I T V/S. K.M.MAHIM ( 2 1 3 ITR 820 ) , HE TR E ATED THE ADVANCES OF R S .17,18,500 RECEIVED BY TH E ASSESSEE AS UN E XPL A IN E D CASH CREDITS UN D ER S.68. IN THE SAID CA S E, I T W AS HELD BY TH E HON'BLE K ERALA HIGH COURT THAT APART FROM FILING THE CON F I R MATIO N LETTERS, TH E ASSESSEE HAVING FAILED TO PRODUCE ANY O TH E R EVIDENCE TO ESTABLISH THE CAPACITY OF THE CONC E RNED CREDITORS, TH E RE WAS CL EA R FAILURE ON THE P A RT OF THE ASSESSEE TO DI S CHARGE THE BUR D EN THAT LAY UPON HIM TO PROVE THE RELEVANT CASH CREDITS IN TERMS OF S.68. ACCOR D INGLY, ADDITION OF R S .17,89, 5 00 W A S M A DE BY TH E ASSESSING OFFICER TO THE TOTAL INC O M E OF THE ASSESSEE ON ACCOUN T OF UN E XP L AIN E D CASH CREDITS UN D ER S.68. I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 3 3. DURIN G TH E COU R SE OF ASSESSMENT PROC E EDIN G S, IT WAS ALSO FOUN D BY THE ASSESSING OFFICER ON VERIFICATION OF THE S UPPO R TING VOUCH E RS PRODUCED BY TH E ASSESSEE FOR VARIOUS EXPENSES T HAT THE EXPENSES CL A IM E D BY THE ASSESSEE WERE NOT FULLY V E RI FIA BLE. IN T H I S RE G ARD, H E NO T ED THAT SOME O F THE EX P EN S ES CLAIMED BY TH E ASSES SEE W E RE SUPPORTED BY ONLY SELF MADE VOUCH E RS AND THE SAME WERE NO T AMENABLE FOR PROPER VERIFICATION. ACCOR D INGLY, A DISALLOWAN C E OF R.1,71,532 BEIN G 10% OF TH E VA R IOUS EXPENSES CLAIMED BY THE ASSESSEE WAS MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF UNVERIFIABLE ELEMENT INVOLVED IN THE EXPENDITURE CLAIMED BY THE ASSESSEE. THE TO T AL INCOME OF THE ASSESSEE WAS THUS COMPUTED BY THE ASSESSING OFFICER FOR THE Y E AR UN D ER CON S I D E R ATION AT RS. 27 , 80,060 VIDE ORDER DATED 31.12.2009 PASSED UN D ER S.143(3) OF THE ACT. 4. AGAIN S T THE OR D ER PASSED BY THE ASSESSING OFFICER UN D ER S.143(3), AN APPEAL WAS PREFERRED BY TH E ASSESSEE BEFORE TH E LEARNED CIT(A), CHALLENGING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CRE D ITS UN D ER S.68 AND DISALLOWANCE OF EXPENSES. AFTER CONSIDERING THE SU B MI S SION S MADE BY TH E ASSESSEE AS WELL AS THE M A TE R IAL AVAILABLE ON RECORD, THE LEARNED CIT(A) DELETED THE ADDITION M A DE BY THE ASSESSING OFFICER UN D ER S.68 F OR TH E FOLLOWING R E ASON S GIV EN IN PARAGRAPH NO.4A OF THE IMPU G N E D ORDER - 4 A. FIRST ADDITION IS ADVANCES RECEIVED FROM 4 PARTIES AGAINST SUPPLY OF MATERIALS AMOUNTING TO RS.17,89,500. WHEN CALLED UPON TO EXPLAIN AS TO WHY MATERIALS WERE NOT SUPPLIED, T HE APPELLANT HAS INFORMED THE AO THAT IN THE NEXT YEAR SUCH ADVANCES WERE RETURNED. NOW, THE AO HAS INVOKED THE PROVISIONS OF SECTION 68 ON THE GROUND THAT ONLY CONFIRMATIONS WERE FURNISHED, BUT NOT THAT SUCH CONFIRMATIONS WERE ACCOMPANIED BY STATUTORY D OCUMENTS LIKE PAN, COPIES OF IT RETURNS, ACCOUNT COPIES OF THE CREDITORS IN THE BOOKS OF THE APPELLANT, AUDITED BALANCE SHEET OF THE PURCHASERS I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 4 REFLECTING THE ADVANCES IN SUCH BALANCE SHEETS ETC AND ETC AND FOR SUCH ALLEGED LAPSES THE IMPUGNED ADDITION WAS MADE BY THE AO, WHICH IS UNDER CHALLENGE NOW. IN COURSE OF THE APPELLATE PROCEEDINGS, IT IS EXPLAINED THAT THE IMPUGNED ADVANCES WERE RECEIVED FOR CERTAIN QUALITY OF GRANITE MATERIAL, WHICH IS TO BE EXCAVATED FROM THE NATURAL DEPOSITS. BUT, THE APPEL LANT COULD NOT SUPPLY THE MATERIAL DUE TO HIS OWN BUSINESS PROBLEMS AND ACCORDINGLY THESE AMOUNTS WERE RETURNED IN THE SUBSEQUENT YEAR. THE AR RELIED ON THE DECISION OF THE APEX COURT RENDERED IN THE CASE OF CIT VS. SMT. P.K. NOORJAHAN, REPORTED IN (1999) 2 37 ITR 570(SC), WHEREIN UNDER SIMILAR CIRCUMSTANCES, THE ADDITION MADE BY THE AO WAS ORDERED TO BE DELETED. IN ANY CASE, WHEN THE APPELLANT HAS SAID THAT THE ADVANCES RECEIVED WERE RETURNED IN THE NEXT YEAR, THE AO COULD HAVE VERIFIED THE FACTUAL POSITION WITH REFERENCE TO ASSESSMENT RECORDS OF THE NEXT ASSESSMENT YEAR TO COME TO A PROPER CONCLUSION, W HICH WAS NOT DONE BY HIM. IN THE CIRCUMSTANCES, AS THE ADVANCES STAN D REFUNDED IN THE NEXT A SSESSMENT YEAR, ON WHICH THERE WAS NO ADVERSE FINDING BY THE REVENUE, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION AND H E IS ACCORDINGLY DIRECTED TO DELETE THE SAME. 5. THE DISALLOWANCE OF R S .1,71,532 MADE BY THE ASSESSING OFFICER OUT OF VARIOUS EXPENSES CLAIMED WAS ALSO R E STRICTED BY THE LEARNED ASSESSING OFFICER TO R S .70,000 FOR THE FOLLOWING REASON S GI V EN IN PARAGRAPH 4B OF THE IMPU G N E D ORDER WHICH R E ADS AS UN D ER - 4B. SECOND ADDITION IS DUE TO DISALLOWANCE OF EXPENDITURE ON SOME HEADS AT 10% FOR RS. 1,71,532 AS PER THE DETAILS MENTIONED AT PARA 4 ON PAGE NO 3 TO 4. IN COURSE OF THE APPELLATE PROCEEDINGS, THE AR HAS BROADLY CONCEDED THAT ELEMENTS OF FACTORS LIKE CASH PAYMENTS, SELF MADE VOUCHERS ETC . ARE THERE, BUT SUCH THINGS ARE COMMON IN THIS LINE OF BUSIN ESS AND SUGGESTED THAT SOME DISALLOWANCE MAY BE CONSIDERED. IN VIEW OF THE FACTS, CIRCUMSTANCES, NATURE OF BUSINESS AND OTHER EXPLANATIO N S OFFERED BY THE AR. I AM OF THE FIRM VIEW THAT ENDS OF JUSTICE ARE MET IF THE DISALLOWANCE I S RESTRICTED TO RS. 70,00 0 AND THE A O IS DIRECTED TO RESTRICT THE ADDITION TO THIS EXTENT ONLY AND THUS THE APPELLANT GETS A RELIEF OF RS.1,01,532. 6. AGAIN S T THE ORDER OF THE LEARNED CIT(A) GIVING RELIEF TO THE ASSESSEE AS ABOVE, R E VENUE HAS PREFERRED THIS APPEAL B E FORE THE TRI BUNAL ON THE FOL L O W IN G GROUNDS - I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 5 A. THE L D. CIT(A) ERRED BOTH IN LAW AND IN FACTS OF THE CASE. B. THE L D. CIT(A) ERRED IN CONCLUDING THAT THE AO COULD HAVE VERIFIED T HE FACTUAL POSITION WITH REFERENCE TO ASSESSMENT RECORDS OF THE NEXT ASSESSMENT YEAR, AS THE AO HAS VERIFIED AND FOUND THAT BOTH THE RECEIPT AND REPAYMENTS WERE BY MEANS OF CASH. THE SAME WAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER AT PARA 3.1 C. THE L D. CIT(A) OUGHT TO HAVE OBSERVED THAT THE AO DOUBTED THE GENUINENESS OF TRANSACTION AS BOTH THE RECEIPT AND PAYMENT WERE IN CASH AND THE ASSESSEE FAILED TO DISCHARGE THE BURDEN THAT LAY UPON HIM TO PROVE THE GENUINENESS OF CASH CREDITS. D. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUN - CE MENTS WHEREIN IT WAS HELD THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM. WHEN THE NATURE AND SOURCE OF A RECEIPT, WHETHER IT BE OF MONEY OR OTHER PRO PERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE. I . ROSHAN DI HATTI VS. CIT (SC) 107 ITR 938 II . KHALE KHAN MOHAMMAD HANIF VS CIT (SC) 50 TR 1 E. RELIANCE IS ALSO PLACED ON THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF CIT VS. BAJU PATNAIK (SC) 160 ITR 674 AND DHANALAKSHMI STEEL RE - ROLLING M I LLS VS CIT (AP) 228 ITR 780 WHEREIN IT WAS HELD THAT ASSESSEE MUST PROVE IDENTITY OF CREDITS, CAPACITY OF THE CREDITOR TO ADVANCE MONEY AND T HE GENUINENESS OF TRANSACTION. F. THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS.17,89,500 / - AS THE ADVANCES STAND REFUNDED IN THE NEXT ASSESSMENT YEAR WITHOUT PROVING THE GENUINENESS OF THE TRANSACTION AS THE ASSESSEE FAILED TO FURNISH STATUTORY DOCUMENTS SUCH AS IDENTITY OF PERSON, PAN, IT RETURNS OF THE PROSPECTIVE PURCHASERS, COPIES OF THE ASSESSEE'S ACCOUNT IN THE PU R CHASERS' BOOKS OF ACCOUNT, AUDITED BALANCE SHEET OF THE PURCHASERS REFLECTING THE ADVANCES MADE TO THE ASSESEE AND T HE CREDITW O RTHINESS OF THE CREDITORS. G . RELIANCE IS PLACED ON THE FOLLOWING PRONOUNCEMENTS WHEREIN IT WAS HELD THAT MERE PROOF OF IDENTITY OF CREDITOR OR THAT TRANSACTION WAS BY OF CHEQUE IS NOT SUFFICIENT ANTI ADDITION U / S.68 IS UPHELD AS THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF CREDIT. I. MANGILAL JAIN VS ITO (MAD) 315 ITR 105 II. CIT VS. PRECISION FINANCE P. LTD. (CAL) 208 ITR 465 I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 6 H . RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUN - CEMENTS WHEREIN I T WAS HELD THAT WHER E ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR IT MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE FOR THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE AO, NOT SATISFACTORY. I. SUMANTI DAYAL VS CIT (SC) 214 ITR 801 II. VASANTIBAI N.SHAH VS CIT (BOM) 213 ITR 805 III. SREELEKHA BANERJEE & ORS. VS CIT (SC) 49 ITR 112 I . THE L D. CIT(A) OUGHT TO HAVE SUSTAINED THE DISALLOWANCE OF EXPENDITURE OF RS.1,71,532 / - AS THE SELF MADE VOUCHERS WERE DEFICIENT IN AS MUCH AS THEY DO NOT CONTAIN NARRATION REGARDING THE NATURE OF WORK CARRIED OUT, THE QUANTUM OF WORK DONE AND THE PIECE RATE PER UNIT OF WORK TO ENABLE EXAMINATION OF THE REASONAB LENESS OF THE EXPENDITURE. J . THE L D. CIT(A) ERRED IN RESTRICTING THE DISALLOW - ANCE TO RS.70,OOO / - WITHOUT ANY BASIS. K . ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. GROUNDS (A) AND (K) RAISED BY THE RE V ENUE IN THIS APPEAL ARE GENERAL IN NATURE, WHICH DO NO T REQUIRE ANY SPECIFIC ADJU D I C ATION. AS REGARDS THE ISSUE INVOLVE D IN GROUND S (B) TO (H) REL A TING TO THE DELETION BY THE LEARNED CIT(A) OF THE ADDITION OF RS .17,89,500 MADE BY THE ASSESSING OFFICER, IT IS OB S E RV ED THAT ADVANCES AGGREGATING TO RS .17,89,500 WERE CLAIMED TO B E RECEIVED BY TH E ASSESSEE F R OM FOUR PARTIES DURING THE Y EA R UN D ER CONSIDERATION IN CASH AGAINST SUPPLY OF MATERIAL. NO SUPPLY OF MATERIAL AGAINST THE SAID ADVANCES , HOW EVER , WAS M A DE BY TH E ASSESSEE AND SIN C E THE ADVANCES W E RE C LAIMED TO B E REPAID IN TH E SUBSEQUENT YEAR AGAIN IN CASH, THE ASSESSING OFFI CER REQUI R ED THE ASSESSEE TO ESTABLISH THE IDENTITY AND CAPACITY O F THE CONCERNED CREDITORS AS WELL AS THE GENUINENESS OF THE REL E VANT TR A NSAC T IONS BY FURNISHING RELEVANT EVIDENCE. THE ASSESSEE , HO W EVER , FAILED TO DISCHARGE ITS ONUS SATISFACTORILY IN AS M UCH AS THE CON F I R MATION I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 7 L ET TERS OF THE CONCERNED CREDITORS FIL E D BY HIM DID NO T CONTAIN TH E RELEVANT DETAILS SUCH AS MODE O F PAYM E N T S, P ERMANENT A CCOUNT N UMBER OF THE CONCERNED CREDITORS ETC. COPIES O F THE SAID CONFIRMATION L E TTERS ARE PL A CED ON RECORD B E FORE US IN TH E P APER BOOK FIL E D BY THE ASSESSEE AND A PERUSAL O F THE SAME SHOWS T H A T THE SAID LETTERS WORDED IDENTICALLY, D O NO T E VEN CONTAIN THE DATES OF ISSUANCE OF THE CONFI R MATION LETTERS. THE ASSESSEE ALSO FAILED TO FILE ANY OTHER DOCUMENTARY EVIDENCE SUCH AS INCOME TAX PARTICULARS OF THE CREDITORS OR THEIR BALANCE SHEETS TO SHOW THAT THE ADVANCES CLAIMED TO BE GIVEN BY THEM TO THE ASSESSEE WERE DULY REFLECTED IN THEIR IN C OM E TAX RETURN OR EVEN IN T H EIR B ALANCE SHEETS. DESPITE THIS FAILURE OF THE ASSESSEE TO DISCHARGE THE ONUS OF ESTABLISHING THE CREDITWORTHINESS O F THE CON C ERNED CREDITORS, THE LEARNED CIT(A) STR A NG E LY DEL E TED THE AD D I TI ON MADE BY THE ASSESSING OFFICER UNDER S.68 VIDE HIS IMPU G N E D ORDER, AND THAT TOO, IN OUR OPINION , ON ALL IRRE LEVANT AND IMMATERIAL G R OUNDS . IT I S UNDISPUTED THAT THE ADVANCES IN QUESTION RECEIVED BY THE ASSESSEE IN CASH REPRESENT ED CASH CREDIT S AND THE ASSESSEE HAVING FAILED TO DISCHARGE THE P RI MARY ONUS THAT LAY UP ON HIM TO ESTABLISH INTER ALIA THE CAPACITY OF T HE CONCERNED CRE D ITORS , T HE P R O VI SION S OF S.68 WERE C L EARLY ATTRACTED , AS RIGHTLY HELD BY TH E ASSESSING OFFICER RELYING ON THE DECISION OF THE K ERALA H IGH COU R T IN TH E CASE OF K.M.MAHIM (SUPRA) . THE STAND TAKEN BY TH E ASSESSEE THAT THE ADVANCES W ERE REPAID IN THE SUB S EQU E N T PERIOD WAS E NTIRELY IRRELEVANT AND IMMATERIAL TO THE ISSUE O F ADDITION MADE BY THE ASSESSING OFFICER UN D ER S.68, AND THE LEARNED CIT(A) IN OU R OPINION, WAS NO T J U STIFIED TO TAKE INTO CON S ID E RATION THIS IRRELEVANT AND IMMATERIAL ASPECT TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUN T OF UNEXPLAINED ADVANC E S UNDER S.68 OF THE ACT. 6. AT THE TIME OF H EA RING B E FORE US, LEARNED COUNSEL FOR THE ASSESSEE ALSO HAS NOT B E EN ABLE TO R A ISE ANY MATERIAL ARGUMENT OR I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 8 FILE A NY R EL E VANT EVIDENCE TO ESTABLISH THE CREDITWORTHINESS OF THE CONCERNED CREDITORS FROM WHOM THE AMOUNT IN QUESTION WAS CL AI M E D TO B E RECEIVED BY TH E ASSESSEE AS ADVANCES IN CASH. IN OUR OPINION, THE RELIEF ALLOWED BY THE LEARNED CIT(A) ON THIS I S SUE WAS TOTALLY UNWARRANTED AND HIS IMPUGNED ORDER ON THIS ASPECT IS LIABLE TO BE SET ASIDE. ACCOR D INGLY, WE SET ASIDE THE IMPU G N E D ORDER O F THE LEARNED CIT(A) ON THIS ISSUE AN D R E STORE THAT OF THE ASSESSING OFFICER . G ROUNDS (B) TO (H) OF THE R E VENU E IN THIS APPEAL ARE ACCORDINGLY ALLOWED. 7. AS REGARDS THE I S SUE INVOL V ED IN GROUNDS (I) AND (J) RELATING TO THE DISALLOWANCE OF R S .1,71,572 MADE BY TH E ASSESSING OFFICER OUT OF VARIOUS EXPEN SE S, WHICH IS SUSTAINED BY THE LEARNED CIT(A) TO THE EXTENT OF R S .7 0,000, IT I S OB S ERVED THAT THE RELEVANT EXPENSE CLAIMED BY THE ASSESSEE SUCH AS BLOCK CUTTING CHARGES, CHAMPERING CHARGES, MACHINERY MAI N TENANCE, POLISHING CHARGES, CLEANING CHARES, ETC. W E RE IN THE NATURE OF THE BUSINESS EXPENDITURE REGULARLY REQUIRED TO B E I N C URRED BY THE ASSESSEE GOING BY THE NATURE OF HI S BUSINESS. MOREOVER, THE NATURE OF TH E SE EXPENS E S CLAIMED BY THE ASSESSEE IS SUCH THAT THEY ARE SOMETIMES REQUIRED TO BE PAID BY WAY OF SELF - MADE VOUCH E RS . A LTHOUGH SOME DEFICI E NCIES IN SUCH SELF M ADE VOUCH E RS WE RE POINTED OUT BY THE ASSESSING OFFICER BY STATING THAT THE SAME DID NO T CONTAIN COMP L ETE DETA I LS OF THE NATURE OF WORK DONE, THE QUANTUM OF WORK DONE, ETC., WE ARE O F THE VIEW TH A T THE DISALLOWANCE OF 10% OF THE TOTAL EXPEN SE S MADE BY THE ASSESSING OFFICER FOR SUCH DEFICIENCIES WAS ON TH E HI G HER SIDE KEEPING IN VIEW THE NATURE OF THE EXPENDITURE CLAIMED BY TH E ASSESSEE AS WELL AS THE NATURE O F ASSESSEES BUSINESS, AND THE LEARNED CIT(A) WAS QUITE FAIR AND REASONABLE TO R E STRICT THE SAME TO RS.70,000. W E, TH E R E FORE, FIND NO INFIR M ITY IN TH E IMPU GNE D ORDER O F THE LEARNED CIT(A) ON THI S ISSUE AND I TA NO. 226/H YD/20 13 SHRI YELAMADDI SRINIVASA RAO, KHAMMAM 9 UPHOLDING THE SAME, WE DISMISS G R OUN D S (I) AND ( J) OF THE REVENUES APPEAL. 8. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18 TH MARCH, 2015 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER D T/ - 18 TH MARCH, 201 5 COPY FORWARDED TO: 1. SHRI YELAMADDI SRINIVASA RAO, PROP. HITECH TOOLS & MARBO ROCKS & GRANITE TILES, PLOT NO.18, IDA KHAMMAM 2 . INCOME TAX OFFICER WARD 2, KARIMNAGAR 3. COMMISSIONER OF INCOME - TAX(APPEALS) V IJAYAWADA 4. COMMISSIONER OF INCOME - TAX, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S