Sri. Mallangouds Sankagoudashani, Hubli V. DCIT, Hubli

ITA 259/BANG/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5360 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 20-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G KAMALADHAR
• Assessee Lawyers: ASHOK KULKARNI
• Keywords: Gift; Rectification of order; Opportunity of being heard; Corroborative evidences; Bonafide mistake
• Section: 40A(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ITA NO. 259/BANG/2014 ASSESSMENT YEAR: 2011-12 SHRI MALLANAGOUDA S. SANKAGOUDASHANI, NO.222, 2ND FLOOR, BHAVANI ARCADE, NEAR BASAV VANA, N.C.M., HUBLI 580 029. PAN: AEUPS 7783Q VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), HUBLI. APPELLANT RESPONDENT ITA NO. 295/BANG/2014 ASSESSMENT YEAR: 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), HUBLI. VS. SHRI MALLANAGOUDA S. SANKAGOUDASHANI, NO.222, 2ND FLOOR, BHAVANI ARCADE, NEAR BASAV VANA, N.C.M., HUBLI 580 029. PAN: AEUPS 7783Q APPELLANT RESPONDENT ASSESSEE BY : SHRI ASHOK KULKARNI, ADVOCATE REVENUE BY : SHRI G. KAMALADHAR, STANDING COUNSEL DATE OF HEARING : 03.03.2017 DATE OF PRONOUNCEMENT : 19.05.2017 ITA NOS. 259 & 295/BANG/2014 PAGE 2 OF 76 O R D E R PER BENCH THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 29.11.2013 OF CIT(A) FOR THE ASSESSMENT YEAR 2011-12. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS. ITA NOS. 259 & 295/BANG/2014 PAGE 3 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 4 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 5 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 6 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 7 OF 76 2. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQU IRE ANY SPECIFIC ADJUDICATION. 3. GROUND NO. 2 IS REGARDING THE ADDITION ON ACCOUNT O F SALE OF MATERIAL. THE AO HAS MADE AN ADDITION OF RS. 33,05 ,152/- ON ITA NOS. 259 & 295/BANG/2014 PAGE 8 OF 76 ACCOUNT OF SALE OF MATERIAL AS THESE RECEIPTS WERE FOUND RECORDED IN THE IMPOUNDED DIARIES. THE ASSESSEE CH ALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED TH AT THE ADDITION MADE ON THE ENTIRE AMOUNT IS NOT JUSTIFIED AS ONLY PROFIT ELEMENT IN THE SAID SALE COULD BE TAXED AND NOT THE WHOLE OF THE RECEIPTS. THE CIT(A) DID NOT ACCEPT THE CON TENTION OF THE ASSESSEE AND SUSTAIN THE ADDITION MADE BY THE AO. 4. BEFORE US THE LD. AR OF THE ASSESSEE HAS POINTED OU T THAT THIS ISSUE IS COMMON TO THE ISSUE INVOLVED FOR THE ASSES SMENT YEAR 2006-07 AND 2009-10 WHEREIN THE CIT(A) HAS RESTRICT ED THE ADDITION ONLY THE GP RATE AT 9% AND THIS TRIBUNAL I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-08 HAS DIRECT ED THE AO TO ADOPT THE GP RATE AT 5.5%. THUS, THE LD. AR HAS CONTENTED THAT ONLY THE INCOME / PROFIT ELEMENT IN THE SAID R ECEIPT CAN BE TAXED. ON THE OTHER HAND, THE LD. DR HAS RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN TH E ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHOW THE CORRESPO NDING PURCHASE DETAIL THEN THE ADDITION MADE BY THE AO OF THE ENTIRE RECEIPT IS JUSTIFIED. ITA NOS. 259 & 295/BANG/2014 PAGE 9 OF 76 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY US IN ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 2007-08 TO 2010-11. FOR THE ASSESS MENT YEAR 2007-08 VIDE ORDER DATED 28.04.2017 IN ITA NOS. 219 & 291/BANG/2014 WE HAVE DEALT WITH THIS ISSUE AS UNDE R. 12.GROUND NO. 7 IS REGARDING THE ADOPTION OF 9% GRO SS PROFIT IN RESPECT OF SALE OF MATERIAL. THE AO MADE AN ADDITI ON OF RS. 51,08,557/- AS RECEIPTS RECORDED IN THE IMPOUNDED D IARIES WHICH ARE NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THE AMOUNT WAS RECEIVED TOWARDS SALE OF MATERIALS. SINCE THE ASSESSEE DID NOT FURNISH THE DETAILS AND SUPPORTING DOCUMENTS TO PROVE THAT THE SAID RECEIPT S WAS RECEIVED TOWARDS SALE OF MATERIAL THE AO HAS MADE AN ADDITIO N OF THE ENTIRE AMOUNT OF RS. 51,08,557/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND CONTENDED THAT THE RECEIPT S SHOWN IN THE DIARY WERE TOWARDS SALE OF MATERIAL FOR CIVIL CONTR ACT WORK MADE OUTSIDE BOOKS WHICH WAS ALSO EXPLAINED BY THE ASSES SEE THAT THE CORRESPONDING PAYMENTS MADE TOWARDS PURCHASE OF SIM ILAR MATERIAL WAS ALSO RECORDED IN THE DIARY AND THEREFORE THE EN TRIES AGGREGATING TO RS. 1,42,08,990/- ARE REPRESENTING BOTH IN THE D IARY AND IN THE REGULAR BOOKS WITH IDENTITY IN NAMES, DATES AND VAL UE TOTAL AMOUNTING TO RS. 63,03,554/-. THUS THE ASSESSEE CO NTENDED THAT THIS ITEM OF RS. 63,03,554/- APPEARS IN THE REGULAR BOOK S OF ACCOUNT WHICH WAS LEFT OUT BY THE AO WHILE MAKING THE ADDIT ION. THE CIT(A) AFTER CONSIDERING THE RELEVANT RECORD AS WELL AS SU BMISSIONS OF THE ASSESSEE HAS DIRECTED THE AO TO TAKE AVERAGE GROSS PROFIT AT 9% ON TOTAL SALE OF MATERIAL INCLUDING JELLY AND THEREFOR E THE INCOME HAS TO BE COMPUTED ACCORDINGLY. THUS, THE CIT(A) HAS GRAN TED SUBSTANTIAL RELIEF BY RESTRICTING THE ADDITION ONLY TO THE GROS S PROFIT ON THE SALE OF MATERIAL INSTEAD OF THE ENTIRE AMOUNT ADDED BY THE AO. 13.BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITT ED THAT THE CIT(A) AFTER TAKING INTO CONSIDERATION THE GP RATIO ON VAR IOUS MATERIALS SUPPLIERS HAS DIRECTED THE AO TO TAKE THE AVERAGE G P AT 9%. HOWEVER EVEN IF THE INSTANCES AS TAKEN BY THE CIT(A ) ARE CONSIDERED THE AVERAGE GP OF THE COMPARABLE PARTIES COMES TO L ESS THAN 6% WHEREAS THE CIT(A) HAS ARBITRARILY ADOPTED THE GP A T 9%. THE LD. AR HAS FURTHER SUBMITTED THAT AN IDENTICAL ISSUE HAS B EEN CONSIDERED BY ITA NOS. 259 & 295/BANG/2014 PAGE 10 OF 76 THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESS MENT YEAR 2006-07 VIDE ORDER DATED 30.11.2015 IN ITA NO. 904/BANG/201 5. THUS THE LD. AR HAS SUBMITTED THAT THE AVERAGE GP SHOULD HAVE BE EN TAKEN AT 5.5% INSTEAD OF 9% TAKEN BY THE CIT(A). 14.ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDER OF THE AO AND SUBMITTED THAT WHEN THE ASSESSEE HAS FAILED TO EXPLAIN THE DETAILS AND PARTICULARS OF THE PARTIES TO WHOM THE ALLEGED MATERIAL WERE SOLD THEN THE AO IS JUSTIFIED IN MAKING THE AD DITION OF THE ENTIRE AMOUNT. 15.WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE FIND FROM THE ENTRIES IN TH E DIARY THAT THE RECEIPTS AS WELL AS PAYMENTS WERE RECORDED SIMULTAN EOUSLY AT THE SAME PAGE OF THE DIARY AND THEREFORE IT IS CLEAR TH AT THESE RECEIPTS AND PAYMENTS ARE REPRESENTING THE PURCHASES AND SAL E OF THE MATERIAL. THE AO HAS TAKEN ONLY THE RECEIPT PART O F THE DIARY ENTRIES AND IGNORED THE PAYMENT PART. THE CIT(A) AFTER CON SIDERING THE RELEVANT RECORD FOUND THAT THESE RECEIPTS ARE REPRE SENTING THE SALE OF MATERIAL FOR CONSTRUCTION WORK LIKE STEEL, CEMENT E TC AND THEREFORE THE CIT(A) HAS ASKED THE ASSESSEE TO FURNISH THE GP DETAILS FROM THE LOCAL MARKET WHICH WERE FURNISHED BY THE ASSESSEE A S REPRODUCED BY THE CIT(A) AT PAGE 27 OF THE IMPUGNED ORDER AS UNDE R. 16.THOUGH THE CIT(A) HAS CONSIDERED THE GP DETAILS FURNISHED BY THE ASSESSEE HOWEVER INSTEAD OF TAKING THE AVERAGE OF T HE THESE GP DETAILS THE CIT(A) HAS ADOPTED THE GP AT 9%. WE FI ND THAT THE SAID ADOPTION OF 9% OF GP IS WITHOUT ANY BASIS AND RATHE R CONTRARY TO THE MATERIAL ON RECORD / EVIDENCE. WE FURTHER NOTE THA T THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR T HE ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 30.11.2015 WHILE DEALING A N IDENTICAL ISSUE HAS HELD IN PARA 11 TO 14 AS UNDER. ITA NOS. 259 & 295/BANG/2014 PAGE 11 OF 76 11. BEFORE THE CIT(APPEALS), THE ASSESSEE RELIED O N THE ORDER OF THE CIT(APPEALS) FOR THE A.YS. 2007-08 TO 2011-12 AND C ONTENDED THAT A SUITABLE RATE OF PROFIT TOWARDS SALE OF MATERIAL HA S TO BE CONSIDERED AND NOT WHOLE OF THE RECEIPTS. THE ASSESSEE FURNIS HED GP DETAILS FROM THE LOCAL MARKET WHICH IS AS FOLLOWS:- 12. AVERAGE GROSS PROFIT FOR STEEL WAS GIVEN AT (6. 08 TO 7.56%), FOR CEMENT THE AVERAGE GROSS PROFIT WAS GIVEN AT (3.33 TO 5.09%) AND FOR JELLY NO AVERAGE GROSS PROFIT WAS GIVEN. THE CIT(A ) DIRECTED THE AO TO TAKE AVERAGE GROSS PROFIT AT 9% ON TOTAL SALE OF MATERIALS INCLUDING JELLY AND COMPUTE INCOME ACCORDINGLY. THUS, THIS I SSUE WAS PARTLY ALLOWED BY THE CIT(A). 13. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US . 14. WE HAVE HEARD BOTH THE PARTIES. WE FIND FROM THE GP DETAILS FROM THE LOCAL MARKET FURNISHED BEFORE THE CIT(APPE ALS) THAT AVERAGE GP IS 5.5% APPROXIMATELY AND HENCE WE ARE OF THE OP INION THAT THE CIT(A) WAS NOT JUSTIFIED IN ADOPTING GP AT 9% ON TO TAL SALE OF MATERIALS INCLUDING JELLY. HENCE, THE AO IS DIRECT ED TO WORK OUT THE GP RATE AT 5.5% ON SALE OF MATERIALS INSTEAD OF 9% DIRECTED BY THE CIT(A). 17.IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUN AL IN ASSESSEES OWN CASE WE DIRECT THE AO TO WORK OUT THE GP RATE A T 5.5% ON SALE OF MATERIAL INSTEAD OF 9% DIRECTED BY THE CIT(A). ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO ADOPT GP RATE AT 5.5%. ITA NOS. 259 & 295/BANG/2014 PAGE 12 OF 76 6. GROUND NOS. 3,5 AND 11 ARE REGARDING THE ADDITION O F RS. 8,50,000/-, RS. 2,55,555/- AND RS. 5,07,115/- O N ACCOUNT OF RECEIPT FROM SHRI S.N. HIREMATH FOR CONSTRUCTION OF HOUSE. THE AO NOTED THAT THE RECEIPTS OF RS. 8,50,000/-, RS. 2 ,55,555/- AND RS. 5,07,115/- WERE RECORDED IN THE IMPOUNDED DIARY . THE AO HAS OBSERVED THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN RESPECT OF THESE TRANSACTIONS AND FURTHER THE COMPL ETE ADDRESS OF SHRI S.N. HIREMATH (S.N.H.) ARE NOT FURNISHED BY TH E ASSESSEE. ACCORDINGLY, THE AO MADE AN ADDITION OF THESE THREE AMOUNTS WHILE COMPLETING THE ASSESSMENT. THE ASSESSEE CHAL LENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SU CCEED. 7. AS REGARDS THE RECEIPT OF RS. 8,50,000/- FROM SHRI S.N. HIREMATH THE LD. AR OF THE ASSESSEE HAS SUBMITTED T HAT THIS SUM WAS GIVEN BY SHRI S.N. HIREMATH TO THE ASSESSEE TOW ARDS THE CONSTRUCTION OF HIS HOUSE. SHRI S.N. HIREMATH WAS AN EMPLOYEE OF THE ASSESSEE AND THIS AMOUNT OF RS. 8,50,000/- I S WITHDRAWN FROM HIS BANK ACCOUNT. HE HAS REFERRED TO THE BANK PASS BOOK OF SHRI S.N. HIREMATH AT PAGE NO. 39 OF THE PAPER B OOK AND SUBMITTED THAT THESE ENTRIES OF WITHDRAWAL OF THIS AMOUNT OF RS. 8,50,000/- ON DIFFERENT OCCASIONS IN THE BANK A CCOUNT ARE ITA NOS. 259 & 295/BANG/2014 PAGE 13 OF 76 MATCHING WITH THE ENTRIES IN THE DIARY. THUS THE L D. AR HAS SUBMITTED THAT WHEN THIS AMOUNT WAS RECEIVED BY THE ASSESSEE TOWARDS THE CONSTRUCTION OF THE HOUSE OF SHRI S.N. HIREMATH THEN IT CANNOT BE TREATED AS INCOME OF THE ASSESSEE . HE HAS FURTHER POINTED OUT THAT THE TOTAL PAYMENT RELATING TO THE CONSTRUCTION OF THE HOUSE AS PER THE DIARY IS RS. 8 ,49,846/- WHICH HAS BEEN RECORDED BY THE AO AT PAGE NO. 16 TO 19 OF ASSESSMENT ORDER. THE LD. AR HAS FURTHER POINTED O UT THAT THE IMPOUNDED MATERIAL CONTAINS BILLS RELATING TO THE E XPENSES INCURRED TOWARDS THE HOUSE PROPERTY OF SHRI S.N. HI REMATH FOR A SUM OF RS. 5,07,269/-. HE HAS REFERRED TO THESE BI LLS AT PAGE 117 AND 118 OF THE PAPER BOOK. ALL THEE THREE FIGU RES AS RECORDED IN THE DIARY ARE IN RESPECT OF THE CONSTRU CTION OF THE HOUSE AND ARE OVERLAPPING IN THE DIARY AND IMPOUNDE D MATERIAL. THE LD. AR HAS POINTED OUT THAT A SUM OF RS. 2,45,5 80/- IS APPEARING IN BOTH DIARY AND IMPOUNDED MATERIAL WHIC H SHOWS THAT THESE ARE MERE DUPLICATE ENTRIES OF SAME TRANS ACTIONS ONCE IN THE DIARY AND THEN IN THE OTHER MATERIAL IMPOUND ED. THE LD. AR HAS FURTHER POINTED OUT THAT A SUM OF RS. 1,00,0 00/- IS WITHDRAWN FROM THE BANK ACCOUNT OF SHRI S.N. HIREMA TH AS IT APPEARS IN THE DIARY ENTRY DATED 17.08.2010. THE L D. AR HAS ITA NOS. 259 & 295/BANG/2014 PAGE 14 OF 76 FURTHER POINTED OUT THAT A RECEIPT OF RS. 1,00,000/ - AS APPEARING IN THE DIARY ON 01.10.2010 IS PART OF THE TOTAL REC EIPT OF RS. 8,50,000/- FROM SHRI S.N. HIREMATH. THEREFORE THE TOTAL AMOUNT RECEIVED FROM SHRI S.N. HIREMATH IS RS. 9,50 ,000/- WHICH INCLUDES RS. 8,50,000/- + RS. 1,00,000/-. TH E CORRESPONDING TOTAL EXPENDITURE ON THE CONSTRUCTION OF THE HOUSE IS RS. 11,11,535/- AS AGAINST THE TOTAL RECEI PT OF RS. 9,50,000/- AND THEREFORE THE DIFFERENTIAL AMOUN T OF RS. 1,61,535/- IS THE EXCESS OF EXPENDITURE OVER RE CEIPT. THE LD. AR HAS POINTED OUT THAT THE TOTAL EXPENDITURE WILL BE THE SUM OF RS. 8,49,846/- AS RECORDED AT PAGE 19 AND 20 OF TH E AO PLACED AND RS. 2,61,689/- BEING THE DIFFERENCE BETWEEN RS. 5,07,115/- BEING THE EXPENSES AS RECORDED IN THE IMPOUNDED MAT ERIAL CONTAINS BILLS RELATING TO THE CONSTRUCTION EXPENSE S OF THE HOUSE AND RS. 2,45,580/- WHICH IS COMMON AS APPEARING IN BOTH DIARY AND IMPOUNDED MATERIAL. THUS THE LD. AR HAS SUBMIT TED THAT ALL THESE THREE ADDITIONS MADE BY THE AO ARE NOTHING BU T RELATING TO THE AMOUNT RECEIVED BY THE ASSESSEE AND CORRESPONDI NG EXPENDITURE INCURRED TOWARDS THE CONSTRUCTION OF TH E HOUSE OF THE SHRI S.N. HIREMATH. THEREFORE THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. ITA NOS. 259 & 295/BANG/2014 PAGE 15 OF 76 8. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE DID NOT FURNISH THE DETAILS AND EVIDENCE IN RESPECT OF THESE TRANSACTIONS FOUND RECORDED IN THE DIARY. THEREFOR E THE EXPLANATION OF THE ASSESSEE CANNOT BE ACCEPTED WITH OUT SUPPORTING EVIDENCE. FURTHER THE TRANSACTIONS ARE RECORDED IN THE DIARY BEING CASH RECEIPT BY THE ASSESSEE AND IN THE ABSENCE OF THE SUPPORTING EVIDENCE TO SHOW THAT THESE ARE N OT IN THE NATURE OF INCOME THE ADDITION IS JUSTIFIED. AS REG ARDS THE EXPENDITURE AMOUNT OF RS. 8,49,846/- IS CONCERNED, THERE IS NO DISPUTE THAT THIS AMOUNT OF EXPENDITURE HAS BEEN IN CURRED BY THE ASSESSEE AS RECORDED IN THE DIARY THEREFORE IN THE ABSENCE OF SATISFACTORY EXPLANATION OF THE ASSESSEE TO SHOW TH AT THIS EXPENDITURE WAS INCURRED ONLY TOWARDS THE CONSTRUCT ION OF THE HOUSE OF SHRI S.N. HIREMATH AND AGAINST THE SAME RE CEIPTS AS RECORDED IN THE DIARY, THE SAID EXPENDITURE HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE HAS FAIL ED TO EXPLAIN THE SOURCE. HE HAS RELIED UPON THE ORDERS OF THE A UTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO HAS NOTED THAT THE ASSE SSEE ITA NOS. 259 & 295/BANG/2014 PAGE 16 OF 76 RECEIVED VARIOUS AMOUNTS ON DIFFERENT DATES TOTAL A MOUNTING TO RS. 8,50,000/- AS RECORDED IN THE DIARY AND FURTHER CERTAIN ENTRIES REGARDING CASH FROM ATM WERE ALSO FOUND REC ORDED IN THE DIARY TOTAL AMOUNTING TO RS. 2,55,000/-. THE A O HAS MADE THE ADDITION OF THESE AMOUNTS SEPARATELY AS INCOME OF THE ASSESSEE. APART FROM THESE RECEIPTS ENTRIES THE AO ALSO NOTED THAT AS PER THE NOTINGS IN THE DIARY THE ASSESSEE H AS INCURRED THE EXPENDITURE OF RS. 8,49,846/-. THE AO HAS TAKEN IN TO CONSIDERATION THE IMPOUNDED DOCUMENTS CONTAINING TH E BILLS RELATING TO THE EXPENSES AND FOUND THAT AS PER THE IMPOUNDED DOCUMENTS THE AGGREGATING AMOUNT OF EXPENSES INCURR ED WAS RS. 5,07,269/-. ACCORDINGLY, THE AO MADE AN ADDITI ON OF RS. 5,07,115/-. THUS THE AO HAS MADE THREE SEPARAT E ADDITIONS IN RESPECT OF THE TRANSACTIONS TOWARDS THE RECEIPTS AND EXPENDITURE OF CONSTRUCTION OF HOUSE OF SHRI S.N. H IREMATH. THE DETAILS OF THE RECEIPT AND EXPENDITURE ARE REPR ODUCED BY THE CIT(A) AT PAGE NO. 13, 16 AND PAGE NO. 34 TO 40. ITA NOS. 259 & 295/BANG/2014 PAGE 17 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 18 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 19 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 20 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 21 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 22 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 23 OF 76 ITA NOS. 259 & 295/BANG/2014 PAGE 24 OF 76 10. FROM THE DETAILS OF THE RECEIPTS OF AMOUNT OF RS. 8 ,50,000/- IT IS CLEAR THAT THESE AMOUNTS WERE RECEIVED ON DIFFERENT DATES AS FOUND RECORDED IN THE DIARY AND THE NARRATIONS OF T HE TRANSACTIONS IN THE DIARY CLEARLY SHOW THAT THESE A MOUNTS WERE RECEIVED FROM SHRI S.N. HIREMATH TOWARDS HIS HOUSE CONSTRUCTION UNDERTAKEN BY THE ASSESSEE. WHEN THE DIARY ITSELF IS EXPLAINING THE NATURE OF THE RECEIPT, THE SOURCE OF RECEIPT AND PURPOSE OF THE RECEIPT THEN NO FURTHER EXPLANATION IS REQUIRED AS THE AO HAS NOT FOUND ANY CONTRARY RECORD OR FACT EI THER DURING THE SURVEY PROCEEDINGS OR DURING THE ASSESSMENT PRO CEEDINGS. THE AO HAS MADE THE ADDITION ONLY ON THE GROUND THA T THE ASSESSEE FAILED TO EXPLAIN THE FULL DETAILS. IT IS PERTAINING TO NOTE THAT WHEN THE ENTRIES IN THE DIARY ARE SELF-EXPLANA TORY AND NO CONTRARY FACT IS BROUGHT ON RECORD THEN THE ADDITIO N WHICH IS BASED ON THE DIARY ENTRY CANNOT BE MADE BY IGNORING THE OTHER FACTS RECORDED IN THE DIARY ITSELF AGAINST EACH ENT RY. THIS IS NOT A CASE OF THE TRANSACTIONS FOUND IN THE BOOKS OF AC COUNTS AND ASSESSEE HAS FAILED TO EXPLAIN THE NATURE OF TRANSA CTION. THESE ARE THE TRANSACTIONS RECORDED IN THE DIARY ALONG WI TH THE DESCRIPTION. WE FURTHER NOTE THAT ALL THESE TRANSA CTIONS OF RECEIPT FROM THE SAVING BANK OF SHRI S.N. HIREMATH ACCOUNT ARE ITA NOS. 259 & 295/BANG/2014 PAGE 25 OF 76 MATCHING WITH THE BANK ACCOUNT ENTRIES AS PLACED AT PAGE NO. 39 AND 40 OF THE PAPER BOOK. WE FIND THAT THE SAVING BANK ACCOUNT OF SHRI S.N. HIREMATH MAINTAINED WITH STATE BANK OF MYSORE CONTAINS ALL THESE ENTRIES OF WITHDRAWAL BY CHEQUES . THEREFORE WHEN THESE ENTRIES ARE MATCHING WITH THE BANK ACCOU NT THEN NO FURTHER EXPLANATION IS REQUIRED ABOUT THE SOURCE OF THESE RECEIPTS. THE DIARY ITSELF EXPLAINS THE PURPOSE FO R WHICH THESE AMOUNTS WERE RECEIVED BY THE ASSESSEE. 11. AS REGARDS THE CASH BY ATM OF RS. 2,55,000/- IT IS CLEAR FROM THE DETAILS AS REPRODUCED ABOVE THAT THE TRANSACTIO NS RECORDED IN THE DIARY ITSELF MAKE IT CLEAR THAT IT WAS AN ATTEM PT TO WITHDRAW CASH FROM ATM ON DIFFERENT DATES BUT THE TRANSACTIO N DID NOT HAPPEN. THEREFORE THE ENTRIES IN THE DIARY IS ONLY FOR THE PURPOSE OF MEMORY OF RECORDING THE EVENT THAT THE A SSESSEE TRIED TO WITHDRAW THE CASH FROM THE ATM BUT THE TRA NSACTION DID NOT HAPPEN. WHEN THE DIARY ENTRIES ITSELF ARE PLAI N AND UNAMBIGUOUS THEN IGNORING THE FACTS RECORDED AGAINS T THE DIARY ENTRIES THE ADDITION MADE BY THE AO IS NOT JUSTIFIE D. THEREFORE THIS ADDITION IS DELETED. ITA NOS. 259 & 295/BANG/2014 PAGE 26 OF 76 12. THE NEXT ADDITION HAS BEEN MADE BY THE AO OF RS. 5, 07,115/- ON ACCOUNT OF THE PAYMENT MADE TOWARDS THE CONSTRUC TION OF THE HOUSE. AS PER THE DETAILS REPRODUCED ABOVE THE ENT RIES RELATING TO THIS EXPENDITURE CLEARLY SHOW THAT THE TOTAL EXP ENDITURE INCURRED BY THE ASSESSEE TOWARDS CONSTRUCTION OF TH E HOUSE WAS RS. 8,49,846/-. THE AO FURTHER NOTED THAT AS PER T HE IMPOUNDED MATERIAL CONTAINING BILLS SHOWS THE EXPENDITURE INC URRED FOR CONSTRUCTION OF HOUSE THEREFORE, THE AO MADE THE A DDITION FOR A SUM OF RS. 5,07,115/-. THUS THE AO HAS TAKEN THE E XPENDITURE RECORDED IN THE DIARY AND THE EXPENDITURE FOUND IN THE BILLS AS SEPARATE QUANTUM OF EXPENDITURE. IT IS CLEAR THAT THE AO HAS ALREADY MADE AN ADDITION TOWARDS RECEIPT OF THE AMO UNT FOR CONSTRUCTION OF THE HOUSE AND FURTHER MADE AN ADDIT ION OF RS. 5,07,115/- BEING THE EXCESS EXPENDITURE INCURRE D BY THE ASSESSEE OVER AND ABOVE THE EXPENDITURE RECORDED IN THE DIARY. WE FIND FROM THE IMPOUNDED MATERIAL AS PLACED AT PA GE 117 AND 118 OF THE PAPER BOOK THAT VARIOUS ITEMS OF EXPENDI TURE ARE COMMON AS RECORDED IN THE IMPOUNDED MATERIAL AND IN THE DIARY ENTRIES. THE ASSESSEE HAS POINTED OUT THAT AS MUCH AS RS. 2,45,580/- IS APPEARING IN BOTH DIARY AND IMPOU NDED MATERIAL AND THEREFORE THIS AMOUNT REPRESENTS THE D UPLICATE ITA NOS. 259 & 295/BANG/2014 PAGE 27 OF 76 ENTRIES MADE IN THE DIARY AS WELL AS IMPOUNDED MATE RIAL. FOR INSTANCE WE REFERRED TO AN ENTRY DATED 18.09.2010 F OR A SUM OF RS. 46,449/-. THIS ENTRY IS RECORDED BOTH IN DIARY WITH THE NARRATION EXPENSES INCURRED TOWARDS HOUSE CONSTRUCT ION OF SNH AND IN THE IMPOUNDED MATERIAL WHICH CONTAINS THE BI LL AS TOWARDS MUUDESHWAR CERAMICS. THUS THIS EXPENDITURE OF SUCH AN ODD AMOUNT RECORDED IN BOTH DIARY AS WELL AS PAR T OF THE BILLS CLEARLY SHOWS THAT THE EXPENDITURE AS PER THE IMPOU NDED MATERIAL TO THE EXTENT OF RS. 2,45,580/- IS COMMON IN DIARY AS WELL AS IMPOUNDED MATERIAL. THE ASSESSEE HAS ADMIT TED THAT APART FROM THE EXPENDITURE TOWARDS THE CONSTRUCTION OF THE HOUSE AS RECORDED IN THE DIARY THERE IS A FURTHER E XPENDITURE OF RS. 2,61,689/- AND THEREFORE THE TOTAL EXPENDITURE WAS RS. 11,11,535/-. THE ASSESSEE HAS FURTHER POINTED OUT THAT A SUM OF RS. 1,00,000/- WAS ALSO WITHDRAWN FROM THE B ANK OF SHRI S.N. HIREMATH ON 17.08.2010. WE FIND FROM THE BANK ACCOUNT OF SHRI S.N. HIREMATH AT PAGE NO. 39 AND 40 OF THE PAPER BOOK THAT THERE IS A CASH WITHDRAWAL OF RS. 1 ,00,000/- ON 17.08.2010 WHICH IS OVER AND ABOVE THE DETAILS OF T HE CASH RECEIVED BY THE ASSESSEE FOUND RECORDED IN THE DIAR Y AND REPRODUCED ABOVE. THEREFORE THE TOTAL AMOUNT OF RE CEIPT ITA NOS. 259 & 295/BANG/2014 PAGE 28 OF 76 TOWARDS THE CONSTRUCTION OF THE HOUSE OF SHRI S.N. HIREMATH IS RS. 9,50,000/- (RS. 8,50,000/- + RS. 1,00,000/-) AN D THE TOTAL EXPENDITURE TOWARDS THE CONSTRUCTION OF THE HOUSE I S RS. 11,11,535/- (RS. 8,49,846/- + RS. 2,61,689/-). THE REFORE THERE IS AN EXCESS EXPENDITURE OF RS. 1,61,535/- FOR CONS TRUCTION OF THE HOUSE. IN VIEW OF THE ABOVE DETAILS AS WELL AS DISCUSSION WHEN THESE AMOUNTS ARE NOT IN DISPUTE AS THESE WERE FOUND RECORDED IN THE DIARY, IN THE BANK STATEMENT OF SHR I S.N. HIREMATH AS WELL AS IN THE IMPOUNDED MATERIAL CONTA INING THE BILLS THEN NO ADDITION IS CALLED FOR ON ACCOUNT OF THE AMOUNT RECEIVED AND THE EXPENDITURE INCURRED BY THE ASSESS EE FOR THE PURPOSE OF CONSTRUCTION OF THE HOUSE OF SHRI S.N. H IREMATH. ACCORDINGLY, WE DELETE THESE ADDITIONS MADE BY THE AO. 13. GROUND NO. 4 IS REGARDING THE ADDITION OF RS. 13,50 0/- TOWARDS AGRICULTURE RECEIPTS. WE HAVE HEARD THE LD. AR AND LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 30.11.2015 IN ITA NO. 904/BANG/2015 IN PARA 1 7 AS UNDER. ITA NOS. 259 & 295/BANG/2014 PAGE 29 OF 76 17.WE HAVE HEARD BOTH THE PARTIES. WE ARE OF THE O PINION THAT ONE MORE OPPORTUNITY IS TO BE AFFORDED TO THE ASSES SEE TO PRODUCE DETAILS OF AGRICULTURAL LAND HOLDING TO EST ABLISH THAT HE HAD AGRICULTURAL INCOME WHICH IS NET OF AGRICULTURA L EXPENDITURE. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE GOVERNMENT RECORDS AS TO WHI CH CROPS ARE GROWN AND THE PRICE IT WOULD FETCH IN THE MARKE T SO AS TO ARRIVE AT THE AGRICULTURAL INCOME AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, IN VIEW OF THE EARLIER ORDER OF THIS T RIBUNAL WE DIRECT THE AO TO EXAMINE THE RELEVANT RECORD IN SUPPORT OF THE AGRICULTURE INCOME OF THE ASSESSEE. THIS ISSUE IS REMITTED TO THE RECORD OF THE ASSESSEE. 14. GROUND NO. 6 IS REGARDING THE ADDITION ON ACCOUNT O F MISCELLANEOUS RECEIPTS. THE AO HAS MADE AN ADDITIO N OF RS. 99,200/- ON ACCOUNT OF MISCELLANEOUS RECEIPTS F OUND AS PER THE DIARY ENTRY. THE ASSESSEE CHALLENGED THE ACTIO N OF THE AO BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSEE H AS ALREADY DECLARED MISCELLANEOUS INCOME IN THE PROFIT AND LOS S ACCOUNT UNDER VARIOUS HEADS WHICH IS MORE THAN THIS AMOUNT OF RS. 99,200/- AND THEREFORE NO FURTHER ADDITION IS J USTIFIED. THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESS EE AND CONFIRMED THE ADDITION MADE BY THE AO. ITA NOS. 259 & 295/BANG/2014 PAGE 30 OF 76 15. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMITTE D THAT OUT OF THIS TOTAL AMOUNT OF RS. 99,200/- A SUM OF RS. 4 9,000/- REPRESENTS THE RENT / HIRE CHARGES. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS DECLARED RECEIPT ON HIRE CHARGES OF RS . 1,15,640/- IN THE PROFIT AND LOSS ACCOUNT THEREFORE THE SAID A DDITION CANNOT BE MADE AS IT WOULD BE AMOUNTING TO DOUBLE TAXATION OF THE SAME INCOME. HE HAS FURTHER SUBMITTED THAT THE ANO THER SUM OF RS. 41,500/- REPRESENTS THE RENT AND RS. 16,500/- R EPRESENTS THE DEPOSITS AND EREFORE THE SAME IS NOT AN INCOME. TH E BALANCE AMOUNT OF RS. 5,00/- IS A GIFT RECEIVED AND RS. 8,200/- IS SUNDRY RECEIPTS. THE ASSESSEE HAS DECLARED A SUM O F RS. 3,20,455/- IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD INDIRECT INCOMES. THE SAID INCOME DECLARED BY THE ASSESSEE INCLUDES ALL SUNDRY RECEIPTS AND THEREFORE NO SEPAR ATE ADDITION IS CALLED FOR. 16. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO EXPLAIN THAT THIS AMOUNT HAS ALREADY BEEN INCLUDED IN THE INCOME DECLARED IN THE PROFIT AND LOSS ACCOUNT. FURTHER WHEN THIS AMOUNT IS RECORDED IN THE DIARY THEN IN THE ABSENCE OF THE BREAKUP OF EACH AN D EVERY ITA NOS. 259 & 295/BANG/2014 PAGE 31 OF 76 RECEIPT WHICH IS PART OF THE INCOME DECLARED IN THE PROFIT AND LOSS ACCOUNT THE MERE SUBMISSIONS OF THE ASSESSEE C ANNOT BE ACCEPTED. HE HAS RELIED UPON THE ORDERS OF THE AUT HORITIES BELOW. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE DETAILS OF THE MISCELLANEO US RECEIPTS AS RECORDED IN THE DIARY HAS BEEN REPRODUCED BY THE CI T(A) AT PAGE 17 AND 18 AS UNDER. THE ASSESSEE HAS EXPLAINED THAT OUT OF THESE ENTRI ES THE AMOUNT OF RS. 25,000/- AGAINST THE ENTRY DATED 05.06.2010, RS. 16,500/- ITA NOS. 259 & 295/BANG/2014 PAGE 32 OF 76 AGAINST THE ENTRY DATED 24.04.2010 AND RS. 7,500/- AGAINST THE ENTRY DATED 12.08.2010 ARE RECEIVED FOR RENT / HIRE CHARGES AND THE ASSESSEE HAS ALREADY OFFERED AN INCOME ON ACCOU NT OF HIRE CHARGES OF RS. 1,15,640/-. THEREFORE IT WAS CONTEN TED THAT NO FURTHER ADDITION ON THIS ACCOUNT IS JUSTIFIED. WE FIND THAT THE ASSESSEE INCLUDED AN INCOME OF RS. 1,15,640/- UNDER THE HEAD HIRE CHARGES RECEIPT IN THE PROFIT AND LOSS ACCOUNT WHICH IS PART OF THE TOTAL INDIRECT INCOME SHOWN IN THE PROFIT AN D LOSS ACCOUNT OF RS. 3,20,455/-. THE PROFIT AND LOSS ACC OUNT FOR THE YEAR END 31.03.2011 HAS BEEN PLACED AT PAGE NO. 32 OF THE PAPER BOOK. THEREFORE THIS AMOUNT OF RS. 1,15,640/- IS N OT IN DISPUTE BEING THE INCOME ON ACCOUNT OF HIRE CHARGES ALREADY RECORDED IN THE BOOKS OF ACCOUNTS. THE AO AS WELL AS CIT(A) HA S REJECTED THE EXPLANATION OF THE ASSESSEE AT THRESHOLD WITHOU T VERIFYING AND EXAMINING THIS FACT THAT THE ASSESSEE HAS ALREA DY OFFERED THE HIRE CHARGES INCOME OF RS. 1,15,640/-. ACCORDINGLY , WE ARE OF THE VIEW THAT THIS AMOUNT OF RS. 49,000/- RECORDED IN THE DIARY ENTRIES ON ACCOUNT OF RENT / HIRE CHARGES CANNOT BE SEPARATELY ADDED TO THE INCOME WHEN THE ASSESSEE HAS ALREADY A CCOUNTED THE HIRE CHARGES INCOME OF RS. 1,15,640/-. AS REGA RDS THE OTHER ITEMS OF THESE ENTRIES BEING DEPOSIT OF RS. 16,500/ - AND ITA NOS. 259 & 295/BANG/2014 PAGE 33 OF 76 RS. 25,000/- AS WELL AS SUNDRY RECEIPT OF RS. 8,200 /- THE ASSESSEE HAS SUBMITTED THAT HE HAS ALREADY OFFERED MISCELLANEOUS EARNINGS THEREFORE THIS AMOUNT SHOULD NOT BE ADDED. WE FIND FROM THE DETAILS OF THE INCOME OFFE RED BY THE ASSESSEE UNDER INDIRECT INCOMES THAT THE OTHER INCO MES OFFERED BY THE ASSESSEE IS ONLY ON ACCOUNT OF INTEREST FROM BANK OF RS. 1,78,800/- AND MISCELLANEOUS EARNING OF RS. 15, 055/-. THEREFORE THIS MISCELLANEOUS RECEIPT OF RS. 41,500/ - IS NOT PART OF THE INCOME ACCOUNTED BY THE ASSESSEE. HENCE IN THE ABSENCE OF ANY EXPLANATION WE CONFIRM THE ADDITION TO THE E XTENT OF RS. 41,500/-. AS REGARDS THE SUNDRY RECEIPTS OF RS . 8,200/- SINCE THE ASSESSEE HAS OFFERED THE MISCELLANEOUS RE CEIPT OF RS. 15,055/- THEREFORE NO SEPARATE ADDITION CAN BE MADE ON THIS ACCOUNT. THE ANOTHER ITEM OF RS. 500/- IS CLEARLY ON ACCOUNT OF HOUSE OPENING GIFT THEREFORE THE SAME CANNOT BE TRE ATED AS INCOME OF THE ASSESSEE. THE REMAINING AMOUNTS ON A CCOUNT OF INTEREST AND INSURANCE REBATE ARE CONFIRMED AS ADDI TION TO THE INCOME OF THE ASSESSEE. 18. GROUND NO. 7 IS REGARDING THE ADDITION OF RS. 7,50, 000/-. THE AO HAS MADE AN ADDITION OF RS. 7,50,000/- ON ACCOUN T OF ITA NOS. 259 & 295/BANG/2014 PAGE 34 OF 76 RECEIPTS RECORDED IN THE NAME OF SHRI V.M. YELI. T HE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) A ND CONTENTED THAT THIS ENTRY REPRESENTS THE PAYMENT WH ICH WAS WRONGLY CONSIDERED BY THE AO AS RECEIPT. THE ASSES SEE CONTENTED THAT THIS AMOUNT REPRESENTS THE PAYMENT T OWARDS DISBURSEMENT OF SITE EXPENSES. THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE ADDIT ION MADE BY THE AO. 19. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT DURING THE FINANCIAL YEAR THE ASSESSEE HAS MADE A WITHDRAW AL OF RS. 2,39,51,340/-. THE SAID PAYMENT IS MADE OUT OF THE WITHDRAWAL FROM THE ASSESSEES BANK ACCOUNT. IT IS FURTHER SU BMITTED THAT A SUM OF RS. 1,90,000/- WAS PAID TO SHRI V M YELI AS HAND LOAN WHICH IS ALSO OUT OF SAID WITHDRAWALS FROM THE BANK . SINCE THE CIT(A) HAS DELETED THE SAID ADDITION OF RS. 1,90,000/- THEREFORE THE REVENUE HAS CHALLENGED THE SAID ISSUE IN THE GROUND NO. 4 OF THE REVENUES APPEAL. THUS THE LD. AR HAS SUBMITTED THAT WHEN THE ASSESSEE WAS HAVING SUFFICI ENT CASH WITHDRAWALS FROM THE BANK THEN THE PAYMENT OF THE S AID AMOUNT CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. ON THE OTHER ITA NOS. 259 & 295/BANG/2014 PAGE 35 OF 76 HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HA S NOT FILED ANY EVIDENCE TO PROVE THAT THE SAID AMOUNT IS NOT A RECEIPT BUT A PAYMENT. FURTHER THE DETAILS AND NATURE OF PAYMENT ARE ALSO NOT EXPLAINED. SINCE THIS PAYMENT IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS THEREFORE EVEN IF IT IS PRESUMED THAT THE SAID AMOUNT IS PAYMENT IT IS ALSO LIABLE TO BE TAXED AS UNEXPLAINE D PAYMENT. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO NOTED THE DIARY ENTRY O F RS. 7,50,000/- WHICH HAS BEEN REPRODUCED BY CIT(A) AT P AGE 20 AS UNDER. 8. PAYMENT ENTRY WRONGLY TAKEN AS RECEIPT DATE PARTICULARS AMOUNT EXPLANATION 29/6/2010 TO V M YELI BY CASH WITH AESUTI 750,000 ITS A PAYMENT NOT RECEIPT BUT WRONGLY TAKEN AS RECEIPT TOTAL 7,50,000 THE ASSESSEE EXPLAINED THAT THIS IS A PAYMENT TO SH RI V M YELI FOR DISBURSEMENT OF EXPENSES. WE FURTHER NOTE THAT THE CIT(A) HAS SUSTAINED THE ADDITION EVEN BY CONSIDERING THE SAID AMOUNT AS PAYMENT. THERE IS NO OTHER MATERIAL OR FACT TO SHOW THAT THIS AMOUNT IS NOT A PAYMENT BUT A RECEIPT BY THE ASSESS EE. THEREFORE WE DO NOT FIND ANY REASON TO TREAT THIS A MOUNT AS A ITA NOS. 259 & 295/BANG/2014 PAGE 36 OF 76 RECEIPT WHEN THE ASSESSEE HAS EXPLAINED THE ENTRY I N THE DIARY AS A PAYMENT. WE FURTHER NOTE THAT A SIMILAR ENTRY WA S FOUND FOR A SUM OF RS. 1,90,000/- IN THE NAME OF SAME PERSON V M YELI AS HAND LOAN WHICH WAS ACCEPTED BY THE AO AS WELL AS C IT(A) AS A PAYMENT THOUGH AN ADDITION WAS MADE BY AO. THERE FORE HAVING CONSIDERED THIS AMOUNT AS A PAYMENT THE ONLY QUESTION ARISES IS THE SOURCE OF THE SAID PAYMENT. THE LD. AR HAS SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT CASH BEI NG WITHDRAWAL FROM THE BANK TO THE EXTENT OF RS. 2,39, 51,314/- DURING THE YEAR THEREFORE THIS PAYMENT WAS MADE OUT OF THE SAID CASH WITHDRAWAL. SINCE THIS ASPECT HAS NOT BEEN EX AMINED BY THE AUTHORITIES BELOW THEREFORE WE SET ASIDE THIS I SSUE FOR THE LIMITED PURPOSE OF VERIFYING THE SOURCE OF THIS PAY MENT. WE MAY ALSO CLARIFY THAT THE ADDITION IF ANY SUSTAIN F OR THIS ASSESSMENT YEAR OR THE EARLIER ASSESSMENT YEARS WIL L BE AVAILABLE TO THAT EXTENT BEING THE SOURCE OF THE SAID PAYMENT . ACCORDINGLY, THIS GROUND OF THE ASSESSEES APPEAL I S ALLOWED FOR STATISTICAL PURPOSES. 21. GROUND NO. 8 IS REGARDING THE ADDITION OF RS. 1,75, 000/- TOWARDS COST OF SOFA SET. THE AO MADE AN ADDITION OF RS. ITA NOS. 259 & 295/BANG/2014 PAGE 37 OF 76 1,75,000/- AS FOUND IN THE DIARY ENTRY BEING THE PA YMENT FOR SOFA SET. THE ASSESSEE CHALLENGED THE ACTION OF TH E AO BEFORE THE CIT(A) AND SUBMITTED THAT THIS PAYMENT IS TOWAR DS PERSONAL EXPENSES AND THE SAME IS DEBITED TO THE CAPITAL ACC OUNT FOR RS. 68,100/-, RS. 32,625/- AND RS. 65,250/-. THUS THE ASSESSEE EXPLAINED THAT THE AMOUNTS DULY APPEARING UNDER THE HEAD DRAWINGS FROM THE CAPITAL ACCOUNT AND PART OF THE R EGULAR BOOKS. THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE AS SESSEE AND SUSTAINED THE ADDITION MADE BY THE AO. 22. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE PURCHASED THE FURNITURE FOR HIS HOUSE. TH E COST IS DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE ON V ARIOUS DATES SUCH AS ON 04.05.2010 AND 30.05.2010. HE HAS REFER RED TO THE COPY OF THE CAPITAL ACCOUNT PLACED AT PAGE 34 AND 3 5OF THE PAPER BOOK AND SUBMITTED THAT THESE EXPENSES DEBITED FOR PURCHASE OF FURNITURE HAVE BEEN DULY ACCOUNTED IN THE REGULAR B OOKS. THEREFORE THIS CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. ITA NOS. 259 & 295/BANG/2014 PAGE 38 OF 76 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO AS WELL AS CIT(A) HAS M ADE THIS ADDITION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE NATURE OF PAYMENT OF RS. 1,75,000/-. WE FIND THAT THIS ENTRY WAS FOUND IN THE DIARY MADE ON 22.05.2010 FOR SOFA SET. THE ASSESSEE HAS EXPLAINED RIGHT FROM THE BEGINNING THA T THIS PAYMENT IS TOWARDS THE PERSONAL EXPENSES FOR PURCHA SE OF FURNITURE AND HAS BEEN DULY ACCOUNTED IN THE CAPITA L ACCOUNT OF THE ASSESSEE AS DRAWINGS. WE FOUND THAT ON 04.05.2 010 THERE IS ENTRY FOR PAYMENT OF RS. 65,250/- IN THE NAME OF DU RIAN INDUSTRIES LIMITED TOWARDS THE PURCHASE OF FURNITU RE AND ON 30.05.2010 AGAIN THERE IS AN ENTRY OF RS. 68,100/- TOWARDS PURCHASE OF SOFA TABLE. THEREFORE WHEN THE ASSESSE E HAS EXPLAINED THAT THESE PAYMENTS ARE DULY REFLECTED IN THE BOOKS OF ACCOUNTS AND HAS A DRAWING FROM CAPITAL ACCOUNT THE N NO ADDITION CAN BE MADE FOR THE PERSONAL EXPENDITURE O F THE ASSESSEE. ACCORDINGLY, WE DELETE THIS ADDITION OF RS. 1,75,000/- 24. GROUND NO. 9 IS REGARDING THE ADDITION OF RS. 2,26, 28,812/- ON ACCOUNT OF UNEXPLAINED PAYMENT / EXPENSES. THE AO FOUND THAT THERE ARE DIARY ENTRIES TOWARDS THE DEBIT OF P AYMENTS ITA NOS. 259 & 295/BANG/2014 PAGE 39 OF 76 AGGREGATING RS. 2,26,28,812/- TO PROFIT AND LOSS AC COUNT. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THESE PAYMENT S ARE DEBITED IN THE PROFIT AND LOSS ACCOUNT AND ARE MADE FOR SITE PAYMENTS ACCOUNTED ON DIFFERENT DATES IN NORMAL BOO KS OF ACCOUNTS. THEREFORE THE ASSESSEE CONTENTED BEFORE THE AO THAT ALL THESE AMOUNTS HAVE BEEN DULY ACCOUNTED IN THE R EGULAR BOOKS OF ACCOUNT AND DEBITED IN THE PROFIT AND LOSS ACCOUNT. THE AO DID NOT ACCEPT HE EXPLANATION OF THE ASSESSE E AND MADE THE ADDITION OF THE SAID ACCOUNT. THE ASSESSEE CHA LLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED TH AT CONSEQUENT TO THE SURVEY THE ASSESSEE VIDE LETTER D ATED 02.11.2011 DECLARED ADDITIONAL INCOME OF RS. 1 CROR E AND ALSO PAID AGGREGATE TAX OF RS. 30 LAKHS BY WAY OF ADVANC E TAX. THIS ADDITIONAL INCOME OF RS. 1 CRORE WAS EXPLAINED ON A CCOUNT OF INVESTMENT IN RESIDENTIAL HOME OF RS. 35 LAKHS, LOA N AND ADVANCE TO THE SUPPLIERS AND OTHERS RS. 45 LAKHS AN D EXPENSES IN LABOUR AND MATERIAL OF RS. 20 LAKHS. FURTHER TH E ASSESSEE CONTENTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE RECEIVED GROSS CONTRACT RECEIPT OF RS. 5,20,25,425/ - OUT OF THIS AMOUNT THE ASSESSEE WITHDRAWN FROM BANK OF RS. 2,39 ,51,314/-. THE DETAILS OF THE WITHDRAWAL FROM BANK ARE FURNISH ED. THE ITA NOS. 259 & 295/BANG/2014 PAGE 40 OF 76 CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESS EE AND SUSTAINED THE ADDITION. 25. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE DETAILS OF THE PAYMENT ARE SET OUT IN THE ANNEXURE AT PAGE 57-98 OF THE PAPER BOOK. HE HAS FURTHER SUBMITTED THAT W HEN THE GROSS CONTRACT RECEIPT DURING THE YEAR ARE RS. 5,20,25,42 5/- AND THE ASSESSEE IS HAVING THE CASH EXPENSES AS RECORDED IN THE BOOKS OF ACCOUNT AMOUNTING TO RS. 2,35,62,020/- THEN THIS EX PENDITURE IS ALREADY DEBITED TO THE PROFIT AND LOSS ACCOUNT AND ACCOUNTED IN THE BOOKS OF ACCOUNT. HE HAS FURTHER CONTENTED THA T THE ASSESSEE HAS CASH WITHDRAWAL OF RS. 2,39,51,314/- FROM HIS B ANK ACCOUNT AND AFTER MEETING ALL THE EXPENSES STILL THE ASSESS EE IS HAVING A CASH OF RS. 58,05,687/-. THE ENTIRE EXPENSES ARE R EFLECTED IN THE BOOKS OF ACCOUNT AND ALSO RECORDED IN THE DIARY THE REFORE IT CANNOT BE SEPARATELY ADDED TO THE INCOME OF THE ASS ESSEE. ALTERNATIVELY HE HAS SUBMITTED THAT A TELESCOPIC AD JUSTMENT BE GRANTED AND ONLY DIFFERENTIAL AMOUNT IF ANY IS BROU GHT TO TAX. THE AO HAS MADE THE ADDITION OF THE AGGREGATE EXPEN SES AS PER DIARY WITHOUT CONSIDERING THE EXPENSES AS APPEARING IN THE REGULAR BOOKS. ITA NOS. 259 & 295/BANG/2014 PAGE 41 OF 76 26. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE FAILED TO PRODUCE THE DETAILS TO SHOW THE DATE AND THE ITEM OF EXPENSES WHICH ARE RECORDED IN THE DIARY AND ALSO R ECORDED IN THE BOOKS OF ACCOUNTS. HE HAS RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. IT IS CONTENTED THAT THE AO IN THE EARLIER YEARS TOOK ONLY THE DIFFERENTIAL AMOUNT WHICH WAS O VER AND ABOVE THE EXPENSES RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND MADE ADDITION TO THE INCOME OF THE ASSESSEE. H OWEVER FOR THE YEAR UNDER CONSIDERATION THE AO HAS MADE THE AD DITION OF THE TOTAL AMOUNT OF THE EXPENDITURE RECORDED IN THE DIARY WITHOUT CONSIDERING THE EXPENDITURE ACCOUNTED IN TH E BOOKS OF ACCOUNTS AND ALSO WITHOUT CONSIDERING THE WITHDRAWA LS MADE BY THE ASSESSEE FROM BANK. WE FIND THAT THE ASSESSEE HAS ALSO RECORDED A SUBSTANTIAL EXPENDITURE IN CASH IN THE B OOKS OF ACCOUNTS. IT APPEARS THAT THE EXPENDITURE ACCOUNTE D IN THE BOOKS OF ACCOUNTS REPRESENTS THE TOTAL EXPENDITURE INCURRED / PAID AS WELL AS ACCRUED WHEREAS THE EXPENDITURE AS RECORDED IN THE DIARY REPRESENTS ONLY THE PAYMENTS MADE BY THE ASSESSEE. ITA NOS. 259 & 295/BANG/2014 PAGE 42 OF 76 THEREFORE THE EXPENDITURE WHICH IS ALREADY PART OF THE REGULAR BOOKS OF ACCOUNTS IS ALSO RECORDED IN THE DIARY AT THE TIME OF PAYMENT AND HENCE A CASE OF DUPLICATION OF RECORDIN G THE SAME EXPENDITURE IN THE BOOKS OF ACCOUNTS AS WELL AS IN THE DIARY IS NOT RULED OUT. THE DETAILS OF THE EXPENDITURE AS R ECORDED IN THE DIARY IS VERY HUGE AND IT REQUIRES A PROPER VERIFIC ATION. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE SET ASIDE THIS ISSUE TO THE RECORD OF THE AO FOR PROPER VERIFICATION OF THE AMOUNTS OF EXPENDITURE UNDER THE SAME ITEM / HEAD AS RECORDED IN THE BOOKS OF ACCOUNTS AND IN THE DIARY AND THEN ONLY THE DIFFERENTIAL AMOUNT IF ANY CAN BE CONSIDERED AS THE EXPENDITURE WHICH IS NOT RECORDED IN THE BOOKS OF A CCOUNTS. FURTHER THE AVAILABILITY OF THE CASH AS WITHDRAWN F ROM THE BANK DURING THE YEAR AS WELL AS TELESCOPIC ADJUSTMENT BE ALSO TAKEN INTO CONSIDERATION. HENCE THIS GROUND OF THE ASSES SEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 28. GROUND NO. 10 IS REGARDING THE ADDITION OF RS. 6,46 ,494/- ON ACCOUNT OF CASH PAID TO SUPERVISORS. THE AO HAS MA DE AN ADDITION OF RS. 6,46,494/- ON ACCOUNT OF CASH ON HA ND WITH THE SUPERVISORS OF VARIOUS SITES BECAUSE THESE PAYMENTS WERE NOT ITA NOS. 259 & 295/BANG/2014 PAGE 43 OF 76 REFLECTED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE C HALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED TH AT THIS AMOUNT OF RS. 6,46,494/- IS AN AGGREGATE BALANCE OF CASH IN HAND WITH SUPERVISORS OF VARIOUS SITES AND THE SAME IS ADJUSTED TOWARDS PAYMENT TO VARIOUS WORK SITES. IT WAS ALSO EXPLAINED THAT THE AMOUNT IS AVAILABLE WITH THE ASSESSEE OUT OF THE AMOUNT DRAWN FROM BANK ACCOUNT WHICH IS SPENT FOR SITE. T HE CIT(A) WAS NOT IMPRESSED WITH THE EXPLANATION OF THE ASSES SEE AND CONFIRMED THE ADDITION MADE BY THE AO ON THE GROUND THAT THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE ABOVE SAID PAYMENT. 29. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THIS CASH ON HAND AVAILABLE WITH THE SUPERVISORS OF VARI OUS SITES IS NOT THE PAYMENTS MADE TO THE SUPERVISORS ON THE RES PECTIVE DATES BUT IT IS THE BALANCE OF THE CASH LEFT WITH T HE SUPERVISORS ON THESE DATES. HE HAS REFERRED TO THE DETAILS OF THESE BALANCES AS GIVEN AT PAGE 14 PARA 20(3) OF THE ASSESSMENT OR DER AND SUBMITTED THAT THE BALANCE WITH MR. UDAY ON 21.06.2 010 AS PER THE ASSESSMENT ORDER ARE RS. 37,219/-, RS. 36,000/- , RS. 2,000/- AND RS. 22,000/-. THE LD. AR THEN REFERRED TO THE DETAILS AT PAGE 104 OF THE PAPER BOOK WHERE THE COPY OF DIARY ENTRI ES ARE PLACED AND SUBMITTED THAT THE SAME AMOUNTS ARE REFL ECTED IN THE ITA NOS. 259 & 295/BANG/2014 PAGE 44 OF 76 DIARY ENTRY WHICH CLEARLY SHOWS THAT THESE ARE THE ACCOUNT BALANCES ON DIFFERENT DATES AND THEREFORE THE BALAN CE ON THE EARLIER DATE AND THE BALANCE ON THE SUBSEQUENT DATE S CANNOT BE CLUBBED. BUT IT REPRESENTS THE NET BALANCES IN THE HAND OF THE SUPERVISOR AFTER INCURRING THE EXPENDITURE. THEREF ORE THE BALANCE ON VARIOUS DATES AS PER THE DIARY ENTRY CAN NOT BE CLUBBED TOGETHER. THESE ARE THE BALANCES OUTSTANDI NG AS ON DATE AND NOT THE PAYMENTS MADE ON THAT DATE TO THE SUPER VISORS. THUS THE LD. AR HAS SUBMITTED THAT THESE AMOUNTS CA NNOT BE ADDED TO THE INCOME OF THE ASSESSEE WHEN THESE ARE NOT THE PAYMENTS MADE TO THE SUPERVISORS ON THESE DATES BUT ONLY THE OUTSTANDING BALANCE IN THEIR HANDS. HE HAS FURTHER CONTENTED THAT THE EXPENDITURE INCURRED ON THE SITE AND RECOR DED IN THE BOOKS OF ACCOUNTS IS PART OF THESE PAYMENTS WITH TH E SUPERVISORS AND THEREFORE THE ENTRIES IN THE DIARY IS ONLY FOR MEMORY AND TO KEEP THE ACCOUNT OF AVAILABILITY OF T HE CASH WITH EACH AND EVERY SITE SUPERVISOR. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT WHEN THESE ENTRIES FOUND IN THE DIARY ARE NOT REFLECTED IN THE BOOKS OF ACCOUNTS THEN IN THE ABSE NCE OF THE SOURCE OF THESE CASH AVAILABLE WITH THE SUPERVISORS THE AO IS ITA NOS. 259 & 295/BANG/2014 PAGE 45 OF 76 JUSTIFIED IN MAKING THE ADDITION OF THESE AMOUNTS. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. FROM THE DETAILS OF THE ENTRIE S OF THE DIARY AS PLACED AT PAGE NOS. 104 TO 106 OF THE PAPER BOOK WE FIND THAT THE ASSESSEE HAS NOTED DOWN THE OUTSTANDING BALANCE S WITH THE SUPERVISORS OF VARIOUS SITES ON DIFFERENT DATES. W E FURTHER NOTE THAT IN CASE OF MR. UDAY THE ENTRIES ARE MADE AS UN DER. 8. CASH ON HAND WITH SUPERVISOR OF VARIOUS SITES DATE NOTINGS MADE IN DIARY AMOUNT EXPLANATION 13 APRL UDAY A/C BAL 20,812 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 30 APRL UDAY A/C BAL 21,422 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 26-MAY UDAY A/C BAL 34,200 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 11-JUN UDAY A/C BAL 37,219 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 21-JUN UDAY A/C BAL 37,219 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 21-JUN UDAY A/C BAL 36,000 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 21-JUN UDAY A/C BAL 2,000 CASH ON HAND WITH SUPERVISOR OF DIFF SITES ITA NOS. 259 & 295/BANG/2014 PAGE 46 OF 76 21-JUN UDAY A/C BAL 22,000 CASH ON HAND WITH SUPERVISOR OF DIFF SITES 4-JUL UDAY A/C BAL (24079) 24,079/- CASH ON HAND WITH SUPERVISOR OF DIFF SITES ..AND SO ON. THESE ENTRIES IN THE DIARY CLEARLY SHOW THAT THESE ARE THE ACCOUNT BALANCES WITH THE SUPERVISOR AND THE DIFFERENCE BET WEEN THE TWO DATES BALANCE MAY REPRESENT EITHER EXPENDITURE INCU RRED BY THE SUPERVISOR OR SOME PAYMENT IN BETWEEN MADE BY THE A SSESSEE OR IT MAY BE A CASE OF BOTH EXPENDITURE INCURRED BY THE S UPERVISOR AS WELL AS THE PAYMENT MADE BY THE ASSESSEE IN BETWEEN TWO DATES. THEREFORE PRIMA FACIE IT APPEARS THAT IF THE BALANC E ON THE EARLIER DATE IS MORE THAN THE BALANCE ON THE SUBSEQUENT DAT E THEN THE SUPERVISOR MIGHT HAVE INCURRED SOME EXPENDITURE OUT OF THE CASH AVAILABLE WITH HIM AND THESE ENTRIES IN THE DIARY I S ONLY TO KEEP THE RECORD OF AVAILABILITY OF CASH WITH THE SUPERVISOR INSTEAD OF THE RECORD OF PAYMENT TO THE SUPERVISOR. FURTHER, THE EXPENDITURE INCURRED BY THE SUPERVISOR AS REFLECTED THE DIFFERE NCE OF THE BALANCE AVAILABLE WITH HIM HAS TO BE RECONCILED WITH THE EX PENDITURE INCURRED FOR THE PARTICULAR SITE AND RECORDED IN TH E BOOKS OF ACCOUNTS. THEREFORE TO THAT EXTENT NO ADDITION CAN BE MADE MERELY ITA NOS. 259 & 295/BANG/2014 PAGE 47 OF 76 ON THE BASIS OF THESE ENTRIES IN THE DIARY WHICH RE FLECT THE AVAILABILITY OF THE CASH BALANCE WITH THE SUPERVISO RS OF EACH SITE. IT IS MORE OF MANAGING THE AFFAIRS AND KEEPING THE AVA ILABILITY OF THE CASH WITH THE SUPERVISORS FOR SMOOTH WORK IN PROGRE SS AT SITES. THEREFORE CLUBBING OF ALL ENTRIES IN THE DIARY WHIC H ARE ONLY BALANCES IN THE HAND OF THE SUPERVISORS IS NOT JUST IFIED FOR THE PURPOSE OF MAKING ADDITION OF THIS AMOUNT IN THE HA ND OF THE ASSESSEE. THE ADDITION CAN BE MADE ONLY BY WORKING OUT THE DIFFERENCES OF THE BALANCES IN THE HAND OF THE SUPE RVISORS TAKING THE SAME AS AN EXPENDITURE INCURRED BY THE SUPERVISOR A ND THEN RECONCILIATING THE EXPENDITURE WITH THE EXPENDITURE IF ANY ALREADY RECORDED IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND R EMIT THIS MATTER TO THE RECORD OF THE AO TO PROPERLY VERIFY THE FACTS A ND THEN WORK OUT THE AMOUNTS IF ANY WHICH IS IN EXCESS OF THE EXPEND ITURE RECORDED IN THE BOOKS OF ACCOUNTS AS WELL AS WHICH IS ALSO E XCESS OF THE EXPENDITURE RECORDED IN THE DIARY WHICH IS SEPARATE LY CONSIDERED FOR ADDITION OF INCOME. WE MAKE IT CLEAR THAT THE AVAILABILITY OF BALANCE WITH THE SUPERVISOR CANNOT BE TREATED AS PA YMENT MADE BY THE ASSESSEE WHEN THE EXPENDITURE HAS BEEN SEPARATE LY RECORDED IN THE BOOKS OF ACCOUNTS AS WELL AS IN THE DIARY. ITA NOS. 259 & 295/BANG/2014 PAGE 48 OF 76 31. GROUND NO. 12 IS REGARDING ADDITION ON ACCOUNT OF P AYMENT TOWARDS HOUSEHOLD EXPENSES. THE AO MADE AN ADDITIO N OF RS. 1,06,790/- ON ACCOUNT OF PAYMENT TOWARDS PERSONAL D RAWINGS AS THESE PAYMENTS ARE RECORDED IN THE DIARY AND MADE A GAINST THE ASSESSEES HOUSEHOLD EXPENSES. THE ASSESSEE CHALLE NGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED TH AT THESE ARE PERSONAL CASH DRAWINGS ON VARIOUS DATES AS PER THE BOOKS OF ACCOUNTS TOTAL AMOUNTING TO RS. 2,32,939/-. THEREF ORE THE ASSESSEE SUBMITTED THAT WHEN THE BOOKS OF ACCOUNTS FOR THE YEAR UNDER CONSIDERATION HAS SHOWN THE PERSONAL CASH DRA WINGS OF RS. 2,32,939/- THEN THE FURTHER ADDITION OF RS. 1,0 6,719/- IS NOT REQUIRED. THE CIT(A) DID NOT ACCEPT THIS EXPLANATI ON OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO. 32. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THIS AMOUNT OF RS. 1,06,719/- IS COMPRISING OF VARIOUS T RANSACTIONS OF SMALL AMOUNTS OF FEW HUNDREDS AND SOME OF FEW TH OUSANDS. THE LD. AR HAS POINTED OUT THAT AS PER THE CAPITAL ACCOUNT OF THE ASSESSEE AT PAGE 34 TO 38 OF THE PAPER BOOK SOME OF THE HOUSEHOLD EXPENSES AND WITHDRAWALS ARE ALREADY REFL ECTED AND DEBITED TO THE ACCOUNT. THE ENTRIES APPEARING IN T HE DIARY ARE ITA NOS. 259 & 295/BANG/2014 PAGE 49 OF 76 THE PAYMENT FROM SUCH WITHDRAWALS. THEREFORE THESE ENTRIES ARE NOT THE PAYMENTS FROM THE ACCOUNT OF THE BUSINESS B UT THESE ARE ONLY FOR THE MEMORY PURPOSE AS THESE PAYMENTS ARE M ADE BY THE ASSESSEE OUT OF THE PERSONAL DRAWINGS AS ALREAD Y RECORDED IN THE CAPITAL ACCOUNT OF THE ASSESSEE. HENCE, THE LD . AR HAS SUBMITTED THAT WHEN ASSESSEES PERSONAL DRAWINGS DU RING THE YEAR ARE ALREADY SHOWN IN THE CAPITAL ACCOUNT WHICH ARE MUCH MORE THAN THESE EXPENSES THEN NO SEPARATE ADDITION IS CALLED FOR. ON THE OTHER HAND THE LD. DR HAS RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS FAILED TO RECONCILE THE PAYMENTS MADE AS PER THE ENTRIES RECO RDED IN THE DIARY AND THE ENTRIES AS REFLECTED IN THE BOOKS OF ACCOUNTS. 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE DIARY ENTRIES IN RESPECT O F THESE HOUSEHOLD PAYMENTS ARE OF SMALL SMALL AMOUNTS. WE FIND THAT THESE ARE ABOUT 50 TRANSACTIONS OF SMALL AMOUNTS OF HOUSEHOLD EXPENSES PAID FOR GROCERY ITEMS, POOJA ITEMS, VEGET ABLES, PAYMENT TO MAID ETC. FROM THE DIARY ENTRIES IT CAN NOT BE INFERRED THAT THESE PAYMENTS ARE MADE FROM THE BUSI NESS ACCOUNTS OF THE ASSESSEE. IT IS ALSO NOT THE CASE OF THE AO. ITA NOS. 259 & 295/BANG/2014 PAGE 50 OF 76 SINCE THESE ARE THE PERSONAL HOUSEHOLD EXPENSES AND THEREFORE RECORDING OF THE SAME IN THE DIARY WILL NOT LEAD TO THE CONCLUSION THAT THESE EXPENSES ARE MADE FROM THE BU SINESS FUND OF THE ASSESSEE. THERE IS NO DISPUTE THAT THERE IS A DRAWING FROM THE CAPITAL ACCOUNT OF THE ASSESSEE OF MORE THAN RS . 2,32,000/- DURING THE YEAR UNDER CONSIDERATION. THE DISALLOWA NCE MADE BY THE AO AND CIT(A) IS MAINLY ON THE GROUND THAT THE ENTRIES IN THE DIARY REGARDING SMALL / PETTY HOUSEHOLD EXPENSE S ARE NOT MATCHING WITH THE ENTRIES OF DRAWINGS IN THE CAPITA L ACCOUNT. IT IS PERTINENT TO NOTE THAT THE PERSONAL DRAWINGS SHO WN IN THE CAPITAL ACCOUNT IS NOT NECESSARILY BE FOR EACH AND EVERY PERSONAL EXPENDITURE. ONCE THE OVERALL DRAWINGS DURING THE YEAR IS MORE THAN THE EXPENDITURE AS RECORDED IN THE DIARY THEN NO FURTHER ADDITION IS WARRANTED. ACCORDINGLY, WE DELETE THIS ADDITION OF RS. 1,06,719/-. 34. GROUND NO. 13 IS REGARDING PAYMENT FOR PURCHASES OF MATERIAL FOR SALE. THIS GROUND IS CONNECTED WITH GROUND NO. 2 OF THE APPEAL AND THEREFORE IN VIEW OF OUR FINDING WHILE D EALING WITH GROUND NO. 2 THIS GROUND STANDS DISPOSED OF. ITA NOS. 259 & 295/BANG/2014 PAGE 51 OF 76 35. GROUND NO. 14 IS REGARDING ADDITION ON ACCOUNT OF R EFUND OF SALE OF MATERIAL. THE AO MADE AN ADDITION OF RS. 5 ,23,057/- ON ACCOUNT OF PAYMENT FOR REFUND OF SALE OF MATERIAL. THE AO NOTED THAT AS PER THE DETAILS RECORDED IN THE DIARY VARIOUS AMOUNTS WERE RECEIVED AND REFUNDED HOWEVER, THE DET AILS OF MATERIAL SOLD TO THE PARTIES WERE NOT FURNISHED IN SUPPORT OF THE EXPLANATION. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND EXPLAINED THAT THIS AMOUNT OF RS. 5,23,057/- REPRESENTS THE REFUND OF THE AMOUNT RECE IVED AGAINST THE SALE OF MATERIAL. HOWEVER WHEN THE MATERIAL CO ULD NOT BE SUPPLIED THE AMOUNT WAS REFUNDED BY THE ASSESSEE AN D THEREFORE IT CANNOT BE CONSIDERED AS AN INCOME OF THE ASSESSE E. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E AND CONFIRMED THE ADDITION MADE BY THE AO. 36. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THESE ARE THE AMOUNTS COLLECTED IN ADVANCE TOWARDS THE SUPPLY OF MATERIAL. HOWEVER, FOR SOME REASONS THE ASSESSEE W AS NOT ABLE TO SUPPLY THE REQUIRED QUANTITY OR QUALITY OF MATER IAL AND THEREFORE THE ADVANCES WERE REFUNDED TO THE EXTENT OF RS. 5,23,057/-. HE HAS FURTHER CONTENTED THAT THE TOTA L AMOUNT ITA NOS. 259 & 295/BANG/2014 PAGE 52 OF 76 COLLECTED ON ACCOUNT OF SALE OF MATERIAL IS ALREADY CONSIDERED BY THE AO FOR THE PURPOSE OF ADDITION. THE AO HAS GIV EN THE DETAILS OF THE TOTAL AMOUNT COLLECTED AT PAGE 4 TO 9 OF THE ASSESSMENT ORDER. THUS BY COMPARING THE DETAILS OF THE AMOUNT COLLECTED ON ACCOUNT OF SALE OF MATERIAL AND THE RE FUND MADE BY THE ASSESSEE FOR NON-SUPPLY OF MATERIAL IT CAN BE N OTED THAT THE PAYMENT IS MADE TO THE SAME PERSONS FROM WHOM THE A MOUNT WERE COLLECTED. THUS IT IS CLEAR THAT THE REFUND O F ADVANCE IS MADE TO THE PERSON WHO PAID THE MONEY FOR SUPPLY OF MATERIAL. THEREFORE NO ADDITION IS JUSTIFIED ON THIS ACCOUNT. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HA S FAILED TO FURNISH THE COMPLETE DETAILS OF AMOUNT RECEIVED, RE FUNDED, MATERIAL SOLD TO THESE PARTIES. FURTHER, THE COMPL ETE NAME AND ADDRESS OF THE PARTIES WERE NOT FURNISHED. THEREFO RE IN THE ABSENCE OF THE DETAILS OF EXPLANATION THE REFUND OF THESE AMOUNT THE AO IS JUSTIFIED IN MAKING THE ADDITION. 37. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO HAS MADE AN ADDITION ON ACCOUNT OF THE RECEIPT OF SALE OF MATERIAL OF RS. 33,05,152 /-. THE DETAILS OF THE AMOUNT RECEIVED TOWARDS SALE OF MATERIAL AS PER THE DIARY ITA NOS. 259 & 295/BANG/2014 PAGE 53 OF 76 ENTRY WERE ALSO REPRODUCED BY THE AO AT PAGE 4 AND 5 OF THE ASSESSMENT ORDER. THE AO HAS THEN ALSO MADE AN ADD ITION OF RS. 5,23,057/- ON THE BASIS OF THE DIARY ENTRIES SH OWING THE REFUND OF THE AMOUNT COLLECTED IN ADVANCE TOWARDS S UPPLY OF MATERIAL. THESE ENTRIES ARE REPRODUCED BY THE AO A T PAGE 25 AND 26 OF THE ORDER. THE ASSESSEE CONTENTED BEFORE THE AUTHORITIES BELOW THAT REFUND IS NOTHING BUT PART O F THE AMOUNT RECEIVED TOWARDS THE SALE OF MATERIAL AND WHEN THE ASSESSEE COULD NOT SUPPLY THE MATERIAL HE HAS REFUNDED THE A MOUNT RECEIVED FROM THE CLIENT. ON ANALYSIS OF THE ENTRI ES IN THE DIARY IN RESPECT OF THE AMOUNTS RECEIVED TOWARDS THE SALE OF MATERIAL AS WELL AS REFUND OF THE AMOUNT DUE TO NON-SUPPLY O F MATERIAL WE FIND THAT SOME OF THE ENTRIES ARE IN THE COMMON NAMES THEREFORE, IT CANNOT BE CONCLUDED THAT THE REFUND A MOUNT SEPARATELY NOTED IN THE DIARY IS NOT PART OF THE AM OUNT RECEIVED TOWARDS THE SALE OF MATERIAL. EVEN OTHERWISE WHEN THE DIARY ENTRY ITSELF MAKE IT CLEAR THAT THESE AMOUNTS WERE ON ACCOUNT OF REFUND WHICH WERE RECEIVED BY THE ASSESSEE FOR SUPP LY OF MATERIAL THEN THE REFUND CANNOT BE TREATED AS INCOM E OF THE ASSESSEE. ONLY THE AMOUNT WHICH IS RECEIVED FOR SA LE OF MATERIAL CAN BE TAKEN INTO CONSIDERATION FOR THE PU RPOSE OF ITA NOS. 259 & 295/BANG/2014 PAGE 54 OF 76 INCOME OF THE ASSESSEE WHICH HAS ALREADY BEEN CONSI DERED SEPARATELY AND THEREFORE NO SEPARATE ADDITION ON AC COUNT OF REFUND OF THE AMOUNT RECEIVED FOR SUPPLY OF MATERIA L CAN BE MADE. HENCE WE DELETE THE ADDITION MADE BY THE AO ON THIS GROUND. 38. GROUND NO. 15 IS REGARDING THE PAYMENT RELATING TO DDCA. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDE RED THE RELEVANT MATERIAL ON RECORD. WE HAVE CONSIDERED TH IS ISSUE FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 28.04. 2017 IN ITA NOS. 219 & 291/BANG/2014 FROM PARA 33 TO 35 AS UNDER. 33.GROUND NO. 14 IS REGARDING AN ADDITION OF RS. 27 ,748/- REPRESENTING THE AMOUNTS COLLECTED FOR AND ON BEHAL F OF DHARWAD DISTRICT CONTRACTORS ASSOCIATION. THIS AMO UNT WAS FOUND RECORDED IN THE DIARY BUT NOT REFLECTED IN TH E BOOKS OF ACCOUNT THEREFORE THE AO HAS MADE THE ADDITION OF S AID AMOUNT OF RS. 27,748/-. THE ASSESSEE CHALLENGED TH E ACTION OF THE AO BEFORE THE CIT(A) AND EXPLAINED THAT THIS AM OUNT REPRESENTS THE COLLECTION FOR AND ON BEHALF OF DHAR WAD DISTRICT CONTRACTORS ASSOCIATION (DDCA) HOWEVER THE CIT(A) W AS NOT IMPRESSED BY THE EXPLANATION OF THE ASSESSEE AND HE LD THAT THE ASSESSEE HAS NOT FILED THE DETAILS WITH SUPPORTING EVIDENCE FOR INCURRING SUCH EXPENDITURE. 34.BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ENTRIES IN THE DIARY CLEARLY MENTION THE CHEQUES / CASH ARE COLLECTED ON BEHALF OF THE ASSOCIATION. HE HAS REF ERRED TO THE DIARY ENTRIES AND SUBMITTED THAT THERE IS NOTING AG AINST EACH RECEIPT THAT CHEQUE BY DDCA OR CHEQUES ISSUED BY OT HER MEMBERS FOR DDCA. THUS THE LD. AR HAS SUBMITTED TH AT THIS AMOUNT REPRESENTS ONLY THE COLLECTION FOR AND ON BE HALF OF THE DDCA. THE ASSESSEE BEING THE PRESIDENT OF THE DDCA HAS COLLECTED THIS FUND CONTRIBUTED BY MEMBERS OF THE A SSOCIATION THEREFORE THIS AMOUNT CANNOT BE TREATED AS INCOME O F THE ASSESSEE. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ITA NOS. 259 & 295/BANG/2014 PAGE 55 OF 76 ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE THEN IT WAS RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE. 35.WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO HAS MADE THE A DDITION OF THIS AMOUNT OF RS. 27,748/- ON THE BASIS OF THE DIA RY ENTRIES. WE FIND THAT THE ENTRIES RECORDED IN THE DIARY ALSO CONTAINS THE NARRATIONS AND EXPLANATION OF NATURE OF TRANSACTION . IT IS MANIFEST FROM THE NOTING AGAINST EACH ENTRY THAT TH ESE ARE THE RECEIPTS COLLECTED BY THE ASSESSEE ON BEHALF OF DDC A. THE AO HAS NOT DISPUTED THESE NARRATIONS IN THE DIARY. WE ALSO FIND THAT THE ENTRIES IN THE DIARIES ARE SELF-EXPLANATOR Y AND THEREFORE THE NATURE OF THESE ENTRIES CANNOT BE DISPUTED WHEN THE ADDITION ITSELF IS BASED ON THE DIARY ENTRIES. THE AO IS NOT PERMITTED TO TAKE ONLY THE AMOUNT OF THE DIARY ENTR IES BY IGNORING THE OTHER DETAILS. THEREFORE IF THE DIARY ENTRY IS THE BASIS OF ADDITION THEN THE ENTIRE DETAILS OF THE DI ARY ENTRY IS TO BE TAKEN INTO ACCOUNT. ACCORDINGLY IN VIEW OF THE FACT THAT THESE DIARY ENTRIES ARE SELF-EXPLANATORY AS COLLECT ION FOR AND ON BEHALF OF DDCA AND THE ASSESSEE BEING THE PRESIDENT OF DDCA HAS COLLECTED THIS AMOUNT ON BEHALF OF THE ASSOCIAT ION THE ADDITION IS NOT JUSTIFIED. ACCORDINGLY, THE SAID A DDITION IS DELETED. ACCORDINGLY THIS ADDITION IS DELETED. 39. GROUND NO. 16 IS REGARDING THE ADDITION ON ACCOUNT OF DIARY ENTRIES OF RS. 15,80,770. THE AO MADE AN ADDITION OF RS. 15,80,770/- ON THE BASIS OF THE DIARY ENTRIES A ND CONSIDERING SAME AS PAYMENTS MADE BY THE ASSESSEE. THE AO NOTE D THAT THE ASSESSEE HAS NOT FURNISHED ANY SUPPORTING DETAIL OR EVIDENCE TO SHOW THAT THE SAID ENTRIES REPRESENTS AMOUNT OF EXP ENSES INCURRED ON THE PROJECTS. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED THAT THESE E NTRIES ARE NOT THE PAYMENTS BUT THESE ARE ONLY THE AGGREGATE A MOUNT OF ITA NOS. 259 & 295/BANG/2014 PAGE 56 OF 76 EXPENDITURE INCURRED ON THE PROJECTS. THESE ARE RE PETITIVE ENTRIES FOR STATISTICAL PURPOSES. THUS THE ASSESSE E CONTENDED THAT IT WILL AMOUNT TO DOUBLE ADDITION WITHOUT ANY SEPARATE INCOME WHEN THESE ENTRIES ARE ONLY REFLECTING THE T OTAL EXPENDITURE INCURRED ON THESE PROJECTS AND NOT THE PAYMENTS. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASS ESSEE AND CONFIRMED THE ADDITION MADE BY THE AO FOR WANT OF D ETAILS AND EVIDENCES TO SHOW THAT THESE ARE NOT PAYMENTS. 40. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ENTRIES IN THE DIARY REFLECTS THE TOTAL EXPENDITURE ON VARIOUS PROJECTS AND ARE NOT REPRESENTING THE PAYMENTS. HE HAS FURTHER CONTENTED THAT THESE ARE THE AGGREGATE AMOUNT OF EX PENSES INCURRED FOR THE PURCHASE OF STEEL ON VARIOUS STAGE S OF THE PROJECTS WHICH ARE NOTED IN THE DIARY FOR READY REF ERENCE BUT NO TRANSACTIONS AS SUCH HAS TAKEN PLACE ON THESE DATES . HE HAS FURTHER CONTENTED THAT THESE FIGURES APPEAR IN THE INNER COLUMN SUGGESTING NO TRANSACTION HAS TAKEN PLACE ON THAT D ATE. HE HAS FURTHER SUBMITTED THAT AN AMOUNT OF RS. 2,00,000/- AS APPEARING AT PAGE 105 OF THE PAPER BOOK REPRESENTS THE FIXED DEPOSITS FOR TENDER WHICH EVENTUALLY DID NOT MATERIALIZE. THERE FORE THERE IS ITA NOS. 259 & 295/BANG/2014 PAGE 57 OF 76 NO OUTGOING ON ANY SUM OF RS. 2,00,000/-. THUS THE LD. AR HAS SUBMITTED THAT THESE ARE NOT THE PAYMENTS MADE ON T HESE DATES OR ANY OTHER DATES BUT THESE ARE ONLY THE AGGREGATE EXPENSES AND FURTHER RS. 2,00,000/- IS ONLY TOWARDS FIXED DEPOSI T FOR TENDER PURPOSE. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF THE CLAIM OF THE ASSESSEE THIS AMOUNT OF EXPENDITURE INCURRED ON THE PROJECTS IS TO BE ADDED TO THE INCOME OF THE ASSESSEE. 41. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE DETAILS OF TH E ENTRIES ARE REPRODUCED BY THE CIT(A) AT PAGE 58 OF THE IMPUGNED ORDER AS UNDER. ITA NOS. 259 & 295/BANG/2014 PAGE 58 OF 76 WE FURTHER NOTE THAT THERE IS NO SPECIFIC DATE MENT IONED AGAINST THE ENTRIES BUT DATE HAS BEEN TAKEN AS PER THE DIAR Y LEAF AS THESE ENTRIES ARE MADE IN THE DIARY PAGE 07.04.2010 AND 1 2.04.2010. FURTHER WE NOTE THAT THE MANNER IN WHICH TWO ENTRIE S REPRESENTING THE MANTUR BRIDGE DR A/C AND ISLAMPUR KB SITE ARE DIFFERENT FROM THE OTHER ENTRIES ON THE SAME PAGE OF THE DIARY. THUS ENTRIES ARE OTHERWISE NOT SHOWI NG ANY PAYMENTS BUT ONLY NAME OF THE PROJECTS IS GIVEN. F URTHER THE AMOUNTS AGAINST THESE ENTRIES ARE SHOWN IN THE BRAC KET AND IN THE INNER COLUMN. THEREFORE WITHOUT VERIFYING THE DETAILS OF THE EXPENDITURE INCURRED AND RECORDED IN THE BOOKS OF A CCOUNTS IN RESPECT OF THESE TWO PROJECTS THESE TWO ENTRIES CAN NOT BE TREATED AS A SEPARATE EXPENDITURE OR PAYMENT IN RESPECT OF THESE PROJECTS. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE AO FOR PROPER VERIFICATION OF THE FACTS REGARDI NG THE TOTAL EXPENDITURE IN RESPECT OF THESE PROJECTS AS RECORDE D IN THE BOOKS OF ACCOUNTS AS WELL AS THE DIARY ENTRIES REGARDING THE EXPENDITURE AND THEN AFTER RECONCILIATION OF ALL TH E AMOUNTS THE ISSUE HAS TO BE DECIDED. AS REGARDS THE AMOUNT OF RS. 2,00,000/- THE DIARY ENTRY ITSELF CLEARLY DEMON STRATES THAT THIS AMOUNT REPRESENTS FIXED DEPOSIT FOR THE PURPOS E OF TENDER. ITA NOS. 259 & 295/BANG/2014 PAGE 59 OF 76 THE ASSESSEE EXPLAINED THAT SINCE THE TRANSACTION D ID NOT HAPPEN THEREFORE THIS FIXED DEPOSIT HAS GOT CANCELLED AND THERE WAS NO OUTGO OF THIS AMOUNT. NEITHER THE AO NOR THE CIT(A ) HAS TAKEN ANY STEP TO VERIFY THIS FACT AND REJECTED THE EXPLA NATION OF THE ASSESSEE AT THRESHOLD. ACCORDINGLY, WHEN THE ENTRY ITSELF SHOWS THIS AMOUNT IS TOWARDS THE FIXED DEPOSIT AND IT WAS LATER ON CANCELLED THEN THIS CANNOT BE ADDED AS INCOME OF TH E ASSESSEE. 42. GROUND NO. 17 IS REGARDING ADDITION ON ACCOUNT OF U NEXPLAINED INVESTMENT IN HOUSE. THE AO NOTED THAT THE ASSESSE E HAS CONSTRUCTED A RESIDENTIAL BUILDING AT SHREYAS NAGAR , HUBLI. THE ASSESSEE HAS DEBITED COST OF THE BUILDING AT RS. 68 ,25,372/- AS PER THE BALANCE SHEET AS ON 31.03.2011. DURING THE COURSE OF SURVEY THE ASSESSEE VIDE LETTER DATED 02.03.2011 AG REED TO DISCLOSE ADDITIONAL INCOME OF RS. 35,00,000/- TOWAR DS INVESTMENT IN HOUSE FOR THE ASSESSMENT YEAR 2011-12 AND PAID TAX ON THE SAID ADDITIONAL INCOME. HOWEVER SUBSEQU ENTLY THE ASSESSEE RETRACTED THE DISCLOSURE MADE BY HIM AND C LAIMED REFUND OF TAX. THE AO WAS OF THE VIEW THAT THE COS T OF CONSTRUCTION DEBITED IN THE BOOKS OF ACCOUNT IS LOW AND ACCORDINGLY IT WAS REFERRED TO THE DVO TO DETERMINE THE COST OF ITA NOS. 259 & 295/BANG/2014 PAGE 60 OF 76 THE CONSTRUCTION OF THE SAID BUILDING. THE DVO VID E ITS REPORT DATED 30.04.2013 DETERMINED THE COST OF CONSTRUCTIO N AT RS. 68,41,300/-. THE AO FURTHER OBSERVED THAT AS PER T HE DOCUMENTS INVENTORIED UNDER INVENTORY NO. 26 THE PA YMENTS OF RS. 87,045/- RELATING TO THE SAID RESIDENTIAL HOUSE WERE MADE BY THE ASSESSEE. ACCORDINGLY, THE AO HAS COMPUTED THE TOTAL COST OF CONSTRUCTION AT RS. 69,28,345/- AS AGAINST THE C OST DEBITED BY THE ASSESSEE AT RS. 68,25,372/-. CONSEQUENTLY THE AO MADE AN ADDITION OF RS. 1,02,973/- ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN HOUSE. THE ASSESSEE CHALLENGED THE A CTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 43. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE ITSELF HAS DEBITED THE COST OF CONSTRUCTIO N AT RS. 68,25,372/-. THE AO HAS REFERRED THE MATTER OF VALUATION TO THE DVO WHO HAS DETERMINED THE COST OF CONSTRUCTION AT RS. 68,41,300/- WHICH IS ALMOST SAME AS THE COST OF CONSTRUCTION DEBITED BY THE ASSESSEE. THE AO THEN MADE AN ADDIT ION OF RS. 87,045/- TO THE COST OF CONSTRUCTION BY CONSIDE RING THE IMPOUNDED INVENTORY NO. 26 SHOWING EXPENDITURE ON C OST OF CONSTRUCTION. THE LD. AR HAS SUBMITTED THAT THE EX PENDITURE ITA NOS. 259 & 295/BANG/2014 PAGE 61 OF 76 APPEARING IN THE IMPOUNDED ENTRY NO. 26 ARE DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. HE HAS REFERRED T O THE CAPITAL ACCOUNT AT PAGE 34 TO 38 OF PAPER BOOK AND SUBMITTE D THAT THE VERY SAME ITEM APPEARING IN THE CAPITAL ACCOUNT WHI CH ARE PART OF THE IMPOUNDED INVENTORY NO. 26. THEREFORE THE A DDITION MADE BY THE AO IS NOT JUSTIFIED. HE HAS FURTHER SU BMITTED THAT THE DVO HAS ESTIMATED THE VALUE WHICH IS ONLY NEGLI GIBLY HIGHER THAN THE ASSESSEES COST OF CONSTRUCTION. T HUS HE HAS SUBMITTED THAT NO ADDITION IS CALLED FOR ON THIS AC COUNT. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW. 44. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY THE ASSESSEE HAS SHOWN THE COST OF BUILDING AND DEBITED TO THE BOOKS OF ACCOUN T AT RS. 68,25,372/-. THE AO REFERRED THE MATTER OF COS T OF CONSTRUCTION TO THE DVO WHO HAS ESTIMATED THE COST OF CONSTRUCTION AT RS. 68,41,300/-. THUS THE DIFFEREN CE BETWEEN HE ASSESSEES VALUATION AND THE DVOS VALUATION IS ONL Y RS. 15,928/-. SINCE IT IS A MATTER OF ESTIMATE AND THE DVOS VALUATION IS BASED ON ESTIMATED RATES AND NOT ON TH E ACTUAL ITA NOS. 259 & 295/BANG/2014 PAGE 62 OF 76 EXPENDITURE THEREFORE, THIS SMALL DIFFERENCE BETWEE N THE ASSESSEES COST OF CONSTRUCTION AND DVOS ESTIMATE WOULD NOT WARRANT ANY ADDITION. AS REGARDS THE ADDITION MADE BY THE AO ON ACCOUNT OF IMPOUNDED INVENTORY NO. 26 WE NOTE TH AT THE DETAILS OF THE INVENTORY NO. 26 HAS BEEN REPRODUCED BY THE CIT(A) AT PAGE 60 AS UNDER. DATE BILL NO / NAME AMOUNT 6.10.2010 SHIVA STEELS 31793 4.5.2010 DURIAN INDUSTIRES LIMITED 65250 22653 7.05.2010 A TO Z LIFESTYLE 32599 THUS BY CONSIDERING THESE THREE ITEMS, THE AO HAS A DDED RS. 87,045/- TO THE COST OF CONSTRUCTION. THE LD. AR OF THE ASSESSEE HAS INVITED OUR ATTENTION TO THE CAPITAL A CCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AT PAGE 3 4 AND 35 OF THE PAPER BOOK WHEREIN WE FIND THAT ALL THESE THREE AMOUNTS HAS BEEN DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE . THEREFORE, ONCE THIS AMOUNT HAS ALREADY BEEN TAKEN TO THE CAPI TAL ACCOUNT OF THE ASSESSEE THE SAME CANNOT BE ADDED AS COST OF CONSTRUCTION OF THE BUILDING AND CONSEQUENTLY ADDITION TO THE IN COME OF THE ASSESSEE. ACCORDINGLY, IN THE FACTS AND CIRCUMSTAN CES OF THE CASE WE DELETE THIS ADDITION ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN CONSTRUCTION OF HOUSE. ITA NOS. 259 & 295/BANG/2014 PAGE 63 OF 76 45. GROUND NOS. 18 AND 19 ARE REGARDING DISALLOWANCE U/ S. 40A(3). WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONS IDERED THE RELEVANT MATERIAL ON RECORD. AN IDENTICAL ISSUE HA S BEEN CONSIDERED BY US IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2006-07 VIDE ORDER DATED 30.11.2015 IN PARA 24 TO 2 9 AS UNDER. 24. THE NEXT GROUND OF APPEAL IS REGARDING THE ADDITION OF A SUM OF RS.6,16,351 U/S. 40A(3). THE A O OBSERVED FROM THE DETAILS OF EXPENSES AND PARTY PAYMENT TOWARDS MATERIALS THAT ASSESSEE MADE CASH PAYMENTS TO VARIOUS PARTIES EXCEEDING RS.20,000 IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3). THE AGGREGATE OF SUCH PAYMENTS WORKED OUT TO RS.30,81,756. THE AO WAS OF THE VIEW THAT THE SAID PAYMENTS ARE ALLOWED TO BE SET OFF AGAINST UNEXPLAINED RECEIPTS AND HENCE THE SAME ARE REQUIRE D TO BE DISALLOWED U/S. 40A(3). HENCE DISALLOWANCE OF RS.30,81,756 WAS MADE BY THE AO U/S. 40A(3). BY THE RECTIFICATION ORDER U/S. 154 DATED 21.2.14, DISALLO WANCE U/S. 40A(3) OF RS.30,81,756 WAS RESTRICTED TO RS.6,16,351 BEING 20% OF THE PAYMENT MADE IN CONTRAVENTION OF PROVISIONS OF SECTION 40A(3). 25. THE CIT(A) UPHELD THE ADDITION MADE BY THE AO I N THE ABSENCE OF DETAILS OF CASH PAYMENTS TO DIFFEREN T PARTIES AND THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE MADE THE CASH PAYMENT IN SUPPORT OF THE ASSESSEES CLAIM. 26. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES THAT INVOKING OF THE PROVISIONS OF SECTION 40A(3) AND TH E ADDITION OF RS.6,16,351 IS UNJUSTIFIED SINCE IT HAS NOT BEEN SHOWN THAT ANY PART OF THE PAYMENTS AS REFLECT ED IN THE DIARY REPRESENTS EXPENDITURE CLAIMED AS A DEDUCTION IN COMPUTING INCOME UNDER THE HEAD OF BUSINESS OR OTHER SOURCES. IT WAS SUBMITTED THA T EVERY PAYMENT PER SE IS NOT LIABLE TO ACTION U/S. 4 0A(3) UNLESS IT FALLS WITHIN THE REALM OF CLAIMED EXPENDI TURE WITH RESPECT TO THE ABOVE TWO HEADS. 27. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. BANWARI LAL BANSHIDHAR, 229 ITR 229 ITA NOS. 259 & 295/BANG/2014 PAGE 64 OF 76 (ALL) AT PAGE 232. HE ALSO RELIED ON THE DECISION O F THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS V. CIT, 232 ITR 776 (AP) WHEREIN IT WAS HELD AS UNDER:- . . . THE QUESTION ARISES WHETHER IN SUCH A CASE ANY DEDUCTION ON ACCOUNT OF PURCHASES IS AT ALL ALLOWED TO THE ASSESSEE, THOUGH IT MAY BE TRUE THAT A GROSS PR OFIT RATE OF 15 PER CENT WAS FIXED KEEPING IN VIEW ALL RELEVANT FACTS INCLUDING THE PURCHASES MADE BY THE ASSESSEE. INASMUCH AS WE ARE OF THE VIEW THAT NO DEDUCTION AS SUCH HAVING BEEN ALLOWED TO THE ASSESSEE ON ACCOUNT OF PURCHASES, WE HOLD THAT NO QUESTION OF ANY DISALLOWANCE ON ACCOUNT OF PURCHASE CAN BE MADE IN THIS CASE UNDER SECTION 40A(3). 28. THE LD. DR OBJECTED TO THE SUBMISSION OF THE ASSESSEE STATING THAT WITH RESPECT TO BOTH CONTRACT AND TRADING, ESTIMATE WAS U/S. 40A(3) AND ASSESSEES CLAIM THAT SEC. 40A(3) WOULD BE INAPPLICABLE CAN BE RESTRICTED ONLY TO THE TRADING PORTION, WHOSE GP WA S DETERMINED AT 9%, CANNOT BE ACCEPTED. HE ARGUED THA T SECTION 40A(3) WOULD APPLY TO THE CONTRACT AND TRAD ING RECEIPTS. 29. WE HAVE HEARD BOTH THE PARTIES. WE AGREE WITH THE CLAIM OF ASSESSEE THAT ONCE THERE HAS BEEN AN ESTIMATE, ALL THE DEDUCTIONS ARE DEEMED TO HAVE BEE N TAKEN INTO ACCOUNT WHILE MAKING SUCH ESTIMATE AND HENCE NO SEPARATE ADDITION CAN BE MADE. HOWEVER, WHETHER THE ESTIMATE IS ONLY FOR TRADING PART OF TH E ASSESSEES BUSINESS OR IT IS ALSO TOWARDS CONTRACT PART OF THE BUSINESS IS TO BE VERIFIED BY THE AO. IN THE SE CIRCUMSTANCES, WE DEEM IT FIT TO SET ASIDE THE ISSU E TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO REDO THE ASSESSMENT FOLLOWING THE DECISION IN THE CASE O F INDWELL CONSTRUCTIONS (SUPRA). IN VIEW OF THE DECISION OF THIS TRIBUNAL FOR ASSESS MENT YEAR 2006-07 THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. ITA NOS. 259 & 295/BANG/2014 PAGE 65 OF 76 46. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND WHICH IS REPRODUCED AS UNDER. 1.THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE PROVISIONS OF SECTION 4 0(A)(IA) IS NOT APPLICABLE UNDER THE FACTS AND THE CIRCUMSTA NCES OF THE CASE. 47. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONS IDERED THE RELEVANT MATERIAL ON RECORD FOR THE PURPOSE OF ADMI TTING THE ADDITIONAL GROUND. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE RAISED THIS GROUND BEFORE THE CIT (A) AND IT WAS PARTLY ALLOWED BY THE CIT(A). HOWEVER INADVERT ENTLY THE ASSESSEE COULD NOT FILE THIS GROUND ALONGWITH THE F ORM NO. 36. THUS THE LD. AR HAS PLEADED THAT NOT RAISING THIS G ROUND IN THE ORIGINAL GROUNDS IS NEITHER WILLFUL NOR DELIBERATE BUT DUE BONAFIDE MISTAKE AND INADVERTENT. SINCE THIS GROUN D IS NOT A FRESH PLEA THEREFORE HE HAS PRAYED THAT THE SAME MA Y BE ADMITTED FOR ADJUDICATION ON MERITS. ON THE OTHER HAND THE LD. DR HAS VEHEMENTLY OPPOSED THE ADMISSION OF THE ADDI TIONAL GROUND. 48. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE FIND THAT THE ISSUE OF DISALL OWANCE U/S. 40A(IA) WAS RAISED BY THE ASSESSEE BEFORE THE CIT(A ). THE CIT(A) HAS CONSIDERED THIS ISSUE IN PARA 25 OF THE IMPUGNED ITA NOS. 259 & 295/BANG/2014 PAGE 66 OF 76 ORDER AND GRANTED PART RELIEF TO THE ASSESSEE. THE REFORE IT IS CLEAR THAT THIS IS NOT A FRESH PLEA RAISED BY THE A SSESSEE AT THIS STAGE BUT THIS ISSUE IS ARISING FROM THE IMPUGNED O RDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, IN THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE ADMIT THE ADDITIONAL GROUND FOR ADJUDICATION ON MERITS. 49. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE A O HAS DISALLOWED A SUM OF RS. 57,20,877/- FOR WANT OF TDS . THE CIT(A) THOUGH CONFIRMED THE DISALLOWANCE MADE BY TH E AO U/S. 40(A)(IA) HOWEVER GRANTED RELIEF TO THE EXTENT OF THE COMMON AMOUNT OF RS. 26,15,382/- WHICH WAS DISALLOW ED U/S. 40A(3). THUS THE CIT(A) HAS GIVEN PART RELIEF ONLY TO THE EXTENT OF DOUBLE DISALLOWANCE. HE HAS REFERRED TO THE DETAILS OF THE EXPENDITURE AND SUBMITTED THAT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE ON RS. 34,790/- AND THE PAYMENT WAS M ADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. HE HA S POINTED OUT THAT THE AMOUNT DEDUCTED AS TDS WAS REMITTED VIDE C HEQUE DATED 26.04.2011 WHEREAS THE DUE DATE OF FILING OF RETURN WAS 30.09.2011. THEREFORE THE LD. AR HAS SUBMITTED THA T NEITHER THE AO NOR THE CIT(A) HAS TAKEN INTO CONSIDERATION THE AMOUNT OF TDS DEDUCTED AND PAID BY THE ASSESSEE. HE HAS FURT HER ITA NOS. 259 & 295/BANG/2014 PAGE 67 OF 76 SUBMITTED THAT THE INTEREST ON CAR LOAN FROM KOTAK MAHINDRA LTD., INTEREST ON JCB LOAN, KOTAK MAHINDRA LTD AND INTEREST ON TIPPER LOAN TO SUNDRAM FINANCE LTD. ARE THE PAYMENT S TO NON- BANKING FINANCIAL COMPANIES. THE RECIPIENTS HAVE T AKEN THE SAID AMOUNTS FOR COMPUTING THEIR INCOMES AND THEREF ORE IN VIEW OF THE PROVISO TO SECTION 40(A)(IA) NO DISALLOWANCE IS CALLED FOR IN RESPECT OF THESE AMOUNTS. AS REGARDS THE EXCAVA TION CHARGES OF RS. 29,36,331/- THE LD. AR HAS SUBMITTED THAT TH E PAYMENT TO A SINGLE PERSON ON A SINGLE DAY WAS NOT MORE THAN R S. 20,000/- AND THEREFORE THE PROVISIONS OF TDS ARE NOT APPLICA BLE ON SAID AMOUNT. THUS THE LD. AR HAS SUBMITTED THAT THE DIS ALLOWANCE IS NOT CALLED FOR. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE IS RAISING THESE ISSUES WITHOUT FURNIS HING THE DETAILS BEFORE THE AUTHORITIES BELOW. HE HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 50. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE NOTE THAT OUT OF THE TOTAL DISALLOWANCE OF RS. 57,28,877/- THE CIT(A) HAS DELETED THE DISAL LOWANCE TO THE EXTENT OF RS. 26,15,382/- AS PART OF THE DISALL OWANCE MADE U/S. 40A(3). THE ASSESSEE HAS RAISED VARIOUS POINT S BEFORE US ITA NOS. 259 & 295/BANG/2014 PAGE 68 OF 76 THAT IN SOME OF THE PAYMENTS THE ASSESSEE HAS ALREA DY DEDUCTED TAX AT SOURCE OF RS. 34,07,790/-. THE INTEREST PAY MENT OF RS. 31,078/-, RS. 31,410/- AND RS. 1,06,676/- ARE I N RESPECT OF CAR LOAN, JCB LOAN AND TIPPER LOAN PAID TO KOTAK MA HINDRA LTD. AND SUNDRAM FINANCE LTD. THUS IT IS CONTENTED THAT THESE TWO RECIPIENTS ARE NON-BANKING FINANCIAL COMPANIES AND HAVE INCLUDED THESE INTERESTS AMOUNTS IN THEIR INCOME OF FERED TO TAX AND THEREFORE NO DISALLOWANCE CAN BE MADE FOR NON D EDUCTION OF TDS. THE LD. AR HAS UNDERTAKEN TO PRODUCE THE NECE SSARY CERTIFICATE IN THIS RESPECT. AS REGARDS THE EXCAVA TION CHARGES OF RS. 29,36,331/- THE LD. AR HAS SUBMITTED THAT EACH INDIVIDUAL PAYMENT TO SINGLE PERSON IS LESS THAN RS. 20,000/- AND THE AGGREGATE PAYMENT TO THE SAME PERSON IN THE FINANCI AL YEAR IS LESS THAN RS. 75,000/-. THEREFORE THE PROVISIONS O F TDS ARE NOT APPLICABLE AND CONSEQUENTLY THE DISALLOWANCE U/S. 4 0(A)(IA) IS NOT ATTRACTED. SINCE ALL THESE ASPECTS GO TO THE R OOT OF THE MATTER AND HAVE NOT BEEN CONSIDERED BY THE AUTHORITIES BEL OW THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN THE INTEREST OF JUSTICE WE REMIT THIS ISSUE OF DISALLOW ANCE U/S. 40(A)(IA) WHICH HAS BEEN CONFIRMED BY THE CIT(A) TO THE RECORD OF THE AO FOR PROPER VERIFICATION AS WELL AS CONSID ERING THE ITA NOS. 259 & 295/BANG/2014 PAGE 69 OF 76 FACTS AS CLAIMED BY THE ASSESSEE. NEEDLESS TO SAY THE ASSESSEE BE GIVEN AN OPPORTUNITY OF HEARING BEFORE DECIDING THE ISSUE AS PER LAW. 51. GROUND NO. 20 IS REGARDING THE ADDITION ON ACCOUNT OF INTEREST ON NSC. THE AO MADE AN ADDITION OF RS. 22,610/- ON ACCOUNT OF INTEREST ON NSC. WE HAVE HEARD THE LD. AR AS WE LL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THIS ISSUE WAS CONSIDERED BY THE COORD INATE BENCH OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2008-09. THIS ISSUE IS COMMON TO THE ISSUE RAISED FOR THE ASSESSMENT YEAR 2008-09 AND WE HAVE DECIDED THE SAME VIDE ORDER DATED 05.05 .2017 IN ITA NOS. 220 TO 222 & 292 TO 294/BANG/2014 IN PARA 5 AS UNDER. 5.GROUND NO. 5 IS REGARDING THE ADDITION ON ACCOUNT OF CANCELLATION OF NSC OF RS. 1,21,882/-. THE ASSESSE E PURCHASES NSC BEFORE PRESENTING TENDERS FORM FOR GOVERNMENT W ORKS (CIVIL). A DIARY ENTRY WAS FOUND IN RESPECT OF RS. 1,21,882/ - RECEIVED ON MATURITY OF NSC AND ALSO ON CANCELLATION OF NSC. T HE AO MADE AN ADDITION OF THE SAID AMOUNT. THE ASSESSEE CHALL ENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SU CCEED. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDE RED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOT E THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE COORDINATE BE NCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 30.11.2015 IN ITA NO. 904/BANG/201 5 IN PARA 20- 23 AS UNDER. 20. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS N OT FURNISHED THE DETAILS OF NSC AND HOW THE SAID INVES TMENT IS REFLECTED IN THE BOOKS , ALSO THE SAID ENCASHMENT OF NSC HAS NOT BEEN REFLECTED AS RECEIPTS I N THE REGULAR BOOKS OF ACCOUNT . AS REGARDS WITHDRAWAL OF CASH FROM ATM , THE AO OBSERVED ITA NOS. 259 & 295/BANG/2014 PAGE 70 OF 76 THAT THE ASSESSEE HAS NOT EXPLAINED HOW THE SA I D CASH I S REFLECTED IN THE BOOKS . ACCORD I NG TO THE AO , THE ASSESSEE ' S EXP L ANA TI O N THAT THERE ARE SUFFICIENT WITHDRAWALS WAS NOT CONVINCING . HENCE THE AO ASSESSED THE SAID RECEIPTS OF RS . 10 , 006 AS INCOME FROM UNEXPLAINED RECEIPTS . 21 . BEFORE THE CIT(APPEALS) , THE ASSESSEE REITERATED THE SUBMISS I ONS MADE BEFORE THE AO. 22 . THE CIT(APPEALS) HELD THAT THE ASSESSEE HAS NOT FIL ED ANY DETAILS IN SUPPORT OF HIS CLAIM OF NSC AND DEPE NDED ONLY ON ATM DRAWINGS AND HENCE IN THE ABSENCE OF DETAILS , HE UPHELD THE ADDITION MADE BY THE AO . 23 . WE HAVE HEARD BOTH THE PARTIES. WE ARE OF THE OPINI ON THAT ONE MORE OPPORTUNITY IS TO BE AFFORDED TO THE ASSESSEE TO EXPLAIN HIS CASE BEFORE THE AO AS IT IS STATED THAT THE ASSESSEE HAS SUFFICIENT WITHDRAWALS FROM HIS CAPITA L ACCOUNT AND THE SOURCE IS EXPLAINED. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAM INATION AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. 6.FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL WE SE T ASIDE THIS ISSUE TO THE RECORD OF THE AO FOR FRESH EXAMINATION AND A DJUDICATION IN SAME TERMS OF THE EARLIER ORDER DATED 30.11.2015. IN VIEW OF OUR FINDING ON THIS ISSUE FOR THE ASSESS MENT YEAR 2008-09 THIS ISSUE STANDS DISPOSED OF IN SAME TERMS . ITA NOS. 259 & 295/BANG/2014 PAGE 71 OF 76 52. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS. 53. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQU IRE ANY SPECIFIC ADJUDICATION. 54. GROUND NOS. 2 AND 3 ARE REGARDING THE ADDITION MADE ON ACCOUNT SALE AND PURCHASE OF MATERIAL WHICH WAS RES TRICTED BY THE CIT(A) TO GP RATE. THIS ISSUE IS COMMON AS TO THE GROUND NOS. 2 AND 13 OF THE ASSESSEES APPEAL. IN VIEW OF OUR FINDING ITA NOS. 259 & 295/BANG/2014 PAGE 72 OF 76 ON THIS ISSUE WHILE DEALING WITH THE ASSESSEES APP EAL THESE GROUNDS OF THE REVENUES APPEAL STANDS DISMISSED. 55. GROUND NO. 4 IS REGARDING THE ADDITION MADE ON ACCO UNT OF HAND LOAN OF RS. 1,90,000/-. WE HAVE HEARD THE LD. DR A S WELL AS LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE CIT(A) HAS DIRECTED THE AO TO VERIFY THE BOOKS OF A CCOUNTS OF THE ASSESSEE WITH REFERENCE TO THE DETAILS IN RESPE CT OF THIS AMOUNT OF RS. 1,90,000/-. WHILE DEALING WITH THE G ROUND NO. 7 OF THE ASSESSEE WE SET ASIDE THIS ISSUE TO THE RECO RD OF THE AO FOR VERIFICATION OF AVAILABILITY OF FUNDS WITH THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE RECORD OF THE AO FOR VERIFICATION OF BOOKS OF ACCOUNTS AS WELL AS AVAILA BILITY OF FUND. 56. GROUND NO. 5 IS REGARDING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED PAYMENT WHICH WAS DELETED BY THE CIT(A). THE AO NOTED THAT AS PER THE DIARY ENTRY D ATED 20.01.2011 A PAYMENT OF RS. 4 CRORES WAS MADE TO SH RI K.R. BALLARY. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THIS FIGURE OF RS. 4 CRORES WAS WRONGLY MENTIONED AS THE CORREC T AMOUNT IS RS. 4 LAKHS. THE AO DID NOT ACCEPT THIS EXPLANATIO N OF THE ASSESSEE AND MADE AN ADDITION OF RS. 3,96,00,000/- AFTER ITA NOS. 259 & 295/BANG/2014 PAGE 73 OF 76 ALLOWING THIS AMOUNT OF RS. 4 LAKHS AS EXPLAINED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF TH E AO BEFORE THE CIT(A) AND CONTENTED THAT THE CORRECT AMOUNT IS RS. 4 LAKHS PAID TO SHRI K.R. BALLARY TOWARDS THE PAYMENT OF SI TE EXPENSES UNDER VARIOUS HEADS OF EXPENDITURE BUT BY OVERSIGHT THE SAME AMOUNT IS WRITTEN AS RS. 4 CRORES. AFTER CONSIDERI NG THE ENTRIES OF THE RECEIPT AS WELL AS INNER COLUMN OF THE DIARY THE CIT(A) DIRECTED THE AO TO VERIFY THE BOOKS OF ACCOUNTS OF THE ASSESSEE WITH REFERENCE TO THE DETAILS FILED BY THE ASSESSEE AND THEN DECIDED WHETHER THE ENTRY REPRESENTS RS. 4 CRORES O R RS. 4 LAKHS. 57. BEFORE US THE LD. DR HAS SUBMITTED THAT WHEN THE AS SESSEE IS WRITING EACH AND EVERY MINUTE DETAILS OF DAILY AFFA IRS IN THE DIARY THEN IT IS NOT POSSIBLE THAT THE ASSESSEE COU LD HAVE COMMITTED SUCH A MISTAKE OF WRITING AN AMOUNT OF RS . 4 CRORES INSTEAD OF RS. 4 LAKHS. HE HAS RELIED UPON THE ORD ERS OF THE ASSESSING OFFICER. 58. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE HAS SU BMITTED THAT IT IS ONLY A BONAFIDE MISTAKE AND INADVERTENT ERROR IN WRITING THE AMOUNT. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE FILED THE AFFIDAVIT OF SHRI K.R. BALLARY IN EXPLAINING THE FA CTS OF CORRECT ITA NOS. 259 & 295/BANG/2014 PAGE 74 OF 76 AMOUNT. HE HAS ALSO REFERRED TO THE DIARY ENTRIES AT PAGE 99 AND 100 OF THE PAPER BOOK AND SUBMITTED THAT THE TOTAL SUM OF RS. 10 LAKHS IS SHOWN AS PAID IN THE BRACKETS. THE BRE AKUP OF THE SAID AMOUNT IS GIVEN AS GIVEN AS RS. 6 LAKHS PAID O N 07.01.2011 AT PAGE 100 OF THE PAPER BOOK AND RS. 4 LAKHS PAID ON 20.01.2011. THEREFORE THE AGGREGATE TOTAL OF THESE TWO AMOUNTS IS CLEARLY WRITTEN AS RS. 10 LAKHS WHICH SHOWS THAT THIS AMOUNT IS ONLY RS. 4 LAKHS AND NOT RS. 4 CRORES. 59. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE FIND THAT THE AO HAS TAKEN TH IS AMOUNT OF RS. 4 CRORES AS PER DIARY ENTRY DATED 20.01.2011. WE NOTE THAT THE ENTRY CLEARLY SHOWS THE PAYMENT TO SHRI K.R. BA LLARY AND TOTAL AMOUNT WITHIN BRACKET IS SHOWN AS RS. 10 LAKH S. THE BREAKUP OF THE SAID AMOUNT IS FURTHER SHOWN WITH TH E DIARY ENTRY DATED 17.01.2011 OF RS. 6 LAKHS AND THE BALAN CE IS APPARENTLY OF RS. 4 LAKHS WHICH IS WRITTEN AS RS. 4 CRORES ON 20.01.2011. THEREFORE BY CONSIDERING ALL THE DETAI LS IN RESPECT OF THESE ENTRIES WE HAVE NO DOUBT IN OUR MIND THAT THE TOTAL AMOUNT REFLECTED IN THE DIARY ENTRY IS RS. 10 LAKHS PAID TO SHRI K.R. BALLARY COMPRISING OF THE PAYMENT OF RS. 6 LAKHS ON 17.01.2011 AND BALANCE OF RS. 4 LAKHS PAID ON 20.01 .2011. ITA NOS. 259 & 295/BANG/2014 PAGE 75 OF 76 HOWEVER THIS AMOUNT OF RS. 4 LAKHS IS SHOWN AS RS. 4 CRORES. THEREFORE IT IS APPARENT THAT THERE IS A MISTAKE IN WRITING THIS AMOUNT OF RS. 4 CRORES INSTEAD OF RS. 4 LAKHS. IN VIEW OF THE ABOVE FACTS AS MANIFEST FROM THE DIARY ENTRIES WE D IRECT THE AO TO CONSIDER THIS ISSUE BY TAKING INTO ACCOUNT ALL R ELEVANT DETAILS AS WELL AS THE EXPLANATION AND AFFIDAVIT FILED BY T HE ASSESSEE. THIS GROUND OF THE REVENUES APPEAL IS DISMISSED. 60. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MAY, 2017 SD/- SD/- (S. JAYARAMAN) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 19 TH MAY, 2017. / MS/ ITA NOS. 259 & 295/BANG/2014 PAGE 76 OF 76 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.