ITO, Visakhapatnam V. Pursrla Subash, Visakhapatnam

ITA 483/VIZ/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6339 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: C V S MURTHY
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Salary income; Loose papers; Additional evidence
• Section: 69C; 143(3); 142(1); 133A; 147; 131; 68; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I .T.A.NO S . 472 & 473 /VIZ/201 7 ( / A . Y S : 2007 - 2008 AND 2010 - 11 ) P USARLA SUBHASH PROP.SAGAR DURGA DEVELOPERS DOOR NO.15 - 13 - 6, KRISHNANAGAR MAHARANIPETA, VISAKHAPATNAM [PAN : AIGPP2446K] VS. ADDITIONAL COMMISSIONER OF INCOME TAX RANGE - 1 VISAKHAPATNAM ./ I .T.A.NO S . 474 & 475 /VIZ/201 7 ( / A . Y S : 2011 - 2012 AND 2012 - 13 ) P USARLA SUBHASH PROP.SAGAR DURGA DEVELOPERS DOOR NO.15 - 13 - 6, KRISHNANAGAR MAHARANIPETA, VISAKHAPATNAM [PAN : AIGPP2446K] VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 1(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO S . 481 - 486 /VIZ/201 7 ( / A . Y S : 2007 - 2008 TO 2012 - 13 ) INCOME TAX OFFICER WARD - 1(4) VISAKHAPATNAM VS. P USARLA SUBHASH PROP.SAGAR DURGA DEVELOPERS DOOR NO.15 - 13 - 6, KRISHNANAGAR , MAHARANIPETA, VISAKHAPATNAM [PAN : AIGPP2446K] ( / APPELLANT) ( / RESPONDENT) / ASSESSEE BY : SHRI C.V.S.MURTHY, AR / REVENUE BY : SHRI D.K.SONOWAL, CIT DR / SHRI V.APPALA RAJU, DR / DATE OF HEARING : 02.01.2019 / DATE OF PRONOUNCEMENT : 25 .01.2019 2 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: TH E S E APPEAL S ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 2 , GUNTUR DATED 2 2 .0 6 .201 7 FOR THE ASSESSMENT YEAR S (A.Y S .)200 7 - 0 8 , 2010 - 11 TO 2012 - 13 AND BY THE REVENUE FOR THE A.Y S .200 7 - 08 TO 2012 - 13 . SINCE THE GROUNDS RAISED AND THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON THE APPEAL S ARE CLUBBED , HEARD TOGETHER AND DISPOSED OFF IN COMMON ORDER FOR THE SAKE OF CONVE NIEN CE AS UNDER. 2. THE FACTS ARE COMMON FOR ALL THE APPEALS AND EXTRACTED FROM THE A.Y.2007 - 08. T HE ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS AND FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,68,531/ - . FOR THE ASSESSMENT YEARS UNDER CONSIDERATION THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME @8% ON GROSS RECEIPTS . A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THIS CASE IN THE BUSINESS PREMISES OF SRI PUSARLA SUBHASH, PROP. M/S SAGAR DURGA DEVELOPER ON 10.02.2011. DURING THE COURSE OF SURVEY, EVIDENCES WERE FOUND IN RESPECT OF UNACCOUNTED INCOME AND UNEXPLAINED INVESTMENT IN THE REAL ESTATE 3 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM BUSINESS. THEREFORE, THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT S U/S 147 AND ISSUED THE NOTICE U/S 148 WHICH WERE SERVED ON THE ASSESSEE. SUBSEQUENTLY, NOTICES U/S 143(2) AND 142(1) WE RE ISSUED AND THE ASSESSMENTS WERE COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT , 1961 (HEREINAFTER CALLED AS ACT) FOR THE A.Y. 2007 - 08 TO 2012 - 13 ON TOTAL INCOME AS UNDER : A.Y. RETURN OF INCOME FILED (IN RS.) ASSESSED INCOME (IN RS.) 2007 - 08 1,68,531 4,38,16,100 2008 - 09 1,50,048 3,78,47,370 2009 - 10 2,25,880 4,82,10,079 2010 - 11 7,75,530 4,04,60,410 2011 - 12 15,99,084 3,07,56,629 2012 - 13 15,51,226 82,46,920 2.1 DURING THE COURSE OF SURVEY , INCRIMINATING MATERIAL IN THE FORM OF BOOKS OF ACCOUNTS, DOCUMENTS/DIARIES, LOOSE PAPERS, LAP TOP AND CPU WAS FOUND IN THE BUSINESS PRE MISES OF THE ASSESSEE WHICH WAS IMPOUNDED U/S 131 OF THE ACT ON 10.02.2011. THE AO VERIFIED THE MATERIAL AVAILABLE IN THE BUSINESS PREMISES OF THE ASSESSEE DURING THE COURSE OF SURVEY AND FOUND THAT MATERIAL CONTAIN THE INFORMATION FOR 13 REAL ESTATE PROJECTS AND THE ASSESSEE HAS ADMITTED THE INCOME ONL Y FROM THE FOLLOWING PROJECTS DURING THE PERIOD UNDER CONSIDERATION. 4 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM (I) SAGAR SQUARE (II) DURGALAMMA DWELLINGS (III) KNR PLAZA. (IV) NAGAMALLI ENCLAVE T HE BOOKS OF ACCOUNTS, LOOSE SHEETS AND DOCUMENTS FOUND EVIDENCING THE DEVELOPMENT AND CONSTRUCTION OF 8 OTHER PROJECTS AND THE ASSESSEE DID NOT ADMIT THE INCOME FROM THE UNDER MENTIONED PROJECTS (OTHER PROJECTS ) . THE MATERIAL WAS FOUND RELATING TO THE FOLLOWING PROJECT S DURING THE SURVEY WHICH WAS DENIED BY THE ASSESSEE: ( I ) GOKUL GRANDEUR (SIT A RESIDENCY, NEAR GOKUL THEATRE) ( II ) CHINA WALTAIR ( III ) CHINNAMVARI STREET ( IV ) MADHURA NAGAR - 1 (APARNA APARTMENTS) ( V ) PEDAWALTAIR (GAYATRI RESIDENCY) ( VI ) PRAKASHRAOPETA (VISHNU APARTMENT) ( VII ) SOLDIER PETA ( VIII ) MADHURA NAGAR - 2 (MADHURA MEADOWS) 2.2. THE AO FOUND FROM THE INCRIMINATING MATERIAL THAT THE ASSESSEE HAS MAINTAIN ED THE BOOKS OF ACCOUNTS AND OTHER DETAILS RELATING TO THE ABOVE PROJECTS IN THE NAMES OF LANDMARKS SITUATED NEAR THE CONSTRUCTION SITE LIKE CHINAWALTAIR, PEDAWALTAIR, DURGALAMMA DWELLINGS, SAGAR SQUARE (CMR), VETERINARY HOSPITAL AND MADHURANAGAR ETC. FROM THE IMPOUNDED MATERIAL, THE AO OBSERVED THAT THE ASSESSEE HAS CARRIED OUT 12 PROJECTS, HOWEVER, IN THE STATEMENT RECORDED U/S 131, ACCEPTED THE CONSTRUCTION IN THE FOLLOWING PROJECTS : 5 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM ( I ) NAGA MALLI ENCLAVE ( II ) SAGAR SQUARE ( III ) DURGALAMMA DWELLINGS ( IV ) KNR PLAZA ( V ) FOR MADHURANAGAR 2D PROJECT, THE ASSESSEE STATED THAT HE IS ASSOCIATED WITH IT AND PURCHASED THE LAND ( VI ) IN RESPECT OF MADHURAWADA CONSTRUCTIONS, HE STATED THAT THE PROJECT IS YET TO BE COMMENCED. IN RESPECT OF THE REMAINING 7 OTHER PROJECTS, THE ASSESSEE DENIED HAVING CARRIED OUT ANY CONSTRUCTION ACTIVITY AND SUBMITTED THAT THOSE 7 PROJECTS WERE NOT RELA TED TO HIM AND THEY WER E CARRIED O UT BY OTHER PERSONS. IN REPLY TO Q.NO.38 OF THE STATEMENT REC ORDED U/S 131 ON 10.02.2011, THE ASSESSEE G AVE A REPLY STATING THAT THE ACCOUNTS OF THE PROJECTS MENTIONED IN THE LAPTOP WERE PREPARED BY HIS WIFE, MRS DEEPIKA FOR THE PURPOSE OF BANK LOANS. THE DATA WAS TAKEN FROM THE RESPECTIVE SITE PROMOTERS AND WAS DE SIGNED FOR TWO PARTNERSHIP FIRMS BY EDITING AND ADDING FIGU RES IN LIEU OF ATTRACTING BANK AUTHORITIES FOR OBTAINING THE LOANS. SEVERAL DEBT EQUITY RATIOS W E RE TAKEN AS ADVICES FROM SEVERAL AUDITORS NAMELY SHRI E.S.R.C.MURTHY AND OTHERS. IN A NUT SHELL, THE ASSESSEE CONTENDED THAT THE PROJECTS WERE NOT RELATING TO THE ASSESSEE AND THE ASSESSEES WIFE HAS COLLECTED THE DATA FOR THE PURPOSE OF BANK LOANS. HOWEVER, THE LAPTOP I MPOUNDED VIDE A/PS/106 CONTAIN THE DAY TO DAY ACCOUNTS REGARDING PURCHASE OF LAND , VARIOUS OTHER EXPEN SES RE LATING TO CONSTRUCTION, DETAILS OF RECEIPTS FROM CUSTOMERS, PAYMENTS MADE TO VARIOUS 6 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM GOVERNMENT AGENCIES FOR OBTAINING PLAN APPROVALS ETC. AND THE DETAILS OF INVESTMENTS IN EACH PROJECT. THE AO VERIFIED THE PAYMENTS AND RECEIPTS , PROJECT - WISE AS PER THE SEIZED MATERIAL AND ARRIVED AT THE RECEIPTS AND PAYMENTS PROJECT WISE AS PER THE MATERIAL FOUND IN SURVEY , MARKED AS ANNEXURE A/PS/4 FOR MADHURA M EADOWS, PAGE NO. 13 TO 14, A/PS/8 IN RESPECT OF MADHURA NAGAR, APARNA APARTMENTS, A/ PS/57 IN RESPECT OF PEDAWALTAIR PROJECT (GAYATRI RESIDENCY), A/PS/30 IN RESPECT OF GOKUL GRANDEUR (SITA RESIDENCY) ETC. AS PER THE WORKING OF THE AO, THE TOTAL UNACCOUNTED RECEIPTS AND UNACCOUNTED PAYMENTS, PROJECT WISE AND YEAR WISE ARE AS UNDER 2007 - 08 SL. NO. NAME OF THE PROJECT RECEIPTS RS. PAYMENTS INTEREST RS. MISC RS. OWNER RS. OTHERS RS. 1 CHINNAMVARI STREET 93000 83061 146385 62000 125098 2 CHINA WALTAIR 76197 410362 3 CMR/SAGAR SQUARE 242437 1500000 1133205 4 DURGALAMMA DWELLINGS 25387 1800000 515255 5 MADHURA NAGAR 2D/ MADHURA MEADOWS 10259750 253479 6 MADHURA NAGAR - 1 (MN - 1) 11388790 9771750 7 PEDAWALTAIR CONSTRUCTION 1473814 11009000 301945 8 SOLDIER PETA 135903 255739 9 PRAKASHRAOPETA 35251 216050 TOTAL 11481790 2300540 146385 34402500 3211133 7 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 2008 - 09 SL. NO. NAME OF THE PROJECT RECEIPTS RS. PAYMENTS INTEREST RS. MISC RS. OWNER RS. OTHERS RS. 1 CHINNAMVARI STREET 1007440 364217 419511 29250 2088631 2 CHINA WALTAIR 3538525 370280 2855738 3 CMR/SAGAR SQUARE 4283000 844239 630928 2120000 4 DURGALAMMA DWELLINGS 742535 306000 999883 5 MADHURA NAGAR 2D/ MADHURA MEADOWS 5359900 100000 776217 6 MADHURA NAGAR - 1 (MN - 1) 4408900 7 PEDAWALTAIR CONSTRUCTION 5327000 2438941 2526885 8 SOLDIER PETA 514882 349589 9 VETERINARY HOSPITAL (KNR PLAZA) 802294 3630000 165801 10 PRAKASHRAOPETA 50000 474067 3945535 TOTAL 23974765 6551455 1050439 6185250 13708279 2009 - 10 SL. NO. NAME OF THE PROJECT RECEIPTS RS. PAYMENTS INTEREST RS. MISC RS. OWNER RS. OTHERS RS. 1 CHINNAMVARI STREET 4395620 405933 239509 11250 1297174 2 CHINA WALTAIR 4795500 140584 1841129 3 CMR/SAGAR SQUARE 3352000 583729 2920663 396000 4 DURGALAMMA DWELLINGS 4200000 1116576 902250 1105116 5 MADHURA NAGAR 2D/ MADHURA MEADOWS 5233335 814954 5259625 6 MADHURA NAGAR - 1 (MN - 1) 118500 7 PEDAWALTAIR CONSTRUCTION 1674500 2797087 2675534 8 SOLDIER PETA 6494050 227397 4295655 9 PRAKASHRAOPETA 8735000 449523 980000 1120885 10 VETERINARY HOSPITAL (KNR PLAZA) 1096696 981118 11 GOKUL GRANDEUR (SITA RESIDENCY) DEEPIKA 94441 532500 78900 TOTAL 3 8998505 7726920 3160172 282200 18665106 8 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 2010 - 11 SL. NO. NAME OF THE PROJECT RECEIPTS RS. PAYMENTS INTEREST RS. MISC RS. OWNER RS. OTHERS RS. 1 CMR/SAGAR SQUARE 7035992 376044 42000 3488598 2 DURGALAMMA DWELLINGS 6614500 792763 7252026 3 MADHURA NAGAR 2D/ MADHURA MEADOWS 8581400 1155070 2539905 4 PEDAWALTAIR CONSTRUCTION 17928000 2685390 900000 2873778 5 PRAKASHRAOPETA 1900000 101200 6 VETERINARY HOSPITAL (KNR PLAZA) 4548011 1439935 3085369 7 GOKUL GRANDEUR (SITA RESIDENCY) DEEPIKA 680000 1644000 3289227 TOTAL 47287903 6449202 0 2586000 22630103 2011 - 12 SL. NO. NAME OF THE PROJECT RECEIPTS RS. PAYMENTS INTEREST RS. MISCRS. OWNER RS. OTHERS RS. 1 CMR/SAGAR SQUARE 1291787 13500 270941 2 DURGALAMMA DWELLINGS 8549898 190980 383730 3 MADHURA NAGAR 2D/ MADHURA MEADOWS 3209333 76052 4 PEDAWALTAIR CONSTRUCTION 9739962 5 VETERINARY HOSPITAL (KNR PLAZA) 11072757 653205 2305076 6 GOKUL GRANDEUR (SITA RESIDENCY) DEEPIKA 9089550 983999 5231080 TOTAL 42953287 1917736 654671 0 7536156 2.3. T HE AO PROPOSED TO ESTIMATE THE INCOME ON GROSS RECEIPTS AND TO MAKE THE ADDITION OF UNACCOUNTED PAYMENTS SEPARATELY AND GIVEN AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME SHOULD NOT BE ESTIMATED O N THE UNACCOUNTED RECEIPTS AND WHY THE EXPENDIT URE SHOULD NOT 9 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM BE ADDED U/S 69C OF THE ACT AS THE SAME WAS FOUND TO BE UNRECORDED . SINCE TH ERE WAS NO PROPER EXPLANATION FROM THE ASSESSEE, THE AO ESTIMATED THE INCOME @12% ON UNACCOUNTED RECEIPTS, (I.E. RECEIPTS FOUND AS PER THE IMPOUNDED MATERIAL MINUS THE RECEIPTS ADMITTED BY THE ASSESSEE ) AND MADE THE ADDITION OF UNACCOUNTED PAYMENTS SEPARATELY. ACCORDINGLY, THE AO MADE THE ADDITION OF INCOME FROM REAL ESTATE BUSINESS ON UNACCOUNTED RECEIPTS AND THE UNEXPLAINED EXPENDITURE FOR THE A.Y. 2007 - 08 TO 2011 - 12 AS UNDER : 2.4 . THE AO ALSO MADE SEPARATE ADDITIONS ON ACCOUNT OF UN SECURED LOANS ACCEPTED DURING THE IMPUGNED ASSESSMENT YEARS FOR NON FURNISHING OF CONFIRMATION LETTERS, DEFECTIVE CONFIRMATION LETTERS, INSUFFICIENT CREDIT WORTHINESS ETC ., FOR THE ASSESSMENT YEARS FROM 2007 - 08 TO 2012 - 13 AS UNDER : A.Y. UNACCOUNTED RECEIPTS (IN RS.) ESTIMATION OF INCOME ON UNACCOUNTED RECEIPTS@12% (IN RS.) UNEXPLAINED EXPENDITURE (IN RS.) 2007 - 08 1,14,81,790 10,37,014 4,00,60,558 2008 - 09 2,39,74,765 25,01,899 2,74,95,423 2009 - 10 3,89,98,505 42,42,005 3,23,74,198 2010 - 11 4,72,87,903 40,93,178 3,16,65,305 2011 - 12 4,29,53,287 32,79,781 1,01,08,563 A.Y. AMOUNT (RS.) 2007 - 08 25.5 LAKHS 2008 - 09 77 LAKHS 10 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 2.5 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE PARTLY. AGAINST THE ORDER OF THE LD.CIT(A), BOTH THE REVENUE AND THE ASSESSEE FILED CROSS APPEALS. 3.0 . THE COMMON ISSUES IN REVENUE APPEALS FOR ALL THE ASSESSMENT YEARS ARE (I) E STIMATION OF INCOME O N UNDISCLOSED GROSS RECEIPTS (II) ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE /PAYMENTS AND (III ) U NSECURED LOANS. 4.0 . ESTIMATION OF INCOME ON UNDISCLOSED GROSS RECEIPTS . T HIS ISSUE IS INVOLVED FOR THE A.YS 2007 - 08 TO 201 1 - 12. T HE AO FOUND UNDISCLOSED GROSS RECEIPTS DURI NG THE COURSE OF SURVEY WHICH WAS WORKED OUT PROJECT WISE AND THE ASSESSMENT YEAR WISE IN THE PRECEDING PARAGRAPH NO.2 . THOUGH THE ASSESSEE DENIED HAVING UNDER TAKEN 7 PROJECTS REFERRED TO ABOVE , BASING ON THE MATERIAL FOUND DURING THE SURVEY, T HE AO HELD THAT ALL THE PROJECTS WERE BELONGED TO THE ASSESSEE AND ACCOUNTED THE RECEIPTS PARTLY IN THE BOOKS OF ACCOUNTS. EVEN IN THE CASE OF PROJECTS OWNED BY THE ASSESSEE, IT WAS FOUND A.Y. AMOUNT (RS.) 2009 - 10 82.3 LAKHS 2010 - 11 21.5 LAKHS 2011 - 12 112.45 LAKHS 2012 - 13 17 LAKHS 11 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM THAT THE ASSESSEE HAD ACCOUNTED THE RECEIPTS PARTLY ( I.E. NAGAMALLI ENCLAVE, SAGAR SQUARE, DURGALAMMA DWELLINGS, KNR PLAZA, ) . THE AO QUANTIF IED THE UNACCOUNTED RECEIPTS FROM ALL THE PROJECTS DULY REDUCING THE ADMITTED RECEIPTS IN THE RETURNS OF INCOME AND ESTIMATED THE INCOME ON THE NET UNACCOUNTED R ECEIPTS @12% OF THE GROSS RECEIPTS AND THE SAME WAS BROUGHT TO TAX AS UNACCOUNTED INCOME IN THE REAL ESTATE BUSINESS. 4.1 ON APPEAL, THE LD.CIT(A) OBSERVED THAT ALL 13 PROJECTS (ONE YET TO TAKE OFF) WERE NOT CARRIED OUT BY THE ASSESSEE AND THEY WERE CARRIED OUT BY VARIOUS OTHER / PERSONS. THE LD. CIT(A) VERIFIED THE STATEMENT S RECORDED FROM THE ASSESSEE ON 14 . 02 . 2011 , WHEREIN, THE ASSESSEE IN QUESTION NO.40 FURNISHED THE DETAILS OF PROJECTS UNDERTAKEN BY HIMSELF AND VARIOUS OTHER PERSONS AS UNDER: 'Q. 40. PLEASE FURNISH PROJECT WISE DETAILS OF THE ABOVE PROJECTS ? I FURNISH HEREWITH THE PROJECT WISE DETAILS AS UNDER: 1 . CHINNAMVA RI STREET (00023) 1 - APR - 2005 TO 31 - MARCH - 2010 T HIS IS SITUATED IN ONE TOWN ARE , SIVALAYAM STREET, VSP - DEVELOPED BY PLAKSHM I , W / O P . V.SATYARARAYANA RESIDING AT D. NO 43 - 19 - 1, T . S. N COLONY, VSP - 16, P. LAKSHMI IS SISTER OF N. NOOKARAJU WHO WAS MY FATHER'S FRIEND. 2 . CHINNAWALTAIR (00027) 1 - APR - 2006 TO 31 - MARDI - 2010 THIS PROJECT IS SITUATED AT NEARBY DURGAMAHALAKSHMI ARCH, CHINNAWALTAIR, VISAKHAPATNAM DEVELOP ED BY A.MANGARAJU, D.NO.12 - 43 - 2, GOWSYA STREET, INDIRA COLONY, GAJUWAKA, VISAKHAPATNAM. HE WAS WORKING UNDER MY FATHER FROM 2000 - 2005 AND HAS BEEN ASSOCIATED WITH US TILL DATE. 3. CMR OPPD(10005) 1 - APR - 2006 TO 31 - MARCH - 2011 12 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM THIS PROJECT WAS DONE BY ME. I T IS NEAR PRAKASARAOPETA, ADJACENT TO HOTEL VI JAYABHANU VISAKHAPATNAM. LANDLORD NAME IS V.VIDYASAGAR, 12 - 11 - 1, SAGAR SQUARE APARTMENTS, PRAKASAKAO PETS, VSP. 4. DURGALAMMA DWELLINGS (00004) 1 - APR - 2006 TO 31 - MARCH - 2011 THIS PROJECT WAS DONE BY ME. IT IS SITUATED NEAR POORNA MARKET, RRMR ROAD, VSP. THE O WNER / LANDLORD NAME IS SHRIP.VENKATARAMANA, 51 - 8 - 40 / 29 / 3, NAKKAVANIPALEM , S EETAMRNADHARA, VIS A KHAPATNAM - 13 5 . GOKUL GRANDEUR (10001) 1 - APR - 2008 TO 31 - MARCH - 2011 THIS PROJECT WAS DONE BY MY WIFE SMT.K.DEEPIKA UNDER DEVELOPMENT BASIS WITH LAND OWNER D.SITA DEVI, RESIDING AT NERELLA KONERU, 1 ST FLOOR OF SVS HIGH SCHOOL, ALLIPURAM, VSP. 6. K.DEEPIKA (00012) 1 - APR - 2009 TO 31 - MARCH - 2010 THIS IS NOT A PROJECT 7. MADHURANAGAR2D (10000) 1 - APR - 2006 TO 31 - MARCH - 2011 THIS PROJECT NAME IS MADHURA MEADOWS I AM ASSOCIATED AS LANDOWNER OF THE SITE. I HAVE PURCHASED THIS SITE FROM S SURYAKUMARI IN THE YEAR 2006. 8. MADHURAWDA CONSTRUCTION A/C (00054) 1 - APR - 2007 TO 31 - MARCH - 2011 THIS PROJECT IS YET TO START OF WHICH I HAVE INVESTED IN OBTAINING PLAN SITUATED IN B AKKAVANIPALEM, MADHURAWADA, VISAKHAPATN A M, THE SITE OWNERS ARE M . B.VENKAT RAO AND OTHERS. 9. MN - 1 A/C (10003) 1 - APR - 2006 TO 31 - MARCH - 2007 THIS PROJECT W A S TAKEN UP BY B. SIVA PRASAD WHO USED TO WORK UNTIL 2005, SINCE THEN HE WAS ASSOCIATED WITH US. HIS STATUS IS CONTRACTOR RESIDING AT 22 - 69 - 29 , VASANTA RAO STREET, VSP - 1. 10 . M.S.P (10002) 1 - APR - 2008 TO 31 - MARCH - 2010 M.MADHUSUDHAN PRABHU , WHO IS THE CONTRACTOR OF MADHURA MEADOWS, RESIDING AT 9 - 19 - 37, CBM COMPOUND, VISAKHAPATNAM, 11. PEDAWALTAIR CONSTRUCTION (00052) 1 - APR - 2006 TO 31 - MARCH - 2011 THE P ROJECT WAS TAKEN UP BY CONTRACTOR K.RAMYA LAVANYA DE VI , WIFE OF K. VENUGOPAL WHO WERE OUR FAMILY FRIENDS, RESIDING AT FLAT G - 5, GR. FLOOR, ROCKDALE RESIDENCY, ROCK DA L E LAYOUT, VSP. 12 . PRAKASA RAO PETA (00009) 1 - APR - 2006 TO 31 - MARCH - 2010 THIS PROJECT WAS TAKEN UP BY P.SATISH / WHO USED TO WORK UNDER MY FATHER UNTIL 13 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 2006. SINCE THEN HE WAS ASSOCIATED WITH US. HIS RESIDENCE ADDRE SS IS MVP COLONY, PLOT NA218, SECTOR - 5 F VSP - 17 13 . P.SUBHASH (00013) 1 - APR - 2009 TO 31 - MARCH - 2010 THIS IS NOT A PROJECT. 14 . P.SUBHASH (FROM 1 - APRIL 2009) (10004)1 - APR - 2009 TO 31 - M ARCH - 2010 THIS IS NOT A PROJECT. 15 . P.SUBHASH (FROM 1 - APRIL 2010) (10006) 1 - APR 2010 TO 31 - MARCH - 2011 THIS IS NOT A PROJECT. 16 . SH A RAT A/C. (10008) 1 - APR - 2007 TO 31 - MAR - 2011 SHARAT IS A PROPOSED INVESTOR IN ONE OF THE PARTNERSHIP FIRM WHICH WE THOUGHT OF INCORPORAT IN G. HE IS RESIDENT OF TENA L I, HIS FATHER IS A FRIEND OF MY FATHER. HIS CONTACT ADDRESS IN VISAKHAPATNAM IS T. CHANDRASEKHAR, F - I, FIRST FLOOR, BALAJI RESIDENCY, B ALAYYASASTRI LAYOUT, VSP MOB - 9948699918. ANOTHER ADDRESS IS GK1I PRASAD, NAVAL BASE EMPLOYEE, INDIAN NAVAL CANTEEN SERVIC E, VSP, MOB - 9949827216. 17 . SOLDIERPETA (00015) 1 - APR - 2006 TO 31 - MAR - 2009 THIS PROJECT IS SITUATED IN ONE TOWN AREA, IT WAS DONE BY CONTRACTOR P. CHITTI VARAHALA RAJU, BROTHER - IN - LAW OF N. NOOKARAJU, WHO IS FRIEND OF MY FATHER. HE IS RESIDENT OF DO N DAPARTHY BAZAR, VSP. HIS CONTRACT ADDRESS IS N. NOOKARAJU, C - I, 2 ND FLOOR, SAGER SQUARE, BESIDE ADJACENT TO HOTEL VIJ JAYA B HANU, PRAKASHRAO PETA, VSP. 18. VETERNARY HOSPITAL (00053) 1 - APR - 2007 TO 31 - MAR - 2011 THIS PROJECT IS TAKEN UP BY ME ON DEVELOPMENT BASIS. THE LAND OWNERS NAME IS KANDULA NAGARAJU, RESIDING AT D. NO. 33 - 4 - 28/2, ALLIPURAM, VSP - 4.' 4.2 . T HE L D.CIT(A) OBSERVED FROM STATEMENT AND SUBMISSIONS OF THE ASSESSEE THAT THE DETAILS OF 13 PROJECTS WERE FOUND DURING THE COURSE OF SURVEY AND THE PROJECTS UNDERTAKEN BY THE ASSESSEE AND OTHERS ARE AS UNDER: S.NO. NAME OF THE PROJECT OWNER 1. CHINNAMVARI STREET P.LAXMI 2. CHINNAWALTAIR A.MANGARAJU 3. CMR/SAGAR SQUARE ASSESSEE 4. DURGALAMMA DWELLINGS ASSESSEE 14 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 5. MADHURANAGAR 2D/ MADHURA MEADOWS ASSESSEE& M. MADHUSUDANPRABHU S.NO. NAME OF THE PROJECT OWNER 6. MADHURANAGAR - 1(MN - 1) B.SIVA PRASAD & UMA DEVI 7. PEDDAWALTAIR CONSTRUCTION K.RAMYALAVANYA 8. SOLDIER PETA PROJECT P.CHITTIVARAHALARAJU 9. PRAKASARAOPETA P.SATISH 10. K.N.R.PLAZA / VETERINERY HOSPITAL ASSESSEE 11. GOKUL GRANDEUR/SITA RESIDENCY K.DEEPIKA 12. NAGAMALLI ENCLAVE (PROJECT COMPLETED) ASSESSEE 13. MADHURAWADA CONSTRUCTIONS (ACTIVITY YET TO BEGIN) ASSESSEE 4.3 . T HE LD. CIT(A) ALSO OBSERVED THAT THE AO , SUBSEQUENT TO THE SURVEY U/S 133A CONDUCTED THE ENQUIRIES AND RECORDED THE S TATEMENTS FROM THE DEVELOPERS / CONTRACTORS WHO STATED TO HAVE TAKEN UP THE PROJECTS . THE OBSERVATIONS OF THE LD.CIT(A) FROM THE POST SURVEY ENQUIRIES ARE AS UNDER : THE ASSESSEE COULD REBUT THE BASIC P RESUMPTION CAST ON HIM AS PER SECTION 292C. THE ASSESSEE EITHER DURING SURVEY OR POST SURVEY NEVER ACCEPTED THAT THE OTHER 7 PROJECTS BELONGED TO HIM. THE POST SURVEY ENQUIRIES CARRIED BY THE AO BY SUMMONING DIFFERENT INDIVIDUALS LIKE MR.B.SIVA PRASAD - MA DHURANAGAR/MN - 1 PROJECT ANDSMTK.RAMYALAVANYA DEVI - PEDDAWALTAIR PROJECT, ONLY SUPPORTED THE CLAIM OF THE ASSESSEE. THE POST SURVEY SCRUTINY PROCEEDINGS IN THE CASES OF DIFFERENT INDIVIDUALS (WHOSE RECEIPTS HAVE BEEN CONSIDERED BY THE AO AS BELONGING TO THE ASSESSEE) BY DIFFERENT AOS, SHOW THAT THE DEPARTMENT IS TREATING THOSE PROJECTS AS BELONGING TO THOSE INDIVIDUALS BUT NOT TO THE ASSESSEE. 4.4 . THE LD. CIT(A) AFTER VERIFYING THE STATEMENTS RECORDED FROM THE ASSESSEE AND THE POST SURVEY ENQUIRIES , GIVEN A FINDING THAT O UT OF 13 PROJECTS FOUND IN THE IMPOUNDED MATERIAL, SIX PROJECTS WERE DEVELOPED BY 15 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM THE ASSESSEE AND SEVEN OTHER PROJECTS WERE CARRIED OUT BY OTHER PERSONS AND THE ASSESSEE HAD DISCHARGED THE BURDEN PLACED ON HIM U/S 292C OF THE ACT . ACCORDINGLY CONFIRMED THE ESTIMATION OF INCOME TO THE EXTENT OF 8% OF THE UNACCOUNTED RECEIPTS OF OWN PROJECTS AND DELETED THE REMAINING ADDITION. IN RESPECT OF 7 OTHER PROJECTS, THE LD.CIT(A) HELD THAT THE OTHER PROJECTS WERE CARRIED OUT BY THE PERSONS MENTIONED IN TABLE REFERRED TO IN PARA NO.4.2 AND THE RETURNS OF INCOME WERE FILED BY THE DEVELOPERS. T HE POST SEARCH ENQUIRIES ALSO REVEA LED THAT THE PROJECTS IN FACT WERE CARRIED OUT BY THE OTHER PERSONS AS PER THE DETAILS GIVEN IN THE STATEMENT, HENCE HELD THAT THE UNEXPLAINED EXPENDITURE OR THE ESTIMATION OF INCOME IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE , SINCE THE BURDEN PLACED ON THE ASSESSEE WAS EFFECTIVELY DISCHARGED. 5. AGAINST THE ORDER OF THE LD.CIT(A), THE REVENUE FILED THE APPEAL S CHALLENGING THE DELETION OF ESTIMATION OF INCOME ON ALL 13 PROJECTS . THE REVENUE ALSO CHALLENGED THE DELETION OF ADDITION ON ACCOUNT OF UNACCOUNTED PAYMENTS. THE ABOVE TWO ISSUES ARE INVOLVED IN THE A.YS 2007 - 08 TO 2011 - 12. DURING THE APPEAL HEARING, TH E LD.DR STRONGLY SUPPORTED THE ORDER OF THE AO AND THE LD.AR HEAVILY PLACED RELIANCE ON THE ORDER OF THE LD.CIT(A). 16 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE REVENUE APPEALS , WITH REGARD TO ESTIMATION OF INCOME TWO ISSUES ARE IN VOLVED. F IRST ISSUE IS THE RESTRICTION OF ESTIMATION OF INCOME TO 8 % BY THE LD.CIT(A) AS AGAINST THE ESTIMATION MADE BY THE AO @12% ON THE UNACCOUNTED RECEIPTS OF OWN PROJECTS OF THE ASSESSEE . THE SECOND ISSUE IS ESTIMATION OF INCOME ON OTH ER PROJECTS WHICH WAS DENIED BY THE ASSESSEE AND STATED TO HAVE CARRIED BY OTHERS ( IN SHORT OTHER PROJECTS) . THE THIRD COMMON ISSUE IS UNACCOUNTED PAYMENTS OF OWN PROJECTS AS WELL AS THE OTHER PROJECTS . IN THIS CASE, THERE ARE 13 PROJECTS FOR WHICH TH E MATERIAL WAS FOUND AND THE FOLLOWING PROJECTS WERE ACCEPTED BY THE ASSESSEE AS OWN PROJECTS : S.NO. NAME OF THE PROJECT OWNER 1 . CMR/SAGAR SQUARE ASSESSEE 2 . DURGALAMMA DWELLINGS ASSESSEE 3 . MADHURANAGAR 2D/ MADHURA MEADOWS ASSESSEE & M. MADHUSUDANPRABHU 4 . K.N.R.PLAZA / VETERINERY HOSPITAL ASSESSEE 5 . NAGAMALLI ENCLAVE (PROJECT COMPLETED) ASSESSEE 6 . MADHURAWADA CONSTRUCTIONS (ACTIVITY YET TO BEGIN) ASSESSEE 6.1 . FROM THE ABOVE, IT IS OBSERVED THAT THE SIX PROJECTS WERE CARRIED OUT BY THE ASSESSEE AND THE REMAINING 7 PROJECTS WERE STATED TO HAVE BEEN 17 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM CARRIED OUT BY OTHERS. THE AO CONDUCTED POST SURVEY ENQUIRIES AND RECORDED STATEMENT FROM B.SIVA PRASAD ON 18.02.201 1 AND K.LAVANYA DEVI ON 14.02.2011. BOTH OF THEM HAVE AGREED IN THE ENQUIRIES CONDUCTED BY THE AO THAT THEY HAVE CARRIED OUT CONSTRUCTION ACTIVITY IN RESPECT OF MADHURANAGAR BY B.SIVA PRASAD AND PEDAWALTAIR BY K.LAVANYA DEVI. IN THE REMAINING PROJECTS, TH ERE WAS NO INDICATION OF HAVING RECORDED THE STATEMENTS . H OWEVER, THE LD. CIT(A) BASING ON THE INFORMATION OF RETURN S OF INCOME FILED BY THE RESPECTIVE DEVELOPERS HELD THAT THE OTHER PROJECTS WERE NOT CARRIED OUT BY THE ASSESSEE AND CARRIED OUT BY OTHER PE RSONS. I.E. P.CHITTI VARAHALA RAJU IN THE CASE OF SOLDIERPET PROJECT, P.SATISH IN THE CASE OF PRAKASA RAO PETA PROJECT, B.SIVA PRASAD AND B.UMA DEV I IN THE CASE OF MADHURANA GAR PROJECT, K.RAMYA LAVANYA DE VI IN THE CASE OF PEDDA WALTAIR PROJECT, A.MAN GA RAJU IN THE CASE OF CHINNA WALTAIR PROJECT, SMT.DEEPIKA KARPURAPU IN THE CASE OF GOKUL GRANDEUR / SITA RESIDENCY PROJECT, P.LAKSHMI IN THE CASE OF CHINNAM VA RI VEEDHI PROJECT. THE LD.CIT(A) MAINLY RELIED ON THE INCOME TAX RETURNS FILED BY THE RESPECTIVE D EVELOPERS BEFORE SURVEY OR SUBSEQUENT TO SURVEY, MOU REACHED BY THE DEVELOPER WITH THE LANDLORD AND THE STATEMENT RECORDED FROM B.SIVA PRASAD AND LAVANYA AND HELD THAT THE ASSESSEE HAS DISCHARGED THE PRESUMPTION CAST ON HIM U/S 292C OF THE ACT. ACCORDING LY DIRECTED THE AO TO DELETE THE ADDITIONS 18 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM REPRESENTING ESTIMATION OF UNACCOUNTED INCOME ON UNACCOUNTED RECEIPTS AND UNEXPLAINED EXPENDITURE MADE IN RESPECT OF THE OTHER PROJECTS STATED TO HAVE BEEN TAKEN UP BY OTHERS . 6.2. WE HAVE GONE THROUGH THE ASSE SSMENT ORDERS AND ORDERS OF THE LOWER AUTHORITIES AND OBSERVED THAT THE LD. CIT(A) HEAVILY PLACED RELIANCE ON THE POST SURVEY ENQUIRIES CONDUCTED BY THE DEPARTMENT AND THE STATEMENT RECORDED FROM B.SIVA PRASAD. THOUGH SRI SIVA PRASAD HAS ACCEPTED THAT HE H AD CARRIED OUT THE MADHURANAGAR PROJECT KNOWN AS SUBADRA ENCLAVE, HE HAS NOT MAINTAINED THE BOOKS OF ACCOUN TS AND BOOKS OF ACCOUNTS WERE NOT AVAILABLE WITH HIM. HOWEVER, AS PER THE MATERIAL FOUND DURING THE COURSE OF SURVEY, THE AO HAS GIVEN A FINDING THAT THE DETAILS OF THE EXPENDITURE INCURRED ON VARIOUS SITES AND THE PAYMENTS MADE TO THE VARIOUS PARTIES WAS AVAILABLE IN THE IMPOUNDED MATERIAL . T HE ASSESSEE IN THE STATEMENTS RECORDED STATED THAT THE DATA WAS COLLECTED FROM SITE PROMOTERS AND TABULATED IN THE LAPTOP. THUS THE DEPOSITION MADE BY THE ASSESSEE IS CONTRADICTORY AND INCONSISTENT WITH THE FACTS STATED BY B.SIVA PRASAD IN HIS STATEMENT. IN RESPONSE TO QUESTION NO.16 AND 17 SRI B.SIVA PRASAD COULD NOT EXPLAIN THE ENTRIES RECORDED IN THE IMPOUN DED MATERIAL AND STATED THAT HE DID NOT KNOW THE ENTRIES IN THE IMPOUNDED MATERIAL 19 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM FOUND DURING THE SURVEY . FOR READY REFERENCE, WE EXTRACT RELEVANT PART OF THE STATEMENT OF SRI SIVA PRASAD WHICH IS AVAILABLE IN THE LD. CIT(A) ORDER IN PAGE NO.28 QUESTION N O.16 AND 17, WHICH READS AS UNDER : Q . 16 . I AM SHOWING YOU ASHWANI DELUXE REGISTER MARKED AS A/PS/8, IN PAGES SERIALLY NUMBERED 353, IMPOUNDED DURING THE COURSE OF SURVEY U/SI 33A CONDUCTED IN THE CASE OF SHRI POOSARLA SUBHASH ON 10 - 022011, PLEASE GO THROUGH THE ENTRIES MADE IN AND EXPLAIN THE CONTENTS IN THE BOOK? ANS. I HAVE COMPLETED THE PROJECT MADHURA NAGAR - 1 BY ME ONLY, BUT I DO NOT KNOW ABOUT THE ENTRIES MADE IN PAGE - 5 SERIALLY NUMBERED 353, IMPOUNDED DURING THE COURSE OF SURVEY U/S.133A CONDUC TED IN THE CASE OF SHRI POOSARLA SUBHASH ON 10 - 022011. Q . 17 . LAM SHOWING YOU ASHWAN I DELUXE REGISTER MARKED AS A/PS/8, IN PAGE - 4 SERIALLY NUMBERED 353 , IMPOUNDED DURING THE COURSE OF SURVEY U/S. 133A CONDUCTED IN THE CASE OF SHRI POOSARLA SUBHASH ON 10 - 02 - 2011, PLEASE GO THROUGH THE ENTRIES MADE IN AND EXPLAIN THE CONTENTS IN THE BOOK? ANS:I HAVE COMPLETED THE PROJECT MADHURANAGAR - 1BY ME ONLY, BUT I DO NOT KNOW ABOUT THE ENTRIES MADE IN PAGE - 5 SERIALLY NUMBERED 353 ABOVE. 6. 3. SIMILARLY, DURING THE POST SURVEY ENQUIRIES, THE AO RECORDED THE STATEMENT FROM SMT. K.RAMYA LAVANYA DEVI WHO CLAIMED TO HAVE COMPLETED THE WORK IN RESPECT OF PEDDA WALTAIR PROJECT. SHE HAS ADMITTED THAT SHE HAS NO EXPERIENCE IN CONSTRUCTION ACTIVITY AND S HE HAS NOT MAINTAINED BOOKS OF ACCOUNTS FOR THE PROJECT. SHE ALSO ADMITTED THAT THE ENTRIES MADE IN THE IMPOUNDED MATERIAL WERE NOT KNOWN TO HER. FOR READY REFERENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THE STATEMENT OF K.RAMYA LAVANYA DEVI WHICH WA S REPRODUCED IN THE CIT(A) ORDER IN PAGE NO.29 FROM Q .NO.9 TO 15 WHICH READS AS UNDER : 20 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 9. DO YOU FIL E YOUR RETURNS OF INCOME, IF SO, PLEASE GIVE THE DETAILS? ANS: NO. TILL DATE I HAVE NOT FILED MY INCOME - TAX RETURNS FOR ANY ASSESSMENT YEAR Q. 10 HAVE YOU MAINTAINED ANY BOOKS OF ACCOUNTS IN RESPECT OF PROJECT (PEDA WA L TAIR CONSTRUCTION)? ANS: NA I HAVE NOT MAINTAINED ANY BOOKS OF ACCOUNTS IN RESPECT OF MY PROJECT PEDAWALTAIR CONSTRUCTION. Q.11. I AM SHOWING YOU ASHWANI DELUXE NOTE BOOK MARKED AS A/PS/57, PLEASE GO THROUGH THE ENTRIES MADE IN AND EXPLAIN THE CONTENTS IN THE BOOK? ANS; I DO NOT KNOW THE DETAILS CONTAINED IN THE A BOVE NOTE BOOK MARKED AS A/PS/5. Q12 . IN THE BOOK MARKED AS A/PS/57, THERE IS NOTING IN PAGE - 32, ON 26/09/10, THAT 'BY CUSTOMER (P .W ) SHANKAR SON - IN - LAW RS.10,00,000/ - CQ IN THE NAME OF K.R.L DEVI (A 1) AND IN PAGE 32 ON 01/10/10 BY CUSTOMER SHANKAR (P.W) SON CASH RS.10,00,000/ - FOR FLAT (A - 2). PLEASE GO THROUGH THE SAME AND EXPLAIN THE NATURE OF THESE ENTRIES SHOWN IN THE BOOK A/PS /57? ANS: IN REGARDS TO ENTRY MADE ON 26 - 09 - 10, 1 CONFIRM HERE THAT I HAVE RECEIVED CHEQUE OF R S.10,00,000/ - AGAINST THE FLAT NO.11 - I FROM CUSTOMER SHANKAR AND SUBSEQUENTLY RETURNED TO THE CUSTOMER SHANKAR ON CANCELLATION OF THE SAME. ENTRIES PERTAINING TO 01/10/10 I AM NOT AWARE OF THAT AND I HAVE NOT RECEIVED ANY AMOUNT FROM CUSTOMER SHANKAR SON A GAINST FLAT NOA2. Q.13. IN BOOK MARKED AS A/PS157, THERE I S NOTING IN PAGE - 41, ON 27 / 12 / 10, THAT 'BY B AGYA RA O (P . W) CASH R S . 17,00,000/ - , PLEASE GO THROUGH THE SAME AND EXPLAIN THE NA TURE OF THESE ENTRY SHOWN IN THE BOOK A /PS/57? ANS : I DO NOT KNOW ABOUT THE ABOVE TRANSACTION Q14 H AVE YOU MAINTAINED ANY DAY BOOK OR CASH BOOK PERTAINING TO YOUR ABOVE (PROJECT PEDA WALTAIR CONSTRUCTION? ANS : NO, I HAVE NOT MAINTAINED ANY DAY BOOK OR CASH BOOK PERTAINING TO MY ABOVE PROJECT. Q15 .H AVE YOU GIVEN ANY DAY BOOK, CASH BOOK OR ANY ROUGH BOOK ETC. (SET OF BOOK OF ACCOUNTS) MAINTAINED BY YOU TO ANY OTHER PERSON? ANS: NO, I HAVE NOT MAINTAINED ANY BOOKS OF ACCOUNTS HE., DAY BOOK, CASH BOOK OR ROUGH BOOK ETC. AND HENCE, THE QUESTION DOES NOT ARISE T HAT WHETHER .1 HAVE GIVEN ANY BOOKS OF ACCOUNTS TO ANYBODY. 21 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 6. 4. FROM THE REPLIES OF B.SIVA PRASAD AND K.RAMYA LAVANYA DEVI, THEY HAV E CATEGORICALLY DENIED HAVING KNOWLEDGE OF ENTRIES FOUND DURING THE COURSE OF SURVEY IN THE IMPOUNDED MATERIAL. WHEREAS THE ASSESSEE STATED THAT THE ENTRIES WERE MADE BY HIS WIFE AS PER THE INFORMATION SUPPLIED BY THE PROMOTERS OF THE SITE. SUBMISSION MADE BY THE ASSESSEE DURING THE COURSE OF SU RVEY AND THE REPLIES GIVEN BY THE OTHER PROMOTERS ARE APPARENTLY CONTRADICTING AND INCONSISTENT AND DOES NOT MATCH WITH EACH OTHER. NO OTHER MATERIAL WAS PLACED BY THE ASSESSEE TO DISPROVE THAT MATERIAL FOUND DURING THE COURSE OF SURVEY WAS UNTRUE AND NOT RELATED TO HIM . AS PER THE PROVISIONS OF SECTION 292C, PRESUMPTION IS AVAILABLE TO THE DEPARTMENT TO BELIEVE THAT MONEY, BULLION, JEWELLERY, DOCUMENTS, BOOKS OF ACCOUNTS FOUND DURING THE COURSE OF SURVEY ARE BELONGING TO THE PERSON SURVEYED OR SEARCHED B Y THE DEPARTMENT AND THE CONTENTS ARE TRUE. MERE FILING OF RE TURN OF INCOME BY THE OTHERS ON ESTIMATION BASIS DOES NOT DISCHARGE THE BURDEN PLACED IN SECTION 292C OF THE A CT . THE EXPLANATION OF THE ASSESSEE THAT THE ACCOUNTS OF THE PROJECTS MAINTAINED IN THE LAPTOP WERE PREPARED BY HIS WIFE, M RS DEEPIKA FOR THE PURPOSE OF B ANK LOANS AND THE DATA WAS COLLECTED APPEARS NEITHER CONVINCING NOR SUPPORTED BY ANY DOCUMENTS. IT IS THE OBLIGATION OF THE ASSESSEE TO SUBSTANTIATE HIS SUBMISSION S WITH EVIDENCES WITH THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS 22 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM OF THE RESPECTIVE PROMOTERS, THE BANK ACCOUNTS, REGISTERED S ALE DEEDS ETC. WHEN THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS FOUND DURING THE COURSE OF SURVEY COULD NOT BE EXPLAINED BY THE OTHER PERSON IT CANNO T BE HELD THAT THE BURDEN PLACED U/S 292C IS DISCHARGED BY THE ASSESSEE. FOR READY REFERENCE, WE EXTRACT HEREUNDER SECTION 292C OF THE ACT WHICH READS AS UNDER : PRESUMPTION AS TO ASSETS, BOOKS OF ACCOUNTS ETC. 292C. (1) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SEC TION 132 OR SURVEY UNDER SECTION 133A , IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSON'S HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. 6. 5. THE ASSESSEE HAS DENIED HAVING CARRIED OUT THE WORKS IN OTHER 7 PROJECTS. HAVING FOUND THE BOOKS OF ACCOUNTS, DOCUMENTS, MATERIAL, LOOSE SHEETS, DIARIES ETC. WITH THE COMPLETE DETAILS OF PAYMENTS MADE TO VARIOUS PARTIES, INVESTMENTS MADE IN PROPERTIES AND THE EXPENDITURE INCURRED IN THE PREMISES OF THE ASSESSEE , IT IS BURDEN ON THE ASSESSEE TO PROVE THAT THE ENTRIES IN THE BOOKS OF ACCOUNTS, DOCUMENTS, LOOSE SHEETS, ETC. FOUND DURING THE COURSE OF SURVEY ARE IN FACT DOES NOT BELONG TO HIM BUT BELONGED TO THE OTHER PARTIES WITH RELEVANT EVIDENCES . IN THIS CASE, THE ASS ESSEE HAS NEITHER 23 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM DISCHARGED THE BURDEN NOR DISPROVED THE FACT THAT THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS OF 13 PROJECTS WAS NOT CARRIED OUT BY THE ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE REMITTED BACK TO THE FILE OF THE AO FOR MAKING FRESH ENQUIRIES AND TO AFFORD AN OPPORTUNITY TO THE ASSESSEE TO PROVE THAT THE ENTIRE 13 PROJECTS WERE NOT CARRIED BY HIM AND ONLY SIX PROJECTS WERE CARRIED OUT BY THE ASSESSEE. ACCORDINGLY, WE REMIT THE ISSUE OF QUAN TIFICATION OF GROSS UNACCOUNTED RECEIPTS TO THE FILE OF THE AO FOR REDOING THE SAME AFRESH ON MERITS. THE APPEAL OF THE REVENUE ON ESTIMATION OF INCOME ON 13 PROJECTS IS ALLOWED FOR STATISTICAL PURPOSE. 6.6. THE OTHER ISSUE IS ADDITION MADE U/S 69C ON ACC OUNT OF THE UNACCOUNTED PAYMENT S . THE LD.CIT(A) DELETED THE ADDITION RELATING TO UNACCOUNTED PAYMENTS IN RESPECT OF 7 PROJECTS CARRIED OUT BY OTHERS SINCE THE ASSESSEE DISOWNED THE PROJECTS. IN CASE OF 6 PROJECTS CARRIED OUT BY THE ASSESSEE (OWN PROJECTS ) , TH E LD.CIT(A) HAS MADE CASH FLOW /FUNDS FLOW STATEMENT AND FOUND NO DEFICIT CASH TO MEET THE EXPENSES ACCORDINGLY DELETED THE ADDITION . IN THE PRECEDING PARAGRAPHS WE HAVE HELD THAT THE ISSUE REGARDING THE 13 PROJECTS REQUIRED TO BE REEXAMINED , SINCE THE ASSESSEE HAS NOT DISCHARGED THE BURDEN PLACED ON HIM U/S 292C OF THE ACT. 24 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM WITH REGARD TO THE 6 PROJECTS OWNED BY THE ASSESSEE, THE LD. CIT(A ) COMPI L ED THE CASH FLOW STATEME NT AND HELD THAT THE SOURCES WERE AVAILABLE TO MAKE THE PAYMENTS . IN THE INSTANT CASE IT IS OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING THE BOOKS OF ACCO UNTS, HENCE, ISSUE REQUIRES FURTHER EXAMINATION BY THE AO. THEREFORE, THE ISSUE REGARDING UNACCOUNTED PAYMENTS ALSO REMITTED BACK TO TH E FILE OF THE AO TO EXAMINE THE REAL DEVELOPE R OF 13 PROJECTS AND TO CONSIDER THE ENTIRE ISSUE AND DECIDE THE ISSUE AFRESH ON MERITS. ACCORDINGLY, THE REVENUES APPEAL ON UNACCOUNTED PAYMENTS MADE U/S 69C IS ALLOWED FOR STATISTICAL PURPOSE. 6. 7 . THE NEXT ISSUE IS ESTIMATION OF INCOME ON THE PROJECT S ADMITTED BY THE ASSESSEE AND THE OTHER PROJECTS . THE AO OBSERVED THAT THERE WAS DIFFERENCE IN THE RECEIPTS ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE RECEIPTS FOUND AS PER T HE SEIZED MATERIAL, T HE AO ESTIMATED THE INCOME @12% ON UNACCOUNTED RECEIPTS AND MADE SEPARATE ADDITION FOR UNRECORDED EXPENDITURE . THE MATERIAL AVAILABLE WITH THE AO CONSIST S OF UNDISCLOSED RECEIPTS AS WELL AS THE UNRECORDED PAYMENTS. IT IS NOT CORRECT TO DISREGARD THE MATERIAL AVAILABLE IN RESPECT OF PAYMENTS AND RECEIPTS AND MAKE SEPARATE ADDITION ON ACCOUNT OF UNDISCLOSED RECEIPTS AND UNRECORDED EXPENDITURE. EVEN THE RECEIPTS AND THE PAYMENTS ARE UNACCOUNTED THE AO HAS TO COMPUTE THE INCOME WITH MATCHING RECEIPT AND THE PAYMENT. 25 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM THEREFO RE THE AO IS DIRECTED TO EXAMINE THE RECEIPTS AND EXPENDITURE AND COMPUTE THE INCOME RELATING TO UNACCOUNTED RECEIPTS. 6.8 . ACCORDINGLY, THE ENTIRE ISSUE OF ESTIMATION OF INCOME ON UNDISCLOSED RECEIPTS AND UNACCOUNTED PAYMENTS U/S 69C, IS SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE AO FOR DENOVO CONSIDERATION. THE ASSESSEE IS FREE TO TAKE UP ALL THE CONTENTIONS RAISED IN THE APPEAL BEFORE THE AO. THE AO IS DIRECTED TO AFFORD REASONABLE OPPORTUNITY TO THE ASSESSEE BEFORE COMPLETING THE A SSESSMENT . 7. T HE NEXT ISSUE IN REVENUES APPEAL IS UNSECURED LOANS. THE AO MADE THE ADDITIONS OF UNSECURED LOANS FOR THE ASSESSMENT YEARS FROM 2007 - 08 TO 2 0 12 - 13 AS UNDER: SL. NO. NAME OF THE LOAN CREDITORS LOAN AMOUNT IN ASSESSMENT YEARS IN RS. TOTAL AMOUNT TAKEN 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 1 SRI B RAGHU 600000 0 0 0 0 0 600000 2 SRI K PARTHASARATHI 900000 0 0 0 0 0 900000 3 SMT M ANURADHA 150000 0 0 0 0 0 150000 4 SRI K HARIKRISHNA 800000 0 0 300000 100000 200000 1400000 5 SRI B.G.V. NARASINGA RAO 100000 0 0 0 0 0 100000 6 N. LAKSHMI 0 850000 0 0 0 0 850000 7 D. VENKATARAO 0 1150000 600000 0 0 0 1750000 8 K. VEERABHDRARAO 0 700000 0 0 0 0 700000 9 REDDY RAMU, NRI 0 5000000 0 0 0 0 5000000 10 SMTVARALAKSHMI 0 0 1000000 0 0 0 1000000 11 SRI V NAGAMANI 0 0 1500000 0 0 0 1500000 12 SRI R. LAXAMAN MURTHY 0 0 500000 0 0 0 500000 13 SMT. K HARIKA 0 0 250000 0 0 0 250000 26 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM SL. NO. NAME OF THE LOAN CREDITORS LOAN AMOUNT IN ASSESSMENT YEARS IN RS. TOTAL AMOUNT TAKEN 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 14 SMT K S DEEPIKA 0 0 100000 0 4920000 0 5020000 15 SRI BVR MURTHY 0 0 200000 0 0 0 200000 16 PANDARIVEERAJU 0 0 300000 200000 0 0 500000 17 KKVT RAMAKRISHNA 0 0 100000 0 0 0 100000 18 K VIJAYALAKSHMI 0 0 1250000 0 0 0 1250000 19 N SATYANARAYANA 0 0 2000000 0 0 0 2000000 20 MBL PRASAD 0 0 300000 200000 300000 200000 1000000 21 K BHAVANI 0 0 130000 0 125000 200000 455000 22 K RAJESH 0 0 0 150000 2800000 500000 3450000 23 K BINDU MOHAN 0 0 0 300000 0 0 300000 24 K NIRMALA 0 0 0 1000000 0 0 1000000 25 D VENKATARAMU 0 0 0 0 1000000 0 1000000 26 K INDIRA KUMARI 0 0 0 0 1800000 400000 2200000 27 MUCHARLA KUMAR 0 0 0 0 200000 0 200000 28 M KISHORE KUMAR 0 0 0 0 0 200000 200000 TOTAL 2550000 7700000 8230000 2150000 11245000 1700000 7.1 . DURING THE APPEAL PROCEEDINGS, THE ASSESSEE FILED ADDITIONAL EVIDENCE WHICH W AS ADMITTED BY THE LD.CIT(A) AND CALLED FOR THE REMAND REPORT FROM THE AO. DURING THE REMAND PROCEEDINGS, THE AO VERIFIED THE INFORMATION, RECORDED STATEMENTS FROM THE LOAN CREDITORS AND SUBMITTED THE REMAND REPORT. ON RECEIPT OF THE REMAND REPORT, THE LD.CIT(A) HAS CALLED FOR THE OBJECTIONS FROM THE ASSESSEE AND AFTER HAVING CONSIDERED THE OBJECTIONS, THE REMAND RE PORT AND THE STATEMENTS RECORDED U/S 131 OF THE ACT, THE LD.CIT(A) DELETED ALL THE ADDITIONS MADE BY THE AO EXCEPT IN THE CASE OF SHRI K.HARIKRISHNA. 27 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 7.2 . AGGRIEVED BY THE ORDERS OF THE LD.CIT(A), THE DEPARTMENT HAS FILED APPEAL CHALLENGING THE DELETION OF ADDITIONS MADE BY THE LD.CIT(A). THE REVENUE HAS FILED THE APPEAL CHALLENGING THE ORDER OF THE LD.CIT(A) FOR THE A.Y 2007 - 08 TO 2009 - 10 AND 2011 - 12 TO 2012 - 13 . FROM THE GROUNDS OF APPEAL FILED BY THE REVENUE WE OBSERVE SOME LAPSES WHICH ARE BROUGHT ON RECORD AS UNDER. FOR THE A.Y. 2009 - 10, THE DEPARTMENT RAISED THE FOLLOWING GROUND FOR THE DELETING ADDITION OF CASH CREDITS AS UNDER : 8. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE CREDITORS TO THE EXTENT OF RS.62.80 LAKHS (OUT OF TOTAL ADDITION OF RS.82.30 LAKHS) FAILED TO EXPLAIN THE SOURCE OF THE AMOUNT ADVANCED TO THE ASSESSEE SATISFACTORILY AND THEREFORE THE SAME WERE RIGHTLY TREATED AS UNEXPL AINED CREDITORS U/S 68 OF THE I.T.ACT BY THE ASSESSING OFFICER. 7.3 FOR THE A.Y 2010 - 11, THE DEPARTMENT DID NOT MAKE APPEAL AGAINST THE DELETION OF ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS, EVEN THOUGH IN COUPLE OF CASES, THE SAME CASH CREDITS WE RE CONTINUED AGAINST WHICH THE DEPARTMENT PREFERRED APPEAL FOR THE EARLIER ASSESSMENT YEARS. 7.4 FOR THE A.Y. 2011 - 12, THE DEPARTMENT RAISED THE FOLLOWING GROUNDS AGAINST THE DELETION OF CASH CREDITS. 9. THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN CREDITORS BARRING ONE LOAN CREDITOR OF RS.1,00,000/ - IN THE NAME OF SRI K.HARI KRISHNA WITH AN OBSERVATION THAT THE CREDITORS CONFIRMED THE LOANS AND EXPLAINED THE SOURCES OF THE AMOUNT ADVA NCED TO THE ASSESSEE AND ALL THE THREE INGREDIENTS OF GENUINE CREDITS ARE SATISFIED . 28 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 10. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT IN CASE OF SEVEN CREDITORS (OUT OF EIGHT CREDITORS) THE CREDITORS FAILED TO EXPLAIN THE SOURCE OF THE AMOUNT ADVANCED TO THE ASSESSEE SATISFACTORILY AND THEREFORE THE SAME WERE RIGHTLY TREATED AS UNEXPLAINED CREDITORS U/S 68 OF THE I.T.ACT BY THE ASSESSING OFFICER. FOR THE A.Y. 2012 - 13, THE DEPARTMENT HAS RAISED THE FOLLOWING GROUND AND AGITATED THE ADDITIONS MADE BY THE A O : 3. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT IN CASE OF OTHER FIVE CREDITORS ALSO AMOUNTING TO RS.15 LAKHS, THE CREDITORS FAILED TO EXPLAIN THE SOURCE OF THE AMOUNT ADVANCED TO THE ASSESSEE SATISFACTORILY AND THEREFORE THE SAME WERE RIGHTLY TREATED AS UNEXPLAINED CREDITORS U/S 68 OF THE I.T.ACT BY THE ASSESSING OFFICER. PLAIN READING OF THE GROUNDS OF APPEAL RAISED BY THE DEPARTMENT SHOW THAT THERE IS NO APPLICATION OF MIND IN FILING THE APPEAL. IN THIS CONNECTION, WE OBSERVE THAT THE LD.CIT(A) DELETED ADDITIONS NOT IN ONE CASE BUT IN SEVERAL CREDITORS SOME OF THEM WERE ACCEPTED BY THE AO AND SOME OF THEM WERE REJECTED IN THE REMAND REPORT . INSPITE OF THE FACT THAT SEVERAL CREDITORS LOANS WERE DELETED THE DEPARTMENT DID NOT MAKE THEIR APPEAL SPECIFYING THE NAMES. THE WAY IN WHICH THE GROUNDS ARE FRAMED SHOWS VERY CASUAL ATTITUDE WITH LOT OF AMBIGUITY , LACKING CLARITY. FOR THE A.Y. 2009 - 10, THE AO MADE THE ADDITION OF 82.3 LAKHS IN 13 CREDITORS OUT OF WHICH THE DEPARTMENT OBJECTS FOR DELETION OF ADDITION FOR THE AMOUNT OF RS. 62.80 LAKHS WITHOUT SPECIFICALLY MENTIONING THE NAMES OF THE CREDITORS AGAINST WHOM THE ADDITIONS WERE DELETED BY THE LD.CIT(A). SIMILARLY FOR THE A.Y. 2011 - 12 ALSO, THE REVENUE DID NOT SPECIFICALLY MENTION THE NAMES OF 29 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM CREDITORS IN WHOSE CASE, THE DELETION OF ADDITION ARE NOT ACCEPTABLE BY THE DEPARTMENT. THE SAME IS THE CASE WITH THE A.Y. 2012 - 13. W E EXPECT MINIMUM C ARE BY THE AO AS WELL AS THE SUPERVISING AUTHORIT I ES WHILE FILING THE APPEAL. WITH THE ABOVE OBSERVATIONS WE ADJUDICATE THE ISSUE OF THE ADDITION RELATING TO UNSECURED LOAN CREDITORS AS UNDER . 7.5 DURING THE APPEAL PROCEEDINGS, THE ASSESSEE FILED ADDITIONAL EVIDENCE BEFORE THE LD.CIT(A) WHICH WAS ADMITTED BY THE CIT(A) AND CALLED FOR THE REMAND REPORT. IN THE REMAND REPORT THE FOLLOWING UNSECURED CREDITORS HAVE ACCEPTED AND CONFIRMED THE LOAN TRANSACTION S AND THE SOURCE OF WHICH WAS ACCEPTED BY THE AO. SL. NO. NAME OF THE LOAN CREDITORS LOAN AMOUNT IN ASSESSMENT YEARS IN RS. 2007 - 08 2008 - 2009 2009 - 10 2010 - 11 2011 - 12 2012 - 13 1 SRI B.G.V. NARASINGARAO 100000 0 0 0 0 0 2 K. VEERABHDRARAO 0 700000 0 0 0 0 3 SMT VARALAKSHMI 0 0 1000000 0 0 0 4 SMT. K HARIKA 0 0 250000 0 0 0 5 PANDARIVEERAJU 0 0 300000 200000 0 0 6 KKVT RAMAKRISHNA 0 0 100000 0 0 0 7 K RAJESH 0 0 0 150000 2800000 500000 8 K NIRMALA 0 0 0 1000000 0 0 TOTAL 100000 700000 1650000 1350000 2800000 500000 7.6 . THE LD.CIT(A) DELETED THE ADDITION ON THE BASIS OF THE REMAND REPORT SUBMITTED BY THE AO . S INCE THERE I S NO DISPUTE WITH REGARD TO SOURCE AND THE AO HAS ACCEPTED THE TRANSACTION AS GENUINE THERE IS NO CASE FOR FILING 30 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM APPEAL. DURING THE APPEAL HEARING THE LD.DR COULD NOT PLACE ANY MATERIAL TO CONTROVERT THE FINDING GIVEN BY THE LD.CIT(A). HENCE THE DEPARTMENTS APPEAL IN THE CASE OF ABOVE CREDITORS FOR THE IMPUGNED ASSESSMENT YEARS ARE DISMISSED. 7.7 IN THE FOLLOWING CASES, AT THE REMAND STAGE THE AO HAS CONDUCTED THE ENQUIRIES AND THE CREDITORS HAVE ACCEPTED THE TRANSACTION AND EXPLAINED THE SOURCE. SL. NO. NAME OF THE LOAN CREDITORS LOAN AMOUNT IN ASSESSMENT YEARS IN RS. 2007 - 08 2008 - 2009 2009 - 10 2010 - 11 2011 - 12 2012 - 13 1 SRI K PARTHASARATHI 900000 0 0 0 0 0 2 SMT M ANURADHA 150000 0 0 0 0 0 3 D. VENKATARAO 0 1150000 600000 0 0 0 4 SRI V NAGAMANI 0 0 1500000 0 0 0 5 SMT K S DEEPIKA 0 0 100000 0 4920000 0 6 SRI BVR MURTHY 0 0 200000 0 0 0 7 K VIJAYALAKSHMI 0 0 1250000 0 0 0 8 K RAJESH 0 0 0 150000 2800000 500000 9 K BINDU MOHAN 0 0 0 300000 0 0 10 D VENKATARAMU 0 0 0 0 1000000 0 11 K INDIRA KUMARI 0 0 0 0 1800000 400000 12 MUCHARLA KUMAR 0 0 0 0 200000 0 TOTAL 1050000 1150000 3650000 450000 10720000 900000 7.8 AS PER THE REMAND REPORT AND THE OBSERVATION OF THE LD.CIT(A) M OST OF THEM ARE ASSESSED TO INCOME TAX WHICH WAS NOT DISPUTED BY THE AO. THE LOAN S W ERE GIVEN BY CHEQUE AND INTEREST ALSO WAS PAID BY CHEQUE. THE LD.CIT(A) HAS DELETED THE ADDITION SINCE THE CREDITOR S HA VE CONFIRMED THE 31 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM TRANSACTION S ASSESSED TO INCOME TAX, THE PAYMENT WAS MADE BY CHEQUE AND INTEREST WAS ALSO RECEIVED BY CHEQUE. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE DISCHARGED HIS BURDEN AND SHIFTED TO THE DEPARTMENT. THE AO COULD NOT SHIFT THE ONUS ON THE ASSESSEE. DURING THE APPEAL HEARING THE DEPARTMENT COULD NOT PLACE ANY MATERIAL TO CONTROVERT THE FINDING GIVEN BY THE LD.CIT(A). THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), ACCORDINGLY WE UPHOLD THE OR DER OF THE LD.CIT(A) AND DISMISS THE APPEALS OF THE REVENUE IN THE CASE OF THE SAID UNSECURED CREDITORS FOR THE IMPUGNED ASSESSMENT YEARS. 7.9 IN THE FOLLOWING CREDITORS, THERE WAS AMBIGUITY WITH REGARD TO THE NAME, THE SOURCE AND MISMATCH IN THE NAMES AND SOURCES OF FUNDS SL. NO . NAME OF THE LOAN CREDITORS LOAN AMOUNT IN ASSESSMENT YEARS IN RS. 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 1 SRI B RAGHU 600000 0 0 0 0 0 2 N. LAKSHMI 0 850000 0 0 0 0 3 REDDY RAMU, NRI 0 5000000 0 0 0 0 4 SRI R. LAXAMAN MURTHY 0 0 500000 0 0 0 5 N SATYANARAYANA 0 0 2000000 0 0 0 6 MBL PRASAD 0 0 300000 200000 300000 200000 7 K BHAVANI 0 0 130000 0 125000 200000 8 M KISHORE KUMAR 0 0 0 0 0 200000 TOTAL 0 5850000 2930000 200000 425000 600000 MVL PRASAD IS WRONGLY NAMED AS MBL PRASAD 32 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 8 . B.RAGHU . THE LD. CIT(A) HAS NOT DISCUSSED IN THE APPELLATE ORDER REGARDING THE CREDITOR. HOWEVER, IT IS FOUND THAT THE LD. CIT(A) HAS ALLOWED THE APPEAL FOR UNSECURED LOAN OF RS.6 LA KHS IN THE NAME OF SMT. B.JAYAS REE. THERE WAS NO SUCH CREDITOR AS PER THE ASSESSMENT ORDER. THERE IS A MISMATCH OF NAME, HENCE , THE CORRECT NAME IS TO BE ASCERTAINED AND THE IDENTITY, GENUINENESS, CREDIT WORTHINESS REQUIRED TO BE ESTABLISHED IN THIS CASE . FRESH VERIFICATION REQUIRED TO BE CONDUCTED TO ESTABLISH THE TRANSACTION. 8. 1. N.LAKSHMI . THE LD.CIT(A) ALLOWED THE UNSECURED LOAN SINCE THE CREDITOR HAS CONFIRMED THE TRANSACTION, THE SOURCES ARE EXPLAINED BY THE CREDITOR AND THE INTEREST WAS PAID BY CHEQUE. AS PER THE STA TEMENT RECORDED ON 13.02.2007, THOUGH SHE HAS CONFIRMED THE TRANSACTION, HER ANNUAL SOURCE OF INCOME WAS RS.70,000/ - PER ANNUM. THE ANNUAL INCOME OF RS.70,000/ - PER ANNUM DOES NOT ALLOW THE ASSESSEE TO EXTEND THE LOAN OF RS.8.5 LAKHS TO THE ASSESSEE UNLES S THERE IS SUFFICIENT SOURCE TO MEET THE HOUSEHOLD EXPENDITURE . IN THIS CASE, SOURCES FOR THE HOUSEHOLD EXPENDITURE, DRAWINGS AND THE SURPLUSES REQUIRED TO BE EXAMINED TO ESTABLISH THE GENUINENESS OF LOAN . 8. 2 . REDDY RAMU , NRI . THE LD.CIT(A) HAS ACCEPTED THE TRANSACTION . H OWEVER, FROM THE READING OF THE ORDER OF THE LD. CIT(A) AS WELL AS THE 33 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM ORDER OF THE AO, THERE IS NO PROPER EXPLANATION FOR THE SOURCE. THE ASSESSEE DID NOT ESTABLI SH THE SOURCE WITH MATCHING DATES OF INVESTMENT. HENCE, THIS CASE NEEDS TO BE EXAMINED IN DETAIL. 8.3 . R.LAKSHMANA MURTHY . IN THIS CASE, THE CREDITOR HAS RETIRED IN 2001 - 02 AND RECEIVED THE RETIREMENT BENEFITS IN THE SAME FINANCIAL YEAR AND CLAIMED THE SAME AS SOURCE FOR THE LOANS ADVANCED TO THE ASSESSEE WITHOUT PROPER CASH FLOW. THE AO REQUIRED TO EXAMINE THE RECEIPT OF RETIREMENT BENEFITS AND ITS APPLICATION WITH FUNDS FLOW . THE CREDITOR REQUIRED TO MATCH THE SOURCE WITH THE DATE OF WITHDRAWAL AND EXPLAIN THE SAME. T HE LD.CIT(A) ALSO OPINED THAT THE SOURCE OF DEPOSIT OF CASH NEEDS TO BE PROPERLY EXAMINED IN DETAIL. 8.4 . N.SATYANARAYANA. IN THE ASSESSMENT ORDER, THE NAME WAS MENTIONED AS N.SATYANARAYANA. THE CONFIRMATION LETTER WAS GIVEN BY S R I M.B. VENKATA RAO. THEREFORE, THE ISSUE NEEDS VERIFICATION WITH REGARD TO IDENTITY OF THE CREDITOR, GENUINENESS OF THE LOAN, SOURCES OF N.SATYANARAYANA OR M . B .VENKATA RAO BOTH WITH THE ASSESSEE AS WELL AS THE CREDITOR. 8.5 . M.V.L.PRASAD . THERE IS MISMATCH IN THE NAME I N THE ASSESSMENT ORDER ,T HE NAME WAS MENTIONED AS M.B.L.PRASAD, WHEREAS IN THE APPEAL ORDER THE NAME WAS MENTIONED AS M.V.L.PRASAD. THEREFORE, THE CORRECT NAME OF THE CREDITOR REQUIRED TO BE ESTABLISHED AND CREDIT WORTHINESS OF 34 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM THE CREDITOR, SOURCE AND GE NUINENESS REQUIRED TO BE EXAMINED WITH REFERENCE TO CORRECT NAME. 8. 6 . SMT. K.BHAVANI . SMT. K.BHAVANI HAS ADVANCED A SUM OF RS.1,30,000/ - IN THE A.Y. 2009 - 10 AND RS.1,25,000 IN THE A.Y. 2011 - 12. IN BOTH THE CASES, THE CREDITOR HAS EXPLAINED THE SOURCE AS RECEIPT OF RENT. IN THE FIRST INSTANCE, THE AO REJECTED THE CREDIT FOR MISMATCH OF SIGNATURE IN THE REMAND REPORT. IN THE SECOND INSTANCE FOR THE A.Y. 2011 - 12, THE AO REJECTED THE CLAIM FOR WANT OF PROOF OF SOURCE. THE CREDITOR IS NOT ASSESSED TO TAX AN D THERE IS NO EVIDENCE FOR RECEIPT OF RENTAL INCOME AND THE RENTAL INCOME IS VERY MEAGRE WHICH IS NOT EVEN SUFFICIENT TO MEET THE HOUSEHOLD EXPENDITURE . THEREFORE, THE CASE NEEDS TO BE RE EXAMINED TO ESTABLISH THE IDENTITY AND PROPER SOURCE . 8. 7 . M.KISHORE KUMAR . IN THIS CASE, THERE WAS IMMEDIATE CASH DEPOSIT OF RS. 2 LAKHS ON PRECEDING DAY AND O N 12.03.2012, RS.2 LAKHS WAS GIVEN AS LOAN TO THE ASSESSEE. THE CREDITOR IS NOT AN INCOME TAX ASSESSEE AND NOT FILING RETURNS . D URING THE PREVIOUS YEAR RE LEVANT TO THE IMPUGNED ASSESSMENT YEAR, HIS SALARY INCOME WAS ONLY RS.11,000/ - AND THUS THERE IS NO EVIDENCE OF CASH ACCUMULATION . THEREFORE, THE AO REQUIRED TO EXAMINE THE SOURCE IN THIS CASE WITH ACCUMULATION OF SAVINGS FOR ADVANCING THE AMOUNTS TO THE ASSESSEE. 35 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 8. 8 . IN ALL THE ABOVE CASES, IDENTITY , GENUINENESS AND CREDIT WORTHINESS OF THE CREDITORS REQUIRED TO BE VERIFIED WITH CORRECT PROOFS. THEREFORE, IN OUR CONSIDERED OPINION THE ISSUE NEEDS TO BE REMITTED BACK TO THE FILE OF THE AO FOR FURTHER CON SIDERATION. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE AO TO EXAMINE THE SOURCES , IDENTITY, CREDIT WORTHINESS AND GENUINENESS AND DECIDE THE ISSUE AFRESH ON MERITS. BOTH THE REVENUE AS WELL AS THE ASSESSEES AR AGREED FOR REMITTING THE MATTER BACK TO THE FILE OF THE AO IN ABOVE CASES OF CREDITORS . ACCORDINGLY, THE APPEALS OF THE REVENUE IN THE CASE OF ABOVE CREDITORS FOR ALL THE ASSESSMENT YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . THE NEXT ISSUE IN REVENUE APPEAL FOR THE A.Y.2009 - 10 IS ADDITION OF RS.31,38,000/ - RELATING TO UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. DURING THE COURSE OF SURVEY, THE AO FOUND THAT THE ASSESSEE HAD INVESTED RS.41,37,630/ - TOWARDS PURCHASE OF FLAT AT AKSHYA ASPIRA APARTMENT, KIRLAMPUDI LAYOUT ON 23.07.2008. THE ASSESSEE EXPLAINED THAT RS.10 LAKHS WAS FROM MATURITY OF FD FROM HIS WIFE AND RS.31,38,000/ - FROM BUSINESS RECEIPTS. THE ASSESSEE LATER STATED THAT THE FUNDS WERE SOURCED FROM HOUSING LOAN TAKEN FROM ING VYSYA BANK AND FROM ANDHRA BANK. THE AO FOUND THAT ING VYSYA BANK HAS GRANTED THE LOAN OF RS.40,58,108/ - ON 36 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 31.10.2008 IN THE NAME OF DR.P.VISWESWARA RAO, FATHER OF THE ASSESSEE. WHEN THIS FACT WAS CONFRONTED WITH THE ASSESSEE, THE ASSESSEE HAS TAKEN DIFFERENT STAND AND TRIED TO EXPLAIN THAT HE HAS TA KEN UNSECURED LOANS FROM VARIOUS OTHER PARTIES AS SHOWN IN THE BOOKS OF ACCOUNTS AND THE BALANCE SHEET. SINCE THE ASSESSEE HAS GIVEN INCONSISTENT REPLIES AND DID NOT FURNISH THE CORRECT SOURCE FOR INVESTMENT IN THE HOUSE PROPERTY, THE AO MADE THE ADDITION OF RS.31,38,000/ - . 9.1. ON APPEAL BEFORE THE CIT(A), THE CIT(A) OBSERVED THAT THE AMOUNTS WERE PAID FROM THE BOOKS OF ACCOUNTS AND SURPLUS BUSINESS RECEIPTS WHICH IS INCLUSIVE OF THE LOAN GRANTED BY ING VYSYA BANK IN FAVOUR OF DR.P.VISWESWARA RAO, FATHE R OF THE ASSESSEE. THEREFORE, THE LD.CIT(A) HELD THAT NO ADDITION IS CALLED FOR ON THIS GROUND. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE ASSESSMENT ORDER, THE ASSESSEE IS NOT MAINTAINING THE BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME AT 8% U/S 44AB OF THE ACT. THEREFORE, PAYMENT FROM THE BOOKS OF ACCOUNTS DOES NOT ARISE. THE ASSESSEE EXPLAINED THAT THE SOURCE WAS THE LOAN TAKEN FROM DR.P.VISWESWARA RAO WHICH WAS GRANTED BY ING VYSYA BANK. DURING THE APPEAL HEARING, THE LD.AR COULD NOT EXPLAIN THE SOURCE WITH MATCHING 37 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM EVIDENCE THAT THE LOAN GRANTED TO DR.P.VISWESRARA RAO WAS UTILIZED FOR PURCHASE OF HOUSE. THE LD.AR ALSO COULD NOT PLACE THE SANCTION ADVISE OF BANK LOAN TO EXAMINE THE PURPOSE FOR WHIC H THE LOAN WAS GRANTED AND ITS END UTILIZATION. THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE SAID LOAN WAS UTILIZED FOR ACQUIRING THE HOUSE PROPERTY. HENCE, WE HOLD THAT THE SOURCES REMAINED UNEXPLAINED, ACCORDINGLY, WE SET A SIDE THE ORDER OF THE LD.CIT(A) AND CONFIRM THE ADDITION MADE BY THE AO. ASSESSEES APPEAL S : 11 . THE COMMON ISSUE INVOL VED IN ASSESEES APPEAL S FOR THE A.YS . 2007 - 08, 2010 - 11, 2011 - 12 AND 2012 - 13 IS THE UNSECURED LOAN ACCEPTED FROM SHRI K.HARIK ISHNA. THE ASSESSEE ACCEPTED THE UNSECURED LOANS FROM SHRI K.HARI K RISHNA AS FOLLOWS: SL. NO. NAME OF THE LOAN CREDITORS 2007 - 08 2010 - 11 2011 - 12 2012 - 13 4 SRI K HARIKRISHNA 800000 300000 100000 200000 11.1. FOR THE A.Y. 2007 - 08, THE AO CONSIDERED THE LOAN OF RS.8 LAKHS INSTEAD OF RS.4 LAKHS AND ACCORDINGLY MADE THE ADDITION OF RS.8.00 LAKHS . ASSESSEE EXPLAINED THAT T HERE WAS A MISTAKE IN QUANTUM OF L OAN ADVANCED BY THE CREDITOR IN THE A.Y. 2007 - 08 AND THE CORRECT AMOUNT WAS RS.4.00 LAKHS BUT NOT RS.8.00 LAKHS . HENCE, THE ASSESSEE FILED ADDITIONAL EVIDENCE WHICH WAS ADMITTED BY THE LD.CIT(A) AND CALLED FOR THE REMAND REPORT. THE AO IN 38 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM REMAND REPORT DATED 21.04.2014 ACCEPTED THAT THE LOAN GIVEN BY SRI K.HARIKRISHNA FOR THE A.Y.2007 - 0 8 WAS RS.4 LAKHS BUT NOT RS.8 LAKHS. T HE LD.CIT(A) CONFIRMED THE ADDITION OF RS.4 LAKHS AND HELD THAT THERE IS NO SOURCE TO THE CREDITOR. THE REMAINING AMOUNT OF RS.4 LAKHS WAS DELETED BY THE LD.CIT(A). 11.2. THE DEPARTMENT FILED APPEAL FOR DELETION OF ADDITION OF RS.4 LAKHS AND THE ASSESSEE FILED CROSS APPEAL CHALLENGING THE ORDER OF THE LD.CIT(A). 11.3. AS DISCUSSED ABOVE, THE ACTUAL AMOUNT ADVANCED BY SRI K.HARIKRISHNA WAS RS. 4 LAKHS, BUT NOT RS.8 LAKHS WHICH THE AO HAS ACCEPTED IN THE REMAND REPO RT. THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING ADDITION OF RS.8 .00 LAKHS AND THE CIT(A) HAS RIGHTLY RESTRICTED THE SAME TO RS.4 LAKHS. HENCE, WE DISMISS THE APPEAL OF THE REVENUE ON THIS ISSUE. 11.4. T HE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL IN ITS APPEAL NO. 472/VIZ/2017 AGAINST THE ORDER OF THE LD.CIT(A). DURING THE APPEAL HEARING, THE LD.AR DID NOT BRING ANY FRESH EVIDENCE TO SUPPORT THE SOURCE OF RS.4 LAKHS. THOUGH ASSESSEE STATED THAT HE WAS HAVING SALARY INCOME, INTEREST INCOME AND AS SESSED TO TAX, THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SUPPORT THE SOURCES FOR ADVANCES GIVEN TO THE ASSESSEE. AS PER THE CONFIRMATION LETTER FROM SRI K.HARIKRISHNA H AS GIVEN LOAN OF RS. 4 LAKHS 39 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM IN THE A.Y. 2007 - 08, RS. 3 LAKHS IN THE A.Y.2010 - 11, RS.1 LAKH IN THE A.Y. 2011 - 12 AND RS.2 LAKHS IN THE A.Y. 2012 - 13. F OR A QUERY FROM THE BENCH, THE LD.AR COULD NOT FURNISH ANY EVIDENCE WITH REGARD TO HIS SOURCE OF INCOME AND ACCUMULATION OF SAVINGS TO SUBSTANTIATE THE ADVANCES GIVEN BY THE CREDITOR TO TH E ASSESSEE. IN THE ABSENCE OF SATISFACTORY EXPLANATION OF THE SOURCE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE LOAN S ARE GENUINE. THE ASSESSEE FAILED TO PROVIDE SATISFACTORY EVIDENCE TO SUPPORT THE CREDIT WORTHINESS AND GENUINENESS OF THE LOAN S , THEREFORE, THE ADDITION MADE BY THE AO FOR THE A.Y. 2007 - 08, 2010 - 11, 2011 - 12, 2012 - 13 IN RESPECT OF UNSECURED LOANS ACCEPTED FROM SRI K.HARIKRISHNA AMOUNTING TO RS.4 LAKHS, RS.3 LAKHS, RS.1 LAKH, RS.2 LAKHS RESPECTIVELY ARE CONFIRMED AND THE ORDERS OF THE LD.CIT(A) ARE SUSTAINED. THE APPEALS OF BOTH THE ASSESSEE AND THE REVENUE ARE DISMISSED . 12 . T HE NEXT ISSUE INVOLVED IN ASSESSEES APPEAL FOR THE A.YS 2010 - 11,2011 - 12 AND 2012 - 13 IS SET OFF OF HOUSE PROPERTY LOSS. THE ASSESSEE CLAIMED INTEREST OF RS.RS.4,11,366/ - UNDER THE HEAD INCOME FROM PROPERTY. IN THIS CASE, THE ASSESSEE ADMITTED RENTAL INCOME OF RS.60,000/ - FOR SIX MONTHS @10,000/ - PER MONTH AND CLAIMED INTEREST PAYMENT OF RS.4,53,366/ - TO BANK. THE AO DISAL LOWED THE INTEREST PAYMENT SINCE THE 40 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM LOAN WAS NOT SANCTIONED TO THE ASSESSEE AND SANCTIONED TO DR.P.VISWESWARA RAO, FATHER OF THE ASSESSEE. THE HOUSE PROPERTY WAS OWNED JOINTLY BY THE ASSESSEE WITH HIS WIFE K.DEEPIKA AND THE PROPERTY WAS SOLD BY THEM DURI NG THE YEAR 2012. SINCE, THERE WAS NO EVIDENCE TO ESTABLISH THAT THE LOAN WAS UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF CONSTRUCTION OF HOUSE OR FOR ACQUIRING THE HOUSE , T HE AO DISALLOWED THE INTEREST CLAIM MADE BY THE AS S ESSEE, THUS REJECTED THE CLAIM OF SET OFF OF LOSS UNDER THE HEAD INCOME FROM PROPERTY. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ADDITION IN THE A.YS 2010 - 11 TO 2012 - 13, H ENCE THE APPEAL. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. WHILE DECIDING THE APP EAL FOR THE A.Y. 2009 - 10, WE DECIDED THE ISSUE WITH REGARD TO THE SOURCES AND HELD IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE FAILED TO ESTABLISH THAT THE LOAN GRANTED TO HIS FATHER DR.P.VISWESWARA RAO IN FACT WA S FOR THE PURPOSE OF CONSTRUCTION OR ACQUIRING THE HOUSE PROPERTY OF THE ASSESSEE. HENCE, THE ASSESSEE IS NOT ENTITLED FOR THE DEDUCTION OF INTEREST PAID TO THE BANK FROM PROPERTY INCOME . THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE L D.CIT(A). ACCORDINGLY, APPEAL S OF THE ASSESSEE FOR THE A.YS 41 I.T.A. NO S.472 - 475 /VIZ/201 7 AND 481 - 486/VIZ/2017 SRI PUSARLA SUBASH, VISAKHAPATNAM 2010 - 11,2011 - 12 AND 2012 - 13 ON SET OFF OF HOUSE PROPERTY LOSS ARE DISMISSED. IN THE RESULT, THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED AND THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH J ANUARY, 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 25 . 0 1 .201 9 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE P USARLA SUBHASH , PROP.SAGAR DURGA DEVELOPERS DOOR NO.15 - 13 - 6, KRISHNANAGAR , MAHARANIPETA, VISAKHAPATNAM 2 . / THE REVENUE (I) ADDL.CIT, RANGE - , VISAKHAPATNAM (II)ASST.CIT CIRCLE - 1(1), VISAKHAPATNAM (III) INCOME TAX OFFICER , WARD - 1(4) , VISAKHAPATNAM 3 . THE PR. COMMISSIONER OF INCOME TAX - 1 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX - (APPEALS) - 2 , GUNTUR 5 . , , / DR, ITAT,VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM