M/s Supraja's Sandy Lane Bar & Restaurant, Visakhapatnam V. THE ACIT., CENTRAL CIRCLE - 2, Visakhapatnam

ITA 495/VIZ/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8852 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M BHUPAL REDDY
• Keywords: Unexplained cash credit; Rejection of books of accounts; Business income; Depreciation; Search and seizure; Loose papers; Document seized; Documents seized
• Section: 69C; 133A; 153A; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHR I D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 4 9 4 /VIZAG/ 201 2 ( / ASSESSMENT YEAR: 20 07 - 08 ) ./ I.T.A.NO.4 95 /VIZAG/201 2 ( / ASSESSMENT YEAR: 20 08 - 09 ) M/S SUPRAJAS SANDY LANE BAR & RESTAURANT BESIDE HOTEL PALM BEACH BEACH ROAD, VISAKHAPATNAM [PAN NO.A BFFS8473D ] ACIT, CENTRAL CIRCLE - 2 VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI GVN HARI , AR / RESPONDENT BY : SHRI M BHUPAL REDDY , D R / DATE OF HEARING : 1 4 .06.2017 / DATE OF PRONOUNCEMENT : 29 .06.2017 2 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THE S E APPEAL S ARE FILED BY THE ASSESSEE AGAINST THE ORDER S OF THE C OMMISSIONER OF INCOME TAX (A PPEALS ) [CIT(A)], VI SAKHAPATNAM IN ITA NO. 120 / 10 - 11 /A CIT, CEN.CIR - 2/VSP/2012 - 13 AND ITA NO.121/10 - 11/ACIT, CEN.CIR - 2/VSP/2012 - 13 DATED 28 .0 9 .201 2 FOR T HE A.Y S . 20 07 - 08 AND 2008 - 09 . 2. THE ASSESS EE HAS RAISED TOTAL 7 GROUNDS IN HIS APPEAL FOR THE ASSESSMENT YEAR 2007 - 08 . 3. GROUND NO.1 AND 7 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 4. GROUND NO.2 IS RELATED TO THE IS SUE OF NOTICE U/S 153C OF INCOME TAX ACT. A SEARCH U/S 132 OF THE IT ACT WAS CARRIED OUT IN THE CASE OF SHRI A.T.RAYUDU GROUP ON 04.12.2007. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, BOOKS AND DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND S EIZED. HENCE, THE ASSESSING OFFICER ISSUED NOTICE U/S 153C ON 15.12.2008 FOR THE SIX ASSESSMENT YEARS I.E. FROM 2002 - 03 TO 2007 - 3 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT 08 AND OUT OF WHICH TH E S E APPEAL S ARE RELATED TO THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 . THE ASSESSMENT WAS COMPLETED ON THE TOTAL INCOME OF RS.30,30, 392/ - AGAINST THE ADMITTED INCOME OF RS.89,968/ - . 5 . APPEARING FOR THE ASSESSEE, THE LD. AR ARGUED THAT THE NOTICE ISSUED U /S 153C WAS INVALID SINCE NO BOOKS OF ACCOUNTS OR ANY OTHER DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND BY THE ASSESSING OFFICER IN THE SEARCH CONDUCTED IN THE PREMISES OF A.T.RAYUDU GROUP. THE LD. AR FURTHER ARGUED THAT THE DEPARTMENT H AS FILED A PAPER BOOK FURNISHING THE SATISFACTION NOTE AND THE SEIZED DOCUMENTS FOUND IN THE PREMISES OF A.T. RAYUDU GROUP. AS PER THE SATISFACTION NOTE, THE SEIZED MATERIAL WAS MARKED AS ANN. ATR/B/21 VIDE PAGES 27 - 31 WHICH IS THE FOUNDATION FOR RECORDING THE SATISFACTION OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S 153C OF IT ACT. THE LD. AR INVIT ED OUR ATTENTI ON TO THE PAGE NOS.27 - 31 REFERRED ABOVE WHICH WAS THE STATEMENT OF B ANK ACCOUNT RELATED TO SUPRAJA BAYWATCH BAR RESTAURANT AND STATED THAT IT WAS NOT THE FIRM BELONGING TO THE ASSESSEE AND THE NAME OF THE ASSESSEES FIRM IS SUPRAJA SANDY LANE BAR & REST AURANT. THE LD. AR REFERRING TO PAGE NO.2, PARA 4 AND 5 OF THE ASSESSMENT ORDER STATED THAT M/S SUPRAJAS SANDY LANE BAR AND RESTAURANT (M/S SSLBR) IS THE PARTNERSHIP FIRM 4 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT CONSISTING OF PARTNERS SHRI MVKS SUBBA RAJU AND SRI ANUMOLU JASWANTH CONSTITUTED V IDE PARTNERSHIP DEED DATED 02.06.2006 WITH A SEPARATE LICENSE NO.25/2006 - 07 IN RC NO.279/2006/A3 DATED 07.07.2006 IN FORM NO.2B OF THE PROHIBITION & EXCISE SUPERINTENDENT, VISAKHAPATNAM . PRIOR TO 2006, THE BAR AND RESTAURANT WAS RUN IN THE NAME AND STYLE OF M/S SUPRAJAS BAYWATCH BAR AND RESTAURANT FOR THE PERIOD FROM JULY 2005 TO JUNE 2006 WITH SHRI MVKS SUBBA RAJU HAVING 90% OF THE SHARE AND SHRI A JASWANTH HAVING 10% OF THE SHARE . THE LD. AR CONTENDED THAT BOTH ARE DIFFERENT AND INDEPENDENT FIRMS AND THE SEIZED MATERIAL FOUND IN THE BUSINESS PREMISES OF A.T.RAYUDU GROUP DOES NOT BELONG TO THE ASSESSEE HENCE, THE NOTICE ISSUED U/S 153C REQUIRED TO BE QUASHED . 6 . ON THE OTHER HAND, THE LD.DR ARGUED THAT THE ASSESSING OFFICER HAS DULY RECORDED THE SATI SFACTION AND AS PER THE SATISFACTION RECORDED BY THE ASSESSING OFFICER , IN THE RESIDENCE OF A . T . RAYUDU DURING THE SEARCH, LOOSE SHEETS MARKED AS ANNR. ATR/B/2 VIDE PAGES 27 - 31 WERE FOUND AND SEIZED AND THOUGH THE TITLE OF THE ACCOUNT WAS M/S SUPRAJAS BAYW ATCH BAR RESTAURANT , IT WAS WRITTEN ON THE TOP OF THE TITLE SANDY LANE WHICH CLEARLY SHOWS THAT THE SEIZED MATERIAL PRIMA FACIE B ELONGING TO THE ASSESSEE AND ACC ORDINGLY NOTICE U/S 153C R.W.S. 153A WAS ISSUED. 5 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT 6 .1 TH E LD.DR FURTHER ARGUED THAT TH E PART NERS OF SUPRAJAS BAYWATCH BAR RESTAURANT WE RE (I) MR.MVKS SUBBA RAJU HAVING 90% SHARE AND (II) SHARI A JASWANTH HAVING 10% SHARE WHO ARE NONE OTHER THAN THE SAME PARTNERS OF SUPRAJ AS SANDY LANE BAR & RESTAURANT WITH SLIGHT VARIATION IN PROFIT S HARING RATIO. SHRI MVKS SU BBA RAJU IS HAVING 95% SHARE WHILE SHRI A JASWANTH IS HOLDING 5% SHARE. THOUGH THE NAME OF THE FIRM HAS BEEN CHANGED THERE WAS NO CHANGE IN THE PARTNERS E XCEPT CHANGE IN THE PROFIT SHARING RATIO OF THE PARTNERS. IN A PARTNERS HIP FIRM, IT IS SETTLED ISSUE THAT THE PARTNERS ARE INDEPENDENTLY, JOINTLY AND SEVERALLY LIABLE, HENCE, MERELY BECAUSE THERE WAS CHANGE IN THE NAME OF THE FIRM, THE NOTICE CANNOT BE MADE INVALID. IN BOTH THE FIRMS, THE PARTNERS ARE THE SAME WITH SLIGHT VA RIATION IN THE PROFIT SHARE RATIO. THE ASSESSING OFFICER HAS DULY RECORDED THE SATISFACTION AND AT THE STAGE OF ISSUE OF NOTICE SUFFICIENCY OF THE REASONS IS NOT RELEVANT . FURTHER, THE LD DR ARGUED THAT THE ASSESSEE HAS NEVER CONTESTED THIS ISSUE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD.CIT(APPEALS). THEREFORE, ASSESSING OFFICER HAS ASSUMED THAT THE DOCUMENTS ARE BELONGING TO THE ASSESSEE AND HAS RIGHTLY ISSUED NOTICE U/S 153C. THE LD. DR RELIED ON 6 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF RAJESH SUNDERDAS VASWANI 76 TAXMANN.COM 311. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. A SEARCH U/S 132 WAS CARRIED OUT IN THE CASE OF A.T.RAYUDU GROUP AND DURING THE COURSE OF SEARCH, LOOSE PAPERS WERE FOUND MARKED AS ANN.ATR/B/21, PAGE NOS.27 - 31. THE ASSESSING OFFICER HAS RECORDED THE SATISFACTION AND ISSUED NOTICE U/S 153C OF INCOME TAX ACT. THE ASSESSEE CONTESTED THE VALIDITY OF ISSUE OF NOTICE U/S 153C OF INCOME TAX ACT BEFORE THIS TRIBUNAL . I N THIS CASE, T HE ASSESSEES CONTENTION WAS THAT THE SEIZED MATERIAL WAS REL ATING TO SUPRAJAS BAYWAT C H BAR RESTAURANT WHICH WAS RUN FOR THE PERIOD FROM JULY 2005 TO JUNE 2006 W HEREAS THE ASSESSMENT WAS MADE AND THE NOTICE WAS ISSUED TO SUPRAJA SANDY LANE BAR & RESTAURANT, A DIFFERENT PARTNERSHIP FIRM WHICH CAME INTO EXISTENCE W.E.F. 2.6.2006. ON GOING THROUGH THE EVIDENCES FOUND AND PRODUCED BEFORE US BY THE REVENUE, WE OBSERVE THAT THE SEIZED PAPERS WERE THE STATEMENT OF A BANK ACCOUNT OF STATE BANK OF HYDERABAD IN TH E NAME OF SUPRAJA BAYWATCH BAR RESTAURANT FOR THE PERIOD FROM 16.11.2005 TO 30.09.20 06. BOTH THE PARTNERSHIP FIRMS ARE HAVING SAME PARTNERS WITH FOLLOWING PROFIT SHARING RATIO : 7 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT NAME OF THE FIRM PARTNERS PROFIT RATIO SUPRAJA BAY WAT CH BAR & SHRI MVKS SUBBA RAJU 90% RESTAURANT SHRI A JASWANTH 10% SUPRAJA SANDY LANE BAR & SHRI MVKS SUBBA RAJU 95% RESTAURANT SHRI A JASWANTH 5% 8. FROM THE ABOVE, IT IS OBSERVED THAT THOUGH THE NAME OF THE FIRM IS CHANGED, THERE IS NO CH ANGE IN THE PARTNERS EXCEPT A SMALL VARIATION IN THE PROFIT SHARING RATIO OF THE PARTNERS. BOTH THE PARTNERS HAVE RUN THE ABOVE RESTAURANTS FROM 12.01.2005 TILL THE DATE OF ASSESSMENT. THOUGH FOR THE SAKE OF CONVENIENCE OR FOR OBTAINING THE LICENCE, THE NAME HAS BEEN CHANGED, THERE WAS NO CHANGE IN THE PARTNERSHIP AND THE PARTNERS. THE LD.A.R DID NOT PLACE ANY EVIDENCE HAVING FILED THE RETURNS IN THE NAME OF THE DIFFERENT FIRMS FOR THE PERIOD OF THEIR EXISTENCE . BOTH THE FIRMS ARE BELONGING TO THE SAME PARTNERS AND THE PARTNERS ARE INDIVIDUALLY, SEVERALLY AND JOINTLY LIABLE AS PER THE PARTNERSHIP ACT. THEREFORE, IT IS UN DISPUTED FACT THAT THOUGH THE NAME OF THE PARTNERSHIP FIRM IS CHANGED, THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WAS RELAT ED TO THE PARTNERSHIP FIRM RUN B Y SHRI MVKS SUBBA RAJU AND SHRI ANUMOL U JASWANTH AND THE ASSESSEE HAS NEVER DISPUTED THE 8 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT JURISDICTION AND PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. BY PARTICIPATING I N ASSESSMENT PROCEEDINGS AND NOT DISPUTING THE JURISD ICTION THE ASSESSEE MADE THE AO TO BELIEVE THAT THE PROCEEDINGS ARE CONDUCTED O N THE RIGHT PERSON. THEREFORE WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE SEIZED MATERIAL DOES NOT BELONG TO THE ASSESSEE. 8.1 AS PER 153C OF IT ACT FOR INVOKING JURISDICTION, THERE MUST BE INCRIMINATING M ATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH IN FORM OF MONEY, BULLION, JEWELLERY OR THE EVIDENCES INDICATING THE INFLATION OF E EXPENDITURE OR UNDISCLOSED INVESTMENTS OR SUPPRESSION OF INCO ME. ETC. AS PER THE SATISFACTION NOTE, THE NOTICE U/S 153C WAS ISSUED BASING ON THE MATERIAL FOUND AND SEIZED DURING THE SEARCH IN THE RESIDENTIAL PREMISES OF A.T.RAYUDU AND GROUP BEAR ING N O.ATR/B/2 1 PAGE NO. 27 - 31. ON VERIFICATION OF THE SEIZED MATERIAL IT WAS AN ACCOUNT COPY OF THE STATE BANK OF HYDERABAD BANK ACCOUNT FOR THE PERIOD FROM 08.07.2006 TO 16.08.2006 WHICH WAS MAINTAINED BY THE ASSESSEE . THE LD.AR ARGUED THAT THE SEIZED MATERIAL DOES NOT BELONG TO THE ASSESSEE . T HOUGH THE CONTENT ION OF THE LD.AR IS NOT ACCEPTABLE AS DISCUSSED IN EARLIER PARAGRAPHS , ON GOING THROUGH THE ASSESSMENT ORDER PASSED BY 9 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT THE ASSESSING OFFICER, THERE WAS NO REFERENCE TO THE SEIZED MATERIAL IN THE ASSESSMENT ORDER FOR MAKING ANY ADDITION. THE ASSESSING OFFICER HAS M ADE THE FOLLOWING ADDITIONS IN THE ASSESSMENT ORDER (1) BUSINESS INCOME ESTIMATED RS. 15,84,291/ - (2) UNEXPLAINED EXPENSES U/S 69C TOWARDS PRE OPERATIVE EXPENSES RS.7,98,101/ - (3) UNEXPLAINED EXPENSES U/S 69C TOWARDS RENT PAYMENT OF RS.6,48,000/ - 8 .2 ALL THE ABOVE ADDITIONS ARE MADE ON THE BASIS OF LOOSE SHEETS FOUND DURING THE COURSE OF SURVEY CONDUCTED ON 06.12.2007 WHICH WAS FOUND AND IMPOUNDED AT THE TIME OF SURVEY RELATING TO M/S SSLBR FOR THE MONTH OF JUNE 2007. THE MATERIAL FOUND DURING THE COURSE OF S URVEY DOES NOT GIVE ANY AUTHORIZATION TO THE AO TO MAKE THE ASSESSMENT U/S 153C R.W.S.153A OF IT ACT. THERE SHOULD BE MATERIAL AVAILABLE EVIDENCING THE UNDER STATEMEN T OF INCOME IN THE PREMISES OF SEARCHED PERSON RELATING TO THIRD PARTY TO ASSUME THE J URISDICTION TO MAKE ASSESSMENT UNDER S ECTION 153C R.W.S. 153A OF IT ACT. THIS VIEW IS SUPPORTED VIDE PARAGRAPH 50 OF THE JUDGMENT IN THE CASE OF CIT V. IBC KNOWLEDGE PARK (P.) LTD . [2016] 69 TAXMANN.COM 108 (KAR.) : - 10 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT MATERIALS SUCH AS BOOKS OF ACCOUNT, DOCUMENTS OR VALUABLE ASSETS FOUND DURING A SEARCH SHOULD BELONG TO A THIRD PARTY WHICH WOULD LEAD TO AN INFERENCE OF UNDISCLOSED INCOME OF SUCH THIRD PARTY. SUCH AN INFE RENCE SHOULD BE RECORDED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSONS AND COMMUNICATED TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH THIRD PARTY ALONG WITH THE SEIZED DOCUMENTS AND OTHER INCRIMINATING MATERIALS ON THE BAS IS OF WHICH THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH THIRD PARTY WOULD ISSUE NOTICE UNDER SECTION 153C. ON RECEIPT OF THE AFORESAID MATERIAL, THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH THIRD PARTY WOULD PROCEED AGAINST THE SAID THIRD PA RTY. THUS, WHERE NO MATERIAL BELONGING TO A THIRD PARTY IS FOUND DURING A SEARCH, BUT ONLY AN INFERENCE OF AN UNDISCLOSED INCOME IS DRAWN DURING THE COURSE OF ENQUIRY, DURING SEARCH OR DURING POST - SEARCH ENQUIRY, SECTION 153C WOULD HAVE NO APPLICATION. THU S, THE DETECTION OF INCRIMINATING MATERIAL LEADING TO AN INFERENCE OF UNDISCLOSED INCOME IS A SINE QUA NON FOR INVOCATION OF SECTION 153C OF THE ACT.' 8 . 3 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PR.CIT, BANGALORE VS. LAKSHMI SINGH 78 TAXMAN.COM 274 HELD THAT IN THE ABSENCE OF ANY EVIDENCE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN INVOKING HIS POWER U/S 153C OF IT ACT. SIMILAR VIEW TAKEN BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SUNITA BAI REPORTED 78 TAXMAN.COM 393 . HONBLE CALCUTT A HIGH COURT IN COMMISSIONER OF INCOME - TAX, KOLKATA - III V. VEERPRABHU MARKETING LTD. IN [ 2016] 73 TAXMANN.COM 149 (CALCUTTA) ALSO EXPRESSED THAT EXISTENCE OF INCRIMINATING MATERIAL WHICH MAY BE FOUND DURING SEARCH/REQUISITION/SURVEY OF THIRD PARTY IS A PR EREQUISITE FOR 11 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT ASSESSMENT OF A PERSON OTHER THAN PERSON SEARCHED. HOBLE DELHI HIGH COURT ON THE SIMILAR FACTS IN THE CASE OF COMMISSIONER OF INCOME - TAX V. REFAM MANAGEMENT SERVICES (P.) LTD. [2017] 80 TAXMANN.COM 251 (DELHI) HELD THAT PROCEEDINGS INITIATE D UNDER SECTION 153C AGAINST ASSESSEE IN RESPECT OF ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 ARE NOT JUSTIFIED WHERE ONLY THE DOCUMENT SEIZED DURING SEARCH IN QUESTION WAS A CHEQUE BOOK PERTAINING TO ASSESSEE WHICH REFLECTED THE ISSUE OF CHEQUES DURING AUGUST 2 008 TO OCTOBER 2008, RELEVANT TO ASSESSMENT YEAR 2009 - 10. IN THE JUDICIAL PRONOUNCEMENTS CITED (SUPRA) HELD THAT IN THE ABSENCE OF INCRIMINAT ING MATERIAL, THE ASSESSING OFFICER CANNOT INVOKE THE PROVISIONS OF POWER U/S 153C OF IT ACT. IN THE INSTANT CASE, THE SEIZED MATERAL WAS THE COPY OF THE BANK ACCOUNT AND THE REVENUE HAS NOT ESTABLISHED THAT THE SEIZED MATERIAL IN QUESTION WAS INCRIMINATING EVIDENCES TO INVOKE THE PROVISIONS OF 153C OF IT ACT. THE FACTS OF THE CASE ARE SIMILAR TO THAT OF THE DECISION OF HONBLE DELHI HIGH COURT IN REFAM MANAGEMENT SERVICES (P.) LTD SUPRA THEREFORE, THE ASSESSMENT ORDER AS WELL AS CIT(APPEALS) ORDER CLEARLY EVIDENCES THAT NO INCRIMINATING MATERIAL WAS FOUND WHICH WAS TAKEN AS EVIDENCE OR BASIS FOR FRAMING THE AS SESSMEN T AND THE REVNUE COULD NOT CONTROVERT 12 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT THE SAME WITH ANY OTHER EVIDENCES. THEREFORE, WE HOLD THAT THE ASSESSING OFFICER H AS WRONGLY INVOKED THE POWER U/S 153C OF IT ACT, ACCORDINGLY, THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE SET ASIDE APPEAL OF THE AS SESSEE IS ALLOWED. 9. GROUND NO.3 TO 6 ARE RELATED TO THE ADDITIONS MADE BY THE AO ON THE BASIS OF EVIDENCES COLLECTED DURING THE COURSE OF SURVEY. IN GROUND NO.2 WE HAVE HELD THAT THE ASSESSMENT ORDER PASSED U/S 153C R.W.S. 153C AS IN VALID. HENCE WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE GROUNDS ON MERITS AND DISMISS THEM AS IN FRUCTUOUS. ITA NO.495/VIZ/2012/ 2008 - 09 10. GROUND NOS.1 AND 7 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 11. GROUND NOS. 2 AND 3 ARE RELA TED TO THE REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATING THE INCOME. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE AND CERTAIN EVIDENCES WERE FOUND DURING THE SURVEY. BASING ON THE EVIDENCES FOUND 13 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT DURING THE COURSE OF SURVEY THE ASSESSING OFFICER HAS ESTIMATED THE BUSINESS PROFIT OF RS.21,12,384/ - . IN THIS CASE, SURVEY U/S 13 3A WAS CONDUCTED IN THE BUSINES S PREMISES OF THE ASSESSEE ON 06 .12.2007. DURING THE COURSE OF SURVEY, THE EVIDENCES IN THE FORM OF LOO SE SHEETS WE RE FOUND AND IMPOUNDED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER RECORDED THE ST ATEMENT REGARDING THE CONTENTS OF THE LOOSE SHEETS BUT THE ASSESSEE HAS NEITHER COOPERATED NOR FURNISHED THE SATISFACTORY EXPLANATION. THE ONLY REPLY GIVEN BY THE PARTNER MR.MVKS SUBBA RAJU TO THE SPECIFIC QUESTIONS ASKED BY THE AO WAS AS ALREADY STATED, THE STATEMENT IS NOT A CORRECT STATEMENT AND I REQUEST YOU TO IGNORE THE ENTRIES IN THE SAID IMPOUNDED STATEMENT . THE ASSESSING OFFICER ATTACHED THE COPY OF THE IMPOUNDED LOOSE SHEETS IN PAGE N OS. 4 AND 5 OF THE ASSESSMENT ORDER. THE STATEMENT FOUND DURING THE COURSE OF SURVEY WAS TITLED AS M/S SUPRAJAS SANDY LANE BAR & RESTAURANT , VISAKHAPATNAM, TRADING AND PROFIT AND LOSS ACCOUNT FOR THE MONTH OF JUNE 2007. TH E COMPLETE DETAILS OF PURCHASES, SALES , OTHER EXPENSES AND THE ABSTRACT OF THE BALANCE SHEETS AS ON 30.06.2007 W ERE FOUND DURING THE COURSE OF SURVEY. AS PER THE STATEMENTS FOUND, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE TOTAL LIQUOR SA LES WAS 14 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT RS.9,92,826/ - FOR THE MONTH JUNE 2007 AND RESTAURANT SALES WAS RS.1,61,886/ - , PROFIT UPTO MAY WA S RS.19,74,787/ - , JUNE PROFIT WAS RS.1,37,602/ - AND PROFIT UPTO JUNE WAS RS.21,12,389/ - (AVERAGE MONTHLY PROFIT I.E 2112389/12=1760324/ - ) . THE ENTRIES IN THE ABOVE DOCUMENT WAS PARTIALLY TALLIED WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SINCE THE ABOVE INCOME AND EXPENDITURE DOES NOT TALLY COMPLETELY WITH THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE, THE ASSESSING OFFICER REJECTED THE BOOK S OF ACCOUNTS AND ESTIMATED THE INCOME AT RS,1,76,032/ - PER MONTH WHICH WORKED OUT TO RS.21,12,384/ - FOR THE WHOLE YEAR AND BROUGHT THE SAME TO THE TAX. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE FILED APPEAL BEFORE THE CIT (A) AND THE LD . CIT (A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R . THE RELEVANT PART OF THE LD. CIT (A) ORDER IS EXTRACTED WHICH READS AS UNDER: 8.2 I HAVE CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND HAVE GONE THROUGH THE MATERIAL IMPOUNDED WHICH IS EXTRACTE D IN THE ASSESSMENT ORDER. P&L ACCOUNT IMPOUNDED CLEARLY REFLECTS NET PROFIT OF RS,1,37,602/ - FOR THE MONTH OF JUNE 2007 AND ALSO SHOWS PROFIT UP TO MAY 2007 AT RS.19,74,787/ - . THIS P&L STATEMENT IS FOUND FROM THE ASSESSEE'S PREMISES. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THIS, ONLY EVASIVE REPLIES WERE GIVEN TIME AND AGAIN DESPITE SPECIFIC QUESTIONS RAISED IN THIS REGARD. ASSESSEE'S EXPLANATION THAT THIS PAPER IS PREPARED BY SOME MEDIATOR TO BE SUBMITTED TO BANKS IS WITHOUT ANY SUBSTANCE AS THE ASSESSEE I N SUPPORT OF ITS CONTENTION DID NOT FURNISH ANY EVIDENCE. NEITHER THE WHEREABOUTS OF THE MEDIATOR 15 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT WHO PREPARED THIS NOR THE BANKS TO WHICH IT IS FURNISHED ARE SUBMITTED BY THE ASSESSEE THE ISSUES THAT NEED TO BE NOTED THAT IS ANY CALCULATION MADE TO SUBMIT IT TO BANKS WOULD BE IN PROPER FORMAT, SIGNED AND CERTIFIED BUT NOT IN THE MANNER IN WHICH IT IS FOUND. THE IMPOUNDED MATERIAL SEEMS AS IF IT IS MADE FOR INTERNAL CONSUMPTION OF THE PARTNERS AND IS ONLY MEANT TO REFLECT THE ACTUAL AFFAIRS OF THE ASSESEE'S BUSINESS FOR THE SAKE OF DISCUSSION AMONGST THE PARTNERS. ASSESSEE ALSO STATED THAT THE FIGURES OF PROFITS ARE INFLATED. IF THAT IS THE INTENTION OF ASSESSEE, THE ACTUAL RENT OF RS.82,000/ - WOULD NOT HAVE BEEN REFLECTED IN THE STATEMENT AS AGAINST THE REN T AS PER LEASE DEED OF RS.8,000/ - . BESIDES THE ABOVE FACT IT ALSO SEEMS IMPOSSIBLE THAT A BIG PRE MISES TOUCHING THE SEA WOULD HAVE BEEN TAKEN FOR A RENT OF RS.8,000/ - . THIS ITSELF REFLECTS THE INTENTIONS OF THE ASSESSEE NOT TO SHOW THE ACTUAL AFFAIRS OF TH E FIRM IN THE REGULAR BOOKS OF ACCOUNT. THEREFORE, DESPITE SOME MINOR DISCREPANCIES WHICH COULD NOT BE RECONCILED, I AM OF THE CONSIDERED OPINION THAT THE STATEMENT FOUND AND IMPOUNDED REFLECTED THE ACTUAL AFFAIRS OF THE ASSESSEE FIRM. THEREFORE AO CORRECT LY HELD THAT THE REGULAR BOOKS OF ACCOUNT CANNOT BE RELIED UPON. HENCE AO IS JUSTIFIED IN REJECTING THE BOOKS AND ESTIMATING THE NET PROFIT BASED ON THE IMPOUNDED MATERIAL. THE REFORE THE ESTIMATION MADE BY AO IS UPHELD. 12. A PPEARING FOR THE ASSESSE E, THE LD.AR ARGUED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER ON A SIMPLE PAPER WHICH IS NOT BELONGING TO THE ASSESSEE. THE LOOSE SHEET CANNOT BE A BASIS FOR ESTIMATION OF INCOME. THOUGH THE NET PROFIT WAS SHOWN AS RS.1, 37 , 60 2/ - FOR THE MONTH OF JUNE AND TOTAL SALE OF RS.9,92,826/ - , EVERY MONTH SALES CANNOT BE THE SAME. THERE MAY BE UPS AND DOWNS IN THE SALES. THE ENTIRE EXPENDITURE CANNOT BE ACCOUNTED IN LOOSE PAPERS EVERY MONTH. THE NET PROFIT ARRIVED BY THE AS SESSEE FOR THE MONTH OF JUNE IS PURELY AN ESTIMATION WITHOUT INCLUDING 16 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT ALL THE EXPENSES. THEREFORE, THE LD.AR ARGUED THAT THE ASSESSING OFFICER HAS ESTIMATED THE INCOME FOR THE ENTIRE YEAR ON THE BASIS OF ONE MONTH PROFIT WHICH IS PURELY A GUESS WORK. AC CORDING TO THE LD. AR THE ADDITION REQUIRED TO BE DELETED 1 3 . ON THE OTHER HAND, THE LD.DR ARGUED THAT THE ASSESSEE IS ENGAGED IN THE LIQUOR TRADE AND BAR & RESTAURANT. IN THE LIQUOR TRADE, THE LICENCE IS GIVEN FROM JUNE TO JUNE AND IN THE LOOSE SHE ET FOUND DURING THE COURSE OF SURVEY IT WAS NOTED THAT THE PROFIT UPTO J UNE WAS RS.21,12,389/ - AND PROFIT FOR THE MONTH OF JUNE WAS 1,37,602/ - NET OF ALL EXPENSES. THE AVERAGE NET PROFIT ON THE TOTAL PROFIT PER MONTH WORK ED OUT TO RS. 1,76,032/ - . THEREFOR E, THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE IN COME BASING ON M ONTHLY PROF I T @1,76,032/ - DECLARED BY THE ASSESSEE UPTO J UNE 2007 . THE LD.DR FURTHER ARGUED THAT IT IS FOR THE ASSESSEE TO P R OVE THAT THE CONTENTS OF LOOSE SHEETS FOUND DURING THE COURSE OF SEARCH W ERE INCORRECT. THEREFORE, THE LD.DR ARGUED THAT THERE IS NO ERROR IN THE ASSESSMENT ORDER WHICH WAS RIGHTLY CONFIRMED BY THE CIT(APPEALS) AND NO INTERFERENCE IS CALLED FOR. 17 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT 1 4 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL P LACED ON RECORD. A SURVEY U/S 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 06.12.2007 AND DURING THE COURSE OF SURVEY LOOSE SHEETS FOUND AND IMPOUNDED AS PAGE NOS. 2 AND 3 OF IMPOUNDED DOCUMENTS. THE LOOSE SHEETS ARE COMPUTER GENERATED TR ADING AND PROFIT AND LOSS ACCOUNT FOR THE MONTH OF JUNE 2007 AND BALANCE SHEET AS ON 30.06.2007 PERTAINING TO M/S SSLBAR . STATEMENT WAS ALSO RECORDED FROM THE MANAGER AND PARTNER SHRI MVKS SUBBA RAJU FOR WHICH SHRI SUBBA RAJU HAS NOT EXPLAINED THE CONTENTS TO THE SATISFACTION OF THE ASSESSING OFFICER. THE SALES RECORDED IN LOOSE SHEET WERE TALLIED FOR THE MONTH OF JUNE. AS PER THE AUDIT ED BOOKS OF ACCOUNTS, TOTAL SALES FOR THE MONTH OF 2007 WERE RS.9,92,826/ - WHICH IS IN SYNC WITH THE LO OSE SHEETS. SIMIL ARLY, SOME OTHER EXPENSES SHOWN UNDER TRANSPORT, SALES TAX, TELEPHONE CHARGES FOR TH E MONTH OF JUNE WERE ALSO IN SY N C WITH THE BOOKS OF ACCOUNTS AND THE COMPUTER GENERATED TRADING AND PROFIT AND LOSS ACCOUNT FOUND AT THE TIME OF SURVEY WHICH IS NOT DISPUT ED BY THE AR . THEREFORE, THE ASSESSING OFFICER HELD THAT THE TRADING AND PROFIT AND LOSS ACCOUNT FOUND WAS BELONGING TO THE ASSESSEE. AS PER SECTION 292C OF IT ACT, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE EVIDENCES 18 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT FOUND DURING THE COURSE OF SURV EY WERE NOT BELONGING TO THE PERSON SURVEYED AND THE CONTENTS ARE NOT TRUE. IN THIS CASE, THERE WAS SURVEY IN THE PREMISES OF THE ASSESSEE AND THE EVIDENCES FOUND IN THE SURVEY PREMISES WERE PARTLY TALLIED WITH THE AUDITED BOOKS OF ACCOUNTS AS DISCUSSED ABOVE AND THE ASSESSEE HAS NOT DISCHARGED ITS ONUS THAT THE SAID PROFIT AND LOSS ACCOUNT AND BALANCE SHEET DOES NOT BELONG TO IT AND THE CONTENTS ARE NOT TRUE. . THEREFORE, WE HAVE NO HESITATION TO AGREE WITH THE ASSESSING OFFICER AND THE CIT(APPEALS) THAT THE LOOSE SHEET BELONGS TO THE ASSESSEE AND THE CONTENTS IN THE LOOSE SHEETS ARE TRUE AND CORRECT. IT IS FOR THE ASSESSEE TO PROVE THAT IF ANY ENTRY RECORDED IN THE LOOSE SHEET IS NOT CORRECT. IN THIS CASE, THE ASSESSEE HAS NOT PROVED WITH TAN GIBLE EVI DENCES. TH OUGH THE ASSESSEE HAS STATED THAT CERTAIN EXPENSES A RE NOT RECORDED, HE DID NOT BRING IT TO OUR NOTICE THE EXPENSES SAID TO BE NOT RECORDED. THEREFORE, WE HOLD THAT PROFIT WORKED OUT BY THE ASSESSEE FOR THE MONTH OF JUNE 2007 IS CORRECT. THE ASSESSING OFFICER ESTIMATED THE YEARLY PROFIT BY MULTIPLYING RS.1,76,032/ - THE AVERAGE MONTHLY PROFIT WITH 12 MONTHS FOR THE ASSESSMENT YEAR 2008 - 09. THE ASSESSEE DID NOT FURNISH THE TRUE AND CORRECT FINANCIALS BEFORE THE AO WITH CORRECT AMOUNT OF SALES A ND THE PROFIT. IN THE 19 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT CIRCUMSTANCES OF NON COOPERATION OF THE ASSESSEE THE AO HAS NO OPTION EXCEPT TO ESTIMATE THE PROFIT. HOWEVER THE SALES CANNOT BE THE SAME AMOUNT THROUGH THE YEAR. FOR THE MONTH OF JUNE 2007 THE NET PROFIT WAS RS.1,37.602/ - ON TOTAL SALES OF RS. 9,92,826/ - WHICH WORKS OUT TO 13.85% ON TOTAL SALES. THEREFORE WE DIRECT THE A O TO ESTIMATE THE NET PROFIT ON TOTAL SALES OF THE ASSESSEE @13.85% FOR THE A.Y - 2008 - 09 OR TO ADOPT THE PROFIT ADMITTED BY THE ASSESSEE WHICHEVER IS HIGHER. ACCORDIN GLY THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 1 5 . GROUND NO. 4 IS RELATED TO THE DEPRECIATION, INTEREST ON PARTNERS CAPITAL AND REMUNERATION TO PARTNERS. NO INFORMATION IS AVAILABLE WITH REGARD TO THE DEPRECIATION CLAIMED BY THE ASSESSEE, INTEREST ON PARTNERS CAPITAL AND REMUNERATION TO PARTNERS FROM THE ASSESSMENT ORDER. ON VERIFICATION OF FORM 35, IT APPEARS THAT THE ASSESSEE HAS NOT RAISED THIS GROUND BEFORE THE CIT (APPEALS). HOWEVER, UNLES S THE PARTNERSHIP DEED PERMITS THE INTEREST AND REMUNERATION IT IS NOT ALLOWABLE DEDUCTION. THE LD.AR ALSO DID NOT PLACE ANY EVIDENCE REGARDIN G THE CLAIM OF INTEREST AND REMUNERATION CLAIMED BY THE PARTNERS IN THE RETURN OF 20 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT INCOME . THEREFORE, THE ASSESSEES APPEAL ON INTEREST ON PARTNERS CAPITA L AND THE REMUNERATION IS NOT TENABLE AND DISMISSED. 1 6 . WITH REGARD TO THE DEPRECIATION, IT IS STATUTORY ALLOWANCE WHICH REQUIRE D TO BE ALLOWED BY THE ASSESSING OFFICER. IT IS SEEN FROM THE LOOSE SHEETS THAT WHILE WORKING THE NET PROFIT FOR THE MON TH OF JUNE 2007, NO DEPRECIATION WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION AS PER THE RULES AND ALLOW THE SAME FROM THE I NCOME ESTIMATED AS PER THE DISCUSSION MADE IN THE EARLIER PARAG RAPHS SUBJECT TO PROVIDING THE NECESSARY EVIDENCES FOR THE ASSETS . THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSE. 1 7 . GROUND NOS.5 AND 6 ARE RELATED TO THE UNEXPLAINED CASH CREDIT IN RESPECT OF PUSHKARA CAPITAL. AS PER THE BALANCE SHEET FOUND DURING THE COURSE OF SURVEY IT IS SEEN THAT THE ASSESSING OFFICER FOUND THAT A SUM OF RS.23,14,040 / - WAS SHOWN AS CAPITAL IN PUSHKARA CAPITAL ACCOUNT. THE SOURCE WAS NOT EXPLAINED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND BEFORE THE CIT (APPEALS). SINCE THE SOURCE WAS NOT EXPLAINED BY THE ASSESSEE, THE ASSESSING OFFICER MADE THE ADDITION U/S 68 OF IT ACT. 21 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT THE ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT BUT FAILED TO EXPLAIN THE SOURCE. THEREFORE, CIT(APPEALS) CONFIRMED THE ADDITION IN PARA NO.9.3 OF THE O RDER WHICH IS EXTRACTED AS BELOW : '9.3 UNEXPLAINED CASH CREDIT U/S.68 (A.Y.2008 - 09) THE IMPOUNDED MATERIAL SHOWED THAT TWO PERSONS VIZ SRI MVSK SUBBA RAJU AND ONE SRI PUSHKARA INTRODUCED CAPITAL OF RS,21,79,106/ - AND RS. 23,14,040/ - RESPECTIVELY. FROM TH E REGULAR BOOKS OF ACCOUNT, IT IS SEEN THAT SRI SUBBA RAJU'S CAPITAL ACCOUNT IS ONLY RS.7,45,980/ - . THUS THEE IS A DIFFERENCE IN THE CAPITAL ACCOUNT OF SRI SUBBARA RAJU AMOUNTING TO RS,14,33,136/ - . AS THIS REFLECTS THE INDIVIDUAL INCOME / INVESTMENT OF SRI SUBBA RAJU AC HELD THAT THE SAME WOULD BE CONSIDERED IN SUBBA RAJU'S INDIVIDUAL ASSESSMENT. HOWEVER REGARDING CAPITAL OF PUSHKARA AMOUNTING TO RS.231440/ - NO SATISFACTORY EXPLANATION IS OFFERED BY THE ASSESSEE. THE SECOND OFFICIAL PARTNER AS PER PARTNERSH IP DEED SRI A JASWANT DID NOT COMPLY TO THE NOTICES I SUMMONS ISSUED. THE AMOUNT STANDING IN THE NAME OF SRI A.JASWANT AS PER BOOKS IS ONLY RS.14,498/ - . HENCE AC AFTER GIVING CREDIT TO THE AMOUNT OF RS,14,498 ADDED BACK RS.22,99,542/ - IN THE HANDS OF THE F IRM FOR A.Y.2009 - 10. AGAINST THIS ADDITION IT IS ARGUED BY THE ASSESSEE THAT THE CAPITAL UNDER THE NAME OF PUSHAKARA IS MYTHICAL AND IS SHOWN TO BOOST UP THE CAPITAL OF THE FIRM AND TO STRENGTHEN ITS FINANCIAL STATUS. IN FACT THERE IS NO SUCH PARTNER IN TH E FIRM. THE TWO PARTNERS VIZ., SUBBA RAJU AND JASWANT HAD CAPITAL BALANCE OF RS.7,00,867/ - AND RS.14,498/ - AS ON 31.03.2007. THEREFORE IT IS CONTENDED THAT THE ADDITION MADE IS NOT BASED ON ANY FACTS AND THE SAME SHOULD BE DELETED. IT IS ALSO ARGUED RELYIN G ON INDWELL CONSTRUCTIONS, THAT ONCE THE NET PROFIT IS ESTIMATED NO FURTHER ADDITION IS WARRANTED. I HAVE CONSIDERED THE ARGUMENTS OF THE ASSESSEE. THE IMPOUNDED STATEMENT REFLECTS CAPITAL IN THE NAME OF PUSHKARA. AS STATED BY THE ASSESSEE THIS NAME INDEE D SEEMS TO BE A MYTHICAL NAME. HOWEVER MONEY DOES NOT COME FROM MYTHICAL SOURCES. THOUGH THE NAME MAY BE PSEUDONYM, THE MONEY SHOWN AS A SOURCE IS DEFINITELY NOT PSEUDO AS IT HAS THE MATCHING ASSETS SHOWN IN 22 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT THE BALANCE - SHEET. THEREFORE AO IS DUTY BOUND TO EXAMINE THE CAPITAL INTRODUCTION IN THE NAME OF PUSHKARA. AS NO EXPLANATION IN THIS REGARD IS FORTHCOMING FROM THE ASSESSEE AC RIGHTLY ASSESSED THE DIFFERENCE AMOUNT, AFTER GIVING DUE CREDIT TO THE SECOND PARTNER'S ACTUAL CAPITAL BALANCE, AS UNEXPLAINED C REDIT U/S 68, ASSESSEE RELIANCE ON INDWELL CASE IS ALSO UNFOUNDED AS THE SAME APPLIES TO ADDITIONS FROM SECTION 29 TO 43 ONLY AND NOT TO ADDITION U/S.68. THEREFORE I CONFIRM THE ADDITION MADE BY AO. 1 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED ON RECORD. THERE WAS A CAPITAL OUTSTANDING IN THE CAPITAL ACCOUNT OF PUSHKARA AMOUNTING TO RS.23,14,040/ - . AFTER REDUCING THE LOAN ACCOUNT OF PUSHKARA, THE NET BALANCE WAS RS.22,99,542/ - . IT IS SETTLED ISSUE THAT THE ASSESSEE REQUIRED TO EXPLAIN THE SOURCE OF CASH CREDIT MADE IN THE BOOKS OF ACCOUNT WITH IDENTITY, CAPACITY AND THE CORRECTNESS OF THE ENTRY WITH THE TANGIBLE EVIDENCE . THOUGH THE ASSESSEE CLAIMED THAT THERE WAS NO SUCH PART NER IN THE NAME OF PUSHKARA , THE ASSESSEE HAS SHOWN THE SAME AS OUTSTANDING CAPITAL BALANCE AND ALSO DECLARED THE MATCHING ASSETS. THEREFORE, THE LD. CIT(APPEALS) UPHELD THAT THE MONEY DOES NOT COME FROM MYTHICAL SOURCES. SINCE THE MATCHING ASSETS SHOWN IN THE BALANCE SHEET , THE MONEY HAS COME INTO THE FI RM IN THE NAME OF PUSHKARA , ASSESSEE IS DUTY BOUND TO EXPLAIN THE SOURCE WITH IDENTIFICATION, GENUINENESS AND CREDIT WORTHINESS OF THE CAPITAL 23 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT CONTRIBUTOR . SINCE NO EXPLANATION IS FORTHCOMING FROM THE ASSESSEE, WE HOLD THAT CI T (APPEALS) HAS RIGHTLY CONFI RMED THE ADDITION MADE BY THE ASSESSING OFFICER AND THE ORDER OF THE CIT(APPEALS) IS UPHELD. 19 . IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE A.Y.2007 - 08 IS ALLOWED AND FOR THE A.Y.2008 - 09 IS PARTLY ALLOWED . T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH JUN 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 29 .06.2017 L. RAMA, SPS 24 ITA NO S .4 9 4/VIZAG/201 2 AND 495/VIZ/201,2 A.YS.2007 - 08 AND 2008 -- 09 M/S SUPRAJA S SANDY LANE BAR & RESTAURANT / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT M/S SUPRAJAS SANDY LANE BAR & RESTAURANT, BESIDE HOTEL PALM BEACH BE ACH ROAD, VISAKHAPATNAM 2 . / THE RESPONDENT ACIT, CENTRAL CIRCLE - 2 , VISAKHAPATNAM 3 . / THE CIT (CENTRAL), HYDERABAD 4 . ( ) / THE CIT (A) , VI SAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM