M. Ranga Reddy, Hyd, Hyderabad V. Addl.CIT, Range-9, Hyd, Hyderabad

ITA 541/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6103 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Unexplained cash credit; Salary income; Corroborative evidences; Assessment record; Benefit of exemption; Onus to prove
• Section: 10(14); 142(1); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA.NO.541/HYD/2016 ASSESSMENT YEAR 2006-2007 SHRI M. RANGA REDDY, HYDERABAD. PAN ADYPM1495Q VS. THE ADDL. CIT, RANGE-9 HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MOHD. AFZAL FOR REVENUE : SMT. SUMAN MALIK DATE OF HEARING : 15.02.2017 DATE OF PRONOUNCEMENT : 24.02.2017 ORDER PER G. PAVAN KUMAR, J.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A)-7, HYDERABAD DATED 18.12.2015 FOR THE A.Y. 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS AS UN DER : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)- 9 HYDERABAD, IS AGAINST THE LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS.4,26,000 WHICH WAS RE CEIVED BY WAY OF ALLOWANCES BY THE ASSESSEE AS A MEMBER OF LE GISLATIVE ASSEMBLY. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS.L,22,57,084 MADE U/S 68 OF THE IT ACT. 2 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN ASSUMING THAT THE ASSESSEE HAS NOT DISCHARGED THE O NUS COST ON HIM TO PROVE THE GENUINENESS OF THE TRANSACTION OF THE LOAN AND THE CREDITWORTHINESS OF THE LOAN CREDITOR AND FURTH ER ERRED IN CONFIRMING THE ADDITION OF ADDITION OF RS.1,22,57,0 84. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THAT THE ASSESSMENT OF THE LOAN CREDITO R M/S SAPTASHIKHARA HOUSING PVT LTD, WAS REOPENED ON THE INSTIGATION OF THE ASSESSING OFFICER OF THE ASSESSEE AND AFTER EXAMINATION NO ADDITION WAS MADE. 6. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODI FY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 2. BRIEF FACTS OF THE CASE ARE THE ASSESSEE IS A MEMB ER OF LEGISLATIVE ASSEMBLY OF A.P. AND ENGAGED IN THE BUSI NESS OF LORRY, TRANSPORT AND SAND SUPPLY AND HAVE INCOME FROM AGRICU LTURE. AND THE RETURN OF INCOME WAS FILED ON 30.11.2006 FOR THE A.Y. 2006-07 WITH TOTAL INCOME OF RS.2,34,349 INCLUDING AGRICULTURE INC OME OF RS.1 LAKH. THE ASSESSEE IS A PARTNER OF M/S. SRINIVASA POULTRY A ND HORTICULTURE FARM AND M/S. MAHALAKSHMI THEATRES. THE RETURN OF INC OME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTL Y, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED. IN RESPONSE TO NOTICE, THE LD. A.R. OF THE ASSESSEE APPEA RED. THE LD. A.O. ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT CALLING F OR INFORMATION I.E., BOOKS OF ACCOUNT, DETAILS OF LANDS, CROPS AND AGRICUL TURE INCOME, SALE DEED OF PROPERTY PURCHASE DETAILS AND CASH FLOW STATEM ENT FOR THE F.Y. 2005-06 ALONG WITH BANK STATEMENT. THE A.O. FOUND THAT THE ASSESSEE HAS SALARY INCOME FROM A.P. LEGISLATIVE ASSEMBLY AND DISCLOSED IN THE RETURN OF INCOME AND OBSERVED THAT THE ASSESSEE AS A M EMBER OF A.P. LEGISLATIVE ASSEMBLY RECEIVED SALARY AND ALLOWANCES RS.4,80,000 CONSISTING OF SALARY, CONSTITUTIONAL ALLOWANCE, CONVE YANCE ALLOWANCE, CONTINGENT ALLOWANCE, TELEPHONE ALLOWANCE, SECURITY G UARD ALLOWANCE 3 AND MEDICAL ALLOWANCE. WHEREAS THE ASSESSEE HAS DISC LOSED RS.30,000 AS INCOME FROM SALARY AND HAS NOT OFFERED ANY OTHER A LLOWANCES. THE LD. A.O. ON PERUSAL OF THE SALARY CERTIFICATE FIND THA T THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP AND ALLOWANCES ARE EX EMPT UNDER LAW PROVIDED THE EXPENDITURE HAS BEEN INCURRED BY THE ASS ESSEE. AS PER SECTION 10(17)(I) OF THE ACT DAILY ALLOWANCE OF MEMBER OF LEGISLATIVE ASSEMBLY (IN SHORT MLA) IS EXEMPT AND UNDER SECTION 10(17))(III) OF THE ACT RS.2000 PER MONTH IS EXEMPT AS SPECIFIED BY THE CEN TRAL GOVERNMENT AND REMAINING ALLOWANCE IS TAXABLE UNDER OTHER SOURCES. THEREFORE, THE LD. A.O. OUT OF THE TOTAL ALLOWANCES REC EIVED BY THE ASSESSEE, ALLOWED ONLY RS.2000 PER MONTH AS EXEMPTI ON AND MADE ADDITION OF RS.4,26,000 TO THE RETURNED INCOME UNDER IN COME FROM OTHER SOURCES AS NO EXPLANATIONS WERE SUBMITTED IN RES PECT OF CLAIMS EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING THE INCOME. 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL WITH THE C IT(A). WHEREAS THE LD. CIT(A) CONSIDERED THE FACTS AND THE DEC ISION OF THE TRIBUNAL AND DISTINGUISHED COORDINATE BENCH OF TRIB UNAL DECISION RELIED BY THE ASSESSEE AS NO EVIDENCE WAS PRODUCED O N INCURRING OF SUCH EXPENDITURE AND SUPPORTED THE FINDINGS OF THE A.O. AND FINALLY CONFIRMED THE ACTION OF THE A.O. AND DISMISSED THE ASSE SSEES GROUND. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE TRIBU NAL. 4. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE T HE A.O. AND IN APPEAL PROCEEDINGS IN RESPECT OF ALLOWANCES PROVIDE D TO THE ASSESSEE. THE LD. A.R. SUBMITTED THAT THE ALLOWANCES ARE EXEMPTED UNDER SECTION 10(17)(III) AND FILED PAPER BOOK TO SUBSTANTIATE THE CL AIM WITH SALARY CERTIFICATE ISSUED BY THE GOVERNMENT. THE A.R. EMPHASIZ ES THAT ALLOWANCES ARE PROVIDED BY THE LEGISLATIVE ASSEMBLY TO CARRY-OUT THE DUTIES OF MLA FOR THEIR CONSTITUENCY AND RELIED ON THE DECISION OF HYDERABAD TRIBUNAL IN THE CASE OF SHRI BIJJAM PARTHAS ARATHI REDDY, 4 BANAGANAPALLI, KURNOOL DISTRICT VS., ACIT, CIRCLE-1, KURNOOL (ITA.NO.1158 & 1159/H/06) AND OTHER TRIBUNAL DECISIO NS AND SUBMITTED THAT THE ALLOWANCES GRANTED TO THE MLA ARE TO MEE T THE EXPENDITURE WHOLLY AND EXCLUSIVELY IN PERFORMANCE OF DUTY OF THE MLA AND SUCH EXPENSES ARE INCURRED FOR SPECIFIED PURPOS E AND THUS ALLOWANCES ARE TO COVER THE CONSTITUENCY TRANSPORT EXPEN SES AND OTHER EXPENSES AND PRAYED FOR DELETION OF THE ADDITION MADE BY THE ASSESSING OFFICER. PER CONTRA, THE LD. D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND OPPOSED THE GROUNDS. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. A.RS A RGUMENT THAT THE ASSESSEE BEING MLA, WAS PROVIDED WITH ALLOWANCES BY THE STATE LEGISLATIVE ASSEMBLY AS REFERRED TO THE SALARY CERTIFI CATE ISSUED BY THE LEGISLATURE SECRETARIAT DATED 30.10.2006 AT PAGE 55 OF THE PAPER BOOK, WHERE THE CONSOLIDATED MONTHLY AMOUNT OF RS.40,000 WAS PAID INCLUDING SALARY OF RS.2500 PER MONTH. THESE ALLOWAN CES ARE PAID TO MEMBERS FOR THEIR CONSTITUENCY WORKS WHICH CONSISTS O F CONVEYANCE ALLOWANCE, CONTINGENCY ALLOWANCE, TELEPHONE ALLOWANC E, SECURITY CAR ALLOWANCE AND MEDICAL ALLOWANCE. GENERALLY AS A MEM BER OF LEGISLATIVE ASSEMBLY, THE MEMBER INCURS EXPENDITURE AT VARIOUS TIM ES IRRESPECTIVE OF PLACE AND MAINTAINING VOUCHERS AND BILLS IS A NON -REALISTIC CONSIDERING THE MOVEMENT AND TIME AND THERE IS NO DISPU TE OF INCURRING OF EXPENDITURE BY THE A.O. EXCEPT NOT PRODUCING THE EVI DENCE IN RESPECT OF CLAIM. THE ASSESSEE FILED LETTER DATED 24.12.2008 EXPLAINING THAT RS.4,80,000 WAS RECEIVED BY THE ASSESSEE AND TREATED AS RECEIPT IN THE CASH FLOW STATEMENT AND WITHDRAWN. THE DIFFICULTY OF AS SESSEE-MLA WAS THAT, HE COULD NOT OBTAIN BILLS WHICH IS CONSIDERED MA NDATORY BY THE A.O. IN THIS CONNECTION, THE LD. A.R. DREW OUR ATTENTION TO PAGE 77 OF THE PAPER BOOK WHEREIN SIMILAR ISSUE WAS DISCUSSED ( SHRI BIJJAM PARTHASARATHI REDDY VS. ACIT, CIRCLE-1 KURNOOL) (SUPR A), BY THE 5 COORDINATE BENCH OF THE TRIBUNAL AND HELD AT PAGE-4 PA RA-7 WHICH READ AS UNDER : 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. AS FOR THE CLAIM OF EXEMPTION I N RESPECT OF THE SALARY AND ALLOWANCES RECEIVED BY THE ASSESSEE IN HIS CAPA CITY AS AN MLA, WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 31.1.2006 IN ITA NO.218 AND 219/HYD/200S IN THE CAS E OF N INDRASENA REDDY, HYDERABAD VS., ITO, A COPY OF WHIC H IS FILED BEFORE US. THE TRIBUNAL BY ITS ORDER DATED 31.1.2006 IN TH AT CASE, AFTER DETAILED CONSIDERATION OF THE RELEVANT PROVISIONS O F THE ACT, CONCLUDED VIDE PARA 6.1 THEREOF THAT IN THE CASE OF A MEMBER OF LEGISLATIVE ASSEMBLY OF THE STATE, PROVISIONS OF BOTH S.10(14)( I) AND S.10( 17)(III) WILL BE APPLICABLE. IN THE CASE OF CIT VS. MADDI SU DARSHANAM (174 ITR 659), HON'BLE ANDHRA PRADESH HIGH COURT HAS OBSERVE D THAT SO AS TO BE ENTITLED TO THE BENEFIT OF EXEMPTION UNDER S.10( 14), IT IS ENOUGH IF A PERSON IS HOLDING AN OFFICE AND FOR THE PURPOSE OF PERFORMING THE DUTIES/ASSOCIATED WITH THAT OFFICE, HE IS GRANTED A N ALLOWANCE OR BENEFIT SPECIFICALLY TO MEET THE EXPENSES. IN THE C ASE BEFORE US, THE ASSESSING OFFICER HIMSELF HAS NOTED IN PARA 3 (F) O F THE ASSESSMENT ORDER THAT THE ASSESSEE WAS A HIGH PROFILE MLA AND A RENOWNED PERSON AND IN ORDER TO MAINTAIN DIGNITY, STATUS AND LIFE S TYLE OF A HIGH PROFILE MLA'S REPUTATION, THE ASSESSEE SHOULD HAVE INCURRED AN AMOUNT OF RS.25,000 PER MONTH, VIZ. RS.3 LAKHS PER ANNUM. CON SIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ACCE PT THE CONTENTION OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO AL LOW DEDUCTION IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN CONNECTION WITH PERFORMANCE OF DUTIES OF HIS OFFICE AS MLA. 5.1. SIMILARLY, THE ABOVE DECISION WAS CONSIDERED B Y THE TRIBUNAL IN THE CASE OF SHRI B. DURGA PRASAD, EX.MLA, VENKATAG IRI VS. ITO, WARD- 1, GUDUR, NELLORE DISTRICT (ITA.NOS.826 TO 830/H/2007 DATED 28.09.2012) AND RELIEF WAS GRANTED. THE MUMBAI BENC H OF ITAT IN THE CASE OF MADANLAL MOHANLAL NARANG VS. ACIT (2007) 10 4 ITD 190 (MUM.) EMPHASIZE ON THE ALLOWANCES AND HAS OBSERVED AT PARA -7 AS UNDER: 7. THE EXPRESSION TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED, AS FINDS PLACE IN SECTION 10(14) (I), IS NOT NEW TO THE I.T. ACT. IT WAS FIRST INTRODUCED W.E.F. 1 ST APRIL, 1955, IN SECTION 4(3)(VI) OF THE INDIAN I.T. ACT, 1922 WHICH DEALT W ITH THE EXEMPTION OF ALLOWANCE TO THE SALARIED EMPLOYEES. THIS AMENDM ENT WAS MADE IN THE BACKDROP OF HON'BLE BOMBAY HIGH COURT'S JUDG MENT IN THE 6 CASE OF TEJAJI FRASARAM KHARAWALLA V. CIT (1948) 16 ITR 260 (BOM.) WHEREIN THEIR LORDSHIPS HAD HELD THAT EXEMPTION UND ER SECTION 4(3)(VI) WAS AVAILABLE EVEN IF PORTION OF THE ALLOW ANCE WAS NOT CONSUMED AND STOOD AS SURPLUS IN THE HANDS OF THE E MPLOYEES. SUBSEQUENTLY, THOUGH THIS DECISION WAS REVERSED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. TEJAJI FRASARAM KHARAWALLA, NOT BEFORE SECTION 4(3)(VI) WAS AMENDED, W.E.F. 1 ST APRIL, 1955, BY FINANCE ACT, 1955 THIS AMENDMENT, IT APPEARS, RESU LTED IN CONSIDERABLE APPREHENSION AMONGST THE SALARIED EMPL OYEES AS TO HOW CAN THEY BE EXPECTED TO MAINTAIN METICULOUS DET AILS AND EVIDENCE OF EXPENDITURE INCURRED BY THEM FOR THE AC TUAL USAGE OF ALLOWANCE. TO ALLAY THESE APPREHENSIONS, THE CBDT, ON 1 ST AUG., 1955, ISSUED A CIRCULAR WHICH IS REPRODUCED BELOW F OR READY REFERENCE: SPECIAL ALLOWANCE OR BENEFIT BEING REASONABLE AND NOT DISPROPORTIONATELY HIGH - NO DETAILS OF EXPENSES AC TUALLY INCURRED NEED BE ASKED FOR THE PURPOSE OF GRANTING EXEMPTION UNDER SECTION 4(3)(VI) OF 1922 ACT. THE EXEMPTION UNDER SECTION 4(3)(VI) IN RESPECT OF ANY SPECIAL ALLOWANCE OR BENEFIT WILL BE AVAILABLE FROM THE ASST. YR. 1955-56 ONLY TO THE EXTENT OF THE SANCTIONED AM OUNTS. GENERALLY SPEAKING, WHERE THE SPECIFIC ALLOWANCE IS REASONABLE WITH REFERENCE TO THE NATURE OF THE DUTI ES PERFORMED BY THE ASSESSEE AND ARE NOT DISPROPORTION ATELY HIGH COMPARED TO THE SALARY RECEIVED BY HIM, NO ATT EMPT WILL ORDINARILY BE MADE TO CALL FOR DETAILS OF THE EXPENSES ACTUALLY INCURRED BY HIM WITH A VIEW TO DISENTITLIN G HIM TO SOME EXTENT FROM THE EXEMPTION. AN ENQUIRY WILL, OF COURSE, BE JUSTIFIED AND WILL BE MADE IN CASES WHER E THE ALLOWANCES ARE PRIMA FACIE UNREASONABLY HIGH. WE RESPECTFULLY FOLLOW THE COORDINATE BENCH DECISIONS AND THE ISSUE IS SIMILAR IN THE PRESENT CASE. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION AND ALLOW THE GROUND. 6. THE SECOND ISSUE DEALT BY THE A.O. WHERE THE ASSES SEE HAS PURCHASED A PROPERTY AT BAHADURGUDA, SAROORNAGAR MAN DAL FOR A CONSIDERATION OF RS.1,20,00,000 AND DURING THE COURSE OF HEARING PROCEEDINGS, THE ASSESSEE WAS CALLED TO SUBMIT THE SOU RCES AND CASH FLOW STATEMENT. IN COMPLIANCE THE ASSESSEE FILED CASH F LOW STATEMENT FOR THE PERIOD FROM 01.04.2005 TO 31.03.2006 AND STATEMENT O F AFFAIRS AS 7 ON 31.03.2006 AND ALSO BANK STATEMENTS. FURTHER, THE AS SESSEE FILED CONFIRMATION LETTER FROM SAPTHASIKHARA HOUSING P. LTD., IN RESPECT OF AGGREGATE PAYMENTS OF RS.69,27,244 TO M/S. BIMCO EL ECTRICAL PRODUCTS P. LTD., (ON BEHALF OF THE ASSESSEE) TO PURCHASE LAND AT BAHADURGUDA (V). THE A.O. HAVING COLLECTED THE INFORMATION IS OF THE O PINION THAT THE ASSESSEE COULD NOT EXPLAIN THE CREDITS AND DEALT EXHAU STIVELY AT PAGES 4 TO 7 OF HIS ORDER AND CAME TO THE CONCLUSION THAT THE A SSESSEE IS NOT IN A POSITION TO EXPLAIN THE CREDITS. WHEREAS THE ASSES SEE HAS SUBMITTED THE STATEMENT OF AFFAIRS AND EXPLAINED THE INVESTMENTS OF RS.2,20,22,785 MADE FROM THE ADVANCES AT RS.93,39,63 0 FROM SAPTASIKHARA HOUSING P. LTD., RS.23,50,000 FROM FAMIL Y SOURCES AND THE REMAINING RS.91,33,155 FROM THE PERSONAL ACCOUNT. ON DETAILED VERIFICATION, THE LD. A.O. FOUND SAPTHASIKHARA HOUSING P. LTD., IS A RELATED CONCERN. BASED ON CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE ON UTILISATION OF THE FUNDS DISCLOSED IN A TAB ULATED VERSION AT PAGE-5 OF THE ORDER, THE LD. A.O. OBSERVED THAT THE COMP ANY HAS NOT COME FORWARDED TO EXPLAIN THE AMOUNTS RECEIVED BY THE A SSESSEE AND ALSO NOT PRODUCED THE BOOKS OF ACCOUNT. THEREFORE, SU MMONS UNDER SECTION 131 OF THE ACT ARE ISSUED AND THERE IS NO COMPL IANCE TO THE SUMMONS AND NO BOOKS OF ACCOUNT WERE ALSO PRODUCED. WHEREAS THE A.O. BASED ON THE ANNUAL REPORTS OF SAPTHASIKHARA HOU SING P. LTD., HAS MADE EXHAUSTIVE FINANCIAL ANALYSIS FROM 1999 TO 2006- 07 AND AFTER REPEATED REMINDERS, THE LD. A.R. OF THE COMPANY WAS A PPEARED AND EXPLAINED THAT HE WAS NOT IN A POSITION TO PRODUCE THE BO OKS OF ACCOUNT BUT FILED STATEMENT OF ADVANCES CONFIRMING THE ADVANCES REFERRED AT PAGE-7 BY THE A.O. THE A.O. ON FURTHER INVESTIGATION F OUND THAT THE D.DS WERE PURCHASED IN THE NAME OF M/S. BIMCO ELECTRICAL P RODUCTS P. LTD., IN RESPECT OF PURCHASE OF LAND BY THE ASSESSEE AND HI S FAMILY MEMBERS AT BAHADURGUDA. THE L.. A.O. ISSUED NOTICE UNDER SEC TION 133(6) OF THE ACT TO THE SYNDICATE BANK, CHAITANYAPURI TO SUBMIT THE COP IES OF D.DS 8 AND OTHER INFORMATION. THE BANK HAS COMPLIED THE NOTICE WITH THE INFORMATION AND THE LD. A.O. ON VERIFICATION FOUND THA T SAPTHASIKHARA HOUSING P. LTD., IS HAVING ACCOUNT IN THE SAME BANK AN D CHEQUES WERE ISSUED FROM THE ACCOUNT OF SAPTHASIKHARA HOUSING P. L TD., AND D.DS WERE PURCHASED BY MR. PENTA REDDY HAVING ACCOUNT IN T HE SAME BANK. THE A.O. DISBELIEVED THE FACTS AND HELD THE TRANSACTIONS ARE NOT CLEAR AND WAS NOT SATISFIED AND DOUBTED THE GENUINENESS OF THE TRANSACTIONS AS IDENTITY COULD NOT ESTABLISHED AND ALSO NON-COOPERA TION OF THE COMPANY WHICH FINANCE THE ASSESSEE AND ALSO THE FINA NCE AMOUNT WAS IN THE NAME OF ASSESSEE-HUF AND THE FINANCIAL TRANSAC TION BETWEEN INDIVIDUAL AND HUF STATUS HAS NOT BEEN EXPLAINED. WITH THESE OBSERVATIONS, THE A.O. MADE ADDITION OF RS.1,22,57,084 UNDER SECTION 68 OF THE I.T. ACT AND PASSED THE ORDER. 7. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE L D. CIT(A). THE LD. A.R. ARGUED GROUNDS AND MADE THE SUBMISSIONS ON THE SOURCES SUPPORTED BY WRITTEN SUBMISSIONS AND CONFIRMATION FROM THE COMPANY. THE LD. CIT(A) DEALT ON THE FINDINGS OF THE A.O. AT PAG ES 4 TO 9 OF THE ORDER AND REFERRED TO THE SUBMISSIONS OF THE ASSESSEE AT PARA-7 AT PAGE- 10 WHERE THE ASSESSEE SUBSTANTIATED THE GROUNDS WITH CO NFIRMATIONS AND JUDICIAL DECISIONS. THE LD. CIT(A) HAS CALLED F OR THE REMAND REPORT IN RESPECT OF UNEXPLAINED CREDITS OF RS.1,22,57,084. THE LD. A.O. HAS FILED REMAND REPORT REFERRED AT PARA 7.1 JUSTIFYING THE ACTION IN MAKING THE ADDITION. HOWEVER, ASSESSEE FILED OBJECTIONS ON THE REMAND REPORT PROVIDED IN THE APPEAL PROCEEDINGS BY THE CIT(A) EXP LAINING THE INVESTMENT ALONG WITH THE SOURCES REFERRED AT PAGE 12 TO 14 OF THE ORDER. THE LD. CIT(A) CONSIDERED THE REMAND REPORT, ASSESSEE S SUBMISSIONS AND COMMENTS OF THE A.O. AND OBSERVED THAT THE INVESTMENT OF RS.1,22,57,084 COULD NOT BE PROVED DUE TO NON-ESTABLIS HMENT OF CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AN D INSPITE OF PROVIDING ADEQUATE OPPORTUNITY TO THE SAID COMPANY, THE BOOKS OF 9 ACCOUNT WERE NOT PRODUCED AND THE LD. A.O. MADE A FIN DING THAT THIS COMPANY IS A FAMILY OWNED COMPANY AND THE ASSESSEE H AS NOT DISCHARGED HIS BURDEN TO PROVE THE GENUINENESS OF THE TRANSACTION AND THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. 8. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE T RIBUNAL. BEFORE US, THE LD. A.R. ARGUED THE GROUNDS AND SUBSTAN TIATED HIS ARGUMENTS THAT THE ASSESSEE HAS SOURCES AND REFERRED TO THE PAPER BOOK WHERE SUPPORTING EVIDENCE OF RS.1,22,57,084 WAS FILE D AND THE LD. A.R. ALSO FILED WRITTEN SUBMISSIONS ON PURCHASE OF PROPER TY WHICH WAS NOT FILED DURING ASSESSMENT PROCEEDINGS AND PRAYED FOR D ELETION. PER CONTRA, THE LD. D.R. STRONGLY RELIED ON THE ORDERS OF TH E LOWER AUTHORITIES AND RECORD OF THE A.O. AND SUBMITTED THAT AMPLE OPPORTUN ITIES WERE PROVIDED TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM. BUT THE ASSESSEE FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS O F THE TRANSACTION AND PRAYED FOR CONFIRMATION OF THE ORDER OF THE REVENU E AUTHORITIES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND THE JUDICIAL DECISIONS. THE L D. A.R. ARGUED THAT THE ASSESSEE HAS SUFFICIENT SOURCE IN RESPECT OF INVES TMENT IN THE PROPERTY RS.1,22,57,084 AND HAS SUBSTANTIATED THE CLAI M IN THE APPEAL PROCEEDINGS AND ALSO REFERRED TO PAGE-71 OF THE PAPER BOOK WHERE SAPTHASIKHARA HOUSING P. LTD., HAS MADE PAYMENT TO M/S. BIMCO ELECTRICAL PRODUCTS P. LTD., AND LEDGER ACCOUNT OF M/S . SRINIVASA POULTRY FARM IN THE BOOKS OF SAPTASIKHARA HOUSING P. LTD., WHI CH HAS ADVANCED THE AMOUNT TO THE ASSESSEE. SIMILARLY, ASSESSEE HAS AL SO INTRODUCED CASH AS PER THE DOCUMENTS. THE A.O. HAS ISSUED LETTER DATED 10 TH MARCH, 2010 TO SAPTASIKHARA HOUSING P. LTD., TO PROVIDE THE I NFORMATION IN RESPECT OF SOURCE OF THE ASSESSEE. WE FIND THAT THE LD. CIT(A) HAS DEALT EXHAUSTIVELY ON THE FINDINGS AND ALSO CALLED FOR THE REMAND REPORT AND ASSESSEE WAS ALSO PROVIDED AN OPPORTUNITY TO MAKE HI S COMMENTS. THE LD. A.R. DREW OUR ATTENTION TO PAGES 71 AND 73 OF THE P APER BOOK IN 10 RESPECT OF PURCHASE OF PROPERTIES AND FILED CLARIFICA TION ON CERTAIN FACTS WHICH THE BENCH HAS CALLED FOR AND THESE CLARIFICATIO NS WERE FURNISHED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND ALSO REVENUE S LETTER DATED 14.02.2017 ADDRESSED BY THE ASST. COMMISSIONER OF INC OME TAX 9(1) TO THE AUTHORISED REPRESENTATIVE, ITAT A BENCH WHERE THE ASSESSMENT RECORD OF THE ASSESSEE FOR THE A.Y. 2006-07 WAS CALLE D FOR. THE A.O. REPORTED THAT THE RECORDS ARE NOT TRACEABLE AND ONLY CON CERNED FOLDER IS AVAILABLE WITH THE OFFICE. WE FOUND THAT THE LD. A.R. HA S GIVEN A CLARIFICATION IN RESPECT OF PURCHASE OF DEMAND DRAFT S. BUT THESE FACTS WERE NOT VERIFIED BY THE A.O. THE LD. D.R. SUBMITTED THA T THE BURDEN LIES ON THE ASSESSEE TO PROVE THE TRANSACTION AS GENUIN E AS THE SAME WAS NOT PROVIDED BEFORE THE A.O. AT THIS JUNCTURE, THE L D. A.R. SUBMITTED THAT THE ASSESSEE HAS ADEQUATE CREDITWORTHINESS AND SOURCES TO PROVE THE GENUINENESS OF THE TRANSACTION AND PRAYED THAT AN OPPORTUNITY BE PROVIDED TO EXPLAIN THESE VITAL FACTS WITH PROOFS TO THE A.O. TO MEET THE ENDS OF JUSTICE, WE ARE OF THE OPINION THAT THE MATTER HAS TO BE EXAMINED BY THE A.O. TO VERIFY THE GENUINENE SS OF THE TRANSACTION WITH THE SOURCES AND CONFIRMATIONS. AND TH E ASSESSEE IS DIRECTED TO FILE BEFORE THE ASSESSING OFFICER ALL THE MATERIAL FILED FOR THE FIRST TIME BEFORE THE TRIBUNAL. WE ACCORDINGLY, REMIT TH E DISPUTED ISSUE TO THE FILE OF THE A.O. FOR LIMITED PURPOSE AND THE GRO UND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2017. SD/- SD/- (B. RAMAKOTAIAH) (G.PAVAN KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH FEBRUARY, 2017 VBP/- 11 COPY TO 1. MR. M. RANGA REDDY, HYDERABAD. C/O. MOHD. AFZAL, ADVOCATE, 11-5-465, SHERSONS RESIDENCY, FLAT NO.402, CRIMINAL COURT ROAD, RED HILLS, HYDERABAD 500 004. 2. ADDL. CIT, RANGE-9, I.T. TOWERS, HYDERABAD. 3. CIT(A)-7, HYDERABAD. 4. PR. CIT-7, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE