ALLIANCE HOTELS, MUMBAI V. ACIT 12(1), MUMBAI

ITA 5498/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1961 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Depreciation; Loose papers; Source of fund; Corroborative evidences; Accommodation entries; Retraction; Capital expenditure
• Section: 69C; 143(3); 142(1); 133A; 131; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 4075 / MUM/20 1 1 ( / ASSESSMENT YEAR : 20 0 7 - 08 ) M/S ALLIANCE HOTELS, 121, CITY TERRACE, W H MARG, FORT, MUMBAI - 400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO .4739/ MUM/20 11 ( / ASSESSMENT YEAR : 2007 - 08 ) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. / VS. M/S ALLIANCE HOTELS, 121, CITY TERRACE, W H MARG, FORT, MUMBAI - 400001 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO S .5498/ MUM/20 11 AND 5111/MUM/2012 ( / ASSESSMENT YEA RS : 2008 - 09 & 2009 - 10 ) M/S ALLIANCE HOTELS, 121, CITY TERRACE, W H MARG, FORT, MUMBAI - 400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AAFFA7075E / A S SESSEE BY: SHRI VIJAY MEHTA / RE VENUE BY SHRI RAMCHANDRAN ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 2 / DATE OF HEARING : 2 7 .7 .201 6 / DATE OF PRONOUNCEMENT : 8.11 .2016 / O R D E R PER RAJESH KU MAR, ACCOUNTANT MEMBER : THESE ARE THE FOURS APPEALS FILED BY THE RESPECTIVE PARTIES. ITA NO.4075/MUM/2011 AND ITA NO.4739/MUM/2011 ARE CROSS APPEALS AND THEY ARE DIRECTED AGAINST THE ORDER DATED 31.3.2011 PASSED BY THE LD.CIT(A) FOR THE ASSESSMENT YE AR 2007 - 08. APPEALS B E ARING I.T.A. NOS.5498/MUM/2011 AND 5111/MUM/2012 FOR THE ASSESSMENT YEARS 2008 - 09 & 2009 - 10 ARE FILED BY THE ASSESSEE AGAINST THE ORDERS DATED 21.6.2011 AND 24.5.2012 PASSED BY LD.CIT(A) FOR THE ASSESSMENTS YEARS 2008 - 09 AND 2009 - 10 RESPECTIVELY. SINCE THESE APPEALS BEFORE US PERTAIN TO THE SAME ASSESSEE, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. ITA NO.4 075 /MUM/2011( BY THE ASSESEEE) G ROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1 . ON THE FACTS AND IN THE E CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS ) ERRED IN UPHOLDING THE ADDITION OF RS.6,76,23,000/ - MADE BY THE AO AS UNEXPLAINED INVESTMENT U /S.69 ON THE BASIS OF NOTING MADE IN PAGE 4 AND 5 OF THE LOOSE PAPERS FILE ANNEXURE A FOUND AND IMPOUNDED AT THE PREM ISES OF THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UP HOLDING THE ADDITION ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 3 OF RS.11,97,000/ - MADE BY THE ASSESSING OFFICER AS UNEXPLAINED EXPENDITURE U/S.69C OF THE INCOME TAX ACT, 19 61 . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIATION OF RS.22,99,096/ - MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF SUPPORTING VOUCHERS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING DISALLOWANCE O F INTEREST OF RS.22,75,714/ - PAID TO CORPORATION BANK. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDITION AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C AMOUNTING TO RS. 44 ,81,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE FOLLOWING: FILE NAME (COMPUTER DATE) TOTAL AMOUNT OF UNEXPLAINED EXPENDITURE RS. EMPIRE HOTELS CD \ CITY4 \ D \ C BACKUP 25.11.06 \ MY DOCUMENTS OCT 06 CASH.XLS 7,30,000/ - EMPIRE HOTELS C D \ CITY4 \ D \ C BACKUP 25.11.06 \ MY DOCUMENTS \ OCT. CASH.XLS 14,61,000/ - EMPIRE HOTELS CD \ CITY4 \ D \ C BACKUP 25.11.06 \ MY DOCUMENTS \ 22,90,000/ - TOTAL 44,81,000/ - 3 . BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.20 07 DECLARING A TOTAL INCOME AT NIL. THE RETURN WAS ACCOMPANIED WITH PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND OTHER REQUISITE DETAILS. THE RETURN WAS PROCESSED U/S 143(1) ON 15.11.2008 ACCEPTING THE RETURN ED INCOME . THEREAFTER, T HE CASE WAS SELECTED F OR SCRUTINY AND THE STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN HOTEL BUSINESS I.E. LODGING AND BOARDING. A SURVEY WAS CONDUCTED ON T HE ASSESSEE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 4 U/S 1 33A OF THE ACT ON THE PREMISES OF THE ASSESSEE ON 11 TH AND 12 TH MAY, 2007 BY ADIT V(4), MUMBAI DURING WHICH CERTAIN LOOSE PAPERS WHICH CONTAINED THE DETAILS OF CASH RECEIPTS AND PAYMENTS WERE FOUND AND SEIZED AND WERE AC CORDINGLY COMMUNICATED BY T HE INVESTIGATION WING THROUGH SURVEY REPORT VIDE F.NO.ADDL./DIT(INV.)/UNIT - V/SURVEY REPORT/2007 - 08 DATED 14.11.2007 TO THE AO . THE AO AFTER CONSIDERING THE SURVEY REPORT AND SUBMISSIONS OF THE ASSESSEE ON THE VARIOUS POINTS FINALLY FRAMED THE ASSESSMENT AT RS.9,36,10,810/ - U/S 143(3) OF THE ACT ON 31.12.2009 BY MAKING VARIOUS ADDITIONS AS MENTIONED IN PARA 8 OF THE ASSESSMENT ORDER. 4 . THE ISSUE RAISED IN THE GROUND NO. 1 IS AGAINST THE UPHOLDING THE ADDITION OF RS.6,76,23,000/ - BY THE LD.CIT(A) AS MADE BY THE AO U/S 69 AS UNEXPLAINED INVESTMENT ON THE BASIS OF INCRIMINATING MATERIALS COMPRISING LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY AND THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE UPHOLDING AN AMOUNT OF RS.11,97,000/ - BY THE LD.CIT(A) AS MADE BY THE AO U/S 69C OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED EXPENDITURE . BOTH THESE GROUNDS ARE BEING DECIDED TOGETHER . 5 . FACTS IN BRIEF ARE THAT DURING THE COURSE OF SURVEY PROCEEDINGS ON 11 TH /12 TH MAY, 2007 MADE ON THE PREMISES OF THE ASSESSEE, THE SURVEY TEAM FOUND THAT SOME LOOSE PAPERS NUMBER ED AS 4 & 5 FILE - A WHICH WERE CONFRONTED TO THE ASSESSEE DURING SURVEY . IN THE SAID LOOSE PAPERS THE TOTAL AMOUNT OF RS.6,88,22,000/ - WAS SHOWN AS EXPENDITURE IN CASH AND THE ASSESSEE WAS REQUESTED TO IDENTIFY THE VARIOUS HEADS UNDER WHICH THE ABOVE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 5 AMOUNT S HA VE BEEN SPENT DURING THE RECORDING OF STATEMENT U/S 131 OF THE ACT ON 12.05.2007 . THE ASSESSEE REPLIED TO QUESTION NO.11 THAT HE WAS N OT ABLE TO IDENTIFY THE HEAD S UN D ER WHICH THE SA ID AMOUNT S W ERE SPENT AND THEREFORE HE VOLUNTARILY OFFERED THIS AMOUNT FOR TAX ATION OF RS.6,88,22,000/ - AS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME FOR TH E ASSESSMENT YEAR 2006 - 07. JUST 3 DAYS AFTER ANOTHER STATEMENT OF MR KASHAN GHASWALA , PA RTNER OF THE ASSESSEE WAS RECORDED ON 15.05.2007 U/S 131 OF THE ACT IN WHICH HE STATED WHILE ANSWERING QUERY NO 2 THAT SOURCES OF RS. 6,88,22,000/ - WERE FROM THE CORPORATION BANK AND THE DETAILS OF PAY ORDERS ISSUED BY THE BANK WERE ALSO GIVEN . SUBSEQU ENTLY, THE ASSESSEE VIDE LETTER DATED 4.6.2007 WHICH WAS FILED ON 7.6.2007 RETRACTED SURRENDER /DISCLOSURE MADE VIDE STATEMENT RECORDED U/S 131 OF THE ACT ON 12.5.2007 OF MR KASHAN GHASWALA ONE OF THE PARTNER IN THE ASSESSEE FIRM . IN THE RETRACTION LETTER THE ASSESSEE CLAIMED THAT THE SOURCE OF EXPENDITURE INCURRED QUA RS.6,88,22,000/ - WAS OUT OF BORROWINGS FROM CORPORATION BANK AND THE ASSESSEE FURNISHED COP IES OF PAY ORDERS ISSUED BY THE CORPORATION BANK TO VARIOUS PARTIES ON BEHALF OF T HE ASSESSEE FIRM I.E. M/S ALLIANCE HOTEL. THE ASSESSEE SUBMITTED THAT SOME RENOVATION WORK AT THIRD FLOOR OF EMPIRE BUILDING WAS CARRIED OUT FOR CONVERTING THE SAME INTO RESIDENTIAL ROOMS FOR HOTEL PURPOSE AND THEREFORE, THE ASSESSEE REQUIRED SUBSTAN T IAL AMOUNT OF MONEY WHICH WAS ARRANGED BY THE ASSESSEE FROM CORPORATION BANK BY WAY OF LOAN . THE DISBURSEMENTS FROM THE CORPORATION BANK WERE RELEASED THROUGH PAY ORDERS IN THE NAME OF THE SUPPLIERS OF GOODS AND CONTRACTORS IN ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 6 TERM OF CONDITION OF SAN CTION OF LOAN BY THE BANK . SINCE THE SUPPLIERS AND CONTRACTORS WHO WERE APPOINTED BY THE ASSESSEE TO CARR Y OUT THE RENOVATIONS AND REPA I R WORK WERE NOT INTEREST ED AND INCLINED TO ACCEPT PAYMENT S THROUGH CHEQUES , T HEREFORE, THE ASSESSEE MANAGED SOMEHOW T O GET THE PAY ORDER S IN THE NAMES OF THOSE PARTIES WHO DID NOT ACTUALLY SUPPLIED ANY MATERIAL S OR CARRIED OUT ANY CONSTRUCTION WORK BUT RETURNED THE CASH TO THE ASSESSEE AFTER DEDUCTING ONE PERCENT COMMISSION . IN OTHER WORDS THE SAID PARTIES ONLY PROVIDE D ACCOMMODATION ENTRIES. T HE SAID CASH RECEIVED BACK BY THE ASSESSEE THROUGH THE SAID ACCOMMODATION ENTRIES WAS USED TO PAY THE CONTRACTORS AND SUPPLIERS WHO ACTUALLY CARRIED OUT THE RENOVATION AND REPA I R /CIVIL WORK OF THE ASSESSEE HOTEL. A STATEMENT WAS RECORDED DURING THE SURVEY PROCEEDINGS OF MR KASHAN GHASWALA AND I N REPLY TO THE QUESTION NO.2, THE ASSESSEE STATED THAT THE SOURCE OF EXPEN DITURE SHOWN AT PAGES 4 AND 5 OF THE PAPER BOOK W ERE FROM THE CORPORATION BANK THE DETAILS WHEREOF WERE ALSO FURNISHED. IN REPLY TO QUESTION NO.3, THE ASSESSEE REPLIED THAT THESE PARTIES WERE SUPPLIERS OF FURNITURE, FIXTURES, BUILDING MATERIAL, ELECTRICAL FITTINGS ETC . THE ASSESSEE WAS ALSO ASKED TO TALLY THE FIGURES ON THE LEFT HAND SIDE (RECEIPTS) WITH THE FIGURES OF THE RIGHT HAND SIDE (PAYMENTS) , WHICH ACCORDING TO THE ASSESSEE WERE NOT EXACTLY TALLIED BECAUSE THESE WERE ESTIMATED FIGURES. THE ASSESSEE CLARIFIED CORP CASH REPRESENTED THE PAYMENT RECEIVED FROM CORPORATION BANK AND THE ASSESSEE TIME AN D AGAIN SUBMITTED THAT THE SAID CASH RECEIVED FROM THE PARTIES WHO PROVIDED ACCOMMODATION ENTRIES AFTER COMMISSION OF ONE PER CENT WAS USED IN THE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 7 CONSTRUCTION OF HOTEL. THE DETAILS OF PARTIES IN WHOSE NAMES THE PAY ORDERS WERE ISSUED BY THE ASSESSEE WER E ALSO GIVEN BY THE AO AT PAGE NO.5 OF THE ASSESS MENT ORDER . LASTLY, THE ASSESSEE SUBMITTED THAT SINCE THE SOURCE OF EXPENDITURE OF RS.6,88,22,000/ - WAS FULLY EXPLAINED OUT OF THE CASH TAKEN / RETURNED BY THE FIVE SUPPLIERS /CONTRACTORS TO WHOM THE BANK DIRECTLY ISSUE D PAY ORDERS AND THUS SOURCES OF EXPENDITURE W ERE FULLY EXPLAINED AND NO ADDITIONAL INCOME OF RS.6,88,22,000/ - COULD BE OFFERED IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER DEPUTED AN INSPECTOR FOR VERIFICATION OF FIVE PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE RECEIVED THE CASH BACK , H OWEVER, THE INSPECTOR FROM THE DEPARTMENT REPORTED IN MOST OF THE CASES THESE PARTIES WERE NOT FOUND AS THE PREMISES WERE USED FOR RESIDENCE S AND ONLY IN THE CASE OF M/S PRIYANKA CORPORATION, IT WAS CONFIRMED BY THE WATCHMAN THAT THE LETTERS IN THE NAME OF M/S PRIYANKA CORPORATION W ERE RECEIVED OFF AND ON . THE AO OBSERVED THAT THE A SS ESS E E FAILED TO SU BMIT THE DETAILS OF EXPE NDITURE INCURRED ON VARIOUS DA TE S AND ALSO NAME AND ADDRESSED O F THE PART IES WHO ACTUALLY SUPPLIED THE MATERIALS AND CARRIED OUT THE CONSTRUCTION WORK. THE AO ALSO OBSERVED THAT THE PAYMENT MADE BY THE ASSESSEE COULD NOT BE PROVED TO BE ON ACCOUNT OF E XPENDITURE INCURRED BY THE ASSESSEE ON THE CONSTRUCTION BUT WENT ON TO GUESS AND SURMISE THAT IT COULD BE RECEIVABLE IN FUTURE AND WERE UNEXPLAINED INVESTMENT S. THE AO ALSO OBSERVED THAT THE AMOUNT S DISBURSED TO VARIOUS PARTIES COULD BE FOR THE EXPENDI TURE INCURRED ON BEHALF OF THE ASSESSEE. HOWEVER, SINCE THE PARTIES TO ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 8 WHOM THE PAYMENT S NOT AVAILABLE , THEREFORE, THE EXACT NATURE OF EXPENDITURE COULD NOT BE ASCERTAINED. AT PAGE 13 OF THE ASSESSMENT ORDER, THE ASSESSEE NOTED THAT OUT OF RS.6,88,22,00 0/ - SOME OUTFLOW WERE FOR THE PURPOSE OF CONSTRUCTION AND RENOVATION AND ALSO FOR THE PURPOSE OF INVESTMENT S . THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT RECORDED EXPENDITURE MADE IN THE NOVEMBER 2006 AMOUNTING TO RS.11,97,000/ - IN THE BOOKS OF ACC OUNT, THEREFORE, TREATED THE SAME AS UNEXPLAINED EXPENDITURE U/S 69 C OF THE ACT AND BALANCE OF RS.6,76,23,000/ - WAS TREATED AS UNEXPLAINED INVESTMENT S U/S 69 OF THE ACT. 6 . DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DISMISSED THE APPEAL OF THE A SSESSEE ON GROUND NO.1 AND 2 AFTER CONSIDERING THE SUBMISSIONS OF THE LD. AR BY OBSERVING AND HOLDING AS UNDER : 2.3 THE ASSESSMENT ORDER, SUBMISSIONS MADE FOR THE APPELLANT AND MATERIALS ON RECORD HAVE BEEN CONSIDERED. THE APPELLANT HAS CLAIMED THAT THE SOURCE OF MONEYS FOR CONSTRUCTION AND THE EXPENDITURE ALL ULTIMATELY CAME OUT OF LOANS RAISED FROM CORPORATION BANK, THAT THE APPELLANT OBTAINED LOAN FOR CONSTRUCTION FROM CORPORATION BANK, THAT THE LOAN DISBURSEMENT WAS MADE BY WAY OF PAY ORDERS ISSUED B Y THE BANK DIRECTLY TO THE CONTRACTORS NAMED BY THE APPELLANT, THAT THE APPELLANT HAD NAMED BOGUS PARTIES AS CONTRACTORS, THAT THESE PARTIES ISSUED ACCOMMODATION BILLS AND ON RECEIPT OF THE PAY ORDERS FROM THE BANK, DISCOUNTED THEM FOR A FEE @ 1 % AND THEN RETURNED THE BALANCE AMOUNT IN CASH TO THE APPELLANT. THOUGH THE METHOD OF FINANCING CONSTRUCTION AS CLAIMED IS INGENUOUS, THE APPELLANT HAS NOT BEEN ABLE TO SUPPORT HIS CLAIM, EITHER BY PRODUCING THE PARTIES WHO FURNISHED ACCOMMODATION BILLS AND AFTER DI SCOUNTING RETURNED THE MONEY TO THE APPELLANT, THE ASSESSING OFFICER'S ENQUIRIES HAVE ALSO NOT BEEN ABLE TO PROVE THE EXISTENCE OF THE PARTIES AT THE ADDRESSES PROVIDED BY THE APPELLANT, NOR HAS THE APPELLANT BEEN ABLE TO PROVIDE THE BILLS FURNISHED BY TH E CONTRACTOR'S/WORKMEN FROM WHOM HE CLAIMS TO HAVE ULTIMATELY GOT THE WORK DONE, NOR HAS THE APPELLANT EVEN PRODUCED ANY OF SUCH CONTRACTORS/WORKMEN. FURTHER THE AMOUNTS MENTIONED AT PAGES 4 & 5 OF THE IMPOUNDED PAPERS (RS. 6.88 CRORE) REFERRED TO BY THE A SSESSING ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 9 OFFICER DO NOT MATCH WITH THE AMOUNT OF PAY ORDERS ISSUED BY CORPORATION BANK (RS.7.85 CRORE). EVEN IF THE EXPLANATION OF THE APPELLANT THAT THE AMOUNTS MENTIONED ARE AMOUNTS DISBURSED BY CORPORATION BANK LESS THE DISCOUNTING FEE, (OF 1%), THE AMO UNT WOULD WORK OUT TO RS.7.78 CRORE. FURTHER PAGE 5 MENTIONS ON THE LEFT HAND SIDE, BESIDES 'CORP CASH' ENTRIES ALSO ENTRIES CONTAINING THE DETAILS AS 'CR (JK) 5,000,000.00', 'FROM SANJAY 1,000,000.00' AND 'FROM SANJAY 300,000.00', WHICH HAVE NOT BEEN EXPL AINED, AND TAKING INTO ACCOUNT THESE FACTS THE FIGURE FROM CORP CASH WOULD ONLY REMAIN AT RS.6.08 CRORE WHICH IS STILL LESSER THAN RS.7.85 CRORE. THE APPELLANT'S EXPLANATION EVEN WITH THE RECONCILIATION FURNISHED THUS CANNOT BE ACCEPTED, MERELY ON THE BASI S OF THE APPELLANT'S STATEMENT WITHOUT ANY CORROBORATION, NONE HAS BEEN PROVIDED EITHER BY PRODUCING THE PARTIES WHO DISCOUNTED, PARTIES WHO COMPLETED THE WORK. NO LINK HAS BEEN ESTABLISHED BETWEEN THE FUNDS RAISED FROM THE BANK AND THE OUTGOINGS, EITHER O N THE BASIS OF DATES OF RECEIPT AND EXPENDITURE OTHER EVIDENCE AS DISCUSSED ABOVE. SIMILARLY AS REGARDING THE ADDITION U/S 69C, THE APPELLANT H AS CLAIMED FIRSTLY THAT THESE ARE OUT OF FUNDS RAISED FROM CORPORATION BAN K AND HENCE SOURCE IS EXPLAINED AND SE CONDLY THAT THE EXPENSES WERE FOR THE NATURE OF BUSINESS. THE LINK BETWEEN THE FUNDS RAISED FROM THE BAN K A ND THE EXPENSES HAS NOT BEEN ESTABLISHED AS MENTIONED ABOVE, FURTHE R THE DESCRIPTION OF THE EXPENSES, E.G., FOR WEDDING, IFTEKAR, HOTEL HOTEL EXP ETC. ALSO DO NOT INDICATED THAT THESE ARE INCURRED FOR THE PURPOSE OF BUSINE S S . NO EVIDENCE IN SUPPORT OF SUCH CLAIM HAS BEEN PRODUCED EITHER. THUS, THE ADDITIONS MADE BY THE ASSESSING OFFICER, BOTH REFERRED T TO IN UNDER GROUNDS 1 AND 2 ARE ACCORDING LY UPHELD. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 7 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE ORDER PASSED BY THE LD. CIT(A) WAS WRONG AND AGAINST THE FACT S OF THE CASE ON RECORDS . THE LD. AR SUBMITTED TH AT THE AO HIMSELF ADMITTED IN THE ASSESSMENT ORDER THAT THE RENOVATION OF THE HOTEL PREMISES HAS TAKEN PLACE AND FURTHER HELD THAT THE PURPOSE OF INCURRING THE EXPENDITURE OF RS.6,76,23,000/ - HAS NOT BEEN EXPLAINED BY THE A SS ES S EE AND THESE PAYMENTS W ERE MADE TO BE RECEIVABLE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 10 IN FUTURE. THE AO ALSO NOTED THAT ALTERNATIVELY THAT THESE COULD ALSO BE REIMBURSEMENT TO VARIOUS PARTIES FOR CONSTRUCTION EXPENDITURE INCURRED ON BEHALF OF T HE ASSESSEE. THUS, THE LD. AR ARGUED THAT THERE WAS NO DOUBT IN THE MIND OF THE ASSESSING OFFICER THAT THE ASSESSEE CARRIED OUT THE RENOVATION AND RESTORATION WORK OF HOTEL DURING THE SAID PERIOD. ONCE IT WAS ACCEPTED BY THE AO THAT THAT RENOVATION HAS TAKEN PLACE, THE SAME WOULD DEFINITELY REQUIRE FUNDS FOR RENOVATION A ND ONLY SOURCE OF THE ASSESSEE WAS BY WAY OF LOAN FROM CORPORATION BANK. IT WAS ALSO CORROBO RATED FROM THE LOOSE PAPERS IMPOUNDED DURING THE SEARCH /SURVEY OPERATION WHICH STATED THE SOURCE OF FUNDS FOR MAKING VARIOUS PAYMENTS AS DETAILED THEREIN FROM T H E CORPORATION BANK . THE LD. AR FURTHER ARGUED THAT THE AO COULD NOT ESTABLISH THAT THERE WAS ANY OTHER SOURCE OF MONEY AVAILABLE WITH THE ASSESSEE APART FROM TH E LOAN FROM THE CORPORATION BANK WHICH WAS USED FOR THE PURPOSES OF RENOVATION AND THE MOD US OPER A NDI WAS THAT THE ASSESSEE WAS TO GET PAY ORDER S ISSUED IN THE NAME OF MATERIAL SUPPLIERS AND CONTRACTORS WHO ACTUALLY W ERE NOT CARRYING OUT THE WORK AND ACCORDINGLY ARRANGED T HE PAY ORDERS IN THEIR NAMES WHO AFTER DEDUCTING 1% COMMISSION RETURNED CASH TO THE ASSESSEE . U LTIMATELY, THE ASSESSEE PA ID THE SAID MONEY TO THE MATERIAL SUPPLIE R S AND CONTRACTORS WHO ACTUALLY UNDERT OOK AND PERFORMED THE RENOVATION WORK OF THE HOTEL. THE LD. AR SUBMITTED THAT THE FINDING S OF THE AO FOR UNACCOUNTED MONEY IN THE ASSESSMENT ORDER WERE NOTHING BUT GUESS WORK AND IMAGINATION OF THE ASSESSING OFFICER WITHOUT ANY CORROBORATING EVIDENCE S AND MATERIALS . THE LD. AR DREW OUR ATTENTION TO THE PAGE 13 OF ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 11 THE ASSESSMENT ORDER IN WHICH THE AO HAS NOTED THAT APART FRO M THIS THE SHEER QUANTUM OF RS.6.88 CRORES INDICATES THAT THE OUTFLOW MUST HAVE BEEN UTILIZED FOR BUILDING ASSETS (CONSTRUCTION/RENOVATION/LOANS) . THUS, THERE WAS NO DOUBT IN THE MINDS OF THE AO THAT RENOVATION WAS CARRIED OUT IN THE HOTEL AND THE ASSE SSEE REQUIRED MONEY FOR THE PURPOSE OF SUCH RENOVATION, THE SOURCE WHEREOF WAS EXPLAINED OUT OF THE BANK LOAN TAKEN FROM THE CORPORATION BANK AS HAS BEEN STATED BY THE PARTNER MR KASHAN GHASWALA IN REPLY TO QUERY NO.2 DURING HIS SECOND STATEMENT BY THE D EPARTMENT ON 15.05.2007 . THE AO HAS FAILED TO PROVE ANY OTHER SOUR C E OF INCOME OF THE ASSESSEE . THE LD. AR ALSO SUBMITTED THAT THE LD.CIT(A) WHO HA S ACCEPTED THE CONTENTION AND ALSO ADMITTED THAT RENOVATION WORK WAS DONE BY THE ASSESSEE IN ITS HOTEL W HILE UPHOLDING THE ORDER OF THE AO WHICH WAS CONFUSING AND CONTRADICTORY . THE LD. AR ALSO PLACED A COPY THE DECISION IN THE CASE OF ITO V/S SHRI PARVEZ MOHAMMED HUSSAIN GHASWALA IN ITA NO. 3314/MUM/2013 FOR THE ASSESSMENT YEAR 2004 - 05 AND ITA NO.819/MUM /2012 FOR THE ASSESSMENT YEAR 2007 - 08 COMPOSITE ORDER D ATED 30.10.2015, WHEREIN THE TRIBUNAL WHILE DECIDING THE DEPARTMENTAL APPEAL FOR THE ASSESSMENT YEAR 2007 - 08 HAS CONSIDERED THE ISSUE OF RS.2,62,40,000/ - WHICH WAS COMPRISED IN AND PART OF RS.6,8 8,22,000 (RS.6,76,23,000/ - IN GROUND NO.1 AND RS.11,97,000/ - IN GROUND NO.2) AS APPARENT FROM PAGE 4 OF THE PAPER BOOK . THE LD. AR SPECIFICALLY BROUGHT TO THE ATTENTION OF THE BENCH PARA 6 PAGE 11 AND ALSO PARA 10 AT PAGE 15 OF THE SAID TRIBUNAL ORDER, WHEREIN THE CO - ORDINATE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 12 BENCH HAS UPHELD THE DECISION OF ADDITION BY CIT(A) AS MADE BY THE AO ON THE BASIS OF SOME L OOSE PAPERS NO 4 & 5 FOUND DURING THE SURVEY ON THE ASSESSEE BY HOLDING THAT THE ADDITIONS WERE BASED ON CONJECTURE S AND SURMISES W ITHOUT ANY CONCRETE EVIDENCE IN HIS POSSESSION AND ALSO HELD THAT THE PROVISIONS OF S ECTION 69A OF THE ACT HAS NO APPLICATION IN THE CA S E OF THE A S SES SEE AND W A S RIGHTLY DELE TE D BY THE FIRST APPELLATE AUTHORITY RS.2,62,40,000 / - + RS 40,00 , 000/ - AGGREGATI NG TO RS.3,02,42,000/ - . FINALLY, IT WAS VEHEMENTLY ARGUED THAT SINCE THE ADDITION OF RS.2,62,40,000/ - WAS BASED ON SAME LOOSE PAPERS NO 4 AND 5 HAS DELETED BY THE BY THE CIT(A) WHICH WAS UPHELD BY THE TRIBUNAL AND THEREFORE THE ADDITION OF RS.6,88,22 ,000/ - MADE IN THE CASE OF M/S ALLIANCE HOTEL FOR THE ASSESSMENT YEAR 2007 - 08 ON THE SAME MATERIALS COULD NOT BE SURVIVED AND SUSTAINED IN THE HANDS OF THE ASSESSEE AS BEING WITHOUT ANY BASIS AND BASED ON SURMISES AND CONJECTURES . THE LD AR ARGUED TH AT THE ADDITION OF RS. 6,76,23,000/ - MADE U/S 69 OF THE ACT AS UNEXPLAINED INVESTMENTS DESERVED TO BE DELETED ON THE SAME ANALOGY AS THE SIMILAR ADDITIONS MADE ON THE BASIS OF LOOSE PAPER NO 4 AND 5 WERE DELETED BY CIT(A) AND UPHELD BY THE T RIBUNAL SPECI ALLY IN VIEW OF THE FACT THAT THE RENOVATION AND REPAIRS WERE DULY EXPLAINED WITH SOURCES OUT OF THE LOAN TAKEN FROM THE CORPORATION BANK , AND PRAYING THAT THE ADDITION OF RS.6,76,23,000 / - BE DELETED. SIMILARLY, AN AMOUNT OF RS.11,97,000 / - WAS INC URRED AS EXPENDITURE ON RENOVATION OF HOTEL AND ON THE SAME ANALOGY THE SAID ADDITION BE DELETED IN VIEW OF THE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 13 FACTS AND ARGUMENTS CONSIDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHRI PARVEZ MOHAMMED HUSSAIN GHASWALA(SUPRA). 8 . ON THE OT HER HAND, THE LD. DR HEAVILY RELIED ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DURING THE COURSE OF SURVEY WHILE RECORDING STATEMENT ONE OF THE PARTNER S OF ASSESSEE - FIRM SHRI KASHAN GHASWALA, ADMITTED THAT THE EXPENDITURE INCURRE D ON THE BASIS OF LOOSE PAPERS NO.4 AND 5 IMPOUNDED DURING THE COURSE OF SURVEY WERE INCURRED IN CASH AND WAS UNABLE TO IDENTIFY TO HEADS UNDER WHICH THEY WERE INCURRED AND AS A RESULT OF WHICH HE VOLUNTARILY OFF ERED RS.6,88,22,000/ - AS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOMER DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2007 - 08 IN THE HANDS OF THE ASSESSEE FIRM. THE MERE RETRACTION OF SURRENDER VIDE LETTER DA T ED 7.6.2007, THE ASSESSEE COULD NOT BE ALLOWED TO RETR ACT THE OFFER WHICH IT HAD MADE SUO MOTTU VOLUNTARILY AT THE TIME OF RECORDING OF STATEMENT AS THE WITHDRAW AL/RETRACTION OF THE SAME WAS AN AFTER THOUGHT . THE LD. DR ALSO OBJECTED STRONGLY TO THE SUBMISSIONS OF THE LD.AR THAT AS THE SAID EXPENDITURE WAS INCURRED FOR THE PURPOSES OF RENOVATION OF HOTEL WHICH WAS ILLEGAL AND ALSO STOOD DEMOLISHED BY THE MUNICIPAL CORPORATION AND THE SOURCE OF THE SAID EXPENDITURE WAS OUT OF BANK LOAN TAKEN FROM THE CORPORATION BANK BY THE ASSESSEE. THE ASSESSEE COOK ED UP THE WHOLE STORY TH A T THE PAY ORDER S WERE ISSUED IN THE NAME OF THOSE PARTIES WHO DID NOT CARRY OUT THE ACTUAL WORK OF CONSTRUCTION AND RETURNED BACK THE SAME TO THE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 14 ASSESSEE AND THE SAID CONSTRUCTION AND RENOVATION WAS COMPLETED OUT OF THE CASH REC EIVED BY THE ASSESSEE FROM THOSE FIVE PARTIES T HE DETAILS WHEREOF W ERE GIVE N AT PAGE 5 OF THE ASSESSMENT ORDER . THE FACTS WERE PROVED BY THE VERIFICATION CARRIED OUT BY THE INSPECTOR DEPUTED BY THE AO THAT NONE OF THE PART IES W ERE IN EXISTENCE EXCEP T M/S PRIYANKA CORPORATION . ALL THESE FACTS SHOWED THAT RETRACTION OF THE ASSESSEE WAS AN AFTERTHOUGHT AND THEREFORE THERE WAS NO MERIT IN THE ARGUMENT OF THE LD.AR. LD. DR FINALLY SUBMITTED THAT AN AMOUNT OF RS.6,76,23,000/ - WAS RIGHTLY BROUGHT TO TA X BY THE AO BY INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT ON THE BASIS OF NOTING AT PAGES 4 AND 5 OF THE IMPOUNDED DURING THE SURVEY PROCEEDINGS AND SAME WAS THE POSITION WITH REGARD TO THE ADDITION OF RS.11,97,000 / - WHICH WAS ALSO RIGHTLY MADE U/S 69C OF THE ACT AND PRAYED THAT THE SAME BE UPHELD FOR THE ABOVE REASONS . 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT A SURVEY WAS CONDUCTED U/S 133A ON THE ASSESSEE ON 11 TH AND 12 TH MAY, 2007 AND A SURRENDER /DISCLOSURE OF RS.6,88,22,000/ - WAS MADE ON 12.5.2007 AT THE TIME OF RECORDING THE STATEMENT U/S 131 OF THE ACT IN RELATION TO THE ASSESSMENT YEAR 2007 - 08 WHEN THE MR KASHAN GH ASWALA A PARTNER IN THE ASSESSEE FIRM COULD NOT EXPLAIN THE ENTRIES IN THE LOOSE SHEETS NO 4 AND 5 CONTAINING SOME CASH RECEIPTS AND PAYMENTS OF RS. 6,88,22,000/ - . WE FURTHER FIND THAT IN THE SECOND STATEMENT RECORDED ON 15.05.2007 , MR KASHAN GHASWALA S TATED IN REPLY TO QUERY NO 2 THAT THE SAID ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 15 EXPENDITURE WAS INCURRED OUT OF BANK LOAN TAKEN FROM CORPORATION BANK. THE SURRENDER/ DISCLOSURE WAS RETRACTED BY THE ASSESSEE VIDE LETTER DATED 4.6.2007 FILED ON 7.6 .2007. AT THE TIME OF THE SURVEY, THE ASSESSEE C OULD NOT EXPLAIN THE SOURCE OF RS.6,88,22,000/ - AND VARIOUS HEADS UNDER WHICH THE EXPENDITURES WERE INCURRED AND DEBITED. HOWEVER, IN THE RETRACTION LETTER, THE ASSESSEE SUBMITTED THAT THE EXPENDITURE WAS INCURRED ON THE HOTEL RENOVATION AS RECORDED AT P AGE 4 AND 5 O F THE IMPOUNDED DOCUMENTS DURING THE COURSE OF SURVEY AND THE SOURCES OF THE SAID EXPENDITURE W ERE OUT OF LOAN TAKEN BY THE A SSESSEE FROM THE CORPORATION BANK. THE ASSESSEE ALSO SUBMITTED THAT ONE OF THE CON DITION BY THE BANK FOR SANCTION ING THE LOAN WAS THAT ALL THE PAY ORDERS W OULD BE ISSUED ONLY IN THE NAME OF THE THIRD PART IES I.E SUPPLIERS AND CONTRACTORS AND NO MONEY WOULD BE DISBURSED IN THE NAME OF THE ASSESSEE DIRECTLY. THE LD. AR FURTHER SUBMITTED THAT DUE TO RELUCTANCE OF THE CONTRACTORS AND SUPPLIERS TO ACCEPT THE PAYMENT S BY CHEQUES IN CASH THE PAY ORDERS FROM THE BANK WERE GOT ISSUED IN THE NAME OF SUPPLIERS AND CONTRACTOR WHO ACTUALLY DID NOT CARRY OUT THE WORK . THE SAID SUPPLIERS/CONTRACTORS RETURNED THE CASH TO THE ASSE SSEE AFTER DEDUCTING ONE PER CENT COMMISSION WHICH WAS USED BY THE ASSESSEE FOR THE PURPOSE OF PAYMENT TO THE CONTRACTORS AND SUPPLIERS OF MATERIAL WHO CARRIED OUT THE RENOVATION AND REPAIRS ON THE 3 RD FLOOR OF THE HOTEL FOR CREATING RESIDENTIAL ROOMS. WE FIND THAT AT PAGE 4 AND 5 OF IMPOUNDED DOCUMENTS THERE W ERE DETAILS OF RECEIPT S AND PAYMENT S . AS PER DESCRIPTIONS ON THE PAPER NO 4 AND 5 T HE ASSESSEE RECEIVED RS.6,88,22,000/ - AND T HERE WERE PAYMENTS TO ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 16 VARIOUS PARTIES FOR THE CAPITAL EXPENDITURE A ND CASH IN HAND RS.4,70,000/ - QUA THE PAGE NO 5 TITLED A S CORP CASH (CASH EXPENDITURE DETAILS) DATED 19.12.2006 , IT WAS STATED TO REPRESENT THE MONEY FROM CORPORATION BANK . THE LD. AR SUBMITTED BEFORE US THAT THE EXPENDITURE INCURRED FOR THE PURP OSE OF RENOVATION WAS DULY EXPLAINED OUT OF CASH RECEIVED BY THE ASSESSEE FROM THE SUPPLIERS AND CONTRACTORS IN WHOSE NAMES PAY ORDERS WERE ISSUED BY THE BANK ORIGINALLY AND WHO AFTER RETAINING 1 PER CENT COMMISSION RE TURNED THE BALANCE CASH TO THE ASSE SSEE. AFTER HEARING BOTH THE SIDES IT IS APPARENT THAT THE ASSESSEE HAS CARRIED OUT RENOVATION AND REP A IRS OF THE HOTEL FOR CREATING MORE RESIDENTIAL ROOMS FOR THE PURPOSE OF WHICH THE ASSESSEE HAS RAISED LOAN FROM THE CORPORATION BANK AND THE SAID REN OVATION /CONSTRUCTION WAS FINANCED OUT OF CASH RECEIVED BY THE ASSESSEE BY MAKING NECESSARY ARRANGEMENT WITH THE BANK. FURTHER, THE AO AND LD. CIT(A) HAS ALSO ADMITTED THAT THE ASSESSEE MIGHT HAVE INCURRED SOME EXPENDITURE ON RENOVATION /CONSTRUCTION /LOA NS . WE ALSO FIND THAT THE FACT OF REPAIRS AND RENOVATION HAVING BEEN CARRIED OUT BY THE ASSESSEE I.E ALLIANCE HOTEL WAS NOTED AND ACCEPTED BY THE COORDINATE BENCH WHILE ADJUSTING THE ONE OF ANOTHER PARTNER IN THE ASSESSEE FIRM BY HOLDING THAT THE M/S A LLIANCE HOTEL CARRIED OUT SOME ILLEGAL RENOVATIONS AND REPAIRS WHICH WERE SUBSEQUENTLY DEMOLISHED AS EVIDENT FROM THE ORDER OF BRIHYAN MUMBAI MAHANAGAR PALIKA BEARING NO. ACA/180/MOH - A/DI 19.03.2009. THE SOURCE OF SUCH EXPENDITURE WAS OUT OF LOAN TAKEN BY THE ASSESSEE FROM THE CORPORATION BANK. IN OUR OPINION , THE WHOLE EXERCISE OF REVENUE WAS BASED ON ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 17 CONJECTURES AND SURMISES AND THERE WAS NO MATERIAL ON RECORD WHICH PROVE D THAT THE RENOVATION WORK WAS MET OUT OF MONEY OTHER THAN THE BORROWED FROM THE BANK, NOR COULD THE AO OR LD.CIT(A) RECORD ANY FINDINGS THAT THE ASSESSEE HAD ANY OTHER SOURCE OF INCOME APART FROM ITS REGULAR INCOME OF T HE AS S ES S EE. IN OUR OPINION, THE ASSESSEE HAS EXPLAINED THE SOURCE OF EXPENDITURE AND THE NATURE OF EXPENDITUR E INCURRED AND THEREFORE THE ADDITION S MADE BY THE AO U/S 69 OF THE ACT AS UNEXPLAINED INVESTMENTS OF RS.6,76,23,000/ - AND U/S 69C OF THE ACT UNEXPLAINED EXPENDITURE OF RS.11,97,000/ - COULD NOT BE SUSTAINED IN THE PRESENT FACTS AND CIRCUMSTANCES. MOREOVER, THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI PARVEZ MOHAMMED HUSSAIN GHASWALA (SUPRA) HAS DISMISSED THE DEPARTMENTAL APPEAL FOR THE ASSESSMENT YEAR 2007 - 08 BY UPHOLDING THE ORDER OF THE LD.CIT(A) WHEREIN THE CIT(A) DELET ED THE AD DITION OF RS.2,62,40,000/ - MADE ON THE BASIS OF PAGE 4 AND 5 IMPOUNDED DURING THE COURSE OF SURVEY FROM THE ASSESSEE AND WHICH WERE ALSO THE BASIS FOR MAKING ADDITION S IN THE HANDS OF THE ASSESSEE WHICH ARE SUBJECT MATTER OF THE CURRENT APPEAL BEFORE US . THE ADDITIONS IN THE HANDS OF MR.PARVEZ GHASWALA, THE PARTNER OF THE ASSESSEE - FIRM WAS MADE ON THE BASIS OF S A ME DOCUMENTS PAGE NO 4 AND 5 FOUND DURING THE SURV EY ACTION AS IN THE CA S E OF ASSESSEE . THE TRIBUNAL VIDE PARA 6 HAS HELD AS UNDER : 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD WE FIND THAT THE ADDITION HAS BEEN MADE MAINLY ON THE BASIS OF PARVEZ SIR APPEARING ON THE LOOSE PAPER BEARING NO. 4 & 5 AND CASH STATEMENT DATED 18.11.2006. IN THIS REGARD THE CONSISTENT STAND O F THE ASSESSEE HAS BEEN THAT PARVEZ SIR APPEARING ON THE LOOSE PAPER ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 18 BEARING NO. 4 & 5 AND CASH STATEMENT DATED 18.11.2006 DOES NOT RELATE TO HIM. HE STATED THAT HE SEIZED TO BE A PARTNER WITH EFFECT FROM 15.11.2006 IN THE FIRM OF ALLIANCE HOTEL AND TH E AMOUNTS SHOWN AS HAVING BEEN PAID TO PARVESH SIR DID NOT RELATE TO HIM, AS STATED BY KASAM GHASWALA, PARTNER OF ALLIANCE HOTEL. FURTHER STAND OF THE ASSESSEE HAS BEEN THAT THESE SLIPS OF PAPER WERE RECOVERED FROM THE BUSINESS PREMISES OF ALLIANCE HOTEL AND NOT FROM ASSESSEE. THESE SLIPS OF PAPER BEARING NO. 4 & 5 AND CASH STATEMENT DATED 18.11.2006 WERE NOT IN HIS HANDWRITING. ASSESSEE WAS ALSO NOT CALLED BY THE SURVEY PARTY FOR RECORDING HIS STATEMENT IN RELATION TO PAPERS FOUND DURING THE COURSE OF SU RVEY PROCEEDINGS IN THE PREMISES OF ALLIANCE HOTEL AND TO RECORD THE STATEMENT TO VERIFY WHETHER THE PAYMENTS MADE TO PARVEZ SIR IN THE PAPERS FOUND IS THE PAYMENT MADE TO ASSESSEE OR NOT. ASSESSEE WAS NOT CALLED FOR RECORDING HIS STATEMENT BY THE ASSESS ING OFFICER OF ALLIANCE HOTEL DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE SAID FIRM. HOWEVER, THE ASSESSING OFFICER OF THE ASSESSEE IN HIS CASE RECORDED THE STATEMENT OF THE ASSESSEE WHEREIN ASSESSEE HAD DENIED THAT HE IS NOT PERVEZ SIR AS MENTION ED IN THE PAPERS FOUND DURING THE COURSE OF SURVEY ACTION CONDUCTED AT THE PREMISES OF ALLIANCE HOTEL. IT IS UNDISPUTED THAT PAPERS SHOWING THE NAME OF PARVEZ SIR WERE FOUND IN THE PREMISES OF ALLIANCE HOTEL DURING THE COURSE OF SEARCH ACTION AND NOT FRO M ASSESSEE. PAPERS FOUND WERE NOT IN HIS HANDWRITING. THE PARTNER OF ALLIANCE HOTEL, SHRI KASAM GHASWALA IN HIS STATEMENT HAS STATED THAT PAYMENT MADE TO PARVEZ SIR IS NOT THE AMOUNT PAID TO THE ASSESSEE. NEITHER THE SURVEY PARTY NOR THE ASSESSING OFFICE R OF ALLIANCE HOTEL RECORDED THE STATEMENT OF ASSESSEE. ASSESSEE, IN HIS STATEMENT BEFORE THE ASSESSING OFFICER, HAS CATEGORICALLY STATED THAT HE IS NOT PERVEZ SIR AS MENTIONED IN THE PAPERS FOUND FROM THE PREMISES OF ALLIANCE HOTEL. ASSESSEE ALSO OBJECT ED TO THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION UNDER SECTION 69 OF THE ACT. FOR INVOKING PROVISIONS OF SECTION 69 OF THE ACT ASSESSEE SHOULD BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLES. IN THIS CASE OF ASSESSE E HE WAS NOT FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLES IN PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR. IN SUCH A SITUATION INVOKING OF PROVISIONS OF SECTION 69 WAS NOT JUSTIFIED. THE ENTRIES MADE ON PAGES 4 & 5 OF THE IMPOUNDED PAPERS WERE NOT MADE CONTEMPORANEOUSLY. THE RIGHT HAND TOP CORNER OF PAGE 5 SHOWS THAT THE ENTRIES WERE MADE ON 19.12.2006 (AFTER THE ASSESSEE RETIRED FROM THE FIRM), THE TRANSACTIONS AS SUCH RELATE TO 11.11.2006, 11.12.2006, 16.12.2006 AND 1 9.12.2006 SHOWING THAT THE ENTRIES WERE MADE A FEW DAYS AFTER THE TRANSACTIONS WERE COMPLETED. IN THIS BACKGROUND THE STAND OF THE ASSESSEE HAS BEEN THAT THE AMOUNTS ALLEGED TO HAVE BEEN PAID TO PARVEZ SIR (AS PER THE IMPOUNDED PAPERS) ALSO SHOW THAT SUC H AMOUNTS WERE DISBURSED BY HIM TO THE VARIOUS HEADS OF LABOURERS IN ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 19 GETTING THE RENOVATION WORK EXECUTED. HAVING CONSIDERED THE SAME THE CIT(A) RIGHTLY HELD THAT ASSESSEE WAS NOT FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S. NO CONCRETE EVIDENCE HAS BEEN BROUGHT ON RECORD BY ASSESSING OFFICER TO ESTABLISH THAT THE ENTRY PARVEZ SIR IN THE IMPOUNDED PAPER ESTABLISHES THE FACT THAT IT REFERS TO THE ASSESSEE, I.E. SHRI PARVEZ MOHAMMED HUSSAIN GHASWALA. SIMILARLY THE AMOUNT O F RS.2,62,40,000/ - MENTIONED AGAINST THE ENTRY OF PARVEZ SIR WAS EVER PAID TO THE ASSESSEE. ASSESSING OFFICER HAD MADE THE ADDITION ONLY ON SURMISE THAT THE IMPOUNDED PAPERS BEARING NO. 4 & 5 WERE CONTAINING ENTRIES WHICH ARE DATED 11.11.2006 WHEREAS THE ASSESSEE RETIRED FROM THE FIRM ON 15.11.2006. ASSESSEE IN HIS STATEMENT BEFORE THE ASSESSING OFFICER HAS CATEGORICALLY DENIED THAT HE IS NOT PARVEZ SIR AS MENTIONED IN THE IMPOUNDED PAPERS IN RESPECT OF ALLIANCE HOTEL. APART FROM THE ABOVE, THE ASSESSIN G OFFICER DID NOT HAVE ANY OTHER GROUND FOR ARRIVING AT THE CONCLUSION THAT THE ENTRY PARVEZ SIR IS REFERRING TO ASSESSEE. IT IS UNDISPUTED FACT THAT ALLIANCE HOTEL HAD CARRIED OUT RECONSTRUCTION WORK WHICH WAS SUBSEQUENTLY TURNED OUT TO BE ILLEGAL AND WAS DEMOLISHED. THIS FACT WAS FURTHER CORROBORATED BY THE ORDER OF THE BRIHYAN MUMBAI MAHANAGAR PALIKA BEARING NO. ACA/180/MOHA/DI. 19.03.2009, CLEARING MENTIONED THAT THE SAID FIRM HAD CONSTRUCTED UNAUTHORIZED CONSTRUCTION OF MEZZANINE FLOOR AND ADDITIONA L ROOM WITH ATTACHED TOILET IN ALLIANCE HOTEL, 3RD FLOOR, EMPIRE BUILDING. THE FACT OF RECONSTRUCTION OF ALLIANCE HOTEL WAS ACCEPTED BY SHRI KASAN GHASWALA, BEING MANAGING PARTNER OF THE FIRM. IN VIEW OF THIS IT IS ABSOLUTELY EVIDENT THAT THE ASSESSING OFF ICER HAS MADE THE ADDITION ON CONJUNCTURE AND SURMISES WITHOUT CONCRETE EVIDENCE IN HIS POSSESSION. SIMILARLY, AT PARA 10 OF THE SAID ORDER, THE TRIBUNAL HAS HELD AS UNDER: 10. THE ASSESSING OFFICER OF ALLIANCE HOTEL DID NOT MAKE ANY SEPARATE ADDITIO N OF RS.40,00,000/ - . IN FACT IN THE AFORESAID COMPUTER SHEET DID NOT ADD THIS AMOUNT TO THE TOTAL INCOME OF ALLIANCE HOTEL. THIS SUM OF RS. 1.08 CRORES INCLUDED THE SUM OF RS.4000,000/ - , ADDED BY ASSESSING OFFICER OF THE ASSESSEE TO THE TOTAL INCOME OF THE ASSESSEE. THUS, ASSESSING OFFICER OF ALLIANCE HOTEL WAS OF THE OPINION THAT OVER AND ABOVE RS.2,62,40,000/ - , NO FURTHER ADDITION OF RS.40,00,000/ - IS REQUIRED TO BE MADE. IN VIEW OF OUR DISCUSSION COUPLED WITH THE FACT THAT PROVISIONS OF SECTION 69A HAS NO APPLICATION ON THE ACT OF ASSESSEES CASE THEREFORE, THE ADDITION OF RS.40,00,000/ - MADE BY ASSESSING OFFICER UNDER SECTION 69A OF THE ACT WAS RIGHTLY DIRECTED TO BE DELETED. ACCORDINGLY, BOTH THE ADDITIONS OF RS.2,62,40,000/ - PLUS RS.40,00,000/ - , AGGREGA TING TO RS.3,02,40,000/ - , WERE RIGHTLY DIRECTED ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 20 TO BE DELETED. THIS REASONED FINDINGS OF THE CIT(A) NEED NOT ANY INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 10 . FROM THE ABOVE FACTS AND DISCUSSIONS, W E FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL HAS UPHELD THE DELETION OF ADDITION BY LD. CIT(A) WHICH WAS MADE BY THE AO ON THE BASIS OF LOOSE PAPERS PAGE NO 4 AND 5 IMPOUNDED D URING THE COURSE SURVEY ACTION TO THE TUNE OF RS.2,62,40,000/ - + RS.40 ,00,000/ - TOTALING TO RS. 3,02,40,000 HOLDING THAT THE SAME WERE MADE ON THE BA S IS OF SURMISES AND CONJUNCTURE AND RIGHTLY DELETED BY THE LD.CIT(A). FOLLOWING THE SAME ANALOGY AND THE RATIO LAID DOWN IN THE SAID DECISION AND ALSO THE FACTS THAT NO CORRO BORATING MATERIALS WERE FOUND BY THE DEPARTMENT TO MAKE THESE ADDITIONS. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON ISSUE OF CONFIRMATION OF ADDITION S OF RS.6,76,23,000/ - AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND RS.11,97,000/ - AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT AND THE AO IS DIRECTED TO DELETE THE SAME. 11. GROUND NO.3 IS AGAINST THE DISALLOWANCE OF DEPRECIATION OF RS.22,99,096/ - MADE BY THE ASSESSING OFFICER ON HOTEL BUILDING. 12 . THE AO OBSERVED THAT THE ASSESSEE ARRANGED ISSUED BOGUS BILLS AMOUNTING TO RS. 7,85,01,143/ - WHICH WERE MENTIONED BY THE AO ON PAGE NO 21 AND 22 OF THE ASSESSMENT ORDER AND NOT RS.6,88,22,000/ - AS CLAIMED BY THE ASSESSEE. THE AO FURTHER NOTED THAT THE CORPORATION BANK MADE DISBURSEMENT S TO FIVE PARTIES FOR BOGUS BILLS DETAILS WHEREOF WAS GIVEN ON ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 21 PAGE 15 OF THE ASSESSMENT ORDER. T HE ASSESSEE HAS CAPITALIZED ONLY RS.4,59,81,929/ - OUT OF RS.7,85,01,143/ - IN ASSESSMENT YEAR 2007 - 08 AND DEPRECIATION WAS ALSO CLAIMED ACCORDINGLY AT RS. 22,99,096/ - IN ASSESSMENT YEAR 2007 - 08 AND NOTWITHSTANDING THE PAYMENTS BY THE ASSESSEE OUT OF CASH WHICH WAS GENERATED OUT OF BANK LOAN FROM CORPORATION BANK , THE ASSESSEE CLAIM OF DEPRECIATION WAS BASED ON THE BOGUS BILLS ISSUED BY THE PARTIES WHO DI D NOT ACTUALLY CARRY OUT THE WORK OF RENOVATION AND CONSTRUCTION BUT PASSED ON THE MONEY TO THE ASSESSEE AFTER RETAINING 1 PER CENT COMMISSION AND THEREFORE DEPRECIATION AMOUNTING TO RS.22,99,096/ - COULD NOT BE ALLOWED AS NOT BEING GENUINE AND FURTHER HELD THAT THE DEPRECIATION ON THE REST OF THE ADDITION S WOULD BE DISALLOWED IN THE YEAR OF ADDITION AS DEPRECIATION ON THE ADDITION WERE UNSUPPORTED BY THE VOUCHERS AND COULD NOT BE ALLOWED FOR THE VARIOUS REASONS AS GIVEN IN PARA 6.9 AT PAGE 2 2 WHICH ARE REPRODUCED BELOW: - 6.9 THE D ISBURSEMENTS MADE BY CORPORATION BANK ON ACCOUNT OF BOGUS BILLS AMOUNTS TO RS.7.,85,01,143/ - . AS THE ASSESSEE HAS CAPITALIZED ONLY RS 4,59,81,928/- OUT OF THE ABOVE IN THE AY 2007 - 08. HENCE THE DEPRECIATION ON THE SAME BEI NG RS . 22,99,096/ - IS DISALLOWED IN THE AY 2007 - 08. DEPRECIATION ON THE REST OF THE ADDITIONS WILL BE DISALLOWED IN THE YEAR OF ADDITION. SIMILARLY THE DEPRECIATION ON THE ADDITION OF RS 4,59,81,928/ - WILL NOT BE ALLOWED IN THE SUBSEQUENT YEARS ALSO. THUS T HE DEPRECIATION ON THE ADDITIONS TO THE CAPITAL ASSETS, UNSUPPORTED BY THE VOUCHERS, CANNOT BE ALLOWED BECAUSE OF THE FOLLOWING REASONS: THE ASSESSEE IN THE COURSE OF THE SURVEY OPERATION U/ S 133A ADMITTED THE UNACCOUNTED EXPENDITURE OF RS 688.20 LACS . LATER HE RETRACTED HIS STATEMENT AND TO EXPLAIN THE PAPERS HE TOOK RESORT OF DUAL EXPLANATION. ON THE ONE HAND HE EXPLAINED THAT THE SOURCE OF THE FUNDS WAS LOAN FROM THE BANK. ON THE OTHER HAND, HE CONTENDED THAT THE EXPENDITURE MENTIONED IN THE SHEET ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 22 I S THE EXPENDITURE FOR THE RENOVATION OF THE HOTEL. HE INDEED CAPITALIZED THE SAME, WITHOUT THE BILLS SUPPORTING THAT. IN THE FY 2006 - 07, AS PER THE SUBMISSIONS OF THE ASSESSEE, HE CAPITALIZED RS 4,59,81,928/ - OF EXPENSES. THE ASSESSEE FAILED TO PRODUCE THE SUPPORTING EVIDENCES OF THE CAPITALIZATION OF THE EXPENSES. ASSES S EE FAILED TO PRODUCE THE PARTIES, THROUGH WHOM HE CLAIMED TO WITHDRAW CASH, FOR VERIFICATION. IN THE COURSE OF THE VERIFICATION BY THE DEPARTMENT, IT WAS FOUND THAT NONE OF THE PART IES EXIST AT THE ADDRESSES MENTIONED BY THE ASSESSEE. THUS BOTH THE CONTENTIONS OF THE ASSESSEE DO NOT STAND THE TEST OF THE EVIDENCE. LOAN MENTIONED BY THE ASSESSEE WAS SANCTIONED ONLY IN NOV 2006 AND THE EXPENDITURE ON THE RENOVATION OF THE ASSES SEE WAS INCURRED BY THE ASSESSEE MUCH EARLIER THEREFORE THE CONTENTION OF THE ASSESSEE IS AGAIN FACTUALLY INCORRECT . ASSESSEE HAS SUBMITTED THE WRONG COST ESTIMATE OF THE RENOVATION OF THE HOT EL TO THE BANK AND THE DIFFERENCE IS ALMOST EQUAL TO THE AM OUNT OF BOGUS BILLS ENTERED BY THE ASSESSEE. THEREFORE THE CASH RECEIVED FROM THE BOGUS BILL PA RTIES CANNOT BE RELATED TO THE EXPENDITURE ON THE RENOVATION OF HOTEL. EVEN THE ASSESSEE HAS NOT TAKEN THE BMC APPROVAL FOR THE RENOVATION OF THE HOTE L. WHIC H FURTHER INDICATES THAT THE CONTENTION OF THE ASSESSEE RELATED TO THE CAPITAL EXPENDIT URE IS NOT CORRECT. EVEN THE BILLS SUBMITTED BY THE ASSESSEE TO THE BANK ARE APPARENTLY BOGUS. A S STATED EARLIER, IT IS IMPOSSIBLE TO UTILIZE THE MATERIAL AS STATED IN THE BILLS IN TH E LOCALITY, WHERE THE HOTEL EXISTS .. NO DEPRECIATION CAN BE ALLOWED WHEN THE DEPARTMENT AND THE ASSESSEE, BE ARE IN AGREEMENT THAT THE BILLS FOR ADDITION TO FIXED ASSET ARE BOGUS. ALL TH ESE FACTS TOGETHER CLEARLY ESTABLISH THAT THE CON TENTION OF THE ASSESSEE IS NOT CORRECT AND DEPRECIATION CANNOT BE ALLOWED TO THE ASSESEEE. ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 23 1 3. DURING THE APPELLATE PROCEEDINGS, THE LD.CIT(A) ALSO UPHELD THE ACTION OF THE AO IN DISALLOWING THE DEPRECIATION OF RS.22,99,096/ - BY REJECTING THE SUBMI SSIONS OF THE ASSESSEE VIDE PARA 3.3 OF THE APPELLATE ORDER BY OBSERVING AND HOLDING AS UNDER: - 3.3 THE ASSESSMENT ORDER, SUBMISSIONS MADE FOR THE APPELLANT AND MATERIALS ON RECORD HAVE BEEN CONSIDERED. IN VIEW OF THE FACT THT APPELLANT HA S NOT BEEN AB LE TO PROVE THE CAPITAL EXPENDITURE THE DEPRECIATION HAS RIGHTLY BEEN DISALLOWED. RELIANCE UPON THE CASE OF MYSORE MINERALS LTD (SUPRA) IS INAPT SINCE THE CASE CITED IS ON THE ISSUE OF WHETHER POSSESSION ON PAYMENT OF PART PRICE EVEN WITHOUT REGISTRATI ON CONSTITUTES OWNERSHIP AND THEREFORE THAT DEPRECIATION IS ALLOWABLE. IN THE PRESENT CASE THE APPELLANT HAS NOT PROVED THE CAPITAL EXPENDITURE INCURRED 1 4. BEFORE US, THE LD.AR VEHEMENTLY SUBMITTED THAT THE ASSESSEE HAS ACTUALLY INCURRED CAPITAL EXP ENDITURE UNDER SPECIFIC HEADS OF FIXED ASSETS AND CAPITALIZED IN THE RELEVANT BLOCK OF ASSETS DETAILS WHEREOF WERE ALSO FILED BEFORE THE AO . THE LD COUNSEL FURTHER SUBMITTED THAT SAID ADDITIONS/CAPITAL EXPENDITURE WERE MET OUT OF THE LOAN FROM CORPORATION BANK. ACCORDINGLY THE DEPRECIATION WAS CLAIMED ON HOTEL BUILDING WHICH WAS BEING USED FOR THE PURPOSES OF BUSINESS OF T HE ASSESSEE OF RUNNING THE HOTEL AND BENEFIT O F DEPRECIATION COULD NOT BE DENIED TO THE ASSESSEE AND PRAYED THAT THE CLA IM OF THE AS SESSEE BE ALLOWED. 15 . THE LD. DR, HEAVILY RELIED ON THE ORDERS OF AUTHORITIES BELOW AND PRAYED THAT THE ORDER OF LD.CIT(A) BE UPHELD ON THIS ISSUE. ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 24 16 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF MATERIAL INCLUDING THE ORDERS OF AUTHORITI ES BELOW , WE FIND THAT THE ASSESSEE HAS ALREADY PROVED BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE HAS INCURRED EXPENDITURE FOR TH E PURPOSE OF CONSTRUCTION AND RENOVATION OF THE HOTEL FOR CREATING SOME MORE SPACE /ROOMS FOR RESIDE NTIAL PURPOSES AND THE SOURCE WAS OUT OF MONEY B ORROWED FROM CORPORATION BANK . WE HAVE ALREADY DECIDED IN GROUNDS NO.1 AND 2 ABOVE THAT THE SOURCE OF RENOVATION AND REPAIRS WERE OUT OF FUNDS ARRANGED FROM THE CORPORATION BANK BY THE ASSESSEE FIRM . ACCORDINGLY W E ARE OF THE CONSIDERED OPINION THAT MONEY SPENT BY THE ASSESSEE TOWARDS CONSTRUCTION AND RENOVATION IN THE BLOCK OF ASSETS WAS ELIGIBLE FOR DEPRECIATION AS THE SAME WAS BEING USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS THE FACT OF EXPENDITURE HAVING INCURRED O N RENOVATION WAS PROVED . ACCORDINGLY , WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO ALLOW THE DEPRECIATION. 1 7. ISSUE RAISED IN GROUNDS OF APPEAL NO.4 IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF INTEREST OF RS.22,75,714/ - PAID TO T HE CORPORATION BANK. 18. THE SAID AMOUNT WAS DISALLOWED BY THE AO BY OBSERVING THAT SINCE THE DEPRECIATION WAS NOT ALLOWED ON THE ADDITION S NOT SUPPORTED BY THE GENUINE BILLS AND VOUCHERS , THE INTEREST ON SUCH FUND S ALSO NEED ED TO BE DISALLOWED ESPEC IALLY WHEN THE LOAN ITSELF WAS NOT USED FOR THE PURPOSE OF BUSINESS HOW THE INTEREST ON THE SAME WOULD BE TREATED AS BUSINESS ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 25 EXPENDITURE . ACCORDINGLY, ON THE SAME ANALOGY THE INTEREST PAID OF RS.22,75,714/ - W AS DISALLOWED BY THE AO. 19. IN THE APPELL ATE PROCEEDINGS, THE LD.CIT(A) ALSO UPHELD THE ACTION OF THE AO . 20. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUS ING THE RELEVANT MATERIAL PLACED BEFORE US , WE FIND THAT THE ASSESSEE HAS ALREADY PROVED THAT THE RENOVATIO N AND CONSTRUCTION OF HOTEL OUT OF FUNDS BORROWED FROM THE CORPORATION BANK WHICH HAS ALREADY BEEN ELABORATELY DISCUSSED WHILE DECIDING GROUNDS OF APPEAL NO.1 AND 2 OF THIS APPEAL AND DECIDED IN FAVOUR OF THE ASSESSEE . IN OUR OPINION , THE ASSES S EE HAS PROVED THAT THE LOAN WAS TAKEN , BORROWED AND USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THEREFORE , THE ASSESSEE IS ENTITLED TO CLAIM THE DEPRECIATION ON THE AMOUNT OF EXPENDITURE CAPITALIZED DURING THE YEAR . ON THE SAME ANALOGY , THE INTEREST ON LOAN FROM CORPORATIO N BANK WOULD BE ALLOWED AS ADMISSIBLE EXPENSES . ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE QUA INTEREST EXPENSES OF RS. 22,75,714/ - . 21. THE ISSUE RAISED IN GROUND NO.5 IS AGAINST THE CONFI RMATION OF ADDITION OF RS.44,81,000/ - BY CIT(A) WHICH WAS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 26 22. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO PROVIDED WITH 16 PAGE PRINTOUT, NUMBERED 1 - 16 OF THE FILES RECOV ERED FROM THE ASSESSEES PREMISES, WHICH THE ASSESSEE DISOWNED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND THEREFORE THE AO NOT SATISFIED AND CONVINCED WITH THE REPLY OF THE AS S ES SEE ULTIMATELY MADE AN ADDITION OF RS.2, 02,66,000 / - AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT ON THE BASIS OF THE SAID PAPERS WHICH CONTAIN ED SOME CASH TRANSACTIONS OF RECEIPT S AND PAYMENT S . 23. DURING THE COURSE OF APPEAL PROCEEDINGS, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADD ITION TO THE EXTENT OF RS 1,57,85,000/ - A ND SUSTAINED THE REMAINING AMOUNT OF RS.44,81,000/ - BY OBSERVING AND HOLDING AS UNDER : 5.3 THE ASSESSMENT ORDER, SUBMISSIONS MADE FOR THE APPELLANT A ND MA TERIALS ON RECORD HAVE BEEN CONSIDERED. THE COMPUTER WAS F OUND' IN T HE PREMISES OF AND UNDER THE CONTROL OF THE APPELLANT AND THUS THE PRESUMPTION IS THAT THE ENTRIES FOUND RECORDED IN THE FILES ON THE COMPUTER BELONG TO THE APPELLANT WHICH PRESUMPTION HAS NOT BEE N REBUTTED. THE APPELLANT HAS MERELY DENIED THE S AME WHICH IS N OT SUFFICIENT TO REBUT THE PRESUMPTION. THE ADDITIONS MADE ARE THUS UPHE LD. HOWEVER WITH REGARD TO ADDITION WITH REGARD TO FI LE RELLABLE_EXPS.XLS, IT HAS BEEN STATED IN APPEAL ORDER DATED 31/03/201 1 IN THE APPELLANT'S APPEAL FOR AY 2006 - 07 IN APPEAL NO. CIT(A) - 23 / AC IT 12(1)/IT - 357//08/09 THAT 'IT IS SEEN THAT ENTRIES ON THE SHEETS REFERRED TO BY THE AO RELATE TO UPADASTRA ACCOUNT, STAMP HOUSE (BOTAWALA), RELIABLE INVESTMENTS & DEVELOPERS AND MARIA DEVELOPERS. IN VIEW OF THE FACT THAT THE PHOTOCOPY OF PROPERTY CARD FILED SHOWS THE NAMES OF OWNERS AS EARLIER OWNED BY UPADRASTA GROUP WHICH WAS TRANSFERRED IN THE NAMES OF JAVED MOHD HUSSEIN, IRFAN M YUSUF VAID, ABRAR IRFAN VAID (CARRYING N BUSINESS IN THE NAME AND STYLE OF RELIABLE INVESTMENT S & DEVELOPERS). FURTHER THAT SHRI JAVED MOHD HUSSIAN AND SHRI JAVED GHASWALA ARE ONE AND THE SAME PERSON, NO ADDITION CAN BE MADE IN THE HANDS OF THE APPELLANT IN RESPECT OF THESE ENTRIES.'. SINCE THE ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 27 ENTRIES ON FILE RELLABLE_EXPS.XLS PERTAIN TO BOTAWALA BUILDING AND UPADASTRAS BLDG, MARIA DEVELOPERS, ON THE SAME REASONING AS IN APPEAL FOR AY 2006 - 07, ADDITION IN RESPECT OF EXPENSES RELATING TO FILE RELLABLE_EXPS.XLS ARE DELETED. ACCORDINGLY THIS GROUND IS PARTLY ALLOWED. 2 4. THE LD. COUNSEL OF THE ASS ESSEE VEHEMENTLY SUBMITTED BEFORE US THAT THE SAID ADDITIONS AS SUSTAINED BY THE LD.CIT(A) AT RS. 44,81,000/ - HAS ALREADY BEEN COVERED BY THE ASSESSEE BY MAKING SUO - MOTT O DISALLOWANCE OF RS.50 LAKHS IN THE COMPUTATION OF INCOME AND ALSO STATED IN THE AFFIDAVIT DATED 11.6.2007 FILED BY THE ASSESSEE BEFORE THE AO A OF COPY WHICH WAS FILED AT PAGE 21 TO 26 OF THE PAPER BOOK . T HEREFORE, RS . 44,81,000/ - BE CONSIDERED AND ADJUSTED OUT OF THE SUO MOTTU DISALLOWANCE ALREADY M ADE BY THE ASSESSEE IN THE COMP UTATION OF INCOME AND ACCORDINGLY THE ADDITION AS SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS.44,81,000/ - BE DELE TE D. 25 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE BEFORE US. WE FIND THAT THE ASSESSEE HAS SUO MOTTO ADDED A SUM OF RS.50 LAKHS TO THE INCOME IN THE COMPUTATION O F TOTAL INCOME . W E ALSO FIND FROM THE COPY OF AFFIDAVIT OF THE ASSESSEE FILED AT PAGES 21 TO 26 OF THE PAPER BOOK STATING THAT RS.50 LAKHS WAS OFFERED BY THE AS SESSEE FOR TAX AND DUE TAXES WERE PAID ACCORDINGLY . WE ALSO FIND FROM THE STATEMENT OF THE TOTAL INCOME FILED AT PAGES 39 TO 40 OF THE PAPER BOOK, WHEREIN A SUM OF RS.50 LAKHS WAS SHOWN AS INCOME TO COVER ALL DEFECTS AND DISCREPANCIES AS FILED AT P A G E 39 OF PB WHICH IS EXTRACTED BELOW: - ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 28 ADD: INCOME OFFERED TO COVER ANY EXPENSES, NOTING JOTTINGS , SHORTFALL IN CASH EXPENSES, OR ANY OTHER ITEM, ANY DEFECT, IN RECONCILIATION OF THE IMPOUNDED MATERIAL, ANY DEFECT IN THE REGULAR BOOKS OF ACCOUNTS ON ACCOUN T OF THE CASH TRANSACTIONS OR FOR ANY OTHER ITEMS OF DISCREPANCY WHICH MAY COME UP T O AT ALTER DA T E. VIDE AFFIDAVIT DA T ED 11.6.2007 W E FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT SINCE THE ASSESSEE HAS ALREADY OFFERED AND ADDED A SUM OF RS.50 LAKHS SUO MOTTU A T THE TIME OF FILING OF RETURN AND THE BENEFIT OF UNEXPLAINED TRANSACTIONS RS.44,81,000/ - SHOULD BE ALLOWED TO BE ADJUSTED AGAINST THE SAID VOLUNTARY DISCLOSURE WHICH WAS SPECIFICALLY MADE TO COVER ANY EXPENSES , NOTING S OR CASH TRANSACT IONS AS PER THE AFFIDAVIT AS IN RESPECT OF SUO MOTTO DISCLOSURE NO OTHER MATERIALS WAS FOUND . WE ARE, THEREFORE, NOT IN AG R EEMENT WITH THE FINDING S OF THE LD. CIT(A) IN UPHOLDING THE ADDITION. IN OUR OPINION, THE SAME SHOULD BE ALLOWED TO BE COVERED AND ADJUSTED AGAINST THE SURREN D ER OF RS.50 LAKHS AT THE TIME OF FILING OF RETURN OF INCOME. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 44,81,000/ - MADE U/S 69C OF THE ACT. 3. ITA NO.4739/M UM/2011( BY THE REVENUE) 26 . GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER: '1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. C I T(A) HAS ERRED IN DELETING THE ADDITION OF RS.L,5 7,85,000 / - MADE U/S. 69C ON THE REASONS THAT THE PH OTOCOPY OF PROPERTY CARD FILED SHOWS THE NAMES OF OWNERS AS EARLIER OWNED BY UPADRASTA GROUP WHICH WAS TRANSFERRED IN THE NAMES OF JAVED MOHD HUSSEM, IRFAN M. YSUF VAID ABRAR IRFAN VAID, CARRYING ON BUSINESS IN THE NAME AND STYLE OF RELIABLE INVESTMENT & DEVELOPERS. ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 29 1 (A) WHILE DOING SO THE ID. C I T(A) FAILED TO APPRECIATE THE FACT THAT ITS MERE DENIAL OF RELATION OF THE FIRM IN THE DATA STORED IN THE NAME OF JAVED GHASWALA AND ALSO THE ASSESSEE HAS NOT PRODUCED ANY SUPPORTING EVIDENCE TO PROVE HIS CONT ENTION. 2) 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED'. 27 . THE ISSUE RAISED BY THE REVENUE IN THE GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.1,57,85 ,000/ - BY THE LD. C IT(A) AS MADE BY THE AO U/S 69C OF THE ACT. 28 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ON THE BASIS OF DOCUMENT FOUNDS DURING THE COURSE OF SURVEY CONFRONTED THE ASSESSEE, WHICH T HE ASSESSEE DENIED ALTOGETHER B Y SUBMITTING THAT NOTING S IN THE SAID PAGES D ID NOT RELATE TO M/S ALLIANCE HOTEL OR ANY PART NER OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT NOTING S WERE RELATED TO SOME PRO PERTY TRANSACTIONS AND BALANCE SHEET OF UPADRASTA GROUP WHICH WAS NOT IN ANY WAY RELATED TO ASSESSEE. HOWEVER, THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S 69 C OF THE ACT . DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DELETED THE SAID ADDITION BY HOLDING THAT : 5.3. HOWEVER WITH REGARD TO ADDITION WITH REGARD TO FI LE RELLABLE_EXPS.XLS, IT HAS BEEN STATED IN APPEAL ORDER DATED 31/03/201 1 IN THE APPELLANT'S APPEAL FOR AY 2006 - 07 IN APPEAL NO. CIT(A) - 23 / AC IT 12(1)/IT - 357//08/09 THAT 'IT IS SEEN THAT ENTRIES ON THE SHEETS REFERRED TO BY THE AO RELATE TO UPADASTRA ACCOUNT, STAMP HOUSE (BOTAWALA), RELIABLE INVESTMENTS & DEVELOPERS AND MARIA DEVELOPERS. IN VIEW OF THE FACT THAT THE PHOTOCOPY OF PROPERTY CARD FILED SHOWS THE NAMES OF OWNERS AS EARLIER OWNED BY UPADRASTA GROUP WHICH WAS TRANSFERRED IN THE NAME S OF JAVED MOHD HUSSEIN, IRFAN M YUSUF VAID, ABRAR IRFAN VAID (CARRYING N BUSINESS IN THE NAME AND STYLE OF RELIABLE INVESTMENTS & DEVELOPERS). FURTHER THAT SHRI JAVED MOHD HUSSIAN AND SHRI JAVED ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 30 GHASWALA ARE ONE AND THE SAME PERSON, NO ADDITION CAN BE MAD E IN THE HANDS OF THE APPELLANT IN RESPECT OF THESE ENTRIES.'. SINCE THE ENTRIES ON FILE RELLABLE_EXPS.XLS PERTAIN TO BOTAWALA BUILDING AND UPADASTRAS BLDG, MARIA DEVELOPERS, ON THE SAME REASONING AS IN APPEAL FOR AY 2006 - 07, ADDITION IN RESPECT OF EXPENSE S RELATING TO FILE RELLABLE_EXPS.XLS ARE DELETED. 29 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE LD.CIT(A) HAS RECORDED THE FINDING OF THE FACTS WHILE DELETING THE SAID ADDITION AND BY HOLDING THAT T HE ENTRIES IN THE SAID PAPER S/SHEETS DID NOT BELONG TO THE ASSESSEE OR SISTER CONCERN OR ITS PARTNER S . WE ARE IN AGREEMENT WITH CONCLUSION DRAWN BY THE LD.CIT(A) AS NOTHING TO CONTROVERT THE FINDING O F LD.CIT(A) HAS BEEN BROUGHT BEFORE US BY THE L D. DR . T HEREFORE WE DISMISS THE APPEAL OF THE REVENUE BY UPHOLDING THE ORDER OF CIT(A) . 30 . OTHER GROUNDS RAISED IN THIS APPEAL IS GENERAL IN NATURE, THEREFORE, DISMISSED. 4. ITA NO. 5498 /MUM/2011( BY THE ASSESSEE ) 31 . GROUNDS OF APPEAL TAKEN BY THE ASSESS EE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER 0 F INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS.59 37,593/ - MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER 0 F INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST OF RS.77,65,935/ - PAID TO CORPORATION BANK MADE BY THE AO ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 31 5. ITA NO. 5498 /MUM/2011 ( BY THE ASSESSEE ) 32 . GROUNDS OF APPEAL TA KEN BY THE ASSESSEE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER 0 F INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING DEPRECIATION OF RS. 69,13,144/ - IN THE ABSENCE OF SUPPORTING VOUCHERS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER 0 F INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF AO IN DISALLOWING INTEREST OF RS.1,08,04,969/ - PAID TO CORPORATION BANK AO 33 . THE ISSUE S RAISED IN ITA NO.5498/MUM/2011 & ITA NO.5498/MUM/2011 ARE IDENTICAL TO THE ONES AS DECIDED BY US IN ITA NO ITA 4075/MUM/2011 SUPRA VIDE PARA NO 16 AND 20 AND THEREFORE OUR DECISIONS IN ITA NO 4075/MUM/2011 WOULD , MUTATIS MUTANDI , APPLY TO THESE GROUNDS AS WELL. 34 . IN THE RESULT , THE APPEAL OF THE ASSESSEE ARE ALLOWED AND THAT OF REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8TH NOVEMBER , 2016 . 8 TH NOVEMBER , 2016 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 8TH NOVEMBER , 2016 . . . ./ SRL , SR. PS ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 32 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / T HE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 33 , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO.4075/MUM/2011 ( / ASSESSMENT YEAR :2007 - 08) M/S ALLIANCE HOTELS, 121, CITY TERRACE, W H MARG, FORT, MUMBAI - 400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO.4739/MUM/2 011 ( / ASSESSMENT YEAR :2007 - 08) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. / VS. M/S ALLIANCE HOTELS, 121, CITY TERRACE, W H MARG, FORT, MUMBAI - 400001 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NOS.5498/MUM/2011 AND 5111/MUM/2012 ( / ASSESSMENT YEARS :2008 - 09 & 2009 - 10) M/S ALLIANCE HOTELS, 121, CITY TERRACE, W H MARG, FORT, MUMBAI - 400001 / VS. ASSTT. CO MMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) CORRIGENDUM THE TRIBUNAL HAS PASSED ORDER IN THESE APPEALS ON 08.11.2016 AND IN THE SAID ORDER FOLLO WING MISTAKES HAVE BEEN CREPT: AT ITEM NO.5 AT PAGE 31 5. ITA NO.5498/MUM/2011 ( BY THE ASSESSEE) IS MENTIONED. ITA NO 4075, 4739/MUM/2011 ALONGWITH TWO OTHER APPEALS 34 THE ABOVE MISTAKE HAS BEEN RECTIFIED AND THE SAME MAY BE READ AS UNDER: 5 . ITA NO.5111/MUM/2012 (BY THE ASSESSEE) AT PAGE 31, PARA 33 READS AS UNDER 33. THE ISSUES RAISED IN ITA NO.5498/MUM/2011 & ITA NO.5498/MUM/2011 ARE IDENTICAL TO THE ONES AS DECIDED BY US IN ITA NO ITA 4075/MUM/2011 SUPRA VIDE PARA NO 16 AND 20 AND THEREFORE OUR DECISIONS IN ITA NO 4075/MUM/2011 WOULD,MUTA TIS MUTANDI, APPLY TO THESE GROUNDS AS WELL. THE ABOVE PARA HAS BEEN REPLACED BY THIS PARA : 33. THE ISSUES RAISED IN ITA NO.5498/MUM/2011 & ITA NO.5111/MUM/2011 ARE IDENTICAL TO THE ONES AS DECIDED BY US IN ITA NO ITA 4075/MUM/2011 SUPRA VIDE PARA NO 16 AND 20 AND THEREFORE OUR DECISIONS IN ITA NO 4075/MUM/2011 WOULD,MUTATIS MUTANDI,APPLY TO THESE GROUNDS AS WELL. SD SD (JO GINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 20 TH FEB, 2017 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI