G Mahesh Babu, Hyderabad V. DCIT., Central Circle-7, Hyderabad, Hyderabad

ITA 55/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98719 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: B RAMAKRISHNAN; BHANU SHEKAR
• Keywords: Unexplained investment; Depreciation; Search and seizure; Principle of natural justice; Opportunity of cross examination; Validity of assessment; Revised return
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORESHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. AND CO NO. THEREIN IF ANY ASSESSMENT YEAR APPELLANT RESPONDENT / CROSS OBJECTOR 256 /HYD/201 5 286/HYD/2015 55/HYD/2015 56/HYD/2015 57/HYD/2015 58/HYD/2015 2006 - 07 2007-08 2009-10 2010-11 2011-12 2012-13 SHRI G.MAHESH BABU HYDERABAD (PAN AFDPM 0965 N) DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 7, HYDERABAD 392 /HYD/201 5 & CO NO.26/HYD/15 393/HYD/205 & CO NO..27/HYD/15 394/HYD/2015 & CO NO.28/HYD/15 395/HYD/2015 & CO NO.29/HYD/15 200 9 - 1 0 2010-11 2011-12 2012-13 DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 7, HYDERABAD SHRI G.MAHESH BABU HYDERABAD (PAN AFDPM 0965 N) ASSESSEE BY : S/ SHRI BHANU SHEKAR & B.RAMAKRISHNAN DEPARTMENT BY : SHRI B.KURMI NAIDU DR DATE OF HEARING 24.11.2015 DATE OF PRONOUNCEMENT 27.11.2015 O R D E R PER BENCH : THERE ARE SIX APPEALS BY THE ASSESSEE AND FOUR APPE ALS BY THE REVENUE IN THIS BUNCH. IN THE APPEALS OF THE REVENUE, ASSE SSEE HAS ALSO FILED CROSS- OBJECTIONS. HENCE, THERE ARE 14 MATTERS IN ALL IN THIS BUNCH. THOUGH THESE MATTERS ARE DIRECTED AGAINST SEPARATE ORDERS OF THE FIRST APPELLATE AUTHORITY, ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 2 SINCE COMMON ISSUES ARE INVOLVED, THE SAME ARE BEIN G DISPOSED OF, BY THIS COMMON CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. 2. LET US FIRST TAKE UP FOR CONSIDERATION, THE AS SESSEES APPEALS. ITA NO.256/HYD/2015 : ASSESSMENT YEAR 2006-07 3. THE ONLY ISSUE INVOLVED IN THIS APPEAL, DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) 12, HYDE RABAD DATED 29.1.2015 FOR THE ASSESSMENT YEAR 2006-07, RELATES TO AN ADD ITION OF RS.76,545 AS INCOME FROM OTHER SOURCES AS AGAINST AGRICULTURAL I NCOME DECLARED BY THE ASSESSEE. 4. BRIEFLY, FACTS ARE THAT ASSESSEE, AN INDIVIDUA L, IS ENGAGED IN THE PROFESSION AS FILM ARTIST. FOR THE YEAR UNDER CONSI DERATION, THE ASSESSEE FILED HIS RETURN OF INCOME ON 27.7.2006 DECLARING LOSS OF RS.2,84,045, BESIDES AGRICULTURAL INCOME OF RS.1,39,945. A SEARCH AND SE IZURE OPERATION WAS CONDUCTED IN CASE OF THE ASSESSEE UNDER S.132 OF TH E ACT ON 4.3.2008. PURSUANT TO THE SAID OPERATION, ASSESSMENT WAS COMP LETED UNDER S.143(3) VIDE ORDER DATED 31.12.2009, DETERMINING THE LOSS A T RS.1,29,863. SUBSEQUENTLY, AGAIN A SEARCH AND SEIZURE OPERATION UNDER S.132 OF THE ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 8.12.2 011. CONSEQUENT TO THE SAID SEARCH AND SEIZURE OPERATION, AS AFORESAID, TH E ASSESSING OFFICER ISSUED NOTICE UNDER S.153A OF THE ACT, CALLING UPON THE AS SESSEE TO FURNISH HIS RETURN OF INCOME. IN RESPONSE TO THE SAID NOTICE, THE ASS ESSEE FILED HIS RETURN OF INCOME ON 31.10.2013 DECLARING LOSS OF RS.1,29,795 BESIDES AGRICULTURAL INCOME OF RS.1,39,945 AS DECLARED IN THE ORIGINAL R ETURN. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT, HOWEVER, WAS OF TH E VIEW THAT IN VIEW OF THE FACT THAT AGRICULTURAL INCOME OF ONLY RS.63,400 WAS ACCEPTED IN ASSESSMENT YEAR 2008-09, TREATED THE BALANCE AGRICULTURAL INC OME DECLARED IN THE YEAR UNDER CONSIDERATION OF RS.76,545 AS INCOME FROM OTH ER SOURCES. ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 3 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, ASSESS EE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY ON THIS ISSUE, WHO, HOWEVER, DISMISSED THE ASSESSEES APPEAL ON THIS ISSUE, CONF IRMING THE ADDITION MADE BY THE ASSESSING OFFICER, AND HENCE, THE ASSESSEE IS I N SECOND APPEAL BEFORE US. 6. THE LEARNED COUNSEL SUBMITTED BEFORE US THAT PR IOR TO THE DATE OF SEARCH I.E. 8.12.2011, ASSESSMENT IN THE CASE OF T HE ASSESSEE WAS COMPLETED UNDER S.143(3), THAT TOO IN PURSUANCE OF SEARCH AND SEIZURE OPERATION CONDUCTED EARLIER IN ASSESSEES PREMISES ON 4.3.200 8. LEARNED COUNSEL SUBMITTED THAT IN THE SAID ASSESSMENT, ASSESSING OF FICER HAD ACCEPTED THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. THEREFORE, THE ISSUE RELATING TO THE NATURE OF AGRI CULTURAL INCOME HAS ALREADY BEEN CONSIDERED BY THE ASSESSING OFFICER IN THE AS SESSMENT COMPLETED UNDER S.143(3). HE SUBMITTED, AS THERE WAS NO INCRIMINAT ING MATERIAL FOUND IN THE SECOND SEARCH AND SEIZURE PROCEEDING RELATING TO TH E AGRICULTURAL INCOME, THEREFORE, THE ISSUE OF AGRICULTURAL INCOME, HAVING ALREADY BEEN EXAMINED AND CONCLUDED IN AN ASSESSMENT COMPLETED UNDER S.143(3) , CANNOT BE MADE SUBJECT MATTER OF ASSESSMENT IN THE RE-ASSESSMENT PROCEEDING, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. FOR THIS PR OPOSITION, HE RELIED UPON THE DECISION OF THE MUMBAI SPECIAL BENCH OF THE TRIBUNA L IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V/S. DCIT (137 ITD 287)(MUM-S B). 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A) 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD. AS FAR AS THE FACTUAL ASPEC T IS CONCERNED, THERE IS NO DISPUTE THAT THERE WAS EARLIER A SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF THE ASSESSEE IN THE YEAR 2008, IN PURSUANC E OF WHICH AN ASSESSMENT WAS MADE UNDER S.143(3), WHEREIN THE ASSESSING OFFI CER HAD ACCEPTED THE ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 4 AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME. IT IS ALSO RELEVANT TO NOTE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL FOUN D, WHILE DISBELIEVING A PART OF THE AGRICULTURAL INCOME AND TREATING IT AS INCOM E FROM OTHER SOURCES. CONSEQUENTLY, IT IS WELL SETTLED THAT IF A PARTICUL AR INCOME IS SUBJECT MATTER OF ASSESSMENT IN AN EARLIER ASSESSMENT PROCEEDINGS AND STANDS CONCLUDED, IT CANNOT BE REOPENED UNLESS THERE ARE INCRIMINATING M ATERIAL FOUND AS A RESULT OF SEARCH TO SHOW UNDISCLOSED INCOME. IN THIS CONTEXT , WE REFER TO THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF AL L CARGO GLOBAL LOGISTICS LTD. V/S. DCIT (SUPRA). ADMITTEDLY, IN THE PRESENT CASE , AS FAR AS AGRICULTURAL INCOME IS CONCERNED, IT HAS BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THEREFORE, IN THE ABSENCE OF ANY INCR IMINATING MATERIAL FOUND DURING THE SECOND SEARCH AND SEIZURE OPERATION COND UCTED ON 8.12.2011, TO SHOW THAT AGRICULTURAL INCOME WAS INFLATED, THE ASS ESSING OFFICER CANNOT CONSIDER THIS ISSUE AGAIN IN THE IMPUGNED RE-ASSESS MENT PROCEEDINGS. ACCORDINGLY, WE DELETE THE ADDITION OF RS.76,545 MA DE BY THE ASSESSING OFFICER TREATING PART OF THE AGRICULTURAL INCOME DECLARED A S INCOME FROM OTHER SOURCES. 9. CONSEQUENTLY, THIS APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO.286/HYD/2015 : ASSESSMENT YEAR 2007-08 10. THE ONLY ISSUE INVOLVED IN THIS APPEAL, DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) 12, HYDE RABAD DATED 29.1.2015 FOR THE ASSESSMENT YEAR 2007-08, IS CHALLENGING TH E VALIDITY OF ASSESSMENT UNDER S.153A. 11. FACTS IN THIS APPEAL ARE MORE OR LESS IDENTICA L TO THE FACTS DISCUSSED IN THE CONTEXT OF APPEAL FOR ASSESSMENT YEAR, VIZ. ITA NO.256/HYD/2015 FOR ASSESSMENT YEAR 2006-07. ONLY DIFFERENCE BEING IN THIS ASSESSMENT YEAR, ASSESSEE DECLARED AGRICULTURAL INCOME OF RS.66,000 AND THE ASSESSING OFFICER ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 5 WHILE COMPLETING THE ASSESSMENT HAS RESTRICTED THE AGRICULTURAL INCOME TO RS.63,400 THEREBY TREATING THE BALANCE AMOUNT OF RS .2,600 AS INCOME FROM OTHER SOURCES. THE CIT(A), HOWEVER, DELETED THE ADD ITION MADE OF RS.2,600 AS INCOME FROM OTHER SOURCES. THUS, SINCE THE ADDITION MADE BY THE ASSESSING OFFICER STANDS DELETED BY THE CIT(A) BY HIS IMPUGNE D ORDER AND THE REVENUE HAS NOT CHALLENGED THE DELETION MADE BY THE CIT(A), IN OUR VIEW, THE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS OF MERE AC ADEMIC NATURE AND HENCE, NOT REQUIRED TO BE ADJUDICATED UPON. ACCORDINGLY, W E DISMISS THIS APPEAL OF THE ASSESSEE. 12. THIS APPEAL OF THE ASSESSEE, BEING OF ACADEMIC NATURE, IS DISMISSED. ITA NO.55/HYD/2015 : ASSESSMENT YEAR 2009-10 13. IN THIS APPEAL DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) 12, HYDERABAD DATED 28.11.2014 FOR THE ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS RAISED FIVE GROUNDS . GROUND NO.1 IS GENERAL, AND CALLS FOR NO SEPARATE ADJUDICATION. I N SECOND GROUND , THE ASSESSEE HAS CHALLENGED THE DECISION OF THE DEPARTM ENTAL AUTHORITIES IN TREATING A PART OF THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. 14. BRIEFLY FACTS OF THE CASE ARE THAT IN THE RETU RN OF INCOME FOR THE ASSESSMENT YEAR 2009-10, BESIDES DECLARING AN INCOM E OF RS.3,16,76,600, ASSESSEE HAS ALSO SHOWN AGRICULTURAL INCOME OF RS.2 ,07,760. DURING THE ASSESSMENT PROCEEDINGS INITIATED UNDER S.153A OF T HE ACT IN PURSUANCE OF A SEARCH AND SEIZURE OPERATION, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE OWNED ACRES 3 AND 95 GUNTAS OF AGRICULTURAL LAND. T HE ASSESSING OFFICER WAS OF THE VIEW THAT THE AGRICULTURAL INCOME SHOWN BY T HE ASSESSEE WAS HIGH AND EXCESSIVE. CONSIDERING THE FACT THAT FOR ASSESSMENT YEAR 2008-09, ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 6 AGRICULTURAL INCOME OF RS.63,400 ONLY WAS ACCEPTED, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE EXCESSIVE AGRICULTURAL INC OME SHOWN SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES. THOUGH THE AS SESSEE EXPLAINED OBJECTING TO THE DISALLOWANCE OF PART OF AGRICULTUR AL INCOME, THE ASSESSING OFFICER OBSERVING THAT THE ASSESSEE HAS FAILED TO PRODUCE EVIDENCE TO SHOW THE VARIETY OF CROPS, DETAILS OF AGRICULTURAL ACTI VITY CARRIED ON, ETC. RESTRICTED THE AGRICULTURAL INCOME TO RS.63,400 AND TREATED TH E BALANCE AMOUNT OF AGRICULTURAL INCOME OF RS.1,44,360 AS INCOME FROM O THER SOURCES. 15. ASSESSEE CHALLENGED THIS DISALLOWANCE OF PART OF AGRICULTURAL INCOME BEFORE THE CIT(A), WHO, HOWEVER, SUSTAINED T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER. HENCE, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 16. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN, THOUGH TH E EXTENT OF AGRICULTURAL LAND HOLDING OF THE ASSESSEE, I.E. 3.95 ACRES REMAINED T HE SAME ALL THROUGH, THE INCOME DECLARED BY THE ASSESSEE VARIED FROM YEAR TO YEAR. IT IS, HOWEVER RELEVANT TO NOTE, THE FACT THAT THE ASSESSEE HAS EA RNED AGRICULTURAL INCOME IS NOT DISBELIEVED BY THE DEPARTMENTAL AUTHORITIES, TH OUGH NOT TO THE EXTENT DECLARED BY THE ASSESSEE. HOWEVER, CONSIDERING THE EXTENT OF LAND HELD BY THE ASSESSEE AND THE FACT THAT THE DEPARTMENTAL AUTHORI TIES ALSO DID NOT DISPUTE THE EARNING OF AGRICULTURAL INCOME BY THE ASSESSEE, WE HOLD THAT THE INCOME DECLARED FROM AGRICULTURAL ACTIVITIES BY THE ASSESS EE IS REASONABLE. THEREFORE, WE DELETE THE DISALLOWANCE MADE BY THE ASSESSING OF FICER ON THIS ASPECT AND ALLOW THIS GROUND. 17. THE NEXT ISSUE RAISED IN GROUND NO.3 RELATES T O THE ADDITION MADE OF RS.1,99,20,000 AS UNEXPLAINED INVESTMENT UNDER S .69B OF THE ACT. ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 7 18. BRIEFLY, FACTS RELATING TO THIS ISSUE, ARE DUR ING THE ASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION AVAILABLE O N RECORD, IT WAS NOTICED BY THE ASSESSING OFFICER THAT IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE AND HIS WIFE HAVE ENTERED AN AGREEMENT WITH M/S.EMAAR HILLS TOWNSHIP (P)LTD. (EHTPL), TO PURCHASE A PLOT OF LAND AT MANIKONDA V ILLAGE, RAJENDRANAGAR MANDAL, RANGA REDDY DISTRICT, ADMEASURING 1328 SQ. FT. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE CBI HAD CONDUCTED AN INVESTIGATION INTO THE IRREGULARITIES DONE BY EHTPL, WHICH REVEALED THAT T HOUGH THE RATE OF SELLING THE VILLAS WAS FIXED AT RS.5,000 PER SQ. YARD, ACTUALLY VILLAS WERE SOLD TO THE BUYERS AT RATES VARYING FROM RS.4,000 PER SQ. YARD TO RS.45,000 PER SQ. YARD. ON THE BASIS OF THE INFORMATION RECEIVED, IT WAS FO UND BY THE ASSESSING OFFICER THAT OVER AND ABOVE THE REGISTERED SALE CONSIDERATI ON, ASSESSEE HAS PAID AN AMOUNT OF RS.1,99,20,000 TOWARDS PURCHASE VALUE OF THE VILLA AT PLOT B-48, WHEREAS, AS PER THE RECORDS, THE ASSESSEE HAS DISC LOSED ONLY THE RECORDED SALE CONSIDERATION, WITHOUT DISCLOSING THE EXCESS A MOUNT PAID BY HIM. HE THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE EXCESS AMOUNT PAID SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT UND ER S.69B. IN RESPONSE TO THE NOTICE ISSUED, THOUGH, THE ASSESSEE DENIED OF H AVING PAID ANY EXCESS AMOUNT OVER AND ABOVE THE RECORDED SALE CONSIDERATI ON IN THE SALE DEED, THE ASSESSING OFFICER RELYING UPON A STATEMENT GIVEN B Y ONE SHRI TUMMALA RANGA RAO UNDER S.164 OF CRPC BEFORE THE METROPOLITAN MAG ISTRATE-II, HYDERABAD AS WELL AS BEFORE THE ASSESSING OFFICER OF EHTPL, OBSE RVED THAT IN THE STATEMENT, IT WAS CATEGORICALLY ADMITTED THAT THE VILLAS IN EH TPL WERE SOLD AT MUCH HIGHER RATE THAN THE RECORDED SALE CONSIDERATION TO ALL T HE OWNERS WHO HAVE ENTERED INTO AGREEMENT WITH EHTPL. ALSO RELYING UPON THE ASSESSMENT OF EHTPL , HE OBSERVED THAT THE DEPARTMENT IN EXERCISE OF POWER U NDER S.133(6) OF THE ACT HAS GATHERED SUBSTANTIAL INFORMATION FROM SOME OF T HE PLOT OWNERS OF EHTPL, WHO HAVE ACCEPTED PAYING ADDITIONAL AMOUNTS RANGING FROM RS.5,000 TO RS.17000 PER SQ. YARD OVER AND ABOVE THE AGREED PR ICE OF RS.5,000 PER SQ. YARD RECORDED IN THE SALE DEED. IN THIS CONTEXT, T HE ASSESSING OFFICER REFERRED TO THE INFORMATION OBTAINED FROM SOME OF THE PLOT OWNERS WHEREIN THEY ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 8 ACCEPTED OF HAVING PAID CONSIDERATION OVER AND ABOV E THE AMOUNTS RECORDED IN THE REGISTERED SALE DEEDS. HE FURTHER OBSERVED THAT IN THE APPELLATE PROCEEDINGS IN THE CASE OF EHTPL, ADDITIONAL EVIDEN CE BROUGHT IN THE FORM OF CHARGE-SHEETS AND SUPPLEMENTAL CHARGE SHEETS FILED BY THE CBI, ALSO REVEALED THAT BUYERS OF PLOTS HAVE PAID ON MONEY IN ADDITION TO THE RECORDED SALE CONSIDERATION. THUS, ON THE BASIS OF THE STATEMENT OF SHRI TUMMALA RANGA RAO AND THE INFORMATION GATHERED FROM CERTAIN BUYERS OF PLOTS, THE ASSESSING OFFICER OBSERVED THAT ASSESSEES VERSION THAT HE HA S NOT PAID ANY ON MONEY TOWARDS PURCHASE OF PLOT CANNOT BE BELIEVED. ACCO RDINGLY, BY OBSERVING THAT ACTUAL SALE VALUE PAID BY THE ASSESSEE TO EHTPL IS NOT RS.5,000 PER SQ. YARD AS MENTIONED IN SALE DEED, BUT RS.15,000 PER SQ.YAD , MADE AN ADDITION OF RS.1,99,20,000 UNDER S.69B OF THE ACT. 19. BEING AGGRIEVED BY THE ADDITION MADE, ASSESSEE CHALLENGED THE SAME BEFORE THE CIT(A). BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS PLEADED BY THE ASSESSEE THAT ENTIRE PAYMENT WAS MADE THROUGH BANK ACCOUNT OF THE ASSESSEE AND HIS WIFE AND THE PAYMENTS ARE DULY REF LECTED IN THE FINANCIAL STATEMENTS AND BOOKS OF ACCOUNT AND APART FROM THE RECORDED PAYMENT, NO ON MONEY WAS PAID . IT WAS SUBMITTED THAT THE ASSESS ING OFFICER, MERELY RELYING UPON THE STATEMENT RECORDED UNDER S.164 OF THE CRPC , CANNOT MAKE ANY ADDITION, AS SUCH STATEMENT IS NO SUBSTANTIVE PIECE OF EVIDENCE AND THE SAME, AT THE MOST, CAN BE USED ONLY FOR THE PURPOSE OF CO RROBORATION. IN THIS CONTEXT, ASSESSEE RELIED UPON A NUMBER OF JUDICIAL PRECEDENTS. IT WAS SUBMITTED THAT ADDITION CANNOT BE MADE SOLELY ON TH E BASIS OF UNCORROBORATED EVIDENCE OF WITNESSES IN A CRIMINAL CASE, TO WHICH ASSESSEE IS NOT A PARTY, AND CONSEQUENTLY, SUCH UNCORROBORATED STATEMENTS HAVE N OT BEEN MADE AVAILABLE TO THE ASSESSEE FOR REBUTTAL OR FOR CROSS EXAMINATI ON, WHICH IS IN VIOLATION OF RULES OF NATURAL JUSTICE. LEARNED CIT(A), AFTER CO NSIDERING THE SUBMISSION OF THE ASSESSEE, HOWEVER, SUSTAINED THE ADDITION BY OB SERVING THAT IN THE STATEMENT RECORDED FROM SHRI T.RANGA RAO, MODUS OPE RANDI OF THE TRANSACTION INVOLVING SALE OF PLOTS HAS BEEN REVEALED. HE OBSE RVED THAT EVEN SOME OTHER ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 9 BUYERS ALSO IN THE COURSE OF INVESTIGATION HAVE AC CEPTED OF HAVING PAID ON MONEY AND EVEN FILED REVISED RETURNS OF INCOME. HE OBSERVED THAT MERE FACT THAT THE ASSESSEE WAS NOT GRANTED OPPORTUNITY OF CROSS EXAMINATION, DOES NOT VITIATE THE ASSESSMENT, AS THE ASSESSING OFFICER H AS MADE THE ASSESSEE AWARE OF THE STATEMENT RECORDED FROM SHRI T.RANGA R AO. ACCORDINGLY, THE CIT(A) CONFIRMED THE ADDITION OF RS.1,99,20,000 MAD E BY THE ASSESSING OFFICER. HENCE, ASSESSEE IS IN SECOND APPEAL ON TH IS ISSUE. 20. THE LEARNED COUNSEL REITERATING THE STAND TAKE N BEFORE THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE STATEME NT RECORDED UNDER S.164 OF THE CRPC BEFORE A JUDICIAL MAGISTRATE HAS NO EVI DENTIARY VALUE, AS IT IS AN UNCORROBORATED EVIDENCE. FURTHER, HE SUBMITTED TH AT NEITHER THE INFORMATION OBTAINED BY THE ASSESSING OFFICER RELATING TO THE A LLEGED PAYMENT OF ON- MONEY, NOR THE STATEMENT RECORDED FROM SHRI T.RANGA RAO WERE SUPPLIED TO THE ASSESSEE. HE SUBMITTED THAT EVEN THOUGH DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SPECIFICALLY ASKED FO R CROSS-EAMINATION OF SHRI T.RANGA RAO, THE ASSESSING OFFICER WITHOUT ALLOWING THE ASSESSEE TO CROSS EXAMINE, HAS MADE THE ADDITION SOLELY RELYING UPON THE STATEMENT OF SHRI T.RANGA RAO. IN THIS CONTEXT, HE REFERRED TO THE L ETTER DATED 13. MARCH, 2014 FILED BEFORE THE ASSESSING OFFICER. THUS, HE SUBMI TTED THAT ADDITION MADE BY THE ASSESSING OFFICER RELYING UPON INFORMATION/MATE RIAL GATHERED WITHOUT SUPPLYING THE SAME TO THE ASSESSEE IS IN VIOLATION OF RULES OF NATURAL JUSTICE, AND HENCE, THE ASSESSMENT MADE HAS TO BE STRUCK DO WN. IN THIS CONTEXT, HE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V.S. CCE (APPEAL NO.4228 OF 2006). 21. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON T HE OTHER HAND, SUBMITTED THAT THE INFORMATION GATHERED BY THE ASSE SSING OFFICER CLEARLY REVEALED THAT ON-MONEY WAS PAID BY THE ASSESSEE FOR PURCHASING THE VILLA. HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT IF IT IS FELT THAT THERE IS VIOLATION OF PRINCIPLES OF NATURAL JU STICE BECAUSE THE ASSESSING ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 10 OFFICER HAS NOT CONFRONTED THE ASSESSEE WITH THE MA TERIALS UTILISED FOR MAKING THE ADDITION, AND HAS NOT ALLOWED OPPORTUNITY TO TH E ASSESSEE TO CROSS EXAMINE SHRI T.RANGA RAO, THEN THE MATTER MAY BE REMITTED B ACK TO THE ASSESSING OFFICER FOR GIVING AN OPPORTUNITY TO THE ASSESSEE T O CROSS EXAMINE THE WITNESS, AND PUT FORTH HIS SAY ON THE ADVERSE MATERIAL GATHE RED BY THE ASSESSING OFFICER, SO THAT PRINCIPLES OF NATURAL JUSTICE ARE COMPLIED WITH. 22. IN THE REJOINDER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IS CLEARLY BROUGHT OUT ON RECORD, AND HENCE THE ADDITION MADE HAS TO BE DELETED. 23. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. IT IS VERY MUCH EVIDENT FR OM THE ASSESSMENT ORDER THAT MAINLY RELYING UPON THE MATERIAL GATHERED AS A RESULT OF INVESTIGATION MADE DURING THE ASSESSMENT PROCEEDINGS OF EHTPL, P ARTICULARLY ON THE BASIS OF STATEMENT RECORDED FROM SHRI T.RANGA RAO, THE AS SESSING OFFICER HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS PAID ON MON EY TO THE EXTENT OF RS.1,99,20,000 OVER AND ABOVE THE RECORDED SALE CON SIDERATION. OF COURSE, BESIDES THE STATEMENT OF SHRI T.RANGA RAO, IT IS SE EN THAT THE DEPARTMENT HAS GATHERED INFORMATION IN EXERCISE OF POWER UNDER S.1 33(6) FROM SOME OTHER BUYERS, WHO AGREED TO HAVE PAID ON-MONEY TOWARDS P URCHASE OF PLOTS/VILLAS FROM EHTPL. IT IS RELEVANT TO NOTE THAT WHEN THE A SSESSEE WAS CALLED UPON TO EXPLAIN WHETHER HE HAS PAID ON-MONEY, HE STOUTLY DE NIED THE SAME AND INSISTED THAT APART FROM RECORDED SALE CONSIDERATIO N, HE HAS NOT PAID ANYTHING MORE. IT IS THE PLEA OF THE ASSESSEE BEFORE THE CI T(A) AS WELL AS BEFORE US THAT THE ASSESSING OFFICER HAS UTILISED THE MATERIAL GAT HERED AS A RESULT OF INVESTIGATION/ENQUIRY ADVERSE TO THE ASSESSEE WITHO UT EITHER SUPPLYING THE SAME TO HIM OR ALLOWING AN OPPORTUNITY TO THE ASSES SEE TO CROSS EXAMINE SHRI T.RANGA RAO, WHOSE STATEMENT PRIMARILY FORMED THE B ASIS OF THE ADDITION. WE FIND THAT THE AFORESAID SUBMISSIONS OF THE ASSESSEE ARE ACCEPTABLE. IT IS VERY MUCH CLEAR FROM THE ASSESSMENT ORDER THAT THOUGH THE ASSESSING OFFICER HAS ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 11 REFERRED TO THE INFORMATION RECEIVED TO SUGGEST THA T THE ASSESSEE HAS PAID AMOUNT OF RS.1,99,20,000, NEITHER IN THE ASSESSMENT ORDER NOR EVEN SUBSEQUENTLY NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW WHAT EXACTLY IS THE INFORMATION/EVIDENCE, WHICH INDICATED THAT ASSE SSEE HAS PAID THE ON MONEY OF RS.1,99,20,000. FURTHER, THE INVESTIGATIO N RESULTS OF CBI AS WELL AS STATEMENT OF SHRI T.RANGA RAO WHICH HAVE BEEN FOL LOWED BY WAY OF CHARGE SHEETS AND SUPPLEMENTARY CHARGE SHEETS, THOUGH HEAV ILY RELIED UPON BY THE ASSESSING OFFICER, BUT ADMITTEDLY THEY WERE NOT SUP PLIED TO THE ASSESSEE. EVEN THE LEARNED DEPARTMENTAL REPRESENTATIVE ACCEPTS THE AFORESAID FACTUAL POSITION. THOUGH IN THE COURSE OF ASSESSMENT PROCEE DINGS THERE IS NO FETTER ON THE ASSESSING OFFICER TO CONDUCT ANY ENQUIRY OR INV ESTIGATION AS FOUND NECESSARY FOR ASCERTAINING THE REAL NATURE OF TRANS ACTION OR INCOME, AT THE SAME TIME, IT IS SALUTARY PRINCIPLE OF LAW THAT ANY ADVERSE MATERIAL GATHERED BY HIM, WHICH HE PROPOSES TO UTILISE AGAINST THE ASSES SEE, MUST BE CONFRONTED TO THE ASSESSEE FOR ALLOWING HIM AN EFFECTIVE OPPORTUN ITY OF REBUTTAL. THIS IS IN KEEPING WITH THE PRINCIPLE OF NATURAL JUSTICE THAT NO PERSON SHOULD BE CONDEMNED WITHOUT GIVING A FAIR OPPORTUNITY OF HEAR ING. IN THE PRESENT CASE, THOUGH THE BASIS FOR ADDITION IS THE STATEMENT RECO RDED FROM SHRI T. RANGA RAO, ADMITTEDLY, THE ASSESSING OFFICER HAS NEITHER SUPPLIED A COPY OF THE STATEMENT TO THE ASSESSEE NOR ALLOWED HIM AN OPPOR TUNITY TO CROSS EXAMINE HIM, THOUGH THE ASSESSEE IN HIS LETTER DATED 13.3.2 014 HAS SPECIFICALLY ASKED FOR CROSS EXAMINATION OF SHRI T.RANGA RAO. IN THE A FORESAID VIEW OF THE MATTER, THERE IS VIOLATION OF RULES OF NATURAL JUSTICE BY T HE ASSESSING OFFICER WHILE MAKING THE ADDITION OF RS.1,99,20,000. THEREFORE, T HE ADDITION MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF ALLEGED PAYMENT OF ON-MONEY, CANNOT BE SUSTAINED. 24. HAVING HELD SO, IT IS NECESSARY TO EXAMINE WH ETHER NON-COMPLIANCE OF THE RULES OF NATURAL JUSTICE IN THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE HAS MADE THE ASSESSMENT VOID AB INITIO , OR THE ASSESSING OFFICER CAN BE ASKED TO DECIDE THE ISSUE AGAIN AFTER FOLLOWING PRI NCIPLES OF NATURAL JUSTICE, AS ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 12 REQUESTED BY THE EARNED DEPARTMENTAL REPRESENTATIVE . AS ALREADY STATED ELSEWHERE IN THE ORDER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF ANDAMAN TIMBER INDUSTRIES (SUPRA), TO PLEAD THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS HAS RENDERED THE ASSESSMENT ORDER VOID . HOWEVER, ON A PERUSAL OF THE SAID JUDGMENT OF THE HON'BLE SUPREME COURT I T IS FOUND TO BE FACTUALLY DISTINGUISHABLE. IN THAT CASE, HON'BLE SUPREME COU RT HAS INITIALLY REMITTED BACK THE MATTER TO THE TRIBUNAL FOR DECIDING THE IS SUE IN ONE WAY OR THE OTHER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. HOWEVER, IT IS NOTICED THAT THE HON'BLE SUPREME COURT ULTIMATELY ALLOWED ASSESS EES APPEAL BECAUSE THE TRIBUNAL WHILE EXAMINING THE ISSUE OF CROSS EXAMINA TION OF WITNESS HAS MERELY OBSERVED THAT EVEN SUCH CROSS-EXAMINATION WOULD NOT HAVE IMPROVED THE ASSESSEES CASE. HONBLE SUPREME COURT HELD, AS TH E DEMAND RAISED AGAINST ASSESSEE WAS SOLELY RELYING UPON THE STATEMENT OF W ITNESS, DENIAL OF CROSS EXAMINATION TO ASSESSEE VITIATED THE ORDER. UNLIKE THE CASE OF ADAMAN TIMBER INDUSTRIES (SUPRA) IN ASSESSEES CASE STATEMENT OF SHRI T.RANGA RAO IS NOT THE ONLY PIECE OF EVIDENCE RELIED UPON BY THE ASSESSING OFFICER. IT IS RELEVANT TO NOTE THAT APART FROM THE STATEMENT OF SHRI T.RANGA RAO, THERE ARE OTHER INFORMATION GATHERED BY THE DEPARTMENT BY TAKING R ECOURSE TO S.133(6) AS PER WHICH SOME OF THE BUYERS OF THE PLOTS HAVE ADMI TTED OF HAVING PAID ON- MONEY. FURTHER, THROUGH A PROCESS OF INVESTIGATION , CBI HAS FOUND IRREGULARITIES IN THE ACTIVITIES OF EHTPL AND SUBMI TTED CHARGE SHEET(S). AS THE STATEMENT OF SRHI T.RANGA RAO, THE ENTIRE CHARGE SH EET(S) FILED BY CBI AND INFORMATION GATHERED BY THE DEPARTMENT THROUGH ENQU IRY HAVE NOT BEEN BROUGHT ON RECORD BEFORE US EITHER BY ASSESSEE OR D EPARTMENT, WE ARE UNABLE TO EXAMINE THE EXTENT OF ASSESSEES INVOLVEMENT, IF AT ALL, IN THE IRREGULARITIES ALLEGED BY CBI OR WHETHER THE ASSESSEE HAS ALSO BEE N IMPLICATED BY THE INVESTIGATION AGENCY OR ANY OTHER PERSON. THEREFORE , IN OUR VIEW, ISSUE RELATING TO PAYMENT OF ON-MONEY REQUIRES TO BE EXAMINED AFRE SH BY ASSESSING OFFICER AFTER CONFRONTING EVIDENCE/MATERIAL SOUGHT TO BE RE LIED UPON TO THE ASSESSEE AND SEEKING HIS RESPONSE ON THEM. THE ASSESSING OFF ICER MUST ALSO DISCLOSE TO ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 13 THE ASSESSEE THE MATERIAL/INFORMATION ON THE BASIS OF WHICH HE HAS QUANTIFIED THE ON-MONEY PAYMENT OF RS.1,99,20,000. IF THE A SSESSING OFFICER IS ABLE TO ESTABLISH ON THE BASIS OF EVIDENCE GATHERED THAT TH E ASSESSEE HAS PAID ON- MONEY TO THE EXTENT QUANTIFIED BY HIM, THEN HE CAN MAKE THE ADDITION UNDER S.69B. ON THE FLIP SIDE, IF THERE IS NO EVIDENCE AV AILABLE ON RECORD TO DIRECTLY LINK THE ASSESSEE TOWARDS PAYMENT OF ON-MONEY, THEN MERELY ON THE BASIS OF THE FACT THAT SOME OTHER BUYERS HAVE ACCEPTED PAYME NT OF ON-MONEY, NO ADDITION CAN BE MADE. WITH THE AFORESAID OBSERVATI ONS, WE REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE-DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING REASONABLE OPPORT UNITY TO THE ASSESSEE, DULY COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE. T HIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 25. GROUND NO.4 RELATES TO DISALLOWANCE OF ASSESS EES CLAIM FOR DEPRECIATION OF AN AMOUNT OF RS.94,727 . 26. BRIEFLY FACTS ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED DEPRECIATION OF RS.21,536 ON LG PLASMA TELEVISION AND RS.71,191 ON HOME THEATRE, TOTALLING TO RS.94,727. THE ASSESSING OFFICER BEING OF THE OP INION THAT THESE ARE PERSONAL ASSETS OF THE ASSESSEE AND FOR PERSONAL US E, DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE. 27. BEING AGGRIEVED BY SUCH DISALLOWANCE, ASSESSEE FILED APPEAL BEFORE THE CIT(A), WHO ALSO CONFIRMED THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER. HENCE, ASSESSEE IS IN SECOND APPEAL ON TH IS ISSUE. 28. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. IT WAS SUBMITTED BY THE LE ARNED COUNSEL FOR THE ASSESSEE THAT PLASMA TV AND HOME THEATRE SYSTEM WER E USED BY THE ASSESSEE FOR HIS BUSINESS PURPOSES, BECAUSE THE AS SESSEE, BEING A FILM ARTIST, ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 14 THESE ELECTRONIC ITEMS ARE REQUIRED TO VIEW FILMS, SEQUENCES AND FOR FINALISATION OF LOCATIONS. THUS, IT IS SUBMITTED TH AT DEPRECIATION IS ALLOWABLE. HOWEVER, BY LOOKING AT THE NATURE OF THE ASSETS AN D THE FACT THAT THEY ARE USED IN ASSESSEES HOME, WE ARE UNABLE TO ACCEPT TH E ASSESSEES CLAIM FOR DEPRECIATION. FURTHER, ASSESSEE HAS NOT SUBSTANTIAT ED WITH ANY EVIDENCE THAT THE TV OR THE HOME THEATRE SYSTEM WERE USED FOR BUS INESS PURPOSES. WE ACCORDINGLY CONFIRM THE DISALLOWANCE MADE BY THE AS SESSING OFFICER, REJECTING THIS GROUND OF THE ASSESSEE. 29. THE NEXT ISSUE RAISED IN GROUND NO.5 RELATES TO DISALLOWANCE OF 20% OUT OF PERSONAL EXPENSES . BRIEFLY FACTS ARE, D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT TH E ASSESSEE HAS CLAIMED TELEPHONE EXPENSES, TRAVELLING EXPENSES, VEHICLE MA INTENANCE EXPENSES, TOTALING TO RS.16,30,130, DISALLOWED 20% OF THE SAM E, BY OBSERVING THAT SUCH AMOUNT IS TOWARDS PERSONAL USER. THE CIT(A) ALSO CO NFIRMED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER. 30. HAVING CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE NAT URE OF EXPENDITURE CLAIMED DEMONSTRATE THAT THERE WOULD BE SOME AMOUNT OF PERS ONAL ELEMENT IN THE SAME, AND HENCE, CERTAIN DISALLOWANCE IS WARRANTED. WE FIND THAT THE DISALLOWANCE WORKED OUT AT 20% MADE BY THE ASSESSIN G OFFICER IS REASONABLE, AND THE CIT(A) WAS THEREFORE, JUSTIFIED IN SUSTAINI NG THE SAME. WE ACCORDINGLY UPHOLD THE ORDERS OF THE REVENUE AUTHORITIES ON THI S ISSUE, AND REJECT THIS GROUND. 31. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS T REATED AS PARTLY ALLOWED. ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 15 ITA NO.56/HYD/2015 : ASSESSMENT YEAR 2010-11 ITA NO.57/HYD/2015 : ASSESSMENT YEAR 2011-12 ITA NO.58/HYD/2015 : ASSESSMENT YEAR 2012-13 32. IN THESE THREE APPEALS DIRECTED AGAINST SIMILA R BUT SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)- 12, HYDERABAD, DATED 28.11.2014 FOR THE ASSESSMENT YEARS 2010-11 AND 20 11-12 AND DATED 12.12.2014, THE FIRST COMMON EFFECTIVE GROUND RELAT ES TO THE ADDITIONS MADE TREATING PART OF AGRICULTURAL INCOME DECLARED BY TH E ASSESSEE AS INCOME FROM OTHER SOURCES. THE ADDITIONS MADE ARE RS.1,19,000 (OUT OF AGRICULTURAL INCOME CLAIMED OF RS.2,10,000) FOR ASSESSMENT YEAR 2010-11 , RS.1,01,000 (OUT OF AGRICULTURAL INCOME CLAIMED OF RS.2,10,000) FOR AS SESSMENT YEAR 2011-12 AND RS.89,000 (OUT OF AGRICULTURAL INCOME CLAIMED OF RS .2,20,000) FOR ASSESSMENT YEAR 2012-13. FACTS AND CIRCUMSTANCES OF THE CASE INVOLVED IN THESE YEARS ARE SIMILAR TO THOSE CONSIDERED IN THE PRECEDING YEARS. HENCE, FOR THE REASONS DISCUSSED HEREINABOVE IN THE CONTEXT OF CORRESPONDI NG ADDITION MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2009-10 I N PARA-16 HEREIN ABOVE, WE DELETE THE ADDITIONS MADE BY THE ASSESSING OFFIC ER AND SUSTAINED BY THE CIT(A), ALLOWING THE GROUNDS OF THE ASSESSEE ON THI S ISSUE. 33. THE NEXT COMMON EFFECTIVE GROUND IN THESE APPE ALS RELATES TO THE ADDITIONS MADE BY DISALLOWANCE OF DEPRECIATION ON L G PLASMA TV SET CLAIMED BY THE ASSESSEE. THE AMOUNTS OF DISALLOWANCE MADE BY THE ASSESSING OFFICER ARE RS.18,306, RS. 15,560 AND RS.13,226 RESPECTIVEL Y FOR THE THREE YEARS UNDER CONSIDERATION. FACTS AND CIRCUMSTANCES OF THE CASE INVOLVED IN THESE YEARS ARE SIMILAR TO THOSE CONSIDERED IN THE PRECED ING YEAR. HENCE, FOR THE REASONS DISCUSSED HEREINABOVE IN THE CONTEXT OF COR RESPONDING GROUND OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IN PARA-28 HEREINABOVE, WE UPHOLD THE DISALLOWANCE IN QUESTION AND REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 16 33. THE NEXT COMMON EFFECTIVE GROUND IN THESE APPE ALS RELATES TO DISALLOWANCE OF PART OF THE EXPENSES CLAIMED, TOWAR DS PERSONAL USER. THE AMOUNTS OF DISALLOWANCE MADE BY THE ASSESSING OFFIC ER ARE RS.2,69,029, RS.4,53,247, RS.5,48,349 RESPECTIVELY FOR THE THREE YEARS UNDER CONSIDERATION. FACTS AND CIRCUMSTANCES OF THE CASE INVOLVED IN THE SE YEARS ARE SIMILAR TO THOSE CONSIDERED IN THE PRECEDING YEAR. HENCE, FOR THE REASONS DISCUSSED HEREINABOVE IN THE CONTEXT OF CORRESPONDING GROUND OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IN PARA-30 HEREINABOVE, WE UPHOLD THE DISALLOWANCES IN QUESTION AND REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 34. THE ONLY OTHER GROUND THAT SURVIVES FOR CONSID ERATION IS IN ITA NO.58/HYD/2015, WHEREIN, VIDE GROUND OF APPEAL NO.5 , ASSESSEE HAS CHALLENGED THE ADDITION OF RS.2 CRORES MADE AS UNDI SCLOSED INCOME. 35. BRIEFLY, THE FACTS ARE, IN THE COURSE OF SEARC H AND SIEZURE OPERATIONS CONDUCTED IN THE CASE OF SHRI JETTI VENA KTA PHANINDRA REDDY, PRODUCER OF THE FILM BUSINESSMAN CERTAIN INCRIMIN ATING MATERIAL IN THE FORM OF LOOSE SHEETS WERE FOUND AND SEIZED. AS PER THE SEIZ ED MATERIAL, OVER AND ABOVE THE PAYMENTS RECEIVED IN CHEQUE TOWARDS REMUN ERATION FOR ACTING IN THE FILM BUSINESSMAN, ASSESSEE HAD BEEN PAID CASH OF RS. 2 CRORES. WHEREAS IT WAS NOTICED BY THE ASSESSING OFFICER, ASSESSEE HAD ONLY SHOWN REMUNRATI0ON OF RS.4.87 CRORES, RECEIVED IN CHEQUE FROM THE MOVI E BUSINESSMAN WITHOUT DISCLOSING THE AMOUNT OF RS.2 CRORE IN CASH AS REVE ALED FROM SEIZED MATERIAL. THE ASSESSING OFFICER, THEREFORE, ISSUED SUMMONS TO BOTH ASSESSEE AND THE PRODUCER SHRI J.V.PHANINDRA REDDY. AS OBSERVED BY A SSESSING OFFICER, BOTH ASSESSEE AND SHRI REDDY FLATLY DENIED OF ANY PAYMEN T HAVING BEEN MADE IN CASH OVER AND ABOVE THE CHEQUE PAYMENTS. ASSESSING OFFICER, HOWEVER, DISBELIEVED THE STATEMENTS OF ASSESSEE AND SHRI RED DY. HE OBSERVED THAT WHEN THE CHEQUE PAYMENTS RECORDED IN THE SEIZED MAT ERIAL WAS ACCEPTED AS CORRECT, CASH PAYMENTS RECORDED CANNOT BE DENIED. H E FURTHER OBSERVED, IN VIEW OF THE SPECIFIC PROVISION OF S.292C PRESUMPTIO N COULD BE, THE CONTENTS OF ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 17 SEIZED MATERIAL ARE TRUE. THOUGH ASSESSEE STRONGLY PROTESTED BEFORE THE ASSESSING OFFICER BY STATING THAT LOOSE SHEETS SEIZ ED FROM A THIRD PARTY CANNOT FORM THE BASIS FOR ADDITION AND ALSO RELIED UPON SO ME JUDICIAL AUTHORITIES IN THAT CONTEXT, THE ASSESSING OFFICER REJECTING ALL C ONTENTIONS OF ASSESSEE TREATED THE AMOUNT OF RS.2 CRORE AS THE UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR. THOUGH THE ASSESSEE CHALLENGED THE ADDITION IN APPEAL, THE LEARNED CIT(A) SUSTAINED THE ADDITION MORE OR LESS ADOPTING THE REASONING OF THE ASSESSING OFFICER. 36. LEARNED AUTHORISED REPRESENTATIVES SUBMISSION S WHILE CONTESTING THE ADDITION ARE TWO-FOLD. FIRSTLY, LOOSE SHEETS SE IZED FROM A THIRD PARTY, WILL HAVE NO EVIDENTIARY VALUE, HENCE CANNOT FORM BASIS FOR ANY ADDITION. HE SUBMITTED, ASSESSEE HAS RECEIVED HIS REMUNERATION F OR THE CONCERNED MOVIE ENTIRELY IN CHEQUE WHICH IS DULY REFLECTED IN HIS BANK ACCOUNT AS WELL AS BOOKS OF ACCOUNT. HE SUBMITTED, PRODUCERS BOOKS OF ACCO UNT ALSO REFLECT THE SAME AMOUNT. HE SUBMITTED BOTH ASSESSEE AS WELL AS THE P RODUCER APPEARING BEFORE THE ASSESSING OFFICER HAVE DENIED OF ANY CASH TRANS ACTION. THEREFORE, SOLELY RELYING UPON A LOOSE SHEET SEIZED FROM A THIRD PART Y, HAVING NO EVIDENTIARY VALUE, ADDITION CANNOT BE MADE. THE SECOND ARGUMENT ADVANCED BY THE LEARNED AUTHORISED REPRESENTATIVE IS, EVEN ACCEPTIN G THAT CASH PAYMENT RECORDED IN THE SEIZED MATERIAL IS CORRECT, NO SPEC IFIC DATE IS MENTIONED AGAINST SUCH PAYMENT. DRAWING THE ATTENTION OF THE BENCH T O THE SEIZED MATERIAL AT PAGE 3 OF THE PAPER-BOOK, HE SUBMITTED, DATES APPEA RING AGAINST EACH PAY- MENT IS IN SEQUENCE. THEREFORE, IF THE PAYMENT REC ORDED IN THE DOCUMENT IMMEDIATELY AFTER ASSESSEES NAME IS IN FEBRUARY, T HEN IT MUST BE ACCEPTED THAT PAYMENT MADE TO ASSESSEE IS PRIOR TO THAT DATE , HENCE, IT WILL NOT RELATE TO THE IMPUGNED ASSESSMENT YEAR. THEREFORE, NO ADDITIO N CAN BE MADE IN THE IMPUGNED ASSESSMENT YEAR. IN SUPPORT OF HIS CONTENT ION, LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS- (A) PRADEEP AMRUTHLAL RUNWAL V/S.TRO (2014) 149 ITD 548 (PUNE) ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 18 (B) DCIT V/S. K. BABU RAO (2014) 39 CCH 0034 (HYD. TRIB ) (C) DCIT V/S. C. KRISHNA YADAV (2011) 46 SOT 250 (HYD) 37. LEARNED DEPARTMENTAL REPRESENTATIVE, RELIED U PON THE REASONING OF THE ASSESSING OFFICER AND THE CIT(A). 38. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIALS ON RECORD. WE HAVE ALSO EXAMINED THE DECISIONS CITED AT THE BAR. UNDISPUTEDLY, THE BASIS FOR THE ADDITION OF RS.2 CR ORES AS UNDISCLOSED INCOME IS A LOOSE SHEET SEIZED NOT FROM THE ASSESSEE, BUT FRO M A THIRD PARTY, WHO HAPPENS TO BE PRODUCER OF A MOVIE IN WHICH ASSESSEE HAS ACTED. ON A PERUSAL OF THE SAID SEIZED DOCUMENT, A COPY OF WHICH IS AT PAGE 3 OF THE PAPER-BOOK, WE FIND IT CONTAINS CASH PAYMENTS MADE TO SOME PER SONS, ONE AMONGST THEM BEING THE ASSESSEE. ADMITTEDLY, APART FROM THIS DOC UMENT, NO OTHER EVIDENCE/MATERIAL WAS FOUND OR HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT CASH PAYMENT OF RS. 2 CRORE WAS ACTUALLY MADE TO ASSESSEE. MORE IMPORTANTLY, EVEN THOUGH A SEARCH OPERATION WAS ALS O CARRIED OUT IN THE CASE OF ASSESSEE, NO INCRIMINATING MATERIAL WAS FOUND. IT IS ALSO A FACT ON RECORD THAT PURSUANT TO SUMMONS ISSUED, BOTH THE ASSESSEE AS WE LL AS THE PRODUCER OF THE MOVIE APPEARED BEFORE THE ASSESSING OFFICER AND DEN IED OF HAVING MADE ANY CASH TRANSACTION AS RECORDED IN THE SEIZED DOCUMENT . IN FACT, A CONFIRMATION LETTER OBTAINED FROM THE PRODUCER STATING THEREIN T HAT ENTIRE REMUNERATIONS ARE PAID IN CHEQUES WAS ALSO SUBMITTED BEFORE THE ASSES SING OFFICER. FURTHER, REMUNERATION RECEIVED BY THE ASSESSEE FOR THE MOVIE BUSINESSMAN AS REFLECTED IN ASSESSEES BANK ACCOUNT AND BOOKS OF A CCOUNT IS ALSO IN AGREEMENT WITH THE BOOKS OF ACCOUNTS MAINTAINED BY THE PRODUC ER. IN THESE CIRCUMSTANCES, EXPLANATION FURNISHED BY SHRI PHANIN DRA REDDY BEFORE THE ASSESSING OFFICER TO THE EFFECT THAT PAYMENTS RECOR DED IN THE LOOSE SHEET ARE FOR ENHANCEMENT OF BUDGET FROM EXHIBITORS APPEARS P LAUSIBLE. MOREOVER, ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 19 EXCEPT THE LOOSE SHEET SEIZED FROM THIRD PARTY, THE RE IS NO OTHER EVIDENCE, WHICH COULD ESTABLISH THE CASH PAYMENT TO ASSESSEE. IN OUR VIEW, IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE TO PROV E THE CONTENTS OF THE SEIZED DOCUMENT TO BE CORRECT, IT WILL HAVE NO EVID ENTIARY VALUE IN THE EYE OF LAW, HENCE, NO ADDITION CAN BE MADE SOLELY RELYING UPON SUCH DOCUMENT. MORE SO, WHEN BOTH THE ASSESSEE AS WELL AS THE PERSON FR OM WHOM THE DOCUMENT WAS SEIZED HAVE DENIED OF HAVING ENTERED INTO ANY S UCH TRANSACTION/ THEREFORE, IN OUR VIEW, THE ADDITION MADE BY THE AS SESSING OFFICER CANNOT BE SUSTAINED. 39. THERE IS ONE MORE ASPECT TO THE ISSUE. ON CAR EFUL EXAMINATION OF THE SEIZED DOCUMENT, IT IS SEEN, AGAINST THE NAME O F EVERY PERSON TO WHOM PAYMENT IS SUPPOSED TO HAVE BEEN MADE, A DATE IS ME NTIONED. INTERESTINGLY, AGAINST ASSESSEES PAYMENT NO DATE IS MENTIONED. FU RTHER, THE PAYMENT DATES ARE IN SEQUENCE. IT IS TO BE NOTED, AS PER THE SE IZED DOCUMENT, THE PAYMENT IMMEDIATELY AFTER ASSESSEE IS RS. 10 LAKHS TO PURI JAGANNADH IN FEBRUARY, 2011. SINCE, ALL SUBSEQUENT PAYMENTS ARE IN CHRONOL OGICAL ORDER, ASSESSEES CONTENTION THAT PAYMENT MADE TO HIM, IF AT ALL, IS PRIOR TO FEBRUARY, 2011 IS ACCEPTABLE. KEEPING THESE FACTS IN VIEW WHEN THE B ENCH MADE A SPECIFIC QUERY TO LEARNED DEPARTMENTAL REPRESENTATIVE TO EXPLAIN H OW ASSESSING OFFICER HAS CORRELATED THE PAYMENT TO THE IMPUGNED ASSESSMENT Y EAR, HE HAS NO VALID ANSWER FOR THE SAME. THEREFORE, EVEN ACCEPTING FOR ARGUMENTS SAKE THAT CONTENTS OF SEIZED DOCUMENT ARE CORRECT, BUT CERTAI NLY, IT CANNOT BE LINKED TO THE IMPUGNED ASSESSMENT YEAR. THUS, LOOKED AT FROM ANY ANGLE, THE ADDITION CANNOT BE SUSTAINED. ACCORDINGLY, ALLOWING ASSESSEE S GROUND, WE DELETE THE ADDITION OF RS.2 CRORES. 40. THESE THREE APPEALS OF THE ASSESSEE ARE ACCORD INGLY PARTLY ALLOWED. 41. NOW, LET US TAKE UP FOR CONSIDERATION, THE REV ENUES APPEALS AND ASSESSEES CROSS OBJECTIONS THEREIN. ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 20 ITA NO.392/HYD/2015 & : ASSESSMENT YEAR 2009-10 CO NO.26/HYD/2015 THEREIN ITA NO.393/HYD/2015 & : ASSESSMENT YEAR 2010-11 CO NO.27/HYD/2015 THEREIN ITA NO.394/HYD/2015 & : ASSESSMENT YEAR 2011-12 CO NO.28/HYD/2015 THEREIN ITA NO.395/HYD/2015 & : ASSESSMENT YEAR 2012-13 CO NO.29/HYD/2015 THEREIN 42. COMMON ISSUE INVOLVED IN ALL THESE APPEALS OF THE DEPARTMENT RELATES TO LEVY OF INTEREST UNDER S.234A AND 234B O F THE INCOME TAX ACT, 1961. ASSESSEE HAS ALSO FILED CROSS OBJECTIONS IN THESE APPEALS RAISING SOME TECHNICAL ISSUES. 43. HAVING CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD, IN THE LIGHT OF THE RELEVAN T STATUTORY PROVISIONS AS WELL AS JUDICIAL PRECEDENTS CITED, WE ARE OF THE VIEW TH AT IN SO FAR AS THE APPEALS FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12 ARE CONCERN ED, THE ORDERS OF THE LEARNED FIRST APPELLATE AUTHORITY ON THE ISSUE IS I N ACCORDANCE WITH STATUTORY PROVISIONS HENCE, THEY CALL FOR NO INTERFERENCE. AC CORDINGLY, WE UPHOLD THE DECISION OF THE LEARNED CIT(A) FOR THOSE YEARS AND DISMISS THE APPEALS OF THE REVENUE. 44. AS FOR THE APPEAL FOR ASSESSMENT YEAR 2012-13 , VIZ. ITA 395/HYD/2015, IT IS A REGULAR ASSESSMENT UNDER S.14 3(3) OF THE ACT. THEREFORE, IN OUR VIEW, INTEREST COMPUTED BY THE AS SESSING OFFICER UNDER S.234B IS IN ORDER. HOWEVER, CONSIDERING THE FACT THAT WE HAVE DELETED THE ADDITION OF RS.2 CRORES MADE BY THE ASSESSING OFFIC ER, WHILE DEALING WITH THE APPEAL OF THE ASSESSEE, BEING ITA NO.58/HYD/2015, F OR THAT YEAR HEREINABOVE, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE IN TEREST UNDER S.234B OF THE ACT, GIVING CONSEQUENTIAL RELIEF TO THE ASSESSEE. THIS APPEAL OF THE REVENUE IS ACCORDINGLY TREATED AS PARTLY ALLOWED. ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 21 45. THE ONLY OTHER SURVIVING ISSUE IS IN THE DEPAR TMENTS APPEAL FOR ASSESSMENT YEAR 2011-12, BEING ITA NO.394/HYD/2015, WHICH, AS RAISED IN GROUND NO.2 THEREOF, RELATES TO ALLOWANCE OF TDS CR EDIT OF RS.5 LAKHS. 46. BRIEFLY, FACTS ARE, DURING THE RELEVANT PREVI OUS YEAR ASSESSEE HAD RECEIVED AN AMOUNT OF RS.50 LAKHS AS ADVANCE FR OM M/S. MADRAS TALKIES FOR ACTING IN A MOVIE, OUT OF WHICH ASSESSEE ACTUAL LY RECEIVED RS.45 LAKHS BY WAY OF CHEQUE AND BALANCE RS.5 LAKHS WAS DEDUCTED A S TDS. SUBSEQUENTLY, HOWEVER, THE PROJECT COULD NOT BE TAKEN UP AND THE CONTRACT GOT CANCELLED. THEREFORE, THE ASSESSEE RETURNED BACK THE ENTIRE AM OUNT OF RS.50 LAKHS TAKEN AS ADVANCE TO M/S. MADRAS TALKIES THROUGH CHEQUE. HOWEVER, SINCE THE AMOUNT OF RS.5 LAKHS TOWARDS TDS WAS ALSO RETURNED BACK BY THE ASSESSEE, IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSM ENT YEAR, ASSESSEE CLAIMED CREDIT FOR THE SAID AMOUNT. THE ASSESSING OFFICER, HOWEVER HAD NOT ACCEPTED THE ASSESSEES CLAIM AND DENIED CREDIT FOR TDS OF R S.5 LAKHS. 47. ASSESSEE BEING AGGRIEVED CHALLENGED THE ADDITI ON OF THE ASSESSING OFFICER BEFORE THE CIT(A), WHO ACCEPTED THE ASSESSE ES CLAIM AND DIRECTED THE ASSESSING OFFICER TO GIVE CREDIT FOR THE TDS OF RS. 5 LAKHS TO THE ASSESSEE. 48. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. AS IT APPEARS, THE ASSESSI NG OFFICER DOES NOT DISPUTE THE FACT THAT THE ASSESSEE ACTUALLY RECEIVED RS.45 LAKHS BY WAY OF CHEQUE AND BALANCE RS.5 LAKHS BY WAY OF TDS. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE RETURNED THE ENTIRE AMOUNT OF RS.50 LAKHS RECEIVED AS ADVANCE FROM MADRAS TALKIES. UNDER THESE CIRCUMSTANCES, THE ASSESSEE I N OUR VIEW WAS ENTITLED FOR GETTING CREDIT OF RS 5 LAKHS DEDUCTED BY WAY OF TDS AND REMITTED TO THE GOVERNMENT ACCOUNT, AS IT IS IN THE NAME OF THE ASS ESSEE. THE APPREHENSION OF THE DEPARTMENT THAT THE DEDUCTOR WILL TAKE CREDI T FOR THE SAME, IN OUR VIEW IS TOTALLY MISPLACED. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 22 LEARNED CIT(A) IN DIRECTING THE ASSESSING OFFICER T O GIVE CREDIT TO THE TDS OF RS.5 LAKHS. THIS GROUND OF THE REVENUE IS ALSO REJE CTED. 49. IN THE LIGHT OF THE ABOVE DISCUSSION, APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2009-10 TO 2011-12 ARE DISMISSED A ND FOR ASSESSMENT YEAR 2012-13 IS TREATED AS PARTLY ALLOWED. 50. AS FAR AS ASSESSEES CROSS OBJECTIONS ARE CONC ERNED, IN VIEW OF OUR DECISION IN DEPARTMENTS APPEALS, THEY HAVE BECOME INFRUCTUOUS, HENCE DISMISSED. 51. TO SUM UP:- (A) OUT OF ASSESSEES APPEALS, A. APPEAL FOR ASSESSMENT YEAR 2006-07, BEING ITA NO.256/HYD/2015, IS ALLOWED AND APPEAL FOR ASSESSME NT YEAR 2007-08, BEING ITA NO.286/HYD/2015, IS DISMISS ED. B. APPEALS FOR ASSESSMENT YEARS 2009-10 TO 2012-13, B EING ITA NOS.55 TO 58/HYD/2015, ARE PARTLY ALLOWED; (B) OUT OF REVENUES APPEALS (I) APPEALS FOR ASSESSMENT YEAR 2009-10 TO 2011-12, BEING ITA NOS.392 TO 394/HYD/2015, ARE DISMISSED; (II) APPEAL FOR ASSESSMENT YEAR 2012-13, BEING ITA NO.395/HYD/2015, IS TREATED AS PARTLY ALLOWED. (C) CROSS OBJECTIONS OF THE ASSESSEE, BEING CO NOS.26 T O 29/HYD/2015, BEING INFRUCTUOUS, ARE DISMISSED ITA NO.256/HYD/2015 & OTHERS SHRI G. MAHESH BABU, HYDERABAD, 23 PRONOUNCED IN THE COURT ON 27TH NOVEMBER, 2015 SD/- SD/- (B.RAMAKOTAIAH) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER. JUDICIAL MEMBER DT/- 27TH NOVEMBER, 2015 COPY FORWARDED TO: 1. SHRI G.MAHESH BABU, NO.398A, ROAD NO.81,JUBILEE HILLS, HYDERABAD 500 033 2. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 7, HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS) 12, HYDERABA D 4. COMMISSIONER OF INCOME - TAX, CENTRAL HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD B.V.S.