T Seshagiri Rao, Secunderabad V. ITO, Ward 11(4), Hyderabad

ITA 569/HYD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2630 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 09-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: P BALAKRISHNA
• Keywords: Unexplained cash credit; Unexplained investment; Salary income; Source of fund; Valuation report; Revised return
• Section: 133A; 147; 69; 148

Judgement Text

ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.566 TO 570/HYD/2013 (ASSESSMENT YEARS: 2005-06 TO 2009-10) SHRI T. SESHAGIRI RAO SECUNDERABAD PAN: ACFPT 2835 B VS INCOME TAX OFFICER WARD 11(4) HYDERABAD ITA NOS.71 TO 74 /HYD/2013 (ASSESSMENT YEARS: 2006-07 TO 2009-10) SMT. T. RAJA BHANSI DEVI HYDERABAD PAN: ACGPT 6026 K VS INCOME TAX OFFICER WARD 11(4) HYDERABAD FOR ASSESSEE : SHRI P. BALAKRISHNA FOR REVENUE : SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH THE ASSESSEES BEFORE US, ARE HUSBAND AND WIFE. THERE WAS A SURVEY U/S 133A OF THE ACT IN THE CASE OF THE ASSESSEE BEFORE US ON 29.9.2010. DURING THE COURSE OF SURVEY, CERTAIN ISSUES WERE NOTICED. THEREFORE, THE ASSESSM ENTS FOR A.Y 2005-06 TO 2009-10 WERE REOPENED U/S 147 OF THE ACT AND CERTAIN DISALLOWANCES AND CONSEQUENTIAL ADDITIONS WERE MADE . COMMON ISSUES ARE INVOLVED IN THE APPEALS OF BOTH THE PART IES. THEREFORE, DATE OF HEARING : 09.02.2017 DATE OF PRONOUNCEMENT : 21.04.2017 ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 2 OF 15 ALL THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSE D OF BY THIS COMMON AND CONSOLIDATED ORDER. 2. SINCE COMMON ISSUES ARE INVOLVED IN THE CASE OF SHRI T. SESHAGIRI RAO IN ALL THE A.YS, EACH OF THE ISSUES IS DISPOSED OF AS UNDER: DISALLOWANCE OF AGRICULTURAL INCOME 3. IN THE RETURNS OF INCOME FOR ALL THE A.YS, THE AS SESSEE HAS SHOWN AGRICULTURAL INCOME. WHEN THE ASSESSEE WA S ASKED TO PRODUCE PATTADAR PASS BOOKS OF THE AGRICULTURAL LAN D HOLDING AND ALSO THE PARTICULARS OF CROPS GROWN, EXPENDITURE IN CURRED AND THE SALE PROCEEDS OF THE AGRICULTURAL PRODUCE ETC., THE ASSESSEE FILED ONLY A COPY OF THE PATTADAR PASS BOOK SHOWING THAT THE ASSESSEE IS THE OWNER OF 3.25 ACRES OF AGRICULTURAL LAND. NO OTHER DETAILS WERE FURNISHED NOR EXPLAINED BY THE ASSESSEE. THE A O THEREFORE, DISBELIEVED THE ASSESSEES CONTENTION OF BEING IN T HE POSSESSION OF THE AGRICULTURAL LAND AND DISALLOWED THE ENTIRE AGR ICULTURAL INCOME AS SHOWN BY THE ASSESSEE FOR ALL THE A.YS. TH E ASSESSEE FILED APPEALS BEFORE THE CIT (A) ALONG WITH THE EVI DENCE OF OWNING 3.25 ACRES OF WET LAND AT PAMARU MANDAL, KRISHNA DI STT. AND SUBMITTED THAT SINCE IT IS AN ANCESTRAL PROPERTY, I T IS NOT REFLECTED IN THE BALANCE SHEETS OF THE ASSESSEE FOR THE RELEV ANT YEARS. IT WAS SUBMITTED THAT THE LANDS WERE FERTILE AND WET LANDS YIELDING TWO CROPS PER ANNUM AND THE INCOME PER CROP IS ABOUT RS .15,000 TO RS.20,000 PER ACRE. THE CIT (A), CALLED FOR REMAND REPORTS FROM THE AO FOR ALL THE A.YS. AO SUBMITTED THE REMAND REP ORT STATING THAT SINCE THE ASSESSEE COULD NOT PRODUCE ANY SUPPO RTING EVIDENCE IN RESPECT OF LAND HOLDING, HE HAD TREATED THE AGRICULTURAL INCOME RETURNED BY THE ASSESSEE AS DEE MED INCOME ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 3 OF 15 OF THE ASSESSEE. AFTER CONSIDERING THE REMAND REPO RT, THE CIT (A) OBSERVED THAT THE ASSESSEE HAS ANCESTRAL AGRICULTUR AL LAND TO THE EXTENT OF 3.25 ACRES AND THEREFORE, IS NOT REFLECTE D IN THE BALANCE SHEET PREPARED FOR THE INDIVIDUAL. HE ALSO OBSERVED THAT THE ASSESSEES SHARE IN THE ANCESTRAL PROPERTY IS NOT I NDICATED AND IF IT IS HUF PROPERTY AS INDICATED, THE AMOUNT AVAILABLE T O THE ASSESSEE AS AN INDIVIDUAL NOT INDICATED. HE ALSO OB SERVED THAT THE ASSESSEE HAS FAILED TO FURNISH INFORMATION SUCH AS TYPES OF CROPS GROWN, EXPENSES ASSOCIATED WITH GROWING OF SUCH CRO PS ETC., THEREFORE, HE CAME TO THE CONCLUSION THAT THE INCOM E INDICATED BY THE ASSESSEE IS HIS GROSS INCOME AND THE EXPENSES H AVE TO BE TAKEN INTO CONSIDERATION. TAKING ALL THESE FACTS IN TO CONSIDERATION, THE CIT (A) RESTRICTED THE DISALLOWANCE TO A PART O F THE AGRICULTURAL INCOME RETURNED AND GRANTED PARTIAL RELIEF TO THE A SSESSEE. AGAINST THE CONFIRMATION OF THE PART OF THE ADDITIO N FOR EACH OF THE A.YS BY THE CIT (A), THE ASSESSEE IS IN APPEAL BEFOR E US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT (A), WHE REAS THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT EXCEPT FOR REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, THE LEARNED COUN SEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE BEFORE US ANY EVIDENCE WHATSOEVER IN SUPPORT OF EARNING OF THE AGRICULTURA L INCOME AS EXPLAINED BY THE ASSESSEE IN HIS RETURNS OF THE INC OME FOR THE RESPECTIVE A.YS. WE FIND THAT THE CIT (A) HAS CONSID ERED ALL THE ASPECTS OF THE ISSUE BEFORE ALLOWING CERTAIN PART O F THE INCOME AS ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 4 OF 15 AGRICULTURAL INCOME. THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO REBUT THE FINDINGS OF THE CIT (A). AS THE ORDER OF THE CIT (A) IS A WELL CONSIDERED ORDER, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE SAME ON THE ISSUE OF AGRICULTURAL INCOME FOR AL L THE A.YS. THE ASSESSEES GROUNDS OF APPEAL FOR ALL THE A.YS AGAINS T DISALLOWANCE OF PART OF THE AGRICULTURAL INCOME ARE ACCORDINGLY REJECTED. INTEREST INCOME 6. THIS ISSUE HAS ARISEN FOR THE A.YS 2008-09 AND 20 09- 10 ONLY. BRIEF FACTS RELATING TO THIS ISSUE ARE THA T THE ASSESSEE IS THE MANAGING DIRECTOR IN M/S. MULTISCALE EXIM PRIVA TE LIMITED. DURING THE ABOVE A.YS, THE ASSESSEE HAS EARNED SALAR Y INCOME AND INTERESTS ON LOANS. HOWEVER, IN THE RETURN OF I NCOME FOR THE A.Y 2008-09 AND 2009-10, THE ASSESSEE HAS DISCLOSED ONLY SALARY INCOME AND INTEREST INCOME WAS NOT DISCLOSED. EVEN IN THE REVISED RETURN OF INCOME FILED, THE ASSESSEE DID NOT DISCLO SE INTEREST INCOME. THE AO, THEREFORE, TREATED THE INTEREST INC OME AS INCOME ACCRUED TO THE ASSESSEE DURING THE RELEVANT A.YS AND BROUGHT IT TO TAX. DURING THE APPELLATE PROCEEDINGS BEFORE THE CI T (A), THE ASSESSEE SUBMITTED THAT THE AO HAS ADDED THE INTERE ST INCOME TO THE RETURNED INCOME OF THE ASSESSEE ON THE BASIS OF THE CLAIM OF INTEREST PAYABLE BY THE COMPANY IN WHICH THE ASSE SSEE WAS AN INVESTOR. IT WAS SUBMITTED THAT THOUGH THE COMPANY HAS CLAIMED INTEREST AS PAYABLE, IT HAS NOT PAID THE SAME TO TH E ASSESSEE AND THEREFORE, THE ASSESSEE HAS NOT RETURNED IT IN HIS RETURN AS HE WAS UNDER AN IMPRESSION THAT IT WAS TO BE DISCLOSED ONL Y WHEN IT IS RECEIVED. THE CIT (A) OBSERVED THAT THE ASSESSEE HI MSELF IS THE MANAGING DIRECTOR OF THE COMPANY M/S. MULTISCALE EX IM PRIVATE LTD WHEREIN THE INTEREST HAS BEEN SHOWN AS PAYABLE TO THE ASSESSEE. HE HELD THAT THE INTEREST HAS SINCE ACCRU ED TO THE ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 5 OF 15 ASSESSEE AND THEREFORE, IT IS TAXABLE IN THE HANDS OF THE ASSESSEE. HE ACCORDINGLY CONFIRMED THE ADDITION. AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE US FOR BOTH THE A.YS 2008-09 AND 20 09-10 RESPECTIVELY. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS FOLLOWING T HE MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE IS BOUND TO OFFE R THE INCOME ON ACCRUAL BASIS. FURTHER, THE ASSESSEE HIMSELF IS T HE DIRECTOR OF THE COMPANY IN WHICH THE INTEREST IS SHOWN TO BE PA YABLE AND THE ASSESSEE HAS NOT CHALLENGED THE ASSESSMENT COMPLETE D IN THE HANDS OF THE COMPANY. THEREFORE, THE INTEREST INCOM E RECEIVABLE BY THE ASSESSEE IS TAXABLE IN THE HANDS OF THE ASSE SSEE EVEN IF IT IS NOT YET RECEIVED BY THE ASSESSEE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT (A) ON THIS ISS UE. GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR THE A.YS 2008-09 A ND 2009-10 ON THE ADDITIONS OF INTEREST INCOME ARE THEREFORE, REJECTED. LOAN CREDITORS 8. (I) ADDITION OF RS.14,72,000 UNDER THE HEAD UNEXPLAINED LOAN CREDITOR FOR THE A.Y 2007-08 AND (II) ADDITION OF RS.1,90,000 FOR THE A.Y 2008-09. 9. BRIEF FACTS OF THE CASE FOR THE A.Y 2007-08 ARE T HAT DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN LOANS TO THE TUNE OF RS.32,07,94 9 OUT OF WHICH RS.22,72,000 IS FROM HIS WIFE SMT. T. RAJ BHA NSI DEVI OF AND THE BALANCE IS FROM HIS SONS AND DAUGHTER-IN-LA W. THE AO DISBELIEVED THE CLAIM OF LOANS FROM HIS WIFE AND CH ILDREN AND TREATED THEM AS UNEXPLAINED CREDITS. THE ASSESSEE P REFERRED AN ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 6 OF 15 APPEAL BEFORE THE CIT (A) WHO DELETED THE ADDITIONS OF LOANS FROM THE ASSESSEES SONS AND DAUGHTER-IN-LAW ON THE BASI S OF THE REMAND REPORT SUBMITTED BY THE AO. HOWEVER, HE CONF IRMED THE ADDITION OF THE LOAN FROM HIS WIFE TO THE EXTENT OF RS.14,72,000 DISBELIEVING IT. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CLAIMED BEFORE THE CIT (A) THAT OU T OF THE AMOUNT OF RS.22,72,000 RECEIVED FROM HIS WIFE, AN AMOUNT O F RS.10.00 LAKHS WAS THE REPAYMENT OF THE ADVANCE GIVEN BY THE ASSESSEE HIMSELF DURING THE FINANCIAL YEAR 2005-06 AND THE R EST OF THE AMOUNT OF RS.12,72,000 WAS AN ADVANCE FROM HER OWN SOURCES OF INCOME. HE SUBMITTED THAT IN THE REMAND REPORT, THE AO HAS NOT SUBMITTED ANY COMMENTS, LEAVE ALONE, ANY ADVERSE CO MMENTS ON THESE SUBMISSIONS OF THE ASSESSEE. HE SUBMITTED THA T THE CIT (A) HAS ERRONEOUSLY CONFIRMED THE ADDITION NOT ONLY OF RS.12,72,000 BUT ALSO OF RS.2,00,000 AGAINST THE SUM OF RS.10,00 ,000 WHICH IS THE RETURN OF THE ADVANCE MADE BY THE ASSESSEE TO H IS WIFE IN EARLIER YEARS. HE SUBMITTED THAT SINCE THE AO HAS N OT GIVEN ANY COMMENTS ON THE ASSESSEES SUBMISSIONS IN THE REMAN D REPORT, THE ASSESSEES COMMENTS HAVE TO BE ACCEPTED IN TOTO . 11. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS NOT BEEN ABLE TO PROVE THE CREDITWORTHINESS OF SMT. RAJA BHA NSI DEVI TO ADVANCE A SUM OF RS.12,72,000 TO THE ASSESSEE AND F URTHER THAT CIT (A) HAS PERUSED THE BOOKS OF ACCOUNT OF THE ASS ESSEE AND FOUND THAT THE ASSESSEE WAS STILL TO RECEIVE A SUM OF RS.2.00 LAKHS ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 7 OF 15 OUT OF RS.10.00 LAKHS ADVANCED BY HIM. THEREFORE, A CCORDING TO HIM, THE ADDITIONS ARE JUSTIFIED. 12. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS MADE HIS S UBMISSIONS BEFORE THE CIT (A) AND THE CIT (A) HAD CALLED FOR A REMAND REPORT FROM THE AO ON THE EVIDENCE SUBMITTED BY THE ASSESS EE. WE HAVE PERUSED THE REMAND REPORT AND IT IS SEEN THAT THE A O HAS NOT OFFERED ANY COMMENTS ON THESE SUBMISSIONS OF THE AS SESSEE. WHEN THE AO HAS NOT OFFERED ANY COMMENT, IT IS TO B E PRESUMED THAT HE HAS SATISFIED WITH THE SUBMISSIONS OF THE A SSESSEE. IF AT ALL ANY ADDITION IS TO BE SUSTAINED, IT CAN ONLY BE OF RS.2.00 LAKHS WHICH IS STILL SHOWN TO BE PAYABLE TO THE ASSESSEE OUT OF THE ADVANCE OF RS.10.00 LAKHS GIVEN TO HIS WIFE. THEREF ORE, WE SUSTAIN THE ADDITION OF RS.2.00 LAKHS ONLY. THE ASSESSEE GE TS A RELIEF OF RS.12,72,000. THEREFORE, THE ASSESSEES GROUNDS OF APPEAL FOR THE A.Y 2007-08 ON THIS ISSUE ARE PARTLY ALLOWED. 13. AS REGARDS THE LOAN FROM THE ASSESSEES DAUGHTE R-IN- LAW FOR THE A.Y 2008-09, WE FIND THAT A TOTAL OF RS. 20,20,000 HAS BEEN CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM HIS DAUGHTER-IN-LAW AND THE AO HAS ACCEPTED ONLY RS.10. 00 LAKHS SINCE THEY WERE CREDITED TO THE ACCOUNT OF THE ASSE SSEE FROM THE ACCOUNT OF THE DAUGHTER-IN-LAW. BEFORE THE CIT (A) THE ASSESSEE HAS SUBMITTED THE DETAILS OF THE BANK A/C AND THE C IT (A) HAS OBSERVED THAT AN AMOUNT OF RS.8,30,000 HAS BEEN SHO WN TO HAVE BEEN CLEARED THROUGH SBH AND ONLY A SUM OF RS.1,90, 000 WAS BROUGHT IN CASH FROM THE CASH RECEIVED BY HER FROM THE ASSESSEE IN EARLIER A.Y. THE CIT (A) HAS CLEARLY OBSERVED TH AT THE ASSESSEE ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 8 OF 15 HAS NOT FILED ANY RELIABLE EVIDENCE TO EXPLAIN THE CASH CREDIT OF RS.1,90,000. THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE US ALSO TO SUBSTANTIATE HIS CLAIM. IN VIEW OF THE SAME, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT (A) ON THIS ISSUE AND THE ASSESSEES GROUND OF APPEAL FOR THE A.Y 2008-09 IS R EJECTED. ADDITION ON ACCOUNT OF INVESTMENT IN CONSTRUCTION OF COMMERCIAL COMPLEX: 14. THIS ISSUE ARISES IN THE A.Y 2009-10. BRIEF FACT S ARE THAT THE ASSESSEE HAD CONSTRUCTED A COMMERCIAL COMP LEX IN PLOT NO.17, ECIL CROSS ROAD, HYDERABAD. SINCE THE ASSESS EE DID NOT FURNISH THE DETAILS OF THE COST OF CONSTRUCTION, TH E AO MADE A REFERENCE TO THE VALUATION CELL TO ASCERTAIN THE CO ST OF CONSTRUCTION. THE VALUATION CELL REQUESTED SOME MOR E TIME TO DO THE PROVISIONAL ASSESSMENT SINCE THE ASSESSEE HAS N OT SUBMITTED ANY DETAILS. IN VIEW OF THE FACT THAT THE ASSESSMEN T WAS GETTING TIME BARRED, THE AO PROCEEDED TO WORK OUT THE COST OF CONSTRUCTION AS PER THE REPORT OF THE REGISTERED VA LUER SUBMITTED TO INDIAN OVERSEAS BANK BY THE ASSESSEE AND FOUND I N THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SURVE Y WHICH WAS IMPOUNDED. AS PER THE SAID VALUATION REPORT, THE CO ST OF CONSTRUCTION WAS RS.1,95,20,000. SINCE THE ASSESSEE HAD SHOWN ONLY A SUM OF RS.90,92,130 AS INCURRED TOWARDS CONS TRUCTION AS ON 31.03.2009, THE BALANCE INVESTMENT OF RS.1,04,27 ,870 WAS TREATED AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T . ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVE D, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 15. IT WAS SUBMITTED THAT THE VALUATION REPORT SUBM ITTED BEFORE THE BANK BY THE ASSESSEE WAS FOR THE PURPOSE OF AVAILING A ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 9 OF 15 LOAN AND WAS NOT THE ACTUAL VALUATION OF THE COST O F CONSTRUCTION. IT WAS SUBMITTED THAT THE REPORT WAS OBTAINED BY TH E ASSESSEE FOR THE SAKE OF OFFERING IT AS A COLLATERAL SECURITY FO R THE LOAN WHILE THE CONSTRUCTION WAS STILL IN PROGRESS. THEREFORE, ACCO RDING TO THE ASSESSEE, THE SAID REPORT CANNOT BE ACCEPTED AS THE BASIS FOR THE ACTUAL COST OF CONSTRUCTION. THE ASSESSEE ALSO FURN ISHED THE COPY OF THE DEPARTMENTAL VALUATION OFFICERS REPORT ACCO RDING TO WHICH THE COST OF CONSTRUCTION WAS WORKED OUT AT RS.1,08, 07,000 AND ALSO THAT THE DIFFERENCE BETWEEN SUCH VALUATION AND ASSESSEES BOOKS HAS ARISEN AS THE VALUATION OFFICER HAS ADOPT ED THE CPWD RATES AND HAS ALSO NOT GIVEN EXEMPTION FOR SELF SUP ERVISION OF THE CONSTRUCTION OF THE COMPLEX. IT WAS ALSO SUBMITTED THAT THE COST OF CONSTRUCTION AS PER THE ASSESSEE UP TO THE FINANCIA L YEAR 2010-11 IS RS.1,09,69,067 WHICH INCLUDED THE INVESTMENTS MA DE PRIOR TO THE A.Y 2004-05 I.E., RS.24,62,500 WHICH HAS BEEN IG NORED BY THE AO. IT WAS SUBMITTED THAT IF ALL THESE COSTS ARE TA KEN INTO CONSIDERATION, THE COST OF CONSTRUCTION SHOWN BY TH E ASSESSEE WAS APPROPRIATE. THE CIT (A) ACCEPTED THE DVOS VALUATI ON AT RS.1,08,07,000 AND HAS ALSO ALLOWED 10% RELIEF ON T HE VALUATION OF THE DVO FOR ADOPTING CPWD RATES AND A FURTHER OF 15% RELIEF ON ACCOUNT OF PERSONAL SUPERVISION. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT (A) IN NOT ACCEPTING THE CLAIM OF INVESTMENT OF RS.25,62,500 MADE PRIOR TO THE A.Y 2004-05. 16. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE FINANCIAL YEAR 2004-05, THE ASSESSEE HAD INVEST ED A SUM OF RS.25,62,500 IN CONSTRUCTION OF THE BUILDING AS IS EVIDENT FROM THE BALANCE SHEET AS ON 31.3.2005. HE SUBMITTED THA T THOUGH THE ASSESSEE HAS FURNISHED THE DETAILS OF INVESTMENT YE AR-WISE AND ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 10 OF 15 ALSO THE DETAILS AS TO HOW THE SAME IS REFLECTED IN THE ASSESSEES BALANCE SHEETS, NONE OF THE AUTHORITIES BELOW HAS R EALLY VERIFIED THE SAME. HE DREW OUR ATTENTION TO PAGE 24 OF THE P APER BOOK FILED ON 8.2.2017 AND ALSO PAGE 24 OF THE PAPER BOOK FILE D FOR THE A.Y 2005-06 TO 2009-10. THE LEARNED DR, HOWEVER, SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. 17. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED THE DETAILS OF YEAR- WISE INVESTMENT BEFORE US AND FURTHER THAT THESE IN VESTMENTS WERE ALSO REFLECTED IN THE BALANCE SHEET OF THE RES PECTIVE A.YS AND NONE OF THE AUTHORITIES HAVE VERIFIED THE SAME. THE REFORE, WE ARE INCLINED TO SET ASIDE THE ISSUE TO THE AO AND DIREC T THE AO TO VERIFY THE CONTENTIONS OF THE ASSESSEE AND SINCE TH E CIT (A) HAS CONSIDERED THE DIFFERENCE IN THE VALUATION AS PER T HE CPWD RATES AND THE STATE PWD RATES AND HAS GIVEN RELIEF OF 10% ACCORDINGLY AND SINCE THE CIT (A) HAS ALSO GIVEN RELIEF OF 10% F OR SELF SUPERVISION, WE DIRECT THE AO TO ALLOW THE SAME WHI LE ARRIVING AT THE COST OF CONSTRUCTION AS PER THE DETAILS FURNISH ED BY THE ASSESSEE. IN THE RESULT, ASSESSEES GROUND OF APPEA L ON THIS ISSUE IS PARTLY ALLOWED. 18. IN THE RESULT, ASSESSEES APPEALS FOR THE A.Y 20 05-06 AND 2006-07 ARE DISMISSED AND THE APPEALS FOR THE A .Y 2007-08, 2008-09 AND 2009-10 ARE PARTLY ALLOWED. ITA NOS. 71 TO 74 /HYD/2013 (ASSESSMENT YEARS: 200 6-07 TO 2009-10) IN THE CASE OF SMT. RAJA BHANSI DEVI. ADDITION ON ACCOUNT OF ADDITIONAL INVESTMENT IN THE RESIDENTIAL PROPERTY: ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 11 OF 15 19. THE ASSESSEE IS AN INDIVIDUAL, DERIVING OF INCO ME FROM COMMISSION. SHE FILED HER RETURN OF INCOME FOR THE A.Y 2006-07 ON 2.01.2007 ADMITTING TOTAL INCOME OF RS.1,41,766 AND OTHER SOURCES AT RS.12,025. DURING THE SURVEY OPERATION I N THE CASE OF ASSESSEES HUSBAND SHRI T. SESHAGIRI RAO U/S 133A O F THE ACT, IT WAS NOTICED THAT THE ASSESSEE HAS CONSTRUCTED A RES IDENTIAL HOUSE BUT HAS NOT REFLECTED THE ACTUAL COST OF CONSTRUCTI ON IN THE RETURNS OF INCOME FILED BY HER. SINCE THERE WAS REASON TO B ELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE A.Y 2006-07, THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE SAME, THE ASSESS EE FILED A REVISED RETURN OF INCOME ON 17.11.2011 ADMITTING TO TAL INCOME AT RS.1,53,791. 20. DURING THE RE-ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THERE IS A DIFFERENCE OF RS.9,16,065 IN THE COST OF CONSTRUCTION OF A RESIDENTIAL PROPERTY BETWEEN THE VALUATION REPORT OF THE DEPARTMENTAL VALUATION OFFICER AND TH E DECLARATION OF THE COST OF THE BUILDING BY THE ASSESSEE. WHEN T HE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE, THE ASSESSEE COULD NOT OFFER ANY EXPLANATION AND THEREFORE, THE DIFFERENCE WAS TREAT ED AS UNEXPLAINED INVESTMENT AND BROUGHT TO TAX. AGGRIEVE D, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) MAK ING VARIOUS SUBMISSIONS. THE CIT (A) OBSERVED THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION AND THAT THE PERIOD OF CONS TRUCTION WAS 3 YEARS WHEREAS THE VALUATION CELL HAS TAKEN THE CONS TRUCTION PERIOD AS 2 YEARS. HE ALSO OBSERVED THAT THE DIFFER ENCE IN THE VALUATION REPORT AND ALSO THE COST OF CONSTRUCTION AS SHOWN IN THE ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 12 OF 15 BALANCE SHEET FOR THE A.Y 2004-05 WAS RS.8,10,154 BU T SINCE THE ASSESSEE HAS NOT CLAIMED ANY RELIEF ON THESE ISSUES , HE DID NOT GRANT ANY RELIEF. HOWEVER, AS REGARDS THE EXEMPTION FOR SELF SUPERVISION, THE CIT (A) HAS ALLOWED 15% AS AGAINST 7.5% ALLOWED BY THE DEPARTMENTAL VALUATION OFFICER. THUS, THE CI T (A) GRANTED PARTIAL RELIEF AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OR THE LEARNED COMMISSIONER OR INCOME TAX (APPEALS) IS ERRONEOUS 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN ALLOWING THE ELIGIBLE RELIEF' ON SPREAD OVER OF CONSTRUCTION PERIOD 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING 15%, RELIEF ON DIFFERENCE BETWEEN CPWD RATES AND STATE PWD RATES WHICH IS TO BE ALLOWED. 4) THE LEARNED CIT (A) OUGHT TO HAVE CONSIDERED THE CPWD RATES INCLUDES CONTRACTORS PROFIT OF 11% AND MATERIALS, CONTINGENCIES ARE RAISED BY 3% AND WATER AND ELECTRICITY RAISED BY 1% WHICH HAS TO GIVE DUE CONSIDERATION AND NECESSARY RELIEF. 5) THE LEARNED CIT (A) ERRED IN NOT CONSIDERING DIFFERENCE OR RATES OR TILES AND OTHERS AND NOT GIVEN OPPORTUNITY FOR PRODUCING THE BILLS. 6)) THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEES SPOUSE IS AN ENGINEER AND THERE IS NO NEED TO INCLUDE ARCHITECT & STRUCTURAL ENGINEERS FEE OF RS.29,163 IN VALUATION REPORT. 7) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 13 OF 15 21. A COPY OF THE VALUATION REPORT IS ALSO SUBMITTE D BEFORE US. AS SEEN THEREFROM, WE FIND THAT THE DVO HAS ADO PTED THE CPWD RATE AS AGAINST THE STATE PWD RATES AND AS HEL D BY THE CIT (A) IN THE ASSESSEES HUSBANDS CASE, 10% RELIEF IS TO BE GIVEN FOR THE DIFFERENCE BETWEEN THE CPWD AND STATE PWD RATES . THEREFORE, GROUNDS OF APPEAL NO.3 TO 5 ARE PARTLY ALLOWED. 22. AS REGARDS GROUND NO.6, WE FIND THAT THE CIT (A ) HAS ALREADY GIVEN RELIEF OF 10% FOR SELF SUPERVISION AND WE ARE SATISFIED THAT IT WOULD TAKE CARE OF THE ARCHITECT AND ENGINE ERS FEE AS WELL. THEREFORE, NO FURTHER EXEMPTION IS TO BE ALLOWED. T HEREFORE, GROUND NO.6 IS REJECTED. 23. IN THE RESULT, ASSESSEES APPEAL FOR THE A.Y 200 6-07 IS PARTLY ALLOWED. A.YS 2007-08 TO 2009-10 24. IN ALL THESE YEARS, THE COMMON GROUND OF APPEAL IS AGAINST THE DISALLOWANCE OF THE LOANS ALLEGEDLY REC EIVED BY THE ASSESSEE FROM HER SPOUSE MR. T. SESHAGIRI RAO. BRIE F FACTS ARE THAT DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y 2007-0 8, THE ASSESSEE HAS SHOWN TO HAVE RETURNED AN ADVANCE OF R S.2,41,250. AS THE ASSESSEE FAILED TO FURNISH THE DETAILS SUCH AS NAMES, ADDRESS OF THE PARTY, NATURE OF THE ADVANCE RETURNE D ETC., THE AO TREATED THE AMOUNT AS UNEXPLAINED INCOME OF THE ASS ESSEE. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FURN ISHED THE FINANCIAL STATEMENTS FOR THE ASSESSMENT YEARS 2005- 06 AND 2007- 08 AND SUBMITTED THAT THE AMOUNT OF RS.2,41,000 REP RESENTS RETURN OF PART OF ADVANCES GIVEN BY THE ASSESSEE IN THE FINANCIAL YEAR 2005-06 OF RS.17,13,250 WHICH CAN BE VERIFIED FROM THE ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 14 OF 15 FINANCIAL YEAR STATEMENTS AND SAID ADVANCE IS REMIS SION OF THE ADVANCE GIVEN IN FINANCIAL YEAR 2005-06. ON THESE S UBMISSIONS, THE CIT (A) CALLED FOR A REMAND REPORT FROM THE AO, BUT THE AO DID NOT OFFER ANY COMMENT WHATSOEVER IN RESPECT OF THES E SUBMISSIONS. THE CIT (A) OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED THE REQUIRED INFORMATION AT THE ASSESSMEN T STAGE AND EVEN DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT FURNISHED ANY CONCRETE EVIDENCE EXCEPT THE STATEMEN T AFFAIRS OF THE ASSESSEE AS WELL AS OF HER HUSBAND SHRI T. SESH AGIRI RAO, THE CREDITOR. HE THEREFORE, CONFIRMED THE ADDITION MADE BY THE AO OF RS.2,41,256. SIMILARLY IN THE A.Y 2008-09, SIMILAR A DDITION OF RS.14,72,000 AND IN THE A.Y 2009-10, THE ADDITIONS O F RS.2,31,950 WERE CONFIRMED. 25. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE RELEVANT DETAILS SUC H AS THE FINANCIAL STATEMENTS FOR ALL THE THREE A.YS AND THE AO DURING THE REMAND PROCEEDINGS HAS NOT OFFERED ANY COMMENTS DUE TO WHICH THE ASSESSEES CONTENTION SHOULD BE TREATED AS HAVI NG BEEN ACCEPTED BY THE AO AND THE ADDITION SHOULD BE DELET ED. 26. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTH ORITIES BELOW. 27. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS CLAIMED TH ESE AMOUNTS FOR THE RELEVANT A.YS AS REMISSION OF ADVANCES GIVEN BY HER TO HER HUSBAND IN THE EARLIER YEARS AND HAS SUBMITTED RELE VANT FINANCIAL STATEMENTS. DURING THE REMAND PROCEEDINGS, THE AO H AS VERIFIED ITA NOS 566 TO 570 AND 71 TO 74 T SESHAGIRI RAO SE CUNDERABAD PAGE 15 OF 15 THE SAME, BUT DID NOT OFFER ANY COMMENT, LEAVE ALON E, ANY ADVERSE COMMENTS. THEREFORE, IT HAS TO BE DEEMED THAT THE A O IS SATISFIED WITH THE CONTENTION OF THE ASSESSEE. SINCE CONSIDER ABLE TIME HAS LAPSED, WE ARE OF THE OPINION THAT NO USEFUL PURPOS E WOULD BE SERVED IN REMANDING THE ISSUE TO THE FILE OF THE AO AT THIS STAGE FOR RE-VERIFICATION OF ASSESSEES CONTENTIONS. IN VIEW OF THE SAME, WE ARE INCLINED TO ACCEPT THE CONTENTIONS OF THE ASSES SEE AND THE ASSESSEES APPEALS FOR THE A.YS 2007-08 TO 2009-10 A RE ALLOWED. 28. IN THE RESULT, APPEAL FOR THE A.Y 2006-07 IS PAR TLY ALLOWED AND THE APPEALS FOR THE A.Y 2007-08 TO 2009- 10 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST APRIL, 2017. VINODAN/SPS COPY TO: 1 SHRI T. SESHAGIRI RAO & SMT. T. RAJA BHANSI DEVI, H.NO.1-7- 122/2A, ECIL, KAMALA NAGAR, HYDERABAD 2 INCOME TAX OFFICER WARD 11(4) HYDERABAD 3 CIT (A)-VI IT TOWERS, 6 TH FLOOR, A BLOCK, AC GUARDS, HYDERABAD 500 005 4 CIT V HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER