Manoj Vaibhav Gems N Jewellers Private Limited, Visakhapatnam V. The Assistant Commissioner of Income Officer, Central Circle-1, Visakhapatnam

ITA 61/VIZ/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3478 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Keywords: Bogus purchase; Unexplained cash credit; Depreciation; Business expenditure; Search and seizure; Rule of consistency; Earning of tax free income; Period of limitation; Cost of acquisition; Validity of assessment; Accommodation entries; Right to appeal; Documents seized; Revenue expenditure
• Section: 143(3); 153A; 14A; 37(1); 131; 68; 132; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 5 3 - 56 /VIZ/ 201 8 ( / A SST. YEAR S : 20 1 1 - 1 2, 2013 - 14, 2014 - 15 AND 201 5 - 1 6 ) ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 VISAKHAPATNAM VS. M/S MANOJ VAIBHAV GEMS N JEWELLERS PVT. LTD. (FORMERLY KNOWN AS VAIBHAV EMPIRE PVT. LTD.) V SQUARE, DWARAKA NAGAR, VISAKHAPATNAM [PAN : A AB CV8928J ] ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO. 61 - 63 /VIZ/201 8 ( / A SST. YEAR S : 2013 - 14, 2014 - 15 AND 2015 - 16 ) M/S MANOJ VAIBHAV GEMS N JEWELLERS PVT. LTD. (FORMERLY KNOWN AS VAIBHAV EMPIRE PVT. LTD.) V SQUARE, DWARAKA NAGAR, VISAKHAPATNAM [PAN : A ABCV8928J] VS. ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / ASSESSEE BY : SHRI G.V.N.HARI, AR / REVENUE BY : SHRI DEBA KUMAR SONOWAL, DR / DATE OF HEARING : 12 . 07. 2018 / DATE OF PRONOUNCEMENT : 21 .0 8 .2018 2 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM / O R D E R P ER BENCH : THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3, VISAKHAPATNAM DATED 31.10.2017 FOR THE ASSESSMENT YEAR S 201 1 - 1 2, 2013 - 14, 2014 - 15 AND 2015 - 16 AND THE CROSS APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2013 - 14, 2014 - 15 AND 2015 - 16. ITA/53/VIZ/2012 2. ALL THE GROUNDS IN THIS APPEAL ARE AGAINST THE CANCELLATION OF PROTECTIVE ASSESSMENT HOLDING THAT ONCE SUBSTANTIAL ASSESSMENT IS MADE, PROTECTIVE ASSESSMENT HAS NO LEGS TO STAND. 3. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A CO MPANY BY NAME MANOJ VAIBHAV GEM S N JEWELLERS PVT. LTD., [ FORMERL Y KNOWN AS VAIBHAV EMPIRE PVT. LTD. (VEPL) ] AND IS CARRYING ON THE BUSINESS OF GOLD, SILVER AND DIAMONDS ETC. . FOR THE ASSESSMENT YEAR 2011 - 12 , THE ASSESSMENT WAS COMPLETED U/S 143(3) BY AN ORDER DATED 20.05.2013 ON A TOTAL INCOME OF RS.8,07,22,883/ - . THE DDIT (INV ESTIGATION ) , AIR INTELLIGENCE UNIT, KOLKATA 3 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM HAS INTERCEPTED SHRI K.APPA R AO , THE EMPLOYEE OF THE ASSESSEE AT NETAJI SUBASH CHANDRA BOSE INTERNATIONAL AIRPORT, KOLKATA ON 04.04.2014 AND FOUND THAT HE WAS CARRYING GOLD WITH HIM , WEIGHING 5000 GMS. HE WAS ASKED TO PRODUCE THE SUPPORTING DOCU MENTS IN RESPECT OF THE SOURCE AND THE OWNERSHIP FOR THE SAID GOLD B ULLION FOUND IN HIS POSSESSION AND HE HAD PRODUCED THE COPIES OF DELIVERY CHALLAN ISSUED BY M/S BRINKS ARYA INDIA PVT. LTD. , THE BULLION DEALER AND O N VERIFICATION THE DEPARTMENT FOUND THE VARIATION IN SERIAL NUMBERS , HENCE , SEARCH AND SEIZURE ACTION U/S 132 WAS CARRIED OUT ON SRI K.APPA R AO AND THE SAID GOLD BULLION WEIGHING 5000 GMS WAS SEIZED U/S 132 OF THE INCOME TAX ACT (HEREINAFTER CALLED AS ACT). SRI K.APPA R AO IS WORKING WITH THE ASSESSEE COMPANY AND HAS BEEN CARRYING GOLD BULLION BARS OF THE ASSESSEE FOR BUSINESS PURPOSES WHICH HE STATED IN HIS STATEMENT RECORDED U/S 131 AND ALSO DURING THE COURSE OF SEARCH. THE FACT THAT THE GOLD BULLION BELONGED TO THE ASSESSEE COMPANY WAS NOT DISPUTED AND ACCEPTED BY SRI R.SATISH, VICE PRESIDENT OF THE COMPANY. THEREFORE, THE AO ISSUED NOTICE U /S 153C OF THE ACT AND TAKEN UP THE CASE FOR SCRUTINY. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD PURCHASED CUT AND POLISHED DIAMONDS OF RS.12,00,02,396/ - FROM S RI GRANDHI MANOJ KUMAR (HUF) WHO IS HOLDING CONTROLLI NG STAKE IN THE COMPANY . SRI GRANDHI MANOJ KUMAR (HUF) STATED 4 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM TO HAVE PURCHASED THE SAID DIAMONDS FROM TWO PARTIES VIZ. M/S PANKAJ EXPORTS AND ASTHA IMPEX ON 30.03.2010. THE SAID DIAMONDS WERE SHOWN AS CLOSING STOCK IN THE BOOKS OF M/S GRANDHI MANOJ KUMAR (HUF) (VENDOR) AS AT THE EN D OF THE FINANCIAL YEAR 2009 - 10 AND SOLD TO THE ASSESSEE COMPANY ON 01.04.2010 . SRI GRA NDHI MANOJ KUMAR, HUF IS HAVING 75.01% SHARES IN THE ASSESSEE COMPANY WHICH IS THE SUBSTANTIAL INTEREST TO CONTROL AND MANAGE TH E AFFAIRS OF THE COMPANY . THE AO IN THE CASE OF M/S GRANDHI MANOJ KUMAR (HUF) FOR THE A.Y. 2010 - 11 OBSERVED THAT THE DIAMONDS STATED TO HAVE BEEN PURCHASED BY THE VENDOR FROM M/S ASTHA IMPEX AND M/S PANKAJ EXPORTS WERE ACCOMMODATION ENTRIES AND BOGUS PURCHASES AS PER THE INFORMATION RECEIVED FROM THE INCOME TAX INVESTIGATION WING, MUMBAI. M/S BHAN WARILAL JAIN IS OPERATING AND MANAGING 70 BENAMI CONCERNS IN THE NAMES OF THEIR EMPLOYEES THROU GH WHICH THEY PROVIDE D THE ACCOMMODATION ENTRIES OF UNSECURED LOANS A N D BOGUS PURCHASES FOR VARIOUS BENEFICIARIES. THE ABOVE MENTIONED TWO CONCERNS ARE ONE AMONG THE 70 BENAMI CONCERNS OPERATED BY M/S BHANWARILAL JAIN. INCOME TAX INVESTIGATION WING OF MUMBAI CONDUCTED SEARCHES IN THE CASE OF BHANWARILAL JAIN GROUP AND FOUND THE ABOVE FACT OF PROVIDING ACCOMMODATION ENTRIES AND THE HUF CONCERN I S ONE OF THE CONCERNS SAID TO HAVE RECEIVED THE ACCOMMODATION ENTRIES IN RESPECT OF 5 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM PURCHASE OF DIAMONDS. THER EFORE, THE AO HELD THAT THE PURCHASES MADE BY THE HUF CONCERN WAS BOGUS PURCHASES AND ACCORDINGLY MADE THE ADDITION IN THE HANDS OF THE HUF DURING THE ASSESSMENT YEAR 2010 - 11. T HE SAID STOCKS OF CUT AND POLISHED DIAMONDS WERE SOLD TO THE ASSESSEE COMPANY . A S PER THE FINDING OF THE AO IN THE CASE OF HUF, THE SAID PURCHASES WERE BOGUS . THEREFORE, THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS NOT MADE ACTUAL PURCHASES, ONLY ACCOMMODATION ENTRIES WERE MADE TO INFLATE THE EXPENDITURE, HENCE ASSESSED THE SAID AMO UNT OF RS.12,00,02,396/ - IN THE HANDS OF THE ASSESSEE COMPANY ON PROTECTIVE BASIS. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND CHALLENGED THE APPEAL ON MERITS AS WELL AS ON LEGAL GROUNDS . AS FAR AS THE LEGAL GROUNDS ARE CONCERNED, THE ASSESSEE RAISED THE VALIDITY OF THE ADDITIONS MADE U/S 153C WITHOUT HAVING THE SEIZED MATERIAL AS WELL AS THE VALIDITY OF ASSESSMENT MADE ON PROTECTIVE BASIS AFTER COMPLETION OF SUBSTANTIVE ASSESSMENT . THE LD.CIT(A) UPHELD THE ISSUE OF NOTICE U/S 153C . HOWEVER, THE LD. CIT(A) DELETED THE ADDITION MADE IN THE HANDS OF THE ASSESSEE, SINCE THE SUBSTANTIVE ASSESSMENT WAS COMPLETED AND THE ADDITION WAS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF M/S GRANDH I MANOJ KUMAR (HUF) . 6 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 5. AGAINST THE ORDER OF THE LD. CIT (A) , THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL PROCEEDINGS, THE ASSESSEE SUBMITTED A PETITION FOR CONSIDERING THE FOLLOWING GROUND WHICH WAS DECIDED AGAINST HIM BY THE LD.CIT (A). THE LD.AR REQUESTED FOR ADJUDICATING THE FOLLOWING GROUND IN THIS APPEAL. THE GROUND RAISED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES READS AS UNDER : ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE LD.CIT(A) IS JUSTIFIED IN REJECTING THE PLEA RAISED BY THE APPELLANT THAT THE ADDITION OF RS.12,00,02,396/ - MADE BY THE ASSESSING OFFICER IS OUTSIDE THE SCOPE OF ASSESSMENT U/S 143(3) R.W.S 153C OF THE INCOME TAX ACT,1961 THE ABOVE GROUND HAS BEEN REQUESTED TO CONSIDER UNDER RULE 27 OF THE ITAT RULES. THE LD.AR SUBMITTED THAT THE ASSESSEE COULD NOT RAISE THIS ISSUE BEFORE THE ITAT AS THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE ON DIFFERENT GROUND. THE AR FURTHER SUBMITTED THAT THE ASSESSEE IS ENTITLED TO SUPPORT THE ORDER OF THE LD.CIT(A) ON A GROUND DECIDED BY HIM AGAINST THE ASSESSEE. 5.1 ON THE OTHER HAND, LD.DR OBJECTED FOR ADMISSION OF THE ABOVE GROUND WITH REGARD TO VALIDITY OF THE ASSESSMENT MADE U/S 153C R.W.S. 143(3) OF THE ACT. THE LD.DR SUBMITTED THAT THE AS SESSEE HAS NEITHER FILED THE APPEAL 7 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM NOR FILED THE CROSS OBJECTIONS, THEREFORE, THE ASSESSEE HAS NO LOCUS STANDI FOR RAISING A SEPARATE GROUND UNDER RULE 27 OF ITAT RULES. HENCE, ARGUED THAT THE GROUND RAISED BY THE LD.AR IS UNADMISSIBLE. ACCORDINGLY, REQ UESTED TO REJECT THE SAID GROUND. 5.2 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE LD.CIT(A) HAS OTHERWISE ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO. HENCE, THERE IS NO REASON TO FILE AN APPEAL BY THE ASSESSEE AGAINS T THE ORDER OF THE LD.CIT(A). THE ASSESSEE CHALLENGED ADDITION MADE BEFORE THE CIT(A) STATING THAT IT WAS BEYOND THE SCOPE OF SECTION 153C OF THE ACT. THOUGH THE LD.CIT(A) UPHELD THE VALIDITY OF ISSUE OF NOTICE U/S 153C DELETED THE PROTECTIVE ASSESSMENT MADE IN THE HANDS OF THE ASSESSEE SINCE THE SUBSTANTIVE ASSESSMENT WAS MADE IN THE HANDS OF THE M/S GRANDHI MANOJ KUMAR (HUF). THE REVENUE HAS CHALLENGED THE ORDER OF THE LD.CIT(A) AND FILED THE APPEAL. THEREFORE THE ASSESSEE TO SUPPORT HIS CASE REQUESTED US CONSIDER THE ABOVE GROUND UNDER RULE 27 OF ITAT RULES. AT THIS JUNCTURE IT IS RELEVANT TO REFER RULE 27 OF ITAT RULES WHICH READS AS UNDER : RE SPONDENT MAY SUPPORT ORDER ON GROUNDS DECIDED AGAINST HIM. 27. THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM . 8 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM FROM THE PLAIN READING OF RULE 27OF ITAT RULES, IT PERMITS THE ASSESSEE TO SUPPORT THE ORDER ON GROUNDS DECIDED AGAINST THE ASSESSEE. ON SIMILAR FACTS HONBLE GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL CIT, VADODARA VS. SUN PHARMACEUTICAL INDUSTRIES 86 TAXMAN.COM 148 CONSIDERED THE IDENTICAL ISSUE AND HELD AS UNDER: 11. TO PUT THE CONTROVERSY BEYOND DOUBT, RULE 27 OF THE RULES MAKES IT CLEAR THAT THE RESPONDENT IN APPEAL BEFORE THE TRIBUNAL EVEN WITHOUT FILING AN APPEAL CAN SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. IT CAN BE EASILY APPRECIATED THAT ALL PRAYERS IN THE APPEAL MAY BE ALLOWED BY THE COMMISSIONER (APPEALS), HOWEVER, SOME OF THE CONTENTIONS OF THE APPELLANT MAY NOT HAVE APPEALED TO THE COMMISSIONER. WHEN SUCH AN ORDER OF THE COMMISSIONER IS AT LARGE BEFORE TH E TRIBUNAL, THE RESPONDENT BEFORE THE TRIBUNAL WOULD BE ENTITLED TO DEFEND THE ORDER OF THE COMMISSIONER ON ALL GROUNDS INCLUDING ON GROUNDS HELD AGAINST HIM BY THE COMMISSIONER WITHOUT FILING AN INDEPENDENT APPEAL OR CROSS - OBJECTION. 12. RULE 27 OF THE RULES IS AKIN TO RULE 22 ORDER XLI OF THE CIVIL PROCEDURE CODE. SUB - RULE (1) PROVIDES THAT ANY RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED FROM ANY PART OF THE DECREE, MAY NOT ONLY SUPPORT THE DECREE BUT MAY ALSO STATE THAT THE FINDING AGAINST HIM IN THE C OURT BELOW IN RESPECT OF ANY ISSUE OUGHT TO HAVE BEEN DECIDED IN HIS FAVOUR; AND MAY ALSO TAKE ANY CROSS - OBJECTION TO THE DECREE WHICH HE COULD HAVE TAKEN BY WAY OF AN APPEAL. IN CASE OF VIRDHACHALAMPILLAI V. CHALDEAN SYRIAN BANK LTD. AIR 1964 SC 1425 IN CO NTEXT OF THE SAID RULE THE SUPREME COURT OBSERVED AS UNDER: '32. LEARNED COUNSEL FOR THE APPELLANT RAISED A SHORT PRELIMINARY OBJECTION THAT THE LEARNED JUDGES OF THE HIGH COURT HAVING CATEGORICALLY FOUND THAT THERE WAS AN ANTECEDENT DEBT WHICH WAS DISCHAR GED BY THE SUIT - MORTGAGE LOAN ONLY TO THE EXTENT OF RS. 59,000/ - AND ODD AND THERE BEING NO APPEAL BY THE BANK AGAINST THE FINDING THAT THE BALANCE OF THE RS. 80,000/ - HAD NOT GONE IN DISCHARGE OF AN ANTECEDENT DEBT, THE RESPONDENT WAS PRECLUDED FROM PUTTI NG FORWARD A CONTENTION THAT THE ENTIRE SUM OF RS. 80,000/ - COVERED BY EXS. A AND B WENT FOR THE DISCHARGE OF ANTECEDENT DEBTS. WE DO NOT SEE ANY SUBSTANCE IN THIS OBJECTION, BECAUSE THE RESPONDENT IS ENTITLED TO CANVASS THE CORRECTNESS OF FINDINGS AGAINST 9 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM IT IN ORDER TO SUPPORT THE DECREE THAT HAS BEEN PASSED AGAINST THE APPELLANT.' 13. LIKEWISE, IN CASE OF S. NAZEER AHMED V. STATE BANK OF MYSORE AIR 2007 SCW 766 IT WAS HELD AND OBSERVED AS UNDER: '7. THE HIGH COURT, IN OUR VIEW, WAS CLEARLY IN ERROR IN HO LDING THAT THE APPELLANT NOT HAVING FILED A MEMORANDUM OF CROSS - OBJECTIONS IN TERMS OF ORDER XLI RULE 22 OF THE CODE, COULD NOT CHALLENGE THE FINDING OF THE TRIAL COURT THAT THE SUIT WAS NOT BARRED BY ORDER II RULE 2 OF THE CODE. THE RESPONDENT IN AN APPEA L IS ENTITLED TO SUPPORT THE DECREE OF THE TRIAL COURT EVEN BY CHALLENGING ANY OF THE FINDINGS THAT MIGHT HAVE BEEN RENDERED BY THE TRIAL COURT AGAINST HIMSELF. FOR SUPPORTING THE DECREE PASSED BY THE TRIAL COURT, IT IS NOT NECESSARY FOR A RESPONDENT IN TH E APPEAL, TO FILE A MEMORANDUM OF CROSS - OBJECTIONS CHALLENGING A PARTICULAR FINDING THAT IS RENDERED BY THE TRIAL COURT AGAINST HIM WHEN THE ULTIMATE DECREE ITSELF IS IN HIS FAVOUR. A MEMORANDUM OF CROSS - OBJECTIONS IS NEEDED ONLY IF THE RESPONDENT CLAIMS A NY RELIEF WHICH HAD BEEN NEGATIVED TO HIM BY THE TRIAL COURT AND IN ADDITION TO WHAT HE HAS ALREADY BEEN GIVEN BY THE DECREE UNDER CHALLENGE. WE HAVE THEREFORE NO HESITATION IN ACCEPTING THE SUBMISSION OF THE LEARNED COUNSEL FOR THE APPELLANT THAT THE HIGH COURT WAS IN ERROR IN PROCEEDING ON THE BASIS THAT THE APPELLANT NOT HAVING FILED A MEMORANDUM OF CROSS - OBJECTIONS, WAS NOT ENTITLED TO CANVASS THE CORRECTNESS OF THE FINDING ON THE BAR OF ORDER II RULE 2 RENDERED BY THE TRIAL COURT.' 14. SIMILAR ISSUE CA ME - UP BEFORE DIVISION BENCH OF THIS COURT IN CASE OF DAHODSAHAKARIKHARIDVECHANSANGH LTD. V. CIT [2006] 282 ITR 321/[2005] 149 TAXMAN 456 (GUJ.) IN WHICH THE COURT OBSERVE D AS UNDER: '17. TAKING UP THE SECOND ISSUE FIRST, THE TRIBUNAL HAS COMMITTED AN ERROR IN LAW IN HOLDING THAT THE ASSESSEE HAVING NOT FILED CROSS - OBJECTION AGAINST FINDINGS ADVERSE TO THE ASSESSEE IN THE ORDER OF COMMISSIONER (APPEALS), THE SAID FINDINGS H AD BECOME FINAL AND REMAINED UNCHALLENGED. THE TRIBUNAL APPARENTLY LOST SIGHT OF THE FACT THAT THE ASSESSEE HAD SUCCEEDED BEFORE THE COMMISSIONER (APPEALS). THE APPEAL HAD BEEN ALLOWED AND THE PENALTY LEVIED BY THE ASSESSING OFFICER DELETED IN ENTIRETY. IN FACT, THERE WAS NO OCCASION FOR THE ASSESSEE TO FEEL AGGRIEVED AND HENCE, IT WAS NOT NECESSARY FOR THE ASSESSEE TO PREFER AN APPEAL. THE POSITION IN LAW IS WELL SETTLED THAT A CROSS OBJECTION, FOR ALL INTENTS AND PURPOSES, WOULD AMOUNT TO AN APPEAL AND TH E CROSS OBJECTOR WOULD HAVE THE SAME RIGHTS WHICH AN APPELLANT HAS BEFORE THE TRIBUNAL. 18. SECTION 253 OF THE ACT PROVIDES FOR APPEAL TO THE TRIBUNAL. UNDER SUB - SECTION (1), AN ASSESSEE IS GRANTED RIGHT TO FILE AN APPEAL; UNDER SUB - SECTION (2), THE COMMIS SIONER IS GRANTED A RIGHT TO FILE APPEAL BY 10 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ISSUING NECESSARY DIRECTION TO THE ASSESSING OFFICER; SUB - SECTION (3) PRESCRIBES THE PERIOD OF LIMITATION WITHIN WHICH AN APPEAL COULD BE PREFERRED. SECTION 253(4) OF THE ACT LAYS DOWN THAT EITHER THE ASSESSING O FFICER OR THE ASSESSEE, ON RECEIPT OF NOTICE THAT AN APPEAL AGAINST THE ORDER OF COMMISSIONER (APPEALS) HAS BEEN PREFERRED UNDER SUB - SECTION (1) OR SUBSECTION (2) BY THE OTHER PARTY, MAY, NOTWITHSTANDING THAT NO APPEAL HAD BEEN FILED AGAINST SUCH AN ORDER OR ANY PART THEREOF, WITHIN 30 DAYS OF THE NOTICE, FILE A MEMORANDUM OF CROSS OBJECTIONS VERIFIED IN THE PRESCRIBED MANNER AND SUCH MEMORANDUM SHALL BE DISPOSED OF BY THE TRIBUNAL AS IF IT WERE AN APPEAL PRESENTED WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER SUB - SECTION (3). THEREFORE, ON A PLAIN READING OF THE PROVISION, IT TRANSPIRES THAT A PARTY HAS BEEN GRANTED AN OPTION OR A DISCRETION TO FILE CROSS OBJECTION. 19. IN CASE A PARTY HAVING SUCCEEDED BEFORE COMMISSIONER (APPEALS) OPTS NOT TO FILE CROSS OBJECTION EVEN WHEN AN APPEAL HAS BEEN PREFERRED BY THE OTHER PARTY, FROM THAT IT IS NOT POSSIBLE TO INFER THAT THE SAID PARTY HAS ACCEPTED THE ORDER OR THE PART THEREOF WHICH WAS AGAINST THE RESPONDENT. THE TRIBUNAL HAS, IN THE PRESENT CASE, UNFORTUNATEL Y DRAWN SUCH AN INFERENCE WHICH IS NOT SUPPORTED BY THE PLAIN LANGUAGE EMPLOYED BY THE PROVISION. 20. IF THE INFERENCE DRAWN BY THE TRIBUNAL IS ACCEPTED AS A CORRECT PROPOSITION, IT WOULD RENDER RULE 27 OF THE TRIBUNAL RULES REDUNDANT AND NUGATORY. IT IS N OT POSSIBLE TO INTERPRET THE PROVISION IN SUCH MANNER. ANY INTERPRETATION PLACED ON A PROVISION HAS TO BE IN HARMONY WITH THE OTHER PROVISIONS UNDER THE ACT OR THE CONNECTED RULES AND AN INTERPRETATION WHICH MAKES OTHER CONNECTED PROVISIONS OTIOSE HAS TO B E TO AVOIDED. RULE 27 OF THE TRIBUNAL RULES IS CLEAR AND UNAMBIGUOUS. THE RIGHT GRANTED TO THE RESPONDENT BY THE SAID RULE CANNOT BE TAKEN AWAY BY THE TRIBUNAL BY REFERRING TO PROVISIONS OF SECTION 253(4) OF THE ACT. THE TRIBUNAL WAS, THEREFORE, IN ERROR I N HOLDING THAT THE FINDING RECORDED BY THE COMMISSIONER (APPEALS) REMAINED UNCHALLENGED SINCE THE ASSESSEE HAD NOT FILED CROSS OBJECTIONS.' 15. THE FIRST QUESTION IS, THEREFORE, ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAS CHALLED THE VALIDITY OF THE ADDITION MADE U/S 143(3) R.W.S. 153C OF THE ACT BEFORE THE LD.CIT(A) AND THE SAID 11 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM GROUND WAS DECIDED BY THE LD.CIT(A) AGAINST THE ASSESSEE, HOWEVER THE LD.CIT(A) GRANTED THE COMPLETE R E LIEF AND DELETED THE ENTIRE ADDITION MADE BY THE AO AND THE ASSESSEE HAS NO GRIEVANCE. SINCE THE FACTS ARE SIMILAR TO THAT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT (SUPRA) AND THE ITAT RULE 27 PERMIT THE ASSESSEE TO SUPPORT HIS CASE ON ANY GROUND DECIDED BY THE LOWER AUTHORITIES, WE AGREE THAT THE PETITION FILED BY THE LD.AR FOR ADJUDICATING THE ABOVE GROUND UNDER RULE 27 IS PERMISSIBLE AND ACCORDINGLY ADMIT THE PETITION. 6. THE ISSUE RAISED BY THE LD. AR IN THE PETITION UNDER RULE 27 GOES TO THE ROOT OF THE CASE AND THE VALIDITY OF ENTIRE ASSESSMENT AND THIS IS DEPENDENT ON THIS GROUND. HENCE, WE CONSIDER IT IS NECESSAY TO ADJUDICATE ABOVE GROUND UNDER RULE 27 FIRST, BEFORE TAKING UP ANY OTHER GROUND RAISED BY THE REVENUE IN IT S APPEAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ADDITION OF RS.12,00,02,396/ - WAS MADE IN THE HANDS OF SRI GRANDHI MANOJ KUMAR(HUF) FOR THE ASSESSMENT YEAR 2010 - 11 ON SUBSTANTIVE BASIS AND PROTECTIVE LY IN THE HAN DS OF THE ASSESSEE. THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS MADE U/S 153C R.W.S. 143(3) OF THE ACT . THERE WAS SEARCH IN THE CASE OF SRI K.APPA R AO AND DURING THE COURSE OF SEARCH, GOLD WEIGHING 5000 GMS. W AS FOUND ON 04 .04.2014 WHICH WAS RELEVANT TO T H E FINANCIAL 12 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM YEAR 2014 - 15 AND THE AS SESSMENT YEAR INVOLVED WAS 2015 - 16. ASSESSMENT FOR THE ASSESSMENT YEAR 2011 - 12 WAS C OMPLETED U/S 143(3) ON 20.05.2013. THERE WAS NO OTHER MATERIAL AVAILABLE DURING THE COURSE OF SEARCH INDICATING ANY SURP LUS STOCK ESCAPE MENT OF INCOME IN THE HANDS OF THE ASSESSEE. SINCE THE ASSESSMENT FOR THE ASSESSMENT YEAR 2011 - 12 WAS COMPLETED, NO NOTICE U/S 153C CAN BE ISSUED AS HELD BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY (2 017) [397 ITR 0344] WITHOUT HAVING THE INCRIMINATING MATERIAL . THE LD.AR FURTHER SUBMITTED THAT ON THE SIMILAR FACTS, THE HONBLE ITAT HAS CONSIDERED SIMILAR ISSUE AND HELD THAT NO NOTICE U/S 153C CAN BE ISSUED IN THE CASE OF COMPLETED ASSESSMENTS WITHOUT HAVING THE INCRIMINATING MATERIAL . T HE ASSESSEE ALSO FURNISHED THE COPY OF NOTICE ISSUED U/S 153C DATED 24.12.2014 AND ARGUED THAT THE NOTICE ISSUED U/S 153C IS BAD IN LAW AND THE ASSESSMENT MADE U/S 153C IS VOID ABINITIO. THE LD.A.R FURTHER ARGUED THAT T HERE WAS NO INCRIMINATING MATERIAL RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FOUND IN THE PREMISES OF SEARCHED PERSON THEREFORE THE AO IS NOT PERMITTED TO MAKE ANY ADDITION U/S 153C OF THE A CT. THE ADDITIONS MADE BY THE AO WERE DECLARED IN TH E REGULAR BOOKS OF ACCOUNTS, HENCE 153C DOES NOT GIVE SCOPE TO EXAMINE THE ISSUES WHICH WERE DECLARED IN THE BOOKS OF ACCOUNTS, THUS ARGUED THAT ADDITION MADE BY 13 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM THE AO REQUIRED TO BE DELETED. THE LD.DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 7 . W E HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. S EARCH U/S 132 WAS CONDUCTED IN THE CASE OF SRI K.APPA R AO, THE EMPLOYEE OF THE ASSESSEE COMPANY AND FOUND AND SEIZED THE GOLD WEIGHING 50 00GMS (NET) WHICH WAS BELONGING TO THE ASSESSEE AND THERE WAS NO DISPUTE . THE GOLD WAS SEIZED U/S 132 ON 04.04.2014 RELATING TO THE ASSESSMENT YEAR 2015 - 16. THERE IS NO OTHER MATERIAL FOUND RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2011 - 12. THOUGH THE LD.CIT(A) IN HIS ORDER UPHELD THE NOTICE ISSUED U/S 153C STATING THAT THE INFORMATION REGARDING THE POSSESSION OF GOLD AND JEWELLERY IN THE HANDS OF SRI K.APPA R AO IS BELONGING TO THE ASSESSEE IS INCRIM INATING, THE SA ID MATERIAL WAS NOT RELEVANT TO THE ASSESSMENT YEAR 2011 - 12. THE CIT(A) FURTHER OBSERVED THAT THERE WAS SEARCH IN THE CASE OF BHANWARILAL JAIN AND OTHERS, WHEREIN THE INFORMATION WAS RECEIVED WITH REGARD TO PURCHASE OF GOLD AND DIAMONDS . T HE SAID INFORMATIO N WAS RELATED TO SRI GRANDHI MANOJ KUMAR, HUF AND THAT WAS RELATED TO THE ASSESSMENT YEAR 2009 - 10, BUT NOT 2011 - 12. THEREFORE, THE INFORMATION RECEIVED WITH REGARD TO THE BOGUS PURCHASE OF DIAMONDS AS 14 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ACCOMMODATION ENTRIES FROM PANKAJ EXPORTS AND ASTHA IM PEX CANNOT BE IMPO RTED FOR ISSUE OF NOTICE U/S 153C , SINCE THE INFORMATION WAS NOT RELATED TO THE ASSESSEE. THE LD. AR FURNISHED THE COPY OF NOTICE ISSUED U/S 153C TO THE ASSESSEE DATED 24.12.2014, WHEREIN, THE NOTICE WAS ISSUED CONSEQUENT TO SEARCH CONDUC TED IN THE CASE OF SRI K.APPA R AO BUT NOT M/S BHANWARILAL JAIN AND OTHERS . AS PER THE INFORMATION AVAILABLE ON RECORD, THERE WAS NO OTHER INCRIMINATING MATERIAL AVAILABLE TO THE AO RELATING TO THE ASSESSMENT YEAR 2011 - 12 IN THE CASE OF THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED WAS 143(3) AND THERE WAS NO INCRIMINATING MATERIAL RELATING TO THE IMPUGNED ASSESSMENT YEAR . THE ADDITION MADE BY THE AO IS VERY MUCH AVAILABLE IN THE BOOKS OF ACCOUNTS WHICH WAS EXAMINED BY THE AO AT THE TIME OF ORIGINAL ASSESSMENT MADE U/S 143(3) . 7 .1 . AS PER THE PROVISIONS OF SECTION 153C OF THE ACT THE A.O. IS REQUIRED TO ISSUE THE NOTICE ONLY ON THE BASIS OF MONEY, BULLION, JEWELLERY, OTHER ARTICLE OR THING SEIZED OR REQUISITIONED BELONGED TO OR ANY BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITI ONED PERTAINS TO OR PERTAIN TO THE ASSESSEE. FOR READY REFERENCE WE EXTRACT SECTION 153C OF THE ACT, WHICH READS AS UNDER; 15 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 153C(1) NOT WITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHER E THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BO OKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON [AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR R EASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCO ME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB - SECTION (10 OF SECTION 153A]. 7 .1.1. ON THE IDENTICAL FACTS AND CIRCUMSTANCES, THIS TRIBUNAL IN THE CASE OF LALITHA DEVI VS. ASSISTANT COMMISSIONER OF INCOME TAX, (2018) 52 CCH 0472 VISHAKAPATNAM(TRIB) HELD THAT THE INVOKING PROVISIONS OF SECTION 153C OF THE ACT WITHOUT HAVING INCRIMINATING MATERIAL IS BAD IN LAW. 7 .1.2. HONBLE SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY, CITED SUPRA HELD AS UNDER . 18. THE ITAT PERMITTED THIS ADDITIONAL GROUND BY GIVING A REASON THAT IT WAS A JURISDICTIONAL ISSUE TAKEN UP ON THE BASIS OF FACTS ALREADY ON THE RECORD AND, THEREFORE, COULD BE RAISED. IN THIS BEHALF, IT WAS NOTED BY THE ITAT THAT AS PER THE PROVISIONS OF SE CTION 153C OF THE ACT, INCRIMINATING MATERIAL WHICH WAS SEIZED HAD TO PERTAIN TO THE ASSESSMENT YEARS IN QUESTION AND IT IS AN UNDISPUTED FACT THAT THE DOCUMENTS WHICH WERE SEIZED DID NOT ESTABLISH ANY CO - RELATION, DOCUMENT - WISE, WITH THESE FOUR ASSESSMENT YEARS. SINCE THIS REQUIREMENT UNDER SECTION 153C OF THE ACT IS ESSENTIAL FOR ASSESSMENT UNDER THAT PROVISION, IT BECOMES A JURISDICTIONAL FACT. WE FIND THIS REASONING TO BE LOGICAL AND VALID, HAVING REGARD TO THE PROVISIONS OF SECTION 153C OF THE ACT. PAR A 9 OF THE ORDER OF THE ITAT REVEALS THAT THE ITAT HAD SCANNED THROUGH THE SATISFACTION NOTE AND THE MATERIAL WHICH WAS DISCLOSED THEREIN WAS CULLED OUT AND IT SHOWED THAT THE SAME BELONGS TO ASSESSMENT YEAR 2004 - 05 OR 16 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM THEREAFTER. AFTER TAKING NOTE OF THE MATERIAL IN PARA 9 OF THE ORDER, THE POSITION THAT EMERGES THEREFROM IS DISCUSSED IN PARA 10. IT WAS SPECIFICALLY RECORDED THAT THE COUNSEL FOR THE DEPARTMENT COULD NOT POINT OUT TO THE CONTRARY. IT IS FOR THIS REASON THE HIGH COURT HAS ALSO GIVEN ITS IMPR IMATUR TO THE AFORESAID APPROACH OF THE TRIBUNAL. THAT APART, LEARNED SENIOR COUNSEL APPEARING FOR THE RESPONDENT, ARGUED THAT NOTICE IN RESPECT OF ASSESSMENT YEARS 2000 - 01 AND 2001 - 02 WAS EVEN TIME BARRED. 19. WE, THUS, FIND THAT THE ITAT RIGHTLY PERMITTE D THIS ADDITIONAL GROUND TO BE RAISED AND CORRECTLY DEALT WITH THE SAME GROUND ON MERITS AS WELL. ORDER OF THE HIGH COURT AFFIRMING THIS VIEW OF THE TRIBUNAL IS, THEREFORE, WITHOUT ANY BLEMISH. BEFORE US, IT WAS ARGUED BY THE RESPONDENT THAT NOTICE IN RESP ECT OF THE ASSESSMENT YEARS 2000 - 01 AND 2001 - 02 WAS TIME BARRED. HOWEVER, IN VIEW OF OUR AFOREMENTIONED FINDINGS, IT IS NOT NECESSARY TO ENTER INTO THIS CONTROVERSY. 20. INSOFAR AS THE JUDGMENT OF THE GUJARAT HIGH COURT RELIED UPON BY THE LEARNED SOLICITOR GENERAL IS CONCERNED, WE FIND THAT THE HIGH COURT IN THAT CASE HAS CATEGORICALLY HELD THAT IT IS AN ESSENTIAL CONDITION PRECEDENT THAT ANY MONEY, BULLION OR JEWELLERY OR OTHER VALUABLE ARTICLES OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISIT IONED SHOULD BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. THIS PROPOSITION OF LAW LAID DOWN BY THE HIGH COURT IS CORRECT, WHICH IS STATED BY THE BOMBAY HIGH COURT IN THE IMPUGNED JUDGMENT AS WELL. THE JUDGMENT OF THE GUJ ARAT HIGH COURT IN THE SAID CASE WENT IN FAVOUR OF THE REVENUE WHEN IT WAS FOUND ON FACTS THAT THE DOCUMENTS SEIZED, IN FACT, PERTAIN TO THIRD PARTY, I.E. THE ASSESSEE, AND, THEREFORE, THE SAID CONDITION PRECEDENT FOR TAKING ACTION UNDER SECTION 153C OF TH E ACT HAD BEEN SATISFIED. 7 . 2 IN THE INSTANT CASE THE AO HAS NO T MADE ANY ADDITION ON THE BASIS OF INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE , FOUND FROM THE SE ARCHED PERSON U/S 132 OF THE A C T. THE ADDITION WAS MADE ON THE BASIS OF ENTRIES IN THE RE GULAR BOOKS ACCOUNTS REVISITING THE SAME. THEREFORE, FACTS OF THE CASE ARE SQUARELY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF LALITHA DEVI AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE CITED. R ESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT AND THE DECISION OF THIS TRIBUNAL, WE HOLD THAT THE NOTICE ISSUED U/S 153C WITHOUT 17 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM JURISDICTION AND IS INVALID . THUS THE CONSEQUENT ADDIT ION S MADE IN THE ORDER IS BEYOND THE SCOPE OF SECTION 1 43(3) R.W.S. 153C AND ARE UNSUSTAINABLE. THEREFORE WE SET ASIDE THE ORDERS OF THE LD.CIT(A) ON THIS GROUND AND DELETE THE ADDITION OF RS.12,00,02,396/ - . ACCORDINGLY WE ALLOW THE GROUND RAISED BY THE ASSESSEE UNDER RULE 27 OF ITAT RULES AND DISMISS THE APP EAL OF THE REVENUE ON THIS GROUND. 8 . THE NEXT ISSUE IS THE VALIDITY OF PROTECTIVE ASSESSMENT MADE IN THE HANDS OF THE ASSESSEE. THE REVENUE HAS FILED THE APPEAL AGITATING THE ISSUE OF PROTECTIVE ASSESSMENT. HAVING HELD THAT THE NOTICE ISSUED U/S 153C INVALID AND DEL E TED THE ADDITIONS MADE IN THE ASSESSMENT HOLDING THAT THEY ARE BEYOND THE SCOPE OF SECTION 143(3) R.W.S 153C OF THE ACT , THE ISSUE OF PROTECTIVE ASSESSMENT IS ONLY OF ACADEMIC INTEREST. 9 . WE HEARD BOTH THE PARTIES ON THE ISSUE OF VALIDITY OF PROTECTIVE ASSESSMENT AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSEE PURCHASED THE JEWELLERY FROM M/S GRANDHI MLANOJ KUMAR (HUF) AND THE ASSESSING OFFICER HAS GIVEN A FINDING IN THE ORDER OF THE HUF THAT THE PURCHASE OF JEWELLERYWAS BOGUS AND ACCORDINGLY MADE THE ADDITION ON SUBSTANTIVE BASIS IN THE HANDS OF M/S GRANDHI MANOJ KUMAR (HUF) AND PROTECTIVELY IN THE HANDS OF THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE 18 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM HAS PURCHASED THE DIAMONDS FROM M/S MANOJ KUMAR (HUF) AND THE PAYMENT WAS MADE THROUGH THE RUNNING ACCOUNT THUS ESTABLISHED THE SOURCE OF PAYMENT AND THE SAID DIAMONDS WERE TAKEN IN TO STOCK.THERE WAS NO EVIDENCE TO SHOW THAT THE VENDOR HAS NOT SOLD THE DIAMONDS TO THE ASSESSEE. THE AO HAS COMPLETED THE ORIGINAL ASSESSMENT U/S 143(3) AND ACCEPTED THE PURCHASESAND BOOK STOCKS AND SUBSEQUENT SALES DECLARED BY THE ASSESSEE. WITHOUT THE PURCHASES THERE CANNOT BE STOCKS OR THE SALES. WHILE MAKING THE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE THE LD.AO DID NOT CONSIDER THE ISSUE OF SUNBSEQUENT SALES OR THE THE STOCKS AND THERE WAS NO DISPUTE WITH REGARD TO SOURCE FOR PURCHASE OF THE DIAMONDS.IF THE PURCHASES ARE CONSIDERED AS BOGUS THE REPRESENTING STOCKS OR THE SALES ALSO REQUIRED TO BE REDUCED FROM THE TRADING ACCOUNT EXCEPT THE PROFIT ELEMENT OF PROFIT ON SALES.ONCE THE ASSESSING OFFICER ACCEPTS THE SALES OR THE STOCKS THERE IS NO CASE FOR SUSPECTING THE PURCHASES, UNLESS THE ASSESSING OFFICER ESTABLISHES THAT THER IS NO SOURCE FOR PURCHASES. IN THIS CASE THE ASSESSEE MADE THE PAYMENT THROUGH THE RUNNING ACCOUNT AND THE AO DID NOT DISPUTE THE AVAILABILITY OF MATCHING STOCKS OR THE SALES.FROM THE ABOVE DISCUSSION IT ESTABLISHED THAT THE ASSESSING OFFICER NEITHER DOUBTED THE SOURCE FOR PURCHASES NOR THE SALES OR THE REPRESENTING STOCKS. THERE FORE THERE IS NO CASE FOR MAKING ADDITION ON ACCOUNT OF PURCHASE OF 19 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM DIAMONDS,HENCE WE HOLD THAT THE AO ERRED IN MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. FURTHER, SINCE THE AO HAS MADE THE ADDITION SUBSTANTIVELY IN THE HANDS OF HUF, IN THE YEAR 2009-10 AND THERE WAS NO AMBIGUITY IN THE MIND OF THE ASSESSING OFFICER WITH REGARD T O THE BENEFICIARY , THERE IS NO C A SE FOR MAKING THE PROTECTIVE ASSESSMENT. PROTECTIVE ASSESSMENT IS MADE WHEN THERE IS AMBIGUITY WITH REGARD TO THE ACTUAL BENEFICIARY. IN THIS CASE THE AO HELD THAT THE PURCHASES WERE MADE BY M/S GRANDHI MANOJ KUMAR (HUF) ON ACCOMMODATION BILLS AND THE AO DID NOT DOUBT THE STOCKS IN THE HANDS OF THE HUF. IT IS EVIDENT FROM THE ASSESSM E NT ORDER AS THE AO DID NOT REDUCE THE VALUE OF STOCKS REPRESENTING THE BOGUS PURCHASES IN THE HANDS OF M/S GRANDHI MANOJ KUMAR (HUF).ONCE THE ASSESSING OFFICER MAKES THE ASSESSMENT SUBSTANTIVELY IN THE HANDS OF THE CORRECT ASSESSEE THE ADDITIONS MADE ON PROTECTIVE BASIS ARE UNSUSTAINABLE. 1 0 . SIMILAR ISSUE WAS CONSIDERED BY COORDINATE BENCH OF ITAT, DELHI ABENCH IN DCIT, CC-19, NEW DELHI VS. SMT. MALA KALSI (2018) 90 TAXMAN.COM 175 AND HELD AS UNDER 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDERS. ALL THE GROUNDS IN THE REVENUE'S APPEAL, IN SUBSTANCE, RELATE TO SOLITARY ISSUE OF DELETION OF PROTECTIVE ADDITION BY THE LD. CIT (A). THE REFORE, THE SAME ARE BEING CONSIDERED TOGETHER. WE FIND THAT AO IN THE ASSESSMENT ORDER ADMITTED THAT THE ENTIRE AMOUNT WHICH WAS ADDED TO THE 20 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM INCOME OF THE ASSESSEE ON 'PROTECTIVE BASIS' WAS ALREADY ASSESSED IN THE HANDS OF THE OVERSEAS COMPANIES ON 'SUBS TANTIVE BASIS'. IT WAS FURTHER NOTED THAT THE ASSESSING OFFICER DID NOT CONSIDER THE DETAILS FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT MADE THE ASSESSMENT OF THE ASSESSEE ON THE BASIS OF THE ASSESSMENT ORDERS OF THE OVERSEAS COM PANIES AND ALSO THAT OF HER HUSBAND SH. AJAY KALSI. WE FURTHER NOTE THAT ADDITION WHICH WAS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THE OVERSEAS COMPANIES WAS ALSO MADE IN THE HANDS OF SH. AJAY KALSI ON PROTECTIVE BASIS AND ALSO THE SAME AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE ON PROTECTIVE BASIS. THEREFORE, ADDITION OF THE SAME AMOUNT WAS MADE BY THE ASSESSING OFFICER IN THE HANDS OF THREE PERSONS I.E. (A) THE OVERSEAS COMPANIES, (B) SH. AJAY KALSI AND (C) SMT. MALA KALSI WHICH WAS UNWARRANTED AND UNJUSTIFIED. THE ADDITIONS MADE IN CASE OF THE OVERSEAS COMPANIES U/S 6(3) IS NOT RELEVANT TO THE CASE OF THE ASSESSEE AS SHE IS ONLY A SHAREHOLDER, AND WAS NOT ENTITLED TO DERIVE ANY BENEFIT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT DERIV E ANY BENEFIT FOR WHICH SHE IS LIABLE TO PAY TAXES THEREON AS PER THE INDIAN TAX LAWS. IT IS NOT OUT OF PLACE TO MENTION THAT WHEN ADDITION WAS ALREADY MADE IN THE HANDS OF THE OVERSEAS COMPANIES ON SUBSTANTIVE BASIS TREATING THEM AS RESIDENTS IN INDIA, TH ERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE SUCH AN ADDITION IN THE HANDS OF A SHARE HOLDER ON PROTECTIVE BASIS, WHEN NO BENEFIT WAS DERIVED BY HER FROM THESE COMPANIES TO PROTECT THE INTEREST OF REVENUE. IT IS NOTED THAT WITHOUT ASSESSING TH E INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER SIMPLY TRANSFERRED THE ADDITION MADE IN CASE OF THE OVERSEAS COMPANIES TO THE ASSESSMENT ORDER OF SH. AJAY KALSI ON THE GROUND THAT HE EXERCISED CONTROL AND MANAGEMENT OF THE AFFAIRS OF THE OVERSEAS COMPANIES AS LAID DOWN IN SECTION 6(3) OF THE I.T. ACT 1961 WITHOUT BRINING ON RECORD A CONCRETE AND SUBSTANTIAL EVIDENCE TO PROVE HIS ROLE. BASED ON THE ASSESSMENT OF SH. AJAY KALSI, BY VIRTUE OF BEING A 50% SHARE HOLDER IN MULTI A SSET HOLDINGS LTD., THE ASSESSING OFFICER MADE AN ADDITION OF SIMILAR AMOUNT IN CASE OF THE ASSESSEE MEANING THEREBY THAT THE ASSESSING OFFICER DID NOT ASSESS THE INCOME OF THE ASSESSEE BASED ON THE DETAILS FILED IN HER RETURN U/S 153A, BUT ASSESSED THE IN COME OF THE OVERSEAS COMPANIES IN HER HANDS WITHOUT ANY BASIS. WE FURTHER NOTE THAT IN THE CASE OF THE ASSESSEE'S HUSBAND SH. AJAY KALSI, A PROTECTIVE ADDITION WAS ALSO MADE ON IDENTICAL FACTS. IN THAT CASE LD. CIT (A) VIDE HIS ORDER DATED 27.04.2015 IN AP PEAL NO. 346/14 - 15 DISCUSSED THE FACTS PERTAINING TO THE PROTECTIVE ADDITION IN DETAIL AND DELETED THE ENTIRE PROTECTIVE ADDITION MADE BY THE ASSESSING OFFICER IN HIS CASE. SINCE, THE FACTS OF THE ASSESSEE'S CASE ARE SIMILAR TO THOSE OF HER HUSBAND, THE RE ASONS GIVEN BY THE LD. CIT (A) IN HIS ABOVE ORDER IN THE CASE OF SH. AJAY KALSI WILL APPLY MUTATIS MUTANDIS IN THE CASE OF THE ASSESSEE ALSO. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS AMOUNTING TO RS. 3,71,32,83,664/ - WAS RI GHTLY DELETED BY THE LD. CIT (A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT (A) AND REJECT THE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, THE REVENUE'S APPEAL IS DISMISSED. 21 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM SINCE THE FACTS OF THE ASSESSEES CASE ARE ALSO SIMILAR, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH OF ITAT, WE HOLD THAT HAVING MADE ADDITION SUBSTANTIVELY IN THE HANDS OF HUF, THE ADDITION MADE ON PROTECTIVE BASIS REQUIRED TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDIT IO N MADE IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS AND UPHOLD THE ORDER OF THE LD.CIT(A). THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.54/ VIZ /2018 - A.Y.2013 - 14 11 . FOR THE A.Y. 2013 - 14, THE AO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153 C ON TOTAL INCOME OF RS.23,07,01,225/ - . THE AO MADE THE FOLLOWING ADDITION S TO THE RETURNED INCOME . (I) SHORT TERM CAPITAL GAINS ON SALE OF WINDMILL RS.1,85,31,098/ - (II) SHORT ADMISSION OF RENT FROM JUKASO HOTEL RS.11,58,990/ - (III) DISALLOWANCE OF EXPENDITURE RELATING TO ADVANCE PAID FOR PREMISES RS.8,10,000/ - (IV) DISALLOWANCE OF EXPENDITURE RELATING TO EXEMP T INCOME RS.97,98,498/ - (V) COMMISSION PAID TO M/S G.MANOJ K UMAR (HUF) RS.52.58,428/ - (VI) DISCOUNT ON SALES RELATING TO CUSTOMERS PROVIDED B M/S G.MANOJ KUMAR (HUF) RS.87,64,043/ - 22 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM A GAINST THE ORDER OF THE AO, THE ASSESSE FILED APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSE. AGAINST THE ORDER OF THE CIT(A), THE ASSESSE CARRIED THE MATTER TO THE TRIBUNAL AND THE REVENUE HAS FILED CROSS APPEAL IN ITA 54/VIZ/2018. THE REVENUE S APPE AL IS RELATING TO THE DEPRECIATION OF WINDMILL AND COMPUTATION OF SHORT TERM CAPITAL GAINS ON SALE OF WINDMILL. 1 2 . THE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS SOLD WINDMILL FOR A CONSIDERATION OF 3,23,93,890/ - AND THE LAND FOR A SUM OF RS.8,00,000/ - AS PER THE MOU REACHED ON 11.04.2012 WITH M/S K.K.P.SPINNING MILLS LTD., 88 SALEM ROAD, NAMAKKAL, TAMIL NADU. T HE ASSESSEE, AFTER TAKIN G THE CLOSING WRITTEN DOWN VALUE OF RS.13,191 / - AS PER THE BOOKS OF ACCOUNTS SHOWN THE SALE PRICE AT RS.1,38,62,792/ - AND DISCLOSED CAPITAL GAIN OF RS.1,38,49,601/ - . THE AO DID NOT ACCEPT THE CAPITAL GAINS DECLARED B Y THE ASSESSEE AND C ONSIDERING THE BOOK VALUE, SALE CONSIDERATION AND THE VALUE OF LAND IN THE BOOKS OF ACCOUNTS T HE AO REWORKED THE SHORT TERM CAPITAL GAIN ON SALE OF WIND MILL AS UNDER CONSIDERATION RECEIVED FROM KKP MILLS RS.3,23,93,890/ - LESS COST OF ACQUISITION DEPRECIATED VALUE RS.13,1 91/ - -------------------- 23 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM SHORT TERM CAPITAL GAIN RS.3,23,80,699/ - SHORT TERM CAPITAL GAIN DISCLOSED RS.1,38,49,602/ - -------------------- UNDISCLOSED SHORT TERM CAPITAL GAIN RS.1,85,31,098/ - AND CALLED FOR THE EXPLANATION OF THE A SSESSEE AS TO WHY THE SHORT TERM CAPITAL GAINS SHOULD NOT BE ASSESSED AT RS.1,85,31,098/ - . 1 3 . THE ASSESSEE EXPLAINED THAT IT HAD SOLD THE WINDMILL ALONG WITH LAND OF 1.2 ACRES SITUATED AT RAJAMPATTI VILLAGE, PALANI WHICH WAS BOUGHT FOR A CONSIDERATION O F RS.2,06,280/ - AND FURTHER INCURRED DEVELOPMENT CHARGES AGGREGATING TO RS.1,13,87,440/ - AND THE AGGREGATE TOTAL COST OF LAND WAS RS.1,18,00,000/ - AND SET UP WIND MILL WITH A COST OF RS.6,87,05,414/ - . THEREFORE, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS BIFURCATED THE SALE PRICE TOWARDS THE COST OF THE LAND AND THE WIND MILL SEPARATELY AND THE INDEXED COS T OF LAND WORKED OUT TO RS. 1,93,71,098/ - AND THE BALANCE AMOUNT OF RS. 1,38,62,792 / - WAS APPORTIONED FOR WIND MILL UNIT. THE ASSESSEE ARGUED THAT IT HAS RIGHTLY OFFERED THE SHORT TERM CAP ITAL GAINS ON SALE OF WIND MILL BY ALLOCATING THE SALE PROCEEDS OF TH E WIND MILL TOWARDS THE LAND AND THE WINDMILL. HOWEVER, THE AO WAS OF THE VIEW THAT THE WIND MILL COST OF RS.6,87,05,414/ - INCLUDES THE INSTALLATION AND DEVELOPMENT OF THE LAND COST OF RS.1 , 18 , 00 , 000/ - AND THE WRITTEN DOWN VALUE OF WINDMILL 24 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM INCLUDING THE LAND COST WAS RS.13,191/ - , THUS NO SEPARATE ALLOCATION OF SALE CONSIDERATION TOWARDS THE LAND COST IS NECESSARY. THUS HELD THAT THE SHORT TERM CAPITAL GAINS ON SALE WIND MILL WORKS OUT RS.3,23,80,699/ - AND ACCORDINGLY MADE THE ADDITION OF RS.1,85,31,098/ - TOWARDS SHORT ADMISSION OF CAPITAL GAINS ON SALE OF LAND. 1 4 . ON APPEAL, T HE LD.CIT(A) HAS VERIFIED THE DETAILS OF THE FIXED ASSETS FROM THE BALANCE SHEET AND FOUND THAT THE ASSESSEE HAS CORRECTLY CLASSIFIED THE WIND MILL UNDER THE PLANT AND MACHINERY AND THE LAND WA S SHOWN INDEPENDENTLY IN THE FIXED ASSETS. ACCORDING TO THE LD.CIT(A), T HE COMPOSITE VALUE OF WIND MILL COST WAS RS.6 , 87 , 05,441/ - AND A CCORDINGLY GIVEN A FINDING THAT THE ASSESSEE HAS CLAIMED THE DEPRECIATION ONLY ON WIND MILL EXCLUDING COST OF THE LAND AND THE WRITTEN DOWN VALUE OF THE WIND MILL WAS RS.13,191 / - AS ON 31.03.2012 APART FROM THE LAND COST AT RS.1,18,00,000/ - . THEREFORE HEL D THAT THERE WAS NO JUSTIFICATION FOR DENYING THE COST OF ACQUISITION OF THE LAND AND ACCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO. 1 5 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 25 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 1 6 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL PLACED ON RECORD. IT IS THE CASE OF THE REVENUE THAT AS PER THE MOU DATED 11.04.2012 WITH M/S K.K.P. SPINNING MILLS LTD , THE CONSIDERATION RECEIVED ON SALE OF WIND MI LL WAS RS.3,23,93,890/ - AND THE WRITTEN DOWN VALUE OF THE WIND MILL WAS RS.13 , 191/ - INCLUSIVE OF LAND COST. T HE REMAINING BALANCE OF RS.3,23,80 , 699/ - SHOULD BE ASSESSED TO SHORT TERM CAPITAL GAINS AND NO SEPARATE DEDUCTION IS REQUIRED TOWARDS THE LAND COST AND DEVELOPMENT CHARGES. TH E CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAD SOLD THE WIND MILL FOR A CONSIDERATION OF RS.3,23,93,890/ - WHICH INCLUDES COST OF LAND RS.1,18,00,00 0 / - AND THE WRITTEN DOWN VALUE OF THE WINDMILL WAS RS.13,191/ - WHICH WAS SHOWN AT SEPARATELY IN THE BALANCE SHEET FROM THE BEGINNING AND NOT INCLUDED IN THE COST OF WIND MILL FOR THE PURPOSE OF DEPRECIATION. IN THE BALANCE SHEET THE ASSESSEE HAS SHOWN THE COST OF LAND AND THE COST OF WIND MILL SEPARATELY FROM THE DATE OF ACQUISITION OF THE WIND MILL AND CLAIMED THE DEPRECIATION ONLY ON THE WIND MILL UNIT BUT NOT ON THE LAND. THIS FACT WAS CONFIRMED BY THE LD.CIT(A) IN HIS ORDER. THEREFORE THE ASSESSEE RIGHTLY ALLOCATED THE SALE CONSIDERATION TOWARDS INDEX ED COST OF LAND AT RS.1,93,71,098/ - AND HAS CALCULATED THE CAPITAL GAIN ON SALE OF LAND AND THE WIND MILL AT RS.1,38,62,792/ - . IN THIS CASE, THE CIT(A) HAS VERIFIED DEPRECIATION SCHEDULE AND THE FIXED ASSETS AND FOUND THAT THE WIND MILL 26 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM FORM ED PART OF PLANT AND MACHINERY IN BLOCK OF ASSETS AND THE LAND WAS DECLARED SEPARATELY AT RS.1,18,00,000/ - IN THE BALANCE SHEET . THE LD.CIT(A) ALSO OBSERVED THAT THE ASSESSEE DID NOT CLAIM THE DEPRECIATION ON THE LAND BUT CLAIMED THE DEPRECIATION ONLY ON WIND MILL. FROM THE FINDING OF THE LD.CIT(A), IT IS OBSERVED THAT THE ASSESSEE HAS SHOWN THE COST OF LAND, INCLUDING THE DEVELOPMENT EXPENSES SEPARATELY IN THE BALANCE SHEET AND NEVER CLAIMED THE DEPRECIATION. THEREFORE, THE COMPOSITE VALUE OF WIND MILL WAS RS.6,87 ,05,414/ - INCLUSIVE OF LAND COST AND THE ASSESSEE HAS CLAIMED THE DEPRECIATION ONLY ON WIND MILL. AS PER THE INCOME TAX ACT, CAPITAL GAINS HAS TO BE COMP UTED SEPARATELY ON THE LAND AND THE WIND MILL. IN THIS CASE, THE ASSESSEE HAS SOLD THE WIND MILL ALON G WITH THE LAND FOR A CONSIDERATION OF RS.3,23,93,890/ - AND SHOWN THE SALE PRICE OF WIND MILL AT RS.1,38,62,792/ - AND T HE PRICE OF THE LAND WAS TAKEN AT RS. 1 , 93,71,098/ - . I T IS EVIDENT FROM THE ABOVE FACTS THAT THE SALE PRICE OF WIND MILL INCLUDING THE CO ST OF LAND WAS RS.3,23,93,890/ - . HENCE THE SALE CONSIDERATION OF WIND MILL REQUIRE TO BE BIFURCATED TOWARDS THE LAND AND THE WINDMILL BUT NOT THE WIND MILL ALONE. THE REVENUE DURING THE APPEAL HEARING DID NOT PLACE ANY MATERIAL TO CONTROVERT THE FINDING GI VEN BY THE LD.CIT(A).THE AO HAS NOT DISPUTED THE BASIS FOR APPORTIONING OF SALE PRICE TOWARDS THE LAND COST ON THE BASIS OF INDEXED COST OF ACQUISITION. THE LD.DR DID NOT PLACE ANY 27 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM MATERIAL TO BIFURCATE AND DETERMINE THE SALE CONSIDERATION TOWARDS THE LAND AND THE WINDMILL . THE ASSESSEE HAS TRANSFERRED THE LAND ALSO ALONG WITH THE WIND MILL. THE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION ON THE LAND, THEREFORE WE HOLD THAT ASSESSEE HAS RIGHTLY ALLOCATED THE SALE CONSIDERATION TOWARDS THE WINDMILL AND THE LA ND AND DID NOT COMMIT ANY ERROR IN DEDUCTING THE INDEXED COST OF LAND FROM THE SALE CONSIDERATION OF THE WIND MILL AND OFFERING THE BALANCE AMOUNT OF RS.1,38,62,792 / - TOWARDS THE SALE PRICE OF WIND MILL . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. ITA NO.61/VIZ/2018 1 7 . THIS IS A CROSS APPEAL FILED BY THE ASSESSEE FOR THE A.Y.2013 - 14 . 1 8 . GROUND NO.1 AND 8 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 19 . GROUND NO. 2 AND 3 ARE RELATED TO THE ASSESSMENT OF RENT RECEIVED OR RECEIVABLE FROM M/S JUKASO HOTELS. GROUND NO.4 AND 5 ARE RELATED TO THE FORFEITURE OF ADVANCE RENT IN RESPECT OF PREMISES WHICH IS CLAIMED AS 28 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM BUSINESS EXPENDITURE. GROUND NO. 6 AND 7 ARE RELATED TO THE DISALLOWANCE OF EXPENDITURE ON EXEMPT INCOME U/S 14A OF I.T.ACT. 2 0 . GROUND NO.2 AND 3 ARE RELATED TO THE ADDITION OF RS.11,58,990/ - RELATING TO UNREALIZED RENT FROM M/S JUKASO HOTELS. THE AO FOUND THAT THE ASSESSE HAD ENTERED INTO THE LEASE AGREEMENT ON 16.07.2012 WITH M/S JUKASO HOTELS FOR A FIXED RENT OF RS.8,27,850/ - P.M AND THE RENT WAS PAYABLE FROM 01 . 09 . 2012. FROM 01.09.2012 TO 31.03.2013 A S PER THE AGREEMENT, THE RENT RECE IVABLE FROM M/S JUKASO HOTELS WAS AT THE ORDER OF RS.57,94,950/ - FOR 7 MONTHS, W HEREAS THE ASSESSE E HAS ADMITTED THE RENT OF RS.41,39,250/ - , THEREBY SHORT ADMISSION OF RS.16,55,700/ - . AS PER THE BOOKS OF ACCOUNTS, THE ASSESSE E HAS SHOWN THE DEBIT BALANCE OF RS.16,74,311/ - AS ON 31.03.2013 IN THE ACCOUNT OF LESSEE WHICH IS DUE FROM THE JUKASO HOTELS. THE AO WAS OF THE VIEW THAT THE ASSESS E E HAS SUPPRESSED THE RENT RECEIPT OF RS.16,55,700/ - AND THE SAME NEEDS TO BE BROUGHT TO TA X. A CCORDINGLY T HE AO ISSUED THE S HOW CAUSE NOTICE TO THE ASSESSE E AND T HE ASSESS E E SUBMITTED A REPLY STATING T HAT THOUGH THE RENT AGREEMENT WAS DATED 16.07.2012 AND IS EFFECTIVE FROM 01.09.2012 , THE PREMISES COULD NOT BE MADE READY FOR OCCUPATION TO T HE TENANT BEFORE 31.10.2012 DUE TO PENDENCY OF INTERIOR AND MISC WORKS , HENCE OFFERED THE RENTAL INCOME ON 29 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ACTUAL S . THE ASSESSEE FURTHER SUBMITTED THAT THE PREMISES WAS HANDED OVER TO THE TENANT ON 01.11.2012 AND COLLECTED RENT FROM 01.11.2012. HOWEVER, THE AO DID NOT BELIEVE THE SUBMISSION MADE BY THE ASSESSE, RELIED ON THE LEASE AGREEMENT REGISTERED BEFORE THE SUB REGISTRAR OFFICE AND HELD THAT THE ASSESSE HAS SUPPRESSED THE RECEIPT TO THE EXTENT OF RS.16,55,700/ - AND ACCORDINGLY MADE THE ADDITION OF RS .11,58,990/ - AFTER REDUCING THE SUM FOR REPAIRS @30% AS PER SECTION 24 OF IT ACT. . 2 1 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 2 2 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESS E E FILED APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE PREMISES COULD NOT BE HANDED OVER TO THE TENANT AS PER THE AGREEMENT AND HANDED OVER THE PREMISES ON 01.11.2012 AND ACCORDINGLY THE R ENT WAS COLLECTED. THE ASSESSEE ARGUED THAT S INCE THE PREMISES WAS NOT READY FOR OCCUPATION , THE RIGHT TO RECEIVE THE RENT DID NOT ARISE TO THE ASSESSE E EVEN THOUGH THERE WAS AN AGREEMENT . AS PER THE AGREEMENT THE ASSESSE E WAS OBLIGED TO SURRENDER THE PREMISES TO THE TENANT ON 01.09.2012 WHICH THE ASSESSEE COULD NOT FULFILL THE PROMISE. IN THE FACTS AND CIRCUMSTANCES, THE 30 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM LD.AR ARGUED THAT THE ASSESSE HAS RIGHT LY COLLECTED THE RENT FROM 01.11 .2012 AND OFFERED THE SAME TO INCO ME AND THERE WAS NO CASE FOR MAKING THE ADDITION. 2 3 . ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 2 4 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THERE WAS A REGISTERED AGREEMEN T SIGNED BY THE ASSESSE FOR A MONTHLY RENT OF RS.8,27,850/ - , D ATED 16.07.2012. THE LD.AR SUBMITTED THAT PREMISES WAS NOT MADE AVAILABLE TO THE TENANT AS PER THE TERMS OF THE AGREEMENT AND IT WAS MADE READY BY 31.10.2012 AND COLLECTED THE RENT FROM 01.11.2 012. HENCE, THE RENT WAS COLLECTED FROM 01.11.2012 AND RIGHTLY OFFERED THE SAME TO THE INCOME. HOWEVER, THE LD.AO OBSERVED THAT THERE WAS DEBIT BALANCE OF RS.16,74,311/ - AS ON 31.03.2013 , WHICH SHOW S THAT THE RENT WAS DUE FROM M/S JUK ASO HOTELS FROM 01.09 .2012 AND THE SAME WAS ACCOUNTED BY THE ASSESS E E IN ITS BOOKS OF ACCOUNTS. DURING THE APPEAL HEARING, THE LD.AR DID NOT BRING ANY EVIDENCE TO ESTABLISH THAT THE PREMISES WAS NOT HANDED OVER TO THE LESSEE AS PER THE TERMS AND CONDITIONS OF THE LEASE AGRE EMENT. HAVING CREDITED THE RENT TO THE BOOKS OF 31 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ACCOUNTS AND SHOWN AS DEBIT BALANCE, THE ASSESS E E CANNOT DENY THE SAME FOR ADMISSION OF INCOME. IN CASE, THE RENT IS NOT REALISED, THE ASSESS E E IS FREE TO CLAIM THE SAME AS DEDUCTION AS AND WHEN THE SAME WA S WRITTEN OFF AS PER LAW. THE ASSESSE ALSO DID NOT FURNISH ANY CONFIRMATION LETTER FROM THE LESSEE TO SUPPORT THE RENT DUE AT RS.41,39,250/ - AND NOT RS.57,94,950/ - . THEREFOR E, WE HOLD THAT THE LD.CIT(A), HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE AO, ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSE E . 2 5 . GROUND NO. 4 AND 5 ARE RELATED TO THE ADDITION OF RS.8,10,000/ - RELATING TO THE PAYMENT OF RENT . THE AO FOUND THAT THE ASSESS E E DEBITED RENT OF RS.28,37,800/ - P & L ACCOUNT AND AS PER THE LEDGER ACCOUNT MAINTAINED BY THE ASSESSE E , THE SUM PAID WAS SHOWN AT RS.20,27,800/ - RESULTING IN DIFFERENCE OF RS.8,10,000/ - EXCESS CLAIM. THE AO CALLED FOR THE DETAILS AND THE ASSESSE E EXPLAINED THAT IT HA D PAID THE ADVANCE OF RS .8,10,000 TO MR.G. V.B.CHOUDHARY TO SHIFT THE CORPORATE OFFICE TO SOME OTHER PLACE IN VISAKHAPATNAM , BUT T HE ASSESSE COULD NOT OCCUPY THE PREMISES DUE TO VASTHU PROBLEMS , H ENCE, THE ASSESEE HAD FOREGONE THE RENTAL ADVANCE P AID TO THE LESSOR AND THE SUM WAS CHARGED TO PROFIT & LOSS ACCOUNT AS REVENUE EXPENDITURE . THE ASSESSE ALSO DID NOT PRODUCE ANY 32 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM EVIDENCE TO ESTABLISH THE GENUINENESS OF THE CLAIM. T HE AO HELD THE EXPENDITURE AS CAPITAL IN NATURE AND IT IS NOT ALLOWABLE DEDUCTION U/S 37(1) AND ACCORDINGLY MADE THE ADDITION. 2 6 . ON APPEAL BEFORE THE CIT(A), THE LD.CIT(A) CONFIRMED THE ADDITION SINCE THE ASSESSE FAILED TO PRODUCE RENTAL AGREEMENT. 2 7 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSE E IS IN APPEAL BEFORE US. DURING THE APPEAL HEARING , THE LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. BUT NO EVIDENCE WAS PRODUCED TO SUPPORT THE CLAIM. IN THE ABSENCE OF ANY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE PAYMENT, NATURE OF PAYMENT, REASONS FOR PAYMENT, REASONS FOR NO N RECOVERY OF THE ADVANCE, AND THE COPY OF LEASE AGREEMENT WE ARE UNABLE TO ACCEPT THE CLAIM OF THE ASSESS E E AND DECLINE TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSE E . 2 8 . GROUND NO.6 AND 7 ARE RELATED TO THE DISALLOWANCE OF EXPENDITURE RELATABLE TO EARNING OF EXEMPT INCOME U/S 14A OF I.T.ACT. THE ASSESSE E HAD INVESTED A SUM OF RS.20,54,77,370/ - IN THE SHARES OF UNLISTED COMPANY M/S 33 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM VAIBHAV SKY SCAPES LTD (VSSL) AND RECEIVED THE DIVIDEND INCOME OF RS.9,90,000/ - AND CLAIM ED EXEMPTION U/S 10(34) OF I.T.ACT. TH E AO CALLED FOR THE EXPLANATION AS TO WHY THE EXPENDITURE RELATABLE TO EARNING OF THE DIVIDEND INCOME SHOULD NOT BE DISALLOWED U/S 14A R..W RULE 8 D OF IT RULES AN D T HE ASSESS E E EXPLAINED THAT THE ASSE SS E E IS HAVING SUFFICIENT PROFITS AND SURPLUS INTEREST FREE FUNDS OF RS.12,49,27,000/ - IN THE BUSINESS AND MADE THE INVESTMENTS OUT OF INTEREST FREE FUNDS. . THE ASSESS E E ARGUED THAT THE ASSESSE E I S HAVING SUFFICIENT INTEREST FREE FUNDS IN THE FORM O F PAID UP SHARE CAPITAL AND THE PROFITS AND THE SURPLUS FUNDS WERE USED FOR INVESTMENTS, NO DISALLOWANCE IS CALLED FOR U/S 14A . HOWEVER, THE AO NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSE E APPLIED RULE 8D AN D DISALLOWED THE AMOUNT OF RS.97,98,498/ - U/S 14A R.W.RULE 8D OF IT RULES. 29 . ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAD RECEIVED EXEMPT INCOME OF RS.9,90,000/ - AND ONCE THERE IS DIVIDEND INCOME, THE AO IS DUTY BOUND TO INVOKE RULE 8D OF I.T.RULES. ACCORDINGLY, CONFIRMED THE ADDITION MADE BY THE AO U/S 14A R.W.RULE 8D. 3 0 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSE E CARRIED THE MATTER TO THE TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT 34 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM THE ASSESSE E HAS MADE THE INVESTMENT OF RS.12,49,27,000/ - IN THE SUBSIDIARY COMPANY OF THE ASSESSE E I.E. VAIBHAV SKY SCAPES LTD. (VSSL). THE LD.AR ARGUED THAT THE AMOUN T WAS INVESTED OUT OF INTEREST FREE SURPLUS FUNDS , HENCE, NO DISALLOWANCE IS CALLED FOR U/S 14A . THE LD.AR ALSO R ELIED ON THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. NHPC LTD. (2018 [167 DTR (P&H) 33], WHEREIN, THE HONBLE HIGH COURT HELD THAT INVESTMENT IN SUBSIDIARY COMPANIES OUT OF INTEREST FREE FUNDS DOES NOT ATTRACT THE DISALLOWA NCE U/S 14A OF I.T.ACT. 3 1 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THERE IS NO DISPUTE THAT VSSL IS A SUBSIDIARY COMPANY OF THE ASSESSE E AND THE ASSESSE E MADE INVESTMENT IN THE SUBSIDIARY COMPANY TO THE TUNE OF RS.12,49,27,000/ - . THE ASSESSE E ALSO FURNISHED THE DETAILS OF INTEREST FREE FUNDS AVAILABLE TO THE ASSESS E E ACCORDING TO WHICH THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSE ARE MORE THAN THE INVESTMENT MADE BY THE ASSESSE E IN VSSL. THERE IS NO DISPUTE THAT THE ASSESSE E HAD MADE THE INVESTMENTS FROM THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESS E E. THEREFORE, THE FACTS OF THIS CASE ARE SIMILAR TO THAT OF CIT VS. NHPC (SUPRA), WHEREIN HONBLE PUNJAB & HARYANA HIGH COURT HE LD AS UNDER : 35 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 17. THE ISSUE IS COVERED BY A JUDGEMENT OF A DIVISION BENCH OF THIS COURT DT.6 TH SEPT.2016 IN CIT VS. MAX INDIA LTD. IT APPEAL NO.186 OF 2013 [REPORTED AT (2016) 290 CTR (P&H) 76: (2016) 141 DTR (P&H) 145 ED.J. BEFORE DEALING WITH THE J UDGEMENT, IT IS NECESSARY TO NOTE A FEW FACTS. RS.521 CRORES WAS THE ASSESSEES TOTAL BUSINESS EXPENDITURE BY WAY OF INTEREST ON LOANS. THE ASSESSEES BUSINESS ASSETS WERE ABOUT RS.26,930CRORES OF WHICH RS.1,014 CRORES WERE INVESTED IN ITS WHOLLY OWNED SUBSIDIARIES. IT IS FROM THE INVESTMENT IN ITS SUBSIDIARIES THAT THE ASSESSE EARNED RS.36.06 CRORES BY WAY OF DIVIDEND. HOWEVER, IT IS IMPORTANT TO NOTE THAT THE ASSESSE HAD FREE FUNDS OF ITS SOWN OF A SUM OF RS.17.275 CRORES AVAILABLE TO IT. THUS, A S AGAINST THE INVESTMENT OF RS.1,014CRORES WHICH YIELDED DIVIDEND OF RS.36.06 CRORES, THE ASSESSE HAD AVAILABLE TO IT RS.17,275 CRORES. AS MR.VED JAIN, THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSE, RIGH TLY SUBMITTED, THE PRESUMPTION IS THAT TH E ASSESSE USED ITS OWN FUNDS WHILE MAKING THE INVESTMENT OF RS.1014 CRORES IN THE SUBSIDIARIES. THERE IS NOTHING TO REBUT THIS PRESUMPTION. THE TRIBUNAL, THEREFORE, RIGHTLY HELD THAT THERE WAS NO QUESTION OF DISALLOWANCE UNDER S.14A. 3 1 .1. IN THE INS TANT CASE, THE ASSESS E E MADE INVESTMENTS OUT OF INTEREST FREE FUNDS IN THE SUBSIDIARY COMPANY, THEREFORE, THE DECISION IN THE CASE OF THE ASSESSE E IS SQUARELY COVERED BY THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS.NHPC. THERE FORE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT, WE HOLD THAT THERE IS NO CASE FOR MAKING THE DISALLOWANCE U/S 14A. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSE. THE ASSES SEES APPEAL ON THIS GROUND IS ALLOWED. 3 2 . IN THE RESULT, APPEAL OF THE ASSESSE IS PARTLY ALLOWED. 36 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ITA NO.55 AND 61 /VIZ/2018 - A.Y.2014 - 15 3 3 . IN THIS CASE, FOR THE ASSESSMENT YEAR 2014 - 15, THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.15,71,12,710/ - . THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 153C ON TOTAL INCOME OF RS. 22,66,24,6 33/ - . THE AO MADE THE ADDITION OF RS.19,13,940/ - RELATING TO THE UNDISCLOSED RENT FROM M/S JUKASO HOTEL , A SUM OF RS.95,04,513/ - U/S 14A R.W.RULE 8D, A SUM OF RS.3,60,00,000/ - AS UNDISCLOSED CAS H CREDIT U/S 68 IN THE NAME OF SHRI G.MANOJ KUMAR AND RS.1,14,64,669/ - U/S 40A(2)(B) OF INCOME TAX ACT. ON APPEAL, THE LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE ORDER OF THE CIT(A), BOTH THE REVENUE AND THE AS SESSEE HAVE FILED CROSS APPEALS REVENUE APPEAL : ITA 55/VIZ/2018 3 4 . GROUND NO.1 AND 2 OF REVENUES APPEAL ARE RELATED TO DISALLOWANCE OF EXPENDITURE RELATED TO THE EARNING OF EXEMPT INCOME U/S 14A R.W.R.8D OF INCOME TAX RULES. THE AO FOUND THAT THE ASSESSEE HAS INVESTED A SUM OF RS. 12,49,27,000 / - IN THE SHARES OF UNLISTED COMPANY M/S VAIBHAV SKY SCAPES LTD.. AND NO DIVIDEN D INCOME WAS EARNED BY THE A SSESSEE. THE DE BITED THE FINANCE COST OF RS.21,38,94,548/ - TO P&L ACCOUNT , HENCE THE AO DISALLOWED A SUM OF RS.95,04,513/ - U/S 14A(2) R.W.R.8D OF IT RULES. 37 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 3 5 . ON APPEAL, THE LD.CIT(A) FOUND THAT NO DIVIDEND /EXEMPT INCOME WAS RECEIVED BY THE AS SESSEE, THUS RELYING ON TH E DECISION OF THIS TRIBUNAL IN THE CASE OF M/S RADHAKRISHNA AUTOMOBILES PVT. LTD. IN ITA NO.511/VIZ/2017 AND SRI D.VEERABHADRA REDDY(HUF) IN ITA NO.263/VIZ/2014 AND ALSO FOLLOWING VARIOUS DECISIONS OF HONBLE HIGH COURTS , MENTIONED HEREUNDER HELD THAT IN THE ABSENCE OF EXEMPT INCOME, NO DISALLOWANCE IS CALLED FOR U/S 14A, ACCORDINGLY DELETED THE ADDITION. (A) HONBLE CHENNAI HIGH COURT IN THE CASE OF REDINGTON(INDIA) LTD. 77 TAXMANN.COM 257 (B) HONBLE DELHI HIGH COURT IN THE CASE OF THE CHEM INVESTM ENTS 61 TAXMANN.COM 118 (C) HONBLE GUJARAT HIGH COURT IN THE CASE OF SINTEX INDUSTRIES LTD. 82 TAXMANN.COM 171 3 6 . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE CASE OF M/S RADHAKRISHNA AUTOMOBILES PVT. LTD , WE HAVE HELD THAT IN THE ABSENCE OF EXEMPT INCOME, THERE IS NO CASE FOR DISALLOWANCE U/S 14A R.W.RULE 8D OF INCOME TAX ACT. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE ASSESSE E DID NOT EARN EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. SIMILARLY, IT IS AN UNDISPUTED FACT THAT M/S VAIBHAV 38 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM SKYSCAPE LTD. IS A SUBSIDIARY COMPANY OF THE ASSESSEE AND THE ASSESSEE HAS MADE THE INVESTMENTS IN THE SUBSIDIARY COMPANY OUT OF INTERES T FREE FUNDS AVAILABLE TO THE ASSESSEE. THEREFORE, FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION IS IDENTICAL TO THE FACTS OF THE CASE OF THE EARLIER ASSESSMENT YEAR 2013 - 14, WHEREIN IT WAS HELD THAT DISALLOWANCE IS NOT CALLED FOR U/S 14A R.W.RULE 8 D IN INVESTMENTS MADE IN SUBSIDIARY COMPANIES OUT OF INTEREST FREE FUNDS. THE ASSESSEES CASE IS ALSO COVERED BY THE DECISION OF THIS TRIBUNAL INM/S RADHAKRISHNA AUTOMOBILES PVT. LTD (SUPRA) WHERE IN THE ITAT HAS GIVEN A RULING THAT NO DISALLOWANCE IS REQUI RED TO BE MADE IN THE ABSENCE OF EXEMPT INCOME. RESPECTFULLY FOLLOWING THE RULE OF CONSISTENCY, WE HOLD THAT NO DISALLOWANCE IS CALLED FOR U/S 14A SINCE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND D ISMISS THE APPEAL OF THE REVENUE ON THIS GROUND. 3 8 . GROUND NO.3 IS RELATED TO THE ADDITION OF RS.3,60,00,000 / - AND RS.37,50,000/ - AS UNEXPLAINED CREDITS. 3 9 . T HE AO FOUND THAT THERE WAS A LOAN OF RS.3,60,00,000/ - APPEARING IN THE NAME OF SRI GRANDHI MANOJ KUMAR (HUF) AS ON 30.11.2013 . THE AO FOUND FROM THE BOOKS OF ACCOUNTS THAT THERE WAS CREDIT OF RS.2,69,01,000 / - 39 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM AND RS.90,99,999/ - IN THE NAME OF SHRI MANOJ KUMAR ON 30.11.2013 IN STATE BANK OF HYDERABAD ACCOUNT AGGREGATING TO RS.3,60,00,000/ - . ON VERIFICATION OF THE BANK ACCOUNT, THE SAID AMOUNTS WERE CREDITED TO M/S VAIBHAV SIGN TOWERS PVT. LTD. ON 29.11.2013. FURTHER ON 30.11.2013, THE SAID CHEQUES WERE REVERSED DUE TO EFFECTS NOT CLEARED AND DEBITED TO THE M/S VAIBHAV SIGN TOWER PVT. LTD. FINAL LY THE SAID AMOUNT WAS RECEIVED FROM VAIBHAV SIGN TOWERS ON 30/11/2013 AND CREDITED TO THE ACCOUNT OF MR.MANOJ KUMAR (HUF). T HE AO WAS OF THE VIEW THAT NO AMOUNT WAS RECEIVED BY THE ASSESSEE FROM SRI GRANDHI MANOJ KUMAR (HUF) , BUT THE ASSESSEE HAS SHOWN THE BALANCE OF RS.3,60,00,000/ - IN THE NAME OF SRI GRANDHI MANOJ KUMAR (HUF) AS ON 30.11.2013 HENCE THE SAME AMOUNTS TO UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE . 40 . A S PER THE BOOKS OF ACCOUNT IN THE NAME OF SRI GRANDHI MANOJ KUMAR (HUF) ANOTHER LOAN WAS ALSO APPEARING ON 26.04.2013 FOR A SUM OF RS.37,50,000/ - AND THE AO DID NOT FIND SUCH ENTRY IN THE BANK ACCOUNT. THEREFORE, THE AO HELD THAT BOTH THE AMOUNTS OF RS.3,60,00,000/ - AND RS.37,50,000/ - WERE UNACCOUNTED CASH CREDITS AND ACCORD INGLY BROUGHT TO TAX. 40 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 4 1. ON APPEAL BEFORE THE CIT(A), THE LD.CIT(A) DELETED THE ADDITION HOLDING THAT ON VERIFICATION OF THE BANK ACCOUNT, THE LD.CIT(A) FOUND THAT THE CREDIT OF RS.3,60,00,000/ - WAS MATCHED WITH THE BANK ACCOUNT AND THE SOURCE OF CREDI T WAS EXPLAINED. AND THERE WAS NO SCOPE FOR TREATING THE SAME AS UNEXPLAINED. SIMILARLY THE SBH ACCOUNT OF SRI GRANDHI MANOJ KUMAR SHOWS THE DEBIT ENTRY OF 37,50,000/ - , HENCE THE LD.CIT(A ) DELETED THE ADDITION. 4 2 . AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL . 4 3 . WE HAVE HEARD BOTH THE CASES AND PERUSED THE MATERIAL PLACED ON RECORD AND THE FACTS OF THE CASE ARE EXTRACTED FORM THE ORDER OF THE LD.CIT(A) WHICH READS AS UNDER : 4.4(A)THE FACTS OF THIS ISSUE ARE THAT THE ASSESSEE HAD ORIGINALLY GIVEN AN AMOUNT OF RS.3,60,00,000/ - IN SIX INSTALMENTS TO KVMAS (KARNATAKA ARYA VYSYA MAHASABHA) TO DEVELOP A SITE BELONGING TO THEM AT BANGALORE. THE COMPANY ENTERED INTO AN AGREEMENT WITH KVMAS ON 03.06 . 2011 AND CREATED A SPECIAL PURPOS E VEHICLE (SP V) IN THE NAME A ND STYLE OF VSTPL (M/S. VAIBHAV SIGN TOWERS PVT. LTD) TO UNDERTAKE THE PROJECT. SUBSEQUENTLY, THE AMOUNT OF RS.3,60,00,000/ - WAS TRANSFERRED TO VSTPL, AFTER THE DEMISE OF THE MANA GING DIRECTOR, SRI GRA NDHIMARIOJ KUMAR ON 07.02.2012. SUBSEQUENT TO THE INCIDENT, THE PROJECT WAS ABANDONED AND COMPANY WAS CL OSED. THERE WAS A TRIPARTITE AGREEMENT BETWEEN VEPL, VSTPL A ND KVMAS ON 13.07.2012. THIS AGREEMENT WAS DRAWN IN ORDER TO DEVELOP A COMMERCIA L/ RESIDENTIAL/ SEMI - RESIDENTIAL HOTEL COMPLEX ON B O T (BUILD/ OPERATE/TRANSFER) BASIS. M/S . VEPL IS AN ASSIGNOR, VSTPL IS AN ASSIGNEE AND KVMAS IS A LESSOR IN THE PROJECT. BOTH TH E ASSIGNOR & ASSIGNEE ARE REFERRED TO AS PARTIES. T HE EF FECTIVE DATE OF THE AGREEMENT WAS 13.07.2012. AS PER THE AGREEMENT; THE LESSOR G RANTS L EASE OF AREA OF RS.52,000 SQ. FT. FOR 41 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM A TENURE OF 29 YEARS 7 MONT HS TO DEVELOP, C O NSTRUCT, OPERATE AND MAINTAIN T HE PROJECT. THE LESSEE PAY L EASE RENT O F RS.1,50,000 / - PER MONTH FOR INITIAL 30 MONTHS. AFTER 30 MONTHS, THE REGULAR MONTH LY RENT OF RS.36,00,000/ - TO BE PAID ON OR BEFORE THE 15 ' DAY OF EVERY CALENDAR MONT H WITH AN ENHANCEMENT AT THE RATE OF 9.9% FOR EVERY THREE YEARS. A SECURITY DEPOSIT OF RS.90,99,000 / - . AS PER THE SCHEDULE WAS PAID AND SUBSEQUENTLY AN AMOUNT OF RS.2,69,01,000/ - WAS ALSO PAID. ON THE SUDDEN DEMISE OF SRI GRANDHI MANOJ KUMAR, THE L EASE AGREE MENT WAS CANCELLED AND THE KVMAS HAS SETTLED ADVANCE AMOUNT AND REMITTED TO VEPL ON 30.11.2013. IT IS THIS AMOU NT THAT THE ASSESSING OFFICER HA S CONSIDERED FOR ADDITION. 4 3 . 1. AND THE LD.CIT(A) DELETED THE APPEAL AS PER THE DISCUSSION MADE IN PARA NO.4.4 (A) AND (B) AND FOR THE SAKE OF CONVENIENCE AND CLARITY, WE EXTRAC T THE RELEVANT PART OF THE ORDER AS UNDER '4.4(D) I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSIONS OF THE L EARNED AUTHORIZED REPRESENTATIVE OF THE APPELLANT AND HAVE PERUSED THE LEASE AGREEMENT AND SUBSEQUENT CANCELLATION OF LEASE AGREEMENT. IT IS SEEN FROM THE LEDGER ACCOUNT THAT THE APPELLANT COMPANY MADE PAYMENTS TO KVMAS ON VARIOUS DATES TO AN EXTENT OF RS .3,60,00,000 IN THE FINANCIAL YEAR 2011 - 12. THESE PAYMENTS WERE ISSUED BY VEPL TO KVMAS ON BEHALF OF THE VSTPL. IT IS A FACT THAT THE PROJECT WAS NOT MATERIALIZED DUE TO THE SUDDEN DEMISE OF SRI GRANDIMANOJ KUMAR, THE LEASE AGREEMENT WAS CANCELLED AND VST PL WAS CLOSED. IT IS ALSO SEEN THAT THE KVMAS AFTER CANCELLING THE LEASE DEED HAS ISSUED CHEQUES IN FAVOUR OF VEPL AS ON 30.11.2013. ACCORDINGLY, THE BANK ACCOUNT OF VEPL IS CREDITED WITH RS.3,60,00,000/ - ON .30.11.2013. SUBSEQUENTLY, THE APPELLANT HAD CRE DITED THE SAME AMOUNT TO HUF ON 30.11.2013. THE BANK ACCOUNT OF HUF AND THE BANK OF THE APPELLANT AND THE LEDGER ACCOUNTS DEMONSTRATE THESE ENTRIES. NOW, THE ONLY QUESTION TO BE ANSWERED IS WHETHER THE AMOUNT WAS TRANSFERRED TO HUF OR NOT. IT IS THE EXPLAN ATION OF THE LEARNED AR OF THE APPELLANT THAT KVMAS PAID THE AMOUNT TO THE APPELLANT ON 30.11.2013. THERE WAS AN OBSERVATION FROM THE BANKERS THAT THE FUNDS OF THE COMPANY SHOULD NOT BE DIVERTED TO ANY OTHER PURPOSES. IN ORDER TO NOT TO HAMPER THE RELATION WITH THE BANKERS, AN ENTRY WAS PASSED TRANSFERRING THE DEPOSIT TO HUF ON 31.03.2013. 4. 4(E). ON EXAMINING THE BANK ACCOUNTS AND THE LEDGER ACCOUNTS, I FIND THAT THE CREDIT OF RS.3,60,00,000/ - IN THE BOOKS OF THE APPELLANT HAS BEEN EXPLAINED. IN OTHER WORDS, THE SOURCE OF CREDIT, IDENTITY OF THE PARTY AND GENUINENESS OF THE FUND COMING TO THE ACCOUNTS OF THE APPELLANT CANNOT BE DOUBTED. THEREFORE, THERE IS NO SCOPE TO TREAT THE CREDIT OF RS.3,60,00,000/ - IN THE BOOKS OF THE APPELLANT AS UNEXPLAINED. WHAT THE APPELLANT HAD MADE IS ONLY A BOOK ENTRY AFFECTING THE TRANSFER IN THE BOOKS OF HUF AND THE APPELLANT. REGARDING THE OBSERVATIONS OF THE 42 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ASSESSING OFFICER WITH RESPE CT TO VSTPL, THE ENTRIES WERE REVERSED DUE TO THE NON - AVAILABILITY OF FUNDS. HOWEVER, ON SUBSEQUENT DATES THEY WERE REPAID AND HONOURED. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 4 3 .2 . DURING T H E APPEAL HEARING, THE LD.AR PRODUCED STATE BANK OF HYDERABAD ACCOUNT COPY VAIBHAV EMPIRE PVT. LTD., SBH A/C NO. 62189636663. AS PER THE BANK ACCOUNT,ON 29.11.2013, THERE WAS CREDIT OF RS.2,69,01,000/ - AND RS.90,99,000 BY CLEARING CHEQUE AGGREGATING TO RS. 3, 60,00,000/ - . ON 30.11.2013 SAID CHEQUES WERE RETURNED AS NOT CLEARED WITH A REMARK TO PRESENT AGAIN. THE ABOVE CHEQUES OF R S.90,99,000/ - AND RS.2,69,01,000/ - WERE AGAIN RE PRESENTED TO THE BANK ON 30.11.2013 AND CREDITED TO THE ACCOUNT OF THE ASSESSEE. FR OM THE ABOVE DETAILS OF SBH ACCOUNT IT IS CLEAR THAT THE ASSESSEE RECEIVED CHEQUES OF RS.3,60,00,000/ - FROM KVMAS, WHICH WAS REMITTED TO THE ASSESSEE ON 30.11.2013 AS STATED BY THE ASSESSEE. SINCE THE AMOUNTS WERE REMITTED ON BEHALF OF GRANDHI MANOJ KUMAR AS P ER TRIPARTITE AGREEMENT DATED 13.07.2012, THE AMOUNT WAS SHOWN IN THE NAME OF GRANDHI MANOJ KUMAR, HUF AS EXPLAINED BY THE ASSESSEE. THIS FACT WAS ESTABLISHED BY THE BANK ACCOUNT WHICH WAS ALSO CONFIRMED BY THE LD.CIT(A). THEREFORE, THE SOURCE WAS EX PLAINED AND ADDITION MADE BY THE AO IS UNSUSTAINABLE . ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE . 43 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 4 3 .3 WITH REGARD TO THE ADDITION OF RS.37,50,000/ - , THE LD. CIT(A) HAS GIVEN A FINDING THAT THE SAID ENTRY WA S FOUND DEBITED IN THE SBH A/C OF SRI GRANDHI MANOJ KUMAR. THE REVENUE COULD NOT CONTROVERT THE ABOVE FINDING OF THE LD.CIT(A) WITH REGARD TO THE RS.3,60,00,000/ - AND RS.37,50,000/ - WITH ANY TANGIBLE EVIDENCE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ITA NO.62/VIZ/2018 (ASSESSEE) 4 4 . ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION OF RS.19,13,940/ - ON ACCOUNT OF RENT RECEIVED FROM M/S JUKASO HOTELS. T THE ASSESSE HAD ENTERED INTO LEASE AGREEMENT WITH M/S JUKASO HOTELS PARTNERSHIP FIRM ON 16.07.2012 FOR MONTHLY RENT OF RS.8,27,850/ - PER MONTH FOR LETTING OUT THEIR PROPERTY. AS PER THE LEASE AGREEMENT, THE RENT PAYABLE BY THE TENANT WORKED OUT TO RS.99,34,200/ - AND AGAINST SAID SUM THE ASSESSE HAS ADMITTED A SUM OF RS.72,00,000/ - IN THE BOOKS OF ACCOUNTS . IN RESPONSE TO THE SHOW CAUS E NOTICE ISSUED BY THE AO, THE ASSESSE STATED THAT THOUGH THE ASSESSEE HAD ENTERED IN TO LEASE AGREEMENT WITH THE ASS ESSE WITH M/S JUKASO HOTELS LTD, O N 16.07.2012 FOR LETTING OUT OF THE PR OPERTY FOR A 44 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM MONTHLY RENT OF RS.8,27,850/ - PER MONTH, T HERE WAS DOW NWARD REVISION OF RENTAL AGREEMENT DUE TO THE BUSINESS EXIGENCIES. ACCORDINGLY ENTERED INTO SUPPLEMENT ARY LEASE AGREEMENT ON 01.08.2014 AND REDUCED THE RENT FROM RS.8,27,850/ - TO 6,00,000/ - P.M. THE ASSESSE HAS PROVIDED BOTH THE AGREEMENTS BEFORE THE AO. THE AO OBSERVED THAT THE RENT AGREEMENT DATED 16.07.2012 WAS FOR A MONTHLY RENT OF RS.8,27,250/ - WAS A REGISTERED AGREEMENT AND SUBSEQUENT RENT AGREEMENT WAS AN UNREGISTERED AGREEMENT , HENCE HELD THAT THE REGISTERED AGREEMENT GIVES RIGHT TO THE ASSESSE TO COLLECT THE RENT DUE AND TO ENFORCE THE SAME. THE AO ALSO OB SERVED THAT THE ASSESSE HA D ADMITTED THE RENTAL S FROM M/S KANKATALA TEXTILE PVT. LTD. IN THE NEARBY LOCATION @39.41 SQ.FT., HENCE THE RENT CHARGED BY THE ASSESSE @38.32 SQ.FT. AS PER THE ORIGI NAL AGREEMENT IN THE CASE OF JUKASO HOTELS WAS REASONABLE. FURTHER, THE AO HAS OBSERVED THAT THERE WAS DEBIT BALANCE OF RS.58,44,733/ - AS ON 31.03.2014 IN THE BOOKS OF THE ASSESSE. THEREFORE, HELD THAT THE DIFFERENCE IN RENT OFFERED BY THE ASSESSE REQUIR ED TO BE BROUGHT TO TAX, ACCORDINGLY MADE THE ADDITION OF RS.19,13,940/ - . 4 5 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSE E WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE AO 45 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM HOLDING THA T THE ASSESSE E CANNOT SUOMOTO DE CREASE THE RENTALS WITHOUT THE CONSENT OF THE PARTY . THE LD.CIT(A) OBSERVED THAT NO DETAILS WERE FURNISHED AND THERE WAS NO CONFIRMATION FROM THE LESSEE THAT THE RENTAL S DUE TO THE ASSESSE WAS RS.72,00,000/ - BUT NOT RS.99,34,000/ - . THEREFORE , THE LD.CIT( A) REJECTED THE CLAIM OF THE ASSESSE AND CONFIRMED THE ADDITION. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE CIT(A) ORDER WHICH READS AS UNDER : 4.2(D) I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSIONS AND I HAVE ALSO GONE THROUGH THE ORIGINAL LEASE AGREEMENT AS WELL AS THE SUPPLEMENTARY LEASE AGREEMENT. THE ORIGINAL LEASE AGREEMENT DRAWN BETWEEN THE PARTIES ON 16.07.2012 IS A REGISTERED DOCUMENT. AS PER THE AGREEMENT, THE LEASE RENTALS ARE STARTING FROM 01. 09.2012. IT IS A VALID DOCUMENT IN THE EYES OF LAW. THIS LEASE AGREEMENT GIVES RIGHT TO THE APPELLANT TO RECEIVE THE RENT. INCOME - TAX RECOGNIZED TWO POINTS OF TIME; ACCRUAL AND RECEIPT. THE RIGHT TO RECEIVE RENT HAD ACCRUED TO THE APPELLANT WHEN THE D OCUMENT WAS SIGNED & REGISTERED. IT BESTOWS LEGAL RIGHT ON THE APPELLANT TO RECEIVE THE RENT. AT THE SAME TIME, IT ALSO CASTS CORRESPONDING LIABILITY ON THE PART OF THE LESSEE TO PAY THE RENT. THERE IS NO HYPOTHETICAL SITUATION AS LONG AS THE RIGHT TO RECEIVE IS NOT INFRINGED. THERE IS NO PROBABILITY OF NOT RECEIVING THE AMOUNT IN THE ABSENCE OF ANY OBSTRUCTION TO THE RIGHT OF RECEIPT OF THE APPELLANT. THE VOLUNTARY ACTION OF THE APPELLANT TO DISCLOSE ONLY RS.6,00,000/ - PER MONTH IS SELF SERVING WIT HOUT EXERCISING THE RIGHT TO RECEIVE. ACCORDINGLY, THE APPELLANT NEED TO DISCLOSE RENTAL INCOME ON ACCRUAL BASIS BASED ON ORIGINAL AGREEMENT . HOWEVER, THE APPELLANT HAD SHOWN RENTAL INCOME AT RS.6,00,000/ - AS PER THE SUPPLEMENTARY AGREEMENT. THE ASSESSI NG OFFICER IS OF THE OPINION THAT THE SUPPLEMENTARY AGREEMENT HAS NO VALIDITY UNDER LAW AS IT WAS NOT REGISTERED. I UPHELD THE VIEW OF THE ASSESSING OFFICER. THE APPELLANT IS OF THE VIEW THAT THERE IS NO TAX EXIGIBLE ON THE NOTIONAL INCOME. THE RENTA L INCOME RECEIVED IN REALITY IS RS.72 LAKHS BUT NOT RS.99.34 LAKHS. I AM NOT INCLINED TO AGREE WITH THE ARGUMENT OF THE APPELLANT DUE TO THE REASON THAT THERE IS NO INFRINGEMENT TO HIS RIGHT TO RECEIVE THE RENT. THERE ARE NO CIRCUMSTANCES TO DISPLAY THA T THE RENTALS ARE HYPOTHETICAL IN NATURE. THERE IS NO SCOPE OF PROBABILITY OR IMPROBABILITY OF NOT RECEIVING / REALIZING THE RENTS. THOUGH, THERE IS A FORCE IN THE ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE APPELLANT REGARDING REAL INCOME , NO CREDENCE CAN BE GIVEN TO THE SUPPLEMENTARY LEASE AGREEMENT. IT IS AN INDISPUTABLE FACT THAT THE RIGHT TO RECEIVE RENT HAS ARISEN DUE TO THE REGISTERED LEASE AGREEMENT NOT BY SUPPLEMENTARY LEASE AGREEMENT. SUPPLEMENTARY LEASE 46 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM AGREEMENT WITHOUT REGIS TRATION CANNOT BE ENFORCED IN THE EYES OF LAW. THE RIGHT THAT ARISES OUT OF AGREEMENT HAS NOT BEEN EXHAUSTED BY THE APPELLANT IN THE EVENT OF FAILURE ON THE P ART OF LESSEE. THE APPELLANT CANNOT SUO - MOTTO REDUCE THE RENTALS WITHOUT THE CONSENT OF THE O THER PARTY. THE PARTY (LESSEE) WOULD HAVE S HOWN THE OUTSTANDING RENTALS IN ITS BOOKS. NO DETAILS WERE FILED BEFORE ME IN THIS REGARD. IN THE INSTANT CASE, THERE IS SNO CONFIRMATION FROM THE LESSEE THAT THE RENTAL DUE TO THE APPELLANT IS RS.72 LAKHS AND NOT RS.99.34 LAKHS. IN VIEW OF THESE INCONSISTENCIES, THE REAL INCOME THEORY OF THE APPELLANT IS REJECTED AND THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. 4 6 . AGGRIEVED BY THE ORDER THE LD.CIT(A), THE ASSESSE IS IN APPEAL BEFORE US. DURIN G THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSE HAS LET OUT THE PROPERTY TO M/S JUKASO HOTELS PARTNERSHIP FIRM FOR A MONTHLY RENT OF RS.8,27,850/ - PER MONTH BY REGISTERED LEASE AGREEMENT DATED 16.07.2012. HOWEVER, SINCE THE TENANT OR THE LESSEE WAS NOT PAYING RENT DUE AND EXPRESSED THEIR INABILITY TO MAKE THE PAYMENT OF RENT, BOTH THE ASSESSE E AND TENANT HAVE REACHED A MUTUAL AGREEMENT FOR PAYMENT OF RENT @RS.6,00,000/ - BY SUPPLEMENTARY AGREEMENT DATED 01.08.2014.THE LD.AR SUBMITTED THAT THE TENA NT HAS LEFT PREMISES AND THE ASSESSE WAS UNABLE TO RECOVER THE OUTSTANDING DUES, HENCE ARGUED THAT THE ASSESSE HAS RIGHTLY OFFERED THE RENTS OF RS.72,00,000/ - AS PER THE REVISED SUPPLEMENTARY AGREEMENT, THEREFORE REQUESTED TO SET ASIDE THE ORDERS OF THE LO WER AUTHORITIES AND DELETE THE ADDITION MADE BY THE AO. 47 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 4 7 . ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSE ENTERED INTO LEASE AGREEMENT FOR LETTING OUT ITS PREMISES TO M/S JUKASO HOTELS PARTNERSHIP FIRM FOR A MONTHLY RENT OF RS.8,27,850/ - . THERE WAS NO DISPUTE THAT THE ASSESSE HAS CHARGED THE RENT AS PER THE LEASE AGREEMENT WHICH IS ESTABLISHED BY THE FACT THAT THE ASSESSE HAS S HOWN THE RECEIVABLES FROM THE TENANT. THE ASSESSE HAS ENTERED INTO SUPPLEMENTARY LEASE AGREEMENT ON 01.08.2014 I.E. AFTER COMPLETION OF IMPUGNED FINANCIAL YEAR. THEREFORE, TILL THE END OF THE FINANCIAL YEAR, THE ORIGINAL LEA SE AGREEMENT DATED 16.07.2012 WAS IN FORCE AND RENT ACCRUE S TO THE ASSESS E E AS PER THE LEASE AGREEMENT DATE 16.07.2012. THE SUPPLEMENTARY AGREEMENT REACHED ON 01.08.2014 CANNOT BE MADE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR. THE ASSESS E E ALSO DID NOT FURNISH ANY EVIDENCE OR CONF IRMATION FROM THE TENANT WITH REGARD TO THE DUES OF THE TENA N T BEFORE THE LD.CIT(A) OR BEFORE THE AO. THE ASSESS E E IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND AS PER WHICH THE RENTS ACCRUED AS PER THE LEASE AGREEMENT REQUIRED TO BE BROUGHT TO TAX. IN CASE OF UNREALIZED RENT, THE SAME REQUIRED TO BE CLAIMED AS PER THE PROVISIONS OF 48 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM THE ACT. THE ASSESSE CANNOT SUOMOTO REDUCE THE INCOME ACCRUED DURING THE YEAR AND REDUCE THE RENT BY MAKING THE SUBSEQUENT LEASE AGREEMENT WITHOUT PROPER EVIDENCE FROM T HE TENANT. FURTHER THE ASSESSE HAS ALSO SHOWN DEBIT BALAN CE OF RS.58,44,733/ - AS RECEIVABLE FROM THE TENANT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE ASSESSE I S DISMISSED. ITA NO.56 /VIZ/2018 - A.Y.2015 - 16(REVENUE) 4 9 . GROUND NO.1 AND 2 ARE RELATED TO THE DISALLOWANCE MADE U/S 14A R.W.RULE 8D IN RESPECT OF THE INVESTMENTS MADE IN M/S VAIBHAV SKY SCAPES LTD., A SUBSIDIARY COMPANY OF THE ASSESS E E. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS E E DID NOT RECEIVE ANY DIVIDEND. THE AO HAS MADE THE DISALLOWANCE U/S 14A R.W.RULE 8D OF INCOME TAX RULES AND THE LD.CIT(A) DELETED THE ADDITION HOLDING THAT NO DISALLOWANCE IS CALLED FOR IN THE ABSENCE OF EXEMPT INCOME , PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL AND THE HONBLE HIGH COURTS AS UNDER : M/S RADHAKRISHNA AUTOMOBILES PVT. LTD. IN ITA NO.511/VIZ/2017 AND SRI D.VEERABHADRA REDDY(HUF) IN ITA NO.263/VIZ/2014 AND THE FOLLOWING DECISIONS OF HONBLE HIGH COURTS HELD THAT IN THE ABSE NCE OF 49 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM EXEMPT INCOME, NO DISALLOWANCE IS CALLED FOR U/S 14A, ACCORDINGLY DELETED THE ADDITION. (A) HONBLE CHENNAI HIGH COURT IN THE CASE OF REDINGTON(INDIA) LTD. 77 TAXMANN.COM 257 (B) HONBLE DELHI HIGH COURT IN THE CASE OF THE CHEM INVESTMENTS 61 TAXMANN.COM 11 8 (C) HONBLE GUJARAT HIGH COURT IN THE CASE OF SINTEX INDUSTRIES LTD. 82 TAXMANN.COM 171 5 0 . IDENTICAL ISSUE WAS DECIDED AGAINST REVENUE IN APPEAL NO.55/VIZ/2018 AND IN FAVOUR OF THE ASSESSE FOR T HE ASSESSMENT YEAR 2014 - 15. S INCE THE FACTS ARE IDENTICAL, WE HOLD THAT NO DISALLOWANCE IS CALLED FOR U/S 14A R.W.RULE 8D OF IT RULES IN THE ABSENCE OF EXEMPT INCOME. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE ON THIS GROUND. 5 1 . GROUND NO.2 IS RELATED TO THE DELETION OF ADDITI ON OF RS.10,83,000/ - U/S 37 READ WITH EXPLANATION 2 OF THE ACT. 5 2 . DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSE E HA D DEBITED A SUM OF RS.15,88,201/ - UNDER THE HEAD CORPORATE SOCIAL RESPONSIBILITY AND CLAIMED THE DEDUCTION U/S 37(1) OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSE STATED THAT THE EXPENDITURE WAS 50 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM INCURRED VOLUNTARILY IN THE COURSE OF PROMOTION OF BUSINESS AND EXPANDING THE BRAND AT RURAL AREAS. T HE DETAILS OF THE EXPENDITURE WAS AS FOLLOWS: RECEIVER AMOU NT REMARKS 7,83,300 TREE PLANTATION AND TREE GUARDS CHARGES ON HUDHUD CYCLONE SRI KRISHNA VIDYAMANDIR, VSP. 3,00,000 FOR CONSTRUCTION OF SCHOOL BUILDING 96,990 ARRANGING OF NAME BOARD TO VILLAGES 25,950 CONSTRUCTION OF TOILETS IN SCHOOLS 11,330 DISTRIBUTION OF SITTING BENCHES FOR STUDENTS AT VILLAGE SCHOOLS 68,600 DISTRIBUTION OF BUTTER MILK TO GENERAL PUBLIC ON HUDHUD CYCLONE GVMC, VISAKHAPATNAM 10,000 DISTRIBUTION OF CANDLES TO GENERAL PUBLIC ON HUDHUD CYCLONE. 15,750 DISTRIBUTION OF FANS FOR STUDENTS AT VILLAGE SCHOOLS 98,120 DISTRIBUTION OF FANS, GLASSES, PLATES AND WATER FILTER (PURE IT) FOR STUDENTS AT VILLAGE SCHOOLS 78,706 DISTRIBUTION OF FANS, WATER TANKS, BENCHES ETC. FOR STUDENTS AT VILLAGE SCHOOLS 2,450 DISTRIBUTION OF SINTEX TANKS AT VILLAGE SCHOOLS 4,770 DISTRIBUTION OF VEGETABLES TO GENERAL PUBLIC ON HUD HUD CYCLONE 2,500 HELPING TO OLDAGE HOMES MAHAVIR INTERNATIONAL SERVICE TRUST 25,000 MAHAVIR INTERNATIONAL SERVICE TRUST 51 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 17,235 STAFF CONVEYANCE EXPENSES WHILE CSR ACTIVITY GVMC, VISAKHAPATNAM 22,500 WARD BEAUTIFICATION CHARGES KALINGA FISHERMEN WELFARE FUND 25,000 WELFARE FUND AT KALINGA FISHERMEN DUE TO HUDHUD CYCLONE TOTAL 15,88,201 53. THE AO OBSERVED THAT THE ASSESSE HAS CLAIMED THE EXPENDITURE UNDER THE HEAD CORPORATE SOCIAL RESPONSIBILITY AND THE SAME IS NOT ALLOWABLE AS PER SECTION 37 (1), EXPLANATION 2 OF THE ACT ACCORDINGLY DISALLOWED THE SAME. 54 . O N APPEAL, THE LD.CIT(A) VERIFIED THE ACCOUNTS AND THE DE TAILS OF EXPENDITURE AND OBSERVED THAT MO ST OF THE EXPENDITURE IS IN CHARITY / PUBLIC CONCERN AND FOR BUILDING THE BRAND VALUE FOR THE ASSESSEES BUSINESS. MOST OF THE EXPENDITURE WAS INCURRED FOR TREE PLANTATION, TREE GUARDS IN THE CITY, CONSTRUCTION OF SCHOOL BUILDING, TOILETS AND DRINKING WAT ER FACILITIES WHICH FALLS UNDER THE PROMOTION, BRAND EXPANSION. THEREFORE, THE LD.CIT(A) DIRECTED THE AO TO ALLOW THE EXPENSES TO THE TUNE OF RS.10,83,800/ - U/S 37(1) AND DISALLOW THE REMAINING AMOUNT OF RS.5,04,950/ - . 52 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 55 . DURING THE APPEAL HEARING, THE LD.DR SUPPORTED THE ORDERS OF THE AO AND PER CONTRA LD.AR SOUGHT SOME MORE RELIEF SINCE THE ASSESSEE HAS SPENT THE AMOUNT FOR BRAND PROMOTION AND FOR BUSINESS EXPANSION. . 5 6 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND OBSE RVED THAT MOST OF THE EXPENDITURE WAS INCURRED FOR TREE PLANTATION, SCHOOL BUILDINGS, TOILETS, DRINKING WATER ETC. AS OBSERVED BY THE LD.CIT(A), PARTLY, THE EXPENDITURE WAS IN THE NATURE OF THE BUSINESS PROMOTION AND BRAND EXPANSION, PARTLY RELATED TO COR PORATE SOCIAL RESPONSIBILITY. DURING THE APPEAL HEARING, THE LD.DR DID NOT BRING ANY MATERIAL TO CONTROVERT THE FINDING OF THE LD.CIT(A). WE FIND THAT RELIEF GRANTED BY THE LD.CIT(A) IS REASONABLE. THEREFORE, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISM ISS THE APPEAL OF THE REVENUE. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ITA NO.63/VIZ/2018 - A.Y.2015 - 16(ASSESSEE) 57 . THE ONLY ISSUE IN THIS APPEAL IS RELATED TO THE LEASE AGREEMENT WITH M/S J UKASO HOTELS PARTNERSHIP FIRM ODATED 16.07.2012 WHICH WAS ENTERED IN TO FOR A MONTHLY RENT OF RS.8,27,850/ - PER MONTH. AS PER THE LEASE AGREEMENT, THE RENT RECEIVABLE BY THE ASSESSE WAS RS.99,34,200/ - AGAINST WHICH THE ASSESSE HAS ADMITTED RS.72,00,000/ - . THE ASSESSEE EXPLAINED 53 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM REASON FOR SHORT ADMISS ION OF THE RENT THAT T HERE WAS A REVISION OF RENT AGREEMENT DUE TO THE BUSINESS EXIGENCIES. ACCORDINGLY ENTERED INTO SUPPLEMENT ARY LEASE AGREEMENT ON 01.08.2014 AND REDUCED THE MONTHLY RENT FROM RS.8,27,850/ - TO 6,00,000/ - P.M. THE ASSESSE HAS FURNISHED B OTH THE AGREEMENTS BEFORE THE AO. THE AO OBSERVED THAT THE RENT AGREEMENT DATED 16.07.2012 WAS FOR A MONTHLY RENT OF RS.8,27,250/ - WAS A REGISTERED AGREEMENT AND SUBSEQUENT RENT AGREEMENT I.E. SUPPLEMENTARY RENT AGREEMENT DT. 01.08.2014 WAS AN UNREGISTERED AGREEMENT. THEREFORE, THE AO HELD THAT THE REGISTERED AGREEMENT GIVES RIGHT TO THE ASSESSE TO COLLECT THE RENT AND TO ENFORCE THE SAME. THE AO ALSO OBSERVED THAT THE MONTHLY RENT OF RS.8,27,250/ - IS COMPARABLE AND REASONABLE IN THE VICINITY . FURTHER, THE AO HAS OBSERVED THAT THERE WAS DEBIT BALANCE OF RS.58,44,733/ - AS ON 31.03.2014 IN THE BOOKS OF THE ASSESSE. THEREFORE, HELD THAT THE DIFFERENCE IN RENT OFFERED BY THE ASSESSE REQUIRED TO BE BROUGHT TO TAX, ACCORDING LY MADE THE ADDITION OF RS.19,18,65 0/ - . 58 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESS E E WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE AO HOLDING THAT THE ASSESSE E CANNOT SUOMOTO DECREASE THE RENTALS . 54 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM ACCORDINGLY, THE LD.CIT(A) REJECTED THE CLAIM OF THE ASSESSE E AND CONFIRMED THE ADDITION 59 . AGGRIEVED BY THE ORDER THE LD.CIT(A), THE ASSESSE E IS IN APPEAL BEFORE US. 60 . DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSE HAS LET OUT THE PROPERTY TO M/S JUKASO HOTELS PARTNERSHIP FIRM FOR A MONTHLY RENT OF RS.8,27,850/ - PER MONTH BY REGISTERED LEASE AGREEMENT DATED 16.07.2012. HOWEVER, SINCE THE TENANT OR THE LESSEE WAS NOT PAYING RENT DUE AND EXPRESSED HIS INABILITY TO MAKE THE PAYMENT OF RENT, BOTH THE ASSESSE AND TENANT HA D REACHED A MUTUAL AGREEMENT FOR PAYMENT OF RENT @RS.6,00,000/ - BY SUPPLEMENTARY AGREEMENT DATED 01.08.2014.THE LD.AR SUBMITTED THAT THE TENANT HAS LEFT THE PREMISES AND THE ASSESSE WAS UNABLE TO RECOVER THE OUTSTANDING DUES, HENCE ARGUED THAT THE ASSESSE HAS RIGHTLY OFFERED THE RENTS OF RS.72,00,000/ - AS PER THE REVISED SUPPLEMENTARY AGREEMENT, THEREFORE REQUESTED TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDITION MADE BY THE AO. 55 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM 61 . ON THE OTHER HAND, THE LD .DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 62 . WE HAVE HEARD BOTH THE CASES AND PERUSED THE MATERIAL PLACED ON RECORD. THERE WAS A LEASE AGREEMENT WITH M/S JUKASO HOTELS PVT. LTD. FOR A MONTHLY RENT OF RS.8.27,850/ - . THOUGH THE LEASE AGREEMENT W AS REGISTERED ON 1.8.2014, THE ASSESSE HAS ENTERED INTO SUPPLEMENTARY LEASE AGREEMENT TO SCALE DOWN THE RENT AS THE TENANT EXPRESSED HIS INABILITY TO PAY THE RENT AND DUE TO THE BAD BUSINESS CONDITIONS. THOUGH THE AO BROUGHT THE COMPARABLE CASE IN THE VIC INITY OF THE AREA, THE AO DID NOT BRING ANY EVIDENCE TO SHOW THAT IN THE SAME BUILDING, RENT COLLECTED BY THE ASSESSE @27.77 PER SQ.FT IS UNREASONABLE AND NOT FAIR MARKET RENT. THOUGH THERE WAS REGISTERED LEASE AGREEMENT, THE SUBSEQUENT LEASE AGREEMENT EN TERED INTO B Y THE ASSESSE WITH THE TENANT FOR PAYMENT OF RENT @6,00,000/ - CANNOT BRUSH ASIDE, WITHOUT BRINGING ON RECORD ANY EVIDENCE TO SHOW THAT THE SUBSEQUENT LEA SE AGREEMENT DATED 01.08.2014 WAS FALSE AND FABRICATED. THERE WAS NO MATERIAL TO ESTABLISH THAT THE ASSESSE HAS COLLECTED THE RENT @8,27,850/ - AS PER THE ORIGINAL LEASE AGREEMENT WHEN T HE ASSESSE HAS BROUGHT ON RECORD THE SUPPLEMENTARY LEASE AGREEMENT , THE AO CANNOT SIMPLY BRUSH ASIDE THE WRITTEN SUPPLEMENTARY LEASE AGREEMENT ENTERED 56 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM INTO DURIN G THE YEAR UNDER CONSIDERATION MUTUALLY UNLESS THE AO PROVES THAT THE SUPPLEMENTARY LEASE AGREEMENT IS BOGUS AND CANNOT MADE ANY ADDITION AS SUPPRESSION OF RECEIPT . THEREFORE, WE DO NOT SEE ANY REASON TO UPHOLD THE ADDITION MADE BY THE AO, ACCORDINGLY THE ORDER OF THE LD .CIT(A) IS SET ASIDE AND APPEAL OF THE ASSESS E E ON THIS GROUND IS ALLOWED. IN THE RESULT, APPEAL OF THE ASSESS E E IS ALLOWED. 63 . IN THE RESULT, APPEALS OF THE REVENUE FOR THE ASSESSMENT YEAR S 2011 - 12, 2013 - 1 4, 2014 - 15 AND 2015 - 16 IN I.T.A. NO.S 53 - 56/VIZ/2018 ARE DISMISSED AND APPEALS OF THE ASSESSE FOR THE ASSESSMENT YEAR 2013 - 14 IN I.T.A. NO.61/VIZ/2018 IS PARTLY ALLOWED, FOR THE ASSESSMENT YEAR 2014 - 15 IN I.T.A NO.62/VIZ/2018 IS DISMISSED AND FOR THE ASSES SMENT YEAR 2015 - 16 IN I.T.A.NO.63/VIZ/2018 IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST , 2018. SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH) ( V. DURGA RAO) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / VISAKHAPATNAM /DATED : 21 .0 8 .2018 L.RAMA, SPS 57 I.T.A NOS .5 3 - 56 /VIZ/2018 AND 61 - 63 /VIZ/2018 VAIBHAV EMPIRE PVT. LTD., MANOJ VAIBHAV GEMS AND JEWELLERS PVT. LTD. , VISAKHAPATNAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S GRANDHI MANOJ KUMAR, C/O VAIBHAV JEWELLERS THE LOWER GROUND, D.NO.47 - 15 - 9/1, V SQUARE, OPP:TSR COMPLEX , DWARAKA NAGAR, VISAKHAPATNAM 2. / THE REVENUE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 VISAKHAPATNAM 3. THE PR.COMMISSIONER OF INCOME TAX (CENTRAL), VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 3, VISAKHAPATNAM 5. , , / DR, ITAT, VISAKHAPATNAM 6. / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT,VISAKHAPATNAM