P. Pavani, Nellore, Hyderabad V. ACIT, Central Circle, Tirupathi

ITA 617/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74709 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Unexplained expenditure; Gift; Business income; Depreciation; Income from undisclosed sources; Search and seizure; Opportunity of being heard; Source of fund; Valuation report; Revised return
• Section: 40A(3); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1. 615/H/12 2002-03 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. 2. 616/H/12 2003-04 -DO- -DO- 3. 617/H/12 2004-05 -DO- -DO- 4. 677/H/12 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) 5. 618/H/12 2005-06 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. 6. 678/H/12 2005-06 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) 7 619/H/12 2006-07 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. 8 679/H/12 2006-07 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) 9 620/H12 2007-08 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. 10 621/H/12 2008-09 -DO- -DO- 11 680/H/12 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) 12 622/H/12 2002-03 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 2 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 13 623/H/12 2003-04 -DO- -DO- 14 624/H/2 2004-05 -DO- -DO- 15 681/H/12 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) 16 625/H/12 2005-06 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 17 682/H/12 2005-06 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) 18 626/H/12 2006-07 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 19 683/H/12 2006-07 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) 20 627/H/12 2007-08 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 21 628/H/12 2008-09 -DO- -DO- 22 1388/H12 2002-03 M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 23 1444/H/12 2002-03 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) 24 1389/H/12 2003-04 M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 25 1445/H/12 2003-04 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) 3 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 26 1390/H/12 2004-05 M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 27 1446/H/12 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) 28 1385/H/12 2006-07 PAVANI CONSTRUCTIONS, NELLORE. (PAN AAKFP0761D) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 29 1386/H/12 2007-08 -DO- -DO- 30 1387/H/12 2008-09 -DO- -DO- 31 1391/H/12 2005-06 PAVANI ESTATES, NELLORE (PAN AAKFP0763B ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI 32 1392/H/12 2006-07 -DO- -DO- 33 1393/H/12 2007-08 -DO- -DO- 34 1394/H/12 2008-09 -DO- -DO- 35 1447/H/12 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PAVANI ESTATES, NELLORE (PAN AAKFP0763B 36 1448/H/12 2007-08 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATHI SHRI B. KRISHNA RAO, NELLORE (PAN AVBPB7256M) 37 1449/H/12 2008-09 -DO- -DO- A SSESSEE BY : SHRI S. RAMA RAO DEPARTMENT BY : SHRI D. SUDHAKAR RAO DATE OF HEARING 10-01-2014 DATE OF PRONOUNCEMENT 28 - 02 - 201 4 4 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS O R D E R PER BENCH: ALL THESE APPEALS PERTAINING TO DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF CIT(A). SINCE COMM ON ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE CLUBBED AND HE ARD TOGETHER, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NO. 615/HYD/12 FOR AY 2002-03 IN CASE OF SMT. P . PAVANI 2. ASSESSEE HAS RAISED 4 GROUNDS. GROUND NO. 1 &4 A RE GENERAL IN NATURE, HENCE, NO NEED TO BE ADJUDICATED. THE LEARN ED AR DOES NOT WANT TO PRESS GROUND NO. 2, THEREFORE, THIS GROUND IS DI SMISSED AS NOT PRESSED. THE ONLY GROUND WHICH IS REQUIRED TO BE AD JUDICATED IS GROUND NO.3 PERTAINING TO ESTIMATION OF PROFIT @ 16%. 3. BRIEFLY THE FACTS RELATING TO GROUND NO. 3 ARE T HAT THE ASSESSEE AN INDIVIDUAL IS ENGAGED IN THE BUSINESS OF REAL ESTAT E AND CONSTRUCTION. FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE FILED HER RE TURN OF INCOME ON 13/08/2003 DECLARING TOTAL INCOME OF RS. 3,36,010/- . ON 23/01/2008, A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT WAS CONDUCTED IN CASE OF THE ASSESSEE AND HER HUSBAND SHRI P.B. RAGH AVA RAO AND OTHERS IN THE GROUP. DURING SEARCH OPERATIONS, CERT AIN INCRIMINATING MATERIALS WERE SEIZED BY THE DEPARTMENT. AS A RESU LT OF SEARCH, A NOTICE WAS ISSUED U/S 153A OF THE ACT CALLING UPON THE ASSESSEE TO FILE HER RETURN OF INCOME. IN RESPONSE TO THE SAID NOTIC E, THE ASSESSEE FILED HER RETURN OF INCOME ON 07/09/2009 DECLARING THE SA ME TAXABLE INCOME OF RS. 3,36,010/-. IT WILL BE PERTINENT TO MENTION HERE THAT DURING SEARCH PROCEEDING, THE ASSESSEE HAD ADMITTED AN AMOUNT OF RS. 30 LAKH AS UNDISCLOSED INCOME FOR DIFFERENT ASSESSMENT YEARS, THE DETAILS OF SUCH UNDISCLOSED INCOME ARE AS UNDER: 5 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 2003-04 RS. 10 LAKHS 2005-06 RS. 10 LAKHS 2006-07 RS. 03 LAKHS 2007-08 RS. 06 LAKHS 2008-09 RS. 01 LAKH 4. DURING THE SEARCH AND SEIZURE PROCEEDINGS, V ARIOUS BANK ACCOUNTS WHICH WERE NOT DISCLOSED TO THE DEPARTMENT WERE UNE ARTHED WHERE DEPOSITS WERE FOUND TO BE MADE AT REGULAR INTERVALS . DEPOSITS AT VARIOUS BANK ACCOUNTS FOR ALL THE ASSESSMENT YEARS PUT TOGE THER WAS QUANTIFIED AT RS. 2,51,71,713/-, WHICH MOSTLY REPRESENTED THE RECEIPTS FROM REAL- ESTATE BUSINESS. IT APPEARED FROM THE SEIZED MATER IAL THAT THE ASSESSEE HAD ROUTED PROCEEDS OF REAL ESTATE BUSINESS AND SIZ ABLE PORTION OF SUCH RECEIPTS/TURNOVER APPEARED TO HAVE NOT ACCOUNTED F OR THE PURPOSE OF TAX. THE TOTAL OF THE TURNOVER RECORDED FOR 7 YEARS WAS QUANTIFIED AT RS. 6,96,90,994/- INCLUDING AN AMOUNT OF RS. 4,04,550/- SHOWN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS STATED BY THE ASSESSEE THAT THESE AMOUNTS WERE CONSIDERED WHILE FURNISHING RETU RN OF INCOME U/S 153A AS AGAINST WHICH THE TOTAL AMOUNT OF RS. 4,93, 34,096/- WAS REFLECTED IN THE ORIGINAL RETURNS OF INCOME. THE D ETAILS OF TURNOVERS AND RETURNED INCOME AS PER THE ORIGINAL RETURN OF INCOM E VIS--VIS REVISED RETURN FILED U/S 153A AS INDICATED IN THE TABULAR F ORM IS REFLECTED HEREUNDER: AY GROSS RECEIPTS AS PER ROI U/S 153A GROSS RECEIPTS AS PER ROI U/S 139 INCREMENTAL TURNOVER (2-3) RETURNED INCOME AS PER ROI U/S 153A RETURNED INCOME AS PER ROI U/S 139 INCREMENTAL INCOME (5- 6) DISCLOSURE MADE U/S 132(4) ASSESSED INCOME INCLUDING RETURNED INCOME U/S 153A 02-03 404550 404550 - 336014 336014 - - 2933120 03-04 4736942 3675000 1061942 750519 450519 300000 1000000 3322779 04-05 4722982 3760000 962982 1082787 582787 500000 - 6742710 05 - 06 21576194 3964500 17611694 2756310 1556310 1200000 1000000 * 14452065 06 - 07 13022685 13022685 - 1549853 849853 700000 300000 20365046 07-08 15829807 15109500 720307 1272667 672667 60000 0 600000 4065588 08-09 9397834 9397834 - 1790229 - 1790229 100000* 1 4429597 TOTAL 69690994 49334069 20356925 9538379 4448150 50 90229 3000000 66310905 6 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS * IN ADDITION TO THE ABOVE AMOUNT, ASSESSEE ADMITTE D ADDITIONAL INCOME OF RS. 4,00,000 & 11,00,000 FOR AY 2005-06 & 2008-0 9, RESPECTIVELY. 5. THE AO AFTER CONSIDERING THE MATERIALS ON R ECORD REFERRED THE BOOKS OF ACCOUNT AS WELL AS SEIZED MATERIALS FOR SP ECIAL AUDIT U/S 142(2A) OF THE ACT. THE SPECIAL AUDITOR AFTER CONSI DERING THE MATERIALS AND BOOKS OF ACCOUNT SUBMITTED ITS AUDIT REPORT DAT ED 24/05/2010 BROADLY STATING AS UNDER: 1) THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONST RUCTION CONTRACT. 2) OPENING BALANCES DECLARED BY THE ASSESSEE HAVE B EEN RELIED UPON 3) NO VOUCHERS OR BILLS IN SUPPORT OF EXPENDITURE O R RECEIPTS ARE PRODUCED FOR VERIFICATION. 4) ON 11/03/2002 AN AMOUNT OF RS. 1,96,03,447/- IS SHOWN AS CASH RECEIVED FROM CH JANARDHAN REDDY AND CH ROHINI TOWA RDS BALANCE AMOUNT RECEIVABLE ON SALE OF HOTEL IN THE NARRATION IT IS WRITTEN BEING DDS ENCASHED. SUCH ENTRY IS NOT APPEARING IN THE B ANK STATEMENTS PRODUCED BEFORE THE ASSESSEE. 5) BANK STATEMENT OF OD IN ANDHRA PRADESH IS NOT PR ODUCED FOR VERIFICATION. 6) SAVING BANK ACCOUNT NO. 36328 WITH AB IS NOT REF LECTED IN THE BOOK. 7) THE DEPOSIT ANALYSIS OF BANK ACCOUNTS WHOSE STA TEMENTS ARE PRODUCED ARE AS FOLLOWS: (RS.) FY BANK A/C NO TOTAL DEPOSITS CHEQUES CASH INTEREST TRANS- FERS CASH WITHDRAWALS 01-02 ANDHRA BANK A/C 53312 # 38 0 0 38 0 0 01-02 ANDHRA BANK A/C 100088 # 692754 673000 19750 4 0 673000 01-02 ANDHRA BANK A/C 2298 # 871 855 0 16 0 0 693663 673855 19750 58 0 673000 ON THE BASIS OF SPECIAL AUDIT REPORT, THE AO COMPLE TED THE ASSESSMENT BY MAKING THE FOLLOWING ADDITIONS: 1) UNEXPLAINED CREDIT IN BANK ACCOUNT OF RS. 6,93,6 69/- 2) UNEXPLAINED CASH RECEIPT OF RS. 1,90,344/- 7 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS AS A RESULT TOTAL INCOME WAS DETERMINED AT RS. 29,3 3,120/-. 6. BEING AGGRIEVED OF THE ADDITIONS MADE IN THE ASSESSMENT ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 7. IN COURSE OF THE PROCEEDING BEFORE THE CIT (A), THE ASSESSEE CONTENDED THAT THE MAJORITY OF THE ADDITIONS HAVE B EEN MADE BY THE AO IN AN ARBITRARY MANNER WITHOUT CONSIDERING THE GROS S INCOME SHOWN IN THE RETURNS OF INCOME FILED IN RESPONSE TO THE NOTI CE U/S 153A OF THE ACT. IT WAS CONTENDED THAT THE SPECIAL AUDITORS HAVE NOT CONSIDERED THE BOOKS OF ACCOUNT PRESENTED IN SUPPORT OF RETURNS OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A. IT WAS SUBMITTED THAT BANK CREDITS WERE TREATED AS UNACCOUNTED RECEIPTS EXCLUDING THE TRANS ACTIONS IN BOOKS OF ACCOUNT, WHICH RESULTED IN ADDITIONS UNDER THE HEAD UNDISCLOSED BANK ACCOUNT, ALTHOUGH, THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNT WHICH IN TURN WERE RELIED UPON BY THE ASSES SEE FOR FILING RETURNS OF INCOME U/S 153A. THE VARIOUS ADDITIONS MADE BY T HE AO IN THE AFORESAID MANNER IN DIFFERENT ASSESSMENT YEARS ON THE BASIS OF THE SPECIAL AUDIT REPORT ARE AS UNDER: AY CREDITS IN BANK A/CS EXTRA/ON MONEY RECEIPTS/CASH CREDITS UNDISCLOSED INVESTMENT IN JEWELLERY/PROP ERTY CHIT LOSS DISALLOWANCES U/S 40(A)(IA)/40A(3 ) ADHOC DISALLOWANC E OF EXPENDITURE NEGATIV E CASH BALANCE 02-03 693663 1903447 - - - - - 03-04 2084249 236000 - - - 252010 - 04 - 05 4268680 - - 128513 1005676 257000 - 05-06 7720605 236000 - 149652 4 - 289724 1952902 06-07 3490301 5310000/ 7617150 - - 884400 1601135 - 07-08 1462949 - - - 163000/ 21900 1232869 - 08-09 5451266 - 601847/ 900889 336978 NIL/ 4900000 536177 - TOTAL 25171713 7685447/ 7617150 601847/ 900889 196201 5 2053076/ 4921000 4168915 1952902 8. ON THE BASIS OF THE SUBMISSIONS MADE BY TH E ASSESSEE AS WELL AS MATERIALS SUBMITTED BEFORE HIM, THE CIT(A) CALLED F OR A REMAND REPORT 8 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS FROM THE AO. IN THE REMAND REPORT DATED 20/10/2011, THE AO STATED AS UNDER: 1. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS CLAIM ED THAT THE CASH DEPOSITS AMOUNTING TO RS. 19,750/- IN BANK ACC OUNT WHICH WERE ALREADY INCLUDED IN CASH BOOKS AND REFLECTED A S CONTRA ENTRIES WERE TREATED AS UNDISCLOSED INCOME BY THE A O. IN SUPPORT OF HIS CLAIM THE ASSESSEE HAS PRODUCED T HE COPIES OF ANDHRA BANK JOINT A/C (100088) BOOK, COPY OF CASH B OOK IN THE BOOKS OF THE ASSESSEE. ON VERIFICATION OF THE ABOVE ACCOUNT COPIES IT IS FOUND THAT THE ABOVE AMOUNTS WERE REFL ECTED BY THE ASSESSEE IN HIS CASH BOOK. 2. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS CLAIM ED THAT SAVINGS BANK INTEREST ALREADY CONSIDERED BY THE ASS ESSEE IN HIS BOOKS OF ACCOUNT WAS TREATED AS CONTRACT RECEIPTS A ND ADDED TO THE UNDISCLOSED INCOME. AS PER THE SPECIAL AUDIT RE PORT THE BANK INTEREST RECEIVED BY THE ASSESSEE ON THE SB ACCOUNT S HELD BY THE ASSESSEE DURING THE FY 2001-02 IS RS. 58/-. ON VERI FICATION OF THE P&L ACCOUNT AND BALANCE SHEET OF THE ASSESSEE, IT I S FOUND THAT THE BANK INTEREST OF RS. 58/- IS NOT ACCOUNTED FOR BY THE ASSESSEE IN HER BOOKS OF ACCOUNTS. 3. THE TOTAL DEPOSIT IN THE ANDHRA BANK A/C NO. 229 8 DURING THE FY 2001-02 AS REPORTED IN THE SPECIAL AUDIT REPORT WAS RS. 871 WHICH WAS TAKEN BY THE AO AS UNDISCLOSED INCOME. WH EREAS THE ACTUAL DEPOSITS IN THIS ACCOUNT DURING THE FY 2001- 02, AS VERIFIED FROM THE COPY BANK ACCOUNT STATEMENT PRODUCED BY TH E ASSESSEE ARE RS. 16 ONLY. THUS, THE TOTAL DEPOSITS IN THE AN DHRA BANK A/C NO. 2298 DURING THE FY 2001-02 WAS OVER STATED BY R S. 855 ( NOT RS. 857 AS POINTED OUT BY THE ASSESSEE IN HER WRITT EN SUBMISSIONS). 4. AMOUNTS RECEIVED FROM OTHER ASSESSEES DULY ACCO UNTED IN BOOKS SUPPORTING RETURN OF INCOME U/S 153A. THE ASS ESSEE HAS CLAIMED THAT SHE HAS RECEIVED AN AMOUNT OF RS. 6,73 ,000/- FROM CH. VANAJAKSHAMMA THROUGH ANDHRA BANK A/C NO. 10008 8 AND THE SAME WAS CONSIDERED IN BOOKS SUPPORTING RETURN OF I NCOME U/S 153A WHICH WAS WRONGLY ADDED BY THE AO AS UNDISCLOS ED INCOME, IT IS VERIFIED FROM THE BANK ACCOUNT THAT RS. 6,73, 000/- WAS DEPOSITED BY CH. VANAJAKSHAMMA ON 15/10/2001 AND TH E SAME WAS TRANSFERRED TO CH. VANAJAKSHAMMA ON THE SAME DA Y. 8.1 THE CIT(A) ON CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS OTHER MATERIALS ON RECORD AND THE REMAND R EPORT SUBMITTED BY 9 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS THE AO NOTED THAT THE AO IN THE REMAND REPORT HAS A CCEPTED THE FACT THAT THE CREDITS INTO THE BANK ACCOUNT STAND EXPLAI NED EXCEPT SMALL VARIATIONS IN FIGURES. HE FURTHER NOTED THAT THE SU BMISSIONS OF THE ASSESSEE AND RECONCILIATION MADE BY THE AO IN THE R EMAND REPORT ARE BASED ON THE REVISED BOOKS OF ACCOUNT WHILE THE ADD ITIONS MADE BY THE AO WAS ON THE BASIS OF OLD BOOKS OF ACCOUNT, SEIZED MATERIAL AS WELL AS THE OBSERVATIONS OF THE SPECIAL AUDIT. THE CIT(A) HAVING NOTED THE FACT THAT VARIOUS CREDITS INTO THE BANK ACCOUNTS WERE IN CORPORATED IN THE REVISED BOOKS OF ACCOUNT, WHICH WERE TAKEN AS BASIS BY THE ASSESSEE FOR FILING RETURN U/S 153A OF THE ACT, THERE IS NO BASI S FOR TREATING THE AMOUNT OF RS. 6,93,669/- AS UNEXPLAINED CREDIT. WITH REGAR D TO ADDITION OF RS. 19,03,447/- REPRESENTING THE AMOUNT SHOWN TO HAVE B EEN RECEIVED IN CASH FROM SHRI CH. JANARDHAN REDDY AND SMT. CH. ROH INI TOWARDS BALANCE AMOUNT RECEIVABLE ON SALE OF HOTEL, THE CIT (A) NOTED THAT THE AO HAS MADE THE ADDITION SOLELY ON THE BASIS OF THE OBSERVATIONS MADE BY THE SPECIAL AUDIT AND WITHOUT CONSIDERING THE RE PLY OF THE ASSESSEE THAT THE PARTIES WHO HAVE PURCHASED THE HOTEL HAVE ARRANGED FOR PAYMENTS BY WAY OF PAY ORDERS IN CASH, THEREFORE, T HE SAME WAS NOT APPEARING IN THE BANK ACCOUNT. ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE, REMAND REPORT WAS CALLED FOR FROM THE AO. FROM THE REMAND REPORT AS WELL AS OTHER MATERIALS ON RECORD, IT WAS NOTED BY THE CIT(A) THAT THE AMOUNT OF RS. 19,03,447/- ACTUALLY REPRESENT SALE CONSIDERATION OF THE HOTEL LOCATED AT NELLORE AND T HERE ARE INDEED SOME ENTRIES WRONGLY PASSED IN THE BOOKS OF ACCOUNT INDI CATING THE SAID RECEIPTS, WHICH LED TO THE AO TO CONCLUDE THAT THE SAME REPRESENTS UNEXPLAINED CASH RESULTING IN ADDITION. THE CIT(A) AFTER EXAMINING COPIES OF THE SALE DEED AS WELL AS OTHER RELATED DE TAILS FURNISHED FOUND THAT THE AMOUNT ACTUALLY REPRESENT THE ACTUAL RECEI PT ON WHICH CAPITAL GAINS HAVE BEEN DULY CALCULATED AND SHOWN IN THE IN COME TAX RETURN SUBMITTED BY THE ASSESSEE. HE, THEREFORE, WAS OF TH E VIEW THAT AS THERE IS NO ADDITIONAL MATERIAL TO TREAT THE SAID AMOUNT AS UNACCOUNTED INCOME 10 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS OF THE ASSESSEE, THERE IS NO GROUND TO MAKE THE ADD ITION ON THE BASIS OF THE CASH ENTRY IN THE BOOKS OF ACCOUNT AND OBSERVAT IONS BY THE SPECIAL AUDIT. IT WAS NOTED BY THE CIT(A) THAT SINCE THE SP ECIAL AUDIT HAS RELIED ON THE OLD BOOKS OF ACCOUNT WHEREAS THE CREDIT ENTR IES WERE MADE IN THE REVISED BOOKS OF ACCOUNT, WHICH WAS RELIED UPON BY THE ASSESSEE FOR FURNISHING RETURNS OF INCOME U/S 153A, THE ADDITION MADE IS NOT SUSTAINABLE. HAVING HELD SO, THE CIT(A) NOTED THAT FROM THE FINDINGS OF THE AO AND SUBMISSIONS OF THE ASSESSEE WITH REGARD TO THE ADDITIONS MADE IN THE ASSESSMENT ORDER, CERTAIN DEFICIENCIES AND INCONSISTENCIES WERE NOTICED AS REGARDS THE STAND TAKEN BOTH BY TH E ASSESSEE AS WELL AS THE AO. AS AN ILLUSTRATION, THE CIT(A) NOTED THE FOLLOWING DEFICIENCIES: 1) THE ASSESSEE DISALLOWED A SMALL PORTION OF THE E XPENSES WHILE FURNISHING RETURN OF INCOME, KNOWING WELL THAT THE VOUCHERS/BILLS FOR THE SAME ARE NOT FULLY VERIFIABLE THEREBY INVIT ING FURTHER INTERVENTION OF THE AO IN MAKING MORE DISALLOWANCES ON SOME OCCASIONS. 2) WHILE FURNISHING RETURN OF INCOME, DISALLOWANCE OF CERTAIN EXPENDITURE AS PER THE STATUTORY PROVISIONS OF SECT ION 40A(3) AND SECTION 40(A)(IA) WERE NOT UNDERTAKEN BY THE ASSESS EE THEREBY INVITING FURTHER INTERFERENCE FROM THE AO AND REPOR T OF THE SPECIAL AUDIT. 3) THE AO HAS SELECTIVELY CHOSEN TO APPLY THE PROVI SIONS OF SECTION 40A(3) AS POINTED OUT BY THE SPECIAL AUDIT. EXTRA/INCREMENTAL EXPENDITURE WERE NOT SUBJECTED TO THE DISCUSSION WITH REFERENCE TO THE APPLICABILITY OF S ECTION 40A(3) AND SECTION 40(A)(IA) AND ALSO RELEVANCE OF THE SAME TO THE BUSINESS INCOME. 4) ON EXAMINING THE REMAND REPORT OF THE AO, IN THE AFORESAID CONTEXT, THE CIT(A) NOTED THAT THE AO IN THE REMAND REPORT HAS 11 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ONLY CONSIDERED THE ISSUE RELATING TO CREDITS IN TH E UNDISCLOSED BANK ACCOUNTS AND ANALYZING THE REVENUE RECEIPTS IN THE BANK ACCOUNT INCLUDING ON MONEY/EXTRA MONEY BUT HE WAS C OMPLETELY SILENT ON THE ADHOC 20% DISALLOWANCE OF THE EXPENDI TURE UNDER CERTAIN HEADS REFLECTED IN THE OLD SEIZED BOOKS WHE REAS HE IS ALTOGETHER SILENT ON THE INCREMENTAL EXPENDITURE. 8.2 THE CIT(A) NOTED THAT THE SPECIAL AUDIT REPO RT AS WELL AS REMAND REPORT INDICATE THAT WHILE MAKING ADDITIONS UNDER T HE HEAD CREDITS IN BANK ACCOUNTS, NEITHER THE ORIGINAL BOOKS OF ACCOU NT NOR RECONSTRUCTED BOOKS OF ACCOUNT HAVE BEEN CONSIDERED IN ASSESSING THE BUSINESS INCOME. THE REMAND REPORT WAS CONFINED TO ONLY ISSU ES OF UNDISCLOSED BANK ACCOUNTS AND ON MONEY RECEIPTS AND DID NOT MAKE ANY COMMENT/OBSERVATIONS ON THE ADEQUACY OF BILLS AND V OUCHERS IN SUPPORT OF RETURN FILED U/S 153A. HE NOTED THAT THOUGH BILL S AND VOUCHERS SUPPORTING RETURN FILED U/S 153A WERE FURNISHED IN COURSE OF ASSESSMENT PROCEEDINGS, WHICH APPEARS TO HAVE NOT BEEN EXAMINE D BY AO. THE CIT(A) NOTED THAT ADDITIONS MADE BY THE AO IN RESPE CT OF UNACCOUNTED INVESTMENTS, UNEXPLAINED EXPENDITURE ETC. WERE FOUN D TO HAVE BEEN INFLUENCED BY SEIZED MATERIAL AND SPECIAL AUDIT REP ORT, RATHER THAN THE CONTENTS OF BOOKS OF ACCOUNT MAINTAINED AND RETURNS OF INCOME FILED BY THE ASSESSEE. HE OBSERVED THAT ASSESSEE WAS ADMITTI NG CASH RECEIPTS AS INCOME WITHOUT CONSIDERING THE COMMENCEMENT AND STAGES IN COMPLETION OF THE PROJECTS ON HAND, IN SPITE OF THE FACT THAT ASSESSEE IS ENGAGED IN VARIOUS PROJECTS AT DIFFERENT PLACES. AD VANCES RECEIVED FOR FUTURE PROJECTS WERE ALSO ADMITTED AS INCOME, AS A RESULT OF WHICH NEXUS CANNOT BE ESTABLISHED BETWEEN THE TURNOVER REFLECTE D IN THE BOOKS OF ACCOUNT AND CORRESPONDING EXPENDITURE/INCOME OF EAC H PROJECT. HE NOTED THAT IN COURSE OF ASSESSMENT PROCEEDING NEITH ER ASSESSEE NOR AO HAS ESTABLISHED THE NEXUS BETWEEN INCOME AND EXPEND ITURE PROJECT WISE, AS THERE IS NO CLARITY ON THE EXPENDITURE INC URRED ON EACH PROJECT 12 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS VIS--VIS REVENUE RECOGNIZED IN EACH OF THE YEAR SP ECIAL AUDIT ALSO OBSERVED THAT, ASSESSEES TURNOVER COULD NOT BE COR RECTLY ASCERTAINED, AS ASSESSEE HAS OFFERED TOTAL RECEIPTS AS INCOME. A S A RESULT OF METHODOLOGY FOLLOWED BY THE ASSESSEE IN RECOGNIZING REVENUE, THE PERCENTAGE OF PROFIT MAY VARY FROM YEAR TO YEAR FOR THE SAME PROJECTS WHICH MAY HAVE OVERLAPPED INTO MORE THAN ONE FINANC IAL YEAR. THE CIT(A) OBSERVED THAT THERE ARE DEFECTS AND DISCREPA NCIES IN MAINTAINING THE BOOKS OF ACCOUNT AND ALSO THE METHOD OF RECOGNI ZING REVENUE. THE CIT(A) FELT THAT ON THIS BASIS ALONE THE AO COULD H AVE REJECTED THE BOOKS OF ACCOUNT AND PROCEEDED TO ESTIMATE INCOME AT A PE RCENTAGE OF THE TURNOVER ON REASONABLE BASIS. 8.3 THE CIT(A) AFTER CONSIDERING PROS AND CONS OF THE ENTIRE MATERIAL AVAILABLE BEFORE HIM, INFERRED THAT THE BOOKS OF AC COUNT OF THE ASSESSEE WERE DEEMED TO HAVE BEEN REJECTED IN THE COURSE OF ASSESSMENT. HE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE WAS OF THE OPINION THAT IN THE GIVEN CIRCUMSTA NCES, A FAIR ESTIMATION OF THE PROFITS ON THE TURNOVERS WOULD TAKE CARE OF THE DEFECTS/DEFICIENCIES AS FOUND IN THE CASE. THE CIT( A), THEREAFTER, CONSIDERING THE PROFITS FOR EACH OF THE ASSESSMENT YEAR BASED ON THE ADDITIONS/DISALLOWANCES WHICH HAVE BEEN CONFIRMED O R DEEMED TO HAVE BEEN CONFIRMED UNDER VARIOUS HEADS AS GIVEN IN TABU LAR FORM IN PARA 7.3 OF HIS ORDER FOUND THAT THE PROFITS FOR EACH OF THE ASSESSMENT YEAR ARE VARYING WITH MINIMUM OF 9.00% IN THE AY 2007-08 TO A MAXIMUM OF 37.23% IN AY 2004-05. THE CIT(A) NOTED THAT SINCE T HERE WILL BE OVERLAPPING OF INCOMES AND EXPENDITURE OF THE PROJE CTS IN MORE THAN ONE FY, IT WILL BE REASONABLE TO WORK OUT AVERAGE RATE/ PROFIT OF THE 7 ASSESSMENT YEARS. THE CIT(A) ON THE BASIS OF THE PR OFITS FOR EACH ASSESSMENT YEAR AS MENTIONED IN THE TABULAR FORM FO UND THAT THE AVERAGE OF THE BUSINESS PROFIT ON THE TOTAL TURNOVE R IN ALL THE ASSESSMENT YEARS PUT TOGETHER WORKED OUT TO 15.47% INCLUDING THE BUSINESS LOSS FOR 13 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS AY 2002-03. HE FURTHER NOTED THAT AGGREGATE PERCENT AGE OF 15.47% WAS WORKED OUT DUE TO SIGNIFICANT AMOUNT ADJUSTED/TREAT ED UNDER THE HEADS SUCH AS DISALLOWANCES U/S 40A(3) AMOUNTING TO RS. 1 0,05,676/- FOR AY 2004-05 AND NEGATIVE CASH BALANCE OF RS. 19,52,902/ - FOR AY 2005-06, WHICH WAS ON THE BASIS OF SKELETAL INFORMATION AVAI LABLE IN OLD BOOKS OF ACCOUNT RELIED UPON BY THE AO AND SPECIAL AUDIT WHE REAS THE RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO SECTION 153A WAS ON THE BASIS OF REVISED SET OF BOOKS OF ACCOUNTS. HE, THER EFORE, OPINED THAT THERE IS A POSSIBILITY OF DUPLICATION OF TAX ON ACC OUNT OF DISALLOWANCES OF FEW EXPENSES. THE CIT(A), THEREFORE, RELYING UPON H IS FINDING IN ASSESSEES OWN CASE FOR THE AY 2006-07 WITH REGARD TO ON MONEY/EXTRA RECEIPTS FROM THE PROJECTS, VIZ., PAVANI PRESTIGE , PAVANI CLASSIC PROCEEDED TO ADOPT THE RATE OF NET PROFIT AT 16% FO R ALL 7 ASSESSMENT YEARS INCLUDING THE IMPUGNED ASSESSMENT YEAR. 8.4 ON THE AFORESAID LINE, THE CIT(A) DIRECT ED THE AO TO ESTIMATE THE INCOME OF THE ASSESSEE AT 16% ON THE TOTAL TURN OVER. 9. THE ONLY CONTENTION ADVANCED BY THE LEA RNED AR BEFORE US IS THE RATE ADOPTED AT 16% IS HIGH AND EXCESSIVE AND C ANNOT BE ACCEPTED IN THIS PARTICULAR LINE OF BUSINESS. THE LEARNED DR ON THE OTHER HAND SUBMITTED THAT THE PROFIT RATE ADOPTED AT 16% IS FA IR AND REASONABLE REQUIRING NO INTERFERENCE. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. FROM THE ELABORATE DISCUSSIONS OF FACTS AND REASONING GIVEN BY THE CIT(A), WE FULLY AGREE W ITH THE CIT(A) THAT IN ASSESSEES CASE INCOME HAS TO BE DETERMINED BY ESTI MATION ONLY. THE CIT(A) HAS ALSO ACCEPTED ADDITIONAL TURNOVER AS BUS INESS RECEIPTS. IT IS ALSO NOT DISPUTED THAT ASSESSEE IS ENGAGED IN CONST RUCTION BUSINESS. THEREFORE, CONSIDERING THE NATURE OF BUSINESS OF TH E ASSESSEE, ESTIMATION OF PROFIT AT 16% IS CERTAINLY ON THE HI GHER SIDE. MORE SO, 14 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS WHEN IT IS FOUND THAT ASSESSEE IS FOUND TO HAVE OFF ERED THE TOTAL RECEIPTS AS INCOME AND EVEN HAS SHOWN ADVANCES RECEIVED FOR FUTURE PROJECTS AS INCOME. THIS TRIBUNAL HAS BEEN CONSISTENTLY TAKING A VIEW THAT IN CASE OF ESTIMATION OF PROFIT IN RESPECT OF CONSTRUCTION BUS INESS ON REJECTION OF BOOKS OF ACCOUNT, NET PROFIT RATE WOULD BE 12.5% BE FORE DEPRECIATION OR 8% INCLUDING DEPRECIATION. CONSIDERED IN THE AFORES AID PERSPECTIVE, THE NET PROFIT ADOPTED AT 16%, BEING ON THE HIGHER SIDE , WE ARE OF THE VIEW THAT PROFIT RATE OF 8% WOULD BE FAIR AND REASONABLE CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE. WE, THEREFORE, DIRECT THE AO TO ESTIMATE THE PROFIT BY APPLYING RATE OF 8%, N ET OF ALL DEDUCTIONS, ON THE TURNOVER DECLARED BY THE ASSESSEE. ACCORDIN GLY, THIS GROUND IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL IN ITA NO. 615/H/1 2 IS PARTLY ALLOWED. ITA NO. 616/H/12 FOR AY 2003-04 IN CASE OF P. PAVAN I 11. ASSESSEE HAS RAISED 4 GROUNDS. GROUND NO. 1 & 4 ARE GENERAL IN NATURE, HENCE, NO NEED TO BE ADJUDICATED. THE LEARN ED AR DID NOT PRESS GROUND NO. 2, THEREFORE, THIS GROUND IS DISMISSED A S NOT PRESSED. 12. THE ONLY GROUND WHICH IS REQUIRED TO BE AD JUDICATED IS GROUND NO.3 PERTAINING TO ESTIMATION OF PROFIT @ 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECIDED BY US IN AY 2002-03 IN ITA NO. 615/H/12 VIDE PARAS 2 TO 10 (SUPRA) AND, THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIM ATE THE NET PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER, DECLARED BY TH E ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 13. IN THE RESULT, APPEAL IN ITA NO. 616/H/ 12 IS PARTLY ALLOWED. ITA NO. 617/HYD/12 FOR AY 2004-05 IN CASE OF P. PA VANI. 15 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 14. GROUND NO. 1 & 5 DO NOT REQUIRE ANY ADJUDI CATION AS THEY ARE GENERAL IN NATURE. . GROUND NO. 3 WAS NOT PRESSED AND THE SAME IS DISMISSED AS NOT PRESSED. 15. GROUND NO.4 IS PERTAINING TO ESTIMATION O F PROFIT @ 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUN D DECIDED BY US IN AY 2002-03 IN ITA NO. 615/H/12 VIDE PARAS 2 TO 10 (SUP RA) AND, THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT T HE AO TO ESTIMATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECL ARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 16. GROUND NO. 2 RELATES TO DISALLOWANCE OF EXPENDITURE AMOUNTING TO RS. 10,05,676/- U/S 40(A)(IA) OF THE ACT. 17. BRIEFLY THE FACTS ARE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE SPECIAL AUDIT IN ITS REPORT HAS POINTED OUT THAT AN AMOUNT OF RS. 10,05,676/- WAS PAID THRO UGH CHEQUES/CASH TO CREDITORS FOR EXPENSES TOWARDS LABOUR/MATERIAL WITH OUT DEDUCTING TAX AT SOURCE. WHEN ASKED TO REPLY, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT GIVEN ANY WORK ON CONTRACT BASIS. THE AO, H OWEVER, HELD THAT PAYMENTS MADE ATTRACT TDS PROVISIONS. SINCE THE ASS ESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE PAYMENT OF RS. 10,05, 676/-, THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE BY MAKING DISAL LOWANCE U/S 40(A)(IA) OF THE ACT. 18. BEING AGGRIEVED OF THE SAID DISALLOWANCE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) CONFIRME D THE ADDITION. 19. WE HAVE HEARD THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IT IS TO BE NOTED THAT THE CIT(A) IN THE ORDER PASSED HAS HELD THAT THE ASSESSEES BOOKS OF ACCOUNT DEEMED TO HAVE BEEN REJ ECTED AND THE PROFIT WAS ESTIMATED AT 16%. THEREFORE, WHEN THE BO OKS OF ACCOUNT HAVE BEEN REJECTED AND PROFIT ESTIMATED, NO SEPARATE DIS ALLOWANCE OF EXPENDITURE CAN BE MADE AS DISALLOWANCE U/S 40(A)(I A) IS STATUTORY 16 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS DISALLOWANCE. THE HONBLE AP HIGH COURT IN CASE OF INDWELL CONSTRUCTIONS, 232 ITR 776 (AP) HAS HELD THAT IN C ASE OF REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF PROFIT ALL ALLOW ANCES AND DEDUCTIONS FROM SECTION 30 TO 44 IS DEEMED TO HAVE BEEN TAKEN CARE OF, THEREFORE, NO SEPARATE DEDUCTION/DISALLOWANCE CAN BE MADE ONCE PROFIT IS ESTIMATED BY APPLYING A FIXED RATE. ITAT CALCUTTA SPECIAL BENCH IN CASE OF ITO VS. KENARAM SAHA AND SUBHASH SAHA, [301 ITR 171 (AT)] HELD AS FOLLOWS: NOW COMING TO THE DEPARTMENTAL APPEAL IN THE CASE OF SRI SHYAMAL KR. DEY VIDE I. T. A. NO. 1772 (KOL)/2007, THE ASSESSING OF FICER HAS DETERMINED THE INCOME BY APPLYING A NET PROFIT RATE OF THE TURNOVE R. THE ASSESSING OFFICER IN ADDITION TO THE DETERMINATION OF NET PROFIT AS A PE RCENTAGE OF TURNOVER, MADE FURTHER DISALLOWANCE UNDER SECTION 40A(3). THE COMM ISSIONER OF INCOME- TAX (APPEALS) DELETED THE DISALLOWANCE MADE UNDER S ECTION 40A(3). THE REVENUE AGGRIEVED WITH THE ORDER OF THE COMMISSIONE R OF INCOME-TAX (APPEALS) IS IN APPEAL BEFORE US. IT IS CONTENDED B Y LEARNED COUNSEL THAT ONCE A NET PROFIT RATE IS APPLIED, NO FURTHER ADDIT ION/DISALLOWANCE CAN BE MADE UNDER SECTION 40A(3). IN SUPPORT OF THIS CONTE NTION, HE HAS RELIED UPON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COU RT IN THE CASE OF CIT V. BANWARI LAL BANSHIDHAR IN WHICH THEIR LORDSHIPS HEL D AS UNDER (HEADNOTE): AFFIRMING THE DECISION OF THE TRIBUNAL, THAT NO DI SALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 40A(3) RE AD WITH RULE 6DD(J) OF THE INCOME-TAX RULES, 1962, AS NO DEDUCTI ON WAS ALLOWED TO AND CLAIMED BY THE ASSESSEE. WHEN THE GROSS PROF IT RATE WAS APPLIED, THAT WOULD TAKE CARE OF EVERYTHING AND THE RE WAS NO NEED FOR THE ASSESSING OFFICER TO MAKE SCRUTINY OF THE AMOUN T INCURRED ON THE PURCHASES MADE BY THE ASSESSEE. THE ABOVE DECISION OF THE HON'BLE ALLAHABAD HIGH C OURT WOULD BE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. WHEN A NET PROFIT RATE IS APPLIED, THERE REMAINS NO SCOPE FOR FURTHER DISALLOWANCE OF ANY EXPENDITURE. IN VIEW OF THE ABOVE, WE RESPECTFULLY FOLLOWING THE ABOVE D ECISION OF THE HON'BLE ALLAHABAD HIGH COURT HOLD THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE UNDER SE CTION 40A(3) MADE BY THE ASSESSING OFFICER. ACCORDINGLY, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DISMISS THE REVENUE'S APPE AL. 19.1 THE COORDINATE BENCH OF THIS TRIBUNAL IN C ASE OF M/S TEJA CONSTRUCTIONS VS. ACIT IN ITA NO. 308/HYD/2009, DAT ED 23/10/2009 17 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS WHILE CONSIDERING IDENTICAL ISSUE OF DISALLOWANCE U /S 40(A)(IA) OF THE ACT IN CASE OF ESTIMATION OF PROFIT FOLLOWING THE DECIS ION OF THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF INDWELL (SUPRA) AN D IN CASE OF ITO VS. KENARAM SAHA (SUPRA), DIRECTED TO DELETE THE ADDITI ON MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN THE AFORESAID VIEW OF THE MATTER, WE HOLD THAT NO SEPARATE DISALLOWANCE U/S 4 0(A)(IA) OF THE ACT CAN BE MADE WHEN THE PROFIT OF THE ASSESSEE HAS BEE N ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION OF RS. 10,05,676/- MADE ON THIS COUNT. 19.2 IN THE RESULT, APPEAL OF THE ASSESSEE IN I TA NO. 617/HYD/12 IS PARTLY ALLOWED. ITA NO. 677/HYD/12 FOR AY 2004-05 BY REVENUE IN CAS E OF SMT. P. PAVANI 20. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 16% ON THE TURNOVER. 21. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, T HE AO WHILE COMPLETING THE ASSESSMENT HAS MADE THE FOLLOWING AD DITIONS: I) DISALLOWANCE OF EXPENDITURE FOR WANT OF BILLS OF RS. 2,57,000/-, II) INCORRECT CREDITS IN BANK ACCOUNT RS. 42,68,680/- A ND III) CHIT LOSS OF RS. 1,28,513/-. 22. IT IS FURTHER EVIDENT FROM THE ASSESSMENT OR DER THAT AFORESAID ADDITIONS WERE MADE ONLY ON THE BASIS OF THE OLD B OOKS OF ACCOUNT FOUND AT THE TIME OF SEIZURE AS WELL AS THE OBSERVA TIONS MADE BY THE SPECIAL AUDIT. 18 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 23. SO FAR AS THE DISALLOWANCE OF RS. 2,57,000/- DUE TO WANT OF BILLS AND VOUCHERS IS CONCERNED, ON PERUSAL OF PARA 4.4 O F THE ORDER PASSED BY THE CIT(A), WE ARE OF THE VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS COME TO A JUST AND FAIR CONCLUSION. IT IS A FACT THAT THE ASSESSEE HIMSELF HAS DISALLOWED AN AMOUNT OF RS. 1,85,140/- OUT OF THE EXPENDITURE CLA IMED WHILE TAKING INTO CONSIDERATION THE FACT THAT FULL SETS OF BILLS AND VOUCHERS ARE NOT AVAILABLE. FURTHER, BOOKS OF ACCOUNT OF THE ASSESSE E WERE FOUND TO BE DEFECTIVE HENCE, PROFIT WAS ESTIMATED BY REJECTING THEM. ONCE, PROFIT IS ESTIMATED REJECTING THE BOOKS OF ACCOUNT NO SEPARAT E DISALLOWANCE OF EXPENDITURE CAN BE MADE. THEREFORE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 24. SIMILARLY, WITH REGARD TO THE ADDITION MADE OF RS. 42,68,680/- ON ACCOUNT OF INCORRECT CREDITS IN BANK ACCOUNTS, AS C AN BE SEEN FROM THE EXTRACT OF THE REMAND REPORT AT PARA 5.3 OF THE CIT (A)S ORDER, THE AO HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT TH E BANK CREDITS HAVE ALREADY BEEN CONSIDERED BY HIM AS CONTRACT RECEIPTS IN THE REVISED BOOKS OF ACCOUNT AND TAKEN INTO CONSIDERATION WHILE FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153A OF THE ACT. H E HAS FURTHER STATED THAT ON VERIFICATION OF THE ACCOUNT COPIES, IT WAS FOUND THAT THE RECEIPTS WERE REFLECTED BY THE ASSESSEE IN THE RECONSTRUCTED BOOKS OF ACCOUNT AND WERE INCLUDED IN THE TURNOVER SHOWN BY THE ASSE SSEE DURING THE YEAR. THAT BEING THE CASE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION AS THE SO-CALLED UNEXPLAINED CREDITS IN TH E BANK HAVE BEEN RECONCILED BY THE ASSESSEE AND CONSIDERED AS A TURN OVER IN THE RETURN FILED IN RESPONSE TO SECTION 153A OF THE ACT. IN TH AT VIEW OF THE MATTER, THE ADDITION WOULD NOT SURVIVE. SIMILARLY WITH REGA RD TO CHIT LOSS OF RS.1,28,513/-THE CIT(A) HAS NOTED THE FACT THAT THE CHIT IN FACT WAS SUBSCRIBED BY HIM WITH MARGADARSHI CHIT FUND PVT. L TD. AND AS SUCH THE BID AMOUNT WAS TAKEN TO THE BOOKS OF ACCOUNT, THERE FORE, WHEN THE 19 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS AMOUNT WAS UTILIZED FOR THE PURPOSE OF BUSINESS, TH E CHIT LOSS ARISING BECOMES ALLOWABLE EXPENDITURE. THAT APART, WHEN CON SIDERING THE DEFECTS/DEFICIENCIES/SHORTCOMINGS IN THE ACCOUNTS O F THE ASSESSEE PROFIT HAS BEEN ESTIMATED THEN THE ESTIMATION MADE TAKES C ARE OF ALL SUCH DEFECTS AND DEFICIENCIES, THEREFORE, NO SEPARATE AD DITION CAN BE MADE ON ACCOUNT OF SUCH DEFECT AND DEFICIENCY. IT IS ALS O A FACT THAT DEPARTMENT HAS ACCEPTED SUCH ESTIMATION OF PROFIT F OR PRECEDING AYS 2002-03 AND 2003-04. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING THE ADDITIONS MADE BY THE AO. ACCORDINGLY, REVENUE APPEAL IS DISMISSED. 25. IN THE RESULT, APPEAL OF THE REVENUE IN IT A NO. 677/H/12 IS DISMISSED. ITA NO. 618/H/12 FOR AY 2005-06 BY THE ASSESSEE IN CASE OF SMT. P. PAVANI 26. GROUND NO. 1 & 5 ARE GENERAL IN NATURE, HENC E, NEED NO ADJUDICATION. GROUND NO. 3 WAS NOT PRESSED BY THE A SSESSEE, HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 27. GROUND NO. 4 RELATES TO ESTIMATION OF PR OFIT AT 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECID ED BY US IN AY 2002-03 IN ITA NO. 615/H/12 VIDE PARAS 2 TO 10 (SUPRA) , TH EREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIM ATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECLARED BY TH E ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 28. GROUND NO. 2 RELATES TO THE ACTION OF T HE CIT(A) IN CONFIRMING THE ADDITION OF RS. 19,52,902/- MADE ON ACCOUNT OF NEGATIVE CASH BALANCE. 29. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE AO NOTED THAT THE SPECIAL AUDIT IN ITS REPORT HAS POINTED OU T CASH IN HAND IS ON 20 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS NEGATIVE SIDE ON DIFFERENT DATES AND THE MAXIMUM NE GATIVE CASH BALANCE IS RS. 19,52,902 ON 22/10/2004. WHEN THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THIS, SHE REPLIED THAT THE NEGATIVE CASH BALANCE IS DUE TO WRONG RECORDING OF ENTRIES IN THE BOOKS OF ACCOUNT AND IT HAD HAPPENED DUE TO A MISTAKE OF THE ACCOUNTANT IN NOT RECORDING TRANSACTIONS AS PER THE DATE OF TRANSACTION. AO, THEREFORE, OBSERVING T HAT THE ASSESSEES VERSION CLEARLY INDICATES THAT THE BOOKS OF ACCOUNT ARE NOT DEPENDABLE, TREATED THE AMOUNT OF RS. 19,52,902/- BEING THE BOO K NEGATIVE CASH BALANCE AS UNEXPLAINED CASH AND ADDED THE SAME TO T HE INCOME OF THE ASSESSEE. 30. BEFORE THE FIRST APPELLATE AUTHORITY DURI NG APPEAL PROCEEDINGS, THE ASSESSEE CONTENDED THAT BOOK NEGATIVE CASH BALA NCE WAS FOUND OUT FROM THE ORIGINAL SET OF BOOKS AND NOT ON THE BASIS OF BOOKS OF ACCOUNT SUPPORTING THE RETURN FILED U/S 153A. IT WAS SUBMI TTED THAT THE ADDITION IS NOT SUSTAINABLE AS THERE IS NO NEGATIVE CASH BAL ANCE AS PER THE REVISED BOOKS OF ACCOUNT ON THE BASIS OF WHICH RETU RN U/S 153A WAS FILED. THE CIT(A), THOUGH, ACCEPTED THE FACT THAT T HE NEGATIVE BOOK BALANCE WAS ON THE BASIS OF ORIGINAL SET OF BOOKS O F ACCOUNT AND AS PER THE RECONSTRUCTED BOOKS OF ACCOUNT BASED ON THE SEI ZED MATERIAL AND THE RESULTANT INCREMENTAL TURNOVER AS WELL AS INCREMENT AL EXPENDITURE, THERE IS NO NEGATIVE CASH BALANCE, HOWEVER, SUSTAINED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS NOT EXPLAINED SUCH DEFICIT WITH THE HELP OF RECONSTRUCTED INFORMATION INCLUDING THE OLD AND NEW CASH BOOKS OF ACCOUNT OF THE RELEVANT BRANCHES OF THE ASSESSEE, W ITH FURTHER HELP OF RELATED RECEIPTS AND PAYMENTS. 31. HAVING HEARD THE PARTIES, WE ARE OF THE V IEW THAT ADDITION OF RS. 19,52,902/- IS NOT JUSTIFIED, AS IT IS NOT DISPUTED THAT BOOK CASH NEGATIVE BALANCE OF RS. 19,52,902/- WAS ON THE BASIS OF ORIG INAL SET OF BOOKS. THE CIT(A) HAS ALSO NOT DISPUTED THE FACT THAT AS PER T HE REVISED BOOKS OF ACCOUNT BASED ON THE SEIZED MATERIAL THE RESULTANT INCREMENTAL TURNOVER 21 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS AS WELL AS THE INCREMENTAL EXPENDITURE HAVE BEEN CO NSIDERED AND THERE IS NO NEGATIVE CASH BALANCE. IT IS ALSO A FACT THAT ASSESSEE HAS FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153A OF THE ACT ON THE BASIS OF REVISED BOOKS OF ACCOUNT. IN THESE CIRCUMSTANCES , WHEN THE PROFIT IS ESTIMATED BY REJECTING THE BOOKS OF ACCOUNT, NO SEP ARATE ADDITION CAN BE MADE. THAT BESIDES, THE CONTENTION OF THE ASSESSEE THAT THERE WILL BE NO NEGATIVE CASH BALANCE IF TELESCOPING OF ADDITIONAL INCOME DECLARED BY THE ASSESSEE IS TAKEN IN TO CONSIDERATION ALSO APPE ARS TO BE CORRECT. IN THIS VIEW OF THE MATTER WE ARE OF THE VIEW THAT ADD ITION OF RS. 19,59,902/- IS NOT SUSTAINABLE AND ACCORDINGLY, WE DIRECT THE A O TO DELETE THE SAME. GROUND OF THE ASSESSEE IS ALLOWED. 32. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 618/H/12 IS PARTLY ALLOWED. ITA NO. 678/H/12 FOR AY 2005-06 BY REVENUE IN CASE OF SMT. P. PAVANI 33. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 16% ON THE TURNOVER. 34. SIMILAR ISSUED HAS BEEN DECIDED IN ITA NO. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24(SUPRA). FOLLOWING THE CONCLUSIONS DRAWN THEREIN, WE DISMISS THIS GROUND OF APPEAL OF THE RE VENUE. 35. IN THE RESULT, APPEAL IN ITA NO. 678/H/12 IS DISMISSED. ITA NO. 619/H/12 FOR AY 2006-07 IN CASE OF SMT. PAV ANI 36. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. GR OUND NO. 4 IS NOT PRESSED. 37. GROUND NO. 5 IS WITH REGARD TO ESTIMATION OF PROFIT AT 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUN D DECIDED BY US IN AY 22 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 2002-03 IN ITA NO. 615/H/12 VIDE PARAS 2 TO 10 (SUP RA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT T HE AO TO ESTIMATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECLA RED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 38. GROUND NOS. 2 & 3 RELATE TO DISALLOWANCES EXPENDITURE ON ESTIMATE BASIS AND U/S 40(A)(IA) AMOUNTING TO RS. 6 ,49,092/- AND RS. 8,84,400/- RESPECTIVELY. 39. THIS ISSUE HAS BEEN DECIDED BY US IN ITA NO. 617/H/12 FOR AY 2004-05 IN CASE OF P. PAVANI VIDE PARAS 16 TO 19.1. FOLLOWING THE DECISION THEREIN WE HOLD THAT NO SEPARATE DISALLOWA NCE OF EXPENDITURE EITHER ON ESTIMATE BASIS OR U/S 40(A)(IA) OF THE AC T CAN BE MADE WHEN THE PROFIT OF THE ASSESSEE HAS BEEN ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITIONS MADE ON THIS COUNT. THUS , GROUND NOS. 2 & 3 ARE ALLOWED. 40. IN THE RESULT, APPEAL IN ITA NO. 619/H/12 IS PARTLY ALLOWED. ITA NO. 679/H/12 FOR AY 2006-07 BY REVENUE APPEAL I N CASE OF SMT. P. PAVANI 41. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 16% ON THE TURNOVER 42. THIS ISSUE HAS BEEN DECIDED BY US IN ITA N O. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24 AND THEREFORE FOLLOWING THE DECISION THEREIN WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING TH E ADDITIONS MADE BY THE AO. ACCORDINGLY, REVENUE APPEAL IS DISMISSED. 43. IN THE RESULT, APPEAL IN ITA NO. 679/H/1 2 IS DISMISSED. 23 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ITA NO. 620/H/12 FOR AY 2007-08 IN CASE OF SMT. P. PAVANI. 44. GROUND NOS. 1 & 7 ARE GENERAL IN NATURE. GR OUND NO. 5 IS NOT PRESSED. 45. GROUND NO. 6 IS WITH REGARD TO ESTIMATION O F PROFIT AT 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUN D DECIDED BY US IN AY 2002-03 IN ITA NO. 615/H/12 VIDE PARAS 2 TO 10 (SUP RA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT T HE AO TO ESTIMATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECLA RED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 46. GROUND NOS. 2, 3 & 4 RELATE TO DISALLOWAN CE OF EXPENDITURE ON ESTIMATE BASIS, U/S 40A(3) AND U/S 40(A)(IA). THIS ISSUE HAS BEEN DECIDED BY US IN ITA NO. FOR AY 2004-05 IN CASE OF P. PAVANI VIDE PARAS 16 TO 19.1. FOLLOWING THE DECISION THEREIN WE HOLD THAT NO SEPARATE DISALLOWANCE OF EXPENDITURE CAN BE MADE WHEN THE PR OFIT OF THE ASSESSEE HAS BEEN ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITIONS MADE ON THIS COUNT. THUS, GROUND NOS. 2, 3 & 4 ARE ALLOWED. 47. IN THE RESULT, APPEAL IN ITA NO. 620/H/12 IS PARTLY ALLOWED. ITA NO. 621/H/12 FOR AY 2008-09 IN CASE OF SMT. P. PAVANI. 48. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. GR OUND NO. 4 IS NOT PRESSED. 49. GROUND NO. 5 RELATES TO ESTIMATION OF PROF IT AT 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECID ED BY US IN AY 2002-03 IN ITA NO. 615/H/12 VIDE PARAS 2 TO 10 (SUPRA), THE REFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIM ATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 24 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 50. GROUND NO. 2 IS RELATING TO DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA). THIS ISSUE HAS BEEN DECIDED BY US IN ITA NO. FOR AY 2004-05 IN CASE OF P. PAVANI VIDE PARAS 16 TO 19.1. FOLLOWI NG THE DECISION THEREIN WE HOLD THAT NO SEPARATE DISALLOWANCE U/S 4 0(A)(IA) OF THE ACT CAN BE MADE WHEN THE PROFIT OF THE ASSESSEE HAS BEE N ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITIONS M ADE ON THIS COUNT. THUS, GROUND NO. 2 IS ALLOWED. 51. GROUND NO. 3 RELATES TO CIT(A) SUSTAININ G THE ADDITION OF RS. 4,87,600/- OUT OF RS. 6,01,847/- REPRESENTING UNACC OUNTED INVESTMENT IN JEWELLERY. 52. DURING ASSESSMENT PROCEEDINGS, THE AO NOTE D THAT DURING SEARCH AND SEIZURE OPERATION, CERTAIN AMOUNTS OF JEWELLERY IN GOLD AND SILVER WAS FOUND AT THE RESIDENCE OF THE ASSESSEE, WHICH W AS VALUED BY REGISTERED VALUER. AS PER THE DETAILS FURNISHED IN VALUATION REPORT, THE TOTAL OF THE GOLD JEWELLERY WAS QUANTIFIED AT RS. 7 28.200 GRAMS, WHICH WAS SHOWN TO BE BELONGING TO 10 INDIVIDUALS INCLUDI NG ASSESSEE. IN ADDITION TO THIS, GOLD WEIGHING 335 GRAMS WAS SHOWN TO HAVE MORTGAGED TO ANDHRA BANK FOR OBTAINING LOAN. THEREFORE, TOTAL QUANTITY OF JEWELLERY AMOUNTED TO 1063.200 GRAMS. AO TREATED JEWELLERY OF 563 GRAMS VALUED AT RS. 6,01,847/- AFTER ALLOWING CREDIT OF 500 GRAM S AS PER THE CBDT CIRCULAR AS UNACCOUNTED INVESTMENT OF ASSESSEE IN A BSENCE OF ANY EVIDENCE TOWARDS THE DATE OF ACQUISITION AND ADDED IT TO THE INCOME OF THE ASSESSEE. 53. BEFORE THE CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT THE GOLD JEWELLERY BELONGED TO 10 FAMILY MEMBERS INCLUDING A SSESSEE, WHO ARE LIVING TOGETHER IN THE ASSESSEES HOUSE. IT WAS ALS O CONTENDED THAT THE QUANTUM OF GOLD JEWELLERY WAS ACCUMULATED OVER A PE RIOD OF TIME AND ALSO INCLUDED THE JEWELLERY RECEIVED FROM ANCESTORS AND FRIENDS IN THE FORM OF GIFTS ON VARIOUS OCCASIONS BY ALL MEMBERS R ESIDING WITH HIM. THE 25 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE, THOUGH, ACCEPTED THE FACT THAT GOLD JEWELLERY BELONGED TO O THER FAMILY MEMBERS ALSO, WHO ARE STAYING WITH THE ASSESSEE, BUT, AT TH E SAME TIME, HE ESTIMATED THE UNACCOUNTED JEWELLERY BELONGING TO TH E ASSESSEE TO 460.08 GRAMS, VALUED AT RS. 4,89,600/-, THEREBY SU STAINING THE ADDITION TO THAT EXTENT. 54. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIALS ON RECORD. IT IS VERY MUCH EVIDENT FROM THE OBSERVATIO NS MADE BY THE CIT(A) THAT HE DID NOT DISPUTE THE FACT THAT GOLD J EWELLERY BELONGS TO THE ASSESSEE AS WELL AS OTHER FAMILY MEMBERS WHO ARE AL SO STAYING WITH THE ASSESSEE. THEREFORE, WITHOUT QUANTIFYING THE AMOUNT OF JEWELLERY ACTUALLY BELONGING TO EACH FAMILY MEMBER, THE CIT(A ) COULD NOT HAVE TREATED THE AMOUNT OF 460 GRAMS AS BELONGING TO ASS ESSEE. IN THE AFORESAID CIRCUMSTANCES, SINCE THE ADDITION MADE IS NOT ON THE BASIS OF COGENT MATERIAL, WE ARE INCLINED TO DELETE THE ADDI TION SUSTAINED BY THE CIT(A). THIS GROUND IS ALLOWED. 55. IN THE RESULT, APPEAL IN ITA NO. 621/H/12 IS PARTLY ALLOWED. ITA NO. 680/H/12 FOR AY 2008-09 BY REVENUE IN CASE OF SMT. P. PAVANI. 56. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 16% ON THE TURNOVER 57. THIS ISSUE HAS BEEN DECIDED BY US IN ITA N O. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24 AND THEREFORE FOLLOWING THE DECISION THEREIN WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING TH E ADDITIONS MADE BY THE AO. ACCORDINGLY, REVENUE APPEAL IS DISMISSED. 58. IN THE RESULT, APPEAL IN ITA NO. 680/H/1 2 IS DISMISSED. 26 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ITA NO. 622/HYD/12 FOR AY 2002-03 IN CASE OF SHRI P.V. RAGHAVA RAO. 59. ASSESSEE HAS RAISED IN TOTAL 5 GROUNDS. GROU ND NO.1 AND 5 ARE GENERAL IN NATURE AND THEY DO NOT REQUIRE ANY ADJUD ICATION. 60. GROUND NO.3 IS NOT PRESSED. HENCE, IT IS DISMI SSED AS SUCH. 61. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED TH E ORDER OF THE CIT (A) IN SUSTAINING ADDITION OF RS.1,85,176/- OUT OF AN ADDITION OF RS.4,41,675/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISALLOWANCE OF EXPENDITURE ON ESTIMATE BASIS. 62. BRIEFLY THE FACTS RELATING TO THE ISSUE ARE, TH E ASSESSEE IS AN INDIVIDUAL. A SEARCH AND SEIZURE OPERATION WAS CARR IED OUT IN THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE A ND HIS WIFE SMT. PAVANI AND OTHER GROUP CONCERNS ON 21-3-2008. DURI NG THE SEARCH, AS STATED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER CERTAIN INCRIMINATING MATERIAL PERTAINING TO THE ASSESSEE W AS FOUND AND SEIZED. IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT, T HE ASSESSEE FILED HIS RETURN OF INCOME ON 9-10-2009 DECLARING AN INCOME O F RS.3,98,700/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEES C ASE WAS REFERRED TO SPECIAL AUDIT. THE SPECIAL AUDIT AFTER GOING TH ROUGH THE SEIZED BOOKS OF ACCOUNTS SUBMITTED HIS AUDIT REPORT. ON THE BAS IS OF THE SEIZED MATERIAL, SPECIAL AUDIT REPORT AND OTHER MATERIALS ON RECORD, THE ASSESSING OFFICER PROCEEDED TO COMPLETE ASSESSMENT BY MAKING FOLLOWING ADDITIONS:- I) ON MONEY RECEIPTS IN RESPECT OF FLATS OF M/S PAVAN I HOMES RS.5,22,964/- II) UNDISCLOSED AMOUNT IN THE BANK ACCOUNT RS.12,67 ,371/- III) ESTIMATED DISALLOWANCE OF EXPENDITURE AT 20% O UT OF THE TOTAL EXPENDITURE TOWARDS COOLIES AND MATERIALS PUR CHASES OF RS.25,65,013/-, RS.RS.4,41,675/- 27 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 63. BEING AGGRIEVED OF THE ADDITIONS MADE IN TH E ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) . THE CIT (A) TOTALLY DELETED THE ADDITIONS MADE ON ACCOUNT OF ON-MONEY R ECEIVED AND UNDISCLOSED AMOUNT IN THE BANK ACCOUNT. HOWEVER, T HE CIT (A) WAS OF THE VIEW THAT BOOKS OF ACCOUNTS OF THE ASSESSEE CAN NOT BE CONSIDERED TO BE RELIABLE DUE TO VARIOUS DEFECTS AND DEFICIENCIES HENCE DEEMED TO HAVE BEEN REJECTED. HE THEREFORE PROCEEDED TO ESTI MATE THE PROFIT FROM BUSINESS OF CONSTRUCTION WORK AT THE RATE OF 15% OF THE TURNOVER. SO FAR AS DISALLOWANCE OF EXPENDITURE CLAIMED BY THE A SSESSEE ON ACCOUNT OF PAYMENTS TO COOLIES AND PURCHASES AS MADE BY THE ASSESSING OFFICER ON ESTIMATE BASIS, THE CIT (A) RESTRICTED THE DISA LLOWANCE TO 10% OF THE TOTAL EXPENDITURE CLAIMED OF RS.25,65,013/- WORKING OUT TO RS.2,56,501/-. 64. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. IT IS CONTENTION OF THE LEARNED AR, WHEN THE CIT (A) H AS RESORTED TO ESTIMATION OF PROFITS BY REJECTING THE BOOKS OF ACC OUNTS, HE CANNOT RELY UPON THE SAME BOOKS OF ACCOUNTS FOR SEPARATE DISALL OWANCE OF INDIVIDUAL ITEMS OF EXPENDITURE CLAIMED BY THE ASSESSEE IN THE BOOKS. IN OUR VIEW, THE CONTENTION OF THE LEARNED AR CARRIES FORCE. AD MITTEDLY, THE CIT (A) HAS PROCEEDED TO ESTIMATE THE PROFIT FROM BUSINESS BY OBSERVING THAT THE ASSESSEES BOOKS OF ACCOUNTS IS DEEMED TO HAVE BEEN REJECTED. THEREFORE, ONCE THE CIT (A) HAS RESORTED FOR ESTIMA TION OF PROFIT BY REJECTING THE BOOKS OF ACCOUNT, HE CANNOT AGAIN PIC K UP INDIVIDUAL ITEMS OF EXPENDITURE FOR DISALLOWANCE. WHEN PROFIT IS ES TIMATED BY APPLYING A FIXED RATE, THEN IT IS DEEMED THAT ALL OTHER EXPEND ITURE/DISALLOWANCES HAVE BEEN TAKEN CARE OF. THIS VIEW WAS ALSO EXPRES SED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. IN DWELL LIMITED ( 232 ITR ). IN THIS VIEW OF THE MATTER, WE DIRECT THE AS SESSING OFFICER TO DELETE ADDITION OF RS.2,56,501/-. 65. THE NEXT ISSUE AS RAISED IN GROUND NO.4 IS WITH REGARD TO ESTIMATION OF INCOME FROM BUSINESS BY APPLYING THE RATE OF 15% OF THE 28 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS TOTAL TURNOVER. AS STATED HEREIN BEFORE, THE CIT ( A) HAVING COME TO A CONCLUSION THAT VARIOUS DEFECTS AND DEFICIENCIES F OUND BY THE ASSESSING OFFICER WOULD LEAD TO INFERENCE THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE DEEMED TO HAVE REJECTED PROCEEDED TO ESTIMATE THE PROFIT FROM THE BUSINESS OF THE ASSESSEE. THE CIT (A) TAKING INTO CONSIDERATION THE ADDITIONS/DISALLOWANCES MADE FOR EACH ASSESSMENT YEAR COMPUTED THE PROFIT VIS-A-VIS THE TURNOVER DEC LARED BY THE ASSESSEE FOR ASSESSMENT YEARS 2002-03 TO 2008-09 WORKED OUT THE AVERAGE PROFIT TO 11.99%. THE CIT (A) OBSERVED THAT THOUGH HIGHE R PERCENTAGE OF PROFITS IS INVOLVED IN MORE THAN ONE OF SEVEN ASSES SMENT YEARS BUT DUE TO THE REASON THE TURNOVERS FOR ASSESSMENT YEAR 200 7-08 IS VERY HIGH WHILE THE PROFITS ARE AT THE LOWEST AT 7.11%. CONS IDERING THE AFORESAID FACTS, THE CIT (A) THOUGHT IT PROPER TO ESTIMATE T HE PROFIT AT 15% FOR ALL THE SEVEN ASSESSMENT YEARS. 66. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. THE LEARNED AR CONTENDED BEFORE US THAT THE ASSES SEE IS IN CONSTRUCTION BUSINESS HENCE, NET PROFIT RATE OF 15 % ADOPTED BY THE CIT (A) IS HIGH AND EXCESSIVE. IT WAS SUBMITTED BY THE LEARNED AR THAT THE CO-ORDINATE BENCHES OF THIS TRIBUNAL HAD CONSISTEN TLY HELD THAT IN CASE OF REJECTION OF BOOKS OF ACCOUNTS IN CASE OF CIVIL CONSTRUCTION WORK PROFIT IS TO BE ESTIMATED AT 12.5% BEFORE DEPRECIATION OR 8% NET OF DEPRECIATION. HAVING CONSIDERED THE SUBMISSIONS O F THE PARTIES, WE ARE OF THE VIEW THAT NET PROFIT OF 15% ADOPTED BY THE C IT (A) IS ON THE HIGHER SIDE. IT IS A FACT THAT THIS TRIBUNAL IS CO NSISTENTLY HOLDING THE VIEW THAT IN CASE OF CIVIL CONSTRUCTION WORK ESTIMATION OF PROFIT AFTER REJECTION OF BOOKS OF ACCOUNTS IS TO BE MADE AT 12.5% BEFORE DEPRECIATION OR AT 8% NET OF DEPRECIATION. IN TUNE WITH THE CONSISTEN T VIEW OF THE TRIBUNAL, WE HOLD THAT A NET PROFIT RATE OF 8% NET OF ALL DED UCTIONS WOULD BE JUST AND REASONABLE. WHILE DECIDING SIMILAR ISSUE IN CA SE OF SMT. P. PAVANI ITA NO. 615/H/12 IN PARA TO 2 TO 10, WE HAVE HELD T HAT NET PROFIT RATE OF 29 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 8% WILL BE FAIR AND REASONABLE. ACCORDINGLY, WE DIR ECT THE ASSESSING OFFICER TO ESTIMATE THE NET PROFIT AT THE RATE OF 8 % ON THE TOTAL TURNOVER DISCLOSED BY THE ASSESSEE. HENCE, THIS GROUND IS PARTLY ALLOWED. 67. IN THE RESULT, APPEAL IN ITA NO. 622/H/12 IS PA RTLY ALLOWED. ITA NO.623/HYD/12 FOR AY 2003-04 IN CASE OF P.V. R AGHAVA RAO 68. GROUND NOS. 1 AND 5 BEING GENERAL GROUNDS, THEY DO NOT REQUIRE ANY ADJUDICATION. GROUND NO.3 IS NOT PRESSED AND TH EREFORE IT IS DISMISSED AS SUCH. 69. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED CO NFIRMATION OF A PART OF THE DISALLOWANCE MADE BY THE ASSESSING OFFI CER ON EXPENDITURE CLAIMED ON ESTIMATE BASIS. THIS ISSUE IS SIMILAR T O THE ISSUE RAISED IN ITA NO.622/HYD/2012 OF THE SAME ASSESSEE. THEREFORE , FOLLOWING OUR FINDING GIVEN VIDE PARAS 61 TO 64, WE DELETE THE AD DITION FOR THE YEAR UNDER CONSIDERATION ALSO. 70. GROUND NO.4 IS WITH REGARD TO CIT (A) ESTIMATI NG THE PROFIT FROM BUSINESS AT 15% OF THE TOTAL TURNOVER. THIS ISSUE I S ALREADY DECIDED BY US IN GROUND NO.4 OF ITA NO.622/HYD/12 VIDE PARA 66 (SUPRA). FOLLOWING OUR DECISION THEREIN, WE DIRECT THE ASSESSING OFFIC ER TO ESTIMATE THE PROFIT AT 8% ON THE TOTAL TURNOVER DISCLOSED BY THE ASSESSEE NET OF ALL DEDUCTIONS. ITA NO.624/HYD/12 FOR AY 2004-05 IN CASE OF P.V. R AGHAVA RAO. 71. GROUND NOS. 1 AND 7 ARE GENERAL GROUNDS AND HEN CE NOT REQUIRED TO BE ADJUDICATED UPON. GROUND NO.5 IS NOT PRESSED AND THEREFORE IT IS DISMISSED AS SUCH. 72. GROUND NO.2 IS SIMILAR TO GROUND NO.2 RAISED I N ITA NO.622/HYD/2012 OF THE SAME ASSESSEE. THEREFORE, FO LLOWING OUR FINDING 30 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS GIVEN VIDE PARAS 61 TO 64, WE DELETE THE ADDITION F OR THE YEAR UNDER CONSIDERATION ALSO. 73. IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED CON FIRMATION OF ADDITION OF RS.20,000/- ON ACCOUNT OF DIFFERENCE IN BANK BALANCE. BRIEFLY STATED IN THE REPORT SUBMITTED BY THE SPECIAL AUDIT IT WAS POINTED OUT, THE BALANCE IN THE ANDHRA BANK A/C NO.6667 AS APPE ARING IN THE BOOKS OF ASSESSEE AS ON 31-3-2004 IS RS.31,647/- WHEREAS IN THE BALANCE SHEET IT WAS SHOWN AT RS.11,647/-. THE SPECIAL AUD IT THEREFORE SUGGESTED FOR ADDITION OF THE AMOUNT OF RS.20,000/- LESS SHOWN BY THE ASSESSEE IN THE BALANCE-SHEET. ON THE BASIS OF SUG GESTION MADE BY THE SPECIAL AUDIT THE AO ADDED AN AMOUNT OF RS.20,000/- . THE CIT (A) ALSO CONFIRMED SUCH ADDITION BY OBSERVING THAT THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE IN A DETAILED MANNER. 74. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. IT IS CONTENTION OF THE LEARNED AR THAT THE SPECIAL AU DIT WHILE CONDUCTING THE AUDIT HAS NOT CONSIDERED THE REVISED BOOKS OF A CCOUNTS SUPPORTING THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/ S 153A WHEREIN THE AMOUNT OF RS.11,647/- WAS SHOWN AS THE CASH BALANCE . IT WAS SUBMITTED THAT EVEN THE BANK STATEMENT ALSO SHOWS THE BALANCE AS ON 31-3-2004 AT RS.11,647/-. IN VIEW OF THE AFORESAID CONTENTI ON OF THE ASSESSEE IT WAS INCUMBENT ON THE PART OF THE ASSESSING OFFICER AS WELL AS CIT (A) TO VERIFY THE ACTUAL CASH BALANCE AS SHOWN IN THE BANK ACCOUNT VIS A VIS RECONSTRUCTED BOOKS OF ACCOUNTS ON THE BASIS OF WHI CH RETURN WAS FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT. THE REVENUE AUTHORITIES HAVING NOT MADE ANY EFFORT TO VERIFY THIS ASPECT, THE ADDITION OF RS.20,000 CANNOT BE SUSTAINED. ACCORDINGLY, WE DEL ETE THE SAME. HENCE, THIS GROUND IS ALLOWED. 31 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 75. IN GROUND NO.4, THE ASSESSEE HAS CHALLENGED ADD ITION OF RS.10,71,499/- MADE BY THE ASSESSING OFFICER AND SU STAINED BY THE CIT(A) ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 76. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER WHILE GOING THROUGH THE SPECIAL A UDIT REPORT NOTED THAT THE SPECIAL AUDIT HAS POINTED OUT THAT THE BALANCE AS PER CASH BOOK IS NEGATIVE ON 31-3-2004 AT RS.10,67,710/-. WHEREAS T HE ASSESSEE HAS SHOWN A POSITIVE BALANCE OF RS.3,789/- IN THE BALAN CE-SHEET. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THE ASSE SSEE WITHOUT HAVING CASH BALANCE HAS INCURRED EXPENDITURE AND ACCORDING LY TREATED THE AMOUNT OF RS.10,71,499 AS UNEXPLAINED EXPENDITURE A ND ADDED IT TO THE INCOME OF THE ASSESSEE. THE ADDITION WAS CHALLENG ED BY THE ASSESSEE BEFORE THE CIT (A). THE CIT (A) SUSTAINED THE ADD ITION BY STATING THAT THE ASSESSEE HAS NOT EXPLAINED THE DEFICITS WITH TH E HELP OF RECONSTRUCTED INFORMATION INCLUDING THE OLD AND NEW CASH BOOKS OF THE RELEVANT BRANCH AND ALSO WITH THE HELP OF RELATED RECEIPTS AND PAYMENTS. 77. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. IT IS CONTENTION OF THE LEARNED AR THAT THE NEGATIVE C ASH BALANCE WAS FOUND FROM THE ORIGINAL SET OF BOOKS OF ACCOUNTS SE IZED AT THE TIME OF SEARCH AND SEIZURE OPERATION WHICH IS NOT CORRECTLY MAINTAINED. HOWEVER, THE ASSESSEE HAS REVISED THE ENTIRE BOOKS OF ACCOUNTS TAKING INTO ACCOUNT THE SEIZED MATERIAL AND FILED HIS RETU RN ON THAT BASIS IN RESPONSE TO NOTICE U/S 153A OF THE ACT AS PER WHICH THERE IS NO NEGATIVE CASH BALANCE. AS IS EVIDENT FROM THE ORDER OF THE CIT (A) HE ACCEPTS THE FACT THAT THE NEGATIVE CASH BALANCE RELATING TO THE SUBJECT ADDITION IS AS PER THE ORIGINAL SET OF BOOKS OF ACCOUNTS. HE ALSO ACCEPTS THE FACT THAT THE ASSESSEE HAS REVISED THE BOOKS OF ACCOUNTS BASE D ON SEIZED MATERIAL BY TAKING INTO CONSIDERATION, RESULTANT IN CREMENTAL TURNOVER AS WELL AS INCREMENTAL EXPENDITURE AS PER WHICH THERE IS NO NEGATIVE CASH 32 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS BALANCE. THAT BEING THE CASE CIT (A) WAS NOT JUSTI FIED IN SUSTAINING THE ADDITION OF RS.10,71,499 WHICH WAS MADE ON THE BASI S OF OLD SET OF BOOKS OF ACCOUNTS. WITHOUT VERIFYING THE REVISED B OOKS OF ACCOUNTS, AND CLAIM OF THE ASSESSEE THAT AS PER WHICH THERE IS NO NEGATIVE CASH BALANCE THE REVENUE AUTHORITIES ARE NOT JUSTIFIED I N MAKING THE ADDITION ON THE BASIS OF OLD BOOKS OF ACCOUNTS WHICH ADMITTE DLY WERE FOUND TO BE DEFECTIVE. THEREFORE CONSIDERING THE TOTALITY OF F ACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ADDITION O F THE AMOUNT OF RS.10,71,499/- CANNOT BE SUSTAINED. ACCORDINGLY, W E DIRECT TO DELETE THE SAME. 78. GROUND NO.6 IS SIMILAR TO GROUND NO.4 OF ITA NO . 622/HYD/12 DECIDED VIDE PARAS 65 AND 66(SUPRA). FOLLOWING OUR DECISION THEREIN, WE DIRECT THE ASSESSING OFFICER TO ESTIMATE THE PROFIT AT 8% ON THE TOTAL TURNOVER DISCLOSED BY THE ASSESSEE NET OF ALL DEDUC TIONS. 79. IN THE RESULT, APPEAL IN ITA NO. 624/H/12 I S PARTLY ALLOWED. ITA NO.681/HYD/12 FOR AY 2004-05 BY THE REVENUE IN CASE OF SHRI P.V. RAGHAVA RAO. 80. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 15% ON THE TURNOVER. 81. SIMILAR ISSUE HAS BEEN DECIDED BY US IN IT A NO. 677/H/12 IN CASE OF SMT. P. PAVANI FOR AY 2004-05 VIDE PARAS 20 TO 2 4. FACTS BEING IDENTICAL, FOLLOWING THE DECISION THEREIN WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING THE ADDITIONS MADE BY THE AO. WE MAY NOTE THAT REVENUE HAS ACCEPTED SUCH ESTIMATION OF PROFIT MADE BY CIT( A) BY DELETING ADDITIONS IN ASSESSMENT YEARS 2002-03, 2003-04, 200 7-08 AND 2008-09. ACCORDINGLY, REVENUE APPEAL IS DISMISSED. 33 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 82. IN THE RESULT, APPEAL OF REVENUE IN ITA N O. 681/H/12 IS DISMISSED. ITA NO. 625/H/12 FOR AY 2005-06 IN CASE OF SHRI P.V . RAGHAVA RAO 83. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. 84. GROUND NO. 4 IS NOT PRESSED AND THE SAME IS DISMISSED AS NOT PRESSED. 85. GROUND NO. 2 RELATES TO DISALLOWANCE OF EXP ENDITURE ON ESTIMATE BASIS AND GROUND NO. 3 RELATES TO DISALLOWANCE OF 2 0% OF THE EXPENDITURE CLAIMED BY APPLYING PROVISIONS OF SECTI ON 40A(3). SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 617/HYD/201 2 FOR AY 2004-05 IN CASE OF P. PAVANI VIDE PARAS 16 TO 19.1. FOLLOWI NG THE DECISION THEREIN WE HOLD THAT NO SEPARATE DISALLOWANCE EITHE R OF EXPENDITURE CLAIMED ON ESTIMATE BASIS OR U/S 40A(3) OF THE ACT CAN BE MADE WHEN THE PROFIT OF THE ASSESSEE HAS BEEN ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITIONS MADE ON THIS COUNT. THU S, GROUND NOS. 2 & 3 ARE ALLOWED. 86. GROUND NO. 5 RELATES TO ESTIMATION OF INCO ME AT 15%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECID ED BY US IN CASE OF THE SAME ASSESSEE IN AY 2002-03 IN ITA NO. 622/H/12 VID E PARAS 65 AND 66 (SUPRA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIMATE THE NET PROFIT BY APPLYING RATE OF 8 % ON THE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 87. IN THE RESULT, APPEAL IN ITA NO. 625/H/12 IS PARTLY ALLOWED. ITA NO. 682/HY/12 FOR AY 2005-06 BY REVENUE IN CAS E OF SHRI P.V. RAGHAVA RAO. 88. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND 34 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 15% ON THE TURNOVER. 89. THIS ISSUE HAS BEEN DECIDED BY US IN ITA N O. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24, THEREFORE FOLLOWING TH E DECISION THEREIN WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING TH E ADDITIONS MADE BY THE AO. 90. IN THE RESULT, APPEAL OF REVENUE IN ITA NO. 682/H/12 IS DISMISSED. ITA NO. 626/H/12 FOR AY 2006-07 IN CASE OF SHRI P. V. RAGHAVA RAO. 91. GROUND NO. 1 & 6 ARE GENERAL IN NATURE. GRO UND NO. 4 IS DISMISSED AS NOT PRESSED. 92. GROUND NO. 2 RELATES TO DISALLOWANCE OF E XPENDITURE ON ESTIMATE BASIS. THIS ISSUE HAS BEEN DECIDED BY US IN ITA NO. 625/HYD/2012 IN CASE OF SAME ASSESSEE FOR AY 2004-05 VIDE PARA 85 ( SUPRA). FOLLOWING THE DECISION THEREIN WE HOLD THAT NO SEPARATE DISAL LOWANCE OF EXPENDITURE CAN BE MADE WHEN THE PROFIT OF THE ASSE SSEE HAS BEEN ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE T HE ADDITIONS MADE ON THIS COUNT. THUS, GROUND NO. 2 IS ALLOWED. 93. GROUND NO. 3 RELATES TO CONFIRMATION OF THE ADDITION OF RS. 7,57,837/- BY THE CIT(A) ON ACCOUNT OF NEGATIVE CAS H BALANCE. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 618/H/12 FO R AY 2005-06 IN CASE OF SMT. PAVANI VIDE PARAS 28 TO 31 (SUPRA). FO LLOWING THE DECISION THEREIN WE DIRECT THE AO TO DELETE THE ADDITION OF RS. 7,57,837/- MADE ON ACCOUNT OF NEGATIVE CASH BALANCE. 94. GROUND NO. 5 RELATES TO ESTIMATION OF PROF IT AT 15%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECID ED BY US IN ASSESSEES OWN CASE FOR AY 2002-03 IN ITA NO. 622/H/12 VIDE P ARAS 65 & 66 35 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS (SUPRA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIMATE THE NET PROFIT BY APPLYING RATE OF 8 % ON THE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 94.1 IN THE RESULT APPEAL IN ITA NO. 626/H/12 IS PA RTLY ALLOWED. ITA NO. 683/H/12 FOR AY 2006-07 BY THE REVENUE IN C ASE OF SHRI P.V. RAGHAVA RAO. 95. THE ONLY ISSUE RAISED BY THE DEPARTMENT IS W ITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO AND RESORTING TO ESTIMATION OF PROFIT BY APPLYING THE R ATE OF 15% ON THE TURNOVER. 96. SIMILAR ISSUE HAS BEEN DECIDED BY US IN IT A NO. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24, THEREFORE FOLLOWING TH E DECISION THEREIN WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING TH E ADDITIONS MADE BY THE AO. 97. IN THE RESULT, APPEAL IN ITA NO. 683/H/1 2 IS DISMISSED. ITA NO. 627/HYD/12 FOR AY 2007-08 IN CASE OF SHRI P .V. RAGHAVA RAO 98. GROUND NO. 1 & 6 ARE GENERAL IN NATURE. 99. GROUND NO. 2 RELATES TO DISALLOWANCE OF EXPE NDITURE OF RS. 4,41,029/- OUT OF TOTAL AMOUNT OF RS. 15,23,719/-. THIS ISSUE HAS BEEN DECIDED BY US IN ASSESSEES OWN CASE IN ITA NO. 625 /HYD/2012 FOR AY 2004-05 VIDE PARA 85 (SUPRA). FOLLOWING THE DECISIO N THEREIN WE HOLD THAT NO SEPARATE DISALLOWANCE OF EXPENDITURE OF THE ACT CAN BE MADE WHEN THE PROFIT OF THE ASSESSEE HAS BEEN ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITIONS MADE ON THIS COUNT. THUS, GROUND NO. 2 IS ALLOWED. 36 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 100. GROUND NO. 3 RELATES TO CIT(A) CONFIRMING A DDITION OF RS. 14,98,000/- ON ACCOUNT OF ON MONEY RECEIPTS BY THE ASSESSEE. 101. BRIEFLY THE FACTS ARE, IN COURSE OF ASSESS MENT PROCEEDINGS, THE AO ON EXAMINING THE SEIZED MATERIAL, NOTICED THAT T HE ASSESSEE HAS PURCHASED A FLAT BEARING NO. 203, HUDA ENCLAVE, JUB ILEE HILLS, HYDERABAD FROM ONE SHRI RAJA PRAVEEN REDDY FOR A CO NSIDERATION OF RS. 57,89,250/-. WHEN CALLED UPON BY THE AO TO EXPLAIN AS TO WHETHER THIS WAS ACCOUNTED FOR, AS MENTIONED IN THE ASSESSMENT O RDER, THE ASSESSEE HAVING FAILED TO PRODUCE ANY PROOF IN SUPPORT OF TH E CLAIM THAT THE AMOUNT PAID IN RESPECT OF SALE OF THE FLAT WAS OUT OF HIS OWN SOURCES OF INCOME, AO TREATED THE AMOUNT OF RS. 57,89,250/- AS ASSESSEES UNDISCLOSED INCOME. THE ADDITION WAS CHALLENGED IN APPEAL BEFORE THE CIT(A). 102. IN COURSE OF APPEAL PROCEEDINGS BEFORE THE C IT(A), IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSEE IN FACT RECEIVED AN AMOUNT OF RS. 40,50,000/- FROM SHRI RAJA PRAVEEN REDDY BY THE END OF THE FY 2006-07, WHICH WAS DULY RECORDED IN THE BOOKS AND T HE BALANCE AMOUNT WAS RECEIVED DURING THE FY 2008-09. IT WAS ALSO BRO UGHT TO THE NOTICE OF THE CIT(A) THAT IN AY 2008-09, THE AO HAS MADE AN A DDITION OF RS. 20 LAKH IN THIS REGARD. THE CIT(A) ON THE BASIS OF SUB MISSIONS MADE BY THE ASSESSEE CALLED FOR A REMAND REPORT FROM THE AO. TH E AO IN THE REMAND REPORT STATED THAT DURING THE REMAND PROCEEDING, TH E ASSESSEE HAD EXPLAINED THAT THE EXTRA MONEY RECEIVED TOWARDS WHI CH THE ADDITION WAS MADE WAS DULY ACCOUNTED AND FORMED PART OF THE TOTA L CONTRACT RECEIPTS REFLECTED IN THE RETURN FILED U/S 153A. IT WAS ALSO EXPLAINED BY THE ASSESSEE THAT EXTRA MONEY RECEIVED ARE DULY ACCOUNT ED FOR IS FURTHER EVIDENT FROM THE FACT THAT IT IS ON ACCOUNT OF THE EXTRA RECEIPTS, THE TURNOVER AS PER THE RETURN U/S 153A HAVE SHOWN AN I NCREASE OVER THE TURNOVER AS COMPARED TO THE ORIGINAL RETURN. THE AO ON VERIFYING THE AFORESAID CONTENTION OF THE ASSESSEE STATED THAT ON VERIFICATION OF BOOKS 37 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS OF ACCOUNT FOUND THAT THERE IS AN INCREASE OF RS. 6 6,34,981/- IN THE TURNOVER SHOWN IN THE RETURN U/S 153A AS COMPARED T O THE ORIGINAL RETURN. THE CIT(A) ON CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, VIS- -VIS, REMAND REPORT OF THE AO NOTED THAT OUT OF TH E TOTAL SALE CONSIDERATION OF RS. 57,89,250/- STATED TO HAVE BEE N RECEIVED ON SALE OF FLAT FROM SHRI RAJA PRAVEEN REEDY, AN AMOUNT OF RS. 40,50,000/- WAS RECEIVED IN FY 2006-07 AND THE BALANCE AMOUNT IN TH E SUBSEQUENT YEARS. HE FURTHER NOTED THAT OUT OF BALANCE OF RS. 17,39,250/-, AN AMOUNT OF RS. 9,04,750/- WAS TREATED AS UNACCOUNTED RECEIPTS FOR THE AY 2008-09 LEAVING A BALANCE OF RS. 8,34,500/- TOWA RDS UNDIVIDED SHARE OF THE LAND AS DISCUSSED IN THE ASSESSMENT ORDER FO R AY 2008-09. ON CONSIDERATION OF THE AFORESAID FACTS, THE CIT(A) HE LD THAT THERE CANNOT BE ANY FURTHER AMOUNT AVAILABLE WITH THE ASSESSEE TO B E TREATED AS EXTRA RECEIPTS/ON MONEY WHICH REMAINED UNACCOUNTED FOR. H E ALSO NOTED THE FACT THAT THE AO IN THE REMAND REPORT HAS ACCEPTED THE FACT THAT THE EXTRA RECEIPTS HAVE FORMED PART OF THE TURNOVER WHI CH RESULTED IN AN INCREASE IN TURNOVER AS DISCLOSED IN THE RETURN FIL ED IN RESPONSE TO NOTICE U/S 153A AS COMPARED TO THE TURNOVER DISCLOSED IN T HE ORIGINAL RETURN OF INCOME. THE CIT(A), THEREFORE, DELETED THE ADDITION OF RS. 57,89,250/-. HOWEVER, THE CIT(A) HELD THAT AN AMOUNT OF RS. 14,9 8,000/- REPRESENTING THE ADVANCE FROM MRS. LAKSHMI SRAVANTH I ORIGINALLY EXPLAINED AS A CREDIT AND SUBSEQUENTLY ADVANCE REC EIVED FOR SALE OF FLAT WAS EXPLAINED TO BE THE EXTRA CONTRACT RECEIPTS CON SIDERED FOR FURNISHING THE RETURN OF INCOME U/S 153A OF THE ACT. THE CIT(A ) OBSERVED THAT AS PER ASSESSEES OWN SUBMISSION THE SAID AMOUNT WAS N OT REFLECTED IN THE BOOKS AS EXTRA RECEIPTS/CONTRACT RECEIPT WHICH RESU LTED IN ESCAPEMENT FROM TAX. HE, THEREFORE, CONCLUDED THAT THE ADDITIO N WHICH COULD BE MADE ON ACCOUNT OF EXTRA RECEIPTS ON SALE OF FLAT WHICH WAS NOT OFFERED FOR TAX IS THE AMOUNT OF RS. 14,98,000/-. 38 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 103. WE HAVE HEARD THE CONTENTIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. SO FAR AS THE AMOUNT OF RS. 57 ,89,250/- IS CONCERNED, THE REMAND REPORT SUBMITTED BY THE AO AS WELL AS THE OBSERVATIONS MADE BY THE CIT(A) WOULD CLEARLY SHOW THAT THEY HAVE ACCEPTED THE FACT THAT THE SAID AMOUNT HAS BEEN ACC OUNTED FOR, HENCE, THERE CANNOT BE ANY SCOPE FOR FURTHER ADDITION ON T HAT ACCOUNT. HOWEVER, SO FAR AS THE ADDITION OF RS. 14,98,000/- MADE BY T HE CIT(A), IT IS TO BE NOTED THAT IN PARA 5.7 OF HIS ORDER, THE CIT(A) HAS NOTED THAT THE ASSESSEE HAS OFFERED THE SAID AMOUNT AS ADDITIONAL INCOME IN THE FORM OF EXTRA RECEIPTS FOR THE YEAR UNDER REFERENCE. IF IT HAS ALREADY BEEN OFFERED AS ADDITIONAL INCOME, THEN, IT CANNOT BE AG AIN ADDED TO THE INCOME OF THE ASSESSEE. WE, THEREFORE, REMIT THIS I SSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE ASSESSEE HAS OFFERED THE A FORESAID AMOUNT OF RS. 14,98,000/- AS ADDITIONAL INCOME AND DECIDE THE ISSUE ACCORDINGLY AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 104. GROUND NO. 5 RELATES TO ESTIMATION OF PROFIT AT 15%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECIDED BY US IN ASSESSEES OWN CASE AY 2002-03 IN ITA NO. 6622/H/12 VIDE PARAS 65 & 66 (SUPRA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIMATE THE NET PROFIT BY APPLYING RATE OF 8% ON T HE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 105. IN THE RESULT, APPEAL IN ITA NO. 627/H/12 IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 628/H/12 FOR AY 2008-09 IN CASE OF SHRI P.V . RAGHAVAN RAO. 106. GROUND NO. 1 & 7 ARE GENERAL IN NATURE. GROU ND NO. 5 IS NOT PRESSED. 107. GROUND NO. 2 RELATES TO DISALLOWANCE U/S 40A( 3) OF RS. 35,85,735/- AND GROUND NO. 3 RELATES TO DISALLOWANCE OF RS. 25, 14,408 U/S 40(A)(IA). THIS ISSUE HAS BEEN DECIDED BY US IN ITA NO. 617/H/ 12 FOR AY 2004-05 39 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS IN CASE OF P. PAVANI VIDE PARAS 16 TO 19.1. FOLLOWI NG THE DECISION THEREIN WE HOLD THAT NO SEPARATE DISALLOWANCE U/S 4 0A(IA)/40A(3) OF THE ACT CAN BE MADE WHEN PROFIT OF THE ASSESSEE HAS BE EN ESTIMATED. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITIONS M ADE ON THIS COUNT. THUS, GROUND NOS. 2 & 3 ARE ALLOWED. 108. GROUND NO. 4 RELATES TO CONFIRMATION OF ADD ITION OF AN AMOUNT OF RS. 9,04,750/- ON ACCOUNT OF ON MONEY. 109. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO ON THE BASIS OF SEIZED MATERIAL NOTED THAT THE ASSESSEE HA S RECEIVED TOTAL UNACCOUNTED MONEY FROM SALE OF FLAT PERTAINING TO H YDERABAD PROJECT AT RS. 1,99,22,113/- OUT OF WHICH AN AMOUNT OF RS. 20 LAKH PERTAINED TO AY 2008-09. WHEN ASSESSEE WAS ASKED TO EXPLAIN DURING THE ASSESSMENT PROCEEDING WITH REGARD TO AFORESAID UNACCOUNTED MON EY RECEIVED BY HIM, HE EXPLAINED THAT ON MONEY RECEIPTS WERE REFLE CTED IN THE UNACCOUNTED BANK ACCOUNT. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT INCOME TO BE ESTIMATED BY TAKING UNACCOUNTED B ANK DEPOSITS AS GROSS RECEIPTS. HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BY STATING THAT THE DEPOSITS AND THE WITHD RAWALS IN THE BANK ACCOUNT ARE NOT IN REGULAR INTERVALS AND THE ASSESS EE HAS NOT PROVED THE NEXUS BETWEEN ON MONEY RECEIPTS AND BANK DEPOSITS. HE, THEREFORE, TREATED THE AMOUNT OF RS. 20 LAKH AS UNACCOUNTED AN D ADDED IT TO THE INCOME OF THE ASSESSEE. THE ADDITION WAS CHALLENGED IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), IT WAS CONTENDED BY THE ASSESSEE THAT AT THE TIME OF SEARCH, THE ASSESSEE HAD ADMITTED THAT AN AMOUNT OF RS. 20 LAKH WAS RECEIVED AGAINST FLAT BEARING NO. 203 STAN DING IN THE NAME OF NIKITHA AND R.S. REDDY TOWARDS EXECUTION OF ALTERAT IONS, SHALL BE INCLUDED IN THE CONSOLIDATED DECLARATION. IT WAS SU BMITTED THAT THE OFFER WAS MADE BY THE ASSESSEE DURING THE COURSE OF SEARC H WITHOUT EXAMINING ACTUAL TRANSACTION IN THE BOOKS OF ACCOUN T AND ON THE PRESUMPTION THAT ONLY RS. 28,80,000/- WAS RECORDED AS ON 31/03/2007. IT 40 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS WAS FURTHER SUBMITTED THAT THE ASSESSEE IN FACT HAD RECEIVED AND DULY RECORDED IN THE BOOKS OF ACCOUNT, AN AMOUNT OF RS. 40,50,000/- BY THE END OF FY 2006-07 AGAINST THE TOTAL CONSIDERATION O F RS. 57,89,250/-, WHICH ALSO INCLUDE THE AMOUNT OF RS. 20 LAKHS. IT W AS, THUS, SUBMITTED THAT THE RETURN OF INCOME FILED IN RESPONSE TO NOTI CE U/S 153A FOR AY 2007-08 ALREADY INCLUDES THE AMOUNT OF RS. 20 LAKH SINCE THE ASSESSEE HAS RECEIVED THE SAID AMOUNT DURING THE FY AND THE BALANCE AMOUNT WAS OFFERED IN THE FY 2008-09. ON THE BASIS OF THE SUBM ISSIONS MADE BY THE ASSESSEE, CIT(A) CALLED FOR A REMAND REPORT FROM TH E AO. IN THE REMAND REPOT, AO STATED THAT ON EXAMINING THE DIRECT INCOM E ACCOUNT IN THE BOOKS OF ACCOUNT FOR AY 2006-07, IT WAS FOUND THAT THE ASSESSEE HAS SHOWN RS. 40,50,000/- AS RECEIVED FROM R.P. REDDY F OR SALE OF FLAT NO. 203, HUDA ENCLAVE, JUBILEE HILLS, HYD. HOWEVER, AS PER THE SWORN STATEMENT OF THE ASSESSEE DATED 18/03/2008, THE ASS ESSEE HIMSELF STATED THAT THE TOTAL COST OF THE FLAT WAS RS. 57,8 9,250/-. HE, THEREFORE, STATED IN THE REMAND REPORT THAT SINCE ASSESSEE HAS SHOWN RS. 40,50,000/- AS RECEIVED FROM THE BUYERS, THE BALANC E AMOUNT OF RS. 17,39,250/- IS NOT DISCLOSED BY THE ASSESSEE. ON BE ING CONFRONTED WITH THE REMAND REPORT, THE ASSESSEE SUBMITTED THAT AN A MOUNT OF RS. 8,34,500/- WAS RECEIVED TOWARDS UNDIVIDED SHARE OF LAND AND RECORDED IN THE BOOKS OF ACCOUNT IN FY 2008-09 TOWARDS SALE OF FLAT NO. 203 TO MR. P. REDDY, WHICH HAS BEEN TOTALLY OVERLOOKED BY THE AO. THUS, THE TOTAL AMOUNT OF RS. 48,84,500/- WERE ACCOUNTED DURING THE FY 2006-07 AND 2008-09 LEAVING THE BALANCE OF RS. 9,04,750/- REPRE SENTING THE COST OF EXTRA WORK, WHICH HAS NOT BEEN PAID BY THE CUSTOMER . THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, IN THE LIGHT OF THE MATERIAL ON RECORD ACCEPTED THE AMOUNT OF RS. 48,84,500/- AS EXPLAINED WHILE SUSTAINING THE ADDITION TO THE EXTENT OF RS. 9,04,7 50/- BY OBSERVING THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN WITH SUFF ICIENT EVIDENCE IN THIS REGARD. 41 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 110. HAVING HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE CIT(A). IT IS NOT DISPUTED THAT AS PER THE SEIZED MATERIALS THE AMOUNT RECEIVE D ON SALE OF FLAT IS RS. 57,89,250/- OUT OF WHICH THE ASSESSEE HAS ACCOU NTED FOR AN AMOUNT OF RS. 40,50,000/- IN THE FY 2006-07 AND AN AMOUNT OF RS. 8,34,500/- WAS ACCOUNTED FOR IN AY 2008-09 AS UNDIVIDED SHARE OF FLAT. HOWEVER, SO FAR AS THE BALANCE AMOUNT OF RS. 9,04,750/- IS CONC ERNED, THE ASSESSEE APART FROM STATING THAT THE AMOUNT REPRESENTED THE COST OF EXTRA WORK WHICH HAS NOT BEEN PAID BY THE CUSTOMER HAS NOT BRO UGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE SUCH CLAIM. IN THE AFORES AID VIEW OF THE MATTER, THE ASSESSEE HAVING FAILED TO EXPLAIN WITH EVIDENCE THAT THE AMOUNT OF RS. 9,04,750/- WAS NOT RECEIVED BY HIM, THE ADDITIO N IS REQUIRED TO BE SUSTAINED. ACCORDINGLY, WE DISMISS THIS GROUND RAIS ED BY THE ASSESSEE. 111. GROUND NO. 6 IS ESTIMATION OF INCOME AT 15% . THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUND DECIDED BY US IN ASSESEES OWN CASE FOR AY 2002-03 IN ITA NO. 622/H/12 VIDE PARAS 65 & 66 (SUPRA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIMATE THE NET PROFIT BY APPLYING RATE OF 8% ON T HE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 112. IN THE RESULT, APPEAL IN ITA NO. 628/H/12 IS PARTLY ALLOWED. ITA NO. 1388/H/12 FOR AY 2002-03 IN CASE OF PAVANI TOWERS. 113. GROUND NO. 1 & 6 ARE GENERAL IN NATURE. 114. IN GROUND NO. 2 & 3, THE ASSESSEE HAS RAISE D THE ISSUE OF SUSTAINING THE ADDITION IN ABSENCE OF SEIZED MATERI AL. 115. BRIEFLY STATED, ASSESSEE IS A PARTNERSHIP F IRM. AS A RESULT OF SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF S MT. P PAVANI AND SHRI P.V. RAGHAVA RAO AND OTHERS, A NOTICE WAS ISSU ED U/S 153C OF THE ACT. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 42 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 03/08/2009 ADMITTING INCOME OF RS. 42,880/-. IN THE ASSESSMENT PROCEEDING, WHICH ENSUED THEREAFTER, THE AO REFERRE D TO AN AUDITOR FOR SPECIAL AUDIT. AFTER RECEIVING SPECIAL AUDIT REPORT , THE AO MADE ADDITION ON ACCOUNT OF UNDISCLOSED RECEIPTS ON CONSIDERING T HE FACT THAT THE ASSESSEE HAS DISCLOSED GROSS RECEIPTS OF RS. 42,50, 000/- IN THE RETURN FILED IN RESPONSE TO SECTION 153C AS AGAINST RS. 22 ,85,000/- DISCLOSED IN THE ORIGINAL RETURN. HOWEVER, HE NOTICED THAT THE A SSESSEE, THOUGH, HAD ENHANCED HIS GROSS RECEIPTS BUT, AT THE SAME TIME, COMPUTED HIS INCOME AT RS. 42,875/- BY CLAIMING ADDITION AS EXPENSES. THE AO NOTED THAT THOUGH SOME MATERIAL EVIDENCING SUPPRESSION OF GROS S RECEIPTS WAS FOUND, BUT, THERE WAS NO MATERIAL INDICATING ADDITI ONAL EXPENSES. THE AO NOTED THAT IN THE ORIGINAL RETURN ASSESSEE ONLY ADM ITTED THE GROSS RECEIPTS WHICH ARE RECEIVED IN CHEQUES AND OMITTING TO DECLARE THE AMOUNT RECEIVED IN CASH. THE AO FURTHER EXAMINING T HE HEADS UNDER WHICH THE ADDITIONAL EXPENDITURE WAS CLAIMED, NOTED THAT THE ASSESSEE HAS NOT PRODUCED ANY BILLS AND VOUCHERS IN SUPPORT OF HIS CLAIM. THEREFORE, OUT OF THE TOTAL EXPENDITURE OF RS. 40,8 7,307/- CLAIMED BY THE ASSESSEE, THE AO DISALLOWED AN AMOUNT OF RS. 19,67, 000/- AND ADDED IT TO THE INCOME OF THE ASSESSEE. THE AO ALSO MADE AN ADDITION OF AN AMOUNT OF RS. 7,844/- TOWARDS INCOME TAX WRONGLY DE BITED TO THE P&L A/C AND AN AMOUNT OF RS. 30,375/- BEING CONTRIBUTIO N TO CHITS WRONGLY DEBITED TO THE P&L A/C. BEING AGGRIEVED OF THE ADD ITIONS MADE BY THE AO, ASSESSEE CHALLENGED THE SAME IN APPEAL BEFORE T HE CIT(A). 116. THE CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE IN THE LIGHT OF THE MATERIALS ON RECORD, HELD THAT THO UGH THE ASSESSEE HAS EVERY RIGHT TO CLAIM UNACCOUNTED EXPENDITURE FOUND IN THE SEARCH PROCEEDINGS ALONG WITH UNACCOUNTED RECEIPTS, HE, HO WEVER NOTED THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE RELATIN G TO INCURRING OF SUCH EXPENSES EITHER BEFORE THE SPECIAL AUDIT OR BE FORE THE AO. HE FURTHER NOTED THAT THE ASSESSEE HAS NOT INDICATED T HE DETAILS OF 43 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS EXPENDITURE NOR PRODUCED VOUCHERS AND BILLS RELATED TO SUCH EXPENDITURE FOR VERIFICATION. ON THE CONTRARY, THE ASSESSEE OFF ERED TO ADMIT THE INCOME ON ESTIMATE BASIS AT A REASONABLE RATE. IN T HE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESSEE, THE CIT(A) PROCEE DED TO ESTIMATE THE NET PROFIT BY APPLYING THE RATE OF 16% TO THE G ROSS RECEIPTS OF RS. 42,52,000/- DISCLOSED BY THE ASSESSEE. 117. WE HAVE HEARD THE PARTIES AND PERUSED THE M ATERIALS ON RECORD. FROM NARRATION OF FACTS HEREINABOVE, IT IS VERY MUC H CLEAR THAT WHILE IN THE ORIGINAL RETURN THE ASSESSEE HAS DISCLOSED GROS S RECEIPTS AT RS. 22,85,000/-, IN THE RETURN FILED IN RESPONSE TO NOT ICE U/S 153C THE ASSESSEE DISCLOSED GROSS RECEIPTS OF RS. 42,52,000/ -. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THERE WAS NO SEIZED MATERIAL IS WITHOUT ANY BASIS. ONLY BECAUSE OF SEIZED MATERIALS UNEART HED AS A RESULT OF SEARCH, THE ASSESSEE WAS COMPELLED TO ENHANCE THE G ROSS RECEIPTS OF RS. 42,52,000/-. IT IS VERY MUCH CLEAR FROM THE MAT ERIALS ON RECORD THAT AT THE TIME OF FILING OF ORIGINAL RETURN, THE ASSES SEE ONLY DISCLOSED GROSS RECEIPTS THROUGH CHEQUES TOTALLY SUPPRESSING RECEIP TS IN CASH WHICH CAME TO LIGHT ONLY AS A RESULT OF SEARCH. IN THE A FORESAID CIRCUMSTANCES, THE CONTENTION OF THE ASSESSEE THAT THE ADDITION CA NNOT BE MADE IN ABSENCE OF SEIZED MATERIAL IS WITHOUT ANY BASIS. HO WEVER, SO FAR AS ESTIMATION OF PROFIT @ 16% IS CONCERNED, WE ARE OF THE VIEW THAT THE NET PROFIT RATE ADOPTED BY THE CIT(A) IS ON THE HIGHER SIDE CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE, I.E. , CIVIL CONSTRUCTION WORK. CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE ARE OF THE VIEW THAT NET PROFIT RATE OF 8% WOULD BE JUST AND R EASONABLE. WE, THEREFORE, DIRECT THE AO TO ESTIMATE THE PROFIT BY APPLYING THE RATE OF 8% ON THE TURNOVER OF RS. 42,52,000/- NET OF ALL DEDUC TIONS. 118. GROUND NO. 5 RELATES TO ADDITION OF AN AMOU NT OF RS. 30,375/- REPRESENTING CONTRIBUTION OF CHIT. WHILE MAKING THE AFORESAID ADDITION, 44 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS THE AO NOTED THAT THE ASSESSEE HAS WRONGLY DEBITED TO MARGARDARSHI CHIT TO THE SALE AND CEMENT ACCOUNT. 119. DURING THE APPEAL PROCEEDINGS BEFORE THE CIT (A), IT WAS CONTENDED BY THE ASSESSEE THAT THE AO HAS MADE THE ADDITION PURELY ON THE BASIS OF OBSERVING MADE BY THE SPECIAL AUDIT WH ICH IS BASED ON THE BOOKS OF ACCOUNT SUPPORTING THE ORIGINAL RETURN OF INCOME WHEREAS THE ASSESSEE HAS RIGHTLY CLAIMED IN THE REVISED RETURN WHICH WAS NEITHER EXAMINED BY THE AO NOR BY THE SPECIAL AUDIT. CIT(A) , HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED ANY INFORMATION IN SUPPORT OF HIS INCURRING OF SUCH EXPENDITURE DURING THE APPEAL PROCEEDING ALSO. 120. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. IT IS NOT DISPUTED THAT THE CIT(A) HAS ESTI MATED THE PROFIT AT A FIXED RATE. IT IS FURTHER NOTED THAT THE CIT(A) HIM SELF HAS COMMENTED THAT SINCE THE ASSESSEES INCOME HAS BEEN QUANTIFIED ON ESTIMATE BASIS NO FURTHER ALLOWANCE OF EXPENDITURE CAN BE ALLOWED. TH AT BEING THE CASE, NO SEPARATE ADDITION OF THE AMOUNT OF RS. 30,375/- COU LD HAVE BEEN SUSTAINED BY THE CIT()A) HAVING ESTIMATED THE INCOM E OF THE ASSESSEE. WE, THEREFORE, DELETE THE ADDITION MADE. 121. IN THE RESULT, APPEAL IN ITA NO. 1388/H/12 IS PARTLY ALLOWED. ITA NO. 1444/H/12 FOR AY 2002-03 BY REVENUE IN CAS E OF PAVANI TOWERS. 122. GROUND NOS. 1 & 3 ARE GENERAL IN NATURE. HENCE, NOT REQUIRED TO BE ADJUDICATED. 122. IN GROUND NOS. 2(A) & (B) THE REVENUE STAT ED THAT CIT(A) IS NOT JUSTIFIED IN ESTIMATING PROFIT BY DELETING THE ADDI TION MADE OF RS. 19,67,000/- TOWARDS UNACCOUNTED RECEIPTS WHEN THE A SSESSEE FAILED TO SUBMIT ANY BILLS. 45 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 123. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24 READ WITH PARA 117 O F ITA NO. 1388/H/12, THEREFORE FOLLOWING THE DECISION THEREI N WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING THE ADDITIONS MADE BY THE AO. 124. IN THE RESULT, APPEAL OF REVENUE IN ITA NO. 1444/H/12 IS DISMISSED. ITA NO. 1389/H/12 FOR AY 2003-04 IN CASE OF PAVANI TOWERS 125. GROUND NO. 1 & 5 ARE GENERAL IN NATURE. HENCE, THEY DO NOT REQUIRE TO BE ADJUDICATED. 126. GROUND NO. 2 & 3 RELATE TO ISSUE OF ESTIMATI ON OF INCOME IN ABSENCE OF SEIZED MATERIAL. SIMILAR HAS BEEN DECIDE D BY US IN ITA NO. 1388/H/12 FOR AY 2002-03 VIDE PARAS 114 TO 117 (SUP RA). FOLLOWING THE DECISION THEREIN WE DISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 127. GROUND NO. 4 RELATES TO ESTIMATION OF PROFIT A T 16% OF THE GROSS RECEIPTS OF RS. 1,20,10,000. THIS GROUND IS MATERIA LLY IDENTICAL TO THAT OF THE GROUND DECIDED BY US IN AY 2002-03 IN ITA NO. 1 388/H/12 IN ASSESSEES OWN CASE VIDE PARA 117 (SUPRA), THEREFOR E, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIM ATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 128. IN THE RESULT, APPEAL IN ITA NO. 1389/H/ 12 IS PARTLY ALLOWED. ITA NO. 1445/H/12 FOR AY 2003-04 BY THE REVENUE IN CASE OF PAVANI TOWERS. 129. GROUND NOS. 1 & 4 ARE GENERAL IN NATURE. HENCE , THEY DO NOT REQUIRE TO BE ADJUDICATED. 46 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 130. ISSUE RAISED IN GROUND NOS. 2(A) & 2(B) ARE TH AT, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE OF RS. 93,7 0,000/- TOWARDS UNACCOUNTED RECEIPTS WHEN THE ASSESSEE FAILED TO SU BMIT ANY BILLS. 131. THIS ISSUE HAS BEEN DECIDED BY US IN ITA NO. 677/H/12 FOR AY 2004-05 VIDE PARAS 20 TO 24 READ WITH PARA 117 OF I TA NO. 1388/H/12, THEREFORE FOLLOWING THE DECISION THEREIN WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESORTING TO ESTIMATION OF PROFIT WHILE DELETING THE ADDITIONS MADE BY THE AO. 132. IN GROUND NO. 3(A) AND (B), REVENUE HAS C HALLENGED THE DELETION OF ADDITION OF RS. 1,14,65,740/- BEING THE DIFFEREN CE BETWEEN THE ACTUAL AND ADMITTED CONSIDERATION OF SALE OF FLATS. 133. BRIEFLY STATED, DURING THE COURSE OF ASSES SMENT PROCEEDING, THE AO REFERRING TO THE SEIZED DOCUMENT MARKED AS A/VP R/RES/PO/3 NOTED THAT ASSESSEE HAS RECEIVED CONSIDERATION OVER AND A BOVE THE CONSIDERATION REFLECTED IN THE BOOKS OF ACCOUNT AND REGISTERED AMOUNT. AO REFERRING TO FEW INSTANCES, SUCH AS CONSIDERATIO N RECEIVED IN RESPECT OF FLAT BEARING NO. A-202 FROM SHRI G. SIVAKUMAR WA S SHOWN AS RS. 5,93,969/- AS PER THE SEIZED DOCUMENT. DURING POST SEARCH DETAILS OF SALE CONSIDERATION STATED TO HAVE BEEN RECEIVED IN RESPECT OF EACH OF THE FLATS, HOWEVER, NO BOOKS OF ACCOUNT WERE PRODUCED B EFORE THE ADIT (INV.) THE AO EXAMINING THE REGISTER AND OTHER DETA ILS NOTED THAT THE SALE CONSIDERATION RECEIVED IN RESPECT OF FLAT A-20 2 IS SHOWN AS RS. 3,55,500/- THEREBY RESULTING IN DIFFERENCE OF RS. 2 ,38,469/-, WHICH AS PER THE AO IS UNACCOUNTED. FROM THIS THE AO INFERRED TH AT ASSESSEE WAS ACCOUNTING FOR 60% OF SALE CONSIDERATION AND 40% RE MAINED UNACCOUNTED. HE NOTED THAT AS PER THE DETAILS DURIN G THE RELEVANT ACCOUNTING PERIOD, THE ASSESSEE HAD SHOWN TOTAL CON SIDERATION RECEIVED AT RS. 1,71,98,610/-. THE AO APPLYING THE AFORESAID RATIO HELD THAT AMOUNT OF RS. 1,71,98,610/- IS 60% OF THE CONSIDERA TION RECEIVED, 47 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS WHEREAS 40% OF REMAINED UNACCOUNTED WHICH WORKED OU T TO RS. 1,14,65,740/-. THOUGH THE ASSESSEE SUBMITTED YEAR W ISE COST OF CONSTRUCTION ADMITTED BY HIM, THE AO DID NOT ACCEPT THE SAME AND ADDED THE AMOUNT OF RS. 1,14,65,740/- TO THE INCOME RETUR NED. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). 134. DURING THE HEARING OF APPEAL PROCEEDINGS B EFORE THE CIT(A), IT WAS CONTENDED BY THE ASSESSEE THAT THE ADDITION WAS MADE BASED ON THE SEIZED MATERIAL BY ASSUMING THAT THE ASSESSEE H AS NOT DISCLOSED 40% OF THE AMOUNT OF CONSIDERATION RECEIVED AGAINST FLAT NO. A-202 SOLD TO SHRI G. SIVAKUMAR. ASSESSEE CONTENDED THAT THE A O HAS MADE COMPUTATION OF GROSS RECEIPTS FROM SALE OF FLATS AT RS. 1,71,98,610/- SOLELY ON THE BASIS OF THE FLAT SOLD TO SHRI G. SIV AKUMAR AND PRESUMED THAT THE AMOUNT OF RS. 1,71,98,610/- REPRESENT ONLY 60% OF THE CONSIDERATION THEREBY MAKING ADDITION OF RS. 1,14,6 5,470/- TREATING IT TO BE THE BALANCE 40%. THE ASSESSEE FURTHER CONTENDED THAT THE ASSUMPTIONS MADE BY THE AO IS TOTALLY INCORRECT AS IT IS BASED ON THE SEIZED MATERIAL AND NOT DERIVED OUT OF THE BOOKS OF ACCOUNT SUPPORTING THE RETURN OF INCOME FURNISHED WHEREIN THE TOTAL RE CEIPTS OF RS. 1,20,10,000/- WERE ACCOUNTED IN THE BOOKS OF ACCOUN T. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAS RECORDED TOTAL RECE IPTS FROM SALE OF FLATS AMOUNTING TO RS. 3,00,27,883/- ON REVENUE REA LIZATION BASIS SPREAD OVER BETWEEN FY 2001-02 TO 2003-04, WHICH IS MORE T HAN THE AMOUNT OF RS. 2,86,64,080/- INCLUDING UNACCOUNTED TURNOVER OF RS. 1,14,65,740/- AS QUANTIFIED BY THE AO. THE CIT(A) AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF SEIZED MATERIAL AND ALSO FINDINGS OF THE AO, NOTED THAT THE BASIS AS ADOPTED BY THE AO FOR E STIMATING UNACCOUNTED RECEIPT IS FROM SALE OF FLAT BEARING NO . A-202 TO SHRI G. SIVAKUMAR WHEREIN THE CONSTRUCTION VALUE AS PER THE SEIZED MATERIAL WAS SHOWN AT RS. 5,93,969/- AS AGAINST THE AMOUNT O F RS. 3,55,500/- ADMITTED BY THE ASSESSEE, WHICH ACCORDING TO THE AO RESULTED IN 48 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS SUPPRESSION OF RECEIPTS TO THE EXTENT OF RS. 2,38,4 69/-, WHICH WORKED OUT TO 40% OF THE TOTAL CONSIDERATION OF RS. 5,93,969/- . THE CIT(A) NOTED THAT APPLYING THE SAME YARDSTICK, THE AO QUANTIFIED THE UNACCOUNTED RECEIPTS AT RS. 1,14,65,740/-. THE CIT(A) NOTED THA T AS PER THE MATERIAL ON RECORD ONLY ON THE BASIS OF SALE OF ONE FLAT AS APPEARED IN THE SEIZED MATERIAL, THE AO HAS QUANTIFIED THE ADDITION AND NO SUCH INFORMATION WAS RELATABLE TO ANY OTHER TRANSACTION INVOLVING SALE O F FLATS WAS FOUND OR MADE OUT. THE CIT(A) NOTED THAT THE AO HAS NOT EXAM INED THE PURCHASERS OR SELLERS FOR ARRIVING AT THE CONCLUSIO N THAT THE ASSESSEE HAS NOT ACCOUNTED 40% OF THE RECEIPTS FROM THE SALE OF FLATS. THE CIT(A) WAS OF THE VIEW THAT IF AT ALL, THE UNACCOUNTED RECEIPT S HAVE TO BE QUANTIFIED IT COULD HAVE BEEN CONFINED TO THE TRANSACTION OF F LAT NO. A-202 ONLY IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE ASSESSEE H AS UNACCOUNTED RECEIPTS FROM OTHER FLATS. HE FURTHER HELD THAT THE UNACCOUNTED RECEIPTS OF THE ASSESSEE WERE ALREADY SUBJECTED TO TAX BEING THE DEPOSITS MADE INTO BANK ACCOUNT AND SUCH CREDITS FOR THE YEAR UND ER REFERENCE WAS QUANTIFIED AT RS. 1,20,10,000/- AND AFTER EXCLUDING THE TURNOVER SHOWN IN THE BOOKS OF ACCOUNT, THE NET PROFIT WAS ESTIMATED ON SUCH UNACCOUNTED TURNOVER TO ARRIVE AT THE PROFIT OF THE ASSESSEE. H E FURTHER NOTED THAT SINCE THE UNACCOUNTED RECEIPTS ARE ACCOMPANIED BY T HE EXPENDITURE AND THE ESTIMATION OF THE PROFIT HAS TAKEN CARE OF THE RECEIPTS AS WELL AS THE EXPENDITURE TRACED DURING THE COURSE OF SEARCH PROC EEDINGS, THERE IS NO JUSTIFICATION TO EXTRAPOLATE SINGLE TRANSACTION FOR ARRIVING AT THE UNACCOUNTED RECEIPTS AS HAS BEEN DONE BY THE AO. TH E CIT(A) HELD THAT THE ADDITION MADE BY THE AO BY ESTIMATING THE GROSS RECEIPTS WOULD RESULT IN SUBJECTING RECEIPTS TO TAX TWICE AS THE SUPPRESSED RECEIPTS HAS ALREADY BEEN SUBJECTED TO TAX ON ESTIMATE BASIS. HE , THEREFORE, DELETED THE ADDITION OF RS. 1,14,65,740/-. 135. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL ON RECORD. AS CAN BE SEEN FROM THE ORDERS OF THE REVEN UE AUTHORITIES AS 49 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS WELL AS OTHER MATERIALS ON RECORD, EXCEPT SINGLE IN STANCE OF SALE OF FLAT NO. A-202, THERE IS NO OTHER EVIDENCE BEFORE THE AO EITHER BY WAY OF SEIZED MATERIAL OR ANY OTHER MATERIAL TO SHOW THAT THE ASSESSEE HAS SUPPRESSED THE RECEIPT IN RESPECT OF ALL THE FLATS. THEREFORE, BY APPLYING THE SINGLE INSTANCE OF SUPPRESSION OF RECEIPT, IF AT ALL THERE BE ANY, THE AO COULD NOT HAVE QUANTIFIED THE UNACCOUNTED RECEIP T AT RS. 1,14,65,740/- THAT TOO BY ASSUMING THAT RECEIPTS SH OWN BY THE ASSESSEE REPRESENTS 60% OF THE TOTAL CONSIDERATION. FURTHER , IT IS ALSO A FACT THAT THE ASSESSEE TAKING INTO CONSIDERATION THE INFORMAT ION AVAILABLE IN THE SEIZED MATERIALS HAS DECLARED THE GROSS RECEIPTS OF RS. 1,20,10,000/- IN THE RETURN FURNISHED IN RESPONSE TO NOTICE ISSUED U /S 153C AS AGAINST THE RECEIPTS OF RS. 26,40,000/- SHOWN IN THE ORIGINAL R ETURN. THEREFORE, THE CONCLUSION DRAWN BY THE CIT(A) THAT THE UNACCOUNTED RECEIPTS FROM SALE OF FLAT HAS ALREADY BEEN TAKEN CARE OF BY ENHANCING GROSS RECEIPT OF RS. 1,20,10,000/- CANNOT BE DISREGARDED. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING TH E ADDITION, WHICH IS ACCORDINGLY UPHELD. HENCE, THIS GROUND OF REVENUE I S DISMISSED. 136. IN THE RESULT, APPEAL IN ITA NO. 1445/H/1 2 IS DISMISSED. ITA NO. 1390/H/12 FOR AY 2004-05 IN CASE OF M/S PAV ANI TOWRES 137. GROUND NO. 1 AND 5 ARE GENERAL IN NATURE. 138. GROUND NOS. 2 &3 ARE AGAINST THE ADDITION MA DE WHEN NO MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERATIONS AND WITHOUT CONSIDERING THE FACT THAT THE ASSESSMENT IS MADE U/S 153C OF TH E ACT. SIMILAR HAS BEEN DECIDED BY US IN ITA NO. 1388/H/12 FOR AY 2002 -03 VIDE PARAS 114 TO 117 (SUPRA). FOLLOWING THE DECISION THEREIN WE D ISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 139. GROUND NO. 4 IS REGARDING ESTIMATION OF PRO FIT @ 16%. THIS GROUND IS MATERIALLY IDENTICAL TO THAT OF THE GROUN D DECIDED BY US IN AY 2002-03 IN ITA NO. 1388/H/12 IN ASSESSEES OWN CASE VIDE PARA 117 50 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS (SUPRA), THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO ESTIMATE THE PROFIT BY APPLYING RATE OF 8% ON THE TURNOVER DECLARED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 140. IN THE RESULT, APPEAL IN ITA NO. 1390/H/1 2 IS PARTLY ALLOWED. ITA NO. 1446/H/12 FOR AY 2004-05 BY THE REVENUE IN CASE OF PAVANI TOWERS 141. THE ISSUE RAISED IN GROUND NO. 2(A) & (B) BY THE DEPARTMENT IS RELATING TO THE ISSUE OF ESTIMATION OF NET PROFIT B Y THE CIT(A) BY DELETING THE ADDITION OF RS. 14,30,000/- MADE BY THE AO TOWA RDS UNACCOUNTED RECEIPTS. 142. SINCE WE HAVE ALREADY UPHELD THE ESTIMATION OF INCOME, THIS GROUND OF THE DEPARTMENT CANNOT SURVIVE AND ACCORDI NGLY THIS GROUND IS DISMISSED. 143. IN THE RESULT, APPEAL IN ITA NO. 1446/H/1 2 IS DISMISSED. ITA NO. 1385/H/12 FOR AY 2006-07 IN CASE OF PAVANI CONSTRUCTIONS 144. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. 145. IN GROUND NOS. 2, 3 & 4, ASSESSEE HAS CHAL LENGED THE ACTION OF THE CIT(A) IN CONFIRMING A PART OF THE ADDITION MAD E BY THE AO IN ABSENCE OF SEIZED MATERIAL. 146. AS ALREADY DISCUSSED HEREINBEFORE A NOTICE W AS ISSUED U/S 153C OF THE ACT AS A CONSEQUENCE TO THE SEARCH AND SEIZU RE OPERATION CONDUCTED IN THE GROUP CASES OF SHRI P.V. RAGHAVA R AO AND SMT. PAVANI. IN RESPONSE TO THE NOTICE U/S 153C, ASSESSE E FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 48,560/-. DURING THE ASSESSMENT PROCEEDINGS, THE AO REFERRED FOR SPECIAL AUDIT. ON THE BASIS OF THE REPORT SUBMITTED BY THE SPECIAL AUDIT REPORT AND OT HER MATERIALS ON 51 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS RECORD, THE AO NOTICED THAT THE ASSESSEE HAD CLAIME D VARIOUS EXPENSES UNDER THE HEAD DIRECT EXPENSES AMOUNTING TO RS. 1 5,92,043/- AND AN AMOUNT OF RS. 8,52,650/- UNDER THE HEAD SALARIES AN D WAGES. AS STATED BY THE AO IN THE ASSESSMENT ORDER, SINCE THE ASSESS EE COULD NOT FURNISH SUPPORTING BILLS AND VOUCHERS, THE AO DISALLOWED 20 % OF THE EXPENDITURE CLAIMED UNDER THE AFORESAID TWO HEADS, WHICH WORKED OUT TO RS. 4,88,940/-, WHICH WAS ADDED TO THE INCOME OF THE AS SESSEE. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 147. THE CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE AND IN THE LIGHT OF THE MATERIALS ON RECORD, RESTRI CTED THE DISALLOWANCE TO 10% OF THE TOTAL EXPENDITURE CLAIMED UNDER THE AFOR ESAID TWO HEADS. 148. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AS CAN BE SEEN FROM THE GROUNDS OF APPEAL RAISED BE FORE THE CIT(A), THE ASSESSEE NEVER CHALLENGED THE DISALLOWANCE OF EXPEN DITURE ON THE GROUND OF ABSENCE OF SEIZED MATERIAL. IT IS EVIDENT FROM THE FACTS ON RECORD, IN THE PRECEDING ASSESSMENT YEARS ALSO, THE CIT(A) HAS RESORTED TO ESTIMATION OF PROFIT SINCE THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT FOUND TO BE RELIABLE. IN THE APPEAL BEFORE US, IT IS A FACT ON RECORD THAT THE EXPENDITURE CLAIMED ON ACCOUNT OF DIRECT EXPENSES AND SALARY & WAGES WAS NOT SUPPORTED BY BILLS AND VOUCHERS. TH AT BEING THE CASE, THE CIT(A) WAS JUSTIFIED IN DISALLOWING THE AMOUNT OF 10% AND ACCORDINGLY, THERE IS NO REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A), WHICH IS HEREBY UPHELD. ACCORDINGLY, THE GROUNDS RA ISED IN THIS REGARD ARE THEREFORE DISMISSED. 149. IN THE RESULT, ASSESSEES APPEAL IN ITA NO . 1385/H/12 IS DISMISSED. ITA NO. 1386/H/12 FOR AY 2007-08 IN CASE OF PAVANI CONSTRUCTIONS. 150. GROUND NO. 1 & 6 ARE GENERAL IN NATURE. 52 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 151. IN GROUND NOS. 2 & 3 THE ASSESSEE HAS RAISED THE ISSUE OF SUSTAINING THE ADDITION IN ABSENCE OF SEIZED MATERI AL. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 1388/H/12 FOR AY 2002 -03 VIDE PARAS 114 TO 117 (SUPRA). FOLLOWING THE DECISION THEREIN WE D ISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 152. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGE D THE DISALLOWANCE OF 10% EXPENSES CLAIMED UNDER THE HEAD DIRECT EXPE NSES AND WAGES & SALARIES. SIMILAR ISSUE WAS RAISED IN ITA NO. 1385/ H/12 FOR AY 2006-07, HENCE, FOLLOWING THE DECISION THEREIN WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF THE TOTAL EXPENDITURES CLAIM ED UNDER BOTH THE HEADS. THIS GROUND IS PARTLY ALLOWED. 153. GROUND NO. 5 RELATES TO THE ACTION OF THE C IT(A) IN CONFIRMING THE ADDITION OF RS. 94,315/- OUT OF THE TOTAL ADDITION OF RS. 1,44,905/- U/S 40A(3) OF THE ACT. 154. BRIEFLY, THE FACTS ARE, DURING THE ASSESSME NT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS MADE CASH PAYMENTS TO WARDS EXPENDITURE INCURRED UNDER VARIOUS HEADS. THE AO RELYING UPON T HE REPORT OF THE SPECIAL AUDIT DISALLOWED 20% OF THE TOTAL EXPENDITU RE CLAIMED OF RS. 7,24,525/-, WHICH WORKED OUT TO RS. 1,44,905/-. BEI NG AGGRIEVED OF SUCH DISALLOWANCE, THE ASSESSEE CHALLENGED THE SAME BEFO RE THE CIT(A). 155. IN COURSE OF HEARING OF APPEAL BEFORE THE C IT(A), THE ASSESSEE CONTENDED THAT IT HAS NOT MADE PAYMENTS IN EXCESS O F RS. 20,000/- IN RESPECT OF SALARIES AMOUNTING TO RS. 2,52,920/- AND THAT APART THE AMOUNTS WERE NOT PAID TO A SINGLE PERSON. IT WAS FU RTHER CONTENDED THAT BECAUSE THE PAYMENTS WERE BELOW RS. 20,000/- IN SEV ERAL INSTANCES, ADDITION TO THE EXTENT OF RS. 50,590/- OUT OF TOTAL ADDITION OF RS. 1,44,905/- IS NOT JUSTIFIED. 156. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ACCEPTED ITS CLAIM THAT THE AMOUNT OF RS. 50,590/- OUT OF THE TOTAL 53 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ADDITION CANNOT BE SUSTAINED AS PAYMENTS WERE NOT E XCEEDED RS. 20,000/- AND ACCORDINGLY HE SUSTAINED DISALLOWANCE OF RS. 94,315/-. 157. HAVING HEARD THE CONTENTIONS OF PARTIES AND PERUSED THE MATERIALS ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF CIT(A). AS WOULD BE EVIDENT FROM THE DISCUSSION MADE BY THE CIT(A), THE ASSESSEE ITSELF CONTENDED BEFORE THE CIT(A) THAT EXCEPT THE AMOUNT OF RS. 50,590/-, REST OF THE ADDITION MADE ATTRACTS PROVISIONS U/S 40A(3) OF THE ACT. THAT BEING THE CASE, IN OUR VIEW, THE ORDER PASSED BY THE CIT( A) IS FAIR AND REASONABLE AND CANNOT BE INTERFERED WITH. THE GROUN D IS, THEREFORE, DISMISSED. 158. IN THE RESULT, APPEAL IN ITA NO. 1386/H/12 IS PARTLY ALLOWED. ITA NO. 1387/H/12 FOR AY 2008-09 IN CASE OF PAVANI CONSTRUCTIONS. 159. GROUND NO. 1 & 5 ARE GENERAL IN NATURE. 160. GROUND NOS. 2 & 3 ARE AGAINST THE ADDITION M ADE WHEN NO MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERAT IONS AND WITHOUT CONSIDERING THE FACT THAT THE ASSESSMENT IS MADE U/ S 153C OF THE ACT. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 138 8/H/12 FOR AY 2002- 03 VIDE PARAS 114 TO 117 (SUPRA). FOLLOWING THE DEC ISION THEREIN WE DISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 161. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENG ED THE DISALLOWANCE OF 10% EXPENSES CLAIMED UNDER THE HEAD DIRECT EXPE NSES AND WAGES & SALARIES. SIMILAR ISSUE WAS RAISED IN ITA NO. 1385/ H/12 FOR AY 2006-07, HENCE, FOLLOWING THE DECISION THEREIN WE CONFIRM TH E ORDER OF THE CIT(A) ON THIS COUNT AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 162. IN THE RESULT, APPEAL IN ITA NO. 1387/H/1 2 IS PARTLY ALLOWED. 54 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ITA NOS. 1448 & 1449/H/12 FOR AYS 2007-08 AND 2008- 09 BY THE REVENUE IN CASE OF SHRI B. KRISHNA RAO 163. THE REVENUE HAS RAISED THE FOLLOWING GROUN DS, WHICH ARE COMMON IN BOTH THE APPEALS: GROUND NO. 1 & 6 ARE GENERAL IN NATURE. 2. CIT(A) IS NOT CORRECT TO CONCLUDE THAT SUBSTANTI VE ADDITIONS WERE MADE IN THE CASE OF SRI P.V. RAGHAVA RAO IN RESPECT OF THE BANK TRANSACTIONS OF SRI B. KRISHNA RAO. 3.THE CIT(A) WRONGLY DELETED THE ADDITION BY STATIN G THAT SRI P.V. RAGHAVA RAO HAS OWNED UP ALL THE BANK ACCOUNT TRANS ACTIONS RELATING TO SRI B. KRISHNA RAO. 4. THE CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITIONS THOUGH THE ASSESSMENT WAS MADE ON PROTECTIVE BASIS. 5. THE CIT(A) IS NOT CORRECT TO CONCLUDE THAT THE C REDITS DO NOT REPRESENT THE INCOME OF THE ASSESSEE APART FROM REP RESENTING THE INCOME OF SRI P.V. RAGHAVAN RAO. 164. WE FIND THAT THE CIT(A) HAS DELETED THE ADDIT IONS MADE ON PROTECTIVE BASIS AS THE INCOMES WHICH ARE CONSIDERE D IN THE CASE OF THE ASSESSEE WERE ALREADY ASSESSED IN THE HANDS OF SHRI P.V. RAGHAVA RAO ON SUBSTANTIVE BASIS. 165. HAVING HEARD THE PARTIES AND PERUSED THE MA TERIALS ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE CIT( A). SINCE THE ADDITIONS HAVE ALREADY BEEN MADE IN THE HANDS OF SHRI P.V. RA GHAVA RAO ON SUBSTANTIVE BASIS, THERE IS NO NEED TO UPHOLD THE A DDITIONS MADE ON PROTECTIVE BASIS IN THE CASE OF THE PRESENT ASSESSE E. THEREFORE, WE UPHOLD THE ORDERS OF THE CIT(A) IN YEARS UNDER CONS IDERATION AND DISMISS THE GROUNDS RAISED BY THE REVENUE ON THIS COUNT. 166. IN THE RESULT, BOTH THE APPEALS OF REVENUE IN ITA NOS. 1448 & 1449/H/12 ARE DISMISSED. 55 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ITA NO. 1391/H/12 FOR AY 2005-06 IN CASE OF PAVANI ESTATES 167. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. 168. GROUND NOS. 2 & 3 ARE AGAINST THE ADDITION M ADE WHEN NO MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERAT IONS AND WITHOUT CONSIDERING THE FACT THAT THE ASSESSMENT IS MADE U/ S 153C OF THE ACT. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 138 8/H/12 FOR AY 2002- 03 VIDE PARAS 114 TO 117 (SUPRA). FOLLOWING THE DEC ISION THEREIN WE DISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 169. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENG ED THE DISALLOWANCE OF 5% EXPENSES CLAIMED UNDER THE HEAD DIRECT EXPEN SES AND WAGES & SALARIES. SIMILAR ISSUE WAS RAISED IN ITA NO. 1385/ H/12 FOR AY 2006-07, HENCE, FOLLOWING THE DECISION THEREIN WE CONFIRM TH E ORDER OF THE CIT(A) ON THIS COUNT AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 170. GROUND NO. 5 RELATES TO THE ACTION OF THE C IT(A) IN CONFIRMING THE ADDITION OF 10% OF THE EXPENSES OF RS. 5,98,868/-. 171. WE HAVE HEARD THE PARTIES AND PERUSED THE MAT ERIALS ON RECORD. THE AO HAS MADE THE DISALLOWANCE ON THE GROUND THAT ASSESSEE HAS FAILED TO PRODUCE SUPPORTING VOUCHERS AND HAS FAILE D TO DEDUCT TAX AT SOURCE. THE CIT(A) HAS HELD THAT NO DISALLOWANCE CA N BE MADE U/S 40(A)(IA) AS THE AO HAS NOT ESTABLISHED THE DEFAULT BY ASSESSEE. EVEN SO FAR AS ALLEGATION OF NON FURNISHING OF BILLS AND VOUCHERS ARE CONCERNED, THE CIT(A) HAS OBSERVED THAT THOUGH VOUC HERS WERE AVAILABLE WITH THE ASSESSEE, THE AO REFUSED TO VERI FY THEM AND MADE THE ADDITION SOLELY ON THE BASIS OF SPECIAL AUDIT REPOR T. THE CIT(A), THEREFORE, RESTRICTED THE DISALLOWANCE TO 10% OF TH E EXPENDITURE CLAIMED. IN OUR VIEW, CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE DIRECT THE AO TO DISALLOW 5% IN STEAD OF 10%, CONSI DERING THE FACT THAT SOME AMOUNT OF INFLATION ON EXPENDITURE CANNOT BE R ULED OUT. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 56 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 172. IN THE RESULT, APPEAL IN ITA NO. 1391/H/12 IS PARTLY ALLOWED. ITA NO. 1392/H/12 FOR AY 2006-07 IN CASE OF PAVANI ESTATES 173. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. 174. GROUND NOS. 2 & 3 ARE AGAINST THE ADDITION M ADE WHEN NO MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERAT IONS AND WITHOUT CONSIDERING THE FACT THAT THE ASSESSMENT IS MADE U/ S 153C OF THE ACT. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 138 8/H/12 FOR AY 2002- 03 VIDE PARAS 114 TO 117 (SUPRA). FOLLOWING THE DEC ISION THEREIN WE DISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 175. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGE D THE DISALLOWANCE OF 5% EXPENSES CLAIMED UNDER THE HEAD DIRECT EXPEN SES AND WAGES & SALARIES. SIMILAR ISSUE WAS RAISED IN ITA NO. 1385/ H/12 FOR AY 2006-07, HENCE, FOLLOWING THE DECISION THEREIN WE CONFIRM TH E ORDER OF THE CIT(A) ON THIS COUNT AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 176. GROUND NO. 5 RELATES TO THE ACTION OF THE CIT (A) IN SUSTAINING DISALLOWANCE OF 10% OF THE EXPENSES OF RS. 5,15,996 /-. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ASSESSEES OWN CASE FOR A Y 2005-06 IN ITA NO. 1391/H/12 PARAS 170 & 171 (SUPRA). FOLLOWING T HE DECISION THEREIN WE DIRECT THE AO TO DISALLOW 5% ON THIS COUNT AND T HE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 177. IN THE RESULT, APPEAL IN ITA NO. 1392/H/12 IS PARTLY ALLOWED. ITA NO. 1393/H/12 FOR AY 2007-08 IN CASE OF PAVANI ESTATES 178. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. 179. GROUND NOS. 2 & 3 ARE AGAINST THE ADDITION MA DE WHEN NO MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERATIONS AND WITHOUT CONSIDERING THE FACT THAT THE ASSESSMENT IS MADE U/S 153C OF TH E ACT. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 1388/H/12 FOR AY 2002-03 VIDE PARAS 57 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 114 TO 117 (SUPRA). FOLLOWING THE DECISION THEREIN WE DISMISS THESE GROUNDS OF APPEAL OF THE ASSESSEE. 180. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF 5% EXPENSES CLAIMED UNDER THE HEAD DIRECT EXPENSES AND WAGES & SALARIES. SIMILAR ISSUE WAS RAISED IN ITA NO. 1385/ H/12 FOR AY 2006-07, HENCE, FOLLOWING THE DECISION THEREIN WE CONFIRM TH E ORDER OF THE CIT(A) ON THIS COUNT AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 181. GROUND NO. 5 RELATES TO THE ACTION OF THE CIT (A) IN CONFIRMING THE ADDITION OF 10% OF THE EXPENSES OF RS. 4,98,979/-. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 1392/H/12 FOR AY 2006 -07 IN ASSESSEES OWN CASE VIDE PARA 171 (SUPRA). FOLLOWING THE DECIS ION THEREIN WE DIRECT THE AO TO DISALLOW 5% ON THIS COUNT AND THE GROUND RAISED BY ASSESSEE IS PARTLY ALLOWED. 182. IN THE RESULT, APPEAL IN ITA NO. 1393/H/12 IS PARTLY ALLOWED. ITA NO. 1394/H/12 FOR AY 2008-09 IN CASE OF PAVANI ESTATES 183. GROUND NOS. 1 & 7 ARE GENERAL IN NATURE. 184. GROUND NOS. 2 & 3 ARE AGAINST THE ADDITION MA DE WHEN NO MATERIAL WAS FOUND DURING SEARCH AND SEIZURE OPERATIONS AND WITHOUT CONSIDERING THE FACT THAT THE ASSESSMENT IS MADE U/S 153C OF TH E ACT. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 1388/H/12 FOR AY 2002-03 VIDE PARAS 114 TO 117 (SUPRA). FOLLOWING THE DECISION THEREIN WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 185. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGE D THE DISALLOWANCE OF 5% EXPENSES CLAIMED UNDER THE HEAD DIRECT EXPEN SES AND WAGES & SALARIES. SIMILAR ISSUE WAS RAISED IN ITA NO. 1385/ H/12 FOR AY 2006-07, HENCE, FOLLOWING THE DECISION THEREIN WE CONFIRM TH E ORDER OF THE CIT(A) ON THIS COUNT AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE. 58 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 186. GROUND NO. 5 RELATES TO THE ACTION OF THE CIT( A) IN CONFIRMING THE ADDITION OF 10% OF THE EXPENSES OF RS. 6,65,875/-. CIT(A)S ORDER IS CONFIRMED. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 1392/H/12 FOR AY 2006-07 IN ASSESSEES OWN CASE VIDE PARA 171 (SUPRA) FOLLOWING THE DECISION THEREIN WE CONFIRM THE ORDER OF THE CI T(A) BY DISMISSING THE GROUND RAISED BY ASSESSEE. 187. IN GROUND NO. 6, ASSESSEE HAS CHALLENGED TH E ACTION OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS. 2,84,160/- OUT OF TOTAL ADDITION OF RS. 27,63,500/-. 188. BRIEFLY STATED, DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE AO NOTED THAT IN COURSE OF SEARCH AND SEIZURE OPERA TION, CERTAIN AGREEMENTS REFERRING TO CONSTRUCTION OF INDEPENDENT HOUSE, WERE FOUND AND SEIZED, WHICH ARE AS UNDER: SL.NO. NAME AND ADDRESS OF THE PURCHASER BUILT UP AREA CONTRACT 1. SR. VLVN PRASAD, S/O DAMODARA RAO, FLAT NO. 201, DHEERAJ HEIGHT, MAGUNTA LAYOUT, NELLORE 1500 SFT. 11,62,500/- 2. KALPAM MADHURI SRILATHA, W/O DR. T. VIJAYA SANKAR, RTPPVV REDDY NAGAR, KADAPA. 2200 SFT. 21,50,000/- 3. L. MANJULA, W/O. LAKSHMANNA MAGUNTA LAYOUT, NELLORE 1200 SFT. 12,98,000/- 4. SMT. Y. BHAVANI, W/O KOTESWARA RAO 1200 SFT 9,60,000/- 5. SMT. DUVVURU WANI, W/O MURALIDHAR REDDY, LAKSHMI NAGAR, NELLORE 2600 SFT 22,10,000/- 189. HE NOTED THAT AGREEMENTS HAVE BEEN ENTERED WITH THESE PERSONS WERE FOR CONSTRUCTION OF THE BUILDINGS AND CONSTRUC TED BUILDINGS AS PER THE AGREEMENTS WERE HANDED OVER. HE ALSO NOTED THAT PAYMENTS IN RESPECT OF HOUSE WERE ALSO RECEIVED. ON BEING CALLE D UPON BY THE AO, THE ASSESSEE SUBMITTED THE DETAILS OF GROSS RECEIPT S FROM APARTMENTS AS 59 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS WELL AS INDEPENDENT HOUSE. THE AO AFTER VERIFYING T HE DETAILS NOTED THAT THE ASSESSEE HAS ADMITTED RECEIPT OF RS. 4,34,000/- FROM SMT. D. VANI WHEREAS AS PER THE AGREEMENTS CONSIDERATION IS RS. 22,10,000/-. HE, THEREFORE, OPINED THAT THERE IS SUPPRESSION OF GROS S RECEIPTS TO THE TUNE OF RS. 17,76,000/-. SIMILARLY, HE NOTED THAT IN CAS E OF SRILATHA, THOUGH, THE ASSESSEE ADMITTED GROSS RECEIPTS OF RS. 11,62,5 00/-, BUT, AS PER THE AGREEMENT THE AMOUNT IS RS. 21,50,000/- RESULTING I N A SUPPRESSION OF RS. 9,87,500/-. AS NOTED BY THE AO IN THE ASSESSMEN T ORDER, SINCE THE ASSESSEE DID NOT EXPLAIN THE DIFFERENCE, HE ADDED T HE AMOUNT OF RS. 27,63,500/- TO THE INCOME OF THE ASSESSEE. BEING AG GRIEVED OF SUCH ADDITION, ASSESSEE CHALLENGED BEFORE THE CIT(A). 190. IN COURSE OF HEARING OF APPEAL BEFORE THE CI T(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE AGREEMENT WITH SMT. VANI W AS ORIGINALLY ENTERED INTO FOR PURCHASE OF 2600 SFT. BUILT UP ARE A FOR A CONSIDERATION OF RS. 22,10,000/- AGAINST WHICH THE PAYMENT MADE WAS ONLY RS. 4,30,000/-, WHICH AGAIN WAS DURING FY 2006-07. IT W AS SUBMITTED BY THE ASSESSEE THAT THE AMOUNT OF RS. 4,30,000/- RECEIVED DURING THE FY 2006-07 WAS DULY ACCOUNTED FOR. IT WAS CONTENDED TH AT SUBSEQUENTLY THE SAID PURCHASER EXPRESSED HER INABILITY TO BUY THE F LAT AND THE SAID AMOUNT WAS FORFEITED BY THE ASSESSEE AND OFFERED A S INCOME IN THE SAME YEAR. THUS, IT WAS SUBMITTED THAT THERE WAS NO UNDISCLOSED INCOME AS THE CONTRACT WITH THE SAID PARTY WAS CANCELLED A ND, THEREFORE, THERE IS NO JUSTIFIABLE REASON FOR MAKING THE ADDITION SOLEL Y ON THE BASIS OF THE SEIZED MATERIAL. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE SUBMITTED A COPY OF THE CANCELLATION AGREEMENT. SIMILARLY IN CA SE OF SMT. SRILATHA, IT WAS SUBMITTED BY THE ASSESSEE THAT ORIGINALLY AGREE MENT WAS FOR MAKING THE BUILDING AT A SPECIFIED RATE ON TOTAL AREA OF 2 200 SFT., BUT, DURING THE EXECUTION OF WORK, SHE EXPRESSED HER INTENTION TO T AKE UP CERTAIN WORKS OF FLOOR AND INTERIOR ON HER OWN AND ACCORDINGLY B ALANCE AMOUNT OF RS. 9,87,500/- WAS NOT COLLECTED FROM HER. IN SUPPORT O F SUCH CONTENTION, 60 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS ASSESSEE SUBMITTED SUPPLEMENTARY AGREEMENT ENTERED WITH THE PARTY. ASSESSEE FURTHER SUBMITTED THAT AS THE RETURN OF IN COME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS SUBMITTED O N 01/10/2008 I.E. SUBSEQUENT TO THE DATE OF SEARCH ALL RECEIPTS WERE CONSIDERED AND THERE CANNOT BE ANY SUPPRESSION OF RECEIPTS. 191. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE MATERIALS ON RECORD, FOUND THAT TH ERE ARE SUBSEQUENT DEVELOPMENTS WITH REGARD TO THE AGREEMENTS ORIGINA LLY ENTERED BY THE ASSESSEE WITH SMT. VANI AND SMT. SRILATHA BASING ON WHICH THE DIFFERENCE OF RS. 27,63,500/- WAS TREATED AS SUPPRE SSED SALE RECEIPTS. THE CIT(A) WAS CONVINCED WITH THE FACT THAT IN CASE OF SMT. VANI THE ACTUAL AMOUNT WAS RS. 4,34,000/-, WHICH WAS ALSO AC COUNTED FOR IN THE ASSESSMENT YEAR 2007-08 AND THE BALANCE AMOUNT AS P ER THE ORIGINAL AGREEMENT WAS NEVER REALIZED, WHICH ALSO ULTIMATELY STOOD CANCELLED. IN CASE OF SMT. SRILATHA ALSO THE ASSESSEE ACTUALLY RE CEIVED AN AMOUNT OF RS. 11,62,500/- AND THE BALANCE AMOUNT OF RS. 9,85, 500/- WAS NEVER RECEIVED BY THE ASSESSEE. HOWEVER, THE CIT(A) NOTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE STATUS OF THE FLAT /HOUSE, WHICH WAS SUPPOSED TO HAVE BEEN PURCHASED BY SMT. VANI BUT TH E AMOUNT PAID BY HER WAS FORFEITED. SINCE THE ASSESSEE FAILED TO FUR NISH INFORMATION WITH REGARD TO THE SALE OF FLAT, WHICH WAS SUPPOSED TO H AVE BEEN SOLD TO SMT. VANI, THE CIT(A) WAS OF THE VIEW THAT THE AMOUNT OF RS. 17,76,000/- (RS. 22,10,000 RS. 4,34,000) PERTAINING TO THE TRANSAC TION WITH SMT. VANI REPRESENT UNACCOUNTED RECEIPTS OF THE ASSESSEE. THE CIT(A), HOWEVER, WAS OF THE VIEW THAT THOUGH THE AMOUNT OF RS. 17,76 ,000/- REPRESENT THE UNACCOUNTED RECEIPT, BUT, THE ENTIRE AMOUNT CANNOT BE THE INCOME OF THE ASSESSEE AS INCIDENTAL EXPENDITURE IS ASSOCIATED WI TH SUCH RECEIPT. THE CIT(A), THEREFORE, ADOPTING THE NET PROFIT RATE AS APPLIED IN CASE OF SHRI P.V. RAGHAVA RAO AND SMT. PAVANI ESTIMATED THE PROF IT @ 16% ON THE 61 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS UNACCOUNTED RECEIPT OF RS. 17,76,000/- THEREBY WORK ING OUT THE NET PROFIT AT RS. 2,84,160/-. 192. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES. AS WOULD BE EVID ENT FROM THE MATERIALS AVAILABLE ON RECORD, THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE CIT(A) THAT THE ASSE SSEE HAS NOT DISCLOSED THE AMOUNT RECEIVED FROM SALE OF FLAT, WHICH WAS IN ITIALLY AGREED TO BE SOLD TO SMT. VANI. THAT BEING THE CASE, THE FINDING OF THE CIT(A) REMAINS UNASSAILABLE. HOWEVER, THE PROFIT RATE AT 16% ADOPT ED BY THE CIT(A) IS ON THE HIGHER SIDE SINCE, IN CASE OF SHRI P.V. RAGH AVA RAO AND SMT. PAVANI, WE DIRECTED THE AO TO ESTIMATE PROFIT AT 8% FOLLOWING THE SAME IN THIS CASE ALSO, WE DIRECT THE AO TO APPLY THE NE T PROFIT RATE OF 8% IN PLACE OF 16% ADOPTED BY THE CIT(A) ON THE UNACCOUNT ED RECEIPT OF RS. 17,76,000/-. 193. IN THE RESULT, APPEAL IN ITA NO. 1394/H/12 IS PARTLY ALLOWED. ITA NO. 1447/H/12 FOR AY 2008-09 BY THE REVENUE IN CASE OF PAVANI ESTATES. 194. GROUND NO. 1 & 5 ARE GENERAL IN NATURE. 195. GROUND NO. 2 RELATES TO THE ACTION OF THE CI T(A) IN DELETING THE ADDITION OF RS. 9,87,500/- REPRESENTING ALLEGED SUP PRESSION OF RECEIPT FROM SALE OF FLAT TO SMT. SRILATHA. 196. HAVING HEARD THE PARTIES AND PERUSED THE MA TERIALS ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). I T IS VERY MUCH CLEAR FROM THE DISCUSSION MADE BY THE CIT(A) THAT THE ASSESSEE HAS DEMONSTRATED BEFORE HIM THAT ORIGINAL AGREEMENT WITH SMT. SRILAT HA WAS SUBSEQUENTLY MODIFIED AND ASSESSEE HAS ACTUALLY RECEIVED AN AMOU NT OF RS. 11,62,500/- IN STEAD OF RS. 21,15,000/- AS PER THE ORIGINAL AGREEMENT. IN 62 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS THAT VIEW OF THE MATTER, THERE IS NO REASON TO INTE RFERE WITH THE ORDER OF THE CIT(A) AND THE SAME IS HEREBY CONFIRMED. 197. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED THE ACTION OF THE CIT(A) IN ESTIMATING PROFIT ON THE RECEIPT OF RS. 1 7,76,000/- FROM SMT. VANI IN TERMS OF AGREEMENT. 198. IN VIEW OF OUR FINDING IN ASSESSEES APPEAL IN ITA NO. 1394/H/12 (SUPRA), THIS GROUND OF THE REVENUE IS DISMISSED. 199. IN GROUND NO. 4, THE REVENUE RAISED THE ISSU E OF CONSIDERATION OF FRESH EVIDENCE BY THE CIT(A). WE FIND SUCH CONTENT ION OF THE REVENUE IS DEVOID OF MERIT AS THE CIT(A) IS CONFERRED WITH APP EALLATE JURISDICTION AND HIS POWER IS COTERMINOUS WITH THAT OF THE AO, T HEREFORE, HE CAN DECIDE THE APPEAL CONSIDERING THE TOTALITY OF THE F ACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE DEPARTMENT COULD NOT SUBSTANTIATE WHAT FRESH EVIDENCE/INFORMATION WAS SUBMITTED BEFORE THE CIT(A), WHICH WAS NOT BEFORE THE AO. IN THE AFORESAID VIEW OF THE MAT ER, THIS GROUND OF DEPARTMENT CANNOT BE ENTERTAINED AND ACCORDINGLY DI SMISSED. 200. IN THE RESULT, APPEAL IN ITA NO. 1447/H/12 IS DISMISSED. 201. TO SUM UP, THE RESULT OF ALL THE APPEALS UND ER CONSIDERATION AS FOLLOWS: SL.NO. ITA NO. AY APPELLANT RESPONDENT RESULT 1. 615/H/12 2002-03 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. PARTLY ALLOWED 2. 616/H/12 2003-04 -DO- -DO- PARTLY ALLOWED 3. 617/H/12 2004-05 -DO- -DO- PARTLY ALLOWED 4. 677/H/12 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) DISMISSED 63 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 5. 618/H/12 2005-06 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. PARTLY ALLOWED 6. 678/H/12 2005-06 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) DISMISSED 7 619/H/12 2006-07 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. PARTLY ALLOWED 8 679/H/12 2006-07 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) DISMISSED 9 620/H12 2007-08 SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. PARTLY ALLOWED 10 621/H/12 2008-09 -DO- -DO- PARTLY ALLOWED 11 680/H/12 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SMT. P. PAVANI, NELLORE (PAN AHIPP7924K) DISMISSED 12 622/H/12 2002-03 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 13 623/H/12 2003-04 -DO- -DO- PARTLY ALLOWED 14 624/H/2 2004-05 -DO- -DO- PARTLY ALLOWED 15 681/H/12 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) DISMISSED 16 625/H/12 2005-06 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 17 682/H/12 2005-06 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) DISMISSED 18 626/H/12 2006-07 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 19 683/H/12 2006-07 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) DISMISSED 64 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 20 627/H/12 2007-08 SHRI P.V. RAGHAVA RAO, NELLORE (PAN AKPPP0576P) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED FOR STATISTICAL PURPOSES. 21 628/H/12 2008-09 -DO- -DO- PARTLY ALLOWED 22 1388/H12 2002-03 M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 23 1444/H/12 2002-03 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) DISMISSED 24 1389/H/12 2003-04 M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 25 1445/H/12 2003-04 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) DISMISSED . 26 1390/H/12 2004-05 M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 27 1446/H/12 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI M/S PAVANI TOWERS, NELLORE. (PAN AAFFP1143G) DISMISSED 28 1385/H/12 2006-07 PAVANI CONSTRUCTIONS, NELLORE. (PAN AAKFP0761D) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI DISMISSED 29 1386/H/12 2007-08 -DO- -DO- PARTLY ALLOWED 30 1387/H/12 2008-09 -DO- -DO- PARTLY ALLOWED 31 1391/H/12 2005-06 PAVANI ESTATES, NELLORE (PAN AAKFP0763B ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PARTLY ALLOWED 32 1392/H/12 2006-07 -DO- -DO- PARTLY ALLOWED 33 1393/H/12 2007-08 -DO- -DO- PARTLY ALLOWED 34 1394/H/12 2008-09 -DO- -DO- PARTLY ALLOWED 65 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS 35 1447/H/12 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI PAVANI ESTATES, NELLORE (PAN AAKFP0763B DISMISSED 36 1448/H/12 2007-08 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, TIRUPATHI SHRI B. KRISHNA RAO, NELLORE (PAN AVBPB7256M) DISMISSED 37 1449/H/12 2008-09 -DO- -DO- DISMISSED ORDER PRONOUNCED IN THE COURT ON 28/02/2014. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 28/02/2014 COPY FORWARDED TO: 1. 2. 3. 4. 5. SMT. PAVANI, SHRI P.V. RAGHAVA RAO PAVANI TOWERS PAVANI ESTATES B. KRISHNA RAO, C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, H.NO. 3-6-643, SHRIYAS ELEGANCE, ST. NO. 9, HIMAYATNAGAR , HYD-500 029. 6 6. 8. ACIT, CC, TIRUPATHI. CIT (A) VII, HYDERABAD. CIT CONCERNED, HYDERABAD. 9 DEPARTMENTAL REPRESENTATIVE, ITAT, H YDERABAD. 66 ITA NO. 615/H/12 AND OTHERS SMT. P. PAVANI AND OTHERS S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER