M/s Midwest Granites Private Limited, Hyderabad V. ACIT,Central Circle - 7, Hyderabad

ITA 618/HYD/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4707 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2005-2006
• Appeal Filed On: 04-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Depreciation; Search and seizure; Additional depreciation; Revenue expenditure; Capital expenditure; TDS
• Section: 44AD; 143(3); 153A; 32(1)(iia); 37(1); 10B; 143(1); 43; 13; 153; 119; 22; 153C; 131; 68; 37; 132; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS.616 TO 622/HYD/2014 A. Y S: 2003 - 04 TO 2009 - 10 MIDWEST GRANITES (P) LTD., HYDERABAD. PAN: AAACM 9486 D VS. ACIT, CENTRAL CIRCLE - 7, HYDEABAD. (APPELLANT) (RESPONDENT) ITA NOS. 957, 958, 959, 961 & 962 /HYD/2014 A.YS. 2004 - 05, 2005 - 06, 2006 - 07, 2008 - 09 & 2009 - 10 DCIT, CENTRAL CIRCLE - 7, HYDEABAD. VS. MIDWEST GRANITES (P) LTD., HYDERABAD. PAN: AAACM 9486 D (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI MURALI MOHAN RAO REVENUE BY: SMT. NIVEDITA BISWAS, DR DATE OF HEARING: 20 /02/2020 DATE OF PRONOUNCEMENT: 24 / 02 /20 20 ORDER PER A. MOHAN ALANKAMONY, AM.: THE ABOVE CAPTIONED APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT(A) - VI, HYDERABAD DATED 24/01/2014 IN APPEAL NOS. 0481 TO 0487/2013 - 14/CIT(A) - VI PASSED U/S. 143(3) R.W.S 153A & 2 U/S. 250(6) OF THE ACT FOR THE ASST. YEARS 2003 - 04 TO 20 09 - 10. THE REVENUE HAS ALSO FILED APPEALS AGAINST THE ORDER OF LD. CIT (A) - VI, HYDERABAD FOR THE AYS 2004 - 05 TO 2006 - 07 AND 2008 - 09 TO 2009 - 10. 2. T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF M ANUFACTURING , PROCESSING AND TRADING IN GRANITE AND MARBLE SLABS . SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE ACT WAS CONDUCTED IN THE ASSESSEES GROUP ON 24/7/2008. SUBSEQUENTLY, NOTICE U/S. 153A OF THE WAS ISSUED ON 17/7/2009 CALLING FOR RETURN OF IN COME FOR THE AYS 2003 - 04 TO 2008 - 09. IN RESPONSE, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR ALL THE RELEVANT AYS ON 13/10/2009 . SUBSEQUENTLY, ASSESSMENTS WERE COMPLETED U/S. 143(3) R.W.S 153 OF THE ACT WHEREIN THE LD. AO MADE ADDITIONS. ON APP EAL, THE LD. CIT (A) GRANTED PART RELIEF TO THE ASSESSEE AGGRIEVED BY WHICH, BOTH THE ASSESSEE AND THE REVENUE ARE NOW IN APPEAL BEFORE US. APPEAL NO.616/H/2014 (AY: 2003 - 04): (ASSESSEES APPEAL) 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUX ES OF THE ISSUE S ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 3 (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD D ISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REGISTRATION CHARGES AMOUNTING TO RS. 55,025/ - . (III) THE LD. CIT (A) HAS ERRED IN SUSTAINING 50% OF THE ADDITION AMOUNTING TO RS. 37,29,714/ - (50% OF RS. 74,59,428) MADE BY THE LD. AO TOWARDS INFLATED EXPENDI TURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. (IV) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 29,21,000 TOWARDS PAYMENT MADE TO SRI RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. (V) THE LD. C IT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS.1,24,940/ - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. APPEAL NO.617/H/2014 (AY: 2004 - 05): (ASSESSEES APPEAL) 4. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REGISTRATION CHARGES AMOUNTING TO RS. 73,877/ - . 4 (III) THE LD. CIT (A) HAS ERRED IN SUSTAINING 50% OF THE ADDITION AMOUNTING TO RS. 36,14,465/ - (50% OF RS. 72,28,9 30/ - ) MADE BY THE LD. AO TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. (IV) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 28,10,000/ - TOWARDS PAYMENT MADE TO SRI RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. (V) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS.4,08,155/ - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. APPEAL NO. 957 /H/2014 (AY: 2004 - 05): ( REVENUE S APPEAL) 5. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT T HE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION MADE BY THE LD. AO OF RS. 1,82,90,500/ - TOWARDS UNEXPLAINED CASH RECEIPTS. APPEAL NO.61 8 /H/2014 (AY: 200 5 - 06 ): (ASSESSEES APPEAL) 6. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 5 (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REG ISTRATION CHARGES AMOUNTING TO RS. 2,79,950/ - . (III) THE LD. CIT (A) HAS ERRED IN SUSTAINING 50% OF THE ADDITION AMOUNTING TO RS. 35,87,076/ - (50% OF RS. 71,74,152) MADE BY THE LD. AO TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 3 7(1) OF THE ACT. (IV) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 11,41,000 TOWARDS PAYMENT MADE TO SRI RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. (V) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS.4,52, 390 / - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. (VI) THE LD. CIT (A) HAS ERRED IN DIRECTING THE LD. AO TO VERIFY THE SOURCE FOR ACQUIRING LAND AMOUNTING TO RS. 20 LAKHS SINCE ALL DETAILS OF PAYMENT WERE SUBMITTED. (VII) LD. CI T (A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 75,285/ - MADE BY THE LD. AO TOWARDS DIFFERENCE IN SALE. APPEAL NO. 958 /H/2014 (AY: 2005 - 06 ): ( REVENUE S APPEAL) 7. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT T HE LD. CIT (A) HAS ERRED IN UPHOLDING THE 6 ADDITION MADE BY THE LD. AO OF RS. 2,81,87,800/ - TOWARDS UNEXPLAINED CASH RECEIPTS. APPEAL NO.61 9 /H/2014 (AY: 200 6 - 0 7 ): (ASSESSEES APPEAL) 8. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REGISTRATION CHARGES AMOUNTING TO RS. 1,83,285 / - . (III) THE LD. CIT (A) HAS ERRED IN SUSTAINING 50% OF THE ADDITION AMOUNTING TO RS. 36,20,477 / - (50% OF RS. 72,40 ,954/ - ) MADE BY THE LD. AO TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. (IV) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 9,000/ - TOWARDS PAYMENT MADE TO SRI RAMAK RISHNA REDDY AS UNACCOUNTED EXPENDITURE. (V) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 29,81,843 / - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. 7 (VI) THE LD. CIT (A) HAS ERRED UPHOLDING THE ADDITION MADE BY THE LD . AO OF RS. 39,328/ - TOWARDS PENALTY PAID TO CENTRAL EXCISE DEPARTMENT. (VII) THE LD. CIT (A) HAS ERRED UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 1,07,898/ - TOWARDS INTEREST PAID FOR DELAYED REMITTANCE OF TAX DEDUCTED AT SOURCE. APPEAL NO. 959 /H/2014 (AY: 200 6 - 07 ): ( REVENUE S APPEAL) 9. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEAL HOWEVER, THE CRUX ES OF THE ISSUE ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 2,21,88,016/ - TOWARDS UNEXPLAINED CASH RECEIPTS. (II) THE LD. CIT (A) HAS ERRED IN ALLOWING ADDITIONAL DEPRECIATION OF RS. 12,89,185/ - BY HOLDING THAT THE ASSESSEES ACTIVITY OF CUTTING GRANITE INTO BLOCKS AMOUNTS TO MANUFACTURING / PRODUCTION. APPEAL NO.620/H/2014 (AY: 2007 - 08): (ASSESSEES APPEAL) 10. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 8 (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REGISTRATION CHARGES AMOUNTING TO RS. 2,75,880/ - . (III) THE LD. CIT (A) HAS ERRED IN SUSTAINING 50% OF THE ADDITION AMOUNTING TO RS. 18,66,217/ - (50% OF RS. 37,32 ,434/ - ) MADE BY THE LD. AO TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. (IV) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 24,59,000/ - TOWARDS PAYMENT MADE TO SRI RA MAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. (V) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 8,21,732 / - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. APPEAL NO.621/H/2014 (AY: 2008 - 09): (ASSESSEES APPEAL) 11. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REGISTRATION CHARGES AMOUNTING TO RS. 1,32,595/ - . 9 (III) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 54,96,657/ - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. (IV) THE LD. CIT (A) HAS ERRED UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 49,360/ - TOWARDS PRIOR PERIOD EXPENSES. (V) THE LD. CIT (A) HAS ERRED UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 9,212 / - TOWARDS INTEREST PAID FOR DELAYED REMITTANCE OF TAX DEDUCTED AT SOURCE. APPEAL NO. 961 /H/2014 (AY: 200 8 - 09 ): ( REVENUE S APPEAL) 12. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEAL HOWEVER, THE CRUX ES OF THE ISSUE IS THAT: - (I) THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE ACTIVITY OF CUTTING GRANITE INTO BLOCKS IS MANUFACTURING / PRODUCTION THEREBY ENTITLED TO CLAIM THE BENEFIT OF DEDUCTION UNDER SECTION 10B OF THE ACT FOR RS. 11,48,84,461/ - . (II) THE LD. CIT (A) HAS ERRED IN ALLOWING ADDITIONAL DEPRECI ATION OF RS. 66,50,908/ - BY HOLDING THAT THE ASSESSEES ACTIVITY OF CUTTING GRANITE INTO BLOCKS AMOUNTS TO MANUFACTURING / PRODUCTION. 10 APPEAL NO.6 22 /H/2014 (AY: 200 9 - 10 ): (ASSESSEES APPEAL) 13. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DISALLOWED THE EXPENDITURE INCURRED TOWARDS LIFE TAX, REGISTRATION CHARGES AMOUNTING TO RS. 2,62,520 / - . (III) THE LD. CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE MADE BY THE LD. AO TO THE EXTENT OF RS. 14,22,922 / - TOWARDS FOREIGN EXCHANGE FLUCTUATION. (IV) THE LD. CIT (A) HAS ERRED IN DIRECTING THE LD. AO TO VERIFY THE ADDITION MADE OF RS. 11,21,400/ - ON ACCOUNT OF SALE OF SCRAP AND THEREAFTER GRANT RELIEF IF THE CLAIM OF THE ASSESSEE HAS MERIT. APPEAL NO. 962 /H/2014 (AY: 20 09 - 10 ):( REVENUE S APPEAL) 14. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEAL HOWEVER, THE CRUX ES OF THE ISSUE IS THAT: - (I) THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE ACTIVITY OF CUTTING GRANITE INTO BLOCKS IS MANUFACTURING / PRODUCTION T HEREBY 11 ENTITLED TO CLAIM THE BENEFIT OF DEDUCTION UNDER SECTION 10B OF THE ACT FOR RS. 14,22,28,086 / - . (II) THE LD. CIT (A) HAS ERRED IN ALLOWING ADDITIONAL DEPRECIATION OF RS. 66,53,865 / - BY HOLDING THAT THE ASSESSEES ACTIVITY OF CUTTING GRANITE INTO BLOCKS A MOUNTS TO MANUFACTURING / PRODUCTION. ASSESSEES APPEAL FOR THE AY 2003 - 04: ITA NO.616/HYD/2014 15. GROUND NO. (I) : A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 16. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 17. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 55,025/ - . 18. DURING THE COURSE OF ASSESSMENT PROCEEDINGS PURSUANT TO SEARCH IT WAS OBSERVED BY THE LD. AO FROM THE SPECIAL AUDIT REPORT THAT THE ASSESSEE COMPANY HAD PAID RS. 55,025/ - TOWARDS MOTOR VEHICLE TAX AND REGISTRATION CHARGES WITH RESPECT TO PURCHASE OF FORD IKON CAR AND THE SAME THE WAS CLAIMED AS REV ENUE EXPENDITURE. HOWEVER, THE LD. AO WAS OF THE VIEW THAT THE EXPENDITURE IS CAPITAL IN NATURE AS IT GOES TO INCREASE THE COST OF THE CAR THE UTILIZATION OF WHICH GIVES ENDURING BENEFIT TO THE ASSESSEE. THEREFORE, THE LD. AO DISALLOWED THE ENTIRE 12 AMOUNT A S DEDUCTION AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT (A) HELD THAT THE LIFE TAX AND REGISTRATION CHARGES ARE ONE - TIME PAYMENTS AND CERTAINLY ADD TO THE VALUE OF THE ASSET AND SUCH EXPENSE SHALL BE TREATED AS CAPITAL EXPENDITURE WH ICH IS ENTITLED FOR CLAIMING DEPRECIATION. AT THE OUTSET, WE DO NOT AGREE TO THE VIEW OF THE LD. AO AND PARTIALLY AGREE TO THE VIEW OF THE LD. CIT (A) . MOTOR VEHICLE TAX FOR A STIPULATED PERIOD (NORMALLY FOR A PERIOD OF 10 YEARS OR AS THE CASE MAY BE) IS COLLECTED IN ADVANCE AT THE TIME OF THE SALE OF THE NEW VEHICLE . THEREFORE, IT IS REVENUE EXPENDITURE WHICH IS PRE - PAID IN NATURE . IN SUCH CIRCUMSTANCES, THE PRE - PAID EXPENDITURE IS TO BE PROPO RTIONALLY TREATED AS REVENUE EXPENDITURE OVER THE PERIOD OF THE VALIDITY OF MOTOR VEHICLE TAX COLLECTED IN ADVANCE. I.E., IF THE MOTOR VEHICLE TAX IS COLLECTED FOR A PERIOD OF 10 YEARS, THE PRE - PAID AMOUNT HAS TO BE ALLOWED AS DEDUCTION FOR THE PERIOD OF 10 YEARS IN EQUAL INSTALMENTS. IT IS PERTINENT TO MENTIONED THAT AS HELD BY THE LD. CIT (A) , THE PRE - PAID MOTOR VEHICLE TAX MAY ALSO BE TREATED AS EXPENDITURE WHICH GOES TO ADD THE COST OF THE VEHICLE BECAUSE PR EDOMINANTLY THE LIFE OF THE VEHICLE IS CONSIDERED TO BE THE SAME AS THE PERIOD FOR WHICH THE MOTOR VEHICLE TAX IS COLLECTED IN ADVANCE. IN SUCH CASE, THE ASSESSEE WILL BE ENTITLED FOR THE BENEFIT OF DEPRECIATION TOWARDS THE COST OF THE VEHICLE AND THE PRE - PAID MOTOR VEHICLE TAX PAID IN ADVANCE AS HELD BY THE LD. CIT (A) . IN THIS CIRCUMSTANCE, W E HEREBY DIRECT THE LD. AO TO EITHER ALLOW DEPRECIATION AS EXPLAINED BY US HEREINABOVE OR THE PRE - PAID 13 EXPENDITURE IN INSTALMENT AS ILLUSTRATED HEREINABOVE WHICHEVER IS MORE BENEFICIAL TO THE ASSESSEE. WITH RESPECT TO REGISTRATION CHARGES PAID AT THE TIME OF ACQUIRING THE NEW VEHICLE, NO DOUBT IT IS ATTRIBUTABLE TO THE COST OF THE VEHICLE AS HELD BY THE LD. CIT (A) FOR WHICH THE ASSESSEE IS ENTITL ED TO THE BENEFIT OF DEPRECIATION. IT IS ORDERED ACCORDINGLY. 19. GROUND NO. (III) : S USTAINING 50% OF THE ADDITION AMOUNTING TO RS. 37,29,714/ - (50% OF RS. 74,59,428) MADE TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. 20. DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUBSEQUENT TO SEARCH IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS. 37,04,860 / - TO M/S. BLOCK MAKERS ENTERPRISES AND RS. 37,54,568/ - TO M/S. SAI ROCK ENTERPRISES A GGREGATING TO RS. 74,59,428/ - WHEREIN THE RELATIVES OF THE DIRECTORS OF THE ASSESSEE - COMPANY SMT. K. RANGANAYAKAMMA AND SMT. V. PRAMEELA RANI ARE PROPRIET RIX RESPECTIVELY. ON QUERY, SMT. K. RANGANAYAKAMMA HAD STATED THAT SHE HAD UNDERTAKEN THE WORK OF PRO CESSING GRANITE STONES FROM THE ASSESSEE COMPANY BY WAY OF CONTRACT AND THE CONTRACT RECEIPT WAS INCLUDED IN THE COMPUTATION OF INCOME AND TAX WAS PAID U/S. 44AD OF THE ACT. HOWEVER, THE LD. AO OPINED THAT SINCE THE ASSESSEE WAS NOT OBLIGED TO MAINTAIN BOO KS OF ACCOUNT AS PER SECTION 44AD OF THE ACT AND ACCORDINGLY SHE HAS NOT MAINTAINED HER BOOKS OF ACCOUNT , THERE WAS NO DOCUMENTARY EVIDENCE TO PROVE THAT SHE HAS UNDERTAKEN AND CARRIED 14 OUT THE CONTRACT WORK OF PROCESSING THE GRANITES. THEREAFTER, THE LD. AO OPINED THE TRANSACTION MADE BY THE ASSESSEE IS BOGUS AND IT WAS A NOVEL METHOD ADOPTED BY THE ASSESSEE TO REDUCE ITS INCOME BY INFLATING BOGUS EXPENDITURE AND THEREBY INVOKED THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT AND DISALLOWED THE EXPENDITURE OF RS. 37,04,860/ - . IN THE INSTANCE WHEN THE AMOUNT WAS PAID TO M/S. SAI ROCK ENTERPRISES PROPRIETRIX SMT. V. PRAMEELA RANI , SHE COULD NOT RESPOND TO THE SUMMONS ISSUED U/S. 131 OF THE ACT AS SHE WAS OUT OF THE COUNTRY . HOWEVER , THE LD. AO TREATED THE SAME ALSO AS BOGUS EXPENDITURE AND DISALLOWED THE EXPENDITURE OF RS. 37,54,568/ - INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. THUS, THE LD. AO MADE AN AGGREGATE DISALLOWANCE OF RS. 74,59,428/ - IN THE HANDS OF THE ASSESSEE U/S. 40A(2)(B) OF THE ACT. ON APPEAL, THE LD. CIT (A) WAS OF THE VIEW THAT THE GENUINENESS OF THE EXPENSES INCURRED BY THE ASSESSEE NOT FULLY EXPLAINED FOR THE FOLLOWING REASONS: - (I) BOTH THE PROPRIETORSHIP CONCERNS M/S. BLOCK MAKERS ENTERPRISES AND SAI ROCK ENTERPRISES OWNED BY THE RELATIVES OF THE DIRECTORS HAD NOT MAINTAINED ENOUGH EVIDENCE SUCH AS BOOKS OF ACCOUNT IN ORDER TO ESTABLISH THAT THEY ARE CAR RIED OUT THE CONTRACT OF GRANITE PROCESSING. (II) GENUINENESS OF THE EXISTENCE OF THE PROPRIETORSHIP CONCERN WERE DOUBTED DURING THE COURSE OF SEARCH PROCEEDINGS AND POST SEARCH PROCEEDINGS. 15 (III) CONDUCT OF THE PARTIES DURING THE ASSESSMENT PROCEEDINGS AND THE C ORROBORATIVE INFORMATION CREATES A DOUBT AS TO THE GENUINENESS OF THE TRANSACTION. (IV) DURING THE RELEVANT ASSESSMENT YEAR BENEFITS U/S. 10B ARE NOT AVAILABLE WHICH CREATES A DOUBT THAT THE ASSESSEE HAS BEEN CLAIMING BOGUS EXPENDITURE IN ORDER TO AVOID TAX LI ABILITY. (V) FILING OF RETURN OF INCOME BY INCLUDING SUCH BOGUS RECEIPTS AND PAYING TAX THEREON ALONE CANNOT ESTABLISH THE GENUINENESS OF THE TRANSACTION. 21. HAVING OBSERVED SO, THE LD. CIT (A) FURTHER OPINED THAT ACTIVITIES SUCH AS CUTTING, SQUARING AND DRESSING OF GRANITES WERE CERTAINLY CARRIED OUT , MAY BE , BY OUTSIDE PARTIES WITHOUT WHICH THE GRANITE BLOCKS COULD NOT HAVE BEEN EXPORTED AND THEREFORE, CERTAIN EXPENSES WERE INCURRED BY THE ASSESSEE TOWARDS THESE ACTIVITIES. THEREFORE, THE LD. CIT (A) ALL OWED 50% OF THE AGGREGATE EXPENSE OF RS. 74,59,428/ - INCURRED BY THE ASSESSEE AND THEREBY GRANTED PART RELIEF. 22. BEFORE US, THE LD. AR SUBMITTED THAT THE ENTIRE DISALLOWANCE MADE BY THE LD. AO WAS ONLY FOR THE REASON THAT THE PROPRIETORSHIP CONCERNS TO W HOM ASSESSEE HAD MADE PAYMENT HAD NOT MAINTAINED BOOKS OF ACCOUNT. THE LD. AR FURTHER SUBMITTED THAT WHEN SECTION 44AD OF THE ACT PROVIDES THAT BOOKS OF ACCOUNT NEED NOT BE MAINTAINED, THEN THERE IS NO OBLIGATION ON THE PART OF THE PROPRIETORSHIP FIRM TO MAINTAIN THE 16 BOOKS OF ACCOUNT AS THEY HAVE DECLARED PROFIT @ 8% OF THE TURNOVER AS STIPULATED UNDER THE ACT. THE LD. AR FURTHER SUBMITTED THAT THE LD. AO AND THE LD. CIT (A) HAS INVOKED THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT WITHOUT EXAMINING THE NATURE AND SCOPE OF THE WORK CARRIED OUT BY THE PROPRIETORSHIP FIRM. IT WAS THEREFORE PLEADED THAT THE ADDITION SUSTAINED BY THE LD. CIT (A) MAY BE DELETED. LD. DR ON THE OTHER HAND VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT (A). 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT BOTH THE REVENUE AUTHORITIES HAS NOT LOOKED INTO THE SCOPE, VOLUME AND NATURE OF WORK CARRIED OUT BY THE PROPRIETORSHIP FIRM. FURTHER, IT IS E VIDENT THAT THE LD. CIT (A) HAS ACCEPTED THAT CERTAIN WORK WAS CARRIED OUT FOR PROCESSING THE GRANITES OTHERWISE THE GRANITE SLABS COULD NOT BE EXPORTED. FROM THIS, IT IS EVIDENT THAT THE ENTIRE DISALLOWANCE MADE BY THE LD. AO AND PARTLY SUSTAINED BY THE LD. CIT (A) IS BASED ON SURMISES AND CONJECTURES AND WITHOUT EXAMINING THE QUANTUM OF WORK PERFORMED BY THE PROPRIETORSHIP FIRMS. MOREOVER, WHEN THE PROPRIETORSHIP CONCERNS WERE NO REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AS PER SECTION 44AD OF THE ACT, REVENUE CANNOT TAKE ANY ADVERSE INFERENCE FOR THOSE PROPRIETORSHIP CONCERNS IN NOT MAINTAINING THE BOOKS OF ACCOUNTS. IT IS A SETTLED LEGAL POSITION THAT ADDITIONS MADE ON THE B ASIS OF PRESUMPTION IS NOT SUSTAINABLE IN LAW. THEREFORE, WE DO NOT FIND ANY MERIT IN THE DISALLOWANCE MADE BY THE LD. AO WHICH WAS PARTLY SUSTAINED BY THE LD. 17 CIT (A). HENCE, WE HEREBY DIRECT THE LD. AO TO DELETE THE ADDITIONS MADE AND SUSTAINED IN THE HANDS OF THE ASSESSEE ON THIS ISSUE. ACCORDINGLY, THIS GROUND RAISED BY THE ASSESSEE IS DECIDED IN ITS FAVOUR. 24. GROUND NO. (IV) : A DDITION OF RS. 29,21,000 / - TOWARDS PAYMENT MADE TO SRI K.V. RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. 25. DURING THE COURSE OF SEARCH PROCEEDINGS, A NOTING CONTAINING THE DETAILS OF PAYMENT MADE TO SRI K.V. RAMAKRISHNA REDDY WAS FOUND AND SEIZED WHICH INDICATED THE TOTAL PAYMENT OF RS. 146.88 LAKHS. WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR IT WAS OBSERVED THE PA YMENT MADE TO SRI K.V. RAMAKRISHNA REDDY WAS RS. 29,21,000/ - OUT OF WHICH RS. 12 LAKHS WAS PAID BY CASH, RS. 13 LAKHS BY WAY OF CHEQUE AND RS. 4.21 LAKHS IN THE FORM OF VARIOUS EXPENDITURE. THE LD. AO OPINED THAT THE ABOVE SAID PAID TO SRI K.V. RAMAKRISHN A REDDY IS THE UNACCOUNTED MONEY OF THE ASSESSEE. HE FURTHER OBSERVED THAT THE CHEQUE PAYMENT MADE COULD NOT BE RECONCILED WITH THE BOOKS OF ACCOUNT. THEREFORE, HE REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND TREATED THE SAME AS UNACCOUNTED EXPEND ITURE IN THE HANDS OF THE ASSESSEE COMPANY. ON APPEAL, THE LD. CIT (A) DIRECTED THE LD. AO TO VERIFY THE EXPLANATION OFFERED BY THE ASSESSEE AND THEREAFTER DECIDE THE MATTER. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US NOW. 26. AS EXPLAINED BEFORE THE LD. REVENUE AUTHORITIES, LD. AR SUBMITTED THAT OUT OF RS. 29,21,000 , PAYMENT WAS MADE THROUGH CHEQUE AND RS. 18 4,20,845 WAS THE EXPENDITURE INCURRED ON BEHALF OF SRI K.V. RAMAKRISHNA REDDY BY THE ASSESSEE COMPANY AND THESE PAYMENTS WERE ENTERED IN THE PERSONAL ACCOUNT OF SRI K.V. RAMAKRISHNA REDDY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. IT WAS FURTHER EXPLAINED THAT THE AMOUNT OF RS. 17 LAKHS WAS PAID IN CASH BY M/S. RELIANCE GRANITE PVT LTD., TOWARDS PA RT CONSIDERATION FOR PURCHASE OF SHARES AND THE SAME WAS DECLARED AS UNEXPLAINED INVESTMENTS IN THE HANDS OF M/S. RELIANCE GRANITE PVT LTD., WHILE FILING RETURN OF INCOME U/S. 153A OF THE ACT FOR THE AY 2003 - 04. FROM THE ABOVE SUBMISSION OF THE LD. AR AND THE FINDINGS OF THE LD. AO AND THE LD. CIT (A) IT APPEARS THAT THE LD. AO HAVE MADE THE ADDITION OF RS. 29,21,000 IN THE HANDS OF THE ASSESSEE WITHOUT VERIFYING THE FACTS AND BY PRESUMPTIONS. IT CANNOT BE SAID THAT THE CHEQUE PAYMENT MADE BY THE ASSESSEE CANNOT BE VERIFIED AND THE SAME CANNOT BE BRUSHED ASIDE BY STATING THA T THE CHEQUE PAYMENT CANNOT BE RECONCILED. IN THIS SITUATION, WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD. AO FOR MAKING ADDITION OF RS. 29,21,000 IN THE HANDS OF THE ASSESSEE. HOW EVER, IN THE INTEREST OF JUSTICE, WE REMIT THE MATTER BACK TO THE FILE OF THE LD. AO IN ORDER TO VERIFY WHETHER THE PAYMENT OF RS. 8 LAKH IS MADE BY CHEQUE, THE EXPEN DITURES INCURRED AGGREGATING TO RS. 4,20,845 ARE ENTERED IN THE BOOKS OF ACCOUNT OF THE AS SESSEE AND THE AMOUNT OF RS. 17 LAKH IS TREATED AS UNEXPLAINED INVESTMENT IN THE HANDS OF M/S. RELIANCE GRANITE PVT LTD., FOR THE AY 2003 - 04 AND IF FOUND SO, DELETE THE ADDITION AND IF FOUND OTHERWISE, DECIDE THE MATTER IN 19 ACCORDANCE WITH LAW AND MERITS BY PASSING A SPEAKING ORDER. IT IS ORDERED ACCORDINGLY. 27. GROUND NO. (V) : ADDITION OF RS.1,24,940/ - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. 28. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE DUE DATE OF FILING OF THE INCOME TAX RETURN FOR THE AY 2003 - 04 WAS EXTENDED UP TO 30.11.2003 AS PER SECTION 119 OF THE ACT AND THE ASSESSEE HAD FILED THE RETURN OF INCOME WITHIN SUCH DUE DATE ON 27/11/2003. HOWEVER, THE LD. AO HAD LEVIED INTEREST U/S. 234A OF THE ACT FOR DEFAULT IN FURNISHING THE RETURN OF INCOME. SINCE THESE FACTS ARE NOT VERIFIED BY THE LD. AO AS WELL AS NOT ADDRESSED BY THE LD. CIT (A), WE REMIT BACK THE MATTER TO THE FILE O F THE LD. AO FOR FRESH CONSIDERATION. NEEDLESS TO MENTION THAT IF THERE IS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE THEN, INTEREST CANNOT BE LEVIED U/S. 234A OF THE ACT . ASSESSEES APPEAL FOR THE AY 2004 - 05 : ITA NO.617/HYD/2014 29. G ROUND NO. (I) : - A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 30. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 31. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 73,877/ - . 20 32. THIS GROUND IS IDENTICAL TO THE GROUND NO. (II) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS TH E FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 33. GROUND NO. (III) : S USTAINING 50% OF THE ADDITION AMOUNTING TO RS. 36,14,465/ - (50% OF RS. 72,28,930/ - ) MADE TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) O F THE ACT. 34. THIS GROUND IS IDENTICAL TO THE GROUND NO. (III) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE EXCEPT FOR THE FACT THAT THE QUANTUM OF PAYMENT MADE TO M/S. BLOCK MAKERS ENTERPRISES IS RS. 35,93,864/ - AND TO M/S. OM SAI ENTERPRISES IS RS. 36,35,066/ - AGGREGATING TO RS.72,28,930/ - . HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 35. GROUND NO. (IV) : A DDITION OF RS. 28,10,000/ - TO WARDS PAYMENT MADE TO SRI K.V. RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. 36. THIS GROUND IS IDENTICAL TO THE GROUND NO.(IV) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO EXCEPT FOR THE FACT THAT THE QUANTUM OF PAYMENT, EXPENDITURE INCURRED AND INVESTMENT MADE DIFFERS AS FOLLOWS: - 21 (A) PAYMENT MADE THROUGH CHEQUE TO SRI K.V. RAMAKRISHNA REDDY RS. 26 LAKH (B) EXPENDITURE INCURRED ON BE HALF OF SRI K.V. RAMAKRISHNA REDDY OF RS. 2,10,920/ - (C) INVESTMENT MADE BY M/S. RELIANCE GRANITE PRIVATE LIMITED WHICH IS ASSESSED AS UNEXPLAINED INVESTMENT IN ITS HANDS RS. 15 LAKH. 37. GROUND NO. (V) : ADDITION OF RS. RS.4,08,155/ - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. 38. AT THE OUTSET, THE LD. A R SUBMITTED THAT THE DUE DATE OF FILING OF THE INCOME TAX RETURN FOR THE AY 2004 - 05 WAS EXTENDED UP TO 01.11.2004 AS PER SECTION 119 OF THE ACT AND THE ASSESSEE HAD FILED THE RETURN OF INCOME WITHIN SUCH DUE DATE ON 01 /11/200 4 . HOWEVER, THE LD. AO HAD LEV IED INTEREST U/S. 234A OF THE ACT FOR DEFAULT IN FURNISHING THE RETURN OF INCOME. SINCE THESE FACTS ARE NOT VERIFIED BY THE LD. AO AS WELL AS NOT ADDRESSED BY THE LD. CIT (A), WE REMIT BACK THE MATTER TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION. NE EDLESS TO MENTION THAT IF THERE IS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE THEN, INTEREST CANNOT BE LEVIED U/S. 234A OF THE ACT. APPEAL NO. 957 /H/2014 (AY: 2004 - 05): ( REVENUE S APPEAL) 39. DELETION OF THE ADDITION MADE BY THE LD. AO OF RS. 1,82,90,500/ - TOWARDS UNEXPLAINED CASH RECEIPTS. 22 40. DURING THE COURSE OF SEARCH PROCEEDINGS CERTAIN DOCUMENTS WERE SEIZED FROM THE RESIDENCE OF SRI N. TIRUPATI RAO, FORMER DIRECTOR OF ASSESSEE - COMPANY (MIDWEST GRANITE PRIVATE LIMITED) CONTAINING DE TAILS OF CASH RECEIPTS OF M/S. SAM (SRILANKAN COMPANY). IT WAS ALSO OBSERVED THAT THE ASSESSEE - COMPANY WAS THE MAJORITY SHARE HOLDER OF M/S. SAM. ON QUERY, MR. N. TIRUPATI RAO STATED THAT THIS AMOUNT WAS ACCOUNTED IN THE BOOKS OF M/S. SAM. SINCE MR. N. TIRUPATI RAO DID NOT PRODUCE THE BOOKS OF ACCOUNT OF M/S. SAM THE LD. AO ADDED THE SAME IN THE HANDS OF THE ASSESSEE COMPANY AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. ON APPEAL, THE LD. CIT (A) AFTER EXAMINING THE ISSUE IN DETAIL AND OBTAINED THE REM AND REPORT FROM THE LD. AO DELETED THE ADDITION BY OBSERVING AS FOLLOWS: 9.3.AS COULD BE SEEN FROM THE RECORD, THE TOTAL AMOUNT OF RS. 7,67,12,492/ - WAS SHOWN TO HAVE BEEN RECEIVED BY THE GROUP CONCERNS BETWEEN THE PERIOD FROM 9/8/2013 TO 13/3/2006, OUT OF WHICH CERTAIN AMOUNTS WERE ALSO SHOWN TO HAVE BEEN PAID TO THIRD PARTIES OR INCURRED AS EXPENSE. THE AO IGNORED SUCH OUTFLOW ON THE PREMISE THAT THEY ARE NOT IDENTIFIED WITH NATURE OF ACCOUNT AND ARE NOT RELATED TO THE ASSESSEE COMPANY. I THIS CONTE XT, IT MAY BE RELEVANT TO OBSERVE THAT AT THE SAME LENGTH AND BREADTH, THE RECEIPTS ARE NOT FULLY RELATABLE TO THE ASSESSEE AND THIS ASPECT WAS NOT DISPROVED BY THE AO WITH THE HELP OF ANY COGENT EVIDENCE. IT MAY BE PERTINENT TO REFER TO THE RELEVANT PORT ION OF STATEMENT RECORDED FROM MR. K.V. RAGHAVA REDDY, CHAIRMAN OF THE GROUP COMPANIES, WHICH WAS RELIED UPON BY THE AO WHICH INDICATE THE EQUIVOCAL NATURE OF EXPLANATION OFFERED ON THE ISSUE CASH RECEIPTS MIGHT NOT HAVE BEEN CONSIDERED IN THE BOOKS OF A CCOUNT MAINTAINED BY MIDWEST GRANITE PVT LTD / NOVA GRANITES (INDIA) LTD. WE WILL CONSIDER SUCH RECEIPTS, NOT ACCOUNTED FOR ALONG WITH EXPENDITURE INCURRED ON BEHALF OF SAM IN INDIA AND THE BALANCE WILL BE OFFERED AS ADDITIONAL INCOME IN OUR GROUP CONCERN S. FURTHER WHERE THE DOCUMENT IS CAPABLE OF SPEAKING ON TWO POSSIBILITIES, IT MAY NOT BE CORRECT TO ACCEPT ONE AND REJECT THE OTHER, ON THE SAME PLATFORM, WHICH MEAN WHERE THE RECEIPTS ARE LIABLE TO BE TREATED AS INCOME, P A YMENTS DESERVED TO BE TREATED AS EXPENSES OR OUTFLOW. SUCH ARGUMENTS COULD NOT HAVE BEEN REJECTED WITHOUT DETAILED DISCUSSION. 23 NOTWITHSTANDING THE ABOVE FACT AND OBSERVATION, IT WAS ALSO OBSERVED AND FOUND THAT ON THE SAME SET OF INFORMATION, PROCEEDINGS U/S. 153C WERE INITIATED IN THE CASE OF M/S. SAGMPL AND ASSESSED THE SAME AMOUNTS IN THE HANDS OF THE ASSESSEE COMPANY AS THE REPRESENTATIVE OF SAGMPL, WHICH MEAN THE AO WHO HAS ASSESSED THE ASSESSEE COMPANY U/S. 153A, HAS ARRIVED AT THE CONCLUSION THAT T HE INFORMATION WAS RELATED TO SAGMPL, FOR INITIATING THE PROCEEDINGS U/S. 153C. FURTHER, THE ASSESSMENT OF THE ASSESSEE COMPANY WAS NOT MADE ON PROTECTIVE BASIS. JUDICIAL DECISION ENDORSE THIS VIEW ON THE SAID ISSUE OF DOUBLE TAXATION. UNDER THE CIRCUMS TANCES, I AM OF THE CONSIDERED OPINION THAT SAME INCOME WHICH WAS ASSESSED IN THE HANDS OF ONE ASSESSEE CANNOT BE ASSESSED IN THE HANDS OF ANOTHER ASSESSEE AND SUCH ASSESSMENT AMOUNTS TO DOUBLE TAXATION OF THE SAME AMOUNTS. HENCE, I AM OF THE CONSIDERED O PINION TH A T THE INCOME ASSESSED IN THE HANDS OF SAGMPL U/S. 153C R.W.S 1449(C) OF THE ACT IS NOT ASSESSABLE IN THE HANDS OF THE ASSESSEE U/S. 143(3) R.W.S 153A. ON THIS GROUND, THE ASSESSEE SUCCEEDS AND THE ADDITION STANDS DELETED. THE GROUND OF APPEAL I S TREATED AS ALLOWED. 41. FROM THE ABOVE IT IS APPARENT THAT THE FINDING OF THE LD. CIT (A) IS THAT THE SAME INCOME WAS ASSESSED IN THE HANDS OF ANOTHER ASSESSEE AND THEREFORE, IT CANNOT BE TAXED ONE AGAIN IN THE HANDS OF THE ASSESSEE - COMPANY AS IT WOUL D AMOUNTS TO DOUBLE TAXATION. HENCE, THE LD. CIT (A) DELETED THE ADDITION WHICH IS APPROPRIATE. SINCE, THE REVENUE HAS NOT COME OUT WITH ANY OTHER MATERIAL OR ARGUMENT TO NEGATE THE FINDING OF THE LD. CIT (A) WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDER. THEREFORE, THE APPEAL OF THE REVENUE IS DEVOID OF MERITS. APPEAL NO.618/H/2014 (AY: 2005 - 06): (ASSESSEES APPEAL) 42. GROUND NO. (I) : - A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 43. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 24 44. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 2,79,950 / - . 45. THIS GROUND IS IDENTICAL TO THE GROUND NO.(II) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 46. GROUND NO. (III) : S USTAINING 50% OF THE ADDI TION AMOUNTING TO RS. 35,87,076/ - (50% OF RS. 71,74,152) MADE TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. 47. THIS GROUND IS IDENTICAL TO THE GROUND NO.(III) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 AND 2004 - 05 HEREINABOVE EXCEPT FOR THE FACT THAT THE QUANTUM OF PAYMENT MADE TO M/S. BLOCK MAKERS ENTERPRISES IS RS. 35,9 1 , 504 / - AND TO M/S. OM SAI ENTERPRISES IS RS. 3 5 , 82,648 / - AGGREGATING TO RS.7 1,74,152 / - . HENCE, THE SAME DECISION SHALL HOL D GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 48. GROUND NO. (IV) : A DDITION OF RS. 11,41,000 / - TOWARDS PAYMENT MADE TO SRI K.V. RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. 49. THIS GROUND IS IDENTICAL TO THE GROUND NO.(IV) RAIS ED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 AND 2004 - 05 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO EXCEPT FOR THE FACT THAT THE QUANTUM 25 OF PAYMENT, EXPENDITURE INCURRED AN D INVESTMENT MADE DIFFERS AS FOLLOWS: - (A) PAYMENT MADE THROUGH CHEQUE TO SRI K.V. RAMAKRISHNA REDDY RS. 5 LAKH (B) EXPENDITURE INCURRED ON BEHALF OF SRI K.V. RAMAKRISHNA REDDY OF RS. 90,684 / - (C) INVESTMENT MADE BY M/S. RELIANCE GRANITE PRIVATE LIMITED WHICH IS ASSESSED AS UNEXPLAINED INVESTMENT IN ITS HANDS RS. 5 .50 LAKH. 50. GROUND NO. (V) : ADDITION OF RS. RS. 4,52,390 / - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. 51. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME WI THIN THE DUE DATE I.E., 30.10.2005 AND THE RETURN WAS PROCESSED U/S. 143(1) ON 20/07/2006. THEREAFTER, ASSESSMENT WAS MADE U/S. 143(3) ON 24/12/2007. IT WAS THEREFORE PLEADED THAT THERE WAS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE HE NCE INTEREST LEVIED BY THE LD. AO U/S. 234A OF THE ACT FOR RS. 4,52,390/ - IS NOT JUSTIFIABLE. THE LD. DR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD. AR. AFTER HEARING BOTH SIDES, WE FIND IT APPROPRIATE TO REMIT THE MATTER TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION AS THE ISSUE IS NEITHER VERIFIED BY THE LD. AO NOR ADDRESSED BY THE LD. CIT (A). NEEDLESS TO MENTION THAT IF THERE IS NO 26 DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE THEN, INTEREST CANNOT BE LEVIED U/S. 234A OF THE AC T. 52. GROUND NO. (VI) : THE LD. CIT (A) HAS ERRED IN DIRECTING THE LD. AO TO VERIFY THE SOURCE FOR ACQUIRING LAND AMOUNTING TO RS. 20 LAKHS THOUGH ALL DETAILS OF PAYMENT WERE SUBMITTED BEFORE THE LD. AO. 53. DURING THE COURSE OF ASSESSMENT PROCEEDINGS PURSUANT TO SEARCH IT WAS NOTICED BY THE LD. AO FROM THE SEIZED MATERIAL (PAGE 121 OF ANNEXURE - A/MGPL/OFF/2) THAT THE ASSESSEE HAD PAID RS. 93,58,000/ - FOR THE PROPOSED ACQUISITION OF LAND. OUT OF THE AMOUNT OF RS. 93,58,000/ - AN A MOUNT OF RS. 20 LAKH WAS SHOWN AS PAID BY M/S. NOVA GRANITE (INDIA) PVT LTD., (GROUP COMPANY OF THE ASSESSEE) ON BEHALF OF THE ASSESSEE - COMPANY. SINCE THE INCREMENTAL VALUE OF THE LAND FOR RS. 20 LAKH WAS NOT DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE COMPANY FOR THE AY 2004 - 05 TO 2006 - 07 THE LD. AO OPINED THAT THE AMOUNT OF RS. 20 LAKH IS THE UNACCOUNTED INVESTMENT OF THE ASSESSEE. ACCORDINGLY, THE LD. AO MADE ADDITION OF RS. 20 LAKH IN THE HANDS OF THE ASSESSEE AS UNACCOUNTED INVESTMENT . WHEN THE M ATTER CAME UP BEFORE THE LD. CIT (A), AFTER EXAMINING THE ISSUE HE HELD THAT THESE ARE MATTERS OF DETAILS OF FACTS, WHICH REQUIRED TO BE EXAMINED IN DETAIL AND ARRIVE AT CORRECT CONCLUSIONS. THERE IS NO PLACE FOR SURMISES IN THE PLACE OF TRUTH OR FACTS. SINCE BOTH THE COMPANIES ARE GROUP CONCERNS AND ASSESSED BY SAME A.O., EXAMINATION OF INFORMATION IN DETAIL, MAY NOT BE 27 AN ISSUE. THE AO MAY ENQUIRE THIS AN ALLOW THE CLAIM OF APPELLANT ON EXAMINATION OF FACTS. SUBJECT TO THE ABOVE OBSERVATION, THIS GRO UND MAY BE TREATED AS PARTLY ALLOWED. 54. BEFORE US, THE LD. AR SUBMITTED THAT THE ENTIRE DETAILS OF PAYMENT MADE FOR RS. 20 LAKHS THROUGH DEMAND DRAFT BY M/S. NOVA GRANITE (INDIA) PVT LTD., TO VARIOUS PARTIES ON BEHALF OF THE ASSESSEE - COMPANY WERE ALL S UBMITTED BEFORE THE LOWER AUTHORITIES (PAPER BOOK PAGE NO. 172) , HOWEVER BOTH THE REVENUE AUTHORITIES WITHOUT EXAMINING THE SAME ARRIVE AT THE RESPECTIVE CONCLUSIONS. THE LD. AR THEREFORE ARGUED THAT SUCH ATTITUD E OF THE REVENUE BRINGS GREAT HARDSHIP TO THE ASSESSEE IN TAKING THE MATTER BACK AND FORTH. THEREAFTER, THE LD. AR PLEADED FOR GRANTING RELIEF TO THE ASSESSEE. THE LD. DR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LD. AR. 55. AFTER HEARING BOTH PARTIE S, WE FIND MERIT IN THE SUBMISSION OF THE LD. AR. THE ASSESSEE HAS FILED A VOLUMINOUS PAPER BOOK CONTAINING 1 TO 392 PAGES WHEREIN THE COUNSEL OF THE ASSESSEE HAS VOUCHED AS UNDER: THIS IS TO CERTIFY THAT THIS PAPER BOOK CONSISTS OF ONLY THOSE PAPERS WHI CH WERE FILED BEFORE THE LOWER AUTHORITIES. FOR P. MURALI & CO., CHARTERED ACCOUNTANTS. SD/ - PARTNER. PAPER BOOK PAGE NO.172 CONTAINS THE FOLLOWING INFORMATION: ANNEXURE FOR POINT NO.5 (NOTE ON PURCHASE OF QUARRY LAND AT BANGALORE) 28 NAME OF THE PATTADAR EXTENT OF LAND (IN ACRES) AMOUNT OF ADVANCE GIVEN PAYMENT AT THE TIME OF REGISTRATION TOTAL AMOUNT REMARKS (DETAILS FOR ADVANCES MADE NO FURTHER PAYMENTS DONE) SIVARUDRAMMA 4.02 11.65 0 11.65 MADAPPA 2.18 1.40 5.03 6.43 JADIA 2.56 1.75 7.25 9.00 RS. 1,50,000 VIDE DD TAKEN FROM MIDWEST ZUFFIKHAN 9.51 3.00 6.00 9.00 RS. 1,50,000 DD TAKEN FROM MIDWEST RS. 50,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST JAMANDH 11.00 5.00 5.00 10.00 RS. 5 ,0 0,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST. ANWAR PASHA 6.60 2.50 5.00 7.50 RS. 3,50,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST MUNITHQEEM 4.70 2.50 5.000 7.50 RS. 2,50,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST UBEDULLA 2.00 2.00 5.00 7.00 RS. 1,00,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST SARDAR PASHA 2.12 3.00 3.00 6.00 RS. 50,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST ASLAM 2.12 2.00 1.00 3.00 RS. 2,00,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST PANDAMMA 4.91 2.10 13.90 16.00 UNNIKRISHNA 0 0.50 0 0.50 RS. 50,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST MALLIKA RANGASWAMY RS. 2,50,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST B C MALLANNA RS. 2,00,000 DD TAKEN FROM NOVA AND DEBITED TO MIDWEST TOTAL 51.72 37.40 56.18 93.58 TOTAL PAYMENT MADE RS. 23.25 LAKHS (THROUGH NOVA RS. 20.00 LAKHS AND THROUGH MGPL RS. 3.25 LAKHS. FOR P. MURALI & CO., CHARTERED ACCOUNTANTS SD/ - PARTNER ** AGGREGATE AMOUNT OF RS. 20 LAKH WAS PAID THROUGH DEMAND DRAFTS BY M/S. NOVA GRANITE (INDIA) PRIVATE LIMITED TO VARIOUS PARTIES ON BEHALF OF MIDWEST. 56. WHEN THE ASSESSEE HAD MADE SUCH DETAILED SUBMISSION BEFORE THE LD. REVENUE AUTHORITIES AND SINCE THE PAYMENTS WERE MADE BY DEMAND DRA FT BY M/S. NOVA GRANITE (INDIA) PVT LTD., ON BEHALF OF THE ASSESSEE - COMPANY WHICH ARE ALL VERIFIABLE FACTS FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE AND FROM THE BANK STATEMENTS, IT APPEARS THAT THE LD. REVENUE AUTHORITIES HAS NOT FULFILLED THEIR OBLIGATIO NS AND TO MAKE THEIR TASK EASY MADE ADDITIONS IN THE HANDS OF THE ASSESSEE BY SURMISES AND CONJECTURES WHICH IS NOT APPRECIABLE. IN THIS SITUATION, IN ORDER TO AVOID 29 HARDSHIP TO THE ASSESSEE AND KEEPING IN VIEW OF THE FAILURE ON THE PART OF THE REVENUE TO VERIFY THE PARTICULARS SUBMITTED BY THE ASSESSEE, IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS. 20 LAKHS IN THE HANDS OF THE ASSESSEE ON THIS ISSUE CANNOT BE SUSTAINED. THEREFORE, WE HEREBY DIRECT THE LD. AO TO DELETE T HE ADDITION MADE FOR RS. 20 LAKHS IN THE HANDS OF THE ASSESSEE ON THIS ISSUE. 57. GROUND NO. (VII) : LD. CIT (A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 75,285/ - MADE BY THE LD. AO TOWARDS DIFFERENCE IN SALE. 58. DURING THE COURSE OF ASSESSMENT PROCEEDINGS PURSUANT TO SEARCH IT WAS OBSERVED BY THE LD. AO THAT THE SALES AMOUNT AS PER LEDGER FORM IN SEIZED MATERIAL WAS SHOWN AT RS. 35,15,80,854/ - WHEREAS ASSESSEE HAS DECLARED IN HIS P & L ACCOUNT SUBMITTED BEFORE THE REVENUE AS RS. 34, 9 3,05,557/ - . SINCE THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE DIFFERENCE AMOUNT OF RS. 22,75,275/ - THE LD. AO TREATED THE SAME AS UNACCOUNTED SALES AND BROUGHT TO TAX. BEFORE THE LD. CIT (A), THE ASSESSEE RECONCILED THE DEFERENCE TO THE EXTENT OF RS. 22,00, 012/ - . THEREFORE, THE LD. CIT (A) GRANTED RELIEF TO THAT EXTENT AND SUSTAINED THE BALANCED AMOUNT OF RS. 75,285/ - . SINCE THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE AMOUNT OF RS. 75,285/ - BEFORE THE LD. REVENUE AUTHORITIES AND BEFORE US, AT THIS STAG E, WE DO NOT HAVE ANY OTHER OPTION BUT TO SUSTAIN THE ADDITION OF RS. 75,285/ - . ACCORDINGLY, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. 30 APPEAL NO. 958 /H/2014 (AY: 2005 - 06 ): ( REVENUE S APPEAL) 59. DELETION OF THE ADDITION MADE BY THE LD. AO OF RS. 2,81,87,800 / - TOWARDS UNEXPLAINED CASH RECEIPTS. 60. SINCE THE FACTS AND ISSUE ARE IDENTICAL TO THAT OF THE REVENUES APPEAL FOR THE AY 2004 - 05, THE SAME DECISION HOLDS GOOD. ACCORDINGLY, THE APPEAL OF TH E REVENUE IS DEVOID OF MERITS. APPEAL NO.619/H/2014 (AY: 2006 - 07): (ASSESSEES APPEAL) 61. GROUND NO. (I) : - A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 62. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 63. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 1,83,285 / - . 64. THIS GROUND IS IDENTICAL TO TH E GROUND NO.(II) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 65. GROUND NO. (III) : S USTAINING 50% OF THE ADDITION AMOUNTING TO RS. 36,20,477 / - (50% OF RS. 72,40,954 ) MADE TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. 31 66. THIS GROUND IS IDENTICAL TO THE GROUND NO.(III) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 , 2004 - 05 AND 2005 - 06 HEREINABOVE EXCEPT FOR THE FACT THAT THE QUANTUM OF PAYMENT MADE TO M/S. BLOCK MAKERS ENTERPRISES IS RS. 35,88,076 / - AND TO M/S. OM SAI ENTERPRISES IS RS. 36,52,878 / - AGGREGATING TO RS. 72,40,954 / - . HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 67. GROUND NO. (IV) : A DDITION OF RS. 9,000 / - TOWARDS PAYMENT MADE TO SRI K.V. RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. 68. THIS GROUND IS IDENTICAL TO THE GROUND NO.(IV) RAISED BY T HE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR . FURTHER FROM THE ORDER OF THE LD. AO IT IS NOT CLEAR AS TO WHAT EXTENT TO THE AGGREGATE AMOUNT OF RS. 9,000 / - WAS TOWARDS PAYMENT MADE THROUGH CHEQUE TO MR. K.V. RAMAKRISHNA REDDY OR TOWARDS EXPENDITURE INCURRED ON BEHALF OF SRI K.V. RAMAKRISHNA REDDY ETC . HOWEVER, IT WAS CLARIFIED BY THE ASSESSEE THAT THIS AMOUNT COMPRISES OF PAYMENT OF RS. 8,474/ - (ROUNDED OFF AS RS. 9,000) TOWARDS TAX PAID ON BEHALF OF SRI. K.V. RAMA K RISHNA REDDY WHICH WAS DULY ACCOUNT ED IN THE BOOKS OF ACCOUNT S OF THE ASSESSEE COMPANY BY DEBITING TO THE PERSONAL ACCOUNT OF SRI K.V. RAMAKRISHNA REDDY. 32 69. GROUND NO. (V) : ADDITION OF RS. RS. 29,81,843 / - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. 70. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCO ME WITHIN THE DUE DATE I.E., ON 27/11/2006 . IT WAS FURTHER SUBMITTED THAT FOR THE RELEVANT AY THE DUE DATE OF FILING THE RETURN OF INCOME WAS EXTENDED UP TO 30/11/2006 AS PER ORDER U/S. 119 OF THE ACT. IT WAS THEREFORE PLEADED THAT SINCE THERE WAS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSES SEE , INTEREST LEVIED BY THE LD. AO U/S. 234A OF THE ACT FOR RS. 29,81,843 / - IS NOT JUSTIFIABLE. THE LD. DR COULD NOT SUCCESSFULLY CONTROVERT TO THE SUBMISSION OF THE LD. AR. AFTER HEARING BOTH SIDES, WE FIND IT APPROPRIATE TO REMIT THE MATTER TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION AS THE ISSUE IS NEITHER VERIFIED BY THE LD. AO NOR ADDRESSED BY THE LD. CIT (A). NEEDLESS TO MENTION THAT IF THERE IS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE THEN, INTEREST CANNOT BE LEVIED U/S. 234A OF THE ACT. 71. GROUND NO. (VI) : THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 39,328/ - TOWARDS PENALTY PAID TO CENTRAL EXCISE DEPARTMENT. 72. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE US THAT THE AMOUNT PAID TO CENTRAL EXCISE DEPARTMENT FOR RS. 39,328/ - IS COMPENSATORY IN NATURE AND IT IS NOT BARRED BY SECTION 37 OF THE ACT. LD. DR RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES. 33 73. WE FIND MERIT IN THE SUBMISSION OF THE LD. AR. EXPLANATION - 1 TO SECTION 37 PROHIBITS ANY EXPENDITURE INCURRED BY THE ASSESSEE WHICH IS RELATED TO AN OFFENCE OR ANY EXPENSE PROHIBITED BY LAW. IN THE CASE OF THE ASSESSEE IT APPEARS THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WITH RESPECT TO PAYMENT MADE TO CENTRAL EXCISE IS IN REGARD TO NON - COMPLIANCE OF THE PROVISIONS OF THE ACT WHICH IS ONLY PENAL IN NATURE AND IT IS NOT AN ACT WHICH IS PROHIBITED BY LAW OR WITH RESPECT TO ANY OFFENCE. HENCE, WE HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION MADE FOR RS. 39,328/ - . 74. GROU ND NO. (VI I ) : THE LD. CIT (A) HAS ERRED UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 1,07,898/ - TOWARDS INTEREST PAID FOR DELAYED REMITTANCE OF TAX DEDUCTED AT SOURCE. 75. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE AMOUNT OF RS. 1,07,898/ - WAS PAID TO THE REVENU E TOWARDS DELAY IN REMITTANCE OF TDS AND THE LD. AO DISALLOWED THE EXPENDITURE BY RELYING ON EXPLANATION - 1 TO SECTION 37 OF THE ACT WHICH WAS CONFIRMED BY THE LD. CIT (A). T HE LD.AR ARGUED BY STATING THAT THE INTEREST PAID TO THE REVENUE TOWARDS DELAY IN REMITTANCE OF TDS IS NEITHER AN OFFENCE UNDER THE ACT NOR ATTRIBUTABLE TO AN Y EXPENSE PROHIBITED BY LAW. THEREFORE, EXPLANATIO - 1 TO SECTION 37 OF THE ACT IS NOT APPLICABLE. IT WAS THEREFORE PLEADED THAT THE ADDITION MADE BY THE LD. AO WHICH IS FURTHER CO NFIRMED BY THE LD. 34 CIT (A) MAY BE DELETED. LD. DR RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES. 76. WE FIND MERIT IN THE SUBMISSION OF THE LD. AR. EXPLANATION - 1 TO SECTION 37 PROHIBITS ANY EXPENDITURE INCURRED BY THE ASSESSEE WHICH IS RELATED TO AN OFFENCE OR ANY EXPENSE PROHIBITED BY LAW. IN THE CASE OF THE ASSESSEE IT APPEARS THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WITH RESPECT TO PAYMENT MADE TO THE REVENUE IS IN REGARD TO INTEREST PAID ON THE DELAYED REMITTANCE OF TDS WHICH I S COMPENSATORY IN NATURE AND IS NOT EXPENSE WHICH IS PROHIBITED BY LAW OR WITH RESPECT TO ANY OFFENCE. HENCE, WE HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION MADE FOR RS. 1,07,898/ - . APPEAL NO. 959 /H/2014 (AY: 200 6 - 07 ): ( REVENUE S APPEAL) 77. GROUND NO.:(I) DELETION OF THE ADDITION MADE BY THE LD. AO OF RS. 2,21,88,016 / - TOWARDS UNEXPLAINED CASH RECEIPTS. 78. SINCE THE FACTS AND ISSUE ARE IDENTICAL TO THAT OF THE REVENUES APPEAL FOR THE AY 2004 - 05 & 2005 - 06, THE SAME DECISION HOLDS GOOD. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DEVOID OF MERITS. 79. GROUND NO.:(II) DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS. 12,89,185/ - . 80. DURING THE COURSE OF ASSESSMENT PROCEEDINGS PURSUANT TO SEARCH, IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD CLAIMED ADDITIONAL 35 DEPRECIATION U/S. 32(1)(IIA) OF THE ACT ON PLANT AND MACHINERY, MINING EQUIPMENT ETC. THE LD. AO OPINED THAT THE ACTIVITY OF THE ASSESSEE CANNOT BE TREATED AS MANUFACTURING OR PRODUCTION OF ARTICLE OR THING AS ENVISAGED U/S. 32(1)( IIA) OF THE ACT AND THEREFORE DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION OF RS. 12,89,185/ - . ON APPEAL, THE LD. CIT (A) HELD THAT THE ACTIVITY OF MAKING THE BLOCKS, ALONG WITH SHAPING AND CUTTING OF GRANITES AMOUNTS TO MANUFACTURING / PRODUCTION BY R ELYING ON HIS OWN ORDER OF THE OTHER ASSESSMENT YEARS WHILE GRANTING THE BENEFIT OF DEDUCTION U/S. 10B OF THE ACT. 81. AT THE OUTSET, ON PERUSING THE ORDERS OF THE LD. CIT (A), WE FIND THAT THE LD. CIT (A) WHILE DECIDING THE ISSUE WITH RESPECT TO DEDUCTIO N U/S. 10B OF THE ACT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008 - 09 RELIED ON THE CIRCULAR NO.729 DATED 1/11/1995 ISSUED BY THE CBDT THE CRUX OF WHICH IS AS FOLLOWS: - WHEN ROUGH GRANITE IS CUT TO DIMENSIONAL BLOCKS OF UNIFORM COLOUR AND SIZE , IT NOT ONLY UNDERGOES MECHANICAL PROCESS OF CUTTING BUT ALSO CERTAIN AMOUNT OF DRESSING AND POLISHING IS INVOLVED TO REMOVED VARIOUS NATURAL FLAWS SUCH AS COLOUR VARIATIONS, GRAIN VARIATIONS, JOINTS, FISSURES, MOLES, PATCHES, HAIR LINE CRACKS ETC. THE P ROFITS DERIVED FROM THE EXPORT OF SUCH GRANITE DIMENSIONAL BLOCKS WOULD, ACCORDINGLY, BE ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. 82. BASED ON THE ABOVE CIRCULAR AND THE ACTIVITY OF THE ASSESSEE BEING CUTTING, POLISHING AND SIZING OF THE GRANITES, THE LD. CIT (A) HELD THAT IT AMOUNTS TO MANUFACTURING ACTIVITY / PRODUCTION OF GOODS AS ENVISAGED UNDER THE ACT. ACCORDINGLY, THE LD. CIT (A) GRANTED RELIEF TO THE ASSESSEE 36 BY ALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) AS HE HAS ONLY RELIED ON THE CIRCULAR OF THE CBDT AND THE FACT THAT THE ASSESSEES ACTIVITY WAS CUTTING, POLISHING AND SIZING OF GRANITE IS NOT IN DISPUTE. THEREFORE, THE ORDER OF THE LD. CIT (A) DOES NOT CALL FOR ANY INTERFERENC E. HENCE, THE APPEAL OF THE REVENUE ON THIS ISSUE IS DEVOID OF MERIT. APPEAL NO.6 20 /H/2014 (AY: 2007 - 08 ): (ASSESSEES APPEAL) 83. GROUND NO. (I) : - A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 84. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 85. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 2,75,880 / - . 86. THIS GROUND IS IDENTICAL TO THE GROUND NO.(II) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 87. GROUND NO. (III) : SUSTAINING 50% OF THE ADDI TION AMOUNTING TO RS. 18,66,217/ - (50% OF RS. 37,32,434/ - ) MADE BY THE LD. AO TOWARDS INFLATED EXPENDITURE ON GRANITE PROCESSING AND DRESSING CHARGES U/S. 37(1) OF THE ACT. 37 88. THIS GROUND IS IDENTICAL TO THE GROUND NO.(III) RAISED BY THE ASSESSEE IN THE A PPEAL FOR THE AY 2003 - 04 AND 2004 - 05 HEREINABOVE EXCEPT FOR THE FACT THAT THE QUANTUM OF PAYMENT MADE TO M/S. BLOCK MAKERS ENTERPRISES IS RS. 31,94,762 / - AND TO M/S. OM SAI ENTERPRISES IS RS. 5,37,672 / - AGGREGATING TO RS. 37,32,434 / - . HENCE, THE SAME DECIS ION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 89. GROUND NO. (IV) : A DDITION OF RS. 24,59,000/ - TOWARDS PAYMENT MADE TO SRI K.V. RAMAKRISHNA REDDY AS UNACCOUNTED EXPENDITURE. 90. THIS GROUND IS IDENTICAL TO THE GROUND NO.(IV) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR. FURTHER FROM THE ORDER OF THE LD. AO IT IS NOT CLEAR AS TO WHAT EXTE NT TO THE AGGREGATE AMOUNT OF RS. 24,59,000/ - WAS TOWARDS PAYMENT MADE THROUGH CHEQUE TO MR. K.V. RAMAKRISHNA REDDY OR TOWARDS EXPENDITURE INCURRED ON BEHALF OF SRI K.V. RAMAKRISHNA REDDY , PURCHASE OF GRANITES ETC. HOWEVER, IT WAS CLARIFIED BY THE ASSESSE E THAT THE PAYMENT WAS DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND WE FAILED TO UNDERSTAND AS TO WHAT PREVENTED THE REVENUE TO VERIFY THE SAME. 91. GROUND NO. (V) : ADDITION OF RS. RS. 8,21,732 / - TOWARDS LEVY OF INTEREST U/S. 234A OF THE ACT. 38 92. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME WITHIN THE DUE DATE I.E., ON 30/11/2007. IT WAS FURTHER SUBMITTED THAT FOR THE RELEVANT AY THE DUE DATE OF FILING THE RETURN OF INCOME WAS EXTENDED UP TO 29/02/2008 AS PER ORDER U/S. 119 OF THE ACT. IT WAS THEREFORE PLEADED THAT SINCE THERE WAS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE, INTEREST LEVIED BY THE LD. AO U/S. 234A OF THE ACT FOR RS. 8, 21,732/ - IS NOT JUSTIFIABLE. THE LD. DR COULD NOT SUCCESSFULLY CONTROVERT TO THE SUBMISSION OF THE LD. AR. AFTER HEARING BOTH SIDES, WE FIND IT APPROPRIATE TO REMIT THE MATTER TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION AS THE ISSUE IS NEITHER VERI FIED BY THE LD. AO NOR ADDRESSED BY THE LD. CIT (A). NEEDLESS TO MENTION THAT IF THERE IS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE THEN, INTEREST CANNOT BE LEVIED U/S. 234A OF THE ACT. APPEAL NO.6 21 /H/2014 (AY: 2008 - 09 ): (ASSESSEES AP PEAL) 93. GROUND NO. (I) : - A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 94. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 95. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 1,32,595 / - . 39 96. THIS GROUND IS IDENTICAL TO TH E GROUND NO.(II) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 97. GROUND NO. (III) : ADDITION OF RS. RS. 54,96,657 / - TOWARDS L EVY OF INTEREST U/S. 234A OF THE ACT. 98. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME WITHIN THE DUE DATE I.E., ON 26/09/2008. IT WAS THEREFORE PLEADED THAT SINCE THERE WAS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE, INTEREST LEVIED BY THE LD. AO U/S. 234A OF THE ACT FOR RS. 54,96,657 / - IS NOT JUSTIFIABLE. THE LD. DR COULD NOT SUCCESSFULLY CONTROVERT TO THE SUBMISSION OF THE LD. AR. AFTER HEARING BOTH SIDES, WE FIND IT APPROPRIATE TO REMIT THE MATTER TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION AS THE ISSUE IS NEITHER VERIFIED B Y THE LD. AO NOR ADDRESSED BY THE LD. CIT (A). NEEDLESS TO MENTION THAT IF THERE IS NO DEFAULT IN FURNISHING THE RETURN OF INCOME BY THE ASSESSEE THEN, INTEREST CANNOT BE LEVIED U/S. 234A OF THE ACT. 99. GROUND NO. (IV) : THE LD. CIT (A) HAS ERRED UPHOLDING THE ADDITION MADE BY THE LD. AO OF RS. 49,360/ - TOWARDS PRIOR PERIOD EXPENSES. 100. THE LD. AO DISALLOWED AN AMOUNT OF RS. 49,360/ - BY HOLDING THAT IT RELATES TO PRIOR PERIOD. THE LD CIT (A) AFTER EXAMINING THE ISSUE OBSERVED THAT THE LD. AO HAD BROUGHT OUT ENTIRE INFORMATION ON RECORD. 40 THEREFORE, THE LD CIT (A) REMITTED THE MATTER BACK TO THE FILE OF THE LD. AO FOR DE NOVO CONSIDERATION. ON THIS ISSUE W E ARE OF THE VIEW THAT WHEN THE LD. AO MA KES AN AD - HOC ADDITION WITHOUT PROPER EXPLANATION , THEN THE ADDITION IS NOT SUSTAINABLE. THEREFORE, WE HEREBY DIRECT THE LD. AO TO DELETION THE ADDITION MADE FOR RS. 49,360/ - . 101. GROUND NO. (V) : THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION MADE BY TH E LD. AO OF RS. 9,212/ - TOWARDS INTEREST PAID FOR DELAYED REMITTANCE OF TAX DEDUCTED AT SOURCE. 102. ON THIS ISSUE THE LD. AR SUBMITTED THAT THE ASSESSEE HAS REQUESTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE LD. AO FOR RE - COMPUTATION OF THE INTEREST AND THE LD. DR DID NOT SERIOUSLY OBJECTED TO THE SUBMISSION OF THE LD. AR. THEREFORE, IN THE INTEREST OF JUSTICE WE REMIT THE MATTER BACK TO THE FILE OF THE LD. AO FOR DE NOVO CONSIDERATION. APPEAL NO. 961 /H/2014 (AY: 200 8 - 09 ): ( REVENUE S APPEAL) 103. GROUND NO.(I) DE DUCTION UNDER SECTION 10B OF THE ACT FOR RS. 11,48,84,461/ - . 104. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 10B OF THE ACT. ON PERUSING THE ISSUE THE LD. AO OPINED THAT THE 41 ASSESSEE IS NOT ENTITLED FOR THE BENEFIT OF DEDUCTION U/S. 10B OF THE ACT FOR THE FOLLOWING REASONS: (I) EXTRACTION OF GRANITE BLOCK FROM THE MOTHER ROCK, DRESSING THEM, CUTTING THEM INTO SMALLER PIECE, POLISHING THE GRANITE DOES NOT AMOUNT TO MANUFACTURING OR PRODUCTION AS ENVISAGED UNDER THE ACT. (II) THE ASSESSEE COMPANY HAD TRANSFERRED THE GRANITE QUARRY LEASE FROM ITS S ISTER COMPANY TO ITS NAME AND THEREFORE, IT AMOUNTS TO RECONSTITUTION OF A BUSINESS ALREADY INTO EXISTENCE . 105. ON APPEAL, THE LD. CIT (A) GRANTED RELIEF TO THE ASSESSEE DUE TO THE FOLLOWING REASONS: - (I) THE ESSENCE OF CIRCULAR NO. 729 DATED 1/10/1995 ISSUED BY THE CBDT CAN BE SUMMARIZED AS UNDER: WHEN ROUGH GRANITE IS CUT TO DIMENSIONAL BLOCKS OF UNIFORM COLOUR AND SIZE, IT NOT ONLY UNDERGOES MECHANICAL PROCESS OF CUTTING BUT ALSO CERTAIN AMOUNT OF DRESSING AND POLISHING IS INVOLVED TO REMOVED VARIOUS NATUR AL FLAWS SUCH AS COLOUR VARIATIONS, GRAIN VARIATIONS, JOINTS, FISSURES, MOLES, PATCHES, HAIR LINE CRACKS ETC. THE PROFITS DERIVED FROM THE EXPORT OF SUCH GRANITE DIMENSIONAL BLOCKS WOULD, ACCORDINGLY, BE ELIGIBLE FOR DEDUCTION UNDER THIS SECTION. SINCE T HE CIRCULAR HAS CLARIFIED THAT DRESSING OF THE GRANITE, CUTTING THEM INTO SMALLER PIECES, POLISHING THE GRANITE AMOUNTS TO MANUFACTURING OR PRODUCTION AS ENVISAGED UNDER THE ACT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 10B OF THE ACT. 42 (II) IT IS EVIDENT FROM THE FACT OF THE CASE THAT THE ASSESSEE - COMPANY HAD TAKEN OVER THE LEASE OF THE GRANITE QUARRY FROM M/S. VICTORIAN GRANITE PRIVATE LIMITED, A GROUP CONCERN, FOR EXTRACTION OF GRANITE W.E.F 28/12/2006 WHICH IS LATER THAN 8/9/2006 WHEN THE PERMISSION WAS GRANTED BY THE DEVELOPMENT COMMISSIONER, VISAKHAPATNAM TO THE ASSESSEE - COMPANY FOR ESTABLISHING THE 100% EOU. FURTHER, THE GRANTING OF LICENCE FOR QUARRYING IS NOT THE REQUIREMENT FOR 100% EOU AND THE TRANSACTION OF SUCH LICENCE ALONE MAY N OT CONSTITUTE RECONSTRUCTION OR RECONSTITUTION OF THE COMPANY AS DEFINED IN CLAUSE (II) OF SUB - SECTION (2) OF SECTION 10B OF THE ACT. 106. WE DO NOT FIND ANY INFIRMITY ON THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. THE CBDT CIRCULAR NO. 729 DATED 1/11/1 995 HAS MADE IT CLEAR THAT DRESSING OF THE GRANITE, CUTTING THEM INTO SMALLER PIECES, POLISHING THE GRANITE AMOUNTS TO MANUFACTURING OR PRODUCTION AS ENVISAGED UNDER THE ACT. FURTHER, AS OBSERVED BY THE LD. CIT (A), TRANSFER OF THE LICENCE FROM ANOTHER EN TITY ALONE MAY WILL NOT CONSTITUTE RECONSTRUCTION OR RECONSTITUTION OF THE COMPANY. THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERENCE WITH THE ORDER THE LD. CIT (A) ON THIS ISSUE. HENCE, THE APPEAL OF THE REVENUE ON THIS ISSUE IS DEVOID OF MERITS. 43 1 07. GROUND NO. (II): DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS. 12,89,185/ - . 108. SINCE THE ISSUE IS ALREADY ADJUDICATED ON THE IDENTICAL FACTS IN THE REVENUES APPEAL FOR THE AY 2006 - 07 HEREINABOVE, THE SAME DECISION HOLDS GOOD. ACCORDINGLY, THE APPEA L OF THE REVENUE IS DEVOID OF MERITS ON THE ISSUE. APPEAL NO.6 22 /H/2014 (AY: 200 9 - 10 ): (ASSESSEES APPEAL) 109. GROUND NO. (I) : - A DDITION MADE BY THE LD. AO WITHOUT INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. 110. SINCE THE ASSESSEE HAS WITHDRAWN THIS GROUND, THE GROUND DOES NOT SURVIVE FOR ADJUDICATION. 111. GROUND NO. (II) : DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS LIFE TAX AND REGISTRATION CHARGES AMOUNTING TO RS. 2,62,520 / - . 112. THIS GROUND IS IDENTICAL TO THE GROUND NO.(II) RAISED BY THE ASSESSEE IN THE APPEAL FOR THE AY 2003 - 04 HEREINABOVE. HENCE, THE SAME DECISION SHALL HOLD GOOD AS THE FACTS ARE IDENTICAL FOR THE RELEVANT ASSESSMENT YEAR ALSO. 113. GROUND NO. (III) : THE LD. CIT (A) HAS ERRED IN SUSTAININ G THE DISALLOWANCE MADE BY THE LD. AO TO THE EXTENT OF RS. 14, 53 ,922/ - TOWARDS FOREIGN EXCHANGE FLUCTUATION. 44 114. DURING THE COURSE OF ASSESSMENT PROCEEDINGS PURSUANT TO SEARCH THAT THE ASSESSEE HAD CLAIMED FOREIGN EXCHANGE FLUCTUATION EXPENSES OF RS. 14,53,922/ - AS DEDUCTION TOWARDS PURCHASE OF HYDRAULIC MACHINE FROM SANDVIK MINING. THE LD. AO OPINED THAT THE AFORESAID EXPENSE IS ATTRIBUTABLE TOWARDS THE PURCHASE OF CAPITAL AS SET AND THEREFORE, IT CANNOT BE ALLOWED AS REVENUE EXPENSES ACCORDINGLY HE DISALLOWED THE AMOUNT OF RS. 14,53,922/ - AS ALLOWABLE DEDUCTION. ON APPEAL, THE LD. CIT (A) UPHELD THE ORDER OF THE LD. AO. HOWEVER, GRANTED DEPRECIATION ON THE SAME. 115. AT THE OUTSET, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) BY VIRTUE OF SECTION 43A OF THE ACT. THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERE IN THE ORDER OF THE LD. CIT (A). 116. GROUND NO. (IV) : THE LD. CIT (A) HAS ERRED IN DIRECTING THE LD. AO TO VERIFY THE ADDITION MADE OF RS. 11,21,400/ - ON ACCOUNT OF SALE OF SCRAP AND THEREAFTER GRANT RELIEF IF THE CLAIM OF THE ASSESSEE HAS MERIT. 117. WHILE COMPLETING THE ASSESSMENT, THE LD. AO OBSERVED FROM THE MATERIAL SEIZED THAT THE ASSESSEE HAS SOLD SCRAP OF 52,900 KG AT A RATE OF RS. 21/ - PER KG ALONG WITH RADIATOR AND COOLER AND REALISED AN AMOUNT OF RS. 11,21,400/ - . THE LD. AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE ONLY FOR THE REASON THAT DURING THE SURVEY PROCEEDINGS ASSESSEE HAD ADMITTED IT AS NOT RECORDED IN THE BOOKS OF ACCOUNTS. WHEN THE MATTER CROPPED UP BEFORE THE LD. CIT (A), THE ASSESSEE 45 EXPLAINED THAT THE AMOUNT WAS RECORDED IN THE BOOKS OF ACCOUNTS AND ALSO INCLUDED IN VAT RETU RN . SINCE THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE LD. AO, THE LD. CIT (A) REMANDED THE MATTER BACK TO THE FILE OF THE LD. AO FOR VERIFICATION. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND ACCORDINGL Y WE HEREBY DIRECT THE LD. AO TO EXAMINE THE ISSUE AFRESH PROVIDING PROPER OPPORTUNITY TO THE ASSESSEE OF BEING HEARD . APPEAL NO. 962 /H/2014 (AY: 20 09 - 10 ): ( REVENUE S APPEAL) 118. GROUND NO.(I) DE DUCTION UNDER SECTION 10B OF THE ACT FOR RS. 14,22,28, 086/ - . 119. SINCE THE ISSUE IS ALREADY ADJUDICATED ON THE IDENTICAL FACTS IN THE REVENUES APPEAL FOR THE AY 200 8 - 09 HEREINABOVE, THE SAME DECISION HOLDS GOOD. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DEVOID OF MERITS ON THE ISSUE. 120. GROUND NO. (II): D ISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS. 66,53,865 / - . 121. SINCE THE ISSUE IS ALREADY ADJUDICATED ON THE IDENTICAL FACTS IN THE REVENUES APPEAL FOR THE AY 2006 - 07 AND 2008 - 09 HEREINABOVE, THE SAME DECISION HOLDS GOOD. ACCORDINGLY, THE APPEAL OF THE R EVENUE IS DEVOID OF MERITS ON THE ISSUE. 46 122. IN THE RESULT, ALL THE ASSESSEES APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE REVENUES APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2020 . SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 24 TH FEBRUARY, 2020. OKK COPY TO: - 1) M/S. MIDWEST GRANITES (P) LTD C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD - 82. 2) ACIT, CIRCLE - 16(2), IT TOWERS, HYDERABAD (II) DCIT, CENTRAL CIRCLE - 7, 8 TH FLOOR, AAYAKAR BHAVAN, L.B. STADIUM ROAD, BASHEERBAGH ROAD, HYDERABAD 500 004. 3) THE CIT(A) - VI , HYDERABAD 4) THE PR. CIT - VI , HYDERABAD / CIT (C ENT RAL), HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE