Dy.CIT, Circle-1(2), Hyderabad V. M/s Deepika Infratech Private Limited, Hyderabad

ITA 749/HYD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2592 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Unexplained expenditure; Loose papers; Opportunity of being heard; Onus to prove
• Section: 133(6); 201(1); 131; 68; 69; 28; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 749/HYD/2013 ASSESSMENT YEAR: 2008-09 DY. COMMISSIONER OF INCOME- TAX, CIRCLE 1(2), HYDERABAD. VS. M/S DEEPIKA INFRATECH PVT. LTD., HYDERABAD. PAN AABCD 9818 R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P. CHANDRA SEKHAR ASSESSEE BY : SHRI A.V. RAGHURAM DATE OF HEARING : 01-03-2017 DATE OF PRONOUNCEMENT : 28-04-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE REVENUE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) V, HYDE RABAD, DATED 24/01/2013 FOR AY 2008-09 WHEREIN THE REVENUE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS IN LAW AND ON FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE OF RS.8.06 CRORES ON THE BASIS OF LOOSE SHEETS FOUND A T THE TIME OF THE SURVEY IN THE ABSENCE OF ANY EVIDENCE PRODUCED BY THE ASSESSEE THAT THE TRANSACTION IS NOT RELATED TO THE ASSESSEE. 3. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE U/S 69 OF THE IT ACT, 1961 OF RS.8.15 CRORES ON THE BASIS OF LOOSE SHEETS FOUND AT THE TIME OF THE SURVEY IN THE ABSENCE OF A NY EVIDENCE PRODUCED BY THE ASSESSEE THAT THE TRANSACTION IS NO T RELATED TO THE ASSESSEE. 2 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 4. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE OF RS.12.40 LACS AND RS.5.36 LACS AS THE ASSESSEE FAIL ED TO PRODUCE EVIDENCE IN SUPPORT OF THE CLAIM THAT THE TRANSACTI ON IS BETWEEN ONE SRI SUBRAMANYAM AND M/S. VENKAT REDDY AND CO. 5. THE LEARNED CIT(A) ERRED IN RESTRICTING THE ADDI TION MADE U/S.68 OF THE IT ACT TOWARDS UNEXPLAINED CREDITS IN THE FORM OF SUNDRY CREDITORS. 6. THE LEARNED CIT(A) ERRED IN DELETION OF ADDITION MADE U/S 40(A)(IA) ON THE GROUND THAT THE AMOUNT IN QUESTION ARE NOT DEBITED TO P&L A/C DURING THE YEAR. 7. THE LEARNED CIT(A) ERRED IN NOT CONFIRMING THE A DDITION TO THE EXTENT OF RS.76,07,900/- TOWARDS UNEXPLAINED SHARE CAPITAL, AS THE ASSESSEE COULD NOT PRODUCE THE EVIDENCE BEFORE THE AO DURING THE REMAND PROCEEDINGS. 8. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. GROUND NOS. 1 & 8 ARE GENERAL IN NATURE. 3. AS REGARDS GROUND NO. 2 RELATING TO ADDITION ON ACCOUNT OF DISALLOWANCE U/S 69 OF THE ACT OF RS.8,06.40,000, IT IS OBSERVED THAT IN THE ASSESSMENT ORDER DATED 31.12.2010, VIDE PAGE NO.13 OF THE IMPOUNDED ANNEXURE A/19/DIPL, NOTINGS SHOWING PAYME NTS MADE WITH REGARD TO BANGALORE SITE OF RS.6,54,75,000/- A ND RS.1,51,65,000/- UNDER THE HEAD 'RAS' WERE NOTICED. SINCE, THE ABOVE SITE WORK DETAILS WERE NOT EXPLAINED WITH PROPER EV IDENCES AT THE TIME OF ASSESSMENT PROCEEDINGS U/S 144 OF THE ACT, THE T OTAL PAYMENT AGGREGATING TO RS.8,06,40,000 (RS.6,54,75,000-JSR + RS.1,51,65,000 - RAS) WAS TREATED AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND ACCORDINGLY ADDED IN THE HANDS OF THE ASSESSEE. 4. ON AN APPEAL BEFORE THE CIT(A), THE ASSESSEE OBJ ECTED TO THE ABOVE ADDITION AND HAS MADE A WRITTEN SUBMISSION TH ROUGH A PAPER BOOK DULY MENTIONING THAT THE TRANSACTION BELONGING TO BANGALORE SITE PERTAINS TO JSR CONSTRUCTIONS AND THE AMOUNTS REPRE SENTED BANK TRANSFERS FROM HEAD OFFICE TO BANGALORE SITE FOR DE VANGIRI SITE AND THAT THESE TRANSACTIONS ACTUALLY PERTAIN TO AY 2009 -10 AND NOT AY 3 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 2008-09, WHICH IS SUBJECT MATTER OF APPEAL UNDER CO NSIDERATION. HE FURTHER ARGUED THAT THERE WERE NO TRANSACTIONS FOR THE AY 2008-09 SINCE NO SUB-CONTRACT WAS ASSIGNED TO JSR CONSTRUCT IONS FOR THE AY 2008-09. HOWEVER, SURVEY WAS CONDUCTED IN THE YEAR 2010, THE AO HAS WRONGLY INCLUDED THE CONTRACT WORKS PERTAINING TO FY 2008-09 (AY 09-10) IN HER ASSESSMENT ORDER PASSED FOR THE AY 20 08-09. 4.1 WHEN THE CIT(A) CALLED FOR A REMAND REPORT FRO M AO, THE AO IN HER REMAND REPORT DATED 03.10.2011 HAS MENTIONED TH AT WITH REGARD TO ADDITION MADE OF RS.8,06,40,000/- BASED ON THE I MPOUNDED MATERIAL A/19/DIPL/LOOSE SHEETS (VIDE PAGE NO.13), IT WAS STATED BY THE ASSESSEE THAT M/S JSR CONSTRUCTIONS DID NOT HA VE ANY TRANSACTIONS IN THE FY 2007-08 AND IN THE ACCOUNT O F M/S RAS INFRASTRUCTURE, THE ENTRIES IN THE LOOSE SHEETS (SA ME PAGE NO.13 OF ANNEXURE A/19/DIPL/LOOSE SHEETS), WERE NOT CONNECTE D TO THE ASSESSEE'S ACCOUNTS. AS SUCH THE AR WAS REQUESTED T O FILE COPIES OF THE AGREEMENTS ENTERED INTO BY THE ASSESSEE FOR VER IFICATION OF THE CONTRACT WORK GIVEN TO BOTH THE ABOVE CONCERNS. IN RESPONSE, TO THE SAME, THE ASSESSEE HAD STATED THAT THE JSR CONSTRUC TIONS COPY COULD NOT BE PRODUCED SINCE THERE WERE NO TRANSACTIONS IN THE FY 2007-08 RELEVANT TO AY 2008-09. HOWEVER, HE HAS PRODUCED TH E WORK ORDER COPY OF RAS CONSTRUCTIONS FOR THE PERIOD 01.04.2007 TO 31.03.2008 I.E. FY 2007-08 RELEVANT TO AY 2008-09 BEFORE THE A O. THE AO HAS NOTICED THAT EXCEPT DISCREPANCY NOTED WITH REGARD T O ONE TRANSACTION DATED 07.05.2007 IN THE BOOKS OF RAS INFRASTRUCTURE LTD, FOR WHICH THE ASSESSEE WAS ASKED TO PRODUCE BANK ACCOUNT STAT EMENT IN ORDER TO VERIFY THE DISCREPANCY. SHE WENT ON TO ADD THAT OTHER THAN THIS, NO DISCREPANCY WAS NOTED AND THE DETAILS PRODUCED WERE FOUND TO BE IN ORDER. FORM NO.16A OF JSR AND RAS WERE ALSO OBTAINE D AND PLACED ON RECORD. 4 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 4.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AS WELL AS THE REMAND REPORT OF AO, THE CIT(A) DELETED THE ADDITIO N MADE BY THE AO BY OBSERVING AS UNDER: 4.4 I HAVE GONE THROUGH THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE ASSESSEE. I HAD OBTAINED THE WOR K ORDER COPY OF JSR DURING THE COURSE OF APPELLATE PROCEEDINGS, WHEREIN, LETTER OF ACCEPTANCE BY DEEPIKA FOR THE QUOTATION G IVEN BY JSR DATED 02.02.2009 FOR THE WORK RELATING TO WESTERN T RANSPORT CORRIDOR - TUMKUR - HAVERI SECTION (KM 207+000 TO K M 284+000) WORK IS NOTICED. FURTHER, ON VERIFICATION OF THE LEDGER PERTAINING TO JSR CONSTRUCTIONS FOR THE PERIOD OF M ARCH, 2009 (01.03.09 TO 31.03.09), IT IS SEEN THAT THE TOTAL C ONTRACT WORK AMOUNTING TO RS.6,06,79,800/- WAS EXECUTED AND THE TDS OF RS.3,39,900/- IS DEDUCTED. AS SUCH, THE CONTENTION OF THE ASSESSEE THAT NO TRANSACTIONS TOOK PLACE WITH JSR C ONSTRUCTIONS DURING THE FY 07-08 RELEVANT TO AY 08-09 IS ACCEPTE D AND THE ADDITION MADE BY THE AO OF RS. RS.6,54,75,000/-, BA SED ON THE LOOSE SHEET VIDE PAGE NO.13 OF ANNEXURE A/19/DIPL/L OOSE SHEETS IS DELETED SINCE THE SAID ADDITION PERTAINS TO AY 2009-10. WITH REGARD TO SUB-CONTRACT WORK WITH RAS INFRASTRU CTURE, THE LEDGER ACCOUNT COPY FOR THE PERIOD 01.04.2007 TO 31 .03.2008 (AY 08-09) WAS OBTAINED AND PERUSED. ON VERIFICATION OF THE SAME, IT IS SEEN THAT THE TOTAL SUB-CONTRACT PAYMENTS MADE T O RAS INFRASTRUCTURE LTD THROUGH CHEQUES WAS RS.1,27,08,9 95/-, FOR WHICH TDS AMOUNTING TO RS.1,43,995/- IS DEDUCTED. M OREOVER, THE AO IN REMAND REPORT DATED 03.10.2011 HAS STATED THAT EXCEPT FOR A PARTICULAR TRANSACTION DATED 7.05.2007, THE TRANSACTIONS/WORK SITE DETAILS WERE FOUND TO BE IN ORDER. HOWEVER, SHE HAS NOT GIVEN ANY CLARITY ABOUT THE NA TURE OF DISCREPANCY NOTICED IN HER REMAND -SPORT. IN ORDER TO EXAMINE THE DISCREPANCY, THE LEDGER ACCOUNTS IN THE BOOKS O F RAS AS WELL AS THAT OF THE ASSESSEE WERE VERIFIED PARTICULARLY WITH REFERENCE TO 07.05.2007 TRANSACTION. IT IS SEEN THAT THE DISC REPANCY WAS IN THE BOOKS OF RAS, WHEREIN, FOR THE CHEQUE NO.430745 , THE BANK MENTIONED WAS STATE BANK OF INDIA, FILM NAGAR BRANC H, WHEREAS IN THE BOOKS OF THE ASSESSEE, FOR THE SAME CHEQUE N O., THE BANK MENTIONED WAS UCO BANK. THIS IS THE ONLY DISCREPANC Y WHICH WAS NOTICED AT THE TIME OF APPELLATE PROCEEDINGS AS FAR AS THE DISCREPANCY MENTIONED BY THE AO FOR THE TRANSACTION DATED 07.05.2007 IS CONCERNED. OTHER THAN THIS, THE AO HA S NOT MENTIONED OF ANY OTHER SHORTCOMINGS IN THE DETAILS THAT WERE FILED BEFORE HER AND THAT THE AO HERSELF HAS COMMEN TED THAT THE TRANSACTIONS/WORK SITE DETAILS WHICH WERE PROVIDED BY THE ASSESSEE ARE FOUND TO BE IN ORDER. ACCORDINGLY, THE ADDITION 5 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. MADE BY THE AO OF RS. 1,51,65,000/- IS HEREBY DELET ED SINCE THE ASSESSEE HAS BOOKED THE SUB-CONTRACT WORKS AT RS.1, 27,08,995/- IN HIS LEDGER MAINTAINED FOR THE PERIOD 01.04.2007 TO 31.03.2008 (AY 2008-09), AND NOT RS.1,51,65,000/- WHICH WAS RE LIED BY THE AO BASED ON THE ANNEXURE A/19/DIPL/LOOSE SHEETS (PA GE NO.13). ACCORDINGLY, THE CONSOLIDATED ADDITION OF RS.8,06,40,000/- AS UNEXPLAINED INVESTMENT U/S 69 O F THE ACT, IS ORDERED TO BE DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. CONSIDERING THE FACT THAT THIS ASSESSMEN T WAS COMPLETED U/S 144, AO HAS MADE THE ADDITION WITH THE IMPROPER INFORMATION AVAILABLE ON RECORD. THE INFORMATION FOUND DURING S URVEY WAS ABOUT THE TRANSACTIONS RELATING TO JSR CONSTRUCTIONS AND RAS INFRASTRUCTURE LTD. BASED ON THE OBJECTIONS RAISED BY THE ASSESSEE ON THE ABOVE TRANSACTIONS, THE CIT(A) CALLED FOR REMAND REPORT F ROM THE AO IN WHICH ASSESSEE COULD NOT SUBMIT THE DETAILS OF JSR CONSTRUCTIONS AS THERE WERE NO TRANSACTIONS IN THE FY 2007-08. HOWEV ER, ASSESSEE HAS SUBMITTED THE TRANSACTIONS RELATING RAS INFRASTRUCT URE FOR THE PERIOD 01/04/2007 TO 31/03/2008. IN THE REMAND REPORT, WIT H REFERENCE TO RAS INFRASTRUCTURE, THE AO HAS FOUND ONE DISCREPANC Y IN THE TRANSACTION DATED 07/05/2007 AND OTHER TRANSACTIONS ARE FOUND TO BE IN ORDER. CIT(A) HAS VERIFIED THE WORK ORDER COPY OF JSR CONSTRUCTIONS IN THE APPELLATE PROCEEDINGS WHEREIN THE ASSESSEE HAS CARRIED ON THE WORK RELATING TO WESTERN TRANSPORT C ORRIDOR TUMKUR, WHILE ON VERIFICATION OF THE LEDGER COPY OF JSR CON STRUCTIONS FOR THE PERIOD MARCH09, CIT(A) HAS NOTICED THAT TOTAL WORK AMOUNTING TO RS. 6,06,79,800/- WAS EXECUTED AND TDS WAS ALSO DEDUCTE D. SINCE, THESE TRANSACTIONS ARE RELATING TO AY 2009-10, THE ADDITI ON MADE IN AY 2008-09 WAS DELETED. WITH REGARD TO RAS INFRASTRUCT URE, CIT(A) CALLED FOR LEDGER ACCOUNT COPY FOR THE PERIOD 01/04 /07 TO 31/03/08, ON VERIFICATION OF THE ABOVE LEDGER COPY, IT WAS NO TICED THAT TOTAL SUB- 6 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. CONTRACT PAYMENTS MADE TO RAS INFRASTRUCTURE LTD., THROUGH CHEQUE WAS RS. 1,27,08,995/- FOR WHICH TDS WAS ALSO DEDUCT ED OF R. 1,43,995/-. IN THE REMAND REPORT, AO NOTICED DISCR EPANCY IN ONLY ONE TRANSACTION AND OTHER TRANSACTIONS ARE FOUND TO BE IN ORDER. THE DISCREPANCY NOTED BY THE AO WAS CAREFULLY VERIFIED BY CIT(A) AND IT WAS NOTICED THAT CHEQUE NO. 430745, WHICH WAS MENTI ONED AS SBI, FILM NAGAR BRANCH, WHEREAS, IN THE BOOKS OF THE ASS ESSEE FOR THE SAME CHEQUE NO., THE BANK WAS MENTIONED AS UCO BANK . SINCE THIS IS ONLY ONE DISCREPANCY NOTED BY THE AO, WHICH WAS EXA MINED BY THE CIT(A), THE WHOLE TRANSACTION SEEMS TO BE IN ORDER AND ACCORDINGLY, THE ADDITION MADE BY THE AO IN THIS REGARD ALSO DEL ETED. SINCE THE WHOLE TRANSACTIONS ARE VERIFIED BY CIT(A) AND IN TH E REMAND REPORT AO ALSO FOUND THE TRANSACTION ARE TO BE IN ORDER, WITH REGARD TO RAS INFRASTRUCTURE LTD. AND WITH REGARD TO JSR CONSTRUC TIONS, THE TRANSACTIONS OF WHICH WERE RELATING TO AY 2009-10, IN OUR OPINION, THE FINDINGS OF CIT(A) ARE FOUND TO BE IN ORDER. ACCORD INGLY, WE UPHOLD THE ORDER OF CIT(A) ON THIS ISSUE AND DISMISS THE G ROUND RAISED BY THE REVENUE. 7. AS REGARDS GROUND NO. 3 RELATING TO ADDITION ON ACCOUNT OF DISALLOWANCE U/S 69 - 8,15,22,060 & RS.1.95,65,295/ - U/S 28, IT IS OBSERVED THAT AS PER NOTINGS IN THE IMPOUNDED ANNEX URE A/19/DIPL/LOOSE SHEETS, DETAILS OF INVESTMENT OF RS .8,15,22,060/- AND INTEREST INCOME EARNED OF RS.1,95,65,295/- WERE NOTICED. SINCE, THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY EXPLANA TION, THE SAME WAS ADDED BY THE AO U/S 69 AND 28 TOTALING RS.10,10 ,87,355 TO THE INCOME RETURNED. 8. BEFORE THE CIT(A), THE ASSESSEE IN HIS WRITTEN S UBMISSIONS HAS STATED THAT THESE ARE ROUGH CALCULATIONS FOR VARIOU S PERMUTATIONS AND COMBINATIONS MADE BY STAFF AND HAS NO RELEVANCE TO ACCOUNTS. IT WAS 7 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. FURTHER SUBMITTED THAT LOOSE SHEETS AND ROUGH NOTIN GS CANNOT BE THE BASIS OF ADDITION UNLESS THE SAME IS COUPLED WITH S UBSTANTIVE EVIDENCE AND AS SUCH THE ASSESSEE DO NOT ATTRIBUTE THE LOOSE SHEET, AS THE HAND WRITING IS NEITHER RECOGNIZABLE, NOR TH E FIGURES ARE RECONCILABLE. THE ASSESSEE HAS CONTESTED DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THE LOOSE SHEET HAS NO R ELEVANCE TO IT. 8.1 WHEN THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO, IN THE REMAND REPORT, THE AO HAS MENTIONED THAT THE ASSESS EE WAS REQUESTED TO EXPLAIN FULLY ABOUT THE NATURE OF SUCH TRANSACTION INCLUDING IDENTITY OF THE PERSON WHO HAS JOTTED DOW N THE ABOVE AMOUNTS. HOWEVER, THE ASSESSEE HAS NOT ATTRIBUTED T HE ABOVE LOOSE SHEET SINCE NEITHER THE HAND WRITING NOR THE FIGURE S WERE RECOGNIZABLE. THE AO HAS CONCLUDED THAT THE ASSESSE E'S CONTENTION WAS NOT ACCEPTABLE AS THE AMOUNTS WERE WRITTEN WITH DATES AND SINCE THE CHIT WAS FOUND IN ASSESSEE'S PREMISES, THE ONUS LIES ON THE ASSESSEE TO PROVE. AS THE ASSESSEE HAS NOT DISCHARG ED ITS ONUS, THE AMOUNTS WERE ADDED IN THE HANDS OF THE ASSESSEE. WH ILE FORWARDING THE ABOVE REMAND REPORT, THE ADDI.CIT, RANGE-1 HAS IN FACT SUGGESTED THAT SINCE THE ABOVE SLIP PASSES THROUGH TWO FINANCIAL YEARS I.E. 08-09 & 09-10, AN AMOUNT OF RS.8,15,22,0 60/- MAY BE ADDED FOR THE AY 08-09 AND THE BALANCE AMOUNT OF RS .1,95,65,295/- FOR THE SUBSEQUENT AY. 8.2 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE REMAND REPORT OF THE AO, DELETED THE AD DITION MADE BY THE AO BY OBSERVING AS UNDER: 5.4 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE. ON A CLOSE PERUSAL OF THE SLIP, OTHER THAN INDICATING THE DATES AND THE AMOUNT, NO OTHER NOTINGS IS FOUND ON THE SLIP SUGGESTING THAT IT BELONGS TO THE ASSESSEE, SINCE NO NAME OF ANY PERSON ASSOCIATED WITH THE ASS ESSEE IS 8 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. REFLECTED. NO DOUBT IT INDICATES THE TOTAL RECEIPT AS ON 31.03.2008 AND 31.03.2009, BUT NO EVIDENTIARY VALUE IS NOTICED TO ATTRIBUTE THIS AMOUNT TO THE ASSESSEE. IN THIS S ITUATION, THE BURDEN OF PROOF RESTS ON THE AO TO PROVE CONCLUSIVE LY THAT THE AMOUNTS BELONG TO THE ASSESSEE, AS THE ASSESSEE HAS CONSISTENTLY DISOWNED THE SAME. THE AO IN REMAND RE PORT DATED 03.10.2011 HAS MERELY SUGGESTED THAT SINCE THE ASSE SSEE HAS NOT PROVED ITS ONUS TO DISPROVE THE CONTENTION OF THE D EPARTMENT THAT IT ACTUALLY BELONGED TO THE ASSESSEE, THE SAME IS PROPOSED TO BE ADDED. IN FACT THE AO HAS NOT PROVED ANYTHING NEW OTHER THAN SHIFTING THE ONUS ON THE ASSESSEE TO PROVE. NO FURTHER EFFORT/INQUIRY WAS MADE BY THE AO TO CRACK THE NOTI NGS IN IDENTIFYING THE HANDWRITING. THE ASSESSING OFFICER HAS TO ESTABLISH THE LINK BETWEEN THESE LOOSE DOCUMENTS WI TH OTHER BOOKS OF ACCOUNTS OF THE ASSESSEE IN ORDER TO SUSTA IN THE ADDITION. THE NOTINGS AS SUCH CANNOT BE CONSIDERED ALONE AS CONCLUSIVE EVIDENCE. THE ENTIRE CASE DEPENDS ON THE RULE OF EVIDENCE. THE ASSESSEE HAS EVERY RIGHT TO SHIFT THE BURDEN OF PROOF. THERE IS NO CONCLUSIVE PRESUMPTION. THE ASSE SSING OFFICER SHALL BE SPECIFIC ABOUT THE NATURE OF NEXUS OF THE MATERIAL TO THE BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER SHO ULD ACT IN A JUDICIOUS MANNER, PROCEED WITH JUDICIAL SPIRIT AND SHOULD COME TO A JUDICIAL CONCLUSION AND TO ACT FAIRLY AS A REASON ABLE PERSON AND NOT ARBITRARILY AND CAPRICIOUSLY. ASSESSMENT MADE S HOULD HAVE ADEQUATE MATERIAL AND IT SHOULD STAND ON ITS OWN LE GS. THE BASIS FOR ADDITION IS ONLY A LOOSE SLIP. THIS LOOSE SLIP IS AN UNSIGNED DOCUMENT. THE ASSESSING OFFICER HAS NOT ESTABLISHED ANY NEXUS BETWEEN THE LOOSE SLIP AND THE BUSINESS OF THE ASSE SSEE. AS SUCH IN MY OPINION, IT IS A DUMB DOCUMENT HAVING NO EVID ENTIARY VALUE AND HENCE NO ADDITION CAN BE MADE IN THE ABSENCE OF CORROBORATIVE MATERIAL. IF THERE IS CIRCUMSTANTIAL EVIDENCE IN ANY FORM, THE ADDITION IS TO BE MADE ON THAT BASIS, TO THE EXTENT OF MATERIAL AVAILABLE. THE ASSESSEE IS NOT EXPECTED TO EXPLAIN THE LOOSE PAPERS FOUND AS THERE IS NO EVIDENCE OTHER TH AN LOOSE SLIP FOR COMING TO THE CONCLUSION BY THE AO. IN MY OPINI ON, NO ADDITION CAN BE MADE ON THE BASIS OF DUMB DOCUMENTS /LOOSE SLIP IN THE ABSENCE OF ANY OTHER MATERIAL TO SHOW THAT T HE ASSESSEE HAS MADE INVESTMENTS AS OPINED BY THE AO. NOTINGS O N THE LOOSE SHEETS ARE REQUIRED TO BE SUPPORTED/CORROBORATED BY OTHER EVIDENCE AND ARE ALSO INCLUDE THE STATEMENT OF A PE RSON WHO ADMITTEDLY IS A PARTY TO THE NOTING. THE EVIDENCE O N RECORD IS NOT SUFFICIENT TO SUPPORT THAT THE ASSESSEE MADE INVEST MENT/RECEIVED MONEY. THE CIRCUMSTANCES SURROUNDING THE CASE ARE N OT STRONG ENOUGH TO JUSTIFY THE ADDITION. THEREFORE, MERELY O N THE BASIS OF PRESUMPTION AND SOME UNCORROBORATED NOTINGS, ADDITI ONS CANNOT BE SUSTAINED. AS A QUASI JUDICIAL AUTHORITY THE ASS ESSING OFFICER HAS TO SATISFY ON THE BASIS OF COGENT MATERIAL EITH ER FOUND IN 9 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. COURSE OF SURVEYOR ON POST SURVEY ENQUIRIES THAT TH E TRANSACTION RECORDED IS A REAL, BUT NOT AN IMAGINARY ONE, AND T HE SAME HAS ACTUALLY TAKEN PLACE. 5.5 IN THE CASE OF HARISH DAULATRAM IMANI VS DEN (I NV) MUMBAI 2008 (24 SOT 541) IT WAS HELD THAT UNCORROBORATED N OTINGS IN THE LOOSE PAPER CANNOT BE THE BASIS OF ANY ADDITION . IN THE CASE OF THE ASSESSEE, NO ATTEMPT HAS BEEN MADE BY THE AO IN MAKING ENQUIRY AND UNILATERALLY FIXING THE LIABILITY ON TH E ASSESSEE. MY VIEW IS FURTHER STRENGTHENED BY THE CASE OF CIT VS MOULALI KUMAR SHAH 2008 (307 LTR 137) (GUJ), WHEREIN, IT WAS HELD THAT IN THE ABSENCE OF CORROBORATIVE MATERIAL AND EXAMINATION O F PARTIES, NO ADDITION IS POSSIBLE. IN SUCH CASES ONUS HEAVILY LI ES ON THE DEPARTMENT TO PROVE WITH CORROBORATIVE EVIDENCE THA T ENTRIES IN THE LOOSE SHEETS ACTUALLY REPRESENTED THE UNDISCLOS ED INCOME OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE JUDICIAL PR ECEDENTS AND IN THE ABSENCE OF ANY ENQUIRY BY THE ASSESSING OFFICER AND THE INCONSISTENCIES FOUND IN THE NOTINGS, I AM OF THE C ONSIDERED OPINION THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF LOOSE SLIP NOTINGS, CANNOT BE SUSTAINED. I, THEREFORE, DI RECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.10,1 0,87,355/-. THIS GROUND OF APPEAL IS THUS ALLOWED. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. DURING THE SURVEY PROCEEDINGS, THE DEPAR TMENT IMPOUNDED CERTAIN LOOSE SHEETS AS PER WHICH DETAILS OF INVEST MENT OF RS. 8,15,22,060/- AND INTEREST CALCULATION OF RS. 1,95, 65,295/- WERE NOTICED. SINCE ASSESSEE HAS NOT GIVEN ANY EXPLANATI ON, THE SAME WERE ADDED U/S 69 AND U/S 28 OF THE ACT TO THE TAXABLE I NCOME OF THE ASSESSEE. ASSESSEE IN THE APPELLATE PROCEEDINGS, SU BMITTED THAT THESE LOOSE SHEETS CONTAIN ROUGH CALCULATIONS FOR VARIOUS PERMUTATIONS AND COMBINATIONS MADE BY STAFF AND HAS NO RELEVANCE TO ACCOUNTS. IT WAS FURTHER SUBMITTED THAT LOOSE SHEETS AND ROUGH NOTIN GS CANNOT BE THE BASIS FOR ADDITION. IN THE REMAND REPORT, AO HAS CO NFIRMED THE ADDITION BY OBSERVING THAT ONUS IS ON THE ASSESSEE TO PROVE BY WAY OF DOCUMENTARY EVIDENCE AND EXPLAINING THAT IT INVOLVE S TWO AYS, INCOME CAN BE CHARGED TO TAX ACCORDINGLY. HOWEVER, THE FAC T REMAINS THAT THE LOOSE SHEETS FOUND DURING SURVEY HAS NO EVIDENCE TO SHOW THAT IT BELONGS TO ASSESSEE NOR IT HAS ANY RELEVANCE TO THE BUSINESS CARRIED 10 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. ON BY THE ASSESSEE. IN VIEW OF THESE OBSERVATIONS, WE ARE IN AGREEMENT WITH THE FINDINGS OF CIT(A) THAT AO HAS N OT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT LOOSE SHEETS HAS A NY RELEVANCE TO THE ASSESSEE NOR TO THE BUSINESS OF THE ASSESSEE AS PAPER FOUND HAS NO NAME OF THE ASSESSEE NOR THE PERSON IN WHOSE FAV OUR THE DETAILS OF INVESTMENT OR INTEREST RECEIPT IS FOUND NOR FOUN D ANY EVIDENCE TO SHOW THAT SUCH TRANSACTIONS WERE CARRIED ON BY ASSE SSEE. MERE FINDING OF LOOSE SHEETS CAN BE EQUATED WITHOUT ANY EVIDENCE OF THE PERSON OR HAS ANY LINK TO COMPLETION OF ANY BUSINES S TRANSACTION, IT CAN BE REGARDED AS DUMB DOCUMENT. THE BASIS OF SUCH DUMB DOCUMENT CANNOT BE THE BASIS TO MAKE ANY ADDITION, HENCE, WE ARE IN AGREEMENT WITH THE FINDING OF CIT(A) AND ACCORDI NGLY UPHOLDING THE DECISION OF CIT(A) ON THIS ISSUE, THE GROUND RA ISED BY THE REVENUE IN THIS REGARD IS DISMISSED. 10. AS REGARDS GROUND NO. 4 RELATING TO ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 68 - RS.12,40,000 &. RS .5,36,855/- U/S 28, IT IS OBSERVED THAT THE AO IN THE ASSESSMENT OR DER HAS NOTED THAT AS PER ANNEXURE A/19/DIPL, PAYMENT OF RS.12,40,000/ - WAS SHOWN TO HAVE BEEN PAID TO ONE SRI SUBRAMANYAM. WHEN THIS WA S CONFRONTED THE ASSESSEE, NO EXPLANATION WAS PROVIDED FOR. AS S UCH THE AO HAS CONSIDERED THIS AMOUNT AS UNEXPLAINED EXPENDITURE U /S 68 OF THE ACT AND HAS ADDED TO THE INCOME RETURNED. 11. BEFORE THE CIT(A), THE ASSESSEE FILED WRITTEN SUBMISSIONS WHEREIN IT WAS STATED THAT THE AMOUNT OF RS.12,40,0 00/- WAS PAID TO S. SUBRAMANYAM BY M/S G VENKAT REDDY & CO. PERTAINI NG TO SOME TRANSACTION BETWEEN THEM. HE FURTHER STATED THAT SI NCE THE AO HAS NOT SUMMONED OR EXAMINED SRI SUBRAMANYAM, NO REASON WAS ESTABLISHED TO ADD THE ABOVE AMOUNT OF RS.12,40,000 /- IN THE HANDS OF THE ASSESSEE. 11 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 11.1 ON FORWARDING THE WRITTEN SUBMISSIONS TO THE AO BY THE CIT(A), VIDE REMAND REPORT DATED 03.10.2011 THE AO HAS STATED THAT A STATEMENT WAS RECORDED FROM THE MD SRI K.UPENDER REDDY. THE RELEVANT PORTION IS REPRODUCED AS UNDER: Q.7) I AM SHOWING YOU THE PAGE NO.27 OF THE PAPER B OOK IN WHICH A STATEMENT WAS SHOWN WHICH WAS TITLED 'S.SUB RAMANYAM' AND AT THE END OF THE STATEMENT, IT WAS MENTIONED A S 'BALANCE TO BE RECEIVED AT RS.54,79,009. PLEASE THROW LIGHT ON THE SAME. ANS: THIS MATTER PERTAINED TO SRI S.SUBRAMANYAM, WH O HAPPENED TO BE A CONTRACTOR. HE HAS COME FOR A SETTLEMENT WI TH G. VENKATA REDDY & CO. AND THE PAPER TO THIS EFFECT MIGHT HAVE BEEN LEFT IN OUR PREMISES. IT HAS NOTHING TO DO WITH OUR BUSINES S. 11.2 WITH REGARD TO ADDITION MADE OF RS.5,36,855/- PERTAINING TO SAME SRI S. SUBRAMANYAM, THE AO HAS NOTICED THAT AS PER ANNEXURE A/19/DIPL, THE AMOUNT RELEASED FROM THE COURT OF RS .10,34,341/- AND INTEREST OF RS.5,76,226/- (01.03.07 TO 27.06.09 FOR RS.10,34,341), THUS TOTALING TO RS.16,10,567/- WAS NOT OFFERED TO TAX. AS THE ASSESSEE COULD NOT GIVE PROPER EXPLANATION, HENCE 1 /3RD OF RS.16,10,567 I.E. RS. 5,36,855/- WHICH IS RELEVANT TO AY 2008-09 IS ADDED U/S 28. 11.3 BEFORE THE CIT(A), THE ASSESSEE VIDE HIS PAPER BOOK HAS SUBMITTED THAT SINCE THE COURT MATTER DOES NOT PERT AIN TO THE ASSESSEE, THE SAME HAS NO REFERENCE TO THE ASSESSEE AND THAT AO SHOULD HAVE VERIFIED WITH SRI S.SUBRAMANYAM, BEFORE RESORTING TO ADDITION IN ITS HANDS. 11.4 IN HER REMAND REPORT DATED 03.10.2011, THE AO HAS RECORDED A STATEMENT FROM SRI UPENDER REDDY, WHICH IS REPRODUC ED AS UNDER: Q.8. I AM SHOWING YOU THE PAGE NO. 29 OF THE PAPER BOOK IN WHICH IT WAS MENTIONED ABOUT A SUM TOTALLING TO RS. 18,19,433/- 12 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. AND HAVING A MENTION AS 'FROM THE DATE OF RECEIVING (AS PER KUR)......... AMOUNTING TO RS. 35, 00, 000/-. PLEAS E EXPLAIN. ANS: THIS MATTER ALSO PERTAINED TO SRI S. SUBRAMANY AM, WHO HAPPENED TO BE A CONTRACTOR. HE HAS COME FOR A SETT LEMENT WITH M/S G. VENKAT REDDY & CO. AND THE PAPER TO THIS EFF ECT MIGHT HAVE BEEN LEFT IN OUR PREMISES. MYSELF BEING THE AR BITRATOR FOR THE SAID DISPUTE, TOLD TO PAY INTEREST ON THE AMOUN T TO SETTLE THE DISPUTE..... IT IS NOTHING TO DO WITH MY OWN BUSINE SS ACTIVITIES' 11.5 AS SUCH SUMMONS U/S 131 WERE ISSUED TO SRI S.S UBRAMANYAM, WHICH WERE RETURNED UNSERVED. AS THE ASSESSEE COULD NOT FURNISH THE COURT CASE DETAILS, THE SUBMISSIONS MADE WAS NOT AC CEPTED AND ACCORDINGLY ADDED IN THE HANDS OF THE ASSESSEE SUGG ESTING THAT RS.10,34,341/- (NOT PART OF ASSESSMENT ORDER) AND R S.5,36,855/- ALONG WITH ADDITION OF RS.12,40,000/- MADE VIDE PAG E NO. 60 OF A/19/DIPL. 11.6 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE AS WELL AS THE REMAND REPORT OF THE AO, DELETED THE AD DITION MADE BY THE AO BY OBSERVING AS UNDER: 7.7 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT AND I WOULD LIKE TO TH ROW THE FOLLOWING POINTS ON THIS ISSUE. FIRST OF ALL THE ISSUE IS NOT AT ALL RELATED TO THE ASSESSEE SINCE THIS A TRANSACTION BETWEEN SRI SUBRAMANYAM AND MS G .VENKAT REDDY & CO, WHICH IS EVIDENCED BY THE STATEMENT GIV EN BY THE MD SRI UPENDER REDDY BEFORE THE AO THE ASSESSEE ON HIS PART HAS FURNISHED THE RESIDE NTIAL ADDRESS OF SRI SUBRAMANYAM WHO WAS RESIDING AT FLAT AT NO.5 03, KRISHNA SAI APARTMENTS, YOUSUFGUDA, HYDERABAD, 500045 I.E. TO SAY HE HAS IDENTIFIED THE PERSON TO WHOM SUCH TRANSACTION BELONGS TO. SINCE THE ASSESSEE HAD POINTED OUT THAT THE ASSE SSING OFFICER DID NOT SUMMON SRI SUBRAMANYAM OF S.S. CONSTRUCTION S, THE BURDEN OF PROOF WHICH LAY ON THE ASSESSEE STOOD DIS CHARGED. THEREFORE, THE ADDITION MADE IN THE HANDS OF THE AS SESSEE WAS 13 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. NOT JUSTIFIED AS THE ASSESSEE HAD DISCHARGED ITS BU RDEN OF PROOF IN IDENTIFYING SRI SUBRAMANYAM. THIS FACT WAS ALSO ACCEPTED BY THE AO IN HER REM AND REPORT DATED 03.10.2011 THAT THE ABOVE SUBMISSION OF SRI U PENDER REDDY MORE OR LESS MATCHES WITH THE SUBMISSIONS OF THE ASSESSEE, THAT THE TRANSACTION WAS IN FACT BETWEEN SRI SUBRAMANYAM AND MIS G.VENKAT REDDY & CO . THE AO HAS NOT MADE ANY FURTHER ENQUIRY WITH REG ARD TO THE ABOVE TRANSACTION IN SPITE OF HAVING RESIDENTIAL AD DRESS IN HAND AND ACCORDINGLY NOT DISCHARGED ITS BURDEN OF PROOF. THE AO HAS MENTIONED THAT SUMMONS ISSUED U/S 131 TO SRI S. SUBRAMANYAM RETURNED UNSERVED DUE TO CHANGE IN ADDR ESS. HOWEVER, IT SEEMS NO FURTHER ATTEMPT HAS BEEN MADE TO LOCATE SRI SUBRAMANYAM. IT IS ALSO NOT KNOWN WHETHER ANY ATTEMPT HAS BEE N MADE TO CONTACT M/S G.VENKAT REDDY & CO., WHO IS ALSO ONE O F THE PARTY TO THE ABOVE TRANSACTION. FURTHER, NO ATTEMPT HAS BEEN MADE TO KNOW THE WH EREABOUTS OF SUBRAMANYAM AS TO WHERE HE IS LIVING PRESENTLY. IT WAS HELD BY VARIOUS COURTS THAT THERE CAN BE N O PRESUMPTION ON THE BASIS OF SOME UNCORROBORATED NOTINGS AND ON THE BASIS OF MERE SUSPICION, THAT ADDITIONS CAN BE MADE. MOREOVER, THE EXPRESSION THAT THE ASSESSEE OFFERED NO EXPLANATION, MEANS, THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE NATURE OF THE SLIP FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE ON HIS PART HAS IDENTIFIED SRI SUBRAMANYAM, PROVIDED RESIDENTIAL AD DRESS AND STATED THAT IT WAS A TRANSACTION BETWEEN SUBRAMANYA M AND VENKAT REDDY & CO BY GIVING A STATEMENT. THUS, THE ASSESSEE HAS DISCHARGED ITS COMPLETE RESPONSIBILITY IN PUTTI NG THE FACTS BEFORE THE AO. THE AO HAS PUT EFFORT ONLY IN ISSUIN G SUMMONS U/S 131 AND WHEN THE SAME WERE RETURNED UNSERVED, S HE HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT PR OVED ANYTHING IN SPITE OF AMPLE OPPORTUNITIES. THE OPINI ON OF THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE AS SESSEE AS NOT SATISFACTORY, IS REQUIRED TO BE BASED ON PROPER APP RECIATION OF FACTS. THE OPINION OF THE AO IS REQUIRED TO BE FORM ED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD FILE. 14 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. DUE TO LACUNA OF ABOVE POINTS, I HOLD THAT TAXING A THIRD PARTY TRANSACTION IN THE HANDS OF THE ASSESSEE IS NOT TEN ABLE AND SUSTAINABLE IN THE EYE OF LAW. HENCE THE ADDITIONS MADE OF RS.12,40,000/- AND RS.5,36,855/- IN THE HANDS OF TH E ASSESSEE IS DELETED. HOWEVER, THE AO IS DIRECTED TO MAKE A FRES H ENQUIRY IN IDENTIFYING SRI SUBRAMANYAM'S WHEREABOUTS, RECORD A STATEMENT FROM HIM AND ACCORDINGLY OBTAIN THE SOURCES OF THE ABOVE TWO ADDITIONS INCLUDING THE COURT RELEASE AMOUNT OF RS. 10,34,341/- AND TAX IN THE HANDS OF SRI SUBRAMANYAM. ACCORDINGL Y, THIS GROUND OF APPEAL IS ALLOWED. 12. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. AO HAS MADE ADDITIONS OF RS. 12,40,000/- AND RS. 5,36,855/- IN THE HANDS OF ASSESSEE WHEREAS THE MD SHRI K. UPENDER REDDY IN HIS STATEMENT CLEARLY EXPLAINED THAT THESE TWO TRANSACTIONS WERE NOT RELATING TO ASSESSEE AND THESE TRANSACTION S WERE RELATING TO SHRI S. SUBRAMANYAM AND SHRI G. VENKATA REDDY & CO. THESE PAYMENTS WERE RELATING TO SOME DISPUTES BETWEEN THE PARTIES WHO HAS NO CONNECTION WITH THE ASSESSEE COMPANY. SINCE IT HAS NO RELEVANCE TO THE ASSESSEE COMPANY, WE ARE ALSO IN A GREEMENT WITH THE FINDINGS OF CIT(A) THAT THESE TRANSACTIONS IN F ACT HAS NO RELATION WITH THE ASSESSEE COMPANY. ACCORDINGLY, WE UPHOLD T HE DECISION OF THE CIT(A) ON THIS ISSUE AND DISMISS THE GROUND RAI SED BY THE REVENUE. 13. AS REGARDS GROUND NO. 5 RELATING TO THE ADDITIO N ON ACCOUNT OF DISALLOWANCE U/S 68 - RS.27,10,43,771/-, IT IS OBSE RVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO PROVIDE DETAILS OF SUNDRY CREDITORS FOR WHICH IT HAS FURNIS HED THE DETAILS AMOUNTING TO RS. 27,64,91,074/-. IN ORDER TO VERIFY THE DETAILS SUBMITTED BY THE ASSESSEE, NOTICES U/S 133(6) WERE ISSUED TO ALL THE CREDITORS FROM TIME TO TIME. IN RESPONSE TO SUCH NO TICES, CONFIRMATIONS WERE RECEIVED FROM PARTIES. AT THE TI ME OF COMPLETION OF ASSESSMENT, CREDITORS CONFIRMATION AMOUNTING TO RS. 63,77,127/- 15 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. WERE RECEIVED AND SINCE AO WAS NOT IN A POSITION TO RECONCILE THE SAME, ADDITION WAS MADE. 14. IN THE APPELLATE PROCEEDINGS, ASSESSEE CONTESTE D THAT AO HAS MADE ADDITION BOTH DEBIT AND CREDIT BALANCES OF THE PARTIES AND THE AO HAS ISSUED CONFIRMATIONS FOR THE BALANCES AS ON 31/03/2009 WERE CALLED FOR IN STEAD OF 31/03/2008. CIT(A) HAS CALLE D FOR REMAND REPORT AND AO HAS SUBMITTED THE REMAND REPORT DATED 03/10/ 11 WHEREIN IT WAS STATED THAT ONLY IN RESPECT OF FEW CASES CONFIR MATIONS WERE RECEIVED WHICH WERE CONTRARY TO THE AMOUNTS ACTUALL Y SHOWN IN THE ASSESSEES BOOKS. HE SUBMITTED THAT ASSESSEE HAS FA ILED TO FURNISH CONFIRMATIONS AND NOT RECONCILED THE FIGURES. THUS, THE ADDITION MADE MAY BE SUSTAINED. 14.1 CIT(A) ON RECEIPT OF REMAND REPORT, DIRECTED T HE AO TO SUBMIT CONSOLIDATED REPORT ON SUNDRY CREDITORS. BASED ON T HE ABOVE DIRECTION, AO HAS FURNISHED CONSOLIDATED REPORT VI DE HER LETTER DATED 16/02/12 AND THE SAME WAS FORWARDED TO ADDITIONAL C IT, RANGE 1, HYDERABAD ON 22/02/12. IN THE SAME REPORT, IT WAS M ENTIONED THAT ASSESSEE HAS OFFERED FOR AN ADDITION OF RS. 20% OF OUTSTANDING CREDITORS IN CASES WHERE THE ADDRESSES, ACCOUNT COP IES AND CONFIRMATIONS WERE NOT AVAILABLE SINCE SOME OF THE CREDITORS ARE LOCATED IN REMOTE AREAS, DATA GOT CORRUPTED AND ALS O CLOSURE OF BUSINESS OF CERTAIN CREDITORS. HOWEVER, ADDL. CIT H AS NOT ACCEPTED THE VOLUNTARY DISCLOSURE OF THE ASSESSEE AND FORWAR DED ANNEXURES III, IV, V & VI TOTALLING TO RS. 25,24,82,662/-. 14.2 THE ABOVE REMAND REPORT WAS FORWARDED TO THE A SSESSEE FOR ITS COMMENTS. THE ASSESSEE HAS SUBMITTED THAT WITH REGA RD TO SUNDRY CREDITORS OUT OF TOTAL OF RS. 27.74 CRORES, 14.83 C RORES WERE MOBILISATION ADVANCES RECEIVED FROM VARIOUS GOVT. A GENCIES. OUT OF 16 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. THE BALANCE CREDITORS OF RS. 12.91 CRORES, ACCORDIN G TO THE ANNEXURE IV OF THE REMAND REPORT, CONFIRMATIONS RECEIVED F ROM SEVEN PARTIES. IT WAS FURTHER SUBMITTED EVEN IN RESPECT OF THE ABO VE 7 PARTIES, THE AMOUNTS ARE SUBJECTED TO RECONCILIATION AND IN AY 2 009-10 CLOSING BALANCES WERE ACCEPTED DURING SCRUTINY PROCEEDINGS AND HENCE, RECONCILED IN THE SUBSEQUENT AY. IT WAS FURTHER SUB MITTED THAT KEEPING IN VIEW OF SUCH DISCREPANCIES, ASSESSEE HAS OFFERED VOLUNTARILY 20% DISALLOWANCE OF OUTSTANDING CREDITO RS IN CASES WHERE ADDRESSES, CONFIRMATIONS ETC. ARE NOT AVAILABLE. AC CORDINGLY, SUCH DISALLOWANCE WORKED OUT TO RS. 1.16 CRORES, BUT, TH E AO REJECTING THE SAID OFFER PROPOSED FOR A DISALLOWANCE OF RS. 21.25 CRORES, WHICH WAS NOT BASED ON FACTS. 14.3 AFTER CONSIDERING THE REMAND REPORT AND SUBMIS SIONS OF THE ASSESSEE, THE CIT(A) HAS ANALYSED THE CREDITORS ANN EXURE WISE AND CONSIDERED THE ADDITION BASED ON ANNEXURES SUBMITTE D BY THE AO AS UNDER: APPELLANT'S COMMENTS ON ANNEXURE-III THE APPELLANT VIDE LETTER DATED 19.03.2012 FILED BE FORE THE APPELLATE AUTHORITY HAS MENTIONED THAT IN THE ABOVE ANNEXURE, OUT OF NINE PARTIES, FIVE PARTIES HAVE CONFIRMED TH E BALANCES WHICH ARE HIGHER THAN THE CLOSING BALANCES IN OUR B OOKS. IN RESPECT OF REMAINING FOUR PARTIES, THEY ARE SUBJECT TO RECONCILIATION, WHICH IS AN ONGOING PROCESS. HE FURTHER STATED THAT IN RESPECT OF SOME CREDITORS , THE AMOUNTS ARE RECONCILED IN THE AY 2009-10 AND CLOSING BALANC ES WERE ACCEPTED DURING SCRUTINY PROCEEDINGS AND HENCE RECO NCILED AND TALLIED IN THE SUBSEQUENT YEAR. THE APPELLANT FURTH ER SUBMITTED THAT THE OUTSTANDING CREDITORS FOR THE AY 2008-09, WERE ALSO ADDED AGAIN AS OUTSTANDING CREDITORS IN THE ASSESSM ENT YEAR 2009-10. AS SUCH, THE ASSESSMENT ORDER PASSED FOR T HE AY 2009- 10 DATED 30.12.2011, WHEREIN THE TOTAL SUNDRY CREDI TORS ADDED OF RS.2,43,36,140/- IS ALSO NOTED: THE LEDGER ACCOUNTS OF CREDITORS FOR THE FINANCIAL YEAR 2008-09 (AY 2009-10) WERE AL SO PRODUCED BEFORE ME FOR VERIFICATION OF OPENING AND CLOSING B ALANCES. IN RESPECT OF SOME CASES, THE APPELLANT HAS FURNISHED CONFORMATIONS 17 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. FROM THE PARTIES. ACCORDINGLY, THE FINAL FINDINGS F OR THE ANNEXURE - III ARE AS UNDER. SL. NO NAME OF THE PARTY (M/S) CLOSING BALANCE AS PER BOOKS (RS.) CONFIRMATION S FROM PARTIES (RS.) DIFFERENCE (+/- (RS.) FINAL FINDINGS 1 ASHOKA BUILDERS 2,75,00,000 2,79,96,825 (+)4,96,925 AS THE CREDITOR HAS CONFIRMED EXCESS MOUNT OF RS.4,96,925/THE SAME IS ADDED IN THE HANDS OF THE APPELLANT. 2 CYNERGY ENGINEERS & CONSTRUCTION S 2,35,000 4,56,152 (+)2,21,152 SINCE THIS IS A DEBIT BALANCE, ITCANNOT BE TREATED AS CREDITOR, HENCE DELETED. 3 MITHRA EARTH MOVERS 15,807 15,807 --- CONFIRMATION IS FURNISHED DURING APPELLATE PROCEEDINGS. HENCE THIS AMOUNT IS DELETED. 4 RR & CO 1,41,194 34,499 (-)1,06,695 IN THE BOOKS OF THE APPELLANT AS ON 01.04.2008, THERE IS A CREDIT BALANCE OF RS.1,41,194/-. HOWEVER, DURING THE AY 200809, THE SHORTFALL OF RS.1,06,695/- IS RECONCILED IN THE AY 09-10,HENCE, NO ADDITION IS MADE. 5 SEC-BAD ENGG. CORPN. 14,479 36,090 (+)21,611 IN THE BOOKS OF THE CREDITOR, THE BROUGHT FORWARD BALANCE AS ON 01.04.08 REPRESENTS RS.36,090/-. THE AMOUNT OF RS.21,611/- GOT RECONCILED DURING THE AY 08-09. HENCE, NO ADDITION IS MADE. 6 SHIV STEEL AGENCY 41,02,925 46,24,345 (+)5,21,420 THE OPENING BALANCE OF RS.41 ,02,925/- AS ON 01.04.08 IS 18 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. RECONCILED AND A CLOSING BALANCE OF RS.21,00,000 IS SHOWN IN AY 08- 09. AS SUCH THE AMOUNT OF RS.5,2L,420/- GOT RECONCILED IN AY 08-09. HENCE, AMOUNT OF RS.5,2L,420/- IS DELETED. 7 USHA ENGINEERS 38,198 1,61,855 (+)1,23,657 THE OPENING CREDIT BALANCE OF RS.38,198/- IN THE BOOKS OF THE APPELLANT GOT RECONCILED AND CLOSING BALANCE OF RS.66,505/- IS SHOWN FOR AY 08- 09. HENCE THE AMOUNT OF RS.1,23,657 IS DELETED. 8 SRI SRI PARAMESWAR A SERVICE STATION 3,17,31,485 34,13,426 (-) 2,83,18,059 THE APPELLANT HAS TAKEN LC FROM ANDHRA BANK, SOMAJIGUDA BRANCH, HYDERABAD AND MADE PAYMENTS TO THE CREDITOR FROM 18.02.08 TO 26.03.08 AMOUNTING TO RS.2,82,99,869/-. HENCE THE BALANCE AMOUNT OF RS.18,190/- (2,83,18,059- 2,82,99,869) IS ADDED AS UNEXPLAINED SUNDRY CREDITOR NOW. 9 VERTEX ENGINEERS 77,63,830 49,02,446 (-) 28,61,384 SINCE, NO CONFIRMATION IS PROVIDED FOR THE BALANCE AMOUNT OF RS.28,61,384/- , THIS ADDITION IS SUSTAINED. TO SUM UP, OUT OF THE TOTAL SUNDRY CREDITORS OF RS. 3,19,68,633/- AS PER ANNEXURE III, SUNDRY CREDITORS AMOUNTING TO RS.33,76,499/- IS ADDED U/S 68 OF THE ACT, SINCE 19 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. CONFIRMATIONS/RECONCILIATION COULD NOT BE DONE BY T HE APPELLANT EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS. 10.8 DETAILS OF SUNDRY CREDITORS NOT RECEIVED - RS. 1.06,47,003/-. AS PER COL. NO.(3) OF THE FINAL/CONSOLIDATED REMAND REPORT FORWARDED BY THE ADDI.CIT, R-1, HYDERABAD, THE DETA ILS OF SUNDRY CREDITORS WHERE CONFIRMATIONS NOT RECEIVED A RE QUANTIFIED AT RS.1,06,47,003/-. THIS WAS FORWARDED TO THE APPE LLANT FOR SUBMITTING HIS COMMENTS/OBJECTIONS. THE APPELLANT V IDE LETTER DATED 19.03.2012 HAS STATED THAT SINCE PARTY WISE B REAKUP FOR THE ABOVE QUANTIFICATION WAS NOT FURNISHED, THEY CO NTINUE TO RELY ON THE WRITTEN SUBMISSIONS FILED TO THE DEPARTMENT ON SUNDRY CREDITORS. I HAVE GONE THROUGH THE ABOVE QUANTIFICATION OF SUN DRY CREDITORS AMOUNTING TO RS.1,06,47,003/-. OTHER THAN SIMPLY ME NTIONING THAT DETAILS OF CONFIRMATIONS NOT RECEIVED, THE AO HAS NOT FURNISHED ANY DETAILS SUCH AS NAMES/AMOUNTS/ ETC. F OR ALL OTHER VARIATIONS SHE HAS FURNISHED THE LIST IN ANNEXURES, BUT FOR ARRIVING AT THIS AMOUNT, NO CLEAR QUANTIFICATION IS GIVEN. IN THE ABSENCE OF SUCH DETAILS, IT IS NOT POSSIBLE FOR THE UNDERSIGNED TO GIVE A CLEAR DIRECTION. AS SUCH, I TAKE PAIN IN REF ERRING THE MATTER BACK TO THE DESK OF THE AD TO QUANTIFY THE NAMES OF THE CREDITORS WHO FIT INTO THE ABOVE ADDITION OF RS.1,06,47,003/- , WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE APPELLANT. WHILE DOING SO, NECESSARY PRECAUTION IN IDENTIFYING THE EXACT CREDI TOR MAY BE TAKEN, IN ORDER TO AVOID DUPLICATION. 10.9 ANNEXURE - IV - ADDITION MADE UNDER THIS HEAD IS RS.3,08,62,764/- APPELLANT'S COMMENTS ON ANNEXURE-IV THE APPELLANT VIDE LETTER DATED 19.03.2012 FILED BE FORE THE UNDERSIGNED WITH REGARD TO ABOVE PROPOSAL FOR ADDIT ION OF RS.2,67,56,423/- HAS SUBMITTED THAT BY OVERSIGHT TH E AMOUNTS OF AY 2009-10 WERE FURNISHED BEFORE THE IT(A), WHICH A RE NOT COMPARABLE WITH THE BALANCE SHEET FIGURES OF AY 200 8-09. THEREFORE, TO THIS LIMITED EXTENT THEIR EARLIER WRI TTEN SUBMISSIONS MAY KINDLY BE IGNORED TO THE EXTENT OF AMOUNTS ONLY AND THESE AMOUNTS ARE ACTUALLY NOT TO BE CONSIDERED AS SUNDRY CREDITORS AND NO ADDITIONS CAN BE DONE ON THIS COUNT, SINCE T HE ENTIRE SUNDRY CREDITORS FOR THE YEAR HAVE ALREADY BEEN CON SIDERED. ACCORDINGLY, THE FINAL FINDINGS FOR ANNEXURE-IV ARE AS UNDER. SL. NO NAME OF THE PARTY (M/S) CLOSING BALANCE AS PER BOOKS DIFFERENCE REMARKS 20 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. BEFORE CIT(A) 1 AISHU CASTINGS 3,68,344 ------ 3,68,344 THIS ENTRY APPEARS IN ANNEXURE-V, IT SHOULD BE DELETED FROM ANNEXURE-V. SECONDLY, AS THERE IS NO CONFIRMATION OF CREDITOR, THE ADDITION OF RS.3,68,344/- IS SUSTAINED. 2 AMBICA STEELS LTD 72,72,459 31,69,632 41,02,827 THE OPENING BALANCE OF RS.72,72,459 AS ON 01.04.08 IS RECONCILED DURING THE AY 0910 VIDE ENTRY DATED 23.06.2008 IN THE LEDGER ALE OF ARNBICA STEELS WHICH SHOWS THAT THE AMOUNT OF RS.41,02,8271- WAS PAID TO THE CREDITOR THROUGH LC TAKEN ON ANDHRA BANK, SOMAJIGUDA. HENCE, THE ADDITION OF RS.41,02,827 IS DIRECTED TO BE DELETED. 3 SALVO EXPLOSIVES 40,84,625 ------ 40,84,625 THE APPELLANT HAS FURNISHED CONFIRMATION FROM THE ABOVE CREDITOR FOR RS.38,94,493/-. FOR THE BALANCE AMOUNT OF RS.L,90,132/- IT GOT RECONCILED IN THE AY 2009- 10. AS SUCH, THIS - ADDITION IS DELETED. HOWEVER, THE SAME ENTRY APPEARS IN ANNEXURE- V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 4 SHIV STEEL AGENCY 41,02,925 ------- 41,02,925 THE OPENING BALANCE OF RS.4L,02,295/- AS 21 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. ON 01.04.08 PERTAINING TO ABOVE CREDITOR GOT RECONCILED IN THE CLOSING BALANCE OF RS.21,00,00,000FO R THE AY 2009-10. HENCE, NO ADDITION IS MADE TO AVOID DOUBLE TAXATION OF THE CREDITOR. 5 SHREYA ENTERPRISES 15,19,900 ------ 15,19,900 THE OPENING BALANCE OF RS.15,19,900/- AS ON 01.04.08 PERTAINING TO ABOVE CREDITOR IS RECONCILED AS THE CLOSING BALANCE OF RS.2,74,900/- IS ADDED AS UNCONFIRMED SUNDRY CREDITOR FOR THE AY 2009- 10. HENCE, THE ADDITION MADE IN THIS YEAR IS DELETED TO AVOID DOUBLE TAXATION. 6 SREE SPARES 60,000 ------ 60,000 AS ON 01.04.08 THE OPENING, BALANCE OF RS.60,000/- IS NOTICED IN THE LEDGER ACCOUNT OF THE CREDITOR. HOWEVER, IN THE AY 2009-10, AN AMOUNT OF RS.55,100/- WAS ADDED IN THE ASSESSMENT ORDER FOR THE AY 09-10. AS SUCH, THE BALANCE AMOUNT OF RS.4,900/- (60,000-55,100) IS ADDED IN THIS AY 2008-09. FURTHER, AS THE AMOUNT OF RS.60,000/- APPEARS IN ANNEXURE V, IT HAS TO BE DELETED FROM ANNEXURE- V ALSO. 22 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 7 SRI SAI ENTERPRISES 91,29,721 ------ 91,29,721 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF RS.9L,29,721/- IS ADDED. HOWEVER, THE SAME ENTRY APPEARS IN ANNEXURE- V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 8 MOTOR & GENERAL TRADERS 1,08,720 ----- 1,08,720 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF RS.1,08,720/- IS ADDED. HOWEVER, THE SAME ENTRY APPEARS IN ANNEXURE- V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 9 MD.KHADIR TYRE WORKS 1,03,484 1,00,000 3,484 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF RS.3,484/- IS ADDED NOW. 10 MD. MUNEER OLD TYRES 1,15,000 ---- 1,15,000 THIS OPENING BALANCE OF RS.1,15,000/- AS ON 01.04.08 IS NOTICED. HOWEVER IN THE AY 2009- 10, RS.2,82,700/- IS ADDED AS UNCONFIRMED CREDITOR. AS THE SAID AMOUNT GOT RECONCILED AND WAS ADDED IN THE AY 2009-10, THE AMOUNT OF RS.1,15,000/- IS DELETED. HOWEVER, AS THE SAME ENTRY IS APPEARING IN ANNEXURE-V, TO AVOID DOUBLE TAXATION OF CREDITOR, IT IS DELETED FROM ANNEXURE-V. 11 SAI DURGA ENGG. WORKS 1,09,051 ----- 1,09,051 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF 23 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. RS.1,09,051/- IS ADDED. HOWEVER, THE SAME ENTRY APPEARS IN ANNEXURE- V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 12 SRI SAI ENTERPRISES 35,72,021 ----- 35,72,021 THE OPENING BALANCE OF RS.3512021 AS ON 01.04.08 IS RECONCILED AND A CLOSING BALANCE OF RS.35,02,621 IS ADDED AS UNCONFIRMED CREDITOR FOR THE AY 09.10. HENCE, THE BALANCE AMOUNT OF 69,400 (35,12,021 35,02,621) IS ADDED NOW. HOWEVER, AS THE SAME ENTRY APPEARS IN ANNEXURE- V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 13 SRI SRINIVASA ENGG. WORKS 61,815 ------ 61,815 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF RS.61,815/- IS ADDED. HOWEVER, THE SAME ENTRY APPEARS IN ANNEXURE- V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 14 M SUDARSHAN 1,01, 115 ----- 1,01,115 AS ON 01.04.08 THE OPENING BALANCE OF RS.L,01,115/- IS NOTICED IN THE LEDGER ACCOUNT OF THE CREDITOR. HOWEVER, IN THE AY 2009-10, AN AMOUNT OF RS.11,551/- WAS ADDED IN THE AY 09-10. AS SUCH, THE BALANCE AMOUNT OF RS.95,624/- 24 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. (107175 11,551) IS ADDED IN THIS AY 2008- 09. FURTHER, AS THE AMOUNT OF RS.1,01,115/- APPEARS IN ANNEXURE V, IT HAS TO BE DELETED FROM ANNEXURE- V ALSO. 15 SRINIVASA REDDY 58,900 ------ 58,900 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF RS.58,900/- IS ADDED. HOWEVER, THE SAME ENTRY APPEARS IN ANNEXURE-V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 16 ANDHRA ENGG. WORKS 1,19,600 ------ 1,19,600 AS ON 01.04.08 THE OPENING BALANCE OF RS.L,19,6001- IS NOTICED IN THE LEDGER ACCOUNT OF THE CREDITOR. HOWEVER, IN THE AY 2009-10, AN AMOUNT OF RS.91,500/- WAS ADDED IN THE AY 09-10. AS SUCH, THE BALANCE AMOUNT OF RS.28,100 (RS.1,19,600 91,500) IS ADDED IN THIS AY 2008- 09. FURTHER, AS THE AMOUNT OF RS.1,19,6001- APPEARS IN ANNEXURE V, IT HAS TO BE DELETED FROM ANNEXURE- V ALSO. 17 MOTOR & GENERAL TRADERS 28,33,639 ------ 28,33,639 SINCE, NO CONFIRMATION IS PROVIDED, THE AMOUNT OF RS.28,33,639/- IS ADDED. HOWEVER, THE SAME ENTRY APPEARS IN 25 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. ANNEXURE-V ALSO. HENCE, IT SHOULD BE DELETED FROM ANNEXURE-V. 18 STANDARD TYRE RETREADERS 2,80,000 ------ 2,80,000 AS ON 01.04.08 THE OPENING BALANCE OF RS.2,80,0001- IS NOTICED IN THE LEDGER ACCOUNT OF THE CREDITOR. HOWEVER, IN THE AY 2009-10, AN AMOUNT OF RS.3,00,000/- WAS ADDED IN THE AY 09-10. AS THE ABOVE AMOUNT OF RS.2,80,000/- GOT RECONCILED AND A FINAL UNCONFIRMED SUNDRY CREDITOR IS ADDED IN AY 2009-10. NO ADDITION IS MADE SINCE THE SAME GOT RECONCILED IN AY 09-10. FURTHER, AS THE AMOUNT OF RS.2,80,000/- APPEARS IN ANNEXURE V, IT HAS TO BE DELETED FROM ANNEXURE- V ALSO. 19 M VENKATARAYU LU CHETTY 80,850 ------ 80,850 THE OUTSTANDING BALANCE OF RS.80,8501- IS NOT APPEARING & IN THE LEDGER ACCOUNT OF THE SONS CREDITOR FOR THE PERIOD 01.04.08 TO 31.03.09. HENCE, THE ADDITION OF RS.80,850/- IS SUSTAINED. 20 VIJAY INDUSTRIES 44,077 ------ 44,077 AS ON 01.04.08 THE OPENING BALANCE OF RS.44,077/- IS NOTICED IN THE LEDGER ACCOUNT OF THE CREDITOR. HOWEVER, IN THE AY 2009-10, AN AMOUNT OF S.1,36,669/- WAS ADDED AS 26 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. UNCONFIRMED CREDITOR IN THE AY 09-10. AS THE ABOVE AMOUNT OF RS.44,071/- GOT RECONCILED AND A FINAL NCONFIRMED SUNDRY CREDITOR IS ADDED IN AY 09- 10, THE ADDITION OF RS.44,077/- IS DELETED NOW. FURTHER, AS THE AMOUNT OF RS.44,071/- APPEARS IN ANNEXURE V, IT HAS TO BE DELETED FROM ANNEXURE-V ALSO. TO SUM UP, OUT OF THE TOTAL SUNDRY CREDITORS OF RS. 3,08,62,764/- AS PER ANNEXURE IV, AN AMOUNT OF RS. 1,28,12,858/- IS ADDED U/S 68 OF THE ACT, SINCE CONFIRMATIONS/RECONCILIATION C OULD NOT BE DONE BY THE APPELLANT IN SPITE OF SUFFICIENT OPPORT UNITY AND TIME AVAILED BY THE APPELLANT. 10.10 ANNEXURE-V - ADDITION MADE UNDER THIS HEAD IS RS.2,67,56,423/- APPELLANT'S COMMENTS ON ANNEXURE-V THE APPELLANT VIDE LETTER DATED 19.03.2012 FILED BE FORE THE UNDERSIGNED WITH REGARD TO ABOVE PROPOSAL FOR ADDIT ION OF RS.2,67,56,423/- HAS SUBMITTED THAT BY OVERSIGHT TH E AMOUNTS OF AY 2009-10 WERE FURNISHED BEFORE THE CIT(A), WHICH ARE NOT COMPARABLE WITH THE BALANCE SHEET FIGURES OF AY 200 8-09. THEREFORE, TO THIS LIMITED EXTENT THEIR EARLIER WRI TTEN SUBMISSIONS MAY KINDLY BE IGNORED TO THE EXTENT OF AMOUNTS ONLY AND THESE AMOUNTS ARE ACTUALLY NOT TO BE CONSIDERED AS SUNDRY CREDITORS AND NO ADDITIONS CAN BE DONE ON THIS COUNT, SINCE T HE ENTIRE SUNDRY CREDITORS FOR THE YEAR HAVE ALREADY BEEN CON SIDERED. ON VERIFICATION OF ANNEXURE-V WITH THAT OF ANNEXURE -IV, I OBSERVE :TAT AO HAS WRONGLY INCLUDED THE SAME PARTI ES IN ANNEXURE-V, WHICH IS NOTHING BUT DUPLICATION OF ADD ITION OF THE SAME CREDITORS. AS I HAD GIVEN A DIRECTION FOR ANNE XURE - IV, VIDE COLUMN NO.(6), THE ENTIRE ADDITION OF RS.2,67,56,42 3/- IN ANNEXURE-V, GETS DELETED AUTOMATICALLY. 27 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 10.11 ANNEXURE-VI - ADDITION MADE UNDER THIS HEAD I S RS.15,22.47,839/- APPELLANT'S COMMENTS ON ANNEXURE-VI THE AO VIDE ANNEXURE-VI OF REMAND REPORT DATED 22.0 2.12 HAS QUANTIFIED THE ADDITION AT RS.15,22,47,839/-. THE S AID QUANTIFICATION WAS FORWARDED TO THE APPELLANT FOR H IS SUBMISSIONS/OBJECTIONS, IF ANY. IN RESPONSE TO THE SAME, THE APPELLANT VIDE LETTER DATED 19.03.2012 ARGUED THAT THIS ANNEXURE CONTAINS ONLY THE LIST OF DEBIT BALANCES IN THE BOO KS OF THE ASSESSEE, AS CONFIRMED BY THE AO IN HER REMAND REPO RT. THEREFORE, DEBIT BALANCES BEING THE NATURE OF ASSET CANNOT BE ADDED TO THE INCOME, SINCE IT IS THE AMOUNT RECEIVA BLE BY THE ASSESSEE AND NOT A LIABILITY. FURTHER, HE STATED TH AT THE ISSUE OF SUNDRY CREDITORS BEING A CONTINUOUS PROCESS, THE CO URTS HAVE HELD THAT WHERE THERE ARE DIFFERENCES IN BALANCES O F CREDITS ACCORDING TO BOOKS OF ACCOUNTS OF ASSESSEE AND CRED ITOR'S BOOKS AND WHICH ARE SUBJECT TO RECONCILIATION, THEY CANNO T BE ADDED U/S 68 OF THE ACT. WHILE FURNISHING SOME CONFIRMATIONS FROM THE PARTIE S, THE APPELLANT STATED THAT THE AMOUNT OF SUNDRY CREDITOR S AS PER AUDITED BALANCE SHEET IS RS. 27.74 CRORES, OUT OF W HICH RS. 14.83 CRORES REPRESENTS MOBILISATION OF ADVANCE RECEIVED FROM VARIOUS GOVT. AGENCIES AS SUCH THE NET UN-RECONCILED SUNDRY CREDITORS BALANCE IS ONLY 5.78 CRORES. THE FINAL FINDINGS/OBS ERVATIONS ON ANNEXURE VI ARE AS UNDER: SL. NO. NAME OF THE PARTY DEBIT BALANCES HAVING NO CONFIRMATIONS REMARKS 1 BHEL ADVANCE ALC 13,23,43,385 CONFIRMATION FURNISHED FROM BHEL AS ADVANCE PAID TO THE APPELLANT OF RS.13,66 CRORES. HENCE, DELETED. 2 MITHRA EARTH MOVERS 2 , 15,807 CONFIRMATION FURNISHED FROM THE CREDITOR DURING APPELLATE PROCEEDINGS, HENCE DELETED. 3 SAGAR CEMENTS 40,18,151 CONFIRMATION FURNISHED FROM THE CREDITOR DURING APPELLATE PROCEEDINGS, HENCE DELETED. 4 VIBROMAX 1,896 SINCE, THIS IS A DEBIT 28 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. ENGINEERING CORPORATION BALANCE, THE ADDITION IS DELETED. 5 VIJAYA ELECTRICALS LTD 13,91,466 SINCE, THIS IS A DEBIT BALANCE, THE ADDITION IS DELETED. 6 WMI CRANES 38,31,000 CONFIRMATION FURNISHED FROM THE CREDITOR DURING APPELLATE PROCEEDINGS, HENCE DELETED. 7 VERTEX PROJECTS 1,54,534 AS VERTEX PROJECTS IS A SUBCONTRACTOR, AN ADVANCE OF RS.1,54,534/- IS GIVEN TO HIM. THE SAME ENTRY IS REFLECTED IN SL.NO.(9) OF ANNEXURE-II ENCLOSED TO THE FINAL REMAND REPORT. SINCE, THIS AMOUNT SHOWS DEBIT BALANCE, THE SAME IS DELETED. 8 P SUBBA RAO 6,14,753 AS P. SUBBA RAO IS A SUBCONTRACTOR, AN ADVANCE OF RS.6,14,753/- IS GIVEN TO HIM. THE SAME ENTRY IS SHOWN IN SL.NO.(6) OF ANNEXURE-II ENCLOSED TO FINAL REMAND REPORT. SINCE, THIS AMOUNT SHOWS DEBIT BALANCE. THE SAME IS DELETED. 9 SS CONSTRUCTIONS 3,09,090 AS SS CONSTRUCTIONS IS A SUBCONTRACTOR, AN ADVANCE OF RS.3,09,090/- IS GIVEN TO HIM. THE SAME ENTRY IS SHOWN IN SL.NO.(5) OF ANNEXURE-II ENCLOSED TO FINAL REMAND REPORT. SINCE, THIS AMOUNT SHOWS DEBIT BALANCE, THE SAME IS DELETED. 10 NSR CONSTRUCTIONS 94,37,232 AS NSR CONSTRUCTIONS IS A SUBCONTRACTOR, AN ADVANCE OF RS.94,37,232/- IS GIVEN TO HIM. THE SAME ENTRY IS SHOWN IN SL.NO.(18) OF ANNEXURE-II ENCLOSED TO FINAL REMAND REPORT. SINCE, THIS AMOUNT SHOWS DEBIT BALANCE, THE SAME IS DELETED. 29 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 11 K DINAKAR REDDY 1305 25 AS K.DINAKAR REDDY IS A SUBCONTRACTOR, AN ADVANCE OF RS.1,30,525/- IS GIVEN TO HIM. THE SAME ENTRY IS SHOWN IN SL.NO.(35) OF ANNEXURE-II ENCLOSED TO FINAL REMAND REPORT. SINCE, THIS AMOUNT SHOWS DEBIT BALANCE, THE SAME IS DELETED. ALL THE ENTRIES IN THE ANNEXURE-VI REPRESENT DEBIT BALANCES IN THE LOOKS OF THE APPELLANT (THIS FACT IS ALSO MENTIONED BY AD ITSELF). DEBIT BALANCES REPRESENT THE NATURE OF ASSET AND HE NCE CANNOT BE ADDED TO THE INCOME, AS IT REPRESENTS AMOUNT REC EIVABLE BY THE APPELLANT AND NOT A LIABILITY. HENCE, THE ADDIT ION MADE AS PER ANNEXURE-VI AMOUNTING TO RS.15,22,47,839 IS DELETED . 15. AGGRIEVED WITH THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 16. LD. DR SUBMITTED THAT CIT(A) HAS DELETED ANNEXU RE V WITHOUT GIVING PROPER EXPLANATION. HE FURTHER SUBMITTED THA T THE SAME WAS DELETED BY REFERRING THAT REPETITION ENTRIES WHEREA S THE PARTIES ARE NOT MATCHING. HE FURTHER SUBMITTED THAT CIT(A) SHOU LD HAVE BROUGHT TO TAX FOR THE CREDITORS OUTSTANDING AS ON 31/03/08 . HE CANNOT SHIFT THE POLE TO 31/03/2009. 17. LD. AR, ON THE OTHER HAND, SUBMITTED THAT CIT(A ) HAS VERIFIED CREDITORS EXHAUSTIVELY AND CAME TO CONCLUSION BY GI VING PROPER FINDINGS AND EXPLANATION. 18. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. WE OBSERVE THAT AO HAS MADE ADDITION U/S 68 OF RS. 27,10,43,771/-. IN THE REMAND REPORT AO HAS SUBMITT ED THE DETAILS FOR RS. 25,24,82,662/- WITH DETAILED ANNEXURES II I TO VI. CIT(A) AFTER ANALYSING THE CREDITORS IN DETAIL HAS CONFIRM ED THE DISALLOWANCE AS UNDER: 30 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 1. ANNEXURE III RS. 33,76,499/- 2. FOR VERIFICATION BY THE AO RS. 1,06,47,003/- 3. ANNEXURE IV RS. 1,28,12,858/- 4. ANNEXURE V RS. NIL (DUE TO REPETITION ENTRIES) 5. ANNEXURE VI RS. NIL (DUE TO DEBIT BALANCES & CONFIRMATIONS.) 18.1 EVEN THOUGH THE CIT(A) HAS DEALT WITH THE SUND RY CREDITORS EXHAUSTIVELY IN DEALING WITH ANNEXURE III, WHERE VER HE HAS FOUND THAT THE CONFIRMATIONS FROM PARTIES WHICH IS MORE T HAN CLOSING BALANCE AS PER BOOKS OF ASSESSEE, THE EXCESS AMOUNT S WERE ADDED AS UNDISCLOSED INCOME IN THE HANDS OF ASSESSEE. WE ARE NOT IN A POSITION TO APPRECIATE THE ABOVE FINDINGS OF CIT(A) , IN OUR OPINION, THE BALANCES AS PER CLOSING BALANCE IN THE BOOKS OF ASSESSEE HAS TO BE RECONCILED WITH CONFIRMATIONS AND, IF THERE IS ANY DIFFERENCE, IT MAY BE DUE TO VARIOUS FACTORS LIKE THE OTHER PARTY NEEDS HIS ACCOUNTS BE RECONCILED. MISTAKE OF OTHER PARTIES CANNOT BE A DDED IN THE HANDS OF ASSESSEE. SIMILARLY, THERE IS A SHORTAGE IN THE CONFIRMATION BALANCES WHICH WERE NOT CONSIDERED. CIT(A) HAS DELE TED ANNEXURE V OBSERVING THAT THERE IS A REPETITION OF CREDITORS . WE OBSERVE THAT ALL THE CREDITORS ARE NOT REPETITIVE. 18.2 WE FURTHER OBSERVE THAT CIT(A) AND AO HAS ALRE ADY CONFIRMED THAT SUNDRY CREDITORS OUTSTANDING BALANCES INCLUDE DEBIT BALANCES TO THE EXTENT OF RS. 15.22 CRORES. IN OUR OPINION, SUN DRY CREDITORS BALANCES INCLUDE THESE DEBIT BALANCES, WHICH MEANS THE SUNDRY CREDITORS SHOULD BE AS BELOW: AS PER THE BALANCE SHEET CREDITORS OUTSTANDING RS. 27.10 CRORES DEBIT BALANCES AS ABOVE RS. 15.22 CRORES TOTAL CREDITORS RS. 42.32 CRORES ========== 18.3 HENCE, THE ASSESSEE HAS TO SUBMIT THE DETAILS OF SUNDRY CREDITORS OF RS. 42.32 CRORES WITHOUT CONSIDERING T HE MOBILISATION 31 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. ADVANCES (WHICH SHOULD BE ADDITIONAL) AND THE PARTY -WISE RECONCILIATION HAS TO BE DONE AS ON 31/03/2008. WE ARE IN AGREEMENT WITH CIT(A) THAT DEBIT BALANCES HAS TO BE ACCEPTED, BUT, THE ASSESSEE HAS TO ACCOUNT FOR RS. 42.32 CRORES OF SUNDRY CREDI TORS AND NEEDS TO BE RECONCILED. IN OUR CONSIDERED VIEW, THE EXERCIS E DONE BY VARIOUS PARTIES INVOLVED ARE NOT PROPER AND A FRESH RECONCI LIATION AND CONFIRMATION NEEDS TO BE DONE. HENCE, WE REMIT THIS ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION TO RECONCILE THE WH OLE SUNDRY CREDITORS AS DISCUSSED ABOVE. ACCORDINGLY, THIS GROUND IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. 19. AS REGARDS GROUND NO. 6 RELATING TO DISALLOWANC E U/S 40(A)(IA) OF RS. 28,16,79,775, IT IS OBSERVED THAT IN THE ASS ESSMENT PROCEEDINGS, THE AO HAD ASKED THE ASSESSEE TO PRODU CE TDS DETAILS IN RESPECT OF FOLLOWING PAYMENTS: SUB-CONTRACT EXPENSES RS. 26,75,89,977 DEPARTMENT LABOUR RS. 1,38,39,778 AUDIT FEES RS. 50,000 ADVERTISEMENT RS. 2,00,000 TOTAL RS. 28,16,79,775 =========== IN THE ABSENCE OF TDS DETAILS, AO HAS DISALLOWED TH E ENTIRE AMOUNT U/S 40(A)(IA) OF THE ACT. 20. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS ALONG WITH THE PAPER BOOK CLAIM ING THAT THE ENTIRE AMOUNT OF SUB-CONTRACT RECEIPTS HAS ALREADY SUFFERED TDS, WHICH WAS NOT CONSIDERED BY THE AO. FURTHER, AO HAS DISALLOWED THE DEPARTMENT LABOUR OF RS. 1.38 CRORES FOR WHICH TDS PROVISIONS ARE NOT APPLICABLE AND THE PAYMENTS WERE MADE FOR MORE THAN 1000 MEMBERS WHO ARE INVOLVED IN THE PROJECTS. SIMILARLY, WITH T HE OTHER DISALLOWANCES OF RS. 2 LAKH TOWARDS ADVERTISEMENT W AS ALREADY DISALLOWED BY THE ASSESSEE AND WITH REGARD TO AUDIT FEES, IT WAS ONLY 32 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. A PROVISION AND TDS WILL BE DEDUCTED AS AND WHEN TH E PAYMENT IS MADE. THE ASSESSEE FURTHER CLAIMED THAT IN THE MONT H OF MARCH, GROSS RECEIPTS WERE RS. 26,75,89,977/- AND TOTAL TD S DEDUCTED WAS RS. 30,31,794/-. THIS AMOUNT OF RS. 30,31,794 WAS I NCLUDED IN THE CONSOLIDATED CHALLAN FOR RS. 88,47,037, WHICH WAS P AID THROUGH ANDHRA BANK, SOMAJIGUDA BRANCH, HYDERABAD ON 29/03/ 08. 20.1 THE CIT(A) FORWARDED THE PAPER BOOK OF ASSESSE E TO AO FOR REMAND REPORT. INITIALLY, AO REJECTED THE SUBMISSIO NS OF THE ASSESSEE. HOWEVER, WHILE SUBMITTING CONSOLIDATED REMAND REPOR T ON VARIOUS ISSUES, AO FINALLY QUANTIFIED THE AMOUNT AT RS. 10, 05,88,166/- SINCE THE ASSESSEE FAILED TO SUBMIT RECONCILIATION OF TDS PAID IN THE HANDS OF FIRM WITH THAT OF ASSESSEE COMPANY. WITH REGARD TO TDS MADE ON SUB-CONTRACTS, AO RECOMMENDED FOR DISALLOWANCE U/S 40(A)(IA) AS NOTED IN THE LEDGER ACCOUNT OF ADVANCES FOR SUPPLIE RS AND SUB- CONTRACTORS AND ENCLOSED ANNEXURE III TO REMAND R EPORT ( CONSISTING OF 45 PARTIES). THE ABOVE REMAND REPORT WAS FORWARD ED TO ASSESSEE FOR ITS COMMENTS. 20.2 ASSESSEE SUBMITTED THAT SINCE THE AMOUNTS ARE STANDING IN THE BALANCE SHEET AS ADVANCES AND ARE NOT DEBITED TO P& L A/C, NO EXPENDITURE HAS CLAIMED. THE ADVANCE PAYMENTS, EVEN THOUGH, SUBJECT TO TDS PROVISIONS, DO NOT FALL UNDER THE AM BIT OF SECTION 40(A)(IA) FOR THE PURPOSE OF DISALLOWANCE. AS THE C OMPANY WAS FORMED BY TAKING WORK OF PARTNERSHIP FIRM WITH EFFE CT FROM 01/03/08, TDS MADE BY FIRM ON TWO CONTRACT PAYMENTS ARE TO BE CONSIDERED ONLY FOR LIMITED PURPOSE OF TDS COMPLIANCE AND HENC E, ADDITION MADE U/S 40(A)(IA) AMOUNTING TO RS. 10,05,88,166/- IS NO T SUSTAINABLE. 20.3 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AS WELL AS THE REMAND REPORT OF AO, THE CIT(A) OBSERVED AS UNDER: 33 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 11.10 IN THE CASE OF THE APPELLANT, IT IS SEEN THAT NO EXPENDITURE IS CLAIMED AS THE AMOUNT IS LYING IN THE BALANCE SH EET AS ADVANCES AND IS NOT DEBITED TO P&L ALE, SO AS TO AT TRACT THE PROVISIONS OF SECTION 40(A)(IA). HENCE, THE CONTENT ION OF THE ASSESSING OFFICER THAT IT IS IN VIOLATION OF SECTIO N 40(A)(IA) IS NOT TENABLE AND IS NOT SUSTAINABLE FOR THE AY 2008-09. IN THE YEAR, IN WHICH SUCH AMOUNTS ARE ACTUALLY DEBITED TO PROFIT A ND LOSS ACCOUNT, THE DISALLOWANCE U/S 40(A)(IA) IS ATTRACTE D, PROVIDED, IF TAX HAS BEEN DEDUCTED DURING THE YEAR AND THE SAME IS NOT DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME. HOWEVER, FOR THIS AY 2008-09, I AM OF THE OPINION T HAT THE PROVISIONS OF SECTION 201(1) AND 201(1A) ARE ATTRAC TED ON THE AMOUNT OF RS.10,O5,88,166/-, AS THE ASSESSEE HAS NO T DEDUCTED TDS, THOUGH IT IS NOT DEBITED TO P&L A/C. PENALTY U /S 221, FOR VIOLATING TDS PROVISIONS MAY ALSO BE IMPOSED ON THE ASSESSEE. IN OTHER WORDS 40 A IA IS NOT ATTRACTED. BUT BASIC LEVY OF INTEREST U/S 201/201(LAL IS TO BE CHARGED AS PER LAW. 21. LD. DR SUBMITTED THAT AO HAS NOT VERIFIED WHETH ER THE ADVANCES WERE CHARGED TO P&L A/C. AS PER THE REMAND REPORT, AO HAS VERIFIED TDS DEDUCTION AND COMPLIANCE WITH THE FIRM I.E. DEEPIKA CONSTRUCTIONS. HE SUBMITTED THAT FROM THE RECORD, I T CLEARLY SHOWS THAT AO HAS NO OCCASION TO VERIFY THE PAYMENTS WHIC H ARE CHARGED TO P&L A/C AND SOME OF THE PAYMENTS KEPT AS ADVANCES. HE PRAYED THAT THE ISSUE MAY BE REMITTED TO AO FOR FURTHER VERIFIC ATION. WITH REGARD TO ADVERTISEMENT AND AUDIT FEES, LD. DR SUBMITTED T HAT THESE EXPENDITURES ARE ALREADY DEBITED TO P&L A/C AND ADD ITION ON THESE ACCOUNTS SHOULD BE SUSTAINED. 22. LD. AR SUBMITTED THAT PAYMENTS WERE KEPT IN THE BALANCE SHEET AS ADVANCES AND NOT CHARGED TO P&L A/C HE SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE TO THE CASE OF ASSESSEE. 23. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. WE HAVE NOTICED THAT ORIGINALLY AO HAS M ADE ADDITION OF RS. 28,16,79,775/-. IN THE REMAND REPORT, AO HAS QU ANTIFIED THE 34 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. DISALLOWANCE U/S 40(A)(IA) AT RS. 10,05,88,166/-. H E HAS VERIFIED THE TDS COMPLIANCES WITH THE DETAILS SUBMITTED BY THE A SSESSEE WHICH INCLUDES TDS COMPLIANCES BY THE ASSESSEE AS WELL AS THE FIRM I.E. DEEPIKA CONSTRUCTIONS. WE ARE NOT SURE THE EXTENT O F VERIFICATION DONE BY THE AO. WE FIND IN THE BALANCE SHEET THAT A DVANCES TO SUPPLIERS AND FOR EXPENSES THE OUTSTANDING AT THE B ALANCE SHEET DATE ARE RS. 28,46,83,075/-. AT THE SAME TIME, THE ASSE SSEE HAS CHARGED TO P&L A/C SUB-CONTRACT EXPENSES TO THE EXTENT OF R S. 26,75,89,977/-. IN FACT, ASSESSEE HAS CHARGED TO P&L A/C CERTAIN EX PENSES. FOR THE SAKE OF CLARITY AND JUSTICE, WE REMIT THIS ISSUE AL SO BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE COMPLIANCES O F TDS WITH REGARD TO THE EXPENDITURE CHARGED TO P&L A/C AND ADVANCES KEPT IN BALANCE SHEET. WE DIRECT THE AO TO BRING TO TAX U/S 40(A)( IA) ONLY TO THE EXTENT OF EXPENSES CHARGED TO P&L A/C, LIKE, ADVERT ISEMENT, SUB- CONTRACT EXPENSES AND AUDIT FEES. NEEDLESS TO MENTI ON THAT ASSESSEE MAY BE GIVEN PROPER OPPORTUNITY OF BEING HEARD IN T HE MATTER. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 24. AS REGARDS GROUND NO. 7 RELATING TO ADDITION ON ACCOUNT OF DISALLOWANCE U/S 68 OF RS. 27,42,19,940/-, IT IS OBSERVED THAT THE AO IN ASSESSMENT ORDER HAS NOTED THAT M/S DEEPIKA C ONSTRUCTIONS, THE FIRM THAT HAS BEEN TAKEN OVER BY THE ASSESSEE C OMPANY SHOWED THE CAPITAL AT RS.18,28,21,991/-. HOWEVER, IN THE B ALANCE SHEET THE CAPITAL WAS MENTIONED AT RS,45,70,41,931/-. SINCE, THERE IS INCREASE IN THE SHARE CAPITAL AND THE ASSESSEE HAS NOT ADDUC ED ANY EVIDENCE BEFORE THE AO, THE DIFFERENCE AMOUNT OF RS. 27,42,1 9,940 (457041931 - 182821991), IS ADDED AS UNEXPLAINED U/ S 68 OF THE ACT. 25. BEFORE THE CIT(A), THE ASSESSEE FILED PAPER BOO K WHEREIN IT WAS STATED THAT THE COMPANY HAS ALLOTTED SHARES TO THE EXTENT OF RS.23 CRORES BY WAY OF A JOURNAL ENTRY IN FAVOUR OF DEEPI KA AVENUES PRIVATE 35 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. LTD AND WAS ALSO SHOWN IN THE BALANCE SHEET AS SHAR E APPLICATION MONEY IN SCHEDULE-I TO BALANCE SHEET. IT WAS ALSO M ENTIONED THAT AN AMOUNT OF RS.99,00,000/- WAS ADDED DURING THE YEAR AS SHARE CAPITAL BY PROMOTERS. NECESSARY COPIES OF FORM NO.2 FOR THE ABOVE TRANSACTIONS WERE FILED. IT WAS ALSO INFORMED THAT THE PROMOTERS ARE OPERATING MORTGAGE LOAN ACCOUNTS FROM UCO BANK AMOU NTING TO RS.2,67,12,040/-, WHICH WAS SHOWN UNDER SHARE APPLI CATION MONEY AND HENCE NO UNEXPLAINED INVESTMENT WAS MADE IN THE FORM OF SHARE CAPITAL/SHARE APPLICATION MONEY. 25.1 WHEN THE PAPER BOOK SUBMITTED BY THE ASSESSEE FORWARDED TO AO BY THE CIT(A) FOR HIS COMMENTS, WHILE GIVING THE OBSERVATIONS IN THE REMAND REPORT BY THE AO DATED 03.10.2011, REGAR DING THE ADDITIONS ON DIFFERENCE OF RS.27,42,19,940/-, AO OB SERVED THAT IT WAS STATED BY THE ASSESSEE THAT RS.23 CRORES WAS ON ACC OUNT OF ADVANCE ON LAND FROM M/S DEEPTI AVENUES PVT LTD AND THE BAL ANCE INVESTMENT WAS DONE BY SRI K. UPENDER REDDY, MD AND HIS FAMILY MEMBERS. THE ASSESSEE HAS INFORMED THAT THERE WAS NO ADVANCE OF LAND AND THE LAND WAS TRANSFERRED BY THE SAID COMPANY IN LIEU OF ALLOTMENT OF 46 LAKHS SHARES AT PREMIUM WHICH WAS EVIDENCED IN FORM 2 FILED BEFORE THE REGISTRAR OF COMPANIES. HOWEVER, THE DETAILS OF SOURCES OF SHARE CAPITAL ARE AS UNDER: A. LAND TRANSFER IN LIEU OF ALLOTMENT OF 46 LAKH SHARES RS. 23,00,00,000 B. PROMOTERS MORTGAGE LOAN FROM UCO BANK 2,67,12,040 C. SHARE CAPITAL INTRODUCED BY PROMOTERS AS PER FORM NO. 2 99,00,000 D. CAPITAL ACCOUNT OF FIRM TAKEN OVER BY APPELLANT 18,28,21,991 TOTAL 44,9 4, 34,031 THE AO NOTED THAT AS PER BALANCE SHEET, THE SHARE C APITAL WAS SHOWN AS RS. 45,70,41,931/-, THEREBY LEAVING A BALANCE SO URCE TO BE EXPLAINED FOR THE AMOUNT WHICH COMES TO RS. 76,07,9 00 (RS. 36 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 45,70,41,931 44,94,34,031) AND SINCE NO EXPLANATI ON WAS OFFERED, THE CIT(A) WAS REQUESTED TO ADD RS. 76,07,900/-. 25.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AND REMAND REPORT OF THE AO, THE CIT(A) OBSERVED THAT THE DIFF ERENCE OF RS. 76,07,900/- WAS ARRIVED BY THE AO AS SHE HAS ADOPTE D DIRECTORS FAMILY MEMBERS MORTGAGE LOAN FROM UCO BANK AS RS. 2 ,67,12,040 WHEREAS AS PER THE LEDGER PRODUCED BY THE ASSESSEE, IT IS SHOWN AS RS. 3,42,19,940 (18720000 + 15499940). FURTHER, THE AO HAS ALSO NOT TAKEN INTO ACCOUNT THE OPENING BALANCE OF SHARE CAPITAL OF RS. 1,00,000/-. SINCE THE DIFFERENCE AMOUNT OF RS. 76,0 7,900/- IS SATISFACTORILY EXPLAINED BY THE ASSESSEE ON PRODUCT ION OF LEDGER ACCOUNTS OF SHARE CAPITAL AND SHARE APPLICATION MON EY, THE CIT(A) DIRECTED THE AO TO DELETE THE ADDITION OF RS. 76,07 ,900/- AS SUGGESTED BY THE AO IN THE REMAND REPORT. 26. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. AS THERE IS INCREASE IN THE SHARE CAPITA L AND THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE, THE AO MADE THE DIFFE RENCE AMOUNT OF RS. 27,42,19,940/- AS UNEXPLAINED U/S 68 OF THE ACT . WHEN THE CIT(A) ASKED THE REMAND REPORT, THE AO REQUESTED TH E CIT(A) TO ADD RS. 76,07,900/- AS UNEXPLAINED AS AGAINST RS. 27,42 ,19,940/-. THE CIT(A) WHILE DIRECTING THE AO TO DELETE THE SAID AD DITION GAVE A CATEGORICAL FINDING THAT THE ASSESSEE HAS SATISFACT ORILY EXPLAINED THE SAID AMOUNT ON PRODUCTION OF LEDGER ACCOUNTS OF SHA RE CAPITAL AND SHARE APPLICATION MONEY. THEREFORE, WE FIND NO INFI RMITY IN THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO DELETE THE ADD ITION MADE ON ACCOUNT OF SHARE CAPITAL AND ACCORDINGLY, UPHOLDING THE DECISION OF CIT(A), WE DISMISS THIS GROUND OF REVENUE. 37 ITA NO. 749/H/13 M/S DEEPIKA INFRATECH PVT. LTD., HYD. 27. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 28 TH APRIL, 2017. KV COPY TO:- 1) ACIT, CIRCLE 17(1), 9 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYD. . 2) M/S DEEPIKA INFRATECH PVT. LTD., 8-2-686/C/D/5, ROAD NO. 12, BANJARA HILLS, HYDERABAD. 3) CIT(A) - V, HYD. 4 CIT - 1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE