Shameer Ahmed, Tumkur V. DCIT, Tumkur

ITA 838/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63789 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: RAMASUBRAMANYAM
• Keywords: Business income; Business expenditure

Judgement Text

PAGE 1 OF 12 ITA NO. 838/BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.838/BANG/2011 (ASST. YEAR 2008-09) SHRI SHAMEER AHMED, PROP: K S BREWELL, KODIGEHALLI, MADHURIGI TALUK, TUMKUR. PA NO.AIKPA 4162 F VS THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, TUMKUR. (APPELLANT) (RESPONDENT) DATE OF HEARING : 05.11.2012 DATE OF PRONOUNCEMENT : 09.11.2012 APPELLANT BY : SHRI RAMASUBRAMANYAM, C.A. RESPONDENT BY : SMT. SUSAN THOMAS JOSE, JCIT OR DER PER GEORGE GEORGE K : 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE CIT (A)-II, BANGALORE DATED 17.4.2012. THE RELEVANT ASSESSMENT YEAR IS 2008-09. 2. THE ASSESSEE HAS, IN HIS GROUNDS OF APPEAL, RAI SED FIVE GROUNDS , IN WHICH, GROUND NO.1 BEING GENERAL IN NATURE, IT DOESNT SURVIVE FOR ADJUDICATION. IN GROUND NO.5 , IT HAS BEEN STATED THAT THE CIT (A) ERRED IN HOLDING THAT THE ASSESSEE HAD RECEIVED A SUM OF RS. 56,000/- OVER AND ABOVE WHAT HAS BEEN DISCLOSED IN THE FINANCIAL STATEMENT HOWEVER, PAGE 2 OF 12 ITA NO. 838/BANG/2011 2 DURING THE COURSE OF HEARING, THE LEARNED AR SUBMIT TED THAT THIS GROUND IS NOT PRESSED AND, HENCE, GROUND NO.5 IS DISMISSED AS NOT PRESSED . THE REMAINING GROUNDS RELATE TO A SOLITARY ISSUE , NAMELY, THAT THE CIT (A) ERRED IN HOLDING THAT THE SUM OF RS.64,61,000/- WAS NOT ALLOWABLE AS A DEDUCTION. 3. THE FACTS IN BRIEF ARE AS FOLLOWS:- THE ASSESSEE, AN INDIVIDUAL, WAS A BORE-WELL CON TRACTOR WHO UNDERTOOK DRILLING OF BORE-WELLS ON BEHALF OF SC/ST AND BACK-WARD CLASS DEVELOPMENT AGENCIES UNDER THE GOVERNMENT OF KARNAT AKA [GOK] SCHEMES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HA D CLAIMED DEDUCTION OF RS.64.61 LAKHS BEING SUBSIDY PAID TO THE BENEFICIARI ES. BEING QUERIED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD STATED THAT THE DEVELOPMENT CORPORATIONS OF GOK HAVE IDENTIFIED THE ELIGIBLE BENEFICIARIES UNDER THE SAID SCHEMES AND AWARDED THE CONTRACT TO THE PANEL OF CONTRACTORS WHICH INCLUDED THE ASSESSEE. ACCORDING TO THE DIRECTIVES OF THE GOVERNMENT, EACH BENEFICIARY HAD TO DEPOSIT MARGIN M ONEY OF RS.14000/- WITH THE CORPORATION BEFORE SANCTIONING OF THE BORE -WELL PERMIT. ACCORDING TO THE ASSESSEE, THE BENEFICIARIES BEING BACKWARD A ND POORER CLASSES, THEY WERE UNABLE TO MOBILIZE THE REQUIRED FUNDS OF RS.14 000/- TO MAKE DEPOSIT FOR ELECTRIFICATION, PLUMBING ETC., THE SCHEME ITSE LF WAS ON THE VERGE OF COLLAPSE. TO AUGMENT HIS BUSINESS FORTUNE, THE ASS ESSEE TOOK HIMSELF THE TASK OF FUNDING RS.13000/- AS SUBSIDY TO THE BENEFI CIARIES OF BORE-WELLS SO THAT HE COULD COMPLETE THE DIGGING OF BORE-WELLS AN D GET THE AGREED CONSIDERATION FROM THE CORPORATIONS. ACCORDING TO THE ASSESSEE, SUCH PAGE 3 OF 12 ITA NO. 838/BANG/2011 3 PAYMENTS WERE MADE IN CASH AFTER OBTAINING RECEIPTS FROM THOSE BENEFICIARIES. 4. AFTER DUE CONSIDERATION OF THE ASSESSEES CONTE NTIONS, OBTAINING NECESSARY CLARIFICATIONS FROM THE DEVELOPM ENT CORPORATIONS WHO HAVE AWARDED SUCH CONTRACTS TO THE ASSESSEE AND ALS O TAKING INTO ACCOUNT THE STATEMENTS RECORDED ON OATH FROM SOME OF THE BE NEFICIARIES, THE AO HAD DISALLOWED THE ALLEGED SUBSIDY PAYMENTS OF RS.64. 61 LAKHS PURPORTED TO HAVE BEEN MADE TO THE BENEFICIARIES AND ADDED THE S AME TO THE TOTAL INCOME OF THE ASSESSEE. THE REASONING FOR SUCH REJECTION OF THE ASSESSEES CLAIM, AS RECORDED IN THE ASSESSMENT ORDER, IS EXTRACTED A S UNDER: 15.SINCE THE CONTRACTOR IS NOT DIRECTL Y INVOLVED IN IDENTIFYING THE BENEFICIARIES, THE QUEST ION OF MAKING SUBSIDY TO THE BENEFICIARIES DOES NOT ARISE. SINCE THE BENEFICIARIES ARE PLEDGING THE LAND TO THE CORPORATIONS, THE ASSESSEE NOWHERE COMES INTO PICTU RE AT ALL. MOREOVER, CONTRACT AMOUNT DIRECTLY GIVEN TO AS SESSEE BY ABOVE MENTIONED CORPORATIONS NOT BY THE BENEFICIARIES, AFTER RECEIVING THE MONEY ASSESSEE IS FREE TO PAY HIS MONEY TO ANYBODY ONLY AFTER PAYMENTS OF TAXES, IF ANY. IN THIS CASE, ASSESSEE WITHOUT PAYING TAXES, REDUCING HIS TAX LIABILITIES. ASSESSEE HAS CLAIMED THE EXPENDITURE AS HAVING GIVEN TO THE BENEFICIARIE S WHICH IS NOT ACCEPTABLE. 16. THE BENEFICIARY ARE NOT DIRECTLY COMES IN CONTAC T WITH THE CONTRACTOR. THE PAYMENT IS MADE BY THE CORPORATIONS DIRECTLY TO THE CONTRACTOR. THE BENEFI CIARY HAS NO ROLE TO PLAY IN THE PAYMENT MADE TO THE CONTRA CTOR WHATSOEVER. IT IS OBVIOUS THAT THE ASSESSEE IS RED UCING HIS TAX LIABILITY BY DEBITING EXPENSES UNDER THE HEAD SUBSIDY... PAGE 4 OF 12 ITA NO. 838/BANG/2011 4 5. AGGRIEVED, THE ASSESSEE HAD CARRIED THE ISSUE, AMONG OTHERS, BEFORE THE CIT (A) FOR RELIEF. AFTER CONSIDERING T HE ASSESSEES CONTENTIONS, ANALYZING THE TWIN ISSUES, NAMELY, (I) WHETHER SUCH P AYMENT WAS ACTUALLY MADE? & (II) WHETHER THERE WAS BUSINESS EXIGENCY FOR SUCH PAYMENTS TO RENDER IT AN ALLOWABLE EXPENDITURE U/S 37(1)?, AND ALSO TAKING INTO ACCOUNT THE STATEMENTS OF SOME OF THE ALLEGED BENEFICIARIES , THE CIT (A) HAD REJECTED THE ASSESSEES CLAIM. THE RELEVANT PORTIO N OF THE CIT (A)S FINDINGS IN NOT ALLOWING THE ASSESSEES CLAIM, FOR APPRECIAT ION OF FACTS, IS EXTRACTED AS UNDER: 3.14. IN SUCH CIRCUMSTANCES OF THE CASE AS NARRATED ABOVE WHERE: (A) THE APPELLANT HAS NOT PROVED THE PAYMENT OF SUBSIDY; (B) THE NATURE OF PAYMENT/EXPENDITURE, IF ANY, DOES NOT QUALIFY TO BE A BUSINESS EXPENDITURE; (C) NO BUSINESS EXPEDIENCY HAS BEEN PROVED; (D) THAT EACH AND EVERY BENEFICIARY WAS IN NEED OF SUBSIDY IS HIGHLY UNLIKELY; (E) THE REPLIES/EXPLANATIONS OF THE APPELLANT ARE SELF- CONTRADICTORY AS NARRATED ABOVE; (F) THE EXPENDITURE CLAIMED AT RS.64,61,000/- ACCOUNTS FOR 26% OF RS.2,48,65,360/- BEING THE TOTAL BUSINESS RECEIPTS, SHOWING THAT SUCH AN EXPENDITURE OF SUCH NATURE IS VERY IMPROBABLE IN NORMAL BUSINESS TERMS THE EXPENDITURE OF RS.64,61,000/- CLAIMED IS NOT ALLOWABLE. 6. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEAL. DURING THE COURSE OF HEARING, THE LEARNED AR HAS, M ORE OR LESS, REITERATED PAGE 5 OF 12 ITA NO. 838/BANG/2011 5 WHAT HAS BEEN REPRESENTED BEFORE THE FIRST APPELLAT E AUTHORITY. IN ADDITION, IT WAS SUBMITTED THAT AS PER THE SCHEME F RAMED BY THE CORPORATIONS, THE COST OF BORE-WELL SHOULD NOT EXCE ED RS.1 LAKH. THE BENEFICIARY WAS TO BEAR RS.14000/- AND THE BALANCE S UM WOULD BE BORNE BY THE CORPORATIONS. IT WAS, FURTHER, SUBMITTED THAT IF THE BENEFICIARIES DID NOT HAVE SUFFICIENT FUNDS TO DEPOSIT RS.14000/-, TH EY HAD AN OPTION TO AVAIL THE LOAN. DURING THE COURSE OF CARRYING OUT THE DRI LLING OPERATIONS, IT WAS SUBMITTED, THE ASSESSEE HAD NOTICED THAT MANY OF THE BENEFICIARIES DID NOT HAVE SUFFICIENT FUNDS TO DEPOSIT RS.14000/- AND THE Y WERE ALSO RELUCTANT TO AVAIL LOANS BY MORTGAGING THEIR LANDS. IT WAS SUBM ITTED THAT THE ASSESSEE HAD DECIDED TO MAKE THE PAYMENTS TO THE BENEFICIARIE S WHICH COULD FACILITATE THE ASSESSEE TO COMPLETE THE DIGGING OPE RATIONS AND ALSO TO RECEIVE THE AGREED CONSIDERATION FROM THE CORPORATI ONS. THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAD PRODUCED BE FORE THE AO THE AFFIDAVITS AND CONFIRMATION LETTERS GIVEN BY THE BEN EFICIARIES WHEREIN THEY HAVE CONFIRMED THE RECEIPT OF SUBSIDY FROM THE ASSES SEE TOWARDS THE COST OF ELECTRIFICATION, LAYING OF PIPE LINES AND OTHER E XPENSES THAT THE BENEFICIARIES HAD TO BEAR UNDER THE SAID SCHEME. T HE ASSESSEE, IT WAS SUBMITTED, HAD ALSO PRODUCED THE SUBSIDY PAYMENT REGI STER DULY SIGNED BY THE BENEFICIARIES, ACKNOWLEDGING THE RECEIPT OF SUB SIDY FROM THE ASSESSEE. 6.1. THE LEARNED A R HAD ALSO DREW THE REFERENCE O F THIS BENCH TO THE EFFECT THAT THE CIT (A) HAD, IN HER FINDINGS AT PARA 3.4. (G), ALLEGED THAT- PAGE 6 OF 12 ITA NO. 838/BANG/2011 6 (G) THE AO WAS ASKED TO FURTHER VERIFY THE GENUINEN ESS DURING THE COURSE OF APPEAL. SOME OF THE PERSONS H AVE DENIED, A FEW HAVE ACCEPTED, SOME WHILE ACCEPTING, HAVE DENIED SIGNING ON THE SAID AFFIDAVIT IN THEIR NAMES SHOWING THEREBY THAT THE AFFIDAVITS ARE NOT GENUINE. THE APPELLANT HAS NO EXPLANATION. EVEN THOSE FEW PERSONS WHO AGREED TO HAVING RECEIVED SOME AMOUNT, HAVE DENIED ISSUING ANY RECEIPTS CLEARLY SHOWING THAT THE EVIDENC ES FORWARDED BY THE APPELLANT ARE NOT GENUINE AND, THEREFORE, NOT RELIABLE. COUNTERING THE CIT (A)S ALLEGATION, THE LEARNED A R SUBMITTED THAT THE ABOVE FACTS HAVE NOT BEEN PUT-FORTH BEFORE THE ASSE SSEE FOR HIS COMMENTS. THUS, IT WAS ARGUED, THE CIT (A) HAD COME TO A CONC LUSION UNILATERALLY - SAY, PRECISELY, AT THE BACK OF THE ASSESSEE -THAT THE EVI DENCE PRODUCED BY THE ASSESSEE WAS NOT GENUINE. 6.2. IN CONCLUSION, THE LEARNED AR HAD FURNISHED A VOLUMINOUS PAPER BOOK RUNNING TO 232 PAGES WHICH, INTER ALIA, CONTAI NED COPIES OF (I) LIST OF BENEFICIARIES WHO SUBMITTED AFFIDAVITS AND CONFIRMA TION LETTERS; (II) LETTERS FROM AMBEDKAR CORPORATION, DEVARAJ URS CORPORATION; (III) AQUITTANCE REGISTER ETC., 6.3. ON THE OTHER HAND, THE LEARNED D R SUPPORTED THE STAND OF THE AUTHORITIES BELOW. OUR ATTENTION WAS ALSO INVITED TO THE OBSERVATIONS OF THE CIT (A), PARTICULARLY, THE QUESTION OF THE ASSESSEE MAKING PAYMENTS TO THE BENEFICIARIES DO NOT ARISE AS A BUSINESS REQUIREMEN T. FOR APPRECIATION OF FACTS, THE RELEVANT PORTION OF THE CIT (A)S OBSERV ATION IS REPRODUCED AS UNDER: PAGE 7 OF 12 ITA NO. 838/BANG/2011 7 3.8. (ON PAGE 9) (II) MOREOVER, THE ORGANIZATION AWARDING CONTRACT T O THE APPELLANT ALSO HAVE A SCHEME THAT THE BENEFICIARY AV AILS OF A LOAN FROM THESE ORGANIZATIONS WITH REGARD TO T HEIR SHARE OF RS.14000/- AS BROUGHT OUT AT PAGES 6 TO 8 OF THE ASSESSMENT ORDER. IT IS EVIDENT THAT SOME OF T HE BENEFICIARIES HAVE AVAILED OF THIS FACILITY AS IN T HE CASE OF SHRI MAHADEVAIAH AT PARA 3.9 BELOW SHOWING THAT THE SCHEME IS FUNCTIONAL AND VIABLE. THEREFORE, THE QU ESTION OF THE APPELLANT MAKING PAYMENTS TO THE BENEFICIARIE S DOES (SIC) DO NOT ARISE AS A BUSINESS REQUIREMENT. 6.4. IN VIEW OF THE ABOVE, IT WAS PLEADED BY THE L EARNED D R THAT THERE IS NO ANY INFIRMITY IN THE STAND OF THE CIT (A) WHICH REQUIRES THE INTERVENTION OF THE BENCH. 6.5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS, DULY GONE THROUGH THE RELEVANT MATERIALS ON RECORD AND ALSO T HE EVIDENCES FURNISHED BY THE LEARNED AR IN THE SHAPE OF A PAPER BOOK. 7. THERE WAS NO DISPUTE IN THE FACT THAT THE ASSES SEE WAS ONE OF THE SUCCESSFUL TENDERERS FOR DIGGING OF BORE-WELLS UNDER THE SAID SCHEME. IT WAS THE CASE OF THE ASSESSEE THAT HE HAD FINANCI ALLY HELPED THE BENEFICIARIES WHO WERE MOSTLY DOWN TRODDEN AND VIRTU ALLY NOT FINANCIALLY SOUND TO PAY RS.14000/- TO THE CORPORATION(S) SO AS TO GET THE PUMP SETS AND OTHER EQUIPMENTS [SOURCE: P 21 OF P.B] INSTALLE D. THUS, IT WAS CLAIMED, THE ASSESSEE HAD EXTENDED THE FINANCIAL HELP TO THE BENEFICIARIES WHICH IN TURN FACILITATED THE ASSESSEE TO EXECUTE THE DIGGIN G OF MORE BORE-WELLS, AS A RESULT OF WHICH, HE WAS ABLE TO GET THE AGREED CONS IDERATION FROM THE PAGE 8 OF 12 ITA NO. 838/BANG/2011 8 CORPORATIONS. IN ESSENCE, BY INCURRING CERTAIN EXPE NSES THE ASSESSEE WAS ABLE TO GARNER A LION SHARE OF HIS BUSINESS FORTUNE . IN BUSINESS PARLANCE, THE EXPENSE INCURRED BY THE ASSESSEE WAS NOTHING BUT BUSINESS EXPEDIENCY. THE WORD SUBSIDY WOULD HAVE BEEN USED BY THE ASSES SEE TO HIGHLIGHT THAT HE HAD LENT MONIES TO THE BENEFICIARIES. THUS, THE NO MENCLATURE OF SUBSIDY HAS NO RELEVANCE HERE AND, THUS, NO MUCH SIGNIFICANCE N EED TO BE ATTACHED ANY MORE. THE CONTENTION OF THE ASSESSEE WAS THAT TO B OOST UP HIS BUSINESS FORTUNE, HE HAD INCURRED CERTAIN EXPENSES BY GIVING CASH PAYMENTS TO THE BENEFICIARIES WHICH HAVE HELPED THEM TO PAY TO THE C ORPORATIONS TO AVAIL THE BENEFIT OF DIGGING OF BORE-WELLS IN THEIR LANDS AND ALSO TO RECEIVE PUMP SETS AND OTHER EQUIPMENTS UNDER GANGA KALAYANA SCHEME. IT HAS ALSO BEEN MADE IT ABUNDANTLY CLEAR BY THE CORPORATIONS THAT TO AVAIL THE SCHEME, THE BENEFICIARIES WERE REQUIRED TO PAY CERTAIN AMOUNTS [ REFER: PAGES 22, 24 & 26 OF PB]. IN EFFECT, THE ASSESSEE STOOD TO GAIN IN GETTING ORDERS FOR DIGGING MORE BORE-WELLS. THUS, IN OUR CONSIDERED VIEW, THE EXPENSES INCURRED BY THE ASSESSEE CANNOT BE CATEGORIZED AS NO BUSINESS REQU IREMENT AS ATTRIBUTED BY THE FIRST APPELLATE AUTHORITY. IT IS RATHER UNIVERS AL THAT TO EARN ANY INCOME, ONE IS EXPECTED TO INCUR CERTAIN EXPENSES. THUS, T HE MOOT QUESTION FOR CONSIDERATION NOW IS THE ALLOW-ABILITY OF THE QUANTU M OF EXPENSES CLAIMED BY THE ASSESSEE. 7.1. THE AO HAD OBSERVED THAT THE CONFIRMATION LET TERS AND AFFIDAVITS WERE STEREO TYPE THOUGH SIGNED BY DIFFEREN T PARTIES GIVING RISE TO THE INFERENCE THAT THEY WERE ALL MADE UP AND NOT GEN UINE. THIS PHILOSOPHY OF THE AO, IN OUR CONSIDERED VIEW, IS NOT ON THE SOUND FOOTING. ONE SHOULD NOT BE IN HASTE IN JUMPING INTO A CONCLUSION WITHOUT TA KING INTO ACCOUNT THE PAGE 9 OF 12 ITA NO. 838/BANG/2011 9 GROUND REALITIES. IN THE INSTANT CASE, MOST OF THE BENEFICIARIES WERE, ADMITTEDLY, DOWN TRODDEN WITH VILLAGE BACK-GROUND AN D MOST OF THEM APPEARED TO BE ILLITERATES. SUCH BEING THE SCENARI O, THEY WERE NOT EXPECTED TO GIVE THEIR CONFIRMATION LETTERS/AFFIDAVITS WITH DIFFERENT CONTENTS. WHAT WAS IMPORTANT WAS THE CONTENTS OF THE AFFIDAVIT/CON FIRMATION AND NOT THE FORMAT. 7.2. AT THIS POINT OF TIME, WE WOULD LIKE TO HIGHL IGHT THAT WHEN THE ASSESSING OFFICER WAS REQUIRED TO SEND HIS REMAND R EPORT BY THE CIT (A) IN HER COMMUNICATION DATED 19.5.2011, THE AO, IN HIS L ETTER DATED 16.8.2011 [REFER: PAGE 13 OF PB], HAD STATED THAT - THE APPELLANT PRODUCED BY HIM WERE NOT CONSIDERED B Y THE AO. FOLLOWING DEFECTS WERE NOTICED FROM AFFIDA VITS: (I) AGE OF THE PERSONS MAKING THE AFFIDAVITS IS NOT THERE; (II) FULL RESIDENTIAL ADDRESS OF PERSONS ARE NOT THERE TO VERIFY THE CORRECTNESS OF THE SAME; (III) SURVEY NOS. OF THE AGRICULTURAL LANDS ARE NOT MENTIONED; (IV) NAMES AND ADDRESS OF THE WITNESSES IN THE AFFIDAVITS WERE NOT AVAILABLE TO ASCERTAIN TRUTH. FROM THE ABOVE FACTS, IT IS VERY CLEAR THAT THE APPE LLANT HAS CREATED THE AFFIDAVITS JUST TO SUIT HIS CONVIN CES (SIC) CONVENIENCE AND TO CLAIM THE EXPENSES WHICH WERE NO T GENUINE ONES 7.3. YET AGAIN, THE CIT (A) HAD, IN HER LETTER DAT ED 12.1.2012, DIRECTED THE AO TO SEND HIS REMAND REPORT, THE AO [ INCIDENTALLY, THE SAME PAGE 10 OF 12 ITA NO .838/BANG/2011 10 INCUMBENT] IN HIS SECOND REMAND REPORT (DT.23.2.201 2), HAD REPORTED AS UNDER: THE CIT (APPEALS)-II, BANGALORE VIDE LETTER CITED ABOVE DIRECTED TO CAUSE NECESSARY ENQUIRIES ABOUT THE GENUINENESS OF APPELLANT CLAIM IN RESPECT OF 150 PE RSONS TO WHOM SUBSIDY HAVE BEEN PAID TO THE BENEFICIARIES. TO VERIFY THE GENUINENESS OF THE SUBSIDY PAID, SUMMONS U /A 131 OF THE I. T ACT WERE ISSUED TO AROUND 20 PERSO NS RANDOMLY. OUT OF 20 PERSONS, THE FOLLOWING 7 PERSON S APPEARED AND THEIR SWORN STATEMENTS WERE RECORDED: 1. SRI VENKACHALAIAH 2. SRI MOHIDDIN SAB; 3. SRI MAHADEVAIAH; 4. SRI ABDUL KADAR; 5. SRI SADASHIVAIA H; 6. SMT. AMBUJABAI & 7. SRI RAHAMATHULLA KHAN. THE SUMMONS SENT TO THE FOLLOWING PERSONS WERE RETURNED UN-SERVED WITH THE POSTAL AUTHORITIES REMA RKS AS MENTIONED AGAINST THEIR NAMES: 1. SRI NATARAJU (ADDRESSEE NOT AVAILABLE IN THE VILLA GE) THE REMAINING 9 PERSONS THOUGH THE SUMMONS WERE DUL Y SERVED BY THE POSTAL AUTHORITIES, THERE IS NO RESPON SE FROM THEM. OUT OF THE 7 PERSONS WHO HAVE APPEARED, 4 PERSONS V IDE SL.NOS. 1,2,4 & 5 HAVE AGREED THAT THEY HAVE RECEIVE D THE SUBSIDY FROM THE APPELLANT. SRI ABDUL KADAR EVEN TH OUGH AGREED THAT HE HAS RECEIVED THE SUBSIDY AMOUNT BUT DENIED THE SIGNATURE APPEARED IN THE AFFIDAVIT WHIC H WAS PRODUCED BY THE APPELLANT. THE REMAINING 3 PERSONS HAVE DENIED THE RECEIPT OF SUBSIDY FROM THE APPELLANT, IN FACT, THEY HAVE PAID E XTRA MONEY FOR DIGGING THE EXTRA DEPTH OVER AND ABOVE THE LIMIT PRESCRIBED BY THE GOVERNMENT. PAGE 11 OF 12 ITA NO .838/BANG/2011 11 FROM THE ABOVE RANDOM ENQUIRY, CONCLUSION MAY BE DRAW N THAT ONLY 50% OF THE SUBSIDY DEBITED APPEARS TO BE GENUINE ONE, THE REMAINING 50% APPEARS TO BE NOT GENUINE. DUE TO PAUCITY OF TIME, 100% VERIFICATION COULD NOT BE MADE AS I AM HOLDING ADDITIONAL CHARGE AND V ISITING TUMKUR OFFICE ONCE IN A WEEK TO EXAMINE ALL THE 150 BENEFICIARIES. IN THE ABOVE CIRCUMSTANCES, THE DEC ISION MAY BE TAKEN ON MERITS. (COURTESY : PAGES 1&2 OF PB) 7.4. FROM THE ABOVE, IT COULD BE SEEN THAT THERE I S QUITE CONTRAST IN THE SUBMISSIONS OF THE REMAND REPORTS BY THE ASSESSI NG OFFICER ON THE SAME ISSUE. TO ILLUSTRATE FURTHER, THE ASSESSING OFFICE R TOOK A STAND IN HIS FIRST REMAND REPORT THAT THE ASSESSEE HAD CREATED THE AFFIDAVITS JUST TO SUI T HIS CONVENIENCE AND TO CLAIM THE EXPENSES WHICH WERE NO T GENUINE, HOWEVER, IN HIS SUBSEQUENT REMAND REPORT DATED 23.2.2012, HE TO OK ALTOGETHER A CONFLICTING VIEW THAT [AT THE COST OF REPETITION] FROM THE ABOVE RANDOM ENQUIRY, CONCLUSION MAY BE DRAWN THAT ONLY 50% OF T HE SUBSIDY DEBITED APPEARS TO BE GENUINE ONE, THE REMAINING 50% APPEAR S TO BE NOT GENUINE. 7.5. ON HER PART, THE CIT (A) HAD IN HER OPEN REMA RKS MENTIONED THAT CERTAIN ENQUIRIES WERE CAUSED AND THE REPORT OF THE AO DATED 23.2.2012 HAS ALSO BEEN TAKEN INTO ACCOUNT [REFER: PARA 2 OF CIT (A)S ORDER]. HOWEVER, WHILE DECIDING THE ISSUE, SHE HAD KEPT THE ASSESSING OFFICERS REMAND REPORT DATED 23.2.2012 OUT OF HER PURVIEW. 7.6. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMS TANCES OF THE ISSUE AS DELIBERATED UPON SUPRA AND ALSO THE FACT FINDING REPORT OF THE ASSESSING OFFICER [REMAND REPORT DATED 23.2.2012] WHEREIN HE HAD AFFIRMED THAT PAGE 12 OF 12 ITA NO .838/BANG/2011 12 CONCLUSION MAY BE DRAWN THAT ONLY 50% OF THE SUBSIDY D EBITED APPEARS TO BE GENUINE WE ARE OF CONSIDERED VIEW THAT THE RESTRICTION OF THE EXPENDITURE TO 50% WOULD SUFFICE TO MEET THE ENDS OF JUSTICE. 7.7. IN A NUT-SHELL, THE EXPENSES CLAIM OF THE AS SESSEE IS RESTRICTED TO RS.32,30,500/- AS AGAINST RS.64,61 LAKHS WHICH W AS DISALLOWED BY THE AUTHORITIES BELOW. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT , THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF NOVEMBER, 2012 SD/- SD/- (JASON P BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.