Dr. T. Indira Gouri, R.R.Dist., Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 974/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2587 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 04-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Value adopted by valuation officer; Gift; Valuation report
• Section: 143(3); 234B; 147; 68; 148

Judgement Text

ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.973 & 947/HYD/2016 (A.YS 2004-05 & 2005-06) DR. T. INDIRA GOURI INDIRA HOSPITAL, SHAMSHABAD, HYDERABAD PAN: AHGPR 6668 G VS INCOME TAX OFFICER WARD 8(2) HYDERABAD FOR ASSESSEE SHRI S. RAMA RAO FOR REVENUE SMT. U. MINI CHANDRAN, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THESE ARE ASSESSEES APPEALS FOR THE A.YS 2004-05 & 2005-06 RESPECTIVELY. THE COMMON GROUND OF APPEAL I N BOTH THE APPEALS IS AGAINST THE VALIDITY OF THE RE-ASSESSMEN T PROCEEDINGS U/S 147 OF THE ACT AND ALSO AGAINST THE ADDITION OF THE DIFFERENCE IN THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDIN G. OTHER THAN THESE TWO ISSUES, OTHER GROUNDS RAISED ARE AGAINST OTHER ADDITIONS MADE BY THE AO FOR THE RESPECTIVE A.YS. 2. FOR THE SAKE OF CONVENIENCE, THE GROUNDS OF APPEA L FOR THE A.Y 2004-05 ARE REPRODUCED HEREUNDER: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. DATE OF HEARING : 09.02.2017 DATE OF PRONOUNCEMENT : 28.04.2017 ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 2 OF 12 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE RE-OPENING OF ASSESSMENT U/S 147 IS JUSTIFIED. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE COST OF CONSTRUCTION OF THE PROPERTY WAS ALREADY RECORDED IN THE BOOKS OF ACCOUNT AND THE SAME WAS SHOWN IN THE BALANCE SHEET ANNEXED TO THE RETURN OF INCOME AND THE BOOKS OF ACCOUNT SO ANNEXED WERE NOT REJECTED. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THE FACT THAT NO FRESH INFORMATION HAS COME TO THE KNOWLEDGE OF THE ASSESSING OFFICER AND THE INITIATION OF PROCEEDINGS U/S 147 WAS AFTER A PERIOD OF FOUR YEARS. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE REFERENCE TO THE VALUATION CELL FOR ARRIVING AT THE COST OF CONSTRUCTION IS JUSTIFIED, PARTICULARLY WHEN THE BOOKS OF ACCOUNT ARE NOT REJECTED. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ESTIMATION OF COST OF CONSTRUCTION WHEN THE BOOKS OF ACCOUNT OF THE APPELLANT WERE NOT REJECTED. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DIRECTED THAT THE VALUATION SHOULD HAVE BEEN MADE EACH YEAR SEPARATELY AND THE AMOUNT INCURRED DURING THE YEAR IS TO BE COMPARED WITH THE AMOUNT SO ARRIVED AT. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THERE IS ANY UNACCOUNTED FOR EXPENDITURE IN CONSTRUCTION OF HOSPITAL BUILDING. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE VALUATION CELL VALUED THE PROPERTY BY ADOPTING THE RATES AS MENTIONED BY THE CPWD WITHOUT PROVIDING ANY RELIEF TOWARDS SELF SUPERVISION AND ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 3 OF 12 THE DIFFERENCE BETWEEN THE CPWD AND THE LOCAL RATES. 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT CONSIDERING THE EXPENDITURE INCURRED ON CONSTRUCTION OF THE PROPERTY DURING THE FINANCIAL YEAR 2008-09 OF RS. 7,23,463/ -. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE SAID AMOUNT WAS RECORDED IN THE BOOKS OF ACCOUNT AND HAS TO BE DEDUCTED FOR ARRIVING AT THE DIFFERENCE. 10. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.25,09,254/-MADE AS REPRESENTING DIFFERENCE BETWEEN THE COST ADMITTED IN THE BOOKS OF ACCOUNT AND THE COST ARRIVED AT BY THE VALUATION CELL . 11. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO SEE THAT THE PROPORTION OF THE DIFFERENCE WAS NOT CORRECTLY ADOPTED BY THE ASSESSING OFFICER. 12. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE' ADDITION OF RS.3,60,000/- MADE BY THE ASSESSING OFFICER U/S 68 DISBELIEVING THE AMOUNTS RECEIVED FROM SRI T. JAGANNADHAM OF RS.L,75,000/- & SMT. A.VIDYA DEVI OF RS.L,85,000/- 13. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.2,21,200/- BEING THE INVESTMENT MADE IN THE HOSPITAL BUILDING. THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT OUT OF THE SAID AMOUNT, RS.L,05,000/- WAS RECEIVED BY THE APPELLANT AS GIFT FROM HER FATHER; RS.39,000/-WAS RECEIVED FROM HER BROTHER; RS.55,000/-TOWARDS AGRICULTURAL INCOME AND RS.22,200/- FROM OUT OF INTERNAL ACCRUALS. 14. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.L,60,800/-. ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 4 OF 12 15. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST U/S 234A, 234B AND 234C OF THE I.T.ACT. 16. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND A DOCTOR BY PROFESSION. SHE WAS RUNN ING A HOSPITAL IN THE NAME AND STYLE OF M/S INDIRA HOSPITALS. SHE FILED HER RETURN OF INCOME FOR THE A.Y 2004-05 ON 1.11.2004 DE CLARING TOTAL INCOME OF RS.1,48,746 AND THE SAME WAS PROCESSED U/ S 143(1) OF THE I.T. ACT. THERE WAS A SURVEY OPERATION ON THE P REMISES OF THE ASSESSEE ON 21.02.2008 AND IT WAS FOUND THAT THE AS SESSEE HAS NOT ADMITTED AND SHOWN THE REASONABLE COST OF THE C ONSTRUCTION OF HOSPITAL BUILDING AND PURCHASE PRICE OF THE EQUIPME NTS. THE AO, THEREFORE, REFERRED THE VALUATION OF THE COST OF CO NSTRUCTION OF THE HOSPITAL BUILDING TO THE VALUATION CELL DURING THE ASSESSMENT U/S 143(3) OF THE ACT FOR THE A.Y 2008-09. THE DEPARTMEN TAL VALUATION OFFICER VALUED THE BUILDING COST AT RS.1,34,46,000. ON RECEIPT OF THE ABOVE REPORT AND INFORMATION, THE AO REOPENED T HE ASSESSMENT FOR THE A.YS 2004-05 AND 2005-06 BY ISSUA NCE OF A NOTICE U/S 148 ON 25.3.2011. IN RESPONSE TO THE NOT ICE, THE ASSESSEE FILED A LETTER STATING THAT THE RETURN ALR EADY FILED MAY BE TREATED AS COMPLIANCE TO THE NOTICE U/S 148 OF THE ACT. THEREAFTER, THE AO ISSUED A DETAILED QUESTIONNAIRE TO THE ASSES SEE AND THE ASSESSEE SUBMITTED ITS REPLY. AFTER CONSIDERING THE ASSESSEES DETAILED REPLY, THE AO OBSERVED THAT THE ASSESSEE H AS CONSTRUCTED THE HOSPITAL BUILDING IN TWO PHASES, THE FIRST PHAS E BEING IN THE FINANCIAL YEARS 2003-04 AND 2004-05 AND THE SECOND PHASE IN THE FINANCIAL YEARS 2007-08 AND 2008-09. HE OBSERVED TH AT THE ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 5 OF 12 VALUATION OF THE COST OF CONSTRUCTION ADOPTED BY TH E VALUATION OFFICER IS MUCH LOWER THAN THE EXPENDITURE ALLEGED TO HAVE BEEN INCURRED BY THE ASSESSEE UP TO 31.03.2004. HE OBSER VED THAT THE VALUATION OFFICER HAS ADOPTED THE PLINTH AREA RATE AND COST INDEX METHOD WHILE ARRIVING AT THE HOSPITAL BUILDING COST . THE AO ARRIVED AT THE DIFFERENCE BETWEEN THE VALUATION SHO WN BY THE ASSESSEE AND THE VALUATION OF THE DVO AT RS.25,09,2 54 AND ISSUED A SHOW CAUSE NOTICE TO BRING THE DIFFERENCE TO TAX. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, HE OBSE RVED THAT THE TOTAL COST OF CONSTRUCTION AS PER THE VALUATION REPORT WAS RS.1,34,45,607 AND AFTER REDUCING THE ADDITIONS MAD E DURING THE A.Y 2008-09 TOWARDS UNEXPLAINED INVESTMENT AND ALSO AFTER REDUCING THE AMOUNT OF INVESTMENT MADE BY THE ASSES SEE AS SHOWN IN THE BALANCE SHEET, HE ARRIVED AT A FIGURE AND AFTER REDUCING THE SUM OF RS.36,10,000 SHOWN TO HAVE BEEN INVESTED BY THE ASSESSEE FOR THE A.Y 2003-04 & 2004-05, HE ARRIV ED AT THE BALANCE OF RS.54,36,714 AS UNEXPLAINED INVESTMENT F OR THE PERIOD BETWEEN OCTOBER 2003 TO OCTOBER 2004 AND APPORTIONE D IT AMONGST THE TWO YEARS IN THE RATIO OF THE PERIOD OF CONSTRUCTION IN THE RESPECTIVE FINANCIAL YEARS. THUS FOR THE F.Y 200 3-04, HE MADE AN ADDITION OF RS.25,09,254 AND FOR THE F.Y 2004-05 A N ADDITION OF RS.29,27,460. 4. FURTHER, HE ALSO OBSERVED THAT THE ASSESSEE HAS N OT BEEN ABLE TO EXPLAIN THE CREDITS IN ITS BOOKS AND T HEREFORE, HE MADE FURTHER ADDITION AND ULTIMATELY ARRIVED AT THE TOTAL TAXABLE INCOME AT RS.34.00 LAKHS. SIMILARLY, FOR THE A.Y 200 5-06 ALSO, THE AO MADE OF AN ADDITION OF RS.29,27,460 TOWARDS THE DIFFERENCE BETWEEN THE COST ADMITTED IN THE BOOKS OF ACCOUNT A ND THE COST ARRIVED AT BY THE VALUATION CELL FOR THE HOSPITAL B UILDING AND ALSO ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 6 OF 12 MADE ADDITIONS OF VARIOUS OTHER UNEXPLAINED CASH CR EDITS. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE TH E CIT (A) CHALLENGING THE VALIDITY OF THE ASSESSMENT AFTER 4 YEARS AND ALSO THE MERITS OF THE ADDITIONS MADE BY THE AO. 5. THE CIT (A) OBSERVED THAT FOR BOTH THE ASSESSMEN T YEARS, THE ORIGINAL ASSESSMENT WAS NOT COMPLETED U/ S 143(3) OF THE ACT AND THAT THE RETURNS WERE ACCEPTED U/S 143( 1) OF THE I.T. ACT. HE, THEREFORE, HELD THAT THE PROVISO TO SECTIO N 147 OF THE ACT IS NOT APPLICABLE AND UPHELD THE VALIDITY OF THE AS SESSMENT U/S 147 OF THE ACT. THEREAFTER, HE PROCEEDED TO CONSIDE R THE ASSESSEES CONTENTIONS ON MERIT AND CONFIRMED OF THE ADDITIONS MADE BY THE AO. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEF ORE US. 6. THE ASSESSEE HAS RAISED A GROUND OF APPEAL AGAIN ST THE VALIDITY OF THE ASSESSMENT AND ALSO AGAINST THE ADD ITIONS MADE TO THE RETURNED INCOME. AT THE TIME OF HEARING, THE LE ARNED COUNSEL FOR THE ASSESSEE HAS FILED BEFORE US THE COPY OF TH E ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. DHARI A CONSTRUCTIONS CO., REPORTED IN (2016) 328 ITR 515 ( S.C) WHEREIN IT WAS HELD THAT THE OPINION OF THE DISTRICT VALUATION OFFICER (DVO) PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF RE OPENING OF AN ASSESSMENT U/S 147 OF THE ACT AND THAT THE AO HAS T O APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT IN THE CASE BEFORE US ALSO, THE AO HAD NO OTHER INFORM ATION EXCEPT THE DVO REPORT SUBMITTED DURING THE ASSESSMENT PROC EEDINGS FOR THE A.Y 2008-09 FOR REOPENING OF THE ASSESSMENT. THE REFORE, ACCORDING TO HIM, THE REOPENING OF THE ASSESSMENT I S NOT VALID. ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 7 OF 12 7. THE LEARNED DR HOWEVER, SUBMITTED THAT IN THE CA SE BEFORE US, THE RETURNS WERE ACCEPTED U/S 143(1) OF THE ACT AND THERE WAS NO APPLICATION OF MIND BY THE AO TO THE R ETURN OF INCOME FILED BY THE ASSESSEE. HE SUBMITTED THAT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJES H JHAVERI STOCK BROKERS PVT. LTD IN CIVIL APPEAL NO.2830 OF 2 007, DATED 23.05.2007 (291 ITR 500 (SC) , THE ACCEPTANCE OF THE RETURN U/S 143(1) OF THE ACT CANNOT BE CALLED AS ASSESSMENT U/ S 143(3) OF THE ACT I.E. AFTER APPLICATION OF MIND BY THE AO. HE SU BMITTED THAT ON RECEIPT OF THE VALUATION REPORT DURING THE ASSESSME NT PROCEEDINGS FOR THE A.Y 2008-09, THE AO APPLIED HIS MIND AND CAM E TO THE CONCLUSION THAT THE INCOME HAS ESCAPED THE ASSESSME NT FOR THE A.Y 2004-05 AND 2005-06 AND THEREFORE, THE ASSESSMEN T IS VALIDLY REOPENED. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE DEPARTMENTAL VALUATION OFFICERS REPORT IS AN OPINION WHICH HAS COME TO THE KNOWLEDG E OF THE AO DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y 2008-0 9 AND THE SAME WAS EXAMINED AND AN ADDITION WAS MADE DURING T HE A.Y 2008-09. IT IS PURSUANT THERETO, THAT THE ASSESSMEN TS FOR THE RELEVANT A.YS HAVE BEEN REOPENED. WE FIND THAT THE A O FOR THE A.Y 2008-09 HAS OBSERVED THAT THE CONSTRUCTION OF THE H OSPITAL BUILDING HAS TAKEN PLACE IN TWO PHASES AND HAS BROU GHT THE PROPORTIONATE COST TO THE TAX IN THE A.Y 2008-09 AND FORMED A BELIEF THAT THE COST OF CONSTRUCTION IN THE FIRST P HASE HAS ALSO BEEN UNDER REPORTED BY THE ASSESSEE. THE JUDGMENT OF THE HON'BLE SUPREME COURT IS ONLY TO THE EFFECT THAT THE REOPEN ING OF ASSESSMENT CANNOT BE DONE ONLY ON RECEIPT OF DVO RE PORT, BUT AO SHOULD HAVE APPLIED HIS MIND TO IT. THEREFORE, WE A RE OF THE ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 8 OF 12 OPINION THAT THE RE-ASSESSMENT PROCEEDINGS HAVE BEE N VALIDLY INITIATED. THEREFORE, THE ASSESSMENT ORDER IS IN AC CORDANCE WITH THE ABOVE JUDGMENT. THUS, GROUNDS OF APPEAL NO.2 & 3 ARE REJECTED. 9. AS REGARDS GROUNDS OF APPEAL NO.4 TO 11 ARE CONCERNED, WE FIND THAT THEY PERTAIN TO VALUATION O F COST OF CONSTRUCTION OF THE PROPERTY. ADMITTEDLY, THE ASSES SEES BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED BUT THE VALUATION AS PER THE VALUATION CELL HAS BEEN ADOPTED BY THE AO AND THE D IFFERENCE HAS BEEN TREATED AS UNEXPLAINED INVESTMENT. WE HAVE GON E THROUGH THE RELEVANT RECORDS AS WELL AS THE VALUATION REPOR T SUBMITTED BY THE DEPARTMENTAL VALUATION OFFICER. WE FIND THAT TH E DVO HAS VALUED THE PROPERTY AS ON 31.3.2008. THE DVO HAS AD OPTED THE CPWD RATE AND NOT THE STATE PWD RATE, AND HE HAS AD OPTED PLINTH AREA INDEXATION METHOD FOR VALUATION OF THE PROPERTY. WE ALSO FIND THAT HE HAS NOT GIVEN ANY REBATE FOR SELF SUPERVISION, WHEREAS IT IS THE CASE OF THE ASSESSEE THAT HER HUS BAND IS AN ARCHITECT AND HE HIMSELF HAS SUPERVISED THE CONSTRU CTION OF THE HOSPITAL. WE FIND THAT FOR THE A.Y 2008-09, THE CIT (A) HAS CONSIDERED THE ISSUE AT LENGTH AND HAS OBSERVED THA T THE STATE PWD RATES ARE TO BE CONSIDERED AND ALSO THE SELF SU PERVISION REBATE IS TO BE GIVEN. SINCE THE CONSTRUCTION OF TH E BUILDING HAS STARTED IN FINANCIAL YEAR 2003-04 AND HAS BEEN PART IALLY COMPLETED IN THE FINANCIAL YEAR 2007-08, THE RATES ADOPTED FOR FINANCIAL YEAR 2007-08 MAY BE HIGHER THAN THE RATES FOR THE A.YS 2004-05 AND 2005-06. WE FIND THAT THE ORDER OF THE CIT (A) FOR THE A.Y 2008-09 HAS ATTAINED FINALITY AS NO APPEAL HAS B EEN FILED BY THE REVENUE. THEREFORE, WE ARE OF THE OPINION THAT THE AO FOR THE A.YS 2004-05 AND 2005-06 ALSO HAS TO ADOPT THE VALUA TION AS PER ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 9 OF 12 THE STATE PWD RATES FOR THE RELEVANT PERIOD AND ALS O HAS TO GRANT DISCOUNT FOR THE SELF SUPERVISION. THEREFORE, THE I SSUE OF VALUING THE COST OF CONSTRUCTION OF THE HOSPITAL BUILDING F OR THE A.YS 2004- 05 AND 2005-06 IS REMITTED TO THE FILE OF THE AO FO R CONSIDERATION IN ACCORDANCE WITH LAW AND OUR OBSERVATIONS ABOVE. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPP ORTUNITY OF HEARING. THUS, GROUNDS OF APPEAL NO.4 TO 11 ARE ACC ORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10. AS REGARDS GROUND OF APPEAL NO.12, WE FIND THAT THE ASSESSEE HAS CLAIMED THAT A SUM OF RS.1,75,000 HAS BEEN TAKEN BY THE ASSESSEE AS UNSECURED LOAN FROM HER FATHER S HRI T. JAGANNADHAM AND A SUM OF RS.1,85,000 FROM SMT. A. V IDYA DEVI ALSO AS A LOAN. THE ASSESSEE HAS ALSO FILED COPIES OF THE CONFIRMATION LETTERS OF THESE TWO PARTIES. WE FIND THAT SHRI T. JAGANNADHAM CONFIRMED THAT HE HAS GIVEN LOAN OUT OF HIS PERSONAL SAVINGS AND PENSIONARY BENEFITS AND THAT T HE AMOUNT IS ALSO RECEIVED THROUGH CHEQUES. SIMILARLY, SMT. A. V IDYA DEVI ALSO HAS GIVEN HER PAN AND HAS ALSO CONFIRMED THAT SHE H AS GIVEN LOAN TO THE ASSESSEE FOR CONSTRUCTION OF THE HOSPITAL BU ILDING. NONE OF THE AUTHORITIES BELOW HAVE VERIFIED THE CONTENTIONS MADE IN THE CONFIRMATION LETTERS AND HAVE PERFUNCTORILY REJECTE D THE ASSESSEES CONTENTION. SINCE THE CONFIRMATION LETTERS HAVE BEE N FILED, WE ARE OF THE OPINION THAT THE IDENTITY OF THE CREDITORS A ND THEIR CREDIT WORTHINESS AS WELL AS GENUINENESS OF THE TRANSACTIO N HAS BEEN PROVED. THEREFORE, WE DIRECT THE ADDITION OF RS.3,6 0,000 TO BE DELETED. GROUND NO.12 IS ACCORDINGLY ALLOWED. 11. AS REGARDS THE ADDITION OF RS.2,21,200, IT IS E XPLAINED BY THE ASSESSEE THAT A SUM OF RS.1,05,000 WAS RECEI VED BY THE ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 10 OF 12 ASSESSEE AS A GIFT FROM HER FATHER, RS.39,000 WAS A GIFT FROM HER BROTHER, RS.55,000 WAS HER INCOME FROM AGRICULTURAL OPERATIONS AND RS.22,200 WAS FROM OUT OF INTERNAL ACCRUALS. W HILE THE ASSESSEE HAS FILED CONFIRMATIONS OF THE GIFTS FROM HER FATHER AND BROTHER, NO EVIDENCE WHATSOEVER FOR THE AGRICULTURA L INCOME AND INTERNAL ACCRUALS HAVE BEEN FILED. SINCE THE CONFIR MATIONS HAVE BEEN FILED, WE ARE INCLINED TO ACCEPT THE GIFT FROM ASSESSEES FATHER AND BROTHER, WHO OUT OF LOVE AND AFFECTION MIGHT HA VE GIVEN THE GIFT OF CASH FOR CONSTRUCTION OF THE HOSPITAL BUILD ING AND WE ARE ALSO INCLINED TO ACCEPT A SUM OF RS.22,200 TO BE OU T OF INTERNAL ACCRUALS AS THE ASSESSEE IS A MEDICAL PROFESSIONAL. HOWEVER, AS REGARDS THE AGRICULTURAL INCOME OF RS.55,000, WE CO NFIRM THE ADDITION AS NO EVIDENCE WHATSOEVER OF HOLDING OF AG RICULTURAL LAND AND CARRYING ON OF AGRICULTURAL ACTIVITIES HAS BEEN FILED BY THE ASSESSEE. THEREFORE, THE ADDITION OF RS.55,000 IS C ONFIRMED. SIMILARLY, ADDITION OF RS.1,60,800 IS ALSO CONFIRME D AS THE ASSESSEE HERSELF AGREED FOR THE ADDITION DURING THE ASSESSMENT PROCEEDINGS. THUS, GROUND OF APPEAL NO.13 IS PARTLY ALLOWED AND GROUND OF APPEAL NO.14 IS REJECTED. 12. AS REGARDS GROUND NO.15 AGAINST CHARGING OF INT EREST U/S 234A, 234B AND 234C OF THE I.T. ACT, WE DIRECT THE AO TO GIVE CONSEQUENTIAL RELIEF, IF ANY, TO THE ASSESSEE. 13. IN THE RESULT, ASSESSEES APPEAL FOR THE A.Y 200 4-05 IS PARTLY ALLOWED. ITA NO.974/HYD/2016 A.Y 2005-06 14. FOR THE A.Y 2005-06, WE FIND THAT THE GROUNDS OF APPEAL NO. 2 & 3 ARE AGAINST THE PROCEEDINGS U/S 14 7 OF THE ACT ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 11 OF 12 AND FOR THE DETAILED REASONS GIVEN BY US FOR THE A. Y 2004-05, THESE TWO GROUNDS ARE REJECTED. 15. AS REGARDS GROUNDS OF APPEAL NO.4 TO 10 AGAINST THE ADDITIONS TOWARDS UNACCOUNTED INVESTMENT IN THE CON STRUCTION OF THE HOSPITAL BUILDING, WE SET IT ASIDE TO THE FILE OF THE AO FOR CONSIDERATION IN ACCORDANCE WITH THE DIRECTIONS FOR THE A.Y 2004- 05 ABOVE. THESE GROUNDS ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 16. AS REGARDS THE OTHER ADDITIONS IN GROUNDS OF AP PEAL NO. 11 TO 15, WE FIND THAT THE AO HAS FOUND THAT TH E ASSESSEE HAS RECEIVED GIFTS OF VARIOUS AMOUNTS FROM HER RELATIVE S AND ALSO LOANS FROM ONE SHRI T. PURUSHOTHAM AND ALSO HER HUSBAND S HRI R. SRINIVAS. HE ALSO OBSERVED CERTAIN DISCREPANCIES IN THE RECEIPTS OF THE HOSPITAL. ASSESSEE SUBMITTED HER EXPLANATION, B UT THE AO WAS NOT SATISFIED BY ASSESSEES CONTENTION AND BROUGHT THEM TO TAX. ON APPEAL, THE CIT (A) CONFIRMED THE ADDITIONS FOR WANT OF NECESSARY EVIDENCE IN SUPPORT OF ASSESSEES CONTENT IONS THAT ASSESSEES HUSBAND HAS RECEIVED THE GIFTS AND LOANS ON HER BEHALF AND UTILIZED THE SAME FOR CONSTRUCTION OF THE HOSPI TAL BUILDING. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR PARTICULAR ATTENTION TO THE WRITTEN SUBMISSIONS OF THE ASSESSE E FILED BEFORE THE CIT (A) GIVING EXPLANATION OF THE ASSESSEE ON E ACH OF THE GIFT, LOAN ETC., AND SUBMITTED THAT THE CIT (A) HAS NOT C ONSIDERED ANY OF THE SUBMISSIONS OF THE ASSESSEE. HAVING GONE THR OUGH THE SUBMISSIONS, WE FIND THAT THE ASSESSEE HAS FILED EL ABORATE SUBMISSIONS WITH THE NECESSARY EVIDENCE BOTH BEFORE THE AO AND THE CIT (A) AND THE CIT (A) HAD CALLED FOR A REMAND REPORT FROM THE AO AND THEREAFTER HAS CONFIRMED THE ADDITIONS. EXCEPT FOR ITA NOS 973 AND 974 OF 2016 D R T INDIRA GOURI HYDERABAD PAGE 12 OF 12 REITERATING THE SUBMISSION MADE AS ABOVE, THE LEARN ED COUNSEL FOR THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE ASSES SEES CLAIM WITH ANY EVIDENCE CONTRARY TO THE FINDINGS OF THE A UTHORITIES BELOW. THEREFORE, THESE ADDITIONS ARE CONFIRMED. T HUS, THESE GROUNDS ARE REJECTED. 17. GROUND OF APPEAL NO.16 IS AGAINST CHARGING OF I NTEREST U/S 234A, 234B AND 234C OF THE I.T. ACT AND THE AO IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF, IF ANY, TO THE ASSESSEE. 18. IN THE RESULT, ASSESSEES APPEALS FOR THE A.YS 2 004-05 AND 2005-06 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH APRIL, 2017. VINODAN/SPS COPY TO: 1 SHRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA'S E LEGANCE, 3-6- 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 INCOME TAX OFFICER WARD 8(2) SIGNATURE TOWERS, KO NDAPUR, HYDERABAD 3 CIT (A)-10 HYDERABAD 4 CIT (IT & TP) HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER