M/s. Mahavir Ispat Pvt.Ltd., Hyderabad V. DCIT, Central Circle-4, Hyderabad

ITA 990/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74633 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 22-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: B SAI PRASAD
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Gift; Business income; Business expenditure; Income from undisclosed sources; Search and seizure; Salary income; Peak credit; Additional evidence
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL. NO. ITA NO. & A.Y. APPELLANT RESPONDENT 1. 430/HYD/2012 A.Y. 2008-09 THE DEPUTY CIT CENTRAL CIRCLE-4 HYDERABAD SRI RAMPRASAD AGARWAL HYDERABAD PAN: AACPA3130H 2. 639/HYD/2012 A.Y. 2008-09 SRI SHIVRAM KANTILAL AGARWAL HYDERABAD PAN: AACPA1442N 3. 713/HYD/2012 A.Y. 2008-09 SRI SHIVRAM KANTILAL AGARWAL HYDERABAD PAN: AACPA1442N THE DEPUTY CIT CENTRAL CIRCLE-4 HYDERABAD 4. 640/HYD/2012 A.Y. 2008-09 THE DEPUTY CIT CENTRAL CIRCLE-4 HYDERABAD SMT. VANITA AGARWAL HYDERABAD PAN: ADCPA4929R 5. 641/HYD/2012 A.Y. 2008-09 SRI VIJAY RAM AGARWAL HYDERABAD PAN: AACPA1168P 6. 990/HYD/2012 A.Y. 2008-09 M/S. MAHAVIR ISPAT PVT. LTD. HYDERABAD PAN: AACCM5071A THE DEPUTY CIT CENTRAL CIRCLE-4 HYDERABAD 7. 1089/HYD/2012 A.Y. 2008-09 THE DEPUTY CIT CENTRAL CIRCLE-4 HYDERABAD M/S. MAHAVIR ISPAT PVT. LTD. HYDERABAD PAN: AACCM5071A 8. 1090/HYD/2012 A.Y. 2009-10 REVENUE BY: SRI P. SOMASEKHAR REDDY ASSESSEE BY: SRI B. SAI PRASAD DATE OF HEARING: 28.01.2014 DATE OF PRONOUNCEMENT: 21.02.2014 ORDER ORDER ORDER ORDER PER CHANDRA POOJARI, AM : THE ABOVE APPEALS ARE CROSS APPEALS, BY REVENUE AN D DIFFERENT ASSESSEES, DIRECTED AGAINST DIFFERENT ORD ERS OF THE CIT(A)5VII, HYDERABAD FOR ASSESSMENT YEARS 2008509 AND 20095 10. SINCE THE ISSUES INVOLVED ARE IDENTICAL AND TH E ASSESSEES ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 2 BELONG TO SAME GROUP, ALL THE ABOVE APPEALS ARE CLU BBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP ASSESSEE'S APPEAL IN ITA NO. 990/H YD/ 2012 PERTAINING TO MAHAVIR ISPAT PVT. LTD. THE ASSESS EE RAISED GROUNDS OF APPEAL AS FOLLOWS: (1) THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL )-VII, HYDERABAD IN SO FAR AS IT WENT AGAINST THE APPELLAN T, IS ERRONEOUS BOTH ON FACTS AND IN LAW. (2) THE CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS . 2,44,96,200 MADE TOWARDS UNEXPLAINED CREDITS IN THE BANK ACCOUNT HAVING HELD THAT THE SAID AMOUNT WAS UTILIS ED FOR PAYMENT OF ELECTRICITY CHARGES FOR BUSINESS PURPOSE S. (3) THE CIT(A) WHILE HOLDING THAT THE AMOUNT OF RS. 2,42,60,675 AS ADMISSIBLE EXPENDITURE HAVING BEEN U TILIZED FOR ELECTRICITY PAYMENTS FOR BUSINESS PURPOSES ERRE D IN ESTIMATING ASSUMED PROFIT AT RS. 38,58,701/- ON ASS UMPTION. (4) THE CIT(A) ERRED IN ESTIMATING THE SEED CAPITAL REQ UIRED AT RS. 33,49.5671- FOR EARNING THE PROFIT ESTIMATED BY HIM. (5) THE CIT(A) RESORTED TO THE ADDITIONS OF RS. 38,58,7 01 AND RS. 33,49,567 PURELY ON ESTIMATE BASIS AND THE ASSE SSMENT BEING A SEARCHED RELATED ASSESSMENT SUCH ROUTINE AD DITIONS SHOULD NOT HAVE BEEN MADE WITHOUT THERE BEING ANY INCRIMINATING SEIZED MATERIAL DETECTED DURING THE S EARCH OPERATIONS. (6) WITHOUT PREJUDICE TO THE ABOVE CONTENTION, THE CIT( A) OUGHT TO HAVE CONSIDERED THE AMOUNT OF RS. 2,44,96, 200 DEPOSITED IN BANKS AS TURNOVER AND ESTIMATED REASON ABLE PROFIT ON THE SAME WITHOUT RESORTING TO THE AMOUNTS ESTIMATED BY HIM AS SPECIFIED IN GROUND NOS. 3 AND 4. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE5COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING M.S. INGOT S AND THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED IN THE GROUP OF ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 3 CASES ON 29.01.2009 ALONG WITH OTHER SUNDER GROUP O F CASES. FOR THE YEAR UNDER REFERENCE, THE ASSESSEE FURNISHE D THE RETURN OF INCOME DECLARING AN INCOME OF RS. 16,31,160, AGA INST WHICH THE TOTAL INCOME WAS DETERMINED AT RS. 2,61,27,356 BY VIRTUE OF ADDITION OF RS. 2,44,96,200 BEING THE AMOUNTS OF CA SH DEPOSITS IN THE BANK ACCOUNTS MAINTAINED BY VARIOUS INDIVIDUAL MEMBERS OF THE FAMILY/DIRECTORS OF THE COMPANY, TREATED AS UNEXPLAINED CREDITS IN THE HANDS OF THE ASSESSEE5COMPANY. THE MAIN ISSUE INVOLVED IN THIS CASE IS THAT DURING THE COURSE OF SEARCH PROCEEDINGS CONDUCTED IN THIS GROUP, IT WAS NOTICED THAT CERTAIN CASH DEPOSITS WERE MADE INTO THE BANK ACCOU NTS MAINTAINED BY THE DIRECTORS/ FAMILY MEMBERS OF THE GROUP AND IN ABSENCE OF EXPLANATION ACCEPTABLE TO THE ASSESSI NG OFFICER, THE ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSE E COMPANY ON SUBSTANTIVE BASIS AND IN THE HANDS OF TH E INDIVIDUAL ACCOUNT HOLDERS ON PROTECTIVE BASIS FOR THE RELEVANT ASSESSMENT YEAR. THE DETAILS OF THE BANK ACCOUNTS, NAMES OF THE ACCOUNT HOLDERS AND THE AMOUNTS OF DEPOSITS ARE AS UNDER: SI. NO. NAME ALC NO. & BANK AMOUNT (RS.) 1 SIVARAM AGARWAL 1624 / NASIK CO. OP URBAN BANK L TD 53,25,800 2 VIJAYRAM AGARWAL 1625 / - DO - 54,48,800 3 RAMPRASAD AGARWAL 1626 / - DO - 78,78,800 4 KANTILAL AGARWAL 1627 / - DO - 58 42,800 TOTAL 2,44,96,200 4. THUS, THE AMOUNT OF RS. 2,44,96,200 REPRESENTING TH E TOTAL OF THE CASH DEPOSITS INTO THE BANK ACCOUNTS MAINTAI NED BY THE ABOVE INDIVIDUALS/DIRECTORS/MEMBERS OF THE GROUP, W ERE ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 4 TREATED AS UNEXPLAINED DEPOSITS/CREDITS AND AS SUCH THE SAME WAS TREATED AS THE INCOME OF THE ASSESSEE COMPANY B Y THE ASSESSING OFFICER AS THE SAME AMOUNTS WERE OBSERVED TO BE THE AMOUNTS PERTAINING TO THE ASSESSEE COMPANY BASED ON THE STATEMENT RECORDED FROM SHRI KANTILAL AGARWAL, WITH ALMOST ENTIRE AMOUNT OF SUCH DEPOSITS UTILIZED FOR PAYING THE ELECTRICITY BILLS OF THE COMPANY, WITHOUT RECORDING IN THE BOOK S OF ACCOUNTS OF THE COMPANY. THE SPECIFIC OBSERVATIONS OF THE ASSESSING OFFICER ARE THAT THE ASSESSEE COMPANY ITS ELF ADMITTED THAT THE ABOVE TRANSACTIONS ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND RATHER MAINTAINED ON A LOOSE SHEET WHICH HAS NO LEGAL BASE. THE ASSESSEE ITSELF STATE D THAT THERE ARE UNRECORDED ELECTRICITY EXPENSES. THE SOURCES FO R MEETING THESE EXPENSES ARE FROM THE BANK DEPOSITS. HENCE, T HE ASSESSEE COULD TO SOME EXTENT EXPLAINED THE SOURCES FOR THE UNRECORDED EXPENDITURE. THERE ARE BANK DEPOSITS TO THE TUNE O F RS. 2,44,96,200 IN THE NAME OF FOUR PERSONS. THE DEPONE NT SHRI KANTILAL ADMITTED THAT DEPOSITS PERTAIN TO BUSINESS ACTIVITIES OF M/S MAHAVIR ISPAT PVT. LTD AND THE SAME WERE NOT CO NSIDERED IN THE ACCOUNTS OF THE ASSESSEE COMPANY FOR THE AY 200 8509. IN THIS REGARD, THE ASSESSEE SIMPLY STATED THAT THESE AMOUNTS REPRESENT ADVANCES RECEIVED FROM THE PURCHASES. THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HAVING RECEIVED THE ABOVE SUMS. HENCE, THESE DEPOSITS OF RS. 2,44,9 6,200 ARE NOTHING BUT UNEXPLAINED DEPOSITS IN THE BANK. THE U NEXPLAINED DEPOSITS OF RS .24496200 ARE ADDED TO THE INCOME RE TURNED. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 5 5. THE ASSESSEE OBJECTED TO THE ABOVE ADDITION OF RS. 2,44,96,200. IT WAS SUBMITTED BEFORE THE CIT(A) THA T WHILE THE SOURCES OF THE DEPOSITS IN THE SAID BANK ACCOUNTS W AS FROM THE BUSINESS FUNDS OF THE COMPANY, THE SAID DEPOSITS WE RE UTILIZED BY THE ASSESSEE FOR CLEARING THE ELECTRICAL DUES OF THE ASSESSEE COMPANY. WHILE THE CREDITS IN THE BANK ACCOUNTS HAV E FLOWN FROM THE BUSINESS FUNDS, THE DEBITS/WITHDRAWALS IN THE BANK ACCOUNTS FOUND THEIR DESTINATION OR TRAVELLED INTO MEETING THE ELECTRICITY EXPENDITURE OF THE ASSESSEE COMPANY. TH E DEBITS/WITHDRAWALS FROM THE ABOVE MENTIONED BANK AC COUNTS WERE UTILIZED FOR MAKING THE PAYMENTS MADE TO M/S R AIN CALCINING LTD, TOWARDS ELECTRICITY EXPENDITURE, FOR DIFFERENT MONTHS, IS AS UNDER: SL. NO. FOR THE MONTH OF AMOUNT (RS.) 1. JULY, 2007 34,16,542 2. AUGUST, 2007 32,66,477 3. SEPTEMBER, 2007 45,54,463 4. OCTOBER, 2007 16,04,360 5. NOVEMBER, 2007 32,12,366 6. DECEMBER, 2007 27,77,173 7. JANUARY, 2008 20,15,944 8. FEBRUARY, 2008 16,78,703 TOTAL 2,42,70,675 6. WHILE FURNISHING THE COPIES OF THE ELECTRICITY BILL S RELATED TO THE EXPENDITURE INDICATED ABOVE, BEFORE THE CIT(A), IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT WHILE THE CR EDITS IN THE ABOVE MENTIONED BANK ACCOUNTS ARE ROUTED OUT OF THE FUNDS OF THE ASSESSEE COMPANY, THE WITHDRAWALS FROM THE BANK ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 6 ACCOUNTS WERE ALSO ROUTED THROUGH BANKING CHANNELS FOR THE PURPOSE OF CLEARING THE ELECTRICAL EXPENDITURE OF T HE ASSESSEE COMPANY. AS PER THE ASSESSEE, THERE ARE NO FUNDS LE FT IN THE BANK ACCOUNT SINCE ALL THE BANK ACCOUNTS ARE CLOSED SUBSEQUENT TO THE PAYMENT OF ELECTRICITY CHARGES AN D THE TRANSACTIONS INDICATING THE FLOW OF FUNDS OUT OF TH E BANK ACCOUNTS, RUN AS UNDER: RECEIPTS DURING THE YEAR WHICH WERE NOTED IN SHEETS LOOSE RS. 2,44,96,200 AMOUNTS DEPOSITED IN THE FOUR BANK ACCOUNTS RS. 2,44,96, 200 AMOUNT SPENT TOWARDS ELECTRICITY EXPENSES RS. 2,42 , 70,675 FUNDS WITHDRAWN FOR OTHER PURPOSES RS. 2,25, 525 7. THE ASSESSEE STATED THAT DURING THE COURSE OF SEARC H PROCEEDINGS ITSELF THIS ISSUE WAS EXAMINED AND THE ASSESSEE WAS QUESTIONED ON THIS ISSUE AND IN THE SWORN DEPOSITIO N RECORDED FROM KANTILAL AGARWAL, MD OF THE COMPANY, IT WAS ST ATED THAT THE DEPOSITS WERE OUT OF THE RECEIPTS OF THE ASSESS EE COMPANY AND THE DEBITS/WITHDRAWALS FROM THE BANK ACCOUNTS W ERE UTILIZED FOR THE PURPOSE OF PAYING THE ELECTRICITY EXPENDITURE OF THE ASSESSEE COMPANY AND THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES ONLY. IT WAS FURTHER SUBMITTE D BY THE ASSESSEE THAT THE SAME EXPLANATION WAS OFFERED BY T HE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND THE SAME WERE SHOWN TO HAVE BEEN INCORPORATED IN THE ASSESSM ENT ORDER AND THE ESSENCE OF THE SAID SUBMISSIONS INDICATE AS UNDER: (A) THE AMOUNT OF RS. 2,44,96,200/5 DEPOSITED IN THE INDIVIDUAL BANK ACCOUNT WERE ADVANCES BY ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 7 CUSTOMERS AND THE MONIES WERE FORFEITED ON TECHNICAL GROUNDS AS THE COMPANY DID NOT ISSUE ANY RECEIPT FOR SUCH DEPOSITS TO THE DEPOSITORS. (B) BANK DEPOSITS WERE UTILIZED FOR THE PURPOSE OF PAYING ELECTRICITY CHARGES OF THE ASSESSEE COMPANY. (C) THE ELECTRICITY CHARGES WERE NOT DEBITED IN THE REGULAR BOOKS OF ACCOUNTS BUT HAVE BEEN SEPARATELY NOTED ON A PAPER. (D) HAD THE ASSESSEE RECORDED THESE ENTRIES IN BOOKS OF ACCOUNTS, IT WOULD HAVE ONLY INCREASED ELECTRICITY CHARGES AND RECEIPTS ETC., AND SINCE THE DEPOSITS AND ELECTRICITY CHARGES ARE MORE OR LESS EQUAL, THE AFORESAID TRANSACTIONS NEUTRALIZED THE P&L A/C. (E) SINCE THE EXPENDITURE INCURRED TOWARDS ELECTRICAL CHARGES IS FOR REGULAR RUNNING OF THE BUSINESS AND AS THE PAYMENT IS AMPLY PROVED SINCE THE ENTIRE PAYMENT IS MADE BY A/C PAYEE CHEQUES, IT IS AN ADMISSIBLE EXPENSE. 8. IT WAS FURTHER ARGUED BY THE ASSESSEE THAT THE DEPO SITS INTO BANK ACCOUNTS WERE UTILIZED FOR ELECTRICITY CH ARGES OF THE COMPANY, AS SUPPORTED BY THE EVIDENCES IN THE FORM OF BILLS ISSUED BY THE ELECTRICITY SUPPLYING COMPANY AND ALS O THE PAYMENTS MADE BY ACCOUNT PAYEE CHEQUES FROM THE SAI D BANK ACCOUNTS AND THIS POSITION WAS INDICATED TO TH E DEPARTMENT AT THE STAGE OF SEARCH OPERATIONS AS WEL L AS THE ASSESSMENT PROCEEDING AND CONTENDED THAT SINCE THE CLAIM WAS MADE IN THE NASCENT STAGE, THE SAME CANNOT BE D OUBTED AS AN EXERCISE OF AN AFTERTHOUGHT. FURTHER, IT WAS CONTENDED BY ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 8 THE ASSESSEE THAT THE ASSESSING OFFICER DID NOT EXA MINE THE EVIDENCE/PROOF OF PAYMENT OF ELECTRICITY EXPENDITUR E AND AS SUCH THE CLAIM WAS NOT CONSIDERED IN ITS PROPER PER SPECTIVE'. IT WAS ALSO CONTENDED THAT SINCE THE RECEIPTS WERE UTI LIZED FOR THE PURPOSE OF MEETING THE ELECTRICITY EXPENSES OF THE ASSESSEE COMPANY, AND AS THE CLAIM OF EXPENDITURE SATISFIED THE INGREDIENTS OF SECTION 37(1), THE SAME IS ALLOWABLE AS BUSINESS EXPENDITURE. 9. THE CIT(A) OBSERVED THAT THE ASSESSEE COMPANY ENGAG ED IN MANUFACTURING OF M.S. INGOTS AND WAS RUNNING A U NIT UNDER THE NAME AND STYLE OF M/S. MAHAVIR ISPAT PVT. LTD. AND WAS SHOWN TO HAVE USED THE H.T.C.C. ELECTRICITY CONNECT ION SANCTIONED IN THE NAME OF SHRI SHIVA SPINNING MILLS PVT. LTD., HYDERABAD, DURING THE YEAR AND IN THE SUBSEQUENT YE ARS TOO. DURING THE COURSE OF THE SEARCH PROCEEDINGS CONDUCT ED IN THE GROUP, ON 2950152009, IT WAS FOUND THAT CERTAIN BAN K ACCOUNTS WERE OPENED AND MAINTAINED BY SHRI VIJAYRAM AGARWAL , SHRI SHIVRAM AGARWAL, SHRI RAMPRASAD AGARWAL AND SHRI KA NTILAL AGARWAL AT NASIK CO5OPERATIVE URBAN BANK LTD., AT H YDERABAD AND THE TOTAL OF THE DEPOSITS MADE INTO SUCH ACCOUN TS WAS QUANTIFIED AT RS. 2,44,96,200 DURING THE YEAR UNDER REFERENCE. IT IS ALSO A FACT THAT THESE CASH DEPOSITS/CREDITS WER E ASSESSED IN THE HANDS OF THE INDIVIDUAL ACCOUNT HOLDERS ON PROT ECTIVE BASIS AND IN THE NAME OF THE COMPANY ON SUBSTANTIVE BASIS . OUT OF THE SAID DEPOSITS OF 2,44,96,200, AN AMOUNT OF RS. 2,42,70,760/5 WAS THE AMOUNT SHOWN TO HAVE INCURRED BY THE ASSESS EE ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 9 COMPANY TOWARDS MEETING THE ELECTRICITY EXPENDITURE WHICH WAS PAID BY ACCOUNT PAYEE CHEQUES DRAWN FROM THE BA NK ACCOUNTS MAINTAINED IN WHICH THE CASH WERE DEPOSITE D. HOWEVER, THIS EXPENDITURE WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT. HENCE, THE ASSESSING OFFICER HAS NOT CONSI DERED THE SAME AS BUSINESS EXPENDITURE WHILE TREATING THE DEP OSITS INTO THE BANK ACCOUNTS, AS UNEXPLAINED CREDITS/DEPOSITS BASED ON THE ADMISSION OF SHRI KANTILAL AGARWAL, THE MD OF T HE COMPANY THAT SUCH DEPOSITS WERE OUT OF THE BUSINESS RECEIPT S OF THE COMPANY. 10. THE CIT(A) FURTHER OBSERVED THAT, AS INDICATED BY T HE ASSESSEE, THIS ISSUE/FACTUAL POSITION WAS BROUGHT T O THE NOTICE OF THE DEPARTMENT AT THE VERY FIRST STAGE OF THE SEARC H OPERATIONS AS WELL AS THE ASSESSMENT PROCEEDINGS. HOWEVER, WHI LE COMPLETING THE ASSESSMENTS, THE ASSESSING OFFICER D ID NOT CONSIDER THE ASSESSEE'S CLAIM OF UTILIZATION OF THE SAID DEPOSITS TOWARDS THE ELECTRICITY EXPENSES AS BUSINESS EXPENS E OF THE COMPANY, WHILE TREATING THE DEPOSITS/CREDITS INTO T HE BANK ACCOUNTS AS A BUSINESS RECEIPT OF THE ASSESSEE COMP ANY. HE HAS GONE THROUGH THE RELEVANT PORTION OF THE STATEM ENT RECORDED FROM SHRI KANTILAL AGARWAL, THE MD OF THE COMPANY WHICH RUNS AS UNDER: ' ... THE AMOUNTS DEPOSITED IN THE AFORESAID BANK A CCOUNTS WERE UTILIZED FOR THE PAYMENT OF ELECTRICITY CHARGES INC URRED BY MIPL. CERTAIN ADVANCES FOR SUPPLY OF GOODS AND DEPO SITS WERE RECEIVED FROM VARIOUS CUSTOMERS FOR SUPPLY OF GOODS WHICH WERE FORFEITED AND WERE DEPOSITED IN THE ABOVE SAID BANK ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 10 ACCOUNTS. THE AMOUNTS WERE RECEIVED IN RESPECT OF B USINESS ACTIVITIES OF M/S MAHAVIR ISPAT PVT. LTD. AND AMOUN TS RECEIVED ARE MORE OR LESS EQUIVALENT TO THE ELECTRICITY CHAR GES INCURRED BY THE SAID COMPANY. ENTRIES IN RESPECT OF THESE TR ANSACTIONS HAD NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF T HE COMPANY. HOWEVER, THE DETAILS OF AMOUNTS RECEIVED AND FORFEI TED AND DEPOSITED AND UTILIZED HAVE BEEN RECORDED ON A LOOS E SHEET. IT DOES NOT AFFECT THE P&L OF THE COMPANY AS THE SAME WAS NOT INCORPORATED IN THE BOOKS OF ACCOUNTS.' 11. THE CIT(A) OBSERVED THAT THE SAME STAND WAS TAKEN A ND EXPLAINED DURING THE ASSESSMENT PROCEEDINGS AND SUB MISSIONS WERE INCORPORATED IN THE ASSESSMENT ORDER AS REFERR ED TO. AS COULD BE SEEN FROM THE ABOVE SUBMISSIONS AND FACTS, THE CASH DEPOSITS WERE SHOWN AS THE RECEIPTS OF THE BUSINESS AND THE SAME WERE USED FOR MEETING THE EXPENSES RELATED TO BUSINESS BUT WITHOUT RECORDING IN THE REGULAR BOOKS OF ACCOU NT. HOWEVER, IT HAS BEEN CLEARLY INDICATED AND ESTABLISHED THAT SUCH TRANSACTIONS WERE RECORDED ON LOOSE SHEETS THAT HAV E FORMED PART OF THE SEIZED MATERIAL AND THE FINDINGS OF THE SEARCH, IN THE FORM OF DISCOVERING THE UNACCOUNTED BANK ACCOUNT, W HICH WERE THE DESTINATION OF UNACCOUNTED RECEIPTS AND TH E SOURCE OF THE UNACCOUNTED EXPENSES INCURRED THROUGH ACCOUN T PAYEE CHEQUES. THERE ARE NO DOUBTS WHATSOEVER ON 'THIS I SSUE. 12. SINCE, THE INCOME AS WELL AS EXPENSES WERE PART OF THE SAME INFORMATION THAT WAS MADE OUT DURING THE SEARC H PROCEEDINGS, THIS WAS ALL ALONG ARGUED BY THE ASSES SEE, THE TRANSACTIONS MUST BE LOOKED AT AS A WHOLE AND NOT D ISSECTED. IN THIS CONTEXT, THE ASSESSEE RELIED UPON THE RATIO OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF VODAFONE INTER NATIONAL ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 11 HOLDINGS BV (341 ITR 1), WHEREIN, THE HON'BLE COURT SHOWN TO HAVE HELD THAT 'THE TASK OF REVENUE WAS TO ASCERTAI N THE TRUE NATURE OF THE TRANSACTION AND WHILE DOING SO, IT HA D TO LOOK AT THE ENTIRE TRANSACTION HOLISTICALLY5 AND NOT ADOPT A DISSECTING APPROACH.' BASED ON THE RATIO OF THE DECISION REFER RED SUPRA THE FACTS OF THE CASE ARE CORRELATED AND SUCH FACTS THAT HAVE EMANATED IN THIS CASE ARE; (A) BOTH THE RECEIPTS AND OUTGOINGS ARE TRANSACTED OUTSIDE THE BOOKS OF ACCOUNTS BUT RECORDED ON LOOSE SHEETS. (B) THE RECEIPTS WERE SPENT FOR THE PURPOSE OF BUSINESS AS EVIDENT IN THE FORM OF CHEQUE PAYMENTS SUPPORTED BY BILLS ISSUED BY THE SUPPLIER OF THE POWER COMPANY. 13. THE CIT(A) FURTHER OBSERVED THAT THESE FACTS WERE I N THE NOTICE OF BOTH THE DEPARTMENT AND THE ASSESSEE SINC E THE DATE OF SEARCH AND AS SUCH CANNOT BE CLAIMED AS AN EXERC ISE OF AN AFTERTHOUGHT AND AS SUCH CANNOT BE IGNORED. THE FAC T THAT WERE BROUGHT ON THE RECORD CLEARLY INDICATE THAT TH OUGH THE UNACCOUNTED RECEIPTS AS WELL AS THE EXPENSES ARE PA RT OF THE RECORD FOUND IN THE COURSE OF SEARCH AND ARE WELL D OCUMENTED, SUPPORTED BY PAYMENTS THROUGH ACCOUNT PAYEE CHEQUES . THIS CLEARLY INDICATES THAT THE AMOUNTS ARE EXPENDED FOR EARNING THE INCOME, THOUGH THE SAME WERE NOT RECORDED IN TH E REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IN SU PPORT OF ITS CONTENTIONS, THE ASSESSEE FILED COPIES OF RELEVANT ELECTRICITY BILLS, RECEIPTS FOR PAYMENT OF ELECTRICITY BILLS AND COPIE S OF THE BANK ACCOUNT THROUGH WHICH THE CHEQUE PAYMENTS ARE MADE FOR THE ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 12 SAID EXPENSES. AS COULD BE SEEN FROM THE RECORD OF THE ASSESSEE WITH SPECIAL REFERENCE TO THE ABOVE MENTIO NED TRANSACTIONS, IT IS AN ADMITTED AND UNDISPUTED FACT THAT BOTH THE RECEIPTS OF THE ASSESSEE COMPANY AND ALSO THE PAYME NTS MADE SUBSEQUENTLY, WERE RELATED TO THE ASSESSEE COM PANY, THOUGH THEY ARE OUTSIDE THE REGULAR BOOKS OF ACCOUN TS. ANY EXPENDITURE TO BECOME AN ALLOWABLE EXPENDITURE AS P ER THE PROVISIONS OF SECTION 37(1), THE AMOUNTS MUST5 BE P AID AND EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION AND SUCH EXPENDITURE SHOULD NOT HAVE THE CHARACTERISTIC OF CAPITAL/PERSONAL IN NATURE OR AN ALLOWANCE OF THE CHARACTER DESCRIBED IN SECTION 30 TO 36 OF THE IT ACT, 1961. IN THE INSTANT CASE, THE EXPENDITURE INCURRED BY TH E ASSESSEE WHICH HAS BEEN CLAIMED AS ALLOWABLE EXPENDITURE CAN NEITHER BE CLASSIFIED AS CAPITAL OR PERSONAL OR THE EXPENDI TURE SPECIFICALLY ALLOWED UNDER OTHER PROVISIONS OF THE ACT. ON THE LINES OF THE ABOVE DISCUSSION, THE OBSERVATIONS AND BASED ON THE FACTS OF THE CASE, I AM OF THE OPINION THAT THE CLAIM OF THE ASSESSEE FOR ALLOWING THE EXPENSES MET OUT FOR ELEC TRICITY CHARGES TO THE TUNE OF RS. 2,42,70,675/5 AGAINST TH E DEPOSITS OF RS. 2,44,96,200/5 INTO THE BANK ACCOUNTS IN THE FOR M OF UNEXPLAINED CREDITS, WHICH WERE CONSIDERED AS BUSIN ESS RECEIPTS, IS HELD TO BE AN ALLOWABLE EXPENSE. ACCOR DINGLY, THE AMOUNT OF RS. 2,42,70,675 IS TREATED AS AN ALLOWABL E EXPENSE, LEAVING A BALANCE OF 2,25,525/5 FOR TAXATION AS UNE XPLAINED CREDIT U/S 68 OF THE IT ACT, 1961. HOWEVER, IT IS P ERTINENT TO KNOW ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 13 WHAT WAS THE INCOME GENERATED AGAINST THE EXPENSES INCURRED AND IT IS ALSO RELEVANT TO ASCERTAIN THE UNACCOUNTE D RECEIPTS/INCOME GENERATED VIS5A5VIS THE UNACCOUNTED EXPENSES. IT IS A MATTER OF FACT AND AS SUCH ASCERT AINABLE FROM THE FACT RELATABLE TO THE ASSESSEE'S CASE ITSELF. I N THIS CONTEXT, IT IS RELEVANT TO REFER TO THE SHOW CAUSE NOTICE DATED 16 51252010 ISSUED BY THE ASSESSING OFFICER PROPOSING FOR ESTIM ATING THE INCOME ON ACCOUNT OF EXPENSES RECORDED OUTSIDE THE BOOKS. THE RELEVANT PORTION OF THE NOTICE IS AS UNDER: 'IT WAS YOUR CLAIM THAT YOU PAID ELECTRICITY CHARGE S FROM THOSE FUNDS. FROM THIS IT IS OBVIOUS THAT THE ELECTRICITY CHARGES WHICH WERE INCURRED OUTSIDE THE ACCOUNT BOOKS WERE MET FR OM THOSE DEPOSITS. THUS, IT IS CLEAR THAT THERE IS PRODUCTIO N OF MATERIAL OUTSIDE THE ACCOUNT BOOKS BY CONSUMING ELECTRICITY WHICH WAS NOT BROUGHT INTO THE BOOKS. HENCE, I PROPOSE TO MAK E ESTIMATED ADDITION OF PROFIT IN RESPECT OF SUCH PRODUCTION OU TSIDE THE ACCOUNT BOOKS. YOU ARE REQUESTED TO FILE YOUR OBJEC TIONS'. 14. HE OBSERVED THAT IT IS RELEVANT TO LOOK AT THE ANGL E OF ESTIMATION OF INCOME ARISING OUT OF THE CLAIM OF UN ACCOUNTED EXPENDITURE MADE BY THE ASSESSEE. THOUGH, IT HAS BE EN CONTENDED BY THE ASSESSEE THAT THE SEARCH OPERATION S DID NOT RESULT IN DETECTING ANY INCRIMINATING MATERIAL SUGG ESTING SUPPRESSION OF EITHER PRODUCTION OR SALES, IT WAS C ONCEDED THAT THE PRODUCTION/INCOME GENERATED BY THE UNACCOUNTED EXPENDITURE, DO EXCEED THE EXPENSES INCURRED. THE I NFORMATION RELATED TO SUCH PRODUCTION/TURNOVER AND THE RELATED MANUFACTURING EXPENSES, SPECIALLY WITH REFERENCE TO THE CONSUMPTION OF POWER BY THE ASSESSEE FOR THE YEAR U NDER REFERENCE ALONG WITH FEW OF THE SUBSEQUENT YEARS, T HROW A ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 14 PATTERN AND ON THE SAID LINES, THE FOLLOWING INFORM ATION WAS BROUGHT ON RECORD. RS. ELECTRICITY EXPENSES RECORDED IN BOOKS OF ACCOUNT 2 ,17,54,813 TURNOVER AS PER THE BOOKS OF ACCOUNT 12,53,14,790 % OF ELECTRICITY CONSUMPTION TO THE TURNOVER 17.36% TURNOVER OUTSIDE THE BOOKS ON PRO5RATA BASIS ON THE ELECTRICITY EXPENSES OF RS. 2,42,70,675 13,98,08,035 A.Y. TURNOVER (RS.) MFG. EXPENSES (RS.) GP/PERCENTAGE (RS.) 2008509 12,53,14,790 12,18,44,048 34,70,742/2.76 2009510 13,23,18,275 12,93,53,642 29,64,633/2.24 2010511 7,24,37,528 7,14,10,688 10,26,840/1.41 2011512 8,84,32,437 8,67,79,591 16,52,846/1.86 15. THE GROSS PROFIT FOR THE YEAR UNDER REFERENCE IS WO RKED OUT TO 2.76%, WHEREAS, THE AGGREGATE OF THE GROSS PROFI T FOR ALL THE FOUR YEARS PUT TOGETHER IS WORKED TO 2.06%. ON THE LINES OF THE GROSS PROFIT AS PER THE BOOKS AS INDICATED ABOVE, T HE PROFIT RELATED TO THE UNACCOUNTED TURNOVER IS WORKED OUT A S UNDER: 1. AT THE RATE OF 2.06% ( AGGREGATE GP) RS. 28,80,0 45 2. AT THE RATE OF 2.76% (GP FOR AY 2008509) RS. 38,5 8,701 16. SINCE, THE BASIS FOR ESTIMATING THE PRODUCTION WAS RELATED TO THE ELECTRICITY CONSUMPTION, CONFINED TO THE YEA R UNDER REFERENCE, THE BOOK PROFIT ON THE UNACCOUNTED TURNO VER ALSO SHOULD BE RELATABLE TO THE GROSS PROFIT FOR THE SAI D YEAR, AS AGAINST THE AGGREGATION OF THE PROFIT FOR FOUR YEAR S AS INDICATED BY THE ASSESSEE. HENCE, THE PROFIT MADE BY THE ASSE SSEE ON THE TURNOVER ACHIEVED FOR THE YEAR ON ACCOUNT OF UNACCO UNTED ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 15 ELECTRICITY EXPENSES HAS BEEN WORKED OUT AND TAKEN AT RS. 38,58,701/5. FURTHER, THE RELEVANT QUESTION THAT A RISES IN ESTIMATION OF THE PROFITS RELATED TO THE UNACCOUNTE D TURNOVER, IS THE ROLE AND QUANTITY OF THE INVESTMENTS. IN THIS C ASE, THOUGH THE MAJOR EXPENSE IN MANUFACTURING IS THE ELECTRICITY, IT IS ALSO A FACT THAT MAJOR INGREDIENTS SUCH AS STEEL AS RAW MATERIA L AND OTHER CONSUMABLES CONSTITUTE A SIZEABLE EXPENSE AND THE I NFORMATION RELATED TO SUCH EXPENDITURE NEED TO BE ASCERTAINED FROM THE BOOKS OF THE ASSESSEE, BASED ON THE DATA RELATED TO THE PRODUCTION RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OR ANY OTHER COMPARABLE CASE. SINCE SUCH INFORMATIO N IS AVAILABLE ON THE RECORDS OF THE ASSESSEE THE SAME I S USED AS A BASIS FOR ARRIVING AT THE INVESTMENT ON THE CONSUMA BLES BY RELATING TO THE QUANTUM OF CONSUMABLES, WITH THAT O F TURNOVERS. THIS IS ALSO IMPORTANT TO ASCERTAIN. THE PERIOD OF CREDIT CYCLE, FOR THE PURPOSE OF ROTATION OF SUCH CAPITAL/INVESTMENTS INTO THE SYSTEM, IN QUANTIFYING THE AMOUNTS OF INVESTMENTS R EQUIRED. IN VIEW OF THE FACTUAL POSITION THAT NO INFORMATION WA S TRACED ON THE UNRECORDED PRODUCTION AND SALES OUTSIDE THE BOO KS, THE ASSESSMENT NEED TO BE BASED ON A FAIR AND PROPER ES TIMATES ON THE ASSESSEE'S BUSINESS AND THE INFERENCES TO BE DRAWN FROM THE AVAILABLE MATERIAL SHOULD BE RELIABLE AND INFER ABLE. IN THIS CONTEXT, THE BOOK RESULTS OF THE ASSESSEE'S BUSINES S CONSIDERED AS THE RELEVANT MATERIAL UNLESS AND UNTIL IT PROVED OTHERWISE. IN THIS CASE, THE BOOK RESULTS WERE ACCEPTED BY THE AS SESSING OFFICER AND NO DOUBTS WHATSOEVER WERE RAISED REGARD ING THEM. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 16 FURTHER, IT HAS BEEN HELD THAT IF THE NATURE OF THE BUSINESS IS THE SAME UNDER THE ORDINARY CIRCUMSTANCES, IT MAY BE PR ESUMED THAT RESULTS OF THE BUSINESS OF THE ASSESSEE WILL R EMAIN THE SAME. 17. THE CIT(A) OBSERVED THAT THE INFORMATION RELATED TO THE ASSESSEE'S RECORD AS REGARDS THE TURNOVERS AND PURC HASES ACCOUNTED IN THE BOOKS OF ACCOUNT FOR THE RELEVANT YEAR, SO AS TO MAKE THE BASIS FOR ESTIMATING THE AMOUNTS OF INV ESTMENTS ASSOCIATED WITH THE UNACCOUNTED TURNOVER LINKED TO THE UNACCOUNTED EXPENDITURE OF RS. 2,42,70,760/5, WHICH WAS CLAIMED BY THE ASSESSEE UNDER THE HEAD 'ELECTRICITY EXPENSES'. THIS IS BASED ON THE ABOVE MENTIONED ASSUMPTION THA T RESULTS OF THE BUSINESS WILL REMAIN THE SAME UNDER THE NORMAL CIRCUMSTANCES. 5 SALES/TURNOVER AS PER BOOKS 5 RS. 12,53,14,790 5 PURCHASES AS PER BOOKS 5 RS. 10,80,81,500 5 PERCENTAGE OF PURCHASES TO THE SALES 5 86.25% 5 UNACCOUNTED TURNOVER ESTIMATED ON THE BASIS OF ELECTRICITY EXPENSE 5 RS. 13,98,0 8,035 5 PURCHASES AGAINST SUCH TURNOVER ON PRO5RATA BASIS ( @86.25%) 5 5 RS. 12,05,85,430 5 AVERAGE MONTHLY PURCHASES 5 5 RS. 1,00,48,702 18. THE CIT(A) OBSERVED THAT, KEEPING THE PRACTICAL AND FIELD SITUATION, SPECIALLY THE ACTIVITIES RELATED TO THE TRADE UNDER REFERENCE, AS APPLICABLE IN THE CASES WHERE SALES A RE MADE BY CASH TRANSACTIONS IN MIND, IT IS REASONABLE TO HOLD THAT CREDIT OF 10 DAYS TO THE BUYERS IS AN ACCEPTABLE PERIOD AS AL LOWED BY THE SELLERS AND AS SUCH THE INVESTMENTS WERE PROPOS ED TO BE ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 17 QUANTIFIED ON THE BASIS OF AVERAGE OF PURCHASES REQ UIRED FOR TRANSACTIONS FOR A PERIOD OF 10 DAYS, FOR WHICH THE ASSESSEE HAD RESERVATIONS AND IN THIS REGARD, THE SUBMISSIONS OF THE ASSESSEE SUGGEST THAT THE SURPLUS OF CASH RECEIPTS OVER THE DEPOSITS INTO BANK ACCOUNTS (PEAK CREDIT) TO BE CONSIDERED AS THE INVESTMENT GONE INTO THE UNACCOUNTED PRODUCTION. IN THIS REGARD, THE ASSESSEE FURNISHED THE DETAILS OF 'DAY TO DAY SALE RECEIPTS AND THE DEPOSITS INTO THE BANK ACCOUNTS, A S PER WHICH THE PEAK CREDIT STOOD AT RS. 20,46,320/5 AS ON 11.1 1.2007 AND AS PER THE ASSESSEE THE SAID AMOUNT WAS AVAILABLE ON H AND FOR THE ASSESSEE FOR THE INVESTMENTS RELATED TO THE UNA CCOUNTED TURNOVERS. 19. THE CIT(A) EXAMINED THE ASSESSEE'S SUBMISSION WITH REFERENCE TO THE FACTS OF THE CASE AND THE INFORMAT ION THAT HAVE FORMED PART OF THE RECORD. THE ARGUMENT OF TH E ASSESSEE APPEARS NOT REASONABLE AND NOT ACCEPTABLE FOR THE R EASONS THAT THE CREDITS INDICATED AS PEAK CREDITS BY THE A SSESSEE WERE ONLY ABSORBING THE EXPENSES UNDER THE HEAD 'ELECTRI CITY EXPENSES' AND THE OTHER INVESTMENTS RELATED TO PURC HASE OF RAW MATERIAL AND OTHER CONSUMABLES WAS NOT TAKEN CARE B Y SUCH CREDITS. IT IS ALSO A FACT THAT THE INFORMATION REL ATED TO THE DEPOSITS INTO BANK AND CASH RECEIPTS WAS ONLY A PAR T OF THE INFORMATION AND NOT THE ENTIRETY OF INFORMATION WAS FOUND IN THE SEARCH' PROCEEDINGS. UNDER THE CIRCUMSTANCES, THE C IT(A) WAS OF THE OPINION THAT A MINIMUM OF INVESTMENT OF 10 DAYS ' PURCHASES, AS A SEED CAPITAL IS THE REQUIREMENT FOR THE TURNOVERS ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 18 AS ACHIEVED BY THE ASSESSEE OUTSIDE THE BOOKS. ACCO RDINGLY, THE AMOUNT REQUIRED FOR THE SAID PURPOSE IS QUANTIF IED AT RS. 33,49,567/5 BEING THE 1/3 RD OF RS. 1,00,48,702/5 WHICH WAS THE AVERAGE OF MONTHLY PURCHASES ESTIMATED/QUANTIFIED A S ABOVE AND THE SAME IS TREATED AS THE AMOUNTS OF UNACCOUNT ED INVESTMENTS THAT WOULD HAVE BEEN REQUIRED BY THE AS SESSEE RELATED TO THE PRODUCTION/TURNOVER OUTSIDE THE BOOK S OF THE ACCOUNT, IN THE FORM OF ADDITIONAL BUSINESS ACTIVIT Y. ON THE LINES OF THE ABOVE DISCUSSION, THE UNACCOUNTED INCOME REL ATED TO THE UNACCOUNTED TURNOVER IS QUANTIFIED AS UNDER: INVESTMENT REQUIRED FOR AN ACCOUNTED TURNOVER 5 RS , 33,49,567 ADD: PROFIT ON THE UNACCOUNTED TURNOVER 5 RS. 38 ,58,701 5555555555555 RS. 72,08,268 =========== 20. THE CIT(A) OBSERVED THAT IT IS PERTINENT TO LOOK IN TO THE PLEA OF THE ASSESSEE THAT THE BALANCE OF RS. 2,25,5 25/5, BEING THE AMOUNTS DRAWN FROM THE BANK ACCOUNTS AS REFERRE D, BEING THE BALANCE AMOUNTS AFTER MEETING THE EXPENDITURE O F ELECTRICITY CHARGES (24496200 5 24270760), MAY BE C ONSIDERED AS THE INVESTMENT IN THE UNACCOUNTED PRODUCTION/TUR NOVERS. THIS AMOUNT IS THE TOTAL OF THE CASH DEPOSITED INTO THE BANK ACCOUNT REPRESENTING THE UNACCOUNTED RECEIPTS OF TH E COMPANY AS REDUCED BY THE AMOUNT SPENT FOR THE ELEC TRICITY CHARGES RELATED TO THE UNACCOUNTED TURNOVER, AS PER THE ASSESSEE. SINCE, THE AMOUNTS WERE WITHDRAWN IN CASH , CREDIT WAS REQUESTED FOR THE CASH AVAILABLE, FOR MEETING THE E XPENSES ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 19 RELATED TO THE UNACCOUNTED TURNOVER. ACCORDING TO THE CIT(A) THE UNACCOUNTED INVESTMENTS IS ALLOWED TO BE REDUCE D TO THE EXTENT OF CASH AVAILABLE WITH THE ASSESSEE IN THE F ORM OF THE AMOUNTS WITHDRAWN FROM BANK ACCOUNTS TO THE EXTENT OF RS. 2,25,525/5, AFTER MEETING THE EXPENDITURE UNDER THE HEAD 'ELECTRICITY CHARGES'. ACCORDINGLY, THE INVESTMENT RELATED TO THE UNACCOUNTED TURNOVERS STAND REDUCED TO RS. 31,24,04 2/5 (RS. 3349567 5 225525) AND THE TOTAL ADDITION RELATED T O THE UNACCOUNTED BUSINESS OF THE ASSESSEE PROPORTIONATEL Y QUANTIFIED AT RS. 69,82,743/5 (RS. 7208268 5 225525 ). THUS, OUT OF THE ADDITION OF RS. 2,42,70,675/5 MADE ON ACCOUNT O F UNEXPLAINED DEPOSITS, THE AMOUNT TO THE EXTENT OF R S. 69,82,743/5 IS SUSTAINED BY THE CIT(A), BEING THE I NCOME GENERATED/EARNED BY THE ASSESSEE FROM THE BUSINESS ACTIVITY OUTSIDE M/S. MAHAVIR ISPAT PVT. LTD AY 2008509 BOOK S OF ACCOUNT THAT IS RELATED TO THE 'ELECTRICITY EXPENDITURE' BO OKED OUTSIDE THE BOOKS OF ACCOUNT, WITH THE BALANCE OF THE AMOUN T STAND DELETED. ACCORDINGLY, THE ASSESSEE GOT PART RELIEF. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US THROUGH THE FOL LOWING GROUNDS: (1) THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL )-VII, HYDERABAD IN SO FAR AS IT WENT AGAINST THE APPELLAN T, IS ERRONEOUS BOTH ON FACTS AND IN LAW. (2) THE CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS . 2,44,96,200 MADE TOWARDS UNEXPLAINED CREDITS IN THE BANK ACCOUNT HAVING HELD THAT THE SAID AMOUNT WAS UTILIS ED FOR PAYMENT OF ELECTRICITY CHARGES FOR BUSINESS PURPOSE S. (3) THE CIT(A) WHILE HOLDING THAT THE AMOUNT OF RS. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 20 2,42,60,675 AS ADMISSIBLE EXPENDITURE HAVING BEEN U TILIZED FOR ELECTRICITY PAYMENTS FOR BUSINESS PURPOSES ERRE D IN ESTIMATING ASSUMED PROFIT AT RS. 38,58,701/- ON ASS UMPTION. (4) THE CIT(A) ERRED IN ESTIMATING THE SEED CAPITAL REQ UIRED AT RS. 33,49.5671- FOR EARNING THE PROFIT ESTIMATED BY HIM. (5) THE CIT(A) RESORTED TO THE ADDITIONS OF RS. 38,58,7 01 AND RS. 33,49,567 PURELY ON ESTIMATE BASIS AND THE ASSE SSMENT BEING A SEARCHED RELATED ASSESSMENT SUCH ROUTINE AD DITIONS SHOULD NOT HAVE BEEN MADE WITHOUT THERE BEING ANY INCRIMINATING SEIZED MATERIAL DETECTED DURING THE S EARCH OPERATIONS. (6) WITHOUT PREJUDICE TO THE ABOVE CONTENTION, THE CIT( A) OUGHT TO HAVE CONSIDERED THE AMOUNT OF RS. 2,44,96, 200 DEPOSITED IN BANKS AS TURNOVER AND ESTIMATED REASON ABLE PROFIT ON THE SAME WITHOUT RESORTING TO THE AMOUNTS ESTIMATED BY HIM AS SPECIFIED IN GROUND NOS. 3 AND 4. 21. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQU IRE ANY ADJUDICATION. GROUND NO. 2 IS NOT PRESSED BY T HE AR. ACCORDINGLY, GROUND NO. 2 IS DISMISSED AS NOT PRESS ED. 22. GROUND NO. 3 IS WITH REGARD TO ESTIMATION OF PROFIT ON ESTIMATED UNACCOUNTED TURNOVER ON THE BASIS OF UNAC COUNTED RECEIPTS. 23. THE LEARNED AR SUBMITTED THAT THE CIT(A) MERELY ESTIMATED THE TURNOVER IN THE ABSENCE OF ANY SEIZED MATERIAL UNEARTHED TO SUPPORT HIS FINDINGS. THE CIT(A) IS N OT JUSTIFIED IN ESTIMATING THE UNACCOUNTED TURNOVER OF RS. 13,98,08 ,035 AS AGAINST THE ANNUAL DECLARED TURNOVER AS PER AUDITED ACCOUNTS AT RS. 12,53,14,790 AND AFTER ESTIMATING THE UNACCO UNTED TURNOVER ON THE BASIS OF UNACCOUNTED ELECTRICITY CH ARGES, HE ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 21 ESTIMATED THE PROFIT ON THE UNACCOUNTED TURNOVER AT RS. 2.76%. ACCORDINGLY, THERE IS NO BASIS FOR SUCH ADDITION. 24. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E CIT(A) OUGHT TO HAVE CONFIRMED THE UNACCOUNTED DEPO SIT IN THE BANK ACCOUNTS AND ALSO UNEXPLAINED EXPENDITURE ON E LECTRICITY. INSTEAD OF THIS, HE HAS GIVEN RELIEF TO THE ASSESSE E. HE PLEADED TO CONFIRM THE ORDER OF THE AO. 25. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE THERE IS AN UNACCO UNTED DEPOSIT IN THE BANK ACCOUNT AT RS. 2,44,96,200 AND AFTERWAR DS THE SAME AMOUNT WAS USED FOR PAYMENT OF ELECTRICITY CHARGES AT RS. 2,42,60,675. THEREAFTER, THE CIT(A) WORKED OUT THE TURNOVER ON THE BASIS UNACCOUNTED ELECTRICITY CHARGES WORKED OU T AT RS. 13,98,08,035 AND ESTIMATED THE PROFIT ON IT AT 2.76 %. THE DECLARED TURNOVER BY THE ASSESSEE IN ITS BOOKS OF A CCOUNT IS AT RS. 12,53,14,790. ACCORDING TO THE CIT(A) UNACCOUN TED TURNOVER IS MORE THAN THE ACCOUNTED TURNOVER. HE DETERMINED THE TURNOVER IN PROPORTION TO THE ELECTRICITY CHARGES I NCURRED BY THE ASSESSEE AS COMPARED TO THE ACCOUNTED ELECTRICITY C HARGES AND ACCOUNTED TURNOVER. THIS IS ONE OF THE POSSIBL E METHOD OF DETERMINING THE UNACCOUNTED TURNOVER. WE DO NOT F IND ANY INFIRMITY IN THIS METHOD ADOPTED BY THE CIT(A) AND CONFIRM THE ESTIMATION OF UNACCOUNTED TURNOVER ON THE BASIS OF UNACCOUNTED ELECTRICITY CHARGES WHICH IS IN PROPORT ION TO THE ACCOUNTED ELECTRICITY CHARGES AND ACCOUNTED TURNOVE R. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 22 HOWEVER, IN OUR OPINION, INSTEAD OF APPLYING RATE O F PROFIT AT 2.76% AS INCOME ON UNACCOUNTED TURNOVER, IT IS APPR OPRIATE TO DETERMINE THE NET PROFIT ON THE BASIS OF MEAN RATE OF NET PROFIT WHICH WAS WORKED AT 2.06%, AS RECORDED BY THE CIT(A ) IN HIS ORDER. THIS VIEW OF OURS IS SUPPORTED BY THE DECIS ION OF VIZAG BENCH OF THIS TRIBUNAL IN THE CASE OF PRAKASH ARTS MOVING MEDIA IN ITA NO. 3055308 AND 3485351/VIZAG/2008 DATED 23. 11.2010. ACCORDINGLY, WE DIRECT THE AO TO RECOMPUTE THE NE T PROFIT ON UNACCOUNTED TURNOVER AT RS. 13,98,08,035 BY APPLYIN G THE MEAN RATE OF NET PROFIT AS MENTIONED IN CIT(A)'S ORDER A T 2.06%. THIS GROUND OF THE ASSESSEE IS ALLOWED. 26. COMING TO THE NEXT GROUND WITH REGARD TO ADDITION O F RS. 33,49,567 WHICH REPRESENTED THE ESTIMATED SEED CAPI TAL TO CARRY ON UNACCOUNTED BUSINESS. 27. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THIS ADDITION IS MADE BY THE CIT(A) ONLY ON ESTIMATION B ASIS THOUGH THERE IS NO WHISPER ON THIS ISSUE AT THE END OF THE AO WHICH IS NOTHING BUT ENHANCEMENT OF ASSESSED INCOME BY CIT(A ) WITHOUT GIVING FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. FURTHER, NO INFORMATION RELATING TO THE CAPITAL EMPLOYED FOR TH E PURPOSE OF PURCHASE OF RAW MATERIAL OUTSIDE THE BOOKS OF ACCOU NT WAS FOUND DURING THE COURSE OF SEARCH. BEING SO, IN OU R OPINION, THE ADDITION IS ONLY ON SURMISES AND CONJECTURES WHICH CANNOT BE PERMITTED IN SEARCH ASSESSMENT. ACCORDINGLY, WE DE LETE THE ADDITION. IN THE RESULT, ITA NO. 990/HYD/2012 IS P ARTLY ALLOWED. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 23 ITA NO. 1089/HYD/2012 (BY REVENUE) 28. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: (1) THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BOTH O N FACTS AND IN LAW. (2) THE LEARNED CIT(A) HAS ERRONEOUSLY ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE CASH DEPOSITS I N THE BANK ACCOUNT PERTAIN TO THE BUSINESS OF THE ASSESSEE WIT HOUT ANY DOCUMENTARY EVIDENCE BEING BROUGHT ON RECORD. (3) THE LEARNED CIT(A) HAS ERRED IN ALLOWING UNACCOUNTE D ELECTRICITY EXPENSES OF RS. 2,42,70,675/- FROM THE UNEXPLAINED BANK DEPOSITS, AS IT WAS NEVER ESTABLIS HED THAT THE CASH DEPOSITS PERTAIN TO THE BUSINESS OF THE AS SESSEE. (4) THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT AN INI TIAL INVESTMENT OF 10 DAYS PURCHASES IS A MINIMUM REQUIR EMENT TO ACHIEVE THE TURNOVER OUTSIDE THE BOOKS, AS A RES ULT INVESTMENT OF RS. 31.24 LAKHS ONLY IS RECEIVED TO A CHIEVE TURNOVER OF RS. 13.98 CRORES WHICH IS NOT REASONABL E AS PER ANY BUSINESS STANDARDS. (5) THE LEARNED CIT(A) HAS ERRED IN ACCEPTING VARIOUS ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE DURI NG THE COURSE OF APPELLATE PROCEEDINGS WITHOUT ALLOWING AN OPPORTUNITY TO THE ASSESSING OFFICER TO CROSS EXAMI NE THE SAME IN ACCORDANCE WITH THE RULE 46A OF THE IT RULE S. 29. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS APPEAL BECOMES INFRUCTUOU S SINCE WE HAVE DECIDED THE ISSUE, ARISING OUT OF THE ABOVE GR OUNDS, IN FAVOUR OF THE ASSESSEE IN ASSESSEE'S APPEAL NO 990/ HYD/2012. ACCORDINGLY, ITA NO. 1089/HYD/2012 IS DISMISSED AS INFRUCTUOUS . ITA NO. 1090/HYD/2012 (BY REVENUE): 30. THE REVENUE RAISED THE FOLLOWING GROUNDS: ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 24 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BOTH O N FACTS AND IN LAW. 2. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITI ON WHEN THE ASSESSEE FAILED TO PRODUCE ANY INFORMATION BEFO RE THE AO REGARDING THE GENUINENESS OF THIS TRANSACTION, I DENTITY OF THE CREDITORS AND THE CREDITWORTHINESS OF THE CR EDITORS. 3. THE LEARNED CIT(A) OUGHT TO HAVE FURNISHED OPPORTUN ITY TO THE AO BEFORE ADMITTING THE ADDITIONAL EVIDENCE SUB MITTED BY THE ASSESSEE UNDER RULE 46A OF THE IT RULES. 31. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE COMP ANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF M.S. IN GOTS AND THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED IN THE GROUP OF CASES ON 2950152009 ALONG WITH OTHER SUNDE R GROUP OF CASES. FOR THE YEAR UNDER REFERENCE, THE ASSESSEE FURNISHED THE RETURN OF INCOME DECLARING AN INCOME OF RS. 25,06,4 70/5, AGAINST WHICH THE TOTAL INCOME WAS DETERMINED AT RS. 59,31, 470/5 BY VIRTUE OF ADDITION OF RS. 34,25,000/5, BEING THE DI SALLOWANCE OF SHARE APPLICATION MONEY, TREATED AS UNEXPLAINED CRE DITS IN THE HANDS OF THE ASSESSEE COMPANY. THE ASSESSING OFFICE R MADE AN ADDITION OF RS. 34,25,000/5 BEING THE SHARE APPLICA TION MONEY RECEIVED BY THE ASSESSEE COMPANY DURING THE YEAR UN DER REFERENCE AND THE INFORMATION RELATED TO THE SAME W AS STATED TO HAVE BEEN GATHERED FROM THE 3CD REPORT OF THE AS SESSEE COMPANY. WHILE MAKING THE ADDITION, THE ASSESSING O FFICER OBSERVED THAT THE ASSESSEE HAD NOT SUBMITTED THE DE TAILS TO PROVE THE GENUINENESS OF TRANSACTION AND CREDITWORT HINESS OF CREDITORS AND IN ABSENCE OF THE SAME, THE ENTIRE AM OUNT OF SHARE APPLICATION MONEY OF RS. 34,25,000/5 WAS TREA TED AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE COM PANY WITH ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 25 A FURTHER COMMENT THAT SHARE APPLICATION MONEY WAS RECEIVED PARTLY IN CASH. THE ASSESSEE OBJECTED TO THE ABOVE ADDITION AND FILED WRITTEN SUBMISSIONS INDICATING THE LEGAL POSITION AND FACTS RELATED TO THE ISSUE, SUBMITTING THAT NO INCR IMINATING MATERIAL TO THROW SUSPICION ON THE SHARE INVESTMENT S WAS DETECTED AND THE ADDITION BY THE ASSESSING OFFICER WAS ON MERE SUSPICION. IT WAS ALSO SUBMITTED THAT THE INVE STMENTS AS SHARE APPLICATION MONEY WERE MADE BY 13 INDIVIDUALS BELONGING TO THE SAME GROUP AND SHARES WERE ALLOTTE D TO THE APPLICANTS SUBSEQUENTLY ON 2250652009. THE ASSESSEE ALSO FURNISHED A NOTE ON LEGAL POSITION IN THE MATTER OF INVESTMENTS MADE TOWARDS SHARE APPLICATION MONEY/SHARE CAPITAL VIS5A5VIS THEIR ASSESSABILITY IN THE HANDS OF THE ASSESSEE CO MPANY, WHILE FURNISHING A LIST OF JUDICIAL DECISIONS ON THE ISSU E OF ACCEPTING SUCH INVESTMENTS AS SHARE APPLICATION MONEY/SHARE C APITAL. WHILE FURNISHING THE WRITTEN SUBMISSIONS, THE ASSES SEE ALSO FURNISHED THE CONFIRMATIONS FROM THE SHARE APPLICAN TS, WHO ARE NONE BUT THE DIRECTORS OF THE COMPANY AND THEIR FAM ILY MEMBERS, WHO ALSO FALL UNDER THE JURISDICTION OF TH E ASSESSING OFFICER. ON APPEAL THE CIT(A) CONFIRMED THE ADDITI ON. 32. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS SEEN FROM THE ORDER OF THE CIT(A) ALL 13 INVESTORS ARE OF THE FAMILY MEMBERS/DIRECTOR OF THE ASSESSEE5 COMPANY AND OUT OF THEM 9 ARE ASSESSED TO TAX AND T HEY HAVE FURNISHED RETURNS OF INCOME AND INVESTMENT IS THROU GH BANKING CHANNELS AND THE CIT(A) DELETED RS. 30.25 LAKHS PER TAINING TO 9 ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 26 PARTIES AND CONFIRMED RS. 4 LAKHS FROM NON5ASSESSEE S AS HELD BY THE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXP ORTS (216 CTR 195). WHEN THE ASSESSEE FURNISHED INCOME5TAX DETAI LS, THE BURDEN CAST UPON THE ASSESSEE IS PROVED. IF THE DE PARTMENT HAS ANY DOUBT IT COULD HAVE PROCEEDED AGAINST THE I NVESTOR AND NOT AGAINST THE ASSESSEE. FURTHER, WE TAKE SUP PORT FROM THE DECISION OF THE TRIBUNAL CO5ORDINATE BENCH IN THE C ASE OF VENSA LABORATORIES PVT. LTD. IN ITA NO. 1117/HYD/2009 DAT ED 29.1.2009 WHEREIN THE TRIBUNAL HELD AS FOLLOWS: ' WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD. IN THE PRESENT CASE, THE CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OF FICER SENT THE REMAND REPORT VIDE REFERENCE NO.ITO.3(2)/RR/9/10 DA TED AS FOLLOWS: I) AS SEEN FROM THE AFFIDAVIT FILED BY SHRI D. RAMA LINGA RAJU, THE ENTIRE AMOUNT OF RS.23,00,000 HAS BEEN INVESTED IN THE COMPANY BY WAY OF TRANSFER FROM HIS BANK ACCOUNT. O N PERUSAL OF THE SAID BANK ACCOUNT, IT IS SEEN THAT THERE ARE INSTANCES OF CASH DEPOSITS INTO HIS BANK ACCOUNT ON THE DAY THE TRANSFER WAS AFFECTED. SHRI D. RAMALINGA RAJU SUBMITTED THE DETA ILS OF THE SOURCES FOR THE CHEQUES AND THE CASH DEPOSITS IN TH E BANK ACCOUNT WITH ICICI BANK, SR NAGAR BRANCH, HYDERABAD WHICH ARE ON RECORD. SHRI D. RAMALINGA RAJU HAS ALSO SUBM ITTED CONFIRMATION LETTERS FROM THE PERSONS WHO HAVE PURP ORTEDLY GIVEN HIM THE LOANS AND GIFTS. SHRI D. RAMALINGA RA JU HAS DEPOSED THAT HE OWNS 13 ACRES OF AGRICULTURAL LAND. COPIES OF THE PATTADAR PASS BOOK HAVE ALSO BEEN FILED. II) AS SEEN FROM THE AFFIDAVITS FILED BY SRI J. KRI SHNA RAO, HE HAS INVESTED AN AMOUNT OF RS.15.90 LAKHS IN ALL. TH E SOURCES WERE STATED TO BE HIS OWN SALARY INCOME, SAVINGS AN D ALSO BORROWED FUNDS WHICH WERE DEPOSITED IN HIS BANK ACC OUNT. SHRI J. KRISHNA RAO HAS ALSO SUBMITTED COPIES OF CONFIRMATIONS/PATTADAR PASS BOOK IN SUPPORT OF HIS CLAIM FOR THE SOURCES OF THE INVESTMENT. III) SIMILARLY, SMT. J. JEEVITHA MALA AND SRI V. SI VARAMA RAJU HAVE DEPOSED VIDE THEIR AFFIDAVITS THAT THEY HAVE I NVESTED RS. 7,00,000 AND RS. 5,00,000/- RESPECTIVELY. THEY HAVE ALSO ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 27 SUBMITTED CONFIRMATIONS FROM THE PERSONS WHO GAVE T HEM LOANS/GIFTS. IV) COPIES OF THE BANK ACCOUNT STATEMENTS, CONFIRMA TION LETTERS, PATTADAR PASS BOOKS, ETC. SUBMITTED BY THE ABOVE FO UR INVESTORS ARE ON RECORD. 5. THE CIT(A) PLACED RELIANCE ON THE ABOVE REPORT A ND DELETED THE ADDITION. WE HAVE CAREFULLY GONE THROUGH THE AB OVE REMAND REPORT. 5.1. IN THE CASE OF CIT VS. STELLAR INVESTMENTS LTD . (251 ITR 263) (SC), WHEREIN IT WAS HELD THAT EVEN THE SHARE HOLDERS ARE NOT GENUINE, SHARE CAPITAL CANNOT BE REGARDED AS UN DISCLOSED INCOME OF THE ASSESSEE. 5.2 IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. (205 ITR 98) DELHI (FULL BENCH), WHEREIN IT WAS HELD THAT FOR TH E OPERATION OF SECTION 68, IT WOULD BE IMMATERIAL WHETHER THE A MOUNT IS CREDITED IN THE BOOKS IN THE SHARE APPLICATION MONE Y ACCOUNT AND IT WAS HELD THAT S.68 IS APPLICABLE IN RESPECT OF SHARE APPLICATION MONEY. 5.3. IN THE CASE OF CIT VS. LOVELY EXPORTS (216 ITR 195) (SC), WHEREIN IT WAS HELD THAT EVEN IF THE SHARE APPLICAT ION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM THE ALLEGED B OGUS SHARE HOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFI CER, THEN THE DEPARTMENT IS FREE TO PROCEED THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UN DISCLOSED INCOME OF THE ASSESSEE. 5.4. IN THE CASE OF VIT VS. VALUE CAPITAL SERVICES (P) LTD. (307 ITR 334), WHEREIN IT WAS HELD THAT CIT(A) HAVING AC CEPTED THE EXISTENCE OF SHARE APPLICANTS AND THE REVENUE HAVIN G NOT SHOWN, THAT APPLICANT DID NOT HAVE THE MEANS TO MAK E THE INVESTMENT AND THAT SUCH INVESTMENTS ACTUALLY NOT E MANATED FROM THE COPPERS OF THE ASSESSEE COMPANY, THE ADDIT ION COULD NOT BE MADE. 6. IN VIEW OF THE ABOVE JUDGEMENTS, WE ARE OF THE O PINION THAT THE IMPUGNED ADDITION CANNOT BE MADE IN THE HANDS O F THE ASSESSEE. HOWEVER, IF SO ADVISED, THE SAME COULD BE CONSIDERED IN THE HANDS OF THE RESPECTIVE INVESTORS AS UNEXPLA INED INVESTMENTS U/S 69 OF THE INCOME TAX ACT, 1961. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED.' ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 28 33. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE CIT(A). IT IS NOT POSSIBLE TO SAY THAT THERE I S VIOLATION OF RULE 46A OF IT RULES. THE CIT(A) FOLLOWED THE JUDGEMENT OF SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA). ORDER OF THE CIT(A) IS CONFIRMED AND APPEAL OF THE REVENUE IN ITA NO. 1090/HYD/2012 IS DISMISSED. ITA NO. 639/HYD/2012 BY REVENUE ITA NO. 713/HYD/2012 BY ASSESSEE 34. THE REVENUE RAISED THE FOLLOWING GROUNDS: (1) THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS ON FAC TS. (2) THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANC E OF RS. 53,25,800 AS PER THE CASH DEPOSITS OF THE ASSES SEES UNDISCLOSED BANK ACCOUNT AS IT IS NOT EXPLAINED BY THE ASSESSEE WITH VERIFIABLE SOURCES OF SAME. (3) THE LD. CIT(A) OUGHT TO HAVE NEGATED THE CONTENTION OF THE ASSESSEE THAT THE SAID DEPOSITS IN HIS INDIVIDUAL A ND UNDISCLOSED ACCOUNT RELATED TO ASSESSEE'S COMPANY R ECEIPTS AND DRAWALS FOR COMPANY EXPENSES AS IT IS AN AFTERT HOUGHT O THE ASSESSEE TO RELATE UNRELATED FACTS AND TRANSACT ION. 35. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : (1) THE ORDER OF THE CIT(A), HYDERABAD INSOFAR AS IT WE NT AGAINST THE APPELLANT, IS ERRONEOUS BOTH ON FACTS A ND IN LAW. (2) THE CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS . 25,83,100 MADE TOWARDS UNEXPLAINED CREDITS IN THE B ANK ACCOUNT. (3) THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE CREDI TS IN BANK ACCOUNT IN AN AMOUNT OF RS. 29,04,100 REPRESEN TED THE TURNOVER OF THE BUSINESS HANDLED BY THE APPELLA NT. (4) WITHOUT PREJUDICE TO THE ABOVE CONTENTION, THE CIT( A) OUGHT TO HAVE CONSIDERED ADDITION OF ESTIMATED ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 29 REASONABLE PROFIT ON THE TURNOVER BUT NOT THE ENTIR E AMOUNT. 36. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE, MR . SHIVARAM K AGARWAL, AN INDIVIDUAL BY STATUS IS DERIVING INCO ME FROM HOUSE PROPERTY AND OTHER SOURCES AND RELATED TO KANTILAL GROUP OF CASES, IN WHOSE CASE, A SEARCH & SEIZURE PROCEEDING HAS TAKEN PLACE ON 29.1.2009. RETURN OF INCOME WAS FILED ON 23.12.2010 DECLARING AN INCOME OF RS. 2,06,540 WHEREAS THE ASS ESSMENT WAS COMPLETED DETERMINING THE TOTAL INCOME AT RS. 8 1,15,440 BY VIRTUE OF THE ADDITION OF RS. 53,25,800 BEING THE C ASH DEPOSITS MADE IN THE BANK ACCOUNT NO. 1624, AT NASIK COOPER ATIVE URBAN BANK LTD., AND DISALLOWANCE OF RS. 25,83,100 BEING CASH DEPOSITS IN BANK ACCOUNT NO. 1426, MAINTAINED WITH AGRASEN COOPERATIVE URBAN BANK LTD. WHILE COMPUTING THE TAX ABLE, INCOME, THE ASSESSING OFFICER HAS TREATED THE AMOUN TS CREDITED IN BANK ACCOUNT BEARING NO. 1624 WITH NASIK COOPERA TIVE URBAN BANK LTD AND THE DEPOSITS MADE IN THE BANK AC COUNT FOR THE YEAR UNDER REFERENCE IS QUANTIFIED AT RS. 53,25 ,800. ON ENQUIRY BY THE ASSESSING OFFICER, IT WAS STATED THA T THE ASSESSEE TRIED TO EXPLAIN THE SAID CASH DEPOSITS BY GIVING D IFFERENT VERSIONS AT DIFFERENT TIMES, WITH THE MAIN END USE OF THE SAID AMOUNTS BEING THE AMOUNTS PAID AS ELECTRICITY CHARG ES FOR M/S MAHAVIR ISPAT PVT. LTD. NOT SATISFIED WITH THE EXPL ANATIONS AS REGARDS TO THE SOURCES OF SUCH CASH DEPOSITS, THE A SSESSING OFFICER HAS TREATED IT AS UNEXPLAINED CASH CREDITS U/S 68 OF THE IT ACT, 1961 AND ADDED TO THE TOTAL INCOME OF THE A SSESSEE, ON ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 30 PROTECTIVE BASIS, SINCE THE SAME AMOUNT WAS ADDED I N THE HANDS OF THE M/S. MAHAVIR ISPAT PVT LTD, ON SUBSTA NTIVE BASIS. 37. THE ASSESSEE HAS MENTIONED IN HIS ARGUMENT THAT TH E BANK ACCOUNT NO. 1625 OF NASIK COOPERATIVE URBAN BA NK LTD WITH THE AMOUNTS OF CASH DEPOSITS CONFIRMED TO BE Q UANTIFIED AT RS. 53,25,800 FOR THE FINANCIAL YEAR 2007508. D URING THE COURSE OF FIRST APPELLATE PROCEEDINGS, IT WAS SUBMITTED TH AT THE ISSUE WAS EXPLAINED AT THE TIME OF SCRUTINY PROCEEDINGS A ND THE SAID DEPOSITS IN THE BANK ACCOUNT ARE SHOWN TO BE THE RE CEIPTS FROM THE COMPANY M/S MAHAVIR ISPAT PVT. LTD AND THE SAME WERE UTILIZED TO CLEAR THE ELECTRICITY CHARGES OF THE CO MPANY. IT WAS ALSO NARRATED THAT AFTER DEPOSITING THE CASH RECEIV ED FROM THE COMPANY, THE CHEQUES WERE ISSUED TO CLEAR THE ELECT RICITY CHARGES OF THE COMPANY, AND SINCE THE DEPOSITS AND THE OUTGOINGS OF TILE BANK ACCOUNT BELONG TO THE TRANSA CTIONS OF THE COMPANY, THE SAID AMOUNT SHOULD BE TAXED IN THE HANDS OF THE COMPANY AND A CONFIRMATION LETTER TO THIS EXTEN T WAS SUBMITTED BY THE ASSESSEE. ACCORDINGLY, IT WAS PLEA DED THAT THE ADDITION MADE ON THE PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE, BE DELETED. 38. ON APPEAL, THE CIT(A) OBSERVED THAT THE ADDITIONS A RE MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS I N THE HANDS OF THE ASSESSEE. IT MAY BE PERTINENT TO MENTION HE RE THAT THERE IS A CONFUSION IN MENTIONING OF THE BANK ACCOUNT HE LD JOINTLY BY MR. SHIVRAM K. AGARWAL, THE ASSESSEE AND HIS WIFE M RS. VANITA ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 31 AGARWAL AT M/S NASIK COOPERATIVE URBAN BANK LTD WHOSE ACCOUNT NUMBER IS 1624. HOWEVER, IN THE SUBMISSION S MADE BY THE ASSESSEE, THE BANK ACCOUNT NUMBER IS TAKEN AT 1 625. THERE IS NO VARIATION IN THE AMOUNTS CREDITED INTO THE SA ID BANK ACCOUNT WHICH STOOD AT RS. 53,25,800. THOUGH THE AC COUNT IS STANDING IN THE NAME OF THE ASSESSEE AS WELL AS HIS WIFE SMT. VANITA AGARWAL, THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE, ON PROTECTIVE BASIS, WHILE TREATING THE S AME AS THE INCOME OF M/S. MAHAVIR ISPAT PVT. LTD, ON SUBSTANTI VE BASIS FOR THE ASSESSMENT YEAR UNDER REFERENCE. THE CONFIRMATI ON LETTER SUBMITTED BY THE ASSESSEE INDICATE THE POSITION ACC ORDINGLY. SINCE THE COMPANY WAS SHOWN AS SOURCE OF THE CASH D EPOSITS AND ALSO THE END5USER OF THE SAID AMOUNTS FOR MAKIN G OUT ITS EXPENDITURE IN THE FORM OF ELECTRICITY CHARGES, THE SAID AMOUNTS ARE OFFERED FOR TAX IN THE HANDS OF M/S. MAHAVIR IS PAT PVT. LTD. THE CIT(A) OBSERVED THAT THE SUBMISSION OF THE ASSE SSEE ARE FOUND TO BE ACCEPTABLE. ACCORDINGLY, HE DIRECTED T HE AO TO DELETE THE ADDITION MADE ON THE PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. 39. THE NEXT GROUND OF APPEAL RELATES TO THE ADDITION O F RS. 25,83,100 ON ACCOUNT OF UNDISCLOSED INCOME BEING TH E CASH CREDITS IN THE BANK ACCOUNT MENTIONED TO BE THE ACC OUNT WITH AGRASEN COOPERATIVE URBAN BANK LTD. WHILE MAKING T HE ADDITION, THE ASSESSING OFFICER HAS REFERRED TO THE SAID ACCOUNT NO. AS 1426 AND ADDED THE AMOUNT OF RS. 25,83,100, AS ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 32 UNEXPLAINED CASH DEPOSITS IN THE SAID ACCOUNT, WITH OUT TAKING FURTHER DETAILS. 40. THE CIT(A) OBSERVED THAT THERE IS CONFUSION AS REGA RDS TO THE BANK ACCOUNT REFERRED TO AND THE QUANTITY OF TH E CASH DEPOSITS MADE INTO THE SAID BANK ACCOUNT. AS PER TH E INFORMATION SUBMITTED BY THE ASSESSEE, THE ACCOUNT NUMBER OF THE BANK IS 1424 MAINTAINED WITH AGRASEN COOPERATIV E URBAN BANK LTD OF SIDDIAMBER BAZAR BRANCH, HELD JOINTLY B Y MR. SHIVRAM AGARWAL AND HIS WIFE SMT VANITA DEVI AGARWAL, BUT N OT 1426, AS REFERRED BY ASSESSING OFFICER IN HIS ORDER. THE DEP OSITS MADE INTO SUCH ACCOUNT IS RS. 29,04,100, FOR THE YEAR UNDER R EFERENCE WHICH IS EXACTLY TALLYING WITH THE AMOUNTS MENTIONE D BY THE ASSESSEE WHILE SUBMITTING HIS EXPLANATION. AS COUL D BE VERIFIED, THERE IS NO ACCOUNT BEARING NO. 1426 STANDING IN TH E SAID NAMES WITH THE SAID BANK AND THE ASSESSING OFFICER DO NOT HAVE ANY CLUE ABOUT THE SOURCE OF DEPOSITS OF RS. 2 5,83,100 OF SUCH ACCOUNT AS MENTIONED IN THE ASSESSMENT ORDER. FURTHER, THERE WAS A WRONG MENTION OF FINANCIAL YEAR 2005506 FOR TAKING THE REFERENCE OF AMOUNT OF RS. 25,83,100 ADDED IN A SSESSMENT ORDER. UNDER THE CIRCUMSTANCES, IT CAN BE HELD THAT THE AMOUNTS OF RS. 29,04,100 ARE RELATED TO BE CASH DEP OSITS MADE IN ACCOUNT NO. 1424 STANDING IN THE NAME OF SMT VAN ITA AGARWAL AND MR. SHIVARAM AGARWAL AND THE AMOUNT OF RS. 25,83,100 BEING THE ADDITION MADE IN THE ASSESSMENT ORDER IS NOT HAVING ANY RELEVANCE. SINCE THE SAID AMOUNT OF RS. 29,04,100 WAS ADDED IN THE HANDS OF SMT. VANITA AGA RWAL ON ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 33 PROTECTIVE BASIS, THE SAME AMOUNT WAS REQUESTED TO BE CONSIDERED IN THE HANDS OF THE ASSESSEE ON SUBSTANT IVE BASIS. 41. THE CIT(A) OBSERVED THAT THE EXPLANATION OFFERED BY THE ASSESSEE FOR THE AMOUNT OF RS. 29,04,100 BEING THE CASH DEPOSITS INTO THE BANK ACCOUNT NO. 1424 AT AGRASEN COOPERATIVE URBAN BANK LTD, IT IS TO BE MENTIONED H ERE THE ASSESSEE GROUP IS IN THE HABIT OF OPENING A BANK AC COUNT AND RUNNING IT FOR AN YEAR WITH THE CASH DEPOSITS MADE IN THE SAID ACCOUNTS WERE GENERALLY USED FOR CLEARING THE ELECT RICITY BILLS OF THE GROUP COMPANY BY NAME M/S. MAHAVIR ISPAT PVT. L TD. THE GENERAL EXPLANATION FOR SUCH DEPOSITS WOULD BE THAT THE AMOUNTS ARE ASSESSED ON SUBSTANTIVE BASIS IN THE HA NDS OF THE COMPANY AND ACCORDINGLY RELIEF WERE REQUESTED IN IN DIVIDUAL HANDS, WHEREIN THE ASSESSMENTS WERE DONE ON PROTECT IVE BASIS. IN THIS CASE, THE ADDITION WAS MADE ON SUBSTANTIVE BASIS AND THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE CA SH DEPOSITS ARE OUT OF BUSINESS TRANSACTIONS OF PURCHASE AND SA LE OF STEEL INGOTS, IS NOT ACCEPTABLE, SINCE THE SAME IS NOT SU BSTANTIATED BY THE ASSESSEE WITH THE HELP OF ANY EVIDENCE IN THIS REGARD. FURTHER, THE ASSESSEE HAS NOT SHOWN ANY INCOME FROM SUCH ACTIVITY WHILE FURNISHING THE RETURN OF INCOME AND AS SUCH, THE EXPLANATION CAN ONLY BE CONSIDERED AS AN AFTERTHOUG HT RESORTED FOR EXPLAINING THE UNEXPLAINED CASH DEPOSI TS MADE INTO THE BANK ACCOUNT BEARING NO. 1424 AT AGRASEN COOPERATIVE URBAN BANK LTD., STANDING JOINTLY IN THE NAMES OF S RI SHIVRAM K. AGARWAL AND SMT VANITA DEVI AGARWAL THE PROVISIONS ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 34 OF THE INCOME TAX ACT ARE VERY DEAR TO INDICATE THA T THE CREDITS APPEARED IN THE BOOKS OF ACCOUNTS WHICH ALSO INCLUD E THE BANK ACCOUNTS, NEED TO BE EXPLAINED BY THE PARTY IN WHOSE NAMES SUCH CREDITS ARE TAKEN PLACE. IN THE PRESENT CASE, THE CREDITS ARE TAKEN PLACE IN THE JOINT ACCOUNT HELD B Y THE ASSESSEE AND ALONG HIS WIFE SMT. VANITA DEVI AGARWA L, WHO STATED THAT THE SAID BANK ACCOUNT WAS OPENED BY MR. SHIVRAM K. AGARWAL AND HE WILL BE ABLE TO EXPLAIN THE SOURC ES FOR THE SAID CREDITS. HOWEVER, THE ASSESSEE FAILED TO PROV E SUCH CREDITS EITHER AT THE STAGE OF ASSESSMENT PROCEEDINGS OR AP PEAL PROCEEDINGS, ALONG WITH THE REQUIRED EVIDENCE. HENC E, THE ASSESSEE IS NOT ELIGIBLE FOR THE RELIEF ON THIS ADD ITION. SINCE THE ADDITION WAS MADE IN THE HANDS OF SMT. VANITA DEVI AGARWAL ON PROTECTIVE BASIS WHICH WAS DELETED BY THE ORDER OF CIT(A)5VII IN ITA NO. 1312/DCIT CC54/CIT(A}5VII/10511 DT. 16.0 1.2012, THE ADDITION OF THE SAME AMOUNT OF RS. 29,04,100, IS CO NFIRMED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE CIT(A) DISM ISSED THIS GROUND OF APPEAL. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 42. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE REVENUE APPEAL IN 639/HYD/ 2012 IS TO BE DISMISSED AS THIS ADDITION IS MADE ON PROTECTIVE BASIS. WE HAVE DEALT WITH THE SAME ISSUE IN CASE OF M/S. MAHA VIR ISPAT PVT. LTD. IN ITA NO. 990/HYD/2012 AND 1089/HYD/2012 WHER EIN WE HAVE GIVEN CERTAIN DIRECTIONS RELATING TO THE ADDIT ION THEREIN. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 35 BEING SO, THE PROTECTIVE ASSESSMENT IS VACATED. IT A NO. 639/HYD/2012 (REVENUE) IS DISMISSED . 43. COMING TO THE ASSESSEE'S APPEAL IN ITA NO. 713/HYD/ 2012. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE JOINT ACCOUNT WAS HELD IN THE NAMES OF SHIVRAM K. AGARWAL AND HIS WIFE SMT. VANITA SHIVRAM AGARWAL. BEFORE US IT WAS STATED THAT CORRECT ACCOUNT NO. IS 1424 AND NOT 1426. THERE IS NO CLARITY REGARDING THE BANK A/C NO. AND THE AMOUNT DEPOSITED IN THAT BANK ACCOUNT. ACCORDING TO THE A SSESSEE THE AMOUNT DEPOSITED IN THE BANK A/C. IS AT RS. 29,04,1 00. THE AO CONSIDERED IT AS RS. 25,83,100. FINANCIAL YEAR WAS MENTIONED BY THE AO AS 2005506. THE CIT(A) AGREED WITH THE ASSE SSEE THAT THE AMOUNT DEPOSITED IN THE BANK IS RS. 29,04,100. HOWEVER, HE ENHANCED THE ASSESSMENT WITHOUT GIVEN PROPER OPPORT UNITY TO THE ASSESSEE. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND DETERMINE THE EXACT A/C. NO. AND EXACT AMOUNT DEPOSITED IN TH E BANK ACCOUNT. IF IT IS CONSIDERED IN WIFE'S HANDS, IT C ANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. THERE SHALL NOT BE ANY DOUBLE ADDITION. WITH THESE OBSERVATIONS, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION. ITA NO. 713/HYD/2012 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES . ITA NO. 640/HYD/2012 (REVENUE) 44. THE REVENUE RAISED THE FOLLOWING GROUND OF APPEAL: ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 36 (1) THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANC E AS NEITHER THE ASSESSEE NOR THE ASSESSEE'S HUSBAND AS JOINT ACCOUNT HOLDER COULD EXPLAIN THE SOURCES OF THE CAS H DEPOSIT DURING ASSESSMENT OR APPEAL PROCEEDINGS. 45. THE ISSUE IN THE GROUND IS RELATING TO PROTECTIVE A SSESSMENT IN ASSESSEE'S HANDS, SUBSTANTIVELY MADE IN THE HAND S OF THE ASSESSEE'S HUSBAND SHIVRAM K. AGARWAL. SINCE WE HA VE REMITTED THE ISSUE BACK TO THE FILE OF THE AO IN HE R HUSBAND'S CASE IN ITA NO. 713/HYD/2012, THIS IS ALSO GOES BAC K TO THE AO FOR RE5EXAMINATION AND TO SUSTAIN THE ADDITION ONLY IN ONE HAND IF WARRANTED. ITA NO. 640/HYD/2012 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 430/HYD/2012 (BY REVENUE): 46. THE FOLLOWING GROUND IS RAISED BY THE REVENUE: (1) THE LD. CIT(A) HAS ERRED IN DELETING THE PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE AND IN HOLDING THAT TH E CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE PERTAI N TO M/S. MAHAVIR ISPAT PVT. LTD. 47. THIS ISSUE IS CONSIDERED IN THE HANDS OF M/S. MAHAV IR ISPAT PVT. LTD. IN ITA NO. 990/HYD/2012. BEING SO, THIS PROTECTIVE ASSESSMENT IS ANNULLED. APPEAL OF THE REVENUE IN I TA NO. 430/HYD/2012 IS DISMISSED. ITA NO. 641/HYD/2012 (BY REVENUE): 48. THE FOLLOWING GROUNDS ARE RAISED BY THE REVENUE: (1) THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ON FACTS. ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 37 (2) THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DISALLOWANC E MADE AS PER THE ASSESSEE UNDISCLOSED BANK ACCOUNT DEPOSIT A S IT IS ONLY FOUND CONSEQUENT TO SEARCH AND THE ASSESSEE FAILED TO EXPLAIN SOURCES OF SAME. (3) THE LD. CIT(A) OUGHT NOT HAVE ALLOWED THE CONTENTIO N OF THE ASSESSEE THAT THE SAID DEPOSIT AND DRAWALS AS RELAT ABLE TO COMPANIES RECEIPTS AND EXPENSES ARE THE ACCOUNT IS AN INDIVIDUAL UNDISCLOSED ACCOUNT AND ASSESSEE CLAIM IS NON RELAT ABLE. (4) THE LD. CIT(A) HAS ERRED IN ADOPTING A CONTRADICTOR Y STAND IN THE CASE BECAUSE IN THE CASE OF SRI SHIVRAM KANTILAL AG ARWAL FOR A.Y. 2008-09, IN ITA NO. 1306/DCIT, CC-4/ CIT(A)-VI I/2010- 11 DATED 30.1.2012, THE CIT(A) HAS HELD THAT EXPLAN ATION OFFERED BY THE ASSESSEE THAT CASH DEPOSITS ARE OUT OF BUSIN ESS TRANSACTIONS OF THE COMPANY IS NOT SUBSTANTIATED AND CREDITS APP EARING IN BANK ACCOUNT OF THE ASSESSEE NEEDS TO BE EXPLAINED BY TH E AS HIMSELF. 49. THIS ISSUE IS CONSIDERED IN THE HANDS OF M/S. MAHAV IR ISPAT PVT. LTD. IN ITA NO. 990/HYD/2012. BEING SO, THIS PROTECTIVE ASSESSMENT IS ANNULLED. APPEAL OF THE REVENUE IN I TA NO. 641/HYD/2012 IS DISMISSED . 50. IN THE RESULT, ITA NO. 990/HYD/2012 (ASSESSEE) PARTLY ALLOWED ITA NO. 1089/HYD/2012 (REVENUE) 5 DISMISSED ITA NO. 1090/HYD/2012 (REVENUE) DISMISSED ITA NO. 639/HYD/2012 (REVENUE) DISMISSED ITA NO. 713/HYD/2012 (ASSESSEE) PARTLY ALLOWED FOR STAT. PURPOSES ITA NO. 640/HYD/2012 (REVENUE) ALLOWED FOR STAT ISTICAL PURPOSES. ITA NO. 430/HYD/2012 (REVENUE) DISMISSED ITA NO. 641/HYD/2012 (REVENUE) 5 DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2014. SD/5 (SAKTIJIT DEY) JUDICIAL MEMBER SD/5 (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 21 ST FEBRUARY, 2014 TPRAO ITA NO. 430/HYD/2012 & ORS. SRI RAMPRASAD AGARWAL & ORS. ========================= 38 COPY FORWARDED TO: 1. THE DEPUTY CIT, CENTRAL CIRCLE54, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD5500 004 2. SRI RAMPRASAD AGARWAL, 21525236, URDUGALLI, PATHERG ATTI, HYDERABAD5500 002. 3. SRI SHIVRAM KANTILAL AGARWAL, 21525631, URDUGALLI, PATHERGATTI, HYDERABAD5500 002. 4. SMT. VANITA AGARWAL, 21525631, URDUGALLI, PATHERGAT TI, HYDERABAD5500 002 5. SRI VIJAY RAM AGARWAL, 21525631, URDUGALLI, PATHERG ATTI, HYDERABAD5500 002. 6. M/S. MAHAVIR ISPAT PVT. LTD., 21525636/1, URDUGALLI , PATHERGATTI, HYDERABAD5500 002. 7. THE CIT(A)5VII, HYDERABAD. 8. THE CIT (CENTRAL), HYDERABAD. 9. THE DR BENCH 'A', ITAT, HYDERABAD