Smt Seema Harwani Prop.Supreme Enterprises, Hyderabad V. DCIT, Hyderabad

ITSSA 15/HYD/2005

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8099 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-01-2011
• Assessment Year: misc
• Appeal Filed On: 13-01-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER IT(SS)A. NO.11/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 SHRI RAJ KUMAR HARWANI, HYDERABAD (PAN AAOPH 5066R) VS THE DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.12/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 SMT. VISHNU BHAI HARWANI, HYDERABAD (PAN AAMPH 9233 K) VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.13/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 SMT. RATI BALWANI, HYDERABAD (PAN AENPB 1313 A) VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.14/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 SHRI MURALIDHAR HARWANI, HYDERABAD (PAN AAFPH 1546 M) VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.15/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 SMT. SEEMA HARWANI, HYDERABAD (PAN AAHPH 2619 H) VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.16/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 SHRI HARISH KUMAR HARWANI, HYDERABAD (PAN AAYPH 0485 N) VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.17/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 2 SMT. BHARATI HARWANI, HYDERABAD. PAN AAMPH 6991 D VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT IT(SS)A. NO.18/HYD/2005 BLOCK PERIOD 1996-97 TO 2001-02 AND 1.4.01 TO 29.1. 02 M/S SUPREME RECORDING COMPANY, HYDERABAD (PAN AAECS 6138 A) VS DCIT, CENTRAL CIRCLE 4, HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI P. MURALI MOHAN RAO RESPONDENT BY : SHRI K.V.N. CHARYA ORDER PER CHANDRA POOJARI, A.M.: THESE APPEALS PREFERRED BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE CIT (A) GUNTUR AND PERTAINS TO THE BLOCK ASSESSMENT YEARS 1996- 97 TO 2001-02 AND 1.4.01 TO 29.1.02. SINCE CERTAIN ISSUES INVOLVED IN THESE APPEALS ARE COMMON IN NATURE, THE Y ARE CLUBBED, HEARD AND DISPOSED OFF TOGETHER FOR THE SA KE OF CONVENIENCE. 2. THE FIRST GROUND RAISED BY THE ASSESSEE IN HIS APPEAL IN NO.11/H/05 IS WITH REGARD TO TREATMENT OF INVEST MENT IN LAND AS UNDISCLOSED INCOME. 3. BRIEF FACTS OF THE ISSUE ARE THAT DURING THE SE ARCH, EVIDENCE WAS GATHERED WHICH SUGGESTED THAT THERE HA S BEEN UNEXPLAINED INVESTMENT OF RS.2.5 LAKHS MADE BY THE ASSESSEE DURING JULY 2000 IN PROPERTY SITUATED AT D .NO.21- 1-854 RIKABGUNJ, HYDERABAD. IN THE ASSESSMENT ORDE R, THE ASSESSING OFFICER HAS REFERRED TO THE SEIZED MATERI AL CITED AS EVIDENCE. IT IS ALSO MENTIONED THAT THE ASSESSEE D URING THE ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 3 SEARCH PROCEEDINGS AS WELL AS THE ASSESSMENT PROCEE DINGS ACCEPTED THAT THE ABOVE INVESTMENT IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS. A REQUEST WAS MADE DURING THE ASSESSMENT PROCEEDINGS FOR TELESCOPING OF THIS INVE STMENT AGAINST UNDISCLOSED SALES ADMITTED BY OTHER CONCERN S. THE ASSESSING OFFICER REJECTED THE SUBMISSION OF THE AS SESSEE AFTER POINTING OUT THAT THE INVESTMENT IN THE ABOVE PROPERTY WAS MADE DURING THE PREVIOUS YEAR RELEVANT TO ASSES SMENT YEAR 2001-02 AND THE INCOME FROM SUPPRESSION OF SAL ES BELONGS TO OTHER MEMBERS OF THE GROUP AND THAT TOO UNDISCLOSED SALES IS ASSESSED FOR THE PERIOD FROM 1 .4.01 TO 29.1.02. THE ASSESSING OFFICER HAS ALSO POINTED OU T THAT THE ASSESSEE AS WELL AS THE OTHER MEMBERS AND CONCE RNS OF THE GROUP ARE INDEPENDENT ENTITLES AND ASSESSEES OF THE GROUP AND THEREFORE THE REQUEST OF THE ASSESSEE TO TELESCOPE THE INVESTMENT AGAINST THE INCOME EARNED BY OTHER A SSESSEE IS NOT ACCEPTED. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR OPINION, THE ASSESSING OFFICER OUGHT TO HAVE ADOPTED EITHER THE INCOME MET HOD OR INVESTMENT METHOD TO DETERMINE THE UNDISCLOSED INCO ME. IN THIS CASE THE ASSESSING OFFICER HAS ADOPTED BOTH THE METHODS CUMULATIVELY. HENCE, WE DIRECT THE ASSESSI NG OFFICER TO TELESCOPE THE UNDISCLOSED INVESTMENT OUT OF THE UNDISCLOSED INCOME DETERMINED BY ASSESSING OFFICER UP TO THE PERIOD OF THIS INVESTMENT COVERING THE BLOCK PE RIOD AND THERE CANNOT BE DOUBLE ADDITION ONE IN THE FORM OF UNDISCLOSED INCOME AND ANOTHER IN THE FORM OF UNDIS CLOSED INVESTMENT. THIS ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDINGLY, IS G ROUND OF THE APPEAL IS PARTLY ALLOWED. ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 4 5. THE COMMON ISSUE ARGUED BY THE ASSESSEES COUN SEL BEFORE US IN IT(SS)A. NOS.11 & 14/H/2005 ARE WITH R EGARD TO TREATMENT OF SALARY AND COMMISSION OF BUSINESS INCOME AS UNDISCLOSED INCOME THOUGH THESE INCOMES ARE SUBJ ECT TO TAX DEDUCTION AT SOURCE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE GROUNDS OF APPEAL RAISED BEFORE US AS WELL AS BEFOR E THE CIT(A). WE FIND FROM THE RECORDS THAT NO SUCH GROU ND NEITHER RAISED BEFORE THE CIT(A) NOR TRIBUNAL. HE NCE THE ARGUMENTS PLACED BY THE ASSESSEES COUNSEL ON THIS ISSUE ARE MIS- PLACED AND DISMISSED ACCORDINGLY. 7. THE NEXT COMMON GROUNDS IN ITA NOS.11, 12, 14 & 18/H/2005 IS WITH REGARD TO TREATING THE PHYSICAL C ASH FOUND DURING THE SEARCH ACTION AS UNDISCLOSED INCOM E. 8. BRIEF FACTS OF THE ISSUE ARE THAT ON SUCH CASH IN THE CASE OF SHRI RAJKUMAR HARWANI (IN NO.11/05) AND SHR I MURALIDHAR HARWANI IN INCOME TAX ACT, 1961 NO.14/H/ 05 IS THAT THE ASSESSING OFFICER HAS ADDED 50% OF THE CASH FOUND IN THE BED ROOM OF THE ASSESSEE AND HIS BROTH ER SHRI MURALI HARWANI. THE TOTAL CASH FOUND IS AT RS.3,66 ,199/-. THE ASSESSEES HEREIN COULD NOT EXPLAIN THE SOURCE OF CASH FOUND IN HIS BED ROOM SATISFACTORY AT THE TIME OF S EARCH. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE ASS ESSEE IS EXPLAINED AS UNDER: NAME OF THE CONCERN AMOUNT RS. BALANCE AS PER BOOKS OF ACCOUNTS ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 5 SUPREME MUSIC 98,303 MUSIC NETWORK 49,735 SUMADHUR 1,0 7,828 2,55,866 CASH BELONGING TO OUR EMPLOYEE AT SUPREME MUSIC VIZAG 50,000 3,05,866 BALANCE CASH BELONGING TO THE OTHER FAMILY MEMBERS AND CHILDREN 60,323 3,66,189 THUS THE EACH FOUND AT THE RESIDENCE STANDS DULY RECOGNISED. 8.1. THE ASSESSING OFFICER HAS REJECTED HIS EXPLAN ATION AFTER FOLLOWING OBSERVATIONS: A) THE ASSESSEE HAD TAKEN A STAND IN ANOTHER CONNECTED CASE THAT RS.70,000/- BELONGS TO M/S SUPREME MUSIC BUT NOW IS BEING CLAIMED AS THE SOURCE FOR THE CASH FOUND. B) THE CASH BOOK OF THE ABOVE CONCERNS WERE NOT UP TO DATE. THE FAMILY CONCERNS OF THE ASSESSEE ARE INVO LVED IN PURCHASES AND SALES OUTSIDE THE BOOKS OF ACCOUNT S WHICH IS EVIDENT FROM THE DEFICIT AND SURPLUS STOCK S FOUND DURING THE SEARCH. THE ASSESSING OFFICER ALS O NOTED THAT THE ASSESSEE HAD NOT EXPLAINED THE SOURC E FOR CASH SATISFACTORILY. 9. IN THE CASE OF SHRI VISHNU HARWANI IN ITA NO.12/H/2005 BRIEF FACTS OF THE ISSUE ARE THAT : AN AMOUNT OF RS.70,945 HAS BEEN ADDED AS UNEXPLAINE D CASH. THE ABOVE AMOUNT WAS FOUND DURING THE COURSE OF SEARCH WHICH WAS ALSO SEIZED ONLY SEIZED AFTER RECO RDING THE STATEMENT OF SHRI HARISH KUMAR HARWANI (RS.70,000). SHRI ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 6 HARWANI HAS STATED THAT CASH BOOK WAS NOT WRITTEN U P TO DATE AND CLOSING BALANCES WERE NOT DRAWN. HE HAD A LSO CLAIMED THAT THE SOURCE FOR THE AMOUNT IS THAT FROM THE CASH SALES MADE AND NOT ENTERED IN THE CASH BOOK FR OM 15 TH JANUARY, 2002 TO 28 TH JANUARY, 2002. THE ASSESSING OFFICER REJECTED THE ABOVE EXPLANATION OF THE ASSES SEE AFTER POINTING OUT THAT THE ASSESSEE IS MAKING PURCHASES AND SALES OUT OF THE BOOKS WHICH IS CORROBORATED BY THE DEFICIT STOCK FOUND ON THE DATE OF SEARCH. NO EVIDENCE WAS ALSO PRODUCED REGARDING THE CASH SALES. 10. IN THE CASE OF M/S SUPREME MUSIC IN IT NO.18/HYD/05 BRIEF FACTS OF THE ISSUE ARE THAT DURI NG THE SEARCH, AN AMOUNT OF RS.27,500/- WAS FOUND AND INVENTORISED AND AN AMOUNT OF RS.5,70,000/- WAS FOU ND IN THE CASE OF SHRI P. KARUNAKAR RAO, BROTHER OF SHRI MADHAVA RAO WHO IS SUPPOSED TO BE THE SALES REPRESENTATIVE OF THE ASSESSEE COMPANY. THE ABOVE AMOUNT WAS SEIZED. TH E ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE ABOVE AMOUNT REPRESENTS THE AMOUNT COLLECTED BY SHR I MADHAVA RAO, THEIR SALES AND SENT THROUGH HIS BROTH ER. SHRTI MADHAVA RAO HAS COLLECTED MONEY FROM VARIOUS DEALERS. THE RECONCILIATION WAS ALSO EXPLAINED AS UNDER: 11. THE TOTAL CASH IN THE PREMISES WAS RS.5,97,000 I.E. 5,70,000 BROTHER BY THE COLLECTION AGENT FROM THE D ISTRICTS AND RS.27,500/- FOUND IN THE SHOP PREMISES. THE RE CEIPTS ON SALES WERE RS.6,37,979/- AND THE EXPENDITURE ON ADVERTISEMENT WAS RS.27,000 AND ON ACCOUNT FREIGHT CHARGES WAS RS.12,003. THUS THE CASH ON HAND AS PE R THE BOOKS OF ACCOUNTS OF RS.5,98,976 AS ON THE DATE OF SEARCH STANDS RECONCILED. ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 7 12. THE ASSESSING OFFICER REJECTED THE ABOVE EXPLA TION OF THE ASSESSEE BY POINTING OUT THAT SHRI HARISH KUMAR HARWANI, ONE OF THE DIRECTORS OF THE COMPANY HAD ST ATED DURING THE SEARCH THAT HE DOES NOT KNOW SHRI P. KAR UNAKAR RAO AND HE ALSO DOES NOT KNOW IN WHAT CAPACITY SRI MADHAVA RAO IS WORKING. HE ALSO DENIED ANY KNOWLED GE OF THE TRANSACTION. THE OTHER REASONS GIVEN BY THE AS SESSING OFFICER WHILE REJECTING THE EXPLANATION IS AS UNDER : A) ON THE DAY OF SEARCH, A SWORN DEPOSITION WAS RECORDED FROM SHRI HARISH KUMAR HARWANI ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY WHEREIN HE WAS ASKED ABOUT THE DETAILS OF THE SALES REALISATIONS F ROM OUT STATION PARTIES. IN RESPONSE HE STATED THAT HE DID NOT KNOW MR. P. KARUNAKAR RAO AND ALSO DID NOT KNOW IN WHAT CAPACITY MR. P. MADHAVA RAO IS WORKING IN THE ASSESSEE COMPANY. FURTHER, HE HAS ALSO STATED THAT HE DID NOT KNOW ANYTHING ABOUT THE DETAILS OF ABOVE TRANSACTIONS. B) THE ASSESSEE COMPANY IS INVOLVED IN MAKING PURCHASE OUTSIDE THE BOOKS OF ACCOUNTS AS IS EVIDEN T FROM THE SURPLUS STOCK FOUND ON THE DAY OF SEARCH. C) THE CASH BOOK IS NOT UPDATED AND THE THEORY OF THE ASSESSEE THAT THE SOURCES FOR THE ABOVE CASH ARE REALISATIONS OF SALES FROM OUTSTATION PARTIES BY TH E SALES AGENT MR. P. MADHAVA RAO IS A MERE AFTER THOUGHT ON THE PART OF THE ASSESSEE TO EXPLAIN AWAY THE CASH FOUND ON THE DAY OF SEARCH. D) THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE FLOWING FROM THE MATERIAL SEIZED TO SUBSTANTIATE ITS CLAIM. ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 8 E) ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE WIT H REGARD TO REALISATIONS, IT IS FOUND THAT THE ASSESS EES SALES AGENT COLLECTED FROM PARTIES AT VIJAYAWADA, CUDDAPAH, NANDYAL ON THE SAME DAY VIZ., 28.1.2002 WHICH APPEARS TO BE IMPROBABLE. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AS STATED EARLIER ELSEWHERE I N THIS ORDER, THE ASSESSING OFFICER HAS TREATED THE INCOM E AS WELL AS UNEXPLAINED INVESTMENT AS UNDISCLOSED INCOME OF THE ASSESSEE. THIS IS NOT PROPER. THE ASSESSING OFFIC ER IS REQUIRED TO DETERMINE THE UNDISCLOSED INCOME EITHER ON THE BASIS OF INCOME METHOD OR INVESTMENT METHOD. FURT HER, IN THIS CASE THE BOOKS OF ACCOUNTS ARE NOT WRITTEN UP TO THE DATE OF SEARCH HENCE THE ASSESSING OFFICER IS DIREC TED TO GIVE DUE CREDIT TO THE AVAILABLE CASH BALANCE AS ON DATE OF SEARCH IN THE BOOKS OF ACCOUNTS TO THE PHYSICAL CASH FOUND DURING THE COURSE OF SEARCH. FURTHER, HE HAS TO GIVE DUE CREDIT AND TELESCOPE OUT OF THE UNDISCLOSED INCOME DETERMINED BY HIM DURING THAT PERIOD COVERING THE BLOCK PERIOD. ACCO RDINGLY THIS ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OF FICER FOR RECONSIDERATION. 14. THE NEXT COMMON GROUND IN ITA NOS.12,13,15,16, 17 & 18/H/05 IS WITH REGARD TO TREATMENT OF DEFICIT/SU RPLUS STOCK AS UNDISCLOSED INCOME. 15. BRIEF FACTS OF THE ISSUE ARE THAT ON PHYSICAL VERIFICATION OF THE STOCK ON THE DATE OF SEARCH ACT ION THERE WAS A DEFICIT SURPLUS STOCK IN THESE ASSESSEES CAS ES. THOUGH THE ASSESSEE HAS TAKEN A PLEA THAT THERE WAS INTER CONCERN TRANSFER OF CASSETTES AND CDS BETWEEN THEM AND ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 9 HAS TO BE CONSIDERED THE SAME, THE LOWER AUTHORITIE S REJECTED THE CLAIM OF THE ASSESSEE AND MADE ADDITIO N TOWARDS DEFICIT SURPLUS STOCK IN THE HANDS OF EACH ASSESSEES. AGAINST THIS THE ASSESSEES ARE IN APPEA L BEFORE US. 16. ADMITTEDLY, THESE ASSESSEES ARE INTER RELATED TO EACH OTHER AND THE CONCERNS ARE FAMILY CONCERNS WHERE TH ERE IS INTER TRANSFER STOCK BETWEEN THE CONCERNS IS COMMON . BEING SO, THE ASSESSING OFFICER HAS DIRECTED TO ARR IVE CUMULATIVELY NET SURPLUS OR DEFICIT STOCK AND TO BE TREATED THE SAME, AS UNDISCLOSED INCOME IN THE RESPECTIVE ASSESSEES HANDS. THIS ISSUE IS REMITTED BACK TO T HE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDIN GLY, THIS GROUND OF THE APPEAL IS PARTLY ALLOWED. 17. THE NEXT COMMON GROUND IN IT NOS.12 &13/HYD/2005 IS WITH REGARD TO TREATMENT OF SURPLUS STOCK AS WELL AS INCOME OF THE ASSESSEE. 18. THOUGH THE ASSESSEES COUNSEL ARGUED THIS GROU ND BEFORE US, WE FIND THERE IS NO SUCH GROUND RAISED BEFORE THE CIT(A) OR BEFORE US. ACCORDINGLY THIS GROUND IS DI SMISSED AS UN-ADMITTED. 19. THE NEXT GROUND IN IT NO.18/H/2005 IS WITH REG ARD TREATMENT OF UNACCOUNTED PAYMENT TO M/S LAXMI NARASIMHA PICTURES. 20. BRIEF FACTS OF THE ISSUE ARE THAT THE EVIDENCE GATHERED DURING THE SEARCH WITH REGARD TO UNEXPLAINED EXPEND ITURE HAS INDICATED UNACCOUNTED PAYMENT OF RS.4,50,000/- BY ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 10 THE ASSESSEE TOWARDS PURCHASE OF ASSIGNMENT CHARGES OF TELUGU FILM AUDI TO ONE M/S LAKSHMI NARASIMHA PIC TURES. THE ASSESSING OFFICER HAS REFERRED TO THE SEIZED DO CUMENT WHICH INDICATED SUCH PAYMENT. SHRI RAJ KUMAR HARWA NI, DIRECTOR OF THE COMPANY ACCEPTED THE UN-ACCOUNT PAY MENT. HOWEVER, THE ASSESSEE COMPANY WHILE FILING THE RETU RN SOUGHT FOR TELESCOPING OF THE SAME TO THE UNDISCLOS ED SALES ADMITTED IN OTHER CONCERNS OF THE GROUP INTO THE AB OVE UNACCOUNTED PAYMENT. 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. HEREIN THE ASSESSEE S COUNSEL SOUGHT FOR TELESCOPING OF THIS PAYMENT OUT OF UNDISCLOSED INCOME. WE ACCEDE TO THE REQUEST OF TH E ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFF ICER TO SET OFF THIS UNEXPLAINED EXPENDITURE OUT OF UNDISCLOSED INCOME IF ANY DURING THE PERIOD COVERING THE BLOCK PERIOD. ON THE OTHER HAND, IF THERE IS NO UNDISCLOSED INCOME IN TH E HANDS OF THE ASSESSEE DURING THE RELEVANT PERIOD, THE UNE XPLAINED EXPENDITURE HAS TO BE TREATED AS UNDISCLOSED INCOME SEPARATELY. THE ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. 22. THE NEXT GROUND IN IT NO.17/HYS/2005 IS WITH R EGARD TO TREATMENT OF UNEXPLAINED PAYMENT MADE TO M/S JET SPEED. 23. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSIN G OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE FOR THE RE ASON THAT NO CONFIRMATION LETTER WAS PRODUCED FROM THE PARTIE S FROM WHOM JOB WORK WAS DONE. THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT THE SOURCE OF PAYMENTS WAS NOT PRO PERLY ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 11 EXPLAINED BY THE ASSESSEE. THE ASSESSEE IS AGGRIEV ED AGAINST THE ABOVE DECISION OF THE ASSESSING OFFICER THE ASSESSEE IS IN APPEAL BEFORE US. 24. THE AR SUBMITTED THAT THE ASSESSING OFFICER ER RED IN BRINGING TO TAX A SUM OF RS.6,72,180 BEING THE AMOU NT PAID TO JET SPEED AUDIO LIMITED, MUMBAI. THE ASSESSING OFFICER OUGHT TO HAVE BELIEVED THE CASE OF THE ASSESSEE THA T THE ASSESSEE WAS UNDERTAKING SUCH RECORDING ON BEHALF O F VARIOUS PARTIES IN THE STATE OF AP AND THAT THE ASS ESSEE WAS ONLY EARNING COMMISSION OF 10% ON THE SAID TRANSACT ION. THE EXPENDITURE OF RS.6,72,180 WAS INCURRED FROM OU T OF THE MONIES PAID BY VARIOUS PARTIES ON WHOSE BEHALF THE RECORDING WAS GOT DONE, AND HENCE THE ASSESSEE HAD SOURCES FOR THE SAID PAYMENT OF RS.6,72,180/-. THE DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 25. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE MAIN CRUX OF TH E ARGUMENT OF THE ASSESSEES COUNSEL IS THAT THE ASSE SSEE HAS COLLECTED PAYMENTS FROM VARIOUS PARTIES PAID TO THE JET SPEED LTD AND PAID ON THEIR BEHALF AND THE ASSESSEE IS RECEIVING ONLY COMMISSION AT 10% ON THAT AMOUNT AN D HE IS ALSO CLAIMING TO SET OFF THIS EXPENDITURE OUT OF THE UNDISCLOSED INCOME. WE FIND NO FORCE IN THE ARGUME NTS OF THE ASSESSEES COUNSEL WITH REGARD TO PAYMENT OF TH IS AMOUNT ON BEHALF OF OTHER PARTIES. HOWEVER, WE ACC EDE TO THE OTHER PROPOSITIONS OF THE ASSESSEE REGARDING TE LESCOPING OF THIS PAYMENT OUT OF THE UNDISCLOSED INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO TEL ESCOPE THIS PAYMENT OUT OF THE UNDISCLOSED INCOME IN THE RELEV ANT PERIOD IF ANY. IF THERE IS NO UNDISCLOSED INCOME D URING THE ITA NO.11 TO 18 /H/2005 S/SHRI RAJKUMAR HARWANI & OTHERS, HYD. 12 RELEVANT PERIOD COVERING THE BLOCK PERIOD, HE IS A T LIBERTY TO CONSIDER THE BALANCE PAYMENT AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ISSUE IS SET ASIDE TO THE FILE OF AS SESSING OFFICER FOR FRESH CONSIDERATION. 26. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE S ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 11.8.2011 SD/ - G.C. GUPTA SD/ - CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 11 TH AUGUST, 2011 COPY FORWARDED TO: 1. M/S Y. RATNAKAR, ADVOCATE, TILAK ROAD, HYDERABAD C/O RAJKUMAR, SMT. VISHNUBHAI, MURALIDHAR HARWANI, PROP. SUPREME MUSIC CO., 5-1-750, HARIDAS MARKET, BANK ST. KOTI, HYDERABAD., 2. SMT. RATI BALWANI, SMT. SEEMA HARWANI, , SHRI HARISH KUMAR HARWANI, , SMT. BHARATI HARWANI, (PROP.). M/S SUPREME MUSIC, HYDERABAD & VISAKHAPATNAM, HYDERABAD 21-1-8-48, RAIKABGUNJ, HYDERABAD. 2. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 4, HYDERABAD. 3. THE CIT(A) GUNTUR & HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/