ACIT,Central Circle, Tirupathi V. Sri Sunku Ramesh Babu, Hyderabad

ITSSA 2/HYD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3543 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Document seized; Opportunity of being heard; Peak credit; Block assessment; Documents seized
• Section: 142(1); 68; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER IT(SS)A NO. 1/HYD/2014 BLOCK ASSESSMENT: AYS 1997-98 TO 2003-04 SUNKU RAMESH BABU, HYDERABAD. PAN AZUPS 5478 H VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TIRUPATHI. (APPELLANT) (RESPONDENT) IT(SS)A NO. 2/HYD/2014 BLOCK ASSESSMENT: AYS 1997-98 TO 2003-04 ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE, TIRUPATHI. VS. SUNKU RAMESH BABU, HYDERABAD. PAN AZUPS 5478 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI V. SREEKAR DATE OF HEARING : 24-10-2017 DATE OF PRONOUNCEMENT : 29-12-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: BOTH THESE APPEALS ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE DIRECTED AGAINST THE ORDER OF THE LEARNED C OMMISSIONER OF INCOME-TAX (A), GUNTUR, DATED 31/12/2013 FOR THE BLOCK PERIOD AYS 1997-98 TO 2003-04. 2. BRIEFLY THE FACTS OF THE CASE ARE, A SEARCH AND SEIZURE OPERATION US/ 132(1) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) WAS CARRIED OUT IN THE CASE OF SINGANAMALA RAMESH B ABU AND SRI S. 2 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. SATYA RAMA MURTHY ON 21/02/2003. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS INCLUDING BOOKS OF ACCOUNT BELONG ING TO THE ASSESSEE WERE FOUND AND SEIZED. SUBSEQUENTLY, A NOT ICE U/S 158BD DATED 23/11/2004 WAS ISSUED IN ORDER TO FILE RETURN FOR BLOCK PERIOD. HOWEVER, ASSESSEE HAD NOT FILED ANY RETURN OF INCOM E IN RESPONSE TO THE NOTICES ISSUED U/S 158BD AND U/S 142(1) OF THE ACT. THEREFORE, ASSESSMENT WAS COMPLETED U/S 144 RWS 158BD OF THE A CT. AO MADE THE FOLLOWING ADDITIONS WHILE COMPLETING THE ASSESS MENTS U/S 144 OF THE ACT: 1. CASH DEPOSITS FOUND IN THE BANK ACCOUNTS OPERATED BY ASSESSEE AND FAMILY MEMBERS AS CASH CREDIT U/S 68 OF THE ACT. 71,59,370/- 2. CAPITAL INVESTMENT IN M/S SRS AND SRI SAI GANESH PRODUCTIONS 20,00,000/- 3. AMOUNTS ADVANCED BY THE ASSE3SSEE IN SRS AND SRI SAI GANESH PRODUCTIONS. 39,00,000/- 4. INVESTMENTS IN SRS AND SRI SAI GANESH PRODUTIONS 67,37,750/- 5. CAPITAL AND FINANCE BROUGHT INTO THE BANNER OF SRS ART MOVIES FOR PELLIPANDIRI 28,80,000/- 6. CAPITAL OF THE ASSESSEE IN SRS ART MOVIES 50,000 /- 7. TOTAL INVESTMENT INCLUDING CAPITAL IN M/S SRI UMAMAHESWARA MOVIES (P) LTD., 5,50,000/- 8. PAYMENT FOR ROYALTY IN THE NAME OF UMAMAHESWAR MOVIES PVT. LTD. 3,06,000 9. UNEXPLAINED EXPENDITURE TOWARDS COMPENSATION PAID TO THE RETIRING PARTNER SRI M. CHANDRASEKHAR 1,00,000 10. PEAK CREDITS ARRIVED FROM A/SRB/23 TREATED AS UNDISCLOSED INCOME 24,10,000 11. PEAK CREDITS ARRIVED FROM A/SRB/28 TREATED AS UNDISCLOSED INCOME 5,15,000 12. UNDISCLOSED INVESTMENT IN PROMOTES RECEIVABLE 2 7,00,000 13. INTEREST INCOME FROM FILM FINANCE AS ARRIVED FR OM A/SRB/23 AND A/SRB/28 24,65,875 14. AMOUNTS RECEIVED ON SALE OF REMAKE RIGHTS OF ANURAAGA SANGAMA 3,00,000 15. DOMESTIC EXPENDITURE OF THE ASSESSEE DURING THE BLOCK PERIOD TREATED AS UNEXPLAINED EXPENDITURE. 12,45,000 16. UNDISCLOSED EXPENDITURE FOUND IN THE SEIZED MATERIAL NO. A/SRB/39 TREATED AS UNDISCLOSED INCOME. 2,87,000 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(A). 3 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, FOUND THAT RS. 6 LAKH WITHDRAWALS IN ASSESESEES OW N BANK ACCOUNT AND RS. 14 LAKH WITHDRAWALS IN THE ACCOUNT OF HIS S ON SHRI S. BALAJI KUMAR CAN BE CONSIDERED FOR TELESCOPIC BENEFIT AND ACCORDINGLY, ADDITION TO THE EXTENT OF RS. 20 LAKHS WERE DELETED AND ALL OTHER ADDITIONS WERE SUSTAINED BY THE CIT(A) JUSTIFYING T HE FINDINGS OF AO. AGAINST THIS ORDER, BOTH ASSESSEE AND REVENUE ARE I N APPEAL BEFORE US. REVENUE IS AGGRIEVED WITH DELETION OF RS. 20 LA KHS FOR GIVING TELESCOPIC BENEFIT TO THE ASSESSEE, AT THE SAME TIM E, ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OTHER ADDITIONS SUSTAI NED BY THE CIT(A). 4.1 ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT HEREIN. 2 THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.71,59,37 0/- WITHOUT CONSIDERING THE FACT THAT THE PEAK AMOUNT IS ONLY A NOMINAL BALANCE AND SUCH PEAK AMOUNT IS ALSO PROPERLY EXPLA INED. THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT THE BANK AC COUNTS IN THE NAMES OF THE FAMILY MEMBERS I.E. SMT.V.VASUNDAR AMMA AND SRI S. BALAJI KUMAR COULD NOT HAVE BEEN CONSIDE RED IN THE ASSESSMENT OF THE APPELLANT AND WHILE DETERMINING T HE UNEXPLAINED SOURCE ONLY THE PEAK AMOUNT WHICH COULD NOT BE EXPLAINED ALONE SHOULD HAVE BEEN CONSIDERED. THE AS SESSING OFFICER OUGHT TO HAVE CONSIDERED THESE FACTS AND AL LOWED SUBSTANTIAL RELIEF WITHOUT LIMITING THE RELIEF ONLY TO RS.20,00,000/-. 3 THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN ADDING RS.20,00,000/-, RS.39,0 0,000/- AND RS.67,37,750/- AS REPRESENTING THE CAPITAL INVESTME NT WITH SRS AND SRI SAI GANESH PRODUCTIONS WITHOUT CONSIDERING THE FACT THAT THE AMOUNTS WERE NOT INDEPENDENTLY INVESTED WI THOUT CONSIDERING THE EXPLANATION SUBMITTED. 4 THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.28,80 ,000/- AS UNDISCLOSED INCOME WITH SRS ART MOVIES. 5 THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN ADDING RS.5,50,000/- AS UNEXPL AINED INVESTMENT WITH MI S UMAMAHESHWAR MOVIES PVT.LTD. 4 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. 6 THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.1,03,28, 875/- TOWARDS UNEXPLAINED INVESTMENT WITHOUT CONSIDERING THE EXPLANATION SUBMITTED. 7 THE LEARNED CIT (A) ERRED IN CONFIRMING CHARGING OF INTEREST U/S 158BFA(1) OF THE I.T.ACT. 8 ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME O F HEARING. 4.2 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LR. CIT (A) WHILE DISPOSING THE APPEAL NOT T AKEN INTO CONSIDERATION THE GROUND ON WHICH THE ADDITION WAS MADE; 2. THE LR. CIT(A) HAS DELETED THE ADDITION OF RS.6 LAKHS OUT OF THE TOTAL ADDITION MADE OF RS.30,10,370/- ON THE GR OUND THAT THE ASSESSEE HAS WITHDRAWN RS.6 LAKHS WITH JUBILEE HILL S COOPERATIVE BANK. THE COMMISSIONER OF INCOME-TAX(A) HAS NOT VERIFIED THE SOURCES OF DEPOSITS FOR RS.6 LAKHS. 3. THE LR. CIT (A) OUGHT NOT TO HAVE DELETED THE AD DITION OF RS.14 LAKHS IN RESPECT OF SRI S.BALAJI KUMAR ON THE GROUND THAT CASH WITHDRAWLS OF RS.15.57 LAKHS DURING THE ENTIRE BLOCK PERIOD. THE COMMISSIONER OF INCOME-TAX(A) HAS VERIF IED THE SOURCES OF DEPOSITS OF RS.15.57 LAKHS; 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 5. FIRST WE WILL TAKE UP THE GROUNDS RAISED BY THE ASSESSEE. 6. GROUND NO. 1 IS GENERAL IN NATURE. 7. AS REGARDS GROUND NO. 2 RELATING TO THE ADDITION OF RS. 71,59,370/-, THE AR OF THE ASSESSEE SUBMITTED THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF SRI SINGANAMALA RAMESH BABU AND NOT IN THE CASE OF ASSESSEE ON 21/0 2/2003. ASSESSEE IS ENGAGED IN PRODUCING AND FINANCING OF C INEMAS. HE SUBMITTED THAT AO MADE ADDITION ONLY BASED ON THE R ECEIPT WITHOUT CONSIDERING WITHDRAWALS IN THE BANK ACCOUNT MAINTAI NED BY THE ASSESSEE. HE SUBMITTED THAT IN VARIOUS OCCASIONS, A SSESSEE WAS 5 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. EXAMINED ON OATH AND FURTHER SUBMITTED THAT CIT(A) HAS GIVEN SOME RELIEF BY TAKING TELESCOPIC BENEFIT. HOWEVER, CIT(A ) FAILED TO CONSIDER THE PLEA OF THE ASSESSEE BY TAKING PEAK CREDIT IN A LL THE SIX ACCOUNTS MAINTAINED BY THE ASSESSEE AND HIS FAMILY MEMBERS. 7.1 WITH REGARD TO GROUND NO.3, LD. AR SUBMITTED TH AT AO MADE THE ADDITION OF RS. 20 LAKHS, RS. 39 LAKHS AND RS. 67.3 LAKHS AS REPRESENTING CAPITAL INVESTMENT IN M/S SRS AND SRI SAI GANESH PRODUCTIONS WITHOUT CONSIDERING THAT THE AMOUNTS WE RE INDEPENDENTLY INVESTED. HE BROUGHT TO OUR NOTICE PAGE 18 OF THE P APER BOOK SUBMITTED BY THE DEPARTMENT, WHICH IS TRIAL BALANCE OF M/S SRS AND SRI SAI GANESH PRODUCTIONS, SEIZED DURING THE SEARC H, AS PER WHICH, IT IS SHOWN THAT RS. 20 LAKHS AS CAPITAL INVESTMENT BY THE ASSESSEE. HE ALSO BROUGHT TO OUR NOTICE PAGE 19 OF THE PAPER BOO K, WHICH IS DAILY EXPENDITURE SHEET, WHICH CONTAINS ADVANCE RECEIPT F ROM THE ASSESSEE TO THE EXTENT OF RS. 39 LAKHS AND ALSO BROUGHT TO O UR NOTICE PAGE 20 OF PAPER BOOK, WHICH IS LEDGER EXTRACT IN THE NAME OF ASSESSEE, WHICH CONTAINED OPENING BALANCE OF RS. 37,50,000/- AND TH E CREDITS TO THE EXTENT OF RS. 29,87,750/- WERE ADDED AS ADDITION. H E SUBMITTED THAT ALL THESE ADDITIONS ARE NOT SUBSTANTIATED AND THESE ARE OUT OF INCOMPLETE BOOKS OF ACCOUNT. FURTHER, HE SUBMITTED THAT BY MAKING ADDITION OF RS. 67,37,750/-, AO HAS NOT CONSIDERED THE ABOVE ADDITION OF RS. 20 LAKHS AND RS. 39 LAKHS, WHICH IS NOTHING BUT DOUBLE ADDITION. HE PRAYED THAT THE ABOVE ADDITIONS ARE OU T OF UNSUBSTANTIATED DOCUMENTS CANNOT BE RELIED UPON AND MADE A PLEA THAT THE ADDITION SHOULD BE DELETED. 7.2 WITH REGARD TO GROUND NOS. 4 & 5, LD. AR SUBMIT TED THAT AS PER THE SEIZED DOCUMENTS NO. A/SRB/21, THERE WAS A NOT E IN THE NAME OF THE ASSESSEE, AS PER WHICH, RS. 28,80,000/- WAS MEN TIONED, WHICH WAS NOT SIGNED BY ANYBODY AND THE SAME WAS TAKEN AS INVESTMENT BY THE ASSESSEE IN SRS ART MOVIES. SIMILARLY, IN THE C ASE OF M/S SRI 6 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. UMAMAHESWARA MOVIES (P) LTD., TO THE EXTENT OF RS. 5,50,000/-. HE SUBMITTED THAT AO MADE ADDITION WITHOUT PROPER EVID ENCE. 7.3 FINALLY, LD. AR SUBMITTED THAT AO HAS MADE ADDI TION CONSIDERING THE BANK DEPOSITS, INVESTMENT, PRONOTES, ETC. WITHO UT CONSIDERING INTER-LINK IN ALL THESE ACCOUNTS/SOURCE. HE FURTHER SUBMITTED THAT ASSESSEE HAS FINANCED IN MOVIE BUSINESS, HENCE, THE AO SHOULD HAVE CONSIDERED THE TELESCOPIC INVESTMENT IN THE BUSINES S AND COLLECTION DURING THE PERIOD AND NET BALANCE SHOULD BE CONSIDE RED AS ACTUAL INVESTMENT IN BUSINESS. MERE TAKING ONLY CREDITS IS NOT PROPER. 8. LD. DR, ON THE OTHER HAND, SUBMITTED THAT ASSESS EE NEVER COOPERATED WITH THE DEPARTMENT AND ASSESSEE WAS GIV EN SEVERAL OPPORTUNITIES DURING THE ASSESSMENT PROCEEDINGS. IT IS THE DUTY OF THE ASSESSEE TO EXPLAIN THE SOURCES BEFORE THE AUTHORIT IES. HE FURTHER SUBMITTED THAT ALL THE RELEVANT MATERIALS SEIZED DU RING THE SEARCH WERE ALREADY MADE AVAILABLE TO THE ASSESSEE. 9. IN THE REJOINDER, LD. AR SUBMITTED THAT SEARCH W AS NOT CARRIED OUT IN THE PREMISES OF THE ASSESSEE NOR ON THE ASSE SSEE, IT IS ONLY 158BD ASSESSMENT. THEREFORE, THE BURDEN IS ON THE A O, WHO SHOULD HAVE SUBSTANTIATED ADDITIONS MADE IN THE CASE OF AS SESSEE. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. 10.1 AS REGARDS GROUND NO. 2, IT IS FACT THAT SEARC H PROCEEDINGS WERE CARRIED ON IN THE CASE OF SRI SINGANAMALA RAMESH BA BU AND NOT IN THE CASE OF ASSESSEE ON 21/02/2003. DURING THE COUR SE OF SEARCH, CERTAIN BANK ACCOUNTS AND BOOKS OF ACCOUNT, WHICH A RE INCOMPLETE, WERE SEIZED. WE HAVE NOTICED THAT AO HAS MADE ADDIT IONS, WHICH CAN BE CLASSIFIED AS CREDITS IN BANK ACCOUNTS, INVESTME NT IN SRS AND SRI 7 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. SAI GANESH PRODUCTIONS, INVESTMENT IN MOVIE BUSINES S AND FINANCING OF MOVIES. 10.2 WITH REGARD TO ADDITION U/S 68, I.E. CREDITS I N BANK ACCOUNT, THE FACTS BROUGHT ON RECORD THAT ASSESSEE HAS MAINTAIN ED FOUR ACCOUNTS IN HIS PERSONAL NAME AND TWO ACCOUNTS IN HIS FAMILY MEMBERS NAME. IT WAS SUBMITTED BEFORE THE AO THAT THE CREDITS WER E OUT OF WITHDRAWALS MADE FROM THE SAME ACCOUNT OR OTHER BAN K ACCOUNTS WHICH INCLUDES ACCOUNTS MAINTAINED BY THE ASSESSEE AND THE FAMILY MEMBERS. CIT(A) HAS OBSERVED THAT THERE WERE WITHDR AWALS TO THE EXTENT OF RS. 6 LAKHS DURING THE BLOCK PERIOD FROM THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE AND RS. 14 LAKHS FROM TH E BANK ACCOUNT MAINTAINED BY HIS SON AND THERE IS NO OTHER MATERIA L BROUGHT ON RECORD BY THE ASSESSEE TO SUBSTANTIATE THE WITHDRAW ALS MADE BEYOND RS. 20 LAKHS DURING THE BLOCK PERIOD. HOWEVER, BEFO RE US, LD. AR SUBMITTED THAT PEAK CREDIT SHOULD BE ADOPTED BY TAK ING ALL THE SIX ACCOUNTS MAINTAINED BY THE ASSESSEE CONSIDERING THE FACT THAT OTHER FAMILY MEMBERS DID NOT HAVE ANY INDEPENDENT SOURCE OF INCOME. IN OUR VIEW, THE BENEFIT OF PEAK CREDIT CAN BE EXTENDE D ONLY IN THE CASE OF THE ASSESSEE, WHO IS INVOLVED IN SOME BUSINESS, IN WHICH, THERE IS RECEIPTS AS WELL AS WITHDRAWALS. IN THIS CASE, CIT( A) HAS CLEARLY BROUGHT ON RECORD THAT ONLY TO THE EXTENT OF RS. 20 LAKHS WAS WITHDRAWN DURING THE BLOCK PERIOD. THEREFORE, IN TH E GIVEN CASE, THE PEAK CREDIT CANNOT BE EXTENDED TO THIS CASE CONSIDE RING FACTS OF THE CASE. THEREFORE, THE PLEA OF THE ASSESSEE IS REJECT ED. 10.3 WITH REGARD TO REVENUES APPEAL AGAINST THE DE LETION OF RS. 20 LAKHS, RS. 6 LAKHS IN CASE OF ASSESSEE AND RS. 14 L AKHS IN THE ASSESSEES SON ACCOUNT. IT WAS ARGUED THAT CIT(A) HAS NOT VERIFIED THE SOURCE OF THE DEPOSITS TO THE EXTENT OF RS. 20 LAKHS. WE HAVE NOTICED THAT DURING THE BLOCK PERIOD, THERE WERE AD DITIONS MADE CONSIDERING THE FACT THAT ASSESSEE HAS INVESTED IN THE MOVIE BUSINESS AND IT IS KNOWN FACT THAT ASSESSEE WAS EARNING INCO ME FROM MOVIE 8 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. BUSINESS, THEREFORE, IT IS NOT NECESSARY TO ESTABLI SH INDEPENDENTLY FOR THE SOURCE OF RS. 20 LAKHS. SINCE THE SOURCES WERE ALREADY ESTABLISHED AND ADDITIONS WERE CONFIRMED IN OTHER A CCOUNTS, IT IS NOT NECESSARY TO ESTABLISH THE SOURCE FOR RS. 20 LAKHS INDEPENDENTLY. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. WITH REGARD TO GROUND NOS. 3, 4 & 5, IT IS OBSE RVED THAT CERTAIN DOCUMENTS WERE SEIZED LIKE TRIAL BALANCE, LEDGER EX TRACTS, DAILY EXPENDITURE SHEET, ETC., WHICH ARE BELONGING TO THE FIRMS M/S SRS AND SRI SAI GANESH PRODUCTS AND M/S SRI UMAMAHESWARA MO VIES PVT. LTD. THESE ARE INDEPENDENT BUSINESS ENTITIES AND THE DOC UMENTS SEIZED WERE OUT OF INCOMPLETE BOOKS OF ACCOUNT. SINCE ASSE SSEE HAS NOT SUBSTANTIATED OR SUBMITTED ANY DOCUMENTS BEFORE THE REVENUE AUTHORITIES, THE ADDITIONS TO THE EXTENT OF TRANSAC TIONS NOTICED IN THE NAME OF THE ASSESSEE WERE CONSIDERED FOR MAKING ADD ITION. HOWEVER, IN OUR CONSIDERED VIEW, AO HAS NOT CALLED FOR INDEP ENDENT INCOME AND EXPENDITURE STATEMENT OF RESPECTIVE COMPANIES TO EV ALUATE THE INVESTMENTS MADE BY THE ASSESSEE IN THOSE VENTURES. MERELY BECAUSE IT WAS NOT SUBSTANTIATED BY THE ASSESSEE, AO CANNOT MAKE ADDITIONS AS IT IS THE DUTY OF THE AO TO BRING ON RECORD PROP ER REASONS/GROUNDS/EVIDENCE BY MAKING PROPER INVESTIGA TION IN THE CASE OF INDEPENDENT ENTITIES. IT IS NOT CLEAR FROM THE R ECORDS WHETHER INDEPENDENT ENTITIES ARE ASSESSED TO TAX INDEPENDEN TLY. THEREFORE, IN OUR CONSIDERED VIEW, THESE ADDITIONS CANNOT BE MADE WITHOUT SUBSTANTIATING OR BY MAKING PROPER INVESTIGATION. T HEREFORE, WE REMIT THESE ISSUES BACK TO THE FILE OF THE AO TO CALL FOR COMPLETE BOOKS OF ACCOUNT AND FINANCIAL RECORDS IN THE CASE OF M/S SR S AND SRI SAI GANESH PRODUCTIONS AND M/S SRI UMAMAHESWARA MOVES P VT. LTD AND MAKE THE ASSESSMENT DE-NOVO AFTER PROVIDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THESE GROUNDS ARE ALLO WED FOR STATISTICAL PURPOSES. 9 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. 12. WITH REGARD TO GROUND NO. 6 RELATING TO THE ADD ITION MADE FOR FINANCING IN THE MOVIE BUSINESS BY THE ASSESSEE, IT IS OBSERVED THAT DEPARTMENT HAS SEIZED A BOOK IN THE FORM OF DIARY, IN WHICH, ASSESSEE HAS LENT MONEY TO VARIOUS PERSONS BY TAKING PRONOTE S AS SECURITY FOR THE LOANS ADVANCED TO SUCH PERSON. SEIZED DOCUMENT CLEARLY SHOWS THAT ASSESSEE HAS FINANCED AND COLLECTED INTEREST. IN THIS REGARD, ASSESSEE HAS NOT BROUGHT ON RECORD ANY SUBSTANTIAL EVIDENCE TO PROVE THAT ASSESSEE HAS PROPER SOURCE TO SUBSTANTIATE THE SE TRANSACTIONS. SINCE IT WAS NOT SUBSTANTIATED BY ANY COGENT MATERI AL/EVIDENCE, WE ARE INCLINED TO ACCEPT THE FINDINGS OF AO, PARTICUL ARLY, SINCE NUMBER OF OPPORTUNITIES WERE PROVIDED TO ASSESSEE BUT HE COUL D NOT SUBSTANTIATE THE TRANSACTIONS. THEREFORE, THE ADDITION WITH REGA RD TO FINANCING AND INTEREST INCOME IN THE MOVIE BUSINESS, IS UPHELD. H OWEVER, WE ALSO FIND THAT AO HAS MADE ADDITION ON UNDISCLOSED INVES TMENT IN PRONOTES. IT IS A NORMAL PRACTICE IN THE CASE OF FI NANCE BUSINESS THAT FINANCIERS WILL RECEIVE PRONOTES AS SECURITY AGAINS T ADVANCES LENT. IT IS NOT APPROPRIATE TO MAKE ADDITION CONSIDERING THE PR ONOTES AS UNDISCLOSED INVESTMENT. ACCORDINGLY, WE DELETE THE ADDITION MADE AS UNDISCLOSED INVESTMENT IN PRONOTES. ACCORDINGLY, GR OUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 13. WITH REGARD TO GROUND NO. 7, ASSESSEE HAS NOT M ADE ANY SUBMISSIONS NOR MADE ANY CALCULATIONS TO SUBSTANTIA TE THAT AO HAS CHARGED INTEREST U/S 158BFA WRONGLY. THEREFORE, WE TREAT THIS GROUND AS NOT PRESSED. 10 IT(SS)A NOS. 1&2/H/14 SUNKU RAMESH BABU, HYD. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 29 TH DECEMBER, 2017. KV COPY TO:- 1) SUNKU RAMESH BABU, C/O SRI S. RAMA RAO, ADVOCATE , FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREE T NO. 9, HIMAYATNAGAR, HYDERABAD 500 029 2)ACIT, CENTRAL CIRCLE, TIRUPATHI. 3) CIT(A), GUNTUR 4 CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE