The DCIT, Circle-1(1), Guntur, Guntur V. Sri G.V.S.L.Kantha Rao, Guntur

ITSSA 3/VIZ/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0498 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-12-2014
• Assessment Year: misc
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Document seized; Block assessment; Documents seized
• Section: 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BEFORE S/SHRI D.MANMOHAN (VP) & J.SUDHAKAR REDDY, ( AM) IT(SS)A. NO. 03/VIZ/2012 BLOCK PERIOD : 1995-2002 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I(1), GUNTUR VS SHRI G.V.S.L.KANTHA RAO, D.NO.25-7-11, 3 RD LINE, RAMANAMAKSHETRAM, GUNTUR [PAN: AHEPG 4370 L] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.V.N. CHARYA, DR ASSESSEE BY : SHRI S. RAMA RAO, AR DATE OF HEARING : 05-12-2014 DATE OF PRONOUNCEMENT : 19-12-2014 O R D E R PER J. SUDHAKAR REDDY, AM : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-GUNTU R, DATED 24-02-2011. 2. THE FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL CARRIED ON BUSINESS IN THE NAME AND STYLE OF VIRAT CRANE BOTTLING AND ALSO DIRECTOR IN CRANE GROUP OF COMPANIES. SEARCH AND SEIZURE OPERATIONS WERE COND UCTED BY THE INCOME TAX AUTHORITIES IN THE BUSINESS AND RESIDENT IAL PREMISES OF THE APPELLANT AND ON THE CRANE GROUP OF COMPANIES O N 07-02-2002. THE CASES OF THE APPELLANT AND CRANE GROUP OF COMPA NIES WERE NOTIFIED TO THE JURISDICTION OF THE DEPUTY COMMISSI ONER OF INCOME IT (SS) A.NO. 3/VIZ/2012 :- 2 -: TAX, CENTRAL CIRCLE-3, HYDERABAD. THE APPELLANT FI LED THE BLOCK RETURN OF INCOME DISCLOSING UNDISCLOSED INCOME AND THE ASSESSING OFFICER COMPLETED THE BLOCK ASSESSMENT U/S.158BC OF THE INCOME TAX ACT (ACT) ON 27-02-2004 AND DETERMINED THE UNDI SCLOSED INCOME. THE DETAILS ARE AS UNDER: ASSESSMENT YEAR UNDISCLOSED INCOME ADMITTED INCOME DETERMINED ADDITION MADE RELIEF GRANTED IN APPEAL 1996-97 9,65,400/- 9,65,400/- -- 1997-98 4,25,227/- 4.25.227/- -- 1998-99 7,94,616/- 65,74,616/- 57,80,000/- SET ASIDE BY ITAT 1999-00 6,88,317/- 10,98,317/- 4,10,000/- SET ASIDE BY ITAT 2000-01 9,96,816/- -- 2001-02 40,76,939/- -- 2002-03 54,89,036/- 57,01,036/- 2,12,000/- 2,12,000/- 3. AGGRIEVED BY THE ABOVE ASSESSMENT, THE APPELLANT PREFERRED AN APPEAL BEFORE THE HON'BLE CIT(APPEALS), AP-1, HYDER ABAD. THE APPEAL WAS DISPOSED OFF BY THE HON'BLE CIT(APPEALS) AGAINS T THE APPELLANT. AGGRIEVED BY THE ORDER OF HON'BLE CIT(APPEALS), AP -1, HYDERABAD, THE APPELLANT FILED 2 ND APPEAL BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD. 4. WHILE THE 2 ND APPEAL BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL IS PENDING, THE HON'BLE CIT, CENTRAL CIRCL E, HYDERABAD IT (SS) A.NO. 3/VIZ/2012 :- 3 -: CANCELLED THE ORDER U/S.158BC DT.27-02-2004 OF THE DY.CIT, U/S.263 OF THE ACT. AT THE TIME OF ASSESSMENT PROCEEDINGS U/S.158BC R/S. 263, THE APPELLANT HAS FILED A LETTER FOR CONSIDERA TION, RECEIVED FROM ONE, MANIK RAO, PROP. SANTHI FIRE WORKS, HYDERABAD, BEFORE THE DY.CIT, CENTRAL CIRCLE-3, HYDERABAD. THE ASSESSING OFFICER, DY.CIT, CENTRAL CIRCLE-3 HYDERABAD PLACED THE LETTER ON REC ORD AND DID NOT CONSIDER THE SAME WHILE PASSING THE ORDER U/S.158BC R/W. 263 OF THE INCOME TAX ACT. THE 2 ND APPEAL FILED BY THE APPELLANT WAS SET ASIDE BY THE HON'BLE INCOME TAX APPELLATE TRIBUNAL AND SE NT BACK TO THE ASSESSING OFFICER FOR CONSIDERATION. THE APPELLANT 'S AND CRANE GROUP OF COMPANIES WERE NOTIFIED AND SENT BACK TO ITS ORI GINAL JURISDICTIONAL ASSESSING OFFICER, THE ACIT, CIRCLE-1(1), GUNTUR. THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS HAS M ADE ENQUIRIES AS REGARDS LETTER FILED BY THE APPELLANT AT THE TIME O F ASSESSMENT PROCEEDINGS U/S.158BC R/W.263 OF THE ACT. 5. THE ASSESSING OFFICER IN HIS ORDER PASSED U/S.14 3(3) R.W.S.158BC & SECTION 254 OF THE ACT ON 31-12-2008 REFERRED TO THE EVIDENCE-IN-QUESTION AND BASED ON THE ENQUIRIES MAD E BY THE DEPARTMENT WITH SHRI B.MANIK RAO, CAME TO THE CONCL USION THAT NO MONEY WAS ADVANCED BY SHRI B.MANIK RAO TO SHRI KANT A RAO AND FURTHER CAME TO THE CONCLUSION THAT THIS IS AN AMOU NT GIVEN BY THE ASSESSEE TO MR. B.MANIK RAO. HE MADE AN ADDITION B ASED ON THE IT (SS) A.NO. 3/VIZ/2012 :- 4 -: NOTINGS FOUND IN PAGE NOS. 5 & 6 AND ARRIVED AT A C ONCLUSION THAT THE LOANS WERE ADVANCED BY THE ASSESSEE AND HENCE THIS IS UNDISCLOSED INCOME. HE MADE ADDITION OF RS.57,80,000/-. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPE AL. THE FIRST APPELLATE AUTHORITY (FAA) CONSIDERED THE NOTINGS AT PAGE NOS.5 & 6 OF THE SEIZED MATERIAL AND CAME TO THE FOLLOWING CONCL USIONS: A. THE PAPERS FOUND DURING THE COURSE OF SEARCH CAN BE RELIED UPON FOR THE PURPOSE OF ASSESSMENT BY THE ASSESSING OFFICER. B. AS PER THE STATEMENT OF SHRI BHASKARA RAO, IT IS CL EAR THAT PAPERS-IN-QUESTION BELONG TO THE ASSESSEE. THE STA TEMENT OF MR.BHASKARA RAO WAS PUT TO THE ASSESSEE DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS AND HE WAS ALLOWED TO BE CROSS- EXAMINED. C. AS REGARDS THE CONTENTS OF THE PAPERS, MR.BHASKARA RAO, WAS NOT CLEAR AND HE HAD EXPRESSED IGNORANCE ABOUT THE FACTS AND FIGURES CONTAINED THEREIN. HE DID NOT CLEARLY MENT ION THE NATURE OF TRANSACTION. THEREFORE, HIS STATEMENT CA NNOT BE RELIED UPON WITH REGARD TO THE CONTENTS, WHILE COMI NG TO A CONCLUSION. D. AS REGARDS THE ENQUIRIES MADE BY ASSESSING OFFICER WITH SHRI MANIK RAO, AND THE LETTER WRITTEN BY SHRI MANIK RAO , IN RESPONSE TO SUCH ENQUIRY HE HELD THAT IT DOES NOT C ONSTITUTE EVIDENCE, AS HE IS AN INTERESTED PARTY AND AS HIS N AME IS NOTED IT (SS) A.NO. 3/VIZ/2012 :- 5 -: IN THE SEIZED MATERIAL. HE HELD THAT THE LETTER GI VEN BY MR. MANIK RAO SHOULD BE REJECTED. E. ACCORDING TO THE PROVISIONS OF SECTION 132(4A), THE CONTENTS OF THE PAPER FOUND IS TO BE HELD AS VALID. F. THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT PAG E NO.6 RELIED UPON BY THE ASSESSING OFFICER, RELATES TO THE YEAR 1988 IS TO BE ACCEPTED AS THE MONTH AND YEAR CLEARLY MENTIONED IN THE SEIZED MATERIAL. G. THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON RECORD TO SHOW THAT YEAR 1988 IS WRONGLY MENTIONED. H. UNLESS THE ASSESSING OFFICER BRING EVIDENCE TO DEMO NSTRATE THAT THE CONTENTS IN THE SEIZED PAPERS, IT IS TO BE PRESUMED THAT THE CONTENTS THEREON ARE CORRECT. I. WITH REGARD TO PAGE NO.5, IT IS CLEAR THAT THE AMOU NT OF RS.30 LAKHS WAS TAKEN AS LOAN FROM MR. MANIK RAO AND THE INTEREST PAYABLE IS 1.5% PER MONTH. J. IT IS CLEAR THAT AMOUNT OF RS.10 LAKHS WAS TAKEN FR OM MR. ANR AND THERE IS WORKING OF INTEREST PAYABLE IN THE SAI D PAPER. K. THE PRESUMPTION OF THE ASSESSING OFFICER THAT THE A MOUNTS-IN- QUESTION WAS LOANS GIVEN AND NOT LOAN TAKEN, IS NOT JUSTIFIED. ON PERUSAL OF PAPERS, IT CLEARLY SHOWS THAT THE AM OUNT OF RS.40 LAKHS WAS RECEIVED BY THE ASSESSEE AND WAS NO T PAID. IT (SS) A.NO. 3/VIZ/2012 :- 6 -: L. THERE IS NO INDICATION IN THE SEIZED PAPER THAT THE AMOUNT OF LOANS WAS GIVEN BY THE ASSESSEE. M. THE ENTRIES MADE BY WAY OF PAYMENT AND THE ACTUAL I NTEREST ALSO INDICATE THAT THE AMOUNTS ARE PAYABLE. N. THE OBSERVATION OF THE ASSESSING OFFICER THAT THE A SSESSEE PAID RS.40 LAKHS TO TWO DIFFERENT PERSONS IS NOT CORRECT . O. THE ASSESSEE DID NOT RECORD EITHER THE RECEIPT OF R S.40 LAKHS AS LOAN OR THE PAYMENT OF RS.5,25,000/- AS INTEREST IN ITS BOOKS OF ACCOUNT AND HENCE IT CANNOT BE PART OF THE INCOME UNDER THE DEEMING PROVISIONS OF THE ACT. P. AS FAR AS THE AMOUNT OF PAYMENT OF RS.5,25,000/- IS CONCERNED, IT WAS SPENT BY THE ASSESSEE AND NOT REC ORDED IN THE BOOKS OF ACCOUNT AND HENCE THE PROVISIONS OF SE CTION 69 APPLY. HE GRANTED PART RELIEF. 6. AGGRIEVED, THE REVENUE IS IN APPEAL ON THE FOLLO WING GROUNDS: '1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS ON FACT S AND IN LAW. 2. THE ORDER OF THE LD.CIT(A) IS EX-FACIE PERVERSE TO THE FACTS OF THE CASE IN CONCLUDING THAT THE TRANSACTIONS RECORD ED IN PAGE NO.5 OF THE SEIZED DOCUMENTS A/PBR/7 REPRESENT THE LOANS RECEIVED BY THE ASSESSEE AND THE INTEREST MENTIONED THEREIN REPRESENTS THE INTEREST PAYABLE BY THE ASSESSEE WIT HOUT ANY BASIS. 3. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE MADE AN ALTERNATIVE PLEA REGARDING TREATING THE NAT URE OF TRANSACTIONS RECORDED IN THE SEIZED MATERIAL AS LOA NS RECEIVED IT (SS) A.NO. 3/VIZ/2012 :- 7 -: BY HIM RATHER THAN LOANS ADVANCED BY HIM, ONLY DURI NG THE RE- ASSESSMENT PROCEEDINGS IN PURSUANCE OF SET-ASIDE OR DER BY THE HON'BLE TRIBUNAL WHILE MAINTAINING THE RELEVANT SEI ZED DOCUMENT DOESN'T BELONG TO HIM WHICH POINTS TO THE INFERENCE THAT THE SAID ALTERNATIVE PLEA IS AN AFTER THOUGHT DESIGNED TO RE DUCE THE INCIDENCE OF TAX. 4. THE LD.CIT(A) ERRED IN IGNORING THE OUTCOME OF T HE ENQUIRY MADE BY THE AO WHICH SHOWED THAT THE LETTER FURNISH ED BY THE ASSESSEE PURPORTEDLY FROM ONE OF THE PARTIES FROM W HOM THE LOAN WAS CLAIMED TO HAVE BEEN RECEIVED IS NOT GENUI NE. 5. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT IF THE TRANSACTIONS RECORDED IN THE SEIZED DOCUMENT WERE A CTUALLY IN THE NATURE OF LOANS RECEIVED BY THE ASSESSEE, THERE WAS NO PLAUSIBLE REASON WHY THE SAID DOCUMENT WAS KEPT WHI CH HIS EMPLOYEE CLANDESTINELY AND WHY THE TRANSACTIONS THE REIN WERE IN RECORDED IN THE BOOKS OF ACCOUNT. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE TOTALITY OF THESE FACTS AND CIRCUMST ANCES, TO CONCLUDE THAT THE TRANSACTIONS IN THE SEIZED DOCUME NTS REPRESENT THE UNDISCLOSED LOANS ADVANCED BY THE ASSESSEE AND THE INTEREST ACCRUED THEREON. 6. ANY ADDITIONAL GROUND THAT MAY BE URGED OR RAISE D AT THE TIME OF HEARING'. THE LD. DEPARTMENTAL CIT-DR SHRI K.V.N.CHARYA, REF ERRED TO THE SEIZED PAPER WHICH IS EXTRACTED BY THE CIT(APPE ALS) AT PAGE NOS.4 & 5 OF HIS ORDER AND VEHEMENTLY CONTENDED THAT A PE RUSAL OF THIS SEIZED PAPERS DEMONSTRATES THAT THE AMOUNTS-IN-QUES TION WERE LOANS ADVANCED BY THE ASSESSEE AND NOT LOANS TAKEN. HE S UPPORTED THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT ON AN ENQUIRY WITH MR. MANIK RAO, THE ISSUE HAS CLEARLY COME OUT THAT THESE ARE AMOUNTS BELONGING TO THE ASSESSEE WHICH WERE ADVANC ED OUT OF BOOKS OF ACCOUNT. HE TOOK THIS BENCH TO PAGE NOS. 2 TO 8 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE SAME SHOULD BE UPHELD. IT (SS) A.NO. 3/VIZ/2012 :- 8 -: HE ARGUED THAT THE CIT(APPEALS) HAS DRAWN A WRONG P RESUMPTION BY MISLEADING THE FACTS AND AGREED WITH THE CONTENTION S OF THE ASSESSEE. HE POINTED OUT THAT THE PAPER-IN-QUESTION WAS KEPT BY THE ASSESSEE WITH SHRI BHASKAR RAO AND SHRI BHASKAR RAO WAS EXAM INED BY THE REVENUE, AND ON A DIRECTION OF INCOME TAX APPELLATE TRIBUNAL, OPPORTUNITY OF CROSS-EXAMINING THE WITNESS SHRI BHA SKAR RAO WAS GRANTED TO THE ASSESSEE. HE ALSO REFERRED TO THE R ESULTS OF ENQUIRY AND THE CONTENTS OF THE LETTERS OF CONFIRMATION OBT AINED FROM SHRI MANIK RAO AND SUBMITTED THAT THIS PROVES THE CASE O F THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT IN CASE IT IS H ELD THAT ASSESSEE HAS RECEIVED THIS AMOUNT AS LOAN, THEN, THAT ASSESSING OFFICER SHOULD BE ASKED TO INITIATE PROCEEDINGS FOR VIOLATION OF SECT ION 269SS OF THE ACT. HE PRAYED THAT THE ORDER OF THE ASSESSING OFFICER B E RESTORED AND THAT OF THE LD.CIT BE REVERSED. 7. THE LD.COUNSEL FOR THE ASSESSEE, SHRI S. RAMA RA O, ON THE OTHER HAND READ THE CONTENTS OF THE SEIZED PAPERS-I N-QUESTION I.E., PAGE NOS.5 & 6 AND GAVE HIS VERSION AND ARGUED THAT ON A PLAIN READING OF THIS EVIDENCE DEMONSTRATES THAT PAGE NO. 6 BELONGS TO THE YEAR 1988. AS FAR AS PAGE NO.5 IS CONCERNED, IT IS CLEAR THAT THIS AMOUNT IS BORROWED BY THE ASSESSEE AND NOT AMOUNTS ADVANCED BY THE ASSESSEE. REFERRING TO THE STATEMENT OF MR. BH ASKAR RAO, HE SUBMITTED THAT NOTHING TURNS ON THE STATEMENT FOR T HE REASON THAT IT (SS) A.NO. 3/VIZ/2012 :- 9 -: MR. BHASKAR RAO HAS STATED THAT HE DOES NOT KNOW TH E CONTENTS OF THE PAPER. ON THE LETTERS OF MR. MANIK RAO, IT IS CLEAR THAT HE HAS NEITHER RECEIVED LOAN NOR GIVEN A LOAN TO THE ASSES SEE WHICH MEANS THAT THIS LETTER CANNOT BE TAKEN AS EVIDENCE AS OTH ERWISE IT WOULD GO CONTRARY TO THE CONCLUSIONS DRAWN BY THE ASSESSING OFFICER. RELIED ON THE ORDERS OF CIT(APPEALS) AND SUBMITTED THAT TH E SAME SHOULD BE UPHELD. 8. JOINING THE ISSUE, THE LD. DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT A PERUSAL OF PAGE NOS.5 & 6 DEMONSTR ATES THAT THE SAME FIGURES ARE APPEARING AND A PERUSAL OF THE REP LY GIVEN BY MR. BHASKAR RAO DEMONSTRATES THAT THE YEAR 1988 WAS WRI TTEN TO MISLEAD THE READERS OF THIS SLIP OF PAPER. HE SUBMITTED TH AT BOTH OF THEM SHOULD BE READ TOGETHER. 9. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CON SIDERATION OF THE FACTS AND CIRCUMSTANCE OF THE CASE, THE PAPERS ON RECORD AND THE ORDER OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS: WE HAVE PERUSED PAGE NOS.5 & 6 OF THE SEIZED PAPER S OF A/PBR/7 OF THE SEIZED MATERIAL. IN OUR VIEW, BOTH OF THESE PAPERS REFLECT THE SAME TRANSACTION. THIS IS CLEAR AS THE FIGURES ARE THE SAME. PAGE NO.6 IS IN CODED LANGUAGE. THE STATEME NT OF IT (SS) A.NO. 3/VIZ/2012 :- 10 - : MR. BHASKAR RAO ON THIS ISSUE IS SO CLEAR, THAT IT IS DIFFICULT TO HOLD THAT PAGE NO.6 BELONGS TO THE YEAR 1988. TO THIS E XTENT, THE ORDER OF LD.CIT(APPEALS) CANNOT BE UPHELD BY US. HENCE, THI S OBSERVATION IS REVERSED. 10. COMING TO THE EVIDENCE GIVEN BY MR. BHASKAR RAO , ON EVALUATION OF THE SAME, WE AGREE THAT NOTHING MUCH TURNS OUT ON THE SAME, FOR THE REASON THAT MR. BHASKAR RAO HAS PLEAD ED IGNORANCE WITH RESPECT TO THE CONTENTS OF THESE DOCUMENTS. H IS STATEMENT IS NOT OF MUCH HELP. SIMILARLY, REGARDING THE LETTER WRITTEN BY SHRI MANIK RAO IN RESPONSE TO AN ENQUIRY BY THE ASSESSIN G OFFICER, WE FIND THAT THIS DOES NOT HELP EITHER WAY FOR THE REA SON THAT HE HAS COMPLETELY DENIED ANY TRANSACTION WITH THE ASSESSEE . A PERUSAL OF THE LETTER DEMONSTRATES THAT MR. MANIK RAO STATES T HAT HE HAS NEITHER RECEIVED ANY ADVANCE OR GIVEN ANY LOAN TO T HE ASSESSEE. IF THIS LETTER IS TREATED AS EVIDENCE, THEN, THE CONCL USIONS OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS GIVEN MONEY TO MR. MANIK RAO, WOULD ALSO BE NEGATIVED. THUS, UNDER THESE CI RCUMSTANCES, WE CAN ONLY EXAMINE THE CONTENTS OF THE SEIZED MATERIA L AND THEN COME TO A CONCLUSION, WHETHER IT IS A LOAN GIVEN OR LOAN TAKEN. THERE IS NO COLLABORATORY EVIDENCE TO SUGGEST THE ORDER OF THE ASSESSING OFFICER. IT (SS) A.NO. 3/VIZ/2012 :- 11 - : 11. THE EXTRACTS OF THE SEIZED MATERIAL AS RE-PRODU CED AT PAGE NO.4 OF THE IT(APPEALS) ORDER IS EXTRACTED FOR READY REF ERENCE: PAGE NO.5 10,00,000 MARCH, 97 UP TO 7,20,000 APRIL 97 TO JULY 98 16 MONTHS 30L, 45,000 X 16 MANIK RAO 3,20,000 ANR, IOL. 20,000 X 16 1,50,000 AUG, SEPT. OCT. NOV. DEC. '98 30,000 X 5 21,90,000 2,82,746 EXPENSES 1,62,807 -EXP. 24,72,746 1,00,000 -EXP. 5,25,000 PAYMENT MADE 10,000 -LAND 9,346 -LAND -------------- 2,82,746 PAGE NO.6 UP TO JULY END OF 1988 10.00 7.20 JULY 88 INTEREST 3.20 JULY 88 AN INTEREST 2.73 --------- JULY 88 EXPENDITURE 23.22 9 JULY 88 TRAVELLING 23.22 DESPATCH 4760062.68 RATAN 145847.02 ---------------- 330215 2322000 PAYABLE 330215 ---------- SENT STOCK 1991785 975000 ---------- PAID 1016785 ----------- PAYABLE 18816 ----------- PAID IN BEGINNING + CREDIT NOTES 1035601 T ------------ 25000 ------------ CREDIT NOTES 1060601 ------------ IT (SS) A.NO. 3/VIZ/2012 :- 12 - : A PERUSAL OF THE SAME DEMONSTRATES THAT RS.7,20,000 /- WAS INTEREST UPTO THE MONTH OF JULY, 1998 IN PAGE NO.5 OF THE SE IZED MATERIAL AND THIS IS APPEARING AS 7.2 IN PAGE NO.6 OF THE SEIZED MATERIAL. THE OTHER FIGURES ARE ALSO TALLYING. THUS, BOTH THE PA GES REPRESENT THE SAME ENTRIES. EXPENSES HAVE BEEN RECORDED IN THE SE NOTINGS AND IS ALSO STATED THAT STOCK HAS BEEN SENT. MENTION IS A LSO MADE ON CREDIT NOTES. THESE NOTINGS OF STOCK AND CREDIT NOTES DEM ONSTRATES THAT IT IS AN OUT GO OF EXPENDITURE. THIS MEANS THAT WHAT WAS TAKEN, IS A LOAN FROM MR. MANIK RAO AND MR.ANR. HENCE, THE FIN DINGS OF THE LD.CIT(APPEALS) HAS TO BE UPHELD. IF IT WAS A LOAN GIVEN, THEN THE FIGURES OF INTEREST PAYMENTS AND EXPENDITURE AS WEL L AS STOCK CREDITS, BEING RECORDED AND GIVEN CREDIT DOES NOT ARISE. TH US, WE AGREE WITH THE FINDINGS OF THE LD.CIT(APPEALS) ON THIS ISSUE A ND DISMISS THIS GROUND OF THE REVENUE. 12. REGARDING THE ARGUMENT OF LD.DR, THAT DIRECTION S SHOULD BE GIVEN TO ASSESSING OFFICER, TO INITIATE PROCEEDINGS FOR VIOLATION OF SECTION 269SS OF THE ACT, WE HOLD THAT NO SUCH DIRE CTIONS CAN BE GIVEN BY US, AS WE HAVE NO SUCH POWER. THE ISSUE I S NOT BEFORE THE INCOME TAX APPELLATE TRIBUNAL. IT (SS) A.NO. 3/VIZ/2012 :- 13 - : IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER, 2014 SD/- SD/- (D. MANMOHAN) VICE PRESIDENT (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: 19 TH DECEMBER, 2014 TNMM COPY TO: 1. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I(1), CENTRAL REVENUE BUILDINGS, 1 ST FLOOR, KANNAVARITHOTA, GUNTUR 2. SHRI G.V.S.L.KANTHA RAO, D.NO.25-7-11, 3 RD LINE, RAMANAMAKSHETRAM, GUNTUR-522 004 3. THE CIT(A), GUNTUR 4. THE CIT, GUNTUR 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT VISAKHAP ATNAM