Movva Srinivasa Rao,, v. THE DCIT, CENTRAL CIRCLE,, Vijayawada

ITA 647/VIZ/2013 | 2010-2011
Pronouncement Date: 27-10-2016 | Result: Dismissed

Appeal Details

RSA Number 64725314 RSA 2013
Assessee PAN AKNPM1139K
Bench Visakhapatnam
Appeal Number ITA 647/VIZ/2013
Duration Of Justice 2 year(s) 11 month(s) 28 day(s)
Appellant Movva Srinivasa Rao,,
Respondent THE DCIT, CENTRAL CIRCLE,, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 27-10-2016
Assessment Year 2010-2011
Appeal Filed On 30-10-2013
Judgment Text
ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM . . $ BEFORE SHRI V. DURGA RAO JUDICIAL MEMBER & SHRI G. MANJUNATHA ACCOUNTANT MEMBER ./I.T.A.NOS.646&647/VIZAG/2013 ( / ASSESSMENT YEARS: 2008-09 & 2010-11) MOVVA SRINIVASA RAO PONNURU VS. DCIT CENTRAL CIRCLE VIJAYAWADA [PAN: AKNPM1139K ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.672&673/VIZAG/2013 ( / ASSESSMENT YEARS: 2008-09 & 2010-11) DCIT CENTRAL CIRCLE VIJAYAWADA VS. MOVVA SRINIVASA RAO PONNURU ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.149/VIZAG/2014 ( / ASSESSMENT YEAR: 2006-07) MOVVA JAYASREE PONNURU [PAN: AKMPM2635B ] VS. DCIT CENTRAL CIRCLE VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 2 ./I.T.A.NOS.645/VIZAG/2013 ( / ASSESSMENT YEAR: 2010-11) MOVVA JAYASREE PONNURU VS. DCIT CENTRAL CIRCLE VIJAYAWADA ( / APPELLANT) ( / RESPONDENT) ./I.T.A.NOS.671/VIZAG/2013 ( / ASSESSMENT YEAR: 2010-11) DCIT CENTRAL CIRCLE VIJAYAWADA VS. MOVVA JAYASREE PONNURU ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.644/VIZAG/2013 ( / ASSESSMENT YEAR: 2004-05) ./I.T.A.NOS.148/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) TARIGOPULA SUBBA RAO PONNURU [PAN: ADUPT0546R ] VS. DCIT CENTRAL CIRCLE VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.643/VIZAG/2013 ( / ASSESSMENT YEAR: 2004-05) MOVVA RAMASESHAGIRI RAO PONNURU VS. DCIT CENTRAL CIRCLE VIJAYAWADA [PAN: AHNPR7275A ] ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 3 ./I.T.A.NOS.670/VIZAG/2013 ( / ASSESSMENT YEAR: 2004-05) DCIT CENTRAL CIRCLE VIJAYAWADA VS. MOVVA RAMASESHAGIRI RAO PONNURU ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.144 TO 147/VIZAG/2014 ( / ASSESSMENT YEARS: 2007-08 TO 2010-11) MOVVA RAMASESHAGIRI RAO PONNURU VS. DCIT CENTRAL CIRCLE VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI D.L. NARASIMHA RAO AR / RESPONDENT BY : SHRI G. GURUSAMY DR / DATE OF HEARING : 22.09.2016 / DATE OF PRONOUNCEMENT : 27.10.2016 / O R D E R PER G. MANJUNATHA ACCOUNTANT MEMBER: THESE APPEALS FILED BY DIFFERENT ASSESSEES AND CR OSS APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST SEPARATE BUT I DENTICAL ORDERS OF THE CIT(A) GUNTUR FOR THE ASSESSMENT YEARS 2004-05 20 06-07 2007-08 2008-09 2009-10 & 2010-11. SINCE THE FACTS ARE ID ENTICAL AND ISSUES ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 4 ARE COMMON AND ALSO INTER CONNECTED THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.646 & 672/VIZAG/2013-A.Y. 2008-09: 2. THE BRIEF FACTS EXTRACTED FROM ITA NO.646 OF 201 3 ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM HOUS E PROPERTY SHARE OF PROFIT FROM PARTNERSHIP FIRMS AND INCOME FROM OTHER SOURCES FILED HIS RETURN OF INCOME U/S 139(1) OF THE INCOME TAX ACT 1961 (HEREINAFTER CALLED AS THE ACT)FOR THE ASSESSMENT YEAR 2008-09 DECLARING TOTAL INCOME OF RS.4 65 560/- BESIDES AGRICULTURAL INCOM E OF RS.2 55 000/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE G ROUP CASES OF MOVVA GROUP PONNURU ON 15.10.2009. DURING THE C OURSE OF SEARCH OPERATION CERTAIN INCRIMINATING DOCUMENTS FOUND AN D SEIZED REVEALS THAT THE ASSESSEE AND HIS FAMILY MEMBERS HAVE UNDISCLOSE D INCOME IN THE FORM OF INVESTMENTS IN PURCHASE OF IMMOVABLE PROPER TIES AND LOANS AND ADVANCES TO THIRD PARTIES. THE IMPOUNDED DOCUMENT F OUND DURING THE COURSE OF SEARCH MARKED AS ANNEXURE-A/MSR/02 REVEAL S THAT THE ASSESSEE HAS MADE CERTAIN INVESTMENTS IN PURCHASE O F IMMOVABLE PROPERTY AT VINUKONDA GUNTUR AS WELL AS PAYMENT TO RAYAPATI V.K. PRASAD. IN THE COURSE OF STATEMENT RECORDED ON 11.2 .2010 THE ASSESSEE HAD STATED THAT THE NOTINGS ON THE SEIZED DOCUMENT PAGES OF 56 TO 58 OF ANNEXURE-A/MSR/02 SEIZED FROM HIS RESIDENCE ARE PAY MENT MADE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 5 TOWARDS PURCHASE OF LAND AND ALSO LOAN TO R.V.K. PR ASAD. THE ASSESSEE FURTHER STATED THAT CERTAIN PAYMENTS TOWARDS LAND P URCHASED IN GUNTUR IN THE NAME OF HIS FATHER SHRI M. RAMASESHAGIRI RAO WAS RECORDED IN THE PAPERS AND TOTAL AMOUNT OF SUCH PAYMENTS WORKS OUT TO RS.2 50 31 000/-. THE AMOUNT RECORDED ON THESE PAGE S INCLUDES AMOUNT OF RS.2 30 24 000/- OFFERED AS ADDITIONAL INCOME ON THE BASIS OF NOTINGS CONTAINED ON PAGES 32 AND 33 AS WELL AS PAGES 46 AN D 47 OF ANNEXURE- A/MSR/02. 3. CONSEQUENT TO SEARCH THE CASE HAS BEEN NOTIFIED TO CENTRAL CIRCLE AND ACCORDINGLY THE ASSESSING OFFICER ISSUED NOTIC E U/S 153C R.W.S. 153A OF THE ACT CALLING FOR THE RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2008-09. IN RESPONSE TO THE SAID NOTICE THE ASSESS EE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 12.7.2011 DECLARING TOTAL INCOME OF RS.4 65 560/- BESIDES AGRICULTURAL INCOM E OF RS.2 50 000/-. THEREAFTER THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED . IN RESPONSE TO NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FILED WRITTEN SUBMISSIONS AND OTHE R DETAILS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER ASKED ASSESSEE TO EXPLAIN THE SOURCES FOR AMOUNT OF RS.2 31 56 000/- RECORDED IN POCKET DIARY. IN RESPONSE TO NOTICE T HE ASSESSEE SUBMITTED ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 6 THAT THE AMOUNT RECORDED IN THE POCKET DIARY ARE AM OUNTS PAID FOR PURCHASE OF PROPERTY AT VINUKONDA GUNTUR AND ALSO LOANS AND ADVANCES GIVEN TO R.V.K. PRASAD. THE ASSESSEE FURTHER SUBMI TTED THAT THE TOTAL AMOUNT RECORDED IN THE DIARY WORKS OUT TO RS.2 30 2 4 000/-WHICH WAS OFFERED AS ADDITIONAL INCOME IN THE HANDS OF HIS FA MILY MEMBERS. THE ASSESSEE FURTHER SUBMITTED THAT THE SAID AMOUNT HAS BEEN OFFERED AS ADDITIONAL INCOME IN VARIOUS FAMILY MEMBERS AND ACC ORDINGLY FILED A CASH FLOW STATEMENT EXPLAINING THE SOURCES FOR THE INVES TMENTS. 4. THE A.O. AFTER CONSIDERING THE EXPLANATION OF TH E ASSESSEE HELD THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCES FOR INVESTMENTS MADE IN PURCHASE OF PROPERTY AS WELL AS ADVANCE GIVEN TO R.V.K. PRASAD. THOUGH THE ASSESSEE CLAIMS TO HAVE RECEIVED AMOUNT FROM HIS PARTNERSHIP FIRM OUT OF ADDITIONAL INCOME OFFERED DURING THE COURSE OF SEARCH THE ASSESSEE HAS FAILED TO LINK THE AMOUNT DRAWN FROM THE FIRM TO THE INVESTMENT MADE IN HIS PERSONAL HANDS. IN VI EW OF THE ASSESSEES FAILURE TO EXPLAIN THE SOURCES OF FUNDS WITH APPROP RIATE EVIDENCES THE TOTAL AMOUNT FOUND IN POCKET DIARY EXCLUDING AMOUNT OFFERED TO TAX TOWARDS PURCHASE OF VINUKONDA LANDS OF RS.32 81 000 /- WHICH WORKS OUT TO RS.1 98 75 000/- HAS BEEN BROUGHT TO TAX AS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. SI MILARLY THE A.O. MADE ADDITIONS OF RS.59 15 000/- TOWARDS UNACCOUNTE D INCOME AND ALSO ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 7 A SUM OF RS.6 LAKHS TOWARDS UNACCOUNTED INCOME ADMI TTED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153C OF THE ACT. 5. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE AS SESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE ALSO FILED DETAILED CASH FLOW STATEMENT EXPLAINING THE SOURCES OF INCOME AN D CASH OUTFLOW DEPLOYING THE INVESTMENTS COVERING THE PERIOD FROM ASSESSMENT YEAR 2004-05 TO 2010-11. THE ASSESSEE ALSO FILED ENGLISH TRANSCRIPTION OF ALL THE ENTRIES RECORDED ON PAGES 56 TO 58 OF ANNEXURE A/MSR/2 AND EXPLAINED THAT HOW THE NOTINGS IN THE SEIZED DOCUME NTS HAVE BEEN CONSIDERED IN THE HANDS OF HIMSELF AND HIS FAMILY M EMBERS. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OFFERED BY THE A SSESSEE FOR THE DETAILED REASONS RECORDED IN HIS ORDER AT PAGES 13 TO 22 ACCEPTED THE EXPLANATIONS OF THE ASSESSEE WITH REGARD TO THE SOU RCES OF UNEXPLAINED INVESTMENT TO THE EXTENT OF RS.1 57 89 000/- AND TH E BALANCE AMOUNT OF RS.46 86 000/- IS CONFIRMED WHICH INCLUDES AN EXCE SS AMOUNT OF RS.5 19 000/- CLAIMED IN RESPECT OF INVESTMENT IN V INUKONDA PROPERTIES RS.4 16 000/- FOR WHICH NO EXPLANATION HAS BEEN OFF ERED RS.5 LAKHS IN RESPECT OF SMT. M. JAYASREE WHICH IS ERRONEOUSLY CL AIMED AS PAID FOR KORITIPADU PROPERTY AND RS.26 51 000/- BEING SHORTF ALL OF CASH IN THE SOURCES FOR INVESTMENT MADE BY THE ASSESSEE. THE CI T(A) FURTHER HELD ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 8 THAT THE ASSESSEE HAS EXPLAINED THE SOURCES BY WAY OF CASH FLOW STATEMENT WHEREIN HE HAD EXPLAINED THE SOURCES WHI CH IS DRAWN FROM HIS PARTNERSHIP FIRM REFUND OF CERTAIN ADVANCES GI VEN FOR PURCHASE OF PROPERTIES SALE OF CERTAIN LANDS AND ALSO OPENING BALANCE BROUGHT FORWARD FROM EARLIER YEARS. IN THE ABSENCE OF ADVE RSARY EVIDENCE TO SHOW THAT THE ADDITIONAL INCOME OFFERED IN THE HAND S OF PARTNERSHIP FIRM HAS BEEN USED FOR PURCHASE OF PROPERTIES OR EXPENDE D ELSEWHERE THE SOURCES AVAILABLE IN THE FIRM ACCOUNT TOWARDS ADDIT IONAL INCOME SHOULD BE TELESCOPED AGAINST INVESTMENT MADE BY THE PARTNE RS IN THEIR PERSONAL HANDS. WITH THESE OBSERVATIONS ALLOWED SOURCES DRAW N FROM THE PARTNERSHIP FIRM AND ALSO ACCEPTED THE EXPLANATIONS OFFERED BY THE ASSESSEE WHEREVER THE ASSESSEE HAS PROVED THE SOURC ES WITH MATERIAL EVIDENCES AND CONFIRMED THE REMAINING ADDITIONS BY STATING THAT THE ASSESSEE HAS FAILED TO PROVE THE SOURCES FOR INVES TMENT IN PROPERTIES. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. 6. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) IS ERRED IN CONFIRMING ADDITIONS OF RS.5 19 000/- ON THE GROUND THAT THE UTILIZATION OF THE FUNDS TO THIS EXTENT IS NOT PROVED DESPITE THE FACT THAT THE SAID AMOUNT HAD BEEN INCLUDED IN THE TOTAL INVESTMENT OF RS.2 40 31 000/- QUANTIFIED BY THE LD. A.O. BASED ON THE SEIZED DOCU MENTS. THE A.R. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 9 FURTHER SUBMITTED THAT THE CIT(A) FAILED TO APPRECI ATE THE FACT THAT A SUM OF RS.5 LAKHS RECORDED IN THE DIARY IN THE NAM E OF M. JAYASREE IS ALREADY FORMED PART OF THE TOTAL INVESTMENTS AND HE NCE SEPARATE ADDITION TO THE AFORESAID EXTENT OF RS.5 LAKHS IS U NWARRANTED. THE A.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE ACC EPTED THE LOAN AMOUNT OF RS.20 LAKHS BORROWED FROM THE GROUP FIRM M/S. MOVVA AGRO FARMS AND THE SOURCE OF WHICH HAS BEEN EXPLAINED BY FILING NECESSARY LEDGER EXTRACTS AND ALSO CONFIRMATION FROM THE CRED ITOR. THE A.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITIONS MADE BY THE A.O. TOWARDS UNEXPLAINED INVESTMENT IN PROPERTIES AND LOANS AS THE ASSESSEE HAS EXPLAINED THE SOURCES FOR THE INVESTMENT BY WAY OF A DETAILED CASH FLOW STATEMENT WHEREIN THE CASH RECEIPTS AND CASH OUTFLOW HAS BEEN EXPLAINED WITH NECESSARY EVID ENCES. THE CIT(A) WITHOUT APPRECIATING THE FACTS CONFIRMED THE ADDIT IONS TO THE EXTENT OF RS.40 86 000/- THEREFORE REQUESTED TO DELETE THE ADDITIONS CONFIRMED BY THE CIT(A). 7. ON THE OTHER HAND THE LD. D.R. SUBMITTED THAT T HE EXPLANATIONS OFFERED BY THE ASSESSEE DURING THE COURSE OF ASSESS MENT PROCEEDINGS CONSIST OF VARIOUS OPENING CASH BALANCES OFFERED IN INDIVIDUALS/FIRMS HANDS AND THE SAME WERE EXPLAINED AS SOURCES FOR IN VESTMENTS MADE IN ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 10 VINUKONDA PROPERTY AND LOAN GIVEN TO R.V.K. PRASAD HAS NOT BEEN EXPLAINED WITH NECESSARY SUPPORTING DOCUMENTS. THE D.R. FURTHER SUBMITTED THAT FURNISHING OF SUCH ADVANCES ONLY SHO WS THE CULINARY OF THE SKILLS OF THE ACCOUNTANT OF THE ASSESSEE AND AR E NOT BASED ON ANY FACTS. THE D.R. FURTHER SAID THAT THE ASSESSEE HAS EXPLAINED THE SOURCES FOR INVESTMENTS BY WAY OF CASH FLOW STATEMENTS WITH OUT ANY DOCUMENTARY EVIDENCES THEREFORE THE CIT(A) WAS ER RED IN DELETING THE ADDITIONS MADE BY THE A.O. ACCORDINGLY ADDITIONS M ADE BY THE A.O. SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE ADDITIONS OF RS.1 98 75 000/- TOWARDS UNE XPLAINED INVESTMENT IN PURCHASE OF PROPERTY AND LOANS AND AD VANCES TO THIRD PARTIES. THE A.O. MADE ADDITIONS BASED ON THE SEIZ ED DOCUMENTS FOUND DURING THE COURSE OF SEARCH. THE A.O. WAS OF THE OP INION THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCES FOR INVE STMENT IN PURCHASE OF PROPERTY AND ALSO LOANS GIVEN TO R.V.K. PRASAD. TH OUGH THE ASSESSEE TRIED TO EXPLAIN THE SOURCES OUT OF UNDISCLOSED INC OME OFFERED IN THE HANDS OF PARTNERSHIP FIRM FAILED TO LINK UP THE FU NDS DRAWN FROM THE PARTNERSHIP FIRM AND INVESTMENTS MADE IN HIS INDIVI DUAL HANDS. IT IS THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 11 CONTENTION OF THE ASSESSEE THAT HE HAD EXPLAINED TH E SOURCES FOR INVESTMENTS IN PURCHASE OF PROPERTIES AND LOANS AND ADVANCES BY WAY OF CASH FLOW STATEMENTS WHEREIN THE SOURCES ARE EXPLA INED WITH NECESSARY EVIDENCES. THE ASSESSEE FURTHER CONTENDED THAT OUT OF TOTAL AMOUNT OF RS.2 31 56 000/- A SUM OF RS.2 30 24 000/- HAS BEE N OFFERED AS ADDITIONAL INCOME ON THE BASIS OF NOTINGS CONTAINE D IN THE SEIZED DOCUMENT IN THE NAME OF VARIOUS FAMILY MEMBERS. TH E ASSESSEE FURTHER STATED THAT THE CASH FLOW STATEMENT FILED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS EXPLAINS THE SOURCES FOR INV ESTMENT. THE MAIN SOURCE OF INVESTMENT IN PROPERTIES AND LOANS AND AD VANCES IS OUT OF OPENING BALANCES BROUGHT FORWARD FROM PREVIOUS YEAR S AMOUNT DRAWN FROM PARTNERSHIP FIRMS OUT OF ADDITIONAL INCOME OFF ERED DURING THE COURSE OF SEARCH SALE OF CERTAIN IMMOVABLE PROPERT IES AND REFUND OF ADVANCE GIVEN TO PURCHASE OF IMMOVABLE PROPERTIES. ALL THESE DOCUMENTS ARE FURNISHED BEFORE THE A.O. TO EXPLAIN THE SOURCES. THEREFORE THE A.O. WAS NOT CORRECT IN HOLDING THAT THE SOURCES FOR INVESTMENTS HAVE NOT BEEN EXPLAINED WITH NECESSARY EVIDENCES. 9. HAVING HEARD BOTH THE PARTIES AND CONSIDERED THE MATERIALS AVAILABLE ON RECORD WE FIND THAT THE ASSESSEE HAS MADE AN INVESTMENT OF RS.2 30 24 000/- TOWARDS PURCHASE OF PROPERTIES AND LOANS AND ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 12 ADVANCES TO R.V.K. PRASAD. THE ASSESSEE HAS EXPLAI NED THE SOURCES FOR INVESTMENTS IN PROPERTIES AND LOANS AND ADVANCES BY FILING A DETAILED CASH FLOW STATEMENT WHEREIN THE SOURCES FOR INVEST MENT HAS BEEN EXPLAINED OUT OF OPENING CASH BALANCE BROUGHT FORWA RD FROM PREVIOUS FINANCIAL YEAR AMOUNT DRAWN FROM PARTNERSHIP FIRMS AND SALE OF CERTAIN IMMOVABLE PROPERTIES. THE ASSESSEE ALSO FILED AN EN GLISH TRANSCRIPTION COPY OF SEIZED DOCUMENT AND ENTRIES RECORDED AT PAG E NOS.56 TO 58 OF ANNEXURE-A/MSR/2. THE CIT(A) AFTER ANALYZING THE SE IZED DOCUMENT AND ALSO CASH FLOW STATEMENT FILED BY THE ASSESSEE FOR THE DETAILED REASONS RECORDED IN HIS ORDER CAME TO THE CONCLUSION THAT THE ASSESSEE HAS EXPLAINED THE SOURCE TO THE EXTENT OF RS.1 57 89 00 0/- OUT OF TOTAL INVESTMENT OF RS. 2 30 24 000/- IN PROPERTIES AND L OANS AND ADVANCES. THE REMAINING AMOUNT OF RS.46 86 000/- IS SUSTAINED BY HOLDING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE AMOUNT OF RS.5 1 9 000/- CLAIMED IN RESPECT OF INVESTMENT IN VINUKONDA PROPERTIES RS.4 16 000/- FOR WHICH NO EXPLANATIONS HAS BEEN OFFERED AND RS.5 LAKHS IN RESPECT OF SMT. M. JAYASREE WHICH IS ERRONEOUSLY CLAIMED TO HAVE PAID FOR KORITIPADU PROPERTY AND RS.26 51 000/- BEING THE SHORTFALL OF SOURCE FOR INVESTMENT MADE FOR THE YEAR. THE FACTS REMAIN UNCHANGED. TH E ASSESSEE FAILED TO BROUGHT ON RECORD ANY EVIDENCE TO PROVE THE FINDING S OF THE FACTS RECORDED BY THE CIT(A) IS INCORRECT. THEREFORE WE ARE OF THE VIEW THAT ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 13 THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.1 57 89 000/- AND CONFIRMED THE BALANCE AMOUNT OF RS.40 86 000/-. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE APPEAL FILED BY THE REVENUE AS WELL AS THE ASSESSEE. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.646/VIZAG/2013 FOR THE A.Y. 2008-09 AND APPEAL F ILED BY THE REVENUE IN ITA NO.672/VIZAG/2013 FOR THE A.Y. 2008-09 ARE DISMISSED. ITA NOS.647 & 673/VIZAG/2013-A.Y. 2010-11: 11. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM THESE TWO APPEALS IS ADDITION TOWARDS INVESTMENT AND PURCHASE OF IMMOVABLE PROPERTIES/FINANCE AND AVAILABILITY OF SOURCE IN CA SH TO EXPLAIN SUCH INVESTMENT. THE A.O. MADE ADDITION OF RS.1 77 24 00 0/- TOWARDS UNEXPLAINED INVESTMENT BEING ADVANCE GIVEN TO SHRI R.V.K. PRASAD. THE A.O. OBSERVED THAT THE ASSESSEE HAS FAILED TO EXPLA IN THE SOURCES FOR SUCH ADVANCES WITH NECESSARY ADVANCES. THOUGH THE ASSESSEE CLAIMS TO HAVE EXPLAINED THE SOURCES OUT OF LOAN RECEIVED FRO M HIS FATHER AMOUNT DRAWN FROM PARTNERSHIP FIRMS OPENING CASH BALANCE OF RS.20 LAKHS AND REFUND OF LAND ADVANCE GIVEN IN THE PREVIOUS FINANC IAL YEAR FAILED TO PROVE THE SOURCES WITH MATERIAL EVIDENCES. THE A.O . OBSERVED THAT ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 14 INITIALLY THE ASSESSEE CLAIMS TO HAVE RECEIVED LOAN OF RS.30 LAKHS FROM HIS FATHER HAS REVISED THE AMOUNT TO RS.41 40 000/- H OWEVER FAILED TO SUBSTANTIATE THE LOAN WITH NECESSARY EVIDENCES. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE CLAIMS TO HAVE RECEIVED A SUM OF RS.25 LAKHS BEING ADVANCE GIVEN FOR PURCHASE OF LAND AT VINUKON DA AND THE SAME HAS BEEN USED FOR LOANS GIVEN TO SHRI R.V.K. PRASAD . THOUGH THE ASSESSEE CLAIMS TO HAVE RECEIVED THE ADVANCE FAILE D TO FURNISH ANY DETAILS REGARDING PERSONS FROM WHOM THE AMOUNT IS R ECEIVED BACK AND DATES OF REFUND ETC. SINCE THE ASSESSEE FAILED T O EXPLAIN THE SOURCES OF RS.25 LAKHS THE A.O. OPINED THAT THE SOURCES OF RS .25 LAKHS REMAINED UNEXPLAINED. AS REGARDS OPENING CASH BALANCE OF RS .25 LAKHS WHICH WAS ALSO USED FOR ADVANCING THE LOAN THE A.O. OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE IN THE FORM OF C ASH BOOK OR CASH FLOW STATEMENT TO SHOW THAT THE DATE OF LOAN TO SHRI R.V .K. PRASAD HE ACTUALLY HAD CASH BALANCE OF RS.20 LAKHS. AS FAR AS THE AMOUNT WITHDRAWN FROM PARTNERSHIP FIRM THE A.O. OBSERVED THAT THE ASSESSEE CLAIMS TO HAVE WITHDRAWN AN AMOUNT OF RS.67 78 000/ - FROM M/S. LAKSHMI AUTO FINANCE TO ADVANCE GIVEN TO SHRI R.V.K . PRASAD. THE ASSESSEE IS HAVING OPENING BALANCE OF RS.67 77 843/ - IN THE BOOKS OF ACCOUNTS OF M/S. LAKSHMI AUTO FINANCIERS. THOUGH IT IS CLAIMED BY THE ASSESSEE THAT ENTIRE AMOUNT IS WITHDRAWN BY HIM BY THE END OF THE YEAR ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 15 HE HAS NOT SPECIFIED DATES OF WITHDRAWAL FROM FIRM AND DATES OF ADVANCE TO SHRI R.V.K. PRASAD TO ESTABLISH DIRECT NEXUS BET WEEN WITHDRAWAL OF AMOUNT AND ADVANCE TO SHRI R.V.K. PRASAD. IN THE A BSENCE OF NECESSARY EVIDENCES TO PROVE THE SOURCES AND DEPLOYMENT OF MO NEY TOWARDS ADVANCE GIVEN TO SHRI R.V.K. PRASAD THE A.O. DISBE LIEVED THE CLAIM OF THE ASSESSEE AND BROUGHT TO TAX A SUM OF RS.1 71 24 000/- AS UNEXPLAINED INCOME OF THE ASSESSEE. SIMILARLY THE A.O. OBSERVED THAT THE ASSESSEE HAD GIVEN ADVANCE OF RS.30 65 000/- H OWEVER FAILED TO ADMIT ANY INTEREST ON SUCH ADVANCES THEREFORE WOR KED OUT INTEREST @ 24% ON RS. 30 65 000/- FOR A PERIOD FROM 13.4.2009 TO 30.1.2010 WHICH WORKS OUT TO RS.6 13 000/- AND ADDED BACK TO THE TO TAL INCOME OF THE ASSESSEE AS UNACCOUNTED INCOME FOR THE YEAR. 12. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AS REGARDS AD DITIONS TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTIES/AD VANCE GIVEN TO SHRI R.V.K. PRASAD THE ASSESSEE CLAIMS TO HAVE EXPLAINE D THE SOURCES OUT OF OPENING CASH BALANCE AS PER CASH FLOW STATEMENT DR AWINGS FROM CAPITAL ACCOUNT OF THE PARTNERSHIP FIRM M/S. LAKSHMI AUTO F INANCIERS OUT OF ADDITIONAL INCOME OFFERED BY THE FIRM AGRICULTURAL INCOME REPAYMENT OF ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 16 ADVANCE FOR VINUKONDA PROPERTY AND REPAYMENT OF AMO UNT GIVEN TO SHRI K.V. ROSAIAH. THE ASSESSEE HAD FILED DETAILED CASH FLOW STATEMENT FROM THE ASSESSMENT YEAR 2004-05 TO 2010-11 AND CLAIMS O PENING CASH BALANCE OF RS.26 37 709/-. THE ASSESSEE ALSO CLAIM S TO HAVE RECEIVED AN AMOUNT OF RS.84 68 655/- FROM M/S. LAKSHMI AUTO FINANCIERS AND SRINIVASA AUTO FINANCE. THE ASSESSEE ALSO CLAIMS T O HAVE RECEIVED AN AMOUNT OF RS.3 50 000/- FROM PARTNERSHIP FIRM AND F URTHER SUM OF RS.1 96 000/- FROM AGRICULTURAL INCOME AND A FURTHE R SUM OF RS.25 LAKHS OUT OF REPAYMENT OF ADVANCE FOR VINUKONDA PROPERTY WHICH IS THE SOURCE OF ADVANCE GIVEN TO SHRI R.V.K. PRASAD. 13. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS O F THE ASSESSEE FOR THE DETAILED DISCUSSIONS IN HIS ORDER HAS ACCEPTED THE SOURCE TO THE EXTENT OF RS.1 64 87 709/- BEING OPENING CASH BALAN CE OF RS.26 37 709/- RS.74 LAKHS DRAWING FROM M/S. LAKSHMI AUTO FINANCI ERS RS.20 LAKHS DRAWN FROM PARTNERSHIP FIRM TOWARDS UNRECORDED RECE IPT OF INTEREST INCOME WHICH IS OFFERED IN THE HANDS OF THE PARTNER SHIP FIRM RS.41 LAKHS CLAIMS TO HAVE OWNED BY THE ASSESSEE AND HIS WIFE W HICH WAS GIVEN AS ADVANCE TO SHRI R.V.K. PRASAD AND RS.3 50 000/- OUT OF ADDITIONAL INCOME OFFERED FOR THE YEAR. HOWEVER THE CIT(A) RE JECTED THE CLAIM OF THE ASSESSEE WITH REGARD TO THE ADVANCE RECEIVED BA CK OF RS.25 LAKHS ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 17 GIVEN AS ADVANCE FOR VINUKONDA PROPERTIES. THE CIT (A) OBSERVED THAT NEITHER DURING THE COURSE OF SEARCH NOR SUBSEQUENTL Y DURING STATEMENT RECORDED U/S 132(4) OF THE ACT THE ASSESSEE FAILED TO MENTION ANYTHING ABOUT THE REFUND OF RS.25 LAKHS SHOWN AS ADVANCE GI VEN FOR VINUKONDA PROPERTIES. FOR THE RETURN OF ADVANCE TO BE A SOUR CE OF INVESTMENT MADE UP TO THE DATE OF SEARCH IT WOULD BE NECESSAR Y FOR THE SAID ADVANCE TO BE RETURNED PRIOR TO THE DATE OF SEARCH HOWEVER IN ALL THE STATEMENTS RECORDED DURING THE SEARCH AND SUBSEQUEN TLY THE ASSESSEE WAS VERY CLEAR THAT HE HAD INVESTED RS.25 LAKHS TOW ARDS VINUKONDA PROPERTIES THEREFORE OPINED THAT THE CLAIM MADE BY THE ASSESSEE TOWARDS REFUND OF ADVANCE OUT OF VINUKONDA PROPERTY IS UNACCEPTABLE. WITH THESE OBSERVATIONS DELETED THE ADDITIONS MADE BY THE A.O. TO THE EXTENT OF RS.1 64 87 709/- AND CONFIRMED THE BALANC E AMOUNT OF RS.32 14 291/-. AS REGARDS INTEREST ON ADVANCES GIV EN TO SHRI K.V. ROSAIAH THE CIT(A) CONFIRMED THE ADDITIONS MADE BY THE A.O. BY HOLDING THAT THE EVIDENCES ON RECORD INDICATES THAT THE ASSESSEE OUGHT TO HAVE RECEIVED INTEREST ON AMOUNT LEND TO SHRI K. V. ROSAIAH. FURTHER IT IS SEEN THAT SHRI M. RAMASESHAGIRI RAO IN A STA TEMENT RECORDED ON 11.2.2010 HAD STATED THAT IN THE CASE OF M/S. LAKSH MI AUTO FINANCE AND M/S. SRINIVASA AUTO FINANCE THEY HAVE RECEIVED INT EREST @ 24% EQUALLY IN ALL CASES. HENCE IT IS FAIR TO ASSUME THAT THE ASSESSEE ALSO WOULD ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 18 HAVE RECEIVED INTEREST @ 24% PER ANNUM ON THE AMOUN T LEND TO SHRI K.V. ROSAIAH. WITH THESE OBSERVATIONS CONFIRMED T HE ADDITIONS MADE BY THE A.O. TOWARDS INTEREST ON LOANS. AGGRIEVED BY T HE CIT(A) ORDER THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFOR E US. 14. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITION TOWARDS UNEXPLAINED INVESTMENT BEING ADVANCE GIVEN TO SHRI R.V.K. PRASAD. THE A.O. MADE ADDITIONS OF RS.1 71 24 000/- FOR THE REASON THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCES FOR ADVANCE GIVEN TO SHRI R.V.K. PRASAD. THE A.O. FURTHER OBSERVED THAT THOU GH ASSESSEE CLAIMS TO HAVE SOURCES BY FILING CASH FLOW STATEMENT FAIL ED TO ADDUCE SUPPORTING EVIDENCES FOR THE SOURCES OF INCOME THE REFORE OPINED THAT THE ASSESSEE HAS FAILED TO PROVE THE SOURCES. IT I S THE CONTENTION OF THE ASSESSEE THAT HE HAD EXPLAINED THE SOURCES OF ADVAN CE GIVEN TO R.V.K. PRASAD BY FILING CASH FLOW STATEMENT WHEREIN THE SOURCES HAVE BEEN EXPLAINED WITH NECESSARY EVIDENCES. THE ASSESSEE C LAIMS TO HAVE EXPLAINED THE SOURCES OUT OF OPENING CASH BALANCE B ROUGHT FORWARD FROM PREVIOUS FINANCIAL YEAR DRAWING FROM PARTNERSHIP F IRM AGRICULTURAL INCOME REPAYMENT OF AMOUNT GIVEN TO SHRI K.V. ROSA IAH THEREFORE THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE H AS NOT EXPLAINED THE SOURCES WITH NECESSARY EVIDENCES. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 19 15. HAVING HEARD BOTH THE PARTIES AND CONSIDERED T HE MATERIALS AVAILABLE ON RECORD WE FIND THAT THE ASSESSEE HAS FILED A CASH FLOW STATEMENT WHEREIN HE HAD EXPLAINED THE SOURCES OF CASH INFLOW AND ALSO INVESTMENTS MADE DURING THE FINANCIAL YEAR. DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR THE ASSESSEE HAS GIVEN AN AMOUNT OF RS.1 71 24 000/- ADVANCE TO SHRI R.V.K. PRASAD TOWA RDS PURCHASE OF PROPERTY. THE SOURCES FOR THE SAID INVESTMENT HAS BEEN EXPLAINED OUT OF OPENING BALANCE OF RS.26 37 709/- DRAWINGS FROM CA PITAL ACCOUNT OF PARTNERSHIP FIRM M/S. LAKSHMI AUTO FINANCE OF RS.84 68 655/- CASH AMOUNT RECEIVED FROM M/S. LAKSHMI AUTO FINANCE OUT OF ADDITIONAL INCOME OFFERED BY THE FIRM OF RS.3 50 000/- AGRICU LTURAL INCOME OF RS.1 96 000/- REPAYMENT OF ADVANCE FOR VINUKONDA P ROPERTY OF RS.25 LAKHS AND REPAYMENT OF AMOUNT GIVEN TO SHRI K.V. RO SAIAH OF RS.30 65 000/-. IN THE CASH FLOW STATEMENT THE AS SESSEE CLAIMS TO HAVE OPENING CASH BALANCE OF RS.26 37 709/- WHICH WAS B ROUGHT FORWARD FROM PREVIOUS FINANCIAL YEAR FOR WHICH THE ASSESSE E HAS EXPLAINED THE SOURCE IS OUT OF DRAWING FROM PARTNERSHIP FIRM. SI MILARLY AS REGARDS DRAWING FROM PARTNERSHIP FIRM THE ASSESSEE HAS FIL ED A CAPITAL ACCOUNT COPY OF THE PARTNERSHIP FIRM WHICH SHOWS CASH WITH DRAWALS OF RS.74 LAKHS UP TO THE DATE OF INVESTMENT. SIMILARLY THE ASSESSEE HAD RECEIVED FURTHER AMOUNT OF RS.3 50 000/- OUT OF ADDITIONAL I NCOME OFFERED BY THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 20 ASSESSEE. THEREFORE ON PERUSAL OF EVIDENCES AND C ASH FLOW STATEMENT FILED BY THE ASSESSEE IT INDICATES THAT THE ASSESS EE IS HAVING SOURCE TO THE EXTENT OF RS.1 64 87 709/- AS AGAINST THIS THE ASSESSEE HAS MADE INVESTMENT OF RS.1 97 02 000/- INCLUDING ADVANCE GI VEN TO SHRI R.V.K. PRASAD OF RS.1 71 24 000/- AND FINANCE GIVEN TO SHR I K.V. ROSAIAH OF RS.30 65 000/-. THE DIFFERENCE OR SHORTFALL IN THE CASH SOURCES WORKS OUT TO RS.32 14 291/- FOR WHICH THE ASSESSEE FAILS TO O FFER ANY EXPLANATIONS. THE CIT(A) AFTER CONSIDERING THE DETAILED EXPLANATI ONS FURNISHED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE CASH FLOW STATEMENT FOR THE REASONS RECORDED IN HIS ORDER ACCEPTED THE EXPLANAT IONS TO THE EXTENT OF RS.1 64 87 709/- AND CONFIRMED REMAINING AMOUNT OF RS.32 14 291/- AS UNEXPLAINED. THE FACTS REMAIN UNCHANGED. THE ASSE SSEE FAILS TO BROUGHT ON RECORD ANY EVIDENCES TO PROVE THE FINDIN GS OF THE FACTS RECORDED BY THE CIT(A) IS INCORRECT. HENCE WE INC LINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE RE VENUE AS WELL AS ASSESSEE. 16. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS INTEREST ON LOANS GIVEN TO SHRI K.V. ROSAIA H. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH O PERATION SEIZED DOCUMENTS VIDE ANNEXURE A/MSR/RES/4 SHOWS PAYMENT O F RS.1 CRORE IN ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 21 CASH TO SHRI K.V. ROSAIAH AS MORTGAGE FINANCE. THE ASSESSEE SHARE IN THE SAME WAS OFFERED AT RS.30 65 000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE MODUS OPERANDI OF THE ASSESSEE AND HIS FAMILY MEMBERS IS SUCH THAT TH E ASSESSEE ADVANCED LOANS BY MORTGAGING PROPERTIES WITH THE DE BTORS AND IF THE LOAN IS REPAID WITHIN THE AGREED PERIOD WITH INTERE ST THEY WILL ENTER INTO AN AGREEMENT WITH CONCERNED PARTY WITH RESPECT TO T HOSE PARTIES. IF THE DEBTOR FAILS TO RETURN THE AMOUNT ONCE PRINCIPAL A ND INTEREST EXCEEDS VALUE OF PROPERTY THEY GET THE PROPERTY REGISTERED IN THEIR NAME. THEREFORE OPINED THAT THE ASSESSEE HAS ADVANCED LO AN AMOUNT OF RS.1 CRORE WITHOUT CHARGING ANY INTEREST. SINCE THE AS SESSEE FAILED TO OFFER ANY INTEREST ON SUCH ADVANCES THE A.O. CALCULATED INTEREST @ 24% FOR A PERIOD FROM 13.4.2009 TO 30.1.2010 WHICH WORKS OUT TO RS.6 13 000/-. IT IS THE CONTENTION OF THE ASSESSEE THAT THE SAID TRA NSACTION IS NOT MORTGAGE FINANCE BUT IT IS AN ADVANCE GIVEN FOR PU RCHASE OF PROPERTY. SINCE THE PROPERTY WAS NOT FOUND SUITABLE DUE TO V ASTHU ISSUES SHRI K.V. ROSAIAH AGREED FOR CANCELLATION OF PURCHASE DE ED ONLY ON THE CONDITION THAT THE INTEREST ON THE ADVANCE IS WAIVE D THEREFORE NO INTEREST IS CHARGED ON ADVANCE GIVEN TO SHRI K.V. R OSAIAH. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 22 17. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSE SSEE FOR THE REASON THAT THE FACTS EMERGED FROM THE SEIZED DOCUMENT IND ICATES THAT THE ASSESSEE AND OTHER FAMILY MEMBERS HAD FINANCED RS.1 CRORE TO SHRI K.V. ROSAIAH AGAINST SUCH FINANCE CERTAIN PROPERTIES W ERE OBTAINED THROUGH SALE DEED-CUM-GPA IN FAVOUR OF THE ASSESSEE AND OTH ER FAMILY MEMBERS. THE TRANSACTION CLEARLY INDICATES THAT THE INTEREST BEARING LOAN AMOUNT OF RS.1 CRORE HAS BEEN GIVEN TO THE PARTY. THE PROPER TY IN QUESTION WAS NOT PURCHASED BY THE ASSESSEE AND HIS FAMILY MEMBER S FOR THEIR OWN USE. IT WAS OFFERED AS COLLATERAL SECURITY FOR THE CASH LOAN GIVEN TO SHRI K.V. ROSAIAH. THIS IS SUPPORTED BY THE FACT THAT T HE FOUR PROPERTIES TOTALLING RS.72 LAKHS RECEIVED FROM SHRI K.V. ROSA IAH WERE BY MEANS OF SALE AGREEMENT-CUM-GPA AND NOT THROUGH A REGISTERED SALE DEED. WHEN A PROPERTY IS MERELY A COLLATERAL SECURITY FOR A LO AN THE SUBSEQUENT CANCELLATION OF MORTGAGE DEED AND REFUND OF ADVANCE S CANNOT BE CLAIMED AS IT IS AN ADVANCE GIVEN FOR PURCHASE OF P ROPERTY. THEREFORE WE ARE OF THE VIEW THAT THE A.O. HAS RIGHTLY CHARGE D INTEREST ON INTEREST BEARING ADVANCE GIVEN TO SHRI K.V. ROSAIAH. THE CIT (A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HAS RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 23 THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A ) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.647/VIZAG/2013 FOR THE A.Y. 2010-11 AND APPEAL F ILED BY THE REVENUE IN ITA NO.673/VIZAG/2013 FOR THE A.Y. 2010-11 ARE DISMISSED . ITA NO.149/VIZAG/2014 A.Y. 2006-07: 19. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DERIVING INCOME FROM HOUSE PROPERTY SHARE OF INCOM E FROM PARTNERSHIP FIRM FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 DECLARING TOTAL INCOME OF RS.2 20 000/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE GROUP CASES OF MOVVA GROUP PONNURU ON 15.10.2009. CONSEQUENT TO SEARCH THE CASE WAS NOT IFIED TO CENTRAL CIRCLE AND ACCORDINGLY NOTICE U/S 153C R.W.S. 153A OF THE ACT WAS ISSUED. IN RESPONSE TO THE SAID NOTICE THE ASSESS EE FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 3.6.2011 DECLARING TOTAL INCOME OF RS.14 28 997/- AND AGRICULTURAL INCOME OF RS.1 60 000/-. SUBSEQUENTLY THE CASE HAS BEEN SELECTED FOR SCRUTI NY AND ACCORDINGLY NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED . IN RESPONSE TO NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FURNISHED DETAILS CALLED FOR. THE ASSESSMENT FOR THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 24 YEAR HAS BEEN COMPLETED U/S 143(3) R.W.S. 153C OF T HE ACT AND DETERMINED TOTAL INCOME AT RS.27 43 650/- BY MAKING ADDITIONS OF RS.3 40 655/- TOWARDS DISALLOWANCE OF BUSINESS EXPE NDITURE AND RS.8 14 000/- TOWARDS UNACCOUNTED INVESTMENT IN PRO PERTY. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE CIT(A) THE ASSESSEE HAS FILED DETAI LED WRITTEN SUBMISSION. THE CIT(A) FOR THE REASONS RECORDED IN HIS ORDER CONFIRMED THE ADDITIONS TOWARDS DISALLOWANCE OF BUSINESS EXPE NDITURE AND DELETED ADDITIONS OF RS.7 49 000/- OUT OF TOTAL ADDITIONS O F RS.8 14 000/- TOWARDS UNEXPLAINED INVESTMENT IN PROPERTY. AGGRIEVED BY T HE CIT(A) ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 20. THE ONLY ISSUE CAME UP FOR OUR CONSIDERATION FR OM ASSESSEES APPEAL IS ADDITION TOWARDS DISALLOWANCE OF BUSINESS EXPENDITURE OF RS.3 40 655/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE A.O. NOTICED THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS.3 40 655/- TOWARDS INTEREST PAID TO MOVVA GROUP FIRMS AND CLAIMED THE SAME AS DEDUCTION FROM HER INCOME. THE A.O. FURTHER OBSERVED THAT FO R THE ASSESSMENT YEAR 2004-05 AND 2005-06 INTEREST PAID TO MOVVA GR OUP FIRMS IS CLAIMED AS DEDUCTION UNDER THE HEAD INCOME FROM HOU SE PROPERTY WHEREAS FOR THE CURRENT YEAR UNDER CONSIDERATION I NTEREST PAID TO MOVVA ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 25 GROUP FIRMS IS CLAIMED AS BUSINESS EXPENDITURE. THE REFORE ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN WHY THE INTE REST PAID TO MOVVA GROUP FIRM SHALL NOT BE DISALLOWED. IN RESPONSE TO SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED THAT IT HAS RIGHTLY CLAIMED INTEREST PAID TO MOVVA GROUP FIRM AS BUSINESS EXPENDITURE BECAUSE IN THE PREVIOUS ASSESSMENT YEARS THE INTEREST CLAIMED UNDER THE HEAD HOUSE P ROPERTY HAS BEEN DISALLOWED. IT WAS FURTHER SUBMITTED THAT SHE HAD BORROWED AMOUNT FROM M/S. MOVVA GROUP FIRMS AND USED FOR THE PURPOS E OF BUSINESS THEREFORE INTEREST PAID ON SUCH LOAN SHOULD BE ALL OWED AS BUSINESS EXPENDITURE. THE A.O. AFTER CONSIDERING THE EXPLANA TIONS OF THE ASSESSEE HELD THAT THE ASSESSEE FAILED TO FURNISH ANY EXPLAN ATIONS WITH REGARD TO HOW THE BORROWED FUND HAS BEEN USED IN HER BUSINESS . THE A.O. FURTHER OBSERVED THAT AS PER THE PROVISIONS OF SECTION 37 O F THE ACT ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS CAN ONLY BE ALLOWED AS DEDUCTION. SINCE THE ASSESS EE FAILED TO OFFER ANY EXPLANATIONS WITH REGARD TO BORROWED FUNDS AND DEPL OYMENT OF FUNDS FOR THE PURPOSE OF BUSINESS THE INTEREST PAID ON SUCH LOAN CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. 21. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE A SSESSEE REITERATED ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 26 THE SUBMISSIONS MADE BEFORE THE A.O. THE CIT(A) AF TER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HELD THAT ASSESSEE HA S NEITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR DURING THE APP ELLATE PROCEEDINGS SUBMITTED ANY EVIDENCE THAT THE AMOUNT BORROWED BY HER HAVE BEEN UTILIZED WHOLLY AND EXCLUSIVELY FOR HER BUSINESS AN D NOT FOR ACQUISITION OF PERSONAL ASSETS. IN VIEW OF THE SAME UPHELD THE A DDITIONS MADE BY THE A.O. TOWARDS DISALLOWANCE OF BUSINESS EXPENDITURE. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 22. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT T HE LD. CIT(A) ERRED IN HOLDING THAT THE BORROWED FUNDS WERE UTILIZED FO R ACQUISITION OF PROPERTY AND HENCE THE DEDUCTION SOUGHT FOR INTERES T ON BORROWED CAPITAL WAS NOT ALLOWABLE U/S 37 OF THE ACT BUT TH E FACT IS THAT THE ASSESSEE HAS UTILIZED THE BORROWED FUND FOR THE PUR POSE OF HER BUSINESS. THE A.R. FURTHER SUBMITTED THAT THE A.O. DID NOT DI SPUTE THE ACTUAL PAYMENT OF INTEREST HOWEVER ONLY DISPUTED THE FACT THAT THE ASSESSEE HAS FAILED TO UTILIZE THE BORROWED FUNDS FOR THE PU RPOSE OF BUSINESS. IT WAS FURTHER SUBMITTED THAT WHEN THE PAYMENT OF INTE REST IS NOT DISPUTED MERELY BECAUSE IT WAS NOT CLAIMED UNDER P ROPER HEAD THE INTEREST PAYMENT CANNOT BE DISALLOWED. ON THE OTHE R HAND THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF THE CIT(A). ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 27 23. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. DISALLOWED INTEREST PAID ON LOANS FOR THE REAS ON THAT THE ASSESSEE HAS FAILED TO PROVE THE UTILIZATION OF BORROWED FUN DS IN HER BUSINESS. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS U SED THE BORROWED FUNDS FOR THE PURPOSE OF ACQUISITION OF PROPERTY WH ICH IS PROVED BY HER CONDUCT THAT IN THE PRECEDING FINANCIAL YEARS SHE HAD CLAIMED INTEREST PAID ON SUCH LOANS UNDER THE HEAD INCOME FROM HOUS E PROPERTY. THE A.O. FURTHER WAS OF THE OPINION THAT WITHOUT ANY RE ASON UNDER SOME SET OF FACTS THE ASSESSEE HAS CLAIMED INTEREST AS BUSI NESS EXPENDITURE THEREFORE OPINED THAT EXPENDITURE CLAIMED BY THE A SSESSEE IS NOT ALLOWABLE AS BUSINESS EXPENDITURE. IT IS THE CONTEN TION OF THE ASSESSEE THAT THE A.O. DID NOT DISPUTED THE PAYMENT OF INTER EST. BUT DISALLOWED INTEREST MERELY ON TECHNICAL FLAW THAT THE INTEREST HAS BEEN CLAIMED UNDER INCORRECT HEAD. WE DO NOT FIND ANY MERITS IN T HE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HERSELF I N THE PREVIOUS FINANCIAL YEARS HAS CLAIMED THE INTEREST PAID ON SA ID LOANS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THIS CLEARLY SH OWS THAT THE ASSESSEE HAS USED THE FUNDS FOR THE PURPOSE OF ACQU ISITION OF CAPITAL ASSETS. ONCE THE FUNDS ARE NOT USED IN THE BUSINES S THEN THE INTEREST PAID ON SUCH LOANS CANNOT BE ALLOWED AS BUSINESS EX PENDITURE. TO CLAIM ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 28 A PARTICULAR EXPENDITURE AS BUSINESS EXPENDITURE T HE ASSESSEE SHOULD PROVE BEYOND DOUBT THAT EXPENDITURE IS INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE PRESENT CASE ON HAND THE ASSESSEE FAILED TO PROVE WITH NECESSARY EVIDENCE THE FUND IS USED FOR BUSINESS PURPOSE. THEREFORE WE ARE OF THE VIEW THAT THE A.O . HAS RIGHTLY DISALLOWED INTEREST PAID ON LOANS. THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT( A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE APPEAL FI LED BY THE ASSESSEE. 24. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.149/VIZAG/2014 FOR THE A.Y. 2006-07 IS DISMISSED. ITA NOS.645 & 671/VIZAG/2013-A.Y. 2010-11: 25. THESE CROSS APPEALS FILED BY THE ASSESSEE AS W ELL AS REVENUE ARE DIRECTED AGAINST ORDER OF CIT(A) GUNTUR DATED 30.8 .2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 2010-11. SINCE THE FACTS AR E IDENTICAL AND ISSUES ARE COMMON THEY ARE CLUBBED HEARD TOGETHER AND DI SPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 26. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DERIVING INCOME FROM HOUSE PROPERTY SHARE OF INCOM E FROM PARTNERSHIP FIRM FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 29 DECLARING TOTAL INCOME OF RS.5 97 880/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE GROUP CASES OF MOVVA GROUP PONNURU ON 15.10.2009. CONSEQUENT TO SEARCH THE CASE HAS BEEN NOTIFIED TO CENTRAL CIRCLE AND ACCORDINGLY NOTICE U/S 153C R.W.S. 153A OF THE ACT WAS ISSUED. IN RESPONSE TO THE SAID NOTICE THE ASSESS EE FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 17.8.2011 DECLARING TOTAL INCOME OF RS.17 01 940/-. SUBSEQUENTLY THE CASE H AS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) AND 142 (1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES THE AUTHORIZED REP RESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED D ETAILS CALLED FOR. THE ASSESSMENT FOR THE YEAR HAS BEEN COMPLETED U/S 143(3) R.W.S. 153C OF THE ACT AND DETERMINED TOTAL INCOME OF RS.62 05 540/- BY MAKING ADDITIONS TOWARDS FINANCE TO K.V. ROSAIAH OF RS.37 53 000/- AND INTEREST ON FINANCE AMOUNT OF RS.7 50 600/-. AGGRIEVED BY TH E ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE REITERATED SUBMISSIONS MADE BEFORE A.O . THE CIT(A) FOR THE REASONS RECORDED IN HIS ORDER DELETED THE ADDIT IONS MADE TOWARDS FINANCE TO SHRI K.V. ROSAIAH AND CONFIRMED THE ADDI TIONS TOWARDS INTEREST ON LOANS. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 30 27. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM REVENUE APPEAL IS ADDITION TOWARDS UNEXPLAINED FINANCE TO S HRI K.V. ROSAIAH. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH OPERATION ONE SMALL NOTE BOOK CONTAINING SOME FINA NCIAL TRANSACTION WAS SEIZED AS MARKED A/MSR/RES/04 FROM THE RESIDE NCE OF SHRI M. RAMASESHAGIRI RAO. PAGE NO.4 OF THE SAID DOCUMENT C ONTAINS HAND WRITTEN NOTE INDICATING THAT A LOAN OF RS.1 CRORE W AS GIVEN TO SHRI K.V. ROSAIAH ON MORTGAGE OF PROPERTY FOR A PERIOD OF 3 M ONTHS. DURING THE COURSE OF SEARCH PROCEEDINGS A STATEMENT OF SHRI M . RAMASESHAGIRI RAO WAS RECORDED WHEREIN HE HAS ASKED TO EXPLAIN THE S OURCES OF THIS AMOUNT OF RS.1 CRORE. SHRI M. R. RAO IN HIS STATE MENT RECORDED DATED 28.1.2010 STATED THAT THIS TRANSACTION IS NOT REFL ECTED IN THE REGULAR BOOKS OF ACCOUNTS AND THAT HE COULD NOT EXPLAIN THE SOURCES FOR RS.1 CRORE GIVEN TO SHRI K.V. ROSAIAH AND ACCORDINGLY O FFERED AN AMOUNT OF RS.1 CRORE AS UNACCOUNTED INCOME FOR ASSESSMENT YEA R 2010-11 IN THE HANDS OF HIS SON SRI M. SRINIVASA RAO AND DAUGHTER- IN-LAW SMT. M. JAYASREE. OUT OF THE TOTAL RS.1 CRORE THE AMOUNT O FFERED IN THE CASE OF THE ASSESSEE WAS RS.37 53 000/- (RS.27 63 000/- TOW ARDS FINANCE AND RS.9 90 000/- TOWARDS PURCHASE OF PROPERTY). IN TH E RETURN FILED IN RESPONSE TO NOTICE U/S 153C OF THE ACT THE ABOVE A MOUNT WAS NOT OFFERED AS INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 31 A.O. OBSERVED THAT THE ASSESSEE HAS NOT OFFERED THE INCOME TOWARDS THE SAID TRANSACTION IN THE RETURN FILED FOR THE RELEVA NT ASSESSMENT YEAR. THEREFORE ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN WHY THE SAME SHALL NOT BE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE. 28. IN RESPONSE TO NOTICE THE ASSESSEE SUBMITTED T HAT SHE HAD SOURCES OF INCOME FOR THE SAID INVESTMENT OUT OF WI THDRAWALS FROM M/S. LAKSHMI AUTO FINANCIERS AND RENTAL INCOME EARNED FO R THE PERIOD. THE ASSESSEE FURTHER STATED THAT SHE IS HAVING CAPITAL WITHDRAWALS OF RS.44 99 000/- FROM M/S. LAKSHMI AUTO FINANCIERS R ENTAL INCOME OF RS.10 98 000/- AND OPENING CASH BALANCE OF RS.9 44 000/- OUT OF WHICH AMOUNT IS GIVEN TO SHRI K.V. ROSAIAH THEREFORE TH E SOURCES FOR THE INVESTMENT HAS BEEN EXPLAINED TO THIS EFFECT FILE D CASH FLOW STATEMENT EXPLAINING SOURCES FOR THE INVESTMENT. THE A.O. AF TER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HELD THAT THE ASSESSE E FAILED TO EXPLAIN THE SOURCES OF RS.37 53 000/- GIVEN TO SHRI K.V. ROSAIA H. THOUGH SHE HAD FILED A CASH FLOW STATEMENT EXPLAINING THE SOURCES THE CASH FLOW STATEMENT DOES NOT EXPLAIN THE AVAILABILITY OF CASH . THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HERSELF ADMITTED RS.37 5 3 000/- AS UNACCOUNTED INCOME AT THE TIME OF SEARCH PROCEEDING S AND ACCORDINGLY ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 32 HER CLAIM THAT SHE HAD SOURCES FOR THE SAID INVESTM ENT CANNOT BE ACCEPTED NOW. 29. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE AS SESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE ALSO FILED A CASH FLOW STATEMENT EXPLAINING THE SOURCES FOR INVESTMEN T OF RS.37 53 000/-. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF TH E ASSESSEE AND ALSO TAKEN INTO ACCOUNT CASH FLOW STATEMENT FILED BY THE ASSESSEE HELD THAT THE ASSESSEE HAS EXPLAINED THE SOURCES FOR AMOUNT G IVEN TO SHRI K.V. ROSAIAH BY FILING A CASH FLOW STATEMENT. THE CIT(A ) FURTHER HELD THAT IT IS SEEN FROM THE CASH FLOW STATEMENT FILED BY THE A SSESSEE THAT THE ASSESSEE IS HAVING OPENING CASH BALANCE OF RS.55 74 000/-. THIS INCLUDES AMOUNT RECEIVED FROM RENTAL INCOME AS WELL AS WITHDRAWALS FROM THE ADDITIONAL INCOME OFFERED BY THE FIRM. TH E ASSESSING OFFICER HAS NOT POINTED OUT ANY INVESTMENT OR SOURCE WHICH IS NOT INCLUDED OR WRONGLY INCLUDED IN THE CASH FLOW STATEMENT. IN TH E ABSENCE OF CONTRARY FINDINGS TO THE EFFECT THAT THE ASSESSEE HAS UTILIZ ED THE AVAILABLE FUNDS IN SOME OTHER FORM THE SOURCES AVAILABLE IN THE FORM OF OPENING CASH BALANCE AND REGULAR SOURCE OF INCOME CANNOT BE IGNO RED. WITH THESE OBSERVATIONS DELETED THE ADDITIONS MADE BY THE A.O . TOWARDS FINANCE TO ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 33 SHRI K.V. ROSAIAH. AS REGARDS THE INTEREST ON LOAN THE CIT(A) CONFIRMED THE ADDITIONS MADE BY THE A.O. BY STATING THAT THE EVIDENCE ON RECORD INDICATE THAT THE ASSESSEE SHALL HAVE RECEIVED THE INTEREST ON AMOUNT LEND TO SHRI K.V. ROSAIAH. FURTHER IT IS SEEN THAT SHRI M.R. RAO IN A STATEMENT RECORDED ON 11.2.2010 HAD STATED THAT IN THE CASE OF M/S. LAKSHMI AUTO FINANCE AND M/S. SRINIVASA AUTO FINANC E THEY HAVE RECEIVED INTEREST @ 24% IN ALL CASES AND HENCE IT I S FAIR TO ASSUME THAT THE ASSESSEE WOULD ALSO HAVE RECEIVED INTEREST OF 2 4% PER ANNUM ON THE AMOUNT LEND TO SHRI K.V. ROSAIAH. HENCE I DO NOT FIND ANY REASON TO DISTURB THE FINDINGS OF THE ASSESSING OFFICER AN D ADDITION ON ACCOUNT OF UNACCOUNTED INTEREST IS SUSTAINED. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE U S. 30. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITION TOWARDS UNEXPLAINED ADVANCE GIVEN TO SHRI K.V. ROSA IAH. THE A.O. MADE ADDITIONS OF RS.37 53 000/- FOR THE REASON THAT TH E ASSESSEE FAILED TO PROVE THE SOURCES FOR ADVANCE GIVEN TO SHRI K.V. RO SAIAH. THE A.O. WAS OF THE OPINION THAT THOUGH ASSESSEE FILED A CASH FL OW STATEMENT EXPLAINING THE SOURCES FOR INVESTMENT FAILED TO OF FER COGENT EVIDENCES FOR SOURCES IN THE FORM OF OPENING CASH BALANCE BRO UGHT FORWARD FROM PREVIOUS FINANCIAL YEAR. IT IS THE CONTENTION OF T HE ASSESSEE THAT SHE HAD ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 34 SOURCE TO EXPLAIN THE AMOUNT GIVEN TO SHRI K.V. ROS AIAH. THE ASSESSEE FURTHER CONTENDED THAT SHE IS HAVING RS.55.74 LAKHS CASH SURPLUS AT THE END OF THE FINANCIAL YEAR 2008-09 WHICH IS AVAILABL E TO COVER UP THE ADVANCES GIVEN TO SHRI K.V. ROSAIAH. 31. HAVING HEARD BOTH THE SIDES WE FIND FORCE IN T HE ARGUMENTS OF THE ASSESSEE. THE ASSESSEE HAS FILED A CASH FLOW STATEM ENT EXPLAINING THE AMOUNT GIVEN TO SHRI K.V. ROSAIAH. ON PERUSAL OF T HE CASH FLOW STATEMENT FILED BY THE ASSESSEE WE FIND THAT THE A SSESSEE IS HAVING OPENING CASH BALANCE OF RS.55 74 000/- AS ON 1.4.20 09. AS PER THE SEIZED DOCUMENT THE INVESTMENT MADE ON 13.4.2009 W AS RS.37 53 000/-. ONCE THERE IS SOURCE WHETHER THE SAME WAS IN THE NATURE OF MORTGAGE FINANCE OR PART FOR ACQUISITION OF PROPERTY AND PART FOR FINANCE IS NOT RELEVANT WHILE DETERMINING THE S OURCE OF THIS INVESTMENT. SINCE SHE HAD SUFFICIENT SOURCE OF INC OME TO EXPLAIN THE INVESTMENT MADE IN THE ADVANCE GIVEN TO SHRI K.V. R OSAIAH THE A.O. WAS NOT CORRECT IN MAKING ADDITIONS. THE CIT(A) AFT ER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE RIGHTLY DELETED THE AD DITIONS MADE TOWARDS ADVANCE GIVEN TO SHRI K.V. ROSAIAH. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE APPEAL FILED BY THE REV ENUE. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 35 32. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS INTEREST ON LOANS GIVEN TO SHRI K.V. ROSAIA H. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH O PERATION A SEIZED DOCUMENT VIDES ANNEXURE A/MSR/RES/4 SHOWS PAYMENT O F RS.1 CRORE IN CASH TO SHRI K.V. ROSAIAH AS MORTGAGE FINANCE. THE ASSESSEE SHARE IN THE SAME WAS OFFERED AT RS.37 53 000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE MODUS OPERANDI OF ASSESSEE AND HIS FAMILY MEMBERS IS SUCH THAT THE AS SESSEE ADVANCED LOANS BY MORTGAGING PROPERTIES WITH THE DEBTORS AND IF THE LOAN IS REPAID WITHIN THE AGREED PERIOD WITH INTEREST THEY WILL E NTER INTO AN AGREEMENT WITH CONCERNED PARTY WITH RESPECT TO THOSE PARTIES. IF THE DEBTOR FAILS TO RETURN THE AMOUNT ONCE PRINCIPAL AND INTEREST EXCE EDS VALUE OF PROPERTY THEY GET THE PROPERTY REGISTERED IN THEIR NAME. THEREFORE OPINED THAT THE ASSESSEE HAS ADVANCED LOAN AMOUNT O F RS.1 CRORE WITHOUT CHARGING ANY INTEREST. SINCE THE ASSESSEE FAILED TO OFFER ANY INTEREST ON SUCH ADVANCES THE A.O. CALCULATED INTE REST @ 24% ON RS. 37 53 000/- FOR A PERIOD FROM 13.4.2009 TO 30.1.201 0 WHICH WORKS OUT TO RS. 7 50 600/-. IT IS THE CONTENTION OF THE ASS ESSEE THAT THE SAID TRANSACTION IS NOT MORTGAGE FINANCE BUT IT IS AN A DVANCE GIVEN FOR PURCHASE OF PROPERTY. SINCE THE PROPERTY WAS NOT FOUND SUITABLE DUE TO VASTHU ISSUES SHRI K.V. ROSAIAH AGREED FOR CANCELL ATION OF PURCHASE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 36 DEED ONLY ON THE CONDITION THAT THE INTEREST ON TH E ADVANCE IS WAIVED THEREFORE NO INTEREST IS CHARGED ON ADVANCE GIVEN TO SHRI K.V. ROSAIAH. 33. HAVING HEARD BOTH THE SIDES AND CONSIDERED MAT ERIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT THE FACTS EMERGED FROM THE SEIZED DOCUM ENT INDICATES THAT THE ASSESSEE AND OTHER FAMILY MEMBERS HAD FINANCED RS.1 CRORE TO SHRI K.V. ROSAIAH AGAINST SUCH FINANCE CERTAIN PROPERT IES WERE OBTAINED THROUGH SALE DEED-CUM-GPA IN FAVOUR OF THE ASSESSEE AND OTHER FAMILY MEMBERS. THE TRANSACTION CLEARLY INDICATES THAT TH E INTEREST BEARING LOAN AMOUNT OF RS.1 CRORE HAS BEEN GIVEN TO THE PAR TY. THE PROPERTY IN QUESTION WAS NOT PURCHASED BY THE ASSESSEE AND HIS FAMILY MEMBERS FOR THEIR OWN USE. IT WAS OFFERED AS COLLATERAL SECURI TY FOR THE CASH LOAN GIVEN TO SHRI K.V. ROSAIAH. THIS IS SUPPORTED BY T HE FACT THAT THE FOUR PROPERTIES TOTALING RS.72 LAKHS RECEIVED FROM SHRI K.V. ROSAIAH WERE BY MEANS OF SALE AGREEMENT-CUM-GPA AND NOT THROUGH A R EGISTERED SALE DEED. WHEN A PROPERTY IS MERELY A COLLATERAL SECURI TY FOR A LOAN THE SUBSEQUENT CANCELLATION OF MORTGAGE DEED AND REFUND OF ADVANCES CANNOT BE CLAIMED AS IT IS AN ADVANCE GIVEN FOR PUR CHASE OF PROPERTY. THEREFORE WE ARE OF THE VIEW THAT THE A.O. HAS RIG HTLY CHARGED INTEREST ON INTEREST BEARING ADVANCE GIVEN TO SHRI K.V. ROSA IAH. THE CIT(A) ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 37 AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HAS RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASO NS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE WE INCLINED TO UPH OLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 34. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.645/VIZAG/2013 AND APPEAL FILED BY THE REVENUE I N ITA NO.671/VIZAG/2013 FOR THE A.Y. 2010-11 ARE DISMISSED. ITA NO.644/VIZAG/2013-A.Y. 2004-05: 35. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DERIVING INCOME FROM BUSINESS RENT AND INTEREST IN COME. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE GROUP CASES OF MOVVA GROUP PONNURU ON 15.10.2009. DURING THE COURSE OF SEARCH OPERATION CERTAIN INCRIMINATING DOCUMENTS FOUND AND SEIZED REVEALS TH AT THE ASSESSEE AND HIS FAMILY MEMBERS HAVE UNDISCLOSED INCOME IN THE F ORM OF INVESTMENTS IN PURCHASE OF IMMOVABLE PROPERTIES AND LOANS AND A DVANCES TO THIRD PARTIES. THE IMPOUNDED DOCUMENT FOUND DURING THE CO URSE OF SEARCH MARKED AS ANNEXURE-A/MSR/03 REVEALS THAT THE ASSESS EE HAS MADE CERTAIN INVESTMENTS IN PURCHASE OF IMMOVABLE PROPER TY. CONSEQUENT TO SEARCH THE CASE HAS BEEN NOTIFIED TO CENTRAL CIRCL E AND ACCORDINGLY THE ASSESSING OFFICER ISSUED NOTICE U/S 153C R.W.S. 153 A OF THE ACT CALLING ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 38 FOR THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 20 04-05. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED HIS RETURN OF INC OME FOR THE ASSESSMENT YEAR 2004-05 ON 9.8.2011 DECLARING TOTAL INCOME OF RS.69 046/-. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED WRITTEN SUBMISSIONS AND OTHER DETAILS CAL LED FOR. THE ASSESSMENT WAS COMPLETED U/S 143(3). R.W.S. 153C AN D DETERMINED TOTAL INCOME OF RS. 24 38 190/- BY MAKING ADDITIONS OF R S. 22 00 000/- TOWARDS ADDITIONAL INCOME ADMITTED U/S 132(4) ADDI TION TOWARDS INTEREST INCOME OF RS. 41 648/- AND DISALLOWANCE OF CLAIM OF INTEREST ON BORROWED CAPITAL. 36. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITIONAL INCOME ADMITTED U/S 132(4) OF THE ACT FOR RS. 22 LA KHS. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH A SEIZED DOCUMENT MARKED AS ANNEXURE-A/MSR/RES./03 FROM PAGES 49 TO 58 AND ANNE XURE- A/MSR/RES./01 FROM PAGES 92 TO 98 PERTAINS TO PURCH ASE OF TWO PROPERTIES. THE REGISTERED VALUE OF PROPERTY EXCLUD ING REGISTRATION CHARGES IS 28 LAKHS WHEREAS THE DOCUMENT SEIZED AT PAGES 92 TO 98 SHOWS THAT THE ASSESSEE ENTERED INTO AN AGREEMENT-C UM-GPA ON 6.4.2003 IN RESPECT OF THE ABOVE PROPERTY FOR A VAL UE OF RS.50 LAKHS. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 39 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER HAS REPRODUCED THE RELEVANT EXTRACT OF THE ASSESSEES S TATEMENT RECORDED U/S 132(4) OF THE ACT WHEREIN HE HAD ADMITTED THAT THE DIFFERENCE AMOUNT OF RS.22 LAKHS BETWEEN THE ACTUAL PURCHASE P RICE AS PER AGREEMENT-CUM-GPA DATED 6.4.2003 OF RS. 50 LAKHS AN D THE PRICE RECORDED IN THE REGISTERED DOCUMENT DATED 23.11.200 7 OF RS.28 LAKHS IS HIS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2004- 05. WHILE FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153C OF THE ACT THE ASSESSEE HAS NOT INCLUDED THE SAID ADMISSION OF RS. 22 LAKHS IN THE RETURN FILED. DURING THE ASSESSMENT PROCEEDINGS NO SPECIFIC REAS ON WAS ATTRIBUTED FOR NOT ADMITTING THIS INCOME. THEREFORE THE A.O. MADE ADDITIONS OF RS.22 LAKHS AS ADDITIONAL INCOME OF THE ASSESSEE FO R THE ASSESSMENT YEAR 2004-05. 37. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE A SSESSEE SUBMITTED THAT HE IS HAVING SOURCE OF INCOME TO THE EXTENT OF RS.14 LAKHS TO EXPLAIN THE ADDITIONAL INCOME OFFERED U/S 132(4) OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT HE IS A PARTNER IN M/S. LAKSHMI AUTO FINANCE AND M/S. SRINIVASA AUTO FINANCE AND THESE T WO FIRMS HAVE DISCLOSED ADDITIONAL INCOME GENERATED IN CASH ON AC COUNT OF UNDISCLOSED ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 40 INTEREST INCOME. OUT OF THIS ADDITIONAL INCOME OFF ERED IN THE RETURN OF INCOME FILED BY THE FIRM HE HAD DRAWN RS.7 44 665/ - FROM M/S. LAKSHMI AUTO FINANCE AND RS.6 55 335/- FROM M/S. SRINIVASA AUTO FINANCE I.E. RS.14 LAKHS IN TOTAL. OUT OF THE TOTAL ADMISSION O F RS.22 LAKHS HE IS HAVING SOURCE OF INCOME TO THE EXTENT OF RS.14 LAKH S THEREFORE THE REMAINING RS.8 LAKHS MAY BE CONSIDERED FOR ADDITION . THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HELD T HAT THE EVIDENCE IN THE FORM OF SEIZED DOCUMENT CLEARLY EXHIBITS THAT T HE ASSESSEE HAS MADE PAYMENTS OVER AND ABOVE THE CONSIDERATION RECORDED IN THE SALE DEED AND BASED ON SUCH EVIDENCES THE ASSESSEE HIMSELF H AS ADMITTED DISCLOSURE OF ADDITIONAL INCOME OF RS.22 LAKHS FOR THE ASSESSMENT YEAR 2004-05. THE ASSESSEES CONTENTION THAT HE HAD REC EIVED LOANS OF RS.14 LAKHS FROM PARTNERSHIP FIRMS IS INCORRECT AS THESE LOANS HAVE BEEN RECEIVED ON 6.6.2003 WHEREAS THE PAYMENT OF CASH F OR PURCHASE OF PROPERTY TAKEN PLACE ON 3.4.2003 AND 2.6.2003 I.E. PRIOR TO THE RECEIPT OF THESE TWO LOANS. THE CIT(A) FURTHER OBSERVED TH AT THESE LOANS WERE RECEIVED PRIOR TO THE SEARCH AND FORM PART OF THE A SSESSEES BALANCE SHEET/STATEMENT OF AFFAIRS FILED ALONG WITH REGULAR RETURN OF INCOME FILED U/S 139(1) OF THE ACT TO EXPLAIN THE SOURCES OF IN VESTMENT OF RS.28 LAKHS TOWARDS PURCHASE OF PROPERTY. THE ASSESSEE F AILED TO PROVE THAT THESE TWO CASH LOANS WERE UTILIZED FOR THE PURPOSE OF MAKING CASH ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 41 PAYMENT TOWARDS PURCHASE OF PROPERTY. THEREFORE H ELD THAT THE A.O. WAS RIGHT IN MAKING ADDITIONS OF RS.22 LAKHS AND AC CORDINGLY CONFIRMED THE ADDITIONS. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 38. THE LD. A.R. SUBMITTED THAT THE CIT(A) OUGHT NO T TO HAVE DISREGARDED THE SOURCES EXPLAINED BY THE ASSESSEE B Y FILING CONFIRMATION LETTERS FROM M/S. SRINIVASA AUTO FINANCIERS AND M/S . LAKSHMI AUTO FINANCIERS EVIDENCING THE ADVANCEMENT OF LOANS TO THE ASSESSEE TO THE EXTENT OF RS.14 LAKHS. THE A.R. FURTHER SUBMITTED THAT THE SAID LOAN AMOUNT BORROWED FROM THE PARTNERSHIP FIRMS HAVE BEE N SUFFERED TAX IN THE HANDS OF ABOVE TWO FIRMS THEREFORE IT DOES NO T APPEAR REASONABLE TO SUSTAIN THE ENTIRE ADDITIONS OF RS.22 LAKHS DIS REGARDING THE SOURCES TO THE EXTENT OF RS.14 LAKHS. ON THE OTHER HAND T HE LD. D.R. STRONGLY SUPPORTED THE ORDER OF CIT(A). 39. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE ADDITIONS OF RS.22 LAKHS TOWARDS ADDITION AL INCOME ADMITTED U/S 132(4) OF THE ACT IN RESPECT OF CASH PAYMENT M ADE TOWARDS PURCHASE OF PROPERTIES. THE A.O. WAS OF THE OPINIO N THAT THE ASSESSEE HIMSELF HAS ADMITTED ADDITIONAL INCOME WHILE RECORD ING STATEMENT U/S ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 42 132(4) OF THE ACT BASED ON A SEIZED DOCUMENT HOWEV ER FAILED TO ADDUCE ANY EXPLANATION FOR NOT ADMITTING THE SAME I N THE RETURN OF INCOME FILED U/S 153C OF THE ACT. IT IS THE CONTEN TION OF THE ASSESSEE THAT HE HAD SOURCE OF INCOME TO THE EXTENT OF RS.14 LAKHS TOWARDS ADDITIONAL INCOME OFFERED U/S 132(4) OF THE ACT TH EREFORE THE A.O. WAS ERRED IN MAKING ADDITION OF RS.22 LAKHS DESPITE PR OVING THE SOURCES TO THE EXTENT OF RS.14 LAKHS. THE ASSESSEE FURTHER CO NTENDED THAT HE HAD DRAWN MONEY FROM PARTNERSHIP FIRMS IN TURN THE FIR MS HAVE BEEN DISCLOSED ADDITIONAL INCOME IN THE FORM OF INTEREST RECEIPTS. THE FIRM HAS FILED CONFIRMATION LETTERS EVIDENCING THE ADVAN CEMENT OF LOANS TO THE ASSESSEE THEREFORE THE A.O. WAS NOT CORRECT IN DIS REGARDING THE EVIDENCES FILED BY THE ASSESSEE. 40. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT ON PERUSAL OF THE ASSESSMENT RECORDS W E FIND THAT THE ASSESSEE HIMSELF HAS ADMITTED ADDITIONAL INCOME OF RS.22 LAKHS AT THE TIME OF SEARCH TOWARDS DIFFERENTIAL VALUE OF PROPER TIES PURCHASED. THE ASSESSEE HAS PURCHASED PROPERTIES FOR A CONSIDERATI ON OF RS.50 LAKHS WHEREAS THE REGISTRATION VALUE OF THE PROPERTY HAS BEEN SHOWN AS RS.28 LAKHS. THE DIFFERENCE AMOUNT OF RS.22 LAKHS HAS BE EN PAID BY CASH ON ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 43 3.4.2003. THOUGH THE ASSESSEE CLAIMS TO HAVE BORRO WED LOAN FROM M/S. LAKSHMI AUTO FINANCE AND M/S. SRINIVASA AUTO FINANC E IT IS FACTUALLY INCORRECT AS THESE TWO LOANS HAVE BEEN RECORDED IN THE REGULAR RETURN FILED U/S 139(1) OF THE ACT TO EXPLAIN THE SOURCES FOR INVESTMENT OF RS.28 LAKHS RECORDED IN THE SALE DEED. THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS HAS RIGHTLY UPHELD THE ADDITIONS MAD E BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE APPEAL FILED BY THE ASSESSEE. 41. IN THE RESULT APPEAL FILED BY THE ASSESSEE IN ITA NO.644/VIZAG/2013 FOR THE A.Y. 2004-05 IS DISMISSED. ITA NO.148/VIZAG/2014 - A.Y. 2009-10: 42. THE ONLY ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS UNACCOUNTED INVESTMENT IN FDR AMOUNTING TO RS.13 99 900/-. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBTAINED INFORMA TION FROM ING VYSYA BANK PONNURU WHICH SHOWED THAT THE ASSESSEE HAD O BTAINED FIXED DEPOSITS AMOUNTING TO RS.13 99 900/- AND THE INTERE ST RECEIVED ON THE SAME AT RS.68 348/-. SINCE THE SAID INVESTMENT IN FIXED DEPOSIT WAS NOT INCLUDED IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR AND ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 44 ASSESSEE NOT EXPLAINED THE SOURCES FOR THE INVESTME NT THE A.O. MADE ADDITIONS OF RS.13 99 900/- ALONG WITH INTEREST INC OME OF RS.68 348/-. ON APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE CONTENDED THAT THE SOURCES FOR THE INVESTMENTS IN FIXED DEPOS IT WAS OUT OF AGRICULTURAL INCOME AND ALSO PART OF AMOUNT WAS LOA N BORROWED FROM M/S. LAKSHMI AUTO FINANCE AND M/S. SRINIVASA AUTO F INANCE. AS REGARDS INTEREST INCOME THE ASSESSEE SUBMITTED THAT THE IN TEREST INCOME HAS BEEN OFFERED IN THE HANDS OF SRI T. SUBBA RAO (HUF) . THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE HELD T HAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGARDING GENERATION OF AGRICULTURAL INCOME IN THE FORM OF LAND HOLDING RECORDS CROPS GROWN AN D SALE RECEIPTS FOR HAVING SOLD THE AGRICULTURAL CROPS. THE CIT(A) FUR THER HELD THAT THE ASSESSEE FAILED TO DISCLOSE ANY AGRICULTURAL INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153C OF THE ACT. NO EVIDENCE HAS BEEN FURNISHED TO JUSTIFY THE LOAN BORROWED FROM TH E PARTNERSHIP FIRMS. WITH THESE OBSERVATIONS CONFIRMED THE ADDITIONS OF RS.13 99 900/- TOWARDS UNACCOUNTED INVESTMENT IN FIXED DEPOSITS AN D RESULTANT INTEREST INCOME OF RS.68 348/-. AGGRIEVED BY THE CIT(A) ORD ER THE ASSESSEE IS IN APPEAL BEFORE US. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 45 43. THE LD. A.R. SUBMITTED THAT THE CIT(A) WAS ERRE D IN SUSTAINING THE ADDITION OF RS.13 99 900/- TOWARDS UNACCOUNTED INVE STMENT IN FDR DESPITE FURNISHING SOURCES OF INCOME TO COVER UP TH E INVESTMENT. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE IS HAVING AGRICULTURAL INCOME PROOF OF WHICH IS FURNISHED TO THE ASSESSING OFFICE R. THE ASSESSEE ALSO BORROWED LOAN FROM M/S. LAKSHMI AUTO FINANCE AND M/ S. SRINIVASA AUTO FINANCE. THIS FACT WAS NOT DISPUTED BY THE A.O. T HE A.O. MADE ADDITIONS MERELY ON THE BASIS OF NON-DISCLOSURE OF SAID INVESTMENT IN THE RETURN OF INCOME. BUT THE FACT IS THAT THE ASSESS EE IS HAVING SUFFICIENT SOURCE OF INCOME TO EXPLAIN THE INVESTMENT THEREFO RE THE A.O. WAS NOT CORRECT IN MAKING ADDITION TOWARDS FIXED DEPOSITS O F RS.13 99 900/-. ON THE OTHER HAND LD. D.R. STRONGLY SUPPORTED THE ORD ER OF CIT(A). 44. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE ADDITION OF RS.13 99 900/- TOWARDS UNACCO UNTED FIXED DEPOSIT IN ING VYSYA BANK. THE A.O. WAS OF THE OPINION THA T THE ASSESSEE HAS FAILED TO DISCLOSE THE SAID INVESTMENT IN HIS RETUR N OF INCOME AND ALSO FAILED TO EXPLAIN THE SOURCES FOR THE INVESTMENT. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HAD SOURCE OF INCOME TO EXPLAI N THE FIXED DEPOSIT IN ING VYSYA BANK. THE ASSESSEE FURTHER CONTENDED THAT HE OWNS 6 ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 46 ACRES OF AGRICULTURAL LANDS AT KONDAPROLU WHILE HI S WIFE OWNS 8 ACRES OF LAND AT PONNURU. APART FROM THE SAME HE HAD BORRO WED RS.36 LAKHS FROM M/S. LAKSHMI AUTO FINANCE AND M/S. SRINIVASA A UTO FINANCE AND THE PART OF THE SAME HAS BEEN UTILIZED TOWARDS MAKI NG FIXED DEPOSITS. THEREFORE THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCES FOR INVESTMENT. WE DO NOT FIN D ANY MERITS IN THE ARGUMENT OF THE ASSESSEE FOR THE REASON THAT THE AS SESSEE HAS FAILED TO OFFER SATISFACTORY EXPLANATIONS FOR NON-DISCLOSURE OF SAID FIXED DEPOSIT IN HIS RETURN OF INCOME. WE FURTHER NOTICED THAT ASSE SSEE CLAIMS TO HAVE SOURCES OF INCOME IN THE FORM OF AGRICULTURAL INCOM E AND LOAN BORROWED FROM PARTNERSHIP FIRM HOWEVER FAILED TO FILE NECES SARY EVIDENCES IN THE FORM OF LAND HOLDING RECORDS AND PROOF OF GENERATIO N OF AGRICULTURAL INCOME. THE ASSESSEE ALSO FAILED TO PROVE THE RECE IPT OF FUNDS FROM PARTNERSHIP FIRMS. THEREFORE WE ARE OF THE VIEW T HAT THE A.O. HAS RIGHTLY MADE ADDITIONS TOWARDS UNACCOUNTED FIXED DE POSITS. THE CIT(A) AFTER CONSIDERING THE RELEVANT EXPLANATIONS RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY ERROR OR INFIRMI TY IN THE ORDER OF CIT(A). HENCE WE INCLINED TO UPHELD CIT(A) ORDER AND REJECT THE APPEAL FILED BY THE ASSESSEE. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 47 45. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.148/VIZAG/2014 FOR THE A.Y. 2009-10 IS DISMISSED. ITA NOS.643 & 670/VIZAG/2013 A.Y. 2004-05: 46. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DERIVING INCOME FROM INTEREST AND REMUNERATION FROM PARTNERSHIP FIRM FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 31.3.2005 DECLARING TOTAL INCOME OF RS.2 74 740/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE GROUP CASES OF MOVVA GROUP PONNURU ON 15.10.2009. DURING THE COURSE OF SEARCH OPERATION CERTAIN INCRIMINATING DOCUMENTS SEIZED REVEALS THAT THE ASSESSEE IS HAVIN G UNDISCLOSED INCOME. SUBSEQUENTLY THE CASE HAS BEEN NOTIFIED T O CENTRAL CIRCLE AND ACCORDINGLY THE A.O. ISSUED NOTICE U/S 153A OF THE ACT CALLING FOR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05. IN RESP ONSE TO THE NOTICE THE ASSESSEE FILED RETURN OF INCOME ON 15.4.2011 AD MITTING THE SAME INCOME AS RETURNED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT. THE CASE HAS BEEN SELECTED FOR SCRUTINY A ND ACCORDINGLY NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO THE NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FURNISHED BOOKS OF ACCOUNTS AND OT HER DETAILS CALLED FOR. THE ASSESSMENT FOR THE YEAR WAS COMPLETED U/S 143(3) R.W.S. 153A ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 48 OF THE ACT ON 28.12.2011 BY MAKING THE FOLLOWING AD DITIONS. (1) UNEXPLAINED INVESTMENT IN AMOUNT USED FOR REAL ESTA TE RS.33 48 000/- (2) UNEXPLAINED INVESTMENT IN SITES RS.19 66 000/- (3) UNEXPLAINED ADVANCE TO DEBTORS RS.7 57 500/-. 47. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE A SSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS. THE CIT(A) AFTER CON SIDERING THE EXPLANATIONS OF THE ASSESSEE UPHELD THE ADDITIONS MADE BY THE A.O. TOWARDS UNEXPLAINED INVESTMENT IN LAND USED FOR REA L ESTATE. AS REGARDS ADDITION OF RS.19 66 000/-TOWARDS UNEXPLAINED INVES TMENT IN SITES THE CIT(A) DELETED ADDITION OF RS.12 37 000/- AND CONFI RMED BALANCE OF RS.7 29 000/-. SIMILARLY DIRECTED THE A.O. TO DEL ETE ADDITIONS MADE TOWARDS UNEXPLAINED ADVANCE TO DEBTORS OF RS.7 57 5 00/-. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE AS WELL AS REVENUE A RE IN APPEAL BEFORE US. 48. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITION TOWARDS UNEXPLAINED INVESTMENT IN LAND USED FOR REA L ESTATE BUSINESS. THE FACTS OF THE CASE ARE THAT IN HIS ORIGINAL RETU RN OF INCOME FILED U/S 139(1) OF THE ACT THE ASSESSEE HAD REFLECTED INCOM E FROM REAL ESTATE BUSINESS. THE PROFIT & LOSS ACCOUNT FILED ALONG WI TH RETURN OF INCOME ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 49 SHOWED PURCHASE OF LAND VALUED AT RS.33 48 000/- W HICH WAS CONVERTED INTO RESIDENTIAL FLATS AND SOLD TO DIFFERENT PERSON S. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO F URNISH DETAILS OF LAND INCLUDING THE PURCHASE DOCUMENTS BOOKS OF ACC OUNTS AND EVIDENCE IN SUPPORT OF THE EXPENDITURE CLAIMED. SINCE THE ASSESSEE FAILED TO OFFER ANY EXPLANATIONS WITH REGARD TO THE SOURCES O F EXPENDITURE CLAIMED IN THE REAL ESTATE BUSINESS AND ALSO FAILED TO PROD UCE BOOKS OF ACCOUNTS THE A.O. MADE ADDITION OF RS.33 48 000/- BEING PURC HASE COST OF LAND AS UNEXPLAINED INVESTMENT. THE A.O. WAS OF THE OPINIO N THAT THE ASSESSEE HAS FAILED TO PROVE THE SOURCES FOR EXPENDITURE BEI NG COST OF PURCHASE OF LAND. THE A.O. FURTHER WAS OF THE OPINION THAT THE ASSESSEE FAILED TO FURNISH BOOKS OF ACCOUNTS AND ALSO BILLS AND VOUCHE RS IN SUPPORT OF EXPENDITURE CLAIMED THEREFORE OPINED THAT THE ASS ESSEE FAILED TO FURNISH NECESSARY EVIDENCES IN SUPPORT OF PURCHASE OF LAND. IT IS THE CONTENTION OF THE ASSESSEE THAT THE TRANSACTION REL ATING TO REAL ESTATE BUSINESS WAS DECLARED IN THE REGULAR RETURN FILED U /S 139(1) OF THE ACT. DURING THE COURSE OF REGULAR ASSESSMENT NO INFORMA TION WAS CALLED FOR WITH REGARD TO THE SOURCE OF INVESTMENT. THE ASSESS EE FURTHER SUBMITTED THAT HE HAD COLLECTED ADVANCE FROM PROSPECTIVE BUYE RS WHICH IS THE SOURCE OF INVESTMENT IN PURCHASE OF LAND. IT WAS F URTHER ARGUED THAT SINCE THE TRANSACTION WAS DULY REFLECTED IN THE REG ULAR RETURN OF INCOME ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 50 FILED FOR THE ASSESSMENT YEAR 2004-05 AND THE TRANS ACTION OF PURCHASE AS WELL AS SALES WERE HAPPENED IN THE SAME FINANCIA L YEAR ADVANCE RECEIVED FROM CUSTOMERS DID NOT FIND MENTION IN THE BALANCE SHEET FOR THE YEAR ENDED 31.3.2004. SINCE THE TRANSACTION IS PART OF REGULAR RETURN FILED U/S 139(1) OF THE ACT THE A.O. WAS ER RED IN BRINGING TO TAX THE SAME AS UNEXPLAINED INVESTMENT IN THE ASSESSMEN T PROCEEDINGS U/S 143(3) R.W.S. 153A OF THE ACT. 49. HAVING HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD WE FIND THAT THE TRANSACTION P ERTAINING TO REAL ESTATE BUSINESS WAS DISCLOSED IN THE REGULAR RETURN OF INC OME FILED FOR THE ASSESSMENT YEAR 2004-05. IT IS ALSO AN ADMITTED FA CT THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION WITH REGARD TO THE SOURCES OF INVESTMENT IN PURCHASE OF LAND. THE ASSESSEE ALSO FAILED TO F URNISH BOOKS OF ACCOUNTS AND NECESSARY SUPPORTING BILLS AND VOUCHER S IN SUPPORT OF EXPENDITURE CLAIMED IN THE PROFIT & LOSS ACCOUNT. THE ASSESSEE CLAIMS TO HAVE RECEIVED ADVANCE FROM PROSPECTIVE BUYERS TO SO URCE THE INVESTMENT IN PURCHASE OF LAND HOWEVER FAILED TO SUBSTANTIATE THE ADVANCE RECEIVED FROM CUSTOMERS WITH NECESSARY EVID ENCES. IT IS FOR THE ASSESSEE TO EXPLAIN THE SOURCES OF MONEY WHICH IS U SED IN THE INVESTMENT IN PURCHASE OF LANDS. THE CLAIM THAT TH E ASSESSEE HAD ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 51 RECEIVED THIS ENTIRE AMOUNT AS ADVANCE FROM PROSPEC TIVE BUYERS IS UNACCEPTABLE IN THE ABSENCE OF ANY CORROBORATIVE PR OOF. IT IS UNBELIEVABLE THAT A LARGE GROUP OF PERSONS WOULD PA Y CASH ADVANCE TO THE ASSESSEE FOR DEVELOPMENT OF PLOTS OF LANDS EVEN BEFORE HE WAS PURCHASED THE SAID LAND WHERE THIS WAS THE FIRST V ENTURE EVER CARRIED OUT BY THE ASSESSEE IN THIS LINE OF BUSINESS. SINC E THE ASSESSEE FAILED TO PROVE THE ADVANCE RECEIVED FROM CUSTOMERS BY FILING NECESSARY EVIDENCES SUCH AS IDENTITY AND GENUINENESS OF THE T RANSACTIONS IT IS DIFFICULT TO ACCEPT THE EXPLANATIONS OF THE ASSESSE E THAT THE SOURCES OF MONEY IS OUT OF ADVANCES RECEIVED FROM CUSTOMERS. ANOTHER IMPORTANT ASPECT TO BE NOTED HERE IS THAT THE ASSESSEE HAS PU RCHASED DEMAND DRAFTS BY TENDERING CASH. THIS GIVES RISE TO THE SU SPICION THAT THE ASSESSEE IS NOT HAVING SUFFICIENT SOURCE OF INCOME TO EXPLAIN THE INVESTMENT IN LAND. THEREFORE WE ARE OF THE VIEW THAT THE A.O. HAS RIGHTLY MADE ADDITIONS TOWARDS UNEXPLAINED INVESTME NT IN LAND. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE AS SESSEE RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY R EASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE WE INCLINED T O UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 52 50. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS UNEXPLAINED INVESTMENT IN SITES. DURING THE COURSE OF ASSESSME NT THE A.O. NOTICED THAT THE ASSESSEE HAS PURCHASED 4 PROPERTIES AND TH E TOTAL INVESTMENT ON PURCHASE OF PROPERTIES IS AT RS.19 66 000/-. TH E ASSESSING OFFICER OBSERVED THAT THIS INVESTMENT OF RS.19 66 000/- FOR PURCHASE OF LAND WAS DISCLOSED NEITHER IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT NOR IN THE RETURN FILED U/S 153A OF THE ACT. DURIN G THE ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMS THAT THE ABOVE PRO PERTIES WERE REFLECTED IN THE RETURN OF INCOME FILED IN THE CASE OF M. RAMASESHAGIRI RAO (HUF). THE A.O. OBSERVED THAT ON VERIFICATION OF THE ASSESSMENT RECORDS OF SHRI M. RAMASESHAGIRI RAO (HUF) FOR THE ASSESSMENT YEAR 2004-05 THE SAID PROPERTIES WERE NOT DISCLOSED. H ENCE THE A.O. HELD THAT NO EXPLANATIONS HAVE BEEN FILED IN RESPECT OF PURCHASE OF THE SAID PROPERTIES AND ACCORDINGLY MADE ADDITIONS OF RS.19 66 000/- BEING UNEXPLAINED INVESTMENTS IN SITES. IT IS THE EXPLAN ATION OF THE ASSESSEE THAT THE SAID INVESTMENT IN PURCHASE OF SITES IS RE FLECTED IN THE RETURN OF INCOME FILED IN THE NAME OF SHRI M. RAMASESHAGIRI R AO (HUF). THE ASSESSEE HAS FILED COPY OF STATEMENT OF AFFAIRS OF SHRI M. RAMASESHAGIRI RAO (HUF) AND EXPLAINED THAT OUT OF THE 4 PROPERTIE S 3 PROPERTIES WERE INCORPORATED IN THE STATEMENT OF AFFAIRS AND THE SO URCES FOR THE INVESTMENT HAVE BEEN EXPLAINED BY THE HUF. AS REGA RDS THE 4 TH ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 53 PROPERTY IT WAS SUBMITTED THAT THE SOURCES FOR INV ESTMENT IN THE SITE IS OUT OF AMOUNT WITHDRAWN FROM PARTNERSHIP FIRM M/S. SRINIVASA AUTO FINANCE AND M/S. LAKSHMI AUTO FINANCE. THE ASSESSE E FURTHER EXPLAINED THAT THE PARTNERSHIP FIRMS HAVE DISCLOSED ADDITIONA L INCOME IN THE FORM OF INTEREST RECEIPTS OUT OF WHICH HE HAD DRAWN AN AMOUNT OF RS.25 91 000/- WHICH IS PARTLY SOURCED TOWARDS INVE STMENT IN PURCHASE OF SITE. TO THIS EFFECT FURNISHED COPY OF CASH FLO W STATEMENT PREPARED FOR THE YEAR 2004-05. 51. HAVING HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIALS AVAILABLE ON RECORD WE FIND THAT OUT OF 4 PROPERTI ES 3 PROPERTIES WERE DISCLOSED IN THE RETURN OF INCOME FILED IN THE NAME OF SHRI M. RAMASESHAGIRI RAO (HUF). THE ASSESSEE HAS FILED COP Y OF RETURN OF INCOME FILED BY THE HUF ALONG WITH STATEMENT OF AFF AIRS. ON PERUSAL OF THE RETURN OF INCOME FILED BY SHRI M. RAMASESHAGIRI RAO (HUF) ON 10.3.2005 IT CLEARLY SHOWS THAT 3 OF THE SITES MEN TIONED IN THE ASSESSMENT ORDER HAVE BEEN DISCLOSED IN THE BALANCE SHEET AS ON 31.3.2004. SINCE THE PROPERTIES WERE DISCLOSED IN T HE CASE OF SHRI. M. RAMASESHAGIRI RAO (HUF) THE SOURCES FOR ACQUISITIO N OF SAME CAN BE CONSIDERED ONLY IN THE HANDS OF HUF. THEREFORE WE ARE OF THE VIEW THAT THE A.O. WAS ERRED IN MAKING ADDITIONS TOWARDS 3 SI TES IN THE HANDS OF ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 54 THE ASSESSEE. AS REGARDS THE 4 TH SITE THE ASSESSEE CLAIMS TO HAVE EXPLAINED THE SOURCE OUT OF ADDITIONAL INCOME OFFER ED IN THE HANDS OF PARTNERSHIP FIRMS. THE ASSESSEE FILED A CASH FLOW STATEMENT EXPLAINING THE SOURCES OF INCOME AND DEPLOYMENT OF AVAILABLE S OURCE FOR ACQUISITION OF PROPERTIES. ON PERUSAL OF THE CASH FLOW STATEME NT FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 WE FIND T HAT THE ASSESSEE HAS SHOWN A SOURCE OF INCOME OF RS.25 91 872/- DRAW N FROM PARTNERSHIP FIRMS OUT OF WHICH AN AMOUNT OF RS. 1 02 500/- HAS BEEN UTILIZED FOR PRO-NOTE LOANS. THE REMAINING CASH BALANCE OF RS.2 4 89 372/- HAS BEEN CARRIED FORWARD TO NEXT FINANCIAL YEAR AND USED FOR EXPLAINING THE INVESTMENT IN THE NEXT FINANCIAL YEAR. THE CASH FL OW STATEMENT FILED BY THE ASSESSEE DOES NOT FIND INVESTMENTS MADE IN SITE . THEREFORE WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO EXPLAIN THE INVESTMENT OF RS. 7 29 000/- IN SITE. NO DOUBT THE ASSESSEE IS HAVI NG REQUISITE CASH BALANCE IN HAND AT THE END OF THE YEAR TO COVER UP THE INVESTMENT OF RS.7 29 000/- FOR PURCHASE OF SITE. BUT THE FACT IS THAT THE ASSESSEE HIMSELF HAS NOT CONSIDERED THE INVESTMENT IN SITE IN THE CASH FLOW STATEMENT WHICH CLEARLY SHOWS THAT THE AMOUNT DRAWN FROM PARTNERSHIP FIRMS HAS NOT BEEN UTILIZED FOR THE PURPOSE OF PURC HASE OF SITE. THEREFORE THE CLAIM OF THE ASSESSEE THAT THE SOURC ES FOR INVESTMENT IN THE SITE IS OUT OF AMOUNT DRAWN FROM PARTNERSHIP FI RM IS INCORRECT. THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 55 CIT(A) WITHOUT APPRECIATING THE FACTS DELETED THE A DDITIONS MADE BY THE A.O. HENCE WE REVERSE THE ORDER OF THE CIT(A) AND UPHOLD THE ADDITIONS MADE BY THE A.O. TOWARDS PURCHASE OF SITE OF RS.7 2 9 000/-. IN THE RESULT THE GROUND RAISED BY THE REVENUE IS ALLOWED . 52. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS UNEXPLAINED ADVANCE TO DEBTORS. DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE FAI LED TO OFFER ANY EXPLANATIONS WITH REGARD TO THE UNACCOUNTED ADVANCE S TO VARIOUS DEBTORS. THE ASSESSING OFFICER FURTHER HELD THAT L EDGER ACCOUNTS FILED BY THE ASSESSEE DO NOT OFFER ANY EXPLANATIONS REGARDIN G THE SOURCES OF ADVANCES. IT WAS FURTHER OBSERVED THAT THE ASSESSE E IN HIS REPLY DATED 7.12.2011 STATED THAT THE CASH FLOW STATEMENT IS FI LED SO AS TO EXPLAIN THE SOURCES FOR THE ADVANCES. BUT THE CASH FLOW ST ATEMENT FILED BY THE ASSESSEE FAILED TO EXPLAIN THE SOURCES FOR UNEXPLAI NED ADVANCES OF RS.7 57 000/- THEREFORE MADE ADDITIONS AS UNEXPLAI NED INCOME OF THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THA T THE SOURCES FOR UNACCOUNTED ADVANCE OF RS.7 57 500/- HAS BEEN EXPLA INED OUT OF AMOUNT DRAWN FROM PARTNERSHIP FIRMS. THE ASSESSEE FURTHER EXPLAINED THAT THE PARTNERSHIP FIRMS HAVE OFFERED ADDITIONAL INCOME IN THE FORM OF INTEREST RECEIPTS OUT OF WHICH HE HAD DRAWN AN AMO UNT OF ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 56 RS.25 91 000/- WHICH IS AVAILABLE TO COVER UP THE A DVANCE OF RS.7 57 500/- THEREFORE THE A.O. WAS ERRED IN MAK ING ADDITION. 53. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT CASH FLOW STATEMENT FILED BY THE ASSESS EE DO NOT FIND ANY ENTRY WITH REGARD TO THE UNACCOUNTED ADVANCE OF RS. 7 57 500/-. NO DOUBT THE ASSESSEE IS HAVING A SUFFICIENT CASH BALA NCE OF RS.24 89 372/- TO COVER UP THE UNACCOUNTED ADVANCE OF RS.7 57 500/ - HOWEVER THE FACTS REMAIN THAT THE ASSESSEE HAS CARRIED FORWARD THE CASH BALANCE TO NEXT FINANCIAL YEAR TO EXPLAIN THE INVESTMENTS MADE IN THE NEXT FINANCIAL YEARS. THE ASSESSEE FAILED TO INCORPORATE THE INVES TMENT IN THE FORM OF ADVANCES IN THE CASH FLOW STATEMENT FILED FOR THE A SSESSMENT YEAR 2004- 05. THEREFORE WE ARE OF THE VIEW THAT THE ASSESSE E HAS NOT EXPLAINED THE SOURCES FOR INVESTMENT OF RS.7 57 500/- IN THE FORM OF UNACCOUNTED DEBTORS. THE CIT(A) WITHOUT APPRECIATING THE FACTS SIMPLY DELETED THE ADDITIONS BY HOLDING THAT THE SOURCES AVAILABLE IN THE FORM OF ADDITIONAL INCOME OFFERED BY THE PARTNERSHIP FIRM CANNOT BE IG NORED. SINCE THE ASSESSEE HIMSELF NOT EXPLAINED THE ADVANCES IN THE CASH FLOW STATEMENT FILED FOR THE YEAR AND ALSO FACT THAT THE CASH BALA NCE HAS BEEN CARRIED FORWARD TO THE NEXT YEAR TO EXPLAIN THE OTHER ASSET S IT IS INCORRECT ON ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 57 THE PART OF THE CIT(A) TO HOLD THAT THE ASSESSEE IS HAVING SOURCES TO EXPLAIN THE UNACCOUNTED INVESTMENTS IN DEBTORS. TH EREFORE WE REVERSE THE ORDER OF THE CIT(A) AND UPHOLD THE ADDITIONS MA DE BY THE A.O. TOWARDS UNACCOUNTED INVESTMENTS IN DEBTORS. 54. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.643/VIZAG/2013 FOR THE A.Y. 2004-05 IS DISMISSED AND APPEAL FILED BY REVENUE IN ITA NO.670/VIZAG/2013 FOR THE A.Y. 20 04-05 IS ALLOWED. ITA NOS.144 145 146 & 147/VIZAG/2014-(A.Y. 2007-0 8 2008-09 2009-10 AND 2010-11): 55. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DERIVING INCOME FROM INTEREST AND REMUNERATION FROM PARTNERSHIP FIRM FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2007-08 TO 2010-11 U/S 139(1) OF THE INCOME TAX ACT 1961. A SEARCH AN D SEIZURE OPERATION WAS CONDUCTED IN THE GROUP CASES OF MOVVA GROUP PONNURU ON 15.10.2009. DURING THE COURSE OF SEARCH OPERATION CERTAIN INCRIMINATING DOCUMENTS SEIZED REVEALS THAT THE ASSESSEE IS HAVIN G UNDISCLOSED INCOME. CONSEQUENT TO SEARCH THE CASE HAS BEEN NO TIFIED TO CENTRAL CIRCLE AND ACCORDINGLY THE A.O. ISSUED NOTICE U/S 153A OF THE ACT CALLING FOR RETURN OF INCOME FOR THE ASSESSMENT YEARS 2007- 08 TO 2010-11. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED RETURN O F INCOME FOR THE A.Y. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 58 2007-08 TO 2010-11 ON 15.4.2011 DECLARING TOTAL INC OME OF RS. 69 76 000 RS. 16 67 190/- RS. 21 22 730/- AND RS. 49 75 330/- RESPECTIVELY. THE CASE HAS BEEN SELECTED FOR SCRUTI NY AND ACCORDINGLY NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO THE NOTICES THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FURNISHED BOOKS OF ACCOUNTS AND OT HER DETAILS CALLED FOR. THE ASSESSMENTS FOR THE A.Y. 2007-08 TO 2010- 11 WERE COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT ON 28.12.2011 AND THE A.O. DETERMINED TOTAL INCOME OF RS. 4 42 34 600/- RS. 4 36 53 960/- RS. 72 00 730 AND RS. 1 52 78 010/- RESPECTIVELY. AGGRI EVED BY THE ASSESSMENT ORDERS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS AND ALSO FILED ADDITIONAL EVIDENCES. THE CIT(A) AFT ER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE AND ALSO TAKEN INTO AC COUNT THE REMAND REPORT ISSUED BY THE A.O. PARTLY ALLOWED APPEALS F ILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 2008-09 2009-10 & 2010-11. AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE IS IN A PPEAL BEFORE US. 56. THE ASSESSEE HAS RAISED NUMBER OF GROUNDS FOR A LL THE ASSESSMENT YEARS. FROM THESE GROUNDS OF APPEAL THE ASSESSEE H AS AGITATED 8 ISSUES AS FOLLOWS: ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 59 1. ADDITIONS TOWARDS UNACCOUNTED INVESTMENT IN MOVVA R EAL ESTATE. 2. ADDITIONS TOWARDS PROFIT AT NAGARAM LANDS. 3. ADDITIONS TOWARDS ADHOC DISALLOWANCE OF EXPENDITURE . 4. ADDITIONS TOWARDS INTEREST ON ADVANCE TO RRC HOUSIN G PVT. LTD. AND INTEREST ON LOAN TO SALEEM. 5. ADDITIONS TOWARDS UNACCOUNTED INVESTMENTS IN VINUKO NDA LAND. 6. ADDITIONS TOWARDS UNACCOUNTED ADVANCES 7. ADDITIONS TOWARDS ADVANCE TO K.V. ROSAIAH. 8. ADDITIONS TOWARDS INTEREST ON ADVANCE TO K.V. ROSAI AH. 57. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITIONS TOWARDS UNACCOUNTED INVESTMENT IN MOVVA REAL ESTATE . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT IN THE BALANCE SHEET FILED ALONG WITH ORIGINAL RETURN OF INCOME T HE ASSESSEE HAD SHOWN RS.12 28 000/- AS INVESTMENT IN MOVVA REAL ESTATE WHEREAS IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT SUCH INVESTMENT HAS NOT BEEN REFLECTED. IN RESPONSE TO A QUERY THE ASSESSEE STATED THAT INITIALLY HE WANTED TO SHOW LAND PURCHASED AT NAGA RAM HYDERABAD IN ITS PROPRIETARY CONCERN IN THE NAME AND STYLE OF M/ S. MOVVA REAL ESTATE HOWEVER WHILE FILING REVISED RETURNS U/S 153A OF T HE ACT THE SAID INVESTMENT HAS BEEN SHOWN AS PART OF HIS LANDED ASS ETS. THEREFORE THE SAME HAS NOT BEEN SEPARATELY SHOWN AS IN THE BALANC E SHEET FILED ALONG WITH REVISED RETURN. THE A.O. DID NOT AGREE WITH T HE EXPLANATIONS OF THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 60 ASSESSEE FOR THE REASONS THAT DURING THE COURSE OF SEARCH WHILE RECORDING STATEMENT U/S 132(4) OF THE ACT ON 28.1. 2010 THE ASSESSEE ADMITTED THAT INVESTMENTS IN NAGARAM LAND WERE NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME AND ALSO THE PURCHASE COS T OF LAND WAS NOT TALLIED WITH THE COST OF LAND CLAIMED BY THE ASSESS EE FOR THE ASSESSMENT YEAR 2007-08. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAS NOT FURNISHED ANY FRESH EVIDENCE OR EXPLANATIONS BUT H AS INSTEAD REPEATED THE SUBMISSIONS MADE DURING THE ASSESSMENT PROCEEDI NGS. THE FACTS REMAIN UNCHANGED. THE ASSESSEE FAILS TO BROUGHT ON RECORD ANY EVIDENCES TO PROVE THAT INVESTMENTS IN NAGARAM LAND HAS BEEN CONSIDERED IN THE REVISED RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. THE CIT(A) AFTER CONSIDERING THE EXPLANAT IONS OF THE ASSESSEE RIGHTLY CONFIRMED THE ADDITIONS MADE BY THE A.O. TO WARDS UNACCOUNTED INVESTMENTS IN MOVVA REAL ESTATE FOR THE ASSESSMENT YEAR 2007-08 & 2008-09. WE DO NOT SEE ANY REASONS TO INTERFERE WIT H THE ORDER OF THE LD. CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A ) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE FOR THE ASSESSMEN T YEAR 2007-08 AND 2008-09. 58. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS PROFIT ON KOLLAPADAKA LANDS ON PRESUMPTIVE BASIS. THE LD. A.R. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 61 FOR THE ASSESSEE DURING THE COURSE OF HEARING SUBM ITTED THAT HE DID NOT PRESS THE GROUND HENCE THE GROUND RELATING TO ADDI TIONS TOWARDS PROFIT ON KOLLAPADAKA LAND IS DISMISSED AS NOT PRESSED. 59. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS PROFIT ON NAGARAM LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE ALO NG WITH HIS SON SHRI M. SRINIVASA RAO AND DAUGHTER IN LAW SMT. M. JAYASR EE HAD PURCHASED IN ALL 7 ACRES 27 GUNTAS LANDS AT NAGARAM VILLAGE IN H YDERABAD BEARING SURVEY NO.59 68 & 69. THE SAID LANDS WERE LATER CO NVERTED INTO RESIDENTIAL FLATS BY TAKING NECESSARY APPROVALS FRO M THE DY. DIRECTOR TOWN & COUNTRY PLANNING HYDERABAD A.P. AS PER TH E APPROVED PLAN THE ASSESSEE FORMED 66 FLATS IN TWO PHASES WITH SAL EABLE AREA OF 19 803 SQ.YDS. THE INVESTMENT IN THE SAID LANDS WAS NOT DI SCLOSED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT. THE A.O. FURTHER OBSERVED THAT DURING THE FINANCIAL YEAR RELEVANT TO ASSESSME NT YEAR 2007-08 THE ASSESSEE HAD SOLD 7 422.6 SQ.YDS OF LAND FOR REGIST ERED VALUE OF RS.44 33 639/-. IT WAS ALSO SEEN FROM THE SEIZED D OCUMENT PAGE NO.33 & 34 OF NOTE BOOK MARKED AS A/MRSR/PO1 CONTAIN DETA ILS OF SALE OF 3 FLATS OF LAND FOR A CONSIDERATION OF RS.57 75 690/- . THE ABOVE AMOUNT OF RS.57 75 690/- WAS OFFERED AS UNACCOUNTED INCOME IN THE HANDS OF SMT. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 62 MOVVA JAYASREE DAUGHTER IN LAW OF THE ASSESSEE. B ASED ON THE SEIZED DOCUMENT THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE SALE PROCEEDS OF THE LAND AT NAGARAM SHOULD NOT BE TREATED AS RS.4 3 00/- PER SQ.YD. AS AGAINST THE REGISTERED VALUE OF RS.700 TO 1000/- PE R SQ.YD. SINCE THE ASSESSEE FAILED TO FILE ANY EXPLANATIONS THE A.O. RECOMPUTED SALE CONSIDERATION BY ADOPTING RS.4 300/- PER SQ.YD. FOR THE TOTAL AREA SOLD WHICH WORKS OUT TO RS.2 50 92 290/-. AFTER REDUCING THE AMOUNT ASSESSED IN THE HANDS OF SMT. M. JAYASREE TOWARDS 3 FLATS AND ALSO AFTER REDUCING PROPORTIONATE COST OF LAND AND DEVE LOPMENT EXPENDITURE AGGREGATING RS.19 28 903/- ARRIVED AT A NET PROFIT OF RS.2 31 64 017/- AND MADE ADDITIONS TO THE RETURNED INCOME. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE FAILED TO DISCLOSE THE NET PROFIT FROM NAGARAM LANDS NEITHER IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT NOR IN THE RETURN FILED U/S 153A OF THE ACT. THE A.O. FURTHER WAS OF THE OPINION THAT THE ASSESSEE EXECUTED SALE DEEDS FOR A CONSIDERATION OF RS.700/- TO RS.1000/- PER SQ.YD. WHEREAS THE SEIZED DOCUMENT I NDICATES THE PRICE PER SQ.YD. AT RS.4 300/- THEREFORE WORKED OUT THE SALE CONSIDERATION BASED ON THE SALE VALUE AS PER SEIZED DOCUMENT AND AFTER REDUCING THE COST OF LAND AND DEVELOPMENT EXPENDITURE ARRIVED AT A NET PROFIT OF RS.2 31 64 017/-. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 63 60. IT IS THE CONTENTION OF THE ASSESSEE THAT QUANT IFICATION OF SALE PROCEEDS OF NOTIONAL PRICE IS NOT PROPER AND LAWFUL . THE ASSESSEE FURTHER CONTENDED THAT THE SEIZED DOCUMENT DOES NOT INDICAT E COLLECTIONS OF SALE PRICE OVER AND ABOVE WHAT IS STATED IN THE SALE DEE DS. IT WAS FURTHER SUBMITTED THAT BASED ON A ONE OR TWO SALE DEEDS TH E SALE PRICE CANNOT BE ADOPTED FOR ENTIRE PROJECT BECAUSE SOME OF THE FLATS HAVE BEEN SOLD TO ITS IMMEDIATE RELATIVES WHEREIN HE HAD NOT COLLE CTED ANY PROFIT. THE ASSESSEE FURTHER CONTENDED THAT HE AND HIS FAMILY M EMBERS HAVE ADMITTED UNDISCLOSED INCOME OF RS.7 03 00 000/- WHI CH COVERS ALL DEFICIENCIES IN THE FORM OF BUSINESS INCOME WHICH W AS CONVERTED INTO ASSETS AND ALL ASSETS ARE REFLECTED IN THE CASH FLO W STATEMENT THEREFORE MAKING SEPARATE ADDITIONS TOWARDS PROFITS FROM NAGA RAM LANDS IS NOT CORRECT. THE ASSESSEE FURTHER SUBMITTED THAT UNLES S THERE IS EVIDENCE ON RECORD TO SHOW A HIGHER SALE CONSIDERATION IS RECEI VED IT IS INCORRECT TO COME TO THE CONCLUSION THAT HIGHER AMOUNT WAS INFAC T RECEIVED FOR THE SAID DOCUMENTS. THE ASSESSEE FURTHER SUBMITTED THA T OUT OF 12 FLATS SOLD 3 FLATS HAVE BEEN GIVEN TO HIS IMMEDIATE FAMI LY MEMBERS MEASURING 898.12 SQ.YDS. AND FURTHER 3 FLATS HAVE B EEN SOLD TO HIS COUSINS WITHOUT ANY PROFIT. THEREFORE THE A.O. WAS INCORRECT IN ESTIMATING SALE PRICE BASED ON A SEIZED DOCUMENT WI THOUT ANY EVIDENCE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 64 TO SHOW THAT ON MONEY HAS BEEN RECEIVED FOR SALE OF FLATS TO THE ENTIRE PROJECT AND DETERMINING NET PROFIT IS INCORRECT. 61. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE HAS PURCHASED 7 ACRES 27 GUNTAS OF LAND AND CONVERTED INTO RESIDENTIAL FLATS . ACCORDING TO THE A.O. THE SAID TRANSACTION IS NOT REFLECTED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT. THE A.O. FURTHER OBSE RVED THAT THE ASSESSEE HAS COLLECTED ON MONEY OVER AND ABOVE THE CONSIDERA TION RECORDED IN THE SALE DEEDS. ACCORDING TO THE A.O. THE ASSESSE E HAS SOLD THESE FLATS AT A PRICE OF RS.4 300/- PER SQ.YD. WHEREAS THE CO NSIDERATION SHOWN IN THE SALE DEEDS IS AT RS.700/- TO RS.1000/- PER SQ.Y DS. THEREFORE BASED ON THE SEIZED MATERIAL WORKED OUT A SALE CONSIDERAT ION AND NET PROFIT FROM THE PROJECT AFTER REDUCING THE COST OF LAND AN D DEVELOPMENT EXPENDITURE. IT IS THE CONTENTION OF THE ASSESSEE T HAT THE A.O. WAS ERRED IN APPLYING RS.4300/- PER SQ.YD. UNIFORMLY FOR ALL THE FLATS AS HE HAD SOLD CERTAIN FLATS TO HIS IMMEDIATE RELATIVES WITHO UT ANY PROFIT. THE ASSESSEE FURTHER CONTENDED THAT THE SEIZED DOCUMENT S INDICATES A PRICE OF RS.4 300/- PER SQ.YD ON 29.3.2007 WHEREAS HE HA D SOLD ALL THE FLATS ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 65 IN THE YEAR 2006 THEREFORE IT IS INCORRECT TO ADO PT UNIFORM SALE PRICE FOR ALL THE FLATS WITHOUT ANY EVIDENCES. 62. HAVING HEARD BOTH THE SIDES AND CONSIDERED MAT ERIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT THE SEIZED DOCUMENTS CLEARLY INDICATES THAT THE ASSESSEE HAS SOLD FLATS OVER AND ABOVE THE SALE CONSIDERATION SH OWN IN THE SALE DEEDS. IT IS ALSO AN UNDISPUTED FACT THAT HIS DAUG HTER IN LAW SMT. M. JAYASREE HAD ADMITTED UNDISCLOSED INCOME OF RS.57 7 5 690/- TOWARDS SALE OF 3 FLATS FOR A CONSIDERATION OF RS.4 300/- A ND RS.3 900/- PER. SQ.YD. RESPECTIVELY. THOUGH ASSESSEE CLAIMS TO HAV E SOLD CERTAIN FLATS TO HIS IMMEDIATE RELATIVES FAILS TO PROVE THAT THOSE FLATS WERE SOLD AS STATED IN THE SALE DEED CONTRADICTING THE FINDINGS RECORDED BY THE A.O. BASED ON THE SEIZED DOCUMENTS. THE CIT(A) AFTER CON SIDERING THE RELEVANT FACTS HAS REWORKED THE PROFIT FROM THE PRO JECT TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSEE HAS SOLD F LATS IN NOVEMBER 2006 WHILE THE SEIZED DOCUMENTS REFLECTS THE PRICE OF MARCH 2007 AND ALSO OTHER RELEVANT FACTS SUCH AS THE FLATS SOLD BY THE ASSESSEE ARE NOT ADJACENT TO MAIN ROAD AND AN ELEMENT OF DISCOUNT TO FRIENDS AND RELATIVES IS POSSIBLE. TAKING INTO ACCOUNT ALL THE SE FACTS HAS TAKEN A SELLING PRICE OF RS.2 700/- PER. SQ.YD. TOWARDS FLA T SOLD TO OUTSIDERS AND ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 66 SALE CONSIDERATION SHOWN IN THE SALE DEEDS IN RESPE CT OF FLATS SOLD TO HIS RELATIVES AND WORKED OUT A NET PROFIT OF RS.92 83 2 82/-. THE RELEVANT FINDINGS OF THE CIT(A) IS EXTRACTED BELOW: 7.11 I AM ALSO IN AGREEMENT THAT THREE OF THE PLOTS HAVE BEEN SOLD AND REGISTERED IN THE NAMES OF THE APPELLANTS BROTHERS AND SISTER IN LAW I.E. HIS IMMEDIATE FAMILY MEMBERS AND IT IS NATURAL TO A SSUME THAT PROFIT WOULD NOT HAVE BEEN OBTAINED IN RESPECT OF THESE PL OTS. HOWEVER I DO NOT ACCEPT THE CONTENTION OF THE APPELLANT THAT PLO TS HAVE BEEN SOLD TO FRIENDS AND COUSINS AT COST. IT IS POSSIBLE THAT SO ME DISCOUNT MAY HAVE BEEN GIVEN BUT IT IS UNACCEPTABLE THAT THE SALE PR ICE TO COUSINS AND FRIENDS WOULD BE WELL BELOW THE ACTUAL MARKET PLACE . 7.12 THE APPELLANT HAS CITED JUDICIAL PRONOUNCEMENT S IN FAVOUR OF HIS CONTENTION THAT THE BURDEN OF PROOF IS ON THE DEPAR TMENT TO SHOW THAT HE HAS RECEIVED A HIGHER CONSIDERATION THAN THE STATED ONE. WHILE IT IS ACCEPTED THAT THE BURDEN OF PROOF TO FURNISH EVIDEN CE IN SUCH CASES LIES ON THE DEPARTMENT THE REQUIREMENT IS NOT THAT ACTUAL SALE PRICE OF EACH UNIT SOLD HAS TO BE BACKED BY DOCUMENTARY EVIDENCE. IT I S ENOUGH IF THE EVIDENCE AVAILABLE INDICATES THAT THE SALE PRICE RE FLECTED IN THE ACCOUNTS OF THE APPELLANT DIFFERS SUBSTANTIALLY FROM THE SALE P RICE MENTIONED IN SEIZED DOCUMENTARY EVIDENCE EVEN THOUGH THE EVIDENCE MAY BE IN RESPECT OF ONLY A SMALL PART OF THE TOTAL SALES MADE. IN THIS C ASE EVIDENCE HAS BEEN FOUND IN RESPECT OF FOUR PLOTS OF LAND WHICH INDIC ATES THAT THE ACTUAL SALE PRICE VARIED FROM RS.3 900/PER SQ. YARD ON 17.03.2 007 TO RS.4 300/- PER SQ. YARD ON 29.03.2007. THIS CONTRASTS SUBSTANTIALL Y FROM THE SALE PRICE REFLECTED BY THE APPELLANT WHICH IS RS.700/- PER S Q. YARD TO RS.1 000/- PER SQ. YARD. MOREOVER EVEN IN RESPECT OF THOSE PL OTS WHERE SEIZED DOCUMENT REFLECTS SALE PRICE OF RS.4 300/- PER SQ. YARD THE STATED CONSIDERATION IS ONLY IN THE REGION OF RS.1 000/- A SQ. YARD. THUS IT IS APPARENT THAT THE APPELLANT HAS GROSSLY UNDER STATE D THE SALES CONSIDERATION AND TO THAT EXTENT THE ASSESSING OFFI CER'S ACTION IS JUSTIFIABLE. HOWEVER I AM INCLINED TO AGREE WITH T HE APPELLANT TO THE EXTENT THAT THE ATTENDANT CIRCUMSTANCES INDICATE A RAPID INCREASE IN THE LAND PRICES. THE SRO VALUE ITSELF HAS RISEN BY 42% BETWEEN NOVEMBER AND MARCH OF THE SAME FINANCIAL YEAR. SECONDLY THE LAY OUT PLAN ALSO SUBSTANTIATES THE APPELLANT'S CONTENTION THAT THE P LOTS SOLD BY SMT.M.JAYASREE ARE ON THE MAIN ROAD TO SHAMSHABAD W HILE A LARGE NUMBER OF PLOTS SOLD BY THE APPELLANT DO NOT HAVE A CCESS BY ANY ROAD. THIRDLY THE APPELLANT HAS SOLD A LARGE NUMBER OF P LOTS IN NOVEMBER 2006 AS AGAINST PLOTS SOLD BY SMT. M.JAYASREE ON 29.03.2 007. EVEN AMONGST THE PLOTS SOLD BY SMT. M.JAYASREE A SUBSTANTIAL PR ICE VARIATION OF RS.400/PER SQ. YARD OVER 12 DAYS HAS BEEN NOTICED. SOME OF THE PLOTS HAVE BEEN SOLD TO COUSINS AND FRIENDS AND HENCE AN ELEMENT OF DISCOUNT CANNOT BE RULED OUT. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 67 7.13 KEEPING IN VIEW ALL THE ATTENDANT FACTS AND CI RCUMSTANCES WHAT EMERGES IS THAT THE APPELLANT HAS SOLD THREE PLOTS TO HIS IMMEDIATE FAMILY MEMBERS I.E. BROTHERS AND SISTER IN LAW FOR WHICH THE SALES CONSIDERATION REFLECTED IN THE REGISTERED DOCUMENT CAN BE ADOPTED . IN RESPECT OF OTHER PLOTS THE SEIZED DOCUMENTS CLEARLY INDICATED THAT THE ACTUAL SALES CONSIDERATION IS MUCH HIGHER THAN THE STATED CONSID ERATION. HOWEVER (I) TAKING INTO ACCOUNT THE FACT THAT THE APPELLANT HAS SOLD HIS PLOTS IN NOVEMBER 2006 WHILE THE SEIZED DOCUMENT REFLECTS THE PRICE ON 29.03.2007 (II) SOME OF THE APPELLANT'S PLOTS ARE NOT ON THE MAIN ROAD (III) AN ELEMENT OF DISCOUNT TO FRIENDS AND RELATIV ES IS POSSIBLE THE SALES CONSIDERATION BEING ADOPTED IN RESPECT OF PLOTS SOL D BY THE APPELLANT OTHER THAN TO HIS BROTHERS AND SISTER IN LAW IS RS.2 700 /- PER SQ. YARD. OUT OF THE TOTAL AREA OF 6 115.99 SQ. YARDS SOLD BY THE AP PELLANT PLOTS SOLD TO HIS BROTHERS AND SISTER IN LAW AGGREGATE 2 227.35 SQ. Y ARDS. THUS FOR PLOTS SOLD TO OTHERS MEASURING 3 888.64 SQ. YARDS RS.2 700/PER SQ. YARD THE SALES CONSIDERATION IN RESPECT OF THESE 9 PLOTS IS RS.1 04 99 328/-. THE STATED CONSIDERATION FOR PLOTS SOLD TO APPELLANT'S BROTHERS AND SISTER IN LAW IS RS.15 59 145/-. THUS THE TOTAL CONSIDERATION IN RESPECT OF THE 12 PLOTS WORKS OUT TO RS.1 20 58 473/-. THE UNACCOUNTED PROF IT IN RESPECT OF NAGARAM PLOTS IS WORKED OUT AS UNDER: SALE CONSIDERATION FOR 12 PLOTS MEASURING 6 115.99 SQ. YARDS RS.1 20 58 473 LESS : PROPORTIONATE COST OF LAND RS. 17 17 125 LESS : PROPORTIONATE DEVELOPMENT EXPENDITURE RS. 1 0 58 066 RS. 92 83 282 7.14 IT SHOULD ALSO BE NOTED THAT THE APPELLANT HAS REFLECTED RS.9 09 000/- AS PROFIT FROM SALE OF LAND AT NAGARA M AND KOLLAPADAKAL. CREDIT FOR THE SAME SHALL HAVE TO BE GIVEN TO THE A PPELLANT. THIS HAS NOT BEEN CONSIDERED WHILE DETERMINING PROFIT IN RESPECT OF THE KOLLAPADAKAL LAND. HENCE THE ENTIRE AMOUNT IS BEING REDUCED FROM THE UNRECORDED PROFIT FROM NAGARAM PLOTS SALE. THE PROF IT IS HENCE DETERMINED AT RS.83 74 282/- AS AGAINST RS.2 31 64 017/- DETERMINED BY THE ASSESSING OFFICER. THE APPELLANT' S GROUNDS OF APPEAL NO.4 & 5 ARE PARTLY ALLOWED. 63. THE CIT(A) HAS CONSIDERED ALL THE FACTS AND RE- WORKED NET PROFIT FROM THE PROJECT. THE ASSESSEE FAILS TO BROUGHT ON RECORD ANY EVIDENCES TO PROVE THE FINDING OF THE FACT RECORDED BY THE CI T(A) IS INCORRECT. THEREFORE WE ARE OF THE VIEW THAT THE CIT(A) HAS R IGHTLY RE-WORKED THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 68 NET PROFIT FROM NAGARAM LANDS AND HIS ORDER DOES NO T REQUIRE ANY INTERFERENCE. HENCE WE INCLINED TO UPHOLD THE CIT (A) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 64. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS UNACCOUNTED EXPENDITURE OF RS.70 12 499/-. DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE A SSESSEE HAD CLAIMED TOTAL EXPENDITURE OF RS.78 51 799/- FOR ASSESSMENT YEAR 2007-08 & 2008-09 BUT FAILED TO SUBSTANTIATE EXPENDITURE WIT H NECESSARY BILLS AND VOUCHERS. THE A.O. FURTHER OBSERVED THAT THE ASSES SEE HAD SUBMITTED SELF-MADE VOUCHERS FOR RS.70 12 499/- HOWEVER THES E VOUCHERS PERTAIN TO THE PERIOD 5.8.2006 TO 14.10.2006. THE SALES OF FLATS HAVE STARTED IN NOVEMBER 2006 WHILE THE EXPENDITURE HAD BEEN INCU RRED PRIOR TO THIS PERIOD AND HENCE THE SOURCE OF EXPENDITURE WAS NOT EXPLAINED ACCORDINGLY MADE ADDITIONS OF RS.70 12 499/- AS UN EXPLAINED EXPENDITURE. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HAD COLLECTED ADVANCE FROM CUSTOMERS TOWARDS BOOKING OF FLATS WHI CH IS THE SOURCE OF EXPENDITURE INCURRED TOWARDS DEVELOPMENT OF FLATS. THE ASSESSEE FURTHER CONTENDED THAT IT IS A COMMON PRACTICE IN R EAL ESTATE BUSINESS THAT PAYMENTS FOR PURCHASE OF PROPERTY ARE SPREAD O VER VARIOUS INSTALLMENTS AND THE PROPERTY IS FINALLY REGISTERED ONLY WHEN THE LAST ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 69 INSTALLMENT IS PAID. THE ASSESSEE FURTHER CONTENDE D THAT THE PROJECT WAS LAUNCHED IN THE MONTH OF APRIL 2006 AND DEVELOPMEN T WAS CARRIED OUT BETWEEN AUGUST AND OCTOBER 2006. THE ASSESSEE STA RTS COLLECTING ADVANCE FROM BUYERS AS SOON AS THE PROJECT WAS APPR OVED BY THE AUTHORITIES AND FLATS WERE REGISTERED IN THE MONTH OF NOVEMBER AND DECEMBER 2006 THEREFORE THE A.O. WAS INCORRECT I N HOLDING THAT SOURCES FOR EXPENDITURE WAS NOT EXPLAINED. 65. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT IT IS A COMMON PRACTICE IN REAL ESTATE BUSINESS THAT THE DE VELOPER/BUILDERS OF THE PROJECT START COLLECTING ADVANCES FROM CUSTOMER S THE MOMENT THEY LAUNCHED THE PROJECT. IN THE PRESENT CASE THE ASS ESSEE PROJECT WAS APPROVED IN THE MONTH OF APRIL 2006 AND THE REGIST RATIONS OF THE FLATS WERE TAKEN PLACE IN THE MONTH OF NOVEMBER AND DECEM BER 2006. TAKING INTO OVER ALL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FACT THAT COLLECTION OF ADVANCE FROM THE BUYERS OF THE F LATS IN THE REAL ESTATE BUSINESS IS COMMON WE ARE OF THE VIEW THAT THE A.O . WAS ERRED IN HOLDING THAT THE ASSESSEE FAILED TO EXPLAIN THE SOU RCES FOR EXPENDITURE. IT IS NOT A CASE OF A.O. THAT THE EXPENDITURE WAS N OT GENUINE. THE A.O. NEVER DOUBTED THE GENUINENESS OF THE EXPENDITURE. THEREFORE WE ARE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 70 OF THE VIEW THAT THE ASSESSEES EXPLANATIONS THAT H E HAD COLLECTED ADVANCE FROM CUSTOMERS AND WHICH IS THE SOURCES FOR DEVELOPMENT EXPENDITURE APPEARS TO BE REASONABLE. THE CIT(A) W ITHOUT APPRECIATING THE FACTS SIMPLY RESTRICTED THE ADDITION TO 20% OF THE TOTAL EXPENDITURE DISALLOWED. THEREFORE REVERSE THE FINDINGS OF CIT( A) AND DIRECT THE A.O. TO ALLOW THE EXPENDITURE AS CLAIMED BY THE ASSESSEE . 66. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS INTEREST ON ADVANCE GIVEN TO RRC HOUSING PV T. LTD. AND LOAN GIVEN TO SALEEM. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE A.O. NOTICED THAT SEIZED DOCUMENT A/MRSR/PO1 PAGE 4 2 SHOWS THAT RS.24 LAKHS HAS BEEN GIVEN TO RRC HOUSING PVT. LTD. ON 16.2.2007 AT 24% INTEREST. THE A.O. OBSERVED THAT THE ASSESSEE HAD NOT OFFERED INTEREST ON THIS LOAN. DURING THE ASSESSMENT PROCE EDINGS THE ASSESSEE CLAIMED THAT THE ENTIRE AMOUNT WAS RECEIVED BACK ON 31.3.2007 AND HENCE NO INTEREST WAS OFFERED FOR THE ASSESSMENT YE ARS 2008-09 & 2009-10. THE A.O. DID NOT ACCEPT EXPLANATIONS OF T HE ASSESSEE ON THE GROUND THAT THERE IS NO EVIDENCE THAT AMOUNT OF RS. 24 LAKHS WAS RECEIVED BACK ON 31.3.2007. IT IS THE CONTENTION O F THE ASSESSEE THAT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAD FILED ADDITIONAL EVIDENCES WHICH WAS FORWARDED TO THE A.O. FOR HIS C OMMENTS. THE A.O. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 71 VIDE HIS REMAND REPORT DATED 26.12.2013 HAS STATED THAT A STATEMENT OF SHRI R. RAMESH CHAND M.D. RRC HOUSING PVT. LTD. W AS RECORDED AND HE HAD ADMITTED THAT THE LOAN AMOUNT WAS REPAID ON 31.3.2007 IN CASH AND THEREFORE RECOMMENDED THAT NO ADDITION IS REQUI RED TOWARDS INTEREST ON ADVANCE GIVEN TO RRC HOUSING PVT. LTD. THEREFORE THE CIT(A) WAS ERRED IN SUSTAINING THE ADDITIONS TOWARD S INTEREST. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REAS ON THAT DURING THE REMAND PROCEEDINGS THE A.O. AFTER EXAMINING THE MA NAGING DIRECTOR OF RRC HOUSING PVT. LTD. GAVE HIS CATEGORICAL FINDING THAT THE LOAN WAS REPAID ON 31.3.2007. THEREFORE WE ARE OF THE VIEW THAT THE CIT(A) WAS ERRED IN SUSTAINING THE ADDITIONS TOWARDS INTEREST ON ADVANCE GIVEN TO RRC HOUSING PVT. LTD. HENCE WE REVERSE THE FINDIN GS OF THE CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITIONS TOWARDS INT EREST ON ADVANCE TO RRC HOUSING PVT. LTD. FOR THE ASSESSMENT YEAR 2008- 09 & 2009-10. 67. IN SO FAR AS ADDITION TOWARDS INTEREST ON LOAN TO SALEEM IS CONCERNED THE A.O. OBSERVED THAT AS PER PAGE NO.12 AND 36 AT ANNEXURE A/MSR/RES/03 A HAND WRITTEN SHEET OF PAPER WAS SEIZED WHICH SHOWED A LOAN OF RS.48 LAKHS TO ONE SYED SALEEM AT THE RATE OF 31% INTEREST FOR VARIOUS PERIODS UP TO 6.8.2009. IT WA S ALSO SEEN THAT AT SOME POINT AFTER 26.5.2007 AND BEFORE 26.5.2008 AN AMOUNT OF RS.32.90 ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 72 LAKHS HAS BEEN RECEIVED FROM SYED SALEEM TOWARDS IN TEREST. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMED THAT T HE LOAN HAS BEEN REPAID ON 31.3.2006 AND HENCE NO INTEREST HAS BEEN OFFERED FOR THE ASSESSMENT YEAR 2008-09 2009-10 AND 2010-11. THE A.O. DID NOT ACCEPT THE EXPLANATIONS OF THE ASSESSEE HELD THAT SEIZED DOCUMENT SHOWS CONTRARY TO THE CLAIM MADE BY THE ASSESSEE TH AT LOAN WAS RECEIVED ON 31.3.2006. THE A.O. FURTHER OBSERVED T HAT THE SEIZED DOCUMENTS CLEARLY SHOWS THAT SYED SALEEM HAD REPAID AN AMOUNT OF RS.32 90 000/- ON 26.5.2008 WHICH CLEARLY SHOWS THA T LOAN IS OUTSTANDING EVEN AFTER 31.3.2006. THEREFORE CALCU LATED INTEREST @ 31% AND MADE ADDITIONS OF RS.14 48 000/- EACH FOR THE ASSESSMENT YEAR 2008-09 2009-10 AND 2010-11. 68. DURING APPELLATE PROCEEDINGS THE ASSESSEE FURN ISHED SOME ADDITIONAL EVIDENCE WHICH WAS FORWARDED TO THE ASSE SSING OFFICER TO FURNISH A REMAND REPORT. THE ASSESSING OFFICER VID E HIS REMAND REPORT STATED THAT A STATEMENT OF SYED SALEEM WAS RECORDED AND HE HAS STATED THAT THIS AMOUNT OF RS.48 LAKHS WAS RECEIVED FOR PU RCHASE OF AGRICULTURAL LAND WHICH HOWEVER COULD NOT TAKE PLACE. THE RATE O F INTEREST CHARGEABLE AS 24% BUT DUE TO FINANCIAL CRUNCH HE W AS NOT IN A POSITION TO PAY THE ENTIRE AMOUNT AND AS PER MUTUAL SETTLEME NT TOTAL INTEREST OF ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 73 RS.12 LAKHS WAS PAID OUT OF WHICH RS.3 03 247/- WA S PAID ON 31.3.2009 WHILE RS.8 96 753/- WAS PAID ON 31.3.2006. THE CIT( A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE AND ALSO CONSIDERE D THE REMAND REPORT OF THE A.O. HELD THAT THE SEIZED DOCUMENT CLEARLY SHOWS THAT AT LEAST A PART OF THE LOAN AND ACCRUED INTEREST REMAINED OUTS TANDING TILL 6.8.2009. THE CIT(A) FURTHER OBSERVED THAT AS AGAINST A PRINC IPAL AMOUNT OF RS.48 LAKHS THE BORROWER HAS REPAID INTEREST OF RS.32 90 000/- BEFORE 26.5.2008. THE SEIZED DOCUMENT ITSELF INDICATE THAT THE ACCRUED BALANCE AS ON 26.5.2007 WAS RS.60 28 000/-. INTEREST FOR T HE PERIOD 26.5.2007 TO 26.5.2008 HAS BEEN WORKED OUT AT RS.8 70 900/-. A FURTHER AMOUNT OF RS.1 65 000/- HAS ALSO BEEN PAID AS PENALTY FOR NONPAYMENT OR DELAYED PAYMENT. THUS FOR THE ASSESSMENT YEAR 200 7-08 RELEVANT TO ASSESSMENT YEAR 2008-09 THE AMOUNT OF INTEREST HAS BEEN DETERMINED AT RS.10 35 900/- AS AGAINST RS.14 48 000/- WORKED OUT BY THE A.O. SIMILARLY FOR THE ASSESSMENT YEAR 2009-10 THE CIT (A) HAS WORKED OUT INTEREST OF RS.13 16 109/- AS AGAINST RS.14 48 000/ - DETERMINED BY THE A.O. IN SO FAR AS ASSESSMENT YEAR 2010-11 THE CIT (A) HAS DETERMINED INTEREST OF RS.6 61 700/- AS AGAINST RS.14 48 000/- DETERMINED BY THE A.O. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 74 69. THE LD. A.R. SUBMITTED THAT THERE IS NO EVIDENC E TO SHOW THAT THE ASSESSEE WAS IN RECEIPT OF INTEREST FROM SYED SALEE M BEYOND RS.12 LAKHS. THE A.R. FURTHER SUBMITTED THAT THE ASSESSIN G OFFICER HIMSELF DURING REMAND PROCEEDINGS EXAMINED SYED SALEEM AND RECORDED HIS STATEMENT. THE BORROWER SHRI. SYED SALEEM HAD ADMI TTED THAT HE HAD SETTLED THE LOAN AMOUNT FOR AN INTEREST OF RS.12 LA KHS OUT OF WHICH RS.3 03 247/- HAS BEEN PAID FOR THE ASSESSMENT YEAR 2008-09 AND RS.8 96 753/- HAS BEEN PAID DURING THE YEAR ENDED 3 1.3.2006. ACCORDINGLY THE A.O. OBSERVED THAT THE ADDITION MA DE FOR THE A.Y. 2008- 09 SHOULD BE RESTRICTED TO RS.3 03 247/- ONLY AS A GAINST RS.14 48 000/- AND ADDITION MADE FOR THE ASSESSMENT YEAR 2010-11 M AY KINDLY BE DELETED. THEREFORE THE CIT(A) WAS INCORRECT IN REW ORKING INTEREST. THE D.R. ON THE OTHER HAND STRONGLY SUPPORTED THE ORDE R OF CIT(A). 70. HAVING HEARD BOTH THE PARTIES AND CONSIDERED MA TERIALS AVAILABLE ON RECORD WE FIND THAT THE CIT(A) HAS REWORKED INT EREST ON LOAN GIVEN TO SYED SALEEM BASED ON THE SEIZED DOCUMENT WHICH INDICATES THAT LOAN IS OUTSTANDING TILL 15.10.2009. THE CIT(A) AFTER AN ALYZING THE SEIZED DOCUMENT HAS REWORKED THE INTEREST FOR THE ASSESSME NT YEAR 2008-09 TO 2010-11 AND ARRIVED AT AN INTEREST OF RS.10 35 900/ - RS.13 16 109/- AND RS.6 61 700/- RESPECTIVELY FOR THE ASSESSMENT Y EARS 2008-09 2009- ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 75 10 & 2010-11. THE FACTS REMAIN UNCHANGED. THE ASS ESSEE FAILED TO BROUGHT ON RECORD ANY EVIDENCES TO SHOW THE FINDING S OF FACTS RECORDED BY THE CIT(A) IS INCORRECT. THEREFORE WE ARE OF T HE VIEW THAT THE CIT(A) HAS RIGHTLY REWORKED ADDITIONS TOWARDS INTEREST ON LOAN GIVEN TO SYED SALEEM. WE DO NOT SEE ANY ERROR OR INFIRMITY IN TH E ORDER OF THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND R EJECT THE GROUND RAISED BY THE ASSESSEE. 71. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS UNACCOUNTED INVESTMENTS IN VINUKONDA LANDS. THE ASSESSING OFFICER OBSERVED THAT AS PER SEIZED DOCUMENT ANNEXU RE A/MSR/02 PAGE 56 TO 58 CERTAIN FINANCIAL TRANSACTIONS HAD BEEN R ECORDED WHICH SHOWS THAT THE ASSESSEE HAD MADE INVESTMENTS TOWARDS PURC HASE OF LAND AT VINUKONDA. AS PER THE SEIZED DOCUMENT THE ASSESSEE HAS MADE INVESTMENT OF RS.32 81 000/- OUT OF WHICH RS.7 81 0 00/- WAS OFFERED IN THE HANDS OF THE ASSESSEE AND THE BALANCE WAS OFFER ED IN THE HANDS OF HIS SON SHRI M. SRINIVASA RAO. THE A.O. FURTHER OB SERVED THAT IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT THE ASS ESSEE HAD ADMITTED RS.1 20 060/- TOWARDS INVESTMENT IN VINUKONDA LAND. REGARDING THE BALANCE IT WAS STATED THAT THE AMOUNT SO GIVEN REC EIVED BACK FROM THE SELLERS. THE A.O. FURTHER OBSERVED THAT EVEN IF THE AMOUNT GIVEN FOR ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 76 PURCHASE OF LAND WAS RETURNED BACK THE SOURCES FOR ORIGINAL INVESTMENT REMAINS UNEXPLAINED AND HENCE ADDED DIFFERENCE OF R S.6 60 940/- AS UNEXPLAINED INVESTMENT. IT IS THE CONTENTION OF THE ASSESSEE THAT ENTRIES CONTAIN IN THE SEIZED DOCUMENT IN ANNEXURE A/MSR/02 AT PAGES 56 TO 58 HAVE BEEN EXPLAINED AND THE SOURCES FOR INVESTMENT WAS REFLECTED IN THE CASH FLOW STATEMENT FILED FOR THE ASSESSMENT YEAR 2 008-09. WE DO NOT SEE ANY MERITS IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE SEIZED DOCUMENTS CLEARLY SHOWS THAT TOTAL INVESTMEN T IN THE LAND AT VINUKONDA IS RS.32 81 000/- OUT OF WHICH RS.7 81 0 00/- WAS OFFERED IN THE NAME OF ASSESSEE AND RS. 25 LAKHS HAS BEEN CONS IDERED IN THE HANDS OF SHRI M. SRINIVASA RAO. THOUGH THE ASSESSE E ADMITTED RS.7 81 000/- IN HIS HANDS TOWARDS INVESTMENT OFFE RED RS.1 20 060/- ONLY AND FAILED TO OFFER ANY SOURCE FOR THE REMAINI NG AMOUNT OF RS.6 60 940/-. THE CIT(A) AFTER CONSIDERING THE REL EVANT DETAILS CONFIRMED ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT(A). HENCE WE IN CLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE AS SESSEE. 72. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS UNACCOUNTED ADVANCE OF RS.14 53 000/-. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT SEIZE D DOCUMENT ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 77 ANNEXURE A/MSR/RES/04 SHOWS THAT THE ASSESSEE HAD A DVANCED RS.35 LAKHS TO SHRI D. LAKSHMI SURYA PRASAD ON 30.5.2009. THE ASSESSEE HAD ADMITTED THAT THIS AMOUNT WAS NOT REFLECTED IN HIS REGULAR BOOKS OF ACCOUNTS AND AGREED TO OFFER THE SAME PARTLY IN HIS HANDS AND PARTLY IN THE HANDS OF HIS SON SHRI M. SRINIVASA RAO. DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED ON 28.1.2010 THE ASSESSE E STATED THAT HE HAD PURCHASED LAND FROM SHRI D.L. SURYA PRASAD FOR RS.20 47 000/- AND OUT OF THE BALANCE RS.14 53 000/- HE HAD RECEIVED R S.5 11 000/-. THE A.O. NOTED THAT THE ASSESSEE HAD OFFERED AMOUNT REL ATING TO PURCHASES HOWEVER THE BALANCE AMOUNT OF RS.14 53 000/- WAS N OT REFLECTED IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT THEREFO RE MADE ADDITIONS OF RS.14 53 000/- AS UNACCOUNTED ADVANCE. IT IS THE C ONTENTION OF THE ASSESSEE THAT INVESTMENT IN PURCHASE OF LAND IS REF LECTED IN CASH FLOW STATEMENT. THE ASSESSEE FURTHER CONTENDED THAT OUT OF RS.35 LAKHS HE HAD PURCHASED LANDS FOR RS.20 47 000/- AND BALANCE AMOUNT HAS BEEN RECEIVED BACK FROM THE PARTY WHICH WAS EXPLAINED IN THE CASH FLOW STATEMENT. 73. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSE SSEE FOR THE REASON THAT THE ASSESSEE FAILS TO CONVINCINGLY EXPLAIN THE SOURCES FOR INVESTMENT ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 78 IN ADVANCE GIVEN TO SHRI D.L. SURYA PRASAD. THE AS SESSEE HAS FILED A CASH FLOW STATEMENT EXPLAINING SOURCES FOR ADVANCE OF RS.35 LAKHS. AS PER THE SAID CASH FLOW STATEMENT THE ASSESSEE CLAI MS TO HAVE OPENING CASH BALANCE OF RS.1 06 99 213/-. THIS INCLUDES REF UND OF RS.48 LAKHS FROM SYED SALEEM WHICH WAS NOT ACCEPTED BY THE A.O. THE ASSESSEE ALSO CLAIMS TO HAVE SOURCE OF CASH OF RS.45 02 000/ - SHOWN AS REFUND FROM CANCELLATION. THE DETAILS OF THIS CANCELLATIO N INDICATES THAT HE HAS TAKEN INTO ACCOUNT CANCELLATION OF FINANCIAL TRANSA CTION OF SHRI K. V. ROSAIAH HOWEVER THE SEIZED DOCUMENT INDICATES THA T THE LOAN TRANSACTION WITH SHRI K.V. ROSAIAH WAS OUTSTANDING AS ON THE DATE OF SEARCH. THOUGH THE ASSESSEE INCORPORATED ADVANCE OF RS.14 53 000/- IN THE CASH FLOW STATEMENT THE SOURCES FOR THE SAM E ARE NOT EXPLAINED WITH NECESSARY EVIDENCES. THE CIT(A) AFTER CONSIDER ING THE RELEVANT DETAILS CONFIRMED ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE AS SESSEE. 74. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION OF RS.31 82 000/- TOWARDS LOAN TO SHRI K.V. ROSAIAH. THE A.O. NOTED THAT THE ASSESSEE HAD NOT REFLECTED HIS SHARE OF INVESTM ENT IN THE AMOUNT GIVEN TO SHRI K.V. ROSAIAH AND ADDED THE SAME AS IN COME FROM OTHER ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 79 SOURCES. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HAD SOURCES OF INCOME FOR EXPLAINING THE LOAN GIVEN TO SHRI K.V. R OSAIAH AND HAS BEEN REFLECTED THE INVESTMENT IN THE CASH FLOW STATEMENT FOR THE ASSESSMENT YEAR 2010-11 WHICH FORMS PART OF TOTAL AMOUNT OF RS .58 28 270/- SHOWN AS ACQUISITION OF PROPERTIES. 75. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE SUFFERS FROM AN INFIRMITY IN AS MUCH AS IT REFLECTS RECEIPT OF RS.48 LAKHS AS REPAYMENT OF LOAN FROM SYED SALEEM AND RS.45 02 000 /- AS REFUND FROM CANCELLATION OF TRANSACTION WITH SHRI K.V. ROSAIAH. THE A.O. MADE A CATEGORICAL OBSERVATION THAT THE REPAYMENT RECEIVED FROM SYED SALEEM WAS ONLY RS.32 90 000/-. THE REFUND FROM SHRI K.V. ROSAIAH WAS HAPPENED SUBSEQUENT TO THE SEARCH. THE CIT(A) AFTER CONSIDERING RELEVANT FACTS SUSTAINED ADDITIONS. THE FACTS REMAI N UNCHANGED. THE ASSESSEE FAILS TO BRING ON RECORD ANY EVIDENCES TO SHOW THAT THE FINDINGS OF THE FACTS RECORDED BY THE CIT(A) ARE INCORRECT. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT(A). HENC E WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISE D BY THE ASSESSEE. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 80 76. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS INTEREST ON LOANS GIVEN TO SHRI K.V. ROSAIA H. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SEARCH O PERATION A SEIZED DOCUMENT VIDES ANNEXURE A/MSR/RES/4 SHOWS PAYMENT O F RS.1 CRORE IN CASH TO SHRI K.V. ROSAIAH AS MORTGAGE FINANCE. THE ASSESSEE SHARE IN THE SAME WAS OFFERED AT RS.31 82 000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE MODUS OPERANDI OF ASSESSEE AND HIS FAMILY MEMBERS IS SUCH THAT THE AS SESSEE ADVANCED LOANS BY MORTGAGING PROPERTIES WITH THE DEBTORS AND IF THE LOAN IS REPAID WITHIN THE AGREED PERIOD WITH INTEREST THEY WILL E NTER INTO AN AGREEMENT WITH CONCERNED PARTY WITH RESPECT TO THOSE PARTIES. IF THE DEBTOR FAILS TO RETURN THE AMOUNT ONCE PRINCIPAL AND INTEREST EXCE EDS VALUE OF PROPERTY THEY GET THE PROPERTY REGISTERED IN THEIR NAME. THEREFORE OPINED THAT THE ASSESSEE HAS ADVANCED LOAN AMOUNT O F RS.1 CRORE WITHOUT CHARGING ANY INTEREST. SINCE THE ASSESSEE FAILED TO OFFER ANY INTEREST ON SUCH ADVANCES THE A.O. CALCULATED INTE REST @ 24% ON RS. 31 82 000/- FOR A PERIOD FROM 13.4.2009 TO 29.1.201 0 WHICH WORKS OUT TO RS. 7 63 680/-. IT IS THE CONTENTION OF THE ASSE SSEE THAT THE SAID TRANSACTION IS NOT MORTGAGE FINANCE BUT IT IS AN A DVANCE GIVEN FOR PURCHASE OF PROPERTY. SINCE THE PROPERTY WAS NOT FOUND SUITABLE DUE TO VASTHU ISSUES SHRI K.V. ROSAIAH AGREED FOR CANCELL ATION OF AGREEMENT ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 81 ONLY ON THE CONDITION THAT INTEREST ON THE ADVANCE IS WAIVED THEREFORE NO INTEREST IS CHARGED ON ADVANCE GIVEN TO SHRI K.V . ROSAIAH. 77. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIALS ON RECORD WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSE SSEE FOR THE REASON THAT THE FACTS EMERGED FROM THE SEIZED DOCUMENT IND ICATES THAT THE ASSESSEE AND OTHER FAMILY MEMBERS HAD FINANCED RS.1 CRORE TO SHRI K.V. ROSAIAH AGAINST SUCH FINANCE CERTAIN PROPERTIES W ERE OBTAINED THROUGH SALE DEED-CUM-GPA IN FAVOUR OF THE ASSESSEE AND OTH ER FAMILY MEMBERS. THE TRANSACTION CLEARLY INDICATES THAT INTEREST BEA RING LOAN AMOUNT OF RS.1 CRORE HAS BEEN GIVEN TO THE PARTY. THE PROPERT Y IN QUESTION WAS NOT PURCHASED BY THE ASSESSEE AND HIS FAMILY MEMBERS FO R THEIR OWN USE. IT WAS OFFERED AS COLLATERAL SECURITY FOR THE CASH LOA N GIVEN TO SHRI K.V. ROSAIAH. THIS IS SUPPORTED BY THE FACT THAT THE FO UR PROPERTIES TOTALING RS.72 LAKHS RECEIVED FROM SHRI K.V. ROSAIAH WERE BY MEANS OF SALE AGREEMENT-CUM-GPA AND NOT THROUGH A REGISTERED SALE DEED. WHEN A PROPERTY IS MERELY A COLLATERAL SECURITY FOR A LOAN THE SUBSEQUENT CANCELLATION OF MORTGAGE DEED AND REFUND OF ADVANCE S CANNOT BE CLAIMED AS IT IS AN ADVANCE GIVEN FOR PURCHASE OF P ROPERTY. THEREFORE WE ARE OF THE VIEW THAT THE A.O. HAS RIGHTLY CHARGE D INTEREST ON INTEREST BEARING ADVANCE GIVEN TO SHRI K.V. ROSAIAH. THE CIT (A) AFTER CONSIDERING ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 82 THE EXPLANATIONS OF THE ASSESSEE HAS RIGHTLY UPHELD THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE WE INCLINED TO UPHOLD THE CIT(A ) ORDER AND REJECT THE GROUND RAISED BY THE ASSESSEE. 78. THE LD. A.R. FOR THE ASSESSEE ARGUED A LEGAL I SSUE FOR ALL THE ASSESSMENT YEARS IN ALL THE CASES WITHOUT RAISING ANY SPECIFIC GROUND IN ANY OF THE YEARS IN RELATION TO VALIDITY OF ASSESS MENT ORDER PASSED BY THE A.O. THE LD. A.R. FOR THE ASSESSEE SUBMITTED T HAT THE A.O. WAS ERRED IN MAKING ADDITIONS WITHOUT SEIZED MATERIALS FOR THE COMPLETED ASSESSMENT YEARS. THE A.R. REFERRED TO THE PROVISIO NS OF SECTION 153A AND SUBMITTED THAT IN CASE OF COMPLETED ASSESSMENTS THE A.O. HAS NO JURISDICTION TO MAKE ADDITIONS WITHOUT ANY SEIZED M ATERIALS. IN CASE OF ABATED ASSESSMENT THE A.O. HAS JURISDICTION TO ASS ESS TOTAL INCOME INCLUDING UNDISCLOSED INCOME FOUND AS A RESULT OF S EARCH. IN THE PRESENT CASE THE A.O. MADE ADDITIONS TO RETURNED INCOME WI THOUT ANY SEIZED MATERIALS THEREFORE THE ASSESSMENT ORDERS PASSED BY THE A.O. IS INVALID CONSEQUENTLY ADDITION ARE LIABLE TO BE DEL ETED. HAVING CONSIDERED THE ARGUMENTS AND HAVING CONSIDERED MATE RIALS ON RECORD WE FIND THAT THERE ARE NO MERITS IN THE ARGUMENTS O F THE LD. A.R. FOR THE ASSESSEE AS THE ASSESSEE DID NOT RAISED THIS LEGAL GROUND BEFORE THE ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 83 CIT(A) OR EVEN BEFORE US. HENCE THE LEGAL ARGUMENT PUT-FOURTH BY THE LD. A.R. IS REJECTED FOR ALL THE CASES. 79. THE LD. A.R. FOR THE ASSESSEE RELIED UPON PLET HORA OF CASE LAWS IN SUPPORT OF HIS ARGUMENTS. WE HAVE GONE THROUGH EACH AND EVERY CASE LAWS REFERRED BY THE LD. A.R. IN THE LIGHT OF THE F ACTS OF PRESENT CASE AND CAME TO THE CONCLUSION THAT ALL THE CASE LAWS REFER RED BY THE A.R. IS NOT APPLICABLE TO THE FACTS OF THE CASE AND HENCE REJE CTED. 80. IN THE RESULT THE APPEALS FILED BY THE ASSESSE E FOR THE ASSESSMENT YEARS 2007-08 2008-09 & 2009-10 ARE PARTLY ALLOWED AND THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010- 11 IS DISMISSED. 81. IN THE RESULT THE APPEALS FILED BY THE ASSESSE E IN ITA NOS.646 & 647/VIZAG/2013 FOR THE ASSESSMENT YEARS 2008-09 & 2 010-11 RESPECTIVELY ARE DISMISSED THE APPEALS FILED BY THE REVENUE IN ITA NOS.672 & 673/VIZAG/2013 FOR THE A.YS. 2008-09 & 20 10-11 RESPECTIVELY ARE DISMISSED THE APPEAL FILED BY THE ASSESSEE IN ITA NO.149/VIZAG/2014 & ITA NO.645/VIZAG/2013 FOR THE A .YS. 2006-07 & 2010-11 RESPECTIVELY ARE DISMISSED THE APPEAL FILED BY THE REVENUE IN ITA NO.671/VIZAG/2013 IS DISMISSED THE APPEALS FILED BY THE ASSESSEE IN ITA NOS.644/VIZAG/2013 & 148/VIZAG/2014 FOR THE A.YS 2004-05 & 2009-10 RESPECTIVELY ARE DISMISSED THE APPEAL FILED BY THE ASSESSEE IN ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 84 ITA NO.643/VIZAG/2013 FOR THE A.Y. 2004-05 IS DISMISSED THE APPEAL FILED BY THE REVENUE IN ITA NO.670/VIZAG/2013 FOR T HE A.Y. 2004-05 IS ALLOWED THE APPEALS FILED BY THE ASSESSEE IN ITA NOS.144 T O 146/VIZAG/2014 FOR THE A.YS 2007-08 TO 2009-10 RESP ECTIVELY ARE PARTLY ALLOWED AND THE APPEAL FILED BY THE ASSESSEE IN ITA NO.147/ VIZAG/2014 FOR THE A.Y. 2010-11 IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 27 TH OCT16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 27.10.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI MOVVA SRINIVASA RAO D.NO.1 4-01-117 RAM NAGAR GBC ROAD PONNURU-522 124 GUNTUR DIST. 2. / THE APPELLANT SMT. MOVVA JAYASREE C/O SRI MOV VA RAMASESHAGIRI RAO D.NO.14-01-117 RAM NAGAR GBC ROAD PONNURU-5 22 124 GUNTUR DIST. 3. / THE APPELLANT SRI TARIGOPULA SUBBA RAO S/O NA RAYANA SWAMY PONNURU-522 124 GUNTUR DIST. 4. / THE APPELLANT SRI MOVVA RAMASESHAGIRI RAO D.N O.14-1-117 RAM NAGAR GBC ROAD PONNURU GUNTUR DIST. ITA NOS.643 TO 647/VIZAG/2013 670 TO 673/VIZAG/201 3 & 144 TO 149/VIZAG/2014 SHRI MOVVA SRINIVASA RAO & SMT. MOVVA JAYASREE VIJ AYAWADA 85 5. / THE RESPONDENT THE DCIT CENTRAL CIRCLE VIJAY AWADA 6. + / THE CIT (CENTRAL) HYDERABAD 7. + ( ) / THE CIT (A) GUNTUR 8. THE ACIT CENTRAL RANGE VISAKHAPATNAM 9. # . . # / DR ITAT VISAKHAPATNAM 10 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . # / ITAT VISAKHAPATNAM