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TMI Blog2021 (8) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... companies funds received from sites and other receipts indicating varying sums - the impounded document is assessee s INVESTMENT STATEMENT FROM 10-09-2007 TO 10-08-2012 wherein its Managing Director had duly pointed out the same in the nature of investments and loans which ought to be treated as un-explained u/s.68 of the Act only. The assessee s further argument that the impugned sum is merely an estimate also fails to inspire confidence since there is no material before us which could suggest the factual position to be different than that found during the course of survey . It appears that assessee s failure in filing its cogent explanation only led the AO to add the impugned sums in all these assessment years. We thus restore this un-explained cash credit addition in these facts and circumstances in AY.2010-11. The CIT(A) s findings under challenge stand reversed therefore. Revenue succeeds in its instant identical latter substantive ground. - ITA No. 1412/Hyd/16, 1413/Hyd/16, 943/Hyd/16, 944/Hyd/16, 1500/Hyd/16, 1501/Hyd/16 - - - Dated:- 24-8-2021 - Shri S.S.Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Revenue : Smt. S.Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been put at ₹ 37.07 cr., against which the AO made separate disallowance of ₹ 32.81 cr., which are agitated separately. On the issue of withdrawal of ₹ 15.82 cr., and treatment of the entire amount as unexplained expenditure by the AO, the submissions of the appellant run as under: (i) the amount of ₹ 15.82 cr. cannot be treated as unexplained expenses, as the source for the said amounts are explainable through books, which in turn received from Gayatri Ratna JV, routed through banking channels, (ii) No finding by AO in asst. order, to show that work related to the above expenditure, was not executed and on contrary, RA bills released by EE, NSC Division, Miryalaguda, show the total value the work done at ₹ 34.10 cr. (iii) AO failed to consider the fact that an amount of ₹ 10.09 cr. were paid to M/s.Mohan Projects Contractors Pvt Ltd (MPCPL), a subcontractor and the same were accounted in their books and assessed to tax. (iv) The observations of the AO as regards unverifiable nature of vouchers in sweeping, with the specific reference made to only few bills/vouchers. (v) The disallowance of expenses of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s entire expenditure pertaining to the very project to the tune of ₹ 32,18,13,943/- as bogus under a separate head. The CIT(A) therefore has rightly held it to be an instance of the double addition apart from all other factual and legal aspects. We therefore find no merit in the Revenue s instant former substantive grievance in all these appeals in view of the foregoing clinching reason(s). This identical former substantive ground in the instant six appeals stand declined therefore. 3. Next comes the latter issue of un-explained cash credits addition of ₹ 20,50,99,560/- in lead AY.2010-11 in ITA No.943/Hyd/2016. We notice with the able assistance of both the parties that the CIT(A) s findings under challenge have elaborately taken into consideration the Assessing Officer s reasoning as well as the assessee s submissions as under: 13.0 Additions based on entries in the material traced and impounded during survey proceedings ₹ 20,50,99,560/-: 13.1 While finalizing the assessment order the AO made reference to the information in the documents impounded during the survey proceedings conducted in this case on 30-10-2012. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrive at the disallowances to the extent of ₹ 6.83 crores and ₹ 2.90 crores, respectively. The total addition made based on impounded documents, thus totalled to ₹ 2050.99 lakhs (126.00 + 951.00 + 683.00 + 290.99 lakhs). 13.2 The appellant objected for such disallowances/additions and it has been broadly submitted that the AO erred in taking cognizance of two unsigned impounded papers which have no evidentiary value under law. It was also contended and explained that the loose sheets were merely a discussion paper prepared for the information of the management and it was merely an inflow and outflow of funds for the periods mentioned there in. It was contended and submitted that the figures mentioned in these papers were not actual figures but rough figures rounded off and wherever certain figures like increase in bank loans etc were available it was taken on the basis of increase in their limits and the headings were conveniently grouped under recognizable heads for easy understating of the management. It was contended by the assessee that the AO disregarded the explanation and proposed to make certain whimsical additions which were on basis of presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Sec.68, in case no explanation is forthcoming from assessees or the explanation offered is not acceptable to the AO. In case of assessee under reference, it was contended that neither corroborative evidence was brought on record nor any enquiries were made by the AO to ascertain the incomes that have the connotation of unexplained credits and in fact the assessee has explained the contents of loose sheets, as ad hoc cash flow statement prepared for certain period, comprising more than an year for the guidance/benefit of the management. It was also contended that the AP has conveniently ignored the major contents of the loose sheets and drew adverse inference from few of the entries, for making the total additions of ₹ 20.51 crores, on this count. While elaborating on the additions on each of the item under reference the appellant submitted as under: 13.3.1 Regarding the addition of ₹ 1.26 crores, on account of entries in loose sheets, being treated as unexplained credits, being aggregate of two entries on page 6 of loose sheets, with the amounts of ₹ 0.75 crores and ₹ 0.51 crores, with the narration of 'SLP funds', it has been submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and of crores every year and this explanation of the assessee was rejected and addition made on proportionate basis (18.42%) and to arrive at the figure of ₹ 2,90,99,560/-, as unexplained credit/income of the appellant for the year under reference, which is nothing but based on an hypothesis but not on facts. In this regard, the appellant relied on certain judicial decisions. 13.4 The appellant also contended and submitted that AO erred in making additions based on formula of 18.42% worked out on proportionate turnovers of 5 years, with that of turnovers for the year, which are in turn based on mere surmises and conjectures without involvement of law or accountancy. The appellant further contended that the AO failed to consider the past record of the assessee-company and comparable companies in similar business before resorting to huge additions. It was also highlighted and submitted by the appellant that AO failed to explain why only 4 items were chosen to tax, out of many items of expenses as reflected in the loose sheets of the impounded material and there was no application of mind by the AO as such the additions made to the extent of ₹ 20.51 crores, based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.00 g) Sud Reddy - ₹ 5.00 h) YLMC claims release - ₹ 1.15 i) SLP funds - ₹ 0.75 j) SLP MD Sir House - ₹ 0.51 ₹ 109.33 crores 13.5.1 As could be seen from the information brought on record, this was not put to the assessee during the survey proceedings and an explanation was sought from the assessee only during the assessment proceedings, vide the show cause notice dtd.05-02-2013 and the assessee's reply regarding the same was that the information in sheets was complied/prepared to impress the management with the figures for 5 years spanning the period referred in documents, with adjustments made, to last two decimal places. However, based on the nomenclature of the entries in loose sheets and the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her funds utilised by GPL, respectively, the basis adopted by the AO on proportionate basis, is only an assumption and does not appeal to a logic or reason. The formula applied by the AO, appears based on theories, without being supported by facts or solid reasons. Same is the case with the addition of ₹ 9.51 crores standing against the name of M/s.Gayatri Tele Soft Ltd. 13.6.1 In this case, it is not only the basis for selecting the few entries of loose sheets for making the addition, but also the validity of information that was found during the survey proceedings and put to use against the assessee, in the assessments, is in question. It was submitted by the assessee and appears to be fact that such impounded material was never examined during the survey proceedings, to ascertain it's relevance of the contents, to the company, vis-a-vis the books of account maintained for the years under reference. Further, the documents under reference, relied upon by the AO failed to controvert the submissions of the assessee that the statements prepared were falling in to 5 years for the period from 10-092007 to 10-08-2012 and was prepared for some vague purpose of impressing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to additions as per provisional of Sec.68 are not justified. On similar basis the amounts under various heads could not be estimated and treated as unexplained incomes. Further, in absence of any independent evidence brought on record by the AO to demolish the contentions of the assessee, it is reasonable to hold that the additions made on the unsubstantiated information are not sustainable and do not have legs to stand. Under the circumstances and based on facts of the case, the addition of ₹ 20.51 crores (₹ 0.75+0.51+9.51+6.83+2.90) based on entries in loose sheets are ordered to be deleted. The grounds relatable to the said additions, thus, are treated as Allowed . 3.1. Learned CIT-DRs vehement contention before us is that the Assessing Officer had rightly made the impugned addition on account of assessee s failure to explain identity, genuineness and creditworthiness of the corresponding creditor parties which could sufficiently throw light on source of the sum in issue. She further invited our attention to the assessee s Managing Director, Shri T.V.Sandeep Reddy survey statement dt.03-10-2012 admitting the corresponding entries in the impounded document pg.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A). The very factual position continues in the instant second appellate proceedings as well. 3.4. Faced with the foregoing factual position, we are of the opinion that the assessee s impounded document explaining all details with the corresponding parties deserves to be presumed as disclosing the correct particulars during the course of survey as per Section 292(C) of the Act, (more particularly in view of the amendment therein vide Finance Act, 2008 with retrospective effect from 01-06-2002). Coupled with this, we posed a specific query to the learned counsel as to whether all the remaining entries in both sides of the impounded document Annexure-I are correct or not? The reply received from the assessee s side is in affirmative only. All this leads us to an irresistible conclusion that the learned Assessing Officer had rightly made the impugned addition in assessee s hands taking into consideration the totality of all the corresponding entries in the impounded document rather than adopting a pick and choose method. 3.5. Coming to the learned counsel s argument that such loose sheets or dumb documents are ought not be allowed to form the basis of the impugned add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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