TaxTMI 
TaxTMI 
2021 (8) TMI 1215
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....s certain identical expenditure claim pertaining to Dummugudem Project to the tune of Rs. 15.82 crores (in lead case ITA No.943/Hyd/2016) to the extent of 12.5% and in deleting un-explained credits addition of Rs. 20,50,99,560/- (involving varying sum in all these six assessment years); respectively. We advert to its foregoing former substantive grievance and notice that the CIT(A)'s detailed lower appellate discussion deleting the impugned addition under challenge reads as follows: "8.0 Addition on account of expenditure incurred in cash, for payments made on Dummugudem Project - Rs. 15,82,00,000/-: 8.1 While finalizing the assessment order, the AO had observed that the appellant had drawn an amount of Rs. 15.82 cr. From various bank accounts, during the period 02-04-2009 to 30-03-2010, in the denominations ranging from 7 lakhs to 9 lakhs on each occasion, with the description of purpose as 'Dummugudem Tail Pond, PK-8 labour advance'. As per the AO, these amounts were not explained during survey proceedings and were not supported by bills/vouchers and no TDS was made on such amounts. During the asst. proceedings, only self-made Vouchers were shown to have been produced....
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....ention that an amount of Rs. 10.09 crores were shown to be given as 'advance to M/s.Mohan Projects Constructions Pvt Ltd (MPCPL) which is one of the sub-contractors, who are assessed to tax and what has been claimed as direct expense in hands of the assessee company is only Rs. 5.73 cr. It was also submitted that out of Rs. 15.82 cr., only an amount of Rs. 9.38 cr. was directly met through assessee and Rs. 3.66 cr. were incurred through M/s.MPCPL who submitted bills for said a unt of Rs.l0.09 cr. given as advance. Further, with the amounts of Rs. 32.80 cr shown as the expenses for Dummugudem Project, been disallowed by the AO separately, I am of the considered opinion that there is no need to treat the amounts of Rs. 15.82 cr. as income separately, on the ground of disallowance of expenses related to Dummugudem Project. Accordingly, the addition of Rs. 15.82 cr. held to be unsustainable as separate addition, with the said amounts merged with disallowance of Rs. 32.82 cr., related to Dummugudem, which has been disallowed on same issue. Thus, this ground to this extent is treated as Partly Allowed". 2.1. Learned CIT-DR vehemently contended during the course of hearing that the C....
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....ts. The amounts treated as unexplained credits, On these lines are Rs. 0.75 crores, as appeared against the indication/description of 'SLP' and Rs. 0.51 crores against the caption, 'SLP' MD Sir House', for which the contention of the appellant was that AO could not give a clear finding as to which site payments the amounts of Rs. 1.26 crores relate to, as all site payments have been properly accounted. The next item under examination was Rs. 9.51 crores, standing against name of Gayatri Telesoft and the assessee's explanation was that during 2007-08 and 2008-09, .M/s.GPL advanced certain amounts to M/s.Mohan Projects Ltd which in turn given amount of Rs. 10.58 crores to Gayatri Star Khem, however this explanation was not acceptable to the AO. Hence, AO treated the amount as unexplained credit. Similarly, there are two other entries for amounts of Rs. 37.09 crores against the description of 'SLP' and Rs. 15.09 crores, against "other site funds utilized by GPL". While treating these amounts as unexplained income of the assessee, the AO worked out the ratio of the total amounts of funds mentioned in impounded document, with that of the turnover for the ....
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....rated with contemporaneous record, no adverse view can be taken by the Assessing Authorities. It was also contended that, AO has not brought on record any corroborative material or evidence to show that inferences drawn by him on basis of entries in loose sheets are correct. In this regard, the assessee relied on the several decisions of ITAT, Hyderabad. The appellant also contended that AO made huge additions on the basis of entries in two loose sheets, which are nothing but dumb documents and failed to substantiate the basis for addition, as there is no corroborative evidence to support such additions and AO have nothing" to do except to match whatever data available. 13.3 As regards to the additions made on the basis of entries in loose sheets, as 'unexplained credits', it has been submitted that there is no provision in the Income Tax Act to make additions under the head 'unexplained credit' except under Sec.68 and under no stretch of imagination, the loose sheets found and impounded in this case, can be considered as books of account, as such the provisions of Sec.68 are not applicable to the facts of the case. It was also contended that entries relating to s....
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....quiries, as per the appellant. 13.3.3 As regards to the amount of Rs. 37.09 crores which was marked as 'SLP' out of which an amount of Rs. 6.83 crores was treated as unexplained income, by the AO on proportionate basis, it has been submitted by the assessee that the amounts represent the net balance amount of equipment loans obtained from SREI Finance for a project specific works, during the period of 2010-11 and 2011-12. It was also explained that an amount of Rs. 5.78 crores representing interest but was written as 5.82 crores in loose sheet and the matching value of assets treated as unexplained, were not reflected in books, as the same are leased assets and the AO rejected the said explanation of the assessee summarily and applied a formula which was neither explained nor have any base and treated 18.42% of such amounts (37.09 crores) and arrived at figure of Rs. 6.83 crores as unexplained income of the assessee for the year under reference, notwithstanding the fact that such amounts not falling in one year. 13.3.4 Regarding the amounts of Rs. 15.80 crores which was mentioned as 'other site funds utilized by GPL' it was explained that these amounts were rece....
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....r the said period were shown at Rs. 2051.45 crores, indicated under main head 'Receipts' but divided under various subheads such as (i) working capital limits - Rs. 451.00 crores (ii) Term loans from banks - Rs. 425.00 crores (iii) Other loan funds - Rs. 114.00 crores (iv) Other group companies Rs. 443.77 crores (v) Funds received from sites _ Rs. 508.35 crores and (vi) Other receipts - Rs. 109.33 crores. While ignoring the funds shown under first five heads ( i to v), the AO had picked up the only entries falling under the head 'other receipts', which are enumerated as under: a) SLP - Rs. 37.09 b) Trust Funds - Rs. 23.64 c) Other site funds Utilized by GPL - Rs. 15.80 d) Pioneer Builders - Rs. 9.81 e) Gayatri Telesoft Ltd - Rs. 9.51 f) Essar Project - Rs. 6.00 g) Sud Reddy - Rs. 5.00 h) YLMC claims release - Rs. 1.15 i) SLP funds - Rs. 0.75 j) SLP MD Sir House - Rs. 0.51 Rs. 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 duri....
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....s, the additions made on account of unexplained credits to the extent of Rs. 1.26 crores for the year, based on the entries relatable to more than an year, without bifurcating the figures/amounts to the respective years, is not justified and held to be arbitrary. Even for the additions of Rs. 6.88 crores and Rs. 2.90 crores, out of the funds referred as SLP and other 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 Rs. 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, ....
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....ntries in loose sheets are not corroborated by contemporaneous record, as such no adverse view can be taken by the AO. Further, it was not established whether the loose sheets represent books of the assessee, without brining any corroborative evidence on record and without relating the entries of loose sheets to the year under reference as such resorting 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 Rs. 20.51 crores (Rs. 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 expla....
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.... filed even a retraction before the departmental authorities concerned. And that this investment sheet duly make it clear the corresponding time span has been from 10-09-2007 to 10- 08-2012 only. There is further no issue that the assessee had also not explained the said entries in issue before the Assessing Officer or before 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 addi....