ALLIANCE HOTELS,MUMBAI vs. ACIT 12(1), MUMBAI

taken by the assessee are as under : “1 . On the facts and in the e circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs.6,76,23,000/- made by the AO as unexplained investment u/s.69 on the basis of noting made in page 4 and 5 of the loose papers file Annexure A found and impounded at the premises of the appellant.

Brief facts of the case are that the assessee filed its return of income on 31.10.2007 declaring a total income at NIL. The return was accompanied with profit and loss account, balance sheet and other requisite details. The return was processed u/s 143(1) on 15.11.2008 accepting the returned income. Thereafter, the case was selected for scrutiny and the statutory notices under section 143(2) and 142(1) of the Income Tax Act, 1961 were issued and served upon the assessee. The assessee was engaged in hotel business i.e. lodging and boarding. A survey was conducted on the assessee

The issue raised in the ground no. 1 is against the upholding the addition of Rs.6,76,23,000/- by the ld.CIT(A) as made by the AO u/s 69 as unexplained investment on the basis of incriminating materials comprising loose papers found during the course of survey and the issue raised in ground no.2 is against the upholding an amount of Rs.11,97,000/- by the ld.CIT(A) as made by the AO u/s 69C of the Income Tax Act, 1961 as unexplained expenditure. Both these grounds are being decided together .

During the appellate proceedings, the ld. CIT(A) dismissed the appeal of the assessee on ground no.1 and 2 after considering the submissions of the ld. AR by observing and holding as under : “2.3 The assessment order, submissions made for the appellant and materials on record have been considered. The appellant has claimed that the source of moneys for construction and the expenditure all ultimately came out of loans raised from Corporation Bank, that the appellant obtained loan for construction from Corporation Bank, that the loan disbursement was made by way of pay orders issued by the bank directly to the contractors named by the appellant, that the appellant had named bogus parties as contractors, that these parties issued accommodation bills and on receipt of the pay orders from the bank, discounted them for a fee @ 1 % and then returned the balance amount in cash to the appellant. Though the method of financing construction as claimed is ingenuous, the appellant has not been able to support his claim, either by producing the parties who furnished accommodation bills and after discounting returned the money to the appellant, the Assessing Officer's enquiries have also not been able to prove the existence of the parties at the addresses provided by the appellant, nor has the appellant been able to provide the bills furnished by the contractor's/workmen from whom he claims to have ultimately got the work done, nor has the appellant even produced any of such contractors/workmen. Further the amounts mentioned at pages 4 & 5 of the impounded papers (Rs. 6.88 crore) referred to by the Assessing

The ld. AR vehemently submitted before us that the order passed by the ld. CIT(A) was wrong and against the facts of the case on records. The ld. AR submitted that the AO himself admitted in the assessment order that the renovation of the hotel premises has taken place and further held that the purpose of incurring the expenditure of Rs.6,76,23,000/- has not been explained by the assessee and these payments were made to be receivable 10 4739/Mum/2011 Alongwith two other appeals in future. The AO also noted that alternatively that these could also be reimbursement to various parties for construction expenditure incurred on behalf of the assessee. Thus, the ld. AR argued that there was no doubt in the mind of the Assessing Officer that the assessee carried out the renovation and restoration work of hotel during the said period. Once it was accepted by the AO that that renovation has taken place, the same would definitely require funds for renovation and only source of the assessee was by way of loan from Corporation Bank. It was also corroborated from the loose papers impounded during the search /survey operation which stated the source of funds for making various payments as detailed therein from the Corporation Bank. The ld. AR further argued that the AO could not establish that there was any other source of money available with the assessee apart from the loan from the Corporation bank which was used for the purposes of renovation and the modus operandi was that the assessee was to get pay orders issued in the name of material suppliers and contractors who actually were not carrying out the work and accordingly arranged the pay orders in their names who after deducting 1% commission returned cash to the assessee. Ultimately, the assessee paid the said money to the material suppliers and contractors who actually undertook and performed the renovation work of the hotel. The ld. AR submitted that the findings of the AO for unaccounted money in the assessment order were nothing but guess work and imagination of the assessing officer without any corroborating evidences and materials. The ld. AR drew our attention to the page 13 of 11 4739/Mum/2011 Alongwith two other appeals the assessment order in which the AO has noted that “Apart from this the sheer quantum of Rs.6.88 crores indicates that the outflow must have been utilized for building assets (construction/renovation/loans). Thus, there was no doubt in the minds of the AO that renovation was carried out in the hotel and the assessee required money for the purpose of such renovation, the source whereof was explained out of the bank loan taken from the Corporation Bank as has been stated by the partner Mr Kashan Ghaswala in reply to query No.2 during his second statement by the department on 15.05.2007. The AO has failed to prove any other source of income of the assessee. The ld. AR also submitted that the ld.CIT(A) who has accepted the contention and also admitted that renovation work was done by the assessee in its hotel while upholding the order of the AO which was confusing and contradictory. The ld. AR also placed a copy the decision in the case of ITO V/s Shri Parvez Mohammed Hussain Ghaswala in ITA No.3314/Mum/2013 for the assessment year 2004-05 and ITA No.819/Mum/2012 for the assessment year 2007-08 composite order dated 30.10.2015, wherein the Tribunal while deciding the departmental appeal for the assessment year 2007-08 has considered the issue of Rs.2,62,40,000/- which was comprised in and part of Rs.6,88,22,000(Rs.6,76,23,000/- in ground no.1 and Rs.11,97,000/- in ground no.2) as apparent from page 4 of the paper book. The ld. AR specifically brought to the attention of the Bench para 6 page 11 and also para 10 at page 15 of the said Tribunal order, wherein the Co-ordinate 12 4739/Mum/2011 Alongwith two other appeals Bench has upheld the decision of addition by CIT(A) as made by the AO on the basis of some loose papers no 4 & 5 found during the survey on the assessee by holding that the additions were based on conjectures and surmises without any concrete evidence in his possession and also held that the provisions of section 69A of the Act has no application in the case of the assessee and was rightly deleted by the First Appellate Authority Rs.2,62,40,000/- + Rs 40,00,000/- aggregating to Rs.3,02,42,000/-. Finally, it was vehemently argued that since the addition of Rs.2,62,40,000/- was based on same loose papers no 4 and 5 has deleted by the by the CIT(A) which was upheld by the Tribunal and therefore the addition of Rs.6,88,22,000/- made in the case of M/s Alliance Hotel for the assessment year 2007-08 on the same materials could not be survived and sustained in the hands of the assessee as being without any basis and based on surmises and conjectures. The ld AR argued that the addition of Rs. 6,76,23,000/- made u/s 69 of the Act as unexplained investments deserved to be deleted on the same analogy as the similar additions made on the basis of loose paper no 4 and 5 were deleted by CIT(A) and upheld by the Tribunal specially in view of the fact that the renovation and repairs were duly explained with sources out of the loan taken from the Corporation Bank, and praying that the addition of Rs.6,76,23,000/- be deleted. Similarly, an amount of Rs.11,97,000/- was incurred as expenditure on renovation of hotel and on the same analogy the said addition be deleted in view of the

On the other hand, the ld. DR heavily relied on the orders of authorities below and submitted that the assessee during the course of survey while recording statement one of the partners of assessee-firm Shri Kashan Ghaswala, admitted that the expenditure incurred on the basis of loose papers No.4 and 5 impounded during the course of survey were incurred in cash and was unable to identify to heads under which they were incurred and as a result of which he voluntarily offered Rs.6,88,22,000/- as additional income over and above the regular incomer declared by the assessee in the return of income for the assessment year 2007-08 in the hands of the assessee firm. The mere retraction of surrender vide letter dated 7.6.2007, the assessee could not be allowed to retract the offer which it had made suo mottu voluntarily at the time of recording of statement as the withdrawal/retraction of the same was an after thought. The ld. DR also objected strongly to the submissions of the ld.AR that as the said expenditure was incurred for the purposes of renovation of hotel which was illegal and also stood demolished by the Municipal Corporation and the source of the said expenditure was out of bank loan taken from the Corporation Bank by the assessee. The assessee cooked up the whole story that the pay orders were issued in the name of those parties who did not carry out the actual work of construction and returned back the same to the 14 4739/Mum/2011 Alongwith two other appeals assessee and the said construction and renovation was completed out of the cash received by the assessee from those five parties the details whereof were given at page 5 of the assessment order. The facts were proved by the verification carried out by the Inspector deputed by the AO that none of the parties were in existence except M/s Priyanka Corporation. All these facts showed that retraction of the assessee was an afterthought and therefore there was no merit in the argument of the ld.AR. Ld. DR finally submitted that an amount of Rs.6,76,23,000/- was rightly brought to tax by the AO by invoking the provisions of section 69 of the Act on the basis of noting at pages 4 and 5 of the impounded during the survey proceedings and same was the position with regard to the addition of Rs.11,97,000/- which was also rightly made u/s 69C of the Act and prayed that the same be upheld for the above reasons.

We have carefully considered the rival submissions and perused the material placed before us including the orders of authorities below. We find that a survey was conducted u/s 133A on the assessee on 11th and 12th May, 2007 and a surrender/disclosure of Rs.6,88,22,000/- was made on 12.5.2007 at the time of recording the statement u/s 131 of the Act in relation to the assessment year 2007-08 when the Mr Kashan Ghaswala a partner in the assessee firm could not explain the entries in the loose sheets no 4 and 5 containing some cash receipts and payments of Rs. 6,88,22,000/-. We further find that in the second statement recorded on 15.05.2007, Mr Kashan Ghaswala stated in reply to query no 2 that the said 15 4739/Mum/2011 Alongwith two other appeals expenditure was incurred out of bank loan taken from Corporation Bank. The surrender/disclosure was retracted by the assessee vide letter dated 4.6.2007 filed on 7.6.2007. At the time of the survey, the assessee could not explain the source of Rs.6,88,22,000/- and various heads under which the expenditures were incurred and debited. However, in the retraction letter, the assessee submitted that the expenditure was incurred on the hotel renovation as recorded at page 4 and 5 of the impounded documents during the course of survey and the sources of the said expenditure were out of loan taken by the assessee from the Corporation Bank. The assessee also submitted that one of the condition by the bank for sanctioning the loan was that all the pay orders would be issued only in the name of the third parties i.e suppliers and contractors and no money would be disbursed in the name of the assessee directly. The ld. AR further submitted that due to reluctance of the contractors and suppliers to accept the payments by cheques in cash the pay orders from the bank were got issued in the name of suppliers and contractor who actually did not carry out the work. The said suppliers/contractors returned the cash to the assessee after deducting one per cent commission which was used by the assessee for the purpose of payment to the contractors and suppliers of material who carried out the renovation and repairs on the 3rd floor of the hotel for creating residential rooms. We find that at page 4 and 5 of impounded documents there were details of receipts and payments. As per descriptions on the paper no 4 and 5 the assessee received Rs.6,88,22,000/- and there were payments to 16 4739/Mum/2011 Alongwith two other appeals various parties for the capital expenditure and cash in hand Rs.4,70,000/- qua the page no 5 titled as “Corp Cash” (cash expenditure details) dated 19.12.2006, it was stated to represent the money from Corporation Bank. The ld.AR submitted before us that the expenditure incurred for the purpose of renovation was duly explained out of cash received by the assessee from the suppliers and contractors in whose names pay orders were issued by the bank originally and who after retaining 1 per cent commission returned the balance cash to the assessee. After hearing both the sides it is apparent that the assessee has carried out renovation and repairs of the hotel for creating more residential rooms for the purpose of which the assessee has raised loan from the Corporation Bank and the said renovation/construction was financed out of cash received by the assessee by making necessary arrangement with the bank. Further, the AO and ld. CIT(A) has also admitted that the assessee might have incurred some expenditure on renovation /construction/loans. We also find that the fact of repairs and renovation having been carried out by the assessee i.e Alliance Hotel was noted and accepted by the coordinate bench while adjusting the one of another partner in the assessee firm by holding that the M/S alliance Hotel carried out some illegal renovations and repairs which were subsequently demolished as evident from the order of Brihyan Mumbai Mahanagar Palika bearing no. ACA/180/MOH-A/di 19.03.2009. The source of such expenditure was out of loan taken by the assessee from the corporation bank. In our opinion, the whole exercise of revenue was based on 17 4739/Mum/2011 Alongwith two other appeals conjectures and surmises and there was no material on record which proved that the renovation work was met out of money other than the borrowed from the Bank, nor could the AO or ld.CIT(A) record any findings that the assessee had any other source of income apart from its regular income of the assessee. In our opinion, the assessee has explained the source of expenditure and the nature of expenditure incurred and therefore the Additions made by the AO u/s 69 of the Act as unexplained investments of Rs.6,76,23,000/- and u/s 69C of the Act unexplained expenditure of Rs.11,97,000/- could not be sustained in the present facts and circumstances. Moreover, the co-ordinate bench of the Tribunal in the case of Shri Parvez Mohammed Hussain Ghaswala (supra) has dismissed the departmental appeal for the assessment year 2007-08 by upholding the order of the ld.CIT(A) wherein the CIT(A) deleted the addition of Rs.2,62,40,000/- made on the basis of page 4 and 5 impounded during the course of survey from the assessee and which were also the basis for making additions in the hands of the assessee which are subject matter of the current appeal before us. The additions in the hands of Mr.Parvez Ghaswala, the partner of the assessee-firm was made on the basis of same documents page no 4 and 5 found during the survey action as in the case of assessee. The Tribunal vide para 6 has held as under : “6. After going through the rival submissions and material on record we find that the addition has been made mainly on the basis of “Parvez Sir” appearing on the loose paper bearing No. 4 & 5 and cash statement dated 18.11.2006. In this regard the consistent stand of the assessee has been that “Parvez Sir” appearing on the loose paper 18 4739/Mum/2011 Alongwith two other appeals bearing No. 4 & 5 and cash statement dated 18.11.2006 does not relate to him. He stated that he seized to be a partner with effect from 15.11.2006 in the firm of Alliance Hotel and the amounts shown as having been paid to “Parvesh Sir” did not relate to him, as stated by Kasam Ghaswala, partner of Alliance Hotel. Further stand of the assessee has been that these slips of paper were recovered from the business premises of Alliance Hotel and not from assessee. These slips of paper bearing No. 4 & 5 and cash statement dated 18.11.2006 were not in his handwriting. Assessee was also not called by the survey party for recording his statement in relation to papers found during the course of survey proceedings in the premises of Alliance Hotel and to record the statement to verify whether the payments made to “Parvez Sir” in the papers found is the payment made to assessee or not. Assessee was not called for recording his statement by the Assessing Officer of Alliance Hotel during the course of assessment proceedings of the said firm. However, the Assessing Officer of the assessee in his case recorded the statement of the assessee wherein assessee had denied that he is not “Pervez Sir” as mentioned in the papers found during the course of survey action conducted at the premises of Alliance Hotel. It is undisputed that papers showing the name of “Parvez Sir” were found in the premises of Alliance Hotel during the course of search action and not from assessee. Papers found were not in his handwriting. The partner of Alliance Hotel, Shri Kasam Ghaswala in his statement has stated that payment made to “Parvez Sir” is not the amount paid to the assessee. Neither the survey party nor the Assessing Officer of Alliance Hotel recorded the statement of assessee. Assessee, in his statement before the Assessing Officer, has categorically stated that he is not “Pervez Sir” as mentioned in the papers found from the premises of Alliance Hotel. Assessee also objected to the action of the Assessing Officer in making addition under section 69 of the Act. For invoking provisions of section 69 of the Act assessee should be the owner of any money, bullion, jewellery or any other valuable articles. In this case of assessee he was not found to be the owner of any money, bullion, jewellery or any other valuable articles in previous year relevant to assessment year. In such a situation invoking of provisions of section 69 was not justified. The entries made on pages 4 & 5 of the impounded papers were not made contemporaneously. The right hand top corner of page 5 shows that the entries were made on 19.12.2006 (after the assessee retired from the firm), the transactions as such relate to 11.11.2006, 11.12.2006, 16.12.2006 and 19.12.2006 showing that the entries were made a few days after the transactions were completed. In this background the stand of the assessee has been that the amounts alleged to have been paid to “Parvez Sir” (as per the impounded papers) also show that such amounts were disbursed by him to the various heads of labourers in 19 4739/Mum/2011 Alongwith two other appeals getting the renovation work executed. Having considered the same the CIT(A) rightly held that assessee was not found to be owner of any money, bullion, jewellery or other valuable articles. No concrete evidence has been brought on record by Assessing Officer to establish that the entry “Parvez Sir” in the impounded paper establishes the fact that it refers to the assessee, i.e. Shri Parvez Mohammed Hussain Ghaswala. Similarly the amount of Rs.2,62,40,000/- mentioned against the entry of “Parvez Sir” was ever paid to the assessee. Assessing Officer had made the addition only on surmise that the impounded papers bearing No. 4 & 5 were containing entries which are dated 11.11.2006 whereas the assessee retired from the firm on 15.11.2006. Assessee in his statement before the Assessing Officer has categorically denied that he is not “Parvez Sir” as mentioned in the impounded papers in respect of Alliance Hotel. Apart from the above, the Assessing Officer did not have any other ground for arriving at the conclusion that the entry “Parvez Sir” is referring to assessee. It is undisputed fact that Alliance Hotel had carried out reconstruction work which was subsequently turned out to be illegal and was demolished. This fact was further corroborated by the order of the Brihyan Mumbai Mahanagar Palika bearing No. ACA/180/MOHA/di. 19.03.2009, clearing mentioned that the said firm had constructed unauthorized construction of mezzanine floor and additional room with attached toilet in Alliance Hotel, 3rd floor, Empire Building. The fact of reconstruction of Alliance Hotel was accepted by Shri Kasan Ghaswala, being Managing Partner of the firm. In view of this it is absolutely evident that the Assessing Officer has made the addition on conjuncture and surmises without concrete evidence in his possession. ”

From the above facts and discussions, we find that the coordinate bench of the Tribunal has upheld the deletion of addition by ld. CIT(A) which was made by the AO on the basis of loose papers page no 4 and 5 impounded during the course survey action to the tune of Rs.2,62,40,000/- + Rs.40,00,000/- totaling to Rs.3,02,40,000 holding that the same were made on the basis of surmises and conjuncture and rightly deleted by the ld.CIT(A). Following the same analogy and the ratio laid down in the said decision and also the facts that no corroborating materials were found by the department to make these additions. Therefore, we set aside the order of the ld. CIT(A) on issue of confirmation of additions of Rs.6,76,23,000/- as unexplained investment u/s 69 of the Act and Rs.11,97,000/- as unexplained expenditure u/s 69C of the Act and the AO is directed to delete the same.

Ground No.3 is against the disallowance of depreciation of Rs.22,99,096/- made by the Assessing Officer on hotel building.

The AO observed that the assessee arranged issued bogus bills amounting to Rs.7,85,01,143/- which were mentioned by the AO on page no 21 and 22 of the assessment order and not Rs.6,88,22,000/- as claimed by the assessee. The AO further noted that the Corporation Bank made disbursements to five parties for bogus bills details whereof was given on 21 4739/Mum/2011 Alongwith two other appeals page 15 of the assessment order. The assessee has capitalized only Rs.4,59,81,929/- out of Rs.7,85,01,143/- in assessment year 2007-08 and depreciation was also claimed accordingly at Rs.22,99,096/- in assessment year 2007-08 and notwithstanding the payments by the assessee out of cash which was generated out of bank loan from Corporation Bank ,the assessee claim of depreciation was based on the bogus bills issued by the parties who did not actually carry out the work of renovation and construction but passed on the money to the assessee after retaining 1 per cent commission and therefore depreciation amounting to Rs.22,99,096/- could not be allowed as not being genuine and further held that the depreciation on the rest of the additions would be disallowed in the year of addition as depreciation on the addition were unsupported by the vouchers and could not be allowed for the various reasons as given in para 6.9 at page 22 which are reproduced below:- “6.9 The disbursements made by Corporation Bank on account of bogus bills amounts to Rs.7.,85,01,143/-. As the assessee has capitalized only Rs 4,59,81,928/- out of the above in the AY 2007-08. Hence the depreciation on the same being Rs.22,99,096/- is disallowed in the AY 2007-08. Depreciation on the rest of the additions will be disallowed in the year of addition. Similarly the depreciation on the addition of Rs 4,59,81,928/- will not be allowed in the subsequent years also. Thus the depreciation on the additions to the capital assets, unsupported by the vouchers, cannot be allowed because of the following reasons: » The assessee in the course of the survey operation u/ s 133A admitted the unaccounted expenditure of Rs 688.20 lacs. Later he retracted his statement and to explain the papers he took resort of dual explanation. On the one hand he explained that the source of the funds was loan from the bank. On the other hand, he contended that the expenditure mentioned in the sheet 22 4739/Mum/2011 Alongwith two other appeals is the expenditure for the renovation of the hotel. He indeed capitalized the same, without the bills supporting that. In the FY 2006-07, as per the submissions of the assessee, he capitalized Rs 4,59,81,928/- of expenses. » The assessee failed to produce the supporting evidences of the capitalization of the expenses. » Assessee failed to produce the parties, through whom he claimed to withdraw cash, for verification. In the course of the verification by the department, it was found that none of the parties exist at the addresses mentioned by the assessee. » Thus both the contentions of the assessee do not stand the test of the evidence. » Loan mentioned by the assessee was sanctioned only in Nov 2006 and the expenditure on the renovation of the assessee was incurred by the assessee much earlier therefore the contention of the assessee is again factually incorrect. » Assessee has submitted the wrong cost estimate of the renovation of the hotel to the bank and the difference is almost equal to the amount of bogus bills entered by the assessee. Therefore the cash received from the bogus bill parties cannot be related to the expenditure on the renovation of hotel. » Even the assessee has not taken the BMC approval for the renovation of the hotel. Which further indicates that the contention of the assessee related to the capital expenditure is not correct. » Even the bills submitted by the assessee to the bank are apparently bogus. As stated earlier, it is impossible to utilize the material as stated in the bills in the locality, where the hotel exists”.. No depreciation can be allowed when the department and the assessee, be are in agreement that the bills for addition to fixed asset are bogus. All these facts together clearly establish that the contention of the assessee is not correct and depreciation cannot be allowed to the asseseee”.

Before us, the ld.AR vehemently submitted that the assessee has actually incurred capital expenditure under specific heads of fixed assets and capitalized in the relevant block of assets details whereof were also filed before the AO. The ld counsel further submitted that said additions/capital expenditure were met out of the loan from Corporation Bank. Accordingly the depreciation was claimed on hotel building which was being used for the purposes of business of the assessee of running the hotel and benefit of depreciation could not be denied to the assessee and prayed that the claim of the assessee be allowed.

The ld. DR, heavily relied on the orders of authorities below and prayed that the order of ld.CIT(A) be upheld on this issue.

Issue raised in grounds of appeal no.4 is against the confirmation of disallowance of interest of Rs.22,75,714/- paid to the Corporation Bank.

After considering the rival submissions and perusing the relevant material placed before us, we find that the assessee has already proved that the renovation and construction of hotel out of funds borrowed from the Corporation Bank which has already been elaborately discussed while deciding grounds of appeal no.1 and 2 of this appeal and decided in favour of the assessee. In our opinion, the assessee has proved that the loan was taken ,borrowed and used for the purpose of business of the assessee and therefore , the assessee is entitled to claim the depreciation on the amount of expenditure capitalized during the year. On the same analogy , the interest on loan from Corporation Bank would be allowed as admissible expenses. Accordingly, we set aside the order of the ld. CIT(A) and direct the AO to allow the claim of the assessee qua interest expenses of Rs. 22,75,714/-.

During the course of appeal proceedings, the ld. CIT(A) partly allowed the appeal of the assessee by deleting the addition to the extent of Rs 1,57,85,000/- and sustained the remaining amount of Rs.44,81,000/- by observing and holding as under : “5.3 The assessment order, submissions made for the appellant and materials on record have been considered. The computer was found' in the premises of and under the control of the appellant and thus the presumption is that the entries found recorded in the files on the computer belong to the appellant which presumption has not been rebutted. The appellant has merely denied the same which is not sufficient to rebut the presumption. The additions made are thus upheld. However with regard to addition with regard to file RELlABLE_EXPS.xls, it has been stated in appeal order dated 31/03/2011 in the appellant's appeal for AY 2006-07 in appeal No. CIT(A)-23/ACIT 12(1)/IT- 357//08/09 that "It is seen that entries on the sheets referred to by the AO relate to Upadastra account, Stamp House (Botawala), Reliable Investments & Developers and Maria Developers. In view of the fact that the photocopy of property card filed shows the names of owners as earlier owned by Upadrasta Group which was transferred in the names of Javed Mohd Hussein, Irfan M Yusuf Vaid, Abrar Irfan Vaid (carrying n business in the name and style of Reliable Investments & Developers). Further that Shri Javed Mohd Hussian and Shri Javed Ghaswala are one and the same person, no addition can be made in the hands of the appellant in respect of these entries.". Since the 27 4739/Mum/2011 Alongwith two other appeals entries on file RELlABLE_EXPS.xls pertain to Botawala Building and Upadastras Bldg, Maria Developers, on the same reasoning as in appeal for AY 2006-07, addition in respect of expenses relating to file RELlABLE_EXPS.xls are deleted. Accordingly this ground is partly allowed.”

The ld. counsel of the assessee vehemently submitted before us that the said additions as sustained by the ld.CIT(A) at Rs. 44,81,000/- has already been covered by the assessee by making suo-motto disallowance of Rs.50 lakhs in the computation of income and also stated in the affidavit dated 11.6.2007 filed by the assessee before the AO a of copy which was filed at page 21 to 26 of the paper book. Therefore, Rs. 44,81,000/- be considered and adjusted out of the suo mottu disallowance already made by the assessee in the computation of income and accordingly the addition as sustained by the ld. CIT(A) to the extent of Rs.44,81,000/- be deleted.

We have carefully considered the rival contentions of the parties and perused the material available before us. We find that the assessee has suo motto added a sum of Rs.50 lakhs to the income in the computation of total income. We also find from the copy of affidavit of the assessee filed at pages 21 to 26 of the paper book stating that Rs.50 lakhs was offered by the assessee for tax and due taxes were paid accordingly. We also find from the statement of the total income filed at pages 39 to 40 of the paper book, wherein a sum of Rs.50 lakhs was shown as income to cover all defects and discrepancies as filed at page 39 of PB which is extracted below:-

Grounds of appeal taken by the revenue are as under: "1 On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.l,57,85,000/- made u/s. 69C on the reasons that the photocopy of property card filed shows the names of owners as earlier owned by Upadrasta Group which was transferred in the names of Javed Mohd Hussem, Irfan M. Ysuf vaid Abrar Irfan Vaid, carrying on business in the name and style of Reliable Investment & Developers.

The issue raised by the revenue in the ground No.1 is against the deletion of addition of Rs.1,57,85,000/- by the ld. CIT(A) as made by the AO u/s 69C of the Act.

During the course of assessment proceedings, the assessee on the basis of document founds during the course of survey confronted the assessee, which the assessee denied altogether by submitting that notings in the said pages did not relate to M/s Alliance Hotel or any partner of the assessee. The assessee submitted that notings were related to some property transactions and balance sheet of Upadrasta Group which was not in any way related to assessee. However, the AO added the same to the total income of the assessee u/s 69C of the Act . During the appellate proceedings, the ld. CIT(A) deleted the said addition by holding that : 5.3……. However with regard to addition with regard to file RELlABLE_EXPS.xls, it has been stated in appeal order dated 31/03/2011 in the appellant's appeal for AY 2006-07 in appeal No. CIT(A)-23/ACIT 12(1)/IT- 357//08/09 that "It is seen that entries on the sheets referred to by the AO relate to Upadastra account, Stamp House (Botawala), Reliable Investments & Developers and Maria Developers. In view of the fact that the photocopy of property card filed shows the names of owners as earlier owned by Upadrasta Group which was transferred in the names of Javed Mohd Hussein, Irfan M Yusuf Vaid, Abrar Irfan Vaid (carrying n business in the name and style of Reliable Investments & Developers). Further that Shri Javed Mohd Hussian and Shri Javed 30 ITA No 4075, 4739/Mum/2011 Alongwith two other appeals Ghaswala are one and the same person, no addition can be made in the hands of the appellant in respect of these entries.". Since the entries on file RELlABLE_EXPS.xls pertain to Botawala Building and Upadastras Bldg, Maria Developers, on the same reasoning as in appeal for AY 2006-07, addition in respect of expenses relating to file RELlABLE_EXPS.xls are deleted.

We have heard the rival submissions and perused the material placed before us. We find that the ld.CIT(A) has recorded the finding of the facts while deleting the said addition and by holding that the entries in the said papers/sheets did not belong to the assessee or sister concern or its partners. We are in agreement with conclusion drawn by the ld.CIT(A) as nothing to controvert the finding of ld.CIT(A) has been brought before us by the ld. DR. Therefore we dismiss the appeal of the revenue by upholding the order of CIT(A).

Other grounds raised

In the result, the appeal of the assessee are allowed and that of revenue is dismissed. The above order was pronounced in the open court on 8th November, 2016. घोषणध खुरे न्मधमधरम भें ददनधंकः 8th November,2016 को की गई । Sd sd (JOGINDER SINGH) ( RAJESH KUMAR) Judicial Member Accountant Member भुंफई Mumbai: 8th November, 2016. व.नन.स./ SRL , Sr. PS