Shri Dhirajlal V. Sanghvi, Ahmedabad V. The ACIT, Central Circle-2(4), Ahmedabad

CO 267/AHD/2014

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5440 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-07-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Capital asset; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Peak credit; Corroborative evidences; Assessment record; Onus to prove; Documents seized
• Section: 143(3); 153A; 133(6); 201; 64; 131; 69; 132; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, CENTRAL CIRCLE - 2(4), AHMEDABAD (APPELLANT /RESPONDENT ) VS DHIRAJ LAL V. SANGHVI, A/14/21, T IRTH BHOOMI APARTMENTS, OPP. LAW GARDEN, ELLISBRIDGE, AHMEDABAD PAN: ADKPS5328 J (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI O.P. SHARMA , CIT - D . R. ASSESSEE BY: SHRI S.N. SOPARKAR & MS. URVASHI SHODHAN , A.R S . DATE OF HEARING : 18 - 07 - 2 019 DATE OF PRONOUNCEMENT : 03 - 10 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE TWO APPEALS FILED BY REVENUE AND TWO CROSS OBJECTIONS FILED ASSESSEE FOR A.Y. 2010 - 11 & 2011 - 12 , ARI SE FROM ORDER OF THE CIT(A) - III, AHMEDABAD DATED 07 - 05 - 2 014 , IN PROCEEDINGS UNDER SECTION 153 A R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS FILED FOLLOWING GROUNDS OF APPEAL: - IT(SS)A NO. 302/AHD/2014 I T (SS) A NO S . 302, 303 & CO NO S. 267 & 268 / A HD/20 14 A SS ESSMENT YEAR 2010 - 11 & 2011 - 12 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GRANTING RE LIEF IN RESPECT OF TELESCOPING OF INCOME BENEFIT AMOUNTING TO RS. 70,00,000/ - . 3 . THE ASSESSEE HAS FILED FOLLOWING GROUNDS IN CROSS OBJECTION: - CO NO. 267/AHD/2014 1. IN LAW AND IN FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERR ED IN CONFIRMING ADDITION OF RS. 1,00,00,000 AFTER COMPUTING PEAK BALANCE FOR CURRENT ACCOUNT TRANSACTIONS IN THE CASE OF APPELLANT AT RS. 1,09,50,310 AS AGAINST PEAK BALANCE OFFERED TO TAX FOR RS. 9,50,310. 4 . A SEARCH ACTION U/S. 132 OF THE ACT WAS CARRIED OUT IN THE GROUP CASES OF SANGHVI GROUP ON 9 TH MARCH, 2011. A NOTICE U/S. 153A OF THE ACT WAS ISSUED ON 28 TH SEP, 2011. IN RESPONSE TO NOTICE ISSUED U/S. 153A OF THE ACT, THE ASSESSEE HAS FILED RETURN ON 23 RD MARCH, 2012 DECLARING INCOME OF RS. 1 , 60 , 060/ - . DURING THE COURSE OF SEARCH, T HE ASSESSEE HAS DISCLOSED RS. 24.6 CORES AS UNACCOUNTED INCOME VIDE STATEMENT U/S. 132(4) OF THE ACT ON 10 TH MARCH, 2012 AND THE ASSESSING OFFICER STATED THAT ASSESSEE HAS NOT DISCLOSED THIS AMOUNT IN HIS RETURN OF INCOME FILED IN RESPECT TO NOTICE ISSUED U/S. 153A OF THE ACT. T HE AS SESSEE HAS SUBMITTED THAT HE HAD DISCLOSED MOST OF T HE ITEMS AND HUGE DIFFERENCE IN FIGURES WAS ONLY DUE TO TELESCOPING EFFECT AND SUBMITTED A CASH FLOW CONTENDING THAT HE HAD INCLUD ED ENTIRE UNACCOUNTED TRANSACTION IN THE CASH FLOW STATEMENT . THE ASSESSING OFFICER STATED THAT ASSESSE E HAS DIVIDED CASH FLOW STATEMENT IN FOUR PARTS (I) RECEIPT INFLOW, (II) RECEIPT (III) PAYMENT OUTFLOW AND (IV) PAYMENTS. THE ASSESSEE SUBMITTED THAT R ECEIPT S AND PAYMENTS WERE TRANSACTION S OF FINANCIAL NATURE AND NO INCOME WAS GENERATED FROM THESE TRANSACTIONS, LOAN S AND ADVANCES GIVEN TO THE VARIOUS PARTIES AND RECEIVED FROM THE VARIOUS PARTIES WERE INCLUDED UNDER THESE HEADS. RECEIPT INFLOW AND PAYME NT OUTFLOW WERE TRANSACTIONS OF I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 3 REVENUE NATURE. ACCORDINGLY , THE ASSESSEE H A S DISCLOSED FOLLOWING AMOUNTS IN VARIOUS YEARS IN THE NAME OF FOLLOWINGS PERSONS. I) DHIRAJLAL SANGHAVI, HUF RS.20,00,000/ - A.Y.2008 - 09 II) DHIRAJLAL SANGHAVI, INDL. RS. 10, 00 0/ - A.Y.2009 - 10 III ) - DO - RS.15,00,000/ - A.Y.2010 - 11 VI) - DO - RS.10,65,00,000/ - A.Y.2011 - 12 V) ASHIK D. SANGHAVI RS. 1,56,00,000 / - A.Y.2008 - 09 VI) DHIRAJLAL SANGHAVI, HUF RS. 1,02,33,850/ - A.Y.2008 - 09 ______________ TOTAL RS .135933850/ - THE AS SESSING OFFICER HAS REJECTED THE CASH FLOW STATEMENT AFTER OBSERVING FOL LOWING DISCREPANCIES IN THE THE CASH FLOW SUBMITTED BY THE ASSESSEE. 5.3 A PERUSAL OF THE CASH FLOW STATEMENT OF THE ASSESSEE REVEALS FOLLOWING DISCREPANCIES: I) TRANSACTIONS DONE UNDER NAMES OF DIFFERENT MEMBERS OF FAMILY MEMBERS HAVE BEEN INCLUDED BY THE ASSESSEE IN HIS CASH FLOW STATEMENT. IT IS PERTINENT TO MENTION HERE THAT TRANSACTIONS OF PROPERTY, WHEREIN THE NAME OF THE ASSESSEE IS NOT APPEARING IN THE LEGAL DOCUMENTS AND CHEQUE AMOUNT IS ALSO_NOT PAID BY THE ASSESSEE CANNOT BE CLAIMED BY THE ASSESSEE IN HIS CASH FLOW STATEMENT JUST TO TAKE BENEFIT OF TELESCOPING. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED DURING THE COURSE OF THE PROCEEDINGS THAT THE ASS ESSEE HAS OWNED UP THESE TRANSACTIONS IN HIS STATEMENTS. HOWEVER, IT IS TO BE KEPT IN MIND THAT STATEMENT OF THE ASSESSEE CAN'T OVER - RIDE THE APPLICABILITY OF LAW, PARTICULARLY WHEN ALL THE FAMILY MEMBERS ARE ALSO FILING THEIR RETURNS OF INCOME AND ARE ALS O HAVING THEIR INDEPENDENT SOURCE OF INCOME. SOME OF SUCH TRANSACTIONS SHOWN BY THE ASSESSEE IN HIS CASH FLOW STATEMENT ARE AS UNDER: IT IS SEEN THAT AS PER DOCUMENTS SEIZED THAT SHRI ASHIK SANGHVI HAS SOLD A FLAT IN MUMBAI FOR RS. 1.15 CRORES. AS PER DO CUMENTS SEIZED, CASH PAYMENT OF RS. 46 LACS WAS MADE ON THIS PROPERTY. IN THE RETURN OF INCOME SHRI ASHIK SANGHVI SUO - MOT DECLARED THE VALUE OF THE PROPERTY AS RS. 2.71 CRORES. SHRI ASHIK SANGHVI COULD NOT FURNISH ANY BASIS FOR CONSIDERING THE VALU E OF TH IS PROPERTY AT RS. 2.51 CRORES AND THE CASH COMPONENT OF RS.1.56 CRORES IS CONSIDERED IN THE CASH FLOW OF THE ASSESSEE. SIMILARLY, IT IS SEEN THAT A FLAT OF RS. 33 LACS WAS PURCHASED BY SHRI SAGAR SANGHVI, WHEREIN CASH PAYMENT OF RS. 25 LACS WAS MADE. TH IS AMOUNT WAS CONSIDERED AS PAYMENT BY THE ASSEESSEE IN THE CASH FLOW STATEMENT. IT IS SEEN THAT THE BANAKHAT IS REGISTERED IN THE NAME OF SHRI SAGAR SANGHVI, FURTHER THE AGREEMENT TO SALE WHEREIN THE AMOUNT OF RS. 33 LACS IN MENTIONED AGAINST THE DOCUMENT ED PRICE OF RS. 8 LACS IS ALSO IN THE NAME OF SHRI SAGAR SANGHVI, HENCE, THE ASSESSEE CONTENTION THAT THE PAYMENT HAS BEEN MADE BY HIS IS NOT ACCEPTABLE AS SHRI SAGAR SANGHIV IS THE PROP. OF ABBERANT STYLE RETAIL STATE AND IS ALSO ENGAGED IN SHARE TRADING BUSINESS. SIMILARLY IT IS SEEN THAT THE ASSESSEE'S WIFE SMT. KOKILABEN SANGHVI, WHO IS THE PROP OF RETAIL SAREE SHOP IN THE NAME OF AISHWARYA NX HAD PAID CASH OF RS. 85 LACS TO ONE SHRI G.K.PATEL, HOWEVER, THE PAYMENT HAS BEEN REFLECTED BY THE ASSESSEE. VARIOUS ENTRIES REGARDING CASH LOANS GIVEN AND TAKEN WERE FOUND DURING THE COURSE OF SEARCH AS DISCUSSED IN THE ORDER. THE ASSESSEE HAS REVERSED THE ENTRY OF CASH RECEIPT IN CASES WHERE THE I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 4 ENTRY HAS BEEN STRUCK OFF. HOWEVER, EVEN IN CASES WHERE THE ENTR IES HAVE NOT BEEN STRUCK OFF, THE ASSESSEE HAS REVERSED THE ENTRY STATING THAT AS CHEQUE HAS BEEN RETURNED THE CASH HAS ALSO BE GIVEN, BUT THERE IS NO EVIDENCE OR NOTING IN RESPECT OF THE CASH REPAID. HENCE THE ASSESSEE'S CONTENTION IS NOT ACCEPTABLE. (II ) IN THE CASE OF SHRI. ASHIK SANGHVI, IT IS TO BE FURTHER NOTICED THAT AS PER SEIZED DOCUMENTS, ONLY RS.46 LACS WERE RECEIVED IN CASH ON SALE OF FLAT IN MUMBAI. HOWEVER, THE ASSESSEE HAS ARBITRARILY SHOWN FURTHER CASH RECEIPTS OF RS.1.10 CRORES IN HIS CASH FLOW STATEMENT. THERE IS NO SUCH MATERIAL FOUND DURING SEARCH WHICH INDICATES SUCH ON - RNONEY RECEIPT BY THE ASSESSEE. FURTHER, NO SUCH INFORMATION WAS GIVEN BY THE ASSESSEE OR SHRI ASHIK SANGHVI IN THEIR STATEMENTS DURING THE COURSE OF SEARCH. (III) THE A SSESSEE IS NOT ONLY TAKING BENEFIT OF TELESCOPING IN THE CASE OF HIS FAMILY MEMBERS, BUT HE IS ALSO TAKING BENEFIT OF TELESCOPING IN THE CASH FLOW STATEMENT IN RESPECT OF TRANSACTIONS DONE BY SHRI MOHANBHAI BHARWAD, WHO IS ALTOGETHER A DIFFERENT PARTY. (IV ) AT THE END OF THE CASH FLOW STATEMENT, THE ASSESSEE HAS SHOWN VARIOUS AMOUNTS AS ENTRY REVERSED UNDER THE HEAD 'RECEIPTS' BETWEEN 21/02/2011 TO 05/03/2011. WHEN INQUIRED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CONTENDED THAT HE HAS ADVANCED THESE AMOUNTS EARLIER AND THESE AMOUNTS HAVE BEEN RECEIVED BACK BY HIM. WHEN ASKED TO GIVE EVIDENCE IN SUPPORT OF RECEIPT OF THESE AMOUNTS, THE ASSESSEE SUBMITTED THAT HE HAS ISSUED CHEQUES TO VARIOUS PARTIES ON THESE DATES AND IT SHOULD BE IMPLIE D THAT HE HAS RECEIVED CASH BACK FROM THESE PARTIES, AS WHILE ADVANCING MONEY IN CASH, HE IS RECEIVING CHEQUES FROM THE PARTIES AND WHILE RECEIVING BACK CASH, HE IS ISSUING CHEQUES TO THE PARTIES CONCERNED TO SQUARE OFF THE TRANSACTIONS. IT IS TO BE NOTED THAT THERE IS NO SEIZED MATERIALS TO SUPPORT THE ARGUMENTS OF THE ASSESSEE. IN THE EARLIER PART OF THE CASH FLOW STATEMENT, THE ASSESSEE HAS SHOWN RECEIPT/PAYMENT OF LOANS/ADVANCES ON THE BASIS OF THE SEIZED MATERIAL. HOWEVER, IN CASE OF 'ENTRY REVERSED', THERE IS NO SEIZED PAPER WHERE SUCH TRANSACTION IS RECORDED. THE ASSESSEE HAS INSERTED THESE RECEIPTS ONLY ON THE BASIS OF ISSUANCE OF CHEQUES AND SUCH RECEIPTS CANNOT BE CONSIDERED ONLY ON PRESUMPTIVE BASIS. (V) THE ASSESSEE HAS NOT SHOWN MANY INWAR D AND OUTWARD TRANSACTIONS IN CASH IN HIS CASH FLOW STATEMENT ON THE PLEA THAT EITHER THESE TRANSACTIONS DO NOT PERTAIN TO HIM OR THESE TRANSACTIONS ARE ACCOUNTED FOR. THE CLAIM OF THE ASSESSEE IN RESPECT OF THESE TRANSACTIONS IS CONSIDERED IN SUBSEQUENT P ARAGRAPHS. IN VIEW OF THE ABOVE OBSERVATIONS, THE ASSESSING OFFICER HAS REJECTED THE CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE AND DISCUSSED THE ISSUES AS UNDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS ASKED THE ASSES SEE TO EXPLAIN THE CONTENT OF A DIARY A/13 COMPRISING OF 36 PAGES FOUND AND IMPOUNDED DU RING THE COURSE OF SURVEY CARRIED A T THE GROUP SHOW ROOM ASHWARYA NX , BADAJ, AHMEDABAD. THE ASSESSING OFFICER HAS PRODUCED THE PAGE WISE SUMMARY OF DIARY AT PARA 6.1 O F ASSESSMENT ORDER AS UNDER: - SR. NO. NAME OF THE PERSON TO WHOM CASH PAID PAGE NO. OF SEIZED MATERIAL AMOUNT (RS.) 1 PRATIK BHARWAD A - 30, PAGE NO. 2 700000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 5 2 RAJESH JHAVERI A - 30, PAGE NO. 4 17500000 3 RAJESH JHAVERI & MA SHUKBHAI ADANI A - 30, PAGE NO. 5 3500000 4 MANISH PAKODA A - 30, PAGE NO. 8 300000 5 VAIBHAV A - 30, PAGE NO. 15 700000 6 SEVAN TIBHAI A - 30, PAGE NO. 16 1500000 7 FOR PURCHASE OF LAND NEAR SUDAMA RESORT A - 30, PAGE NO. 17 1100000 8 CHETANBHAI (FOR DHOLERA LAND) A - 30, PAGE NO. 18 750000 9 MITULBHAI A - 30, PAGE NO. 19 250000 10 KIRITBHAI A - 30, PAGE NO. 20 250000 11 HARESHBHAI A - 30, PAGE NO. 21 600000 12 FOUR PERSONS A - 30, PAGE NO. 23 7000000 13 DHAV AL SANGHVI A - 30, PAGE NO. 29 2000000 14 RUCHIR A - 30, PAGE NO. 30 6000000 15 PRAVIN VORA & S.K. A - 30, PAGE NO. 32 7000000 16 DHAVALBHAI A - 30, PAGE NO. 33 1000000 17 RAMESH HIRA (DESSA) A - 30, PAGE NO. 34 2000000 18 MOHANBHA I & PRATIK BHARWAD A - 30, PAGE NO. 35 13000000 TOTAL 6,51,50,000/ - T HE ASSESSEE WAS ASKED TO EXPLAIN THE CONTENTS OF THIS DIARY AND TO SHOW CAUSE AS TO WHY THE AMOUNTS ADVANCED AGGREGATING TO R S. 6,61,50 ,0 00/ - UN - RE CORDED IN THE BOOKS OF ACCOUNT S HOULD NOT BE TREATED AS HIS UNACCOUNTED INCOME. THE ASSESSEE EXPLAINED THAT NOITNGS FOUND IN THE LO O SE PAPERS, DIARIES ETC. HAS NEXUS WITH THE ADDITIONAL INCOME DECLARED BY HI M BASED ON CASH FLOW STATEMENT. BASED ON THE EXPLANATION THE AMOUNT ADMITTED BY THE I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 6 ASSESSEE AS RECEIPT/PAYMENT MENTIONED AT PARA 6.4 IN THE ASSESSMENT ORDER IS REPRODUCED AS UNDER: - SR. NO. NAME OF THE PERSON TO WHOM CASH PAID AMOUNT (RS.) RECEIPT PAYMENT REMARKS 1 PRATIK BHARWAD 700000 700000 2 RAJESH JH AVERI 17500000 17500000 17500000 DURING THE STATEMENT RECORDED U/S 131 ON 26.05.2011 THE ASSESSEE HAD CONTENDED THAT THE CASH GIVEN IN F.Y. 2009 - 10 WAS RECEIVED BACK 3 RAJESH JHAVERI & MASHUKBHAI ADANI 3500000 3500000 4 MANISH PAKODA 300000 300000 5 VAIBHAV 700000 NOT ADMITTED 6 SEVANTIBHAI 1500000 1500000 1500000 DURING THE STATEMENT RECORDED U/S 131 T HE ASSESSEE HAD CONTENDED THAT THE CASH GIVEN WAS RECEIVED BACK 7 FOR PURCHASE OF LAND NEAR SUDAMA RESORT 1 100000 1100000 8 CHETANBHAI (FOR DHOLERA LAND) 750000 750000 9 MITUJBHAI 250000 2500000 10 KIRIT BHAI 250000 250000 11 HARESHBHAI 600000 600000 12 FOUR PERSONS 7000000 5000000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 7 13 DHAVAL SANGHVI 2000000 14 RUCHIR 6000000 6000000 PERTAINS TO 20 10 - 11 15 PRAVIN VORA & S.K. 7000000 6500000 300000 500000 16 DHAVALBHAI 1000000 1000000 17 RAMESH HIRA (DESSA) 2000000 2000000 18 MOHANBHAI & PRATIK BHARWAD 13000000 13000000 THE ASSESSING OFFICER HAS NOT ACCEPTE D THE ABOVE SUBMISSION OF THE AS SESSEE AND STATED THAT ASSESSEE HAS WITHOUT ASSIGNING ANY REASON OR EVIDENCES CONSIDER ED THE AMOUNT EITHER PAYMENT OR RECEIPT AND TAKEN BENEFIT OF TELESC OPING. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT SOME OF THE TRANSACTIONS WERE PERTAINED TO THE ASS ESSMENT YEAR 2010 - 11 AND SOME OF THE TRANSACTIONS WERE PERTAINED TO ASSESSMENT YEAR 2011 - 12. THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS WITHOUT ASSIGNING ANY REASONS OR EVIDENCE CONSIDERED THE AMOUNT AS EITHER RECEIPT OR PAYMENT AND TAKEN BEN EFITS OF TELESCOPING. THE ASSESSING OFFICER HAS TAKEN THE VIEW OF THE TRANSACTIONS AS UNDER : - A.Y.2010 - 11 A.Y.2011 - 12 RECEIPT PAYMENT RECEIPT PAYMENT PRATIK BHARWAD 700000 RAJESH JHAVERI 10000000 17500000 7500000 RAJESH JHA VERI & MASHUKBHAI ADANI 3500000 MANISH PAKODA 300000 VAIBHAV 700000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 8 SEVANTIBHAI 1500000 FOR PURCHASE OF LAND NEAR SUDAMA RESORT 1100000 CHETANBHAI (FOR DHOLERA LAND) 750000 V - ULBHAI 250000 KIRI TBHAI 250000 HARESHBHAI 600000 FOUR PERSONS 5000000 2000000 DHAVAL SANGHVI 2000000 RUCHIR 60 00000 PRAVIN VORA & S.K. 3000000 6500000 500000 DHAVALBHAI 1000000 1000000 RAMESH HIRA (DESS A) 2000000 2000000 MOHANBHAI & PRATIK BHARWAD 13000000 170 00000 28500000 43150000 THE ASSESSING O FFICER HAS OBSERVED THAT IN ASSESSMENT YEAR 2010 - 11 THE ASSESSEE HAS NOT RECEIVED ANY CASH BY WAY OF ADVANCE A ND HAS MADE PAYMENT IN CASH. HE W AS ALSO OF THE VIEW THAT TRANSACTIONS WERE PERTAINED TO THE DIFFERENT BUSINESS AND DIFFERENT ENTITIES AND THE TELESCOPING OF ONE TRANSACTION TO ANOTHER TRANSACTION CANNOT BE GIVEN. CONSIDERING THE ABOVE , I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 9 THE ASSESSING OF FICER HAS MADE ADDITION OF RS. 1 .70 CRORES AS UNACCOUNTED INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 . 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PA RT OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 7.2 I HAVE GONE THROUGH THE CONTENTIONS OF THE APPELLANT AND THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN HER ASSESSMENT ORDER. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 1,00,00,000 ON AC COUNT OF THE AMOUNT RECEIVED FROM RAJESH JHAVERI HOLDING THAT THE SOURCE OF PAYMENT IS NOT EXPLAINED. THE APPELLANT HAS SHOWN SOURCE OF SUCH PAYMENT PRIMARILY OUT OF THE AMOUNT DISCLOSED FROM THE SALE OF MUMBAI FLAT. THE APPELLANT HAS CONTENDED THAT THE SA ME IS IN THE NATURE OF CURRENT ACCOUNT TRANSACTION AND THIS WAS ALSO STATED IN THE STATEMENT RECORDED BEFORE THE DEPARTMENTAL AUTHORITIES. THE EXTRACT OF THE STATEMENT IS AS UNDER: - STATEMENT U/S 131 ON OATH OF SHRI DHIRAILAL V. SANPHVI ON 26/05/2011 AT 05.00 P.M AT ROOM NO. 134, 1ST FLOOR AAVKAR BHAVAN, ASHRAM ROAD. AHMEDABAD. RS. 45 LAC RECEIVED IN CASH ON 18.03.2010 FROM RAJESH JHAVERI RS. 55 LAC RECEIVED IN CASH ON 19.03.2010 FROM RAJESH JHAVERI ALL THE ABOVE CASH RECEIVED FROM SHREE RAJESH JHAVER I WERE EARLIER ADVANCED TO HIM BY ME FOR SHORT TERMS WHICH ARE RETURNED BACK AS ABOVE. THESE CASH TRANSACTIONS ARE NOT RECORDED IN BOOKS OF ACCOUNTS. 7.3 ACCORDINGLY, THE CONTENTION OF THE APPELLANT THAT THE ABOVE AMOUNT RECEIVED FR OM SHREE RAJESH JHAVE RI WERE EARLIER ADVANCED TO HIM WHICH ARE RETURNED BACK IS BEING ACCEPTED. HOWEVER, NEITHER IN THE SEIZED PAPER NOR IN THE STATEMENT RECORDED OF THE APPELLANT THE DATES WHEN SUCH AMOUNT HAS BEEN ADVANCED TO SHREE RAJESH JHAVERI HAS BEEN INDICATED. THE APP ELLANT HAD SHOWN SUCH PAYMENT IN THE CONSOLIDATED CASH FLOW STATEMENT IN A MANNER THAT WOULD MOST SUITABLE TO HIM. SUCH ARBITRARY MANNER IS NOT ACCEPTABLE AND HENCE IT IS ASSUMED THAT THE SAME WAS ADVANCED ON FIRST DAY OF THE FINANCIAL YEAR I.E. 1 - 4 - 2009. 7.4 THE APPELLANT HAS OFFERED PEAK BALANCE OF RS 1,79,75,937 ON THE BASIS OF CONSOLIDATED CASH FLOW STATEMENT PREPARED AND FILED BEFORE THE ASSESSING OFFICER. THE ASSESSMENT YEAR WISE DISCLOSURE OF PEAK BALANCE AS SUBMITTED TO THE ASSESSING OFFICER AMOUNTS TO RS 9,50,310 AND RS 1,70,05,627 IN ASSESSMENT YEAR 2010 - 11 AND 2011 - 12.HENCE, FOR THE REASONS STATED ABOVE AND BECAUSE OF SHIFTING OF TRANSACTION TO 1 - 4 - 2009 THEREVISED YEAR - WISE PEAK BALANCE IS AS UNDER. IT ALSO NEEDS MENTION THAT THE OVERALL PEAK BALA NCE WILL REMAIN UNALTERED ON ACCOUNT OF SHIFTING OF TRANSACTIONS. PARTICULARS ASSESSMENT YEAR - 2010 - 11 ASSESSMENT YEAR 201 1 - 1 2 TOTAL PEAK BALANCE AS SUBMITTED TO ASSESSING OFFICER AND OFFERED TO TAX 9,50,310 1,70,25,627 1,79,75,937 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 10 REVISED PEA K BALANCE ON ACCOUNT OF CHANGE IN DATE IN A.Y. 2010 - 11 1,09,50,310 70,25,627 1,79,75,937 CHANGE 1 ,00,00,000 1,00,00,000 7.5 WITH REFERENCE TO THE ADDITION OF RS. 70,00,000, THE SAME IS IN THE NATURE OF CURRENT ACCOUNT TRANSACTION AS STATED IN THE STATEMENT AND HAS BEEN CONSIDERED IN THE CASH FLOW STATEMENT. THE SOURCE OF SUCH PAYMENT IS LARGELY OUT OF THE SATE OF MUMBAI FLAT AND SINCE I HAVE GIVEN THE TELESCOPING OF INCOME AGAINST THE PAYMENT, SEPARATE ADDITION FOR SUCH CURRENT ACCOUNT TRAN SACTION IS TO BE DELETED, AS THE SAME IS COVERED BY THE .PEAK BALANCE OF RS. 1,09,50,310. AS APPELLANT HAS MADE A DISCLOSURE OF RS. 15,00,000 THE BALANCE OF RS. 94,50,310 IS CONFIRMED. THE GROUND OF APPEAL IS PARTLY ALLOWED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. AFTER TAKING INTO CONSIDERATION THE DOCUMENT AND MATERIAL FOUND AND SEIZED FROM SEARCH AND SURVEY ACTION, THE ASSESSEE HAS OFFERED PEAK BALANCE OF RS. 1,79,75,937/ - ON THE BASIS OF CONSOLIDATED CASH FLOW ST ATEMENT PREPARED AND FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE MADE YEAR WISE DISCLOSURE OF PEAK BALANCE TO THE AMOUNT OF RS. 9,50,310 AND RS. 1,70,07,627/ - FOR ASSESSMENT YEAR 2010 - 11 AND 2011 - 12. HOWEVER THE ASSESSING OFFICER OBSERVED THAT IN A SSESSMENT YEAR 2010 - 11, THE ASSESSEE HAS NOT RECEIVED ANY CASH AGAINST THE PAYMENT TO THE AMOUNT OF RS. 1,70,00,000/ - MADE DURING THE YEAR, THEREFORE THE ASSESSING OFFICER HAS NOT GIVEN TELESCOPING EFFECT OF THIS TRANSACTION AND CONSIDER RS. 1,70,00,000 / - AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. HOWEVER, AFTER CONSIDERING THE FACT THAT ASSESSEE HAS RECEIVED RS. 45 LACS IN CASH ON 18 TH MARCH, 2010 AND ON 19 TH MARCH, 2010 RESPECTIVELY FROM SHRI RAJESH JAVERI PERTAINING TO SALE OF MUMBAI FLAT, THE LD. CIT(A) HAS SHIFTED PEAK BALANCE TO THE AMOUNT FOR RS. 1 CRORE FORM ASSESSMENT YEAR 2011 - 12 TO 2010 - 11 AFTER CONSIDERING THE STATEMENT OF THE ASSESSEE RECORDED U/S. 131 OF THE ACT ON 26 TH MAY, 2011. WE CONSIDER THAT IT WAS A DMITTED BY THE ASSESSEE IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT ON 26 - 05 - 2011 STATING THAT SUCH CASH WERE RECEIVED ON 18 - I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 11 03 - 2010 FROM RAJESH JHAVERI WHICH WERE EARLIER ADVANCED TO HIM FOR SHORT TERM PURPOSES. SINCE , THE ASSESSEE HAD RECEIVED CASH TO THE AMOUNT OF RS. 45 LACS AND RS. 55 LACS FROM RJESH JHAVERI ON 18 - 03 - 2010 AND 19 - 03 - 2010 PERTAINING TO THE ASSESSMENT YEAR 2010 - 11, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE LD. CIT(A) IN SHIFTING THE PEAK BALANCE FROM ASSESSMENT YEAR 2011 - 12 TO ASSESSMENT YEAR 20 - 10 - 2011. LOOKING TO THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THEREFORE, THE SAME IS DISMISSED. AFTER CONSDIRING THE ABOVE FACTS AND MATERIAL ON RECORD WE DO NOT FIND ANY ERROR IN THE FINGISN OF THE LD. CIT(A) IN DELETING THE SEPARATE ADDITION OF RS., 70,00,000/ - WHICH WAS ALREADY COVERED BY THE PEAK BALANCE. AS SOURCE OF SUCH PAYMENT WAS OUT OF SALE OF MUMBAI FLAT WHICH WAS ALREADY INCLUDED IN THE FUND FLO W STATEMENT. AFTER CONSIDERING THE ABOVE FACTS, WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL OF THE REVENUE AS THE ASSESSING OFFICER HAS CONSIDERED THE PAYMENT SIDE OF TRANSACTIONS AND WITHOUT ANY RELEVANT REASONS IGNORED THE RECEIPT TRANSACTIONS. IT IS C LEAR FROM THE FINDING OF LD. CIT(A) THAT THE AFORESAID AMOUNT WAS ALREADY CONSIDERED AND COVERED BY THE PEAK BALANCE OF RS. 10950310/ - , THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) IN DELETING THE AFORESAID ADDITION WHICH WAS ALREA DY COVERED IN THE PEAK BALANCE. ITA NO. 303 /AHD/2014 & CO NO. 268 /AHD/2014 FOR ASSESSMENT YEAR 2010 - 11 & 2011 - 12 7 . THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - ITA NO. 303/AHD/2014 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,65,23,380/ - MADE ON ACCOUNT OF UNEXPLAINED JEWELLERY. I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 12 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 4,31,50,000/ - MADE ON ACCOUN T OF ADVANCES MADE IN CASH. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTI NG THE ADDITION TO RS. 4,33,140/ - OUT OF TO TAL ADDITION OF RS. 3,19,00,00 0/ - AND THEREBY GR ANTED RELIEF OF RS. 3,14,66,860/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND CASH ADVANCES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 5,84,71,4 00/ - MADE ON ACCOUNT OF ON - MONEY PAYMENT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 5,29,43,000/ - MADE ON ACCOUNT OF RTGS RECEIPTS. 6. ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO RS. 6,03,00,000/ - OUT OF TOTAL A DDITION OF RS. 6,11,10,000/ - AND THEREBY GRANTED RELIEF OF RS. 8,10,000/ - MADE ON ACCOUNT OF RTGS CASH RECEIPTS. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,02,33,850/ - MADE ON ACCOUNT OF INCOME FROM ADVICES GIVEN TO INVESTORS. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING TH E ADDITION TO RS. 19,64,598/ - OUT OF TOTAL ADDITION OF RS. 98,72,060/ - AND THEREBY GRANTED RELIEF OF RS. 79,07,462/ - MADE ON ACCOUNT OF OTHER EXPENSES. 8 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN CROSS OBJECTION: - CO NO. 268/AHD/2014 1. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT (APPEALS) H AS ERRED IN CONFIRMING ADDITION OF UNEXPLAINED CASH FOUND DURING THE COURSE OF SEARCH FOR RS. 4,89,863 WITHOUT APPRECIATI NG THE FACT THAT CASH RECORDED IN THE BOOKS OF ACCOUNT APPELLANT AND HIS GROUP WAS IN EXCESS OF PHYSICAL CASH FOUND DURING THE COURSE OF SEARCH. 1.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMIN G ADDITION OBSERVING THAT CREDIT FOR CASH RECORDED IN REGULAR BOOKS OF ACCOUNT OF SAGAR SANGHVI, SON OF APPELLANT, CANNOT BE GIVEN AS THERE WAS DIFFERENCE OF CASH BALANCE IN ORIGINAL RETURN OF INCOME AND RETURN FILED UNDER SECTION 153A FOR RS. 1,41,594 IN A.Y. 2009 - 10 WITHOUT APPRECIATING THE FACT THAT CASH BALANCE IS ACCEPTED IN ASSESSMENT ORDER PASSED UNDER SECTION 153A IN THE CASE OF SAGAR SANGHVI BY SAME ASSESSING OFFICER. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPE ALS) HAS ERRED IN CONFIRMING ADDITION OF RS. 45,00,000 PERTAINING TO CASH ADVANCES TO BABULAL VORA OUT OF TOTAL ADDITION OF RS. 3,19,00,000 MADE BY ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT SUCH AMOUNT WAS ALREADY INCLUDED IN SEPARATE ADDITION O F RS. 2,74,00,000 (RS. 3,19,00,000 - RS. 45,00,000) MADE BY ASSESSING OFFICER AND ALREADY CONSIDERED IN CASH FLOW STATEMENT PREPARED AND PEAK BALANCE OFFERED TO TAX IN RETURN OF INCOME . 3. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C IT (APPEALS) HAS ERRED IN CONFIRMING ADDITION OF RS.40,66,860 OUT OF TOTAL ADDITION OF RS.93,87,982 MADE BY ASSESSING OFFICER ON THE GROUND THAT PROFIT SHOWN IN LOOSE PAPER (ANNEXURE - A/6 -- PAGE - 145) ENTIRELY BELONGS TO APPELLANT WITHOUT APPRECIATING T HE FACT THAT SAID LOOSE PAPER ITSELF SUGGESTS THAT NOTINGS MENTIONED THEREIN ARE 'FOR ROUGH WORK' AND IN ANY CASE, FIGURES OF RS. 52,41,112 (93,87,982 - 40,66,860) PERTAINS TO APPELLANT AND SAME WAS ALREADY OFFERED TO TAX TO AVOID ANY DISPUTE. 4. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN UPHOLDING ADDITION OF ALLEGED UNEXPLAINED EXPENDITURE FOR RS. 19,64,598 (RS. 13,50,000 FOR AMC FEES + RS. 6,14,598 FOR EXPENSES ON BMW CAR) OUT OF TOTAL ADDITION OF RS. 98,7 2,060 MADE BY ASSESSING OFFICER. 4.1 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN CONFIRMING ADDITION OF AMC FEES FOR RS. 13,50,000 WITHOUT APPRECIATING THE FACT THAT LOOSE PAPER I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 13 NO. 2 OF ANNEXURE - A/30 SHOWS T HE FIGURE OF 15 WHICH MEANS THAT RS. 1.5 LACS WAS PAID AND NOT RS. 15,00,000 AS ALLEGED BY ASSESSING OFFICER AND SAID FIGURE OF RS. 1.5 LACS WAS ALREADY ACCEPTED BY AUTHORISED OFFICER WHILE RECORDING STATEMENT OF APPELLANT UNDER SECTION 131 OF THE ACT ON 2 6 TH MAY, 2011. 4.2 WITHOUT PREJUDICE TO PARA 4.1 LEARNED CIT (APPE ALS) OUGHT TO HAVE APPRECIATED T H AT ENTIRE TRANSACTION IS TAX NEUTRAL AS LOOSE PAPE R ITSELF STATES THAT FIGURE OF 15 WAS RETURNED ON VERY SAME DATE AND SAME WOULD HAVE NO IMPACT ON CASH FLOW STATEMENT PREPARED BY APPELLANT. 9 . T HE BASIC FACTS PERTAINING TO THE ASSESSMENT YEAR 2011 - 12 ARE SIMILA R TO THE FACT AS ELABORATED IN THIS ORDER ABOVE FOR ASSESSMENT YEAR 2010 - 11 . DURING THE YEAR UNDER CONSIDERATION, ASSESSMENT ORDER U/S. 143( 3) R.W.S. 153B(1 )(B) OF THE INCOME TAX ACT WAS COMPLETED ON 26 TH MARCY, 2013. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE SANGHVI GROUP OF CASES ON 9 TH MARCH, 2011. DURING THE SEARCH , THE ASSESSEE HAS DISCLOSED RS. 24.6 CRORE AS HIS UNACCOUNTE D INCOME AS PER STATEMENT U/S. 132(4) OF THE ACT MADE ON 10 TH MARCH, 2011. T HE ASSESSEE HAD NOT DISCLOSED THIS AMOUNT IN THIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 1 53A OF THE ACT AND SUBMITTED THAT HE HAD DISCLOSED MOST OF THE ITEMS AND THE REASONS FOR THE DIFFERENCES WAS ON ACCOUNT OF TELESCOPING EFFECT. THE ASSESSEE HAS FURNISHED CASH FLOW STATEMENT AND CONTENDED THAT HE HAD INCLUDED ENTIRE UNACCOUNTED TRANSACTIONS IN CASH IN THE SAID STATEMENT . THE ASSESSEE HAS DISCLOSED AMOUNT IN VARIOU S YEARS AS REFLECTED ABOVE WHILE ADJUDICATING THE APPEAL OF THE REVENUE F ILED IN ITA N O. 302/AHD/2011 - 12. A SEARCH ACTION U/S. 132 OF THE ACT WAS CARRIED OUT IN THE GROUP CASES OF SANGHVI GROUP ON 9 TH MARCH, 2011. A NOTICE U/S. 153A OF THE ACT WAS ISSUE D ON 28 TH SEP, 2011. DURING THE COURSE OF SEARCH, THE ASSESSEE HAS DISCLOSED RS. 24.6 CORES AS UNACCOUNTED INCOME VIDE STATEMENT U/S. 132(4) OF THE ACT ON 10 TH MARCH, 2012 AND THE ASSESSING OFFICER STATED THAT ASSESSEE HAS NOT DISCLOSED THIS AMOUNT IN HI S RETURN OF INCOME FILED IN RESPECT TO NOTICE ISSUED U/S. 153A OF THE ACT. THE ASSESSEE HAS SUBMITTED THAT HE HAD DISCLOSED MOST OF THE ITEMS I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 14 AND HUGE DIFFERENCE IN FIGURES WAS ONLY DUE TO TELESCOPING EFFECT AND SUBMITTED A CASH FLOW CONTENDING THAT HE H AD INCLUDED ENTIRE UNACCOUNTED TRANSACTION IN THE CASH FLOW STATEMENT. THE ASSESSING OFFICER STATED THAT ASSESSEE HAS DIVIDED CASH FLOW STATEMENT IN FOUR PARTS (I) RECEIPT INFLOW, (II) RECEIPT (III) PAYMENT OUTFLOW AND (IV) PAYMENTS. THE ASSESSEE SUBMITT ED THAT RECEIPTS AND PAYMENTS WERE TRANSACTIONS OF FINANCIAL NATURE AND NO INCOME WAS GENERATED FROM THESE TRANSACTIONS, LOANS AND ADVANCES GIVEN TO THE VARIOUS PARTIES AND RECEIVED FROM THE VARIOUS PARTIES WERE INCLUDED UNDER THESE HEADS. RECEIPT INFLOW AND PAYMENT OUTFLOW WERE TRANSACTIONS OF REVENUE NATURE. ACCORDINGLY, THE ASSESSEE HAS DISCLOSED FOLLOWING AMOUNTS IN VARIOUS YEARS IN THE NAME OF FOLLOWINGS PERSONS. I) DHIRAJLAL SANGHAVI, HUF RS.20,00,000/ - A.Y.2008 - 09 II) DHIRAJLAL SANGHAVI, INDL. RS. 10, 000/ - A.Y.2009 - 10 III ) - DO - RS.15,00,000/ - A.Y.2010 - 11 VI) - DO - RS.10,65,00,000/ - A.Y.2011 - 12 V) ASHIK D. SANGHAVI RS. 1,56,00,000 / - A.Y.2008 - 09 VI) DHIRAJLAL SANGHAVI, HUF RS. 1,02,33,850/ - A.Y.2008 - 09 ______________ TOT AL RS.135933850/ - HOWEVER, THE ASSESSING OFFICER HAS OBSERVED THE FOLLOWING DISCREPANCIES IN THE CASH FLOW STA TEMENT . I) TRANSACTIONS DONE UNDER NAMES OF DIFFERENT MEMBERS OF FAMILY A MEMBERS HAVE BEEN INCLUDED BY THE ASSESSEE IN HIS CASH FLOW STAT EMENT. IT IS PERTINENT TO MENTION HERE THAT THOSE TRANSACTIONS OF PROPERTY, WHEREIN THE NAME OF THE ASSESSEE IS NOT APPEARING IN THE LEGAL DOCUMENTS AND CHEQUE AMOUNT IS ALSO NOT PAID BY THE ASSESSEE CANNOT BE CLAIMED BY THE ASSESSEE IN HIS CASH FLOW STATE MENT JUST TO TAKE BENEFIT OF TELESCOPING. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED DURING THE COURSE OF THE PROCEEDINGS THAT THE ASSESSEE HAS OWNED UP THESE TRANSACTIONS IN HIS STATEMENTS. HOWEVER, IT IS TO BE KEPT IN MIND THAT STATEMENT OF THE ASSESSEE C AN'T OVER - RIDE THE APPLICABILITY OF LAW, PARTICULARLY WHEN ALL THE FAMILY MEMBERS ARE ALSO FILING THEIR RETURNS OF INCOME AND ARE ALSO HAVING THEIR INDEPENDENT SOURCE OF INCOME. (II) SOME OF SUCH TRANSACTIONS SHOWN BY THE ASSESSEE IN HIS CASH FLOW ST ATEMENT ARE AS UNDER: I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 15 IT IS SEEN THAT AS PER DOCUMENTS SEIZED THAT SHRI ASHIK SANGHVI HAS SOLD A FLAT IN MUMBAI FOR RS. 1.15 CRORES. AS PER DOCUMENTS SEIZED, CASH PAYMENT OF RS. 46 LACS WAS MADE ON THIS PROPERTY. IN THE RETURN OF INCOME SHRI ASHIK SANGHV I SUO - MOTU DECLARED THE VALUE OF THE PROPERTY AS RS. 2.71 CRORES. SHRI ASHIK SANGHVI COULD NOT FURNISH ANY BASIS FOR CONSIDERING THE VALUE OF THIS PROPERTY AT RS. 2.51 CRORES AND THE CASH COMPONENT OF RS. 1.56 CRORES IS CONSIDERED IN THE CASH FLOW OF THE A SSESSEE. SIMILARLY, IT IS SEEN THAT A FLAT OF RS. 33 LACS WAS PURCHASED BY SHRI ' SAGAR SANGHVI, WHEREIN CASH PAYMENT OF RS. 25 LACS WAS MADE. THIS AMOUNT WAS CONSIDERED AS PAYMENT BY THE ASSEESSEE IN THE CASH FLOW STATEMENT. IT IS SEEN THAT THE BANAKHAT IS REGISTERED IN THE NAME OF SHRI SAGAR SANGHVI. FURTHER THE AGREEMENT TO SALE WHEREIN THE AMOUNT OF RS. 33 LACS IS MENTIONED AGAINST THE DOCUMENTED PRICE OF RS. 8 LACS IS ALSO IN THE NAME OF SHRI SAGAR SANGHVI, HENCE, THE ASSESSEE'S CONTENTION THAT THE P AYMENT HAS BEEN MADE BY HIM IS NOT ACCEPTABLE AS SHRI SAGAR SANGHVI IS THE PROPRIETOR OF 'ABBERANT STYLE' A RETAIL SHOP AND IS ALSO ENGAGED IN SHARE TRADING BUSINESS. SIMILARLY IT IS SEEN THAT THE ASSESSEE'S WIFE SMT. KOKILABEN SANGHVI, WHO IS THE PROP O F A RETAIL SAREE SHOP IN THE NAME OF AISHWARYA NX HAD PAID CASH OF RS. 85 LACS TO ONE SHRI G.K.PATEL, HOWEVER, THE PAYMENT HAS BEEN REFLECTED BY THE ASSESSEE. VARIOUS ENTRIES REGARDING CASH LOANS GIVEN AND TAKEN WERE FOUND DURING THE COURSE OF SEARCH AS DISCUSSED IN THE ORDER. THE ASSESSEE HAS REVERSED THE ENTRY OF CASH RECEIPT IN CASES WHERE THE ENTRY HAS BEEN STRUCK OFF. HOWEVER, EVEN IN CASES WHERE THE ENTRIES HAVE NOT BEEN STRUCK OFF, THE ASSESSEE HAS REVERSED THE ENTRY STATING THAT AS CHEQUE HAS BEEN RETURNED THE CASH HAS ALSO BE GIVEN, BUT THERE IS NO EVIDENCE OR NOTING IN RESPECT OF THE CASH REPAID. HENCE THE ASSESSEE'S CONTENTION IS NOT ACCEPTABLE. (III) IN THE CASE OF SHRI. ASHIK SANGHVI, IT IS TO BE FURTHER NOTICED THAT AS PER SEIZED DOCUMENTS, O NLY RS.46 LACS WERE RECEIVED IN CASH ON SALE OF FLAT IN MUMBAI. HOWEVER, THE ASSESSEE HAS ARBITRARILY SHOWN FURTHER CASH RECEIPTS OF RS. 1.10 CRORES IN HIS CASH FLOW STATEMENT. THERE IS NO SUCH MATERIAL FOUND DURING SEARCH WHICH INDICATES SUCH ON - MONEY REC EIPT BY THE ASSESSEE. FURTHER, NO SUCH INFORMATION WAS GIVEN BY THE ASSESSEE OR SHRI ASHIK SANGHVI IN THEIR STATEMENTS DURING THE COURSE OF SEARCH. (IV) THE ASSESSEE IS NOT ONLY TAKING BENEFIT OF TELESCOPING IN THE CASE OF HIS FAMILY MEMBERS, BUT HE IS ALS O TAKING BENEFIT OF TELESCOPING IN THE CASH FLOW STATEMENT IN RESPECT OF TRANSACTIONS DONE BY SHRI MOHANBHAI BHARWAD, WHO IS ALTOGETHER A DIFFERENT PARTY. (V) AT THE END OF THE CASH FLOW STATEMENT, THE ASSESSEE HAS SHOWN VARIOUS AMOUNTS AS ENTRY REVERSED U NDER THE HEAD 'RECEIPTS' BETWEEN 21/02/2011 TO 05/03/2011. WHEN INQUIRED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CONTENDED THAT HE HAS ADVANCED THESE AMOUNTS EARLIER AND THESE AMOUNTS HAVE BEEN RECEIVED BACK BY HIM. WHEN ASKED TO GIVE EVIDENCE IN SUPPORT OF RECEIPT OF THESE AMOUNTS, THE ASSESSEE SUBMITTED THAT HE HAS ISSUED CHEQUES TO VARIOUS PARTIES ON THESE DATES AND IT SHOULD BE IMPLIED THAT HE HAS RECEIVED CASH BACK FROM THESE PARTIES, AS WHILE ADVANCING MONEY IN CASH, HE IS RECEIV ING CHEQUES FROM THE PARTIES AND WHILE RECEIVING BACK CASH, HE IS ISSUING CHEQUES TO THE PARTIES CONCERNED TO SQUARE OFF THE TRANSACTIONS. IT IS TO BE NOTED THAT THERE IS NO SEIZED MATERIAL TO SUPPORT THE ARGUMENTS OF THE ASSESSEE. IN THE EARLIER PART OF T HE CASH FLOW STATEMENT, THE ASSESSEE HAS SHOWN RECEIPT/PAYMENT OF LOANS/ADVANCES ON THE BASIS OF THE SEIZED MATERIAL. HOWEVER, IN CASE OF 'ENTRY REVERSED', THERE IS NO SEIZED PAPER WHERE SUCH TRANSACTION IS RECORDED. THE ASSESSEE HAS INSERTED THESE RECEIPT S ONLY ON THE BASIS OF ISSUANCE OF CHEQUES AND SUCH RECEIPTS CANNOT BE CONSIDERED ONLY ON PRESUMPTIVE BASIS. (VI) THE ASSESSEE HAS NOT SHOWN MANY INWARD AND OUTWARD TRANSACTIONS IN CASH IN HIS CASH FLOW STATEMENT ON THE PLEA THAT EITHER THESE TRANSACTIONS DO NOT PERTAIN TO HIM OR THESE TRANSACTIONS ARE ACCOUNTED FOR. THE CLAIM OF THE ASSESSEE IN RESPECT OF THESE TRANSACTIONS IS CONSIDERED IN SUBSEQUENT PARAGRAPHS. IN VIEW OF THE OBSERVATIONS, THE AS SESSING OFFICER HAS REJECTED THE CASH FLOW STATEMENT SUBM ITTED BY THE ASSESSEE AND MADE VARIOUS ADDITIONS ON THE BASIS OF ISSUES EMERGED FROM THE ASSESSMENT PROCEEDINGS CONTESTED IN THE INSTANT I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 16 APPEAL BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE. FURTHER FACTS ARE BRIEFLY DISCLOSED AS UNDER WHILE A DJUDICATING THE GROUNDS OF APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE. GROUND NO. 1 ( DELETING ADDITION OF RS. 1 , 65 , 23 , 380/ - ON ACCOUNT OF UNEXPLAINED JEWELRY ) 10. D URING THE COURSE OF SEARCH TOTAL JEWELRY WEIGHING 78 76. 92 GRAMS , 1 06 .73 DIAMONDS AND 33650 GRAM S OF SILVER WORTH RS. 2,15,25730/ - WAS FOUND BELONGING TO TH E SANGHVI G ROUP. IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT ON 26 TH MAY, 2011 SHRI DHIRAJLAL V. SANGHVI STATED THAT HE HAD DISCLOSED JEWELRY WEIGHING 62 02. 56 GRAMS AND DIAMOND WEIGHING 259.60 GRAM IN THE VOLUNTARY DISCLOSURE SCHEME OF 1997. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER, THE ASSESSEE HAS SUBMITTED HIS EXPLANATION VIDE LETTER D ATED 26 TH NOV, 2011 AND THE GIST OF THE SAME STATED AT PAGE NO . 6 OF THE ASSESSMENT ORDER IS REPRODUCED AS UNDER: - THE JEWELLERY AND VALUABLES WHICH HAD BEEN FOUND DURING THE COURSE OF SEARCH WERE RECEIVED BY THE ASSESSEE, HIS WIFE AND OTHER MEMBERS OF THE FAMILY FROM THEIR PARENTS, IN - LAWS AND RELATIVES ON THE OCCA SION OF MARRIAGE, FESTIVALS, CHILD - BIRTH IN THE FAMILY AND OTHER SOCIAL OCCASIONS AND RITUALS. THE JEWELLERY WAS RECEIVED ON VARIOUS OCCASIONS AS PER FAMILY CUSTOM AND TRADITION. THE ASSESSEE SUBMITS THAT, THE ASSESSEE'S HUF, UNDER THE VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 (VDIS), HAD MADE DISCLOSURE OF GOLD JEWELLERY WEIGHING 6,202.56 GMS AND DIAMONDS WEIGHING 259.60 CARATS. COPIES OF THE CERTIFICATE ISSUED UNDER SECTION 68(2) OF THE VDIS, 1997, ALONG WITH CHALLAN SUBMITTED. THIS FACT WAS STATED IN S TATEMENT RECORDED ON 10 TH MARCH, 2011 WAS AGAIN REITERATED ON 26 TH MAY, 2011 UNDER THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT ACCORDINGLY, OUT OF GOLD JEWELLERY AND OTHER VALUABLES FOUND WEIGHING 7,876.92 GMS FROM THE RESIDENCE AND BANK LOCKERS, T HE SAME WAS OUT OF THE DISCLOSURE MADE UNDER THE VDIS, 1997. OUT OF THE DISCLOSURE OF JEWELLERY AND OTHER VALUABLES MADE UNDER THE VDIS, THE ASSESSEE ON DIFFERENT SOCIAL OCCASIONS SUCH AS MARRIAGE AND BIRTH OF CHILD HAS REMADE THE JEWELLERY ACCORDING TO TH E TREND AND FASHION PREVAILING AND AFTER RE - MAKING, THE SAME WAS GIVEN TO DIFFERENT FAMILY MEMBERS VARIOUS SOCIAL OCCASION. FURTHER RELYING ON INSTRUCTION NO. 1916, DATED 11 TH MAY, 1994 ISSUED BY THE CBDT AND REPORTED AT 122 TAXMAN (ST.) 98 THE ASSESSE E CLAIMED FURTHER EXEMPTION OF 1600 GMS IN RESPECT OF HIS DAUGHTER - IN - LAWS, GRAND - DAUGHTER AND GRANDSON. WITHOUT PREJUDICE TO THE ABOVE CONTENTION, THE ASSESSEE ALSO CONTENDED THAT THE ASSESSEE BEING THE HEAD OF THE FAMI LY (AS THE SAID JEWELLERY BELON GS TO THE ASSESSEE'S GROUP), HAS MADE A DISCLOSURE IN RESPECT OF JEWELLERY FOUND DURING THE COURSE OF SEARCH IN THE RETURN OF INCOME FOR A.Y. 2011 - 12 WHICH IS INCLUDED IN TOTAL DISCLOSURE OF RS. 10.66 CR. I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 17 FURTHER VIDE SUBSEQUENT SUBMISSION DATED 15 TH JAN, 2 013, THE ASSESSEE HAS ALSO FURNISHED COPIES OF BILLS FOR REMAKING OF JEWELRY DISCLOSED IN VOLUNTARY DISCLOSURE INCOME SCHEME. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSE E STATING THAT ASSESSEE HAS NOT GIVEN ANY DETAIL REGARDING F ILING OF WEALTH TAX RETURN AND ALSO THE JEWELRY WAS NOT REFLECTED IN THE BALANCE SHEET OF ANY MEMBER OF THE ASSESSEE. THE ASSESSI NG OFFICER HAS ALSO STATED T HAT ASSESSEE HAS NOT PROVED THAT THE JEWELRY WAS REMADE FROM THE JEWELRY DECLARED UNDER VDIS. TH E ASSESS ING OFFICER HAS ALSO OBSERVED THAT THE AS SESSEE HAS ONLY DISCLOSED JEWELRY OF RS. 71 LACS IN THE CASH FLOW STATEMENT APART FROM TH E UNDISCLOSED EXPENDITURE OF R S. 25 , 00 , 510/ - AS PER BILLS FOUND DUR ING SEARCH/SURVEY. AFTER REJECTING THE CLAIM OF THE ASSESSEE, T HE ASSESSING OFFI CER HAS TREATED THE JEWELRY OF R S. 1 , 65 , 23 , 380/ - AS UNACCOUNTED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. 11. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A) AGAINST SUSTAINING THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER. IN RESPECT OF GROUND NO. 1, ADDITION OF RS. 1,65,23,380/ - MADE ON ACCOUNT OF UNEXPLAINED JEWELRY. THE LD. CIT(A) HAS DELETED THE SAID ADDITION. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 7.3 I HAVE GONE THROUGH THE SUBMISSIONS FILED BY THE APPELLANT AND THE ASSESSMENT ORDER CAREFULLY AND OBSERVED THAT THE APPELLANT IN HIS STATEMENT RECORDED BEFORE THE DEPARTMENTAL AUTHORITIES HAS STATED THAT THE DISCLOS URE OF JEWELLERY WAS MADE IN THE VDIS. THE ASSESSEE HAS ALSO REBUTTED THE CONTENTIONS OF THE ASSESSING OFFICER AT PARA NO. 11.3 OF THE SOF. IT HAS ALSO BEEN STATED THAT THE BILLS ALONG WITH THE ITEMS FROM WHICH THE ORNAMENTS WERE REMADE WERE ALSO FILED BEF ORE THE ASSESSING OFFICER. THE ASSESSING OFFICER'S CONTENTION FOR NOT ACCEPTING THE CONTENTION THAT THE JEWELLERY WHICH WAS OUT OF THE VDIS WAS ON THE GROUND THAT NO BILLS WERE FOUND DURING THE COURSE OF SEARCH AND THEY WERE REMADE OUT OF THE ORNAMENTS. HO WEVER, THIS CONTENTION CANNOT BE THE SOLE GROUND FOR REJECTING THAT THE ORNAMENTS WERE MADE OUT OF THE ITEMS DECLARED IN THE VDIS, SINCE THE SEARCH CANNOT BE SACROSANCT TO ALL THE DOCUMENTS/BILLS FOUND. THERE IS SUBSTANTIAL I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 18 FORCE IN THE ARGUMENT OF THE APP ELLANT ABOUT THE ITEMS BEING REMADE FROM THE ITEMS DECLARED IN THE VDIS FOR THE REASONS STATED IN THE SOF. ACCORDINGLY, AFTER CONSIDERING THE ITEMS DISCLOSED IN THE VDIS FROM WHICH NEW ORNAMENTS WERE BEING PREPARED, THE APPELLANT HAS CONSIDERED TOTAL OUTFL OW TOWARDS JEWELLERY OF RS. 24,69,275/ AND RS. 71,00,000/ - IN THE CASH FLOW STATEMENT. FURTHER, THE AR OF THE APPELLANT IN THE COURSE OF THE HEARING HAS ALSO CONTENDED THAT RS. 75,00,000/ - HAS ALSO BEEN CONSIDERED AS OUTFLOW TO COVER ANY OTHER DISCREPANCIE S. 7.4 IN VIEW OF THE ABOVE, SINCE I HAVE ALREADY ALLOWED THE TELESCOPING OF THE INCOME AGAINST THE APPLICATION, SEPARATE ADDITION FOR JEWELLERY FOR RS. 1,65,23,380/ - IS UNCALLED FOR AND IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. THE APPELLANT GETS RELIEF. GROUND NO. 2 ( DELETING A DDITION OF RS. 4,31,50,000/ - ON ACCOUNT OF ADVANCE MADE IN CASH ) 12 . DURING THE SURVEY ACTION CONDUCTED AT THE GRO UP SHOW ROOM AT ASHWARYA NX AT V ADAJ, AHMEDABAD A DIARY INVENTORIZED AS A - 30 CONSISTING OF 36 PAG ES WAS IMPOUNDED . T HE ASSESSEE IN HIS STATEMENT U/S. 131 ON 26 TH MA Y, 2011 STATED THAT THE ENTRIES IN THE DIARIES WERE RELATED TO FIN ANCIAL TRANSACTION AND PAGE WISE SUMMARY OF SUCH ENTRIES AS REPORTED AT PAGE 12 OF THE ASSESSMENT ORDER IS PRESENTED AS UND ER: - SR. NO. NAME OF THE PERSON TO WHOM CASH PAID PAGE NO. OF SEIZED MATERIAL AMOUNT (RS.) 1 PRATIK BHARWAD A - 30, PAGE NO. 2 700000 2 RAJESH JHAVERI A - 30, PAGE NO. 4 17500000 3 RAJESH JHAVERI & MASHUKBHAI ADANI A - 30, PAGE NO. 5 3500000 4 MANISH PAKODA A - 30, PAGE NO. 8 300000 5 VAIBHAV A - 30, PAGE NO. 15 700000 6 SEVANTIBHAI A - 30, PAGE NO. 16 1500000 7 FOR PURCHASE, OF LAND NEAR SUDAMA RESORT A - 30, PAGE NO. 17 1100000 8 CHETANBHAI (FOR DHOLERA LAND ) A - 30, PAGE NO. 18 750000 9 MITULBHAI A - 30, PAGE NO. 19 250000 10 KIRITBHAI A - 30, PAGE NO. 20 250000 11 HARESHBHAI A - 30, PAGE NO. 21 600000 12 FOUR PERSONS A - 30, PAGE NO. 23 7000000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 19 13 DHAVAL SANGHVI A - 30, PAGE NO. 29 2000000 14 RUCHIR A - 30, PAGE NO. 30 6000000 15 PRAVIN VORA 85 S.K. A - 30, PAGE NO. 32 7000000 16 DHAVALBHAI A - 30, PAGE NO. 33 1000000 17 RAMESH HIRA (DESSA) A - 30, PAGE NO. 34 2000000 18 MOHANBHAI 85 PRATIK BHARWAD A - 30, PAG E NO. 35 13000000 TOTAL 6,51,50,000 THE ASSESSING OFFICER HAS STATED THAT DURING THE COURSE OF SEARCH PROCEEDINGS SHRI DH IR AJ LAL SANGHVI IN HIS STATEMENT RECORDED U/S. 131 ADMITTED THAT HE HAD MADE CASH ADVANCE S WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. ON PERUSAL OF THE AFORESAID PAGE, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS GIVEN SHORT TERM ADVANCES TO VARIOUS PARTIES, THEREFORE, DURING THE COURSE OF ASSESSMENT, THE ASSESSEE WAS ASKED TO EXPLAIN WHY NOT THE AM OUNT OF ADVANCE AGG REGATING TO R S. 6 , 51 , 50 , 00 0 / - SHOULD NOT BE TREATED AS HIS UNACC OUNTED INCOME. THE ASSESSEE EXPLAINED VIDE LETTER DATED 21 ST DECEMBER, 2012 THAT ALL THE NOTING S IN LOOSE PAPER DIARIES ETC . DURING SEARCH IN RESPECT OF VARIOUS ASSESSEES HAVE NEXUS WITH THE ADDITIONAL INCOME DE CLARED BY HIM AND THE SAME WAS THE BASIS OF THE CASH FLOW ST ATEMENT SUBMITTED ALONG WITH THE SUBMISSION . DURING THE COURSE OF ASSESSMENT, T HE ASSESSEE HAS SUBMITTED CASH FLOW STATEMENT ALONG WI TH THE SUBMISSION EXPLAINING THAT INFLOW CONSISTED OF RECEIPT/INCOME AND OUTFLO W CONSISTED OF PAYMENT EXPENSES AS UNDER : - SR. NO. NAME OF THE PERSON TO WHOM CASH PAID AMOUNT (RS.) RECEIPT PAYMENT REMARKS 1 PRATIK BHARWAD 700000 700000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 20 2 RAJESH JHAVERI 1750000 0 17500000 17500000 DURING THE STATEMENT RECORDED U/S 131 ON 26.05.2011 THE ASSESSEE HAD CONTENDED THAT THE CASH GIVEN IN F.Y. 2009 - 10 WAS RECEIVED BACK 3 RAJESH JHAVERI & MASHUKBHAI ADANI 3500000 350 0000 4 MANISH PAKODA 300000 300000 5 VAIBHAV 700000 NOT ADMITTED 6 SEVANTIBHAI 1500000 1500000 1500000 DURING THE STATEMENT RECORDED U/S 131 THE ASSESSEE HAD CONTENDED THAT THE CASH GIVEN WAS REC EIVED BACK 7 FOR PURCHASE OF LAND NEAR SUDAMA'RESORT 1100000 1100000 8 CHETANBHAI (FOR DHOLERA LAND) 750000 750000 9 MITULBHAI 250000 2500000 10 KIRITBHAI 250000 250000 11 HARESHBHAI 600000 600000 12 FOUR PERSONS 7000000 5000000 13 DHAVAL SANGHVI 2000000 14 RUCHIR 6000000 6000000 PERTAINS TO 20 10 - 11 15 PRAVIN VORA 8S S.K. 7000000 6500000 300000 500000 16 DHAVALBHAI 1000000 1000000 17 RAMESH HIRA (DESSA) 2000000 . 2000000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 21 18 MOHANBHAI & PRATIK BHARWAD 13000000 13000000 THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE AND STATED THAT ASSESSEE HAS WITHOUT ASSIGNING ANY REASON OR EVIDENCE CONSIDERED TH E AMOUNT AS EITHER PAYMENT OR RECEIPT AND TAKEN BENEFIT OF TELESCOPING. THE ASSESSING OFFICER HAS MADE HIS OWN ANALYSIS OF TRANSACTION IN THE DIARY AS UNDER: - A.Y.2010 - 11 A.Y.2011 - 12 RECEIPT PAYMENT RECEIPT PAYMENT PRATIK BHARWAD 70OOOO RAJESH JHAVERI 1000OOOO 17500000 7500000 RAJESH JHAVERI & MASHUKBHAI ADANI 3500000 MANISH PAKODA 300000 VAIBHAV 700000 SEVANTIBHAI 1500000 FOR PURCHASE OF LAND NEAR SUDAMA RESORT 1100000 CHE TANBHAI (FOR DHOLERA LAND) 750000 MITULBHAI 250000 KIRITBHAI 250000 HARESHBHAI 600000 FOUR PERSONS 5000000 2000000 DHAVAL SANGHVI 2000000 RUCHIR 6000000 PRAVIN VORA & S.K. 3000000 6500000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 22 500000 DHAVALBHAI 1000000 1000000 RAMESH HIRA (DESSA) 2000000 2000000 MOHANBHAI & PRATIK BHARWAD 13000000 17000000 28500000 43150000 THE ASSES SING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS NOT EXPLAINED THE SOURCE OF CAS H PAYMENT AND THE BENEFIT OF TELESCOPING CANNOT BE GIVEN AS NO DIRECT NEXUS REGARDING THE PAYMENT AND RECEIPT WAS FOUND IN THE SEIZED DOCUMENT. THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSE E AND MADE A DDITION OF R S. 4,31,50,000/ - BY CONSIDERING THE SAME AS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION . T HE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUC ED AS UNDER: - 11.3 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE OBSERVATION MADE BY THE ASSESSING OFFICER IN HER ORDER. THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: (A) THE APPELLANT IN HIS CASH FLOW STATEME NT HAS CONSIDERED THESE TRANSACTIONS AS CURRENT ACCOUNT TRANSACTIONS WHEREBY THE FUNDS RECEIVED FROM A PARTICULAR PERSON IS GIVEN TO ANOTHER AND UPON RECEIPT OF THAT PERSON IS GIVEN TO ANOTHER. IN BETWEEN THE INCOME EARNED WERE ALSO UTILIZED IN SUCH RECYCL ING OF FUNDS. THE APPELLANT HAS COMPUTED THE PEAK OF SUCH TRANSACTIONS AND OFFERED THE SAME AS INCOME. THE LOGIC BEHIND THE APPLICABILITY OF THE PEAK CREDIT THEORY IS THAT IF THE BORROWING FROM VARIOUS PERSONS IS TO BE TREATED AS NON - GENUINE THEN SYSTEMATI C \ REPAYMENT TO SUCH PERSON SHOULD ALSO BE TREATED AS NON - GENUINE. SUCH RECYCLING THUS - CONSTITUTED UNEXPLAINED CREDITS AND UNEXPLAINED DEBITS, THUS, ACCORDINGLY A NETTING OF THE TWO IS REQUIRED TO BE WORKED OUT FROM THE CASH FLOW STATEMENT. (B) THE C ONTENTION OF THE ASSESSING OFFICER THAT CERTAIN NOTINGS DO NOT CONTAIN JAMA OR UDAAR AND THE APPELLANT WITHOUT ASSIGNING ANY REASON HAS TREATED THE PAYMENTS OR RECEIPTS IS INCORRECT FOR THE REASON THAT THE APPELLANT IN HIS STATEMENT RECORDED BEFORE THE DEP ARTMENTAL AUTHORITIES HAVE CLEARLY ACCEPTED ALL SUCH NOTINGS AND ALSO EXPLAINED THAT THEY WERE RECEIPTS OR PAYMENTS. THE ASSESSING OFFICER IN HER ORDER ITSELF HAS MENTIONED THAT SHE HAS GONE THROUGH THE DETAILS FILED I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 23 BY THE ASSESSEE PARTICULARLY THE CASH F LOW STATEMENT AND SINCE THE STATEMENT WAS ALREADY FORMING PART OF ASSESSMENT RECORDS, THE OBSERVATION OF THE ASSESSING OFFICER IS UNCALLED FOR. (C) THE ASSESSING OFFICER IN HER ASSESSMENT ORDER IN THE CHART REPRODUCED MENTIONED THAT CERTAIN AMOUNT WAS RECEIVED AND PAID WHICH ITSELF PROVES THE RECYCLING OF THE FUNDS AND ACCORDINGLY, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 4,31,50,000. (D) THE ASSESSING OFFICER'S OBSERVATION THAT THE BENEFIT OF TELESCOPING ALSO CANNOT B E GIVEN SINCE THE DIRECT NEXUS FOR THE PAYMENT AND RECEIPT IS NOT FOUND IS ALSO NOT ACCEPTABLE FOR THE REASON THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO BRING OUT ANY CORROBORATIVE EVIDENCE TO SUPPORT THAT THE PAYMENT HAS BEEN MADE BY THE APPELLANT WE RE NOT OUT OF THE INCOME DECLARED BY THE APPELLANT AND HIS GROUP AND ONCE THE PEAK IS OFFERED BY THE APPELLANT AS ADDITIONAL INCOME, THE ADDITION THE MADE BY THE ASSESSING OFFICER IS UNCALLED FOR AND ACCORDINGLY THE SAME IS DELETED. THISJGOUND OF \ ' APPEAL IS ALLOWED. THE APPELLANT GETS RELIEF GROUND NO. 3 ( ADDITION AS U NACCOU NTED CASH AND CASH ADVANCES OF R S.4 , 33 , 140/ - ) AND GROUND NO. 2 OF CROSS OBJECTION OF THE ASSESSEE 13 . DURING THE COURSE OF SURVEY AT THE OFFICE PREMISES OF SANGHVI FINCAP PVT. LTD. A DIARY AS PER ANNEXURE A - 30 WAS SEIZED WHICH CONTAINED VARIOUS ENTRIES REGARDING CASH PAYMENT. FURTHER PAGE 82 OF THE ANNEXURE 9 IMPOUNDED FROM THE SAME PREMISES REVEALED ACKNOWLEDGEMENT OF CASH RECEIPT. THE ASSESSING OFFICER HAS GIVEN PAGE WISE SUMMAR Y OF THE TRANSACTION S RECORDED ON THESE PAGES AT PAGE 15 OF THE ASSESSMENT ORDER AS UNDER: - SR. NO. NAME OF THE PERSON TO WHOM CASH PAID PAGE NO. OF SEIZED MATERIAL AMOUNT 1 BABUBHAI RIKHAVCHAND SHAH A - 9 PAGE. 82 RS. 45,00,00 0/ - 2 RAJU - VRUNDAVAN A - 30 PAGE NO. 25 TO 28 RS. 50,00,000/ - 3 BABULAL A - 30 PAGE NO. 26 RS. 79,00,000/ - 4 PRAVIN VORA A - 30 PAGE NO. 27 RS. 45,00,000/ - 5 PRAVIN VORA A - 30 PAGE NO. 28 RS. 1,00,00,000/ - TOTAL RS. 3,19,00,000/ - THE A SSESSEE HAS EXPLAINED THAT HE HAD PAID CASH TO SHRI BABUBHAI VORA AND SHRI P RAVIN VORA AGAINST WHICH HE HAD OBTAINED CHEQUE ENTRIES. THE I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 24 ASSESSEE S SUBMISSION REPORTED AT PAGE 16 OF THE ASSESSMENT ORDER IS REPRODUCED AS UNDER: - NO. NAME DATE AMOUNT R EPRESENTED BY 1 COLOURFUL 11 - 01 - 11 9,00,000 BABULAL VORA 2 PRAFULKUMAR BABULAL VORA 11 - 01 - 11 9,00,000 BABULAL VORA 3 ELEGANCE EXCLUSIVE 10 - 01 - 11 9,00,000 BABULAL VORA 4 ELEGANCE 10 - 01 - 11 9,00,000 BABULAL VORA 5 RANI SAHEBA 11 - 0 1 - 11 9,00,000 BABULAL VORA 6 AMBITION 10 - 01 - 11 9,00,000 BABULAL VORA TOTAL 54,00,000 SIMILARLY, THE FOLLOWING ARE THE AMOUNTS RECEIVED THROUGH BANKING CHANNEL FROM PRAVIN VORA AND HIS GROUP WHICH IS SUMMARIZED AS UNDER: NO. NAME DATE AMOUNT REPRESENTED BY 1 AJIT P. JOSHI 13 - 01 - 11 7,00,000 PRAVIN VORA 2 SAJAN A. SHAH 13 - 01 - 11 6,00,000 PRAVIN VORA 3 ABHAY H. MEHTA HUF 13 - 01 - 11 14,00,000 PRAVIN VORA 4 HARDIK GEMS 13 - 01 - 11 9,00,000 PRAVIN VORA 5 NIDHI EXPORTS 1 3 - 01 - 11 9,00,000 PRAVIN VORA SUB - TOTAL 45,00,000 6 ASHOKKUMAR H. VORA 31 - 12 - 10 1,50,000 PRAVIN VORA 7 SHANTABEN H. VORA 31 - 12 - 10 1,00,000 PRAVIN VORA 8 ALKABEN H. VORA 30 - 12 - 10 12,00,000 PRAVIN VORA 9 MINAXIBEN C. VOR A 31 - 12 - 10 3,50,000 PRAVIN VORA 10 JINAL PROPERTIES PVT. LTD 31 - 12 - 10 2,00,000 PRAVIN VORA 11 SHANTA PROPERTIES PVT LTD 11 - 12 - 10 30 - 12 - 10 24,00,000 20,00,000 PRAVIN VORA I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 25 12 RAJNIANT H. VORA HUF 11 - 12 - 10 30 - 12 - 10 6,00,000 5,00,000 PRAVI N VORA SUB - TOTAL 75,00,000 GRAND TOTAL 1,20,00,000 ON VERIFICATION OF THE MATERIAL, THE ASSESSING OFFICER OBSERVED THA T AS AGAINST TOTAL CASH GIVEN OF RS. 3 .19 CRORE ENTRIES OF RS. 2.15 CRORE HAS BEEN TAKE N. THE ASSESSEE HAS ALSO EXPLAINED THAT THE AMOUNT OF RS. 45 LACS GIVEN TO SHRI BABUBHAAI VORA AND PRAVIN VORA WERE THE SAME AND THEY BELONGED TO THE SAME FAMILY. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CASH GIVEN TO SHRI BABUBULAL VORA WAS A SEPARATE TRANSACTION AND CANNOT BE LINKE D WITH THE LOAN ENTRY PROVIDED BY THE SHRI PRAVIN VORA. THE ASSESSING OFFICER HAD NOT ACCEPTED THE EXPLANATION O F THE ASSESSEE AND CONSIDERED THAT ENT IRE CASH LOAN OF RS. 2.74 CRORE + RS. 45 LAC S CASH LOAN GIVEN TO SHRI BABULAL VORA WERE UNACCOUNTED CAS H TRANSACTIONS. ACCORDINGLY, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 3,19,0000/ - AS UNACCOUNTED CASH OF THE ASSESSEE. THE ADDITION OF RS. 3.19 CRORE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND CASH ADVANCE WHICH WAS RESTRICTED TO RS. 4,33,140/ - BY THE LD. CIT(A). RELEVANT PART OF THE DECISION OF LD. CIT(A) IS AS UNDER: - 10.3 I HAVE GONE THROUGH THE FACTS OF THE CASE, OBSERVATION MADE BY THE ASSESSING OFFICER AND ARGUMENTS PUT FORWARDED BY THE AR. THE ADDITION MAD E BY THE ASSESSING OFFICER OF RS 3,19,00,000 IS COMPRISING OF CURRENT ACCOUNT TRANSACTIONS OF RS 2,74,00,000 AND ANOTHER TRANSACTION OF RS 45,00,000. SO FAR AS, THE FIRST PART TRANSACTION OF RS 2,74,00,000 IS CONCERNED THE APPELLANT HAS CONSIDERED IN THE C ASH FLOW STATEMENT AND THE SAME IS ALSO ACCEPTED BY THE ASSESSING OFFICER. IT HAS BEEN MENTIONED IN THE ASSESSMENT ORDER ITSELF THAT THE TRANSACTIONS OF RS 2,74,00,000 FORMS PART OF THE CASH FLOW STATEMENT SUBMITTED ON 21.12.2012. THE APPELLANT HAS COMPUTE D THE PEAK OF SUCH TRANSACTIONS AND OFFERED THE SAME AS INCOME. SINCE THE SARAFI ENTRIES AS STATED BY THE ASSESSING OFFICER HERSELF THEY ARE IN THE NATURE OF RECYCLING FUNDS AND UNDER THAT CIRCUMSTANCES THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADD ITION OF RS 2,74,00,000 AS THE SAME IS COVERED BY THE INCOME OFFERED AS PEAK BALANCE. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 2,74,00,000 IS DELETED. 10.4 THE FACTS OF NEXT TRANSACTION OF RS 45,00,000 ARE THAT, APPELLANT HAS CONTENDE D THAT 45,00,000 WAS GIVEN TO BABULAL VORA AND CHEQUE WAS TAKEN. DURING THE COURSE OF SEARCH NOTING OF RS 45,00,000 GIVEN WAS ALSO FOUND AND THE EXTRACT OF THE NOTINGS HAS ALSO BEEN REPRODUCED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. THE APPELLANT CONTENTION IS THAT THE AMOUNT WHICH I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 26 WAS GIVEN TO BABULAL IS ALREADY INCLUDED IN THE FIGURE OF RS 2,74,00,000 AND HENCE NO SEPARATE ADDITION IS CALLED FOR. THE ASSESSING OFFICER HAS CONTENDED THAT THIS TRANSACTION OF RS 45,00,000 IS OVER AND ABOVE THE TRAN SACTION OF RS 2,74,00,000. THE ASSESSING OFFICER HAS CONTENDED THAT THIS TRANSACTION WAS DONE WITH PRAVIN VORA AND NOT WITH BABULAL VORA. THE CONTENTION OF THE APPELLANT IS NOT ACCEPTABLE, FOR THE REASON THAT THOUGH THE APPELLANT HAS STATED THAT IN THE LOO SE PAPER THE AMOUNT WAS GIVEN TO BABULAL THROUGH PRAVIN VORA, THE CORRESPONDING CHEQUES HAVE BEEN RECEIVED FROM PRAVIN VORA. THIS CONFIRMS THAT THE TRANSACTION OF RS. 45,00,000 IS DIFFERENT AND DISTINCT FROM THE TRANSACTION OF BABULAL VORA AND ACCORDINGLY IT IS OVER AND ABOVE THE TRANSACTION OF RS 2,74,00,000. SINCE THIS TRANSACTION IS NOT CONSIDERED IN THE CASH FLOW STATEMENT, THE ADDITION OF RS 45,00,000 IS SUSTAINED. AT THE SAME TIME SINCE I HAVE ALREADY CONFIRMED THE ADDITION OF RS 40,66,860 TOWARDS INC OME FROM INVESTORS (DISCUSSED IN SUBSEQUENT PARA), THE SAME WOULD BE AVAILABLE FOR TELESCOPING OF SUCH PAYMENT BUT ONLY TO THE EXTENT OF RS 40,66,860 AND ACCORDINGLY THE BALANCE OF RS 4,33,140 IS CONFIRMED. THE GROUND OF APPEAL IS PARTLY ALLOWED. G ROUND - 4 (DELETING A DDITION OF RS. 5 , 84 , 71 , 400/ - ON ACCOUNT OF OWN MONEY PAYMENT ) 14 . DURING THE COURSE OF SEARCH , IT WAS NOTICED THAT ONE OF THE ENTITY OF SANGHVI GROUP M/S. SANGHVI INFRACON PVT. LTD. WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION DURING ASSESS MENT YEAR 2011 - 12 . I T HAD PU RCHASED A PLOT OF LAND AT NAV A V ADAJ IN AHMEDABAD FROM DHARMABHAI PATEL FAMILY. DURING THE COURSE OF SEARCH AS PER PAGE NO. 10 TO 14 OF ANNEXURE A - 30 EVIDENC E OF CASH PAYMENT TO SHRI DHARAMSIBHAI PATEL TO THE AMOUNT OF RS. 5, 5201, 000/ - WAS FOUND. FURTHER, AS PER PAGE NO. 93 TO 95 OF ANNEXURE A - 1 SEIZED FROM THE RESIDENCE OF ASSESSEE, I T WAS NOTICED THAT VALUE OF LAND WAS FINALIZED @ 35000/ - PER SQ. D URING THE COURSE OF POST SEARCH PROCEEDINGS ASSESSEE HAD ADMITTED THAT HE HAD PAID RS. 35,000/ - PER SQ . MT . AS AGAINST DOCUMENTED PRICE OF R S. 9000 PER SQ . MT . FOR PURCHASE OF THIS LAND AND ASSESSEE H AD ALSO ADMITTED THAT T H E TO T AL PURCHASE PRICE OF THE LAND WAS RS. 7 , 47 , 16 , 250/ - AS AGAINST THE DOCUMENTED PRICE OF RS. 1 , 62 , 44 , 850/ - . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE COMPANY SANGHVI INFRACON IN THE NAM E OF WHICH THE IMPUGNED LAND PURCHASED WAS INCORPORATED ON 19 TH JUNE, 2010 WHEREAS THE SUBSTANTIAL PAYMENT OF RS. 5 , 02 , 01 , 000/ - WAS MADE PRIOR TO T HE INCORPORATION O F THE COMPANY, THEREFORE , THE PAYMENT OF RS. 5,84,71,400/ - WAS CONSIDERED I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 27 IN THE HANDS OF THE ASSESSEE FROM UNACCOUNTED SOURCES. ACCOR DI NGLY, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 5 , 84 , 71 , 400/ - AS CASH PAYME NT UNACCOUNTED SOURCES. IN RESPECT OF ADDITION OF RS. 5,84,71,400/ - MADE ON ACCOUNT OF OWN MONEY PAYMENT, THE LD. CIT(A) HAS DELETED THE SAID ADDITION. RELEVANT PART OF DECISION OF LD. CIT(A) IS AS UNDER: - 9.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THE ASSESSING OFFICE R'S OBSERVATIONS AND I FIND THAT THE TOTAL ON - MONEY PAYMENT MADE FOR THE LAND AT VADAJ WAS TO THE TUNE OF RS. 5,84,71,400/. OUT OF THE SAME AND AS PER THE MATERIAL FOUND DURING THE COURSE OF SEARCH /SURVEY, THE PAYMENT MADE IN A.Y. 2010 - 11 WAS RS. 75,51,00 0/ AND THE BALANCE IN A.Y. 2011 - 12. THE SAME IS EVIDENCED BY THE SEIZED MATERIAL AND ACCEPTED BY THE APPELLANT. AS I HAVE ALREADY ALLOWED THE TELESCOPING OF THE INCOME AGAINST THE APPLICATION AND THIS PAYMENT BEING COVERED IN THE CASH FLOW STATEMENT AS OUT FLOW AS LAND PAYMENT, NO SEPARATE ADDITION IS CALLED FOR. THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 5,84,7 1,400/ HAS ALSO RESULTED IN DOUBLE ADDITION AS THE INCOME AND APPLICATION BOTH GETTING TAXED. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER FOR RS. 5,84,7 1,400/ IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. GROUND NO. 5 ( DELETING A DDITION OF R S. 5 , 29 , 43 , 000/ - ON ACCOUNT OF RTGS ENTRIES ) 15 . DURING THE COURSE OF SEARCH CERTAIN PAPERS WERE SEIZED WHICH INDICATE SHARE TRADING B Y THE ASSESSEE AND A GROUP OF INVESTORS AND THES E PAGES INDICATE RECEIPT OF FUND BY WAY OF RTGS AND CASH. SHRI S AJJAN KUMAR NANWAL ONE OF THE MAIN PERSON L OOKING AFTER FINANCIAL MATTER OF VARIOUS ENTITIES OF THE SANGHVI G ROUP IN HIS STATEMENT RECORDED U/S . 131 STATED THAT THESE PAGES CONTAINED ENTRIES OF FUNDS TRANSFERRED THROUGH RTGS AND ALSO FUNDS RECEIVED BY CASH. ON PERUSAL OF THE THESE ENTRIES IN THOSE DOCUMENTS , THE ASSESSING OFFICER NOTICED THAT ALL THE TRANSACTIONS WERE IN REL ATION OF SHARE TRADIN G AND THE SUM OF CASH ENTRIES ON THESE PAGES WERE TO THE AMOUNT OF R S. 6.11 CORES. THE ASSESSING OFFICER HAS STATED THAT I N THE STATEMENT RECORDED U/S. 131 DURING POST SEARCH PROCEEDINGS , SHRI DHIRAJLAL SANGHVI ADMITTED THAT T H E CASH OF RS. 6, 11, 0 10,0 00/ - WAS BELONGED TO HIM AND HE WOULD PAY TAX ON THE SAME. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE CONTENT OF THESE PAGES, THE I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 28 ASSESSEE HAS STATED THAT ADDITIONAL INCOME HAS BEEN CONSIDERED IN THE CO MPUTATION OF THE CASH FLOW STATEMENT PROVIDED DURING THE COU RS E OF ASSESSMENT PROCEEDINGS AND THE NOTING OF R S. 6.11 CRORES HAVE BEN EXPLAINED AND DISCLOSED IN THE RETURN OF INCOME FILED WITH THE DEPARTMENT. DURING THE COURSE OF ASSESSMENT, T HE ASSESSEE EXPLAINED VIDE REPLY DATED 10 TH JAN, 2013 THAT T H E RTGS AS PER THE NOTINGS HAVE BEEN DIRECTLY RECEIVED BY THE GROUP OF INVESTORS AS LOAN AND THE ASSESSEEE HAS PROVIDED THE RELEVANT DETAIL SUCH AS NAME, ADDRESS, PAN, BANK ACCOUNT NO. OF REMITTER ETC . THE RELEVANT PART OF THE DETAILS IS REPRODUCED AS UNDER: - SR . NO PAGE NO. OF ANX NAME AND ADDRESS OF PARTY DATE OF AMOUNT NAME AND ADDRESS OF REMIITER 1 9 RECEIVED RTGS TRANSACTIONS 114 HIGH GROWTH VIN TRADE PVT. LTD 8/9/2010 4500000 CAS PICAN PROJECT PVT. LTD PLOT NO 159A, FIRST FLOOR, MLA COLONY, ROAD NO, 12 BANJARA HILLS HYDERABAD - 34 2 110 HARISH BOHRA 5/10/2010 5550000 RAJA REDDY NANDYGADADA VILAGE SRINIVAS SANDRA POST BANARPET TALUKA KOLAR DIST KARNATAKA 3 110 GROMAX CORPORATE SERVICES PVT. LTD. 7/7/2010 8443000 M.N. PRATIMA I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 29 409 TRIPUTI TOWERS NR. TELEPHONE EXCHANGE STREET HOUSE NO. 106/21, FIRST FLOOR, NR. OLD DIV JYAJYOTI SCL GIDC CROSSING ROAD AKRI VILLAGE GIDC VAPI E.G. ROAD JOSHI BULLION GEMS & 4 109 JEWELLERY PVT. LTD 412, LAXMIMGLL 27 - 07 - 2010 18000000 RAJA REDDY BUILDING NO. 5 LAXMI INDUSTRIAL ESTATE, NEW LINK ROA D NANDYGADADA VILAGE SRINIVAS SANDRA POST ANDHERI WEST BANARPET TALUKA MUMBAI - 400 053 KOLAR DIST KARNATAKA 5 107 GROMAX CORPORATE SERVICES PVT. LTD. 21 - 07 - 2010 6000000 M.M. GANESH 409 TRIPUTI TOWERS NR. T ELEPHONE EXCHANGE STREET 215, 5TH CROSS ROAD LEFT SIDE ROAD GIDC CROSSING ROAD ILLIYASHNAGAR GIDC VAPI BANGLORE (SOUTH) 6 3 GROMAX CORPORATE SERVICES PVT. LTD. 3/11/2010 4000000 KARUSALA SRINIVASRAO 409 TRIPUTI TOWER S NR. TELEPHONE EXCHANGE STREET LOWYERPETH PRAKASHAM GIDC CROSSING ROAD HYDERABAD GIDC VAPI 7 3 GROMAX CORPORATE SERVICES PVT. LTD. 8/11/2010 2500000 KARUSALA SRINIVASRAO 409 TRIPUTI TOWERS NR. TELEPHONE EXCHANGE ST REET LOWYERPETH PRAKASHAM GIDC CROSSING ROAD HYDERABAD I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 30 GIDC VAPI 6 3 GROMAX CORPORATE SERVICES PVT. LTD. 10/11/2010 4000000 KARUSALA SRINIVASRAO 409 TRIPUTI TOWERS NR. TELEPHONE EXCHANGE STREET LOWYERPETH PRAKA SHAM GIDC CROSSING ROAD HYDERABAD GIDC VAPI TOTAL 52 993000 TH E ASSESSEE HAS SUBMITTED THAT THESE WERE THIRD PARTIES TRANSACTIONS WHICH WERE REMITTED BY A THIRD PARTY AND RECEIVED BY ANOTHER THIRD PARTY. I T WAS ALSO EXPLAINED THAT THE NOTING FOUND WAS IN RESPECT OF PURCHASE OF SHARES MADE BY GROUP OF INVESTORS AND THERE WAS MOVEMENTS OF FUNDS THROUGH BANKING CHANNELS BY THIRD PARTIES TO THE INVESTORS (THIRD PARTIES). IT IS ALSO SUBMITTED THAT ASSESSEE HAD ACTED AS FACILITATORS IN PROVIDING FUND S TO THE INVESTORS AND FOR THIS PURPOSE HE HAD MADE NOTHINGS OF FUNDS WHICH WERE REMITTED BY THIRD PARTY AND RECEIVED BY ANOTHER THIRD PARTY. THE ASSESSEE HAS ALSO SUBMITTED THAT ALL THE RELEVANT DETAILS FROM THE REM ITTER S AND THE RECEIVERS OF THE RTGS SUCH AS NAME, ADDRESS, PAN, BANK ACCOUNT NO S . OF REMITTER S AND RECEIVER S AND THE COPIES OF THE SAME WERE SUBMITTED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE A SSESSEE STATING THAT MERELY CONFIRMING BANK TRANSACTION DOES NOT PROVE THE GENUINENESS OF THE TRANSACTION AND THE SHARE TRANSACTION ON THE SEIZED DOCUMENT S HAVE IN FACT TAKEN PLACE WHICH WAS EVIDENT FROM THE ENTRIES IN THE BOOKS OF THE ASSESSEE AND THE ADM ISSION OF THE CASH RECEIVED. THE ASSESSING OFFICER HAS ALSO STATED THAT NONE OF THE BENEFICIARIES HAVE REPLIED TO LETTERS ISSUED U/S. 133(6) OF THE ACT. THE RE FORE, THE ASSESSING I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 31 OFFICER HAS TREATED RTGS ENTRIES AMOUNTING TO RS. 5 , 29 , 43 , 000/ - AS BELONGING TO THE AS S ESSEE WHICH WAS NOT RECORD ED IN THE BOOKS OF ACCOUNT AS UNACCOUNTED INCOME OF THE ASSESSEE. T HE LD. CIT(A) HAS DELETED THIS ADDITION. RELEVANT PART OF DECISION OF LD. CIT(A) IS AS UNDER: - 13.3 I HAVE GONE THROUGH THE FACTS OF THE CASE AND TH E OBSERVATION MADE BY THE ASSESSING OFFICER IN HER ORDER. DURING THE COURSE OF SEARCH, NOTINGS PERTAINING TO CERTAIN RTGS TRANSACTIONS BELONGING TO THE THIRD PARTIES WERE FOUND. THE ASSESSING OFFICER ON THE BASIS OF SUCH NOTINGS AND THE FACT THAT CERTAIN P ARTIES DID NOT RESPOND TO THE LETTERS ISSUED, PROCEEDED TO MAKE THE ADDITION IN THE HANDS OF THE APPELLANT TO THE TUNE OF RS 5,29,43,000/. THE ACTION OF THE ASSESSING OFFICER IN MAKING SUCH ADDITION IS NOT JUSTIFIED AND UNCALLED FOR, FOR THE FOLLOWING REAS ONS: (A) THERE IS NO DENYING OF THE FACT THAT, THESE RTGS TRANSACTIONS BELONGED TO THIRD PARTY; (B) THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS PROVIDED THE NAME, ADDRESS AND PERMANENT ACCOUNT NUMBER OF THE REMITTER AND BENEFICIARY, ALONG WITH BANK ACCOUNT NUMBER; (C) THE ASSESSING OFFICER CONFIRMED THESE TRANSACTIONS FROM THE BANKING AUTHORITIES ON THE BASIS OF DETAILS PROVIDED BY THE APPELLANT. THIS HAS BEEN MENTIONED IN THE ASSESSMENT ORDER ITSELF. (D) IT IS ALSO OBSERVED THAT T HE APPELLANT IS NEITHER REMITTER NOR BENEFICIARY IN THE SAID TRANSACTIONS. (E) ACCORDINGLY THE PRIMARY ONUS ON THE APPELLANT TO PROVE THAT THE TRANSACTIONS DO NOT BELONG TO HIM WAS DISCHARGED. FURTHER THE ASSESSING OFFICER HAS NOT POINTED OUT SINGLE TRANSA CTION TO PROVE THAT THEY DO NOT BELONG TO THE REMITTER AND THE BENEFICIARY FOR WHICH DETAILS WERE PROVIDED. (F) FURTHER, THE VERY REQUIREMENT FOR THE ASSESSEE TO HAVE TO PROVE THE CAPACITY OF THE PAYER IS ALSO PROVED BECAUSE WHERE THE PAYMENT HAS BEEN RECE IVED BY MEANS OF A CHEQUE DRAWN IN THE BANK ACCOUNT OF THE PAYER, THE CAPACITY OF THE PAYER STANDS ESTABLISHED BY VIRTUE OF THE FACT OF THE EXISTENCE OF ADEQUATE BANK BALANCE IN HIS BANK ACCOUNT (IDENTITY OF THE PAYER AND GENUINENESS OF THE TRANSACTION ALS O STAND ESTABLISHED IN THE CASE OF PAYMENTS BY CHEQUE). (G)WITH REGARDS TO OBSERVATION OF AO THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT BENEFICIARY/REMITTER DID NOT REPLY IN THE MATTER , IT IS SUBMITTED THAT APPELLANT HAS SUBMITTED ALL THE DETAI LS TO PROVE GENUINENESS OF TRANSACTIONS. IT IS FURTHER SUBMITTED THAT NAME AND ADDRESSES ALONG WITH PAN AND BANK ACCOUNT NUMBER WERE PROVIDED AND HENCE INITIAL BURDEN TO PROVE WHEREABOUTS ARE FULFILLED. THE OBSERVATION OF THE ASSESSING OFFICER THAT THE AP PELLANT ROLE WAS TO RECEIVE COMMISSION @1.5% AND THAT INCOME HAS NOT BEEN DISCLOSED BY IHE APPELLANT AND ACCORDINGLY THE SAME IS AN AFTERTHOUGHT, IS ALSO NOT JUSTIFIED FOR THE REASON EVEN IF THE SAME INCOME IS TAKEN TO THE CASH FLOW STATEMENT THE SAME WOUL D BE OF NO USE SINCE THE IT WOULD BE TELESCOPED AGAINST THE NEGATIVE BALANCE WHICH IS SEPARATELY OFFERED BY THE APPELLANT AS PEAK BALANCE. 13.4 IN VIEW OF ABOVE, (I) THE IDENTITY OF THE REMITTER AND BENEFICIARY ARE PROVED AS BANKS HAVE CONFIRMED. (II ) THE CAPACITY OF THE PAYER STANDS PROVED SINCE THE PAYMENT HAS BEEN RECEIVED BY MEANS OF A CHEQUE DRAWN IN THE BANK ACCOUNT OF THE PAYER, BY VIRTUE OF THE FACT OF THE EXISTENCE OF ADEQUATE BANK BALANCE IN HIS BANK ACCOUNT - (ROHINI BUILDERS - SLP DISMIS SED AND BINDING ON DEPARTMENT) (III) IT IS SUBMITTED THAT NAME AND ADDRESSES OF REMITTER AND BENEFICIARY ALONG WITH PAN & BANK ACCOUNT NUMBER HENCE INITIAL BURDEN ARE FULFILLED. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.5,29,43,000 IS DELETED AND THE APPELLANT'S GROUND OF APPEAL IS ALLOWED. GROUND NO. 6 ( RESTRICTING A DDITION OF RS. 6, 0 3,00 , 000/ - ON ACCOUNT OF RTGS CASH RECEIPT ) I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 32 16 . DURING THE COURSE OF ASSESSMENT, THE ASSESS ING OFFICER HAS NOTICED CASH ENTRIES ON VARIOUS PAGES OF ANNEXURE A - 9 AS UNDER: - SR. NO. PAGE NO. OF THE LOOSE PAPER FILE A - 9 DATE AMOUNT IN CASH 1 2 10500000 2 2 6500000 3 3 31.10.2010 6500000 4 27 17.11.2008 8,10,000 4 107 & 109 27.07.2010 10000000 5 109 29.07.2010 900000 0 6 109 18.08.2010 9000000 7 112 300000 8 114 6000000 9 114 2500000 TOTAL 6,11,1O,000/ - AS DISCUSSED AT PAGE 12 OF THIS ORDER, THE ASSESSING OFFICER OBSERVED THAT ALL THE AFORESAID TRANSACTIONS WERE RELATED TO TRADING IN S HARE S . THE ASSESSING OFFICER STATED THAT ASSESSEE IN HIS STATEMENT RECORDED U/S. 131 DURING POST SEARCH PROCEEDINGS HAD ADMITTED THAT THE CASH OF R S. 6 .11CRORE BELONGED TO HIM AND HE WOULD PAY TAX ON THE SAME. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSE E CONTENDED THAT THE SAME TRANSACTIONS HAVE BEEN CONSIDERED IN THE FUND FLOW PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION O F THE ASSESSEE STATING THAT THE ASSESSEE HAS ADMITTED THAT THE CASH MENTIONED ABOVE WAS UNACCOUNTED INCOME, T HEREFORE, THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. REGARDING ADDITION OF RS. 6,11,10,000/ - I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 33 MADE BY THE ASSESSING OFFICER, THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF RS . 6,03,00,000/ - RELEVANT PART OF DECISION OF LD. CIT(A) IS AS UNDER: - 12.3 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE OBSERVATION MADE BY THE ASSESSING OFFICER IN HER ORDER. THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS 6,11,10,000/. THE CONTE NTION OF THE APPELLANT THAT OUT OF THE SAID SUM RS 8,10,000/ HAS BEEN DISCLOSED IN THE BOOKS OF ACCOUNT OF ASIQ, SANGHVI IS FOUND TO BE CORRECT. IN THE CASH FLOW STATEMENT FILED, THE APPELLANT HAD PROVIDED DOCUMENTARY EVIDENCE OF THIS SUM BEING ACCOUNTED F OR. MORE IMPORTANTLY THE PRESENT ASSESSING OFFICER HAS ALSO PASSED ASSESSMENT ORDER IN THE CASE OF ASHIQ SANGHVI AND ACCEPTED THE RETURNED INCOME. IN VIEW OF THE SAME, I AM OF CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS 8,10,000/ IN THE HANDS OF THE APPELLANT. THE SAME IS HEREBY DELETED. REGARDING THE BALANCE SUM OF RS 6,03,00,000/ THE SAME FORMS PART OF THE ADDITIONAL INCOME. THE ADDITION TO THE EXTENT OF RS 6,03,00,000 IS CONFIRMED. THUS THIS GROUND OF APPEAL IS P ARTLY ALLOWED. THE APPELLANT GETS PART RELIEF GROUND NO. 7 ( DELETING A DDITION FOR R S. 1 , 02 , 33 , 850/ - ON ACCOUNT OF INCOME FROM ADVIC ES GIVEN TO INVESTORS ) 17 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE AN D HIS GROU P WAS TRADING IN SH A RES IN HUGE QUANTITY WHICH HAS RESULTED IN SUBSTANTIAL UNACCOUNTED RECEIPT AND FURTHER OBSERVED THAT ASSESSEE WAS ALSO RECEIVING FUNDS BY WAY OF ADVICE GIVEN TO INVESTORS. THE ASSESSING OFFICER HAS NOTICED THAT ON REVERSE OF PAGE NO. 9 OF LOOS E PAPER AS PER ANNEXURE A - 10 THERE WAS HAND WRITTEN ENTRY WHEREIN A CALCULATION WAS MADE AS PER WHICH 70% OF RS. 1 , 02 , 33 , 850/ - HAD BEEN WORKED OUT AT RS. 71,63,695 . SHRI SAJJANKUMAR NANWAL ONE OF THE KEY PER SON OF THE GROUP HAS STATED IN THE STA TEMENT REC ORDED U/S. 131 OF THE ACT THAT CALCULATION ON THIS P AGE PERTAINED TO ONE SHRI RAMESHBHAI OF SABARMATI AND THE CALCULATION SHOW PROFIT OF R S. 1 , 02 , 33 ,850/ - WHICH WAS DISTRIBUTED IN THE RATIO OF 70% TO SHRI RAMESH BHAI AND BALANCE 30% TO S HRI DEERAJ LAL SANGHVI I.E. 30 , 70,155/ - . DURING THE COURSE OF ASSESSMENT, THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF THE TRANSACTION ALONG WITH THE COMPLETE ADDRESS OF SHRI RAMESHBHAI. THE ASSESSEEE FAILED TO FURNISH THE DETAILS AND SUBMITTED THAT HE HAS CONS IDERED THE ENTIRE AMOUNT OF RS. 1 , 02 , 33 , 850/ - IN DISCLOSURE I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 34 REFLECTED IN THE CASH FLOW STATEMENT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE ACCEPTED T HE ENTIRE TRANSACTION IN THE CASH FLOW STATEMENT THEREFORE THE ASSESSING OFFICER HAS TREAT ED THE AMOUNT OF RS. 1,02,33, 850/ - AS UNACCOUNTED INCOME OF THE ASSESSEE . THE ADDITION OF RS. 1,02,33,850/ - WAS MADE ON ACCOUNT OF INCOME FROM SERVICES RENDERED TO THE INVESTORS. THE LD. CIT(A) HAS DELETED THIS ADDITION. RELEVANT PART OF DECISION OF LD . CIT(A) IS AS UNDER: - 14.3 I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE AND THE DISCUSSION MADE BY THE ASSESSING OFFICER IN HER ORDER. THE APPELLANT HUF IS ENGAGED THE SHARE MARKET ACTIVITY. THE APPELLANT HUF IS ALSO ASSESSED THE PRESENT ASSESSING OFFICER. THE APPELLANT HUF HAD DISCLOSED ADDITIONAL INCOME OF RS 1,02,33,850/ IN ITS RETURN OF INCOME AND THE SAME IS ALSO STATED IN THE ASSESSMENT ORDER AS PAGE NO 3. THE ASSESSING OFFICER HAS CORRECTLY QUANTIFIED THE INCOME BUT THE SAME IS REQUIRED TO B E TAXED IN THE HANDS OF HUF AND NOT THE APPELLANT. FURTHER, THE CONTENTION OF THE APPELLANT IS CORRECT THAT THE SAME IS INCLUDED IN THE CASH FLOW STATEMENT AND AVAILABLE FOR TELESCOPING FOR THE REASONS STATED ABOVE. ACCORDINGLY THE ADDITION OF RS 1,02,33 ,850 IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. THE APPELLANT GETS RELIEF. GROUND NO. 8 ( RESTRICTING ADDITION TO R S. 19 , 64 , 598/ - ON ACCOUNT OF OTHER EXPANSES ) AND GROUND NO. 4 OF CROSS OBJECTION OF THE ASSESSEE 18 . DURING THE COURSE OF SEARCH/ SU RVEY FROM VARIOUS PREMISES OF THE ASSESSEE GROUP LOOSE PAPER WERE SEIZED AND IMPOUNDED. ON PERUSAL OF THESE LOOSE PAPERS , THE ASSESSING OFFICER OBSERVED THAT THERE WERE VARIOUS EXPENSES WHICH WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS. THE DETAIL S OF SU CH EXPENSES AGGREGATING TO RS. 98 , 72 , 060/ - ON VARIOUS PA GES OF LOOSE PAPER SEIZED WERE REPORTED AT PAGE NO. 34 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS CONTENDED THAT SOME OF THE EXPENSES I.E. NOTING OF THE AMC PAYMENT WERE CONSIDERED IN THE CASH FLOW AN D SOME OF THE EXPENSES WERE RECEIVED BACK AND WAS TAX NEUTRAL . THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND TREATED THE TOTAL AMOUNT OF RS. 98 , 72 , 060/ - AS UNACCOUNTED EXPENDITURE AND ADDED TO T HE TOTAL INCOME OF THE ASSESSEE . IN RESPECT OF ADDITION OF RS. 98,72,060/ - MADE BY THE ASSESSING OFFICER ON I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 35 ACCOUNT OF OTHER EXPENSES, THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF RS. 19,64,594/ - . RELEVANT PART OF THE DECISION OF LD. CIT(A) IS AS UNDER: - 16.3 I HAVE GON E THROUGH THE FACTS OF THE CASE, THE OBSERVATION MADE BY THE ASSESSING OFFICER AND ARGUMENTS PUT FORWARDED BY THE AR. THE ASSESSING OFFICER HAS OBSERVED THAT THERE ARE CERTAIN EXPENSES TO THE TUNE OF RS 98,72,060 WHICH ARE NOT RECORDED AND ACCORDINGLY HAS MADE ADDITION TO THE ASSESSED INCOME. THE ACTION OF THE ASSESSING OFFICER IN MAKING SUCH ADDITION IS INCORRECT SINCE THAT OUT OF THE EXPENSES OF RS 9872060 EXPENSES TO THE TUNE OF JRS 70,49,962 HAS BEEN CONSIDERED4N - THE - CASH 41OW~STATEMENT. AS I HAVE ALRE ADY ALLOWED THE TELESCOPING OF THE INCOME AGAINST THE APPLICATION AND THIS PAYMENT BEING COVERED IN THE CASH FLOW STATEMENT AS OUTFLOW AS EXPENSES/OUTFLOW, NO SEPARATE ADDITION IS CALLED FOR. THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 70,49,962 HAS ALSO RESULTED IN DOUBLE ADDITION AS THE INCOME AND APPLICATION BOTH GETTING TAXED. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER FOR RS. 70,49,962 / IS DELETED. FOR BALANCE OF THE AMOUNT OF RS 28,22,098/, THE APPELLANT HAS CONTENDED THAT (A) OUTFLOW ON ACCOUNT OF HONDA JAZ PERTAINS TO A.Y. 2010 - 11 AND THEREFORE THE SAME IS WITHOUT JURISDICTION - X (B) EXPENSES ON RENOVATION OF RS 72,500 IS ALREADY INCLUDED IN OVERALL RENOVATION EXPENSES AND THEREFORE NO SEPARATE ADDITION IS CALLED FOR; PURSUANT TO THE STATEMENT OF THE APPELLANT AMC FEES THAT 'RS. 1.5 LAC FEE OF AMC GIVEN IN CASH TO MOHANBHAI BHARWAD WHICH WAS TAKEN BACK ON THE SAME DAY THAT IS WHY IT IS CANCELLED, AND THEREFORE TOTAL AMOUNT INVOLVED IS RS 1,50,000 AND NOT RS 15,00,000, ADDITION OF RS. 13.50 LACS IS UNCALLED FOR. (D) THE APPELLANT HAS CONTENDED THAT THERE IS NO SUCH EXPENSE OF RS 6,14,598 ON BMW CAR. 16.4 I HAVE GONE THROUGH THE CONTENTIONS AND FIND THAT SO FAR AS EXPENSES ON RENOVATION AND PURCHASE OF HONDA JAZ IS CONC ERNED OF RS 72,500 AND RS 7,85,000 THERE IS SUBSTANTIAL FORCE IN THE ARGUMENTS OF THE APPELLANT AND SINCE THEY ARE INCLUDED IN THE CASH FLOW STATEMENT, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. REGARDING THE ADDITION OF RS 6,1,4,598/ AND RS 13 ,50,000/ FOR EXPENSES ON BMW CAR AND AMC FEES, THE APPELLANT HAS FAILED TO JUSTIFY THE CONTENTIONS WITH ANY DOCUMENTARY OR RELEVANT EVIDENCE. THE ARGUMENTS PUT FORWARDED BY THE AR OF THE APPELLANT IS NOT ACCEPTED AND ADDITION TO THIS EXTENT OF RS 19,64,598 / IS CONFIRMED. ACCORDINGLY ADDITION TO THE TUNE OF RS 19,64,598 IS CONFIRMED. THE GROUND OF APPEAL IS PARTLY ALLOWED . GROUNDS OF CROSS OBJECTION 1 AND 1.1 19 . DURING THE COURSE OF SEARCH AND SURVEY ACTION CONDUCTED AT THE RESIDENCE AND BUSINESS PREMI SES OF SANGHVI GROUP TOTAL CASH TO THE AMOUNT OF RS. 11 , 59 , 487/ - WAS FOUND FROM 10 DIFFERENT PR EMISES AS REPORTED AT PAGE NO. 10 OF THE ASSESSMENT ORDER . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT THE SOURCE OF CASH FOUN D ALONG WITH EVIDENCES. T HE ASSESSEE HAS STATED THAT THE CASH BALANCE AS PER I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 36 BOOKS OF ACCOUNT AS ON 9 TH MARCH, 2011 WAS TO THE AMOUNT OF RS. 14 , 85 , 178/ - AND IT WAS THE PRACTICE OF THE ASSESSEE AND HIS FAMILY MEMBER S TO TAKE AWAY THE PHYSICAL CASH FROM BUSI NESS PREMISES TO THE RESIDENCE. IT WAS FURTHER EXPLAINED THAT BECAUSE OF THIS PRACTICE THE CASH TOTALING OF RS. 10 , 52 , 500/ - WAS FOUND IN THE RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE COUR S E OF ASSESSMENT PROCEEDINGS, THE DETAIL FURNISHED BY THE A SSESSEE HAS BEEN VERIFIED BY T H E ASSESSING OFFICER. ON VERIFICATION , IT IS NOTICED THAT ASSSESSEE COULD NOT EXPLAIN THE SOURCE OF THE CASH AMOUNT ING TO RS. 4 , 89 , 863/ - AFTER CONSIDERING THE CASH BALANCE OF R S. 5 , 65 , 686/ - IN RESPECT OF ASHWARYA NX AS PER T RIAL BAL A NCE SEIZED VIDE ANNEXURE A - 28. FURTHER CASH OF RS. 6 , 480 FOUND FRO M THE PREMISES OF KUNAL WAS CONSIDERED AS ACCOUNTED AFTER CONSIDERING STATEMENT OF THE MANAGER OF THE PROPRIETARY CONCERN ON THE DATE OF SURVEY THAT CASH WAS RE - CONCILED AS PER CA SH BOOK. THE LD. CIT(A) HAS SUSTAINED THIS ADDITION. RELEVANT PART OF DECISION OF LD. CIT(A) IS AS UNDER: - 8.2 I HAVE GONE THROUGH THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE AN ADDI TION OF RS. 4,89,863/ ON COMPARISON WITH THE PHYSICAL CASH FOUND DURING THE COURSE OF SEARCH WITH THAT OF THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS NOT ACCEPTED THE BALANCE OF THE CASH BOOK PERTAINING TO THE M/S ABERRANT STYLE, PROPRIETORSHIP CONCERN OF SAGAR SANGHVI, ON THE GROUND THAT THE CASH BALANCE AS PER THE RETURN OF INCOME FILED FOR A.Y. 2009 - 10 DID NOT MATCH WITH THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT. SINCE THAT WOULD HAVE THE CASCADING EFFECT IN SUBSEQUENT YEARS, THE BALAN CE AS STATED BY THE APPELLANT CANNOT BE ACCEPTED. I AGREE WITH THE CONTENTION OF THE ASSESSING OFFICER ABOUT THE GENUINENESS OF THE CASH BALANCE CLAIMED BY THE APPELLANT MORE SO SINCE THE APPELLANT HAS ALSO NOT BEEN ABLE TO PROVE THE CASH BALANCE AS ON 31 S T MARCH, 2009 AS STATED IN THE ASSESSMENT ORDER. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 4,89,863/ - IS SUSTAINED AND THIS GROUND OF APPEAL IS REJECTED AND DISMISSED. GROUND NO. 3 OF CROSS OBJECTION 20 . T HE TH IRD GROUND OF CROS S OBJECTION IS FILED BY THE ASSESSEE AGAINST T H E DECISION OF LD. CIT(A) IN CONFIRMING ADDITION OF RS. 40 , 66 , 8 60/ - OUT OF TOTAL ADDITION OF R S. 93 , 87 , 982/ - MADE ON PROFIT SHOW N IN LOOSE PAPER . DURING THE COU R SE OF SEARCH PAGE NO. 145 AS PER ANNEXURE A/6 WAS SEIZED SHOWING TRANSACTION PERTAINING TO CERTAIN SHARES OF PROFIT EARNED THEREON . TOTAL PROFIT I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 37 OF THE TRANSACTION WAS SHOWN AT RS. 82 , 62 , 592/ - EXCLUDING GTL. THE PROFIT OF GTL WAS SHOWN AT RS. 8 , 74 , 252/ - AND G OLD PROFIT OF RS. 6 , 89 , 000/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE EXPLAINED THAT HE H AS DISCLOS ED 50% OF RS. 82 , 62 , 592/ - TO THE AMOUNT OF RS. 39 , 12 , 860/ - AND OUT OF GTL PROFIT HE HAS DISCLOSED RS. 6 , 40 ,252/ - AND GOLD PROFIT OF RS . 68 , 900/ - WAS ALSO DISCLOSED. HOWEVER, WITH REGARD TO REMAINING AMOUNT TOTALING TO RS. 41 , 46 , 8 60/ - T HE ASSESSEE HAS NOT FURN I SHED ANY EXPLANATION . THE ASSES SING OFFICER ST A TED THAT ASSESSEE ADMITTED PART OF THE TRANSACTION AMOUNTING TO R S. 52 , 41 ,112/ - , H OWEVER, THE REMAINING 50% OF PROFIT ASSESSEE STATED THAT IT WAS NOT BELONGED TO HIM. SINCE THE ASSESSEE HAS FAILED TO PROVIDE THE NAME AND ADDRESS OF THE BENEFICIARIES OF THE TRANSACTION , THEREFORE , THE TOTAL PROFIT FROM THE TRANSACTION TO THE AMOUNT OF R S. 93 , 87 , 972/ - WAS CONSIDERED AS UNDISCLOSED INCOME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS PARTY ALLOWED THE APPEAL OF THE ASSES S EE AND SUSTAINED THE ADDITION TO THE EXTENT OF RS. 40 , 66 , 860/ - . RELEVANT PART OF THE DECISION OF LD. CIT(A) IS AS UNDER: - 15.3 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE OBSERVATION MADE BY THE ASSESSING OFFICER IN HER ORDER. THE ASSESSING OFFICER HAS PROCEEDED TO MAKE THE ADDITION SINCE THE APPELLANT HAS FAILED TO PROVIDE DETAILS AS TO WI TH WHOM THE SHARE OF 50% WAS MADE. FURTHER THE CONTENTION OF THE APPELLANT THAT THE SAME IS ROUGH IN NATURE IS INCORRECT, SINCE THE APPELLANT HIMSELF HAS TAKEN RS 52,31,112 TO THE CASH FLOW STATEMENT AND TELESCOPED AGAINST THE PAYMENT/OUTFLOWS. ACCORDINGLY THE ASSESSING OFFICER WAS CORRECT IN HOLDING THAT THE ASSESSEE THE ONUS IS ON THE ASSESSE TO PROVIDE THE NAME AND ADDRESS OF THE OTHER BENEFICIARY OF THE TRANSACTION. SINCE THE APPELLANT HAS HIMSELF OFFERED RS 52,31,112/ - AS PART OF THE ADDITIONAL INCOME THE BALANCE AMOUNT OF RS 40,66,860/ IS CONFIRMED. ACCORDINGLY TOTAL ADDITION MADE BY THE ASSESSING OFFICER OF RS 93,87,972/ - IS CONFIRMED. HOWEVER THE ADDITIONAL INCOME OF RS 40,66,860/ WOULD BE AVAILABLE FOR TELESCOPING AGAINST THE PAYMENT/OUTFLOW. THE GR OUND OF APPEAL IS DISMISSED. I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 38 FINDINGS: - 21 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT ASSESSING OFFICER HAS RIGHTLY MADE THE VARIOUS ADDITIONS AS ELABORATED ABOVE IN THE GROUND S OF APPE AL OF THE REVENUE AFTER CONSIDERING THE VARIOUS SEIZED DOCUMENTS FOUND DURING THE COU R SE OF SURVEY AND SEARCH TAKEN PLACE IN THE GROUP CASES OF THE A SSESSEE. ON THE OTHER HAND, LD. COUNSEL HAS SUBMITTED VARIOUS PAPER BOOK COMPRISING DETAIL S OF SUBMISSION S AND COPIES OF DOCUMENTS FURNISHED BEFORE THE ASSESSING OFFICER AND LD. CIT(A) DURING THE COURSE OF HEARING. IN RESPECT OF APPEAL OF REVENUE , THE LD. COUNSEL CONTENDED THAT LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION AFTER CONSIDERING THE SEIZED MATERI AL AND FUND FLOW STATEMENT AND SUBMISSION OF THE ASSESSEE . IN RESPECT OF CROSS OBJECTION FILED BY THE ASSESSSEE, THE LD. COUNSEL CONTENDED THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE. IN RESPEC T OF APPEAL OF THE REVENUE VIDE ITA NO . 303/AHD/2014, ASSESSMENT YEAR 2011 - 12, W E HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. A SEARCH AND SEIZURE ACTION WAS CARRIED IN THE SANGHVI GROUP OF CASES ON 9 TH MARCH, 2011. THE ASSESSEE WAS TH E KEY PERSON OF THIS GROUP DURING THE COURSE OF SEARCH . DURING THE COU R SE OF ASSESSMENT PROCEEDINGS, THE ASSESSE E SUBMITTED THAT HE HAS DISCLOSED MOST OF THE ITEMS AN D DIFFERENCES IN FIGURING WAS DUE TO TELESCOPIN G EFFECT. H E HAS SUBMITTED A CASH FLOW S TATEMENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE CASH FLOW STATEMENT WAS DIVIDED IN FOUR PARTS, RECEIPT OUTFLOW , RECEIPTS, PAYMENT OUTFLOW AND PAYMENT S . IT WAS SUBMITTED THAT RECEIPT AND PAYMENTS WERE TRANSACTIONS OF FINANCIAL NATUR E AND NO INCO ME WAS GENERATED F R O M THESE TRANSACTIONS AND U NDER THESE CATEGORIES, LOAN AND ADVANCES GIVEN TO VARIOUS I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 39 PARTIES WERE INCLUDED UNDER THESE HEADS . THE RECEIPT INFLOW AND PAYMENT OUTFLOW WERE TRANSACTIONS OF REVENUE NATURE. THE ASSESSEE HAS CALCULATED HIS UNDISCLOSED INCOME AS TOTAL OF RECEIPT INFLOW AND DIFFERENCE OF TOTAL PAYMENT AND TOTAL RECEIPT I.E. PEAK OF CASH FLOW ST ATEMENT. THE ASSESSEE HAS DEMONSTRATED AFTER REFERRING THE MATERIAL ON RECORD THAT HE WAS THE KEY PERSON OF THE GROUP WHO HAS UNDERTA KEN ALL THE FINANCIAL TRANSACTIONS PARTICULARLY THE CASH TRANSACTIONS FOR OR ON BEH ALF OF THE GROUP. THIS FACT IS ALSO DEMONSTRATED FROM THE PRELIMINARY STATEMENT RECORDED ON 10 TH MARCH, 2011 U/S. 132(4) WHEREIN THE ASSESSEE HAS STATED THAT HE UNDERTAKE S ALL TYPE OF FINANCIAL TRANSACTION S IN RESPECT OF HIS SONS AND HIS WIFE. RELEVANT PART OF THESE STATEMENTS IS REPRODUCED AS UNDER : - A] THE RELEVANT EXTRACT FROM PRELIMINARY STATEMENT U/S 132(4) OF THE ACT RECORDED ON 10.03.2011 IS REPRODUCED HERE UNDER: STATEMENT U/S 132(4)/131/133A STATEMENT ON OATH OF SHRI/SMT/KU. DHIRAJLAL V. SANGHVI SON/DAUGHTER/WIFE OF VAGHJIBHAI SHIVJIBHAI SANGHVI ON 10/03/2011 AT 11.00 A.M/ P.M AT A - 14, TIRTHBHUNI APPARTMENT, LAW GARDEN, A'BAD Q.4 WHAT IS YOUR ROLE/CONTRIBUT ION IN YOUR AND YOUR FAMILY MEMBER'S TRADE/BUSINESS/OCCUPA TION AND FINANCIAL ACTIVITIES? . A.4 IN ANSWER TO THE ABOVE QUESTION I STATE THAT BEING THE ELDEST PERSON IN THE FAMILY, I SUPPORT/ UNDERTAKE IN ALL THE TYPES OF TRADE/BUSINESS/OCCUPATION AND FINAN CIAL ACTIVITIES CARRIED ON BY MY SONS, SON'S WIVES AND MY WIFE. I ALONG WITH MY FAMILY LIVE TOGETHER IN HUF. I CARRY OUT FINANCIAL ACTIVITIES AND BUSINESS/OCCUPATION BY MYSELF. B] IN THE DECLARATION EXECUTED BY THE APPELLANT HE HAS STATED THE FOLLOWING: (FREE ENGLISH TRANSLATION) (2) I, IN THE NAME OF AISHWARYA SAREES CARRY OUT THE BUSINESS OF SELLING SAREES, DRESS MATERIAL AND READYMADE GARMENTS. I ALSO UNDERTAKE BUSINESS IN REAL ESTATE AND ALSO SHARE MARKET TRANSACTIONS. ALL THESE BUSINESSES ARE BEI NG CARRIED OUT BY MY FAMILY MEMBERS AND ASSOCIATES UNDER MY DIRECT CONTROL AND SUPERVISION. I OWE AND UNDERTAKE THE RESPONSIBILITY FOR ALL THE FINANCIAL TRANSACTIONS. C] THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS HAD STATED THE FOLLOWING TO THE ASSE SSING OFFICER VIDE DIFFERENT COMMUNICATIONS MADE FROM TIME TO TIME AS UNDER: '...........6. THE ASSESSEE SUBMITS THAT ALL THE BUSINESS OPERATIONS AND FINANCIAL DECISIONS ARE BEING CARRIED OUT UNDER THE DIRECT CONTROL AND SUPERVISION OF DHIRAJLAL V. SANGHVI AND ACCORDINGLY, THE FINANCIAL NOTINGS FOUND DURING THE COURSE OF SEARCH HAVE BEEN OWNED UP BY THE ASSESSEE UNLESS IN RESPECT OF CERTAIN TRANSACTIONS.' I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 40 THE ASSESSEE HAD ALSO EXPLAINED THAT IN THE FUND F L OW STATEMENT ALL THE TRANSACTION S OF INFLOW AND O UTFLOW WERE INCORPORATED TO ARRIVE AT A REAL INCOME AND W HILE PREPARING THE CASH FLOW THE ASSESSEE HAS CONSIDERED THE INFLOW A ND OUTFLOW EMANATING FROM THE LOOSE PAPER NOTINGS AND JOTTING FOUND DURING THE COURSE OF SEARCH. TH ESE FACTS WERE ALSO CONFIRMED BY T H E A S SE S SE IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT AND THE RELEVANT PART IS REPRODUCED AS UNDER : - THIS WAS VERY CLEARLV STATED BV THE APPELLANT BEFORE THE DEPARTMENT AUTHORITIES DURING THE COURSE OF RECORDING OF THE STATEMENT ON 26 TH MAY. 2011 U NDER SECTION 131 OF THE ACT, THE EXTRACT OF WHICH IS AS UNDER: 'S - 13 - A/30: THIS DIARY CONTAINS NOTING OF CURRENT ACCOUNT TRANSACTIONS. THE SOURCE OF NOTING RECORDED ARE LARGELY EITHER OUT OF (1) HIS INCOME OF ASSESSEE AND/OR GROUP. (2) SALE OF CAPITAL AS SETS. (3) FUNDS GIVEN EARLIER, OUT OF THE INCOME.' DURING THE CO URSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSE E HAS MADE FOLLOWING CONTENTIONS AGAINST THE ACTION OF ASSESSING OFFICER IN REJECTING THE CASH FLOW STATEMENT : - 7. THE ACTION OF THE ASSESSING OFFICER IN REJECTION THE CASH FLOW STATEMENT AND NOT TELESCOPING THE PAYMENTS OR THE OUTFLOWS AGAINST THE INCOME OFFERED VOID AND BAD IN LAW FOR THE FOLLOWING REASONS: (I) AT THE OUTSET IT IS SUBMITTED THAT THE ASSESSING OFFICER IS WHOLLY UNJUSTIFIED AND UNJUST IN REJECTING THE ENTIRE CASH FLOW STATEMENT PRIMARILY BECAUSE THAT THE APPELLANT HAD OWNED UP THE CASH PAYMENTS MADE IN RESPECT OF PURCHASE OF PROPERTY MADE BY HIS WIFE AND SON, WHICH WAS DONE CONSEQUENT TO THE STATEMENT RECOR DED OF THE APPELLANT BEFORE THE DEPARTMENTAL AUTHORITIES AS UNDER: IN THE CASE OF SAGAR D. SANGHVI AND KOKILABEN D. SANGHVI: DURING THE COURSE OF RECORDING OF THE STATEMENT UNDER SECTION 131 ON OATH ON 26 MAY, 2011 ADMITTED RS. 25 LACS AS UNACCOUNTED INVES TMENT ON BEHALF OF THE ASSESSEE. THE EXTRACT FROM THE RELEVANT QUESTION/ANSWER IS REPRODUCED HEREUNDER: Q - 19: I AM SHOWING YOU MATERIALS COMPRISING PAPERS, DIARIES, LOOSE PAPER FILE, ETC., SEIZED AND IMPOUNDED FROM YOUR RESIDENCE AND BUSINESS PLACES. PLEAS E EXPLAIN THE CONTENTS OF THE PAGES OF THE SEIZED MATERIAL. IT IS ALSO SEEN THAT SOME PAGES PERTAIN TO EXPENSES MADE ON JEWELLERY PURCHASE, VEHICLES, FINANCIAL TRANSACTIONS, ETC. YOU ARE ALSO REQUESTED TO EXPLAIN THE SOURCES AND ALSO WHETHER THEY ARE REFLE CTED IN THE BOOKS OF ACCOUNT IN RESPECT OF EXPENSES AND FINANCIAL TRANSACTIONS APPEARING IN THE SEIZED AND IMPOUNDED MATERIAL. A - 19: PARTY NO. ANNEXURE PAGE NO. EXPLANATION I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 41 S - 2 A/12 69 TO 73 COPY OF BANAKHAT AGREEMENT OF PROPERTY TP SCHEME NO. 3/5, FINAL PLOT NO. 682, DEVARSHI CO - OP. HOUSING SOCIETY LIMITED, FLAT NO. G - 1, TOTAL AREA 90 SQ.YARD. AS PER BANAKHAT WAS PURCHASED BY SAGAR D. SANGHVI FROM RAJESH BALWANTBHAI GOHIL FOR RS. 33 LACS. HOWEVER, IN THE REGISTERED PURCHASE DEED THE PRICE HAS BEEN SHOWN AS RS. 8 LAC. I, THEREFORE, ADMIT RS. 25 LAC AS UNACCOUNTED INVESTMENT ON BEHALF OF SAGAR D. SANGHVI. S - 13 A BUNGALOW WAS PURCHASED ON 14 - 09 - 2010, PLOT NO. 302, VASANTVI HAR CO - OP HOUSING SOCIETY TENEMENT NO. 15B, 414.72 SQ.MTR. THIS PROPERTY WAS PURCHASED BY MY WIFE KPKILABEN D. SANGHVI FROM GUNVANTBHAI KANTILAL PATEL FOR RS. 1,15,00,000. (DOCUMEN TED PRICE). HOWEVER, DETAILS OF ACTUAL PAYMENT IS GIVEN ON PAGE NO. 7. RS. 1.25 CRORE GIVEN TO GUNVANTBHAI ON 28 - 07 - 2010 IN CASH AS WELL AS BY CHEQUE. RS. 25 LACS IN CASH GIVEN TO HIM ON 28 - 07 - 2010. RS. 20 LACS IN CASH GIVEN TO I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 42 HIM ON 06 - 08 - 2010. RS. 10 LACS IN CASH GIVEN TO HIM ON 11 - 08 - 2010. RS. 20 LACS IN CASH GIVEN TO HIMON28/ - 8/2010. 1 ADMIT THAT THE CASH AMOUNTS ARE NOT RECORDED IN MY BOOKS OF ACCOUNT THUS PURSUANT TO THE STATEMENT ONLY AND HAVING REGARDS TO THE FUNDAMENTAL FACT THAT CASH TRANSACTIONS WERE UNDERTAKEN BY THE APPELLANT AND, THESE, WERE CONSIDE RED TO BE A PART OF THE CASH FLOW STATEMENT. (II) REGARDING THE OBSERVATION THAT THE APPELLANT HAS INC LUDED RS. 1.56 CRORES I N RESPECT OF SALE OF FLAT AT MUMBAI OF WHICH DOCUMENTARY EVIDENCE ONLY TO THE EXTENT OF RS. 0.46 CRORES WERE FOUND AND NO EVIDENCE REGARDING RS. 1.10 CRORE WAS FOUND DURING THE COURSE OF SEARCH, IS VOID FOR THE REASON (A) FIRSTLY RS 1.10 CRORE HAS BEEN STATED BY THE APPELLANT TO HAVE BEEN RECEIVED IN F.Y. 2009 - 10 AND THAT ACCORDINGLY THAT SHOULD NOT BE THE GROUND FOR REJECTING THE CASH FLOW STATEMENT OF F.Y. 2010 - 11 (B) SECONDLY THE ASSESSING OFFICER IS ACCEPTING THE FACT THAT RS. 1.10 CRORE HAS BEEN RECEIVED BUT HAS NOT BEEN RECEIVED TOWARDS THE SALE OF THE FLAT AS OBSERVED IN THE CASE OF ASHIK D. SANGHVI. ACCORDINGLY, THE ACT ION OF THE ASSESSING OFFICER IS SELF - CONTRADICTORY (C) THE ACTION OF THE ASSESSING OFFICER IN TAXING THE SAME AS INCOME FROM UNDISCLOSED SOURCE IS ONLY TO PROTECT THE PURCHASER OF THE SAID FLAT SO THAT NO ADVERSE ACTION CAN BE TAKEN IN HIS CASE; (D) TH E ASSESSING OFFICER HAS REJECTED THAT THE APPELLANT COULD NOT HAVE RECEIVED SUCH HIGHER AMOUNT OF ON - MONEY ON THE BASIS OF HUMAN PROBABILITIES, SINCE IT CANNOT BE EXPECTED THAT 100% ON - MONEY PAYMENT COULD HAVE BEEN RECEIVED, WHICH IS SELF - CONTRADICTORY TO THE STAND TAKEN BY THE ASSESSING OFFICER WHO HAS ACCEPTED MORE THAN 100% ON - MONEY PAYMENT IN THE CASE OF APPELLANT ITSELF FLAT. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IS BASED PURELY ON ASSUMPTIONS, SURMISES AND CONJECTURES. (III) THE ASSESS ING OFFICER MADE THE ADDITION IN RESPECT OF ON MONEY PAYMENTS FOR LAND REGISTERED IN THE NAME OF SANGHVI INFRACON P. LTD IN THE HANDS OF THE APPELLANT ON THE GROUND THE COMPANY HAD NO SOURCE OF MAKING THE PAYMENT, & THEREFORE HELD THAT THE ADDITION IS TO B E MADE IN THE CASE OF APPELLANT. SIMILAR IS THE SITUATION IN THE CASE OF SAGAR AND KOKILABEN SANGHVI AS THEY ALSO DO NOT HAVE ANY SOURCE OF MAKING THE ON MONEY PAYMENT AND THUS THE REJECTION OF CASH FLOW STATEMENT OWING TO PAYMENTS MADE FOR SAGAR & KOKILAB EN SANGHVI IS CONTRADICTORY TO THE STAND TAKEN BY THE ASSESSING OFFICER HERSELF. (IV) LASTLY THE OBSERVATION OF THE ASSESSING OFFICER THAT MANY ENTRIES HAVE NOT BEEN SHOWN IN THE CASH FLOW STATEMENT IS ONLY TO MAKE A HIGH PITCHED ASSESSMENT AND WITHOU T CONSIDERING THE FACTS OF THE CASE. THE APPELLANT HAD SUBMITTED EXHAUSTIVE DETAILS WERE PROVIDED IN THE ASSESSMENT PROCEEDINGS AND THE EXPLANATION REGARDING EACH OF THE OBSERVATION MADE BY THE ASSESSING OFFICER ABOUT THE NON - INCLUSION IN THE CASH FLOW STA TEMENT IS DEALT WITH IN SUBSEQUENT PARAS. 8. THUS THE REJECTION THE ENTIRE CASH FLOW STATEMENT THEREBY MAKING ADDITIONS OF RECEIPTS AND PAYMENTS BOTH WITHOUT BRINGING A SINGLE CORROBORATIVE EVIDENCE TO SUPPORT THE FACT THAT THE PAYMENTS HAVE BEEN MADE BY T HE APPELLANT WERE NOT OUT OF THE INCOME DECLARED BV THE APPELLANT AND ITS GROUP AND ONCE THE INCOME AND SHORTFALL WERE DECLARED AS ADDITIONAL INCOME I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 43 THERE WAS NO SCOPE FOR THE ASSESSING OFFICER TO MAKE ADDITION FOR RECEIPTS AND PAYMENTS OF THE CASH FLOW ST ATEMENT. 9. AS STATED SUPRA, THE FUND/ CASH FLOW STATEMENT WHICH WAS SUBMITTED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS COMPRISES OF (A) RECEIPTS IN THE NATURE OF INCOME, (B) PAYMENT FOR INVESTMENT/EXPENSES, AND (C) PEAK OF RECEIPTS AND PAYMENTS. THE SUMMARY OF TRANSACTIONS INCLUDED IN THE FUND/ CASH FLOW STATEMENT IS AS UNDER. SUMMARISED CASH FLOW STATEMENT RECEIPTS AMOUNT (RS.) AMOUNT(RS.) PAYMENTS AMOUNT(RS .) AMOUNT(RS .) OPENING BALANCE 30 67 365 WF LOW (INCOME) OUTFLOW IFLOWRTGS 6 03 00 000 BIJAL APARTMENT 25 00 000 ADVICE FOR SHARE 1 02 33 850 VASANT VIHAR BUNGALOW 85 00 000 INFLOW SHARE 5241 112 JEWELLERY LOOSE PAPERS 24 69 275 OTHER INFLOW 1 40 85 000 JEWELLERY DISCLOSURE 71 00 0 00 SUDAMA RESORT 1100000 DHOLERA PLOT 7 50 000 VADAJLAND 5 09 20 400 EXPENSES 3 01 907 AMOUNT GIVEN TO PHOTOGRAPHER 1 15000 RENOVATION EXPENSES 57 94 055 CATERING EXP ENSES 4 53 000 INTEREST 5000 OTHER OUTFLOWS 1177605 OUTFLOW TO COVER ANY 7500000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 44 DISCREPANCIES SUB TOTAL 8 98 59 962 SUB TOTAL 8 86 86 242 RECEIPT PAVMETNT RAJESH ZAVERI 75 00 000 RAJESH JHAVERI 75 00 000 MITULBHAI 25 00 000 MAHASUKHBHAI 35 00 000 FOUR PERSONS(S V DV) 50 00 000 SHEVANTIBHAI 1500000 PRAVIN VORA 30 00 000 KIRITBHAI 2 50 000 SK 5 00 000 HARESHBHAI 6 00 000 DHAVAL SANGHVI 100 0000 FOUR PERSONS - KABIR 20 00 000 RAMESH HIRA 20 00 000 DHAVAL SANGHVI 20 00 000 SHEVANTIBH AI 1500000 PRAVINBHAI VORA 65 00 000 AMCTAX 1 50 000 DHAVALBHAI 10 00 000 OTHER INFLOWS 25484000 RAMESH HIRA 20 00 000 MOHANBHAI BHARWAD 1 30 00 000 RAJU VRINDAVAN 50 00 000 BABULAL __ 79 00 000 PRAVIN VORA _ 1 45 00 000 ARIHANT PLASTIC 50000 AMC TAX 1 50 000 OTHER OUTFLOWS 1200000 SUB TOTAL 4 86 34 000 SUB TOTAL 6 86 50 000 I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 45 CLOSING BALANCE - 1 5774915 TOTAL 141561 327 TOTAL 141561 327 PARTICULARS AMOUNT(RS.) AMOUNT(RS.) LNCOME ADD: PEAK BALANCE OF RECEIPT AND PAYMENT (AS PER CASH FLOW STATEMENT) 8 98 59 962 1 70 25 627 TOTAL DHIRAJLAL SANGHVI - HUF A.Y. 2011 - 12 DHIRAJLAL SANGHVI - A.Y. 2011 - 12 106885589 1 02 33 850 106600000 CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND MATERIAL ON RECORD, WE OBSERVE THAT ASSESSEE WAS THE KEY PERSON OF THE GROUP WHO UNDERTAKE ALL THE FINANCIAL TRANSACTIONS AND THIS FACT WAS ALSO ACKNOWLEDGED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AT PARA 5 WHEREIN HE HAS STATED THAT ASSESSEE WAS THE KEY PERSON OF THIS GROUP AND DURING THE COURSE OF SEARCH, THE ASSESSEE HAS DISCLOSED RS. 24.6 CORES AS UNACCOUNTED INCOME, THEREFORE, WE DO NOT FIND JUSTIFICATION IN THE FINDING OF ASSESSING OFFICER THAT ASSESSEE WAS NOT THE KEY PERSON IN RESPECT OF TRANSACTION UNDERTAKEN BY THE OTHER FAMILY MEMBERS OF THE GROUP. GROUND N O. 1 OF REVENUE IN DELETING ADDITION OF RS, 1,65,23,380/ - , WE HAVE NOTICED THAT ASSESSEE HAS EXPLAINED DURING THE COURSE OF SURVEY ACTION THAT HE HAD DISCLOSED JEWELRY WEIGH ING 6202.56 GRAMS AND DIAMOND WEIGHING 259.60 GRAM. THE ASSESSEE HAS ALSO EXPLAINE D THAT 1600 GRAM OF JEWELRY IN RESPECT OF HIS FAMILY WERE EXEMPT AS PER INSTRUCTION NO. 1916 DATED 11 TH MAY, 1994 ISSUED BY THE CBDT. THE ASSESSEE HAS CLAIMED THAT OUT OF GOLD JEWELRY AND OTHER VALUABLE FOUND JEWELRY TO THE EXTENT OF 7876.92 GRAMS WAS I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 46 OUT OF THE DISCLOSURE MADE UNDER T HE VDIS SCHEME AND STATED THAT DISCLOSURE IN RESPECT OF JEWELRY FOUND WAS ALSO INCLUDED IN THE TOTAL DISCLOSURE OF R S. 10.66 CRORES. THE ASSESSEE HAS ALSO FURNISHED THE CERTIFICA TE ISSUED U/S. 68(2) OF THE VDIS , 1997 ALONG W ITH CHALLAN OF PAYMENT OF TAXES FILED BY T H E ASSESSEE. THESE FACTS WERE ALSO REPORTED BY T H E ASSESSEE IN HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT AT THE TIME OF SEARCH ACTION. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE HAS ALSO FURNISHED REMAKING BILL OF JEWELRY TO SUBSTANTIATE HIS CLAIM THAT JEWELRY WAS RE MADE OUT OF THE JEWELRY DECLARED UNDER VDIS . THE ASSESSEE HAS ALSO FURNISHED THE CONFIRMATION OF THE JEWELLER CONFIRMING THE REMAKING OF THE JEWELRY . IN THE LIGHT OF THE ABOVE FACTS AND CIRC UMSTANCES , WE CONSIDER THAT LD. CIT(A) HAS RIGHTLY ALLOWED THE TELESCOPING OF TH E INCOME AGAINST SEPARATE ADDITION, THEREFORE , WE DO NOT FIND ANY SUBSTANCE IN THIS GROUND OF APPEAL OF THE REVENUE AN D THE SAME IS DISMISSED. GROUND NO. 2 (ADVANCE MADE ON AC COUNT OF CASH) : - DURING THE SURVEY ACTION AT THE GROUP S SHOW ROOM AT AISHWARYA NX AT VADAJ A HMEDABAD, A DIARY MARKED AS A/30 CONSISTING OF 36 PAGES WAS IMPOUNDED. THE PAGES OF THIS DIARY WERE HAND WRITTEN IN RESPECT OF FIN ANCIAL TRANSACTIONS AS EXPLAINED BY THE ASSESSEE SHRI DHIRAJLAL V. SANGHVI. THE PAGE WISE SUMMAR Y OF SUCH PAGES CONTAINING FINANCIAL TRANSACTIONS WAS AGGREGATING TO RS. 6,51,50,000/ - . SHRI DHIRAJLAL SANGHVI IN HIS STATEMENT RECORDED U/S. 131 ADMITTED THAT HE HAD MADE CASH ADVANCES WHIC H WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS CONTENDED THAT ALL THE ENTRIES HAVE NEXUS WITH THE ADDITIONAL INCOME DECLARED BY HIM AS PER THE CASH FLOW SUBMITTED IN HIS SUBMISSION. THE ASSESSING OFFICER HAS STATED THAT BENEFIT OF TELESC OPING CANNOT BE GIVEN AS NO DIRECT NEXUS REGARDING THE PAYMENT AND RECEIPT WAS I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 47 FOUND IN THE SEIZED DOCUMENTS. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 4,31,50,000/ - AFTER TAKING INTO CONSIDERATION ONLY THE PAYMENT MADE BY THE ASSESSEE. T HE ASSESSEE HAS SUBMITTED THE DETAIL OF RECEIPT AND PAYMENT MADE TO VARIOUS PERSONS , HOWEVER THE ASSESSING OFFICER HAS NO T DISPROVED THE CLAI M O F AMOUNT RECEIVED FROM VARIOUS PERSONS AND ADDED THE AFORESAID INCOME OF THE ASSESSEE BY STA T ING THAT T H E SOURCE OF PAYMENT WAS NOT EXPLAINED . ON THE BASIS OF MATERIAL ON RECORD, WE CONSIDER THAT THE ASSESSING OFFICER HAS MADE THE AFORESAID ADDITION ON SELF ANALYSIS AND ASSUMPTION WITHOUT CONTRADICTING THE CLAIM OF THE ASSESSEE OF THE CORRESPONDING RECEIPT AMOUNT SHOWN IN THE CASH FLOW STATEMENT. THE ASSESSEE IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT ON 26 - 05 - 2011 HAS STATED THAT THIS DIARY CONTAINS NOTING OF CURRENT ACCOUNT TRANSACTIONS AND THE SOURCE OF NOTING RECORDED ARE LARGELY EITHER OUT OF HIS INCOME OR INCOME OF T HE GROUP, SALE OF CAPITAL ASSETS AND FROM THE FUNDS ADVANCED EARLIER OUT OF THE INCOME . IN THE CASH FLOW STATEMENT, THE ASSESSEE HAS COMPUTED PEAK OF SUCH TRANSACTIONS AND OFFERED THE SAME AS INCOME. HOWEVER, IT IS OBSERVED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTRADICT THE CLAIM OF TH E ASSESSEE AND ONLY PAYMENT MADE HAS BEEN TAKEN INTO ACCOUNT WHILE COMPUTING UNACCOUNTED INCOME OF RS. 4,31,50,000/ - . CO NSIDERING THE ABOVE FACTS AND F IN D INGS OF THE LD. CIT(A) , WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 3 AND CROSS OBJECTION 2 OF THE ASSESSEE : - THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 3. 1 9 CRORES TOWARDS CASH ADVANCES TO PRAVIN VORA AND OTHERS ON THE BASIS OF DIARY AS PER ANNEXURE A - 3 SEIZED DURING THE COURSE OF SURVEY AT THE OFFICE PREMISES OF FINCAP PVT. LTD. WHICH CONTAINED VARIOUS I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 48 ENTRIES REGARDING CASH PAYMENT. THE ASSESSEE HAS EXPLAINED THAT HE HAD PAID CASH TO SHRI BABUBHAI VORA AND SHRI PRAVINBHAI VORA AGAINST WHICH HE HAD RECEIVED CHEQUE ENTRIES. THE RELEVANT PART O F THE SUBMISSION OF THE ASSESSEE HAS BEEN PRODUCED AT PAGE NO.37 AND 38 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS EXPLAINED THAT HE HAS CONSIDERED A N AMOUNT OF RS. 2.74 CRORES OUT OF THE AMOUNT OF RS. 3 .19 CRORES IN THE CASH FLOW STATEME N T AND THE PEAK CREDIT ARISING FROM SUCH SHORT TERM TRANSACTION S HAVE BEEN OFFERED TO TAX. HOWEVER , THE ASSESSING OFFICER HAS OB SERVED THAT THE TRANSACTION OF R S. 45 LACS WHICH WAS INCLUDE D IN THE CASH FLOW STATEMENT PERTAINING TO BABULAL VO R A WAS A SEPARATE TRANSACTION AND CANNOT BE LINKED WITH THE LOAN ENTRY PROVIDED BY SHRI PRAVIN VORA WHICH WAS CONSIDERED AS UNACCOUNTED INCOME OF THE ASSE S SEE. THE ASSESSING OFFIC ER HAS MADE ADDITION OF RS. 3.19 CRORES COMPRISING OF RS. 2.74 CRORES ACCEPTED BY THE ASSESSEE AS PER THE CASH FLOW STATEMENT AND THE AFORESAID TRANSACTION OF RS. 45 LACS AGGREGATING TO RS. 3.19 CRORE AS THE UNACCOUNTED CASH OF THE ASSESSEE. THE LD. CIT(A ) HAS DELETED THE ADDITION OF R S. 2.74 CRORE ON THE GROUND THAT THE ASSESSEE HAD CONSIDERED THE S A ME IN THE CASH FLOW STATEMENT WHICH WAS ALSO ACCEPTED BY THE ASSESSING OFFICER. THE LD. CIT(A) HAS CONFIRMED HE ADDITION OF R S. 45 LACS CONSIDERING THAT SA ME AS DIFFERENT TRANSACTION WHICH WAS NOT INCLUDED IN THE CASH FLOW S T AT E MENT. HOWEVER, THE LD. CIT(A) HAS GIVEN TELESCOPING EFFECT OF THE AFORESAID PAYMENT OF RS. 45 AGAINST THE ADDITION R S. 40,66,860/ - AS INCOME FROM INVESTOR MADE AS PER INCOME FROM I NVESTOR FOR TELESCOPING OF SUCH PAYMENT TO THE EXTENT IN PARA 15.3 IN OR D ER OF THE LD. CIT(A), THEREFORE, THE LD. CIT(A) HA S RESTRICTED THE ADDITION TO THE AMOUNT OF RS . 4 , 33 , 140/ - . IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE OBSERVE THAT THE A SSESSEE HAS ALREADY CONSIDERED THE AMOUNT OF RS. 2.74 CRORE IN THE FOUND FLOW I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 49 STATEMENT , HOWEVER , THE ASSESSING OFFICER HAD AGAIN ADDED THE SAME AMOUNT IN THE TOTAL INCOME OF THE ASSESSEE WITHOUT CONTRADICTING THE S E FACTS WITH ANY RELEVANT SUPPORTING MATE RIAL, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) IN DELETING THE ADDITION OF R S. 2.74 CRORE. THE LD. CIT(A) HAS PROVED IN HIS FINDINGS THAT THE TRANSACTION OF R S. 45 LACS WAS DIFFERENT AND DISTINCT FROM THE TRANSACTION OF BABULA L VORA OVER THE TRANSACTION OF RS. 2.74 LAC. THE ASSESSEE HAS FAILED TO DISPROVE THESE MATERIAL FACT S WITH RELEVANT SUPPORTING EVIDENCES , THEREFORE, WE JUSTIFY THE DECISION OF LD. CIT(A) IN SUSTAINING THE ADDITION TO THE EXTENT OF RS. 45 LACS. FURTHER, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) FOR GIVING TELESCOPING OF ADDITION OF RS. 45 LACS AGAINST THE ADDITION OF R S. 40, 66, 860/ - SUSTAINED BY THE LD. CIT(A) AS PER PARA 15.3 OF HIS ORDER AS THE REVENUE HAS FAILED TO CONTRADICT THAT WHY TH E ADDITIONAL INCOME OF RS. 40,66,860/ - BE NOT CONSIDERED FOR TELESCOPING AGAINST THE PAYMENT/OUTFLOW. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 2 OF CROSS OBJECTION OF THE ASSESSEE : - THE ASSESSEE HAS FILED CROSS OBJECTION 2 AGAINST THE DECISION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 45 LACS PERTAINING TO CASH ADVANCE TO BABULAL VORA. THE ASSESSEE HAS CONTENDED THAT THE CASH LOAN GIVEN AS PER ENTRY IN THE DIARY A - 30 PAGE 45 AND ON 82 OF THE ANNEXURE A - 9 WAS THE SA ME AS SHRI BABUBHAI VORA AND SHRI PRAVIND VORA BELONG TO THE SAME FAMILY. AFTER PERUSAL OF THE FINDINGS OF THE LD. CIT(A), IT IS CLEAR THAT THESE TWO ENTRIES ARE PERTAINED TO TWO INDIVIDUAL RECORDED ON THE TWO DIFFERENT PAGES AND MATERIAL. AS PER PAGE NO . 82 OF THE ANNEXURE A, THE ASSESSEE HAS PAID CASH OF RS. 45 LAC TO THE BABUBHAI RIKHAVCHAND SHAH AND AS PER PAGE OF ANNEXURE A - 30 THE ASESSEE HAD MADE CASH PAYMENT OF RS. 45 LAC TO SHRI PRAVIN VORA. THE ASSESSE COULD I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 50 NOT SUBSTANTIATE WITH RELEVANT EVIDEN CES THAT CASH LOAN GIVEN TO THE BABULAL VORA WAS SEPARATE TRANSACTION. HOWEVER, THE LD. CIT(A) HAS ALREADY PROVIDED TELESCOPING EFFECT TO THE CASH LOAN OF RS. 45 LACS AGAINST THE INCOME OF RS. 40,66,860/ - AND ULTIMATELY THE LD. CIT(A) HAS CONFIRMED THE BA LANCE AMOUNT TO THE EXTENT OF RS. 4,33,140/ - . THE ASSESSEE FAILED TO CONTROVERT THE FINDING OF THE LD. CIT(A) WITH ANY RELEVANT SUPPORTING MATERIAL THEREFORE THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. GROUND NO. 4 OF THE REVENUE DELETING A DDITION OF RS. 5,84,71,400/ - MADE ON ACCOUNT OF NO - MONEY PAYMENT : - DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT M/S. SANGHVI INFRACON PVT. LTD WAS ENGAGED IN THE BUSINESS OF THE CONSTRUCTION. DURING THE ASSESSMENT YEAR 2011 - 12, IT HAD PURCHASED A PLOT OF LAND AT NAVA VADAJ IN AHMEDABAD OWNED BY SANJOY DHARMSIBHAI PATEL AND SH R I JAYESH DHARMSIBHAI PATEL. DURING THE COURSE OF SEARCH EVIDENCE OF CASH PAYMENT TO SHRI DHAR AMSI BHAI AMOUNTING TO RS. 5 , 52 , 01 , 000/ - WAS FOUND. FURTHER , THE DOCUMENTS FOUND FROM THE RESIDENCE OF THE ASSESSEE REVEALED THAT THE FINAL VALUE OF THE LAND WAS @ 35000/ - PER SQ. YARD AS AGAINST T HE DOCUMENTED PRICE OF RS. 9000/ - PER SQ. METER FOR PURCHASE OF THE SAID LAND. ACCORDINGLY , CASH PAYMENT OF RS. 5,84,71,40 0/ - WAS PAID AS ON MONEY FOR THE PURCHASE OF THE LAND. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LAND WAS PURCHASED IN THE NAME OF SANGHVI IN FRACON , HOWEVER , THE COMPANY WAS INCORPORATED IN 19 TH JUNE , 2010 WHEREAS SUBSTANTIAL PAYMENT OF RS. 5 , 02 , 01 , 0 00/ - OUT OF RS. 5 , 84 , 71 , 400/ - WAS MADE PRIOR TO THE INCORPORATION OF THE COMPANY. THEREFORE , AN AMOUNT OF RS. 5 , 84 , 71 , 400/ - WAS ADDED IN THE HANDS OF THE ASSESSEE AS UNACCOUNTE D SOURCE. THE LD. CIT(A) HAS DELETED THE IMPUGNED ADDITION AFTER ALLOWING TEL ESCOPING OF TH E INCOME AGAINST THE APPLICATION AND THE SAME HAS BEEN I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 51 COVERED IN THE CASH FLOW STATEMENT. WITHOUT RETREATING THE FACTS AS ELABORATED ABOVE IN THIS ORDER PARTICULARLY IN PARA 22, IT HAS BEEN DEMONSTRATED FROM THE MATERIAL ON RECORDS I.E. ST ATEMENTS OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH THAT ASSESSEE WAS THE KEY PERSON OF THE GROUP WHO HAD UNDERTAKEN ALL THE TRANSACTIONS PARTICULARLY THE CASH TRANSACTIONS FOR OR ON BEHALF OF THE GROUP. THEREFORE, WE DO NOT FIND ANY SUBSTANCE I N THE INFERENCE OF THE ASSESSING OFFICER THAT ON MONEY P AYMENT WAS MADE PRIOR TO THE INC ORPORATION OF T H E COMPANY. THE ASSESSING OFFICER HAS MADE THE ADDITION ON ASSUMPTION BASIS WITHOUT DISPROVING THE MATERIAL UNDISPUTED FACT THAT THE ASSESSE WAS THE KEY PERSON WHO HAD UNDERTAKEN MOST OF THE CASH TRANSACTIONS ON OR ON BEHALF OF THE GROUP . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD. CIT(A) AND APPEAL OF THE REVENUE ON THIS ISSUE IS DISMISSED. GROUND NO. 5 OF THE REVENUE IN DELETING ADDITION OF RS. 5,29,43,000/ - : - IN RESPECT OF DELETING ADDITION OF RS. 5 , 29 , 43 , 000/ - MADE ON ACCOUNT OF RTGS RECEIPT , THE ASSESSING OFFICER HAS OBSERVED FROM THE NOTINGS PERTAINING TO RTGS TRANSACTION THAT AFORESAID AMOUNTS WERE NOT RECORDED IN THE BOOKS O F THE ASSESSEE, THEREFORE, THE SAME WAS ADDED AS UNACCOUNTED INCOME OF THE ASSESSEE. IN THIS REGARD, THE ASSESSEE HAS EXPLAINED TO THE ASSESSING OFFICER THAT RTGS TRANSACTION S WERE NOT PERTAINING TO THE ASSESSEE OR ITS GROUP AND ACTUALLY THESE TRANSACTION S WERE BELONGED TO THE THI RD PARTY. THE ASSESSEE HAS FURNISHED THE COMPLETE DETAILS OF THE PARTIES TO WHOM THESE RTGS TRANSACTIONS WERE BELONGED. THE ASSESSEE HAS FURNISHED THE NAME AND ADDRESSES OF THE PARTIES, DETAIL OF BANK ACCOUNT, PAN NO, DATE OF TRA NSACTION, AMOUNT OF TRANSACTION, NAME AND ADDRESSES OF THE REMITTER, PAN DETAIL OF BANK FROM WHERE THE RTGS WAS SENT. HOWEVER, THE ASSESSING OFFICER HAS I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 52 TREATED THE AFORESAID RTGS AS UNACCOUNTED TRANSACTION OF THE ASSESSEE WITHOUT CONSIDERING AND DISPROV ING THE SUPPORTING EVIDENCES FURNISHED BY THE ASSESSEE THAT THESE TRANSACTIONS WERE BELONGED TO THE THIRD PARTIES. THE ASSESSEE HAS ALSO FURNISHED BEFORE THE LOWER AUTHORITIES THE PROFORMA COPY OF RTGS FORM WHEREIN THE DETAIL OF BOTH THE PARTIES I.E. REMI TTER AND THE BENEFICIARY WERE GIVEN BY THE ISSUING AUTHORITY WHICH IS REPRODUCED AS UNDER: - SL. NO 1 PAGE NO. OF ANX 9 NAME AND ADDRESS OF PARTY RECEIVED RTGS DATE OF TRANSACTIONS AMOUNT NAME AND ADDRESS OF REMITTER 114 HIGH GROWTH VIN TRADE PVT. LTD 8/9/2010 4500000 CASPICAN PROJECT PVT. LTD PLOT NO 159 A, FIRST FLOOR, MLA COLONY, ROAD NO, 12 BANJARA HILLS HYDERABAD - 34 2 110 HARISH BOHRA 5/10/2010 5550000 RAJA REDDY NANDYGADADA VILAGE SRINIVAS SANDRA POST BANARPET TALUKA KOLAR DIST KARNATAKA 3 110 GROMAX CORPORATE SERVICES PVT. LTD. 7/7/2010 8443000 M.N. PRATIMA 409 TRIPUTI TOWERS HOUSE NO. 106/21, NR. TELEPHONE EXCHAN GE STREET FIRST FLOOR, NR. OLD DIYJYAJYOTI SCL I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 53 GIDC CROSSING ROAD AKRI VILLAGE GIDC VAPI ' - E.G. ROAD 4 109 JOSHI BULLION GEMS & JEWELLERY PVT. LTD 412, LAXMI MALL BUILDING NO. 5 LAXMI INDUSTRIAL ESTATE, NEW LINK ROAD 27 - 07 - 2 010 18000000 RAJA REDDY NANDYGADADA VILAGE SRINIVAS SANDRA POST ANDHERI WEST BANARPET TALUKA MUMBAI - 400 053 KOLAR DIST KARNATAKA 5 107 GROMAX CORPORATE SERVICES PVT. LTD. 21 - 07 - 2010 6000000 M.M. GANESH 409 T RIPUTI TOWERS NR. TELEPHONE EXCHANGE STREET 215, 5TH CROSS ROAD LEFT SIDE ROAD GIDC CROSSING ROAD ILLIYASHNAGAR GIDC VAPI BANGLORE (SOUTH) 6 3 GROMAX CORPORATE SERVICES PVT. LTD. 3/11/2010 4000000 KARUSALA SRINIVASRAO 409 TRIPUTI TOWERS NR. TELEPHONE EXCHANGE STREET LOWYERPETH PRAKASHAM GIDC CROSSING ROAD HYDERABAD GIDC VAPI 7 3 GROMAX CORPORATE SERVICES PVT. LTD. 8/11/2010 2500000 KARUSALA SRINIVASRAO 409 TRIPUTI TOWERS NR. TE LEPHONE EXCHANGE STREET LOWYERPETH PRAKASHAM GIDC CROSSING ROAD HYDERABAD I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 54 GIDC VAPI 6 3 GROMAX CORPORATE SERVICES PVT. LTD. 10/11/2010 4000000 KARUSALA SRINIVASRAO 409 TRIPUTI TOWERS NR. TELEPHONE EXCHANGE STREET LOWYERPETH PRAKASHAM GIDC CROSSING ROAD HYDERABAD GIDC VAPI TOTAL 52993000 THE ASSESSEE HAD ALSO EXPLAINED TH A T HE HA D ACTED AS FACILITATOR IN PROVIDING THE FUNDS TO THE INVESTORS AND FOR THIS PURPOSE HE HAD MADE NOT ING OF FUNDS WHICH W E RE REMITTED BY THIRD PARTY AND RECEIVED BY ANOTHER THIRD PARTY. IN THE LIGHT OF THE ABOVE MATERIAL FACTS, WE OBSERVE THAT THE ASSESSING OFFICER HAD NOT DISPROVED THE MATERIAL/EVIDENCES THAT THE ASSESSEE WAS NEITHER REMITTER NOR BENEFI CIARY IN THE SAID TRANSITIONS. AFTER CONSIDERING THE ABOVE FACTS AND FINDINGS OF LD. CIT(A), WE DO NOT FIND ANY MER IT IN THE APPEAL OF THE REVENUE AS ASSESSING OFFICER HAS FAILED TO DISPROVE THE MATERIAL FURNISHED BY THE ASSESSEE THAT THE IMPUGNED TRANSAC TION S WERE PERTAINED TO THE THIRD PARTY NOT TO THE ASSESSEE OR HIS GROUP. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 6 OF THE REVENUE IN RESTRICTING ADDITION TO RS. 6,03,00,000/ - REGARDING ADDITION OF RS. 6.3 CRORE DURING T HE COURSE OF ASSESSMENT, THE ASSE SSING OFFICER NOTICED THAT ON DIFFERENT P AGES OF A NNEXURE A - 9 THERE W E RE CASH ENTRIES TO THE AMOUNT OF R S. 6.11 CRORE AND T HE ASSESSEE HAD ADMITTED THAT T H E AFORESAID CASH BELONGED TO HIM AND HE WOULD PAY TAX ON THE SAME , THEREFORE, THE ASSESSING OFFICER HAS ADDED THE AFORESAID AMOUNT AS UNACCOUNTED INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS RESTRICTED THE SAID I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 55 ADDITION TO THE EXTENT OF RS. 6,03,00,000/ - ON THE GROUND THAT ACT OUT OF RS. 6.11 CRORE AN AMOUNT OF RS. 8,10,00 0/ - HAS BEEN DISCL OSED IN THE BOOKS OF ASHOK D. SANGHVI. IN THIS CONNECTION, THE ASSESSEE HAS SUBMITTED THAT OUT OF RS. 6 .11 CRORE AN AMOUNT OF RS. 8.10 LACS HAS BEEN ACCOUNTED IN THE BOOKS OF ACCO UNT OF ASHOK D. SANGHVI WHICH HAS BEEN ACCEP TED BY THE A SSESSING OFFICER, THEREFORE, I N THE LIGHT OF THE ABOVE FACTS, WE CONSIDER THAT WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) IN PROVIDING RELIEF TO THE ASSESSEE TO THE EXTENT OF RS. 8,10,000/ - . GROUND NO. 7 OF THE REVENUE IN DELETING ADDITION OF RS. 1 , 02 , 33 , 850/ - THE ASSESSING OFFICER HAS MADE ADDITION OF RS.1, 0 2,33,850/ - TOWARDS INCOME FROM ADVICE TO INVESTORS ON THE BASIS OF PAGE NO. 1 OF THE LOOS E PAPER FILE AS PER ANNEXURE A - 10 WHEREIN HAND WRITTEN CALCULATION HAS BEEN MADE IN RESPECT O F P URCHASE AND SALE OF SH ARES. THE ASSESSING OFFICER NOTICED ON RE VERSE OF PAGE NO. 9 OF THIS LOO S E PAPER FILE A - 10 THAT THERE WAS A HAND WRITTEN ENTRY WHEREIN A CALCULATION WAS MADE AS PER WHICH 70 % OF RS. 1 , 02 , 33 , 850/ - HAS BEEN WORKED OUT AT RS. 71 , 63 ,695 . T HIS PROFIT WAS DISTRIBUTED IN THE RATIO OF 70% TO RAMESHBHAI AND BALANCE 30% WAS PAID TO SHRI DHREERAJLAL SANGHVI RS. 30 , 70 ,155/ - . THE ASSESSEE EXPLAINED THAT HE HAS CONSIDERED THE ENTIRE AMOUNT OF RS. 1 , 02 , 33 , 850/ - IN DISCLOSURE AND REFLECTED THE SAM E IN HIS CASH FLOW STATEMENT. THE HUF OF THE ASSESSEE WAS ENGAGED IN THE SHARE MARKET ACTIVITY AND THE HUF HAD DISCLOSED ADDITIONAL INCOME OF RS. 1,02,33,850/ - IN THE RETURN OF INCOME. T HE ASSESSING OFFICER HAS CONSIDERED THE SAME AS UNACCENTED INCOME OF THE ASSESSEE ON THE GROUND THAT NO DETAIL S HAVE BEEN FURNISHED BY THE ASSESSEE. IN THIS REGARD, IT IS NOTICED THAT ASSESS ING OFFICER ON PAGE NO. 3 OF ASSESSMENT ORDER HAS GIVEN THE BIFURCATION OF THE INCOME DISCLOSED BY THE ASSESSSE IN VARIOUS YEARS AND I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 56 IT IS NOTICED THAT AN AMOUNT OF RS.1 , 02 , 33 , 850/ - HAS CLEARLY DISCLOSED BY DHIRAJLAL SANGHVI HUF IN ASSESSMENT YEAR 2011 - 12. THEREFORE, WE CONSIDE R WITHOUT CONTRADICTING THESE MATERIEL FACTS, THE ASSESSING OFFICER IS NOT JUSTIFIED IN ADDING THE SAME AS UNA CCOUNTED INCOME OF THE ASSESSEE THEREFORE WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A) ON THIS ISSUE . ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 8 OF REVENUE IN RESTRICTING THE ADDITION ON ACCOUNT OF OTHER EXPE NSES TO RS. 19 , 64 , 5 98/ - AND GROUND NO. 4 OF CROSS OBJECTION OF THE ASSESSEE : - T HE ASSESSING OFFICER HAS MADE ADDITION OF R S. 98 , 72 , 060/ - PERTAINING TO VARIOUS EXPENSES FOUND ON PERUSAL OF LOOSE PAPER SEIZED FROM VARIOUS PREMISES. IN THIS REGARD, IT IS NOT ICED THAT ASSESSEE HAS GIVEN THE BIFURCATION OF THESE EXPENSES AND STATED THAT OUT OF THE EXPENSES OF R S. 98.72 LACS EXPENSES TO THE AMOUNT OF RS. 70.46 LACS HAVE BEEN CONSIDERED IN THE CASH FLOW STATEMENT AN D THE SOURCE OF SUCH EXPENSES WAS OUT OF THE ADD ITIONAL INCOME DECLARED BY TH E ASSESSEEE EXCEPT EXPENSES TO THE AMOUNT OF RS. 19 , 6 4 , 594/ - , T HE ASSESSEE HAS INCLUDED THE REMAINING EXPENSES IN THE CASH FLOW STATEMENT. THE LD. CIT(A) HAS SUSTAINED THE FOLLOWING EXPENSES: - AMC FEES 13,50,000/ - BMW CAR 6,14,598/ - ------------- 19,64,598/ - AFTER PERUSAL OF THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSE COULD NOT CONTRADICT THE CONTENTS OF LOOSE PAPER AS REPRODUCED BY THE ASSESSING OFFICE R AT PAGE NO. 35 OF THE ASSESSMENT ORDER IN RESPECT OF NOTING OF AMC PAYMENT MADE TO SHRI MOHANKAKA ON 08 - 04 - 2010. HOWEVER, REGARDING EXPENSES OF RS. 7,95,598/ - THE LD. CIT(A) HAS ACCEPTED THAT AN AMOUNT OF RS. 1,81,000/ - I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 57 OUT OF THIS EXPENSES WAS INCLUDE D IN THE RENOVATION EXPENSES AS MENTIONED IN THE LOOSE PAPER. REGARDING BALANCE OF RS. 6,14,598/ - TREATED AS BMW EXPENSES, THE ASSESSEE HAS EXPLAINED THAT HERE WAS NO SUCH EXPENSES ON BMW CAR. IT IS ALSO NOT DEMONSTRATED FROM THE LOOSE PAPER A - 1/100 PLA CED AT PAGE NO. 390 OF THE PAPER BOOK PART - 2 THAT THE ASSESSEE HAD SPECIFICALLY INCURRED SUCH EXPENSES ON BMW CAR. THE LOWER AUTHORITY HAD ALSO NOT VERIFIED THAT ASSESSEE WAS HAVING ANY BMW CAR. THE LD. CIT(A) HAS ACCEPTED THAT OUT OF SUCH EXPENSES ON A MOUNT FOR RS. 1,81,000/ - WAS PERTAINED TO RENOVATION EXPENSES THEREFORE WE OBSERVE THAT THE LOWER AUTHORITY HAD FAILED TO DISPROVE THE CONTENTION OF THE ASSESSEE THAT NOT ANY EXPENSES OF RS. 6,14,589/ - WAS INCURRED ON BMW CAR. THEREFORE, ADDITION TO THE E XTENT OF RS. 6,14,598/ - IS DEL ETED. CONSIDERING THE FINDING OF LD. CIT(A) THAT OUT OF THE EXPENSES OF RS. 98,72,060/ - EXPENSES TO THE TUNE OF RS. 70,49,962/ - HAS BEEN CONSIDERED IN TH E CASH FLOW STATEMENT , WE DO NOT FIND ANY FORCE IN THE APPEAL OF THE RE VENUE ON THIS ISSUE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION NO. 4 OF THE ASSESSEE IS PARTLY ALLOWED. CROSS OBJECTION NO. 1 OF THE ASSESSEE IN CONFIRMING UNEXPLAINED CASH FOUND OF RS. 4,89,863/ - : - R EGARDING CROSS OBJECTION FILED BY T H E ASSESSEE AGAINST ACTION OF THE LD. CIT(A) IN CONFIRMING ADDITION OF UNEXPLAINED CASH FOUN D DURING SEARCH OF RS. 4 , 89 , 8 63/ - , THE ASSESSEE HAD FAILED TO EXPLAIN THE DIFFERENCE IN CASH AS PER THE DETAILS FILED IN THE ORIGINAL RETURN AND IN THE R ETURN FILED U/S. 153A IN THE CASE OF SHRI SAGAR SANGHVI. CONSIDERING THE ABOVE, W E FIND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SOURCE OF CASH AMOUNTING TO RS. 4 , 89 , 863/ - , THEREFORE, WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL FI L E D BY THE ASSESSEE AND THE SAME IS DISMISSED. I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 58 GROUND NO. 3 OF CROSS OBJECTION : - THE ASSESSING OFFICER HAS NOTICED TRANSACTIONS PERTAINING TO SHARES AND EARNING OF PROFIT AS PER PAGE NO. 145 OF ANNEXURE A - 6 SIZED DURING THE COURSE OF SEARCH. T HE ASSESSEE HAS ADMITT ED PART OF THE TRANSACTION AMOUNTING TO RS. 52 , 41 , 1 12/ - AND STATED THAT REMAINING 50% OF THE PROFIT DID NOT BELONG TO HIM . HOWEVER, THE ASSESSEE HAS FAILED TO PROVIDE NAME AND ADDRESS OF OTHER BENEFICIARIES OF THE TRANSACTIONS , THEREFORE , THE ASSESSING O FFICER HAS TREATED THE PROFIT FROM THE TR ANSACTION TO THE AMOUNT OF RS. 9 3 , 87 , 9 8 2/ - AS UNCLOSED INCOME OF THE ASSESSEE. IN THIS REGARD, WE CONSIDER THAT ASSESSEE HAS FAILED TO SUBSTANTIATE WITH ANY MATERIAL THAT THE BALANCE AMOUNT OF RS. 40 , 66 , 860/ - WAS P ERTAINED TO ANY OTHER PERSON AND EVEN THE ASSESSEE HAS FAILED TO PROVIDE BASIC INFORMATION I.E. NAME AND ADDRESSES OF THE BENEFICIARIES OF THE TRANSACTIONS , T HEREFORE, THIS GROUND OF CROSS OBJECTION OF THE ASSE SSEE STANDS DISMISSED. THEREFORE, THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. 22. IN THE RESULT, THE APPEAL OF THE REVENUE VIDE IT(SS)A 302/AHD/2014 AND CROSS OBJECTION NO. 26 7/AHD/2014 ARE DISMISSED. THE A PPEAL OF THE REVENUE VIDE ITA 303/AHD/2014 IS DISMISSED AND T HE CROSS OBJECTION NO. 268/AHD/2018 IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 03 - 10 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 03 /10 /2019 / COPY OF ORDER FORWARDED TO: - I.T(SS).A NO. 302, 303 & CO NOS. 267 & 268/AHD/2014 A.Y. 2010 - 11 & 2011 - 12 PAGE NO ACIT VS. DHIRAJLAL V. SANGHVI 59 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,