Ashok Shantilal Chhalani, V. Income-tax Officer,

CO 56/PUN/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1538 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 02-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: C V CHITALE
• Keywords: Business expenditure; Bad and doubtful debts; Corroborative evidences; Retraction; Condonation of delay
• Section: 143(3); 142(1); 133A; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.570/PN/2013 ASSESSMENT YEAR : 2002-03 THE INCOME TAX OFFICER, WARD 1, AHMEDNAGAR. . APPELLANT VS. SHRI ASHOK SHANTILAL CHHALLANI, KARACHIWALA NAGAR, AHMEDNAGAR. PAN : AAHPC1025C . RESPONDENT CO NO.56/PN/2014 ASSESSMENT YEAR : 2002-03 SHRI ASHOK SHANTILAL CHHALLANI, KARACHIWALA NAGAR, AHMEDNAGAR. PAN : AAHPC1025C . CROSS OBJECTOR VS. THE INCOME TAX OFFICER, WARD 1, AHMEDNAGAR. . RESPONDENT DEPARTMENT BY : SHRI RAJESH DAMOR ASSESSEE BY : SHRI C.V. CHITALE / DATE OF HEARING : 10.09.2015 / DATE OF PRONOUNCEMENT: 06.11.2015 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A)-I, PUNE DATED 07.12.2012 RELATING TO ASSESSM ENT YEAR 2002-03 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT). THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE APPEAL OF THE REVENUE. 2 ITA NO.570/PN/2013 CO NO.56/PN/2014 2. BOTH THE APPEAL AND CROSS OBJECTION RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.570/PN/2013 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN DELETING THE ADDITION OF RS.31,43,232/- MADE BY THE ASSESSIN G OFFICER INSTEAD OF CONFIRMING THE SAME. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN GIVING ANY CREDENCE TO THE RETRACTION BY THE ASSESSEE FROM THE STATEMENT GIVEN BY HIM ON OATH AT THE TIME OF THE SURVEY, MORE SO WHEN SUCH R ETRACTION HAD NOT BEEN MADE WITHIN A REASONABLE TIME. 4. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (AP PEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF THE APPELLAT E PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 4. THE ASSESSEE/CROSS OBJECTOR IN CO NO.56/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTION :- A) THE ASSESSING OFFICER HAS ERRED MAKING AND THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING ASSESSING ESTIMAT ING BHISHI INCOME OF THE ASSESSEE AT RS.15,000/-. B) THE ASSESSING OFFICER HAS ERRED MAKING AND THE C OMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING ASSESSING ESTIMAT ING INCOME FROM INTEREST OF THE ASSESSEE AT RS.1,82,070/-. C) THE ASSESSING OFFICER HAS ERRED MAKING AND THE C OMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING ASSESSING ESTIMAT ING INCOME FROM INTEREST ON SHORT TERM LOANS OF THE ASSESSEE AT RS.1,50,000/-. D) THE ASSESSING OFFICER HAS ERRED MAKING AND THE C OMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN INCLUDING SAME INCOME THRICE I.E. FIRST AS BHISHI INCOME OF RS.15,000/- THEREAFTER AS INTEREST INCOME OF RS.1,8 2,070/- AND ON THIRD OCCASION AS INCOME FROM INTEREST ON SHORT TERM LOANS OF RS.1,50 ,000/-. E) THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE CROSS OBJECTIONS. 3 ITA NO.570/PN/2013 CO NO.56/PN/2014 5. THE CROSS OBJECTION HAS BEEN FILED BY THE ASSESS EE WITH A DELAY OF 4 DAYS. THE ASSESSEE PRAYED FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTION ON THE GROUND THAT THE RESPONDENT/ASSESSE E WAS NOT AWARE OF THE FORMALITIES OF THE CROSS OBJECTION. CONSIDERING TH E FACTS STATED BY THE ASSESSEE, THE MARGINAL DELAY OF ABOUT FOUR DAYS STANDS CONDON ED AND CROSS OBJECTION MEMO IS ADMITTED FOR HEARING ON MERITS. 6. NOW, WE MAY PROCEED TO DECIDE THE ISSUES/GROUNDS OF APPEAL RAISED BY THE REVENUE AS WELL AS BY THE ASSESSEE AS PER CROSS OBJECTION MEMO. 7. THE RELEVANT FACTS CONCERNING THE ISSUES INVOLVE D, IN BRIEF, ARE THAT THERE WAS A SURVEY ACTION UNDER SECTION 133A OF THE ACT C ONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 24.11.2003. CERTAIN CO MPUTERIZED CASH BOOK WAS IMPOUNDED IN THE COURSE OF SURVEY. IT WAS SEEN BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2002-03. A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 06.03.2006 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME . THEREAFTER, NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED ON 20.06.2006. THE ASSESSEE FILED RETURN OF INCOME ON 24.11.2006 DECLARING TOTA L INCOME OF RS.44,990/-. THE INCOME DECLARED COMPRISED OF LONG TERM CAPITAL GAINS ON SALE OF HOUSE AT KARACHIWALA NAGAR, AHMEDNAGAR. A NOTE WAS APPENDED TO THE COMPUTATION OF INCOME WHICH INDICATED THAT AN INVESTMENT OF RS.1,0 8,000/- HAS BEEN MADE TOWARDS PURCHASE OF AGRICULTURAL LAND FROM THE SALE PROCEEDS OF THE RESIDENTIAL PROPERTY. 8 THE IMPOUNDED BOOKS ALSO INCLUDED A CASH BOOK IN THE FORM OF COMPUTER PRINTOUTS COMPRISING OF 39 PAGES FOR THE P ERIOD FROM 01.04.2001 TO 29.03.2002. THE CASH BOOK WAS IN RESPECT OF PROPRI ETORSHIP CONCERN OF THE ASSESSEE, NAMELY, CHALLANI MARKETING & INVESTMENTS . ON VERIFICATION OF THE ENTRIES IN THE CASH BOOK, IT WAS NOTICED BY THE ASS ESSING OFFICER THAT THE RECEIPTS IN THE CASH BOOK COMPRISES CONTRIBUTION TO BHISHI (CHIT FUND), AMOUNTS RECEIVED FROM SHARES SALE & PURCHASE A/C, CASH DEPOSITS FROM VARIOUS PERSONS, ETC.. ON THE OTHER HAND, THE PAYM ENT COMPRISES OF PAYMENTS 4 ITA NO.570/PN/2013 CO NO.56/PN/2014 IN VARIOUS ACCOUNTS, NAMELY, SANGLI BANK LTD., MANT RI BANK, TO SEVERAL OTHER PERSONS ON ACCOUNT OF DISTRIBUTION OF NAFA (PROFIT) FROM BHISHI AND TO M/S SAMRUDHI MARKETING AND INVESTMENTS. IN ORDER TO VE RIFY THE NATURE OF ENTRIES, THE SOURCE OF RECEIPTS AND DESTINATION OF OUTGOINGS , A STATEMENT OF THE ASSESSEE WAS RECORDED ON 22.12.2006 IN PURSUANCE OF SUMMON U NDER SECTION 131 OF THE ACT. IN THE STATEMENT RECORDED UNDER SECTION 131 O F THE ACT, THE ASSESSEE DENIED THE OWNERSHIP OF THE IMPUGNED CASH BOOK IN T HE NAME OF PROPRIETORSHIP CONCERN, NAMELY, CHALLANI MARKETING & INVESTMENTS F OUND FROM THE BUSINESS PREMISES OF THE ASSESSEE. HE SUBMITTED THAT HE DOE S NOT KNOW HOW TO OPERATE COMPUTER AND IS TOTALLY UNAWARE OF THE ENTRIES WITH THE USE OF COMPUTER. HE ADMITTED DOING BHISHI BUSINESS AND THE BOOKS PERTAI NING TO THE BHISHI BUSINESS ARE NOTE BOOK, REGISTER, ETC. AS IMPOUNDED. THE AS SESSEE STATED THAT THE IMPUGNED CASH BOOK ALONG WITH 2-3 COMPUTER FILES WE RE GIVEN TO HIM BY ONE MR. SURESH MOTILAL KANKARIYA IN THE MORNING OF THE DATE OF SURVEY AND TOLD THE SAME MAY BE KEPT ALONG WITH THE BOOKS OF BHISHI. I N CONNECTION WITH THE SALE OF THE HOUSE AT RS.9,00,000/-, IT WAS SUBMITTED THA T THE HOUSE WAS SOLD TO THE SAME PERSON, NAMELY, SHRI SURESH KANKARIYA. HE FUR THER EXPLAINED THAT BHISHI BUSINESS WAS ALSO KNOWN TO SHRI SURESH KANKARIYA AS HE WAS MEMBER OF THE BHISHI. WITH REGARD TO TRANSACTION OF SALE OF HOUS E PROPERTY, THE ASSESSEE SUBMITTED THAT SHRI SURESH KANKARIYA WAS ONE OF THE PARTIES. REGARDING BHISHI TRANSACTIONS RECORDED IN CASH BOOK, THE ASSESSEE ID ENTIFIED SOME OF THE PARTIES APPEARING IN THE COMPUTERIZED BOOK WITH WHOM BHISHI TRANSACTIONS WERE MADE. THE ASSESSEE ALSO IDENTIFIED THE FULL NAMES IN PLAC E OF THE SHORT NAMES IN RESPECT OF FEW TRANSACTIONS. 8.1 IN RESPECT OF SHARE TRADING ACTIVITIES DONE BY HIM, THE ASSESSEE REPLIED UNDER SECTION 131 OF THE ACT THAT SHARE TRADING BUS INESS WAS DONE BY HIS LATE BROTHER I.E. LALIT CHALLANI. IT WAS NOTICED BY THE ASSESSING OFFICER THAT ASSESSEE HAD GIVEN STATEMENT ON OATH ON 15.10.2003 AND 19.02.2004 IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS IN CASE OF ONE M/S SAMRUDHI MARKETING & INVESTMENTS PVT. LTD., AHMEDNAGAR FOR ASSESSMENT YEAR 2001-02 WHEREIN HE HAD ACCEPTED THE FACTS THAT HE WAS DOING SHARE TRADING BUSINESS THROUGH M/S SAMRUDHI MARKETING & INVESTMENTS PVT. LTD., AHMEDNAGAR AND 5 ITA NO.570/PN/2013 CO NO.56/PN/2014 A SPECIFIC FACT REGARDING THE LOSS INCURRED TO THE EXTENT OF RS.12 TO 12.5 LAKHS WAS OBSERVED. THE ASSESSEE SUBMITTED THAT EARLIER STATEMENT WAS GIVEN AT THE INSTANCE OF SHRI SURESH KANKARIYA WHO HAD ASSURED T HAT INCOME-TAX MATTER WILL BE CLEARED ON GIVING SUCH REPLY. WITH REGARD TO BA NK ACCOUNT NOS. MENTIONED IN THE CASH BOOK OF THE PROPRIETORSHIP CONCERN, THE ASSESSEE SUBMITTED THAT ACCOUNT NUMBERS DO NOT PERTAIN TO HIM AND HE DOES N OT KNOW THE ACCOUNT HOLDERS. 8.2. THE ASSESSEE ONCE AGAIN ASSERTED THAT THE COMP UTERIZED CASH BOOK DOES NOT BELONG TO HIM AND THE SAME WAS BROUGHT TO HIS P REMISES ALONG WITH OTHER COMPUTER FILES BY SHRI SURESH KANKARIYA. TO SUPPOR T THIS CONTENTION, HE SUBMITTED THAT TRANSACTIONS RECORDED IN THE IMPUGNE D CASH BOOK FROM 25.01.2002 ONWARDS UPTO 17.03.2002 COULD NOT BE EXE CUTED BY HIM FOR THE REASON THAT HE WAS COMPELLED TO LEAVE AHMEDNAGAR BY POLICE AND FROM 18.03.2002 TO 22.03.2002 HE WAS IN POLICE CUSTODY. HE SUBMITTED THAT THE IMPOSSIBILITY OF DOING CASH TRANSACTIONS DURING THA T PERIOD GOES TO SHOW THAT THE CASH BOOK IS WHOLLY INCORRECT AND FICTITIOUS AN D DOES NOT BELONG TO HIM. 8.3. HE NEXT SUBMITTED THAT THE STATEMENT BEFORE IT O, WARD 4 ON 15.10.2003 AND 19.02.2004 WERE GIVEN UNDER PRESSURE AND THEREF ORE CANNOT BE RELIED UPON. 8.4 HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT T HE CONTENTION OF THE ASSESSEE REGARDING DENIAL OF THE OWNERSHIP OF THE C ASH BOOK IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE IN THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT. THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE COULD NOT DENY THE OWNERSHIP OF BOOKS FOUND IN THE POSSESSION OF THE ASSESSEE AS PER THE PROVISIONS OF EVIDENCE ACT. THE ASSESSING OFFICER OBSERVED THAT WHILE DENYING THE CASH BOOK IMPOUNDED, THE ASSESSEE HAS I DENTIFIED CERTAIN NAMES/ENTRIES RELATING TO THE BHISHI BUSINESS CONDU CTED BY HIM AND ALSO THE RECEIPT OF SALE PROCEEDS OF RS.9,00,000/- FROM SALE OF HIS HOUSE. AS REGARDS THE DENIAL ABOUT THE BUSINESS OF TRADING IN SHARES, THE ASSESSEE HAD EARLIER DEPOSED BEFORE THE ITO, WARD 4 ON TWO OCCASIONS I.E. 15.10. 2003 AND 19.02.2004 IN CONNECTION WITH ASSESSMENT PROCEEDINGS OF M/S SAMRU DHI MARKETING & 6 ITA NO.570/PN/2013 CO NO.56/PN/2014 INVESTMENT PVT. LTD.. THE ASSESSING OFFICER TOOK N OTICE OF THE FACT THAT THE ASSESSEE HAD DENIED HAVING MADE ANY SHARE TRADING V IDE HIS LETTER DATED 15.10.2003 IMMEDIATELY AFTER THE STATEMENT WAS RECO RDED ON THAT DATE TO ITO, WARD 4 SUBMITTING THAT HIS STATEMENT GIVEN WAS NOT TRUE AND GIVEN UNDER PRESSURE. IN THE STATEMENT ON OATH DATED 22.12.200 6 ALSO, HE DENIED THE SHARE TRADING TRANSACTIONS. THUS, THERE IS ACCEPTANCE OF HAVING DONE THE SHARE TRADING ON TWO OCCASIONS I.E. ON 15.10.2003 THROUGH A LETTER AND ON 22.12.2006 IN THE STATEMENT RECORDED ON OATH. THE ASSESSING O FFICER, INTER-ALIA , OBSERVED THAT THE STATEMENT CANNOT BE RELIED UPON, HOWEVER, SIMULTANEOUSLY PLACED RELIANCE ON SECTION 110 OF THE EVIDENCE ACT, WHEREB Y POSSESSION IS THE PROOF OF THE OWNERSHIP UNLESS IT IS EXPLAINED OTHERWISE I N SATISFACTORY MANNER. AS PER THE ASSESSING OFFICER, THE ASSESSEE HAS NOT CON CLUSIVELY PROVED THAT THE CASH BOOK DOES NOT BELONG TO HIM. HE, ACCORDINGLY, RELIED UPON THE COMPUTERIZED CASH BOOK IMPOUNDED AND PROCEEDED TO M AKE ASSESSMENT UNDER VARIOUS HEADS. 8.5 WITH REFERENCE TO HAND WRITTEN NOTE BOOK IMPOUN DED AND STATEMENT THEREON RECORDED IN THE COURSE OF SURVEY, THE ASSES SING OFFICER OBSERVED THAT THE ASSESSEE IS RUNNING 9 BHISHI AS ADMITTED BY THE ASSESSEE. THEREFORE, INCOME EARNED FROM THESE BHISHI IS NOT ASCERTAINABL E FROM THE NOTE BOOKS. HOWEVER, HE TOOK SUPPORT FROM THE IMPOUNDED COMPUTE RIZED CASH BOOK IN WHICH TRANSACTIONS OF TWO BHISHI WERE RECORDED. FR OM THE TRANSACTIONS RECORDED IN THE COMPUTERIZED CASH BOOK IN RESPECT O F BHISHI, THE ASSESSEE WAS FOUND TO HAVE EARNED RS.5,300/-. ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE INCOME FROM 9 BHISHI RUN BY THE ASSESSEE AT RS. 30,000/- AND ADDED THE SAME AS A TOTAL INCOME OF THE ASSESSEE. 8.6 FROM THE TRANSACTIONS RECORDED IN THE CASH BOOK , IT WAS NOTICED BY THE ASSESSING OFFICER THAT CERTAIN AMOUNTS WERE GIVEN O N LOAN TO VARIOUS PERSONS. THE SOURCE OF THE PAYMENT IS THE AMOUNT RECEIVED FR OM SECOND MONTH OF BHISHI RETAINED BY THE ASSESSEE AS SECURITY IN CASE OF DEF AULT BY A MEMBER. THIS AMOUNT DOES NOT BEAR INTEREST AS PER REPLY TO QUEST ION NO.3 OF THE STATEMENT OF THE ASSESSEE. FROM THE CASH BOOK IMPOUNDED, THE AS SESSING OFFICER OBSERVED 7 ITA NO.570/PN/2013 CO NO.56/PN/2014 THAT THE AMOUNT AVAILABLE WITH THE ASSESSEE WAS RS. 28,81,000/- BEING MONTHLY AMOUNTS RECEIVED AS CONTRIBUTIONS TO THE 9 BHISHIS. THE ASSESSING OFFICER OBSERVED THAT SINCE THE AFORESAID AMOUNT IS AVAILAB LE FOR CIRCULATION, 50% OF THE ABOVE AMOUNT I.E. RS.14,45,000/- CAN BE DEEMED TO HAVE BEEN DIVERTED TOWARDS LOAN. HE ACCORDINGLY ESTIMATED INTEREST @ 18% PER ANNUM ON RS.14,45,000/- WHICH WORKED OUT TO RS.2,60,100/- WH ICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8.7 THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE USED TO ACCEPT DEPOSITS FROM OTHERS WHICH WAS, IN-TURN, UTILIZED F OR GIVING LOANS FOR SHORT PERIODS. THE EXACT QUANTUM OF RECEIPTS OF SUCH DEP OSITS AND AMOUNTS GIVEN AS LOAN HAS NOT BEEN FURNISHED BEFORE THE ASSESSING OF FICER. THE ASSESSING OFFICER, HOWEVER, OBSERVED THAT CONSIDERING THE FAC TS THAT THESE DEPOSITS BEAR INTEREST, THE INCOME FROM THIS ACTIVITY IS TO BE ES TIMATED. BASED ON THE STATEMENT RECORDED IN THE SURVEY ACTION AND ALSO WI TH REFERENCE TO NOTINGS IN THE NOTE BOOK, THE ASSESSING OFFICER ESTIMATED INCO ME FROM THIS SOURCE AT RS.1,50,000/- AS PER PARA 7 OF THE ASSESSMENT ORDER . 8.8 THE ASSESSING OFFICER NEXT OBSERVED THAT ALTHOU GH THE ASSESSEE HAS DENIED THE OWNERSHIP OF CASH BOOK IMPOUNDED IN THE COURSE OF SURVEY, THE INCOME/SURPLUS, ETC. AS PER CASH BOOK IS ATTRIBUTAB LE TO THE ASSESSEE. THE OPENING BALANCE AS ON 01.04.2001 IS RS.5,00,393/- W HICH IS NOT CARRIED FORWARD TO ANY OF THE BOOKS IMPOUNDED. THE DESTINATION OF THIS SURPLUS IS ALSO NOT REFLECTED. THE ASSESSING OFFICER, THUS, OBSERVED T HAT BY VIRTUE OF THE OWNERSHIP OF THE CASH BOOK, THE SURPLUS IS TO BE TR EATED AS BELONGING TO THE ASSESSEE. HE ACCORDINGLY ADDED THE AFORESAID SURPL US AMOUNT AS AT THE END OF YEAR OF RS.31,43,232/- AS THE UNDISCLOSED INCOME OF THE ASSESSEE. 8.9 AS PER PARA 8.2 OF THE ASSESSMENT ORDER, THE AS SESSING OFFICER OBSERVED THAT SHRI SURESH KANKARIYA WAS EXAMINED ON OATH ON 29.12.2006 TO VERIFY THE CORRECTNESS OF THE STATEMENT OF THE ASSESSEE IN RES PECT OF CASH BOOK. HOWEVER, SHRI SURESH KANKARIYA HAS DENIED THE ALLEGATION MAD E BY THE ASSESSEE. 8 ITA NO.570/PN/2013 CO NO.56/PN/2014 9. AGGRIEVED BY THE IMPUGNED ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 9.1 BEFORE THE CIT(A), THE ASSESSEE ONCE AGAIN CONT ENDED THAT ESTIMATION OF INCOME FROM BHISHI AT RS.30,000/- PLACING RELIANCE ON COMPUTERIZED CASH BOOK NOT BELONGING TO HIM IS NOT PROPER AND JUSTIFIED. IN RESPECT OF ESTIMATED ADDITION TOWARDS INTEREST OF RS.2,60,100/-, THE ASS ESSEE CONTENDED THAT THE ADDITION IS DUE TO ESTIMATION OF INCOME TOWARDS INT EREST @ 18% PER ANNUM BASED ON ESTIMATED DEPLOYMENT OF FUND AT RS.14,45,0 00/- WITHOUT ANY LEGALLY SOUND BASIS. IN RESPECT OF INCOME FROM MONEY LENDI NG ACTIVITY OF RS.1,50,000/- ESTIMATED BY THE ASSESSING OFFICER BA SED ON COMPUTERIZED CASH BOOK, THE ASSESSEE PLEADED THAT THERE IS NO RATIONA L BASIS FOR MAKING SUCH ADDITION. THE ASSESSEE FURTHER SUBMITTED THAT WITH OUT PREJUDICE, THE EXPENSES IN RELATION TO SUCH PURPORTED BUSINESS ACTIVITY AND EXPENSES TOWARD RECOVERABILITY OF BAD DEBTS HAVE NOT BEEN TAKEN INT O ACCOUNT AT ALL. 9.2 AS REGARDS OF ADDITION OF RS.31,43,232/-, THE A SSESSEE CONTENDED BEFORE THE CIT(A) THAT SURPLUS HAS BEEN TREATED AS UNEXPLA INED INCOME OF THE ASSESSEE ON THE BASIS OF ALLEGED COMPUTERIZED CASH BOOK WHIC H DOES NOT BELONG TO HIM AND THEREFORE NO ADDITION ON THIS ACCOUNT IS ALSO C ALLED FOR. IN THE COURSE OF APPELLATE PROCEEDINGS, THE REMAND REPORT OF THE ASS ESSEE DATED 13.09.2012 WAS RECEIVED ON THE ISSUE. THE EXTRACT OF THE REMAND R EPORT IS REPRODUCED HEREINBELOW :- 4. SURPLUS CASH BALANCE: INCOME OF RS.31,43,232/- ASSESSED FOR THIS YEAR AS SURPLUS CASH BALANCE AS CLOSING CASH BALANCE FROM T HE COMPUTERIZED CASH BOOK. DURING REMAND PROCEEDING, THE ASSESSEE CONTENTION A S FOLLOWS- A) CASH ON HAND CANNOT BE INCOME UNDER THE LAW. B) NONE OF THE BANK ACCOUNTS MENTIONED IN THE COMP UTERIZED CASH BOOKS BELONGS TO HIM AND NOT IN HIS NAME ALSO AND THAT TH E BANK ACCOUNT USED TO TAKE AWAY MONEY EARNING TO SAMRUDHI MARKETI NG & INVESTMENT OF MR. KANKARIA AND IT IS CONFIRMED FROM BANK RECORD CALL BY THE OFFICE DIRECTLY. C) SALE & PURCHASE OF SHARES SHOWN IN COMPUTERIZED CASH BOOKS DO NOT APPEAR IN DMAT STATEMENT RECORD OF THE ASSESSEE. D) PAPER CUTTING & PC ORDER FOR IMPRISONMENT OF TH E ASSESSEE DURING THAT PERIOD TRANSACTION HAS BEEN RECORDED IN THE CO MPUTERIZED CASH BOOKS. 9 ITA NO.570/PN/2013 CO NO.56/PN/2014 FACTS OF THE CASE / OBSERVATION: AS STATED ABOVE DURING THE COURSE OF SURVEY ACTION U/S 133A OF THE I.T. ACT, 1961 ON 24/11/2003 COMPUTERIZED CASH BOOK FOR F.Y. 2001-02 RELEVANT TO A.Y. 2002- 03 WERE FOUND AND IMPOUNDED FROM THE BUSINESS / OFF ICE CUM RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY ACTION I N HIS STATEMENT HE HAD EXPLAINED THAT THE ABOVE CASH BOOK FOR THE PERIOD 01/04/2001 TO 31/03/2002 IS OF HIS INDIVIDUAL BUSINESS AND ENTRIES IN THE BOOKS ARE OF BHISHI, LO AN AND SHARE TRADING. THEREAFTER, HE RETRACTED HIS STATEMENT AND STATED THAT THE BOOK S ARE NOT BELONGING TO HIM, SAME WERE GIVEN TO HIM BY SHRI SURESH KANKARIYA ON 24/11 /2003 I.E. ON THE DATE OF SURVEY. A SUMMONS U/S 131 OF THE I.T. ACT, 1961 WAS ISSUED TO SHRI SURESH KANKARIYA. IN RESPONSE TO SUMMONS SHRI SURESH KANKARIYA ATTENDED ON 12/07/2012. A STATEMENT WAS RECORDED ON OATH. IN HIS STATEMENT HE STATED T HAT THERE WAS BUSINESS RELATIONS WITH SHRI ASHOK CHALLANI, THE ASSESSEE, HE HAD PURC HASED RESIDENTIAL BUNGALOW OF SHRI ASHOK CHALLANI. HOWEVER, HE DENIED THAT HE HA D GIVEN BOOKS TO THE ASSESSEE ON THE DATE OF SURVEY. A COPY OF STATEMENT OF SHRI SU RESH KANKARIYA WAS PROVIDED TO THE ASSESSEE AND HE WAS ALSO GRANTED OPPORTUNITY TO CROSS EXAMINE TO SHRI SURESH KANKARIYA. HOWEVER, DURING CROSS EXAMINE HE FAILED TO PROVE HIS PLEA THAT THE COMPUTERIZED BOOKS WERE GIVEN TO HIM BY SHRI SURESH KANKARIYA ON 24/11/2003 I.E. ON THE DATE OF SURVEY. ON 14/08/2012 HE HAS FILED HIS FINAL REPLY AND RAIS ED SEVERAL QUESTIONS, ASSUMPTIONS WITH REFERENCE TO HIS OWN CROSS EXAMINA TION OF SHRI SURESH KANKARIYA. HOWEVER, HE COULD NOT PRODUCE PROOF OF HIS SAY THAT THE COMPUTERIZED BOOKS ARE DISOWNED BY HIM. 9.3 WITH REGARD THE ADDITION OF RS.31,43,232/- TOWA RDS SURPLUS CLOSING CASH BALANCE, THE CIT(A) ARRIVED AT THE FINDING THAT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES REGARDING THE ENTRIES IN TH E CASH BOOK, THE ADDITION OF THE IMPUGNED CLOSING CASH BALANCE IS INCORRECT AND THEREFORE SAME IS DELETED. THE RELEVANT PARAS CONCERNING THE ISSUE ARE REPRODU CED AS UNDER :- 10.2 THUS, IT IS SEEN FROM THE ASSESSMENT ORDER AS WELL AS FROM THE ABOVE- MENTIONED REPORT OF THE ASSESSING OFFICER THAT HE H AS NOT BEEN ABLE TO ANSWER THE QUESTIONS RAISED BY THE APPELLANT THAT THE PAYMENTS AS SHOWN IN THE IMPUGNED CASH BOOK ARE INTO VARIOUS BANK ACCOUNTS, NONE OF WHICH ARE OWNED BY THE APPELLANT. PERUSAL OF THESE BANK ACCOUNTS FURTHER SHOWS THAT T HESE AMOUNTS ARE TRANSFERRED EITHER ON THE SAME DAY OR WITHIN A FEW DAYS TO THE BANK ACCOUNT OF SAMRUDHI MARKETING INVESTMENT PVT. LTD. IN THIS REGARD, IT I S SEEN THAT DURING STATEMENT RECORDED ON 22/12/2006 AT ASSESSMENT STAGE, VIDE QU ESTION NOS. 14 AND 15, THE APPELLANT WAS QUERIED ABOUT THE BANK ACCOUNT NOS. M ENTIONED IN THE IMPOUNDED CASH BOOK. HE WAS ALSO ENQUIRED ABOUT THE BANK ACCO UNT DETAILS PROCURED BY THE ASSESSING OFFICER FROM SANGLI BANK LTD, AHMEDNAGAR AND FROM DWARKADAS MANTRI BANK LTD, MARKET YARD BRANCH AND CHOUPATI KARANJA B RANCH, AHMEDNAGAR. THE APPELLANT STATED IN RESPONSE THAT THESE ACCOUNT-HOL DERS WERE NOT KNOWN TO HIM, NOR WERE THEY CONNECTED TO HIM OR CHALLANI MARKETING AN D INVESTMENT. IN RESPONSE TO QUESTION NO 16 REGARDING TRANSACTIONS WITH SAMRUDHI MARKETING INVESTMENT PVT. LTD. IN THE CASH BOOK OF AMOUNTS MOSTLY OF RS 20,00 0 BOTH PAID AND RECEIVED, HE HAS DENIED OWNERSHIP OF THE CASH BOOK AND IN FACT, EXPR ESSED SURPRISE AT THE ENTRIES FROM 25/01/2002 ONWARDS. 10.3 AT THIS STAGE, IT MAY BE MENTIONED THAT THE AP PELLANT HAD FILED AN AFFIDAVIT DATED 16/12/2010 ALONGWITH WRITTEN SUBMISSIONS DATE D 20/12/2010 DURING APPELLATE PROCEEDINGS, CONTESTING THE AUTHENTICITY OF TILE CONTENTS OF THE CASH BOOK. IN THE SAID 10 ITA NO.570/PN/2013 CO NO.56/PN/2014 AFFIDAVIT, HE HAS STATED THAT DURING SURVEY, HE HAD OWNED UP THE AFORESTATED CASH BOOK DUE TO MENTAL STRESS CAUSED BY DIFFICULT FINAN CIAL POSITION AND DUE TO THE DIRECTION OF SHRI SURESH MOTILAL KANKARIYA. HOWEVER , THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER DURING ASSESSME NT PROCEEDINGS VIDE LETTER DATED 21/12/2006. FURTHER, HE STATES THAT HE HAS NOT SOLD AND PURCHASED ANY SHARES DURING THE IMPUGNED A.Y. AND AS PROOF OF THE SAME, HIS DEMAT ACCOUNT STATEMENT HAS BEEN ATTACHED. FURTHER, ALL SHARE TRANSACTIONS AS P ER SESI GUIDELINES ARE TO BE DONE THROUGH DEMAT ACCOUNT WHEREAS THE CASH BOOK SH OWS SALE OF SHARES IN CASH. THE CASH BOOK SHOWS SUBSTANTIAL AMOUNTS PAID TO ABO UT 60-70 BANK ACCOUNTS WITH WHOM HE HAS NO TRANSACTIONS. SUBSEQUENT TO ASSESSME NT, HE HAS BEEN ABLE TO GET COPIES OF THE CORRESPONDENCE BETWEEN THE INCOME TAX DEPARTMENT AND BANKS IN WHICH THESE ACCOUNTS EXISTED. HE HAS ENCLOSED LETTE R OF SANGLI BANK, AHMEDNAGAR DATED 18/12/2006 WHICH CLEARLY STATES THAT THERE IS NO BANK ACCOUNT OWNED BY SHRI ASHOK CHALLANI OR CHALLANI MARKETING AND INVESTMENTS. THE BANK HAS PR OVIDED NAMES OF ACCOUNT HOLDERS AND INTRODUCER, WHEREBY IT IS SEEN THAT THE INTRODUCER OF ONE OF THE ACCOUNT HOLDERS, SHRI GITAY SUBHASH BHAG WAN IS MR KANKARIYA (ACTUALLY INTRODUCER IS SADHNA SURESH KANKARIYA, WIFE OF SURE SH MOTILAL KANKARIYA). IN TURN, THIS ACCOUNT HOLDER HAS INTRODUCED OTHER BANK ACCOU NTS. FURTHER, THE BANK STATEMENTS OF THESE ACCOUNT HOLDERS IN SANGALI BANK , AHMEDNAGAR SHOW THAT CASH WAS TRANSFERRED TO CURRENT ACCOUNT NO 1039, WHICH B ELONGS TO SAMRUDHI MARKETING INVESTMENT PVT. LTD. THE SAME METHODOLOGY HAS BEEN ADOPTED IN THE BANK ACCOUNTS IN DWARKADAS MANTRI BANK LTD, MARKET YARD BRANCH AN D CHOUPATI KARANJA BRANCH, AHMEDNAGAR. 10.4 FURTHER, ALTHOUGH NOT MENTIONED IN THE REMAND REPORT, IT IS SEEN THAT DURING REMAND PROCEEDINGS, THE APPELLANT HAS IN THE COURSE OF CROSS-EXAMINATION ON 3/8/12 ENQUIRED FROM SHRI SURESH MOTILAL KANKARIYA, DIRECT OR-SHAREHOLDER IN SAMRUDHI. MARKETING INVESTMENT PVT. LTD, ABOUT HIS BUSINESS D EALINGS WITH THE APPELLANT AND WITH CHALLANI MARKETING INVESTMENT PVT. LTD. REGARDING BANK ACCOUNTS OF SAMRUDHI MARKETING IN SANGLI BANK, AHMEDNAGAR, SHRI KANKARIYA HAS CONFIRMED THE SAME. HE CONFIRMED HAVING INDIVIDUAL ACCOUNT B UT NOT ACCOUNT OF THE COMPANY IN DWARKADAS MANTRI BANK LTD. HE CHOSE NOT TO RESP OND TO THE ITOS QUERY REGARDING FACT RELATING TO INTRODUCTION OF THE BANK ACCOUNTS NOR TO THE FACT THAT ONE OF THE DEPOSITORS HAD GIVEN THE ADDRESS OF HIS FIRM , S.M. AUTOMOBILES IN THE BANK ACCOUNT. HE HAS THUS DENIED KNOWLEDGE OF THE PERSO NS TO WHOM PAYMENTS ARE MADE VIA THE IMPUGNED CASH BOOK, STATING THAT ONLY BUSIN ESS DEALINGS WERE MADE WITH CHALLANI MARKETING INVESTMENT PVT. LTD. IN RESPONS E TO QUESTION NO. 28 AS TO THE PURPOSE OF MAKING PAYMENTS BY THESE PARTIES TO SAMR UDHI MARKETING INVESTMENT PVT. LTD. HE HAS SIMPLY CHOSEN TO STATE THAT HE DOES NOT KNOW ANYTHING. 10.5 CLEARLY THEREFORE, THE ENTRIES IN THE CASH BOO K RELATING TO THE BANK ACCOUNTS IN MANTRI BANK AND SANGALI BANK AS WELL AS THE TRAN SACTIONS PERTAINING TO SELL AND PURCHASE OF SHARES ARE EITHER SUSPICIOUS OR AT LEAS T, DO NOT RELATE TO THE APPELLANT. AS CAN BE SEEN FROM THE COPIES OF BANK ACCOUNTS IN THESE TWO BANKS CASH HAS BEEN DEPOSITED AND WITHDRAWN WITHIN A FEW DAYS TO BE TRA NSFERRED TO SAMRUDHI MARKETING AND INVESTMENTS AND ITS BANK ACCOUNT WHICH IS CA 10 39. IT IS SEEN THAT NO ATTEMPT HAS BEEN MADE BY THE ASSESSING OFFICER, BOTH DURING ASSESSMENT AND REMAND PROCEEDINGS, TO EXAMINE THE BANK ACCOUNT HOLDERS AN D SAMRUDHI MARKETING & INVESTMENTS, TO WHOSE ACCOUNT MONIES HAVE BEEN TRAN SFERRED. FURTHER, THE APPELLANT HAS CONSISTENTLY TAKEN A STAND DURING ASS ESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS THAT HE HAS NOT SOLD OR PURCH ASED ANY SHARES DURING F.Y. 01- 02 RELEVANT TO A.Y. 02-03. COPIES OF HIS DEMAT ACCO UNT FOR THE PERIOD 6.12.2000 TO 26.12.2002 HAVE BEEN SUBMITTED WHICH SHOWS NO TRADI NG WHATSOEVER THE PROCEEDS IN THE CASH BOOK FROM SALE PURCHASE ARE RE CORDED IN CASH WHICH ARE ALSO NOT PERMISSIBLE AS PER THE SEBI RULES. THEREFORE, I T WOULD NOT BE CORRECT STEP THAT THE ENTRIES IN THE CASH BOOK PERTAINED TO ACTUAL SH ARE TRANSACTIONS WHICH ARE ONLY PERMISSIBLE THROUGH BANKING CHANNELS. THE ASSESSING OFFICER HAS ALSO NOT GIVEN ANY BASIS FOR ADDITION OF THE CLOSING CASH BALANCE OF RS.31,43,232, EVEN IN THE 11 ITA NO.570/PN/2013 CO NO.56/PN/2014 REMAND PROCEEDINGS. 10.6 ANOTHER ASPECT WHICH HAS NOT BEEN CONSIDERED B Y THE ASSESSING OFFICER IS THE FACT THAT DUE TO HIS FINANCIAL DIFFICULTIES THE APP ELLANT WAS ABSCONDING FROM AHMEDNAGAR SINCE THE MONTH OF JANUARY, 2002. SUBSE QUENTLY, ON COMPLAINTS LAUNCHED BY CERTAIN BHISHI MEMBERS WHO LAUNCHED AN FIR BEFORE THE POLICE ON 12.3.2002, THE APPELLANT WAS ARRESTED AND REMANDED TO POLICE CUSTODY BETWEEN 19.3.2002 AND 22.3.2002. THIS ABSENCE OF THE APPELL ANT IS RECORDED BOTH IN THE POLICE FIR AND IN THE CHIEF JUDICIAL MAGISTRATE AHM EDNAGAR ORDER DATED 31.3.2007 IN CRIMINAL CASE NO. 170/2002 AND IS ALSO AVAILABLE IN THE PUBLIC DOMAIN I.E. MED IA REPORTS WHICH HAVE BEEN FURNISHED BEFORE ME. THERE FORE, IT IS VERY SURPRISING THAT THE CASH BOOK SHOWS REGULAR ENTRIES OF RECEIPT AND PAYMENT EVEN FOR THE PERIOD JAN. 2002 TO MARCH 2002. 10.7 CONSIDERING ALL THE ABOVE, IT IS HELD THAT THI S ADDITION HAS BEEN GROSSLY AND UNFAIRLY MADE IN THE APPELLANT'S HANDS WITHOUT ANY ATTEMPT BEING MADE TO EXAMINE THE ENTRIES MADE IN THE CASH BOOK, OR THE BANK ACCO UNT HOLDERS WHOSE ACCOUNTS ARE MENTIONED IN THE AFORESTATED CASH BOOK THE ASSESSIN G OFFICER WAS AFFORDED AN OPPORTUNITY OF DEALING WITH THE CONTENTIONS MADE BY THE APPELLANT AS WELL AS TO EXAMINE THE CASH BOOK DURING REMAND PROCEEDINGS. HO WEVER, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES REGARDING THE ENTRIES I N THE CASH BOOK BEING PROVED TO BE INCOME OF THE APPELLANT, IT IS HELD THAT THE ADD ITION OF THE CLOSING CASH BALANCE OF RS.31,43,232 IS INCORRECT. GROUND NO. 5 OF THE ORIGINAL GROUNDS OF APPEAL AND GROUND NO. 9 OF THE REVISED GROUNDS OF APPEAL ARE T HUS ALLOWED. IN SHORT, THE CIT(A) ANALYZED REMAND REPORT AND THE SUBMISSIONS OF THE ASSESSEE AT PARA 10 OF HIS ORDER AND CAME TO THE CO NCLUSION THAT THE ACTION OF THE ASSESSING OFFICER IN MAKING IMPUGNED ADDITION I S WITHOUT MAKING ANY ATTEMPT TO EXAMINE THE ENTRIES MADE IN THE CASH BOO K OR BANK ACCOUNT-HOLDERS WHOSE ACCOUNT ARE MENTIONED IN THE AFORESAID CASH B OOK. FOR THIS PURPOSE, THE ASSESSING OFFICER WAS ALSO AFFORDED AN OPPORTUNITY OF DEALING WITH THE CONTENTION MADE BY THE ASSESSEE AS WELL AS THE EXAM INATION OF THE CASH BOOK DURING THE REMAND PROCEEDINGS. HE OBSERVED THAT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES REGARDING ENTRIES IN THE CA SH BOOK BEING PROOF TO BE THE INCOME OF THE ASSESSEE, THE ADDITION OF CLOSING CASH BALANCE OF RS.31,43,232/- IS INCORRECT. ACCORDINGLY, THE CIT( A) DELETED THE IMPUGNED ADDITION. 10. IN RESPECT OF OTHER ADDITIONS, THE CIT(A) HAVIN G CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT P ROVIDED PARTIAL RELIEF TO THE ASSESSEE AND SUSTAINED THE DISALLOWANCE TOWARDS BHI SHI INCOME AT RS.15,000/- AFTER ALLOWANCE OF BUSINESS EXPENSES INCLUDING LOSS ES ON ACCOUNT OF NON- 12 ITA NO.570/PN/2013 CO NO.56/PN/2014 RECOVERY OF DUES. THE PARTIAL RELIEF TO THE EXTENT OF RS.15,000/- WAS GRANTED ON AGREED BASIS AS PER THE AVERMENTS MADE IN THE REMAN D REPORT. WITH REGARD TO THE ESTIMATION OF INTEREST INCOME AT RS.2,60,100/- ON ESTIMATED INVESTMENT OF RS.14,45,000/- BEING 50% OF MONTHLY AMOUNT RECEIVED AS CONTRIBUTION FROM 9 BHISHI, THE CIT(A) OBSERVED THAT OWNERSHIP OF THE CASH BOOK CANNOT BE DENIED BY THE ASSESSEE AND THEREFORE THE INTEREST INCOME FROM THE MONEY LENDING ACTIVITY HAS BEEN COR RECTLY COMPUTED AT RS.2,60,100/- BY TAKING INTO ACCOUNT THE ENTRIES FR OM THE IMPOUNDED CASH BOOK. HOWEVER, HE PROVIDED RELIEF TOWARDS LIKELY E XPENSES TO EARN INCOME FROM THE ALLEGED MONEY LENDING ACTIVITY @ 30% OF TH E INCOME. ACCORDINGLY, HE UPHELD THE ADDITION OF RS.1,82,070/- AS TAXABLE INCOME FROM THE MONEY LENDING ACTIVITY. WITH REGARD TO ADDITION OF RS.1,50,000/- BEING INTE REST DEPOSITS UTILIZED FOR GIVING LOANS FOR SHORT PERIODS, THE CIT(A) OBSE RVED THAT MONEY LENDING ENTRIES WERE FOUND IN THE IMPOUNDED BOOK NO.23 AND IN THE ABSENCE OF ANY SPECIFIC REASONS GIVEN BY THE ASSESSEE, THE ADDITIO N OF RS.1,50,000/- ON ACCOUNT OF INCOME FROM MONEY LENDING WAS UPHELD. 11. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE US. THE ASSESSEE HAS ALSO FILED CROSS-OBJECTION IN RESPECT OF CERTAIN DISALLOWANCES SUSTAINED BY THE CIT(A) AS PER THE GR OUNDS IN THE CROSS- OBJECTION MEMO. 12. THE LD. DEPARTMENTAL REPRESENTATIVE ON BEHALF O F THE REVENUE SUBMITTED THAT THE ADDITION OF RS.31,43,232/- ARISE S FROM THE IMPOUNDED COMPUTERIZED CASH BOOK FOUND DURING THE COURSE OF S URVEY AT THE BUSINESS PREMISES OF THE ASSESSEE. THEREFORE, THE CONTENTS OF THE CASH BOOK CANNOT BE DENIED BY THE ASSESSEE. THE LD. DEPARTMENTAL REPRE SENTATIVE CONTENDED THAT SUBSEQUENT RETRACTION FROM THE ORIGINAL STAND WITHO UT ANY DISTINGUISHABLE 13 ITA NO.570/PN/2013 CO NO.56/PN/2014 REASON IS UNSUSTAINABLE. HE ACCORDINGLY RELIED UPO N THE ORDER OF THE ASSESSING OFFICER AND PLEADED REVERSAL OF THE ORDER OF THE CI T(A) ON THE ISSUE. 13. THE LD. AUTHORIZED REPRESENTATIVE ON BEHALF OF THE ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT ADMITTEDLY THE COMPUTE RIZED CASH BOOK WAS IMPOUNDED AT THE TIME OF THE SURVEY CONDUCTED ON 24 .11.2003. HOWEVER, IT HAS BEEN THE STAND OF THE ASSESSEE ALL ALONG THAT C OMPUTERIZED CASH BOOK WAS GENERATED ELSEWHERE AND PROVIDED TO HIM BY SHRI SUR ESH KANKARIYA. THE ASSESSEE IS NOT A COMPUTER LITERATE AND THE AFORESA ID CASH BOOK HAS NOT BEEN GENERATED WITH HIS CONCURRENCE. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT, IN THE STATEMENT BEFORE THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT ON 22.12.2006 ITSELF, THE ASSESSEE HAD CLEARLY DENI ED THE OWNERSHIP OF THE COMPUTERIZED CASH BOOK. THE DENIAL OF THE OWNERSHI P IS SUPPORTED BY SEVERAL IMPORTANT SUBSTANTIAL FACTS VIZ. THE ASSESSEE DOES NOT HAVE ANY COMPUTER AND NOR HAS AVAILED THE SERVICES OF ANY COMPUTERIZED AC COUNTING. SECONDLY, THE BOOKS OF THE ASSESSEE ARE HAND-WRITTEN WHICH WERE A LSO IMPOUNDED. BESIDES COMPUTERIZED CASH BOOK, NO OTHER ALLIED COMPUTERIZE D BOOKS OF ACCOUNT LIKE LEDGER, BANK BOOK ETC. WAS FOUND. THE LD. AR FURTH ER EXHORTED THAT APART FROM EXISTENCE OF COMPUTERIZED CASH BOOK OWNED UP AT THE TIME OF SURVEY, THERE IS NO OTHER EVIDENCE TO CORROBORATE THE CORRECTNESS OF THE COMPUTERIZED CASH BOOK. THE MOST RELEVANT FACT THAT NO CASH WAS FOUN D IN THE COURSE OF SURVEY AS AGAINST THE SUBSTANTIAL CASH BALANCE OF RS.31.43 LA KHS REPORTED IN THE PURPORTED CASH BOOK CANNOT BE BRUSHED ASIDE. THE COMPUTERIZE D CASH BOOK RECORDS RECEIPTS AS WELL AS DEPOSITS OF MONEY INTO VARIOUS BANK ACCOUNTS. THE IMPUGNED REASON OF RECEIPT OF CASH IS STATED TO BE SALE OF SHARES ALSO. IN THIS CONNECTION, IT WAS SUBMITTED THAT THE SHARES AS OWN ED BY HIM ARE REFLECTED IN THE DEMAT ACCOUNT AND HE HAS NEITHER PURCHASED NOR SOLD ANY SHARES DURING THE FINANCIAL YEAR 2001-02 RELEVANT TO ASSESSMENT YEAR 2002-03. THE LD. AR ADVERTED OUR ATTENTION TO PARA 4.10 OF THE CIT(A)S ORDER AND SUBMITTED THAT IN THE COURSE OF CROSS-EXAMINATION OF SHRI SURESH KANK ARIYA IN THE REMAND PROCEEDINGS WHERE THE SHRI SURESH KANKARIYA DID NOT RESPOND TO ASSESSING OFFICER QUERY REGARDING THE FACT RELATING TO INTROD UCTION OF BANK ACCOUNT, ETC.. THE LD. AR STRENUOUSLY ARGUED THAT THE CORRECTNESS OF THE COMPUTERIZED CASH 14 ITA NO.570/PN/2013 CO NO.56/PN/2014 BOOK CAN ALSO BE IMPUGNED ON THE BASIS OF THE FACT THAT HE WAS COMPELLED TO LEAVE AHMEDNAGAR FROM 25.01.2002 TO 17.03.2002 AND WAS DETAINED IN POLICE CUSTODY FROM 18.03.2002 TO 22.03.2002 WHICH RENDERS THE EXECUTION OF ALLEGED CASH BOOK TRANSACTIONS DURING THAT PERIOD A REAR IM POSSIBILITY. THIS FACT ITSELF CLEARLY DISCREDITS THE CORRECTNESS OF THE COMPUTERI ZED CASH BOOK WHICH IS THE BASIS OF IMPUGNED ADDITION. HE RELIED UPON THE DET AILED FINDINGS OF THE CIT(A) ON THIS ISSUE AND SUBMITTED THAT THERE IS NO BASIS FOR MAKING ADDITION OF THE CLOSING CASH BALANCE OF RS.31,43,232/- AS UNDISCLOS ED INCOME. 14. WITH REFERENCE TO THE GROUNDS TAKEN IN THE CROS S-OBJECTION MEMO, THE LD. AUTHORIZED REPRESENTATIVE ON BEHALF OF THE ASSE SSEE SUBMITTED THAT ESTIMATION OF BHISHI INCOME OF RS.15,000/- IS BASED ON SURMISES AND NOT CALLED FOR. AS REGARDS SUSTENANCE OF ADDITION OF RS.1,82, 070/- TOWARDS INTEREST BY CIT(A) OUT OF 2,60,100/- ESTIMATED BY THE ASSESSING OFFICER ON ESTIMATED DEPLOYMENT OF FUNDS RECEIVED IN BHISHI BUSINESS, HE AGAIN SUBMITTED THAT THE ADDITION HAS BEEN SUSTAINED WITHOUT ANY COGENT EVID ENCE. THE ENTIRE ACTION OF ESTIMATION IS IN THE REALM OF CONJECTURES AND SURMI SES. SIMILARLY, THE ESTIMATION INTEREST INCOME ON SHORT TERM LOAN AT RS .1,50,000/- WAS PLEADED TO THE WITHOUT ANY BASIS ON THE SAME REASONINGS. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS, ORDERS OF THE AUTHORITIES BELOW AND OTHER MATERIAL PLACED ON RECO RD AND ALSO PERUSED THE PAGES OF PAPER BOOK RELIED UPON. THE SUBSTANTIVE I SSUE ARISES IN THE REVENUES APPEAL IS CORRECTNESS OF ADDITION OF RS.3 1,43,232/- APPEARING AS CLOSING BALANCE IN THE COMPUTERIZED CASH BOOK IMPOU NDED DURING THE COURSE OF SURVEY ON 24.11.2003. IT IS THE CONTENTION ON BEHA LF OF THE REVENUE THAT DURING THE COURSE OF SURVEY ACTION, THE ASSESSEE IN HIS STATEMENT HAD EXPLAINED THAT THE ABOVE CASH BOOK FOR THE PERIOD 01.04.2001 TO 31.03.2002 IS OF HIS INDIVIDUAL BUSINESS AND ENTRIES IN THE BOOKS ARE OF BHISHI, LOAN AND SHARE TRADING. THEREFORE, SUBSEQUENT RETRACTION OF THE S TATEMENT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE AFORESAID CASH BOOK DO NOT BELONG TO HIM AND SAME WERE GIVEN TO HIM BY ONE SHRI SURESH KANKARIYA ON THE DATE OF SURVEY IS NOT CREDIBLE. 15 ITA NO.570/PN/2013 CO NO.56/PN/2014 15.1 WE ALSO TAKE NOTICE OF THE CONTENTION OF THE A SSESSEE THAT THERE IS TOTAL LACK OF CORROBORATIVE EVIDENCE TO SUPPORT THE ENTRI ES RECORDED IN THE COMPUTERIZED CASH BOOK AND ALSO THE ASSESSEE IS NOT CONVERSANT WITH THE COMPUTERIZED ENTRIES. THE CONTENTION OF THE ASSESS EE IS THAT HIS BOOKS ARE HAND-WRITTEN WHICH WERE ALSO SIMULTANEOUSLY IMPOUND ED IN THE COURSE OF THE SURVEY. EXCEPT FOR THE COMPUTERIZED CASH BOOK, NO OTHER COMPUTERIZED ALLIED BOOKS WERE FOUND. WE FIND CONSIDERABLE FORCE IN TH E CONTENTION OF THE ASSESSEE THAT COMPUTERIZED CASH BOOK CANNOT BE RELI ED UPON FOR THE AFORESAID REASONS. COUPLED WITH THIS, THE CONTENTION OF THE ASSESSEE THAT HE WAS COMPELLED TO LEAVE THE CITY BY THE POLICE AND THERE AFTER HE WAS IN POLICE CUSTODY DURING THE SOME OF THE DAYS COVERING THE IM PUGNED CASH BOOK HAS BEEN WEIGHED. THE AFORESAID CONTENTION OF THE ASSE SSEE IS SUPPORTED BY PAPER CUTTING AND PC ORDER FOR IMPRISONMENT OF THE ASSESS EE DURING A PART OF TRANSACTIONS PERIOD RECORDED IN THE COMPUTERIZED BO OK ANNEXED AT PAGE 57 TO 65 OF THE PAPER BOOK. WE ALSO NOTICE THE OBSERVATI ON OF THE CIT(A) AT PARA 10.4 OF THE ORDER THAT THE ANSWER FROM SHRI SURESH KANKARIYA IN THE COURSE OF CROSS-EXAMINATION ON 03.08.2012 IS VAGUE AND NON-DE SCRIPT. ANOTHER IMPORTANT FACTOR WHICH LEANS TOWARDS THE ASSESSEE I S THAT THERE WAS NO ATTEMPT MADE TO EXAMINE THE ENTRIES MADE IN THE BOOKS OF AC COUNT OR THE BANK ACCOUNT- HOLDERS WHOSE ACCOUNT ARE MENTIONED IN THE AFORESAI D CASH BOOK AS NOTED BY THE CIT(A) IN PARA 10.7 OF THE ORDER. OTHER MITIGA TING FACTOR THAT TRANSCEND OTHER CONSIDERATIONS ARE THAT NO CASH WAS FOUND DUR ING THE COURSE OF SURVEY. THE SHARE TRANSACTIONS RECORDED IN THE CASH BOOK WE RE ALSO NOT FOUND TO BE IN SYNC WITH DEMAT STATEMENT. IN THE LIGHT OF THESE O VERWHELMING CIRCUMSTANCES READ WITH RETRACTION OF THE EARLIER UNDER SECTION 1 31 OF THE ACT TO THE ASSESSING OFFICER, WE FIND OURSELVES IN COMPLETE AGREEMENT WI TH THE OBSERVATIONS OF THE CIT(A) THAT THE IMPUGNED ADDITION CANNOT BE SUSTAIN ED MERELY OWING TO PRESENCE OF A COMPUTERIZED CASH BOOK WITHOUT ANYTHI NG MORE. IN THIS VIEW OF THE MATTER, WE ARE NOT INCLINED TO INTERFERE WITH T HE FINDINGS OF THE CIT(A) ON THE ISSUE. 15.2 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. 16 ITA NO.570/PN/2013 CO NO.56/PN/2014 16. NOW, WE ADDRESS OURSELVES TO THE VARIOUS GROUND S TAKEN BY ASSESSEE AS PER CROSS-OBJECTION MEMO. 16.1 THE FIRST GROUND AS PER CROSS-OBJECTION MEMO I S TOWARDS QUESTIONING THE CORRECTNESS OF SUSTAINING THE ESTIMATED BHISHI INCO ME OF THE ASSESSEE AT RS.15,000/- BY THE CIT(A) AS AGAINST THE ADDITION O F RS.30,000/- UNDER SECTION 143(3) OF THE ACT. WE NOTICE FROM THE ORDER OF THE CIT(A) THAT HE HAS TAKEN COGNIZANCE OF THE SUBMISSIONS OF THE ASSESSEE AS WE LL AS THE REMAND REPORT FILED BY THE ASSESSING OFFICER IN THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE HIM. WE ALSO FIND THAT THE ASSESSEE HAD AGREED TO THE ADDITION OF RS.15,000/- VIDE LETTER DATED 20.07.2012 BEFORE THE ASSESSING O FFICER. IN VIEW OF THE CONCESSION OFFERED BY THE ASSESSEE HIMSELF, NO GRIE VANCE SURVIVES ON THIS POINT. BE THAT AS IT MAY, THE ASSESSEE HAS NOT POI NTED OUT BEFORE US AS TO HOW THE ESTIMATION SUSTAINED IS UNREASONABLE HAVING REG ARD TO THE HAND-WRITTEN BOOKS SHOWING BHISHI TRANSACTIONS FOUND IN THE COUR SE OF SURVEY. IN THE RESULT, THE FIRST GROUND OF THE CROSS-OBJECTION MEMO IS DIS MISSED. 16.2 THE NEXT GRIEVANCE OF THE ASSESSEE AS PER CROS S-OBJECTION MEMO IS TOWARDS ESTIMATION OF INTEREST INCOME OF RS.1,82,07 0/- SUSTAINED BY THE CIT(A) AS AGAINST THE ADDITION OF RS.2,60,100/- MADE BY TH E ASSESSING OFFICER. WE NOTICE FROM THE ASSESSMENT ORDER THAT INCOME HAS BE EN ESTIMATED BASED ON THE AVERMENTS MADE IN THE SURVEY PROCEEDINGS THAT A PAR T OF THE BHISHI RECEIPTS ARE DEPLOYED TOWARDS LENDING AT INTEREST @ 17% TO 18%. THE ASSESSING OFFICER HAS CONSIDERED 50% OF THE AMOUNT RECEIVED AS CONTRI BUTION FROM DIFFERENT BHISHI AS ESTIMATED DEPLOYMENT OF FUNDS AND FURTHER ESTIMATED INTEREST THEREON @ 18% PER ANNUM. WE ALSO NOTICE FROM PARA 6 OF THE ASSESSMENT ORDER THAT ASSESSEE HAD GIVEN STATEMENT AS PER REPLY TO QUESTI ON NO.3 OF THE STATEMENT DATED 24.11.2003 THAT THE AMOUNT DOES NOT BEAR INTE REST. AT THE SAME TIME, AS PER REPLY TO QUESTION NO.9, IT WAS PURPORTEDLY STAT ED BY THE ASSESSEE THAT THE INTEREST CHARGED ON AMOUNT OF LOAN RANGES FROM 17% TO 18%. WE FIND THE STATEMENT APPEARS TO SOMEWHAT CONTRADICTORY WHICH R EMAINED UNRECONCILED. WE ALSO FIND THAT APART FROM THE STATEMENT, THERE I S NO OTHER CORROBORATIVE EVIDENCE AVAILABLE AT THE DISPOSAL OF REVENUE TO SU PPORT SUCH ACT OF DEPLOYMENT 17 ITA NO.570/PN/2013 CO NO.56/PN/2014 AND ACTUAL EARNING OF INTEREST THEREON. IN VIEW OF THESE FACTS, THERE IS NO MERIT IN THE MAKING OF ESTIMATION ON HYPOTHETICAL BASIS. THUS, WE FIND NO MERIT IN THE ACTION OF THE CIT(A) ON THIS POINT. THIS IS AL SO FOR THE REASON THAT ESTIMATION OF INTEREST INCOME OF RS.1,50,000/- FROM ALLEGED MONEY LENDING ACTIVITY HAS ALREADY BEEN MADE. IN THE RESULT, THE GROUND NO.2 OF THE CROSS- OBJECTION MEMO OF THE ASSESSEE IS ALLOWED. 16.3 THE NEXT OBJECTION OF THE ASSESSEE IS TOWARDS ESTIMATED INCOME OF RS.1,50,000/- FROM THE MONEY LENDING ACTIVITIES AS REFERRED ABOVE. CONSIDERING THE DEPOSITIONS MADE BY THE ASSESSEE IN THE COURSE OF THE SURVEY ACTION AND ALSO CONSIDERING THE FACT THAT THE CONSI DERABLE AMOUNT WAS AVAILABLE AT THE DISPOSAL OF THE ASSESSEE TOWARDS CONTRIBUTIO N COLLECTED IN BHISHI BUSINESS WHICH MONEY WAS ADMITTEDLY CIRCULATED FOR SHORT TER M ADVANCES, ESTIMATION OF INCOME QUANTIFIED AT RS.1,50,000/- FROM THIS SOURCE APPEARS TO BE IN TUNE WITH CERTAIN NOTINGS MADE IN THE IMPOUNDED HAND-WRITTEN NOTE BOOKS. THUS, THE ESTIMATIONS ARE REASONABLE AND JUSTIFIED. ACCORDIN GLY, THE CROSS-OBJECTION OF THE ASSESSEE ON THIS ISSUE IS DISMISSED. 17. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMI SSED AND THE CROSS- OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 06 TH DAY OF NOVEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 06 TH NOVEMBER, 2015. 18 ITA NO.570/PN/2013 CO NO.56/PN/2014 % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE