DCIT, Ludhiana V. M/s Jain Udhay International Pvt. Ltd., Ludhiana

ITA 102/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90082 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: E PASS LUDHIANA PAN AAJCSR
• Keywords: Search and seizure; Loose papers; Document seized; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 102/CHD/2015 (ASSESSMENT YEAR : 2009-10) THE D.C.I.T., VS. M/S JAIN UDHAY INTERNATIONAL PVT. LTD. CENTRAL CIRCLE-III, B-XXXIII/212, G.T. RD. (WEST), LUDHIANA. JALANDHAR BYE PASS, LUDHIANA. PAN: AAJCS2611R (APPELLANT) (RESPONDENT) APPELLANT BY : DR.AMARVEER SINGH, DR RESPONDENT BY : SHRI S.R.CHHABRA DATE OF HEARING : 01.04.2015 DATE OF PRONOUNCEMENT : 08.04.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, LUDHIANA DATED 11.11.2014 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE T HE DECISION OF THE CIT(A) TO DELETE THE ADDITION OF RS. 25,79,850/- PAI D IN CASH FOR PURCHASE OF PLOT, IS CORRECT. 2. WHETHER THE DECISION OF THE CIT(A) TO DELETE THE ADDITION ON ACCOUNT OF CASH PAID FOR PURCHASE OF PLOT BASED ON ENTRIES IN HAND WRITTEN PAGE NO. 2 OF ANNEXURE AL IS PERVERSE AS ON THE BASIS OF SIMILAR ENTRIES IN HAND WRITTEN PAGE NO. 1 OF ANNEXU RE AL HE HAS 2 CONFIRMED THE ADDITION IN THE CASE OF SISTER CONCER N OF THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCT ED IN THE CASE OF THE ASSESSEE ON 01.03.2011 AND DURIN G THE COURSE OF SEARCH OPERATION CERTAIN LOOSE DOCUME NTS HAD BEEN FOUND AND SEIZED. THE SEIZED DOCUMENT AT S.NO.PAGE 2 OF ANNEXURE A-L ( PARTY NO.B-1) SEIZED FROM THE RESIDENCE OF SH. SANJEEV KUMAR JAIN, 11-12 MAHA VIR ENCLAVE BAREWAL ROAD, DIRECTOR OF THE ASSESSEE COMP ANY REVEALED THAT AN AMOUNT OF RS.91,54,835/- HAD BEEN PAID FOR PURCHASE OF LAND SITUATED AT PLOT NO.B-L5, PUNJAB APPAREL PARK, G.T.ROAD, DORAHA. THE DETAILS OF PAYMENTS AS RECORDED ON THE IMPUGNED SEIZED DOCUMEN T ARE AS UNDER:- S.NO. PARTICULARS AMOUNT(RS.) 1 ADVANCE CHEQUE TO KAY JAIN HOSIERY 1000000 2. CHEQUE TO KAY JAIN HOSIERY 4953500 3. CASH PAID TO KAY JAIN HOSIERY 500000 4. CASH PAID TO KAY JAIN HOSIERY 2079850 5. CHEQUE TO KAY JAIN HOSIERY 244430 6 CHEQUE TO KAY JAIN HOSIERY 79380 7 CHEQUE TO KAY JAIN HOSIERY 297675 TOTAL 91,54,835/- 3. THE ASSESSING OFFICER FURTHER OBSERVED THAT AMOUNTS GIVEN IN CHEQUE TO THE TUNE OF RS.65,74,985/- HAD BEEN DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY WHEREAS THE CASH PAYMENT MADE FOR PURCHAS E OF 3 SAID PLOT HAD NOT BEEN SHOWN IN THE BOOKS OF ACCOUN TS. THE ASSESSEE ON BEING CONFRONTED WITH THESE FACTS SUBMI TTED THAT CASH PAYMENTS OF RS.25,79,850/- HAD BEEN BOOKE D UNDER THE HEAD LAND AND SITE DEVELOPMENT EXPENSES I NSTEAD OF LAND ACCOUNT. THE ASSESSING OFFICER AFTER CONSI DERING THE EXPLANATION OF THE ASSESSEE ON THE ISSUE CAME T O THE CONCLUSION THAT THERE WAS NO INCREASE IN THE VALUE OF LAND AS CLAIMED BY THE ASSESSEE AND THE BOOKS OF ACCOUNT S ONLY RECORDED THE AMOUNTS SPENT ON CONSTRUCTION OF THE B UILDING AND THE SAME COULD NOT BE ATTRIBUTED TO PURCHASE OF LAND AS CLAIMED. THE ASSESSING OFFICER, THEREFORE, PROCEEDE D TO MAKE THE IMPUGNED ADDITION. 4. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT (APPEALS) AND THE ARGUMENTS OF THE ASSE SSEE ON THE ABOVE ISSUE ARE AS UNDER : 'A SEARCH U/S 132 WAS CARRIED OUT AT THE BUSINESS P REMISES OF THE ASSESSEE COMPANY AT B-XXXIII-212, G.T. ROAD ( WEST), JALLANDHAR BYE PASS, LUDHIANA ON 01.03.2011. INVENT ORY OF CASH IN HAND AND STOCKS WERE CARRIED OUT AND CERTAIN LOOSE PAPERS/DOCUMENTS WERE SEIZED. AS A RESULT OF DISCUSS ION WITH THE RAIDING PARTY, A SUM OF RS. 1 CRORE WAS SURRENDE RED U/S 132(4) FOR THE A.Y. 2011-12 AS FOLLOWS :- UNDISCLOSED/UNREALIZED SALES/DEBTORS : RS.900000 0 UNEXPLAINED DOCUMENTS OR EXPENSES : RS.1000000 TOTAL RS.10000000 4 AMONG THE SEIZED DOCUMENTS, THERE WAS A PAPER, COPY ENCLOSED, WHICH INDICATED CERTAIN PAYMENTS MADE TO KAY JAIN HOSIERY SOME BY CHEQUES SOME IN CASH. THIS PAPER W AS SEIZED FROM THE RESIDENCE OF SH. SANJEEV KUMAR JAIN AT 11- 12, MAHAVIR ENCLAVE, BAREWAL ROAD, LUDHIANA, DIRECTOR OF THE CO MPANY. THE TOTAL PAYMENTS OF RS.91,54,835/-, DETAILED ON PAGE 3 OF ASSESSMENT ORDER, WERE FOR THE PURCHASE OF LAND SITUATED AT PL OT NO. 15, PUNJAB APPAREL PARK, G.T. ROAD, DOHARA, LUDHIANA. A PERUSAL OF THIS SEIZED PAPER INDICATES THAT SOME PAYMENTS WERE MADE BY CHEQUES AND SOME PAYMENTS WERE MADE IN CASH. THE A.O. FOUND THAT PAYMENTS BY CHEQUE WERE RECORDE D IN THE BOOKS OF ACCOUNTS BUT CASH ENTRIES WERE NOT RECORDE D. HE THEREFORE ISSUED A NOTICE UNDER SECTION 153A DATED 05.12.2011 AND IN REPLY TO WHICH, THE ASSESSEE FILED ITS RETURN IN FORM NO .6 ON 12.01.2012 DECLARING THE SAME TAXABLE INCOME OF RS.1073410. THE A.O. ASKED THE ASSESSEE AS TO WHY PAYMENTS MAD E IN CASH AND NOT RECORDED IN THE BOOKS OF ACCOUNT TO WH ICH ASSESSEE REPLIED VIDE LETTER DATED 18.02.2013, COPY ENCLOSED STATING THAT BOTH TYPES OF ENTRIES WERE RECORDED IN THE BOOKS OF ACCOUNT UNDER TWO DIFFERENT HEADS I.E. PAYMENTS BY CHEQUE AMOUNTIN G TO RS. 6574985/- UNDER THE HEAD LAND ACCOUNT AND PAYMENTS MADE IN CASH OF RS.2579850/- UNDER THE HEAD SITE DEVELOPMEN T EXPENSES UNDER BUILDING UNDER CONSTRUCTION ACCOUNT. THE ABOVE EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. AND HE, THEREFORE, MADE AN ADDITION O F RS.2579850/- TO THE ALREADY ASSESSED INCOME OF RS.1073410/-. HEN CE, THIS ADDITION IS AGITATED BEFORE YOUR KIND HONOUR IN APP EAL. (A) SUBMISSION ON MERITS :- THE SPLIT UP OF THE TOTAL COST OF RS. 9154835/- AS DETAILED IN THE SEIZED PAPER IN RESPECT OF PURCHASE OF LAND IS AS FOL LOWS :- COST OF PLOT @ RS. 2150/- FOR 3969 SQ. YDS. :- 853 3350/- 5 BOUNDRY WALL CHARGES :- 244430/- 2 YEARS MAINTENANCE CHARGES :- 79380/- 50% TRANSFER FEE (PAID TO PUNJAB APPAREL PARK) :- 297675/- TOTAL 9154835/- THE ASSESSEE WANTED TO PAY THE ENTIRE AMOUNT BY CHE QUE. HOWEVER, THE SELLER M/S KAY JAIN HOSIERY, WHICH IS NOT RELATED TO THE ASSESSEE OR ANY OF ITS DIRECTORS, FOR REASONS BEST KNOWN TO IT, INSISTED ON PAYMENT BY CHEQUES ONLY TO THE EXTENT OF RS.6574985 /- AND BALANCE RS. 2579850/- IN CASH. SINCE THE ASSESSEE WAS INTERESTED IN PURCHASING THE ABOVE PLOT OF LAND FOR SETTING UP A NEW UNIT IN THE HOSIERY ZONE ON G.T. ROAD, DORAHA, IT HAD NO OTHER OPTION BUT TO COMPLY WITH TH E WISHES OF THE SELLER OF PLOT. SINCE THE ASSESSEE DID NOT HAVE ANY SURPLUS CA SH FOR THAT PURPOSE, SH. SANJEEV JAIN, DIRECTOR OF THE COMPANY, W ITHDREW CASH FROM HIS BANK A/C NO. 10202389004 IN STATE BANK OF I NDIA BY SELF CHEQUES AND OUT OF THAT CASH IN HAND PAYMENTS WERE MADE TO KAY JAIN HOSIERY FROM TIME TO TIME. SOME OTHER EXPENSES OF THE ASSESSEE COMPANY WERE MET RIGHT FROM AUGUST, 2007 TO MARCH, 2 008 AND THE TOTAL CASH SPENT ON BEHALF OF THE ASSESSEE COMPANY AMOUNTING TO RS. 40 LACS WAS DEBITED TO THE ASSESSEE COMPANY ON 31.03.2008. COPY OF SANJEEV KUMAR JAIN ACCOUNT IN BOOKS OF JAIN UDHAY HOSIERY (P) LTD., BANK A/C AND CASH IN HAND ACCOUNT OF SANJ EEV KUMAR JAIN ARE ENCLOSED. FROM THE ABOVE, IT WOULD BECOME CRYSTAL CLEAR THA T CASH PAYMENTS WERE MADE OUT OF THE BANK WITHDRAWLS OF SH . SANJEEV KUMAR JAIN. THE AVAILABILITY OF CASH CANNOT BE DOUBT ED SINCE THE SAME WAS AVAILABLE BY SELF WITHDRAWALS FROM SBI ACC OUNT AS INDICATED IN THOSE ACCOUNTS. AFTER THE CASH PAYMENTS MADE BY SH. SANJEEV K UMAR JAIN, THE AMOUNT WAS DEBITED TO THE ASSESSEE COMPANY. THE A SSESSEE COMPANY HAD NO CHOICE TO DEBIT THE CASH PAYMENT TO K AY JAIN HOSIERY TO LAND ACCOUNT. INSTEAD IT OPTED TO DEB IT THE SAME 6 UNDER THE HEAD 'SITE DEVELOPMENT EXPENSES UNDER BUIL DING CONSTRUCTION ACCOUNT' BY SELF PREPARED VOUCHERS ALL EGEDLY SHOWING PURCHASE OF CEMENT, SAND, BRICKS & STONE ETC. WHEN ACTUALLY THESE ITEMS WERE NEVER PURCHASED OR USED. COPY OF SHARE A PPLICATION ACCOUNT OF SANJEEV KUMAR JAIN, CAPITAL WORK IN PROGRE SS ACCOUNT AND IMPREST A/C BUILDING UNDER CONSTRUCTION IN THE BOOKS OF THE JAIN UDHAY FABRICS PVT. LTD, ARE ENCLOSED. ACTUAL EXPENSES ON CONSTRUCTION OF BUILDING STARTED MUCH LATER AND THIS FACT CAN BE GOT VERIFIED FROM AN ACTU AL VISIT TO THE LAND SITE IF CONSIDERED FEASIBLE. IN VIEW OF THE ABOVE SUBMISSIONS AND FACTUAL PO SITION, IT IS PRAYED THAT THE SAID ADDITION OF RS. 2579850/- MAY KINDLY BE DELETED SINCE THE AVAILABILITY OF THE CASH CANNOT B E DENIED WHICH WAS USED FOR MAKING CASH PAYMENTS TO KAY JAIN HOSIE RY WHO IS THE SELLER OF THE PLOT.' 5. THE LEARNED CIT (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REFERRED THE MATTER TO THE ASSESSING OFFICER FOR FILING REMAND REPORT AND THE ASSESSING OFFICER ALSO FILED REMAND REPORT ON THE M ATTER IN ISSUE. THE OBSERVATION OF THE LEARNED CIT (APPEALS ) IN PARA 5 OF THE APPELLATE ORDER READS AS UNDER : 5. THE PERUSAL OF THE SUBMISSIONS MADE BY THE APPEL LANT REVEALED THAT SPECIFIC CLAIM HAD BEEN MADE TO THE EFFECT THAT AMOUNT OF RS.25,79,850/- PAID IN CASH FOR PURCHASE OF PROPERTY FROM M/S KAY JAIN HOSIERY HAD BEEN WITHDRAWN FROM T HE PERSONAL ACCOUNT OF DIRECTOR MR.SANJEEV KUMAR JAIN. IT WAS FURTHER SUBMITTED THAT THE SAID WITHDRAWALS FROM BANK ACCOUN T IN CASH HAD BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE COMPANY UNDER THE HEAD BUILDING AND CONSTRUCTION. IT WAS ALSO CLAIMED THAT THERE HAD NOT BEEN ANY ACTUAL CONSTRUCTION OF TH E BUILDING AS RECORDED IN THE BOOKS OF ACCOUNTS BUT THE SAID MANIPU LATION HAD BEEN UNDERTAKEN IN ORDER TO GENERATE THE REQUISITE CA SH FOR PAYMENT 7 OF SAME FOR PURCHASE OF LAND. IN THIS BACKGROUND, THE AR OF THE APPELLANT CLAIMED THAT NO CONSTRUCTION ON THE GIVEN P LOT OF LAND HAD BEEN DONE WHICH COULD BE VERIFIED. IT WAS UNDER THES E CIRCUMSTANCES THAT THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE CLAIM OF THE APPELLANT AS TO WHETHER ANY CONSTRUCTI ON HAD BEEN UNDERTAKEN DURING THE YEAR UNDER CONSIDERATION OR IN THE LATER PERIOD. THE ASSESSING OFFICER VIDE HIS REPORT DATED 22.07.2014 SUBMITTED THE FOLLOWING COMMENTS AFTER VERIFICATIONS :- 'IN THIS REGARD, IT IS SUBMITTED THAT I ALONGWITH M Y INSPECTOR VISITED THE SITE NO.B-15, PUNJAB APPAREL P ARK, G.T ROAD, DORAHA (LUDHIANA), WHICH IS PURCHASED BY THE AF ORESAID COMPANY LEASED DATED 22.05.2008. IT IS A VACANT PLOT MEASURING 3969 SQ.YARDS AS PER COPY OF SITE PLAN OF THE PUNJAB APPAREL PARK, DORAHA SUBMITTED BY THE ASSESS EE. IT IS FURTHER SUBMITTED THAT THERE IS NO CONSTRUCTI ON OR ANY DEVELOPMENT ON THE ABOVE SAID PLOT OF LAND EXCEP T FOR A SMALL BOUNDARY WALL FOR ITS IDENTIFICATION WHICH TOO APPEARS TO BE VERY OLD ONE. THIS REPORT IS SUBMITTED FOR YOUR KIND PERUSAL AND IN COMPLIANCE TO YOUR ABOVE SAID OFFICE LETTER DATED 25 .06.2014. 6. THE ASSESSEE IN REJOINDER SUBMITTED AS UNDER : IN CONTINUATION TO OUR EARLIER WRITTEN ARGUMENTS DTD.11.02.2014 AND YOUR HONOUR'S DIRECTIONS TO THE LD. ASSESSING OFFICER TO VISIT THE SPOT FOR VERIFICATION OF ASSESS EE'S CONTENTION THAT ACTUALLY NO CONSTRUCTION OR DEVELOPMENT OF THE SITE PURCHASED HAD TAKEN PLACE AT ALL EVEN TILL NOW. FROM A PERUSAL OF THE INSPECTION REPORT SUBMITTED B Y THE LD. ASSESSING OFFICER, YOUR HONOUR WOULD OBSERVE TH AT THE ASSESSEE'S CONTENTION STATED IN OUR REPLY DATED 11. 02.2014 STANDS ESTABLISHED BY ACTUAL INSPECTION OF THE SITE BY THE ASSESSING OFFICER. 8 AS REGARDS BOUNDARY WALL, WHICH THE LD. ASSESSING OFF ICER HAS OBSERVED THAT THE SAME APPEARS TO BE VERY OLD, IT IS SUBMITTED THAT THE BOUNDARY WALL WAS ALREADY EXISTING AT THE TIME W HEN THE SITE WAS PURCHASED. THIS WOULD BE CLEAR FROM THE SIZED PAP ER ALREADY ENCLOSED WITH OUR EARLIER REPLY THAT THE COST OF THE BOUNDARY WALL AT RS.2,44,430/- WAS RECOVERED BY THE SELLER FROM US SEPARATELY IN ADDITION TO THE OTHER COSTS OF THE SI TE. THUS, FROM BOTH OF THE ABOVE FACTS, IT IS CLEAR THA T CASH OF RS.25,79,850/- PAID TO THE SELLER, WHICH AC CORDING TO THE ASSESSING OFFICER IS INCOME FROM UNDISCLOSED SOURCE S, ACTUALLY HAS BEEN PAID BY THE DIRECTOR OUT OF DISCLOSED SOURCES. THE SAID AMOUNT WAS ULTIMATELY DEBITED BY THE ASSESSEE COMPANY UNDE R THE HEAD 'BUILDING CONSTRUCTION ACCOUNT' BY GIVING FIC TITIOUS NAMES TO THE MATERIAL PURCHASED, THOUGH ACTUALLY NO MATER IAL WAS PURCHASED. THIS WAS DONE SINCE THE SELLER DID NOT W ISH TO TAKE THE ENTIRE PRICE BY CHEQUE AND THE ASSESSEE DID NOT HAV E ANY MONEY OTHER THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS PRAYED THAT THE ADDITION MADE BY THE LD. A.O TO THE TUNE OF RS.25,7 9,850/- MAY KINDLY BE DELETED.' 7. THE LEARNED CIT (APPEALS) CONSIDERING THE MATER IAL ON RECORD, REMAND REPORT AND SUBMISSIONS OF THE ASS ESSEE DELETED THE ADDITION. THE FINDINGS OF THE LEARNED CIT (APPEALS) IN PARA 7 OF THE APPELLATE ORDER ARE REPR ODUCED AS UNDER : 7. I HAVE CONSIDERED THE FACTS OF THE CASE, THE B ASIS OF ADDITION MADE BY THE ASSESSING OFFICER AND THE SUBMIS SIONS OF THE AR OF THE APPELLANT AND THE VERIFICATION ON THE SAME CARRIED OUT BY THE ASSESSING OFFICER. THE APPELLANT HAD ACCEPTED TH E FACT THAT NO CONSTRUCTION HAD BEEN UNDERTAKEN ON THE IMPUGNED PLO T OF LAND EITHER DURING THE YEAR UNDER CONSIDERATION OR TILL DATE. T HE CLAIM OF THE APPELLANT TO THE EFFECT THAT THE ENTRIES MADE IN TH E BOOKS OF 9 ACCOUNTS UNDER THE HEAD 'LAND AND DEVELOPMENT EXPEN SES' WERE INTENDED TO GENERATE CASH SO AS TO MAKE CASH PAYMENT S TO THE IMPUGNED SELLER SEEMS TO BE CORRECT. IF THE SAID E NTRIES REGARDING EXPENDITURE OF LAND AND BUILDING CONSTRUC TION WERE FACTUALLY INCURRED, THEN THERE IS NO WAY THE C ORRESPONDING CONSTRUCTION IN THE FORM OF BUILDING WOULD NOT HAVE BEEN THERE. SIMILAR CLAIM HAD BEEN MADE BY THE APPELLANT IN RESPEC T OF LAND AND DEVELOPMENT EXPENSES DEBITED IN THE YEAR 2009- 10 IN THE CASE' OF M/S JAIN UDHAY FABRICS PVT. LTD. AND ON VE RIFICATION BY THE ASSESSING OFFICER FULLY DEVELOPED BUILDING WAS SAID TO BE EXISTING ON THE PLOT OF LAND PURCHASED BY M/S JAIN UDHAY FAB RICS PVT. LTD. IT WAS UNDER THE GIVEN CIRCUMSTANCES THAT THE CLAIM OF APPELLANT OF HAVING GENERATED CASH BY MANIPULATING BOOKS OF ACCO UNTS WAS FOUND TO BE NOT ACCEPTABLE AND SAID ADDITION HAD BEEN CON FIRMED. HOWEVER SINCE NO B UILDING HAS BEEN FOUND TO BE CONSTRUCTED, AS PER THE REPORT OF THE ASSESSING OFFICER, THE CLAIM OF THE APPELLANT ON THE ISSUE CANNOT BE SAID TO BE INCORRECT OR WITHOUT ANY BASIS. IT IS A MATTER OF FACT AS ESTABLISHED BY THE SEIZED RECORD THAT PAYMENTS IN CASH TO THE TUNE OF RS.25,79,850/- HAD BEEN MADE FOR PURCHASE OF PLOT, HOWEVER THE SOURCE THEREOF HAS BEEN EXPLAINED AS BOGUS ENTRIES IN THE BOOKS OF ACCOUNTS UNDER THE HEAD LAN D AND DEVELOPMENT EXPENSES. IN VIEW OF THE ABOVE DETAILED ANALYSIS OF FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED ENT RIES IN THE BOOKS OF ACCOUNTS UNDER THE HEAD LAND AND DEVELOPMENT EXPE NSES HAVE NOT BEEN FOUND TO BE CORRECT. IN THE CIRCUMSTANCES , THE NEXT QUESTION ARISES AS TO WHERE THE SAID WITHDRAWAL OF AMOUNT OF CASH HAS BEEN UTILIZED. THE PURCHASE OF LAND BY THE APPELLANT IN SAME YEAR INVOLVING PAYMENT OF CORRESPONDING AMOUNT OF CASH AS EVIDENCED BY SEIZED RECORD IS CLEARLY THE ANSWER TO THE QUESTION. IN THE CIRCUMSTANCES, IT WOULD BE WRONG TO CONCLUDE THAT SOURCE OF SAID CASH IS UNACCOUNTED REQUIRING ADDITION. THE SAID CASH HA D BEEN GENERATED FROM THE REGULAR BOOKS OF ACCOUNTS AS DET AILED ABOVE BY WRONGLY TERMING THE SAME AS 'LAND AND DEVELOPMENT E XPENSES'. THEREFORE, NO CASE FOR SEPARATE ADDITION ON THIS ACCOU NT IS CALLED FOR. SAME IS THEREFORE DIRECTED TO BE DELETED. IN THE RESULT APPEAL IS ALLOWED. 10 8. WE HAVE HEARD THE LEARNED D.R FOR THE REVENUE AND LEARNED COUNSEL FOR ASSESSEE AT LENGTH AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 9. THE LEARNED COUNSEL FOR ASSESSEE ALSO PLACED ON RECORD COPY OF LEASE DEED OF PLOT NO.B-15, PUNJAB A PPAREL PARK, G.T. ROAD, DORAHA DATED 22.5.2008. THE CONSIDERATION OF THE LEASE DEED IS RS.28,77,525/-. IT IS NOT IN DISPUTE THAT DURING THE COURSE OF SEARCH OPERATI ON THE SEIZED DOCUMENT WAS FOUND AND RECOVERED FROM THE RESIDENCE OF THE DIRECTOR OF ASSESSEE COMPANY WHICH REVEALED THAT AN AMOUNT OF RS.91,54,835/- HAS BEEN PAID FOR PURCHASE OF THE LAND SITUATED AT PLOT NO.B-15, PUNJAB APPAREL PARK, G.T. ROAD, DORAHA. THE ASSESSEE NEV ER DISPUTED THE CONTENTS OF THE ABOVE SEIZED DOCUMENT FOUND DURING THE COURSE OF SEARCH. SECTION 292C OF THE A CT WOULD ALSO APPLY AGAINST THE ASSESSEE AND PRESUMPTION SHA LL BE LAID AGAINST THE ASSESSEE THAT THE SEIZED DOCUMENT BELONGED TO THE ASSESSEE COMPANY. THE LEARNED COUNSEL FOR A SSESSEE ALSO DURING THE COURSE OF ARGUMENTS DID NOT DISPUTE THE CONTENTS OF THE SEIZED DOCUMENT REVEALING THAT THE AMOUNT OF RS.91,54,835/- HAD BEEN PAID FOR PURCHASE OF THE ABOVE PLOT. PART OF THE PAYMENT HAD BEEN MADE BY CHEQUE AND THE DISPUTE IS OF THE CASH PAYMENT TO THE PURCHASER OF RS.25,79,850/-. THE ASSESSEE AT THE ASSESSMENT ST AGE CLAIMED THAT THE CASH AMOUNT OF RS.25,79,850/- HAD BEEN BOOKED UNDER THE HEAD LAND AND SITE DEVELOPMENT EX PENSES 11 INSTEAD OF LAND ACCOUNT. LATER ON THE ASSESSEE, HOWEVER, STATED THAT THESE EXPENSES WERE CLAIMED THROUGH SEL F PREPARED VOUCHERS SHOWING PURCHASE OF CEMENT, SAND, BRICKS AND STONE, ETC. HOWEVER, ACTUALLY THESE IT EMS WERE NEVER PURCHASED OR USED. IT WAS, THEREFORE, CLEAR THAT THE ASSESSEE MANIPULATED THE BOOK ENTRIES FOR THE PURPO SE OF SHOWING THE AMOUNT IN QUESTION CLAIMING IT TO BE TH ROUGH EXPLAINED SOURCES. THE LEARNED CIT (APPEALS) ALSO OBSERVED IN HIS FINDINGS THAT THE CLAIM OF THE ASSESSEE OF G ENERATING CASH BY MANIPULATING BOOKS OF ACCOUNT WAS FOUND TO BE NOT ACCEPTABLE AND THE SAID ADDITION HAS BEEN CONFIRMED . THE LEARNED CIT (APPEALS), HOWEVER, ON BUILDING CONSTRU CTION THAT NO CONSTRUCTION HAVE BEEN RAISED ON THE PLOT A ND THAT THE WITHDRAWAL OF THE AMOUNT OF CASH HAD BEEN UTILI ZED, DELETED THE ADDITION. THE LEARNED CIT (APPEALS) F URTHER OBSERVED THAT THE SOURCE OF THE AMOUNT IN QUESTION HAS BEEN CLAIMED THROUGH BOGUS ENTRIES IN THE BOOKS OF ACCOU NT. THEREFORE, ON GIVING SUCH OBSERVATION AGAINST THE A SSESSEE, THE LEARNED CIT (APPEALS) SHOULD NOT HAVE DELETED T HE ADDITION. THE LEARNED CIT (APPEALS) ALSO FAILED T O APPRECIATE AND CONSIDER THE MATERIAL ON RECORD. T HE LEARNED CIT (APPEALS) ACCEPTED THE WITHDRAWAL OF TH E AMOUNT FOR THE PURPOSE OF EXPLAINING THE AMOUNT IN QUESTION. THE ASSESSEE HAS FILED COPIES OF THE AC COUNT OF SHRI SANJEEV KUMAR JAIN FROM 1.4.2007 TO 31.3.2008 IN THE BOOKS OF ACCOUNT OF JAIN UDAY HOSIERY (P) LTD., FRO M WHERE THE FUNDS WERE TRANSFERRED TO HIS SAVING BANK ACCOU NT IN STATE BANK OF INDIA AT PAGES 8 AND 9 TO SHOW WITHDR AWAL OF 12 THE DIRECTOR FROM ANOTHER COMPANY. FURTHER COPIES OF THE SAVING ACCOUNT WITH SBI OF SHRI SANJEEV KUMAR JAIN FROM 1.4.2007 TO 31.3.2008 IN HIS BOOKS OF ACCOUNT SHOWI NG WITHDRAWAL OF CASH AMOUNT OUT OF WHICH SHARE APPLIC ATION MONEY FOR RS.40 LACS WERE GIVEN TO THE ASSESSEE COM PANY IS FILED AT PAGES 10 TO 12. COPIES OF THE SAVING BAN K STATEMENT OF SBI OF SHRI SANJEEV KUMAR JAIN FROM 1. 4.2007 TO 31.3.2008 ARE FILED AT PAGES 13 TO 28 FROM WHERE CASH WAS WITHDRAWN. COPY OF CASH IN HAND IN THE BOOKS OF SHRI SANJEEV KUMAR JAIN FROM 1.4.2007 TO 31.3.2008 IS FI LED AT PAGES 29 OF THE PAPER BOOK. COPY OF SHRI SANJEEV KUMAR JAIN SHARE APPLICATION ACCOUNT IS FILED AT PAGE 30 TO SHOW ON 31.3.2008 CASH OF RS.40 LACS HAS BEEN RECEIVED F OR SHARE APPLICATION MONEY. COPIES OF IMPREST ACCOUNT BUIL DING UNDER CONSTRUCTION FOR 1.4.2008 TO 31.3.2009 FROM W HERE AMOUNTS WERE SHOWN AS USED IN CONSTRUCTION TO SQUA RE UP THE ACCOUNT ARE FILED AT PAGES 32 TO 35. THE LEAR NED COUNSEL FOR ASSESSEE BY REFERRING TO THESE DOCUMENT S SUBMITTED THAT THE DIRECTOR SHRI SANJEEV KUMAR JAIN HAS WITHDRAWN RS.40 LACS FROM 1.4.2007 TO 31.3.2008 (PB -29) WHICH WAS SUFFICIENT TO EXPLAIN THE SOURCE OF AMOUN T IN QUESTION FOR PURCHASE OF THE PLOT. HE HAS, HOWEVE R, SUBMITTED THAT THE SAME AMOUNT WAS WRONGLY SHOWN FO R GIVING OF SHARE APPLICATION MONEY WHICH WAS MERE EN TRY. THE CONTENTION OF THE LEARNED COUNSEL FOR ASSESSEE IS WHOLLY INCORRECT AND IS NOT ACCEPTABLE. ONCE THE ASSESSE E 13 MANIPULATED THE BOOKS ENTRY IN THE BOOKS OF ACCOUNT TO SHOW INITIALLY THAT THE CASH PAYMENTS WERE BOOKED U NDER THE HEAD LAND AND SITE DEVELOPMENT EXPENSES, WOUL D CLEARLY DISAPPROVE THE CONTENTION OF THE ASSESSEE. THE ASSESSEE ACCEPTED THIS FACT IN THE REPLY BEFORE THE LEARNED CIT (APPEALS) THAT IN FACT, NO BUILDING MATERIAL WA S PURCHASED AND USED. THEREFORE, INITIALLY THE CLAI M OF THE ASSESSEE OF USING THE MATERIAL FOR SITE DEVELOPMENT EXPENSES WAS FOUND TO BE INCORRECT. THE ASSESSEE FURTHER TRIED TO EXPLAIN THAT THE AMOUNT WAS WITHDRAWN BY S HRI SANJEEV KUMAR JAIN FROM THE COMPANY AND LATER ON TRANSFERRED TO HIS ACCOUNT FROM WHERE THE CASH WAS WITHDRAWN. THE EXPLANATION OF THE ASSESSEE IS ALS O FALSE AND FABRICATED. THE COPIES OF THE STATEMENTS REFE RRED TO ABOVE PERTAINED TO THE PERIOD FROM 1.4.2007 TO 31.3 .2008. THE LEASE DEED OF THE PROPERTY IN QUESTION IS, HOWE VER, DATED 22.5.2008. IT WOULD, THEREFORE, CLEARLY PROV E THAT THE AMOUNT IN QUESTION WITHDRAWN BY SHRI SANJEEV KUMAR JAIN HAS NO CONNECTION WITH THE LEASE DEED IN QUESTION. NO PURCHASER WITHOUT ENTERING INTO THE DEAL TO PURCHAS E THE PROPERTY WOULD WITHDRAW THE SMALL AMOUNTS IN WHOLE OF THE YEAR IN ANTICIPATION TO PURCHASE THE PROPERTY AND WHEN THE PROPERTY IS PURCHASED BY THE ASSESSEE COMPANY, THE ASSESSEE COMPANY HAS FAILED TO WITHDRAW ANY AMOUNT, THEREFORE, THERE WAS NO REASON FOR THE DIRECTOR TO WITHDRAW SMALL AMOUNT IN WHOLE OF THE YEAR IN EARLIER YEARS. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE AMOUN T AS WITHDRAWN BY SHRI SANJEEV KUMAR JAIN IS AVAILABLE T O THE 14 ASSESSEE COMPANY FOR EXPLAINING THE AMOUNT IN QUEST ION, WAS WHOLLY INCORRECT. FURTHER THE CLAIM OF THE AS SESSEE IS FACTUALLY INCORRECT BECAUSE LEDGER OF SHRI SANJEEV KUMAR JAIN (CASH IN HAND)(PB-29) SHOWS THAT THE AMOUNT OF WITHDRAWAL OF RS.40 LACS WAS PAID TO JAIN UDHAY INTERNATIONAL (P) LTD. FOR SHARE APPLICATION MONEY ON 31.3.2008 AND ACCORDING TO THE STATEMENT OF LEARNED COUNSEL FOR ASSESSEE THE SHARE APPLICATION MONEY ENTRY WAS ALSO BOGUS WOULD CLEARLY SHOW THAT THE ASSESSEE WAS MANIPULATING AND MAKING BOGUS ENTRY SO AS TO EXPLAI N THE SOURCE OF INVESTMENT IN PROPERTY. THEREFORE, THER E IS NO QUESTION OF ACCEPTING THE EXPLANATION OF THE ASSESS EE FOR THE SOURCE OF INVESTMENT IN THE PROPERTY. THE LEARNED CIT (APPEALS) WITHOUT APPRECIATING THE FACTS AND CIRCUM STANCES OF THE CASE AND WITHOUT ANY VALID AND COGENT REASON S SHOULD NOT HAVE DELETED THE ADDITION. THUS THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE CASH IN QUESTION. TH EREFORE, THE LEARNED CIT (APPEALS) SHOULD NOT HAVE DELETED T HE ADDITION. 10. CONSIDERING THE TOTALITY OF THE FACTS, CIRCUMSTANCES, MATERIAL ON RECORD AND BOGUS ENTRIES MADE BY THE ASSESSEE AND ITS DIRECTOR IN THE BOOKS OF AC COUNT CLEARLY SUGGEST THAT THE ASSESSEE HAS FAILED TO EXP LAIN THE SOURCE OF PAYMENT OF CASH OF RS.25,79,850/-. THER EFORE, THE ORDER OF THE LEARNED CIT (APPEALS) CANNOT BE SU STAINED IN LAW. THE SAME IS LIABLE TO BE REVERSED. 15 11. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION, THE ORDER OF THE LEARNED CIT (APPEALS) IS SET ASIDE AND REVERSED AND THE ORDER OF THE ASSESSING OFFICER IS RESTORED. 12. IN THE RESULT, DEPARTMENTAL APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF APRIL, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 8 TH APRIL, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH