SHRI MANGI KANDOI, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

ITA 1168/JPR/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6499 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 10-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRISH BEDI DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Unexplained investment; Unexplained expenditure; Invalid notice; Gift; Business income; Income from undisclosed sources; Search and seizure; Salary income; Loose papers; Document seized; Principle of natural justice; Valuation report; Notional interest; Documents seized; Reassessment proceedings
• Section: 69C; 143(3); 153A; 250; 143(2); 69A; 64; 43; 48; 73; 72; 13; 153; 22; 153C; 132; 12; 63

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 1309/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 SHRI MANGI LAL KANDOI, D-91, AMBA BARI, JAIPUR. CUKE VS. D.C.I.T., CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ACMPK 6560 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 1090/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 SHRI MANGI KANDOI, D-91, AMBA BARI, JAIPUR. CUKE VS. D.C.I.T., CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ACMPK 6560 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 1091/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 SHRI MANGI KANDOI, D-91, AMBA BARI, JAIPUR. CUKE VS. D.C.I.T., CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ACMPK 6560 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 1168/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 SHRI MANGI KANDOI, D-91, AMBA BARI, JAIPUR. CUKE VS. D.C.I.T., CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ACMPK 6560 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 2 VK;DJ VIHY LA -@ ITA NO. 1306/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 A.C.I.T., CENTRAL CIRCLE-3, JAIPUR. CUKE VS. SHRI MANGI LAL KANDOI, D-91, AMBA BARI, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ACMPK 6560 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 1307/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 A.C.I.T., CENTRAL CIRCLE-3, JAIPUR. CUKE VS. SHRI MANGI LAL KANDOI, D-91, AMBA BARI, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: ACMPK 6560 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI AMRISH BEDI (CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/08/2020 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 07/09/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THESE ARE THE APPEALS AND CROSS APPEAL FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE SEPARATE ORDERS OF LD.CIT(A)-IV, JAIPUR DATED 01/11/2018 AND 04/09/2018 FOR THE A.YS. 2010-11 TO 2014-15 RESPECTIVELY IN THE MATTER OF ORDER PASSED U/S 143(3) READ WITH SECTION 153A AND 245HA OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 3 2. IN ALL THESE APPEALS AND CROSS APPEAL, COMMON ISSUES ARE INVOLVED, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, A COMMON ORDER IS BEING PASSED. 3. THE HEARING OF THE APPEALS WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PANDEMIC. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVED INCOME FROM SALARY AND OTHER SOURCES DURING THE YEARS UNDER CONSIDERATION. A SEARCH WAS CONDUCTED ON 18.07.2012 IN THE CASE OF THE ASSESSEE GROUP. THE ASSESSEE IS HEAD OF FAMILY SO HE UNDERTAKEN TO PAY ALL THE DUE TAXES AND ALSO UNDERTAKE OTHER RESPONSIBILITIES. THE SEARCH WAS CONDUCTED ON 18.07.2012. DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) OF THE INCOME TAX ACT, 1961 THE ASSESSEE HAS ADMITTED TOTAL SURRENDERED OF RS. 15.89 CRORES IN THE HANDS OF ALL THE FAMILY MEMBERS. THE DETAILS OF SURRENDER ADMITTED ARE AS UNDER: - SR.NO. PARTICULARS SURRENDER IN THE HANDS OF AMOUNT REMARKS 1 ON ACCOUNT OF LOANS AND ADVANCES AS PER EXHIBIT-4, 5 & 6 MANGI LAL KANDOI 86000000 2 SEIZED DOCUMENTS MANGI LAL KANDOI 2500000 SET OFF IS CLAIMED 3 SEIZED DOCUMENTS MANGI LAL KANDOI 4924000 4 SEIZED DOCUMENTS MANGI LAL KANDOI 1241200 4 JEWELLERY AND OTHER DISCREPANCIES MANGI LAL KANDOI 40000000 SUBJECT TO VERIFICATION AND CLARIFICATION ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 4 5 SALE OF PLOT AT ARPIT NAGAR RAJKUMAR KANDOI AND SADHNA KANDOI 24300000 SET OFF IS CLAIMED TOTAL 158965200 THE YEAR-WISE BIFURCATION OF SURRENDER MADE IS AS UNDER: - SR.NO. A.Y. SURRENDER ON A/C OF ADVANCES AMOUNT OF JEWELLERY AND OTHER SURRENDER OTHER SEIZED DOCUMENTS SALE OF ARPIT NAGAR LAND TOTAL 1 2008-09 150000 0 0 0 150000 2009-20 200000 0 0 0 200000 2010-11 0 0 600000 0 600000 2011-12 3300000 0 0 24300000 27600000 2012-13 56850000 0 4924000 0 61774000 2012-13 0 0 450000 0 450000 2013-14 25500000 40000000 2500000 0 68000000 2013-14 0 0 191200 0 191200 TOTAL 86000000 40000000 8665200 24300000 158965200 4. IN THE A.Y. 2008-09, 2009-10 AND 2010-11, THE A.O. MADE ADDITION OF RS. 1.50 LACS, RS.2.00 LACS AND RS.6.00 LACS RESPECTIVELY ON ACCOUNT OF ALLEGED UNDISCLOSED ADVANCES MADE BY THE ASSESSEE WHICH WAS CONFIRMED BY THE LD. CIT(A). 5. IN THE A.Y. 2011-12, THE A.O. MADE ADDITION OF RS. 34,34,440/- ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCES MADE BY THE ASSESSEE AND ALSO MADE ADDITION OF RS. 2.43 CRORES ON ACCOUNT OF UNDISCLOSED INCOME FROM SALE OF ARPIT NAGAR LAND. IT WAS THE CONTENTION OF THE LD AR OF THE ASSESSEE THAT THIS PROFIT WAS UTILIZED FOR MAKING ADVANCES IN THE SUBSEQUENT YEAR. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 5 6. IN THE A.Y. 2012-13, THE A.O. MADE ADDITION OF 5,68,50,000/- ON ACCOUNT OF ADVANCES GIVEN TO VARIOUS PERSONS. FURTHER ADDITION OF RS. 49,24,000/- WAS MADE ON ACCOUNT OF UNDISCLOSED ADVANCES. A FURTHER ADDITION OF RS. 4.50 LACS WERE MADE BY THE A.O. ON PRESUMPTION BASIS IN THE A.Y. 2012-13. 7. IN THE A.Y. 2013-14, THE A.O. MADE ADDITION OF RS. 2,55,00,000/- ON ACCOUNT OF ADVANCES MADE BY THE ASSESSEE ON THE BASIS OF SEIZED DOCUMENTS. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 15.00 LACS MADE ON ACCOUNT OF SCRAP TRADING. THE A.O. HAD ALSO MADE ADDITION OF RS. 25.00 LACS ON ACCOUNT OF ALLEGED UNDISCLOSED ADVANCES MADE BY THE ASSESSEE ON THE BASIS OF SEIZED DOCUMENTS. HOWEVER, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 1,18,12,662/- MADE BY THE A.O. ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCES OF RS. 2.55 CRORES. THE A.O. ALSO MADE ADDITION OF RS. 49,160/- ON ACCOUNT OF INTEREST INCOME EARNED ON ADVANCES OF RS. 25.00 LACS. 8. A FURTHER ADDITION OF RS. 1,91,200/- MADE BY THE A.O. IN THE A.Y. 2013-14 ON ACCOUNT OF ADVANCES AND THE SAME WAS CONFIRMED BY THE LD. CIT(A). 9. AN ADDITION OF RS. 2,09,63,520/- WAS MADE BY THE A.O. ON ACCOUNT OF JEWELLERY FOUND DURING THE COURSE OF SEARCH BY TREATING THE SAME AS ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 6 UNEXPLAINED. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 97,65,444/- OUT OF THE ADDITION MADE ON ACCOUNT OF JEWELLERY. 10. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 2,03,965/- MADE BY THE A.O. ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCES OF RS. 25.00 LACS. FURTHER THE LD. CIT(A) HAS ALSO DELETED THE ADDITION OF RS. 6,87,125/- MADE BY THE A.O. ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCES OF RS. 49.24 LACS. 11. THE LD. CIT(A) ALSO DELETED ADDITION OF RS. 2,06,257/- MADE BY THE A.O. ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCES OF RS. 12.41 LACS. 12. DURING THE COURSE OF ASSESSMENT, THE A.O. HAD ALSO MADE ADDITION OF RS. 4.00 CRORES ON ACCOUNT OF UNEXPLAINED TRANSACTIONS WHICH WAS DELETED BY THE LD. CIT(A). 13. THE LD. CIT(A) HAS ALSO DELETED ADDITION OF RS. 1,11,98,057/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY. THE LD. CIT(A) HAD ALSO DELETED ADDITION OF RS. 56,39,819/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. AGAINST THE ADDITION UPHELD BY THE LD. CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 7 HOWEVER, AGAINST THE ADDITION DELETED BY THE LD. CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE THE ITAT. 14. IT WAS ARGUED BY LD AR OF THE ASSESSEE THAT DURING THE COURSE OF SEARCH NO INCRIMINATING DOCUMENT OR OTHER MATERIAL WAS FOUND ESTABLISHING ANY UNDISCLOSED INCOME IN THE HANDS OF ASSESSEE. THE A.O INDULGED IN MAKING ADDITION ON THE ASSUMPTION AND PRESUMPTION WITHOUT BRINGING ANY MATERIAL ON RECORD. SUCH ADDITIONS WERE IN RESPECT OF SCRAP INCOME OF RS. 5,00,000/- OF WHICH NO PAPER WAS FOUND DURING THE COURSE OF SEARCH. THE ADDITION WAS MADE SIMPLY ON THE BASIS OF DISCLOSURE OF SUCH INCOME BEFORE THE SETTLEMENT COMMISSION WHICH WAS DONE TO MEET THE COMPLIANCE OF THE PROVISIONS OF SECTION 245C(1). THE ADDITION STANDS DELETED BY THE LD.CIT(A) BEING WITHOUT ANY BASIS. SIMILARLY, ADDITION MADE ON ACCOUNT OF NOTIONAL INTEREST OF RS. 3035/- AND RS. 60750/- ALSO STAND DELETED AS NO PAPER WAS FOUND RELATING TO THESE PAPERS. 15. WITH REGARD TO ADDITION OF RS. 6.00 LACS IN THE A.Y. 2010-11 WITH REFERENCE TO PAGE NO. 1 & 2 OF ANNEXURE A-1 SEIZED FROM D-91, AMBA BARI, JAIPUR, IT WAS CONTENDED BY THE LD. AR THAT THE ASSESSEE WAS EXAMINED U/S 132(4) OF THE ACT. THE REPLY OF THE ASSESSEE IS CONTAINED IN RESPONSE TO QUESTION NO. 25. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 8 16. AS PER LD. AR THESE DOCUMENTS PERTAIN TO SHRI ANAND SINGHAL. SHRI ANAND SINGHAL ALSO ADMITTED THAT THE PAGES WERE IN HIS HANDWRITING AND HE AGREED FOR PAYING TAX ON THE UNDISCLOSED AMOUNT OF RS. 6,00,000/- AS NOTED ON THESE PAPERS. THE APPARENTLY THE CONTENTS OF THESE PAGES COULD NOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE. THE A.O. COULD NOT BE IGNORANT OF THE POSITION OF LAW. BOTH THE A.O. AND FOR THAT MATTER THE ASSESSEE CANNOT CHANGE THE POSITION OF LAW BY MUTUALLY AGREEING ON SOME ISSUES. IT IS SETTLED POSITION OF LAW THAT WHAT IS OTHERWISE NOT TAXABLE CANNOT BECOME TAXABLE BECAUSE OF THE ADMISSION OF THE ASSESSEE NOR CAN THERE BE ANY WAIVER OF THE RIGHT OTHERWISE ADMISSIBLE TO THE ASSESSEE IN LAW. THE CHARGEABILITY OF INCOME IS NOT DEPENDENT ON THE ADMISSION OF OR WAIVER BY THE ASSESSEE. CHARGEABILITY IS DEPENDENT ON THE CHARGING SECTION OF THE INCOME TAX ACT WHICH NEEDS TO THE STRICTLY CONSTRUED AND FOLLOWED. CIT VS. BHASKAR MITTAR 262 ITR 638 (KOL). 17. IN VIEW OF THE ABOVE CONTENTION OF THE LD AR THAT THERE WAS NO CASE FOR TAKING ACTION U/S 153A IN THE HANDS OF HET ASSESSEE THERE BEING NO MATERIAL RELATING TO HIM FOUND DURING THE COURSE OF SEARCH. PLETHORA OF DECISIONS WERE CITED WHEREIN IT HAS BEEN HELD THAT IF DURING THE COURSE OF SEARCH NO UNDISCLOSED INCOME IS NOTICED, ACTION U/S 153A IS NOT TRIGGERED. THE FOLLOWING CASE LAWS ARE RELIED ON: - ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 9 (I) DCIT VS. ROYAL MARWAR TOBACCO PRODUCT (P.) LTD [2009] 29 SOT 53 (AHD.)(URO): SINCE NO MATERIAL INDICATING ANY SUPPRESSED SALES FOR ASSESSMENT YEARS 2000-01 TO 2003-04 HAD BEEN FOUND DURING COURSE OF SEARCH FOR SAID YEARS, AND THERE WAS NO DEFECT IN BOOKS OF ACCOUNT, ASSESSING OFFICER WAS NOT. JUSTIFIED, IN MAKING ADDITION FOR SAID YEARS ON BASIS OF MATERIAL SEIZED RELATING TO ASSESSMENT YEAR 2004- 05. (II) IN KUSUM GUPTA V. DCIT (ITA NOS. 4873/DEI2009, (2005- 06) 2510(A.Y. 2003-04), 3312 (A.Y. 2004-05) 2833/DEL/2011 (A.Y. 2006-07) ORDER DT. 28-032013): ITAT DELHI BENCH ALSO HELD AS UNDER: '10. ON PERUSAL OF THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION AND OTHERS IN QUESTION IN THE APPEALS BEFORE US, WE FIND SUBSTANCE IN THE CONTENTION OF LD. AR THAT NO INCRIMINATING MATERIAL FOUND OR STATEMENT RECORDED DURING THE COURSE OF SEARCH WAS THERE TO SUGGEST EVEN PRIMA FACIE THAT SOME UNDISCLOSED INCOME WAS THERE TO ATTRACT THE INVOCATION OF THE PROVISIONS LAID DOWN U/ S 153 A OF THE ACT FOR THE ADDITION AS PER THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL ON THE ISSUE IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. VS. DCIT (SUPRA). AS DISCUSSED ABOVE THE RATIO LAID DOWN IS THAT WHEN NO ASSESSMENT HAS BEEN ABATED, ADDITION IN THE ASSESSMENT U/S 153A CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL RECOVERED DURING SEARCH. RESPECTFULLY FOLLOWING THIS DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL WE HOLD THAT IN THE A. Y. INVOLVED IN THE APPEAL SINCE ASSESSMENT HAS BEEN ABATED, ADDITION MADE IN THE ASSESSMENT U/ S 153A , IN ABSENCE OF ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 10 INCRIMINATING MATERIAL RECOVERED OR STATEMENT RECORDED DURING THE SEARCH, SHOWING NON-GENUINENESS OF GIFTS WAS BEYOND JURISDICTION, HENCE ADDITION SO MADE AT RS. 20,00,000/- ON ACCOUNT OF NON- GENUINENESS OF THE GIFT WHICH WAS NOT MADE IN THE ORIGINAL ASSESSMENT U/ S 153(3) OF THE ACT, WAS RIGHTLY DELETED BY THE LD. CIT(A) WITHOUT COMMENTING ON MERITS OF IT. THE SAME IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED.' THE ISSUES ARISES FROM THOSE PROCESSED RETURN CAN BE RAISED ONLY WHEN SOME MATERIALS FOUND AGAINST THE ASSESSEE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANIL KR. BHATIA SITED IT SUPRA HELD THAT ASSESSMENT U/S 153(A) WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT HAS ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. THE EXPIRY OF TIME FOR ISSUING NOTICE U/S 143(2) OF THE ACT TAKES AWAY THE JURISDICTION OF THE AO FOR ISSUING NOTICE U/S 143(2). IT IS JURISDICTIONAL POWER AVAILABLE WITH THE AO TO BE EXERCISED IN A GIVEN PERIOD. ONCE, IT IS EXERCISED THEN IT CAN BE COMPLETED ONLY BY MAKING ORDER U/S 143(3) OF THE ACT WITHIN THE TIME AVAILABLE U/S 153(1) OF THE ACT. ONCE SEARCH TAKES PLACE U/S 132(1) OF THE ACT AND COMPLETION OF PROCEEDING IS PENDING ON THAT DATE THEN SUCH PROCEEDINGS ABATE. THUS, THE SCOPE OF ASSESSMENT U/S 153A DEPENDS UPON WHETHER ANY ASSESSMENT OR REASSESSMENT PROCEEDINGS WERE PENDING OR COMPLETED ON THE DATE OF THE SEARCH. WHENEVER THE ABATED PROCEEDINGS ARE MERGED WITH THE PROCEEDINGS U/S 153A THEN SCOPE OF ASSESSMENT IS VIDE AND IT WILL COVER ALL ISSUES ARISING FROM THE ORIGINAL RETURN AND ISSUE ARISING ON THE BASIS OF INCRIMINATING DOCUMENTS, AND ASSETS FOUND AND SEIZED ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 11 DURING THE SEARCH. WHEREVER THE PROCEEDINGS ARE COMPLETED PRIOR TO THE SEARCH THEN NOTHING MERGES WITH PROCEDING U/S 153 A OF THE ACT AND NOTHING ABATES. IN SUCH A SITUATION, THE AO HAS TO RESPECT THE COMPLETENESS OF THE PROCEEDINGS. ADMITTEDLY, IN THE CASE OF ASSESSEE, NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THE PROVISIONS OF SECTION 153A GIVE POWER TO ASSESSING OFFICER TO ASSESS AND REASSESS THE INCOME. THE ASSESSING OFFICER IS EMPOWERED TO MAKE ADDITION ON ACCOUNT OF UNDISCLOSED INCOME OR INCOME ESCAPED ASSESSMENT. IN THE CASE UNDER CONSIDERATION, THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE TIME PERIOD FOR ISSUING NOTICE U/S 143(2) WAS ALREADY EXPIRED PRIOR TO THE DATE OF SEARCH. THEREFORE, THE PROCEEDINGS DO NOT GET ABATED BY VIRTUE OF PROVISO TO SECTION 153A . IN VIEW OF THE FACTS OF THE CASE IT IS SUBMITTED WHEN THERE WAS NO MATERIAL FOUND DURING SEARCH WARRANTING ACTION U/S 153A, THE LD. ASSESSING OFFICER HAS NO POWER TO FRAME THE ASSESSMENT U/S 153A. THE ISSUE HAS NOW BEEN DECIDED BY THE JURISDICTIONAL HIGH COURT OF RAJASTHAN IN THE CASE OF JAI STEEL INDIA VS. ACIT 88 DTR 1. THE HON'BLE HIGH COURT HAS HELD AS UNDER 'SECTION 153A CANNOT BE READ IN ISOLATION, IN AS MUCH AS, THE SAME IS TRIGGERED ONLY ON ACCOUNT OF ANY SEARCH/REQUISITION U/S 132 OR 132A. IF ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURT OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH, SUCH BOOKS OF ACCOUNTS OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO CONSIDERATION WHILE ASSESSING OR REASSESSING THE TOTAL INCOME UNDER THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 12 PROVISIONS OF S. 153A. EVEN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERATION. THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF S. 132 OR S. 132A, IN AS MUCH AS IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE.' THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT PROCEEDINGS U/S 153A ARE WARRANTED ONLY ON EXISTENCE OF INCRIMINATING MATERIAL WHICH IN THIS CASE WAS ABSENT. BESIDES THE AFORESAID DECISION OF THE JURISDICTIONAL HIGH COURT OF RAJASTHAN THE HON'BLE BENCH IS ALSO TAKING CONSISTENT VIEW FOLLOWING THE DECISION OF KABUL CHAWLA OF DELHI HIGH COURT IN ITA NO. 707/2014 DATED 22.08.2015. IN THE CASE OF THE ASSESSEE GROUP SEARCH WAS CONDUCTED ON 28.07.2016. DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL WAS FOUND AGAINST THE ASSESSEE RELATING TO THIS ASSESSMENT YEAR. AS SUCH THERE WAS NO CASE WITH THE LD. ASSESSING OFFICER FOR HAVING ANY SATISFACTION AS REQUIRED UNDER THE LAW FOR INITIATING PROCEEDINGS U/S 153A. THE PROCEEDINGS U/S 153A ARE CALLED FOR ONLY IF IN THE CASE OF SEARCH ANY INCRIMINATING MATERIAL IS FOUND AGAINST THE ASSESSEE. THERE WAS NO CASE WITH THE LD. ASSESSING OFFICER FOR HAVING ANY SATISFACTION FOR INITIATING PROCEEDING U/S 153A. THUS THERE IS NO VALID FOUNDATION FOR ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 13 ISSUING NOTICE U/S 153A AND HENCE THE ASSESSMENT CANNOT BE FRAMED ON THE STRENGTH OF SUCH AN INVALID NOTICE WHICH IS AB-INITIO VOID. IT IS SUBMITTED THAT DURING THE COURSE OF SEARCH ABSOLUTELY NO PAPERS OR ANY INCRIMINATING MATERIAL WAS SEIZED. NO STATEMENTS WERE RECORDED U/S 132(4) IN RESPECT OF ANY ISSUE FOR YEAR UNDER CONSIDERATION . THE PROVISIONS OF SECTION 153A TRIGGER ONLY WHEN THERE EXIST ANY INCRIMINATING MATERIAL FOUND DURING SEARCH WHICH MAY BE IN THE FORM OF ANY DOCUMENT, BOOKS OF ACCOUNTS, CASH, STOCK OR BULLION. IN THIS CASE NOTHING OF THE SORT WAS FOUND OR SEIZED. HENCE THE NOTICE ISSUED U/S 153A IS INVALID. THE ISSUE HAS NOW BEEN DECIDED BY THE JURISDICTIONAL HIGH COURT OF RAJASTHAN IN THE CASE OF JAI STEEL INDIA VS. ACIT 88 DTR 1. THE HON'BLE HIGH COURT HAS HELD AS UNDER 'SECTION 153A CANNOT BE READ IN ISOLATION, IN AS MUCH AS, THE SAME IS TRIGGERED ONLY ON ACCOUNT OF ANY SEARCH/REQUISITION U/S 132 OR 132A. IF ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURT OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH, SUCH BOOKS OF ACCOUNTS OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO CONSIDERATION WHILE ASSESSING OR REASSESSING THE TOTAL INCOME UNDER THE PROVISIONS OF S. 153A. EVEN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF THE SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERATION. THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 14 REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF S. 132 OR S. 132A, IN AS MUCH AS IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE.' IT IS SUBMITTED THAT THE HON'BLE HIGH COURT HAS SPECIFICALLY HELD THAT PROCEEDINGS U/S 153A/153C TRIGGER ONLY ON EXISTENCE OF INCRIMINATING MATERIAL OTHERWISE NOT. NO ADDITIONS CAN BE MADE WITHOUT THERE BEING INCRIMINATING MATERIAL FOUND DURING SEARCH. THERE ARE ALSO DECISIONS ALSO QUOTED BELOW WHERE IN SIMILAR FINDING HAVE BEEN GIVEN AND IT HAS BEEN SPECIFICALLY HELD THAT ROUTINE ADDITIONS ON ACCOUNT OF CASH CREDITS, GP RATE, DISALLOWANCE OF EXPENSES CANNOT BE MADE U/S 153A/153C WHICH ARE FEATURES OF A REGULAR ASSESSMENT. (III) SINGHAD TECHNICAL EDUCATION SOCIETY VS. ACIT (2011) 57 DTR 241 SEARCH AND SEIZURE ASSESSMENT U/S 153C ABSENCE OF INCRIMINATING MATERIAL WHERE NO ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL OR DOCUMENT IS FOUND, ASSESSMENT OF SUCH ASSESSMENT YEAR CANNOT BE DISTURBED BY INVOKING THE PROVISIONS OF SECTION 153C. (IV) LMJ INTERNATIONAL LTD. VS. DCIT (2008) 14 DTR 540 (KOL TRIB) WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEAR, THE ASSESSMENT OF SUCH YEARS CANNOT BE DISTURBED. ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 15 BACK IN THE PROCEEDING U/S 153C WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN RESPECT OF THE DISALLOWED AMOUNT IN THE SEARCH PROCEEDINGS. (V) ACIT VS. GAMBHIR SILK MILLS (2010) 6 ITR 376 (AHM. TRIB) IN THE PRESENT CASE, IT IS SEEN THAT WHEN THE SEARCH WAS CONDUCTED AT THE PREMISES OF SHRI SUBHASH GAMBHIR. NO AMOUNT OF MONEY, BULLION. JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BELONGED TO THE PRESENT ASSESSEE. NOTHING IS HANDED OVER TO THE AO HAVING JURISDICTION OVER THE PRESENT ASSESSEE. NO SUCH VALUABLE ARTICLE OR THING OR ANY BOOKS OF ACCOUNT OR DOCUMENTS HAVE BEEN REFERRED EVEN IN THE ASSESSMENT ORDER FOR FRAMING ASSESSMENT UNDER S. 153C OF THE IT ACT, 1961. SINCE FOR ALL THESE YEARS, THE RETURNS WERE ORIGINALLY FILED AND PROCESSED AND SINCE NO ADDITIONAL MATERIAL IS FOUND PERTAINING TO THE ASSESSEE, WHICH IS HELD TO BE BELONGING TO THE ASSESSEE THE AO DOES NOT ASSUME JURISDICTION FOR FRAMING ASSESSMENT UNDER S. 153C R.W.S. 153A OF THE IT ACT, 1961. WE THEREFORE, CANCEL ALL THE ASSESSMENTS MADE FOR ALL THESE YEARS. AS PER THE LD AR, THE RATIO OF THE AFORESAID CASE LAWS IS FULLY APPLICABLE TO THE FACTS OF THE CASE, THEREFORE, FRAMING OF THE ASSESSMENT IS ILLEGAL AND UNLAWFUL. THEREFORE, THE NOTICE ISSUED U/S 153A DESERVES TO BE QUASHED. 18. AS PER THE LD AR WHILE CONFIRMING THE ADDITION OF RS. 6.00 LACS THE LD. CIT(A) HAS NOT PERUSED THE SEIZED PAPERS NOR HAS GONE THROUGH THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 16 STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF THE ACT, WHEREIN THE ASSESSEE HAD VERY CLEARLY STATED THAT THE AMOUNT OF RS. 600000/- WAS UNDISCLOSED INCOME OF SHRI ANAND SINGHAL WHO WAS PRESENT AT THE TIME OF STATEMENT AND ADMITTED THAT THE INCOME OF RS. 600000/- PERTAINED TO HIM. THE STATEMENT U/S 132(4) IS ON OATH AND CARRIES EVIDENTIARY VALUE. IT CANNOT BE SUPERSEDED BY A SUBSEQUENT AFFIDAVIT OF THE ASSESSEE THAT INCOME OF ANYBODY MAY BE ASSESSED IN HIS HAND. IN THESE CIRCUMSTANCES THE ADDITION WAS WRONGLY BEEN MADE IN THE HANDS OF THE ASSESSEE AND THE LD. CIT(A) HAS ALSO ERRED IN CONFIRMING THE SAME. 19. IT WAS ARGUED BY THE LD AR THAT THE CONFESSIONAL STATEMENT U/S 132(4) BEING UNDER PRESSURE VIOLATES THE BOARD CIRCULARS. 20. THE LD AR HAS SUBMITTED THAT IN THE CASE OF THE ASSESSEE DURING THE COURSE OF SEARCH STATEMENT WAS RECORDED U/S 132(4) AND DURING THE COURSE OF STATEMENT LOT OF PRESSURE WAS BUILT AND EXERTED UPON THE ASSESSEE FOR SURRENDERING INCOME. NORMALLY DURING THE COURSE OF SEARCH A PERSON IS OUT OF WITS AND IS NOT CAPABLE OF PREPARING ANY STATEMENT OF SURRENDER THEN AND THERE BUT IN THE CASE OF THE ASSESSEE HE WAS PRESSURIZED BY THE AUTHORIZED OFFICERS TO SURRENDER INCOME ON ONE GROUND OR THE ANOTHER AND THEREFORE THE ASSESSEE FOR THE SATISFACTION OF THE AUTHORIZED OFFICERS PREPARED ANNEXURE 'A' AND SURRENDERED INCOME OF RS. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 17 8.6 CRORES. SUCH CONFESSIONAL SURRENDER HAS NO VALUE IN THE EYE OF LAW. THE SAME IS VIOLATIVE OF BOARD CIRCULARS QUOTED BELOW: - (I) F. NO. 286/2/2003-IT (INV) DATED 10.03.2003 NO CONFESSIONAL STATEMENT IN THE COURSE OF SEARCH, SEIZURE AND SURVEY. MARCH 10TH, 2003 CONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH &SEIZURE AND SURVEY OPERATION GOVERNMENT OF INDIA MINISTRY OF FINANCE &COMPANY AFFAIRS DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES ROOM NO. 254/NORTH BLOCK, NEW DELHI, THE 10TH MARCH, 2003 TO ALL CHIEF COMMISSIONERS OF INCOME TAX, (CADRE CONTRA) & ALL DIRECTORS GENERAL OF INCOME TAX INV. 21. HE FURTHER CONTENDED THAT ANNEXURE-A1, PAGE 1 AND 2 ARE DUMP PAPERS IN SO FAR AS THE PAPERS COULD NOT BE LINKED WITH THE BUSINESS OF THE ASSESSEE EITHER BY MAKING INVESTIGATION OF SEARCHED MATERIAL OR BY CAUSING POST SEARCH ENQUIRIES. IN VIEW OF THIS, AS PER THE LD AR, IT WAS WRONG ON THE PART OF THE A.O. TO HAVE MADE ADDITION WITH REFERENCE TO THESE PAPERS. THESE PAGES ARE ROUGH AND DUMP. NO ADDITION IS WARRANTED ON THE BASIS OF THESE PAPERS. THE FOLLOWING CASE LAWS WERE QUOTED IN SUPPORT: - (I) DCIT VS. RAJENDRA KUMAR SANCHETI (ITAT JAIPUR) 42 TAXWORLD 152 DATED 27.03.2009 ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 18 ADDITION CANNOT BE MADE ON THE BASIS OF SEIZED PAPER WHICH IS NOT PREPARED BY THE ASSESSEE AND WHICH APPEARS TO BE A DEAF AND DUMB DOCUMENT. (II) MAHAAN FOODS LTD. VS. DCIT (ITAT DELHI) (2009) 27 DTR 185 IN THE ABSENCE OF ANY OTHER EVIDENCE FOUND DURING THE COURSE OF SEARCH OR BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE EXPENDITURE FOUND NOTED ON SEIZED DOCUMENTS WAS ACTUALLY INCURRED BY THE ASSESSEE, THE SAME CANNOT BE ADDED TO THE UNDISCLOSED INCOME OF THE ASSESSEE. NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE MUCH LESS ANY INFERENCE OF UNEXPLAINED EXPENSES ON THE BASIS OF A DUMB DOCUMENT FOUND AT THE RESIDENCE OF ITS DIRECTOR AS THERE IS NO PROOF TO SHOW THAT THE AMOUNT MENTIONED IN THE SAID DOCUMENT WAS PAID BY THE COMPANY. (III) MOOLCHAND KUMAWAT & SONS VS. DCIT (AJMER) ITAT JAIPUR BENCH 42 TAXWORLD 241 IN M.A. NO. 93/JP/2008 ARISING OUT OF ITSSA NO. 24/JP/2005 ORDER DATED 20.02.2009 ADDITION CANNOT BE MADE ON THE BASIS OF A DUMB DOCUMENT OR ON THE BASIS OF ENTRIES FOUND RECORDED ON A PAPER SEIZED DURING SEARCH WITHOUT CONDUCTING ANY ENQUIRY FROM THE CONCERNED PARTY. (IV) ASSISTANT COMMISSIONER OF INCOME TAX VS. SATYA PAL WASSAN (2007) 295 ITR 9 AT 352 (JABALPUR) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 19 A DOCUMENTS FOUND DURING THE COURSE OF A SEARCH MUST BE A SPEAKING ONE AND WITHOUT ANY SECOND INTERPRETATION, MUST REFLECT ALL THE DETAILS ABOUT THE TRANSACTION OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. ANY GAP IN THE VARIOUS COMPONENTS FOR THE CHARGE OF TAX MUST BE FILLED UP BY THE ASSESSING OFFICER THROUGH INVESTIGATION AND CORRELATION WITH THE OTHER MATERIAL FOUND EITHER DURING THE COURSE OF THE SEARCH OR ON INVESTIGATION. WITHOUT THIS NO ADDITION CAN BE MADE ON THE BASIS OF A LOOSE SHEET. (V) IT WAS HELD IN THE FOLLOWING CASES THAT ADDITION COULD NOT BE MADE ON THE BASIS OF UNCORROBORATED NOTING ON LOOSE SHEETS AND PAPERS (1) S.P. GOYAL VS. DCIT (2002) 77 TTJ 1 (MUM) (2) CHANDRA MOHAN MEHTA VS. ACIT (1999) 65 TTJ 327 (PUNE) (3) BANSAL STRIPS PVT. LTD. VS ACIT (2006) 100 TTJ 665 (DEL) (4) KISHAN CHAND SOBHRAJ MAL (1991) 42 TTJ 423 (JP) (5) CIT VS. NARESH KHATTAR (HUF) (2003) 261 ITR 664 (DEL) (6) LAL CHAND AGARWAL VS ACIT 21 TW 213 (ITAT JAIPUR) (7) CIT VS. S.M. AGARWAL (2007) 293 ITR 43 (DEL) (8) CIT VS. GIRISH CHOUDHARY (2008) 296 ITR 619 (DEL) (9) JAYANTI LAL PATEL VS. ACIT (1998) 233 ITR 588 (RAJ) (10) RAKESH GOYAL VS. ACIT (2004) 87 TTJ 151 (DEL) (11) ITO VS. MANNA LAL JHALANI 22 TW 551 (ITAT JAIPUR) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 20 (12) HISSARIA BROTHER VS. ACIT 22 TW 684 (ITAT JAIPUR) (13) DCIT VS. COUNTRYWIDE BUILDESTATE PVT LTD. (2012) 48 TW 50 (JAIPUR ITAT) ORDER DATED 29.06.2012 ITA NO. 961/JP/2011 IT WAS SUBMITTED THAT THE RATIO OF THE AFORESAID CASES IS FULLY APPLICABLE TO THE FACTS OF THE CASE. IN THE CASE OF THE ASSESSEE ADDITIONS HAVE BEEN MADE ON THE BASIS OF A MUTE PAPER WITHOUT CONDUCTING ANY ENQUIRY AND WITHOUT ANY CORROBORATING MATERIAL. THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THE PAPER WITH THE AFFAIRS WITH THE ASSESSEE. IN VIEW OF THIS THE ADDITION MADE DESERVES TO BE DELETED. 22. THE LD AR ALSO VEHEMENTLY ARGUED THAT THE A.O. HAS MADE ADDITION REFERRING TO SOME REPORT (PARA 8.2.4 OF THE ASSESSMENT ORDER) SUBMITTED UNDER RULE 9 AS WELL RULE 9A BY THE COMMISSIONER OF INCOME TAX TO THE SETTLEMENT COMMISSION. THE A.O. HAS NOT FURNISHED COPIES OF THESE REPORTS TO THE ASSESSEE NOR SOUGHT ANY REPLY ON THESE REPORTS FROM THE ASSESSEE. IT WAS INCUMBENT UPON THE LD. ASSESSING OFFICER TO HAVE PROVIDED OPPORTUNITY TO THE ASSESSEE BEFORE UTILIZING THE REPORTS OF THE COMMISSIONER. THUS, THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN VIOLATED, AND THE A.O. SHOULD NOT MAKE ANY ADDITION ON THE BASIS OF A REPORT WHICH WAS NOT DISCLOSED TO THE ASSESSEE. THE FOLLOWING CASE LAWS ARE QUOTED IN SUPPORT: - (I) GARGI DIN JWALA PRASAD VS. CIT (1974) 96 ITR 97 (ALL) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 21 PRINCIPLES OF NATURAL JUSTICE ARE APPLICABLE THE PRINCIPALS OF NATURAL JUSTICE ARE APPLICABLE TO ASSESSMENT PROCEEDINGS. THE ELEMENTARY PRINCIPLE OF NATURAL JUSTICE IS THAT THE ASSESSEE SHOULD HAVE KNOWLEDGE OF THE MATERIAL WHICH IS GOING TO BE USED AGAINST HIM SO THAT HE MAY BE ABLE TO MEET IT. (III) MUNNA LAL MURLIDHAR VS CIT (1971) 79 ITR 540 (ALL) THE PRINCIPLE OF NATURAL JUSTICE INVOLVES A RIGHT IN THE ASSESSEE TO INSPECT THE REPORTS AND OBTAIN THE SUBSTANCE OF THE ALL RELEVANT DOCUMENTS SUCH AS STATEMENTS, ORDERS, REPORTS ETC. SO AS TO BE ABLE TO LEAD EVIDENCE IN REBUTTAL OR TO CROSS EXAMINE WITNESS WHO HAVE GIVEN EVIDENCE AGAINST HIM. IT ALSO MEANS THAT THE ASSESSEE SHOULD BE GIVEN A REASONABLE TIME AND OPPORTUNITY TO PRODUCE SUCH EVIDENCE AS HE MAY CONSIDER NECESSARY. (III) IN THE FOLLOWING IT WAS HELD THAT THE ASSESSING OFFICER CAN MAKE ENQUIRIES TO GATHER MATERIAL PRIVATELY AND CONFIDENTIALLY. HE CAN ALSO SUMMON WITNESSES AND RECORD THEIR STATEMENT IN THE PRESENCE OF THE ASSESSEE OR EVEN BEHIND HIS BACK. HOWEVER, THE SUBSTANCE OF ANY INFORMATION SOUGHT TO BE USED AGAINST THE ASSESSEE, SHOULD BE PUT TO HIM AND HE SHOULD HAVE FARE OPPORTUNITY. IT IS UPTO THE ASSESSEE TO AVAIL OF IT, CONSTANT WITH THE PRINCIPAL OF NATURAL JUSTICE, TO REBUT THE SAME. (A) CHIRANJI LAL STEEL ROLLING MILLS VS. CIT (1972) 84 ITR 222 (P&H) (B) NAMASIVAYAM CHETTIAR (S.N.) VS. CIT (1960) 38 ITR 579 (SC) (C) ABDUL RAZAK VS. CIT (1935) 3 ITR 361 (PAT) (D) BALASUBRAMANIAN (P.N.) VS. ITO (1978) 112 ITR 512 (AP) (E) BAGSU DEVI BAFNA VS. CIT (1966) 62 ITR 506 (CAL) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 22 (F) CASHMIR VASTRALAYA VS. CIT (1978) 112 ITR 630 (PAT)' IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES, THE LD AR REQUESTED THAT ADDITION CONFIRMED BY THE LD. CIT(A) MAY KINDLY BE DELETED. 23. IT WAS ALSO SUBMITTED BY THE LD AR THAT THE ASSESSEE HAS OFFERED FOLLOWING INCOME FOR TAXATION IN THE HANDS OF SHRI MANGI LAL KANDOI AND SHRI RAJKUMAR KANDOI BEFORE INCOME TAX SETTLEMENT COMMISSION AS UNDER: A.Y. MANGI LAL KANDOI RAJ KUMAR KANDOI TOTAL 2007-08 200000 200000 400000 2008 - 09 300000 300000 600000 2009-10 500000 500000 1000000 2010-11 500000 500000 1000000 2011-12 26119780 7580220 33700000 2012-13 24300000 2500000 26800000 2013-14 24666450 6000000 30666450 2014-15 500000 2000000 2500000 TOTAL 77086230 19580220 96666450 BUT THE SETTLEMENT COMMISSION HAS REJECTED THE PETITION OF THE ASSESSEE AND SEND BACK TO THE AO. NOW THE LD. AO HAS MADE THE ADDITIONS ON FOLLOWING ACCOUNT - (I) AS PER SURRENDER MADE BY THE ASSESSEE FOR RS. 15,89,65,200/-. (II) ON ACCOUNT OF JEWELLERY OF RS. 2,09,63,501/- IN ADDITION TO AMOUNT OF RS. 4,00,00,000/- WHICH WAS SURRENDERED ON ACCOUNT OF EXCESS JEWELLERY AND OTHER DISCREPANCIES FOUND DURING THE COURSE OF SEARCH SUBJECT TO VERIFICATION IF ANY. IT WAS CONDITIONAL SURRENDER. (III) ADDITION ON ACCOUNT OF INTEREST EARNED ON VARIOUS SURRENDERED LOANS AND ADVANCES ON PRESUMPTION BASIS WHERE THERE IS NO EVIDENCE OF RECEIPT OF INTEREST. IF IT IS PRESUMED THAT INTEREST INCOME IS RECEIVED THEN PRESUMPTION IS ALSO THAT ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 23 IT IS INCLUDED IN NEXT YEAR ADVANCES. AS NO OTHER ASSETS/VALUABLE/JEWELLERY/CASH/STOCK/EXPENDITURE WAS FOUND. 24. AS PER THE LD AR, IN THE A.Y. 2011-12, THE LD. CIT(A) HAS UPHELD ADDITION OF RS. 33.00 LACS OUT OF RS. 34,34,440/-ON ACCOUNT OF INTEREST EARNED AND UNDISCLOSED ADVANCES MADE BY THE ASSESSEE ON PRESUMPTION BASIS. AS PER THE LD AR, THE PAPER I.E. PAGE NO. 1 AND 2 OF ANNEXURE AS-1 TO AS-4 ON THE BASIS OF WHICH ADDITION WAS MADE DID NOT PERTAIN TO THE ASSESSEE. HENCE THERE WAS NO OCCASION FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. THESE PAPERS WERE VIRTUALLY DUMP PAPERS AS THESE DID NOT CONTAIN ANY DATE PARTICULARLY THE YEAR WHICH THESE PERTAIN, IT WAS NOT KNOWN AS WHO WAS THE WRITER OF THESE PAPERS AND FURTHER THESE PAPERS DID NOT CONTAIN SIGNATURE OF THE ASSESSEE. IT WAS ARGUED THAT THE A.O. HAD FAILED TO LINK THESE PAPERS WITH THE BUSINESS OF THE ASSESSEE EITHER WITH THE OTHER MATERIAL FOUND DURING SEARCH OR BY CONDUCTING ANY POST SEARCH ENQUIRES. IT IS SETTLED PRINCIPLE OF LAW THAT UNLESS THE PERIOD OF THE PAPERS IS ESTABLISHED AND THE WRITER OF THESE PAPERS IS KNOWN, NO ADDITION COULD BE MADE. 25. AS PER THE LD AR, THE ADDITIONS WERE MADE AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IT WAS SUBMITTED THAT THE A.O. HAD REFERRED TO SOME REPORT SUBMITTED BY THE CIT TO ITSC AND ADDITIONS HAVE BEEN MADE EXPLOITING THIS REPORT. BUT THE SAME WAS NOT FURNISHED TO THE ASSESSEE FOR ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 24 DEFENSE. IT IS SETTLED POSITION OF LAW NO MATERIAL CAN BE USED AGAINST THE ASSESSEE GATHERED AT HIS BACK UNLESS OPPORTUNITY IS PROVIDED. 26. THE LD AR HAS FURTHER CONTENDED THAT THE ADDITIONS HAVE BEEN EXCLUSIVELY BASED ON STATEMENT U/S 132(4) WHICH WAS TAKEN UNDER DURESS AND IN CLEAR CUT VIOLATIONS OF BAORD'S CIRCULARS. THE ADDITION HAS BEEN MADE WITH REFERENCE TO A PAPER WHICH WAS GOT PREPARED THEN AND THERE AT THE TIME OF SEARCH WHEN THE ASSESSEE WAS SURROUNDED BY A NUMBER OF REVENUE OFFICERS. NO OPPORTUNITY WAS PROVIDED TO ANALYZE AND RELATE THE PAPERS WITH THE BUSINESS AFFAIRS OF THE GROUP. THE ASSESSEE WANTS TO SUBMIT THAT THE STATEMENT WHICH WAS PREPARED BY THE ASSESSEE AT THE TIME OF SEARCH AND THE STATEMENT RECORDED U/S 132(4) ARE NOT RELIABLE AS THESE WERE DONE THREAT AND FORCE. 27. OUR ATTENTION WAS ALSO INVITED TO THE FACT THAT THE SURRENDER OF INCOME AS PER ANNEXURE 'A' GOT PREPARED BY THE ASSESSEE JUST AT THE TIME OF SEARCH DURING THE COURSE OF STATEMENT U/S 132(4) BEING IN VIOLATION OF BOARD CIRCULARS, IS BAD IN LAW. SUCH SURRENDER CANNOT BE MADE THE BASIS OF ADDITION IN THE ASSESSMENT PROCEEDINGS. THE BOAR'S CIRCULAR IS VERY CLEAR THAT ADDITION DURING THE COURSE OF ASSESSMENT SHOULD BE EVIDENCE BASED AND NOT BASED ON THE STATEMENT RECORDED U/S 132(4). IN THE CASE OF THE ASSESSEE THE A.O. HAS MADE THE ADDITION JUST REFERRING TO ANNEXURE 'A' GOT ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 25 PREPARED BY THE ASSESSEE AT THE TIME OF SEARCH ITSELF. THERE IS NO ANALYSIS OF ANY SEIZED MATERIAL WARRANTING SUCH ADDITION. THIS BEING SO THE ADDITION IS WITHOUT ANY BASIS AND WITHOUT ANY REFERENCE TO INCRIMINATING MATERIAL FOUND DURING SEARCH. 28. AS PER THE LD AR, PAGES MARKED AS AS4, AS5 AND AS6 ARE DUMP PAPERS, THEREFORE, NO ADDITION IS WARRANTED ON THE BASIS OF THESE PAPERS. THE FOLLOWING CASE LAWS ARE QUOTED IN SUPPORT: - (I) DCIT VS. RAJENDRA KUMAR SANCHETI (ITAT JAIPUR) 42 TAXWORLD 152 DATED 27.03.2009 ADDITION CANNOT BE MADE ON THE BASIS OF SEIZED PAPER WHICH IS NOT PREPARED BY THE ASSESSEE AND WHICH APPEARS TO BE A DEAF AND DUMB DOCUMENT. (II) MAHAAN FOODS LTD. VS. DCIT (ITAT DELHI) (2009) 27 DTR 185 IN THE ABSENCE OF ANY OTHER EVIDENCE FOUND DURING THE COURSE OF SEARCH OR BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE EXPENDITURE FOUND NOTED ON SEIZED DOCUMENTS WAS ACTUALLY INCURRED BY THE ASSESSEE, THE SAME CANNOT BE ADDED TO THE UNDISCLOSED INCOME OF THE ASSESSEE. NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE MUCH LESS ANY INFERENCE OF UNEXPLAINED EXPENSES ON THE BASIS OF A DUMB DOCUMENT FOUND AT THE RESIDENCE OF ITS DIRECTOR AS THERE IS NO PROOF TO SHOW THAT THE AMOUNT MENTIONED IN THE SAID DOCUMENT WAS PAID BY THE COMPANY. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 26 (III) MOOLCHAND KUMAWAT & SONS VS. DCIT (AJMER) ITAT JAIPUR BENCH 42 TAXWORLD 241 IN M.A. NO. 93/JP/2008 ARISING OUT OF ITSSA NO. 24/JP/2005 ORDER DATED 20.02.2009 ADDITION CANNOT BE MADE ON THE BASIS OF A DUMB DOCUMENT OR ON THE BASIS OF ENTRIES FOUND RECORDED ON A PAPER SEIZED DURING SEARCH WITHOUT CONDUCTING ANY ENQUIRY FROM THE CONCERNED PARTY. (IV) ASSISTANT COMMISSIONER OF INCOME TAX VS. SATYA PAL WASSAN (2007) 295 ITR 9 AT 352 (JABALPUR) A DOCUMENTS FOUND DURING THE COURSE OF A SEARCH MUST BE A SPEAKING ONE AND WITHOUT ANY SECOND INTERPRETATION, MUST REFLECT ALL THE DETAILS ABOUT THE TRANSACTION OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. ANY GAP IN THE VARIOUS COMPONENTS FOR THE CHARGE OF TAX MUST BE FILLED UP BY THE ASSESSING OFFICER THROUGH INVESTIGATION AND CORRELATION WITH THE OTHER MATERIAL FOUND EITHER DURING THE COURSE OF THE SEARCH OR ON INVESTIGATION. WITHOUT THIS NO ADDITION CAN BE MADE ON THE BASIS OF A LOOSE SHEET. (V) IT WAS HELD IN THE FOLLOWING CASES THAT ADDITION COULD NOT BE MADE ON THE BASIS OF UNCORROBORATED NOTING ON LOOSE SHEETS AND PAPERS (1) S.P. GOYAL VS. DCIT (2002) 77 TTJ 1 (MUM) (2) CHANDRA MOHAN MEHTA VS. ACIT (1999) 65 TTJ 327 (PUNE) (3) BANSAL STRIPS PVT. LTD. VS ACIT (2006) 100 TTJ 665 (DEL) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 27 (4) KISHAN CHAND SOBHRAJ MAL (1991) 42 TTJ 423 (JP) (5) CIT VS. NARESH KHATTAR (HUF) (2003) 261 ITR 664 (DEL) (6) LAL CHAND AGARWAL VS ACIT 21 TW 213 (ITAT JAIPUR) (7) CIT VS. S.M. AGARWAL (2007) 293 ITR 43 (DEL) (8) CIT VS. GIRISH CHOUDHARY (2008) 296 ITR 619 (DEL) (9) JAYANTI LAL PATEL VS. ACIT (1998) 233 ITR 588 (RAJ) (10) RAKESH GOYAL VS. ACIT (2004) 87 TTJ 151 (DEL) (11) ITO VS. MANNA LAL JHALANI 22 TW 551 (ITAT JAIPUR) (12) HISSARIA BROTHER VS. ACIT 22 TW 684 (ITAT JAIPUR) (13) DCIT VS. COUNTRYWIDE BUILDESTATE PVT LTD. (2012) 48 TW 50 (JAIPUR ITAT) ORDER DATED 29.06.2012 ITA NO. 961/JP/2011 IT IS SUBMITTED THAT THE RATIO OF THE AFORESAID CASES IS FULLY APPLICABLE TO THE FACTS OF THE CASE. IN THE CASE OF THE ASSESSEE ADDITIONS HAVE BEEN MADE ON THE BASIS OF A MUTE PAPER WITHOUT CONDUCTING ANY ENQUIRY AND WITHOUT ANY CORROBORATING MATERIAL. THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE PAPER ARE LINKED WITH THE AFFAIRS AND BUSINESS OF THE ASSESSEE. IN VIEW OF THIS THE ADDITION MADE DESERVES TO BE DELETED. 29. THE ADDITION OF RS. 1,34,410/- UPHELD BY THE LD CIT(A) ON ACCOUNT OF NOTIONAL INTEREST WAS STATED TO BE UNJUSTIFIED. AS PER THE LD AR, NOT ONLY THAT THE A.O. IS UNJUSTIFIED IN MAKING ADDITION OF RS. 33,00,000/- ON ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 28 ACCOUNT OF ALLEGED UNEXPLAINED ADVANCES BUT HE FURTHER ERRED IN MAKING ADDITION OF RS. 1,34,410/- ON ACCOUNT OF INTEREST ON SUCH ADVANCES. THE INTEREST HAS BEEN CALCULATED PURELY ON PRESUMPTIVE BASIS. NOT A SINGLE PAPER WAS FOUND DURING SEARCH RELATING TO RECEIPT OR PAYMENT OF INTEREST. THE A.O. HAS MADE THE ADDITION SIMPLY ON SUSPICION AND DOUBT THAT WHEN THE ASSESSEE HAD ADVANCED LOANS, THEREFORE INTEREST WAS BOUND TO FOLLOW. IT IS SUBMITTED NO ADDITION CAN BE MADE U/S 153A ON BASIS OF PRESUMPTION. PRESUMPTION HOWEVER STRONG CANNOT TAKE THE PLACE OF EVIDENCE. THE FOLLOWING CASE LAWS ARE QUOTED IN SUPPORT: - (I) UMA CHARAN SHAW & BROTHERS 37 ITR 271 (SC) (II) CIT VS. ANUPAM KAPOOR 299 ITR 179 (P&H) (III) CIT VS. DHIRAJ LAL GIRDHARI LAL 26 OTR 736 (IV) DHAKESHWARI COTTON MILLS 26 ITR 775 (SC) (V) STATE VS. GULZARI LAL TONDON 1979 AIR 1382 (SC) (VI) J.A. NAIDU VS. STATE OF MAHARASTRA 1979 AIR 1537 (SC) FURTHER IT IS ESTABLISHED POSITION OF LAW THAT INTEREST CANNOT BE TAXED ON NOTIONAL BASIS. IN THIS CASE THERE IS NO EVIDENCE THAT INTEREST ACCRUED TO THE ASSESSEE OR INTEREST WAS RECEIVED BY HIM. EVEN THE ASSESSEE HAS CHALLENGED THE ADDITION ON ACCOUNT OF ALLEGED ADVANCES AND HENCE THE QUESTION OF TAXING INTEREST DOES NOT ARISE. THERE IS NO MATERIAL ON RECORD TO AS TO ESTABLISH THAT ASSESSEE RECEIVED INTEREST ON THE ALLEGED ADVANCES. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 29 IT IS THE WORKING OF THE MIND OF THE A.O. THAT HAS RESULTED IN ADDITION ON ACCOUNT OF INTEREST. THE INTEREST HAS BEEN CALCULATED NOTIONALLY AND ADDITION HAS BEEN MADE ACCORDINGLY. NO ADDITION CAN BE MADE ON NOTIONAL BASIS. THE FOLLOWING CASE LAWS ARE QUOTED IN SUPPORT: - (I) COMMISSIONER OF INCOME TAX VS. EXCEL INDUSTRIES LTD. (2013) 358 ITR 295 (SC) INCOME ACCRUES WHEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY A CORRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT. ONLY THEN CAN IT BE SAID THAT FOR THE PURPOSES OF TAXABILITY THAT THE INCOME IS NOT HYPOTHETICAL AND IT HAS REALLY ACCRUED TO THE ASSESSEE (II) MRS. SUSHILA MALLIK VS. ITO (2011) 61 DTR 437 (LUCKNOW) (III) KESRI CHAND JAI SUKH LAL VS. CIT 248 ITR 47 (GUWAHATI) NO ADDITION CAN BE MADE ON NOTIONAL BASIS, IF THE ASSESSEE HAS NOT CHARGED INTEREST ON ADVANCES THE ASSESSING OFFICER CANNOT DECIDE THAT HE SHOULD HAVE CHARGED THE INTEREST. (IV) KISHANCHAND JAISUKH LAL VS. CIT 248 ITR 47 (GUWAHATI) NO ADDITION CAN BE MADE ON NOTIONAL BASIS. IF THE ASSESSEE HAS NOT CHARGED INTEREST ON ADVANCES, THE ASSESSING OFFICER CANNOT DECIDE THAT HE SHOULD HAVE CHARGED THE INTEREST. (V) CIT VS. ASIAN HOTELS LTD. (2010) 323 ITR 470 (DEL) NOTIONAL INTEREST IS NOT ASSESSABLE AS BUSINESS INCOME. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 30 (VI) CIT VS. SHOORJI VALLABH DAS & CO. 46 ITR 144 (SC) (VII) CIT VS. BALBIR SINGH MANI (2017) 398 ITR 531 (SC)' 30. THE ASSESSEE ALSO CHALLENGED THE ADDITION OF RS. 2.43 CRORES CONFIRMED BY THE LD. CIT(A) ON ACCOUNT UNDISCLOSED INCOME FROM SALE OF ARPIT NAGAR LAND, WHICH WAS ALLEGED TO BE UTILIZED FOR MAKING ADVANCES. 31. AS PER THE LD AR, THE ADDITIONS WERE MADE AGAINST THE PRINCIPLES OF NATURAL JUSTICE. IT WAS SUBMITTED THAT THE A.O. HAD REFERRED TO SOME REPORT SUBMITTED BY THE CIT TO ITSC AND ADDITIONS HAVE BEEN MADE EXPLOITING THIS REPORT. BUT THE SAME WAS NOT FURNISHED TO THE ASSESSEE FOR DEFENSE. IT IS SETTLED POSITION OF LAW NO MATERIAL CAN BE USED AGAINST THE ASSESSEE GATHERED AT HIS BACK UNLESS OPPORTUNITY IS PROVIDED. 32. THE LD. AR HAS FURTHER CONTENDED THAT PAGE 5 SCANNED ABOVE IS TOTALLY A DUMP PAPER. SECONDLY IN THE STATEMENT RECORDED U/S 132(4) THE ASSESSEE STATED THAT THE AMOUNT OF RS. 2,43,00,000/- REQUIRED TO BE CONSIDERED 1/3 RD EQUALLY I.E. RS. 81,00,000/- IN EACH HAND OF SMT. SHADHANA, SHRI RAJKUMAR AND SMT. SHIVANI. HOWEVER, FOR NO REASON LATER ON AN AFFIDAVIT IS FURNISHED AND THE ASSESSEE IS ASKED TO OWN THE ENTIRE AMOUNT. THIRDLY THE ENTIRE ADDITION IS BASED NOT ON ANY MATERIAL OR ON ANY ENQUIRY BUT SOLELY ON THE CONFESSIONAL STATEMENT OF THE ASSESSEE. IT IS ESTABLISHED POSITION OF LAW THAT NO ADDITION CAN BE MADE SIMPLY AND ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 31 SIMPLY ON THE BASIS CONFESSIONAL STATEMENT. SUCH STATEMENTS ARE DIRECTLY IN VIOLATION OF BOARD CIRCULARS. SUCH ADDITIONS DESERVE TO BE KNOCKED DOWN AT THE FIRST SIGHT. THEREFORE, THE ADDITION IS ASSAILED AS UNDER AND DESERVES TO BE DELETED. 32.1 THE LD. AR INVITED OUR ATTENTION TO ANNEXURE AS-4, 5, 6 SEIZED FROM RESIDENCE OF SHRI MANGI LAL KANDOI, AMBABARI, JAIPUR. ANNEXURE-A EXHIBIT- 1 SEIZED FORM ANAND SINGHAL S/O MANGI LAL KANDOI, AMBABARI, JAIPUR. 32.2 AS PER THE LD AR, ANNEXURE-AS- 4, 5, 6 IS SUMMARY OF ALL LOANS AND ADVANCES GIVEN BY THE ASSESSEE AS ON DATE OF SEARCH THAT IS 18.07.2020. THE ASSESSEE HAS SURRENDERED RS. 8.6 CR. ON THE BASIS OF ABOVE ANNEXURES. THE ASSESSEE OWNS ALL THE ENTRIES RECORDED IN ABOVE ANNEXURES AND THE TOTAL OF THIS WAS 8.6 CR. 32.3 AS PER THE LD AR, ANNEXURE-A EXHIBIT-1, 2 AND 3 ARE FOUND FROM SHRI ANAND SINGHAL SON OF THE ASSESSEE WHO IS RECORDING ENTRIES AT THE TIME OF TRANSACTIONS AND SUBSEQUENTLY MERGED IN THE ANNEXURE-AS- 4, 5, 6. IT WAS SUBMITTED BEFORE THE LD. AO THAT THE ENTRIES RECORDED IN ANNEXURE-A- EXHIBIT-1 ARE PART OF ANNEXURE-AS- 4, 5, 6. THE YEAR WISE ADDITIONS MADE BY THE LD. AO ON THE BASIS OF ANNEXURE-A EXHIBIT-1 ARE AS UNDER :- 1) ASSESSMENT YEAR 2010-11 RS. 6,00,000/-. IN THE ASSESSMENT ORDER ON PAGE NO. 13 IN PARA 8.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. 6,00,000/- IS PART OF 8.6 CR. SURRENDERED BY THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 32 ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THEREFORE THIS REQUIRED DELETION. 2) ASSESSMENT YEAR 2012-13 RS. 49,24,000/- + RS. 4,50,000/. IN THE ASSESSMENT ORDER ON PAGE NO. 12 IN PARA 7.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. 49,24,000/- IS PART OF 8.6 CR. SURRENDERED BY THE ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THIS ADDITION WAS MADE ON THE BASIS OF ANNEXURE- A-1 PAGE NO. 5 FOR THE AMOUNT OF RS. 17 LACS + 30 LACS + 2.24 LACS IN THE ORDER ON PAGE 12 IN PARA 7.2.2. THE ASSESSEE HAS STATED AS UNDER: - IN EXPLANATION TO RS. 17 LACS, 30 LACS AND 2.24 LACS IT IS PROVIDED THAT THESE AMOUNTS PERTAIN TO THE LOANS AND ADVANCES GIVEN TO THE AFOREMENTIONED PARTIES WHICH HAVE BEEN RECEIVED BACK BY THE ASSESSEE. FURTHER, IT IS HUMBLY SUBMITTED THAT SUCH ADVANCES HAVE BEEN SOURCED OUT OF OWN MONEY SURRENDER OF RS. 8.6 CRORE IN EARLIER PARAS. THEREFORE, NO ADDITION CAN BE MADE IN THIS REGARD. THE AMOUNT OF RS. 4,50,000/- IS ALSO PART OF SURRENDERED OF RS. 5,68,50,000/- SURRENDERED FOR THE YEAR UNDER CONSIDERATION. 3) ASSESSMENT YEAR 2013-14 RS. 25,00,000 /-. IN THE ASSESSMENT ORDER ON PAGE NO. 11 IN PARA 7.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. RS. 25,00,000 /- IS PART OF 8.6 CR. SURRENDERED BY THE ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THEREFORE THIS REQUIRED DELETION. THIS ADDITION WAS MADE ON THE BASIS OF ANNEXURE- A-3 PAGE NO. 14 FOR THE AMOUNT OF RS. 25 LACS IN THE ORDER ON PAGE 11 IN PARA 7.2.2. THE ASSESSEE HAS STATED AS UNDER : - FIRSTLY, THE SEIZED DOCUMENT ON THE BASIS OF WHICH ADDITION TO THE TUNE OF RS. 25,00,000/- IS PROPOSED TO BE MADE PERTAINS TO MEMORANDA INTEREST CALCULATION BY A FINANCE BROKER. IF IT IS PRESUMED THAT THIS DOCUMENT REPRESENTS ANY TRANSACTIONS IN THE NATURE OF LOANS THEN THE LOAN AMOUNT RS. 25 LACS HAS ALREADY BEEN INCLUDED IN THE CALCULATION OF AMOUNT OF RS. 8.6 CRORES. THE SEIZED DOCUMENT ONLY CONTAINS CALCULATION OF INTEREST ON THE AMOUNT WHICH WE HAVE ALREADY DISCLOSED IN EARLIER PARAGRAPH. THEREFORE THIS AMOUNT WAS PART OF THE RS. 8.6 CR. AND THE ADDITION DESERVE DELETED. 32.4 IN VIEW OF ABOVE CONTENTIONS, IT WAS THE ARGUMENT OF THE LD AR THAT ALL THESE DOCUMENTS FOUND AND SEIZED ON THE BASIS OF WHICH INCOME WAS ASSESSED BY THE A.O. HAVE AGAIN BEEN TAXED ON THE PLEA THAT THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 33 ADVANCES WERE GIVEN. AS PER THE LD AR, ALL THESE AMOUNTS WERE PART OF RS. 8.60 CRORES SURRENDERED BY THE ASSESSEE, THEREFORE, NO SEPARATE ADDITION ARE REQUIRED. 33. ON THE OTHER HAND, THE LD CIT-DR HAS SUPPORTED THE ORDER OF THE A.O. AND VEHEMENTLY ARGUED THAT ALL THE ADDITIONS WERE MADE ON THE BASIS OF SEIZED MATERIAL AND THE SURRENDER WAS MADE BY THE ASSESSEE DURING THE COURSE OF SEARCH. AS PER THE LD. CIT-DR, THE SET OFF ASKED BY THE ASSESSEE WITH REGARD TO INCOME EARNED AND THEN USED FOR ADVANCES WAS NOT BEFORE THE LOWER AUTHORITIES, THEREFORE, NO RELIEF CAN BE GIVEN FOR THE AMOUNT SO EARNED AND USED FOR ADVANCES. OUR ATTENTION WAS DRAWN TO THE VARIOUS FINDINGS BY THE A.O. WITH REGARD TO EACH AND EVERY SEIZED MATERIAL GIVING DESCRIPTION OF THE ENTRIES THEREIN. HE FURTHER CONTENDED THAT THE LD. CIT(A) HAS NOT PROPERLY APPRECIATED THE FINDING OF THE A.O. WHILE DELETING THE VARIOUS ADDITIONS SO MADE BY THE A.O. ACCORDINGLY, HE REQUESTED FOR UPHOLDING VARIOUS ADDITIONS SO MADE BY THE A.O. 34. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO GONE THROUGH THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND THE VARIOUS DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND THE REPLY OF THE ASSESSEE ON SUCH SEIZED DOCUMENTS. WE HAD ALSO DELIBERATED ON THE JUDICIAL ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 34 PRONOUNCEMENTS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD. AR AND DR BEFORE US DURING THE COURSE OF HEARING IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD WE FOUND THAT DURING THE COURSE OF SEARCH, THE ASSESSEE HAS SURRENDERED RS. 15,89,65,200/-. YEARWISE BREAKUP OF THE INCOME SURRENDERED AS GIVEN AT PARA 3 OF THIS ORDER HEREINABOVE, WE FOUND THAT IN THE A.Y. 2008-09 AND 2009-10, THE A.O. HAD MADE ADDITION OF RS. 1.50 LACS AND RS. 2.00 LACS RESPECTIVELY ON ACCOUNT OF ADVANCES SURRENDERED BY THE ASSESSEE. WE ALSO FOUND THAT THE DETAILED FINDING HAS BEEN GIVEN BY THE A.O. AND THE LD. CIT(A) WITH REGARD TO AMOUNT FOUND TO HAVE BEEN ADVANCED BY THE ASSESSEE, ACCORDINGLY, WE CONFIRM THE ADDITION OF RS. 1.50 LACS IN THE A.Y. 2008-09 AND RS. 2.00 LACS IN THE A.Y. 2009-10. IN THE A.Y. 2010-11, THE ASSESSEE HAS SURRENDERED RS. 6.00 LACS ON ACCOUNT OF SEIZED DOCUMENTS AND IN THE A.Y. 2011-12, THE ASSESSEE HAS SURRENDERED RS. 2.43 CRORES ON ACCOUNT OF SALE OF ARPIT NAGAR PLOT. IN THE A.Y. 2011-12, THE ASSESSEE HAD SURRENDERED RS. 33.00 LACS ON ACCOUNT OF ADVANCES AND RS. 5,68,50,000/- ON ACCOUNT OF ADVANCES IN THE A.Y. 2012-13. SIMILAR SURRENDER ON ACCOUNT OF ADVANCE WAS MADE IN THE A.Y. 2013-14 AMOUNTING TO RS. 2,55,00,000/-. FOR THE A.Y. 2013-14, THE A.O. HAD MADE ADDITION OF RS. 4.00 CRORES ON ACCOUNT OF JEWELLERY AND RS. 25.00 LACS ON ACCOUNT OF OTHER SEIZED MATERIAL. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 35 35. IN THE A.Y. 2013-14, THE A.O. HAS COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153B(B)(1) & R.W.S. 245HA OF INCOME TAX ACT, 1961 ON 15.09.2017 DETERMINING TOTAL INCOME AT RS. 11,03,13,509/- INTER-ALIA MAKING THE FOLLOWING ADDITIONS: - (I) ADDITION OF RS. 15,00,000/- ON ACCOUNT OF INCOME SURRENDERED BY THE ASSESSEE BEFORE ITSC ON ACCOUNT OF SCRAP BUSINESS. (II) ADDITION OF RS. 2,55,00,000/- ON ACCOUNT OF UNDISCLOSED ADVANCES AND INTEREST OF RS. 1,18,12,662/- TOTALING TO RS. 3,73,12,662/- AS PER ANNEXURE 'A' GOT PREPARED BY THE ASSESSEE AT THE TIME OF SEARCH ITSELF ON THE BASIS OF ANNEXURE AS-1 TO AS-4. (III) ADDITION OF RS. 25,00,000/- ON ACCOUNT OF UNDISCLOSED ADVANCES AND INTEREST OF RS. 2,53,125/- THEREON AS PER ANNEXURE 'A-3' PAGE NO. 14 AND RS. 4250/- ON ACCOUNT OF BROKERAGE EARNED @ 10% MADE BY THE ASSESSEE ON PRESUMPTION BASIS. (IV) ADDITION OF RS. 6,87,175/-ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCES OF RS. 49,24,00,000/- ADDITION MADE IN EARLIER YEARS ON PRESUMPTION BASIS WITH REFERENCE TO ANNEXURE A-1 PAGE 5. (V) ADDITION OF RS. 3,97,457/- (RS. 1,91,200/- ON ACCOUNT OF UNDISCLOSED ADVANCES AND RS. ON ACCOUNT OF INTEREST OF RS. 2,06,257/- ON PRESUMPTION BASIS ON SUCH ADVANCES WITH REFERENCE TO ANNEXURE A-1 PAGE 2.) (VI) ADDITION OF RS. 4,00,00,000/- WITH REFERENCE TO ANNEXURE AS-3 AND AS-7. (VII) ADDITION OF RS. 2,09,63,501/-ON ACCOUNT OF UNEXPLAINED JEWELLERY. (VIII) ADDITION OF RS. 56,39,819/-ON ACCOUNT OF UNEXPLAINED CASH. 36. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED THE FOLLOWING ADDITIONS: (I) ADDITION OF RS. 2,55,00,000/- ON ACCOUNT OF ALLEGED UNDISCLOSED ADVANCES MADE BY THE ASSESSEE ON THE BASIS SEIZED DOCUMENTS. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 36 (II) ADDITION OF RS. 25,00,000/- ON ACCOUNT OF ALLEGED UNDISCLOSED ADVANCES MADE BY THE ASSESSEE ON THE BASIS SEIZED DOCUMENTS. (III) ADDITION OF RS. 49,160/- ON ACCOUNT OF INTEREST INCOME EARNED ON ADVANCE OF RS. 25,00,000/- ON PRESUMPTION BASIS. (IV) ADDITION OF RS. 1,91,200/- AS UNDISCLOSED ADVANCE. (V) ADDITION OF RS. 97,65,444/- OUT OF TOTAL ADDITION OF RS. 2,09,63,520/- FOR JEWELLERY FOUND DURING THE COURSE OF SEARCH BY TREATING THE SAME AS UNEXPLAINED. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEE AS WELL AS THE REVENUE HAVE PREFERRED APPEALS BEFORE THE ITAT. 37. WITH REGARD TO ADDITION OF RS. 15.00 LACS ON ACCOUNT OF INCOME SURRENDERED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION ON ACCOUNT OF SCRAP BUSINESS, THE LD. CIT(A) HAS DELETED THE SAME AFTER FOLLOWING HIS APPELLATE ORDER FOR THE A.Y. 2011-12 DATED 04/09/2018 WHEREIN THE LD. CIT(A) HAS HELD AS UNDER: 5. I HAVE CONSIDERED THE RELEVANT FACTS AND THE ARGUMENT ADVANCED. I FIND THAT DURING THE COURSE OF SEARCH NO MATERIAL IS FOUND WHICH SUGGESTS THAT THE APPELLANT WAS CARRYING ON SCRAP TRADING BUSINESS. THE INCOME WAS DECLARED BEFORE THE SETTLEMENT COMMISSION ONLY TO FULFILL THE REQUIREMENT OF APPLICATION FOR SETTLEMENT THAT THE INCOME WHICH IS NOT OTHERWISE DECLARED TO THE DEPARTMENT IS DECLARED IN THE APPLICATION FOR SETTLEMENT SO THAT THE CASE CAN BE ADMITTED BY SETTLEMENT COMMISSION. THE SOLE BASIS OF ADDITION IS THE DECLARATION BEFORE SETTLEMENT COMMISSION WHICH ITSELF HAS BEEN REJECTED BY THE SETTLEMENT COMMISSION HOLDING THAT 'THE APPLICANT HAS NOT FURNISHED ANY INFORMATION ABOUT QUANTITY OF SCRAP SOLD, PARTIES TO WHICH SUCH SCRAP WAS SOLD, OR ANY OTHER EVIDENCE INCIDENTAL ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 37 TO PROCUREMENT, SUPPLY OR TRANSPORTATION OF SUCH SCRAP DURING THE PERIOD UNDER CONSIDERATION. THUS THE BASIS OF SURRENDER WAS SHROUDED IN MYSTERY.' THOUGH UNDER SECTION 245 HA(3), THE ASSESSING OFFICER SHALL BE ENTITLED TO USE ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION OR THE RESULTS OF THE ENQUIRY HELD OR EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDINGS BEFORE IT AS IF SUCH MATERIAL, INFORMATION, ENQUIRY AND EVIDENCE HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER, I FIND THAT EXCEPT THE DECLARATION BEFORE THE SETTLEMENT COMMISSION THERE IS NO MATERIAL IN POSSESSION OF ASSESSING OFFICER TO HOLD THAT THE APPELLANT HAVE EARNED THE INCOME FROM SCRAP TRADING. AS PER SECTION 245 HA(2), WHERE A PROCEEDING BEFORE THE SETTLEMENT COMMISSION ABATES, THE ASSESSING OFFICER BEFORE WHOM THE PROCEEDING AT THE TIME OF MAKING APPLICATION WAS PENDING, SHALL DISPOSE OF THE CASE IN ACCORDANCE WITH THE PROVISION OF THIS ACT AS IF NO APPLICATION UNDER SECTION 245C HAS BEEN MADE. THE COMBINED READING OF SECTION 245 HA (2) AND 245 HA (3) SUGGEST THAT WHEREAS THE ASSESSMENT HAS TO BE MADE IN ACCORDANCE WITH THE PROVISION OF THE ACT AS IF NO APPLICATION FOR SETTLEMENT HAS BEEN MADE, THE ASSESSING OFFICER IS ALSO ENTITLED TO USE THE MATERIAL AND INFORMATION PRODUCED BY THE ASSESSEE BEFORE SETTLEMENT COMMISSION AS ALSO THE EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION. IF THE INCOME IS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISION OF LAW, IT IS SETTLED LAW AS LAID DOWN BY THE SUPREME COURT THAT, THE PRIMARY ONUS LIES UPON THE ASSESSING OFFICER TO DEMONSTRATE THAT THE ASSESSEE HAS EARNED CERTAIN INCOME CHARGEABLE UNDER THE ACT. THERE IS NO MATERIAL BEFORE THE ASSESSING OFFICER TO SUGGEST THAT THE APPELLANT HAS EARNED INCOME FROM SCRAP TRADING. WHILE COMPUTING THE INCOME IF THE ASSESSING OFFICER IS TO USE THE MATERIAL AND INFORMATION PRODUCED BY THE ASSESSEE BEFORE SETTLEMENT COMMISSION AS ALSO THE EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION, FINDING OF THE SETTLEMENT COMMISSION REVEALS THAT BEFORE THE SETTLEMENT COMMISSION THERE WAS NO INFORMATION ABOUT THE QUANTITY OF SCRAP SOLD, PARTIES TO WHICH SUCH SCRAP WAS SOLD, OR ANY OTHER EVIDENCE INCIDENTAL TO PROCUREMENT, SUPPLY OR TRANSPORTATION OF SUCH SCRAP DURING THE PERIOD UNDER CONSIDERATION. THUS THE FINDING OF SETTLEMENT COMMISSION IS THAT NO SUCH INCOME IN THE FORM OF SCRAP TRADING IS FOUND TO HAVE BEEN EARNED. AS RIGHTLY ARGUED BY THE LD. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 38 COUNSEL FOR THE APPELLANT THAT WHEN THERE IS NO MATERIAL EITHER BEFORE ASSESSING OFFICER OR BEFORE SETTLEMENT COMMISSION THAT THE APPELLANT HAS EARNED THE INCOME, AND SINCE THE ASSESSING OFFICER HAS NO OTHER EVIDENCE TO SUGGEST THAT ANY INCOME FROM SCRAP TRADING ACCRUED TO THE APPELLANT, THE ADDITION MADE SOLELY ON THE BASIS OF APPLICATION FILED BEFORE SETTLEMENT COMMISSION IS NOT SUSTAINABLE. JUST AS THE ASSESSEE HAS ADMITTED BEFORE SETTLEMENT COMMISSION OF HAVING EARNED THE INCOME WITHOUT ANY BASIS, THE APPELLANT HAS ALSO DENIED BEFORE ASSESSING OFFICER HAVING EARNED SUCH INCOME. THEREFORE, IT WAS INCUMBENT UPON THE PART OF ASSESSING OFFICER TO BRING ON RECORD CERTAIN MATERIAL FOR MAKING THE ADDITION. IN ABSENCE OF ANY SUCH MATERIAL AND IN VIEW OF THE FINDING OF THE SETTLEMENT COMMISSION AS WELL AS DENIAL OF APPELLANT HAVING EARNED I N C O M E F R O M S C R A P T R A D I N G , T H E A D D I T I O N O F 7 , 5 0 , 0 0 0 / - I S R E Q U I R E D TO BE DELETED AND IS HEREBY DELETED. 38. IN THE A.Y. UNDER CONSIDERATION I.E. A.Y. 2013-14, WE FOUND THAT THE ASSESSEE HAD FILED APPLICATIONS U/S 245C(1). IT WAS AT HIS BEHEST THAT INCOME ON ACCOUNT OF SCRAP BUSINESS WAS DISCLOSED. THIS WAS PRIMARILY DONE TO FULFILL THE CONDITIONS PRESCRIBED U/S 245C(1). THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION BY FILING APPLICATION U/S 245C(1) FOR THE ASSESSMENT YEARS 2007-08 TO 2014-15. IN THE APPLICATION THE ASSESSEE SURRENDERED ADDITIONAL INCOME OF RS. 67,50,000/- IN ORDER TO MAKE COMPLIANCE OF THE PROVISIONS OF SECTION 245C(1) OF THE ACT. ADDITIONAL INCOME NOT DISCLOSED BEFORE THE A.O. WAS REQUIRED TO BE SURRENDERED BEFORE THE COMMISSION IN ORDER TO GET THE APPLICATION ADMITTED BEFORE THE COMMISSION. OTHERWISE THE ASSESSEE DID NOT ENJOY OR EARNED SUCH INCOME. IT WAS PRIMARILY ON THIS GROUND THAT ALTHOUGH THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 39 ASSESSEE IN FACT AND IN REALITY, DID NOT EARN ANY INCOME FROM SCRAP BUSINESS BUT THE SAME WAS DISCLOSED BEFORE THE SETTLEMENT COMMISSION SO THAT THE APPLICATION WAS NOT REJECTED. THE SETTLEMENT COMMISSION CONCLUDED THAT THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF INCOME FROM SCRAP AND ITS BASIS OF DISCLOSURES. THEREFORE, THE APPLICATION BEFORE THE SETTLEMENT COMMISSION STOOD REJECTED. THE SETTLEMENT COMMISSION PASSED ORDER ON 19.09.2016 U/S 245D(4) AND REJECTED THE APPLICATION OF THE ASSESSEE OBSERVING AS UNDER: - 11. SCRAP INCOME AND MISCELLANEOUS INCOME LIKE COMMISSION 11.1 THE SOFS MENTION THAT THE TWO CO-APPLICANTS HAVE ALSO INDULGED IN TRADING OF COPPER AND OTHER SCRAP ON ACCOUNT OF THEIR CONTACTS WITH THE SCRAP DEALERS. IT WAS CLAIMED THAT SOME OF THESE TRANSACTIONS WERE IN CASH, AND THEY WERE NOT ACCOUNTED FOR AND THE TWO CO- APPLICANTS KEPT IT WITH THEMSELVES. IT WAS FURTHER CLAIMED THAT THE TWO CO-APPLICANTS HAVE EARNED MISCELLANEOUS COMMISSION INCOME FROM SUPPLIES MADE BY THE VENDERS TO THEIR GROUP. 11.2 IN FACT, INCOME FROM THIS ACTIVITY IS THE SOLE BASIS OF THE DISCLOSURE OF INCOME MADE BY APPLICANT BEFORE THE COMMISSION. IT IS ON THIS BASIS THAT ADDITIONAL INCOME IN THE HANDS OF SH. MANGE LAL KANDOI IS SHOWN AT AN AMOUNT OF RS.67.50 LACS AND RS.127.50 LACS IN THE HANDS OF RAJ KUMAR KANDOI. 11.3 THE APPLICANTS WERE QUESTIONED ABOUT THE BASIS OF DISCLOSURE OF THE ABOVE INCOME AND THE MANNER OF EARNING SUCH INCOME. COUNSEL FOR APPLICANTS STATED DURING THE COURSE OF HEARING THAT CERTAIN SEIZED DOCUMENTS INDICATED TRADING IN SCRAP BUSINESS AND EARNING THEREFROM. THE COMMISSION EXAMINED THESE SEIZED DOCUMENTS SPECIALLY PAGE NUMBERS 49 OF AS3 (PB NO.173), AND ALSO REFERRED TO PAGE NO.181 AND 182 OF THE PAPER BOOK FILED WITH THE SETTLEMENT APPLICATION IN CASE OF RAJ KUMAR KANDOI AS POINTED OUT BY COUNSEL OF ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 40 THE APPLICANTS. ON EXAMINATION OF THESE DOCUMENTS, THE COMMISSION IS OF THE VIEW THAT THESE ARE ONLY INDICATIVE OF SOME TRADING IN SCRAP. IN SOME OF THE DOCUMENTS THE QUANTITIES ARE MENTIONED BUT THERE ARE NO DETAILS AS TO WHOM THESE WERE SOLD AND THERE IS NO WAY THAT ANY INCOME CAN BE ESTIMATED FROM SUCH LIMITED TRANSACTIONS. TO POINTED QUERIES IN THIS REGARD, IT WAS CONCEDED THAT THESE ARE ONLY LIMITED DOCUMENTS AND AT BEST ONLY AN ESTIMATE CAN BE MADE. IN FACT THE APPLICANTS IN THEIR REPLY RECEIVED ON 14/09/2016, STATED THAT 'THE INCOME FROM SCRAP AND COMMISSION HAS BEEN ESTIMATED ON THE BASIS OF AVAILABLE INFORMATION WITH THE APPLICANTS IN ABSENCE OF ANY EVIDENCE IN RESPECT OF ALL THE TRANSACTIONS'. HOWEVER, THERE HAS TO BE A REASONABLE BASIS OF ESTIMATE WHICH COULD NOT BE ESTABLISHED BY THE APPLICANTS. THIS IS SPECIALLY SO, BECAUSE IT IS ONLY ON THIS ACCOUNT THAT THE ENTIRE SURRENDER HAS BEEN MADE BEFORE THE COMMISSION. THE APPLICANT HAS NOT FURNISHED ANY INFORMATION ABOUT QUANTITY OF SCRAP SOLD, PARTIES TO WHICH SUCH SCRAP WAS SOLD, OR ANY OTHER EVIDENCE INCIDENTAL TO PROCUREMENT, SUPPLY OR TRANSPORTATION OF SUCH SCRAP DURING THE PERIOD UNDER CONSIDERATION: THUS THE BASIS OF SURRENDER WAS SHROUDED IN MYSTERY. THE PERUSAL OF THE ORDER OF THE SETTLEMENT COMMISSION REVEALS THAT THE SETTLEMENT COMMISSION HAS OBSERVED THAT THE SURRENDER OF INCOME OF RS. 67.50 LACS FOR VARIOUS ASSESSMENT YEARS I.E. FROM ASSESSMENT YEAR 2007- 08 TO 2014-15 WHICH INCLUDED RS. 15,00,000/- FOR THE ASSESSMENT YEAR 2013-14 WAS SHROUDED IN MYSTERY. THE ASSESSEE HAD MENTIONED IN THEIR APPLICATION BEFORE THE SETTLEMENT COMMISSION THAT PAGE NO. 49 OF AS-3 INDICATED REGARDING TRADING IN SCRAP BUSINESS. HAVING GONE THROUGH THIS PAPER THE SETTLEMENT COMMISSION WAS OF THE VIEW THAT IT WAS ONLY INDICATIVE THAT THERE WAS SOME TRADING IN SCRAP BUT THERE WAS NO WAY TO MAKE ANY ESTIMATE FROM SUCH LIMITED TRANSACTIONS. IN VIEW OF THIS THE SETTLEMENT COMMISSION OBSERVED THAT THE BASIS OF SURRENDER OF INCOME ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 41 FROM SCRAP BUSINESS WAS SHROUDED IN MYSTERY AND THEREFORE REJECTED THE SAME. THE HON'BLE SETTLEMENT COMMISSION HAS VERY SPECIFICALLY MENTIONED IN PARA 4 THAT THE MANNER OF EARNING OF SUCH INCOME HAS BEEN LEFT VAGUE AND NO BASIS WAS FURNISHED FOR THE WORKING OF THE SURRENDERED INCOME. IN THE VIEW OF THE SETTLEMENT COMMISSION THE ASSESSEE FAILED IN PROVIDING VITAL INGREDIENT REGARDING THE DISCLOSURE MADE. THE DISCLOSURE WAS HELD NOT TO BE CANDID IN SO FAR AS THE MANNER OF EARNING WAS SHOWN. IN SHORT, THE SETTLEMENT COMMISSION DID NOT AGREE WITH THE SOURCE OF INCOME SO DISCLOSED BY THE ASSESSEE ON ACCOUNT OF SCRAP BUSINESS. THE SUMMUM BONUM OF THE REJECTION OF THE ASSESSEE'S APPLICATION BY THE SETTLEMENT COMMISSION IS THE FOLLOWING (I) THE ASSESSEE IN FACT DID NOT ENJOY ANY SUCH INCOME FROM SCRAP BUSINESS. (II) THE ASSESSEE COULD NOT FURNISH EVIDENCE OF SOURCE OF INCOME FROM SCRAP BUSINESS. (III) THE ASSESSEE FAILED TO SUBSTANTIATE THE QUANTUM OF INCOME FROM SCRAP BUSINESS AS DISCLOSED IN THE APPLICATION BEFORE SETTLEMENT COMMISSION. IN VIEW OF THE AFORESAID FACTS, THE LD. CIT(A) CONCLUDED THAT IT IS ESTABLISHED BEYOND DOUBT THAT THE ASSESSEE DID NOT HAVE ANY SUCH INCOME FROM SCRAP BUSINESS AS DISCLOSED BEFORE THE SETTLEMENT COMMISSION. THE INCOME WAS SO DISCLOSED BY THE PREVIOUS COUNSEL OF THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 42 ASSESSEE JUST AND JUST TO GET THE APPLICATION ADMITTED BY HOOK OR BY CROOK. THE SCHEME OF THE PREVIOUS COUNSEL FAILED, THE SETTLEMENT COMMISSION DID NOT ACCEPT THE INCOME FROM SCRAP BUSINESS AND REJECTED THE APPLICATION. 39. THE LD. CIT(A) IN THE IMPUGNED ORDER GIVEN A CATEGORICAL FINDING THAT NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO JUSTIFY THE DISCLOSURE OF INCOME FROM SCRAP BUSINESS. THE A.O. ALSO HAS NOT QUOTED OR REFERRED TO ANY DOCUMENT FOUND DURING SEARCH WITH RESPECT TO INCOME FROM SCRAP BUSINESS. NO ADDITION COULD HAVE BEEN MADE U/S 153A UNLESS THE SAME IS LINKED WITH THE MATERIAL FOUND DURING SEARCH. IN VIEW OF THESE FACTS, THE LD. CIT(A) CONCLUDED THAT THE ADDITION MADE BY THE A.O. IS UNCALLED AND DESERVES TO BE DELETED. THE DETAILED FINDING GIVEN BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD DR, ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING SO RECORDED BY THE LD. CIT(A) FOR DELETING THE ADDITION OF RS. 15.00 LACS MADE BY THE A.O. ON ACCOUNT OF SCRAP TRADING. 40. THE ADDITION MADE BY THE A.O. ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCE OF RS. 2.55 CRORES, WERE DELETED BY THE LD. CIT(A). WE FOUND THAT THE LD. CIT(A) HAS DELETED THE ADDITION OF NOTIONAL INTEREST WITH REFERENCE TO HIS DECISION IN THE CASE OF THE ASSESSEE HIMSELF FOR ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 43 ASSESSMENT YEAR 2012-13. THE LD. CIT(A) HAD OBSERVED IN THE ORDER FOR ASSESSMENT YEAR 2012-13 DELETING THE ADDITION MADE BY THE A.O. PRESUMING THAT ASSESSEE HAD ALSO EARNED INTEREST ON ADVANCES ALTHOUGH NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH. THE LD. CIT(A) HELD THAT NO ADDITION COULD BE MADE SIMPLY ON THE BASIS OF PRESUMPTION AS PRESUMPTION HOWEVER STRONG CANNOT TAKE THE PLACE OF EVIDENCE. THE ASSESSEE QUOTES THE SUBMISSION MADE BEFORE THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2012-13 WHERE THE ADDITION ON ACCOUNT OF NOTIONAL INTEREST WAS OF RS. 33,39,681/-. 41. IT IS ESTABLISHED POSITION OF LAW THAT INTEREST CANNOT BE TAXED ON NOTIONAL BASIS. IN THIS CASE THERE IS NO EVIDENCE THAT INTEREST ACCRUED TO THE ASSESSEE OR INTEREST WAS RECEIVED BY HIM. EVEN THE ASSESSEE HAS CHALLENGED THE ADDITION ON ACCOUNT OF ALLEGED ADVANCES AND HENCE THE QUESTION OF TAXING INTEREST DOES NOT ARISE. THERE IS NO MATERIAL ON RECORD SO AS TO ESTABLISH THAT ASSESSEE RECEIVED INTEREST ON THE ALLEGED ADVANCES. IT IS THE WORKING OF THE MIND OF THE A.O. THAT HAS RESULTED IN ADDITION ON ACCOUNT OF INTEREST. THE INTEREST HAS BEEN CALCULATED NOTIONALLY AND ADDITION HAS BEEN MADE ACCORDINGLY. 42. THE DECISION OF THE LD. CIT(A) IS BASED ON MANY JUDICIAL PRONOUNCEMENT AND SOUND LAW. THEREFORE, THE DECISION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 1,18,12,622/- DESERVES TO BE CONFIRMED. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 44 43. SIMILARLY, ADDITION OF RS. 6,87,125/- ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCE OF RS. 49.24 LACS WAS DELETED BY THE LD. CIT(A) BY HAVING THE SAME OBSERVATION TO THE EFFECT THAT ADDITION WAS MADE BY THE A.O. BY PRESUMING THAT THE ASSESSEE HAD EARNED INTEREST ON ADVANCES ALTHOUGH NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH. AFTER GIVING DETAILED FINDING, THE LD. CIT(A) HAS CONCLUDED THAT NO ADDITION COULD BE MADE SIMPLY ON THE BASIS OF PRESUMPTION AS THE PRESUMPTION, HOWEVER, STRONG CANNOT TAKE THE PLACE OF EVIDENCE. 44. SIMILARLY, ADDITION OF RS. 1,66,185/- ON ACCOUNT OF NOTIONAL INTEREST WAS DELETED BY THE LD. CIT(A) AFTER HAVING THE SIMILAR OBSERVATION AND THE FINDINGS. WE FOUND THAT WHILE DELETING THE IMPUGNED ADDITION OF NOTIONAL INTEREST, THE LD. CIT(A) HAS DELIBERATED ON VARIOUS JUDICIAL PRONOUNCEMENTS AS REFERRED TO IN HIS ORDER AND AFTER APPLYING THE PROPOSITION OF LAW LAID DOWN THEREIN TO THE FACTS OF INSTANT CASE AND CONCLUDED THAT THE ADDITION SO MADE ON ACCOUNT OF NOTIONAL INTEREST IS NOT WARRANTED. 45. GROUND NO. 5 OF THE REVENUES APPEAL RELATES TO DELETION OF SIMILAR ADDITION OF RS. 2,06,257/- MADE BY THE A.O. ON ACCOUNT OF INTEREST EARNED ON UNDISCLOSED ADVANCE OF RS. 12.41 LACS. THE REASONING GIVEN BY THE LD. CIT(A) FOR DELETING THE ADDITION IS SAME AS NARRATED ABOVE. FOLLOWING THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 45 REASONING GIVEN BY THE LD. CIT(A) IN HIS ORDER, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING SO RECORDED FOR DELETING THE ADDITION ON ACCOUNT OF NOTIONAL INTEREST. 46. THE LD. CIT(A) HAS ALSO DELETED THE ADDITION OF RS. 4.00 CRORES MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED TRANSACTION. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT THE ADDITION WAS MADE ON THE BASIS OF LOOSE PAPERS FOUND AS-3 PAGE NO. 1 TO 9, 31 TO 40, 51 TO 58, 60, 62 TO 65 AND 70 TO 74. IT WAS CONTENTION OF THE LD AR THAT THESE PAGES WERE VAGUE, WERE NOT HAVING NAME OF ANY PARTY, NO DATE AND AMOUNT WERE FOUND NOTED, HENCE THE ASSESSEE HAD MADE A GENERAL LUMP DISCLOSURE OF RS. 4 CRORES WITHOUT SUBSTANTIATING THE SAME WITH CORRESPONDING ASSETS. SUCH SURRENDER WAS UNLAWFUL. THE A.O. HAD MADE THE ADDITION SIMPLY AND SIMPLY ON THE BASIS OF STATEMENT RECORDED U/S 132(4) WITHOUT BRINGING ON RECORD ANY MATERIAL CORRELATING THE INCOME ASSESSED WITH THE SEIZED MATERIAL. THE LD. CIT(A) HAS DELETED THE SAME AFTER GIVING DETAILED FINDING IN HIS APPEAL ORDER AND OBSERVED THAT THE A.O. HAD FAILED TO ESTABLISH CORRELATION BETWEEN THE SURRENDERED AMOUNT OF RS. 4.00 CRORES AND THE PAPERS FOUND. THE LD. CIT(A) HAS FURTHER OBSERVED THAT THE ADDITION CANNOT BE MADE SOLELY WITH REFERENCE TO STATEMENT RECORDED U/S 132(4). THE PRIMARY ONUS IS UPON THE REVENUE TO BRING ON THE RECORD MATERIAL SUBSTANTIATING THE SURRENDER. THE LD. CIT(A) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 46 HAS ALSO REFERRED THAT AT FIRST THESE PAPERS ON THE BASIS OF WHICH ADDITION HAS BEEN MADE WERE STATED BY THE ASSESSEE TO RELATE WITH KANDOI METAL POWDERS MFG. PVT LTD AND NOT WITH THE ASSESSEE. THE PRECISE OBSERVATION OF THE LD. CIT(A) WHILE DELETING THE IMPUGNED ADDITION WAS AS UNDER: 17. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS, THE SEIZED MATERIAL, THE ARGUMENT ADVANCED AND THE CASE LAW CITED. THE PRIMARY REASON FOR ADDITION IS THE ADMISSION BY THE APPELLANT DURING THE COURSE OF SEARCH. I HAVE THEREFORE CONSIDERED THE REPLY GIVEN WHILE EXPLAINING THE SEIZED MATERIAL REFERRED THEREIN. FIRSTLY IT WAS STATED BY THE APPELLANT THAT THE SAID DOCUMENT PRIMARY RELATES TO KANDOI METAL POWDERS MANUFACTURING CO PRIVATE LIMITED. IT WAS STATED THAT OUT OF THE SAID PAPERS IN MAJORITY CASES THE TRANSACTIONS ARE NOT RECORDED IN BOOKS OF ACCOUNTS AND PURCHASE, SALES AND DEBTORS ARE OUTSIDE THE BOOKS OF ACCOUNTS. IT WAS ALSO STATED THAT THE TRANSACTION IN ANNEXURE AS-7 WHICH IS A DIARY IS ALSO NOT RECORDED IN REGULAR BOOKS OF ACCOUNTS. SOME OF THE TRANSACTION RECORDED IN SAID SEIZED MATERIAL CORROBORATES WITH ANNEXURE AS-7 AND THE ACCURATE CALCULATION OF THE SAME IS NOT POSSIBLE. IT WAS ALSO EXPLAINED THAT BEING THE ELDEST MEMBER OF THE FAMILY, THE JEWELLERY, CASH ETC. FOUND DURING SEARCH WHICH IS NOT EXPLAINED, ON BEHALF OF ALL THE MEMBERS OF THE FAMILY A LUMP SUM DISCLOSURE OF 4 CRORES IS MADE. THIS INCLUDES THE UNRECORDED TRADE TRANSACTION, INVESTMENT IN JEWELLERY AND TRADE OR PERSONAL TRANSACTION OF UNDISCLOSED INCOME OF THE FAMILY MEMBERS WHICH IS NOT KNOWN WILL COVER UP THE ENTIRE DISCLOSURE OF 4 CRORES. I THEREFORE NOTE THAT THE DISCLOSURE IS A LUMP SUM DISCLOSURE WITHOUT ANY SPECIFIC REFERENCE TO ANY PARTICULAR AMOUNT OF UNDISCLOSED INCOME AND THE NATURE THEREOF. WHEN THE APPELLANT EXPLAINED DURING ASSESSMENT PROCEEDINGS THAT THE SURRENDER WAS LUMP SUM, VAGUE AND WITHOUT CONSIDERING RELEVANT MATERIAL, THE AO SUSTAINED THE ADDITION BECAUSE THE ASSESSEE HAD DECLARED THE UNACCOUNTED INCOME IN STATEMENT RECORDED DURING SEARCH. HOWEVER HE HAS ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 47 NOT BROUGHT OUT ANY ENTRY ON ANY OF THE ABOVE REFERRED SEIZED MATERIAL TO HOLD THAT THE SAME CONTAINS ANY UNDISCLOSED INCOME. IN THE ENTIRE ASSESSMENT ORDER, NO CORRELATION IS ESTABLISHED BETWEEN THE ENTRIES RECORDED IN THE SEIZED MATERIAL WITH THE ABOVE REFERRED DISCLOSURE OF 4 CRORES. JUST AS THE ASSESSEE HAD ADMITTED DURING SEARCH OF HAVING UNDISCLOSED INCOME, IN THE SAME BREATH DURING ASSESSMENT PROCEEDINGS HE HAS DECLARED NOT TO HAVE EARNED SUCH INCOME. THE SETTLED LAW IN THIS REGARD IS THAT THE PRIMARY ONUS OF TAXING AN INCOME IS UPON THE REVENUE TO PROVE THAT THE ASSESSEE HAS EARNED TAXABLE INCOME. ONLY AFTER THE REVENUE HAS EVIDENCE OF THE ASSESSEE HAVING RECEIVED CERTAIN INCOME, THE ASSESSEE CAN BE ASKED TO EXPLAIN THE SOURCE THEREOF. EXCEPT THE ADMISSION OF THE APPELLANT THERE IS NO EVIDENCE WITH THE ASSESSING OFFICER TO HOLD THAT THE APPELLANT HAVE EARNED CERTAIN INCOME. NEITHER THE NATURE OF TRANSACTION IS STATED NOR IS THE AMOUNT AGAINST SUCH SEIZED MATERIAL STATED. I ALSO FIND THAT IN RESPECT OF OTHER ADDITIONS OF VARIOUS ADVANCES GIVEN, NOT ONLY THE SEIZED MATERIAL RECORDED THE DATE AND AMOUNT GIVEN ALONG WITH THE NAME OF THE PERSON TO WHOM SUCH ADVANCES GIVEN BUT WAS ALSO CATEGORICAL ADMISSION OF THE APPELLANT AS ALSO HIS SONS. HOWEVER IN THE PRESENT ISSUE UNDER CONSIDERATION, NO SUCH SPECIFIC AMOUNT AGAINST ANY OF THE SEIZED MATERIAL WITH NARRATION THEREON IS FOUND. THEREFORE WHETHER THE NOTINGS IN SUCH SEIZED MATERIAL IS GIVING RISE TO TAXABLE INCOME ITSELF IS DOUBTFUL. IT IS SETTLED LAW THAT MERELY ON THE ADMISSION AND WITHOUT ANY CORROBORATING MATERIAL NO ADDITION CAN BE MADE. EVEN AFTER EXERCISING THE LONGEST ARM OF THE REVENUE BY CONDUCTING SEARCH, NO EVIDENCE OF APPLICATION OF SUCH INCOME IN THE FORM OF ASSET OR EXPENDITURE IS FOUND AGAINST SUCH HUGE INCOME OF 4 CRORES. HAD THE ASSESSEE EARNED SUCH HUGE INCOME, THE SAME WOULD HAVE BEEN FOUND TO HAVE BEEN APPLIED EITHER FOR ACQUISITION OF ANY ASSET OR FOR SPENDING THE SAME. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 48 17.2 ANOTHER REASON GIVEN BY THE AO IS THAT THE STATEMENT WAS VOLUNTARY WHICH IS ALSO FOUND TO BE SO BY HON'BLE SETTLEMENT COMMISSION. EVEN IF IT IS CONSIDERED THAT THE STATEMENT WAS VOLUNTARY, THE STATEMENT ITSELF SHOULD BE SUCH WHICH NARRATES THE NATURE OF TRANSACTION AND RELATES THE SAME WITH THE SEIZED MATERIAL FOR COMPUTATION OF UNDISCLOSED INCOME. IN THE PRESENT CASE IT IS SEEN THAT EXCEPT THE STATEMENT, NEITHER THE NATURE OF TRANSACTION IS STATED NOR ITS RELATION TO THE SEIZED MATERIAL IS STATED WHERE SUCH INCOME OF 4 CRORES ARE RECORDED. THEREFORE EVEN IF THE STATEMENT IS VOLUNTARY, SINCE IT HAS NO CORROBORATION OR IS BROUGHT OUT BY THE AO, NO ADDITION CAN BE MADE ONLY ON THE BASIS OF STATEMENT RECORDED DURING SEARCH. LD. A.O. HAS ALSO REFERRED TO THE JUDGMENT OF RAJASTHAN HIGH COURT IN THE CASE OF SHRI RAVI MATHUR DATED 13TH OF MAY 2016 FOR THE PROPOSITION THAT STATEMENT RECORDED UNDER SECTION 132(4) HAVE GREAT EVIDENTIARY VALUE AND CANNOT BE DISCARDED IF RETRACTED AFTER LONGTIME. IN MY CONSIDERED OPINION, THE SAID JUDGMENT IS DISTINGUISHABLE ON FACTS. IN THE PRESENT CASE THOUGH THERE IS STATEMENT OF THE APPELLANT, THE STATEMENT DO NOT RELATE THE AMOUNT OF DISCLOSURE WITH THE RESPECTIVE ENTRIES OF THE SEIZED MATERIAL. THOUGH THE QUESTION WAS SPECIFIC WITH REFERENCE TO THE SEIZED MATERIAL, THE ADMISSION IS LUMP SUM WITHOUT NARRATING THE ENTRIES THEREON AND THE AMOUNT OF SUCH ENTRY. THUS ONCE AGAIN THE ADDITION IS PURELY ON THE BASIS OF ADMISSION OF THE APPELLANT WITHOUT ANY REFERENCE TO ANY SPECIFIC NATURE OF ENTRY IN THE SEIZED MATERIAL WITH DESCRIPTION THEREON. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 49 17.3 HERE IT IS PERTINENT TO NOTE THE PROVISION RELATING TO SEARCH U/ S. 132 AND ASSESSMENT U/ S.143. THE PROVISION OF SECTION 132 ENTITLES THE AUTHORIZED OFFICER TO CONDUCT A SEARCH AND RECORD THE STATEMENT OF THE PERSON IN POSSESSION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS FOUND DURING SEARCH. IT IS ALSO PROVIDED THAT THE PERSON IN POSSESSION OF SUCH MATERIAL CAN BE EXAMINED ON OATH AND THE STATEMENT CAN BE RECORDED WHICH CAN BE UTILISED FOR THE PURPOSE OF ASSESSMENT. HOWEVER THE PROVISION STOPS THERE ONLY AND CANNOT BE CONSIDERED TO BE ASSESSMENT PROCEEDINGS. ASSESSMENT U/S. 143 IS MADE ON THE BASIS OF RELEVANT MATERIAL, EXPLANATION OF THE APPELLANT, EVIDENCES FOUND AND SUCH OTHER MATERIAL FOR COMPUTATION OF CORRECT INCOME. THUS, THE PURPOSE AND INTENT OF BOTH THE PROVISIONS ARE ENTIRELY DIFFERENT AND ONE IS NOT A SUBSTITUTE FOR THE OTHER. THIS ALSO MAKES IT CLEAR THAT, THOUGH THE STATEMENT RECORDED DURING THE COURSE OF SEARCH CAN BE USED IN EVIDENCE IN ASSESSMENT PROCEEDINGS, YET THE SAME CANNOT BE THE SOLE BASIS FOR COMPUTING THE INCOME IN REGULAR ASSESSMENT PROCEEDINGS. SINCE THE ASSESSMENT U/S 143 IS TO BE MADE AFTER HEARING SUCH EVIDENCES AS THE ASSESSEE MAY PRODUCE AND SUCH OTHER EVIDENCE AS THE ASSESSING OFFICER MAY REQUIRE IN SPECIFIED POINTS, AND AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED, THE ASSESSING OFFICER SHALL MAKE AN ASSESSMENT OF THE TOTAL INCOME. SINCE THE PRIMARY ONUS TO TAX ANY INCOME IS UPON THE REVENUE AND SINCE THE ASSESSING OFFICER FAILED TO BRING OUT ANY SUCH MATERIAL F O R T A X I N G T H E I N C O M E O F 4 C R O R E S , I N M Y CONSIDERED OPINION THE SAME IS NOT SUSTAINABLE ON THE FACTS OF THE CASE AS ALSO IN LAW. HAVING EXAMINED THE SEIZED MATERIAL, IT IS NOT DISCERNIBLE AS TO HOW SUCH MATERIAL DEMONSTRATES THAT THE APPELLANT HAS EARNED T H E I N C O M E O F 4 C R O R E S . I N M Y O P I N I O N O N L Y O N T H E B A S I S O F ADMISSION BY THE APPELLANT, THE SAME IS NOT SUSTAINABLE. EVEN THE ASSESSING OFFICER HAS NOT RELATED THE NOTING IN THE SEIZED MATERIAL WITH THE AMOUNT OF 4 CRORES. THE ADDITION OF 4 ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 50 CRORES IS THEREFORE LIABLE TO BE DELETED AND IS ACCORDINGLY HEREBY DELETED. 47. WE HAD CAREFULLY GONE THROUGH THE OBSERVATION OF THE A.O. AND THE FINDINGS GIVEN BY THE LD. CIT(A) WHILE DELETING THE ADDITION AND FOUND THAT THE LD. CIT(A) HAS DEALT WITH EACH AND EVERY OBJECTION OF THE A.O. AND AFTER CONTROVERTING THE SAME, REACHED TO THE CONCLUSION THAT NO ADDITION IS WARRANTED WITHOUT ANY CORROBORATING MATERIAL. THE LD. CIT(A) HAS FURTHER OBSERVED THAT THE ASSESSMENT U/S 143 IS MADE ON THE BASIS OF RELEVANT MATERIAL, EXPLANATION OF THE ASSESSEE, EVIDENCES FOUND AND SUCH OTHER MATERIAL FOR COMPUTATION OF CORRECT INCOME. THUS, THE PURPOSE AND INTENT OF BOTH THE PROVISIONS ARE ENTIRELY DIFFERENT AND ONE IS NOT A SUBSTITUTE FOR THE OTHER. THIS ALSO MAKES IT CLEAR THAT, THOUGH THE STATEMENT RECORDED DURING THE COURSE OF SEARCH CAN BE USED IN EVIDENCE IN ASSESSMENT PROCEEDINGS, YET THE SAME CANNOT BE THE SOLE BASIS FOR COMPUTING THE INCOME IN REGULAR ASSESSMENT PROCEEDINGS. SINCE THE ASSESSMENT U/S 143 IS TO BE MADE AFTER HEARING SUCH EVIDENCES AS THE ASSESSEE MAY PRODUCE AND SUCH OTHER EVIDENCE AS THE ASSESSMENT OFFICER MAY REQUIRE IS SPECIFIED POINTS, AND AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED, THE A.O. SHALL MAKE AN ASSESSMENT OF THE TOTAL INCOME. SINCE THE PRIMARY ONUS TO TAX ANY INCOME IS UPON THE REVENUE AND SINCE THE A.O. FAILED TO BRING OUT ANY SUCH MATERIAL FOR ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 51 TAXING THE INCOME OF RS. 4.00 CRORES, IN OUR CONSIDERED OPINION THE SAME IS NOT SUSTAINABLE ON THE FACTS OF THE CASE AS ALSO IN LAW. HAVING EXAMINED THE SEIZED MATERIAL, IT IS NOT DISCERNIBLE AS TO HOW SUCH MATERIAL DEMONSTRATES THAT THE ASSESSEE HAS EARNED THE INCOME OF RS. 4.00 CRORES. 48. THE DETAILED FINDING SO GIVEN BY THE LD. CIT(A) IN PARA 17 TO 17.3 WHILE DELETING ADDITION OF RS. 4.00 CRORES, HAS NOT BEEN CONTROVERTED BY THE LD DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD, ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS SO RECORDED BY THE LD. CIT(A) WHICH ARE AS PER MATERIAL ON RECORD. 49. THE REVENUE IS ALSO IN APPEAL FOR DELETING ADDITION OF RS. 1,11,98,057/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY. IN THIS REGARD, WE OBSERVE THAT THE A.O. MADE ADDITION OF RS. 2,09,63,501/- ON ACCOUNT OF UNEXPLAINED GOLD JEWELLERY, DIAMOND AND SILVER ITEMS. THE TOTAL JEWELLERY FOUND WAS OF RS. 2,41,67,236/-. THE A.O. CONSIDERING THE JEWELLERY DISCLOSED IN THE BALANCE SHEET OF THE VARIOUS FAMILY MEMBERS OF RS. 32,03,735/- MADE ADDITION OF THE BALANCE JEWELLERY ETC. OF RS. 2,09,63,501/-. 50. BY THE IMPUGNED ORDER, THE LD. CIT(A) AFTER FOLLOWING THE CBDT INSTRUCTION NO. 1916 DATED 11.05.94 REGARDING SEIZURE OF JEWELLERY NEEDS ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 52 TO THE APPLIED FOR PURPOSES OF ASSESSMENT ALSO. IN THE WORDS OF THE LD. CIT(A) WHAT IS NOT TO BE SEIZED AS PER THE INSTRUCTION DESERVES TO BE TREATED AS EXPLAINED. WHILE HOLDING SO THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT OF RAJASTHAN IN THE CASE OF SATYA NARAYAN PATNI 40 TAXMAN 440. FOLLOWING THE INSTRUCTION QUOTED ABOVE THE LD. CIT(A) HAS GIVEN CREDIT OF JEWELLERY DISCLOSED IN THE WEALTH TAX RETURN, ALTHOUGH NOT DISCLOSED IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME. THE LD. CIT(A) HAS HELD THAT THE CBDT INSTRUCTION DOES NOT REQUIRE JEWELLERY TO BE DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS OR IN THE BALANCE SHEET. IT IS ENOUGH IF THE JEWELLERY IS DISCLOSED IN THE WEALTH TAX RETURN, THEN CREDIT HAS TO BE GIVEN ACCORDINGLY. THE LD. CIT(A) HAS FURTHER HELD THAT CREDIT OF JEWELLERY DISCLOSED IN THE BALANCE SHEET HAS TO BE GIVEN WITH REFERENCE TO WEIGHT AND NOT VALUE. IN VIEW OF THIS THE LD. CIT(A) GAVE CREDIT OF 3421.779 GRAMS GOLD JEWELERY, 189.62 CARATS OF DIAMONDS AND 16.75 KG OF SILVERWARE AS DISCLOSED BY THE ASSESSEE GROUP IN THE WEALTH TAX RETURN OR BALANCE SHEET. THE LD. CIT(A) FURTHER ALLOWED RELIEF IN RESPECT OF SAVITRI KANDOI AND SNEH KANDOI OF GOLD JEWELLERY 500 GRAMS AND 112 GRAMS BEING COVERED FULLY UNDER THE CBDT INSTRUCTION. 51. WE FOUND THAT THE ASSESSEE HAD DISCLOSED 1500 GRAMS OF GOLD JEWELLERY IN THE HANDS OF SIX MALE/FEMALE CHILDREN @ 250 GRAMS WHEREAS ONLY 100 GRAMS WAS ALLOWABLE AS PER CBDT INSTRUCTION. THE LD. CIT(A) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 53 CONSIDERING THE STATUS OF THE FAMILY AND TRADITIONS HAS ALLOWED 200 GRAMS FOR CHILDREN AND THUS BENEFIT HAS BEEN GIVEN OF 200 GRAMS OF GOLD AND REMAINING 300 GRAMS HAS BEEN TREATED AS UNEXPLAINED OF THE VALUE OF RS. 8,85,000/-. 52. FURTHERMORE, THE ASSESSEE HAS DISCLOSED 189.620 CARATS OF GOLD IN WEALTH TAX AND IT RETURNS AS AGAINST 373.620 GRAMS FOUND DURING SEARCH. THUS 184 GRAMS REMAINED TO BE EXPLAINED. THE ASSESSEE HAD PLEADED THAT CONSIDERING THE STATUS OF FAMILY, NUMBER OF FAMILY MEMBERS, TRADITIONS IN THE TRADITIONAL MARWADI FAMILY MORE CREDIT REQUIRED TO BE GIVEN OF THE DIAMOND FOUND DURING SEARCH. IN VIEW OF THE SUBMISSION OF THE ASSESSEE THE LD. CIT(A) HAS GIVEN CREDIT OF 25% OF 184 CARATS OF DIAMOND WHICH REMAINED UNEXPLAINED. THUS 46 CARAT OF DIAMOND HAS FURTHER BEEN TREATED AS EXPLAINED AND BALANCE 138 CARATS OF DIAMOND OF THE VALUE OF RS. 37,13,994/- WAS TREATED AS UNEXPLAINED. THE SILVER WEIGHING 39 KG HAS BEEN TREATED AS EXPLAINED BY THE LD. CIT(A) WITH RESPECT TO THE STATUS OF THE FAMILY AND TRADITIONS. IN VIEW OF THE AFORESAID FACTS THE LD. CIT(A) HAS SUSTAINED ADDITION OF RS. 97,65,444/- (885000+3713994+5166450 [SURRENDERED BY THE ASSESSEE]) TOTALING TO RS. 97,65,444/-. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 54 53. A DETAILED FINDING HAS BEEN RECORDED BY THE LD. CIT(A) FOR UPHOLDING THE ADDITION OF RS. 97,65,444/-. THE PRECISE OBSERVATION OF THE LD. CIT(A) WHILE UPHOLDING THE ADDITION OF RS. 97,65,444/- ON ACCOUNT OF JEWELLERY WAS AS UNDER: 1 8 . T H E N E X T G R O U N D O F A P P E A L I S A G A I N S T A D D I T I O N O F 2 , 0 9 , 6 3 , 5 0 1 / - O N ACCOUNT OF JEWELLERY FOUND DURING THE COURSE OF SEARCH WHICH WAS TREATED AS UNEXPLAINED. DURING THE COURSE OF SEARCH, GOLD JEWELLERY WEIGHING 7936.779 GMS., DIAMOND JEWLLERY OF 373.62 CARATS AS ALSO 39.75 KG OF S I L V E R W A R E W A S F O U N D . T H E S A M E W A S V A L U E D A T 2 , 4 1 , 6 7 , 2 3 6 . O U T O F T H E S A M E , J E W E L L E R Y W O R T H 1 , 0 3 , 4 1 , 7 7 8 W A S S E I Z E D . D U R I N G T H E COURSE OF SEARCH THE ASSESSEE WAS ASKED TO EXPLAIN THE JEWELLERY FOUND. THE APPELLANT COULD NOT FILE RELEVANT EVIDENCE. HOWEVER IT WAS STATED THAT SOME OF THE FAMILY MEMBERS HAVE FILED WEALTH-TAX RETURN WHEREIN THE JEWELLERY WERE DECLARED. THE ASSESSING OFFICER HELD THAT THE FAMILY MEMBERS WERE NOT FILING THEIR WEALTH TAX RETURNS FOR LAST 20-30 YEARS BEFORE SEARCH. THE ASSESSEE ALSO COULD NOT EXPLAIN THE JEWELLERY FOUND WITH WEALTH TAX RETURN, SOURCE OF JEWELLERY PURCHASED OR JEWELLERY GIFTED. ON THE BASIS OF THE FINDING OF THE SETTLEMENT COMMISSION THE ASSESSING OFFICER PROPOSED THE ADDITION. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE FILED WEIGHT-WISE CHART OF TOTAL JEWELLERY FOUND AND THAT DECLARED IN THE WEALTH TAX RETURNS AS ALSO CREDIT FOR THE SEVERAL MEMBERS OF THE FAMILY BASED ON CBDT CIRCULAR. THE ASSESSING OFFICER HELD THAT SINCE AS PER THE INCOME TAX RETURN, THE JEWELLERY DECLARED IN THE BALANCE SHEET O F V A R I O U S F A M I L Y M E M B E R S W A S 3 2 , 0 3 , 7 3 5 O N L Y A N D T H E V A L U E ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 55 O F J E W E L L E R Y F O U N D D U R I N G S E A R C H W A S 2 , 4 1 , 6 7 , 2 3 6 , T H E B A L A N C E J E W E L L E R Y O F 2 , 0 9 , 6 3 , 5 0 1 I S T O B E C O N S I D E R E D A S U N E X P L A I N E D A N D REQUIRED TO BE ADDED. HE ALSO HELD THAT BENEFIT OF JEWELLERY SHOWN IN WEALTH TAX RETURNS FILED BEFORE 30 YEARS CANNOT BE GIVEN TO THE ASSESSEE AS THE FAMILY MEMBERS HAVE NOT FILED THEIR WEALTH TAX RETURNS THEREAFTER. IN THE BALANCE SHEET FOR A . Y . 2 0 1 3 - 1 4 , T H E J E W E L L E R Y D E C L A R E D I S O N L Y 3 2 . 0 3 L A K H S . H E ACCORDINGLY HELD THAT JEWELLERY DECLARED IN THE WEALTH TAX RETURNS FILED MORE THAN 20-30 YEARS BACK IS NOT EXISTING AT PRESENT AND IF ANY THEN THE SAME IS COVERED BY THE JEWELLERY DECLARED IN THE INCOME TAX RETURNS. THE AO RELYING UPON THE AFFIDAVIT OF THE APPELLANT AS ALSO HIS SON HELD THAT SINCE THEY HAVE AGREED TO CONSIDER THE UNDISCLOSED JEWELLERY ONLY IN THE HANDS OF THE APPELLANT, THE ENTIRE ADDITION ON ACCOUNT OF UNEXPLAINED JEWELLERY IS TO BE MADE IN THE HANDS OF THE A P P E L L A N T H E R E I N . A C C O R D I N G L Y A D D I T I O N O F 2 , 0 9 , 6 3 , 5 0 1 W A S MADE WHICH IS NOW CHALLENGED IN APPEAL BEFORE ME. APPELLANT'S SUBMISSIONS : 19. THE LD. COUNSEL FOR THE APPELLANT SUBMITTED AS UNDER. 'THE ADDITION HAS BEEN MADE WITH RESPECT TO THE ALLEGED UNEXPLAINED INVESTMENT IN GOLD AND DIAMOND AND SILVER JEWELLERY. THE FOLLOWING JEWELLERY WAS FOUND AT THE RESIDENCE OF SHRI MANGI LAL KANDIO: - (I) GOLD JEWELLERY 7936.779 GRAMS (II) DIAMOND 373.62 CARATS (III) SILVER 39.75 KILOGRAMS THE ABOVE JEWELLERY WAS VALUED FOR A SUM OF RS. 2,41,67,236/-. AGAINST THIS JEWELLERY BENEFIT HAS BEEN GIVEN OF RS. 32,03,735/- ON ACCOUNT OF JEWELLERY DECLARED IN THE INCOME TAX RETURNS FOR THE ASSESSMENT YEAR 2013-14 BY SHRI M.L. KANDIO OF RS. 3,48,475/-, SMT. SAVITRI KANDIO OF RS. 8,41,500/-, SMT. SADHANA ANAND SINGHAL OF RS. 7,29,760/-, SHIVANI KANDOI OF RS. 5,98,316/- AND SNEH NARENDRA KANDOI OF RS. 6,85,684/- ALL TOTALING TO RS. 32,03,735/-. THUS THE LD. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 56 ASSESSING OFFICER MADE ADDITION OF THE REMAINING AMOUNT OF RS. 2,09,63,501/- (24167236-3203735). DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED FOLLOWING REPLY: - 'THE WEIGHT WISE CHART OF TOTAL JEWELLERY FOUND DURING THE COURSE OF SEARCH IS SHOWN AS UNDER:- PARTICULARS GOLD JEWELRY (GRAMS) DIAMONDS (CARAT) SILVER ITEMS (K.G.) TOTAL VALUE FOUND AT THE TIME OF SEARCH 7936.779 373.620 39.750 24167236 DECLARED AS PER WEALTH RETURNS AND BOOKS -3421.779 -189.620 -16.750 DIFFERENCE 4515.00 184.00 23.000 CLAIM OF JEWELRY REGARDING OTHER FAMILY MEMBERS SMT. SAVITRI KANDOI 500.00 92.00 10.00 SNEH KANDOI 112.00 92.00 5.00 6 MALE AND FEMALE MEMBERS 1500.00 0 8.00 TOTAL 2112.00 184.00 23.00 DIFFERENCE 2403 0 0 5166450 THEREFORE THE TOTAL UNDISCLOSED JEWELLERY OF THE ASSESSEE COMES OUT TO 2403 GRAMS AND IF VALUED @ 2150/- PER GRAMS (PRESENT VALUATION) COMES OUT TO RS. 5166450/- AND NOT RS. 20963501/-. THE ASSESSEE IS READY TO INCLUDE SUCH INCOME IN HIS RETURN OF INCOME' THE LD. ASSESSING OFFICER VIRTUALLY DID NOT CONSIDER THE REPLY AT ALL AND MADE ADDITION OF RS. 2,09,63,501/-. THE ADDITION MADE BY THE LD. ASSESSING OFFICER IS UNLAWFUL, ILLEGAL AND UNJUST ON THE FOLLOWING COUNTS: - 2. JEWELLERY SEIZED ONLY OF RS. 1,03,41,778/- IT IS SUBMITTED THAT AS MENTIONED BY THE LD. ASSESSING OFFICER IN PARA 7.6 OF THE ASSESSMENT ORDER THAT OUT OF TOTAL JEWELLERY FOUND OF RS. 2,41,67,236/- JEWELLERY TO THE EXTENT OF RS. 1,03,41,778/- WAS SEIZED. IN OTHER WORDS THE REMAINING JEWELLERY FOUND TO THE EXTENT OF RS. 1,38,35,458/- WAS TREATED AS EXPLAINED BY THE AUTHORIZED OFFICERS. THEREFORE THE EXPLANATION REQUIRED IS ONLY IN RESPECT OF ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 57 JEWELLERY SEIZED OF RS. 1,03,41,778/-. THEREFORE THE LD. ASSESSING OFFICER WAS WRONG IN MAKING ADDITION OF RS. 2,09,63,501/-. 3. CBDT INSTRUCTION 1994 DATED 11-05-1994 NOT FOLLOWED BY THE LD. ASSESSING OFFICER: IT IS SUBMITTED THAT THE LD. ASSESSING OFFICER HAS NOT FOLLOWED THE INSTRUCTIONS OF THE CBDT ISSUED UNDER CIRCULAR NO. 1994 DATED 11.05.1994 WHICH IS QUOTED BELOW: - 'CBDT INSTRUCTION 1994 DATED 11-05-1994 INSTANCES OF SEIZURE OF JEWELLERY OF SMALL QUANTITY IN THE COURSE OF OPERATION UNDER SECTION 132 HAVE COME TO THE NOTICE OF .THE BOARD. THE QUESTION OF A COMMON APPROACH TO SITUATION WHERE SEARCH PARTIES COME ACROSS ITEMS OF JEWELLERY HAS BEEN EXAMINED BY THE BOARD AND FOLLOWING GUIDELINES ARE ISSUED FOR STRICT COMPLIANCE. (I) IN THE CASE OF A WEALTH-TAX ASSESSEE, GOLD JEWELLERY AND ORNAMENTS FOUND IN EXCESS OF THE GROSS WEIGHT DECLARED IN THE WEALTH-TAX RETURN ONLY NEED TO BE SEIZED. (II) IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH-TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS. PER MARRIED LADY 250 GMS PER UNMARRIED LADY AND 100 GMS. PER MALE MEMBER OF THE FAMILY, NEED NOT BE SEIZED. (III) THE AUTHORIZED OFFICER MAY HAVING REGARD TO THE STATUS OF THE FAMILY AND THE CUSTOMS AND PRACTICES OF THE COMMUNITY TO WHICH THE FAMILY BELONGS AND OTHER CIRCUMSTANCES OF THE CASE, DECIDE TO EXCLUDE A LARGER QUANTITY OF JEWELLERY AND ORNAMENTS FROM SEIZURE. THIS SHOULD BE REPORTED TO THE DIRECTOR OF INCOME-TAX/COMMISSIONER AUTHORISING THE SEARCH ALL THE TIME OF FURNISHING THE SEARCH REPORT. (IV) IN ALL CASES, A DETAILED INVENTORY OF THE JEWELLERY AND ORNAMENTS FOUND MUST BE PREPARED TO BE USED FOR ASSESSMENT PURPOSES.' AS PER THIS CIRCULAR BENEFIT HAS TO BE GIVEN TO THE EXTENT OF 500 GMS. PER MARRIED LADY 250 GMS PER UNMARRIED LADY AND 100 GMS. PER MALE MEMBER OF THE FAMILY. ACCORDINGLY A CHART WAS SUBMITTED TO THE LD. ASSESSING OFFICER WHICH IS PRODUCED ABOVE AND AFTER FOLLOWING THE BOARD CIRCULAR ONLY 2403 GRAMS REMAINED AS UNEXPLAINED VALUE OF WHICH WORKS OUT TO RS. 51,66,450/-. THE SAME DESERVES TO BE CONSIDERED PROPORTIONATELY IN VARIOUS HANDS AND NOT ENTIRELY IN THE HANDS OF THE ASSESSEE. 4. TOTAL JEWELLERY CANNOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE: - IT IS SUBMITTED THAT GOLD JEWELLERY, DIAMONDS AND SILVER JEWELLERY BELONG TO THE ENTIRE FAMILY WHICH CONSISTED OF 14 MEMBERS AS DETAILED BY THE LD. ASSESSING OFFICER IN PARA 7.6.3 PAGE 24 OF THE ASSESSMENT ORDER. SOME OF THESE MEMBERS NAMELY SHRI M.L. KANDOI, SMT. SAVITRI KANDOI, SMT. SADHANA ANAND SINGHAL, SMT. SHIVANI KANDOI AND SNEH NARENDRA KANDOI HAD DISCLOSED THE JEWELLERY IN THEIR IT RETURNS. WHEREAS SOME OTHER MEMBERS DISCLOSED THE JEWELRY IN THEIR WEALTH TAX RETURN WHICH WERE FILED UPTO ASSESSMENT YEAR 1993-94 OR EARLIER. HOWEVER THEIR WEALTH TAX RETURN DISCLOSED POSSESSION OF JEWELERY AND THE BENEFIT OF WHICH REQUIRED TO BE GIVEN. THE LD. ASSESSING OFFICER HAS NOT GIVEN ANY CREDIT OF THIS JEWELLERY DISCLOSED IN WEALTH TAX RETURNS. JEWELLERY HAD BEEN DISCLOSED IN THE WEALTH TAX RETURNS BY SHRI ANAND SINGHAL, SHRI R.K. KANDOI AND SHRI N.K. KANDOI ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 58 WHO HAD NOT DISCLOSED JEWELLERY IN THEIR INCOME TAX RETURNS. THE JEWELLERY DISCLOSED BY THESE PERSONS IS IN THEIR INCOME TAX RETURN UPTO ASSESSMENT YEAR 1993-94. BENEFIT HAS TO BE GIVEN OF VALUATION AS ON 31.03.2013. THIS EXERCISE HAS NOT BEEN DONE BY THE LD. ASSESSING OFFICER. BENEFIT HAS BEEN GIVEN OF THIS JEWELLERY BECAUSE IT IS NOT THE CASE OF THE LD. ASSESSING OFFICER THAT SUCH JEWELLERY WAS EVER SOLD BY THESE MEMBERS. IN CASE THIS BENEFIT IS GIVEN THEN THERE WOULD BE NO UNEXPLAINED JEWELLERY WARRANTING ADDITION. IN CASE IF THERE REMAINS ANY UNEXPLAINED JEWELLERY THE SAME REQUIRES TO BE CONSIDERED IN THE HANDS OF THE PERSONS TO WHOM THE SAME BELONGS. IN ANY CASE THE LD. ASSESSING OFFICER WAS NOT JUSTIFIED TO CONSIDER THE ENTIRE JEWELLERY IN THE HANDS OF THE ASSESSEE AND MADE ADDITIONS ACCORDINGLY. THE ADDITION MADE IS TOTALLY UNLAWFULLY, ILLEGAL AND UNJUST THE SAME DESERVES TO BE DELETED. ANALYSIS & DECISION 20. I HAVE CAREFULLY CONSIDERED THE IMPUGNED ORDER, AND THE SUBMISSIONS MADE. THE FACT IS NOT IN DISPUTE TO THE EXTENT THAT ON THE DATE O F S E A R C H T H E J E W E L L E R Y V A L U I N G 2 4 1 L A K H ( R O U N D E D O F F ) W A S F O U N D . O U T O F T H E S A M E , J E W E L L E R Y V A L U I N G O N L Y 1 0 3 L A K H (ROUNDED OFF) WERE SEIZED AND THE REMAINING JEWELLERY VALUED A T 1 3 8 L A K H W E R E N O T S E I Z E D . T H I S I S F O R T H E R E A S O N T H A T I N VIEW OF CBDT INSTRUCTIONS NO. 1916 DATED 11TH OF MAY 1994, JEWELLERY DECLARED IN WEALTH TAX RETURNS ARE NOT REQUIRED TO BE SEIZED. ALSO IF A PERSON IS NOT LIABLE TO WEALTH-TAX, JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS FOR MARRIED LADY, 250 GMS. FOR UNMARRIED LADY AND 100 GMS. FOR A MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED. THE INSTRUCTION ALSO EXTENDS TO CONSIDER THE STATUS OF THE FAMILY AND CUSTOMS AND PRACTICES OF THE COMMUNITY TO WHICH THE FAMILY BELONGS AS ALSO OTHER CIRCUMSTANCES OF THE CASE FOR EXCLUSION OF LARGE QUANTITY OF JEWELLERY AND ORNAMENTS FROM SEIZURE. THOUGH THE CIRCULAR REFERS ONLY TO NON-SEIZURE OF JEWELLERY, IT SHOULD ALSO BE CONSIDERED AS APPLICABLE WHILE CONSIDERING THE EXPLANATION OF THE PERSON TO CONSIDER WHETHER THE JEWELLERY ETC. FOUND ARE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 59 TO BE CONSIDERED AS EXPLAINED OR UNEXPLAINED FOR THE PURPOSE OF ASSESSMENT. IF AS PER THE CIRCULAR, THE JEWELLERY IS NOT REQUIRED TO BE SEIZED, IT WOULD IMPLY THAT TO THAT EXTENT THE POSSESSION OF JEWELLERY IS DEEMED TO BE EXPLAINED BY EITHER DECLARING IN WEALTH TAX RETURNS, OR BY USAGE AND CUSTOM, OR BY THE STATUS OF THE FAMILY AS ALSO CUSTOM AND PRACTICES OF THE COMMUNITY TO WHICH THE ASSESSEE BELONGS. I THEREFORE HOLD THAT THE CBDT INSTRUCTIONS NEEDS TO BE APPLIED EVEN FOR CONSIDERING WHETHER THE JEWELLERY FOUND DURING SEARCH SHOULD BE CONSIDERED AS EXPLAINED OR UNEXPLAINED FOR THE PURPOSE OF ASSESSMENT. THIS VIEW IS HELD BY HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SATYA NARAIN PATNI 40 TAXAMNN.COM 440. THE HEAD NOTE AND MAIN PORTION OF THE JUDGEMENT IS AS UNDER: SECTION 69A OF THE INCOME-TAX ACT, 1961 - UNEXPLAINED MONEY (JEWELLERY) - ASSESSMENT YEAR 2005-06 ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED JEWELLERY FOUND DURING SEARCH PROCEEDING WAS UNDER CHALLENGE - IN STATEMENTS, FAMILY MEMBERS CLEARLY STATED THAT THESE WERE PERSONAL WEARING JEWELLERY AND SAME WERE RECEIVED BY LADIES/DAUGHTER-IN-LAW ON/OR AT TIME OF THEIR MARRIAGE EITHER FROM PARENTAL SIDE OR IN-LAWS SIDE - REVENUE COULD NOT PLACE ANY MATERIAL TO SHOW OTHERWISE THAN THAT STIPULATED IN CBDT CIRCULAR 1916, DATED 11-5-1994 WHICH STATES THAT IF JEWELLERY FOUND IN POSSESSION OF A MARRIED LADY, UNMARRIED LADY AND MALE MEMBER OF FAMILY IS TO EXTENT OF 500 GMS., 250. GMS AND 100 GMS. EACH, OFFICIALS WOULD NOT QUESTION SOURCE AND ACQUISITION - FURTHER, ASSESSING OFFICER, IN FIRST INSTANCE, DID NOT SEIZE SAID JEWELLERY - WHETHER SINCE JEWELLERY WAS FOUND TO BE WITHIN TOLERABLE LIMIT PRESCRIBED BY CBDT, NO ADDITION WAS JUSTIFIABLE - HELD, YES [PARAS 12 TO 14] [IN FAVOUR OF ASSESSEE] CIRCULARS AND NOTIFICATIONS : INSTRUCTION NO. 1916, DATED 11-5-1994 HELD ON PERUSAL OF THE CIRCULAR OF THE BOARD, IT IS CLEAR THAT IN THE CASE OF WEALTH TAX ASSESSEE, WHATEVER GOLD JEWELLERY AND ORNAMENTS HAVE BEEN FOUND AND DECLARED IN THE WEALTH TAX RETURN, NEED NOT BE SEIZED. HOWEVER, SUB-CLAUSE (II) PRESCRIBES THAT IN CASE OF A PERSON NOT ASSESSED TO WEALTH TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS. PER MARRIED LADY, 250. GMS PER UNMARRIED LADY AND 100 GMS. PER MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED. SUB-CLAUSE (III) ALSO PRESCRIBES THAT THE AUTHORISED OFFICER MAY, HAVING REGARD TO THE STATUS OF THE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 60 FAMILY, AND THE CUSTOM AND PRACTICES OF THE COMMUNITY TO WHICH THE FAMILY BELONGS AND OTHER CIRCUMSTANCES OF THE CASE, DECIDE TO EXCLUDE A LARGER QUANTITY OF JEWELLERY AND ORNAMENTS FROM SEIZURE. [PARA 11] THE CIRCULAR OF THE CBDT, DATED 11-5-1994 ONLY REFERS TO THE JEWELLERY TO THE EXTENT OF 500 GMS. PER MARRIED LADY, 250 GMS. PER UNMARRIED LADY AND 100 GMS. PER MALE MEMBER OF THE FAMILY, NEED NOT BE SEIZED AND IT DOES NOT SPEAK ABOUT THE QUESTIONING OF THE SAID JEWELLERY FROM THE PERSON WHO HAS BEEN FOUND WITH POSSESSION OF THE SAID JEWELLERY. HOWEVER, THE BOARD, LOOKING TO THE INDIAN CUSTOMS AND TRADITIONS, HAS FAIRLY EXPRESSED THAT JEWELLERY TO THE SAID EXTENT WILL NOT BE SEIZED AND ONCE THE BOARD IS ALSO OF THE EXPRESS OPINION THAT THE SAID JEWELLERY CANNOT BE SEIZED, IT SHOULD NORMALLY MEAN THAT ANY JEWELLERY, FOUND IN POSSESSION OF A MARRIED LADY TO THE EXTENT OF 500 GMS. 250 GMS. PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE FAMILY WILL ALSO NOT BE QUESTIONED ABOUT ITS SOURCE AND ACQUISITION. AT THE TIME OF WEDDING, THE DAUGHTER/DAUGHTER-IN-LAW RECEIVES GOLD ORNAMENTS JEWELLERY AND OTHER GOODS NOT ONLY FROM PARENTAL SIDE BUT IN-LAWS SIDE AS WELL AT THE TIME OF 'VIDAI' (FAREWELL) OR/AND AT THE TIME WHEN THE DAUGHTER-IN-LAW ENTERS THE HOUSE OF HER HUSBAND. THEREAFTER ALSO, SHE CONTINUES TO RECEIVE SOME SMALL ITEMS BY VARIOUS OTHER CLOSE FRIENDS AND RELATIVES OF BOTH THE SIDES AS WELL AS ON THE AUSPICIOUS OCCASION OF BIRTH OF A CHILD WHETHER MALE OR FEMALE AND THE CBDT, LOOKING TO SUCH CUSTOMS PREVAILING THROUGHOUT INDIA, IN ONE WAY OR THE ANOTHER, CAME OUT WITH THIS CIRCULAR AND IT SHOULD ALSO MEAN THAT TO THE EXTENT OF THE AFORESAID JEWELLERY, FOUND IN POSSESSION OF THE VARIOUS PERSONS, EVEN SOURCE CANNOT BE QUESTIONED. IT IS CERTAINLY 'STRIDHAN' OF THE WOMAN AND NORMALLY NO QUESTION AT LEAST TO THE SAID EXTENT CAN BE MADE. HOWEVER, IF THE AUTHORIZED OFFICERS OR/AND THE ASSESSING OFFICERS FIND JEWELLERY BEYOND THE SAID WEIGHT, THEN CERTAINLY THEY CAN QUESTION THE SOURCE OF ACQUISITION OF THE JEWELLERY AND ALSO IN APPROPRIATE CASES, IF NO PROPER EXPLANATION HAS BEEN OFFERED, CAN TREAT THE JEWELLERY BEYOND THE SAID LIMIT AS UNEXPLAINED INVESTMENT OF THE PERSON WITH WHOM THE SAID JEWELLERY HAS BEEN FOUND. [PARA 12] SIMILAR VIEW HAS ALSO BEEN TAKEN BY HON'BLE DELHI HIGH COURT IN THE CASE OF ASHOK CHADDHA VS. CIT 14 TAXMANN.COM 57 (DEL) 21. THUS, APPLYING THE CBDT INSTRUCTION, I NOTE THAT VARIOUS MEMBERS OF THE FAMILY WERE DECLARING THE JEWELLERY IN THEIR WEALTH TAX RETURNS THOUGH MAY BE MUCH PRIOR TO THE DATE OF SEARCH. HOWEVER THE DECLARATION OF JEWELLERY IN WEALTH TAX RETURNS IN EARLIER YEAR WILL DEFINITELY EXPLAIN THAT THE JEWELLERYWERE IN THEIR POSSESSION IN EARLIER YEARS ALSO. THE ASSESSING OFFICER HAS NOT GIVEN CREDIT FOR THE JEWELLERY DECLARED IN WEALTH TAX RETURNS FOR ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 61 THE REASON THAT THEY ARE NOT APPEARING IN THE BALANCE SHEETS FOR A.Y. 2013-14. IN MY OPINION, THE APPROACH IS NOT SUSTAINABLE. THE CBDT INSTRUCTION NOWHERE PROVIDES THAT THE JEWELLERY DECLARED IN WEALTH TAX RETURNS SHOULD CONTINUE TO BE SHOWN ALSO IN THE REGULAR BOOKS OF ACCOUNTS. NOT SHOWING THE JEWELLERY IN BOOKS OF ACCOUNTS MAY BE FOR THE REASON THAT THE SAME ARE RECEIVED BY WAY OF GIFTS ETC. ON VARIOUS OCCASIONS. SINCE THERE WILL BE NO COST IN RESPECT OF SUCH JEWELLERY RECEIVED BY WAY OF GIFT OR ON VARIOUS OCCASIONS, THE SAME WILL NOT APPEAR IN THE BOOKS OF ACCOUNTS. NOT MENTIONING THE JEWELLERY IN THE BOOKS OF ACCOUNTS CANNOT BE VIEWED TO HOLD THAT THE JEWELLERY WAS NOT IN POSSESSION OF SUCH PERSON PARTICULARLY WHEN THE SAME IS DISCLOSED IN THE WEALTH TAX RETURNS. I THEREFORE HOLD THAT THE JEWELLERY DISCLOSED IN THE WEALTH TAX RETURNS SHOULD BE CONSIDERED AS EXPLAINED AND TO THAT EXTENT THE ADDITION IS REQUIRED TO BE DELETED. WHILE CONSIDERING THE VALUE OF JEWELLERY DECLARED IN THE WEALTH TAX RETURNS, THE ASSESSING OFFICER WILL NOT APPLY THE VALUE DECLARED IN THE WEALTH TAX RETURNS BUT THE WEIGHT OF SUCH JEWELLERY DECLARED IN WEALTH TAX RETURNS TO BE CONSIDERED AS EXPLAINED. EVEN WHILE CONSIDERING THE VALUE DECLARED IN THE BOOKS OF ACCOUNTS AS EXPLAINED, THE ASSESSING OFFICER HAS ERRED IN ADOPTING THE AMOUNT SHOWN IN THE BALANCE SHEET. WHILE CONSIDERING THE JEWELLERY AS EXPLAINED OR UNEXPLAINED, THE ASSESSING OFFICER SHOULD HAVE GONE BY THE WEIGHT OF SUCH JEWELLERY OR IF ANY DESCRIPTION IS AVAILABLE IN RESPECT OF SUCH JEWELLERY TO CONSIDER WHETHER THE SAME IS EXPLAINED OR NOT. FOR BOTH THESE PURPOSES, I.E. JEWELLERY DECLARED IN WEALTH TAX RETURN AND JEWELLERY DECLARED IN BALANCE SHEET, THE ASSESSEE WILL CORRELATE THE JEWELLERY FOUND WITH THAT DECLARED IN THE EITHER ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 62 WEALTH TAX RETURNS OR IN THE BALANCE SHEET AND THE WEIGHT OF SUCH JEWELLERY SHALL BE EXCLUDED FOR CONSIDERING WHETHER THE SAME IS A EXPLAINED OR UNEXPLAINED. AS PER THE APPELLANT, THE JEWELLERY DECLARED EITHER IN WEALTH TAX RETURNS OR IN BOOKS OF ACCOUNTS IS 3421.779 GMS. OF GOLD JEWELLERY, 189.62 CARATS OF DIAMOND JEWELLERY AND 16.75 KG OF SILVERWARE. 22. THE APPELLANT HAS FILED FOLLOWING CHART BEFORE THE AO AND HAS OWNED UP 2112 GMS OF GOLD AS UNDISCLOSED INCOME OF THE A P P E L L A N T F O R T H E C U R R E N T A. Y R . A N D H A S O F F E R E D 5 1 , 6 6 , 4 5 0 A S U N D I S C L O S E D INCOME ON ACCOUNT OF GOLD AND DIAMONDS. PLEASE REFER TABLE BELOW: PARTICULARS GOLD JEWELRY (GRAMS) DIAMONDS (CARAT) SILVER ITEMS (K.G.) TOTAL VALUE FOUND AT THE TIME OF SEARCH 7936.779 373.620 39.750 24167236 DECLARED AS PER WEALTH TAX RETURNS AND BOOKS -3421.779 -189.620 -16.750 DIFFERENCE 4515.00 184.00 23.000 CLAIM OF JEWELRY REGARDING OTHER FAMILY MEMBERS SMT. SAVITRI KANDOI 500.00 92.00 10.00 SNEH KANDOI 112.00 92.00 5.00 6 MALE AND FEMALE MEMBERS 1500.00 0 8.00 TOTAL 2112.00 184.00 23.00 DIFFERENCE 2403 0 0 5166450 23. IN THE CHART ABOVE, THE GOLD JEWELLARY, DIAMONDS AND SILVER ARTICLES FROM THE WT RECORDS 86 WHAT IS PURCHASED BY DIFFERENT ASSESSEES, IS 3421.779 GMS, 184 CARAT 85 16.75 KGM. THE APPELLANT HAS SUCCESSFULLY EXPLAINED THE SAME. THE EVIDENCES OF ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 63 PURCHASES HAVE BEEN FILED WITH NATURE AND SOURCES OF ACQUISITION. SAME WERE FILED BEFORE THE AO AND ALSO BEFORE ME. I FIND NO INFIRMITY IN THE SAME. COMING TO THE FURTHER CLAIM OF 500 GMS & 112 GMS OF GOLD IN THE NAME OF SAVITRI KANDOI 86 SNEH KANDOI, THE CLAIM OF LD. A/R IS CORRECT AS BOTH OF THEM ARE NOT WT ASSESSEE AND SUCH CLAIM IS IN COMMENSURATE WITH THE EXISTING INSTRUCTION OF CBDT ON JEWELLARY. COMING TO THE CLAIM OF 250 GMS OF GOLD IN THE HAND OF EACH OF THE 6 CHILDREN, INSTEAD OF 100 GMS AS PROVIDED BY THE CBDT INSTRUCTION, I AM OF THE VIEW A FURTHER ALLOWANCES OF 100 GMS EACH CAN BE PROVIDED IN THE HAND OF EACH OF THE CHILDREN CONSIDERING THE STATUS OF FAMILY AND RAJASTHANI TRADITIONS. THUS INSTEAD OF 1500 GMS CLAIMED THE CLAIM ALLOWED IS 1200 GMS. THUS 50 GMS FOR EACH OF THE CHILDREN IS CONSIDERED AS UNEXPLAINED. THE ADDITION ON ACCOUNT OF 300 GOLD WOULD BE 8 , 8 5 , 0 0 0 ( G O L D R A T E B E I N G 2 9 5 0 0 A S P E R V A L U A T I O N R E P O R T ) . 24. NOW COMING TO THE CLAIM OF DIAMOND OF 184 CARAT, WHICH ARE EQUALLY DISTRIBUTED IN THE HANDS SAVITRI KANDOI & SNEH KANDOI EQUALLY I AM OF THE VIEW IT IS NOT LOGICAL NOR BASED ON FACTS TO TREAT ENTIRE 184 CARAT AS EXPLAINED. ALSO A ALLOWANCE IS CALLED FOR TO TREAT A PORTION OF DIAMONDS FOUND AS EXPLAINED CONSIDERING THE NATURE, STATUS OF FAMILY. IT IS POINTED OUT THAT KANDOI FAMILY IS WELL ESTABLISHED FAMILY WHO ARE FILING RETURN WITH SUBSTANTIAL RETURN OF INCOME. ALSO DRAWING MADE ARE SIGNIFICANT OVER A PERIOD OF TIME. CONSIDERING THE STATUS AND STANDING OF FAMILY AND ALSO THE TRADITIONAL MILIEU I AM OF THE VIEW THAT ABOUT 25% OF 184 CARAT CAN BE TREATED AS EXPLAINED ON ESTIMATE. THUS 46 CARAT IS TREATED AS UNEXPLAINED AND 138 CARAT OF DIAMOND WILL BE SUBJECTED TO TAXATION. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 64 NEXT QUESTION ARISES AT WHAT VALUE 138 CARAT WILL BE TAXED. PERUSAL OF ALL THE VALUATION REPORT DRAWN DURING THE COURSE OF S E A R C H S H O W S T H A T P E R C A R A T D I A M O N D V A L U E R A N G E S F R O M 1 0 , 0 0 0 I N M O S T C A S E S T O 1 , 7 5 , 0 0 0 ( R E F E R I T E M N O . 1 5 I N T H E JEWELLARY ANNEXURE JF1(C) DRAWN AT THE BEDROOM OF SMT. SAVITRI KANDOI). AN EXERCISE WAS UNDERTAKEN TO COMPUTE AVARRAGE VALUE OF DIAMOND FROM ALL THE JEWELLARY INVENTORIES 85 AVERAGE VALUE COMPUTED. AS PER THIS THE AVERAGE VALUE DIAMOND COMES OUT TO BE 2 6 9 1 3 P E R C A R A T . T H E T A B U L A T I O N I S G I V E N B E L O W F O R R E A D Y R E F E R E N C E : ANN FOUND FROM TOTAL CARAT OF DIAMOND TOTAL VALUE (RS.) AV (RS. ) JF1 BEDROOM OF SMT. SADHANA W/O SH. ANAND SINGHAL 41.9 CT. 519000 12386 JF1(C) BEDROOM OF SMT. SAVITRI KANDOI 23.5 1465000 62340 JF1 (A) BEDROOM OF SMT. SAVITRI KANDOI 86.35 4849750 56163 JF1(B) BEDROOM OF SMT. SAVITRI KANDOI 7CT. 84000 12000 JF3 BEDROOM OF SMT. SNEHLATA W/O SH. RAJENDRA KANDOI 11CT. (DIAM.) 110000 10000 JF4 BEDROOM OF SMT. SNEHLATA W/O SH. RAJENDRA KANDOI 55 CT. 975000 17727 JF1 BEDROOM OF SMT. SHIVANI KANDOI 45 CT. 800000 17777 AVERAGE RS. 26913 T H U S V A L U E O F 1 3 8 C A R A T W I L L B E 1 3 8 C A R A T X 2 6 9 1 3 = 3 7 1 3 9 9 4 , W H I C H I S T R E A T E D A S U N E X P L A I N E D A S U N E X P L A I N E D . T H U S A F U R T H E R A D D I T I O N O F 3 7 , 1 3 , 9 9 4 I S M A D E . THUS IN NUT SHELL THE TOTAL DISCLOSURE ON ACCOUNT OF JEWELLARY B Y A P P E L L A N T 5 1 , 6 6 , 4 5 0 I S I N C R E A S E D B Y 1) RS. 885000- ON ACCOUNT OF GOLD 950 GMS TREATED AS UNEXPLAINED IN THE HANDS OF EACH OF SIX MINOR CHILDREN 2) RS. 3713994- ON ACCOUNT OF DIAMONDS. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 65 THE TOTAL ADDITION WHICH WOULD REMAIN IS THUS : 5 1 , 6 6 , 4 5 0 + 8 , 8 5 , 0 0 0 + 3 7 , 1 3 , 9 9 4 = 9 7 , 6 5 , 4 4 4 ) . T H E A P P E L L A N T G E T S C O N S E Q U E N T I A L R E L I E F O F 2 , 0 9 , 6 3 , 5 0 1 - 9 7 , 6 5 , 4 4 4 = 1 , 1 1 , 9 8 , 0 5 7 25. AS REGARDS SILVER ITEMS OF 39 KGS FOUND, 16 KGS. ARE DECLARED IN WEALTH TAX RETURNS OR IN BOOKS OF ACCOUNTS. I ALSO FIND THAT THE APPELLANT HEREIN IS QUITE AGED AND IS HEAD OF HUGE FAMILY OF 3 MARRIED SONS, THEIR WIVES AND CHILDREN. THE TOTAL MEMBERS OF THE FAMILY ARE 14. THE APPELLANT BELONGS TO A RAJASTHANI FAMILY WHERE GIVING LARGE AMOUNT OF JEWELLERY & SILVER UTENSILS IN MARRIAGE AND ON OCCASION OF CHILDBIRTH IS VERY MUCH PREVALENT. REGARDING BALANCE 23 KGS., LOOKING TO THE SIZE OF THE FAMILY AND USAGE AND CUSTOM THEREOF THESE SMALL ITEMS CAN BE REASONABLY CONSIDERED AS EXPLAINED AND NO ADDITION IS REQUIRED IN THIS REGARD. THE GROUND RELATING TO JEWELLARY IS THUS ALLOWED AS INDICATED ABOVE. THE DETAILED FINDINGS SO RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD AR AND THE DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD, ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) FOR UPHOLDING THE ADDITION OF RS. 97,65,444/- ON ACCOUNT OF JEWELLERY. ACCORDINGLY, GROUND TAKEN BOTH BY ASSESSEE AND THE REVENUE ARE DISMISSED. 54. ADDITION OF RS. 56,39,819/- WAS MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT WHICH WAS DELETED BY THE LD. CIT(A) AFTER HAVING THE FOLLOWING OBSERVATION: ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 66 28. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND THE ARGUMENT ADVANCED. WHEN THE CASH FOUND DURING SEARCH IS LESS THAN THAT SHOWN IN THE BOOKS OF ACCOUNTS, THE QUESTION OF CONSIDERING THE SAME AS UNEXPLAINED DOES NOT ARISE. MERELY STATING THAT THERE ARE CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNTS AND HENCE THE ENTIRE CASH REMAINS UNEXPLAINED, IS NOT ACCEPTABLE. IF THE ASSESSING OFFICER HAS ANY REASON TO DOUBT THE CORRECTNESS OF THE ENTRIES, TO THAT EXTENT THE SAME MAY BE DISCARDED BUT DISCARDING THE ENTIRE BOOKS OF ACCOUNTS AS INCORRECT WILL NOT JUSTIFY THE ADDITION. HOW MUCH IS THE CASH RECEIPTS RECORDED ON 15 JULY 2012 AND AFTER DISCARDING SUCH RECEIPTS HOW MUCH CASH STILL REMAINS IS NOT WORKED OUT BY THE ASSESSING OFFICER. WHEN THE APPELLANT FILED RECONCILIATION DURING THE COURSE OF ASSESSMENT, THE TOTAL CASH WAS WORKED OUT AT 1 , 3 4 , 6 8 , 9 7 4 . N O C O M M E N T I S M A D E B Y T H E A S S E S S I N G OFFICER AS TO WHETHER THE SAME IS CORRECT OR NOT. ONLY THE ENTRIES WHICH ARE INCORRECT CAN BE DISCARDED BUT REST OF THE ENTRIES SHOULD HAVE BEEN ACCEPTED. AT ANY RATE SINCE THE CASH FOUND DURING COURSE OF SEARCH IS MUCH LESS THAN THE SAME SHOWN AS PER BOOKS OF ACCOUNTS OF VARIOUS OTHER CONCERNS, THE APPELLANT CANNOT BE HELD TO POSSESS ANY UNEXPLAINED CASH. IF THE DISCREPANCY IS IN THE BOOKS OF ACCOUNTS OF CERTAIN CONCERNS, THE SAME CAN BE APPROPRIATELY CONSIDERED IN THE ASSESSMENT OF THOSE CONCERNS BUT THE WHOLESALE REJECTION OF ALL THE BOOKS OF ACCOUNTS OF ALL THE CONCERNS AND CONSIDERING THE ENTIRE CASH FOUND DURING SEARCH AS UNEXPLAINED MONEY IN THE HANDS OF THE APPELLANT IS NOT SUSTAINABLE ON FACTS AS ALSO IN LAW. I OBSERVE THAT THE ADDITION IS MADE SOLELY ON THE REASON OF THE REPORT FILED ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 67 UNDER RULE 9A BEFORE SETTLEMENT COMMISSION. THE AO HAS NOT TRIED TO RECONCILE THE CASH FOUND WITH THE ENTRIES IN THE BOOKS OF ACCOUNTS. THE REPORT BEFORE SETTLEMENT COMMISSION CANNOT BE CONSIDERED TO BE FINAL AFTER DURING ASSESSMENT PROCEEDINGS THE APPELLANT HAVE FURNISHED THE RECONCILIATION AND TRIED TO EXPLAIN THE CASH FOUND DURING SEARCH. SINCE THE CASH FOUND IS LESS THAN THAT SHOWN IN THE BOOKS OF ACCOUNTS AFTER FURTHER RECONCILIATION AND SINCE NO DEFECT IS POINTED OUT SPECIFICALLY OF SUCH RECONCILIATION, THE ADDITION UNDER SECTION 69A IS NOT VALID. IT WAS EXPLAINED THAT THERE ARE VARIOUS PAYMENTS WHICH ARE NOT RECORDED. THUS AT LEAST TO THE EXTENT OF CASH FOUND THE SAME IS EXPLAINED BY WAY OF BOOKS OF ACCOUNTS AND HENCE NO ADDITION IS JUSTIFIED. SECTION 69A PROVIDES THAT WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SUCH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, THE ASSESSING OFFICER MAY MAKE THE ADDITION. THUS THE PREREQUISITE FOR MAKING ADDITION UNDER SECTION 69A IS THAT THE MONEY ETC. ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS, IF ANY, MAINTAINED BY HIM. SINCE IN THE PRESENT CASE THE CASH FOUND IS RECORDED IN THE BOOKS OF ACCOUNTS, THE ADDITION U/S 69A IS NOT SUSTAINABLE. I ACCORDINGLY DELETE THE ADDITION OF 5 6 , 3 9 , 8 1 9 / - . ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 68 55. THE REVENUE IS IN FURTHER APPEAL BEFORE THE ITAT AGAINST THE SAID DELETION BY THE LD. CIT(A). 56. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE A.O. MADE ADDITION OF RS. 56,39,815/- OF THE TOTAL AMOUNT OF CASH FOUND DURING THE COURSE OF SEARCH WITHOUT GIVING CREDIT TO THE BALANCES AVAILABLE IN THE BOOKS OF ACCOUNTS OF THE GROUP WHICH AMOUNTED TO RS. 1,34,68,974/-. THE CASH AVAILABLE IN BOOKS ARE MORE AS AGAINST CASH FOUND PHYSICALLY. THIS WAS SO BECAUSE CERTAIN PAYMENTS WERE STILL TO BE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. CONSIDERING THE SUBMISSION OF THE ASSESSEE THE LD. CIT(A) DELETED THE ADDITION. THE LD. CIT(A) HAS HELD THAT FOR SMALL DISCREPANCIES IN THE BOOKS OF ACCOUNTS AND OVERWRITING THE BOOKS CANNOT BE REJECTED UNLESS IT IS ESTABLISHED THAT DISCREPANCIES IN OVERWRITINGS ESTABLISHED MANIPULATION AND FRAUD. THE LD. CIT(A) HAS ALSO HELD THAT AS THE CASH STOOD ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS, SECTION 69A COULD NOT BE INVOKED. 57. WE FURTHER FOUND THAT DURING THE COURSE OF SEARCH THE CASH WAS FOUND FROM VARIOUS PLACES WAS RS. 5639819/- WHICH INCLUDED THE FOLLOWING:- (I) RS. 4335800/- FROM THE RESIDENCE OF THE ASSESSEE ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 69 (II) RS. 894000/- FROM D-91, AMBA BARI, JAIPUR (III) RS. 40000/- KMPL (IV) RS. 242000/- GITS (V) RS. 47000/- DESERT INN THE A.O. HAS TREATED THE ENTIRE AMOUNT OF RS. 56,39,819/- AS UNEXPLAINED AND HAS MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. THE A.O. DID NOT CONSIDER THE REPLY OF THE ASSESSEE GIVEN IN QUESTION NO. 28 58. WE HAVE GONE THROUGH THE REPLY OF THE ASSESSEE, THE PERUSAL OF REPLY OF THE ASSESSEE STATES THAT THE CASH POSITION AS PER BOOKS WAS MORE THAN FOUND DURING SEARCH. THE ASSESSEE HAS CLEARLY STATED THAT THERE WAS NO UNEXPLAINED CASH AND A RECONCILIATION SHALL BE SUBMITTED LATER ON. SUBSEQUENTLY IT WAS SUBMITTED THAT CASH BALANCE AS PER BOOKS AS ON THE DATE OF SEARCH WAS RS. 82,26,670/- WITHOUT MAKING ANY ADJUSTMENTS. THE BOOK POSITION OF CASH OF RS. 82, 26,670/- FULLY COVERED THE CASH FOUND OF RS. 56,39,819/-. THERE WAS NO CASE OF ANY ADDITION. FURTHER AFTER MAKING NECESSARY ADJUSTMENT THE POSITION OF CASH AS PER BOOKS WORKED OUT TO RS. 1,34,68,974/-. THUS, IN FACT CASH WAS FOUND SHORT. THIS WAS BECAUSE VARIOUS EXPENSES AND WITHDRAWAL REMAINED TO BE DEBITED WHICH ARE DONE TOWARDS THE MONTH END. THUS, THERE WAS NO CASE FOR ANY ADDITION ON ACCOUNT EXCESS CASH. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 70 59. WE ALSO OBSERVE THAT THE A.O. HAS NOT MADE EFFORT TO FIND OUT THE BOOK POSITION OF ANY CONCERN. THE SAME HAS NOT BEEN DISCUSSED. THE A.O. HAS ALSO REFERRED TO REPORT SUBMITTED UNDER RULE 9 TO ITSC (PARA 7.7.1) AND HAS MADE THE ADDITION ON THE BASIS OF SUCH REPORT. WE OBSERVE THAT THE A.O. WAS PRECLUDED IN UTILIZING THE REPORT IN MAKING ADDITION WITHOUT FURNISHING A COPY OF THE SAME TO THE ASSESSEE FOR DEFENSE AND REBUTTAL. THE ACTION OF THE A.O. IS CONTRARY TO THE ESTABLISHED PRINCIPLES OF EQUITY AND JUSTICE. THE ADDITION IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. THE A.O. COULD NOT HAVE UTILIZED THE REPORT SUBMITTED UNDER RULE 9 WITHOUT FIRST FURNISHING A COPY OF REPORT TO THE ASSESSEE. THIS WAS NOT DONE. THE ASSESSEE DOES NOT KNOW THE CONTENTS OF THE REPORT SUBMITTED UNDER RULE 9 BY THE CIT TO ITSC. IN VIEW OF THIS THE ASSESSEE WAS PRECLUDED IN MAKING DEFENSE. THE ACTION BEING AGAINST THE EQUITY AND JUSTICE. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (I) GARGI DIN JWALA PRASAD VS. CIT (1974) 96 ITR 97 (ALL) PRINCIPLES OF NATURAL JUSTICE ARE APPLICABLE THE PRINCIPALS OF NATURAL JUSTICE ARE APPLICABLE TO ASSESSMENT PROCEEDINGS. THE ELEMENTARY PRINCIPLE OF NATURAL JUSTICE IS THAT THE ASSESSEE SHOULD HAVE KNOWLEDGE OF THE MATERIAL WHICH IS GOING TO BE USED AGAINST HIM SO THAT HE MAY BE ABLE TO MEET IT. (III) MUNNA LAL MURLIDHAR VS CIT (1971) 79 ITR 540 (ALL) ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 71 THE PRINCIPLE OF NATURAL JUSTICE INVOLVE A RIGHT IN THE ASSESSEE TO INSPECT THE REPORTS AND OBTAIN THE SUBSTANCE OF THE ALL RELEVANT DOCUMENTS SUCH AS STATEMENTS, ORDERS, REPORTS ETC. SO AS TO BE ABLE TO LEAD EVIDENCE IN REBUTTAL OR TO CROSS EXAMINE WITNESS WHO HAVE GIVEN EVIDENCE AGAINST HIM. IT ALSO MEANS THAT THE ASSESSEE SHOULD BE GIVEN A REASONABLE TIME AND OPPORTUNITY TO PRODUCE SUCH EVIDENCE AS HE MAY CONSIDER NECESSARY. (III) IN THE FOLLOWING IT WAS HELD THAT THE ASSESSING OFFICER CAN MAKE ENQUIRIES TO GATHER MATERIAL PRIVATELY AND CONFIDENTIALLY. HE CAN ALSO SUMMON WITNESSES AND RECORD THEIR STATEMENT IN THE PRESENCE OF THE ASSESSEE OR EVEN BEHIND HIS BACK. HOWEVER THE SUBSTANCE OF ANY INFORMATION SOUGHT TO BE USED AGAINST THE ASSESSEE, SHOULD BE PUT TO HIM AND HE SHOULD HAVE FARE OPPORTUNITY. IT IS UPTO THE ASSESSEE TO AVAIL OF IT, CONSTANT WITH THE PRINCIPAL OF NATURAL JUSTICE, TO REBUT THE SAME. (A) CHIRANJI LAL STEEL ROLLING MILLS VS. CIT (1972) 84 ITR 222 (P&H) (B) NAMASIVAYAM CHETTIAR (S.N.) VS. CIT (1960) 38 ITR 579 (SC) (C) ABDUL RAZAK VS. CIT (1935) 3 ITR 361 (PAT) (D) BALASUBRAMANIAN (P.N.) VS. ITO (1978) 112 ITR 512 (AP) (E) BAGSU DEVI BAFNA VS. CIT (1966) 62 ITR 506 (CAL) (F) CASHMIR VASTRALAYA VS. CIT (1978) 112 ITR 630 (PAT)' 60. CONSIDERING THE DETAILED FINDING SO RECORDED BY THE LD. CIT(A) AS QUOTED ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER FOR DELETING THE ADDITION OF 56,39,819/- MADE BY THE A.O. U/S 69A OF THE ACT. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 72 61. THE ADDITION OF RS. 2.55 CRORES MADE BY THE A.O. ON ACCOUNT OF ALLEGED UNDISCLOSED ADVANCES MADE BY THE ASSESSEE ON THE BASIS OF SEIZED DOCUMENTS WERE CONFIRMED BY THE LD. CIT(A). 62. THE CONTENTION OF THE LD. AR WAS THAT T HE PAPER I.E. PAGE NO. 1 AND 2 OF ANNEXURE AS-1 TO AS-4 ON THE BASIS OF WHICH ADDITION WAS MADE DID NOT PERTAIN TO THE ASSESSEE. HENCE THERE WAS NO OCCASION FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. THESE PAPERS WERE VIRTUALLY DUMP PAPERS AS THESE DID NOT CONTAIN ANY DATE PARTICULARLY THE YEAR WHICH THESE PERTAIN, IT WAS NOT KNOWN AS WHO WAS THE WRITER OF THESE PAPERS AND FURTHER THESE PAPERS DID NOT CONTAIN SIGNATURE OF THE ASSESSEE. IT WAS ARGUED THAT THE A.O. HAD FAILED TO LINK THESE PAPERS WITH THE BUSINESS OF THE ASSESSEE EITHER WITH THE OTHER MATERIAL FOUND DURING SEARCH OR BY CONDUCTING ANY POST SEARCH ENQUIRES. IT IS SETTLED PRINCIPLE OF LAW THAT UNLESS THE PERIOD OF THE PAPERS IS ESTABLISHED AND THE WRITER OF THESE PAPERS IS KNOWN, NO ADDITION COULD BE MADE. 63. THE LD. AR FURTHER ARGUED THAT THE ADDITION WAS MADE BY THE A.O. IN THE HANDS OF THE ASSESSEE DESPITE THE FACT THAT IN STATEMENT RECORDED U/S 132(4) IT WAS BROUGHT ON RECORD THAT THESE PAPERS PERTAINED TO SHRI ANAND SINGHAL AND SHRI R.K. KANDOI AND NARENDRA KANDOI ALSO AND ACCORDINGLY ADDITION IF ANY WAS REQUIRED TO BE MADE EQUALLY IN FOUR HANDS. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 73 64. AS PER THE LD AR, THE LD. CIT(A) FAILED TO CONSIDER THIS POSITION OF LAW AND ERRONEOUSLY HAS UPHELD THE ACTION OF THE A.O. IN MAKING THE ENTIRE ADDITIONS IN THE HANDS OF THE ASSESSEE. THE LD. CIT(A) HAS FOLLOWED THE STATEMENT RECORDED U/S 132(4) ONLY IN PART. IF THE STATEMENT WAS FOLLOWED IN TOTO THE ADDITION WOULD HAVE BEEN IN FOUR HANDS INSTEAD OF THE TOTAL ADDITION MADE IN THE HANDS OF THE ASSESSEE. 65. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ADDITION OF RS. 2,55,00,000/- HAS BEEN MADE BY THE A.O. WITH REFERENCE TO ANNEXURE 'A' PAGE 1 & 2 GOT PREPARED BY THE ASSESSEE DURING THE COURSE OF SEARCH ITSELF CONSIDERING ANNEXURES AS-1 TO AS-4 FOUND AND SEIZED DURING THE COURSE OF SEARCH. DURING THE COURSE OF SEARCH STATEMENT OF SHRI M.L. KANDOI WAS RECORDED U/S 132(4). IN THIS STATEMENT THE ASSESSEE WAS EXAMINED WITH REFERENCE TO ANNEXURE A-4, A-5 AND A-6 AND WAS ASKED TO PREPARE A SEPARATE ANNEXURE 'A'. THE ASSESSEE SURRENDERED A SUM OF RS. 8.60 CRORES ON ACCOUNT OF ADVANCES, IN THIS ANNEXURE 'A'. IT IS ON THE BASIS OF THIS SURRENDER OF ADVANCES THAT THE AFORESAID ADDITION OF RS. 2,55,00,000/- HAS BEEN MADE BIFURCATING THE SURRENDER IN RELEVANT ASSESSMENT YEARS. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 74 66. IT IS PERTINENT TO MENTION HERE THAT DURING THE COURSE OF SEARCH, SURRENDER WAS TAKEN FROM THE ASSESSEE NOT ONLY WITH RESPECT TO ADVANCES SO MADE AND FOUND AS PER SEIZED MATERIAL BUT ALSO ON ACCOUNT OF OTHER SEIZED DOCUMENT AND ON ACCOUNT OF SALE OF ARPIT NAGAR LAND. WE FOUND THAT THE ASSESSEE HAS SURRENDERED A SUM OF RS. 2.43 CRORES IN THE A.Y. 2011-12 ON ACCOUNT OF SALE OF ARPIT NAGAR LAND, ADDITION OF WHICH WAS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) IN THE A.Y. 2011-12. WE HAVE ALSO UPHELD THE ADDITION OF RS. 2.43 CRORES ON ACCOUNT OF INCOME EARNED ON SALE OF ARPIT NAGAR LAND IN THE A.Y. 2011-12. HOWEVER, IN THE A.Y. 2012-13, THE DEPARTMENT HAS MADE ADDITION ON ACCOUNT OF ADVANCES AMOUNTING TO RS. 5,68,50,000/- ALLEGED TO BE GIVEN BY THE ASSESSEE. WE FOUND THAT THE AMOUNT OF DISCLOSURE MADE BY THE ASSESSEE ON ACCOUNT OF INCOME ON SALE OF ARPIT NAGAR LAND AMOUNT OF RS. 2.43 CRORES WAS AVAILABLE WITH THE ASSESSEE WHICH WAS GIVEN AS ADVANCE IN THE IMMEDIATE SUCCEEDING YEAR I.E. 2012-13. THUS, OUT OF TOTAL ADDITION OF RS. 5,68,50,000/- ON ACCOUNT OF ADDITION FOR THE ADVANCES IN THE A.Y. 2012- 13, A SET OFF OF RS. 2.43 CRORES ARE REQUIRED TO BE ALLOWED. THUS, WE CONFIRM THE ADDITION ON ACCOUNT OF LOANS AND ADVANCES IN THE A.Y. 2012- 13 TO THE EXTENT OF RS. 3,25,50,000/- I.E. (5,68,50,000 - 2,43,00,000). WE DIRECT ACCORDINGLY. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 75 67. SIMILARLY, IN THE A.Y. 2010-11, SURRENDER OF INCOME OF RS. 6.00 LACS WAS CONFIRMED BY US. IN THE ASSESSMENT ORDER ON PAGE NO. 13 IN PARA 8.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. 6,00,000/- IS PART OF 8.6 CR. SURRENDERED BY THE ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THIS INCOME IS ALSO REQUIRED TO BE SET OFF OUT OF SURRENDER FOR ADVANCES AMOUNTING TO RS. 33.00 LACS IN A.Y. 2011-12. ACCORDINGLY, WE DIRECT THE A.O. TO RESTRICT ADDITION ON ACCOUNT OF ADVANCES IN THE A.Y. 2011-12 TO RS. 27,00,000/- (RS. 33,00,000 - 6,00,000). 68. SIMILARLY, WE FOUND THAT THE ADDITION WAS MADE ON THE BASIS OF OTHER SEIZED DOCUMENTS, RS. 49,24,000/- AND RS. 4,50,000/- IN THE A.Y. 2012-13. IN THIS REGARD, WE FOUND THAT THE ADDITIONS WERE MADE ON THE BASIS OF TWO SEIZED DOCUMENTS :- A.) ANNEXURE AS-4, 5, 6 SEIZED FROM RESIDENCE OF SHRI MANGI LAL KANDOI, AMBABARI, JAIPUR. B.) ANNEXURE-A EXHIBIT-1 SEIZED FORM ANAND SINGHAL S/O MANGI LAL KANDOI, AMBABARI, JAIPUR. ANNEXURE-AS- 4, 5, 6 IS SUMMARY OF ALL LOANS AND ADVANCES GIVEN BY THE ASSESSEE AS ON DATE OF SEARCH THAT IS 18.07.2020. THE ASSESSEE HAS SURRENDERED RS. 8.6 CR. ON THE BASIS OF ABOVE ANNEXURES. THE ASSESSEE OWNS ALL THE ENTRIES RECORDED IN ABOVE ANNEXURES AND THE TOTAL OF THIS WAS 8.6 CR. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 76 ANNEXURE-A EXHIBIT-1, 2 AND 3 ARE FOUND FROM SHRI ANAND SINGHAL SON OF THE ASSESSEE WHO IS RECORDING ENTRIES AT THE TIME OF TRANSACTIONS AND SUBSEQUENTLY MERGED IN THE ANNEXURE-AS- 4, 5, 6. IT WAS SUBMITTED BEFORE THE LD. AO THAT THE ENTRIES RECORDED IN ANNEXURE-A- EXHIBIT-1 ARE PART OF ANNEXURE-AS- 4, 5, 6. THE YEAR WISE ADDITIONS MADE BY THE LD. AO ON THE BASIS OF ANNEXURE-A EXHIBIT-1 ARE AS UNDER :- IN THE ASSESSMENT ORDER ON PAGE NO. 13 IN PARA 8.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. 6,00,000/- IS PART OF 8.6 CR. SURRENDERED BY THE ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THEREFORE THIS REQUIRED DELETION. IN THE ASSESSMENT ORDER ON PAGE NO. 12 IN PARA 7.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. 49,24,000/- IS PART OF 8.6 CR. SURRENDERED BY THE ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THEREFORE THIS REQUIRED DELETION. THIS ADDITION WAS MADE ON THE BASIS OF ANNEXURE- A-1 PAGE NO. 5 FOR THE AMOUNT OF RS. 17 LACS + 30 LACS + 2.24 LACS IN THE ORDER ON PAGE 12 IN PARA 7.2.2. THE ASSESSEE HAS STATED AS UNDER : - IN EXPLANATION TO RS. 17 LACS, 30 LACS AND 2.24 LACS IT IS PROVIDED THAT THESE AMOUNTS PERTAIN TO THE LOANS AND ADVANCES GIVEN TO THE AFOREMENTIONED PARTIES WHICH HAVE BEEN RECEIVED BACK BY THE ASSESSEE. FURTHER, IT IS HUMBLY SUBMITTED THAT SUCH ADVANCES HAVE BEEN SOURCED OUT OF OWN MONEY SURRENDER OF RS. 8.6 CRORE IN EARLIER PARAS. THEREFORE, NO ADDITION CAN BE MADE IN THIS REGARD. FURTHER, THE INCOME OF RS. 2.24 LACS HAVE BEEN RECEIVED FROM THE SALE OF SCRAP WHICH HAS ALREADY BEEN INCLUDED IN 8.6 CRORES ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 77 THE AMOUNT OF RS. 4,50,000/- IS ALSO PART OF SURRENDERED OF RS. 5,68,50,000/- SURRENDERED FOR THE YEAR UNDER CONSIDERATION. IN THE ASSESSMENT ORDER ON PAGE NO. 11 IN PARA 7.2.2 THE ASSESSEE HAS SUBMITTED THAT ABOVE RS. RS. 25,00,000 /- IS PART OF 8.6 CR. SURRENDERED BY THE ASSESSEE ON THE BASIS OF ANNEXURE-AS- 4, 5, 6. THEREFORE THIS REQUIRED DELETION. THIS ADDITION WAS MADE ON THE BASIS OF ANNEXURE- A-3 PAGE NO. 14 FOR THE AMOUNT OF RS. 25 LACS IN THE ORDER ON PAGE 11 IN PARA 7.2.2. THE ASSESSEE HAS STATED AS UNDER : - FIRSTLY, THE SEIZED DOCUMENT ON THE BASIS OF WHICH ADDITION TO THE TUNE OF RS. 25,00,000/- IS PROPOSED TO BE MADE PERTAINS TO MEMORANDA INTEREST CALCULATION BY A FINANCE BROKER. IF IT IS PRESUMED THAT THIS DOCUMENT REPRESENTS AND TRANSACTIONS IN THE NATURE OF LOANS THEN THE LOAN AMOUNT RS. 25 LACS HAS ALREADY BEEN INCLUDED IN THE CALCULATION OF AMOUNT OF RS. 8.6 CRORES. THE SEIZED DOCUMENT ONLY CONTAINS CALCULATION OF INTEREST ON THE AMOUNT WHICH WE HAVE ALREADY DISCLOSED IN EARLIER PARAGRAPH. THEREFORE THIS AMOUNT WAS PART OF THE RS. 8.6 CR. AND THE ADDITION DESERVE DELETED. FROM THE RECORD, WE FOUND THAT THE INCOME SURRENDERED ON THE BASIS OF ABOVE DOCUMENTS I.E. RS. 49,24,000/- AND RS. 4,50,000/- IN THE A.Y. 2012-13 AND RS. 25.00 LACS IN THE A.Y. 2013-14 WHICH WORKS OUT TO BE RS. 78,74,000/-, DESERVES TO BE SET OFF OUT OF ADDITION OF RS. 2.55 CRORES MADE IN THE A.Y. 2013-14 ON ACCOUNT OF SURRENDER FOR ADVANCES. IN ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 78 NUTSHELL, THE ADDITION OF RS. 2.55 CRORES MADE IN THE A.Y. 2013-14 ON ACCOUNT OF SURRENDER FOR ADVANCES IS RESTRICTED TO RS. 1,76,26,000/- (2,55,00,000 - 78,74,000). WE DIRECT ACCORDINGLY. 69. FOR THE A.Y. 2014-15, THE REVENUE IS IN APPEAL BEFORE THE ITAT FOR DELETING ADDITION OF RS. 1,34,07,372/- ON ACCOUNT OF INTEREST ALLEGED TO BE EARNED ON UNSECURED ADVANCES OF RS. 8.6 CRORES, RS. 3,71,672/- FOR INTEREST EARNED ON ADVANCES OF RS. 25.00 LACS, RS. 7,79,944/- FOR INTEREST EARNED ON ADVANCE OF RS. 49.24 LACS AND RS. 2,34,102/- ON ACCOUNT OF INTEREST ON ADVANCE OF RS. 12.41 LACS. WE FOUND THAT THE SIMILAR ADDITION MADE ON ACCOUNT OF INTEREST ALLEGED TO HAVE BEEN EARNED ON ADVANCES MADE IN EARLIER YEARS WERE DELETED BY THE LD. CIT(A) AFTER RECORDING DETAILED FINDINGS. WE HAVE ALSO DEALT WITH THE ISSUE IN THE RESPECTIVE YEARS FOR DELETING ADDITION MADE ON ACCOUNT OF INTEREST ALLEGED TO BE EARNED BY THE ASSESSEE. IN THE YEAR UNDER CONSIDERATION ALSO, THE LD. CIT(A) AFTER GIVING DETAILED FINDINGS, HAVE DELETED THE ADDITION MADE BY THE A.O. ON ACCOUNT OF INTEREST ALLEGED TO HAVE BEEN EARNED ON THE ADVANCES. FOLLOWING THE REASONING GIVEN HEREINABOVE IN EARLIER A.YS WE CONFIRM THE FINDINGS OF THE LD. CIT(A) FOR DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST ALLEGED TO BE EARNED WHICH WAS FOUND TO BE NOT ACTUALLY EARNED BY THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN DELETING THESE ADDITIONS. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 79 70. THE REVENUE IS ALSO AGGRIEVED FOR DELETING ADDITION OF RS. 5.00 LACS MADE ON ACCOUNT OF SCRAP TRADING AND MISC. INCOME. WE FOUND THAT SIMILAR ADDITION WAS MADE BY THE A.O. IN THE A.Y. 2013-14. AFTER GIVING DETAILED FINDINGS, THE LD. CIT(A) HAS DELETED THE SAME. WE HAVE ALSO GIVEN OUR FINDINGS IN THE A.Y. 2013-14 AND CONFIRMED THE ORDER OF THE LD. CIT(A) FOR DELETING THE ADDITION ON ACCOUNT OF SCRAP TRADING. FOLLOWING THE SAME REASONING, WE CONFIRM THE FINDING OF THE LD. CIT(A) FOR DELETING THE ADDITION OF RS. 5.00 LACS MADE BY THE A.O. ON ACCOUNT OF SCRAP TRADING AND MISC. INCOME DURING THE A.Y. 2014-15. 71. IN THE RESULT, APPEALS OF THE ASSESSEE FOR THE A.Y. 2008-09, 2009- 10 AND 2010-11 ARE DISMISSED WHEREAS APPEALS OF THE ASSESSEE FOR THE A.Y. 2011-12, 2012-13 AND 2013-14 ARE ALLOWED IN PART, IN TERMS INDICATED HEREINABOVE. ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2020. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/09/2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI MANGI LAL KANDOI, JAIPUR. ITA 1309/JP/2018 & 5 ORS APPEALS_ MANGI LAL KANDOI VS DCIT 80 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T./ACIT CENTRAL CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1309, 1306, 1307, 1090, 1091 & 1168/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR