ACIT, Cent. Cir.-1, Nashik V. Prakash Pusaram Laddha HUF), Nashik

ITA 1255/PUN/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1676 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2016
• Assessment Year: misc
• Appeal Filed On: 30-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B MOREY
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained investment; Block assessment
• Section: 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1255/PN/2011 BLOCK PERIOD : 1997-98 TO 2003-04 ACIT, CENTRAL CIRCLE - 1, NASHIK . / APPELLANT V/S SHRI PRAKASH PUSARAM LADDHA (HUF), 6/7 FALCON PLAZA, OPP : URDU HIGH SCHOOL, SARDA CIRCLE, NASHIK 422 002 PAN NO. AAABHL3627F . / RESPONDENT / ASSESSEE BY : SHRI SUNIL PATHAK / REVENUE BY : SHRI S.B. MOREY, CIT / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 26-07-2011 OF THE CIT(A)-I, NASHIK RELATING TO T HE BLOCK PERIOD 1997-98 TO 2003-04. 2. IN GROUND OF APPEAL NO.1 TO 7 THE REVENUE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSMENT U/S.158BD OF THE AC T IS NULL AND VOID. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE BE FORE THE CIT(A) TOOK ADDITIONAL GROUND CHALLENGING THE LEGALITY OF NOTICE AND THE / DATE OF HEARING :26.04.2016 / DATE OF PRONOUNCEMENT:27.06.2016 2 ITA NO.1255/PN/2011 ASSESSMENT PROCEEDINGS U/S.158BD. THE RELEVANT PORTION OF THE SUBMISSION OF THE ASSESSEE TO THE ADDITIONAL GROUND BEFORE THE CIT(A) WHICH HAS BEEN REPRODUCED BY HIM IN HIS ORDER READS AS UNDER : 1. APPELLANT IS A HUF, HAVING AGRICULTURAL INCOME AS ITS SOURCE OF INCOME. THERE WAS NO ACTION CARRIED OUT AGAINST THE A PPELLANT U/S 132 OF THE INCOME TAX ACT, 1961. 2. THERE ARE SERIOUS DEFICIENCIES IN ASSUMING JURISDICTIO N TO ISSUE NOTICE U/S 158BD AGAINST THE ASSESSEE AND COMPLETION OF A SSESSMENT U/S 158BD. THEREFORE, RELYING ON THE DECISION OF PUNE IT AT 'A' BENCH, IN THE CASE OF ACIT VIS AURANGABAD HOLIDAY RESORTS (P) LTD. (1 18 ITD 1) IT IS REQUESTED TO FIRST CONSIDER THE ISSUE REGARDING THE CORR ECTNESS OF ASSUMPTION OF JURISDICTION BY ISSUE OF NOTICE U/S 158BD A ND PASSING OF ASSESSMENT ORDER U/S 158BD. IN CASE THE ASSUMPTION OF JURISD ICTION BY ISSUE OF THE NOTICE U/S 158BD DT. 05.05.2005 AND THE PASSING OF ASSESSMENT ORDER U/S 158BD ARE CONSIDERED AS CORRECT AND PROPER, ONE MORE OPPORTUNITY OF HEARING BE ALLOWED TO PRESENT THE CASE ON MERITS. 3. NOTICE U/S 158BD WAS ISSUED IN THE CASE OF APPELLANT ON 21.04.2005 AND THE SAME WAS SERVED ON 27.04.2005 (PHOTOCOPY ENCLO SED). IN RESPONSE TO THE NOTICE U/S 158BD, A LETTER SEEKING CERTAIN INF ORMATION, INCLUDING THE COPY OF 'SATISFACTION NOTE' RECORDED BY THE ASSESSING OF FICER OF PERSON SEARCHED, WAS SUBMITTED BY APPELLANT ON 15.05.2005. IN REPLY THERETO, BY LETTER DT. 03.06.2005, ASSESSING OFFICER REFUSED TO COMM UNICATE THE SATISFACTION NOTE RECORDED BY THE ASSESSING OFFICER OF PE RSON SEARCHED (PHOTOCOPY ENCLOSED - PLEASE REFER HIGHLIGHTED PARA N OS. V & VI). BY LETTERS DT. 12.10.2010, A.O. WAS REQUESTED FOR BLOCK PERIOD A SSESSMENT PROCEEDING/ORDER SHEET COPIES IN THE CASES ON PRAKASH L ADDHA (INDIVIDUAL) & PRAKASH LADDHA (HUF) I.E. APPELLANT. IN RESPONSE TO THE SAID REQUESTS, COPIES OF COMBINED PROCEEDING SHEET ENTRIES RECORDED I N THE CASES OF PRAKASH CONSTRUWELL PVT. LTD, PRAKASH LADDHA (INDIVIDU AL) AND OTHERS, COVERED U/S 158BC, IS SUPPLIED ALONG WITH THE SEPARATE PROCEEDING SHEET RECORDED IN THE CASE OF APPELLANT HUF. THEREAFTER BY LETTER DT. 25.10.2010 APPELLANT IS INFORMED THAT, NO SEPARATE PROCEEDING SHE ET WAS RECORDED IN THE CASE OF PRAKASH LADDHA (INDIVIDUAL). FROM THE COM BINED PROCEEDING SHEET ENTRIES IT CAN BE SEEN THAT, THERE IS NO SATISFACTI ON RECORDED BY THE ASSESSING OFFICER OF PERSON SEARCHED I.E. MR. PRAKASH P. L ADDHA (INDIVIDUAL) TO ISSUE NOTICE U/S 158BD IN THE CASE OF MR. PRAKASH P. LADDHA (HUF). FURTHER, THERE IS NO IOTA OF RECORDING OF SUCH SATISF ACTION IN THE ASSESSMENT ORDER DT. 29.10.2004, PASSED U/S 158BC, IN THE CASE OF PERSON SEARCHED MR. PRAKASH P. LADDHA (INDIVIDUAL) (COPY OF BLOCK PERIOD ASSESSMENT ORDER U/S 158BC IS ENCLOSED). 4. THUS, NEITHER IN THE PROCEEDING SHEET ENTRIES RECOR DED FOR ASSESSMENT U/S 158BC NOR IN THE ASSESSMENT ORDER, PASSED U/S 158BC, IN THE CASE OF THE CONCERNED PERSON SEARCHED, I.E. MR. P RAKASH P. LADDHA (INDIVIDUAL), THE SATISFACTION OF HIS ASSESSING OFFICER I S RECORDED. HENCE, THE NOTICE ISSUED U/S 158 BD IS VOID AB INITIO AS THE SATISFACTION, REQUIRED TO BE RECORDED FOR ASSUMPTION OF JURISDICTION IN CASE OF 'OTH ER PERSON' IS ABSENT. FOR THIS PROPOSITION RELIANCE IS PLACE ON THE PUNE ITA T, 'A' BENCH DECISION DT. 29.01.2010, IN THE CASE OF RAM REMEDIES PVT. LTD . V/S DCIT, CIR. 1(1), NASHIK (ITA NO.479/PN/04) AND THE SPL. BENCH DECISION OF ITAT, IN THE 3 ITA NO.1255/PN/2011 CASE OF SHRI MANOJ AGGRAWAL (113 ITD 377). AS TO THE ABSENCE OF RECORDING OF 'SATISFACTION' FOR ISSUE OF NOTICE IN THE CASE OF 'O THER PERSON' THE HONOURABLE SUPREME COURT HAS OBSERVED AS UNDER IN THE CASE OF MANISH MAHESHWARI V/S ACIT (289 ITR 341 - COPY ENCLOSED) AT PARA 16 AS UNDE R- 'AS THE AO HAS NOT RECORDED ITS SATISFACTION, WHICH IS MANDATORY; NOR HAS IT TRANSFERRED THE CASE TO THE AO HAVING JURISD ICTION OVER THE MATTER, WE ARE OF THE OPINION THAT THE IMPUGNED JUD GMENTS OF THE HIGH COURT CANNOT BE SUSTAINED, WHICH ARE SET ASIDE ACC ORDINGLY. IN VIEW OF ABOVE FACTS, IT IS PRAYED TO HOLD THAT, TH E ASSESSMENT ORDER DT. 21.05.2007, PASSED IN THE CASE OF APPELLANT HUF U/S 158BD, BE DECLARED AS NULL AND VOID. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) ALLOWED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BY H OLDING THAT THE NOTICE ISSUED U/S.158BD AND THE CONSEQUENT ASSESSM ENT PROCEEDINGS U/S.158BD ARE NOT AS PER LAW AND ACCORDINGL Y HELD THE SAME TO BE NULL AND VOID BY OBSERVING AS UNDER : 7.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , THE RIVAL SUBMISSIONS AND APPLIED MY MIND ON THE POSITION OF THE L AW ON THIS ISSUE. THE A.O. WAS ASKED VIDE A NOTICE FOR HEARING IN THIS CASE. HOWEVER, HE PREFERRED NOT TO ATTEND. UNDER THE CIRCUMSTANCES, I H AD TO PROCEED ON THE BASIS OF MATERIAL ON RECORD. FROM THE MATERIAL ON REC ORD, I FIND THAT, THE CASE OF APPELLANT IS EMANATING FROM THE PROCEEDINGS U/ S 158BC IN THE CASES OF MR. PRAKASH P. LADDHA (INDIVIDUAL), M/S PRAKASH CON STROWELL PVT. LTD., M/S Q FAB CEMENTS PVT. LTD. AND M/S VASTUKRUPA CONSTRUCT ION (INDIA) PVT. LTD. NO SEPARATE ORDER SHEETS WERE RECORDED IN THE CASE S OF MR. PRAKASH P. LADDHA (LNDIVIDUAL), M/S PRAKASH CONSTROWELL PVT. LTD. , M/S Q FAB CEMENTS PVT. LTD. AND M/S VASTUKRUPA CONSTRUCTION (INDI A) PVT. LTD. IN THE COMBINED ORDER SHEETS RECORDED FOR ALL THE GROUP ASSESSEE S, COVERED U/S 158BC, I DID NOT FIND RECORDING OF ANY SATISFACTION B Y THE AO OF PERSON SEARCHED REGARDING THE INCOME BELONGING TO THE APPEL LANT. ASSESSMENT ORDERS IN THE CASES OF CONCERNED PERSONS SEARCHED, I.E. M R. PRAKASH P. LADDHA (INDIVIDUAL), M/S PRAKASH CONSTROWELL PVT. LTD. , M/S Q FAB CEMENTS PVT. LTD. AND M/S VASTUKRUPA CONSTRUCTION (INDI A) PVT. LTD WERE PASSED ON 29.10.2004 AND NO SATISFACTION IS FOUND RECORD ED IN THE BLOCK ASSESSMENT ORDERS OF ANY OF THE SAID CASES. WHEREAS THE SATI SFACTION RECORDED BY THE AO. REGARDING CERTAIN INCOME BELONG ING TO PRAKASH P. LADDHA (HUF) WAS RECORDED ON 21.04.2005 AND THE NOTI CE U/S 158BD WAS ALSO ISSUED ON 21.04.2005. THUS, THE SATISFACTION ENVISAGE D U/S 158BD AS WELL AS THE NOTICE U/S 158BD, BOTH WERE ISSUED AFTER CO MPLETION OF ASSESSMENTS IN THE CASES OF PERSONS SEARCHED I.E. MR. PRAKASH P. LADDHA (INDIVIDUAL) AND M/S PRAKASH CONSTROWELL PVT. LTD. THE REFORE, IT IS HELD THAT THE NOTICE ISSUED U/S 158BD AND THE CONSEQUENT ASSE SSMENT PROCEEDINGS COMPLETED U/S 158BD, BOTH ARE NULL AND VO ID FOR THE REASONS STATED ABOVE. THIS VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS 4 ITA NO.1255/PN/2011 I. PUNE ITAT, 'A' BENCH DECISION DT. 29.01.2010, IN THE CASE OF RAM REMEDIES PVT. LTD. VIS DCIT, CIR. 1(1), NASHIK (IT A NO. 479/PN/04) II. SPL. BENCH DECISION OF ITAT, IN THE CASE OF SHRI MANO J AGRAWAL (113 ITD 377) AND III. SUPREME COURT DECISION IN THE CASE OF MANISH MAHESHWA RI V/S ACIT (289 ITR 341) 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOS ED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE FACTS IN THE CASE OF M ANISH MAHESHWARI (SUPRA) ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. SO FAR AS THE DECISION IN THE CAS E OF RAM REMEDIES PVT. LTD. VS. DCIT (SUPRA) IS CONCERNED THE REVENUE HAS NOT ACCEPTED THE ABOVE DECISION AND AN APPEAL HAS BEEN FILED BEFORE THE HONBLE HIGH COURT U/S.260A OF THE I.T. ACT. HE ACCORDINGLY SUBMITTED THAT THE OR DER OF THE CIT(A) BE SET ASIDE ON THIS ISSUE. 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A) ON THIS ISSUE. HE SUBMITTED TH AT DESPITE GIVEN OPPORTUNITY BY THE LD.CIT(A) TO REMAIN PRESENT DURIN G THE HEARING OF THE APPEAL THE AO DID NOT ATTEND. FURTHER TH E CIT(A) HAS GIVEN A FINDING THAT THE CASE OF THE ASSESSEE IS EMANATING FROM THE PROCEEDINGS U/S.158BC IN THE CASE OF MR.PRAKASH P. LADDH A (INDIVIDUAL), M/S. PRAKASH CONSTRUWELL PVT. LTD., M/S. Q.FAB CEMEN T PVT. LTD., AND M/S. VASTUKRUPA CONSTRUCTION INDIA PVT. LT D. NO SEPARATE ORDER SHEETS WERE LOCATED IN THE CASE OF MR. P RAKASH P. LADDHA, M/S. PRAKASH CONSTRUWELL PVT. LTD., M/S. Q.FAB CEM ENT PVT. LTD., AND M/S. VASTUKRUPA CONSTRUCTION INDIA PVT. LTD. NO SATISFACTION HAS BEEN RECORDED IN THE CASE OF ANY OF THE SEARCHED P ERSONS REGARDING 5 ITA NO.1255/PN/2011 THE INCOME BELONGING TO THE ASSESSEE. THEREFORE, THE DEC ISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RAM REMEDIES PV T. LTD. (SUPRA) IS SQUARELY APPLICABLE. MERELY BECAUSE THE DEPART MENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL THE SAME CANNOT BE A GROUND FOR TAKING A DIFFERENT VIEW. HE SUBMITTED THAT SINCE THE LD.C IT(A) HAS PASSED A SPEAKING ORDER ON THIS ISSUE, THEREFORE, THE S AME SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE LD.CIT(A) IN THE INSTANT CASE HAS GIVEN A CATEGORICAL FINDING THAT THERE IS NO RECORDING OF ANY SATISFA CTION IN THE CASE OF ANY OF THE PERSONS SEARCHED NAMELY, MR. PRAKASH P. LADDHA (INDIVIDUAL), M/S. PRAKASH CONSTRUWELL PVT. LTD., M/S. Q.FAB CE MENT PVT. LTD., AND M/S. VASTUKRUPA CONSTRUCTION INDIA PVT. LT D., WHOSE CASES ARE COVERED U/S.158BC REGARDING ANY INCOME BELONG ING TO THE ASSESSEE. HE HAS ALSO GIVEN A CATEGORICAL FINDING THAT TH E SATISFACTION RECORDED BY THE AO REGARDING CERTAIN INCOME BELONGING TO MR. PRAKASH P. LADDHA (HUF) WAS RECORDED ON 21-04-2005 AND THE NO TICE U/S.158BD WAS ALSO ISSUED ON 21-04-2005 WHEREAS THE AS SESSMENTS IN THE CASE OF THE SEARCHED PERSONS WERE COMPLETED ON 29-10-2004. THUS, THE SATISFACTION ENVISAGED U/S.158BD AS WELL AS THE NOTICE U/S.158BD WERE ISSUED AFTER COMPLETION OF THE ASSESSMENT ON 29-10- 2004 IN THE CASES OF THE PERSONS SEARCHED, I.E. THE ABOV E 4 PARTIES. IT IS THE SETTLED POSITION OF LAW THAT THE NOTICE U/S.158BD HA S TO BE ISSUED PRIOR TO COMPLETION OF THE ASSESSMENT U/S.158BC IN THE CASE OF THE SEARCHED PERSON. SINCE IN THE INSTANT CASE THE LD.C IT(A) HAS GIVEN 6 ITA NO.1255/PN/2011 A CATEGORICAL FINDING THAT THE SATISFACTION RECORDED U/S.158 BD AS WELL AS THE NOTICE ISSUED U/S.158BD WERE ADMITTEDLY AFTER THE COMPLE TION OF ASSESSMENTS IN THE CASE OF THE SEARCHED PERSONS, THERE FORE, THE NOTICE U/S.158BD HAS TO BE TREATED AS NULL AND VOID. SINCE THE NOTICE IS HELD AS NULL AND VOID THE SUBSEQUENT PROCEEDINGS ALSO BECOME NULL AND VOID. SINCE THE LD.CIT(A) WHILE HOLDING SO HAS FOLLOWED THE DE CISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RAM REMEDIE S PVT. LTD., THEREFORE, MERELY BECAUSE THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT THE SAME IN OUR OPINION CANNOT BE A BASIS FOR TAKING A DIFFERENT VIEW IN ABSENCE OF ANY CONTRARY MATERIA L BROUGHT TO OUR NOTICE. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONINGS GIVEN BY THE CIT(A) ON THIS ISSUE WE FIND NO INFIRM ITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. GROUND OF APPEAL NO.8 BY THE REVENUE READS AS UNDER : 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION OF RS.10,00,000/- BEING UNDISCLOSED INCOME ON A/C OF BANK DEPOSITS WHICH HAVE NOT BEEN EXPLAINED BY TH E ASSESSEE WITH ANY DOCUMENTARY OR COGENT EVIDENCE. 10. FACTS OF THE CASE, IN BRIEF ARE THAT THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS D EPOSITED IN HIS BANK ACCOUNT CASH OF RS 5,00,000/- ON 03-04-2000 AND T HERE WAS ANOTHER CREDIT OF RS. 5,00,000/- BY CLEARANCE. ON BEING QUESTIONED BY THE AO IT WAS SUBMITTED BY THE ASSESSEE THAT THE DEPO SIT WAS OUT OF SELF WITHDRAWAL OF RS.7,80,000/- ON 03-04-2000 I.E. THE SAME DA Y AND IT WAS FOLLOWED BY CONTRA ENTRIES OF RS.5,00,000/- BY CHEQUE /CASH ON 06- 04-2000. THE AO DID NOT ACCEPT THE ASSESSEE'S EXPLANAT ION ON THE GROUND THAT THERE WAS NO LINK OF CASH WITHDRAWALS AND C ASH DEPOSITS IN 7 ITA NO.1255/PN/2011 THE INDIVIDUAL HANDS AND HANDS OF HUF. HE, THEREFORE, MADE ADDITION OF RS.10,00,000/-. 11. BEFORE CIT(A) THE ASSESSEE EXPLAINED THE DEPOSIT OF RS .10 LAKHS AS UNDER (PAGE 8 OF THE CIT(A)S ORDER) : 'OUT OF TWO CREDITS/DEPOSITS OF RS. 5,00,000/- EACH, IN S.B A/C NO. 6198 ON 03.04.2000 & 04.04.2000, FIRST BY CASH & SECOND BY CLE ARING, AO. ASKED FOR EXPLANATION IN RELATION TO CASH DEPOSIT OF RS. 5,00,00 0/- ONLY. NO EXPLANATION WAS CALLED WITH RESPECT TO THE CREDIT OF RS. 5,00,000/-, BY WAY OF CLEARING. I. AS REGARDS CASH DEPOSIT OF RS. 5,00,000/-, IT WAS EXPL AINED THAT, IT REPRESENTED RE-DEPOSIT OF EARLIER CASH WITHDR AWAL OF RS.7,80,000/- FROM THE SAME BANK ACCOUNT ON THE SAME DAY. HOWEVER, THE AO HAS REJECTED APPELLANT'S EXPLANATION BY OBSERVING THAT, THE CASH DEPOSIT OF RS. 5,00,000/- IS NOT PROVED FROM THE IMMEDIATELY EARLIER WITHDRAWAL OF RS. 7,80,000/-. NO EVIDENCE OF ANY OTHER UTILISATION OF THE WITHDRAWAL OF RS.7,80,00 0/- IS BROUGHT ON RECORD BY THE A.O. THUS, THE A.O. EXPECTED ASSESSEE T O PROVE NEGATIVE FACT THAT, HE DID NOT UTILIZE THE CASH WIT HDRAWAL OF RS. 7,80,000/- FOR ANY OTHER PURPOSE. IN ABSENCE OF ANY M ATERIAL BROUGHT ON RECORD BY THE A.O, TO SHOW ANY OTHER UTIL IZATION OF THE SAID CASH WITHDRAWAL OF RS. 7,80,000/-, HE WAS NOT JUSTI FIED IN REJECTING EXPLANATION OFFERED BY APPELLANT. II. DEPOSIT OF RS. 5,00,000/- ON 04.04.2000 WAS BY WAY OF CLEARING OF CHEQUE OF M/S RAMESHWAR CONSTROWEL AND NOT A CASH DEPOSIT. IN SUPPORT OF THIS I HEREWITH ENCLOSE A CONFIR MATION LETTER FROM SAID M/S RAMESHWAR CONS TROWEL (ENCLOSURE NO. 12). THUS, A.O. CLEARLY ERRED IN MAKING ADDITION OF RS. 5,00,00 0/- DEPOSITED, BY CHEQUE, ON 04.04.2000. IN VIEW OF ABOVE SUBMISSIONS, IT IS PRAYED TO DELETE THE ADDITION OF RS.5,00,000/-.' 12. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 10.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE RIVAL CONTENTIONS ON THIS ISSUE AND ALSO THE REMAND REPORT. AS TO THE CASH DEPOSIT OF RS. 5,00,000/- ON 03.04.2000, IT IS A FACT THAT, I MMEDIATELY ON THE SAME DAY THERE WAS A CASH WITHDRAWAL OF RS. 7,80,000/- BEFO RE MAKING DEPOSIT. NO OTHER UTILISATION OF THIS CASH WITHDRAWN OF RS. 7,80 ,000/- IS BROUGHT ON RECORD BY THE A.O. UNDER THE CIRCUMSTANCES, THE A.O. WAS NOT JUSTIFIED IN REJECTING THE APPELLANT'S EXPLANATION ON THIS ISSUE, O NLY ON THE BASIS OF THE STATEMENT OF MR. PRAKASH LADDHA (IND). THE FACT OF I MMEDIATELY EARLIER CASH WITHDRAWAL AND ITS AVAILABILITY FOR REDEPOSIT CANNOT BE BRUSHED ASIDE AND THE ADMISSIONS IN THE STATEMENT RECORDED U/S 132(4) CANN OT BE RELIED UPON IF THERE IS NO INDEPENDENT MATERIAL TO SUPPORT IT. IT IS ALSO ADMITTED BY THE A.O. THAT, ADDITIONS FOR ALL THE ADMISSIONS ARE NOT MAD E. THEREFORE, THERE IS 8 ITA NO.1255/PN/2011 NO JUSTIFICATION FOR MAKING THE ADDITION OF RS. 5,00, 000/- FOR CASH DEPOSIT ON 03.04.2000 AND THE SAME IS DELETED. AS REGARDS THE C REDIT BY CLEARING OF RS.5,00,000/- ON 04.04.2000, IT APPEARS THAT THE LD. A.O. FAILED TO APPRECIATE THE NATURE OF THE TRANSACTION. IN THE ASSESSMENT ORDER THE ISSUE IS NOT PROPERLY DEALT WITH. HE HAS CONFUSED IT WITH SOME CASH WITHDRAWAL. IN THE REMAND REPORT AS WELL HE HAS NOT PROPERLY DEALT WITH THE EXPLANATION OFFERED BY THE APPELLANT. THE CREDIT BY WAY OF CLEA RING REFERS TO THE REALISATION OF CHEQUE FROM ONE M/S RAMESHWAR CONSTROWEL . THE APPELLANT HAS FURNISHED CONFIRMATION LETTER OBTAINED FROM THE SA ID PARTY. IT DID ITS JOB BY FURNISHING THE CONFIRMATION LETTER. NOW SINCE THE TRANSACTION IS NOT OF CASH DEPOSIT AND SINCE IT IS THROUGH THE REGULAR BANKIN G CHANNELS, IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE A.O . AGAINST THE SAID BANK TRANSACTION, HE WAS NOT JUSTIFIED IN MAKING THE ADDITI ON. ACCORDINGLY, BOTH THE ADDITIONS OF RS. 5,00,000/- EACH, TOTALING RS. 10, 00,000/-, ARE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 13. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 14. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY OPPOSE D THE ORDER OF THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE IN THE STATEMENT RECORDED U/S.132(4) ON 11-10-2002 HAD ADMITTE D THE CREDIT OF RS.10 LAKHS IN THE BANK ACCOUNT AS DEPOSIT FROM UNACCO UNTED SOURCES. HOWEVER, HE HAS CHANGED THE PLEA DURING THE A SSESSMENT PROCEEDINGS WITHOUT ANY COGENT EVIDENCE. THE CLAIM OF THE ASSESSEE THAT CIRCULATION OF THE MONEY IS NOTHING BUT AN ATTEMPT W ITHOUT ANY EVIDENCE TO LINK CREDITS TO THE DEBITS. HE ACCORDINGLY SU BMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 15. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 16. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO MADE ADDITION OF RS. 10 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF CASH DE POSIT OF RS.5 LAKHS ON 03-04-2000 AND ANOTHER CREDIT ENTRY OF RS.5 LA KHS ON 04-04- 9 ITA NO.1255/PN/2011 2000. ON BEING QUESTIONED BY THE AO REGARDING THE DEPO SIT OF CASH OF RS.5 LAKHS IT WAS EXPLAINED THAT THE SAME IS OUT OF WITHDR AWAL OF RS.7,80,000/- ON 03-04-2000, I.E. THE SAME DAY AND OUT OF T HE CASH IN HAND THE AMOUNT OF RS.5 LAKHS WAS DEPOSITED. WE FIND THE AO DISBELIEVED THE ABOVE ON THE GROUND THAT SHRI PRAKASH P . LADDHA IN HIS STATEMENT ON 11-10-2002 DURING THE SEARCH ACTION HAD ADMITTED THE ABOVE CREDIT OF RS.10 LAKHS IN THE BANK ACCOUNT AS DEPO SITS FROM UNACCOUNTED SOURCES. HOWEVER, THE ASSESSEE IS TAKING N EW PLEA FOR WHICH HE DISBELIEVED THE SAME. WE FIND THE LD.CIT(A) DELETED THE ABOVE 2 ADDITIONS ON THE GROUND THAT ADDITION CANNOT BE MADE ON THE BASIS OF MERE STATEMENT WITHOUT ANY OTHER EVIDENCE. THE AO HAS NOT GIVEN ANY FINDING THAT THE AMOUNT OF RS.7,80,000/- WITHDRAWN AS PER T HE BANK ACCOUNT ON THE SAME DAY HAS BEEN UTILIZED OTHERWISE AN D CASH IS NOT AVAILABLE TO THE ASSESSEE. HE HAS ALSO GIVEN A CATEGORICA L FINDING THAT AO HAS NOT ASKED ANY FURTHER DETAILS REGARDING THE NATU RE OF CREDIT OF RS.5 LAKHS IN THE BANK ACCOUNT. THE ASSESSEE DURING THE COURSE OF APPEAL PROCEEDINGS HAS FILED A CONFIRMATION FROM M/S. RAMESHW AR CONSTROWELL FROM WHOM THE AMOUNT OF RS.5 LAKHS WAS RECEIVE D THROUGH BANKING CHANNEL. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) IN DELETING THE ABOVE ADDITION. ADMITTEDLY, THE ASSESSEE HAS WITHDRAWN AN AMOUNT OF RS.7,80,000/- IN CASH ON THE VERY SAME DAY WHEN THE AMOUNT OF RS.5 LAKHS WAS DEPOSITED IN THE BANK. IN ABSEN CE OF ANY MATERIAL IN THE HANDS OF THE AO THAT THE MONEY HAS BEEN UTILIZED OTHERWISE THE AO IN OUR OPINION IN THE INSTANT CASE SHOUL D NOT HAVE DISBELIEVED THAT OUT OF THE ABOVE CASH WITHDRAWAL THE ASS ESSEE HAS MADE DEPOSIT OF RS.5 LAKHS IN CASH IN THE BANK ACCOUNT. 17. IT IS THE SETTLED PROPOSITION OF LAW THAT WHILE STATEME NT RECORDED U/.S.132(4) IS A GOOD PIECE OF EVIDENCE, HOWEVER, THE ASSESSE E CAN 10 ITA NO.1255/PN/2011 ALWAYS REBUT THE SAME WITH COGENT EVIDENCE. IN THE INS TANT CASE THE ASSESSEE HAS EXPLAINED THE DEPOSIT OF CASH OF RS.5 LAKHS AS OUT OF THE WITHDRAWAL OF RS.7,80,000/- ON THE VERY SAME DAY. THE AO IN ABSENCE OF ANY MATERIAL AT HIS DISPOSAL THAT THE MONEY WITHDRAWN HAS BEEN UTILIZED OTHERWISE SHOULD NOT HAVE DISBELIEVED AND MADE ADD ITION MERELY ON THE BASIS OF STATEMENT RECORDED U/S.132(4). 18. SO FAR AS THE ADDITION OF RS.5 LAKHS IN THE BANK ACCO UNT BY CLEARING ON 04-04-2000 IS CONCERNED WE FIND THE ASSESSEE HAS ALREADY FILED A CONFIRMATION FROM M/S. RAMESHWAR CONSTROWELL FROM WHOM THE AMOUNT OF RS.5 LAKHS WAS RECEIVED. NO ADVERSE MATERIAL WA S FURNISHED BEFORE US TO SHOW THAT THE CONFIRMATION OBTAINED FROM M/ S. RAMESHWAR CONSTROWELL SHOWING THAT THEY HAVE ISSUED TH E CHEQUE OF RS. 5 LAKHS TO THE ASSESSEE IS FALSE OR UNTRUE. UNDER T HESE CIRCUMSTANCES AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SA ME IS UPHELD AND THE GROUND RAISED BY THE REVENUE ON THIS ISS UE IS DISMISSED. 19. GROUND OF APPEAL NO.9 BY THE REVENUE READS AS UNDER : 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION OF OPENING BALANCE O F RS.51,07,615/- APPEARING IN THE NAME OF THE ASSESSEE IN THE TRIAL BAL ANCE OF M/S. PRACHI ASSOCIATES WHICH HAVE NOT BEEN EXPLAINED BY THE ASSESSEE W ITH ANY DOCUMENTARY OR COGENT EVIDENCE. 20. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF M/S. PRAKASH CONSTRUWELL PVT.LTD., IT W AS SEEN THAT PAGE 8 OF ANNEXURE A.25 SEIZED SHOWS THE TRIAL BALAN CE AS ON 10-01-2000 WHEREIN THERE WAS OPENING BALANCE (AS ON 01- 04-1999) OF RS.51,07,615/- IN THE NAME OF THE ASSESSEE IN THE BOOKS O F M/S PRACHI ASSOCIATES, PROPRIETARY CONCERN OF SHRI PRAKASH P. LADD HA (INDIVIDUAL). 11 ITA NO.1255/PN/2011 THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION AS REGARDS THE SOURCE OF THIS INVESTMENT IN M/S. PRACHI ASSOCIATES AS ON 01-04-199 9. THE ASSESSEE ARGUED THAT THE TRANSACTION OF RS.51,07,615/- P ERTAINS TO PERIOD PRIOR TO BLOCK PERIOD. THE ASSESSEE FILED COPIES OF EX TRACTS OF ACCOUNTS OF M/S. PRACHI & ASSOCIATE SHOWING EXISTING ACCOUNT OF THE ABOVE CONCERN WITH OPENING BALANCE OF RS.46,31,615/- AS O N 01-04- 1998. ON VERIFICATION OF THE RECORDS OF M/S. PRACHI ASSOCIATE S AO FOUND THAT IT HAD BEEN SHOWING YEAR TO YEAR CERTAIN CREDITS A S ADVANCE RECEIVED AND BREAK-UP OF SUCH ADVANCES HAD NOT BEEN P ROVIDED WHICH COULD ESTABLISH THE INVESTMENT BY THE ASSESSEE. THE ASS ESSEES EXPLANATION WAS THEREFORE REJECTED BY THE AO AND AN AM OUNT OF RS.51,07,615/- WAS TREATED AS INVESTMENT FROM UNDISCLOSED SOURCE S. 21. BEFORE THE LD.CIT(A) THE ASSESSEE SUBMITTED AS UNDER : 'A TRIAL BALANCE, FOR THE PERIOD FROM 01.04.1999 TO 10.01.2000, OF M/S PRACHI & ASSOCIATES WAS FOUND & SEIZED, AS PER ANNEXURE A - 25, PAGE NO.8, FROM THE BUSINESS PREMISES OF M/S PRAKASH CONSTROWELL PVT. LTD. IN THIS TRIAL BALANCE, AGAINST THE NAME OF APPELLANT, OPENIN G BALANCE OF RS. 51,07,615/- APPEARED. M/S PRACHI & ASSOCIATES IS A PROPR IETARY CONCERN OF MR. PRAKASH LADDHA (INDIVIDUAL). THEREFORE, IN THE C ASE OF MR. PRAKASH P. LADDHA (INDIVIDUAL), AN EXPLANATION WAS CALLED WITH REFERENCE TO THE CREDITS APPEARING IN HIS BOOKS OF ACCOUNTS, IN THE NAME OF APP ELLANT. IN THE CASE OF MR. PRAKASH P. LADDHA (INDIVIDUAL), IT WAS EXPLAINED BY LETTER DT. 12.08.2004 AT PARA NO. 9.2 THAT - '9.2 ANNEXURE A I TEM NO. 25 PAGE NO.8: RELEVANT ACCOUNT EXTRACTS OF PRAKASH LADDHA (HUF), AP PEARING IN MY BOOKS OF ACCOUNTS (PPL-II) FOR THE PERIOD FROM 01.04.1997 TO 10.01.2000 ARE ENCLOSED.' FURTHER, BY LETTER DT. 18.10.2004, IN THE INDIVIDUAL CASE, AT PARA 3(II), IT WAS EXPLAINED TO THE AO. THAT, THE BALANC E OF RS. 51,07,615/- COMPRISED OF RS. 46,07,615/- BEING THE OPENING BALANC E FOR THE TRANSACTIONS PRIOR TO 1.4.96 AND THE BALANCE AMOUNT O F RS. 5,00,000/-, DEPOSITED ON 1.4.97, REPRESENTED THE AMOUNT DECLARED UNDER VDIS. THIS EXPLANATION WAS ACCEPTED BY THE AO. IN THE CASE OF MR . PRAKASH P. LADDHA (INDIVIDUAL), AS GENUINE. NO ADDITION WAS MADE BY HIM FOR THE CREDITS APPEARING IN THE NAME OF APPELLANT IN HIS BOOKS OF AC COUNTS, THOUGH IN THE CASES OF OTHER TWO CREDITORS, APPEARING IN THE SAME TRI AL BALANCE, HE MADE ADDITIONS [ENCLOSURE NO. 15 - RELEVANT PART OF B/P ASSE SSMENT ORDER IN THE CASE OF MR. PRAKASH P. LADDHA (INDIVIDUAL)]. THUS, THE TRANSACTION, AS APPEARING IN THE BOOKS OF ACCOUNTS OF M/S PRACHI & ASSO CIATES, PROP : MR. PRAKASH P. LADDHA (INDIVIDUAL) & ACCEPTED IN HIS CASE, WAS AS UNDER OP. CREDIT BALANCE ON 01-04-1996 - RS.46,07,615/- ADD : ADDITION DURING 1997-98 12 ITA NO.1255/PN/2011 OUT OF DECLARATION UNDER VDIS - RS.5,00,000/- -------------------- BALANCE AS ON 01-04-1999 - RS.51,07,615/- -------------------- IN REPLY TO THE AO'S QUERY, IN THE CASE OF APPELLANT, IT WAS SUBMITTED, AT PARA NO. 3 OF THE LETTER DT. 17.04.2007, THAT - 'OUT OF OPENING BALANCE OF RS. 51,07,615/- IN THE ACCOUNT OF M/S PRACHI & ASSOCIATES, AN AMOUNT OF RS. 46,07,615/- RELATED TO THE TRANSACTION PRIOR TO BLOC K PERIOD. IN SUPPORT OF THIS, ENCLOSED IS AN ACCOUNT EXTRACT FROM THE BOOKS OF M/S PRACHI & ASSOCIATES. M/S PRACHI & ASSOCIATES IS A PROPRIETARY CONCER N OF SHRI PRAKASH P. LADDHA. THEREFORE, COPY OF RELEVANT BALAN CE SHEET ENCLOSED WITH HIS RETURN OF INCOME FOR A.Y. 97-98, ALONG WITH RELE VANT GROUPING DETAILS ARE ENCLOSED. COPIES OF SUBSEQUENT ACCOUNT EXTRACTS FOR TRAN SACTIONS RESULTING INTO BALANCE OF RS. 51,07,615/- AS ON 31.03.1999 ARE ENCLOSED.' (ENCLOSURE NO. 16) FROM THE ABOVE EVIDENCES & FROM THE CASE OF S HRI PRAKASH P. LADDHA (LNDIVIDUAL), IT NOW CANNOT BE DENIED THAT, OUT OF RS. 51,07,615/-, RS.46,07,615/- REPRESENTED THE DEPOSIT MADE BY APPELL ANT PRIOR TO COMMENCEMENT OF BLOCK PERIOD. FURTHER, THE ADDITION AL DEPOSIT OF RS.5,00,000/-, MADE FROM OUT OF AMOUNT DECLARED UNDE R VDIS, IS SUPPORTED BY THE DECLARATION UNDER VDIS (ENCLOSURE NO. 17). TH EREFORE, IF THE PARTY WITH WHOM THE INVESTMENT IS MADE IS CONFIRMING THAT IT HAD RECEIVED RS.46,07,615/- PRIOR TO COMMENCEMENT OF BLOCK PERIOD & IF THAT CONTENTION IS ALREADY ACCEPTED IN THE CASE OF THAT PARTY, THEN N OW THE AO OF APPELLANT CANNOT GO BACK TO SAY THAT, THE WHOLE OF INVESTMENT W AS MADE ON 01.04.1999. THIS IS ALSO INCORRECT AS PER SEIZED PAPER W HERE IT IS CLEARLY APPEARING UNDER THE HEAD 'OPENING BALANCE'. THIS IS C LEARLY AGAINST THE PRESUMPTION U/S 132(4A). THUS, THE AO FAILED TO APPRECIATE THE ISSUE BEFORE HIM AND ERRED IN MAKING ADDITION OF RS. 51,07,615/-, AS UDI, IN THE HANDS OF APPELLANT, ONLY ON THE BASIS OF SUSPICION. THEREFORE, I T IS PRAYED TO DELETE THE ADDITION OF RS. 51,07,615/-. 22. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 11.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER , ABOVE SUBMISSIONS BY THE APPELLANT, REMAND REPORT ON THE ISSUE AND THE REJOINDER SUBMITTED BY THE APPELLANT. I HAVE ALSO GONE THROUGH THE EVIDENCES LIKE SEIZED TRIAL BALANCE, THE RELEVANT PART OF THE ASSESSMEN T ORDER IN THE CASE OF MR. PRAKASH LADDHA (IND), ACCOUNT EXTRACTS AND THE VD IS CERTIFICATE ISSUED IN THE CASE OF APPELLANT HUF. SO FAR AS THE AMOUNT OF CREDIT OF RS. 5,00,000/- BY M/S PRACHI ASSOCIATES ON 01.04.1997 IS CONCERNED, CLA IMED OUT OF SUM DECLARED UNDER VDIS, IT IS SEEN THAT THE APPELLANT HA D DECLARED RS. 5,00,000/- AS CASH IN HAND AS ON 31.03.1997. THIS CASH I N HAND WAS DEPOSITED WITH M/S PRACHI ASSOCIATES ON 01.04.1997. NO O THER UTILISATION IS EVEN ALLEGED BY THE AO. THEREFORE, THERE IS NO REASON FOR MAKING THE ADDITION OF RS. 5,00,000/- ON 01.04.99. SECONDLY, IT IS TO BE UNDERSTOOD THAT, THE ACTION U/S 132 WAS AGAINST MR. PRAKASH LADDHA (LND ) AND M/S PRAKASH CONSTRUWELL P. LTD. IT WAS NOT AGAINST THE APPELLANT H UF. IN THIS ACTION U/S 132 A TRIAL BALANCE OF M/S PRACHI ASSOCIATES FOR THE PE RIOD FROM 01.04.1999 13 ITA NO.1255/PN/2011 TO 10.01.2000 WAS SEIZED. IN THIS TRIAL BALANCE A SUM O F RS. 51,07,615/- APPEARED AGAINST THE NAME OF APPELLANT UNDER THE COL UMN OF OPENING BALANCE. IN THE CASE OF PRAKASH P. LADDHA (LND) EXPLA NATION AS TO THIS TRIAL BALANCE WAS CALLED FOR. IN REPLY MR. PRAKASH P. LADDH A SUBMITTED ACCOUNT EXTRACTS FROM THE BOOKS OF ACCOUNTS OF HIS PROPRIETARY CONCERN M/S PRACHI ASSOCIATES. ACCORDING TO THESE ACCOUNTS EXTRACTS THE SUM O F RS. 51,07,615/- ACCUMULATED TO THE CREDIT OF APPELLANT REPRESENTED R S. 46,07,615/- AS OPENING BALANCE AS ON 01.04.1996 AND THE ONLY ACCRET ION THERETO OF RS. 5,00,000/- ON 01.04.1997 BY CASH. IN THE BLOCK ASSESSMEN T OF MR. PRAKASH LADDHA (IND) THIS EXPLANATION OFFERED BY HIM IS ACCE PTED AND THE TRANSACTIONS CLAIMED BY MR. PRAKASH LADDHA AS THOSE OF H UF ARE ALSO ACCEPTED. IT IS FOR THIS REASON NO ADDITION IS MADE IN HIS INDIVIDUAL CASE FOR THE CREDITS FROM THE APPELLANT HUF. NOW IF THE DATES OF CREDITS FROM HUF ARE NOT ACCEPTED IN THE CASE OF THE APPELLANT HUF, A PECULIAR SITUATION MAY ARISE IN THE CASE OF THE INDIVIDUAL. IF THE CREDITS BY THE HUF ARE ADOPTED AS ON 31.03.1999, THEN SHORT CASH MAY BE THERE IN THE CA SE OF THE INDIVIDUAL FOR PERIODS PRIOR TO 31.03.1999. SECONDLY, MR. PRAKA SH LADDHA HAS SUBSTANTIATED HIS CLAIM BY FURNISHING ACCOUNTS EXTRACTS A ND THE BALANCE SHEETS FURNISHED WITH THE REGULAR RETURNS. IT IS NOT THE CLAIM OF THE A.O. THAT THESE ACCOUNTS EXTRACTS OR THE BALANCE SHEETS ARE FALSE. THE REGULAR BOOKS OF ACCOUNTS OF PRACHI ASSOCAITES ARE NOT REJECTED IN THE CASE OF PRAKASH LADDHA (IND). THEREFORE, NOW THESE CANNOT BE DOUBTED IN THE CASE OF THE APPELLANT. NOTHING IS BROUGHT ON RECORD BY THE A.O. IN SUPPORT OF HIS ACTION OF REJECTING THE ACCOUNT EXTRACTS OF PRACHI ASSOCIATES. UNDER THE CIRCUMSTANCES I AM SATISFIED THAT THE SUM OF RS.46,07,615 /- REPRESENTED THE OPENING BALANCE AS ON 01.04.1996 AND THEREFORE FELL BEYOND THE BLOCK PERIOD. HENCE IT CANNOT BE TREATED AS UNDISCLOSED INCO ME OF THE APPELLANT FOR THE BLOCK PERIOD. ACCORDINGLY, THE IMPUGNED ON OF RS. 51,07,615/- IS DELETED. GROUND NO.5 IS ALLOWED. 23. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 24. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY OPPOSED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ABOVE DELETION BY THE LD.CIT(A) IS NO T ACCEPTABLE AS THE ASSESSEE WAS NEITHER ASSESSED TO TA X UPTO THE PERIOD UNDER CONSIDERATION NOR HAS ANY EVIDENCE TO PROVE THE SOURCE OF OPENING BALANCE AS ON 01-04-2009. NO RETURN OF INCOME H AD EVER BEEN FILED BY THE ASSESSEE FROM A.Y. 1995-96 ONWARDS. THE SAID BALANCE SHEET SHOWED SHRI PRAKASH P. LADDHA (HUF) AS THE PROP RIETOR OF M/S. PRACHI ASSOCIATES AS ON 01-04-1994 WHEREAS THE OPENING BALANCE OF THE ASSESSEE SHOWN IN THE ACCOUNTS OF PRACHI ASSOCIATES HAV ING PROPRIETOR SHRI PRAKASH P. LADDHA (INDIVIDUAL) AS ON 01-04-1999. THER E IS NO 14 ITA NO.1255/PN/2011 EVIDENCE OF TRANSFER OF PROPRIETORSHIP IN THE INTERVENING PE RIOD AND HENCE OPENING BALANCE OF RS.51,07,615/- REMAINED UNEXPLAINED. 25. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 26. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PA PER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN THE INSTANT CASE DUR ING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF M/S. PRAKASH CONSTROWELL PV T. LTD. PAGE 8 OF ANNEXURE A-25 WAS SEIZED. THE SAID DOCU MENT SHOWS THE TRIAL BALANCE AS ON 10-01-2000 WHEREIN THERE WAS OP ENING BALANCE OF RS.51,07,615/- IN THE NAME OF THE ASSESSEE IN THE BOOK S OF M/S. PRACHI ASSOCIATES. M/S. PRACHI ASSOCIATES IS THE PROPRIETA RY CONCERN OF SHRI PRAKASH P. LADDHA (INDIVIDUAL). ON THE BASIS OF THESE S EIZED DOCUMENT THE AO MADE ADDITION OF RS.51,07,615/- AS INVESTM ENT FROM UNDISCLOSED SOURCES IN THE HANDS OF THE ASSESSEE SINCE T HE ASSESSEE PRAKASH P. LADDHA (HUF) WAS THE PROPRIETOR OF THIS CONCER N EARLIER. WHILE DOING SO HE HELD THAT THE ASSESSEE COULD NOT EXPLAIN SATISFACTORILY THE INVESTMENT. WE FIND BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE OPENING BALANCE AS ON 01-04-1996 WAS RS.46,07,615/- AND AN AMOUNT OF RS.5 LAKHS WAS DECLARED UNDER VDIS WHICH WAS INTRODUCE D DURING F.Y. 2007-08. IT WAS ALSO SUBMITTED THAT IN THE CASE OF S HRI PRAKASH P. LADDHA (INDIVIDUAL) THE ABOVE EXPLANATION WAS ACCEPTED BY THE AO. BASED ON THE SUBMISSION OF THE ASSESSEE THE LD.CIT(A) DELE TED THE ADDITION. WHILE DOING SO, HE HELD THAT THE CREDIT OF RS.5 LAKH S BY M/S. PRACHI ASSOCIATES AS ON 01-04-1997 WAS OUT OF THE DEC LARATION UNDER VDIS AS CASH IN HAND AS ON 31-03-1997. HE HAD ALSO GIV EN A FINDING THAT NO OTHER UTILIZATION OF THIS CASH WAS ALLEGED BY THE A O. THEREFORE, 15 ITA NO.1255/PN/2011 HE HELD THAT THIS CASH OF RS.5 LAKHS WAS AVAILABLE TO THE A SSESSEE. FURTHER, HE HAD ALSO GIVEN A FINDING THAT IN THE HANDS OF S HRI PRAKASH P. LADDHA (INDIVIDUAL) THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT OF RS.51,07,615/- HAS BEEN ACCEPTED BY THE AO BEING OPEN ING BALANCE AS ON 01-04-1996 OF RS.46,07,615/- AND INVESTMENT OF RS.5 LAKHS ON 01-04-1997 BY CASH. THEREFORE, HE HELD THAT SINCE THE S AME HAS BEEN ACCEPTED IN THE HANDS OF THE INDIVIDUAL, THEREFORE, THE AD DITION OF THE SAME IN THE HANDS OF THE HUF WILL CREATE A PECULIAR SITUATIO N. HE ALSO HELD THAT THE AMOUNT OF RS.46,07,5615/- FALLS BEYOND THE B LOCK PERIOD AND CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASS ESSEE FOR THE BLOCK PERIOD. THE ABOVE FACTUAL FINDING GIVEN BY THE LD.CIT(A ) IN HIS ORDER COULD NOT BE CONTROVERTED BY THE DEPARTMENTAL L D. REPRESENTATIVE. WHEN IN THE HANDS OF SHRI PRAKASH P. LAD DHA (INDIVIDUAL) THE EXPLANATION THAT AN AMOUNT OF RS.46,07,615/- IS THE OPENING BALANCE AS ON 01-04-1996 HAS BEEN ACCEPTED, TH EREFORE, WE FIND NO REASON AS TO WHY THE SAME SHOULD BE ADDED IN THE HANDS OF THE HUF. UNDER THESE CIRCUMSTANCES AND IN VIEW OF THE DETAILE D REASONING GIVEN BY THE LD.CIT(A) ON THIS ISSUE WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 27. GROUND OF APPEAL NO.10 BY THE REVENUE READS AS UNDER : 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION OF RS. 8,50,000/- MADE BY THE AO ON ACCOUNT OF INVESTMENT IN THE SHARE APPLICATION OF M/S. Q-FAB CEMENT WHICH HAVE NOT BEEN EXPLAINED BY THE ASSESSEE WITH ANY DOCUMENTARY OR COGENT EVIDENCE. 28. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED FROM THE AUDITED ACCOUNTS OF M/S. Q- FAB CEMENT PVT. LTD. NOTED THAT THE ASSESSEE HAS DEPO SITED AN AMOUNT 16 ITA NO.1255/PN/2011 OF RS.8,50,000/- AS SHARE APPLICATION MONEY. ON BEING QUEST IONED BY THE AO TO EXPLAIN THE SOURCE IT WAS EXPLAINED THAT THE S AME IS OUT OF CASH IN HAND OF RS. 6,46,638/- AS ON 01-04-2001 AND THE AGRICULTURE INCOME OF RS. 2,04,830/-. THE AO REJECTED THE ASSESSEE'S CLAIM ON THE GROUND THAT THE ASSESSEE COULD NOT EXPLAIN THE ABOVE INVESTMENT WITH DOCUMENTS AND EVIDENCES. HE OBSERVED THAT ASSESSEE WA S NOT ASSESSED TO TAX AND HAD NOT PRODUCED RECORDS WITH REGARD TO T HE OPENING BALANCES AND AGRICULTURAL INCOME. THE ASSESSEE ALSO DID NOT EXPLAIN THE AVAILABILITY OF CASH FROM DATE TO DATE AS PER THE INVESTMEN TS MADE. HE THEREFORE REJECTED ASSESSEE'S EXPLANATION AND MADE ADD ITION OF RS. 8,50,000/-. 29. BEFORE CIT(A) THE ASSESSEE SUBMITTED AS UNDER : '1. APPELLANT INVESTED RS. 8,50,000/- IN THE SHARE APP LICATION OF M/S Q- FAB CEMENT PVT. LTD. THE INVESTMENT WAS EXPLAINED FRO M OPENING BALANCE OF CASH IN HAND OF RS. 6,46,638/-, AS ON 01.04.2001 & THE AGRICULTURAL INCOME, FROM AGRICULTURAL LAND AT VILLAGE SARUL, AD MEASURING ABOUT 40 ACRES, OF RS.2,04,830/-. IN SUPPORT OF THE OPENING BALANCE O F RS. 6,46,638/- IT WAS POINTED OUT TO THE A.O. THAT IT IS THE SAME BALANCE T HAT IS ASSESSED UNDER W.T. ACT FOR AY. 2001-02, BY HIMSELF. IN SUPPORT OF T HE AGRICULTURAL INCOME RELEVANT 7/12 EXTRACT WAS ALSO SUBMITTED. HOWEVER, THE AO. HAS REJECTED THE EXPLANATION OFFERED BY APPELLANT, ON THE GROUND THAT THE AVAILABILITY OF CASH ON EACH DAY OF INVESTMENT IS NOT EXPLAINED. ACCOR DINGLY, HE TREATED IT AS UNEXPLAINED INVESTMENT OF APPELLANT RESULTING INTO UDI IN THE HANDS OF APPELLANT. 2. AO HAS DISBELIEVED EXPLANATION OF APPELLANT, REGAR DING THE OPENING BALANCE OF RS. 6,46,638/- ON THE GROUNDS THAT - I. A PPELLANT IS NOT ASSESSED TO TAX & II. NO RECORD IS KEPT OF OPENING BALANCE. A S TO THE ASSESSMENT TO TAX, APPELLANT WOULD LIKE TO POINT OUT THAT, IT IS T HE SAME OPENING BALANCE WHICH IS TAXED BY THE SAME AO UNDER WEALTH TAX, AS CLO SING CASH IN HAND AS ON 31.03.2001. THIS IS EVIDENT FROM THE COPIES OF NET WEALTH STATEMENT, ACKNOWLEDGEMENT OF W.T. RETURN & THE ASSESSMENT ORDER PASSED UNDER W.T. ACT FOR AY. 2001-02. FURTHER, CONSIDERING THE NATURE & SCALE OF ACTIVITIES OF APPELLANT, APPELLANT CANNOT BE EXPECTED TO MAINTAIN BOOKS OF ACCOUNTS ON D AY TO DAY BASIS. LAW ALSO DOES NOT OBLIGE APPELLANT TO MAINTAIN SUCH BOOKS O F ACCOUNTS. EVEN THE AO HAS NOT SPELLED OUT WHAT MORE RECORD WAS REQUIRED B Y HIM TO SATISFY HIMSELF ABOUT THE OPENING BALANCE AVAILABLE IN THE H ANDS OF APPELLANT. IN THE OPINION OF APPELLANT, ALL THE POSSIBLE RECORD WAS MADE AVAILABLE BY APPELLANT. THEREFORE, APPELLANT IS OF THE OPINION TH AT, AO ERRED IN OBSERVING THAT - ' ... THERE ARE NO RECORDS KEPT/PRODUCED AS TO THE ALLEGED OPENING BALANCE.' NOTHING ADVERSE IS BROUGHT ON RECORD BY THE A.O. HENCE, THERE IS 17 ITA NO.1255/PN/2011 NO BASIS FOR AO'S FINDING THAT, NO RECORD IS KEPT/PRODU CED BY APPELLANT IN SUPPORT OF THE CLAIM REGARDING OPENING BALANCE. 3. AO WAS ALSO NOT JUSTIFIED IN REJECTING APPELLANT'S C LAIM REGARDING AGRICULTURAL INCOME ON THE BASIS OF SO CALLED DEEP INV ESTIGATION OF LAND HOLDING OF AGRICULTURAL LAND AT S.NO. 133 OF SARUL, RESULTING INTO CONCLUSION THAT, THERE WAS NO AGRICULTURAL INCOME GENERATED FRO M THE BARREN LAND AT SARUL. THIS CONCLUSION OF AO IS NOT CORRECT. FIRST, FO R THE REASON THAT, APPELLANT WAS NEITHER CONFRONTED WITH THE SO CALLED D EEP INVESTIGATION BY THE INVESTIGATION WING NOR WAS ALLOWED ANY OPPORTUNIT Y TO REBUT THE FINDINGS OF THE INVESTIGATION WING. SECOND, FOR THE R EASON THAT, AO HAS NOT BROUGHT ON RECORD ANY MATERIAL AGAINST THE PROOF IN THE FORM OF 7/12 EXTRACT SUBMITTED BY APPELLANT, IN SUPPORT OF HIS CLAI M THAT, THE LAND WAS CULTIVATED & THE CROP OF EUCALYPTUS (NILGIRI) WAS GRO WN ON IT. CONSIDERING THE SIZE OF HOLDING (17.38 HECTORS I.E. ABOUT 43.5 AC RES) THE INCOME FROM AGRICULTURE, CLAIMED AT RS. 2,04,830/- WAS VERY MUCH REASONABLE. IN VIEW OF ABOVE SUBMISSIONS, APPELLANT IS OF THE OPINIO N THAT, AO ERRED IN HOLDING THAT, THE INVESTMENT OF APPELLANT IN THE SHAR E APPLICATION MONEY OF Q-FAB CEMENT PVT. LTD. WAS FROM UNDISCLOSED SOURCES. TH EREFORE, IT IS PRAYED TO DELETE THE ADDITION OF RS. 8,50,000/- MADE TO THE 'NIL' UDI DECLARED BY APPELLANT.' 30. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 12.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT, THE REMAND REPORT ON THE ISSUE AND THE REJOINDER SUBMITTED BY THE APPELLANT. I HAVE ALSO GONE THROUGH THE EVIDE NCES LIKE 7/12 EXTRACT, THE FINANCIAL STATEMENTS COMPILED BY THE APPELLANT FO R THE ENTIRE BLOCK PERIOD AND THE WEALTH TAX COMPUTATIONS AND ASSESSMENT O RDERS PASSED U/S 17 R.W.S. 16(3) OF THE W.T. ACT, IN THE CASE OF THE A PPELLANT FOR THE AY. 2001- 02. FROM THE MATERIAL ON RECORD IT IS FOUND THAT THE GENERATION OF THE OPENING BALANCE IS EXPLAINED BY THE APPELLANT BY FUR NISHING THE CASH FLOW STATEMENT FOR THE ENTIRE BLOCK PERIOD FROM 01.04.199 6. SECONDLY, THE CASH IN HAND OF RS.6,46,638/-, AS ON 31.03.2001, IS THE SAME CASH BALANCE THAT IS TAXED UNDER SCRUTINY W.T. ASSESSMENT FOR A.Y.2001-02. TH US, THE INITIAL BURDEN OF PROVING THE OPENING CASH BALANCE IS DISCHAR GED BY THE APPELLANT. HENCE, NOW IT IS NOT OPEN FOR THE A.O. TO DOUBT THE OPENING CASH, WITHOUT BRINGING ON RECORD MATERIAL DISPROVING THE APPELLANT 'S CLAIM. MERE REJECTION OF APPELLANT'S EXPLANATION, WITHOUT ANY E VIDENCE, CANNOT JUSTIFY THE ADDITION. THIRDLY, THE A.O. HAS NOT DISPUTED THE HOLDING OF AGRICULTURAL LAND BY THE APPELLANT. THE CROP ENTRIES ON 7/12 EXTR ACTS ARE ALSO NOT DISPROVED BY THE A.O. FURTHER, THE REPORT OF THE INV ESTIGATION WING WAS NOT CONFRONTED TO THE APPELLANT, THEREFORE CANNOT BE A GROUND FOR MAKING ANY ADDITION. UNDER THE CIRCUMSTANCES, I AM OF THE CONSIDE RED VIEWS THAT CONSIDERING THE LAND HOLDING OF ABOUT 40 ACRES AND TH E CROP ENTRIES OF EUCALYPTUS ON THE 7/12 EXTRACT, THE AGRICULTURAL INC OME OF RS. 2,04,830/- CLAIMED BY THE APPELLANT IS REASONABLE. THUS, THE ENTI RE INVESTMENT IN THE SHARE APPLICATION MONEY OF Q FAB CEMENT PVT. LTD. IS THUS EXPLAINED AND NO ADDITION IS CALLED FOR TO THE UNDISCLOSED INCOME FOR T HIS REASON. THEREFORE, THE IMPUGNED ADDITION OF RS.8,50,000/- IS NOT JUSTIFIE D AND THE SAME IS DELETED. THE GROUND NO. 6 IS THUS ALLOWED. 18 ITA NO.1255/PN/2011 31. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 32. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY OPPOSED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE LD.CIT(A) IN HIS ORDER OBSERVED THAT THE GENERATION OF THE OPENING BALANCE IS EXPLAINED BY THE ASSESSEE BY FURNISHING THE CASH FLOW STATEMENT FOR THE ENTIRE BLOCK PERIOD AND THE CASH IN HAND OF RS. 6,46,638/- IS THE SAME CASH BALAN CE THAT IS TAXED UNDER SCRUTINY WEALTH TAX ASSESSMENT FOR A.Y. 2001 -02. THE EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE AS HE WAS NOT ASSESSED TO TAX AND NO RECORDS WERE PRODUCED IN SUPPORT OF OPENI NG BALANCE CLAIMED AT RS. 6,46,638/- & SOURCE OF AGRICULTURE INCOME O F RS.2,04,830/-. THE AMOUNT OF RS. 8,50,000/- HAS BEEN TRAN SFERRED TO Q-FAB IN CASH ON VARIOUS DATES BUT NO EXPLANATION REGAR DING THE AVAILABILITY OF CASH ON RESPECTIVE DATES OF DEPOSITS WERE E VER FURNISHED. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 33. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 34. AFTER HEARING BOTH THE SIDES, WE FIND THE AO MADE ADD ITION OF RS.8,50,000/- IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF INVESTMENT IN THE SHARE APPLICATION OF M/S. Q-FAB CEMENTS PVT. LTD. ON T HE GROUND THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF THE SAME. THE EXPLANATION OF THE ASSESSEE THAT THE SAME IS OUT OF CASH IN HAND OF RS.6,46,638/- AS ON 01-04-2001 AND AGRICULTURAL INCOME OF RS.2,04,830/- WAS REJECTED BY THE AO ON THE GROUND THA T ASSESSEE WAS NOT ASSESSED TO TAX AND HAS NOT PRODUCED RECORDS WIT H REGARD TO THE OPENING BALANCE AND AGRICULTURAL INCOME. WE FIND IN APPEAL TH E 19 ITA NO.1255/PN/2011 LD.CIT(A) DELETED THE ADDITION ON THE GROUND THAT ASSESSE E FILED EVIDENCES LIKE 7/12 EXTRACT, WEALTH TAX COMPUTATION AND A SSESSMENT ORDERS PASSED U/S.17 R.W.S. 16(3) OF THE WEALTH TAX ACT FOR THE A.Y. 2001-02. HE ALSO OBSERVED FROM THE SUBMISSION FILED BY THE ASSESSEE THAT THE GENERATION OF OPENING BALANCE HAS BEEN EXPLAINED BY FURNISHING THE CASH FLOW STATEMENT FOR THE ENTIRE BLOCK PER IOD FROM 01- 04-1996 ONWARDS. HE HAS ALSO GIVEN A FINDING THAT THE C ASH IN HAND OF RS.6,46,638/- AS ON 31-03-2001 IS THE SAME CASH BALANCE WHICH HAS BEEN TAXED UNDER SCRUTINY WEALTH TAX ASSESSMENT FOR TH E A.Y. 2001- 02. THUS, ACCORDING TO HIM, THE ASSESSEE HAS DISCHARGED T HE BURDEN CAST ON HIM BY PROVING THE OPENING CASH BALANCE. 35. SO FAR AS THE INCOME FROM AGRICULTURE IS CONCERNED, HE OBSERVED THAT THE AO HAS NOT DISPUTED THE CROP ENTRIES OF 7/12 EXTRACTS. FURTHER, HE HAS ALSO GIVEN A FINDING THAT THE REPORT OF TH E INVESTIGATION WING WAS NOT CONFRONTED TO THE ASSESSEE FOR WHICH SAME CANNOT BE A GROUND FOR MAKING ADDITION. SINCE THE ASSESSEE WAS HOLDING ABOUT 40 ACRES OF LAND AND THE 7/12 EXTRACTS SHOW THE CROP EN TRIES OF EUCALYPTUS, THEREFORE, HE HELD THAT THE AGRICULTURAL INCOME OF RS.2,04,830/- CLAIMED BY THE ASSESSEE IS REASONABLE. HE AC CORDINGLY ACCEPTED THE SOURCE OF INVESTMENT OF RS.8,50,000/- AS SHA RE APPLICATION MONEY IN M/S. Q-FAB CEMENTS PVT. LTD. THE LD. DEPARTMENTAL REPRESENTATIVE WAS UNABLE TO CONTROVERT ANY OF THE ABOVE FACTUAL FINDINGS GIVEN BY THE CIT(A). IN THIS VIEW OF THE MATT ER AND IN VIEW OF THE DETAILED REASONINGS GIVEN BY THE CIT(A) ON THIS ISSUE, WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHE LD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 20 ITA NO.1255/PN/2011 36. GROUNDS OF APPEAL NO.11 & 12 BEING GENERAL IN NATURE ARE DISMISSED. 37. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-06-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED :27 TH JUNE, 2016. & '#)! *! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I, NASHIK 4. 5. 6. THE CIT CENTRAL, NAGPUR $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // $ ' //TRUE COPY // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE