PRABHATIBEN J. JOSHI, Ahmedabad V. THE ITO, WARD -3(3), Ahmedabad

ITA 1282/AHD/2003

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9345 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-07-2009
• Assessment Year: 1992-1993
• Appeal Filed On: 03-04-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K SHREEDHAR
• Assessee Lawyers: G S PATEL
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Retraction
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI R.V. EASWAR, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 29/07/09 DRAFTED ON: 19 /08/09 ITA NO.1282/AHD/2003 ASSESSMENT YEAR : 1992-93 PRABHAVATI J.SONI PROP.JASU JEWELLERS NEAR JAIN DERASAR GANDHI ROAD AHMEDABAD VS. THE ITO WARD-3(3) AHMEDABAD PAN/GIR NO. : - (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI G.S. PATEL, AR RESPONDENT BY: SHRI K.SHREEDHAR, CIT-DR O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-VII, AHMEDABAD DATED 31/01/2003 PAS SED FOR ASSESSMENT YEAR 1992-93. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING ADDITIONAL GROUND IN HER APPEAL:- THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER H AD NO JURISDICTION U/S.147/148 TO ASSESS OTHER INCOMES WH ICH WERE NOT COVERED IN THE REASONS RECORDED U/S.148 BY THE AO. HENCE THE ADDITION OF OTHER INCOMES VIZ. (1) RS.59,984/- CASH (2) RS.55,000/- AND RS.78,000/- CASH CREDITS U/S.68. (3) RS.1,11, 000/- COMMISSION PAID AND (4) RS.10,22,755/- U/S.41(1) BEING ILLEGAL , BE CANCELLED. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 2 - 3. AFTER HEARING THE RIVAL SUBMISSIONS AS THE ISSUE INVOLVED IN THIS GROUND OF APPEAL IS A LEGAL ISSUE AND GOES TO THE R OOT OF THE MATTER, THEREFORE, THE BENCH ADMITTED THE SAME FOR HEARING AND ALLOWED BOTH THE PARTIES TO MAKE THEIR SUBMISSIONS THEREON. 4. GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST T HE ORDER OF THE LD.CIT(APPEALS) CONFIRMING ADDITION OF RS.2,17,773/ - ON ACCOUNT OF UNACCOUNTED STOCK. 5. THE BRIEF FACTS OF THE CASE ARE THAT, DURING THE COURSE OF SEARCH, PHYSICAL STOCK OF SILVER GOODS AND ARTICLES FOUND A T THE BUSINESS PREMISES AT GANDHI ROAD, AHMEDABAD WAS AT RS.5,36,853/-. T HE VALUATION OF THIS STOCK WAS DONE BY A REGISTERED VALUER BY TAKING INT O ACCOUNT THE GROSS WEIGHT OF THE GOODS ESTIMATING, THE NET WEIGHT AND VALUING THE SAME ON THE BASIS OF PURITY OF GOODS FOUND. THE BOOK STOCK OF THE APPELLANT AS ON THE DATE OF SEARCH WAS FOUND TO BE RS.3,24,743/-. THU S, THE STOCK OF SILVER GOODS AT RS.2,17,733/- REPRESENTING UNACCOUNTED STO CK WAS SEIZED AT THE TIME OF SURVEY. IN REPLY TO THE SHOW-CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THE VALUATION MADE ON THE DATE OF SEARCH WAS NOT CORRECT IN AS MUCH AS THE PURITY OF VARIOUS ITEMS WAS MUCH ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 3 - LESS THAN ADOPTED BY THE DEPARTMENTAL VALUER. ACC ORDING TO THE APPELLANT, IF CORRECT VALUATION WAS DONE, THE PHYSI CAL STOCK WOULD WORK OUT AT RS.3,25,000/- AGAINST RS.5,36,854/- ADOPTED BY T HE DEPARTMENTAL VALUER. THUS, ACCORDING TO THE APPELLANT, THE BOO K STOCK TALLIED WITH THE PHYSICAL STOCK AND NO ADDITION COULD BE MADE ON THI S ACCOUNT. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE VALUATION OF SILVER ARTICLES F OUND AT THE TIME OF SEARCH WAS DONE BY A REGISTERED VALUER. AT THE TIME OF SE ARCH OR THEREAFTER, THE ASSESSEE DID NOT FILE ANY OBJECTION AND THE ASSESS EE OBJECTED AGAINST THE VALUATION ONLY DURING PROCEEDINGS U/S.132(5). MORE OVER, DURING ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO GIVE DESCRIPTION OF TOTAL STOCK FOUND WITH PURITY, ARTICLE-WISE. SINCE SUCH QUANTITY DETAILS OF STOCK WITH PURITY, ARTICLE-WISE WAS NOT FILED BEFORE THE ASSESSING OFFICER, AMOUNT OF RS.2,17,773/- WAS TAKEN AS ASSESSEES INV ESTMENT IN UNACCOUNTED STOCK AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. IN APPEAL, BEFORE THE LD.CIT(APPEALS), THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE VALUATION DONE BY THE DEPARTMENTAL VALUER WAS ON THE HIGHER SIDE AND THAT CORRECT PURITY OF THE ARTICLES HAD NOT BEEN TAKEN. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 4 - 7. THE LD.CIT(APPEALS) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE, HELD AS UNDER:- 4.4. AFTER CAREFULLY GOING THROUGH THE FACTS AND C IRCUMSTANCES OF THE CASE, I AM UNABLE TO AGREE WITH THE CONTENTIONS RAISED ON BEHALF OF THE APPELLANT. IT IS NOTED THAT AT THE TIME OF S EARCH, SHRI. NILESH H. SONI (SON OF SISTER OF APPELLANT'S HUSBAND) WAS FOU ND TO MANAGING THE SHOP AT GANDHI ROAD. ANNEXURE-XX TO THE PANCHAN AMA DATED 13.2.92 RUNS INTO 7 PAGES AND GIVES COMPLETE DESCRI PTION OF EACH ITEM WITH QUANTITY, GROSS WEIGHT, NET WEIGHT AND VALUE ADOPTED. THIS VALUATION WAS DONE IN THE PRESENCE OF TWO INDE PENDENT WITNESSES AND SHRI. NILESH H. SONI, WHO BY SIGNING THE INVENTORY HAVE CERTIFIED TO THE CORRECTNESS OF THE SAME. NOT ONLY THIS, ON THE DATE OF SEARCH ON 13.2.92, A STATEMENT OF SHRI. NIL ESH H. SONI WAS RECORDED U/S 132(4) ON OATH. IN RESPONSE TO QUESTIO N NO.11, SHRI. NILESH SONI WAS CONFRONTED WITH THE FACT THAT THE T OTAL STOCK FOUND ON THE DATE OF SEARCH AT RS.5,36,854/- WAS IN EXCES S OF THE BOOK STOCK BY RS.2,17,758/- (AFTER EXCLUDING SILVER ORNA MENTS CLAIMED TO BELONG TO THE CUSTOMERS). WHEN REQUIRED TO EXPLAIN THE DIFFERENCE IN ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 5 - THE .BOOK STOCK AND PHYSICAL STOCK OF RS.2,17,758/- , SHRI. NILESH SONI STATED THAT HE HAD NO EXPLANATION ABOUT THE SA ID DIFFERENCE. THIS STATEMENT WAS GIVEN BY SHRI. NILESH H. SONI FO R JASU JEWELLERS ACTING AS A MANAGER. 4.4 FURTHER, A STATEMENT OF APPELLANT'S HUSBAND, SH RI. JASU V. SONI WHO WAS CONTROLLING THE AFFAIRS OF THE APPELLANT'S BUSINESS WAS ALSO RECORDED AND IN THIS STATEMENT SHRI. JASUBHAI V. SO NI MADE A DISCLOSURE OF UNDISCLOSED INCOME AT RS.25,88,000/- WITH THE FOLLOWING BIFURCATION:- A. EXCESS STOCK OF GOLD ORNAMENTS 2987 GRAS. FOUND AT THE PREMISES OF M/S JASU JEWELLERS & SONS GOLD PALACE, SWASTIK SUPER MARKET, ASHRAM ROAD, AHMEDABAD AT RS.50,000/- . B. EXCESS STOCK OF DIAMONDS FOUND AT M/S JASU JEWELLERS & SONS GOLD PALACE AT RS.1,61,000/. C. EXCESS STOCK OF SILVER ARTICLES FOUND AT M/S JAS U JEWELLERS GANDHI ROAD AT RS.2,17,000/. D. INVESTMENT IN BUNGALOW AT SATYAGRAH CHAWANI RS.8 LAKHS. 4.5 DURING APPEAL PROCEEDINGS, MY ATTENTION WA S DRAWN BY SHRI.CHATBAR TO LETTER DATED 16.4.02 FROM JASUBHAI V. SONI ADDRESSED TO D.D.I.T. (INVESTIGATION) RETRACTING F ROM THE DISCLOSURE MADE ON THE GROUND THAT THE SAME WAS UNDER DURESS A ND PRESSURE. IT ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 6 - IS, HOWEVER, NOTICED THAT WHEREAS THE STATEMENTS OF SHRI. NILESH H. SONI AND SHRI. JASUBHAI V. SONI WERE RECORDED ON OA TH U/S 132(4), THE RETRACTION IS ONLY BY WAY OF A SIMPLE LETTER AD DRESSED TO DOIT (INV.) AND THAT TOO AFTER TWO MONTHS OF SEARCH. IN MY VIEW, THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH HAV E MORE EVIDENTIARY VALUE THAN RETRACTION BY WAY OF A SIMPL E LETTER ADDRESSED TO DOIT(INV.) MAKING UNSUPPORTED ALLEGATI ON OF DURESS AND MENTAL PRESSURE. 4.6 ALLAHABAD HIGH COURT IN THE CASE OF DR. S.C. GU PTA VS. CIT (2001) 118 TAXMAN 2S2(A11) HAS HELD THAT 'AN ADMISS ION (IN THE PRESENT CASE BOTH SHRI.NILESH H. SONI AND APPELLANT 'S HUSBAND SHRI. JASUBHAI V. SONI ADMITTED THAT STOCK OF RS.2,17.000 /- WAS UNACCOUNTED DURING THE COURSE OF STATEMENTS RECORDE D AT THE TIME OF SEARCH) IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE .' IT HAS ALSO BEEN HELD THAT STATEMENTS MADE VOLUNTARILY BY AN AS SESSEE COULD FORM THE BASIS OF ASSESSMENT. THE MERE FACT THAT TH E ASSESSEE HAD RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMEN T UNACCEPTABLE. THE ONLY REMEDY IN SUCH A CASE WAS THAT THE ASSESSE E PROVES THAT THE STATEMENT WAS MADE UNDER DURESS OR PRESSURE. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 7 - 4.7 IN THE PRESENT CASE, THE APPELLANT HAS FA ILED TO PROVE THAT THE STATEMENTS RECORDED AT THE TIME OF SEARCH WERE MADE UNDER DURESS OR PRESSURE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, KEEPING IN VIEW THE FACT THAT THE VALUATION WAS DONE IN THE PR ESENCE OF APPELLANT'S MANAGER AND TWO INDEPENDENT WITNESSES A ND THAT SUCH VALUATION WAS DONE BY AN APPROVED DEPARTMENTAL VALU ER AND FURTHER KEEPING IN VIEW THE STATEMENTS RECORDED AT THE TIME OF SEARCH OF SHRI. NILESH H. SONI AND APPELLANTS HUSBAND SHRI JASUBHAI V.SONI, IT IS HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE STOCK OF RS.2,17,773/- WAS UNACCOUNTED ACCORDINGLY , ADDITION OF RS.2,17,773/- REPRESENTING INVESTMENT IN SUCH STOCK MADE BY THE ASSESSING OFFICER IS UPHELD. THE GROUND OF APPEAL IS REJECTED. 8. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESS EE, BY WAY OF WRITTEN SUBMISSIONS, SUBMITTED AS UNDER:- THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS.2,17,773/- AS UNACCOUNTED STOCK MADE BY A.O. (PA RA 4 PAGES 3-7) 1.1. THERE WAS SEARCH U/S.132 AT THE BUSINESS PREMISES A ND AT THE RESIDENCE ON 13-2-92. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 8 - 1.2. THE STOCK, AS PER BOOKS OF ACCOUNT WAS FOUND AT RS.3,24,742/-.HOWEVER, AS PER THE VALUATION BY THE REGISTERED VALUER, THE STOCK WAS VALUED AT RS.5,36, 853/-. THE ASSESSING OFFICER ADDED THE DIFFERENCE OF RS.2,17,733/- AS UNACCOUNTED STOCK. 1.3. THE LD. CIT(A) CONFIRMED THAT ADDITION OF RS.2,17,7 33/- ON THE BASIS OF THE STATEMENTS RECORDED U/S.132(4) OF NILESH SONI (MANAGER) AND OF JASUBHAI SONI (HUSBAND) (PARA 4.7 PAGES 6-7). 1.4. THE APPELLANT SUBMITS THAT THE RELEVANT STATEMENTS HAVE NO EVIDENTIARY VALUE AS THE STATEMENT OF THE APPELL ANT U/S.132(4) HAD NOT BEEN RECORDED BY THE AO. 1.5. THE APPELLANT FURTHER SUBMITS THAT AS PER PRESUMPTI ON U/S.132(4A) THE STOCK FOUND AS PER BOOKS WAS TO BE CONSIDERED TRUE AND CORRECT. 1.6. AS SUCH, THE ADDITION OF RS.2,17,773/- BEING ILLEGA L, BE DELETED. ADDITION OF RS.2,17,773/- AS UNACCOUNTED STOCK. (I N ADDITION TO SUBMISSIONS IN P.B.1) (A)THE STOCK AT THE TIME OF SEARCH ON 13-02-92 WAS OF RS.3,24,742/- AS PER BOOKS OF ACCOUNTS WHICH WAS VA LUED BY REGISTERED VALUER AT RS.5,36,853/- AS NOTED BY T HE AO IN THE ORDER. ALL THE ITEMS (NOS.72) OF STOCK SHOW N IN THE LIST OF PANCHNAMA TALLY WITH THE ITEMS (NOS.72) OF STOCK AS PER BOOKS OF ACCOUNT. THERE IS ONLY DIFFERENCE IN VALUATION BECAUSE OF VALUATION OF STOCK BY REGISTER ED VALUER. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 9 - (B) THE ITEMS (NOS.14) OF STOCK SEIZED OF RS.2,17,773/- AS PER LIST, TALLY WITH THE RESPECTIVE ITEM NUMBERS SHOWN IN THE LIST OF STOCK AS PER BOOKS OF ACCOUNT. (C) THE APPELLANT THEREFORE SUBMITS THAT THE SEIZED STO CK OF RS.2,17,773/- IS ALREADY ACCOUNTED FOR IN THE STOCK OF RS.3,24,742/- AS PER BOOKS OF ACCOUNT WITH WAS ALRE ADY FILED WITH THE A.O. AT THE TIME OF SEARCH ON 13-02- 92. A COPY OF THE SAME IS ENCLOSED HEREWITH. THE APPELLA NT THEREFORE SUBMITS THAT THE ADDITION OF RS.2,17,773/ - AS UNDISCLOSED STOCK BEING ILLEGAL, BE CANCELLED. (D) THE REMARKS OF THE AO THAT THE DETAILS OF QUANTITA TIVE STOCK WAS NOT FILED, ARE NOT JUSTIFIED. 9. THE LD.DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 13/02/1992. THE ASSESSEE DEALS IN SILVER ARTICLES. DURING THE COU RSE OF SEARCH, SILVER ARTICLES FOUND IN THE POSSESSION OF THE ASSESSEE W AS VALUED BY THE DEPARTMENTAL VALUER AT RS.5,36,853/-. ACCORDING TO THE ASSESSING OFFICER, THE BOOK VALUE OF THE STOCK OF SILVER ARTI CLES WAS RS.3,24,742/. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT RS .2,17,773/- WAS THE ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 10 - UNDISCLOSED INVESTMENT MADE BY THE ASSESSEE IN THE STOCK OF SILVER ARTICLES AND, THEREFORE, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE ABOVE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY TH E LD.CIT(APPEALS). BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IT WAS EXPLAINED TO THE ASSESSING OFFICER THAT THE ACTUAL VALUE OF THE SILVER ARTICLES FOUND DURING THE COURSE OF THE SEAR CH WAS RS.3,24,742/- AND NOT RS.5,36,853/- VALUED BY THE DEPARTMENTAL VALUER AND POINTED OUT THAT THE DEPARTMENTAL VALUER ON THE BASIS OF THE GIVEN LIST OF THE ARTICLES FOUND ARBITRARILY ASSUMED A NOMINAL PERCENTAGE AS I MPURITIES AND TAKEN MORE PERCENTAGE OF PURE SILVER AND THEREBY ARRIVED AT A INFLATED VALUE OF RS.5,36,853/-. HE SUBMITTED THAT AS NO EXCESS QUA NTITY OF SILVER ARTICLES WERE FOUND DURING THE COURSE OF SEARCH UNEXPLAINED INVESTMENT THEREIN CANNOT BE ASSUMED MERELY BECAUSE OF DIFFERENCE IN V ALUATION. HE ALSO CONTENDED THAT NOT EVEN A SINGLE PIECE OF SILVER AR TICLES FOUND DURING THE COURSE OF THE SEARCH COULD BE SHOWN BY THE DEPARTME NT AS BEING NOT ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOU NT. WE FIND FORCE IN THE ABOVE SUBMISSIONS OF THE LD. AUTHORISED REPRESENTAT IVE OF THE ASSESSEE. WE FIND THAT NOWHERE IT WAS FOUND THAT ANY ARTICLE FOUND IN THE POSSESSION OF THE ASSESSEE WAS NOT RECORDED IN HER BOOKS OF AC COUNT EITHER AS OPENING STOCK OR PURCHASES DURING THE YEAR. FURTHER, IT I S OBSERVED THAT THE ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 11 - DEPARTMENTAL VALUER ESTIMATED THE MARKET VALUE AS O N THE DATE OF THE SEARCH, WHEREAS THE BOOK VALUE WAS A VALUE ARRIVED AT BY APPLYING COST OR MARKET VALUE WHICHEVER IS LESS. THUS, SUCH MARKE T VALUE ARRIVED AT BY THE DEPARTMENTAL VALUER IS NOT STRICTLY COMPARABLE WITH THE BOOK VALUE. THE LD.DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY MATERIAL BEFORE US TO CONTROVERT THE SUBMISSION OF THE ASSESSEE THA T THE DEPARTMENTAL VALUER ARRIVED AT THE MARKET VALUE ONLY BY ASSUMING CERTAIN PERCENTAGE AS IMPURITY AND CERTAIN PERCENTAGE AS PURITY WHICH CAN NOT BE THE ACTUAL FACT. SIMPLY BECAUSE ASSESSEES MANAGER DID NOT OBJECT TO THE MARKET VALUE ARRIVED AT BY THE DEPARTMENTAL VALUER DOES NOT MEA N THAT THE ASSESSEE HAS ADMITTED THAT HE HAS ACTUALLY MADE ANY UNEXPLAINED INVESTMENT IN THE STOCK OF SILVER ARTICLES. AS PER THE PROVISIONS OF SECTION 69 OF THE I.T. ACT, 1961 BURDEN LIES ON THE DEPARTMENT INITIALLY TO EST ABLISH THAT, IN FACT, ANY INVESTMENT WAS MADE BY THE ASSESSEE WHICH WAS NOT R ECORDED IN THE BOOKS OF ACCOUNT AND ONLY AFTER THAT ONUS SHIFTS ON THE A SSESSEE TO EXPLAIN THE SOURCE OF SUCH INVESTMENT. IN THE INSTANT CASE, NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE WHICH WAS EITHER FOUND DURING THE COURSE OF THE SEARCH OR OTHERWISE AVAILABLE WITH THE DEPARTMENT T O UNMISTAKENLY EVIDENCE THAT THE ASSESSEE HAS MADE ACTUALLY ANY IN VESTMENT IN THE SILVER ARTICLES WHICH WAS NOT RECORDED IN THE BOOKS OF ACC OUNT. IN VIEW OF THE ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 12 - ABOVE, IN OUR CONSIDERED OPINION, THE LOWER AUTHORI TIES WERE NOT JUSTIFIED IN MAKING ADDITION OF RS.2,17,773/- ON THE GROUND O F ASSESSEE HAVING MADE ANY UNEXPLAINED INVESTMENT IN THE STOCK. WE, THEREFORE, DELETE THE ADDITION OF RS.2,17,773/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 11. THE SECOND GROUND OF THE APPEAL RELATES TO ADD ITION(S) OF RS.59,984/- AND RS.6,041/- ON ACCOUNT OF UNEXPLAINE D CASH FOUND AND SEIZED. 12. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER OBSERVED THAT, AT THE TIME OF SEARCH CASH OF RS.59,984/- WAS FOUND FORM M/S.JASU JEWELLERS & SONS GOLD PALACE PREMISES, SWASTIK SUPE R MARKET WHICH CASH WAS CLAIMED TO BELONG TO THE ASSESSEE. FURTHER, C ASH OF RS.6,041.- WAS FOUND FORM THE PREMISES OF THE ASSESSEE AT PATASAPO LE, GANDHI ROAD, AHMEDABAD. AS AGAINST THE TOTAL CASH OF RS.66,025 /- THUS FOUND, THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE FORM OF SEI ZED CASH BOOK REVEALED THAT CASH BALANCE OF RS.334/- ONLY EXISTED AS ON TH E DATE OF SEARCH. IN RESPONSE TO SHOW-CAUSE NOTICE DATED 5.12.97, THE AS SESSEE CONTESTED THE PROPOSED ADDITION AND STATED THAT THE HUSBAND OF TH E ASSESSEE SHRI JASUBHAI V.SONI THOUGH HAD ADMITTED THAT THE SAID CASH REPRE SENTED UNACCOUNTED ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 13 - INCOME OF THE ASSESSEE, BUT HE HAD DONE SO ONLY DUE TO METAL TENSION. THE CONTENTIONS OF THE ASSESSEE WAS, HOWEVER, REJECTED BY THE ASSESSING OFFICER WHO OBSERVED THAT THE ABOVE ADDITION WAS BE ING MADE NOT MERELY ON THE BASIS OF STATEMENT MADE BY SHRI JASUBHAI V. SONI BUT ON THE GROUND THAT THE CASH BOOK OF THE ASSESSEE REVEALED CASH OF RS.334/- ONLY AS ON THE DATE OF SEARCH AND NO EXPLANATION FOR THE CASH OF R S.60,025/- WAS FURNISHED. 13. IN APPEAL, BEFORE THE LD.CIT(APPEALS), THE LD . AUTHORISED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE VALUATION DONE BY THE DEPARTMENTAL VALUER WAS ON THE HIGHER SIDE AND THAT CORRECT PURITY OF THE ARTICLES HAD NOT BEEN TAKEN. 14. THE LD.CIT(APPEALS) AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, HELD AS UNDER:- 6.3. AFTER GOING THROUGH THE FACTS AND CIRCUMSTANC ES OF THE CASE, I AM OF THE VIEW THAT THE ADDITION MADE IS ON SOUND F OOTINGS AND DESERVES TO BE CONFIRMED. THE HUSBAND OF THE APPE LLANT HAD CATEGORICALLY STATED THAT THE CASH OF RS.59,984/- B ELONGED TO THE ASSESSEE APART FROM CASH OF RS.6,041/- WHICH WAS FO UND FROM THE ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 14 - APPELLANTS OWN BUSINESS PREMISES. THE CASH BOOK O F THE APPELLANT REVEALED CASH OF RS.334/-ONLY. NO EXPLANATION FOR T HE CASH SO FOUND HAS BEEN FURNISHED EITHER DURING ASSESSMENT PROCEED ING OR DURING PROCEEDINGS BEFORE ME. ON THE CONTRARY, VIDE LETTER DATED 20.3.97 ADDRESSED BY THE APPELLANT TO A.C.I.T., INV. CIRCLE -2(1), AHMEDABAD HAS STATED THAT THE SEIZED CASH OF RS.59984 'MAY B E BELONGING TO MY SISTER CONCERNS M/S JASU JEWELLERS & SONS, ASHRA M ROAD AND M/S JASU JEWELLERS & SONS GOLD PALACE, ASHRAM ROAD R AND NOT TO ME. 6.4 SINCE THE SOURCES OF CASH FOUND AND SEIZED AT THE TIME OF SEARCH HAVE NOT BEEN EXPLAINED, BASED ON THE STATEMENT OF SHRI. JASUBHAI V. SONI RECORDED AT THE TIME OF SEARCH (THE SAID ST ATEMENT HAVING BEEN RECORDED ON OATH HAS MORE EVIDENTIARY VALUE TH AN A RETRACTION BY WAY OF A SIMPLE LETTER), IT IS HELD THAT THE ASS ESSING OFFICER WAS JUSTIFIED IN HOLDING CASH OF RS.60,025/- AS UNEXPLA INED AND ACCORDINGLY MAKING ADDITION OF THE SAID AMOUNT. THE ADDITION OF RS.60,025/- IS, THEREFORE, SUSTAINED AND THE GROUND OF APPEAL IS REJECTED. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 15 - 15. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSE SSEE, BY WAY OF WRITTEN SUBMISSIONS, SUBMITTED AS UNDER:- THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS.59,984/- AND OF RS.6,041/- AS UNACCOUNTED CASH MADE BY A.O. (PARA 6- PAGES 12-14). 2.1. THE CASH OF RS.59,984/- WAS FOUND DURING SEARC H FROM M/S.JASU JEWELLERS & SONS, GOLD PALACE, SWASITK SUPER MARKET (GROUP CONCERN), AND CASH OF RS.6,041/- WAS FOUND FROM THE PREMISES OF THE APPELLANT VIZ. PATASAPOLE, GANDHI ROAD, AHMEDABAD. CASH BALANCE AS PER BOOKS WAS FOUND OF RS.334/-. 2.2. THE CASH WAS NOT FOUND AT THE PREMISES OF THE APPELLANT. AS PER PRESUMPTION U/S.132 (4A), THE CASH BELONGS TO THE PERSON FROM WHOSE PREMISES THE SAID CASH WAS FOUND. THE ONUS IS ON A.O. TO PROVE THAT THE CASH OF RS.59,984/- FOUND FROM THE PREMISES OF GROUP CONCERN BELONGS TO THE ASSESSEE. THE AO HAS FAILED TO DISCHARGE THE SAID ONUS. 2.3. THE LD. LD.CIT(APPEALS) HAS CONFIRMED THE ADDITION OF RS.66,025/- ON THE BASIS OF THE STATEMENT OF TH E HUSBAND WHICH HAS NO EVIDENTIARY VALUE. (PARA 6.4 PAGE 14). 2.4. THE APPELLANT THEREFORE SUBMITS THAT THE ADDITION O F RS.59,984/- BEING CASH NOT FOUND FROM THE PREMISES OF THE APPELLANT BEING ILLEGAL, BE CANCELLED. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 16 - 16. THE LD.DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, DURING THE COURSE OF THE SEARCH CASH OF RS.59,984/ - WAS FOUND FROM M/S.JASU JEWELLERS AND SONS, GOLD PALACE, SWASTIK S UPER MARKET AND CASH OF RS.6,041/- WAS FOUND FROM THE PREMISES OF THE AS SESSEE AT PATASAPOLE, GANDHI ROAD, AHMEDABAD. DURING THE COURSE OF THE SEARCH, ASSESSEES HUSBAND SHRI JASUBHAI SONI ADMITTED THAT CASH OF RS .59,984/- ALSO BELONGS TO THE ASSESSEE. THUS, THE ASSESSEE WAS FOUND OWNE R OF CASH OF RS.66,025/-. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF ABOVE CASH OF RS.66,025/- AN D, THEREFORE, ADDED TO THE SAME TO THE INCOME OF THE ASSESSEE. THE LD.CI T(APPEALS) ALSO CONFIRMED THE ABOVE ACTION OF THE ASSESSING OFFICER . BEFORE US, THE ASSESSEE COULD NOT BRING ANY MATERIAL TO SHOW THAT CASH OF RS.66,025/- AVAILABLE WITH HER WAS OUT OF DISCLOSED SOURCES. T HE ASSESSEE HAS SIMPLY CONTENDED THAT THE STATEMENT GIVEN BY HER HUSBAND S HRI JASUBHAI SONI THAT THE CASH OF RS.59,984/- BELONGED TO THE ASSESSEE WA S UNDER A MISTAKE. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 17 - HOWEVER, IT IS OBSERVED THAT THE ASSESSEE COULD NOT EXPLAIN WHO WAS THE OWNER OF THIS CASH OF RS.59,984/- NOR STATEMENT OF ANY PERSON ADMITTING OWNERSHIP OVER THE AFORESAID AMOUNT WAS FILED NOR S TATEMENT OF THE HUSBAND OF THE ASSESSEE AFFIRMING THAT THE EXPLANAT ION GIVEN AT THE TIME OF THE SEARCH WAS GIVEN UNDER A MISTAKE WAS FILED. I N ABSENCE OF ANY SUCH MATERIAL, WE DO NOT FIND ANY FORCE IN THE CONTENTIO N OF THE ASSESSEE. HOWEVER, IT IS OBSERVED THAT THE ASSESSING OFFICER RECORDED IN THE ASSESSMENT ORDER THAT CASH OF RS.334/- WAS AVAILAB LE WITH THE ASSESSEE AS PER THE BOOKS OF THE ASSESSEE FOUND DURING THE COUR SE OF THE SEARCH. THUS, THE SOURCE OF RS.334/- OUT OF THE TOTAL AMOUNT OF RS.66,025/- STANDS EXPLAINED FROM THE BOOKS FOUND DURING THE COURSE OF SEARCH ITSELF. THEREFORE, THERE WAS NO REASON FOR MAKING ADDITION OF SAID RS.334/-. WE, THEREFORE, MODIFY THE ORDER OF THE LD.CIT(APPEALS) AND CONFIRM ADDITION TO THE EXTENT OF RS.65,691/- AND DELETE THE REMAINI NG AMOUNT OF RS.334/-. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PART LY ALLOWED. 18. THE THIRD GROUND OF THE APPEAL RELATES TO ADD ITION(S) OF RS.55,000/- ON ACCOUNT OF CASH CREDIT IN THE NAME OF SHRI NILES H H.SONI AND RS.78,000/- IN THE NAME OF SMT.NARMADABEN B.SONI. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 18 - 19. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER OBSERVED THAT SHRI NILESH H.SONI WAS WORKING AS MANAGER OF T HE ASSESSEE-COMPANY AT A PALTRY SALARY OF RS.1,000/-. AFTER SCRUTINIZ ING THE BANK ACCOUNT OF SHRI NILESH H.SONI, THE ASSESSING OFFICER HAS HELD THAT THE CREDITOR DID NOT HAVE THE CAPACITY OF HAVING DEPOSITED FUNDS OF RS.5 5,000/- WITH THE ASSESSEE. SIMILARLY, IN THE CASE OF SMT.NARMADA S ONI, THE ASSESSING OFFICER SCRUTINIZED THE BANK ACCOUNT AND HAS HELD T HAT THE CAPACITY OF THIS CREDITOR WAS NOT SUCH AS TO HAVE ADVANCED A LARGE A MOUNT OF RS.78,000/-. IN VIEW OF THESE FACTS, ADDITION OF RS.55,000/- AND RS.78,000/- WERE MADE HOLDING THE CREDITS IN THE ACCOUNTS OF SHRI NILESH H.SONI AND NARMADA B.SONI AS UNEXPLAINED. 20. IN APPEAL, THE LD.CIT(APPEALS), HELD AS UNDER :- 7.1 DURING APPEAL PROCEEDINGS, IT HAS BEEN NOTED T HAT THE APPELLANT DID NOT EVEN FILE THE CONFIRMATIONS OF SH RI NILESH H.SONI AND SMT. NARMADA B.SONI. IN THE ABSENCE OF CONFIR MATIONS IT HAS TO BE HELD THAT THE APPELLANT HAS NOT DISCHARGED TH E PRIMARY ONUS WHICH LAY UPON IT TO PROVE THE IDENTITY AND THE CAP ACITY OF THE CREDITORS AS ALSO THE GENUINENESS OF THE TRANSACTIO NS. IN VIEW OF THESE FACTS AND AGREEING WITH THE OBSERVATIONS OF A SSESSING OFFICER AT PARA 4(I) AND 4(II), IT IS HELD THAT ADDITIONS O F RS.55,000/- AND ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 19 - RS.78,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS WAS JUSTIFIED. THE ADDITIONS ARE, THEREFORE, UPHELD. THE GROUND OF APPEAL IS REJECTED. 21. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSES SEE, BY WAY OF WRITTEN SUBMISSIONS, SUBMITTED AS UNDER:- THE LD CIT(A) HAS ERRED IN CONFIRMING THE CASH CRE DITS OF RS.55,000/- IN THE NAME OF NILESH H.SONI AND OF RS. 78,000/- IN THE NAME OF NARMADA B.SONI, MADE BY A.O. (PARA 7- P AGES 14- 15). 3.1. THE AO HAD MADE THE ADDITIONS ON THE GROUND T HAT THE DEPOSITORS CAPACITY IS NOT PROVED BY THE APPELLANT. 3.2. THE LD CIT(A) CONFIRMED THE CASH CREDITS ON TH E BASIS OF THE AO. (PARA 7.1. PAGES 15). 3.3. THE APPELLANT SUBMITS THAT THE SAID DEPOSITS W ERE THROUGH CHEQUES DRAWN FROM THEIR BANK ACCOUNTS. THE COPIES OF THEIR BANK ACCOUNTS WERE FILED WITH THE AO. AS SUC H THE APPELLANT HAD DISCHARGED THE ONUS AS PER SECTION 68 . THE SOURCE OF SOURCE CANNOT BE EXPLAINED BY THE APPELLA NT AS IT IS WITHIN THE PERSONAL KNOWLEDGE OF THE DEPOSITO RS. THE APPELLANT RELIES ON THE LEGAL RATIO LAID DOWN BY HON.GUJARAT HIGH COURT IN THE CASES REPORTED IN 256 ITR PAGE 360 (GUJ) AND 280 ITR 512 (GUJ). ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 20 - ADDITION OF CASH CREDITS OF RS.55,000/- IN THE NAM E OF NILESH H.SONI AND OF RS.78,000/- IN THE NAME OF NAR MADA B.SONI. (IN ADDITION TO SUBMISSIONS IN P.B.1). (I) NILESH H.SONI- RS.55,000/- CREDITS ARE THROUGH CHEQUES. COPY OF ACCOUNT AND COPIES OF BANK STATEMENTS ARE ENCLOSED. THE REQUIREMENTS OF SECTION 68 ARE SATISFIED. AS SUCH, THE ADDITION AS BOGUS CREDIT BEING ILLEGAL, BE CANCELLED. THE REMARK OF THE AO THAT THE SOURCE OF DEPOSIT OF RS.35,000/- DOES NOT STAND EXPLAINED, IS NOT JUSTIFIED. (II) NARMADA B.SONI RS.78,000/- CREDITS ARE THROUGH CHEQUES COPY OF ACCOUNT AND COPIES OF BANK STATEMENTS ARE ENCLOSED. REQUIREMENTS OF SECTION 68 ARE SATISFIED. OPENING BALANCE OF RS.1,73,282/- IS ACCEPTED. AS SUCH THE ADDITION AS NON G3ENUINE CREDIT BEING ILLEGAL, BE CANCELLED. THE REMARK OF THE AO THAT THE DEPOSIT ENTRY OF RS.31,200/- IS NOT EXPLAINED, IS NOT JUSTIFIED. THE APPELLANT RELIES ON 256 ITR 360 (GUJ) PAGES 8-9 OF P.B.1. 22. THE LD.DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEE HAS SHOWN TO HAVE TAKEN LOAN OF RS.55 ,000/- FROM SHRI NILESH ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 21 - H.SONI AND RS.78,000/- FROM SMT. NARMADA B.SONI . THE ASSESSING OFFICER FOUND THAT IN THE CASE OF SHRI NILESH H.SON I THAT HE IS EARNING MONTHLY SALARY OF RS.1,000/- AND TRANSACTIONS IN H IS BANK ACCOUNT ARE VERY FEW. HE, THEREFORE, OPINED THAT THE AFORESAID CA SH CREDIT WAS NOT GENUINE. FURTHER IN RESPECT OF SMT.NARMADA B.SONI, HE OBSERV ED THAT THOUGH THERE WERE MANY TRANSACTIONS IN HER BANK ACCOUNT, BUT SOU RCE OF EACH DEPOSIT IN HER BANK ACCOUNT COULD NOT BE EXPLAINED BY THE ASSE SSEE. FURTHER, THE ASSESSEE EXPLAINED THE SOURCE OF DEPOSIT OF RS.28,0 00/- IN 19/04/1991 AS RECEIPT OF INTEREST FROM ASSESSEE. THUS, THE ASSES SING OFFICER FROM THE AMOUNT RECEIVED BY THE ASSESSEE FOUND THAT NO SUCH PAYMENT WAS MADE BY THE ASSESSEE. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER CONCLUDED THIS LOAN OF RS.78,000/- ALSO AS NOT GENUINE AND ADDED T HE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD.CIT(APPEALS) C ONFIRMED THE ADDITION. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE LOANS WERE TAKEN FROM BOTH THE PARTIES BY A/C. PAYEE CHEQUES. THE IDENTITY AND THE GENUINENESS OF THE TRANSACTI ONS WAS NOT DOUBTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ONLY DISPUTED THE CAPACITY OF THE CREDITORS. HE SUBMITTED THAT CAPACITY OF CREDITORS ARE PROVED BY THE DEPOSITS IN THE BANK ACCOUNT OF THE CREDITORS. FOR THE ABOVE SUBMISSION, HE PLACED RELIANCE ON THE DECISION OF T HE HON'BLE GUJARAT HIGH ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 22 - COURT IN THE CASE OF DEPUTY CIT VS. ROHINI BUILDER S (2002) 256 ITR 360(GUJ.). IT WAS ALSO SUBMITTED THAT THE ASSESSE E COULD NOT BE REQUIRED TO EXPLAIN ITS SOURCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE FOR ITS INABILITY TO EXPLAIN THE SOURCE OF SOURCE AS SUCH SOURCE OF SOURCE IS WITHIN THE SPECIAL KNOWLEDGE OF THE CREDI TOR AND NOT THE ASSESSEE. WE FIND THAT IT IS NOT IN DISPUTE THAT THE LOANS WE RE RECEIVED BY THE ASSESSEE BY 'A/C. PAYEE CHEQUES', THE IDENTITY OF THE CREDITORS ARE NOT IN DOUBT. IN THE CASE OF ROHINI BUILDERS(SUPRA), IT WAS HELD THAT THE CAPACITY OF THE CREDITOR WAS PROVED BY SHOWING THAT THE AMOU NTS WERE RECEIVED BY THE ASSESSEE BY THE 'A/C. PAYEE CHEQUES' DRAWN FROM THE BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE O F THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE. IT IS OBSERVED THAT THE ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD BY EXAMINING THE CREDITORS TO SHOW THAT THE AFORESAID LOAN COULD NOT BE GENUINE OR THE SAME WAS ADVANCED AFTER RECEIVING CASH FROM THE ASSESSEE . IN THE FACTS OF THE PRESENT CASE, IN OUR CONSIDERED OPINION, THE INITIA L BURDEN WHICH WAS ON THE ASSESSEE TO PROVE NATURE AND SOURCE OF DEPOSIT IN ITS BOOKS OF ACCOUNT WERE DISCHARGED BY THE ASSESSEE AND, THEREAFTER, TH E REVENUE COULD NOT ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 23 - BRING ANY COGENT MATERIAL TO SHOW THAT THE SAID EXP LANATION OF THE ASSESSEE WAS BOGUS OR CANNOT BE GENUINE. IN OUR CONSIDERE D OPINION, THE ADDITION WAS MADE ONLY ON THE BASIS OF DOUBTS OR SURMISES A ND, THEREFORE, THE SAME IS UNSUSTAINABLE. WE, THEREFORE, DELETE THE ADDIT ION OF RS.55,000/- AND RS.78,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CRE DITS AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 24. THE FOURTH GROUND OF THE APPEAL RELATES TO ADDITION OF RS.1,11,000/- IN RESPECT OF COMMISSION. 25. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER OBSERVED THAT THE ASSESSEE HAS DEBITED RS.1,11,000/- IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD SALES COMMISSION. THE APPELLANT W AS REQUIRED TO FURNISH DETAILS OF COMMISSION PAID, NAMES AND ADDRE SSES OF THE PARTIES TO WHOM SUCH COMMISSION WAS PAID AND FURTHER TO GIVE D ETAILS OF SERVICES RENDERED BY THE PARTIES TO WHOM COMMISSION WAS PAID ALONG WITH MODE OF PAYMENT OF SUCH COMMISSION. IN RESPONSE TO SHOW-C AUSE NOTICE DATED 5.12.97, THE ASSESSEE SIMPLY STATED THAT THE SALES OF THE FIRM WERE AT RS.25,52,692/-; THE PAYEES WERE NOT RELATED TO THE ASSESSEE AND COMMISSION WAS PAID SINCE THE PAYEES BROUGHT CUSTOM ERS TO THE SHOP OF ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 24 - THE ASSESSEE. FURTHER DETAILS REQUIRED BY THE ASS ESSING OFFICER AS ABOVE WERE NOT FURNISHED. DESPITE REPEATED OPPORTUNITIE S BEING GIVEN, THE ASSESSEE DID NOT FURNISH DETAILS OF NAMES, ADDRESSE S AND MODE OF PAYMENTS, ETC. ON INVESTIGATIONS MADE, THE ASSESSING OFFICER CAME TO KNOW THAT AN AMOUNT OF RS.51,000/- WAS SHOWN AS HAV ING BEEN PAID TO SMT. JAYSHREE H. SONI WHO WAS DAUGHTER IN LAW OF TH E APPELLANT. THUS, THE REPLY DATED 13.12.97 GIVEN BY THE APPELLANTS TO THE ASSESSING OFFICER THAT NONE OF THE PAYEES WERE RELATED TO HER, WAS FALSE. THE ASSESSING OFFICER REQUIRED THE APPELLANT TO SPECIFY THE TRANSACTIONS ON WHICH COMMISSION WAS PAID AND ALSO TO PRODUCE JAYSHREE H. SONI BEFOR E THE ASSESSING OFFICER FOR EXAMINATION. NEITHER THE REQUIRED DETAI LS WERE FURNISHED NOR THE SAID JAYSHREE H. SONI WAS PRODUCED BEFORE THE A SSESSING OFFICER. THE ASSESSING OFFICER FURTHER NOTED A VARIATION IN COMM ISSION DEBITED TO P & L ACCOUNT WHICH IN THE RETURN WAS CLAIMED AT RS.1,1 1,000/- BUT ON A SEIZED PAPER (PAGE-71), THE COMMISSION AMOUNT WAS SHOWN ON LY AT RS.51,000/-. IN THE ABSENCE OF ANY EVIDENCE OR FURTHER INFORMATI ON, THE ASSESSING OFFICER DISALLOWED COMMISSION OF RS.1,11,000/-. 26. IN APPEAL, THE LD.CIT(APPEALS), HELD AS UNDER :- ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 25 - 8.2. EVEN DURING APPEAL PROCEEDINGS, THE APPELLA NT HAS NOT FURNISHED DETAILS OF COMMISSION AMOUNT, THE DETAILS OF SERVICES RENDERED BY THE PERSONS TO WHOM COMMISSION WAS PA ID, MODES OF PAYMENT ETC. THE APPELLANT'S AUTHORISED REPRESENTAT IVE WAS REQUESTED TO STATE AS TO WHETHER SIMILAR COMMISSION WAS PAID IN THE EARLIER YEARS ALSO AND ALSO TO INFORM THE POSIT ION OF SALES. SHRI. CHATBAR, ADVOCATE STATED THAT THE SALES DURING THE YEAR UNDER CONSIDERATION WERE RS.25,52,692/- AND IN THE IMMEDI ATELY PROCEEDING YEAR THE SALES WERE RS.23,11 ,536/-. HOW EVER, SHRI. CHATBAR ADMITTED THAT NO COMMISSION HAD BEEN PAID I N THE EARLIER YEARS. 27. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSES SEE, BY WAY OF WRITTEN SUBMISSIONS, SUBMITTED AS UNDER:- THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDIT ION OF RS.1,11,000/- OUT OF COMMISSION, MADE BY THE A.O. ( PARA 8 PAGE 15-17). 4.1. THE AO HAS MADE ADDITION OF RS.1,11,000/- ON THE GR OUND THAT THERE IS NO EVIDENCE FILED BY THE APPELLANT IN SUPPORT OF THE SAME AND AS SUCH THEY ARE BOGUS EXPENSES DEB ITED TO P&L A/C. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 26 - 4.2. THE LD CIT(A) HAS CONFIRMED THE ADDITION OF RS.1,11,000/- ON THE BASIS OF THE A.O. (PARA 8-3- P AGE 17). 4.3. THE APPELLANT SUBMITS THAT THOSE EXPENSE WERE INCUR RED FOR EFFECTING SALES THROUGH THE COMMISSION AGENTS A ND THE SAME WERE DEBITED TO P&L A/C IN THE BOOKS OF ACCOUN T WHICH WERE FOUND DURING THE COURSE OF SEARCH AND AS SUCH AS PER PRESUMPTION U/S.132(4A, THE EXPENSES DEBITED TO P&L A/C. ARE TO BE PRESUMED TO BE TRUE. AS SUCH, THE ADDITION OF RS.1,11,000/- BEING ILLEGAL. 28. THE LD.DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 29. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED TO HAVE MADE COMMISSION PA YMENT OF RS.1,11,000/-. THE AFORESAID CLAIM WAS DISALLOW ED BY THE ASSESSING OFFICER IN PROCEEDING INITIATED U/S.148 OF THE I.T. ACT, 1961 ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH THE REQUIRED P ARTICULARS TO PROVE GENUINENESS OF THE SAME. THE ABOVE ACTION OF THE A SSESSING OFFICER WAS CONFIRMED BY THE LD.CIT(APPEALS). IN OUR CONSIDE RED OPINION, THE ASSESSING OFFICER HAS THE JURISDICTION TO MAKE ASSE SSMENT OF INCOME ESCAPED WHICH WAS RECORDED IN THE REASONS U/S.148(2 ) OF THE I.T. ACT, 1961 ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 27 - AND ALONG WITH THE SAME, THE ASSESSING OFFICER CAN ALSO MAKE ADDITION IN RESPECT OF SUCH OTHER ESCAPED INCOME WHICH WAS NOT ICED BY HIM DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS. HOWEVER, THE ASSESSING OFFICER HAS NO JURISDICTION TO MAKE A FISHING OR R OVING ENQUIRY IN A PROCEEDINGS U/S.148 OF THE I.T. ACT, 1961 WHICH IS NOT CONNECTED WITH THE RECORDED REASONS IN ANTICIPATION TO DIG OUT SOME OT HER ESCAPED INCOME. OUR ABOVE VIEW FIND SUPPORTS FORM THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIPAN KHANNA VS. CIT (2002) 255 ITR 220(P&H) WHICH WAS RENDERED AFTER FO LLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT.LTD. (1992) 198 ITR 297 (SC). IT IS NOTICED THAT THE ASSESSING OFFICER MADE AN ENQUIRY IN RESPECT OF COMMISSION PAYMENT WHICH WAS NOT RECORDED IN THE REASONS AS FOUND FROM THE SUBMISSIONS OF THE PARTIES NOTED HEREINBELOW IN RESPECT OF ADDITIO NAL GROUND OF APPEAL AND THE ADDITION WAS MADE BECAUSE OF INABILITY OF THE A SSESSEE TO FURNISH CERTAIN DETAILS AND NOT BECAUSE OF ANY POSITIVE MAT ERIAL NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF RE-ASSESSMEN T PROCEEDINGS. THEREFORE, IN OUR CONSIDERED VIEW, THE AFORESAID AD DITION WAS WITHOUT JURISDICTION AND BAD IN LAW. WE, THEREFORE, DELE TE THE ADDITION OF RS.1,11,000/- AND ALLOW THIS GROUND OF APPEAL OF TH E ASSESSEE. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 28 - 30. THE FIFTH GROUND OF THE APPEAL RELATES TO ADDITION OF RS.10,22,755/- ON ACCOUNT OF UNPROVED SUNDRY CREDITORS. 31. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER INQUIRED ABOUT FILING OF RETURN OF INCOME FOR ASSESSMENT YEA R 1993-94, WHERE UPON AS PER LETTER DATED 16/10/97, THE ASSESSEE EXPLAINE D THAT AFTER THE SEARCH AND SEIZURE ACTION IN FEBRUARY1992, THE BUSINESS WA S CLOSED DOWN AND THE PREMISES HANDED OVER TO THIRD PARTY. THE ASSESSIN G OFFICER ACCORDINGLY NOTED THAT THE ASSESSEE WAS NO LONGER DOING BUSINES S AND HAD IN FACT ABSCONDING FROM AHMEDABAD. LOCAL ENQUIRIES MADE B Y THE ASSESSING OFFICER REVEALED THAT THE ASSESSEE HAD CEASED TO DO BUSINESS FROM MARCH, 1992 ONWARDS. VIDE ORDER-SHEET ENTRY DATED 2.12.97 AND SHOW CAUSE DATED 5.12.97, THE ASSESSING OFFICER REQUIRED THE APPELLA NT TO SHOW CASE AS TO WHY SUNDRY CREDITORS BE NOT ADDED BACK TO THE TOTAL INCOME U/S 41(1) OF THE INCOME-TAX ACT SINCE THE APPELLANT HAD DISCONTI NUED HER BUSINESS AND ACCORDINGLY THE LIABILITIES CEASED TO EXIST. FURTHE R, THE APPELLANT WAS REQUIRED TO GIVE COMPLETE ADDRESS AND CONFIRMATION FROM THE PARTIES SHOWN UNDER THE HEAD SUNDRY CREDITORS ALONG WITH DE TAILS OF PAYMENT. NEITHER ANY DETAILS WERE FURNISHED NOR ANY REPLY WA S GIVEN TO THE SHOW ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 29 - CAUSE NOTICE. INVOKING SECTION 41(1) OF THE INCOME- TAX ACT, ADDITION OF RS.10,22,755/- WAS MADE. 32. IN APPEAL, THE LD.CIT(APPEALS), HELD AS UNDER :- 9.2 DURING THE COURSE OF APPEAL PROCEEDINGS, THE A PPELLANT'S AUTHORISED REPRESENTATIVE FILED A COPY OF BALANCE S HEET AS ON 31.3.91 SHOWING THAT SOME OF THE PARTIES APPEARING UNDER THE HEAD SUNDRY CREDITORS WERE APPEARING IN THE BALANCE SHEE T AS ON 31.3.91 ALSO. SHRI. CHATBAR ALSO FILED COPIES OF ACCOUNTS O F SOME OF THE CREDITORS AS PER BOOKS OF ACCOUNT OF THE APPELLANT. HOWEVER, SHRI. CHATBAR WAS INFORMED THAT THE ADDITION MADE WAS U/S 41(1) ON THE GROUND THAT THE BUSINESS HAD DISCONTINUED AND THE L IABILITIES HAD CEASED TO EXIST AND IN THE ABSENCE OF DETAILS OF PA YMENTS MADE TO SUNDRY CREDITORS, THE ACTION OF THE ASSESSING OFFIC ER IN MAKING ADDITION OF RS.10,22,755/- U/S 41(1) APPEARED JUSTI FIABLE. SHRI. CHATBAR CONFIRMED THAT THE APPELLANT HAD DISCONTINU ED HER BUSINESS IN MARCH, 1992. NO DETAILS WERE, HOWEVER, AVAILABLE WITH HIM REGARDING THE DISPOSAL OF ASSETS BY THE APPELLANT I NCLUDING DETAILS OF PAYMENT MADE IF ANY TO THE PARTIES SHOWN UNDER THE HEAD SUNDRY CREDITORS, IN VIEW OF THESE FACTS, I AM OF THE VIEW THAT THE ASSE SSING ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 30 - OFFICER WAS JUSTIFIED IN INVOKING SECTION 41(1) AND MAKING ADDITION OF RS.10,22,755/-. THE GROUND OF APPEAL IS, THE REFORE, REJECTED. 33. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSES SEE, BY WAY OF WRITTEN SUBMISSIONS, SUBMITTED AS UNDER:- THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,22,755/- BEING SUNDRY CREDITORS MADE BY AO U /S.41(1). (PARA 9 PAGES 17-18). 5.1. THE AO ADDED RS.10,22,755/- U/S.41(1) ON THE GROUN D THAT THE BUSINESS WAS DISCONTINUED BY THE APPELLANT AND ACCORDINGLY THE SAID LIABILITIES CEASED TO EXISTS, AND HAS NOT PAID THE SAID AMOUNT. 5.2. THE LD. CIT(A) CONFIRMED THE SAME ON THE BASIS OF T HE A.O.(PARA 9-2 PAGE 18). 5.3. THE APPELLANT SUBMITS THAT THOSE CREDITORS WERE OUTSTANDING AS PER BALANCE SHEET AS ON 31-3-92 I.E. A.Y. 1992-93. THE SAID CREDIT BALANCES WERE NOT WRITTEN OFF TO P&L A/C AS ON 31-3-92 I.E. A.Y. 1992-93. SECTION 4 1(1) IS APPLICABLE ONLY WHEN THERE IS CESSATION OF LIABI LITY. THERE IS NO CESSATION OF LIABILITY IN THE CASE OF T HE APPELLANT. HENCE THE ADDITION OF RS.10,22,755/- U/S.41(1) BEING ILLEGAL BE CANCELLED. THE APPELLAN T RELIES ON (2002) 125 TAXMAN 741 (GUJ) AND 236 ITR 518 (SC) . 34. THE LD.DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 31 - 35. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSING OFFICER MADE ADDITION OF RS.10,22,755 /- U/S.41(1) OF THE I.T. ACT, 1961 ON THE GROUND THAT THE ASSESSEE HAS STOP PED THE BUSINESS FROM MARCH-1992 AND WAS ABSCONDING AND, THEREFORE, THE SUNDRY CREDITORS BALANCE OF RS.10,22,755/- WAS CEASED TO EXIST. TH E LD.CIT(APPEALS) CONFIRMED THE ABOVE ADDITION MADE BY THE ASSESSING OFFICER. IN OUR CONSIDERED OPINION, FOR INVOKING THE PROVISIONS OF SECTION 41(1) OF THE I.T. ACT, 1961 THE PRE-CONDITION IS THAT THE LIABILITY S HOULD HAVE BEEN CEASED TO EXIST. SIMPLY BECAUSE THE ASSESSEE HAS STOPPED HER BUSINESS OR WAS ABSCONDING DOES NOT PROVE THAT THE LIABILITY OF THE ASSESSEE CEASED TO EXIST. FURTHER, FOR THE SAME REASONS AS MENTIONED HEREINAB OVE IN RESPECT OF GROUND NO.4, IN OUR CONSIDERED OPINION, AS THIS AMO UNT WAS NOT PART OF THE RECORDED REASON AND AS NO MATERIAL WAS NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, BU T AS THE ASSESSMENT WAS MADE ON THE BASIS OF A ROVING AND FISHING ENQU IRY AND BECAUSE OF THE INABILITY OF THE ASSESSEE TO FURNISH REQUIRED DETAI LS IN PURSUANCE OF SUCH ROVING AND FISHING ENQUIRY ONLY, THE ADDITION SO MA DE IN A RE-ASSESSMENT ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 32 - PROCEEDINGS WAS WITHOUT JURISDICTION AND, THEREFORE , BAD IN LAW. IN THE CIRCUMSTANCES, WE DELETE THE ADDITION OF RS.10,22,7 55/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 36. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE READS AS UNDER:- THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER H AD NO JURISDICTION U/S.147/148 TO ASSESS OTHER INCOMES WH ICH WERE NOT COVERED IN THE REASONS RECORDED U/S.148 BY THE AO. HENCE THE ADDITION OF OTHER INCOMES VIZ. (1) RS.59,984/- CASH (2) RS.55,000/- AND RS.78,000/- CASH CREDITS U/S.68. (3) RS.1,11, 000/- COMMISSION PAID AND (4) RS.10,22,755/- U/S.41(1) BEING ILLEGAL , BE CANCELLED. 37. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IT IS NOTICED THAT THE REVENUE HAS NOT DISPUTED THE CONTENTION OF THE ASSESSEE THAT THE REASONS RECORDED DOES NOT INCLUDE - (1) RS.59,984/- CASH (2) RS.55,000/- AND RS.78,000/- CASH CREDITS U/S.68. (3) RS.1,11, 000/- COMMISSION PAID AND (4) RS.10,22,755/- SUNDRY CREDITORS U/S.41(1) O F THE I.T. ACT, 1961 BY PRODUCING COPY OF REASONS RECORDED U/S.148 OF THE I .T. ACT, 1961. HOWEVER, IT IS OBSERVED THAT THE ADDITION IN RESPEC T OF CASH IN HAND WAS MADE BY THE ASSESSING OFFICER FOR RS.66,025/-. TH E ASSESSEE HAS SUBMITTED THAT REASONS RECORDED DOES NOT CONTAIN TH E AMOUNT OF RS.59,984/-. THUS, IT IMPLIES THAT THE ADDITION O F RS.6,041/- MADE BY THE ITA NO .1282/AHD/2003 PRABHAVATI J.SONI VS. ITO ASST.YEAR 1992-93 - 33 - ASSESSING OFFICER WAS IN ACCORDANCE WITH THE RECORD ED REASONS. WHEN ANY ADDITION IS MADE ON THE BASIS OF RECORDED REAS ONS, THEN ANY OTHER INCOME WHICH WAS ESCAPED FROM THE ASSESSMENT AND N OTICED BY THE ASSESSING OFFICER DURING THE COURSE OF RE-ASSESSMEN T PROCEEDINGS CAN BE VALIDLY MADE BY THE ASSESSING OFFICER. IT IS OBSE RVED THAT ADDITION OF RS.6,041/- INCLUDED IN THE AMOUNT OF RS.65,691/- W AS CONFIRMED BY US. THEREFORE, IN OUR CONSIDERED OPINION, IT WAS WITHI N THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE ADDITION IN RESPECT OF AN Y OTHER ESCAPED INCOME NOTICED BY HIM, EVEN IF SUCH INCOME WAS NOT PART OF RECORDED REASONS. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THIS ADDI TIONAL GROUND OF APPEAL AND, THEREFORE, THE SAME IS DISMISSED. 38. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 21/08/2009. SD/- SD/- ( R.V. EASWAR ) ( N.S. SAINI ) VICE PRESIDENT ACCO UNTANT MEMBER AHMEDABAD; DATED 21/08/2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESP ONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-VII, AHMEDABAD 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD.