Haresh I. Talreja, V. DCIT,

ITA 1392/PUN/2003

• Counselvise Citation: 139224514 RSA 2003
• Duration Of Justice: 8 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-01-2012
• Assessment Year: misc
• Appeal Filed On: 12-12-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Keywords: Unexplained investment; Search and seizure; Document seized; Source of fund; Valuation report; Block assessment; Documents seized
• Section: 133A; 133(6); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICI AL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 1392/PN/2003 (BLOCK ASSTT. YEAR: 92-93 TO 2002-03) SHRI HARESH I TALREJA, .. APPELLANT 885 OPP. AKSHTA MANGAL KARYALAYA, KARAD, SATARA PAN ABEPT 2062 L VS. DY. COMMISSIONER OF INCOME-TAX, .. RESPONDENT CEN. CIR. 2(1), PUNE AND ITA NO 68/PN/2004 (BLOCK ASSTT. YEAR: 92-93 TO 2002-03) DY. COMMISSIONER OF INCOME-TAX, .. APPELLANT CEN. CIR. 2(1), PUNE VS. SHRI HARESH I TALREJA, .. RESPONDENT KARAD, SATARA. ASSESSEE BY : SHRI M K KULKARNI DEPARTMENT BY : SHRI HARESHWAR SHARMA DATE OF HEARING: 11.01.2012 DATE OF PRONOUNCEMENT: 30 01.2012 ORDER PER G.S.PANNU, AM : SINCE COMMON ISSUES ARE INVOLVED IN THE CAPTIONED CROSS-A PPEALS OF THE ASSESSEE AS WELL AS THE REVENUE, THEY WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY WAY OF A COMBINED ORDER FOR THE SAKE OF C ONVENIENCE AND BREVITY. 2. THE CAPTIONED CROSS-APPEALS ARE DIRECTED AGAINST THE OR DER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 14.10.2003, WHICH IN TURN HAVE ARISEN FROM THE ORDER DATED 18.4.2001 PASSED BY THE A SSESSING OFFICER UNDER SECTION 158BC(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT T HE ACT), PERTAINING TO THE BLOCK ASSESSMENT YEARS 1992-93 TO 2002-03. 3. GROUND NOS. 1(A) TO (C) OF THE REVENUE RELATE TO ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY DEBTORS OF RS 61,62,5 52/-. THE SAID ADDITION HAS BEEN REDUCED BY RS 51,62,552/- BY THE COM MISSIONER OF INCOME- TAX (APPEALS) THEREBY RETAINING AN ADDITION OF RS 10 LAKHS. THE REVENUE IS IN APPEAL AGAINST THE REDUCTION OF THE DISALLOWANCE BY RS 51,62,552/- IN ITS APPEAL, WHEREAS THE ASSESSEE IN ITS CROSS APPEAL IN GROUND N O.. HAS CONTESTED THE SUSTENANCE OF ADDITION OF RS 10 LAKHS. SINCE THE TWO CROSS- GROUNDS RELATE TO THE SAME ISSUE, THE SAME ARE BEING T AKEN UP TOGETHER. 4. BRIEFLY STATED THE FACTS ARE THAT IN THE CASE OF ASSESSE E AS WELL AS OTHER FAMILY MEMBERS, A SEARCH AND SEIZURE ACTION UNDER SECTIO N 132(1) OF THE ACT WAS CARRIED OUT IN THE BUSINESS AS WELL AS RESIDENTIAL PREM ISES ON 18-04-2001. THE ASSESSEE IS A WHOLESALE DEALER IN COUNTRY LIQUOR UNDE R THE NAME AND STYLE OF M/S TALREJA TRADERS. A NOTICE UNDER SECTION 158BC WAS SERVED ON THE ASSESSEE ON 7-12-2001 REQUIRING HIM TO FILE BLOCK RETURN WITHIN 20 DAYS OF THE RECEIPT OF THE SAID NOTICE. THE ASSESSING OFFICER HAS DET ERMINED THE UNDISCLOSED INCOME AT RS. 90,34,673/- AS AGAINST THE UNDISCL OSED INCOME OF RS.67,000/- DECLARED BY THE ASSESSEE. THE MAIN ADDITION M ADE BY THE ASSESSING OFFICER WAS ON ACCOUNT OF UNACCOUNTED SUNDRY DEBTORS OF RS 61,62,452/- PERTAINING TO THE FINANCIAL YEAR 2000-01 COMPRISED IN THE BLOCK PERIOD. THE FACTS RELATING TO THE SAID ADDITION ARE TH AT DURING THE COURSE OF SEARCH, CERTAIN PAPERS MARKED AS ANNEXURE A-1 AND A-2 WE RE SEIZED WHICH REPRESENTED COLLECTION DIARIES FOR THE PERIOD 1.12.2000 TO 18.4.2001, THE ASSESSING OFFICER HELD THAT SUCH DIARIES AS PARALLEL BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS NOTED IN PARA 4 OF THE ASSESSMENT ORDER AS UNDER :- 'BEFORE THE ISSUES PERTAINING TO THIS ASSESSEE ARE DISCUSSED, IT IS IMPORTANT TO UNDERSTAND THE NATURE OF BUSINESS OF THE ASSESSEE A ND THE SYSTEM OF MAINTAINING THE BOOKS OF ACCOUNT. THE ASSESSEE IS DEALING IN SALE OF COUNTRY LIQUOR ON WHOLESALE BASIS IN THE NAME AND STYLE OF TALREJA TRADERS. THE ASSESSES CONCERN HAD MAINTAINED SETS OF BOOKS OF ACCOUNTS. THE FIRST SET OF BOOKS OF ACCOUNTS WAS MEANT TO BE PRODUCED BEFORE INCOME-TAX AUTHORITIES, HEREINAF TER CALLED THE REGULAR BOOKS OF ACCOUNTS IN RESPECT OF THESE- BOOKS OF ACCOUNTS, TH E SEARCH PARTY HAD FOUND THAT THE BOOKS WERE MAINTAINED IN THE COMPUTER UP TO 28.2.20 01. THE COMPUTERIZED PRINTS OUT OF THESE ACCOUNTS WERE TAKEN FOR THE PERIOD 1/4/200 0 TO 11/7/2000 AND ALSO FOR 11.7.2000 TO 28.2.2001, WHICH WERE SEIZED AS A-49 T O- A-50. ANOTHER SET OF BOOKS OF ACCOUNTS WERE THREE LEDGERS SEIZED AS A-1 TO A-2. T HESE LEDGERS (A-1 AND A-2) CONTAINED THE PARTY-WISE LEDGER ACCOUNTS IN RESPECT OF THOSE PARTIES, FROM WHOM, THE AMOUNTS WERE RECEIVABLE ON ACCOUNT OF 'CASH BUT CRE DIT SALES' (DISCUSSED BELOW). THESE ACCOUNTS PERTAINED TO PERIOD FROM 1.12.2000 T O 18.4.2001 ONLY. THESE BOOKS OF ACCOUNTS (A-1 AND A-2) WERE PREPARED FOR ASSESSEE'S OWN CONSUMPTION AND WERE NOT MEANT FOR PRODUCING BEFORE INCOME-TAX AUTHORITIES, HEREIN AFTER CALLED PARALLEL BOOKS OF ACCOUNTS. THE ASSESSEE WAS AFFECTING THREE TYPES OF SALES; TH E FIRST TYPE OF SALE WAS THE 'CREDIT SALE', WHICH WAS RECORDED IN REGULAR BOOKS AS WELL PARALLEL BOOKS. THE SECOND TYPE OF SALE WAS 'CASH SALE, WHICH WAS RECORDED,' IN THE RE GULAR BOOKS ONLY AS CASH SALES. THE THIRD TYPE OF SALE WAS INTACT CREDIT SALE, BUT WAS RECORDED IN THE REGULAR BOOKS AS CASH- SALES (FOR CONVENIENCE HEREIN AFTER REFERRED TO 'CASH BUT CREDIT SALE'). THE RECORDS OF THESE' CASH BUT CREDIT SALES' WERE MAINT AINED ONLY IN A-1 AND A-2. ACCORDINGLY THERE WERE THREE TYPES OF CUSTOMERS OF THE ASSESSEE CONCERN. THE FIRST CATEGORY OF CUSTOMERS WAS THOSE TO WHOM O NLY CASH SALES WERE MADE. THESE SALES WERE NOT RECORDED IN THE PARALLEL BOOKS OF ACCOUNTS. THESE WERE RECORDED ONLY IN THE REGULAR BOOKS OF ACCOUNTS BECA USE THE CASH WAS RECEIVED ON THE COUNTER ONLY. THE SECOND CATEGORY OF CUSTOMERS WAS THOSE TO WHOM ONLY CREDIT SALES WERE MADE. THESE SALES WERE ALSO NOT RECORDED IN THE PARALLEL BOOKS OF ACCOUNTS. THESE WERE RECORDED ONLY IN THE REGULAR BOOKS OF ACCOUNTS BECA USE THE ENTIRE SALE WAS RECORDED- IN THE REGULAR BOOKS AND THERE WAS NO NEED TO MAINT AIN PARALLEL RECORDS IN RESPECT OF SUCH CUSTOMERS. THE THIRD CATEGORY OF CUSTOMERS WAS THOSE TO WHOM C REDIT SALE AS WELL AS 'CASH BUT CREDIT' SALE WAS MADE. THE CREDIT SALE IN RESPECT O F THESE CUSTOMERS WAS RECORDED IN REGULAR AS WELL AS PARALLEL BOOKS OF ACCOUNT AS CR EDIT SALES. THE CASH BUT CREDIT SALES WAS RECORDED IN THE REGULAR BOOKS AS CASH SALES AND CREDIT SALES IN PARALLEL BOOKS. DUE TO THIS ACCOUNTING PRACTICE, OF WORDING OF CRED IT SAKE AS CASH SALES (IN REGULAR BOOKS), THE ASSESSEE WAS INTRODUCING HIS OWN CASH, IN THE REGULAR CASH BOOK, WHICH WAS OTHERWISE RECEIVABLE FROM THE PERSONS MENTIONED IN A-1 AND A-2. THE CORRECTNESS OF THESE DOCUMENTS (A-1I AND A- 2) IS C ONFIRMED BY THE FACT BECAUSE SOME OF THESE PERSONS (HAVING A/CS IN A-1 AND A-2) HAVE ALSO CONFIRMED (IN A-3) THE AMOUNTS PAYABLE TO TALREJA TRADERS AS WRITTEN IN A- 1 AND A-2. DUE TO THIS PRACTICE, THERE WERE DEBTORS IN THE PARALLEL BOOKS OF ACCOUNT S, WHICH WERE NATURALLY NOT THERE IN THE REGULAR BOOKS BECAUSE THE CREDIT SALES MADE TO THESE CUSTOMERS WERE RECORDED AS CASH SALES IN THE REGULAR BOOKS. DUE TO THIS SYSTEM FOLLOWED BY THE ASSESSEE, THERE WERE DIFFERENT POSITION OF SALES, CASH BALANCE AND SUNDRY DEBTORS IN THE REGULAR BOOK S VIS--VIS THE PARALLEL BOOKS OF ACCOUNTS. THREE ISSUES, WHICH NEEDED TO BE IN EXAMI NED IN RESPECT OF THESE FINDINGS, WERE: WHAT WAS THE CASH BALANCE IN THE REGULAR BOOKS OF A CCOUNTS AND TO RECONCILE THE SAME WITH THE CASH PHYSICALLY FOUND. THE SALES RECORDED IN THE PARALLEL BOOKS HAVE BEEN ACCOUNTED FOR IN THE REGULAR BOOKS AND WHETHER THERE ARE ANY UNACCOUNTED SALES. THE QUANTIFICATION OF TOTAL AMOUNT RECEIVABLE FROM DEBTORS IN THE PARALLEL BOOKS OF ACCOUNTS, OVER AND ABOVE THE DEBTOR'S RECORDED IN T HE REGULAR BOOKS OF ACCOUNTS. THE SUM TOTAL OF CASH IN HAND AND THE AMOUNT RECEIV ABLE FROM DEBTORS IN THE REGULAR BOOKS OF ACCOUNTS WAS TO BE DETERMINED WHICH WERE T HE TWO DISCLOSED ASSETS IN THE BOOKS. AT THE SAME TIME THE POSITION OF DEBTORS (AS PER PARALLEL BOOKS) PLUS CASH PHYSICALLY FOUND WERE THE ACTUAL ASSETS OF THE ASSE SSEE. IN CASE THE ACTUAL ASSETS ARE MORE THAN THE ASSETS DECLARED IN THE REGULAR BOOKS, IT MEANS THAT THE ASSETS ARE NOT DISCLOSED IN THE REGULAR BOOKS. THESE ISSUES WERE CONFRONTED TO THE ASSESSEE, AT TH E TIME OF SEARCH AND HIS DETAILED STATEMENT WAS RECORDED IN LETTER-DATED 23. 4.2003, THE ASSESSEE AGAIN GAVE HIS CLARIFICATIONS IN RESPECT OF HIS STATEMENT GIVEN ON 8.4.2001. THE STATEMENT OF THE ASSESSEE WAS ALSO RECORDED ON 28.4.2003 WHEN HE WAS FINALLY CONFRONTED WITH THE ISSUES DISCUSSED ABOVE. THE ISSUES AND THE STATEMEN TS OF THE ASSESSEE IN RESPECT OF THESE ISSUES AND THE CLARIFICATION GIVEN BY THE ASS ESSEE ARE DISCUSSED IN RELEVANT PARAGRAPHS DISCUSSED.' THE ASSESSING OFFICER UPHELD THE STAND OF THE ASSESSEE THAT THERE WAS NO NEGATIVE POSITION OF CASH IN HAND AND ALSO INFERRED THA T THERE WAS NO UNACCOUNTED SALES IN QUANTITY, BUT THERE WAS SUPPRESSION OF SALE PRICE IN RESPECT OF SALES TO CERTAIN PARTIES. THE ASSESSING OFFICER FUR THER OBSERVED IN PARA 4.2 OF THE ASSESSMENT ORDER AS FOLLOWS: AS DISCUSSED ABOVE, THE ASSESSEE HAD CLAIMED THAT HE WAS RECORDING ME CREDIT SALES AS REFLECTED IN A-1 AND A-2 AS CASH SALES IN REGULAR BOOKS. IN ORDER TO ASCERTAIN WHETHER THE 'CASH CREDIT SALES' (A-1 AND A-2) HAVE BEEN DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS (SET-2), THE ASSESSEE DID ANOTHER EXERCISE FOR PERIOD OF 5 MONTHS (DECEMBER 1 2000 TO APRIL 18, 2001) AND PREPARED AN OTHER SET OF BOOKS (SET-3). WHILE PREPARING THESE BOOKS, HE TOOK THE CASH SALES, CRED IT SALES, 'CREDIT-CASH SALE' ON THOSE DATES AS RECORDED IN A-1 AND A-2. ANOTHER PUR POSE OF THIS EXERCISE WAS TO FIND THAT WHETHER THERE IS ANY NEGATIVE POSITION OF CASH IF THE SALES AS ACTUALLY HAPPENED ARE TAKEN. ON THE BASIS OF THESE BOOKS HE ALSO PREP ARED PARTY WISE ACCOUNTS IN RESPECT OF THOSE PARTIES, WHICH APPEARED IN A-1 AND A-2. IT WAS FOUND THAT THERE ARE NO UNACCOUNTED SALES IN RESPECT OF ANY PARTY. THERE WAS DIFFERENCE OF ONLY RS. 869, AS DISCUSSED BY THE ASSESSEE IN LETTER DATED 23.4.2 003. AN AMOUNT OF RS. 2,18,375/- WHICH ARE NOT SALES BUT CASH LOANS ADVANCED BY THE ASSESSEE AS SUBMITTED IN LETTER DATED 23.4.2003. SINCE THESE ADVANCES HAVE BEEN CON SIDERED WHILE COMPUTING THE NET AMOUNT RECEIVABLE FROM THE DEBTORS, THEREFORE, NO SEPARATE ADDITION IS BEING MADE ON THIS ACCOUNT. 5. THEREAFTER, THE ASSESSING OFFICER QUANTIFIED THE ADDI TION AT RS 61,52,662/- AS UNACCOUNTED ASSETS IN THE FOLLOWING MANNE R:- IN THIS MANNER, THE SUM TOTAL OF CASH IN HAND AND THE AMOUNT RECEIVABLE FROM DEBTORS IN THE REGULAR BOOKS OF ACCOUNTS WAS DETERMINED WHI CH WERE THE TWO DISCLOSED ASSETS IN THE BOOKS. AT THE SAME TIME THE POSITION OF DEBT ORS (AS PER PARALLEL BOOKS) PLUS CASH PHYSICALLY FOUND WERE THE ACTUAL ASSETS OF THE ASSESSEE. FROM THE ABOVE DISCUSSION, IT CAN BE MADE OUT THAT THE UNACCOUNTED ASSETS WERE MORE IN PARALLEL BOOKS OF ACCOUNTS THAN IN THE REGULAR BOOKS OF ACCO UNTS THE MAXIMUM DIFFERENCE IS THERE ON 1.12.2000, WHERE THERE WERE UNACCOUNTED AS SETS WHICH INCLUDED THE UNACCOUNTED DEBTORS AND CASH AMOUNTING TO RS 61,52, 662/- MORE THAN THE REGULAR BOOKS OF ACCOUNTS. 6. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (AP PEALS), ASSESSEE CHALLENGED THE FINDING OF THE ASSESSING OFFICER WITH REG ARD TO THE 'PARALLEL BOOKS OF AMOUNTS IN THE FOLLOWING WORDS: THE SEARCH ACTION IN THIS WAS CASE CONDUCTED AGAINS T THIS ASSESSEE WHICH COMMENCED ON 18.04.2001 ALONG WITH HIS FATHER SHRI IDANDAS TALREJA AND BROTHER SHRI BHARAT TALREJA , HIS MOTHER SMT. MEERABAI TALREJA, HIS EMPLOYEES SHRI MAHESH WADHWANI, SHRI GIRIDHARI TALREJA. INITIALLY IT WAS A SURVEY ACTION U/S 133A WHICH WAS GOT CONVERTED INTO SEARCH ACTION U/S 131(1)(A), (B),(C) OF THE ACT. AS A RESULT OF SEARCH ACTION CERTAIN DOCUMENTS WERE SEIZED AS DESCRIBED IN PANCHANAMA ALONG WITH CASH AMOUNT OF RS.4,00,000/-. THE DOCUMENTS. SEIZED INCLUDED CLONES CALLED NO. A 1 AND A-2 WHICH HAVE B EEN NOMENCLATED BY THE A.O. IN HIS ASSESSMENT ORDER FOR THE BLOCK PERIOD AS 'PARAL LEL BOOKS. FURTHER, VIDE HIS LETTER DATED 25.08.2003, THE ASS ESSEE SUBMITTED AS UNDER : 'THE SO CALLED DIARIES' SEIZED AT THE TIME OF ACTI ON UNDER SECTION 132 ON 18.04.2001 AND SUSPECTED TO BE A RECORD OF 'CONCEALED SALES' I S A BEREFT OF TRUTH. THESE ARE ONLY 'COLLECTION DIARIES' AS THEY CONTAIN RECORD OF COLL ECTION ONLY IT IS IN THE HANDWRITING OF THOSE WHO GO ON IKE FOR 'COLLECTION OF DUES' FROM T HE CUSTOMERS. ONE 'COLLECTION DIARY' IS IN THE HANDWRITING OF SHRI IDANDAS TALREJA, FATH ER OF THE ASSESSEE SHRI. H. I. TALREJA. THE OTHER IS IN THE HANDWRITING OF SHRI. MAHESH WAD HAVANE, THE MARKET-IN-CHARGE OF THE ASSESSEE. IT HAS BEEN CONCLUSIVELY MOVED THAT NO SALE OR PURC HASE WAS OMITTED TO BE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THE DIFFERENCES I N BALANCES ARE ONLY DUE TO THE PECULIAR METHOD OF ACCOUNTING FAMED BY THE ASSESSEE IN AS MUCH AS THE PATTIES WHO PAID THE AMOUNTS OF SALE BILLS BY CHEQUES WERE TREA TED AS 'CREDIT SALES' BOTH IN 'COLLECTION DRAFTEE AND 'REGULAR BOOKS OF ACCOUNTS' ; THE PARTIES WHO WERE PAYING IN CASH, THOUGH IN FACT CREDIT SALES TO THEM, WERE SO ACCOUNTED FOR IN 'COLLECTION DIARIES' AS 'CREDIT SALES' BUT IN REGULAR BOOKS OF ACCOUNTS THEY WERE SHOWN AS 'CASH SALES'; THE DIFFERENCE IN 'FINAL ACCOUNT BALANCES' OF THE PARTI ES WERE DUE TO THIS.' 7. FROM THE ABOVE, THE COMMISSIONER OF INCOME-TAX (APP EALS) INFERRED THAT ANNEXURE A-1 AND A-2 ARE RELEVANT DOCUMENTS SEIZ ED AT THE TIME OF SEARCH BUT TREATING THEM AS PARALLEL BOOKS OF ACCOUNTS IS NE ITHER BORNE OUT BY THE RECORDS NOR IS FACTUALLY CORRECT. THE STATEMENTS ON OA TH GIVEN BY THE ASSESSEE UNDER SECTION 132(4) OF THE ACT ON THIS ISSUE COULD B E TREATED AS REBUTTABLE PROPOSITIONS TO BE USED 'IN EVIDENCE' AND NO T AS EVIDENCE PER-SE. ACCORDING TO HIM, MERELY COMPARING SUNDRY DEBTORS AND CASH AS REFLECTED IN THE DIARIES WITH THE 'TOTAL ASSETS' AS PER THE REGULAR BOOKS OF ACCOUNTS WILL NOT GIVE THE TRUE PICTURE OF UNACCOUNTED ASSETS. THE COMMISSION ER OF INCOME-TAX (APPEALS) THEREAFTER EXTRACTED IN PARA 5.7 OF HIS ORDE R THE SUBMISSIONS OF THE ASSESSEE DATED 18.8.2003 DURING THE APPELLATE PROCEEDING S, WHICH WERE FACTUALLY VERIFIED BY THE ASSESSING OFFICER FROM THE REG ULAR BOOKS OF ACCOUNTS OF FINANCIAL YEAR 2000-01. 8. RECAPITULATING THE FACTS, THE COMMISSIONER OF INCOME -TAX (APPEALS) OBSERVED THAT THE ASSESSEE WAS THE MAIN PERSON WHO RAN TH E LIQUOR BUSINESS AT DIFFERENT LOCATIONS AND HIS BROTHER AND FATHER WERE ONLY ASSISTING HIM IN THE BUSINESS. THE BUSINESS WAS BEING CONDUCTED AT MORE THAN ON E LOCATION THROUGH RELATIVES AND EMPLOYEES. HE ALSO OBSERVED THAT INITIALLY, SURVEY UNDER SECTION.133A WAS CONDUCTED AT THE BUSINESS PREMISES OF THE A SSESSEE, WHICH WAS LATER CONVERTED INTO A SEARCH. ACCORDING TO THE COMM ISSIONER OF INCOME- TAX (APPEALS), WHAT WAS RELEVANT WAS THE STATEMENT OF T HE ASSESSEE UNDER SECTION 132(4) WHICH COMMENCED AT 11.50 P.M. ON 19.04 20 01 AND CONTINUED TILL 21.04.2001. IN THIS CONTEXT, HE OBSERVED AS UNDE R: THIS STATEMENT RECORDED IN ENGLISH AND CONTINUED F OR THREE DAYS, BRINGS OUT THE TRUE NATURE OF THE PERSON AND THE BUSINESS BEING CONDUCT ED BY HIM. IT COULD BE EASILY SEEN THAT FOR DAY TO DAY ACCOUNTING OF THE BUSINESS ACTI VITY, THE APPELLANT HAS TO CONSULT HIS ACCOUNTANT FROM TIME TO TIME, WHO IS ALSO A NEAR RE LATIVE OF THE APPELLANT. IN QUESTION NO.9 OF THE STATEMENT U/S.132(4) DATED 20.04.2001, THE APPELLANT HAS ADMITTED THAT THERE ARE MISTAKES AND ERRORS IN THE ACCOUNTS AND T HIS ASSERTION HAS BEEN FOUND TO BE CORRECT DURING THE ASSESSMENT PROCEEDINGS BY THE AS SESSING OFFICER AND THEREFORE THE DIFFERENT SETS OF ACCOUNTS HAVE BEEN GOT PREPARED. IN RESPECT OF DIARIES, IN RESPONSE TO QUESTION NO.18, THE APPELLANT HAS GIVEN DETAILED SU BMISSION, WHICH HAS BEEN FOUND TO BE TRUE. IN RESPONSE TO QUESTION NO. 21, 22 AND 24, THE APPELLANT HAS ADMITTED UNRECORDED SALES TO FIVE PARTIES AMOUNTING TO RS.67 ,300/- AND THIS HAS ALSO BEEN DISCLOSED IN THE BLOCK RETURN. HOWEVER, THE APPELLA NT WAS NOT ABLE TO GIVE ANY SATISFACTORY ANSWER ABOUT THE OUTSTANDING BALANCE N OT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS (REFER TO QUESTION NO.29). HE HAS OF CO URSE TRIED TO GIVE VARIOUS EXPLANATIONS, BUT THESE WERE NOT SATISFACTORY AS TH IS WAS APPARENTLY A QUESTION RELATED TO ACCOUNTANCY. THE COMMISSIONER OF INCOME-TAX (APPEALS) REQUIRED THE A SSESSEE TO PREPARE A DETAILED CHART TO SHOW AS TO HOW THE CASH RECEIVED FRO M THE CREDIT SALES ON DAILY BASIS AND REFLECTED IN THE DIARY A-1 AND A-2 HAD BEEN CREDITED IN THE REGULAR BOOKS OF ACCOUNTS AND FOUND THAT AT NO STAGE IT COULD BE SAID THAT THE CASH SHOWN AS DEPOSITED ON ACCOUNT OF ACTUAL CREDIT SALE WAS NOT OUT OF THE CASH REALIZATION OUT OF THE EARLIER CREDIT SALES REFLECT ED IN DIARIES A-1 AND A-2. HE THUS CAME TO A FINDING THAT THE AFORESAID ANSWERS TO THE QUESTIONS IN THE STATEMENT UNDER SECTION 132(4) OF THE ASSESSEE COULD NOT BE REGARDED AS TRUE STATEMENT OF AFFAIRS IN RESPECT OF ACCOUNTING ENTRIES AND THE METHOD OF MAINTENANCE OF BOOKS OF ACCOUNTS. AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE IN DETAIL, THE COMMISSIONER OF INCOME-TAX (APPEAL S) HELD THAT THE BASIS ON WHICH THE ADDITION WAS MADE BY THE ASSESSING OFFIC ER COULD NOT BE CONSIDERED AS CORRECT AND REASONABLE. HE THEN PROCEEDED T O CONSIDER THE FOLLOWING OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 4 .3 RELATING TO INFLATION OF EXPENSES: IT IS WORTHWHILE TO MENTION THAT THE FIGURES OF UN ACCOUNTED DEBTORS ON THESE DATES HAS BEEN PREPARED ON THE BASIS OF SET 3, BOOKS PREP ARED BY THE THE ASSESSEE BASED ON A1 & A2. LIKEWISE THE FIGURES OF ACCOUNTED DEBTO RS AS WELL AS CASH IN HAND ON DIFFERENT DATES HAS BEEN PREPARED ON THE BASIS OF S ET 2 PREPARED BY THE ASSESSEE HIMSELF. THE ASSESSEE ALSO SUBMITTED THE CHART, WHI CH HAS BEEN ENCLOSED AS 'ANNEXURE 1 TO 3' OF THIS ASSESSMENT ORDER. EVEN TH EN THE ASSESSEE WAS GIVEN OPPORTUNITY IN THE FORM OF SHOW CAUSE NOTICE DATED 28/4/2003, WHEREIN HE WAS ASKED TO SUBMIT EXPLANATION, IF ANY, REGARDING THESE UNAC COUNTED ASSETS. THE ASSESSEE DID NOT FURNISH ANY REPLY. IT IS PRESUMED THAT ASSESSEE HAS NOTHING TO SAY IN THIS MATTER. HOWEVER, IT IS IMPORTANT TO DISCUSS LETTER DATED 23 /4/2003 FURNISHED BY THE ASSESSEE WHEREIN HE HAS SUBMITTED ON PAGE NO. 14 & 15 THAT T HERE WAS NO SUPPRESSION OF SALE. HE ALSO TRIED TO SUBSTANTIATE HIS CONTENTIONS BY FU RNISHING QUANTITATIVE DETAILS OF LIQUOR PURCHASED AND SOLD. THE ASSESSEE INDIRECTLY WANTS T O TAKE A PLEA THAT IF THERE ARE NO UNACCOUNTED SALES HOW THERE COULD BE UNACCOUNTED DE BTORS. IT MAY BE MENTIONED THAT IN TRADING ACCOUNT AND IN PROFIT AND LOSS ACCO UNT, THE SALES ARE NOT THE ONLY COMPONENT WHICH DETERMINES THE PROFIT. THERE ARE OT HER COMPONENTS ALSO LIKE PURCHASES AND EXPENSES WHICH DETERMINE THE PROFIT. THE CONTENTION OF THE ASSESSEE MAY BE CORRECT AND ACCEPTABLE THAT THERE WAS NO SUP PRESSION IN SALE OF LIQUOR AS FAR AS THE QUANTITY WAS CONCERNED. AT THE SAME TIME, TH E ASSESSEE HAS HIMSELF ADMITTED ON THE BASIS OF ACCOUNTS, IN RESPECT OF 5 PARTIES D ISCUSSED IN PARA 4.2 ABOVE , THAT THERE WAS SUPPRESSION IN THE SALE PRICE, WHILE PREP ARING THE BILLS WHICH WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS.. IN THE PERIOD OF 4 MONTHS, THERE WAS SUPPRESSION OF RS. 67,300/-. THERE WAS SUPPRESSION OF PROFITS NOT ONLY BY SUPPRESSION OF SALE PRICE, BUT THE INCOME HAS ALSO BEEN SUPPRESSED BY THE ASSE SSEE BY INFLATING THE EXPENSES. THIS IS EVIDENT FROM BLANK SIGNED VOUCHERS, VOUCHER S WITHOUT DATE AND AMOUNT SEIZED DURING SEARCH( A5,6,10,14 TO 25). IT WAS ONLY BECAU SE OF THESE VOUCHERS THAT THE ASSESSEE WAS ABLE TO REDUCE HIS PROFITS WHILE FILIN G REGULAR RETURNS. THE ASSESSEE PREPARED SET-2 BOOKS OF ACCOUNTS ON THE BASIS OF DE BITING THESE EXPENSES AND HE HAD ALSO FILED RETURN OF INCOME FOR F.Y. 2000-01 BASED ON ACCOUNTS PREPARED AS PER SET 2. NO SEPARATE ADDITION HAS BEEN MADE IN RESPECT OF THESE VOUCHERS, WHICH WERE PREPARED TO MANIPULATE THE ACCOUNTS AND REDUCE THE PROFITS. IT MAY BE MENTIONED THAT THE INCOME TAX RETURN PREPARED BY THE ASSESSEE FOR F.Y. 2000-2001 DOES NOT INCLUDE THE UNACCOUNTED DEBTORS WHICH ARE OVER AND ABOVE TH E DEBTORS REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. IN THE LIGHT OF THESE DI SCUSSION, AN ADDITION OF RS. 61,62,552/- IS MADE. THIS ADDITION IS CONSOLIDATED ADDITION TAKING CARE OF UNACCOUNTED SALES, UNACCOUNTED ADVANCES AND INFLATED EXPENSES, WHICH IS PLOUGHED BACK INTO THE UNACCOUNTED BUSINESS OF THE ASSESSEE IN THE FORM OF UNDISCLOSED DEBTORS. 9. THE COMMISSIONER OF INCOME-TAX (APPEALS) PROCEEDED FU RTHER TO TOUCH UPON ANOTHER ISSUE CONSIDERED BY THE ASSESSING OFFICER, VI DE PARA 4.2 OF THE ASSESSMENT ORDER, WHICH IS AS UNDER: ON PERUSAL OF DIARY A-1 AND A-2, IT IS SEEN THAT T HERE WAS SUPPRESSION OF SALE PRICE IN RESPECT OF SALES TO CERTAIN PARTIES, WHERE AS THERE WAS NO DIFFERENCE IN QUANTITY OF LIQUOR SOLD. THEREFORE WHEN THE BILL WAS ISSUED IT WAS FOR LESSER AMOUNT BUT IN THE PARALLEL BOOKS THE ACTUAL AMOUNT RECEIVABLE WAS WRI TTEN, WHICH WAS BASED ON THE ACTUAL SALE PRICE. IN REPLY TO Q. NO. 24, HARESH TA LREJA ADMITTED THAT THE UNDER INVOICING IN EACH BOX WAS RS. 20/-. IT WAS DONE ONL Y IN RESPECT OF SHRI G.D. POTS, Y.S. NIKAM, G.C. DHAS AND N.D. GHADGE. THE ASSESSEE ADMI TTED IN Q.NO. 22 OF HIS STATEMENT RECORDED ON 18.4.2001 THAT SUCH SALES AMO UNTED TO RS. 67,300, WHICH HAVE NOT BEEN DISCLOSED IN THE REGULAR BOOKS. HOWEV ER NO SEPARATE ADDITION IS BEING MADE ON THIS ISSUE BECAUSE IN THE PARALLEL BOOKS AC TUAL SALE FIGURE WAS RECORDED AND THE POSITION OF UNACCOUNTED ASSETS (AMOUNT RECEIVAB LE FROM DEBTORS) HAS BEEN COMPUTED ON THE BASIS OF THESE BOOKS AS DISCUSSED I N THE FOLLOWING PARAGRAPHS. 10. THE COMMISSIONER OF INCOME-TAX (APPEALS) OBSERVED TH AT THE FACT THAT IN RESPECT OF THESE PERSONS THERE WAS UNDER-INVOICING DONE BY THE ASSESSEE HAS BEEN ADMITTED. HE LAID EMPHASIS ON THE POINT THAT THE ASSESSING OFFICER HOWEVER DID NOT RESORT TO ANY EXTRAPOLATION ON THIS A CCOUNT. ACCORDING TO THE COMMISSIONER OF INCOME-TAX (APPEALS), EXTRAPOLATION ON THE BASIS OF SUCH ADMITTED STATE OF SUPPRESSED SALES WAS EMINENTLY CALLED FO R IN VIEW OF THE DECISIONS OF HON. SUPREME COURT IN THE CASE OF M/S.H.M. EUSUFALI, 190 1TR 271 (SC), DR. M.K E. MEMON, 248 ITR 310 (BOM) AND G ODHAVAT PAN MASALA PRODUCTS P. LTD. 119 TAXMAN 206 (BOM), BESIDES RAJNIK & CO. 251 ITR 461 (A.P.). AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS) , WHEN THE SEIZED MATERIAL IS NOT A COMPLETE RECORD OF ALL THE UNDISCLOSED TRANSACTIONS OF THE APPELLANT, ANY ESTIMATION OF THE CASH RECEIPTS / EXPEN DITURE NOT DISCLOSED IN THE SEIZED MATERIAL IS REQUIRED TO BE DONE ON THE BASI S OF THE INFORMATION CONTAINED IN THE SEIZED MATERIAL ITSELF. FOR THIS PROPO SITION, HE RELIED ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KHOPADE KISANRAO MANIKRAO V. ACIT 250 ITR 18 (AT). CONSIDERING THE TWO ASPECTS AND TAKING INTO ACCOUNT THE CASH RECEIVED FROM CUSTOMER MAINTAINED IN THE DIARIES IN THE OPENING BALANCE AS ON 01.12.2000 AMOUNTING TO RS.2,65 ,825/-, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT IT WOUL D BE REASONABLE TO MAKE AN ADDITION OF RS. 10,00,000/- TO THE UNDISCLOSED I NCOME OF THE ASSESSEE, OUT OF WHICH RS. 5,00,000/- IS TO BE TAKEN AS INV ESTMENT IN UNDISCLOSED SALES AND THE BALANCE ON ACCOUNT OF SEIZED MAT ERIAL REFERRED TO ABOVE RELATING TO POSSIBLE SUPPRESSION OF EXPENSES ETC. ACC ORDINGLY, THE COMMISSIONER OF INCOME-TAX (APPEALS) SUSTAINED AN ADDITIO N OF RS.10,00,000/- TO THE UNDISCLOSED INCOME FOR THE FINANCIA L YEARS IN THE BLOCK PERIOD AND ALLOWED A RELIEF OF RS 51,62,552/-. 11. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE, ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND SUBMITT ED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) SHOULD HAVE UPHELD THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER. ACCORDING TO HIM, THE ASSE SSING OFFICER HAS RIGHTLY MADE AN ADDITION OF RS 61,62,552/- ON ACCOUNT OF THE DIFFERENCE OF SUNDRY DEBTORS AS REVEALED BY THE SEIZED DOCUMENTS AND T HE COMMISSIONER OF INCOME-TAX (APPEALS) INSTEAD OF SUSTAINING THE ENTIRE AD DITION, WAS NOT JUSTIFIED IN SUSTAINING ONLY AN AD HOC ADDITION OF RS 10,00,000/- . IT WAS POINTED OUT THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) OVERLOOKED THE FACT THAT THE DIFFERENCE OF THE SUNDRY DEBTORS OF RS 61,62,552/- WO RKED OUT FROM THE SEIZED TWO SETS OF ACCOUNTS WAS AS PER THE ASSESSEES OWN SUBMISSIONS. T HE LEARNED DEPARTMENTAL REPRESENTATIVE, THEREFORE, CONTE NDED THAT THE ADDITION MADE BY THE ASSESSING OFFICER MAY BE UPHELD IN TOTO. 12. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) SHOULD HAVE DEL ETED THE ENTIRE ADDITION AND THAT THE ADDITION SUSTAINED OF RS 10,00, 000/- BE DELETED. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, AN ADDITION OF RS 6 1,60,552/- WAS MADE BY THE ASSESSING OFFICER PRIMARILY FOR HIS ASSERTION THAT T HE SEARCH ON THE ASSESSEE REVEALED TWO PARALLEL SET OF ACCOUNT BOOKS. AS PER THE ASSESSING OFFICER, ON THE BASIS OF THE PARALLEL SET OF ACCOUNT BO OKS THE POSITION OF DEBTORS AND CASH IN HAND REVEALED THAT THERE WAS UNACCOUNTED ASSE TS ON COMPARISON WITH THE REGULAR ACCOUNT BOOKS. FOR THE SAID REASON, HE M ADE A CONSOLIDATED ADDITION OF RS 61,52,662/- ON ACCOUNT OF UNACCOUNTED DE BTORS, UNACCOUNTED SALES, UNACCOUNTED ADVANCES AND INFLATED EXPENSES. THE COMM ISSIONER OF INCOME-TAX (APPEALS), ON THE OTHER HAND, FOUND THAT T HE APPROACH OF THE ASSESSING OFFICER TO COMPARE SUNDRY DEBTORS AND CASH AS REF LECTED IN THE SO CALLED PARALLEL ACCOUNT BOOKS WITH THE FIGURES APPEARING IN THE REGULAR ACCOUNT BOOKS WOULD NOT GIVE THE TRUE PICTURE OF UNACCOUNTED ASSE TS. HOWEVER, THE COMMISSIONER OF INCOME-TAX (APPEALS) NOTICED THAT THE A SPECT OF SUPPRESSION OF SALES BY WAY OF UNDER-INVOICING WAS ADMITTED BY THE ASSESSEE. SECONDLY, ACCORDING TO THE COMMISSIONER OF INCOME-TAX (APPEALS), TH E ASPECT OF SUPPRESSION OF EXPENSES WAS ALSO POSSIBLE. FOR BOTH THE ASPE CTS, HE HAS RETAINED AN ADDITION OF RS 10 LAKHS AS UNDISCLOSED INCOME OUT OF WHICH RS 5 LAKHS IS TOWARDS UNDISCLOSED SALES AND THE BALANCE ON ACCOUNT O F SUPPRESSION OF EXPENSES. 14. BEFORE WE PROCEED FURTHER WE FIND IT APPROPRIATE TO BRIEFLY TOUCH UPON THE TYPES OF ACCOUNT BOOKS SEIZED. ONE SET OF ACCOUNT BOOKS WA S THE REGULAR BOOKS OF ACCOUNT FOUND TO HAVE BEEN MAINTAINED BY THE A SSESSEE DURING SEARCH. THE SECOND SET OF ACCOUNT BOOKS FOUND WERE THREE LEDGERS WHICH CONTAINED PARTY-WISE ACCOUNT IN RESPECT OF PARTIES TO WHOM SALES WERE EFFECTED. THE ASSESSEE HAD 3 CATEGORY OF CUSTOMERS. THE FIR ST CATEGORY WAS THOSE TO WHOM ONLY CASH SALES ACROSS THE COUNTER WERE MADE . SUCH SALES WERE RECORDED AS CASH SALES IN THE REGULAR ACCOUNT BOOKS, BUT WERE NOT RECORDED IN THE PARALLEL SET OF LEDGERS SEIZED. THE SE COND CATEGORY OF CUSTOMERS WAS TO WHOM CREDIT SALES WERE MADE; AND SUCH SAL ES WERE RECORDED ONLY IN THE REGULAR ACCOUNT BOOKS AND NOT IN T HE PARALLEL THREE LEDGERS SEIZED. WITHIN THE SECOND CATEGORY OF SALES, I.E . CREDIT SALES, THE ASSESSEE RECORDED SUCH SALES AS CASH SALES IN THE REGULAR ACCOUNT BOOKS, AND IN THE PARALLEL THREE LEDGERS SEIZED THE SAME WERE RECORDED AS CREDIT SALES. THIS CATEGORY OF SALES HAS BEEN DESCRIBED AS CASH BUT CREDIT SALES FOR CONVENIENCE BY THE ASSESSING OFFICER. THEREFORE, IT IS EVID ENT THAT THE SO CALLED PARALLEL BOOKS OF ACCOUNT CONTAINED ONLY THE PART Y-WISE LEDGER ACCOUNTS OF SALES AND THAT TOO, IT DID NOT RECORD ALL THE CATEG ORY OF SALES EFFECTED. IN FACT, THE ASSESSEE RIGHTLY CLARIFIED AND THE SAME HAS BEEN ACCEPTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE SO CALLED PARALLEL LEDGERS SEIZED WERE NOTHING BUT COLLECTION DIARIES. THE SAID PREMISE WHICH STANDS ACCEPTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), IN OUR VIEW, IS FURTHER STRENGTHENED BY THE FACT THAT THE ASSESSING OFFICER IN PARA 4.2 OF THE ASSESSMENT ORDER HAS FOUND THAT THERE ARE NO SALE OR PUR CHASE OMITTED TO BE RECORDED IN THE REGULAR BOOKS OF ACCOUNT, INASMUCH AS THERE WAS NO SUPPRESSION OF THE QUANTITY OF LIQUOR SOLD. IN FACT, TH E ONLY SUPPRESSION ON ACCOUNT OF SALES IS NOTED TO BE ON PRICE DIFFERENCE IN RESP ECT OF CERTAIN PARTIES. THE ASSESSEE EXPLAINED THAT THE DIFFERENCES IN THE BALA NCES OF PARTIES AS PER THE REGULAR ACCOUNT BOOKS AND THE COLLECTION DIARIES W AS ON ACCOUNT OF THE PECULIAR METHOD OF ACCOUNTING FOLLOWED WITH REGARD TO ONE OF THE CATEGORY OF CUSTOMERS ENUMERATED IN THE EARLIER LINES. IN THE CASE O F CREDIT SALES WHERE THE AMOUNTS WERE PAID BY THE CUSTOMERS BY CHEQUE, THE SAM E WERE TREATED AND RECORDED AS CREDIT SALES AS SUCH IN THE REGULAR BOOKS OF ACCOUNT AS WELL AS THE SEIZED COLLECTION DIARIES. HOWEVER, THE PARTI ES WHO PAID IN CASH THOUGH CREDIT SALES WERE MADE TO THEM, SUCH SALES WERE ACCO UNTED FOR IN THE SEIZED COLLECTION DIARIES AS CREDIT SALES, BUT IN THE RE GULAR ACCOUNT BOOKS, THEY WERE SHOWN AS CASH SALES. THE AFORESAID EXPLANATION OF THE ASSESSEE WAS FURTHER PUT TO FACTUAL VERIFICATION BY THE COMMISSIO NER OF INCOME-TAX (APPEALS) WITH THE HELP OF THE ASSESSING OFFICER ON 26.9.2003 IN THE COURSE OF THE APPELLATE PROCEEDINGS. THE ASSESSEE HAD FACTUALLY ASSERTED THAT EVEN WITH REGARD TO THE SALE SHOWN AS CREDIT SALES IN THE SEI ZED COLLECTION DIARIES, BUT ACCOUNTED FOR AS CASH SALES IN REGULAR ACCOUNTS IT WAS CLAIMED THAT THOUGH SUCH AMOUNT OF CASH IMPACTED THE CASH-IN-HAND POSITION A S PER ACCOUNT BOOKS BUT THE CASH WAS ACTUALLY NON-EXISTENT. BEFORE THE COM MISSIONER OF INCOME- TAX (APPEALS), AS IS EVIDENT FROM PARA 5.7 OF HIS ORDER , THE ASSESSEE EXPLAINED THAT EVEN AFTER DISREGARDING SUCH NON-EXISTENT CASH BALAN CE THERE WAS POSITIVE CASH BALANCE AS PER THE BOOKS OF ACCOUNT AND, THEREFORE, IT CANNOT BE SAID THAT THERE WAS AN OCCASION FOR THE ASSESSEE TO INTRODUCE OWN MONE Y WHEN IN FACT THERE WAS NO SUCH REQUIREMENT. THIS FACTUAL APPRECIATION BROUGHT OUT BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS NOT BEEN RE BUTTED BY THE REVENUE BEFORE US AND, THEREFORE, WE ARE INCLINED TO GO ALONG WITH THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT, ESP ECIALLY CONSIDERING THE OBSERVATIONS OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) THAT THE ASSESSING OFFICER WAS PRESENT BEFORE HIM FROM TIME TO TI ME. THEREFORE, UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE METHODOLOGY CARRIED OUT BY THE ASSESSING OFFICER TO DETERMINE UNDISCLOSED INCOME ON ACCOUNT OF SALES, DEBTORS, ETC. WAS NOT REASONABLE AND THE COMMISSIONER OF INCOME-TAX (APPEALS) RIGHTLY DEPARTED FROM THE SAME. IN SO FAR AS THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS CONCERNED, THE SAME IN OUR VIEW IS QUITE JUSTIFIED. THE TWO ASPECTS, NAMELY, EVIDE NCE OF UNDER-INVOICING OF SALES THE SUPPRESSION OF EXPENSES ETC. ARE BASED ON SEIZED MATERIAL AND, THEREFORE, ADDITION ON SUCH COUNTS WAS JUSTIFIABLE. RESULT ANTLY, THE ESTIMATION OF UNDISCLOSED INCOME AT RS 10 LAKHS ON THESE TWO ASPECTS I S HEREBY AFFIRMED. 15. IN THE RESULT, THE GROUNDS OF APPEAL RAISED BY THE REVENUE AS WELL AS THE ASSESSEE IN RELATION TO THE AFORESAID ISSUES ARE DISMISSE D. 16. THE NEXT GROUND OF APPEAL OF THE REVENUE IS IN R EGARD TO THE RELIEF OF RS 8,18,121/- GRANTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) OUT OF ADDITION OF RS 26,67,121/- ON ACCOUNT OF INVESTMENT IN THE CONSTRUCTION AND FURNISHING OF IMMOVABLE PROPERTY. 17. THE FACTS, IN BRIEF, ARE THAT DURING THE COURSE O F SEARCH PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE GROUP WAS OWNING NUMBER OF P ROPERTIES IN THE NAME OF IDANDAS TALREJA, BHARAT TALREJA AND SMT MEER A LKBAI. IN THEIR STATEMENTS, BHARAT TALREJA AND IDANDAS TALREJA ADMITTE D THAT THE SOURCE OF INVESTMENT IN THESE PROPERTIES WAS THE ACCOUNTED AND UN ACCOUNTED INCOME OF M/S TALREJA TRADERS. THE ASSESSING OFFICER HAS MADE DETAILE D DISCUSSION WITH REGARD TO THE PROPERTY FOR WHICH BUNDLE NO. A-33 WAS SEIZED CONSISTING OF VOUCHERS PERTAINING TO THE EXPENSES INCURRED IN THE CONST RUCTION OF THE HOUSE LOCATED AT SURVEY NO. 259A/2A. THOUGH THE TOTAL EXP ENSES INCURRED AS PER THESE VOUCHERS WERE ONLY OF RS.3,86,702/-, AS PER VALUAT ION REPORT SEIZED (PREPARED BY ONE MR. RITESH D. SHAH), THE VALUATION O F THE PROPERTY WAS MADE AT RS.57.8 LAKHS INCLUDING THE VALUE OF THE PLOT AT RS. 10.15 LAKHS AND THE VALUE OF THE FURNITURE AT RS.16.50 LAKHS. DURING THE SEARCH, THE ASSESSEE, AT DIFFERENT STAGES STATED THE COST OF CONSTRUCTION TO BE RS.19 LAKHS OR RS. 28 LAKHS. THE INVESTIGATION WING OF THE INCOME-TAX DEPARTMENT GOT T HE PROPERTY VALUED BY MR. SHIRISH UPARE AND AS PER THIS REPORT DATED 23.04. 2001, THE VALUATION OF THE BUILDING WAS AT RS.32.80 LAKHS AND THE VALUE OF THE FU RNITURE WAS RS.13.54 LAKHS. THEREAFTER, THE ASSESSEE GOT THE VALUATION DONE FR OM SHRI. K. N. BAPAT, WHO DETERMINED THE COST OF CONSTRUCTION AT RS. 22.02 LA KHS. THE PROPERTY WAS ALSO REFERRED FOR VALUATION TO THE DEPARTMENTAL VALU ATION OFFICER (IN SHORT THE DVO) BY THE ASSESSING OFFICER AND AS PER HIS REPORT DATED 28.04.2003, IT WAS VALUED AT RS 40,81,121/- COMPRISING OF THE COST OF CONSTR UCTION AT RS. 34.24 LAKHS AND FURNITURE AT RS. 5.93 LAKHS. THE ASSESSING OFFICER , AFTER DISCUSSING IN DETAIL, HAS HELD AS UNDER: THEREFORE, IT IS APPARENT THAT ASSESSEE DOES NOT H AVE ANY EXPLANATION EXCEPT RS. 8.54 LACS PAID BY CHEQUE FROM THE ACCOUNT OF HARESH TALREJA. THE WITHDRAWALS OF HARESH TALREJA AMOUNTING TO RS. 1.97 LACS, FUNDS GI VEN BY BHARAT TALREJA AMOUNTING TO RS. 1 LAC HAVE ALSO BEEN ATTRIBUTED IN THE CONST RUCTION OF THE HOUSE. LDANDAS TALREJA HAD INVESTED RS. 2 LACS FROM RECEIPTS FROM PATAN SHOP. AS THE ADDITION HAS BEEN MADE ON ACCOUNT OF RECEIPTS FROM PATAN SHOP AN D RECEIPTS OF BHARAT TALREJA. THEREFORE, TO AVOID DOUBLE ADDITION, THE FUNDS OF R S. 2 LACS BY IDANDAS, RS. 1 LAC BY BHARAT AND RS. 1.97 LACS BY HARISH + 8.54 LACS (RS. 13.51 LACS) PAID BY CHEQUE ARE THE ONLY SOURCES WHICH EXPLAIN INVESTMENTS IN THE C ONSTRUCTION OF THE HOUSE. SINCE THE VALUATION OF THE TOTAL PROPERTY IS RS. 40,18,121, T HEREFORE ADDITION OF RS. 26,67,121 IS MADE ON ACCOUNT OF INVESTMENT FROM UNEXPLAINED SOU RCES IN THE CONSTRUCTION OF THE HOUSE. 18. ON THE BASIS OF ABOVE DISCUSSION, THE ASSESSING OFFICER MA DE AN ADDITION OF RS 26,67,121/- ON ACCOUNT OF INVESTMENT FRO M UNEXPLAINED SOURCES IN THE CONSTRUCTION OF THE STATED HOUSE. 19. IN APPEAL, BESIDES MAKING OTHER SUBMISSIONS, THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SMT AMIYA BALA PAUL V. CIT 130 TAXMAN 511 WHEREIN IT HAS BEEN HAS HELD TH AT THE ASSESSING OFFICER CANNOT MAKE A REFERENCE UNDER SECTION 55A OF TH E ACT TO DVO FOR VALUATION, AS HE IS NOT SO EMPOWERED EITHER UNDER SECTI ON 134(1) OR UNDER SEC. 133(6) OR UNDER SECTION 131 OF THE ACT. IN VIEW OF THE AFORESAID, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE REF ERENCE TO DVO WAS NOT VALID, BUT THE VALUATION DONE BY THE REGISTERED VALUER AT THE TIME OF SEARCH WAS RELEVANT. THE COMMISSIONER OF INCOME-TAX (APPEALS) T HEN PROCEEDED TO CONSIDER THE REASONABLE ESTIMATE IN THE LIGHT OF INFORM ATION AVAILABLE ON RECORD REGARDING THE INVESTMENT IN THE HOUSE PROPERTY AND T HE SOURCES FOR EXPLAINING THE SAME. HE FOUND AS A MATTER OF FACT THAT THE ASSESSE E HAD ADMITTED A FIGURE OF RS.28 LAKHS DURING THE STATEMENT ON OATH UNDER SECTION 132(4) OF THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO NOTICED TH AT SHRI. RITESH D. SHAH IN HIS VALUATION REPORT, WHICH WAS FOUND AND SEIZE D AT THE TIME OF SEARCH, HAD TAKEN THE VALUATION OF THE CONSTRUCTION OF THE BUIL DING AT RS.31.20 LAKHS, WHICH WAS MORE OR LESS NEARER TO THE VALUATION MADE BY SHRI SHIRISH UPARE AT RS.32.80 LAKHS. THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCORDINGLY ESTIMATED THE COST OF CONSTRUCTION AT RS 30,00,000/- AND AFTER GIVING THE BENEFIT OF THE INVESTMENT GIVEN BY THE ASSESSING OFFICE R AT RS 13,51,000/-, DIRECTED THE BALANCE TO BE ADDED AS UNDISCLOSED INVESTMEN T IN THE CONSTRUCTION OF THE HOUSE. AS REGARDS THE FURNITURE, THE COMMISSIONER OF INCOME-TAX (APPEALS) DIRECTED FURTHER ADDITION OF RS 2, 00,000/-. HE THUS ESTIMATED THE UNEXPLAINED INVESTMENT IN THE COST OF CONST RUCTION OF THE HOUSE AND THE FURNITURE AT RS.18,49,000/- AND GRANTED A R ELIEF OF RS.8,18,121/-. REVENUE IS IN APPEAL AGAINST THE GRANTING OF RELIEF T O THE EXTENT OF 8,18,121/-, WHEREAS ASSESSEE IS IN APPEAL BY WAY OF GROUND NOS (3) & ( 4) AGAINST SUSTENANCE OF ADDITION OF RS 18,49,000/-. 20. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTAT IVE ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN GRANTING RELIEF OF RS 8,18,121/- BY PLACING RELIANCE ON THE ORDER OF THE ASS ESSING OFFICER. ON THE CONTRARY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) SHOULD HAVE DELETE D THE ENTIRE ADDITION AND PRAYED THAT THE ADDITION MADE ON THIS ACCOUNT BE DELETED IN FULL. 21. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ON THESE CROSS-GROUNDS, THE SUBSTANTIVE DISPUTE IS WITH REGARD TO THE QUANTUM OF A DDITION TO BE MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTRUCTION OF HOU SE AT 259/2A, MALKAPUR, TAL. KARAD. THE ASSESSING OFFICER HAS MADE AN A DDITION OF RS 26,67,121/- BASED ON THE VALUATION OF THE PROPERTY M ADE BY THE DVO AT RS 40,18,121/-. AS PER THE ASSESSING OFFICER, AGAINST THE STA TED VALUE OF INVESTMENT MADE, THE EXPLAINED SOURCES ARE TO THE EXTE NT OF RS 13,51,000 AND THEREFORE, THE ADDITION OF RS 26,67,121/- AS UNEXPL AINED INVESTMENT IN THE CONSTRUCTION OF THE HOUSE. THE COMMISSIONER OF INCOME-TAX (APPEALS) NOTICED THAT AT VARIOUS STAGES, VARIED VALUATIONS OF THE PROPE RTY WERE MADE INCLUDING THE VALUATION REPORT OF A REGISTERED VALUER FOUND AT THE TIME OF SEARCH AS ALSO THE REPORT OF THE VALUER APPOINTED BY THE INVESTIGAT ION WING, ADMISSION OF THE ASSESSEE DURING STATEMENT UNDER SECTION 132(4), ETC. HE HA S ESTIMATED THE COST OF CONSTRUCTION AT RS 30 LAKHS AND AFTER GIVING THE B ENEFIT OF THE EXPLAINED SOURCES ADMITTED BY THE ASSESSING OFFICER AT RS 13.51 LAKHS TH E BALANCE HAS BEEN ADDED AS UNDISCLOSED INVESTMENT IN THE CONSTRUCTION O F THE HOUSE. THE UNEXPLAINED INVESTMENT IN THE FURNITURE HAS BEEN SEPA RATELY ADDED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AT RS 2,00,000/- 22. IN THIS REGARD, WE FIND THAT AT THE TIME OF SEAR CH VALUATION REPORT FROM A REGISTERED VALUER WAS FOUND WHEREIN THE PROPERTY WAS VALUED AT RS 57.80 LAKHS, INCLUSIVE OF VALUE OF PLOT AT RS 10.15 LAKHS AND VA LUE OF FURNITURE AT RS 16.50 LAKHS. THE INVESTIGATION WING OBTAINED A VALUAT ION REPORT DATED 23.4.2001 WHEREIN THE VALUE OF BUILDING WAS STATED AT RS 32.80 LAKHS AND THAT OF FURNITURE AT 13.54 LAKHS. ANOTHER VALUATION WAS GOT DONE BY THE ASSESSEE WHEREIN THE COST OF CONSTRUCTION WAS STATED AT RS 22.02 LAK HS. THE DVO, ON A REFERENCE BY THE ASSESSING OFFICER, VALUED THE COST OF CONS TRUCTION AT RS 34.24 LAKHS AND THAT OF FURNITURE AT RS 5.93 LAKHS. ON TOP OF ALL THESE, DURING THE COURSE OF HIS EXAMINATION AT THE TIME OF SEARCH, THE ASSE SSEE STATED THE COST OF CONSTRUCTION AT RS 28 LAKHS ALSO. IN THIS BACKGROUND, IN O UR VIEW, NOTWITHSTANDING THAT THE COMMISSIONER OF INCOME-TAX (AP PEALS) HAS DISREGARDED THE REFERENCE TO THE DVO, IN OUR VIEW, TH E ASSESSING OFFICER WAS NOT CORRECT IN MERELY ADOPTING THE VALUATION CONTAINED IN THE REPORT OF THE DVO. ADOPTING A HOLISTIC VIEW BECAUSE AN EXERCISE OF VAL UATION PRIMARILY INVOLVES ESTIMATION, WE FIND THAT THE DETERMINATION O F ESTIMATED COST OF CONSTRUCTION BY THE COMMISSIONER OF INCOME-TAX (APPEALS) I S MORE APPROPRIATE AND REASONABLE. IN THIS MANNER, THE COST O F CONSTRUCTION ESTIMATED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AT RS 30 LAKH S IS UPHELD AND THE ADDITION RETAINED ON THIS COUNT BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO DESERVES TO BE SUSTAINED. WE HOLD SO. EVEN WITH REG ARD TO THE UNEXPLAINED INVESTMENT TOWARDS THE COST OF FURNITURE, T HE ADDITION OF RS 2 LAKHS RETAINED BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) IS HEREBY AFFIRMED. IN THIS VIEW OF THE MATTER, REVENUE AS WEL L AS THE ASSESSEE FAIL IN THEIR RESPECTIVE GROUNDS. 23. IN THE RESULT, REVENUES APPEAL, VIDE ITA NO 60/ PN/04 IS DISMISSED. 24. WE SHALL NOW TAKE UP ASSESSEES APPEAL, VIDE ITA NO 1392/PN/03. GROUND NO. 1 OF APPEAL READS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE BLOCK ASSESSMENT YEAR 2001-02 HAD JUST EXPIRED WHEN SEARCH OPERATION S WERE UNDERTAKEN ON 18.4.2001 AND SINCE THE DATE OF FILING OF THE RETURN U/S 139( 1) HAD NOT THEN ARRIVED THE PROVISIONS OF S. 158BA(3) AND S.158BB(1)(D) BECAME APPLICABLE AND, THEREFORE, THE INCOME COMPRISED IN THE REGULAR BOOKS OF ACCOUNTS MAINTAIN ED ON THE BASIS OF PRIMARY RECORDS AVAILABLE AND AUDITED THE SAID INCOME SHOUL D HAVE BEEN EXCLUDED FROM THE BLOCK ASSESSMENT. 25. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND AND, THEREFORE, THE SAME STANDS DISMISSED AS NOT PRESSED. 26. IN GROUND NO. 2, IT IS CONTENDED THAT THE COMMISSI ONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS 10,00,000/- OUT OF TOTAL ADDITION OF RS 61,62,552/- MADE ON ACCOUNT OF UN ACCOUNTED SUNDRY DEBTORS. THIS GROUND IS CONNECTED WITH GROUND NO. 1 OF REVENUES CROSS- APPEAL, VIDE ITA NO 60/PN/04. FOR DETAILED REASONS GI VEN IN THE EARLIER PARAGRAPHS OF THIS ORDER, WE HAVE AFFIRMED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 27. GROUND NOS (3) AND (4) RELATE TO THE ADDITION SUS TAINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON ACCOUNT OF UNEXP LAINED INVESTMENT IN IMMOVABLE PROPERTY/FURNITURE. THIS ISSUE IS CONNECT ED WITH GROUND NO. 2 OF REVENUES CROSS-APPEAL (SUPRA). FOR DETAILED REASONS GIVE N IN THE EARLIER PARAGRAPHS OF THIS ORDER, WE HAVE AFFIRMED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). ACCORDINGLY, THESE GROUNDS OF APPEA L OF THE ASSESSEE ARE DISMISSED. 28. GROUND NO. 5 IS WITH REGARD TO THE ADDITION OF RS 42,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INVESTMENT IN IMMOVABLE PRO PERTY AT NANDGAON IN THE NAME OF SHRI BHARAT TALREJA. DURING THE COURSE OF SEARCH A DOCUMENT WAS FOUND WHICH WAS THE ORIGINAL COPY OF A PURCH ASE DEED OF A PROPERTY AT NO 332A NANDGAON DATED 4.4.1998, WHICH W AS PURCHASED FROM SHRI DINKAR D PATIL FOR RS 42,000/- IN THE NAME OF S HRI BHARAT I TALREJA. IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, ASSE SSEE ADMITTED THAT THE INVESTMENT IN PURCHASE OF THE SAID PROPERTY WAS MAD E BY HIM IN THE NAME OF SHRI BHARAT TALREJA. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS 42,000/- IN THE HANDS OF THE ASSESSEE. IN APPEAL, THE C OMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ADDITION BY HOLDING AS FOLLOWS: 8. IN SO FAR AS GROUND NO.14 IS CONCERNED, THE INV ESTMENT IN IMMOVABLE PROPERTY AT NANDGAON IN THE NAME OF SHRI.BHARAT TALREJA HAS BEEN ADMITTED BY THE APPELLANT TO BE HIS OWN IN THE STATEMENT U/S.132(4). NO REASON W HATSOEVER HAS BEEN GIVEN FOR CLAIMING A DIFFERENT POSITION AT THIS STAGE. THE AS SESSING OFFICER HAS BROUGHT OUT THE FACTS IN PARA 6.1.1 OF THE ASSESSMENT ORDER AND THE SAME IS UPHELD. IT MAY OF COURSE BE STATED THAT IT WILL NOT BE CORRECT TO TREAT MR. BHARAT TALREJA AS BENAMIDAR' OF THE APPELLANT, BUT THE TRUE STATE OF AFFAIRS IS THAT TH E PROPERTY HAS BEEN PURCHASED IN THE NAME OF THE BROTHER BY THE FUNDS OF THE APPELLANT. AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 29. BEFORE US, LEARNED COUNSEL FOR ASSESSEE SUBMITTED THA T THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADDITION IN TH E HANDS OF THE ASSESSEE. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESEN TATIVE, APPEARING FOR THE REVENUE, POINTED OUT THAT AS A RESULT OF ASSESSEES O WN ADMISSION IN THE STATEMENT RECORDED UNDER SECTION 132(4) THERE WAS NO J USTIFICATION FOR THE ASSESSEE TO ASSAIL THE IMPUGNED ADDITION. 30. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. AD MITTEDLY, BOTH THE AUTHORITIES BELOW HAVE PROCEEDED TO MAKE THE ADDIT ION ON THE BASIS OF ASSESSEES STATEMENT UNDER SECTION 132(4) OF THE ACT TO THE EFFECT THAT THE INVESTMENT IN PURCHASE OF IMPUGNED PROPERTY WAS MADE B Y HIM, ALBEIT IN THE NAME OF SHRI BHARAT TALREJA. EVEN BEFORE US, THERE IS NOTHING TO CONTROVERT THE AFORESAID POSITION AND THEREFORE, IT WAS IMPERATIVE FO R THE ASSESSEE TO EXPLAIN THE SOURCE OF FUNDS FOR SUCH AN INVESTMENT. IN THE ABSENCE OF ANY EXPLANATION FORTHCOMING FROM THE ASSESSEE, IN OUR VIEW, THE COMMISSION ER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN RETAINING THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SAME IS HEREBY AFFIRMED AND ACCORDINGLY GROUN D RAISED BY THE ASSESSEE IS DISMISSED. 31. IN GROUND NO. 6, THE GRIEVANCE OF THE ASSESSEE IS THA T THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS 1,63,000/- BEING INVESTMENT IN THE PUR CHASE OF TATA SUMO IN THE NAME OF SHRI BHARAT TALREJA. DURING THE COURSE OF SEARCH PROCEEDINGS, IT WAS FOUND THAT ASSESSEE-GROUP OWNED A TATA SUMO BEARING JNO MH-11- 7898. ON FURTHER ENQUIRIES, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE INVESTMENT IN PURCHASE OF THE SAID VEHICLE BY WAY OF MA RGIN MONEY AND CASH REPAYMENT OF LOANS WAS MADE BY THE ASSESSEE OUT OF UNDISCLO SED INCOME. THE ASSESSING OFFICER ALSO REFERRED TO THE STATEMENT OF THE ASSESSEE UNDER SECTION 132(4) OF THE ACT IN THIS REGARD. ON THESE FACTS, THE ASSESSING OFFICER MADE ADDITION OF RS 1,63,000/- IN THE HANDS OF THE ASS ESSEE BEING UNDISCLOSED INCOME ON ACCOUNT OF INVESTMENT IN PURCHASE OF TATA SUMO CAR BY WAY OF MARGIN MONEY AND/OR CASH REPAYMENT OF LOANS. IN APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS) JUSTIFIED THE ADDI TION BY HOLDING AS FOLLOWS: 9. THE SAME IS THE POSITION IN SO FAR AS GROUND NO . 15 IS CONCERNED. THE ASSESSING OFFICER HAS REFERRED TO THE STATEMENT U/S .132(4) AND ON THE BASIS OF ADMISSION OF THE APPELLANT THAT THE INVESTMENT IN T HE MARGIN MONEY IN THE PURCHASE OF TATA SUMO CAR IN THE NAME OF SHRI.BHARAT TALREJA WA S MADE BY HIM SO ALSO FOR THE CASH REPAYMENT AND AS SUCH THE ADDITION HAS TO BE M ADE IN THE HANDS OF THE APPELLANT. THIS ALSO GETS PROVED BY THE STATEMENT O N OATH OF SHRI. BHARAT TALREJA AT THE TIME OF SURVEY U/S.133 A OF THE I.T. ACT, 1961 PRIOR TO THE SEARCH OPERATIONS. GROUND NO.14 AND 15 ARE ACCORDINGLY DECIDED AGAINST THE APPELLANT. BEING AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE US . 32. BEFORE US, LEARNED COUNSEL FOR ASSESSEE SUBMITTED THA T THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADDITION OF RS 1,63,000/- BEING INVESTMENT IN THE PURCHASE OF TATA SUMO IN THE HANDS OF THE ASSESSEE. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT AS A RESULT OF ASSESSEES OWN ADMISSION IN THE STATEMENT RECORDE D UNDER SECTION 132(4) OF THE ACT THERE WAS NO JUSTIFICATION FOR THE ASSE SSEE TO ASSAIL THE IMPUGNED ADDITION. 33. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. AD MITTEDLY, BOTH THE AUTHORITIES BELOW HAVE PROCEEDED TO MAKE THE ADDIT ION ON THE BASIS OF ASSESSEES STATEMENT UNDER SECTION 132(4) OF THE ACT TO THE EFFECT THAT THE INVESTMENT IN PURCHASE OF THE TATA SUMO WAS MADE BY HI M, ALBEIT IN THE NAME OF SHRI BHARAT TALREJA. EVEN BEFORE US, THERE IS NOT HING TO CONTROVERT THE AFORESAID POSITION AND THEREFORE, IT WAS IMPERATIVE FO R THE ASSESSEE TO EXPLAIN THE SOURCE OF FUNDS FOR SUCH AN INVESTMENT. IN THE ABSENCE OF ANY EXPLANATION FORTHCOMING FROM THE ASSESSEE, IN OUR VIEW, THE COMMISSION ER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN RETAINING THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SAME IS HEREBY AFFIRMED AND ACCORDINGLY GROUN D RAISED BY THE ASSESSEE IS DISMISSED. 34. GROUND NO. 7 IS WITH REGARD TO LEVY OF INTEREST UNDER SECTION 158BFA(1) OF THE ACT. IN THIS CASE, NOTICE UNDER SECTION 158BC OF THE ACT WAS SERVED ON THE APPELLANT ON 07.12.2001 REQUIRING HIM TO FILE T HE BLOCK RETURN WITHIN 20 DAYS. THE ASSESSEE FILED THE BLOCK RETURN ON 18.05.2002. T HE ASSESSING OFFICER HELD THE RETURN TO HAVE BEEN FILED BEYOND T HE DUE DATE AND CHARGED INTEREST UNDER SECTION 158BFA(1) OF THE ACT. IN APPEAL , THE COMMISSIONER OF INCOME-TAX (APPEALS) UPHELD THE CHARGING OF INTEREST U NDER SECTION 158BFA(1) OF THE ACT. AGAINST THE SAME, ASSESSEE IS IN FURTHER AP PEAL BEFORE US. 35. BEFORE US, APART FROM STATING THAT THE LEVY OF INT EREST UNDER SECTION 158BFA(1) OF THE ACT IS NOT JUSTIFIED, APPELLANT ASSESSEE HAS NOT ADVANCED ANY SPECIFIC ARGUMENTS. UNDER THESE CIRCUMSTANCES, CONSIDERING THE FACTUAL POSITION BROUGHT OUT BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA 11 OF HIS ORDER, WE HOLD THAT THE ASSESSING OFFICER WAS JUST IFIED IN CHARGING INTEREST UNDER SECTION 158BFA(1) OF THE ACT. WE ACCORDI NGLY DISMISS THIS GROUND. 36. GROUND NO. 8 IS WITH REGARD TO CHARGING OF SUR-CHA RGE IN BLOCK ASSESSMENT. WE FIND THAT THIS ISSUE IS LIABLE TO BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V SURESH N GUPTA 297 ITR 322 (SC). RESPECTFULLY FO LLOWING THE AFORESAID JUDGMENT OF THE HONBLE SUPREME COURT, WE AFFIRM TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT. THE A SSESSEE FAILS ON THIS GROUND OF APPEAL. 37. RESULTANTLY, BOTH THE APPEALS OF THE REVENUE AS W ELL AS ASSESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF JANUARY, 2012. SD/- SD/- (I C SUDHIR) (G.S . PANNU) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE, DATED 30 TH JANUARY, 2012 B COPY TO:- 1) SHRI HARESH I TALREJA, KARAD, SATARA 2) DCIT CEN. CIR. 2(1), PUNE 3) THE CIT (A)-I PUNE 4 THE CIT (CEN) PUNE 5) DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE TRUE COPY BY ORDER SR. PS, ITAT PUNE