SHRI RANJEET SINGH YADAV, Jaipur V. ACIT, Jaipur

ITA 1418/JPR/2010

• Counselvise Citation: 141823114 RSA 2010
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 15-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A K BHANDARI
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Search and seizure; Document seized; Opportunity of cross examination; Source of fund; Deemed to accrue or arise in india; Cost of acquisition; Onus to prove; Documents seized
• Section: 143(3); 153A; 131; 69; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NOS. 1418, 1419 1420 1421 & 1422/JP/2010 ASSESSMENT YEARS: 2004-05, 2005-06, 2006-07, 200 7-08 & 2008-09 PAN: AAOPY 4757 G SHRI RANJEET SINGH YADAV VS. THE ACIT 146, AVADHPURI, KALWAR ROAD CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO. 1426, 1427 & 1456/ JP/2010 ASSESSMENT YEARS: 2005-06 2006-07 & 2007-08 PAN: AAOPY 4757 G THE ACIT VS. SHRI RANJEET SINGH YADAV CENTRAL CIRCLE- 1 146, AVADHPURI, KALWAR ROAD JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY: SHRI A.K. BHANDARI DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 5-10-2011 DATE OF PRONOUNCEMENT: 16-11-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED THE APPEALS AGAINST RESPE CTIVE ORDERS OF THE LD. CIT(A)- CENTRAL, JAIPUR FOR THE ASSESSMENT YEARS 2004-05 TO 2008-09 WHILE THE REVENUE HAS FILED THE APPEALS FOR THE ASSESSMENT YEARS 2005-06 2006 -07 & 2007-08. 2 2.0 FIRST OF ALL, WE WILL TAKE UP APPEAL FOR THE AS SESSMENT YEAR 2004-05. WE WILL TAKE UP GROUND OF APPEAL NO. 1. AFTER CONSIDERING OTHER GROUNDS OF APPEAL BECAUSE DISPOSAL OF OTHER GROUNDS OF APPEAL WILL HELP US TO DISPOSE OFF THE FIRST GROUND OF APPEAL. 2.1 THE SECOND AND THIRD GROUNDS OF APPEAL ARE AS U NDER:- 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 40,54,325/- UNDER SECTION 69 AS ALLEGED UNEXPLAINED INVESTMENT. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETI NG THE SAID ADDITION OF RS. 40,54,325/- 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT (A) HAS ERRED IN ENHANCING THE ASSESSMENT BY WA Y OF A FURTHER ADDITION OF RS.60,75,000/- UNDER SECTION 69 AS ALLE GED UNEXPLAINED INVESTMENT. THE ACTION OF THE LD. CIT (A) IS ILLEGA L, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE ENHANCEMENT OF RS.60,75,000 /-. 2.2 BRIEF FACTS OF THE CASE AS CONTAINED IN THE ORD ER OF THE LD CIT(A) ARE AS UNDER:- THE ASSESSEE IS A LAND DEVELOPER AND IN CONSEQUE NT TO SEARCH AND SEIZURE OPERATION CARRIED OUT ON 16.11.07, NOTICE U /S 153A WAS ISSUED IN RESPONSE TO WHICH RETURN DECLARING INCOME OF RS. 4 ,88,999/- WAS FILED. DURING THE COURSE OF SEARCH OPERATION VARIOUS INCRI MINATING DOCUMENTS REGARDING INVESTMENT IN IMMOVABLE PROPERTY BY WAY O F SALE-PURCHASE AGREEMENT AND CONSTRUCTION ACTIVITY WERE FOUND AND SEIZED. A.O. NOTICED THAT FOR PURCHASE OF LAND FOR DIFFERENT SCHEMES, TH E APPELLANT USED TO PREPARE TWO TYPES OF AGREEMENT. FIRST AGREEMENT WAS THE REAL AGREEMENT MADE IN THE NAME OF SH. RANJEET YADAV, THE APPELLAN T HIMSELF IN WHICH THE ACTUAL AMOUNT OF SALE AND PURCHASE CONSIDERATION WA S MENTIONED AND THE DETAILS OF AMOUNT PAID WERE ALSO WRITTEN IN AGREEME NT. AFTER LAPSE OF CERTAIN 3 TIME MAY BE FEW MONTHS OR SOMETIMES MORE THAN A YEA R, SECOND AGREEMENT WAS USED TO BE PREPARED IN WHICH THE NAME OF THE PU RCHASER USED TO BE HOUSING SOCIETY INSTEAD OF SH. RANJEET YADAV, THE A PPELLANT AND THE SALE CONSIDERATION IN THIS AGREEMENT WAS SUPPRESSED. THE N THE HOUSING SOCIETY USED TO ALLOT PLOTS TO THE VARIOUS MEMBERS OF THE S OCIETY. 2.3 DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE PURCHASED LAND AND SUBSEQUENTLY ON THIS LA ND, PROJECT NAMED AS GOVIND VATIKA PROJECT WAS IMPLEMENTED THROUGH THE HOUSING SOCIET Y. THE DETAILS ARE AS UNDER:- ANNEX URE DETAILS OF PROPERTY SALE CONSIDERATION IN THE NAME OF SOCIETY (RS. PER BIGHA) AS PER SECOND AGREEMENT ACTUAL SALE CONSIDERATION (RS. PER BIGHA) AS PER THE FIRST AGREEMENT F.Y. TOTAL SALE CONSIDERATI ON PAID TO LAND OWNERS A-2 6 BIGHA 15 BISWA LAND VILLAGE HATHOJ 1.75 LACS PER BIGHA (PAGE NO. 8-14) 9.00 LACS PER BIGHA (PAGE NO. 152-154) 2003-04 2004-05 60.75 LACS A-7 6 BIGHA 6.5 BISWA VILLAGE HATHOJ 1.75 LACS PER BIGHA (PAGE NO. 1-3) 6.41 LACS PER BIGHA (PAGE NO. 58) 2003-04 40.54 LACS 2.4 THE AO NOTICED FROM ANNEXURE A-7 PAGE 58 OF TH E DOCUMENT SEIZED THAT ASSESSEE HAS PAID RS. 40,34,325/- FOR GOVIND VATIKA PROJECT. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF FUND OF RS. 40,54,325/-. BEFORE THE AO, T HE ASSESSEE GAVE THE FOLLOWING EXPLANATION. 'THE EVIDENCE IN THIS REGARD ARE NOT PRESENTLY TRAC EABLE. ON OCCASIONS I ALSO RECEIVE MONEY FOR BULK BO OKING OF PLOTS FROM THE PERSONS WHO ARE IN THIS BUSINESS. THE AMOUNT SO R ECEIVED IS USED BY ME FOR MAKING SUBSEQUENT PAYMENTS TO THE FARMERS (SELL ERS OF LAND) AS PROVIDED IN THE INITIAL AGREEMENT WITH THEM FOR MY BUYING THE LAND. THUS I AM ABLE TO DO THE BUSINESS WITHOUT INVESTING ANY CA PITAL OF MINE'. 2.5 THE ABOVE EXPLANATION WAS NOT FOUND JUSTIFIABLE BY THE AO AFTER OBSERVING AS UNDER:- 4 ASSESSEE HAS NOT ABLE TO GIVE EVIDENCE / RECEIPT FOR ADVANCE BOOKING OF PLOTS IN GOVIND VATIKA PROJE CT. THUS ASSESSEE HAS GIVEN SKETCHY CASH FLOW FOR SUMMARY WITHOUT ANY EVIDENCE / SUPPORT DOCUMENTS THAT ADVANCE HAVE BEEN RECEIVED O F BOOKING OF PLOTS. NO CONFIRMATION HAS BEEN FILED FROM PERSONS WHO HAVE BOOKED PLOTS IN THIS SCHEME. THUS EXPLANATION OFFER ED IS UNACCEPTABLE AND WITHOUT ANY BASIS. THUS I HAVE NO OTHER OPTION BUT TO TREAT THE AMOUNT OF RS. 40,54,325/- AS UNEXPLAIN ED CASH CREDIT US/ 68 FOR ASSESSEE HAS FAILED TO EXPLAINED OF SOURCES OF FUNDS. THUS ADDITION OF RS. 40,54,325/- IS BEING MADE AS UNEXPL AINED CASH CREDITS TO THE TOTAL INCOME OF THE ASSESSEE. 2.6 BEFORE THE LD CIT(A), THE ASSESSEE FIRST TRIED TO EXPLAIN THE MODUS OPERANDI OF THE BUSINESS. THE ASSESSEE ENTERS INTO AGREEMENT TO PUR CHASE THE LAND FROM THE FARMERS AND HE PAYS CERTAIN AMOUNT. THE ASSESSEE THEN STARTS MARKI NG PLOTS AND STARTS RECEIVING THE ADVANCE. MONEY SO RECEIVED IN ADVANCE IS PAID TO TH E FARMER AND LAND IS FORMALLY TRANSFERRED IN THE NAME OF THE SOCIETY. THE ASSESSE E SUBMITTED THE LIST OF PLOT HOLDERS ALONGWITH THEIR ADDRESSES AND SUBMITTED THAT THE AO COULD HAVE MADE ENQUIRIES FOR VERIFYING THE FACTS. 2.7 THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE LD.AR CONFIRMED THE ADDITION AFTER OBSERVING AS UNDER:- 2.4 I HAVE CONSIDERED THE ARGUMENT OF THE A.R. AN D HAVE PERUSED THE ASSESSMENT ORDER. IT IS ADMITTED FACTS THAT THE 6 BIGHA 6.5 BISWA LAND AT VILLAGE HATHOJ HAS BEEN PURCHASED BY THE APPELLANT VIDE AGREEMENT AND THE APPELLANT HAS PAID RS. 4054325/- IN CASH FOR PURCHA SE OF THE LAND AS PER THE DETAILS MENTIONED ON PAGE 58 OF ANN.A-7, @ RS. 6410 00/- PER BIGHA. NEITHER THE PURCHASE OF THIS LAND NOR THE AMOUNT SO PAID WAS SHOWN IN THE 5 REGULAR BOOKS OF ACCOUNTS BY THE APPELLANT . LATER ON SOURCE OF PAYMENT HAS BEEN TRIED TO EXPLAIN BY GIVING MODUS OPERANDI OF THE BUSINESS. HOWEVER THE MODUS OPERANDI OF THE BUSINESS IS NOT G OING TO HELP THE APPELLANT, UNLESS THE APPELLANT GIVES SPECIFIC DETAILS WITH SPECIFIC NAMES AND ADDRESS AND THE AMOUNT STATED TO BE RECEIVED AL ONGWITH DATE, FROM THE VARIOUS CONTENDED PERSONS. THE APPELLANT HAS SQUARE LY FAILED TO FURNISH THESE DETAILS EITHER BEFORE A.O. OR EVEN BEFORE UND ERSIGNED. THE CLAIM OF THE APPELLANT THAT HE HAS FURNISHED THE NAMES AND A DDRESS OF THE PROSPECTIVE PLOT HOLDERS AND A.O. COULD HAVE MADE VERIFICATION FROM THEM, IS IRRELEVANT AND MISPLACED. IT IS QUITE EVIDENT THAT THE LAND PU RCHASE AS WELL AS PAYMENT MADE BY THE APPELLANT ARE UNACCOUNTED. MOREOVER, IF THE APPELLANT WANTS TO PROVE THE NATURE AND SOURCE OF THIS PAYMENT, ONUS I S ON THE APPELLANT TO FURNISH THE COMPLETE DETAILS OF VARIOUS CONTENDED P AYMENTS SO RECEIVED FROM VARIOUS SPECIFIC PERSONS ALONGWITH DATE AND OT HER DETAILS, WHICH HE HAS FAILED. (THESE CONTENDED RECEIPTS SHOULD PRECED E DATE OF PAYMENT FOR PURCHASE OF THIS LAND). 2.5 THE APPELLANT HAS TRIED TO ARGUE THAT CASH FL OW SUMMARY STATEMENT WAS FURNISHED. HOWEVER, FROM PERUSAL OF C ASH FLOW SUMMARY STATEMENT, IT IS SEEN THAT APPELLANT HAS JUST GIVEN FOLLOWING NARRATION/DETAILS. TO ADVANCE FROM BOOKING OF PLOT UPTO 14.5.03 RS. 7 ,53,000/- TO ADVANCE FROM BOOKING OF PLOT UPTO 5.8.03 RS. 9, 03,000/- ---DO--- UPTO 27.9.03 RS. 6,03,000/- 2.6 ON BEING ASKED BY A.O. TO FURNISH SPECIFIC DE TAILS OF ADVANCES WITH SUPPORTING, THE APPELLANT VIDE LETTER DATED 9.12.09 HAS MENTIONED THAT SUPPORTING DETAILS OF THE ADVANCES A ND THE EVIDENCE FOR THE SAME ARE NOT PRESENTLY TRACEABLE. IT IS MEN TIONED THAT THESE DETAILS WERE ALSO NOT FURNISHED BEFORE UNDERSIGNED, EVEN AF TER LAPSE OF ABOUT 9 MONTHS FROM DATE OF FILING OF APPEAL. 2.7 ANOTHER ARGUMENT TAKEN BY THE APPELLANT THAT TH ERE WAS NO CASH CREDIT IN THE BOOKS OF ACCOUNTS AND ACCORDINGL Y ADDITION SO MADE BY 6 THE A.O. U/S 68 DESERVES TO BE DELETED, HAS BEEN GO NE THROUGH BY THE UNDERSIGNED. CONSIDERING THE FACTS AND THE LEGAL PO SITION ON THE ISSUE, THE UNDERSIGNED VIDE ORDER-SHEET ENTRY DATED 16.8.10 HA S ASKED THE A.R. TO SHOW CAUSE AS TO WHY THIS ADDITION SO MADE BY THE A .O. BE CHANGED TO BE MADE U/S 69 OF THE INCOME TAX ACT, 1961 AS UNEXPLAI NED INVESTMENT IN PURCHASE OF LAND, AS THIS PURCHASE OF LAND WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND OPPORTUNITY WAS GIVEN TO PUT UP HIS CAS E. THE A.R. OF THE APPELLANT VIDE HIS WRITTEN SUBMISSION DATED 11.10.1 0 HAS REPLIED THAT PROVISIONS OF SECTION 69 ARE ALSO NOT APPLICABLE BE CAUSE NATURE AND SOURCE OF THE INVESTMENT IS FULLY EXPLAINED WITHOUT GIVING ANY DETAILS AS TO HOW THE NATURE AND SOURCE OF THE INVESTMENT IS EXPLAINED. A S ALREADY DISCUSSED, HE HAS COMPLETELY FAILED TO EXPLAIN THE SOURCE OF INVE STMENT. ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES AND THE LEGAL P OSITION ON THE ISSUE UNDER CONSIDERATION, THE AMOUNT OF RS. 40,54,325/- PAID FOR PURCHASE OF LAND, WHICH IS UNACCOUNTED, IS HELD TO BE UNEXPLAIN ED INVESTMENT U/S 69 OF I.T. ACT, 1961 AND ADDED TO THE TOTAL INCOME OF THE APPELLANT. THUS ADDITION OF RS. 40,54,325/- IS UPHELD AS ABOVE. 2.8 THE ASSESSEE HAS ALSO PURCHASED LAND IN ADDITIO N TO LAND OF RS. 40,54,325/- AND THE SAME WAS NOTICED BY THE AO BUT THE SAME WAS NOT CON SIDERED FOR MAKING ADDITION. IT IS NOT DISPUTED THAT THE LAND SO PURCHASED IS PART OF GOVI ND VATIKA PROJECT. THE LD CIT(A) ISSUED NOTICE FOR ENHANCEMENT. THE ASSESSEE FILED SUBMISSI ONS AND THESE HAVE BEEN SUMMARIZED BY THE LD CIT(A) IN PARA 3.2 OF HIS ORDER AS UNDER: - 3.2 THE A.R. OF THE APPELLANT FILED WRITTEN SUBMI SSION DATED 28.10.2010 IN RESPONSE TO SHOW CAUSE DATED 20 .10.10. IN THE WRITTEN SUBMISSION, IT WAS SUBMITTED THAT THE AGREE MENT AT PAGE NO. 152 TO 154 OF ANN. A-2 IS UNSIGNED AND HENCE NO EVI DENTIARY VALUE. ALSO THE INVESTMENT FOR ACQUIRING LAND FOR GOVIND V ATIKA SCHEME 7 INCLUDE PURCHASE COST OF THE LAND WHICH HAS BEEN SH OWN WHILE ESTIMATING PROFIT FROM THE SAID SCHEME AND ACCO RDINGLY, NO FURTHER ADDITION IS JUSTIFIED. IT WAS AGAIN SUBMITT ED THAT CONSIDERING THE MODUS OPERANDI AND OTHER SUBMISSION AS MADE EAR LIER, NO FURTHER ENHANCEMENT MAY BE MADE. 2.9 THE LD CIT(A), AFTER CONSIDERING THE SUBMISSION S VIDE PARA 3.3 OF HIS ORDER, HELD AS UNDER AND MADE AN ENHANCEMENT OF RS. 60.75 LACS. 3.3 I HAVE ALREADY CONSIDERED AND DISCUSSED THE A RGUMENT OF THE APPELLANT IN THE EARLIER PARAGRAPH WHILE DISCUSSING ADDITION OF RS. 40.54 LAKHS AND THESE ARGUMENTS WERE FOUND TO BE LACKING ANY MERIT. THE OTHER ARGUMENT REGARDING AGREEMENT BEING UNSIGNED IS ALSO DEVOID OF ANY MERIT, IN VIEW OF THE DISCUSSION ALREADY MADE IN EARLIER P ARAGRAPHS, BRIEFLY REITERATED THAT (I) TOTAL LAND BEING 13 BIGHA 1.5 B ISWA FOR THE PROJECT WILL CONSTITUTE ONLY WHEN THIS LAND OF 6 BIGHA 15 BISWA IS ALSO CONSIDERED, (II) TOTAL ADMITTED AMOUNT OF INVESTMENT SHOWN IS RS. 10 4.82 LAKHS, WHICH WILL CONSTITUTE NOT ONLY LAND PURCHASED FOR RS. 40.75 LA KHS BUT ALSO THIS LAND PURCHASE FOR RS. 60.75 LAKHS. HENCE CONTENTS OF AGR EEMENT ARE HAVING EVIDENTIARY VALUE, AS THESE ARE WELL SUPPORTED BY C ORROBORATIVE EVIDENCES. AS BOTH THE LANDS HAVE BEEN PURCHASED FOR GOVIND VA TIKA PROJECT, WHICH HAS BEEN DEVELOPED IN A.Y. 2004-5, AS PER THE APPEL LANT; HENCE PURCHASE OF THIS LAND OF 6 BIGHA 15 BISWA AND CONSEQUENT PAYMEN T THEREOF, HAS BEEN OBVIOUSLY MADE IN PERIOD RELEVANT TO A.Y. 2004-05. AS THE FACTS AND CIRCUMSTANCES FOR THIS ISSUE OF ENHANCEMENT OF RS. 60.75 LAKHS ARE SAME, AS DISCUSSED IN THE EARLIER PARAGRAPHS REGARDING PURCH ASE OF LAND FOR RS.40.54 LAKHS, IT IS HELD THAT INVESTMENT OF RS.60.75 LAKHS IN PURCHASE OF 6 BIGHA 15 BISWA LAND AT VILLAGE HATHOJ FOR GOVIND VATIKA PROJ ECT DEVELOPED ON 13 BIGHA 1.5 BISWA LAND IS UNEXPLAINED AND ACCORDINGLY IS HELD TO BE ADDED U/S 69 OF I.T.ACT. THIS WILL LEAD TO ENHANCEMENT BY RS. 60.75 LAKHS. 8 2.10 BEFORE US, THE LD.AR HAS EXPLAINED THE MODUS O PERANDI OF THE BUSINESS AND SUCH MODUS OPERANDI WILL BE APPLICABLE FOR ALL THE PROJ ECTS. THE SUBMISSIONS ARE AS UNDER:- 1.5 THE ASSESSEE APPELLANT ELABORATELY EXPLAINED MODUS OPERANDI AS WELL AS HIS BUSINESS MODEL TO THE LD AO AS WELL AS CIT(A). THE LD. AO NOWHERE IN HIS ASSESSMENT ORDER HAS REJECTED THE BU SINESS MODEL NOR HAS HE FOUND THE BUSINESS MODEL EXPLAINED TO BE FALSE. THE LD CIT(A) HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE LD AO IN THIS REGARD. THE SAID MODUS OPERANDI IS AS UNDER:- THE ASSESSEE APPELLANT STARTED HIS CAREER AS A MILK VENDOR IN HIS VILLAGE. THEREAFTER IN THE YEAR 2000 AT THE AGE OF 30 YEARS, HE STARTED THE BUSINESS OF REAL ESTATE, AS HE WAS COMFORTABLE DEAL ING WITH FARMERS BECAUSE OF HIS RURAL BACKGROUND. ASSESSEE APPELLANTS FATHE R WAS AN AGRICULTURIST. THE ASSESSEE APPELLANTS AREA OF OPERATION IS THE P ERIPHERAL LOCATIONS OF JAIPUR CITY. HE ENTERS INTO AGREEMENT TO BIND TH E FARMERS TO SELL THEIR AGRICULTURAL LANDS TO HIM. AT THE TIME OF ENTERING INTO THIS AGREEMENT HE PAYS A MEAGER SUM AS ADVANCE. AS SOON AS SUCH AN AG REEMENT IS EXECUTED THE ASSESSEE APPELLANT PROCLAIMS THE LAND TO BE BEL ONGING TO HIM. ON THIS BASIS HE STARTS MARKETING THE PLOTS AND STARTS RECE IVING THE ADVANCE AGAINST SALE OF PLOTS ON SUCH AGRICULTURAL LAND. ON OCCASIO NS HE ALSO RECEIVES MONEY FOR BULK BOOKING OF PLOTS FROM THE PERSONS WHO ARE IN THIS BUSINESS. THE AMOUNT SO RECEIVED IS USED BY HIM FOR MAKING SUBSEQ UENT PAYMENTS TO THE FARMERS (SELLERS OF LAND) AS PROVIDED IN THE INITIA L AGREEMENT WITH THEM FOR BUYING THE LAND. THUS, THE ASSESSEE APPELLANT IS AB LE TO DO THE BUSINESS WITHOUT INVESTING HIS OWN CAPITAL. THE AGREEMENTS FROM THE FARMERS FOR BUYING THE LAND WERE SEIZED FROM ASSESSEE APPELLANTS RESIDENCE DURING THE COUR SE OF SEARCH. THE MODUS OPERANDI OF ENTERING INTO THE BUYING AGREEMENT WITH SMALL INITIAL ADVANCE AND THEREAFTER MAKING REMAINING PAYMENTS SCATTERED OVER THE LONGER PERIOD IS FULLY EVIDENCED FROM SUCH AGREEMENTS. THE ABOVE-MODUS OPERANDI IS A TRADE PRACTICE AND AL L THE PLAYERS WHO DONT HAVE FINANCIAL BACKGROUND LIKE THE ASSESS EE APPELLANT USE THIS 9 MODUS OPERANDI SO THAT BUSINESS CAN BE DONE WITHOUT INVOLVEMENT OF CAPITAL IN THE BUSINESS. MARGINS IN THIS MODEL OF B USINESS ARE COMPARATIVELY LOW BECAUSE ONE HAS TO FIND BUYERS OF THE PLOTS ALM OST IMMEDIATELY OR BEFORE ENTERING INTO THE AGREEMENT WITH SELLER TO G ET THE FUNDS FROM THE PROSPECTIVE BUYER SO THAT PAYMENT COMMITMENTS CAN B E HONOURED. 1.6 ANOTHER IMPORTANT FEATURE WORTH NOTICING IS THE FACT THAT NO UNSOLD STOCK WAS KEPT BY THE APPELLANT ASSESSEE AT THE END . NORMALLY, ALL DEVELOPERS KEEP SOME STOCK UNSOLD AT THE END TO REA P HIGH PROFITS. BUT THE APPELLANT ASSESSEE HAD NOT KEPT ANY UNSOLD STOCK FO R WANT OF CAPITAL. THE POSITION OF SCHEMEWISE AREA OF PLOTS SOLD AND TOTA L PLOT AREA OF SCHEMES AS PER MAP ARE AS UNDER: NAME OF SCHEME TOTAL PLOT AREA AS PER MAP (IN SQ.YARDS) PB NO. TOTAL PLOT AREA SOLD (IN SQ.YARDS) PB NO. GOVIND VATIKA GOKUL VIHAR MANGALAM RESIDENCY SUBHAM VIHAR BRIJ VIHAR 25788.10 15144.80 16953.20 33020.00 8274.60 282 283 284 285 286 25788.40 15039.20 16953.28 33169.80 8274.60 253-259 260-264 265-269 270-278 279-280 1.7 THE LD AO AS WELL AS THE CIT(A) COULD NOT PROPE RLY APPRECIATE THE MODUS OPERANDI. BOTH THE LOWER AUTHO RITIES INSISTED FOR SPECIFIC EVIDENCES AS IF IT WAS A CASE WHERE REGULA R BOOKS OF ACCOUNTS WERE MAINTAINED. ADMITTEDLY THE INCOME IS FROM UNDISCLOS ED BUSINESS AND THEREFORE EVIDENCES WILL BE OF THE NATURE AND QUALI TY OF THAT OF THE 10 UNACCOUNTED BUSINESS. SIMILARLY WHEN NO BOOKS OF AC COUNTS ARE MAINTAINED, RECOURSE TO ESTIMATION OF INCOME ON THE BASIS OF AS SETS CUM EXPENDITURE THEORY IS A SETTLED PROPOSITION OF LAW. 1.8 THE BUSINESS MODEL FOLLOWED BY THE ASSESSEE IS ALSO EVIDENT FROM THE STATEMENTS GIVEN BY SHRI LEELADHAR U/S 131 OF THE INCOME TAX ACT, 1961 BEFORE THE LD. AO ON 27.11.2009 IN WHICH HE HAS ACCEPTED THAT THE ADVANCE PAYMENT HAS BEEN MADE TO ASSESSEE FOR T HE PURCHASE OF PLOT IN THE PROPOSED SCHEME BEFORE PURCHASE OF LAND.COPY OF STATEMENTS OF SHRI LEELADHAR AT PB PAGE 249-252. IT IS ALSO EVIDENT FROM THE SEIZED RECORDS ( PB PAGE 171-178) THAT ASSESSEE USED TO TAKE PAYMENT FROM PERSONS AGAINST BULK BOOKING AND PAYMENT IS MADE TO FARMERS/SELLERS OF LAND FROM THE PROCEEDS OF BULK BOOKING. THE PAYMENT IS MADE TO MADAN LAL SHARMA ( GOVIND VATIKA SCHEME) OUT OF RECEIPTS AGAINST BULK BOOKING FROM C HOTE MAMAJI AND SURENDRA JI . FURTHER IT IS ALSO EVIDENT FROM SEIZED RECORDS (PB PAGE 16-20) THAT THE AGREEMENT HAS BEEN ENTERED BY ASSESSEE AND MOHD .SHARIF WITH SELLER OF SUBHAM VIHAR PROJECT. MOHD. SHARIF WAS IDENTIFIED A S BULK PURCHASER TO WHOM ASSESSEE AGREED TO ALLOT PLOTS AT BULK RATE AN D THE MAJOR PORTION OF THE INITIAL INVESTMENT CAME FROM MOHD.SHARIF AGAINST HI S BOOKING IN BULK QUANTITY. THIS FACT WAS EXPLAINED TO LD.AO (PB PAGE 288-302) VIDE LETTER DATED 5 TH DECEMBER 2009. FURTHER LD. AO WAS REQUESTED VIDE L ETTER DT 09.12.2009 (PB 413 ) TO VERIFY MOHD.SHARIFF S/O SHRI HUSSAIN KHAN R/ O 33 ,RAGHU NATHPURI,KALWAR ROAD,JHOTWARA ,JAIPUR TOW ARDS BULK BOOKING BY USING HIS POWERS U/S 131.THE ADDRESS OF MOHD. SH ARIF WAS ALSO AVAILABLE IN THE AGREEMENT (PB PAGE 16-20) BUT THE LD.AO WAS SATISFIED ABOUT BULK BOOKING THAT IS WHY HE HAS NOT CALLED HI M FOR VERIFICATION IN SPITE OF SPECIFIC REQUEST BY THE ASSESSEE DURING AS SESSMENT PROCEEDINGS. 2.11 IN RESPECT OF GOVIND VATIKA PROJECT, THE SUBMI SSIONS OF THE ASSESSEE ARE AS UNDER:- 1.9 MODUS OPERANDI OF APPELLANTS BUSINESS GOVIND VAT IKA PROJECT: 11 THE SEIZED PAPERS CLEARLY DEPICTED THE SEQUENCE OF RECEIPTS FROM BOOKING AND THAT OF PAYMENTS FOR ACQUIRING LAND. BO TH THE LOWER AUTHORITIES HAVE CONVENIENTLY IGNORED THE FACTS ON RECORD. THE DETAILS IN THIS REGARD FOR THE GOVIND VATIKA SCHEME ARE AS UNDER:- PARTICULARS PB PAGES TOTAL AREA 13 BIGHA 1.5 BISWA SALE AMOUNT(RS.) 1,52,30,801 187-190 LESS: COST OF LAND (RS. ) 1,04,82,000/- 187-190 DEVELOPMENT COST 41,26,096/- 187-190 PROFIT 6,22,705/- 187-190 PROFIT % ON COST 5.94 AREA IN SQ. YARDS 25788 AREA OF PLOTS SOLD 24302 AREA OF PLOTS GIVEN TO FARMERS(SELLER) AS COMPLIMENTARY 1486 1.10 GOVIND VATIKA WAS THE FIRST PROJECT OF THE ASS ESSEE APPELLANT. AS PER SEIZED DOCUMENTS, THE ASSESSEE APPELLANT HAS PURCHASED THE LAND FOR THE PROJECT AS UNDER: ANNEXURE/ PAGE NO. DETAILS OF THE PROPERTY NAME OF SELLER PURCHASE CONSIDERATION (RS. IN LACS) PB PAGE A-2/152-154 6 BIGHA 15 BISWA LAND VILLAGE-HATHOJ NARSI YADAV 60.75 8-10 A-7/58 6 BIGHA 6.5 BISWA VILLAGE HATHOJ MADANLAL SHARMA 44.07 32-37 171 TOTAL 13 BIGHA 1.5 BISWA 104.82 1.11 THE FACT OF STAGGERED PAYMENTS FOR ACQUIRING L AND IS EVIDENT FROM THE PB 29-37. AT PB 8-10 IS THE AGREEMENT FOR PURCHASE OF LAND FROM NARSI YADAV FOR GOVIND VATIKA PROJECT. AS PER PB 8-10 , THE ENTIRE PAYMENT IS MENTIONED TO HAVE RECEIVED PRIOR TO THE ADVANCE AMOUNT OF RS. 5.11 LACS. HOWEVER, THE SAID PAYMENTS, IN FACT, HAVE BEEN MADE ON THE FOLLOWING DATES: 12 FROM THE ABOVE, IT MAY BE OBSERVED THAT AFTER THE I NITIAL PAYMENT ON 15-10-03, THE LAST INSTALMENT WAS PAID ON 2-11-04. THAT IS AFTER ABOUT 13 MONTHS. IT IS ALREADY PROVED THAT THE APPELLANT ASS ESSEE STARTED RECEIVING MONEY FROM THE SAID GOVIND VATIKA PROJECT AS EARLY AS FEBRUARY, 2003 . 1.12. SIMILARLY, IN RESPECT OF LAND ACQUIRED FROM S HRI MADANLAL, THE PAYMENT SCHEDULE AGREED BY AS UNDER: RS.21000 AS ADVANCE RS.500000 ON 15/03/2003 REMAINING AMOUNT IN 4 INSTALMENTS OF 12 MONTHS AS U NDER: IST - 10/06/2003 IIND- 01/09/2003 IIIRD - 15/11/2003 IVTH - 01/02/2004 ACTUAL DATE OF PAYMENTS AMOUNT (RS. IN LACS) SEIZED DOCUMENT ANNEXURE/ PAGE PB 15-10-03 0.11 A-20/2 29 18-11-03 5.00 A-20/2 29 24-12-03 6.00 A-20/2 29 11-2-04 4.00 A-20/2 29 16-4-04 7.00 A-20/2 29 20-5-04 5.00 A-20/2 29 1-7-04 5.00 A-20/2 29 16-9-04 5.00 A-20/2 29 27-9-04 9.70 A-20/2 29 1-10-04 4.50 - 6.06 2-11-04 3.38 TOTAL 60.75 13 1.13 AGAINST THE ABOVE, THE ACTUAL PAYMENTS WERE MA DE TO MADAN LAL AS UNDER: 1.14 THE DELAYS WERE AS UNDER: INSTALLMENT AMOUNT (RS.IN LACS) DUE DATE ACTUAL DATE OF COMPLETE PAYMENT OF THE INSTALLMENT LATE (IN MONTHS) FIRST 10.00 10/06/2003 5-8-03 TWO SECOND 10.00 1/09/2003 3-12-03 THREE THIRD 10.00 15/11/2003 16-3-03 FOUR FOURTH 10.00 1/02/2004 27-5-03 FOUR 1.15 THE DELAYS WERE FOR THE REASON THAT THE ASSESS EE APPELLANT HAS NO CAPITAL OF HIS OWN AND ONLY AFTER RECEIVING THE BOOKING AMOUNT, HE WAS ABLE TO MAKE PAYMENT. IT IS A WELL KNOWN FACT IN THE BUSINESS THAT THE CO ST OF GOODS PURCHASED IN CASH IS LESS AND COST OF GOODS PURCHAS ED ON CREDIT IS HIGHER DEPENDING ON THE PERIOD OF CREDIT. IF THE CREDIT PE RIOD ALLOWED IS MORE THAN THE COST OF PURCHASES WILL BE MORE RESULTING IN RED UCTION OF PROFIT. NO ACTUAL DATE OF PAYMENTS AMOUNT (RS. IN LACS) SEIZED DOCUMENT ANNEXURE/ PAGE PB 9-2-03 .21 A-7/20 30-37 15-3-03 5.00 A-7/20 30-37 14-5-03 5.00 A-7/25 30-37 5-8-03 6.50 A-7/24 30-37 27-9-03 3.50 A-7/23 30-37 22-10-03 3.00 A-7/26 30-37 3-12-03 4.29 A-7/27 30-37 8-12-03 2.50 A-7/28 30-37 16-3-03 10.00 A-7/28 30-37 27-5-03 4.07 A-7/28 30-37 TOTAL 44.07 14 PRUDENT MAN WILL PURCHASE ON CREDIT FOR SUCH A LONG PERIOD IF HE HAS HIS OWN CAPITAL/CASH. 1.16 AS PER MODUS OPERANDI FOLLOWED BY ASSESSEE APP ELLANT, AS SOON AS THE AGREEMENT WAS EXECUTED, THE ASSESSEE AP PELLANT PROCLAIMED THE LAND TO BE BELONGING TO HIM. ON THIS BASIS, HE STAR TED MARKETING THE PLOTS AND STARTED RECEIVING THE ADVANCE AGAINST SALE OF P LOTS ON SUCH AGRICULTURAL LAND, WHICH ARE EVIDENCED BY THE FOLLOWING SEIZED D OCUMENTS. ANNEXURE/ PAGE NO. PARTICULARS PB PAGE A-21/PAGE 1-77 RETAIL AND BULK SALE 38-115 A-22/PAGE 1-56 RETAIL AND BULK SALE 116-165 A-18/PAGE BULK SALE 166-178 A-19/PAGE 2,13 BULK SALE 179-180 A-20/PAGE 2,6,7,8 BULK SALE 181-184 A-23/PAGE 28 BULK SALE 185 ON OCCASIONS HE ALSO RECEIVED MONEY FOR BULK BOOKIN G OF PLOTS FROM THE PERSONS WHO ARE IN THIS BUSINESS. TH E AMOUNT SO RECEIVED WAS USED BY HIM FOR MAKING SUBSEQUENT PAYM ENTS TO THE SELLER OF LAND AS PER RECEIPTS SEIZED DURING SEARCH . THUS, THE ASSESSEE APPELLANT WAS ABLE TO DO THE BUSINESS WITHOUT INVES TING HIS OWN CAPITAL. 1.17 THE COMPLETE CASH ACCOUNT FOR RECEIPTS AND PAY MENT REGARDING GOVIND VATIKA PROJECT PREPARED WITH THE H ELP OF SEIZED DOCUMENTS FOR EVIDENCING THE ABOVE BUSINESS MODEL I S AT PB PAGE187-190 . THE SAID DATE WISE ACCOUNT CONFIRM THE FOLLOWING: (I) PAYMENT FOR ACQUIRING THE LAND HAVE BEEN MADE IN A STAGGERED WAY OVER A PERIOD AS AGAINST THE FACT OF LUMP SUM PAYMENT TAKEN BY THE LOWER AUTHORITIES FOR MAKING/CONFIRMING THE ADDITIONS. 15 (II) THE ENTIRE FUNDING FOR ACQUIRING THE LAND IS BY REC EIVING THE BOOKING AMOUNT AND THUS NO CAPITAL OF THE ASSESSEE APPELLANT IS INVOLVED. (III) THE PROFIT OF GOVIND VATIKA PROJECT IS RS. 6,22,705 /- AS DECLARED BY THE ASSESSEE APPELLANT IN HIS RETURN OF INCOME. (IV) ALL THE PLOTS IN THE SCHEME HAVE BEEN SOLD BY THE A PPELLANT AND NO UNSOLD STOCK WAS KEPT BY THE APPELLANT. 1.18 THE LD CIT(A) AT PAGE 5 OF HIS ORDER FOR THE A.Y.2004-05 HAS DISMISSED THE GROUND OF APPEAL FOR THE SPECIFIC REASON THAT IT IS NOT CLEAR WHETHER RECEIPTS PRECEDE THE DATE OF PAYMENT FOR PU RCHASE OF LAND. THE APPREHENSION OR DOUBT OF THE LD CIT(A) IN THIS REGA RD IS MISCONCEIVED AND ILL-FOUNDED AS IS CLEAR FROM THE ABOVE DETAILS. 1.19 THE DETAILS AT PB187-190 ARE PREPARED FROM THE SEIZED MATERIALS ONLY. SIMILAR DETAILS (PB 303-308) WERE A LSO FILED BEFORE THE LD AO AND CIT(A). BOTH THE LOWER AUTHORITIES REJECTED THE SAME WITHOUT MAKING ANY EFFORT OF UNDERSTANDING OF THE CONTENT. IT IS ALSO MOST HUMBLY SUBMITTED THAT IT WAS THE DUTY OF THE LOWER AUTHORI TIES TO PROPERLY APPRAISE THE SEIZED DOCUMENTS. HAD THEY DISCHARGED THEIR OBL IGATION DILIGENTLY, THEY WOULD NOT HAVE COMMITTED THE ERROR, WHICH THEY HAVE DONE. IT IS ALSO TO BE NOTED THAT ADMITTEDLY THIS WAS ASSESSEE APPELLANT U NDISCLOSED BUSINESS AND NO DAY TO DAY FORMAL BOOKS COULD BE EXPECTED OF SUC H UNDISCLOSED BUSINESS. IT IS A TRITE LAW THAT IN SUCH A SITUATION, ASSESSM ENT HAS TO BE FRAMED BY INFERRING THE CONCLUSION FROM THE INCOMPLETE RECORD S. 1.20 THE LD CIT(A) HAS ALSO ERRED IN NOT APPRECIATI NG THE FACT THAT COMPLETE NAMES AND ADDRESSES OF THE PLOT HOLDERS WE RE FURNISHED BEFORE THE LD AO (PB PAGE 253-281), AND SPECIFIC REQUEST WAS MADE TO LD.AO FOR VERIFICATION OF FACT BY USING HIS POWER U/S 131 OF THE INCOME TAX ACT1961 VIDE LETTER DT.01.12.2009 (PB 388-402) ,WHO WITHOUT ENQUIRY AND RECORDING ANY FACT OF THE DETAILS BEING FALSE HAD S UMMARILY REJECTED THE SAME. 1.21 THE AGREEMENT FOR PURCHASE OF LAND FOR SHUBHAN VIHAR PROJECT (PB16-20) IS FOR RS. 10100000. THE LD.AO HA S ERRED BY ADDING 16 RS.11000000 AND LD.CIT(A) HAS ERRED IN CONFIRMING R S.11000000. 1.20 THE LD. CIT( A) WAS FACTUALLY AND LEGALLY INCO RRECT ON THE FOLLOWING ISSUES: MAINTENANCE OF BOOKS OF ACCOUNTS :- THE LD CIT(A) HAS MENTIONED ON PAGE NO.4 OF HIS ORD ER FOR A.Y.2004-05 THAT NEITHER THE PURCHASE OF THIS LAND NOR THE AMOUNT SO PAID WAS SHOWN IN THE REGULAR BOOKS OF ACCOUNTS BY THE A PPELLANT. FURTHET AT PAGE NO.5 OF HIS ORDER FOR A.Y.2005-06 HE HAS MENTI ONED THAT THIS PURCHASE OF LAND HAS NOT BEEN SHOWN IN THE REGULAR BOOKS OF ACCOUNTS AND THUS IT IS UNACCOUNTED. FURTHER ON PAGE NO. 4 OF ASSESSMENT YEAR 2006-07 HE HAS MENTIONED AS THE PURCHASE OF THIS LAND WAS NOT ACCOUNT FOR I N THE BOOKS OF ACCOUNTS AND CONSEQUENTLY THIS PAYMENT WAS ALSO UNACCOUNTED, A.O. ADDED THE SAME. WHEREAS HE HIMSELF HAS MENTIONED ON PAGE NO.7 OF HI S ORDER FOR A.Y.2005-06 THAT APPELLANT HAS NOT MAINTAINED ANY B OOKS OF ACCOUNTS FOR THIS PROJECT AND FOR THAT MATTER FOR OTHER PROJECTS ALSO. THE APPELLANT HAS CATEGORICALLY ADMITTED BEFORE BOT H THE LOWER AUTHORITIES THAT NO REGULAR BOOKS OF ACCOUNTS HAS B EEN MAINTAINED BY HIM INSPITE OF THAT THE LD. CIT(A) WAS CONFUSED THAT B OOKS OF ACCOUNTS WERE MAINTAINED OR NOT BECAUSE AT ONE PLACE HE HAS MENTI ONED THAT REGULAR BOOKS OF ACCOUNTS WERE NOT MAINTAINED AND ON OTHER PLACE HE HAS MENTIONED THAT THE PURCHASE OF LAND AND AMOUNTS SO PAID WAS NOT S HOWN IN THE REGULAR BOOKS OF ACCOUNTS. NAME AND ADDRESS OF PLOT HOLDERS:- THE LD.CIT(A) ON PAGE NO.5 OF HIS ORDER FOR A.Y.200 4-05 HAS STATED THAT THE CLAIM OF APPELLANT THAT HE HAS SUBM ITTED THE NAME AND ADDRESS OF THE PROSPECTIVE PLOT HOLDERS AND LD.AO C OULD HAVE MADE VERIFICATION FROM THEM IS IRRELEVANT AND MISPLACED. THE APPELLANT HAS SUBMITTED THE LIST OF PLOT HOLDER S OF ALL SCHEMES TO THE LD. AO (PB253-281 ) AS WELL AS TO THE LD.CIT(A) IN WHICH PLOT NO., 17 NAME AND ADDRESS OF PLOT HOLDERS AND AREA OF EACH P LOT WAS GIVEN. THUS THE LD.CIT(A) IS CONFUSED THAT LIST OF PROSPECTIVE PLOT HOLDERS HAVE BEEN GIVEN FOR ALL THE SCHEMES WHEREAS LIST OF ACTUAL PLOT HOL DERS OF ALL SCHEMES HAVE BEEN SUBMITTED TO LD.AO AND LD.CIT (A). LD. CIT (A ) HAS FAILED TO APPRECIATE THE FACTS CORRECTLY ON MISCONCEPTION . 2.12 BEFORE US, THE LD DR HAS SUBMITTED AS UNDER:- I). IT IS UNDISPUTED FACT THAT AS PER THE SALE AG REEMENTS THE LAND PURCHASED BY THE ASSESSEE FOR HIS DIFFERENT PROJECT S HAS BEEN PURCHASED IN CASH. THE ASSESSEE HAS HIMSELF ADMITTED THAT HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS FOR ANY OF HIS PROJECTS . THEREFORE, THE INVESTMENTS IN THE PURCHASE OF THE LANDS ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HENCE, IT IS THE RESPONSIBILITY OF THE AS SESSEE TO EXPLAIN THE SOURCE OF THE AMOUNT INVESTED U/S 69 OF THE I.T. ACT. INSTEAD OF EXPLAINING THE NATURE AND SOURCE OF THE INVESTMENTS IN LAND FOR THE ABOVE A.YRS., THE ASSESSEE HAS MENTION ED THE MODUS OPERANDI OF HIS BUSINESS. THIS IS A VERY GENERAL EXPLANATION AND DOES NOT PROVIDE ANY EVIDENCE ABOUT THE SOURCE. II). THE ASSESSEE HAS CLAIMED THAT THE CASH FOR I NVESTMENT IN LAND WAS RECEIVED BY HIM AS ADVANCE FROM HIS PROSPE CTIVE CUSTOMERS. IN SUPPORT OF THIS HE HAS SUBMITTED CASH FLOW SUMMARY FOR DIFFERENT A.YRS( ASSESSEES PAPER BOOK(APB) PG. 303 TO 308). FROM TH ESE STATEMENTS, IT IS SEEN THAT THESE ARE REALLY SUMMARY ONLY. THEY DO NOT PROVIDE ANY DETAILS. THEY CONTAIN ENTRIES SUCH AS TO ADVANCE FROM BOOKING OF PLOTS UPTO. (DATE) (RETAIL AS WELL AS BULK BOOKING) . IN ALL THE STATEMENTS SUCH ENTRIES ONLY ARE MADE. THE ASSESSEE HAS NOT GIVEN EVEN SIMPLE DETAIL S, SUCH AS I) NAME OF THE PERSON FROM WHOM CASH RECEIVED AS BOOKING ADVAN CE II) DATE OF RECEIPT III) ADDRESS OF SUCH PERSON. OVER AND ABOVE THIS FA ILURE HE HAS NOT FURNISHED ANY CONFIRMATION FROM THE SO CALLED ADVANCE GIVERS. SUCH INCOMPLETE EXPLANATION IS TOTALLY UNSATISFACTORY AND THE A.O A ND LD. CIT(A) HAVE RIGHTLY REJECTED IT AND ADDED THE UNACCOUNTED INVES TMENT IN LAND AS THE INCOME OF THE ASSESSEE. 18 III). THE ASSESSEE HAS CONTENDED THAT HE PROVIDED T HE DETAILS OF THE PLOT OWNERS AND THEIR ADDRESSES TO THE A.O AND THE A.O SHOULD HAVE VERIFIED THESE DETAILS FROM THE PLOT OWNERS. FROM T HE DETAILS OF THE PLOT OWNERS FURNISHED BY THE ASSESSEE ( APB PAGE NO. 25 3 TO 281), IT CAN BE SEEN THAT ONLY THE PLOT NO; NAME OF THE PLOT OWNER; ADDRESS AND SIZE OF THE PLOT ARE GIVEN. MANY OF THE ADDRESSES ARE INCOMPLET E. IN THE LIST FOR BRIJ VIHAR ON PG. 279 OF THE PAPER BOOK FOR ADDRESS ONLY JAIPUR IS WRITTEN. ON THE REMAINING PAGES RELATED TO OTHER PROJECTS THERE ARE DOZENS OF ADDRESSES WHICH ARE INCOMPLETE AND FROM WHICH THE PERSON CANN OT BE LOCATED. NO DETAILS ARE PROVIDED AS TO HOW MUCH PAYMENT WAS REC EIVED FROM THE PLOT OWNERS AND WHEN. WITHOUT THESE DETAILS HOW CAN THE A.O MAKE ANY VERIFICATION FROM THESE PLOT OWNERS? IT IS THE RESP ONSIBILITY OF THE ASSESSEE TO GIVE DATE WISE DETAILS OF THE PAYMENTS RECEIVED FROM THESE PARTIES AND ALSO THEIR CONFIRMATIONS ABOUT THE SAME. IT IS ONLY THEN CAN IT BE SAID THAT THE ASSESSEE HAS DISCHARGED HIS ONUS AND THE ONUS H AS SHIFTED TO THE A.O. IT MAY BE HIGHLIGHTED HERE THAT BEFORE THE A.O THE ASS ESSEE VIDE HIS LETTER DATED 09.12.2009 HAS CLEARLY MENTIONED THAT SUPPORT ING DETAILS OF THE ADVANCES AND THE EVIDENCE FOR THE SAME ARE NOT PRES ENTLY TRACEABLE. SUCH EVIDENCES WERE NOT PRODUCED EVEN BEFORE LD. CIT(A). IN THIS REGARD, IT IS SUBMITTED THAT THOUGH SECTION 68 AND 69 OF THE I.T ACT DEAL WITH TWO DIFFERENT SITUATIONS BUT FOR MAKING THESE SECTIONS OPERATIVE THE LANGUAGE IN BOTH THE SECTIONS IS EXAC TLY THE SAME. BOTH THE SECTIONS SPEAK AS FOLLOWS: SECTION 68- AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE N ATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER SATISFACTORY SECTION 69- AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM I S NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY 19 IN RESPECT OF SECTION 68 IN A NUMBER OF CASES HON BLE SUPREME COURT HAS HELD THAT THE BURDEN TO PROVE THAT THE CASH CRE DIT IS GENUINE IS ON THE ASSESSEE. SINCE THE LANGUAGE IN SECTION 69 IS THE S AME, THEREFORE FOR THIS SECTION ALSO THE BURDEN TO PROVE THAT THE INVESTMENT MADE B Y HIM IS EXPLAINED LIES ON THE ASSESSEE. IN THIS REGARD, FOR SECTION 68, THE F OLLOWING DECISIONS OF HONBLE SUPREME COURT ARE RELIED ON: I) SUMATI DAYAL VS. CIT(1995) 214 ITR 801(SC) II) CIT VS. P. MAHANAKALA(2007) 291 ITR 278 (SC) III) VIJAY KUMAR TALWAR VS. CIT(2007) 330 ITR 01(SC) IN RESPECT OF SECTION 69, THERE ARE DIRECT DECISION S WHICH HAVE HELD THAT THE INITIAL BURDEN TO PROVE THE NATURE AND SOURCE OF IN VESTMENTS NOT RECORDED IN THE BOOKS OF ACCOUNTS IS ON THE ASSESSEE. IN THE CASE O F PIRANI & CO. VS. ACIT(2001) 250 ITR 467 HONBLE A.P HIGH COURT HELD AS UNDER: IT IS TRITE TO STATE THAT SECTION 69 CLEARLY LAYS DOWN THE INITIAL BURDEN ON THE ASSESSEE OF PROVING THE NATURE OF SOURCE OF INV ESTMENTS NOT RECORDED IN THE BOOKS OF ACCOUNT. IF THE ASSESSEE FAILS TO EXPLAIN AND PROVE THE NATURE AND SOURCE OF INVESTMENTS, THE UNEXPLAINED INVESTMENTS WOULD B E ASSESSABLE UNDER SECTION 69 AND THERE WOULD BE NO BURDEN ON THE DEPARTMENT TO P ROVE THAT SUCH INVESTMENTS WERE THE INCOME OF THE ASSESSEE. IN GIVING THIS DECISION HONBLE HIGH COURT DREW STR ENGTH FROM FOLLOWING MORE JUDGEMENTS: 1) JATINDRA NATH SARMAH VS. ITO(1978) 113 ITR 898(GAUH ATI HC ) 2) RAGHUNATH SINGH VS. CIT (1965) 57 ITR 562 (P & H H C) 3) SMT. KAMALA DEVI JHAWAR VS. CIT(1978) 115 ITR 401(C AL. HC) IN THIS CASE ALSO THE INITIAL BURDEN TO EXPLAIN THE NATURE AND SOURCE OF THE INVESTMENT IN LAND NOT RECORDED IN THE BOOKS OF THE ASSESSEE, LIES ON THE ASSESSEE. BUT, AS EXPLAINED ABOVE HE HAS FAILED TO DISCHARGE THIS INITIAL BURDEN AND THEREFORE THE UNEXPLAINED INVESTMENT HAS BEEN RIGHTLY ADDED B Y THE CIT(A) U/S 69. IV). IN HIS SUBMISSIONS, THE ASSESSEE HAS ALSO CLA IMED THAT THE ADVANCES RECEIVED FROM PROSPECTIVE PLOT OWNERS ARE REFLECTED IN THE DIARIES SEIZED DURING THE SEARCH OPERATIONS. IT MAY BE NOTED THAT DURING THE ASSESSMENT AND FIRST APPEAL PROCEEDINGS THE ASSESSEE MADE THIS GENERAL STATEMEN T ONLY BUT NEVER EXPLAINED 20 WHICH ENTRIES IN THE DIARIES WERE RELATED TO WHICH PAYMENTS FOR LAND. THE ASSESSEE HAS FURNISHED THE COPIES OF SUCH DIARIES IN THE PAP ER BOOK AT PG. 38 TO 185. FROM THESE DIARIES, IT CAN BE SEEN THAT MANY OF THE PAGE S ARE BLANK. ON SOME OF THE PAGES NAMES OF THE PERSONS AND AMOUNTS ARE MENTIONED BUT NO DATES ARE GIVEN. THE ASSESSEE HAS NOT LINKED THE ENTRIES ON THESE PAGES WITH THE CASH FLOW SUMMARY SUBMITTED BY HIM TO THE A.O AND CIT(A) TO EXPLAIN T HE SOURCE OF MONEY INVESTED IN THE LAND. IN MANY CASES THE NAMES APPEARING IN T HE DIARY ARE DIFFERENT FROM THE NAME OF PLOT OWNER SHOWN IN THE LIST SUBMITTED BY T HE ASSESSEE. FOR EXAMPLE, ON PAGE 138 OF APB FOR PLOT NO. 26 THE NAME IS G.Y.ME ENA BUT ON PAGE 254 OF APB THE PLOT OWNER IS SUNITA MEENA. SIMILARLY FOR PLOT NO. 25 ( PG. 137 OF APB) DIARY SHOWS PRASHANT JOSHI BUT THE LIST ON PG. 254 SHOWS SWAPNIL SHARMA. SUCH DIFFERENCES CAN BE FOUND FOR PLOT NOS. 21, 22, 25, 26, 32 ON PG. 254 OF APB AND MANY OTHER PLOTS. THUS, THE ASSESSEE HAS FAILED TO EXPLAIN THE LINK BETWEEN THE DIARIES AND THE PROSPECTIVE PLOT OWNERS. THEREFORE, THE ENTRIES IN THESE DIARIES IN NO WAY EXPLAIN THE SOURCE OF THE MONEY USED FOR INVEST ING IN THE LAND. V). THE ASSESSEE HAS SUBMITTED THE DATE WISE CASH STA TEMENT IN ITEM NO. 17(PAGE 187 TO 190) OF THE APB. THIS STATEMENT WAS NOT SUBMITTED EITHER BEFORE THE A.O OR BEFORE LD. CIT(A). THEREFORE, THIS KIND OF ANALYSIS IS TOTALLY NEW EVIDENCE WHICH WAS NOT PRESENTED BEFORE THE LOWER A UTHORITIES FOR VERIFICATION AND HENCE CANNOT BE ADMITTED AT THIS STAGE BEFORE HONB LE ITAT. SECONDLY, THIS CASH STATEMENT IS INCOMPLETE AS IT I S MADE FOR THE PERIOD 5.2.2003 TO 15.11.2004 ONLY. MORE IMPORTANTLY, THE BALANCES IS THIS STATEMENT DO NOT TALLY WITH THE CASH SUMMARY GIVEN BY THE ASSESS EE TO THE A.O AND CIT(A). ON 31.03.2003 THE BALANCE IN THE CASH SUMMARY IS RS. 3 2,695/-(APB PG. 303) BUT IN THIS STATEMENT THE BALANCE IS RS. 1,13,700/-(APB PG . 187). AS ON 31.03.2004 THE BALANCE IN CASH SUMMARY IS RS. 50,27,095/-(APB PG. 304) BUT IN THIS STATEMENT THE BALANCE IS RS. 40,98,320/-(APB PG. 189). IT IS NOT UNDERSTOOD AS TO WHAT PREVENTED THE ASSES SEE OR HIS A.R TO PRESENT THIS ANALYSIS BEFORE THE LOWER AUTHORITIES. THE ONL Y PURPOSE OF THE ASSESSEE DOING IT SO LATE IS TO PREVENT THE DEPARTMENT FROM TAKING AC TION AGAINST THE PERSONS FROM WHOM THE MONEY IS CLAIMED TO BE RECEIVED AS AN ADVA NCE. IT MAY BE NOTED THAT IF 21 THESE DATE WISE DETAILS GIVEN BY THE ASSESSEE ARE A CCEPTED NOW THE DEPARTMENT WILL NOT BE ABLE TO TAKE ACTION AGAINST THOSE PARITIES A S THE TIME LIMIT OF 6 YEARS MAY HAVE EXPIRED IN MANY OF THE CASES. EVEN OTHERWISE THIS EVIDENCE IS OF NO HELP TO THE A SSESSEE BECAUSE HE HAS FAILED TO GIVE THE CONFIRMATIONS FROM THE PERSONS ( SO CALLED PROSPECTIVE PLOT OWNERS) FROM WHOM SUCH CASH IS CLAIMED TO BE RECEIV ED. IT MAY KINDLY BE NOTED THAT WHEN AS PER SECTION 68, EVEN THE CASH CREDIT E NTRIES MADE IN THE REGULAR BOOKS OF ACCOUNTS ARE REQUIRED TO BE EXPLAINED BY THE ASS ESSEE WHY SHOULD THE ENTRIES IN ROUGH DIARIES BE EXEMPTED FROM SUCH EXPLANATION. T HEREFORE, SINCE THE ASSESSEE HAS FAILED TO FURNISH CONFIRMATIONS OF THE PARTIES FROM WHOM ADVANCE IS CLAIMED TO BE RECEIVED, THEREFORE THE SOURCE OF INVESTMENT IN THE LAND REMAINS UNEXPLAINED. 2.13 WE HAVE HEARD BOTH THE PARTIES. THE ACTION U/S 132 OF THE ACT I.E. SEARCH OPERATIONS WERE CARRIED ON 16-11-2007. THE CASE WAS CENTRALIZE D WITH CENTRAL CIRCLE ON 31-12-2007. NOTICE U/S 153A WAS ISSUED ON 15-02-2008. THE ASSES SEE FILED RETURN OF INCOME ON 06-02- 2009. WE ARE NOT AWARE AS TO WHEN THE COPIES OF SEI ZED DOCUMENTS AND COPIES OF STATEMENTS WERE PROVIDED TO THE ASSESSEE. AFTER FIL ING OF RETURN, THE CASE WAS FIXED FOR HEARING ON 6-11-2009. THE ASSESSEE HAS FILED REPLIE S VIDE LETTERS DATED 18-11-09, 01-12-09 AND 05-12-09. SECTION 153A, NOTICES WERE ISSUED FOR THE ASSESSMENT YEARS 2004-05 TO 2007-08 AND ALL THE ASSESSMENTS WERE TO BE BARRED B Y LIMITATION BY 31-12-2009. ALL ASSESSMENTS WERE TO BE COMPLETED WITHIN 15 MONTHS A S THE EFFECTIVE HEARINGS WERE STARTED ON 18-11-2009. 2.14 PAGES NO. 187 TO 190 CONTAIN THE DETAILS OF AM OUNTS RECEIVED FROM THE PERSONS IN LIEU OF PLOTS BOOKED IN GOVIND VATIKA PROJECT. IN T HESE DETAILS, THE LD.AR HAS REFERRED TO SEIZED EXHIBIT NUMBER IN RESPECT OF RECEIPTS OF AMO UNTS TO SHOW THAT RECEIPTS WERE VERIFIABLE FROM SEIZED RECORD. THE PAYMENTS HAVE BE EN MADE TO THE PERSON FROM WHOM THE 22 LANDS WERE PURCHASED AND THESE ARE VERIFIABLE FROM THE RECORD. ONLY DEVELOPMENT EXPENSES MENTIONED ON PAYMENT BASIS ARE NOT VERIFIABLE FROM SEIZED RECORD. IN THE REPLY VIDE LETTER DATED 18 TH NOV. 2009, THE ASSESSEE STATED THAT HE HAS ACCEPT ED THE BULK BOOKINGS AND DIARIES SEIZED WILL REVEAL THE AMOUNTS RECEIVED DUR ING BOOKING. VIDE LETTER DATED 18-11- 2009, IT WAS MENTIONED AS UNDER:- I HAVE PREPARED FINANCIAL RESULTS OF THE COMPLETE BUSINESS CYCLE PERTAINING TO ONE SCHEME CALLED GOVIND VATIKA PROJE CT. THE COMPLETE DETAILS WILL BE SUBMITTED SHORTLY. 2.15 PAGE NOS. 187 TO 189 OF THE PAPER BOOK CONTAIN S THE DETAILS OF ACCOUNTS RECEIVED IN BOOKING OF PLOTS. THERE ARE BULK BOOKINGS. WE HAVE NOTICED FEW OF THE BULK BOOKINGS AND DETAILS GIVEN IN THESE PAGES ARE IN CHRONOLOGICAL O RDER AND HENCE WE HAVE EXTRACTED SPECIFIC BULK BOOKINGS. PLOT NO. 1-2, 54-62, 64, 73-75, 77 BY RAMJI DATE SEIZED EXHIBIT AMOUNT (RS.) 20-11-2003 A-20/2 1,00,000 22-11-2003 A-20/2 25,000 18-12-2003 A-20/2 1,00,000 07-01-2004 A-20/2 3,90,000 11-03-2004 A-20/2 2,00,000 03-04-2004 A-20/2 50,000 18-04-2004 A-20/2 2,65,000 01-05-2004 A-20/2 1,50,000 21-05-2004 A-20/2 2,00,000 13-06-2004 A-20/2 1,00,000 ANNEXURE A/20/2 IS AVAILABLE AT PAGE 29 OF THE PAPE R BOOK AND NAME OF RAMJI IS MENTIONED. HOWEVER, WHEN SOCIETY ISSUED PATTAS IN R ESPECT OF ABOVE PLOTS, THE NAMES ARE DIFFERENT. THE DETAILS OF NAMES OF THE PERSON IN WH OSE NAME, THE PATTAS WERE ISSUED WERE 23 GIVEN TO THE AO. THE NAME OF THE SOCIETY WAS GIVEN AND IF THE AO WANTED TO MAKE FURTHER ENQUIRY THEN SUCH DETAILS COULD HAVE BEEN COLLECTED . 2.16 THE BULK BOOKING OF FLATS IS BY SHRI RAM NIWAS JI YADAV FOR PLOT NO. `126, 127, 130, 131, 133, 137-139. AS PER CHRONOLOGICAL, THE P AYMENTS IN CHART AT PAGES 187 TO 189 ARE:- 11-01-2004 RS. 51,000 03-02-2004 RS. 5,50,000 19-03-2004 RS. 1,00,000 06-04-2004 RS. 3,00,000 10-04-2004 RS. 1,09,000 14-04-2004 RS. 11,000 ALL THE ABOVE ENTRIES EXCEPT OF RS. 11,000/- ARE AV AILABLE AT SEIZED EXHIBIT A-19 PAGE 2 AND COPY OF SUCH PAGE IS AVAILABLE AT PAGE 179 OF PAPER BOOK. HOWEVER, THE TOTAL MENTIONED AT A-19 PAGE 2 IS 11,21,000/- AND SUCH TOTAL IS THE SA ME AS OF ALL THE ENTRIES MENTIONED ABOVE. IT MEANS THAT NO SEPARATE ENTRY OF RS. 11,000/- IS THERE BUT THIS AMOUNT IS INCLUDED. PAGE 2 OF EXHIBIT A-19 ALSO CONTAINS THE RECEIPT FROM SHRI DEVENDER AND THESE ARE THE SAME AS CONTAINED IN ALL THE RECEIPTS OF GOVIND VATIKA PROJ ECT. THE ENTRIES ARE ONLY FOR GOVIND VATIKA PROJECT WHILE CASH FLOW STATEMENT IS FOR THE PROJECTS FOR THE FINANCIAL YEAR AND HENCE THERE WILL BE DIFFERENCE IT IS NOTED THAT CAS H IN HAND AS ON 31-03-2005 AND 31-03- 2006 IS MORE THAN OF RS. 50,000 /- AND HENCE ASSESSEE IS LIABLE TO WEALTH TAX. THE EXPLANATION OF THE ASSESSEE THAT IT IS RECEIVING FU NDS FROM INVESTORS FOR BULK PURCHASES IS FOUND TO BE CORRECT FROM THE RECORDS AND SUCH INVES TORS HAVE PERHAPS SOLD THE PLOT BEFORE THE SOCIETY ISSUED PATTAS. WHEN THE SEIZED RECORD I NDICATE BOTH THE RECEIPTS AND PAYMENTS THEN SUCH ENTRIES ARE TO BE ACCEPTED UNLESS THE ASS ESSEE WAS NOT ABLE TO ESTABLISH IT. THE 24 ASSESSEE MADE A REQUEST TO THE AO TO ISSUE SUMMONS RECORDS WERE SEIZED IN THE YEAR 2007 BUT NO EFFORT MADE TO ANALYSE SUCH RECORDS. WE HAVE ALSO GONE THROUGH THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SEARCH. THE RE VENUE ASKED THE ASSESSEE AS TO WHETHER HE HAS WORKED FOR GUMAN GROUP I.E. THE GROUP WHICH WAS ALSO DOING THE REAL ESTATE BUSINESS. SEARCH OPERATIONS WERE CONDUCTED IN THAT GROUP AND PERHAPS SEARCH ACTION AGAINST ASSESSEE WAS INITIATED FOR HIS ASSOCIATION WITH GUMAN GROUP. THE ASSESSEE STATED THAT GUMAN GROUP OFFERED TO GET THE PLOTS BOOKED IN THEIR PROJECT FROM INTENDED CUSTOMERS AND THE GROUP WAS WILLING TO PAY RS. 20/- PER SQ. Y ARD WHILE HE DEMANDED RS. 35/- PER SQ. YARD AND HENCE THE DEAL DID NOT MATERIALIZE. THE AS SESSEE WAS ALSO ASKED THE QUESTIONS ABOUT THE ENTRIES IN THE DOCUMENTS. THE ASSESSEE ST ATED THAT NO REGULAR BOOKS OF ACCOUNTS WERE KEPT AND ONLY DIARIES WERE MAINTAINED. IT MEAN S THAT THERE WERE RELEVANT DOCUMENTS TO ASCERTAIN THE TRANSACTIONS. IT IS TRUE THAT IN T RANSACTION OF REAL ESTATE, THE MONEY PASSED ON IS NOT ALWAYS THE ACCOUNTED MONEY. THE ASSESSEE IS ONLY A CONDUIT AND THE REVENUE HAS PERHAPS TAKEN NO ACTION AGAINST THE PERSONS WHO REC EIVED THE CONSIDERATION OVER AND ABOVE THE CONSIDERATION SHOWN IN THE SALE DEEDS. SO FAR A S THE ASSESSEE IS CONCERNED, IT IS CLEAR THAT SEIZED DOCUMENTS SHOW THE SOURCE OF FUNDS. HEN CE, THERE IS NO QUESTION OF MAKING ADDITION OF RS. 40,54,325/- PLUS RS. 60,75,000/-. W HILE RECORDING SUCH FINDINGS, WE HAVE CONSIDERED THE TOTAL ASSET POSITION FILED BEFORE TH E LOWER AUTHORITIES. HENCE, THESE ADDITIONS ARE DELETED AND GROUNDS OF APPEAL NOS 2 AND 3 ARE A LLOWED. 3.1 THE GROUND OF APPEAL NO 4 IS AS UNDER:- 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION OF RS.3 ,77,455/- AGAINST THE ADDITION OF RS.6,66,023/- MADE BY THE LD. AO IN RES PECT OF GOVIND VATIKA PROJECT BY DISALLOWING 1/3 DEVELOPMENT EXPENSES. TH E ACTION OF THE LD. CIT 25 (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS.3,77,455/-. 3.2 THE AO IN HIS ASSESSMENT ORDER HAS ESTIMATED TH E PROFIT IN THE PROJECT AT RS. 19,98,070/- AND SINCE SUCH PROJECT YIELDED PROFIT I N THREE ASSESSMENT YEARS FROM 2003-04 TO 2005-06 AND ACCORDINGLY PROFIT TO BE TAXED FOR T HE YEAR UNDER REFERENCE WAS TAKEN AT RS. 6,66,023/- WHICH REPRESENTED 1/3 RD OF RS. 19,98,070/-. THE FINDINGS OF THE AO ARE AS UNDER:- THE ASSESSEE IS NOT MAINTAINING REGULAR BOOKS OF AC COUNTS. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE FOR V ERIFICATION OF PROFIT AS COMPUTED AS ABOVE AND HAS NOT DECLARED IN THE RETURN OF INCOME. ASSESSEE HAS TAKEN MINIMUM DEVELOPMENT EXPE NSES RS. 169 PER SQ. YARD AND HAS GIVEN BIFURCATION IS AS UNDER:- S.NO. PARTICULARS RATE PER SQ. YARD 1. ROADS INTERNAL 30 2. ROAD APPROACH 10 3. TREE GUARDS / TREE 10 4. ARROWS, GLOW SIGNS 5 5. DEMARCATION, SITE PLANS, MAPS ETC. 15 6. BOUNDARY WALL, FENCING OF SCHEME 30 7. BOUNDARY WALL PLOTS/ BLOCKWISE 30 8. PIT FILLING 24 9. SITE OFFICE EXPENSES 15 TOTAL 169 AS PER THE ENQUIRIES CONDUCTED BY THE INSPECTOR AT THE PROJECT SITE AND CONFRONTED TO THE ASSESSEE. IT REV EALED THAT ONLY 26 BASIC DEVELOPMENT HAS BEEN UNDERTAKEN IN THIS PROJE CT AS ONLY APPROACH ROAD AND FURTHER PLOTTING OF PLOTS HAS B EEN DONE. IN THE NAME OF DEVELOPMENT EXPENSES, SUPERFICIAL MINUTE DE VELOPMENT EXPENSES LIKE JUST PLOTTING AND KACCHA ROAD UNDERTA KEN. THUS IN ABSENCE OF ANY RELIABLE EVIDENCE PRODUCED BY THE AS SESSEE AND THE PREVAILING DEVELOPMENT EXPENSES IN PRIVATE PROJECT S DEVELOPMENT EXPENSES RANGE TO 50 TO 60 PER SQ. YARD. I AM L EFT WITH NO OPTION BUT TO DISALLOW 1/3 RD DEVELOPMENT EXPENSES. THUS THE PROFIT IS IN THIS PROJECT IS COMPUTED AS RS. 19,98,070 /- THIS PROFIT IS APPORTIONED AT RS. 6,66,023/- IN THREE F.YS. 2002-0 3 TO 2004-05 RELEVANT TO A.YS. 2003-04 TO 2005-06. THUS ADDITION OF RS. 6,66,023/- IS MADE ON ACCOUNT OF PROFIT AT GOVIND V ATIKA PROJECT. 3.3 THE FINDINGS OF THE LD CIT(A) ON THIS ISSUE IS AS UNDER:- 4.1 THIS ISSUE WAS APPEARING IN APPEAL FOR A.Y. 2 005-06. THE APPELLANT HAS MADE SAME SUBMISSION DURING THE YEAR. IN VIEW OF THE DETAILED DISCUSSION AND FINDING GIVEN IN APPEAL NO. 546/09-10 FOR A.Y. 2005-06 VIDE ORDER DATED 11.10.2010, IN APPELLANT'S OWN CASE, THE DISALLOWANCE OF DEVELOPMENT EXPENSES IS UPHELD. HOW EVER, AS NOTED IN THE APPEAL FOR A.Y. 2005-06, THE A.O. HAS ADDED THE PRO JECT ESTIMATED BY HIM WITHOUT GIVING CREDIT FOR THE PROFIT ALREADY SHOWN BY THE APPELLANT IN ITS RETURN FILED U/S 153A. IN THE RETURN FOR A.Y. 2004- 05 THE UNDISCLOSED INCOME FROM GOVIND VATIKA PROJECT IS SHOWN AT RS. 2 ,88,568/-, (WHICH IS INCLUDED IN INCOME OF RS. 3,52,968/-). ACCORDINGLY, ADDITION TO THE EXTENT OF RS. 3,77,455/- (RS.6,66,023/- - RS. 2,88,568/-) IS UPHELD. . 3.4 DURING THE COURSE OF APPELLATE PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE RAISED THE FOLLOWING SUBMISSIONS AS MENTIO NED BY THE LD CIT(A) IN PARA 3.2 AND 3.3 OF APPELLATE ORDER. THESE ARE REPRODUCED AS UND ER:- 3.2 BEFORE ME, IT WAS SUBMITTED THAT DETAILS OF DEVELOPMENT EXPENSES WERE FURNISHED BEFORE THE A.O. THE A.O. 27 HAS DISALLOWED 1/3 RD OF THE EXPENSES ONLY ON THE BASIS OF REPORT OF INSPECTOR. ON PERUSAL OF THE REPORT OF THE INSPECTO R, IT IS SEEN THAT HE HAS MENTIONED ABOUT THE NAME OF GOVIND VATIKA ON LY AND NOT OF OTHER SCHEME. THE REPORT CONSISTS OF 15 LINES ONLY. IT WAS CLAIMED BY THE A.R. THAT THIS SCHEME ALONGWITH OTHER SCHEME S ARE BEING DEVELOPED IN HATHOJ AT KALWAR ROAD WHERE MORE THAN 50 DIFFERENT SCHEMES ARE DEVELOPED. THE REPORT DOES NOT MENTION ANYTHING SPECIFIC ABOUT THE LOCATION, WHICH LEADS TO DOUBT A BOUT THE INSPECTOR REALLY HAVING VISITED SITE. NO OPPORTUNIT Y OF CROSS- EXAMINATION WAS ACCORDED BEFORE RELYING ON THE REPO RT. IT WAS SUBMITTED THAT DISALLOWANCE MAY BE DELETED. 3.3 ALTERNATIVELY, IT WAS SUBMITTED THAT IN ANY CAS E, THE A.O. HAS ADDED THE PROFIT FROM GOVIND VATIKA PROJE CT IN THE RETURN OF INCOME AND THE A.O. SHOULD HAVE ADDED ONLY THE E XCESS PROFIT ESTIMATED BY HIM. THE TOTAL PROFIT SHOWN BY THE APP ELLANT FOR THIS PROJECT WAS RS. 6,22,705/- AND CREDIT FOR THE SAME SHOULD HAVE BEEN GIVEN BY THE A.O. 3.5 THE LD CIT(A) RECORDED THE FINDINGS VIDE PARAS 3.4 AND 3.5 OF HIS ORDER AS UNDER:- 3.4 I HAVE CONSIDERED THE ARGUMENT OF THE A.R. AN D HAVE PERUSED THE ASSESSMENT ORDER. AT THE OUTSET IT IS EVIDENT AND UNDISPUTED THAT THE APPELLANT HAS NOT MAINTAINED AN Y BOOKS OF ACCOUNTS FOR VARIOUS PROJECTS AND IT IS ALSO UNDIS PUTED THAT THE EXPENSES ON DEVELOPMENT OF THIS GOVIND VATIKA PROJ ECT HAS BEEN SHOWN BY THE APPELLANT PURELY ON ESTIMATED BASIS . THERE IS NO SUPPORTING BILLS OR VOUCHERS FOR ANY OF THE EXPENSE S. THE APPELLANT HAS ESTIMATED THE EXPENSES OF VARIOUS ACTIVITIES OF PER SQ.YD BASIS. ACCORDINGLY, IT IS QUITE EVIDENT AND UNDISPUTED TH AT THE VERACITY OF THESE EXPENSES CANNOT BE CHECKED/TESTED BY THE A.O . THUS THE A.O. 28 WAS PERFECTLY JUSTIFIED, EVEN IN ABSENCE OF INSPECT OR REPORT TO MAKE DISALLOWANCE OUT OF EXPENSES SHOWN ON ESTIMATED BAS IS ON DEVELOPMENT OF THE PROJECT. THE INSPECTOR REPORT HA S ONLY STRENGTHENED THE FINDING OF THE A.O. THUS THE CONTE NTION OF THE APPELLANT IS DEVOID OF ANY MERIT THAT THE ONLY BASI S FOR DISALLOWANCE IS INSPECTORS REPORT. NOW COMING TO THE INSPECTOR R EPORT, IT IS NOTICED THAT THE INSPECTOR HAS VISITED THE GOVIND VATIKA SCHEME OF THE APPELLANT ON 7.12.09. THE INSPECTOR HAS SPECIFI CALLY MENTIONED ABOUT VISITING AFORESAID SCHEME NAMELY GOVIND VATIK A DEVELOPED BY APPELLANT IN ITS REPORT. ACCORDINGLY, CONTENTION OF THE A.R. OF THE APPELLANT THAT HE HAS DOUBT ABOUT VISITING THE SITE BY THE INSPECTORS, AS THEE ARE MORE THAN 50 DIFFERENT SCHEMES IN THAT AREA, IS DEVOID OF MERIT. WHEN THE INSPECTOR HAS SPECIFICALLY MENTIONE D THE GOVIND VATIKA SCHEME OF THE APPELLANT, THERE WAS NO REQUIR EMENT FOR THE INSPECTOR TO MAKE THE MENTION OF VARIOUS OTHER SCHE MES OF THE NEARBY AREA. AS REGARDS THE CONTENTION OF NOT PROVI DING OPPORTUNITY IS CONCERNED. A.O. HAS BROUGHT TO MY NOTICE DURING THE COURSE OF HEARING THAT THE REPORT OF THE INSPECTOR WAS SHOWN TO THE A.R. OF THE APPELLANT AND HE WAS CONFRONTED WITH THE FACTS MENT IONED IN THE REPORT AS IS EVIDENT FROM ORDER SHEET ENTRY DATED 1 7.12.09. ACCORDINGLY CONTENTION OF THE A.R. OF THE APPELLANT REGARDING CONTENDED DEFECTS IN THE REPORT OF THE INSPECTOR AR E REJECTED BEING DEVOID OF ANY MERIT. THE 1/3 RD DISALLOWANCE SO MADE BY THE A.O. OUT OF ESTIMATED DEVELOPMENT EXPENSES IS UPHELD. 3.5 HOWEVER, I AGREE WITH THE ALTERNATIVE SUBMISSIO N OF THE A.R. THAT WHEN PROFIT OF GOVIND VATIKA PROJECT HAS BEEN COMPUTED BY THE A.O. AT RS. 19,98,070/- WHICH HAS B EEN DIVIDED INTO 3 YEARS AT RS. 6,66,023/-, THE ADDITION SHOULD BE MADE ONLY AFTER REDUCING THE PROFIT SHOWN BY THE APPELLANT FROM TH IS PROJECT IN THE RETURN OF INCOME. IN A.Y. 2005-06, THE APPELLANT HA S SHOWN UNDISCLOSED INCOME FROM ALL THE SCHEMES AT RS. 5,67 ,060/- IN THE 29 RETURN OF INCOME, WHICH INCLUDES UNDISCLOSED INCOME FROM GOVIND VATIKA PROJECT OF RS. 1,32,628/-. THUS THE AMOUNT R EQUIRED TO BE ADDED COMES TO RS. 5,33,395/- IN A.Y. 2005-06 AND A DDITION TO THE AFORESAID EXTENT IS UPHELD. 3.6 BEFORE US, THE LD.AR HAS SUBMITTED AS UNDER:- 4.5 THE BASIS FOR DISALLOWANCE MADE BY THE LD AO IS A REPORT OF THE INSPECTOR. PERUSAL OF THE REPORT OF T HE INSPECTOR DOES NOT INSPIRE ANY CONFIDENCE ABOUT HIS ACTUALLY VISITING THE SITES. THE REPORT MENTIONS THE NAME OF GOVIND VATIK A ONLY AND NOT OF ANY OTHER SCHEME SURROUNDING TO GOVIND VATIK A OR ADJACENT TO IT TO SUPPORT THE VISIT OF INSPECTOR , IF DONE, AT CORRECT LOCATION. THE REPORT IS CONSISTED OF 15 LIN ES ONLY. PLEASE NOTE THAT THE AREA WHERE THESE SCHEMES ARE B EING DEVELOPED IS HATHOJ ON KALWAD ROAD. THE DEVELOPMENT IN THAT AREA IS SCATTERED OVER AROUND 15 KMS AND MORE THAN 50 DIFFERENT SCHEMES ARE BEING DEVELOPED BY DIFFERENT COLONIZERS IN THAT AREA. THE REPORT DOES NOT MENTION ANYTHING SPECIFIC ABOUT THE LOCATION WHICH LEADS TO DOUBT ABOUT THE I NSPECTOR REALLY HAVING VISITED THE SITES. 4.6 THE LD. INSPECTOR IN HIS REPORT HAS MENTIONED ABOUT HIS ENQUIRIES FROM SOME OF THE PERSONS RESIDI NG IN THE SCHEME. ON THE BASIS OF THE ENQUIRY FROM PERSONS HE HAS GIVEN A REPORT OF NO DEVELOPMENT EXPENSES HAVING BEING IN CURRED. HOWEVER, LD. INSPECTOR HAS NOT MENTIONED THE NAME O F EVEN A SINGLE PERSON FROM WHOM ENQUIRIES WERE MADE BY HIM. ALL THIS CONFIRMS THAT THE INSPECTOR HAS GIVEN A REPORT WITH OUT ACTUALLY VERIFYING THE FACTS AND VISITING THE LOCATION. 4.7 THE REPORT OF THE INSPECTOR OTHERWISE ALSO IS CONTRADICTORY. 30 IT ACCEPTS AT ONE PLACE ABOUT CONSTRUCTION OF KACHI ROAD,BUT AT THE SAME TIME OBSERVES THAT THERE IS NO DEMARCATION FOR ROAD. AT THE END OF REPORT HE MENTI ONS THAT THERE NO ROAD IS THERE ON PHYSICAL VERIFICATION. IT MENTIONS OF THE BOUNDARY AND POSSESSION OF PLOTS BUT AT THE SAME TIME OBSERVES THAT DEMARCATION IS NOT D ONE. WITHOUT DEMARCATION POSSESSION AND BOUNDARY WALL AR E NOT POSSIBLE. IT MENTIONS THAT ON ENQUIRY FROM NEARBY PERSONS TH EY SAID THAT NO PLOT FACILITY WAS GIVEN BUT AT THE SA ME TIME OBSERVES THAT HOUSE AND BOUNDRYWALL WAS MADE. HE MENTIONS A REMARKS THAT EXPENSES SHOWN BY ASSESS EE IS NOT FAIR WITHOUT INDICATING ANY SPECIFIC DETAILS THESE CONTRADICTION FURTHER CONFIRMS THAT THE REPOR T HAS BEEN WRITTEN WITHOUT VISITING THE LOCATION. 4.8 WE REQUESTED BEFORE LD.CIT(A) (PB360) FOR CROSS EXAMINING THE INSPECTOR, ON THE BASIS OF WHO SE REPORT THE LD.AO HAS DISALLOWED THE EXPENDITURE, IN THE IN TEREST OF JUSTICE AND FINDING OUT TRUTH BUT THE SAME HAS NOT BEEN DONE 4.9 THIS IS THE FIRST SCHEME OF ASSESSEE WHICH HE H AS DEVELOPED. IT IS ESTABLISHED FACT IN BUSINESS THAT INITIALLY THE PERSON TRIES TO ESTABLISH HIS IMAGE/GOODWILL IN TH E MARKET. IMAGE/GOODWILL IS ALWAYS EARNED BY GIVING GOOD QUAL ITY PRODUCTS AT LOW PRICE.TO MAINTAIN GOOD QUALITY HE H AS TO DEVELOP THE COLONY BETTER THAN OTHERS. THIS IS THE REASON THAT ASSESSEE COULD HAVE BOOK THE PLOTS IN BULK BOOKING EVEN BEFORE PURCHASING THE LAND THE EXPENSES INCURRED BY THE ASSESSEE APPELLANT IS MOST REASONABLE LOOKING TO DE VELOPMENT. 4.10 THE LD CIT(A) AT PAGE 9 OF HIS ORDER(A.Y. 2005 - 06) HAS UPHELD THE ADDITION MADE BY THE LD AO ON TH E GROUND 31 THAT THE ASSESSEE APPELLANT HAS SHOWN THE DEVELOPME NT COST PURELY ON ESTIMATED BASIS. HE COMPLETELY IGNORED TH E FACT THAT THE ASSESSEE APPELLANT HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT FOR HIS UNDISCLOSED BUSINESS. IN SUCH CASES, EXPENS ES ARE ALWAYS TAKEN ON ESTIMATED BASIS. THE LD CIT(A) HAS NOT DISPUTED THE REASONABLENESS OF EXPENSES INCURRED. 4.11 THE CIT(A) HAS OBSERVED THAT THE REPORT OF THE INSPECTOR WAS SHOWN TO THE AR OF THE APPELLANT AND HE WAS CONFRONTED WITH THE FACTS MENTIONED IN THE REPORT. HOWEVER, NO OPPORTUNITY OF CROSS EXAMINATION WAS AFFORDED TO TH E ASSESSEE APPELLANT BEFORE RELYING ON THE REPORT OF THE INSPE CTOR. EVEN OTHERWISE, ANY REPORT WHICH, ON THE FACE OF IT, IS UNRELIABLE CANNOT BE MADE BASIS OF DISALLOWANCE EVEN IF THE CO NTENT OF WHICH MIGHT HAVE BEEN SHOWN TO THE AR OF THE ASSESS EE APPELLANT. 3.7 THE LD DR IN HIS WRITTEN SUBMISSIONS HAS MENTIO NED THAT HE IS RELYING ON THE ORDER OF THE LD CIT(A). 3.8 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THAT DEVELOPMENT EXPENSES ARE NOT VERIFIABLE AND NO DOCUMENTS FOUND TO ASCERTAIN THE QUANTUM OF DEVELOPMENT EXPENSES. IT IS DEFINITELY AN ESTIMATE. THE QUANTUM OF DEVELOPMENT COST OF COLONY CLAIMED IS RS. 41,26,096/- AND 1/3 RD OF THIS HAS BEEN DISALLOWED. IF THE DISALLOWANCE A S MADE BY THE AO IS CONSIDERED THEN NET PROFIT WILL COME TO 13.12% AND THIS IS QUITE EXCESSIVE. HENCE, ONE HAS TO ASCERTAIN THE ESTIMATED EXPENSES. IN THE INSTANT CASE, PROFIT PER SQ. YARD SHOWN BY THE ASSESSEE IS RS. 25.62/- PER SQ. YARD. DURING THE CO URSE OF SEARCH PROCEEDING, THE STATEMENT OF ASSESSEE WAS RECORDED AND IT WAS STATED BY HIM T HAT HE DEMANDED RS. 35/- PER SQ. YARD AS COMMISSION ON THE SELLING OF THE PLOT WHILE THE GUMAN GROUP OFFERED RS. 20/- PER SQ. 32 YARD. THIS IS FOR SUBSEQUENT ASSESSMENT YEARS. IF THE DISALLOWANCE AS MADE BY THE AO IS CONSIDERED THEN PROFIT WILL BE RS. 82/- PER SQ. YAR D. HENCE IT IS OBSERVED THAT DISALLOWANCE AS MADE BY THE AO IS EXCESSIVE. IN THE CASE OF MANG LAM PROJECT, THE ASSESSEE HAS SHOWN PROFIT OF RS. 26/- PER SQ. YARD AND THE AO MADE AN ADDITION MAKING THE PROFIT AT RS. 52/- PER SQ. YARD,. THE LD CIT(A) HAS DELETED THE ADDITI ON THOUGH THE REVENUE IS IN APPEAL BUT THE PROFIT PER SQ. YARD AS CONFIRMED BY THE LD CIT( A) IS RS. 26/- PER SQ. YARD. HENCE, THE FACT HAS BEEN CONSIDERED WHILE ESTIMATING THE DISAL LOWANCE TO BE MADE. IN THE REAL ESTATE BUSINESS CONDUCTED BY THE ASSESSEE, HE WAS TO FIX T HE PRICE PER SQ. YARD AND HENCE IT IS APPROPRIATE TO ASCERTAIN PROFIT PER SQ. YARD THEN T HE PROFIT AS PERCENTAGE OF TURN OVER. FOR ALL THE PROJECTS, WE WILL BE ESTIMATING THE PROFIT AND YARD STICK WILL BE ON THE BASIS OF PROFIT PER SQ. YARD. WE FEEL THAT IT WILL BE FAIR AND REAS ONABLE TO ESTIMATE THE DISALLOWANCE FOR ASSESSMENT YEAR 2004-05 AND 2005-06 AT RS. 1,12,485 /- AND RS. 1,77,765/- WHICH IS 1/3 RD OF DISALLOWANCE CONFIRMED BY THE LD. CIT(A) AS AGAI NST RS. 3,37,455/- AND RS. 5,33,395/- MADE BY THE LD CIT(A) AFTER CONSIDERING THE PROFIT SHOWN BY THE ASSESSEE IN THE RETURNS U/S 153A OF THE ACT FROM THE PROFITS AS UNDISCLOSED INC OME. 4.1 NOW WE WILL TAKE UP THE GROUND OF APPEAL NO. 1 FOR THE ASSESSMENT YEAR 2004-05 AND THE SAME IS REPRODUCED AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN NOT CONSIDERING THE ASSET BASE D THEORY FOR DECIDING THE VARIOUS GROUNDS RELATED TO UNEXPLAINED INVESTMENTS IN SPITE OF SPECIFIC SUBMISSIONS MADE IN THIS REGARD D URING APPELLATE PROCEEDINGS. THE ACTION OF THE LD. CIT (A) IS ILLEG AL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE PROVIDED IN VARIOUS GROUNDS OF APPEAL FOR ADDITIONS UNDER SECTION 69 FOR UNEXPLAINED INVESTMENTS. 4.2 THE ABOVE REFERRED GROUND OF APPEAL HAS NOT BEE N RAISED BEFORE THE LD CIT(A) FOR THE ASSESSMENT YEAR 2004-05 AND THEREFORE, THE LD C IT(A) HAS NOT RECORDED ANY FINDING. 33 THE WRITTEN SUBMISSIONS FILED BEFORE THE LD CIT(A) AVAILABLE AT PAGES 333 TO 358 CONTAIN THE ARGUMENTS ON THE ABOVE ISSUE AT PAGES 344 TO 35 3 AND WERE MADE PART OF ARGUMENTS FOR ADDITION ON ACCOUNT OF ALLEGED EXPLAINED CASH CRED IT FOR ASSESSMENT YEARS 2003-04 TO 2006-07. THE ADDITIONS AGITATED WERE:- 2003-04 RS. 5,21,000 2004-05 RS. 40,54,235 2005-06 RS. 40,51,000 2005-06 RS. 1,24,00,000 2006-07 RS. 1,10,00,000 ACCORDING TO THE ASSESSEE, TOTAL ASSETS FOUND WERE EXPLAINED EXCEPT TO THE UNDISCLOSED ASSETS OF RS. 25.00 LACSS. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS. 1.MUSSTAQ AHMED AND ORS VS ACIT, 66 TTJ 305 (JAIP UR) 2. ACIT VS SHRI MAHESH CHAND JAIN (ITSSA NO.105/J P/05) 3. DCIT VS RAMKUMAR DHANUMA(2000) 24TW 305 (JAIPU R) 4.3 BEFORE US, THE LD.AR HAS REITERATED THE SAME SU BMISSIONS. 4.4 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THAT FACTS FOUND DURING THE COURSE OF SEARCH ARE TO BE CONSIDERED. THE WORD MAY IS BEIN G MENTIONED IN SECTION 68 & 69. THE HONB'LE APEX COURT IN THE CASE OF CIT VS. P MOHAN K ALA, 291 ITR 278 HAS HELD THAT THE ASSESSEE HAS TO GIVE AN EXPLANATION AND THE AO HAS TO CONSIDER THAT EXPLANATION. THE AO HAS TO APPLY HIS MIND BEFORE COMING TO THE CONCLUSI ON AS TO WHETHER THE EXPLANATION IS SATISFACTORY OR NOT. THE CONCLUSION WILL BE THE CON CLUSIONS AS THAT OF A PRUDENT PERSON. THE PRUDENT PERSON WILL DEFINITELY CONSIDER THE QUANTUM OF ASSETS FOUND FOR ACCEPTING OR REJECTING THE EXPLANATION. ADDITIONS MADE TOWARDS I NCOME ARE FAR MORE THAN THE WORTH OF 34 THE ASSESSEE. IT IS TRUE THAT ONUS IS NOT ON THE RE VENUE TO ESTABLISH THAT INCOME ADDED U/S 68 OR 69 IS REAL INCOME AS IT IS A DEEMED INCOME. BUT IF THE ASSESSEE HAS EXPLAINED THE SOURCES THEN SUCH EXPLANATION IS TO BE TESTED ON THE BASIS OF HUMAN PROBABILITY. MOREOVER, TO ASCERTAIN INCOME UNDER ASSET THEORY, ONE SHOULD HAV E THE DETAILS OF EXPENSES AND NONE OF THE AUTHORITIES BELOW HAVE DETERMINED THE OUTGOINGS . HENCE, WE HOLD THAT ASSET THEORY CANNOT BE APPLIED FOR ESTIMATING THE INCOME. HOWEVE R, THE FACTS NOTICED ARE TO BE CONSIDERED. SINCE WE HAD ALREADY DELETED THE ADDITI ON ON ACCOUNT OF INVESTMENT, HENCE THE GROUND OF APPEAL NO 1 IS DISPOSED OFF AS ABOVE. 5.0 NOW WE WILL TAKE UP THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. 5.1 THE FIRST GROUND OF APPEAL IS THE SAME AS RAISE D IN THE ASSESSMENT YEAR 2004-05 AND OUR FINDING IS THE SAME AS GIVEN FOR THAT ASSESSMEN T YEAR. 6.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 IS AS UNDER:- 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,24,00,000/- UNDER SECTION 69 AS ALLEGED UNEXPLAINED INVESTMENT. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETI NG THE SAID ADDITION OF RS. 1,24,00,000/- 6.2 THE AO WHILE MAKING ADDITION OBSERVED AS UNDER: - (A). THE ASSESSEE AS PER SEIZED [ANNEXURE A-1 PAG E-1 TO 7 ] HAS PAID RS. 10,21,000/- TO THE SELLER OF LAND SH. SOHAN, SH. MOHAN AND SH. RADHEY JI YADAV FOR GOKUL VIHAR PROJE CT AT VILL. MINAWALA LAND @ 15,50,000/- PER BHIGA ON 15.10.200 4 FURTHER 35 AMOUNT OF RS. 40,00,000/- WAS PAID ON 15.11.2004 AN D OTHER AMOUNT OF RS. 40,00,000/- WAS GIVEN ON 15.12.2004 A ND FINAL PAYMENT OF RS. 33,79,000/- ON 15.01.2005 FOR ACQUIR ING THIS LAND FOR THE GOKUL VIHAR PROJECT. THUS TOTAL PAYMENT OF RS. 1,24,00,000/- HAS BEEN MADE FOR GOKUL VIHAR PROJECT . ASSESSEE WAS ASKED AS PER ORDER SHEET TO EXPLAIN THE SOURCES OF FUND OF RS. 1,24,00,000/- 'THE EVIDENCE IN THIS REGARD ARE NOT PRESENTLY TRACEABLE. ON OCCASIONS I ALSO RECEIVE MONEY FOR BU LK BOOKING OF PLOTS FROM THE PERSONS WHO ARE IN THIS BUSINESS. THE AMOUNT SO RECEIVED IS USED BY ME FOR MAKING SUBSEQUENT PAY MENT TO THE FARMERS (SELLERS OF LAND) AS PROVIDED IN THE IN ITIAL AGREEMENT WITH THEM FOR MY BUYING THE LAND. THUS I AM ABLE TO DO THE BUSINESS WITHOUT INVESTING ANY CAPITAL OF MI NE.' THE ASSESSEE EXPLANATION HAS BEEN CAREFULLY CONSIDE RED BUT NOT BEEN FOUND JUSTIFIABLE. ASSESSEE HAS NOT ABLE TO GIVE EVIDENCE / FOR ADVAN CE BOOKING OF PLOTS IN GOVIND VATIKA PROJECT. THUS ASS ESSEE HAS GIVEN SKETCHY CASH FLOW FOR SUMMERY WITHOUT ANY EVIDENCE / SUPPORT DOCUMENTS THAT ADVANCE HAVE BEEN RECEIVED OF BOOKIN G OF PLOTS. NO CONFIRMATION HAS BEEN FILED FROM PERSONS WHO HAV E BOOKED PLOTS IN THIS SCHEME. THUS EXPLANATION OFFERED IS U NACEEPTABLE AND WITHOUT ANY BASIS. THUS I HAVE NO OTHER OPTION BUT TO TREAT THE AMOUNT OF RS. 1,24,00,000/- AS UNEXPLAINED CASH CRE DIT U/S 68 FOR ASSESSEE HAS FAILED TO EXPLAINED OF SOURCES OF FUND S. THUS ADDITION OF RS. 1,24,00,000/- IS BEING MADE AS UNEXPLAINED C ASH CREDITS TO THE TOTAL INCOME OF THE ASSESSEE. 6.3 THE LD CIT(A) HAS CONFIRMED THE ADDITION VIDE P ARA 2.6 OF HIS ORDER AFTER OBSERVING AS UNDER:- 36 2.6 I HAVE CONSIDERED THE ARGUMENT OF THE A.R. AND HAVE PERUSED THE ASSESSMENT ORDER. IT IS ADMITTED F ACT THAT APPELLANT HAS PURCHASED 8 BIGHA OF LAND AT VILLAGE MEENAWALA BY WAY OF AGREEMENT BETWEEN APPELLANT AND THE SELLERS NAMELY SH. SOHANJI, SH. MOHANJI AND SH. RADHEJI @ RS. 15.5 LAK H PER BIGHA. THIS PURCHASE OF LAND HAS NOT BEEN SHOWN IN THE REG ULAR BOOKS OF ACCOUNT AND IS THUS UNACCOUNTED . OBVIOUSLY THE PAYMENT SO MADE BY THE APPELLANT AGAINST THE PURCHASE OF LAND TOTALING TO RS. 12400000/- IS ALSO UNACCOUNTED . THE DETAIL OF AMOUNT PAID/PAYABLE IS SPECIFICALLY MENTIONED IN THIS AGRE EMENT, WHICH COMES TO TOTAL OF RS.1,24,00,000/-. THE APPELLANT H AS NOWHERE DISPUTED THIS PAYMENT EITHER BEFORE A.O. OR EVEN BEFORE UNDERSIGNED. AS THIS PURCHASE OF LAND IS UNACCOUNTE D, IT IS EVIDENT THAT RS. 12400000/- HAS BEEN PAID FROM UNAC COUNTED SOURCES, UNLESS THE APPELLANT IS ABLE TO PROVE PART LY OR FULLY THE SOURCE OF PAYMENT OF THIS MONEY. AS ALREADY MENTION ED, ON BEING ASKED BY THE A.O. TO FURNISH THE DETAILS AND EVIDENCE OF THE SOURCE OF THE FUND, THE APPELLANT HAS GIVEN THE GEN ERAL REPLY MENTIONING STATED MODUS OPERANDI OF HIS BUSINESS, W ITHOUT COMMENTING ON THE MERITS OR DEMERITS OF THE MODUS O PERANDI, THE A.O. HAS ASKED TO GIVE SPECIFIC DETAILS OF THE MONEY STATED TO BE RECEIVED FROM VARIOUS PERSONS ALONGWITH EVIDENCE /PROOF. THE APPELLANT HAS SQUARELY FAILED TO FURNISH ANY SUCH D ETAILS BEFORE THE A.O. RATHER HE HAS SPECIFICALLY MENTIONED THAT SUPPORTING DETAILS OF ADVANCE AND EVIDENCE FOR THE SAME ARE NO T PRESENTLY TRADING VIDE HIS LETTER DATED 9.12.09. EVEN IN THE APPEAL PROCEEDINGS BEFORE THE UNDERSIGNED TO ATTEMPT HAS BEEN MADE TO EXPLAIN THE SOURCE OF FUND, BY GIVING SPECIFIC D ETAILS AT 37 SPECIFIC AMOUNT RECEIVED FROM SPECIFIC PERSON. ONLY NAMES AND ADDRESS OF THE PLOT HOLDERS WAS GIVEN BEFORE THE A. O., WITHOUT GIVING ANY DETAILS OF THE AMOUNT RECEIVED FROM EACH OF THE CONTENDED PLOT HOLDERS AS WELL AS THE DATE OF RECEI PT OF THOSE AMOUNTS. IT IS QUITE CLEAR THAT FIRSTLY THIS PURCHA SE OF LAND IS NOT RECORDED IN THE BOOKS OF ACCOUNT AND THUS IS UNACCO UNTED AND SECONDLY THE ONUS LIES ON THE APPELLANT TO GIVE DET AILS OF SOURCE OF INVESTMENT OF RS.12400000/- FOR THE PURCHASE OF LAND WITH SUFFICIENT EVIDENCE. ACCORDINGLY, THE CONTENTION NO W TAKEN BY THE A.R. OF THE APPELLANT THAT HE HAS GIVEN THE NAM E AND ADDRESS OF THE PLOT HOLDERS AND A.O. COULD HAVE MADE VERIFI CATION IS DEVOID OF ANY MERIT. 2.7 ANOTHER ARGUMENT TAKEN BY THE APPELLANT THAT TH ERE WAS NO CASH CREDIT IN THE BOOKS OF ACCOUNTS AND ACC ORDINGLY ADDITION SO MADE BY THE A.O. U/S 68 DESERVES TO BE DELETED HAS BEEN GONE THROUGH BY THE UNDERSIGNED. CONSIDERING T HE FACTS AND THE LEGAL POSITION ON THE ISSUE, THE UNDERSIGNED VI DE ORDER-SHEET ENTRY DATED 16.8.10 HAS ASKED THE A.R. TO SHOW CAUS E AS TO WHY THIS ADDITION SO MADE BY THE A.O. BE CHANGED TO BE MADE U/S 69 OF THE I.T. ACT, 1961 AS UNEXPLAINED INVESTMENT IN PURCHASE OF LAND, AS THIS PURCHASE OF LAND WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND OPPORTUNITY WAS GIVEN TO PUT UP HIS CAS E. THE A.R. OF THE APPELLANT VIDE HIS WRITTEN SUBMISSION DATED 11.10.10 HAS REPLIED THAT PROVISIONS OF SECTION 69 ARE ALSO NOT APPLICABLE BECAUSE NATURE AND SOURCE OF THE INVESTMENT IS FULL Y EXPLAINED, WITHOUT GIVING ANY DETAILS AS TO HOW THE NATURE AND SOURCE OF THE INVESTMENT IS EXPLAINED. AS ALREADY DISCUSSED, HE H AS FAILED TO 38 EXPLAIN THE SOURCE OF INVESTMENT. ACCORDINGLY, IN V IEW OF THE FACTS AND CIRCUMSTANCES AND THE LEGAL POSITION ON T HE ISSUE UNDER CONSIDERATION, THE AMOUNT OF RS. 12400000/- PAID FO R PURCHASE OF LAND WHICH IS UNACCOUNTED, IS HELD TO BE UNEX PLAINED INVESTMENT AND ADDED TO THE TOTAL INCOME OF THE APP ELLANT. THUS ADDITION OF RS. 1,24,00,000/- IS UPHELD AS ABOVE. 6.4 BEFORE US, THE LD.AR DREW OUR ATTENTION TO MODU S OPERANDI OF THE BUSINESS OF THE ASSESSEE AS EXPLAINED IN THE CASE OF THE ASSESSEE F OR THE ASSESSMENT YEAR 2004-05. IT IS TRUE THAT ALL THE DETAILS IN RESPECT OF GOVIND VATIKA PR OJECT WERE AVAILABLE AND FOUND DURING THE COURSE OF SEARCH. IN RESPECT OF PROJECT NAMED AS G OKUL VIHAR , ALL DETAILS ARE NOT AVAILABLE. HOWEVER, THE SOCIETY ALLOTTED PLOTS AND DETAILS OF NAMES AND ADDRESSES OF SUCH PLOTS HOLDERS HAVE BEEN GIVEN AT PAGES 260 TO 264 O F THE PAPER BOOK.. IT WAS SUBMITTED THAT THE ASSESSEE IS NOT A PERSON OF MAKING INVESTMENT O F RS. 1.24 CRORES FROM HIS OWN FUNDS AND THEREFORE, IT WAS STATED THAT ASSET THEORY SHOU LD HAVE BEEN APPLIED. 6.5 ON THE OTHER HAND, THE LD DR STATED THAT ASSESS EE HAS FAILED TO EXPLAIN THE SOURCES OF MAKING PAYMENT AND HENCE THE ENTIRE SUM IS TO BE ADDED 6.6 WE HAVE HEARD BOTH THE PARTIES. IN RESPECT OF ' GOVIND VATKA PROJECT', THE ASSESSEE WAS ABLE TO EXPLAIN THE SOURCES OF INVESTMENT. THE ASSESSEE IS DOING THE REAL ESTATE BUSINESS ON THE BASIS OF THE FUNDS PROVIDED BY BULK PURCHASER AND RETAIL PURCHASER. ONE WILL HAVE TO APPLY THE THEORY OF HUMAN PROBABILITY. ONE IS REQUIRED TO BE TAXED ON THE REAL INCOME AND BEST JUDGEMENT ASSESSMENT IS TO BE MADE ON THE BASIS OF OVERALL CIRCUMSTANCES OF THE CASE. OUR ATTENTION WAS DRAWN TOWARDS THE AC COUNT PREPARED FOR 'GOVIND VATKA PROJECT'. THE AMOUNTS WERE RECEIVED FROM BULK PURCH ASERS BEFORE THE AMOUNT WAS PAID AS 39 PER AGREEMENT. A SUM OF RS. 21,000/- WAS PAID ON 09 -02-2003 AND RS. 5,00,000/- WAS PAID ON 4-03-2003 AND A SUM OF RS. 5,11,000/- WAS MENTIO NED IN THE AGREEMENT. IN THE CASE OF 'GOVIND VATKA PROJECT' , A SUM OF RS. 21,000/- WAS PAID BEFORE THE DATE OF AGREEMENT AND A SUM OF RS. 10,00,000/- WAS PAID ON 15-10-2004. THE ASSESSEE HAS ALSO FILED THE CASH FLOW STATEMENT ALSO. LOOKING TO THE MODUS OPERANDI OF TH E BUSINESS OF THE ASSESSEE WHICH IS VERIFIABLE FROM THE EXECUTION OF THE PROJECT OF 'GO VIND VATKA PROJECT', WE HOLD THAT THE INVESTMENT FOR PURCHASING THE LAND IS OUT OF THE FU NDS RECEIVED FROM BULK AND RETAIL PURCHASERS AND HENCE NO ADDITION IS REQUIRED TO BE MADE ON THIS ACCOUNT. HENCE, THE ADDITION OF RS. 1,24,00,000/- CONFIRMED BY THE LD C IT(A) IS DELETED. 7.1 THE THIRD GROUND OF APPEAL IS AGAINST ADDITION OF RS. 40,51,000/- CONFIRMED BY LD CIT(A) ON THE GROUND THAT INVESTMENT IN LAND IN RES PECT OF 'BRIJ VIHAR PROJECT' IS UNEXPLAINED. 7.2 OUR FINDING IS THE SAME AS GIVEN IN THE CASE OF 'GOVIND VATKA PROJECT' AND GOKUL VIHAR PROJECT AND ACCORDINGLY WE HELD THAT THE LD C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION AND THE ADDITION OF RS. 41,51,000/- IS DELETED. 8.1 THE FOURTH GROUND OF APPEAL RAISED BY THE ASSES SEE IS AS UNDER:- 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION OF RS.5 ,33,395/- AGAINST THE ADDITION OF RS.6,66,023/- MADE BY THE LD. AO IN RES PECT OF GOVIND VATIKA PROJECT BY DISALLOWING 1/3 DEVELOPMENT EXPENSES. TH E ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS.5,33,395/-. 8.2 THE REVENUE HAS RAISED THE GROUND OF APPEAL NO. 1 AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AN D ON FACTS IN 40 DIRECTING THE AO TO REDUCE THE ADDITION OF RS. 6,66 ,023/- BY RS. 1,32,628/- IN RESPECT OF GOVIND VATIKA PROJECT ON T HE GROUND THAT THE ASSESSEE HAS SHOWN PROFIT OF RS. 1,32,628/- WHE N HE HIMSELF HAD UPHELD THE ACTION OF THE AO IN DISALLOWING 1/3 RD PART OF DEVELOPMENT EXPENSES AS THE ASSESSEE HAD NOT SHOWN THE AMOUNT O F RS. 1,32,628/- IN HIS RETURN OF INCOME FILED U/S 153A F OR ASSESSMENT YEAR 2005-06. 8.3 WE HAD DECIDED THIS ISSUE WHILE DECIDING THE AP PEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05. THE REVENUE HAS NOT RAISED ANY GROUND OF APPEAL FOR THE ASSESSMENT YEAR 2004-05. FOLLOWING OUR FINDING IN T HE ASSESSMENT YEAR 2004-05 IN WHICH THE ADDITION OF ASSESSMENT YEAR 2005-06 WAS ALSO CO NSIDERED, WE HOLD THAT AN ADDITION OF RS. 177,765/- IS TO BE MADE. HENCE, THE GROUND OF A PPEAL 4 OF THE ASSESSEE IS PARTLY ALLOWED WHILE GROUND OF APPEAL NO 1 OF THE REVENUE IS DISMISSED. 9.1 GROUND OF APPEAL NO. 5 OF THE APPEAL OF THE ASS ESSEE FOR THE ASSESSMENT YEAR 2005- 06 IS AS UNDER:- 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE L D. AO IN ESTIMATING THE PROFITS OF BRIJ VIHAR PROJECT AT 6% OF TOTAL SALES AND THEREAFTER CONFIRMING THE ADDITION OF RS.2,51,872/- OUT OF THE TOTAL ADDI TION OF RS.2,64,000/- MADE BY THE LD. AO ON ACCOUNT OF PROFIT OF BRIJ VIHAR PR OJECT. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID A DDITION OF RS.2,51,872 /-. 9.2 THE GROUND OF APPEAL NO 2 OF THE APPEAL OF THE REVENUE IS AS UNDER:- 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AN D ON FACTS IN DIRECTING THE AO TO REDUCE THE ADDITION OF OF RS. 2 ,64,000/- BY RS. 12,287/- IN RESPECT OF THE BRIJ VIHAR PROJECT ON TH E GROUND THAT THE ASSESSEE HAS SHOWN THE AMOUNT OF RS. 12,287/- EVEN THOUGH THE 41 ASSESSEE HAD NOT SHOWN THE AMOUNT OF RS. 12,287/- I N HIS RETURN OF INCOME FILED U/S 153A FOR ASSESSMENT YEAR 2005-06. 9.3 WE HAVE HEARD BOTH THE PARTIES. THE COST OF LAN D IS RS. 661/- PER SQ. YARD. THE ASSESSEE HAS SHOWN PROFIT AT RS. 26/- PER SQ. YARD. THE AO MADE ADDITION OF RS. 5,28,000/- FOR THIS PROJECT. AFTER MAKING ADDITION, THE PROFIT PER SQ. YARD WILL COME TO RS. 91/-PER SQ. YARD . THE LD CIT(A) HAS CONSIDERED THE PROFIT DISC LOSED IN THE RETURN U/S 153A AND DIRECTED THAT THE SAME BE REDUCED FROM THE ADDITION MADE BY THE AO AND ACCORDINGLY UPHELD THE ADDITION OF RS. 3,18,414/-. 9.4 ANOTHER ASPECT IS THAT THE ASSESSEE HAS SHOWN P ROFIT ON THE BASIS OF PERCENTAGE COMPLETION METHOD. THE PERCENTAGE COMPLETION OF PRO JECT IS BASED ON THE AMOUNT PAID TO THE PARTY FROM WHICH LAND PURCHASED AS THESE DETAIL S ARE AVAILABLE AND DETAILS OF RECEIPT OF BOOKING ARE NOT AVAILABLE. THE ASSESSEE SHOWED PROF IT OF RS. 12,128/- DURING ASSESSMENT YEAR 2005-06 AND RS. 1,97,458/- DURING THE ASSESSME NT YEAR 2006-07. THE AO HAS BIFURCATED THE ADDITION MADE FOR THE PROJECT FOR BO TH THE ASSESSMENT YEARS IN EQUAL PROPORTION. THE METHOD OF ACCOUNTING OF PROFIT IN T HE CASE OF PROJECT IS EITHER PERCENTAGE COMPLETION METHOD OR PROJECT COMPLETION METHOD. THE RE IS NO SUCH METHOD TO DIVIDE PROFIT EQUALLY FOR ALL THE YEARS AS THE RETURN FOR A PARTI CULAR YEAR IS TO BE FILED BEFORE ONE IS ABLE TO ASCERTAIN THE PERIOD DURING WHICH PROJECT WILL BE C OMPLETED. HENCE, THE ACTION OF THE AO IN MAKING ADDITION EQUALLY FOR BOTH THE ASSESSMENT YEARS IS NOT ACCEPTABLE. ONE HAS TO ESTIMATE THE PROFIT. DURING THE COURSE OF SEARCH, T HE ASSESSEE IN HIS STATEMENT MENTIONED THAT AGREEMENT WITH GUMAN GROUP DID NOT MATERIALIZE BECAUSE HE DEMANDED RATE OF RS. 35/- PER SQ. YARD WHILE GUMAN GROUP WAS WILLING TO PAY COMMISSION OF RS. 20/- PER SQ. YARD. OF COURSE IN A PROJECT WHICH IS UNDERTAKEN BY THE ASSESSEE, THE PROFIT PER SQ. YARD 42 EXPECTED SHOULD BE MORE THAN RS. 35/- PER SQ. YARD FOR THE YEAR IN WHICH THE OFFER WAS GIVEN BY GUMAN GROUP. THE ASSESSEE ALSO SHOWED PROF IT AT RS. 26/- PER SQ. YARD IN MANGLAM PROJECT AND THE AO MADE THE ADDITION WHICH WAS EQUIVALENT TO PROFIT SHOWN BY THE ASSESSEE. THE SAME HAS BEEN DELETED. HENCE, THE LD CIT(A) IN RESPECT OF MANGLAM PROJECT CONSIDERED THE PROFIT RATE AT RS. 26/- PER SQ. YARD AS NORMAL. CONSIDERING THESE FACTS, WE FEEL IT WILL BE FAIR AND REASONABLE TO RE STRICT THE ADDITION WHICH IS 1/3 RD OF THE PROFIT SHOWN BY THE ASSESSEE. HOWEVER, WE ALSO ACCE PT THE ACCOUNTING ADOPTED BY THE ASSESSEE AS THE ASSESSEE HAS ADOPTED PERCENTAGE COM PLETION METHOD. IN RESPECT OF BRIJ VIHAR PROJECT, THE ASSESSEE HAS SHOWN PROFIT OF RS . 12,128/- FOR THE ASSESSMENT YEAR 2005- 06 AND RS. 1,97,458/- FOR THE ASSESSMENT YEAR 2006- 07. HENCE, THE ADDITION CONFIRMED FOR THE ASSESSMENT YEAR 2005-06 WILL BE RS. 4,010/- AND RS. 62,486/- FOR THE ASSESSMENT YEAR 2006-07. HENCE, THE GROUND OF APPEAL OF THE ASSESSE E IS PARTLY ALLOWED WHILE GROUND OF APPEAL REVENUE IS DISMISSED. 10.1 THE SIXTH GROUND OF APPEAL OF THE ASSESSEE FO R THE ASSESSMENT YEAR 2005-06 IS AS UNDER:- 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE L D. AO IN ESTIMATING THE PROFITS OF GOKUL VIHAR PROJECT AT 6% OF TOTAL SALES AND THEREAFTER CONFIRMING THE ADDITION OF RS.3,44,744/- OUT OF THE TOTAL ADDI TION OF RS.7,44,000/- MADE BY THE LD. AO ON ACCOUNT OF PROFIT OF GOKUL VIHAR P ROJECT. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID A DDITION OF RS.3,44,744/ -. 10.2 THE THIRD GROUND OF APPEAL RAISED BY THE REVEN UE IS AS UNDER:- 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FA CTS IN DIRECTING THE AO TO REDUCE THE ADDITION OF RS. 7,44,000/- BY RS. 3,. 99,256/- IN RESPECT OF GOKUL VIHAR PROJECT ON THE GROUND THAT THE ASSESSEE HAS SHOWN PROFIT OF 43 RS.3,99,256/- EVEN THOUGH THE ASSESSEE HAD NOT SHOW N THE AMOUNT OF RS. 3,99,256/- IN HIS RETURN OF INCOME FILED U/S 153A F OR ASSESSMENT YEAR 2005- 06. 10.3 THE ASSESSEE SHOWED A PROFIT RATE OF RS. 26/- PER SQ. YARD. THE AO MADE ADDITION OF RS. 7,44,000/- AND SUCH ADDITION AMOUNTED TO ADD ITION OF RS. 48.50/- PER SQ. YARD I.E. THE AO HAS APPLIED THE RATE OF 74.50/-PER SQ. YARD. 10.4 THE LD CIT(A) HAS CONSIDERED THAT ASSESSEE HIM SELF HAS SHOWN UNDISCLOSED INCOME FROM THIS PROJECT AND ACCORDINGLY DIRECTED THE AO T O REDUCE THE SAME FROM UNDISCLOSED INCOME DETERMINED. 10.5 WE HAVE CONSIDERED THAT RATE PER SQ. YARD SHOW N BY THE ASSESSEE IS NOT ACCEPTABLE AND THE RATE DETERMINED BY THE LD CIT(A) IS EXCESSI VE. IN CASE OF BRIJ VIHAR PROJECT, WE HAVE HELD THAT PROFIT OF AROUND 1/3 RD IS TO BE ADDED. THUS THE ADDITION WHICH IS REQUIRE D TO BE CONFIRMED WILL BE RS. 1,33,090/-. HENCE, THE GRO UND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED WHILE GROUND OF APPEAL OF THE REVENU E IS DISMISSED. 11.1 THE FOURTH GROUND OF APPEAL RAISED BY THE REVE NUE IS AS UNDER:- 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AN D ON FACTS IN DIRECTING THE AO TO DELETE THE ADDITION MADE IN RESPECT OF THE MA NGLAM RESIDENCE PROJECT ON THE GROUND THAT THE ASSESSEE HAS SHOWN P ROFIT OF RS. 2,19,843/- EVEN THOUGH THE ASSESSEE HAD NOT SHOWN THE AMOUNT O F RS. 2,19,843/- IN HIS RETURN OF INCOME FILED U/S 153A FOR ASSESSMENT YEAR 2005-06. 11.2 THE ASSESSEE HAS SHOWN PROFIT AT RS. 26/- PER SQ. YARD AND DISCLOSED THE PROFIT OF RS. 4,39,686/-. THE AO MADE THE ADDITION EQUAL TO R S. 4,39,686/-. THE LD CIT(A) HELD THAT ASSESSEE HAS SHOWN UNDISCLOSED INCOME FROM SUCH PRO JECT IN THE RETURN FILED U/S 153A AND HENCE THE SAME IS TO BE REDUCED. THUS THE ADDITION MADE BY THE AO WAS DELETED. 44 11.3 CONSIDERING OUR FINDINGS FOR BRIJ VIHAR PROJE CT, WE FEEL THAT ESTIMATION MADE BY THE ASSESSEE IS TO BE FURTHER INCREASED BY A SUM WH ICH REPRESENTS 1/3 RD OF THE PROFIT SHOWN. WE THEREFORE, CONFIRM THE ADDITION OF RS. 1,46,562/ - FOR BOTH THE ASSESSMENT YEARS 2005-06 AND 2006-07 AT RS. 73,281/- EACH. HENCE, THE GROUND OF APPEAL IS PARTLY ALLOWED. ASSESSMENT YEAR 2006-07 12.1 THE FIRST GROUND OF APPEAL RAISED BY THE ASSES SEE IS THE SAME AS RAISED IN ASSESSMENT YEAR 2004-05. 12.2 FOLLOWING OUR FINDINGS FOR THE ASSESSMENT YEAR 2004-05,WE HOLD THAT THE ASSETS FOUND DURING THE SEARCH ARE TO BE CONSIDERED FOR CO MING TO CONCLUSION OF ESTIMATED INCOME. HOWEVER, IN ABSENCE OF DETAILS OF OUTGOINGS , IT IS NOT POSSIBLE TO ASCERTAIN INCOME FROM INCOME AND EXPENDITURE ACCOUNT. 13.1 GROUND OF APPEAL NO. 2 IS AGAINST PAYMENT OF R S. 1,10,00,000/- AS UNEXPLAINED INVESTMENT. 13.2 WE HAVE ACCEPTED THE CONTENTION OF THE ASSESSE E THAT HE ARRANGED FUNDS FROM BULK PURCHASERS AND RETAIL PURCHASERS FOR PAYING THE SUM TO THE FARMERS. HENCE, THE EXPLANATION IN RESPECT OF INVESTMENT IS TO BE CONSIDERED SATISF ACTORY IN VIEW OF THE WORD MAY MENTIONED IN SECTION 69 OF THE ACT. CONSIDERING OUR FINDINGS FOR INVESTMENT IN BRIJ VIHAR, GOKUL VIHAR AND GOVIND VATIKA, WE FEEL THAT NO ADDITION IS REQUIRED TO BE MADE U/S 69 FOR PAYMENT TO FARMERS FOR THE SHUBHAM VIHAR PR OJECT. HENCE, THE ADDITION OF RS. 1,10,00,000/-IS DELETED AND GROUND OF APPEAL NO 2 O F THE ASSESSEE IS ALLOWED. 14.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE FO R THE ASSESSMENT YEAR 2006-07 IS AS UNDER:- 45 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 21,00,000/- UNDER SECTION 69 AS ALLEGED UNEXPLAINED INVESTMENT. THE A CTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 21,00,000/-. 14.2 THE FINDING OF THE LD CIT(A) ON THIS ISSUE IS AS UNDER:- 2.11 SIMILAR FACTS ARE THERE IN RESPECT OF PURCHA SE OF 2 BIGHA 10 BISWA LAND AT VILLAGE BEGUS FOR WHICH THE APPELLANT HAS MADE PAYMENT OF RS. 21,00,000/- THE APPELLANT HAS NOT SHOWN THIS LA ND ALSO IN HIS BOOKS OF ACCOUNT OR BOOKS OF ACCOUNT OF HUF, IF ANY MAINTAIN ED. IN ANY CASE, AS THE APPELLANT HAS BEN ACTUALLY DOING THE BUSINESS IN HI S INDIVUDUAL CAPACITY AND NO EVIDENCE OF INCOME OF HUF ETC WAS FURNISHED EITH ER BEFORE THE A.O. OR EVEN BEFORE THE UNDERSIGNED, IT IS APPROPRIATE TO H OLD THAT THE APPELLANT HAS HIMSELF INVESTED IN PURCHASE OF THIS LAND ALSO AND MERELY FOR THE PURPOSE OF AGREEMENT HE HAS PUT HUF THEREIN. ACCORDINGLY, THE PAYMENT MADE BY APPELLANT FOR PURCHASE OF LAND BEING UNACCOUNTED, T HE ADDITION MADE BY THE A. O. AMOUNTING TO RS. 21 LAKHS IS ALSO UPHELD. 14.3 BEFORE US, THE LD.AR HAS FILED THE FOLLOWING S UBMISSIONS. 3.3 RANJEET SINGH YADAV HUF ENTERED INTO AN AGREEMENT WITH MR.MOOL CHAND GURJAR FOR THE PURCHASE OF LAND AT BEGUS VIDE AGREEMENT DATED 06.10.2005 IN MACHWA TEHSIL, DISTR ICT JAIPUR. COPY OF AGREEMENT (ANNEXURE-15/PAGE 1-3) IS AT PB 26-28 . THE AGREEMENT IS IN THE NAME OF RANJEET SINGH YADAV HUF AND NOT R ANJEET SINGH YADAV INDIVIDUAL I.E. ASSESSEE. 3.4 THE SEIZED DOCUMENTS CLEARLY SHOW THAT THE TRA NSACTION BELONGED TO HUF. THERE IS NO EVIDENCE WITH THE DEPA RTMENT TO HOLD THAT THE INVESTMENT IS OF THE APPELLANT. 46 3.5 THE HUF IS A SEPARATE ENTITY AND IS ASSESSED BY HIS JURISDICTIONAL AO VIDE PAN AAGHR2433E. THE HUF HAS BEEN FILING ITS RETURN SINCE LONG BACK AND RETURN FOR THE A.Y.2 006-07 HAS BEEN FILED ON 31.03.2007. THE PAYMENT HAS BEEN MADE THRO UGH BANK STATEMENT OF RANJEET SINGH YADAV HUF ONLY. 3.6 IN THE AGREEMENT (PB 27-28 ) THE PAYMENT HAS BEEN MENTIONED TO BE THROUGH CHEQUE NO. 094282 DT.06.10.2005 OF J AIPUR NAGAUR ANCHALIK GRAMIN BANK BRANCH JHOTWARA ,JAIPUR. ALL THE STATEMENT OF BANK ACCOUNTS (PB309-331.) OF THE ASSESSEE APPE LLANT WERE WITH THE LD AO WHO HAS FAILED TO VERIFY THIS PAYMENT FRO M THE SAID BANK STATEMENT. ON VERIFICATION IT WOULD HAVE BEEN FOUND THAT ASSESSEE APPELLANT HAS NOT MADE THE PAYMENTS. IF THE LD AO W OULD HAVE CARED TO EXAMINE THE BANK ACCOUNT OF RANJEET SINGH YADAV HUF, HE WOULD HAVE FOUND THE PAYMENT IN THE SAID BANK ACCOU NT. THUS, LD AOS ACTION IS BASE LESS AND CONTRARY TO FACTS ON R ECORD. 3.7 INCOME TAX CAN BE CHARGED U/S 4 READ WITH SECTI ON 2(31) OF THE INCOME TAX ACT, 1961. SECTION 4 STATES THAT INCOME TAX SHALL BE CHARGED IN RESPECT OF THE TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON. TYPES OF PERSONS HAVE BEEN DEFINED U/S 2(31) OF THE INCOME T AX ACT, 1961. CLAUSE (I) AND CLAUSE (II) OF SECTION 2(31) RELATES TO IND IVIDUAL AND HUF RESPECTIVELY. BOTH ARE DISTINCT AND DIFFERENT ENTITIES. IT IS A W ELL SETTLED PRINCIPAL OF LAW THAT INCOME SHALL BE CHARGED TO TAX IN THE H ANDS OF THE PERSON TO WHOM IT BELONGS. FURTHER, INCOME OF ONE PERSON CANN OT BE TAXED IN THE HANDS OF OTHER PERSON. HONORABLE SUPREME COURT IN THE CASE OF ITO V/S BACH U LAL KAPOOR [1966] 60 ITR 74 (SC) HAS HELD THAT SO L ONG AS HUF EXISTS, INDIVIDUAL MEMBERS CANNOT BE SEPARATELY ASS ESSED IN RESPECT OF HUFS INCOME. IN THE CASE OF CIT VS. DREDGING CORPORATION OF INDI A LTD. (1988) 174 ITR 682, 687 (AP) IT HAS BEEN HELD THAT THE CHARGE OF INCOME TAX IS ON EVERY PERSON. THUS THE DEFINITION OF THE 47 EXPRESSION PERSON OCCURRING IN SECTION 2(31) IS A VERY CRUCIAL DEFINITION BECAUSE IT IS WITH REFERENCE TO THE CATE GORY OF ENTITIES SPECIFIED IN SECTION 2(31) THAT THE LIABILITY TO TA X UNDER THE INCOME TAX ACT, 1961 IS DETERMINED. IF THE PERSON I S NOT CAPABLE OF BEING CONSIDERED AS A PERSON WITHIN THE MEANING OF SECTION 2(31), THEN NO LIABILITY ATTACHES. IT HAS BEEN HELD BY THE APEX COURT IN THE CASE OF C IT VS. RAMESHWARLAL SANWARMAL [1971] 082 ITR 0628 (SC) THA T INDIVIDUAL AND HUF ARE TOTALLY DIFFERENT UNITS OF T AXATION AND THAT THEY ARE TWO DIFFERENT ASSESSEE. THIS PRINCIPA L EMERGES FROM THE CHARGING SECTION 4 OF THE ACT ITSELF. 3.8 IT IS HUMBLY SUBMITTED THAT ADDITION WERE MADE IN T HE HAND OF THE ASSESSEE APPELLANT FOR THE LAND PURCHAS ED BY OTHER PERSON I.E.RANJEET SINGH YADAV HUF WHICH IS AGAINST THE CHARGING SECTION ITSELF. IN VIEW OF THE ABOVE, THERE IS NO BASIS FOR CONFIRM ING THE ADDITION OF RS. 21.00 LACS. THEREFORE, HUMBLE PRAYE R IS MADE FOR DELETING THE SAME. 14.4 ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF AUTHORITIES BELOW. 14.5 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THA T THE ASSESSEE HAS NOT FILED THE REQUIRED EVIDENCE. THE ASSESSEE IN HIS CAPACITY OF HUF IS H AVING S.B. A/C NO.1004489 IN JAIPUR NAGAUR ANCHALIK GRAMIN BANK. THE AGREEMENT WAS ALSO IN THE NAME OF HUF. SINCE THE EVIDENCE ON WHICH THE ASSESSEE IS PLACING RELIANCE WAS NOT BEFORE THE AO AND HENCE THIS ISSUE IS RESTORED BACK ON THE FILE OF THE AO. THE A SSESSMENT YEAR INVOLVED IS 2006-07 AND THE REVENUE IF IT FEELS THAT THE ACTION IS TO BE TA KEN AGAINST HUF OF THE ASSESSEE THEN IT WILL HAVE LEGAL REMEDY STILL AVAILABLE. HENCE, THE ADDIT ION OF RS. 21.00 LACS IS RESTORED BACK ON THE FILE OF THE AO. 48 15.1 THE FOURTH GROUND OF APPEAL OF THE ASSESSEE I S AGAINST CONFIRMING THE ADDITION OF RS. 66,542/- IN CASE OF BRIJ VIHAR PROJECT. 15.2 THE FIRST GROUND OF APPEAL OF THE REVENUE IS A GAINST DELETING THE ADDITION OF RS. 2,64,000/- TO RS. 66,542/-. 15.3 THIS ISSUE STANDS DECIDED WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2005-06. FOLLOWING OUR FINDING THAT ADDITION OF RS. 62,486/- IS TO BE RETAINED. THE GROUND OF APPEAL OF ASSESSEE IS PARTLY ALLOWED WHILE GROUN D OF APPEAL OF REVENUE IS DISMISSED. 16.1 THE FIFTH GROUND OF APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IS AS UNDER:- 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. AO IN ESTIMATING THE PROFITS OF SHUBHAM VIHAR PROJECT AT 6% OF TOTAL SALES AND THEREAFTER CONFIRMING THE ADDITION OF RS.3,91,119/- OUT OF THE TOTAL ADDITION OF RS.7,52,320 /- MADE BY THE LD. AO ON ACCOUNT OF PROFIT OF SHUBHAM VIHAR PROJECT. THE ACTION OF THE LD. CIT (A) IS ILL EGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEAS E BE GRANTED BY DELETING THE SAID ADDITION OF RS.3,91,119/-. 16.2 THE GROUND OF APPEAL NO. 2 OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IS AS UNDER:- 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FA CTS IN DIRECTING THE AO TO DELETE THE ADDITION OF RS. 7,52,320/- BY RS. 5,1 8,075/- IN RESPECT OF THE SHUBHAM VIHAR PROJECT ON THE GROUND THAT THE ASSESS EE HAS SHOWN PROFIT OF RS. 5,18,075 /-EVEN THOUGH THE ASSESSEE HAD NOT SHO WN THE AMOUNT OF RS. 5,18,075/- IN HIS RETURN OF INCOME FILED U/S 153A F OR ASSESSMENT YEAR 2006- 07. 16.3 THE ASSESSEE HAS SHOWN PROFIT @ OF RS. 26/- PE R SQ. YARD AT RS. 9,09,194/- IN DIFFERENT ASSESSMENT YEARS AS UNDER:- A.Y. PROFIT (RS.) 2006-07 5,18,075/- 49 2007-08 99,914/- 2008-09 2,91,205/ THE AO MADE ADDITION OF RS. 22,56,940/- WHICH REPRE SENTED AN ADDITION @ RS. 64.54/- PER SQ. YARD. THIS MEANS THAT THE PROFIT IS AT RS. 90.5 4/- PER SQ. YARD. THE LD CIT(A) DIRECTED THE AO TO REDUCE THE DECLARED UNDISCLOSED INCOME I N THE RETURN U/S 153A AND HENCE REDUCED THE ADDITION TO RS. 13,47,760/- WHICH MEANS THAT THE LD CIT(A) ADOPTED PROFIT RATE AT RS. 64.50/- PER SQ. YARD. LOOKING TO OUR DISCUSS ION AS CONTAINED IN EARLIER PARAS IN RESPECT OF OTHER PROJECTS, WE FEEL THAT PROFIT SHOU LD BE DETERMINED ON PERCENTAGE COMPLETION METHOD AND IT WILL BE FAIR AND REASONABL E TO RESTRICT THE ADDITION AS 1/3 RD OF PROFIT DISCLOSED BY THE ASSESSEE 16.4 THE ADDITION FOR DIFFERENT ASSESSMENT YEARS WI LL BE :- A.Y. AMOUNT 2006-07 1,72,692/- 2007-08 33,315/- 2008-09 97,069/- 16.5 THE THIRD GROUND OF APPEAL OF REVENUE IS AGAIN ST THE RELIEF OF RS. 2,19,843/- GIVEN BY THE LD CIT(A) IN RESPECT OF MANGLAM RESIDENCY PR OJECT. THIS ISSUE HAS BEEN CONSIDERED IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 200 5-06 AND FOLLOWING THAT FINDING, THE ADDITION TO THE EXTENT OF RS. 73,281/- IS CONFIRMED . ASSESSMENT YEAR 2007-08 17.1 THE FIRST GROUND OF APPEAL OF ASSESSEE IS THE SAME AS IN ASSESSMENT YEAR 2004-05 AND OUR FINDING IS THE SAME AS GIVEN IN ASSESSMENT YEAR 2004-05. 18.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION TO THE EXTENT OF RS. 6,52,406/- IN SHUBHAM VIHAR PROJECT. 50 18.2 THE FIRST GROUND OF APPEAL OF THE REVENUE IS T HAT THE LD CIT(A) HAS ERRED IN GIVING RELIEF OF RS. 99,914/- IN RESPECT OF SUBHAM VIHAR P ROJECT. 18.3 THE ISSUE HAS BEEN CONSIDERED WHILE DISPOSING OFF APPEAL FOR TE ASSESSMENT YEAR 2006-07. THE ADDITION IS REDUCED TO RS. 33,315/-. H ENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED WHILE THE GROUND OF APPE AL OF THE REVENUE IS DISMISSED. 19.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 IS AS UNDER:- 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS. 3,75,000/- UNDER SECTION 69 AS ALLEGED UNEXPLAINED INVESTMENT OUT OF THE TOTAL ADDITION OF RS.23,75,000/- MADE BY THE LD. AO UNDER SECTION 68. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAI NST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID A DDITION OF RS.3,75,000 /- . 19.2 THE SECOND AND THIRD GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER:- 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FA CTS IN DIRECTING THE AO IN DELETING THE ADDITION OF RS20,00,000/- OUT OF T OTAL ADDITION OF RS. 23,75,000/-WHICH WAS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 AS THE ASSESSEE HAD FAILED TO EXPLAIN THE SOURCE OF FUND FOR PAYMENT OF RS. 23,75,000/- TO M/S. KASHERA FOR ONE BIGHA LAND AT MACHWA. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FA CTS IN DIRECTING THE AO IN DELETING THE ADDITION OF RS20,00,000/- AS THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE REGARDING CANCELLATION OF AGRE EMENT REGARDING LAND AT MARCHWA.. 19.3 THE LD CIT(A) HAS CONSIDERED THIS ISSUE IN PAR AS 4.1 TO 4.3 AND THESE ARE REPRODUCED AS UNDER:- 51 4.1 THE A. O. HAS MADE THIS ADDITION CONSIDER ING THE SALE AGREEMENT FOUND AT PAGE NO. 28 TO 31 OF ANN. A-11, IN WHICH PURCHASE OF 1 BIGHA LAND FOR RS. 23.75 LAKHS WAS MENTIONED AND THE APPE LLANT FAILED TO EXPLAIN THE NATURE AND SOURCE OF PAYMENT FOR THE SAME. 4.2 BEFORE ME, IT WAS SUBMITTED THAT AS PER THI S AGREEMENT ONLY RS. 3.75 LAKHS WAS GIVEN AS ADVANCE TO THE SELLER. HOWEVER, LATER ON THE DEAL COULD NOT BE FINALIZED DUE TO SOME DISPUTE IN THE LAND, W HICH CAME INTO THE KNOWLEDGE OF APPELLANT AFTER THE EXECUTION OF THE AGREEMENT. THE APPELLANT HAD NOT PAID ANY FURTHER AMOUNT TO M/S. KESARA, THE SELLER. THE LAND IS STILL IN THE NAME OF SH. KESARA, WHICH CAN BE VERIFIED BY YOUR GOOD SELF FRO M THE COPY OF JAMABANDI WHICH IS SUBMITTED (BEFORE ME). ADDRESS OF SH. KESARA WAS ALSO GIVEN FOR FURTHER VERIFICATION OF THE A.O., IF ANY. IN VIEW OF THE AB OVE, IT WAS SUBMITTED THAT THE ADDITION MAY BE DELETED. COPY OF THE SUBMISSION AND COPY OF JAMABANDI WAS ALSO SHOWN TO THE A.O., WHO WAS PRESENT DURING THE HEARI NG. IT WAS ALSO SUBMITTED THAT THIS LAND HAS NOT BEEN IN ANY WAY CONSIDERED OR INC LUDED IN ANY OF THE PROJECT OF THE APPELLANT. 4.3 I HAVE CONSIDERED THE ARGUMENT OF A. R. AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. ON PERUSA L OF COPY OF AGREEMENT DATED 21.03.07, GIVEN BY A. O. IT IS SEEN THAT THE APPELL ANT HAS GIVEN ADVANCE OF RS. 3.75 LAKHA FOR THE PURCHASE OF ONE BIGHA OF LAND FOR RS. 23,75,000/- THERE IS NO ANY DETAIL OR EVIDENCE REGARDING FURTHER PAYMENT. AS THE AGREE MENT ONLY INDICATE PAYMENT F ADVANCE OF RS. 3.75 LAKHS AND THE LAND HAS NOT BEEN TAKEN POSSESSION OF BY THE APPELLANT AND AS THE COPY OF THE JAMABANDI STILL IN DICATE THE NAME OF THE OWNER AS SH. KESARA AND NOT THE APPELLANT AND IN ABSENCE OF ANY OTHER EVIDENCE IN FAVOUR OF A.O'S FINDING AND IN ABSENCE OF ANY FURTHER COMMENTS OR E VIDENCE FURNISHED BY THE A. O. DURING THE APPEAL HEARING TO SUPPORT THE A.O.'S FIN DING THE ADDITION TO THE EXTEND OF RS. 20 LAKHS IS NOT SUSTAINABLE AND IS THEREFORE DE LETED. HOWEVER, AS APPELLANT HAS SQUARELY FAILED TO FURNISHED THE NATURE AND SOURCE OF PAYMENT OF RS. 3,75,000/- PAID AS ADVANCE FOR PURCHASE OF AFORESAID PLOT AND AS AL READY DISCUSSED IN APPEAL FOR A. Y. 2006-07 REGARDING ARGUMENT OF CONTENDED RECEIPT FRO M ADVANCE BOOKING BEING NOT TENABLE, THE ADDITION OF RS. 3,75,000/- IS HEREBY C ONFIRMED AS UNEXPLAINED INVESTMENT 52 GIVEN AS ADVANCE FOR PURCHASE OF LAND, INSTEAD OF U /S 68 DONE BY THE A. O. AFTER GIVING OPPORTUNITY FOR THE SAME VIDE ORDER SHEET ENTRY DAT ED 16.08.2010 AND CONSIDERING THE REPLY OF THE APPELLANT AS IS HELD IN APPEAL FOR A. Y. 2006-07. 19.4 THE LD.AR HAS SUBMITTED AS UNDER:- 2.3 THE ASSESSEE APPELLANT ALONGWITH MR. SHARIF HAD ENT ERED INTO AN AGREEMENT WITH MR. KESARA FOR THE PURCHASE OF LAND IN MACHWA TEHSIL, DISTRICT JAIPUR. COPY OF AGREEMENT ( ANNEXURE- 11/PAGE 28 TO 31) IS AT PB 22-25 TOTAL CONSIDERATION MUTUALLY AGREED BETWEEN ASSESSE E AND MR. KESARA WAS RS. 23.75 LACS, OUT OF WHICH RS.3.75 LAC S WAS PAID TO MR. KESARA DURING THE YEAR FINANCIAL YEAR 2006-07. THIS AGREEMENT COULD NOT BE MATERIALIZED DUE TO SOM E DISPUTE IN LAND WHICH CAME TO THE NOTICE OF THE ASSESSEE APPEL LANT AFTER EXECUTION OF AGREEMENT. THEREAFTER THE ASSESSEE APP ELLANT HAS NOT PAID ANY AMOUNT TO MR. KESARA. MR. KESARA HAS NOT RETURN ED RS. 3.75 LACS TO THE ASSESSEE APPELLANT. THE LAND IS STILL IN THE NAME OF MR. KASERA. COPY O F JAMABANDI TAKEN FROM INTERNET WAS SUBMITTED TO THE LD AO VIDE LETTER DATED 01.12.2009. (PB 287) IT CLEARLY SHOWS MR.KESARA WAS THE OWNER OF THE LAND TILL 01.12.2009. 2.4 THE ADDRESS OF MR. KESARIA IS ALSO MENTIONED ON PAGE 31 OF ANNEXURE A-11 OF SEIZED PAPERS. (PB22).DURING THE COURSE OF ASSESSMENT, THE ASSESSEE APPELLANT ALSO REQUESTED V IDE LETTER DATED 1 ST DECEMBER, 2009 TO LD AO TO SUMMON MR. KASARIA U/S 1 31 FOR VERIFICATION OF FACTS, WHICH WAS NOT EXERCISED. NO OTHER SEIZED PAPER SHOWS THAT ASSESSEE HAD PAID RS.20.00 LACS TO MR.K ESARA. 2.5 THE LD AO MADE THE ADDITION CONSIDERING THE SAL E AGREEMENT FOUND IN WHICH PURCHASE OF 1 BIGHA LAND F OR RS. 23.75 LACS WAS MENTIONED AND THE ASSESSEE APPELLANT FAILED TO EXPLAIN THE NATURE 53 AND SOURCE OF PAYMENT FOR THE SAME. LEARNED AO ALSO FAILED TO SUPPORT HIS FINDINGS ABOUT PAYMENT OF RS.20 LACS DU RING APPEAL PROCEDING BEFORE LD.CIT(A) HOWEVER, THE LD CIT(A) C ONSIDERING THAT THERE IS NO EVIDENCE REGARDING FURTHER PAYMENT OF R S. 20.00 LACS AND LAND HAS NOT BEEN TAKEN POSSESSION BY THE ASSESSEE APPELLANT, JAMABANDI STILL INDICATE THE NAME OF OWNER AS SH. K ERSARA DELETED THE ADDITION TO THE EXTENT OF RS. 20.00 LACS. 2.6 IN RESPECT OF PAYMENT OF RS. 3.75 LACS, I T IS HUMBLY SUBMITTED THAT T HE PECULIAR MODUS OPERANDI FOLLOWED BY ASSESSEE APPELLANT AS EXPLAINED ABOVE DID NOT INVOLVE ANY CA PITAL OF HIS OWN. RS.3.75 LACS PAID BY THE ASSESSEE HAS ALSO BEEN SHO WN IN THE CASH FLOW SUMMARY SUBMITTED ALONG WITH THE LETTER DATED 5.12.2009 . (PB 303-308 ). THE ASSET THEORY AS SUBMITTED IN GROUND NO. 1 MAY PLEASE BE CONSIDERED HERE ALSO. IN VIEW OF THE ABOVE, THERE IS NO BASIS FOR CONFIRM ING THE ADDITION OF RS. 3.75 LACS. THEREFORE, HUMBLE PRAYER IS MADE FOR DELETING THE SAME.THE ACTION OF THE LD CIT(A) IN DELETING THE ADDITION OF RS. 20.00 LACS IS FULLY JUSTIFIED AND IS BASED ON FACTS ON RECORD, THEREFOR E, APPEAL OF THE DEPARTMENT IN THIS REGARD DESERVE TO BE DISMISSED. 19.5 ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDER OF THE AO. 19.6 WE HAVE HEARD BOTH THE PARTIES. THE LD CIT(A) HAS CLEARLY MENTIONED THAT THE AO HAS NOT FURNISHED ANY EVIDENCE OR COMMENTS DURING A PPELLATE PROCEEDINGS. THE APPELLATE PROCEEDINGS WERE ATTENDED BY THE AO. HENCE, THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 20.00 LACS. IN RESPECT OF BALANCE SUM OF RS. 3.75 LACS, WE HAVE NOTICED THAT ASSESSEE HAS DISCLOSED HIS UNDISCLOSED INCOME FROM PROFITS. WE HAVE ALSO ENHANCED THE PROFIT IN DIFFERENT PROJECTS AND THUS THE SOURCE OF RS. 3.75 LACS STANDS EXPLAINED. THE ADDITION OF RS. 3.75 LACS IS DELETED. HENCE, THE GR OUND OF APPEAL NO. 3 OF THE ASSESSEE IS ALLOWED WHILE GROUND OF APPEAL NOS 2 AND 3 OF THE REVENUE ARE DISMISSED. 54 ASSESSMENT YEAR 2008-09 20.1 THE FIRST GROUND OF APPEAL HAS NOT BEEN PRESSE D AS PER PAGE NO. 47 OF THE WRITTEN SUBMISSION. 21.1 THE SECOND GROUND OF APPEAL IS THAT THE LD CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 9,58,500/- REPRESENTING THE CASH FO UND DURING THE COURSE OF SEARCH 21.2 THIS ISSUE HAS BEEN CONSIDERED BY THE LD CIT(A ) VIDE PARAS 3.1 TO 3.3 IN HIS ORDER AND THESE ARE REPRODUCED AS UNDER:- 3.1 A.O. NOTED THAT DURING THE COURSE OF SEARCH, RS. 9,58,500/- WAS FOUND FOR WHICH IS ANSWER TO QUESTION NO. 14, A PPELLANT STATED THAT RS.1 LAKH BELONGS TO HIM AND REMAINING AMOUNT WAS TAKEN AS LOAN FROM 7-8 PERSONS FOR REPAYING LOANS TAKEN E ARLIER. ON BEING ASKED TO FURNISH THE NAME OF THE PERSONS FROM WHOM LOAN WAS TAKEN, HE STATED THAT HE DOES NOT REMEMBER. SIMILAR LY, HE STATED THAT HE DOES NOT REMEMBER THE NAMES OF THE PERSONS TO WH OM THE EARLIER LOAN WAS TO BE REPAID. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE APPELLANT FILED CONFIRMATION FOR CASH ADVANCE O F RS. 10 LAKHS GIVEN BY ONE SH. LEELA DHAR AND ALSO FILED THE COPY OF HIS BANK ACCOUNT INDICATING WITHDRAWAL. STATEMENT OF SH. LEE LA DHAR WAS RECORDED BY THE A.O. HE NOTICED THAT THERE WERE ONLY SINGLE FINANCIAL TRANSACTION OF SH. LEELA DHAR WITH THE APPELLANT. MOREOVER, DETAILS OF WHICH PLOT OR LAND WERE TO BE PURCHASED BY THE APPELLANT ON BEHALF OF SH. LEELA DHAR WERE ALSO NOT KNOWN. THE A.O. ALSO NOTED THAT SH. LEELA DHAR WAS NOT ABLE TO EXPLAIN THE SOURCE OF THE MONEY RECEIVED. ACCORDINGLY, A.O. TRE ATED THE STATEMENT OF SH. LEELA DHAR AS UNRELIABLE AND CA SH FOUND AT THE PREMISES OF THE APPELLANT AS UNEXPLAINED AND ADDED THE SAME. 55 3.2 BEFORE ME, IT WAS SUBMITTED THE CASH ADVANCE RE CEIPT WAS SUBMITTED VIDE LETTER 24.11.09 BEFORE THE A.O. AND STATEMENT OF SH. LEELA DHAR WAS RECORDED BY THE A.O. ON 27.11.09 , IN WHICH HE HAS ACCEPTED THAT HE HAS GIVEN RS. 10 LAKHS. THE APPELLANT BEING IN THE BUSINESS OF REAL ESTATE, RECEIVES MONEY FROM A NUMBER OF PERSONS AND ACCORDINGLY DURING THE COURSE OF SEARCH , BEING UNDER MENTAL STRAIN, THE APPELLANT MIGHT HAVE SAID THE AMOUNT BEING RECEIVED FROM 5-6 PERSONS. SH. LEELA DHAR IS ASSESS ED TO TAX. CONSIDERING THESE FACTS, IT WAS REQUESTED THAT THE ADDITION MAY BE DELETED. 3.3 IT HAVE CONSIDERED THE ARGUMENT OF THE A.R. AN D HAVE PERUSAL THE ASSESSMENT ORDER AND RELEVANT RECORD. IT IS AN ADMITTED FACT THAT ON BEING CONFRONTED DURING THE COURSE OF SEARCH, ABOUT THE SOURCE OF CASH OF RS. 9,58,500/-, IT WAS STATED BY THE APPELLANT THAT RS. 1 LAKH BELONGS TO HIM AND THE BALANCE HAS BEEN TAKEN AS LOAN FROM 7-8 PERSONS. THIS LOAN WAS TAKEN FOR REPAYMENT OF EARLIER LOAN. HOWEVER, THE APPELLANT HAS FAILED TO GIVE T HE NAME AND ADDRESS OF THE PERSONS FROM WHOM CONTENDED LOAN WAS TAKEN. SIMILARLY, HE HAS FAILED TO GIVE THE NAME AND ADDRE SS OF THE PERSONS TO WHOM EARLIER LOAN WAS TO BE REPAID. NOW DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT HAS TAKEN COM PLETELY DIFFERENT STAND. NOW IT WAS CLAIMED TO BE THE ADVAN CE AGAINST PLOT PURCHASE, INSTEAD OF LOAN AND THAT TOO FROM SINGLE PERSON INSTEAD OF 7-8 PERSONS . THERE IS NO EARLIER TRANSACTION WITH SH. LEELA DHAR . ONLY ONE TRANSACTION THAT TOO OF AS HIGH AMOUNT AS RS. 10 LAKHS HAS BEEN NOW SHOWN. IT IS QUITE DIFFICULT TO BELIEVE TH AT THE APPELLANT 56 COULD NOT REMEMBER THE NAME OF THE PERSON FROM WHOM SUCH HEAVY ADVANCE WAS TAKEN. ACCORDINGLY, THE CONTENTION IN T HE ASSESSMENT PROCEEDINGS HAS BEEN RIGHTLY REJECTED BY THE A.O. A ND HE HAS RIGHTLY HELD THE CASH FOUND OF RS. 9,58,500/- AS UNEXPLAIN ED. THE ADDITION IS THEREFORE SUSTAINED. 21.3 BEFORE US THE LD.AR HAS SUBMITTED AS UNDER:- 7.3 THE ABOVE AMOUNT OF CASH WAS FOUND AND SEIZ ED DURING THE COURSE OF SEARCH OPERATIONS CONDUCTED ON 16/11/2007 AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. 7.4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS CON FIRMATION REGARDING CASH ADVANCE RECEIPT OF RS. 10,00,000/- F ROM SHRI LEELADHAR WAS SUBMITTED VIDE LETTER DATED 24/11/200 9 ALONGWITH THE BANK ACCOUNT OF SHRI LEELADHAR. COPY OF CONFIRMATIO N OF SHRI LEELADHAR AND COPY OF HIS BANK ACCOUNT ARE AT PB 24 7-248 7.5 STATEMENTS UNDER SECTION 131 OF THE INCOME-TAX ACT, 1961 OF SHRI LEELADHAR WERE ALSO RECORDED ON 27/11/2009 IN WHICH HE HAD ACCEPTED THE FACT THAT HE HAD GIVEN RS. 10,00,000 F OR BOOKING OF PLOT IN A PROPOSED SCHEME OF APPELLANT. (PB 249-252) 7.6 SHRI LEELADHAR IS REGULARLY ASSESSED TO TAX AND HIS PAN IS AIAPG7560K. HE HAS ACCEPTED HAVING ADVANCED THE MON EY. ALL THESE FACTS WERE KNOWN TO THE LD. AO AS THESE WERE EMERGING OUT OF HIS STATEMENT RECORDED BY THE LD. AO. UNDER THESE C IRCUMSTANCES, AT WORST, ADDITION CAN BE MADE IN THE HANDS OF SHRI LE ELADHAR AS UNEXPLAINED INVESTMENT. 7.7 THE ONLY REASON OF REJECTING THE EXPLANATION OF THE APPELLANT GIVEN BY THE LD. AO AT PG.4 OF HIS ORDER (A.Y. 2008 -09) IS THAT DURING THE COURSE OF SEARCH THE ASSESSEE HAD EXPLAI NED THIS AS RECEIPT 57 FROM 5-6 PERSONS WHEREAS DURING ASSESSMENT PROCEEDI NGS THIS IS EXPLAINED TO BE A RECEIPT FROM ONLY ONE PERSON I.E. SHRI LEELA DHAR. IT MAY BE NOTED THAT THE ASSESSEE IS INTO THE BUSIN ESS OF REAL ESTATE WHO RECEIVES MONEY FROM A NUMBER OF PERSONS AGAINST BOOKING OF PLOTS. DURING THE COURSE OF SEARCH, UNDER MENTAL ST RAIN, THE ASSESSEE MIGHT HAVE SAID THE RECEIPT BEING FROM 5-6 PERSONS, BECAUSE DUE TO NATURE OF HIS BUSINESS AND FREQUENCY OF TRANSACTION S FORGETTING THE EXACT DETAILS IS NOT UNNATURAL. THE LD. AO IS SATIS FIED ABOUT THE SOURCE AS WELL AS THE IDENTITY OF THE PERSONS THERE FORE; UNDER THESE CIRCUMSTANCES WITHOUT PROVING THE EXPLANATION BEING WRONG OR UNSUBSTANTIATED THE SAME CANNOT BE REJECTED. 7.8 THE LD CIT(A) AT PAGE 3 OF HIS ORDER(A.Y. 2008- 09) HAS UPHELD THE ADDITION MADE BY THE LD AO ON THE GROUND THAT THEIR IS NO EARLIER TRANSACTION WITH SHRI LEELA DHAR. ONLY ONE TRANSACTION OF HIGH AMOUNT IS SHOWN. HE ALLEGED THAT IT IS DIFFICU LT TO BELIEVE THAT THE ASSESSEE APPELLANT COULD NOT REMEMBER THE NAME OF THE PERSONS FROM WHOM SUCH HEAVY ADVANCE WAS TAKEN . IT IS HUMBLY SUBMITTED THAT MR.LEELADHAR WAS ASKED A SPECIFIC QUESTION(Q.N O.8 PB250) ABOUT DEALINGS WITH ASSESSEE APPELLANT IN WHICH HE HAS REPLIED THAT EARLIER HE HAS DEALT WITH ASSESSEE APPELLANT TWICE. THE OBSERVATIONS OF THE LD CIT(A) ARE MISCONCEIVED AND DESERVED TO B E REJECTED. 7.9 BOTH THE LOWER AUTHORITIES HAVE NOT DOUBTED THE IDENTITY AND CREDIT WORTHINESS OF SHRI LEELADHAR.HOWEVER, DOUBT ON THE GENUINENESS OF THE TRANSACTION IS ARBITRARY AND BAS ELESS. 7.10 ONLY ON THE BASIS OF STATEMENT THE ADDITION CA NNOT BE MADE . 7.11 RELIANCE IS PLACED ON THE FOLLOWING DECISIONS :- (I) HONBLE APEX COURT IN PULLANGODE RUBBER PRODUCE CO LTD VS STATE OF KERALA [1973] 91 ITR 18 HAS HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CAN NOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE T HE ADMISSION TO SHOW THAT IT IS INCORRECT. 58 (II) GARGIDIN JWALA PRASAD VS CIT (1974) 96 ITR 9 7 (ALL) HELD THAT THE ADDITION MERELY BASED ON STATEMENT OF WITNESSES CANNOT BE MADE. III) CIT VS G.KRISHNAN (1994) 210 ITR 707 MAD . HELD THAT ADDITION CANNOT BE MADE MERELY ON THE BA SIS OF STATEMENT. IV) ACIT V/S ASHOK KUMAR JAIN 32 TW 115 (ITAT JAIPU R) IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. V) SHRI RAJENDRA KR. KEDIA V/S DCIT 22TW,506(I TAT, JAIPUR) NO VALID ADDITION CAN BE MADE ON THE BASIS OF SUCH INVALID CONFESSIONAL STATEMENT; PARTICULARLY WHEN SUPPORTIN G CORROBORATIVE DOCUMENTARY EVIDENCE IN THE FORM OF BOOKS WAS FORTH COMING. VI) ITO VS. VIJAY KUMAR KESAR 327 ITR 497(CHATTISGARH HIGH COURT) ASSESSEE HAS RETRACTED FROM DISCLOSURE FOR UNDISCLO SED INCOME MADE BY HIM DURING THE SURVEY PROCEEDINGS. THE ADDITION MADE ON ACCOUNT OF EXCESS CASH IN STOCK WAS DELETED BY ACC EPTING UPDATE BOOKS OF ACCOUNTS PREPARED BY THE ASSESSEE. THERE W ERE PRIMARY EVIDENCES ON RECORD FOR ACCEPTANCE OF CASH. IN VIEW OF THE ABOVE, THE ACTION OF THE LD CIT(A) I N CONFIRMING THE ACTION OF LD. AO IS UNJUSTIFIED AND DESERVES TO BE QUASHED . 21.4 THE LD DR IN HIS WRITTEN SUBMISSIONS HAS STATE D THAT HE IS RELYING ON THE ORDER OF LD CIT(A). 21.5 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THA T AT THE TIME OF SEARCH, THE ASSESSEE STATED CASH FOUND FROM HIS RESIDENCE REPRESENTS THE AMOUNTS RECEIVED FROM 7-8 PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO RECORDED THE STATEMENT OF SHRI LEELA DHAR GURJAR ON 27-11-09 U/S 131 OF THE ACT. SHRI L EELA DHAR GURJAR STATED THAT HE KNOWS SHRI RANJEET YADAV FOR THE LAST THREE YEARS. SHRI L EELA DHAR GURJAR STATED THAT HE HAS MADE TWO TRANSACTIONS OF PURCHASE AND SALE WITH SHRI YAD AV. SHRI LEELA DHAR GURJAR STATED THAT HE PAID RS. 10.00 LACS ON 13-11-07 FOR PURCHASING P LOTS IN A SCHEME AT KALWAR ROAD SIRSI. SHRI LEELA DHAR GURJAR HAS ALSO STATED THAT THE NAM ES OF THE FARMERS FROM WHOM THE LAND 59 WAS TO BE PURCHASED AND THESE NAMES WERE SHRI SOHAN YADAV AND SHRI MOHAN YADAV SHRI LEELA DHAR ALSO STATED THAT HE HAS NOT RECEIVED BAC K THE SUM. THE CONFIRMATION OF SHRI LEELA DHAR GURJAR WAS FILED. THE BANK ACCOUNT OF SH RI LEELA DHAR GURJAR SHOWS CASH WITHDRAWAL OF RS. 10.00 LACS ON12-11-07. THE ASSESS EE HAS DISCHARGED THE ONUS TO SHOW THAT STATEMENT RECORDED AT THE TIME OF SEARCH IS RU BUTTABLE. THE AO HAS RECORDED THE STATEMENT ON OATH OF SHRI LEELA DHAR GURJAR. ON THE BASIS OF EVIDENCES FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S, WE HOLD THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 9,58,50 0/-. HENCE, THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 22.1 THE THIRD GRIEVANCE OF THE ASSESSEE IS AGAINST CONFIRMATION OF ADDITION OF RS. 4,61,115/- OUT OF ADDITION OF RS. 7,52,320/- MADE B Y THE AO IN RESPECT OF SHUBHAM VIHAR PROJECT. 22.2 THIS ISSUE STANDS DECIDED WHILE DISPOSING OFF APPEAL FOR THE ASSESSMENT YEAR 2006-07 AND AS PER OUR FINDING, AN ADDITION OF RS. 97,069/- IS CONFIRMED. 22.3 BEFORE PARTING WITH THE APPEAL, WE WOULD LIKE TO PLACE THE FOLLOWING FACTS. III. POSITION OF DECLARED INCOME AND ASSESSED INCOME DUR ING VARIOUS YEARS IS AS FOLLOWS:- A.Y. INCOME DECLARED IN IT RETURN (IN RESPONSE TO NOTICE U/S 153A) INCOME ASSESSED BY AO VIDE ORDER U/S 143(3) 2008-09 6,60,241/- 1,10,48,061/-* 2007-08 2,39,610/- 33,66,930/- 2006-07 12,82,238/- 1,56,18,400/- 2005-06 10,63,902/- 1,94,08,770/- 2004-05 4,88,999/- 52,09,350/- 2003-04 84,755/- 12,71,780/- TOTAL 3819745 55923291 TOTAL(AFTER RECTIFICATION) 47323291 60 *INCOME HAS BEEN SUBSEQUENTLY ASSESSED AT RS.24,21, 060/- BY RECTIFYING THE MISTAKE U/S 154 OF THE INCOME TAX AC T, 1961 ON 02.02.2010. 1.24DURING THE COURSE OF SEARCH TOTAL ASSETS FOUND WERE AS UNDER:- NOTE 1: : ADVANCE AGAINST SALE OF PROPERTY RECEIVED FROM MR. LEELADHAR S/O LATE SHRI BABULAL GUZAR RESIDENT OF 24, SURAJ NAGAR , KALWAR ROAD, JAIPUR, AMOUNTING TO RS. 10 LAKHS . ASSET FOUND UNDISCLOSED REMARKS CASH RS.9,58,500/- NIL NOTE 1 JEWELLERY GOLD 153 GMS. SILVER 750 GMS. NIL NOTE 2 CARS ACCENT CAR, RJ-14-8C- 6287 NIL NOTE 3 SUZUKI MOTOR CYCLE ONE NIL NOTE 4 IMMOVABLE PROPERTY IN THE NAME OF RANJIT SINGH YADAV 1. 146, ADVADPURI KALWAR ROAD 2. 83, KALYAN KUNJ, KALWAR RAOD, JAIPUR 3. AGRICULTURAL LAND, GOVINDPURAL, KALWAR ROAD, JAIPUR (400SQ.YD.) (1BIGHA 5 BISWA) NIL NIL RS.12.50 LAC NOTE 5 NOTE 6 IMMOVABLE PROPERTY IN THE NAME OF WIFE 1. AGRICULTURAL LAND, GOVINDPURA, KALWAR ROAD, JAIPUR 2. 127, SHAYMPURI COLONY, KALWAR, ROAD 3. LAND AT KALWAR ROAD, JAIPUR (1BIGHA 5 BISWA) (200 SQ. YD.) (6 BIGHA) RS.12.50 LACS NIL NIL NOTE 7 NOTE 8 TOTAL RS.25 LACS 61 NOTE 2: THE JEWELLERY IS ACQUIRED BY ASSESSEE APPELLANT PA RTLY OUT OF HIS OWN SAVINGS IN DIFFERENT YEARS AND PARTLY HE RECEIVED T HE SAME ON VARIOUS CEREMONIAL OCCASIONS FROM HIS FRIENDS AND RELATIVES INCLUDING THE JEWELLERY RECEIVED DURING HIS MARRIAGE FROM HIS IN LAWS. NOTE 3: THE CAR WAS PURCHASED IN THE F.Y. 2004-05 WHICH HA S ALREADY BEEN DISCLOSED IN RETURN FILED U/S 139(1) FOR THE A.Y. 2 005-06 . THE CAR HAS BEEN FINANCED THROUGH HDFC CAR LOAN. NOTE 4: IT HAS ALREADY BEEN DISCLOSED IN THE RETURN OF INC OME FILED FOR THE A.Y. 2000-01. NOTE 5 : THE LAND WAS PURCHASED BY ASSESSEE APPELLANT ON 1 7/06/88 AND CONSTRUCTION WAS DONE. THE SAID LAND AND BUILDING H AS ALREADY BEEN DISCLOSED IN THE RETURN FILED BY HIM FOR THE A.Y. 2 000-01. THE ASSESSEE APPELLANT IS PRESENTLY RESIDING AT THIS PR OPERTY. NOTE 6 : THE PROPERTY WAS PURCHASED BY ASSESSEE APPELLANT IN THE YEAR 1999- 2000 (BEYOND THE PERIOD). NOTE 7 : THE LAND WAS PURCHASED BY ASSESSEE APPELLANTS WI FE ON 13/01/2000. THE SAID PROPERTY HAS ALREADY BEEN DISCLOSED IN THE RETURN FILED BY ASSESSEE APPELLANTS WIFE FOR THE A.Y. 2000-01. NOTE 8 : THE LAND WAS PURCHASED BY ASSESSEE APPELLANTS WI FE ON 8/07/04. THE SAID PROPERTY HAS ALREADY BEEN DISCLOSED IN THE RET URN FILED BY HIS WIFE FOR THE A.Y. 2005-06 22.4 THE DETAILS OF DISCLOSED INCOME AND UNDISCLOSE D INCOME PARTICULARS 04-05 05-06 06-07 07-08 08-09 INCOME DISCLOSED IN RETURNS UNDISCLOSED, OTHER INCOME 3,52,968 64,400 9,21,560 3,54,500 11,31,000 3,614 3,39,608 33,400 7,60,241 4,69,036 UNDISCLOSED INCOME FROM TOWNSHIP 2,88,568 5,67,060 11,27,386 3,06,208 2,91,205 SCHEME-WISE AND YEARWISE BREAK UP OF UNDISCLOSED IN COME SCHEME 04-05 05-06 06-07 07-08 08-09 GOVIND VATIKA 2,88,568 1,32,628 2,01,509 0 0 GOKUL VIHAR 0 3,99,256 0 0 0 SUBHAM VIHAR 0 0 5,18,075 99,914 2,91,205 62 BRIJ VIHAR 0 12,128 1,97,458 0 0 MANGLAM VIHAR 0 23,048 2,10,344 2,06,294 0 2,88,568 5,67,060 11,27,386 3,06,208 2,91,205 22.5 THE ASSESSEE SELLS THE PLOTS TO BULK PURCHASER AND RETAIL SELLER AND HAS TO GIVE THE RATE OF LAND AS PER SQ. YARD. HENCE, THE PROFIT MAR GIN HAS BEEN ESTIMATED ON THE BASIS OF PROFIT PER SQ. YARD AND NOT ON THE BASIS OF PERCENT AGE OF TURN OVER. 23. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE PARTLY ALLOWED WHILE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 ARE PARTLY ALLOWED WHILE APPEAL FOR ASSESSMENT YEAR 2007-08 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-11 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 16 /11/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI RANJEET SINGH YADAV, JAIPUR 2. THE ACIT, CENTRAL CIRCLE- 1, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE ( ITA NO.1418 TO 1422/JP /10) A.R, ITAT, JAIPUR 63