Shri Ummaid Mal Singhvi, JODHPUR V. ACIT, JODHPUR

ITA 157/JODH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59561 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: U C JAIN
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Gift; Income from undisclosed sources; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Additional evidence; Fair market value; Valuation report; Accommodation entries; Revised return; Documents seized; Set aside
• Section: 50C; 133A; 153A; 234B; 139(5); 250; 68; 69

Judgement Text

1 ITA 157(4)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 157 & 158/JODH/2011 ASSTT. YEAR : 2007-08 & 08-09. SHRI UMMAID MAL SINGHVI, VS. THE ACIT, CENTRAL CI RCLE-2, C/O SHRI U.C. JAIN, ADVOCATE, JODHPUR. SHATRUNJAY HARI SINGH NAGAR, PALI ROAD, JODHPUR. ITA NO. 261 & 258/JODH/2011 ASSTT. YEAR : 2007-08 & 08-09. THE ACIT, CENTRAL CIRCLE-2, VS. SHRI UMMAID MAL S INGHVI, JODHPUR. JODHPUR. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI U.C. JAIN DEPARTMENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING : 13.12.2011 DATE OF PRONOUNCEMENT : 19.01.2011. ORDER DATE OF ORDER : 19/01/2012. PER R.K. GUPTA, J.M. THESE ARE FOUR APPEALS BY ASSESSEE AND DEPARTMENT AGAINST THE ORDERS OF LD. CIT (A) RELATING TO ASSESSMENT YEARS 2007-08 & 2008-09. 2. WE WILL TAKE FIRST APPEALS OF ASSESSEE AND DEPAR TMENT FOR THE ASSESSMENT YEAR 2007-08. 2 3. GROUND NOS. 1, 2 AND 11 IN APPEAL OF ASSESSEE WE RE NOT PRESSED AT THE TIME OF HEARING OF APPEALS BY LD. A/R. THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 4. GROUND NOS. 3 & 4 RELATE TO CONFIRMING ADDITIONS OF RS. 7,00,000/- AND RS. 3,00,000/- MADE BY AO ON THE BASIS OF PAGE 15 OF AN NEXURE A-3. 5. BRIEF FACTS OF THE CASE ARE THAT DURING THE COUR SE OF SEARCH CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF SINGHVI GROUP CERTAIN BOOKS OF ACCOUNTS, DOCUMENTS AND VALUABLES WERE FOUND AND SEIZED. THE ASSESSEE F ILED THE RETURN U/S 139(1) ON 28/07/2006 DECLARING AN INCOME OF RS. 4,76,580/-. I N RESPONSE TO NOTICE U/S 153A, THE ASSESSEE FILED RETURN OF INCOME ON 27-01-2009 DECLA RING AN INCOME OF RS. 4,76,580/-. THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME AT RS. 42,42,580/- BY ORDER DATED 16/12/2009 BY MAKING ADDITION UNDER THE FOLLOWING H EADS, WHICH ARE CHALLENGED BEFORE ME IN THE GROUNDS OF APPEAL RAISED IN THE MEMO OF A PPEAL: A. ADDITION MADE U/S 69 IN RESPECT OF UNRECORDED ADVAN CE MADE TO, I SHRI KAMAL BHANDARI RS. 5,00,000/- II SHRI PAPPU RS. 6,50,000/- III SHRI MUNNA RS. 3,50,000/- IV M/S. SIDDHARTA RS. 8,00,000/- V SMT. SUNITA SINGHVI RS. 3,81,500/ - B. ADDITION MADE FOR INADEQUATE HOUSEHOLD EXP. RS. 59,497/- C. ADDITION FOR CASH DEPOSITED IN BANK RS. 7,00,0 00/- D. ADDITION FOR CASH DEPOSITED IN BANK RS. 3,00,0 00/- E. ADDITION FOR INTEREST INCOME FROM SHRI KAILASH MODI RS. 25,000/- TOTAL ADDITION RS. 37,66,000/- 3 5.1. WHILE MAKING THE ABOVE ADDITION, THE AO OBSERV ED IN HIS ORDER THAT THESE AMOUNTS WERE SURRENDERED BY THE ASSESSEE IN THE STA TEMENT RECORDED DURING THE COURSE OF SEARCH. ACCORDINGLY HE MADE THE IMPUGNED ADDITI ONS. DETAILED WRITTEN SUBMISSIONS WERE FILED BEFORE LD. CIT (A). 5.2 IN RESPECT OF RS. 7,00,000/- , IT WAS SUBMITTE D BY THE A.R. THAT THE ASSESSEE RECEIVED CHEQUE NO. 397010 DATED 03/06/2006 OF RS. 8,00,000/- FROM SHRI VINOD SINGHVI AS REPAYMENT OF HIS ADVANCE MADE PRIOR TO 3 1/03/2001. THE ASSESSEE DEPOSITED THE CHEQUE IN UCO BANK A/C NO. 11308 ON THE SAME DA TE AND SUBSEQUENTLY WITHDRAWN CASH ON 06/06/2006. THE RECEIPT OF CHEQUE, ITS DEPO SIT IN THE BANK ACCOUNT AND WITHDRAWAL OF CASH WAS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. ON 26/07/2006 ASSESSEE DEPOSITED CASH OF RS. 7,00,0 00/- IN THE UCO BANK ACCOUNT; OUT OF CASH WITHDRAWAL OF RS. 8,00,000/- MADE ON 06/06/ 2006. THE ASSESSEE ADVANCED THE MONEY TO M/S. S.D. FINANCE CO BY CHEQUE NO. 392392 OF RS. 7,00,000/- ON 26-JUL- 2006. THE DEPOSIT OF CASH IN THE BANK ACCOUNT IS DU LY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. FURTHER, THE SOURCE OF MAKING SUCH CASH D EPOSIT OF RS. 7,00,000/- IS SATISFACTORILY PROVED FROM THE SEIZED PAPER ITSELF WHICH CONTAINS LSYQ FL)KFKZ D TEK LSYQ FL)KFKZ D TEK LSYQ FL)KFKZ D TEK LSYQ FL)KFKZ D TEK DJK; JD DJK; JD DJK; JD DJK; JD [PB PG. 110]. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED MEMORANDUM RECORDS IN THE FORM OF NOTEBOOK IN WHICH ALL THE MONEY RECEIVED BY HIM AND DEPOSITED IN BANK ACCOUNT AND MONEY PAID BY HIM THROUGH BANK ACCOUNT IS RECORDED. THIS MEMORANDUM NOTEBOOK WAS FOUND AT THE TIME OF SEARCH AND WAS SEIZED & INVENTORISED AS ANNEXURE-3. ALL THE ENTRIES IN TH E NOTEBOOK CAN BE VERIFIED FROM THE BOOKS OF ACCOUNTS. THE AUTHORISED OFFICER OBTAINED SURRENDER OF THE ASSESSEE UNDER DURESS AT THE TIME OF SEARCH ON THE BASIS OF THIS N OTEBOOK WITHOUT ACTUALLY VERIFYING 4 WHETHER THE TRANSACTIONS WERE RECORDED IN THE REGUL AR BOOKS OF ACCOUNTS. THE ONLY BASIS OF THE ADDITION MADE IS BLINDLY RELYING ON THE SURR ENDER OBTAINED UNDER DURESS WITHOUT CONSIDERING THE TRANSACTION RECORDED IN THE REGULAR BOOKS OF ACCOUNTS BY THE ASSESSEE AND WITHOUT APPLYING MIND. THE AR TO SUPPORT ITS SU BMISSION DRAWN ATTENTION TO COPY OF BANK BOOK OF UCO BANK ACCOUNT , COPY OF CASH BOOK COPY OF BALANCE SHEET AS ON 31-03-2006 FILED ALONG WITH THE REGULAR RETURN OF I NCOME BEFORE THE SEARCH AND COPY OF BALANCE SHEET AS ON 31-03-2007 FILED ALONG WITH THE REGULAR RETURN OF INCOME BEFORE THE SEARCH. 5.3. THE AR FURTHER SUBMITTED THAT DURING THE COURS E OF ASSESSMENT PROCEEDING BOOKS OF ACCOUNTS WERE PRODUCED AND THESE ENTRIES W ERE VERIFIED TO THE AO. EVEN AFTER SUCH EFFORTS, ONE FAILS TO UNDERSTAND WHY THE A.O. MADE ADDITION BY RECORDING FALSE FINDING OF FACT THAT THE TRANSACTION WAS NOT RECORD ED IN THE BOOKS OF ACCOUNTS. THE AR FURTHER SUBMITTED THAT THE WRITTEN SUBMISSION IN PA RA 4(G) TO 4(N) EQUALLY APPLICABLE TO THIS GROUND ALSO. 5.4. SIMILAR SUBMISSION WAS MADE IN RESPECT OF SOUR CE OF RS. 3 LAKHS DEPOSITED IN CASH IN THE BANK ACCOUNT ON 4.7.06 THAT SAME WAS OUT OF WITHDRAWAL OF RS. 3,81,500/- BY SELF CHEQUE ON 6.6.06. 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, THE LD. CIT (A) GAVE HIS FINDING WHICH ARE RECORDED IN PARA 5.7 .3 TO 5.7.5 ARE AS UNDER :- 5.7.3 HOWEVER, AS REGARDS DEPOSITS OF RS. 3 LAKHS IN THE BANK ACCOUNT ON 4.7.06 FOR ISSUING CHEQUE TO M/S HARSHIT A FINANCE BY WAY OF LOAN ADVANCE IS CONCERNED, IT IS QUITE EVIDENT THAT THOUGH APPARENTLY IN THE CASH BOOK THE CASH IS AVAILABLE BY WAY OF CASH WITHDRAWAL BY SELF CHEQUE GIVEN TO SMT. SUNITA SINGHVI OF RS. 3,81,500 /- BUT AS THIS AMOUNT 5 IS ACTUALLY RETURNED BACK TO SMT. SUNITA SINGHVI, I NFACT THERE IS NO CASH BALANCE AVAILABLE WITH THE APPELLANT AND HENCE THE CASH DEPOSIT OF RS. 3,00,000/- SO MADE ON 4.07.06 IN THE BANK ACCOUNT BY THE APPELLANT IS OUT OF UNDISCLOSED SOURCES. THIS IS FURTHER PROVED FROM THE STATEMENT OF APPELLANT WHEREIN IN ANSWER TO QUESTION NO. 26, (ON PAGE 16 OF THE STATEMENT) AT P.B. PAGE 73, THE APPELLANT HAS CATEG ORICALLY ADMITTED THAT IN ANSWER TO QUESTION NO. 18, HE HAS DEPOSITED RS. 3 LAKHS IN THE BANK ON 4.7.06 AND WHILE MAKING ENTRIES IN THE ANN. A-3, ON PAGE 15, HE HAS GIVEN THE INDICATION AS RS. 3 LAKHS RETURNED TO SUN ITA THROUGH SELF (CHEQUE) SHOWN DEPOSITED. HOWEVER, IT WAS MY UNACCOUNTED INCOME FROM ADVANCE WHICH WAS DEPOSITED IN THE BANK AND I AM READY TO PAY TAX ON IT. 5.7.4 SIMILARLY CASH DEPOSIT MADE IN THE BANK ACCO UNT OF UCO BANK ON 26.7.06 AMOUNTING TO RS. 7 LAKHS FOR GIVING ADVANCE TO M/S S.D. FINANCE IS ALSO THE CASH DEPOSIT FROM UNDISCLO SED SOURCES, WHICH IS ALSO EVIDENT FROM PAGE 15 OF ANN. A-3. THIS IS FURT HER PROVED FROM THE STATEMENT OF THE APPELLANT WHEREIN IN ANSWER TO QUE STION NO. 26 (ON PAGE 16 OF THE STATEMENT) AT P.B. PAGE 73, THE APPELLANT HAS CATEGORICALLY ADMITTED THAT IN ANSWER TO QUESTION NO. 17, HE HAS STATED RS. 7 LAKHS DEPOSITED IN CASH IN THE BANK ACCOUNT ON 27.6. 06, THE NARRATION OF WHICH ON PAGE 15 OF ANN.A-3 WAS SELF SIDHARTHA BUT IT IS MY UNDISCLOSED INCOME BY WAY OF RECOVERY OF EARLIER CA SH ADVANCE WHICH HAS BEEN DEPOSITED IN THE BANK AND THEREAFTER THE CHEQUE OF RS. 7 LAKHS HAVE BEEN TO M/S S.D. FINANCE. THE ARGUMENT OF THE A.R. THAT CASH DEPOSITED IS OUT OF EARLIER WITHDRAWALS IN CAS H OF RS. 8 LAKHS AFTER RECEIPT OF CHEQUE FROM M/S SIDHARTHA, IS TOTALLY IN CORRECT BECAUSE FROM THE OVERALL FACTS AND CIRCUMSTANCES AND THE NARRATI ON GIVEN IN THE LOOSE PAPERS, IT HAS ALREADY BEEN HELD ABOVE THAT ON RECE IVING CHEQUE OF RS. 8 LAKHS FROM M/S SIDHARTHA, THE SAME AMOUNT HAS BEEN RETURNED BACK BY SELF CHEQUE TO M/S SIDHARTHA AND THUS THOUGH IN THE BOOKS OF ACCOUNTS 6 APPARENTLY THE CASH BALANCE IS SHOWN AS INCREASED BY RS. 8 LAKHS BUT ACTUALLY, THERE IS NO SUCH CASH BALANCE. 5.7.5 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, AD DITION OF RS. 7 LAKHS + RS. 3 LAKHS SO MADE BY THE A.O. IS HEREBY CONFIRMED. 7. THE LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE WRITTEN SUBMISSIONS FILED. 8. ON THE OTHER HAND, THE LD. D/R PLACED RELIANCE O N THE ORDERS OF THE AO AND LD. CIT (A). 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE NOTED THAT ASSESSEE RECEIVED A CHEQUE OF RS. 8,00,000/- F ROM SHRI VINOD SINGHVI AS REPAYMENT OF HIS ADVANCE MADE PRIOR TO 31.3.2001. THIS AMOUN T WAS DEPOSITED IN UCO BANK ACCOUNT NO. 11308 ON THE SAME DATE AND SUBSEQUENTLY WITHDRAWN CASH ON 6.6.2006. ALL THESE TRANSACTIONS ARE RECORDED IN REGULAR BOOKS OF ACCOUNT. THEREAFTER ON 26.7.2006 ASSESSEE DEPOSITED CASH OF RS. 7,00,000/- IN UCO BA NK ACCOUNT OUT OF CASH WITHDRAWAL OF RS. 8,00,000/- MADE ON 6.6.2006. THEREAFTER, TH E ASSESSEE ADVANCED THE MONEY TO M/S. S.D. FINANCE CO. BY CHEQUE ON 26.7.2006. THIS ENTR Y IS ALSO RECORDED IN BOOKS OF ACCOUNT. THEREFORE, IN OUR CONSIDERED VIEW, THE LD . CIT (A) WAS NOT CORRECT IN HOLDING THAT THERE WAS NO CASH AVAILABILITY ON THE DATE OF DEPOSIT I.E. 26.7.2006. THE AO AND LD. CIT (A) HAVE MADE AND CONFIRMED THIS ADDITION FOR T HE SIMPLE REASON THAT DURING SEARCH PROCEEDINGS THE ASSESSEE HAS SURRENDERED THIS AMOUN T. IF BY WRONG NOTION THE AMOUNT WAS SURRENDERED OTHERWISE THE EXPLANATION OF THE AS SESSEE WAS NOT FOUND INCORRECT, THEN IN OUR CONSIDERED VIEW THE EXPLANATION SHOULD HAVE BEEN ACCEPTED. THE ASSESSEE HAS EXPLAINED THAT ALL THE ENTRIES ARE RECORDED IN REGU LAR BOOKS OF ACCOUNT AND THEY ARE VERIFIABLE. AMOUNT OF RS. 8,00,000/- WAS RECEIVED BY CHEQUE. THEREAFTER ASSESSEE 7 WITHDREW RS. 7,00,000/- FROM THIS BANK ACCOUNT IN J UNE AND THEN IN JULY THE SAME WAS REDEPOSITED AGAINST WHICH A CHEQUE IN THE NAME OF M /S. S.D. FINANCE CO. WAS ISSUED. THEREFORE, HOW IT CAN BE SAID THAT THIS AMOUNT WAS FROM UNDISCLOSED SOURCES, IS NOT UNDERSTANDABLE. BOTH THE LOWER AUTHORITIES HAVE T AKEN PLEA THAT THE AMOUNT RECEIVED BY ASSESSEE WAS ON ACCOUNT OF ENTRY. THERE WAS NO EVI DENCE ON RECORD TO ESTABLISH THAT THE CHEQUE RECEIVED BY ASSESSEE AMOUNTING TO RS. 8,00,0 00/- WAS ON ACCOUNT OF ENTRY ONLY. THERE IS A BANK WITHDRAWAL AND THERE IS A REDEPOSIT IN BANK ACCOUNT. THEREFORE, IN OUR VIEW EXPLANATION OF THE ASSESSEE SEEMS TO BE CORREC T. ACCORDINGLY, WE DELETE THIS ADDITION OF RS. 7,00,000/-. 10. REGARDING ADDITION OF RS. 3,00,000/-, WE ARE OF THE VIEW THAT THE MATTER SHOULD GO BACK TO THE FILE OF AO. THE FACTS ARE NOT CLEAR FR OM THE ORDERS OF THE AO OR LD. CIT (A) OR FROM THE WRITTEN SUBMISSIONS WHETHER THERE WAS ANY CASH IN HAND AVAILABLE IN THE BOOKS OF ACCOUNT OR NOT. THE LD. CIT (A) NOTED THAT THE ASSESSEE DEPOSITED RS. 3,00,000/- IN THE BANK ACCOUNT ON 4.7.2006 FOR ISSUING CHEQUE TO M/S. HARSHITA FINANCE BY WAY OF LOAN ADVANCE. IT IS FURTHER NOTED THAT THE SOURCE OF TH IS AMOUNT IS EXPLAINED AS ASSESSEE RECEIVED A CHEQUE FROM SMT. SUNITA SINGHVI AND THE SAME AMOUNT WAS WITHDRAWN WHICH WAS RECORDED IN THE BOOKS OF ACCOUNT. HOWEVER, THE LD. CIT (A) HAS TAKEN A NOTE THAT IN FACT AMOUNT OF RS. 3,81,500/- TAKEN FROM SMT. SUNIT A SINGHVI WAS RETURNED BACK TO SMT. SUNITA SINGHVI THROUGH SELF CHEQUE. THEREFORE, HE DREW AN INFERENCE THAT THERE WAS NO CASH BALANCE AVAILABLE IN HAND/CASH BOOK. AS PER SU BMISSION OF THE ASSESSEE IT WAS SUBMITTED THAT THERE IS A CASH IN HAND AVAILABLE IN THE BOOKS OF ACCOUNT AND FROM THIS CASH AVAILABLE THE AMOUNT OF RS. 3,00,000/- WAS DEPOSITE D ON 4.7.2006. SINCE FACTS ARE NOT CLEAR, THEREFORE, WE RESTORED THIS ISSUE TO THE FIL E OF AO TO CONSIDER AFRESH. IF IT IS FOUND 8 THAT THERE IS A CASH BALANCE IN THE CASH BOOK, THEN OF COURSE SOURCE OF DEPOSIT SHOULD BE TAKEN AS EXPLAINED. WE ORDER ACCORDINGLY. 11. GROUND NOS. 5 & 6 RELATE TO CONFIRMING ADDITION OF RS. 25,000/- MADE BY AO ON THE BASIS OF PAGE 7 OF ANNEXURE A-11. 12. THE BRIEF FACTS DISCUSSED BY LD. CIT (A) ARE T HAT ON THE BASIS OF PAGE 7 OF ANNEXURE A-11 FOUND AND SEIZED FROM THE RESIDENCE O F THE ASSESSEE IN RESPECT OF ALLEGED INTEREST RECEIVED FROM SHRI KAILASH MODI. THE A.O. IN PARA 9 AT PAGES 8 AND 9 OF THE ASSESSMENT ORDER OBSERVED THAT AS PER ANNEXU RE A-11 SEIZED FROM THE RESIDENCE OF ASSESSEE ON 25/03/2008 AT PAGE 7 IT IS WRITTEN T HAT THE ASSESSEE HAD RECEIVED INTEREST RELATING TO VARIOUS ASSESSMENT YEARS OUT OF WHICH I NTEREST AMOUNTING TO RS. 25,000/- RELATES TO THIS ASSESSMENT YEAR WHICH HAD NOT BEEN DECLARED BY THE ASSESSEE. THE AO FURTHER OBSERVED THAT SIMILAR ENTRIES WAS ALSO FOUN D IN THE POCKET DIARY FOUND AND IMPOUNDED AT THE BUSINESS PREMISES OF SIDHARTHA AT THE TIME OF SURVEY AND THEREFORE ADDITION OF RS. 25,000/- MADE TO THE INCOME OF THE ASSESSEE. 13. THE LD. A/R OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ADVANCED A SUM OF RS. 5,00,000/- TO SHRI KAILASH MODI BEFORE 01/04/20 01. SHRI KAILASH MODI WAS NOT IN THE POSITION TO REPAY THE MONEY ADVANCED THEREFORE THE ASSESSEE AGREED WITH SHRI KAILASH MODI TO OBTAIN REPAYMENT AS AND WHEN THE BO RROWER IS ABLE TO REPAY THE INSTALLMENTS. THE ASSESSEE DID NOT CLAIMED INTEREST FROM SHRI KAILASH MODI WHICH IS EVIDENCED FROM THE SIZED MATERIAL ITSELF WHICH STAT ES THAT INTEREST IS OVER DUE FOR THE PERIOD FROM 01/04/2002 TO 02/07/2005. EVEN THE LD. A.O. DID NOT MADE ANY ADDITION IN RESPECT OF INTEREST FOR SUCH PERIOD WHICH SHOWS THA T HE ALSO ADMITS THAT NO INTEREST WAS RECEIVED BY THE ASSESSEE TILL 02/07/2005. FURTHER I N THE SEIZED PAPER INSTALLMENTS 9 RECEIVED FROM SHRI KAILASH MODI ON VARIOUS DATES IS NOTED. NOTHING IS WRITTEN IN THE SEIZED PAPER WHICH INDICATES THAT THE AMOUNTS RECEI VED FROM SHRI KAILASH MODI IS IN THE NATURE OF INTEREST. TO SUPPORT THAT THE AMOUNT RECE IVED FROM SHRI KAILASH MODI WAS NOT INTEREST AND PRINCIPAL ONLY THE AR SUBMITS THAT THE PAYMENTS THOUGH EQUAL WERE NOT MADE ON THE SAME DATE OF EACH MONTH. TIME GAP BETWE EN EACH PAYMENT VARIES. IF IT IS TO BE ASSUMED THAT SHRI KAILASH MODI HAS PAID INTER EST TO THE ASSESSEE THAN HE WOULD HAVE ADJUSTED INTEREST PAYMENT IN ACCORDANCE WITH T HE TIME GAP BETWEEN EACH INSTALLMENT, BUT NO SUCH CHANGE IN PAYMENT WAS DONE . FURTHER ON THE FACT THAT IF ANY INTEREST WAS RECEIVED BY THE ASSESSEE THAN THE SAME WOULD PERTAIN TO PRIOR PERIOD IN WHICH NO INTEREST WAS RECEIVED AS IT CANNOT BE ASSU MED THAT THE DEBTOR DOES NOT PAID ANY INTEREST FOR THE PERIOD OF MORE THAT 5 YEARS AN D THAN HE STARTS PAYING INTEREST FOR SUBSEQUENT PERIOD. 13.1. THE LD. A/R OF THE ASSESSEE ALTERNATIVELY ARG UED THAT IT IS TRITE LAW THAT COMPUTATION OF UNDISCLOSED INCOME CAN EITHER BE MAD E ON THE BASIS OF INCOME OR CAN BE BASED ON INVESTMENTS AND EXPENDITURES. HOWEVER, COM PUTATION OF UNDISCLOSED INCOME CANNOT BE MADE BY ADDITION BOTH ON INCOME AND INVES TMENT BASIS AS BENEFIT OF TELESCOPIC IS REQUIRED TO BE GIVEN. 14. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) GAVE FOLLOWING FINDING AT PARA 6.3 OF HIS ORDER AS UNDER :- 6.3 I HAVE CONSIDERED THE ARGUMENT OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY T HE ADVANCE HAS BEEN GIVEN TO SH. KAILASH MODI AND UNDISPUTEDLY HE IS MAKING PAYMENT IN INSTALLMENT. THE A.R. HAS ARGUED THAT THIS REPAYMENT IS OF THE PRINCIPAL AMOUNT, WHERE THE A.O . HAS HELD IT 10 TO BE THE INTEREST RECEIVED. THE ARGUMENT OF THE A. R. THAT THE INTEREST IS OUTSTANDING FROM 2.2.02 TO 2.7.05 IS FO UND CORRECT AS PER THE NARRATION AVAILABLE ON PAGE 7 OF ANN. A-11. OF COURSE THE PAYMENT RECEIVED IS NOT REGULAR AS ARGUED BY THE A. R, BUT THAT CAN NOT DECIDE THAT THESE PAYMENTS ARE NOT INTEREST PAYMENT. INFACT AS THE INTEREST IS OVERDUE AND IN CASE OF AN Y ADVANCE IN SUCH NATURE, THE RECOVERY OF OUTSTANDING INTEREST I S FIRST MADE AND THEREAFTER THE PRINCIPAL IS COLLECTED/RECOVERED, TH E A.O. WAS JUSTIFIED IN TREATING THE AMOUNT SO RECEIVED FROM S H. KAILASH MODI AS INTEREST AMOUNT. ACCORDINGLY THE ADDITION O F RS. 25,000/- IS CONFIRMED. 15. AFTER CONSIDERING THE ORDERS OF THE AO, LD. CIT (A) AND SUBMISSIONS OF THE ASSESSEE, WE FIND NO INFIRMITY IN THE FINDING OF LD . CIT (A). FINDING OF LD. CIT (A) HAS BEEN REPRODUCED SOMEWHERE ABOVE IN THIS ORDER. EVE N THE ASSESSEE COULD NOT EXPLAIN THAT ON WHAT ACCOUNT THESE RECEIPTS WERE FOUND RECORDED ON PAGE 7 IN THE ANNEXURE A-11. THERE IS NO SATISFACTORY EXPLANATION, THEREFORE, ON THE REASONING GIVEN BY LD. CIT (A), WE CONFIRM HIS ORDER. 16. GROUND NO. 7 RELATES TO CONFIRMING THE ADDITION OF RS. 35,497/- ON ACCOUNT OF HOUSEHOLD EXPENSES. 17. THE AO MADE ADDITION OF RS. 59,497/- ON THE BAS IS OF ESTIMATION OF HOUSEHOLD EXPENSES AT RS. 1,20,000/-. THE LD. CIT (A) DELETED THIS ADDITION IN PART. 18. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED ON THIS ISSUE AS NO MATERIAL IN SEARCH WAS FOUND IN RESPECT OF ANY EXPENDITURE ON HOUSEHOLD EXPENSES. THIS IS A CASE OF SEARCH, THEREFORE, WITHOUT ANY 11 MATERIAL IN CASE OF SEARCH, NO ADDITION CAN BE MADE . ACCORDINGLY, THE ADDITION OF RS. 35,497/- SUSTAINED BY LD. CIT (A) IS DELETED. 19. GROUND NOS. 8 & 9 IN APPEAL OF ASSESSEE ARE AGA INST RECORDING THE FINDING THAT AMOUNT OF RS. 8,00,000/- AND RS. 3,81,500/- RECEIVE D FROM M/S. SIDHARATHA AND FROM SMT. SUNITA SINGHVI WERE RETURNED BACK TO M/S. SIDH ARATHA AND SMT. SUNITA SINGHVI. THE DEPARTMENT THROUGH GROUND NO. 2 HAS CHALLENGED THE ORDER OF LD. CIT (A) AS LD. CIT (A) HAS DELETED BOTH THESE ADDITIONS. 20. SINCE THESE GROUNDS ARE INTER LINKED, THEREFORE , THEY ARE DISPOSED OFF TOGETHER. 21. BRIEF FACTS IN RESPECT OF THESE TWO ADDITIONS A RE RECORDED IN PARA 5 AND 5.1 IN THE ORDER OF LD. CIT (A) AT PAGES 11 & 12 ARE AS UNDER :- 5. GROUND NO 4 & 5 ARE AGAINST THE ADDITION OF RS. 8,00,000/- & RS. 3,81,500/- ON THE BASIS OF PAGE NO. 13 OF ANNEX URE A-3 [PB 109] FOUND & SEIZED FROM THE RESIDENCE OF THE ASSESSEE. THE AO IN PARA 5 AT PAGES 4 TO 6 OF THE ASSESSMENT ORDER OBSERVED THAT DURING THE COURSE OF SEARCH ON 25/03/2008 ANNEXURE A-3 WAS FOUND AND SEI ZED FROM THE RESIDENCE OF THE ASSESSEE. THERE IS ENTRY ON PAGE 1 3 WHEREIN A CHEQUE NO. 397010 AMOUNTING TO RS. 8,00,000/- HAS BEEN SHO WN AS DEPOSITED IN THE UCO BANK ACCOUNT OF THE ASSESSEE ON 03/06/2006 AND ON 06/06/2006 THIS AMOUNT OF RS. 8,00,000/- WAS GIVEN TO M/S SIDD ARTH AS SELF CHEQUE AND THE ASSESSEE HAD ADMITTED THIS FACT THAT THOSE AMOUNT WAS NOT RECORDED IN BOOKS OF ACCOUNTS AND SURRENDERED THE S AME FOR TAXATION. IT WAS FURTHER OBSERVED BY THE AO THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WHEN CONFRONTED WITH THIS ENTRY, REPLIED THAT IN THE ASSESSMENT YEAR 2006-07 THE ASSESSEE HAS SH OWN DEBTOR OF RS. 8,00,000/- TO SHRI VINOD SINGHVI PROPRIETOR M/S SID HARTH. DURING THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2007- 08 THE ASSESSEE REALIZED THE LOAN THROUGH CHEQUE NO. 397010 FROM HD FC BANK AND 12 SAME WAS DEPOSITED IN ASSESSEES UCO BANK ACCOUNT N O. 11308 ON 03- 06-2006. THE CONFIRMATION OF ACCOUNT AND BANK STATE MENT OF M/S SIDHARTH IS ENCLOSED HEREWITH. THE AO REJECTED SUB MISSION OF THE ASSESSEE AND MADE ADDITION OF RS. 8,00,000/- TO THE INCOME OF ASSESSEE PLACING RELIANCE ON THE STATEMENT OF APPELLANT AND THE FOLLOWING DECISIONS: A. RAMESHCHANDRA AND CO. V/S. CIT (1987) 168 ITR 37 5 (BOM.) B. RAKESH MAHAJAN V/S. CIT CITED AT 214 CTR 218 (P& H) C. V. KUNHIKANNAN V/S. CIT (219 ITR 235 TO 243) (KE R) D. SURJEET SINGH CHAHBRA V/S. UNION OF INDIA & ORS. (SC) IN SLP NO. 14028 OF 1996 5.1 SIMILAR OBSERVATION WAS GIVEN BY A.O. IN RESPE CT OF ENTRY ON PAGE 13 WHEREIN CHEQUE OF RS. 3,81,500/- WAS REC EIVED FROM SMT. SUNITA SINGHVI AND DEPOSITED IN THE UCO BANK ACCOUN T OF THE APPELLANT ON 6.6.06 AND ON 7.6.06, THIS AMOUNT OF RS. 3,81,50 00/- WAS GIVEN TO SMT. SUNITA SINGHVI AS SELF CHEQUE. 22. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A) WHICH ARE RECORDED IN PARA 5.3 AND 5.3.4 PAGES 12 TO 15 IN THE ORDER OF LD. CIT (A ) ARE AS UNDER :- 5.3. THE AR OF THE ASSESSEE FILED DETAILED WRITTEN SUBMISSION ON THE ISSUE. IT WAS SUBMITTED THAT THE ASSESSEE MADE AN ADVANCE OF RS. 8,00,000/- TO HIS SON, SHRI VINOD SINGHVI IN PY 200 0-01 WHICH IS EVIDENCED FROM THE BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2001 FILED ALONG WITH REGULAR RETURN OF INCOME [PB PG. 111 TO 114] . THE ADVANCE SO MADE WAS RECORDED IN THE REGULAR BOOKS OF ACCOUN TS OF ASSESSEE AS WELL AS IN THE BOOKS OF DEBTORS WHO IS ALSO ASSESSE D TO TAX AND IS REFLECTED IN THE BALANCE SHEETS OF BOTH THE PARTIES FILED ALONG-WITH REGULAR 13 RETURNS MUCH BEFORE SEARCH, RIGHT FROM AY 2002-03 T O AY 2006-07. SHRI VINOD SINGHVI REPAID THIS ADVANCE BY CHEQUE NO. 397 010 DATED 03-06- 2006 DRAWN ON THE HDFC BANK BEARING ACCOUNT NO. 142 2740000023 BANK ACCOUNT MAINTAINED IN THE NAME OF M/S. SIDDHAR TA PROPRIETORSHIP OF SHRI VINOD SINGHVI [PB PG. 140 & 141] . THE ASSESSEE DEPOSITED THE CHEQUE IN HIS BANK ACCOUNT MAINTAINED WITH UCO BANK A/C NO. 11308. THE RECEIPT OF CHEQUE AND ITS DEPOSIT IN THE BANK A CCOUNT IS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE AS SESSEE [PB PG. 116 & 125] . ON 06/06/2006 THE ASSESSEE WITHDREW CASH OF RS. 8 ,00,000/- FROM BANK ACCOUNT BY SELF-CHEQUE [PB PG. 116, 125, 132] . THE WITHDRAWAL OF MONEY IS DULY RECORDED IN THE REGULAR BOOKS OF ACCO UNTS. THE AR FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED MEMORANDUM R ECORDS IN THE FORM OF NOTEBOOK IN WHICH ALL THE MONEY RECEIVED BY HIM AND DEPOSITED IN BANK AND MONEY PAID BY HIM THROUGH BANK ACCOUNT IS RECORDED. THIS MEMORANDUM NOTEBOOK WAS FOUND AT THE TIME OF SEARCH AND WAS SEIZED & INVENTORISED AS ANNEXURE-3. ALL THE ENTRIES IN TH E NOTEBOOK CAN BE VERIFIED FROM THE BOOKS OF ACCOUNTS. FURTHER THE SEIZED PAGE 13 OF ANNX. A-3, THE WORD LSYQ FL)KFKZ) LSYQ FL)KFKZ) LSYQ FL)KFKZ) LSYQ FL)KFKZ) IS NOTED WHICH MEANS THAT THE MONEY RECEIVED FROM M/S. SIDDHARTA WAS WITHDRAWN IN CASH AND NOT THAT THE SUM OF RS. 8,00,000/- WAS PAID TO M/S. SIDDHARTA BY THE ASSESSEE [PB PG. 109]. FURTHER SHRI VINOD SINGHVI PROP. OF M/S SIDDHARTHA WHO WAS ALSO SEARCHED ON THE SAME DATE HAS NOT CLAIMED ANY LOAN OF RS. 8,00,000/- RECEIVED FROM HIS FATHER. HAD THE CONTEN TION OF AO CORRECT THEN SHRI VINOD SINGHVI PROP. OF M/S SIDDHARTHA COU LD HAVE CLAIMED THIS AMOUNT AND COULD EXPLAINED HIS CASH TO THIS EX TENT. THE AUTHORISED OFFICER OBTAINED SURRENDER OF THE ASSESSEE UNDER DU RESS AT THE TIME OF SEARCH ON THE BASIS OF THIS NOTEBOOK WITHOUT ACTUAL LY VERIFYING WHETHER THE TRANSACTIONS WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. ADDITION SO MADE WAS BLINDLY AND MECHANICALLY BY RE LYING ON THE SURRENDER OBTAINED AT THE TIME OF SEARCH WITHOUT AP PLYING ANY MIND. THE AR TO SUPPORT ITS SUBMISSION DRAWN ATTENTION TO COP Y OF BANK BOOK OF 14 UCO BANK ACCOUNT [PB PG. 125 & 130], COPY OF CASH BOOK [PB PG. 131 TO 139], COPY OF BALANCE SHEET AS ON 31-03-2006 FILED ALONG WITH THE REGULAR RETURN OF INCOME BEFORE THE SEARCH [PB PG. 144 TO 145] AND COPY OF BALANCE SHEET AS ON 31-03-2007 FILED ALONG WITH THE REGULAR RETURN OF INCOME BEFORE THE SEARCH, [PB PG. 49]. 5.3.1 THE AR FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDING BOOKS OF ACCOUNTS WERE PRODUC ED AND THESE ENTRIES WERE VERIFIED TO THE AO. EVEN AFTER SUCH EF FORTS, ONE FAILS TO UNDERSTAND WHY THE A.O. MADE ADDITION BY RECORDING FALSE FINDING OF FACT THAT THE TRANSACTION WAS NOT RECORDED IN THE B OOKS OF ACCOUNTS. 5.3.2 THE AR FURTHER SUBMITTED THAT THE SURR ENDER OBTAINED AT THE TIME OF SEARCH LOST ITS EVIDENTIARY VALUE ONCE THE ASSESSEE RETRACTED FROM STATEMENTS MADE UNDER DURESS AND NO EVIDENCES WERE FOUND IN THE COURSE OF SEARCH TO CORROBORATE SUCH SURRENDER. ATTENTION WAS DRAWN TO THE INSTRUCTION DATED 10 TH MARCH, 2003 VIDE NO. F NO. 286/2/2003/IT (INV) ISSUED BY HONBLE UNDER SECRETARY (INV. II), CENTRA L BOARD OF DIRECT TAXES U/S 119 OF THE I.T. ACT. THE AR FURTHER SUBMI TTED THAT THE ABOVE INSTRUCTION CLEARLY PROVES THAT THE AUTHORISED OFFI CER ACTED AGAINST THE INSTRUCTIONS ISSUED BY THE CBDT U/S 119 OF THE ACT, WHICH WERE BINDING ON HIM AS DECIDED BY HONBLE SUPREME COURT IN THE C ASE OF K.P. VARGHESE V/S. ITO & ANR. (1981) 131 ITR 597 (SC). T HE LD. A.O. GROSSLY ERRED IN PLACING RELIANCE ON THE SURRENDER OBTAINED IN VIOLATION OF INSTRUCTIONS OF CBDT WHICH WERE BINDING ON HIM. THE AR DRAWN ATTENTION TOWARDS THE AFFIDAVIT OF THE ASSESSEE DAT ED 14-09-2009 EXPLAINING THE CIRCUMSTANCES IN WHICH SURRENDER WAS OBTAINED. [PB PG. 87 TO 97] THE AR FURTHER SUBMITS THAT THE AO DID NOT CONTROVERT THE FACTS STATED IN THE AFFIDAVIT BUT CHOOSES TO IGNORE THE SAME WITHOUT SPECIFYING ANY REASON FOR DOING SO. AS SUCH THE AFF IDAVIT FILED BY THE ASSESSEE REMAINED UNCONTROVERTED AS SUCH, IT CANNOT BE IGNORED AND IS VALID PIECE OF EVIDENCE TO SUBSTANTIATE THE CLAIM O F ASSESSEE. RELIANCE IS PLACED BY A.R. ON VARIOUS DECISIONS: 15 5.3.3 THE AR FURTHER SUBMITTED THAT THE CASES REF ERRED BY THE A.O. COULD NOT BE APPLIED TO THE FACTS OF THE CASE UNDER CONSIDERATION AS DETAILED SUBMISSION MADE AT PAGE 24 TO 26 OF THE WR ITTEN SUBMISSION. 5.3.4 THE AR ALTERNATIVELY ARGUED THAT EVEN ON GOING WITH THE VERSION OF LD. A.O., IF THE ASSESSEE WITHDRAW MONEY FROM HIS BANK ACCOUNT AND ADVANCED TO M/S. SIDDHARTA THAN ALSO NO ADDITION IS PERMISSIBLE U/S 69 AS THE SOURCE FOR MAKING SUCH AD VANCE IN CASH IS SATISFACTORILY PROVED FROM THE REPAYMENT RECEIVED F ROM SHRI VINOD SINGHVI WHICH IS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. AS SUCH WHEN SOURCE OF THE INVESTMENT IS EXPLAINED THERE IS NO APPLICATION OF SEC 69 OF THE I.T. ACT. THE AR PRAYED FOR DELETION OF T HE ADDITION. 23. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT THE ADDITIONS MADE BY AO WERE NOT JU STIFIED AND, THEREFORE, HE DELETED THE ADDITIONS. THE FINDINGS OF LD. CIT (A) ARE RECOR DED IN PARA 5.7 TO TO 5.7.2 ARE AS UNDER :- 5.7 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R AN D HAVE PERUSED THE MATERIAL ON RECORD. FROM PERUSAL OF PAGE 13 OF AN. A-3 AS WELL AS THE REPLY FILED BY THE APPELLANT THAT M/S SIDHARTHA, TH E PROPRIETARY CONCERN OF HIS SON OF SH. VINOD SINGHVI HAS BEEN SHOWN AS D EBTORS IN THE BOOKS OF ACCOUNTS, AND THE FACT THAT CHEQUE NUMBER 397010 OF RS 8 LAKHS WAS RECEIVED FROM M/S SIDHARTHA AND IS FOUND DEPOSITED IN THE BANK ACCOUNT OF THE APPELLANT, MAKE US TO BELIEVE THAT THE ADVAN CE GIVEN EARLIER HAS BEEN RECEIVED BACK ON 3.6.2006. NOW ON 6.6.06, SELF CHEQUE OF RS. 8 LAKHS WAS GIVEN TO M/S SIDHARTHA AND THIS FACT WAS ADMITTED BY THE APPELLANT, THE A.R. HAS ARGUED THAT THE SELF CHEQUE WAS NOT GIVEN TO M/S SIHDARTHA AS ADVANCE AND IF M/S SIDHARTHA HAS NOW R ECEIVED THIS CASH ADVANCE, THEN SH. VINOD SIGNHVI PROP. WOULD HAVE C LAIMED IT WHILE EXPLAINING THE CASH FOUND DURING THE COURSE OF SEAR CH. IT IS QUITE EVIDENT THAT AS PER THE BOOKS OF ACCOUNTS, APPARENTLY THE A DVANCE OF RS 8 LAKHS 16 WAS GIVEN BY THE APPELLANT TO M/S SIDHARTHA EARLIER THAT TOO THROUGH CHEQUE AND NOT BY CASH. NOW THE MOOT QUESTION TO BE ANSWERED IS AS TO WHAT FOR THE SAME AMOUNT OF RS. 8 LAKH WAS IMMEDIAT ELY WITHDRAWN FROM THE BANK BY WAY OF SELF CHEQUE GIVEN TO M/S SI DHARTHA ON 6.6.06. OBVIOUSLY IT IS NOT A NORMAL WITHDRAWAL BY THE APPE LLANT BECAUSE APPARENTLY THERE WAS NO NEED OF THE CASH, WHICH IS FURTHER PROVED AS THE CASH HAS NOT BEEN UTILIZED AND WAS APPARENTLY LYING AS CASH BALANCE IN THE BOOKS. THE WITHDRAWAL OF THE SAME AMOUNT HAS TO BE SEEN IN CONJUNCTION WITH THE NARRATION MENTIONED IN THE SEI ZED LOOSE PAPERS PARTICULARLY PAGE 13, 14 AND 15 OF ANN. A-3. THE NA RRATION WITH REFERENCE TO ABOVE RS.8 LAKHS ENTRY IS AS BELOW:- SELF (SIDHARTH) - RS. 8,00 ,000/- CHEQUE NO. 392383 IT REFLECTS THAT THE SELF CHEQUE OF RS. 8 LAKHS WAS GIVEN TO M/S SIDHARTHA. APPARENTLY THE ADVANCE OF RS. 8 LAKHS WA S SHOWN BY THE APPELLANT TO M/S SIDHARTHA EARLIER, AS APPEARING IN THE BOOKS OF ACCOUNTS OF RESPECTIVE PARTIES. THIS ADVANCE HAS BEEN RETURN ED BACK TO THE APPELLANT APPARENTLY THROUGH CHEQUE ON 3.6.06. ACCO RDINGLY, GIVING BACK RS. 8 LAKH BY SELF CHEQUE TO M/S SIDHARTHA CAN NOT AT ALL CONSIDERED TO BE UNACCOUNTED ADVANCE NOW MADE ON 6.6.06, AS HA S BEEN OBSERVED BY THE A.O. ACTUALLY IT IS THE RETURNING BACK OF THE AMOUNT IN CASH, WHICH WAS RECEIVED BY CHEQUE. ONLY CONCLUSION FROM THESE EVIDENCES IS THAT THE APPARENT ADVANCE EARLIER SHOWN BY THE A PPELLANT TO M/S SIDHARTHA WAS NOT THE REAL ADVANCE AND IT WAS ONLY ACCOMMODATION ENTRY. SINCE, THE ADVANCE WAS SHOWN TO BE RECOVERED BACK IN THE BOOKS BY RECEIVING THE CHEQUE OF RS. 8 LAKHS BY THE APPEL LANT FROM M/S SIDHARTHA, THE EQUIVALENT AMOUNT OF RS. 8 LAKHS HAS BEEN RETURNED IN CASH BY THE APPELLANT TO M/S SIDHARTHA ON 6.6.06. 17 5.7.1 SIMILARLY, IN RESPECT OF ANOTHER ENTRY SHOWN IN THE NAME OF SUNITA SINGHVI WHERE THE CHEQUE NO. 759363 WAS R ECEIVED ON 6.6.06 OF RS. 3,81,500/- AND SAME AMOUNT WAS WITHDRAWN BY SELF CHEQUE ON 7.6.06 AND THIS MONEY HAS BEEN RETURNED BACK TO SMT . SUNITA SINGHVI BY SELF CHEQUE (I.E IN CASH), IT IS CONCLUDED THAT IT WAS ALSO AN ACCOMMODATION ENTRY OF LOAN GIVEN. THIS FACT IS PRO VED FROM THE ADMITTED CORRECT FACT BY THE APPELLANT WHEREIN IN HE HAS ADMITTED THAT THE MONEY WAS WITHDRAWN AND GIVEN TO THE PARTY . IT WAS JUST TO SAVE THE OTHER PARTIES THAT THE APPELLANT HAS ADDED IT T O BE THE UNACCOUNTED ADVANCE NOW GIVEN IN CASH. THE MONEY HAS BEEN GIVEN BACK IN CASH TO SMT. SUNITA SINGHVI IS FURTHER PROVED FROM THE ENTR Y ON PAGE 14 OF A-3, WHEREIN THE APPELLANT HAS MENTIONED THE SAME NARRAT ION OF WITHDRAWAL OF THE CASH FROM THE BANK BY SELF CHEQUE OF SMT. SU NITA SINGHVI. THE APPELLANT HAS ADMITTED THIS FACT IN ANSWER TO QUEST ION NO. 19, WHEREIN HE HAS STATED THAT HE HAS GIVEN BACK RS. 3,81,000/- IN CASH TO SMT. S UNITA SINGHVI BY SELF CHEQUE. 5.7.2 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, TH E ARGUMENT OF THE A.R IS PARTLY CORRECT THAT THESE ARE NOT UNACCO UNTED ADVANCES GIVEN TO M/S SIDHARTHA OR SMT. SUNITA SINGHVI BUT INFACT THESE ARE ACCOMMODATION ENTRIES OF THE LOAN EARLIER GIVEN, WH ICH HAVE BEEN SHOWN IN THE BOOKS TO HAVE BEEN RECOVERED AND AS THERE WA S NO ACTUAL TRANSACTION OF LOAN, THE MONEY RECEIVED THROUGH CHE QUE WAS RETURNED BACK BY SELF CHEQUE ( I.E IN CASH) TO THOSE PARTI ES NAMELY M/S SIDHARTHA AND SMT. SUNITA SINGHVI. ACCORDINGLY THERE IS NO CA SE OF ADDITION IN THE FORM OF UNACCOUNTED ADVANCE IN THE CASE OF APPELLAN T. THEREFORE, ADDITION IN THE HANDS OF APPELLANT IN RESPECT OF RS . 8 LAKHS AND RS. 3,81,500/- IS HEREBY DELETED. HOWEVER, THE A.O. IS FREE TO TAKE NECESSARY ACTION IN THE CASE OF CONCERNED PERSONS. 24. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF AO. 18 25. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE PLACED RELIANCE ON THE ORDER OF LD. CIT (A) IN RESPECT TO DELETING THE ADDITION REG ARDING THE ISSUE THAT THE AMOUNTS WERE NOT RETURNED BACK. THE LD. A/R INVITED ATTENTION O F THE BENCH ON THE WRITTEN SUBMISSION PLACED ON RECORD. 26. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THERE IS NO INFIRMITY IN THE FINDING OF LD. CI T (A) IN RESPECT OF DELETION OF ADDITIONS. THE LD. CIT (A) HAS ASCERTAINED THE FACTUAL ASPECTS AND FOUND THAT M/S. SIDHARATHA, A PROPRIETORSHIP CONCERN OF SON OF THE ASSESSEE SHRI VINOD SINGHVI, HAS BEEN SHOWN AS DEBTOR IN THE BOOKS OF ACCOUNT, AS IN FACT, A CHEQU E OF RS. 8,00,000/- WAS RECEIVED FROM M/S. SIDHARATHA WHICH WAS FOUND DEPOSITED IN THE BA NK. IT WAS EXPLAINED THAT IN FACT THE ADVANCE WAS GIVEN TO M/S. SIDHARATHA IN PREVIOUS YE AR 2000-01 WHICH HAS BEEN SHOWN IN THE BALANCE SHEET. THEREAFTER, THE ASSESSEE RECEIVE D BACK THIS AMOUNT VIDE CHEQUE NO. 397010 DATED 3.6.2006 DRAWN ON HDFC BANK. THIS ENT RY IS ALSO RECORDED IN THE BOOKS OF ACCOUNT. THEREAFTER ASSESSEE WITHDREW CASH OF RS . 8,00,000/- FROM THE BANK ACCOUNT BY SELF CHEQUE. FROM THIS TRANSACTION, THE AO AND LD. CIT (A) ARE DRAWING INFERENCE THAT BY WITHDRAWING THROUGH SELF CHEQUE THE AMOUNT HAS BEEN RETURNED TO M/S. SIDHARATHA WHEREAS THE ASSESSEE HAS RECORDED THE CASH IN HIS B OOKS OF ACCOUNT ON THE DATE OF CASH WITHDRAWAL AND THEREAFTER A SUM OF RS. 7,00,000/- W AS REDEPOSITED FOR GIVING ADVANCE TO M/S. S.D. FINANCE I.E. ON 26.7.2006. THE LD. CIT ( A) HAS GIVEN HIS FINDING THAT ADVANCE GIVEN IN PREVIOUS YEAR WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THERE IS NO CASE OF ADDITION OF RS. 8,00,000/-. HO WEVER, HE HAS TREATED THIS AMOUNT WAS RETURNED BACK TO M/S. SIDHARATHA AFTER WITHDRAWING CASH THROUGH SELF CHEQUE AND, THEREFORE, HE HAS HELD THAT THE AMOUNT OF RS. 8,00, 000/- HAS BEEN GIVEN BACK AND 19 ACCORDINGLY HE HAS CONFIRMED AN ADDITION OF RS. 7,0 0,000/- BY NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE. WE HAVE ALREADY DISPO SED OFF THE GROUND IN RESPECT OF ADDITION OF RS. 7,00,000/- BY HOLDING THAT THERE WA S A CASH AVAILABILITY WITH THE ASSESSEE. THEREFORE, WE HOLD THAT THE AMOUNT OF RS. 8,00,000/ - WITHDRAWN THROUGH SELF CHEQUE WAS WITH THE ASSESSEE AS CASH AVAILABILITY HAS BEEN SHO WN IN THE REGULAR BOOKS OF ACCOUNT WHICH IS VERIFIABLE. THEREFORE, THE GROUND OF THE ASSESSEE IS ALLOWED THAT THIS AMOUNT WAS NOT RETURNED BACK. 26.1. REGARDING THE AMOUNT OF RS. 3,81,500/-, WE HA VE ALREADY RESTORED THE ISSUE TO THE FILE OF AO WHILE DISPOSING THE GROUND OF THE ASSESS EE WHERE LD. CIT (A) HAS CONFIRMED THIS ADDITION, TO ASCERTAIN THE FACTUAL ASPECT WHET HER THERE WAS A CASH AVAILABLE AS PER BOOKS OF ACCOUNT OR NOT. IF THERE WAS A CASH AVAIL ABLE AS PER BOOKS OF ACCOUNT, THEN IT CANNOT BE SAID THAT THIS AMOUNT OF RS. 3,81,500/- W AS RETURNED BY THE ASSESSEE. THEREFORE, THE ISSUE IN RESPECT OF RETURNING AMOUNT OF RS. 3,81,500/- IS RESTORED BACK TO THE FILE OF THE ASSESSEE. FOR THE SAKE OF CLARIFIC ATION, WE CONFIRM THE ORDER OF LD. CIT (A) IN DELETING THE ADDITION OF RS. 3,81,500/- AS LD. C IT (A) HAS ASCERTAINED THE FACTUAL ASPECTS THAT THIS AMOUNT WAS RECEIVED FROM SMT. SUN ITA SINGHVI AND WAS AVAILABLE WITH THE ASSESSEE. THEREFORE, ADDITION OF RS. 3,81,500/ - WAS RIGHTLY DELETED BY LD. CIT (A). THE FINDING OF LD. CIT (A) ARE REPRODUCED SOMEWHERE ABOVE WHICH REMAINED UNCONTROVERTED ON THE POINT OF DELETION. 27. GROUND NO. 10 IS AGAINST CHARGING OF INTEREST U NDER SECTION 234A, 234B AND 234C. 28. CHARGING OF INTEREST IS MANDATORY, THEREFORE, T HE AO IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF, IF ANY. 20 29. GROUND NOS. 12 & 13 ARE GENERAL IN NATURE. 30. NOW WE WILL TAKE THE REMAINING GROUNDS IN APPEA L OF THE DEPARTMENT. 31. GROUND NO. 1 IS AGAINST DELETING THE ADDITION O F RS. 15,00,000/- (RS. 5,00,000/- IN THE NAME OF SHRI KAMAL BHANDARI, RS. 3,50,000/- IN THE NAME OF SHRI MUNNA AND RS. 6,50,000/- IN THE NAME OF SHRI PAPPU) MADE BY AO UN DER SECTION 69 OF THE ACT. 32. BRIEF FACTS OF THE CASE IN THIS REGARD ARE REC ORDED IN THE ORDER OF LD. CIT (A) IN PARA 4 ARE THE ADDITION OF RS. 15,00,000/- MADE ON THE BASIS OF PAGE NO. 27 OF ANNEXURE A-1 IMPOUNDED FROM M/S. SIDDHARTA PALACE ON ACCOUNT OF ALLEGED UNRECORDED LOANS GIVEN BY ASSESSEE TO SHRI PAPPU FOR RS. 6,50,000/-, TO SHRI MUNNA FOR RS. 3,50,000/- AND TO SHRI KAMAL BHANDARI FOR RS. 5,00,000/-. THE AO IN PARA 2 TO 4 AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER OBSERVED THAT AS PER PAGE N O 27 OF ANNEXURE A-1 IMPOUNDED FROM M/S SIDHARTHA PALACE WHICH BELONGS TO SHRI UMM AID MAL SINGHVI IT HAS BEEN MENTIONED THAT LOAN HAS BEEN GIVEN TO SHRI PAPPU FO R RS. 6,50,000/-, TO SHRI MUNNA FOR RS. 3,50,000/- AND TO SHRI KAMAL BHANDARI FOR RS. 5 ,00,000/-. THE AO REJECTED THE SUBMISSION OF THE ASSESSEE THAT THE ENTRIES RECORDE D AT PAGE NO 27 OF ANNEXURE A-1 WERE NOT LOAN GIVEN BUT ARE ADVANCE RECEIVED FROM S HRI PAPPU, SHRI MUNNA AND SHRI KAMAL BHANDARI TOWARDS SALE OF AGRICULTURAL LAND BE LONGING TO HIM AND HIS FAMILY MEMBERS BUT AS THE PARTIES COULD NOT ABLE TO ARRANG E BALANCE PAYMENT, THE AMOUNT RECEIVED AS ADVANCE RETURNED TO THEM AFTER-WORDS. T HE AO REJECTED THE SUBMISSION ON THE FINDING THAT THE ASSESSEE HAD GIVEN THE LOAN TO SHRI PAPPU, SHRI MUNNA AND SHRI KAMAL BHANDARI WHOSE IDENTITY HAS NOT BEEN ESTABLIS HED; NO ADDRESS/ PAN OF SHRI PAPPU, SHRI MUNNA AND SHRI KAMAL BHANDARI WERE PROV IDED; HENCE ADDITION FOR RS. 21 6,50,000/- U/S 68, RS. 3,50,000/- U/S 69 AND RS. 5, 00,000/- U/S 69 MADE TO THE INCOME OF THE ASSESSEE. 33. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A) WHICH ARE RECORDED IN PARA 4.1 TO 4.1.5 ARE AS UNDER :- 4.1 THE AR OF THE ASSESSEE FILED WRITTEN SUBMIS SION ON THE ISSUE. ACCORDING TO THE AR THE ASSESSEE AT THE FIRS T INSTANCE AGREED TO SELL THE AGRICULTURAL LAND BELONGING TO HIM AND HIS FAMILY MEMBERS TO SHRI PAPPU, SHRI MUNNA AND SHRI KAMAL BHANDARI AND RECEIVED RS. 15,00,000/- AS ADVANCE; ENTRIES TO THIS EFFECT ARE ALSO FOUND RECORDED IN THE SEIZED DIARIES. THE ABOVE PARTIES COULD NOT ARR ANGE THE ENTIRE SALE CONSIDERATION IN THE STIPULATED TIME AND AS SUCH TH E AGREEMENT WAS CANCELLED AND THE LAND IN QUESTION WAS SOLD TO OTHE R PARTIES DURING THE ASSESSMENT YEAR 2008-09 BY REGISTERED SALE DEED AND THE AMOUNT OF ADVANCE RECEIVED WAS RETURNED TO THEM, WHICH IS ALS O EVIDENT FROM THE DIARIES IN WHICH LINE ON THESE NAMES WERE MARKED. T HIS IS INDICATION OF CANCELLATION OF AGREEMENT AND RETURN OF MONEY. SINC E THE DOCUMENT WAS NOT REGISTERED, THE ASSESSEE HAD NOT UTILIZED THE A MOUNT IN QUESTION AND THE SAME IS APPEARING AS CASH IN HAND AS ON 31-03-2 007 AND THE NAMES, AMOUNTS AND CASH IN HAND ARE NOT APPEARING IN THE B ALANCE SHEET AS ON 31-03-2008. SINCE THE AMOUNT WAS SHOWN AS CASH IN H AND AND HAS NOT BEEN UTILIZED FOR ANY PURPOSE AND ULTIMATELY RETURN ED BACK TO THE PARTIES BUT SINCE THE NAMES ARE APPEARING IN THE SEIZED DIA RIES/DOCUMENTS, THE EFFECT WAS GIVEN IN THE BALANCE SHEET. 4.1.1 THE AR FURTHER ARGUED THAT THE LD. A.O. ASSUM ED WITHOUT ANY MATERIAL ON RECORD THAT THE AMOUNTS REPRESENTS MONE Y ADVANCED BY THE ASSESSEE TO THESE PERSONS AND DID NOT ACCEPT THE EX PLANATION OF ASSESSEE THAT THE SUM RECORDED IN THE SEIZED PAPER WERE ACTU ALLY RECEIVED BY THE ASSESSEE AS ADVANCE FOR AGREEMENT TO SELL THE LAND. NO BASIS WHATSOEVER 22 WAS GIVEN BY THE LD. A.O. IN MAKING SUCH ASSUMPTION S. IF THE EXPLANATION OF THE ASSESSEE IS REJECTED BY LD. A.O. THAN THE PAPER ON THE BASIS OF WHICH ADDITION IS MADE REMAINS UNCORROBORA TED AND THE SAME BEING DUMB DOCUMENT DOES NOT HAVE EVIDENTIARY VALUE AND NO ADDITION ON SUCH DOCUMENTS CAN BE MADE. 4.1.2 THE AR FURTHER SUBMITTED THAT DUE TO SHORT TI ME & NON-PRESENCE OF INTENDED BUYERS IN JODHPUR, THE ASSESSEE COULD N OT OBTAIN THE COPY OF AGREEMENT AND THEREFORE AN APPLICATION UNDER RULE 4 6A MOVED FOR ADMISSION OF ADDITIONAL EVIDENCE OF THE SALE AGREEM ENT. IT WAS FURTHER SUBMITTED THAT IN THE REMAND REPORT ON THE APPLICAT ION UNDER RULE 46A (A COPY OF WHICH WAS PROVIDED TO THE AR) THE AO DID NO T CONTRAVENE THE FACTS OF THE AGREEMENT AND AS SUCH THE SUBMISSION O F THE ASSESSEE THAT THE ENTRIES FOUND RECORDED AT PAGE 27 OF THE ANNEXU RE A-1 ARE NOT LOAN GIVEN BUT ADVANCE RECEIVED FOR SALE OF LAND MAY KIN DLY BE ACCEPTED. 4.1.3 THE AR FURTHER ARGUED THAT SEC 69 CASTS HEAVY BURDEN ON THE REVENUE TO ESTABLISH THAT THE ASSESSEE, IN FACT, HA D MADE THE INVESTMENT IN THE RELEVANT ASSESSMENT YEAR. NO SUCH MATERIAL W AS BROUGHT BY LD. A.O. AT ANY TIME TO PROVE THAT THE ASSESSEE HAD NOT RECEIVED ANY ADVANCE BUT IN FACT HAD MADE AN ADVANCE OF RS. 15,00,000/- TO THREE PERSONS IN THE PREVIOUS YEAR RELEVANT TO AY 2007-08 AS SUCH NO ADDITION CAN BE MADE U/S 68 & 69 AS MADE IN THE IMPUGNED ORDER. FOR THIS ARGUMENT RELIANCE WAS PLACED ON THE DECISIONS OF HONBLE ITA T JODHPUR BENCH IN THE CASE OF REDHEY SHYAM TANWAR V/S. ACIT (2002) 77 TTJ (JD) 505. [PB PG. 157 TO 160] 4.1.4 THE AR FURTHER SUBMITTED THAT THE A.O. DID NO T DOUBTED THE CASH IN HAND OF RS. 15,55,000/- AVAILABLE AND SHOWN IN T HE BALANCE SHEET FILED AS ON 31/03/2007; WHICH INCLUDED RS. 15,00,000/- RE CEIVED FROM SHRI KAMAL BHANDARI, SHRI MUNNA AND SHRI PAPPU. IT MEANS THAT THE A.O. HAD ALSO ADMITTED THE SOURCE OF RECEIVING CASH OF RS. 1 5,55,000/-, WHICH IS 23 THE CREDIT BALANCE OF SHRI KAMAL BHANDARI, SHRI MUN NA AND SHRI PAPPU. THE LD. A.O. NO WHERE DOUBTED THE CREDIT SHOWN IN T HESE NAMES IN THE IMPUGNED ORDER AND ON THE OTHER HAND HE IS TREATING THE SUM NOTED IN THE SEIZED PAPER AS MONEY ADVANCED BY THE ASSESSEE. FUR THER IN THE SUCCEEDING YEAR, THE ASSESSEE REPAID THE MONEY RECE IVED BY HIM TO THE INTENDED PURCHASERS ON THE CANCELLATION OF AGREEMEN T. THE A.O. DID NOT DOUBTED REPAYMENT OF SUCH ADVANCE. 4.1.5 THE AR FURTHER ARGUED THAT THE SEIZED PA PER NOWHERE SUGGESTS THAT THE SUMS RECORDED OPPOSITE NAMES OF PARTIES AR E ADVANCES MADE BY THE ASSESSEE. ATTENTION WAS DRAWN TOWARDS THE MANNE R IN WHICH THE ASSESSEE RECORDS THE ADVANCES MADE BY IT FROM THE S EIZED PAPERS FROM WHICH IT CAN BE OBSERVED THAT WHENEVER ANY ADVANCE MADE BY THE ASSESSEE WAS RECORDED THAN HE WOULD ALSO RECORD DET AILS LIKE INTEREST RECEIVED OR DUE WITH AMOUNT & PERIOD OF INTEREST. F URTHER, THE ASSESSEE ALSO RECORDS THE PERIOD FOR WHICH INSTALLMENTS ARE RECEIVED OR INSTALLMENTS DUE. NO SUCH INFORMATION WAS RECORDED IN RESPECT OF AMOUNTS NOTED OPPOSITE TO THESE NAMES. IT AMPLY CLA RIFIES THAT THE SUMS RECORDED IN THE SEIZED PAPER ARE NOT ADVANCES MADE BY THE ASSESSEE. THE AR FURTHER ARGUED THAT THE ASSESSEE WHEREVER MADE A DVANCES IN CASH, THE SAME WAS AGAINST THE SECURITY AS APPEARED FROM THE SEIZED DOCUMENT ITSELF AND NO SECURITY WAS RECORDED AGAINST THE ENT RY OF SHRI KAMAL BHANDARI, SHRI MUNNA AND SHRI PAPPU WHICH PROVES TH AT THE SUMS RECORDED IN THE SEIZED PAPER ARE NOT ADVANCES MADE BY THE ASSESSEE. 34. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT THE ADDITIONS MADE BY AO ARE NOT JUS TIFIED. ACCORDINGLY HE DELETED THE ADDITION. 35. THE LD. D/R PLACED RELIANCE ON THE ORDER OF THE A.O. 24 36. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE HAS PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 37. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND THAT LD. CIT (A) HAS EXAMINED THE ISSUE IN THREAD-BEAR. THE FINDING S OF LD. CIT (A) HAVE BEEN RECORDED IN PARA 4.2 TO 4.2.2 AT PAGES 8 TO 10 ARE AS UNDER :- 4.2 I HAVE CONSIDERED THE ARGUMENT OF LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. THE ADDITION OF RS. 15 LAKH HAS BEEN MADE ON THE BASIS OF ENTRIES ON PAGE 27 OF ANN. A-1 . THE A.O HAS PRESUMED THAT THESE ARE THE ADVANCES GIVEN BY THE APPELLANT TO SH. KAMAL BHANDARI- RS. 5,00,000/-, TO SH. MUNNA RS. 3,50,000/- & TO SH. PAPPU- RS. 6,50,000/-, WHEREAS ON BEING ASKED THE A PPELLANT HAS REPLIED DURING THE ASSESSMENT PROCEEDINGS ITSELF THAT THE A PPELLANT HAS AGREED TO SALE THE AGRICULTURAL LAND BELONGING TO HIM AND OTH ER FAMILY MEMBERS AND RECEIVED THE AMOUNT AS ADVANCE FROM THESE THREE PERSONS TOTALING TO RS. 15 LAKHS. AS THESE PARTIES COULD NOT ARRANGE T HE FURTHER FUNDS AND ACCORDINGLY THE DEAL WAS CANCELLED AND LAND IN QUES TION WAS SOLD TO OTHER PARTIES DURING A.Y 2008-09 BY REGISTERED SALE DEED/ AGREEMENT TO SALE AND AMOUNT OF ADVANCE SO RECEIVED FROM THESE T HREE PERSONS WERE RETURNED TO THEM. SAME IS ALSO EVIDENT FROM PAGE 27 OF ANN. A-1, WHEREIN AGAINST EACH OF THESE THREE NAMES, TICK MA RK OF RIGHT HAS BEEN MADE. A.O. DID NOT ACCEPT THE ARGUMENT OF THE APPEL LANT ON THE GROUND THAT IDENTITY OF THESE PERSONS WAS NOT ESTABLISHED, ADDRESS AND PAN NO. HAS NOT BEEN PROVIDED. FOR BETTER UNDERSTANDING, TH E ENTRIES AT PAGE 27 OF ANN. A-1, (DIARY) ARE REPRODUCED BELOW:- 25 KAMAL BHANDARI 3L + 2L ( T 5L) MUNNA 3L + 50 H T (3/50) PAPPU 26/5/06 5L 1/50 TOTAL 6/50L 4.2.1 FROM PERUSAL OF AFORESAID ENTRIES, IT CAN NO T BE ESTABLISHED THAT THESE ARE EITHER ADVANCES OR LOAN. THEREFORE TO UNDERSTAND WHETHER THESE ARE ADVANCES OR LOANS, OTH ERS CIRCUMSTANTIAL EVIDENCE HAS TO BE SEEN. IN THIS CASE, THE APPELLAN T HAS FURNISHED HIS EXPLANATION THAT THE AGRICULTURAL LAND WAS AGREED T O BE SOLD TO THESE 3 PARSONS AGAINST WHICH THE ADVANCES WERE RECEIVED FR OM THESE 3 PERSONS. THE APPELLANT HAS ALSO FILED THE COPY OF THE DOCUME NT SIGNED BY SH. PAPPU SONI INDICATING THAT PAPPU SONI ALONG WITH SH . MUNNA AND SH. KAMAL BHANDARI AGREED TO PURCHASE AGRICULTURAL LAND OF SH. UMMAID MAL SINGHVI AND FAMILY MEMBERS FOR RS. 28 LAKHS AND AGAINST WHICH RS. 6,50,000/-, RS. 5,00,000/- AND RS. 3,50,000/- HAS B EEN GIVEN RESPECTIVELY BY SH. PAPPU SONI, SH KAMAL BHANDARI AND SH. MUNNA TO SH. SINGHVI. IT IS FURTHER MENTIONED IN THE DOCUMENT THAT IF BY ANY REASON THEY ARE NOT ABLE TO PAY THE BALANCE AMOUNT, SH. SINGHVIS WILL R ETURN THE ADVANCE. BELOW THIS THE DETAILS OF RETURN OF AMOUNT ON 1.7.0 7 ALONGWITH SIGNATURE OF SH. PAPPU SONI IS ALSO AVAILABLE. THIS DOCUMENT BEING FILED AS ADDITIONAL EVIDENCE WAS SENT FOR OBJECTION, IF ANY, AND COMMENT OF THE A.O. THE A.O. HAS FURNISHED HIS REMAND REPORT FIRST LY OBJECTING TO THE ADMITTING OF ADDITIONAL EVIDENCE ON THE BASIS THAT THE ENOUGH OPPORTUNITY WAS GIVEN. IN SUPPORT OF THE SAME, THE A.O. MENTIONED THAT VIDE LETTER DATED 10.2.09, THE CONFIRMATION OF THE CASH CREDITORS WERE 26 ASKED. HOWEVER, IT IS SEEN THAT THESE ENTRIES WERE NOT CASH CREDITORS. A.O. FURTHER MENTIONED THAT VIDE QUERY LETTER DATED 10.11.09, AGAIN CONFIRMATION OF THESE CASH CREDITORS OF ADVANCE REC EIVED FOR SALE OF LAND WAS ASKED, BUT IT IS SEEN BY THE UNDERSIGNED THAT U LTIMATELY, THE A.O. HAS ADDED THESE AMOUNTS CONSIDERING THEM TO BE LOANS/AD VANCES GIVEN BY THE APPELLANT TO THESE 3 PERSONS AND QUERY REGARDING CO NFIRMATION OF CREDITORS IS THUS ULTIMATELY NOT FOUND RELEVANT FRO M PERSPECTIVE OF A.O. MOREOVER, IN EFFECT THE A.O. IN THE REMAND REPORT D ATED 6.4.10, HAS NOT COMMENTED ANYTHING ADVERSELY ON THE MERIT OF THE DO CUMENT FURNISHED BY THE APPELLANT. AS REGARDS ADMISSION OF ADDITIONA L EVIDENCE IS CONCERNED, I AGREE WITH THE ARGUMENT OF THE A.R. T HAT DUE TO PAUCITY OF TIME AND MANY CASES OF THE GROUP UNDER SCRUTINY, TH E APPELLANT COULD NOT FILE THE SAID DOCUMENT AND ACCORDINGLY ADDITIONAL E VIDENCE IS ALLOWED TO BE ADMITTED. 4.2.2 NOW CONSIDERING THE CIRCUMSTANTIAL EVIDENCES, IT IS QUITE EVIDENT THAT THESE ENTRIES ARE NOT REFLECTING ADVANCES GIVE N BY THE APPELLANT TO THESE PERSONS. ACCORDINGLY, ADDITION SO MADE BY THE A.O. CONSIDERING THEM TO BE ADVANCES GIVEN TO 3 PERSONS TOTALING TO RS. 15 LAKHS IS HEREBY DELETED. 37.1. THE ABOVE FINDING OF LD. CIT (A) ARE FINDING OF FACT WHICH REMAINED UNCONTROVERTED. THE LD. CIT (A) HAS TAKEN INTO CON SIDERATION THE NATURE OF NOTING IN THE DIARY AND FOUND THAT DUE TO PAUCITY OF TIME THE ASS ESSEE COULD NOT EXPLAIN DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, ALL THE ENTRIES M ADE IN THE DIARY WERE EXPLAINED PROPERLY BEFORE LD. CIT (A). THE LD. CIT (A) HAS E XAMINED ALL THESE DETAILS RECORDED IN DIARY AND FOUND THAT THEY ARE ACCEPTABLE. BEFORE A DMITTING THE ADDITIONAL EVIDENCES, THE LD. CIT (A) HAS SOUGHT REMAND REPORT FROM AO, AND T HE AO FURNISHED HIS REMAND REPORT. 27 IN THE REMAND REPORT, FIRSTLY, IT WAS OBJECTED THAT THEY SHOULD NOT BE ADMITTED AS PROPER OPPORTUNITY WAS ALREADY GIVEN. ON MERIT ALSO, THE AO HAS COMMENTED THAT THESE ARE CASH CREDITS WHICH REMAINED UNVERIFIABLE. THEREAFTER, T HE LD. CIT (A) AFTER EXAMINING THE ISSUE FOUND THAT THE ADDITION MADE BY AO WAS NOT JU STIFIED. AS STATED ABOVE, THE FINDINGS OF LD. CIT (A) REMAINED UNCONTROVERTED, THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) REPRODUCED SOMEWHERE ABOVE I N THIS ORDER. ACCORDINGLY WE CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE ALSO . 37.2. FOR THE SAKE OF CLARIFICATION, THE DEPARTMENT HAS TAKEN A GROUND I.E. GROUND NO. 1(II) I.E. AGAINST ADMITTING THE ADDITIONAL EVIDENC E UNDER RULE 46A. 37.3. THE LD. CIT (A) HAS ADMITTED THE ADDITIONAL E VIDENCES AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD. THEREFORE, WE SEE NO UN REASONABLENESS IN ADMITTING THE ADDITIONAL EVIDENCES ON THE PART OF THE LD. CIT (A) . THEREFORE, THE GROUND TAKEN BY THE DEPARTMENT IS ALSO DISMISSED. 38. THE REMAINING GROUND NO. 3 IS AGAINST DELETING THE ADDITION OF RS. 24,000/- OUT OF ADDITION MADE ON ACCOUNT OF HOUSEHOLD EXPENSES. 39. THIS ISSUE HAS ALREADY BEEN DISPOSED OFF BY US WHILE DISPOSING GROUND OF THE ASSESSEE WHERE WE HAVE DELETED THE ENTIRE ADDITION. THEREFORE, WE CONFIRM THE ORDER OF LD. CIT (A) IN THIS RESPECT ALSO. 40. NOW WE WILL TAKE THE APPEAL OF THE ASSESSEE AND DEP ARTMENT FOR THE ASSESSMENT YEAR 2008-09 . 41. GROUND NOS. 1, 2 AND 13 IN APPEAL OF ASSESSEE W ERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 42. GROUND NOS. 14 AND 15 ARE GENERAL IN NATURE. 28 43. GROUND NO. 12 IS AGAINST CHARGING OF INTEREST U NDER SECTION 234A, 234B AND 234C. 44. CHARGING OF INTEREST IS MANDATORY, THEREFORE, A O IS DIRECTED TO GIVE CONSEQUENTIAL RELIEF, IF ANY. 45. GROUND NOS. 3 & 4 ARE AGAINST CONFIRMING THE AD DITION MADE BY AO IN RESPECT OF 12 BIGHA 16 BISWAS OF AGRICULTURAL LAND BY INVOKING PROVISIONS OF SECTION 50C EVEN AFTER HOLDING THAT PROVISIONS OF SECTION 50C ARE NOT APPL ICABLE IN RESPECT OF SUCH LAND. THE ASSESSEE IS ALSO OBJECTING IN DIRECTING THE AO TO G ET SUCH LAND VALUED BY VALUATION OFFICER AND COMPUTE THE CAPITAL GAIN ON THE BASIS O F SUCH VALUATION REPORT. 46. THE DEPARTMENT HAS ALSO TAKEN A GROUND I.E. GRO UND NO. 1(I) TO 1(III). BY THESE GROUNDS THE DEPARTMENT IS OBJECTING IN DIRECTING T HE AO TO REFER THE AGRICULTURAL LAND SOLD BY THE ASSESSEE FOR A SALE CONSIDERATION OF RS. 2,5 0,000/- AGAINST WHICH THE STAMP VALUATION AUTHORITY ADOPTED VALUE OF RS. 10,00,000/ - TO THE DVO IN TERMS OF PROVISIONS OF SECTION 50C(2) OF THE ACT. THE DEPARTMENT IS AL SO OBJECTING IN HOLDING THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN RESPECT OF 12 BIGHA 16 BISWA OF AGRICULTURAL LAND SOLD BY ASSESSEE THROUGH AGREEMENT. THE DEPARTMENT IS ALSO OBJECTING IN DIRECTING THE AO TO REFER THE SALE OF 12 BIGHA 16 BISWA OF AGRICU LTURAL LAND TO DVO FOR ASCERTAINING VALUATION UNDER SECTION 55A AND TO ADOPT THE SAME F OR COMPUTING CAPITAL GAINS DESPITE THE FACT THAT THE AO HAD MADE THE ADDITION ON ACCOU NT OF PROVISIONS OF SECTION 50C AND THERE IS NO JUSTIFICATION FOR DEVIATION FROM THE SA ME. 47. THESE GROUNDS OF THE ASSESSEE AS WELL AS OF THE DEPARTMENT ARE INTER LINKED, THEREFORE, THEY ARE BEING DISPOSED OFF TOGETHER. 29 48. THE LD. COUNSEL OF THE ASSESSEE HAS FILED WRITT EN SUBMISSIONS AND HAS REQUESTED THAT THE SAME MAY BE CONSIDERED. 49. ON THE OTHER HAND, THE LD. D/R HAS PLACED RELIA NCE ON THE ORDER OF THE AO AND ALSO PLACED RELIANCE ON THE ORDER OF THE LD. CIT (A) WHE RE THE ADDITION HAS BEEN CONFIRMED BY LD. CIT (A). 50. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF SINGHVI GROUP CERTAIN BOOKS OF ACCOUNTS, DOCUMENTS AND VALUABLES WERE FOUND AND SEIZED. THE ASSESSEE F ILED THE RETURN ON 31/07/2008 DECLARING AN INCOME OF RS. 12,87,327/-. [PB PG. 72 TO 76] . THE RETURN WAS REVISED U/S 139(5) ON 27/01/2009 IN WHICH THE ASSESSEE DISCLOSE D AN INCOME OF RS. 58,17,680/-. [PB PG. 77 TO 84] AFTER CONSIDERING THE MATERIAL AND ASSETS FOUND AT THE TIME OF SEARCH. THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME AT RS. 1,06,03,570/- BY ORDER DATED 21/12/2009 BY MAKING ADDITION UNDER THE FOLLOWING H EADS, WHICH ARE CHALLENGED BEFORE ME IN THE GROUNDS OF APPEAL RAISED IN THE MEMO OF A PPEAL: A. ADDITION MADE U/S 50C ON SALE OF AGRICULTURE LAND RS. 16,88,000/- B. ADDITION MADE U/S 69 RS. 5,66,600/- C. ADDITION MADE U/S 69 FOR ADVANCE TO SHRI MANOJ SING HVI RS. 2,00,000/- D. ADDITION MADE FOR INVESTMENT IN GOLD JEWELLERY RS . 8,16,591/- E. ADDITION MADE FOR INVESTMENT IN SILVER JEWELLERY R S. 4,55,013/- F. ADDITION MADE FOR EXCESS CASH FOUND RS. 3,30,0 00/- G. ADDITION MADE U/S 69 FOR ADVANCE TO SHRI JUGAL KISH ORE MANTRI RS. 6,54,690/- H. DISALLOWING LOSS ON SALE OF CAR RS. 75,0 00/- TOTAL ADDITION RS. 47,85,894/- 30 50.1. THE AO MADE AN ADDITION OF RS. 16,88,000/- UN DER THE HEAD LONG TERM CAPITAL GAINS BY INVOKING PROVISIONS OF SECTION 50C FOR SALE OF A GRICULTURAL LAND. THE A.O. DISCUSSED THIS ISSUE IN PARA 2 AT PAGE 1 TO 2 OF THE ASSESSMENT OR DER AND OBSERVED THAT THE ASSESSEE ALONG WITH HIS FAMILY MEMBERS OWNED THE AGRICULTURAL LAND AT JHALAMAND MEASURING 14 BIGHA 1 BISWA. THE LAND WAS PURCHASED IN THE F.Y. 1994-95 F OR RS. 4,66,016/-. THE AGRICULTURAL LAND REFERRED ABOVE WAS SOLD DURING THE YEAR UNDER CONSI DERATION. THE LAND MEASURING 1 BIGHA 5 BISWA WAS SOLD THROUGH REGISTERED SALE DEED AND BAL ANCE LAND MEASURING 12 BIGHA 16 BISWA WAS SOLD BY AGREEMENT TO SALE. THE REGISTERING AUTH ORITY FOR THE PURPOSE OF STAMP DUTY ADOPTED THE VALUE OF THE PROPERTY SOLD THROUGH REGI STERED SALE DEED MEASURING 1 BIGHA 5 BISWA AT RS. 10,00,000/- I.E. RS. 40,000/- PER BISW A. THE A.O. INVOKED THE PROVISIONS OF SECTION 50C FOR THE ENTIRE LAND OF 14 BIGHA 1 BISWA AND CALCULATED 1/5 TH SHARE OF CAPITAL GAIN TAXABLE IN THE HANDS OF ASSESSEE AT RS. 20,49,718/- AS AGAINST DISCLOSED AT RS. 361,718/-, WHICH RESULTED IN ADDITION OF RS. 16,88,000/-. 51. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A) WHICH ARE RECORDED IN PARA 5.1 TO 5.1.9 AS UNDER :- 5.1 THE A.R. MADE DETAILED SUBMISSION ON THE ISSUE IN HIS WRITTEN SUBMISSION AT PB PG 9 TO 19. THE A.R. ALSO FILED SU BMISSION ON THE ISSUE BY LETTER DATED 11/10/2010 AND 17/12/2010. THE A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE AND HIS FAMILY MEMBERS EARLIER AG REED TO SALE THE SAME AGRICULTURAL LAND FOR RS. 28,00,000/- TO SHRI PAPPU SONI, SHRI KAMAL BHANDARI AND SHRI MUNNA AND RECEIVED AN ADVANCE OF RS. 15,00 ,000/- AND THE BALANCE WAS PAYABLE AT THE TIME OF REGISTRY. SINCE THESE PE RSONS SHOWN THEIR INABILITY TO PAY THE BALANCE AND GET THE DOCUMENT REGISTERED IN THEIR FAVOUR THEY ASKED TO CANCEL THE DEAL AND TO RETURN THE MONEY. THEREAFTER THE ASSESSEE AND HIS FAMILY MEMBERS AGREED TO SALE THE SAME LAND TO SHRI RAMESH BHANDARI AND SHRI JASSA 31 RAM ON 06/04/2007 ON WHICH DATE A CHEQUE BEARING NO 17360 FOR RS. 4,50,000/- DRAWN ON CENTURION BANK WAS RECEIVED IN THE NAME OF SHRI UMMAID MAL SINGHVI. THE ASSESSEE FURTHER RECEIVES CHEQUE A S DETAILED AT PAGE NO 16 OF THE WRITTEN SUBMISSION. THE A.R. OF THE ASSESSEE FU RTHER SUBMITTED THAT ON 06/04/2007 THE DLC RATE OF THE AREA FOR UN-IRRIGATE D AGRICULTURAL LAND WAS RS. 2,00,000/- PER BIGHA. IT WAS FURTHER SUBMITTED THAT FROM THE SALE DEED ITSELF THE COPIES OF WHICH IS PLACED AT PB PG NO 96 TO 101 SHOWS THAT THE LAND SOLD IS UNIRRIGATED AND IS AWAY FROM THE MAIN ROAD AND THIS FACT IS EVIDENT FROM PAGE 5 PARA 7 OF THE SALE DEED (PB 100). THE A.R. FURTHER REFERRED TO THE DECISION OF COLLECTOR STAMP, JODHPUR TO SHOW THAT AT THE TIME O F PURCHASE OF THE LAND IN QUESTION THE REGISTERING AUTHORITY APPLIED DLC RATE ARBITRARY AND ON APPEAL THE COLLECTOR STAMPS AFTER DISCUSSING THE LOCATION OF L AND AND THE NATURE OF LAND ADMITTED THE VALUATION DISCLOSED IN THE SALE DEED A ND THUS THE VALUE ADOPTED BY THE REGISTERING AUTHORITY AT THE TIME OF SALE OF SA ME LAND CANNOT BE TAKEN INTO ACCOUNT OR ON THAT BASIS THE PROVISION OF SECTION 5 0C COULD NOT HAVE BEEN INVOKED AND IN THE SITUATION THE A.O. SHOULD NOT HA VE INVOKED THE PROVISIONS OF SECTION 50C WITHOUT DUE OPPORTUNITY TO THE ASSES SEE AND FOR THIS RESPECT THE ATTENTION WAS DRAWN TOWARDS THE QUERY LETTER ISSUED BY A.O. AND REPLY FILED BY THE ASSESSEE PLACED IN PAPER BOOK PAGE 124 TO 126. 5.1.1 THE A.R. FURTHER SUBMITTED THAT AT THE INSTANCE OF PURCHASER, THE ASSESSEE AND HIS FAMILY MEMBERS EXECUTED SALE DEED FOR THE LAND MEASURING 1 BIGHA 5 BISWA AND FOR THE BALANCE OF LAND EXECUTED A AGREEMENT TO SALE THE COPIES OF WHICH ARE PLACED AT PB PG NO 102 TO 106. THE A.R. FURTHER SUBMITTED THAT AT THE TIME OF SEARCH THE AUTHORISED OFFICER F OUND AND SEIZED THE DIARIES MAINTAINED BY SHRI UMMAID MAL SINGHVI AND AS PER TH IS DIARY THE TOTAL SALE CONSIDERATION RECEIVED TALLIES WITH THE CONSIDERATI ON DISCLOSED IN THE RETURN OF INCOME. THE A.R. FURTHER SUBMITTED THAT THE EVIDENT IARY VALUE OF DOCUMENTS FOUND AND SEIZED CANNOT BE IGNORED PARTICULARLY WHE N THE DEPARTMENT IS MAKING ADDITIONS U/S 68 AND 69 ON THE BASIS OF THE SAME DOCUMENTS. THE A.R. 32 FURTHER SUBMITTED THAT A DOCUMENT CANNOT BE PARTLY ACCEPTED AND PARTLY REJECTED. 5.1.2 THE A.R. FURTHER SUBMITTED THAT THE A .O. ERRED IN APPLYING PROVISIONS OF SECTION 50C IN RESPECT OF LAND WHICH WAS NOT SOLD AND FOR WHICH NO REGISTERED SALE DEED WAS EXECUTED AND TO SUPPORT THIS CONTENTION THE RELIANCE WAS PLACED ON THE DECISION IN THE FOLLOWIN G CASES:- A. NAVNEET KUMAR THAKKAR V/S. ITO (2007) 112 TTJ (JD) 76 B. SMT. VIJAY LAXMI DHADDHA V/S. ITO (2009) 20 DTR (JP )(TRIB) 365 C. CARLTON HOTEL (P) LTD. VS. ACIT (2009) 122 TTJ (LUC KNOW) 515 5.1.3 THE A.R. AFTER HEAVILY RELYING ON THE D ECISIONS OF THE JURISDICTIONAL TRIBUNAL AND OTHER TRIBUNAL SUBMITTED THAT THE A.O. GROSSLY ERRED IN INVOKING PROVISIONS OF SECTION 50C IN RESPECT OF 12 BIGHA 1 6 BISWA OF AGRICULTURAL LAND WHICH WAS NOT SOLD BY REGISTERED SALE DEED. 51.4 IN RESPECT OF AGRICULTURAL LAND SOLD BY REGISTERED DEED MEASURING 1 BIGHA 5 BISWA IT WAS SUBMITTED THAT THE A.O. ERRED IN INVOKING THE PROVISIONS OF SECTION 50C WITHOUT ANY OPPORTUNITY AND LOOKING TO THE FACT THAT REGISTERING AUTHORITY APPLIED THE RATES IN RESPECT OF IRRIGATED LAND WHEREAS THE LAND SOLD WAS UNIRRIGATED. FURTHER AT THE TIME OF PURCHASE WH EN IN THE SIMILAR FASHION THE REGISTERING AUTHORITY APPLIED ARBITRARY RATES THE A SSESSEE WENT IN APPEAL BEFORE THE COLLECTOR STAMPS JODHPUR WHO HAD DISCUSSED THE NATURE OF LAND, LOCATION OF LAND AND AFTER ENQUIRY ACCEPTED THE VALUE SHOWN IN THE SALE DEED WHICH WAS FAR LESS THEN DLC RATES. ON THIS BASIS THE A.R. SUBMITT ED THAT SINCE THERE IS NO CHANGE EITHER IN THE NATURE OF LAND OR THE LOCATION OF THE LAND THE A.O. OUGHT TO HAVE EITHER VALUED THE LAND IN LIGHT OF ORDER OF CO LLECTOR STAMPS, JODHPUR OR SHOULD HAVE REFERRED THE MATTER TO THE VALUATION OF FICER AS PROVIDED IN THE SECTION 50C ITSELF. 5.1.5 ALTERNATIVELY, IT WAS SUBMITTED THAT , THE A.O. SHOULD HAVE REFERRED THE MATTER OF VALUATION OF THE LAND TO THE VALUATIO N OFFICER AS PER THE PROVISIONS OF SECTION 50C (2). THE A.O. HAS ERRED IN JUST TAKI NG THE VALUE OF 1BIGHA 5 33 BISWA LAND AS PER THE DLC RATE WITHOUT REFEREEING T HE MATTER TO THE VALUATION CELL. DURING THE APPEAL PROCEEDINGS, REQUEST WAS MA DE TO THE UNDERSIGNED FOR EXERCISING POWERS U/S 250(4) TO ISSUE DIRECTION TO THE A.O. TO OBTAIN THE VALUATION REPORT FROM THE VALUATION OFFICER. IN THI S REGARD CASE OF MEGHRAJ BAID VS. ITO REPORTED IN 114 TTJ 841 (JU) DECIDED BY HON BLE JODHPUR BENCH WAS REFERRED AND REPRODUCED WHICH IS AS BELOW:- AFTER EXAMINING THE PROVISION EXTRACTED HEREINABO VE IN ITS LETTERS AND SPIRIT, WE ARE OF THE OPINION THAT IN CASE THE A.O DOES NOT AGREE WITH THE EXPLANATION OF THE ASSESSEE WITH REGARD TO LOWER CO NSIDERATION DISCLOSED BY HIM THEN HE SHOULD REFER THE MATTER TO DVO FOR GETT ING ITS MARKET RATE ESTABLISHED AS ON DATE OF THE SALE TO ARRIVE AT THE CORRECT SALE CONSIDERATION. IF THIS PROVISION IS READ IN THE SENSE THAT IF THE AO IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE HEN HE MAY OR MAY NO T SEND THE MATTER FOR VALUATION TO THE DVO THEN IN THAT CASE THIS PROVISI ON WOULD BE RENDERED REDUNDANT. THE WORD MAY USED IN THIS SUB SECTION SIGNIFIED THAT IN CASE LD. A.O. IS NOT SATISFIED WITH THE EXPLANATION OF THE A SSESSEE HE SHOULD REFER THE MATTER TO THE DVO FOR THE MENTIONED PURPOSE. LD AR HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT RENDERED IN T HE CASE OF ASHOK LEYLAND LTD VS. UNION OF INDIA & ORS. (1997) 105 STC 152 (S C) WHEREIN IT HAS BEEN HELD THAT THE DEEMING PROVISIONS ARE REBUTTABLE ONE . WE HAVE EXAMINED THE ENTIRE FACTS OF THIS CASE IN THE LIGHT OF THE PROVI SIONS AND PRECEDENTS RELIED BEFORE US. IN OUR CONSIDERED OPINION THE BEFITTING REPLY OF ALL THE QUERIES AROUSE IN OUR MINDS AS WELL AS RAISED BY THE PARTIE S IS THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. A.O. WITH A DI RECTION THAT HE SHALL REFER THIS MATTER OF VALUATION IN THE LIGHT OF SUB SECTION (2) OF A 50C TO THE DVO FOR DETERMINING THE CONSIDERATION OF THIS PLOT SOLD BY THE ASSESSEE ORDER U/S 50C OF THE ACT. THE OTHER CONNECTED GROUNDS ARE ALSO REL ATED TO THIS MAIN GROUND. THEREFORE, THE ENTIRE APPEAL IS RESTORED BACK TO TH E FILE OF THE AO WITH THE DIRECTION THAT HE WOULD DO AS DIRECTED ABOVE AND AL SO GIVE OPPORTUNITY OF HEARING TO THE ASSESSEE AS PER LAW. 5.1.6 IT WAS FURTHER SUBMITTED THAT POWER OF C IT(A) ARE COTERMINOUS WITH THE POWER OF A.O. AND LAPSES COMMITTED ON THE PART OF A.O CAN BE CURED AND RECTIFIED BY THE UNDERSIGNED BY DIRECTING A.O. TO R EFER THE MATTER TO THE VALUATION OFFICER. CASE OF CIT VS. KANPUR COALS SYN DICATE 53 ITR 225 (SC) AND JUTE CORPORATION OF INDIA LTD VS. CIT 187 ITR 6 88 (SC) WERE ALSO CITED IN SUPPORT OF THE AFORESAID REQUEST. 34 5.1.7 THE ABOVE REQUEST OF THE APPELLANT MADE VIDE LETTER DATED 11.10.2010, WAS FORWARDED TO THE A.O. FOR HIS COMME NTS. REMINDER LETTER DATED 27.10.10 AND FURTHER LETTER DATED 22.12.10 WA S ISSUED. VIDE LETTER DATED 19.1.2011, THE A.O. REPLIED THAT THE COMMENTS HAVE BEEN FORWARDED THROUGH PROPER CHANNEL TO THE OFFICE OF UNDERSIGNED. HOWEVE R, THESE WERE NOT RECEIVED BY MY OFFICE PROBABLY BECAUSE INADVERTENTLY THESE W ERE NOT FORWARDED BY THE ADDL. CIT TO THIS OFFICE. LASTLY THE REMINDER WAS I SSUED ON 17.3.2011 TO THE ADDL CIT, CENTRAL RANGE, JODHPUR, WHICH ALSO REMAIN ED UNCOMPLIED WITH. 5.1.8 DURING THE HEARING OF APPEAL A QUERY WAS RAISED BY UNDERSIGNED AS TO WHY THE VALUE ADOPTED BY THE REGISTERING AUTHORITY SHOULD NOT BE CONSIDERED GOOD PIECE OF EVIDENCE AND BE TAKEN AS SALE CONSIDE RATION OF LAND WHICH WAS SOLD BY AGREEMENT TO SALE, THE A.R. VIDE WRITTEN SUBMISSION DATED 17/02/2011 OBJECTED TO THE ADOPTION OF THE VALUE ADOPTED BY TH E REGISTERING AUTHORITY ON THE GROUND THAT THE RATE APPLIED WAS ERRONEOUS IN L IGHT OF THE ORDER OF COLLECTOR STAMP JODHPUR AND THE LAND IS BEING UN-IRRIGATED WH EREAS THE REGISTERING AUTHORITY APPLIED THE RATE OF IRRIGATED LAND. THE L OCATION OF LAND WAS ALSO DISCUSSED IN THE REPLY. A.R. FURTHER RELIED ON THE FOLLOWING DECISIONS TO SUPPORT THAT THE RATES ADOPTED BY REGISTERING AUTHO RITY CANNOT BE MADE A BASIS TO DETERMINE THE FAIR MARKET VALUE OF THE AGRICULTU RAL LAND AGREED TO SALE BY SALE AGREEMENT: A. K.P. VARGHESE VS. ITO REPORTED IN 131 ITR AT PAGE 5 97 (SC) B. ITO VS. NEO TRUST REPORTED IN 320 ITR 312 (GUJ) C. SMT. PREMLATA SURYA VS. GIFT TAX OFFICER REPORTED I N 92 TTJ (JD) 941 5.1.9 THE A.R. FINALLY CONCLUDED HIS SUBMI SSION THAT THE DLC RATE ADOPTED BY REGISTERING AUTHORITY AT THE TIME OF REG ISTRATION OF SALE DEED IS ERRONEOUS AND THIS FACT IS PROVED FROM THE ORDER OF COLLECTOR STAMPS JODHPUR. THE FACT THAT THE PARTIES AGREED TO SALE THE LAND O N 06/04/2007 CANNOT BE DENIED AS ON THIS DATE A CHEQUE OF RS. 4,50,000/- W AS GIVEN IN LIEU OF AGREEMENT AND AS SUCH THE MATERIAL DATE IS 06/04/20 07. FURTHER HAD THE LAND SO POTENTIAL VALUE THEN THE PARTIES WHO AGREED TO PURC HASE THIS LAND PRIOR TO THIS 35 DATE WOULD NOT HAVE ASK THE ASSESSEE TO RETURN THE MONEY AND CANCEL THE AGREEMENT AND THE PROVISIONS OF SECTION 50C COULD N OT HAVE BEEN APPLIED FOR THE LAND WHICH WAS NOT SUBJECT TO REGISTRATION AND THE QUESTION OF ESTIMATION OF FAIR MARKET VALUE WILL NOT ARISE. 52. THE LD. CIT (A) AFTER CONSIDERING THE ORDER OF THE AO AND THE WRITTEN SUBMISSIONS WAS IN AGREEMENT WITH THE ASSESSEE THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN RESPECT OF 12 BIGHA 16 BISWA OF AGRICULTURAL LAND. THE AO HAS MADE ADDITION IN RESPECT OF TOTAL LAND MEASURING 14 BIGHA 1 BISWA. THERE WE RE TWO SEPARATE AGREEMENT AND SALE DEED. FOR LAND MEASURING 1 BIGHA 5 BISWA, THE LAND WAS SOLD THROUGH REGISTERED SALE DEED DATED 18.1.2008 FOR RS. 2.5 LACS. HOWEVER, THE REG ISTERING AUTHORITY TOOK THE VALUE OF RS. 10,00,000/- WHILE DETERMINING THE STAMP DUTY. THE AO ON THE BASIS OF RATE ADOPTED BY STAMP DUTY AUTHORITY FOR SALE OF 1 BIGHA 5 BISWA APPLIED PROVISIONS OF SECTION 50C FOR ENTIRE LAND SOLD BY ASSESSEE I.E. 14 BIGHA 1 BI SWA, WHEREAS ASSESSEE HAS SOLD THE REMAINING LAND OF 12 BIGHA 16 BISWA THROUGH SALE AG REEMENT DATED 8.1.2008 FOR RS. 28,00,000/-. THE ASSESSEE CHALLENGED THE ADOPTION OF SECTION 50C IN RESPECT OF SOME OF THE LAND I.E. 14 BIGHA 1 BISWA. HOWEVER, THE LD. C IT (A) HELD THAT SECTION 50C IS APPLICABLE ON SALE OF 1 BIGHA 5 BISWA AS THE SAME W AS SOLD THROUGH REGISTERED SALE DEED AND, THEREFORE, PROVISIONS OF SECTION 50C WERE APPL ICABLE AS STAMP DUTY AUTHORITY HAS ADOPTED SALE CONSIDERATION AT RS. 10,00,000/- AGAIN ST RS. 2,50,000/- SHOWN BY ASSESSEE FOR THE PURPOSE OF STAMP DUTY. REGARDING THE REMAI NING LAND I.E. 12 BIGHA 16 BISWA, THELD. CIT (A) HAS HELD THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE AS THIS LAND WAS SOLD THROUGH AGREEMENT. WHILE HOLDING SO, THE LD. C IT (A) HAS TAKEN INTO CONSIDERATION VARIOUS DECISIONS OF TRIBUNAL. HOWEVER, WHILE HOLD ING THAT PROVISIONS OF SECTION 50C ARE 36 NOT APPLICABLE, THE LD. CIT (A) HAS DIRECTED THE AO TO REFER THE MATTER TO THE DVO FOR ASCERTAINING THE VALUATION OF REMAINING LAND OF 12 BIGHA 16 BISWA FOR THE PURPOSE OF CAPITAL GAIN IN VIEW OF SECTION 55A. AS STATED ABO VE, BOTH HAVE CHALLENGED THE FINDING OF LD. CIT (A) IN RESPECT TO REFERRING THE MATTER TO T HE DVO. FOR THE SAKE OF CLARITY, WE WOULD LIKE TO REPRODUCE THE FINDINGS OF LD. CIT (A) WHICH ARE RECORDED IN PARA 5.2 TO 5.2.7 AT PAGES 10 TO 13 AS UNDER :- 5.2 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. UNDISPUTED FACTS ARE THAT APPELLANT IS ONE OF THE FIVE CO-OWNERS OF THE TOTAL LAND MEASURING 14 BIGHA 1 BI SWA WHICH WAS PURCHASED DURING F.Y 1994-95. THE SAID LAND WAS SOLD BY TWO S EPARATE DOCUMENTS AS BELOW:- I) SALE AGREEMENT DATED 8.1.2008 FOR SALE OF 12 BI GHA 16 BISWA LAND FOR RS. 28 LAKHS II) REGISTERED SALE DEED DATED 18.1.2008 FOR SALE OF 1 BIGHA 5 BISWA LAND FOR RS. 2.5 LAKHS, WHICH WAS VALUED BY THE REGISTER ING AUTHORITY AT RS. 10 LAKHS WHILE DETERMINING THE STAMP DUTY. 5.2.1 MOST OF THE ARGUMENTS TAKEN BY THE A.R ARE A GAINST THE ADOPTION OF DLC RATE EVEN FOR THE LAND WHICH WAS SO LD BY AGREEMENT TO SALE BY INVOKING THE PROVISIONS OF SECTION 50C. THESE AR GUMENTS WILL BE DISCUSSED LATER ON. 5.2.2 THE MAIN ARGUMENTS AGAINST ADOPTION OF DLC RATE IN RESPECT OF 1 BIGHA 5 BISWA LAND SOLD BY REGISTERED SALE DEED W AS (I) DLC RATE FOR IRRIGATED LAND TAKEN, WHEREAS THE LAND WAS UN-IRRIGATED (II) AT THE TIME OF PURCHASE OF THIS LAND BY THE APPELLANT, THE DLC RATE WAS ENHANC ED AND ON APPEAL FILED BY THE APPELLANT, THE COLLECTOR STAMPS ACCEPTED THE VA LUE DISCLOSED IN THE SALE DEED, AFTER DISCUSSING THE LOCATION AND NATURE OF L AND.(III) THE A.O. HAS 37 ADOPTED THE DLC RATE WITHOUT REFERRING THE MATTER T O THE VALUATION OFFICER AS PROVIDED U/S 50C(2). 5.2.3 AS REGARDS FIRST ARGUMENT IS CONCERNED, THE UNDERSIGNED CANNOT SIT OVER THE JUDGMENTS OR THE ORDER OF THE SUB- REGISTR AR FOR DETERMINING THE VALUE OF PROPERTY FOR THE STAMP DUTY. MOREOVER AS PER THE PROVISIONS OF SECTION 50C, THE INCOME TAX DEPARTMENT HAS TO CONSIDER THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS IT IS WITHOUT ANY IFS AND BUTS, OF COURSE SUBJECT TO PROVISIONS OF SECTION 50C(2). ACCORDINGLY, THE ARGU MENT THAT STAMP VALUATION AUTHORITY HAS TAKEN RATE FOR IRRIGATED LAND WHEREAS THE LAND IS UNIRRIGATED, IS NOT RELEVANT AS FAR AS PROVISIONS OF SECTION 50C AR E CONCERNED AND IS ACCORDINGLY REJECTED. NOW COMING TO THE SECOND ARGU MENT, IT IS PERTINENT THAT ISSUE UNDER CONSIDERATION IS TO DECIDE ABOUT THE SA LE VALUE OF THE LAND AND HENCE THE DLC RATE AT THE TIME OF PURCHASE THAT TOO ABOUT 13 YEARS BACK (I.E F.Y 1994-95) IS NOT RELEVANT TO DECIDE ABOUT THE D LC RATE NOW WHEN THE LAND HAS BEEN SOLD. MOREOVER, SECONDLY IF THE APPELLANT AND THE NEW PURCHASER WAS SO AGITATED ON THE ISSUE OF DLC RATE BEING HIGHER A ND WAS SO SURE THAT HAPPENING AT THE TIME OF PURCHASE OF LAND IN THE YE AR 1994-95, WOULD HAVE NOW CHANGED THE STAMP DUTY VALUATION AT THE TIME OF SALE, THEN THEY COULD HAVE FILED THE APPEAL AGAINST THE VALUE DETERMINED BY TH E STAMP VALUING AUTHORITY. CERTAINLY THIS HAS NOT BEEN DONE EITHER BY THE APPE LLANT OR BY THE PURCHASER, AS ADMITTED BY THE A.R OF THE APPELLANT. HENCE THIS AR GUMENT IS ALSO REJECTED. 5.2.4 HOWEVER, I AGREE WITH THE ALTERNATIVE ARGUMENT OF THE APPELLANT THAT A.O SHOULD HAVE REFERRED THE PROPERTY FOR VALUATION TO THE DEPARTMENTAL VALUATION OFFICER AS PROVIDED U/S 50C (2). IT IS SE EN THAT IN SECTION 50C (2) THERE IS EXPRESS PROVISION, WHICH HAS BEEN UPHELD A ND ELABORATED IN THE CASE OF MEGHRAJ VAID VS. ITO 114 TTJ (JU) WHEREIN THE HONB LE ITAT HAS HELD THAT IN CASE THE A.O. DOES NOT AGREE WITH THE EXPLANATION O F THE ASSESSEE WITH REGARD TO THE LOWER CONSIDERATION DISCLOSED BY HIM, THEN H E SHOULD REFER THE MATTER TO DVO FOR GETTING ITS MARKET VALUE DETERMINED. THE HO N'BLE ITAT HAS FURTHER 38 HELD THAT SINCE REFERENCE HAS NOT BEEN MADE BY THE A.O., THE MATTER IS RESTORED BACK TO THE FILE OF A.O WITH THE DIRECTION THAT HE SHALL REFER THIS MATTER OF VALUATION IN THE LIGHT OF SECTION 50C(2) TO DVO FOR DETERMINING THE MARKET VALUE OF THE LAND. IN THE INSTANT CASE, IT IS SEEN THAT THE APPELLANT HAS SHOWN/CLAIMED THE SALE CONSIDERATION OF 1 BIGHA 5 B ISWA LAND AT RS. 2,50,000/- WHICH IS LESS THAN THE DLC RATE OF RS. 10 LAKHS. IN HIS WRITTEN SUBMISSION, THE A.R. HAS STATED THAT THE VALUATION SO ADOPTED BY ST AMP VALUING AUTHORITY HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION ETC BY THE SELLER AND ON FURTHER ENQUIRY BY HIM (I.E A.R.) FROM PURCHASER, A.R. SUBM ITTED THAT IT WAS ALSO NOT DISPUTED BY THE PURCHASER. AS THE REMAND REPORT ON APPLICATION/REQUEST OF THE APPELLANT FOR REFERRING THE MATTER TO THE VALUATION OFFICER STATED TO BE SUBMITTED BY THE A.O. THROUGH PROPER CHANNEL, WAS NOT RECEIVE D BY THE UNDERSIGNED TILL THE LAST, THE UNDERSIGNED COULD NOT DECIDE THIS ISS UE BY PASSING INTERLOCUTORY ORDER DURING THE PENDENCY OF APPEAL. 5.2.5 CONSIDERING AFORESAID FACTS AND CIRCUMSTANCE S, IT IS HELD BY THE UNDERSIGNED THAT IT IS A CASE WHERE PROVISION OF SE CTION 50C(2) ARE CLEARLY APPLICABLE AND MATTER NEEDS TO BE REFERRED TO DVO U/S 50 C(2) FOR DETERMINING THE VALUE OF THE LAND. SINCE AS PER THE ADMINISTRATIVE GUIDELINES, HIGH DEMAND APPEALS, LIKE THAT OF THE APPELLANT, AR E TO BE PREFERABLY DECIDED BEFORE 31.3.2011 AND AS THE INTEREST OF EITHER PART Y (I.E THE APPELLANT OR THE A.O.) ARE NOT GOING TO BE ADVERSELY EFFECTED IF I D ECIDE THE APPEAL NOW AND SIMULTANEOUSLY GIVE DIRECTION IN RELATION TO THE AF ORESAID ISSUE, INSTEAD OF KEEPING IT PENDING TILL THE A.O. SENDS HIS REPORT A FTER ACTING ON THE DIRECTION OF THE UNDERSIGNED ON THIS ISSUE, THIS APPEAL IS DECID ED BY THIS APPEAL ORDER ALONGWITH THE DIRECTION TO THE A.O. ON THE ISSUE O F VALUATION. ACCORDINGLY A.O. IS DIRECTED TO REFER THE MATTER TO THE VALUATI ON OFFICER U/S 50C (2) AND THEREAFTER ADOPT THE VALUE DETERMINED BY THE VALUAT ION OFFICER, IF THE SAME IS LESS THAN THE VALUE TAKEN BY STAMP VALUATION AUTHOR ITY OR TAKE THE VALUE TAKEN BY STAMP VALUATION AUTHORITY, IF VALUE DETERMINED B Y VALUATION OFFICER U/S 50C (2) IS MORE THAN THE VALUE ADOPTED BY STAMP VAL UATION AUTHORITY, AS 39 SPECIFICALLY MENTIONED U/S 50C(3). THIS ISSUE IS D ECIDED AS ABOVE WITH SPECIFIC DIRECTION TO THE A.O. TO TAKE THE VALUE A S ABOVE (WHICH CAN NOT BE TREATED AS SETTING ASIDE OF THE MATTER IN VIEW OF T HE FACT THAT A.O. IN THE PRESENT MATTER HAS NO DISCRETION AND HAS TO TAKE VALUE IN MATHEMATICAL MANNER, WHEREAS IN THE SET ASIDE MATTER, THE A.O. HAS TO CO NSIDER FACTS AND LEGAL ISSUES AND GIVE OPPORTUNITY TO ASSESSEE AND AFTER CONSIDER ING ALL FACTS AND LEGAL ISSUES HE HAS TO COME TO A CONCLUSION, EITHER FULLY ACCEPT ING OR PARTLY ACCEPTING OR REJECTING THE CLAIM OF ASSESSEE, AND THUS HAS TO AP PLY HIS DISCRETION). 5.2.6 NOW COMING TO THE SECOND PORTION OF TH E ADDITION, THE SOME ARGUMENTS AGAINST DLC RATE HAVE ALREADY BEEN CONSID ERED ABOVE AND HAVE BEEN REJECTED. HOWEVER, I AGREE WITH THE ARGUMENT OF THE A.R. THAT THIS PIECE OF LAND IS SOLD BY AGREEMENT TO SALE AND NOT BY RE GISTERED SALE DEED AND HENCE, PROVISION OF SECTION 50C ARE NOT APPLICABLE IN THE YEAR UNDER CONSIDERATION. IT IS SEEN THAT THE AMENDMENT TO THE AFFECT THAT PROVI SIONS OF SECTION 50C ARE APPLICABLE FOR PROPERTIES SOLD THROUGH AGREEMENT TO SALE HAS COME INTO EFFECT W.E.F 1.10.2009 . ACCORDINGLY, THE ADDITION SO MADE BY THE A.O. O N THE BASIS OF DLC RATE BY APPLYING THE PROVISION OF SECTION 50 C FOR THIS PIECE OF LAND SOLD THROUGH AGREEMENT TO SALE, DESERVES TO BE DELE TED. 5.2.7 CONSIDERING THE ABOVE POSITION, DURING T HE APPEAL PROCEEDING, THE UNDERSIGNED HAS RAISED THE QUERY TO THE A.R. THAT T HOUGH PROVISIONS OF SECTION 50C ARE NOT APPLICABLE ON SALE MADE THROUGH AGREEME NT, BUT THE DLC RATE IS A GOOD PIECE OF EVIDENCE. THE A.R. ARGUED THAT DLC RA TE ARE ARBITRARY AND INFACT INCORRECT AS PER THE FACTS GIVEN BY HIM AND ALSO IN VIEW OF THE DECISION IN THE CASE OF K.P. VERGHESE VS. ITO 131ITR 597(SC), ITO V S. NEO TRUST 320 ITR 312, THE RATES ADOPTED BY THE REGISTERING CANNOT BE MADE A BASIS TO DETERMINE THE FAIR MARKET VALUE OF THE LAND. AFTER CONSIDERIN G THE ARGUMENTS OF THE APPELLANT, LEGAL POSITION OF THE ISSUE AND PARTICU LARLY AFTER CONSIDERING THE FACT THAT THE A.O. HAS BEEN DIRECTED TO REFER THE M ATTER FOR VALUATION OF THE IMPUGNED LAND FOR DETERMINING VALUE OF PART OF THE LAND OF 1 BIGHA AND 5 40 BISWA, WHICH HAS BEEN SOLD BY REGISTERED SALE DEED, IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 50C (2), IT WILL BE APPROPRIA TE TO TAKE THE VALUE AT THE SAME RATE PER BIGHA AS DETERMINED BY THE VALUATION OFFICER FOR THE TOTAL LAND OF 14 BIGHA 1 BISWA, AS THIS LAND OF 12 BIGHA 16 BI SWA SOLD THROUGH AGREEMENT TO SALE IS PART OF THE TOTAL LAND OF 14 BIGHA 1 BIS WA. ACCORDINGLY, THE A.O. IS DIRECTED TO SIMULTANEOUSLY REFER THE MATTER TO THE DVO U/S 55A FOR GETTING THE VALUATION OF THIS PART OF THE LAND ALSO AND ADOPT T HE VALUE DETERMINED BY VALUATION OFFICER, WHICH WILL BE IN CONSISTENT WITH THE PROVISIONS OF SECTION 55A AND ADOPT THE VALUE AS DETERMINED BY DVO. 53. AFTER CONSIDERING THE ABOVE FINDING, WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A) IN RESPECT TO APPLICABILITY OF SECTION 50C FOR AGRICULTURAL LAND OF 1 BIGHA 5 BISWA SOLD THROUGH REGISTERED SALE DEED DATED 18.1.2008. THER EFORE, TO THIS EXTENT THE ORDER OF LD. CIT (A) IS CONFIRMED. THE ARGUMENT OF LD. A/R HAS ALREADY BEEN TAKEN INTO CONSIDERATION BY LD. CIT (A) WHILE CONFIRMING THE APPLICATION OF PROVISIONS OF SECTION 50C IN RESPECT TO SALE OF LAND OF 1 BIGHA 5 BISWA. 53.1. HOWEVER, REGARDING THE DIRECTION OF LD. CIT ( A) TO REFER THE MATTER TO THE DVO FOR DETERMINING THE VALUATION UNDER SECTION 55A FOR 12 BIGHA 16 BISWA, WE FIND THAT LD. CIT (A) WAS JUSTIFIED IN HOLDING THAT PROVISIONS OF SEC TION 50C ARE NOT APPLICABLE ON ACCOUNT OF SALE OF LAND THROUGH AGREEMENT. THERE WAS AN AME NDMENT IN THE PROVISIONS OF SECTION 50C WITH EFFECT FROM 1.10.2009 ON SALE THROUGH AGRE EMENT THE PROVISIONS OF SECTION 50C ARE APPLICABLE. UNDER THE PROVISIONS OF SECTION 50 C WHICH WERE AMENDED WITH EFFECT FROM 1.10.2009, SECTION 50C WAS MADE APPLICABLE ON SALE THROUGH AGREEMENT ALSO. IT MEANS THAT BEFORE 1.10.2009 PROVISIONS OF SECTION 5 0C WERE NOT APPLICABLE ON SALE THROUGH AGREEMENT. THIS VIEW HAS BEEN TAKEN BY ITA T JAIPUR BENCHES AND JODHPUR BENCH IN VARIOUS OTHER CASES DECIDED. THEREFORE, W E CONFIRM THE FINDING OF LD. CIT (A) 41 THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE I N RESPECT TO LAND OF 12 BIGHA 16 BISWA SOLD THROUGH AGREEMENT. 53.2. REGARDING REFERRING THE MATTER TO DVO, WE FIN D THAT NO MATERIAL WAS FOUND DURING THE SEARCH PROCEEDINGS THAT ANY AMOUNT OVER AND ABO VE WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE OF LAND THROUGH AGREEMENT OF 12 BIG HA 16 BISWA. WITHOUT ANY MATERIALS THERE IS NO QUESTION OF MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE. REFERRING THE MATTER TO THE DVO FOR ASCERTAINING THE VALUATION UN DER SECTION 55A IS NOT CORRECT AS THERE IS NO MATERIAL FOUND DURING THE COURSE OF SEARCH TO SHOW THAT ASSESSEE HAS RECEIVED OVER AND ABOVE THE AGREED AMOUNT THROUGH SALE AGREEMENT. THEREFORE, THERE IS NO QUESTION OF ASCERTAINING THE VALUATION AND WITHOUT ANY MATERIAL OR EVIDENCE REFERRING THE MATTER TO THE DVO IS NOT JUSTIFIED FOR THE REASON THAT ANY ADDITI ON CAN BE MADE UNDER SECTION 50C AND NOT ON THE BASIS OF VALUATION ADOPTED BY THE DVO. THE AO HAS ALSO MADE ADDITION ON THE BASIS OF PROVISIONS OF SECTION 50C AND NOT ON THE B ASIS OF VALUATION WHETHER IT WAS LOWER OR HIGHER. THE PROVISIONS OF SECTION 50C ARE SPECI FIC WHEREBY IT HAS BEEN PROVIDED THAT IF ANY AUTHORITY I.E. CENTRAL AUTHORITY OR STATE AUTHO RITY ADOPTS THE VALUATION OF A PROPERTY SOLD THROUGH REGISTERED SALE DEED THEN THE SAME VAL UATION SHALL BE ADOPTED FOR THE PURPOSES OF MAKING ADDITION UNDER SECTION 50C SUBJE CT TO FULFILLING THE CONDITION OF EXCEPTION CLAUSE PROVIDED UNDER SECTION 50C(2). TH ERE IS NO CASE OF 50C HERE AS THE LAND IS SOLD THROUGH SALE AGREEMENT AND NOT THROUGH REGI STERED SALE DEED AND WE HAVE ALREADY HELD ABOVE THAT WHERE LAND IS SOLD THROUGH SALE AGR EEMENT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. IN VIEW OF THESE FACTS AND CIR CUMSTANCES, WE HOLD THAT LD. CIT (A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO REFER THE MATTER TO DVO FOR ASCERTAINING THE VALUATION OF SOLD PROPERTY FOR THE PURPOSE OF CAPIT AL GAINS. ACCORDINGLY SUCH DIRECTIONS 42 OF LD. CIT (A) ARE QUASHED. THE GROUNDS OF THE ASS ESSEE ARE ALLOWED AND THE GROUNDS OF THE DEPARTMENT FAIL. 54. GROUND NO. 5 IN APPEAL OF THE ASSESSEE IS AGAIN ST SUSTAINING THE ADDITION OF RS. 5,66,600/- MADE BY AO UNDER SECTION 69. 55. THE BRIEF FACTS OF THE CASE IN THIS REGARD ARE DISCUSSED IN PARA 6 AT PAGE 14 OF THE ORDER OF LD. CIT (A) AS UNDER :- THE LD. A.O. DISCUSSED THIS ISSUE IN PARA 3 AT PAG E 3 AND 4 OF THE ASSESSMENT ORDER AND OBSERVED THAT DURING THE COURS E OF SEARCH AT THE RESIDENCE OF THE ASSESSEE CERTAIN DOCUMENTS WERE SE IZED AS PER PAGE 1 OF ANNEXURE A-1 THE ASSESSEE HAD GIVEN LOANS OUT OF BO OKS TO SHRI RAMCHANDRA, SHRI NITESH NAHAR AND SHRI LAL SINGH RA JPUROHIT FOR AMOUNT TOTALING TO RS. 26,50,000/-. THE A.O. FURTHER OBSE RVED THAT AS PER PAGE 2 (ERRONEOUSLY WRITTEN AS PAGE 21) OF ANNEXURE A-1 TH E ASSESSEE HAD GIVEN LOANS OUT OF BOOKS TO SHRI RAM CHOUDHARY, SHRI MANO J SINGHVI AND M/S HARSHITA FINANCE FOR AMOUNT TOTALING TO RS. 7,00,00 0/-. THE AO FURTHER OBSERVED THAT OUT OF THESE RS. 33,50,000/- THE DISC LOSED RS. 27,83,400/- IN THE RETURN OF INCOME AND THEREFORE ADDITION OF RS. 5,66,600/- WAS MADE. THE A.O. FURTHER OBSERVED THAT THE EXPLANATION FILED BY THE ASSESSEE THAT THE LESSER AMOUNT OFFERED FOR TAX ON THE GROUND THAT TH AT THE SOURCE FOR THE ALLEGED LOAN IS AVAILABLE; NOT ACCEPTABLE ON THE GR OUND THAT NO DOCUMENTARY EVIDENCE WAS AVAILABLE TO PROVE THE SOURCE CLAIMED BY THE ASSESSEE. 56. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A) WHICH HAVE BEEN RECORDED IN PARA 6.1 TO 6.1.4 ARE AS UNDER :- 6.1 THE AR OF THE ASSESSEE SUBMITTED THA T THE PAGE 1 OF THE ANNEXURE A-1 CONTAINING DETAILS OF THE LOAN ADVANCE D TO SHRI MUKESH SINGHVI ACCORDINGLY THE FINDING RECORDED BY THE A.O . THAT AS PER PAGE 1 OF 43 THE ANNEXURE A-1 LOANS WERE GIVEN BY THE ASSESSEE T O SHRI RAMCHANDRA, SHRI NITESH NAHAR AND SHRI LAL SINGH RAJPUROHIT IS INCORRECT. THE AR FURTHER SUBMITTED THAT THERE IS NO DISPUTE THAT AS PER PAGE 1 AND 2 OF THE ANNEXURE A-1 THE ASSESSEE ADVANCED LOANS FOR RS. 33 ,50,000/- OUT OF BOOKS AND THE DISPUTE IS REGARDING THE ADJUSTMENT OF SOUR CE AVAILABLE WITH THE ASSESSEE ON ACCOUNT OF INCOME SURRENDER AND ON ACCO UNT OF INTEREST AND RECEIPT OF MONEY WHICH WAS TAXED IN THE PRECEDING A SSESSMENT YEARS AND RECORDED IN THE SEIZED DOCUMENTS ITSELF. 6.1.1 THE AR FURTHER SUBMITTED THAT THE ADDITION MA DE IS PERVERSE TO MATERIAL AND WITHOUT CONSIDERING THE PRINCIPLE OF R OTATION / CYCLING OF FUND THEORY / ASSET AND EXPENDITURE METHOD WHICH IS WELL ACCEPTED BY THE HONBLE JODHPUR TRIBUNAL AND RAJASTHAN HIGH COURT I N PLETHORA OF CASES AS IT IS THE MOST SCIENTIFIC METHOD OF COMPUTING UNDIS CLOSED INCOME. 6.1.2 THE AR OF THE ASSESSEE FURTHER SUBMITTED THA T A TABLE EXPLAINING THAT THE ASSESSEE WAS HAVING FUND ON THE BASIS OF SEIZED RECORDS ITSELF TO THE TUNE OF RS. 5,66,600/- TO INVEST IN UNRECORDED ADVANCE I S PLACED AT PAGE NO. 38 TO 39 OF PAPER BOOK MARKED AS ANNEXURE A. IT WAS FURTHER SUBMITTED THAT IN THE ASSESSMENT ORDERS FROM AY 2002-03 TO AY 2007-08 , THE LD. A.O. HAS ASSESSED TOTAL INCOME TO THE TUNE OF RS. 65,02,800/ - BUT DID NOT CONSIDERED THAT THIS INCOME WILL FORM SOURCE FOR MAKING FURTHE R INVESTMENT IN SUBSEQUENT PERIOD. NO BENEFIT WAS GIVEN FOR REALIZA TION OF INVESTMENTS. AS SUCH CONSIDERING THE OVERALL FACTS OF THE CASE, THE ADDITION MADE BY LD. A.O. IS UNTENABLE UNDER LAW AND DESERVES TO BE DELETED. 6.1.3 THE AR FURTHER ARGUED THAT ASSESSEE HAD SHOWN CASH BALANCE OF RS. 15,55,000/- IN THE BALANCE SHEET AS ON 31-03-2007, WHICH INTER-ALIA INCLUDES RS. 15,00,000/- RECEIVED FROM SHRI KAMAL BHANDARI S HRI PAPPU AND SHRI MUNNA ON ACCOUNT OF AGREEMENT TO SELL THE PROPERTY SITUATED AT JHALAMAND. IN THE ORDER PASSED U/S 153A FOR AY 2007-08, THE LD . A.O. TREATED THE MONEY RECEIVED FROM FOLLOWING PERSONS AS ADVANCE PAID TO THEM AND MADE ADDITION 44 OF RS. 15,00,000/-, WHICH IS SUB-JUDICED BEFORE YOU R HONOUR IN THE APPEAL NO. 250/09-10. ON THIS ISSUE DETAILED SUBMISSION MA DE IN RESPECTIVE YEAR. 6.1.4 THE AR ALTERNATIVELY ARGUED THAT EVEN BY GO ING WITH THE VERSION OF LD. A.O., IF THE ASSESSEE HAD ACTUALLY MADE AN ADVA NCE OF RS. 15,00,000/- TO THE PERSONS AS REFERRED ABOVE, THAN THE LINES STRIK ING THE NAMES OF THE PERSONS IN THE SEIZED PAPERS WOULD MEAN THAT THE MO NEY WAS RECEIVED BACK BY THE ASSESSEE IN THE RELEVANT PREVIOUS YEAR AS SU CH THERE WAS EXISTENCE OF SOURCE OF INVESTMENT TO THE EXTENT OF RS. 15,00,000 /- AS SUCH LD. A.O. ERRED IN IGNORING THE SOURCE OF RS. 15,00,000/- MAKING SE PARATE ADDITION TO THAT EXTENT. THE AR PRAYED FOR DELETION OF ADDITION. THE AR FURTHER ARGUED THAT IF THE ADDITION OF RS. 15,00,000/- IS SUSTAINED IN THE A.Y. 2007-08 THEN THE ASSESSEE IS FURTHER ENTITLED TO THE BENEFIT OF RS. 15,00,000/- AS IT WILL AMOUNT TO SOURCE FOR UNEXPLAINED INVESTMENT AND THE INCOME OFFERED AT RS. 27,83,400/- IS FURTHER REQUIRED BY A SUM OF RS, 15, 00,000/- AS THE MONEY SHOWN TO HAVE RETURN TO RESPECTIVE PARTIES CONSTITU TE A SOURCE FOR RS. 33,50,000/-. 57. AFTER CONSIDERING THE SUBMISSIONS, LD. CIT (A) CONFIRMED THE ADDITION BY RECORDING HIS FINDING IN PARA 6.2 AT PAGES 16 & 17 ARE AS UNDER :- 6.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A .R AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT ON BEING ASKED BY THE A.O., ABOUT NOT DISCLOSING THE WHOLE OF UNACCOUNTED ADVAN CES OF RS. 33,50,000/-, THE A.R. FURNISHED THE REPLY AND TRIED TO EXPLAIN T HE SOURCE OF THESE ADVANCES PARTLY. IT WAS CLAIMED THAT THERE WAS OPENING CASH BALANCE OF RS. 15,55,000/- WHICH INCLUDES ADVANCE OF RS. 15 LAKHS RECEIVED FRO M SH. KAMAL BHANDARI, SH. PAPPU AND SH. MUNNA AGAINST SALE OF AGRICULTURA L LAND AND FURTHER RS. 4,45,000/- WAS CLAIMED TO BE RECEIVED FROM SH. KAIL ASH MODI. A.O. REJECTED THE CLAIM MAINLY ON THE GROUND THAT NO DOCUMENTARY EVIDENCE REGARDING MONEY RECEIVED FROM THESE THREE PERSONS WAS FURNISH ED. MOREOVER, THEIR 45 IDENTITY AND CREDITWORTHINESS WAS ALSO NOT PROVED. SIMILARLY NO EVIDENCE WAS FURNISHED REGARDING MONEY RECEIVED FROM SH. KAI LASH MODI. ACCORDINGLY, A.O. REJECTED THE CLAIM AND ADDED THE DIFFERENCE AMOUNT OF RS. 5,66,600/-. BEFORE ME, APART FROM THE AFORESAID ARG UMENTS, FURTHER ARGUMENT WAS TAKEN THAT DETAILS OF ROTATION OF FUNDS WAS PRE PARED, WHEREIN INCOME AND INVESTMENT /EXPENDITURE WERE CONSIDERED AND ACCORDI NGLY DISCLOSURE OF ADDITIONAL INCOME OF RS. 27,83,400/- IS CORRECT. I T IS SEEN BY THE UNDERSIGNED THAT AS FAR AS MONEY CLAIMED TO BE RECEIVED FROM AF ORESAID THREE PERSONS NAMELY SH. BHANDARI, SH. PAPPU AND SH. MUNNA IS CON CERNED, AS PER THE APPELLANTS OWN VERSION, THE MONEY WAS RETURNED BAC K TO ALL THREE OF THEM ON 1.7.07, AS PER THE ADDITIONAL EVIDENCE FURNISHED IN THE APPEAL FOR A.Y 2007- 08 IN THE CASE OF APPELLANT ITSELF, WHILE EXPLAININ G THE ADDITION OF RS. 15 LAKH MADE BY THE A.O.. ON THE OTHER HAND, IT IS SEEN THA T UNACCOUNTED ADVANCES TO SH. RAMCHANDRA, SH. NITESH NAHAR AMOUNTING TO RS. 1 2,50,000/- WAS GIVEN ON 5.9.2007 AND UNACCOUNTED ADVANCES OF RS. 14 LAKH WAS GIVEN ON 1.11.07. ACCORDINGLY, IT IS EVIDENT THAT NO MONEY WAS AVAILA BLE OUT OF THE ADVANCE RECEIVED FOR SALE OF AGRICULTURAL LAND, AS THE SA ME WAS GIVEN BACK WELL BEFORE THE DATE WHEN UNACCOUNTED ADVANCES WERE MADE TO SH. RAMCHANDRA, SH. NITESH NAHAR AND TO SH. LAL CHAND RAJPUROHIT. SIMILARLY NO EVIDENCE OF REALIZATION FROM KAILASH MODI TO THE EXTENT OF RS. 4,45,000/- DURING THE YEAR IS REFLECTED, AS CLAIMED. AS PER PAGE 7 OF ANN. A -11 (P.B. PAGE 158), THE REALIZATION DURING THE YEAR IS ONLY RS. 20,000/- (R S. 10,000/- ON 18.4.07 + RS. 10,000/- ON 6.7.07). HENCE THE ARGUMENT SO TAKE N BY THE APPELLANT IS REJECTED. OTHER VARIOUS ARGUMENTS AND SUBMISSION MA DE BY THE A.R HAS ALSO BEEN CONSIDERED AND FOUND TO BE HAVING NO FORCE. TH EREFORE, THE ADDITION OF RS. 5,66,600/- IS HEREBY CONFIRMED. 58. AFTER CONSIDERING THE ORDERS OF THE AO, LD. CIT (A) AND WRITTEN SUBMISSIONS, WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). T HE CONTENTION OF THE ASSESSEE THAT IF ROTATION OF AMOUNT IS TAKEN INTO CONSIDERATION THEN THERE IS AVAILABILITY OF RS. 5,66,600/- 46 FOR ADVANCING LOANS. HOWEVER, THIS FACT HAS ALSO BE EN EXAMINED BY LD. CIT (A) AND FOUND THAT THE CONTENTION OF THE ASSESSEE WAS NOT CORRECT AND, THEREFORE, NOT ACCEPTABLE. THE LD. CIT (A) HAS EXAMINED THE ISSUE IN DETAIL AND THEN O NLY GIVEN HIS FINDING. THE LD. CIT (A) HAS TAKEN INTO CONSIDERATION THE AVAILABILITY OF TH E AMOUNT FOR ADVANCING OF LOAN AND FOUND THAT THERE WAS A SHORTAGE OF RS. 5,66,600/- A ND ACCORDINGLY HELD THAT ORIGINALLY DECLARATION OFRS. 33,50,000/- DURING THE COURSE OF SEARCH WAS CORRECT. THE ASSESSEE HAS OFFERED RS. 27,83,400/- IN THE RETURN AND REMAINING AMOUNT OF RS. 5,66,600/- WAS ADDED BY THE AO WHICH WAS FOUND ADDED RIGHTLY. FINDING O F LD. CIT (A) REPRODUCED SOMEWHERE ABOVE IN THIS ORDER WHICH REMAINED UNCONT ROVERTED. THEREFORE, WE CONFIRM THE FINDING OF LD. CIT (A). THIS GROUND OF THE ASS ESSEE FAILS. 59. GROUND NO. 6 OF THE ASSESSEE IS AGAINST SUSTAIN ING AN ADDITION OF RS. 2,00,000/- MADE BY AO UNDER SECTION 69 ON THE BASIS OF PAGE 22 OF ANNEXURE A-4. 60. THE AO MADE ADDITION BY DISCUSSING THE ISSUE IN PARA 4 AT PAGE 5 OF HIS ORDER AND BY OBSERVING THAT AS PER ANNEXURE A-4 PAGE 22 SEIZE D FROM THE RESIDENCE OF THE ASSESSEE IT WAS FOUND THAT HE HAS GIVEN A LOAN OF RS. 6,00,000/ - TO SHRI MANOJ SINGHVI OUT OF WHICH ONLY RS. 4,00,000/- HAS BEEN SURRENDERED DURING SEA RCH. HENCE ADDITION OF RS. 2,00,000/- WAS MADE. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT THE RS. 2,00,000/- REFERRED BY THE AO ALREADY DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND INCLUDED IN RS. 27,83,400/- DISCUSSED IN THE GROUND OF APPEAL NO 4 AND AS SUCH THE ADDITION IS ERRONEOUS. THE AR DRAWN MY ATTENTION TOWARDS THE REPLIED FILED BEFORE THE A O ON 15/03/2009 IN WHICH THE ENTRIES IN THE SEIZED DOCUMENTS EXPLAINED AND TOWARDS THE AFFI DAVIT OF ASSESSEE FILED BEFORE THE AO ON 14/09/2009. THE AR FURTHER REFERRED THE TABLE SHOWN IN ANNEXURE A OF THE WRITTEN 47 SUBMISSION DISCUSSED ABOVE WHICH CLARIFIES THAT ADD ITION OF RS. 2,00,000/- IS DOUBLE ADDITION AND NEEDS TO BE DELETED. 61. THE LD. CIT (A) BY RECORDING HIS FINDING IN PAR A 7.2 CONFIRMED THIS ADDITION ALSO. HIS FINDINGS ARE AS UNDER :- 7.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY AS PER PAGE 22 OF ANN. A-4, THE APPELLANT HAS GIVEN RS. 6 LAKHS TO SH. MANOJ SINGHV I THAT TOO UNACOUNTEDLY ( RS. 4 LAKHS ON 20.1.08 AND RS. 2 LAKHS ON 15.2.08), WHEREAS WHILE MAKING DISCLOSURE AT THE TIME OF SEARCH, THE APPELLANT HAS MADE THE DISCLOSURE ON THE BASIS OF ADVANCES NOTICED ON PAGE 1& 2 OF ANN. A-1. WHICH TOTALS UPTO RS. 33,50,000/-. IN THESE TWO PAGES, ONLY RS. 4 LAKHS A DVANCED TO SH. MANOJ SIGNHVI ON 20.1.08 IS INCLUDED AND THEREFORE, FURT HER RS. 2 LAKHS GIVEN ON 15.2.08 IS OVER AND ABOVE THE SURRENDER OF RS. 33,5 0,000/-. IN GROUND NO. 4 AND 5, THE UNDISCLOSED AMOUNT OF ADVANCE OF RS. 33 ,50,000/- WAS ONLY CONSIDERED AND AS THE APPELLANT HAS DISCLOSED RS. 2 7,83,400/-, THE DIFFERENCE OF RS. 5,66,600/- WAS ADDED AND SAME WAS UPHELD. TH US CLEARLY THESE RS. 2 LAKHS FURTHER ADVANCED TO SH. MANOJ HAS NOT BEEN CO NSIDERED THEREIN AND THESE ARE OVER AND ABOVE THE EARLIER ADVANCES TOTAL ING TO RS. 33,50,000/-. THE ARGUMENT OF CONTENDED DOUBLE ADDITION TAKEN BY A.R OF THE APPELLANT IS WITHOUT ANY MERIT AND IS REJECTED. THEREFORE, THE A DDITION OF RS. 2,00,000/- SO MADE BY THE A.O. IS SUSTAINED. 62. AFTER CONSIDERING THE FINDINGS OF LD. CIT (A) A ND WRITTEN SUBMISSIONS OF THE ASSESSEE, WE FIND THIS MATTER SHOULD GO BACK TO AO TO ASCERTAIN FACTUAL ASPECTS. IN THE WRITTEN SUBMISSION IT HAS BEEN SUBMITTED THAT ASSES SEE HAS FILED A REVISED RETURN AND ON ACCOUNT OF LOAN ADVANCED TO SHRI MANOJ KUMAR SINGHV I, A SUM OF RS. 7,00,000/- HAS BEEN SURRENDERED. SINCE THIS ASPECT HAS NOT BEEN TAKEN INTO CONSIDERATION BY LD. CIT (A) OR BY 48 AO WHILE PASSING ASSESSMENT, THEREFORE, WE RESTORE THIS ISSUE TO THE FILE OF AO TO CONSIDER AFRESH. WE ORDER ACCORDINGLY. 63. NEXT ISSUE IS AGAINST CONFIRMING AN ADDITION OF RS. 5,08,841/- OUT OF TOTAL ADDITION MADE OF RS. 8,16,591/- BY THE AO IN RESPECT OF INVE STMENT IN GOLD JEWELLERY. 64. THE DEPARTMENT THROUGH GROUND NO. 2 IS ALSO CHA LLENGING THE DELETION OF ADDITION OF RS. 3,07,750/- OUT OF TOTAL ADDITION MADE BY AO. 65. SINCE BOTH THESE GROUNDS ARE INTER LINKED, THER EFORE, THEY ARE BEING DISPOSED OFF TOGETHER. 66. THE AO DISCUSSED THIS ISSUE IN PARA 5 AT PAGE 5 AND 6 OF THE ASSESSMENT ORDER AND OBSERVED THAT OUT OF JEWELLERY OF 2161 GMS FOUND DU RING THE SEARCH OUT OF WHICH 600 GMS (375 GMS TO SMT. VIMAL SINGHVI AND 225 GMS TO SHRI UMMAID MAL SINGHVI) OF JEWELLERY CONSIDERED EXPLAINED. BALANCE JEWELLERY OF 1561 GMS VALUED AT RS. 19,21,591/- REMAINED UNEXPLAINED. THE ASSESSEE HAS SURRENDERED RS. 11,05 ,000/- ON THIS ACCOUNT AND THEREFORE BALANCE RS. 8,16,591/- ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 67. SUBMISSIONS OF THE ASSESSEE ARE RECORDED IN PAR A 8.1 TO 8.1.2 AT PAGES 18 AND 19 ARE AS UNDER :- 8.1. THE AR OF THE ASSESSEE FILED WRITTEN SUBMISSION ON THE GROUND AT PAGE 24 TO 27 OF THE WRITTEN SUBMISSION DURING THE COURSE OF HEARING OF THE APPEAL THE AR SUBMITTED THAT OUT OF 2161 GMS ASSESS ED AT RS. 26,62,212/- GOLD JEWELLERY FOUND AT THE TIME OF SEARCH [PB PG. 171 TO 173] THE ASSESSEE TREATED GOLD JEWELLERY WEIGHING 1071 GMS (771 GMS I N THE HANDS OF SMT. VIMLA SINGHVI AND 300 GMS IN THE HANDS OF ASSESSEE) AS EXPLAINED AND BALANCE GOLD JEWELLERY WEIGHING 1090 GMS VALUED AT RS. 12,00,000/- WAS DECLARED IN THE BALANCE SHEET AS INVESTMENT. INCOME OF RS. 11,05,000/- WAS DECLARED IN THE REVISED RETURN OF INCOME AFTER GIVI NG CREDIT OF SOURCES 49 AVAILABLE WITH THE ASSESSEE FOR MAKING INVESTMENT I N GOLD JEWELLERY. [PB PG. 40, 41, 81, 82, 103, 107, 108]. THE AR FURTHER SUBMITTED THAT THE ASSESSEE & HIS WIFE SMT. VIMLA SINGHVI RECEIVED GOLD JEWELLERY WEIGHING 850 GMS (225 GMS + 250 GMS + 375 GMS) BY WILL DATED 19-11-1997 O F LATE SMT. SUGAN KANWAR W/O SHRI MOHAN MAL JI SINGHVI (MOTHER OF ASS ESSEE). SHE EXPIRED ON 24-11-2001. THE WILL WAS FOUND AT THE TIME OF SE ARCH A COPY OF WHICH IS PLACED AT [PB PG 167 TO 170] AND THEREFORE THE GOLD JEWELLERY FOUND IN THE POSSESSION OF ASSESSEE TO THE EXTENT OF WEIGHT 850 GMS IS EXPLAINED BY THE WILL. 8.1.1 THE AR FURTHER SUBMITTED THAT THE ASSESSEE W AS 60 YEARS OLD AT THE TIME OF SEARCH AND LOOKING TO THE STATUS OF FAMILY, GOLD JEWELLERY OF 221 GMS (AFTER REDUCING GOLD JEWELLERY RECEIVED FROM WILL) CAN BE TREATED AS EXPLAINED IN THE HANDS OF ASSESSEE AND HIS WIFE. FO R THIS THE AR DRAWN SUPPORT FROM THE INSTRUCTION NO. 1916 [F.NO. 286/63 /93-IT (INV.II)] DATED 11-05-1994 ISSUED BY CBDT [PB PG. 175] WHICH ARE BINDING ON A.O. BY VIRTUE OF PROVISION OF SEC 119 AND AS LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V/S. ITO & ANR. (1981) 131 ITR 597 (SC). VIDE ABOVE REFERRED CIRCULAR, CBDT HAD ISSUED GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN COURSE OF SEARCH WHERE IT WAS INST RUCTED TO REFRAIN FROM SEIZING GOLD JEWELLERY UPTO 500 GMS IN CASE OF MARR IED LADY AND 100 GMS IN CASE OF MALE MEMBER. 8.1.2 IT WAS FURTHER SUBMITTED BY THE AR THAT THE ASSESSEE HAD CLAIMED SET-OFF OF RS. 95,000/- AGAINST THE INVESTM ENT OF RS. 12,00,000/- IN THE GOLD JEWELLERY AS HE WAS HAVING SOURCE FOR MAKI NG SUCH INVESTMENT WHICH WILL BE EXPLAINED BY TABLE MARKED AS ANNEXURE B PRODUCED AT PB PAGE 40 TO 41 AND DECLARED AN INCOME OF RS. 11,05,000/- FOR THE PURPOSE OF INVESTMENT IN GOLD JEWELLERY AND PRAYED FOR DELETIO N OF THIS ADDITION. 50 68. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) FOUND THAT THE AO WAS CORRECT IN MAKING THE ADDITION. ACCORDINGLY HE CONFIRMED TH E ADDITION BY GIVING HIS FINDING IN PARA 8.2 AT PAGES 19 & 20 AS UNDER :- 8.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT OU T OF TOTAL GOLD JEWELLERY OF 2161 GMS FOUND DURING THE COURSE OF SEARCH, A.O. CO NSIDERED 600 GMS JEWELLERY (375 GMS TO SMT. VIMLA SINGHVI, WIFE AND 225 GMS TO SH. UMMAID MAL SINGHVI) RECEIVED FROM WILL OF MOTHER OF APPELLANT LT. SMT. SUGAN KANWAR (EXPIRED ON 24.11.01) AS EXPLAINED AND REMAINING ENTIRE JEWELLERY WAS TREATED AS UNEXPLAINED. HOWEVER, IT I S SEEN THAT IN THIS WILL, WHICH WAS SEIZED DURING THE COURSE OF SEARCH AND AV AILABLE AT P.B. PAGE 167 TO 170 TOTAL GOLD JEWELLERY WAS 850 GMS, OUT OF WHI CH APART FROM MENTION OF 375 GMS TO SMT. VIMALA DEVI AND 225 GM TO SH. UMMAI D MAL SINGHVI, BALANCE JEWELLERY OF 250 GMS WAS ALSO INTENDED TO B E GIVEN TO SH. UMMAID MAL AFTER THE DEATH OF SMT. SUGAN KANWAR, THE MOTHE R AND THUS ARGUMENT OF THE A.R IN THIS REGARD WAS FOUND CORRECT. THE OTHER ARGUMENT OF THE A.R. THAT LOOKING TO THE STATUS FURTHER GOLD JEWELLERY OF 221 GMS MAY ALSO BE TREATED AS EXPLAINED IN VIEW OF THE CBDT INSTRUCTION 1916 DATE D 11.5.94 IS REJECTED, AS THE CBDT INSTRUCTION IS APPLICABLE IN CASES WHERE N O EVIDENCE OF ACQUISITION OF JEWELLERY IS AVAILABLE. ACCORDINGLY, GOLD JEWELL ERY TO THE EXTENT OF 850 GMS IS HELD TO BE EXPLAINED AS PER THE WILL OF TH E MOTHER OF THE APPELLANT, WHICH WAS FOUND DURING THE COURSE OF SEARCH AND WAS ALSO CONSIDERED BY THE A.O. BUT NOT FULLY. HENCE THE JEWELLERY OF 1311 GMS ( 2161 GMS 850 GMS) IS HELD TO BE UNEXPLAINED, THE VALUE OF WHICH TAKEN @ RS. 1231/- PER GM AS TAKEN BY THE A.O. WILL COME TO RS. 16,13,841/-, AS AGAINST RS. 19,21,591/- TAKEN BY THE A.O. THIS WILL LEAD TO RELIEF OF RS. 3 ,07,750/- AND BALANCE ADDITION OF RS. 5,08,841/- IS HEREBY CONFIRMED. THE ADDITION WAS DELETED OF RS. 3,07,750/-. 51 69. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND THAT THE GROUND OF THE DEPARTMENT IS LIABLE TO BE DISMISSED AND GROUND OF THE ASSESSEE IS LIABLE TO BE ALLOWED IN PART. WE NOTED THAT THAT TOTAL JEWELLERY WAS FO UND AT 2161 GRAMS. THE ASSESSEE HAS DISCLOSED JEWELLERY OF 1090 GRAMS WHILE FILING THE REVISED RETURN. IN THIS WAY THE ASSESSEE HAS DECLARED RS. 11,05,000/- IN HIS REVISE D RETURN. THE AO ALLOWED PART RELIEF ON ACCOUNT OF JEWELLERY RECEIVED THROUGH WILL I.E. 375 GRAMS TO SMT. VIMLA SINGHVI, WIFE AND 225 GRAMS TO SHRI UMMAID MAL SINGHVI, THE ASSES SEE WHEREAS TOTAL JEWELLERY RECEIVED THROUGH WILL WAS 850 GRAMS. THE LD. CIT ( A) HAS ALLOWED THE RELIEF TO THIS EXTENT. REMAINING VALUE OF 221 GRAMS JEWELLERY WAS CONFIRMED BY LD. CIT (A) WHICH WAS AT RS. 5,08,841/- @ RS. 1231/- PER GRAM AS TAKEN BY AO. THE ASSESSEE HAS TAKEN VALUE @ RS. 1100/- PER GRAM. THE AO HAS ADOPTED THE VALUE T O RS. 1231/- PER GRAM. THE VALUE DECLARED BY ASSESSEE FOR 1090 GRAMS HAS BEEN ACCEPT ED BY THE AO AS NO ADDITION HAS BEEN MADE ON THAT ACCOUNT. THEREFORE, THE VALUE OF 221 GRAMS OF JEWELLERY SHOULD BE TAKEN @ RS. 1100/- PER GRAM AGAINST RS. 1231/- PER GRAM TAKEN BY THE AO. WE FURTHER NOTED THAT SOME JEWELLERY MAY HAVE BEEN RECEIVED BY ASSESSEE OR HIS WIFE ON ACCOUNT OF RELIGIOUS OR MARRIAGE ANNIVERSARY OR BIRTH OF CHIL DREN. THEREFORE, TAKING INTO ACCOUNT THE TOTALITY OF THE CIRCUMSTANCES, WE ARE OF THE VIEW T HAT IF AN ADDITION OF RS. 2,50,000/- IS SUSTAINED AGAINST RS. 5,08,841/- THEN IT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. IN THIS WAY THE GROUND OF THE ASSESS EE IS ALLOWED IN PART AND GROUND OF THE DEPARTMENT FAILS. 70. GROUND NO. 8 IS AGAINST CONFIRMING THE ADDITION OF RS. 2,53.269/- IN RESPECT OF INVESTMENT IN SILVER JEWELLERY. 52 71. THE DEPARTMENT HAS ALSO CHALLENGED THE DELETION OF ADDITION BY LD. CIT (A) ON ACCOUNT OF INVESTMENT IN JEWELLERY OF RS. 2,01,744/ - OUT OF TOTAL ADDITION OF RS. 4,55,013/- MADE BY THE AO. 72. BOTH THESE GROUNDS ARE INTER LINKED, THEREFORE, THEY ARE BEING DISPOSED OFF TOGETHER. 73. THE AO DISCUSSED THIS ISSUE IN PARA 6 AT PAGE 6 OF THE ASSESSMENT ORDER AND OBSERVED THAT DURING THE COURSE OF SEARCH SILVER JE WELLERY OF RS. 580013/- WAS FOUND AT THE RESIDENCE OF THE ASSESSEE. OUT OF WHICH THE ASSESSE E HAD SURRENDERED ONLY FOR RS. 1,25,000/- AND THE ASSESSEE HAS NOT EXPLAINED THE SOURCE FOR B ALANCE AND THEREFORE RS. 4,55,013/- ADDED TO THE INCOME OF THE ASSESSEE. 74. DURING THE COURSE OF HEARING THE AR OF THE ASSE SSEE SUBMITTED THAT AT THE TIME OF SEARCH, SILVER JEWELLERY & UTENSILS WEIGHING 28,750 GMS (NET WEIGHT) WAS FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, WHICH WAS ASS ESSED AT RS. 5,80,013/-. WHILE FILING RETURN OF INCOME, THE ASSESSEE TREATED SILVER JEWEL LERY & UTENSILS WEIGHING 22,554 GMS AS EXPLAINED AND BALANCE SILVER JEWELLERY & UTENSILS W EIGHING 6,196 GMS VALUED AT RS. 1,25,000/- WERE DECLARED IN THE BALANCE SHEET AS IN VESTMENT. INCOME OF RS. 1,15,000/- WAS DECLARED IN THE REVISED RETURN OF INCOME. [PB PG. 81, 82, 108] 75. THE AR EXPLAINED THE SOURCE OF 4.5 KG OF SILVER JEWELLERY AND UTENSILS AS RECEIVED FROM HIS MOTHER BY WILL AND ATTENTION WAS DRAWN TOW ARDS THE REPLY GIVEN BY ASSESSEE TO Q. 27 OF STATEMENTS RECORDED AT THE TIME OF SEARCH [PB PG. 59, 60, 70, 71]. THE AR FURTHER SUBMITTED THAT THE ASSESSEE WAS 60 YEARS OLD AT THE TIME OF SEARCH AND LOOKING TO THE STATUS OF FAMILY, SILVER JEWELLERY & UTENSILS OF 19,554 GM S (AFTER REDUCING SILVER JEWELLERY & UTENSILS RECEIVED FROM WILL) CAN BE TREATED AS EXPL AINED IN THE HANDS OF ASSESSEE AND HIS 53 WIFE. ON THE ISSUE THE AR DRAWN SUPPORT FROM THE IN STRUCTION NO. 1916 [F.NO. 286/63/93- IT (INV.II)] DATED 11-05-1994 ISSUED BY CBDT [PB PG. 175] WHICH ARE BINDING ON A.O. BY VIRTUE OF PROVISION OF SEC 119 AND AS LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V/S. ITO & ANR. (1981) 131 ITR 597 (S C). I MAY BRING TO YOUR HONOURS ATTENTION THAT THE AUTHORIZED OFFICER DID NOT SEIZE D ANY PART OF SILVER JEWELLERY & UTENSILS WHICH SHOWS THAT HE WAS SATISFIED THAT THE SILVER J EWELLERY & UTENSILS SO FOUND AT THE TIME OF SEARCH WAS NOT EXCESS LOOKING TO THE STATUS OF FAMI LY. THE AR PRAYED FOR DELETION OF THIS ADDITION. 76. AFTER CONSIDERING THE ORDERS OF THE AO AND SUBM ISSIONS OF THE ASSESSEE, THE LD. CIT (A) ALLOWED THE ISSUE IN PART IN FAVOUR OF THE ASSESSEE BY GIVING HIS FINDING IN PARA 9.2 AT PAGES 21 & 22 OF HIS ORDER AS UNDER :- 9.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE WILL I FOUND THE ARGUMENT OF THE APPELLANT PARTLY CORRECT. AS 4 KG OF SILVE R UTENSILS AND JEWELLERY IS MENTIONED IN THE WILL AND NOT 4.5 KG AS CLAIMED B Y THE APPELLANT. ACCORDINGLY, SILVER UTENSILS AND JEWELLERY TO THE E XTENT OF 4.0 KG IS TREATED AS EXPLAINED, AS A.O. HAS ALREADY ACCEPTED THE CONTENT S OF THE WILL REGARDING GOLD JEWELLERY. FURTHER, SILVER UTENSILS WEIGHING 6 KG ARE TREATED AS EXPLAINED TO HAVE BEEN ACQUIRED /RECEIVED ON VARIOUS CEREMONI AL OCCASIONS, AS PER THE TRADITIONS AND CUSTOMS, MAKING TOTAL SILVER UTENSIL S AND ORNAMENTS WEIGHING 10 KG AS EXPLAINED. THE VALUE OF 10 KG SILVER UTEN SILS TAKEN ON PROPORTIONATE BASIS WILL COME TO RS. 2,01,744/- AND THEREFORE, RE LIEF TO THIS EXTENT IS GIVEN. BALANCE SILVER JEWELLERY AND UTENSILS OF RS. 2,53,2 69/- ARE HELD AS UNEXPLAINED IN VIEW OF THE FACT THAT THE HOUSEHOLD WITHDRAWALS ARE QUITE INADEQUATE AND WHICH MAY NOT EVEN BE SUFFICIENT TO MEET DAY TO DAY EXPENSES, AS OBSERVED BY THE A.O. IN THE ASSESSMENT ORDER. IN BRIEF, ADDITION OF RS. 2,53,269/- IS UPHELD. 54 77. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) AND SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT 4 KG OF SILVER RECEIVED T HROUGH WILL, THEREFORE, THERE IS NO QUESTION OF TREATING THE 4 KG OF SILVER AS UNEXPLAI NED. ACCORDINGLY WE HOLD THAT THE LD. CIT (A) WAS JUSTIFIED IN TREATING THE 4 KG OF JEWEL LERY RECEIVED THROUGH WILL OF MOTHER OF THE ASSESSEE. IN FACT, TOTAL SILVER UTENSILS ETC. WERE FOUND AT 28.05 KG. 4 KG WAS OUT OF WILL OF THE MOTHER OF THE ASSESSEE AND 10 KG HAS BE EN TREATED BY LD. CIT (A) AS EXPLAINED AND REGARDING REMAINING SILVER UTENSILS, THE LD. CI T (A) HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND, THEREFORE, AN ADDITION OF RS. 2,53,269/- HAS BEEN SUSTAINED. THE LD. CIT (A) HAS ALREADY GIVEN A REASONABLE RELIEF TO TH E ASSESSEE, THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) REPROD UCED SOMEWHERE ABOVE IN THIS ORDER. ACCORDINGLY, WE CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 78. GROUND NO. 9 IN APPEAL OF THE ASSESSEE IS AGAIN ST CONFIRMING THE ADDITION OF RS. 6,08,000/- MADE UNDER SECTION 69 FOR ALLEGED ADVANC E TO SHRI JUGAL KISHORE MANTRI AND FURTHER ADDITION OF RS. 46,690/- CONFIRMED ON ACCOU NT OF INTEREST ON SUCH ALLEGED ADVANCE. 79. THE AO DISCUSSED THIS ISSUE IN PARA 8 AT PAGE 7 OF THE ASSESSMENT ORDER AND OBSERVED THAT AS PER EXHIBIT 7 FOUND AND IMPOUNDED AT THE PREMISES OF HMS FINANCE DURING SURVEY U/S 133A ON 25/03/2008 THERE IS LOAN OF RS. 6,08,000/- GIVEN BY THE ASSESSEE TO SHRI JUGAL KISHORE MANTRI. THE AO FURTHER OBSERV ED THAT THIS ENTRY ALSO APPEARS ON PAGE 37 OF ANNEXURE A-5 IMPOUNDED FROM THE BUSINESS PREM ISES OF HMS FINANCE. ADDITION FOR RS. 6,08,000/- ON ACCOUNT OF LOAN AND RS. 46,690/- ON ACCOUNT OF INTEREST FROM 10/01/2008 TO 31/03/2008 MADE TO THE INCOME OF THE ASSESSEE. 55 79.1. IT WAS SUBMITTED BY LD. A/R BEFORE LD. CIT (A ) THAT ADDITION WAS MADE GROSSLY NEGLECTING THE PRINCIPAL OF NATURAL JUSTICE ON THE GROUND THAT AO BEFORE MAKING ADDITION NEVER PROVIDED AN OPPORTUNITY TO THE ASSESSEE TO EX PLAIN THE PAPERS FOUND DURING SURVEY U/S 133A. THE AR FURTHER SUBMITTED THAT THE STATEMENT O F SHRI MANOJ SINGHVI MANAGER OF THE HMS FINANCE WERE RECORDED DURING THE COURSE OF SURV EY AND IN THE REPLY OF THE QUESTION REGARDING THE EXHIBIT 7 OF THE ANNEXURE A HE STATED THAT ;G ISIJ JH TQXY FDKKSJ EA=H ,OA MUDS IFJOKJ LS LECFU/KR GS PWWAFD OS LOAN YSUS CKCR CKR DJUS VK;S FKS] ML NKSJKU MULS ;G ISI J ESJS DK;KZY; ESA NQV X;S FKS BUDKS BL ISIJ DS VK/KKJ IJ DKSBZ LOAN UGHA FN;K X;K GSA. THE AR FURTHER SUBMITTED THAT SINCE LD. A.O. DID NOT CONFRONTED WITH THE ANNEXURE A-7 AND A-5 PG. 37, THEREFORE THE ASSESSEE HAS MOVED A SEPARATE APPLICATION U/R 46A O F THE I.T. RULES, 1962 BEFORE THE CIT(A) FOR ADMISSION OF AFFIDAVIT OF SHRI JUGAL KIS HORE MANTRI AS ADDITIONAL EVIDENCE IN SUPPORT OF SUBMISSIONS OF ASSESSEE. THE AR FURTHER SUBMITTED THAT WHEN THE COPY OF THE APPLICATION WAS FORWARDED TO THE AO; HE DIDNT OPT TO ENQUIRE INTO THE MATTER BUT OPT TO OPPOSE FILING APPLICATION UNDER RULE 46A IN CASUAL MANNER. 79.2. THE AR FURTHER SUBMITTED THAT SHRI JUGAL KISH ORE MANTRI APPROACHED THE FIRM OF ASSESSEE, M/S. HMS FINANCE & CO. FOR OBTAINING LOAN OF RS. 6,08,000/-. FOR THE PURPOSE OF ASSESSING OF SECURITY OFFERED FOR THE LOAN, HE PROV IDED INFORMATION AS CONTAINED IN ANNEXURE A-7 OF PG. 1 TO 11, WHICH CONTAINS DETAILS OF RD A/ C OF SHRI JUGAL KISHORE MANTRI AND HIS FAMILY MEMBERS, LIKE A/C NO., DATE OF INVESTMENT, A MOUNT INVESTED, MATURITY DATE AND PERSON TO WHOM RD A/C BELONGS. THE PAPERS IN FORM O F ZEROXE COPIES WERE PROVIDED BY HIM TO THE ASSESSEE SO THAT THE ASSESSEE CAN VERIFY THE SECURITY BEFORE MAKING ACTUAL ADVANCE. AT THE TIME OF DISCUSSION OF LOAN PROPOSAL, INTEREST O F RS. 15,200/- WAS DECIDED TO BE CHARGED PER MONTH ON THE LOAN. BEFORE THE TRANSACTION FINAL ISE SHRI JUGAL KISHORE MANTRI POINTED OUT 56 THAT TWO RDS BEING A/C NO. 180927 & 180926 AMOUNTIN G TO RS. 1,41,000/- WILL MATURE WITHIN FEW DAYS AND THEREFORE THE ORIGINAL LOAN SUM OF RS. 6,08,000/- SHOULD BE REDUCED BY RS. 1,40,000/-. HOWEVER, BEFORE ACTUAL DISBURSEMENT OF LOAN, THE WHOLE PROPOSAL WENT DOWN AS RATE OF INTEREST PROPOSED TO BE CHARGED BY ASSESSEE @ 30% WAS ON HIGHER SIDE, PARTICULARLY FOR A SECURED LOAN. AS SUCH ACTUAL LOA N WAS NOT DISBURSED BY THE ASSESSEE TO SHRI JUGAL KISHORE MANTRI THEREFORE THERE IS NO QUE STION FOR MAKING ADDITION U/S 69. IT WAS FURTHER ARGUED THAT THE NAME OF ASSESSEE WAS NEVER INTRODUCED IN THE RD A/C OF POST OFFICE. FURTHER, THE ORIGINAL RD PASS BOOKS WERE ALSO NOT P ROVIDED TO THE ASSESSEE. AS SUCH THE ASSESSEE CANNOT OBTAIN ANY REPAYMENT ON MATURITY OF RD A/C. IF THE ASSESSEE HAD ACTUALLY ADVANCED LOAN THAN FOR THE OBVIOUS REASON HE WOULD HAVE OBTAINED ORIGINAL PASS BOOKS AS A SECURITY FOR LOAN. AT THE TIME OF SEARCH ALSO, THE AUTHORISED OFFICER DID NOT FOUND ANY ORIGINAL RD PASS BOOKS. THIS FURTHER PROVES THE CON TENTION OF ASSESSEE THAT NO LOAN IN FACT WAS GIVEN. 79.3. THE AR FURTHER SUBMITTED THAT THE LD. A.O. FA ILED TO PROVE THAT THE ASSESSEE HAD ACTUALLY ADVANCED ANY LOAN TO SHRI JUGAL KISHORE MA NTRI. NO CORROBORATING MATERIAL WAS BROUGHT ON RECORD. THE ADDITION WAS MADE ONLY ON TH E BASIS OF SUSPICIOUS AND SURMISES. IN RESPECT TO ANNEXURE A-5, PG-37. IT IS SUBMITTED THA T THE ANNEXURE A-5 IS A LOAN REGISTER. THIS REGISTER CONTAINS INFORMATION LIKE NAME, ADDRE SS AND CONTACT DETAILS OF BORROWER, DETAILS OF FINANCE AMOUNT, MONTHLY INTEREST INSTALL MENTS, DUE DATES OF INSTALLMENTS, DETAILS OF ACTUAL PAYMENTS RECEIVED. FURTHER, FOR IDENTIFICATI ON, THE ASSESSEE ALLOTS FILE NO. FOR EACH LOAN ADVANCED WHICH IS WRITTEN AT THE TOP RIGHT COR NER OF THE PAGES IN THE REGISTER. THE ASSESSEE MAINTAINS BORROWERS ACCOUNTS IN BOOKS OF ACCOUNTS MAINTAINED FOR M/S. HMS FINANCE & ELECTRIC. ON THE BASIS OF THESE FILE NOS. NO FILE NO. WAS ALLOTTED AT PAGE 37 OF A-5 57 TO THE PROPOSED LOAN OF SHRI JUGAL KISHORE MANTRI W HICH ITSELF SHOWS THAT ACTUAL DISBURSEMENT OF LOAN WAS NOT MADE. [PB PG. 187]. FURTHER SEC 69 CASTS HEAVY BURDEN ON THE REVENUE TO ESTABLISH THAT THE ASSESSEE HAD MADE ANY INVESTMENT IN THE RELEVANT ASSESSMENT YEAR WHICH IS UNRECORDED IN THE REGULAR BOOKS OF AC COUNTS. IN THE SEARCH PROCEEDINGS, THE LD. A.O. WAS OUGHT TO HAVE ESTABLISHED SUCH LOAN ON THE BASIS OF MATERIAL FOUND DURING SEARCH. NO SUCH MATERIAL WAS BROUGHT BY LD. A.O. AT ANY TIM E TO PROVE THAT THE ASSESSEE HAD ADVANCED THE LOAN OF RS. 6,08,000/- TO SHRI JUGAL K ISHORE MANTRI IN THE PREVIOUS YEAR RELEVANT TO AY 2007-08 AND AS SUCH NO ADDITION CAN BE MADE. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS OF HONBLE ITAT JODHPUR BENCH I N THE CASE OF REDHEY SHYAM TANWAR V/S. ACIT (2002) 77 TTJ (JD) 505. THE AR FURTHER SU BMITTED THAT IN LIGHT OF AFFIDAVIT OF SHRI JUGAL KISHORE MANTRI THERE REMAINS NO DOUBT AB OUT THE CLAIM OF THE ASSESSEE THAT HE HAD NOT ADVANCED ANY LOAN TO SHRI JUGAL KISHORE MAN TRI. THE AR PRAYED FOR THE DELETION OF ARBITRARY ADDITION. 79.4. THE AR FURTHER SUBMITTED THAT SINCE NO LOAN W AS ADVANCED TO SHRI JUGAL KISHORE MANTRI, THEREFORE NO INTEREST WAS ACCRUED TO THE AS SESSEE AND THE ADDITION ON ACCOUNT OF INTEREST SO MADE IS BAD IN LAW AND DESERVES TO BE D ELETED. 80. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) WAS NOT SATISFIED WITH THE EXPLANATION. ACCORDINGLY HE CONFIRMED THE ADDITION BY GIVING HIS FINDING IN PARA 11.2 AT PAGES 26 & 27 AS UNDER :- 11.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. THE ISSUE UNDE R CONSIDERATION IS WHETHER LOAN WAS ACTUALLY GIVEN TO JUGAL KISHRORE MANTRI OR NOT. THE A.R. HAS TRIED TO ARGUE THAT THE LOAN WAS NOT G IVEN AND IT WAS JUST 58 A PROPOSAL FOR GIVING A LOAN WHICH ULTIMATELY DID N OT MATERIALIZE. A.R. SUPPORTED HIS CLAIM ON THE GROUND THAT ORIGINA L R.D. PASSBOOKS BELONGING TO BORROWERS OR HIS FAMILY MEMBERS WERE N OT FOUND, AS THE ORIGINAL PASSBOOK IS KEPT AS SECURITY FOR LOAN. THI S ARGUMENT OF THE APPELLANT IS CONSIDERED BUT IS FOUND TO BE HAVING N O FORCE WHICH IS CLEAR ON THE BASIS OF FORTHCOMING DISCUSSIONS. ON C LOSE PERUSAL OF PAGE 11 OF ANN. A-7, (P.B. PAGE 176) AT THE LAST NA RRATION MENTIONED IS RS.15, 200/- EVERY MONTH INTEREST STARTED 10/01/08 THE IMPORTANT AND VITAL POINT TO BE NOTICED IS THAT INTEREST HAS ALREADY STARTED W.E.F. 10.01.08. IF IT WAS ONLY A PROPOSAL THEN THE NARRATION WOULD HAVE BEEN INTEREST TO START W.E.F 10.01.08. IT IS FURTHER SEEN THAT IN RESPECT OF ALL THE 11 R.D. ACC OUNTS THERE ARE REQUEST LETTER FROM THE ACCOUNT HOLDER TO THE POST MASTER REQUESTING TO MAKE THESE ACCOUNTS UNDER JOINT NAMES AND NAME OF THE PERSONS TO BE ADDED HAS BEEN LEFT BLANK, SO THAT SAME CAN B E BUILT UP CONVENIENTLY BY THE APPELLANT. ALL THE APPLICATIONS ARE DULY SIGNED. IF IT WAS JUST A PROPOSAL THEN ONLY ONE OR TWO SAMPLE APPLICATIONS WOULD HAVE BEEN THERE AND NOT APPLICATION FROM THE ENTIRE ACCOUNT HOLDER. MOREOVER, SH. JUGAL KISHORE MANTRI HAS GOT 6 R.D. A CCOUNTS, THEN THERE ARE SIX SEPARATE APPLICATION. OBVIOUSLY, THES E DETAILS TO SUCH AN EXTENT WILL ONLY INFER THAT ACTUALLY THE MONEY HAS BEEN ADVANCED TO SH. JUGAL KISHROE MANTRI AMOUNTING TO RS. 6,08,000/ - AS MENTIONED IN THESE DOCUMENTS AND MERELY NON-RECOVERY OF THE ORIGINAL R.D. PASSBOOK WITH THE APPELLANT DURING THE COURSE OF SE ARCH, WILL NOT ALTER THE AFORESAID FACT. THE AFORESAID FACT IS FURTHER P ROVED TO THE HILT FROM CAREFUL PERUSAL OF PAGE 37 OF ANN. A-5, WHEREIN ANN . A-5 IS THE LOAN REGISTER AS ADMITTED BY THE APPELLANT. AS PER THE A PPELLANT THIS REGISTER CONTAINS INFORMATION LIKE NAME, ADDRESS, C ONTRACT DETAIL, FINANCE AMOUNT, MONTHLY INTEREST INSTALLMENT, DUE D ATE OF INSTALLMENT, 59 DETAILS OF ACTUAL PAYMENT RECEIVED ETC. IT IS SEEN THAT THIS REGISTER NAMELY ANN. A-5 DOES CONTAIN THE NAME OF SH. JUGAL KISHORE MANTRI. IN THIS PAGE, COMPLETE ADDRESS AND PHONE NO. ETC AR E MENTIONED. FURTHER THE AMOUNT ADVANCED IS ALSO MENTIONED BEING RS. 6, 08,000/-. THE INTEREST INSTALLMENT OF RS. 15,200/- IS ALSO ME NTIONED. AGAINST THE DATE 10/01/08 , THE WORD STARTED IS SPECIFICALLY MENTIONED. ALL THESE DETAILS BEING AVAILABLE IN THE LOAN REGISTER CLEARLY PROVE THAT THE ADVANCE HAS BEEN GIVEN TO SH. JUGAL KISHORE MANTRI. FURTHER CLOSE PERUSAL OF THIS PAGE REFLECTS FOLLOWING NARRATION I N THE MIDDLE OF LAST WRITTEN LINE.( TRANSLATED INTO PHONETIC ENGLISH) 50 H AAYE 19/3/08 IT CLEARLY PROVES THAT RS. 50,000/- HAS BEEN RECEIV ED BY THE APPELLANT AS INTEREST FOR THIS PERIOD ON LUMPSUM BA SIS. THUS THERE IS NO DOUBT THAT THE AMOUNT WAS REALLY ADVANCED TO SH. JUGAL KISHORE MANTRI. THE AFFIDAVIT OF SH. JUGAL KISHORE MANTRI N OW FURNISHED AS ADDITIONAL EVIDENCE IS JUST A SELF SERVING DOCUMENT AND THEREFORE THE CONTENTS OF THE SAME CANNOT BE ACCEPTED IN VIEW OF THE OVERWHELMING EVIDENCE SEIZED FROM THE PREMISES OF THE APPELLANT, AS DISCUSSED ABOVE. AS THE AMOUNT OF RS. 6,08,000/- + INTEREST R ECEIVABLE AMOUNTING TO RS. 46,690/- ( THE ACTUAL AMOUNT RECEI VED IS RS. 50,000/-) IS NOT RECORDED IN THE BOOKS, THE ADDITI ON SO MADE BY THE A.O. AMOUNTING TO RS. 6,54,690/- IS UPHELD. 81. AFTER CONSIDERING THE ORDERS OF AO AND LD. CIT (A) AND SUBMISSIONS OF THE ASSESSEE, WE ARE OF THE VIEW THAT THIS MATTER SHOUL D GO BACK TO THE FILE OF AO TO PASS A FRESH ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AN 60 AFFIDAVIT OF SHRI JUGAL KISHORE WAS FILED BY WHICH IT WAS STATED THAT HE HAS NOT TAKEN ANY LOAN. HOWEVER, LD. CIT (A) HAS NOT ADMITTED THE SAM E BY OBSERVING THAT THE AFFIDAVIT OF SHRI JUGAL KISHORE MANTRI NOW FURNISHED AS AN ADDIT IONAL EVIDENCE IS SELF SERVING EVIDENCE AND, THEREFORE, THE CONTENTS OF THE SAME C ANNOT BE ACCEPTED IN VIEW OF OVER- WHELMING EVIDENCE SEIZED FROM THE PREMISES OF THE A SSESSEE DURING THE COURSE OF SEARCH. IT IS ALSO A MATTER OF FACT THAT DURING THE COURSE OF SEARCH, STATEMENT OF THE ASSESSEE WAS RECORDED AND PAPERS RELATING TO LOAN TO SHRI JUGAL KISHORE MANTRI FOUND DURING THE COURSE OF SEARCH WERE SHOWN TO THE ASSESSEE AND ASSESSEE H AS GIVEN A REPLY THAT IN FACT SHRI JUGAL KISHORE MANTRI HAS LEFT THIS PAPER IN THE PREMISES OF THE ASSESSEE, HOWEVER, NO LOAN HAS BEEN GIVEN TO HIM. THIS REPLY WAS GIVEN IN RESPONS E TO QUESTION NO. 8 PUT BY THE SEARCH PARTY DURING THE COURSE OF SEARCH. AFFIDAVIT OF SH RI JUGAL KISHORE MANTRI WAS FILED DURING THE APPELLATE PROCEEDINGS AS NO OPPORTUNITY WAS GRANTED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, WE FEEL THAT TH E STATEMENT OF THE ASSESSEE RECORDED DURING THE SEARCH AND AFFIDAVIT OF SHRI JUGAL KISHO RE MANTRI SHOULD BE TAKEN INTO CONSIDERATION, THEN A FRESH ORDER SHOULD BE PASSED. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF AO TO PASS A FRESH ORDER AFTER AFFOR DING A REASONABLE OPPORTUNITY OF BEING HEARD. WE ORDER ACCORDINGLY. 82. GROUND NO. 10 IN APPEAL OF THE ASSESSEE IS AGAI NST NOT ALLOWING SHORT TERM CAPITAL LOSS OF RS. 75,000/- ON SALE OF CAR WHICH WAS CARRI ED FORWARD FROM ASSESSMENT YEAR 2005- 06 AGAINST THE LONG TERM CAPITAL GAIN IN VIEW OF PR OVISIONS OF SECTION 74(1) OF THE ACT. 83. THE LD. CIT (A) HAS NOT ALLOWED THE ISSUE FOR T HE REASON THAT THIS ISSUE WILL BE DISCUSSED WHILE DISPOSING THE APPEAL FOR ASSESSMENT YEAR 2005-06. IF THE LOSS PERTAINS TO TYE YEAR UNDER CONSIDERATION THEN SAME HAS TO BE AL LOWED AS PER PROVISIONS OF LAW. 61 THEREFORE, WE SET ASIDE THIS ISSUE TO THE FILE OF A O TO PASS A FRESH ORDER AFTER TAKING INTO CONSIDERATION THE DECISION GIVEN IN ASSESSMENT YEAR 2005-06 BY LD. CIT (A). WE ORDER ACCORDINGLY. 84. GROUND NO. 11 IS AGAINST NOT ALLOWING TELESCOPI NG. 85. WE FIND THAT NO SUCH GROUND WAS TAKEN BEFORE LD . CIT (A). HOWEVER, IF ASSESSEE CAN PROVE THE MATERIAL FOR ALLOWING TELESCOPING, TH EN THE AO MAY CONSIDER THE ISSUE AFRESH WHILE PASSING A FRESH ORDER ON CERTAIN ISSUE S REMANDED TO HIS FILE BY US. WE ORDER ACCORDINGLY. 86. THERE IS ONE MORE GROUND IN APPEAL OF THE DEPAR TMENT I.E. AGAINST DELETING THE ADDITION OF RS. 3,30,000/- MADE ON ACCOUNT OF UNEXP LAINED CASH FOUND DURING THE COURSE OF SEARCH. 87. THE AO DISCUSSED THIS ISSUE IN PARA 7 AT PAGE 7 OF THE ASSESSMENT ORDER AND OBSERVED THAT DURING THE COURSE OF SEARCH TOTAL CAS H OF RS. 58,49,000/- WAS FOUND OUT OF WHICH RS. 55,00,000/- LACS WAS ADMITTED BY SHRI VIN OD SINGHVI AS BELONGING TO HIM. FOR THE BALANCE RS. 3,49,000/- NO SATISFACTORY EXPLANA TION WAS FURNISHED BY THE ASSESSEE. AN AMOUNT OF RS. 19,000/- HAS BEEN SURRENDERED BY THE ASSESSEE ON THIS ACCOUNT AND BALANCE RS. 3,30,000/- ADDED TO THE INCOME OF THE ASSESSEE. 88. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT FOR RS . 3,49,000/- THE ASSESSEE PROVIDED EXPLANATION BY REPLYING TO QUESTION NO 8 OF THE STA TEMENT RECORDED AT THE TIME OF SEARCH [PB PG 46, 62] THAT RS. 2,00,000/- WAS IN RESPECT OF BOOKING MADE FOR SIDDHARTA PALACE, RS. 1,30,000/- CASH WAS BELONGING TO HARSHITA FINANCE A ND RS. 60,000/- CASH WAS BELONGED TO THE ASSESSEE HIMSELF. 62 89. THE AR OF THE ASSESSEE SUBMITTED THAT AGAINST R S. 60,000/- BELONGING TO THE ASSESSEE THE CASH BALANCE AS PER BOOKS OF ACCOUNTS ON 25-03- 2008 (DATE OF SEARCH) IS AS UNDER, [PB PG. 223 TO 254] - AS PER CASH BOOK OF SHRI UMAID MAL SINGHVI RS. 6 ,112/- - AS PER CASH BOOK OF M/S. HMS FINANCE & ELECTRIC RS . 26,345/- - AS PER CASH BOOK OF SHRI UMAID MAL SINGHVI HUF RS. 3,447/- - AS PER CASH BOOK OF SMT. VIMLA SINGHVI RS. 3,55 0/- RS. 39,454/- 90. AFTER CONSIDERING CASH BALANCE RECORDED IN THE BOOKS OF ACCOUNTS, THE CASH OF RS. 20,546/- (RS. 60,000 RS. 39,454) IS FOUND EXCESS OUT OF WHICH THE ASSESSEE HAD HIMSELF DECLARED INCOME OF RS. 19,000/- IN THE REVISED RETU RN OF INCOME AND AS SUCH NO ADDITION FOR EXCESS CASH FOUND IS JUSTIFIED AS THE CASH AVAILABL E FOR BOOKING OF SIDDARTH IS NOTED IN THE SEIZED DOCUMENTS ITSELF AND CLAIM IN THE PRELIMINAR Y STATEMENT ABOUT HARSHITA FINANCE WAS PROVED TO BE ERRONEOUS BY A.O. 91. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) DELETED THIS ADDITION BY GIVING HIS FINDING IN PARA 10.2 AT PAGE 23 OF HIS ORDER AS UNDER :- 10.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD . A.R AND HAVE PERUSED THE MATERIAL ON RECORD. I AGREE WITH THE AR GUMENT OF THE A.R THAT DURING THE COURSE OF SEARCH IN THE PRELIMINARY STAT EMENT ITSELF, PARTICULARLY IN ANSWER TO QUESTION NO. 8, THE APPELLANT HAS MENTION ED THAT ABOUT RS. 2 LAKH BEING RECEIVED FROM BOOKING OF M/S SIDHARTHA PALACE , PROP. SMT. SUNITA SINGHVI ARE LYING IN THE RESIDENCE, APART FROM RS. 1,30,000/- BELONGING TO M/S HARSHITA FINANCE AND FURTHER RS. 60 TO 70,000/ - BELONGS TO HIM. IT IS ALSO NOTICED THAT BEFORE THE CONCLUSION OF THE SEAR CH, OUT OF THE TOTAL CASH OF RS. 58,49,000/- SO FOUND, RS. 55,00,000/- WERE ADMI TTED TO BE UNACCOUNTED 63 BY THE APPELLANT AND WAS ULTIMATELY ADMITTED BY HI S SON SH. VINOD SINGHVI TO BE BELONGING TO HIM. THE SEARCH PARTY SEIZED RS. 55 LAKHS ONLY CONSIDERING IT TO BE UNACCOUNTED, AND BALANCE WAS P RIME-FACIELY TREATED AS ACCOUNTED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES PARTICULARLY CONSIDERING THE CASH OF RS. 2 LAKHS BELONGING TO M/S SIDHARTHA PALACE PROP. SUNITA SINGHVI AND RS. 1,30,000/- AS BELONGING TO HARSHITA FINANCE, THE ADDITION OF THESE AMOUNTS DONE BY THE A.O. IN THE HANDS OF APPE LLANT IS DELETED. 92. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). THE LD. CIT (A) HAS GI VEN A FINDING AFTER ASCERTAINING THE ACTUAL FACTUM OF THE CASE. THEREFORE, ON THE REASO NING GIVEN BY LD. CIT (A), WE CONFIRM HIS ORDER. 93. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART AND PART FOR STATISTICA L PURPOSES. 94. THE ORDER IS PRONOUNCED ON 19.01.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- SHRI UMMAID MAL SINGHVI, JODHPUR. THE ACIT, CENTRAL CIRCLE-2, JODHPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 157(4)/JODH/2011) BY ORDER, AR ITATJODHPUR. 64