Shri Manoj Singhvi, JODHPUR V. ACIT, JODHPUR

ITA 160/JODH/2011

• Counselvise Citation: 16023314 RSA 2011
• 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: 2008-2009
• 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; Valuation report; Retraction
• Section: 69C; 50C; 133A; 234B; 131; 69; 132; 144; 68

Judgement Text

1 ITA 160 (2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 160/JODH/2011 ASSTT. YEAR : 2008-09. SHRI MANOJ SINGHVI, VS. THE ACIT, CENTRAL CIRCLE -2, C/O SHRI U.C. JAIN, ADVOCATE, JODHPUR. SHATRUNJAY HARI SINGH NAGAR, PALI ROAD, JODHPUR. ITA NO. 259/JODH/2011 ASSTT. YEAR : 2008-09. THE ACIT, CENTRAL CIRCLE-2, VS. SHRI MANOJ SINGHV I, JODHPUR. JODHPUR. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI U.C. JAIN DEPARTMENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING : 13.12.2011 DATE OF PRONOUNCEMENT : 19.01.2012. ORDER DATE OF ORDER : 19/01/2012. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY ASSESSEE AND DEPARTMENT A GAINST THE ORDERS OF LD. CIT (A) RELATING TO ASSESSMENT YEARS 2008-09. 2. GROUND NOS. 1 AND 7 WERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS. 8 & 9 ARE GENERAL IN NATURE. 2 4. GROUND NO. 6 RELATES TO CHARGING OF INTEREST UND ER SECTION 234A, 234B AND 234C IS CONSEQUENTIAL IN NATURE. THEREFORE, AO IS DIREC TED TO GIVE CONSEQUENTIAL RELIEF, IF ANY. 5. GROUND NOS. 2 & 3 RELATE TO IN NOT DELETING THE ADDITION MADE BY AO IN RESPECT OF 12 BIGHA 16 BISWA OF AGRICULTURAL LAND BY INVOKING PROVISIONS OF SECTION 50C BUT DIRECTING THE AO TO GET VALUATION BY VALUATION OFFI CER TO COMPUTE THE CAPITAL GAIN ON THE BASIS OF SUCH VALUATION REPORT. 6. THE ASSESSEE IS ONE OF THE CO-OWNER OF THE LAND. IN THE HAND OF OTHER CO-OWNER I.E. SHRI UMMAID MAL SINGHVI THE AO HAS ALSO MADE ADDITI ON UNDER SECTION 50C. THE LD. CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE A ND IN RESPECT TO 12 BIGHA 16 BISWA, IT WAS HELD THAT PROVISIONS OF SECTION 50C ARE NOT APP LICABLE BUT THE AO WAS DIRECTED TO GET THE VALUATION FROM THE VALUATION OFFICER TO COMPUTE THE CAPITAL GAINS. WE HAVE ALREADY DISPOSED OFF THE GROUND OF THE ASSESSEE AS WELL AS THE GROUND OF THE DEPARTMENT BY WHICH GROUND OF THE ASSESSEE HAS BEEN ALLOWED AND GROUND OF THE DEPARTMENT HAS BEEN REJECTED. FINDINGS OF THE TRIBUNAL HAVE BEEN RECORDED IN PARA 53 TO 53.2 IN THE CASE OF SHRI UMMAID MAL SINGHVI, WHICH ARE REPRODUCED HERE AS UN DER :- AFTER CONSIDERING THE ABOVE FINDING, WE FIND NO IN FIRMITY IN THE FINDING OF LD. CIT (A) IN RESPECT TO APPLICABILITY OF SECTION 50C FOR AGRICULTURAL LAND OF 1 BIGHA 5 BISWA SOLD THROUGH R EGISTERED SALE DEED DATED 18.1.2008. THEREFORE, TO THIS EXTENT THE ORD ER OF LD. CIT (A) IS CONFIRMED. THE ARGUMENT OF LD. A/R HAS ALREADY BEE N TAKEN INTO CONSIDERATION BY LD. CIT (A) WHILE CONFIRMING THE A PPLICATION OF PROVISIONS OF SECTION 50C IN RESPECT TO SALE OF LAN D OF 1 BIGHA 5 BISWA. // HOWEVER, REGARDING THE DIRECTION OF LD. CIT (A) TO REFER THE MATTER TO THE DVO FOR DETERMINING THE VALUATION UNDER SECT ION 55A FOR 12 BIGHA 3 16 BISWA, WE FIND THAT LD. CIT (A) HAS HELD THAT PR OVISIONS OF SECTION 50C ARE NOT APPLICABLE ON ACCOUNT OF SALE OF LAND THROU GH AGREEMENT. THERE WAS AN AMENDMENT IN THE PROVISIONS OF SECTION 50C W ITH EFFECT FROM 1.10.2009 ON SALE THROUGH AGREEMENT THE PROVISIONS OF SECTION 50C ARE APPLICABLE. UNDER THE PROVISIONS OF SECTION 50C WH ICH WERE AMENDED WITH EFFECT FROM 1.10.2009, SECTION 50C WAS MADE AP PLICABLE ON SALE THROUGH AGREEMENT ALSO. IT MEANS THAT BEFORE 1.10. 2009 PROVISIONS OF SECTION 50C WERE NOT APPLICABLE ON SALE THROUGH AGR EEMENT. THIS VIEW HAS BEEN TAKEN BY ITAT JAIPUR BENCHES AND JODHPUR BENCH IN VARIOUS OTHER CASES DECIDED. THEREFORE, WE CONFIRM THE FINDING O F LD. CIT (A) THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN RES PECT TO LAND OF 12 BIGHA 16 BISWA SOLD THROUGH AGREEMENT. REGARDING REFERRING THE MATTER TO DVO, WE FIND THAT NO MATERIAL WAS FOUND DURING THE SEARCH PROCEEDINGS THAT ANY AM OUNT OVER AND ABOVE WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE OF LAND THROUGH AGREEMENT OF 12 BIGHA 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 UNDER SECTIO N 55A IS NOT CORRECT AS THERE IS NO MATERIAL FOUND DURING THE COURSE OF SEA RCH TO SHOW THAT ASSESSEE HAS RECEIVED OVER AND ABOVE THE AGREED AMO UNT THROUGH SALE AGREEMENT. THEREFORE, THERE IS NO QUESTION OF ASCE RTAINING THE VALUATION AND WITHOUT ANY MATERIAL OR EVIDENCE REFERRING THE MATTER TO THE DVO IS NOT JUSTIFIED FOR THE REASON THAT ANY ADDITION CAN BE MADE UNDER SECTION 50C AND NOT ON THE BASIS OF VALUATION ADOPTED BY TH E DVO. THE AO HAS ALSO MADE ADDITION ON THE BASIS OF PROVISIONS OF SE CTION 50C AND NOT ON THE BASIS OF VALUATION WHETHER IT WAS LOWER OR HIGH ER. THE PROVISIONS OF SECTION 50C ARE SPECIFIC WHEREBY IT HAS BEEN PROVID ED THAT IF ANY AUTHORITY I.E. CENTRAL AUTHORITY OR STATE AUTHORITY ADOPTS TH E 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 5 0C SUBJECT TO FULFILLING THE CONDITION OF EXCEPTION CLAUSE PROVIDED UNDER SE CTION 50C(2). THERE IS 4 NO CASE OF 50C HERE AS THE LAND IS SOLD THROUGH SAL E AGREEMENT AND NOT THROUGH REGISTERED SALE DEED AND WE HAVE ALREADY HE LD ABOVE THAT WHERE LAND IS SOLD THROUGH SALE AGREEMENT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. IN VIEW OF THESE FACTS AND CIRCUMSTANC ES, 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 CAPITAL GAINS. ACCORDINGLY SUCH DIRECTIONS OF LD. CIT (A) ARE QUAS HED. THE GROUNDS OF THE ASSESSEE ARE ALLOWED AND THE GROUNDS OF THE DEP ARTMENT FAIL. 7. SINCE FACTS ARE IDENTICAL, THEREFORE, ON THE REA SONING GIVEN BY THE TRIBUNAL IN CASE OF SHRI UMMAID MAL SINGHVI, THE GROUNDS OF THE ASSE SSEE ARE ALLOWED. 8. THE DEPARTMENT HAS ALSO TAKEN GROUND NO. 2 AGAIN ST HOLDING THAT PROVISIONS OF SECTION 50C ARE NOT APPLICABLE AND DIRECTION OF LD. CIT (A) TO GET THE VALUATION FROM THE VALUER. 9. SINCE THESE GROUNDS HAVE ALREADY BEEN DISPOSED O FF WHILE DISPOSING THE GROUND IN CASE OF SHRI UMMAID MAL SINGHVI (SUPRA), THEREFORE, ON THE SAME REASONING THESE GROUNDS OF THE DEPARTMENT FAIL. 10. GROUND NOS. 4 & 5 IN APPEAL OF THE ASSESSEE ARE AGAINST CONFIRMING THE ADDITION OF RS. 20,00,000/- AS UNEXPLAINED INVESTMENT UNDER SEC TION 69. 11. THE AO MADE ADDITION OF RS. 20,00,000/- IN RESP ECT OF UNSECURED LOANS APPEARING IN THE BOOKS OF M/S. HARSHITA FINANCE, PROP. SMT. SHAR MILA SINGHVI. THE A.O. IN PARA 4 AT PAGE 5 AND 6 OF THE ASSESSMENT ORDER OBSERVED THAT DURIN G THE COURSE OF SEARCH AT THE RESIDENCE OF THE ASSESSEE STATEMENT OF SHRI MANOJ SINGHVI WAS RE CORDED WHEREIN HE HAD ADMITTED THAT THE AMOUNT OF RS. 20 LACS ON ACCOUNT OF UNEXPLAINED UNS ECURED LOANS WAS OBTAINED BY HIM, WHICH HAS NOT SHOWN IN THE RETURN OF INCOME. THE A. O. FURTHER OBSERVED THAT SINCE THE 5 AMOUNT SURRENDERED AT THE TIME OF SEARCH WAS NOT IN CLUDED IN THE RETURN OF INCOME, THEREFORE THE SAME IS LIABLE TO BE ASSESSED IN THE HANDS OF T HE ASSESSEE AND FOR THIS REASON HE MADE THE ADDITION. 11.1. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT A DE TAILED EXPLANATION SHOWING THE ERRONEOUS NATURE OF ADDITION WAS DISCUSSED BY HIM IN DETAIL I N HIS WRITTEN SUBMISSION AT PAGE NO 42 TO 44. HE FURTHER SUBMITTED THAT THE OBSERVATION OF TH E A.O. THAT SURRENDER WAS MADE AT THE TIME OF SEARCH IS INCORRECT AS NO SUCH SURRENDER WAS MAD E IN THE STATEMENT RECORDED U/S 132(4) AT THE TIME OF SEARCH. THE A.R. FURTHER SUBMITTED THAT ON THE SAME DAY SURVEY U/S 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF M/S HARSHIT A FINANCE PROP. SMT SHARMILA SINGHVI. DURING THE COURSE OF SURVEY AT BUSINESS PLACE WHEN THE AUTHORISED OFFICER COULD NOT FOUND ANY INCRIMINATING DOCUMENTS OR PAPERS OR ANY TRANSACTI ON THEN HE EXERCISED COERCION AND PRESSURE TACTICS AND OBTAINED A SURRENDER IN THE MA NNER HE LIKED IN THE STATEMENT RECORDED U/S 131 TO SHOW HIS SURVEY SUCCESSFUL. 11.2. THE A.R. FURTHER SUBMITTED THAT THE SURRENDER OBTAINED AT THE TIME OF SURVEY AT THE BUSINESS PREMISES OF HIS WIFE WHERE NO INCRIMINATIN G DOCUMENTS WERE FOUND IS IN ITSELF INVALID AND INADMISSIBLE AGAINST THE ASSESSEE BEING CONTRARY TO THE EXPRESS GUIDELINES ISSUED BY THE CBDT AND THE AUTHORISED OFFICER CONDUCTING S URVEY BEING SUBORDINATED TO THE CBDT IS BOUND TO FOLLOW THE SAME INSTRUCTION UNDER THE P ROVISIONS OF SECTION 119 OF THE ACT. 11.3. THE A.R. FURTHER SUBMITTED THAT THE A.O. ERRE D IN MAKING THE ADDITION SIMPLY ON THE PRESUMPTION THAT THE SURRENDER WAS MADE AT THE TIME OF SEARCH WHICH IS IN FACT AN INCORRECT STATEMENT OF FACT. THE A.R. FURTHER SUBMITTED THAT THE A.O. BEING QUASI JUDICIAL AUTHORITY WAS SUPPOSED TO PASS AN ASSESSMENT ORDER ON THE BASIS O F MATERIAL ON RECORD. THERE IS NO MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE HAD OBTAINED A NY LOAN IN CASH FOR WHICH THE A.O. MADE 6 THE ADDITION U/S 68 FOR RS. 20,00,000/-. THE A.R. F URTHER ELABORATE THAT SECTION 68 APPLIES WHEN THERE IS A CREDIT IN THE BOOKS OF ACCOUNT IF A NY MAINTAINED BY THE ASSESSEE. IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE THERE IS NO CREDIT IN A NY NAME BY WAY OF CASH AND AS SUCH PROVISIONS OF SECTION 68 ARE NOT APPLICABLE. EVEN I N THE CASE OF THE WIFE OF THE ASSESSEE WHO IS THE PROPRIETOR OF M/S HARSHITA FINANCE NO CREDIT WA S FOUND IN CASH AND ALL THE CREDIT ENTRIES FOUND IN HER BOOKS WAS ACCEPTED BY THE AO AS GENUIN E AND AS SUCH THERE IS NO QUESTION TO MAKE ANY ADDITION ON THE BASIS OF SURRENDER. 11.4. THE AR OF THE ASSESSEE FURTHER RELIED ON THE VARIOUS DECISIONS TO SHOW THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURRENDER OBTAINED DURI NG THE COURSE OF SURVEY. 11.5. THE AR OF THE ASSESSEE FURTHER SUBMITTED THAT CASE LAWS RELIED BY THE AO IN HIS ASSESSMENT ORDER WHILE MAKING THE ADDITION HAS NO A PPLICATION ON THE FACTS OF THE CASE AND HE HAS GIVEN DETAILED REASONS FOR THE SAME IN PARA VI PAGE 36 TO 39 OF HIS WRITTEN SUBMISSION. THE AR FURTHER SUBMITTED THAT EVIDENTIARY VALUE OF THE STATEMENT RECORDED DURING THE COURSE OF SURVEY IS TO BE JUDGED IN LIGHT OF THE DECISION REPORTED IN 263 ITR 101 (KER) FULL BENCH, 300 ITR 157, 97 ITD 361, 22 SOT 429 (MUM), 23 DTR 1 71 AND 28 SOT 215 THE COPIES OF WHICH ARE PLACED AT PAPER BOOK PAGE NO. 205 TO 214 AND SUBMITTED THAT IF THE STATEMENT OF THE ASSESSEE OBTAINED DURING THE COURSE OF SURVEY IS JU DGED IN LIGHT OF RATIO LAID DOWN IN THESE CASES NO ADDITION IS CALLED FOR IN THE HANDS OF THE ASSESSEE AND AS SUCH PRAYS FOR THE DELETION OF THE SAME. 12. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE ORDER OF THE AO, THE LD. CIT (A) WAS NOT SATISFIED WITH THE EXPLANATION OF THE A SSESSEE. ACCORDINGLY HE CONFIRMED THE ADDITION. FINDINGS OF LD. CIT (A) HAVE BEEN RECORD ED IN PARA 7.2. TO 7.2.3 AT PAGES 18 TO 21 AS UNDER :- 7 7.2. I HAVE CONSIDERED THE SUBMISSION OF THE LD. A .R AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT STATEMENT OF SH . MANOJ SINGHVI ON THE ISSUE OF UNSECURED LOAN WAS NOT RECORDED U/S 132(4) AT TH E RESIDENCE, HOWEVER, THE SAME WAS RECORDED ON OATH DURING THE COURSE OF SURV EY CARRIED OUT AT THE BUSINESS PREMISES OF THE APPELLANT AND HIS WIFE. ME RELY BECAUSE THE STATEMENT HAS BEEN RECORDED DURING THE COURSE OF SURVEY AND N OT DURING THE COURSE OF SEARCH, THE STATEMENT WILL NOT LOOSE ITS EVIDENTIAR Y VALUE. NOW COMING TO THE OTHER ARGUMENT OF THE APPELLANT THAT RETRACTION LET TER DATED 15.9.09 WAS FILED, IT IS TO MENTION THAT SEARCH WAS CONDUCTED AS EARLY AS ON 25.3.08, WHEN THE STATEMENT OF THE APPELLANT WAS RECORDED AND HENCE T HE RETRACTION LETTER SO FILED ON 15.9.09 I.E ABOUT ONE AND HALF YEAR AFTERWARD, CANNOT BE TAKEN ON THE FACE VALUE AND DESERVES TO BE REJECTED. THE CLAIM O F THE APPELLANT THAT THE COPY OF THE STATEMENT WAS GIVEN LATE AND ACCORDINGLY RET RACTION WAS FILED LATE IS ALSO NOT FOUND FULLY CORRECT IN VIEW OF THE FACT THE COP IES OF THE STATEMENT HAVE BEEN GIVEN ON 6.1.2009, WHEREAS THE RETRACTION WAS NOT FILED AT THE EARLIEST BUT WAS FILED AS MUCH AS 8 MONTHS AFTERWARDS ON 14.9.2009. THE HONBLE COURTS HAVE HELD THAT IF THE STATEMENT HAS BEEN REC ORDED UNDER DURESS OR COERCION OR MISTAKEN BELIEF, THEN RETRACTION CAN BE MADE BUT IMMEDIATELY AND AT THE FIRST AVAILABLE OPPORTUNITY BY FILING AFFIDA VIT INTER-ALIA, MENTIONING THE REASONS AND CIRCUMSTANCES AS TO HOW AND WHY STATEME NT GIVEN ON OATH ARE NOT CORRECT. MOREOVER HEAVY BURDEN LIES ON THE PERSON W HO RETRACTS THE STATEMENT. THIS BURDEN HAS TO BE DISCHARGED BY FILING DIRECT A ND SPECIFIC EVIDENCES TO REBUT WHAT HAS BEEN AVERRED IN THE STATEMENT. IN TH E INSTANT CASE, THE FIRST CONDITION OF IMMEDIATELY FILING OF THE AFFIDAVIT RE TRACTING THE STATEMENT IS NOT SATISFIED, AS SEEN ABOVE. THE SECOND CONDITION IS A LSO NOT SATISFIED, IF WE SEE THE OVERALL FACTS. IT IS SEEN THAT THE APPELLANT IN HIS STATEMENT IN REPLY TO QUESTION NO. 10 ABOUT THE UNSECURED LOAN OF RS. 1, 49,97,000/- APPEARING IN THE BALANCE SHEET OF PROPRIETARY FIRM OF HIS WIFE NAMEL Y M/S HARSHITA FINANCE, HAS STATED AS BELOW:- 8 THIS LOAN HAS BEEN TAKEN FROM 40-41 PARTIES. OUT O F WHICH I WILL NOT ABLE TO PROVIDE ADDRESSES OF ALL THESE PARTIES BECA USE SOME OF THE LOANS ARE ADJUSTMENT ENTRIES I.E. THOUGH THE NAME OF THE PARTIES ARE SHOWN (BEING THE CASH CREDITOR) BUT MY MONEY HAS BEEN INV ESTED. OUT OF THE TOTAL LOAN, ABOUT RS. 20 LAKH LOAN IS BY WAY OF ADJ USTMENT ENTRIES, IN WHOSE CASES I WILL NOT BE ABLE TO GIVE THE ADDRESSE S AND GET THE VERIFICATION DONE. ACCORDINGLY, I SURRENDER RS. 20 LAKHS CONSIDERING IT TO BE MY UNDISCLOSED INCOME. 7.2.1 FROM PERUSAL OF THE ANSWER GIVEN BY THE APPE LLANT, IT IS QUITE EVIDENT THAT SAME IS QUITE UNEQUIVOCAL AND AFTER UNDERSTAND ING ALL THE FACTS. ACCORDINGLY, IT CANNOT BE SAID THAT THERE WAS ANY M ISCONCEPTION OF THE FACTS OR LAW. THE CLAIM OF THE APPELLANT MADE ABOUT ONE AND HALF YEAR AFTERWARD, RETRACTING THE STATEMENT SHOULD HAVE BEEN SUPPORTED BY THE CONCRETE EVIDENCE ABOUT THESE UNSECURED LOANS BEING GENUINE BY FILING THE COMPLETE ADDRESSES AS WELL AS CONFIRMATIONS FROM THE PARTIES. HOWEVER, IT IS NOTICED BY THE UNDERSIGNED THAT NO SUCH EXERCISE WAS DONE BY THE A PPELLANT FOR CONTENDED REBUTTAL OF THE STATEMENT. ON FURTHER GOING THROUGH THE CASE OF THE WIFE OF THE APPELLANT NAMELY SMT. SHAMILA SINGHVI, IT WAS NOTIC ED BY THE UNDERSIGNED ON PERUSAL OF ASSESSMENT ORDER THAT THE BOOKS OF ACC OUNTS AND OTHER DOCUMENTS WERE NOT PRODUCED BEFORE A.O AND A.O. HAS TO PASS T HE ORDER U/S 144 FOR A.Y 2007-08 AND A.Y 2008-09 ACCORDINGLY, THERE IS NO QU ESTION OF FURNISHING OF THE CONFIRMATIONS OF ALL THESE UNSECURED LOANS IN T HE CASE OF SMT. SHARMILA SINGHVI ALSO. REGARDING ARGUMENT OF THE A.R. THAT THE A.O. HAS NOT GIVEN ANY ADVERSE FINDING AND NOT MADE ADDITION IN THE CASE O F SMT. SHARMILA SINGHVI, IT IS NOTICED BY THE UNDERSIGNED THAT A.O. HAS NOT MAD E ADDITION IN THE CASE OF SMT. SHARMILA SINGHVI CONSIDERING THAT THE MONEY IN VESTED BY WAY OF ADJUSTMENT ENTRIES OF THE LOAN, HAS BEEN SURRENDERE D BY THE APPELLANT AND SAME HAS BEEN ADDED IN THE CASE OF APPELLANT. 7.2.2 THE OTHER ARGUMENT TAKEN ON LEGAL ISSUE I S THAT A.O. HAS MADE ADDITION U/S 68, WHICH IS TOTALLY INCORRECT AND UNLAWFUL, AS THERE ARE NO SUCH UNSECURED 9 LOANS IN THE BOOKS OF APPELLANT. ON CONSIDERING THI S ARGUMENT AND VARIOUS FACTS AS ABOVE, THE UNDERSIGNED GAVE OPPORTUNITY TO THE A PPELLANT VIDE ORDER SHEET DATED 11.2.11 AS TO WHY SHOULD NOT THE AMOUNT OF RS . 20 LAKHS BE CONSIDERED AS UNACCOUNTED INVESTMENT OF THE MONEY BY THE APPEL LANT BY WAY OF ADJUSTMENT ENTRIES OF THE LOAN (I.E BOGUS/NAME LEND ER CREDITS), INSTEAD OF SAME BEING ADDED U/S 68 BY A.O. AND THE APPELLANT WAS RE QUESTED TO FURNISH EXPLANATION, IF ANY ON THIS ISSUE. THE ARGUMENT OF THE APPELLANT HAS ALREADY BEEN SUMMARIZED ABOVE. THE CLAIM OF THE APPELLANT T HAT ALL THE CONFIRMATIONS OF THE CREDITORS APPEARING IN THE APPELLANTS BOOKS OF ACCOUNTS WERE FILED AND A.O. DID NOT DOUBT THE GENUINENESS MAY BE CORRECT. HOWEVER, IT IS EVIDENT THAT THE ADDITION IS MADE NOT IN RESPECT OF THE CRE DITORS APPEARING IN THE BOOKS OF APPELLANT BUT HAS BEEN MADE IN RESPECT OF AMOUNT INVESTED BY THE APPELLANT BY WAY OF ADJUSTMENT LOAN ENTRIES IN THE BOOKS OF M /S HARSHITA FINANCE, PROP. SMT. SHARMILA SINGHVI. AS ALREADY MENTIONED, EVEN T HE BOOKS OF ACCOUNTS OF SMT. SHARMILA SINGHVI AS WELL AS OTHER DETAILS WERE NOT PRODUCED/FURNISHED IN THE ASSESSMENT PROCEEDINGS IN A.Y 2007-08 AND A.Y 2 008-09, THEN THERE IS NO QUESTION OF FILING CONFIRMATION OF THE CREDITORS IN HER CASE. HENCE, THE ARGUMENT OF FILING CONFIRMATION IN THE CASE OF SMT. SHARMILA SINGHVI IS REJECTED. 7.2.3 CONSIDERING THESE FACTS AND CIRCUMSTANCES, T HE ADDITION OF RS. 20,00,000/-IS HELD TO BE MADE IN THE CASE OF APPELL ANT U/S 69 AS UNACCOUNTED INVESTMENT BY WAY OF ADJUSTMENT LOAN ENTRIES SHOWN IN THE BOOKS OF PROPRIETARY CONCERN OF WIFE NAMELY M/S HARSHITA FIN ANCE. 13. AFTER CONSIDERING THE ORDERS OF THE AO, LD. CIT (A) AND SUBMISSIONS OF THE ASSESSEE, WE FIND THAT THE ADDITION SUSTAINED BY LD . CIT (A) IS NOT JUSTIFIED. THE LD. CIT (A) IN HIS ORDER HIMSELF HAS ADMITTED THAT STATEMEN T WAS NOT RECORDED UNDER SECTION 132(4) BUT WAS RECORDED DURING THE COURSE OF SURVEY CARRIED OUT AT THE BUSINESS PREMISES 10 OF THE ASSESSEE AND HIS WIFE. THERE IS NO CASH LOA N IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND, THEREFORE, IN OUR CONSIDERED VIEW NO ADDITION COULD HAVE BEEN MADE UNDER SECTION 68. THE ADDITION HAS BEEN MADE IN RESPECT OF LOAN TAKEN IN CASE OF WIFE OF THE ASSESSEE. THERE WAS TOTAL LOAN OF ABOUT RS. 1.49 CRORES OR SO IN CASE OF ASSESSEES WIFE AND IT WAS SUBMITTED THAT THIS LOAN WAS TAKEN FROM 40-41 PARTI ES. IN THE STATEMENT RECORDED UNDER SECTION 131 IT WAS STATED THAT AT THE TIME OF SURVE Y THE ASSESSEE WAS NOT ABLE TO FURNISH ALL THE DETAILS OF CREDITORS, THEREFORE, IT WAS SUBMITT ED THAT A SUM OF RS. 20,00,000/- MAY BE TREATED AS UNEXPLAINED. 13.1. THIS IS UNDISPUTED FACT THAT LOANS WERE SHOWN IN CASE OF ASSESSEES WIFE AND NOT IN CASE OF ASSESSEE. THE ASSESSEES WIFE IS ALSO ASSE SSED TO TAX REGULARLY. FOR ASSESSMENT YEAR 2008-09 ASSESSMENT WAS ALSO COMPLETED UNDER SE CTION 144 READ WITH SECTION 153B VIDE ORDER DATED 18.12.2009, COPY OF THE ORDER IS P LACED ON RECORD AND NO ADDITION WHATSOEVER HAS BEEN MADE IN THE HANDS OF WIFE OF TH E ASSESSEE. IT MEANS, THE AO IN CASE OF ASSESSEES WIFE WAS SATISFIED WITH THE LOAN TAKE N BY THE WIFE OF THE ASSESSEE IN THE PROPRIETORSHIP CONCERN NAMED M/S. HARSHITA FINANCE. THE AO HAS MADE ADDITION IN THE HANDS OF THE ASSESSEE FOR THE REASON THAT UNDER SEC TION 131 THE ASSESSEE HAS ACCEPTED TO SURRENDER A SUM OF RS. 20,00,000/-. THE STATEMENT R ECORDED UNDER SECTION 131 DOES NOT HAVE ANY EVIDENTIARY VALUE IF THERE IS NO CORROBORA TIVE EVIDENCE. IN THE PRESENT CASE THERE IS NO CORROBORATIVE EVIDENCE THAT ANY LOAN IS TAKEN BY THE ASSESSEE OR THEY ARE UNEXPLAINED. WHATEVER THE LOANS WERE TAKEN THEY WER E TAKEN IN CASE OF ASSESSEES WIFE AND THEY HAVE BEEN ACCEPTED IN CASE OF ASSESSEES W IFE WHILE COMPLETING THE ASSESSMENT UNDER SECTION 144 READ WITH SECTION 153B. THEREFOR E, IN OUR CONSIDERED VIEW, NO ADDITION COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. IF ANY ADDITION COULD HAVE MADE, THAT 11 WOULD HAVE MADE IN THE HANDS OF ASSESSEES WIFE AS WIFE IS REGULARLY ASSESSED TO TAX AND LOANS WERE SHOWN IN THE HANDS OF THE WIFE OF THE AS SESSEE AND NOT IN THE HANDS OF THE ASSESSEE. IN VIEW OF THESE FACTS AND CIRCUMSTANCE S, WE DELETE THE ADDITION OF RS. 20,00,000/-. 14. THERE IS ONE MORE GROUND IN THE APPEAL OF THE D EPARTMENT I.E. GROUND NO. 1 WHICH IS AGAINST DELETING THE PROTECTIVE ADDITION OF RS. 30,00,000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE UND ER SECTION 69. 15. THE AO MADE ADDITION OF RS. 30,00,000/- ON PROT ECTIVE BASIS IN RESPECT OF INVESTMENT IN CONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY SITUA TED AT B/26, KAMLA NEHRU NAGAR, JODHPUR BELONGING TO SMT. SHARMILA SINGHVI, WIFE OF THE ASS ESSEE. THE A.O. IN PARA 3 AT PAGE 2 TO 5 OF THE ASSESSMENT ORDER OBSERVED THAT DURING THE COURS E OF SEARCH AT THE RESIDENCE OF THE ASSESSEE STATEMENT OF SHRI MANOJ SINGHVI WERE RECORDED WHERE IN HE HAD ADMITTED THAT THE AMOUNT OF RS. 30 LACS WAS SPENT BY HIM ON THE CONSTRUCTION OF H.NO. B-26, KAMLA NEHRU NAGAR, JODHPUR WHICH BELONGS TO HIS WIFE SMT. SHARMILA SIN GHVI. THE A.O. FURTHER OBSERVED THAT THE AMOUNT OF SURRENDER WAS NOT INCLUDED IN THE RETURN OF INCOME AND THEREFORE HE MADE THE ADDITION OF RS. 30,00,000/- ON THE PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AND SUBSTANTIVE ADDITION OF RS. 30,00,000/- WAS MADE IN THE HANDS OF OWNER OF THE HOUSE SMT. SHARMILA SINGHVI IN DIFFERENT YEAR DURING WHICH THE CONSTRUCTION WAS MADE. THE A.O. REJECTED THE SUBMISSION OF THE ASSESSEE THAT NO ADD ITION CAN BE MADE IN HIS HANDS ON THE GROUND THAT SURRENDER WAS NOT VOLUNTARY BY PLACING RELIANCE ON THE FOLLOWING DECISIONS: 12 A. RAMESHCHANDRA AND CO. CIT [1987] 168 ITR 375 (BOM) B. RAKESH MAHAJAN VS. CIT 214 CTR 218 (P&H) C. V. KUNHIKANNAN VS. CIT 219 ITR 235 TO 243 (KER) D. SURJEET SINGH CHAHBRA VS. UNION OF INDIA, SLP (C) N O. 14028 OF 1996. 16. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT SMT. S HARMILA SINGHVI W/O ASSESSEE IS THE OWNER OF THE PROPERTY WHATEVER INVESTMENT WAS MADE BY HER ARE RECORDED IN HER BOOKS OF ACCOUNTS IN THE RESPECTIVE YEARS AND DISCLOSED IN H ER RETURN OF INCOME FILED PRIOR TO SEARCH. SHE ALSO OBTAINED A LOAN OF RS. 23,50,000/- FROM UC O BANK IN HER OWN NAME. IT WAS ALSO SUBMITTED THAT WHEN THE A.O. MADE SUBSTANTIVE ADDIT ION IN THE HANDS OF SMT. SHARMILA SINGHVI THE OWNER OF THE HOUSE THEN THERE WAS NO NE ED TO MAKE PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE, PARTICULARLY WHEN THE OWNER OF THE HOUSE IS SHOWING INVESTMENT MADE IN EACH YEAR IN HER HANDS. IT WAS FURTHER SUBMITTED THAT NO INVESTMENT WAS MADE BY THE ASSESSEE AND THE SURVEY PARTY OBTAINED SURRENDER FO RCEFULLY, WHICH HE HAD RETRACTED SUBSEQUENTLY SOON AFTER RECEIPT OF THE COPY OF HIS STATEMENT. FURTHER IT WAS SUBMITTED THAT THE SURRENDER WAS OBTAINED AT THE BUSINESS PREMISES OF HIS WIFE WHERE THE SURVEY WAS AUTHORIZED AND NO SEARCH WARRANT WAS ISSUED IN RESPECT OF BUSI NESS PREMISES AND THUS THE FINDING OF THE A.O. THAT THE SURRENDER WAS MADE DURING THE COURSE OF SEARCH IS AN INCORRECT STATEMENT OF FACT. THE SUBMISSION OF THE AR IS THAT THERE WAS NO SATIS FACTION IN HIS CASE AS REQUIRED U/S 132 AND THE SOLE REASON FOR CARRYING THE SEARCH AT HIS HOUS E IS THAT THE ASSESSEE IS ONE OF SON OF SHRI UMMAID MAL SINGHVI. THE SUBMISSION OF THE AR IS THA T WHEN THE SEARCH ITSELF IS INVALID AS THERE BEING NO SATISFACTION AS REQUIRED U/S 132 THE ENTIRE PROCEEDINGS AGAINST HIM ARE INVALID AND VOID AB INITIO AND AS SUCH NO STATEMENT EITHER OBTAINED U/S 132 OR 133A CAN BE USED AGAINST HIM. THE AR FURTHER SUBMITS THAT CASES REFE RRED BY THE A.O. ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE FOR WHICH DETAILED SUBMISSION IS MADE IN THE WRITTEN SUBMISSION. 13 16.1. THE A.R. FURTHER SUBMITTED THAT THE DEPARTMEN T EXERCISED POWER U/S 153C IN THE CASE OF THE OWNER OF THE HOUSE SMT. SHARMILA SINGHVI FOR THE ASSESSMENT YEAR FALLING IN THE BLOCK PERIOD. IT WAS FURTHER SUBMITTED THAT DURING THE AS SESSMENT PROCEEDINGS OF THE OWNER OF THE HOUSE, THE A.O. EXERCISED HIS POWER U/S 142A(1) AND REFERRED THE MATTER TO THE VALUATION OFFICER TO DETERMINE THE INVESTMENT IN THE CONSTRUC TION OF THE HOUSE. THE VALUATION OFFICER BY HIS REPORT DATED 10/12/2009 DETERMINED THE YEAR WISE INVESTMENT FROM THE A.Y. 2006-07 TO 2009-10 AT RS. 91,42,582/- AS AGAINST DISCLOSED BY THE OWNER AT RS. 86,58,974/-. THE DIFFERENCE BETWEEN THE INVESTMENT DISCLOSED IN THE CONSTRUCTION OF HOUSE BY THE OWNER OF THE HOUSE AND ESTIMATED BY THE DVO WAS ONLY OF RS. 4,83 ,608/- WHICH IS ONLY 5.29% AND THAT TO IS DUE TO ESTIMATION OF COST BY APPLYING CPWD RATES IN PLACE OF PWD RATE. FURTHER THE OWNER OF THE HOUSE MAINTAINED COMPLETE BOOKS OF ACCOUNTS AND VOUCHERS IN RESPECT OF COST OF CONSTRUCTION OF HOUSE WHICH WAS PRODUCED BEFORE THE VALUATION OFFICER. THE VALUATION OFFICER EXAMINED THE BOOKS & VOUCHERS AND COULD NOT FOUND ANY FAULT IN RESPECT OF SUCH BOOKS OR VOUCHERS OR CLAIMED ANY ITEM OF EXPENDITUR E WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. FURTHER THE DIFFERENCE BETWEEN THE COST O F CONSTRUCTION DISCLOSED BY THE OWNER OF THE HOUSE AND ESTIMATED BY THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT IS NEGLIGIBLE, NO ADVERSE INFERENCE CAN BE DRAWN ABOUT THE UNDISCL OSED INVESTMENT IN THE CONSTRUCTION OF HOUSE AND THUS VERY FOUNDATION FOR MAKING THE ADDIT ION IS ERRONEOUS. 16.2. `THE A.R. FURTHER SUBMITTED THAT WHEN THE ADD ITIONS IN RESPECT OF COST OF CONSTRUCTION HAS BEEN MADE IN THE RESPECTIVE YEARS BY THE A.O. I N THE CASE OF SMT. SHARMILA SINGHVI THE OWNER OF THE HOUSE AND THE PART OF THE ADDITION HAV ING BEEN CONFIRMED BY THE LD. CIT(A) IN APPEAL NO 241/09-10 FOR THE ASSESSMENT YEAR 2008-09 IN THE CASE OF THE OWNER OF THE HOUSE 14 SMT. SHARMILA SINGHVI AND AS SUCH THE PROTECTIVE AD DITION HAS NO LEGS TO STAND AND PRAYED FOR ITS DELETION. 16.3. THE A.R. OF THE ASSESSEE FURTHER SUBMITTED TH AT SURRENDER OBTAINED DURING THE SURVEY CANNOT BE MADE A BASIS FOR THE ADDITION PARTICULARL Y WHEN THE SAME WAS RETRACTED AND PROVED TO BE ERRONEOUS IN LIGHT OF THE VALUATION OFFICERS REPORT. ON THIS ISSUE THE A.R. OF THE ASSESSEE DRAWN THE ATTENTION TOWARDS THE INSTRUCTION OF THE BOARD AND THE JUDICIAL DECISIONS ON THE ISSUE REFERRED AT PAGE NO 29 TO 41 OF THE WRITTEN S UBMISSION PLACED ON RECORD. IT WAS FURTHER SUBMITTED THAT SECTION 68, 69, 69A, 69B, 69C OR 69D ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND AS SUCH THE A.O. ERRED IN MAKING THE P ROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE AND PRAYS FOR ITS DELETION. 17. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) DELETED THIS ADDITION BY GIVING HIS FINDING IN PARA 6.2. AT PAGE 16 AS UNDER :- 6.2. I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACT S ARE THAT THE RESIDENTIAL HOUSE PROPERTY SITUATED AT B-26, KAMLA NEHRU NAGAR, JODHPUR IS OWNED BY SMT. SHARMILA SINGHVI, WIFE OF APPELLANT. THE INVESTMENT IN THE CONSTRUCTION OF HOUSE HAS BEEN SH OWN BY HER IN THE REGULAR RETURN FILED WELL BEFORE THE SEARCH. FURTH ER THE UNACCOUNTED INVESTMENT IN THE CONSTRUCTION OF HOUSE HAS ALSO BE EN DECLARED IN THE HANDS OF SMT. SHARMILA SINGHVI. THE A.O. HAS ALSO M ADE FURTHER ADDITION IN THE HANDS OF SMT. SHARMILA SINGHVI IN A .Y 2007-08 AND A.Y 2008-09 ON SUBSTANTIVE BASIS. THE UNDERSIGNED, WHILE DECIDING THE APPEAL OF A.Y 2007-08 IN THE CASE OF SMT. SHARMILA SINGHVI, HAS NOT DISAGREED WITH THE VIEW OF A.O. FOR ADDITIONS TO BE CONSIDERED IN THE HANDS OF SMT. SHARMILA SINGHVI ON SUBSTANTIVE BASIS . IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE ADDITION ON ACCOUNT OF INVESTMENT IN CONSTRUCTION OF HOUSE SO MADE A.O. ON PROTECTIVE BA SIS IN THE HANDS OF 15 APPELLANT IS NOT JUSTIFIED AND IS HEREBY DELETED. A S THE ADDITION HAS BEEN DELETED ON THE ABOVE ARGUMENT AND FACTS AND TH E LEGAL POSITION, THE MERITS OF THE OTHER ARGUMENTS SO TAKEN BY THE A .R. IS NOT BEING COMMENTED UPON, EITHER WAY. 18. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) ON WHICH RELIANCE HAS BEEN PLACED BY RESPECTIVE PARTIES, WE FIND NO INFIR MITY IN THE FINDING OF LD. CIT (A). THE LD. CIT (A) HAS CATEGORICALLY HELD THAT SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF SMT. SHARMILA SINGHVI, WIFE OF THE ASSESSEE AND THE SAME HAS BEEN CONFIRMED ALSO. THEREFORE, THERE IS NO BASIS IN MAKING THE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. THIS FINDING OF LD. CIT (A) REMAINED UNC ONTROVERTED, THEREFORE, THERE IS NO REASON TO INTERFERE WITH THIS FINDING. ACCORDINGLY, WE CONFIRM THE FINDING OF LD. CIT (A). 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART AND APPEAL OF THE DEPARTMENT IS DISMISSED. 20. 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 MANOJ SINGHVI, JODHPUR. THE ACIT CENTRAL CIRCLE-2, JODHPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 160(2)/JODH/2011) BY ORDER, AR ITAT JODHPUR. 16