ACIT Cent. Cir.-3, Nashik V. M/s. Rushiraj Builders & Developers, Nashik

ITA 1802/PUN/2005

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59997 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-12-2011
• Assessment Year: misc
• Appeal Filed On: 06-12-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHETAN KARIA
• Keywords: Document seized; Block assessment; Documents seized
• Section: 40A(3); 205

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 1802/PN/2005 (BLOCK PERIOD FROM A.Y. 1997-98 TO 2003-04) ASSTT. COMMISSIONER OF INCOME TAX ... APPELLANT CENTRAL CIRCLE-3, NASHIK V. M/S RUSHIRAJ BUILDERS & DEVELOPERS RESPONDENT 1, SIDDHI PART, NEW PANDIT COLONY, OLD CORPORATION ROAD, NASHIK PAN :NOT AVAILABLE APPELLANT BY : SHRI CHETAN KARIA RESPONDENT BY : SHRI HARESHWAR SHARMA HEARD ON :14/12/11 PRONOUNCED ON : 13 /02/12 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS : 1) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (APPEALS) ERRED IN DIRECTING TO ALLOW A DEDUCTION OF RS.26,09,350/-, STATED TO BE CASH PAYMENT MADE TO S HRI NARENDRA THAKKAR IN RESPECT OF PREMIUM TOWARDS PLOT NO. 33 FOR_PRATIKSHA BUILDING, AGAINST THE ON MONEY REC EIPTS DECLARED ON PRATIKSHA PROJECT ON PLOT NO. 33. 2) THAT, ON THE FACTS AND IN THE CIRCUMSTANCE OF THE C ASE, THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE EXI STENCE OF CASH PAYMENT OF RS. 26,09,350/- IN RESPECT OF PRATIKSHA PROJECT ON PLOT NO 33 IS EVIDENT FROM THE SEIZED DOCUMENT. 3) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN DELETING THE DISALL OWANCE OF RS.24,15,160/- MADE U/S. 40A(3) OF THE I.T. ACT 196 1 BY THE ASSESSING OFFICER. 4) THAT, THE LEARNED CIT (APPEALS) ERRED IN LAW IN HOL DING THAT DISALLOWANCE CANNOT BE CONSTITUTED AS UNDISCLOSED I NCOME WITHIN THE DEFINITION OF SEC. 158B OF THE I.T. ACT. ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 2 5) THAT, THE LEARNED CIT(APPEALS) ERRED IN LAW IN HOLD ING THAT DISALLOWANCE OF U/S. 40A(3) IN BLOCK ASSESSMENT WA S OUTSIDE THE AMBIT OF CHAPTER XIV B OF THE I.T. ACT IGNORING P ROVISION OF SEC. 158BH OF CHAPTER XIV-B 6) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDITI ON OF RS.3,99,763/- MADE BY THE ASSESSING OFFICER IN SALE OF FLAT NO. 10 OF PRATISHA APARTMENT AND FLAT NO. 10 OF PRAN AV APARTMENT. . 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVA NCED BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELI ED UPON. GROUND NOS. 1 & 2 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE FIRM E NGAGED IN THE BUSINESS OF BUILDERS WAS SUBJECTED TO SEARCH OPER ATION U/S. 132 OF THE ACT ON 25 TH MARCH 2003 IN RESIDENTIAL AS WELL AS BUSINESS PREM ISES OF ITS PARTNERS MR. YOGESHCHANDRA PRAVINCHANDRA TRIVEDI AN D SHRI. JAIRAJ MANHARSINGH JHALA. CERTAIN DOCUMENTS WERE FOUND AN D SEIZED. IN RESPONSE TO NOTICE ISSUED U/S. 158BC, THE ASSESSEE FILED ITS BLOCK RETURN OF INCOME DECLARING UNDISCLOSED INCOME OF RS. 50 L AKH. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED FROM THE SE IZED MATERIAL THAT ASSESSEE HAD CONSTRUCTED THE BUILDING PRATIKSHA AP ARTMENT ON PLOT NO. 33 OF SURVEY NO. 705/2/1 UNDER THE DEVELOPMENT AGRE EMENT WITH SHRI. PARAJI ABAJI KARANJKAR AND RAJESH HARI NAWANI FOR T HE CONSIDERATION OF RS.5,84,255/-. AFTER THE CONSTRUCTION OF THE BUILD ING PRATIKSHA APARTMENT, THE CONVEYANCE DEED WAS MADE BY SHRI CH ANDULAL KHEMANI AS A POWER OF ATTORNEY HOLDER OF SHRI. PARAJI ABAJI KARANJKAR AND SHRI. RAJESH HARI NAWANI IN FAVOUR OF THE SOCIETY OF T HE FLAT OWNERS OF PRATIKSHA APARTMENT. THE TOTAL PIECE OF LAND BEARI NG SURVEY NO. 705/2/1 WAS OWNED BY MAHARASHTRA PRABHODHANI SEVA MANDAL A ND MAHARASHTRA ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 3 PRABHODHANI SEVA MANDAL HAD GIVEN POWER OF ATTORNEY DATED 10.6.1994 IN RESPECT OF ENTIRE LAND IN FAVOUR OF SHRI. JITEN DRA M. THAKKER. THE PLOT NO. 43 OF THE SAID LAND WAS SOLD BY SHRI. JITENDRA M. THAKKER AS A POWER OF ATTORNEY OF MAHARASHTRA SEVA MANDAL AS PER SAL E DEED DATED 8.7.1994 TO SHRI PARAJI ABAJI KARANJKAR AND RAJESH HARI NAWANI. THUS AS ON 19.7.1997, THE DATE ON WHICH, THE ASSESSEE FIRM HAD TAKEN THE PLOT NO. 33 FOR DEVELOPMENT AND CONSTRUCTION OF PRATIKS HAH APARTMENT BUILDING, THE OWNERS OF THE PLOT WERE SHRI PARAJI ABAJI KARANJKAR AND RAJESH HARI NAWANI. THESE PERSONS WERE ABSOLUTE O WNERS OF PLOT NO. 33 AS ON 19.7.1997 AND SHRI JITENDRA M. THAKKER WAS NO T HAVING ANY RIGHT OR TITLE OR INTEREST IN THE PLOT NO. 33. THE ASSESSEE FIRM HAD ALSO TAKEN UP OTHER PLOTS OF LAND FROM SURVEY NO. 705/2/1 FOR DEV ELOPMENT AND CONSTRUCTION OF BUILDINGS FROM SHRI JITENDRA M. TH AKKAR AS A POWER OF ATTORNEY HOLDER OF MAHARASHTRA PRABHODHAN SEVA MANA L. THE DEVELOPMENT AGREEMENTS WITH THE ASSESSEE FIRM IN R ESPECT OF SUCH OTHER PLOTS OF SURVEY NO. 705/2/1 WERE SIGNED BY SHRI JIT ENDRA M. THAKKAR AND THE CONVEYANCE DEED IN RESPECT OF THE SAID OTHER PL OTS IN FAVOUR OF THE SOCIETIES OF THE BUILDINGS CONSTRUCTED THEREON BY T HE ASSESSEE FIRM WERE ALSO SIGNED BY SHRI. JITENDRA M. THAKKAR AS A POWER OF ATTORNEY HOLDER. BUT THE DEVELOPMENT AGREEMENT 10-07-1997 AS WELL A S THE CONVEYANCE DEED DT. 10-11-1998 IN RESPECT OF PLOT NO. 33 WERE NOT SIGNED BY SHRI JITENDRA M. THAKKAR AS HE HAD NO CONCERN OR RIGHT OR INTEREST IN RESPECT OF PLOT NO. 33. 3.1. THE SEIZED DOCUMENT MARKED NO. A-2 SHOWED THAT THE ASSESSEE FIRM HAD MADE CASH PAYMENTS IN RESPECT OF SEVERAL P LOTS TAKEN UP BY THE ASSESSEE FIRM FOR DEVELOPMENT AND CONSTRUCTION AND SUCH CASH PAYMENTS WERE FOUND TO BE OVER AND ABOVE THE CONSIDERATION RECORDED IN THE AGREEMENT IN RESPECT OF THOSE PLOTS. AGAINST THE E NTRIES FOR SUCH CASH ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 4 PAYMENTS THE NAME OF SHRI NARENDRA M. THAKKAR, THE BROTHER OF SHRI JITENDRA M. THAKKAR, WAS WRITTEN. THE ASSESSEE F IRM HAD FILED AFFIDAVITS DURING THE COURSE OF ASSESSMENT PROCEEDINGS STATING THAT SINCE SHRI JITENDRA M. THAKKAR WAS HLDING THE POWER OF ATTORNE Y IN RESPECT OF THE LAND BEARING SURVEY NO. 705/2/1 OWNED BY MAHARASH TRA PRABHODHAN SEVA MANDAL, THE NEGOTIATIONS FOR THE PLOTS OF THE SAID LAND WERE MADE WITH SHRI NARENDRA M. THAKKAR AND THE CASH PAYMENT S WERE MADE TO HIM AS ON MONEY CONSIDERATION FOR THE SAID PLOTS. HENC E THE ASSESSEE HAD ARGUED THAT SUCH CASH PAYMENTS APPEARING IN THE SE IZED DOCUMENTS SHOULD BE ALLOWED AS EXPENDITURE IN THE COMPUTATION OF UNDISCLOSED INCOME FROM THE UNRECORDED BUSINESS TRANSACTIONS AP PEARING IN THE SEIZED DOCUMENTS. 3.2. FROM THE SEIZED DOCUMENT MARKED ANNEXURE A-2, THE ASSESSEE CLAIMED THAT THE FOLLOWING CASH PAYMENTS AGGREGATIN G TO RS. 26,09,350/- WERE MADE TO SHRI NARENDRA M. THAKKAR, THE BROTHER OF SHRI JITENDRA M. THAKKAR OR TO SHRI BHANUBHAI PATEL, HIS MESSENGER I N RESPECT OF THE PLOT NO. 33 ON WHICH PRATIKSHA APARTMENT IS CONSTRUCTED. SR.NO. DATE AMOUNT CORRESPONDING ENTRIES IN THE SEIZED MATERIAL 1 31-01-1997 5,00,000/- A-2, PAGE NO. 54 2 05-02-1997 4,00,000/- A-2,PAGE NO. 55 3 05-02-1997 1,00,000/- A-2,PAGE NO.55 4 11-02-1997 11,000/- A-2,PAGE NO. 56 5 18-04-1997 2,00,000/- A-2,PAGE NO. 64 6 21-05-1997 1,00,000/- A-2,PAGE NO. 70 7 02-06-1997 2,00,000/- A-2,PAGE NO. 73 8 02-07-1997 2,00,000/- A-2,PAGE NO. 79 9 02-07-1977 1,00,000/- A-2,PAGE NO. 79 ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 5 10 09-07-1997 3,00,000/- A-2,PAGE NO. 81 11 14-07-1997 3,00,000/- A-2,PAGE NO. 82 12 11-08-1997 1,98,350/- A-2, PAGE NO.82 TOTAL 26,09,350/- 3.3. HOWEVER, IN THE BLOCK ASSESSMENT ORDER THE AO HAD NOT ALLOWED THE CASH PAYMENTS OF RS. 26,09,350/- AS EXPENDITURE IN RESPECT OF PRATIKSHA APARTMENT BUILDING AS DISCUSSED IN PARA NO. 10.9.3 OF THE ASSESSMENT ORDER BECAUSE SHRI JITENDRA M. THAKKAR OR SHRI NARE NDRA M. THAKKAR WAS NOT HOLDING ANY RIGHT, TITLE, INTEREST IN RESPECT O F PLOT NO. 33 AS ON 19-07- 1997 WHEN THE SAID PLOT WAS TAKEN UP BY THE ASSESSE E FOR DEVELOPMENT IN CONSTRUCTION. 3.4. HOWEVER THE CIT(A) HAS ALLOWED THE AMOUNT OF R S. 26,09,350/- AS EXPENDITURE HOLDING THAT SHRI JITENDRA M. THAKKAR W AS HAVING THE POWER OF ATTORNEY AND THAT THE ASSESSEE FIRM WAS NEGOTIAT ING WITH SHRI NARENDRA M. THAKKAR IN RESPECT OF THE SAID PLOT. THE CIT(A) ALSO REFERRED TO THE ENTRY ON PAGE NO. 14 OF SEIZED BOOKING REGISTER A- 9 WHERE THE TOTAL COST OF THE SAID PLOT IS MENTIONED AT RS. 31,93,600/- AN D WHERE THE DEDUCTION OF AGREEMENT CONSIDERATION OF RS. 5,84,255/- FROM R S. 31,93,600/- IS SHOWN AND THE BALANCE OF RS. 26,09,345/- WITH A REM ARK CASH PAID IS WRITTEN. THE CIT(A) RELIED UPON THE ARGUMENT MADE BY THE ASSESSEE THAT THE AMOUNT OF RS. 26,09,345/- WAS PAID TO SHRI. PAR AJI ABAJI KARANJKAR THROUGH SHRI. NARENDRA M. THHAKKAR. THIS ARGUMEN T WAS RELIED BY CIT(A) WITHOUT THEY BEING ANY CONFIRMATION OF SHRI PARAJI ABAJI KARANJKAR IN THE SEIZED DOCUMENT OR WITHOUT ANY CONFIRMATION OF SHRI PARAJI ABAJI KARANJKAR IN THE SEIZED DOCUMENT OR WITHOUT ANY CON FIRMATION OF SHRI PARAJI ABAJI KARANJKAR FILED BY THE ASSESSEE. ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 6 4. IN SUPPORT OF THE GROUNDS, THE LD. D.R. HAS BASI CALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER. THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHROTIES BELOW. 5. CONSIDERING THE SUBMISSIONS, WE FOUND THAT THE I SSUE INVOLVED IS AS TO WHETHER THESE SPECIFIC PAYMENTS MADE TOWARDS PLO T NO. 33 AS EVIDENT FROM ANNEXURE A2 SEIZED DURING THE COURSE OF SEARCH SHOULD NOT BE ALLOWED TO BE SET OFF ALL AGAINST ON-MONEY RECEIP T ON SALE OF FLAT IN RESPECT OF PRATIKSHAH PROJECT ON PLOT NO. 33 AS EVIDENT ON PAGE NOS. 79 & 83 OF ANNEXURE A2. THE A.O HAS TAKEN COGNIZANCE OF THE ON-MONEY RECEIPTS AND THE CORRESPONDING ENTRY OF ON-MONEY PAYMENT HAS BEEN IGNORED BY HIM ON THE EXCUSE THAT THE NAME OF THE SELLER DOES NOT APPEAR ON IT. THE CONTENTION OF THE ASSESSEE REMAI NED THAT SHRI. JITENDRA M. THAKKER, THE BROTHER OF SHRI NARENDRA M. THAKKER WAS HOLDING POWER OF ATTORNEY FOR THE ENTIRE LAND ADMEASURING 67,100/ - SQ. MTR AND SURVEY NO. 705/2/1 FROM MAHARASHTRA PRABODHAN SEVA MANDAL . SHRI P.A. KARANJKAR AND SHRI RAJESH HARI NAWANI ON PURCHASES OF LAND ON 8.7.1994 THROUGH SHRI. JITENDRA THAKKER AS GENERAL POWER OF ATTORNEY HOLDER WHICH WAS EXECUTED ON 18/9/1996 BY CONFIRMATION DEED WITH THE SAID PARTY. THUS IT WAS EVIDENT THAT EVEN IF THE PLOT BELONGING TO SHRI PARAJI ABAJI KARANJKAR & OTHERS WAS WITH SHRI JITENDRA M. THAKK ER AS POWER OF ATTORNEY HOLDER VIDE DEED DATED 10/6/1994. SHRI CH ANDULAL KHEMANI AND M/S. PRASAD DEVELOPERS ARE CONFIRMING PARTY TO THE SAID DEED. THUS, IT WAS SHRI JITENDRA M. THAKKER WHO WAS NEGOTIATING F OR DEVELOPMENT OF THE PLOT AND HIS BROTHER NARENDRA M. THAKKER USED TO COLLECT THE PREMIUM FROM THE DEVELOPERS. IT WAS ALSO SUBMITTED THAT ALMOST ALL THE OTHER FLATS WHERE THE ASSESSEE HAS CONSTRUCTED BUIL DINGS WERE ALSO ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 7 NEGOTIATED THROUGH SHRI. JITENDRA M. THAKKER AND PR EMIUM WAS COLLECTED BY HIS BROTHER SHRI. NARENDRA M. THAKKER WHICH WAS ALSO PART OF THE SEIZED PAPER AND DULY ALLOWED BY THE A.O. THESE SU BMISSIONS OF THE ASSESSEE HAS NOT BEEN REBUTTED BEFORE THE TRIBUNAL NOR THE REVENUE HAS REBUTTED THIS MATERIAL FACT BEFORE US THAT A.O DID NOT DOUBT THAT PAYMENT AMOUNTING TO RS. 26,09,350/0 WAS MADE IN RESPECT OF THE PLOT NO. 33 AS EVIDENT IN SEIZED DOCUMENT MARKED AS ANNEXURE A2. WE THUS FULLY CONCUR WITH THE FINDING OF THE LD CIT(A) THAT ONCE THE PAYMENT FOR THE SAID PLOT HAS BEEN ESTABLISHED, THERE IS NO REASON TO DISALLOW THE SAID EXPENDITURE MERELY BECAUSE THE PAYMENTS WERE MADE TO THE PERSON WHO WAS NEGOTIATING IN RESPECT OF ALL THE PLOTS. WE A LSO DO NOT FIND INFIRMITY IN THE OBSERVATION OF THE LD CIT(A) MADE BY HIM ON THE BASIS OF SUBMISSION OF THE ASSESSEE AND DOCUMENTS SEIZED TH AT THE NEXUS OF SUCH CASH PAYMENT MADE TO SHRI NARENDRA M. THAKKER, BRO THER OF SHRI JITENDRA M. THAKKER IN RESPECT OF PLOT NO. 33 STAND S ESTABLISHED. WE THUS FIND THAT WHEN THE NEXUS OF TRANSACTIONS BETWEEN THE ASSESSEE IN ONE HAND AND SHRI JITENDRA M. THAKKER AND HIS BROTHER SHRI. NARENDRA M. THAKKER ON THE OTHER HAND TO ALL THESE PROJECT S INCLUDING PRATIKSHAH PROJECT HAVE BEEN ESTABLISHED, THERE IS NO REASON AS TO WHY THIS SPECIFIC PAYMENT TOWARDS SUCH PLOT NO. 33 AS ANNEXURE A2 SHO ULD NOT BE ALLOWED AGAINST THE ON-MONEY RECEIPT ON SALE OF FLATS. I T IS AN ESTABLISHED PROPOSITION OF LAW THAT COGNIZANCE TO BE GIVEN TO THE CONTENTS OF ALL THE SEIZED DOCUMENTS TO DETERMINE UNDISCLOSED INCOME. THE EXISTENCE OF CASH PAYMENTS OF RS. 26,09,350/- IN RESPECT OF PRA TIKSHAH PROJECT ON PLOT NO. 33 IS CLEARLY EVIDENT FROM THE SIZED DOCU MENT ANNEXURE A2 AND A9 WHICH HAS NOT BEEN DOUBTED BY THE A.O. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT LD CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE SAID EXPENSES PERTAINING TO THE PLOT NO. 33 H AVE TO BE NECESSARILY ALLOWED AGAINST THE TOTAL ON-MONEY RECEIPTS FOR PRATIKSHAH PROJECT ON ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 8 PLOT NO. 33. WE THUS UPHOLD THE ACTION OF THE LD C IT(A) IN DIRECTING THE A.O TO ALLOW THE DEDUCTION OF RS. 26,09,350/- AGAIN ST THE ON-MONEY RECEIPTS DECLARED ON PRATIKSHAH PROJECT ON PLOT N O. 33 AT NASHIK. THE GROUNDS 1 & 2 INVOLVING THE ISSUE ARE THUS REJECTE D. GROUND NO. 3 TO 5 6. THE RELEVANT FACTS ARE THAT THERE WERE UNRECORDE D CASH EXPENSES OF RS.1,63,40,920/- AND UN-RECORDED CASH RECEIPTS OF R S. 2,33,51,150/- AS PER SEIZED RECORDS AND AFTER SETTING OFF OTHER MISC ELLANEOUS EXPENSES, THE BALANCE AMOUNT OF RS. 50 LAKH WAS OFFERED AS UNDISC LOSED INCOME IN THE BLOCK RETURN. THE A.O., OUT OF SAID CASH EXPENSES , FOUND THAT THE CASH PAYMENT OF RS. 1,20,75,800/- EXCEEDED RS. 20,000/- AND ACCORDINGLY DISALLOWED 20% OF THE SAME U/S. 40A(3) AND THE BALA NCE CASH OF RS. 1,39,25,760/- WERE ALLOWED TO BE SET OFF AGAINST CA SH RECEIPT. THE A.O. INVOKED PROVISIONS U/S. 40A(3) MAINLY ON THE BASIS THAT THE CASH EXPENSES WOULD NOT HAVE BEEN REVEALED TO THE DEPAR TMENT BUT FOR THE SEARCH ACTION U/S. 132(1) AND THEREFORE, THE SAID C ASH EXPENSES IN CONTRAVENTION TO THE PROVISIONS OF SEC. 40A(3) ARE DISALLOWABLE. HE FURTHER OPINED THAT PRIOR TO AMENDMENT TO SECTION 1 58 BB BY FINANCE ACT 2002, THE UNDISCLOSED INCOME WAS TO BE COMPUTED AS PER PROVISIONS OF CHAPTER IV WHICH INCLUDED PROVISION OF SEC. 40A(3 ). HE WAS THEREFORE OF THE VIEW THAT THERE IS NO EXCEPTIONS PROVIDED IN CH APTER XIV-B IN RESPECT OF APPLICATION OF SEC. 40A(3) AND HENCE DISALLOWED THE CASH EXPENSES EXCEEDING RS. 20,000/- U/S. 40A(3) AMOUNTING TO RS. 24,15,160/-. THE LD CIT(A) HAS DELETED THE DISALLOWANCE AFTER DISCU SSING SEVERAL DECISIONS ON THE ISSUE RELIED UPON BEFORE HIM. THE LD CIT(A) HAS FOLLOWED THE BINDING DECISION OF NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF SADHURAM WADHWANI, IT(SS) NO. 10/NAG/1999 DATED 13.11.2002 W HEREIN THE ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 9 TRIBUNAL HAS HELD THAT THE DISALLOWANCE U/S. 40A(3) IN THE BLOCK ASSESSMENT WAS OUTSIDE THE AMBIT OF CHAPTER XIV B OF THE ACT. 7. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS PLACE D RELIANCE ON THE ASSESSMENT ORDER AND HAS ALSO CITED FOLLOWING DECIS IONS : 1) GANESH FOUNDRY AND CASTING LTD. VS. ITAT & ANR. (2010), 328 ITR 202 (PAT.) 2) CIT VS. M/S. SAI METAL WORKS, ITA NO. 125 OF 20 04 & OTHERS, JUDGMENT DT. 10.3.2011 (PUN. & HAR.). 8. THE LD. A.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER ON THE ISSUE. HE PLACED RELIANCE ON THE DECI SIONS CITED BEFORE THE AUTHORITIES BELOW AND ALSO ON THE DECISION OF HONB LE MADRAS HIGH COURT IN THE CASE OF TCV ENGINEERING LTD. VS. ACIT (2006) 205 CTR (MAD) 161. HE SUBMITTED THAT THE DECISIONS RELIED UPON BY THE LD. D.R. HAVING DISTINGUISHABLE FACTS ARE NOT APPLICABLE IN THE PRE SENT CASE. HE ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. CARGO CLEARING AGENCY (GUJ.) VS. JCIT (2008), 218 C TR (GUJ.) 541 2. CIT VS. BANWARILAL BANSIDHAR (1998), 148 CTR (ALLHA ) 533 3. CIT VS. S. MOHAMMAB DHARUBUDEEN (2008) 4 DTR (MAD.) 218. HE SUBMITTED THAT IN THOSE DECISIONS RELIED UPON BY THE LD. D.R ALL INGENUINE PAYMENTS WERE MADE WHEREAS IN THE PRESEN T CASE, THE A.O HAS ACCEPTED CASH RECEIPT AND CASH EXPENSES AS GENU INE TRANSACTIONS WHICH THE ASSESSEE HAD ACTUALLY ENTERED DURING THE BLOCK PERIOD IN QUESTION. HE SUBMITTED FURTHER THAT THERE IS NO BI NDING DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT ON THE ISSUE AND IN CASE DIFFERENT VIEWS HAVE BEEN EXPRESSED BY DIFFERENT HIGH COURTS ON AN ISSUE, THAT FABOURABLE TO THE ASSESSEE WILL BE FOLLOWED. IN TH IS REGARD, HE PLACED RELIANCE ON THE DECISIONS OF HONBLE SUPREME COURT IN THE CASES OF CIT ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 10 VS. VEGETABLE PRODUCTS (1973) 88 ITR 192 (SC), AND CIT VS. PODAR CEMENT PVT. LTD. (1997) 226 ITR 625 (SC). 9. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE LD CIT(A) HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWI NG THE DECISION OF NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF SADHURA M WADHWANI (SUPRA) HOLDING THAT THE DISALLOWANCE U/S. 40A(3) IN THE BL OCK ASSESSMENT WAS OUTSIDE THE AMBIT OF CHAPTER XIV B OF THE I.T. ACT . THE LD CIT(A) HAS DISCUSSED SEVERAL DECISIONS RELIED UPON BEFORE HIM INCLUDING THE DECISIONS OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF JANATA TILES, 66 TTJ 695 (PUNE) AND SHARMA ASSOCIATES, 55 ITD 171 (PUNE) HOL DING THAT ONCE THE TRANSACTIONS ARE UNRECORDED AND UNDISCLOSED FROM TH E REGULAR BOOKS OF ACCOUNT, THERE CAN NOT BE FURTHER DISALLOWANCE U/ S. 40A(3) OF THE ACT. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF MU MBAI BENCH OF THE TRIBUNAL IN THE CASE OF WESTERN INDIA BAKERS (P) LT D. VS. DCIT (2004) 84 TTJ (MUM) 223 EXPRESSING THE SIMILAR VIEW WITH THIS OBSERVATION THAT HEADING OF CHAPTER XIV B IS SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES. SECTION 158 BA DEALS ASSESSMENT OF UNDISCL OSED INCOME AS A RESULT OF SEARCH. THIS SECTION OPENS WITH A NON- OBSTINATE CLAUSE AND THIS ENACTS PROVISIONS OF OVERRIDING NATURE SO AS T O PREVAIL OVER ANY OTHER PROVISIONS OF THE ACT. THE ASSESSED UNDISCLOSED IN COME IS ASSESSED AT THE HIGHER RATE OF 60% U/S. 113 OF THE ACT, OBSERVE D THE TRIBUNAL. WE, HOWEVER, FIND THAT DIFFERENT VIEWS HAVE BEEN EXPRES SED BY DIFFERENT HIGH COURTS ON THE ISSUE AND NO DECISION OF HONBLE JURI SDICTIONAL HIGH COURT ON THE ISSUE HAS BEEN BROUGHT TO OUR NOTICE BY THE P ARTIES. UNDER THESE CIRCUMSTANCES, IN VIEW OF THE DECISIONS OF HONBLE SUPREME COURT IN THE CASES OF CIT VS. VEGITABLE PRODUCTS (SUPRA) AND CI T VS. PODAR CEMENT PVT. LTD. (SUPRA), WE ADOPT THE JUDGMENT ON THE ISS UE WHICH IS FAVOURABLE TO THE ASSESSEE. WE THUS RESPECTFULLY FOLLOWING TH E DECISION OF CARGO ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 11 CLEARING AGENCY (GUJ.) VS.JCIT (SUPRA) & OTHERS REL IED UPON BY THE LD. A.R. HOLD THAT THE LD CIT(A) HAS RIGHTLY DELETED TH E DISALLOWANCE U/S. 40A (3) OF THE ACT MADE BY THE A.O WITH DIRECTION TO D ELETE THE SAME INVOLVING AMOUNT OF RS.24,15,160/-. THE SAME IS UP HELD. GROUND NO. 3 TO 5 INVOLVING THIS ISSUE ARE THUS REJECTED. GROUND NO. 6 10. THE RELEVANT FACTS ARE THAT A.O. ESTIMATED RS. 3,99,763/- ON ACCOUNT OF ON-MONEY RECEIPT IN RESPECT OF 2 FLATS SOLD BY THE ASSESSEE. THE A.O DID NOT ACCEPT THE EXPLANATION OF THE ASSES SEE THAT IT HAD CONSTRUCTED 6 BUILDINGS AND IN RESPECT OF THE FACT S IN THE SIX BUILDINGS, HE HAD TAKEN ON MONEY EXCEPT IN THE CASE OF TWO FLA TS. IT WAS EXPLAINED BY THE ASSESSEE THAT THE REGISTERS AND DIARIES FOUN D GIVES DETAILS OF ON- MONEY RECEIVED FROM ALL THE FLAT PURCHASERS OF THE SIX BUILDINGS EXCEPT FOR THE TWO FLATS. IT WAS SUBMITTED THAT THE ASSE SSEE DID NOT HAVE ANY ON-MONEY IN THE CASE OF SHRI ASHOK B. SALIAN AND SHRI YOGESH DHARASKAR TO WHOM THESE FLATS WERE SOLD. THE REASON SHOWN W AS THAT SHRI. ASHOK B. SALIAN WAS A REGULAR SUPPLIER OF BRICKS, SAND, C EMENT ETC., AND THUS WITH HIM THERE WAS BUSINESS RELATION AND THUS THE F LAT WAS SOLD AT THE AGREEMENT VALUE ITSELF. SIMILARLY IN RESPECT OF FL AT SOLD TO SHRI. YOGESH DHARASKAR, IT WAS EXPLAINED THAT HE WAS PAINTING C ONTRACTOR AND WITH HIM ALSO BUSINESS RELATIONS WERE THERE AND THE FLAT WAS SOLD TO HIM AT THE AGREEMENT VALUE ITSELF. AFTER DISCUSSING THE ISSU E IN DETAIL, THE LD CIT(A) HAS DELETED THE ADDITION MERELY ON THE BASIS THAT IN BLOCK ASSESSMENT, NO ADDITION CAN BE MADE ON ESTIMATION AND WITHOUT SUPPORT OF ANY SEIZED MATERIAL IN CORROBORATION. ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 12 11. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS BASI CALLY PLACED RELIANCE ON THE ASSESSMENT ORDER WHEREAS THE LD. A.R. HAS RE LIED UPON THE FIRST APPELLATE ORDER ON THE ISSUE. 12. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW ON THE ISSUE, WE FULLY CONCUR WITH THE FINDING OF THE LD C IT(A) SUPPORTED BY THE DECISIONS RELIED UPON BEFORE HIM THAT ADDIION MADE BY THE A.O BASED ON PRESUMPTION AND SURMISES DESPITE NON-EXISTENCE OF ANY INCRIMINATING SEIZED DOCUMENTS IS NOT IN CONFORMITY WITH THE PR OVISIONS OF SEC. 158BB OF THE ACT. WE FIND THAT IN THE PRESENT CASE, IT I S AN ADMITTED FACT THAT THE ASSESSEE HAD RECORDED ALL THE TRANSACTIONS OF ON-MONEY RECEIPTS OF RS. 2.33 CRORES IN THE SEIZED RECORDS FROM ALL THE FLATS IN THE SIX PROJECTS, THEN THERE WAS NO REASON FOR THE ASSESSEE NOT TO EN TER INTO ON-MONEY RECEIPTS IN RESPECT OF THE TWO FLATS IF IT HAD ACTU ALLY RECEIVED THE SAME. THE LD CIT(A) HAS FOLLOWED THE DECISION OF THIRD ME MBER OF THE PATNA BENCH OF THE TRIBUNAL IN THE CASE OF SHRI. D.N. KAM ANI (70 ITD 77 (PAT)(TM ) WHERE ADDITION ON ON-MONEY ON SALE OF FLATS BASED ON PRESUMPTION WAS DELETED. THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. M.K.E. MENON (2001) 248 ITR 310 (BOM) CITE D BEFORE THE LD CIT(A), HAS BEEN PLEASED TO EXPLAIN THE PROVISIONS OF BLOCK ASSESSMENT AND REGULAR ASSESSMENT AND HAS CONCLUDED THAT THE P ROVISIONS OF BLOCK ASSESSMENT ARE SEPARATE AND DIFFERENT FROM REGULAR ASSESSMENT AND THE A.O MUST NOT MAKE ROVING ENQUIRIES WHILE MAKING BLO CK ASSESSMENT BUT ONLY CONSIDER THE DOCUMENTS AND MATERIAL FOUND IN T HE COURSE OF SEARCH ACTION. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER ON THIS ISSUE. THE SAME IS UPHELD. THE GROUND NO. 6 IS ACCORDINGLY REJECTED. 13. IN RESULT, APPEAL IS DISMISSED. ITA . NO1802/PN/2005 RUSHIRAJ BUILDERS & DEVELOPERS. B.P. 97-98 TO 03-04 PAGE OF 13 13 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 13TH F EBRUARY 2012. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 13TH FEBRUARY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (CENTRAL), NAGPUR 4. THE CIT(A)- I, NAGPUR 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE