The ACIT, Central Circle-4, Surat V. M/s. Dhara Associates, Valsad

ITA 1945/AHD/2007

• Counselvise Citation: 194520514 RSA 2007
• Duration Of Justice: 4 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-08-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 09-05-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Retraction; Documents seized
• Section: 133A; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI G.D.AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER APPEAL(S) / CO(S) BY APPELLANT VS. RESPONDENT SL. NO(S). ITA NO(S) / CO NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 1945/AHD/2007 1998-99 ACIT CENTRAL CIR-4 SURAT M/S.DHARA ASSOCIATES 4 TH FLOOR AMAR CHAMBERS STATION ROAD, VALSAD PAN: AABFD 8136 F 2. 1946/AHD/2007 1999-2000 REVENUE ASSESSEE 3. 1947/AHD/2007 2000-01 REVENUE ASSESSEE 4. 1948/AHD/2007 2001-02 REVENUE ASSESSEE 5. 1949/AHD/2007 2002-03 REVENUE ASSESSEE 6. 1950/AHD/2007 2003-04 REVENUE ASSESSEE 7. 1951/AHD/2007 2004-05 REVENUE ASSESSEE 8. CO NO.183/AHD/07 (IN ITA NO.1945/A/07) 1998-99 ASSESSEE REVENUE 9. CO NO.184/AHD/07 (IN ITA NO.1946/A/07) 1999-2000 ASSESSEE REVENUE 10. CO NO.185/AHD/07 (IN ITA NO.1947/A/07) 2000-01 ASSESSEE REVENUE 11. CO NO.186/AHD/07 (IN ITA NO.1948/A/07) 2001-02 ASSESSEE REVENUE 12. CO NO.187/AHD/07 (IN ITA NO.1949/A/07) 2002-03 ASSESSEE REVENUE 13. CO NO.188/AHD/07 (IN ITA NO.1950/A/07) 2003-04 ASSESSEE REVENUE 14. CO NO.189/AHD/07 (IN ITA NO.1951/A/07) 2004-05 ASSESSEE REVENUE REVENUE BY : SHRI S.K. GUPTA, CIT-D.R. ASSESSEE BY : SHRI S.N. SOPARKAR DATE OF HEARING : 24/08/ 2011 DATE OF PRONOUNCEMENT : 26/08/2011 O R D E R PER BENCH : THESE SEVEN APPEALS HAVE BEEN FILED BY THE REVENUE AND SEVEN CROSS OBJECTIONS ARE RAISED BY THE ASSESSEE, ALL AR ISING FROM THE ORDERS ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 2 - OF CIT(A)-I, AHMEDABAD IDENTICALLY DATED 28/02/2007 . FACTS RELATED TO THESE APPEALS ARE SIMILAR, HENCE ALL ARE CONSOLIDAT ED AND HEREBY DECIDED BY THIS COMMON ORDER. WE SHALL FIRST TAKE UP THE APPEALS OF THE REVENUE. (A) APPEALS FILED BY THE REVENUE (ITA NOS.1945 TO 1951/ AHD/2007) 2. GROUNDS RAISED BY THE REVENUE FOR ALL THE YEARS ARE IDENTICALLY WORDED EXCEPT THE QUANTUM INVOLVED. SINCE THE LEAD YEAR I S THE A.Y. 1998-99, THEREFROM THE GROUNDS ARE REPRODUCED BELOW:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.31,63,962/- (A.Y. 99-00 RS.9,98,8 46/-, A.Y. 2000-01 - RS.16,79,519/-, A.Y. 2001-02 RS.2,08 ,156/-, A.Y. 2002-03 RS.42,476/-, A.Y. 2003-04 RS.42, 467/- AND A.Y. 2004-05 RS.2,02,498/-) MADE BY THE A.O. ON ACCOUNT OF ON MONEY RECEIPT ON SALE OF PLOTS. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG THE A.O. TO TAKE ON-MONEY @ RS.100/- PER SQ. YARD AS AGAINST @ RS.575/- PER SQ. YARD AS RECORDED IN SEIZED MATERIA L. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A. O. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 2.1. FACTS INVOLVED ARE SIMILAR IN ALL THE APPEA LS AND FOR THE SAKE OF BREVITY, THE FACTS AS NARRATED IN LEAD A.Y. 1998-99 VIDE AN ORDER U/S.143(3) R.W.S. 153A DATED 24/03/2006, IN SHORT, WERE THAT A SEARCH U/S.132 WAS CARRIED OUT AT THE BUSINESS PREMISES AN D AT THE RESIDENTIAL ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 3 - PREMISES. IT HAS ALSO BEEN NOTED BY THE AO THAT ON E OF THE PARTNERS RESIDENCE WAS ALSO SEARCHED ON 18/06/2003, NAMELY S HRI CHIMANLAL MAGANLAL SHAH. THE SAID PARTNER WAS STATED TO BE THE KEY PERSON, ALLEGED TO BE RESPONSIBLE FOR THE IMPUGNED UNDISCL OSED TRANSACTIONS , THEREFORE, HE HAD DISCLOSED AN INCOME OF RS.31.76 LACS ON BEHALF OF THE GROUP. HOWEVER, FOR A.Y. 1998-99, RETURN WAS FILED DECLARING ONLY AN INCOME OF RS.8,761/-. IT WAS NOTED BY THE AO TH AT A PLOT BEARING SURVEY NO.153A SITUATED AT PAIKI, ABRAMA, VALSAD W AS PURCHASED IN AUGUST-1992. A PROJECT WAS DEVELOPED NAMELY DHA RA NAGAR. FURTHER, IT WAS ALSO NOTED BY THE AO THAT A NOTE-BO OK/ DIARY CONTAINING PAGES 1 TO 141 WAS SEIZED MARKED AS ANNEXURE BF-1. IT WAS AN ADMITTED FACTUAL POSITION THAT THE SAID SEIZED NOTE-BOOK CON TAINED THE DETAILS OF SALE OF PLOTS IN RESPECT OF THE SAID DHARA NAGAR PROJECT. THE DIARY CONTAINED THE DETAILS SUCH AS NAME OF THE PLOT HOLD ERS, PLOT NUMBER, AREA OF PLOT, PAYMENT RECEIVED, DATE OF TRANSACTION, ETC . A STATEMENT U/S.131 OF SHRI CHIMANLAL M. SHAH WAS RECORDED ON 1/8/2003. HE HAS INFORMED THAT IN ALL A PLOTTING OF 279 PLOTS WAS DONE ON THE SAID LAND FOR THE PROJECT DHARA NAGAR. HE HAS ALSO INFORMED THAT 123 PLOTS WERE SOLD DURING THE PERIOD FROM 01/04/1997 TO 31/03/2003. HE HAS STAT ED THAT IN THE REGULAR BOOKS OF ACCOUNT THE SALE VALUE WAS SHOWN IN THE RA NGE OF RS.201/- TO RS.551/- PER SQ.YD. HE HAS ALSO INFORMED THAT THE ACTUAL SALES CONSIDERATION WAS VARYING FROM RS.500/- TO RS.625/- PER YD. ON THE BASIS OF THE SAID ADMISSION, MR.CHIMANLAL M.SHAH HAS PROP OSED THAT ON AN AVERAGE BASIS THE AMOUNT OF ON-MONEY RECEIVED ON SALE OF PLOT COULD BE TAKEN AT RS.100/- PER SQ.YD. ACCORDING TO AO, HE HAS AGREED THAT ON- MONEY OF RS.29,76,495/- WERE RECEIVED FROM THE F.Y . 1997-98 UPTILL THE ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 4 - DATE OF SEARCH. IT IS WORTH TO MENTION THAT THROUGH AN AFFIDAVIT THE SAID STATEMENT WAS RETRACTED. 2.2. THEREAFTER, THE AO HAS DISCUSSED CERTAIN LEGAL ASPECTS OF THE ISSUE, SUCH AS, THE ROLE OF PRESUMPTION AS PRESCRIBED U/S. 132(4A) OF I.T. ACT. HE HAS ALSO DISCUSSED THE ADMISSION MADE U/S.132 DU RING THE COURSE OF SEARCH. THE AO HAS ALSO DISCUSSED THE LEGAL QUES TION IN RESPECT OF THE EVIDENTIARY VALUE AS PER SECTION 17 TO SECTION 31 OF THE INDIAN EVIDENCE ACT, 1872 OF THE ADMISSION MADE BY THE ASSESSEE. SINCE CERTAIN AFFIDAVITS HAVE BEEN FILED, THEREFORE, THE AO HAS A LSO DISCUSSED THE IMPORTANCE OF THOSE AFFIDAVITS SPECIALLY WHEN ACCOR DING TO HIM THEY WERE NOT SUPPORTED BY AN EVIDENCE. 2.3. AFTER THE DISCUSSION OF CERTAIN LEGAL ASPECTS THE AO HAS REFERRED CERTAIN INSTANCES OF SALE OF PLOTS WHICH WERE ALLEG ED TO HAVE BEEN SOLD ON HIGHER PRICE, BUT IN THE BOOKS LESSER SALE PRICE WA S RECORDED. FACTS RELATED TO THOSE INSTANCES WERE MENTIONED BY THE AO IN PARA-12.A IN THE ASSESSMENT ORDER, REPRODUCED BELOW:- 12. A. THE STATEMENT RECORDED WAS ON OATH AND TH E LEGAL CONSEQUENCES WERE MADE AWARE BEFORE RECORDING THE S TATEMENT U/S.132(4). IT CANNOT BE SAID TO BE SWEET WILL OF THE AUTHORIZED OFFICER. AS IT IS DULY SIGNED BY HIM, THE STATEMEN T CANNOT BE SAID TO BE ONE SIDED. AS DISCUSSED IN THE NEXT PARAS, I T WAS NOTICED THAT IN THE SEIZED NOTE BOOK INVENTORISED AS BF-1, ON PA GE NO.65, THE DETAILS OF PLOT NO.128 IS WRITTEN. IN THIS PAGE TH E SALES PRICE OF THE PLOT MENTIONED AT RS.575/- AS AGAINST THE ASSESSEE HAS SHOWN THE SALES VALUE OF RS.50,000/- @ 200/- PER SQ. METER IN ITS BOOKS OF ACCOUNTS. THE SALES OF THE PLOT SHOWN IN A.Y. 1999 -2000. ON PAGE ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 5 - NO.8 OF THE SAID NOTE BOOK, THE DETAILS OF PLOT NO. 15 IS RECORDED. THE SALES PRICE AS PER THE NOTE BOOK IS RS.550/- SQ . YARD AS AGAINST RS.400/- RECORDED IN THE BOOKS OF ACCOUNTS. THE BO OKING OF THE SAID PLOT IS IN THE FINANCIAL YEAR 2001-02 AS THE F IRST AMOUNT RECEIVED ON 04.01.2002. THE SALES IS SHOWN IN A.Y. 2004-05. PAGE NO.66 IS RELATED TO PLOT NO.131 IN WHICH THE SALES PRICE MENTIONED AS 600/- PER SQ. YARD AS AGAINST RS.500/- SHOWN IN THE REGULAR BOOKS OF ACCOUNTS. PAGE NO.107 IS RELATED TO PLOT NO.212 AND 213 IN WHICH THE SALES PRICE MENTIONED AS 625/- HOWEVER THERE ARE NO DETAILS AVAILABLE ON RECORD. PAGE NO.133 IS RELATE D TO PLOT NO.264 AND 265 IN WHICH THE SALES PRICE MENTIONED AS 701/- PER SQ. YARD AND ALSO MENTIONED THAT MARCH SUDHI CHUKTE IT MEA NS PAYMENT RECEIVED UPTO MARCH, HOWEVER THERE IS NO DETAILS FI LED EVEN AFTER REPEATED REMINDERS. MOREOVER IN THE PAGE NO.86 OF LOOSE PAPER FILE NO.BF-22, DETAILS OF PLOT NO.9,10,21,22,46 AND 47 ARE WRITTEN. THE TOTAL AREA OF THESE PLOTS MENTIONED AT 2918.13 SQ.YARD AND TOTAL SALES CONSIDERATION MENTIONED OF RS.16,06,165 /- AT THE SALES RATE OF RS.551/- PER SQ.YARDS MENTIONED ON THIS PAG E. 2.4. THEREAFTER VIDE PARA 16 THE AO HAS COMMENTED T HAT THE SAID NOTE- BOOK WAS SEIZED FROM THE BUSINESS PREMISES OF THE A SSESSEE AND IT CONTAINED CERTAIN NOTINGS ABOUT THE RATES OF SALE P ER SQUARE YARD TRANSACTED BY THE ASSESSEE IN RESPECT OF THE PLOTS OF DHARA NAGAR. THE AO HAS, THEREFORE, ADOPTED THE SAID SALE RATE UNIF ORMLY IN RESPECT OF ALL THE PLOTS WHICH WERE SOLD YEAR-WISE BY THE ASSESSEE , AS REFLECTED IN THE FOLLOWING CHART:- A.Y. RANGE OF SALES RATE SHOWN BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNTS SALES RATE AS PER IMPOUNDED NOTE BOOK INVENTORISED AS BF-1 ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 6 - PAGE NO. PLOT NO. RATE PER SQ.YARD 1998-99 151 TO 301 65 128 575/- 1999-2000 175 TO 301 2000-01 151 TO 352 65 129 631/- 2001-02 252 TO 450 2002-03 251 TO 500 8 66 15 131 550/- AND 600/- 2003-04 550 TO 669 107 212 & 213 625/- 2004-05 353 TO 671 133 264 AND 265 701/- 2.5. BY APPLYING THE ESTIMATED RATE OF SALE FOR RE SPECTIVE YEARS ON ALL THE PLOTS SOLD THE AO HAS YEAR-WISE MADE THE ADDITI ON AS FOLLOWS:- A.Y. SALES SHOWN SQ.YARDS ESTIMATED SALES RATE ESTIMATED SALES CONSIDERATION SALES CONSIDERATION SHOWN IN THE BOOKS OF ACCOUNTS DIFFERENCE 1998-99 13193.93 575 7,586,510 3,103,175 4,483,335 1999-2000 4150.44 574 2,465,361 1,051,471 1,413,890 2000-01 5889.53 594 3,498,381 1,229,639 2,268,742 2001-02 1761.50 594 1,046,331 662,025 384,306 2002-03 881.40 594 523,552 392,945 130,607 2003-04 649.04 625 405,650 393,200 12,450 2004-05 2122.21 701 1,487.669 1,072,950 414,719 3. FOR ALL THE YEARS, THE ASSESSEE HAS CHALLENGED T HE RESPECTIVE ADDITIONS BEFORE THE LD.CIT(A). AFTER DETAILED DI SCUSSION, LD.CIT(A) WAS OF THE VIEW THAT SINCE ONE OF THE PARTNER HAS MADE A STATEMENT THAT AN AVERAGE ON-MONEY @ RS.100/- PER SQ.YD. WAS RECEIVE D BY THE ASSESSEE, THEREFORE, HE HAS DIRECTED THE AO TO ADOPT THE SAI D RATE FOR ALL THE YEARS ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 7 - AND RECALCULATE THE ADDITION. RELEVANT PARAGRAPH N O.4.3; REPRODUCED BELOW:- 4.3. I HAVE CAREFULLY CONSIDERED THE CASE OF THE A SSESSING OFFICER, SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AND THE LAW ON THE POINT. THE STATEMENTS CAN ALWAYS B E CONSIDERED WHILE INTERPRETING THE SEIZED DOCUMENTS. THE STAT EMENTS WERE NOT TO BE MADE THE SOLE BASIS FOR MAKING OR SUSTAINING THE ADDITIONS. NONETHELESS, THE SAME CAN ALWAYS BE USED AS A TOOL IN INTERPRETING THE SEIZED DOCUMENTS. AT MORE THAN ONE OCCASION IT HAS BEEN HELD BY THE ASSESSING OFFICER THAT THE SEIZED DOCUMENTS SHOW AND THERETO VERY CATEGORICALLY, THAT THE APPELLANT HAS RECEIVED SALES CONSIDERATION MORE THAT WHAT IS RECORDED IN THE REG ULAR BOOKS OF ACCOUNTS. UNFORTUNATELY, THE APPELLANT HAS NOT BEE N IN A POSITION TO EXPLAIN SATISFACTORY THESE SEIZED DOCUMENTS SO R IGHTLY RELIED UPON BY THE ASSESSING OFFICER. THE APPELLANT, EXCE PT FOR SUBMITTING THAT IT HAS NOT RECEIVED ANY ON-MONEY, HAS NOT PLAC ED ON RECORD ANY CONCRETE EVIDENCE TO SUBSTANTIATE ITS SUBMISSIO NS. I AM, THEREFORE NOT AT ALL CONVINCED THAT THE APPELLANT H AS NOT RECEIVED ANY ON-MONEY INSOFAR AS THE DEALINGS OF THE APPELLA NT FIRM ARE CONCERNED. MORE SO WHEN IN STATEMENT RECORDED AT T HE TIME OF THE SEARCH, THE PARTNER OF THE APPELLANT HAS CATEGORICA LLY ADMITTED HAVING RECEIVED ON-MONEY AT THE RATE OF RS.100/- ON ALL THE DEALS. HOWEVER, AT THE SAME TIME, I DO NOT AGREE WITH THE METHOD ADOPTED BY THE ASSESSING OFFICER WHILE QUANTIFYING THE ON-M ONEY. THE ASSESSING OFFICER HAS ESTIMATED AND ADJUSTED THE SA LE PRICE OF THE LAND ON YEAR TO YEAR BASIS. UNDER THE LAW, THIS AC TION OF THE ASSESSING OFFICER IS NOT JUSTIFIED. IT IS WELL SET TLED THAT IN CASE OF ASSESSMENTS WHICH ARE BEING FRAMED PURSUANT TO THE SEARCH AND SEIZURE ACTION, THE ADDITIONS, SHALL HAVE TO BE WOR KED OUT BASED ON THE SEIZED DOCUMENTS AND THERE IS NO SCOPE FOR ANY ESTIMATION OR GUESS WORK. UNDER THE CIRCUMSTANCES, THE BEST INDI CATOR OF CALCULATING THE ON-MONEY RECEIPT SHALL BE THE CONCU RRENT AND SPONTANEOUS STATEMENTS OF THE PARTNERS RECORDED AT THE TIME OF THE SEARCH. I THEREFORE HOLD THAT THE APPELLANT HAS RE CEIVED ON-MONEY AT THE RATE OF RS.100 PER SQR YARD ON ALL THE TRANS ACTIONS OF SALE AND ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RECALCULATE THE ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 8 - ON MONEY RECEIPT BASED ON THE SALES SHOWN BY THE AP PELLANT IN ITS REGULAR BOOKS OF ACCOUNTS. ASSESSING OFFICER IS DI RECTED TO SUSTAIN THE ADDITION OF ON-MONEY AT THE RATE OF RS.100 PER SQUARE YARD OF LAND SOLD BY THE APPELLANT FOR ALL THE YEARS UNDER CONSIDERATION AND ADDITION ON ACCOUNT OF ON-MONEY IN EXCESS OF RS .100 PER SQUARE YARD IS DIRECTED TO BE DELETED. THEREFORE , THE 2 ND GROUND OF APPEAL RAISED BY THE APPELLANT IS PARTLY ALLOWED . 4. FROM THE SIDE OF THE ASSESSEE, LD.AR MR. S.N.SOP ARKAR AND FROM THE SIDE OF THE REVENUE LD.DR MR.S.K. GUPTA APPEAR ED. REVENUE HAS PLACED RELIANCE ON THE ORDER OF THE AO AND ARGUED T HAT ONCE CERTAIN INSTANCES OF ON-MONEY RECEIVED BY THE ASSESSEE ON SALE OF PARTICULAR SALE OF PLOTS WERE DETECTED CONSEQUENCE UPON THE SE ARCH, THEREFORE, THE SAME RATE WAS CORRECTLY APPLIED BY THE AO IN RESPEC T OF ALL THE SALES EXECUTED BY THE ASSESSEE. IT HAS ALSO BEEN ARG UED THAT LD.CIT(A) WAS NOT CORRECT IN IGNORING THE SAID FACT AND DIRECTING THE AO TO APPLY A UNIFORM RATE OF RS.100/- IN RESPECT OF ALL THE PLOT S. 4.1. ON THE OTHER HAND, LD.AR MR.SOPARKAR HAS COMME NTED THAT THIS IS NOT AN ORDINARY ASSESSMENT BUT AN ASSESSMENT IN CO NSEQUENCE UPON AN ACTION U/S.132 OF THE I.T. ACT. HE HAS ARGUED THA T THE AO SHOULD NOT HAVE APPLIED THE RATE OF ON-MONEY IN RESPECT OF A LL THE PLOTS BUT SHOULD HAVE CONFINED TO THOSE VERY PLOTS WHICH WERE FOUND RECORDED IN THE SEIZED DIARY. FOR THIS LEGAL PROPOSITION, HE HAS PLACED RELIANCE ON AN ORDER OF ITAT D BENCH AHMEDABAD IN THE CASE OF AC IT VS. M/S.AMAR CORPORATION, WHEREIN IN THE BUNCH OF 12 CASES BEAR ING ITA NOS.2036 TO 2041/AHD/2007 AND CO BEARING NOS.190 TO 195/AHD/200 7 ORDER DATED ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 9 - 31/03/2011, IT WAS HELD THAT THE QUESTION OF EXTRA POLATION COULD ARISE ONLY IN A SITUATION WHEN THE SEIZED DOCUMENTS GIVE SUCH AN INDICATION THAT THERE HAPPENED TO BE A REGULAR OCCURRENCE IN A SYSTEMATIC MANNER. ONE MORE IMPORTANT FACT HAS ALSO BEEN BROUGHT TO OU R NOTICE THAT THE SAID BUNCH OF APPEALS OF M/S.AMAR CORPORATION (SUPRA) W AS A CONNECTED CASE WITH THIS APPELLANT AND COVERED BY THE SAME SEARCH OPERATION. HE HAS ALSO DRAWN OUR ATTENTION THAT SHRI CHIMANLAL M. SHA H HAPPENED TO BE THE COMMON PERSON IN BOTH THE CASES AND IN THE PRESENT APPEAL AS WELL HIS STATEMENT WAS RELIED UPON BY THE REVENUE DEPARTMENT . HE HAS FURTHER CLARIFIED THAT THE STATEMENT OF SHRI CHIMANLAL M.SH AH WAS IDENTICALLY REFERRED BY THE RESPECTIVE AOS IN CASE OF THIS AP PELLANT AS ALSO IN THE CASE OF M/S.AMAR CORPORATION(SUPRA). 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED. AS FAR AS THE STATEMENT OF SHRI CHIMANLAL M.SHAH IS CONCERNED, WE HAVE ALREADY DEALT WITH THE SAME WHILE DECIDING THE APPE AL OF M/S.AMAR CORPORATION(SUPRA) VIDE PARAGRAPH NO.9 AS FOLLOWS:- 9. A STATEMENT HAS ITS VALUE IN THE EYES OF LAW I F IT IS CORROBORATED BY CONNECTED EVIDENCE. AS FAR AS THE STATEMENTS BEING RECORDED UNDER THE ACT ARE CONCERNED, THERE A RE TWO SITUATIONS I.E. SOMETIMES STATEMENTS IS RECORDED U/ S.133A OF THE ACT AT THE TIME OF SURVEY. THE COURTS HAVE CLEARLY H ELD THAT THERE IS NO EVIDENTIARY VALUE IN RESPECT OF A STATEMENT U/S. 133A UNLESS IT IS SUPPORTED BY SOME MATERIAL. SECOND SITUATION IS THA T THE ACT HAS EMPOWERED THE REVENUE TO RECORD THE STATEMENT DURIN G THE COURSE OF SEARCH AND STATEMENT IS RECORDED U/S.132(4) OF T HE I.T. ACT. BECAUSE U/S132(4) OF THE ACT, AS ASSESSEE IS EXAMIN ED ON OATH, ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 10 - THEREFORE, SUCH A STATEMENT HAS ALWAYS BEEN TREATED AS AN EVIDENCE AS HELD BY THE HBLE COURT. FOR REFERENCE, CASE LA WS ARE ABHI DEVELOPERS [2007]12 SOT 444 (AHD.), TDI MARKETING P VT.LTD. [2009]28 SOT 215 (DEL) AND PAUL MATHEWS & SONS [200 3]263 ITR 101 (KER.). EVEN IT HAS BEEN HELD BY THE HBL E JURISDICTIONAL HIGH COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOK SHI REPORTED AT 174 TAXMANN 466 (GUJ.) THAT MERELY ON THE BASIS OF A STATEMENT RECORDED U/S. 132(4), NO ADDITION CAN BE MADE UNTIL SOME CORROBORATIVE EVIDENCE WAS FOUND IN SUPPORT OF SUCH ADMISSION. IN THE PRESENT CASE, THE AO HAS PROCEEDED TO EXTRA POLATE THE ON- MONEY OF RS.180/- FOR REST OF THE FLATS IN RESPECT IVE YEARS. BUT THERE WAS NO MATERIAL IN HIS POSSESSION TO CONCLUSI VELY DEMONSTRATE THAT IN RESPECT OF THE OTHER FLATS THE ASSESSEE HAD IN FACT CHARGED ON-MONEY FROM THE CUSTOMERS. ONCE THE REVENUE DEPARTMENT HAS TAKEN THE EXTREME STEP OF CONDUCTIN G A RAID ON THIS ASSESSEE, THEN IT IS EXPECTED TO UNEARTH EVERY PENNY OF UNRECORDED MONEY, BUT THE FACT IS THAT NEITHER ANY UNACCOUNTED MONEY WAS RECOVERED NOR ANY SUCH DOCUMENT WAS FOUND IN POSSESSION OF THE ASSESSEE THROUGH WHICH IT COULD B E HELD THAT THE ASSESSEE WAS IN THE PRACTICE OF CHARGING ON-MONEY O N OTHER FACTS AS WELL. 5.1. WE HAVE THEREFORE CONCLUDED THAT THOUGH AN ADM ISSION COULD BE SAID TO BE AN IMPORTANT PIECE OF EVIDENCE BUT SUCH AN ADMISSION CAN ONLY BE CONCLUSIVE IF CORROBORATED BY SOME EVIDENCE. WE HAVE ALSO OPINED THAT IT IS OPEN FOR THE ASSESSEE TO DEMONSTRATE THA T THE SAID ADMISSION WAS INCORRECT. THE RIGHT OF RETRIEVAL, IN LEGAL TERM INOLOGY RETRACTION, IS AVAILABLE AS PER LAW, BUT IT SHOULD BE WITHIN A REA SONABLE TIME AND SHOULD ALSO BE SUPPORTED BY SOME COGENT EVIDENCE. WE HA VE REMARKED THAT THE ONUS IS ON THAT PERSON TO ESTABLISH THAT THE IMPUGN ED ADDITION WAS INCORRECT. WE HAVE CITED A DECISION OF CIT VS. S. KHADER KHAN & SON REPORTED AT [2008] 300 ITR 157 (MAD.). IN THE SA ID DECISION WE HAVE CONCLUDED THAT THEREFORE, AS FAR AS THE PRESENT CASE IS CONCERNED, ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 11 - SINCE THE STATEMENT IS NOT BY THE PARTNER OF THE FI RM AND MOREOVER THE SAME WAS RETRACTED BY FILING AN AFFIDAVIT, COUP LED WITH THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND, THEREFORE , THE VIEW TAKEN BY THE AO COULD NOT SAID TO BE PERMISSIBLE IN THE EYES OF LAW. THEREFORE, WE HEREBY HOLD THAT THE EXTRAPOLATION W AS INCORRECT. THE AO IS EMPOWERED TO CONFINE HIMSELF ON THE INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND MATE RIAL IS TO BE TREATED AS TRUE AND CORRECT. 6. ONCE A VIEW HAS BEEN TAKEN BY THE RESPECTED COOR DINATE BENCH ON IDENTICAL FACTS IN A CONNECTED GROUP OF CASES, T HEREFORE, ASSIGNING THE SAME REASON AND THE SAME LOGIC, WE HEREBY HOLD THAT THE AO SHOULD CONFINE HIMSELF VERBATIM TO THE SEIZED MATERIAL, I. E. THE IMPUGNED DIARY/NOTE-BOOK CONTAINING PAGES 1 TO 141 MARKED AS ANNEXURE BF-1. THEREAFTER, THE A.O.IS EXPECTED TO RESTRICT ONLY TO THOSE SALES INSTANCES WHICH WERE FOUND RECORDED THEREIN I.E. IN THE SAID NOTE-BOOK. WE HAVE NOTICED THAT THE AO WAS AWARE ABOUT THOSE SPECIFIC SALE INSTANCES OF THE PLOTS; RELEVANT PARAGRAPH FROM THE ASSESSMENT ORDER HAS ALREADY BEEN EXTRACTED ABOVE. THOSE SPECIFIC SALE INSTANCES WH ERE THE AMOUNT OF ON- MONEY HAS ALSO BEEN CATEGORICALLY NOTED , SHOULD B E MADE THE BASIS OF ADDITION. IN RESPECT OF REST OF THE NOTINGS, THE RE WAS NO MENTION BY THE AO THAT THE ASSESSEE HAS RECEIVED ON-MONEY. H ENCE, FOLLOWING THE ABOVE JUDGEMENT OF THE RESPECTED COORDINATE BENCH, WE CAN CONCLUDE THAT NO ADDITION OF ON-MONEY WAS WARRANTED IN RES PECT OF ALL THE PLOTS. WE ARE ALSO NOT WITH THE VIEW TAKEN BY THE LD.CIT(A ) TO ADOPT A UNIFORM RATE OF RS.100/- OF ON-MONEY ON ALL THE PLOTS. WE HEREBY HOLD THAT ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 12 - SINCE THE REVENUE DEPARTMENT IS IN POSSESSION OF TH E IMPUGNED DIARY WHEREIN CERTAIN SALE INSTANCES WERE FOUND RECORDED IN RESPECT OF SPECIFIC AMOUNT OF ON-MONEY ALLEGED TO HAVE BEEN CHARGED B Y THE ASSESSEE ON SALE OF THOSE PLOTS, THEREFORE, THE AO SHOULD HAVE MADE THE ADDITION ONLY IN RESPECT OF THOSE SALES INSTANCES AND NOT TO EXTR APOLATE THE SAID AMOUNT OF ON-MONEY MERELY ON PRESUMPTION ON ALL THE PLOT S. WE DIRECT ACCORDINGLY. 7. IN VIEW OF THE ABOVE CONCLUSION, AS FAR AS THE G ROUNDS OF THE REVENUE ARE CONCERNED, THE SAME ARE HEREBY PARTLY A LLOWED. (B) CROSS OBJECTIONS FILED BY THE ASSESSEE (CO NOS.183 TO 189/AHD/2007) 8. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GR OUNDS FOR ALL THE YEARS AS FOLLOWS:- EXTRACTED FROM CO NO.183/AHD/2007 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT RETRACTION OF THE STATEMENTS MADE BY THE PARTNERS O F THE APPELLANT WAS INVALID AND NOT ACCEPTABLE WITHOUT APPRECIATING THAT THE SAID STATEMENT WAS TAKEN UNDER PRESSURE AND IMMEDIATELY AFTER THE STATEMENT WAS GIVEN, RETRACTION AFFIDAVIT WAS DULY AFFIRMED AND PLACED BEFORE THE AUTHORITIES AT THE FIRST GIVEN OP PORTUNITY. 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF LD. AO IN MAKING ADDITION ON ACCOUNT OF RECEIPT OF ON MONEY AT THE RATE OF RS.100/- PER SQ. YARD OF LAND SOLD DURING THE YEAR UNDER CONSIDERATION. ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 13 - 3. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AN D ON FACTS IN NOT PROPERLY APPRECIATING AND CONSIDERING VARIOUS SUBMI SSIONS, EVIDENCES AND SUPPORTING PLACED ON RECORD DURING TH E COURSE OF THE ASSESSMENT PROCEEDINGS AND NOT PROPERLY APPRECI ATING VARIOUS FACTS AND LAW IN ITS PROPER PERSPECTIVE AND FURTHER ERRED IN PASSING ORDERS IN GROSS VIOLATION OF THE PRINCIPLES OF NATU RAL JUSTICE. 4. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE LEVY OF INTEREST U/S.234B & C OF THE ACT. LD. CIT(A) FA ILED TO APPRECIATE THAT LD. AO HAS LEVIED INTEREST U/S.234 B & 234C OF THE ACT ON THE ASSESSED INCOME FIGURE WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT. THE APPELLANT CAM E TO KNOW ABOUT THE LEVY OF INTEREST ONLY WHEN THE ASSESSMENT ORDER ALONG WITH NOTICE U/S.156 OF THE ACT WERE RECEIVED BY IT. THE ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF VIKSHARA TRADING & INVESTMENT (P) LTD. VS. DCIT (61 TTJ 6) FOLLOWING THE DECISION OF THE COCHIN BENCH IN THE C ASE OF M MANI VS. ACIT (51 TTJ 273) WHEREIN IT WAS HELD THAT THE LEVY OF INTEREST U/S.234A/B/C IS AN APPEALABLE ISSUE AND THEREFORE O PPORTUNITY OF HEARING MUST BE GRANTED TO THE ASSESSEE. IF THE OP PORTUNITY IS NOT GRANTED, THERE IS GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE, THE LEVY OF INTEREST DESERVES TO BE DELE TED. 5. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING UPON THE GROUND CHALLENGING THE ACTION OF AO IN INITIATING PENALTY UNDER SECTION 271(1)(C) OF THE A CT WITHOUT RECORDING MANDATORY SATISFACTION AS CONTEMPLATED UN DER THE ACT. 8.1. WHILE DECIDING THE APPEALS OF THE REVENUE, WE HAVE TAKEN A VIEW THAT IN SEARCH AND SEIZURE CASES WHEN THE REVENUE I S IN POSSESSION OF SEIZED DOCUMENTS, THEN HE SHOULD CONFINE TO THOSE N OTINGS ONLY. AN EXTRAPOLATION IS POSSIBLE IF THE SEIZED DOCUMENT IT SELF SUGGEST THAT THERE WAS A RECURRENCE OF THE RECEIPT OF ON-MONEY OR TH E ASSESSEE HAS IN THE NORMAL COURSE HAS EARNED UNACCOUNTED INCOME IN A SY STEMATIC AND A ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 14 - REGULAR MANNER AND THAT FACT HAD EMERGED OUT OF THE SEIZED MATERIAL, THEN THE EXTRAPOLATION IS JUSTIFIABLE, OTHERWISE NOT. IN THE LIGHT OF THE ABOVE LEGAL PROPOSITION, WE THEREFORE HOLD THAT THE LD.CI T(A) HAD GONE WRONG IN DIRECTING THE AO TO APPLY A UNIFORM RATE OF RS.100/ - PER SQ.YRD. AS ON- MONEY ALLEGED TO HAVE BEEN RECEIVED ON ALL THE SAL ES TRANSACTION. IN THE ABSENCE OF SOME SPECIFIC EVIDENCE SUCH AN OBSERVAT ION CAN BE SAID TO BE MERELY ON PRESUMPTION OR SUPPOSITION. WE HEREBY REVERSE THE SAID FINDING OF THE LD.CIT(A) AND DIRECT THE AO TO COMPU TE THE ADDITION OF ON-MONEY IN RESPECT OF THOSE SALES OF PLOTS WHICH WERE FOUND RECORDED IN THE SAID SEIZED MATERIAL. IN THIS MANNER, THE G ROUND RAISED BY THE CROSS OBJECTOR IS HEREBY PARTLY ALLOWED. 9. REST OF THE GROUNDS IN THE CROSS OBJECTION ARE E ITHER CONSEQUENTIAL OR DO NOT REQUIRE ANY SPECIFIC ADJUDICATION AT THIS STAGE, HENCE, TREATED AS INFRUCTUOUS IN NATURE. 10. IN THE RESULT, ALL THE REVENUES APPEALS AS WE LL AS ASSESSEES CROSS OBJECTIONS ARE PARTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 26/ 08 /2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 26/ 08 /2011 T.C. NAIR, SR. PS ITA NOS.1945 TO 1951/AHD/2007 (BY REVENUE) & CO NOS.183 TO 189/AHD/2007 (BY ASSESSEE) ACIT VS. M/S.DHARA ASSOCIATES ASST.YEARS - 1998-99 TO 2004-05 - 15 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..24/08/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/08/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S26.08.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.08.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER