M/s. J.K. Promoters, Anand V. The Income tax Officer,Ward-1, Anand

ITA 1945/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72990 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: N C AMIN
• Keywords: Unexplained expenditure; Business income; Income from undisclosed sources; Retrospective amendment; Revised return
• Section: 44AD; 40A(3); 143(3); 133A; 131; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NOS. 133, 134 /AHD/2009 & I. T.A. NOS. 1945,19 46 & 1947/AHD/2012 (ASSESSMENT YEAR: 2 003-04 & 2004-05) M/S. J.K. PROMOTERS, SHEFALI APARTMENT B/H KALPANA CINEMA ANAND V/S ITO WARD-1, ANAND (APPELLANT) (RESPONDENT) PAN: AABFJ 4166B APPELLANT BY : SHRI N.C. AMIN. A.R. RESPONDENT BY : SHRI K.C. MATHEWS, SR. D.R. ( )/ ORDER DATE OF HEARING : 20-01-2014 DATE OF PRONOUNCEMENT : 21-02-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 5 APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE ORDER OF CIT(A)-IV, BARODA DATED 31.12.2008 & 18.07.2012 FOR A.YS. 2003-04 & 2 004-05 RESPECTIVELY. OUT OF THE 5 APPEALS, 2 APPEALS ARE AGAINST THE QUANTUM ADDITI ONS, 2 APPEALS ARE AGAINST ORDER U/S. 154 AND 1 APPEAL IS AGAINST PENALTY ORDER. 2. BEFORE US AT THE OUTSET, THE LD. A.R. SUBMITTED THOUGH THE QUANTUM APPEALS BEFORE US PERTAIN TO DIFFERENT ASSESSMENT YEARS I.E. A.Y. 03- 04 & 04-05 BUT THE ISSUE INVOLVED IN BOTH THE APPEALS ARE SIMILAR AS THEY ARISE OUT O F SAME SURVEY ACTION AND THE FACTS AND CIRCUMSTANCES OF THE CASE ARE SIMILAR AND THERE FORE THE SUBMISSIONS MADE IN THE CASE OF ONE YEAR WOULD BE EQUALLY APPLICABLE TO OTH ER AND THEREFORE BOTH THE ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 2 QUANTUM APPEALS CAN BE HEARD TOGETHER. WE THEREFOR E PROCEED WITH THE FACTS OF A.Y. 03-04 IN ITA NO. 133/AHD/2009. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BU ILDING CONSTRUCTION. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2002-03 ON 23.7.2003 DE CLARING TOTAL INCOME OF RS 37,080/-. A SURVEY OPERATION U/S 133A OF THE ACT WA S CARRIED AT THE BUSINESS PREMISES OF ASSESSEE ON 23.9.2003 AND THEREAFTER AS SESSEE FILED REVISED RETURN OF INCOME ON 20.10.2003 DECLARING REVISED TOTAL INCOME OF RS.7,40,620/- THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) RWS 145(3) OF THE ACT VIDE ORDER DATED 28.2.2006 AND TH E TOTAL INCOME WAS ASSESSED AT RS 33,33,120/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 31.12 .2008 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS IN NOW IN APPEAL BEFORE US. THE GROUND RAISED WHICH WERE LATER REVIS ED, BY THE ASSESSEE READS AS UNDER:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING AN ADDITION OF RS. 16,86,813/- BEING CON TRACT RECEIPTS NOT RECORDED IN BOOKS OF ACCOUNT AND NOTED IN THE DIARY TOTALLY ADD ED WHICH IS AGAINST THE PROVISIONS OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF TH E APPELLANT, THE TOTAL GROSS RECEIPTS ADDED BY LEARNED A.O. ON THE BASIS OF STAT EMENT RECORDED U/S. 131 DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A AN D CONFIRMED BY LD. CIT(A) REQUIRES TO BE DELETED. 3. ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THE C ASE OF THE APPELLANT, AN ADDITION OF RS. 20,000/- CONFIRMED BY LD. CIT(A) HOLDING IT AS UNACCOUNTED RECEIPTS REQUIRES TO BE DELETED. 4. THAT THE BOOK RESULTS OF THE APPELLANT HAS NOT B EEN ACCEPTED BY LEARNED A.O. AND AS SUCH DISALLOWANCE OF RS. 28,613/- CONFIRMED BY CIT(A) U/S 40A(3) DESERVES TO BE DELETED. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE A PPELLANT, THE REVISED RETURN OF INCOME WAS CONSIDERED BY LD. A.O., HOWEVER, VARI OUS ADDITIONS MADE BY LD. A.O. AND CONFIRMED BY CIT(A) WHICH IS AGAINST THE P ROVISIONS OF THE ACT WHICH DESERVES TO BE DELETED. GROUND NO 1 AND 2 ARE INTERCONNECTED AND THEREFORE THE SAME ARE CONSIDERED TOGETHER. IT IS WITH RESPECT TO CONFIRMI NG OF ADDITION OF RS 16,86,813/-. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 3 5. DURING THE COURSE OF SURVEY PROCEEDINGS ON 23.9. 2003, A DIARY WAS FOUND WHICH REFLECTED CASH ENTRIES THAT WERE NOT REFLECTED IN T HE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. THE TOTAL OF SUCH CASH ENTRIES AGGREGATED TO RS 43,28,407/- COVERING TWO FINANCIAL YEARS RELEVANT TO AY 2003-04 (RS 22,82,55 9/-) AND AY 2004-05 (RS 20,45,848/-) STATEMENT OF SHRI KAMLESHBHAI PATEL, A PARTNER, WAS ALSO RECORDED AT THE TIME OF SURVEY U/S. 133A WHEREIN HE ADMITTED TH E CASH ENTRIES TO BE THE UNRECORDED INCOME OF THE FIRM. LATER VIDE LETTER DA TED 12.10.2003, ASSESSEE RECONCILED THE UNRECORDED INCOME AND CORRECTED THE BREAKUP OF THE INCOME FOR THE TWO YEARS AT RS 16,32,559/- FOR AY 2003-04 AND RS 2 6,95,848/- FOR AY 2004-05. SUBSEQUENTLY ASSESSEE FILED REVISED RETURN OF INCOM E WHERE IT CREDITED ONLY RS 7,03,558/- IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD 'WORK IN PROGRESS' INSTEAD OF THE RECONCILED FIGURE OF RS 16,32,559/- WHICH WA S ADMITTED IN THE STATEMENT RECORDED AT THE TIME OF SURVEY. THE ASSESSEE WAS AS KED TO SHOW CAUSE THE CHANGE IN STAND TO WHICH ASSESSEE INTERALIA, APART FROM SU BMITTING THAT THE STATEMENT RECORDED U/S. 133A OF THE ACT DID NOT CARRY EVIDENT IARY VALUE, ALSO SUBMITTED THAT IN THE STATEMENT RECORDED THE PARTNER HAD DECLARED THE GROSS RECEIPTS AND NOT THE TOTAL INCOME. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOU ND ACCEPTABLE TO THE AO. HE THEREAFTER FOR THE REASONS RECORDED IN THE ORDER RE JECTED, THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) AND CONSIDERED THE INCOME R ECORDED AT THE TIME OF SURVEY AMOUNTING TO RS 16,86,813/- U/S 69 OF THE ACT. AGGR IEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) R EJECTED THE GROUND OF ASSESSEE AND UPHELD THE ORDER OF AO BY HOLDING AS UNDER:- 2.2 I HAVE CONSIDERED THE SUBMISSIONS. DURING SURVE Y ACTION AT APPELLANT'S PREMISES ON 23.9.2003, BLUE DIARY INVENTORISED AT ITEM NO.9 OF ANNEXURE-K WAS FOUND. DURING THE STATEMENT RECORDED ON OATH U/S.133A ON 23.9.200 3, SHRI KAMESHBHAI J. PATEL, PARTNER IN ANSWER TO Q.NO.16 SUBMITTED THAT DIARY-K -9 CONTAINED DETAILS OF J. K. LANDMARK SCHEME, I.E. NAMES AND ADDRESSES OF THE BU YERS, NUMBER OF THE SHOPS SOLD AND DATE WISE RECEIPTS. THE AUTHORIZED OFFICER IN Q.NO.17 SHOWED PAGE NO.24 OF THE DIARY TO SHRI KAMLESHBHAI, WHICH CONTAINED RECO RD OF RECEIPTS, BOTH BY CASH AND CHEQUE ON VARIOUS DATES IN RESPECT OF SHOP NOS. B.I , B.2 AND B.3 SOLD TO SHRI PRAHLADBHAI MANDALIA OF ANAND. SHRI KAMLESHBHAI, AF TER VERIFYING CASH BOOK AND LEDGER REPLIED THAT ALL PAYMENTS BY CHEQUE WERE REC ORDED IN THE BOOKS OF ACCOUNTS, WHEREAS THE CASH RECEIPTS OF RS.14,50,000/- AS PER DIARY'S PAGE 24 WERE NOT RECORDED IN THE ACCOUNT BOOKS. THE ASSESSING OFFICE R, THEN IN Q.NO.19 REFERRED TO ANNEXURE KJP-1 PREPARED ON THE BASIS ALL THE PAGES OF DIARY K-9, AFTER TALLYING THE SAME WITH CASH BOOK, AS PER WHICH TOTAL CASH RECEIP TS OF RS.43,28,407/- FOR F.Y.2002-03 AND 2003-04 RESPECTIVELY WERE NOT RECOR DED IN THE BOOKS OF ACCOUNTS. SHRI KAMLESHBHAI ADMITTED THAT THESE AMOUNTS WERE N OT RECORDED IN THE BOOKS OF ACCOUNTS. HE ACCEPTED NET UNRECORDED INCOME OF RS.1 3,53,558/- FOR F.Y.2002-03 ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 4 AND RS.19,60,848/- FOR F.Y.2003-04 AFTER ALLOWING D EDUCTION FOR CASH PAYMENTS RECORDED IN THE BOOKS OF ACCOUNTS, AS PER HIM. SHRI SHAILESHBHAI J. PATEL, ANOTHER PARTNER, IN HIS STATEMENT ON 26.9.2003 U/S.131 CONF IRMED THE DECLARATION OF ADDITIONAL INCOME OF RS.13.53 LAKH FOR A.Y.2003-04 AND RS.19.6 LAKH FOR A.Y.2004-05 MADE BY SHRI KAMLESHBHAI J. PATEL. HE REITERATED THAT IN F.Y.2002-03, OUT OF TOTAL CASH RECEIPTS/ON MONEY OF RS.22,82,559/- AS PER DIARY, A MOUNT OF RS.9,29,001/- WAS RECORDED IN THE BOOKS/CASH BOOK AND THUS ONLY RS.13 ,53,558/- WAS NET ADDITIONAL INCOME OF THE FIRM. FOR F.Y.2003-04, NET ADDITIONAL INCOME WAS ADMITTED TO BE RS.19,60,848/-, AFTER DEDUCTING CASH RECEIPT OF RS. 85,000/- CLAIMED TO BE RECORDED IN THE BOOKS OF ACCOUNTS. BOTH THE PARTNERS THUS ACCEP TED THE ENTRIES IN DIARY K-9 TO BE 'ON MONEY' PAYMENTS NOT RECORDED IN THE BOOKS OF AC COUNTS AND ALSO DECLARED THEM TO BE NET UNACCOUNTED INCOME. IN VIEW OF THE DOCUME NTARY EVIDENCE GATHERED DURING THE SURVEY U/S.133A AND THE STATEMENT OF THE PARTNE RS ON OATH, THERE IS NO DOUBT THAT THE CASH ENTRIES IN THE DIARY WERE OF RECEIPTS IN RESPECT OF J. K. LANDMARK SCHEME AND AS PER PARTNERS' OWN ADMISSION, RECEIPTS AT LEAST TO THE EXTENT OF RS.13,53,558/- FOR F.Y.2002-03 AND RS.19,60,848/- F OR F.Y.2003-04 WERE NET UNDISCLOSED INCOME. LATER, THROUGH LETTER DATED 12. 10.2003, IT WAS POINTED OUT BY THE APPELLANT THAT ONE ENTRY OF RS.6.5 LAKH INCLUDED IN F.Y.2002-03 ACTUALLY PERTAINED TO F.Y.2003-04, DUE TO WHICH THE CASH RECEIPTS FOR THE TWO YEARS AS PER THE DIARY WORKED OUT TO RS.16,32,559/-FOR F.Y.2002-03 AND RS. 26,95,848/- FOR F.Y.2003-04. REGARDING CLAIM OF RS.9,29,001/- AND RS.85,000/-, B EING RECORDED IN THE REGULAR CASH BOOKS, DESPITE PROVIDING DUE OPPORTUNITY, NO D ATE WISE OR PARTY WISE RECONCILIATION COULD BE MADE BY THE APPELLANT AS DI SCUSSED IN PARA 18 OF THE ASSESSMENT ORDER. THUS, IT IS HELD THAT THE ASSESSI NG OFFICER WAS JUSTIFIED IN NOT ALLOWING CREDIT FOR RS.9,29,001/- AND RS.85,000/- A ND IN HOLDING THAT THE UNRECORDED RECEIPTS FOR J. K. LANDMARK SCHEME WERE RS.16,86,81 3/- AND RS.26,41,593/- FOR F.YRS.2002-03 AND 2003-04 RESPECTIVELY AS PER ANNEX URE-A TO ASSESSMENT ORDER. WHETHER IT WAS JUSTIFIED TO TREAT THESE UNACCOUNTED RECEIPTS TO BE NET INCOME IS ADJUDICATED IN PARA 2.2.2. 2.2.1. BEFORE PROCEEDING FURTHER, APPELLANT'S RELAT ED GROUND OF APPEAL (NO.3) THAT THE AUTHORISED OFFICER HAD NO JURISDICTION OR POWER TO OBTAIN DECLARATION OF INCOME DURING SURVEY U/S.133A IS DISPOSED OF. IN APPELLANT'S CASE , THE UNACCOUNTED RECEIPTS ARE EVIDENCED FROM THE DIARY FOUND DURING THE SURVEY, W HICH RECORDED NAMES OF PERSONS MAKING THE PAYMENTS, DATES, AMOUNTS RECEIVED BY CHE QUE AS WELL AS CASH. STATEMENT RECORDED DURING SURVEY ONLY CORROBORATED DIARY ENTRIES. THE AUTHORISED OFFICERS DID NOT OBTAIN ANY CONFESSION OF UNDISCLOS ED INCOME BUT THE APPELLANT HIMSELF ADMITTED ENTRIES IN THE DIARY TO BE UNACCOU NTED. THIS GROUND OF APPEAL IS HENCE, DISMISSED. 2.2.2. APPELLANT'S CONTENTION THAT UNACCOUNTED RECE IPTS AS PER DIARY K-9 WERE GROSS RECEIPTS AND NOT NET INCOME IS NOW TAKEN UP. APPELL ANT'S CASE IS DISTINGUISHABLE FROM THE DECISIONS RELIED UPON. APPELLANT HAD SOLD SHOPS IN J. K. LANDMARK SCHEME AND HAD RECORDED PART OF SALE CONSIDERATION IN THE BOOK S IN RESPECT OF EACH SHOP. COST OF CONSTRUCTION AND OTHER EXPENSES IN RESPECT OF THESE SHOPS WERE ALREADY DEBITED IN THE REGULAR BOOKS OF ACCOUNTS. THUS, IT IS NOT A CA SE, WHERE UNRECORDED SALES DETECTED WERE WITHOUT CORRESPONDING PURCHASES. HERE , PURCHASES WERE ALREADY DEBITED. APPELLANT HAS NOT BEEN ABLE TO ADDUCE ANY EVIDENCE THAT ANY EXPENSES OUTSIDE THE BOOKS WERE INCURRED. DURING APPELLATE P ROCEEDINGS ALSO, IT WAS ACCEPTED BY THE PARTNER SHRI SHAILESH PATEL THAT THERE WAS N O EVIDENCE WITH THE APPELLANT REGARDING EXPENSES OUTSIDE THE BOOKS. IN THIS SITUA TION, CASH RECEIPTS AS PER DIARY K- 9, WHICH WERE ADMITTED TO BE NET UNACCOUNTED INCOME OF THE APPELLANT FIRM BY BOTH ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 5 THE PARTNERS IN THEIR STATEMENT ON OATH, IS TO BE T AKEN AS NET UNACCOUNTED INCOME ONLY. IT IS RELEVANT TO NOTE HERE THAT IN THE REVIS ED RETURN, APPELLANT HAD INCREASED ITS INCOME BY RS.7,03,558/- BY TERMING THE SAME AS WIP, NOT SHOWN IN ORIGINAL RETURN. THIS FIGURE MATCHES EXACTLY WITH THE FIGURE ARRIVED AT BY SUBTRACTING RS.9,29,001/-, I.E. THE CASH RECEIPTS CLAIMED TO BE RECORDED IN RE GULAR CASH BOOK FOR F.Y.2002-03 FROM TOTAL CASH RECEIPTS OF RS.16,32,559/- IN DIARY K-9 FOR F.Y.2002-03. THUS, WHILE WORKING OUT RS.7,03,558/-, NO EXPENSES WERE DEDUCTE D BY APPELLANT. 6. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NO W IN APPEAL BEFORE US. 7. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MA DE BEFORE AO PARTICULARLY THAT THE STATEMENT WAS RECORDED DURING THE COURSE OF SURVEY U/S 133A WHEN THE ASSESSEE WAS FULLY EXHAUSTED AND FURTHER THE ASSESSEE HAD ST ATED IN THE STATEMENT WAS GROSS RECEIPTS AND NOT THE INCOME. HE THEREFORE SUBMITTED THAT AFTER RECONCILING THE ASSESSEE HAD RIGHTLY SUBMITTED THAT RS 7,03,558/- W AS THE INCOME IN THE REVISED RETURN. HE FURTHER PLACED RELIANCE ON THE DECISION OF APEX COURT IN THE CASE OF CIT VS S. KHADER KHAN SON (2013) 352 ITR 480 (SC) FOR THE PROPOSITION THAT STATEMENT RECORDED U/S 133A OF THE ACT HAS NO EVIDENTIARY VAL UE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT BE THE BASIS OF ADDITI ON. IN THE ALTERNATE HE SUBMITTED THAT ADDITION MAY BE MADE @8% U/S 44AD OF THE ACT AND FOR WHICH HE PLACED RELIANCE ON THE DECISION IN THE CASE OF V.R.TEXTILE S VS JCIT (2011) 11 ITR (TRIB) 476 (AHD), KESHARBHAI GHAMARBHAI CHAUDHARY VS ITO (2012 ) 44 (II) ITCL 439 (AHD) (ITA NO 1402/AHD/2009 ORDER DATED 28 TH JAN 2011 FOR THE PROPOSITION THAT WHERE THE LEGISLATURE HAS PROVIDED SOME FORMULA FOR ESTIMATIO N OF INCOME, THE INCOME SHOULD BE ESTIMATED ACCORDINGLY AND EVEN IF THE AO HAS REJ ECTED THE BOOKS OF ACCOUNTS. HE ALSO RELIED ON VARIOUS OTHER DECISIONS. 8. THE LD.D.R ON THE OTHER HAND TOOK US THROUGH THE FINDINGS OF AO AND CIT(A). HE SUBMITTED THAT DURING THE COURSE OF SURVEY, STATEME NT OF SHRI KAMLESHBHAI PATEL, THE PARTNER OF THE FIRM, WAS RECORDED U/S 133A ON 23.9. 2003 WHEREIN HE ADMITTED THE CASH ENTRIES TO BE THE UNRECORDED INCOME OF THE FIR M. HE POINTED TO THE RELEVANT ANSWERS GIVEN TO Q NO 14 TO 18 (THE TRANSLATED COPI ES OF WHICH ARE PLACED AT PAGE 34 TO 36 OF THE PAPER BOOK) IN HIS SUPPORT. HE FURT HER SUBMITTED THAT SUBSEQUENTLY, STATEMENT OF ANOTHER PARTNER, SHRI SHAILESHBHAI PAT EL WAS RECORDED U/S 131(1) OF THE ACT ON 26.9.2003 WHEREIN HE CONFIRMED THE EARLIER S TATEMENT GIVEN BY ANOTHER PARTNER SHRI KAMLESHBHAI PATEL ON 23.9.2003 TO BE T RUE AND AGREED WITH HIS ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 6 STATEMENTS. THE RELEVANT ENGLISH TRANSLATION OF THE ANSWER TO QUESTION NO 3 WAS PLACED AT PAGE 37 OF THE PAPER BOOK. THE LD.D.R. FU RTHER SUBMITTED THAT BEFORE AO WHEN THE ASSESSEE HAD RAISED A PLEA THAT THE STATEM ENT RECORDED U/S 133A WAS NOT LEGAL AND VALID IN THE EYES OF LAW, AO GRANTED ANOT HER OPPORTUNITY TO EXPLAIN AND CORROBORATE THE DETAILS IN RESPONSE TO WHICH SHRI S AILESHBHAI PATEL ON 10.1.2006, ADMITTED IN STATEMENT RECORDED U/S 131 OF THE ACT T HAT THE CASH ENTRIES TO BE UNACCOUNTED INCOME OF THE FIRM. HE SUBMITTED THAT T HE AFORESAID FACTS ARE RECORDED ON PAGE 11 OF THE ASSESSMENT ORDER. HE FURTHER SUBM ITTED THAT A RECONCILIATION WAS SUBMITTED BY ASSESSEE ON 12.10.2003 (I.E. AFTER ABO UT 19 DAYS FROM THE SURVEY) WHEREIN ALSO THE CORRECTED BREAKUP OF THE UNACCOUNT ED INCOME WAS GIVEN BY THE ASSESSEE. HE ALSO SUBMITTED THAT EARNING OF UNRECOR DED MONEY BY THE ASSESSEE WAS ALSO CONFIRMED BY ONE OF THE PURCHASER, SHRI RA OJIBHAI RATHOD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO HAD RECORDED ST ATEMENT OF SHRI RAOJIBHAI BHIKHABHAI RATHOD U/S 131 OF THE ACT ON 17.1.2006, WHEREIN HE HAD STATED THAT AGAINST HIS PAYMENT OF RS 2.20 LACS TOWARDS THE COS T OF FLAT, THE PURCHASE DEED WAS MADE FOR AN AMOUNT OF RS 1.60 LACS. THE LD.D.R. THE REFORE SUBMITTED IT WAS NOT THE CASE WHERE THE ADDITION WAS MADE MERELY ON THE BASI S OF STATEMENT BUT ON THE CONTRARY THE ADDITION WAS MADE ON THE BASIS OF THE CORROBORATIVE MATERIAL FOUND AND ON THE BASIS OF STATEMENTS AND THEREFORE THE DECISI ON OF APEX COURT RELIED UPON BY THE LD. A.R. WAS NOT APPLICABLE TO THE FACTS OF THE CASE. HE FURTHER SUBMITTED THAT AO HAS NOTED AT PAGE 23 OF THE ORDER THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD NEITHER CONTENDED OR CLAIMED HAVING AN Y UNACCOUNTED EXPENDITURE AS INCURRED NOR PRODUCED ANY EVIDENCE WHICH CAN PROVE THAT ANY EXPENDITURE OTHER THAN WHAT WAS ACCOUNTED HAD BEEN INCURRED AND THEREFORE WHATEVER INCOME WHICH WAS COLLECTED IN CASH AND FOUND IN THE DIARY WAS NET IN COME ONLY. HE FURTHER PLACED RELIANCE ON THE DECISIONS IN THE CASE OF CIT VS HOT EL SAMRAT (2010) 323 ITR 353 (KER), CIT VS P.BALASUBRAMANIAN (2013) 354 ITR 116 (MAD) FOR THE PROPOSITION THAT ANY STATEMENT RECORDED U/S 133A WOULD HAVE EVIDENTI ARY VALUE ONLY IF SUPPORTED WTH MATERIALS. HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF BACHITTAR SINGH VS CIT & ANR (2010) 328 ITR 400 (P&H) FOR THE PROPOSIT ION THAT EVEN IF STATEMENT U/S 133A WAS NOT AT PAR WITH THE STATEMENT U/ 132(4) AN D DID NOT HAVE THAT EVIDENTIARY VALUE BUT SUCH STATEMENT CANNOT BE HELD TO BE IRREL EVANT MATERIAL SO AS TO BE RULED OUT OF CONSIDERATION IN TOTALITY OF FACTS. HE ALSO PLACED RELIANCE ON THE DECISION IN THE ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 7 CASE OF CIT VS SONAL CONSTRUCTION 359 ITR 532 (DEL) . HE THUS STRONGLY SUPPORTED THE ORDER OF AO AND CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF SURVEY ON 23.9.2003 A DIARY WAS FOUND WHICH CONTAINED THE DETAILS OF CASH RECEIPTS. THE S TATEMENT OF SHRI KAMLESHBHAI, A PARTNER, WAS ALSO RECORDED WHEREIN HE ADMITTED THAT THE CASH ENTRIES RECORDED IN THE DIARY TO BE UNRECORDED INCOME OF THE FIRM. IT IS AL SO AN UNDISPUTED FACT THAT SUBSEQUENTLY ANOTHER PARTNER, SHRI SHAILESHBHAI PAT EL, IN THE STATEMENT RECORDED U/S 131 OF THE ACT ON 26.9.2003 CONFIRMED THE STATEMENT OF HIS PARTNER SHRI KAMLESHBHAI. IT IS ALSO A FACT THAT ON 12.10.2003 I .E. SUBSEQUENT TO THE SURVEY, A RECONCILIATION OF THE UNRECORDED INCOME WAS SUBMITT ED WHEREIN THE CORRECT YEA WISE BREAKUP OF THE UNACCOUNTED INCOME FOR AY 2003-04 AN D AY 2004-05 WAS FURNISHED BY THE ASSESSEEE. IT IS ALSO A FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO HAD RECORDED STATEMENT OF SHRI RAOJIBHAI RATHOD U/S 131 ON 17.1.2006 WHEREIN HE CONFIRMED THE PAYMENT OF RS 2.20 LACS TOWARDS TH E COST OF FLAT AS AGAINST THE PURCHASE DEED WHICH WAS MADE FOR RS 1.60 LACS. CIT( A) IN HIS ORDER HAS ALSO RECORDED A FINDING THAT BOTH THE PARTNERS OF THE FI RM HAD ACCEPTED THE ENTRIES IN THE DIARY TO BE 'ON MONEY' PAYMENTS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND ALSO DECLARED IT TO BE NET UNACCOUNTED INCOME. CIT(A) HA S ALSO GIVEN A FINDING THAT THE UNACCOUNTED RECEIPTS IN THE DIARY FOUND DURING THE SURVEY CONTAINS EXHAUSTIVE DETAILS LIKE THE NAMES OF PERSONS MAKING THE PAYMENT, DATES , AMOUNTS RECEIVED BY CHEQUE AS WELL AS CASH AND THE STATEMENT OF THE PARTNERS F URTHER CORROBORATES THE ENTRIES IN THE DIARY. WITH RESPECT TO UNACCOUNTED INCOME BEING GROSS RECEIPTS AND NOT THE NET INCOME, CIT(A) HAS GIVEN A FINDING THAT ASSESSEE HA D SOLD SHOPS IN J.K.LANDMARK SCHEME AND HAD RECORDED PART OF THE SALE CONSIDERAT ION IN THE BOOKS IN RESPECT OF EACH SHOP, COST OF CONSTRUCTION AND OTHER EXPENSES WERE ALREADY DEBITED IN THE REGULAR BOOKS OF ACCOUNTS AND NO EVIDENCE WAS ADDUC ED TO DEMONSTRATE THAT ANY EXPENSES OUTSIDE THE BOOKS WERE INCURRED BY THE ASS ESSEE AND WHICH WAS ALSO ACCEPTED BY SHRI SAILESH PATEL DURING APPELLATE PRO CEEDINGS. WITH RESPECT TO CLOSING STOCK/WORK IN PROGRESS, WE FIND THAT THAT DURING T HE COURSE OF SURVEY PROCEEDINGS, A QUESTION (Q NO. 14) WAS ASKED TO SHRI KAMLESHBHAI P ATEL AS TO WHETHER ASSESSEE WAS SHOWING CLOSING STOCK OR WORK IN PROGRESS IN J. K. PROMOTORS SCHEME TO WHICH IT WAS REPLIED WE ARE NOT SHOWING CLOSING STOCK OR WO RK IN PROGRESS. FROM PRACTICAL ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 8 POINT OF VIEW IT IS NOT POSSIBLE TO SHOW THE SAME ( RELEVANT QUESTION AND ANSWER IS ON PAGE 34 OF PAPER BOOK). CIT(A) HAS FURTHER GIVEN A FINDING THAT IN THE REVISED RETURN THE ASSESSEE HAD INCREASED ITS INCOME BY RS 7,03,558/- BY TERMING THE SAME AS WIP WHICH WAS NOT SHOWN IN THE ORIGINAL RETURN. IT HOWEVER EXACTLY MATCHED WITH THE FIGURE OF TOTAL CASH RECEIPTS OF RS 16,32,559/- FOUND IN THE DIARY LESS THE CASH RECEIPTS OF RS 9,29,001/- WHICH WAS CLAIMED TO HAVE BEEN RECORDED IN REGULAR CASH BOOK FOR FY 2002-03 AND THEREFORE WHILE WORKING OUT RS 7,03,558/- NO EXPENSES WERE DEDUCTIBLE BY ASSESSEE. THE AFORESAID FINDINGS OF CIT(A) COULD NOT BE CONTROVERTED BY LD A.R NOR ANY MATERIAL WAS FURNISH ED BY A.R. TO CONTROVERT THE SAME. 10. THUS IN THE PRESENT CASE, WE AGREE WITH THE FIN DINGS OF CIT(A) THAT THE ADDITION HAS NOT BEEN MADE MERELY ON THE BASIS OF STATEMENT RECO RDED DURING THE COURSE OF SURVEY BUT ON THE CONTRARY IT HAS BEEN MADE ON THE BASIS OF CORROBORATIVE EVIDENCE FOUND AT THE TIME OF SURVEY AND WHICH WAS FURTHER C ORROBORATED WITH THE STATEMENTS OF THE PARTNERS AND OTHER PERSON RECORDED U/S 131 A ND 133A OF THE ACT. BEFORE US, LD. A.R. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DEMO NSTRATE THAT THE STATEMENT OF THE PARTNER WAS OBTAINED BY COERCION OR UNDER PRESSURE. IN VIEW OF THE AFORESAID FACTS, WE ARE THEREFORE OF THE VIEW THAT FOR WHICH THE CAS E LAW RELIED UPON BY THE LD. AR CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE, WE ALSO FIND SUPPORT TO OUR VIEW BY THE FOLLOWING DECISIONS. IN THE CASE OF CIT VS SONAL CONSTRUCTION (2013) 359 ITR 532 (DEL) HON'BLE DELHI HIGH COURT HAS HELD THAT WHEN DOCUMENTS WHICH ARE N OT MEANT FOR THE EYES OF THE REVENUE ARE UNEARTHED AFTER UNDERTAKING AN EXERCISE WHICH INVOLVES AN INTRUSION INTO THE PRIVACY OF THE ASSESSEE, IT IS NOT PERMISS IBLE TO DISCOUNT THE VERACITY, GENUINENESS AND TRUTHFULNESS OF THE CONTENTS THEREI N FOR THE FLIMSIEST OF REASONS. IT WOULD BE PROPER TO INSIST UPON STRONG EVIDENCE IN R EBUTTAL OF THE CONTENTS OF THE DOCUMENTS, PARTICULARLY AFTER THE INTRODUCTION OF S ECTION 292C WITH RETROSPECTIVE EFFECT FROM 1-10-1975. IN THE CASE OF CIT VS P. BALASUBRAMANIAN (2013) 354 ITR 116 (MAD), HON'BLE HIGH COURT HAS HELD THAT ANY STATEMENT RECORDED U/S 133A WOULD HAVE EVIDENTIARY VALUE ONLY IF SUPPORTED WITH MATERIALS. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 9 11. BEFORE US, LD. A.R HAS ALSO MADE AN ALTERNATE P LEA THAT THE ADDITION BE RESTRICTED TO 8% OF THE RECEIPTS IN VIEW OF THE FORMULA PRESCRIBE D U/S 44AD OF THE ACT. WE FIND THAT THIS PLEA WAS ALSO RAISED BEFORE CIT(A). CIT(A) WHI LE DISPOSING THE AFORESAID PLEA HAS GIVEN A FINDING THAT PROVISONS OF S. 44AD ARE A PPLICABLE WHEN THE TURNOVER OF THE ASSESSEE DOES NOT EXCEED RS 40 LACS BUT IN THE CASE OF ASSESSEE AFTER INCLUDING THE 'ON MONEY' TO THE TURNOVER DECLARED BY THE ASSESSEE , THE TURNOVER EXCEEDS RS 40 LACS AND THEREFORE THE PROVISIONS OF PRESUMPTIVE TA X DOES NOT APPLY. BEFORE US, LD.A.R. COULD NOT CONTROVERT THE FINDINGS OF CIT(A) AND THEREFORE WE ARE OF THE VIEW THAT THE ALTERNATE PLEA OF THE LD. AR. ALSO CANNOT BE ACCEPTED IN THE PRESENT CASE. 12. IN VIEW OF THE TOTALITY OF THE FACTS AND THE DE CISIONS CITED HEREINABOVE, WE FIND NO INFIRMITY IN THE ORDER OF AO AND CIT(A) AND THUS NO INTERFERENCE IS CALLED FOR IN THEIR ORDER. THUS THESE GROUNDS OF ASSESSEE ARE DISMISSED . GR. NO 3 IS WITH RESPECT TO ADDITION OF RS 20,000/- ON ACCOUNT OF UNACCOUNTED RECEIPTS CONFIRMED BY CIT(A). 13. ON VERIFICATION OF ANNEXURE K-10 (RECEIPT BOOK - TEMP) AO NOTICED CASH RECEIPTS AGGREGATING TO RS 41,000/- IN RESPECT OF BOOKING OF FLATS/SHOPS WERE NOT REFLECTED IN THE REGULAR CASH BOOK (DETAILS OF WHICH ARE ON PAGE 25 OF THE AO ORDER). THE SUBMISSION OF THE ASSESSEE WAS THAT THE AMOUNT OF R S 20,000/- WAS COVERED BY THE WORK IN PROGRESS OF RS 7,03,558/-. WITH RESPECT TO RS 21,000 IT WAS SUBMITTED THAT IT WAS WITH RESPECT TO SHOP NO B-9 IN THE BASEMENT WHI CH WAS BOOKED BY BHAVESH CHAVDA AND ON ACCOUNT OF CANCELLATION OF BOOKING, T HE SAME WAS RETURNED. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO AO AND HE THEREFORE CONSIDERED THE AGGREGATE AMOUNT OF RS 41,000/- TO B E UNEXPLAINED INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CA RRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED PARTIAL RELIEF BY HOLDING AS UNDER:- 5.2. I HAVE CONSIDERED THE SUBMISSIONS. IN RESPECT OF RECEIPTS ISSUED TO PRASHANT KHARE AND JYOTIKABEN PARMAR, APPELLANT HAS CONTRADI CTED ITSELF. DURING THE ASSESSMENT PROCEEDINGS, THESE SUMS WERE CLAIMED TO BE UNACCOUNTED RECEIPTS FORMING PART OF WORK-IN-PROGRESS OF RS.7,03,558/- W HEREAS DURING APPELLATE PROCEEDINGS, THESE AMOUNTS WERE CLAIMED TO BE KACHH A RECEIPTS WHICH WERE LATER ADJUSTED AGAINST PAYMENTS RECORDED IN THE BOOKS. AS RIGHTLY HELD BY ASSESSING OFFICER, DUE TO THE NAMES OF PRASHANT KHARE AND JYO TIKA PARMAR NOT APPEARING IN ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 10 DIARY K-9, THERE WAS NO QUESTION OF ALLOWING SET OF F FOR THESE RECEIPTS AGAINST UNACCOUNTED RECEIPTS IN DIARY K-9 OR THE WIP. AS FA R AS CLAIM REGARDING THESE TWO RECEIPTS BEING KACHHA RECEIPTS, LATER ADJUSTED AGAI NST TOTAL PAYMENT IS CONCERNED, THE SAME IS NOT BACKED BY ANY EVIDENCE AND IS NOT A CCEPTED. ADDITION OF RS.20,000/- IN RESPECT OF FIRST TWO RECEIPTS IS THEREFORE, IN O RDER. REGARDING THE THIRD RECEIPT, THE REASONS ASSIGNED BY THE AO FOR NOT ACCEPTING CONFIR MATION FROM BHAVESH CHAVDA ARE NOT VALID. IT IS VERIFIABLE FROM THE RECORDS TH AT THE SAID BOOKING WAS CANCELLED. ONCE THE BOOKING ITSELF WAS CANCELLED, THERE WAS NO QUESTION OF ANY 'ON MONEY' OR UNRECORDED PAYMENTS FOR THE SAME BEING APPELLANT'S INCOME. THUS, ADDITION OF RS.21,000/- IN RESPECT OF THIRD RECEIPT IS NOT JUST IFIED. TO SUM UP, OUT OF ADDITION OF RS.41,000/-, RS.20,000/- IS CONFIRMED AND THE BALAN CE, I.E. RS.21,000/- IS DELETED. 14. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. BEFORE US, LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO A ND CIT(A). ON THE OTHER HAND LD D.R. RELIED ON THE ORDER OF AO. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. CIT(A) WHILE GRANTING PARTIAL RELIEF HAS NOTED THAT THE CL AIM OF ASSESSEE THAT THE TWO RECEIPTS OF RS. 20,000/- WERE KACHHA RECEIPTS WHICH WERE LAT ER ADJUSTED AGAINST TOTAL PAYMENT WAS NOT BACKED BY ANY EVIDENCE. BEFORE US, LD. AR. COULD NOT BRING ANY MATERIAL TO CONTROVERT THE FINDINGS OF CIT(A). WE T HEREFORE FIND NO INFIRMITY IN HIS ORDER AND THEREFORE NO INTERFERENCE IS CALLED FOR I N THE ORDER OF CIT(A). THUS THIS GROUND OF ASSESSEE IS DISMISSED. GR. NO 3 IS WITH RESPECT TO DISALLOWANCE OF RS 28,6 13/- U/S 40A(3) WHICH WAS CONFIRMED BY CIT(A). 16. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSAL OF AUDIT REPORT AO NOTICED THAT ASSESSEE HAS MADE CASH PAYMENTS AGGREG ATING TO RS 1,43,065/- (DETAILS LISTED ON PAGE 26 OF THE AO ORDER). AO NOT ED THAT NO SATISFACTORY REASON WAS GIVEN BY ASSESSEE TO EXPLAIN AS TO HOW THE SAME WER E COVERED UNDER RULE 6DD(J) SO THAT THE SAME CAN BE ALLOWED AS AN EXPENDITURE. HE ACCORDINGLY DISALLOWED 20% OF THE CASH PAYMENTS APPLYING THE PROVISIONS OF SEC TION. 40A(3) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) CONFIRMED THE ACTION OF AO BY HOLDING AS UNDER:- 6.2. I HAVE CONSIDERED THE SUBMISSIONS. BEFORE AO, INITIALLY, EXCLUSION WAS SOUGHT UNDER RULE 6DD(J) BUT LATER ON BEING ASKED TO SUBST ANTIATE, APPELLANT SWITCHED ITS DEFENCE TO RULE 6DD(K). IN THE FORM NO.35 ALSO, SHE LTER UNDER RULE 6DD(K) HAS ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 11 BEEN TAKEN. UNDER CLAUSE (K) OF RULE 6DD, PAYMENTS TO AGENT WHO IS REQUIRED TO MAKE PAYMENTS IN CASH FOR GOODS OR SERVICES ON BEHA LF OF ASSESSEE ONLY ARE EXCLUDED FROM THE PURVIEW OF SECTION 40A(3). THE PA YMENTS OF RS.1,43,065/- RECORDED ON PAGE.26 OF THE ASSESSMENT ORDER ARE NOT TO ANY AGENT OF THE APPELLANT. PROVISIONS OF RULE 6DD(K) ARE THEREFORE, NOT APPLIC ABLE. DISALLOWANCE OF RS.28,613/- U/S.40A(3) IS CONFIRMED. 17. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. 18. BEFORE US, LD A.R. REITERATED THE SUBMISSIONS M ADE BEFORE LOWER AUTHORITIES AND ALSO RELIED ON THE DECISION IN THE CASE OF CIT VS BANWAR ILAL BANSHIDHAR (1998) 229 ITR 230 AND CIT VS PURSHOTTAMLAL TAMRAKAR UCHEHRA (2004 ) 270 ITR 314. ON THE OTHER HAND LD D R RELIED ON THE ORDER OF AO AND CIT(A). 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) HAS GIVEN A FINDING THAT THE PAYMENTS W ERE NOT MADE TO ANY AGENTS SO AS TO COVER UNDER THE SHELTER OF RULE 6DD(K) AND THERE FORE IT WAS RIGHTLY DISALLOWED BY AO. BEFORE US, LD.AR COULD NOT CONTROVERT THE FINDI NGS OF CIT(A). THE RATIO OF DECISIONS RELIED BY LD A.R. ARE DISTINGUISHABLE ON FACTS AND HAVE NO APPLICATION TO THE PRESENT FACTS. WE THEREFORE FIND NO REASON TO I NTERFERE WITH THE ORDER OF CIT(A). THUS THIS GROUND OF ASSESSEE IS DISMISSED. 20. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED . ITA NO 134 (AY 2004-05) GROUND NO 1 & 2 AND 3 OF THE PRESENT APPEAL ARE IDE NTICAL TO THAT OF AY 2003- 04. 21. BEFORE US, IT HAS BEEN SUBMITTED THAT THE GROUNDS R AISED IN PRESENT APPEAL ARE SIMILAR TO THE GROUNDS RAISED IN APPEAL FOR A.Y. 03 -04, THE FACTS OF THE CASE IN A.Y. 04-05 ARE ALSO SIMILAR TO THAT OF A.Y. 03-04. SINC E THE FACTS OF THE CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEALS ARE SIMILAR TO THAT OF A.Y. 03-04, WE FOR THE REASONS STATED HEREINABOVE WHILE DISPOSING THE APPEAL OF AS SESSEE FOR A.Y. 03-04 ALSO DISMISS THE APPEAL OF ASSESSEE FOR A.Y. 04-05. THUS THESE GROUNDS OF ASSESSEE ARE DISMISSED. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 12 GROUND NO 4 IS WITH RESPECT TO DISALLOWANCE OF INTE REST OF RS 25,800/- CONFIRMED BY CIT(A). 22. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD GIVEN ADVANCE OF RS 1,30,000/- TO SHRI RAKESH R PATEL WHO WAS STATED TO BE A RELATIVE OF PARTNER. AO ALSO NOTED THAT ASSESSEE WAS PAYING INT EREST TO BANK FOR THE BORROWINGS AND ALSO PAYING INTEREST TO PARTNERS. HE WAS THEREF ORE OF THE VIEW THAT INTEREST FREE ADVANCE TO A NON BUSINESS RELATED PERSON WAS NOT JU STIFIED. HE ACCORDINGLY WORKED OUT THE DISALLOWANCE OF INTEREST OF RS 25,800/-. AG GRIEVED BY THE ORDER OF AO ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO CONFI RMED THE ORDER OF AO BY HOLDING AS UNDER:- 6.1 DURING APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT THE CAPITAL OF PARTNERS WAS RS. 27,36,293/-, I.E. MUCH MORE THAN AMOUNT ADVANCE D TO RELATIVE OF RS. 3,00,000/-. THE APPELLANT RELIED UPON DECISION IN THE CASE OF T ORRENT FINANCIERS PVT. LTD. OF ITAT AHMEDABAD. 6.2 I HAVE CONSIDERED THE SUBMISSIONS. APPELLANTS RELIANCE ON THE DECISION IN THE CASE OF TORRENT FINANCIERS IS COMPLETELY MISPLACED. PARTNERS CAPITAL IS NOT INTEREST FREE FUND IN APPELLANTS HANDS. IN THE PROFIT AND L OSS ACCOUNT FOR F.Y. 2003-04, INTEREST OF RS. 3,13,021/- HAS BEEN DEBITED TOWARDS PARTNERS INTEREST EXPENDITURE. DISALLOWANCE OF RS. 25,800/- IS UPHELD. 23. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US. 24. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MAD E BEFORE CIT(A) AND FURTHER SUBMITTED THAT INTEREST WAS ONLY ON ACCOUNT OF CAR LOAN. HE THEREFORE SUBMITTED THAT THE ADDITION BE DELETED. LD D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF CIT(A). 25. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. CIT(A) WHILE UPHOLDING THE ADDITION HAS GIVEN A FINDING TH AT ASSESSEE WAS PAYING INTEREST ON PARTNER'S CAPITAL ACCOUNT AND THEREFORE IT WAS N OT INTEREST FREE AND THEREFORE IT CANNOT BE SAID THAT AMOUNT WAS ADVANCED OUT OF INTE REST FREE FUNDS. BEFORE US, LD A.R COULD NOT PLACE ANY MATERIAL ON RECORD TO CONTR OVERT THE FINDINGS OF CIT(A) HE ALSO COULD NOT SUBSTANTIATE HIS SUBMISSION THAT THE INTEREST WAS ON ACCOUNT OF CAR LOAN. . WE THEREFORE FIND NO REASON TO INTERFERE WI TH THE ORDER OF CIT(A) . THUS THIS GROUND OF ASSESSEE IS DISMISSED. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 13 26. THUS THIS APPEAL OF ASSESSEE IS DISMISSED. ITA NO 1945/AHD/2012 FOR AY 2004-05 27. THIS APPEAL OF ASSESSEE IS AGAINST THE PENALTY OF RS 9,75,000/- LEVIED U/S 271(L)(C) BY THE AO VIDE ORDER DATED 24.3.2010 AND WHICH WAS CONFIRMED BY CIT(A. 28. THE RELEVANT FACTS AS CULLED OUT FROM THE MATER IAL ON RECORD ARE AS UNDER:- 29. ASSESSEE FILED RETURN OF INCOME FOR A.Y. 2004-0 5 DECLARING TOTAL INCOME OF RS 3,93,093/-. A SURVEY U/S 133A WAS CARRIED OUT AT TH E BUSINESS PREMISES OF ASSESSEE ON 23.9.2003 AND THEREAFTER ORDER U/S 143(3) RWS 14 5(3) WAS PASSED ON 29.12.2006 DETERMINING TOTAL INCOME OF RS 34,95,130/- AFTER MA KING AGGREGATE ADDITION OF RS 32,16,848 ON ACCOUNT OF UNRECORDED UNACCOUNTED INCO ME AND OTHER ADDITIONS. AGAINST THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). CIT(A) VIDE ORDER DATED 31.12.2008 GRANTED PARTIAL RELIEF TO ASSESSEE BUT SUSTAINED THE ADDITION OF RS 27,16,755/-. ON THE AFORESAID ADDITIONS, PENALTY OF RS 9,75,000/- WAS LEVIED U/S 271(L)(C) AS THE AO WAS OF THE VIEW THAT THOUGH ASS ESSEE HAD RECEIVED INCOME IN CASH BUT WAS NOT LEDGERISED IN REGULAR BOOKS OF ACC OUNTS AS INCOME AND THE SAME WAS FOUND AT THE TIME OF SURVEY AT THE ASSESSEE'S P REMISES. FURTHER, ONE OF THE PARTNER HAD ALSO ADMITTED IT TO BE UNACCOUNTED INCO ME OF THE ASSESSEE. AO WAS THEREFORE OF THE VIEW THAT SINCE THE ASSESSEE HAD F AILED TO ACCOUNT THE CASH PAYMENTS RECEIVED AGAINST THE CONSTRUCTION OF BUILD ING, IT PROVES THAT ASSESSEE HAS CONCEALED INCOME AND IT HAD TRIED TO REDUCE ITS TAX LIABILITY AND ACCORDINGLY LEVIED PENALTY U/S 271(L)(C). AGGRIEVED BY THE ORDER OF AO , ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 18.7.2012 DI SMISSED THE APPEAL OF ASSESSEE AND THEREBY CONFIRMED THE PENALTY LEVIED BY AO. AGG RIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 30. BEFORE US, LD .A.R. SUBMITTED THAT AO HAD MEREL Y ON THE BASIS OF PRESUMPTION MADE ADDITION WITHOUT BRINGING AND CORROBORATIVE EVIDENC E ON RECORD. HE FURTHER SUBMITTED THAT MERE FACT THAT ADDITION HAS BEEN SUSTAINED IN APPEAL DOES NOT JUSTIFY LEVY OF ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 14 PENALTY AS THE ASSESSMENT AND PENALTY PROCEEDINGS A RE SEPARATE AND DISTINCT. HE THEREFORE SUBMITTED THAT THE PENALTY LEVIED BY THE AO BE DELETED. 31. LD D.R. ON THE OTHER HAND TOOK US THROUGH THE F INDINGS OF AO AND CIT(A) AND SUBMITTED THAT THAT THE INCOME WAS DETECTED DURING THE COURSE OF SURVEY AND HAD THERE BEEN NO SURVEY THE INCOME WOULD HAVE REMAINED UNDETECTED AND UNTAXED. HE FURTHER PLACED RELIANCE ON THE DECISION OF APEX COU RT IN THE CASE OF MAK DATA (P) LTD VS CIT (2013) 38 TAXMANN.COM 448 (SC). HE THEREFORE SUBMITTED THAT AO HAS RIGHTLY LEVIED THE PENALTY IN THE PRESENT CASE AND THE ORDE R OF THE AO BE UPHELD. 32. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF SURVEY U/ S 133A AT THE PREMISES OF ASSESSEE DIARY WAS FOUND WHICH CONTAINED DETAILS OF CASH ENTRIES. THE CASH ENTRIES WAS ACCEPTED AS INCOME BY ONE OF THE PARTNER IN THE STATEMENT THAT WAS RECORDED AT THE TIME OF SURVEY. THE CASH ENTRIES FOUND IN THE DIARY WERE CONSIDERED AS INCOME BY THE AO WHICH WAS ALSO PARTLY CONFIRMED BY CIT(A) . DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS TH E SUBMISSIONS HAVE BEEN GIVEN BY ASSESSEE BUT THE SAME HAVE NOT BEEN PROVED TO BE FALSE OR UNTRUE BY THE REVENUE. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION. 1 TO SECTION . 271(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT, THE ASS ESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOULD AMOUNT TO CONCEALMENT OF PARTIC ULARS OF INCOME. IT IS A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERE NT FROM ASSESSMENT PROCEEDINGS AND THE FINDINGS GIVEN IN THE ASSESSMENT THOUGH IT MAY CONSTITUTE GOOD EVIDENCE BUT SAME IS NOT CONCLUSIVE IN THE PENALTY PROCEEDINGS F URTHER, MERELY BECAUSE ADDITIONS HAVE BEEN CONFIRMED IN APPEAL IT CANNOT BE THE SOLE GROUND FOR COMING TO THE CONCLUSION THAT THE ASSESSEE HAD CONCEALED ANY INCO ME. WE ARE OF THE VIEW THAT IN THE ABSENCE OF COMPLETE AND CONVINCING CORROBORATIV E EVIDENCE, THE REVENUE MAY JUSTIFY ADDITION, BUT IN THE MATTER OF PENALTY PROC EEDINGS, THE ONUS LIES HEAVILY ON THE REVENUE TO PROVE THAT THE ASSESSEE HAD CONCEALED IT S INCOME OR HAS FILED INACCURATE PARTICULARS OF ITS INCOME. FURTHER THE DECISION REL IED UPON BY REVENUE IS ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 15 DISTINGUISHABLE ON FACTS AND THEREFORE CANNOT BE AP PLIED TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THE AFORESAID FACTS WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY IS LEVIABLE U/S 271(1)(C) AND THEREFORE DIR ECT ITS DELETION. THUS THIS GROUND OF ASSESSEE IS ALLOWED. 33. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NO 1946 & 1947/AHD/2012 FOR AY 2003-04 & 2004-0 5 34. BEFORE US, ID A.R SUBMITTED THAT THOUGH THE APPEALS RELATE TO DIFFERENT ASSESSMENT YEARS BUT THE FACTS AND CIRCUMSTANCES OF BOTH YEARS ARE I DENTICAL AND THEREFORE THE SUBMISSIONS MADE BY THEM IN CASE OF ONE YEAR WOULD BE APPLICABLE TO THE OTHER AND THEREFORE BOTH THE APPEALS CAN BE HEARD TOGETHER. W E THEREFORE PROCEED TO DISPOSE OF BOTH THE APPEALS TOGETHER AND PROCEED WITH THE FACT S FOR AY 2003-04. 35. IN THIS CASE, ASSESSEE FILED APPLICATION U/S 15 4 BEFORE AO WHEREIN IT WAS SUBMITTED THAT, AS PER THE ORDER GIVING EFFECT TO CIT(A)'S OR DER, ASSESSEE WAS ENTITLED TO FURTHER DEDUCTION OF SALARY PAID TO PARTNERS RS 8,14,232/- AO NOTED THAT IN THE RETURN OF INCOME FILED, ASSESSEE HAD CLAIMED DEDUCTION OF RS 1,11,843/- U/S 40(B) WITH RESPECT TO SALARY PAID TO PARTNERS AND THE SAME WAS CORRECTLY ALLOWED. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 18.7.2012 DISMISSED THE APPEAL OF THE ASSESSEE BY H OLDING AS UNDER:- 2.2. AS STATED ABOVE, DURING THE COURSE OF APPELLAT E PROCEEDINGS, SHRI N.C AMIN, ADVOCATE ATTENDED AND FILED SUBMISSION DATED 24/05/2012. THE AR OF TH E APPELLANT IN HIS SUBMISSION DATED 24/05/2012 HAS STATED THAT THE ASSESSMENT ORDER U/S 143(3) OF THE IT ACT IN THE CASE OF THE APPELLANT WAS PASSED ON 27/12/2006 BY THE ITO, WARD-1, ANAND DETERMINING TO TAL INCOME OF RS.34,95,130/- BY MAKING VARIOUS ADDITIONS AMOUNTING TO RS.32,16,848/- WHICH INCLUDE D ALLEGED UNRECORDED AND UNACCOUNTED INCOME AMOUNTING TO RS.26,95,848/-. AS PER THE AR, AGAINST THIS SAID ASSESSMENT ORDER, THE APPELLANT HAS FILE D APPEAL BEFORE THE CIT(A) AND THE ID. CIT(A) HAS ALL OWED SUBSTANTIAL DEDUCTIONS AND REVISED TOTAL INCOME AFTER APPEAL EFFECT WORKED OUT AT RS. 17,92, 4877- INCLUSIVE OF ADDITIONS ON ACCOUNT OF ALLEGED DIFFERENCE OF RS.10,59,633/-. AS PER THE AR, WHILE GIVING APPEAL EFFECT, THE AO HAS NOT GIVEN DEDUCTIO N ADMISSIBLE AS PER THE PROVISIONS OF SECTION 40(B) O F THE IT ACT. THE AR HAS FURTHER SUBMITTED THAT ON PERUSAL OF THE ASSESSMENT FOR THE YEAR UNDER CONSID ERATION IT IS PROVED BEYOND DOUBT THAT THE AO HAS ASSESSED THIS INCOME UNDER THE HEAD BUSINESS INCOME AND THE ID CIT(A) HAD ALSO IN PARA 2.2.2 HAS HELD THIS AMOUNT AS BUSINESS INCOME WHICH INCLUDED GROSS RECEIPTS AND ALSO GIVEN FINDING AFTER MAKING THIS ADDITION TO THE DECLARED INCOME IT EXCEEDS RS. 40 LAKHS AND THEREFORE, PROVISIONS OF SECTION 44AD OF THE IT ACT IS NOT APPLICABLE WHICH PROVES BEYOND DOUBT THAT FINDING GIVEN BY DCIT, ANAND CIRCLE, ANAND IN HER ORDER U/S 154 OF THE IT ACT IS AGAINST THE FACTUAL DATA AND FINDING GIVEN BY THE AO AND THE CIT(A) WHO ARE THE ORIGINATORS OF THE PROCEEDIN GS IN THE CASE OF THE APPELLANT. THUS THE AR HAD STATED THAT THE APPELLANT WAS ENTITLED TO SALARY/RE MUNERATION FROM DISCLOSED AND UNDISCLOSED INCOME. THE AR HAS RELIED UPON THE DECISIONS OF VARIOUS HON 'BLE COURTS. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 16 2.3. THE ORDER U/S 154 OF THE IT ACT OF THE DCIT, A NAND CIRCLE, ANAND AS WELL AS THE ABOVE SUBMISSION OF THE AR OF THE APPELLANT HAS BEEN CONSIDERED. IN MY OPINION, THE AR WAS REQUIRED TO FILE APPLICATION U/S 154 OF THE IT ACT ONLY AGAINST THE ASSESSMENT O RDER U/S 143(3) OF THE IT ACT AS PASSED IN THE CASE OF THE APPELLANT BY THE ITO, WARD-1, ANAND AND IT WAS FOR THE CONCERNED AO TO DECIDE SUCH RECTIFICATION APPLICATION IN ACCORDANCE WITH THE LAW. IT IS NOT S EEN THAT THE APPELLANT HAD CLAIMED THE DEDUCTION OF RS.8,14,232/- U/S 40(B) OF THE IT ACT IN RESPECT OF ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY U/S 133A OF THE IT ACT DURING THE ASSESSMENT PROCEEDINGS, BEFORE THE AO. IT IS FURTHER OBSERVED THAT THE APPELLANT WAS REQUIRED TO MAKE SUCH CLAIM EITHER BY WAY OF FILING REVISED RETURN OF INCOME OR BY WAY OF MAKING SUCH CLAIM BEFORE THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAS NOT MADE SUCH CLAIM OF DEDUCTION U/S 40(B) OF THE IT ACT EVEN BEFORE THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO. IN MY OPI NION, NO RECTIFICATION APPLICATION U/S 154 OF THE I T ACT CAN BE FILED AGAINST THE APPEAL EFFECT ORDER OF THE AO IN VIEW OF THE FACT THAT SUCH APPEAL EFFECT ORDER HAS BEEN PASSED BY GIVING EFFECT TO THE ORDER OF THE CIT(A) ONLY. THE AO CANNOT CONSIDER THE DEDUCTION OF ANY AMOUNT U/S 40(B) OF THE IT ACT IN SUCH APPEAL EFFECT ORDER. THE APPEAL EFFECT ORDER A S PASSED BY THE AO IS CONFINED TO ONLY TO THE DECISIO N OF CIT(A) AND THE AO SUOMOTO CANNOT GRANT ANY DEDUCTION WHICH IS NOT SUBJECT MATTER OF SUCH ORDER OF CIT(A). THE APPELLANT WAS REQUIRED TO FILE RECTIFICATION APPLICATION BEFORE THE AO ONLY AGAINS T THE ASSESSMENT ORDER OR IT COULD HAVE RAISED SUCH ISSUE BEFORE THE CIT(A). CONSIDERING THESE FACTS, I REJECT THE ABOVE GROUND OF APPELLANT AS FILED AGAI NST THE ORDER U/S 154 OF THE IT ACT DATED 26/02/2010 OF THE DCIT, ANAND CIRCLE, ANAND. IN THE RESULT, THE APPEAL OF THE APPELLANT IS DISMI SSED. 36. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LEARNED CIT(A) IV, BARODA HAS ERRED BOTH I N LAW AND ON THE FACTS OF THE CASE IN CONFIRMING ORDER PASSED U/S 154 BY THE LEARNED A.O. 2. THAT THE LEARNED CIT(A) OUGHT TO HAVE GRANTED MANDA TORY DEDUCTIONS OF REMUNERATION ALLOWABLE U/S 40(B) OF THE BOOK PROFIT AS PER THE TERMS AND C ONDITIONS OF PARTNERSHIP DEED AND THE PROVISIONS OF THE L.T. ACT 1961. 3. THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE TH E FACTS THAT THE MANNER OF FIXING THE REMUNERATION WAS SPECIFIED IN PARTNERSHIP DEED AND WITHOUT CONSIDERING IT, THE APPLICATION OF THE APPELLANT U/S 154 REJECTED BY LEARNED A.O. AND CONF IRMED BY CIT(A) IS AGAINST THE PROVISIONS OF THE ACT. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPEL LANT THE REMUNERATION CLAIMED BY APPELLANT IN APPLICATION U/S 154 BE ALLOWED. 5. HAVING REGARD TO THE MANDATORY PROVISIONS OF THE AC T, THE APPELLANT IS ENTITLED TO DEDUCTION OF PARTNERS REMUNERATION WHILE COMPUTATION OF BOOK PRO FIT U/S 40(B)(V) OF THE I.T. ACT 1961 BE ALLOWED. 6. THAT THE APPELLANT HAS FILED APPLICATION U/S 154 TO P THE LEARNED A.O. AS WELL AS LEARNED CIT(A), HOWEVER, BOTH THE AUTHORITIES HAVE REJECTED THE SAM E ON IRRELEVANT FACTS AND WITHOUT CONSIDERING THE DECISIONS CITED BY THE APPELLANT BE ALLOWED. 7. THAT THE MISTAKES POINTED OUT BY APPELLANT ARE PATE NT, APPARENT AND GLARING WHICH REQUIRES TO BE RECTIFIED U/S 154 OF THE I.T. ACT 1961 BE DIRECTED. 8. IT IS RESPECTFULLY PRAYED TO THE HON'BLE TRIBUNAL T HAT MOST OF THE TRIBUNALS HAS GRANTED DEDUCTION OF INTEREST AT APPLICABLE RATES AND REMUNERATION ON PROFITS ESTIMATED BY A.O. 9. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS TILL THE APPEAL IS FINALLY HEARD AND DECIDED. 37. BEFORE US AT THE OUTSET, THE LD .AR. SUBMITTED THAT HE DID NOT WISH TO PRESS GROUNDS NO 3 TO 9 AND THE SAME ARE THEREFORE DISMISSED AS N OT PRESSED. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 17 GROUND NO 1 IS GENERAL AND REQUIRES NO ADJUDICATION AND THEREFORE DISMISSED AS NOT PRESSED. THE ONLY EFFECTIVE GROUND IS NO 2 WITH RESPECT T O DEDUCTION OF REMUNERATION U/S 40(B). 38. BEFORE US, LD A.R SUBMITTED THAT AS PER THE ORD ER GIVING EFFECT TO CIT(A)'S ORDER, THE REVISED INCOME WORKED OUT TO RS. 17,92,487/- AND ON WHICH ASSESSEE WAS ENTITLED TO FURTHER DEDUCTION ON ACCOUNT OF SALARY PAID TO PART NERS AT RS 8,14,232/- U/S 40(B) DUE TO THE ENHANCED INCOME. HE THEREFORE SUBMITTED THAT AO AND CIT(A) HAS WRONGLY DENIED THE ASSESSEE DEDUCTION AND THE SAME BE ALLO WED. LD. D.R. ON THE OTHER HAND, TOOK US THROUGH THE ORDER OF AO AND CIT(A) AN D SUBMITTED THAT THERE IS NO APPARENT MISTAKE WHICH CAN BE RECTIFIED U/S 154 AND THEREFORE AO HAS RIGHTLY REJECTED THE CLAIM OF ASSESSEE. 39. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL POSITION IS THAT ASSESSEE HAD CLAIMED DEDUCTION U/S 40(B) ON THE BASIS OF THE INCOME COMPUTED BY IT. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS CERTAIN ADDITIONS ON ACCOUNT OF UNDISCLOSED INCOME WAS MADE AND ADDED TO THE INCOME OF THE ASSESSEE. THE ADDITION OF UNDISCLOSED INCOME WAS MATTER OF AP PEAL BEFORE CIT(A) WHO GRANTED CERTAIN RELIEF TO THE ASSESSEE AND ACCORDINGLY THE ADDITION MADE BY THE AO WAS REDUCED. ON THE AFORESAID ADDITIONS WHICH WERE CONFIRMED BY CIT(A), ASSESSEE SEEKS FURTHER DEDUCTION U/S 40(B) IN RESPECT OF SALARY PAID TO PA RTNERS. WE FIND THAT CIT(A) WHILE UPHOLDING THE ORDER OF AO HAS GIVEN A FINDING THAT ASSESSEE HAD NOT CLAIMED THE DEDUCTION OF RS 8,14,232 U/S 40(B) IN RESPECT OF AD DITION INCOME DECLARED DURING THE SURVEY, BEFORE THE AO DURING ASSESSMENT PROCEEDINGS , NOR ASSESSEE HAD FILED ANY REVISED RETURN OF INCOME. HE HAS FURTHER NOTED THAT NO CLAIM OF DEDUCTION U/S 40(B) WAS MADE EVEN BEFORE CIT(A) IN APPELLATE PROCEEDINGS OR ANY APPLICATION U/S 154 WAS MOVED BEFORE CIT(A). HE HAS FURTHER HELD THAT THE AO HAS ONLY PASSED ORDER GIVING EFFECT TO THE ORDER OF CIT(A) AND AO CANNOT CONSIDER THE DEDUCTIO N OF ANY AMOUNT U/S 40(B) WHILE GIVING SUCH APPEAL EFFECT ORDER. BEFORE US, THE LD. A R. HAS NOT DEMONSTRATED AS TO HOW THE DEDUCTION CAN BE GIVEN IN RECTIFICATION PROCEED INGS WHEN THERE WAS NO SUCH CLAIM BEFORE AO OR CIT(A). IN VIEW OF THE AFORESAID FACTS , WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THEREFORE NO INTERFERENCE TO HIS ORDER I S CALLED FOR. THUS THIS GROUND OF ASSESSEE IS DISMISSED. ITA NOS. 133, 134/ AHD/2009 & ITA NOS. 1945,1946 & 19 47/AHD/2012 . A.Y. 2003-0 4 & 2004- 05 18 40. THUS BOTH THE APPEALS OF ASSESSEE ARE DISMISSED. 41. IN THE RESULT THE GROUNDS RAISED IN BOTH THE APPEAL S ARE DISMISSED. 42. IN THE RESULT IN ASSESSEE APPEAL ITA NO. 1945/AHD/2 012 IS ALLOWED AND THE OTHER 4 APPEALS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 - 02 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD