M/s Lamba Celebrations Resort, Paonta Sahib V. ITO, Nahan

ITA 221/CHANDI/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8387 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 22-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained investment; Value adopted by valuation officer; Gift; Loose papers; Valuation report
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NOS. 221 TO 223/CHD/2012 A.YS: 2005-06 TO 2007-08 LAMBA CELEBRATION RESORT, VS THE ITO, BATTA BRIDGE, NAHAN. PAONTA SAHIB. PAN: AACFL8622R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 21.01.2016 DATE OF PRONOUNCEMENT : 08.03.2016 O R D E R PER BHAVNESH SAINI,JM ALL THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST TH E COMMON ORDER OF LD. CIT(APPEALS) SHIMLA DATED 28.12.2011 FOR ASSESSMENT YEAR 2005-06, 2006-07 AND 2007-08. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. IN ALL THE APPEALS, IDENTICAL QUESTIONS/ADDITIONS HAVE BEEN RAISED THEREFORE, FOR THE PURPOSE OF DISPOSAL OF AL L THE APPEALS, THE APPEALS ARE DECIDED ISSUE-WISE. 3. IN APPEAL NO. 221 AND 222/2012, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NOS. 1 AND 2 WITH 2 REGARD TO RE-OPENING OF THE ASSESSMENTS UNDER SECTI ON 148 OF THE INCOME TAX ACT. SAME ARE, THEREFORE, DISMISSED BEING NOT PRESSED. OTHER ISSUES ARE DECI DED AS UNDER. ISSUE NO.1 4. IN ASSESSMENT YEAR 2005-06, ASSESSEE ON SEVERAL GROUNDS CHALLENGED THE ADDITION OF RS.4,15,951/- ON ACCOUNT OF UNEXPLAINED COST OF CONSTRUCTION OF RESO RT. SIMILARLY IN ASSESSMENT YEAR 2006-07, ASSESSEE IN T HE REMAINING GROUNDS OF APPEAL CHALLENGED THE ADDITION OF RS. 25,57,130/- ON ACCOUNT OF UNEXPLAINED COST OF CONSTRUCTION OF RESORT. IN ASSESSMENT YEAR 2007-08 , ASSESSEE CHALLENGED THE ADDITION OF RS. 15,33,972/- OUT OF TOTAL ADDITION OF RS. 46,12,065/- ON ACCOUNT OF UNEXPLAINED COST OF CONSTRUCTION OF RESORT ON GROUN D NO. 2, 3 AND 4. 5. BRIEF FACTS OF THE ISSUE ARE THAT SURVEY UNDER SECTION 133A WAS CONDUCTED IN THE CASE OF ASSESSEE FIRM ON 09.03.2007. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT ASSESSEE HAD CONSTRUCTED M/S LAMBA CELEBRATION RESORT, THE COST OF CONSTRUCTION OF WHI CH WAS APPROXIMATELY TO THE TUNE OF RS. 1.20 CR. SHRI D.S.LAMBA, PARTNER OF THE ASSESSEE FIRM ADMITTED HA VING MADE THE SAID INVESTMENT AND OFFERED AN ADDITIONAL INCOME OF RS. 40 LACS IN THE HANDS OF THE ASSESSEE FIRM AND IN THE HANDS OF HIS OTHER BUSINESS CONCERN NAME LY 3 M/S MODERN TENT HOUSE. BUT SUBSEQUENTLY, VIDE HIS LETTER DATED 31.03.2007, THE SAID OFFER WAS RETRACT ED STATING THAT HE WAS FORCED TO MAKE THE SAID OFFER O F ADDITIONAL INCOME DURING THE COURSE OF SURVEY. IT WAS ALSO STATED IN THE SAID LETTER THAT NO UNDISCLOSED INCOME WAS INVESTED EITHER IN THE PURCHASE OF LAND FOR M/S LAMBA CELEBRATION RESORT OR IN THE CONSTRUCTION. A S PER A DIARY MARKED AS A-3 IMPOUNDED DURING THE SURVEY ACTION, IT WAS NOTICED BY THE ASSESSING OFFICER THA T DAY- TODAY EXPENSES INCURRED FOR CONSTRUCTION OF THE RES ORT WERE RECORDED IN THE SAID DIARY. THE ASSESSING OFF ICER NOTICED THAT SUM OF RS. 4,15,951/- WAS INCURRED IN CASH ON CONSTRUCTION DURING THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FILE RE TURN OF INCOME FOR ASSESSMENT YEAR 2005-06. IN RESPONSE TO THE SAID NOTICE, RETURN DECLARING NIL INCOME WAS FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DULY PROVIDED COPY OF THE DOCUMEN T A-3 AND COPIES OF THE STATEMENTS RECEIVED FROM PUNJ AB NATIONAL BANK, PAONTA SAHIB TO THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO EXPLAIN ENTRIES RELATED TO THE EXPENSES ON CONSTRUCTION TO THE TUNE OF RS. 4,15,95 1/- MADE IN THE GIVEN IMPOUNDED DOCUMENT. THE ASSESSEE IN THE REPLY SUBMITTED BEFORE ASSESSING OFFICER THA T AS PER THE BALANCE SHEET OF M/S LAMBA CELEBRATION RESO RT FOR THE ASSESSMENT YEAR 2007-08, THE BUILDING OF TH E RESORT WAS AT RS. 63,06,564/-. FURTHER DIRECT PAYME NTS MADE BY PUNJAB NATIONAL BANK, PAONTA SAHIB TO THE 4 SUPPLIERS IN CONSTRUCTION OF THE RESORT IS INCLUDED IN THE TOTAL EXPENDITURE. HENCE, IF RS. 29 LACS AGAIN ADDE D, WILL BE DUPLICACY OF EXPENSES. THE ASSESSEE CONTESTED T HE DOCUMENT A-3 BEFORE ASSESSING OFFICER. THE ASSESSI NG OFFICER, AFTER CONSIDERING REPLY OF THE ASSESSEE FO UND THAT DURING SURVEY, A-3 WAS FOUND AND LETTER RECEIV ED FROM PUNJAB NATIONAL BANK, PAONTA SAHIB WAS ALSO CONSIDERED AND ACCORDING TO THE SEIZED PAPER, PAYME NT OF RS. 4,15,951/- WAS MADE TO DIFFERENT PERSONS DUR ING ASSESSMENT YEAR 2005-06. THE ASSESSEE FAILED TO FI LE THE DETAILS OF THE EXPENSES, THEREFORE, ASSESSING O FFICER CONTACTED SOME OF THE PERSONS ON THE BASIS OF THE P HONE NUMBERS AND THEIR STATEMENTS WERE RECORDED WHICH INCLUDED SHRI SUSHIL KUMAR LUTHRA, PROPRIETOR M/S LUTHRA ASSOCIATES, WHO IS THE PERSON WHO PREPARED S ITE PLAN OF THE RESORT. IN HIS STATEMENT, HE STATED THA T SHRI DEVINDER SINGH LAMBA AND HIS SON TOOK HIM TO AMRITS AR ABOUT FOUR YEARS BACK AND THEY ASKED HIM TO PREPARE SITE PLAN RESEMBLING WITH THE RESORT SITUATED AT AMRITSAR. HE HAS CHARGED RS. 5000/- AS CASH, AS FE ES FOR THE SAME. SHRI HUSAN DEEN WAS ALSO CONTACTED O N THE BASIS OF PHONE NUMBER APPEARING IN DOCUMENT A-3 . THIS PERSON HAS DONE INITIAL WORK OF DIGGING AND FI LLING OF THE FOUNDATION AND HE HAS STATED THAT WORK WAS D ONE IN THE BEGINNING OF THE YEAR 2005 AND CHARGED RS. 1,75,000/-. 5 6(I) APART FROM ABOVE, LOCAL ENQUIRIES WERE CONDUCT ED FROM MISSARWALA, PAONTA SAHIB THAT S/SHRI MEHANDI A ND YAKOOB GAVE SERVICES FOR CONSTRUCTION OF THE BUILDI NG OF M/S LAMBA CELEBRATION RESORT. THEY HAVE PROVIDED MATERIAL IN APRIL, MAY AND JUNE, 2005 FOR TOTAL PAY MENT OF RS. 8420/- AND RS. 4233/-. THE ASSESSING OFFICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE THAT NO REASO NABLE TIME WAS GRANTED TO EXPLAIN THIS ISSUE. THE ASSESS ING OFFICER ALSO DID NOT ACCEPT CONTENTION OF THE ASSES SEE REGARDING VALUATION OF THE BUILDING. THE ASSESSEE HAD OBJECTED TO THE VALUATION OF RESORT BY DISTRICT VAL UATION OFFICER, CHANDIGARH. REPORT OF DVO ESTIMATING THE COST OF CONSTRUCTION AS PER DIRECTION OF THE ASSESSING O FFICER WAS ALSO SUPPLIED TO THE ASSESSEE. THE ASSESSING OF FICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE OBJECTING TO THE REPORT OF DVO. THE ASSESSING OFFICER ALSO NOTE D IN THE ASSESSMENT ORDER THAT HE HAS ALSO NOT ACCEPTED THE VALUATION REPORT OF THE DVO. THE ASSESSING OFFICER , AS PER DOCUMENT A-3 FOUND THAT ASSESSEE HAS PAID RS. 4,15,951/- TO DIFFERENT PERSONS UPTO 31.03.2005 FOR CONSTRUCTION OF M/S LAMBA CELEBRATION RESORT AND ACCORDINGLY ADDITION OF RS. 4,15,951/- WAS MADE AGA INST THE ASSESSEE. 7. THE ADDITION WAS CHALLENGED BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT LAND FOR CONSTRUCTION OF RESORT WAS PURCHASED DURING FINANCI AL YEAR 2004-05 AND CONSTRUCTION WAS STARTED AT THE FA G 6 END OF FINANCIAL YEAR 2004-05. THE CONSTRUCTION WA S COMPLETED IN FINANCIAL YEAR 2006-07 (ASSESSMENT YEA R 2007-08) AND AN INVESTMENT OF RS. 63,06,564/- WAS MADE IN THE SAID CONSTRUCTION. THE SOURCE OF THE INVESTMENT WAS LOAN FROM THE BANK AND WITHDRAWALS FROM PROPRIETORY CONCERNS OF THE PARTNERS. IT WAS SUBMITTED THAT ASSESSING OFFICER HAS REFERRED THE VALUATION OF THE RESORT TO DVO UNDER SECTION 142A O F THE ACT AND DVO HAS ASSESSED THE VALUE OF THE RESORT AT RS. 65,37,000/-. AFTER THAT, THE ASSESSING OFFICER HAD REJECTED THE VALUATION REPORT OF THE DVO WITHOUT ASSIGNING ANY REASONS AND WITHOUT APPLICATION OF MI ND AND MADE THE ADDITION ON THE BASIS OF STATEMENT MAD E BY SHRI D.S.LAMBA DURING THE COURSE OF SURVEY AGAIN WHICH IS NOT BASED ON ANY EVIDENCE OR MATERIAL COLL ECTED DURING THE COURSE OF SURVEY. IT WAS SUBMITTED THAT THE REPORT OF DVO IS AUTHENTIC AND HE IS A VALUATION EX PERT. THE ASSESSING OFFICER HAS PLACED RELIANCE UPON STATEMENT OF VARIOUS PERSONS RECORDED AT THE BACK O F THE ASSESSEE WHICH HAVE NO EVIDENTIARY VALUE. THESE STATEMENTS WERE NEVER CONFRONTED TO THE ASSESSEE AN D NO OPPORTUNITY OF CROSS-EXAMINATION WAS PROVIDED TO TH E ASSESSEE. THE ASSESSEE ALSO ARGUED THAT IMPOUNDED DOCUMENTS SENT BY THE ASSESSING OFFICER TO THE DVO WERE DECLARED TO BE DUMB DOCUMENTS BY THE DVO AND THEREFORE, NO RELIANCE COULD BE PLACED ON SUCH SEIZ ED PAPERS. THE REPORT OF THE DVO SOUGHT UNDER SECTION 142A OUGHT TO HAVE BEEN ACCEPTED BY THE ASSESSING 7 OFFICER UNLESS HE HAD PLAUSIBLE REASONS AND MATERIA L TO ESTIMATE THE VALUE OF CONSTRUCTION DIFFERENT FROM T HE VALUE WORKED OUT BY THE DVO. 8. THE LD. CIT(APPEALS) IN HIS FINDINGS NOTED NON COOPERATION FROM THE SAID OF THE ASSESSEE AT THE ASSESSMENT STAGE AS WELL AS AT THE APPELLATE STAGE. THE LD. CIT(APPEALS) ALSO NOTED THAT DVO HAS, WITHOUT A NY REASONS, REJECTED THE SEIZED PAPER. SINCE THE ASSE SSEE RAISED OBJECTION AGAINST DVO REPORT THEREFORE, HE C ANNOT PLACE RELIANCE ON THE SAME AT APPELLATE STAGE. THE LD. CIT(APPEALS) FOUND THAT THE IMPOUNDED DOCUMENT A-3 CONTAINED THE RECORD OF DAY-TODAY EXPENSES OF CONSTRUCTION. EVEN ASSESSEE ADMITTED THAT CONSTRUC TION STARTED AT THE FAG END OF FINANCIAL YEAR 2004-05 AN D ASSESSING OFFICER GATHERED EVIDENCE BY MAKING LOCAL ENQUIRIES THEREFORE, ADDITION WAS CONFIRMED BY HOLD ING THAT REPORT OF THE DVO IS NOT BINDING ON THE ASSESS ING OFFICER. 9. IN ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICE R RECORDED THE SAME FACTS AS WERE RECORDED BY ASSESSM ENT YEAR 2005-06. AS PER IMPOUNDED DOCUMENT A-3, IT WA S FOUND THAT A SUM OF RS. 34,90,785/- WAS INCURRED ON CONSTRUCTION DURING ASSESSMENT YEAR 2006-07 IN ADDITION TO SOME OTHER EXPENDITURE. IN RESPONSE TO THE SHOW CAUSE NOTICE OF THE ASSESSING OFFICER REGARDIN G THE SAME, IT WAS SUBMITTED THAT DIRECT PAYMENTS MADE BY PUNJAB NATIONAL BANK, PAONTA SAHIB TO THE SUPPLIERS FOR 8 CONSTRUCTION OF THE RESORT WERE ALSO INCLUDED IN TH E TOTAL EXPENDITURE INCURRED BY THE ASSESSEE. TO BE FAIR WI TH THE ASSESSEE, ASSESSING OFFICER ACCEPTED ITS CLAIM AND REDUCED THOSE PAYMENTS RECORDED IN DOCUMENT A-3 WHICH ALSO APPEARED IN THE CONFIRMATORY LETTER OF T HE BANK TO THE ASSESSING OFFICER AND THOSE DIRECTLY P AID BY THE BANK. AFTER GIVING BENEFIT OF PAYMENTS DIRECTL Y MADE BY THE BANK TO THE SUPPLIER, THE ASSESSING OFF ICER ZEROED DOWN NET PAYMENT OF RS. 7,70,755/- DIRECTLY MADE BY THE BANK AND ALSO RECORDED IN THE IMPOUNDED DOCUMENT A-3. THE ASSESSING OFFICER RECORDED SUCH DETAILS AT PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER ALSO GAVE BENEFIT OF WITHDRAWALS MADE BY TWO PARTNERS FROM THEIR PROPRIETORY CONCERN FOR CONSTRUCTION OF THE RESORT AND ALLOWED BENEFIT OF R S. 2,50,000/-. THUS, TOTAL BENEFIT ALLOWED BY THE ASSESSING OFFICER IN RESPECT OF ENTRIES OF EXPENDIT URE RECORDED IN A-3 AMOUNTS TO RS. 7,70,755/- + RS. 2,50,000/- = RS. 10,20,755/-. THE ASSESSING OFFICE R ALSO ACCEPTED THE DIRECT PAYMENTS OF RS. 22,09,970/ - MADE BY THE BANK TO SUPPLIERS AS EXPLAINED INVESTME NT IN THE CONSTRUCTION OF THE RESORT. TREATING THE INVESTMENT AS EXPLAINED TO THAT EXTENT AND ASSESSIN G OFFICER TREATED BALANCE AMOUNT OF RS. 25,57,130/- A S UNEXPLAINED INVESTMENT AND MADE ADDITION ACCORDINGL Y. THE LD. CIT(APPEALS) FOLLOWING HIS ORDER FOR ASSESS MENT YEAR 2005-06 CONFIRMED THE ADDITION. 9 10. IN ASSESSMENT YEAR 2007-08, THE ASSESSING OFFIC ER RECORDED THE SAME FACTS AS HAVE BEEN RECORDED ABOVE . AS PER IMPOUNDED DOCUMENT A-3, IT WAS FOUND THAT A SUM OF RS. 23,83,372/- WAS INCURRED FOR CONSTRUCTIO N DURING ASSESSMENT YEAR 2007-08. THE ASSESSEE SUBMITTED THAT DIRECT PAYMENTS MADE BY PUNJAB NATIONAL BANK, PAONTA SAHIB TO THE SUPPLIERS FOR CONSTRUCTION OF THE RESORT WERE ALSO INCLUDED IN TH E TOTAL EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSIN G OFFICER, ACCORDINGLY, ACCEPTED THE CLAIM OF THE ASS ESSEE AND REDUCED THE SAME AMOUNT WHICH APPEARED IN THE LETTER OF THE BANK ALSO. THE ASSESSING OFFICER AFT ER GIVING BENEFIT OF PAYMENTS DIRECTLY MADE BY THE BAN K TO THE SUPPLIER, ASSESSING OFFICER ZEROED DOWN NET PAY MENT OF RS. 3,16,735/- DIRECTLY MADE BY THE BANK AND RECORDED IN THE IMPOUNDED DOCUMENT A-3. COMPLETE DETAILS OF SAME ARE NOTED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER FURTHER NOTICED THAT MANY ITEMS NECESSARY FOR CONSTRUCTION OF BUILDING WERE MISSING FROM THE DETAILS OF ITEMS AND EXPENSES RECORDED IN A-3. THE ASSESSING OFFICER ALSO RECORDED THAT THERE WERE SIX WELL FURNISHED ROOMS IN THE RESORT HAVING COLOUR TV, DOU BLE BED AND SOFAS, COST OF WHICH NEED TO BE ADDED TO TH E INVESTMENT OF THE ASSESSEE. THE ASSESSING OFFICER IDENTIFIED FOLLOWING ITEMS AND ESTIMATED THE EXPEND ITURE IN RESPECT OF THE SAME AS FOLLOWS : 1. 15% FOR SANITARY AND ELECTRICAL EXPENSES RS.12 ,47,876/- 10 2. 10% FOR WOODEN WORK AND POP RS. 8,31,917/ - 3. 12% FOR GATE, GRILL, EARTH-FILLING AND RS. 9,98,300/- PAINTING ETC. 4. 6 COLOUR TVS RS. 60,000/- 5. 6 AIR CONDITIONERS RS. 90,000/- 6. DOUBLE BED AND FURNITURE RS.1,50,000/- 10(I) THUS, ASSESSING OFFICER CONCLUDED THAT TOTAL PAYMENTS AS RECORDED IN A-3 WERE TO THE TUNE OF RS. 64,21,044/-. PAYMENTS DIRECTLY MADE BY THE PUNJAB NATIONAL BANK, PAONTA SAHIB TO THE SUPPLIERS WERE T O THE TUNE OF RS. 29,85,617/-. OUT OF THE SAID PAYMENTS APPEARING IN DOCUMENT A-3, ASSESSING OFFICER REDUCE D AN AMOUNT OF RS. 10,87,490/- DIRECTLY PAID BY THE BANK AND CONCLUDED TOTAL COST OF CONSTRUCTION AT RS.1,16,97, 264/- INCLUDING THE COST OF ITEMS NOT FOUND ACCOUNTED FOR IN THE DOCUMENTS MAINTAINED BY THE ASSESSEE AS MENTIONED ABOVE. COST OF CONSTRUCTION ARRIVED AT BY THE ASSE SSING OFFICER APPROXIMATED TO AMOUNT OF RS. 1.20 CR ADMIT TED BY SHRI D.S. LAMBA, PARTNER OF THE ASSESSEE FIRM WHICH WAS RETRACTED LATER ON. AFTER TAKING INTO CONSIDERATIO N THE AMOUNT OF INVESTMENT OF RS. 4,15,951/- ALREADY ACCO UNTED FOR IN ASSESSMENT YEAR 2005-06 AND RS.25,57,130/- I N ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER MADE ADDITION OF RS. 46,12,065/- ON ACCOUNT OF INVESTMEN T IN CONSTRUCTION OF THE RESORT. 11. THE SAID ADDITION WAS CHALLENGED BEFORE LD. CIT(APPEALS). THE LD. CIT(APPEALS) FOLLOWED HIS FI NDINGS 11 GIVEN FOR ASSESSMENT YEAR 2005-06 IN RESPECT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF THE RESOR T ON THE BASIS OF A-3. THE LD. CIT(APPEALS) ALSO JUSTIF IED ACTION OF THE ASSESSING OFFICER IN ESTIMATING EXPEN SES ON ACCOUNT OF FURNITURE AND FIXTURES. HOWEVER, NO PROOF WAS FOUND BY THE LD. CIT(APPEALS) FOR MAKING THE ADDITIONS ON ACCOUNT OF SANITARY AND ELECTRICAL EXPENSES, WOODEN WORK AND POP AND EARTH-FILLING ETC . WHICH HAVE NOT BEEN RECORDED IN THE SEIZED PAPER THEREFORE, SAME WERE FOUND TO BE ADHOC ADDITIONS. THE LD. CIT(APPEALS), THEREFORE, DELETED THE ADDITION O F RS. 30,78,093/- ( RS. 12,47,876/- + RS. 8,31,917/- + RS . 9,98,300/- ) AND ACCORDINGLY THE ADDITION IS LEFT T O RS. 15,33,972/- IN CHALLENGE IN ASSESSMENT YEAR 2007-08 . 12. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. IN THIS CASE, THE ABOVE ADDITIONS HAVE BEEN MADE BY TH E AUTHORITIES BELOW ON THE BASIS OF THE DOCUMENT A-3 FOUND DURING THE COURSE OF SURVEY. COPIES OF THE S AME HAVE BEEN FILED IN THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PB-26 TO SHOW THAT THE SEI ZED PAPERS ARE NOT RELIABLE BECAUSE RS. 4000/- ADVANCE HAVE BEEN MENTIONED ON 25.03.2005 ONLY. REST OF THE AMOUNTS MENTIONED IN THE SEIZED PAPER DID NOT PERTA IN TO THE ASSESSMENT YEAR 2005-06. THEREFORE, LD. DR WAS DIRECTED TO EXPLAIN AS TO HOW THE ASSESSING OFFICER HAS CALCULATED AND ESTIMATED THE COST OF CONSTRUCTION W HICH 12 IS STATED TO BE UNDISCLOSED. THE LD. DR ALSO DISCU SSED THIS ISSUE WITH THE ASSESSING OFFICER BUT NOTHING W AS POINTED OUT DURING THE COURSE OF ARGUMENTS AS TO HO W ASSESSING OFFICER BASED HIS CONCLUSIONS AND ESTIMAT ES ON THE BASIS OF WHICH, ADDITIONS HAVE BEEN MADE. O N 14.01.2016 WHEN PART ARGUMENTS WERE ALSO HEARD, LD. DR SOUGHT TIME TO DISCUSS THE SEIZED PAPER WITH THE ASSESSING OFFICER AND ON HIS REQUEST AGAIN, CASE WA S ADJOURNED. ULTIMATELY, LD. DR IS NOT ABLE TO POINT OUT AS TO HOW ASSESSING OFFICER BASED HIS CALCULATIONS AND ESTIMATES OF COST OF CONSTRUCTION ON THE BASIS OF T HE DOCUMENT A-3 FOUND DURING THE COURSE OF SURVEY. IT IS ADMITTED FACT THAT THE ASSESSING OFFICER, IN THIS C ASE, DESPITE RECOVERY OF SEIZED DOCUMENT A-3 MADE A REFERENCE TO THE DVO UNDER SECTION 142A OF THE INCO ME TAX ACT FOR THE PURPOSE OF VERIFYING AND ESTIMATING COST OF CONSTRUCTION IN THE RESORT BASED ON THE SEIZED P APERS. THE REPORT OF THE DVO DATED 23.12.2008 IS FILED IN THE PAPER BOOK IN WHICH THE DISTT.VALUATION OFFICER IN THE COVERING LETTER HAS SPECIFICALLY MENTIONED THAT ON SCRUTINIZING THE ENCLOSED PAPERS, IT IS FOUND THAT MOST OF THE PAPERS ARE DUMB DOCUMENTS AND NO RELIANCE CA N BE PLACED ON THESE PAPERS. THE DVO ALONGWITH HIS T EAM HAD PHYSICALLY VERIFIED EACH AND EVERY ITEM OF WORK OF LAMBA RESORT AND ON THAT BASIS HE HAD PREPARED THE DETAILED VALUATION REPORT, WHICH IS IN ORDER AND TH US SHOULD BE TREATED AS CORRECT. THE REPORT OF THE D VO SHOWS THAT REFERENCE WAS MADE TO HIM UNDER SECTION 13 142A OF THE INCOME TAX ACT. IT IS ALSO MENTIONED I N THE SAID REPORT THAT ASSESSEE SUBMITTED DETAILS OF VOUCHERS/BILLS OF MATERIALS PURCHASED. THE DISTT. VALUATION OFFICER ASSESSED THE COST OF VALUATION AT RS. 65,37,000/- AND THE SAME WAS ASSESSED YEAR-WISE AS UNDER : S.NO. F.Y. A.Y. ASSESSED VALUE 1. 2005-06 2006-07 RS. 29,55,372/- 2. 2006-07 2007-08 RS. 34,61,169/- 3. 2007-08 2008-09 RS. 1,20,459/- RS. 65,37,000/- 13. THE DVO IN THE SAID REPORT ALSO MENTIONED THAT THE SAID COST DOES NOT INCLUDE COST OF LAND/PLANT A ND MACHINERY, FURNITURE/FIXTURES, ACS, AC'S DUCTING AN D GENERATOR SETS ETC. IF THE COST OF ASSTT. YEAR 2008 -09 IS EXCLUDED THEN FOR ASSESSMENT YEAR 2006-07 AND 2007- 08 THE COST WORKED OUT BY THE DVO WOULD BE AT RS. 64,16,541/-. THE ASSESSEE EXPLAINED BEFORE ASSESSI NG OFFICER THAT AS PER BALANCE SHEET OF M/S LAMBA CELEBRATION RESORT FOR ASSESSMENT YEAR 2007-08, THE BUILDING OF THE RESORT WAS SHOWN AT RS. 63,06,564/- . SECTION 142A OF THE INCOME TAX ACT PROVIDES ESTIMATE BY VALUATION OFFICER FOR THE PURPOSE OF MAKING ASSESSMENT OR RE-ASSESSMENT UNDER THIS ACT, WHERE A NY ESTIMATE OF VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69B OR VALUATION OF ANY BULLION, JEWELLERY ETC. REF ERRED TO UNDER SECTION 69A OR 69B OR FOR ASCERTAINING FAIR M ARKET VALUE OF THE PROPERTY IS REQUIRED TO BE MADE, THE 14 ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. THEREFORE, REPORT OF THE DVO IS RELEVANT FOR THE PU RPOSE OF MAKING ASSESSMENT OR RE-ASSESSMENT UNDER THE INCOME TAX ACT. HON'BLE ALLAHABAD HIGH COURT IN TH E CASE OF CIT VS DR. INDRA SWAROOP BHATNAGAR 349 ITR 210 HELD THAT REPORT OF DEPARTMENT VALUATION OFFICER BINDING ON ASSESSING OFFICER. HON'BLE ALLAHABAD HIGH COURT, SIMILARLY IN THE CASE OF COMMISSIONER OF WEA LTH TAX VS DR. H. REHMAN 189 ITR 307 HELD THAT WTO BOUND TO ADOPT VALUATION ESTIMATED BY VALUATION OFF ICER AND COMPLETE ASSESSMENT. 13(I) ITAT JODHPUR BENCH IN THE CASE OF ACIT VS ASH OK KUMAR CHHUGANI 104 TTJ 139 HELD AS UNDER : A.O. CANNOT ENHANCE THE COST OF CONSTRUCTION ARRIVED AT BY THE DVO TO COVER POSSIBLE LEAKAGE FOR THE PURPOSE OF MAKING ADDITION FOR UNDISCLOSED INVESTMENT. 14. THE FACTS NOTED ABOVE, THUS CLEARLY REVEALED TH AT WHEN THE SEIZED DOCUMENT A-3 DID NOT DISCLOSE CLEAR LY AS TO HOW MUCH COST OF CONSTRUCTION HAS BEEN INCURR ED BY THE ASSESSEE AND ASSESSING OFFICER WAS NOT SATIS FIED WITH THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER MADE A REFERENCE TO DVO UNDER SECTION 142A TO VERIFY AND ESTIMATE THE COST OF CONSTRUCTION OF THE RESORT. THE REPORT OF THE DVO SHOWS THAT EVEN THE SEIZED PAPERS WERE FORWARDED TO THE DVO FOR THE PUR POSE OF ESTIMATING THE COST OF CONSTRUCTION. THE DVO, 15 HOWEVER, FOUND THAT MOST OF THE PAPERS ARE DUMB DOCUMENTS AND NO RELIANCE COULD BE PLACED ON THE SA ME. DUE TO THIS REASON, EVEN DURING THE COURSE OF ARGUMENTS, LD. DR SOUGHT TIME TO DISCUSS THE SEIZED PAPERS WITH THE ASSESSING OFFICER TO POINT OUT THE BASIS OF THE ADDITIONS MADE IN ALL THE ASSESSMENT YEARS. BUT NOTHING SPECIFIC HAVE BEEN EXPLAINED AS TO HOW ASSESSING OFFICER MADE THE ABOVE ADDITIONS AGAINST THE ASSESSEE. THE ASSESSING OFFICER, WITHOUT ANY JUSTIFICATION OR CAUSE, DID NOT PLACE RELIANCE UPON THE REPORT OF THE DVO WHICH IS BINDING ON THE ASSESSING OFFICER. SINCE REFERENCE IS MADE BY THE ASSESSING OFFICER TO THE DVO, THEREFORE, ASSESSING OFFICER WA S BOUND TO ADOPT VALUATION DISCLOSED BY THE DVO IN HI S REPORT. HOWEVER, THE ASSESSING OFFICER MERELY PLAC ED RELIANCE UPON SEIZED DOCUMENT WHICH DID NOT DISCLOS E SPECIFICALLY THE QUANTUM OF COST OF CONSTRUCTION IN VESTED BY THE ASSESSEE IN THE RESORT. THEREFORE, THE FIND ING OF THE DVO IN THE VALUATION REPORT THAT MOST OF THE PA PERS ARE DUMB DOCUMENTS, IS RELEVANT AND ADMISSIBLE. TH E REPORT OF THE DVO CLEARLY SHOWS THAT NO INVESTMENTS IN CONSTRUCTION HAVE BEEN MADE IN ASSESSMENT YEAR 2005 - 06. THE LD. CIT(APPEALS), HOWEVER, NOTED THAT ASSE SSEE ADMITTED THAT CONSTRUCTION STARTED AT THE FAG END O F THE FINANCIAL YEAR AND ALSO RELIED UPON CERTAIN STATEME NTS RECORDED BY ASSESSING OFFICER AT THE ASSESSMENT STA GE FOR THE PURPOSE OF MAKING ADDITION IN ASSESSMENT YE AR 2005-06. MAY BE, THE WORK WOULD HAVE STARTED A T THE 16 FAG END OF THE FINANCIAL YEAR 2004-05 BUT NO COST O F CONSTRUCTION HAVE BEEN REPORTED BY ASSESSEE OR BY T HE DVO. THEREFORE, THE ONLY MATERIAL LEFT FOR CONSID ERATION WAS THE STATEMENTS OF S/SHRI SUSHIL KUMAR LUTHRA, HUSAN DEEN, MEHANDI AND YAKOOB FROM WHOM ASSESSING OFFICER ASCERTAINED THAT SAME CONSTRUCTION WAS DONE IN FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2005 -06. THE ASSESSEE HAS RAISED THE OBJECTION IN THIS REGAR D AND SUBMITTED THAT THE ASSESSING OFFICER PLACED RELIANC E UPON THOSE STATEMENTS WHICH WERE RECORDED AT THE BA CK OF THE ASSESSEE AND THESE STATEMENTS WERE NEVER CONFRONTED TO THE ASSESSEE AND ASSESSEE HAS NOT BEE N ALLOWED ANY CROSS-EXAMINATION OF THESE STATEMENTS. THEREFORE, THESE ARE NOT ADMISSIBLE IN EVIDENCE AGA INST THE ASSESSEE. DESPITE SPECIFIC PLEA RAISED BY THE ASSESSEE IN THIS REGARD, THE LD. CIT(APPEALS) DID N OT GIVE ANY FINDING OF THE SAME. EVEN ASSESSMENT ORDER IS SILENT AS TO WHETHER THE STATEMENTS OF THESE PERSON S RECORDED AT THE BACK OF THE ASSESSEE WERE CONFRONTE D TO THE ASSESSEE AT ASSESSMENT STAGE AND WHETHER ASSESS EE HAS BEEN ALLOWED CROSS-EXAMINATION OF THEIR STATEME NT AT ASSESSMENT STAGE. THEREFORE, CONTENTION OF THE ASSESSEE IS CORRECT THAT ASSESSEE HAS NOT BEEN ALLO WED ANY CROSS-EXAMINATION OF THESE STATEMENTS. THEREFO RE, SAME STATEMENTS RECORDED BY THE ASSESSING OFFICER ARE NOT ADMISSIBLE AGAINST THE ASSESSEE IN 17 EVIDENCE. WE RELY UPON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELA RAM 125 ITR 713. THEREFORE, NO RELIANCE ON THESE STATEMENTS CA N BE PLACED AND THERE IS NO MATERIAL AVAILABLE ON RECORD AGAINST THE ASSESSEE TO PROVE IF ANY COST WAS INCUR RED FOR CONSTRUCTION OF RESORT IN ASSESSMENT YEAR 2005- 06. 15. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE ORDERS OF AUTHORITIES BELOW IN ASSESSMENT YEAR 2005 -06 AND DELETE THE ADDITION OF RS. 4,15,951/-. 15(I) IN ASSESSMENT YEAR 2006-07, FACTS ARE SAME. T HE DVO TOOK THE COST OF CONSTRUCTION AT RS. 29,55,372/ -. THE ASSESSING OFFICER, HOWEVER, ON THE BASIS OF DOCUMENT A-3 ESTIMATED THE VALUATION AT RS. 34,90,785/-. THE ASSESSING OFFICER GAVE BENEFIT OF RS. 7,70,755/- BEING THE PAYMENTS MADE DIRECTLY BY THE BANK AND RS. 2,50,000/- CONTRIBUTED BY THE PARTNERS AND GAVE BENEFIT TO THE ASSESSEE FOR A SUM OF RS. 10,20,755/-. THE ASSESSEE HAS SUBMITTED A BANK CERTIFICATE TO SHOW THAT BANK HAS CERTIFIED THAT LO AN OF RS. 35 LACS WAS GRANTED IN FAVOUR OF M/S LAMBA CELEBRATION RESORT. THE LD. COUNSEL FOR THE ASSESSE E EXPLAINED THAT AS PER ASSESSEE THE TOTAL VALUE WAS RS.26,90,702/- OUT OF WHICH BANK LOAN WAS OF RS. 24,40,435/- AND IF THE SAME IS REDUCED, SAME WOULD LEFT TO RS. 2,50,267/- WHICH IS CONTRIBUTED BY THE PARTN ER IN A SUM OF RS. 2,50,000/-. THE LD. COUNSEL FOR THE ASSESSEE ALSO EXPLAINED THAT IN ASSESSMENT YEAR 200 7- 18 08, TOTAL VALUE WAS RS.31,17,441/-. IF THE BANK LO AN OF PUNJAB NATIONAL BANK IN A SUM OF RS. 10,86,991/- AN D STATE BANK OF INDIA OF RS. 2,01,044/- ARE REDUCED T O BALANCE WOULD BE RS. 18,29,406/- WHICH IS SUFFICIEN T AS AGAINST PARTNERS CAPITAL OF RS. 18,72,731/-. THE ASSESSING OFFICER HAS ALSO GIVEN BENEFIT OF BANK LO AN TO THE ASSESSEE, THEREFORE, THE EXPLANATION OF THE ASS ESSEE IS ACCEPTABLE THAT SINCE VALUATION OF COST OF CONST RUCTION HAVE BEEN SHOWN IN A SUM OF RS. 63,06,564/- UPTO ASSESSMENT YEAR 2007-08 IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THEREFORE, NOTHING COULD BE SAID THAT ASS ESSEE MADE ANY UNDISCLOSED INVESTMENT IN THE COST OF CONSTRUCTION OF THE RESORT. THE AUTHORITIES BELOW HAVE MADE THE ADDITIONS IN ALL THE ASSESSMENT YEARS ON T HE BASIS OF THE SEIZED DOCUMENT A-3 BUT THE SAME IS NO T EXPLAINED DURING THE COURSE OF ARGUMENTS AND SINCE REPORT OF THE DVO IS BINDING ON THE ASSESSING OFFIC ER, THEREFORE, ASSESSING OFFICER CANNOT IGNORE THE REPO RT OF THE DVO ESTIMATING COST OF CONSTRUCTION. AS PER DV O, VALUATION IS SHOWN AT RS. 65,37,000/- AS AGAINST TH E COST OF CONSTRUCTION DECLARED BY ASSESSEE IN A SUM OF RS. 63,06,564/- IN THE BOOKS OF ACCOUNT OF ASSESSME NT YEAR 2007-08. THERE IS A MEAGER DIFFERENCE IN THE ESTIMATED COST OF DVO AND THE COST DECLARED BY ASSE SSEE AND AS SUCH, CAN BE IGNORED. THE LD. CIT(APPEALS) DID NOT ACCEPT CONTENTION OF THE ASSESSEE BECAUSE ASSES SEE OBJECTED TO THE REPORT OF DVO AT ASSESSMENT STAGE. MAY BE THE ASSESSEE OBJECTED TO THE REPORT OF DVO AT 19 ASSESSMENT STAGE FOR THE PURPOSE OF ESTIMATION OF C OST OF CONSTRUCTION BECAUSE ASSESSEE HAS EVERY RIGHT TO RAISE OBJECTION AGAINST REPORT OF THE DVO BUT BEFOR E LD. CIT(APPEALS), WHEN ASSESSEE ACCEPTS THE VALUATION D ONE BY THE DVO, THERE IS NOTHING ADVERSE IN NATURE AGAI NST THE ASSESSEE AND NOTHING WOULD PREVENT THE ASSESSEE FROM ADOPTING THE COST OF CONSTRUCTION DISCLOSED BY THE REPORT OF THE DVO, THEREFORE, FINDINGS OF THE LD. CIT(APPEALS) ARE NOT JUSTIFIED FOR THE PURPOSE OF REJECTING THE CONTENTION OF THE ASSESSEE. SINCE TH E DOCUMENT A-3 IS NOT DISCLOSING THE CORRECT PICTURE AS TO HOW THE ASSESSING OFFICER MADE CALCULATION OF THE C OST OF CONSTRUCTION AND THE SAME HAVE ALSO BEEN NOT REL IED UPON BY THE DVO, THEREFORE, ASSESSING OFFICER SHALL HAVE TO ADOPT THE VALUATION REPORT SUBMITTED BY THE DVO WHICH IS BINDING ON HIM AND AS SUCH, THERE WAS NO REASON TO MAKE ANY ADDITION AGAINST THE ASSESSEE IN THE REMAINING ASSESSMENT YEARS 2006-07 AND 2007-08. 16. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND EXPLANATION GIVEN BEFORE US, WE A RE OF THE VIEW THAT SINCE THERE IS NOT MUCH DIFFERENCE BETWEEN THE COST OF CONSTRUCTION REPORTED BY THE DV O AND DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOU NT OF ASSESSMENT YEAR 2007-08, THEREFORE, NO ADDITION CAN BE MADE AGAINST THE ASSESSEE EVEN IN THE REMAINING ASSESSMENT YEARS 2006-08 AND 2007-08. WE, ACCORDINGLY SET ASIDE THE ORDERS OF AUTHORITIES BEL OW IN 20 ASSESSMENT YEAR 2006-07 AND 2007-08 AS WELL AND DELETE THE ADDITION OF RS. 25,57,130/- AND RS. 15,33,972/-. 17. IN THE RESULT, ISSUE NO. 1 IS DECIDED IN FAVOUR OF THE ASSESSEE IN ALL THE ASSESSMENT YEARS. ISSUE NO. 2 18. ON GROUND NO. 5 AND 6 IN ASSESSMENT YEAR 2007- 08, THE ASSESSEE CHALLENGED THE ADDITION OF RS. 9,52,731/- ON ACCOUNT OF ACCRETION IN CAPITAL ACCOU NT OF PARTNER SHRI DEVINDER SINGH LAMBA AND ADDITION OF R S. 5,80,464/- ON ACCOUNT OF ACCRETION IN CAPITAL ACCOU NT OF THE PARTNER SMT. MANMOHAN KAUR LAMBA. IT WAS NOTIC ED BY THE ASSESSING OFFICER THAT THERE WAS AN ADDITION OF RS. 11,92,731/- IN THE ACCOUNT OF SHRI D.S.LAMBA AN D OF RS. 6,80,000/- IN THE ACCOUNT OF SMT. MANMOHAN KAUR LAMBA, TWO PARTNERS OF THE ASSESSEE FIRM WHEN CONFRONTED, IT WAS SUBMITTED THAT ADDITION IN THE C APITAL ACCOUNT OF SHRI D.S. LAMBA WAS ON ACCOUNT OF DRAWIN GS FROM HIS CAPITAL ACCOUNT WITH M/S MODERN TENT HOUSE , M/S GLASS PALACE AND FROM CURRENT ACCOUNT OF M/S MODERN TENT HOUSE. ON CROSS VERIFICATION FROM BALA NCE SHEET/CAPITAL ACCOUNT OF THE SAID BUSINESS CONCERN, IT WAS DISCOVERED BY THE ASSESSING OFFICER THAT SHRI D.S.LAMBA HAD DULY WITHDRAWN RS. 60,000/- AND RS. 1,80,000/- RESPECTIVELY FROM HIS CAPITAL ACCOUNT WI TH M/S MODERN TENT HOUSE AND M/S GLASS PALACE. 21 HOWEVER, THERE WAS FOUND NO BALANCE TO THE CREDIT O F THE ASSESSEE IN THE CURRENT ACCOUNT OF M/S MODERN TENT HOUSE. THERE WAS SHOWN A DEBIT BALANCE OF R. 9,52,731/- AGAINST THE WITHDRAWAL OF EQUIVALENT AMO UNT IN THE GIVEN ACCOUNT. IN THE BOOKS OF M/S MODERN T ENT HOUSE, AVAILABILITY OF THE SAID FUNDS WAS SHOWN ON ACCOUNT OF TERM LOAN OF RS. 5 LACS AND CC LIMIT OF RS. 5 LACS FROM STATE BANK OF INDIA, PAONTA SAHIB. THE ASSESSING OFFICER CONDUCTED FURTHER ENQUIRIES FROM THE BANK AND LEARNT THAT THE AMOUNT OF THE SAID TERM LO AN WAS DIRECTLY DISBURSED BY THE BANK TO THE SUPPLIER OF THE MATERIAL TO M/S MODERN TENT HOUSE. IT WAS ALSO LEARNT THAT AS PER RULE OF THE BANK, DIVERSION OF FUNDS/LOAN WAS NOT ALLOWED. THE ASSESSEE FAILED TO SHOW THE DATES AND THE AMOUNTS TRANSFERRED FROM THE SAID TERM LOAN ACCOUNT TO HIS CAPITAL ACCOUNT IN TH E BOOKS OF THE ASSESSEE FIRM. THE ASSESSEE HAD ALSO ADMITTEDLY NOT BEEN MAINTAINING ANY BOOKS OF ACCOUN T, NOR HIS PROPRIETORY CONCERN WAS HAVING ANY BOOKS OF ACCOUNT. THEREFORE, CONSIDERING THE TOTALITY OF TH E FACTS AND CIRCUMSTANCES, THE CREDIT ENTRY OF RS. 9,52,731 /- IN THE CAPITAL ACCOUNT OF SHRI D.S.LAMBA WAS NOT ACCEP TED AND ADDITION OF THE SAME WAS MADE. LIKEWISE IN THE CAPITAL ACCOUNT OF SMT. MANMOHAN KAUR, CREDIT ENTRI ES WERE EXPLAINED TO BE ON ACCOUNT OF WITHDRAWAL OF R S. 1,80,000/- FROM HER CAPITAL ACCOUNT WITH M/S LAMBA BISTAR BHANDAR AND RS. 5,00,464/- FROM CURRENT ACCOUNT OF M/S LAMBA BISTAR BHANDAR. HOWEVER, ON 22 EXAMINATION OF THE CURRENT ACCOUNT REVEALED THAT TH ERE WAS ONLY WITHDRAWAL OF RS. 1 LAC FROM THE CAPITAL ACCOUNT OF MRS. MANMOHAN KAUR LAMBA WITH M/S LAMBA BISTAR BHANDAR. THE ASSESSING OFFICER, THEREFORE, ALLOWED CREDIT OF RS. 1 LAC AND MADE THE ADDITION ACCORDINGLY. THE LD. CIT(APPEALS), ON THE BASIS OF ABOVE, CONFIRMED THE ADDITION AND DISMISSED THIS GR OUND OF APPEAL OF THE ASSESSEE. 19. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS METAL & METALS OF INDIA 208 CTR 457 IN WHICH IT WAS HELD AS UNDER : PARTNER HAVING ADMITTED THAT HE HAS MADE THE IMPUGN ED DEPOSIT WITH THE ASSESSEE FIRM OUT OF THE AMOUNT REC EIVED AS GIFT, IT IS THE PARTNER AND NOT THE FIRM WHO IS LIA BLE TO BE TAXED BY TREATING THE SAID AMOUNT AS UNDISCLOSED INC OME EVEN IF THE CLAIM OF GIFT SAID TO HAVE BEEN RECEIVE D BY HIM IS REJECTED. 19(I) THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS RAMESHWAR DASS SURESH PAL CHEEKA 208 CTR 459 IN WHICH IT WAS HELD AS UNDER : ONCE A PARTNER OF THE FIRM HAS ACCEPTED HAVING ADV ANCED AMOUNT TO THE FIRM, NO ADDITION COULD BE MADE IN THE HANDS OF FIRM UNDER S. 68. 23 20. SINCE IN THIS CASE THE PARTNERS OF THE ASSESSEE FIRM HAVE ADMITTED THEIR CAPITAL CONTRIBUTION IN TH EIR ACCOUNTS, THEREFORE, NO ADDITION COULD BE MADE IN T HE HANDS OF THE ASSESSEE FIRM. THE ABOVE DECISIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT SQUARELY APPLY IN FAVOUR OF THE ASSESSEE. FURTHER, HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF METACHEM INDUSTRI ES 245 ITR 160 SIMILARLY HELD THAT, ON ACCOUNT OF CAPITAL CONTRIBUTION, NO ADDITION COULD BE MADE IN THE HAND S OF THE ASSESSEE FIRM. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS. HOWEVER, THE ASSESSING OFFICER IS AT LI BERTY TO TAKE UP THIS ISSUE IN THE INDIVIDUAL CASES OF BO TH THE PARTNERS IN ACCORDANCE WITH LAW. 20(I) IN VIEW OF THE ABOVE, BOTH THE ADDITIONS ARE DELETED AND GROUND NOS. 5 AND 6 OF THE APPEAL OF TH E ASSESSEE ARE ALLOWED. ISSUE NO. 2 IS DECIDED IN FA VOUR OF THE ASSESSEE. ISSUE NO. 3 21. ON GROUND NO. 7 IN ASSESSMENT YEAR 2007-08, ASSESSEE CHALLENGED THE ADDITION OF RS. 2,33,147/- AS INCOME FROM BUSINESS. ON THE BASIS OF IMPOUNDED DOCUMENT NO. A-10, IT WAS NOTICED BY ASSESSING OFF ICER THAT M/S LAMBA CELEBRATION RESORT WAS FUNCTIONING SINCE MAY,2006. THE DETAILS OF BEGINNING OF RESORT IN THE MONTH OF MAY AND AUGUST, 2006 WERE FOUND RECORDED I N 24 THE SAID DOCUMENT. ON THE BASIS OF THE SAME DOCUME NT AND STATEMENTS OF THE CONCERNED PERSONS RECORDED BY THE ASSESSING OFFICER, WHO HAVE CONFIRMED ORGANIZIN G FUNCTIONS ON THE DATES GIVEN AT M/S LAMBA CELEBRATI ON RESORT, THE ASSESSING OFFICER MADE THE ABOVE ADDITI ONS. THE LD. CIT(APPEALS) FOUND THAT ASSESSEE FAILED TO EXPLAIN SOURCE OF THE DEPOSIT IN THE BANK. WHATEVE R EXPLANATION WAS GIVEN BEFORE LD. CIT(APPEALS), WAS NOT SUPPORTED BY ANY EVIDENCE, THEREFORE, ADDITION WAS CONFIRMED. 22. DURING THE COURSE OF ARGUMENTS, NO SPECIFIC ARGUMENTS OR MATERIAL HAVE BEEN POINTED OUT TO SHOW THAT HOW THIS ADDITION IS UNJUSTIFIED. THE ASSESSI NG OFFICER NOTED CERTAIN FUNCTIONS HAVE BEEN ORGANIZED DURING ASSESSMENT YEAR UNDER APPEAL IN THE PREMISES OF THE ASSESSEE AND THE ASSESSEE IN THEIR STATEMENT AL SO ADMITTED ARRANGING SUCH FUNCTIONS. THE ASSESSING OFFICER FOUND CERTAIN CREDIT ENTRIES IN THE BANK AC COUNT OF THE ASSESSEE. WHEREVER ASSESSEE WAS ABLE TO EXP LAIN THE ENTRIES, NO ADVERSE VIEW WAS TAKEN BY THE ASSES SING OFFICER. HOWEVER, REST OF THE ADDITION OF AMOUNT O F RS. 2,33,147/- , NO EXPLANATION WAS FILED BEFORE ASSESS ING OFFICER. THEREFORE, ASSESSING OFFICER TREATED THE SAME TO BE INCOME OF THE ASSESSEE. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE 25 AUTHORITIES BELOW. THIS GROUND OF APPEAL OF THE AS SESSEE IS ACCORDINGLY, DISMISSED. THIS ISSUE IS DECIDED A GAINST THE ASSESSEE. 23. NO OTHER POINT IS ARGUED OR PRESSED. 24. IN THE RESULT, ALL APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH MARCH, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD