RAJ KUMAR GOYAL, BHARATPUR V. ACIT, BHARATPUR

ITA 230/JPR/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2177 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PGQ VIHYKFKHZ IZRFKHZ
• Assessee Lawyers: RAJENDRA AGARWAL C A B
• Keywords: Bogus purchase; Unexplained investment; Sale consideration of property below Jantri Value; Opportunity of cross examination; Cost of acquisition; Fair market value; Corroborative evidences; Onus to prove
• Section: 40A(3); 50C; 133A; 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 230/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 SHRI RAJ KUMAR GOYAL, PROP. M/S TILAKDHARI JEWELLERS, SARAFA BAZAR, BHARATPUR-321001. CUKE VS. THE DCIT, CIRCLE, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABYPG1374Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJENDRA AGARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/11/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 16/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 07.01.2016 OF CIT (A) FOR THE ASSESSMENT YEAR 2011- 12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L EARNED CIT(A) HAS ERRED IN:- 1. CONFIRMING THE ADDITION OF RS. 2,89,47,080/- STA TING EXCESS STOCK FOUND DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE I.T. ACT, 1961. ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 2 2. CONFIRMING THE ADDITION OF RS. 24 LACS MADE U/S 68 OF THE I.T. ACT. 3. CONFIRMING THE DISALLOWANCE OF RS. 9000/- ON A/C OF CORRESPONDING INTEREST CLAIMED IN THE P & L A/C ON UNSECURED LOANS. 4. CONFIRMING THE ADDITION OF RS. 4,63,938/- STATIN G EXCESS CASH FOUND DURING THE SURVEY PROCEEDINGS. 5. CONFIRMING THE ADDITION OF RS. 2,00,000/- ON EST IMATE BASIS OUT OF TOTAL ADDITION OF RS. 2,54,730/- MADE BY THE AO ON A/C OF LONG TERM CAPITAL GAINS. 6. CONFIRMING THE ADDITION OF RS. 10,750/- ON A/C O F SURVEY ENTERTAINMENT EXPENSES. 7. CONFIRMING THE ADDITION OF RS. 63,000/- ON A/C O F NOTIONAL RENTAL INCOME ON SHIP AT KILA, BHARATPUR. 8. CONFIRMING THE DISALLOWANCES OF RS. 43,390/- ON ACCOUNT OF CASH PAYMENTS U/S 40A(3) OF THE IT ACT. THE APPELLANT RESERVES HIS RIGHT TO AMEND, ADD, ALT ER, CHANGE OR DELETE ANY OF THE GROUNDS OF THE APPEAL, EITHER BEF ORE OR DURING THE COURSE OF HEARING. 2. GROUND NO. 1 IS REGARDING THE ADDITION OF RS. 2, 89,47,080/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT ON 02.02.2011 A T THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURV EY IT WAS FOUND THAT THE BOOKS OF ACCOUNTS WERE WRITTEN UPTO 21.01.2011. AFTER TAKING ALL THE SALES & PURCHASES BILLS FOUND AT THE BUSINESS PREMI SES A TRADING ACCOUNT WAS PREPARED BY THE ASSESSEES ACCOUNTANT SHRI BALK ISHAN IN THE PRESENT OF THE ASSESSEE WHICH WAS DULY SIGNED AND V ERIFIED BY THE ASSESSEE. IN THIS PROCESS A DIFFERENCE IN THE STOC K WAS FOUND TO THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 3 TUNE OF RS. 2,89,47,080/- AND A TOTAL VALUE OF THE JEWELLERY FOUND DURING THE SURVEY AT THE PREMISES OF THE ASSESSEE WAS DETE RMINED BY THE REGISTERED VALLUER ON PHYSICAL VERIFICATION AT RS. 3,28,10,696/-. THUS, IT WAS FOUND THAT 88.2% OF THE TOTAL STOCK WAS NOT ACC OUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SUMMONS U/S 131 OF THE IT ACT WERE ISSUED ON 03.02.2011, 14.02.2011 & 18.02.2011 TO TH E ASSESSEE TO EXPLAIN EXCESS STOCK FOUND AT THE BUSINESS PREMISES . THE ASSESSEE DID NOT COMPLY WITH THE SUMMONS ISSUED U/S 131 HOWEVER, SUBSEQUENTLY ON 18.08.2011 THE ASSESSEE ATTENDED THE OFFICE OF THE ASSESSING OFFICER AND HIS STATEMENTS WERE RECORDED U/S 131 ON OATH IN WHICH THE ASSESSEE EXPLAINED THAT HIS ENTIRE STOCK WAS RECORD ED IN THE BOOKS OF ACCOUNT, HOWEVER, SOME OF THE JEWELLERY ITEMS BELON GING TO THE CLIENTS WERE KEPT FOR REPAIR PURPOSE AND SOME OTHER JEWELLE RY ITEMS BELONG TO THE FAMILY MEMBERS OF THE ASSESSEE. DURING THE ASSE SSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS SHOW N HUGE PURCHASES FROM M/S RUPAL JEWELLERS, IMMEDIATELY PRIOR TO THE DATE OF SURVEY I.E. 24.01.2011 TO 31.01.2011. ACCORDINGLY, THE AO FOUND THAT THE PURCHASES SHOWN DURING THE 24.01.2011 TO 31.01.2011 ARE NOT GENUINE AS THESE ARE AFTER THOUGHT BOGUS PURCHASES SHOWN BY THE ASSESSEE TO COVER UP THE EXCESS STOCK FOUND DURING THE SURVEY. THE AO HAS GIVEN ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 4 COMPARATIVE DETAILS OF THE PURCHASES IN THE ASSESSM ENT ORDER AND FOUND THAT THE PURCHASES MADE DURING THIS PERIOD OF ONE W EEK I.E. ON 24.01.2011 TO 31.01.2011 ARE ABNORMAL AND SUBSTANTI ALLY HIGH IN COMPARISON TO THE PURCHASES MADE DURING THE OTHER M ONTHS OF THE FINANCIAL YEARS. ACCORDINGLY, THE AO MADE THE ADDIT ION OF THE SAID AMOUNT OF RS. 2,89,47,080/-. THE ASSESSEE CHALLENGE D THE ACTION OF THE AO BEFORE THE LD. CIT(A). THE ASSESSEE FILED ADDITI ONAL EVIDENCE BEFORE THE LD. CIT(A) WHICH WAS FORWARDED TO THE AO FOR EX AMINATION AND COMMENTS. A REMAND REPORT WAS SUBMITTED BY THE AO A ND THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT HAS CONF IRMED THE ADDITION MADE BY THE AO REGARDING UNACCOUNTED PURCHASES BEIN G EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. 3. BEFORE US, LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO EXAMINED THE BOOKS OF ACCOUNTS AND SUPPORTING BILLS AND VOUCHERS PRODUCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NO DEFECT WAS FOUND IN THE BOOKS OF ACCOUNT AND THEREFORE, TH E PURCHASE RECORDED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE C ANNOT BE TREATED AS UNEXPLAINED INVESTMENT BEING EXCESS STOCK FOUND DUR ING THE COURSE OF SURVEY. HE HAS FURTHER SUBMITTED THAT THE ENQUIRY W AS MADE THROUGH THE INSPECTOR AT THE PLACE OF M/S RUPAL JEWELLERS A ND STATEMENT OF THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 5 PROPRIETOR OF RUPAL JEWELLERS WAS RECORDED BY THE I NSPECTOR AT THE BACK OF THE ASSESSEE. HOWEVER, THE FACTUAL POSITION HAS BEEN CONFIRMED BY M/S RUPAL JEWELLERS THAT THE ENTIRE TRANSACTION WAS RECORDED IN THEIR BOOKS OF ACCOUNTS. THE ASSESSEE PRODUCED THE COMPLE TE DETAILS OF PURCHASES MADE FROM M/S RUPAL JEWELLERS WHICH HAS B EEN CONFIRMED BY THE M/S RUPAL JEWELLERS DURING THE ENQUIRY CONDUCTE D BY THE INSPECTOR. THEREFORE, THERE IS NO QUESTION OF ANY BOGUS PURCHA SES FROM M/S RUPAL JEWELLERS. THE LD. AR HAS FURTHER SUBMITTED THAT IN THE REMAND REPORT THE ASSESSING OFFICER HAS GIVEN NO NEW FACTS BUT RE ITERATED THE FACTS ALREADY SUBMITTED BY IT IN THE ASSESSMENT ORDER. ON CE THE SELLER OF THE GOODS HAS CONFIRMED THESE PURCHASES AND THE SALE WA S ALSO RECORDED BY M/S RUPAL JEWELLERS AND THEN ADDITION MADE BY TH E LD. CIT(A) IS NOT JUSTIFIED AND BAD IN LAW. THE LD. AR HAS ALSO REFER RED REMAND REPORT OF THE ASSESSING OFFICER IN PURSUANT TO THE DIRECTIONS OF THIS TRIBUNAL AND SUBMITTED THAT THE DEPARTMENT HAS ADMITTED THE FACT THAT THE ENTIRE SALE SHOWN IN THE BILLS ISSUED BY M/S RUPAL JEWELLE RS HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT AS WELL AS PART OF THE TURN OVER FOR VAT PURPOSE. THUS, THE LD. AR HAS SUBMITTED THAT WHEN THE ASSESS EE PRODUCE THE PURCHASE BILLS WHICH HAS BEEN CONFIRMED BY THE SUPP LIER AND ALSO FOUND DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE SUPPLI ER THEN THE SAME ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 6 CANNOT BE TREATED AS BOGUS PURCHASES. HE HAS PLEADE D THAT THE ADDITION MADE BY THE AO ON THIS ACCOUNT BE DELETED. THE LD. AR HAS RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT DATED 22.02.2011 IN CASE OF CIT VS. M/S ASHISH INTERNATIONAL IN ITA NO. 4299 OF 2009 AND SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN ANY OPPOR TUNITY TO CROSS EXAMINE THE PROPRIETOR OF M/S RUPAL JEWELLERS WHOSE STATEMENT WAS RECORDED BY THE INSPECTOR AT THE BACK OF THE ASSESS EE. THE LD. AR HAS ALSO RELIED UPON THE DECISION OF MUMBAI TRIBUNAL DA TED 31.01.2017 IN CASE OF ACIT VS. SHRI MAHESH K. SHAH IN ITA NO. 519 4/MUM/2014. 4. ON THE OTHER HAND, LD. CIT HAS SUBMITTED THAT TH E ASSESSEE HAS CLAIMED TO HAVE MADE THE PURCHASES FROM M/S RUPAL J EWELLERS FROM 24.01.2011 TO 31.01.2011 WHEREAS THE ASSESSEE DID N OT PRODUCE ANY SUCH BILLS DURING THE COURSE OF SURVEY CONDUCTED ON 02.02.2011. THEREFORE, IT IS CLEAR THAT THESE BILLS WERE SUBSEQ UENTLY OBTAINED BY THE ASSESSEE WITHOUT ANY ACTUAL PURCHASES MADE DURING T HIS PERIOD. FURTHER THE ASSESSEE HAS NOT MADE ANY PAYMENT AGAINST THESE PURCHASES AS IT WAS OUTSTANDING AT THE END OF THE FINANCIAL YEAR ON 31.03.2011. THEREFORE, THESE ARE BOGUS TRANSACTIONS OF PROVIDIN G THE BILLS BY M/S RUPAL JEWELLERS TO COVER UP THE EXCESS STOCK FOUND DURING THE SURVEY. THE LD. DR HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 7 ANALYZED THE PURCHASES MADE BY THE ASSESSEE DURING THE YEAR AND FOUND THAT PURCHASE MADE DURING THIS PERIOD FROM 24 .1.2011 TO 31.01.2011 IS EXCEPTIONALLY HIGH AND THEREFORE, IT IS APPARENT FROM THE FACTS THAT THESE BILLS ARE PROCURED BY THE ASSESSE E WITHOUT ANY ACTUAL PURCHASES. HE HAS RELIED UPON THE ORDERS OF THE AUT HORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT DURING THE COURSE OF SURVEY PROCEEDINGS AN EXCESS STOCK OF RS. 2,89,47,080/- WA S FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE DID NOT FURNISH ANY EXPLANATION REGARDING THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY CONDUCTED ON 02.02.2011. MOREOVER, THE ASSES SEE AVOIDED THE ENQUIRY CONDUCTED BY THE DEPARTMENT DESPITE THE REP RESENTED SUMMONS ISSUED U/S 131 OF THE ACT AND ONLY ON 18.11 .2011 THE ASSESSEE APPEARED BEFORE THE AO TO EXPLAIN THE EXCE SS STOCK. IN HIS STATEMENT THE ASSESSEE HAS EXPLAINED THE EXCESS STO CK BEING THE JELLWERY OF THE CLIENTS KEPT FOR REPAIR AND THEREFO RE, EVEN IN THE STATEMENT RECORDED ON 18.04.2011 AS WELL AS IN THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS THE ASSESSE E HAS EXPLAINED THAT ABOUT ONE KG OF SLIVER AND 250 GRAMS OF GOLD B ELONGS TO THE CLIENTS AND CONFIRMED THE STOCK AS ON THE DATE OF S URVEY BOTH THE SILVER ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 8 AND GOLD TO THE EXTENT OF 1826.900 GRAMS AND 24.029 KG RESPECTIVELY. THE VALUATION OF THE STOCK WAS NOT DISPUTED BY THE ASSESSEE AS VALUER HAS VALUED ENTIRE STOCK FOUND AT THE BUSINESS PREMI SES OF THE ASSESSEE OUT OF WHICH ONLY THE STOCK OF RS. 38,63,616/- WAS RECORDED IN THE BOOKS OF ACCOUNTS AND BALANCE OF RS. 2,89,47,080/- WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS. THUS, AT THE TIME OF SURV EY THIS FACT OF UNACCOUNTED STOCK WAS NOT DISPUTED BY THE ASSESSEE. EVEN SUBSEQUENTLY THE ASSESSEE HAS NOT DISPUTED THAT THE SAID STOCK OF RS. 2,89,47,080/- WAS UNACCOUNTED IN THE BOOKS OF ACCOU NTS. THOUGH THE BOOKS OF ACCOUNT WERE COMPLETED UPTO 21.01.2011 HOW EVER, THE ASSESSEE DID NOT EVEN UNDISPUTE ABOUT ANY PURCHASES 21.01.2011 TILL THE DATE OF SURVEY MADE AFTER RESULTING IN UNACCOUN TED STOCK FOUND DURING THE SURVEY. SUBSEQUENTLY ON 18.08.2011 THE S TATEMENT OF THE ASSESSEE WAS RECORDED U/S 131 OF THE ACT THE ASSESS EE HAS EXPLAINED THE EXCESS STOCK FOUND DURING THE SURVEY AS SOME OF THE STOCK BELONGING TO THE CLIENTS WHICH WAS KEPT FOR REPAIR AND SOME OTHER JEWLLERY ITEMS BELONG TO THE FAMILY MEMBER. THEREFO RE, THE ASSESSEE HAS SPECIFICALLY EXPLAINED THE EXCESS STOCK IN HIS STATEMENT DATED 18.08.2011 TO ANSWER NO. 1 AS UNDER:- ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 9 ESUSA LOSZ DS NKSJKU LEHKKXH; VF/KDKFJ;KS LS DGK FK K FD ESJK LKJK LVKWD ESJS [KKRKSA ESA BUNZKT GS BLESA LS DQN LKEKU XZKGDKSA DK TKS GEKJS FY;S EJEER DJUS DS FY;S NS TKRS GS MUDK J[KK GS] DQN TSOJ ESJS ?KJ IFJOKJ DK GSA ESJS CPPS DH LOSZ D S NL CKN LXKBZ GKSUH FKH RKS DQN LKEKU ?KJ LS EJEER DS FY;S VK;K FKKA ESA BL LKEKU DS LHKH LKP ; LE; VKUS IJ LSOK ESA ISK DJ NWWXKA ;GH CKR ESUS LOSZ DS NKSJKU LHKH VF/KDKFJ;KSA LS FU OSNU FD;K FKKA ESJK DKSBZ LVKWD [KKRKSA DS VYKOK UGHA GSA THUS IT IS CLEAR FROM THIS STATEMENT OF THE ASSESSE E THAT EVEN ON 18.08.2011 THE ASSESSEE DID NOT STATE THAT THE DIFF ERENCE FOUND IN THE STOCK DURING THE SURVEY REPRESENTS THE ALLEGED PURC HASES MADE FROM M/S RUPAL JEWELLERS WHICH WAS CLAIMED BY THE ASSESS EE AT THE TIME OF ASSESSMENT PROCEEDINGS. EVEN OTHERWISE THE DETAILS OF PURCHASES MADE DURING THE WHOLE YEARS HAVE BEEN ANALYZED BY THE AS SESSING OFFICER. AS IT IS CLEAR FROM THE MONTH WISE DETAILS DURING THE FINANCIAL YEAR 01.04.2010 TO 31.03.2011 MONTHLY PURCHASE OF THE AS SESSEE RANGES FROM LOWEST RS. 1,70,000/- TO HIGHEST RS. 11.80 LAC S OF GOLD AND RS. 19,000/- TO RS. 2,00,000/- OF SILVER. SIMILARLY EXC EPT IN THE MONTH OF NOVEMBER AND JANUARY THERE WAS NO PURCHASE OF DIAMO ND ITEMS. EVEN THE PURCHASES MADE DURING THE MONTH OF JANUARY, 201 1 IS NORMAL EXCEPT THE PERIOD FROM 24.1.2011 TO 31.01.2011 WHIC H IS EXCEPTIONALLY HIGH MORE THAN RS. 2 CRORES. PRIOR TO THE MONTH OF JANUARY, 2011 THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 10 STOCK OF THE ASSESSEE NEVER EXCEEDED RS. 26,40,156/ - WHICH HAS INCREASED MORE THAN RS. 2 CRORES DURING THE MONTH O F JANUARY, 2011. THE AO FURTHER ANALYZED THAT THE ASSESSEE MADE TOTA L PURCHASE OF RS. 2.78 CRORES DURING THE WHOLE YEAR EXCEPT JANUARY WH ILE THE PURCHASE MADE DURING THE JANUARY, 2011 IS RS. 2,17,79,000/-. THEREFORE, THE ASSESSEE HAS SHOWN HIS PURCHASES IN THE MONTH OF JA NUARY, 2011 WHICH IS MORE THAN 3500% OF HIS AVERAGE MONTHLY PURCHASES MADE DURING THE WHOLE YEAR EXCLUDING MONTH OF JANUARY, 2011. WE FUR THER NOTE THAT THE SURVEY WAS CONDUCTED ON 02.02.2011 AND IT WAS FOUND THAT THE ASSESSEE HAS COMPLETED BOOKS OF ACCOUNTS UPTO 21.1. 2011, THEREFORE, ONLY A WINDOW OF 10 DAYS WAS AVAILABLE TO THE ASSES SEE FROM 22.1.2011 TO 01.02.2011 TO CLAIM PURCHASES TO THE EXTENT OF E XCESS STOCK FOUND DURING THE COURSE OF SURVEY ON 02.02.2011. THE ASSE SSEE HAS ACCORDINGLY PRODUCED THE BILLS OF PURCHASES MADE FR OM M/S RUPAL JEWELLERS FROM 24.1.2011 TO 31.01.2011 TO THE TUNE OF RS. 2,28,32,695/-. UNDISPUTEDLY THE ASSESSEE HAS NEVER MADE ANY PURCHASES FROM M/S RUPAL JEWELLERS PRIOR TO 24.01.2 011 AND ALSO NOT MADE ANY PURCHASES AFTER 31.01.2011. IT IS ALSO NOT DISPUTED THAT THERE IS NO REGULAR BUSINESS TRANSACTIONS BETWEEN THE ASS ESSEE AND M/S RUPAL JEWELLERS AT ANY POINT OF TIME EXCEPT THE ALLEGED T RANSACTIONS OF ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 11 PURCHASES MADE BY THE ASSESSEE DURING 24.01.2011 TO 31.01.2011. IT IS APPARENT THAT POST SURVEY ACTION ON 02.02.2011 THE ASSESSEE PROCURED THE PURCHASE BILLS TO THE TUNE OF RS. 2,28,32,695/- TO COVER UP THE EXCESS STOCK FOUND AT HIS PLACE AMOUNTING TO RS. 2, 89,47,080/-. THE ASSESSEE NEVER UTTERED A WORD, ABOUT THE PURCHASES MADE FROM M/S RUPAL JEWELLERS DURING 24.01.2011 TO 31.01.2011BUT COULD NOT BE RECORDED IN THE BOOKS OF ACCOUNTS, EITHER DURING TH E STATEMENT RECORDED AT THE TIME OF SURVEY OR EVEN IN THE STATEMENT RECO RDED U/S 131 ON 18.08.2011. THEREFORE, THE PRODUCTION OF THESE BILL S IS NOTHING BUT THE ASSESSEE PROCURED THE SAME FROM M/S RUPAL JEWELLERS WHICH IS AN AFTERTHOUGHT CALCULATED MOVE ON THE PART OF THE ASS ESSEE SPECIFICALLY IN THE FACTS OF THE CASE WHEN THERE WAS NO PURCHASES B Y THE ASSESSEE AT ANY POINT OF TIME EITHER PRIOR TO 24.01.2011 OR SUB SEQUENT TO 31.01.2011. SINCE THE ASSESSEE WAS HAVING ONLY A PE RIOD BETWEEN 22.01.2011 TO 01.02.2011 TO CLAIM THE PURCHASE AS T HE BOOKS OF THE ASSESSEE WERE FOUND TO BE COMPLETED ONLY UPTO 21.01 .2011 AT THE TIME OF SURVEY ON 02.02.2011. THE TRADING ACCOUNT WAS P REPARED AT THE TIME OF SURVEY BY THE ACCOUNTED OF THE ASSESSEE AND INCL UDED ALL THE TRANSACTIONS WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS UPTO THE DATE OF SURVEY. THEREFORE, THERE WAS NO SCOPE OF NO T DISCLOSING THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 12 ALLEGED HUGE PURCHASES MADE FROM M/S RUPAL JEWELLER S DURING THE SURVEY OR POST SURVEY ENQUIRY EVEN ON 18.08.2011. T HEREFORE, THE CLAIM OF ALLEGED PURCHASES FROM M/S RUPAL JEWELLERS IS AP PARENTLY AN AFTERTHOUGHT MANIPULATED CLAIM BASED ON THE BILLS P ROCURED FROM M/S RUPAL JEWELLERS. THE VALUE OF THE PURCHASES SHOWN D URING THE SHORT PERIOD OF ONE WEEK IS EXTREMELY AND EXCEPTIONALLY H IGH THAT THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR SUCH A HI GH PURCHASES DURING THAT PERIOD OF 7 DAYS FROM 24.01.2011 TO 31.01.2011 WHEN AVERAGE PURCHASES DURING THE REST OF THE YEAR IS SUBSTANTIA LLY LOW. FURTHER, THERE IS NO REGULAR BUSINESS TRANSACTIONS WITH M/S RUPAL JEWELLERS. ACCORDINGLY, HAVING REGARDING TO THE FACTS AND CIRC UMSTANCES OF THE CASE THAT THE EXCESS STOCK OF RS. 2,89,47,080/- WAS FOUND AT THE TIME OF SURVEY ON 02.02.2011 THE ASSESSEE EVEN COULD NOT HA VE SHOWN THE PURCHASE OTHER THEN THE PERIOD BETWEEN 02.01.2011 T O 01.02.2011. 6. THE ASSESSEE PRODUCED VAT RETURN OF M/S RUPAL JE WELLERS AND ON EXAMINATION OF THE SAME THE TRIBUNAL FOUND THAT THE RE IS DISCREPANCY IN THE TURNOVER SHOWN BY M/S RUPAL JEWELLERS IN THE VA T RETURN AS WELL AS RECORDED IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE TRIBUNAL DIRECTED THE AO TO CONDUCT THE ENQUIRY AND FILE THE REMAND R EPORT VIDE ORDER DATED 04.08.2017. IN RESPONSE TO THAT THE DEPARTMEN T HAS FILED THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 13 REMAND REPORT DATED 21.09.2017 EXPLAINING THE REASO NS FOR DISCREPANCY IN THE TURNOVER APPEARING IN THE SALES REGISTER AND THE VAT RETURN WAS DUE TO THE SALES RETURNED FROM ONE OF THE PARTIES M /S RAKSHA ENTERPRISES OF RS.1,15,05.289/-. ACCORDINGLY THE SA ID ISSUE OF DISCREPANCY IN THE TURNOVER IS NOW RECONCILED. 7. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS DISCUS SED ABOVE WE ARE OF THE CONSIDERED OPINION THAT THE PURCHASES CLAIME D BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS IS CLEARLY AN AF TERTHOUGHT AND BASED ON MANIPULATED RECORD WITHOUT ANY EXPLANATION FROM THE ASSESSEE AS TO WHY THE ALLEGED PURCHASES WERE NOT E XPLAINED AT THE TIME OF SURVEY AND EVEN SUBSEQUENTLY ON 18.08.2011 WHICH IS MORE THAN 6 MONTHS AFTER THE SURVEY WHEN THE EXCESS STOC K WAS FOUND. FURTHER, THESE ARE ONLY TRANSACTIONS OF PURCHASES M ADE FROM M/S RUPAL JEWELLERS DURING THE SHORT PERIOD OF 7 DAYS AND THE ASSESSEE COULD NOT HAVE SHOWN THE PURCHASES OTHER THEN THE PERIOD 22.0 1.2011 TO 01.02.2011 ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE. 8. GROUND NO. 2 IS REGARDING THE ADDITION OF RS. 24 LACS MADE U/S 68 OF THE I.T. ACT. DURING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE HAS RECEIVED UNSECURED LOANS AMOUNTING TO RS. 43,11,945 /- FROM 18 LOAN ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 14 CREDITORS. THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF THE DEPOSITORS SUCH AS COPY ITR AND BANK STATEMENT TO E STABLISH THE CREDITWORTHINESS OF THE CREDITORS. IN RESPONSE THE ASSESSEE FILED ITR AND BANK STATEMENT OF FEW DEPOSITORS ONLY. THE AO N OTED FROM THE DETAILS FILED BY THE ASSESSEE IN RESPECT OF THE 8 L OAN CREDITORS THAT CREDITORS WERE NOT HAVING CREDITWORTHINESS IN GRANT ING THESE LOANS TO THE ASSESSEE AND THEREFORE, THE ASSESSEE FAILED TO ESTABLISH THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. ACCORDINGLY, THE AO MADE AN ADDITION OF RS. 43,11,945/- AS AN EXPLAI NED CASH CREDITORS. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A). THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO IN R ESPECT OF 7 LOAN CREDITORS AND CONFIRMED THE ADDITION IN RESPECT OF THE REMAINING 11 LOAN CREDITORS AND THEREFORE, THE ADDITION MADE BY THE A O WAS SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 24 LACS. 9. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT ALL THE LOAN CREDITORS ARE HAVING PAN NUMBERS AND GAVE THEI R CONFIRMATION OF LOANS AS WELL AS ASSESSED TO THE INCOME TAX. THE TR ANSACTIONS ARE THROUGH BANKING CHANNEL, THEREFORE, THE ASSESSEE HA S DISCHARGED ITS ONUS OF PROVING IDENTITY, GENUINENESS OF TRANSACTIO NS AND CREDITWORTHINESS OF THE CREDITORS. IN SUPPORT OF HI S CONTENTION HE HAS ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 15 RELIED UPON THE DECISION OF HONBLE JURISDICTION HI GH COURT IN CASE OF KANHIYA LAL JANGID V. ACIT 217 CTR 354. THE LD. AR HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. LOVELY EXPORTS P. LTD 216 CTR 195 AND SUBMITTED THAT WHEN THE ASSESSEE HAS GIVEN THE DETAILS OF THE CREDITORS TO THE AO THEN T HE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT CANNOT TREAT THE LOAN AMOUNT AS UNEXPLAINED CAS H CREDIT. THE LD. AR HAS FURTHER CONTENDED THAT DURING THE REMAND PROCEE DINGS THE AO ISSUED SUMMONS TO ALL THE CREDITORS AND EXAMINED TH EM. IN THE REMAND REPORT THE ASSESSING OFFICER HAS MADE NO ADVERSE IN FERENCE IN RESPECT OF THE CREDITORS TO THE TUNE OF RS. 19,11,945/- AND REMAINING CREDITORS IN RESPECT OF RS. 24 LACS WAS STATED TO BE NOT GENU INE. THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 24 LACS AS IT WAS STATED IN THE REMAND REPORT WITHOUT GOING INTO MERITS OF THE ISSUE THAT THE EVIDENCE PRODUCED BY THE ASSESSEE PROVED IDENTITY, THE GENUINENESS O F THE TRANSACTIONS AND CREDITWORTHINESS. HENCE, THE LD. AR HAS SUBMITT ED THAT THE DISALLOWANCE ADDITION MADE BY THE LD. CIT(A) IS LIA BLE TO BE DELETED. 10. ON THE OTHER HAND, LD DR HAS SUBMITTED THAT THE CASH CREDITORS SHOWN IN THE BOOKS OF ACCOUNTS ARE UNSECURED LOANS. THE AO HAS EXAMINED THE DETAILS AND FOUND THAT PRIOR TO ISSUIN G THE CHEQUES THERE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 16 WAS A CASH DEPOSIT IN THE BANK ACCOUNTS OF THE LOAN CREDITORS. THEREFORE, THE CREDITWORTHINESS OF THE LOAN CREDITO RS AND GENUINENESS OF THE TRANSACTIONS WAS NOT PROVED BY THE ASSESSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS SHOWN UNSECURE D LOAN OF RS. 43,11,945/- RECEIVED DURING THE YEAR UNDER CONSIDER ATION. THE DETAILS OF WHICH ARE GIVEN BY THE AO IN PARA 4.2 OF THE ASSESS MENT ORDER FROM WHICH IT IS CLEAR THAT THE ASSESSEE TOOK THE LOAN F ROM 18 CREDITORS. THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS AND EV IDENCES SUCH AS ITR AND BANK STATEMENT TO ESTABLISH THE CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS. IN RESPONSE THE ASSESSEE FURNI SHED ONLY PARTIAL DETAILS OF FILING THE ITR IN RESPECT OF 5 LOAN CRED ITORS AND ITR AND BANK STATEMENT IN RESPECT OF OTHER 4 LOAN CREDITORS. THU S THE ASSESSEE FILED THE DETAILS IN RESPECT OF TOTAL 9 CREDITORS OUT OF WHICH ONLY ITR WAS FILED IN RESPECT OF 5 AND ITR AS WELL AS BANK STATEMENT W ERE FILED IN RESPECT OF 4. THE AO NOTED FROM THE DETAILS FILED BY THE AS SESSEE THAT THE INCOME DECLARED BY THESE LOAN CREDITORS WAS VERY LE SS AND NOT EVEN RS. 2,00,000/- IN MOST OF THE CASES. FURTHER THE CASH W AS FOUND TO BE DEPOSITED IN THE BANK ACCOUNTS TO THE CREDITORS IN RESPECT OF WHICH THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 17 ASSESSEE FILED THE BANK STATEMENT. ACCORDINGLY, THE AO DISALLOWED THE ENTIRE AMOUNT OF UNSECURED LOAN OF RS. 43,11,945/-. BEFORE THE LD. CIT(A) THE ASSESSEE FURNISHED THE CONFIRMATION AND OTHER DETAILS OF THE LOAN CREDITORS WHICH WAS FORWARDED TO THE AO FOR S UBMISSION OF THE REMAND REPORT. IN THE REMAND REPORT THE AO ACCEPTED THE CREDITS TO THE TUNE OF RS. 19,11,945/- IN RESPECT OF 11 CREDITORS, HOWEVER THE AO HAS STATED IN THE REMAND REPORT THAT THE CREDIT FROM TH E 7 PERSONS TOTAL AMOUNTING TO RS. 24,00,000/- CANNOT BE ACCEPTED AS GENUINE. THE LD. CIT(A) IN THE IMPUGNED ORDER HAS HELD THE ASSESSEE WAS ABLE TO DISCHARGE THE BURDEN TO PROVE THE IDENTITY AND CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS IN RESPECT OF 11 CR EDITORS FROM WHOSE UNSECURED LOAN OF RS. 19,11,945/- HAS BEEN RAISED D URING THE YEAR UNDER CONSIDERATION. 12. AS REGARDS THE UNSECURED LOAN OF RS. 24,00,000/ - FROM 7 PERSONS THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE/ ADDI TION MADE BY THE AO AS THE EVIDENCE FILED BY THE ASSESSEE WAS FULL OF D EFICIENCY AND THE CREDITORS COULD NOT SUBSTANTIATE THE TRANSACTIONS. WE HAVE GONE THROUGH THE REMAND REPORT AS REPRODUCE BY THE LD. C IT(A) IN THE IMPUGNED ORDER AND FOUND THAT THE LOAN CREDITORS CO ULD NOT GIVE THE EXPLANATION ABOUT THE AMOUNT OF CASH DEPOSITED IN THEIR BANK ACCOUNTS ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 18 PRIOR TO THE ISSUING OF CHEQUES OF THE ASSESSEE. EE VEN IN THE STATEMENT THE LOAN CREDITORS HAVE FAILED TO PRODUCE ANY EVIDE NCE IN SUPPORT OF THE DEPOSIT MADE IN THE BANK ACCOUNT IN CASH. THE ASSES SING OFFICER HAS GIVEN THE DETAILS AND FACTS AS RECORDED DURING THE COURSE OF THE STATEMENT OF THESE LOAN CREDITORS WHEREIN ALL THESE 7 CREDITORS COULD NOT GIVE A PROPER EXPLANATION ABOUT THE CASH DEPOSIT IN THEIR BANK ACCOUNT PRIOR TO ISSUING THE CHEQUES. THE DECISIONS RELIED UPON BY LD. AR ARE NOT APPLICABLE FOR THE FACTS OF THE CASE. WHEN THE ASSE SSEE HAS SHOWN AS MANY AS 18 MEMBERS ADVANCE LOAN IS SMALL AMOUNTS BU T SOME OF THEM HAVING NO SOURCE OF INCOME. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) IN SUSTAINING THE ADDITION TO THE EXTENT OF RS. 24,00,000/-. 13. GROUND NO. 3 IS REGARDING THE DISALLOWANCE OF R S. 9,000/- ON ACCOUNT OF CORRESPONDING INTEREST CLAIMED IN RESPEC T OF UNSECURED LOAN. THIS ISSUE IS CONSEQUENTLY TO THE ISSUE RAISED IN G ROUND NO. 2. 14. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. CIT(A) HAS GRA NTED THE CORRESPONDING RELIEF TO THE EXTENT OF ALLOWING THE CLAIM OF LOAN/ UNSECURED CREDITORS AND SUSTAINED THE DISALLOWANCE MADE BY THE AO ON ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 19 ACCOUNT OF THE INTEREST ON THE UNSECURED LOAN TO TH E EXTENT OF THE ADDITION OF RS. 24,00,000/- WHICH WAS CONFIRMED BY THE LD. CIT(A). THEREFORE, THE DISALLOWANCE SUSTAINED BY THE LD. CI T(A) OF RS. 9,000/- TOWARDS THE INTEREST ON THE UNSECURED LOAN IS CONSE QUENTIAL TO THE DISALLOWANCE OF UNSECURED LOAN CREDITORS. ACCORDING LY SUSTAINING TO THE ADDITION TO THE EXTENT OF RS. 24,00,000/- THE DISAL LOWANCE OF INTEREST WHICH IS CORRESPONDING AND CONSEQUENTIAL IS ALSO CO NFIRMED. 15. GROUND NO. 4 IS REGARDING CONFIRMING THE ADDITI ON OF RS. 4,63,938/- ON ACCOUNT OF EXCESS CASH FOUND DURING T HE SURVEY PROCEEDINGS. THE SURVEY PROCEEDINGS U/S 133A OF THE IT ACT WERE CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E ON 02.02.2011. APART FROM THE EXCESS STOCK CASH OF RS. 5,29,520/- WAS ALSO FOUND AT THE BUSINESS PREMISES. THE CASH BALANCE AS PER THE BOOKS OF THE ASSESSEE WAS PREPARED WHICH WAS VERIFIED BY THE ASS ESSEE AT RS. 65,582/-. THE ASSESSEE IN HIS STATEMENT EXPLAINED THE AVAILABILITY OF CASH TO THE EXTENT OF RS. 3,29,010/- BEING PART OF THE AMOUNT BELONGS TO FATHER-IN-LAW OF HIS YOUNGER SON TO THE EXTENT OF RS. 50,000/- AND ANOTHER RS. 2,00,000/- WAS CLAIMED TO BE RECEIVED F ROM SHRI RAM PRAKASH CHANDOSIWALA TO BE HANDED OVER TO HIS SON. THE AO CONFRONTED THE STATEMENT OF THE ASSESSEE TO SHRI RAM PRAKASH C HANDOSIWALA BY ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 20 ISSUING SUMMONS U/S 131 OF THE ACT WHO HAS STATED I N HIS STATEMENT THAT THE SAID AMOUNT WAS TAKEN AS A LOAN FROM THE A SSESSEE WHICH WAS RETURN ALONG WITH INTEREST ON THE DATE OF SURVEY. A CCORDINGLY THE AO FOUND THAT THE EXPLANATION OF THE ASSESSEE REGARDIN G THE AVAILABILITY OF THE CASH WAS NOT SATISFACTORY AS SHRI RAM PRAKASH C HANDOSIWALA HAS GIVEN A DIFFERENT VERSION FROM THE ASSESSEE. ACCORD INGLY, THE AO MADE AN ADDITION OF RS. 4,63,938/-. ON APPEAL THE LD. CI T(A) CALLED FOR A REMAND REPORT FROM THE AO IN RESPECT OF THE ADDITIO NAL EVIDENCE FILED BY THE ASSESSEE AND AFTER CONSIDERING THE REMAND REPOR T THE LD. CIT(A) HAS CONFIRMED THE ADDITION MADE ON ACCOUNT OF EXCESS CA SH OF RS. 4,63,938/-. 16. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE WAS HAVING OPENING BALANCE OF RS. 2,90,588 AS ON 02.02.2011 AND ALSO RECEIVED THE AMOUNTS ON ACCOUNT OF SALES O F ORNAMENTS ON THE SAME DAY. THEREFORE, THE CASH FOUND DURING THE SURV EY HAS BEEN RECONCILED BY THE ASSESSEE AS PER THE CASH BOOK. HE HAS FURTHER SUBMITTED THAT AS PER CASH BOOK DATED 02.02.2011 TH E ENTRIES MADE IN THE CASH BOOK CLEARLY ESTABLISH THE AVAILABILITY OF THE CASH WITH THE ASSESSEE, HOWEVER, NO ADDITION IS CALLED ON THIS AC COUNT. AS REGARDS THE STATEMENT OF SHRI RAM PRAKASH CHANDOSIWALA RECORDED BY THE AO THE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 21 LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO RE CORDED THE STATEMENT ON THE BACK OF THE ASSESSEE WITHOUT ANY K NOWLEDGE OF THE ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINATION WA S GIVEN TO THE ASSESSEE. THEREFORE THE DENIAL OF CLAIM OF THE ASSE SSEE BY THE AO ON THE BASIS OF THE STATEMENT IS NOT JUSTIFIED. HE HAS PLEADED THE ADDITION MADE BY THE AO BE DELETED. 17. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT TH E CASH BOOK AS CLAIMED BY THE ASSESSEE WAS NOT PREPARED AND AVAILA BILITY ON THE DATE OF SURVEY AND THEREFORE, IT IS AN AFTERTHOUGHT SUBS EQUENT ENTRIES MADE BY THE ASSESSEE. THE LD. DR HAS FURTHER SUBMITTED T HAT THE CLAIM OF THE ASSESSEE WAS FOUND TO BE FALSE WHEN SHRI RAM PRAKAS H CHANDOSIWALA HAS DENIED AND STATED THAT THE SAID AMOUNT OF RS. 2 ,00,000/- WAS TAKEN BY HIM FROM ASSESSEE AS LOAN AND IT WAS RETURNED TO THE ASSESSEE, THEREFORE THE ASSESSEE HAS FAILED TO EXPLAIN THE AM OUNT OF RS. 5,00,000/-. HE HAS RELIED UPON THE ORDERS OF THE AU THORITIES BELOW. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ADDITION WAS MADE BY THE A O DUE TO THE EXCESS CASH FOUND AT THE BUSINESS PREMISES OF THE A SSESSEE DURING THE SURVEY ON 02.02.2011. THE ASSESSEE EXPLAIN THE SOUR CE OF THE CASH TO THE EXTENT OF RS. 2,00,000/- AS RECEIVED FROM ONE S HRI RAM PRAKASH ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 22 CHANDOSIWALA WHICH WAS TO BE HANDED OVER TO HIS SON AS PER HIS INSTRUCTION. HOWEVER, WHEN THE AO RECORDED THE STAT EMENT OF SHRI RAM PRAKASH CHANDOSIWALA HE HAS STATED THAT THIS AMOUNT OF RS. 2,00,000/- WAS TAKEN AS A LOAN FROM THE ASSESSEE AND IT WAS RE TURNED BY HIM ON 02.02.2011. THUS THE STATEMENT OF SHRI RAM PRAKASH CHANDOSIWALA WAS NOT THE BASIS OF ADDITION BUT IT WAS RECORDED BY TH E AO TO VERIFY THE CLAIM OF THE ASSESSEE AND THE BASIS OF THE ADDITION STILL REMAINS THE EXCESS CASH FOUND AT THE BUSINESS PREMISES OF THE A SSESSEE. ACCORDINGLY, WE DO NOT FIND ANY MERIT AND SUBSTANCE IN THE OBJECTION OF THE ASSESSEE THAT THE STATEMENT OF SHRI RAM PRAKASH CHANDOSIWALA WAS RECORDED AT THE BACK OF THE ASSESSEE AND CANNOT BE IT RELIED UPON. IT IS PERTINENT TO NOTE THAT IT IS CLAIM OF THE ASSESSEE THAT THIS AMOUNT BELONGS TO SHRI RAM PRAKASH CHANDOSIWALA HOWEVER, H E HAS EXPLAINED THAT THIS AMOUNT WAS TAKEN A LOAN FROM THE ASSESSEE AND WAS REPAID, THEREFORE, THIS AMOUNT WAS FOUND AT THE BUSINESS PR EMISES OF THE ASSESSEE REMAINED UNEXPLAINED. FURTHER, THE OTHER E XPLANATION OF THE ASSESSEE WAS ALSO WITHOUT ANY SUPPORTING EVIDENCE O R SUBSTANTIATED BY ANY FACTS. THE CASH BOOK DATED 02.02.2011 WAS UNDIS PUTEDLY PREPARED SUBSEQUENT TO THE SURVEY WHEREAS THIS AMOUNT OF RS. 2,00,000/- COULD HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS WHEN IT WAS STATED TO BE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 23 TAKEN AS LOAN FROM THE ASSESSEE. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE EXPLANATION OF T HE ASSESSEE WAS NOT FOUND TO BE ACCEPTABLE BECAUSE OF THE CONTRADIC TORY FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THEN THE BUR DEN WAS AGAIN SHIFTY TO THE ASSESSEE TO ESTABLISH ITS CLAIM REGARDING SO URCE OF THE CASH FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE. HENCE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIE S BELOW QUA THIS ISSUE. 19. GROUND NO. 5 IS REGARDING THE ADDITION ON ACCOU NT OF LONG TERM CAPITAL GAIN. THE AO NOTED THAT DURING THE YEAR UND ER CONSIDERATION THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN OF RS. 1,0 4,964/- ON SALE OF PROPERTY. THE ASSESSEE CLAIMED DEDUCTION OF RS. 4,7 1,036/- AS INDEX COST OF IMMOVABLE PROPERTY. THE AO HAS FURTHER NOTE D AS PER THE AGREEMENT TO SALE DATED 11.05.2005 THE SAID PLOT WA S PURCHASED BY THE ASSESSEE AT THE COST OF RS. 1,92,000/- AND STAMP DU TY OF RS. 45,000/-. ACCORDINGLY THE AO DENIED THE CLAIM OF THE ASSESSEE REGARDING THE COST OF IMPROVEMENT OF RS. 2,54,730/- INCURRED DURING TH E YEAR UNDER CONSIDERATION. THE AO HAS FURTHER OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY BILL/VOUCHER OF THE PURCHASE OF ANY BUILD ING MATERIAL TO PROVE THE EXPENDITURE INCURRED BY THE ASSESSEE FOR IMPROV EMENT OF THE PLOT OF LAND. THE AO HAS FURTHER NOTED THAT THE ASSESSEE HA S SOLD TOTAL LAND OF ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 24 MEASURING 3600 SQ. FT, THEREFORE, THE CAPITAL GAIN IS REQUIRED COMPUTED IN RESPECT OF THE SAID AREA OF LAND OUT OF THE TOTA L LAND PURCHASE BY THE ASSESSEE MEASURING 5750 SQ. FT. ACCORDINGLY THE AO WORKED OUT THE PROPORTIONATE COST OF ACQUISITION AT RS. 1,48,383/- . THE AO ADOPTED THE FULL VALUE CONSIDERATION OF THE PROPERTY IN QUESTIO N AS PER SECTION 50C OF THE IT ACT AT RS. 5,95,200/- AND CONSEQUENTLY MADE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS. 2,77,962/- . AFTER CONSIDERING THE REMAND REPORT THE LD. CIT(A) HAS ACCEPTED THE C OST OF IMPROVEMENT TO THE EXTENT OF RS. 54,730/- OUT OF TOTAL AMOUNT O F RS. 2,54,730/-. THE LD. CIT(A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF RS. 2,00,000/- OUT OF TOTAL ADDITION OF RS. 2,54,730/-. 20. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE FURNISHED SUFFICIENT EVIDENCE IN RESPECT O F IMPROVEMENT COST INCURRED BY THE ASSESSEE, HOWEVER THE AO AS WELL AS LD. CIT(A) HAS DISALLOWED THE CLAIM OF THE ASSESSEE WITHOUT CONSID ERING THE EVIDENCE FILED BY THE ASSESSEE. THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 2,00,000/- PURELY ON ADHOC ADMITTED BASIS WITHOUT A NY COGENT EVIDENCE WHICH IS NOT JUSTIFIED. HE HAS THUS PLEADE D THAT THE ADDITION CONFIRMED BY THE LD. CIT(A) MAY BE DELETED. ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 25 21 ON THE OTHER HAND, LD. DR HAS RELIED UPON THE AU THORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODU CE ANY COGENT EVIDENCE IN SUPPORT OF EXPENDITURE INCURRED FOR IMP ROVEMENT OF THE PROPERTY. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS P RODUCED CERTAIN HAND WRITTEN RECEIPT ON THE ORDINARY PAPERS WITHOUT ANY DETAILS OF THE PERSONS TO WHOM THE PAYMENT WAS MADE. THEREFORE, TH ESE ALLEGED RECEIPTS CANNOT BE ACCEPTED AS AN EVIDENCE TO PROVE THE EXPENDITURE INCURRED BY THE ASSESSEE. HOWEVER IF THE ASSESSEE H AD ACTUALLY CARRIED OUT ANY CONSTRUCTION AND OTHER IMPROVEMENT WORK AT THE SITE WHICH CAN BE PHYSICALLY SEEN AND EXAMINED THEN THE CLAIM OF T HE ASSESSEE CANNOT BE REJECTED OUT RIGHTLY TO THE EXTENT OF THE WORK W HICH IS IN EXISTENCE AT THE SITE AND CAN BE SEEN. THE ASSESSEE HAS CLAIM ED TO HAVE INCURRED THE EXPENDITURE IN FILLING THE LAND AND ALSO IN CON STRUCTION OF THE BOUNDARY WALL. AS FAR AS THE EXPENDITURE INCURRED O N THE LAND FILLING IN THE ABSENCE OF ANY EVIDENCE THE SAME CANNOT BE ACCE PTED. HOWEVER, THE EXPENDITURE INCURRED ON CONSTRUCTION OF BOUNDAR Y WALL CANNOT BE REJECTED AS THE BOUNDARY WALL IS IN PHYSICAL EXISTE NCE AND THEREFORE, THE EXPENDITURE TOWARDS CONSTRUCTION OF THE BOUNDARY WA LL HAS TO BE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 26 ALLOWED. THE LD. CIT(A) HAS DISALLOWED THE EXPENDIT URE OF RS. 2,00,000/- CLAIMED ON CONSTRUCTION OF BOUNDARY WALL AND LAND HOLDING HOWEVER, IN THE ABSENCE OF ALL THE DETAILS AND RELE VANT DOCUMENTS, THE EXPENDITURE ON THE BOUNDARY WALL TO THE EXTENT OF R S. 1,00,000/- IS CONSIDERED AS REASONABLE AND PROPER WHEN NO OTHER MATERIAL AND EVIDENCE IN SUPPORT OF THE EXPENDITURE IS AVAILABL E. ACCORDINGLY, WE ALLOW THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS . 1,00,000/- OUT OF DISALLOWANCE OF RS. 2,00,000/- CONFIRMED BY THE LD. CIT(A). IN THE RESULT, GROUND NO. 5 IS PARTLY ALLOWED. 23. GROUND NO. 6 IS REGARDING SURVEY ENTERTAINMENT EXPENSES OF RS. 10,750/-. AT THE TIME OF HEARING THE LD. AR OF THE ASSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESSED THIS GROUND OF THE ASSESSEES APPEAL AND SAME MAY BE DELETED. THE LD. DR HAS RAIS ED NO OBJECTION IF THIS GROUND OF THE ASSESSEE IS DISMISSED AS NOT PRE SSED. ACCORDINGLY, THE GROUND NO. 6 OF THE ASSESSEES APPEAL IS DISMIS SED BEING NOT PRESSED. 24. GROUND NO. 7 IS REGARDING ADDITION OF RS. 63,00 0/- ON ACCOUNT OF NOTION RENTAL INCOME OF SHOP. THE ASSESSEE PURCHASE D A SHOP AT KILA, BHARATPUR ON 23.10.2009 OF RS. 7,16,920/- THE ASSES SEE CLAIMED THAT THE SHOP WAS IN SCRAPED CONDITION AND CANNOT BE USE D FOR ANY BUSINESS ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 27 AND CANNOT BE LET OUT. THE ASSESSING OFFICER HAS ES TIMATED THE NOTIONAL RENT OF RS. 7,500/- PER MONTH AND MADE AN ADDITION OF RS. 63,000/- U/S 23(1) OF THE IT ACT. THE ASSESSEE CHALLENGED THE AC TION OF THE AO BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER CONSIDE RING THE REMAND REPORT HAS CONFIRMED THE ADDITION MADE BY THE AO ON THIS ACCOUNT. 25. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT WHEN THE SHOP WAS NOT IN A CONDITION TO LET OUT THEN THE ACTION OF THE AO IS NOT JUSTIFIED. HE HAS FURTHER CONTENDED THAT THE SH OP REQUIRED A SUBSTANTIAL RENOVATION WORK AND ONLY AFTER THE WORK WAS CARRIED OUT THE SHOP WAS SUBSEQUENTLY LET OUT. HE HAS FURTHER CONTE NDED THAT DURING THE REMAND PROCEEDINGS THE ASSESSEE FURNISHED THE R ENT AGREEMENTS OF THE ADJOINING SHOPS SITUATED IN THE LOCALITY WHEREI N THE RENT OF RS. 3800/- TO 4200/- PER MONTH WAS PAID AND AGREED BETW EEN THE PARTIES. THEREFORE, THE ADDITION MADE BY THE AO IS WITHOUT A NY BASIS. 26. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS ADOPT ED THE NOTIONAL RENT AT RS. 7,500/- PER MONTH AND COMPUTED A TOTAL RENT FOR THE YEAR AT RS. 90,000/-. AFTER ALLOWING THE DEDUCTION U/S 24(A) OF RS. 27,000/- THE AO ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 28 HAS MADE ADDITION OF RS. 63,000/- UNDER THE HEAD IN COME FROM HOUSE PROPERTY. WE FIND THAT WHEN THE ASSESSEE HAS PURCHA SE THIS SHOP IN THE YEAR 2009 AND CLAIMED THAT WITHOUT CARRYING OUT THE RENOVATION WORTE, THE SHOP COULD NOT BE USED. THEREFORE, WITHOUT DISP UTING THE FACT OF REMOVABLE WORK AND FORTH WITH IT IS NOT A CASE OF THE AO THE FACT THAT THE ASSESSEE HAD DELIBERATELY KEPT THE SHOP IN QUES TION VACANT AND NOT LET OUT, THE ADDITION ON ACCOUNT OF NOTIONAL RENT I NCOME CANNOT BE MADE. FURTHER, THE ASSESSING OFFICER HAS ADOPTED TH E FAIR MARKET VALUE OF THE SHOP AT RS. 7500/- PER MONTH WITHOUT GIVING ANY BASIS THAT THE SHOP WOULD HAVE FETCH THE SAID RENT IN CASE IT LET OUT. DURING THE COURSE OF REMAND PROCEEDINGS THE ASSESSEE FURNISHED THE RE NTAL AGREEMENT IN RESPECT OF THE ADJOINING THE SHOPS WHEREIN THE RENT OF RS. 3800/- TO 4200/- WAS AGREED BETWEEN THE PARTIES. THUS WHEN TH E ASSESSEE HAS FURNISHED THE COMPARABLE RATE OF RENT ON WHICH SIMI LARLY SITUATE SHOP WAS LET OUT THEN THE ADDITION MADE BY THE AO WITHOU T GIVING ANY BASIS IS NOT SUSTAINABLE. ACCORDINGLY WE SET ASIDE THIS I SSUE TO THE RECORD OF THE ASSESSING OFFICER TO DECIDE THE SAME AS PER THE PROVISIONS OF SECTION 23(1) (A) OF THE ACT AND AFTER CONDUCTING A PROPER INQUIRY FOR DETERMINING THE ANNUAL LATIN ON THE BASIS OF REASO NABLE EXPECTED FAIR MARKET RENT OF THE SHOP IN QUESTION. FURTHER, WHEN THE ASSESSEE ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 29 CLAIMED THAT THE SHOP WAS NOT IN A CONDITION TO LET OUT AT THE TIME OF PURCHASE BY THE ASSESSEE, THEN THE ASSESSING OFFICE R HAS TO VERIFY THIS FACT AND FIND OUT WHETHER BEFORE LETTING OUT ANY R ENOVATION WORK WAS DONE IN THE SHOP. ACCORDINGLY, THE AO IS DIRECTED T O DISCUSS THE ISSUE AFRESH AFTER GIVING OPPORTUNITY OF HEARING TO THE A SSESSEE. 28. GROUND NO. 8 IS REGARDING THE DISALLOWANCE MADE U/S 40A(3) OF THE IT ACT. THE ASSESSEE CLAIMED EXPENDITURE TOWARD S CAR REPAIRS AND MAINTENANCE OF RS. 22,990/- AND FURTHER AMOUNT OF R S. 20,400/- ON THE REPAIR OF CAR BREAK DOWN. THE ASSESSEE CLAIMED THAT THE EXPENDITURE IS GENUINE AND DUE TO EXIGENCY AND HARDSHIP OF THE ASS ESSEE THE PAYMENT WAS MADE IN CASH AS THE RECIPIENT REFUSED TO ACCEPT THE CHEQUE FROM UNKNOWN PERSON. THE AO DID NOT ACCEPT THE EXPLANATI ON OF THE ASSESSEE AND MADE THE ADDITION OF RS. 43,390/- WHIC H WAS CONFIRMED BY THE LD. CIT(A). 29. BEFORE US, THE LD. AR OF THE ASSESSEE HAS REITE RATED ITS CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW AND SUBMITTE D THAT THE EXPENDITURE WAS IN THE NATURE OF CAR REPAIR AND MAI NTENANCE AS WELL AS EXPENDITURE INCURRED ON BREAK DOWN OF CAR. THEREFOR E, THE PAYMENT WAS MADE IN CASH IN PECULIAR CIRCUMSTANCES WHEN THE RECIPIENT REFUSED TO ACCEPT THE PAYMENT THROUGH CHEQUE. ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 30 30. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT TH E EXPENDITURE INCURRED BY THE ASSESSEE IS IN VIOLATION OF PROVISI ONS OF SECTION 40A(3) OF THE ACT AND FURTHER THE CASE OF THE ASSESSEE FAL LS IN THE AMBIT OF RULE 6DD OF THE IT RULES AND DOES NOT FALLS IN THE EXCEP TION PROVIDED UNDER THE SAID RULE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS CLAIMED EXPEN DITURE OF RS. 22,990/- INCURRED ON 12.06.2010 TOWARDS CAR REPAIR AND MAINTENANCE. SINCE, IT IS AN EXPENDITURE TOWARDS THE REGULAR RE PAIR AND MAINTENANCE, THEREFORE, THERE IS NO EXIGENCY OR EMERGENCY WHIC H WOULD WARRANT THE PAYMENT IN CASH. FURTHER, IN VIEW OF THE PROVISIONS OF SECTION 40A(3) R.W. RULE 6DD OF THE IT RULES THE EXPENDITURE INCU RRED IN CASH IS NOT ALLOWABLE. THE ASSESSEE HAS ALSO CLAIMED RS. 20,400 /- INCURRED ON 07.02.2011 TOWARDS THE REPAIR OF BREAK DOWN OF CAR. SINCE THIS EXPENDITURE WAS INCURRED IN A PECULIAR SITUATION AN D CIRCUMSTANCES UNDER WHICH THE ASSESSEE WAS NOT HAVING ANY OPTION BUT TO GET THE WORK DONE URGENTLY AND HENCE, IN SUCH A SITUATION T HE ASSESSEE WAS BOUND THE PAY IN CASH. ACCORDINGLY, THE EXPENDITURE INCURRED TO GET THE BREAKDOWN OF THE CAR REPAIRED WILL FALL IN EXCEPTIO NS AS PROVIDED UNDER ITA NO. 230/JP/2016 SHRI RAJ KUMAR GOYAL VS.DCIT, BHARATPUR 31 RULE 6DD OF THE IT RULES AND CONSEQUENTLY WE RESTRI CT THE DISALLOWANCE TO THE EXTENT OF RS. 22,990/-. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2018 SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16/01/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAJ KUMAR GOYAL, BHARATPUR. 2. IZR;FKHZ@ THE RESPONDENT - DCIT, CIRCLE, BHARATPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 230/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR