M/s. Anukul Builders, Valsad V. The Income tax Officer, Ward-1, Valsad

ITA 2363/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8719 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 01-06-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: KK SHAH
• Keywords: Rejection of books of accounts; Opportunity of being heard; Principle of natural justice; Validity of assessment
• Section: 143(3); 131; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B, AHMEDABAD BEFORE SHRI BHAVNESH SAINI,JM & SHRI A.N. PAHUJA, A M I.T.A. NO.2363 & 2364/AHD/2007 (ASSESSMENT YEARS 2001-02 & 2002-03) M/S ANUKUL BUILDERS VS ITO, WARD-1 SAMRUDHI COMPLEX VALSAD 1 ST FLOOR, VALSAD [PAN : AAEFA0892N] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KK SHAH, AR REVENUE BY : SMT. NEETA SHAH, DR O R D E R A.N. PAHUJA : THESE APPEALS BY THE ASSESSEE AGAINST A COMMON OR DER DATED 15-04-2007 OF THE LD CIT(A), VALSAD FOR THE AYS 200 1-02 AND 2002-03, RAISE THE FOLLOWING GROUNDS : I.T.A. NO.2363/AHD/2007 1) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING THE PROCEEDINGS U/S 143(3) OF THE ACT R.W.S. 147 & 148 OF THE ACT. 2) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER FOR INVOKING PROVISIONS OF SE CTION 145(3) OF THE ACT. 3) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING T HE ADDITION OF RS.6,15,000/- AS PER THE PARA 5 TO 13 OF THE ASS ESSMENT ORDER. 4) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING A DDITION OF RS.19,312/- ON ACCOUNT OF VALUATION OF CLOSING STOC K AS PER PARA 26 OF THE ASSESSMENT ORDER. 5) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING A DDITION OF RS.7,71,822/- IN RESPECT OF SUNDRY CREDITORS LYING IN THE BALANCE SHEET AS PER PARA 25 OF THE ASSESSMENT ORDE R. ITA 2363 & 2364/AHD/2007 2 6) THE LEARNED CIT(A) FURTHER ERRED IN NOT CONSIDER ING THE ISSUE OF NATURAL JUSTICE REGARDING PASSING OF AN ORDER HU RRIEDLY AND NOT GIVING REASONABLE OPPORTUNITY OF BEING HEARD PA RTICULARLY WHEN IT WAS NOT A TIME BARRING CASE. 7) THE APPELLANT RESERVES RIGHT TO ADD, ALTER AND W ITHDRAW OF ANY GROUNDS OF APPEAL. I.T.A. NO.2364/AHD/2007 1) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING THE PROCEEDINGS U/S 143(3) OF THE ACT R.W.S. 147 & 148 OF THE ACT. 2) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER FOR INVOKING PROVISIONS OF SE CTION 145(3) OF THE ACT. 3) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING T HE ADDITION OF RS.1,55,000/- AS PER THE PARA 5 TO 13 OF THE ASS ESSMENT ORDER. 4) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING A DDITION OF RS.43,161/- ON ACCOUNT OF VALUATION OF CLOSING STOC K AS PER PARA 24 OF THE ASSESSMENT ORDER. 5) THE LEARNED CIT(A) FURTHER ERRED IN NOT CONSIDER ING THE ISSUE OF NATURAL JUSTICE REGARDING PASSING OF AN ORDER HU RRIEDLY AND NOT GIVING REASONABLE OPPORTUNITY OF BEING HEARD PA RTICULARLY WHEN IT WAS NOT A TIME BARRING CASE. 6) THE APPELLANT RESERVES RIGHT TO ADD, ALTER AND W ITHDRAW OF ANY GROUNDS OF APPEAL. SINCE SIMILAR ISSUES WERE INVOLVED IN THESE APPEALS OF THE SAME ASSESSEE, THESE WERE HEARD TOGETHER FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. 2. GROUND NOS. 1 & 2 IN THESE TWO APPEALS RELATING TO THE VALIDITY OF ASSESSMENT U/S 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND REJECTION OF BOOK RES ULTS U/S 145(3) OF THE ACT, WERE NOT PRESSED BEFORE US AT THE TIME OF HEARING OF THE SE APPEALS AND INSTEAD THESE ITA 2363 & 2364/AHD/2007 3 WERE WITHDRAWN VIDE LETTER FILED ON 22.2.2010. THER EFORE, THESE GROUNDS ARE DISMISSED. 3. GROUND NO.3 IN THESE APPEALS RELATE TO THE ADD ITION OF RS.6,15,000/- FOR THE AY 2001-02 AND RS. 1,55,000/- FOR THE AY 2002- 03. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE AY 2001-02, THE ASSE SSING OFFICER[AO IN SHORT] NOTICED THE FOLLOWING DISCREPANCIES IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE: I. THOUGH THE ASSESSEE HAD SHOWN SUNDRY CREDITORS AT RS.9,09,351/- IN THE BALANCE SHEET AS ON 31.3.2001 , THE DETAILS FIL ED (GROUP SUMMARY), REVEALED AN AMOUNT OF RS.9,21,822/- SHOWN AS PAYAB LE TO M/S SHIV CONSTRUCTION. HOWEVER, AFTER OBTAINING A COPY OF A CCOUNT OF M/S SHIV CONSTRUCTION, THE AO RECORDED STATEMENT OF SHRI SH IVPAL J. MISTRY PROP. OF M/S SHIV CONSTRUCTION U/S 131 OF THE ACT. IN REPLY TO QUESTION NO.3, HE CATEGORICALLY STATED THAT THE ENTRY SHOWN IN THE BOOKS OF ACCOUNT OF M/S ANUKUL BUILDERS WERE INCORRECT AND HE DID NOT KNOW ANYTHING ABOUT SUCH AN ENTRY; II. THE ASSESSEE HAD SHOWN SALE OF FLAT NO.904 HAVI NG AREA OF 950 SQ.FT. TO SHRI VINAY P DESAI FOR RS.2,75,000/-,BUT ON VERI FICATION OF THE SALE AGREEMENT OBTAINED FROM DENA BANK, VALSAD, THE FLA T NO.904 WAS FOUND TO HAVE BEEN SOLD TO ONE SHRI HARISH P. DESA I FOR RS.4,00,000/- AND NOT TO VINAY P. DESAI AS STATED; III. LIKEWISE THOUGH THE ASSESSEE HAD SHOWN SALE OF FLAT NO.506 AND 605 HAVING AREA OF 1300 SQ.FT. TO SHRI HARISH P. DESAI FOR RS.4,00,000/-,ON VERIFICATION OF SALE AGREEMENT, IT WAS FOUND THAT T HE FLAT NO.506 WAS SOLD TO VINAY DESAI FOR RS.2,75,000/-; IV. THOUGH THE ASSESSEE CLAIMED SALE OF 5 FLATS ADM EASURING 3550 SQ.FT. FOR AN AMOUNT OF RS.9,75,000/- ON VERIFICATION OF THE INFORMATION GATHERED AND ON BEING CONFRONTED WITH THE SALE AGRE EMENT, THE ASSESSEE FILED A REVISED STATEMENT IN WHICH SALE OF 4 FLATS OF 2900 SQ.FT. WERE SHOWN ;. V. ON VERIFICATION OF THE SALE AGREEMENT OBTAINED F ROM GRUH FINANCE ,IT WAS FOUND THAT THE ASSESSEE HAD SOLD ONE FLAT IE. F LAT NO.907 ADMEASURING 950 SQ.FT. TO SHRI ASHISH KANTILAL JOSH I FOR RS.4,00,000/-. THUS, IN ALL THE ASSESSEE HAD SOLD 5 FLATS ADMEASUR ING 3850 SQ.FT. DURING THE YEAR; ITA 2363 & 2364/AHD/2007 4 VI. THE ASSESSEE HAD SHOWN CLOSING STOCK OF 9100 SQ .FT. BUT ON ACTUAL VERIFICATION IT WAS FOUND THAT THE CLOSING STOCK CO ULD BE ONLY 8800 SQ.FT. SALEABLE AREA; VII. THE VALUE SHOWN FOR THE CLOSING STOCK WAS ALSO FOUND TO BE INCORRECT, THE COST OF LIFT HAVING NOT BEEN TAKEN IN TO ACCOU NT; VIII. THE ASSESSEE DEBITED RS.3,89,250/- IN THE AC COUNTS TOWARDS THE EXPENSES OF LIFT AGAINST THE SALE PRICE OF 5 FLATS ALTHOUGH THE LIFT IS MEANT FOR ALL THE 72 FLATS OF 10 STORIED BUILDING. THUS, CLAIMING EXPENSES OF THE COST OF NEW LIFT ERECTED FROM THE S ALE PRICE OF 5 FLATS WAS ILLOGICAL AND INCORRECT. 3.1 IN THE LIGHT OF AFORESAID DISCREPANCIES, ES PECIALLY WHEN THE AO NOTICED THAT THE ASSESSEE MISREPRESENTED THE FACTS AND MADE IN CORRECT ENTRIES IN THE BOOKS OF ACCOUNTS, THE AO REJECTED BOOK RESULTS, INVOKING THE PROVISIONS OF SEC. 145(3) OF THE ACT. THEREAFTER, THE AO ASKED THE ASSESSEE AS TO WHY SALE PRICE OF VARIOUS FLATS SHOULD NOT BE ADOPTED @421/- PER SQ.F T. IN THE ABSENCE OF SALE AGREEMENT OR ANY DOCUMENTARY EVIDENCE. SINCE THE ASSESSEE DID NOT RESPOND, THE AO PROCEEDED TO ASSESS THE INCOME OF THE ASSESS EE ON THE BASIS OF EVIDENCES GATHERED FROM VARIOUS PERSONS, INSTITUTIO NS AND BANKS AS ALSO ON THE BASIS OF DETAILS AVAILABLE ON RECORD. 3.2 THE AO NOTICED THAT THE ASSESSEE HAD SHOWN SALE OF FIVE FLATS ADMEASURING 3550/- SQ.FT. FOR AN AMOUNT OF RS.9,75, 000/- IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT, THE DETAILS OF WHICH WERE AS UNDER: FLAT NO. SQ.FT. NAME OF PURCHASER SELLING PRICE RATE PER SQ.FT. 904 950 VINAY P DESAI 2,75,000 289.47 506 & 605 1300 HARISH P DESAI 4,00,000 307.69 404 650 HARESH M DESAI 1,50,000 230.76 306 650 SHAKTI K BHANUSHALI 1,50,000 230.76 TOTAL 3650 9,75,000 267.12 ITA 2363 & 2364/AHD/2007 5 HOWEVER, THE DETAILS GATHERED FROM DENA BANK, VALSA D REVEALED THAT FLAT NO.506 ADMEASURING 650 SQ.FT. WAS SOLD TO VINAY P DESAI FO R RS.2,75,000/- AND NOT 950 SQ.FT. AS SHOWN BY THE ASSESSEE,YIELDING RATE OF RS . 423/- PER SQ.FT. AS AGAINST SALE PRICE OF 289/- PER SQ.FT.SHOWN BY THE ASSESSEE . LIKEWISE, IT WAS FOUND THAT THE ASSESSEE SOLD FLAT NO.904 ADMEASURING 950 SQ.F T. FOR RS.4 LAKHS WHICH GAVE A SALE PRICE OF RS.421/- PER SQ.FT. ON BEING CONFRO NTED, THE ASSESSEE REVISED THE STATEMENT OF SALES AS UNDER: FLAT NO. SQ.FT. NAME OF PURCHASER SELLING PRICE 904 950 HARISH P DESAI 4,00,000 506 650 VINAY P DESAI 2,75,000 404 650 HARESH M DESAI 1,50,000 306 650 SHAKTI K BHANUSHALI 1,50,000 TOTAL 2900 9,75,000 3.21 THE AFORESAID DETAILS REVEALED THAT THE AV ERAGE RATE OF SALE WORKED OUT TO RS.336/- PER SQ.FT. AS AGAINST RS.274/- PER SQ.FT. SHOWN IN THE RETURN OF INCOME. THE AO FURTHER NOTICED THAT THE ASSESSEE SOLD FLAT NO. 907 ADMEASURING 950 SQ. FT TO SHRI ASHISH KANTILAL JOSHI VIDE SALE AGREEMEN T EXECUTED AND REGISTERED ON 19. 4.2000 AND THE LATTER HAD OBTAINED LOAN FROM G RUH FINANCE LTD. ON THE STRENGTH OF THE SAID AGREEMENT. SIMILARLY, THE SALE DEED FOR FLAT NO. 306 EXECUTED ON 13.7.2000 WITH SHRI SHAKTIKUMAR K BHANUSHALI RE VEALED THAT THE PURCHASER PAID RS. 2 LACS BY CHEQUE AND RS. 40,000/- IN CASH. HOWEVER, THE ASSESSEE DID NOT PRODUCE A COPY OF SALE AGREEMENT OF FLAT NO. 4 04 SOLD TO SHRI HARISH M DESAI. ON THE BASIS OF THE ENQUIRIES ,AS POINTED OUT IN PARAGRAPHS 17, 18 & 19 OF HIS ORDER, THE AO WORKED OUT THE SALE PRICE OF THE FLATS ADMEASURING 3850 SQ.FT. (AGGREGATE) AT RS.15,90,000/- AS AGAINST THE SALE PRICE SHOWN BY THE ASSESSEE AT RS.9,75,000/- AS UNDER : FLAT NO. SQ.FT. NAME OF PURCHASER SELLING PRICE RATE PER SQ.FT. ITA 2363 & 2364/AHD/2007 6 904 950 HARISH P DESAI 4,00,000 421 506 650 VINAY P DESAI 2,75,000 423 907 950 ASHISH K JOSHI & KALPANA ASHISH JOSHI 4,00,000 421 404 650 HARESH M DESAI 2,75,000 423 306 650 SHAKTI K BHANUSHALI 2,40,000 369 TOTAL 3850 15,90,000 ACCORDINGLY, THE DIFFERENCE OF RS.6,15,000/- WAS AD DED TO THE TOTAL INCOME OF THE ASSESSEE IN THE AY 2001-02. 3.3 SIMILARLY, IN THE AY 2002-03 , THE AO REJECT ED BOOK RESULTS AND ESTIMATED THE VALUE OF FLAT NO.707 HAVING AREA OF 900 SQ.FT.@ RS. 422/- PER SQ. FT. ON THE BASIS OF HIS ENQUIRIES IN THE PRECEDING YEAR, YI ELDING AVERAGE RATE OF MORE THAN RS. 420 PER SQ. FT., RESULTING IN ADDITION OF RS. 1,55,000/- 4. ON APPEAL, THOUGH THE ASSESSEE,INTER ALIA, CONTE NDED THAT THE AGREEMENT WITH SHRI ASHISK K JOSHI & MRS. KALPANA JOSHI WAS CANCELLED AND THAT THERE WAS DIFFERENCE IN FLATS SOLD TO SHAKTI K BHANUSHALI AND FLAT SOLD TO HARISH P DESAI, THE LD. CIT(A) REJECTED THESE CONTENTIONS, HOLDING AS U NDER: 6. THE APPELLANT'S CONTENTION AND SUBMISSIONS WIT H REGARD TO THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING PROVISION S OF SECTION 145(3) OF THE ACT WITHOUT ANY LEGAL GROUND AND REASON WAS EXA MINED ON THE BASIS OF DETAILS MADE AVAILABLE. IT IS FOUND FROM THE ASSESS MENT ORDER THAT THE ASSESSING OFFICER HAS ANALYZED AND POINTED OUT THE DISCREPANCIES FOUND IN THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FILED ALONGWITH THE RETURN OF INCOME. THE REASONS FOR REJECTION OF BOOKS OF ACCOU NTS ARE GIVEN IN PARA 7 & 8 OF THE ORDER WHICH IS REPRODUCED SUMMARILY AS U NDER:- 'THE BALANCE SHEET FILED WITH (LIE RETURN OF INCOME WAS INCORRECT AS THE SUNDRY CREDITOR WAS FOUND TO BE BOGUS AS PER THE ST ATEMENT ON OATH GIVEN BY THE SUNDRY CREDITOR SHRI SHIVPAL MISTRY. A S PER PARA 7.1 ON PAGE NO. 3 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICE R HAS QUOTED THE STATEMENT OF THE SUNDRY CREDITOR AS UNDER '' IN ANS WER TO QUESTION, NO. 3 HE HAS CATEGORICALLY STATED THAT THE ENTRY SHOWN IN THE BOOKS OF ACCOUNT OF M/S. ANNKUL BUILDERS IS INCORRECT AND HE DOES NOT K NOW ANYTHING ABOUT - ITA 2363 & 2364/AHD/2007 7 SUCH AN ENTRY. THUS, THE BALANCE SHEET DOES NOT APP EAR TO BE CORRECT AND GENUINE''. IT IS ALSO FOUND THAT THE APPELLANT WAS GIVEN AN OPPORTUNITY TO CONFIRM AND CROSS EXAMINE THE WITNESS BY THE ASSESS ING OFFICER BY ISSUING LETTER DATED 12.12.2006 GIVING LIME UPTO 20.12.2006 . HOWEVER, THE APPELLANT HAS NOT AVAILED OF THAT OPPORTUNITY TO CR OSS-EXAMINE THE WITNESS OR OBJECTED TO THE STATEMENT GIVEN BY THE SUNDRY CR EDITOR BEFORE PASSING THE ASSESSMENT ORDER. (A) THE NAME OF (HE PURCHASERS OF THE FLAT WERE NOT FOUND TO BE CORRECT AS PER THE ORDER. . (B) THE AMOUNT OF THE SALE PRICE AND THE SALEABLE A REA SOLD ETC. WERE ALSO FOUND TO BE INCORRECT AS THE SALE AGREEMENT EX ECUTED DID NOT TALLY WITH THE STATEMENT GIVEN WITH THE RETURN OF INCOME PER THE ASSESSMENT ORDER. (C) THE CORRECT FLAT NUMBER AND NAME OF THE PURCHAS ER DID NOT TALLY WITH THE. STATEMENT FILED WITH THE RETURN. (D) THE RATE OF SALE PER SQ.FI SHOWN IN THE RETURN WAS DIFFERENT FROM THE FIGURE SHOWN IN THE AGREEMENT TO SALE EXECUTED BY T HE APPELLANT DULY SIGNED BY THE PURCHASER''. 6.1. THE APPELLANT WAS GIVEN OPPORTUNITY UPTO 20. 12.2006 TO EXPLAIN AS TO WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED AS MENTIONED IN PARA- 8 OF THE ASSESSMENT ORDER. THE APPELLANT HAS NOT GI VEN ANY EXPLANATION EITHER AT THE ASSESSMENT STAGE OR AT THE APPELLATE STAGE. 6.2. SECTION 145 (3) OF THE I.T .ACT EMPOWERS TH E ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNTS AND MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE L. T. ACT IF THE ASS ESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. 6.3 THE APPELLANT HAS NOT PRODUCED ANY PROOF AGAINS T THE FINDINGS OF THE ASSESSING OFFICER BEFORE ME. IN VIEW OF THE REA SONS GIVEN IN THE ASSESSMENT ORDER FOR REJECTING THE BOOKS OF ACCOUNT , THE ASSESSING OFFICER IS FULLY JUSTIFIED IN REJECTING THE BOOKS OF ACCOUN TS ESPECIALLY WHEN THE APPELLANT HAS NOT OBJECTED TO THE DEFECTS POINTED O UT IN THE BOOKS OF ACCOUNTS OR THE PROPOSED REJECTION AT THE TIME OF A SSESSMENT. 6.8. THE APPELLANT ITSELF HAS STATED THAT THE PR OJECT WAS COMPLETED IN 1997. IF THAT IS SO, THE ACCOUNTS AND ALL THE STATE MENTS MUST HAVE BEEN COMPLETED. THE APPELLANT WAS ASKED TO CONFIRM THE S TATEMENT OF SUNDRY CREDITOR ONLY AND TO PRODUCE THE SALES AGREEMENT. I T APPEARS FROM THE ITA 2363 & 2364/AHD/2007 8 RECORDS THAT THE ASSESSEE DELIBERATELY AVOIDED COMP LIANCE OF SUCH A LETTER AND DOES NOT DESERVE ANY FAVOURABLE CONSIDERATION. THEREFORE THE ASSESSING OFFICER IS JUSTIFIED IN REJECTING THE BOO KS OF ACCOUNTS BY INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T. ACT. THIS GROUND OF APPEAL OF THE APPELLANT IS THEREFORE, DISMISSED 7. THE NEXT GROUND TAKEN BY THE APPELLANT IS REGARD ING THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN SALE PRICE OF FLAT S OF RS.6,15.000/-AS DISCUSSED IN PARA 5 TO 13 OF THE ORDER. IT IS STATE D THAT THE APPELLANT WAS NOT GIVEN PROPER OPPORTUNITY. THE WRITTEN SUBMISSIO N MADE BY THE - ASSESSEE IN THIS REGARD IS PERUSED. 7.1. THIS STATEMENT OF THE APPELLANT THAT PROPER OPPORTUNITY IS NOT GIVEN IS NOT CORRECT AS THE SEQUENCE OF PROCEEDINGS MENTI ONED IN THE WRITTEN SUBMISSION ITSELF SHOW THAT THE APPELLANT WAS GIVEN 10 MONTHS TIME ( I.E. 10.3.2006 TO 20.12.2006) TO PRODUCE EVIDENCE AND EX PLAIN ITS CASE WHICH IS SUFFICIENT BY ANY STANDARD. IN THIS REGARD THE APPELLANT HAS SUBMITTED : 'YOUR APPELLANTS SUBMIT THAT SINCE PROPER OPPORTUNI TY WETS NOT GIVEN TO YOUR APPELLANTS, YOUR APPELLANTS COULD NOT LEAD EVI DENCE THAT FLAT NO.907 OF ASHISH KJOSHI AND KALPANA JOSHI WAS CANCELLED AN D NOT PAID BALANCE AMOUNT BUT HAD JUST GIVEN A DEPOSIT OF RS10,000/-. ASHISH K. JOSHI AND KALPANA JOSHI HAD DISPUTED FOR QUALITY OF THE CONST RUCTION AND ACCORDING TO THE QUALITY AND SITE OF THEIR FLAT BEING INFERIO R THEY CANCELLED THE TRANSACTION INSPITE OF THE FACT THAT THEIR LOAN WAS SANCTIONED, THEY HAD PAID STAMP DUTY AND SUFFERED A LOSS. IN ANY CASE, THE TR ANSACTION DID NOT MATERIALISE ULTIMATELY AND THEREFORE THIS FLAT CANN OT BE CONSIDERED AS SALE BUT SHOULD BE CONSIDERED AS STOCK IN TRADE. COPY OF LETTER FROM ASHISH JOSHI ENCLOSED'. FURTHER, YOUR APPELLANTS SUBMIT THAT THE TRANSACTIO N WITH HARISH P. DESAI WHICH WAS TOWARDS THE END OF THE YEAR, WHILE THE TR ANSACTION WITH SHAKTI K. BHANUSHALI WAX IN THE EARLIER PERIOD OF THE YEAR , AS CAN BE SEEN FROM THE ENCLOSED COPY OF ACCOUNTS. SHAKTI K. BHANSUSHAL I HAS PAID THE AMOUNT IN JULY 2000 WHILE HARISH P. DESAI AND VINAY DESAI HAVE PAID AT THE END OF THE YEAR I.E. MARCH 2001. DURING THIS PERIOD YOUR APPELLANTS HAVE SPENT SUBSTANTIAL AMOUNT AND IMPROVED THE QUAL ITY OF THAT BY INSTALLING ANOTHER LIFT AND ALSO LOT OF OTHER IMPRO VEMENTS WERE DONE IN HARISH P. DESAI'S-FLAT AND THAT WAS THE CONDITION A S CAN BE SEEN FROM THE EXPENDITURE INCURRED ON HIS FLAT DURING THE YEAR UN DER REVIEW.. YOUR APPELLANTS SUBMIT THAT SHAKTI K, BHANUSHALI WA S GIVEN THE FLAT IN A VERY BAD CONDITION AND WITHOUT AY IMPROVEMENT AND I T IS JUST LYING AS IT IS ITA 2363 & 2364/AHD/2007 9 SINCE LAST THREE TO FOUR YEARS. THIS IS THE MAIN DI FFERENCE IN RATE BETWEEN THE FLAT SOLD TO SHAKTI K. BHANUSHALI AND THE FLAT SOLD TO HARISH P. DESAI. YOUR APPELLANTS, THEREFORE, SUBMIT THAT THIS FACTUA L POSITION AS REFERRED ABOVE SHOULD BE CONSIDERED AND IF PROPER OPPORTUNIT Y WOULD BE GIVEN TO YOUR APPELLANTS , THEY CAN EASILY LEAD TO EVIDENCE TO SUBSTANTIATE THIS FACTUAL POSITION AND THEREFORE, YOUR APPELL ANTS SUBMIT THAT THE ADDITION OF RS.6.15,0()0/-BE DELETED.' 7.2 THE ABOVE SUBMISSIONS HAVE BEEN EXAMINED IN THE LIGHT OF THE ASSESSMENT ORDER AND THE SALE AGREEMENTS EXECUTED A ND REGISTERED TO SELL THE FLATS. THE RELEVANT PORTION OF THE ASSESSM ENT ORDER IS REPRODUCED BELOW: . 7.2. FROM THE ABOVE IT IS FOUND THAT THE ASSESSI NG OFFICER HAD OBTAINED THE SALE AGREEMENT EXECUTED AND REGISTERED TO SELL THE FLAT NO.907 ADMEASURING 950 SQ.FT. FROM GRUH FINANCE LTD. L02, GUMDEV COMPLEX, VAPI SILVASSA ROAD VAPI BY ISSUING LETTER NO.ITO/V LS/133(6)/2005-06 DATED 6.12.2006 U/S. L33(6)OF THE I.T.ACT. IT IS FO UND FROM THE COPY OF THE AGREEMENT WITH ASHISH KANTILAL JOSHI ENCLOSED AS AN NEXURE-III TO THE ORDER THAT SHRI ASHISH KANTILAL JOSHI. A QUALIFIED HAS TAKEN LOAN FROM GRUH FINANCE LTD. ON THE STRENGTH OF THE AGREEMENT EXECUTED AND REGISTERED WITH THE SUB-REGISTRAR ON 19.4.2000 AT E NTRY NO.BLS/790/7/7/2000. 7.4. ON A CAREFUL EXAMINATION OF THIS ARGUMENT P UT FORWARD BY THE APPELLANT AND THE LETTER OF ASHISH K. JOSHI, PRESEN TED BY THE LEARNED COUNSEL ALONG WITH THE WRITTEN SUBMISSION IT IS FOUND THAT THE SALE AGREEMENT WAS EXECUTED AND REGISTERED ON 7.7.2000 O N THE STRENGTH OF WHICH SHRI JOSHI HAS TAKEN LOAN FROM GRUH FINANCE.T HE LETTER CLAIMED TO HAVE BEEN ISSUED BY SHRI JOSHI AND ENCLOSED WITH TH E SUBMISSION IS DATED 10.3.2007. THEREFORE, THIS LETTER HAS NO. REL EVANCE AND IS NOT ACCEPTED. MOREOVER, THE APPELLANT HAS NOT PRODUCED SUCH A LETTER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF TH E ABOVE, THE SAID CLAIM IS DISMISSED. 8. THE OTHER ISSUES RAISED BY THE APPELLANT SUCH AS EXPENDITURE MADE IN THE FLATS, LIFT ERECTED ETC. AND ALSO THE DATE OF S ALE AGREEMENTS MADE WITH VARIOUS CLIENTS ETC. HAVE BEEN EXAMINED. THESE FAC TS ARE IMMATERIAL SINCE THE ASSESSING OFFICER HAS ARRIVED AT THE SALE PRICE OF THE FLATS FROM THE DOCUMENTARY EVIDENCES COLLECTED FROM GOVERNMENT AGENCIES SUCH AS BANKS, FINANCIAL INSTITUTIONS ETC. I.E. REGISTERED SALE AGREEMENTS DULY SIGNED BY THE APPELLANT AND THAT TOO SOME 6-7 YEARS BACK. SINCE THE SALE PRICE IS NOT ON ESTIMATE BASIS AND BASED ON REAL FA CTS EMERGING FROM THE SALE AGREEMENTS EXECUTED BETWEEN THE APPELLANT AND THE PURCHASERS OF ITA 2363 & 2364/AHD/2007 10 THE FLATS, NO INTERFERENCE IS FOUND NECESSARY. THI S GROUND OF APPEAL IS THEREFORE DISMISSED. 4,1. LIKEWISE FOR THE AY 2002-03, THE LD. CIT(A) HELD AS UNDER: SIMILARLY, FOR THE AY 2002-03, THE AO HAS ADOPTED THE SALE PRICE OF FLAT NO.707@ RS . 422/SQ. FT. WHICH COMES TO RS. 3,80,000/- AS AGAI NST RS. 250/ S. FT. SHOWN BY THE APPELLANT. I HAVE CAREFULLY EXAMINED T HE FACTS OF THE CASE, THE SUBMISSION MADE BY THE APPELLANT AND ALSO THE ARGUM ENT PUT FORWARD BY THE AO FOR ADOPTING THE VALUE AT RS. 422/SQ. FT.. CONSIDER ING THE SALE PRICE OF THE FLATS IN THE SAME BUILDING IN THE PREVIOUS YEAR AS PER SALE AGREEMENTS EXECUTED BY THE APPELLANT AND ALSO CONSIDERING THE COST OF FLATS AT THE RELEVANT TIME,I AM OF THE OPINION THAT THE AO IS JUSTIFIED IN ADOPTING THE RA TE OF SALE PRICE AT RS.3,80,000/- FOR FLAT NO. 707.I THEREFORE CONFIRM THE ADDITION M ADE BY THE ASSESSING OFFICER. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR APPEARING BEFORE US DID NOT PRESS GROUNDS RELATING TO REOPENING OF THE ASSESSMENT OR EVEN REJECTION OF BO OKS OF ACCOUNTS IN THESE TWO ASSESSMENT YEARS. AS REGARDS ADDITIONS IN CONSEQUEN CE OF REJECTION OF BOOKS, THE LD. AR MERELY REITERATED THEIR CONTENTIONS BEFO RE THE LD. CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSEE HAD MERELY ENTERED IN TO AN AGREEMENT TO SELL WITH SHRI ASHISH KANTILAL JOSHI AND THE POSSESSION HAD N OT BEEN GIVEN. THE LD. AR EXPLAINED THAT THE MAJOR DIFFERENCE IN THE SALES WA S ON ACCOUNT OF ADDITION TO SALES OF RS.4,00,000/- ON ACCOUNT OF ALLEGED SALE O F FLAT NO.907 TO SHRI ASHISH K JOSHI & MRS. KALPANA JOSHI. THE SAID PARTY DID NOT MAKE ANY PAYMENT AND THE FINANCE WAS ALSO USED BY THEM FOR SOME OTHER PURPOS E WHILE THE AO MADE THE ADDITION MERELY ON THE BASIS OF REGISTERED AGREEMEN T TO SELL WITH GRUH FINANCE LTD. IT WAS POINTED OUT THAT THE SAID FLAT WAS ACT UALLY SOLD TO SMT. SMITA MANSUKHLAL GODIA AND SMT. CHANDABEN MANSUKHLAL GODI A ON 07-02-2009 . THOUGH THE LD. AR SUBMITTED A COPY OF AGREEMENT WI TH THESE PERSONS IN GUJRATI, ITS ENGLISH VERSION WAS NOT FILED DESPITE DIRECTION S OF THE BENCH. AS REGARDS FLATS SOLD TO SHRI HARISH P DESAI AND VINAY DESAI IN MAR CH, 2001 , THE LD. AR POINTED OUT THAT SHRI SHAKTI K BHANSALI HAD BOOKED IN JUL Y, 2000 AND THEREFORE, THE VALUE OF HARISH P DESAI AND VINAY DESAI SHOULD NOT BE TAKEN AS VALUE OF BOOKING IN THE CASE OF HARISH P DESAI. ON THE OTHER HAND , THE LD. DR WHILE CARRYING US THROUGH THE IMPUGNED ORDERS VEHEMENTLY SUPPORTED TH E FINDINGS OF THE LD. CIT(A). ITA 2363 & 2364/AHD/2007 11 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. THE LD. AR APPEARING BEFORE US ON BEHALF OF THE AS SESSEE DID NOT DISPUTE THE FINDINGS OF THE LD. CIT(A) REGARDING REJECTION OF BOOKS OF ACCOUNTS IN THESE TWO ASSESSMENT YEARS. ONLY DISPUTE IS REGARDING ADDITI ON MADE BY THE AO . WE ARE OF THE OPINION THAT NO DOUBT THE AO/CIT(A) SHOULD T RY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSE SSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY, BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID NOT SUBMIT PROPER ACCOUNTS AND DETAILS.[ KAC HWALA GEMS VS JCIT, 288 ITR 10 (2007)(SC) ]. IT IS ALSO TRUE THAT ASSESSING OFFICER OR THE CIT(A) ARE NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND ARE ENT ITLED TO ACT ON MATERIALS WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN COURT OF LAW, NE VERTHELESS, THE ASSESSING OFFICER SHOULD ADOPT A METHOD WHICH MUST REFLECT TH E PROFITS TRULY AND JUSTLY [ GEMINI PICURES LTD. VS CIT (1958) 33 ITR 547 (MAD ).]IN THE INSTANT CASE ,WE FIND THAT THE ASSESSEE ITSELF ADMITTED THAT FLATS NO. 904 & 506 WERE SOLD TO SHRI HARISH P DESAI AND SHRI VINAY P DESAI @RS. 421/SQ. FT. AND RS. 423/SQ. FT. RESPECTIVELY. NEITHER BEFORE THE AO NOR BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED ANY EVIDENCE THAT THE FLAT SOLD IN THE A Y 2002-03 WAS OF POOR QUALITY. EVEN BEFORE US THERE IS NO SUCH MATERIAL SO AS TO E NABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. IN THESE CIRCUMSTANCES, ADOPTIN G RATE OF RS. 423 PER SQ. FT. FOR SALE OF FLAT IN THE PERIOD RELEVANT TO THE AY 2002- 03 ON THE BASIS OF FACTS NOTICED IN THE AY 2001-02 IS IN ACCORDANCE WITH FACTS ON RE CORD AND THERE IS NO MATERIAL BEFORE US TO INTERFERE WITH THE CONCLUSION ARRIVED AT BY THE LD. CIT(A) IN HIS ORDER FOR THE AY 2002-03. AS REGARDS FLAT NO. 404 SOLD TO SHRI HARISH M DESAI IN THE AY 2001-02, THE ASSESSEE DID NOT SUBMIT COPY OF TH E RELEVANT SALE AGREEMENT BEFORE THE AO DESPITE SUFFICIENT OPPORTUNITY PROVID ED . EVEN BEFORE THE LD. CIT(A) THE ASSESSEE DID NOT MAKE ANY ATTEMPT NOR SEEMS T O HAVE DISPUTED THE FINDINGS OF THE AO. BEFORE US ALSO THE ASSESSEE DID NOT DISP UTE THE FINDINGS OF THE LOWER AUTHORITIES IN RESPECT OF FLAT SOLD TO SHRI HARISH M DESAI NOR REFERRED US TO ANY SALE AGREEMENT. EXECUTED WITH SHRI HARESH M DESAI I N RESPECT OF SALE OF FLAT ITA 2363 & 2364/AHD/2007 12 ADMEASURING 650 SQ. FT.. SINCE THE ASSESSEE FAILED TO DISCHARGE THE ONUS PLACED ON THEM, THE AO ON THE BASIS OF SALE OF FLAT NO. 5 06 ADMEASURING 650 SQ. FT., ADOPTED THE RATE OF RS. 423 PER SQ. FT. IN THESE CI RCUMSTANCES, ESPECIALLY WHEN THERE IS NO MATERIAL BEFORE US, WE HAVE NO ALTERNAT IVE BUT TO UPHOLD THE FINDINGS OF THE LOWER AUTHORITIES ON THE SAID ADDITION. AS R EGARDS ADDITION ON THE BASIS OF THE SALE DEED FOR FLAT NO. 306 EXECUTED ON 13.7.200 0 WITH SHRI SHAKTIKUMAR K BHANUSHALI ,WHICH REVEALED THAT THE PURCHASER PAID RS. 2 LACS BY CHEQUE AND RS. 40,000/- IN CASH, SINCE THERE IS NOTHING ON RE CORD SUGGESTING THAT THE SAID FLAT WAS OF POOR QUALITY NOW WE HAVE BEEN REFERRED TO ANY SUCH MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, W E ARE NOT INCLINED TO INTERFERE. HOWEVER, AS REGARDS FLAT NO. 907 ADMEASURING 950 S Q. FT SOLD TO SHRI ASHISH KANTILAL JOSHI VIDE SALE AGREEMENT EXECUTED AND REG ISTERED ON 19.4.2000 AND SHRI JOSHI HAVING OBTAINED LOAN FROM GRUH FINANCE L TD. ON THE STRENGTH OF THE SAID AGREEMENT, THE LD. AR HAS DISPUTED THE FACTUM OF SALE AND INSTEAD IT HAS BEEN PLEADED BEFORE US THAT THE SAID FLAT WAS ACTUA LLY SOLD TO SMT. SMITA MANSUKHLAL GODIA AND SMT. CHANDABEN MANSUKHLAL GODI A ON 07-02-2009 . IT WAS MENTIONED THAT SHRI JOSHI DID NOT MAKE ANY PAYM ENT AND THE FINANCE WAS ALSO USED BY THEM FOR SOME OTHER PURPOSE WHILE THE AO MADE THE ADDITION MERELY ON THE BASIS OF REGISTERED AGREEMENT TO SELL WITH GRUH FINANCE LTD. IT WAS CONTENDED THAT THE SAID FLAT COULD HAVE ADDED TO TH E CLOSING STOCK. SINCE THIS PLEA HAS BEEN TAKEN BEFORE US FOR THE FIRST TIME A ND HAD NEVER BEEN TAKEN BEFORE THE LOWER AUTHORITIES ,APPARENTLY THE AO AND THE LD. CIT(A) COULD NOT HAVE ANY OCCASION TO RECORD THEIR FINDINGS ON THIS ASPEC T. THOUGH THE LD. AR SUBMITTED A COPY OF AGREEMENT WITH SMT. SMITA MANSUKHLAL GOD IA AND SMT. CHANDABEN MANSUKHLAL IN GUJRATI, ITS ENGLISH VERSION WAS NOT FILED BEFORE US DESPITE DIRECTIONS OF THE BENCH. IN THESE CIRCUMSTANCES, TH E MATTER OF ADDITION IN RESPECT OF SALE OF FLAT TO SHRI ASHISH K JOSHI IS RESTORED TO THE FILE OF THE AO WITH THE DIRECTIONS TO ASCERTAIN COMPLETE FACTS AS TO WHETHE R OR NOT THE SAID FLAT HAD ACTUALLY BEEN SOLD TO SHRI JOSHI AND IF SO HOW THE SAID FLAT AGAIN CAME TO BE SOLD IN 2009 BY THE ASSESSEE TO SMT. SMITA MANSUKHLAL GO DIA AND SMT. CHANDABEN MANSUKHLAL AND THEREAFTER ,PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW AFTER ITA 2363 & 2364/AHD/2007 13 ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSSESSEE. IN THE EVENT ,IT IS FOUND THAT THE SAID FLAT WAS NOT ACTUALLY SOLD TO SHRI ASHISH K JO SHI AND MRS. KALPANA JOSHI DURING THE YEAR UNDER CONSIDERATION, ITS APPROPRIAT E VALUE SHOULD BE INCLUDED IN THE CLOSING STOCK. WITH THESE DIRECTIONS, GROUND NO . 3 IN THE APPEAL OF THE ASSESSEE FOR THE AY 2002-03 IS DISMISSED WHILE AGRO UND NO. 3 IN THE APPEAL FOR THE AY 2001-02 IS DISPOSED OF AS INDICATED ABOVE IN SO FAR AS IT RELATES TO ADDITION ON ACCOUNT OF FLAT SOLD TO ASHISH K JOSHI AND MRS. KALPANA JOSHI. THE REMAINING ADDITION STANDS CONFIRMED. 7. GROUND NO.4 IN THESE APPEALS PERTAINS TO A DDITION ON ACCOUNT OF VALUATION OF CLOSING STOCK. THE AO NOTICED IN THE AY 2001-0 2 THAT THE CLOSING STOCK OF 9100 SQ.FT. AS ON 31-03-2001 WAS VALUED AT RS. 19,6 3,065/-.THE OPENING STOCK SHOWN FOR THE A.Y. 2001-02 WAS ONLY 12650 SQ.FT. SINCE THE ASSESSEE HAD SOLD FLATS ADMEASURING 3850 SQ. FT. IN THE YEAR UNDER CO NSIDERATION, THE AO WORKED OUT CLOSING STOCK OF 8800 SQ. FT.[12650-3850] AT RS.19 ,43,744, VALUED AT THE RATE OF RS. 220.88 PER SQ. FT. ACCORDINGLY, THE AO REDUCED AN AMOUNT OF RS.19,312[1963055-1943744](ACTUALLY WORKS OUT RS. 1 9,311/-) WHILE DETERMINING THE INCOME FOR THE AY 2001-02. 7.1 SIMILARLY, IN THE AY 2002-03, THE AO NOTIC ED THAT THE ASSESSEE HAD SHOWN CLOSING STOCK OF 8200 SQ.FT. VALUED AT RS.17, 68,055/- @ RS.215.7 PER SQ.FT. HOWEVER, THE AO WORKED OUT THE CLOSING STOCK AS UND ER: OPENING STOCK 9100 SQ.FT. LESS:SOLD DURING THE YEAR 900 SQ.FT. CLOSING STOCK OF SALEABLE AREA 8200 THUS, THE VALUE OF CLOSING STOCK FOR THE YEAR WAS W ORKED OUT AT RS.18,11,216/-@ RS. 200.88 PER SQ. FT. [8200X220.88] AS AGAINST SHO WN BY THE ASSESSEE AT RS.17,68,055/-. THE DIFFERENCE OF RS.43,161/- WAS, ACCORDINGLY, ADDED TO THE TOTAL INCOME. ITA 2363 & 2364/AHD/2007 14 8. ON APPEAL, THE LD. CIT(A) NOTICED THAT THE ASSESSEE DID NOT PRESS THESE GROUNDS . HOWEVER, THE LD. CIT(A) EXAMINED THE FACT S AND UPHELD THE ADDITION IN THE AY 2002-03. BEFORE US, THE LD. AR URGED THAT T HE EXPENDITURE ON LIFT WHICH WAS INCURRED IN THE CURRENT YEAR SHOULD BE FULLY AL LOWED AND PROPORTIONATE AMOUNT SHOULD NOT BE TAKEN AS CLOSING STOCK WHILE T HE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GO NE THROUGH THE FACTS OF THE CASE. WE FIND THAT IN THE ASSESSMENT ORDER FOR THE AY 20 01-02 , INCOME HAS ACTUALLY BEEN REDUCED BY AN AMOUNT OF RS.19,312/- .SO THE AS SESSEE SHOULD NOT HAVE ANY GRIEVANCE. AS REGARDS AY 2002-03, THE LD. CIT(A ) FOUND THAT THE ASSESSEE CLAIMED LIFT EXPENSES IN THE YEAR UNDER CONSIDERAT ION AND THEREFORE , THERE WAS NO INFIRMITY IN THE FINDINGS OF THE AO IN VALUING THE CLOSING STOCK. BEFORE US , THE LD. AR DID NOT PLACE ANY MATERIAL ,WARRANTING INTER FERENCE IN THE FINDINGS OF THE LD. LOWER AUTHORITIES. EVEN OTHERWISE THIS GROUND WAS N OT PRESSED BEFORE THE LD. CIT(A). THEREFORE, WE HAVE NO ALTERNATIVE BUT TO RE JECT GROUND NO. 4 IN THESE TWO APPEALS. 10. THE NEXT GROUND NO.5 IN THE APPEAL FOR THE AY 2 001-02 PERTAINS TO ADDITION OF RS.7,71,822/-. THE AO FOUND THAT IN ITS BALANCE -SHEET AS ON 31.3.2001 , THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.9,21,822/- PAYAB LE TO SHRI SHIVPAL J MISTRY, PROPRIETOR OF SHIV CONSTRUCTION UNDER THE H EAD SUNDRY CREDITORS. TO A QUERY BY THE AO, THE ASSESSEE DID NOT PRODUCE ANY DETAILS OF WORK DONE OR THE REASONS FOR KEEPING SUCH A HUGE AMOUNT PAYABLE TO A LABOUR CONTRACTOR. THE AO WAS OF THE OPINION THAT THE SALE OF MAJOR PORTION O F THE FLATS AND SHOPS WAS DONE IN 1996-97 AND 1997-98 AND THE AMOUNT COULD HAVE BE EN PAID IN THAT YEARS ITSELF. THE AO, ACCORDINGLY ,SUMMONED SHRI SHIVPAL J MISTRY ,WHO IN HIS STATEMENT ADMITTED THAT EXCEPT AN AMOUNT OF RS.1,50,000/- NO FURTHER AMOUNT WAS DUE TO HIM. THE ASSESSEE WAS PROVIDED WITH A COPY OF THE STATEMENT OF SHRI SHIVPAL J MISTRY. DESPITE OPPORTUNITY ALLOWED BY THE AO, THE ASSESSEE NEITHER FURNISHED ANY EVIDENCE NOR OPTED FOR CROSS EXAMINATION OF SHR I SHIVPAL J MISTRY. ITA 2363 & 2364/AHD/2007 15 ACCORDINGLY, THE AMOUNT OF RS.7,71,822/-[9,21,822-1 ,50,000] WAS ADDED TO THE TOTAL INCOME. 11. ON APPEAL, THE ASSESSEE CONTENDED THAT SHRI SHIVRAJ J MISTRY HAD SUBMITTED BILLS FOR WORK DONE IN THE AY 1996-97 & 1 997-98 AND EXPENDITURE WAS CLAIMED IN THOSE YEARS AND THAT NO ASSESSEE WILL CL AIM BOGUS EXPENDITURE. IT WAS ARGUED THAT THEY SHOULD BE GIVEN PROPER OPPORTUNITY TO EXPLAIN THE DIFFERENCE. IN THE LIGHT OF THESE SUBMISSIONS, THE LD. CIT(A) UPHE LD THE ADDITION IN THE FOLLOWING TERMS: 10.2 I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE A.R . OF THE APPELLANT. 10.2.1 IN THE FIRST PLACE THE ONUS WAS ON THE APPEL LANT TO PROVE THAT THE AMOUNT SHOWN IN THE BALANCE SHEET AS SUNDRY CRE DITOR IS GENUINE AND THE AMOUNT SHOWN IN THE BALANCE SHEET A T RS.7,71,822/- IS ACTUALLY PAYABLE TO SHIV CONSTRUCT ION. THE APPELLANT FAILED TO DISCHARGE THIS LEGAL OBLIGATION TO PROVE THE GENUINENESS AND THE AMOUNT SHOWN IN THE BALANCE SHE ET IS RIGHTLY PAYABLE TO THE CREDITOR. 10.2.2 SECONDLY, THE APPELLANT WAS GIVEN AN OPPORTU NITY TO CROSS EXAMINE THE SO CALLED CREDITOR BEFORE PASSING THE ASSESSMENT ORDER. THE APPELLANT DID NOT AVAIL THE OPPORTUNITY AND NEVER CAME FORWARD TO CROSS EXAMINE HIM. 10.2.3 THIRDLY, THE APPELLANT DID NOT HAVE ANY EXPL ANATION FOR NOT PAYING THE ABOVE AMOUNT FOR SUCH A LONG TIME EVEN W HEN THE APPELLANT HAD ENOUGH FUNDS AND CLOSING STOCK. 10.2.4 FOURTHLY, THE CREDITOR HAS STATED ON OATH U/ S 131 THAT NO AMOUNT WAS RECEIVABLE BY HIM FROM THE APPELLANT. T HE APPELLANT CANNOT HAVE CLAIM OF OUTSTANDING LIABILIT Y WHEN THE CREDITOR DENIES ANY SUCH CLAIM. 10.2.5 IN VIEW OF THE ABOVE, ACTION OF THE ASSESSIN G OFFICER IS UPHELD AND THIS GROUND OF APPEAL IS DISMISSED. ITA 2363 & 2364/AHD/2007 16 12. THE ASSESSEE IS NOW IN APPEAL BEFORE US AG AINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD.AR ON BEHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE THE LD. DR SUPPORTED TH E FINDINGS OF THE LD. CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. UNDISPUTEDLY, THE ONUS WAS ON THE ASSESSEE TO ESTA BLISH THE GENUINENESS OF THE CREDIT SHOWN IN THE BALANCE SHEET AS SUNDRY CR EDITOR. THE ASSESSEE FAILED TO DISCHARGE THIS ONUS BEFORE THE LOWER AUTHORITIES AN D EVEN BEFORE US NO MATERIAL HAS BEEN PLACED SO AS TO ENABLE US TO TAKE A DIFFER ENT VIEW IN THE MATTER. DESPITE OPPORTUNITY ALLOWED BY THE AO TO CROSS EXAMINE THE SAID CREDITOR BEFORE PASSING THE ASSESSMENT ORDER, THE ASSESSEE DID NOT DO SO N OR PLACED ANY MATERIAL BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US ,E STABLISHING THE GENUINENESS OF THE SAID CREDIT ,ESPECIALLY WHEN THE LD. CIT(A) FOU ND THAT THE ASSESSEE HAD ENOUGH FUNDS AVAILABLE WITH IT. IN THESE CIRCUMSTA NCES, ESPECIALLY WHEN THERE IS NO MATERIAL BEFORE US TO CONTROVERT THE FINDINGS OF THE LD. CIT(A) IN THE LIGHT OF UNDISPUTED STATEMENT ON OATH OF THE SAID CREDITOR R ECORDED U/S 131 OF THE ACT, WE ARE NOT INCLINED TO INTERFERE . THEREFORE, GROUND N O.5 IN THE APPEAL FOR THE AY 2001-02 IS DISMISSED. 14. GROUND NO.6 IN APPEAL FOR ASSESSMENT YEAR 2001- 02 AND GROUND NO.5 IN APPEAL FOR ASSESSMENT YEAR 2002-03 BEING GENERAL I N NATURE NOR ANY SUBMISSIONS HAVING BEEN MADE BY THE LD. AR ON BEHAL F OF THE ASSESSEE ON THESE GROUNDS, THESE GROUNDS ARE , THEREFORE, DISMISSED. 15. NO ADDITIONAL GROUND HAS BEEN RAISED IN TERMS O F RESIDUARY GROUND NO.7 IN THE APPEAL FOR THE AY 2001-02 AND RESIDUARY GROUND NO.6 IN THE AY 2002-03, THEREFORE, THESE GROUNDS ARE ALSO DISMISSED. ITA 2363 & 2364/AHD/2007 17 16. IN THE RESULT, APPEAL FOR THE AY 2001-02 IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES WHILE FOR THE AY 2002-03 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31ST DA Y OF MARCH, 2010. SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 31ST MARCH, 2010 COPY OF THE ORDER FORWARDED TO : 1. M/S ANUKUL BUILDERS, SAMRUDDHI COMPLEX, 1 ST FLOOR, VALSAD 2. THE ITO, WARD-1, VALSAD 3. CIT CONCERNED 4. CIT(A), VALSAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE